Exhibit 10(e)
ASSET PURCHASE AGREEMENT
dated as of November 1, 1998
by and between
PP&L GLOBAL, INC.
And
PUGET SOUND ENERGY, INC.
CONTENTS
ARTICLE I SALE OF ASSETS AND CLOSING........................ 2
1.01 The Sale..........................................2
1.02 Liabilities.......................................7
1.03 Purchase Price; Allocation........................9
1.04 Purchase Price Adjustment.........................9
1.05 Closing..........................................10
1.06 Prorations.......................................12
1.07 Further Assurances; Post-Closing Cooperation.....13
1.08 Third Party Consents.............................14
1.09 Insurance Proceeds...............................15
1.10 Inclusion/Exclusion of Certain Assets............15
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.........16
2.01 Corporate Existence of Seller....................16
2.02 Authority........................................17
2.03 No Conflicts.....................................17
2.04 Governmental Approvals and Filings...............18
2.05 Reports..........................................18
2.06 Taxes............................................19
2.07 Legal Proceedings................................19
2.08 Compliance with Laws and Orders..................19
2.09 Real Property....................................20
2.10 Tangible Personal Property.......................21
2.11 Intellectual Property Rights.....................21
2.12 Contracts........................................21
2.13 Licenses.........................................23
2.14 Insurance........................................23
2.15 Environmental Matters............................23
2.16 Absence of Condemnation Proceedings..............24
2.17 Regulation as a Utility..........................24
2.18 Brokers..........................................25
2.19 Acknowledgment of Purchaser......................25
2.20 Disclaimers Regarding Assets.....................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.....25
3.01 Corporate Existence..............................26
3.02 Authority........................................26
3.03 No Conflicts.....................................26
3.04 Governmental Approvals and Filings...............27
3.05 Legal Proceedings................................27
3.06 Compliance with Laws and Orders..................28
3.07 Regulation as a Utility..........................28
3.08 Brokers..........................................28
3.09 Financing........................................28
3.10 Financial Statements.............................28
3.11 Opportunity to Inspect Assets....................29
ARTICLE IV COVENANTS OF SELLER..............................29
4.01 Regulatory and Other Approvals...................29
4.02 HSR Filings......................................30
4.03 Investigation by Purchaser.......................30
4.04 No Solicitations.................................31
4.05 Conduct of Business..............................31
4.06 Certain Restrictions.............................32
4.07 Security Deposits................................34
4.08 Delivery of Books and Records, etc.; Removal of
Property.........................................34
4.09 Fulfillment of Conditions........................34
4.10 Observation, Inspection and Participation........34
4.11 Notice of Breach.................................35
4.12 Bridge Financing Fees............................35
4.13 Special Maintenance and Capital Expenditures.....36
ARTICLE V COVENTANTS OF PURCHASER...........................36
5.01 Regulatory and Other Approvals...................36
5.02 HSR Filings......................................37
5.03 PPUC Approval for Holding Company................37
5.04 Notice of Breach.................................38
5.05 Fulfillment of Conditions........................38
5.06 Tax-Exempt Bond Financed Pollution Control
Facilities.......................................38
5.07 Purchaser Financing..............................39
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER...........39
6.01 Representations and Warranties...................39
6.02 Performance......................................40
6.03 Officers' Certificates...........................40
6.04 Orders and Laws..................................40
6.05 Regulatory Consents and Approvals................40
6.06 Colstrip Rights of First Refusal.................40
6.07 Third Party Consents.............................40
6.08 No Seller Material Adverse Effect................41
6.09 Proceedings......................................41
6.10 Deliveries.......................................41
6.11 Colstrip Operations Arrangements.................41
6.12 Purchaser Financing..............................41
6.13 Opinion of Counsel...............................41
6.14 Transfer of MPC Generation Assets................41
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER.............42
7.01 Representations and Warranties...................42
7.02 Performance......................................42
7.03 Officers' Certificates...........................42
7.04 Orders and Laws..................................42
7.05 Regulatory Consents and Approvals................43
7.06 Third Party Consents.............................43
7.07 Opinion of Counsel...............................43
7.08 No Purchaser Material Adverse Effect.............43
7.09 Proceedings......................................43
7.10 Colstrip Rights of First Refusal.................44
7.11 Deliveries.......................................44
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES.............44
8.01 Transfer Taxes...................................44
8.02 Returns with Respect to Prorated Taxes...........44
ARTICLE IX SURVIVAL; NO OTHER REPRESENTATIONS...............45
9.01 Survival of Representations, Warranties, Covenants
and Agreements 45
9.02 No Other Representations.........................45
ARTICLE X INDEMNIFICATION...................................46
10.01 Other Indemnification...........................46
10.02 Method of Asserting Claims......................49
10.03 Exclusivity.....................................53
10.04 Purchaser's Release of Seller Under the Colstrip
Contracts.......................................53
ARTICLE XI TERMINATION......................................53
11.01 Termination.....................................53
11.02 Effect of Termination...........................54
ARTICLE XII DEFINITIONS.....................................55
12.01 Definitions.....................................55
ARTICLE XIII MISCELLANEOUS..................................71
13.01 Notices.........................................71
13.02 Bulk Sales Act..................................72
13.03 Entire Agreement................................72
13.04 Expenses........................................72
13.05 Public Announcements............................73
13.06 Confidentiality.................................73
13.07 Waiver..........................................74
13.08 Amendment.......................................74
13.09 No Third Party Beneficiary......................74
13.10 No Assignment; Binding Effect...................75
13.11 Headings........................................75
13.12 Invalid Provisions..............................75
13.13 Governing Law...................................76
13.14 Counterparts....................................76
13.15 Consent to Assignment...........................76
SCHEDULES
Schedule I Pre-Closing Known Remedial Liabilities
EXHIBITS
Exhibit A General Assignment and Xxxx of Sale
Exhibit B Assumption Agreement
Exhibit C Pollution Control Facilities
Exhibit D Officer's Certificate of Seller
Exhibit E Secretary's Certificate of Seller
Exhibit F Wholesale Transition Service Agreement
Exhibit G-1 Opinion of Counsel to Seller
Exhibit G-2 Opinion of Montana Counsel to Seller
Exhibit H Officer's Certificate of Purchaser
Exhibit I Secretary's Certificate of Purchaser
Exhibit J Opinion of Counsel to Purchaser
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of November 1,
1998 is made and entered into by and between PP&L Global,
Inc., a Pennsylvania corporation ("Purchaser"), and Puget
Sound Energy, Inc., a Washington corporation ("Seller").
Capitalized terms not otherwise defined herein have the
meanings set forth in Section 12.01.
WHEREAS, Seller and its subsidiaries engage in a number
of diversified energy related businesses;
WHEREAS, Seller's principal business is regulated utility
operations involving the generation, purchase, transmission
and distribution of electricity and the purchase,
transportation and distribution of natural gas in Washington;
and
WHEREAS, Seller desires to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase and acquire from
Seller, Seller's undivided interests in Colstrip Units 1&2 and
Colstrip Units 3&4 and related transmission assets (as defined
herein, the "PSE Colstrip Interests"), Seller's rights under
the Colstrip Contracts (as defined herein) and certain other
assets of Seller relating to the PSE Colstrip Interests, and
in connection therewith, Purchaser has agreed to assume
certain of the liabilities of Seller relating to such assets,
all on the terms set forth herein;
WHEREAS, on the date hereof PP&L Resources, Inc., a
Pennsylvania corporation and the parent of Purchaser
("Parent"), has entered into an Equity Contribution Agreement
(the "Contribution Agreement") with Purchaser and Seller;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 The Sale
(a) On the terms and subject to the conditions set forth
in this Agreement, Seller will sell, transfer, convey, assign
and deliver to Purchaser, and Purchaser will purchase and pay
for, at the Closing, free and clear of all Liens other than
Permitted Liens (as such term is defined with respect to any
date after the Closing), all of Seller's right, title and
interest in, to and under the PSE Colstrip Interests and the
Assets and Properties used or held for use principally in
connection with the operation of the Colstrip Facilities,
except as otherwise provided in Section 1.01(b), as the same
shall exist as of the Closing including, but not limited to
the following (collectively with any proceeds and awards
referred to in Section 1.09, the "Assets"):
(i) Real Property. The real property (including all
buildings, structures, fixtures and other improvements
thereon) used or held for use in connection with or related to
the operation of the Colstrip Facilities, as described in
Section 1.01(a)(i) of the Disclosure Schedule, which real
property is held in fee, easement, permit interest or other
interest, as the case may be (the "Real Property");
(ii) Real Property Leases. (A) The leases and subleases
of real property used or held for use in connection with or
related to the operation of the Colstrip Facilities, as
described in Section 1.01(a)(ii)(A) of the Disclosure
Schedule, as to which Seller is the lessor or sublessor and
(B) the leases and subleases of real property used in
connection with or related to the operation of the Colstrip
Facilities, as described in Section 1.01(a)(ii)(B) of the
Disclosure Schedule, as to which Seller is the lessee or
sublessee, together with any options to purchase the
underlying property and leasehold improvements thereon, and in
each case all other rights, subleases, licenses, permits,
deposits and profits appurtenant to or related to such leases
and subleases (the leases and subleases described in
subclauses (A) and (B), the "Real Property Leases");
(iii) Inventory. All inventories of fuels, supplies,
materials and spares used or held for use in connection with
the operation of the Colstrip Facilities located on the Real
Property or the real property subject to the Real Property
Leases, held for use principally in connection with, or in
transit to the Colstrip Facilities on the date of the Closing
(a listing of the fuel inventories, as of September 30, 1998,
is included in Section 1.01(a)(iii) of the Disclosure
Schedule) (the "Inventory");
(iv) Tangible Personal Property. All machinery,
equipment, vehicles, furniture and other personal property
located where the operation of the Colstrip Facilities is
conducted, or used or held for use in connection with the
operation of the Colstrip Facilities (including but not
limited to the items listed in Section 1.01(a)(iv) of the
Disclosure Schedule), together with all buildings and
structures ("Improvements") pertaining to Colstrip Units 3 and
4, including Seller's interest in the facilities shared by
Colstrip Units 1, 2, 3 and 4 relating thereto, as to those
Improvements which have been severed from the Real Property
and are to be treated as personal property, and all warranties
against manufacturers or vendors relating thereto, to the
extent that such warranties are freely transferable (the
"Tangible Personal Property");
(v) Business Contracts. All contracts, agreements and
personal property leases (other than the Real Property Leases,
the Transferable Permits, the Fuel Contracts and the Colstrip
Contracts) used primarily in the operation of the Colstrip
Facilities, that are listed in Section 1.01(a)(v) of the
Disclosure Schedule (the "Business Contracts");
(vi) Transferable Permits. All Licenses and
Environmental Permits owned or held by Seller and used or held
for use in connection with the operation of the Colstrip
Facilities that are transferable by Seller to Purchaser as
listed in Section 1.01(a)(vi) of the Disclosure Schedule, and
the water rights owned or held by Seller, whether or not such
rights are created or evidenced by a License, and used or held
for use in connection with the operation of the Colstrip
Facilities including those listed in Section 1.01(a)(vi) of
the Disclosure Schedule (the "Transferable Permits");
(vii) Intangible Personal Property. All Intellectual
Property used or held for use principally in connection with
the operation of the Colstrip Facilities and all rights,
privileges, claims, causes of action and options relating or
pertaining to the operation of the Colstrip Facilities or the
Assets, including but not limited to the items listed in
Section 1.01(a)(vii) of the Disclosure Schedule (the
"Intangible Personal Property");
(viii) Security Deposits. All security deposits
deposited by or on behalf of Seller as lessee or sublessee
under the Real Property Leases (the "Tenant Security
Deposits");
(ix) Prepaid Expenses. Except for prepaid expenses and
deposits of Seller attributable to any Excluded Asset or
Retained Liabilities, all prepaid expenses, progress payments
and deposits of or by Seller, rights to receive a prepaid
expense, deposit or progress payment, and cash in transit that
constitutes a prepaid expense, progress payment or deposit,
relating to the Assets or the ownership, operation and
maintenance of the Colstrip Facilities;
(x) Fuel Contracts. All of the fuel contracts listed in
Section 1.01(a)(x) of the Disclosure Schedule (the "Fuel
Contracts");
(xi) Colstrip Contracts. Seller's undivided interests
in, and all of Seller's rights under the Contracts relating
to, the Colstrip Facilities listed in Section 1.01(a)(xi) of
the Disclosure Schedule (the "Colstrip Contracts");
(xii) Allowance and Emission Reduction Credits. All of
the allowances and/or emission reduction credits described in
Section 1.01(a)(xii) of the Disclosure Schedule;
(xiii) Warranties. Any other warranties and indemnities
given by third parties relating to the Assets or to the
ownership, operation and maintenance of the Colstrip
Facilities other than in connection with any Excluded Assets
or Retained Liabilities;
(xiv) Colstrip Books and Records. All books, operating
and maintenance records, operating, safety and maintenance
manuals, engineering or design plans, drawings, blue prints
and as-built plans, specifications, procedures and similar
items of Seller relating specifically to the Colstrip
Facilities (the "Colstrip Books and Records"); and
(xv) PSE Colstrip Transmission Assets. Subject to
Sections 1.10 and 6.12, the PSE Colstrip Transmission Assets
as described in Section 1.01(a)(xv) of the Disclosure
Schedule.
To the extent any of the Colstrip Books and Records are
items susceptible to duplication and are either (x) used in
connection with any of Seller's businesses other than the PSE
Colstrip Interests or (y) are required by Law to be retained
by Seller, Seller may deliver photostatic copies or other
reproductions from which, in the case of Colstrip Books and
Records referred to in clause (x), information solely
concerning Seller's businesses other than the PSE Colstrip
Interests has been deleted. To the extent that any Contract
to be transferred hereunder to Purchaser is also utilized by
or is for the benefit of any of Seller's businesses other than
the PSE Colstrip Interests, the rights and obligations under
such Contracts shall be to the extent practicable allocated
between the PSE Colstrip Interests and such other businesses
in a fair and equitable manner that is reasonably satisfactory
to the parties.
(b) Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the Assets shall not include the
following assets of Seller (the "Excluded Assets"):
(i) Cash. All cash, commercial paper, certificates of
deposit and other bank deposits, treasury bills and other cash
equivalents;
(ii) Investments. Certificates of deposit, shares of
stock, securities, evidences of Indebtedness, interest in
joint ventures, partnerships, limited liability companies and
other entities;
(iii) Tax Refunds. All refunds or credits, if any, of
Taxes relating to the Assets due to or from Seller
attributable to any period ending on or prior to the Closing;
(iv) Real and Personal Property. The real or personal
property forming a part of the Assets described in
Section 1.01(b)(iv) of the Disclosure Schedule, the
delineation and composition of which shall be subject to the
Separation Document;
(v) Corporate Records. All Books and Records of
Seller other than the Colstrip Books and Records;
(vi) Litigation Claims. Any rights (including
indemnification) and claims and recoveries under litigation of
Seller against third parties attributable to the period on or
prior to the Closing except to the extent relating to the
Assumed Liabilities;
(vii) Excluded Obligations. The rights of Seller in,
to and under all Contracts of any nature, the obligations of
Seller under which are not expressly assumed by Purchaser
pursuant to Section 1.02(a);
(viii) Tradename and Logo. All tradenames,
trademarks, service marks or logos owned by Seller or its
Subsidiaries including all of Seller's right, title and
interest in, to and under the names "Puget Sound Energy,
Inc.," "Puget Sound Power & Light Company," "Puget Power" or
any related or similar trade names, trademarks, service marks
or logos;
(ix) Accounts Receivable. All trade accounts
receivable and all notes, bonds and other evidences of
Indebtedness of and rights to receive payments arising out of
sales occurring in connection with the operation of the
Colstrip Facilities prior to the Closing and the security
agreements related thereto, including any rights of Seller
with respect to any third party collection procedures or any
other Actions or Proceedings which have been commenced in
connection therewith;
(x) Insurance. Life insurance policies of Seller's
Employees and all other insurance policies relating to the PSE
Colstrip Interests;
(xi) Allowance and Emission Reduction Credits. All of
Seller's excess allowances and/or emission reduction credits
relating to the Colstrip Facilities that are not described in
Section 1.01(a)(xii) of the Disclosure Schedule;
(xii) All Other Assets. All other Assets and
Properties owned by Seller or its Affiliates not used in the
operation of the Colstrip Facilities; and
(xiii) Other. Seller's rights under this Agreement
and the Operative Agreements.
1.02 Liabilities
(a) Assumed Liabilities. In connection with the sale,
transfer, conveyance, assignment and delivery of the Assets
pursuant to this Agreement, on the terms and subject to the
conditions set forth in this Agreement, at the Closing,
Purchaser will assume and agree to pay, perform and discharge
when due all of the following Liabilities of Seller, direct or
indirect, known or unknown, absolute or contingent, which
arise and are attributable to the period after the date of the
Closing and relate solely to the Assets or which arose and
relate to the period on or prior to the date of the Closing
and are specifically referred to in this Section 1.02(a) as
being assumed by Purchaser (in all cases, except for Seller's
Liabilities in connection with the Pollution Control Bonds and
Liabilities constituting Retained Liabilities) (the "Assumed
Liabilities"):
(i) Real Property Lease Obligations. All Liabilities
of Seller under the Real Property Leases arising and to be
performed after the date of the Closing, and excluding any
such Liabilities arising or to be performed on or prior to the
date of the Closing;
(ii) Tangible Personal Property Obligations. All
Liabilities of Seller under any Contract related to the
Tangible Personal Property arising and to be performed after
the date of the Closing, and excluding any such Liabilities
arising or to be performed on or prior to the date of the
Closing;
(iii) Liabilities under Business Contracts and
Transferable Permits. All Liabilities of Seller under the
Business Contracts and Transferable Permits, to the extent
transferred to Purchaser, arising and to be performed after
the date of the Closing, and excluding any such Liabilities
arising or to be performed on or prior to the date of the
Closing;
(iv) Security Deposits. All Liabilities of Seller
with respect to any security deposit held by Seller as lessor
or sublessor under the Real Property Leases, to the extent and
only to the extent of the respective amount of the security
deposit delivered to Purchaser at the Closing with respect to
any such Real Property Lease (the "Landlord Security
Deposits");
(v) Fuel Contracts and Colstrip Contracts. All
Liabilities of Seller under the Fuel Contracts and the
Colstrip Contracts arising and to be performed after the date
of the Closing, and excluding any such Liabilities arising or
to be performed on or prior to the date of the Closing;
(vi) Pre-Closing Colstrip Liabilities. All
Liabilities of Seller described in Section 1.02(a)(vi) of the
Disclosure Schedule; and
(vii) Environmental Liabilities. Subject to
Section 10.01(b), all Environmental Liabilities; provided,
however, that nothing set forth in this Section 1.02(a) shall
require Purchaser to assume any Liability for (x) payment of
any fines or penalties imposed by a Governmental or Regulatory
Authority relating to the ownership, operation and maintenance
of the Colstrip Facilities on or prior to the Closing
("Environmental Fines and Penalties"), or (y) any Off-Site
Environmental Liabilities).
Except with respect to Environmental Liabilities that are
Assumed Liabilities, Assumed Liabilities shall not include
Liabilities to the extent such Liabilities, but for a breach
or default by Seller of its obligations, would have been paid,
performed or otherwise discharged specifically by their terms
or the terms hereof on or prior to the Closing as it relates
to the Assets or to the extent the same arise out of any such
breach or default.
(b) Retained Liabilities. Except for the Assumed
Liabilities, Purchaser shall not assume by virtue of this
Agreement or the transactions contemplated hereby, and shall
have no liability for, any Liabilities of Seller including
Seller's Liabilities under this Agreement and the Operative
Agreements and including, but not limited to, the following
(the "Retained Liabilities"):
(i) any Liabilities of Seller in connection with the
Pollution Control Bonds or claims by bondholders;
(ii) any Environmental Fines and Penalties;
(iii) any Off-Site Environmental Liabilities;
(iv) any Liabilities of Seller in respect of any
Excluded Assets;
(v) any Liabilities of Seller for Taxes;
(vi) any Liabilities of Seller with respect to
commitments for the purchase or sale of power or fuel, other
than as provided in Section 1.02(a);
(vii) any Liabilities of Seller relating to any
Employee of Seller.
1.03 Purchase Price; Allocation
(a) Purchase Price. Subject to any adjustment required
pursuant to Sections 1.10 or 4.12, the aggregate purchase
price for the Assets shall be an amount equal to the sum of
(x) the Base Purchase Price, (y) the Adjustment Amount and
(z) subject to Sections 1.10(a) and 6.12, the PSE Transmission
Amount (collectively, the "Purchase Price"), payable in
immediately available United States funds at the Closing in
the manner provided in Section 1.05 or thereafter (as provided
in Section 1.04).
(b) Allocation of Purchase Price. Purchaser and Seller
shall negotiate in good faith prior to the Closing Date and
determine the allocation of the consideration paid by
Purchaser for the Assets. Each party hereto agrees (i) that
any such allocation shall be consistent with the requirements
of Section 1060 of the Code and the regulations thereunder,
(ii) to complete jointly and to file separately Form 8594 with
its Federal Income Tax Return consistent with such allocation
for the tax year in which the Closing occurs and (iii) that no
party will take a position on any income, transfer or gains
Tax Return, before any Governmental or Regulatory Authority
charged with the collection of any such Tax or in any judicial
proceeding, that is in any manner inconsistent with the terms
of any such allocation without the consent of the other party.
1.04 Purchase Price Adjustment
(a) Within 30 days after the Closing, Seller shall
obtain from MPC and deliver to Purchaser a statement (each, an
"Adjustment Statement") which reflects (i) the net book value,
as reflected on the books of Seller as of the Closing of all
fuel inventory (FERC account no. 151) and stores inventory
(FERC account no. 154) used at or in connection with the PSE
Colstrip Interests (the "Inventory Adjustment Amount"), and
(ii) the Maintenance and Capital Expenditures Amount
applicable to the PSE Colstrip Interests. The Inventory
Adjustment Amount and the Maintenance and Capital Expenditures
Amount for the Closing are referred to collectively as the
"Adjustment Amount." The Inventory Adjustment Amount will be
based on an inventory survey conducted by MPC within five days
prior to the Closing consistent with MPC's current inventory
procedures (the "Inventory Survey"). Seller will request that
MPC permit an employee, or representative, of Purchaser to
observe the Inventory Survey. Each Adjustment Statement shall
be prepared using the same generally accepted accounting
principles, policies and methods as MPC, has historically used
in connection with the calculation of the items reflected on
such Adjustment Statement. Purchaser agrees to cooperate with
Seller and MPC in connection with the preparation of each
Adjustment Statement and related information, and shall
provide to Seller and MPC such books, records and information
as may be reasonably requested from time to time.
(b) Purchaser may dispute an Inventory Adjustment Amount
or a Maintenance and Capital Expenditures Amount; provided,
however, that Purchaser shall notify Seller and MPC in writing
of the disputed amount, and the basis of such dispute, within
ten (10) Business Days of Purchaser's receipt of the
applicable Adjustment Statement. In the event of a dispute
with respect to any part of an Adjustment Amount, Purchaser
and Seller shall attempt to reconcile their differences and
any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the parties. If Purchaser
and Seller are unable to reach a resolution of such
differences within 30 days of receipt of Purchaser's written
notice of dispute to Seller, Purchaser and Seller shall submit
the amounts remaining in dispute for determination and
resolution to the Independent Accounting Firm, which shall be
instructed to determine and report to the parties, within 30
days after such submission, upon such remaining disputed
amounts, and such report shall be final, binding and
conclusive on the parties hereto with respect to the amounts
disputed. The fees and disbursements of the Independent
Accounting Firm shall be shared equally by Purchaser and
Seller.
(c) Within ten (10) Business Days after Purchaser's
receipt of an Adjustment Statement, Purchaser shall pay all
undisputed amounts, or if there is a dispute with respect to
any amount of such Adjustment Statement within five (5)
Business Days after the final determination of any amounts on
such Adjustment Statement, Purchaser shall pay to Seller an
amount equal to the disputed Adjustment Amount as finally
determined to be payable with respect to such Adjustment
Statement. All Adjustment Statement payments shall be less
the Estimated Adjustment Amount; provided, however, that if
such amount shall be less than zero then within five (5)
Business Days after the final determination of such amount
Seller will pay to Purchaser the amount by which such amount
is less than zero. Any amount paid under this Section 1.04
shall be paid with interest for the period commencing on the
date of the Closing through the date of payment, calculated at
the prime rate for domestic banks as published in the Wall
Street Journal (Northeast Edition) in the "Money Rates"
section on the date of the Closing, and in immediately
available United States funds.
1.05 Closing
(a) Closing. The Closing will take place at the offices
of Xxxxxxx Coie LLP, 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000, or at such other place as Purchaser and Seller mutually
agree, at 7:00 A.M. local time, on the Closing Date. At the
Closing, Purchaser will pay an amount (the "Estimated Purchase
Price") in United States dollars equal to the sum of (x) the
Base Purchase Price, as the same may be adjusted pursuant to
Sections 1.10 and 4.12, and (y) the Estimated Adjustment
Amount for the Closing, by wire transfer of immediately
available United States funds to such account as Seller may
reasonably direct by written notice delivered to Purchaser by
Seller at least two (2) Business Days before the Closing.
Simultaneously, (a) Seller will assign and transfer to
Purchaser good and valid title in and to the Assets (free and
clear of all Liens, other than Permitted Liens, as such term
is defined with respect to periods after the Closing) by
delivery of (i) a General Assignment and Xxxx of Sale
substantially in the form of Exhibit A hereto (the "General
Assignment"), duly executed by Seller, covering the Personal
Property comprising Assets except for the Intellectual
Property, (ii) an assignment of the Intellectual Property in
form and substance reasonably satisfactory to Purchaser,
(iii) (A) special warranty deeds in proper statutory form for
recording and otherwise in form and substance reasonably
satisfactory to Purchaser conveying good and marketable title
to the Real Property in which Seller has a fee or easement
interest (subject only to Permitted Liens), (B) an assignment
in form and substance reasonably satisfactory to Purchaser
conveying valid and subsisting title to the Real Property in
which Seller has a permit interest or other interest (neither
fee nor easement) (subject only to Permitted Liens) and (C)
all necessary documentation to transfer and convey to
Purchaser the water rights listed in Section 1.01(a)(vi) of
the Disclosure Schedule including water rights transfer
certificates executed in proper form to be filed with the
appropriate Governmental or Regulatory Authority, and
(iv) such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance reasonably
acceptable to Purchaser's counsel, as shall be effective to
vest in Purchaser good and valid title to the Assets, good and
marketable title to the Real Property in which Seller has a
fee or easement interest and valid and subsisting title to the
Real Property in which Seller has a permit interest or other
interest (neither fee nor easement), in each case subject only
to Permitted Liens (the General Assignment and the other
instruments referred to in clauses (a) (ii), (iii) and (iv)
being collectively referred to herein as the "Assignment
Instruments"), and (b) Purchaser will assume from Seller the
due payment, performance and discharge of the Assumed
Liabilities by delivery of (i) an Assumption Agreement
substantially in the form of Exhibit B hereto (the "Assumption
Agreement"), duly executed by Purchaser, and (ii) such other
good and sufficient instruments of assumption, in form and
substance reasonably acceptable to Seller's counsel, as shall
be effective to cause Purchaser to assume the Assumed
Liabilities as and to the extent provided in Section 1.02(a)
(the Assumption Agreement and such other instruments referred
to in clause (b) (ii) being collectively referred to herein as
the "Assumption Instruments"). At the Closing, there shall
also be delivered to Seller and Purchaser the opinions,
certificates and other contracts, documents and instruments
required to be delivered under Articles VI and VII.
(b) Additional Purchase Price Payments.
(i) In the event that the Portland Closing Date
occurs either prior to or on the Closing Date, on the Closing
Date Purchaser shall pay to Seller the Combined Payment
Amount; and
(ii) In the event that the Portland Closing Date
occurs after the Closing Date, on the Portland Closing Date
Purchaser shall pay to Seller the Combined Payment Amount.
All payments made pursuant to this Section 1.05(b) shall
be paid by wire transfer of immediately available United
States funds to such account as Seller may reasonably direct
by written notice delivered to Purchaser by Seller at least
two (2) Business Days before the applicable closing date.
1.06 Prorations
The following items relating to the Assets, the
ownership of the PSE Colstrip Interests, and the operation of
the Colstrip Facilities will be allocated pro rata per diem
for the tax year that includes the date of the Closing, with
Seller liable for such items to the extent they are allocable
to the period prior to the date of the Closing and Purchaser
liable for such items to the extent they are allocable to
periods beginning with and subsequent to the date of the
Closing:
(a) Property Taxes on or with respect to the Assets.
(b) Rents, additional rents, Taxes, to the extent
normally adjusted in connection with similar transactions, and
other items payable by Seller under the Real Property Leases
and the Business Contracts.
(c) The amount of rents, Taxes and charges for sewer,
water, telephone, electricity and other utilities relating to
the Real Property and the real property subject to the Real
Property Leases.
(d) All other items (excluding other Taxes) normally
adjusted in connection with similar transactions.
Except as otherwise agreed by the parties, the net amount
of all such prorations will be settled and paid as of the date
of the Closing. At least ninety (90) days prior to the date
of the Closing, Seller will provide Purchaser with a
reasonably detailed schedule showing a calculation of the
estimated prorations as if the Closing were occurring on such
date. If the Closing shall occur before a real estate Tax
rate is fixed, the apportionment of Taxes shall be based upon
the Tax rate for the preceding year applied to the latest
assessed valuation and such Taxes shall be reprorated upon the
request of Seller, on the one hand, or Purchaser, on the other
hand, made within sixty (60) days after the date that the
actual amounts become available. Seller and Purchaser 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 1.06.
1.07 Further Assurances; Post-Closing Cooperation
(a) Subject to the terms and conditions of this
Agreement, at any time or from time to time after the Closing,
at Purchaser's request and without further consideration,
Seller shall execute and deliver to Purchaser such other
instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take
such other actions as Purchaser may reasonably deem necessary
or desirable in order more effectively to transfer, convey and
assign to Purchaser, and to confirm Purchaser's title to, all
of the Assets, and, to the full extent permitted by Law, to
put Purchaser in actual possession and control of the Assets
and to assist Purchaser in exercising all rights with respect
thereto, and otherwise to cause Seller to fulfill its
obligations under this Agreement and the Operative Agreements.
From time to time after the Closing, at Purchaser's request
and expense, Seller will reasonably cooperate with Purchaser
in its efforts to maximize any Tax benefits associated with
the Assets with respect to periods following the Closing and
to minimize the Tax costs associated with the transactions
contemplated hereby; provided such cooperation does not
adversely affect Seller's Tax position. From time to time
after the Closing, at Seller's request and expense, Purchaser
will reasonably cooperate with Seller in its efforts to
maximize any Tax benefits associated with the Assets with
respect to periods prior to the Closing and to minimize the
Tax costs associated with the transactions contemplated
hereby; provided such cooperation does not adversely affect
Purchaser's Tax position.
(b) Following the Closing, each party will afford the
other party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and
other data relating to the PSE Colstrip Interests in its
possession with respect to periods prior to the Closing and
the right to make copies and extracts therefrom, to the extent
that such access may be reasonably required by the requesting
party in connection with (i) the preparation of Tax Returns,
(ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority,
(iv) the determination or enforcement of the rights and
obligations of any Indemnified Party or (v) in connection with
any actual or threatened Action or Proceeding. Further, each
party agrees for a period extending six (6) years after the
Closing not to destroy or otherwise dispose of any such books,
records and other data unless such party shall first offer in
writing to surrender such books, records and other data to the
other party and such other party shall not agree in writing to
take possession thereof during the thirty (30) day period
after such offer is made.
(c) If, in order properly to prepare its Tax Returns,
other documents or reports required to be filed with
Governmental or Regulatory Authorities or its financial
statements or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional
information, documents or records relating to the PSE Colstrip
Interests not referred to in paragraph (b) above, and such
information, documents or records are in the possession or
control of the other party, such other party shall use its
best efforts to furnish or make available such information,
documents or records (or copies thereof) at the recipient's
request, cost and expense. Any information obtained by such
party in accordance with this paragraph shall be held
confidential by such party in accordance with Section 13.06.
(d) Notwithstanding anything to the contrary contained
in this Section 1.07, if the parties are in an adversarial
relationship in litigation or arbitration, the furnishing of
information, documents or records in accordance with paragraph
(c) of this Section 1.07 shall be subject to applicable rules
relating to discovery.
1.08 Third Party Consents
To the extent that any Business Contract, Transferable
Permit, Fuel Contract or Colstrip Contract is not assignable
without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if
such assignment or attempted assignment would constitute a
breach thereof. Seller and Purchaser shall use their
reasonable efforts to obtain the consent of such other party
to the assignment of any such Business Contract, Transferable
Permit, Fuel Contract or Colstrip Contract to Purchaser in all
cases in which such consent is or may be required for such
assignment. If any such consent shall not be obtained, or if
any attempted assignment would be ineffective or would impair
Purchaser's rights and obligations so that Purchaser would not
in effect acquire the benefit of substantially all of such
rights and obligations, Seller shall cooperate with Purchaser
in any reasonable arrangement, to the extent legally
permissible, designed to provide for Purchaser the benefits
intended to be assigned to Purchaser under the relevant
Business Contract, Transferable Permit, Fuel Contract or
Colstrip Contract, including enforcement at the cost and for
the account of Purchaser of any and all rights of Seller
against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise. If and
to the extent that such arrangement is not made in a manner
reasonably satisfactory to Purchaser, Purchaser shall have no
obligation pursuant to Section 1.02 or otherwise only with
respect to any such Business Contract, Transferable Permit,
Fuel Contract or Colstrip Contract. The provisions of this
Section 1.08 shall not affect the right of Purchaser not to
consummate the transactions contemplated by this Agreement as
provided in Section 1.10 or if the conditions to its
obligations hereunder contained in Sections 6.05, 6.06 and
6.07 have not been fulfilled.
1.09 Insurance Proceeds
If any of the Assets (other than an Asset excluded under
Section 1.10) are destroyed, damaged or taken in condemnation,
the insurance proceeds or condemnation award with respect
thereto shall be an Asset; provided, however, Seller agrees
not to settle or compromise any amounts concerning such Assets
during negotiations with Seller's insurance company without
Purchaser's prior consent. At the Closing, Seller shall pay
or credit to Purchaser any such insurance proceeds or
condemnation awards received by it on or prior to the Closing
and shall assign to or assert for the benefit of Purchaser all
of its rights against any insurance companies, Governmental or
Regulatory Authorities and others with respect to such damage,
destruction or condemnation. As and to the extent that there
is available insurance under policies maintained by Seller and
its Affiliates, predecessors and successors in respect of any
Assumed Liability, except for any such insurance proceeds with
respect to which the insured is directly or indirectly self-
insured or has agreed to indemnify the insurer, Seller shall
cause such insurance to be applied toward the payment of such
Assumed Liability. The provisions of this Section 1.09 shall
not affect the right of Purchaser not to consummate the
transactions contemplated by this Agreement if the conditions
to its obligations hereunder contained in Sections 6.01 or
6.08 have not been fulfilled.
1.10 Inclusion/Exclusion of Certain Assets
(a) Purchaser agrees to use its reasonable best efforts
to obtain the approval described in clause (ii) of the
definition of Purchaser Required Regulatory Approvals in a
manner reasonably satisfactory to Purchaser that will allow
Purchaser to purchase and own, operate and maintain after the
Closing the PSE Colstrip Transmission Assets, and to consult
with Seller prior to abandoning its efforts to do so. If,
notwithstanding Purchaser's compliance with the preceding
sentence and with Section 5.01, such Purchaser Required
Regulatory Approval is not obtained from FERC with respect to
the proposed purchase, ownership or operation of the PSE
Colstrip Transmission Assets, or is finally denied by FERC,
within seven (7) months from the date of execution of this
Agreement, or in the event that the condition set forth in
Section 6.12 has not been satisfied on or prior to the
Closing, then (i) at the Closing, Seller and Purchaser shall
enter into the Transmission Service Agreement and the
Separation Document, (ii) the PSE Colstrip Transmission Assets
shall be Excluded Assets hereunder, (iii) the Purchase Price
shall be reduced by the PSE Transmission Amount and (iv) the
conditions to Closing described in Sections 6.05 and 7.05
shall be deemed satisfied with respect to such Purchaser
Required Regulatory Approval solely with respect to the PSE
Colstrip Transmission Assets but shall not be deemed satisfied
with respect to any other Assets, provided that Seller shall
have the right, in its sole discretion, to waive such seven
(7) month period and to require Purchaser to continue to
pursue such approval, consistent with Purchaser's obligations
under Section 5.01 hereof, for such time period(s) as Seller
may determine, not to exceed the time period provided for in
Section 11.01(d) hereof.
(b) Purchaser has been provided copies of title
insurance commitments covering certain of the Assets and
intends to obtain at its expense additional title commitments
and title policies. Seller agrees to use reasonable efforts
to cure title objections of which Seller is notified by
Purchaser, to the extent title would not otherwise satisfy
Seller's obligations with respect to the title to be delivered
by Seller in compliance with Section 1.05(a) of this
Agreement. From and after the date hereof and through the
Closing, Seller shall use reasonable efforts to cure and
remove exceptions to title to the Real Property (other than
those exceptions referred to in the preceding sentence) of
which Seller is notified by Purchaser in writing; provided,
however, that in no event shall Seller be obligated to incur
expenses or make payments of any nature in excess of $620,000
in discharging its obligations set forth in this sentence.
Nothing in the two preceding sentences shall change or
otherwise affect the nature of the title to the Real Property
that Seller is obligated to transfer to Purchaser in
compliance with this Agreement.
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as
follows:
2.01 Corporate Existence of Seller
Seller is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of
Washington, and has full corporate power and authority to own,
use and lease the Assets. Seller is duly qualified or
licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the Assets make
such qualification necessary, except in each case in those
jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not create a Seller
Material Adverse Effect. Seller has heretofore made available
to Purchaser complete and correct copies of its restated
articles of incorporation, as amended, and bylaws (or other
comparable corporate charter documents), as currently in
effect.
2.02 Authority
Seller has full corporate power and authority to execute
and deliver this Agreement and the Operative Agreements to
which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated
hereby and thereby, including to sell and transfer (pursuant
to this Agreement) the Assets. The execution and delivery by
Seller of this Agreement and the Operative Agreements to which
it is a party, and the performance by Seller of its
obligations hereunder and thereunder, have been duly and
validly authorized by the Board of Directors of Seller, no
other corporate action on the part of Seller or its
shareholders being necessary. This Agreement has been duly
and validly executed and delivered by Seller and, subject to
receipt of Seller Required Regulatory Approvals and Purchaser
Required Regulatory Approvals, constitutes, and upon the
execution and delivery by Seller of the Operative Agreements
to which it is a party, such Operative Agreements will
constitute, legal, valid and binding obligations of Seller
enforceable against Seller in accordance with their terms
except as the same may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar Laws
relating to or affecting the rights of creditors generally, or
by general equitable principles.
2.03 No Conflicts
Except as set forth in Section 2.03 of the Disclosure
Schedule, and other than obtaining Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals, the
execution and delivery by Seller of this Agreement do not, and
the execution and delivery by Seller of the Operative
Agreements to which it is a party, the performance by Seller
of its obligations under this Agreement and such Operative
Agreements and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the restated
articles of incorporation, as amended, or restated bylaws, as
amended (or other comparable corporate charter documents) of
Seller;
(b) require any consent, approval, authorization or
permit, or filing with or notification to, any Governmental or
Regulatory Authority, except (x) for the Seller Required
Regulatory Approvals and the Purchaser Required Regulatory
Approvals, or (y) for those requirements which become
applicable to Seller as a result of the specific regulatory
status of Purchaser (or any of its Affiliates) or as a result
of any other facts that specifically relate to the business or
activities in which Purchaser (or any of its Affiliates) is or
proposes to be engaged;
(c) result in a default (or give rise to any right of
termination, cancellation or acceleration or require any
consent or approval) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Seller is
a party or by which Seller, or any of the Assets may be bound,
except for such defaults (or rights of termination,
cancellation or acceleration or any consent or approval) as to
which requisite waivers or consents have been obtained; or
(d) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to Seller
or any of its Assets and Properties.
2.04 Governmental Approvals and Filings
Except for (i) Seller Required Regulatory Approvals and
(ii) with respect to the PSE Colstrip Transmission Assets as
set forth in Section 1.01(a)(xv) of the Disclosure Schedule,
no consent, approval or action of, filing with or notice to
any Governmental or Regulatory Authority on the part of Seller
is required in connection with the execution, delivery and
performance of this Agreement or any of the Operative
Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby, except those as
would be required solely as a result of the identity or the
legal or regulatory status of Purchaser or any of its
Affiliates.
2.05 Reports
Since December 31, 1995, Seller has filed or caused to be
filed with the SEC, the applicable state or local utility
commissions or regulatory bodies and FERC, all material forms,
statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it
with respect to the PSE Colstrip Interests under each of the
Securities Act, the Exchange Act, the applicable state public
utility Laws, the Federal Power Act, the Holding Company Act
and the respective rules and regulations thereunder, all of
which complied in all material respects with all applicable
requirements of the appropriate act and the rules and
regulations thereunder in effect on the date each such report
was filed, and there are no material misstatements or
omissions in respect of such reports.
2.06 Taxes
Seller has timely filed or will timely file all Tax
Returns required to be filed by Seller with respect to the
ownership, operation and maintenance of the Assets and has
paid or will pay all Taxes shown to be due on such returns
with respect to all tax periods ending prior to the Closing
Date. Except for the properties financed with the Pollution
Control Bonds, no other Assets have been financed using tax
exempt financing. The owners of Colstrip Units 1, 2, 3 and 4
have jointly made a timely and effective affirmative election
pursuant to Section 761(a) of the Code and Treasury Regulation
Section 1.761-2(b) to be excluded from all of subchapter K of
the Code, and such election has not been modified, revoked or
otherwise altered, and remains in effect. Seller has not
taken and has not been notified that any of such owners has
taken any action inconsistent with such election.
2.07 Legal Proceedings
Except as disclosed in Section 2.07 of the Disclosure
Schedule (with paragraph references corresponding to those set
forth below):
(a) there are no Actions or Proceedings pending or, to
the Knowledge of the Seller, threatened against, relating to
or affecting Seller with respect to the ownership, operation
or maintenance of the Assets which could reasonably be
expected (i) to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative
Agreements, or (ii) individually or in the aggregate with
other such Actions or Proceedings, to create a Seller Material
Adverse Effect; and
(b) there are no Orders outstanding against Seller with
respect to the ownership, operation and maintenance of the
Assets which, individually or in the aggregate with other such
Orders, would have a Seller Material Adverse Effect.
2.08 Compliance with Laws and Orders
Except as disclosed in Section 2.08 of the Disclosure
Schedule, Seller is not in material violation of or in
material default under any Law or Order applicable to Seller's
ownership of the Assets or, to Seller's Knowledge, the
operation and maintenance of the Assets.
2.09 Real Property
(a) Section 1.01(a)(i) of the Disclosure Schedule
contains a description of, and exhibits indicating the
location of, the Real Property owned by Seller and included in
the Assets, and Section 1.01(a)(ii)(A) of the Disclosure
Schedule contains a description of, and exhibits indicating
the location of, each parcel of real property leased by Seller
(as lessor, sublessor, lessee or sublessee), or as to which
Seller holds easements or other rights, and included in the
Assets.
(b) Seller, or with respect to Real Property described
in Exhibit D to Section 1.01(a)(i) of the Disclosure Schedule,
MPC or its Affiliates, as the case may be, has, and at Closing
Seller will have, good and marketable title to the Real
Property in which Seller (or with respect to the Real Property
described in the aforementioned Exhibit D, MPC or its
Affiliates, as the case may be) holds a fee or easement
interest. Pursuant to the terms and conditions of the
Colstrip Contracts, Seller has, and, to Seller's Knowledge,
MPC or its Affiliates has, valid and subsisting title to the
Real Property in which Seller (or MPC or its Affiliates, as
the case may be) holds a permit interest or other interest, in
each case, free and clear of all Liens other than Permitted
Liens. Except for the Permitted Liens and the Real Property
subject to Real Property Leases described in
Section 1.01(a)(ii)(A) of the Disclosure Schedule, Seller,
subject to the terms and conditions of the Colstrip Contracts,
is in possession of the Real Property and there are no third
party licenses or tenants at the sites of the Real Property or
Real Property Leases.
(c) Seller, has a valid and subsisting leasehold estate
in and the right to quiet enjoyment of the real properties
subject to the Real Property Leases described in
Section 1.01(a)(ii)(B) of the Disclosure Schedule for the full
term thereof. Each Real Property Lease to which Seller is a
party is a legal, valid and binding agreement, enforceable in
accordance with its terms, of Seller and of each other Person
that is a party thereto, and except as set forth in
Section 2.09(c) of the Disclosure Schedule, there is no
default (or any condition or event which, after notice or
lapse of time or both, would constitute a default) thereunder.
(d) Seller has made available to Purchaser prior to the
execution of this Agreement true and complete copies of
(i) any current surveys in Seller's possession or any policies
of title insurance currently in force and in the possession of
Seller with respect to the Real Property, and (ii) all Real
Property Leases (including any amendments and renewal letters)
and, to the extent reasonably available, all other documents
referred to in clause (i) of this paragraph (d) with respect
to the real property subject to the Real Property Leases
described in Section 1.01(a)(ii)(B) of the Disclosure
Schedule.
(e) Except set forth in Section 12.01(e) of the
Disclosure Schedule, all Real Properties have access to a
public road and are zoned for their current uses. No fee
ownership, lease, right of way, easement, license or other
right in real property, other than the Real Property and the
Real Property Leases, is necessary for the Purchaser to own,
operate or maintain the Assets substantially as currently
owned, operated and maintained by Seller. Seller or to
Seller's knowledge, MPC or its Affiliates, has not received
any written notice that any of the improvements on any of the
Real Property or Real Property Leases, including without
limitation the Easements, or any appurtenances thereto or
equipment therein or the operation or maintenance thereof,
violate any restrictive covenant or the terms, conditions or
restrictions of any easement.
2.10 Tangible Personal Property
Seller, subject to the terms and conditions of the
Colstrip Contracts, or, to Seller's Knowledge, MPC or its
Affiliates, is in possession of and has good and valid title
to, or has valid leasehold interests in or valid rights under
Contract to use, all the Tangible Personal Property used in
and individually or in the aggregate with other such property
material to the ownership, operation and maintenance of the
Colstrip Facilities. All the Tangible Personal Property is
free and clear of all Liens, other than Permitted Liens and
Liens disclosed in Section 2.10 of the Disclosure Schedule,
and is in all material respects in good working order and
condition, ordinary wear and tear excepted; provided, however,
that if the PSE Transmission Assets are not purchased by
Purchaser, the Separation Document will be considered a
Permitted Lien with respect to the property, subject thereto.
2.11 Intellectual Property Rights
Seller has not received notice that Seller is infringing
any Intellectual Property of any other Person in connection
with the Assets or the operation of the Colstrip Facilities,
no claim is pending or has been made against Seller to such
effect that has not been resolved and, to its Knowledge,
Seller is not infringing any Intellectual Property of any
other Person.
2.12 Contracts
(a) Section 2.12(a) of the Disclosure Schedule (with
paragraph references corresponding to those set forth below)
contains a true and complete list of each of the following
Contracts (true and complete copies of which, together with
all amendments and supplements thereto, have been made
available to Purchaser prior to the execution of this
Agreement) to which Seller is a party (other than indirectly
pursuant to Seller's obligations under the Colstrip Contracts)
and which relate to the operation of the Colstrip Facilities
or by which any of the Assets are bound:
(i) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of
Seller to engage in any activity relating to the operation of
the Colstrip Facilities or compete with any Person in
connection with the operation of the Colstrip Facilities or
prohibiting or limiting the ability of any Person to compete
with Seller in connection with the operation of the Colstrip
Facilities;
(ii) all partnership, joint venture, shareholders' or
other similar Contracts with any Person in connection with the
operation of the Colstrip Facilities;
(iii) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchises
with whom Seller deals in connection with the operation of the
Colstrip Facilities which in any case involve the payment or
potential payment, pursuant to the terms of any such Contract,
by or to Seller of more than $250,000 annually;
(iv) all Contracts relating to the future disposition
or acquisition of any Assets, other than dispositions or
acquisitions of Inventory in the ordinary course of business;
and
(v) all other Contracts (other than the Real Property
Leases) not described above that constitute Assumed
Liabilities with respect to the operation of the Colstrip
Facilities that (A) involve the payment or potential payment,
pursuant to the terms of any such Contract, by or to Seller of
more than $250,000 annually and (B) cannot be terminated
within sixty (60) days after giving notice of termination
without resulting in any material cost or penalty to Seller
(or, after the Closing, to Purchaser).
(b) Each Contract required to be disclosed in
Section 2.12(a) of the Disclosure Schedule and each of the
Colstrip Contracts and the Fuel Contracts and each of the
Business Contracts which involves the payment or potential
payment by or to Seller of more than $250,000 annually is in
full force and effect and constitutes a legal, valid and
binding agreement, enforceable in accordance with its terms,
of Seller and of each other party thereto; and except as
disclosed in Section 2.12(b) of the Disclosure Schedule
neither Seller nor, to the Knowledge of Seller, any other
party to such Contract is in violation or breach of or default
under any such Contract (or with notice or lapse of time or
both, would be in violation or breach of or default under any
such Contract).
2.13 Licenses
(a) Seller has been, and is, in material compliance with
all Licenses, including without limitation those described on
Section 2.13(b) of the Disclosure Schedule, necessary to allow
Seller to obtain the benefits of the PSE Colstrip Interests as
currently enjoyed by Seller. Except as disclosed in
Section 2.13(a) of the Disclosure Schedule, Seller has not
received any written notification that it is in violation, nor
does Seller otherwise have Knowledge of any violations, of any
of such Licenses, or any Law or Order of any Governmental or
Regulatory Authority applicable to it.
(b) Section 2.13(b) of the Disclosure Schedule sets
forth all material Licenses and Environmental Permits relating
to the ownership, operation and maintenance of the Colstrip
Facilities and to which Seller is a named licensee or
permittee.
2.14 Insurance
Except as set forth in Section 2.14 of the Disclosure
Schedule, all material policies of fire, liability, worker's
compensation and other forms of insurance owned or held by
Seller (other than indirectly through Seller's obligations
under the Colstrip Contracts) and insuring the Assets are in
full force and effect, all premiums with respect thereto
covering all periods up to and including the date as of which
this representation is being made have been paid (other than
retroactive premiums which may be payable with respect to
comprehensive general liability and worker's compensation
insurance policies), and no notice of cancellation or
termination has been received by Seller with respect to any
such policy which was not replaced on substantially similar
terms prior to the date of such cancellation. Except as set
forth in Section 2.14 of the Disclosure Schedule, Seller has
not been refused any insurance with respect to the Assets nor
has its coverage been limited by any insurance carrier to
which it has applied for any such insurance or with which it
has carried insurance during the last twelve months.
2.15 Environmental Matters
With respect to its ownership interest in the PSE
Colstrip Interests, except as disclosed in Section 2.15 of the
Disclosure Schedule:
(a) Seller and to Seller's Knowledge, MPC, holds, and is
in substantial compliance with, all Licenses which are
required for Seller to own, and for MPC to operate and
maintain, the Assets under applicable Environmental Laws
("Environmental Permits"), and Seller has not received any
written notice of any violation of any Environmental Law that
has not heretofore been resolved and Seller and, to Seller's
Knowledge, MPC, is otherwise in substantial compliance with
applicable Environmental Laws with respect to the ownership,
operation and maintenance of the Assets.
(b) Seller has not received any written request for
information, or been notified that it is a potentially
responsible party, under any Environmental Law with respect to
any on-site location relating to the ownership, operation and
maintenance of the Assets.
(c) Seller has not entered into or agreed to any consent
decree or order, and is not subject to any outstanding
judgment, decree, or judicial order relating to compliance
with any Environmental Law or to investigation or cleanup of
Hazardous Materials under any Environmental Law relating to
the ownership, operation and maintenance of the Assets.
(d) There are no claims, actions, proceedings or
investigations pending or, to the Knowledge of Seller,
threatened against Seller before any court, Governmental or
Regulatory Authority relating to any Environmental Law
relating to the PSE Colstrip Interests with respect to the
ownership, operation and maintenance of the Assets.
(e) To its Knowledge, Seller or MPC has made available
to Purchaser: (i) a list of all material environmental reports
and/or audits prepared by or for Seller within the past five
(5) years which discuss the environmental conditions of the
Assets; and (ii) a list of all underground storage tanks
and/or surface impoundments located on the Assets which
contain or have contained Hazardous Materials.
The representations and warranties made in this
Section 2.15 are Seller's exclusive representations and
warranties relating to environmental matters.
2.16 Absence of Condemnation Proceedings
Neither the whole nor any portion of the PSE Colstrip
Interests is subject to any pending or, to Seller's Knowledge,
threatened suit or Order for condemnation or other taking by
any public authority.
2.17 Regulation as a Utility
Seller is a public utility company within the meaning of
the Holding Company Act. Except as set forth in Section 2.17
of the Disclosure Schedule, Seller is not subject to
regulation as a public utility or public service company (or
similar designation) by the United States, any state of the
United States, any foreign country or any municipality or any
political subdivision of the foregoing.
2.18 Brokers
Except for Xxxxxxx, Xxxxx & Co., whose fees, commissions
and expenses are the sole responsibility of MPC, Xxxxxx
Xxxxxxx Xxxx Xxxxxx, whose fees, commissions and expenses are
the sole responsibility of Seller and Xxxxxxx Xxxxx & Co.,
whose fees, commissions and expenses are the sole
responsibility of PGE, all negotiations relative to this
Agreement and the transactions contemplated hereby have been
carried out by Seller directly with Purchaser without the
intervention of any Person on behalf of Seller in such manner
as to give rise to any valid claim by any Person against
Purchaser for a finder's fee, brokerage commission or similar
payment.
2.19 Acknowledgment of Purchaser
Purchaser expressly acknowledges that Seller is the
holder of a non-controlling interest in the Colstrip
Facilities pursuant to the Colstrip Contracts, and that Seller
(i) did not manage the construction of the PSE Colstrip
Interests, (ii) is not now and has never been the operator (or
otherwise in physical possession) of the Colstrip Facilities
and (iii) was not involved in or responsible for the creation
or provision of data or information about the Colstrip
Facilities by MPC or any other co-owner of Colstrip Units 1,
2, 3 and 4.
2.20 Disclaimers Regarding Assets
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE ASSETS
ARE BEING TRANSFERRED "AS IS, WHERE IS" AND SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR
QUALITY OF THE ASSETS OR THE PROSPECTS (FINANCIAL AND
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE ASSETS AND SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS, OR ANY PART
THEREOF.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as
follows:
3.01 Corporate Existence
Purchaser is a corporation duly incorporated, validly
existing and in good standing under the Laws of the
Commonwealth of Pennsylvania and has full corporate power and
authority to conduct its business as it is now being conducted
and to own, lease and operate its Assets and Properties.
Purchaser has full corporate power and authority to enter into
this Agreement and the Operative Agreements to which it is a
party, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and
thereby. Purchaser has heretofore made available to Seller
complete and correct copies of its articles of incorporation
and by-laws (or other comparable corporate charter documents),
as currently in effect.
3.02 Authority
The execution and delivery by Purchaser of this Agreement
and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and
thereunder, have been duly and validly authorized by the Board
of Directors of Purchaser, no other corporate action on the
part of Purchaser or its stockholders being necessary. This
Agreement has been duly and validly executed and delivered by
Purchaser and, subject to receipt of Seller Required
Regulatory Approvals and Purchaser Required Regulatory
Approvals, constitutes, and upon the execution and delivery by
Purchaser of the Operative Agreements to which it is a party,
such Operative Agreements will constitute, legal, valid and
binding obligations of Purchaser enforceable against Purchaser
in accordance with their terms except as the same may be
limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar Laws relating to or
affecting the rights of creditors generally, or by general
equitable principles.
3.03 No Conflicts
Except as set forth in Section 3.03 of the Disclosure
Schedule, and other than obtaining Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals, the
execution and delivery by Purchaser of this Agreement do not,
and the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, the performance by
Purchaser of its obligations under this Agreement and such
Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the articles of
incorporation or by-laws (or other comparable corporate
charter documents) of Purchaser;
(b) require any consent, approval, authorization or
permit, or filing with or notification to, any Governmental or
Regulatory Authority except for Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals;
(c) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or
obligation to which Purchaser is a party or by which any of
its Assets and Properties 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
(d) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to
Purchaser or any of its Assets and Properties.
3.04 Governmental Approvals and Filings
Except for Purchaser Required Regulatory Approvals, no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Purchaser
is required in connection with the execution, delivery and
performance of this Agreement or any of the Operative
Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
3.05 Legal Proceedings
Except as disclosed in Section 3.05 of the Disclosure
Schedule (with paragraph references corresponding to those set
forth below):
(a) there are no Actions or Proceedings pending or, to
the Knowledge of Purchaser, threatened against, relating to or
affecting Purchaser or any of its Assets and Properties which
could reasonably be expected (i) to result in the issuance of
an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative
Agreements, or (ii) individually or in the aggregate with
other such Actions or Proceedings, to create a Purchaser
Material Adverse Effect; and
(b) there are no Orders outstanding against Purchaser
which, individually or in the aggregate with other such
Orders, would have a Purchaser Material Adverse Effect.
3.06 Compliance with Laws and Orders
Except as disclosed in Section 3.06 of the Disclosure
Schedule, Purchaser is not in violation of or in default under
any Law or Order applicable to Purchaser or its Assets and
Properties.
3.07 Regulation as a Utility
Purchaser is not a public utility company within the
meaning of the Holding Company Act. As of the Closing,
Purchaser will be subject to regulation as a public utility
and as a Licensee under the Federal Power Act. Purchaser is
not otherwise subject to regulation as a public utility or
public service company (or similar designation) by the United
States, any state of the United States (except to the extent
that the assets acquired by Purchaser under the MPC Purchase
Agreement and related activities in connection therewith make
Purchaser subject to regulation under Montana law), any
foreign country or any municipality or any political
subdivision of the foregoing.
3.08 Brokers
Except for Chase Securities Inc., whose fees, commissions
and expenses are the sole responsibility of Purchaser, all
negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser
directly with Seller without the intervention of any Person on
behalf of Purchaser in such manner as to give rise to any
valid claim by any Person against Purchaser for a finder's
fee, brokerage commission or similar payment.
3.09 Financing
Purchaser has cash and/or commitments for equity
contributions or credit facilities sufficient (and has
provided Seller with evidence thereof) to pay the Base
Purchase Price and the Combined Payment Amount and to make all
related payments of fees and expenses in connection with the
transactions contemplated by this Agreement and the Operative
Agreements.
3.10 Financial Statements
Purchaser has delivered to Seller the financial
statements of Purchaser listed on Section 3.10 of the
Disclosure Schedule, and such financial statements and notes
fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of
Purchaser as of the respective dates of and for the periods
referred to therein, all in accordance with GAAP, subject, in
the case of interim financial statements, to normal recurring
year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and
the absence of notes and schedules.
3.11 Opportunity to Inspect Assets
Prior to its execution of this Agreement, Purchaser has
conducted an independent investigation of the Assets. In
making its decision to execute this Agreement, and to purchase
the Assets, Purchaser has relied upon the terms and provisions
of this Agreement and the results of such independent
investigation.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all
times from and after the date hereof until the Closing, and,
with respect to Section 4.08, thereafter Seller will comply
with all covenants and provisions of this Article IV, except
to the extent Purchaser may otherwise consent in writing.
4.01 Regulatory and Other Approvals
Seller will (a)(i) take all reasonable steps necessary or
desirable, and proceed diligently and in good faith and use
all reasonable efforts, as promptly as practicable to obtain
all consents, approvals (including Final Orders) or actions
of, to make all filings with and to give all notices to
Governmental or Regulatory Authorities provided that the Final
Order(s) of the WUTC approving the transaction and the terms
and conditions of each of the Operative Agreements and the
respective regulatory treatment of any and all financial
impacts thereof in each case shall be in form and substance
satisfactory to Seller in its reasonable discretion and (ii)
take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions, and give all
notices to, any other Person required of Seller, in each case,
to consummate the transactions contemplated hereby and by the
Operative Agreements, including those described in
Section 2.03 of the Disclosure Schedule and Seller Required
Regulatory Approvals, or required for Purchaser to own,
operate or maintain, on and after the Closing, the Assets
substantially as such assets are currently owned, operated and
maintained by Seller, (b) provide such other information and
communications to such Governmental or Regulatory Authorities
or other Persons as such Governmental or Regulatory
Authorities or other Persons may reasonably request in
connection therewith and (c) provide reasonable cooperation
(i) to Purchaser in obtaining all Purchaser Required
Regulatory Approvals and other consents, approvals or actions
of, making all filings with and giving all notices to
Governmental or Regulatory Authorities or other Persons
required of Purchaser to consummate the transactions
contemplated hereby and by the Operative Agreements and (ii)
to Purchaser and Purchaser's potential lenders in connection
with Purchaser Financing for the transactions contemplated by
this Agreement. Prior to making any filings with a
Governmental or Regulatory Authority pursuant to this
Section 4.01, Seller agrees to provide copies of such filings
to Purchaser. Nothing in this Agreement shall require Seller
to institute litigation or to pay or agree to pay any sum of
money or make financial accommodations (other than the payment
or incurrence of customary expenses and filing or other fees)
in order to obtain any necessary consent, approval or
authorization including, without limitation, the Seller
Required Regulatory Approvals. Seller will provide prompt
notification to Purchaser when any such consent, approval,
action, filing or notice referred to in clause (a) above is
obtained, taken, made or given, as applicable, and will advise
Purchaser of any communications (and, unless precluded by Law
or Order, provide copies of any such communications that are
in writing) with any Governmental or Regulatory Authority or
other Person regarding any of the transactions contemplated by
this Agreement or any of the Operative Agreements.
4.02 HSR Filings
In addition to and not in limitation of Seller's
covenants contained in Section 4.01, Seller will (a) consult
with Purchaser as to appropriate timing of filings and take
promptly all actions necessary to make the filings required of
Seller or its Affiliates under the HSR Act, (b) comply at the
earliest practicable date with any request for additional
information received by Seller or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and (c)
cooperate with Purchaser in connection with Purchaser's filing
under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department
of Justice or state attorneys general.
4.03 Investigation by Purchaser
Seller will (a) provide Purchaser and its officers,
employees, counsel, accountants, financial advisors, potential
lenders, Purchaser's and potential lenders' consultants and
other representatives (collectively, "Representatives") with
full access, upon reasonable prior notice and during normal
business hours, to the Employees and such other officers,
employees and agents of Seller who have any responsibility for
the PSE Colstrip Interests, to Seller's accountants and,
subject to the terms and conditions of the Colstrip Contracts,
to the Assets (including, to the extent it is within Seller's
power to do so, access to the Colstrip 1, 2, 3 and 4 site),
but only to the extent that such access does not unreasonably
interfere with Seller's business and the operation of the
Assets, (b) make available to Purchaser and its
Representatives, upon request, a copy of each report, schedule
or other document filed or received by Seller between the Bid
Date and the Closing with or from the SEC, FERC, EPA, WUTC or
any other relevant Governmental or Regulatory Authority and
relating to the ownership, operation and maintenance of the
Assets or the transactions contemplated by this Agreement, and
all such information and data (including copies of Business
Contracts, Transferable Permits, Fuel Contracts, Colstrip
Contracts, and other Books and Records) concerning the
ownership, operation and maintenance of the PSE Colstrip
Interests and the Assets and the Assumed Liabilities as
Purchaser or its Representatives reasonably may request in
connection with such investigation, except to the extent that
furnishing any such report, schedule, other documents,
information or data would violate any Law, Order (including
any protective order or similar confidentiality obligation),
Contract, License or Environmental Permit applicable to Seller
or by which any of its Assets and Properties is bound. In
furtherance of the foregoing, Seller agrees to cooperate with
Purchaser in connection with Purchaser's efforts to obtain
Purchaser Financing, as defined in Section 5.07. Seller's
cooperation shall include the negotiation and execution of a
consent with the lenders with respect to the Operative
Agreements, which consent shall include providing such lenders
with rights to cure a Purchaser default under the Operative
Agreements; provided, however, that Seller shall not be
obligated, in connection with such cooperation or consent, to
take any action or enter into any agreement that would have
any adverse effect on Seller or any of its rights or benefits
under this Agreement or the Operative Agreements.
4.04 No Solicitations
Subject to the duties imposed by applicable Law, Seller
will not take, nor will it permit any Affiliate of Seller (or
authorize or permit any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for
or on behalf of Seller or any such Affiliate) to take,
directly or indirectly, any action to solicit, encourage,
receive, negotiate, assist or otherwise facilitate (including
by furnishing confidential information with respect to the PSE
Colstrip Interests or permitting access to the Assets and
Properties and Books and Records of Seller) any offer or
inquiry from any Person concerning the acquisition of any of
the Assets other than Purchaser or its Affiliates or any of
their Representatives.
4.05 Conduct of Business
(a) From the Bid Date to the Closing, Seller shall,
consistent with the terms and conditions of the Colstrip
Contracts and to the extent such matters are presented to
Seller by MPC thereunder, vote or cause to be voted its
Project Share (as defined in the Colstrip Contracts) in favor
of (i) the continued operation of the Colstrip Facilities only
in the ordinary course of business consistent with Good
Utility Practice, (ii) causing MPC to use commercially
reasonable efforts, to (A) maintain good relations with and
keep available (subject to dismissals and retirements in the
ordinary course of business) the services of key Employees,
(B) maintain the Assets in good working order and condition,
ordinary wear and tear excepted, (C) maintain the good will of
lessors, customers, suppliers, lenders and other Persons with
whom MPC otherwise has significant business relationships in
connection with the operation of the Colstrip Facilities, (D)
materially comply with all Laws and Orders, including
Environmental Laws applicable to the ownership, operation and
maintenance of the Colstrip Facilities and (E) keep in force
at not less than their present limits all material policies of
insurance covering the Assets to the extent reasonably
practicable in light of the prevailing market conditions in
the insurance industry.
(b) Without limiting the generality of the foregoing,
except with the prior written consent of Purchaser, Seller
will, with respect to the Colstrip Facilities promptly notify
Purchaser if Seller becomes aware of the cancellation of any
material insurance policy or any material modification
thereto.
4.06 Certain Restrictions
Except as set forth in Section 4.06 of the Disclosure
Schedule, Seller will refrain from agreeing to any of the
following actions:
(a) creating any Lien (other than a Permitted Lien) on
the Assets except in the ordinary course of Seller's business
or as required under Seller's instruments of Indebtedness as
in effect on the date hereof and, in each case, as will be
removed on or prior to the Closing;
(b) selling, leasing (as lessor), transferring or
otherwise disposing of, any of the Assets (except as
contemplated by Exhibit D to Section 1.01(a)(i) of the
Disclosure Schedule), other than Assets used, consumed or
replaced in the ordinary course of business consistent with
Good Utility Practice;
(c) entering into, amending or modifying in any material
way, terminating (partially or completely), granting any
waiver of any material term under or giving any material
consent with respect to any Business Contract, Transferable
Permit, Fuel Contract, Colstrip Contract or other contract or
agreement comprising a part of the Assets or that relates to
the Assets, the Assumed Liabilities or is material to the
operation of the Colstrip Facilities;
(d) other than in the ordinary course of business,
incurring, purchasing, canceling, prepaying or otherwise
providing for a complete or partial discharge in advance of a
scheduled payment date with respect to, or waiving any right
under, any Liability of or owing to Seller in connection with
the Assets, the Assumed Liabilities or the operation of the
Colstrip Facilities in an aggregate principal amount exceeding
$500,000;
(e) engaging with any Person in any Business
Combination, unless such Person agrees in a written instrument
to adopt and comply with the terms and conditions of this
Agreement as though such Person was an original signatory
hereto;
(f) engaging in any transaction individually or in the
aggregate with other such transactions material to the
ownership or operation of the Assets with any officer,
director, Affiliate or Associate of Seller, or any Associate
of any such officer, director or Affiliate, that would be an
Assumed Liability and that would extend beyond the Closing
other than in the ordinary course of business on terms no less
favorable to Seller than could be obtained on an arm's-length
basis with an unaffiliated third party;
(g) to the extent it has notice thereof and the
authority to do so pursuant to the Colstrip Contracts, making
any material change in the level of fuel inventory and stores
inventory customarily maintained by Seller with respect to the
PSE Colstrip Interests, other than consistent with Good
Utility Practice;
(h) to the extent it has notice thereof and the
authority to do so pursuant to the Colstrip Contracts,
entering into any commitment for the purchase or sale of fuel
having a term greater than six months and not terminable on or
before the Closing either (i) automatically, or (ii) by option
of Seller (or, after the Closing, by Purchaser) in its sole
discretion, if the aggregate payment under such commitment and
all other outstanding commitments not previously approved by
Purchaser would be expected to exceed $500,000;
(i) making any tax election or entering into or amending
any real or personal property Tax agreement, treaty or
settlement that would have a negative effect on the Tax status
of Purchaser with regard to the Assets; or
(j) entering into any Contract to do or engage in any of
the foregoing.
The foregoing shall not preclude Seller from making, or
agreeing to the making of (i) Maintenance Expenditures and
Capital Expenditures and (ii) at Seller's expense under the
Colstrip Contracts, such other maintenance and capital
expenditures as Seller or MPC deems necessary, subject in all
cases to the applicable provisions of the Colstrip Contracts.
4.07 Security Deposits
Seller will transfer to Purchaser at the Closing all of
Seller's right, title and interest in and to the Tenant
Security Deposits and the Landlord Security Deposits and any
other deposits, prepayments or progress payments made or held
by Seller in connection with the Assets or material to the
ownership, operation and maintenance of the Colstrip
Facilities.
4.08 Delivery of Books and Records, etc.; Removal of Property
(a) At the Closing, Seller shall deliver or make
available to Purchaser at Seller's place of business in
Bellevue, Washington, all of the Books and Records relating to
the PSE Colstrip Interests as are in Seller's possession, and
if at any time after the Closing Seller discovers in its
possession or under its control any other such Books and
Records or other Assets, it will forthwith deliver such Books
and Records or other Assets to Purchaser.
(b) Except as set forth in Section 4.08(b) of the
Disclosure Schedule, within a reasonable time after the
Closing, Seller shall take all commercially reasonable steps
to remove any of Seller's Assets and Properties not being sold
to Purchaser hereunder from the Real Property except as
contemplated by the Separation Document. Such removal shall
be at the sole cost and risk of Seller, including risk of loss
and damage to such Assets and Properties and to the Assets
conveyed to Purchaser hereby.
4.09 Fulfillment of Conditions
Seller will execute and deliver at the Closing each
Operative Agreement that Seller is required hereby to execute
and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy each other
condition to the obligations of Purchaser contained in this
Agreement and will not take or fail to take any action that
could reasonably be expected to result in the nonfulfillment
of any such condition.
4.10 Observation, Inspection and Participation
Seller agrees, subject to its rights and obligations
under the Colstrip Contracts that between the date of this
Agreement and the date of the Closing , Purchaser shall be
entitled to have a reasonable number of representatives, all
of whom shall be employees of Purchaser or its Affiliates
unless otherwise approved by Seller in each instance, which
approval shall not be unreasonably withheld ("Site
Representatives") at any of the Assets, on a full or part time
basis (whether on site or off-site), as determined by
Purchaser; provided, however, that (a) the presence and
activities of the Site Representatives shall be conducted in a
manner as not to interfere unreasonably with the ownership,
operation and maintenance of the Assets, or with the
activities of Seller and MPC not related to the Assets and
(b) the Site Representatives shall not have access to any
information that is unavailable pursuant to Section 4.03.
Reasonable office space and facilities will be made available
by Seller to such Site Representatives. Each Site
Representative shall have the right to review budgets and
expenditures, audit records (except for personnel and medical
records unless required by law), inspect equipment, advise on
repairs required for equipment, review permits, review the
progress of outages, review maintenance and operating
practices and otherwise observe all activities at the above
mentioned facilities in each case to the extent related to the
operation of the Assets. Between the date hereof and the
Closing, Seller shall, to the extent it is able to do so under
the Colstrip Contracts, exercise its reasonable efforts to
invite Site Representatives to attend internal meetings in
which Seller participates and which relate specifically to the
physical operation or maintenance of the Assets; provided,
however, that such obligation shall not extend to (i) meetings
of the boards of directors, or any committees thereof, of
Seller or any of its Affiliates, (ii) meetings with counsel,
or (iii) meetings the subject matter of which, in Seller's
reasonable judgment, if disclosed to Purchaser, would likely
be detrimental to Seller (including, without limitation,
information relating to Seller's proposed business activities
following the Closing or to contractual or other matters as to
which the interests of Seller and Purchaser may diverge).
Site Representatives shall also be entitled to consult with
Seller and make recommendations as to all activities relating
to the management, operation, maintenance, construction,
renewal, addition, replacement, modification and disposal of
the Assets, including, without limitation, applications for
authorizations, permits and licenses, and fuel procurement and
transportation.
4.11 Notice of Breach
Seller shall promptly give notice to Purchaser upon
becoming aware of the occurrence of any event which would
cause or constitute a breach of any of the representations,
warranties or covenants of Seller contained in this Agreement.
4.12 Bridge Financing Fees
In the event that Purchaser obtains bridge financing
directly or indirectly from a non-Affiliated third party in
connection with the transactions contemplated hereby, Seller
will deduct from the Base Purchase Price at the time of
Closing an amount equal to 31.11% of any financing fees paid
by Purchaser in connection with such bridge financing;
provided, however, that the deduction under this Section 4.12
shall not exceed $4,812,717 in the aggregate.
4.13 Special Maintenance and Capital Expenditures
Within thirty (30) days after the date hereof, Seller and
Purchaser shall mutually agree on a Schedule setting forth a
month by month special maintenance and capital expenditure
budget relating to the Assets for calendar years 1999 and 2000
(the "Budget"). The Budget will be divided into two parts;
Category A items and Category B items. With respect to items
listed under Category A, Seller agrees to use commercially
reasonable efforts to cause MPC, to the extent Seller has the
right to do so under the Colstrip Contracts, to conduct and
complete such special maintenance and capital expenditures at
the times set forth in the Budget. With respect to items
listed under Category B, Seller shall cause MPC, to the extent
Seller has the right to do so under the Colstrip Contracts, to
conduct and complete such special maintenance and capital
expenditures at such times as Seller and MPC shall determine
in their reasonable discretion after consultation with
Purchaser. With respect to emergency special maintenance and
capital expenditure items not identified in the Budget that
arise after the date hereof and prior to the Closing, Seller
will cause MPC, to the extent Seller has the right to do so
under the Colstrip Contracts, to consult with Purchaser and to
conduct and complete any such emergency special maintenance
and capital expenditure items in accordance with Good Utility
Practice ("Emergency Expenditures").
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all
times from and after the date hereof until the Closing and, in
the case of Section 5.06, thereafter, Purchaser will comply
with all covenants and provisions of this Article V, except to
the extent Seller may otherwise consent in writing.
5.01 Regulatory and Other Approvals
Purchaser will (a) take all reasonable steps necessary or
desirable, and proceed diligently and in good faith and use
all reasonable efforts, at the earliest commercially
practicable dates, to obtain all consents, approvals or
actions of, to make all filings with and to give all notices
to Governmental or Regulatory Authorities or any other Person
required of Purchaser to consummate the transactions
contemplated hereby and by the Operative Agreements, including
those described in Section 3.03 of the Disclosure Schedule and
Purchaser Required Regulatory Approvals or for Purchaser to
own, operate or maintain, on and after the Closing, the Assets
substantially as such assets are currently owned, operated and
maintained by Seller, (b) provide such other information and
communications to such Governmental or Regulatory Authorities
or other Persons as such Governmental or Regulatory
Authorities or other Persons may reasonably request in
connection therewith and (c) provide reasonable cooperation to
Seller in obtaining Seller Required Regulatory Approvals and
all other consents, approvals or actions of, making all
filings with and giving all notices to Governmental or
Regulatory Authorities or other Persons required of Seller to
consummate the transactions contemplated hereby and by the
Operative Agreements. Prior to making any filings with a
Governmental or Regulatory Authority pursuant to this
Section 5.01, Purchaser agrees to provide copies of such
filings to Seller. Nothing in this Agreement shall require
Purchaser to institute litigation or to pay or agree to pay
any sum of money or make financial accommodations (other than
the payment or incurrence of customary expenses and filing or
other fees) in order to obtain any necessary consent, approval
or authorization including, without limitation, the Purchaser
Required Regulatory Approvals. Purchaser will provide prompt
notification to Seller when any such consent, approval,
action, filing or notice referred to in clause (a) above is
obtained, taken, made or given, as applicable, and will advise
Seller of any communications (and, unless precluded by Law,
provide copies of any such communications that are in writing)
with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
5.02 HSR Filings
In addition to and without limiting Purchaser's covenants
contained in Section 5.01, Purchaser will (a) consult with
Seller as to the appropriate timing of filings and take
promptly all actions necessary to make the filings required of
Purchaser or its Affiliates under the HSR Act, (b) comply at
the earliest practicable date with any request for additional
information received by Purchaser or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and
(c) cooperate with Seller in connection with Seller's filing
under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department
of Justice or state attorneys general.
5.03 PPUC Approval for Holding Company
From the date hereof through the Closing, Purchaser
agrees not to enter into any Contract or take any action
which, when taken together with the consummation of the
transactions contemplated by this Agreement, would violate any
condition imposed by the PPUC that limits Parent's investment
in diversified businesses without prior PPUC approval.
Purchaser further agrees that, in seeking the approval
described in clause (iv) of the definition of Purchaser
Required Regulatory Approvals, Purchaser shall use
commercially reasonable efforts to seek any reasonable PPUC
approval that would allow Purchaser to consummate the
transactions contemplated hereby and to own, operate and
maintain the Assets in substantially the same manner as
currently owned, operated and maintained by Seller.
5.04 Notice of Breach
Purchaser shall promptly give notice to Seller upon
becoming aware of the occurrence of any event which would
cause or constitute a breach of any of the representations,
warranties or covenants of Purchaser contained in this
Agreement.
5.05 Fulfillment of Conditions
Purchaser will execute and deliver at the Closing each
Operative Agreement that Purchaser is hereby required to
execute and deliver as a condition to the Closing, will take
all commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy each other
condition to the obligations of Seller contained in this
Agreement and will not take or fail to take any action that
could reasonably be expected to result in the nonfulfillment
of any such condition.
5.06 Tax-Exempt Bond Financed Pollution Control Facilities
(a) Following the Closing until the maturity or
redemption date of the Pollution Control Bonds,
(i) Except as otherwise permitted in (ii),
Purchaser will not materially change or permit to be changed
the character or nature of the use of those facilities listed
in Exhibit C hereto (the "Pollution Control Facilities") from
the manner Seller has used said facilities prior to the sale
of the Assets, unless such changed use would constitute a use
or purpose of said facilities for which tax-exempt bonds could
be issued pursuant to section 1313 of the Tax Reform Act of
1986 (P.L. 99-514 or, hereinafter, the "1986 Tax Act"), to
refund bonds described in section 1312(a) of the 1986 Tax Act
which, for purposes hereof, are assumed to have been issued to
finance facilities of the same character and use or purpose as
said facilities;
(ii) Purchaser will not sell or otherwise transfer
any portion of such Pollution Control Facilities unless (A)
the transferee covenants to satisfy the conditions of Section
5.06(a)(i) and with respect to its ownership and use of said
facilities following the date of any such purchase or (B) the
transfer relates to personal property and is exclusively for
cash the proceeds of which will be expended within six months
of the date of receipt on facilities for which tax-exempt
bonds could be issued pursuant to section 1313 of the 1986 Tax
Act, to refund bonds described in section 1312(a) of said act
which, for purposes hereof, are assumed to have been issued to
finance facilities of the same character and use or purpose as
said facilities; and
(iii) Purchaser will cooperate with Seller and use
commercially reasonable efforts to permit Seller to have
access to the Colstrip Facilities at reasonable times to
examine the Pollution Control Facilities.
Nothing herein shall be construed to prevent Purchaser
from ceasing to use any facilities or equipment that, in
Purchaser's reasonable judgment, have become obsolescent or
otherwise uneconomical to continue to use. Seller will notify
Purchaser when the Pollution Control Bonds have matured or
been redeemed.
5.07 Purchaser Financing
Purchaser will proceed in good faith and use all
reasonable efforts to obtain financing on commercially
reasonable terms in amounts and structure reasonably
consistent with Purchaser's financing plan as set forth in
Purchaser's written proposal to Seller dated September 25,
1998 (the "Purchaser Financing").
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the
Assets and to assume and pay, perform and discharge the
Assumed Liabilities are subject to the fulfillment, at or
before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Purchaser
in its sole discretion):
6.01 Representations and Warranties
The representations and warranties made by Seller in this
Agreement and the Operative Agreements, taken as a whole,
shall be true and correct, in all material respects, on and as
of the Closing as though repeated on and as of the Closing or,
in the case of representations and warranties made as of a
specified date earlier than the Closing, on and as of such
earlier date.
6.02 Performance
Seller shall have performed and complied with, in all
material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with
by Seller at or before the Closing.
6.03 Officers' Certificates
Seller shall have delivered to Purchaser a certificate,
dated as of the Closing and executed by the Chairman of the
Board, the President or any Vice President of Seller,
substantially in the form and to the effect of Exhibit D
hereto, and a certificate, dated as of the Closing and
executed by the Secretary or any Assistant Secretary of
Seller, substantially in the form and to the effect of Exhibit
E hereto.
6.04 Orders and Laws
There shall not be in effect on the date of the Closing
any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the
Operative Agreements.
6.05 Regulatory Consents and Approvals
Subject to Section 1.10, all Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals shall
have been duly obtained, made or given and shall be in full
force and effect and shall be Final Orders reasonably
satisfactory to Purchaser, and all terminations or expirations
of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Operative Agreements,
including under the HSR Act, shall have occurred.
6.06 Colstrip Rights of First Refusal
Seller shall have either received the consents required
under each of the Colstrip Rights of First Refusal or the
exercise periods of such Colstrip Rights of First Refusal
shall have expired.
6.07 Third Party Consents
The consents (or in lieu thereof waivers) listed in
Section 6.07 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect and shall be
reasonably satisfactory to Purchaser.
6.08 No Seller Material Adverse Effect
There shall not have occurred and be continuing a Seller
Material Adverse Effect.
6.09 Proceedings
All corporate and other proceedings to be taken by Seller
in connection with the transactions contemplated hereby and
all documents incident thereto shall be reasonably
satisfactory in form and substance to Purchaser and its
counsel, and Purchaser and its counsel shall have received all
such certified or other copies of such documents as it or they
may reasonably request.
6.10 Deliveries
Seller shall have executed and delivered to Purchaser
(i) the General Assignment, (ii) the other Assignment
Instruments, (iii) the Wholesale Transition Service Agreement,
dated as of the Closing, with Purchaser substantially in the
form and to the effect of Exhibit F hereto (the "Wholesale
Transition Service Agreement"), and (iv) if the PSE
Transmission Assets are not conveyed to Purchaser at the
Closing, Seller and Purchaser shall have entered into the
Transmission Service Agreement and the related Separation
Document.
6.11 Colstrip Operations Arrangements
There shall be in effect (a) arrangements reasonably
satisfactory to Purchaser pursuant to which Purchaser shall be
the operator of the entire Colstrip generating facility for a
period of at least ten (10) years after the Closing, subject
only to removal for cause or (b) such other arrangements with
respect to the operation of the Colstrip generating facility
as are reasonably acceptable to Purchaser.
6.12 Purchaser Financing
Purchaser's obligation to purchase the PSE Colstrip
Transmission Assets at the Closing is subject to the receipt
by Purchaser, on or prior to the Closing, of the Purchaser
Financing or other financing reasonably satisfactory to
Purchaser.
6.13 Opinion of Counsel
Purchaser shall have received the opinion of (i) Xxxxxxx
Coie LLP, counsel to Seller, dated as of the Closing,
substantially to the effect of Exhibit G-1 hereto, and
(ii) outside Montana counsel to Seller, dated as of the
Closing, substantially to the effect of Exhibit G-2 hereto.
6.14 Transfer of MPC Generation Assets
That portion of the Generation Assets (as such term is
defined in the MPC Purchase Agreement) to be transferred to
Purchaser at the Closing under the MPC Purchase Agreement
consisting of, at a minimum, (i) Xxxxxxx, (ii) MPC's undivided
interest in Colstrip 1,2 and 3, and (iii) the Missouri/Madison
Hydro Units with Basin/Idaho/BPA Power Contracts (in each case
of (i), (ii) and (iii), as such terms are defined in the MPC
Purchase Agreement) shall have been purchased by Purchaser,
unless such purchase has not occurred solely as a result of a
breach by Purchaser of the MPC Purchase Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Assets
are subject to the fulfillment, at or before the Closing, of
each of the following conditions (all or any of which may be
waived in whole or in part by Seller in its sole discretion):
7.01 Representations and Warranties
The representations and warranties made by Purchaser in
this Agreement and the Operative Agreements, taken as a whole,
shall be true and correct, in all material respects on and as
of the Closing as though repeated on and as of the Closing.
7.02 Performance
Purchaser shall have performed and complied with, in all
material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with
by Purchaser at or before the Closing.
7.03 Officers' Certificates
Purchaser shall have delivered to Seller a certificate,
dated as of the Closing and executed by the Chairman of the
Board, the President or any Executive or Senior Vice President
of Purchaser, substantially in the form and to the effect of
Exhibit H hereto, and a certificate, dated as of the Closing
and executed by the Secretary or any Assistant Secretary of
Purchaser, substantially in the form and to the effect of
Exhibit I hereto.
7.04 Orders and Laws
There shall not be in effect on the date of the Closing
any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the
Operative Agreements.
7.05 Regulatory Consents and Approvals
Subject to Section 1.10, all Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals shall
have been duly obtained, made or given and shall be in full
force and effect and shall be a Final Order, and all
terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this
Agreement and the Operative Agreements, including under the
HSR Act, shall have occurred.
7.06 Third Party Consents
The consents (or in lieu thereof waivers) listed in
Section 7.06 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect and shall be
reasonably satisfactory to Seller.
7.07 Opinion of Counsel
Seller shall have received the opinion of Winthrop,
Stimson, Xxxxxx & Xxxxxxx, counsel to Purchaser, dated as of
the Closing, substantially to the effect of Exhibit J hereto.
Such counsel's opinion need not cover any matter contained in
the opinions required by Exhibit J to the extent such matter
involves the laws of Montana, Oregon, Washington, Pennsylvania
or any other jurisdiction other than the federal laws of the
United States or the laws of the State of New York, and in
lieu thereof, Seller shall have received the opinions of
counsel admitted in such other jurisdictions covering such
matters.
7.08 No Purchaser Material Adverse Effect
There shall not have occurred and be continuing a
Purchaser Material Adverse Effect.
7.09 Proceedings
All corporate and other proceedings to be taken by
Purchaser in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Seller and its counsel
and Seller and its counsel shall have received all such
certified or other copies of such documents as it or they may
reasonably request.
7.10 Colstrip Rights of First Refusal
Seller shall have either received the consents required
under each of the Colstrip Rights of First Refusal or the
exercise periods of such Colstrip Rights of First Refusal
shall have expired.
7.11 Deliveries
Purchaser shall have delivered to Seller (i) the
Assumption Agreement (ii) the other Assumption Instruments,
(iii) the Wholesale Transition Service Agreement ,and (iv)
subject to Section 1.10, the Transmission Service Agreement
and Separation Document.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 Transfer Taxes
All Transfer Taxes incurred in connection with this
Agreement and the transactions contemplated hereby shall be
borne by Purchaser, and Purchaser, at its own expense, will
file, to the extent required by applicable Law, all necessary
Tax Returns and other documentation with respect to all such
Transfer Taxes, and, if required by applicable Law, Seller
will join in the execution of any such Tax Returns or other
documentation and will take such positions therein as are
reasonably requested by Purchaser. Nothing in the foregoing
sentence shall require Seller to take a position adverse to
its own posture with regard to Taxes. Prior to the Closing,
Purchaser will provide to Seller, to the extent possible, an
appropriate certificate from each applicable taxing authority
to the effect that no Transfer Tax will be incurred in
connection with this Agreement and the transactions
contemplated hereby.
8.02 Returns with respect to Prorated Taxes
With respect to those Taxes to be prorated in accordance
with Section 1.06 of this Agreement, Purchaser shall prepare
and timely file all Tax Returns required to be filed after the
Closing with respect to the Assets and shall duly and timely
pay all such Taxes shown to be due on such Tax Returns.
Purchaser's preparation of any such Tax Return shall be
subject to Seller's approval, which approval shall not be
unreasonably withheld. Purchaser shall make such Tax Returns
available for Seller's review and approval no later than
twenty (20) Business Days prior to the due date for filing
such Tax Return. Within fifteen (15) Business Days after
receipt of such Tax Return, Seller shall pay to Purchaser its
proportionate share of the amount shown as due on such Tax
Return determined in accordance with Section 1.06 of this
Agreement.
ARTICLE IX
SURVIVAL; NO OTHER REPRESENTATIONS
9.01 Survival of Representations, Warranties, Covenants and
Agreements
(a) Subject to Section 11.02, the representations and
warranties of Purchaser and Seller (other than the
representations and warranties , (x) contained in Section 2.06
(the "Tax Representation") which shall survive for the
applicable period of the applicable statute of limitation),
and (y) contained in Section 2.09(b) (the "Title
Representation") which shall survive the Closing indefinitely)
(all of the representations and warranties of Purchaser and
Seller, excluding the Tax Representation and the Title
Representation, are hereinafter referred to as the "General
Representations"), shall survive the Closing for a period of
twelve (12) months; provided, however, if Purchaser (or any
successor or assign of Purchaser) procures title insurance
with respect to the Real Property, to the extent that
Purchaser (or any successor or assign of Purchaser) actually
receives proceeds from the title insurer in respect of any
matters addressed by any of the representations and warranties
contained in Section 2.09, then, only with respect to such
matters, and only to such extent, such representations and
warranties shall be deemed not to have been made;
(b) Subject to Section 11.02, the covenants and
agreements of Seller and Purchaser contained in this Agreement
(other than the covenants and agreements contained in
Articles IV (excluding Section 4.08) and V (excluding
Section 5.06) (the "Pre-Closing Covenants"), which covenants
and agreements shall survive the Closing for a period of
twelve (12) months) (all of the covenants and agreements of
Purchaser and Seller, excluding the Pre-Closing Covenants, are
hereinafter referred to as the "Post-Closing Covenants"),
shall survive the Closing indefinitely; and
(c) Any due diligence or other investigation or
examination by any party with respect to the transactions
contemplated by this Agreement shall not in any way affect or
lessen the representations and warranties of the other party
contained herein or the indemnifications with respect thereto.
9.02 No Other Representations
Notwithstanding anything to the contrary contained in
this Agreement, it is the explicit intent of each party hereto
that Seller is making no representation or warranty
whatsoever, express or implied, including but not limited to
any implied representation or warranty as to condition,
merchantability or suitability as to any of the Assets, except
those representations and warranties contained in this
Agreement and the exhibits, schedules, documents, certificates
and instruments delivered in connection with the Closing. In
particular, Seller makes no representation or warranty to
Purchaser with respect to (i) the information set forth in the
Confidential Information Memorandum dated March 1998 and the
supplements thereto, or (ii) any financial projection or
forecast relating to the Colstrip Facilities. With respect to
any such projection or forecast delivered by or on behalf of
Seller to Purchaser, Purchaser acknowledges that (i) there are
uncertainties inherent in attempting to make such projections
and forecasts, (ii) it is familiar with such uncertainties,
(iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such
projections and forecasts furnished to it and (iv) it shall
have no claim against Seller with respect to such projections
and forecasts.
ARTICLE X
INDEMNIFICATION
10.01 Other Indemnification
(a) Subject to the other Sections of this Article X,
Seller shall indemnify Purchaser and its Affiliates and their
respective directors, officers, employees, agents and
representatives ("Purchaser Group") in respect of, and hold
Purchaser Group harmless from and against, any and all Losses
suffered, incurred or sustained by Purchaser Group or to which
Purchaser Group becomes subject, resulting from, arising out
of or relating to:
(i) any breach by Seller of any representation or
warranty of Seller contained in this Agreement (determined in
all cases as if the terms "material" or "materially" (or the
capitalized versions thereof) were not included therein);
(ii) any breach by Seller of any covenant or
agreement of Seller contained in this Agreement (determined in
all cases as if the terms "material" or "materially" (or the
capitalized versions thereof) were not included therein); or
(iii) Retained Liability;
provided, however, that Seller shall have no liability for
Losses under clause (i) arising from a breach of a General
Representation or the Tax Representation unless and until the
aggregate amount of all Losses arising from such breaches
asserted by Purchaser equals or exceeds $2,500,000 in which
event Seller shall be liable for all such Losses; and
provided, further, that, except with respect to Losses arising
from a breach of the Title Representation, such
indemnification shall be effective only with respect to claims
written notice of which is received by Seller with respect to
Losses arising under clause (i) above relating to General
Representations (or, with respect to the Tax Representation,
the date upon which the applicable statute of limitations
expires) or clause (ii) above relating to Pre-Closing
Covenants, no later than the date that is twelve (12) months
from the Closing. Except as set forth in paragraph (b) below
in, no event shall the Liability of Seller for Losses under
clause (i) of this Section 10.01(a) arising out of breaches of
the General Representations exceed, in the aggregate, fifty
percent (50%) of the Purchase Price, (or, with respect to
breaches of the Title Representation and the covenants
contained in Sections 1.01(a)(i) and 1.05 exceed, in the
aggregate, the Purchase Price).
(b) In addition to the indemnities contained in clause
(a) above, Seller shall indemnify Purchaser Group in respect
of, and hold it harmless from and against, all Losses
suffered, incurred or sustained by Purchaser Group arising
from any Pre-Closing Environmental Liability; provided,
however, that (1) indemnification for Pre-Closing Unknown
Remedial Liabilities shall be effective only with respect to
Losses arising out of a matter described in a Claim Notice
received by Seller no later than the date that is two years
from the Closing, (2) Seller's Liabilities under this
paragraph for Pre-Closing Known and Unknown Remedial
Liabilities shall be limited in each case to Seller's pro rata
share (calculated pursuant to the Colstrip Contracts) of 50%
of any such Loss suffered, incurred or sustained by Purchaser
Group, and shall not, in any event, exceed, in the aggregate,
an amount equal to 10% of the Purchase Price (each such
Liability of Seller shall be paid by it at the same time that
Purchaser Group has paid its 50% share thereof); provided,
further, that this indemnity shall only extend to such Pre-
Closing Environmental Liabilities attributable to conditions
existing at or prior to the Closing, and Seller shall not be
required to indemnify Purchaser for Losses to the extent
attributable to acts or omissions of Purchaser resulting in an
increase in or aggravation of such Environmental Liabilities,
whether arising from a change in use of the Assets or
otherwise. In the event that Seller disputes the pro rata
share of any Losses attributable by Purchaser to Seller under
this Section 10.01(b)(2) in the Claim Notice, Seller will
nevertheless pay Purchaser the amount requested by Purchaser
in the Claim Notice and Seller shall proceed to resolve any
dispute with MPC and PGE concerning allocations of pro rata
shares. If Purchaser fails to make a claim against a
Potentially Responsible Party with respect to Pre-Closing
Environmental Liabilities, then upon making an indemnity
payment pursuant to this paragraph (b), Seller shall, to the
extent of such indemnity payment, be subrogated to all rights
of Purchaser against any Potentially Responsible Party in
respect of the Losses to which the indemnity payment relates.
If Purchaser makes a claim against, and recovers from, a
Potentially Responsible Party with respect to Pre-Closing
Environmental Liabilities and Seller has made an indemnity
payment with respect to such Loss, then Purchaser shall
reimburse Seller 50% of such amounts recovered, net of any
third party costs of collection.
(c) Subject to the other Sections of this Article X,
Purchaser shall indemnify Seller and its Affiliates and their
respective directors, officers, employees, agents and
representatives ("Seller Group") in respect of, and hold
Seller Group harmless from and against, any and all Losses
suffered, incurred or sustained by Seller Group or to which
Seller Group becomes subject, resulting from, arising out of
or relating to:
(i) any breach by Purchaser of any representation
or warranty of Purchaser contained in this Agreement
(determined in all cases as if the terms "material" or
"materially," or the capitalized versions thereof, were not
included therein);
(ii) any breach by Purchaser of any covenant or
agreement of Purchaser contained in this Agreement (determined
in all cases as if the terms "material" or "materially" (or
the capitalized versions thereof) were not included therein);
or
(iii) an Assumed Liability;
provided, however, that Purchaser shall have no liability for
Losses under clause (i) arising from a breach of a General
Representation unless and until the aggregate amount of all
such Losses arising from such breaches asserted by Seller
equals or exceeds $2,500,000 in which event Purchaser shall be
liable for all Losses; and provided, further, that such
indemnification shall be effective only with respect to claims
written notice of which is received by Purchaser with respect
to Losses arising under clause (i) above relating to General
Representations or clause (ii) above relating to Pre-Closing
Covenants, no later than the date that is twelve (12) months
from the Closing. In no event shall the Liability of
Purchaser for Losses under this Article X arising out of
breaches of the General Representations exceed, in the
aggregate, fifty percent (50%) of the Purchase Price.
(d) To the extent that an Indemnified Party has received
insurance proceeds prior to the payment of an indemnity
payment on an indemnifiable Loss, such indemnifiable Loss
shall be reduced by an amount equal to such proceeds received
by the Indemnified Party. If the amount of any indemnifiable
Loss, at any time subsequent to the making of an indemnity
payment in respect thereof, is reduced by recovery, settlement
or otherwise under or pursuant to any insurance coverage or
pursuant to any claim, recovery, settlement or payment by or
against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection
therewith (together with interest thereon from the date of
payment thereof at the prime rate then in effect for domestic
banks as published in the Wall Street Journal (Northeast
Edition) in the "Money Rates" section), shall promptly be
repaid by the Indemnified Party to the Indemnifying Party.
Nothing in this Section 10.01(d) shall be construed to require
any party hereto to obtain or maintain any insurance coverage
or make any claim under its insurance coverage.
(e) Seller shall not be liable on account of any
obligations of any co-owners of Colstrip Xxxxx 0, 0, 0 xxx 0
xx Xxxxxxxxx.
(x) Except as expressly provided above in this Section
10.01, the Indemnifying Party hereby expressly waives all
rights of subrogation in respect of any payments made by it
under this Article X.
10.02 Method of Asserting Claims
All claims for indemnification by any Indemnified Party
under Section 10.01 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which
an Indemnified Party might seek indemnity under Section 10.01
is asserted against or sought to be collected from such
Indemnified Party by a Person other than Seller, Purchaser or
any Affiliate of Seller or Purchaser (a "Third Party Claim"),
the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. The
Indemnifying Party will notify the Indemnified Party as soon
as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified
Party under Section 10.01 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified Party
with respect to the Third Party Claim pursuant to this
Section 10.02(a), then the Indemnifying Party will have the
right to defend, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and
diligently prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the
Indemnifying Party (with the consent of the Indemnified Party,
which consent will not be unreasonably withheld). The
Indemnifying Party will have full control of such defense and
proceedings, including any settlement thereof; provided,
however, that the Indemnified Party may, at the sole cost and
expense of the Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred to in the
first sentence of this Section 10.02(a)(i), file any motion,
answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests and not prejudicial to
the Indemnifying Party (it being understood and agreed that,
except as provided in clause (ii) below, if an Indemnified
Party takes any such action that is prejudicial and causes a
final adjudication that is adverse to the Indemnifying Party,
the Indemnifying Party will be relieved of its obligations
hereunder with respect to the portion of such Third Party
Claim prejudiced by the Indemnified Party's action); and
provided further, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnifying Party
and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, or, if appropriate and
related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party
Claim, or any cross-complaint against any Person (other than
the Indemnified Party or any of its Affiliates).
Notwithstanding the foregoing, the Indemnified Party may take
over the control of the defense or settlement of a Third Party
Claim at any time if it irrevocably waives its right to
indemnity under Section 10.01 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party Claim
pursuant to Section 10.02(a), or if the Indemnifying Party
gives such notice but fails to prosecute vigorously and
diligently or settle the Third Party Claim, or if the
Indemnifying Party fails to give any notice whatsoever within
the Dispute Period, then the Indemnified Party will have the
right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and
diligently prosecuted by the Indemnified Party to a final
conclusion or will be settled at the discretion of the
Indemnified Party (with the consent of the Indemnifying Party,
which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and
proceedings, including (except as provided in the immediately
preceding sentence) any settlement thereof; provided, however,
that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party
is contesting, or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim against
the Person asserting the Third Party Claim, or any cross-
complaint against any Person (other than the Indemnified Party
or any of its Affiliates). Notwithstanding the foregoing
provisions of this Section 10.02(a)(ii), if the Indemnifying
Party has notified the Indemnified Party within the Dispute
Period that the Indemnifying Party disputes its liability
hereunder to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii)
below, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant
to this Section 10.02(a)(ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and
the Indemnified Party will reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party
pursuant to this Section 10.02(a)(ii), and the Indemnifying
Party will bear its own costs and expenses with respect to
such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to
the Indemnified Party with respect to the Third Party Claim
under Section 10.01 or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party with respect
to such Third Party Claim, the Loss in the amount specified in
the Claim Notice will be conclusively deemed a liability of
the Indemnifying Party under Section 10.01 and the
Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand. If the Indemnifying Party has
timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
(b) In the event any Indemnified Party should have a
claim under Section 10.01 against any Indemnifying Party that
does not involve a Third Party Claim, the Indemnified Party
shall deliver an Indemnity Notice with reasonable promptness
to the Indemnifying Party prior to the expiration of the
indemnification notice period described in this Section 10.02.
If the Indemnifying Party notifies the Indemnified Party that
it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the
claim described in such Indemnity Notice, the Loss in the
amount specified in the Indemnity Notice will be conclusively
deemed a liability of the Indemnifying Party under
Section 10.01 and the Indemnifying Party shall pay the amount
of such Loss to the Indemnified Party on demand. If the
Indemnifying Party disputes all or any portion of its
liability with respect to such claim, it shall notify the
Indemnified Party thereof in writing during the Dispute
Period, specifying the portion of the claim that is disputed
and the basis for such position. If the Indemnifying Party
has timely disputed its liability with respect to such claim,
the Indemnifying Party will be deemed to have accepted and be
liable for payment of the undisputed portion of such claim on
demand and the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by
litigation in a court of competent jurisdiction.
(c) In the event of any Loss resulting from a
misrepresentation, breach of warranty or nonfulfillment or
failure to be performed of any covenant or agreement contained
in this Agreement as to which an Indemnified Party would be
entitled to claim indemnity under Section 10.01 but for the
Loss limitation provisions of Section 10.01(a) and (c), such
Indemnified Party may nevertheless deliver a written notice to
the Indemnifying Party containing the information that would
be required in a Claim Notice or an Indemnity Notice, as
applicable, with respect to such Loss. In the case of a Claim
Notice, the provisions of Section 10.02(a)(i) will be
applicable. If the Indemnifying Party notifies the Indemnified
Party that it does not dispute the claim described therein or
fails to notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes the claim
described in such Claim Notice or Indemnity Notice, as the
case may be, the Loss specified in the notice will be
conclusively deemed to have been incurred by the Indemnified
Party for purposes of making the determination of the Loss
limitations set forth in Section 10.01. If the Indemnifying
Party has timely disputed the claim described in such Claim
Notice or Indemnity Notice, as the case may be, the
Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
(d) In the event of any claim for indemnity under
Section 10.01(a), Purchaser agrees to give Seller and its
Representatives reasonable access to the Books and Records and
Employees in connection with the matters for which
indemnification is sought to the extent Seller reasonably
deems necessary in connection with its rights and obligations
under this Article X.
(e) All payments made pursuant to this Article X shall
be treated as an adjustment to the Purchase Price.
(f) In the event an action, dispute, claim, counterclaim
or controversy ("Dispute") arises between the parties arising
out of or relating to this Agreement, the aggrieved party
shall promptly notify the other party of the Dispute within
ten Business Days after such Dispute arises. If the parties
have failed to resolve the Dispute within ten Business Days
after delivery of such notice, each party shall, within five
Business Days thereafter, nominate a senior officer of its
management to meet to attempt to resolve the Dispute. The
senior officers shall meet within twenty Business Days after
their nomination. Should the senior officers be unable to
resolve the Dispute, either party may pursue any and all
available legal remedies, unless the parties mutually agree in
writing to an alternative dispute resolution procedure.
10.03 Exclusivity
After the Closing, to the extent permitted by Law, the
indemnities set forth in this Article X shall be the exclusive
remedies of Purchaser Group and Seller Group, or any member of
either of them, for any misrepresentation, breach of warranty
or nonfulfillment or failure to be performed of any covenant
or agreement contained in this Agreement, any schedule hereto,
or any certificate delivered by or on behalf of Seller or
Purchaser in connection herewith, and the parties shall not be
entitled to a rescission of this Agreement or to any further
indemnification rights or claims of any nature whatsoever in
respect thereof, all of which the parties hereto hereby waive.
10.04 Purchaser's Release of Seller Under the Colstrip
Contracts
From and after the Closing, Purchaser, for itself and on
behalf of its Affiliates, does hereby release, hold harmless
and forever discharge Seller from any and all claims, demands,
liabilities (including fines and civil penalties) or causes of
action at Law or in equity, whether known or unknown,
resulting from any Claim that Seller is not released from its
obligations under the Colstrip Contracts by virtue of Sections
1.01(a)(xi) and 1.02(a)(v); provided, however, that nothing in
this Section 10.04 shall be deemed to affect Seller's Retained
Liabilities, Purchaser's Assumed Liabilities or the parties'
indemnification obligations hereunder.
ARTICLE XI
TERMINATION
11.01 Termination
This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Seller and Purchaser; or
(b) at any time before the Closing, by Seller or
Purchaser, in the event that any Final Order or Law becomes
effective restraining, enjoining, or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative
Agreements, upon notification of the non-terminating party by
the terminating party; or
(c) at any time before the Closing, by Seller or
Purchaser, in the event (i) of a breach hereof by the non-
terminating party which gives rise to, as applicable, either a
Seller Material Adverse Effect (if Seller is the breaching
party) or a Purchaser Material Adverse Effect (if Purchaser is
the breaching party) if such non-terminating party fails to
cure such breach within forty-five (45) days following
notification thereof by the terminating party, provided that
if, at the end of such forty-five (45) day period, the non-
terminating party is endeavoring in good faith, and proceeding
diligently, to cure such breach, the non-terminating party
shall have an additional forty-five (45) days in which to
effect such cure or (ii) upon notification of the non-
terminating party by the terminating party that the
satisfaction of any condition to the terminating party's
obligations under this Agreement becomes impossible or
impracticable with the use of commercially reasonable efforts
if the failure of such condition to be satisfied by the
terminating party is not caused by a breach hereof by the
terminating party, provided that if it is reasonably possible
that the circumstances giving rise to the impossibility or
impracticability may be removed prior to the expiration of the
time periods provided in the following subsection (d), then
such notification may not be given until such time as the
removal of such circumstances is no longer reasonably possible
within such time periods; or
(d) at any time after the date which is twelve (12)
months after the date of this Agreement, by Seller or
Purchaser upon notification of the non-terminating party by
the terminating party if the Closing shall not have occurred
on or before such date and such failure to consummate is not
caused by a breach of this Agreement by the terminating party;
provided, however, that if on such date Purchaser and Seller
have not received all Purchaser Required Regulatory Approvals
and all Seller Required Regulatory Approvals but all other
conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then neither party may terminate
this Agreement until the expiration of such date which is
eighteen (18) months after the date of this Agreement;
provided further that if on such date Purchaser or MPC has not
received all Purchaser Required Regulatory Approvals or all
Seller Required Regulatory Approvals (in each case as defined
in the MPC Purchase Agreement) related to the Hydro Units (as
defined in the MPC Purchase Agreement) but all other
conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then neither party may terminate
this Agreement until the expiration of the date which is
twenty-four (24) months after the date of this Agreement.
11.02 Effect of Termination
If this Agreement is validly terminated pursuant to
Section 11.01, this Agreement will forthwith become null and
void, and there will be no liability or obligation on the part
of Seller or Purchaser (or any of their respective officers,
directors, employees, agents or other representatives or
Affiliates), except as provided in the next succeeding
sentence and except that the provisions with respect to
expenses in Section 13.04 and confidentiality in Section 13.06
will continue to apply following any such termination.
Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to
Section 11.01(c) or (d), Seller will remain liable to
Purchaser for any willful breach of Section 4.09 of this
Agreement by Seller existing at the time of such termination,
and Purchaser will remain liable to Seller for any willful
breach of Section 5.05 of this Agreement by Purchaser existing
at the time of such termination, and Seller or Purchaser may
seek such remedies, including damages and fees of attorneys,
against the other with respect to any such breach as are
provided in this Agreement or as are otherwise available at
Law or in equity.
ARTICLE XII
DEFINITIONS
12.01 Definitions
(a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Actions or Proceedings" means any action, suit,
proceeding, arbitration or Governmental or Regulatory
Authority investigation.
"Adjustment Amount" has the meaning ascribed to it in
Section 1.04.
"Adjustment Statement" has the meaning ascribed to it in
Section 1.04.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled
by or is under common control with the Person specified. For
purposes of this definition, control of a Person means the
power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by Contract
or otherwise and, in any event and without limitation of the
previous sentence, any Person owning ten percent (10%) or more
of the voting securities of another Person shall be deemed to
control that Person.
"Agreement" means this Asset Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and
the certificates delivered in accordance with Sections 6.03
and 7.03, as the same shall be amended from time to time.
"Assets" has the meaning ascribed to it in
Section 1.01(a).
"Asset Group" means one or more of the categories of
Assets set forth on Schedule I to the MPC Purchase Agreement.
"Assets and Properties" of any Person means all assets
and properties of every kind, nature, character and
description (whether real, personal or mixed, whether tangible
or intangible and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person.
"Assignment Instruments" has the meaning ascribed to it
in Section 1.05.
"Associate" means, with respect to any Person, any
corporation or other business organization of which such
Person is an officer or partner or is the beneficial owner,
directly or indirectly, of ten percent (10%) or more of any
class of equity securities, any trust or estate in which such
Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar capacity and
any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person.
"Assumed Liabilities" has the meaning ascribed to it in
Section 1.02(a).
"Assumption Agreement" has the meaning ascribed to it in
Section 1.05.
"Assumption Instruments" has the meaning ascribed to it
in Section 1.05.
"Base Purchase Price" means $441,000,000.
"Bid Date" means September 28, 1998.
"Books and Records" of any Person means all files,
documents, instruments, papers, books and records relating to
the business, operations, condition of (financial or other),
results of operations and Assets and Properties of such
Person, including financial statements, Tax Returns and
related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies,
minute books, stock certificates and books, stock transfer
ledgers, Contracts, Licenses, customer lists, computer files
and programs, retrieval programs, operating data and plans and
environmental studies and plans.
"Budget" has the meaning ascribed to it in Section 4.13.
"Business Combination" means with respect to any Person,
any merger, consolidation or combination to which such Person
is a party, any sale, dividend, split or other disposition of
capital stock or other equity interests of such Person or any
sale, dividend or other disposition of all or substantially
all of the Assets and Properties of such Person, provided,
however, that neither (i) a divestiture by Seller of all or
part of its generating assets (provided that no such
divestiture will operate as release of Seller from its
obligations pursuant to this Agreement) nor (ii) any
activities or transactions of any Affiliate of Seller (so long
as not involving Seller), shall be considered a Business
Combination hereunder.
"Business Contracts" has the meaning ascribed to it in
Section 1.01(a)(v).
"Business Day" means a day other than Saturday, Sunday or
any day on which banks located in the State of Washington and
the Commonwealth of Pennsylvania are authorized or obligated
to close.
"Capital Expenditures" means those capital expenditures
which are identified in the Budget referred to in
Section 4.13, and such other emergency, non-budgeted capital
expenditures made by Seller in accordance with the provisions
of Section 4.13.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the
rules and regulations promulgated thereunder.
"Claim Notice" means written notification pursuant to
Section 10.02(a) of a Third Party Claim as to which indemnity
under Section 10.01 is sought by an Indemnified Party,
enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying Party under
Section 10.01, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in
good faith, of such Third Party Claim.
"Closing" means the closing of the transactions
contemplated by Section 1.05.
"Closing Date" means (a) the later of (x) July 1, 1999
and (y) the date thirty (30) days after the day on which the
last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings
described in Sections 6.04 through 6.07 and Sections 7.04
through 7.06 has been obtained, made or given or has expired,
as applicable; provided, that Purchaser agrees to use
reasonable efforts to be prepared to close prior to July 1,
1999, and shall give notice to Seller in the event Purchaser
determines that it is able to do so, or (b) such other date as
Purchaser and Seller mutually agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Colstrip Books and Records" has the meaning ascribed to
it in Section 1.01(a)(xii).
"Colstrip Contracts" has the meaning ascribed to it in
Section 1.01(a)(xi).
"Colstrip Facilities" means the thermal electric
generating facilities known as Colstrip Xxxxx 0, 0, 0&0
xxxxxxx xxxx Xxxxxxxx, Xxxxxxx, including the Common
Facilities (as defined in the Colstrip Contracts) and the PSE
Colstrip Transmission Assets.
"Colstrip Rights of First Refusal" means the rights
described in the following agreements: (i) Section 16(d) of
the Construction and Ownership Agreement, dated as of July 30,
1971, by and between Seller and MPC; (ii) Sections 24(b) and
24(f) of the Ownership and Operation Agreement, dated as of
May 6, 1981, as amended, by and among Seller, MPC, WWP, PGE,
and Pacific Power & Light Company ("Pacific"); and
(ii) Section 28(f) of the Colstrip Project Transmission
Agreement, dated as of May 6, 1981, as amended, by and among
Seller, MPC, WWP, PGE and Pacific.
"Combined Payment Amount" means an amount equal to
$461,000,000 minus the amount of the Base Purchase Price
(prior to any adjustment thereto pursuant to Section 1.10).
"Contract" means any agreement, lease, license, evidence
of Indebtedness, mortgage, indenture, security agreement or
other contract.
"Contribution Agreement" has the meaning ascribed to it
in the forepart of this Agreement.
"Disclosure Schedule" means, as the context requires,
(a) the record delivered to Purchaser by Seller herewith and
dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials
as are required to be included therein by Seller pursuant to
this Agreement and (b) the record delivered to Seller by
Purchaser herewith and dated as of the date hereof, containing
all lists, descriptions, exceptions and other information and
materials as are required to be included therein by Purchaser
pursuant to this Agreement.
"Dispute" has the meaning ascribed to it in
Section 10.02(f).
"Dispute Period" means the period ending thirty (30) days
following receipt by an Indemnifying Party of either a Claim
Notice or an Indemnity Notice.
"Easements" means, with respect to the Assets, the
reservations of easements in favor of Seller to be included in
the deeds of conveyance with respect to such Assets,
substantially as set forth in Section 12.01(b) of the
Disclosure Schedule.
"Employee" means each employee or officer of Seller,
Purchaser or MPC, as the context may require, or any of their
Affiliates, whose employment responsibilities relate to the
PSE Colstrip Interests or the Colstrip Facilities.
"Environmental Fines and Penalties" has the meaning
ascribed to it in Section 1.02(a)(vii).
"Environmental Law" means all Federal, state, municipal
and local laws (including common laws), regulations, rules,
ordinances, codes, licenses, decrees, judgments, directives,
or judicial or administrative orders relating to pollution,
protection, preservation or restoration of human health, the
environment or natural resources, including, without
limitation, laws relating to Releases or threatened Releases
of Hazardous Materials (including, without limitation, into or
through ambient air, surface water, groundwater, land,
wetlands, surface and subsurface strata), or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
Hazardous Materials, including without limitation the Clean
Water Act, the Clean Air Act, the Resource Conservation and
Recovery Act, the Toxic Substances Control Act, and CERCLA, in
each case as amended, and their local counterparts.
"Environmental Liabilities" means any liabilities,
obligations or responsibilities under or related to former,
current or future Environmental Laws or the common law,
whether such liability, obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or
in connection with (a) any violation or alleged violation of
Environmental Laws relating to the Assets; (b) compliance with
applicable Environmental Laws relating to the Assets; (c) loss
of life, injury to persons or property or damage to natural
resources (whether or not such loss, injury or damage was made
manifest before or after the Closing) caused (or allegedly
caused) by the presence or Release of Hazardous Materials at,
on, in, under, adjacent to or migrating from the Assets; and
(d) the reasonable investigation and/or remediation required
by Law or constituting a reasonable response to a Governmental
or Regulatory Authority having jurisdiction (whether or not
such investigation or remediation commenced on or before the
Closing) of Hazardous Materials that are present or have been
Released at, on, in, under, adjacent to or migrating from the
Assets, including, but not limited to, Hazardous Materials in
the soil, surface water, sediments, groundwater, landfill
cells, or in other environmental media at or adjacent to the
Assets ("Remedial Liabilities"); provided, further that the
liabilities, obligations or responsibilities described in
clauses (a), (b) and (c) shall not include those described in
clause (d); provided further that Environmental Liabilities
shall not include (x) Purchaser's internal costs or
consequential damages (including the value of employees' time,
loss of use, downtime or increased operating costs); (y) costs
of capital improvements (including the replacement of
equipment that has reached its useful life); nor (z)
monitoring required by environmental permits or the design of
the Assets, except, in the case of clauses (y) and (z), as
covered in clause (d) above.
"Environmental Permits" has the meaning ascribed in
Section 2.15.
"EPA" means the Environmental Protection Agency.
"Estimated Adjustment Amount" means Seller's good faith
reasonable estimate of an Adjustment Amount for the Closing,
which estimate shall be provided to Purchaser no later than
five Business Days before the Closing.
"Estimated Purchase Price" has the meaning ascribed to it
in Section 1.05.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"Excluded Assets" has the meaning ascribed to it in
Section 1.01(b).
"Federal Power Act" means the Federal Power Act of 1935,
as amended, and the rules and regulations promulgated
thereunder.
"FERC" means the Federal Energy Regulatory Commission.
"Final Order" means a final Order after all opportunities
for rehearing are exhausted (whether or not any appeal thereof
is pending) that has not been further revised, stayed,
enjoined, set aside, annulled or suspended, with respect to
which any required waiting period has expired, and as to which
all conditions to effectiveness prescribed therein or
otherwise by Law, regulation or Order have been satisfied.
"Fuel Contracts" has the meaning ascribed to it in
Section 1.01(a)(x).
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in
the immediately prior comparable period.
"General Assignment" has the meaning ascribed to it in
Section 1.05.
"General Representations" has the meaning ascribed to it
in Section 9.01(a).
"Good Utility Practice" means any of the applicable
practices, methods and acts:
(i) required of the party to whom Good Utility
Practice is being applied under regulations of the National
Electric Safety Code (as each of such terms is defined in the
Interconnection Agreement (as such term is defined in the MPC
Purchase Agreement)), or its successor, whether or not the
party whose conduct is at issue is a member thereof; or
(ii) otherwise engaged in or approved by a
significant portion of the electric utility industry during
the relevant time period; 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 to the party being expected to
apply Good Utility Practice, consistent with law, regulation,
good business practices, generation, transmission, and
distribution reliability, safety, and expedition. Good
Utility Practice is intended to include practices, methods, or
acts generally accepted in the region, and is not intended to
be limited to optimum practices, methods, or acts to the
exclusion of all others. Good Utility Practice does not
include intentional disregard of contractual commitments, even
if those commitments are uneconomic under current market
conditions.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official
or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or
other political subdivision or any Native American tribal
council or similar governing entity.
"Hazardous Material" means (A) any petrochemical,
petroleum or petroleum products, oil, flammable explosives,
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 (PCBs);
(B) any chemicals or other materials or substances which are
now or hereafter become defined under any Environmental Law as
or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous chemicals," "hazardous
materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "pollutants,"
"contaminants," "hazardous matter," "restricted hazardous
materials" or words of similar import ; and (C) any other
chemical or other material or substance, the discharge,
emission, Release or exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental or
Regulatory Authority under any Environmental Law.
"Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended, and the rules and regulations
promulgated thereunder.
"HSR Act" means Section 7A of the Xxxxxxx Act (Title II
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended) and the rules and regulations promulgated
thereunder.
"Improvements" has the meaning ascribed to it in
Section 1.01(a)(iv).
"Indebtedness" of any Person means all obligations of
such Person (i) for borrowed money, (ii) evidenced by notes,
bonds, debentures or similar instruments, (iii) for the
deferred purchase price of goods or services (other than trade
payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of
guarantees of the obligations described in clauses (i) through
(iv) above of any other Person.
"Indemnified Party" means any Person claiming
indemnification under any provision of Article X.
"Indemnifying Party" means any Person against whom a
claim for indemnification is being asserted under any
provision of Article X.
"Indemnity Notice" means written notification pursuant to
Section 10.02(b) of a claim for indemnity under Article X by
an Indemnified Party, specifying the nature of and basis for
such claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in
good faith, of such claim.
"Indenture" means the Fortieth Supplemental Indenture,
dated as of September 1, 1954, as amended and supplemented,
between Seller and State Street Bank and Trust Company, as
successor trustee.
"Independent Accounting Firm" means Price
WaterhouseCoopers or such other independent accounting firm of
national reputation mutually appointed by Seller and
Purchaser.
"Intangible Personal Property" has the meaning ascribed
to it in Section 1.01(a)(vii).
"Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, trade names and trade
name rights, service marks and service xxxx rights, service
names and service name rights, brand names, inventions,
copyrights and copyright rights, trade secrets, know-how,
techniques, computer programs and related documentation, and
any and all other intangible assets or proprietary information
or rights (whether registered or under common law) and all
pending applications for and registrations of patents,
trademarks, service marks and copyrights.
"Inventory" has the meaning ascribed to it in
Section 1.01(a)(iii).
"Inventory Adjustment Amount" has the meaning ascribed to
in Section 1.04.
"Inventory Survey" has the meaning ascribed to in Section
1.04.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or similar phrases in this Agreement means:
(i) in the case of Seller, the actual knowledge of Seller's
officers and employees who are persons generally responsible
for the subject matter to which knowledge is pertinent, such
persons being listed in Section 12.01(c) of the Disclosure
Schedule at the date as of which the representation, warranty
or covenant is made or repeated, and (ii) in the case of
Purchaser the actual knowledge of Purchaser's officers and
employees who are persons generally responsible for the
subject matter to which knowledge is pertinent, such persons
being listed in Section 12.01(d) of the Disclosure Schedule at
the date as of which the representation, warranty or covenant
is made or repeated.
"Landlord Security Deposits" has the meaning ascribed to
it in Section 1.02(a)(iv).
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law
of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and
other liabilities of a Person (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become
due).
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations,
franchises and similar consents granted or issued by any
Governmental or Regulatory Authority, other than Environmental
Permits, including applications for any of the foregoing.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other
encumbrance of any kind, or easement, any conditional sale
Contract, title retention Contract or other Contract to give
any of the foregoing.
"Loss" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including interest, court
costs, reasonable fees of attorneys, accountants and other
experts or other reasonable expenses of litigation or other
proceedings or of any claim, default or assessment); provided,
however, "Loss" shall not include any consequential,
incidental or punitive damages for any reason, other than in
the case of willful misconduct.
"Maintenance Expenditures" means those special
maintenance expenditures which are identified in the Budget
referred to in Section 4.13 and such other emergency, non-
budgeted special maintenance expenditures made by Seller in
accordance with the provisions of Section 4.13 and the
exercise of Good Utility Practices.
"Maintenance and Capital Expenditures Amount" means
(i) the aggregate amount of all funds actually expended by
Seller (and amounts due from Seller to third parties at the
time of the Closing in respect of work actually performed by
such third parties, to the extent such amounts are not Assumed
Liabilities) with respect to Maintenance Expenditures and
Capital Expenditures in each case which are identified in the
Budget during the period beginning on the date one (1) year
prior to the Closing and ending on the Closing (or such
shorter period if the Closing occurs less than one year from
the date hereof) up to but not exceeding $6,380,000 in the
aggregate; and (ii) 85% of all Emergency Expenditures made by
Seller in accordance with Section 4.13 (if any, during such
one (1) year (or shorter) period described above). The
Maintenance and Capital Expenditures Amount shall not include
any Capital Expenditures ,Maintenance Expenditures or
Emergency Expenditures with respect to assets or properties
that are not transferred to Purchaser under this Agreement.
"MPC" means The Montana Power Company, a Montana
corporation and the operator of the Colstrip Facilities.
"MPC Purchase Agreement" means the Asset Purchase
Agreement, dated as of the date hereof, by and between
Purchaser and MPC, together with any amendments thereto.
"Off-Site Environmental Liabilities" means any
liabilities, obligations or responsibilities under or related
to former, current or future Environmental Laws or the common
law, whether such liability, obligation or responsibility is
known or unknown, contingent or accrued, arising as a result
of or in connection with Seller's storage, disposal,
transportation, discharge, Release or recycling of Hazardous
Materials prior to the Closing at or to locations other than
the Real Property constituting the Assets, provided that
liabilities attributable to migration of Hazardous Materials
from the Real Property constituting the Assets shall not
constitute Off-Site Environmental Liabilities.
"Operative Agreements" means, collectively, this
Agreement, the General Assignment and the other Assignment
Instruments, the Assumption Agreement, the other Assumption
Instruments, the Wholesale Transition Service Agreement, the
Contribution Agreement, the Transmission Service Agreement (if
required), and any support or other agreements to be entered
into at the Closing in connection with the transaction.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in
each such case whether preliminary or final).
"Parent" has the meaning ascribed to it in the forepart
of this Agreement.
"Permitted Lien" means (i) those Liens and exceptions to
title to the Assets (except Easements) set forth in Section
12.01(e) of the Disclosure Schedule; (ii) the Easements;
(iii) when such term is used with respect to any date before
the Closing, Liens created by the Indenture; (iv) any Lien for
Taxes not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP; (v) when such
term is used with respect to any date prior to the Closing,
any statutory Lien arising in the ordinary course of business
by operation of Law with respect to a Liability that is not
yet due or delinquent; (vi) zoning, entitlement, conservation
restriction and other land use and environmental regulations
by any Governmental or Regulatory Authority; and (vii) any
minor imperfection of title or similar Lien, limited in the
case of items (i) - (vii) (excluding clause (ii)) to only
those matters which, individually or in the aggregate with
other such Liens do not materially detract from the value of
the Assets as currently used or materially interfere with the
ownership, operation and maintenance of the Assets.
"Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, limited
liability company, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"PGE" means Portland General Electric Company, an Oregon
corporation.
"Pollution Control Bonds" means (a) Pollution Control
Revenue Refunding Bonds, Series 1993, due March 1, 2020, of
the City Forsyth, Montana ("Forsyth") in the original
principal amount of $23,460,000, (b) Pollution Control Revenue
Refunding Bonds, Series 1992, due March 1, 2022, of Forsyth in
the original principal amount of $87,500,000, and
(c) Pollution Control Revenue Refunding Bonds, Series 1991A
and 1991B (AMT), due August 1, 2021 of Forsyth in the original
principal amounts of $27,500,000 and $23,400,000,
respectively.
"Pollution Control Facilities" means the facilities
financed with the Pollution Control Bonds described in
Exhibit C hereto.
"Portland Closing Date" means the date on which the
closing of the transactions contemplated by the Asset Purchase
Agreement, dated as of the date hereof, by and between
Purchaser and PGE occurs.
"Post-Closing Covenants" has the meaning ascribed to it
in Section 9.01(b).
"Potentially Responsible Party" has the meaning ascribed
to it in CERCLA.
"PPUC Order" means the Opinion and Order adopted by PPUC
on February 9, 1995 in Pennsylvania Power & Light Company's
application for approval of certain transactions in connection
with the utility's establishment of a holding company
structure.
"Pre-Closing Covenants" has the meaning ascribed to it in
Section 9.01(b).
"Pre-Closing Environmental Liabilities" means those
Environmental Liabilities attributable to the period on or
prior to the Closing;
"Pre-Closing Known Remedial Liabilities" means the subset
of Pre-Closing Environmental Liabilities that are described in
paragraph (d) of the definition of Environmental Liabilities
and that are attributable to the matters set forth in Schedule
I hereto.
"Pre-Closing Known and Unknown Remedial Liabilities"
means all Pre-Closing Known Remedial Liabilities and Pre-
Closing Unknown Remedial Liabilities arising from or relating
to the ownership, operation and maintenance of the PSE
Colstrip Interests, to the extent such PSE Colstrip Interests
or any portion thereof are acquired by Purchaser.
"Pre-Closing Unknown Remedial Liabilities" means the
subset of Pre-Closing Environmental Liabilities that are
described in paragraph (d) of the definition of Environmental
Liabilities and that are not attributable to the matters set
forth in Schedule I hereto.
"PSE Colstrip Interests" means Seller's undivided 50%
interest in Colstrip Units 1&2 and Seller's undivided 25%
interest in Colstrip Units 3&4, together with its interest in
the Common Facilities as provided in the Colstrip Contracts
and the PSE Colstrip Transmission Assets.
"PSE Colstrip Transmission Assets" means Seller's right,
title and interest in and to the 500 kV transmission system,
including related facilities, real property and property
rights, for the transmission of power from the PSE Colstrip
Interests to Bonneville Power Administration's transmission
system near Townsend, Montana, as described in Section
1.01(a)(xv) of the Disclosure Schedule.
"PSE Transmission Amount" means an amount equal to
$88,600,000.
"Purchase Price" has the meaning ascribed to it in
Section 1.03(a).
"Purchaser" has the meaning ascribed to it in the
forepart of this Agreement.
"Purchaser Financing" has the meaning ascribed to it in
Section 5.07.
"Purchaser Group" has the meaning ascribed to it in
Section 10.01(a).
"Purchaser Material Adverse Effect" means any change or
effect after the Bid Date that is individually, or in the
aggregate, materially adverse to (a) the business, operations,
property or condition (financial or otherwise) of Purchaser
and its subsidiaries, taken as a whole, (b) the ability of
Purchaser and each of its subsidiaries, taken as a whole, to
perform their respective obligations under this Agreement or
any of the other Operative Agreements or (c) the validity or
enforceability of this Agreement or any of the other Operative
Agreements, or the rights or remedies of Purchaser hereunder
or thereunder.
"Purchaser Required Regulatory Approvals" means
(i) pursuant to Part II of the Federal Power Act, acceptance
for filing and effectiveness or authorization by Final Order
of FERC, as applicable, to allow Purchaser to (A) implement
wholesale sales of electricity under the Wholesale Transition
Service Agreement and any other jurisdictional agreements to
be assigned to Purchaser, (B) acquire, own and operate the
Assets, and (C) sell electricity at wholesale at market-based
rates; (ii) a Final Order of FERC certifying Purchaser as an
exempt wholesale generator pursuant to Section 32 of the
Holding Company Act; provided however, that in the event
Purchaser does not obtain such certification with respect to
the acquisition and ownership of the PSE Transmission Assets,
then the provisions of Section 1.10 shall apply with respect
to such Assets, and provided further that in any case such
certification will be a Purchaser Required Regulatory Approval
with respect to all other Assets; (iii) Final Orders of the
WUTC, Montana Public Service Commission and the Oregon Public
Utility Commission, if required, including the determinations
required by Section 32(c) of the Holding Company Act for the
Assets to be eligible facilities of Purchaser as an exempt
wholesale generator; (iv) approval or authorization by Final
Order of the Pennsylvania Public Utility Commission pursuant
to the PPUC Order, if required; (v) other Licenses,
Environmental Permits and approvals or authorizations of any
other Governmental or Regulatory Authority reasonably
necessary pursuant to any Law for Purchaser to own and operate
the Assets other than authorizations or approvals, the lack of
which would not materially detract from the value of the
Assets as currently used or materially interfere with the
ownership, operation and maintenance of the Assets; and (vi)
expiration or early termination of the HSR Act waiting period.
"Qualified Transfer" means a sale or other disposition of
the Pollution Control Facilities to a transferee who is
reasonably expected to use the Pollution Control Facilities in
such a way that they are treated as qualified pollution
control facilities within the meaning of Section 103(b)(4)(F)
of the Internal Revenue Code as in effect prior to the
enactment of Public Law No. 99-514 (the "Tax Reform Act of
1986").
"Real Property" has the meaning ascribed to it in Section
1.01(a)(i).
"Real Property Leases" has the meaning ascribed to it in
Section 1.01(a)(ii).
"Release" means any release, spill, emission, pouring,
leaking, pumping, injection, deposit, disposal, discharge,
emptying, dispersal, dumping, leaching or migration into or
through the indoor or outdoor environment, including the
movement of Hazardous Materials through ambient air, soil,
surface water, ground water, wetlands, land, surface or
subsurface strata.
"Representatives" has the meaning ascribed to it in
Section 4.03.
"Resolution Period" means the period ending sixty (60)
days following receipt by an Indemnified Party of a written
notice from an Indemnifying Party stating that it disputes all
or any portion of a claim set forth in a Claim Notice or an
Indemnity Notice.
"Retained Liabilities" has the meaning ascribed to it in
Section 1.02(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Seller" has the meaning ascribed to it in the forepart
of this Agreement.
"Seller Group" has the meaning ascribed to it in Section
10.01(c).
"Seller Material Adverse Effect" means any change in or
effect on any of the Assets or the operation of any of the
Assets after the Bid Date that is materially adverse to the
ownership, business, assets, operations or condition
(financial or otherwise) of (A) in the case of the PSE
Colstrip Interests, the PSE Colstrip Interests or (B) in the
case of the PSE Colstrip Transmission Assets, (unless the
provisions of Section 1.10 or 6.12 have become effective) the
PSE Colstrip Interests or the PSE Colstrip Transmission
Assets, in each case taken as a whole, other than (i) any
change resulting from changes in the international, national,
regional or local wholesale or retail markets for electricity,
(ii) any change resulting from changes in the international,
national, regional or local markets for any fuel used at the
Colstrip Facilities, (iii) any change resulting from changes
in the North American, national, regional or local electricity
transmission systems, and (iv) changes in Law that apply
generally to similarly situated persons, and (v) any
materially adverse change in the Assets which is cured
(including by payment of money) by Seller before the earlier
of the Closing Date and the Termination Date.
"Seller Required Regulatory Approvals" means (i) the
approval, if required, of the SEC pursuant to the Holding
Company Act, (ii) the filings by Seller and Purchaser required
by the HSR Act and the expiration or earlier termination of
all waiting periods under the HSR Act, (iii) a Final Order(s)
of the WUTC approving the transaction and the terms and
conditions of each of the Operative Agreements and the
respective regulatory treatment of any and all financial
impacts thereof, in each case in form and substance
satisfactory to Seller in its reasonable discretion, and (iv)
a Final Order(s) of the FERC approving the transaction or any
aspects thereof over which FERC has jurisdiction, including
the approval, if necessary, of the Transmission Service
Agreement, in form and substance reasonably satisfactory to
Seller.
"Separation Document" means the separation document to be
agreed to by the parties in the event the PSE Transmission
Assets are not purchased by Purchaser.
"Site Representatives" has the meaning ascribed to it in
Section 4.10.
"Tangible Personal Property" has the meaning ascribed to
it in Section 1.01(a)(iv).
"Tax Representation" has the meaning ascribed to it in
Section 9.01(a).
"Tax Returns" means any return, report, information
return or other document (including any related or supporting
information) required to be supplied to any taxing authority
with respect to Taxes.
"Taxes" means all taxes, charges, fees, levies,
penalties, or other assessments imposed by any United States
Federal, state or local or foreign taxing authority, including
but not limited to, income, excise, property, sales, transfer,
franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions
attributable thereto.
"Tenant Security Deposits" has the meaning ascribed to it
in Section 1.01(a)(viii).
"Third Party Claim" has the meaning ascribed to it in
Section 10.02(a).
"Title Representation" has the meaning ascribed to it in
Section 9.01(a).
"Transferable Permits" has the meaning ascribed to it in
Section 1.01(a)(vi).
"Transfer Taxes" means all Taxes in the nature of sales,
use, transfer, recording, value added or forms of conveyance
taxes.
"Transmission Service Agreement" means an agreement
between Seller and Purchaser for Purchaser to purchase firm
point-to-point transmission service from Seller on the PSE
Colstrip Transmission Assets for a term of twenty-five (25)
year pursuant to the terms and conditions of Seller's Open
Access Transmission Tariff from time to time in effect and
accepted for filing by the FERC.
"Wholesale Transition Service Agreement" has the meaning
ascribed to it in Section 6.10.
"WUTC" means the Washington Utilities and Transportation
Commission.
"WWP" means The Washington Water Power Company, a
Washington corporation.
(b) Construction of Certain Terms and Phrases. Unless
the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the
singular or plural number also include the plural or singular
number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire
Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; (v) "include"
or "including" means including without limiting the generality
of any description preceding such term, and (vi) the phrase
"ordinary course of business" refers to the business of Seller
in connection with the ownership of the PSE Colstrip Interests
and the performance of its obligations under the Colstrip
Contracts. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days
are specified. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them
under GAAP. Any representation or warranty contained herein as
to the enforceability of a Contract shall be subject to the
effect of any bankruptcy, insolvency, reorganization,
moratorium or other similar law affecting the enforcement of
creditors' rights generally and to general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at Law).
ARTICLE XIII
MISCELLANEOUS
13.01 Notices
All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given
only if delivered personally or by facsimile transmission or
mailed (first class postage prepaid) to the parties at the
following addresses or facsimile numbers:
If to Purchaser, to:
PP&L Global, Inc.
00000 Xxxxxx Xxxxx Xx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Counsel
with a copy to:
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxx
If to Seller, to:
Puget Sound Energy, Inc.
000 - 000xx Xxxxxx X.X.
Xxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. XxXxxx
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxx
All such notices, requests and other communications will
(i) if delivered personally to the address as provided in this
Section, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in
this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt (in
each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy
of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to
time may change its address, facsimile number or other
information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
13.02 Bulk Sales Act
The parties hereby waive compliance with the bulk sales
act or comparable statutory provisions of each applicable
jurisdiction. Seller shall indemnify Purchaser and its
officers, directors, employees, agents and Affiliates in
respect of, and hold each of them harmless from and against,
any and all Losses suffered, occurred or sustained by any of
them or to which any of them becomes subject, resulting from,
arising out of or relating to the failure of Seller to comply
with the terms of any such provisions applicable to the
transactions contemplated by this Agreement.
13.03 Entire Agreement
This Agreement and the Operative Agreements and the other
exhibits, schedules, documents, certificates and instruments
executed and delivered pursuant to this Agreement supersede
all prior discussions and agreements between the parties with
respect to the subject matter hereof and thereof, including
that certain confidentiality agreement between Purchaser and
MPC dated April 8, 1998, as agreed to include Seller, and
contain the sole and entire agreement between the parties
hereto with respect to the subject matter hereof and thereof.
13.04 Expenses
Except as otherwise expressly provided in this Agreement
(including as provided in Section 11.02), whether or not the
transactions contemplated hereby are consummated, each party
will pay its own costs and expenses incurred in connection
with the negotiation, execution and closing of this Agreement
and the Operative Agreements and the transactions contemplated
hereby and thereby.
13.05 Public Announcements
At all times at or before the Closing, Seller and
Purchaser will not issue or make any reports, statements or
releases to the public or generally to the employees,
customers, suppliers or other Persons with whom Seller has
significant business relationships in connection with the PSE
Colstrip Interests with respect to this Agreement or the
transactions contemplated hereby without the consent of the
other, which consent shall not be unreasonably withheld. If
either party is unable to obtain the approval of its public
report, statement or release from the other party and such
report, statement or release is, in the opinion of legal
counsel to such party, required by Law in order to discharge
such party's disclosure obligations, then such party may make
or issue the legally required report, statement or release and
promptly furnish the other party with a copy thereof. Seller
and Purchaser will also obtain the other party's prior
approval of any press release to be issued immediately
following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
13.06 Confidentiality
Each party hereto will hold, and will use its best
efforts to cause its Affiliates, and their respective
Representatives to hold, in strict confidence from any Person
(other than any such Affiliate or Representative), unless (i)
compelled to disclose by judicial or administrative process
(including in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated
hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or
Proceeding brought by a party hereto in pursuit of its rights
or in the exercise of its remedies hereunder, all documents
and information concerning the other party or any of its
Affiliates furnished to it by the other party or such other
party's Representatives in connection with this Agreement or
the transactions contemplated hereby, except to the extent
that such documents or information can be shown to have been
(a) previously known by the party receiving such documents or
information, (b) in the public domain (either prior to or
after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c)
later acquired by the receiving party from another source if
the receiving party is not aware that such source is under an
obligation to another party hereto to keep such documents and
information confidential; provided that following the Closing
the foregoing restrictions will not apply to Purchaser's use
of documents and information concerning the Assets or the
Assumed Liabilities furnished by Seller hereunder. Purchaser
shall have the right to disclose Information of Seller with
respect to the Assets to potential lenders and their
respective representatives in connection with financing the
transactions contemplated by this Agreement and to third
parties in connection with planning for operations of the
Assets following the Closing, provided that any such
disclosure is made pursuant to confidentiality obligations
equivalent to those provided in this Section 13.06; provided,
further, if such third parties are involved in the energy
industry then Purchaser shall not disclose information of
Seller to such Persons without the written consent of Seller
which shall not be unreasonably withheld. In the event the
transactions contemplated hereby are not consummated, upon the
request of the other party, each party hereto will, and will
cause its Affiliates and their respective Representatives to,
promptly (and in no event later than five (5) Business Days
after such request) redeliver or cause to be redelivered all
copies of confidential documents and information furnished by
the other party in connection with this Agreement or the
transactions contemplated hereby and destroy or cause to be
destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based
thereon prepared by the party furnished such documents and
information or its Representatives.
13.07 Waiver
Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any
term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of
the same or any other term or condition of this Agreement on
any future occasion. All remedies, either under this Agreement
or by Law or otherwise afforded, will be cumulative and not
alternative.
13.08 Amendment
This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of
each party hereto.
13.09 No Third Party Beneficiary
The terms and provisions of this Agreement are intended
solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the
intention of the parties to confer third party beneficiary
rights upon any other Person other than any Person entitled to
indemnity under Article X.
13.10 No Assignment; Binding Effect
Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto
and any attempt to do so will be void, except (a) for
assignments and transfers by operation of Law, (b) that Seller
may assign its rights, interests or obligations hereunder, in
whole or in part, to an Affiliate, and (c) that Purchaser may
assign any or all of its rights, interests and obligations
hereunder (including without limitation, its rights under
Article X) to (i) a direct or indirect wholly-owned
subsidiary, provided that any such subsidiary agrees in
writing to be bound by all of the terms, conditions and
provisions contained herein (in which event, from the date of
such assignment and subject to the other provisions of this
Section 13.10, such assignee shall be the Purchaser for the
purposes of this Agreement), or (ii) any lender providing
purchase money or other financing to Purchaser from time to
time as collateral security for such financing, but no such
assignment referred to in clauses (b) or (c) shall relieve the
assigning party of its obligations hereunder provided that no
such assignment by Seller or Purchaser adversely affects the
availability or timing of any Federal, state or local
government consent or approval required for the consummation
of the transactions contemplated hereby. Subject to the
preceding sentence, this Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
13.11 Headings
The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit
the provisions hereof. Neither party shall be deemed to have
been the drafter of this Agreement, which is the product of
detailed, arm's-length negotiations between the parties and
their respective counsel.
13.12 Invalid Provisions
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and
if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part
hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its
severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as
a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
13.13 Governing Law
This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York applicable
to a contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof.
13.14 Counterparts
This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same
instrument.
13.15 Consent to Assignment
Seller agrees to consent, effective as of the closing
under the MPC Purchase Agreement, to the assignment by MPC to
Purchaser of MPC's rights and obligations under the Power
Sales Agreement dated October 1, 1989, as amended, between
Seller and MPC, provided that the terms of such assignment are
reasonably satisfactory to Seller.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officer of each party as
of the date first above written.
PP&L GLOBAL, INC.
By: /s/ XXXX X. XXXXXXXXX
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
PUGET SOUND ENERGY, INC.
By: /s/ XXXXX XXXXXX
Name: Xxxxxxx X. XxXxxx
Title: Vice President
Schedule I
Pre-Closing Known Remedial Liabilities
Hazardous contamination identified in the report entitled
Phase II Investigation dated August 1998 for the Colstrip
Project prepared for Montana Power Company by Pilko &
Associates, Inc.
EXHIBIT A
GENERAL ASSIGNMENT AND XXXX OF SALE
THIS GENERAL ASSIGNMENT AND XXXX OF SALE is entered into
this ____ day of ________, [1999] by and between [PP&L Global,
Inc.], a Pennsylvania corporation ("Purchaser"), and Puget
Sound Energy, Inc., a Washington corporation ("Seller").
WHEREAS, Purchaser and Seller have entered into an Asset
Purchase Agreement, dated as of October __, 1998 (the "Asset
Purchase Agreement"; capitalized terms not defined herein
shall have the meanings ascribed to them in the Asset Purchase
Agreement), pursuant to which Seller has agreed to sell,
transfer, convey, assign and deliver to Purchaser and
Purchaser has agreed to purchase and acquire from Seller the
PSE Colstrip Interests and certain other assets of Seller used
or held for use principally in connection with the operation
of the PSE Colstrip Interests, and Purchaser has agreed, in
partial consideration therefor, to assume certain obligations
in connection therewith by executing an Assumption Agreement
of even date herewith;
WHEREAS, Seller desires to transfer and assign to
Purchaser the assets described below pursuant to Section 1.05
of the Asset Purchase Agreement and Purchaser desires to
accept the sale, transfer, conveyance, assignment and delivery
thereof;
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, Seller hereby irrevocably sells, transfers,
conveys, assigns and delivers to Purchaser all of Seller's
right, title and interest in, to and under the Assets, free
and clear of all Liens except Permitted Liens (as such term is
defined in the Asset Purchase Agreement with respect to
periods after the Closing Date), TO HAVE AND TO HOLD the same
unto Purchaser, its successors and assigns, forever.
Purchaser hereby accepts the sale, transfer, conveyance,
assignment and delivery of the Assets. Notwithstanding
anything herein to the contrary, the Excluded Assets are
specifically excluded from the Assets and shall be retained by
Seller at and following the Closing Date.
At any time or from time to time after the date hereof,
at Purchaser's request and without further consideration,
Seller shall execute and deliver to Purchaser such other
instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take
such other actions as Purchaser may reasonably deem necessary
or desirable in order more effectively to transfer, convey and
assign to Purchaser, and to confirm Purchaser's title to, all
of the Assets, and, to the full extent permitted by Law, to
put Purchaser in actual possession and operating control of
the Assets and to assist Purchaser in exercising all rights
with respect thereto.
Seller hereby constitutes and appoints Purchaser the true
and lawful attorney of Seller, with full power of
substitution, in the name of Seller or Purchaser, but on
behalf of and for the benefit of Purchaser: (i) to demand and
receive from time to time any and all of the Assets and to
make endorsements and give receipts and releases for and in
respect of the same and any part thereof; (ii) to institute,
prosecute, compromise and settle any and all Actions or
Proceedings that Purchaser may deem proper in order to
collect, assert or enforce any claim, right or title of any
kind in or to the Assets; (iii) to defend or compromise any or
all Actions or Proceedings in respect of any of the Assigned
Assets; and (iv) to do all such acts and things in relation to
the matters set forth in the preceding clauses (i) through
(iii) as Purchaser shall deem desirable. Seller hereby
acknowledges that the appointment hereby made and the powers
hereby granted are coupled with an interest and are not and
shall not be revocable by it in any manner or for any reason.
Purchaser shall indemnify and hold harmless Seller and its
officers, directors, employees, agents and Affiliates from any
and all Losses caused by or arising out of any breach of Law
by Purchaser in its exercise of the aforesaid powers.
This General Assignment and Xxxx of Sale may be executed
in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and
the same instrument.
This General Assignment and Xxxx of Sale and all of the
provisions hereof shall be binding upon and shall inure to the
benefit of the respective parties and their assigns,
transferees and successors.
This General Assignment and Xxxx of Sale shall be
governed by and construed in accordance with the laws of the
State of New York applicable to a contract executed and
performed in such State without giving effect to the conflicts
of laws principles thereof, except that if it is necessary in
any other jurisdiction to have the law of such other
jurisdiction govern this General Assignment and Xxxx of Sale
in order for this General Assignment and Xxxx of Sale to be
effective in any respect, then the laws of such other
jurisdiction shall govern this General Assignment and Xxxx of
Sale to such extent.
This General Assignment and Xxxx of Sale is delivered
pursuant to and is subject to the Asset Purchase Agreement.
In the event of any conflict between the terms of the Asset
Purchase Agreement and the terms of this General Assignment
and Xxxx of Sale, the terms of the Asset Purchase Agreement
shall prevail.
IN WITNESS WHEREOF, the undersigned have caused their
duly authorized officers to execute this General Assignment
and Xxxx of Sale on the day and year first above written.
[PP&L GLOBAL, INC.]
By:____________________________
Name:
Title:
PUGET SOUND ENERGY, INC.
By:____________________________
Name:
Title:
EXHIBIT B
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is entered into this ____ day
of _______, [1999] by and between [PP&L Global, Inc.], a
Pennsylvania corporation ("Purchaser"), and Puget Sound
Energy, Inc., a Washington corporation ("Seller").
WHEREAS, Purchaser and Seller have entered into an Asset
Purchase Agreement, dated as of October __, 1998 (the "Asset
Purchase Agreement"; capitalized terms not defined herein
shall have the meanings ascribed to them in the Asset Purchase
Agreement), pursuant to which Seller has agreed to sell,
transfer, convey, assign and deliver to Purchaser and
Purchaser has agreed to purchase from Seller the PSE Colstrip
Interests and certain other assets of Seller used or held for
use principally in connection with the operation of the PSE
Colstrip Interests, and Purchaser has agreed, in partial
consideration therefor, to assume certain obligations in
connection therewith by executing this Assumption Agreement;
WHEREAS, pursuant to Section 1.05 of the Asset Purchase
Agreement, Purchaser is required to execute and deliver to
Seller this Agreement whereby Purchaser assumes the Assumed
Liabilities;
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, Purchaser hereby undertakes and agrees from and
after the date hereof, subject to the limitations contained
herein, to assume and to pay, perform and discharge when due
the Assumed Liabilities.
Nothing contained herein shall require Purchaser to pay
or discharge any debts or obligations expressly assumed hereby
so long as Purchaser shall in good faith contest or cause to
be contested the amount or validity thereof.
Except for the Assumed Liabilities, Purchaser assumes no
debt, liability or obligation of Seller, including without
limitation the Retained Liabilities, by this Assumption
Agreement, and it is expressly understood and agreed that all
debts, liabilities and obligations not assumed hereby by
Purchaser shall remain the sole obligation of Seller, its
successors and assigns.
No Person other than Seller, its successors and assigns
shall have any rights under this Assumption Agreement or the
provisions contained herein.
This Assumption Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same
instrument.
This Assumption Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the
respective parties and their assigns, transferees and
successors.
This Assumption Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applicable to a contract executed and performed in such State
without giving effect to the conflicts of laws principles
thereof, except that if it is necessary in any other
jurisdiction to have the law of such other jurisdiction govern
this Assumption Agreement in order for this Assumption
Agreement to be effective in any respect, then the laws of
such other jurisdiction shall govern this Assumption Agreement
to such extent.
This Assumption Agreement is delivered pursuant to and is
subject to the Asset Purchase Agreement. In the event of any
conflict between the terms of the Asset Purchase Agreement and
the terms of this Assumption Agreement, the terms of the Asset
Purchase Agreement shall prevail.
IN WITNESS WHEREOF, the undersigned have caused their
duly authorized officers to execute this Assumption Agreement
on the day and year first above written.
[PP&L GLOBAL, INC.]
By:____________________________
Name:
Title:
PUGET SOUND ENERGY, INC.
By:______________________________
Name:
Title:
EXHIBIT C
POLLUTION CONTROL FACILITIES
1. POLLUTION CONTROL EQUIPMENT
Scrubber System
The air pollution control facilities employed on Units #3 and
#4 consist of a complete scrubber system, including duct work,
plenums, scrubber vessels, reheaters and induced draft fans,
together with infrastructures, monitoring and electrical
controls and instrumentation therefore, for the purpose of
removing the sulfur dioxide (SO2) and particulate matter from
the flue gas. The scrubber system also includes a scrubber
maintenance facility, including a machine shop and laboratory
dedicated to the scrubber system and an environment monitoring
laboratory for the pollution control facilities. The scrubber
system utilizes the Wet Venturi Principle and consists of
eight modules for each unit through which the steam generator
gases from the burned coal must pass.
The gases in the scrubber are contacted with finely atomized
scrubber slurry. Within the stated performance of the system,
fly ash particulates are removed by the slurry droplets. The
sulfur dioxide reacts with the alkali contained in the slurry
which results from the mixing of water, fly ash particulates,
hydrated high calcium lime and hydrated dolomitic lime. A
major portion of the sulfur dioxide is converted to solid
sulfate compounds which are retained in the scrubber liquid
and can, therefore, be piped to and deposited in an ash pond
together with the particulate.
After the flue gas passes through the venturi section,
absorption sprays and wash trays, it is processed through a
demister which removes any entrained slurry and is then
reheated and discharged through the stack.
The slurry system in the Units #3 and #4 scrubber system
consists of recycle tanks, regenerators, agitators, pumps and
pipelines. The slurry from the Units #3 and #4 scrubber system
is transported to an effluent holding pond and involves the
use of effluent holding tanks, agitators, pumps and pipelines.
A separate wash tray pond System is used to store the
suspended solids collected from the wash tray system.
Reclaimed water from the clear water section of these ponds is
circulated back to the scrubber system.
Lime Storage
The sole purpose of the lime system is to supply the lime
slurry requirements of the scrubber regeneration system. There
is one lime system that serves the sixteen scrubbers for Units
#3 and #4. Major components of the system include four
slakers, in which calcined high calcium lime is reacted with
water to produce a hydrated lime slurry, slurry transfer
tanks, where the slurry is diluted with water and mixed with
dry hydrated dolomitic lime, slurry feed storage tanks, where
the slurry will be held for use by the regenerators as needed,
hydrators, for mixing calcined dolomitic lime with water, and
agitators.
Scrubber Sludge Disposal
Effluent slurry is pumped from the plant to the sludge
disposal pond located approximately three miles southeast of
the plant. The suspended solids settle to the pond bottom and
the clear water is pumped back to the plant.
There are two phases in the development of this pond. The
first phase requires the construction of one dam 108 feet high
and 1,100 feet in length. A saddle dam must also be added. The
saddle dam will vary in height with a maximum height for this
phase of 36 feet and be approximately 2,800 feet in length.
The capacity of Phase I will be 6,650 acre-feet and it will
last approximately 10 years.
The development of the second phase will require that the
original dam be raised to 138 feet in height and increased to
a length of 2,500 feet. The saddle dam will be raised to a
maximum height of 66 feet and a total length of 3,500 feet.
The capacity of the second phase will be an additional 7,000
acre-feet and it will last approximately 12 years, for a total
life of 22 years.
The sludge disposal pond design takes into account a permit
requirement for minimum seepage, by providing low permeability
plastic concrete filled trenches around the periphery of the
pond constructed during the course of Phase I work.
Coal Dust Control System
The coal dust control system is designed to collect, store and
treat coal dust resulting from mining, crushing, handling and
storing coal in the course of normal Units #3 and #4
operations. To control coal dust air pollution the points
where coal is transferred between conveyors or placed in coal
piles have been enclosed. The coal transfer stations between
conveyors are enclosed with steel framed structures with metal
siding. The structures are equipped with vacuum filtration
systems, consisting of ducts, blowers, dust removal filters
and associated equipment, to remove coal dust from exhaust air
from the structures, and are also equipped with mechanical
dust collectors. The mainline 45,000 ton coal storage pile is
enclosed with a 340' long A-frame precast panel concrete
structure designed to contain coal dust, thereby allowing its
removal and treatment.
Cooling Tower Drift Containment Control Facility
Operation of the cooling towers produces exhaust air emissions
containing circulating water, particulates and other
pollutants generally known as cooling tower drift. To control
release of these air pollutants, the cooling towers are
provided with high efficiency drift eliminators, located at
the top of the cooling tower structures, which remove drift
from the cooling tower exhaust air.
2. SOLID WASTE DISPOSAL
Bottom Ash Disposal
The function of the bottom ash disposal system is to remove
accumulations of furnace bottom ash, pulverizer pyrites,
economizer ash, and air preheater fly ash by means of a water-
ash slurry to a disposal pond located approximately 2,000 feet
southeast of the plant site. The system consists generally of
three sets of fly ash hoppers, (economizer, air heater, and
flue gas duct hoppers) pyrite hoppers, the bottom ash xxxxxx,
an 18,000 gallon transfer tank, a settling pond, a clear water
pond and various pumps, and pipelines.
Clinker grinders are used to grind the bottom ash which is
then mixed with water and sluiced to the ash transfer tank.
The economizer ash collected in economizer hoppers falls by
gravity to the ash transfer tank.
The pyrites are collected in local tanks and sluiced to the
ash transfer tank.
Ash collected in the flue gas duct hoppers and air preheater
hoppers is sluiced to the ash transfer tank.
These ashes are pumped from the ash transfer tank to the
bottom ash pond. Reclaimed water is returned from the bottom
ash disposal pond and redistributed to the various sections of
the bottom ash disposal system.
3. WATER POLLUTION CONTROL
North Plant Sediment Pond
The north plant sediment pond is designed to collect and store
the storm runoff from the general north plant area. These
waters are retrained in the pond, allowing natural evaporation
to desiccate the pond. This prevents high quantities of
suspended solids from being discharged to Armells Creek or
other state surface waters.
North Plant Area Drainage System
The north plant area drainage system is designed to collect
and store storm runoff from the water treatment building, fuel
oil handling area and the cooling tower area in the north
plant area drain pond. The pond also serves as a storage
facility for one cooling tower basin drain, cooling tower
overflow, water treatment filter backwash, and for the cooling
tower blowdown water not used in the flue gas scrubbing
process. These waters are potentially contaminated with oil
and high suspended and dissolved solids and this system stores
these discharges preventing any discharge to Armells Creek or
other state surface waters. The north plant area drainage
system consists of collection basins, piping, concrete
culverts, yard drains, manholes and special yard gradings
(berms) which route these discharges to the north plant area
sump and north plant area drain pond. The north plant area
drain pond incorporates a hypalon liner to comply with a
permit requirement for minimum seepage. The oil separator
section of the sump receives oily surface collection drains.
The oil and water are separated. The oil from the sump is
then trucked away for disposal.
The water discharges are either pumped to the scrubber
effluent holding pond via a 6" diameter pipeline, 19,000 feet
in length for evaporation, to the circulating water system, or
to the plant oily waste sump as appropriate. Each discharge
arrangement has its own set of sump pumps.
Chemical and Oily Waste System
The chemical and oily waste system is designed to collect,
store, treat and dispose of chemical and oily wastes resulting
from the normal operation of Units #3 and #4. This system
consists of drains and pipes, oil separators, chemical waste
sumps, chemical waste neutralizing tanks, neutralizing
chemical storage tanks, chemical inspection equipment, and
associated mechanical and electrical control equipment.
The chemical waste drainage system includes drains and
neutralization tanks for collection and treatment of chemical
waste. Chemical waste drains are located throughout Units #3
and #4, and are used to collect and transfer chemical waste to
holding sumps and neutralization tanks. The neutralization
equipment includes chemical storage and injection equipment as
well as controls and instrumentation.
The oily waste drainage system is made up of a network of
drains which connect oily waste from throughout Units #3 and
#4, and dispose of the wastes in the Units #3 and #4 main
water-oil sump. Oil separation xxxxxxxx in the sump allow for
oil removal. The treated water is monitored for trace oil
levels and released. After separation, the waste oil is
removed by a contractor to an offsite disposal area.
Cooling Tower Blowdown System
The cooling tower blowdown system consists of a 6" pipeline
from the cooling tower to the waste disposal pond where the
blowdown is treated by settlement and evaporation in
accordance with water pollution control requirements.
Groundwater Monitoring Xxxxx
Groundwater monitoring xxxxx have been installed around the
various ponds associated with the plant operation. These ponds
include the scrubber effluent holding pond, the scrubber drain
pond, the scrubber wash tray pond, the bottom ash pond, and
the north plant area effluent pond. These groundwater
monitoring xxxxx provide the ability through sampling to
detect and quantify accidental discharges from the above
mentioned plant storage and waste ponds. This is necessary to
show compliance with State Groundwater Standards and with
permit requirements for minimum seepage.
EXHIBIT D
PUGET SOUND ENERGY, INC.
Officer's Certificate
Puget Sound Energy, Inc., a Washington corporation
("Seller"), pursuant to Section 6.03 of the Asset Purchase
Agreement dated as of October __, 1998 (the "Asset Purchase
Agreement"; capitalized terms not defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement)
between PP&L Global, Inc., a Pennsylvania corporation, and
Seller, HEREBY CERTIFIES that:
(1) The representations and warranties made by Seller in
the Asset Purchase Agreement, taken as a whole, are true and
correct, in all material respects, on and as of the date
hereof as though made on and as of the date hereof or, in the
case of representations and warranties made by Seller as of a
specified date earlier than the date hereof, on and as of such
earlier date.
(2) The agreements, covenants and obligations required
by the Asset Purchase Agreement to be performed or complied
with by Seller at or before the Closing have been duly
performed or complied with in all material respects.
IN WITNESS WHEREOF, Seller has caused this Certificate to
be executed on its behalf by the undersigned on and as of the
____ day of ______, 1999.
PUGET SOUND ENERGY, INC.
By:_____________________
Name:
Title:
EXHIBIT E
PUGET SOUND ENERGY, INC.
[Assistant] Secretary's Certificate
I, __________, [Assistant] Secretary of Puget Sound
Energy, Inc., a Washington corporation ("Seller"), pursuant to
Section 6.03 of the Asset Purchase Agreement dated as of
October __, 1998 (the "Asset Purchase Agreement") between PP&L
Global, Inc., a Pennsylvania corporation, and Seller, DO
HEREBY CERTIFY on behalf of Seller as follows:
(1) Attached hereto as Exhibit A is a true, complete and
correct copy of the Restated Articles of Incorporation of
Seller and all amendments thereto (as so amended, the
"Articles of Incorporation"), and no amendment to the Articles
of Incorporation has been authorized or become effective since
the date of the last of such amendments, no amendment or other
document relating to or affecting the Articles of
Incorporation has been filed in the office of the Secretary of
State of the State of Washington since such date and no action
has been taken by Seller, its shareholders, directors or
officers in contemplation of the filing of any such amendment
or other document or in contemplation of the liquidation or
dissolution of Seller.
(2) Attached hereto as Exhibit B is a true, complete and
correct copy of the Bylaws of Seller, inclusive of all
amendments thereto as in full force and effect on the date
hereof and at all times since [date of last amendment].
(3) Attached hereto as Exhibit C is a true, complete and
correct copy of resolutions adopted by the Board of Directors
of Seller with respect to the Asset Purchase Agreement and the
Operative Agreements to which it is a party and the
transactions contemplated thereby, which resolutions were duly
and validly adopted at a meeting of the Board of Directors of
Seller on __________, 1998, at which a quorum was present and
acting throughout. All such resolutions are in full force and
effect on the date hereof in the form in which adopted and no
other resolutions have been adopted by the Board of Directors
of Seller or any committee thereof relating to the Asset
Purchase Agreement and the Operative Agreements to which it is
a party and the transactions contemplated thereby.
(4) Each of the following named individuals is a duly
elected or appointed, qualified and acting officer of Seller
who holds, and at all times since October __, 1998 [date of
execution of Asset Purchase Agreement] has held, the offices
set opposite such individual's name, and the signature written
opposite the name and title of such officer is such officer's
genuine signature:
[Name] [Title] ______________________________
[Name] [Title] ______________________________
[Name] [Title] ______________________________
[Name] [Title] ______________________________
IN WITNESS WHEREOF, Seller has caused this Certificate to
be executed on its behalf by the undersigned on and as of the
____ day of ________, [1999].
PUGET SOUND ENERGY, INC.
By:_______________________
Name:
Title:
I, __________, [title of officer] of Seller, DO HEREBY
CERTIFY on behalf of Seller that __________ is the duly
elected or appointed, qualified and acting [Assistant]
Secretary of Seller, and the signature set forth above is the
genuine signature of such officer.
_________________________
Name:
Title:
_______ __, [1999]
EXHIBIT G-1
Opinion of Counsel to Seller
(1) Seller is a corporation organized, existing and in
good standing under the laws of the State of Washington and
each state or other jurisdiction in which it is qualified to
do business as a foreign corporation by virtue of owning the
Assets or the PSE Colstrip Interests, and Seller has the
corporate power and authority to execute and deliver the Asset
Purchase Agreement and the Operative Agreements and to
consummate the transactions contemplated thereby; and the
execution and delivery of the Asset Purchase Agreement and the
Operative Agreements and the consummation of the sale of the
Assets contemplated thereby have been duly authorized by all
requisite corporate action taken on the part of Seller;
(2) the Asset Purchase Agreement and the Operative
Agreements have been duly executed and delivered by Seller and
(assuming that the Seller Required Regulatory Approvals and
the Purchaser Required Regulatory Approvals are obtained) are
valid and binding obligations of Seller, enforceable against
Seller in accordance with their terms;
(3) the execution, delivery and performance of the Asset
Purchase Agreement and the Operative Agreements by Seller will
not constitute a violation of the Restated Articles of
Incorporation or Bylaws, as currently in effect, of Seller;
(4) the General Assignment and Xxxx of Sale and other
documents described in Section 1.05(a) are in proper form to
transfer to Purchaser title to the Assets; and
(5) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by
Seller of the Closing other than (i) the Seller Required
Regulatory Approvals, all of which have been obtained and are
Final Orders and (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which if not obtained or made, would not, in the aggregate,
have a Seller Material Adverse Effect.
EXHIBIT G-2
Opinion of Outside Montana Counsel to Seller
(1) The Agreement and the Operative Agreements to which
Seller is a party and which by its terms are governed by
Montana Law have been duly and validly executed and delivered
by Seller and, subject to receipt of Seller Required
Regulatory Approvals, Purchaser Required Regulatory Approvals
and third party consents specified in Section 6.07 of the
Disclosure Schedules and Section 6.07 of the Agreement, are
legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their terms, except as the
same may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar Laws relating to or
affecting the rights of creditors generally, and except as the
enforceability of the Purchase Agreement is subject to the
application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability
of specific performance, injunctive relief or any other
equitable remedy and (ii) concepts of materiality,
reasonableness, good faith and fair dealing;
(2) The Assignment Instruments which by their terms are
governed by Montana Law are in proper form and are effective
to transfer to Purchaser title to the Assets; and
(3) Except for Seller Required Regulatory Approvals, no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Seller is
required in connection with the execution, delivery and
performance of the Agreement or any of the Operative
Agreements to which it is a party or the consummation of the
transactions contemplated thereby, except those as would be
required solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the federal laws of
the United States or the laws of the State of Montana, such
counsel may, in lieu of rendering an opinion as to such
matter, deliver the opinions of counsel admitted in such other
jurisdictions. Such opinions may expressly rely as to matters
of fact upon certificates furnished by Seller and appropriate
officers and directors of Seller and by public officials.
Capitalized terms used but not defined herein shall have the
respective meanings given to such terms in the Purchase
Agreement.
EXHIBIT H
PP&L GLOBAL, INC.
Officer's Certificate
PP&L Global, Inc., a Pennsylvania corporation
("Purchaser"), pursuant to Section 7.03 of the Asset Purchase
Agreement dated as of October __, 1998 (the "Asset Purchase
Agreement"; capitalized terms not defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement)
between Purchaser and Puget Sound Energy, Inc., a Washington
corporation, HEREBY CERTIFIES that:
(1) The representations and warranties made by Purchaser
in the Asset Purchase Agreement, taken as a whole, are true
and correct in all material respects on and as of the date
hereof as though made on and as of the date hereof.
(2) The agreements, covenants and obligations required
by the Asset Purchase Agreement to be performed or complied
with by Purchaser at or before the Closing have been duly
performed or complied with in all material respects.
IN WITNESS WHEREOF, Purchaser has caused this Certificate
to be executed on its behalf by the undersigned on and as of
the ____ day of ________, [1999].
PP&L GLOBAL, INC.
By:______________________
Name:
Title:
EXHIBIT I
PP&L GLOBAL, INC.
[Assistant] Secretary's Certificate
I, __________, [Assistant] Secretary of PP&L Global,
Inc., a Pennsylvania corporation ("Purchaser"), pursuant to
Section 7.03 of the Asset Purchase Agreement dated as of
October __, 1998 (the "Asset Purchase Agreement") between
Purchaser and Puget Sound Energy, Inc., a Washington
corporation, DO HEREBY CERTIFY on behalf of Purchaser as
follows:
(1) Attached hereto as Exhibit A is a true, complete and
correct copy of the [Restated] Articles of Incorporation of
Purchaser and all amendments thereto (as so amended, the
"Articles of Incorporation"), and no amendment to the Articles
of Incorporation has been authorized or become effective since
the date of the last of such amendments, no amendment or other
document relating to or affecting the Articles of
Incorporation has been filed in the office of the Secretary of
State of the Commonwealth of Pennsylvania since such date and
no action has been taken by Purchaser, its stockholders,
directors or officers in contemplation of the filing of any
such amendment or other document or in contemplation of the
liquidation or dissolution of Purchaser.
(2) Attached hereto as Exhibit B is a true, complete and
correct copy of the By-Laws of Purchaser, inclusive of all
amendments thereto, as in full force and effect on the date
hereof and at all times since [date of last amendment].
(3) Attached hereto as Exhibit C is a true, complete and
correct copy of resolutions adopted by the Board of Directors
of Purchaser and PP&L Resources, Inc. ("Parent") with respect
to the Asset Purchase Agreement and the Operative Agreements
to which Purchaser is a party and the transactions
contemplated thereby, which resolutions were duly and validly
adopted at a meeting of the Board of Directors of Purchaser on
__________, 1998, and a meeting of the Board of Directors of
Parent on ________, 1998 at each of which a quorum was present
and acting throughout. All such resolutions are in full force
and effect on the date hereof in the form in which adopted and
no other resolutions have been adopted by the Board of
Directors of Purchaser or any committee thereof or the Board
of Directors of Parent or any committee thereof relating to
the Asset Purchase Agreement and the Operative Agreements to
which it is a party and the transactions contemplated thereby.
(4) Each of the following named individuals is a duly
elected or appointed, qualified and acting officer of
Purchaser who holds, and at all times since October __, 1998
[date of execution of Asset Purchase Agreement] has held, the
office set opposite such individual's name, and the signature
written opposite the name and title of such officer is such
officer's genuine signature:
[Name] [Title] ________________________________
[Name] [Title] ________________________________
[Name] [Title] ________________________________
IN WITNESS WHEREOF, Purchaser has caused this Certificate
to be executed on its behalf by the undersigned on and as of
the ____ day of ________, [1999].
PP&L GLOBAL, INC.
By:________________________
Name:
Title:
I, __________, [title of officer] of Purchaser, DO HEREBY
CERTIFY on behalf of Purchaser that __________ is the duly
elected or appointed, qualified and acting [Assistant]
Secretary of Purchaser, and the signature set forth above is
the genuine signature of such officer.
_________________________
Name:
Title:
_________ __, [1999]
EXHIBIT J
Opinion of Counsel to Purchaser
(1) Purchaser is a corporation organized, existing and
in good standing under the laws of the Commonwealth of
Pennsylvania, and has the corporate power and authority to
execute and deliver the Asset Purchase Agreement and the
Operative Agreements and to consummate the transactions
contemplated thereby; and the execution and delivery of the
Asset Purchase Agreement and the Operative Agreements and the
consummation of the sale and purchase of the Assets
contemplated thereby have been duly authorized by all
requisite corporate action taken on the part of the Purchaser;
(2) the Asset Purchase Agreement and the Operative
Agreements have been duly executed and delivered by Purchaser
and (assuming that the Seller Required Regulatory Approvals
and the Purchaser Required Regulatory Approvals are obtained)
are valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their
terms;
(3) the execution, delivery and performance of the Asset
Purchase Agreement and the Operative Agreements by Purchaser
will not constitute a violation of the Certificate of
Incorporation or Bylaws (or other similar governing
documents), as currently in effect, of the Purchaser;
(4) the Assumption Agreement and other instruments
described in Section 1.05(b) are in proper form and are
effective for Purchaser to assume the Assumed Liabilities; and
(5) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by
Purchaser of the Closing other than (i) the Purchaser Required
Regulatory Approvals, all of which have been obtained and are
Final Orders and (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which if not obtained would not prevent the payment by
Purchaser of the Purchase Price.
