Exhibit 10-MM
PRIVILEGED AND CONFIDENTIAL
[Keystone - Conemaugh]
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
BY AND AMONG
JERSEY CENTRAL POWER & LIGHT COMPANY and METROPOLITAN EDISON COMPANY as
SELLERS,
GPU, INC. and SITHE ENERGIES, INC., as BUYER
Dated as of October 29, 1998
TABLE OF CONTENTS
Page
ARTICLE I 2
1.1 Definitions 2
1.2 Certain Interpretive Matters 16
ARTICLE II 16
2.1 Transfer of Assets 16
2.2 Excluded Assets 18
2.3 Assumed Liabilities 19
2.4 Excluded Liabilities 21
2.5 Control of Litigation 24
2.6 Genco's Assets and Liabilities 24
ARTICLE III 24
3.1 Closing 24
3.2 Payment of Purchase Price 25
3.3 Adjustment to Purchase Price 25
3.4 Allocation of Purchase Price 27
3.5 Prorations 27
3.6 Deliveries by Seller 28
3.7 Deliveries by Buyer 30
3.8 Ancillary Agreements 31
ARTICLE IV 31
4.1 Incorporation; Qualification 31
4.2 Authority Relative to this Agreement 31
4.3 Consents and Approvals; No Violation 32
4.4 Insurance 32
4.5 Title and Related Matters 33
4.6 Real Property Leases 33
4.7 Environmental Matters 33
4.8 Labor Matters 34
4.9 Benefit Plans: ERISA 35
4.10 Real Property 36
4.11 Condemnation 36
4.12 Contracts and Leases 36
4.13 Legal Proceedings, etc 36
4.14 Permits 37
4.15 Taxes 37
4.16 Intellectual Property 38
4.17 Capital Expenditures 38
4.18 Compliance With Laws 38
4.19 PUHCA 38
4.20 Disclaimers Regarding Purchased Assets 38
ARTICLE IVA 40
4A.1. Incorporation; Qualification 40
4A.2. Authority Relative to this Agreement 40
4A.3. Consents and Approvals; No Violation 41
4A.4. Genco Tax Matters 41
4A.5 Subsidiaries 43
4A.6. Capitalization 43
4A.7. Operating Agreements 44
4A.8. Financial Statements 44
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER 44
5.1 Organization 44
5.2 Authority Relative to this Agreement 45
5.3 Consents and Approvals; No Violation 45
5.4 Availability of Funds 46
5.5 Legal Proceedings 46
5.6 No Knowledge of Sellers' Breach 46
5.7 Qualified Buyer 46
5.8 Inspections 46
5.9 WARN Act 47
5.10 Securities Laws 47
ARTICLE VI 47
6.1 Conduct of Business Relating to the Purchased Assets 47
6.2 Access to Information 49
6.3 Public Statements 52
6.4 Expenses 52
6.5 Further Assurances 52
6.6 Consents and Approvals 54
6.7 Fees and Commissions 56
6.8 Tax Matters 56
6.9 Advice of Changes 64
6.10 Employees 65
6.11 Risk of Loss 70
6.12 Additional Covenants of Buyer 71
6.13 Name Change 72
ARTICLE VII 72
7.1 Conditions to Obligations of Buyer 72
7.2 Conditions to Obligations of Sellers 76
7.3 Zoning Condition Adjustments 78
ARTICLE VIII 79
8.1 Indemnification 79
8.2 Defense of Claims 82
ARTICLE IX 84
9.1 Termination 84
9.2 Procedure and Effect of No-Default Termination 86
ARTICLE X 86
10.1 Amendment and Modification 86
10.2 Waiver of Compliance; Consents 86
10.3 No Survival 86
10.4 Notices 87
10.5 Assignment 88
10.6 Governing Law 88
10.7 Counterparts 89
10.8 Interpretation 89
10.9 Schedules and Exhibits 89
10.10 Entire Agreement 89
10.11 Bulk Sales Laws 90
10.12 U.S. Dollars 90
10.13 Zoning Classification 90
10.14 Sewage Facilities 90
10.15 GPU 90
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of October 29, 1998, by and among
Jersey Central Power & Light Company, a New Jersey corporation ("JCP&L"), and
Metropolitan Edison Company, a Pennsylvania corporation ("Met-Ed")(each a
"Seller" and collectively "Sellers"), GPU, Inc., a Pennsylvania corporation
("GPU"), and Sithe Energies, Inc., a Delaware corporation ("Buyer"). Sellers,
GPU and Buyer are referred to individually as a "Party," and collectively as the
"Parties."
W I T N E S S E T H
WHEREAS, Buyer desires to purchase, and Sellers desire to sell, their
interests in the Purchased Assets (as defined herein) upon the terms and
conditions hereinafter set forth in this Agreement;
WHEREAS, simultaneous herewith Buyer is entering into substantially
similar Purchase and Sale Agreements with Sellers' affiliates providing for
Buyer's purchase of the remainder of the Aggregate Purchased Assets (as
hereinafter defined); and
WHEREAS, Buyer desires to purchase, and GPU desires to sell, the Genco
Stock (as defined herein) upon the terms and conditions hereinafter set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms have the
meanings specified in this Section 1.1.
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934.
(2) "Agreement" means this Purchase and Sale Agreement together with the
Schedules and Exhibits hereto, as the same may be from time to time amended.
2
(3) "Aggregate Purchased Assets" means, collectively, the Purchased Assets
(as defined herein) and the Purchased Assets (as defined in each Related
Purchase Agreement).
(4) "Ancillary Agreements" means the Transition Power Purchase Agreements,
as the same may be from time to time amended.
(5) "Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Sellers and Buyer substantially in the form of
Exhibit A hereto, by which Sellers shall, subject to the terms and conditions
hereof, assign Sellers' Agreements, the Real Property Leases, certain intangible
assets and other Purchased Assets to Buyer and whereby Buyer shall assume the
Assumed Liabilities.
(6) "Assumed Liabilities" has the meaning set forth in Section 2.3.
(7) "Benefit Plans" has the meaning set forth in Section 4.9.
(8) "Bill of Sale" means the Bill of Sale, substantially in the form of
Exhibit B hereto, to be delivered at the Closing, with respect to the Tangible
Personal Property included in the Purchased Assets transferred to Buyer at the
Closing.
(9) "Business Day" shall mean any day other than Saturday, Sunday and any
day on which banking institutions in the State of New Jersey or the Commonwealth
of Pennsylvania are authorized by law or other governmental action to close.
(10) "Buyer Benefit Plans" has the meaning set forth in Section 6.10(f).
(11) "Buyer Indemnitee" has the meaning set forth in Section 8.1(b).
(12) "Buyer Material Adverse Effect" has the meaning set forth in Section
5.3(a).
(13) "Buyer Required Regulatory Approvals" has the meaning set forth in
Section 5.3(b).
(14) "Capital Expenditures" has the meaning set forth in Section 3.3(a).
(15) "CERCLA" means the Federal Comprehensive Environmental Response,
Compensation, and Liability Act, as amended.
3
(16) "Closing" has the meaning set forth in Section 3.1.
(17) "Closing Adjustment" has the meaning set forth in Section 3.3(b).
(18) "Closing Date" has the meaning set forth in Section 3.1.
(19) "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
(20) "Code" means the Internal Revenue Code of 1986, as amended.
(21) "Collective Bargaining Agreement" has the meaning set forth in
Section 6.10(d).
(22) "Commercially Reasonable Efforts" means efforts which are reasonably
within the contemplation of the Parties at the time of executing this Agreement
and which do not require the performing Party to expend any funds other than
expenditures which are customary and reasonable in transactions of the kind and
nature contemplated by this Agreement in order for the performing Party to
satisfy its obligations hereunder.
(23) "Computer Systems" has the meaning set forth in Section 4.20.
(24) "Confidentiality Agreement" means the Confidentiality Agreement,
dated March 2, 1998, by and between each Seller and Buyer.
(25) "Direct Claim" has the meaning set forth in Section 8.2(c).
(26) "Emission Allowance" means all present and future authorizations to
emit specified units of pollutants or Hazardous Substances, which units are
established by the Governmental Authority with jurisdiction over the Plants
under (i) an air pollution control and emission reduction program designed to
mitigate global warming, interstate or intra-state transport of air pollutants;
(ii) a program designed to mitigate impairment of surface waters, watersheds, or
groundwater; or (iii) any pollution reduction program with a similar purpose.
Emission Allowances include allowances, as described above, regardless as to
whether the Governmental Authority establishing such Emission Allowances
designates such allowances by a name other than "allowances."
4
(27) "Emission Reduction Credits" means credits, in units that are
established by the Governmental Authority with jurisdiction over the Plants that
have obtained the credits, resulting from reductions in the emissions of air
pollutants from an emitting source or facility (including, without limitation,
and to the extent allowable under applicable law, reductions from shut-downs or
control of emissions beyond that required by applicable law) that: (i) have been
identified by the PaDEP as complying with applicable Pennsylvania law governing
the establishment of such credits (including, without limitation, that such
emissions reductions are enforceable, permanent, quantifiable and surplus) and
listed in the Emissions Reduction Credit Registry maintained by the PaDEP or
with respect to which such identification and listing are pending; or (ii) have
been certified by any other applicable Governmental Authority as complying with
the law and regulations governing the establishment of such credits (including,
without limitation, certification that such emissions reductions are
enforceable, permanent, quantifiable and surplus). The term includes Emission
Reduction Credits that have been approved by the PaDEP and are awaiting USEPA
approval. The term also includes certified air emissions reductions, as
described above, regardless as to whether the Governmental Authority certifying
such reductions designates such certified air emissions reductions by a name
other than "emission reduction credits."
(28) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and charges
of any kind.
(29) "Environmental Claim" means any and all pending and/or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law by any person (including, but
not limited to, any Governmental Authority, private person and citizens' group)
based upon, alleging, asserting, or claiming any actual or potential (a)
violation of, or liability under any Environmental Law, (b) violation of any
Environmental Permit, or (c) liability for investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines, or penalties arising out of, based on,
5
resulting from, or related to the presence, Release, or threatened Release into
the environment of any Hazardous Substances at any location related to the
Purchased Assets, including, but not limited to, any off-Site location to which
Hazardous Substances, or materials containing Hazardous Substances, were sent
for handling, storage, treatment, or disposal.
(30) "Environmental Condition" means the presence or Release to the
environment, whether at the Sites or at an off-Sites location, of Hazardous
Substances, including any migration of those Hazardous Substances through air,
soil or groundwater to or from the Sites or any off-Site location regardless of
when such presence or Release occurred or is discovered.
(31) "Environmental Laws" means all applicable Federal, state and local,
provincial and foreign, civil and criminal laws, regulations, rules, ordinances,
codes, decrees, judgments, directives, or judicial or administrative orders
relating to pollution or protection of the environment, natural resources or
human health and safety, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances (including, without
limitation, Releases to ambient air, surface water, groundwater, land, surface
and subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport, disposal or handling
of Hazardous Substances. "Environmental Laws" include, without limitation,
CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Oil Pollution Act (33 U.S.C. Section
2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
Section 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.),the Pennsylvania Hazardous Sites Cleanup Act (35 P.S.
Section 6020.101 et seq.), the Pennsylvania Solid Waste Management Act (35 P.S.
Section 6018.101 et seq.), the Pennsylvania Clean Stream Law (35 P.S. Section
691.1 et seq.), and all applicable other state laws analogous to any of the
above.
(32) "Environmental Permits" has the meaning set forth in Section 4.7(a).
(33) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
6
(34) "ERISA Affiliate" has the meaning set forth in Section 2.4(k).
(35) "ERISA Affiliate Plans" has the meaning set forth in Section 2.4(k).
(36) "Estimated Adjustment" has the meaning set forth in Section 3.3(b).
(37) "Estimated Closing Statement" has the meaning set forth in Section
3.3(b).
(38) "Excluded Assets" has the meaning set forth in Section 2.2.
(39) "Excluded Liabilities" has the meaning set forth in Section 2.4.
(40) "Facilities Act" has the meaning set forth in Section 10.14.
(41) "FERC" means the Federal Energy Regulatory Commission or any
successor agency thereto.
(42) "FIRPTA Affidavit" means the Foreign Investment in Real Property Tax
Act Certification and Affidavit, substantially in the form of Exhibit C hereto.
(43) "Genco" means GPU Generation, Inc., a Pennsylvania corporation and
wholly-owned subsidiary of GPU.
(44) "Genco Stock" means all of the issued and outstanding shares of
common stock, par value $20 per share, of Genco owned beneficially and of record
by GPU and comprising the only authorized shares of stock of Genco at and as of
the Closing.
(45) "Good Utility Practices" mean any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or previously engaged in by Sellers (in its
operation of the Purchased Assets) or any of the practices, methods or acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practices are not intended to
be limited to the optimum practices, methods or acts to the exclusion of all
others, but rather to be acceptable practices, methods or acts
7
generally accepted in the industry or previously engaged in by Sellers (in its
operation of the Purchased Assets).
(46) "Governmental Authority" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitrating body or
other governmental authority.
(47) "GPU" means GPU, Inc., a Pennsylvania corporation and parent company
of Sellers and Genco.
(48) "GPU Intercompany Tax Allocation Agreement" has the meaning set forth
in Section 6.8(e)(2)(ii).
(49) "GPUN" means GPU Nuclear, Inc., a New Jersey corporation and a
wholly-owned subsidiary of GPU.
(50) "GPUS" means GPU Service, Inc., a Pennsylvania corporation and a
wholly-owned subsidiary of GPU.
(51) "Hazardous Substances" means (a) any petrochemical or petroleum
products, coal ash, oil, radioactive materials, radon gas, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
(52) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
(53) "IBEW 459" means Local 459 of the International Brotherhood of
Electrical Workers.
(54) "Income Tax" means any federal, state, local or foreign Tax (a) based
upon, measured by or calculated with respect to net income, profits or receipts
(including, without limitation, capital gains Taxes and minimum Taxes) or (b)
based upon, measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one
8
or more of the bases on which such Tax may be based, measured by or calculated
with respect to, is described in clause (a), in each case together with any
interest, penalties, or additions to such Tax.
(55) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(56) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
(57) "Indemnitee" has the meaning set forth in Section 8.1(d).
(58) "Independent Accounting Firm" means such independent accounting firm
of national reputation as is mutually appointed by Sellers and Buyer.
(59) "Inspection" means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the Purchased Assets
prior to the Closing.
(60) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, copyrights and copyright rights owned by
Sellers and necessary for the operation and maintenance of the Purchased Assets,
and all pending applications for registrations of patents, trademarks, and
copyrights, as set forth as part of Schedule 2.1(l).
(61) "Inventories" means coal, fuel oil or alternative fuel inventories,
limestone, materials, spare parts, consumable supplies and chemical and gas
inventories relating to the operation of a Plant located at, or in transit to,
such Plant.
(62) "Knowledge" means the actual knowledge of the corporate officers or
managerial representatives of the specified Person charged with responsibility
for the particular function as of the date of the this Agreement, or, with
respect to any certificate delivered pursuant to this Agreement, the date of
delivery of the certificate.
(63) "Material Adverse Effect" means any change in, or effect on the
Purchased Assets that is materially adverse to the operations or condition
(financial or otherwise) of (i) the Aggregate Purchased Assets, taken as a
whole, or (ii) a Specified Plant (as defined below) other than: (a) any change
affecting the international, national, regional or local electric industry as a
whole and not Sellers specifically and exclusively; (b) any
9
change or effect resulting from changes in the international, national, regional
or local wholesale or retail markets for electric power; (c) any change or
effect resulting from changes in the international, national, regional or local
markets for any fuel used in connection with the Aggregate Purchased Assets
including such Specified Plant; (d) any change or effect resulting from, changes
in the North American, national, regional or local electric transmission systems
or operations thereof; (e) any materially adverse change in or effect on the
Aggregate Purchased Assets including such Specified Plant which is cured
(including by the payment of money) before the Termination Date; (f) any order
of any court or Governmental Authority or legislature applicable to providers of
generation, transmission or distribution of electricity generally that imposes
restrictions, regulations or other requirements thereon; and (g) any change or
effect resulting from action or inaction by a Governmental Authority with
respect to an independent system operator or retail access in Pennsylvania or
New Jersey. As used herein, each of the following shall be a "Specified Plant":
(1) the Shawville Station and associated Purchased Assets to be conveyed to
Buyer pursuant to the Related Purchase Agreement with Penelec; (2) the Portland
Station and associated Purchased Assets to be conveyed to Buyer pursuant to the
Related Purchase Agreement to which Met-Ed is a party; and (3) collectively, all
Purchased Assets to be conveyed to Buyer under this Agreement.
(64) "NJBPU" means the New Jersey Board of Public Utilities and any
successor agency thereto.
(65) "Non-Union Employees" has the meaning as set forth in Sections
6.10(b) and (m).
(66) "Operating Agreements" has the meaning set forth in Section
4A.7
(67) "Owners Agreements" means the Memorandum of Owners Agreement for
Conemaugh Steam Electric Station by and among Atlantic City Electric Company,
Baltimore Gas and Electric Company, Delamarva Power and Light Company,
Metropolitan Edison Company, Pennsylvania Power and Light Company, Philadelphia
Electric Company, Potomac Electric Power Company, Public Service Electric and
Gas Company and United Gas Improvement Company, dated August 1, 1966 as amended
(the "Conemaugh Agreement"), that certain Memorandum of Owners Agreement re:
Keystone Electric Generation Station by and among Atlantic City Electric
Company, Baltimore Gas and Electric Company, Delaware Power and Light Company,
Jersey Central Power and Light Company, Pennsylvania Power and Light Company,
Philadelphia Electric Company and Public Service Electric and Gas Company
10
dated December 7, 1964, as amended(the "Keystone Agreement"), being attached
hereto as Schedule 1.1(67).
(68) "PaDEP" means the Pennsylvania Department of Environmental Protection
and any successor agency thereto.
(69) "PaPUC" means the Pennsylvania Public Utility Commission and any
successor agency thereto.
(70) "Penelec" means Pennsylvania Electric Company, a Pennsylvania
corporation.
(71) "Permits" has the meaning set forth in Section 4.14.
(72) "Permitted Encumbrances" means: (i) the Easements; (ii) those
Encumbrances set forth in Schedule 1.1(72); (iii) statutory liens for Taxes or
other governmental charges or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
provided that the aggregate amount for all Aggregate Purchased Assets being so
contested does not exceed $500,000; (iv) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary course of
business relating to obligations as to which there is no default on the part of
Sellers or the validity of which are being contested in good faith, and which do
not, individually or in the aggregate, with respect to all Aggregate Purchased
Assets exceed $500,000; (v) zoning, entitlement, conservation restriction and
other land use and environmental regulations by Governmental Authorities; and
(vi) such other liens, imperfections in or failure of title, charges, easements,
restrictions and Encumbrances which do not materially, individually or in the
aggregate, detract from the value of the Aggregate Purchased Assets as currently
used or materially interfere with the present use of the Aggregate Purchased
Assets and neither secure indebtedness, nor individually or in the aggregate
have a value exceeding $30 million for all Aggregate Purchased Assets.
(73) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
(74) "Plants" means the generating stations and related assets as more
fully identified on Schedule 2.1 attached hereto.
(75) "Pollution Control Revenue Bonds" means the bonds listed on Schedule
6.12.
11
(76) "Post-Closing Adjustment" has the meaning set forth in Section
3.3(c).
(77) "Post-Closing Statement" has the meaning set forth in Section 3.3(c).
(78) "Proprietary Information" of a Party means all information about the
Party or its Affiliates, including their respective properties or operations,
furnished to the other Party or its Representatives by the Party or its
Representatives, after the date hereof, regardless of the manner or medium in
which it is furnished. Proprietary Information does not include information
that: (a) is or becomes generally available to the public, other than as a
result of a disclosure by the other Party or its Representatives; (b) was
available to the other Party on a nonconfidential basis prior to its disclosure
by the Party or its Representatives; (c) becomes available to the other Party on
a nonconfidential basis from a person, other than the Party or its
Representatives, who is not otherwise bound by a confidentiality agreement with
the Party or its Representatives, or is not otherwise under any obligation to
the Party or any of its Representatives not to transmit the information to the
other Party or its Representatives; (d) is independently developed by the other
Party; or (e) was disclosed pursuant to the Confidentiality Agreement and
remains subject to the terms and conditions of the Confidentiality Agreement.
(79) "Purchased Assets" has the meaning set forth in Section 2.1.
(80) "Purchase Price" has the meaning set forth in Section 3.2.
(81) "PURTA" has the meaning set forth in Section 3.5(c).
(82) "PURTA Surcharge" has the meaning set forth in Section 3.5(c).
(83) "Qualifying Offer" has the meaning set forth in Section 6.10(b).
(84) "Real Property" has the meaning set forth in Section 2.1(a).
(85) "Real Property Leases" has the meaning set forth in Section 4.6.
(86) "Related Purchase Agreements" has the meaning set forth in Section
7.1(l).
12
(87) "Release" means release, spill, leak, discharge, dispose of, pump,
pour, emit, empty, inject, leach, dump or allow to escape into or through the
environment.
(88) "Remediation" means action of any kind to address a Release or the
presence of Hazardous Substances at a Site or an off-Site location including,
without limitation, any or all of the following activities to the extent they
relate to or arise from the presence of a Hazardous Substance at a Site or an
off-Site location: (a) monitoring, investigation, assessment, treatment,
cleanup, containment, removal, mitigation, response or restoration work; (b)
obtaining any permits, consents, approvals or authorizations of any Governmental
Authority necessary to conduct any such activity; (c) preparing and implementing
any plans or studies for any such activity; (d) obtaining a written notice from
a Governmental Authority with jurisdiction over a Site or an off-Site location
under Environmental Laws that no material additional work is required by such
Governmental Authority; (e) the use, implementation, application, installation,
operation or maintenance of removal actions on a Site or an off-Site location,
remedial technologies applied to the surface or subsurface soils, excavation and
off-Site treatment or disposal of soils, systems for long term treatment of
surface water or ground water, engineering controls or institutional controls;
and (f) any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws to address the presence or
Release of Hazardous Substances at a Site or an off-Site location.
(89) "Replacement Welfare Plans" has the meaning set forth in
Section 6.10(e)
(90) "Representatives" of a Party means the Party's Affiliates and their
directors, officers, employees, agents, partners, advisors (including, without
limitation, accountants, counsel, environmental consultants, financial advisors
and other authorized representatives) and parents and other controlling persons.
(91) "SEC" means the Securities and Exchange Commission and any successor
agency thereto.
(92) "Sellers' Agreements" means those contracts, agreements, licenses and
leases relating to the ownership, operation and maintenance of the Plants and
being assigned to Buyer as part of the Purchased Assets, including without
limitation the Collective Bargaining Agreement and the Owners Agreements and the
agreements identified on Schedule 4.12(a).
13
(93) "Sellers' Indemnitee" has the meaning set forth in Section 8.1
-------------------
(a).
(94) "Sellers' Material Adverse Effect" has the meaning set forth in
Section 7.2(c).
(95) "Sellers' Required Regulatory Approvals" has the meaning set forth in
Section 4.3(b).
(96) "Site" means, with respect to any Plant, the Real Property (including
improvements) forming a part of, or used or usable in connection with the
operation of, such Plant, including any disposal sites included in the Real
Property. Any reference to the Sites shall include, by definition, the surface
and subsurface elements, including the soils and groundwater present at the
Sites, and any reference to items "at the Sites" shall include all items "at,
on, in, upon, over, across, under and within" the Site.
(97) "Subsidiary" when used in reference to any Person means any entity of
which outstanding securities having ordinary voting power to elect a majority of
the Board of Directors or other Persons performing similar functions of such
entity are owned directly or indirectly by such Person.
(98) "Tangible Personal Property" has the meaning set forth in Section
2.1(c).
(99) "Tax Affiliate" means any entity that is a member of an affiliated
group of corporations (within the meaning of Section 1504(a) of the Code) filing
a consolidated U.S. federal Income Tax Return, or a group of corporations filing
a consolidated or combined Tax Return for state, local or foreign purposes (each
a "Consolidated Group"), if Genco could be held liable for the Taxes of such
entity or Consolidated Group.
(100) "Tax Contest" has the meaning set forth in Section 6.8(e)(4)(i).
(101) "Taxes" means all taxes, charges, fees, levies, penalties or other
assessments imposed by any federal, state or local or foreign taxing authority,
including, but not limited to, income, excise, property, sales, transfer,
franchise, payroll, withholding, social security, gross receipts, license,
stamp, occupation, employment or other taxes, including any interest, penalties
or additions attributable thereto.
(102) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
14
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
(103) "Termination Date" has the meaning set forth in Section 9.1(b).
(104) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(105) "Transferable Permits" means those Permits and Environmental Permits
which may be lawfully transferred to or assumed by Buyer without a filing with,
notice to, consent or approval of any Governmental Authority, and are set forth
in Schedule 1.1 (105).
(106) "Transferred Employees" means Transferred Non-Union Employees and
Transferred Union Employees.
(107) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(108) "Transferred Union Employees" has the meaning set forth in Section
6.10(b).
(109) "Transferring Employee Records" means all records related to
personnel of Sellers, Genco, GPUN or GPUS who will become employees of Buyer
only to the extent such records pertain to: (i) skill and development training
and biographies, (ii) seniority histories, (iii) salary and benefit information
including benefit census and valuation data, (iv) Occupational, Safety and
Health Administration reports, and (v) active medical restriction forms.
(110) "Transition Power Purchase Agreements" means the agreements between
Sellers and Buyer, copies of which are attached as Exhibit E hereto, executed on
the date hereof, relating to the sale of installed capacity to Sellers for a
specified period of time following the Closing Date.
(111) "Transmission Assets" has the meaning set forth in Section 2.2(a).
(112) "Union" means IBEW 459.
(113) "Union Employees" has the meaning set forth in Sections 6.10(a) and
(m).
15
(114) "USEPA" means the United States Environmental Protection Agency and
any successor agency thereto.
(115) "Year 2000 Compliant" has the meaning set forth in Section 4.20.
"Year 2000 Compliance" has a meaning correlative to the foregoing.
(116) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
1.2 Certain Interpretive Matters. In this Agreement, unless the context
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa. The term "includes" or
"including" shall mean "including without limitation." References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets. Upon the terms and subject to the satisfaction of
the conditions contained in this Agreement, at the Closing each Seller will
sell, assign, convey, transfer and deliver to Buyer, and Buyer will purchase,
assume and acquire from such Seller, free and clear of all Encumbrances (except
for Permitted Encumbrances), and subject to Sections 2.2 and 7.3 and the other
terms and conditions of this Agreement, all of such Seller's right, title and
interest in and to all assets constituting, or used in and necessary for
generation purposes to the operation of, the Plants identified in Schedule 2.1
including without limitation those assets described below (but excluding the
Excluded Assets), each as in existence on the Closing Date (collectively,
"Purchased Assets"):
(a) Those certain parcels of real property (including all buildings,
facilities and other improvements thereon and all appurtenances thereto)
described in Schedule 4.10 (the "Real Property"), except as otherwise
constituting part of the Excluded Assets;
(b) All Inventories;
16
(c) All machinery, mobile or otherwise, equipment (including
communications equipment), vehicles, tools, furniture and furnishings and other
personal property located on or used principally in connection with the Real
Property on the Closing Date, including, without limitation, the items of
personal property included in Schedule 2.1(c), together with all the personal
property of Sellers used principally in the operation of the Plants and listed
in Schedule 2.1(c), other than property used or primarily usable as part of the
Transmission Assets or otherwise constituting part of the Excluded Assets
(collectively, "Tangible Personal Property");
(d) Subject to the provisions of Section 6.5(d), all Sellers' Agreements;
(e) Subject to the provisions of Section 6.5(d), all Real Property Leases;
(f) All Transferable Permits;
(g) All books, operating records, operating, safety and maintenance
manuals, engineering design plans, documents, blueprints and as built plans,
specifications, procedures and similar items of Sellers relating specifically to
the aforementioned assets and necessary for the operation of the Plants (subject
to the right of Sellers to retain copies of same for its use) other than such
items which are proprietary to third parties and accounting records;
(h) Subject to Section 6.1, all Emission Reduction Credits associated with
the Plants and identified in Schedule 2.1(h), and all Emission Allowances that
have accrued prior to, or that accrue on or after, the date of this Agreement
but prior to the Closing Date;
(i) All unexpired, transferable warranties and guarantees from third
parties with respect to any item of Real Property or personal property
constituting part of the Purchased Assets, as of the Closing Date;
(j) The names of the Plants. It is expressly understood that Sellers are
not assigning or transferring to Buyer any right to use the names "Jersey
Central Power & Light Company", "JCP&L", "Metropolitan Edison Company",
"Met-Ed", "Pennsylvania Electric Company", "Penelec", "GPU", "GPU Energy", "GPU
Generation", "GPU Nuclear", "GPU Service" and "GPU Genco", or any related or
similar trade names, trademarks, service marks, corporate names and logos or any
part, derivative or combination thereof;
17
(k) All drafts, memoranda, reports, information, technology, and
specifications relating to Sellers' plans for Year 2000 Compliance with respect
to the Purchased Assets; and
(l) The Intellectual Property described on Schedule 2.1(l).
In addition, GPU will sell, assign, convey, transfer and deliver to Buyer,
and Buyer will purchase and acquire from GPU, free and clear of all
Encumbrances, all of GPU's right, title and interest in and to the Genco Stock
and all stock books, stock ledger, minute books, corporate seal, all corporate
records and all other books and records of the type described in Section 2.1
above and relating to Genco.
2.2 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is not acquiring, any right, title or interest in
or to the following specific assets which are associated with the Purchased
Assets, but which are hereby specifically excluded from the sale and the
definition of Purchased Assets herein (the "Excluded Assets"):
(a) Except as expressly identified in Schedule 2.1(c), the electrical
transmission or distribution facilities (as opposed to generation facilities) of
Sellers or any of their Affiliates located at the Sites or forming part of the
Plants (whether or not regarded as a "transmission" or "generation" asset for
regulatory or accounting purposes), including all switchyard facilities,
substation facilities and support equipment, as well as all permits, contracts
and warranties, to the extent they relate to such transmission and distribution
assets (collectively, the "Transmission Assets"), and those certain assets,
facilities and agreements all as identified on Schedule 2.2(a) attached hereto;
(b) Certificates of deposit, shares of stock (except as provided in the
last paragraph of Section 2.1 with respect to the Genco Stock), securities,
bonds, debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities;
(c) All cash, cash equivalents, bank deposits, accounts and notes
receivable (trade or otherwise), and any income, sales, payroll or other tax
receivables;
(d) The rights of Sellers and their Affiliates to the names "Jersey
"Central Power & Light Company", "JCP&L", "Metropolitan Edison Company",
"Met-Ed", "Pennsylvania Electric Company",
18
"Penelec", "GPU", "GPU Energy", "GPU Generation", "GPU Nuclear", "GPU Service"
and "GPU Genco" or any related or similar trade names, trademarks, service
marks, corporate names or logos, or any part, derivative or combination thereof;
(e) All tariffs, agreements and arrangements to which Sellers are a party
for the purchase or sale of electric capacity and/or energy or for the purchase
of transmission or ancillary services;
(f) The rights of Sellers in and to any causes of action against third
parties (including indemnification and contribution), other than to the extent
relating to any Assumed Liability, relating to any Real Property or personal
property, Permits, Environmental Permits, Taxes, Real Property Leases or
Sellers' Agreements, if any, including any claims for refunds, prepayments,
offsets, recoupment, insurance proceeds, condemnation awards, judgments and the
like, whether received as payment or credit against future liabilities, relating
specifically to the Plants or the Sites and relating to any period prior to the
Closing Date;
(g) All personnel records of Sellers or their Affiliates relating to the
Transferred Employees other than Transferring Employee Records or other records,
the disclosure of which is required by law, or legal or regulatory process or
subpoena; and
(h) Any and all of Sellers' rights in any contract representing an
intercompany transaction between Sellers and an Affiliate of Sellers, whether or
not such transaction relates to the provision of goods and services, payment
arrangements, intercompany charges or balances, or the like, except for any
contracts listed on Schedule 4.12(a).
2.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to
Sellers the Assignment and Assumption Agreement pursuant to which Buyer shall
assume and agree to discharge when due, without recourse to Sellers, all of the
following liabilities and obligations of Seller, direct or indirect, known or
unknown, absolute or contingent, which relate to the Purchased Assets, other
than Excluded Liabilities, in accordance with the respective terms and subject
to the respective conditions thereof (collectively, "Assumed Liabilities"):
(a) All liabilities and obligations of Sellers and GPU arising on or
after the Closing Date under Sellers' Agreements, the Operating Agreements, the
Real Property Leases, and the Transferable Permits in accordance with the terms
thereof, including, without limitation, (i) the contracts, licenses,
19
agreements and personal property leases entered into by Sellers with respect to
the Purchased Assets, which are disclosed on Schedule 4.12(a) or not required by
Section 4.12(a) to be so disclosed, and (ii) the contracts, licenses, agreements
and personal property leases entered into by Sellers with respect to the
Purchased Assets after the date hereof consistent with the terms of this
Agreement, except in each case to the extent such liabilities and obligations,
but for a breach or default by Sellers, would have been paid, performed or
otherwise discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default or out of any event which after the
giving of notice would constitute a default by Sellers;
(b) All liabilities and obligations associated with the Purchased
Assets in respect of Taxes for which Buyer is liable pursuant to Sections 3.5 or
6.8(a) hereof;
(c) All liabilities and obligations with respect to the Transferred
Employees arising on or after the Closing Date (i) for which Buyer is
responsible pursuant to Section 6.10 or (ii) relating to the grievances and
arbitration proceedings arising out of or under the Collective Bargaining
Agreement prior to, on or after the Closing Date;
(d) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as a result
of or in connection with (i) any violation or alleged violation of Environmental
Laws, whether prior to, on or after the Closing Date, with respect to the
ownership or operation of any of the Purchased Assets; (ii) loss of life, injury
to persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest on or after the Closing Date) caused (or allegedly caused) by
the presence or Release of Hazardous Substances at, on, in, under, adjacent to
or migrating from the Purchased Assets prior to, on or after the Closing Date,
including, but not limited to, Hazardous Substances contained in building
materials at or adjacent to the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at or
near the Purchased Assets; and (iii) the Remediation (whether or not such
Remediation commenced before the Closing Date or commences on or after the
Closing Date) of Hazardous Substances that are present or have been Released
prior to, on or after the Closing Date at, on, in, under, adjacent to or
migrating from, the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells or in other environmental media at or adjacent to
20
the Purchased Assets; provided, that nothing set forth in this subsection 2.3(d)
shall require Buyer to assume any liabilities or obligations that are expressly
excluded in Section 2.4 including, without limitation, liability for toxic torts
as set forth in Section 2.4(i).
(e) All liabilities and obligations of Sellers with respect to the
Purchased Assets under the agreements or consent orders set forth on Schedule
4.7 arising on or after the Closing; and
(f) With respect to the Purchased Assets, any Tax that may be
imposed by any federal, state or local government on the ownership, sale,
operation or use of the Purchased Assets on or after the Closing Date, except
for any Income Taxes attributable to income received by Sellers.
2.4 Excluded Liabilities. Buyer shall not assume or be obligated to pay,
perform or otherwise discharge the following liabilities or obligations (the
"Excluded Liabilities"):
(a) Any liabilities or obligations of Sellers that are not expressly set
forth as liabilities or obligations being assumed by Buyer in Section 2.3 and
any liabilities or obligations in respect of any Excluded Assets or other assets
of Sellers which are not Purchased Assets;
(b) Any liabilities or obligations in respect of Taxes attributable to the
ownership, operation or use of Purchased Assets for taxable periods, or portions
thereof, ending before the Closing Date, except for Taxes for which Buyer is
liable pursuant to Sections 3.5 or 6.8(a) hereof and any liability in respect of
PURTA not otherwise expressly assumed by Buyer under Section 3.5 hereof;
(c) Any liabilities or obligations of Sellers accruing under any of
Sellers' Agreements or the Operating Agreements prior to the Closing Date;
(d) Any and all asserted or unasserted liabilities or obligations to third
parties (including employees) for personal injury or tort, or similar causes of
action arising solely out of the ownership or operation of the Purchased Assets
prior to the Closing Date, other than any liabilities or obligations which have
been assumed by Buyer in Section 2.3(d);
(e) Any fines, penalties or costs imposed by a Governmental Authority
resulting from (i) an investigation, proceeding, request for information or
inspection before or by a Governmental
21
Authority pending prior to the Closing Date but only regarding acts which
occurred prior to the Closing Date, or (ii) illegal acts, willful misconduct or
gross negligence of Sellers prior to the Closing Date, other than, any such
fines, penalties or costs which have been assumed by Buyer in Section 2.3(d);
(f) Any payment obligations of Sellers for goods delivered or services
rendered prior to the Closing Date, including, but not limited to, rental
payments pursuant to the Real Property Leases;
(g) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as a result
of or in connection with loss of life, injury to persons or property or damage
to natural resources (whether or not such loss, injury or damage arose or was
made manifest before the Closing Date or arises or becomes manifest on or after
the Closing Date) to the extent caused (or allegedly caused) by the off-Site
disposal, storage, transportation, discharge, Release, or recycling of Hazardous
Substances, or the arrangement for such activities, of Hazardous Substances,
prior to the Closing Date, in connection with the ownership or operation of the
Purchased Assets, provided that for purposes of this Section "off-Site" does not
include any location to which Hazardous Substances disposed of or Released at
the Purchased Assets have migrated;
(h) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as a result
of or in connection with the investigation and/or Remediation (whether or not
such investigation or Remediation commenced before the Closing Date or commences
on or after the Closing Date) of Hazardous Substances that are disposed, stored,
transported, discharged, Released, recycled, or the arrangement of such
activities, prior to the Closing Date, in connection with the ownership or
operation of the Purchased Assets, at any off-Site location, provided that for
purposes of this Section "off-Site" does not include any location to which
Hazardous Substances disposed of or Released at the Purchased Assets have
migrated;
(i) Third party liability for toxic torts arising as a result of or in
connection with loss of life or injury to persons (whether or not such loss or
injury arose or was made manifest on or after the Closing Date) caused (or
allegedly caused) by the presence or Release of Hazardous Substances at, on, in,
under, adjacent to or migrating from the Purchased Assets prior to the Closing
Date;
22
(j) Civil or criminal fines or penalties wherever assessed or incurred for
violations of Environmental Laws arising from the operation of the Purchased
Assets prior to the Closing Date;
(k) Subject to Section 6.10, any liabilities or obligations relating to
any Benefit Plan maintained by Sellers or any trade or business (whether or not
incorporated) which is or ever has been under common control, or which is or
ever has been treated as a single employer, with a Seller under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate") or to which a Seller and any
ERISA Affiliate contributed thereunder (the "ERISA Affiliate Plans"), including
but not limited to any liability with respect to any such plan (i) for benefits
payable under such plan; (ii) to the Pension Benefit Guaranty Corporation under
Title IV of ERISA; (iii) relating to any such plan that is a multi-employer plan
within the meaning of Section 3(37)A of ERISA; (iv) for non-compliance with the
notice and benefit continuation requirements of COBRA; (v) for noncompliance
with ERISA or any other applicable laws; or (vi) arising out of or in connection
with any suit, proceeding or claim which is brought against Buyer, any Benefit
Plan, ERISA Affiliate Plan, or any fiduciary or former fiduciary of any such
Benefit Plan or ERISA Affiliate Plan;
(l) Subject to Section 6.10, any liabilities or obligations relating to
the employment or termination of employment, by a Seller, or any Affiliate of a
Seller, of any individual, that is attributable to any actions or inactions
(including discrimination, wrongful discharge, unfair labor practices or
constructive termination) by the Sellers prior to the Closing Date other than
such actions or inactions taken at the written direction of Buyer;
(m) Subject to Section 6.10, any obligations for wages, overtime,
employment taxes, severance pay, transition payments in respect of compensation
or similar benefits accruing or arising prior to the Closing under any term or
provision of any contract, plan, instrument or agreement relating to any of the
Purchased Assets;
(n) Any liability of a Seller arising out of a breach by Seller or any of
its Affiliates of any of their respective obligations under this Agreement or
the Ancillary Agreements; and
(o) Any liability or obligation of Genco relating to the period prior to
the Closing except for liabilities or obligations assumed by Buyer under Section
2.3;
23
(p) Any liability relating to the Pollution Control Revenue Bonds except
as provided in Section 6.12.
2.5 Control of Litigation. The Parties agree and acknowledge that Sellers
shall be entitled exclusively to control, defend and settle any litigation,
administrative or regulatory proceeding, and any investigation or Remediation
activities (including without limitation any environmental mitigation or
Remediation activities), arising out of or related to any Excluded Liabilities,
and Buyer agrees to cooperate fully in connection therewith; provided however,
that without Buyer's written consent, which shall not be unreasonably withheld
or delayed, Sellers shall not settle any such litigation, administrative or
regulatory proceeding which would result in a material adverse effect on the
related Purchased Assets.
2.6 Genco's Assets and Liabilities. Effective immediately prior to the
Closing, GPU shall cause all assets of Genco other than the Operating Agreements
to be transferred by Genco to GPU or one or more of GPU's Affiliates, and to
cause all liabilities of Genco other than those relating to the Operating
Agreements to be assumed by GPU or one or more of GPU's Affiliates.
ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the satisfaction of the
conditions contained in Article VII of this Agreement, the sale, assignment,
conveyance, transfer and delivery of the Purchased Assets to Buyer, the payment
of the Purchase Price to Sellers, and the consummation of the other respective
obligations of the Parties contemplated by this Agreement shall take place at a
closing (the "Closing"), to be held at the offices of Berlack, Israels &
Liberman LLP, 120 West 45th Street, New York, New York at 10:00 a.m. local time,
or another mutually acceptable time and location, on the date that is fifteen
(15) Business Days following the date on which the last of the conditions
precedent to Closing set forth in Article VII of this Agreement have been either
satisfied or waived by the Party for whose benefit such conditions precedent
exist or such other date as the Parties may mutually agree. The date of
24
Closing is hereinafter called the "Closing Date." The Closing shall be effective
for all purposes as of 12:01 a.m. on the Closing Date.
3.2 Payment of Purchase Price. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, Buyer will pay or cause to be paid to Sellers at the Closing
an aggregate amount of five hundred forty six million seven hundred fifty
thousand seven hundred forty one United States Dollars (U.S. $546,750,741.00)
(the "Purchase Price") plus or minus any adjustments pursuant to the provisions
of this Agreement, by wire transfer of immediately available funds denominated
in U.S. dollars or by such other means as are agreed upon by Sellers and Buyer.
3.3 Adjustment to Purchase Price. (a) Subject to Section 3.3(b), at the
Closing, the Purchase Price shall be adjusted, without duplication, to account
for the items set forth in this Section 3.3(a):
(i) The Purchase Price shall be increased or decreased, as
applicable, to reflect the difference between the book value of all
Inventories as of the Closing Date and the value of all Inventories as of
June 30, 1998 as reflected on Schedule 3.3(a)(i).
(ii) The Purchase Price shall be adjusted to account for the
items prorated as of the Closing Date pursuant to Section 3.5.
(iii) The Purchase Price shall be increased by the amount
expended, or for which liabilities are incurred, by Sellers between the
date hereof and the Closing Date for capital additions to or replacements
of property, plant and equipment included in the Purchased Assets and
other expenditures or repairs on property, plant and equipment included in
the Purchased Assets that would be capitalized by Sellers in accordance
with normal accounting policies of Sellers and its Affiliates (together,
"Capital Expenditures"), which are not described on Schedule 6.1 and which
either (A) are mandated after the date of this Agreement by any
Governmental Authority (subject to Buyer's right reasonably to direct
Sellers to contest such mandates by appropriate proceedings at Buyer's
expense and provided there is no adverse impact on the Purchased Assets);
or (B) do not fall within category (A) above but do not exceed in
25
the aggregate $2 million for all Aggregate Purchased Assets; or (C) are
approved in writing by Buyer.
(b) At least ten (10) Business Days prior to the Closing Date, Sellers
shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth Sellers' best estimate of
the adjustments to the Purchase Price required by Section 3.3(a) (the "Estimated
Adjustment"). Within five (5) Business Days following the delivery of the
Estimated Closing Statement by Sellers to Buyer, Buyer may object in good faith
to the Estimated Adjustment in writing. If Buyer objects to the Estimated
Adjustment, the Parties shall attempt to resolve their differences by
negotiation. If the Parties are unable to do so within three (3) Business Days
prior to the Closing Date (or if Buyer does not object to the Estimated
Adjustment), the Purchase Price shall be adjusted (the "Closing Adjustment") for
the Closing by the amount of the Estimated Adjustment not in dispute. The
disputed portion shall be paid as a Post-Closing Adjustment to the extent
required by Section 3.3(c).
(c) Within sixty (60) days following the Closing Date, Sellers shall
prepare and deliver to Buyer a final closing statement (the "Post-Closing
Statement") that shall set forth all adjustments to the Purchase Price required
by Section 3.3(a) (the "Post-Closing Adjustment"). The Post-Closing Statement
shall be prepared using the same accounting principles, policies and methods as
Sellers have historically used in connection with the calculation of the items
reflected on such Post-Closing Statement. Within thirty (30) days following the
delivery of the Post-Closing Statement by Sellers to Buyer, Buyer may object to
the Post-Closing Adjustment in writing. Sellers agree to cooperate with Buyer to
provide Buyer and Buyer's Representatives information used to prepare the
Post-Closing Statement and information relating thereto. If Buyer objects to the
Post-Closing Adjustment, the Parties shall attempt to resolve such dispute by
negotiation. If the Parties are unable to resolve such dispute within thirty
(30) days of any objection by Buyer, the Parties shall appoint the Independent
Accounting Firm, which shall, at Sellers' and Buyer's joint expense, review the
Post-Closing Adjustment and determine the appropriate adjustment to the Purchase
Price, if any, within thirty (30) days of such appointment. The Parties agree to
cooperate with the Independent Accounting Firm and provide it with such
information as it reasonably requests to enable it to make such determination.
The finding of such Independent Accounting Firm shall be binding on the Parties
hereto. Upon determination of the appropriate adjustment by agreement of the
Parties or by binding determination of the Independent Accounting Firm, if the
Post-
26
Closing Adjustment is more or less than the Closing Adjustment, the Party owing
the difference shall deliver such difference to the other Party no later than
two (2) Business Days after such determination, in immediately available funds
or in any other manner as reasonably requested by the payee.
3.4 Allocation of Purchase Price. Buyer and Sellers shall endeavor to
agree upon an allocation among the Purchased Assets and the Genco Stock of the
sum of the Purchase Price and the Assumed Liabilities in a manner consistent
with the provisions of Section 1060 of the Code and the Treasury Regulations
thereunder within sixty (60) days of the date of this Agreement provided that
the portion of the Purchase Price allocated to the Genco Stock may not be less
than $50,000. Each of Buyer and Sellers agree to file Internal Revenue Service
Form 8594, and all federal, state, local and foreign Tax Returns, in accordance
with any such agreed to allocation. Each of Buyer and Sellers shall report the
transactions contemplated by this Agreement for federal Tax and all other Tax
purposes in a manner consistent with any such agreed to allocation determined
pursuant to this Section 3.4. Each of Buyer and Sellers agree to provide the
other promptly with any information required to complete Form 8594. Buyer and
Sellers shall notify and provide the other with reasonable assistance in the
event of an examination, audit or other proceeding regarding any allocation of
the Purchase Price agreed to pursuant to this Section 3.4.
3.5 Prorations. (a) Buyer and Sellers agree that all of the items normally
prorated, including those listed below (but not including Income Taxes),
relating to the business and operation of the Purchased Assets shall be prorated
as of the Closing Date, with Sellers liable to the extent such items relate to
any time period prior to the Closing Date, and Buyer liable to the extent such
items relate to periods commencing with the Closing Date (measured in the same
units used to compute the item in question, otherwise measured by calendar
days):
(i) Personal property, real estate and occupancy Taxes,
assessments and other charges, if any, on or with respect to the business
and operation of the Purchased Assets;
(ii) Rent, Taxes and all other items (including prepaid
services or goods not included in Inventory) payable by or to Seller under
any of Sellers' Agreements;
(iii) Any permit, license, registration, compliance assurance
fees or other fees with respect to any Transferable Permit;
27
(iv) Sewer rents and charges for water, telephone, electricity
and other utilities; and
(v) Rent and Taxes and other items payable by Sellers under
the Real Property Leases assigned to Buyer is a party.
(b) In connection with the prorations referred to in (a) above, in the
event that actual figures are not available at the Closing Date, the proration
shall be based upon the actual Taxes or other amounts accrued through the
Closing Date or paid for the most recent year (or other appropriate period) for
which actual Taxes or other amounts paid are available. Such prorated Taxes or
other amounts shall be re-prorated and paid to the appropriate Party within
sixty (60) days of the date that the previously unavailable actual figures
become available. The prorations shall be based on the number of days in a year
or other appropriate period (i) before the Closing Date and (ii) including and
after the Closing Date. Sellers and Buyer agree to furnish each other with such
documents and other records as may be reasonably requested in order to confirm
all adjustment and proration calculations made pursuant to this Section 3.5.
(c) Notwithstanding anything to the contrary herein, no proration shall be
made under this Section 3.5 with respect to Taxes payable under the Pennsylvania
Public Utility Realty Tax Act ("PURTA") that are attributable the year in which
the Closing occurs (the "Closing Year PURTA Tax"). Buyer shall be fully
responsible and indemnify Seller for, and shall be entitled to receive all
refunds relating to payments Buyer makes with respect to, the Closing Year PURTA
Tax; provided, however, that any additional tax that is imposed in the year in
which the Closing occurs pursuant to Section 1104-A(b) of PURTA or any successor
provision thereof (a "PURTA Surcharge") but which relates to the previous year
shall not be treated as the Closing Year PURTA Tax and Sellers shall be
responsible for such PURTA Surcharge.
3.6 Deliveries by Sellers. At the Closing, each of the Sellers will
deliver, or cause to be delivered, the following to Buyer:
(a) The Bill of Sale, duly executed by the Sellers;
(b) Copies of any and all governmental and other third party consents,
waivers or approvals required with respect to the transfer of the Purchased
Assets, or the consummation of the transactions contemplated by this Agreement;
28
(c) The opinions of counsel and officer's certificates contemplated by
Section 7.1;
(d) One or more special warranty deeds conveying the Real Property to
Buyer, in substantially the form of Exhibit D hereto, duly executed and
acknowledged by Sellers and in recordable form;
(e) The Assignment and Assumption Agreement and any Ancillary Agreements
which are not executed on the date hereof, duly executed by Sellers;
(f) A FIRPTA Affidavit, duly executed by Sellers;
(g) Copies, certified by the Secretary or Assistant Secretary of each of
the Sellers, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by each of the Sellers in connection herewith, and the consummation of
the transactions contemplated hereby;
(h) A certificate of the Secretary or Assistant Secretary of each of the
Sellers identifying the name and title and bearing the signatures of the
officers of each of the Sellers authorized to execute and deliver this Agreement
and the other agreements and instruments contemplated hereby;
(i) Certificates of Good Standing or Subsistence, as applicable with
respect to the Sellers and Genco, issued by the Secretary of the State of
Sellers' and Genco's state of incorporation;
(j) To the extent available, originals of all Sellers' Agreements, Real
Property Leases, Permits, Environmental Permits, and Transferable Permits and,
if not available, true and correct copies thereof, together with
the items referred to in Section 2.1(g);
(k) All such other instruments of assignment, transfer or conveyance as
shall, in the reasonable opinion of Buyer and its counsel, be necessary or
desirable to transfer to Buyer the Purchased Assets, in accordance with this
Agreement and where necessary or desirable in recordable form;
(l) Notices, signed by Sellers, to all other parties to the material
Sellers' Agreements where notice to such parties is required under the terms of
such Sellers' Agreements or pursuant to Section 6.5(d) hereof;
29
(m) Reliance letters from Woodward & Clyde with respect to the
Environmental Reports prepared by Woodward & Clyde concerning the Purchased
Assets and made available for review by Buyer.
(n) Such other agreements, documents, instruments and writings as are
required to be delivered by the Sellers at or prior to the Closing Date pursuant
to this Agreement or otherwise reasonably required in connection herewith.
In addition, GPU will deliver, or cause to be delivered, to Buyer (i) a
stock certificate or certificates representing the Genco Stock accompanied by a
stock power duly endorsed to Buyer, (ii) certificates to the effect of Sections
3.6(g), (h) and (i) with respect to GPU and Genco; and (iii) resignations of all
directors and officers of Genco.
3.7 Deliveries by Buyer. At the Closing, Buyer will deliver, or cause to
be delivered, the following to Sellers:
(a) The Purchase Price, as adjusted pursuant to Section 3.3, by wire
transfer of immediately available funds in accordance with Sellers' instructions
or by such other means as may be agreed to by Sellers and Buyer;
(b) The opinions of counsel and officer's certificates contemplated by
Section 7.2;
(c) The Assignment and Assumption Agreement and any Ancillary Agreements
which are not executed on the date hereof, duly executed by Buyer;
(d) Copies, certified by the Secretary or Assistant Secretary of Buyer, of
resolutions authorizing the execution and delivery of this Agreement, the
Guaranty and all of the agreements and instruments to be executed and delivered
by Buyer in connection herewith, and the consummation of the transactions
contemplated hereby;
(e) A certificate of the Secretary or Assistant Secretary of Buyer,
identifying the name and title and bearing the signatures of the officers of
Buyer authorized to execute and deliver this Agreement, the Guaranty and the
other agreements contemplated hereby;
(f) All such other instruments of assumption as shall, in the reasonable
opinion of Sellers and its counsel, be necessary for Buyer to assume the Assumed
Liabilities in accordance with this Agreement;
30
(g) Copies of any and all governmental and other third party consents,
waivers or approvals obtained by Buyer with respect to the transfer of the
Purchased Assets, or the consummation of the transactions contemplated by this
Agreement and where necessary or desirable in recordable forms;
(h) Such other agreements, documents, instruments and writings as are
required to be delivered by Buyer at or prior to the Closing Date pursuant to
this Agreement or otherwise reasonably required in connection herewith.
3.8 Ancillary Agreements. The Parties acknowledge that the Ancillary
Agreements have been executed on the date hereof.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLERS
Each Seller represents and warrants (as to itself and the Purchased Assets
owned by it) to Buyer as follows:
4.1 Incorporation; Qualification. Such Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and authority to own,
lease, and operate its material properties and assets and to carry on its
business as is now being conducted. Such Seller is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which its business as now being conducted shall require it to be
so qualified, except where the failure to be so qualified would not have a
Material Adverse Effect. Such Seller has heretofore delivered to Buyer true,
complete and correct copies of its Certificate of Incorporation and Bylaws as
currently in effect.
4.2 Authority Relative to this Agreement. Such Seller has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and delivery of this
Agreement by such Seller and the consummation of the transactions contemplated
by such Seller hereby have been duly and validly authorized by all necessary
corporate action required on the part of such Seller and this Agreement has been
duly and validly executed and delivered by such Seller. Subject to the receipt
of Sellers' Required Regulatory Approvals, this Agreement constitutes the legal,
valid and binding agreement of such Seller, enforceable against such Seller in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
31
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4.3(a), and subject to obtaining Sellers' Required Regulatory
Approvals, neither the execution and delivery of this Agreement by Sellers nor
the consummation by Sellers of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of such Seller, (ii) result in a default (or give rise
to any right of termination, consent, cancellation or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
material agreement or other instrument or obligation to which such Seller is a
party or by which it, or any of the Purchased Assets may be bound, except for
such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which, would not,
individually or in the aggregate, create a Material Adverse Effect; or (iii)
constitute violations of any law, regulation, order, judgment or decree
applicable to such Seller, which violations, individually or in the aggregate,
would create a Material Adverse Effect, or create any Encumbrance other than a
Permitted Encumbrance.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Sellers' Required Regulatory Approvals"), no consent or approval of, filing
with, or notice to, any Governmental Authority is necessary for the execution
and delivery of this Agreement by, or for Sellers or Genco, such Seller, or the
consummation by such Seller of the transactions contemplated hereby, other than
(i) such consents, approvals, filings or notices which, if not obtained or made,
will not prevent such Seller from performing its material obligations hereunder
and (ii) such consents, approvals, filings or notices which become applicable to
such Seller or the Purchased Assets as a result of the specific regulatory
status of Buyer (or any of its Affiliates) or as a result of any other facts
that specifically relate to the business or activities in which Buyer (or any of
its Affiliates) is or proposes to be engaged.
4.4 Insurance. Except as set forth in Schedule 4.4, all material policies
of fire, liability, workers' compensation and other forms of insurance owned or
held by, or on behalf of, such Seller with respect to the business, operations
or employees at the Plants or the Purchased Assets are in full force and effect,
32
all premiums with respect thereto covering all periods up to and including the
date hereof have been paid (other than retroactive premiums which may be payable
with respect to comprehensive general liability and workers' compensation
insurance policies), and no notice of cancellation or termination has been
received with respect to any such policy which was not replaced on substantially
similar terms prior to the date of such cancellation. Except as described in
Schedule 4.4, within the 36 months preceding the date of this Agreement, neither
Seller has been refused any insurance with respect to the Purchased Assets nor
has coverage been limited by any insurance carrier to which such Seller has
applied for any such insurance or with which such Seller has carried insurance
during the last 12 months.
4.5 Title and Related Matters. Except as set forth in Schedule 4.5 and
subject to Permitted Encumbrances, (i) such Seller is the owner of record title
to the Real Property (or the interest in the Real Property as set forth in
Schedule 2.1) and has good and valid title to the other Purchased Assets which
it purports to own, free and clear of all material Encumbrances of which the
Sellers have knowledge and (ii) such Seller shall convey to Buyer such title
with respect to the Real Property or interest therein as a reputable title
company doing business in the Commonwealth of Pennsylvania.
4.6 Real Property Leases. Schedule 4.6 lists, as of the date of this
Agreement, all material real property leases under which such Seller is a lessee
or lessor and which relate to the Purchased Assets ("Real Property Leases").
Except as set forth in Schedule 4.6, all such leases are valid, binding and
enforceable against such Seller in accordance with their terms; there are no
existing material defaults by such Seller or, to Sellers' Knowledge, any other
party thereunder; and no event has occurred which (whether with or without
notice, lapse of time or both) would constitute a material default by such
Seller or, to Seller's Knowledge, any other party thereunder. Such Seller has
delivered to Buyer true, correct and complete copies of each of the material
Real Property Leases.
4.7 Environmental Matters. Except as disclosed in Schedule 4.7 or in the
"Phase I" and "Phase II" environmental site assessments prepared by such
Seller's outside environmental consultants ("Environmental Reports") and made
available for inspection by Buyer:
(a) Such Seller holds, and is in substantial compliance with, all permits,
certificates, certifications, licenses and governmental authorizations under
Environmental Laws ("Environmental Permits") that are required for such Seller
33
to conduct the business and operations of the Purchased Assets and such Seller
is otherwise in compliance with applicable Environmental Laws with respect to
the business and operations of such Purchased Assets except for such failures to
hold or comply with required Environmental Permits, or such failures to be in
compliance with applicable Environmental Laws, as would not, individually or in
the aggregate, create a Material Adverse Effect;
(b) Neither Seller has received any written request for information, or
been notified that it is a potentially responsible party, under CERCLA or any
similar state law with respect to the Real Property or any other Purchased
Assets;
(c) Neither Seller has entered into or agreed to any consent decree or
order relating to the Purchased Assets, or is subject to any outstanding
judgment, decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous Substances under
any Environmental Law relating to the Purchased.
(d) To such Seller's Knowledge, no Releases of Hazardous Substances have
occurred at, from, in, on, or under any Site, and no Hazardous Substances are
present in, on, about or migrating from any such Site that could give rise to an
Environmental Claim related to the Purchased Assets for which Remediation
reasonably could be required, except in any such case to the extent that any
such Releases would not, individually or in the aggregate, create a Material
Adverse Effect.
The representations and warranties made in this Section 4.7 are Sellers'
exclusive representations and warranties relating to environmental matters.
4.8 Labor Matters. Such Seller has previously delivered to Buyer a true
and correct copy of the Collective Bargaining Agreement, which is the only
collective bargaining agreement to which it is a party or is subject and which
relates to the business and operations of the Purchased Assets. With respect to
the business or operations of such Purchased Assets, except to the extent set
forth in Schedule 4.8 and except for such matters as will not, individually or
in the aggregate, create a Material Adverse Effect, such Seller (a) is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours; (b) has not
received written notice of any unfair labor practice complaint against it
pending before the National Labor Relations Board; (c) no arbitration proceeding
arising out of or under any collective bargaining agreement is pending against
each Seller;
34
and (d) neither Seller has experienced any work stoppage within the three-year
period prior to the date hereof and to Sellers' Knowledge none is currently
threatened.
4.9 Benefit Plans: ERISA. (a)Schedule 4.9(a) lists all deferred
compensation, profit-sharing, retirement and pension plans, including
multiemployer plans, and all material bonus, fringe benefit and other employee
benefit plans maintained or with respect to which contributions are made by such
Seller, Genco, GPUN or GPUS in respect of the current employees of Seller,
Genco, GPUN or GPUS connected with the Purchased Assets ("Benefit Plans"). True
and complete copies of all such Benefit Plans have been made available to Buyer.
(b) Except as set forth in Schedule 4.9(b), such Seller and the ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
requirements of Section 302 of ERISA, and Section 412 of the Code, with respect
to each Benefit Plan which is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code and has
been administered in all material respects in accordance with its terms as set
forth in the documents governing such Benefit Plan. Except as set forth in
Schedule 4.9(b), neither Seller nor any ERISA Affiliate has incurred any
liability under Section 4062(b) of ERISA to the Pension Benefit Guaranty
Corporation in connection with any Benefit Plan which is subject to Title IV of
ERISA or any withdrawal liability with respect to any Benefit Plan, within the
meaning of Section 4021 of ERISA, nor is there any reportable event (as defined
in Section 4043 of ERISA) with respect to any Benefit Plan. Except as set forth
in Schedule 4.9(b), the Internal Revenue Service has issued a letter for each
Benefit Plan which is intended to be qualified under Section 401(a) of the Code,
which letter determines that such plan is qualified and exempt from United
States Federal Income Tax under Section 401(a) and 501(a) of the Code, and such
Seller is not aware of any occurrence since the date of any such determination
letter which would affect adversely such qualification or tax exemption.
(c) Neither such Seller nor any ERISA Affiliate has engaged in any
transaction described in Section 4069(a) or Section 4212(c) of ERISA. No
Benefit Plan is a multiemployer plan.
(d) Sellers and Sellers' Affiliates have materially complied in good faith
with the notice and continuation requirements of Section 4980B of the Code, and
Part 6 of Subtitle B of Title I of ERISA with respect to any Benefit Plan.
Sellers and each ERISA Affiliate have complied in all material respects with the
requirements of Part 7 of Title I of ERISA.
35
4.10 Real Property. Schedule 4.10 contains a description of the Real
Property included in the Purchased Assets. Copies of any current surveys,
abstracts or title opinions in such Seller's possession and any policies of
title insurance in force and in the possession of such Seller with respect to
the Real Property Seller have heretofore been made available to Buyer (without
making any representation or warranty as to the accuracy or completeness
thereof). No real property other than the Real Property is necessary for Buyer
to own, maintain and operate the Purchased Assets as they are currently used.
4.11 Condemnation. Except as set forth in Schedule 4.11, Seller has not
received any written notices of and otherwise has no Knowledge of any pending or
threatened proceedings or governmental actions to condemn or take by power of
eminent domain all or any part of the Purchased Assets.
4.12 Contracts and Leases. (a) Schedule 4.12(a) lists each written
contract, license, agreement, or personal property lease which is material to
the business or operations of the Purchased Assets, other than any contract,
license, agreement or personal property lease which is listed or described on
another Schedule, or which is expected to expire or terminate prior to the
Closing Date, or which provides for annual payments by Seller after the date
hereof of less than $250,000 or payments by such Seller after the date hereof of
less than $1,000,000 in the aggregate.
(b) Except as disclosed in Schedule 4.12(b), each Sellers' Agreement
(i) constitutes a legal, valid and binding obligation of such Seller and, to
such Seller's Knowledge, constitutes a valid and binding obligation of the other
parties thereto, and (ii) may be transferred to Buyer pursuant to this Agreement
without the consent of the other parties thereto and will continue in full force
and effect thereafter, unless in any such case the impact of such lack of
legality, validity or binding nature, or inability to transfer, would not,
individually or in the aggregate, create a Material Adverse Effect.
(c) Except as set forth in Schedule 4.12(c), there is not, under
Sellers' Agreements, any default or event which, with notice or lapse of time or
both, would constitute a default on the part of such Seller or to such Seller's
Knowledge, any of the other parties thereto, except such events of default and
other events which would not, individually or in the aggregate, create a
Material Adverse Effect.
4.13 Legal Proceedings, etc. Except as set forth in Schedule 4.13, there
are no actions or proceedings pending (or to such Seller's Knowledge overtly
threatened) against such Seller
36
before any court, arbitrator or Governmental Authority, which could,
individually or in the aggregate, reasonably be expected to create a Material
Adverse Effect. Except as set forth in Schedule 4.13, neither such Seller is
subject to any outstanding judgments, rules, orders, writs, injunctions or
decrees of any court, arbitrator or Governmental Authority which would,
individually or in the aggregate, create a Material Adverse Effect.
4.14 Permits. (a) Such Seller has all permits, licenses, franchises and
other governmental authorizations, consents and approvals, (other than
Environmental Permits, which are addressed in Section 4.7 hereof) (collectively,
"Permits") necessary to permit such Seller to own and operate the Purchased
Assets except where the failure to have such Permits would not, individually or
in the aggregate, create a Material Adverse Effect. Except as disclosed on
Schedule 4.14(a), neither Seller has received any notification that it is in
violation of any such Permits, except notifications of violations which would
not, individually or in the aggregate, create a Material Adverse Effect. Each
such Seller is in compliance with all such Permits except where non-compliance
would not, individually or in the aggregate, create a Material Adverse Effect.
(b) Schedule 4.14(b) sets forth all material Permits and Environmental
Permits, other than Transferable Permits (which are set forth on Schedule
1.1(105)) related to the Purchased Assets.
4.15 Taxes. Such Seller has filed all returns required to be filed by it
with respect to any Tax relating to the Purchased Assets, and Seller has paid
all Taxes that have become due as indicated thereon, except where such Tax is
being contested in good faith by appropriate proceedings, or where the failure
to so file or pay would not reasonably be expected to create a Material Adverse
Effect. Such Seller has complied in all material respects with all applicable
laws, rules and regulations relating to withholding Taxes relating to
Transferred Employees. All Tax Returns relating to the Purchased Assets are
true, correct and complete in all material respects. Except as set forth in
Schedule 4.15, no notice of deficiency or assessment has been received from any
taxing authority with respect to liabilities for Taxes of such Seller in respect
of the Purchased Assets, which have not been fully paid or finally settled, and
any such deficiency shown in Schedule 4.15 is being contested in good faith
through appropriate proceedings. Except as set forth in Schedule 4.15, there are
no outstanding agreements or waivers extending the applicable statutory periods
of limitation for Taxes associated with the Purchased Assets that will be
binding upon Buyer after the Closing. None of the Purchased Assets is property
37
that is required to be treated as being owned by any other person pursuant to
the so-called safe harbor lease provisions of former Section 168(f) of the Code,
and none of the Purchased Assets is "tax-exempt use" property within the meaning
of Section 168(h) of the Code. Schedule 4.15 sets forth the taxing jurisdictions
in which such Seller owns assets or conducts business that require a
notification to a taxing authority of the transactions contemplated by this
Agreement, if the failure to make such notification, or obtain Tax clearance
certificates in connection therewith, would either require Buyer to withhold any
portion of the Purchase Price or subject Buyer to any liability for any Taxes of
such Seller.
4.16 Intellectual Property. Schedule 2.1(l) sets forth all Intellectual
Property used in and, individually or in the aggregate with other Intellectual
Property, material to the operation or business of the Purchased Assets, each of
which such Seller or its Affiliates either has all right, title and interest in
or valid and binding rights under contract to use. Except as disclosed in
Schedule 4.16, (i) such Seller is not, nor has it received any notice that it
is, in default (or with the giving of notice or lapse of time or both, would be
in default), under any contract to use such Intellectual Property, and (ii) to
such Seller's Knowledge, such Intellectual Property is not being infringed by
any other Person. Neither Seller has received notice that it is infringing any
Intellectual Property of any other Person in connection with the operation or
business of the Purchased Assets, and such Seller, to its Knowledge, is not
infringing any Intellectual Property of any other Person the effect of which,
individually or in the aggregate, would have a Material Adverse Effect.
4.17 Capital Expenditures. Except as set forth in Schedule 6.1, there are
no capital expenditures associated with the Purchased Assets that are planned by
Sellers through December 31, 1999.
4.18 Compliance With Laws. Each Seller is in compliance with all
applicable laws, rules and regulations with respect to the ownership or
operation of the Purchased Assets except where the failure to be in compliance
would not, individually or in the aggregate, create a Material Adverse Effect.
4.19 PUHCA. Such Seller is a wholly owned subsidiary of GPU, Inc., which
is a holding company registered under the Public Utility Holding Company Act of
1935.
4.20 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
38
ASSETS ARE SOLD "AS IS, WHERE IS", AND EACH SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE PLANTS, THE TITLE, CONDITION, VALUE OR QUALITY OF
THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE PURCHASED ASSETS AND EACH SELLER SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE WITH RESPECT TO THE PURCHASED ASSETS, OR ANY PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING
BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER EACH SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, EACH SELLER FURTHER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS
WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, EACH SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF
THE PURCHASED ASSETS OR THE SUITABILITY OF THE PURCHASED ASSETS FOR OPERATION AS
A POWER PLANT AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER
MATERIAL OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY EACH SELLER OR
THEIR REPRESENTATIVES, OR BY ANY BROKER OR INVESTMENT BANKER, WILL CAUSE OR
CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR
QUALITY OF THE PURCHASED ASSETS.
The Sellers make no warranties and representations of any kind, whether
direct or implied, that any of the hardware, software, and firmware products
(including embedded microcontrollers in non-computer equipment) which may be
included in the Purchased Assets to be transferred under this Agreement (the
"Computer Systems") is Year 2000 Compliant. For purposes hereof, "Year 2000
Compliant" shall mean that the Computer Systems will correctly differentiate
between years, in different centuries, that end in the same two digits, and will
accurately process date/time data (including, but not limited to, calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, including leap year calculations.
39
ARTICLE IVA
REPRESENTATIONS AND WARRANTIES OF GPU
GPU represents and warrants to Buyer as follows:
4A.1. Incorporation; Qualification. (a) Each of GPU and Genco is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation and has all requisite corporate power and
authority to own, lease, and operate its material properties and assets and to
carry on its business as is now being conducted. Each of GPU and Genco is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which its business as now being conducted shall
require it to be so qualified, except where the failure to be so qualified would
not have a Material Adverse Effect. GPU has heretofore delivered to Buyer true,
complete and correct copies of its and Genco's Certificate of Incorporation and
Bylaws as currently in effect.
(b) The Genco Stock, which consists of 2500 shares of common stock,
$20 par value, constitutes all of the issued and outstanding shares of capital
stock of Genco and is owned beneficially and of record by GPU, free and clear of
all Encumbrances. The Genco Stock is issued and outstanding, has been duly
authorized and validly issued, and is fully paid and non-assessable. There are
no other authorized shares of capital stock of Genco other than the 2500 shares
of common stock comprising the Genco Stock. None of the shares comprising the
Genco Stock has been issued in violation of, or is subject to, any preemptive or
subscription rights, rights of first refusal or offer, options, put or call
rights, consent rights, restrictive covenants or agreement with any third party
other than Buyer ("Restrictive Third Party Rights"). There are no outstanding
securities convertible into or exchangeable for the capital stock of Genco.
Neither GPU nor Genco has any obligation, contingent or otherwise to issue,
sell, repurchase, redeem or otherwise acquire any of the Genco Stock or other
capital stock of Genco or any equity or debt securities of Genco.
4A.2. Authority Relative to this Agreement. GPU has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and delivery of this
Agreement by GPU and the consummation of the transactions contemplated by GPU
hereby have been duly and validly authorized by all necessary corporate action
required on the part of GPU and this Agreement has been duly and validly
executed and delivered by GPU. Subject to the receipt of Sellers' Required
Regulatory Approvals, this Agreement constitutes the legal, valid and binding
40
agreement of GPU, enforceable against GPU in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
4A.3. Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4A.3(a), and subject to obtaining Sellers' Required Regulatory
Approvals, neither the execution and delivery of this Agreement by GPU nor the
consummation by GPU of the transactions contemplated hereby (including, without
limitation, the transfer of Genco Stock to Buyer and any documents executed or
actions required to accomplish the purposes of Section 2.6 hereof) will (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of GPU or Genco, (ii) result in a default (or give rise
to any right of termination, option, consent, first offer, first refusal,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, material agreement or other instrument
or obligation to which GPU is a party or by which it may be bound, except for
such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which, would not,
individually or in the aggregate, create a Material Adverse Effect; or (iii)
constitute violations of any law, regulation, order, judgment or decree
applicable to GPU, which violations, individually or in the aggregate, would
create a Material Adverse Effect.
(b) Subject to the receipt of Sellers' Required Regulatory
Approvals, no consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by GPU, or the consummation by GPU of the transactions contemplated
hereby, other than (i) such consents, approvals, filings or notices which, if
not obtained or made, will not prevent GPU from performing its material
obligations hereunder and (ii) such consents, approvals, filings or notices
which become applicable to GPU as a result of the specific regulatory status of
Buyer (or any of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which Buyer (or any of its
Affiliates) is or proposes to be engaged.
4A.4. Genco Tax Matters. With respect to the sale of the Genco Stock,
except as set forth on Schedule 4A.4:
41
(i) Genco has (x) duly and timely filed (or there has been
filed on its behalf) with the appropriate taxing authorities all Tax
Returns required to be filed by it, and all such Tax Returns are
materially correct and (y) timely paid or there has been paid on its
behalf all Taxes due or claimed to be due from it by any taxing authority;
(ii) Genco has, within the time and manner prescribed by law,
withheld and paid over to the proper governmental authorities all amounts
required to be withheld and paid over under all applicable laws;
(iii) There are no Encumbrances for Taxes upon the assets or
properties of Genco, except for statutory encumbrances for current Taxes
not yet due;
(iv) Genco has not requested any extension of time within
which to file any Tax Return in respect of any taxable year which has not
since been filed and no outstanding waivers or comparable consents
regarding the application of the statue of limitations with respect to any
Taxes or Tax Returns has been given by or on behalf of Genco;
(v) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings ("Audits") exist or have
been initiated with regard to any Taxes or Tax Returns of Genco and Genco
has not received any written notice that such an audit is pending or
threatened with respect to any Taxes due from or with respect to Genco or
any Tax Return field by or with respect to Genco.
(vi) Genco has not requested or received a ruling from any
taxing authority or signed a closing or other agreement with any taxing
authority which could materially adversely affect Genco;
(vii) Except for the GPU Intercompany Tax Allocation
Agreement, Genco is not a party to, is not bound by, and has no obligation
under, any Tax sharing agreement, Tax indemnification agreement or similar
contract or arrangement;
(viii) No power of attorney has been granted with respect to
Genco as to any matter relating to Taxes;
(ix) Genco has not filed a consent pursuant to Section 341(f)
of the Code (or any predecessor provision) or agreed to have Section
42
341(f)(2) of the Code apply to any disposition of a subsection (f) asset,
as such term is defined in Section 341(f)(4) of the Code, owned by Genco;
(x) No property owned by Genco (A) is property required to be
treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately prior to the enactment of the Tax Reform Act of 1986,
(B) constitutes "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (C) is tax-exempt bond financed property within
the meaning of Section 168(g) of the Code;
(xi) Since December 31, 1996, Genco has not incurred any
liability for Taxes other than in the ordinary course of business;
(xii) Genco has no liability for Taxes of any person pursuant
to Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law) other than for the consolidated return group
of which GPU is the parent;
(xiii) Genco has not participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code; and
(xiv) Genco is not a party to any contract, agreement or other
arrangement which could result in the payment by it of amounts that could
be nondeductible by reason of Section 280G or 162(m) of the Code.
4A.5. Subsidiaries. Genco does not own any subsidiaries nor any debt,
preferred, common or other equity securities of any kind nor any equity
interests in any other business, legal entity or arrangement.
4A.6. Capitalization. GPU has good and valid title to the Genco Stock,
free and clear of all Encumbrances and upon consummation of the transactions
contemplated hereby, Buyer will acquire good and valid title to the Genco Stock
free and clear of all Encumbrances and Restrictive Third Party Rights. The
authorized, issued and outstanding capital stock of Genco is set forth in
Schedule 4A.6. There are no options, warrants, rights or other agreements in
existence which entitle any Person to acquire any Genco capital stock or
respecting the voting of any Shares thereof.
43
4A.7. Operating Agreements. Each Operating Agreement constitutes a legal,
valid and binding obligation of Genco and, to GPU's Knowledge, constitutes a
valid and binding obligation of the other parties thereto. Except as set forth
in Schedule 4A.7, there is not, under the Operating Agreement any default or
event which, with notice or lapse of time or both would constitute a default on
the part of Genco or to GPU's Knowledge, any of the other parties thereto,
except such events of default and other events which would not, individually or
in the aggregate, create a Material Adverse Effect. As used herein, "Operating
Agreements" means the Keystone Operating Agreement, dated as of December 1,
1965, and the Conemaugh Operating Agreement, dated as of December 1, 1967, each
as amended, among the respective owners of such Plants, copies of which have
been furnished to Buyer.
4A.8. Financial Statements. Attached hereto as Schedule 4A.8 are the
audited balance sheet and income statement of Genco as, at and for the year
ended December 31, 1997, and the unaudited balance sheet and income statement of
Genco as, at and for the period ended June 30, 1998 (the "Financial
Statements"). The Financial Statements (including the notes thereto) have been
prepared in accordance with generally accepted accounting principles ("GAAP")
and present fairly the financial condition of Genco as of the dates set forth
therein (subject in the case of the unaudited financial statements, to year end
audit adjustments). The books and records of Genco are complete in all material
respects and have been maintained in accordance with GAAP or other applicable
regulatory requirements. Genco has no material liability or asset which is not
disclosed in the Financial Statements and which is required to be disclosed in a
balance sheet prepared in accordance with GAAP.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers and GPU as follows:
5.1 Organization. Buyer is a Delaware corporation, duly organized, validly
existing and in good standing under the laws of the state of its organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as is now being conducted. Buyer is,
or by the Closing will be, qualified to do business in the Commonwealth of
Pennsylvania. Buyer has heretofore delivered to Sellers complete and correct
copies of its Certificate of Incorporation and Bylaws (or other similar
governing documents) as currently in effect.
44
5.2 Authority Relative to this Agreement. Buyer has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and delivery of this
Agreement by Buyer and the consummation of the transactions contemplated hereby
by Buyer have been duly and validly authorized by all necessary corporate action
required on the part of Buyer. This Agreement has been duly and validly executed
and delivered by Buyer. Subject to the receipt of Buyer Required Regulatory
Approvals, this Agreement constitutes a legal, valid and binding agreement of
Buyer, enforceable against Buyer in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
5.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 5.3(a), and subject to obtaining
Buyer Required Regulatory Approvals, neither the execution and delivery of this
Agreement by Buyer nor the consummation by Buyer of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws (or other similar
governing documents) of Buyer, or (ii) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, material
agreement or other instrument or obligation to which Buyer or any of its
Subsidiaries is a party or by which any of their respective assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, have a material adverse
effect on the business, assets, operations or condition (financial or otherwise)
of Buyer ("Buyer Material Adverse Effect") or (iii) violate any law, regulation,
order, judgment or decree applicable to Buyer, which violations, individually or
in the aggregate, would create a Buyer Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as the
"Buyer Required Regulatory Approvals"), no consent or approval of, filing with,
or notice to, any Governmental Authority is necessary for Buyer's execution and
delivery of this Agreement, or the consummation by Buyer of the transactions
contemplated hereby, other than such consents, approvals, filings or notices,
45
which, if not obtained or made, will not prevent Buyer from performing its
obligations under this Agreement.
5.4 Availability of Funds. Buyer has sufficient funds and lines of credit
available to it or has received binding written commitments from creditworthy
financial institutions, copies of which have been provided to Seller, to provide
sufficient funds on the Closing Date to pay the Purchase Price and to permit
Buyer to timely perform all of its obligations under this Agreement.
5.5 Legal Proceedings. There are no actions or proceedings pending against
Buyer before any court or arbitrator or Governmental Authority, which,
individually or in the aggregate, could reasonably be expected to create a Buyer
Material Adverse Effect. Buyer is not subject to any outstanding judgments,
rules, orders, writs, injunctions or decrees of any court, arbitrator or
Governmental Authority which would, individually or in the aggregate, create a
Buyer Material Adverse Effect.
5.6 No Knowledge of Sellers' Breach. Buyer has no Knowledge of any breach
by Sellers of any representation or warranty of Sellers, or of any other
condition or circumstance that would excuse Buyer from its timely performance of
its obligations hereunder. Buyer shall notify Sellers promptly if any such
information comes to its attention prior to the Closing.
5.7 Qualified Buyer. Buyer is qualified to obtain any Permits and
Environmental Permits necessary for Buyer to own and operate the Purchased
Assets as of the Closing. Without limiting the foregoing, Buyer is not aware of
any reason or circumstance that would prevent Buyer from procuring Buyer
Required Regulatory Approvals associated with Exempt Wholesale Generator (as
defined in the Public Utility Holding Company Act of 1935) status and
market-based rate authorization specified in items 3 and 2 of Schedule 5.3(b).
5.8 Inspections. Without limitation of Sellers' representations,
warranties and covenants contained in this Agreement or the Ancillary
Agreements, Buyer acknowledges and agrees that it has, prior to its execution of
this Agreement, (i) reviewed the Environmental Reports, (ii) had full
opportunity to conduct to its satisfaction Inspections of the Purchased Assets,
including the Sites, and (iii) fully completed and approved the results of all
Inspections of the Purchased Assets. Subject to the restrictions set forth in
Section 6.2(a), Buyer acknowledges that it is satisfied through such review and
Inspections that no further investigation and study on or of the Sites is
necessary for the purposes of acquiring the Purchased Assets for Buyer's
46
intended use. Buyer acknowledges and agrees that it hereby assumes the risk that
adverse past, present, and future physical characteristics and Environmental
Conditions may not have been revealed by its Inspections and the investigations
of the Purchased Assets contained in the Environmental Reports. In making its
decision to execute this Agreement, and to purchase the Purchased Assets, Buyer
has relied on and will rely upon, among other things, the results of its
Inspections and the Environmental Reports.
5.9 WARN Act. Buyer does not intend to engage in a Plant Closing or Mass
Layoff as such terms are defined in the WARN Act within sixty days of the
Closing Date.
5.10 Securities Laws. Buyer acknowledges that the offer and sale of the
Genco Stock has not been registered under the Securities Act of 1933 or any
state securities laws, and affirms that it is not acquiring such shares with a
view toward distribution in violation of such act or any state securities laws.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased Assets. (a) Except as
described in Schedule 6.1 or as expressly contemplated by this Agreement or to
the extent Buyer otherwise consents in writing, during the period from the date
of this Agreement to the Closing Date, each Seller (i) will operate the
Purchased Assets in the ordinary course of business consistent with the past
practices of such Seller or its Affiliates or with Good Utility Practices, (ii)
shall use all Commercially Reasonable Efforts to preserve intact such Purchased
Assets, and endeavor to preserve the goodwill and relationships with customers,
suppliers and others having business dealings with it, (iii) shall maintain the
insurance coverage described in Section 4.4, (iv) shall comply with all
applicable laws relating to the Purchased Assets, including without limitation,
all Environmental Laws, except where the failure to so comply would not result
in a Material Adverse Effect, and (v) shall continue with such Seller's program,
or (at Buyer's expense) as Buyer may direct, to install such equipment or
software with respect to Year 2000 Compliance in accordance with such Seller's
plans referred to in Section 2.1(k). Without limiting the generality of the
foregoing, and, except as (x) contemplated in this Agreement, (y)
47
described in Schedule 6.1, or (z) required under applicable law or by any
Governmental Authority, prior to the Closing Date, without the prior written
consent of Buyer, such Seller shall not with respect to the Purchased Assets:
(i) Make any material change in the levels of Inventories
customarily maintained by such Seller or its Affiliates with respect to
such Purchased Assets, other than changes which are consistent with Good
Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge, transfer or
otherwise dispose of, any material Purchased Assets individually or in the
aggregate (except for Purchased Assets used, consumed or replaced in the
ordinary course of business consistent with past practices of such Seller
or its Affiliates or with Good Utility Practices) other than to encumber
Purchased Assets with Permitted Encumbrances;
(iii) Modify, amend or voluntarily terminate prior to the
expiration date any of Sellers' Agreements or Real Property Leases or any
of the Permits or Environmental Permits associated with such Purchased
Assets in any material respect, other than (a) in the ordinary course of
business, to the extent consistent with the past practices of such Seller
or its Affiliates or with Good Utility Practices, (b) with cause, to the
extent consistent with past practices of such Seller or its Affiliates or
with Good Utility Practices, or (c) as may be required in connection with
transferring such Seller's rights or obligations thereunder to Buyer
pursuant to this Agreement;
(iv) Except as otherwise provided herein, enter into any
commitment for the purchase, sale, or transportation of fuel having a term
greater than six months and not terminable on or before the Closing Date
either (i) automatically, or (ii) by option of such Seller (or, after the
Closing, by Buyer) in its sole discretion, if the aggregate payment under
such commitment for fuel and all other outstanding commitments for fuel
not previously approved by Buyer would exceed $1,000,000 for all Aggregate
Purchased Assets;
(v) Sell, lease or otherwise dispose of Emission Allowances,
or Emission Reduction Credits identified in Schedule 2.1(h), except to the
extent necessary to operate such Purchased Assets
in accordance with this Section 6.1;
48
(vi) Except as otherwise provided herein, enter into any
contract, agreement, commitment or arrangement relating to such Purchased
Assets that individually exceeds $250,000 or in the aggregate exceeds
$1,000,000 unless it is terminable by such Seller (or, after the Closing,
by Buyer) without penalty or premium upon no more than sixty (60) days
notice;
(vii) Except as otherwise required by the terms of the
Collective Bargaining Agreement, (a) hire at, or transfer to such
Purchased Assets, any new employees prior to the Closing, other than to
fill vacancies in existing positions in the reasonable discretion of such
Seller or Genco, (b) increase salaries or wages of employees employed in
connection with the Purchased Assets prior to the Closing other than in
the ordinary course of business and in accordance with Seller's past
practices, (c) take any action prior to the Closing to effect a change in
a Collective Bargaining Agreement, or (d) take any action prior to the
Closing to increase the aggregate benefits payable to the employees
employed in connection with the Purchased Assets other than increases for
Non-Union Employees in the ordinary course of business and in accordance
with Sellers' past practices or (e) enter into any employment contracts
with employees at the Purchased Assets or any collective bargaining
agreements with labor organizations representing such employees;
(viii) Make any Capital Expenditures except as permitted by
Section 3.3(a)(iii) or for such Seller's account; and
(ix) Except as otherwise provided herein, enter into any
written or oral contract, agreement, commitment or arrangement with
respect to any of the proscribed transactions set forth in the foregoing
paragraphs (i) through (viii).
6.2 Access to Information.
(a) Between the date of this Agreement and the Closing Date, each of
Seller and Genco will, at reasonable times and upon reasonable notice: (i) give
Buyer and its Representatives reasonable access to its managerial personnel and
to all books, records, plans, equipment, offices and other facilities and
properties constituting the Purchased Assets; (ii) furnish Buyer with such
financial and operating data and other information with respect to such
Purchased Assets as Buyer may from time to time reasonably request, and permit
Buyer to make such reasonable
49
Inspections thereof as Buyer may request; (iii) furnish Buyer at its request a
copy of each material report, schedule or other document filed by such Seller or
Genco or any of its Affiliates with respect to such Purchased Assets with the
SEC, FERC, NJBPU, PaPUC, PaDEP or any other Governmental Authority; and (iv)
furnish Buyer with all such other information as shall be reasonably necessary
to enable Buyer to verify the accuracy of the representations and warranties of
such Seller contained in this Agreement; provided, however, that (A) any such
inspections and investigations shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Purchased Assets, (B) such
Seller or Genco shall not be required to take any action which would constitute
a waiver of the attorney-client privilege, and (C) such Seller or Genco need not
supply Buyer with any information which such Seller or Genco is under a legal or
contractual obligation not to supply. Notwithstanding anything in this Section
6.2 to the contrary, Sellers and Genco will only furnish or provide such access
to Transferring Employee Records and will not furnish or provide access to other
employee personnel records or medical information unless required by law or
specifically authorized by the affected employee, nor shall Buyer have the right
to administer to any of Sellers' or Genco's employees any skills, aptitudes,
psychological profile, or other employment related test. Buyer shall not have
the right to perform or conduct any environmental sampling or testing at, in,
on, or underneath the Purchased Assets.
(b) Each Party shall, and shall use its best efforts to cause its
Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party's Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of the
transactions contemplated hereby. After the Closing Date, any Proprietary
Information to the extent related to the Purchased Assets shall no longer be
subject to the restrictions set forth herein. The obligations of the Parties
under this Section 6.2(b) shall be in full force and effect for three (3) years
from the date hereof and will survive the termination of this Agreement, the
discharge of all other obligations owed by the Parties to each other and the
closing of the transactions contemplated by this Agreement.
(c) For a period of seven (7) years after the Closing Date (or such longer
period as may be required by applicable law or Section 6.8(g)), each Party and
its Representatives shall have reasonable access to all of the books and records
of the Purchased Assets, including all Transferring Employee Records in the
possession of the other Party to the extent that such access
50
may reasonably be required by such Party in connection with the Assumed
Liabilities or the Excluded Liabilities, or other matters relating to or
affected by the operation of the Purchased Assets. Such access shall be afforded
by the Party in possession of any such books and records upon receipt of
reasonable advance written notice and during normal business hours. The Party
exercising this right of access shall be solely responsible for any costs or
expenses incurred by it or the other Party with respect to such access pursuant
to this Section 6.2(c). If the Party in possession of such books and records
shall desire to dispose of any books and records upon or prior to the expiration
of such seven-year period (or any such longer period), such Party shall, prior
to such disposition, give the other Party a reasonable opportunity at such other
Party's reasonable expense, to segregate and remove such books and records as
such other Party may select.
(d) Notwithstanding the terms of Section 6.2(b) above, the Parties agree
that prior to the Closing Buyer may reveal or disclose Proprietary Information
to any other Persons in connection with Buyer's financing of its purchase of the
Purchased Assets or any equity participation in Buyer's purchase of the
Purchased Assets (provided that such Persons agree in writing to maintain the
confidentiality of the Proprietary Information in accordance with this
Agreement).
(e) Upon the other Party's prior written approval (which will not be
unreasonably withheld or delayed), either Party may provide Proprietary
Information of the other Party to the NJBPU, the PaPUC, the SEC, the FERC or any
other Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Sellers' Required Regulatory Approvals, or Buyer Required
Regulatory Approvals, respectively, or to comply generally with any relevant law
or regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other Party as far in advance as is practicable
of its intention to release to any Governmental Authority any Proprietary
Information.
(f) Except as specifically provided herein or in the Confidentiality
Agreement, nothing in this Section shall impair or modify any of the rights or
obligations of Buyer or its Affiliates under the Confidentiality Agreement, all
of which remain in effect until termination of such agreement in accordance with
its terms.
(g) Except as may be permitted in the Confidentiality Agreement, Buyer
agrees that, prior to the Closing Date, it will
51
not contact any vendors, suppliers, employees, or other contracting parties of
Sellers, Genco or their Affiliates with respect to any aspect of the Purchased
Assets or the transactions contemplated hereby, without the prior written
consent of Sellers, which consent shall not be unreasonably withheld.
6.3 Public Statements. Subject to the requirements imposed by any
applicable law or any Governmental Authority or stock exchange, prior to the
Closing Date, no press release or other public announcement or public statement
or comment in response to any inquiry relating to the transactions contemplated
by this Agreement shall be issued or made by any Party without the prior
approval of the other Parties (which approval shall not be unreasonably
withheld). The Parties agree to cooperate in preparing such announcements.
6.4 Expenses. Except to the extent specifically provided herein, whether
or not the transactions contemplated hereby are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the obtaining of any
title insurance policy and all endorsements thereto that Buyer elects to obtain
and (b) all filing fees under the HSR Act.
6.5 Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each of the
Parties hereto shall use its best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the purchase and sale of the Purchased Assets pursuant to this Agreement and the
assumption of the Assumed Liabilities, including without limitation using its
best efforts to ensure satisfaction of the conditions precedent to each Party's
obligations hereunder, including obtaining all necessary consents, approvals,
and authorizations of third parties and Governmental Authorities required to be
obtained in order to consummate the transactions hereunder, and to effectuate a
transfer of the Transferable Permits to Buyer. Buyer agrees to perform all
conditions required of Buyer in connection with Sellers' Required Regulatory
Approvals, other than those conditions which would create a Buyer Material
Adverse Effect. Neither of the Parties hereto shall, without prior written
consent of the other Party, take or fail to take any action, which might
reasonably be expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement.
52
(b) Buyer agrees that prior to the Closing Date, neither Buyer nor any of
its Affiliates will enter into any other contract to acquire, nor acquire,
electric generation facilities located in the control area recognized by the
North American Reliability Council as the PJM Control Area if the proposed
acquisition of such additional electric generation facilities might reasonably
be expected to prevent or materially impede, interfere with or delay the
transactions contemplated by this Agreement. Buyer shall give Sellers reasonable
advance notice (and in any event not less than 30 days) before Buyer enters into
contracts to acquire or acquires any electric generation facility located in
said PJM Control Area.
(c) In the event that any Purchased Asset shall not have been conveyed to
Buyer at the Closing, each Seller shall, subject to Section 6.5(d) and (e), use
Commercially Reasonable Efforts to convey such asset to Buyer as promptly as is
practicable after the Closing.
(d) To the extent that Sellers' rights under any Sellers' Agreement or
Real Property Lease may not be assigned without the consent of another Person
which consent has not been obtained by the Closing Date, this Agreement shall
not constitute an agreement to assign the same, if an attempted assignment would
constitute a breach thereof or be unlawful. Sellers and Buyer agree that if any
consent to an assignment of any material Sellers' Agreement or Real Property
Lease shall not be obtained or if any attempted assignment would be ineffective
or would impair Buyer's rights and obligations under the material Sellers'
Agreement or Real Property Lease in question, so that Buyer would not in effect
acquire the benefit of all such rights and obligations, the applicable Seller,
at Buyer's option and to the maximum extent permitted by law and such material
Sellers' Agreement or Real Property Lease, shall, after the Closing Date,
appoint Buyer to be such Seller's agent with respect to such material Seller's
Agreement or Real Property Lease, or, to the maximum extent permitted by law and
such material Sellers' Agreement or Real Property Lease, enter into such
reasonable arrangements with Buyer or take such other actions as are necessary
to provide Buyer with the same or substantially similar rights and obligations
of such material Sellers' Agreement or Real Property Lease as Buyer may
reasonably request. Sellers and Buyer shall cooperate and shall each use
Commercially Reasonable Efforts prior to and after the Closing Date to obtain an
assignment of such material Sellers' Agreement or Real Property Lease to Buyer.
(e) To the extent that Sellers' rights under any warranty or guaranty
described in Section 2.1(i) may not be assigned
53
without the consent of another Person, which consent has not been obtained by
the Closing Date, this Agreement shall not constitute an agreement to assign
same, if an attempted assignment would constitute a breach thereof, or be
unlawful. Sellers and Buyer agree that if any consent to an assignment of any
such warranty or guaranty shall not be obtained, or if any attempted assignment
would be ineffective or would impair Buyer's rights and obligations under the
warranty or guaranty in question, so that Buyer would not in effect acquire the
benefit of all such rights and obligations, the applicable Seller, at Buyer's
expense, shall use Commercially Reasonable Efforts, to the extent permitted by
law and such warranty or guaranty, to enforce such warranty or guaranty for the
benefit of Buyer so as to provide Buyer to the maximum extent possible with the
benefits and obligations of such warranty or guaranty.
(f) Between the date hereof and the Closing, Buyer shall have the right to
commence the regulatory approval processes associated with the construction and
operation of new, modified or repowered electric generating units and associated
equipment at the Real Property. Sellers shall provide reasonable assistance to
Buyer, under Buyer's reasonable direction, in obtaining all Permits required (i)
to own and operate the Purchased Assets as contemplated by the Agreement and the
Ancillary Agreements and (ii) to construct and operate such new or modified
facilities, provided, however, that Buyer shall reimburse Sellers for all
reasonable costs incurred by Sellers in its assistance of Buyer hereunder.
(g) Sellers agree to use Commercial Reasonable Efforts to have the
co-owners of the Keystone and Conemaugh Stations enter into an interconnection
agreement with Seller (substantially in the form of the agreements being
executed by Buyer and JCP&L, Met-Ed and Penelec, respectively, relating to other
generating stations). Pending any such agreement, following the Closing, Sellers
agree to continue to provide interconnection service to each Station on the same
terms and conditions as they are currently so providing.
6.6 Consents and Approvals.
(a) As promptly as possible after the date of this Agreement, Sellers and
Buyer, as applicable, shall each file or cause to be filed with the Federal
Trade Commission and the United States Department of Justice any notifications
required to be filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The Parties
shall use their respective best efforts to respond promptly to any requests for
additional
54
information made by either of such agencies, and to cause the waiting periods
under the HSR Act to terminate or expire at the earliest possible date after the
date of filing. Buyer will pay all filing fees under the HSR Act but each Party
will bear its own costs of the preparation of any filing.
(b) As promptly as possible after the date of this Agreement, Buyer shall
file with the FERC an application requesting Exempt Wholesale Generator status
for Buyer, which filing may be made individually by Buyer or jointly with the
Sellers in conjunction with other filings to be made with the FERC under this
Agreement, as reasonably determined by the Parties. Prior to Buyer's submission
of that application with the FERC, Buyer shall submit such application to the
Sellers for review and comment and Buyer shall incorporate into the application
any revisions reasonably requested by Sellers. Buyer shall be solely responsible
for the cost of preparing and filing this application, any petition(s) for
rehearing, or any re-application. If Buyer's initial application for Exempt
Wholesale Generator status is rejected by the FERC, Buyer agrees to petition the
FERC for rehearing and/or to re-submit an application with the FERC, as
reasonably required by the Sellers, provided that in either case the action
directed by the Sellers does not create a Buyer Material Adverse Effect.
(c) As promptly as possible after the date of this Agreement, Buyer shall
file with the FERC an application requesting authorization under Section 205 of
the Federal Power Act to sell electric generating capacity and energy, but not
other services, including, without limitation, ancillary services, at wholesale
at market-based rates, which filing may be made individually by Buyer or jointly
with Sellers in conjunction with other filings to be made with the FERC under
this Agreement, as reasonably determined by the Parties. Prior to the filing of
that application with the FERC, Buyer shall submit such application to the
Sellers for review and comment and Buyer shall incorporate into the application
any revisions reasonably requested by the Sellers. Buyer shall be solely
responsible for the cost of preparing and filing this application, any
petition(s) for rehearing, or any reapplication. If Buyer's initial application
for market-based rate authorization results in a FERC request for additional
information or is rejected by the FERC, Buyer shall provide that information
promptly, to petition the FERC for rehearing and/or to re-submit an application
with the FERC, as reasonably required by the Sellers, provided that the Sellers
shall have a reasonable opportunity to make changes to such a petition or
re-submission application and,
55
provided further, that the action directed by Seller does not create a Buyer
Material Adverse Effect.
(d) As promptly as possible, and in any case within sixty (60) days, after
the date of this Agreement, Sellers and Buyer, as applicable, shall file with
the NJBPU, the PaPUC, the FERC and any other Governmental Authority, and make
any other filings required to be made with respect to the transactions
contemplated hereby. The Parties shall respond promptly to any requests for
additional information made by such agencies, and use their respective best
efforts to cause regulatory approval to be obtained at the earliest possible
date after the date of filing. Each Party will bear its own costs of the
preparation of any such filing.
(e) Without limitation of Section 10.11, Sellers and Buyer shall cooperate
with each other and promptly prepare and file notifications with, and request
Tax clearances from, state and local taxing authorities in jurisdictions in
which a portion of the Purchase Price may be required to be withheld or in which
Buyer would otherwise be liable for any Tax liabilities of Sellers pursuant to
such state and local Tax law.
(f) Buyer shall have the primary responsibility for securing the transfer,
reissuance or procurement of the Permits and Environmental Permits (other than
Transferable Permits) effective as of the Closing Date. Sellers shall cooperate
with Buyer's efforts in this regard and assist in any transfer or reissuance of
a Permit or Environmental Permit held by Sellers or the procurement of any other
Permit or Environmental Permit when so requested by Buyer.
6.7 Fees and Commissions. Each Seller, on the one hand, and Buyer, on the
other hand, represent and warrant to the other that, except for Goldman, Sachs &
Co., which are acting for and at the expense of such Seller, no broker, finder
or other Person is entitled to any brokerage fees, commissions or finder's fees
in connection with the transaction contemplated hereby by reason of any action
taken by the Party making such representation. Each Seller, on the one hand, and
Buyer, on the other hand, will pay to the other or otherwise discharge, and will
indemnify and hold the other harmless from and against, any and all claims or
liabilities for all brokerage fees, commissions and finder's fees (other than
the fees, commissions and finder's fees payable to the parties listed above)
incurred by reason of any action taken by the indemnifying party.
6.8 Tax Matters.
56
(a) All transfer and sales taxes incurred in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, (a) Pennsylvania and New Jersey sales tax; and (b) the Pennsylvania
and New Jersey realty transfer taxes on conveyances of interests in real
property (including such taxes assessed by Pennsylvania municipalities as well
as by the Commonwealth of Pennsylvania itself)) shall be borne by Buyer. Except
for the Pennsylvania Realty Transfer Tax Statement of Value, which shall be
filed by Buyer, Sellers shall file, to the extent required by, or permissible
under, applicable law, all necessary Tax Returns and other documentation with
respect to all such transfer and sales taxes, and, if required by applicable
law, Buyer shall join in the execution of any such Tax Returns and other
documentation. Prior to the Closing Date, to the extent applicable, Buyer shall
provide to Sellers appropriate certificates of Tax exemption from each
applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with Section 3.5 of
this Agreement, Buyer shall prepare and timely file all Tax Returns required to
be filed after the Closing Date with respect to the Purchased Assets, if any,
and shall duly and timely pay all such Taxes shown to be due on such Tax
Returns. Buyer's preparation of any such Tax Returns shall be subject to
Sellers' approval, which approval shall not be unreasonably withheld. Buyer
shall make such Tax Returns available for Sellers' review and approval no later
than fifteen (15) Business Days prior to the due date for filing each such Tax
Return.
(c) Within fifteen (15) Business Days after receipt of such Tax Return
referred to in Section 6.8(b), each Seller shall pay to Buyer such Sellers'
share of the amount shown on such Tax Return, less payments on account of such
Taxes previously made by each Seller. To the extent that such Sellers' previous
payments exceed such Sellers' share, the Buyer shall pay such excess to such
Seller. With respect to real estate taxes, evidence of payment shall be
delivered by each Seller to Buyer at the Closing. As soon as practicable after
the Closing, Sellers and Buyer shall cooperate in the filing of an amended
return and/or other documents in order to obtain the available refund with
respect to any Closing Year PURTA Tax. Buyer shall be entitled to such refund to
the extent, but only to the extent, that it does not exceed any payments made by
Buyer on account of such PURTA liability.
(d) Buyer and Sellers shall provide the other with such assistance as may
reasonably be requested by the other Party in connection with the preparation of
any Tax Return, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for Taxes, and
57
each shall retain and provide the requesting party with any records or
information which may be relevant to such return, audit, examination or
proceedings. Any information obtained pursuant to this Section 6.8(d) or
pursuant to any other Section hereof providing for the sharing of information or
review of any Tax Return or other instrument relating to Taxes shall be kept
confidential by the parties hereto. Schedule 6.8 sets forth procedures to be
followed with respect to the tax appeals and audits referred to therein.
(e) Genco Tax matters.
(1) Section 338(h)(10) Election. (i) With respect to the sale of the Genco
Stock, GPU and Buyer shall jointly make the election provided for by section
338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations
promulgated under the code and any comparable election under state or local tax
law (the "Election"). As soon as practicable after the Closing Date, with
respect to such Election, GPU and Buyer shall mutually prepare a Form 8023-A,
with all attachments, and GPU shall sign such Form 8023-A. Buyer and GPU shall
also cooperate with each other to take all actions necessary and appropriate
(including filing such additional forms, returns, elections, schedules and other
documents as may be required) to effect and preserve such Election in accordance
with the provisions of Section 1.338(h)(10)-1 of the Treasury Regulations (or
any comparable provisions of state and local tax law) or any successor
provisions.
(ii) With respect to the Election, the parties shall endeavor to agree
upon the amount of the Modified Aggregate Deemed Sales Price as defined in
Section 1.338(h)(10)-1 of the Treasury Regulations (the "Modified ADSP") and
upon an allocation of such Modified ADSP among the assets of Genco pursuant to
Treasury Regulation Section 1.338(h)(10)-1. Buyer and GPU shall use their good
faith Commercially Reasonable Efforts to agree upon such allocation within one
hundred twenty (120) days of the date of this Agreement. In the event that the
parties cannot agree on a mutually satisfactory allocation within said time
period, the Independent Accounting Firm shall, at GPU's and Buyer's joint
expense, determine the appropriate allocation. The finding of such Independent
Accounting Firm shall be binding on the parties. The parties shall take no
action inconsistent with, or fail to take any action necessary for the validity
of the Election, and shall adopt and utilize the asset values determined from
such reasonable allocation for the purpose of all Tax Returns filed by them, and
shall not voluntarily take any action inconsistent therewith upon examination of
any Tax Return, in any refund claim, in any litigation or otherwise with respect
to such
58
Tax Returns. Buyer and GPU shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
the agreed upon allocation of the Modified ADSP.
(2) Return Filing, Payments, Refunds and Credits. Notwithstanding anything
to the contrary in Section 3.5 of this Agreement,
(i) For purposes of this Agreement, the amount of Taxes of Genco
attributable to the pre-Closing portion of any taxable period beginning before
and ending after the Closing Date (the "Straddle Period") shall be allocated
between the pre-Closing and post-Closing portions based, in the case of real and
personal property taxes, on a per diem basis, and in the case of all other Taxes
(including, without limitation, Income Taxes), on the actual activities, income
or loss of Genco during such pre-Closing and post-Closing portions of the
Straddle Period assuming a hypothetical closing of the books as of the end of
the Closing Date; provided, further, that the taxes of Genco that are
attributable to the pre-Closing portion of any taxable period shall include any
Taxes resulting from the gain on any deemed sale of assets by Genco pursuant to
Section 338 of the Code or any comparable provision under the laws of any other
jurisdiction with respect to the transactions contemplated by this Agreement.
(ii) Buyer and GPU shall cause Genco to join, for all pre-Closing periods
and the Straddle Period for which Genco is required or eligible to do so, in all
consolidated, combined or unitary federal, state, or Local Income Tax or
franchise Tax Returns of GPU (or any Tax Affiliate for all pre-Closing periods
("GPU's Tax Returns") and shall, in each jurisdiction where this is required or
permissible under applicable law, cause the taxable year of Genco to terminate
as of the Closing Date. GPU shall cause to be prepared and timely filed all such
GPU's Tax Returns and shall pay or cause to be paid all Taxes shown to be due on
such GPU's Tax Returns; provided, however, that in the case of a GPU's Tax
Return for the Straddle Period, Buyer shall or shall cause Genco to pay to GPU
the portion of such Taxes shown to be due thereon attributable to Genco for the
post-Closing Date portion of the Straddle Period determined in accordance with
Section 6.8(e)(2)(i) and the GPU Intercompany Tax Allocation Agreement in effect
on the date of the signing of this Agreement (the "GPU Intercompany Tax
Allocation Agreement").
(iii) Buyer shall or shall cause Genco to prepare and timely file all
Income Tax Returns of Genco for all pre-Closing periods and the Straddle Period,
other than those referred to in Section 6.8(e)(2)(ii), which Income Tax Returns
have not been filed as of the Closing Date, and shall cause to be timely paid
all Taxes
59
shown to be due on such Tax Returns. No later than ten days prior to the due
date for the filing of each Income Tax Return referred to in this section 6.8
(e)(2)(iii), GPU shall pay to Genco the amount of Taxes shown as due thereon
less any estimated Taxes paid by Genco during the pre-Closing period; provided,
however, that in the case of an Income Tax Return for a Straddle Period, GPU
shall only be required to pay Genco the portion of such Taxes that is
attributable to the pre-Closing Date portion of such Straddle Period, determined
in accordance with Section 6.8(e)(2)(i) and the GPU Intercompany Tax Allocation
Agreement less any estimated Taxes paid by Genco during the pre-Closing period.
GPU shall fully cooperate with Buyer and Genco in accordance with past practice
in the preparation of the Income Tax Return as referred to in this Section
6.8(e)(2)(iii).
(iv) Buyer shall or shall cause Genco to prepare and timely file all Tax
Returns for all pre-Closing periods and the Straddle Period, other than those
Tax Returns referred to in Section 6.8(e)(2)(ii) and (iii), which Tax Returns
have not been filed as of the Closing Date, and shall cause to be timely paid
all Taxes shown to be due thereon. No later than ten days prior to the due date
for the filing of each Tax Return referred to in this Section 6.8(e)(2)(iv), GPU
shall pay to Genco the amount shown as due thereon attributable to the
pre-Closing Date portion of the Straddle Period less any estimated Taxes paid by
Genco during the pre-Closing period.
(v) The Tax Returns referred to in Section 6.8(e)(2)(ii), (iii) and (iv)
shall be prepared in a manner consistent with past practice, unless a contrary
treatment is required by an intervening change in the applicable law. GPU shall
cause to be made available to Buyer a copy of any Tax Return that is required to
be filed by GPU or Genco under 6.8(e)(2)(ii) and Buyer shall cause to be made
available to Seller a copy of any Tax Return that is required to be filed by
Buyer or Genco under Section 6.8(e)(2)(iii) or (iv), in each case together with
all relevant work papers and other information. Each such Tax Return shall be
made available for review and approval no later than 20 Business Days prior to
the due date for the filing of such Tax Return (taking into account proper
extensions), such approval not be unreasonably withheld. An exact copy of any
such Tax Return filed by Buyer shall be provided to GPU and any such Tax Return
filed by GPU shall be provided to Buyer, in each case, no later than ten days
after such Tax Return is filed. To the extent that the Tax Returns that are the
subject of this clause (v) are combined or consolidated tax returns, each
reference to Tax Return shall be to a pro forma separate return of Genco.
60
(vi) Any refunds or credits of the Taxes of Genco plus any interest
received with respect thereto from the applicable taxing authorities for any
pre-Closing period (including without limitation, refunds or credits arising
from amended returns filed after the Closing Date) shall be for the account of
GPU, except to the extent that such refunds or credits are attributable to the
mandatory carryback of any deductions or credits for any Tax Period ending after
a Closing Date and, if received by Buyer or Genco, shall be paid to GPU within
ten days after Buyer or Genco receives such refund or after the relevant Tax
Return is filed within which the credit is applied against Buyer's or Genco's
liability for Taxes for a period which begins after the Closing Date, net of any
Taxes Buyer or Genco is required to pay on account of receiving such refund or
credit (including a reasonable estimate of resulting future Tax costs.) GPU,
without the consent of Buyer, shall not apply for any refund that will create a
material adverse effect on any post-Closing period Tax Return and shall not
apply for any refund for any Straddle Period Tax Return or any Tax Return for
Genco that is not a consolidated, combined, or unitary Tax Return. Any refunds
or credits of Taxes of Genco for any Straddle Period shall be apportioned
between GPU and Buyer in the same manner as the liability for such Taxes is
apportioned pursuant to Section 6.8(e)(2)(i).
(3) Tax Indemnification. (i) Without duplication, GPU shall indemnify,
defend and hold Buyer and Genco harmless from and against any and all Taxes
(including interest and penalties) which may be suffered or incurred by Buyer or
Genco in respect of or relating to, directly or indirectly (x) Taxes of or
attributable to Genco for all pre-Closing periods, (y) Taxes of or attributable
to Genco with respect to the pre-Closing portion of the Straddle period, and (z)
Taxes payable by Genco with respect to any pre-Closing period or Straddle Period
by reason of Genco being severally liable for the Tax of any Tax Affiliate
pursuant to Treasury Regulation 1.1502-6 or any analogous state or local Tax
law.
(ii) Without duplication, Buyer shall indemnify, defend and hold GPU and
each of its Affiliates harmless from and against any and all Taxes (including
interest and penalties) which may be suffered or incurred by them in respect of
or relating to, directly or indirectly (x) Taxes of or attributable to Genco
with respect to all post-Closing periods, and (y) Taxes of or attributable to
Genco with respect to the post-Closing portion of any Straddle Period.
(iii) An indemnity payment due under this Section 6.8(e)(4) shall be made
within thirty (30) days after (i) the party in
61
control of the issue under Section 6.8(e)(3) determines not to contest the
issue, the receipt of a formal notice or assessment from a taxing authority or
the occurrence of any other event giving rise to the payment subject to an
indemnity, or (ii) if the party in control of the issue under Section 6.8(e)(4)
determines to contest the issue, the earlier of the signing of a closing
agreement or settlement agreement or any other similar agreement with the
relevant tax authorities, the receipt of a deficiency notice with respect to
which the period for filing a petition with the relevant court has expired, or a
decision of any court of competent jurisdiction which is not subject to appeal
or as to which the time for appeal has expired.
(4) Tax Contest. (i) GPU and Buyer shall notify the other party in writing
within 30 days of receipt of written notice of any pending or threatened tax
examination, audit or other administrative or judicial proceeding (a "Tax
Contest") that could reasonably be expected to result in an indemnification
obligation under this Section 6.8(e) of such other party pursuant to this
Section 6.8(e). If the recipient of such notice of a Tax Contest fails to
provide such notice to the other party, it shall not be entitled to
indemnification for any Taxes arising in connection with such Tax Contest, but
only to the extent, if any, that such failure or delay shall have adversely
affected the indemnifying party's ability to defend against, settle, or satisfy
any action, suit or proceeding against it, or any damage, loss, claim, or demand
for which the indemnified party is entitled to indemnification hereunder.
(ii) If a Tax Contest relates to any period ending on or prior to the
Closing Date or to any Taxes for which GPU is liable in full hereunder, GPU
shall at its expense control the defense and settlement of such Tax Contest. If
such Tax contest relates to any period beginning after the Closing Date or to
any Taxes for which Buyer is liable in full hereunder, Buyer shall at its own
expense control the defense and settlement of such Tax Contest. The party not in
control of the defense shall have the right to observe the conduct of any Tax
Contest at its expense, including through its own counsel and other professional
experts. Buyer and GPU shall jointly represent Genco in any Tax Contest relating
to a Straddle Period, and fees and expenses related to such representation shall
be paid equally by Buyer and GPU.
(iii) Notwithstanding anything to the contrary in section 6.8(e)(4)(ii),
to the extent that an issue raised in any Tax Contest controlled by one party or
jointly controlled could materially affect the liability for Taxes of the other
party, the controlling party shall not, and neither party in the case of joint
control shall, enter into a final settlement without the
62
consent of the other party, which consent shall not be reasonably withheld.
Where a party withholds its consent to any final settlement, that party may
continue or initiate further proceedings, at its own expense, and the liability
of the party that wished to settle (as between the consenting and the
non-consenting party) shall not exceed the liability that would have resulted
from the proposed final settlement including interest, additions to Tax, and
penalties that have accrued at that time), and the non-consenting party shall
indemnify the consenting party for such Taxes.
Notwithstanding any provision of this Agreement to the contrary,
this Section 6.8 shall survive for the duration of any applicable limitation
periods.
(5) Tax Sharing Agreements. Any Tax sharing agreement to which Genco is a
party shall be deemed terminated with respect to Genco on, and effective as of,
the Closing Date, and no Person shall have any rights or obligations under such
Tax sharing agreement with respect to Genco after such termination; provided,
however, that the GPU Intercompany Tax allocation Agreement shall remain in
effect with respect to Genco in order to determine the portion of GPU and
Sellers' Tax liabilities attributable to Genco, and to be paid to GPU under
Section 6.8(e)(2)(ii) for the post-Closing Date portion of the Straddle Period.
(f) Disputes. In the event that a dispute arises between Sellers or GPU
and Buyer as to the amount of Taxes, or indemnification, whether or not
attributable to Genco, or the amount of any allocation of Purchase Price under
Section 3.4 or 6.8(e)(1)(ii) hereof, the parties shall attempt in good faith to
resolve such dispute, and any agreed upon amount shall be paid to the
appropriate party. If such dispute is not resolved 30 days thereafter, the
parties shall submit the dispute to the Independent Accounting firm for
resolution, which resolution shall be final, conclusive and binding on the
parties. Notwithstanding anything in this Agreement to the contrary, the fees
and expenses of the Independent Accounting Firm in resolving the dispute shall
be borne equally by Seller or GPU, as applicable, and Buyer. Any payment
required to be made as a result of the resolution of the dispute by the
Independent Accounting firm shall be made within ten days after such resolution,
together with any interest determined by the Independent Accounting Firm to be
appropriate.
(g) Cooperation. Buyer and GPU shall (and Buyer and GPU shall cause Genco
to) cooperate fully, as and to the extent reasonably requested by the other
Party, in connection with the
63
filing of Tax Returns pursuant to this Agreement and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees (to the extent such employees were responsible
for the preparation, maintenance or interpretation of information and documents
relevant to Tax matters or to the extent required as witnesses in any Tax
proceedings), available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Parties
agree (i) to retain, and (in the case of Buyer) to cause Genco to retain, all
books and records with respect to Tax matters pertinent to Genco relating to any
taxable period beginning before the Closing Date until six months after the
expiration of the statute of limitations (and, to the extent notified by Buyer
or Sellers, any extensions thereof) of the respective taxable periods, and to
abide by all record retention obligations imposed by law or pursuant to
agreements entered into with any taxing authority, and (ii) to give the other
Party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other Party so requests, Buyer or
Sellers, as the case may be, shall allow the other Party to take possession of
such books and records.
Buyer, Genco and GPU further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
At GPU's request, Buyer will cause Genco to make and/or join with GPU in
making after Closing any election of GPU's consolidated group for which each
member's consent is required, if the making of such election does not have a
material adverse impact on Buyer or Genco for any post-acquisition Tax period.
6.9 Advice of Changes. Prior to the Closing, each Party will promptly
advise the other in writing with respect to any matter arising after execution
of this Agreement of which that Party obtains Knowledge and which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto. Sellers may at
any time notify Buyer of any development causing a breach of any of its or GPU's
representations and warranties in Article IV or IVA. Unless Buyer has the right
to terminate this Agreement pursuant to Section 9.1(f) below by reason of the
developments and exercises that right within the period of
64
fifteen (15) days after such right accrues, the written notice pursuant to this
Section 6.9 will be deemed to have amended this Agreement, including the
appropriate Schedule, to have qualified the representations and warranties
contained in Article IV or IVA above, and to have cured any misrepresentation or
breach of warranty that otherwise might have existed hereunder by reason of the
development.
6.10 Employees.
(a) At least 90 days prior to the Closing Date (but in no case sooner than
ninety (90) days after the date hereof), Buyer shall provide Sellers with notice
of its Union Employee staffing level requirements (which Buyer may determine in
its sole discretion), listed by classification and operation, and shall be
required to make reasonable efforts to offer employment to that number of Union
Employees necessary to satisfy such staffing level requirements. As used herein,
"Union Employees" means such employees of Sellers who are covered by the
Collective Bargaining Agreement as defined in Section 6.10(d) below, and who are
listed in, or whose employment responsibilities are listed in, Schedule
6.10(a)(i) as "Plant Employees" or "Dedicated Support Staff" as associated with
the Plants purchased by Buyer, and those Union Employees who are listed in, or
whose employment responsibilities are listed in, Schedule 6.10(a)(ii) as "Mobile
Maintenance" or "Corporate Support". Any offers of employment shall be made at
least 60 days prior to the Closing Date. In each classification, Union Employees
shall be so offered employment in order of their seniority.
(b) Buyer is also entitled to determine its Non-Union Employee staffing
level requirements in its sole discretion, and make reasonable efforts to make
offers of employment with Buyer or any of its Affiliates, effective on the
Closing Date, to Non-Union Employees consistent with such staffing levels. As
used herein, " Non-Union Employees" means such salaried employees of Sellers,
Genco, GPUN or GPUS who are listed in, or whose employment responsibilities are
listed in, Schedule 6.10(b) as "Plant Employees" or "Dedicated Support Staff",
and those Non-Union Employees listed in, or whose employment responsibilities
are listed in, Schedule 6.10(a)(ii) as "Mobile Maintenance" or "Corporate
Support". Any offers of employment shall be made at least sixty (60) days prior
to the Closing Date. Each person who becomes employed by Buyer or any of its
Affiliates pursuant to Section 6.10(a) or (b) (whether pursuant to a Qualifying
Offer or otherwise) shall be referred to herein as a "Transferred Union
Employee" or "Transferred Non-Union Employee", respectively. At least forty-five
(45) days prior to the Closing Date, Buyer shall provide Seller with notice of
those Non-Union Employees to whom
65
it made a Qualifying Offer. As used herein, the term "Qualifying Offer" means an
offer of employment at an annual level of compensation that is at least 85% of
the employee's current total annual cash compensation (consisting of base salary
and target incentive bonus) at the time the offer is made. Schedule 6.10(b) sets
forth, for each of the Non-Union Employees listed therein, his or her current
base salaries and target incentive bonuses.
(c) All offers of employment made pursuant to Sections 6.10(a) or (b)
shall be made in accordance with all applicable laws and regulations, and in
addition, for Union Employees, in accordance with seniority and all other
applicable provisions of the Collective Bargaining Agreement.
(d) Schedule 6.10(d) sets forth the collective bargaining agreement, and
amendments thereto, to which each Seller is a party with the Union in connection
with the Purchased Assets ("Collective Bargaining Agreement"). Transferred Union
Employees shall retain their seniority and receive full credit for service with
Sellers in connection with entitlement to vacation and all other benefits and
rights under the Collective Bargaining Agreement and under each compensation,
retirement or other employee benefit plan or program Buyer is required to
maintain for Transferred Union Employees pursuant to the Collective Bargaining
Agreement. With respect to Transferred Union Employees, effective as of the
Closing Date, Buyer shall assume the Collective Bargaining Agreement for the
duration of its term as it relates to Transferred Union Employees to be employed
at the Plants in positions covered by the Collective Bargaining Agreement and
shall thereafter comply with all applicable obligations under the Collective
Bargaining Agreement. Consistent with its obligations under the Collective
Bargaining Agreement and applicable laws, Buyer shall be required to establish
and maintain a pension plan and other employee benefit programs for the
Transferred Union Employees for the duration of the term of the Collective
Bargaining Agreement which are substantially equivalent to Seller's plans and
programs in effect for the Transferred Union Employees immediately prior to the
Closing Date (the "Sellers' Plans"), and which provide at least the same level
of benefits or coverage as do Sellers' Plans for the duration of the Collective
Bargaining Agreement. Buyer further agrees to recognize the Union as the
collective bargaining agent for the applicable Transferred Union Employees.
(e) Transferred Non-Union Employees shall be eligible to commence
participation in welfare benefit plans of Buyer or its Affiliates as may be made
available by Buyer (the "Replacement Welfare Plans"). Buyer shall (i) waive all
limitations as to pre-existing condition exclusions and waiting periods with
66
respect to the Transferred Non-Union Employees under the Replacement Welfare
Plans, other than, but only to the extent of, limitations or waiting periods
that were in effect with respect to such employees under the welfare plans
maintained by Sellers, Genco, GPUN or GPUS or their Affiliates and that have not
been satisfied as of the Closing Date, and (ii) provide each Transferred
Non-Union Employee with credit for any copayments and deductibles paid prior to
the Closing Date in satisfying any deductible or out-of-pocket requirements
under the Replacement Welfare Plans (on a pro-rata basis in the event of a
difference in plan years).
(f) Transferred Non-Union Employees shall be given credit for all service
with Sellers, Genco, GPUN, GPUS and their Affiliates under all deferred
compensation, profit-sharing, 401(k), retirement pension, incentive
compensation, bonus, fringe benefit and other employee benefit plans, programs
and arrangements of Buyer ("Buyer Benefit Plans") in which they may become
participants. The service credit so given shall be for purposes of eligibility
and vesting, but shall not be for purposes of level of benefits and benefit
accrual except to the extent that the Buyer Benefit Plans otherwise provide.
(g) To the extent allowable by law, Buyer shall take any and all necessary
action to cause the trustee of any defined contribution plan of Buyer or its
Affiliates in which any Transferred Employee becomes a participant to accept a
direct "rollover" of all or a portion of said employee's "eligible rollover
distribution" within the meaning of Section 402 of the Code from the GPU
Companies Employee Savings Plan for Non-Bargaining Employees or from the
Employee Savings Plan for Bargaining Unit Employees maintained by JCP&L, Met-Ed
or Penelec (the "Sellers' Savings Plans") if requested to do so by the
Transferred Employee. Buyer agrees that the property so rolled over and the
assets so transferred may include promissory notes evidencing loans from
Sellers' Savings Plans to Transferred Employees that are outstanding as of the
Closing Date. However, except as otherwise provided in Section 6.10(d), any
defined contribution plan of Buyer or its Affiliates accepting such a rollover
or transfer shall not be required to make any further loans to any Transferred
Employee after the Closing Date.
(h) Buyer shall pay or provide to Transferred Employees the benefits
described in subparagraphs (i), (ii) and (iii) of this Section 6.10(h), and
shall reimburse Sellers for the cost of the benefits that Sellers' or Sellers'
Affiliates will provide to Union Employees and Non-Union Employees in accordance
with subparagraph (iv) of this Section 6.10(h).
67
(i) Buyer shall make a transition incentive payment in the
amount of $2,500 to each Transferred Union Employee. Payment shall be made
as soon as practicable after, but in any event no later than 60 days
following, the Closing Date.
(ii) In the case of each Transferred Non-Union Employee who is
initially assigned by Buyer to a principal place of work that is at least
50 miles farther from the employee's principal residence than was his
principal place of work immediately prior to the Closing Date and who
relocates his or her principal residence to the vicinity of his or her new
principal place of work within 12 months following the Closing Date, Buyer
shall reimburse the employee for all "moving expenses" within the meaning
of Section 217(b) of the Code incurred by the employee and other members
of his or her household in connection with such relocation, up to a
maximum aggregate amount of $5,000. Claims for reimbursement for such
expenses shall be filed in accordance with such procedures, and shall be
accompanied by such substantiation of the expenses for which reimbursement
is sought, as Buyer may reasonably request. All claims for reimbursement
shall be processed, and qualifying expenses shall be reimbursed, as soon
as practicable after, but in any event no later than 60 days following,
the date on which the employee's claim for reimbursement is submitted to
Buyer.
(iii) Buyer shall provide the severance benefits described in
Section 1 of Schedule 6.10(h) to each Transferred Employee who is
"Involuntarily Terminated" (as defined below) (a) within 12 months after
the Closing Date or (b), in the case of any Transferred Non-Union Employee
who had attained age 50 and had completed at least 10 Years of Service (as
defined in Section 1(c) of Schedule 6.10(h)) prior to the Closing Date, on
or any time prior to June 30, 2004. For purposes of this Section 6.10(h)
and Schedule 6.10(h), a Transferred Employee shall be treated as
"Involuntarily Terminated" if his or her employment with Buyer and all of
its Affiliates is terminated by Buyer or any of its Affiliates for any
reason other than for cause or disability. Buyer shall require any
Transferred Employee who is Involuntarily Terminated, as a condition to
receiving the severance benefits described in Section 1(b), (c), (d), (e)
and (f) of Schedule 6.10(h), to execute a release of claims against
Sellers, Genco, GPUN or GPUS, as applicable, and all of their Affiliates,
and Buyer, in such form as Buyer and Sellers shall agree upon.
68
(iv) At the Closing or as soon thereafter as practicable, but
in any event no later than 60 days following the Closing Date, Buyer shall
pay to Sellers, in addition to all other amounts to be paid by Buyer to
Sellers hereunder, an amount equal to Buyer's Allocable Share (as defined
below) of the aggregate estimated cost that the Sellers or any of Sellers'
Affiliates will or may incur in providing the severance, pension, health
care and group term life insurance benefits described in Section 2 of
Schedule 6.10(h) to the Union Employees and Non-Union Employees therein
described (collectively the "Termination Benefits"). The estimated cost of
such benefits shall be calculated by the actuarial firm regularly engaged
to provide actuarial services to the GPU Companies with respect to their
pension, health care and life insurance plans, and shall be determined
using the same assumptions as to mortality, turnover, interest rate and
other actuarial assumption as used by such firm in determining the cost of
benefits under the GPU Companies' pension, health and group term life
insurance plans for purposes of their most recently issued financial
statements prior to the Closing Date. For purposes of the foregoing,
Buyer's "Allocable Share" shall be calculated as set forth in Schedule
6.10(h)(iv).
(i) Buyer shall not be responsible for any payments required under any
voluntary early retirement plan, program or arrangement offered by Sellers,
Genco, GPUN or GPUS in connection with the transfer of the Purchased Assets.
Within thirty (30) days following the last day that any Union Employee or
Non-Union Employee may elect to participate in any such plan offered by Sellers,
Genco, GPUN or GPUS, Sellers shall provide Buyer with a list of all such
employees who have so elected.
(j) Sellers shall be responsible, with respect to the Purchased Assets,
for performing and discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the notification of its
employees of any "employment loss" within the meaning of the WARN Act which
occurs prior to the Closing Date.
(k) Buyer shall not be responsible for extending COBRA continuation
coverage to any employees and former employees of Sellers, Genco, GPUN or GPUS,
or to any qualified beneficiaries of such employees and former employees, who
become or became entitled to COBRA continuation coverage before the Closing,
including those for whom the Closing occurs during their COBRA election period.
(l) Sellers or Sellers' Affiliates shall pay to all
69
Transferred Employees, all compensation, bonus, vacation and holiday
compensation, pension, profit sharing and other deferred compensation benefits,
workers' compensation, or other employment benefits to which they are entitled
under the terms of the applicable compensation or benefit programs at such times
as are provided therein.
(m) Individuals who are otherwise "Union Employees" as defined in Section
6.10(a) or "Non-Union Employees" as defined in Section 6.10(b) but who on any
date are not actively at work due to a leave of absence covered by the Family
and Medical Leave Act ("FMLA"), or due to any other authorized leave of absence,
shall nevertheless be treated as "Union Employees" or as "Non-Union Employees",
as the case may be, on such date if they are able (i) to return to work within
the protected period under the FMLA or such other leave (which in any event
shall not extend more than twelve (12) weeks after the Closing Date), whichever
is applicable, and (ii) to perform the essential functions of their jobs, with
or without a reasonable accommodation.
(n) Effective as of the day immediately preceding the Closing Date, GPU
shall (i) cause Genco to terminate or to transfer to one or more Affiliates of
GPU, the employment of any individual in the employ of Genco on such preceding
day who will not be a Transferred Employee immediately following the Closing,
and (ii) cause all Benefit Plans maintained by Genco, and all liabilities and
obligations of Genco with respect to such plans, to be transferred to, and
assumed by, one or more Affiliates of GPU other than Genco.
6.11 Risk of Loss.
(a) From the date hereof through the Closing Date, all risk of loss or
damage to the property included in the Purchased Assets shall be borne by
Sellers, other than loss or damage caused by the acts or negligence of Buyer or
any Buyer Representative, which loss or damage shall be the responsibility of
Buyer.
(b) If, before the Closing Date, all or any portion of the Purchased
Assets is (i) taken by eminent domain or is the subject of a pending or (to the
Knowledge of Sellers) contemplated taking which has not been consummated, or
(ii) damaged or destroyed by fire or other casualty, such Seller shall notify
Buyer promptly in writing of such fact, and (x) in the case of a condemnation,
such Seller shall assign or pay, as the case may be, any proceeds thereof to
Buyer at the Closing and (y) in the case of a casualty, such Seller shall either
restore the damage or assign the insurance proceeds therefor (and pay the amount
of any deductible and/or self-insured amount in respect of such
70
casualty) to Buyer at the Closing. Notwithstanding the above, if such casualty
or loss results in a Material Adverse Effect, Buyer and Sellers shall negotiate
to settle the loss resulting from such taking (and such negotiation shall
include, without limitation, the negotiation of a fair and equitable adjustment
to the Purchase Price). If no such settlement is reached within sixty (60) days
after Sellers have notified Buyer of such casualty or loss, then Buyer or
Sellers may terminate this Agreement pursuant to Section 9.1(h). In the event of
damage or destruction which Sellers elect to restore, Sellers will have the
right to postpone the Closing for up to four (4) months. Buyer will have the
right to inspect and observe, or have its representatives inspect or observe,
all repairs necessitated by any such damage or destruction.
6.12 Additional Covenants of Buyer. Notwithstanding any other provision
hereof, Buyer covenants and agrees that, after the Closing Date, Buyer will not
make any modifications to the Purchased Assets or take any action which in and
of itself, results in a loss of the exclusion of interest on the Pollution
Control Revenue Bonds issued on behalf of Sellers in connection with the
Purchased Assets from gross income for federal income purposes under Section 103
of the Code. Actions with respect to the Purchased Assets shall not constitute a
breach by the Buyer of this Section 6.12 in the following circumstances: (i)
Buyer ceases to use or decommissions any of the Purchased Assets or subsequently
repowers such Purchased Assets that are no longer used or decommissioned (but
does not hold such Purchased Assets for sale); (ii) Buyer acts with respect to
the Purchased Assets in order to comply with requirements under applicable
federal, state or local environmental or other laws or regulations; or (iii)
Buyer acts in a manner the Sellers (i.e. a reasonable private provider of
electricity of similar stature as Seller) would have acted during the term of
the Pollution Control Revenue Bonds (including, but not limited to, applying new
technology). In the event Buyer acts or anticipates acting in a manner that will
cause a loss of the exclusion of interest on the Pollution Control Revenue Bonds
from gross income for federal income tax purposes, at the request of Buyer,
Sellers shall take any remedial actions permitted under the federal income tax
law that would prevent a loss of such inclusion of interest from gross income on
the Pollution Control Revenue Bonds. Buyer further covenants and agrees that, in
the event that Buyer transfers any of the Purchased Assets, Buyer shall obtain
from its transferee a covenant and agreement that is analogous to Buyer's
covenant and agreement pursuant to the immediately preceding sentence, as well
as a covenant and agreement that is analogous to that of this sentence. In
addition, Buyer shall not, without 60 days advanced written notice to Seller (to
the extent practicable under the
71
circumstances), take any action which would result in (x) a change in the use of
the assets financed with the Pollution Revenue Control Bonds from the use in
which such assets were originally intended, or (y) a sale of such assets
separate from the generating assets to which they relate, provided that no
notice is required of the events set forth in clauses (i) (ii) or (iii) above.
This covenant shall survive Closing and shall continue in effect so long as the
pollution control bonds remain outstanding.
6.13 Name Change. At or prior to the Closing, GPU shall cause Genco
to amend its certificate of incorporation to change its corporate name to delete
"GPU" therefrom and to adopt such name as Buyer may advise GPU in writing.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer. The obligation of Buyer to effect
the purchase of the Purchased Assets and the other transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the consummation of
the sale of the Purchased Assets contemplated hereby shall have expired or been
terminated.
(b) No preliminary or permanent injunction or other order or decree by any
federal or state court or Governmental Authority which prevents the consummation
of the sale of the Purchased Assets contemplated herein shall have been issued
and remain in effect (each Party agreeing to use its reasonable best efforts to
have any such injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted by any state or federal government or
Governmental Authority which prohibits the consummation of the sale of the
Purchased Assets;
(c) Buyer shall have received all of Buyer's Required Regulatory
Approvals, and such approvals shall contain no conditions or terms which would
result in a Material Adverse Effect;
(d) Sellers and GPU shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied
72
with by Sellers and GPU on or prior to the Closing Date;
(e) The representations and warranties of Sellers and GPU set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date;
(f) Buyer shall have received certificates from an authorized officer of
Sellers and GPU, dated the Closing Date, to the effect that, to such officer's
Knowledge, the conditions set forth in Section 7.1(d) and (e) have been
satisfied by such Seller and GPU;
(g) Buyer shall have received an opinion from Sellers' and GPU's counsel
reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially to
the effect that:
(i) Each of Sellers and GPU is a corporation duly
incorporated, validly existing and in good standing under the laws of its
state of incorporation and has the corporate power and authority to own,
lease and operate its material assets and properties and to carry on its
business as is now conducted, and to execute and deliver the Agreement and
each Ancillary Agreement and to consummate the transactions contemplated
by it thereby; and the execution and delivery of the Agreement by each
Seller and GPU and the consummation of the sale of the Purchased Assets
and the other transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action required on the part of such
Seller;
(ii) The Agreement and each Ancillary Agreement have been duly
and validly executed and delivered by each Seller and GPU, as applicable
and constitutes a legal, valid and binding agreement of each Seller and
GPU, as applicable, enforceable in accordance with its terms, except that
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the Agreement
and each Ancillary Agreement by each Seller and GPU, as applicable does
not (A) conflict with the Certificate of Incorporation or Bylaws of such
Seller or GPU or (B) to the knowledge of such counsel, constitute a
violation of or default under those agreements or
73
instruments set forth on a Schedule attached to the opinion and which have
been identified to such counsel as all the agreements and instruments
which are material to the business or financial condition of each Seller
and GPU;
(iv) The Bill of Sale, the deeds, the Assignment and
Assumption Agreement and other transfer instruments described in Section
3.6 have been duly executed and delivered and are in proper form to
transfer to Buyer such title as was held by such Seller and GPU, in the
case of the Genco Stock to the Purchased Assets;
(v) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by the Sellers and GPU, or the consummation by Sellers and GPU
of the transactions contemplated hereby, other than (i) such consents,
approvals, filings or notices set forth in Schedule 4.3(b) or which, if
not obtained or made, will not prevent the Sellers and GPU from performing
their material obligations hereunder and (ii) such consents, approvals,
filings or notices which become applicable to Sellers or GPU or the
Purchased Assets as a result of the specific regulatory status of Buyer
(or any of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which Buyer (or any
of its Affiliates) is or proposes to be engaged.
(vi) The Genco Stock is owned of record by GPU, and to such
counsel's knowledge, beneficially by GPU free and clear of all
Encumbrances. The Genco Stock has been duly authorized and validly issued,
and is fully paid and non-assessable. There are no other authorized shares
of capital stock of Genco other than the 2500 shares of common stock
comprising the Genco Stock. None of the shares comprising the Genco Stock
has been issued in violation of, or is subject to, any statutory or, to
such counsel's knowledge, other Restrictive Third Party Rights. To such
counsel's knowledge, (i) there are no outstanding securities convertible
into or exchangeable for the capital stock of Genco or any restrictive
covenants applicable to the Genco Stock, and (ii) neither GPU nor Genco
has any obligation, contingent or otherwise, to issue, sell, repurchase,
redeem or otherwise acquire any of the Genco Stock or other capital stock
of Genco or any equity or debt securities of Genco. Upon the consummation
of the transactions contemplated in the Agreement, Buyer will have good
and valid title to the Genco Stock, to such counsel's knowledge, free and
clear of all Encumbrances and Restrictive Third Party Rights.
74
In rendering the foregoing opinion, Sellers' and GPU's counsel may rely on
opinions of counsel as to local laws reasonably acceptable to Buyer.
(h) Sellers and GPU shall have delivered, or caused to be delivered, to
Buyer at the Closing, Sellers' and GPU's closing deliveries described in Section
3.6.
(i) Since the date of this Agreement, no Material Adverse Effect shall
have occurred and be continuing.
(j) Buyer shall have received (at Buyer's cost) from a title insurance
company and surveyor reasonably acceptable to Buyer an ALTA owner's title policy
and ALTA survey, together with all endorsements reasonably requested by Buyer as
are available, insuring title to all of the Real Property included in the
Aggregate Purchased Assets, subject only to Permitted Encumbrances. Sellers
shall provide Buyer with a copy of a preliminary title report and survey for the
Real Property as soon as available.
(k) The closings under the Purchase and Sale Agreements between JCP&L and
Buyer, Penelec and Buyer and Met-Ed and Buyer (collectively, the "Related
Purchase Agreements"), shall have occurred or shall occur concurrently with the
Closing and all conditions to the obligations of Buyer under the Related
Purchase Agreements shall have been satisfied or waived by Buyer.
(l) Buyer shall have received all Permits and Environmental Permits, to
the extent necessary, to own and operate the Plants in accordance with past
emissions and operating practices, except for those Permits and Environmental
Permits, the absence of which would not in the aggregate have a Material Adverse
Effect.
(m) Seller's Required Regulatory Approvals shall contain no conditions or
terms which would result in a Material Adverse Effect.
(n) Neither the Real Property nor any portion thereof shall be part of a
tax lot which includes any real property and/or buildings, facilities or other
improvements other than that which comprises the Real Property.
(o) No Site, or any portion thereof shall be subject to a zoning
classification or classifications, rule or regulation, or a variance or special
exception, which, individually or in the aggregate, does not permit such Site or
any portion thereof to be used as the same (i) is currently used for generation
purposes or (ii) was historically used for generation purposes while under
75
Seller's current ownership or the ownership of any Affiliate thereof, unless the
failure of such Site of any portion thereof to be zoned to permit such use,
shall not result in a Material Adverse Effect.
7.2 Conditions to Obligations of Sellers. The obligation of Sellers and
GPU to effect the sale of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Sellers) of the following conditions:
(a) The waiting period under the HSR Act applicable to the consummation of
the sale of the Purchased Assets contemplated hereby shall have expired or been
terminated;
(b) No preliminary or permanent injunction or other order or decree by any
federal or state court which prevents the consummation of the sale of the
Purchased Assets contemplated herein shall have been issued and remain in effect
(each Party agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted by any state or federal government or Governmental Authority
in the United States which prohibits the consummation of the sale of the
Purchased Assets;
(c) Sellers and GPU shall have received all of Sellers' Required
Regulatory Approvals applicable to them, containing no conditions or terms which
would materially diminish the benefit of this Agreement to Sellers or result in
a material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Sellers ("Sellers' Material Adverse Effect");
(d) All consents and approvals for the consummation of the sale of the
Purchased Assets contemplated hereby required under the terms of any note, bond,
mortgage, indenture, material agreement or other instrument or obligation to
which any Seller is party or by which any Seller, or any of the Purchased
Assets, may be bound, shall have been obtained, other than those which if not
obtained, would not, individually and in the aggregate, create a Material
Adverse Effect;
(e) Buyer shall have performed and complied with in all material respects
the covenants and agreements contained in this Agreement which are required to
be performed and complied with by Buyer on or prior to the Closing Date;
(f) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material
76
respects as of the Closing Date as though made at and as of the Closing Date;
(g) Sellers shall have received a certificate from an authorized officer
of Buyer, dated the Closing Date, to the effect that, to such officer's
Knowledge, the conditions set forth in Sections 7.2(e) and (f) have been
satisfied by Buyer;
(h) Effective upon Closing, Buyer shall have assumed, as set forth in
Section 6.10, all of the applicable obligations under the Collective Bargaining
Agreement as they relate to Transferred Union Employees;
(i) Sellers and GPU shall have received an opinion from Buyer's counsel
reasonably acceptable to Sellers, dated the Closing Date and satisfactory in
form and substance to Sellers and its counsel, substantially to the effect that:
(i) Buyer is a Delaware corporation duly organized, validly
existing and in good standing under the laws of the state of its
organization and is qualified to do business in the State of New Jersey
and Commonwealth of Pennsylvania and has the full corporate power and
authority to own, lease and operate its material assets and properties and
to carry on its business as is now conducted, and to execute and deliver
the Agreement and the Ancillary Agreements by Buyer and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Agreement and the Ancillary Agreements by Buyer and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary corporate action required on the part of Buyer;
(ii) The Agreement and the Ancillary Agreements have been duly
and validly executed and delivered by Buyer, and constitute legal, valid
and binding agreements of Buyer, enforceable against Buyer, in accordance
with their terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting or relating to enforcement of
creditor's rights generally and general principles of equity (regardless
of whether enforcement is considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the Agreement
and the Ancillary Agreements by Buyer do not (A) conflict with the
Certificate of Incorporation or Bylaws (or other organizational
documents), as currently in effect, of Buyer or (B) to the knowledge of
such counsel, constitute
77
a violation of or default under those agreements or instruments set forth
on a Schedule attached to the opinion and which have been identified to
such counsel as all the agreements and instruments which are material to
the business or financial condition of Buyer;
(iv) The Assignment and Assumption Agreement and other
transfer instruments described in Section 3.7 are in proper form for Buyer
to assume the Assumed Liabilities; and
(v) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for Buyer's execution and delivery of
the Agreement and the Ancillary Agreements, or the consummation by Buyer
of the transactions contemplated hereby and thereby, other than such
consents, approvals, filings or notices, which, if not obtained or made,
will not prevent Buyer from performing its respective obligations under
the Agreement, the Ancillary Agreements and Guaranty.
(j) Buyer shall have delivered, or caused to be delivered, to Sellers at the
Closing, Buyer's closing deliveries described in Section 3.7.
7.3 Zoning Condition Adjustments.
(a) In the event that any Site or any portion thereof, shall be
subject to a zoning classification or classifications, rule or regulation, or
variance or special exception, which does not permit or otherwise restrict the
Site or any portion thereof, to be used as the same (i) is currently used for
generation purposes or (ii) was historically used for generation purposes while
under Seller's current ownership or the ownership of any Affiliate thereof for
generation purposes, and if such failure shall result in a material adverse
effect on the use of such Site for generating purposes as currently used (or as
so historically used), then, in such event, Buyer may, prior to the Closing on
written notice to the Seller, exclude from the Purchased Assets such Site and
the Purchased Assets related to such Site. Buyer and Seller shall thereupon
negotiate a fair and equitable adjustment to the Purchase Price or, failing such
agreement within 30 days, the adjustment shall be determined by appraisal in
accordance with Section 7.3(b), the cost of which shall be shared equally be
Buyer and Seller.
(b) The Parties shall select an Appraiser (as defined below) within
30 days of the expiration of the 30 day period referred to in Section 7.3(a). In
the event the Parties cannot within such period agree on a single Appraiser, the
Parties shall each within 15 days select a separate Appraiser, and such
78
Appraisers shall within 15 days, later designate a third Appraiser to act
hereunder. The Appraiser shall be instructed to provide a written report of the
appropriate reduction of the Purchase Price to be allocated to the excluded Site
(and associated Purchased Assets). Each of the Parties may submit such materials
and information to the Appraiser as it deems appropriate and shall use its
Commercially Reasonable Efforts to cause the Appraiser to render its decision
within 60 days after the matter has been submitted to it. The determination of
the Appraiser shall be final and binding on the Parties. As used herein,
"Appraiser" means an individual who has a minimum of ten (10) years of relevant
experience in valuing electric generation facilities and has an MAI designation
of the Appraisal Institute.
(c) Buyer agrees to use Commercially Reasonable Efforts at its
expense and in consultation with Seller to mitigate any adverse zoning
restrictions which could cause a failure of the Closing condition in Section
7.1(o), or require a Purchase Price adjustment under this Section 7.3, including
by seeking a re-zoning or zoning variance of the applicable Site.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Buyer shall indemnify, defend and hold harmless Sellers, their
officers, directors, employees, shareholders, Affiliates and agents (each, a
"Sellers' Indemnitee") from and against any and all claims, demands, suits,
losses, liabilities, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) (each, an "Indemnifiable Loss"), asserted against or
suffered by any Sellers' Indemnitee relating to, resulting from or arising out
of (i) any breach by Buyer of any covenant or agreement of Buyer contained in
this Agreement or the representations and warranties contained in Sections 5.1,
5.2 and 5.3, (ii) the Assumed Liabilities, (iii) any loss or damages resulting
from or arising out of any Inspection, or (iv) any Third Party Claims against
Sellers' Indemnitee arising out of or in connection with Buyer's ownership or
operation of the Plants and other Purchased Assets on or after the Closing Date
(other than Third Party Claims which arise out of acts by Buyer permitted by
Section 6.12 hereof).
79
(b) Each Seller shall indemnify defend and hold harmless Buyer, its
officers, directors, employees, shareholders, Affiliates and agents (each, a
"Buyer Indemnitee") from and against any and all Indemnifiable Losses asserted
against or suffered by any Buyer Indemnitee relating to, resulting from or
arising out of (i) any breach by such Seller of any covenant or agreement of
such Seller contained in this Agreement or the representations and warranties
contained in Sections 4.1, 4.2 and 4.3, (ii) the Excluded Liabilities other than
Section 2.4(o) or 2.4(c) (relating to the Operating Agreements), (iii)
noncompliance by Sellers with any bulk sales or transfer laws as provided in
Section 10.11, or (iv) any Third Party Claims against a Buyer Indemnitee arising
out of or in connection with Sellers' ownership or operation of the Excluded
Assets on or after the Closing Date. GPU shall indemnify, defend and hold
harmless each Buyer Indemnitee from and against any and all Indemnifiable
Losses, asserted against or suffered by any Buyer Indemnitee relating to,
resulting from or arising out of any breach by GPU of any covenant or agreement
of GPU contained in this Agreement, the Excluded Liabilities set forth in
Section 2.4(o) and 2.4(c) (relating to the Operating Agreements) or the
representations and warranties contained in Sections 4A.1, 4A.2 and 4A.3.
(c) Each Party, for itself and on behalf of its Representatives and
Affiliates, does hereby release, hold harmless and forever discharge the other
party, its Representatives and Affiliates, from any and all Indemnifiable Losses
of any kind or character, whether known or unknown, hidden or concealed,
resulting from or arising out of any Environmental Condition or violation of
Environmental Law relating to the Purchased Assets provided that Sellers'
release of Buyer shall not extend to any of Buyer's Assumed Liabilities set
forth in Section 2.3, and provided further that Buyer's release of Sellers shall
not extend to any of Sellers' Excluded Liabilities set forth in Section 2.4.
Subject to the foregoing proviso, each party hereby waives any and all rights
and benefits with respect to such Indemnifiable Losses that it now has, or in
the future may have conferred upon it by virtue of any statute or common law
principle which provides that a general release does not extend to claims which
a party does not know or suspect to exist in its favor at the time of executing
the release, if knowledge of such claims would have materially affected such
party's settlement with the obligor. In this connection, each party hereby
acknowledges that it is aware that factual matters, now unknown to it, may have
given or may hereafter give rise to Indemnifiable Losses that are presently
unknown, unanticipated and unsuspected, and it further agrees that this release
has been negotiated and agreed upon in light of that awareness and it
nevertheless hereby
80
intends to release the other party and its Representatives and Affiliates from
the Indemnifiable Losses described in the first sentence of this paragraph.
(d) Notwithstanding anything to the contrary contained herein:
(i) Any Person entitled to receive indemnification under this
Agreement (an "Indemnitee") shall use Commercially Reasonable Efforts to
mitigate all losses, damages and the like relating to a claim under these
indemnification provisions, including availing itself of any defenses,
limitations, rights of contribution, claims against third Persons and
other rights at law or equity. The Indemnitee's Commercially Reasonable
Efforts shall include the reasonable expenditure of money to mitigate or
otherwise reduce or eliminate any loss or expenses for which
indemnification would otherwise be due, and the Indemnitor shall reimburse
the Indemnitee for the Indemnitee's reasonable expenditures in undertaking
the mitigation.
(ii) Any Indemnifiable Loss shall be net of (A) the dollar
amount of any insurance or other proceeds actually receivable by the
Indemnitee or any of its Affiliates with respect to the Indemnifiable
Loss, but shall not take into account any income tax benefits to the
Indemnitee or any Income Taxes attributable to the receipt of any
indemnification payments hereunder. Any party seeking indemnity hereunder
shall use Commercially Reasonable Efforts to seek coverage (including both
costs of defense and indemnity) under applicable insurance policies with
respect to any such Indemnifiable Loss.
(e) The expiration or termination of any covenant or agreement shall not
affect the Parties' obligations under this Section 8.1 if the Indemnitee
provided the Person required to provide indemnification under this Agreement
(the "Indemnifying Party") with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) Except to the extent otherwise provided in Article IX, the rights and
remedies of Sellers, GPU and Buyer under this Article VIII are exclusive and in
lieu of any and all other rights and remedies which Sellers, GPU and Buyer may
have under this Agreement or otherwise for monetary relief, with respect to (i)
any breach of or failure to perform any covenant, agreement, or representation
or warranty set forth in this Agreement, after the occurrence of the Closing, or
(ii) the Assumed Liabilities or
81
the Excluded Liabilities, as the case may be. The indemnification obligations of
the Parties set forth in this Article VIII apply only to matters arising out of
this Agreement, excluding the Ancillary Agreements. Any Indemnifiable Loss
arising under or pursuant to an Ancillary Agreement shall be governed by the
indemnification obligations, if any, contained in the Ancillary Agreement under
which the Indemnifiable Loss arises.
(g) Notwithstanding anything to the contrary herein, no party (including
an Indemnitee) shall be entitled to recover from any other party (including an
Indemnifying Party) for any liabilities, damages, obligations, payments losses,
costs, or expenses under this Agreement any amount in excess of the actual
compensatory damages, court costs and reasonable attorney's and other advisor
fees suffered by such party. Buyer, Sellers and GPU waive any right to recover
punitive, incidental, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement. The provisions of this
Section 8.1(g) shall not apply to indemnification for a Third Party Claim.
8.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any claim or of
the commencement of any claim, action, or proceeding made or brought by any
Person who is not a party to this Agreement or any Affiliate of a Party to this
Agreement (a "Third Party Claim") with respect to which indemnification is to be
sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying
Party reasonably prompt written notice thereof, but in any event such notice
shall not be given later than ten (10) calendar days after the Indemnitee's
receipt of notice of such Third Party Claim. Such notice shall describe the
nature of the Third Party Claim in reasonable detail and shall indicate the
estimated amount, if practicable, of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee, to elect to
assume the defense of any Third Party Claim at such Indemnifying Party's expense
and by such Indemnifying Party's own counsel, provided that the counsel for the
Indemnifying Party who shall conduct the defense of such Third Party Claim shall
be reasonably satisfactory to the Indemnitee. The Indemnitee shall cooperate in
good faith in such defense at such Indemnitee's own expense. If an Indemnifying
Party elects not to assume the defense of any Third Party Claim, the Indemnitee
may compromise or settle such Third Party Claim over the objection of the
Indemnifying Party, which settlement or compromise shall conclusively establish
the Indemnifying Party's liability pursuant to this Agreement.
82
(b) (i) If, within ten (10) calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof. (ii) Without the prior written
consent of the Indemnitee, the Indemnifying Party shall not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnifying Party shall be relieved of its obligations to
defend such Third Party Claim and the Indemnitee may contest or defend such
Third Party Claim. In such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will be the amount of such settlement offer
plus reasonable costs and expenses paid or incurred by Indemnitee up to the date
of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss which
does not result from a Third Party Claim (a "Direct Claim") shall be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, stating
the nature of such claim in reasonable detail and indicating the estimated
amount, if practicable, but in any event such notice shall not be given later
than ten (10) calendar days after the Indemnitee becomes aware of such Direct
Claim, and the Indemnifying Party shall have a period of thirty (30) calendar
days within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the Indemnifying
Party shall be deemed to have accepted such claim. If the Indemnifying Party
rejects such
83
claim, the Indemnitee will be free to seek enforcement of its right to
indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by, from or against any other
entity, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest thereon from the date
of payment thereof at the publicly announced prime rate then in effect of Chase
Manhattan Bank) shall promptly be repaid by the Indemnitee to the Indemnifying
Party.
(e) A failure to give timely notice as provided in this Section 8.2 shall
not affect the rights or obligations of any Party hereunder except if, and only
to the extent that, as a result of such failure, the Party which was entitled to
receive such notice was actually prejudiced as a result of such failure.
ARTICLE IX
TERMINATION
9.1 Termination. (a) This Agreement may be terminated at any time prior to
the Closing Date by mutual written consent of Sellers and Buyer.
(b) This Agreement may be terminated by Sellers or Buyer if (i) any
Federal or state court of competent jurisdiction shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise prohibiting
the Closing, and such order, judgment or decree shall have become final and
nonappeallable or (ii) any statute, rule, order or regulation shall have been
enacted or issued by any Governmental Authority which, directly or indirectly,
prohibits the consummation of the Closing; or (iii) the Closing contemplated
hereby shall have not occurred on or before the day which is 12 months from the
date of this Agreement (the "Termination Date"); provided that the right to
terminate this Agreement under this Section 9.1(b) (iii) shall not be available
to any Party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on or
before such date; and provided, further, that if on the day which is 12 months
from the date of this Agreement the conditions to the Closing set forth in
Section 7.1(b) or (c) or 7.2(b), (c) or (d)
84
shall not have been fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Termination Date
shall be the day which is 18 months from the date of this Agreement.
(c) Except as otherwise provided in this Agreement, this Agreement
may be terminated by Buyer if any of Buyer Required Regulatory Approvals, the
receipt of which is a condition to the obligation of Buyer to consummate the
Closing as set forth in Section 7.1(c), shall have been denied (and a petition
for rehearing or refiling of an application initially denied without prejudice
shall also have been denied) or shall have been granted but contains terms or
conditions which do not satisfy the closing condition in Section 7.1(c).
(d) This Agreement may be terminated by Sellers, if any of Sellers'
Required Regulatory Approvals, the receipt of which is a condition to the
obligation of Sellers or GPU to consummate the Closing as set forth in Section
7.2(c), shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied) or
shall have been granted but contains terms or conditions which do not satisfy
the closing condition in Section 7.2(c).
(e) This Agreement may be terminated by Buyer if there has been a
violation or breach by Sellers or GPU of any covenant, representation or
warranty contained in this Agreement which has resulted in a Material Adverse
Effect and such violation or breach is not cured by the earlier of the Closing
Date or the date thirty (30) days after receipt by Sellers or GPU, as the case
may be, of notice specifying particularly such violation or breach, and such
violation or breach has not been waived by Buyer.
(f) This Agreement may be terminated by Sellers, if there has been a
material violation or breach by Buyer of any covenant, representation or
warranty contained in this Agreement and such violation or breach is not cured
by the earlier of the Closing Date or the date thirty (30) days after receipt by
Buyer of notice specifying particularly such violation or breach, and such
violation or breach has not been waived by Sellers.
(g) This Agreement may be terminated by Sellers if there shall have
occurred any change that is materially adverse to the business, operations or
conditions (financial or otherwise) of Buyer.
85
(h) This Agreement may be terminated by either of Sellers or Buyer
in accordance with the provisions of Section 6.11(b).
9.2 Procedure and Effect of No-Default Termination. In the event of
termination of this Agreement by either or both of the Parties pursuant to
Section 9, written notice thereof shall forthwith be given by the terminating
Party to the other Party, whereupon, if this Agreement is terminated pursuant to
any of Sections 9.1(a) through (d) and 9.1(g) and (h), the liabilities of the
Parties hereunder will terminate, except as otherwise expressly provided in this
Agreement, and thereafter neither Party shall have any recourse against the
other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of Sellers,
Buyer and GPU.
10.2 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith.
10.3 No Survival. Each and every representation, warranty and covenant
contained in this Agreement (other than the covenants contained in Sections
3.3(c), 3.4, 3.5(b), 3.5(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.10, 6.12, 6.13, and
in Articles VIII and X, which provisions shall survive the delivery of the
deed(s) and the Closing in accordance with their terms and the representations
and warranties set forth in Sections 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3, 4A.1,
4A.2, 4A.3, 4A.5, 4A.6 which representations and warranties and any claims
arising under Section 6.1 shall survive the Closing for eighteen (18) months
from the Closing Date) shall expire with, and be terminated and extinguished by
the consummation of the sale of the Purchased Assets and shall merge into the
deed(s) pursuant hereto and the transfer of the Assumed Liabilities pursuant to
this Agreement and such representations, warranties and covenants shall not
86
survive the Closing Date; and none of Sellers, Buyer , GPU or any officer,
director, trustee or Affiliate of any of them shall be under any liability
whatsoever with respect to any such representation, warranty or covenant.
10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided however, that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Sellers or GPU, to:
c/o GPU Service, Inc.
300 Madison Avenue
Morristown, New Jersey 07962
Attention: Mr. David C. Brauer
Vice President
with a copy to:
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
Attention: Douglas E. Davidson, Esq.
(b) if to Buyer, to:
Sithe Energies, Inc.
450 Lexington Avenue
New York, New York 10017
Attention: Mr. David Tohir
and Hyun Park, Esq.
with a copy to:
Latham & Watkins
Suite 1300
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: W. Harrison Wellford, Esq.
87
10.5 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any Party
hereto, including by operation of law, without the prior written consent of each
other Party, nor is this Agreement intended to confer upon any other Person
except the Parties hereto any rights, interests, obligations or remedies
hereunder. No provision of this Agreement shall create any third party
beneficiary rights in any employee or former employee of Sellers (including any
beneficiary or dependent thereof) in respect of continued employment or resumed
employment, and no provision of this Agreement shall create any rights in any
such Persons in respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement except as expressly
provided for thereunder. Notwithstanding the foregoing, without the prior
written consent of Sellers, (i) Buyer may assign all of its rights and
obligations hereunder to any majority owned Subsidiary (direct or indirect) and
upon Sellers' receipt of notice from Buyer of any such assignment, such assignee
will be deemed to have assumed, ratified, agreed to be bound by and perform all
such obligations, and all references herein to "Buyer" shall thereafter be
deemed to be references to such assignee, in each case without the necessity for
further act or evidence by the Parties hereto or such assignee, and (ii) Buyer
or its permitted assignee may assign, transfer, pledge or otherwise dispose of
(absolutely or as security) its rights and interests hereunder to a trustee,
lending institutions or other party for the purposes of leasing, financing or
refinancing the Purchased Assets, including such an assignment, transfer or
other disposition upon or pursuant to the exercise of remedies with respect to
such leasing, financing or refinancing, or by way of assignments, transfers,
pledges, or other dispositions in lieu thereof (and any such assignee may fully
exercise its rights hereunder or under any other agreement and pursuant to such
assignment without any further prior consent of any party hereto); provided,
however, that no such assignment in clause (i) or (ii) shall relieve or
discharge the assignor from any of its obligations hereunder. The Sellers agree,
at Buyer's expense, to execute and deliver such documents as may be reasonably
necessary to accomplish any such assignment, transfer, pledge or other
disposition of rights and interests hereunder so long as Sellers' rights under
this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
10.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York (without giving effect to
conflict of law principles) as to all
88
matters, including but not limited to matters of validity, construction, effect,
performance and remedies. THE PARTIES HERETO AGREE THAT VENUE IN ANY AND ALL
ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE
IN THE STATE AND FEDERAL COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, WHICH
COURTS SHALL HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES
HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY
SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER
RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8 Interpretation. The articles, section and schedule headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
10.9 Schedules and Exhibits. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.10 Entire Agreement. This Agreement, the Confidentiality Agreement, and
the Ancillary Agreements including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, embody the entire
agreement and understanding of the Parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any material
made available to Buyer pursuant to the terms of the Confidentiality Agreement
(including the Offering Memorandum dated April 1998, previously delivered to
Buyer by Sellers and Goldman, Sachs & Co.). This Agreement supersedes all prior
agreements and understandings between the Parties other than the Confidentiality
Agreement with respect to such transactions.
89
10.11 Bulk Sales Laws. Buyer acknowledges that, notwithstanding anything
in this Agreement to the contrary, Sellers may, in its sole discretion, not
comply with the provision of the bulk sales laws of any jurisdiction in
connection with the transactions contemplated by this Agreement. Buyer hereby
waives compliance by Sellers with the provisions of the bulk sales laws of all
applicable jurisdictions.
10.12 U.S. Dollars. Unless otherwise stated, all dollar amounts set
forth herein are United States (U.S.) dollars.
10.13 Zoning Classification. Without limitation of Sections 7.1(o) and 7.3
Buyer acknowledges that the Real Properties are zoned as set forth in Schedule
10.13.
10.14 Sewage Facilities. Except as set forth in Schedule 10.14, Buyer
acknowledges that there is no community (municipal) sewage system available to
serve the Real Property. Accordingly, any additional sewage disposal planned by
Buyer will require an individual (on-site) sewage system and all necessary
permits as required by the Pennsylvania Sewage Facilities Act (the "Facilities
Act"). Buyer recognizes that certain of the existing individual sewage systems
on the Real Property may have been installed pursuant to exemptions from the
requirements of the Facilities Act or prior to the enactment of the Facilities
Act and that soils and site testing may not have been performed in connection
therewith. The owner of the property or properties served by such a system, at
the time of any malfunction, may be held liable for any contamination,
pollution, public health hazard or nuisance which occurs as the result of such
malfunction.
10.15 GPU. Buyer acknowledges and agrees that the liability of GPU and
each Seller hereunder is several as to each of their respective obligations and
not joint.
90
IN WITNESS WHEREOF, Sellers and Buyer have caused this Agreement to
be signed by their respective duly authorized officers as of the date first
above written.
JERSEY CENTRAL POWER & LIGHT
COMPANY
By: _____________________
Name:
Title:
SITHE ENERGIES, INC. METROPOLITAN EDISON COMPANY
By:_____________________________ By:______________________
Name: Name:
Title: Title:
GPU, INC.
By:_______________________
Name:
Title:
91
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Bill of Sale
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Deeds
Exhibit E Form of Transition Power Purchase Agreement
SCHEDULES
1.1(67) Owner's Agreements
1.1(72) Permitted Encumbrances
1.1(105) Transferable Permits (both environmental and non-
environmental)
2.1 Schedule of Purchased Assets
2.1(c) Schedule of Tangible Personal Property to be Conveyed
to Buyer
2.1(h) Schedule of Emission Reduction Credits
2.1(l) Intellectual Property
2.2(a) Description of Transmission and other Assets not
included in Conveyance
3.3(a)(i) Schedule of Inventory
4.3(a) Third Party Consents
4.3(b) Sellers' Required Regulatory Approvals
4.4 Insurance Exceptions
4.5 Exceptions to Title
4.6 Real Property Leases
4.7 Schedule of Environmental Matters
4.8 Schedule of Noncompliance with Employment Laws
4.9(a) Schedule of Benefit Plans
4.9(b) Benefit Plan Exceptions
4.l0 Description of Real Property
4.11 Notices of Condemnation
4.12(a) List of Contracts
4.12(b) List of Non-assignable Contracts
4.12(c) List of Defaults under the Contracts
4.13 List of Litigation
4.14(a) List of Permit Violations
4.14(b) List of material Permits (other than Transferable
Permits)
4.15 Tax Matters
4.16 Intellectual Property Exceptions
4A.3(a) Genco Consents
4A.4 Genco Tax Matters
4A.6 Genco Capital Stock
4A.7 Operating Agreement Matters
4A.8 Genco Financial Statements
5.3(a) Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
6.8 Tax Appeals
6.10(a)(i) Plant and Support Staff (Union)
6.10(a)(ii) Mobile Maintenance/Corporate Support
6.10(b) Schedule of Non-Union Employees
6.10(d) Collective Bargaining Agreements
6.10(h) Schedule of Severance Benefits
6.10(h)(iv) Allocable Share Percentages
6.12 Pollution Control Revenue Bonds
10.13 Zoning
10.14 Sewage Matters