EXHIBIT 10-NN
PRIVILEGED AND CONFIDENTIAL
[Met-Ed P&S]
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
BY AND AMONG
METROPOLITAN EDISON COMPANY, as SELLER,
and SITHE ENERGIES, INC., as BUYER
Dated as of October 29, 1998
TABLE OF CONTENTS
Page
Article I 1
1.1 Definitions 1
1.2 Certain Interpretive Matters 14
Article II 14
2.1 Transfer 14
2.2 Excluded Assets 16
2.3 Assumed Liabilities 17
2.4 Excluded Liabilities 19
2.5 Control of Litigation 22
2.6 York Haven Assets and Liabilities 22
Article III 22
3.1 Closing 22
3.2 Payment of Purchasing Price 23
3.3 Adjustment to Purchase Price 23
3.4 Allocation of Purchase Price 25
3.5 Proprations 25
3.6 Deliveries by Seller 26
3.7 Deliveries by Buyer 28
3.8 Ancillary Agreements 29
3.9 Easement Agreements 29
Article IV 29
4.1 Incorporation: Qualification 29
4.2 Authority Relative to this Agreement 30
4.3 Consents and Approvals; No Violation 30
4.4 Insurance 31
4.5 Title and Related Matters 31
4.6 Real Property Leases 31
4.7 Environmental Matters 32
4.8 Labor Matters 32
4.9 Benefit Plans ERISA 33
4.10 Real Property 34
4.11 Condemnation 34
4.12 Contracts and Leases 34
4.13 Legal Proceedings, etc. 35
4.14 Permits 35
4.15 Taxes 35
4.16 Intellectual Property 36
4.17 Capital Expenditures 36
4.18 Compliance With Laws 36
4.19 PUHCA 37
4.19A Subsidiaries 37
4.19B Capitalization 37
4.19C York Haven Tax Matters 37
4.19D Financial Statements 39
4.20 Disclaimers Regarding Purchased Assets 39
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ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER 40
5.1 Organization 40
5.2 Authority Relative to this Agreement 40
5.3 Consents and Approvals; No Violation 41
5.4 Availability of Funds 41
5.5 Legal Proceedings 41
5.6 No Knowledge of Seller's Breach 42
5.7 Qualified Buyer 42
5.8 Inspections 42
5.9 WARN Act 42
5.10 Securities Laws 42
ARTICLE VI 43
6.1 Conduct of Business Relating to the Purchased Assets 43
6.2 Access to Information 45
6.3 Public Statements 48
6.4 Expenses 48
6.5 Further Assurances 48
6.6 Consents and Approvals 50
6.7 Fees and Commissions 52
6.8 Tax Matters 52
6.9 Advice of Changes 60
6.10 Employees 60
6.11 Risk of Loss 65
6.12 Additional Covenants of Buyer 66
6.13 Additional York Haven Covenants 67
ARTICLE VII 67
7.1 Conditions to Obligations of Buyer 67
7.2 Conditions to Obligations of Seller 71
7.3 Zoning Condition Adjustments 73
ARTICLE VIII 74
8.1 Indemnification 74
8.2 Defense of Claims 77
ARTICLE IX 79
9.1 Termination 79
9.2 Procedure and Effect of No-Default Termination 80
ARTICLE X 80
10.1 Amendment and Modification 80
10.2 Waiver of Compliance; Consents 80
10.3 No Survival 81
10.4 Notices 81
10.5 Assignment 82
10.6 Governing Law 83
10.7 Counterparts 83
10.8 Interpretation 83
10.9 Schedules and Exhibits 83
10.10 Entire Agreement 83
10.11 Bulk Sales Laws 84
10.12 U.S. Dollars 84
10.13 Zoning Classification 84
10.14 Sewage Facilities 84
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PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of October 29, 1998, by and
between Metropolitan Edison Company, a Pennsylvania corporation ("Met-Ed" or
"Seller"), and Sithe Energies, Inc., a Delaware corporation ("Buyer"). Seller
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 Seller desires to sell, its
interests in the Purchased Assets (as defined herein) upon the terms and
conditions hereinafter set forth in this Agreement; and
WHEREAS, simultaneous herewith Buyer is entering into substantially
similar Purchase and Sale Agreements with Seller's affiliates providing for
Buyer's purchase of the remainder of the Aggregate Purchased Assets (as
hereinafter defined).
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.
(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 Interconnection Agreements, the
Easement Agreements, the Merrill Creek Sublease and the Transition Power
Purchase Agreement, as the same may be from time to time amended.
(5) "Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Seller and Buyer substantially in the form of
Exhibit A hereto, by which Seller
shall, subject to the terms and conditions hereof, assign Seller's 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.
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.
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(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 Seller and Buyer.
(25) "Direct Claim" has the meaning set forth in Section 8.2(c).
(26) "Easements" means, with respect to the Purchased Assets, the
easements and access rights to be granted pursuant to the Easement Agreements,
including, without limitation, easements authorizing access, use, maintenance,
construction, repair, replacement and other activities, as further described in
the Easement Agreements.
(27) "Easement Agreements" means the Easement and License Agreements
between Buyer and Seller, in the form of Exhibit C hereto, whereby Buyer will
provide Seller with certain Easements with respect to the Real Property
transferred to Buyer and whereby Seller will provide Buyer with certain
Easements with respect to certain property owned by Seller.
(28) "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."
(29) "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
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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."
(30) "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.
(31) "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,
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.
(32) "Environmental Condition" means the presence or Release to the
environment, whether at the Sites or at an off-Site location, of Hazardous
Substances, including any migration
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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.
(33) "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. Sections 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.), the Clean Air Act (42 U.S.C. Sections 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Sections 2601 et seq.), the Oil Pollution Act (33 U.S.C.
Sections 2701 et seq.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Sections 11001 et seq.), the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.),the Pennsylvania Hazardous Sites Cleanup Act (35
P.S. Sections 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.
(34) "Environmental Permits" has the meaning set forth in Section
4.7(a).
(35) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(36) "ERISA Affiliate" has the meaning set forth in Section 2.4(k).
(37) "ERISA Affiliate Plans" has the meaning set forth in Section
2.4(k).
(38) "Estimated Adjustment" has the meaning set forth in Section
3.3(b).
(39) "Estimated Closing Statement" has the meaning set forth in Section
3.3(b).
(40) "Excluded Assets" has the meaning set forth in Section 2.2.
(41) "Excluded Liabilities" has the meaning set forth in Section 2.4.
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(42) "Facilities Act" has the meaning set forth in Section 10.14.
(43) "FERC" means the Federal Energy Regulatory Commission or any
successor agency thereto.
(44) "FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit, substantially in the form of Exhibit D
hereto.
(45) "Fish Ladder Contract" means Contract No. 0718564, dated as of
June 4, 1998 between Genco (as agent on behalf of Met-Ed) and Kleinschmidt
Associates and Cianbro Corporation, acting as a joint venture.
(46) "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 Seller 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 generally
accepted in the industry or previously engaged in by Seller in its operation of
the Purchased Assets.
(47) "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.
(48) "GPU" means GPU, Inc., a Pennsylvania corporation and parent
company of Seller.
(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) "GPU Intercompany Tax Allocation Agreement" has the meaning set
forth in Section 6.8(e)(2)(ii).
(52) "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
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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.
(53) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
(54) "IBEW 777" means Local 777 of the International Brotherhood of
Electrical Workers.
(55) "Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (b) based upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (a), in each case together with any interest, penalties,
or additions to such Tax.
(56) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(57) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
(58) "Indemnitee" has the meaning set forth in Section 8.1(d).
(59) "Independent Accounting Firm" means such independent accounting
firm of national reputation as is mutually appointed by Seller and Buyer.
(60) "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.
(61) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, copyrights and copyright rights owned by Seller
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).
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(62) "Interconnection Agreements" means the Interconnection Agreements,
between Seller and Buyer, and Seller and York Haven, respectively, a form of
which is attached as Exhibit E hereto, under which Seller will provide Buyer and
York Haven with interconnection service to Seller's transmission facilities and
whereby Buyer and York Haven, respectively, will provide Seller with continuing
access to certain of the Purchased Assets after the Closing Date.
(63) "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.
(64) "JCP&L" means Jersey Central Power & Light Company, a New Jersey
corporation.
(65) "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.
(66) "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 Seller specifically and exclusively; (b) any change or effect
resulting from changes in the international, national, regional or local
wholesale or retail markets for electric power; (c) any change or effect
resulting from changes in the international, national, regional or local markets
for any fuel used in connection with the 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
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conveyed to Buyer pursuant to this Agreement; and (3) collectively, all
Purchased Assets to be conveyed to Buyer under the Related Purchase Agreement to
which GPU, JCP&L and Met-Ed are parties.
(67) "Merrill Creek Sublease Agreement" means the sublease agreement,
substantially in the form of Exhibit H hereto, pursuant to which Seller will
sublease to Buyer certain entitlements from the Merrill Creek Reservoir Project,
as specified in Exhibit H.
(68) "Non-Union Employees" has the meaning as set forth in Sections
6.10(b) and (m).
(69) "PaPUC" means the Pennsylvania Public Utility Commission and any
successor agency thereto.
(70) "PaDEP" means the Pennsylvania Department of Environmental
Protection and any successor agency thereto.
(71) "Penelec" means Pennsylvania Electric Company, a Pennsylvania
corporation.
(72) "Permits" has the meaning set forth in Section 4.14.
(73) "Permitted Encumbrances" means: (i) the Easements; (ii) those
Encumbrances set forth in Schedule 1.1(73); (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
Seller or York Haven 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.
(74) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
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(75) "Plants" means the generating stations and related assets as more
fully identified on Schedule 2.1 attached hereto.
(76) "Pollution Control Revenue Bonds" means the bonds listed on
Schedule 6.12.
(77) "Portland Unit 5" means the Siemens V84.3 dual fuel combustion
turbine generator undergoing acceptance testing by Siemens Power Corporation,
and all associated or appurtenant fixtures and equipment located at the Portland
Site.
(78) "Post-Closing Adjustment" has the meaning set forth in Section
3.3(c).
(79) "Post-Closing Statement" has the meaning set forth in Section
3.3(c).
(80) "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.
(81) "Purchased Assets" has the meaning set forth in Section 2.1.
(82) "Purchase Price" has the meaning set forth in Section 3.2.
(83) "PURTA" has the meaning set forth in Section 3.5(c).
(84) "PURTA Surcharge" has the meaning set forth in Section 3.5(c).
(85) "Qualifying Offer" has the meaning set forth in Section 6.10(b).
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(86) "Real Property" has the meaning set forth in Section 2.1(a).
(87) "Real Property Leases" has the meaning set forth in Section 4.6.
(88) "Related Purchase Agreements" has the meaning set forth in Section
7.1(l).
(89) "Release" means release, spill, leak, discharge, dispose of, pump,
pour, emit, empty, inject, leach, dump or allow to escape into or through the
environment.
(90) "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.
(91) "Replacement Welfare Plans" has the meaning set forth in Section
6.10(e)
(92) "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.
(93) "SEC" means the Securities and Exchange Commission and any
successor agency thereto.
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(94) "Seller's 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 or to which York
Haven is a party, including without limitation the Collective Bargaining
Agreement and the Agreements listed on Schedule 4.12(a).
(95) "Seller's Indemnitee" has the meaning set forth in Section 8.1 (a).
(96) "Seller's Material Adverse Effect" has the meaning set forth in
Section 7.2(c).
(97) "Seller's Required Regulatory Approvals" has the meaning set forth
in Section 4.3(b).
(98) "Siemens' Agreement" has the meaning set forth in Section 2.4(q).
(99) "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.
(100) "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.
(101) "Tangible Personal Property" has the meaning set forth in Section
2.1(c).
(102) "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 York Haven could be held
liable for the Taxes of such entity or Consolidated Group.
(103) "Tax Contest" has the meaning set forth in Section 6.8(e)(4)(i).
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(104) "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.
(105) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
(106) "Termination Date" has the meaning set forth in Section 9.1(b).
(107) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(108) "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 (108).
(109) "Transferred Employees" means Transferred Non-Union Employees
and Transferred Union Employees.
(110) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(111) "Transferred Union Employees" has the meaning set forth in
Section 6.10(b).
(112) "Transferring Employee Records" means all records related to
personnel of Seller, York Haven, 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.
(113) "Transition Power Purchase Agreement" means the agreement between
Seller and Buyer, a copy of which is attached as Exhibit G hereto, executed on
the date hereof, relating to the sale of installed capacity to Seller for a
specified period of time following the Closing Date.
(114) Transmission Assets" has the meaning set forth in Section 2.2(a).
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(115) "Union" means IBEW 777.
(116) "Union Employees" has the meaning set forth in Sections 6.10(a)
and (m).
(117) "USEPA" means the United States Environmental Protection Agency
and any successor agency thereto.
(118) "Year 2000 Compliant" has the meaning set forth in Section 4.20.
"Year 2000 Compliance" has a meaning correlative to the foregoing.
(119) "York Haven" means York Haven Power Company, a Pennsylvania
corporation and wholly-owned subsidiary of Met-Ed.
(120) "York Haven Plant" means the York Haven Hydroelectric Station
identified as such in Schedule
2.1.
(121) "York Haven Stock" means all of the issued and outstanding shares
of common stock, without value, of York Haven.
(122) "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 Seller will sell,
assign, convey, transfer and deliver to Buyer, and Buyer will purchase, assume
and acquire from 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 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
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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;
(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 Seller 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 Seller's
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 Seller relating
specifically to the aforementioned assets and necessary for the operation of the
Plants (subject to the right of Seller 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, and an amount
equal to all liquidated damages paid to and retained by Seller in respect of
performance guarantees under the Siemens' Agreement;
15
(j) The names of the Plants. It is expressly understood that
Seller is 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;
(k) All drafts, memoranda, reports, information, technology,
and specifications relating to Seller's plans for Year 2000 Compliance with
respect to the Purchased Assets;
(l) The Intellectual Property described on Schedule 2.1(l);
(m) The substation equipment set forth in Schedule A to the
Interconnection Agreement and designated therein as being transferred to Buyer,
and
(n) The York Haven Stock and all stock books, stock ledgers,
minute books, corporate seal, all corporate records and other books and records
of the type described in Section 2.1. relating to York Haven.
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 Seller or any of its 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) Certain revenue meters and remote testing units, drainage
pipes and systems, as identified in the Easement Agreement;
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(c) Certificates of deposit, shares of stock (except as
provided in Section 2.1(n) with respect to the York Haven Stock), securities,
bonds, debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities;
(d) All cash, cash equivalents, bank deposits, accounts and
notes receivable (trade or otherwise), and any income, sales, payroll or other
tax receivables;
(e) The rights of Seller and its Affiliates to 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 or logos, or any
part, derivative or combination thereof;
(f) All tariffs, agreements and arrangements to which Seller
is a party for the purchase or sale of electric capacity and/or energy or for
the purchase of transmission or ancillary services;
(g) The rights of Seller or York Haven 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 Seller's 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;
(h) All personnel records of Seller or York Haven or its
Affiliates relating to the Transferred Employees other than Transferring
Employee Records or other records, the disclosure of which is required by law,
or legal or regulatory process or subpoena; and
(i) Any and all of Seller's and York Haven's rights in any
contract representing an intercompany transaction between Seller or York Haven
and an Affiliate of Seller or York Haven, 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
Seller the Assignment and Assumption Agreement pursuant to which Buyer shall
assume and agree to discharge when due, without recourse to Seller, all of the
following liabilities
17
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 Seller arising on or
after the Closing Date under Seller's Agreements, the Real Property Leases, and
the Transferable Permits in accordance with the terms thereof, including,
without limitation, (i) the contracts, licenses, agreements and personal
property leases entered into by Seller 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 Seller 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
Seller, 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 Seller;
(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 and (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
18
the soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at or near the Purchased Assets; and (iii) the Remediation
(whether or not such Remediation commenced before the Closing Date or commences
on or after the Closing Date) of Hazardous Substances that are present or have
been Released prior to, on or after the Closing Date at, on, in, under, adjacent
to or migrating from, the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells or in other environmental media at or
adjacent to the Purchased Assets; provided, that nothing set forth in this
subsection 2.3(d) shall require Buyer to assume any liabilities or obligations
that are expressly excluded in Section 2.4 including, without limitation,
liability for toxic torts as set forth in Section 2.4(i).
(e) All liabilities and obligations of Seller or York Haven
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 Seller.
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 Seller or York Haven
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 Seller 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 Seller or York Haven
accruing under any of Seller's 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);
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(e) Any fines, penalties or costs imposed by a Governmental
Authority resulting from (i) an investigation, proceeding, request for
information or inspection before or by a Governmental Authority pending prior to
the Closing Date but only regarding acts which occurred prior to the Closing
Date, or (ii) illegal acts, willful misconduct or gross negligence of Seller or
York Haven 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 Seller or York Haven 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;
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(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 Seller 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 Seller under
Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which
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) 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 Seller, or any
Affiliate of Seller, of any individual, that is attributable to any actions or
inactions (including discrimination, wrongful discharge, unfair labor practices
or constructive termination) by Seller 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 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 York Haven relating to the
period prior to the Closing except for liabilities or obligations assumed by
Buyer under Section 2.3;
(p) Any and all obligations under Article III of the Fish
Ladder Contract to pay for performance of the work set forth in Article I to
construct the Coffer dams, attraction flow weir and fish ladder facility, it
being understood that all other
21
obligations under such contract following completion of construction are being
assumed by Buyer under Section 2.3(a); provided, however, that notwithstanding
anything herein to the contrary, Buyer shall bear no financial responsibility
for payment of cost overruns or any other costs incurred in connection with
performance under Article I of the Fish Ladder Contract (other than relating to
additional work, if any, which Buyer requests to be performed);
(q) All obligations, whether financial or otherwise, arising
under the Agreement, dated as of June 29, 1993, as amended, between Met-Ed and
Siemens Power Corporation ("Siemens' Agreement"), relating to the construction
and installation of Portland Unit No. 5 (other than relating to additional work,
if any, which Buyer requests to be performed); and
(r) 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
Seller 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, Seller 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 York Haven Assets and Liabilities. Effective immediately prior to
the Closing, Met-Ed shall cause all Excluded Assets of York Haven to be
transferred by York Haven to Met-Ed or one or more of Met-Ed's Affiliates, and
to cause all liabilities of York Haven (other than Assumed Liabilities) to be
assumed by Met-Ed or one or more of Met-Ed'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 Seller, 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
22
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 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 Seller at the Closing an
aggregate amount of three hundred eighty-five million seven hundred fifty-nine
thousand seven hundred and thirty-two United States Dollars (U.S.
$385,759,732.00) (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
Seller 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 Seller
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 Seller in accordance with normal accounting policies of
Seller 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
23
to Buyer's right reasonably to direct Seller to contest such mandatesby
appropriate proceedings at Buyer's expense and provided there is no
adverse impact on the Purchased Assets); or (B) do not fall within
category (A) above but do not exceed in the aggregate $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,
Seller shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth Seller's 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 Seller 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, Seller
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
Seller has 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 Seller to Buyer, Buyer may object to
the Post-Closing Adjustment in writing. Seller agrees 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 Seller's 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
24
adjustment by agreement of the Parties or by binding determination of the
Independent Accounting Firm, if the Post-Closing Adjustment is more or less than
the Closing Adjustment, the Party owing the difference shall deliver such
difference to the other Party no later than two (2) Business Days after such
determination, in immediately available funds or in any other manner as
reasonably requested by the payee.
3.4 Allocation of Purchase Price. Buyer and Seller shall endeavor to
agree upon an allocation among the Purchased Assets and the York Haven 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. Each of Buyer
and Seller agrees 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 Seller 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 Seller agrees to provide the other promptly with
any information required to complete Form 8594. Buyer and Seller 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 Seller 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 Seller 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 or York Haven under any of Seller's Agreements;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities; and
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(v) Rent and Taxes and other items payable by Seller
under the Real Property Leases assigned to Buyer or to which York Haven
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. Seller and Buyer agree to furnish each
other with such documents and other records as may be reasonably requested in
order to confirm all adjustment and proration calculations made pursuant to this
Section 3.5.
Notwithstanding anything to the contrary herein, no proration
shall be made under this Section 3.5 with respect to Taxes payable under the
Pennsylvania Public Utility Realty Tax Act ("PURTA") that are attributable to
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 Seller
shall be responsible for such PURTA Surcharge.
3.6 Deliveries by Seller. At the Closing, Seller will deliver, or cause
to be delivered, the following to Buyer:
(a)The Bill of Sale, duly executed by Seller;
(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;
(c)The opinions of counsel and officer's certificates
contemplated by Section 7.1;
(d)One or more special warranty deeds conveying the Real
Property to Buyer, in substantially the form of Exhibit F hereto, duly executed
and acknowledged by Seller and in recordable form;
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(e) The Assignment and Assumption Agreement and any Ancillary
Agreements which are not executed on the date hereof, duly executed by Seller;
(f) A FIRPTA Affidavit, duly executed by Seller;
(g) Copies, certified by the Secretary or Assistant Secretary
of Seller, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by Seller in connection herewith, and the consummation of the
transactions contemplated hereby;
(h) A certificate of the Secretary or Assistant Secretary of
Seller identifying the name and title and bearing the signatures of the officers
of Seller authorized to execute and deliver this Agreement and the other
agreements and instruments contemplated hereby;
(i) Certificates of Subsistence with respect to Seller and
York Haven, issued by the Secretary of the State of Seller's and York Haven's
state of incorporation;
(j) To the extent available, originals of all Seller's
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 Seller, to all other parties to the
material Seller's Agreements where notice to such parties is required under the
terms of such Seller's Agreements or pursuant to Section 6.5(d) hereof;
(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 Seller at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
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In addition, Met-Ed will deliver, or cause to be delivered, to Buyer
(i) a stock certificate or certificates representing the York Haven Stock
accompanied by a stock power duly endorsed to Buyer and (ii) resignations of all
directors and officers of York Haven. The instruments of conveyance listed above
in Sections 3.6(a), (d), (e) and (k) will not include any assets owned by York
Haven (unless required to assure continuing valid title by York Haven).
3.7 Deliveries by Buyer. At the Closing, Buyer will deliver, or cause
to be delivered, the following to Seller:
(a) The Purchase Price, as adjusted pursuant to Section 3.3,
by wire transfer of immediately available funds in accordance with Seller's
instructions or by such other means as may be agreed to by Seller 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 Seller and its counsel, be necessary for Buyer to assume
the Assumed Liabilities in accordance with this Agreement;
(g) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the transfer of
the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement and where necessary or desirable in recordable forms;
(h) Certificates of Insurance relating to the insurance
policies required pursuant to Article 10 of the Interconnection Agreement; and
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(i) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.8 Ancillary Agreements. The Parties acknowledge that the Ancillary
Agreements, other than the Merrill Creek Sublease Agreement, the Easement
Agreements and the Interconnection Agreement between Seller and York Haven, have
been executed on the date hereof.
3.9 Easement Agreements. At the Closing, Buyer and Seller shall
execute for each Site an Easement Agreement in the form attached hereto as
Exhibit C, completed as required to cause the entity owning such Site to grant
such Easements and licenses as are contemplated by such form of agreement and
Exhibits B (Distribution Facilities), Exhibits C (Transmission Facilities),
Exhibits F (Distribution Substation), and Exhibits G (Main Substation) thereto,
forms of which are attached thereto. Such forms of Exhibits B, C, F and G to the
agreements are subject to revision as the Parties may agree. The Parties shall
engage in reasonable and good faith negotiations regarding such revisions so as
to minimize the impact of the Seller's Easements, Easement areas and licenses on
the Sites and Buyer's use thereof, consistent with the enjoyment by Seller of
such Easements and license rights as Seller reasonably requires to continue its
use, operation and maintenance of the Excluded Assets.
The Parties shall also engage in reasonable, good faith
negotiations to agree upon the rules and regulations under which Buyer will
grant to Seller access to the Sites, and under which Seller will grant to Buyer
access to Seller's Easements and Easement areas. Such rules and regulations
shall be memorialized as Exhibit J to each agreement.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Incorporation; Qualification. Each of Seller and York Haven 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 Seller and York Haven
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
29
qualified would not have a Material Adverse Effect. Seller has heretofore
delivered to Buyer true, complete and correct copies of its and York Haven's
Certificate of Incorporation and Bylaws as currently in effect.
4.2 Authority Relative to this Agreement. 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 Seller and the consummation of the transactions contemplated by
Seller hereby have been duly and validly authorized by all necessary corporate
action required on the part of Seller and this Agreement has been duly and
validly executed and delivered by Seller. Subject to the receipt of Seller's
Required Regulatory Approvals, this Agreement constitutes the legal, valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms, except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4.3(a), and subject to obtaining Seller's Required Regulatory
Approvals, neither the execution and delivery of this Agreement by Seller nor
the consummation by Seller or York Haven 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 Seller or York Haven, (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 Seller or York Haven 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 Seller or York Haven, 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
"Seller's Required Regulatory Approvals"), no consent or approval of, filing
with, or notice to, any Governmental Authority, by or for Seller or York Haven,
is necessary for the execution and delivery of this Agreement by Seller, or the
consummation by Seller of the transactions contemplated hereby, other than (i)
such consents, approvals,
30
filings or notices which, if not obtained or made, will not prevent Seller from
performing its material obligations hereunder and (ii) such consents, approvals,
filings or notices which become applicable to 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, Seller and York Haven with respect to the
business, operations or employees at the Plants or the Purchased Assets are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date hereof 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 nor York Haven has been refused any insurance
with respect to the Purchased Assets nor has coverage been limited by any
insurance carrier to which Seller or York Haven has applied for any such
insurance or with which Seller or York Haven 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) 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 Seller
has knowledge and (ii) 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 would insure. Met-Ed has good and
valid title to the York Haven Stock, free and clear of all Encumbrances.
4.7 Real Property Leases. Schedule 4.6 lists, as of the date of this
Agreement, all material real property leases under which Seller or York Haven 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 Seller or York Haven in accordance with their
terms; there are no existing material defaults by Seller or York Haven or, to
Seller's or York Haven's 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 Seller or York Haven or, to Seller's or York
31
Haven's Knowledge, any other party thereunder. 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 Seller's
outside environmental consultants ("Environmental Reports") and made available
for inspection by Buyer:
(a) Each of Seller and York Haven holds, and is in substantial
compliance with, all permits, certificates, certifications, licenses and
governmental authorizations under Environmental Laws ("Environmental Permits")
that are required for Seller or York Haven to conduct the business and
operations of the Purchased Assets, and each of Seller and York Haven 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 nor York Haven 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 nor York Haven has entered into or agreed
to any consent decree or order relating to the Purchased Assets, or is subject
to any outstanding judgment, decree, or judicial order relating to compliance
with any Environmental Law or to investigation or cleanup of Hazardous
Substances under any Environmental Law relating to the Purchased Assets.
(d) To Seller's and York Haven'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
Seller's exclusive representations and warranties relating to environmental
matters.
4.8 Labor Matters. 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 or York Haven is a party or is
subject and which relates
32
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, each of Seller and York Haven (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
Seller or York Haven; and (d) neither Seller nor York Haven has experienced any
work stoppage within the three-year period prior to the date hereof and to
Seller's and York Haven's 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
Seller, York Haven, Genco, GPUN or GPUS in respect of the current employees of
Seller, York Haven, Genco, GPUN or GPUS connected with the Purchased Assets
("Benefit Plans"). True and complete copies of all Benefit Plans have been made
available to Buyer.
(b) Except as set forth in Schedule 4.9(b), 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
Seller is not aware of any occurrence since the date of any such determination
letter which would affect adversely such qualification or tax exemption.
33
(c) Neither 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) Seller 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. Seller and each ERISA Affiliate have complied in all material respects
with the requirements of Part 7 of Title I of ERISA.
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 Seller's or York Haven's possession and any
policies of title insurance in force and in the possession of Seller or York
Haven with respect to the Real Property have heretofore been made available to
Buyer (without making any representation or warranty as to the accuracy or
completeness thereof). Except as set forth in Schedule 4.10A, 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, neither Seller
nor York Haven has 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 or York Haven
after the date hereof of less than $250,000 or payments by Seller or York Haven
after the date hereof of less than $1,000,000 in the aggregate.
(b)Except as disclosed in Schedule 4.12(b), each Seller's
Agreement (i) constitutes a legal, valid and binding obligation of Seller or
York Haven and, to Seller's or York Haven'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.
34
(c) Except as set forth in Schedule 4.12(c), there is not,
under Seller's Agreements, any default or event which, with notice or lapse of
time or both, would constitute a default on the part of Seller or York Haven or
to Seller's or York Haven'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 Seller's knowledge overtly
threatened) against Seller or York Haven before any court, arbitrator or
Governmental Authority, which could, individually or in the aggregate,
reasonably be expected to create a Material Adverse Effect. Except as set forth
in Schedule 4.13, neither Seller nor York Haven 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) Each of Seller and York Haven 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 Seller or York Haven 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 nor York Haven
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 of Seller and York Haven 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(108)) related to the Purchased Assets.
4.15 Taxes. 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. 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
35
received from any taxing authority with respect to liabilities for Taxes of
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 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 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 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 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) 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 Seller's
Knowledge, such Intellectual Property is not being infringed by any other
Person. Neither Seller nor York Haven 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 Seller and York Haven, 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 Seller through December 31, 1999.
4.18 Compliance With Laws. Each of Seller and York Haven 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.
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4.19 PUHCA. Seller is a wholly owned subsidiary of GPU, Inc., which is
a holding company registered under the Public Utility Holding Company Act of
1935.
4.19A Subsidiaries. York Haven does not own any subsidiaries nor any
debt, preferred, common or other equity securities of any kind nor any equity or
other interests in any other business, legal entity or arrangement.
4.19B Capitalization. The York Haven Stock, which consists of 500
shares of common stock, without par value, constitutes all of the issued and
outstanding shares of capital stock of York Haven and is owned beneficially and
of record by Seller, free and clear of all Encumbrances. The York Haven 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 York
Haven other than the 500 shares of common stock comprising the York Haven Stock.
None of the shares comprising the York Haven 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 agreements 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 York Haven. Neither Seller nor York Haven
has any obligation, contingent or otherwise, to issue, sell, repurchase, redeem
or otherwise acquire any of the York Haven Stock or other capital stock of York
Haven or any equity or debt securities of York Haven.
4.19C York Haven Tax Matters. With respect to the sale of the York
Haven Stock, except as set forth on Schedule 4.19C:
(i) York Haven 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) York Haven 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 York Haven, except for statutory encumbrances
for current Taxes not yet due;
(iv) York Haven 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
37
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 York Haven;
(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 York
Haven and York Haven 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 York Haven or any Tax Return field by or with respect
to York Haven;
(vi) York Haven 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 York
Haven;
(vii) Except for the GPU Intercompany Tax Allocation
Agreement, York Haven 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 York Haven as to any matter relating to Taxes;
(ix) York Haven has not filed a consent pursuant to
Section 341(f) of the Code (or any predecessor provision) or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset, as such term is defined in Section 341(f)(4) of
the Code, owned by York Haven;
(x) No property owned by York Haven (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, York Haven has not
incurred any liability for Taxes other than in the ordinary course of
business;
(xii) York Haven 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;
38
(xiii) York Haven has not participated in, or
cooperated with, an international boycott within the meaning of Section
999 of the Code; and
(xiii) York Haven 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.
4.19D Financial Statements. Attached hereto as Schedule 4.19D are the
audited balance sheet, income statement and statement of cash flows of York
Haven as at and for the year ended December 31, 1997, and the unaudited balance
sheet, income statement and statement of cash flows of York Haven as at and for
the six months ended June 30, 1998 (the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") and present fairly the financial condition of York Haven as
of the dates set forth therein and results of operations for the periods set
forth therein (subject in the case of the unaudited financial statements, to
year end audit adjustments). The books and records of York Haven are complete in
all material respects and have been maintained in accordance with GAAP or other
applicable regulatory requirements. York Haven 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.
4.20 DISCLAIMERS REGARDING PURCHASED ASSETS EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
ASSETS ARE SOLD "AS IS, WHERE IS", AND 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 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 SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, 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, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF
THE PURCHASED ASSETS OR THE SUITABILITY OF THE
39
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 SELLER OR ITS 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.
Seller makes 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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller 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 Seller complete
and correct copies of its Certificate of Incorporation and Bylaws (or other
similar governing documents) as currently in effect.
5.2 Authority Relative to this Agreement. Buyer has full corporate
power and authority to execute and deliver this Agreement and 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
40
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,
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,
41
arbitrator or Governmental Authority which would, individually or in the
aggregate, create a Buyer Material Adverse Effect.
5.6 No Knowledge of Seller's Breach. Buyer has no Knowledge of any
breach by Seller of any representation or warranty of Seller, or of any other
condition or circumstance that would excuse Buyer from its timely performance of
its obligations hereunder. Buyer shall notify Seller 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 Seller's 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
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
York Haven Stock have 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.
42
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, Seller (i) will operate (or cause York
Haven to operate) the Purchased Assets in the ordinary course of business
consistent with the past practices of Seller, York Haven 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 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 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) 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, Seller shall not with respect to the Purchased Assets:
(i) Make any material change in the levels of
Inventories customarily maintained by Seller or York Haven or its
Affiliates with respect to the Purchased Assets, other than changes
which are consistent with Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge,
transfer or otherwise dispose of, any material Purchased Assets
individually or in the aggregate (except for Purchased Assets used,
consumed or replaced in the ordinary course of business consistent with
past practices of Seller or York Haven 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 Seller's 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
43
of Seller, York Haven or its Affiliates or with Good Utility Practices,
(b) with cause, to the extent consistent with past practices of Seller,
York Haven or its Affiliates or with Good Utility Practices, or (c) as
may be required in connection with transferring 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 Seller or
York Haven (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 the Purchased Assets
in accordance with this Section 6.1;
(vi) Except as otherwise provided herein, enter into
any contract, agreement, commitment or arrangement relating to the
Purchased Assets that individually exceeds $250,000 or in the aggregate
exceeds $1,000,000 unless it is terminable by Seller or York Haven (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 the
Purchased Assets, any new employees prior to the Closing, other than to
fill vacancies in existing positions in the reasonable discretion of
Seller or York Haven, (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 Seller's 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;
44
(viii) Make any Capital Expenditures except as
permitted by Section 3.3(a)(iii) or for 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,
Seller will, at reasonable times and upon reasonable notice: (i) give Buyer and
its Representatives reasonable access to its and York Haven's managerial
personnel and to all books, records, plans, equipment, offices and other
facilities and properties constituting the Purchased Assets; (ii) furnish Buyer
with such financial and operating data and other information with respect to the
Purchased Assets as Buyer may from time to time reasonably request, and permit
Buyer to make such reasonable Inspections thereof as Buyer may request; (iii)
furnish Buyer at its request a copy of each material report, schedule or other
document filed by Seller, York Haven or any of its Affiliates with respect to
the Purchased Assets with the SEC, FERC, 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 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) Seller shall not be required to take any action which
would constitute a waiver of the attorney-client privilege, and (C) Seller need
not supply Buyer with any information which Seller is under a legal or
contractual obligation not to supply. Notwithstanding anything in this Section
6.2 to the contrary, Seller 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 Seller's employees any skills, aptitudes, psychological
profile, or other employment related test. Seller agrees to provide Buyer with
copies of all documents and reports, including without limitation testing
reports, provided to or received from Siemens Power Corporation under the
Siemens' Agreement with respect to the testing and commissioning of Portland
Unit 5. Buyer shall not have the right to perform or conduct any environmental
sampling or testing at, in, on, or underneath the Purchased Assets.
45
(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 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 PaPUC, the SEC, the FERC or any other
Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to
46
obtain Seller's Required Regulatory Approvals, or Buyer Required Regulatory
Approvals, respectively, or to comply generally with any relevant law or
regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other Party as far in advance as is practicable
of its intention to release to any Governmental Authority any Proprietary
Information.
(f) Except as specifically provided herein or in the
Confidentiality Agreement, nothing in this Section shall impair or modify any of
the rights or obligations of Buyer or its Affiliates under the Confidentiality
Agreement, all of which remain in effect until termination of such agreement in
accordance with its terms.
(g) Except as may be permitted in the Confidentiality
Agreement, Buyer agrees that, prior to the Closing Date, it will not contact any
vendors, suppliers, employees, or other contracting parties of Seller, York
Haven or its Affiliates with respect to any aspect of the Purchased Assets or
the transactions contemplated hereby, without the prior written consent of
Seller, which consent shall not be unreasonably withheld.
(h) (i) Buyer shall be entitled to inspect, in accordance with
this Section 6.2(h), all of the Purchased Assets located adjacent to any Point
of Interconnection (as defined in the Interconnection Agreement), as shown in
Schedule A to the Interconnection Agreement, to verify and/or determine the
accuracy of the data, drawings, and records described in such Schedule. The
Parties shall cooperate to schedule Buyer's inspection at the Plants so that any
interference with the operation of the Plants is minimized, to the extent
reasonably feasible, and so that Buyer may complete its inspections of the
Plants within thirty (30) working days of commencement of inspections and within
two (2) months after the execution of this Agreement.
(ii) Seller shall provide, or shall cause to be
provided, to Buyer, access to the Plants at the times scheduled for the
inspections referred to in clause (i) above. Seller shall provide
qualified engineering, operations, and maintenance personnel to escort
Buyer's personnel and to assist Buyer's personnel in conducting the
inspections. Seller and Buyer shall each bear their own costs of
participating in the inspections. At a mutually convenient time not
more than one (1) month after Buyer has completed its inspections, the
Parties shall meet to discuss whether, as a result of the inspections,
it is appropriate to modify Schedule A to the Interconnection Agreement
to portray more accurately the Points of Interconnection. Any
modification to any portion of Schedule A of the Interconnection
Agreement to which the Parties agree shall
47
thereafter be deemed part of Schedule A of the Interconnection
Agreement for all purposes under the Interconnection Agreement.
6.3 Public Statements. Subject to the requirements imposed by any
applicable law or any Governmental Authority or stock exchange, prior to the
Closing Date, no press release or other public announcement or public statement
or comment in response to any inquiry relating to the transactions contemplated
by this Agreement shall be issued or made by any Party without the prior
approval of the other Parties (which approval shall not be unreasonably
withheld). The Parties agree to cooperate in preparing such announcements.
6.4 Expenses. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the obtaining of any
title insurance policy and all endorsements thereto that Buyer elects to obtain
and (b) all filing fees under the HSR Act.
6.5 Further Assurances.
(a) Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the purchase and sale of the Purchased Assets pursuant to this
Agreement and the assumption of the Assumed Liabilities, including without
limitation using its best efforts to ensure satisfaction of the conditions
precedent to each Party's obligations hereunder, including obtaining all
necessary consents, approvals, and authorizations of third parties and
Governmental Authorities required to be obtained in order to consummate the
transactions hereunder, and to effectuate a transfer of the Transferable Permits
to Buyer. Buyer agrees to perform all conditions required of Buyer in connection
with Seller's 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.
(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
48
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 Seller 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, 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. In the event that any Easement
shall not have been granted by Buyer to Seller at the Closing, Buyer shall use
Commercially Reasonable Efforts to grant such Easement to Seller as promptly as
is practicable after the Closing.
(d) To the extent that Seller's rights under any Seller's
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. Seller and Buyer
agree that if any consent to an assignment of any material Seller's 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
Seller's Agreement or Real Property Lease in question, so that Buyer would not
in effect acquire the benefit of all such rights and obligations, Seller, at
Buyer's option and to the maximum extent permitted by law and such material
Seller's Agreement or Real Property Lease, shall, after the Closing Date,
appoint Buyer to be 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 Seller's 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 Seller's Agreement or Real Property Lease as Buyer may
reasonably request. Seller 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 Seller's Agreement or Real Property Lease to Buyer.
(e) To the extent that Seller's rights under any warranty or
guaranty described in Section 2.1(i) may not be assigned without the consent of
another Person, which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign same, if an attempted
49
assignment would constitute a breach thereof, or be unlawful. Seller 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, 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. Seller 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
Seller for all reasonable costs incurred by Seller in its assistance of Buyer
hereunder.
6.6 Consents and Approvals.
(a) As promptly as possible after the date of this Agreement,
Seller and Buyer, as applicable, shall each file or cause to be filed with the
Federal Trade Commission and the United States Department of Justice any
notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby. The Parties shall use their respective best efforts to respond promptly
to any requests for additional information made by either of such agencies, and
to cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing. Buyer will pay all filing fees
under the HSR Act but each Party will bear its own costs of the preparation of
any filing.
(b) As promptly as possible after the date of this Agreement,
Buyer shall file with the FERC an application requesting Exempt Wholesale
Generator status for Buyer, which filing may be made individually by Buyer or
jointly with Seller 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 Seller for review and comment and Buyer shall incorporate into
the application any revisions reasonably requested by Seller. Buyer shall be
solely responsible for the cost of preparing and filing this
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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 Seller, provided that in
either case the action directed by Seller 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 Seller 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 Seller for review and comment and Buyer shall
incorporate into the application any revisions reasonably requested by Seller.
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 Seller,
provided that Seller shall have a reasonable opportunity to make changes to such
a petition or re-submission application and, 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, Seller and Buyer, as applicable, shall
file with 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, Seller 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
Seller pursuant to such state and local Tax law.
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(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. Seller shall
cooperate with Buyer's efforts in this regard and assist in any transfer or
reissuance of a Permit or Environmental Permit held by Seller or the procurement
of any other Permit or Environmental Permit when so requested by Buyer.
6.7. Fees and Commissions. 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 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. Seller, on the one hand, and
Buyer, on the other hand, will pay to the other or otherwise discharge, and will
indemnify and hold the other harmless from and against, any and all claims or
liabilities for all brokerage fees, commissions and finder's fees (other than
the fees, commissions and finder's fees payable to the parties listed above)
incurred by reason of any action taken by the indemnifying party.
6.8. Tax Matters.
(a) All transfer and sales taxes incurred in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, (a) Pennsylvania sales tax; and (b) the Pennsylvania 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, Seller
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 Seller 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 Seller's approval, which approval shall not be unreasonably withheld.
Buyer shall make such Tax Returns
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available for Seller's 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 a Tax
Return referred to in Section 6.8(b), Seller shall pay to Buyer Seller's share
of the amount shown on such Tax Return, less payments on account of such Taxes
previously made by Seller. To the extent that Seller's previous payments exceed
Seller's share, the Buyer shall pay such excess to Seller. With respect to real
estate taxes, evidence of payment shall be delivered by Seller to Buyer at the
Closing. As soon as practicable after the Closing, Seller 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 Seller shall provide the other with such
assistance as may reasonably be requested by the other Party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each shall retain and provide the requesting party with any
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) York Haven Tax matters.
(1) Section 338(h)(10) Election. (i) With respect to the sale of the
York Haven Stock, GPU (it being understood that Met-Ed shall cause GPU to comply
with its obligations in this Section 6.8(e)) 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
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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 York Haven pursuant
to Treasury Regulation Section 1.338(h)(10)-1. Buyer and Seller 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 Seller'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 Tax Returns. Buyer and Seller 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 York Haven
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 York Haven 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 York Haven 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 York Haven
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.
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(ii) Buyer and Seller shall cause York Haven to join, for all
pre-Closing periods and the Straddle Period for which York Haven 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
York Haven to terminate as of the Closing Date. Seller 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 York Haven to pay to Seller the portion of such Taxes shown to be
due thereon attributable to York Haven 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 York Haven to prepare and timely file
all Income Tax Returns of York Haven 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 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 York Haven the amount of
Taxes shown as due thereon less any estimated Taxes paid by York Haven during
the pre-Closing period; provided, however, that in the case of an Income Tax
Return for a Straddle Period, Seller shall only be required to pay York Haven
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
York Haven during the pre-Closing period. Seller shall fully cooperate with
Buyer and York Haven 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 York Haven 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), Seller shall pay to York Haven the amount shown as due thereon
attributable to the pre-Closing Date portion of the Straddle Period less any
estimated Taxes paid by York Haven during the pre-Closing period.
55
(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.
Seller shall cause to be made available to Buyer a copy of any Tax Return that
is required to be filed by GPU or York Haven 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 York Haven 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 Seller 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
York Haven.
(vi) Any refunds or credits of the Taxes of York Haven 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 Seller, 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 York Haven,
shall be paid to Seller within ten days after Buyer or York Haven receives such
refund or after the relevant Tax Return is filed within which the credit is
applied against Buyer's or York Haven's liability for Taxes for a period which
begins after the Closing Date, net of any Taxes Buyer or York Haven is required
to pay on account of receiving such refund or credit (including a reasonable
estimate of resulting future Tax costs.) Seller, 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 York Haven that is not a
consolidated, combined, or unitary Tax Return. Any refunds or credits of Taxes
of York Haven for any Straddle Period shall be apportioned between Seller 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, Seller shall
indemnify, defend and hold Buyer and York Haven harmless from and against any
and all Taxes (including interest and penalties) which may be suffered or
incurred by Buyer or York Haven in respect of or relating to, directly or
indirectly (x)
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Taxes of or attributable to York Haven for all pre-Closing periods, (y) Taxes of
or attributable to York Haven with respect to the pre-Closing portion of the
Straddle period, and (z) Taxes payable by York Haven with respect to any
pre-Closing period or Straddle Period by reason of York Haven 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 Seller
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 York Haven with respect to all post-Closing periods, and (y) Taxes of or
attributable to York Haven with respect to the post-Closing portion of any
Straddle Period.
(iii) An indemnity payment due under this Section 6.8(e)(3) shall be
made within thirty (30) days after (i) the party in control of the issue under
Section 6.8(e)(4) 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) Seller 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 Seller is liable in full hereunder,
Seller shall at its expense control the defense and settlement of such Tax
Contest. If such Tax contest
57
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 Seller shall jointly represent York Haven in any Tax Contest relating to a
Straddle Period, and fees and expenses related to such representation shall be
paid equally by Buyer and Seller.
(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
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 York
Haven is a party shall be deemed terminated with respect to York Haven 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 York Haven after
such termination; provided, however, that the GPU Intercompany Tax allocation
Agreement shall remain in effect with respect to York Haven in order to
determine the portion of Seller's Tax liabilities attributable to York Haven,
and to be paid to Seller 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 Seller or GPU
and Buyer as to the amount of Taxes, or indemnification, whether or not
attributable to York Haven, 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
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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. York Haven and Seller shall (and Buyer and Seller
shall cause York Haven to) cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the 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 York Haven to retain, all books and records
with respect to Tax matters pertinent to York Haven 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 Seller,
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 Seller, as the case
may be, shall allow the other Party to take possession of such books and
records.
Buyer, York Haven and Seller 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 Seller's request, Buyer will cause York Haven 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 York Haven) for any post-acquisition
Tax period.
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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. Seller may at
any time notify Buyer of any development causing a breach of any of its
representations and warranties in Article IV. Unless Buyer has the right to
terminate this Agreement pursuant to Section 9.1(f) below by reason of the
developments and exercises that right within the period of fifteen (15) days
after such right accrues, the written notice pursuant to this Section 6.9 will
be deemed to have amended this Agreement, including the appropriate Schedule, to
have qualified the representations and warranties contained in Article IV above,
and to have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of the development.
6.10 Employees.
(a) At least 90 days prior to the Closing Date (but in no case
sooner than ninety (90) days after the date hereof), Buyer shall provide Seller
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 Seller 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 shall 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 Seller, 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
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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 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 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 Seller 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 "Seller's Plans"), and which provide at least the same level
of benefits or coverage as do Seller's 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
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periods with respect to the Transferred Non-Union Employees under the
Replacement Welfare Plans, other than, but only to the extent of, limitations or
waiting periods that were in effect with respect to such employees under the
welfare plans maintained by Seller, 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 co-payments 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 Seller, 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 "Seller's 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
Seller's 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 Seller for the cost of the benefits Seller or Seller's
Affiliates will provide to Union Employees and Non-Union Employees in accordance
with subparagraph (iv) of this Section 6.10(h).
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(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 Seller, Genco, GPUN or
GPUS, as applicable, and all of their Affiliates, and Buyer, in such
form as Buyer and Seller shall agree upon.
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(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 Seller, in addition to all other amounts to be paid by Buyer to Seller
hereunder, an amount equal to Buyer's Allocable Share (as defined below) of the
aggregate estimated cost that Seller or any of Seller's 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
Seller, 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
Seller, Genco, GPUN or GPUS, Seller shall provide Buyer with a list of all such
employees who have so elected.
(j) Seller 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 Seller, 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) Seller or Seller's Affiliates shall pay to all Transferred
Employees all compensation, bonus, vacation and holiday compensation, pension,
profit sharing and other deferred compensation benefits, workers' compensation,
or other employment
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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, Seller shall (i) cause York Haven to terminate or to transfer to one or
more Affiliates of GPU, the employment of any individual in the employ of York
Haven on such preceding day who will not be a Transferred Employee immediately
following the Closing, and (ii) cause all Benefit Plans (if any) maintained by
York Haven, and all liabilities and obligations of York Haven with respect to
such plans, to be transferred to, and assumed by, one or more Affiliates of GPU
other than York Haven.
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 Seller, 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 Seller) contemplated taking which has not been
consummated, or (ii) damaged or destroyed by fire or other casualty, Seller
shall notify Buyer promptly in writing of such fact, and (x) in the case of a
condemnation, 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, 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 casualty)
to Buyer at the Closing. Notwithstanding the above, if such casualty or loss
results in a Material Adverse Effect, Buyer and Seller 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 Seller has
notified Buyer of such casualty or loss, then Buyer or Seller
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may terminate this Agreement pursuant to Section 9.1(h). In the event of damage
or destruction which Seller elects to restore, Seller 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 Seller 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 Seller (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,
Seller 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 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.
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6.13. Additional York Haven Covenants. Buyer acknowledges and
agrees that the property described in Schedule 4.5 relating to the York Haven
Station is excluded from the Purchased Assets (the "Excluded York Haven
Property"). Prior to the Closing, Seller shall have the right in its sole
discretion to cause York Haven to transfer the Excluded York Haven Property to
Seller or the purchaser of the Three Mile Island Unit 1 nuclear generating
station, provided, however, that prior to the Closing, York Haven shall retain
or cause to be retained, granted or otherwise created for the benefit of York
Haven after the Closing all Easements or other rights required for Buyer to
exercise its rights to the Fish Ladder as described in Schedule 4.10A. If the
Excluded York Haven Property is not so transferred prior to the Closing, at any
time after the Closing Buyer shall, within twenty (20) Business Days of Seller's
written request, and subject to receipt of any required FERC approval, cause
York Haven to transfer the Excluded York Haven Property free and clear of all
Encumbrances other than those existing on the Excluded York Haven Property
immediately prior to the Closing, to Seller or such purchaser by execution of a
deed in substantially the form annexed to Schedule 4.5 and such other
instruments as Seller may reasonably require, provided, however, prior to such
transfer, York Haven shall retain or cause to be retained, granted or otherwise
created for the benefit of York Haven after such transfer all Easements or other
rights required for Buyer to exercise its rights to the Fish Ladder as described
in Schedule 4.10A.
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;
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(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) Seller shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Seller on or prior to the Closing
Date;
(e) The representations and warranties of Seller 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 Seller, dated the Closing Date, to the effect that, to such officer's
Knowledge, the conditions set forth in Section 7.1(d) and (e) have been
satisfied by Seller;
(g) Buyer shall have received an opinion from Seller's counsel
reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially to
the effect that:
(i) Each of Seller and York Haven 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 thereby; and the execution and delivery of
the Agreement by Seller 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 Seller;
(ii) The Agreement and each Ancillary Agreement have
been duly and validly executed and delivered by Seller and constitute
legal, valid and binding agreements of Seller enforceable in accordance
with their 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);
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(iii) The execution, delivery and performance of the
Agreement and each Ancillary Agreement by Seller do not (A) conflict
with the Certificate of Incorporation or Bylaws of Seller or (B) to the
knowledge of such counsel, constitute a violation of or default under
those agreements or instruments set forth on a Schedule attached to the
opinion and which have been identified to such counsel as all the
agreements and instruments which are material to the business or
financial condition of Seller;
(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 Seller to the
Purchased Assets;
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for the execution and
delivery of this Agreement by Seller, or the consummation by Seller of
the transactions contemplated hereby, other than (i) such consents,
approvals, filings or notices set forth in Schedule 4.3(b) or which, if
not obtained or made, will not prevent Seller from performing its
material obligations hereunder and (ii) such consents, approvals,
filings or notices which become applicable to 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; and
(vi) The York Haven Stock is owned of record, and to
such counsel's knowledge, beneficially by Seller free and clear of all
Encumbrances. The York Haven 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 York Haven other than the 500
shares of common stock comprising the York Haven Stock. None of the
shares comprising the York Haven 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 York Haven or any restrictive covenants applicable to
the York Haven Stock, and (ii) neither Seller nor York Haven has any
obligation, contingent or otherwise, to issue, sell, repurchase, redeem
or otherwise acquire any of the York Haven Stock or other capital stock
of York Haven or any equity or debt securities of York Haven. Upon the
consummation of the transactions contemplated in the Agreement, Buyer
will have good and valid title to the York Haven Stock, to such
counsel's knowledge, free and clear of all Encumbrances and Restrictive
Third Party Rights.
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In rendering the foregoing opinion, Seller's counsel may rely on
opinions of counsel as to local laws reasonably acceptable to Buyer.
(h) Seller shall have delivered, or caused to be delivered, to
Buyer at the Closing, Seller'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. Seller shall provide Buyer with a copy of a preliminary title
report and survey for the Real Property as soon as available.
(k) Final Equipment Turnover and Final Acceptance of Portland
Unit 5 shall have occurred under the Siemens' Agreement, each as defined in said
agreement. Buyer shall have received any and all rights under said agreement,
including all claims against Siemens and all liquidated damages (received prior
to or on the Closing and retained by Seller). Portland Unit 5 shall have been
commissioned and placed into commercial operation at no cost whatsoever to
Buyer.
(l) The closings under the Purchase and Sale Agreements
between JCP&L and Buyer, Penelec and Buyer, and JCP&L, Met-Ed, GPU 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.
(m) 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.
(n) Seller's Required Regulatory Approvals shall contain no
conditions or terms which would result in a Material Adverse Effect.
(o) 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.
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(p) No Site, or any portion thereof (other than the
Development Properties listed on Schedule 2.1), 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
Seller's current ownership or the ownership of any Affiliate thereof, unless the
failure of such Site or any portion thereof to be zoned to permit such use shall
not result in a Material Adverse Effect.
7.2. Conditions to Obligations of Seller. The obligation of Seller 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 Seller) 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) Seller shall have received all of Seller's Required
Regulatory Approvals applicable to them, containing no conditions or terms which
would materially diminish the benefit of this Agreement to Seller or result in a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Seller ("Seller 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 Seller is party or by which 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;
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(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 respects as of the
Closing Date as though made at and as of the Closing Date;
(g) Seller 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) Seller shall have received an opinion from Buyer's counsel
reasonably acceptable to Seller, dated the Closing Date and satisfactory in form
and substance to Seller 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 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);
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(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 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
Seller 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 (other
than the Development Properties listed in Schedule 2.1) 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 case, 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.
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(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
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(p), 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 Seller,
its officers, directors, employees, shareholders, Affiliates and agents (each, a
"Seller's 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 Seller's 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
Seller's 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).
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(b) 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 Seller of any covenant or agreement of Seller
contained in this Agreement or the representations and warranties contained in
Sections 4.1, 4.2 and 4.3, (ii) the Excluded Liabilities, (iii) noncompliance by
Seller 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 Seller's ownership or operation of the Excluded Assets on or
after the Closing Date.
(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
Seller's 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 Seller
shall not extend to any of Seller's 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 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 indemnifica-tion
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.
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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 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 Seller and Buyer under this Article VIII are exclusive
and in lieu of any and all other rights and remedies which Seller and Buyer may
have under this Agreement or otherwise for monetary relief, with respect to (i)
any breach of or failure to perform any covenant, agreement, or representation
or warranty set forth in this Agreement, after the occurrence of the Closing, or
(ii) the Assumed Liabilities or the Excluded Liabilities, as the case may be.
The indemnification obligations of the Parties set forth in this Article VIII
apply only to matters arising out of this Agreement, excluding the Ancillary
Agreements. Any Indemnifiable Loss arising under or pursuant to an Ancillary
Agreement shall be governed by the indemnification obligations, if any,
contained in the Ancillary Agreement under which the Indemnifiable Loss arises.
(g) Notwithstanding anything to the contrary herein, no party
(including an Indemnitee) shall be entitled to recover from any other party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments losses, costs, or expenses under this Agreement any amount in excess of
the actual compensatory damages, court costs and reasonable attorney's and other
advisor fees suffered by such party. Buyer and Seller waive any right to recover
punitive, incidental, special,
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exemplary and consequential damages arising in connection with or with respect
to this Agreement. The provisions of this Section 8.1(g) shall not apply to
indemnification for a Third Party Claim.
8.2. Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or brought
by any Person who is not a party to this Agreement or any Affiliate of a Party
to this Agreement (a "Third Party Claim") with respect to which indemnification
is to be sought from an Indemnifying Party, the Indemnitee shall give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
such notice shall not be given later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnitee, to
elect to assume the defense of any Third Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel, provided that the
counsel for the Indemnifying Party who shall conduct the defense of such Third
Party Claim shall be reasonably satisfactory to the Indemnitee. The Indemnitee
shall cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnitee may compromise or settle such Third Party Claim over the
objection of the Indemnifying Party, which settlement or compromise shall
conclusively establish the Indemnifying Party's liability pursuant to this
Agreement.
(b) (i) If, within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof. (ii) Without the prior written
consent of the Indemnitee, the Indemnifying Party shall not enter 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
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indemnification hereunder. If a firm offer is made to settle a Third Party Claim
without leading to liability or the creation of a financial or other obligation
on the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party shall give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm offer
within ten (10) calendar days after its receipt of such notice, the Indemnifying
Party shall be relieved of its obligations to defend such Third Party Claim and
the Indemnitee may contest or defend such Third Party Claim. In such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer plus reasonable costs and expenses paid or
incurred by Indemnitee up to the date of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not be
given later than ten (10) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of thirty (30)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such thirty (30) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such claim, the Indemnitee will be free to seek
enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by, from or
against any other entity, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith (together with interest thereon
from the date of payment thereof at the publicly announced prime rate then in
effect of Chase Manhattan Bank) shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(e) A failure to give timely notice as provided in this
Section 8.2 shall not affect the rights or obligations of any Party hereunder
except if, and only to the extent that, as a result of such failure, the Party
which was entitled to receive such notice was actually prejudiced as a result of
such failure.
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ARTICLE IX
TERMINATION
9.1 Termination.(a) This Agreement may be terminated at any time prior
to the Closing Date by mutual written consent of Seller and Buyer.
(b) This Agreement may be terminated by Seller 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) 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 Seller, if any of
Seller's Required Regulatory Approvals, the receipt of which is a condition to
the obligation of Seller 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).
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(e) This Agreement may be terminated by Buyer if there has
been a violation or breach by Seller 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 Seller 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 Seller, 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 Seller.
(g) This Agreement may be terminated by Seller if there shall
have occurred any change that is materially adverse to the business, operations
or conditions (financial or otherwise) of Buyer.
(h) This Agreement may be terminated by either of Seller 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
Seller and Buyer.
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,
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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, 4.19A, 4.19B, 5.1, 5.2 and
5.3, 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 survive the Closing Date;
and none of Seller, Buyer or any officer, director, trustee or Affiliate of any
of them shall be under any liability whatsoever with respect to any such
representation, warranty or covenant.
10.4 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 Seller, 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.
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(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.
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 Seller (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 Seller, (i) Buyer may assign all of its rights and
obligations hereunder to any majority owned Subsidiary (direct or indirect) and
upon Seller's 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
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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. Seller agrees, 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 Seller's 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 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
83
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 Seller 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.
10.11 Bulk Sales Laws. Buyer acknowledges that, notwithstanding
anything in this Agreement to the contrary, Seller 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 Seller 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(p) 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.
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IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
SITHE ENERGIES, INC. METROPOLITAN EDISON COMPANY
By: By:
------------------------- --------------------------
Name: Name:
Title: Title:
85
[Met-Ed]
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 Easement Agreement
Exhibit D Form of FIRPTA Affidavit
Exhibit E Form of Interconnection Agreement
Exhibit F Form of Deeds
Exhibit G Form of Transition Power Purchase Agreement
Exhibit H Form of Merrill Creek Sublease
SCHEDULES
1.1(73) Permitted Encumbrances
1.1(108) 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) Seller's 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
4.10A Real Property Matters
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
4.19C York Haven Tax Matters
4.19D 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 Agreement
6.10(h) Schedule of Severance Benefits
6.10(h)(iv) Allocable Share Percentages
6.12 Pollution Control Revenue Bonds
6.13 York Haven Covenants
10.13 Zoning
10.14 Sewage Matters