Exhibit 10-OO
PRIVILEGED AND CONFIDENTIAL
[Penelec P&S]
Execution Copy
PURCHASE AND SALE AGREEMENT
BY AND AMONG
PENNSYLVANIA ELECTRIC COMPANY, as SELLER,
and SITHE ENERGIES, INC., as BUYER
Dated as of October 29, 1998
TABLE OF CONTENTS
Page No.
ARTICLE I 1
1.1 Definitions 1
1.2 Certain Interpretive Matters 14
ARTICLE II 14
2.1 Transfer of Assets 14
2.2 Excluded Assets 16
2.3 Assumed Liabilities 17
2.4 Excluded Liabilities 19
2.5 Control of Litigation 21
ARTICLE III 22
3.1 Closing 22
3.2 Payment of Purchase Price 22
3.3 Adjustment to Purchase Price 22
3.4 Allocation of Purchase Price 24
3.5 Prorations 25
3.6 Deliveries by Seller 26
3.7 Deliveries by Buyer 27
3.8 Ancillary Agreements 28
3.9 Easement Agreements 28
ARTICLE IV 29
4.1 Incorporation; Qualification 29
4.2 Authority Relative to this Agreement 29
4.3 Consents and Approvals; No Violation 29
4.4 Insurance 30
4.5 Title and Related Matters 30
4.6 Real Property Leases 31
4.7 Environmental Matters 31
4.8 Labor Matters 32
4.9 Benefit Plans: ERISA 32
4.10 Real Property 33
4.11 Condemnation 33
4.12 Contracts and Leases 33
4.13 Legal Proceedings, etc. 34
4.14 Permits 34
4.15 Taxes 35
4.16 Intellectual Property 35
4.17 Capital Expenditures 36
4.18 Compliance With Laws 36
4.19 PUHCA 36
4.20 Disclaimers Regarding Purchased Assets 36
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER 37
5.1 Organization 37
5.2 Authority Relative to this Agreement 37
5.3 Consents and Approvals; No Violation 38
5.4 Availability of Funds 38
5.5 Legal Proceedings 38
5.6 No Knowledge of Seller's Breach 39
5.7 Qualified Buyer 39
5.8 Inspections 39
5.9 WARN Act 39
ARTICLE VI 40
6.1 Conduct of Business Relating to the Purchased Assets 40
6.2 Access to Information 42
6.3 Public Statements 45
6.4 Expenses 45
6.5 Further Assurances 45
6.6 Consents and Approvals 47
6.7 Fees and Commissions 49
6.8 Tax Matters 49
6.9 Advice of Changes 51
6.10 Employees 52
6.11 Risk of Loss 57
6.12 Additional Covenants of Buyer 58
ARTICLE VII 58
7.1 Conditions to Obligations of Buyer 59
7.2 Conditions to Obligations of Seller 62
7.3 Zoning Condition Adjustments 64
ARTICLE VIII 65
8.1 Indemnification 65
8.2 Defense of Claims 68
ARTICLE IX 70
9.1 Termination 70
9.2 Procedure and Effect of No-Default Termination 71
ARTICLE X 71
10.1 Amendment and Modification 71
10.2 Waiver of Compliance; Consents 72
10.3 No Survival 72
10.4 Notices 72
10.5 Assignment 73
10.6 Governing Law 74
10.7 Counterparts 74
10.8 Interpretation 74
10.9 Schedules and Exhibits 74
10.10 Entire Agreement 75
10.11 Bulk Sales Laws 75
10.12 U.S. Dollars 75
10.13 Zoning Classification 75
10.14 Sewage Facilities 75
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of October 29, 1998, by and between
Pennsylvania Electric Company, a Pennsylvania corporation ("Penelec" 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 Agreement, the
Easement Agreements 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.
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(19) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(20) "Code" means the Internal Revenue Code of 1986, as amended.
(21) "Collective Bargaining Agreement" has the meaning set forth in
Section 6.10(d).
(22) "Commercially Reasonable Efforts" means efforts which are reasonably
within the contemplation of the Parties at the time of executing this Agreement
and which do not require the performing Party to expend any funds other than
expenditures which are customary and reasonable in transactions of the kind and
nature contemplated by this Agreement in order for the performing Party to
satisfy its obligations hereunder.
(23) "Computer Systems" has the meaning set forth in Section 4.20.
(24) "Confidentiality Agreement" means the Confidentiality Agreement,
dated March 2, 1998, by and between 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
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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 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
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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 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. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Oil Pollution Act (33 U.S.C. Section
2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
Section 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.),the Pennsylvania Hazardous Sites Cleanup Act (35 P.S.
Section 6020.101 et seq.), the Pennsylvania Solid Waste Management Act (35 P.S.
Section 6018.101 et seq.), the Pennsylvania Clean Stream Law (35 P.S. Section
691.1 et seq.), and all applicable other state laws analogous to any of the
above.
(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).
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(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.
(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) "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).
(46) "Governmental Authority" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitrating body or
other governmental authority.
(47) "GPU" means GPU, Inc., a Pennsylvania corporation and parent company
of Seller.
(48) "GPUN" means GPU Nuclear, Inc., a New Jersey corporation and a
wholly-owned subsidiary of GPU.
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(49) "GPUS" means GPU Service, Inc., a Pennsylvania corporation and a
wholly-owned subsidiary of GPU.
(50) "Hazardous Substances" means (a) any petrochemical or petroleum
products, coal ash, oil, radioactive materials, radon gas, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
(51) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
(52) "IBEW 459" means Local 459 of the International Brotherhood of
Electrical Workers.
(53) "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.
(54) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(55) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
(56) "Indemnitee" has the meaning set forth in Section 8.1(d).
(57) "Independent Accounting Firm" means such independent accounting firm
of national reputation as is mutually appointed by Seller and Buyer.
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(58) "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.
(59) "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).
(60) "Interconnection Agreements" means the Interconnection Agreements,
between Seller and Buyer, a form of which is attached as Exhibit E hereto, under
which Seller will provide Buyer with interconnection service to Seller's
transmission facilities and whereby Buyer will provide Seller with continuing
access to certain of the Purchased Assets after the Closing Date.
(61) "Inventories" means coal, fuel oil or alternative fuel inventories,
limestone, materials, spare parts, consumable supplies and chemical and gas
inventories relating to the operation of a Plant located at, or in transit to,
such Plant.
(62) "JCP&L" means Jersey Central Power & Light Company, a New Jersey
corporation.
(63) "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.
(64) "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
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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 this Agreement; (2) the Portland Station and associated Purchased
Assets to be conveyed to Buyer pursuant to the Related Purchase Agreement with
Met-Ed; 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.
(65) [Reserved]
(66) "Met-Ed" means Metropolitan Edison Company, a Pennsylvania
corporation.
(67) "MPSC" means Maryland Public Service Commission.
(68) "Non-Union Employees" has the meaning as set forth in Sections
6.10(b) and
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(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) "Permits" has the meaning set forth in Section 4.14.
(72) "Permitted Encumbrances" means: (i) the Easements; (ii) those
Encumbrances set forth in Schedule 1.1(72); (iii) statutory liens for Taxes or
other governmental charges or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
provided that the aggregate amount for all Aggregate Purchased Assets being so
contested does not exceed $500,000; (iv) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary course of
business relating to obligations as to which there is no default on the part of
Seller 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,
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easements, restrictions and Encumbrances which do not materially, individually
or in the aggregate, detract from the value of the Aggregate Purchased Assets as
currently used or materially interfere with the present use of the Aggregate
Purchased Assets and neither secure indebtedness, nor individually or in the
aggregate have a value exceeding $30 million for all Aggregate Purchased Assets.
(73) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
(74) "Plants" means the generating stations and related assets as more
fully identified on Schedule 2.1 attached hereto.
(75) "Pollution Control Revenue Bonds" means the bonds listed on Schedule
6.12.
(76) "Post-Closing Adjustment" has the meaning set forth in Section
3.3(c).
(77) "Post-Closing Statement" has the meaning set forth in Section 3.3(c).
(78) "Proprietary Information" of a Party means all information about the
Party or its Affiliates, including their respective properties or operations,
furnished to the other Party or its Representatives by the Party or its
Representatives, after the date hereof, regardless of the manner or medium in
which it is furnished. Proprietary Information does not include information
that: (a) is or becomes generally available to the public, other than as a
result of a disclosure by the other Party or its Representatives; (b) was
available to the other Party on a nonconfidential basis prior to its disclosure
by the Party or its Representatives; (c) becomes available to the other Party on
a nonconfidential basis from a person, other than the Party or its
Representatives, who is not otherwise bound by a confidentiality agreement with
the Party or its Representatives, or is not otherwise under any obligation to
the Party or any of its Representatives not to transmit the information to the
other Party or its Representatives; (d) is independently developed by the other
Party; or (e) was disclosed pursuant to the Confidentiality Agreement and
remains subject to the terms and conditions of the Confidentiality Agreement.
(79) "Purchased Assets" has the meaning set forth in Section 2.1.
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(80) "Purchase Price" has the meaning set forth in Section 3.2.
(81) "PURTA" has the meaning set forth in Section 3.5(c).
(82) "PURTA Surcharge" has the meaning set forth in Section 3.5(c).
(83) "Qualifying Offer" has the meaning set forth in Section 6.10(b).
(84) "Real Property" has the meaning set forth in Section 2.1(a).
(85) "Real Property Leases" has the meaning set forth in Section 4.6.
(86) "Related Purchase Agreements" has the meaning set forth in Section
7.1(k).
(87) "Release" means release, spill, leak, discharge, dispose of, pump,
pour, emit, empty, inject, leach, dump or allow to escape into or through the
environment.
(88) "Remediation" means action of any kind to address a Release or the
presence of Hazardous Substances at a Site or an off-Site location including,
without limitation, any or all of the following activities to the extent they
relate to or arise from the presence of a Hazardous Substance at a Site or an
off-Site location: (a) monitoring, investigation, assessment, treatment,
cleanup, containment, removal, mitigation, response or restoration work; (b)
obtaining any permits, consents, approvals or authorizations of any Governmental
Authority necessary to conduct any such activity; (c) preparing and implementing
any plans or studies for any such activity; (d) obtaining a written notice from
a Governmental Authority with jurisdiction over a Site or an off-Site location
under Environmental Laws that no material additional work is required by such
Governmental Authority; (e) the use, implementation, application, installation,
operation or maintenance of removal actions on a Site or an off-Site location,
remedial technologies applied to the surface or subsurface soils, excavation and
off-Site treatment or disposal of soils, systems for long term treatment of
surface water or ground water, engineering controls or institutional controls;
and (f) any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws to address the presence or
Release of Hazardous Substances at a Site or an off-Site location.
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(89) "Replacement Welfare Plans" has the meaning set forth in
Section 6.10(e)
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(90) "Representatives" of a Party means the Party's Affiliates and their
directors, officers, employees, agents, partners, advisors (including, without
limitation, accountants, counsel, environmental consultants, financial advisors
and other authorized representatives) and parents and other controlling persons.
(91) "SEC" means the Securities and Exchange Commission and any successor
agency thereto.
(92) "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, including without
limitation the Collective Bargaining Agreement.
(93) "Seller's Indemnitee" has the meaning set forth in Section 8.1 (a).
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(94) "Seller's Material Adverse Effect" has the meaning set forth in
Section 7.2(c).
(95) "Seller's Required Regulatory Approvals" has the meaning set forth in
Section 4.3(b).
(96) "Site" means, with respect to any Plant, the Real Property (including
improvements) forming a part of, or used or usable in connection with the
operation of, such Plant, including any disposal sites included in the Real
Property. Any reference to the Sites shall include, by definition, the surface
and subsurface elements, including the soils and groundwater present at the
Sites, and any reference to items "at the Sites" shall include all items "at,
on, in, upon, over, across, under and within" the Site and agreements set forth
in Schedule 4.1(a).
(97) "Subsidiary" when used in reference to any Person means any entity of
which outstanding securities having ordinary voting power to elect a majority of
the Board of Directors or other Persons performing similar functions of such
entity are owned directly or indirectly by such Person.
(98) "Tangible Personal Property" has the meaning set forth in Section
2.1(c).
(99) "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,
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withholding, social security, gross receipts, license, stamp, occupation,
employment or other taxes, including any interest, penalties or additions
attributable thereto.
(100) "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.
(101) "Termination Date" has the meaning set forth in Section 9.1(b).
(102) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(103) "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 (103).
(104) "Transferred Employees" means Transferred Non-Union Employees and
Transferred Union Employees.
(105) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(106) "Transferred Union Employees" has the meaning set forth in Section
6.10(b).
(107) "Transferring Employee Records" means all records related to
personnel of Seller, 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.
(108) "Transition Power Purchase Agreement" means the agreement between
Seller and Buyer, a copy of which are 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.
(109) "Transmission Assets" has the meaning set forth in Section 2.2(a).
(110) "Union" means IBEW 459.
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(111) "Union Employees" has the meaning set forth in Sections 6.10(a)
and (m).
---------------
(112) "USEPA" means the United States Environmental Protection Agency and
any successor agency thereto.
(113) "Year 2000 Compliant" has the meaning set forth in Section 4.20.
"Year 2000 Compliance" has a meaning correlative to the foregoing.
(114) "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 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;
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(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;
(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;
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(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); and
(m) The substation equipment set forth in Schedule A to the
Interconnection Agreement and designated therein as being transferred to Buyer.
2.2 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is 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;
(c) Certificates of deposit, shares of stock, securities, bonds,
debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities;
(d) All cash, cash equivalents, bank deposits, accounts and notes
receivable (trade or otherwise), and any income, sales, payroll or other tax
receivables;
(e) The rights of 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
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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 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 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 rights in any contract representing an
intercompany transaction between Seller and an Affiliate of Seller, 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 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,
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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 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).
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(e) All liabilities and obligations of Seller 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 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 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);
(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
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 for goods delivered or
services rendered prior to the Closing Date,
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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, (i) 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, (ii) in connection with the coal refuse site at the Seward Plant more
particularly described in Schedule 2.4(h) but only up to a maximum amount of $6
million in the aggregate, and (iii) in connection with the remediation
associated with the leaking underground pipeline at the Broad Street office
facility more particularly described in Schedule 2.4(h).
(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 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
21
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.
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 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 five hundred sixty million six hundred forty one thousand
United States Dollars (U.S. $560,641,000.00) (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):
22
(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 to Buyer's right reasonably to direct
Seller to contest such mandates by appropriate proceedings at Buyer's
expense and provided there is no adverse impact on the Purchased Assets);
or (B) do not fall within category (A) above but do not exceed in the
aggregate $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
23
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 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 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.
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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 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
(v) Rent and Taxes and other items payable by Seller under the
Real Property Leases assigned to Buyer.
(b) In connection with the prorations referred to in (a) above, in
the event that actual figures are not available at the Closing Date, the
proration shall be based upon the actual Taxes or other amounts accrued through
the Closing Date or paid for the most recent year (or other appropriate period)
for which actual Taxes or other amounts paid are available. Such prorated Taxes
or other amounts shall be re-prorated and paid to the appropriate Party within
sixty (60) days of the date that the previously unavailable actual figures
become available. The prorations shall be based on the number of days in a year
or other appropriate period (i) before the Closing Date and (ii) including and
after the Closing Date. 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
25
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;
(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, issued by
the Secretary of the State of Seller's state of incorporation;
26
(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 all 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;
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
27
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
(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 Easement Agreements 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.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Incorporation; Qualification. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and authority to own,
lease, and operate its material properties and assets and to carry on its
business as is now being conducted. Seller is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which its business as now being conducted shall require it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect. Seller has heretofore delivered to Buyer true, complete and
correct copies of its Certificate of Incorporation and Bylaws as currently in
effect.
4.2 Authority Relative to this Agreement. 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 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, (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 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)
29
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, 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 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 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 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, Seller
has not been refused any insurance with respect to the Purchased Assets nor has
coverage been limited by any insurance carrier to which Seller has applied for
any such insurance or with which Seller has carried insurance during the last 12
months.
4.5 Title and Related Matters. Except as set forth in Schedule 4.5 and
subject to Permitted Encumbrances, (i) 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
30
title with respect to the Real Property or interest therein as a reputable title
company doing business in the Commonwealth of Pennsylvania, as applicable, would
insure.
4.6 Real Property Leases. Schedule 4.6 lists, as of the date of this
Agreement, all material real property leases under which Seller is a lessee or
lessor and which relate to the Purchased Assets ("Real Property Leases"). Except
as set forth in Schedule 4.6, all such leases are valid, binding and enforceable
against Seller in accordance with their terms; there are no existing material
defaults by Seller or, to Seller'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, to Seller'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) Seller holds, and is in substantial compliance with, all
permits, certificates, certifications, licenses and governmental authorizations
under Environmental Laws ("Environmental Permits") that are required for Seller
to conduct the business and operations of the Purchased Assets, and Seller is
otherwise in compliance with applicable Environmental Laws with respect to the
business and operations of such Purchased Assets except for such failures to
hold or comply with required Environmental Permits, or such failures to be in
compliance with applicable Environmental Laws, as would not, individually or in
the aggregate, create a Material Adverse Effect;
(b) Seller has not 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) Seller has not entered into or agreed to any consent decree or
order relating to the Purchased Assets, or is not subject to any outstanding
judgment, decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous Substances under
any Environmental Law relating to the Purchased Assets.
(d) To Seller's Knowledge, no Releases of Hazardous Substances have
occurred at, from, in, on, or under any Site, and no Hazardous Substances are
present in, on, about or migrating
31
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 is a party or is subject and which
relates to the business and operations of the Purchased Assets. With respect to
the business or operations of such Purchased Assets, except to the extent set
forth in Schedule 4.8 and except for such matters as will not, individually or
in the aggregate, create a Material Adverse Effect, Seller (a) is in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours; (b) has not received written
notice of any unfair labor practice complaint against it pending before the
National Labor Relations Board; (c) no arbitration proceeding arising out of or
under any collective bargaining agreement is pending against Seller; and (d)
Seller has not experienced any work stoppage within the three-year period prior
to the date hereof and to Seller'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, Genco, GPUN or GPUS in respect of the current employees of Seller,
Genco, GPUN or GPUS connected with the Purchased Assets ("Benefit Plans"). True
and complete copies of all 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
32
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.
(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 possession and any policies of title
insurance in force and in the possession of Seller 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, Seller has not
received any written notices of and otherwise has no Knowledge of any pending or
threatened proceedings or governmental actions to condemn or take by power of
eminent domain all or any part of the Purchased Assets.
4.12 Contracts and Leases. (a) Schedule 4.12(a) lists each written
contract, license, agreement, or personal property lease which is material to
the business or operations of the Purchased Assets, other than any contract,
license, agreement or personal property lease which is listed or described on
another Schedule, or which is expected to expire or terminate prior to the
Closing Date, or which provides for annual payments by Seller after the
33
date hereof of less than $250,000 or payments by Seller 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 and, to Seller's
Knowledge, constitutes a valid and binding obligation of the other parties
thereto, and (ii) may be transferred to Buyer pursuant to this Agreement without
the consent of the other parties thereto and will continue in full force and
effect thereafter, unless in any such case the impact of such lack of legality,
validity or binding nature, or inability to transfer, would not, individually or
in the aggregate, create a Material Adverse Effect.
(c) Except as set forth in Schedule 4.12(c), there is not, under
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 to Seller's Knowledge,
any of the other parties thereto, except such events of default and other events
which would not, individually or in the aggregate, create a Material Adverse
Effect.
4.13 Legal Proceedings, etc. Except as set forth in Schedule 4.13, there
are no actions or proceedings pending (or to Seller's knowledge overtly
threatened) against Seller 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,
Seller is not subject to any outstanding judgments, rules, orders, writs,
injunctions or decrees of any court, arbitrator or Governmental Authority which
would, individually or in the aggregate, create a Material Adverse Effect.
4.14 Permits. (a) Seller has all permits, licenses, franchises and other
governmental authorizations, consents and approvals, (other than Environmental
Permits, which are addressed in Section 4.7 hereof) (collectively, "Permits")
necessary to permit Seller to own and operate the Purchased Assets except where
the failure to have such Permits would not, individually or in the aggregate,
create a Material Adverse Effect. Except as disclosed on Schedule 4.14(a),
Seller has not 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. Seller is in compliance with
all such Permits except where non-compliance would not, individually or in the
aggregate, create a Material Adverse Effect.
34
(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(103)) 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 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. Seller has not received notice that it is
35
infringing any Intellectual Property of any other Person in connection with the
operation or business of the Purchased Assets, and Seller, to its Knowledge, is
not infringing any Intellectual Property of any other Person the effect of
which, individually or in the aggregate, would have a Material Adverse Effect.
4.17 Capital Expenditures. Except as set forth in Schedule 6.1, there are
no capital expenditures associated with the Purchased Assets that are planned by
Seller through December 31, 1999.
4.18 Compliance With Laws. Seller is in compliance with all applicable
laws, rules and regulations with respect to the ownership or operation of the
Purchased Assets except where the failure to be in compliance would not,
individually or in the aggregate, create a Material Adverse Effect.
4.19 PUHCA. Seller is a wholly owned subsidiary of GPU, Inc., which is a
holding company registered under the Public Utility Holding Company Act of 1935.
4.20 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
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 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
36
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 and the State of Maryland. 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
37
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,
38
rules, orders, writs, injunctions or decrees of any court, arbitrator or
Governmental Authority which would, individually or in the aggregate, create a
Buyer Material Adverse Effect.
5.6 No Knowledge of 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.
39
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 the Purchased
Assets in the ordinary course of business consistent with the past practices of
Seller or its Affiliates or with Good Utility Practices, (ii) shall use all
Commercially Reasonable Efforts to preserve intact such Purchased Assets, and
endeavor to preserve the goodwill and relationships with customers, suppliers
and others having business dealings with it, (iii) shall maintain the insurance
coverage described in Section 4.4, (iv) shall comply with all applicable laws
relating to the Purchased Assets, including without limitation, all
Environmental Laws, except where the failure to so comply would not result in a
Material Adverse Effect, and (v) shall continue with 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 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
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 of Seller or
its Affiliates or with Good Utility Practices, (b) with cause, to the
extent consistent with past practices
40
of Seller 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, 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, 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,
(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;
41
(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 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 or any of its Affiliates with respect to the Purchased Assets with the
SEC, FERC, MPSC, 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. Buyer shall not have the right to perform or conduct
any environmental sampling or testing at, in, on, or underneath the Purchased
Assets.
(b) Each Party shall, and shall use its best efforts to cause its
Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other
42
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 MPSC, the SEC, the FERC or any
other Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Seller's Required Regulatory Approvals, or Buyer Required
Regulatory Approvals, respectively, or to comply
43
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 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 thereafter be
deemed
44
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
45
contract to acquire, nor acquire, electric generation facilities located in the
control area recognized by the North American Reliability Council as the PJM
Control Area if the proposed acquisition of such additional electric generation
facilities might reasonably be expected to prevent or materially impede,
interfere with or delay the transactions contemplated by this Agreement. Buyer
shall give 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
46
not been obtained by the Closing Date, this Agreement shall not constitute an
agreement to assign same, if an attempted assignment would constitute a breach
thereof, or be unlawful. 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.
(g) Buyer agrees that it will enter into a lease agreement with
Seller on or before the Closing Date, to be effective as of the Closing,
providing for the lease to Seller of approximately 57,679 square feet of general
office space and 54,510 square feet of various shops and labs, along with a
loading dock access space and approximately 135 parking spaces, at the Genco
Headquarters Building (1001 Broad Street, Johnstown, Pennsylvania), all as
generally described on Schedule 6.5(g) attached hereto, such lease shall be for
a term of three (3) to five (5) years (as designated by Seller), shall include a
market rate rental and other customary expense pass through, and contain other
customary terms and conditions.
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
47
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 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.
48
(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.
(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
49
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 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
50
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) Disputes. In the event that a dispute arises between Seller and
Buyer as to the amount of Taxes, or indemnification, or the amount of any
allocation of Purchase Price under Section 3.4 hereof, the parties shall attempt
in good faith to resolve such dispute, and any agreed upon amount shall be paid
to the appropriate party. If such dispute is not resolved 30 days thereafter,
the parties shall submit the dispute to the Independent Accounting firm for
resolution, which resolution shall be final, conclusive and binding on the
parties. Notwithstanding anything in this Agreement to the contrary, the fees
and expenses of the Independent Accounting Firm in resolving the dispute shall
be borne equally by Seller 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.
(f) Cooperation. Buyer and Seller shall 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 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 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).
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
51
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
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Section 6.10(a) or (b) (whether pursuant to a Qualifying Offer or otherwise)
shall be referred to herein as a "Transferred Union Employee" or "Transferred
Non-Union Employee", respectively. At least forty-five(45) days prior to the
Closing Date, Buyer shall provide Seller with notice of those Non-Union
Employees to whom 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
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its Affiliates as may be made available by Buyer (the "Replacement Welfare
Plans"). Buyer shall (i) waive all limitations as to pre-existing condition
exclusions and waiting periods with 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.
(iv) At the Closing or as soon thereafter as practicable, but
in any event no later than 60 days
55
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
56
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.
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 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.
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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.
ARTICLE VII
CONDITIONS
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7.1 Conditions to Obligations of Buyer. The obligation of Buyer to effect
the purchase of the Purchased Assets and the other transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated.
(b) No preliminary or permanent injunction or other order or decree
by any federal or state court or Governmental Authority which prevents the
consummation of the sale of the Purchased Assets contemplated herein shall have
been issued and remain in effect (each Party agreeing to use its reasonable best
efforts to have any such injunction, order or decree lifted) and no statute,
rule or regulation shall have been enacted by any state or federal government or
Governmental Authority which prohibits the consummation of the sale of the
Purchased Assets;
(c) Buyer shall have received all of Buyer's Required Regulatory
Approvals and such approvals shall contain no conditions or terms which would
result in a Material Adverse Effect;
(d) 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) Seller 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
59
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);
(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
60
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) The closings under the Purchase and Sale Agreements between
JCP&L and Buyer, Met-Ed 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.
(l) Buyer shall have received all Permits and Environmental Permits,
to the extent necessary, to own and operate the Plants in accordance with past
emissions and operating practices, except for those Permits and Environmental
Permits, the absence of which would not in the aggregate have a Material Adverse
Effect.
(m) Seller's Required Regulatory Approvals shall contain no
conditions or terms which would result in a Material Adverse Effect.
(n) Neither the Real Property nor any portion thereof shall be part
of a tax lot which includes any real property and/or buildings, facilities or
other improvements other than that which comprises the Real Property.
(o) No Site, or any portion thereof (other than the Development
Properties listed on Schedule 2.1), shall be subject to a zoning classification
or classifications, rule or regulation, or variance or special exception which
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
61
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, or 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;
(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
62
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 State of Maryland and
Commonwealth of Pennsylvania and has the full corporate power and
authority to own, lease and operate its material assets and properties and
to carry on its business as is now conducted, and to execute and deliver
the Agreement and the Ancillary Agreements by Buyer and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Agreement and the Ancillary Agreements by Buyer and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary corporate action required on the part of Buyer;
(ii) The Agreement and the Ancillary Agreements have been duly
and validly executed and delivered by Buyer, and constitute legal, valid
and binding agreements of Buyer, enforceable against Buyer, in accordance
with their terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting or relating to enforcement of
creditor's rights generally and general principles of equity (regardless
of whether enforcement is considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the Agreement
and the Ancillary Agreements by Buyer do not (A) conflict with the
Certificate of Incorporation or Bylaws (or other organizational
documents), as currently in effect, of Buyer or (B) to the knowledge of
such counsel, constitute a violation of or default under those agreements
or
63
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 a 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.
(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
64
Appraiser. 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 thereto. As used herein,
"Appraiser" means an individual who has a minimum of ten (10) years of relevant
experience in valuing electric generation facilities and has an MAI designation
of the Appraisal Institute.
(c) Buyer agrees to use Commercially Reasonable Efforts at its
expense and in consultation with Seller to mitigate any adverse zoning
restrictions which could cause a failure of the Closing condition in Section
7.1(o), or require a Purchase Price adjustment under this Section 7.3, including
by seeking a re-zoning or zoning variance of the applicable Site.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Buyer shall indemnify, defend and hold harmless 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).
(b) Seller shall indemnify, defend and hold harmless Buyer, its
officers, directors, employees, shareholders, Affiliates and agents (each, a
"Buyer Indemnitee") from and
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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 indemnification under this
Agreement (an "Indemnitee") shall use Commercially Reasonable Efforts to
mitigate all losses, damages and the like relating to a claim under these
indemnification provisions, including availing itself of any defenses,
limitations, rights of contribution, claims against third Persons and
other rights at law or equity.
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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
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liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without leading
to liability or the creation of a financial or other obligation on the part of
the Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer,
the Indemnifying Party shall give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within ten (10)
calendar days after its receipt of such notice, the Indemnifying Party shall be
relieved of its obligations to defend such Third Party Claim and the Indemnitee
may contest or defend such Third Party Claim. In such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be the
amount of such settlement offer plus reasonable costs and expenses paid or
incurred by Indemnitee up to the date of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not be
given later than ten (10) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of thirty (30)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such thirty (30) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such claim, the Indemnitee will be free to seek
enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time subsequent
to the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by, from or against
any other entity, the amount of such reduction, less any costs, expenses or
premiums incurred in connection therewith (together with interest thereon from
the date of payment thereof at the publicly announced prime rate then in effect
of Chase Manhattan Bank) shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(e) A failure to give timely notice as provided in this Section 8.2
shall not affect the rights or obligations of any Party hereunder except if, and
only to the extent that, as a
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result of such failure, the Party which was entitled to receive such notice was
actually prejudiced as a result of such failure.
ARTICLE IX
TERMINATION
9.1 Termination. (a) This Agreement may be terminated at any time prior to
the Closing Date by mutual written consent of 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
70
initially denied without prejudice shall also have been denied) or shall have
been granted but contains terms or conditions which do not satisfy the closing
condition in Section 7.2(c).
(e) This Agreement may be terminated by Buyer if there has been a
violation or breach by 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.
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10.2 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith
10.3 No Survival. Each and every representation, warranty and covenant
contained in this Agreement (other than the covenants contained in Sections
3.3(c), 3.4, 3.5(b), 3.5(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.10, 6.12, 6.13 and
in Articles VIII and X, which provisions shall survive the delivery of the
deed(s) and the Closing in accordance with their terms and the representations
and warranties set forth in Sections 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3, 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:
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Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
Attention: Douglas E. Davidson, Esq.
(b) if to Buyer, to:
Sithe Energies, Inc.
450 Lexington Avenue
New York, New York 10017
Attention: Mr. David Tohir
and Hyun Park, Esq.
with a copy to:
Latham & Watkins
Suite 1300
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: W. Harrison Wellford, Esq.
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
73
otherwise dispose of (absolutely or as security) its rights and interests
hereunder to a trustee, lending institutions or other party for the purposes of
leasing, financing or refinancing the Purchased Assets, including such an
assignment, transfer or other disposition upon or pursuant to the exercise of
remedies with respect to such leasing, financing or refinancing, or by way of
assignments, transfers, pledges, or other dispositions in lieu thereof (and any
such assignee may fully exercise its rights hereunder or under any other
agreement and pursuant to such assignment without any further prior consent of
any party hereto); provided, however, that no such assignment in clause (i) or
(ii) shall relieve or discharge the assignor from any of its obligations
hereunder. 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
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this Agreement.
10.10 Entire Agreement. This Agreement, the Confidentiality Agreement, and
the Ancillary Agreements including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, embody the entire
agreement and understanding of the Parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any material
made available to Buyer pursuant to the terms of the Confidentiality Agreement
(including the Offering Memorandum dated April 1998, previously delivered to
Buyer by 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(o) and
7.3, Buyer acknowledges that the Real Properties are zoned as set forth in
Schedule 10.13.
10.14 Sewage Facilities. Except as set forth in Schedule 10.14, Buyer
acknowledges that there is no community (municipal) sewage system available to
serve the Real Property. Accordingly, any additional sewage disposal planned by
Buyer will require an individual (on-site) sewage system and all necessary
permits as required by the Pennsylvania Sewage Facilities Act (the "Facilities
Act"). Buyer recognizes that certain of the existing individual sewage systems
on the Real Property may have been installed pursuant to exemptions from the
requirements of the Facilities Act or prior to the enactment of the Facilities
Act and that soils and site testing may not have been performed in connection
therewith. The owner of the property or properties served by such a system, at
the time of any malfunction, may be held liable for any contamination,
pollution, public health hazard or nuisance which occurs as the result of such
malfunction.
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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. PENNSYLVANIA ELECTRIC COMPANY
By: By:
-------------------------- --------------------------
Name: Name:
Title: Title:
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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 and Attachment 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
SCHEDULES
1.1(72) Permitted Encumbrances
1.1(103) 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
2.4(h) Seward Coal Refuse Site
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
5.3(a) Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
51301v9 -iv-
6.5(g) Description of Leased Space
6.8 Tax Appeals
6.10(a)(i) Plant and Support Staff (Union)
6.10(a)(ii) Mobile Maintenance/Corporate Support
6.10(b) Schedule of Non-Union Employees
6.10(d) Collective Bargaining Agreements
6.10(h) Schedule of Severance Benefits
6.10(h)(iv) Allocable Share Percentages
6.12 Pollution Control Revenue Bonds
10.13 Zoning
10.14 Sewage Matters