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Exhibit 10.6
CONFORMED COPY
ASSET PURCHASE AGREEMENT
by and between
DUQUESNE LIGHT COMPANY, as SELLER,
ORION POWER HOLDINGS, INC., as BUYER,
AND
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY
OHIO EDISON COMPANY
AND
PENNSYLVANIA POWER COMPANY
Dated as of September 24, 1999
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 24, 1999 (this
"Agreement"), by and among Duquesne Light Company, a Pennsylvania corporation
("Seller"), Orion Power Holdings, Inc., a Delaware corporation ("Buyer"), and
Ohio Edison Company, an Ohio corporation ("OEC"), Pennsylvania Power Company, a
Pennsylvania corporation ("PPC"), and The Cleveland Electric Illuminating
Company, an Ohio corporation ("CEIC"). Each of CEIC, OEC and PPC is a subsidiary
(direct or indirect) of FirstEnergy Corp., an Ohio corporation ("FE"), (each
such subsidiary, an "FE Subsidiary" and collectively the "FE Subsidiaries").
Seller, Buyer and each of the FE Subsidiaries are referred to individually as a
"Party," and collectively as the "Parties."
W I T N E S S E T H
WHEREAS, Seller owns four electric generating facilities located in
Pennsylvania (described herein as the "DLC Plants") and certain facilities and
other assets associated therewith and ancillary thereto;
WHEREAS, Seller has acquired from the FE Subsidiaries beneficial
ownership of three electric generating facilities located in Pennsylvania and
Ohio (described herein as the "FE Plants") and certain facilities and other
assets associated therewith and ancillary thereto pursuant to that certain
Generation Exchange Agreement by and among Seller and the FE Subsidiaries, dated
as of March 24, 1999 (the "Exchange Agreement");
WHEREAS, Buyer desires to purchase and assume, and Seller desires to
sell and assign, the Purchased Assets (as defined in Sections 2.1 and 2.1A
below) and certain associated liabilities, upon the terms and conditions
hereinafter set forth in this Agreement; and
WHEREAS, pursuant to this Agreement, Seller desires and directs the FE
Subsidiaries to transfer and deliver the Purchased FE Assets directly to Buyer.
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:
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ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
terms have the meanings specified in this Section 1.1.
(1) "Accrued FE Liabilities" has the meaning set forth in
Section 2.3(g).
(2) "Accrued Liabilities" means, with respect to a Party, the
aggregate amount of the liabilities of such Party that are fixed or
determinable as of the Auction Closing Date and that arise out of any
of the following obligations incurred by such Party prior to the
Auction Closing Date, except to the extent that any such obligation is
allocable to the right of such Party to receive property, services or
other benefit after the Auction Closing Date: (A) any obligation to
repay money advanced to or for the benefit of such Party; (B) any
obligation to make an expenditure that is includible in the basis of
any asset of such Party for income tax purposes as of the Auction
Closing Date; (C) any obligation to make an expenditure that is
deductible by such Party and is not includible in such basis; and (D)
any obligation to make any expenditure that is not described in clauses
(B) or (C).
(3) "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
(4) "Agreement" means this Asset Purchase Agreement together
with the Schedules and Exhibits attached hereto, as the same may be
from time to time amended.
(5) "Ancillary Agreements" means the Connection Agreements,
the Easement and Attachment Agreements, the Must-Run Agreements, the
DLC Assignment and Assumption Agreement, and the FE Assignment and
Assumption Agreement.
(5A) "Asset Material Adverse Effect" means any change in, or
effect on, the DLC Plants and the FE Plants, from or after the date
hereof, that is materially adverse to the operations or condition
(financial or otherwise) of such Plants, taken as a whole, other than:
(a) any change affecting the international, national, regional or local
electric industry as a whole and not specific and exclusive to such
Plants; (b) any change or effect resulting from changes in
international, national, regional or local wholesale or retail markets
for
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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 such Plants; (d) any change or effect resulting from
changes in the North American, national, regional or local electric
transmission systems or operations thereof; (e) any material adverse
change in or effect on such Plants which is cured (including by the
payment of money) by the FE Subsidiaries or Seller, as the case may be,
before the Termination Date; (f) any order of any court or Governmental
Authority applicable to providers of generation, transmission or
distribution of electricity generally that imposes restrictions,
regulations or other requirements thereon, including any order with
respect to an independent system operator or retail access in
Pennsylvania or Ohio; and (g) any change or effect resulting from the
matter of Allegheny Energy, Inc. v. DQE, Inc., Civil Action No. 98-1639
(W.D.Pa.), which change or effect is specifically addressed in Section
10.1(j) hereof.
(6) "Assigned Agreements" means, with respect to Seller, the
DLC Agreements, and with respect to the FE Subsidiaries, the FE
Agreements.
(7) "Assumed DLC Liabilities" has the meaning set forth in
Section 2.3.
(8) "Assumed FE Liabilities" has the meaning set forth in
Section 2.3A.
(9) "Assumed Liabilities" means the Assumed DLC Liabilities
and the Assumed FE Liabilities, as applicable.
(10) "Auction Closing" has the meaning set forth in Section
3.1.
(11) "Auction Closing Date" means one minute after 11:59 p.m.
on the date which is fifteen (15) Business Days following the date on
which the last of the conditions precedent to the Auction Closing set
forth in Article VIII 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.
(12) "Avon Lake" means all generating units and related assets
located at the generating station known as Avon Lake, as more fully
identified on Schedule 2.1A attached hereto.
(13) "Benefit Plans" means with respect to each Party, each
deferred compensation and each bonus or other incentive compensation,
stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay,
medical, surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (within the meaning of Section 3(1) of ERISA)
each
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profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed
to by such Party or by any ERISA Affiliate and that are identified on
Schedules 4.8 and 5.8(a).
(14) "Bills of Sale" means the Bills of Sale, substantially in
the form of Exhibit A attached hereto, to be delivered at the Auction
Closing by each of Seller and the FE Subsidiaries, with respect to
their Tangible Personal Property included in the Purchased Assets
transferred to Buyer.
(15) "Bond Counsel" has the meaning set forth in Section
7.14(b).
(16) "Brunot Island" means all generating units and related
assets located at the generating station known as Brunot Island, as
more fully identified on Schedule 2.1 attached hereto.
(17) "Business Day" means any day other than Saturday, Sunday
and any day which is a day on which banking institutions in the
Commonwealth of Pennsylvania or the State of Ohio are authorized by law
or other governmental action to close.
(18) "Buyer" has the meaning set forth in the Preamble.
(19) "Buyer Indemnifiable Loss" has the meaning set forth in
Section 9.3.
(20) "Buyer Indemnitee" has the meaning set forth in Section
9.3.
(21) "Buyer Material Adverse Effect" has the meaning set forth
in Section 6.3(a).
(22) "Buyer Required Regulatory Approvals" means the Required
Regulatory Approvals set forth in Schedule 6.3(b).
(23) "CEIC" means The Cleveland Electric Illuminating Company,
a subsidiary of FE and an Ohio corporation.
(24) "CERCLA" means the federal Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et
seq., as amended.
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(25) "Cheswick" means all generating units and related assets
located at the generating station known as Cheswick, as more fully
identified on Schedule 2.1 attached hereto.
(26) "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1984.
(27) "COBRA Continuation Coverage" means the requirements of
Section 4980B(f) of the Code.
(28) "Code" means the Internal Revenue Code of 1986, as
amended.
(29) "Commercially Reasonable Efforts" means efforts by a
Party 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.
(30) "Computer Systems" means hardware, software, and firmware
product (including embedded microcontrollers in non-computer
equipment).
(31) "Connection Agreements" means the DLC Connection
Agreements and the FE Connection Agreements.
(32) "Continuation Period" means DLC Continuation Period or FE
Continuation Period, as applicable.
(33) "Direct Claim" means any claim by an Indemnitee on
account of an Indemnifiable Loss that does not result from a Third
Party Claim.
(34) "DLC" means Duquesne Light Company, a Pennsylvania
corporation.
(35) "DLC Agreements" means any contracts, agreements,
licenses and personal property leases entered into by DLC or one of its
Affiliates with respect to the ownership, operation or maintenance of
the Purchased DLC Assets, whether or not disclosed on Schedule 4.11(a),
including without limitation, the IBEW CBA to the extent applicable to
the employees employed at the DLC Plants, the QF Contracts and the
Power Sales Contract, but excluding the DLC Real Property Leases, and
specifically excluding
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all contractual arrangements associated with the Central Area Power
Coordination Group ("CAPCO").
(36) "DLC Assignment and Assumption Agreement" means the
Assignment and Assumption Agreement between Seller and Buyer
substantially in the form of Exhibit B.1 attached hereto.
(37) "DLC Capital Expenditures" means capital additions to or
replacements of property, plants and equipment included in the
Purchased DLC Assets and other expenditures or repairs on property,
plants and equipment included in the Purchased DLC Assets that would be
capitalized by Seller in accordance with its normal accounting
policies.
(38) "DLC Capital Spare Parts" means any major equipment items
of significant cost that are essential to the operation of a Purchased
DLC Asset. Such equipment is generally a long lead-time item and,
consistent with past practice, has been assigned to the capital base of
the Purchased DLC Asset upon delivery and prior to its placement in
service. The DLC Capital Spare Parts are set forth on Schedule 1.1(38).
(39) "DLC Connection Agreements" means the Connection and Site
Agreements to be entered into by Seller and Buyer with respect to
Brunot Island, Cheswick, Elrama and Phillips, as the case may be,
substantially in the form of Exhibit C.1 hereto, as of the date hereof.
(40) "DLC Continuation Period" has the meaning set forth in
Section 7.11(e)(ii).
(41) "DLC Easements" means the easements and access rights to
be granted by Buyer to Seller pursuant to the DLC Easement and
Attachment Agreement, including, without limitation, easements
authorizing access, use, maintenance, construction, repair, replacement
and other activities with respect to certain of the Purchased DLC
Assets, as further described in the DLC Easement and Attachment
Agreement.
(42) "DLC Easement and Attachment Agreement" means the
Easement, License and Attachment Agreement to be entered into by Buyer
and Seller, substantially in the form of Exhibit D.1 hereto.
(43) "DLC Emission Reduction Credits" means the Emission
Reduction Credits related to any of the DLC Plants.
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(44) [Intentionally omitted.]
(45) "DLC Environmental Permits" means any permits,
registrations, certificates, certifications, licenses and
authorizations, consents and approvals of Governmental Authorities
issued under Environmental Laws held by Seller with respect to the
Purchased DLC Assets.
(46) "DLC Environmental Reports" has the meaning set forth in
Section 4.6.
(47) "DLC Estimated Adjustment" has the meaning set forth in
Section 3.3(b).
(48) "DLC Estimated Closing Statement" has the meaning set
forth in Section 3.3(b).
(49) "DLC Fuel Supplies" has the meaning set forth in Section
2.6(a).
(50) "DLC Governmental Orders" has the meaning set forth in
Section 2.3(h).
(51) "DLC Indemnifiable Loss" has the meaning set forth in
Section 9.1(a).
(52) "DLC Indemnitee" has the meaning set forth in Section
9.1(a).
(53) "DLC Intellectual Property" has the meaning set forth in
Section 2.1(l).
(54) "DLC Inventories" means materials, spare parts,
consumable supplies and chemical inventories relating to the operation
of any DLC Plant, provided that "DLC Inventories" shall not include DLC
Capital Spare Parts, DLC Fuel Supplies, DLC SO2 Emission Allowances or
DLC NOx Emission Allowances.
(55) "DLC Must-Run Agreement" means the Must-Run Agreements
entered into by DLC and the Buyer with respect to Cheswick and Elrama,
as the case may be, substantially in the form of Exhibit E hereto.
(56) "DLC Non-Qualifying Offer" means an offer to DLC
Transferred NonUnion Employees that is either less than 100% of such
employee's current total annual cash compensation at the time the offer
was made (consisting of base salary and target incentive bonus) or
requires, as a condition of acceptance, a relocation of residence as
described in Section 7.11(g).
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(57) "DLC Non-Union Employees" has the meaning set forth in
Section 7.11(c).
(58) "DLC NOx Emission Allowances" means NOx Emission
Allowances allocated to any of the DLC Plants (but not purchased by
DLC) by a Governmental Authority pursuant to a NOx Budget Program.
(59) "DLC Permits" means any permits, licenses, registrations,
franchises and other authorizations, consents and approvals of
Governmental Authorities held by Seller with respect to the Purchased
DLC Assets.
(60) "DLC Plans" means any Benefit Plan of Seller or any ERISA
Affiliate of Seller or to which Seller or any ERISA Affiliate of Seller
contributed thereunder, including any multi-employer plan, that are
listed on Schedule 4.8.
(61) "DLC Plants" means Brunot Island, Cheswick, Elrama and
Phillips.
(62) "DLC Post-Closing Adjustment" has the meaning set forth
in Section 3.3(c).
(63) "DLC Qualifying Offer" means an offer to a DLC
Transferred NonUnion Employee of the same or similar job that is at
least 100% of such employees current total cash compensation at the
time the offer was made (consisting of base salary and target incentive
bonus) and does not require, as a condition of acceptance, a relocation
of residence as described in Section 7.11(g).
(64) "DLC Real Property" has the meaning set forth in Section
2.1(a). Any reference to the DLC Real Property includes, by definition,
Seller's right, title and interest in and to the surface and subsurface
elements, including the soils and groundwater present at the DLC Real
Property, and any reference to items "at the DLC Real Property"
includes all items "at, on, in, upon, over, across, under and within"
the DLC Real Property.
(65) "DLC Real Property Leases" has the meaning set forth in
Section 4.5.
(66) "DLC Required Regulatory Approvals" means the Required
Regulatory Approvals set forth in Schedule 4.3(b).
(67) "DLC Savings Plan" has the meaning set forth in Section
7.11(e)(ii)(E).
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(68) "DLC SEC Reports" has the meaning set forth in Section
4.21.
(69) "DLC SO2 Emission Allowances" means SO2 Emission
Allowances allocated to any of the DLC Plants (but not purchased by
DLC) by the USEPA pursuant to the federal Clean Air Act.
(70) "DLC Tangible Personal Property" has the meaning set
forth in Section 2.1(c).
(71) "DLC Transferable Permits" means those DLC Permits and
DLC Environmental Permits with respect to the Purchased DLC Assets
which may be transferred to Buyer without a filing with, notice to,
consent of or approval of any Governmental Authority, as set forth in
Schedule 1.1(71).
(72) "DLC Transferred Employee Records" means records related
to Seller's employees who become employees of Buyer but only to the
extent such records pertain to (A) skill and development training and
biographies, (B) seniority histories, (C) salary and benefit
information, (D) Occupational, Safety and Health Administration
reports, or (E) active medical restriction forms.
(73) "DLC Transferred Employees" means DLC Transferred
Non-Union Employees and DLC Transferred Union Employees.
(74) "DLC Transferred Non-Union Employees" has the meaning set
forth in Section 7.11.
(75) "DLC Transferred Union Employees" has the meaning set
forth in Section 7.11.
(76) "DLC Transmission Assets" means all Transmission Assets
of Seller or any of its Affiliates located on or forming a part of DLC
Real Property.
(77) "DLC Union Employees" has the meaning set forth in
Section 7.11(b).
(78) "Easement and Attachment Agreements" means the DLC
Easement and Attachment Agreement and the FE Easement and Attachment
Agreement.
(79) "Easements" means DLC Easements or FE Easements, as
applicable.
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(80) "Elrama" means all generating units and related assets
located at the generating station known as Elrama, as more fully
identified on Schedule 2.1 attached hereto.
(81) "Emission Reduction Credits" means credits, in units that
are established by the Governmental Authority with jurisdiction over
the relevant Plant that has obtained the credits, resulting from
reductions in the emissions of air pollutants from an emitting source
or facility (including, without limitation, and to the extent allowable
under applicable law, reductions resulting from shutdowns or control of
emissions beyond that required by applicable law) that: (a) 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 (b) 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
enforce able, 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."
(82) "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.
(83) "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 or pursuant to a common law theory, 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 any Environmental Condition or any
Release or threatened Release into the environment of any Regulated
Substances at any location related to the Purchased Assets, including,
but not limited to, any Off-Site Location to
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which Regulated Substances, or materials containing Regulated
Substances, were sent for handling, storage, treatment, or disposal.
(84) "Environmental Condition" means the presence or Release
of a Regulated Substance (other than a naturally-occurring substance)
on or in environmental media, or structures on Real Property, at an
Off-Site Location or other property (including the presence in surface
water, groundwater, soils or subsurface strata, or air), including the
subsequent migration of any such Regulated Substance, regardless of
when such presence or Release occurred or is discovered.
(85) "Environmental Laws" means all federal, state, local
provincial, foreign and international 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 Regulated 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 Regulated Substances.
"Environmental Laws" include: (a) with respect to federal law, CERCLA,
the Hazardous Materials Transportation Act (49 U.S.C. Sections
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Sections 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. Sections 1251 et seq.), the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Sections 2601 et seq.), the Oil Pollution Act (33 U.S.C.
Sections 2701 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Sections 11001 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Sections 651 et
seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et. seq.),
the Surface Mine Conservation and Reclamation Act (30 U.S.C.
Sections 1251-1279), and regulations adopted pursuant thereto,
and counterpart state and local laws, regulations adopted pursuant
thereto; (b) with respect to Pennsylvania law, the Pennsylvania Clean
Streams Law (35 P.S. Section 691.1 et seq.), the Pennsylvania Air
Pollution Control Act (35 P.S. Section 4001 et seq.), the Pennsylvania
Solid Waste Management Act (35 P.S. Section 6018.101 et seq.), the
Pennsylvania Storage Tank and Spill Prevention Act (35 P.S.
Section 6021.101 et seq.), the Pennsylvania Safe Drinking Water Act (35
P.S. Section 721.1 et seq.), the Pennsylvania Sewage Facilities Act (35
P.S. Section 750.1 et seq.), the Pennsylvania Hazardous Sites Cleanup
Act (35 P.S. Section 6020.101 et seq.), the Pennsylvania Land Recycling
and Environmental Remediation Standards Act (35 P.S. Section 6026.101
et seq.), the Pennsylvania Surface Mining Conservation and Reclamation
Act (52 P.S. Section 1396.1 et seq.), the Coal Refuse Disposal Control
Act (52 P.S. Section 30.51 et seq.); the Non-Coal Surface Mining and
Reclamation Act, (52 P.S. Section 3301 et seq.), the Pennsylvania
Worker and Community Right-to-Know Act, (35 P.S. Section 7301 et seq.),
the Pennsylvania Hazardous Material Emergency Planning and
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Response Act, (35 P.S. Section 6022.101 et seq.), and regulations
adopted pursuant thereto; and (c) with respect to Ohio law, the Ohio
Rev. Code Ann. Section 1501.30 et seq. (Diversion of Waters), Ohio Rev.
Code Ann. Section 1506.01 et seq. (Coastal Management), Ohio Rev. Code
Ann. Section 1509.01 et seq. (Oil and Gas); Ohio Rev. Code Ann. Section
1513.01 et seq. (Coal Surface Mining), Ohio Rev. Code Ann. Section
1520.01 et seq. (Canal Lands), Ohio Rev. Code Ann. Section 3704.01 et
seq. (Air Pollution Control); Ohio Rev. Code Ann. Section 3710.01 et
seq. (Asbestos Abatement), Ohio Rev. Code Ann. Section 3714.01 et seq.
(Construction and Demolition Debris), Ohio Rev. Code Ann. Section
3734.01 et seq. (Solid and Hazardous Wastes), Ohio Rev. Code Ann.
Section 3737.87 et seq. (Petroleum Underground Storage Tanks), Ohio
Rev. Code Ann. Section 3742.01 et seq. (Lead Abatement and Testing),
Ohio Rev. Code Ann. Section 3746.01 et seq. (Voluntary Cleanup of
Contamination Property), Ohio Rev. Code Ann. Section 3747.01 et seq.
(Low-Level Radioactive Waste), Ohio Rev. Code Ann. Section 3748.01 et
seq.(Radioactive Control), Ohio Rev. Code Ann. Section 3750.01 et seq.
(Emergency Planning), Ohio Rev. Code Ann. Section 3751.01 et seq.
(Hazardous Substances); Ohio Rev. Code Ann. Section 3752.01 et seq.
(Cessation of Chemical Handling Operations), Ohio Rev. Code Ann.
Section 3767.01 et seq. (Nuisances); Ohio Rev. Code Ann. Section
4913.01 et seq. (Public Utilities Commission - Acid Rain Control), Ohio
Rev. Code Ann. Section 6109.01 et seq. (Safe Drinking Water); Ohio Rev.
Code Ann. Section 6111.01 et seq. (Water Pollution Control), and
regulations adopted pursuant thereto.
(86) "Environmental Permits" means any permits, registrations,
certificates, certifications, licenses and authorizations, consents and
approvals of Governmental Authorities required under Environmental
Laws.
(87) "Environmental Reports" means the DLC Environmental
Reports and the FE Environmental Reports.
(88) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(89) "ERISA Affiliate" means a trade or business, whether or
not incorporated, that together with a Party would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
(90) "Estimated Closing Statement" means the DLC Estimated
Closing Statement or an FE Estimated Closing Statement, as the case may
be.
(91) "Exchange Agreement" has the meaning set forth in the
Recitals.
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(92) "Exchange Closing" means all conditions to the
consummation of the Exchange Agreement shall have been satisfied or
waived and the transactions contemplated thereby have been completed.
(93) "Excluded DLC Assets" has the meaning set forth in
Section 2.2.
(94) "Excluded DLC Liabilities" has the meaning set forth in
Section 2.4.
(95) "Excluded FE Assets" has the meaning set forth in Section
2.2A.
(96) "Excluded FE Liabilities" has the meaning set forth in
Section 2.4A.
(97) "Exempt Facilities" means, with respect to the Purchased
DLC Assets, those facilities listed on Schedule 7.14 and identified
thereon as "DLC Exempt Facilities" and, with respect to the Purchased
FE Assets, those facilities listed on Schedule 7.14 and identified
thereon as "FE Exempt Facilities".
(98) "Facilities Act" has the meaning set forth in Section
11.13.
(99) "FE" means FirstEnergy Corp., an Ohio corporation and
parent company of the FE Subsidiaries.
(100) "FE (Accrued Liability) Assignment and Assumption
Agreements" means the FE (Accrued Liability) Assignment and Assumption
Agreements between Seller and the applicable FE Subsidiaries, as
contemplated by the Exchange Agreement.
(101) "FE Agreements" means any contracts, agreements,
licenses and personal property leases entered into by an FE Subsidiary
or an Affiliate thereof with respect to the ownership, operation or
maintenance of the Purchased FE Assets, whether or not disclosed on
Schedule 5.11(a), including, without limitation, the Local 140 CBA to
the extent applicable to the employees employed at the FE Plants (as
provided in Section 7.11A hereof), but excluding the FE Real Property
Leases and FE Intellectual Property and specifically excluding all
contractual arrangements associated with the Central Area Power
Coordination Group ("CAPCO").
(102) "FE Assignment and Assumption Agreements" means the
Assignment and Assumption Agreements between the applicable FE
Subsidiary and Buyer substantially in the form of Exhibit B.2 attached
hereto.
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(103) "FE Capital Expenditures" means capital additions to or
replacements of property, plants and equipment included in the
Purchased FE Assets and other expenditures or repairs on property,
plants and equipment included in the Purchased FE Assets that would be
capitalized by the FE Subsidiary making such expenditure in accordance
with its normal accounting policies.
(104) "FE Capital Spare Parts" means any major equipment items
of significant cost that are essential to the operation of a Purchased
FE Asset. Such equipment is generally a long lead-time item and is
assigned to the capital base of the Purchased FE Asset upon delivery
and prior to its placement in service. The FE Capital Spare Parts are
set forth on Schedule 1.1(104).
(105) "FE Closing Payments" has the meaning set forth in
Section 3.2(b).
(106) "FE Connection Agreements" means the Connection and Site
Agreements to be entered into by each applicable FE Subsidiary and
Buyer with respect to Avon Lake, New Castle and Niles, as the case may
be, substantially in the form of Exhibit C.2 hereto, as of the date
hereof.
(107) "FE Continuation Period" has the meaning set forth in
Section 7.11A(e)(ii).
(108) "FE Easements" means the easements and access rights to
be granted by Buyer to the applicable FE Subsidiaries pursuant to the
FE Easement and Attachment Agreements, including, without limitation,
easements authorizing access, use, maintenance, construction, repair,
replacement and other activities with respect to certain of the
Purchased FE Assets, as further described in the FE Easement and
Attachment Agreements.
(109) "FE Easement and Attachment Agreements" means the
Easement, License and Attachment Agreements to be entered into by Buyer
and each applicable FE Subsidiary, substantially in the form of Exhibit
D.2 hereto.
(110) "FE Emission Reduction Credits" means the Emission
Reduction Credits relating to any of the FE Plants.
(111) [Intentionally omitted.]
(112) "FE Environmental Permits" means the permits,
registrations, certificates, certifications, licenses and
authorizations, consents and approvals of
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Governmental Authorities issued under Environmental Laws held by each
FE Subsidiary with respect to its Purchased FE Assets.
(113) "FE Environmental Reports" has the meaning set forth in
Section 5.6.
(114) "FE Estimated Closing Payment" has the meaning set forth
in Section 3.3(b).
(115) "FE Estimated Closing Statement" has the meaning set
forth in Section 3.3(b).
(116) "FE Fuel Supplies" has the meaning set forth in Section
2.6(b).
(117) "FE Governmental Orders" has the meaning set forth in
Section 2.3A(g).
(118) "FE Indemnifiable Loss" has the meaning set forth in
Section 9.2(a).
(119) "FE Indemnitee" has the meaning set forth in Section
9.2(a).
(120) "FE Intellectual Property" has the meaning set forth in
Section 2.1A(k).
(121) "FE Inventories" means materials, spare parts,
consumable supplies and chemical inventories relating to the operation
of any FE Plant, provided that "Inventories" shall not include FE
Capital Spare Parts, FE Fuel Supplies, FE SO2 Emission Allowances or FE
NOx Emission Allowances.
(122) "FE Must-Run Agreement" means the Must-Run Agreements to
be entered into by each FE Subsidiary and the Buyer with respect to
Avon Lake, Niles or New Castle, as the case may be, substantially in
the form of Exhibit E hereto.
(123) "FE Non-Qualifying Offer" means an offer to FE
Transferred NonUnion Employees that is either less than 100% of such
employee's current total annual cash compensation at the time the offer
was made (consisting of base salary and target incentive bonus) or
requires, as a condition of acceptance, a relocation of residence as
described in Section 7.11A(f)(iii).
(124) "FE Non-Union Employees" has the meaning set forth in
Section 7.11A(c).
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(125) "FE NOx Emission Allowances" means NOx Emission
Allowances allocated to any of the FE Plants (but not purchased by an
FE Subsidiary) by a Governmental Authority pursuant to a NOx Budget
Program.
(126) "FE Permits" means any permits, licenses, registrations,
franchises and other authorizations, consents and approvals of
Governmental Authorities held by each of the FE Subsidiaries with
respect to its Purchased FE Assets.
(127) "FE Plans" means any Benefit Plan of any FE Subsidiary
or any ERISA Affiliate thereof or to which any FE Subsidiary or any
ERISA Affiliate thereof contributed thereunder, including any
multi-employer plan, that are listed on Schedule 5.8(a).
(128) "FE Plants" means Avon Lake, New Castle, and Niles.
(129) "FE Post-Closing Adjustment" has the meaning set forth
in Section 3.3(c).
(130) "FE Qualifying Offer" means an offer to an FE
Transferred Non-Union Employee of the same or similar job that is at
least 100% of such employee's current total annual cash compensation at
the time the offer was made (consisting of base salary and target
incentive bonus) and does not require, as a condition of acceptance, a
relocation of residence as described in Section 7.11A(f)(iii).
(131) "FERC" means the Federal Energy Regulatory Commission or
any successor agency thereto.
(132) "FE Real Property" has the meaning set forth in Section
2.1A(a). Any reference to the FE Real Property includes, by definition,
the surface and subsurface elements, including the soils and
groundwater present at the FE Real Property, and any reference to items
"at the FE Real Property" includes all items "at, on, in, upon, over,
across, under and within" the FE Real Property.
(133) "FE Real Property Leases" has the meaning set forth in
Section 5.5.
(134) "FE Required Regulatory Approvals" means the Required
Regulatory Approvals listed in Schedule 5.3(b).
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(135) "FE Savings Plans" means any defined contribution
pension plan maintained by an FE Subsidiary or any ERISA Affiliate
thereof for the benefit of the FE Transferred Employees.
(136) "FE SO2 Emission Allowances" means SO2 Emission
Allowances allocated to any of the FE Plants (but not purchased by an
FE Subsidiary) by the USEPA pursuant to the federal Clean Air Act.
(137) "FE Subsidiaries" has the meaning set forth in the
Recitals.
(138) "FE Subsidiaries SEC Reports" has the meaning set forth
in the Section 5.21.
(139) "FE Tangible Personal Property" has the meaning set
forth in Section 2.1A(c).
(140) "FE Transferable Permits" means those FE Permits and FE
Environ mental Permits held by each of the FE Subsidiaries with respect
to its Purchased FE Assets which may be transferred to Buyer without a
filing with, notice to, consent of or approval of any Governmental
Authority, as set forth in Schedule 1.1(140).
(141) "FE Transferred Employee Records" means records related
to an FE Subsidiary's employees who become employees of Buyer but only
to the extent such records pertain to (a) skill and development
training and biographies, (b) seniority histories, (c) salary and
benefit information, (d) Occupational, Safety and Health Administration
reports, or (e) active medical restriction forms.
(142) "FE Transferred Employees" means FE Transferred
Non-Union Employees and FE Transferred Union Employees.
(143) "FE Transferred Non-Union Employees" has the meaning set
forth in Section 7.11A(c).
(144) "FE Transferred Union Employees" has the meaning set
forth in Section 7.11A(b).
(145) "FE Transmission Assets" means the Transmission Assets
of each FE Subsidiary or any of their Affiliates located on or forming
a part of the FE Real Property.
(146) "FE Union Employees" has the meaning set forth in
Section 7.11A(b).
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(147) "Final Order" means an action by the relevant
Governmental Authority that has not been reversed, stayed, enjoined,
set aside, annulled or suspended and/or with respect to which any
waiting period prescribed by law before the transactions contemplated
hereby may be consummated has expired.
(148) "FIRPTA Affidavit" means the Foreign Investment in Real
Property Tax Act Certification and Affidavit to be executed by Seller
or the applicable FE Subsidiary, as appropriate, substantially in the
form of Exhibit F hereto.
(149) "Fuel Supplies" means the supplies of coal, fuel oil,
natural gas or alternative fuels related to the operation of any Plant
and located at or in transit to such Plant.
(150) "GAAP" means U.S. generally accepted accounting
principles.
(151) "Good Utility Practices" means any practices, methods,
standards, guides, or acts, as applicable, that are:
(a) required by any Governmental Authority, regional
or national reliability council, or national trade
organization, including NERC, ECAR, Edison Electric Institute,
or American Society of Mechanical Engineers, or the successor
of any of them, whether or not the Party whose conduct is at
issue is a member thereof;
(b) otherwise engaged in or approved by a significant
portion of the electric utility industry during the relevant
time period which in the exercise of reasonable judgment in
light of the facts known or that should have been known at the
time a decision was made, could have been expected to
accomplish the desired result at a reasonable cost in a manner
consistent with law, regulation, good business practices,
generation, transmission, and distribution reliability,
safety, environmental protection, economy, and expediency.
Good Utility Practice is intended to be acceptable practices,
methods, or acts generally accepted in the region, and is not
intended to be limited to the optimum practices, methods, or
acts to the exclusion of all others; and
(c) reasonably necessary to maintain the reliability
of the Plants.
(152) "Governmental Authority" means any foreign, federal,
state, local or other governmental, regulatory or administrative
agency, court, commission, department, board, or other governmental
subdivision, legislature, rulemaking board, court, tribunal,
arbitrating body or other governmental authority.
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(153) "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(154) "IBEW " means International Brotherhood of Electrical
Workers.
(155) "IBEW CBA" has the meaning set forth in Section 7.11(b).
(156) "Income Tax" means any federal, state, local or foreign
Tax (a) based upon, measured by or calculated with respect to gross or
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.
(157) "Indemnifiable Loss" means any claim, demand, suit,
loss, liability, damage, obligation, payment, cost or expense
(including, without limitation, the cost and expense of any action,
suit, proceeding, assessment, judgment, settlement or compromise
relating thereto and reasonable attorneys' fees and reasonable
disbursements in connection therewith).
(158) "Indemnifying Party" means a Party obligated to provide
indemnification under this Agreement.
(159) "Indemnitee" means a Person entitled to receive
indemnification under this Agreement.
(160) "Independent Accounting Firm" means such independent
accounting firm of national reputation as is mutually appointed by the
Buyer and Seller or applicable FE Subsidiaries, as applicable.
(161) "Inspection" means all tests, reviews, examinations,
inspections, investigations, verifications, samplings and similar
activities conducted by Buyer or its Representatives with respect to
the Purchased Assets prior to the Auction Closing.
(162) "Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, inventions, copyrights and
copyright rights, and all pending applications for registrations of
patents, trademarks, and copyrights, necessary for the
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operation and maintenance of the applicable Purchased Assets, as set
forth as part of Schedule 2.1(1) or 2.1A(k), as the case may be.
(163) "Inventories" means the DLC Inventories and the FE
Inventories.
(164) "Knowledge" means the actual knowledge of the corporate
officers or Plant managers of the specified Person charged with
responsibility for the particular function as of the date of this
Agreement, or, with respect to any certificate delivered pursuant to
this Agreement, the date of delivery of the certificate.
(165) "Local 140 CBA" has the meaning set forth in Section
7.11A(b).
(166) "Local 270 CBA" has the meaning set forth in Section
7.11A(m).
(167) "Local 270 Employees" has the meaning set forth in
Section 7.11A(m).
(168) "Material Adverse Effect" means any change in, or effect
on, any Plant, from or after the date hereof, that is materially
adverse to the operations or condition (financial or otherwise) of such
Plant, other than: (a) any change affecting the international,
national, regional or local electric industry as a whole and not
specific and exclusive to such Plant; (b) any change or effect
resulting from changes in 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 such 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 such Plant
which is cured (including by the payment of money) by the FE
Subsidiaries or Seller, as the case may be, before the Termination
Date; and (f) any order of any court or Governmental Authority
applicable to providers of generation, transmission or distribution of
electricity generally that imposes restrictions, regulations or other
requirements thereon, including any order with respect to an
independent system operator or retail access in Pennsylvania or Ohio.
(169) "Must-Run Agreements" means the DLC Must-Run Agreement
and the FE Must-Run Agreement.
(170) "New Castle" means all generating units and related
assets located at the generating station known as New Castle, as more
fully identified on Schedule 2.1A attached hereto.
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(171) "Niles" means all generating units and related assets
located at the generating station known as Niles, as more fully
identified on Schedule 2.1A attached hereto.
(172) "NOx Budget Program" means Nitrogen Oxides Budget
Program, which is a statutory or regulatory program promulgated by the
United States or a state pursuant to which the United States or state
provides for a limit on the nitrogen oxides that can be emitted by all
sources covered by the program and establishes allowances or
authorizations, which in total are equal to the amount of nitrogen
oxides allowed by the limit, where each allowance or authorization
represents a "right" to emit a unit of nitrogen oxides, as the means
for ensuring compliance with the limit.
(173) "NOx Emission Allowance" means (a) an authorization by
the PaDEP under its NOx Budget Program authorizing the emission of up
to one ton of nitrogen oxides during the ozone season, as such season
is defined by the PaDEP; (b) an authorization by the OEPA under any
future NOx Budget Program authorizing the emission of up to one ton of
nitrogen oxides during the ozone season, as such season is defined by
the OEPA; or (c) an authorization by USEPA under any future NOx Budget
Program promulgated by the USEPA, including but not limited to any
future program implemented in lieu of a state NOx Budget Program,
authorizing the emission of up to one ton of nitrogen oxides during the
ozone season, as such season is defined by the USEPA.
(174) "OEC" means Ohio Edison Company, a subsidiary of FE and
an Ohio corporation.
(175) "OEPA" means the Ohio Environmental Protection Agency
and any successor agency thereto.
(176) "Off-Site Location" means any real property other than
the Real Property.
(177) "PaDEP" means the Pennsylvania Department of
Environmental Protection and any successor agency thereto.
(178) "PaPUC" means the Pennsylvania Public Utility
Commission, and any successor agency thereto.
(179) "Party" has the meaning set forth in the Recitals.
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(180) "Permit" means DLC Permits or FE Permits, as applicable.
(181) "Permitted Encumbrances" means the permitted liens and
encumbrances as set forth in Schedule 1.1(181).
(182) "Person" means any individual, partnership, limited
liability company, joint venture, corporation, trust, unincorporated
organization, or governmental entity or any department or agency
thereof.
(183) "Phillips" means all generating units and related assets
located at the generating station known as Phillips, as more fully
identified on Schedule 2.1 attached hereto.
(184) "Plant" means, with respect to the Purchased DLC Assets,
any of the DLC Plants, and with respect to the Purchased FE Assets, any
of the FE Plants.
(185) "Post-Closing Adjustments" means the DLC Post-Closing
Adjustments and the FE Post-Closing Adjustments.
(186) "Power Sales Contract" means that certain 100 MW,
eight-year, firm power sale agreement between that certain purchaser
and DLC, a true and correct copy of which is attached as Schedule
1.1(186) hereto.
(187) "PPC" means Pennsylvania Power Company, a subsidiary of
OEC and a Pennsylvania corporation.
(188) "Proposed DLC Post-Closing Adjustment" has the meaning
set forth in Section 3.3(c).
(189) "Proposed FE Post-Closing Adjustment" has the meaning
set forth in Section 3.3(c).
(190) "Proposed Post-Closing Adjustments" means the Proposed
DLC Post-Closing Adjustment and the Proposed FE Post-Closing
Adjustment.
(191) "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 and
all analyses reports, tests or other information created or prepared
by, or on behalf of, a Party during the
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performance of "Phase I" or "Phase II" environmental site assessments.
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; or
(d) is independently developed by the other Party.
(192) "PUCO" means the Public Utilities Commission of the
State of Ohio and any successor agency thereto.
(193) "Purchased Assets" means the Purchased DLC Assets and
the Purchased FE Assets, as applicable.
(194) "Purchased DLC Assets" has the meaning set forth in
Section 2.1.
(195) "Purchased FE Assets" has the meaning set forth in
Section 2.1A.
(196) "Purchase Price" has the meaning set forth in Section
3.2.
(197) "QF Contracts" means (i) those two power purchase
contracts entered into pursuant to Seller's obligations under the
Public Utility Regulatory Act of 1978 ("PURPA") with two hydroelectric
projects, both of which are "Qualifying Facilities" under PURPA, and
(ii) the power purchase contract entered into pursuant to Seller's
obligations under PURPA with a landfill gas-fired facility, which is a
"Qualifying Facility" under PURPA; true and correct copies of all three
QF Contracts are attached as Schedule 1.1(197) hereto.
(198) "Real Property" means the DLC Real Property or the FE
Real Property, as appropriate.
(199) "Real Property Leases" means DLC Real Property Leases
and FE Real Property Leases, as applicable.
(200) "Regulated Substances" means (a) any petrochemical or
petroleum products, oil or coal ash, radioactive materials, radon gas,
asbestos in any form that is or could become friable, urea formaldehyde
foam insulation and dielectric fluid containing
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polychlorinated biphenyls; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "hazardous constituents,"
"restricted hazardous materials," "extremely hazardous substances,"
"toxic substances," "contaminants," "pollutants," "toxic pollutants" or
words of similar meaning and regulatory effect under any applicable
Environmental Law; and (c) any other chemical, material or substance,
exposure to which or whose discharge, emission, disposal or Release is
prohibited, limited or regulated by any applicable Environmental Law.
(201) "Regulatory Material Adverse Effect" shall occur where a
Final Order with respect to the Required Regulatory Approvals contains
terms and conditions that are materially adverse to the financial
condition, prospects, properties, operations or results of operations
of the affected Party, taken as a whole including all Subsidiaries and
Affiliates, to which the terms and conditions of such Final Order
apply; provided that, in addition to the foregoing, any such Final
Order shall be deemed to constitute a Regulatory Material Adverse
Effect if (a) the Party affected by the Regulatory Material Adverse
Effect shall have terminated the Exchange Agreement, and (b) (i) as to
FE Subsidiaries or their Affiliates, if it prohibits such FE
Subsidiaries or its Affiliates from transferring their transmission
assets to American Transmission Systems, Inc. (or its successor and
assigns), is inconsistent with the FERC's determination in Ohio Edison
Co. et al., 81 FERC P. 61,110 (1997) that "we expect First Energy to
participate in the midwest ISO or another appropriate ISO," or requires
the FE Subsidiaries or their Affiliates to divest generating plants
other than Avon Lake, New Castle or Niles, or (ii) as to Seller, if it
disallows from recovery in rates a material portion of the expenses
related to the Exchange.
(202) "Release" means release, spill, leak, discharge, dispose
of, pump, pour, emit, empty, inject, leach, dump or allow to escape
into or through the environment.
(203) "Remediation" means any action taken in the
investigation, removal, confinement, cleanup, treatment, or monitoring
of a Release or an Environmental Condition on Real Property or Off-Site
Location, including, without limitation, (a) obtaining any Permits or
Environmental Permits required for such remedial activities, and (b)
implementation of any engineering controls and institutional controls.
The term "Remediation" includes, without limitation, any action which
constitutes "removal action" or "remedial action" as defined by Section
101 of CERCLA, Section 6901(23) and (24); any action which constitutes
a "response" as defined by Section 102 of the Pennsylvania Hazardous
Sites Cleanup Act, 35 P.S. Section 6020.103; or any action which
constitutes a "remedy" or "remedial activities" as defined by Ohio Rev.
Code Ann. Section 3746.01(N).
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(204) "Representatives" of a Party means such Party's
authorized representatives, including without limitation, its
professional and financial advisors.
(205) "Required Regulatory Approvals" means with respect to a
Party, any consent or approval of, filing with, or notice to, any
Governmental Authority that is necessary for the execution and delivery
of this Agreement and the Ancillary Agreements by such Party or the
consummation thereby of the transactions contemplated hereby, other
than such consents, approvals, filings or notices which are not
required in the ordinary course to be obtained or made prior to the
Auction Closing and the transfer of the Purchased Assets or which, if
not obtained or made, will not prevent such Party from performing its
material obligations hereunder.
(206) "Revenue Bonds" has the meaning set forth in Section
7.14(a).
(207) "SEC" means the Securities and Exchange Commission and
any successor agency thereto.
(208) "Seller" has the meaning set forth in the Preamble.
(209) "SO2 Emission Allowance" means an authorization by the
Administrator of the USEPA under the federal Clean Air Act, 42 U.S.C.
Section 7401, et seq., to emit up to one ton of sulfur dioxide during
or after a specified calendar year.
(210) "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.
(211) "Taxes" means all taxes, charges, fees, levies,
penalties or other assessments imposed by any federal, state, local or
foreign taxing authority, including, but not limited to, income,
excise, property, sales, transfer, franchise, payroll, withholding,
social security, gross receipts, license, stamp, occupation, employment
or other taxes, including any interest, penalties or additions
attributable thereto.
(212) "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.
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(213) "TEC" means The Toledo Edison Company, a subsidiary of
FE and an Ohio corporation.
(214) "Termination Benefits" has the meaning set forth in
Section 7.11A(g).
(215) "Termination Date" has the meaning set forth in Section
10.1(b).
(216) "Third Party Claim" means any claim, action, or
proceeding made or brought by any Person who is not (a) a Party to this
Agreement, or (b) an Affiliate of a Party to this Agreement.
(217) "Transfer Taxes" means any real property transfer or
gains tax, sales tax, conveyance fee, use tax, stamp tax, stock
transfer tax or other similar tax, including any related penalties,
interest and additions to tax.
(218) "Transferable Permit" means a DLC Transferable Permit or
an FE Transferable Permit, as the case may be.
(219) "Transferred Employee Records" means the DLC Transferred
Employee Records and the FE Transferred Employee Records.
(220) "Transmission Assets" means, with respect to a Plant,
the electrical transmission and distribution facilities (as opposed to
generation facilities) located on Real Property or forming part of such
Plant (whether or not regarded as a "transmission" or "generation"
asset for regulatory or accounting purposes), including all switchyard
facilities, step-up transformers, substation facilities and support
equipment, as well as all permits, contracts and warranties, to the
extent they relate to such transmission and distribution assets.
(221) "USEPA" means the United States Environmental Protection
Agency and any successor agency thereto.
(222) "UWUA" means Utility Workers Union of America.
(223) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988, as amended.
(224) "Warranty Deed" means a special warranty deed or limited
warranty deed, as applicable, substantially in the form of Exhibit G.1
attached hereto (with respect to DLC Real Property) or Exhibit G.2
attached hereto (with respect to FE Real Property).
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(225) "Year 2000 Compliant" means, with respect to Seller or
the FE Subsidiaries, that the Computer Systems will correctly
differentiate between years, in different centuries, that end in the
same two (2) 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. "Year 2000 Compliance" has a meaning
correlative to the foregoing.
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 or
restated through the date as of which such reference is made. In addition, for
the avoidance of doubt, to the extent that at the Auction Closing the FE
Subsidiary shall have previously transferred or delivered to Seller, pursuant to
the terms of the Exchange Agreement, any of the items that this Agreement
contemplates will be transferred or delivered by the FE Subsidiary at the
Auction Closing to Buyer pursuant to the terms of this Agreement, (i) Seller, in
place of the FE Subsidiary, shall transfer or deliver to Buyer, and Buyer shall
accept from Seller, all such items as otherwise contemplated by this Agreement
and (ii) Buyer shall make to Seller, in place of the FE Subsidiary, and Seller
shall accept from Buyer, any deliveries and payments correlative to such items
as otherwise contemplated by this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of DLC Assets. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Auction
Closing (as defined in Section 3.1), 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), all of
Seller's right, title and interest in and to all the assets (except for Excluded
DLC Assets) constituting, or used in and necessary to generate electricity from,
the DLC Plants, including, without limitation, those assets identified on
Schedule 2.1 and those assets described below, each as in existence on the
Auction Closing Date (as defined in Section 3.1) (such assets, collectively, the
"Purchased DLC Assets"):
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(a) Those certain parcels of real property owned by Seller
relating to the DLC Plants together with all buildings, facilities, and other
improvements thereon and all appurtenances thereto as described in Schedule 4.9
(the "DLC Real Property");
(b) All DLC Inventories, DLC Capital Spare Parts and DLC SO2
Emission Allowances and DLC NOx Emission Allowances with a vintage year
occurring during or after the year during which the Auction Closing occurs that
have not been transferred or sold to a third party prior to the date of this
Agreement;
(c) All machinery (mobile or otherwise), equipment (including
communications equipment), vehicles, tools, furniture and furnishings and other
personal property related to the Purchased DLC Assets, owned by Seller and
located on the DLC Real Property on the Auction 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 DLC Plants that are in the possession of DLC and whether or not located on
the DLC Real Property as listed in such Schedule 2.1(c), (other than property
used or primarily usable as part of the DLC Transmission Assets) (collectively,
the "DLC Tangible Personal Property");
(d) Subject to the provisions of Section 7.6(c), all DLC
Agreements, including the QF Contracts and the Power Sales Contract;
(e) Subject to the provisions of Section 7.6(c), all DLC Real
Property Leases;
(f) All DLC Transferable Permits;
(g) All books, operating records, operating, safety and
maintenance manuals, engineering design plans, blueprints and as-built plans,
specifications, procedures and similar items of Seller relating specifically to
the Purchased DLC Assets and necessary for the operation of the DLC 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) All DLC Emission Reduction Credits that accrue on or after
the date of this Agreement but prior to the Auction Closing Date;
(i) All unexpired, transferable warranties and guarantees from
third parties with respect to any DLC Purchased Asset (including those listed in
Schedule 2.1(i)), as of the Auction Closing Date;
(j) The names of the DLC Plants. It is expressly understood
that Seller is not assigning or transferring to Buyer any right to use the name
"Duquesne", "Duquesne Light
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Company", "DQE", "DQE, Inc." or any other trade names, trademarks, service
marks, corporate names and logos or any part, derivative or combination thereof;
(k) All drafts, memoranda, reports, information, technology,
and specifications relating to Seller's plans for Year 2000 Compliance with
respect to the Purchased DLC Assets; and
(l) The Intellectual Property as described on Schedule 2.1(l)
(the "DLC Intellectual Property").
(m) All DLC SO2 Emission Allowances and DLC NOx Emission
Allowances allocated to the DLC Plants with a vintage year occurring prior to
the year of the Auction Closing that (i) have not been transferred or sold to a
third-party prior to the date of this Agreement; or (ii) have not been used by
DLC or a person that owns or operates assets as a tenant in common with DLC for
purposes of compliance with applicable Environmental Laws prior to the date of
this Agreement; or (iii) will not be needed by DLC or a person that owns or
operates assets as a tenant in common with DLC, for purposes of compliance with
applicable Environmental Laws with respect to calendar year 1999 operations.
2.1A Transfer of FE Assets. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Auction
Closing (as defined in Section 3.1) Seller will sell, assign and convey
beneficial ownership, and cause each FE Subsidiary, pursuant to Section 2.1B, to
transfer and deliver its Purchased FE Assets (as defined below) and Buyer will
purchase, assume and acquire from Seller, and accept transfer and delivery from
each FE Subsidiary, free and clear of all Encumbrances (except for Permitted
Encumbrances), all of Seller's and such FE Subsidiary's right, title and
interest in and to all the assets (except for Excluded FE Assets) constituting,
or used in and necessary to generate electricity from, the FE Plants, including,
without limitation, those assets identified in Schedule 2.1A and those assets
described below, each as in existence on the Auction Closing Date (collectively,
the "Purchased FE Assets"):
(a) Those certain parcels of real property relating to each
such FE Subsidiary's FE Plants together with all buildings, facilities and other
improvements thereon and all appurtenances thereto, as described in Schedule
5.9 (the "FE Real Property");
(b) All FE Inventories of such FE Subsidiary, FE Capital Spare
Parts of each such FE Subsidiary and, subject to Section 2.2A(j), all FE SO2
Emission Allowances and NOx Emission Allowances of such FE Subsidiary with a
vintage year occurring during or after the year during which the Auction Closing
occurs that have not been transferred or sold to a third party prior to the date
of this Agreement;
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(c) All machinery (mobile or otherwise), equipment (including
communications equipment), vehicles, tools, furniture and furnishings and other
personal property related to the Purchased FE Assets relating to each such FE
Subsidiary's FE Plants and located on the FE Real Property on the Auction
Closing Date, including, without limitation, the items of personal property
included in Schedule 2.1A(c), together with all the personal property of each
such FE Subsidiary used principally in the operation of its FE Plant that are in
the possession of such FE Subsidiary whether or not located on the FE Real
Property, as listed in such Schedule 2.1A(c), (other than property used or
primarily usable as part of the FE Transmission Assets) (collectively, the "FE
Tangible Personal Property");
(d) Subject to the provisions of Section 7.6(c), all FE
Agreements of each such FE Subsidiary;
(e) Subject to the provisions of Section 7.6(c), all FE Real
Property Leases of each such FE Subsidiary;
(f) All FE Transferable Permits of each such FE Subsidiary;
(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 each such FE
Subsidiary relating specifically to its Purchased FE Assets and necessary for
the operation of its FE Plants (subject to the right of each such FE Subsidiary
to retain copies of the same for its use) other than such items which are
proprietary to third parties and accounting records;
(h) All unexpired, transferable warranties and guarantees from
third parties with respect to any FE Purchased Asset of each such FE Subsidiary,
as of the Auction Closing Date;
(i) The names of the FE Plants. It is expressly understood
that neither Seller nor any FE Subsidiary is assigning or transferring to Buyer
any right to use the name "FirstEnergy," "FE," "Ohio Edison," "Pennsylvania
Power," "Cleveland Electric Illuminating," "Toledo Edison," or "The Illuminating
Company" or any other trade names, trademarks, service marks, corporate names or
logos or any part, derivative or combination thereof;
(j) All drafts, memoranda, reports, information, technology,
and specifications relating to the FE Subsidiaries' and their Affiliates' plans
for Year 2000 Compliance with respect to the Purchased FE Assets; and
(k) The Intellectual Property of each such FE Subsidiary, as
described on Schedule 2.1A(k) (the "FE Intellectual Property").
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2.1B Delivery and Transfer of Purchased FE Assets. Upon the terms and
subject to the satisfaction of the conditions contained in this Agreement, at
the Auction Closing (as defined in Section 3.1) each FE Subsidiary will deliver
and transfer its Purchased FE Assets to Buyer and will record title to its FE
Real Property in the name of Buyer, free and clear of all Encumbrances, except
for Permitted Encumbrances.
2.2 Excluded DLC Assets. Notwithstanding anything to the contrary in
this Agreement, nothing in this Agreement will constitute a transfer to Buyer
of, 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 DLC Assets, but which are hereby specifically
excluded from the sale and the definition of Purchased DLC Assets herein (the
"Excluded DLC Assets"):
(a) The DLC Transmission Assets, including those certain
assets, facilities and agreements and other property used or primarily usable as
part of the DLC Transmission Assets identified on Schedule 2.2(a) hereto;
(b) Certain switches and meters in the DLC Plants, gas
facilities, revenue meters and remote testing units, drainage pipes and systems,
as identified in the DLC Easement and Attachment Agreement, and certain
equipment and systems described in Schedule 2.2(b) hereto;
(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
"Duquesne Light Company", "DLC", "DQE", "DQE, Inc." or any other 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, except the QF Contracts, the
Power Sales Contract and that certain diversity contract with Zinc Corporation
of America, (a true and correct copy of which diversity contract is attached as
Schedule 2.2(f) hereto);
(g) Except in the case of causes of action against third
parties (including indemnification and contribution) relating to an
Environmental Condition or Regulated Substance or arising under Environmental
Laws, the rights of Seller in and to any causes of action against third
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parties (including indemnification and contribution) relating to any DLC Real
Property or DLC Tangible Personal Property, DLC Permits, DLC Environmental
Permits, Taxes, DLC Real Property Leases or DLC Agreements, if any, and not
relating to the Assumed DLC Liabilities, 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 DLC Plants or the DLC Real Property
and relating to any period prior to the Auction Closing Date;
(h) All personnel records of Seller and its Affiliates
relating to the DLC Transferred Employees other than DLC Transferable 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 and interests in any
contract that is not a DLC Agreement or that is an intercompany transaction
between Seller and an Affiliate of Seller, whether or not such intercompany
transaction relates to the provision of goods and services, payment
arrangements, intercompany charges or balances, or the like.
2.2A Excluded FE Assets. Notwithstanding anything to the contrary in
this Agreement, nothing in this Agreement will constitute a transfer to Buyer
of, or be construed as conferring on Buyer, and Buyer is not acquiring, any
right, title or interest in or to the following specific assets of each of the
FE Subsidiaries that are associated with their Purchased FE Assets, but which
are hereby specifically excluded from the sale and the definition of Purchased
FE Assets herein (the "Excluded FE Assets"):
(a) The FE Transmission Assets of each such FE Subsidiary,
including those certain assets, facilities and agreements identified on Schedule
2.2A(a) hereto;
(b) Certain switches and meters in the FE Plants, gas
facilities, revenue meters and remote testing units, drainage pipes and systems,
as identified in the FE Easement and Attachment Agreement, and certain equipment
and systems described on Schedule 2.2A(b);
(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 of each such FE
Subsidiaries;
(d) All cash, cash equivalents, bank deposits, accounts and
notes receivable (trade or otherwise), and any income, sales, payroll or other
tax receivables of each such FE Subsidiaries;
(e) The rights of each FE Subsidiary and its Affiliates to the
names "FirstEnergy," "FE," "Ohio Edison," "Pennsylvania Power," "Cleveland
Electric Illuminating,"
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"Toledo Edison," or "The Illuminating Company" or any other trade names,
trademarks, service marks, corporate names or logos of FE or its Affiliates, or
any part, derivative or combination thereof;
(f) All tariffs, agreements and arrangements to which any FE
Subsidiary is a party for the purchase or sale of electric capacity and/or
energy or for the purchase of transmission or ancillary services;
(g) Except in the case of causes of action against third
parties (including indemnification and contribution) relating to an
Environmental Condition or Regulated Substances or arising under Environmental
Laws, the rights of any FE Subsidiary in and to any causes of action against
third parties (including indemnification and contribution) relating to any FE
Real Property or FE Tangible Personal Property, FE Permits, FE Environmental
Permits, Taxes, FE Real Property Leases or FE Agreements, if any, and not
relating to the Assumed FE Liabilities, 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 FE Plants or the FE Real Property and
relating to any period prior to the Auction Closing Date;
(h) All personnel records of each such FE Subsidiary and their
Affiliates relating to the FE Transferred Employees, other than FE Transferred
Employee Records or other records, the disclosure of which is required by law,
or legal or regulatory process or subpoena;
(i) Any and all of each such FE Subsidiary's rights and
interests in any contract that is not an FE Agreement or that is an intercompany
transaction between an FE Subsidiary and its Affiliates, whether or not such
intercompany transaction relates to the provision of goods and services, payment
arrangements, intercompany charges or balances, or the like; and
(j) (i) (A) All FE SO2 Emission Allowances with a vintage year
occurring prior to the year of the Auction Closing and (B) any excess
FE SO2 Emission Allowances resulting from the FE Subsidiaries'
ownership of the FE Plants during the year of the Auction Closing,
which shall be calculated by summing the SO2 Emission Allowances
allocated to the FE Plants by the USEPA for such year, multiplied by
the quotient of the number of days of ownership of the FE Plants by the
FE Subsidiaries divided by 365, and subtracting the actual tons of
sulfur dioxide emitted by the FE Plants during such portion of such
year. If the results of such calculation is zero or less than zero, the
amount of the excess FE SO2 Emission Allowances shall equal zero.
(ii) Any excess FE NOx Emission Allowances resulting
from the FE Subsidiaries' ownership of the FE Plants located in
Pennsylvania during the year of the
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Auction Closing, which shall be calculated by summing the NOx Emission
Allowances allocated to such FE Plants by the PaDEP for such year,
multiplied by the quotient of the number of days of the FE
Subsidiaries' ownership of such FE Plants during the ozone season (as
defined by PaDEP in its NOx Budget Program), divided by the number of
days in said ozone season, and subtracting the actual tons of nitrogen
oxides emitted by such FE Plants during such portion of such ozone
season. If the result of such calculation is zero or less then zero,
the amount of the excess NOx FE Emission Allowances shall equal zero.
2.3 Assumed DLC Liabilities. On the Auction Closing Date, Buyer shall
deliver to Seller the DLC Assignment and Assumption Agreement pursuant to which
Buyer shall assume and agree to discharge when due, without recourse to Seller,
in accordance with the respective terms and subject to the respective conditions
thereof, all of the Assumed DLC Liabilities applicable to the Purchased DLC
Assets acquired by Buyer from Seller as well as all of the Accrued FE
Liabilities relating to the Purchased FE Assets. All of the following
liabilities and obligations of Seller, direct or indirect, known or unknown,
absolute or contingent, which relate to, or arise by virtue of Seller's
ownership of, the Purchased DLC Assets (other than Excluded DLC Liabilities) are
referred to collectively as the "Assumed DLC Liabilities":
(a) All liabilities and obligations of Seller arising on or
after the Auction Closing Date under the DLC Agreements, the DLC Real Property
Leases, and the DLC Transferable Permits in accordance with the terms thereof,
including, without limitation, the DLC Agreements entered into by DLC (i) prior
to the date hereof and (ii) 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 Auction 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 or passage of time or both would constitute a
default by Seller;
(b) All liabilities and obligations of Seller associated with
the Purchased DLC Assets in respect of Taxes for which Buyer is liable pursuant
to Sections 3.5 or 7.9(a) hereof;
(c) All liabilities and obligations of Seller with respect to
the DLC Transferred Employees incurred after the Auction Closing Date for which
Buyer is responsible pursuant to Section 7.11;
(d) All liabilities, responsibilities and obligations of
Seller arising under Environmental Laws or relating to Environmental Conditions
or Regulated Substances (including common law liabilities relating to
Environmental Conditions and Regulated Substances), whether such liability,
responsibility or obligation is known or unknown, contingent or accrued as of
the Auction Closing Date, including but not limited to: (i) costs of compliance
(including capital, operating and other costs) relating to any violation or
alleged violation of Environmental Laws
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occurring prior to, on or after the Auction Closing Date, with respect to the
ownership or operation of the Purchased DLC Assets; (ii) property damage or
natural resource damage (whether such damages were manifested before or after
the Auction Closing Date) arising from Environmental Conditions or Releases of
Regulated Substances at, on, in, under, adjacent to, or migrating from any
Purchased DLC Assets prior to, on or after the Auction Closing Date; (iii) any
Remediation (whether or not such Remediation commenced before the Auction
Closing Date or commences after the Auction Closing Date) of Environmental
Conditions or Regulated Substances that are present or have been Released prior
to, on or after the Auction Closing Date, at, on, in, adjacent to or migrating
from the Purchased DLC Assets; (iv) any violations or alleged violations of
Environmental Laws occurring on or after the Auction Closing Date with respect
to the ownership or operation of any Purchased DLC Assets; (v) any bodily injury
or loss of life arising from Environmental Conditions or Releases of Regulated
Substances at, on, in, under, adjacent to or migrating from any Purchased DLC
Asset on or after the Auction Closing Date; (vi) any bodily injury, loss of
life, property damage, or natural resource damage arising from the storage,
transportation, treatment, disposal, discharge, recycling or Release, at any
Off-Site Location, or arising from the arrangement for such activities, on or
after the Auction Closing Date, of Regulated Substances generated in connection
with the ownership or operation of the Purchased DLC Assets; and (vii) any
Remediation of any Environmental Condition or Release of Regulated Substances
arising from the storage, transportation, treatment, disposal, discharge,
recycling or Release, at any Off-Site Location, or arising from the arrangement
for such activities, on or after the Auction Closing Date, of Regulated
Substances generated in connection with the ownership or operation of the
Purchased DLC Assets; provided, that nothing set forth in this Section 2.3 shall
require Buyer to assume any liabilities, responsibilities or obligations that
are expressly excluded in Section 2.4;
(e) All liabilities and obligations of Seller associated with
the Purchased DLC Assets under the agreements or consent orders set forth on
Schedule 2.3(e) arising on or after the Auction Closing Date;
(f) With respect to the Purchased DLC Assets, any Tax that may
be imposed by any federal, state or local government on the ownership, sale
(except as otherwise provided in Section 7.9(a)), operation or use of the
Purchased DLC Assets on or after the Auction Closing Date, except for any Income
Taxes attributable to income received by Seller; and
(g) All liabilities and obligations of Seller for those
certain Accrued Liabilities of the FE Subsidiaries assigned by the FE
Subsidiaries to and assumed by Seller pursuant to the FE (Accrued Liability)
Assignment and Assumption Agreements, as further described in Section 4.3 of the
Exchange Agreement (the "Accrued FE Liabilities").
(h) All liabilities and obligations of Seller arising on and
after the Auction Closing Date under those orders, consent orders, decrees, or
consent decrees relating to the
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Purchased DLC Assets issued by or entered into with any Governmental Authority
and listed in Schedule 2.3(h) ("DLC Governmental Orders"). In furtherance of
this obligation, on the Auction Closing Date, Buyer shall execute and deliver to
Seller an enforceable agreement acknowledging and agreeing to be bound by, and
assume Seller's obligations under, the DLC Governmental Orders.
(i) For purposes of clarification, without any acknowledgment
or admission that the following is a legal obligation of Seller, Buyer
acknowledges that it shall assume and be fully responsible for holding in its
accounts sufficient SO2 Emissions Allowances and NOx Emissions Allowances to
cover emissions of SO2 and NOx from all of the DLC Plants for all of the
calendar year in which the Auction Closing occurs, including the period of such
year prior to the Auction Closing.
2.3A Assumed FE Liabilities. On the Auction Closing Date, Buyer shall
deliver to Seller and each applicable FE Subsidiary an FE Assignment and
Assumption Agreement pursuant to which Buyer shall assume and agree to discharge
when due, without recourse to Seller or such FE Subsidiary, in accordance with
the respective terms and subject to the respective conditions thereof, all of
the Assumed FE Liabilities applicable to the Purchased FE Assets acquired by
Buyer from Seller and/or such FE Subsidiary, as the case may be. All of the
following liabilities and obligations of each FE Subsidiary, and/or Seller, as
the case may be, if any, direct or indirect, known or unknown, absolute or
contingent, which relate to, or arise by virtue of such FE Subsidiary's, and/or
Seller's, as the case may be, ownership of, the Purchased FE Assets (other than
Excluded FE Liabilities) are referred to collectively as the "Assumed FE
Liabilities":
(a) All liabilities and obligations of such FE Subsidiary,
and/or Seller, as the case may be, (if any), associated with such FE
Subsidiary's Purchased FE Assets arising on or after the Auction Closing Date
under its FE Agreements, FE Real Property Leases and FE Transferable Permits,
each in accordance with the terms thereof, including, without limitation, the FE
Agreements entered into by such FE Subsidiary (i) prior to the date hereof and
(ii) 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 of such FE Subsidiary, would have been paid, performed or otherwise
discharged on or prior to the Auction 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 or passage of time or both would constitute a default by such
FE Subsidiary;
(b) All liabilities and obligations of such FE Subsidiary,
and/or Seller, as the case may be, (if any), associated with such FE
Subsidiary's Purchased FE Assets in respect of Taxes for which Buyer is liable
pursuant to Sections 3.6 or 7.9(a) hereof;
(c) All liabilities and obligations of such FE Subsidiary,
and/or Seller, as the case may be, (if any), associated with such FE
Subsidiary's Purchased FE Assets with respect to the FE
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Transferred Employees incurred after the Auction Closing for which Buyer is
responsible pursuant to Section 7.11A;
(d) All liabilities, responsibilities and obligations of such
FE Subsidiary, and/or Seller, as the case may be, (if any), associated with such
FE Subsidiary's Purchased FE Assets arising under Environmental Laws or relating
to Environmental Conditions or Regulated Substances (including common law
liabilities relating to Environmental Conditions and Regulated Substances),
whether such liability, responsibility or obligation is known or unknown,
contingent or accrued as of the Auction Closing Date including but not limited
to: (i) costs of compliance (including capital, operating and other costs)
relating to any violation or alleged violation of Environmental Laws occurring
prior to, on or after the Auction Closing Date, with respect to the ownership or
operation of the Purchased FE Assets; (ii) property damage or natural resource
damage (whether such damages were manifested before or after the Auction Closing
Date) arising from Environmental Conditions or Releases of Regulated Substances
at, on, in, under, adjacent to, or migrating from any Purchased FE Assets prior
to, on or after the Auction Closing Date; (iii) any Remediation (whether or not
such Remediation commenced before the Auction Closing Date or commences after
the Auction Closing Date) of Environmental Conditions or Regulated Substances
that are present or have been Released prior to, on or after the Auction Closing
Date, at, on, in adjacent to or migrating from the Purchased FE Assets; (iv) any
violations or alleged violations of Environmental Laws occurring on or after the
Auction Closing Date with respect to the ownership or operation of any FE
Assets; (v) any bodily injury or loss of life arising from Environmental
Conditions or Releases of Regulated Substances at, on, in, under, adjacent to or
migrating from any FE Purchased Asset on or after the Auction Closing Date;(vi)
any bodily injury, loss of life, property damage, or natural resource damage
arising from the storage, transportation, treatment, disposal, discharge,
recycling or Release, at any Off-Site Location, or arising from the arrangement
for such activities, on or after the Auction Closing Date, of Regulated
Substances generated in connection with the ownership or operation of the
Purchased FE Assets; and (vii) any Remediation of any Environmental Condition or
Release of Regulated Substances arising from the storage, transportation,
treatment, disposal, discharge, recycling or Release, at any Off-Site Location,
or arising from the arrangement for such activities, on or after the Auction
Closing Date, of Regulated Substances generated in connection with the ownership
or operation of the Purchased FE Assets; provided, that nothing set forth in
this Section 2.3A shall require Buyer to assume any liabilities,
responsibilities or obligations that are expressly excluded in Section 2.4A;
(e) All liabilities and obligations of each such FE
Subsidiary, and/or Seller, as the case may be, (if any), associated with its
Purchased FE Assets under the agreements or consent orders set forth on Schedule
2.3A(e) after the Auction Closing; and
(f) With respect to the Purchased FE Assets of each such FE
Subsidiary, and/or Seller, as the case may be, any Tax that may be imposed by
any federal, state or local government
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on the ownership, sale (except as otherwise provided in Section 7.9(a)),
operation or use of its Purchased FE Assets on or after the Auction Closing
Date, except for any Income Taxes attributable to income received by each such
FE Subsidiary, or Seller, if any.
(g) All liabilities and obligations of FE and each FE
Subsidiary, and/or Seller, as the case may be, (if any), arising on and after
the Auction Closing Date under those orders, consent orders, decrees, or consent
decrees relating to the Purchased FE Assets issued by or entered into with any
Governmental Authority and listed in Schedule 2.3A(g) ("FE Governmental
Orders"). In furtherance of this obligation, on the Auction Closing Date, Buyer
shall execute and deliver to Seller and each applicable FE Subsidiary an
enforceable agreement acknowledging and agreeing to be bound by, and assume the
obligations of FE and the applicable FE Subsidiary, and/or Seller, as the case
may be, (if any), under, the FE Governmental Orders.
(h) For purposes of clarification, without any acknowledgment
or admission that the following is a legal obligation of the FE Subsidiaries,
Buyer acknowledges that it shall assume and be fully responsible for holding in
its accounts sufficient SO2 Emissions Allowances and NOx Emissions Allowances to
cover emissions of SO2 and NOx from all of the FE Plants for all of the calendar
year in which the Auction Closing occurs, including the period of such year
prior to the Auction Closing.
2.4 Excluded DLC Liabilities. Notwithstanding anything to the contrary
in this Agreement, Buyer shall not assume or be obligated to pay, perform or
otherwise discharge the following liabilities or obligations of Seller
(collectively, the "Excluded DLC Liabilities"):
(a) Any liabilities or obligations of Seller in respect of any
Excluded DLC Assets or other assets of Seller that are not Purchased DLC Assets;
(b) Any liabilities or obligations with respect to Taxes
attributable to Seller's ownership, operation or use of the Purchased DLC Assets
for taxable periods, or portions thereof, ending before the Auction Closing
Date, except for Taxes for which Buyer is liable pursuant to Sections 3.5 or
7.9(a) hereof;
(c) Any liabilities or obligations of Seller accruing under
any of the DLC Agreements prior to the Auction 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 relating to the Purchased DLC Assets arising during
or attributable to the period prior to the Auction Closing Date, other than
liabilities or obligations assumed by Buyer under Section 2.3(d);
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(e) Any fines, penalties and associated costs for defending
related enforcement actions, resulting from any violation or alleged violation
of Environmental Laws with respect to the ownership or operation of the
Purchased DLC Assets occurring prior to the Auction Closing Date;
(f) Any payment obligations of Seller pursuant to the DLC
Agreements for goods delivered or services rendered prior to the Auction Closing
Date, including, but not limited to, rental payments pursuant to the DLC Real
Property Leases;
(g) Any liabilities, responsibilities and obligations of
Seller arising under Environmental Laws or relating to Environmental Conditions
or Regulated Substances (including common law liabilities relating to
Environmental Conditions and Regulated Substances), whether such liability,
responsibility or obligation was known or unknown, contingent or accrued, which
relates to (i) any bodily injury, loss of life, property damage or natural
resource damage arising from the storage, transportation, treatment, disposal,
discharge, recycling or Release of Regulated Substances generated in connection
with the ownership or operation of the Purchased DLC Assets at any Off-Site
Location, or arising from the arrangement for such activities, prior to the
Auction Closing Date; or (ii) any Remediation of any Environmental Condition or
Regulated Substance at any Off-Site Location, arising from the storage,
transportation, treatment, disposal, discharge, recycling or Release of
Regulated Substances generated in connection with the ownership or operation of
the Purchased DLC Assets at such Off-Site Location, or arising from the
arrangement for such activities, prior to the Auction Closing Date; provided,
that for purposes of this paragraph, "Off-Site Location" does not include any
location to which Regulated Substances disposed of or Released at the Purchased
DLC Assets have migrated;
(h) Any liability to third parties (including employees) for
bodily injury or loss of life, to the extent caused (or allegedly caused) by
Environmental Conditions or the Release of Regulated Substances at, on, in,
under, or adjacent to, or migrating from, the Purchased DLC Assets prior to the
Auction Closing Date;
(i) Subject to Section 7.11, any liabilities or obligations of
Seller, any Seller Subsidiary or any ERISA Affiliate of Seller relating to any
DLC Plan including but not limited to any liability (i) relating to benefits
payable under any DLC Plan; (ii) relating to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (iii) relating to a multi-employer plan;
(iv) with respect to non-compliance with the notice and benefit continuation
requirements of COBRA; (v) with respect to any noncompliance with ERISA or any
other applicable laws; or (vi) with respect to any suit, proceeding or claim
which is brought against Buyer, any DLC Plan, or any fiduciary or former
fiduciary of any such DLC Plan;
(j) Subject to Section 7.11, any liabilities or obligations
arising from facts or circumstances prior to the Auction Closing Date relating
to the employment or termination of
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employment, including discrimination, wrongful discharge, unfair labor
practices, or constructive termination by Seller of any individual, attributable
to any actions or inactions by Seller prior to the Auction Closing Date other
than actions or inactions taken at the written direction of Buyer;
(k) Subject to Section 7.11, any obligations of Seller for
wages, overtime, employment taxes, severance pay, transition payments in respect
of compensation or similar benefits accruing or arising prior to the Auction
Closing under any term or provision of any contract, plan, instrument or
agreement relating to any of the Purchased DLC Assets; and
(l) 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.
2.4A Excluded FE Liabilities. Notwithstanding anything to the contrary
in this Agreement, Buyer shall not assume or be obligated to pay, perform or
otherwise discharge the following liabilities or obligations of each FE
Subsidiary (collectively, the "Excluded FE Liabilities"):
(a) Any liabilities or obligations of each such FE Subsidiary
in respect of its Excluded FE Assets or other assets of each such FE Subsidiary
that are not its Purchased FE Assets;
(b) Any liabilities or obligations of each such FE Subsidiary
with respect to Taxes attributable to each such FE Subsidiary's ownership,
operation or use of its Purchased FE Assets for taxable periods, or portions
thereof, ending before the Auction Closing Date, except for Taxes for which
Buyer is liable pursuant to Section 3.6 or 7.9(a) hereof;
(c) Any liabilities or obligations of each such FE Subsidiary
accruing under any of the FE Agreements prior to the Auction 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 relating to the Purchased FE Assets arising during
or attributable to the period prior to the Auction Closing Date, other than
liabilities or obligations assumed under Section 2.3A(d);
(e) Any fines, penalties and associated costs for defending
related enforcement actions, resulting from any violation or alleged violation
of Environmental Laws with respect to such FE Subsidiary's ownership or
operation of its Purchased FE Assets occurring prior to the Auction Closing
Date;
(f) Any payment obligations of each such FE Subsidiary
pursuant to its FE Agreements for goods delivered or services rendered prior to
the Auction Closing Date, including, but not limited to, rental payments
pursuant to its FE Real Property Leases;
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(g) Any liabilities, responsibilities and obligations of each
such FE Subsidiary arising under Environmental Laws or relating to Environmental
Conditions or Regulated Substances (including common law liabilities relating to
Environmental Conditions and Regulated Substances), whether such liability,
responsibility or obligation was known or unknown, contingent or accrued, which
relates to (i) any bodily injury, loss of life, property damage or natural
resource damage arising from the storage, transportation, treatment, disposal,
discharge, recycling or Release of Regulated Substances generated in connection
with the ownership or operation of its Purchased FE Assets at any Off-Site
Location, or arising from the arrangement for such activities, prior to the
Auction Closing Date; or (ii) any Remediation of any Environmental Condition or
Regulated Substance at any Off-Site Location, arising from the storage,
transportation, treatment, disposal, discharge, recycling or Release of
Regulated Substances generated in connection with the ownership or operation of
its Purchased FE Assets at such Off-Site Location, or arising from the
arrangement for such activities, prior to the Auction Closing Date; provided,
that for purposes of this paragraph, "Off-Site Location" does not include any
location to which Regulated Substances disposed of or Released at such Purchased
FE Assets have migrated;
(h) Any liability to third parties (including employees) for
bodily injury or loss of life, to the extent caused (or allegedly caused) by
Environmental Conditions or the Release of Regulated Substances at, on, in,
under, or adjacent to, or migrating from, the Purchased FE Assets of each such
FE Subsidiary prior to the Auction Closing Date;
(i) Any liabilities or obligations of each such FE Subsidiary
or any ERISA Affiliate of such FE Subsidiary relating to any FE Plan including
but not limited to any liability (i) relating to benefits payable under any FE
Plan; (ii) relating to the Pension Benefit Guaranty Corporation under Title IV
of ERISA; (iii) relating to a multi-employer plan; (iv) with respect to
non-compliance with the notice and benefit continuation requirements of COBRA;
(v) with respect to any noncompliance with ERISA or any other applicable laws;
or (vi) with respect to any suit, proceeding or claim which is brought against
Buyer, any FE Plan, or any fiduciary or former fiduciary of any such FE Plan, in
each case other than liabilities or obligations assumed under Section 7.11A;
(j) Any liabilities or obligations arising from facts or
circumstances prior to the Auction Closing Date relating to the employment or
termination of employment, including discrimination, wrongful discharge, unfair
labor practices, or constructive termination by any FE Subsidiary of any
individual, attributable to any actions or inactions by each such FE Subsidiary
prior to the Auction Closing Date, including without limitation unfair labor
practice charges relating to Avon Lake, other than such actions or inactions
taken at the written direction of Buyer, other than liabilities or obligations
assumed under Section 7.11A;
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(k) Any obligations of each such FE Subsidiary for wages,
overtime, employment taxes, severance pay, transition payments in respect of
compensation or similar benefits accruing or arising prior to the Auction
Closing under any term or provision of any contract, plan, instrument or
agreement relating to any of its Purchased FE Assets, other than liabilities or
obligations assumed under Section 7.11A; and
(l) Any liability of each such FE Subsidiary arising out of a
breach by each such FE Subsidiary, or any of its Affiliates, of any of their
respective obligations under this Agreement or the Ancillary Agreements.
2.5 Control of Litigation.
(a) The Parties agree and acknowledge that Seller and the FE
Subsidiaries, respectively, shall be entitled exclusively to control, defend and
settle any litigation, administrative or regulatory proceeding, and any
investigation or Remediation activity (including without limitation any
environmental mitigation or Remediation activities), arising out of or related
to any Excluded DLC Liabilities and Excluded FE Liabilities, respectively, and
Buyer agrees to cooperate fully in connection therewith and in connection
therewith, shall comply with the provisions of Section 7.2.
(b) The Parties agree and acknowledge that Buyer shall be
entitled exclusively to control, defend and settle any litigation,
administrative or regulatory proceeding, and any investigation or Remediation
activity (including without limitation any environmental mitigation or
Remediation activities), arising out of or related to any Assumed DLC
Liabilities and Assumed FE Liabilities, respectively, and Seller, with respect
to Assumed DLC Liabilities, and Seller and the FE Subsidiaries, with respect to
Assumed FE Liabilities, agree to cooperate fully in connection therewith and in
connection therewith, shall comply with the provisions of Section 7.2.
2.6 Fuel Supplies.
(a) At the Auction Closing, (i) Seller will sell, assign,
convey, transfer and deliver to Buyer its rights, title and interest in and to
the Fuel Supplies related to the operation of the DLC Plants ("DLC Fuel
Supplies"), and (ii) Buyer shall pay to Seller an amount equal to the actual
cost of such DLC Fuel Supplies on Seller's books and records, as established by
invoices (and reasonable supporting materials demonstrating the actual cost of
such DLC Fuel Supplies), with such invoices and supporting materials to be
delivered to Buyer by Seller not later than three (3) Business Days prior to the
scheduled date of the Auction Closing.
(b) At the Auction Closing, (i) Seller will sell, assign,
convey, transfer and deliver to Buyer its rights, title and interest in and to
the Fuel Supplies related to the operation of the FE Plants (collectively, "FE
Fuel Supplies"), and (ii) Buyer shall pay to Seller an amount equal to
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the actual cost of such FE Fuel Supplies on the FE Subsidiaries' books and
records as established by invoices (and reasonable supporting materials
demonstrating the actual cost of such FE Fuel Supplies), with such invoices and
supporting materials to be delivered to Seller by the FE Subsidiaries and then
by Seller to the Buyer not later than three (3) Business Days prior to the
scheduled date of the Auction Closing.
2.7 Inventories.
(a) Schedule 2.7(a) lists the quantities of DLC Inventories
that will be transferred to Buyer, together with the net book values of such DLC
Inventories. At the Auction Closing, as part of the Purchased DLC Assets, Seller
will transfer to Buyer the DLC Inventories relating to the DLC Plants. Because
Seller has operated the DLC Plants as part of a larger, integrated utility
system, not all of such DLC Inventories have actually been maintained in stock
at each DLC Plant, but are identified and dedicated as Purchased DLC Assets on
Schedule 2.7(a) hereto. Seller shall transport and deliver all such DLC
Inventories to the applicable DLC Plant prior to the Auction Closing.
(b) Schedule 2.7(b) lists the quantities of FE Inventories
that will be transferred to Buyer, together with the net book values of such FE
Inventories. At the Auction Closing, as part of the Purchased FE Assets, Seller
will transfer to Buyer its right, title and interest in and to the FE
Inventories relating to the FE Plants. Because each FE Subsidiary has operated
its FE Plants as part of a larger, integrated utility system, not all of such FE
Inventories have actually been maintained in stock at each such FE Plant, but
are identified and dedicated as Purchased FE Assets on Schedule 2.7(b) hereto.
Each FE Subsidiary shall transport and deliver all such FE Inventories to the
applicable FE Plant prior to the Auction Closing.
ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the satisfaction of the
conditions in Article VIII of this Agreement, each of (i) the sale, assignment,
conveyance, transfer and delivery of the Purchased DLC Assets to Buyer by
Seller, (ii) the sale, assignment and conveyance of Seller's beneficial
ownership of the Purchased FE Assets to Buyer by Seller, (iii) the transfer and
delivery of the Purchased FE Assets to Buyer by Seller and/or each FE
Subsidiary, as the case may be, (iv) the payment of the Purchase Price to Seller
by Buyer, and (v) the consummation of the other respective obligations of the
Parties contemplated by this Agreement shall take place at a closing (the
"Auction Closing"), to be held at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 1440 New York Avenue, N.W., Washington, D.C. or another mutually
acceptable location.
3.2 Closing Payments.
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(a) 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 Auction Closing an aggregate
amount in U.S. dollars of one billion seven hundred five million dollars
($1,705,000,000.00) (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.
(b) Simultaneously with its payment of the Purchase Price
pursuant to Section 3.2(a), Buyer will pay or cause to be paid to Seller the sum
of (i) the amounts payable to Seller for FE Fuel Supplies pursuant to Section
2.6(b) plus (ii) the amount expended by the FE Subsidiaries between the date
hereof and the Auction Closing Date for FE Capital Expenditures that (A) are not
described in Schedule 7.1(A)(c)(viii) and (B) satisfy one or more of the tests
for permitted FE Capital Expenditures set forth in Section 7.1A(c)(viii), plus
or minus (iii) the amount by which the book value of FE Inventories, as of the
Auction Closing Date, exceeds or falls short of that value set forth in Schedule
2.7(b), plus or minus (iv) the net balance payable to or by Seller, if any, for
items relating to the Purchased FE Assets prorated pursuant to Section 3.6 (each
sum, an "FE Closing Payment"), 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 Auction Closing, the
Purchase Price shall be adjusted to account for the items set forth in this
Section 3.3(a):
(i) The Purchase Price shall be adjusted to account
for the amount by which the book value of DLC Inventories held by
Seller, as of the Auction Closing Date, exceeds or falls short of that
set forth in Schedule 2.7(a).
(ii) The Purchase Price shall be adjusted to account
for the net balance payable to or by Seller, if any, for items relating
to the Purchased DLC Assets prorated pursuant to Sections 3.5.
(iii) The Purchase Price shall be adjusted to account
for the amount expended by Seller between the date hereof and the
Auction Closing Date for DLC Capital
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Expenditures that (A) are not described in Schedule 7.1(c)(viii) and
(B) satisfy one or more of the tests for permitted DLC Capital
Expenditures set forth in Section 7.1(c)(viii).
(iv) The Purchase Price shall be adjusted to account
for the amounts payable to Seller for DLC Fuel Supplies pursuant to
Section 2.6(a).
(b) At least ten (10) Business Days prior to the Auction
Closing Date, (i) Seller shall prepare and deliver to Buyer an estimated closing
statement (the "DLC Estimated Closing Statement") that shall set forth Seller's
best estimate of the estimated adjustments to the Purchase Price required by
Section 3.3(a) (the "DLC Estimated Adjustment") and (ii) Seller shall prepare
and deliver to Buyer an estimated closing statement (the "FE Estimated Closing
Statement") that shall set forth Seller's best estimate of the estimated
payments to be made to Seller pursuant to Section 3.2(b) (the "FE Estimated
Closing Payment"). Within five (5) Business Days following the delivery of an
Estimated Closing Statement to Buyer, Buyer may object in good faith to such
Estimated Closing Payment in writing. In the event of any such objection, the
applicable Parties shall attempt to resolve their differences by negotiation. If
such Parties are unable to do so before three (3) Business Days prior to the
Auction Closing Date, the amounts of the DLC Estimated Adjustment and the FE
Estimated Closing Payments not in dispute shall be paid at the Auction Closing
and the disputed portions shall be paid as a Post-Closing Adjustment to the
extent required by Section 3.3(d).
(c) Within sixty (60) days following the Auction Closing Date,
(i) Seller shall prepare and deliver to Buyer a final closing statement setting
forth the final adjustments to the Purchase Price required by Section 3.3(a)
(the "Proposed DLC Post-Closing Adjustment"), and (ii) Seller shall prepare and
deliver to Buyer a final closing statement setting forth the final adjustments
to the final FE Closing Payment (the "Proposed FE Post-Closing Adjustment"). All
calculations of the Proposed Post-Closing Adjustments shall be prepared using
the same accounting principles, policies and methods as Seller and the FE
Subsidiaries have historically used, respectively, in connection with the
calculation of the items reflected on such Proposed Post-Closing Adjustments.
(d) Within thirty (30) days following the delivery of a
Proposed Post-Closing Adjustment to Buyer, Buyer may object to such Proposed
Post-Closing Adjustment in writing. Seller and the FE Subsidiaries agree to
cooperate with Buyer to provide Buyer and Buyer's Representatives information
used to prepare the Proposed Post-Closing Adjustments and information relating
thereto. If Buyer objects to a Proposed Post-Closing Adjustment, the applicable
Parties shall attempt to resolve such dispute by negotiation. If such Parties
are unable to resolve such dispute within thirty (30) days of any such objection
by Buyer, the Parties shall appoint an Independent Accounting Firm, which shall,
at Seller's and Buyer's joint expense, with respect to the Proposed DLC
Post-Closing Adjustment, and at the applicable FE Subsidiary's and Buyer's joint
expense with respect to an FE Post-Closing Adjustment, review such Proposed
Post-Closing Adjustment and determine the appropriate adjustment to the Purchase
Price or an FE Closing Payment, as applicable,
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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 by agreement of the applicable Parties or by binding
determination of the Independent Accounting Firm of the appropriate adjustment
to the Purchase Price (in either case, the "DLC Post-Closing Adjustment") and/or
to an FE Closing Payment (in either case, each an "FE Post-Closing Adjustment"),
if such Post-Closing Adjustment results in a change to either the Purchase Price
or an FE Closing Payment, the Party owing the difference shall deliver such
difference to the Party owed such amount no later than two (2) Business Days
after the determination of such Post Closing Adjustment, in immediately
available funds or in any other manner as reasonably requested by the Party owed
such amount.
3.4 Reserved
3.5 DLC 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 DLC Assets shall be
prorated as of the Auction Closing Date, with Seller liable for such items to
the extent such items relate to any time period prior to the Auction Closing
Date, and Buyer liable for such items to the extent such items relate to periods
commencing with the Auction 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 DLC Assets;
(ii) Rent, Taxes and all other items (including
prepaid services or goods not included in DLC Inventories) payable by
or to Seller under any of the DLC Agreements conveyed to Buyer;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any DLC Transferable
Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities with respect to the Purchased DLC
Assets; and
(v) Rent and Taxes payable by or to Seller under the
DLC Real Property Leases assigned to Buyer.
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(b) In connection with the prorations referred to in Section
3.5(a) above, in the event that actual figures are not available at the Auction
Closing Date, the proration shall be based upon the actual Taxes or other
amounts accrued through the Auction 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
Auction Closing and (ii) including and after the Auction 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.
3.6 FE Prorations.
(a) Seller and each FE Subsidiary, and, as set forth in
Section 2.3A(g), Buyer, 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 FE Assets shall be prorated as of the Auction
Closing Date, with the applicable FE Subsidiary liable to the extent such items
relate to any time period prior to the Auction Closing Date, and Buyer solely
liable to the extent such items relate to periods commencing with the Auction
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 FE
Assets;
(ii) Rent, Taxes and all other items (including
prepaid services or goods not included in FE Inventories)
payable by or to such FE Subsidiary under any of its FE
Agreements conveyed to Buyer;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to the FE
Transferable Permits of such FE Subsidiary;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities with respect to the Purchased
FE Assets of such FE Subsidiary; and
(v) Rent and Taxes payable by or to such FE
Subsidiary under its FE Real Property Leases assigned to
Buyer.
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(b) In connection with the prorations referred to in Section
3.6(a) above, in the event that actual figures are not available at the Auction
Closing Date, the proration shall be based upon the actual Taxes or other
amounts accrued through the Auction 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
Auction Closing Date and (ii) including and after the Auction Closing Date. The
Parties 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 3.6.
3.7 Deliveries by Seller. At the Auction Closing, Seller will deliver,
or cause to be delivered, the following to Buyer:
(a) The Bill of Sale for the Purchased Assets, duly executed
by Seller;
(b) Certified copies of any and all governmental and other
third party consents, waivers or approvals obtained or required to be obtained
by Seller with respect to the transfer of the Purchased DLC Assets, or the
consummation of the transactions contemplated by this Agreement;
(c) One or more Warranty Deeds conveying title to the DLC Real
Property to Buyer, duly executed and acknowledged by Seller and in recordable
form;
(d) The opinions of counsel required by Section 8.1;
(e) The DLC Assignment and Assumption Agreement, 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;
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(i) Certificate of Good Standing with respect to Seller,
issued by the Secretary of State of the Commonwealth of Pennsylvania;
(j) To the extent available, originals of all DLC Agreements,
DLC Real Property Leases and DLC Transferable Permits and, if not available,
true and correct copies thereof;
(k) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary to transfer to Buyer the Purchased DLC Assets, in accordance with this
Agreement and where necessary or desirable in recordable form;
(l) Such other agreements, documents, instruments and writings
as are required to be delivered by Seller at or prior to the Auction Closing
Date pursuant to this Agreement or otherwise reasonably required by Buyer in
connection herewith; and
(m) A certificate dated the Auction Closing Date executed by
the duly authorized officers of Seller to the effect that, to such officers'
Knowledge, the conditions set forth in Sections 8.1(e) and (f) have been
satisfied by Seller and that each of the representations and warranties of
Seller made in this Agreement are true and correct in all material respects as
though made at and as of the Auction Closing Date.
3.8 Deliveries by the FE Subsidiaries. At the Auction Closing, each FE
Subsidiary or, to the extent that any of the following items were delivered to
Seller at the Exchange Closing, Seller, with respect to its FE Assets will
deliver, or cause to be delivered, the following to Buyer:
(a) The Bill of Sale with respect to the Purchased FE Assets
of such FE Subsidiary, duly executed by such FE Subsidiary;
(b) Certified copies of any and all governmental and other
third party consents, waivers, or approvals obtained or required to be obtained
by such FE Subsidiary with respect to the transfer of its Purchased FE Assets or
the consummation of the transactions contemplated by this Agreement;
(c) One or more Warranty Deeds conveying title to the FE Real
Property to Buyer, duly executed and acknowledged by such FE Subsidiary and in
recordable form;
(d) The opinions of counsel required by Section 8.1, in the
form of Exhibit H attached hereto;
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(e) The applicable FE Assignment and Assumption Agreement,
duly executed by such FE Subsidiary;
(f) A FIRPTA Affidavit, duly executed by such FE Subsidiary;
(g) Copies, certified by the Secretary or Assistant Secretary
of such FE Subsidiary, of corporate resolutions authorizing the execution and
delivery of this Agreement, the Exchange Agreement and all of the agreements and
instruments to be executed and delivered by such FE Subsidiary in connection
herewith, and the consummation of the transactions contemplated by this
Agreement;
(h) A certificate of the Secretary or Assistant Secretary of
such FE Subsidiary identifying the name and title and bearing the signatures of
the officers of such FE Subsidiary authorized to execute and deliver this
Agreement and the other agreements and instruments contemplated hereby;
(i) To the extent available, originals of all FE Agreements,
FE Real Property Leases and FE Transferable Permits of such FE Subsidiary and,
if not available, true and correct copies thereof;
(j) Certificate of Good Standing with respect to such FE
Subsidiary, issued by the Secretary of State of Ohio or the Secretary of State
of the Commonwealth of Pennsylvania, as applicable;
(k) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary to transfer to the Buyer the Purchased FE Assets of such FE
Subsidiary, in accordance with this Agreement and where necessary or desirable
in recordable form;
(l) Such other agreements, documents, instruments and writings
as are required to be delivered by such FE Subsidiary at or prior to the Auction
Closing Date pursuant to this Agreement or otherwise reasonably required by
Buyer in connection herewith; and
(m) A certificate dated the Auction Closing Date, executed by
the duly authorized officers of such FE Subsidiary to the effect that, to such
officers' Knowledge, the conditions set forth in Sections 8.1(e) and (f) have
been satisfied by such FE Subsidiary and that each of the representations and
warranties of such FE Subsidiary made in this Agreement are true and correct in
all material respects as though made at and as of the Auction Closing Date.
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3.9 Deliveries by Buyer. At the Auction Closing, Buyer will deliver, or
cause to be delivered, the following:
(a) With respect to Seller:
(i) The Purchase Price, as adjusted pursuant to
Section 3.3, by wire transfer of immediately available funds
denominated in U.S. dollars in accordance with Seller's instructions or
by such other means as are agreed upon by Seller and Buyer;
(ii) The FE Closing Payment to be made to Seller by
wire transfer of immediately available funds denominated in U.S.
dollars in accordance with Seller's instructions or by such other means
as are agreed upon by Buyer and Seller; and
(iii) The DLC Assignment and Assumption Agreement,
duly executed by Buyer;
(iv) All such other instruments of assignment or
assumption as shall, in the reasonable opinion of Seller and its
counsel, be necessary for the assignment of the Purchased DLC Assets to
or the assumption of the Assumed DLC Liabilities by Buyer in accordance
with this Agreement; and
(v) The agreement contemplated by Section 2.3(h)
hereof.
(b) With respect to Seller and the FE Subsidiaries:
(i) The FE Assignment and Assumption Agreements, duly
executed by Buyer;
(ii) All such other instruments of assignment or
assumption as shall, in the reasonable opinion of Seller, the FE
Subsidiaries or their counsel, be necessary for the assignment of the
Purchased FE Assets to or the assumption of the Assumed FE Liabilities
by Buyer in accordance with this Agreement;
(iii) Copies, certified by the Secretary or Assistant
Secretary of Buyer , of resolutions authorizing the execution and
delivery of this Agreement and all of the agreements and instruments to
be executed and delivered by the Buyer in connection herewith, and the
consummation of the transactions contemplated hereby;
(iv) A certificate of the Secretary or Assistant
Secretary of Buyer, identifying the name and title and bearing the
signatures of the officers of Buyer authorized
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to execute and deliver this Agreement and the other agreements and
instruments contemplated hereby;
(v) The opinions of counsel required by Sections 8.2
and 8.3; and
(vi) The agreement contemplated by Section 2.3A(g)
hereof.
(c) Certified copies of any and all governmental and other
third party consents, waivers or approvals obtained or required to be obtained
by Buyer with respect to the transfer of the Purchased Assets or the
consummation of the transactions contemplated by this Agreement;
(d) Certificates of Insurance relating to the insurance
policies required pursuant to each of the DLC Connection Agreement and the FE
Connection Agreements;
(e) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Auction Closing Date
pursuant to this Agreement or otherwise reasonably required by Seller and the FE
Subsidiaries in connection herewith;
(f) Certificate of Good Standing with respect to Buyer, issued
by the Secretary of State of Delaware; and
(g) A certificate dated the Auction Closing Date executed by
the duly authorized officers of Buyer to the effect that, to such officers'
Knowledge, the conditions set forth in Sections 8.2(f), (g) and (i) and Sections
8.3(e),(f) and (h) have been satisfied by Buyer and that each of the
representations and warranties of Buyer made in this Agreement are true and
correct in all material respects as though made at and as of the Auction Closing
Date.
3.10 Ancillary Agreements. The Parties acknowledge that the Ancillary
Agreements (except for the Must-Run Agreements and the Connection Agreements)
shall be executed on or before the Auction Closing Date and each Party agrees to
execute, in connection with the Auction Closing, each Ancillary Agreement to
which it is to be a party, substantially in the form of such Ancillary
Agreements attached hereto. Each Party further acknowledges that, to the extent
that it is a party to such Ancillary Agreement, it has executed the Must-Run
Agreements and the Connection Agreements.
3.11 Work in Progress. The Parties agree to work together before and
after the Auction Closing Date to effect an orderly transition with respect to
work in progress.
ARTICLE IV
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REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
Seller hereby 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
Commonwealth of Pennsylvania and has all requisite corporate power and authority
to own, lease, and operate its material assets and properties 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 Articles of Incorporation and Bylaws
currently in effect.
4.2 Authority. Seller has full corporate power and authority to execute
and deliver this Agreement and each of the Ancillary Agreements to which Seller
is a signatory and to consummate the transactions contemplated hereby or
thereby. The execution and delivery of this Agreement and each of the Ancillary
Agreements to which Seller is a signatory and the consummation of the
transactions contemplated hereby and thereby 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 the DLC Required Regulatory Approvals, each of this
Agreement and the Ancillary Agreements to which Seller is a signatory
constitutes the legal, valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms, except as 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).
4.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 4.3(a), and subject to
obtaining any DLC Required Regulatory Approvals, neither the execution, delivery
and performance of this Agreement nor the execution, delivery and performance of
the Ancillary Agreements will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Seller, (ii) result in a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, material agreement or other instrument or obligation to which Seller
is a party or by which it, or any of the Purchased DLC 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
that would not, individually or in the aggregate, create a Material Adverse
Effect; or (iii) constitute violations of any law, regulation,
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order, judgment or decree applicable to Seller, which violations, individually
or in the aggregate, would create a Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"DLC 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 and the Ancillary Agreements by Seller or the
consummation by Seller of the transactions contemplated hereby and thereby,
other than (i) such consents, approvals, filings or notices which, if not
obtained or made, will not prevent Seller from performing its material
obligations under this Agreement and the Ancillary Agreements and (ii) such
consents, approvals, filings or notices which become applicable to Seller or the
Purchased DLC Assets as a result of the specific regulatory status of the Buyer
(or any of its Affiliates) or as a result of any other facts that specifically
relate to the business or activities in which the 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
(if any) owned or held by, or on behalf of, Seller with respect to the business,
operations or employees at the DLC Plants or the Purchased DLC 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 thirty-six (36) months preceding
the date of this Agreement, Seller has not been refused any insurance with
respect to the Purchased DLC Assets nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve (12) months.
4.5 DLC Real Property Leases. Schedule 4.5 lists, as of the date of
this Agreement, all real property leases under which Seller is a lessee or
lessor and which relate to the Purchased DLC Assets (the "DLC Real Property
Leases"). Except as set forth in Schedule 4.5, all such DLC Real Property Leases
are valid, binding and enforceable against Seller in accordance with their
terms; there are no existing defaults by Seller or, to Seller's Knowledge, any
other party thereunder that could reasonably be expected to result in a Material
Adverse Effect; and no event has occurred which (whether with or without notice,
lapse of time or both) would constitute a default by Seller or, to Seller's
Knowledge, any other party thereunder that could reasonably be expected to
result in a Material Adverse Effect. Seller has delivered to Buyer true, correct
and complete copies of each of the DLC Real Property Leases.
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4.6 Environmental Matters. Except as disclosed in Schedule 4.6 or in the
"Phase I" and "Phase II" environmental site assessments prepared by the
independent environmental consultants and made available for inspection by Buyer
("DLC Environmental Reports"):
(a) Seller holds, and is in substantial compliance with, all
Environmental Permits that are required for Seller to conduct the business and
operations of the Purchased DLC Assets, and Seller is otherwise in compliance
with applicable Environmental Laws with respect to the business and operations
of the Purchased DLC 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 (i) 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 any of the DLC Real Property, or (ii) any
written notification from a Governmental Authority with respect to pending or
ongoing investigations or enforcement actions related to alleged or potential
violations of any applicable Environmental Law with respect to any of the DLC
Real Property;
(c) Seller has not entered into or agreed to any consent decree or
order relating to the Purchased DLC Assets, and is not subject to any
outstanding judgment, decree, or judicial order relating to compliance with any
Environmental Law or to Remediation of Regulated Substances under any
Environmental Law relating to the Purchased DLC Assets; and
(d) To Seller's Knowledge, no Release of Regulated Substances has
occurred at, from, in, on, or under the DLC Real Property, and no Regulated
Substances are present in, on, about or migrating from the DLC Real Property
that could give rise to an Environmental Claim related to the Purchased DLC
Assets for which Remediation reasonably could be required, except in any such
case to the extent that any such Release or Environmental Claim would not,
individually or in the aggregate, create a Material Adverse Effect.
The representations and warranties made in this Section 4.6 are Seller's
exclusive representations and warranties relating to environmental matters of
Seller as of the date hereof.
4.7 Labor Matters. Seller has previously delivered to Buyer true and
correct copies of all collective bargaining agreements to which Seller is a
party or is subject and which relate to the business and operations of the
Purchased DLC Assets. With respect to the business or operations of the
Purchased DLC Assets, except to the extent set forth in Schedule 4.7 and except
for such matters as will not, individually or in the aggregate, create a
Material Adverse Effect, (a) Seller is in compliance with all applicable laws
respecting employment and employment practices, occupational safety and health,
plant closing, mass layoffs, terms and conditions of employment and wages and
hours; (b) Seller has not received any written notice of any unfair labor
practice complaint
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against Seller 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.
4.8 Benefit Plans: ERISA.
(a) Schedule 4.8 lists all DLC Plans maintained for, or in which the
employees of Seller connected with the Purchased DLC Assets participate. True
and complete copies of all such DLC Plans have been made available to the Buyer.
(b) No liability under Title IV or Section 302 of ERISA has been
incurred by Seller or any ERISA Affiliate of Seller that has not been satisfied
in full, and no condition exists that presents a material risk to Seller or any
ERISA Affiliate of Seller of incurring any such liability, other than liability
for premiums due to the Pension Benefit Guaranty Corporation (which premiums
have been paid when due). Insofar as the representation made in this Section 4.8
applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made with
respect to any employee benefit plan, program, agreement or arrangement subject
to Title IV of ERISA to which Seller or any ERISA Affiliate of Seller made, or
was required to make, contributions during the five (5)-year period ending on
the last day of the most recent plan year ended prior to the Auction Closing
Date.
(c) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of Seller or any ERISA
Affiliate of Seller to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due any such
employee or officer.
(d) There has been no material failure of any of the DLC Plans that
is a group health plan (as defined in Section 5000(b)(1) of the Code) to meet
the requirements of Section 4980B(f) of the Code with respect to a qualified
beneficiary (as defined in Section 4980B(g) of the Code). Neither the Seller nor
any ERISA Affiliate of Seller has contributed to a nonconforming group health
plan (as defined in Section 5000(c) of the Code) and no ERISA Affiliate of
Seller has incurred a tax under Section 5000(e) of the Code that is or could
become a liability of Buyer.
(e) There are no pending, threatened or anticipated claims by or on
behalf of any DLC Plans, by any employee or beneficiary covered under any such
DLC Plans, or otherwise involving any such DLC Plans (other than routine claims
for benefits).
4.9 DLC Real Property. Schedule 4.9 contains a description of the DLC Real
Property included in the Purchased DLC Assets. True and correct copies of any
current surveys, abstracts,
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title commitments and title opinions in Seller's possession and all policies of
title insurance currently in force and in the possession of Seller with respect
to the DLC Real Property have heretofore been made available to Buyer.
4.10 Condemnation. Except as set forth in Schedule 4.10, Seller has not
received any written notices of and otherwise has no Knowledge of any pending or
threatened proceedings or actions by any Governmental Authority to condemn or
take by power of eminent domain all or any part of the Purchased DLC Assets.
4.11 Contracts and Leases.
(a) Schedule 4.11(a) lists each DLC Agreement which is material to
Seller for the business or operations of the Purchased DLC Assets, other than
those (i) that are listed or described on another Schedule, (ii) that are
expected to expire or terminate prior to the Auction Closing Date, or (iii) that
provide for annual payments by Seller after the date hereof of less than
$100,000 and payments by Seller after the date hereof of less than $500,000 in
the aggregate.
(b) Except as disclosed in Schedule 4.11(b), each DLC Agreement
listed on Schedule 4.11(a) 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 may be transferred to the Buyer as contemplated
by this Agreement without the consent of the other parties thereto and will
continue in full force and effect thereafter, unless in 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 4.11(c), there is not, under the
DLC Agreements listed on Schedule 4.11(a), any default or event which, with
notice or lapse of time or both, would constitute a default on the part of the
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.
4.12 Legal Proceedings. Except as set forth in Schedule 4.12, there is no
action or proceeding pending or, to Seller's Knowledge, 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 4.12 Seller is not subject to
any outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or Governmental Authority that would, individually or in the
aggregate, create a Material Adverse Effect.
4.13 Permits.
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(a) Seller has all DLC Permits (other than Environmental Permits,
which are addressed in Section 4.6 hereof) necessary to own and operate the
Purchased DLC Assets except where the failure to have such DLC Permits would
not, individually or in the aggregate, create a Material Adverse Effect. Except
as disclosed on Schedule 4.13(a), Seller has not received any written
notification that it is in violation of any such DLC Permits, except
notifications of violations which would not, individually or in the aggregate,
create a Material Adverse Effect. Seller is in compliance with all DLC Permits
except where such non-compliance would not, individually or in the aggregate,
create a Material Adverse Effect.
(b) Schedule 4.13(b) sets forth all material DLC Permits, other than
DLC Transferable Permits (which are set forth on Schedule 1.1(71)), related to
the Purchased DLC Assets.
4.14 Taxes.
(a) Seller has filed or caused to be filed all Tax Returns that are
required to be filed by it with respect to any Tax relating to the Purchased DLC
Assets, and has paid or caused to be 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 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
DLC Transferred Employees. All Tax Returns relating to the Purchased DLC Assets
are true, correct and complete in all material respects. There are no liens for
Taxes upon the Purchased DLC Assets except for liens for Taxes not yet due and
Permitted Encumbrances.
(b) Except as set forth in Schedule 4.14(b), 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 DLC Assets, which
have not been fully paid or finally settled, and any such deficiency shown in
Schedule 4.14 is being contested in good faith through appropriate proceedings.
(c) Except as set forth in Schedule 4.14(c), there are no
outstanding agreements or waivers extending the applicable statutory periods of
limitation for Taxes associated with the Purchased DLC Assets that will be
binding upon Buyer after the Auction Closing.
(d) Except as set forth on Schedule 4.14(d), none of the Purchased
DLC 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 DLC Assets is "tax-exempt
use" property within the meaning of Section 168(h) of the Code.
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(e) Schedule 4.14(e) 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
consideration or subject Buyer to any liability for any Taxes of Seller.
4.15 Intellectual Property. Schedule 2.1(l) sets forth all DLC
Intellectual Property used in and, individually or in the aggregate with other
Intellectual Property, material to the operation or business by Seller of the
Purchased DLC Assets, each of which Seller either has all right, title and
interest in or valid and binding rights under contract to use in connection with
the operation of the Purchased DLC Assets. Except as disclosed in Schedule 4.15,
(a) 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 DLC Intellectual Property, and (b) to Seller's
Knowledge, such DLC Intellectual Property is not being infringed by any other
Person. Except as disclosed in Schedule 4.15, Seller has not received notice
that it is infringing any Intellectual Property of any other Person in
connection with the operation or business of the Purchased DLC Assets, and
Seller, to its Knowledge, is not infringing any Intellectual Property of any
other Person which, individually or in the aggregate, would have a Material
Adverse Effect.
4.16 Capital Expenditures. Except as set forth in Schedule 7.1(c)(viii),
there are no DLC Capital Expenditures that are planned by Seller through
December 31, 2000.
4.17 Compliance With Laws. Seller is in compliance with all applicable
laws, rules and regulations with respect to its ownership or operation of the
Purchased DLC Assets except where the failure to be in compliance would not,
individually or in the aggregate, create a Material Adverse Effect.
4.18 Title. Seller is the owner of record title to the DLC Real Property
and has good and valid title to the other Purchased DLC Assets which it purports
to own. As of the date of the Auction Closing, Seller shall be the owner of
record title to the DLC Real Property and have good and valid title to the other
Purchased DLC Assets which it purports to own, free and clear of all
Encumbrances except Permitted Encumbrances. If the Exchange Closing shall have
occurred prior to the Auction Closing Date, Seller shall also be the owner of
record title to the FE Real Property and have good and valid title to the other
Purchased FE Assets which it purports to own, free and clear of all Encumbrances
except Permitted Encumbrances.
4.19 DISCLAIMERS REGARDING PURCHASED DLC ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED DLC
ASSETS ARE TRANSFERRED "AS IS, WHERE IS", AND SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
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NATURE, EXPRESS OR IMPLIED, AS TO LIABILITIES, OPERATIONS OF THE DLC PLANTS,
CONDITION, VALUE OR QUALITY OF THE PURCHASED DLC ASSETS OR THE PROSPECTS
(FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE PURCHASED DLC ASSETS
AND SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THE PURCHASED DLC 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 DLC 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 DLC
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 DLC ASSETS OR THE
SUITABILITY OF THE PURCHASED DLC ASSETS FOR OPERATION AS A POWER PLANT AND NO
SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION
PROVIDED BY OR COMMUNICATIONS MADE BY SELLER OR ITS REPRESENTATIVES, OR BY ANY
BROKER OR INVESTMENT BANKER, WILL CAUSE OR CREATE ANY WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE PURCHASED DLC ASSETS.
4.20 Year 2000 Compliance. Seller, with respect to all Computer Systems
included in the Purchased DLC Assets to be transferred under this Agreement, has
plans to achieve Year 2000 Compliance with respect to such Computer Systems, and
is using its Commercially Reasonable Efforts to carry out such plans.
4.21 SEC Filings; Financial Statements.
(a) Seller has filed, or caused to be filed, all forms, reports and
documents required to be filed by Seller with the SEC since January 1, 1998, and
has heretofore delivered or made available to Buyer in the form filed with the
SEC, together with any amendments thereto, its (i) Annual Reports on Form 10-K
for the fiscal year ended December 31, 1997, (ii) Quarterly Reports on Form 10-Q
for the fiscal quarter ended March 31, 1998, June 30, 1998 and September 30,
1998, and (iii) all other reports or registration statements filed by Seller
with the SEC since January 1, 1998 (collectively, the "DLC SEC Reports"). The
DLC SEC Reports were prepared substantially in
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accordance with the requirements of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, as the case may be, and the
rules and regulations promulgated under each of such respective acts, and did
not at the time they were filed contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the DLC SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of Seller as at the
respective dates thereof and the consolidated results of operations and cash
flows of Seller for the periods indicated in accordance with GAAP applied on a
consistent basis throughout the periods involved (except for changes in
accounting principles disclosed in the notes thereto) and subject in the case of
interim financial statements to normal year-end adjustments.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF FE
AND THE FE SUBSIDIARIES
Each FE Subsidiary severally with respect to itself and all matters
related to such FE Subsidiary's obligations hereunder and as to the Purchased FE
Assets to be transferred to Buyer, hereby represents and warrants to Buyer as
follows:
5.1 Incorporation; Qualification. Such FE Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
respective state of incorporation and has all requisite corporate power and
authority to own, lease and operate its material assets and properties and to
carry on its business as is now being conducted. Such FE Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which its business as now being conducted shall
require it to be so qualified, except where the failure to be so qualified would
not have a Material Adverse Effect. Such FE Subsidiary has heretofore delivered
to Buyer true, complete and correct copies of its respective Articles of
Incorporation, Code of Regulations or Bylaws as currently in effect.
5.2 Authority. Such FE Subsidiary has full corporate power and authority
to execute and deliver this Agreement and each of the Ancillary Agreements to
which it is a signatory and to consummate the transactions contemplated hereby
or thereby. The execution and delivery of this Agreement and each of the
Ancillary Agreements to which it is a signatory by such FE Subsidiary and the
consummation of the transactions contemplated hereby and thereby by such FE
Subsidiary
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have been duly and validly authorized by all necessary corporate action required
on the part of such FE Subsidiary and this Agreement and each of the Ancillary
Agreements to which it is a signatory has been duly and validly executed and
delivered by such FE Subsidiary. Subject to the receipt of the FE Required
Regulatory Approvals, each of this Agreement and each of the Ancillary
Agreements to which it is a signatory constitutes the legal, valid and binding
agreement of such FE Subsidiary, enforceable against such FE Subsidiary in
accordance with its terms, except as 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).
5.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 5.3(a), and subject to obtaining
any FE Required Regulatory Approvals, neither the execution, delivery and
performance of this Agreement by such FE Subsidiary, nor the execution, delivery
and performance of the Ancillary Agreements to which such FE Subsidiary is a
signatory will (i) conflict with or result in any breach of any provision of the
Articles of Incorporation, Code of Regulations or Bylaws of such FE Subsidiary,
(ii) result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material agreement or other instrument or obligation
to which such FE Subsidiary is a party or by which such FE Subsidiary, or any of
its Purchased FE 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 that would not, individually or in the aggregate,
create a Material Adverse Effect; or (iii) constitute violations of any law,
regulation, order, judgment or decree applicable to such FE Subsidiary, which
violation, individually or in the aggregate, would create a Material Adverse
Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in Schedule 5.3(b) are collectively referred to as "FE
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 and the Ancillary Agreements, or the consummation by
such FE Subsidiary of the transactions contemplated hereby and thereby, other
than (i) such consents, approvals, filings or notices which, if not obtained or
made, will not prevent such FE Subsidiary from performing its material
obligations under this Agreement and the Ancillary Agreements and (ii) such
consents, approvals, filings or notices which become applicable to such FE
Subsidiary or its Purchased FE 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.
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5.4 Insurance. Except as set forth in Schedule 5.4, all material policies
of fire, liability, workers' compensation and other forms of insurance (if any)
owned or held by, or on behalf of, such FE Subsidiary with respect to the
business, operations or employees at its FE Plants or its Purchased FE 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 5.4, within the thirty-six (36)
months preceding the date of this Agreement, such FE Subsidiary has not been
refused any insurance with respect to its Purchased FE Assets nor has its
coverage been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last twelve
(12) months.
5.5 FE Real Property Leases. Schedule 5.5 lists, as of the date of this
Agreement, all real property leases under which such FE Subsidiary is a lessee
or lessor, and which relate to its Purchased FE Assets ("FE Real Property
Leases"). Except as set forth in Schedule 5.5, all such FE Real Property Leases
are valid, binding and enforceable against such FE Subsidiary in accordance with
their terms; there are no existing defaults by such FE Subsidiary or, to such FE
Subsidiary's Knowledge, any other party thereunder that could reasonably be
expected to result in a Material Adverse Effect; and no event has occurred which
(whether with or without notice, lapse of time or both) would constitute a
default by such FE Subsidiary or, to such FE Subsidiary's Knowledge, any other
party thereunder that could reasonably be expected to result in a Material
Adverse Effect. Such FE Subsidiary has delivered to Seller and Seller has
delivered to the Buyer, true, correct and complete copies of each of its FE Real
Property Leases.
5.6 Environmental Matters. Except as disclosed in Schedule 5.6 or in the
"Phase I" and "Phase II" environmental site assessments prepared by the
independent environmental consultants and made available for inspection by Buyer
("FE Environmental Reports"):
(a) Such FE Subsidiary holds, and is in substantial compliance with
all FE Environmental Permits, that are required for such FE Subsidiary to
conduct the business and operations of its Purchased FE Assets, and such FE
Subsidiary is otherwise in compliance with applicable Environmental Laws with
respect to the business and operations of its Purchased FE Assets, except for
such failures to hold or comply with required FE 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) Such FE Subsidiary has not received (i) 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 FE Real Property, or (ii)
any written notification from a Governmental Authority
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with respect to pending or ongoing investigations or enforcement actions related
to alleged or potential violations of any applicable Environmental Law with
respect to any of the FE Real Property;
(c) Such FE Subsidiary has not entered into or agreed to any consent
decree or order relating to its Purchased FE Assets, or is subject to any
outstanding judgment, decree, or judicial order relating to compliance with any
Environmental Law or to Remediation of Regulated Substances under any
Environmental Law relating to its Purchased FE Assets; and
(d) To the Knowledge of such FE Subsidiary, no Release of Regulated
Substances has occurred at, from, in, on, or under its FE Real Property and no
Regulated Substances are present in, on, about or migrating from its FE Real
Property that could give rise to an Environmental Claim related to its Purchased
FE Assets for which Remediation reasonably could be required, except in any such
case to the extent that any such Release or Environmental Claim would not,
individually or in aggregate, create a Material Adverse Effect.
The representations and warranties made in this Section 5.6 are the exclusive
representations and warranties of such FE Subsidiary relating to environmental
matters as of the date hereof.
5.7 Labor Matters. Such FE Subsidiary previously delivered to Buyer true
and correct copies of all collective bargaining agreements to which such FE
Subsidiary is a party or is subject and which relate to the business and
operations of its Purchased FE Assets. With respect to the business or
operations of its Purchased FE Assets, except to the extent set forth in
Schedule 5.7 and except for such matters as will not, individually or in
aggregate, create a Material Adverse Effect, (a) such FE Subsidiary is in
compliance with all applicable laws respecting employment and employment
practices, occupational safety and health, plant closing, mass layoffs, terms
and conditions of employment and wages and hours; (b) such FE Subsidiary has not
received any written notice of any unfair labor practice complaint against any
FE Subsidiary pending before the National Labor Relations Board; (c) no
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against such FE Subsidiary; and (d) such FE Subsidiary has
not experienced any work stoppage within the three-year period prior to the date
hereof and to the Knowledge of such FE Subsidiary none is currently threatened.
5.8 Benefit Plans: ERISA.
(a) Schedule 5.8(a) lists all FE Plans maintained for, or in which
the employees of such FE Subsidiary connected with its Purchased FE Assets
participate. True and complete copies of all such FE Plans have been made
available to Buyer.
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(b) No liability under Title IV or Section 302 of ERISA has been
incurred by such FE Subsidiary or any ERISA Affiliate of such FE Subsidiary that
has not been satisfied in full, and no condition exists that presents a material
risk to such FE Subsidiary or any ERISA Affiliate thereof of incurring any such
liability, other than liability for premiums due the Pension Benefit Guaranty
Corporation (which premiums have been paid when due). Insofar as the
representation made in this Section 5.8 applies to Sections 4064, 4069 or 4204
of Title IV of ERISA, it is made with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which such FE
Subsidiary or any ERISA Affiliate of such FE Subsidiary made, or was required to
make, contributions during the five (5)-year period ending on the last day of
the most recent plan year ended prior to the Auction Closing Date.
(c) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of such FE Subsidiary or any
ERISA Affiliate of such FE Subsidiary to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer.
(d) There has been no material failure of any of the FE Plans that
is a group health plan (as defined in Section 5000(b)(1) of the Code) to meet
the requirements of Section 4980B(f) of the Code with respect to a qualified
beneficiary (as defined in Section 4980B(g) of the Code). Neither such FE
Subsidiary nor any ERISA Affiliate of such FE Subsidiary has contributed to a
nonconforming group health plan (as defined in Section 5000(c) of the Code) and
no ERISA Affiliate of such FE Subsidiary has incurred a tax under Section
5000(e) of the Code that is or could become a liability of Buyer.
(e) There are no pending, threatened or anticipated claims by or on
behalf of any FE Plans, by any employee or beneficiary covered under any such FE
Plans, or otherwise involving any such FE Plans (other than routine claims for
benefits).
5.9 Real Property. Schedule 5.9 contains a description of the FE Real
Property of such FE Subsidiary included in the Purchased FE Assets. True and
correct copies of any current surveys, abstracts, title commitments and title
opinions in such FE Subsidiary's possession and all policies of title insurance
currently in force and in the possession of such FE Subsidiary with respect to
its FE Real Property have heretofore been made available to Buyer.
5.10 Condemnation. Except as set forth in Schedule 5.10, such FE
Subsidiary has not received any written notices of and otherwise has no
Knowledge of any pending or threatened proceedings or actions by any
Governmental Authority to condemn or take by power of eminent domain all or any
part of its Purchased FE Assets.
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5.11 Contracts and Leases.
(a) Schedule 5.11(a) lists each FE Agreement which is material to
such FE Subsidiary for the business or operations of its Purchased FE Assets,
other than those (i) that are expected to expire or terminate prior to the
Auction Closing Date, or (ii) that provide for annual payments by such FE
Subsidiary after the date hereof of less than $100,000 and payments by such FE
Subsidiary after the date hereof of less than $500,000 in the aggregate.
(b) Except as disclosed in Schedule 5.11(b), each FE Agreement
listed in Schedule 5.11(b) constitutes a legal, valid and binding obligation of
such FE Subsidiary and, to the Knowledge of such FE Subsidiary, constitutes a
valid and binding obligation of the other parties thereto, and may be
transferred to Buyer as contemplated by 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 5.11(c), there is not, under any
of its FE Agreements listed on Schedule 5.11(a), any default or event which,
with notice or lapse of time or both, would constitute a default on the part of
such FE Subsidiary or to its 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.
5.12 Legal Proceedings. Except as set forth in Schedule 5.12, there is no
action or proceeding pending or, to the Knowledge of such FE Subsidiary,
threatened against such FE Subsidiary 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 5.12, such FE Subsidiary is not subject to any outstanding
judgments, rules, orders, writs, injunctions or decrees of any court, arbitrator
or Governmental Authority that would, individually or in the aggregate, create a
Material Adverse Effect.
5.13 Permits.
(a) Such FE Subsidiary has all FE Permits (other than the FE
Environmental Permits, which are addressed in Section 5.6 hereof) necessary to
own and operate its Purchased FE Assets except where the failure to have such FE
Permits would not, individually or in the aggregate, create a Material Adverse
Effect. Except as disclosed on Schedule 5.13(a), such FE Subsidiary has not
received any written notification that such FE Subsidiary is in violation of any
such FE Permits, except notifications of violations which would not,
individually or in the aggregate, create a Material
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Adverse Effect. Such FE Subsidiary is in compliance with all its FE Permits
except where non-compliance would not, individually or in the aggregate, create
a Material Adverse Effect.
(b) Schedule 5.13(b) sets forth all material FE Permits, other than
FE Transferable Permits (which are set forth on Schedule 1.1(140)), related to
the Purchased FE Assets of such FE Subsidiary.
5.14 Taxes.
(a) Such FE Subsidiary has filed or caused to be filed all Tax
Returns that are required to be filed by it with respect to any Tax relating to
the Purchased FE Assets or to such FE Subsidiary's operation of the Purchased FE
Assets, and paid or caused to be 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 create
a Material Adverse Effect. Such FE Subsidiary has complied in all material
respects with all applicable laws, rules and regulations relating to withholding
Taxes relating to its FE Transferred Employees. All Tax Returns relating to its
Purchased FE Assets are true, correct and complete in all material respects.
There are no liens for Taxes upon its Purchased FE Assets except for liens for
Taxes not yet due and Permitted Encumbrances.
(b) Except as set forth in Schedule 5.14(b), no notice of deficiency
or assessment has been received from any taxing authority with respect to
liabilities for Taxes of such FE Subsidiary in respect of its Purchased FE
Assets, which have not been fully paid or finally settled, and any such
deficiency shown in Schedule 5.14 is being contested in good faith through
appropriate proceedings.
(c) Except as set forth in Schedule 5.14(c), there are no
outstanding agreements or waivers extending the applicable statutory periods of
limitation for Taxes associated with its Purchased FE Assets that will be
binding upon Buyer after the Auction Closing.
(d) Except as set forth on Schedule 5.14(d), none of its Purchased
FE 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 its Purchased FE Assets is "tax-exempt use"
property within the meaning of Section 168(h) of the Code.
(e) Schedule 5.14(e) sets forth the taxing jurisdictions in which
such FE Subsidiary 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
consideration or subject Buyer to any liability for any Taxes of such FE
Subsidiary.
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5.15 Intellectual Property. Schedule 2.1A(k) sets forth all FE
Intellectual Property used in and, individually or in the aggregate with other
Intellectual Property, material to the operation or business by such FE
Subsidiary of its Purchased FE Assets, each of which such FE Subsidiary or its
Affiliates either has all right, title and interest in or valid and binding
rights under contract to use in connection with its operation of its Purchased
FE Assets. Except as disclosed in Schedule 5.15, (i) such FE Subsidiary 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 FE Intellectual Property, and (ii) to the Knowledge of such FE Subsidiary,
such FE Intellectual Property is not being infringed by any other Person. Such
FE Subsidiary has not received notice that it is infringing any Intellectual
Property of any other Person in connection with the operation or business of its
Purchased FE Assets, and such FE Subsidiary, to its Knowledge, is not infringing
any Intellectual Property of any other Person which, individually or in the
aggregate, would have a Material Adverse Effect.
5.16 Capital Expenditures. Except as set forth in Schedule 7.1A(c)(viii),
there are no FE Capital Expenditures that are planned by such FE Subsidiary with
respect to its Purchased FE Assets through December 31, 2000.
5.17 Compliance With Laws. Such FE Subsidiary is in compliance with all
applicable laws, rules and regulations with respect to the ownership or
operation of its Purchased FE Assets, except where the failure to be in
compliance would not, individually or in the aggregate, create a Material
Adverse Effect.
5.18 Title. Such FE Subsidiary is the owner of record title to the FE Real
Property and has good and valid title to the other Purchased FE Assets which it
purports to own. As of the date of the Auction Closing, (a) if the Exchange
Closing shall not have occurred prior to the Auction Closing Date, such FE
Subsidiary shall be the owner of record title to the FE Real Property and have
good and valid title to the other Purchased FE Assets which it purports to own,
free and clear of all Encumbrances except Permitted Encumbrances, or (b) if the
Exchange Closing shall have occurred prior to the Auction Closing Date, such FE
Subsidiary shall have transferred on that date record title to the FE Real
Property and good and valid title to the other Purchased FE Assets which it
purported to own, free and clear of all Encumbrances except Permitted
Encumbrances.
5.19 DISCLAIMERS REGARDING PURCHASED FE ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE V, THE PURCHASED FE
ASSETS ARE TRANSFERRED "AS IS, WHERE IS", AND SUCH FE SUBSIDIARY EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR
IMPLIED, AS TO LIABILITIES, OPERATIONS OF ITS FE PLANTS, THE TITLE, CONDITION,
VALUE OR QUALITY OF ITS PURCHASED FE
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ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF
ITS PURCHASED FE ASSETS AND SUCH FE SUBSIDIARY SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE WITH RESPECT TO ITS PURCHASED FE 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 SUCH FE SUBSIDIARY
POSSESSES SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE ITS PURCHASED
FE ASSETS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SUCH FE SUBSIDIARY
FURTHER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE
ABSENCE OF REGULATED SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING
UNDER ENVIRONMENTAL LAWS WITH RESPECT TO ITS PURCHASED FE ASSETS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, SUCH FE SUBSIDIARY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
ANY KIND REGARDING THE CONDITION OF ITS PURCHASED FE ASSETS OR THE SUITABILITY
OF ITS PURCHASED FE 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 SUCH FE SUBSIDIARY OR ITS REPRESENTATIVES, OR BY ANY
BROKER OR INVESTMENT BANKER, WILL CAUSE OR CREATE ANY WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR QUALITY OF ITS PURCHASED FE
ASSETS.
5.20 Year 2000 Compliance. Such FE Subsidiary, with respect to all
Computer Systems included in its Purchased FE Assets to be transferred under
this Agreement, has plans to achieve Year 2000 Compliance with respect to such
Computer Systems, and is using its Commercially Reasonable Efforts to execute
and carry out such plans.
5.21 SEC Filings; Financial Statements.
(a) Such FE Subsidiary has filed all forms, reports and documents
required to be filed with the SEC since January 1, 1998, and has heretofore
delivered or made available to Buyer in the form filed with the SEC, together
with any amendments thereto, its (i) Annual Reports on Form 10-K for the fiscal
year ended December 31, 1997, (ii) all proxy statements relating to its meetings
of stockholders (whether annual or special) held since January 1, 1997, (iii)
Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, 1998, June
30, 1998 and September 30, 1998, and (iv) all other reports or registration
statements filed by such FE Subsidiary with the SEC since January 1, 1998
(collectively, "FE Subsidiaries SEC Reports"). The FE Subsidiaries SEC
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Reports were prepared substantially in accordance with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations promulgated under
each of such respective acts, and did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements, including all related notes and
schedules, contained in the FE Subsidiaries SEC Reports (or incorporated by
reference therein) fairly present the consolidated financial position of the FE
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of the FE Subsidiaries for the periods indicated in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except for changes in accounting principles disclosed in the notes
thereto) and subject in the case of interim financial statements to normal
year-end adjustments.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and the FE Subsidiaries as
follows:
6.1 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 Auction Closing will be, qualified to do business in the Common wealth
of Pennsylvania and the State of Ohio. Buyer has delivered or shall promptly
deliver to Seller and the FE Subsidiaries true, complete and correct copies of
its Articles of Incorporation and Bylaws (or other similar governing documents)
as currently in effect.
6.2 Authority. Buyer has full corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Agreements by Buyer and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action required on the part of Buyer and
this Agreement and the Ancillary Agreements have been duly and validly executed
and delivered by Buyer. Subject to the receipt of the Buyer Required Regulatory
Approvals, each of this Agreement and the Ancillary Agreements constitute legal,
valid and binding agreements of Buyer, enforceable against Buyer in accordance
with their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other
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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).
6.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 6.3(a), and subject to obtaining
the Buyer Required Regulatory Approvals, neither the execution, delivery and
performance of this Agreement nor the execution, delivery and performance of the
Ancillary Agreements by Buyer nor the consummation by Buyer of the transactions
contemplated hereby and thereby will (i) conflict with or result in any breach
of any provision of the Articles 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) constitute violations of 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 6.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as the
"Buyer Required Regulatory Approvals"), no consent or approval of, filing with,
or notice to, any Governmental Authority is necessary for Buyer's execution and
delivery of this Agreement and the Ancillary Agreements or the consummation by
Buyer of the transactions contemplated hereby and thereby, other than such
consents, approvals, filings or notices, which, if not obtained or made, will
not prevent Buyer from performing its obligations under this Agreement and the
Ancillary Agreements.
6.4 Availability of Funds. Buyer acknowledges and agrees that on the
Auction Closing Date, it will have sufficient funds to pay the Purchase Price
and the FE Closing Payments and to permit Buyer to timely perform all of its
obligations under this Agreement and the Ancillary Agreements, and that its
commitments and obligations hereunder and thereunder are not subject to a
financing contingency.
6.5 Financial Representations. Buyer has provided Seller with the most
recent balance sheet, income statement and statement of changes in cash flows
for the last fiscal year and most recent interim period. Such financial
statements have been prepared in accordance with generally accepted accounting
principles and fairly reflect the financial posture and results of operations of
Buyer as at and for the periods therein.
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6.6 Legal Proceedings. There are no actions or proceedings pending against
Buyer before any court or arbitrator or Governmental Authority, which,
individually or in the aggregate, could reasonably be expected to create a Buyer
Material Adverse Effect. Buyer is not subject to any outstanding judgments,
rules, orders, writs, injunctions or decrees of any court, arbitrator or
Governmental Authority which would, individually or in the aggregate, create a
Buyer Material Adverse Effect.
6.7 No Knowledge of Seller's Breach or FE's Breach. Buyer has no Knowledge
of any breach by Seller or any FE Subsidiary of any representation or warranty
of Seller or any FE Subsidiary, or of any other condition or circumstance that
would excuse Buyer from its timely performance of its obligations hereunder.
Buyer shall notify promptly Seller, with respect to Seller's representations and
warranties or such other conditions or circumstances, and any FE Subsidiary,
with respect to such FE Subsidiary's representations and warranties or such
other conditions or circumstances, respectively, if any such information comes
to Buyer's attention prior to the Auction Closing.
6.8 Qualified Buyer. Buyer is qualified to obtain any Permits and
Environmental Permits necessary for Buyer to own and operate the Purchased
Assets as of the Auction Closing. Without limiting the foregoing, Buyer is not
aware of any reason or circumstance that would prevent Buyer from procuring the
Buyer Regulatory Approvals associated with (i) "Exempt Wholesale Generator"
status or (ii) a finding that following the Auction Closing, Buyer would not
have market power.
6.9 Inspections.Subject to the restrictions set forth in Section 7.2,
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
Real Property, and (iii) fully completed and approved the results of all
Inspections of the Purchased Assets. Subject to the restrictions set forth in
Section 7.2, Buyer acknowledges that it is satisfied through such review and
Inspections that no further investigation and study on or of the Real Property
is necessary for the purposes of acquiring the Purchased Assets for Buyer's
intended use, and Buyer hereby waives any and all objections to or claims with
respect to any and all physical characteristics and existing Environmental
Conditions of the Real Property, including without limitation, any Regulated
Substances in, at, on, under or related to the Real Property. 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 the results of its Inspections and the Environmental Reports.
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6.10 WARN Act. Buyer does not intend to engage in a "Plant Closing" or
"Mass Layoff" as such terms are defined in the WARN Act within sixty days of the
Auction Closing Date.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business Relating to the Purchased DLC Assets.
(a) Except as described in Schedule 7.1(a) 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 Auction
Closing Date, Seller (i) will operate the Purchased DLC Assets in the ordinary
course of business consistent with its past practices and Good Utility
Practices, (ii) shall use all Commercially Reasonable Efforts to preserve intact
the Purchased DLC Assets, and endeavor to preserve the goodwill and
relationships with customers, suppliers and others having business dealings with
it, (iii) shall maintain adequate insurance coverage relating to the Purchased
DLC Assets, including insurance described in Section 4.4, (iv) shall comply with
all applicable laws relating to such Purchased DLC Assets, including without
limitation, all Environmental Laws, except, with respect to the Purchased DLC
Assets, where the failure to so comply would not result in a Material Adverse
Effect, and (v) shall operate the Purchased DLC Assets in such a manner so as to
ensure that emissions of SO2 and NOx are generally consistent with recent
operations, taking into account fluctuations in demand or utilization of the
Purchased DLC Assets that could cause increases or decreases in such emissions.
(b) Seller shall continue its program to install such equipment or
Computer Systems relating to the Purchased DLC Assets with respect to Year 2000
Compliance in accordance with the plans referred to in Section 2.1(j); provided
that if Buyer requests reasonable changes in such plans, Seller will alter its
plans, provided that (i) all incremental costs of Seller shall be promptly
reimbursed by Buyer and (ii) Buyer shall, to Seller's reasonable satisfaction,
indemnify, defend and hold harmless Seller from and against any and all
Indemnifiable Losses in any way relating to, resulting from or arising out of
such requested changes to such plans.
(c) Without limiting the generality of Section 7.1(a) and, except as
contemplated in this Agreement or as described in Schedule 7.1(c), or as
required under applicable law or by any Governmental Authority, prior to the
Auction Closing Date, without the prior written consent of Buyer, Seller shall
not as to the Purchased DLC Assets:
(i) Make any material change in the levels of DLC Inventories
customarily maintained by Seller with respect to any Purchased DLC Asset,
other than changes which are consistent with Good Utility Practices;
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(ii) Sell, lease (as lessor), encumber, pledge, transfer or
otherwise dispose of, any Purchased DLC Asset (except for DLC Inventories
or DLC Fuel Supplies used, consumed or replaced in the ordinary course of
business consistent with past practices of Seller or with Good Utility
Practices) other than to encumber any such DLC Purchased Asset with
Permitted Encumbrances;
(iii) Modify, amend or voluntarily terminate, prior to the
respective expiration date of any of the DLC Agreements or DLC Real
Property Leases or any of the DLC Permits or DLC Environmental Permits
with respect to such Purchased DLC 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 Good Utility Practices, (B) with cause, to
the extent consistent with past practices of Seller or 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 for any
Purchased DLC Asset having a term greater than six months and not
terminable on or before the Auction Closing Date either (A) automatically,
or (B) by option of Seller (or, after the Auction Closing, by Buyer) in
its sole discretion, if the aggregate payment under such commitment for
fuel and all other outstanding commitments for fuel for that Purchased DLC
Asset not previously approved by Buyer would exceed $1,000,000;
(v) Sell or otherwise dispose of DLC SO2 Emission Allowances
or DLC NOx Emission Allowances or DLC Emission Reduction Credits, except
to the extent necessary to operate such Purchased DLC Assets in accordance
with this Section 7.1;
(vi) Except as otherwise provided herein, enter into any
contract, agreement, commitment or arrangement relating to any Purchased
DLC Asset that individually exceeds $250,000 or in the aggregate exceeds
$1,000,000 unless it is terminable by Seller (or, after the Auction
Closing Date, by Buyer) without penalty or premium upon no more than sixty
(60) days notice;
(vii) Except as otherwise required by the terms of any DLC
collective bargaining agreement or as otherwise provided in Section 7.11,
(A) hire at, or transfer to such Purchased DLC Asset, any new employees
prior to the Auction Closing, other than to fill vacancies in existing
positions in the reasonable discretion of Seller, (B) materially increase
salaries or wages of employees employed in connection with such Purchased
DLC Asset prior to the Auction Closing, (C) take any action prior to the
Auction Closing to affect a material change in any DLC collective
bargaining agreement or (D) take any action prior to
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the Auction Closing to materially increase the aggregate benefits payable
to the employees employed in connection with such Purchased DLC Asset;
(viii) Make any DLC Capital Expenditures except (A) as
described on Schedule 7.1(c)(viii); (B) as mandated after the date of this
Agreement by any Governmental Authority (provided that Seller may, at
Buyer's direction, direct Seller to delay making such DLC Capital
Expenditures and contest such mandates by appropriate proceedings at
Buyer's expense, unless such delay would have an adverse impact on the
Purchased DLC Assets); or (C) those which are prudent in amount but do not
exceed in the aggregate $500,000 for any Purchased DLC Asset, in addition
to those identified in (A) and (B) above; 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).
7.1A Conduct of Business Relating to the Purchased FE Assets.
(a) Except as described in Schedule 7.1A(a) 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 Auction
Closing Date, each FE Subsidiary that is operating one or more of the Purchased
FE Assets, (i) will operate such Purchased FE Assets in the ordinary course of
business consistent with its past practices and Good Utility Practices, (ii)
shall use all Commercially Reasonable Efforts to preserve intact such Purchased
FE Assets, and endeavor to preserve the goodwill and relationships with
customers, suppliers and others having business dealings with it, (iii) shall
maintain adequate insurance coverage relating to such Purchased FE Assets,
including insurance described in Section 5.4, (iv) shall comply with all
applicable laws relating to such Purchased FE Assets, including without
limitation, all Environmental Laws, except, with respect to such Purchased FE
Assets, where the failure to so comply would not result in a Material Adverse
Effect, and (v) shall operate the Purchased FE Assets in such a manner so as to
ensure that emissions of SO2 and NOx are generally consistent with recent
operations, taking into account fluctuations in demand or utilization of the
Purchased FE Assets that could cause increases or decreases in such emissions.
(b) Each FE Subsidiary that is operating one or more of the
Purchased FE Assets, shall continue its program to install such equipment or
Computer Software relating to the Purchased FE Assets (except for such
equipment and computer software described on Schedule 2.2A(b)) with respect to
Year 2000 Compliance in accordance with the plans referred to in Section
2.1A(j); provided that if Buyer requests reasonable changes in such plans, such
FE Subsidiary will alter its plans provided that (i) all incremental costs of
such FE Subsidiary shall be promptly reimbursed by Buyer and (ii) Buyer shall,
to such FE Subsidiary's reasonable satisfaction,
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indemnify, defend and hold harmless such FE Subsidiary from and against any and
all Indemnifiable Losses in any way relating to, resulting from or arising out
of such requested changes to such plans.
(c) Without limiting the generality of Section 7.1A(a) and, except
as contemplated in this Agreement or as described in Schedule 7.1A(c), or as
required under applicable law or by any Governmental Authority, prior to the
Auction Closing Date, without the prior written consent of Buyer, no FE
Subsidiary shall as to its Purchased FE Assets:
(i) Make any material change in the levels of the FE
Inventories customarily maintained by such FE Subsidiary with respect to
its Purchased FE Assets, other than changes which are consistent with
Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge, transfer or
otherwise dispose of, any Purchased FE Asset (except for FE Inventories
or FE Fuel Supplies used, consumed or replaced in the ordinary course of
business consistent with past practices of such FE Subsidiary or with
Good Utility Practices) other than to encumber any such Purchased FE
Asset with Permitted Encumbrances;
(iii) Modify, amend or voluntarily terminate, prior to the
respective expiration date of any of the FE Agreements or FE Real
Property Leases or any of its FE Permits or FE Environmental Permits with
respect to such Purchased FE Assets in any material respect, other than
(A) in the ordinary course of business, to the extent consistent with the
past practices of such FE Subsidiary or Good Utility Practices, (B) with
cause, to the extent consistent with past practices of such FE Subsidiary
or with Good Utility Practices, or (C) as may be required in connection
with transferring of any such FE Subsidiary'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 for any FE
Purchased Asset having a term greater than six months and not terminable
on or before the Auction Closing Date either (A) automatically, or (B) by
option of such FE Subsidiary (or, after the Auction Closing, by Buyer) in
its sole discretion, if the aggregate payment under such commitment for
fuel and all other outstanding commitments for fuel for that Purchased FE
Asset not previously approved by Buyer would exceed $1,000,000;
(v) Sell or otherwise dispose of FE SO2 Emission Allowances or
FE NOx Emission Allowances or FE Emission Reduction Credits, except to
the extent necessary to operate such Purchased FE Assets in accordance
with this Section 7.1A;
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(vi) Except as otherwise provided herein, enter into any
contract, agreement, commitment or arrangement relating to any FE
Purchased Asset that individually exceeds $250,000 or in the aggregate
exceeds $1,000,000 unless it is terminable by such FE Subsidiary (or,
after the Auction Closing Date, by Buyer) without penalty or premium upon
no more than sixty (60) days notice;
(vii) Except as otherwise required by the terms of any FE
collective bargaining agreement or as otherwise provided in Section
7.11A, (A) hire at, or transfer to such FE Purchased Asset, any new
employees prior to the Auction Closing, other than to fill vacancies in
existing positions in the reasonable discretion of such FE Subsidiary,
(B) materially increase salaries or wages of employees employed in
connection with such FE Purchased Asset prior to the Auction Closing, (C)
take any action prior to the Auction Closing to affect a material change
in any FE collective bargaining agreement, or (D) take any action prior
to the Auction Closing to materially increase the aggregate benefits
payable to the employees employed in connection with such FE Purchased
Asset;
(viii) Make any FE Capital Expenditures except as (A) as
described on Schedule 7.1A(c)(viii); (B) as mandated after the date of
this Agreement by any Governmental Authority (provided that Buyer may
direct such FE Subsidiary to delay making such FE Capital Expenditures
and contest such mandates by appropriate proceedings at Buyer's expense,
unless such delay would have an adverse impact on the Purchased FE
Assets); or (C) those which are prudent in amount but do not exceed in
the aggregate $500,000 for any FE Purchased Asset, in addition to those
identified in (A) and (B) above; 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).
7.2 Access to Information.
(a) Between the date of this Agreement and the Auction Closing Date,
Seller with respect to the Purchased DLC Assets, and the FE Subsidiaries with
respect to the Purchased FE Assets, will, at reasonable times and upon
reasonable notice, provide Buyer and its Representatives:
(i) reasonable access to their respective managerial
personnel, to all books, records, plans, equipment, offices and other
facilities and properties constituting such Purchased Assets;
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(ii) such historical financial and operating data and other
information with respect to such Purchased Assets as Buyer may from time
to time reasonably request;
(iii) upon request, a copy of each material report, schedule
or other document filed by Seller, FE or any FE Subsidiary with respect
to such Purchased Assets with the SEC, FERC, PUCO, PaPUC, PaDEP or any
other Governmental Authority;
(iv) access to each Purchased Asset for Inspection by Buyer
and its Representatives at reasonable times during regular business hours
scheduled for such Inspections, and shall provide qualified management,
engineering, operations and maintenance and other personnel to make
presentations as required, to escort such Persons and to assist in all
aspects of conducting the Inspections, provided that each of Buyer,
Seller, and the FE Subsidiaries shall bear their own costs of
participating in the Inspections; and
(v) with all such other information in the possession or
control of Seller or an FE Subsidiary as shall be reasonably necessary to
enable Buyer or its Representatives to verify the accuracy of the
representations and warranties of Seller and the FE Subsidiaries
contained in this Agreement; provided, however, that (A) any such
Inspections shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) neither
Seller nor the FE Subsidiaries shall be required to take any action which
would constitute a waiver of any legal privilege, including, but not
limited to, the attorney-client privilege, the work product privilege,
and the self-critical investigation privilege, and (C) neither Seller nor
the FE Subsidiaries need supply Buyer with any information which Seller
or the FE Subsidiaries are under a legal or contractual obligation to
withhold from disclosure.
Notwithstanding anything in this Section 7.2(a) to the contrary, with respect to
employee records Seller and the FE Subsidiaries will only furnish or provide
such access to Transferred 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.
(b) (i) Buyer and its Representatives shall be entitled to conduct
Inspections, in accordance with this Section 7.2(b), of all of the
Purchased Assets located adjacent to any Connection Point (as defined in
the Connection Agreements), to verify and/or determine the accuracy of the
data, drawings, and records described in the Connection Agreements. The
Parties shall cooperate to schedule Buyer's Inspections of such Purchased
Assets so that any interference with the operation of each Plant is
minimized, to the extent reasonably feasible, and so that Buyer may
complete its Inspections of the Purchased Assets within thirty (30)
working days of commencement of Inspections and within two (2) months
after the execution of this Agreement.
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(ii) At a mutually convenient time not more than one (1) month
after Buyer shall have completed its Inspections, the applicable Parties
shall meet to discuss whether, as a result of the Inspections, it is
appropriate to modify the exhibits to the Connection Agreements to
portray more accurately the Connection Points. Any modification to any
portion of the exhibits of any Connection Agreement to which the
respective Parties of such Connection Agreement agree shall thereafter be
deemed part of such exhibits for all purposes under such Connection
Agreement.
(c) For seven (7) years after the Auction Closing Date (or such
longer period as may be required by applicable law), each Party and its
Representatives shall have reasonable access to all of the books and records of
the Purchased FE Assets, and, with respect to the Purchased DLC Assets, Buyer
and Seller and their Representatives shall have reasonable access to all of the
books and records of the Purchased DLC Assets, including (i) with respect to the
Purchased FE Assets, all FE Transferred Employee Records in the possession of
any Party to the extent that such access may reasonably be required in
connection with the Assumed FE Liabilities or the Excluded FE Liabilities, or
regarding other matters relating to or affected by the operation of the
Purchased FE Assets, and (ii) with respect to the Purchased DLC Assets, all DLC
Transferred Employee Records in the possession Buyer or Seller to the extent
that such access may reasonably be required in connection with the Assumed DLC
Liabilities or the Excluded DLC Liabilities, or other matters relating to or
affected by the operation of the Purchased DLC Assets. Such access shall be
afforded by the Party in possession of any such books and records upon receipt
of reasonable advance 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 holder of the information with respect to such
access pursuant to this Section 7.2(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 the latter's expense, to segregate and remove such books and records as it
may select.
(d) Buyer agrees that, prior to the Auction Closing Date, neither it
nor its Representatives will contact any vendors, suppliers, employees, or other
contracting parties of Seller or its Affiliates or any FE Subsidiary or its
Affiliates with respect to any aspect of the Purchased Assets or the
transactions contemplated hereby, without the prior written consent of Seller or
the relevant FE Subsidiary, as applicable, which consent shall not be
unreasonably withheld. For avoidance of doubt, with respect to an FE
Subsidiary's Purchased FE Assets, consent will only be needed from such FE
Subsidiary.
(e) Seller agrees that, between the date of this Agreement and the
Auction Closing Date, Seller will (i) respond to reasonable inquiries from Buyer
or FE and (ii) inform Buyer
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and FE as promptly as reasonably practicable, in each case concerning any
material developments in or the status of the matter of Allegheny Energy, Inc.
v. DQE, Inc., Civil Action No. 98-1639 (W.D.Pa.), or other litigation concerning
the Agreement and Plan of Merger, dated as of April 5, 1998, by and between DQE,
Inc. and Allegheny Energy, Inc., except to the extent that it is prohibited from
doing so by confidentiality obligations or agreements.
7.3 Confidentiality.
(a) Each Party shall, and shall use its best efforts to cause its
Representatives to, (i) keep all Proprietary Information of any other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party's Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of the
transactions contemplated hereby. After the Auction Closing Date, any
Proprietary Information, to the extent related to the Purchased Assets acquired
by Buyer, shall no longer be subject to the restrictions set forth herein. The
obligations of the Parties under this Section 7.3(a) 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 Auction Closing Date.
(b) Notwithstanding the terms of Section 7.3(a) above, the Parties
agree that prior to the Auction 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.
(c) Upon the other Party's prior written approval (which shall not
be unreasonably withheld), any of the Parties may provide Proprietary
Information of the other Parties to the PUCO, PaPUC, SEC, FERC or any other
Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Required Regulatory Approvals or to comply generally with
any relevant law or regulation. The disclosing Party will seek confidential
treatment for the Proprietary Information provided to any Governmental Authority
and the disclosing Party will notify the other applicable Party as far in
advance as is practicable of its intention to release to any Governmental
Authority any Proprietary Information.
7.4 Public Statements. Subject to the requirements imposed by law, any
Governmental Authority or stock exchange, prior to the Auction 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 any such announcements.
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7.5 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 relating to the Purchased Assets it
would acquire hereunder.
7.6 Further Assurances.
(a) (i) Subject to the terms and conditions of this Agreement,
each Party 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, sale, transfer and delivery of the Purchased
Assets and the assumption of the Assumed Liabilities pursuant to this
Agreement. Such actions shall include, without limitation, each Party
using its best efforts to ensure satisfaction of the conditions precedent
to its 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. Seller and each FE Subsidiary shall cooperate with Buyer
in its efforts to obtain all other Permits and Environmental Permits
necessary for Buyer to operate the Purchased Assets. Buyer agrees to
perform promptly all conditions required of Buyer in connection with the
DLC Required Regulatory Approvals and the FE Required Regulatory
Approvals, other than those conditions which would create a Buyer Material
Adverse Effect or an Asset Material Adverse Effect. None of the Parties
hereto shall, without prior written consent of the other applicable Party
or Parties, 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.
(ii) Except as set forth on Schedule 7.6(a), Buyer agrees that
prior to the Auction Closing Date, it will neither enter into any other
contract to acquire, nor acquire any electric generation facilities or
uncommitted generation capacity located in the Common wealth of
Pennsylvania or the State of Ohio if such acquisition of such additional
electric generation facilities or uncommitted generation capacity might
reasonably be expected to prevent or materially impede, interfere with or
delay the transactions contemplated by this Agreement. Buyer shall give
Seller and the FE Subsidiaries, as appropriate, reasonable advance notice
(and in any event not less than ten (10) days notice) before it contracts
to acquire or acquires any electric generation facility or uncommitted
generation capacity located in the Commonwealth of Pennsylvania or the
State of Ohio.
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(b) (i) In the event that any Purchased Asset shall not have been
assigned, conveyed, transferred and delivered hereunder to Buyer at the
Auction Closing, each of Seller and each FE Subsidiary, as applicable,
shall, subject to Section 7.6(c), use Commercially Reasonable Efforts to
assign, convey, transfer and deliver such asset to Buyer as promptly as is
practicable after the Auction Closing.
(ii) In the event that any Easement shall not have been
granted by Buyer to Seller, or by Buyer to an FE Subsidiary, as the case
may be, at the Auction Closing, Buyer shall use Commercially Reasonable
Efforts to grant such Easement to Seller or such FE Subsidiary, as the
case may be, as promptly as is practicable after the Auction Closing.
(c) (i) To the extent that Seller's or any FE Subsidiary's rights
under any material (as such term is defined in Section 7.6(c)(iii) below)
Assigned Agreement or Real Property Lease may not be assigned without the
consent of another Person which consent has not been obtained by the
Auction 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.
(ii) Seller and the FE Subsidiaries agree that if any consent
to an assignment of any material Assigned Agreement or Real Property Lease
shall not be obtained or if any attempted assignment would be ineffective
or would impair the Buyer's rights and obligations under the material
Assigned Agreement or Real Property Lease in question, so that Buyer would
not in effect acquire the benefit of all such rights and obligations,
Seller or such FE Subsidiary, as the case may be, at the Buyer's option
and to the maximum extent permitted by law and such material Assigned
Agreement or Real Property Lease shall, after the Auction Closing Date,
appoint Buyer to be Seller's or such FE Subsidiary's agent with respect to
such material Assigned Agreement or Real Property Lease, or, to the
maximum extent permitted by law and such material Assigned 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 Assigned
Agreement or Real Property Lease as Buyer may reasonably request. Seller
and the FE Subsidiaries shall cooperate and shall each use Commercially
Reasonable Efforts prior to and after the Auction Closing Date to obtain
an assignment of such material Assigned Agreement or Real Property Lease
to Buyer.
(iii) For purposes of this Section 7.6(c), without limitation,
all Real Property Leases and Assigned Agreements listed on Schedules 4.5,
4.11(a), 5.5 and 5.11(a) are deemed to be "material." Without limitation
of the foregoing, to the extent that any fuel supply contract relating to
a DLC Plant or an FE Plant is not assignable, then Seller with respect to
the DLC Plants and the applicable FE Subsidiary with respect to the FE
Plants agree to continue to purchase fuel pursuant to such contract(s) and
to resell it to Buyer at the purchase price for the
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remainder of the term of such fuel supply contract, provided that the term
of such fuel contract shall not be extended. Buyer shall make payment to
Seller and/or the FE Subsidiaries, as the case may be, in this
circumstance on an as-incurred basis.
(d) To the extent that Seller's or any FE Subsidiary's rights under
any warranty or guaranty described in Section 2.1(i) or 2.1A(i) may not be
assigned without the consent of another Person, which consent has not been
obtained by the Auction 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 each FE Subsidiary 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 or the FE Subsidiaries, as applicable, at Buyer's option and expense,
shall use Commercially Reasonable Efforts, to the extent permitted by law and by
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.
7.7 Consents and Approvals.
(a) As promptly as advisable after the execution of this Agreement,
Buyer and Seller 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. Buyer and
Seller shall use their respective best efforts to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing of such notification. Buyer will
pay all filing fees under the HSR Act relating to the Purchased Assets, but each
of Seller and Buyer will bear its own costs of the preparation of any such
filing.
(b) As promptly as advisable after the date of this Agreement, Buyer
shall make any filings required by the Federal Power Act, individually or
jointly with Seller and the FE Subsidiaries, as reasonably determined by the
Parties. Prior to filings with the FERC, Buyer shall submit such filings to the
other Parties for review and comment and shall incorporate into the application
any revisions reasonably requested. Buyer shall be solely responsible for the
cost of preparing and filing the application, any petition(s) for rehearing, or
any reapplication. If the initial filing is rejected by the FERC, Buyer agrees
to petition the FERC for rehearing and/or to re-submit an application with the
FERC, provided that in either case this action is directed by Seller and does
not create a Material Adverse Effect on Seller or Buyer.
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(c) As promptly as advisable, and in any case within sixty (60) days
after the date of this Agreement, Buyer, Seller and the FE Subsidiaries, as
applicable, shall make or cause to be made any filings required by law with the
PUCO, PaPUC and any other Governmental Authority, and make, or cause to be made,
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
commercially reasonable efforts to cause regulatory approval to be obtained at
the earliest possible date after the date of any such filing. Each Party will
bear its own costs of the preparation of any such filing.
(d) Seller, Buyer and each of the FE Subsidiaries 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 or the FE Closing Payments may be required
to be withheld or in which Buyer would otherwise be liable for any Tax
liabilities of Seller or the FE Subsidiaries pursuant to such state and local
Tax law.
(e) 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 Auction Closing Date.
Seller with respect to the Purchased DLC Assets, and the FE Subsidiaries with
respect to the Purchased FE Assets, 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 an FE Subsidiary, or the procurement of any other
Permit or Environmental Permit, related to the Purchased DLC Assets with respect
to Seller and related to the Purchased FE Assets with respect to the FE
Subsidiaries, when so requested by Buyer.
7.8 Fees and Commissions. Each of Seller, the FE Subsidiaries and Buyer
represent and warrant to the other that, except for Lehman Brothers, Inc., which
is 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 transactions contemplated hereby by reason of any action taken by the Party
making such representation. Each of Seller, the FE Subsidiaries and Buyer will
pay to the others or otherwise discharge, and will indemnify and hold the others
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 party listed above) incurred by reason of any
action taken by the indemnifying party.
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7.9 Tax Matters.
(a) (i) All Transfer Taxes incurred in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, (A) Pennsylvania or Ohio sales tax; (B) the Pennsylvania or
Ohio transfer tax, conveyance fees or conveyances of interests in real
and/or personal property; and (C) Pennsylvania or Ohio sales tax and
transfer tax on deeds shall be borne as follows: fifty percent (50%) by
the Buyer and fifty percent (50%) by the Seller with respect to the
Purchased DLC Assets and the Purchased FE Assets. 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 Taxes, and, if required by applicable law, Buyer shall join in
the execution of any such Tax Returns and other documentation. Prior to
the Auction Closing Date, to the extent applicable, Buyer shall provide to
Seller and the FE Subsidiaries, as applicable, appropriate certificates of
Tax exemption from each applicable taxing authority.
(ii) With respect to the Purchased FE Assets, Buyer shall not
be responsible for Transfer Taxes incurred in connection with the
transfer of the FE Purchased Assets pursuant to the Exchange Agreement.
(b) (i) 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 Auction Closing Date with respect
to the Purchased DLC 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.
(ii) With respect to Taxes to be prorated in accordance with
Section 3.6 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Auction Closing Date with respect
to the Purchased FE 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 the applicable FE Subsidiary's approval,
which approval shall not be unreasonably withheld. Buyer shall make such
Tax Returns available for such FE Subsidiary's review and approval no
later than fifteen (15) Business Days prior to the due date for filing
each such Tax Return.
(c) Buyer and Seller, with respect to Section 7.9(a) and (b)(i), and
Buyer and the FE Subsidiaries, with respect to Section 7.9(b)(ii), shall provide
the other with such assistance as may reasonably be requested by the other Party
in connection with the preparation of any Tax
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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 7.9(c) or pursuant to any other
Section hereof providing for the sharing of information or review of any Tax
Return or other instrument relating to Taxes shall be kept confidential by the
Parties hereto.
(d) In the event that a dispute arises between Buyer and Seller,
with respect to Taxes in Sections 7.9(a) and 7.9(b)(i), and Buyer and any of the
FE Subsidiaries, with respect to Taxes in Section 7.9(b)(ii), or concerning any
amount due under this Section 7.9, the Parties shall attempt in good faith to
resolve such dispute and any agreed upon amount shall be paid to the appropriate
Party. If such dispute is not resolved within thirty (30) days, the Parties to
such dispute shall submit the dispute to the Independent Accounting Firm for
resolution, which resolution shall be final, conclusive and binding on such
Parties. Notwithstanding anything in this Agreement to the contrary, the fees
and expenses of the Independent Accounting Firm in resolving the dispute shall
be borne 50% by Seller or the applicable FE Subsidiary, as the case may be, and
50% by Buyer. Any payment required to be made as a result of the resolution of
the dispute by the Independent Accounting Firm shall be made within ten days
after such resolution, together with any interest determined by the Independent
Accounting Firm to be appropriate.
7.10 Advice of Changes. Prior to the Closing, each Party will advise the
others in writing with respect to any matter arising after execution of this
Agreement of which that Party obtains Knowledge and which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules or Exhibits hereto.
Seller may at any time notify Buyer, in writing, of any development causing a
breach of any of its representations and warranties in Article IV and the FE
Subsidiaries may at any time notify Buyer, in writing, of any development
causing a breach of its representations and warranties in Article V. Unless
Buyer has the right to terminate this Agreement pursuant to Section 10.1(e)
below by reason of such developments and exercises that right within the period
of fifteen (15) days after receipt of such written notice, said written notice
will be deemed to have amended this Agreement, including the appropriate
Schedule or Exhibit, to have qualified the representations and warranties
contained in Article IV and V above, as applicable, and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of the development.
7.11 Seller Employees
(a) Seller may submit an offer of continuing employment with Seller
or a Seller Subsidiary or an Affiliate thereof to those employees who work at or
in support of the DLC Plants and who are identified on Schedule 7.11(a),
provided that such offer shall not be contingent on any such employee waiving
his or her rights to consider a competing offer of employment from Buyer.
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Upon the acceptance by any such employee of Seller's offer of continuing
employment, Seller shall provide written notice thereof to Buyer and shall
modify Schedule 7.11(a) to reflect the same.
(b) At least ninety (90) days prior to the Auction Closing Date,
Buyer shall provide Seller with notice of its staffing level requirements,
listed by classification and operation, and shall be required to offer
employment only to that number of employees of Seller who are covered by the
International Brotherhood of Electrical Workers ("IBEW"), Local Unions 140, 142,
144, 147, 148, 149 collective bargaining agreement with Seller ("IBEW CBA") and
are either (i) employed in positions relating to the DLC Plants or (ii) if
employed at another location, perform substantially all their work in support of
the DLC Plants, and in each case, who are necessary to satisfy Buyer's staffing
level requirements (collectively, "DLC Union Employees"). In each
classification, DLC Union Employees shall be so offered employment in order of
their seniority as provided for in the IBEW CBA. Each person who becomes
employed by Buyer pursuant to this section shall be referred to herein as a "DLC
Transferred Union Employee."
(c) At least ninety (90) days prior to the Auction Closing Date,
Buyer shall provide Seller with notice of its staffing level requirements,
listed by classification and operation, and shall be required to make either a
DLC Non-Qualifying or a DLC Qualifying Offer of employment only to that number
of salaried employees of Seller who are employed in connection with the
Purchased DLC Assets and who are listed in, or are in a function or whose
employment responsibilities are listed in, Schedule 7.11(c) (collectively, "DLC
Non-Union Employees"), which schedule shall also set forth such employees'
salary and responsibilities, and who are necessary to satisfy the staffing level
requirements of Buyer. Each employee employed by Buyer pursuant to this section
shall be referred herein as a "DLC Transferred Non-Union Employee."
(d) All offers of employment made by Buyer pursuant to Sections 7.11
(b) and (c) shall be made in accordance with all applicable laws and
regulations, and for DLC Union Employees, in accordance with the IBEW CBA and
shall remain open for a period of ten (10) working days. Any such offer which is
accepted within such ten (10) working day period shall thereafter be irrevocable
until the earlier of the Auction Closing Date or the termination of this
Agreement pursuant to its terms. Following acceptance of such offers, Buyer
shall provide written notice thereof to Seller and Seller shall provide Buyer
with access to the files and records of employees accepting such offers, to the
extent permitted by contract, the IBEW CBA and/or applicable law. Schedule
7.11(d) sets forth the collective bargaining agreements, and amendments thereto,
to which Seller is a party in connection with the DLC Plants.
(e) With respect to DLC Transferred Union Employees and DLC
Transferred Non-Union Employees, the following shall be applicable:
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(i) For such DLC Transferred Union Employees, Buyer shall
recognize the IBEW as the exclusive collective bargaining representative
and shall assume the terms and conditions of the IBEW CBA, to the extent
applicable to such DLC Transferred Union Employees, until the expiration
of said agreement, and will further comply with all applicable legal
obligations with respect to collective bargaining under federal labor law
thereafter.
(ii) Buyer will establish and maintain benefit plans
(including a severance plan) for DLC Transferred Non-Union Employees and
DLC Transferred Union Employees under either the IBEW CBA or any similar
Seller document which are substantially equivalent to the DLC Plans in
effect for such employees immediately prior to the Auction Closing Date
and provide at least the same level of benefits or coverage as the DLC
Plans in accordance with and for the duration of the IBEW CBA, in the
case of DLC Transferred Union Employees, or until December 31, 2001, in
the case of DLC Transferred Non-Union Employees (such period being
hereinafter referred to as the "DLC Continuation Period"). Subject to
applicable law and the IBEW CBA, nothing in the foregoing shall prevent
Buyer from using different benefit providers or from establishing new
benefit plans or using its existing benefit plans as the means of meeting
its obligation hereunder. The commitments under this paragraph shall,
however, require the following during the Continuation Period:
(A) With respect to health care plans, Buyer agrees to waive
or to cause the waiver of all limitations as to pre-existing conditions
and actively-at-work exclusions and waiting periods for such employees,
except that Buyer may require the employee or his/her dependents who, on
the Auction Closing Date, is then in the process of satisfying any similar
exclusion or waiting period under the Seller health care plans to satisfy
fully the balance of the applicable time period for such exclusion or
waiting period under the applicable Buyer plan. With respect to the
calendar year in which the Auction Closing Date occurs, all health care
expenses incurred by any such employees and/or any eligible dependent
thereof in the portion of the calendar year preceding the Auction Closing
Date that were qualified to be taken into account for purposes of
satisfying any deductible or out-of-pocket limit under any Seller health
care plans shall be taken into account for purposes of satisfying any
deductible or out-of-pocket limit under the health care plan of Buyer for
such calendar year.
(B) With respect to service and seniority, Buyer shall
recognize each such employee's service and seniority with Seller for all
non-pension purposes, including the determination of eligibility and
extent of service or seniority-related welfare benefits such as vacation
and sick pay benefits and to agree to give each such employee full credit
for all vacation benefits banked, accrued, and unused, as of the Auction
Closing Date.
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(C) With respect to pension benefits, Buyer shall provide each
employee with a pension benefit that, when combined with the benefit
accrued by such employee under the Seller pension plan as it exists on the
Auction Closing Date, is at least equal in value to the pension benefit
such employee would have accrued if such employee had remained employed
with Seller and continued to be covered by such Seller pension plan (as it
exists on the Auction Closing Date) during the DLC Continuation Period. In
providing such benefits, Buyer shall recognize each such employee's
combined service and earnings with Seller and Buyer. The determination of
the benefit required by this Section 7.11(e)(ii)(C) shall be made in good
faith by the accounting firm then acting as the independent auditor of
Buyer, which determination shall be final and binding on the parties
hereto and each affected employee.
(D) With respect to post-retirement medical and life insurance
programs, Buyer shall provide to any such employee who retires from
Buyer's employment prior to the expiration of the IBEW CBA with respect to
DLC Transferred Union Employees, and December 31, 2001 with respect to DLC
Transferred Non-Union Employees, and is at least age 55 and has ten or
more years of combined service with Seller and Buyer, benefits, to the
extent possible, that are substantially equivalent to the Seller
post-retirement medical and life insurance programs that such employee
would have received, if such employee had continued to be covered by the
Seller programs as they existed on the Auction Closing Date.
(E) With respect to the Seller's 401(k) Retirement Savings
Plan for Management or the Seller's 401(k) Retirement Savings Plan for the
IBEW (collectively, the "DLC Savings Plan"), Buyer shall take any and all
necessary action to cause the trustee of any defined contribution plan of
Buyer in which any such employee becomes a participant by virtue of this
section, 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 DLC Savings Plan, if requested to do so by such
employee, or to accept a direct plan-to-plan transfer from the DLC Savings
Plan of the account balances of any such employee and the assets of such
plans related thereto, if requested to do so by Seller or by any such
employee. Buyer agrees that the property so rolled over and the assets so
transferred may include (i) promissory notes evidencing loans from the DLC
Savings Plan to such employees that are outstanding as of the Auction
Closing Date, and (ii) shares of Seller common stock in which the account
balances of such employees are invested as of the Auction Closing Date.
However, any defined contribution plan of Buyer accepting such a rollover
or transfer shall not be required to (i) make any further loans to any
such employee after the Auction Closing Date or (ii) permit any additional
investment to be made in Seller common stock on behalf of any such
employee after the Auction Closing Date. Seller hereby represents to Buyer
that the DLC Savings Plan is intended to be qualified within the meaning
of Section 402 of the Code.
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(f) With respect to severance benefits, Buyer is required to provide
for any DLC Transferred Non-Union Employee who is terminated as a result of an
overall reduction in work force due to decreased employment needs of Buyer prior
to the date which is one year following the Auction Closing Date severance
benefits at the level for such employees in effect as of the date hereof. DLC
Transferred Non-Union Employees shall also be entitled to such severance
benefits if, prior to the date which is one year following the Auction Closing
Date, Buyer reduces the pay rate for such employee and such employee within
seven (7) days thereafter terminates employment. Any employee provided severance
benefits under this section may be required to execute a release of claims
against Seller or Buyer, in such form as Buyer shall prescribe, as a condition
for the receipt of such benefits.
(g) Each DLC Transferred Non-Union Employee who is initially
assigned, or assigned within twelve (12) months of the Auction Closing Date, by
Buyer to a principal place of work that requires such employee to relocate his
residence will be reimbursed by Buyer for all relocation expenses in accordance
with the Seller relocation plans in effect as of the date hereof. For purposes
of the foregoing a required relocation of residence shall include a change in
the principal place of work that is more than 30 miles farther from such
employee's principal place of work immediately prior to the Auction Closing Date
and requires a commute from his current residence of at least one hour in each
direction. With respect to any DLC Union Employees who do not receive an offer
of employment from Buyer pursuant to subsection (b) hereof and with respect to
any DLC Non-Union Employees who decline a Non-Qualifying Offer pursuant to
subsection (c) hereof, and are thereafter terminated, Seller shall pay for all
costs that it will or may incur in providing the severance, pension and banked,
accrued or unused vacation benefits described in Schedule 4.8 to the DLC Union
and DLC Non-Union Employees therein described (collectively, the "Termination
Benefits"). The estimated cost of such pension benefits shall be calculated by
the actuarial firm regularly engaged to provide actuarial services to Seller
with respect to its pension plans, and shall be determined using the same
assumptions as to mortality, turnover, interest rate and other actuarial
assumptions as used by such firm in determining the cost of benefits under
Seller's pension plans for purposes of their most recently issued financial
statements prior to Auction Closing Date.
(h) Seller shall be responsible, with respect to the Purchased DLC
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 Auction Closing Date.
(i) Buyer shall not be responsible for extending COBRA Continuation
Coverage to any employees and former employees of Seller, or to any qualified
beneficiaries of such employees and former employees, who become or became
entitled to COBRA Continuation Coverage on or before the Auction Closing Date,
including those for whom the Auction Closing Date occurs during their COBRA
election period.
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(j) Seller or its Affiliates shall pay to all DLC Transferred Union
and DLC Transferred Non-Union Employees, all compensation, bonus, vacation and
holiday compensation, workers' compensation or other employment benefits to
which they are entitled under the terms of the applicable compensation or Seller
benefit plans or programs. Buyer shall pay to each employee offered employment
pursuant to this Section 7.11, all unpaid salary, bonus, vacation and holiday
compensation, workers' compensation or other compensation or employment benefits
that are payable in cash which have accrued to such employees following the
Auction Closing Date, at such times as provided under the terms of the
applicable compensation or benefit programs.
(k) Individuals who are otherwise "DLC Union Employees", as defined
in Section 7.11(b) or "DLC Non-Union Employees", as defined in Section 7.11(c)
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 "DLC Union Employees" or as "DLC
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
Auction Closing Date), whichever is applicable, and (ii) to perform the
essential functions of their job, with or without a reasonable accommodation.
(l) Buyer shall be responsible, with respect to the Purchased DLC
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 following the Auction Closing Date.
(m) Buyer is responsible for extending and continuing to extend
COBRA Continuation Coverage to all DLC Transferred Union and DLC Transferred
Non-Union Employees, and qualified beneficiaries of such employees who become
entitled to such COBRA Continuation Coverage following the Auction Closing Date.
(n) The provisions of this Section 7.11 shall not be construed as
being for the benefit for any person other than the Parties hereto, and shall
not be enforceable by persons other than such Parties (including, without
limitations, the DLC Transferred Union Employees and DLC Transferred Non-Union
Employees.)
7.11A FE Subsidiaries' Employees
(a) The FE Subsidiaries may submit an offer of continuing employment
with an FE Subsidiary or an Affiliate thereof to those employees who work at or
in support of the FE Plants and who are identified on Schedule 7.11A(a),
provided that such offer shall not be contingent on any
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such employee waiving his or her rights to consider a competing offer of
employment from Buyer. Upon the acceptance by any such employee of an FE
Subsidiary's offer of continuing employment, the applicable FE Subsidiary shall
provide written notice thereof to Buyer and shall modify Schedule 7.11A(a) to
reflect the same.
(b) At least ninety (90) days prior to the Auction Closing Date,
Buyer shall provide the applicable FE Subsidiary with notice of its staffing
level requirements, listed by classification and operation, and shall be
required to offer employment only to that number of employees of the applicable
FE Subsidiary who are covered by the UWUA, Local 140 collective bargaining
agreement with FE ("Local 140 CBA") and who are either (i) employed in positions
relating to the FE Plant, New Castle (collectively, "FE Union Employees") or
(ii) if employed at another location, perform substantially all their work in
support of the New Castle Plant, and in each case, who are necessary to satisfy
Buyer's staffing level requirements. In each classification, FE Union Employees
shall be so offered employment in order of their seniority as provided for in
the Local 140 CBA. Each employee who becomes employed by Buyer pursuant to this
section shall be referred herein as an "FE Transferred Union Employee."
(c) At least ninety (90) days prior to the Auction Closing Date,
Buyer shall provide the applicable FE Subsidiary with notice of its staffing
level requirements, listed by classification and operation, and shall be
required to make either an FE Non-Qualifying or an FE Qualifying Offer of
employment only to that number of salaried employees of the applicable FE
Subsidiary who are listed in, or are in a function or whose employment
responsibilities are listed in, Schedule 7.11A(c) (collectively, "FE Non-Union
Employees"), which Schedule 7.11A(c) shall also set forth such employees' salary
and responsibilities, and who are necessary to satisfy Buyer's staffing level
requirements. Each employee who becomes employed by Buyer pursuant to this
section shall be referred herein as an "FE Transferred Non-Union Employee."
Buyer shall inform the FE Subsidiaries of those FE Non-Union Employees to whom
Buyer has made offers of employment not later than ninety (90) days prior to the
Auction Closing Date.
(d) All offers of employment made by Buyer pursuant to Sections
7.11A (b) and (c) shall be made in accordance with all applicable laws and
regulations and shall remain open for a period of ten (10) working days. Any
such offer which is accepted within such ten (10) working day period shall
thereafter be irrevocable until the earlier of the Auction Closing Date or the
termination of this Agreement pursuant to its terms. Following the acceptance of
such offers Buyer shall provide written notice thereof to the aplicable FE
Subsidiary and the applicable FE Subsidiary shall provide Buyer with access to
the files and records of employees accepting such offers, to the extent
permitted by contract, the Local 140 CBA and/or applicable law. Schedule
7.11A(d) sets forth the collective bargaining agreements, and amendments
thereto, to which the applicable FE Subsidiary is a party in connection with the
Purchased FE Assets.
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(e) With respect to FE Transferred Union Employees and FE
Transferred NonUnion Employees, the following shall be applicable:
(i) For such FE Transferred Union Employees, Buyer shall
recognize UWUA, Local 140 as the exclusive collective bargaining
representative and shall assume the terms and conditions of the Local 140
CBA, to the extent applicable to such FE Transferred Union Employees,
until the expiration of said agreement and will further comply with all
applicable legal obligations with respect to collective bargaining under
federal labor law thereafter. Moreover, should Buyer subsequently sell,
convey or otherwise transfer its interest in the New Castle Plant to any
other entity prior to the expiration of the Local 140 CBA, Buyer shall
make the foregoing commitments a condition of such sale, conveyance or
transfer.
(ii) Buyer will establish and maintain benefit plans
(including a severance plan) for FE Transferred Union Employees and FE
Transferred Non-Union Employees under either the Local 140 CBA or any
other similar FE document which are substantially equivalent to the FE
Plans in effect for such employees immediately prior to the Auction
Closing Date and provide at least the same level of benefits or coverage
as the FE Plans for the duration of the Local 140 CBA, in the case of FE
Transferred Union Employees, or December 31, 2001, in the case of FE
Transferred Non-Union Employees (such period being hereinafter referred to
as the "FE Continuation Period"). Subject to applicable law and the Local
140 CBA, nothing in the foregoing shall prevent Buyer from using different
benefit providers or from establishing new benefit plans or using its
existing benefit plans as the means of meeting its obligation hereunder.
The commitments under this paragraph shall, however, require the following
during the FE Continuation Period:
(A) With respect to the applicable FE Subsidiary's health care
plans, Buyer agrees to waive all limitations as to pre-existing conditions
and actively-at-work exclusions and waiting periods for such employees,
except that Buyer may require the employee or his/her dependents who, on
the Auction Closing Date, is then in the process of satisfying any similar
exclusion or waiting period under the FE Subsidiary's health care plans to
satisfy fully the balance of the applicable time period for such exclusion
or waiting period under the Buyer's plan. With respect to the calendar
year in which the Auction Closing Date occurs, all health care expenses
incurred by any such employees and/or any eligible dependent thereof in
the portion of the calendar year preceding the Auction Closing Date that
were qualified to be taken into account for purposes of satisfying any
deductible or out-of-pocket limit under the FE Subsidiary's health care
plans shall be taken into account for purposes of satisfying any
deductible or out-of-pocket limit under the Buyer's health care plan for
such calendar year.
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(B) With respect to service and seniority, Buyer shall recognize
each such employee's service and seniority with the FE Subsidiary for all
non-pension purposes, including the determination of eligibility and
extent of service or seniority-related welfare benefits such as vacation
and sick pay benefits and to agree to give each such employee full credit
for all vacation benefits banked, accrued, and unused, as of the Auction
Closing Date.
(C) With respect to pension benefits, Buyer shall provide each such
employee with a pension benefit that, when combined with the benefit
accrued by such employee under the FE Subsidiary's pension plan as it
exists on the date hereof, is at least equal in value to the pension
benefit such employee would have accrued if such employee had remained
employed with the FE Subsidiary and continued to be covered by such FE
Subsidiary's pension plan (as it exists on the date hereof). In providing
such benefits, Buyer shall recognize each such employee's combined service
and earnings with the applicable FE Subsidiary and Buyer. Further, Buyer
shall provide to any such employee who is laid off by Buyer and who, at
the time of such layoff, is between the ages of 50-54 and has ten or more
years of combined service with the applicable FE Subsidiary and Buyer, a
retirement benefit from Buyer's pension plan, beginning at age 55, that is
at least equal to the subsidized early retirement benefit that such
employee would have received under the FE Subsidiary's pension plan had
such employee continued to be covered by such plan as it exists on the
date hereof. The determination of the benefit required by this Section
7.11A(e)(ii)(C) shall be made in good faith by the accounting firm then
acting as the independent auditor of Buyer, which determination shall be
final and binding on the parties hereto and each affected employee.
Notwithstanding the fact that the commitments set forth in this Section
7.11A(e)(ii) are limited generally to the duration of the FE Continuation
Period, the commitments set forth in this Section 7.11A(e)(ii)(C) shall be
limited to the duration of the FE Continuation Period in the case of FE
Transferred Union Employees and shall survive the expiration of the FE
Continuation Period in the case of FE Transferred Non-Union Employees.
(D) With respect to post-retirement medical and life insurance
programs, Buyer shall provide to any such employee who retires from
Buyer's employment prior to the expiration of the Local 140 CBA with
respect to FE Transferred Union Employees, and December 31, 2001 with
respect to FE Transferred Non-Union Employees, and is at least age 55 and
has ten or more years of combined service with the FE Subsidiary and
Buyer, benefits, to the extent possible, that are substantially equivalent
to the FE Subsidiary's post-retirement medical and life insurance programs
that such employee would have received, if such employee had continued to
be covered by the FE Subsidiary's programs as they existed on the date
hereof.
(E) With respect to the FE Subsidiary's Savings Plan, Buyer shall
take any and all necessary action to cause the trustee of any defined
contribution plan of Buyer in which any
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such employee becomes a participant by virtue of this section, 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 FE Savings Plan, if requested to do so by such employee, or to accept
a direct plan-to-plan transfer from the FE Savings Plan of the account
balances of any such employee and the assets of such plans related
thereto, if requested to do so by the applicable FE Subsidiary or by such
employee. Buyer agrees that the property so rolled over and the assets so
transferred may include (i) promissory notes evidencing loans from the FE
Savings Plan to such employees that are outstanding as of the Auction
Closing Date, and (ii) shares of FE common stock in which the account
balances of such employees are invested as of the Auction Closing Date.
However, any defined contribution plan of Buyer or its Affiliates
accepting such a rollover or transfer shall not be required to (i) make
any further loans to any such employee after the Auction Closing Date or
(ii) permit any additional investment to be made in FE common stock on
behalf of any such employee after the Auction Closing Date. The FE
Subsidiaries hereby represent to Seller and the Buyer that the FE Savings
Plan is intended to be qualified within the meaning of Section 402 of the
Code.
(f) Buyer shall pay or provide to FE Transferred Union Employees
and/or FE Transferred Non-Union Employees the benefits more particularly
described in paragraphs (i), (ii) and (iii), as applicable.
(i) With respect to severance benefits, Buyer is required to
provide for any such employee who is terminated as a result of an overall
reduction in work force due to decreased employment needs of Buyer prior
to the expiration of the Local 140 CBA, with respect to FE Transferred
Union Employees, and December 31, 2001, with respect to FE Transferred
Non-Union Employees, severance benefits at the level for such employees in
effect as of the date hereof. FE Transferred Non-Union Employees shall
also be entitled to such severance benefits if, prior to December 31,
2001, Buyer reduces the pay rate for such employee and such employee
within seven (7) days thereafter terminates employment. Any employee
provided severance benefits under this section may be required to execute
a release of claims against the applicable FE Subsidiary or Buyer, in such
form as Buyer shall prescribe, as a condition for the receipt of such
benefits.
(ii) Each FE Transferred Union Employee or FE Transferred
Non-Union Employee who accepts employment with Buyer, shall be provided by
the Buyer with a transition bonus of $2,500, less applicable taxes,
payable as soon as practicable following the Auction Closing Date. In no
event shall any such employee receive more than one transition bonus as a
result of the transfer of employment from an FE Subsidiary to Buyer.
(iii) Each FE Transferred Non-Union Employee who is initially
assigned, or assigned within twelve (12) months of the Auction Closing
Date, by Buyer to a principal
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place of work that requires such employee to relocate his/her residence
will be reimbursed by Buyer for all relocation expenses in accordance with
the FE Subsidiary's relocation plans in effect as of the date hereof. For
purposes of the foregoing, a required relocation of residence shall
include a change in the principal place of work that is more than 30 miles
farther from such employee's principal place of work immediately prior to
the Auction Closing Date and requires a commute from his/her current
residence of at least one hour in each direction.
(g) With respect to any FE Union Employees who do not receive an
offer of employment from Buyer pursuant to subsection (b) hereof and with
respect to any FE Non-Union Employees who decline an FE Non-Qualifying Offer
pursuant to subsection (c) hereof, and are thereafter terminated, Buyer shall
reimburse the applicable FE Subsidiary for the aggregate estimated cost that
such FE Subsidiary will or may incur in providing the severance, pension, and
banked, accrued or unused vacation benefits described in Schedule 5.8(a) to the
FE Union Employees and FE Non-Union Employees therein described (collectively
the "Termination Benefits"). The estimated cost of such pension benefits shall
be calculated by the actuarial firm regularly engaged to provide actuarial
services to the applicable FE Subsidiary with respect to its pension 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 FE Subsidiary's pension plans for purposes of
their most recently issued financial statements prior to the Auction Closing
Date.
(h) The applicable FE Subsidiary shall be responsible, with respect
to the Purchased FE 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 Auction Closing Date.
(i) Buyer shall not be responsible for extending COBRA Continuation
Coverage to any employees and former employees of any of the FE Subsidiaries, or
to any qualified beneficiaries of such employees and former employees, who
become or became entitled to COBRA Continuation Coverage on or before the
Auction Closing Date, including those for whom the Auction Closing Date occurs
during their COBRA election period.
(j) Individuals who are otherwise "FE Union Employees", as defined
in Section 7.11A(b) or "FE Non-Union Employees", as defined in Section 7.11A(c)
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 "FE Union Employees" or as "FE
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
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event shall not extend more than twelve (12) weeks after the Auction Closing
Date), whichever is applicable, and (ii) to perform the essential functions of
their job, with or without a reasonable accommodation.
(k) The FE Subsidiaries are responsible for extending and continuing
to extend COBRA Continuation Coverage to all employees and former employees, and
qualified beneficiaries of such employees and former employees of the FE
Subsidiaries, who become or became entitled to such COBRA Continuation Coverage
on or before the Auction Closing Date, including those for whom the Auction
Closing Date occurs during their COBRA election period.
(l) The FE Subsidiaries shall pay to each employee of such FE
Subsidiaries to whom the Buyer offers employment pursuant to this Section 7.11A,
all unpaid salary, bonus and holiday compensation, workers' compensation or
other compensation or employment benefits that are payable in cash which have
accrued to such employees through and including the Auction Closing Date, at
such times as provided under the terms of the applicable compensation or benefit
programs. With respect to workers compensation claims of such employees that
require payments that continue beyond the Auction Closing Date, the Buyer shall
be responsible for such payments. The FE Subsidiaries shall be responsible for
initiating the transfer of the claims and the associated risk and liability to
the Buyer with either the Ohio or the Pennsylvania Bureau of Workers'
Compensation, as appropriate.
(m) The following provisions shall apply with respect to employees
who are covered by the UWUA Local 270 Collective Bargaining Agreement ("Local
270 CBA") who are employed in positions at the FE Plant of Avon Lake or, if
employed at another location, perform substantially all their work in support of
the FE Plant of Avon Lake ("Local 270 Employees"). Buyer shall not be obligated
to assume the Local 270 CBA or to recognize UWUA Local 270 as the exclusive
collective bargaining agent for Local 270 Employees unless otherwise required by
federal law as a result of the actions of Buyer. Buyer further shall not be
required to make offers of employment to Local 270 Employees. Buyer shall inform
the FE Subsidiaries of those Local 270 Employees, if any, to whom Buyer has made
offers of employment not later than ninety (90) days prior to the Auction
Closing Date.
(n) Reserved.
(o) The provisions of this Section 7.11A shall not be construed as
being for the benefit for any person other than the Parties hereto, and shall
not be enforceable by persons other than such Parties (including, without
limitations, the FE Union Employees and FE Non-Union Employees).
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(p) The applicable FE Subsidiaries agree to indemnify and hold
harmless Buyer and Seller from any and all remedies or damages that may be
applied or charged to, or imposed on, Buyer and/or Seller as the result of any
unfair labor practice charge (i) filed by UWUA Local 270 or its members against
FE and/or an FE Subsidiary, or to which Buyer and/or Seller is added as a party,
or (ii) filed against Buyer and/or Seller arising out of facts and circumstances
that gave rise to unfair labor practice charges filed against FE and/or an FE
Subsidiary; provided, however, that (x) such indemnity obligation to Buyer shall
not apply to any unfair labor practice charge caused by the actions of Buyer,
and (y) such indemnity obligation to Seller shall not apply to any unfair labor
practice charge caused by the actions of Seller.
7.12 Risk of Loss.
(a) From the date hereof through the Auction Closing Date, all risk
of loss or damage to the assets included in the Purchased Assets shall be borne
by Seller and the FE Subsidiaries, as applicable, 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 Auction Closing Date, all or any portion of the
Purchased Assets are (i) taken by eminent domain or are the subject of a pending
or (to the Knowledge of Seller with respect to the Purchased DLC Assets or to
the Knowledge of any FE Subsidiary with respect to the Purchased FE Assets)
contemplated taking which has not been consummated, or (ii) damaged or destroyed
by fire or other casualty, Seller, with respect to the Purchased DLC Assets and
such FE Subsidiary, with respect to its Purchased FE Assets, shall (x) notify
Buyer promptly in writing of such fact, (y) assign or pay, as the case may be,
any proceeds thereof to Buyer at the Auction Closing and (z) 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 Auction Closing. Notwithstanding the above, if such taking or casualty
results in a Material Adverse Effect to Seller, with respect to the Purchased
DLC Assets, or such FE Subsidiary, with respect to the Purchased FE Assets, then
Seller and Buyer, with respect to the Purchased DLC Assets, and such FE
Subsidiary, Buyer and Seller with respect to the Purchased FE Assets, shall
negotiate to settle the loss resulting from such taking or casualty (and such
negotiation shall include, without limitation, the negotiation of a fair and
equitable payment to Buyer to offset such loss). If no such settlement is
reached within sixty (60) days after Seller, with respect to the Purchased DLC
Assets, and such FE Subsidiary, with respect to the Purchased FE Assets, has
notified Buyer of such taking of casualty, then Buyer or Seller may terminate
this Agreement pursuant to Section 10.1(h). In the event of damage or
destruction which Seller, with respect to the Purchased DLC Assets, and such FE
Subsidiary, with respect to the Purchased FE Assets, elects to restore, Seller
will have the right to postpone the Auction Closing for up to six (6) months and
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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7.13 Reserved
7.14 Tax Exempt Financing.
(a) Buyer understands and agrees that:
(i) the Exempt Facilities have been financed, and refinanced,
in whole or in part, with the proceeds of the issuance and sale by various
governmental agencies or authorities of industrial development revenue
bonds or private activity bonds (collectively, the "Revenue Bonds") the
interest on which, with certain exceptions, is excluded from gross income
for purposes of federal income taxation; and Seller or an FE Subsidiary
(as indicated on Schedule 7.14) is the economic obligor in respect of such
bonds;
(ii) The basis for such exclusion is the use of the Exempt
Facilities for the purpose of (A) the abatement or control of atmospheric
pollution or contamination (B) the abatement or control of water pollution
or contamination, (C) sewage disposal and/or (D) the disposal of solid
waste, such qualifying purposes being discussed in more detail in (b)
below;
(iii) The use of the Exempt Facilities for a purpose other
than a qualifying purpose indicated in subsection (ii) above could impair
(A) such exclusion from gross income of the interest on such bonds,
possibly with retroactive affect, unless appropriate remedial action were
taken (which could include prompt defeasance or redemption of such bonds)
and/or (B) the deductibility of payment by Seller or the applicable FE
Subsidiary of interest based on the restrictions in Section 150 (b) of the
Code; and
(iv) Any breach by Buyer of its obligations under this Section
7.14 could result in the incurrence by Seller or the applicable FE
Subsidiary of additional costs and expenses, including without limitation,
increased interest costs, loss of the interest deduction for tax purposes
and transaction costs relating to any refinancing, redemption and/or
defeasance of all or part of the Revenue Bonds, and Buyer will be liable
to Seller or the applicable FE Subsidiary, as the case may be, for such
additional costs and expenses.
(b) (i) Buyer agrees that it shall not use, or permit the use of,
the Exempt Facilities for any purpose other than
(A) abating or controlling atmospheric or water pollution or
contamination by removing, altering, disposing of or storing
pollutants, contaminants, waste or heat, all as contemplated in U.S.
Treasury Regulations Section 1.103-8(g);
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(B) the collection, storage, treatment, utilization, processing or
final disposal of solid waste, all as contemplated in U.S. Treasury
Regulations Section 1.103-8(f); or
(C) the collection, storage, treatment, utilization, processing or
final disposal of sewage, all as contemplated in U.S. Treasury
Regulations Section 1.103-8(f)
unless Buyer has obtained at its own expense an opinion addressed to Seller or
the applicable FE Subsidiary, as the case may be, of nationally recognized bond
counsel reasonably acceptable to Seller or the applicable FE Subsidiary, as the
case may be, ("Bond Counsel") that such use will not impair (x) the exclusion
from gross income of the interest on any issue of Revenue Bonds for Federal
income tax purposes or (y) the deductibility of Seller's or the applicable FE
Subsidiary's, as the case may be, payments of interest based on the restrictions
in Section 150(b) of the Code.
(ii) Buyer reasonably expects, as of the date of this
Agreement, that the Exempt Facilities will continue to be used for the
qualifying purposes set forth in subsection (i) above, and for no other
purpose, for the remainder of their useful lives.
(c) It is expressly understood and agreed that the provisions of
clause (b) above shall not prohibit Buyer from suspending the operation of the
Exempt Facilities on a temporary basis, or from terminating the operation of the
Exempt Facilities on a permanent basis and shutting down, retiring, abandoning
and/or decommissioning the Exempt Facilities; provided, however, that if the
Exempt Facilities, in whole or in part, are dismantled and sold, including any
sale for scrap, and if the operation of the Plant served by such Exempt
Facilities shall not theretofore have been, and is not then being, terminated on
a permanent basis, then the proceeds of such sale of the Exempt Facilities shall
within six months from the date of sale be expended to acquire replacement
property to be used for the same qualifying purpose as the Exempt Facilities so
sold, unless Buyer has obtained at its own expense an opinion addressed to
Seller or the applicable FE Subsidiary, as the case may be, of Bond Counsel that
the failure to take this action will not impair (x) the exclusion from gross
income of the interest on any issue of Revenue Bonds for Federal income tax
purposes or (y) the deductibility of Seller's or the applicable FE Subsidiary's,
as the case may be, payments of interest based on the restrictions in Section
150(b) of the Code.
(d) Buyer agrees that it shall not issue, or have issued on its
behalf, any tax-exempt bonds to finance or refinance its acquisition of the
Exempt Facilities; provided that it is expressly understood and agreed that this
clause (d) shall not prohibit the use of tax-exempt bonds to finance or
refinance any improvement to the Exempt Facilities made after the date of
acquisition or to any assets other than the Exempt Facilities.
(e) Buyer agrees that it shall give Seller or the applicable FE
Subsidiary, as the case may be, at least 120 days' prior written notice of any
suspension or termination of the operation
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of the Exempt Facilities, or any part thereof, and of any sale, exchange,
transfer or other disposition of the Exempt Facilities, or any part thereof,
including, but not limited to, a sale for scrap.
(f) If Seller or the applicable FE Subsidiary, as the case may be,
shall desire to refund any Revenue Bonds, Buyer shall cooperate with Seller or
the applicable FE Subsidiary, as the case may be, and with Bond Counsel with
respect to the refunding bonds and shall provide upon request any
representations, agreements or covenants that are reasonably requested
concerning its compliance to such date and/or in the future with the
representations, agreements and covenants made herein.
(g) If Buyer shall sell, exchange, transfer or otherwise dispose of
the Exempt Facilities to a third party, Buyer shall cause to be included in the
documentation relating to such transaction covenants and agreements on the part
of such third party substantially indentical to those on the part of Buyer
contained in this Section 7.14.
(h) The covenants and agreements on the part of Buyer contained in
this Section 7.14 shall continue in effect so long as any of the Revenue Bonds,
including any refunding bonds issued hereafter to refund any Revenue Bonds,
shall remain outstanding. Seller or the applicable FE Subsidiary, as the case
may be, shall notify Buyer promptly when there shall be no Revenue Bonds
outstanding.
(i) Other than as contemplated in this Section 7.14, Buyer shall have no
liability under the Revenue Bonds.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Obligations of Buyer. The obligation of Buyer to effect
purchase of the Purchased Assets and the other transactions contemplated by this
Agreement shall be subject to the fulfillment of the following conditions, or
waiver thereof, by Buyer at or prior to the Auction Closing Date:
(a) The Exchange Closing shall have occurred;
(b) 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;
(c) No preliminary or permanent injunction or other order or decree
by any Governmental Authority which prevents the consummation of the sale of the
Purchased Assets
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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 prohibiting the
consummation of the sale of the Purchased Assets;
(d) Buyer shall have received all of Buyer's Required Regulatory
Approvals, in form and substance reasonably satisfactory to it and on terms and
conditions that do not create a Regulatory Material Adverse Effect or an Asset
Material Adverse Effect for Buyer.
(e) Seller and each of the FE Subsidiaries shall have in all
material respects performed and complied with each of their covenants and
agreements contained in this Agreement which are required to be performed and
complied with by Seller and the FE Subsidiaries, as applicable, on or prior to
the Auction Closing Date;
(f) The representations and warranties of Seller and each FE
Subsidiary set forth in this Agreement shall be true and correct in all material
respects as of the Auction Closing Date as though made at and as of the Auction
Closing Date;
(g) Buyer shall have received certificates from an authorized
officer of each of the Seller and each FE Subsidiary, dated the Auction Closing
Date, to the effect that, to such officer's Knowledge, the conditions set forth
in Section 8.1(e) and (f) have been satisfied by Seller, FE and the FE
Subsidiaries, as applicable;
(h) Buyer shall have received an opinion from Seller's counsel,
dated the Auction 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 the Commonwealth of
Pennsylvania and Seller has 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
each of the Ancillary Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby; and the execution and
delivery of the Agreement and the Ancillary Agreements by Seller and the
consummation of the sale of the Purchased Assets contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action required on the part of Seller;
(ii) The Agreement and each of the Ancillary Agreements to
which it is a party have been duly and validly executed and delivered by
Seller and constitute legal, valid and binding agreements of Seller,
enforceable against Seller in accordance with their
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terms, except as 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 of the Ancillary Agreements to which Seller is a party by Seller
does not (A) conflict with the Articles 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 DLC Assignment and Assumption
Agreement, the Warranty Deeds and other transfer instruments described in
Section 3.7 are in proper form to transfer to Buyer such title as was held
by Seller to the Purchased DLC Assets; and
(v) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery of this
Agreement and each of the Ancillary Agreements to which Seller is a party
by Seller or the consummation by Seller of the transactions contemplated
hereby and thereby, other than (A) such consents, approvals, filings or
notices set forth in Schedules 4.3(a) and 4.3(b) or which, if not obtained
or made, will not prevent Seller from performing its material obligations
under this Agreement and each of the Ancillary Agreements to which Seller
is a party and (B) such consents, approvals, filings or notices which
become applicable to Seller or the Purchased DLC 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.
In rendering the foregoing opinion, Seller's counsel may rely on opinions of
local law reasonably acceptable to Buyer.
(i) Buyer shall have received an opinion from each FE Subsidiary's
counsel, dated the Auction Closing Date and reasonably satisfactory in form and
substance to Buyer and its counsel, substantially to the effect that:
(i) Such FE Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation and is qualified to do business in any other state in which
it operates any of the Purchased FE Assets and has the full corporate
power and authority to own, lease and operate its material assets and
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properties, and to carry on its business as now being conducted, and to
execute and deliver the Agreement and each of the Ancillary Agreements to
which it is a party and to consummate the transactions contemplated hereby
and thereby; and the execution and delivery of the Agreement and the
Ancillary Agreements to which such FE Subsidiary is a party by such FE
Subsidiary, and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary
corporate action required on the part of such FE Subsidiary;
(ii) The Agreement and each Ancillary Agreement to which such
FE Subsidiary is a party has been duly and validly executed and delivered
by such FE Subsidiary and constitute legal, valid and binding agreements
of such FE Subsidiary, enforceable against such FE Subsidiary in
accordance with their terms, except as 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 to which such FE Subsidiary is a party by
such FE Subsidiary does not (A) conflict with the Articles of
Incorporation, Bylaws or Code of Regulations, as currently in effect, of
such FE Subsidiary or (B) to the knowledge of such counsel constitute a
violation of or default under those agreements or instruments set forth on
a Schedule attached to the opinion and which have been identified to such
counsel as all the agreements and instruments which are material to the
business or financial condition of such FE Subsidiary;
(iv) The Bill of Sale, the Warranty Deeds and other transfer
documents described in Section 3.8 are in proper form to transfer to Buyer
such title as was held by such FE Subsidiary to the FE Real Property;
(v) The applicable FE Assignment and Assumption Agreement and
other transfer documents described in Section 3.8 are in proper form for
Buyer to assume the Assumed FE Liabilities; and
(vi) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery of the
Agreement and each of the Ancillary Agreements to which such FE Subsidiary
is a party by such FE Subsidiary or the consummation by such FE Subsidiary
of the transactions contemplated hereby, other than (A) such consents,
approvals, filings or notices set forth in Schedules 5.3(a) and 5.3(b) or
which, if not obtained or made, will not prevent such FE Subsidiary from
performing its material obligations under the Agreement and each of the
Ancillary Agreements to which such FE
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Subsidiary is a party and (B) such consents, approvals, filings or notices
which become applicable to such FE Subsidiary or its Purchased FE 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 relate specifically to
the business or activities in which Buyer (or any of its Affiliates) is or
proposes to be engaged;
In rendering the foregoing opinion, such FE Subsidiary's counsel may rely on
opinions of local law reasonably acceptable to Buyer.
(j) Seller shall have delivered, or caused to be delivered, to Buyer
at the Closing, Seller's closing deliveries described in Section 3.7.
(k) Seller and/or the FE Subsidiaries, as the case may be, shall
have delivered, or caused to be delivered, Seller's and/or the FE Subsidiaries'
closing deliveries described in Section 3.8.
(l) Buyer shall have received from a title company ALTA title
owner's policies on the DLC Real Property, subject only to the Permitted
Encumbrances, standard printed exceptions and other Encumbrances as are
reasonably acceptable to Buyer. A Permitted Encumbrance that is not removed
prior to the Auction Closing shall be deemed reasonably acceptable to Buyer as
aforesaid unless such Permitted Encumbrance would have a Material Adverse
Effect. Buyer shall provide Seller with a copy of the preliminary title reports
and surveys for the DLC Real Property as soon as they are available.
(m) Buyer shall have received from a title company ALTA title
owner's policies on the FE Real Property, subject only to the Permitted
Encumbrances, standard printed exceptions and other Encumbrances as are
reasonably acceptable to Buyer. A Permitted Encumbrance which is not removed
prior to the Auction Closing shall be deemed reasonably acceptable to Buyer as
aforesaid unless such Permitted Encumbrance would have a Material Adverse
Effect. Buyer shall provide FE with a copy of the preliminary title reports and
surveys for the FE Real Property as soon as they are available.
(n) Buyer shall have received from Dames and Moore a letter in form
and substance acceptable to Buyer that allows Buyer to rely on the Environmental
Reports prepared by Dames and Moore.
(o) The Auction Closing Date (i) shall not occur before April 30,
2000, and (ii) shall only occur on or after the date that is at least ninety
(90) days following the issuance of a final and nonappeallable order in the
matter of Allegheny Energy, Inc. v. DQE, Inc., Civil Action No. 98-1639
(W.D.Pa.) or in any other proceeding in which Allegheny Energy, Inc. requests
specific
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performance of the Agreement and Plan of Merger, dated as of April 5, 1998, by
and between DQE, Inc. and Allegheny Energy, Inc. or otherwise seeks to enjoin,
restrain or preclude the Auction Closing.
(p) Buyer shall have received enforceable, perpetual easements in
recordable form, and otherwise in form and substance acceptable to Buyer, for
the accommodation of those Purchased DLC Assets existing at Elrama on the
Auction Closing Date on, over or under the property that separates Parcel A from
Parcel C and Parcel B from Parcel D as such property is shown on the survey
referred to on Schedule 1.1(181) for Elrama.
(q) Buyer shall have received any consents of third parties required
for the assignment to Buyer of any of the Agreements listed in Schedules 4.11(b)
and 5.11(b), in form and substance acceptable to Buyer, unless the failure to
receive such consent(s) would not, individually or in the aggregate, create a
Material Adverse Effect.
8.2 Conditions to Obligations of Seller. The obligations of Seller to
effect the sale of the Purchased Assets and the other transactions contemplated
by this Agreement shall be subject to the fulfillment of the following
conditions, or the waiver thereof, by Seller at or prior to the Auction Closing
Date:
(a) The Exchange Closing shall have occurred;
(b) 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;
(c) No preliminary or permanent injunction or other order or decree
by any Governmental Authority which prevents the consummation of the sale of the
Purchased Assets contemplated herein shall have been issued and remain in effect
(each of Seller and Buyer 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 prohibiting the consummation of the sale of the
Purchased Assets;
(d) Seller shall have received all of the DLC Required Regulatory
Approvals, in form and substance reasonably satisfactory to it and on terms and
conditions that do not create a Regulatory Material Adverse Effect for Seller;
(e) All consents and approvals for the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and 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 the Seller is a party or by
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which the Seller, or any of the Purchased Assets, may be bound, shall have been
obtained, other than those which if not obtained, would not, individually and in
the aggregate, create a Material Adverse Effect;
(f) Buyer shall have in all material respects performed and complied
with the covenants and agreements contained in this Agreement which are required
to be performed and complied with by Buyer on or prior to the Auction Closing
Date;
(g) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as of the Auction
Closing Date as though made at and as of the Auction Closing Date;
(h) Seller shall have received a certificate from an authorized
officer of Buyer, dated the Auction Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Sections 8.2(f) and (g) have
been satisfied by Buyer;
(i) Buyer shall have assumed, as set forth in and subject to Section
7.11, all of the applicable obligations under the IBEW CBA as they relate to DLC
Transferred Union Employees;
(j) Seller shall have received an opinion from Buyer's counsel dated
the Auction Closing Date and reasonably satisfactory in form and substance to
Seller and its counsel, substantially to the effect that:
(i) Buyer is a Delaware corporation, duly organized, validly
existing and in good standing under the laws of the state of its
organization and is qualified to do business in the Commonwealth of
Pennsylvania and the State of Ohio and has the full corporate power and
authority to own, lease and operate its material assets and properties,
and to execute and deliver the Agreement and the Ancillary Agreements to
which Buyer is a party and to consummate the transactions contemplated
hereby and thereby; and the execution and delivery of the Agreement and
the Ancillary Agreements to which Buyer is a party by Buyer, and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action required on
the part of Buyer
(ii) The Agreement and each of the Ancillary Agreements to
which Buyer is a party 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 as such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting or relating
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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 of the Ancillary Agreements to which Buyer is a party by Buyer
does not (A) conflict with the Articles of Incorporation or Bylaws (or
other organizational documents), as currently in effect, of Buyer or (B)
to the knowledge of such counsel, constitute a violation of or default
under those agreements or instruments set forth on a Schedule attached to
the opinion and which have been identified to such counsel as all the
agreements and instruments which are material to the business or financial
condition of Buyer;
(iv) The DLC Assignment and Assumption Agreement, the Bill of
Sale, the Warranty Deeds, and other transfer instruments described in
Section 3.9 are in proper form for Buyer to assume the Assumed DLC
Liabilities and for Seller to transfer to Buyer such title as was held by
Seller to the Purchased DLC Assets;
(v) The FE Assignment and Assumption Agreement and other
transfer instruments described in Section 3.9 are in proper form for Buyer
to assume the Assumed FE Liabilities; and
(vi) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for Buyer's execution and delivery of
this Agreement and each of the Ancillary Agreements to which Buyer is a
party or the consummation by Buyer of the transactions contemplated hereby
and thereby, other than (A) such consents, approvals, filings or notices
set forth in Schedules 6.3(a) and 6.3(b) or which, if not obtained or
made, will not prevent Buyer from performing its obligations under this
Agreement and each of the Ancillary Agreements to which Buyer is a party;
and (B) such consents, approvals, filings or notices which become
applicable to Seller or the Purchased DLC 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.
In rendering the foregoing opinion, Buyer's counsel may rely on opinions of
local law reasonably acceptable to Seller.
(k) Buyer shall have delivered, or caused to be delivered, to Seller
at the Auction Closing, Buyer's closing deliveries described in Section 3.9.
8.3 Conditions of Obligations of the FE Subsidiaries. The obligations of
the FE Subsidiaries to effect the transfer and delivery of the Purchased FE
Assets and certain other applicable transactions contemplated by this Agreement
shall be subject to the fulfillment of the
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following conditions, or the waiver thereof, by the FE Subsidiaries at or prior
to the Auction Closing Date:
(a) The Exchange Closing shall have occurred;
(b) No preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the transfer and delivery of the
Purchased FE Assets contemplated herein shall have been issued and remain in
effect (each of the FE Subsidiaries and Buyer agreeing to use its reasonable
best efforts to have such injunction, order or decree lifted) and no statute,
rule or regulation shall have been enacted by any state of federal or
Governmental Authority in the United States prohibiting the consummation of the
sale of the Purchased FE Assets;
(c) The FE Subsidiaries shall have received all of the FE Required
Regulatory Approvals on terms and conditions that do not create a Regulatory
Material Adverse Effect for the FE Subsidiaries;
(d) All consents and approvals for the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and for the
consummation of the transfer and delivery of the Purchased FE Assets
contemplated hereby required under the terms of any note, bond, mortgage,
indenture, material agreement or other instrument or obligation to which an FE
Subsidiary is party or by which any of the FE Subsidiaries, or any of the
Purchased FE 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 in all material respects performed and complied
with the covenants and agreements applicable to the FE Subsidiaries contained in
this Agreement which are required to be performed and complied with by Buyer on
or prior to the Auction Closing Date;
(f) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as of the Auction
Closing Date as though made at and as of the Auction Closing Date;
(g) Each of the FE Subsidiaries shall have received a certificate
from an authorized officer of Buyer, dated the Auction Closing Date, to the
effect that, to such officer's Knowledge, the conditions set forth in Sections
8.3(e) and (f) have been satisfied by Buyer;
(h) Buyer shall have assumed, as set forth in and subject to Section
7.11A, all of the applicable obligations under the Local 140 CBA as they relate
to the FE Transferred Union Employees;
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(i) The FE Subsidiaries shall have received an opinion from Buyer's
counsel reasonably acceptable to the FE Subsidiaries, dated the Auction Closing
Date and satisfactory in form and substance to the FE Subsidiaries and its
counsel, substantially to the effect that:
(i) Buyer is a Delaware corporation, duly organized, validly
existing and in good standing under the laws of the state of its
organization and is qualified to do business in the Commonwealth of
Pennsylvania and the State of Ohio and has the full corporate power and
authority to own, lease and operate its material assets and properties,
and to execute and deliver the Agreement and the Ancillary Agreements to
which it is a party, and to consummate the transactions contemplated
hereby and thereby; and the execution and delivery of the Agreement and
Ancillary Agreements to which Buyer is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action required on the part of
Buyer;
(ii) The Agreement and each of the Ancillary Agreements to
which Buyer is a party 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 as 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 each of the Ancillary Agreements to which Buyer is a party by Buyer
does not (A) conflict with the Articles of Incorporation or Bylaws (or
other organizational documents), as currently in effect, of Buyer or (B)
to the knowledge of such counsel, constitute a violation of or default
under those agreements or instruments set forth on a Schedule attached to
the opinion and which have been identified to such counsel as all the
agreements and instruments which are material to the business or financial
condition of Buyer;
(iv) The FE Assignment and Assumption Agreement and other
transfer instruments described in Section 3.9 are in proper form for Buyer
to assume the Assumed FE Liabilities and for the FE Subsidiaries to
transfer Buyer such title as was held by the FE Subsidiaries to the FE
Real Property; and
(v) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for Buyer's execution and delivery of
this Agreement and each of the Ancillary Agreements to which Buyer is a
party or the consummation by Buyer of the transactions contemplated hereby
and thereby, other than (A) such consents, approvals, filings or notices
set forth in Schedules 6.3(a) and 6.3(b) or which, if not obtained or
made,
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will not prevent Buyer from performing its obligations under this
Agreement and each of the Ancillary Agreements to which Buyer is a party,
and (B) such consents, approvals, filings or notices which become
applicable to FE or the FE Subsidiaries or the Purchased FE 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.
In rendering the foregoing opinion, Buyer's counsel may rely on opinions of
local counsel reasonably acceptable to the FE Subsidiaries.
(j) Buyer shall have delivered, or caused to be delivered, to FE and
the FE Subsidiaries at the Auction Closing, Buyer's closing deliveries described
in Section 3.9.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification and Release of Seller by Buyer.
(a) Buyer shall indemnify, defend and hold harmless Seller, its
officers, directors, employees, shareholders, Affiliates and agents (each, a
"DLC Indemnitee") from and against any and all Indemnifiable Losses asserted
against or suffered by any DLC Indemnitee (each, a "DLC Indemnifiable Loss") in
any way relating to, resulting from or arising out of or in connection with (i)
any breach by Buyer of any covenant or agreement of Buyer contained in this
Agreement or the representations and warranties contained in Section 6.1, 6.2
and 6.3, (ii) the Assumed DLC Liabilities, (iii) the Assumed FE Liabilities,
(iv) any loss or damages resulting from or arising solely out of any Inspection
of the Purchased Assets, and (v) any Third Party Claims against a DLC Indemnitee
arising solely out of or in connection with Buyer's ownership or operation of
the Plants and other Purchased Assets on or after the Auction Closing Date.
(b) Buyer, for itself and on behalf of its Representatives and
Affiliates, does hereby release, hold harmless and forever discharge Seller, its
Representatives and Affiliates, from any and all Indemnifiable Losses of any
kind or character, whether known or unknown, hidden or concealed, in any way
relating to, resulting from or arising out of any Environmental Condition or
violation of Environmental Law relating to the Purchased Assets, other than any
liabilities or obligations described in Sections 2.4(e), (g) and (h). Buyer
hereby waives any and all rights and benefits with respect to such Indemnifiable
Losses that it now has, or in the future may have conferred upon it by virtue of
any statute or common law principle which provides that a general release does
not extend to claims which a party does not know or suspect to exist in its
favor at the time of executing the release, if Knowledge of such claims would
have materially affected such party's settlement with the obligor. In this
connection, Buyer hereby acknowledges that it is aware
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that factual matters now unknown to it may have given or may hereafter give rise
to Indemnifiable Losses that are currently unknown, unanticipated and
unsuspected, and it further agrees that this release has been negotiated and
agreed upon in light of that awareness and nevertheless hereby intends to
release Seller and its Representatives and Affiliates from the Indemnifiable
Losses in the manner contemplated by this paragraph.
9.2 Indemnification and Release of FE Indemnitees by Buyer.
(a) Buyer shall indemnify, defend and hold harmless the FE
Subsidiaries, their officers, directors, employees, shareholders, Affiliates and
agents (each, an "FE Indemnitee") from and against any and all Indemnifiable
Losses asserted against or suffered by any FE Indemnitee (each, an "FE
Indemnifiable Loss") in any way relating to, resulting from or arising out of or
in connection with (i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or the representations and warranties contained in
Section 6.1, 6.2 and 6.3, (ii) the Assumed FE Liabilities, (iii) any loss or
damages resulting from or arising solely out of any Inspection of the Purchased
FE Assets, and (iv) any Third Party Claims against an FE Indemnitee arising
solely out of or in connection with Buyer's ownership or operation of the FE
Plants and other Purchased FE Assets on or after the Auction Closing Date.
(b) Buyer, for itself and on behalf of its Representatives and
Affiliates, does hereby release, hold harmless and forever discharge the FE
Subsidiaries, their Representatives and Affiliates, from any and all
Indemnifiable Losses of any kind or character, whether known or unknown, hidden
or concealed, in any way relating to, resulting from or arising out of any
Environmental Condition or violation of Environmental Law relating to the
Purchased FE Assets, other than any liabilities or obligations described in
Sections 2.4A(e), (g) and (h). Buyer hereby waives any and all rights and
benefits with respect to such Indemnifiable Losses that it now has, or in the
future may have conferred upon it by virtue of any statute or common law
principle which provides that a general release does not extend to claims which
a party does not know or suspect to exist in its favor at the time of executing
the release, if Knowledge of such claims would have materially affected such
party's settlement with the obligor. In this connection, Buyer hereby
acknowledges that it is aware that factual matters now unknown to it may have
given or may hereafter give rise to Indemnifiable Losses that are currently
unknown, unanticipated and unsuspected, and it further agrees that this release
has been negotiated and agreed upon in light of that awareness and nevertheless
hereby intends to release the FE Subsidiaries and their Representatives and
Affiliates from the Indemnifiable Losses in the manner contemplated by this
paragraph.
9.3 Indemnification of Buyer by Seller.
(a) Seller shall indemnify, defend and hold harmless Buyer, its
officers, directors, employees, shareholders, Affiliates and agents (each, a
"Buyer Indemnitee") from and against any and all Indemnifiable Losses asserted
against or suffered by any Buyer Indemnitee (each, a "Buyer Indemnifiable Loss")
in any way relating to, resulting from or arising out of or in connection with
(i) any breach by Seller of any covenant or agreement of Seller contained in
this Agreement or the representations and warranties contained in Section 4.1,
4.2 and 4.3, (ii) the Excluded DLC Liabilities, (iii) noncompliance by Seller
with any bulk sales or transfer laws as provided in Section
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11.14, and (iv) any Third Party Claims against a Buyer Indemnitee arising out of
or in connection with Seller's ownership or operation of the Excluded DLC Assets
on or after the Auction Closing Date.
(b) Seller shall indemnify, defend and hold harmless each Buyer
Indemnitee from and against any and all Buyer Indemnifiable Losses in any way
relating to, resulting from or arising out of or in connection with (i) any
costs and expenses incurred after the date of this Agreement, and in furtherance
of consummation of the transactions contemplated herein, up to a maximum amount
of ten million dollars ($10,000,000), in the event of a Special Termination (as
hereinafter defined), and (ii) any claims asserted against a Buyer Indemnitee
arising out of or relating to the Agreement and Plan of Merger, dated as of
April 5, 1998, by and between DQE, Inc. and Allegheny Energy, Inc.. A "Special
Termination" shall be deemed to have occurred if
(i) Buyer terminates this Agreement pursuant to Section 10.1(j) hereof, or
(ii) Buyer or Seller terminate this Agreement pursuant to Section
10.1(b)(i) hereof, or the Auction Closing fails to occur because the
condition set forth in any of Sections 8.1(c), 8.2(c) or 8.3(b) has not
been satisfied, in either case because of an injunction, order or decree
of a court in connection with the litigation described in Section 8.1(o)
hereof.
9.4 Indemnification of Buyer by FE Subsidiaries. Each FE Subsidiary with
respect to itself and all matters related to the Purchased FE Assets to be
transferred to Buyer by such FE Subsidiary shall indemnify, defend and hold
harmless each Buyer Indemnitee from and against any and all Buyer Indemnifiable
Losses in any way relating to, resulting from or arising out of or in connection
with (i) any breach by such FE Subsidiary of any covenant or agreement of such
FE Subsidiary contained in this Agreement or the representations and warranties
contained in Section 5.1, 5.2 and 5.3, (ii) the Excluded FE Liabilities, (iii)
noncompliance by such FE Subsidiary with any bulk sales or transfer laws as
provided in Section 11.14, and (iv) any Third Party Claims against a Buyer
Indemnitee arising out of or in connection with such FE Subsidiary's ownership
or operation of the Excluded FE Assets on or after the Auction Closing Date.
9.5 Indemnification of Seller by the FE Subsidiaries. Each FE Subsidiary
severally with respect to itself under this Agreement and all its obligations
related to the Purchased FE Assets to be transferred to Buyer by such FE
Subsidiary, shall indemnify, defend and hold harmless each DLC Indemnitee from
and against any and all DLC Indemnifiable Losses in any way relating to,
resulting from or arising out of or in connection with a claim by Buyer or any
Third Party against a DLC Indemnitee arising out of or in connection with
Purchased FE Assets or the Assumed FE Liabilities, provided, however, that after
the Auction Closing, Seller cannot enforce this Section 9.5 against any of the
FE Subsidiaries if such claim is in any way relating to, resulting from or
arising out of the liabilities assumed by Buyer.
9.6 Release of Seller by the FE Subsidiaries.
Each FE Subsidiary, for itself and on behalf of its Representatives
and Affiliates, does hereby release, hold harmless and forever discharge Seller,
its Representatives and Affiliates, from any and all Indemnifiable Losses
resulting from, arising out or relating to the Assumed FE Liabilities. Except as
otherwise provided in Section 9.2, each FE Subsidiary hereby waives any and
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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 of
the FE Subsidiaries 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 currently unknown, unanticipated and unsuspected, and it further
agrees that this release has been negotiated and agreed upon in light of that
awareness and nevertheless hereby intends to release Seller, its Representatives
and Affiliates from Indemnifiable Losses in the manner contemplated by this
paragraph.
9.7 Certain Limitations on Indemnification.
(a) Notwithstanding anything to the contrary contained herein:
(i) Any Indemnitee shall use Commercially Reasonable Efforts
to mitigate all losses, damages and the like relating to a claim under
these indemnification provisions, including availing itself of any
defenses, limitations, rights of contribution, claims against third
persons and other rights at law or equity. The Indemnitee's Commercially
Reasonable Efforts shall include the reasonable expenditure of money to
mitigate or otherwise reduce or eliminate any loss or expenses for which
indemnification would otherwise be due, and the Indemnifying Party shall
reimburse the Indemnitee for the Indemnitee's reasonable expenditures in
undertaking the mitigation.
(ii) Any Indemnifiable Loss shall be net of (A) the dollar
amount of any insurance or other proceeds actually receivable by the
Indemnitee or any of its Affiliates with respect to the Indemnifiable
Loss, and (B) income tax benefits to the Indemnitee, to the extent
realized by the Indemnitee. Any party seeking indemnity hereunder shall
use Commercially Reasonable Efforts to seek coverage (including both costs
of defense and indemnity) under applicable insurance policies with respect
to any such Indemnifiable Loss.
(b) The expiration, termination or extinguishment of any covenant or
agreement shall not affect the Parties' obligations under Sections 9.1 through
9.6 hereof if the Indemnitee provided the Indemnifying Party with proper notice
of the claim or event for which indemnification is sought prior to such
expiration, termination or extinguishment.
(c) Except to the extent otherwise provided in Article X, the rights
and remedies of Seller, Buyer, and the FE Subsidiaries under this Article IX are
exclusive and in lieu of any and all other rights and remedies which each of
Seller, Buyer, and the FE Subsidiaries may have under this Agreement or
otherwise for monetary relief, with respect to (i) any breach of or failure to
perform any covenant, agreement, representation or warranty set forth in this
Agreement, after the occurrence of the Auction 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 IX apply only to matters
arising out of this Agreement but do not extend to matters arising out of any of
the Ancillary Agreements. Any Indemnifiable Loss arising under or pursuant to an
Ancillary Agreement
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shall be governed by the indemnification obligations, if any, contained in such
Ancillary Agreement under which the Indemnifiable Loss arises.
(d) Notwithstanding anything to the contrary contained 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. Each of Buyer, Seller,
and the FE Subsidiaries waives any right to recover punitive, incidental,
special, exemplary and consequential damages arising in connection with or with
respect to this Agreement. The provisions of this Section 9.7(d) shall not apply
to indemnification for a Third Party Claim.
9.8 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion or
commencement of any Third Party Claim made or brought by any Person who is not a
party to this Agreement or any Affiliate of a Party to this Agreement 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 9.8(a), the Indemnifying Party
will not be liable for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, however, that
if the Indemnifying Party shall fail to take reasonable steps necessary to
defend diligently such Third Party Claim within twenty (20) calendar days
after receiving notice from the Indemnitee that the Indemnitee believes
the Indemnifying Party has failed to take such steps, the Indemnitee may
assume its own defense and the Indemnifying Party shall be liable for all
reasonable expenses thereof.
(ii) Without the prior written consent of the Indemnitee, the
Indemnifying Party shall not enter into any settlement of any Third Party
Claim which would lead to liability or create any financial or other
obligation on the part of the Indemnitee
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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 Citibank) shall promptly be repaid by the Indemnitee to the Indemnifying
Party.
(e) A failure to give timely notice as provided in this Section 9.8
shall not affect the rights or obligations of any Party hereunder except if, and
only to the extent that, as a result of such failure, the Party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
ARTICLE X
TERMINATION
10.1 Termination.
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(a) This Agreement may be terminated at any time prior to the
Auction 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 Auction Closing, and such order, judgment or decree shall have become final
and nonappeallable; (ii) any statute, rule, order or regulation shall have been
enacted or issued by any Governmental Authority which prohibits the consummation
of the Auction Closing; (iii) the Auction Closing contemplated hereby shall have
not occurred on or before the day which is twelve (12) months from the date of
this Agreement (the "Termination Date"), provided that the right to terminate
this Agreement under this Section 10.1(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 Auction Closing to occur on or
before such date and provided, further, that if on the Termination Date (x) the
conditions to the Auction Closing set forth in Sections 8.1(d), 8.2(c) and
8.2(d) hereof shall not have been fulfilled but all other conditions to the
Auction Closing shall be fulfilled or shall be capable of being fulfilled, or
(y) the conditions to the Exchange Closing set forth in Sections 9.1(b), 9.2(a)
and 9.3(a) of the Exchange Agreement shall not have been fulfilled but all other
conditions to the Exchange Closing shall be fulfilled or shall be capable of
being fulfilled, then the Termination Date shall be the day which is eighteen
(18) months from the date of this Agreement, except as otherwise specifically
provided in Section 10.1(j) hereof.
(c) Except as otherwise provided in this Agreement, this Agreement
may be terminated by the Buyer if any of the Buyer Required Regulatory
Approvals, the receipt of which is a condition to the obligation of the Buyer to
consummate the Auction Closing as set forth in Section 8.1(d), shall have been
denied (and a petition for rehearing or refiling of an application initially
denied without prejudice shall also have been denied).
(d) This Agreement may be terminated by Seller, if any of the DLC
Required Regulatory Approvals, the receipt of which is a condition to the
obligation of Seller to consummate the Auction Closing as set forth in Section
8.2(d), shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied) or
shall have been granted but are not in form and substance reasonably
satisfactory to Seller.
(e) This Agreement may be terminated by Buyer if there has been a
violation or breach by Seller or an FE Subsidiary 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 Auction Closing Date or the date which is thirty (30) days after receipt
by Seller or an FE Subsidiary of notice specifying particularly such violation
or breach, and such violation or breach has not been waived by Buyer. All such
notices delivered to an FE Subsidiary pursuant to this Section 10.1(e) shall
also be simultaneously delivered to Seller.
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(f) This Agreement may be terminated by Seller, if there has been a
violation or breach by Buyer 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 Auction Closing Date
or the date which is 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 the Party entitled to so
terminate this Agreement under the provisions of Section 7.12(b).
(i) This Agreement may be terminated by Buyer if there shall have
occurred any change that constitutes an Asset Material Adverse Effect.
(j) This Agreement may be terminated by Buyer in the event that
(i) the matter of Allegheny Energy, Inc. v. DQE, Inc., Civil
Action No. 98-1639 (W.D.Pa.)("Merger Litigation") shall not have
been resolved by a final and nonappeallable order by the date that
is twelve (12) months from the date of this Agreement, provided,
however, that if, on such date, the U.S. Court of Appeals for the
Third Circuit shall have issued an order that finally resolves the
Merger Litigation by denying Allegheny Energy, Inc.'s request for
specific performance, but Allegheny Energy, Inc. shall have pending
before the U.S. Supreme Court a petition for writ of certiorari in
respect of such order, then Buyer may terminate this Agreement only
on or after the date that is the earlier of (x) the date on which
the U.S. Supreme Court grants such petition for writ of certiorari
or (y) the date that is fifteen (15) months from the date of this
Agreement, or
(ii) without limitation of Section 10.1(b)(i), there shall
be, at any time prior to the date that is twelve (12) months from
the date of this Agreement, a final and nonappeallable order in the
Merger Litigation that prohibits the Auction Closing.
The Parties agree, however, that if the Merger Litigation or other
litigation described in Section 8.1(o) is resolved by a final, nonappeallable
order that permits the Auction Closing to proceed prior to the date on which
termination would otherwise be permitted under this Section 10.1, then Buyer
may, at its option, extend any Termination Date that would otherwise apply under
this Section 10.1 by a period of up to ninety (90) days from the date of said
order, provided, however, that such extension shall not in any case extend the
term hereof for longer than a total of twenty-one (21) months from the date of
this Agreement.
10.2 Procedure and Effect of No-Default Termination. In the event of
termination of this Agreement by either or both Seller and Buyer pursuant to
Section 10.1, written notice thereof shall
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forthwith be given by the terminating Party to the other Parties, whereupon, if
this Agreement is terminated pursuant to any of Sections 10.1(a) through (d) or
10.1(g) through (j), the liabilities of the Parties hereunder will terminate,
except as otherwise expressly provided in this Agreement, and thereafter none of
the Parties shall have any recourse against any other Party by reason of this
Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Liability of FE Subsidiaries. Each FE Subsidiary shall be
individually responsible for its own obligations, covenants, representations and
warranties under this Agreement.
11.2 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of the Parties.
11.3 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but any 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.
11.4 No Survival.
(a) Except as provided in Section 11.4(b) and 11.4(c), each and
every representation, warranty and covenant contained in this Agreement 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 Auction Closing
Date; and none of Buyer, Seller, any FE Subsidiary or any officer, director,
trustee, Affiliate or agent of any of them shall be under any liability
whatsoever with respect to any such representation, warranty or covenant.
(b) The covenants contained in Sections 3.3(c), 3.3(d), 3.4, 3.5,
3.6, 7.2(c), 7.3(a), 7.5, 7.6, 7.7(e), 7.8, 7.9, 7.11, 7.11A, 7.14, 10.2 and in
Articles IX and XI shall survive the delivery of the deed(s) and the Auction
Closing in accordance with their terms.
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(c) The representations, warranties and disclaimers contained in
Sections 4.1, 4.2, 4.3, 5.1, 5.2, 5.3, 6.1, 6.2, 6.3 and claims arising under
7.1, 7.1A and 7.7(e) shall survive the Auction Closing for eighteen (18) months
from the Auction Closing Date.
11.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided however, that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Seller, to:
Duquesne Light Company
411 Seventh Avenue
Pittsburgh, PA 15219
Telephone: (412) 393-6000
Fax: (412) 393-6760
Attention: Morgan O'Brien
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Telephone: (202) 371-7000
Fax: (202) 393-5760
Attention: Erica A. Ward
(b) if to the FE Subsidiaries, to:
FirstEnergy Corp.
76 South Main Street
Akron, OH 44308
Telephone: (330) 384-5793
Fax: (330) 384-3875
Attention: Anthony J. Alexander
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with copies to:
Winthrop, Stimson, Putnam
& Roberts
One Battery Park Plaza
New York, NY
Telephone: (212) 858-1000
Fax: (212) 858-1500
Attention: Michael F. Cusick
Duquesne Light Company
411 Seventh Avenue
Pittsburgh, PA 15219
Telephone: (412) 393-6000
Fax: (412) 393-6760
Attention: Morgan O'Brien
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Telephone: (202) 371-7000
Fax: (202) 393-5760
Attention: Erica A. Ward
(c) if to Buyer, to:
Orion Power Holdings, Inc.
7 East Redwood Street, 10th Floor
Baltimore, Maryland 21202
Telephone: (410) 230-3507
Fax: (410) 234-0994
Attention: W. Thaddeus Miller
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
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Attention: Michael S. Shenberg
Telephone: (212) 806-5831
Fax: (212) 806-6006
11.6 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any Party
hereto, including by operation of law, without the prior written consent of each
other Party, nor is this Agreement intended to confer upon any other Person
except the Parties hereto any rights, interests, obligations or remedies
hereunder. Except as expressly provided herein, no provision of this Agreement
shall create any third party beneficiary rights in any employee or former
employee of Seller or the FE Subsidiaries (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, Buyer may (i) assign any or all of
its rights and obligations hereunder to one or more wholly owned Subsidiary(s)
(direct or indirect), (ii) assign any or all of its rights and obligations under
Sections 7.11 and 7.11A to Constellation Operating Services, Inc or an Affiliate
thereof, or (iii) make a security assignment to any lender providing financing
in respect of the Buyer's acquisition of the Purchased Assets and in either case
upon receipt of notice by Seller and the FE Subsidiaries 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, provided, however, that no such assignment shall relieve or discharge
the Buyer from any of its obligations hereunder. Each of Seller and the FE
Subsidiaries agree, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer, pledge
or other disposition of rights and interests hereunder so long as none of
Seller's or the FE Subsidiaries' rights are thereby altered, amended, diminished
or otherwise impaired.
11.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania (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
(except to such matters of real estate law that must be governed by the law of
the State of Ohio). 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 PITTSBURGH, PENNSYLVANIA, WHICH COURTS SHALL
HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY
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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.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 Interpretation. The articles, section and schedule headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.10 Schedules and Exhibits. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
11.11 Entire Agreement. This Agreement, the Ancillary Agreements and 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. This
Agreement and the Ancillary Agreements supersede all prior agreements and
understandings between the Parties other than the Confidentiality Agreement with
respect to such transactions.
11.12 U.S. Dollars. Unless otherwise stated, all dollar amounts set forth
herein are United States (U.S.) dollars.
11.13 Sewage Facilities. Pursuant to the provisions of Section 7a of the
Pennsylvania Sewage Facilities Act, 35 P.S. Section 750 (the "Facilities Act"),
Buyer is notified by Seller or the applicable FE Subsidiary, as the case may be,
that a "community sewage system" (as defined by Section 2 of the Facilities Act)
is not available on one or more lots comprising part of the Real Property at the
facilities listed in Schedule 11.13. Prior to construction of any buildings on
such lots, a permit to connect to a community sewage system or permit for
installation of an individual sewage system must be obtained pursuant to Section
7 of the Facilities Act. Before signing this Agreement, Buyer should contact the
local agency charged with administering the Facilities Act in the area of each
such facility and lot(s) to determine the procedure and requirements for
obtaining
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a permit for an individual or community sewage system to service such lot(s), if
required for the intended uses and purposes of such lot(s).
11.14 Bulk Sales Laws. Buyer acknowledges that, notwithstanding anything
in this Agreement to the contrary, Seller and the FE Subsidiaries will not
comply with the provision of the bulk sales laws of any jurisdiction in
connection with the transactions contemplated by this Agreement. Buyer hereby
waives compliance by Seller and the FE Subsidiaries with the provisions of the
bulk sales laws of all applicable jurisdictions to the extent permitted by law.
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IN WITNESS WHEREOF, Buyer, Seller and each of the FE
Subsidiaries have caused this Agreement to be signed by their respective duly
authorized officers as of the date first above written.
ORION POWER HOLDINGS, INC. DUQUESNE LIGHT COMPANY
By: /s/ JACK A. FUSCO By: /s/ MORGAN K. O'BRIEN
------------------------------ --------------------------------
Name: Jack A. Fusco Name: Morgan K. O'Brien
Title: Chief Operating Officer Title: Vice President, Finance
THE CLEVELAND ELECTRIC
ILLUMINATING COMPANY
By: /s/ ANTHONY J. ALEXANDER
----------------------------------
Name: Anthony J. Alexander
Title: Executive Vice President and
General Counsel
OHIO EDISON COMPANY
By: /s/ ANTHONY J. ALEXANDER
----------------------------------
Name: Anthony J. Alexander
Title: Executive Vice President and
General Counsel
PENNSYLVANIA POWER COMPANY
By: /s/ ANTHONY J. ALEXANDER
----------------------------------
Name: Anthony J. Alexander
Title: Executive Vice President and
General Counsel
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Bill of Sale
Exhibit B.1 Form of DLC Assignment and Assumption Agreement
Exhibit B.2 Form of FE Assignment and Assumption Agreement
Exhibit C.1 Form of DLC Connection Agreement
Exhibit C.2 Form of FE Connection Agreement
Exhibit D.1 Form of DLC Easement and Attachment Agreement
Exhibit D.2 Form of FE Easement and Attachment Agreement
Exhibit E Form of DLC Must-Run Agreement and FE Must-Run Agreement
Exhibit F Form of FIRPTA Affadavits
Exhibit G.1 Form of DLC Special Warranty Deed
Exhibit G.2 Form of FE Special Warranty Deed
SCHEDULES
1.1(38) DLC Capital Spare Parts
1.1(71) DLC Transferable Permits
1.1(104) FE Capital Spare Parts
1.1(140) FE Transferable Permits
1.1(181) Permitted Encumbrances
1.1(186) Power Sales Contract
1.1(197) QF Contracts
2.1 DLC Assets
2.1(c) DLC Tangible Personal Property
2.1(i) DLC Purchased Asset Warranties and Guarantees
2.1(l) DLC Intellectual Property
2.1A FE Assets
2.1A(c) FE Tangible Personal Property
2.1A(k) FE Intellectual Property
2.2(a) Excluded DLC Transmission Assets
2.2(b) Certain Excluded DLC Equipment and Systems
2.2(f) Diversity Contract
2.2A(a) Excluded FE Transmission Assets
2.2A(b) Certain Excluded FE Equipment and Systems
2.3(e) Liabilities and Obligations Relating to Purchased DLC Assets
2.3(h) DLC Governmental Orders
2.3A(e) Liabilities and Obligations Relating to Purchased FE Assets
2.3A(g) FE Governmental Orders
2.7(a) DLC Inventories
2.7(b) FE Inventories
4.3(a) DLC Conflicts, Defaults and Violations
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4.3(b) DLC Required Regulatory Approvals
4.4 DLC Insurance Exceptions
4.5 DLC Real Property
4.6 DLC Environmental Matters
4.7 DLC Labor Matters
4.8 DLC Benefit Plans
4.9 DLC Real Property
4.10 DLC Notices of Condemnation
4.11(a) Certain DLC Material Agreements
4.11(b) Certain Non-assignable DLC Material Agreements
4.11(c) Defaults under certain DLC Material Agreements
4.12 Legal Proceedings Involving DLC
4.13(a) DLC Permit Violations
4.13(b) DLC Material Permits (other than Transferable Permits)
4.14(b) DLC Notices of Tax Deficiencies or Assessments
4.14(c) Outstanding DLC Agreements or Waivers Extending Statute of
Limitations for Taxes
4.14(d) DLC Safe Harboring Lease/Exempt Use Property
4.14(e) Taxing Jurisdications for DLC Assets Requiring Notification
4.15 DLC Intellectual Property Exceptions
5.3(a) FE Conflicts, Defaults and Violations
5.3(b) FE Required Regulatory Approvals
5.4 FE Insurance Exceptions
5.5 FE Real Property Leases
5.6 FE Environmental Matters
5.7 FE Labor Matters
5.8(a) FE Benefit Plans
5.9 FE Real Property
5.10 FE Notices of Condemnation
5.11(a) Certain FE Material Agreements
5.11(b) Certain Non-assignable FE Material Agreements
5.11(c) Defaults under certain FE Material Agreements
5.12 Legal Proceedings Involving FE
5.13(a) FE Permit Violations
5.13(b) FE Material Permits (other than Transferable Permits)
5.14(b) FE Notices of Tax Deficiencies or Assessments
5.14(c) Outstanding FE Agreements or Waivers Extending Statute of
Limitations for Taxes
5.14(d) FE Safe Harboring Lease/Tax Exempt Use Property
5.14(e) Taxing Jurisdictions for FE Assets Requiring Notification
5.15 FE Intellectual Property Exceptions
6.3(a) Buyer Conflicts, Defaults and Regulations
6.3(b) Buyer Required Regulatory Approvals
7.1(a) Permitted DLC Activities prior to Closing
7.1(c) Exceptions to Permitted DLC Activities prior to Closing
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7.1(c)(viii) Permitted DLC Capital Expenditures
7.1A(a) Permitted FE Activities prior to Closing
7.1A(c) Exceptions to Permitted FE Activities prior to Closing
7.1A(c)(viii)Permitted FE Capital Expenditures
7.6(a) Permitted Buyer Activities prior to Closing
7.11(a) DLC Employees
7.11(c) DLC Non-Union Employees
7.11(d) DLC Collective Bargaining Agreements
7.11A(a) FE Subsidiaries' Employees
7.11A(c) FE Non-Union Employees
7.11A(d) FE Collective Bargaining Agreements
7.14 Exempt Facilities (DLC & FE)
11.13 Sewage Facilities (DLC & FE)
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................. 2
1.1 Definitions............................................. 2
1.2 Certain Interpretive Matters............................ 28
ARTICLE II PURCHASE AND SALE....................................... 28
2.1 Transfer of DLC Assets.................................. 28
2.1A Transfer of FE Assets................................... 30
2.1B Delivery and Transfer of Purchased FE Assets............ 31
2.2 Excluded DLC Assets..................................... 32
2.2A Excluded FE Assets...................................... 33
2.3 Assumed DLC Liabilities................................. 35
2.3A Assumed FE Liabilities.................................. 37
2.4 Excluded DLC Liabilities................................ 39
2.4A Excluded FE Liabilities. .............................. 41
2.5 Control of Litigation................................... 43
2.6 Fuel Supplies........................................... 43
2.7 Inventories............................................. 44
ARTICLE III THE CLOSING............................................. 45
3.1 Closing................................................. 45
3.2 Closing Payments........................................ 45
3.3 Adjustment to Purchase Price............................ 46
3.4 Reserved................................................ 47
3.5 DLC Prorations.......................................... 47
3.6 FE Prorations........................................... 48
3.7 Deliveries by Seller.................................... 49
3.8 Deliveries by the FE Subsidiaries....................... 51
3.9 Deliveries by Buyer..................................... 49
3.10 Ancillary Agreement..................................... 52
3.11 Work in Progress........................................ 52
ARTICLE IV REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER... 54
4.1 Incorporation; Qualification............................ 54
4.2 Authority............................................... 54
4.3 Consents and Approvals; No Violation.................... 55
4.4 Insurance............................................... 55
4.5 DLC Real Property Leases................................ 56
4.6 Environmental Matters................................... 56
4.7 Labor Matters........................................... 57
4.8 Benefit Plans: ERISA................................... 57
4.9 DLC Real Property....................................... 58
4.10 Condemnation............................................ 58
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4.11 Contracts and Leases.................................... 58
4.12 Legal Proceedings....................................... 59
4.13 Permits................................................. 59
4.14 Taxes................................................... 60
4.15 Intellectual Property................................... 60
4.16 Capital Expenditures.................................... 61
4.17 Compliance With Laws.................................... 61
4.18 Title................................................... 61
4.19 DISCLAIMERS REGARDING PURCHASED DLC ASSETS.............. 61
4.20 Year 2000 Compliance.................................... 62
4.21 SEC Filings; Financial Statements....................... 62
ARTICLE V REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF FE
AND THE FE SUBSIDIARIES................................. 63
5.1 Incorporation; Qualification............................ 63
5.2 Authority............................................... 63
5.3 Consents and Approvals; No Violation.................... 64
5.4 Insurance............................................... 64
5.5 FE Real Property Leases................................. 65
5.6 Environmental Matters................................... 65
5.7 Labor Matters........................................... 66
5.8 Benefit Plans: ERISA................................... 66
5.9 Real Property........................................... 67
5.10 Condemnation............................................ 67
5.11 Contracts and Leases.................................... 67
5.12 Legal Proceedings....................................... 68
5.13 Permits................................................. 68
5.14 Taxes................................................... 69
5.15 Intellectual Property................................... 70
5.16 Capital Expenditures.................................... 70
5.17 Compliance With Laws.................................... 70
5.18 Title................................................... 70
5.19 DISCLAIMERS REGARDING PURCHASED FE ASSETS............... 70
5.20 Year 2000 Compliance.................................... 71
5.21 SEC Filings; Financial Statements....................... 71
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER................. 72
6.1 Organization............................................ 72
6.2 Authority............................................... 73
6.3 Consents and Approvals; No Violation.................... 73
6.4 Availability of Funds................................... 73
6.5 Financial Representations............................... 73
6.6 Legal Proceedings....................................... 74
6.7 No Knowledge of Seller's Breach or FE's Breach.......... 74
6.8 Qualified Buyer......................................... 74
6.9 Inspections............................................. 74
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6.10 WARN Act................................................ 75
ARTICLE VII COVENANTS OF THE PARTIES................................ 75
7.1 Conduct of Business Relating to the Purchased DLC Assets 75
7.1A Conduct of Business Relating to the Purchased FE Assets. 77
7.2 Access to Information................................... 80
7.3 Confidentiality......................................... 82
7.4 Public Statements....................................... 83
7.5 Expenses................................................ 83
7.6 Further Assurances...................................... 83
7.7 Consents and Approvals.................................. 85
7.8 Fees and Commissions.................................... 87
7.9 Tax Matters............................................. 87
7.10 Advice of Changes....................................... 88
7.11 Seller Employees........................................ 89
7.11A FE Subsidiaries' Employees............................. 94
7.12 Risk of Loss............................................ 101
7.13 Exchange Agreement Obligations.......................... 101
7.14 Tax Exempt Financing.................................... 101
ARTICLE VIII CONDITIONS............................................. 104
8.1 Conditions to Obligations of Buyer...................... 104
8.2 Conditions to Obligations of Seller..................... 109
8.3 Conditions of Obligations of the FE Subsidiaries........ 112
ARTICLE IX INDEMNIFICATION......................................... 114
9.1 Indemnification and Release of Seller by Buyer.......... 114
9.2 Indemnification and Release of FE Indemnitees by Buyer.. 115
9.3 Indemnification of Buyer by Seller...................... 116
9.4 Indemnification of Buyer by FE Subsidiaries............. 116
9.5 Indemnification of Seller by the FE Subsidiaries........ 117
9.6 Release of Seller by the FE Subsidiaries................ 117
9.7 Certain Limitations on Indemnification.................. 117
9.8 Defense of Claims....................................... 119
ARTICLE X TERMINATION............................................. 121
10.1 Termination............................................. 121
10.2 Procedure and Effect of No-Default Termination.......... 123
ARTICLE XI MISCELLANEOUS PROVISIONS................................ 123
11.1 Liability of FE Subsidiaries............................ 123
11.2 Amendment and Modification.............................. 123
11.3 Waiver of Compliance; Consents.......................... 123
11.4 No Survival............................................. 124
11.5 Notices................................................. 124
11.6 Assignment.............................................. 126
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11.7 Governing Law........................................... 127
11.8 Counterparts............................................ 127
11.9 Interpretation.......................................... 127
11.10 Schedules and Exhibits.................................. 127
11.11 Entire Agreement........................................ 127
11.12 U.S. Dollars............................................ 128
11.13 Sewage Facilities....................................... 128
11.14 Bulk Sales Laws......................................... 128
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