EXHIBIT 10(c)
EXECUTIION COPY
================================================================================
MASTER AGREEMENT
BY AND BETWEEN
RAINY RIVER ENERGY CORPORATION
AND
CONSTELLATION ENERGY COMMODITIES GROUP, INC.
DATED AS OF DECEMBER 28, 2004
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS......................................................3
Section 1.01 Defined Terms............................................3
Section 1.02 Interpretation...........................................8
ARTICLE II CLOSING..........................................................8
Section 2.01 Closing..................................................8
Section 2.02 Assignment...............................................8
Section 2.03 Assumption...............................................9
Section 2.04 Consideration............................................9
Section 2.05 Conditions Precedent to Closing Obligation of Parties....9
Section 2.06 Deliveries at Closing...................................11
Section 2.07 Further Assurances......................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH OF THE PARTIES...........13
Section 3.01 Authority...............................................13
Section 3.02 No Impediments..........................................13
Section 3.03 Litigation..............................................14
Section 3.04 Brokerage Arrangements..................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF RAINY RIVER...................14
Section 4.01 Existing Agreements.....................................14
Section 4.02 Good and Valid Title....................................14
Section 4.03 No Defaults; No Litigation..............................15
Section 4.04 Solvency................................................15
Section 4.05 Provision of Information................................15
Section 4.06 Validity and Enforceability of Existing Agreements......16
ARTICLE V COVENANTS AND OTHER AGREEMENTS OF THE PARTIES...................16
Section 5.01 Amendments to Existing Agreements.......................16
Section 5.02 FERC Approval...........................................16
Section 5.03 Confidentiality.........................................16
Section 5.04 Notifications...........................................16
Section 5.05 Representations and Warranties..........................17
Section 5.06 Public Announcements....................................17
i
Section 5.07 Cooperation.............................................17
ARTICLE VI INDEMNIFICATION.................................................17
Section 6.01 Indemnification by Rainy River..........................17
Section 6.02 Indemnification by Assignee.............................17
Section 6.03 Limitations on Indemnification..........................18
Section 6.04 Notice of Indemnified Claims............................18
Section 6.05 Assumption of Defense...................................18
Section 6.06 Settlement..............................................19
Section 6.07 Direct Claims...........................................19
ARTICLE VII MISCELLANEOUS...................................................20
Section 7.01 Termination.............................................20
Section 7.02 Effect of Termination...................................20
Section 7.03 Survival................................................21
Section 7.04 Headings................................................21
Section 7.05 Notices.................................................21
Section 7.06 Assignment..............................................22
Section 7.07 Governing Law; Jurisdiction.............................22
Section 7.08 Waiver of Jury Trial....................................22
Section 7.09 Expenses................................................23
Section 7.10 Severability............................................23
Section 7.11 Entire Agreement; Amendment.............................23
Section 7.12 Limitation of Liability.................................23
Section 7.13 Counterparts............................................23
ii
APPENDICES (EXISTING AGREEMENTS)
APPENDIX A ▇▇▇▇▇▇▇ Purchase Agreement
APPENDIX B ▇▇▇▇▇▇▇ Guaranty Agreement
APPENDIX C MGE Purchase Agreement
APPENDIX D MGE Guaranty Agreement
APPENDIX E WPPI Purchase Agreement
APPENDIX F WPPI Guaranty Agreement
APPENDIX G Fuel Supply Agreement
EXHIBITS (TRANSACTION DOCUMENTS)
EXHIBIT A ▇▇▇▇▇▇▇ Consent
EXHIBIT B Bank Consent
EXHIBIT C ▇▇▇▇▇▇▇ Assignment and Novation Agreement
EXHIBIT ▇ ▇▇▇▇▇▇▇ Guaranty Termination and Release
EXHIBIT E Bank Termination and Release
EXHIBIT F New ▇▇▇▇▇▇▇ Guaranty Agreement
EXHIBIT G First ▇▇▇▇▇▇▇ Consent to Pledge
EXHIBIT H Second ▇▇▇▇▇▇▇ Consent to Pledge
EXHIBIT I MGE Assignment and Novation Agreement
EXHIBIT J WPPI Assignment and Novation Agreement
EXHIBIT K MGE Amendment to Guaranty
EXHIBIT L WPPI Amendment to Guaranty
EXHIBIT M New MGE Guaranty Agreement
EXHIBIT N New WPPI Guaranty Agreement
EXHIBIT O Indemnification Agreement
EXHIBIT P TMV Assignment and Novation Agreement
EXHIBIT Q [intentionally omitted]
EXHIBIT R MGE Consent
EXHIBIT S WPPI Consent
iii
MASTER AGREEMENT
----------------
MASTER AGREEMENT, dated as of this 28th day of December, 2004 (this
"AGREEMENT"), by and among RAINY RIVER ENERGY CORPORATION, a Minnesota
corporation and a wholly owned subsidiary of ALLETE, Inc. ("RAINY RIVER"), and
CONSTELLATION ENERGY COMMODITIES GROUP, INC., a Delaware corporation
("ASSIGNEE") and a wholly owned subsidiary of Constellation Energy Group, Inc.
("PARENT"). Each of Rainy River and Assignee is sometimes referred to herein as
a "PARTY" or collectively as the "PARTIES."
RECITALS
WHEREAS, Rainy River and LSP-▇▇▇▇▇▇▇ Energy, LLC, a Delaware limited
liability company ("▇▇▇▇▇▇▇"), have entered into a Third Amended and Restated
Power Purchase Agreement dated as of August 8, 2003, a confidential copy of
which is attached hereto as APPENDIX A (the "▇▇▇▇▇▇▇ PURCHASE AGREEMENT"),
pursuant to which Rainy River has agreed to purchase from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
has agreed to sell to Rainy River electrical capacity and energy from facilities
owned and operated by ▇▇▇▇▇▇▇ upon the terms and conditions set forth in the
▇▇▇▇▇▇▇ Purchase Agreement; and
WHEREAS, the obligations of Rainy River under the ▇▇▇▇▇▇▇ Purchase
Agreement have been guaranteed by Minnesota Power, Inc., a Minnesota corporation
("ALLETE"), pursuant to a Guaranty Agreement, dated as of February 24, 1999, by
ALLETE in favor and for the benefit of ▇▇▇▇▇▇▇, a copy of which is attached
hereto as APPENDIX B (the "▇▇▇▇▇▇▇ GUARANTY AGREEMENT"); and
WHEREAS, Rainy River and Madison Gas and Electric Company, a Wisconsin
corporation ("MGE"), have entered into a Long-Term Capacity and Energy Purchase
Contract dated as of November 30, 2001 (as amended by Amendment No. 1 thereto
dated December 28, 2004), a copy of which is attached hereto as APPENDIX C (the
"MGE PURCHASE AGREEMENT"), pursuant to which MGE has agreed to purchase from
Rainy River a certain percentage of the electrical capacity and energy provided
to Rainy River under the ▇▇▇▇▇▇▇ Purchase Agreement upon the terms and
conditions set forth in the MGE Purchase Agreement; and
WHEREAS, the obligations of Rainy River under the MGE Purchase Agreement
have been guaranteed by Minnesota Power Enterprises, Inc., a Minnesota
corporation ("MP ENTERPRISES"), pursuant to a Guaranty Agreement, dated as of
November 30, 2001, by MP Enterprises in favor and for the benefit of MGE, a copy
of which is attached hereto as APPENDIX D (the "MGE GUARANTY AGREEMENT"); and
WHEREAS, Rainy River and Wisconsin Public Power Inc., a Wisconsin
corporation ("WPPI"), have entered into a Long-Term Capacity and Energy Purchase
Contract dated as of December 13, 2000 (as amended by Amendment No. 1 thereto
dated February 2003 and by Amendment No. 2 thereto dated December 28, 2004), a
copy of which is attached hereto as APPENDIX E (the "WPPI PURCHASE AGREEMENT"),
pursuant to which WPPI has contracted to purchase from Rainy River a certain
percentage of the electrical capacity and energy provided to
1
Rainy River under the ▇▇▇▇▇▇▇ Purchase Agreement upon the terms and
conditions set forth in the WPPI Purchase Agreement; and
WHEREAS, the obligations of Rainy River under the WPPI Purchase Agreement
have been guaranteed by ALLETE pursuant to a Guaranty Agreement, dated as of
January 19, 2001, by ALLETE in favor and for the benefit of WPPI, a copy of
which is attached hereto as APPENDIX F (the "WPPI GUARANTY AGREEMENT"); and
WHEREAS, Rainy River, Tenaska Marketing Ventures, ("TMV") and the other
parties listed therein, as applicable, have entered into the Fuel Supply
Agreement, a copy of which is attached as APPENDIX G; and
WHEREAS, Rainy River desires to assign and transfer to Assignee, and
Assignee desires to assume and accept from Rainy River, all of Rainy River's
rights and obligations from and after the Closing under each of the ▇▇▇▇▇▇▇
Purchase Agreement, the MGE Purchase Agreement, the WPPI Purchase Agreement and
the Fuel Supply Agreement upon the terms and conditions set forth herein; and
WHEREAS, ALLETE desires to terminate the ▇▇▇▇▇▇▇ Guaranty from and after
the Closing; and
WHEREAS, ALLETE and MP Enterprises desire to amend each of the MGE Guaranty
Agreement and WPPI Guaranty Agreement from and after Closing; and
WHEREAS, upon termination of the ▇▇▇▇▇▇▇ Guaranty Agreement and amendment
of each of the MGE Guaranty Agreement and WPPI Guaranty Agreement from and after
the Closing, Assignee desires to cause Parent to enter into new guaranty
agreements with each of ▇▇▇▇▇▇▇, MGE and WPPI; and
WHEREAS, upon execution of this Agreement, Rainy River delivered to
Assignee a duly executed written consent of MGE to (i) the MGE Assignment and
Novation Agreement as required by Section 21.2.1 of the MGE Purchase Agreement,
(ii) the MGE Amendment to Guaranty as required by Section 7.2 of the MGE
Guaranty Agreement, (iii) the New MGE Guaranty Agreement as required by Section
7.2 of the MGE Guaranty Agreement and (iv) the TMV Assignment and Novation
Agreement as required by the Fuel Supply Agreement substantially in the form
attached as EXHIBIT R (the "MGE CONSENT"); and
WHEREAS, upon execution of this Agreement, Rainy River delivered to
Assignee a duly executed written consent of WPPI to (i) the WPPI Assignment and
Novation Agreement as required by Section 21.2.1 of the WPPI Purchase Agreement,
(ii) the WPPI Amendment to Guaranty as required by Section 7.2 of the WPPI
Guaranty Agreement, (iii) the New WPPI Guaranty Agreement as required by Section
7.2 of the WPPI Guaranty Agreement and (iv) the TMV Assignment and Novation
Agreement as required by the Fuel Supply Agreement substantially in the form
attached as EXHIBIT S (the "WPPI CONSENT").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the parties hereby covenant and agree as follows:
2
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"ACTION OR PROCEEDING" means any action, suit, proceeding,
arbitration or Governmental Entity investigation or audit.
"AFFILIATE" means, with respect to any Person, a Person that
controls, is controlled by, or is under common control with such Person (it
being understood that a Person shall be deemed to "control" another Person, for
purposes of this definition, if such Person directly or indirectly has the power
to direct or cause the direction of the management and policies of such other
Person, whether through holding beneficial ownership interests in such other
Person, by contract or otherwise).
"ALLETE" has the meaning ascribed to it in the recitals of this
Agreement.
"ASSIGNEE" has the meaning ascribed to it in the preamble of this
Agreement.
"ASSIGNEE INDEMNIFIED PERSONS" means Assignee and its Affiliates
and each of their respective directors, partners, officers, agents and
employees.
"ASSIGNMENT TRANSACTIONS" has the meaning ascribed to it in
Section 2.05(g) hereof.
"ASSUMPTION" has the meaning ascribed to it in Section 4.04.
"BANK CONSENT" has the meaning ascribed to it in Section 2.05(b)
hereof.
"BANK TERMINATION AND RELEASE" has the meaning ascribed to it
in Section 2.06(b).
"BANKRUPTCY CODE" has the meaning ascribed to it in Section
4.04.
"BUSINESS DAY" means any day which is not a Saturday, a Sunday
or any other day on which banks in the State of New York are authorized or
required by Law to close.
"CLOSING" has the meaning ascribed to it in Section 2.01.
"COLLATERAL AGENT" means Societe Generale, as collateral agent
(together with its successors in such capacity) for the secured parties pursuant
to that certain Collateral Agency Agreement, dated as of November 12, 1999 (as
amended, restated, modified or otherwise supplemented from time to time), among
▇▇▇▇▇▇▇, Societe Generale and the administrative agent named therein.
"CONSENT" means any approval, consent, ratification, waiver or
other authorization.
3
"CONTRACT" means any agreement, contract, lease, consensual
obligation, promise or undertaking (whether written or oral and whether express
or implied), whether or not legally binding.
"DEBT" means any obligations in respect of (i) borrowed money,
(ii) capitalized lease obligations, (iii) interest rate agreements and currency
agreements, (iv) guarantees of any obligation of any third Person, (v) letters
of credit and (vi) indemnities or performance bonds.
"ENCUMBRANCE" means any charge, claim, community or other
marital property interest, condition, equitable interest, lien, option, pledge,
security interest, mortgage, right of way, easement, encroachment, servitude,
right of first option, right of first refusal or similar restriction, including
any restriction on use, voting (in the case of any security or equity interest),
transfer, receipt of income or exercise of any other attribute of ownership.
"EXISTING AGREEMENT(S)" means each of (i) the ▇▇▇▇▇▇▇ Purchase
Agreement, (ii) the ▇▇▇▇▇▇▇ Guaranty Agreement, (iii) the MGE Purchase
Agreement, (iv) the MGE Guaranty Agreement, (v) the WPPI Purchase Agreement,
(vi) the WPPI Guaranty Agreement, and (vii) the Fuel Supply Agreement, each as
attached as an appendix hereto.
"FERC" means the Federal Energy Regulatory Commission.
"FIRST BANK AGREEMENT" means that certain Consent and Agreement,
dated as of November 12, 1999, by and among ALLETE, ▇▇▇▇▇▇▇ and the Collateral
Agent.
"FIRST ▇▇▇▇▇▇▇ CONSENT TO PLEDGE" has the meaning ascribed to it
in Section 2.06(c).
"FUEL SUPPLY AGREEMENT" means the First Amended and Restated
Agreement for Fuel Supply & Fuel Management Services, dated as of December 23,
2004, by and among TMV, WPPI, MGE and Rainy River.
"GOVERNMENTAL ENTITY" means any foreign, federal, state or local
government or subdivision thereof, or governmental, judicial, legislative,
executive, administrative or regulatory authority, agency, commission, court,
tribunal or body.
"GROSSED-UP BASIS" means, when used to describe the basis on which
the payment of a specified sum is to be made, a basis such that the amount of
such payment, after being reduced by the amount of all Taxes imposed on the
recipient of such payment as a result of the receipt or accrual of such payment,
will equal the specified sum. For this purpose, Taxes are to be calculated at
the maximum statutory rate applicable to the recipient of such payment for the
relevant year after taking into account, for example, the effect of deductions
available for interest paid or accrued and Taxes such as state and local income
taxes, which effect similarly would be calculated on the basis of the maximum
statutory rate of the Tax for which such deduction was available.
"INDEMNIFICATION AGREEMENT" has the meaning ascribed to it in
Section 2.06(i) hereof.
4
"INDEMNIFIED CLAIM" has the meaning ascribed to it in Section 6.04
hereof.
"INDEMNIFYING PERSON" means the Person or Persons obligated to
provide indemnification under Article VI.
"INDEMNIFIED PERSONS" means the Person or Persons entitled to
indemnification under Article VI.
"▇▇▇▇▇▇▇" has the meaning ascribed to it in the recitals of this
Agreement.
"▇▇▇▇▇▇▇ ASSIGNMENT AND NOVATION AGREEMENT" has the meaning
ascribed to it in Section 2.06(a) hereof.
"▇▇▇▇▇▇▇ CONSENT" has the meaning ascribed to it in Section
2.05(a) hereof.
"▇▇▇▇▇▇▇ GUARANTY AGREEMENT" has the meaning ascribed to it in the
recitals of this Agreement.
"▇▇▇▇▇▇▇ GUARANTY TERMINATION AND RELEASE" has the meaning
ascribed to it in Section 2.06(b) hereof.
"▇▇▇▇▇▇▇ PURCHASE AGREEMENT" has the meaning ascribed to it in the
recitals of this Agreement.
"LAW" means any statute, law, constitutional provision, code,
regulation, ordinance, rule, ruling, judgment, decision, order, writ,
injunction, decree, permit, concession, grant, franchise, license, agreement,
directive, binding guideline or policy or rule of common law, requirement of, or
other governmental restriction of or determination by any Governmental Entity or
any interpretation of any of the foregoing by any Governmental Entity.
"LIABILITIES" means all Debt, obligations and other liabilities of
a Person of any kind, character or description, whether absolute or contingent,
known or unknown, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, vested or unvested,
executory, determined, determinable or otherwise, and whether or not the same is
required to be accrued on the financial statements of such Person.
"LOSS" or "LOSSES" means any and all losses, costs, claims,
damages, penalties, interest and expenses (including reasonable attorneys' fees
and expenses and reasonable costs of investigation and litigation). In the event
any of the foregoing are indemnifiable hereunder, the terms "Loss" and "Losses"
shall include any and all reasonable attorneys' fees and expenses and reasonable
costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity.
"MGE" has the meaning ascribed to it in the recitals of this
Agreement.
"MGE AMENDMENT TO GUARANTY" has the meaning ascribed to it in
Section 2.06(e) hereof.
5
"MGE ASSIGNMENT AND NOVATION AGREEMENT" has the meaning ascribed
to it in Section 2.06(d) hereof.
"MGE GUARANTY AGREEMENT" has the meaning ascribed to it in the
recitals of this Agreement.
"MGE CONSENT" has the meaning ascribed to it in the recitals of
this Agreement.
"MGE PURCHASE AGREEMENT" has the meaning ascribed to it in the
recitals of this Agreement.
"MP ENTERPRISES" has the meaning ascribed to it in the recitals of
this Agreement.
"NEW ▇▇▇▇▇▇▇ GUARANTY AGREEMENT" has the meaning ascribed to it in
Section 2.06(c) hereof.
"NEW MGE GUARANTY AGREEMENT" has the meaning ascribed to it in
Section 2.06(g) hereof.
"NEW WPPI GUARANTY AGREEMENT" has the meaning ascribed to it in
Section 2.06(h) hereof.
"NON-DISCLOSURE AGREEMENT" has the meaning ascribed to it in
Section 5.03 hereof.
"ORDER" means any writ, judgment, decree, injunction or similar
order of any Governmental Entity (in each such case whether preliminary or
final).
"PARENT" has the meaning ascribed to it in the preamble of this
Agreement.
"PARTY" or "PARTIES" has the meaning ascribed to it in the
preamble of this Agreement.
"PAYMENT" has the meaning ascribed to it in Section 4.04.
"PERSON" means an individual, corporation, partnership, trust,
limited liability company, a branch of any legal entity, unincorporated
organization, joint stock company, joint venture, association, other entity or
Governmental Entity.
"PROVIDED MATERIAL" has the meaning ascribed to it in Section
4.05.
"RAINY RIVER" has the meaning ascribed to it in the preamble of
this Agreement.
"RAINY RIVER INDEMNIFIED PERSONS" means Rainy River and its
Affiliates, and each of their respective directors, partners, officers, agents
and employees.
"RETAINED LIABILITIES" means any Liabilities of Rainy River
(whether known or unknown, accrued, absolute, contingent or otherwise), except
obligations of Rainy River under the ▇▇▇▇▇▇▇ Purchase Agreement, the MGE
Purchase Agreement, the WPPI Purchase Agreement
6
and the Fuel Supply Agreement arising out of facts, events or circumstances that
occur from and after the Closing.
"SECOND BANK AGREEMENT" means that certain Consent and Agreement,
dated as of November 12, 1999, by and among Rainy River, ▇▇▇▇▇▇▇ and the
Collateral Agent.
"SECOND ▇▇▇▇▇▇▇ CONSENT TO PLEDGE" has the meaning ascribed to it
in Section 2.06(c).
"TAX" or "TAXES" means (i) all taxes, however denominated,
including any interest, penalties or additions to tax that may become payable in
respect thereof, imposed by any federal, state, local or foreign government or
any agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all net or gross
income taxes (including, but not limited to, United States federal income taxes
and state income taxes), payroll and employee withholding taxes, unemployment
insurance, social security, sales and use taxes, excise taxes, environmental
taxes, franchise taxes, net proceeds taxes, AD VALOREM taxes, value added taxes,
bank shares taxes, alternative or add-on minimum taxes, deed taxes, profits
taxes, windfall profits taxes, transaction taxes, license taxes, lease taxes,
service taxes, service use taxes, severance taxes, energy taxes, capital taxes,
premium taxes, gross receipts taxes, occupation taxes, real and personal
property taxes, stamp taxes, transfer taxes, withholding taxes, workers'
compensation taxes, and other obligations, assessments, duties, customs, fees,
levies or charges of the same or of a similar nature, and (ii) any obligations
under any agreement or arrangement with respect to any tax described in clause
(i) above.
"THIRD BANK AGREEMENT" means that certain Reaffirmation and
Amendment of Consent and Agreement, dated as of August 8, 2003, by and among
Rainy River, ▇▇▇▇▇▇▇ and the Collateral Agent.
"THIRD PARTY CLAIM" has the meaning ascribed to it in Section 6.05
hereof.
"TRANSACTION DOCUMENT(S)" means each of (i) the ▇▇▇▇▇▇▇ Assignment
and Novation Agreement, (ii) the ▇▇▇▇▇▇▇ Guaranty Termination and Release, (iii)
the New ▇▇▇▇▇▇▇ Guaranty Agreement, (iv) the First ▇▇▇▇▇▇▇ Consent to Pledge,
(v) the Second ▇▇▇▇▇▇▇ Consent to Pledge, (vi) the MGE Assignment and Novation
Agreement, (vii) the MGE Amendment to Guaranty, (viii) the New MGE Guaranty
Agreement, (ix) the WPPI Assignment and Novation Agreement, (x) the WPPI
Amendment to Guaranty, (xi) the New WPPI Guaranty Agreement, (xii) the TMV
Assignment and Novation Agreement, (xiii) the MGE Consent and (xiv) the WPPI
Consent.
"WPPI" has the meaning ascribed to it in the recitals of this
Agreement.
"WPPI AMENDMENT TO GUARANTY" has the meaning ascribed to it in
Section 2.06(f) hereof.
"WPPI ASSIGNMENT AND NOVATION AGREEMENT" has the meaning ascribed
to it in Section 2.06(d) hereof.
"WPPI CONSENT" has the meaning ascribed to it in the recitals of
this Agreement.
7
"WPPI GUARANTY AGREEMENT" has the meaning ascribed to it in the
recitals of this Agreement.
"WPPI PURCHASE AGREEMENT" has the meaning ascribed to it in the
recitals of this Agreement.
Section 1.02 INTERPRETATION. Whenever used in this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, any noun
or pronoun shall be deemed to include the plural as well as the singular and to
cover all genders. Whenever used in this Agreement, unless otherwise specified,
the terms "hereof," "herein," "hereunder" and similar terms refer to this
Agreement as a whole, and references herein to Sections refer to sections of
this Agreement. Whenever used in this Agreement, the term "including" shall be
deemed to mean "including, without limitation."
ARTICLE II
CLOSING
Section 2.01 CLOSING. The closing (the "CLOSING") of the transactions
contemplated hereby will take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, New York, New York, or at such other place as the Parties mutually agree,
at 10:00 a.m. local time, on the date which: (i) occurs on the first day of a
month, (ii) is at least seven (7) days after the satisfaction of all the
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby as set forth in Section 2.05, and (iii) in no event is
earlier than April 1, 2005, or such other date as the Parties may mutually
determine.
Section 2.02 ASSIGNMENT. At the Closing,
(a) on the terms and conditions set forth in the ▇▇▇▇▇▇▇
Assignment and Novation Agreement, Rainy River shall convey, assign and transfer
to Assignee, its successors and assigns for its use, benefit and behalf, free
and clear of all Encumbrances of any kind, all of Rainy River's right, title and
interest in and to the ▇▇▇▇▇▇▇ Purchase Agreement;
(b) on the terms and conditions set forth in the MGE
Assignment and Novation Agreement, Rainy River shall convey, assign and transfer
to Assignee, its successors and assigns for its use, benefit and behalf, free
and clear of all Encumbrances of any kind, all of Rainy River's right, title and
interest in and to the MGE Purchase Agreement; and
(c) on the terms and conditions set forth in the WPPI
Assignment and Novation Agreement, Rainy River shall convey, assign and transfer
to Assignee, its successors and assigns for its use, benefit and behalf, free
and clear of all Encumbrances of any kind, all of Rainy River's right, title and
interest in and to the WPPI Purchase Agreement; and
(d) on the terms and conditions set forth in the TMV
Assignment and Novation Agreement, Rainy River shall convey, assign and transfer
to Assignee, its successors and assigns for its use, benefit and behalf, free
and clear of all Encumbrances of any kind, all of Rainy River's right, title and
interest in and to the Fuel Supply Agreement.
8
Section 2.03 ASSUMPTION. At the Closing,
(a) on the terms and conditions set forth in the ▇▇▇▇▇▇▇
Assignment and Novation Agreement, Assignee shall assume and agree to perform
all of Rainy River's obligations under the ▇▇▇▇▇▇▇ Purchase Agreement to be
performed from and after the Closing, but Assignee shall not assume any Retained
Liabilities;
(b) on the terms and conditions set forth in the MGE
Assignment and Novation Agreement, Assignee shall assume and agree to perform
all of Rainy River's obligations under the MGE Purchase Agreement to be
performed from and after the Closing, but Assignee shall not assume any Retained
Liabilities;
(c) on the terms and conditions set forth in the WPPI
Assignment and Novation Agreement, Assignee shall assume and agree to perform
all of Rainy River's obligations under the WPPI Purchase Agreement to be
performed from and after the Closing, but Assignee shall not assume any Retained
Liabilities; and
(d) on the terms and conditions set forth in the TMV
Assignment and Novation Agreement, Assignee shall assume and agree to perform
all of Rainy River's obligations under the Fuel Supply Agreement to be performed
from and after the Closing, but Assignee shall not assume any Retained
Liabilities.
Section 2.04 CONSIDERATION. As consideration for the assumption by
Assignee of the obligations under the ▇▇▇▇▇▇▇ Purchase Agreement, the MGE
Purchase Agreement and the WPPI Purchase Agreement, Rainy River shall pay to
Assignee at Closing, by wire transfer of immediately available funds to such
account as Assignee may direct, the sum of Seventy-Three Million Dollars
($73,000,000), free and clear of all withholdings.
Section 2.05 CONDITIONS PRECEDENT TO CLOSING OBLIGATION OF PARTIES. The
obligation of the Parties to consummate transactions contemplated hereby, is
subject to the satisfaction prior to the Closing of each of the following
conditions:
(a) A duly executed written consent of ▇▇▇▇▇▇▇, substantially
in the form attached hereto as EXHIBIT A (the "▇▇▇▇▇▇▇ CONSENT"), to (x) the
▇▇▇▇▇▇▇ Assignment and Novation Agreement as required by Section 21.2 of the
▇▇▇▇▇▇▇ Purchase Agreement, (y) the ▇▇▇▇▇▇▇ Guaranty Termination and Release as
required by Section 7.2 of the ▇▇▇▇▇▇▇ Guaranty Agreement and (z) the New
▇▇▇▇▇▇▇ Guaranty Agreement as required by Section 7.2 of the ▇▇▇▇▇▇▇ Guaranty
Agreement;
(b) A duly executed written consent of the Collateral Agent,
substantially in the form attached hereto as EXHIBIT B (the "BANK CONSENT"), to
(x) the ▇▇▇▇▇▇▇ Guaranty Termination and Release, (y) the New ▇▇▇▇▇▇▇ Guaranty
Agreement and (z) the ▇▇▇▇▇▇▇ Assignment and Novation Agreement, as required by
Section 1.3 of the First Bank Agreement, Section 1.4 of the Second Bank
Agreement and the Third Bank Agreement;
(c) No Action or Proceeding by any Governmental Entity shall
have been instituted or threatened which enjoins or prohibits, or would be
reasonably expected to enjoin or prohibit, the consummation of the transactions
contemplated hereby, and no Action or
9
Proceeding by any other Person shall have been instituted that has resulted in
any order or injunction that prohibits or enjoins the consummation of the
transactions contemplated hereby;
(d) (i) Each of the representations and warranties of Rainy
River contained in this Agreement that is qualified by materiality shall have
been true and correct in all respects as of the Closing and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the date of the Closing (other than such representations
and warranties as are made as of another date, which shall be true and correct
as of such date), (ii) the covenants and agreements contained in this Agreement
to be complied with by Rainy River on or before the Closing shall have been
complied with in all material respects and (iii) Assignee shall have received a
certificate of Rainy River as to the matters set forth in clauses (i) and (ii)
above signed by a duly authorized officer of Rainy River;
(e) (i) Each of the representations and warranties of Assignee
contained in this Agreement that is qualified by materiality shall have been
true and correct in all respects as of the Closing and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the date of the Closing (other than such representations
and warranties as are made as of another date, which shall be true and correct
as of such date), (ii) the covenants and agreements contained in this Agreement
to be complied with by Assignee on or before the Closing shall have been
complied with in all material respects and (iii) Rainy River shall have received
a certificate of Assignee as to the matters set forth in clauses (i) and (ii)
above signed by a duly authorized officer of Assignee;
(f) No Law shall be in effect that prohibits or declares
illegal the transactions contemplated hereby; and
(g) the Consent of FERC, the receipt of which is required for
the consummation of the transactions contemplated by the MGE Assignment and
Novation Agreement and the WPPI Assignment and Novation Agreement (the
"ASSIGNMENT TRANSACTIONS"), shall have been obtained and all waiting periods
specified by FERC, if any, the passing of which is necessary for such
consummation, shall have passed.
Section 2.06 DELIVERIES AT CLOSING. At the Closing,
(a) Rainy River shall deliver to Assignee and Assignee shall
deliver to Rainy River: (i) a duly executed instrument of assignment and
novation with respect to the ▇▇▇▇▇▇▇ Purchase Agreement, substantially in the
form attached hereto as EXHIBIT C (the "▇▇▇▇▇▇▇ ASSIGNMENT AND NOVATION
AGREEMENT");
(b) Rainy River shall deliver to Assignee (i) a duly executed
instrument of termination and release with respect to the ▇▇▇▇▇▇▇ Guaranty
Agreement, substantially in the form attached hereto as EXHIBIT D (the "▇▇▇▇▇▇▇
GUARANTY TERMINATION AND RELEASE"), pursuant to which ALLETE and ▇▇▇▇▇▇▇ shall
terminate the ▇▇▇▇▇▇▇ Guaranty Agreement and ALLETE is released of any and all
obligations as "Guarantor" under the ▇▇▇▇▇▇▇ Guaranty Agreement and (ii) a duly
executed instrument of termination and release with respect to the First Bank
10
Agreement, the Second Bank Agreement and the Third Bank Agreement, substantially
in the form attached hereto as EXHIBIT E (the "BANK TERMINATION AND RELEASE");
(c) Assignee shall cause Parent to deliver to Rainy River (i)
a duly executed instrument of guaranty with respect to the ▇▇▇▇▇▇▇ Purchase
Agreement, substantially in the form attached hereto as EXHIBIT F (the "NEW
▇▇▇▇▇▇▇ GUARANTY AGREEMENT"), pursuant to which Parent shall agree to guaranty
the obligations of Assignee under the ▇▇▇▇▇▇▇ Purchase Agreement in favor and
for the benefit of ▇▇▇▇▇▇▇, (ii) a duly executed Consent and Agreement with
respect to the pledge of the New ▇▇▇▇▇▇▇ Guaranty Agreement to the Collateral
Agent, substantially in the form attached hereto as EXHIBIT G (provided that the
opinion of counsel referenced therein may be delivered by one or more counsel
and may contain customary assumptions and qualifications) (the "FIRST ▇▇▇▇▇▇▇
CONSENT TO PLEDGE") and (iii) a duly executed Consent and Agreement with respect
to the pledge of the ▇▇▇▇▇▇▇ Purchase Agreement to the Collateral Agent,
substantially in the form attached hereto as EXHIBIT H (provided that the
opinion of counsel referenced therein may be delivered by one or more counsel
and may contain customary assumptions and qualifications) (the "SECOND ▇▇▇▇▇▇▇
CONSENT TO PLEDGE");
(d) Rainy River shall deliver to the Assignee and the Assignee
shall deliver to Rainy River: (i) a duly executed instrument of assignment and
novation with respect to the MGE Purchase Agreement, substantially in the form
attached hereto as EXHIBIT I (the "MGE ASSIGNMENT AND NOVATION AGREEMENT"), and
(ii) a duly executed instrument of assignment and novation with respect to the
WPPI Purchase Agreement, substantially in the form attached hereto as EXHIBIT J
(the "WPPI ASSIGNMENT AND NOVATION AGREEMENT");
(e) Rainy River shall deliver to Assignee a duly executed
instrument of amendment with respect to the MGE Guaranty Agreement,
substantially in the form attached hereto as EXHIBIT K (the "MGE AMENDMENT TO
GUARANTY"), pursuant to which the guaranteed obligations under the MGE Guaranty
Agreement shall be limited to those obligations arising on or before the
Closing, and the MGE Guaranty Agreement shall have no application to, and ALLETE
shall have no guaranty obligations with respect to, any fact, event or
occurrence from or after the Closing;
(f) Rainy River shall deliver to Assignee a duly executed
instrument of amendment with respect to the WPPI Guaranty Agreement,
substantially in the form attached hereto as EXHIBIT L (the "WPPI AMENDMENT TO
GUARANTY"), pursuant to which the guaranteed obligations under the WPPI Guaranty
Agreement shall be limited to those obligations arising on or before the
Closing, and the WPPI Guaranty Agreement shall have no application to, and MP
Enterprises shall have no guaranty obligations with respect to, any fact, event
or occurrence from or after the Closing;
(g) Assignee shall cause Parent to deliver to Rainy River a
duly executed instrument of guaranty with respect to the MGE Purchase Agreement,
substantially in the form attached hereto as EXHIBIT M (the "NEW MGE GUARANTY
AGREEMENT"), pursuant to which Parent shall agree to guaranty the obligations of
Assignee under the MGE Purchase Agreement in favor and for the benefit of MGE
from and after the Closing;
11
(h) Assignee shall cause Parent to deliver to Rainy River a
duly executed instrument of guaranty with respect to the WPPI Purchase
Agreement, substantially in the form attached hereto as EXHIBIT N (the "NEW WPPI
GUARANTY AGREEMENT"), pursuant to which Parent shall agree to guaranty the
obligations of Assignee under the WPPI Purchase Agreement in favor and for the
benefit of WPPI from and after the Closing;
(i) Rainy River shall cause its parent company to deliver to
Assignee a duly executed indemnification agreement, substantially in the form of
EXHIBIT O (the "INDEMNIFICATION AGREEMENT"), pursuant to which Rainy River's
parent company agrees to indemnify the Assignee Indemnified Person for Rainy
River's obligations under this Agreement;
(j) Rainy River shall deliver to Assignee and Assignee shall
deliver to Rainy River a duly executed instrument of assignment and novation
with respect to the Fuel Supply Agreement, substantially in the form attached
hereto as EXHIBIT P (the "TMV ASSIGNMENT AND NOVATION AGREEMENT"); and
(k) Rainy River shall deliver to Assignee a duly executed copy
of the Consent issued by FERC to the Assignment Transactions.
Section 2.07 FURTHER ASSURANCES. At any time or from time to time after
the Closing, at Assignee's request and without further consideration, Rainy
River shall execute and deliver to Assignee such other instruments of sale,
transfer, conveyance, assignment and confirmation, provide such materials and
information and take such other actions as Assignee may reasonably deem
necessary or desirable in order more effectively to transfer, convey and assign
to Assignee, and to confirm Assignee's title to and rights in the ▇▇▇▇▇▇▇
Purchase Agreement, MGE Purchase Agreement, the WPPI Purchase Agreement and the
Fuel Supply Agreement, and, to the fullest extent permitted by Law, to assist
Assignee in exercising all rights with respect thereto, and otherwise to cause
Rainy River to fulfill its obligations under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH OF THE PARTIES
Assignee hereby represents and warrants with respect to itself and
Affiliates of Assignee that are parties to any of the Transaction Documents and
Rainy River hereby represents and warrants with respect to itself and Affiliates
of Rainy River which are parties to any of the Transaction Documents as follows:
Section 3.01 AUTHORITY. (a) Each Party and each Affiliate of such Party
has all requisite power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by such Party or its
Affiliate, as applicable and constitutes a valid and binding obligation of such
Party or its Affiliate, as applicable, enforceable against it in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws in effect from time to
time relating to or affecting the enforcement of creditors' rights generally and
by general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at Law).
12
(b) Each Party and each Affiliate of such Party which is a
party to a Transaction Document has all requisite power and authority to
execute, deliver and perform its obligations under such Transaction Document and
to consummate the transactions contemplated thereby. Each Transaction Document
will, when duly executed and delivered by such Party or its Affiliate, as
applicable, constitute a valid and binding obligation of such Party or its
Affiliate, as applicable, enforceable against it in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws in effect from time to time relating
to or affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at Law).
Section 3.02 NO IMPEDIMENTS. Except for Consents that have already been
obtained or Consents set forth under the applicable party's name on SCHEDULE
3.02 hereto, the execution, delivery and performance of its obligations under
this Agreement and each Transaction Document to which it is a party will not:
(a) violate any provision of any Law or Order applicable to
such Party hereto, the violation of which could reasonably be expected to have a
material adverse effect on the ability of such Party hereto to perform its
obligations under this Agreement and each relevant Transaction Document;
(b) result in a breach or constitute a default under any
provision of its articles or incorporation or bylaws (or comparable
organizational documents);
(c) result in a breach or constitute a default under any
Contract relating to the management or affairs of such Party hereto or any Debt,
indenture or loan or credit agreement or any other Contract to which it is a
party or by which such Party hereto or its properties or assets may be bound,
the breach or default of which could reasonably be expected to have a material
adverse effect on the ability of such Party hereto to perform its obligations
under this Agreement and each relevant Transaction Document; or
(d) result in, or require, the creation of any Encumbrance
upon or with respect to any of the assets or properties of such Party hereto,
the creation or imposition of which could reasonably be expected to have a
material adverse effect on the ability of such Party hereto to perform its
obligations under this Agreement and each relevant Transaction Document.
Section 3.03 LITIGATION. There is no Action or Proceeding pending or,
to the knowledge of such Party hereto, threatened against, relating to or
affecting such Party hereto which could reasonably be expected to result in the
issuance of any Order of any Governmental Entity (in each such case whether
preliminary or final) restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Transaction Documents.
Section 3.04 BROKERAGE ARRANGEMENTS. Except as set forth on SCHEDULE
3.04, neither Party nor any of its Affiliates has entered (directly or
indirectly) into any agreement with any Person that would obligate such Party or
any of its Affiliates to pay any commission, brokerage, or "finder's fee" in
connection with the transactions contemplated herein.
13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RAINY RIVER
Rainy River hereby represents and warrants to Assignee as follows:
Section 4.01 EXISTING AGREEMENTS. Attached hereto as Appendices A
through G are true and complete copies of the Existing Agreements, as amended to
date, none of which have been rescinded and all of which are in full force and
effect.
Section 4.02 GOOD AND VALID TITLE. Rainy River holds good and valid
title to all of its contractual rights in the ▇▇▇▇▇▇▇ Purchase Agreement, the
MGE Purchase Agreement, the WPPI Purchase Agreement and the Fuel Supply
Agreement, in each case free and clear of any and all Encumbrances. Upon
execution and delivery of the Transaction Documents by the Parties hereto, the
▇▇▇▇▇▇▇ Assignment and Novation Agreement, the MGE Assignment and Novation
Agreement, the WPPI Assignment and Novation Agreement and the TMV Assignment and
Novation Agreement will validly convey all of such contractual rights to
Assignee, in each case free and clear of any and all Encumbrances.
Section 4.03 NO DEFAULTS; NO LITIGATION. There does not exist under the
▇▇▇▇▇▇▇ Purchase Agreement, the MGE Purchase Agreement, the WPPI Purchase
Agreement or the Fuel Supply Agreement any violation, breach or event of
default, or event or condition that, after notice or lapse of time or both,
would constitute a material violation, breach or event of default thereunder on
the part of Rainy River or, to Rainy River's actual knowledge, any other Person.
Rainy River has not received any notice and has no actual knowledge of any claim
alleging any such violation, breach or default. There are no suits, actions,
claims, complaints, litigation, investigations or legal or administrative or
arbitration proceedings pending or, to the actual knowledge of Rainy River,
threatened, whether at law or in equity, before or by any federal, foreign,
state, local or other Governmental Entity which would reasonably be likely to
materially affect this Agreement or the Existing Agreements or any other
agreements, documents and instruments to be executed in connection herewith.
There are no material judgments, decrees, injunctions, rulings, awards or orders
of any Governmental Entity against Rainy River or any of its Affiliates, or
relating to or affecting this Agreement, the Existing Agreements, or any other
agreements, documents and instruments to be executed in connection herewith.
Section 4.04 SOLVENCY. Immediately after the assignment and novation of
the ▇▇▇▇▇▇▇ Purchase Agreement, the MGE Purchase Agreement, the WPPI Purchase
Agreement and the Fuel Supply Agreement pursuant to Section 2.03 (the
"ASSUMPTION"), the payment of the cash consideration pursuant to Section 2.04
(the "PAYMENT") and the other transactions contemplated hereby, Rainy River (and
any successor company), will have a positive net worth (calculated in accordance
with generally accepted accounting principles, consistently applied), will not
be insolvent (as defined under the U.S. Bankruptcy Code (the "BANKRUPTCY CODE"),
other applicable law or in equity), and the fair saleable value of Rainy River's
assets will be greater than the amount required to pay its total indebtedness
(contingent or otherwise). Rainy River further represents that the Assumption
and the Payment are being made without intent to hinder, delay or defraud
present or future creditors of Rainy River (or any successor company), and will
not have the effect of hindering, delaying or defrauding any present or future
creditors of Rainy River (or any successor company). Rainy River further
represents that (A) upon consummation
14
of the Assumption and the Payment, Rainy River (and any successor company) (i)
will have adequate capitalization, (ii) will not have an unreasonably small
capital with respect to the business or transactions engaged in or to be engaged
in by Rainy River and any successor company, (iii) will have the ability to pay
its debts and liabilities as such debts and liabilities mature, and (iv) does
not intend to incur, or believe that it will incur, debts that would be beyond
the ability of Rainy River or any successor company's ability to pay as such
debts mature, and (B) the Assumption is reasonably equivalent value in exchange
for the Payment.
Section 4.05 PROVISION OF INFORMATION. To Rainy River's actual
knowledge after reasonable inquiry, Rainy River has provided to Assignee copies
of all written agreements that are currently in effect and all material
correspondence of Rainy River and its Affiliates relating to the Existing
Agreements (such provided material being defined herein as the "PROVIDED
MATERIAL"). To Rainy River's actual knowledge, the Provided Material accurately
presents and reflects in all material respects all of the transactions and
actions therein described. There have been no material violations of any
Applicable Laws by Rainy River or any of its Affiliates with respect to or
affecting the Existing Agreements. There is no materially adverse fact relating
to the Existing Agreements or the transactions or agreements contemplated by
this Agreement known to Rainy River or any of its Affiliates that Rainy River
has not disclosed or caused to be disclosed to Assignee.
Section 4.06 VALIDITY AND ENFORCEABILITY OF EXISTING AGREEMENTS. Each
of the Existing Agreements is a valid and binding agreement of Rainy River,
enforceable against it in accordance with its terms and, to Rainy River's actual
knowledge, is a valid and binding agreement of each other party thereto,
enforceable against such party in accordance with its terms, except in each case
where enforceability may be limited or otherwise impacted by bankruptcy,
insolvency, or other similar laws affecting creditors' rights generally and
except where enforceability is subject to the application of equitable
principles or remedies.
ARTICLE V
COVENANTS AND OTHER AGREEMENTS OF THE PARTIES
Section 5.01 AMENDMENTS TO EXISTING AGREEMENTS. Between the date of
this Agreement and the Closing, Rainy River shall not modify, amend or terminate
any of the Existing Agreements to which it is a party or waive, release, cancel
or assign any material rights or claims thereunder, without obtaining the prior
written consent of Assignee. Except as provided herein, Rainy River shall
administer the Existing Agreements in the ordinary course of business and
consistent with past practice.
Section 5.02 FERC APPROVAL. Prior to the Closing, the Parties will take
all reasonable steps and proceed diligently and in good faith and use their best
efforts to obtain, as promptly as practicable, all Consents required to
consummate the Assignment Transactions. On or before January 15, 2005, the
Parties hereto agree to make all filings with or give all notices to FERC, as
required to consummate the Assignment Transactions and to contact ▇▇▇▇▇▇▇ and
the Collateral Agent, either in writing or orally, in order to obtain the
▇▇▇▇▇▇▇ Consent and the Bank Consent. Rainy River will provide prompt
notification to Assignee when any such Consent, action, filing or notice
referred to in the prior sentence is obtained, taken, made or given, as
applicable, and
15
will advise Assignee of any communications (and, unless precluded by Law,
provide copies of any such communications that are in writing) with FERC
regarding the Assignment Transactions.
Section 5.03 CONFIDENTIALITY. Each of the Parties hereto hereby agrees
to maintain the confidentiality of the information obtained by such Party
relating to the transactions contemplated by this Agreement, in accordance with
the terms of the Non-Disclosure Agreement, dated July 2, 2004 (the "NON-
DISCLOSURE AGREEMENT") between Rainy River and Assignee, it being understood by
the Parties that the general terms, rights and obligations the Non-Disclosure
Agreement shall now apply equally to the Parties. Notwithstanding the provisions
of this Section 5.03, each Party may communicate the terms of the transaction
contemplated herein to one or more credit rating agencies, provided that such
credit rating agencies are obligated in writing to maintain the confidentiality
of such terms.
Section 5.04 NOTIFICATIONS. Until the Closing, each Party hereto shall
promptly notify the other Parties in writing of any fact, change, condition,
circumstance or occurrence or nonoccurrence of any event of which it is aware
that will or is reasonably likely to result in any of the conditions set forth
in Section 2.05 becoming incapable of being satisfied.
Section 5.05 REPRESENTATIONS AND WARRANTIES. The Parties hereby agree
not to take any action between the date hereof and the Closing which action
would have the effect of causing a representation or warranty of such Party
hereto made herein to become untrue or inaccurate.
SECTION 5.06 PUBLIC ANNOUNCEMENTS. Except as required by Law, any
public announcement, press release or similar publicity with respect to this
Agreement or transactions contemplated hereby will be issued, if at all, at such
time, in such manner and with such content as the Parties mutually agree.
Section 5.07 COOPERATION. Each of Rainy River and Assignee will use,
and cause their respective Affiliates to use, commercially reasonable efforts to
take, or cause to be taken, all other actions necessary, proper or advisable in
order for them to fulfill their obligations in respect of this Agreement and the
transactions contemplated hereby. Each of Rainy River and Assignee will, and
will cause each of their respective Affiliates to, coordinate and cooperate with
each other in exchanging such information and supplying such reasonable
assistance as may be reasonably requested by such Party hereto in connection
with the filings and other actions contemplated by Section 5.02. Notwithstanding
anything to the contrary herein, Assignee and Rainy River shall each use
commercially reasonable efforts to work diligently with ▇▇▇▇▇▇▇ and Collateral
Agent in order to obtain each of ▇▇▇▇▇▇▇'▇ and Collateral Agent's Consents
pursuant to Sections 2.05(a) and (b), respectively.
ARTICLE VI
INDEMNIFICATION
Section 6.01 INDEMNIFICATION BY RAINY RIVER. Subject to the provisions
of Section 6.03 hereof, Rainy River hereby agrees to indemnify each of the
Assignee Indemnified Persons against, and agrees to hold each of them harmless
from, on a Grossed-Up Basis, any and all
16
Losses incurred or suffered by them to the extent such Losses relate to or arise
out of or in connection with (i) any breach by Rainy River of the ▇▇▇▇▇▇▇
Purchase Agreement, the MGE Purchase Agreement, the WPPI Purchase Agreement or
the Fuel Supply Agreement prior to the Closing, (ii) the Retained Liabilities,
(iii) any breach or inaccuracy in any representation or warranty made by Rainy
River in this Agreement or (iv) any failure of Rainy River to perform its
obligations under this Agreement.
Section 6.02 INDEMNIFICATION BY ASSIGNEE. Subject to the provisions of
Section 6.03 hereof, Assignee hereby agrees to indemnify each of the Rainy River
Indemnified Persons against, and agrees to hold each of them harmless from, on a
Grossed-Up Basis, any and all Losses incurred or suffered by them to the extent
such Losses relate to or arise out of or in connection with (i) any breach by
Assignee of any of the ▇▇▇▇▇▇▇ Purchase Agreement, the MGE Purchase Agreement,
the WPPI Purchase Agreement or the Fuel Supply Agreement after the Closing, (ii)
any breach or inaccuracy in any representation or warranty made by Assignee in
this Agreement or (iii) any failure of Assignee to perform its obligations under
this Agreement or of Parent to perform its obligations under those Transaction
Documents to which it is a party.
Section 6.03 LIMITATIONS ON INDEMNIFICATION. The amount of any Losses
incurred or suffered by any Indemnified Person shall be calculated after giving
effect to (a) any insurance proceeds received by the Indemnified Person with
respect to such Losses and (b) any recoveries obtained by the Indemnified Person
from any third Persons with respect to such Losses; PROVIDED that the obligation
of any Indemnifying Person to make any payment to an Indemnified Person shall
not be stayed or delayed pending any determination as to whether an insurance
carrier will make any payment with respect to all or part of any Losses or
whether the Indemnified Person will recover from any third Person with respect
to all or part of any Losses. If any such proceeds or recoveries are received by
an Indemnified Person with respect to any Losses after an Indemnifying Person
has made a payment to the Indemnified Person with respect thereto, the
Indemnified Person shall pay to the Indemnifying Person the amount of such
proceeds or recoveries (up to the amount of the Indemnifying Person's payment).
Section 6.04 NOTICE OF INDEMNIFIED CLAIMS. As soon as is reasonably
practicable after becoming aware of claim for indemnification under this
Agreement (each an "INDEMNIFIED CLAIM"), the Indemnified Person shall promptly
give notice to the Indemnifying Person of such Indemnified Claim and the amount
(to the extent then determinable) that, subject to Section 6.05, the Indemnified
Person will be entitled to receive hereunder from the Indemnifying Person.
Section 6.05 ASSUMPTION OF DEFENSE. The Indemnifying Person shall be
entitled to participate in the defense of any Indemnified Claim arising from any
claim, action, suit or proceeding by a third party (a "THIRD PARTY CLAIM") and,
if they so choose, to assume and control the defense thereof with counsel
selected by the Indemnifying Person, which counsel must be reasonably
satisfactory to the Indemnified Persons; provided however, that the Indemnifying
Person shall acknowledge to the Indemnified Person its liability under this
Agreement with respect to such Third Party Claim prior to assuming the defense
thereof. Should the Indemnifying Person so elect to assume the defense of a
Third Party Claim, the Indemnifying Person shall not be liable to the
Indemnified Persons for legal expenses subsequently incurred by the Indemnified
Persons in connection with the defense thereof, but shall continue to pay for
any expenses of investigation or any Loss suffered. If the Indemnifying Person
assumes such
17
defense, the Indemnified Persons shall have the right to participate in (but not
control) the defense thereof and to employ counsel, at their own expense,
separate from the counsel employed by the Indemnifying Person. If (a) the
Indemnifying Person shall not assume the defense of a Third Party Claim with
counsel reasonably satisfactory to the Indemnified Persons within thirty (30)
calendar days of the notice of the Third Party Claim, (b) legal counsel for the
Indemnified Persons notifies the Indemnifying Person that there are or may be
legal defenses available to the Indemnified Persons which are different from or
additional to those available to the Indemnifying Person, which, if the
Indemnified Persons and the Indemnifying Person were to be represented by the
same counsel, would constitute a conflict of interest for such counsel or
prejudice prosecution of the defenses available to such Indemnified Persons, or
(c) the Indemnifying Person shall assume the defense of a Third Party Claim and
fail to diligently prosecute such defense, then in each such case the
Indemnified Person, by notice to the Indemnifying Person, may employ their own
counsel and control the defense of the Third Party Claim and the Indemnifying
Person shall be liable for the reasonable fees, charges and disbursements of one
counsel employed by the Indemnified Persons, and the Indemnified Persons shall
be promptly reimbursed for any such fees, charges and disbursements, as and when
incurred. Whether the Indemnifying Person or the Indemnified Persons controls
the defense of any Third Party Claim, the Parties hereto shall cooperate in the
defense thereof. Such cooperation shall include the retention and provision to
the counsel of the controlling party of records and information which are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder.
Section 6.06 SETTLEMENT. (a) Any settlement or compromise made or
caused to be made by the Indemnified Person or the Indemnifying Person, as the
case may be, of any Third Party Claim shall also be binding upon the
Indemnifying Person or the Indemnified Person, as the case may be, in the same
manner as if a final judgment or decree had been entered by a court of competent
jurisdiction in the amount of such settlement or compromise. If the defense of
the Third Party Claim is not assumed by the Indemnifying Person and the
Indemnifying Person has acknowledged to the Indemnified Person its liability
under this Agreement with respect to such Third Party Claim, the Indemnifying
Person will not be subject to any liability for any settlement or compromise
made without its Consent, but such Consent may not be unreasonably withheld;
PROVIDED that it shall not be unreasonable for an Indemnifying Person to
withhold its Consent to any settlement or compromise involving the imposition of
equitable remedies or involving the imposition of any material obligations on
the Indemnifying Person other than monetary obligations for which the
Indemnified Person will be indemnified hereunder. If the Indemnifying Person
assumes the defense of such Third Party Claim, the Indemnifying Person shall
have the right to enter into a settlement or compromise of such Third Party
Claim without the Consent of the Indemnified Person; PROVIDED that the
Indemnifying Person shall be required to obtain such Consent if the settlement
or compromise involves the imposition of equitable remedies or involves the
imposition of any material obligations on the Indemnified Person other than
monetary obligations for which the Indemnified Person will be indemnified
hereunder.
(b) The Indemnified Person shall give the Indemnifying Person
at least thirty (30) calendar days' notice of any proposed settlement or
compromise of any Indemnified Claim it is defending, during which time the
Indemnifying Person may reject such proposed settlement or compromise; PROVIDED
that from and after such rejection, the Indemnifying Person shall be
18
obligated to assume the defense of and full and complete liability and
responsibility for such Indemnified Claim, in accordance with the provisions of
this Article VI.
Section 6.07 DIRECT CLAIMS. If an Indemnified Person should have a
claim against an Indemnifying Person hereunder which does not involve a Third
Party Claim, the Indemnified Party shall transmit a written indemnity notice to
the Indemnifying Party describing in detail the nature of the claim and the
basis of the Indemnified Party's request for indemnification under this
Agreement and including all supporting documentation. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute such claim, the
Indemnifying Party shall pay the Indemnified Party the amount of such claim
within thirty (30) days of such notice. If the Indemnifying Party disputes such
claim, the Indemnifying Party shall notify the Indemnified Party and such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction.
ARTICLE VII
MISCELLANEOUS
Section 7.01 TERMINATION. This Agreement may be terminated:
(a) by mutual written agreement of Rainy River and Assignee
prior to the date of the Closing;
(b) by either Party hereto if the conditions set forth in
Sections 2.05(a), (b) and (g) shall not have been satisfied by March 23, 2005
and all other conditions set forth in Section 2.05 have been satisfied, provided
such Party is not then in breach of this Agreement; or
(c) prior to the Closing by either Party hereto, if (i) any
representation or warranty made by the other Party hereto or any of its
Affiliates under this Agreement or any of the Transaction Documents is untrue as
of the date made hereunder, and such breach of a representation or warranty is
or would reasonably be expected, in the case of a breach by Assignee or its
Affiliate, to be materially adverse to the business or results of operations of
Rainy River or its Affiliates or, in the case of a breach by Rainy River or its
Affiliate, is or would reasonably be expected to have a material adverse effect
on the value or condition of the Existing Agreements to Assignee or its
Affiliates; provided that, to the extent the underlying condition which resulted
in the representation or warranty being untrue may be cured such that there
would be no such materially adverse consequence to Rainy River or Assignee or
their respective Affiliates, as applicable, as of the date of such cure, the
other Party hereto (or its Affiliate, as applicable) shall have failed to so
cure such condition by the earlier of: (a) sixty (60) days from receipt of
notice of the related breach of representation or warranty from the other Party
hereto or (b) March 23, 2005, or (ii) the other Party hereto or any of its
Affiliates breaches any covenant or other obligation under this Agreement or
under any other agreement executed in connection herewith, and such breach is or
would reasonably be expected, in the case of a breach by Assignee or its
Affiliate, to be materially adverse to the business or results of operations of
Rainy River or, in the case of a breach by Rainy River or its Affiliate, is or
would reasonably be expected to have a material adverse effect on the value or
condition of the Existing Agreements to Assignee or its Affiliates; PROVIDED
that the breaching Party hereto (or its Affiliate, as
19
applicable) shall have failed to cure such breach by the earlier of: (a) sixty
(60) days from receipt of notice thereof from the non-breaching Party hereto or
(b) March 23, 2005; PROVIDED, FURTHER, that the breach of covenant or obligation
shall not be due to any failure of the non-breaching Party hereto to perform any
of its obligations under this Agreement or under any Transaction Document.
Section 7.02 EFFECT OF TERMINATION. (a) If this Agreement is validly
terminated pursuant to Section 7.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Rainy
River or Assignee or their respective Affiliates (or any of their respective
officers, directors, employees, agents or other representatives), except Section
5.03, Section 7.02(b), Section 7.03 and Section 7.08 will continue to apply
following any such termination.
(b) If this Agreement is terminated by either Party hereto
pursuant to Section 7.01(b), or by Assignee pursuant to Section 7.01(c), then,
within ten (10) Business Days after receipt of notice of such termination, Rainy
River shall pay to Assignee the amount of $1.0 Million by wire transfer in
immediately available funds to an account designated by Assignee.
Section 7.03 SURVIVAL. The representations and warranties of the
Parties contained in Articles III and IV of this Agreement shall survive until
the date which is one year following the Closing and the covenants,
indemnification and other agreements of the Parties contained in this Agreement
shall survive until sixty days after the expiration of the applicable statue of
limitations. Notwithstanding the foregoing, any claim for fraud or criminal
misconduct by any Party hereto may be commenced at any time.
Section 7.04 HEADINGS. The section headings herein are for convenience
of reference only, do not constitute part of this Agreement and will not be
deemed to limit or otherwise affect any of the provisions hereof.
Section 7.05 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (i) as of the date and time delivered or sent by facsimile if
delivered personally or by facsimile (and if by facsimile, confirmation of
receipt is obtained), and (ii) on the fifth Business Day after deposit in the
U.S. mail, if mailed by registered or certified mail (postage prepaid, return
receipt requested), in each case to the Parties at the following addresses (or
at such other address for a Party hereto as shall be specified by like notice,
except that notices of changes of address shall be effective upon receipt):
If to Rainy River:
Rainy River Energy Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
20
Rainy River Energy Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President - Strategic Initiatives
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Assignee:
Constellation Energy Commodities Group, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Head of Operations
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Constellation Energy Commodities Group, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Any Party hereto may by notice to the other change its address for
notice and will so change its address for notice whenever its existing address
for notice ceases to be adequate for delivery both by hand and by facsimile.
Section 7.06 ASSIGNMENT. (a) The rights and obligations under this
Agreement may be transferred only with the written Consent of the other Party
hereto.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Parties hereto, and their respective successors and permitted
assigns.
(c) This Agreement shall not confer any rights or remedies
upon any Person other than the Parties hereto and their respective successors
and permitted assigns.
(d) Any purported assignment of this Agreement without the
written Consent of the other Party hereto shall be null and void.
Section 7.07 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Illinois applicable to Contracts
executed in and to be performed entirely within that State without regard to
principles of conflicts of Laws therein.
(b) To the fullest extent permitted by applicable Law, each
Party hereto (i) agrees that any claim, Action or Proceeding by such Party
seeking any relief whatsoever arising out of, or in connection with, this
Agreement or the transactions contemplated hereby shall be brought only in the
jurisdiction of any United States District Court within the State of Illinois
and
21
not in any other State or Federal court in the United States of America or any
court in any other country, (ii) agrees to submit to the exclusive jurisdiction
of such courts located in the State of Illinois for purposes of all Actions or
Proceedings arising out of, or in connection with, this Agreement or the
transactions contemplated hereby, (iii) waives and agrees not to assert any
objection that it may now or hereafter have to the laying of the venue of any
such Action or Proceeding brought in such a court or any claim that any such
Action or Proceeding brought in such a court has been brought in an inconvenient
forum and (iv) agrees that a final judgment in any such Action or Proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable Law.
Section 7.08 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
Section 7.09 EXPENSES. Except as otherwise provided herein, all fees,
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such fees,
costs and expenses.
Section 7.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the maximum extent possible.
Section 7.11 ENTIRE AGREEMENT; AMENDMENT. (a) This Agreement, the
Transaction Documents and the Non-Disclosure Agreement set forth the entire
understanding and agreement of the Parties and their Affiliates with respect to
the transactions contemplated hereby and supersede and replace any prior
understanding, agreement or statement of intent, in each case written or oral,
of any kind and every nature with respect hereto. Any provision of this
Agreement may be amended, modified or waived in whole or in part at any time by
an agreement in writing between the Parties executed in the same manner as this
Agreement.
(b) The waiver by any Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. Except as otherwise expressly provided herein, no failure on the part of
any Party hereto to exercise, and no delay in exercising, any right, power or
remedy hereunder, or otherwise available in respect hereof at Law or in equity,
shall operate as a waiver thereof, nor shall any single or partial exercise of
such right, power or remedy by such Party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
22
Section 7.12 LIMITATION OF LIABILITY. No Party hereto shall be entitled
to lost profits or consequential damages, except for either of the foregoing
constituting or resulting from a Third Party Claim.
Section 7.13 COUNTERPARTS. This Agreement may be executed in any number
of separate counterparts each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same agreement.
[Signature Page Follows]
23
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be duly executed on its behalf as of the day and year first above written.
RAINY RIVER ENERGY CORPORATION
By: /s/ ▇▇▇▇ ▇. Norgerg
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
CONSTELLATION ENERGY COMMODITIES
GROUP, INC.
LEGAL REVIEW
INT DFH DATE 12/27/04 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
24
SCHEDULE 3.02
CONSENTS
--------------------------------------------------------------------------------
CONSENT: APPLICABLE PARTY:
--------------------------------------------------------------------------------
FERC Approval of the Assignment Rainy River and Assignee
Transactions
--------------------------------------------------------------------------------
Collateral Agent Rainy River and Assignee
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Rainy River and Assignee
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
25
SCHEDULE 3.04
BROKERAGE ARRANGEMENTS
MCC Energy Advisors, Inc. (Rainy River)
26