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EXHIBIT 10.28
AMENDMENT
TO THE
ASSET SALES AGREEMENT
This Amendment, dated as of June 11, 1999 (this "Amendment"), is by and
between NIAGARA MOHAWK POWER CORPORATION, a New York corporation (the "Seller"),
and NRG ENERGY, INC., a Delaware corporation (the "Buyer").
RECITALS
A. Seller and Buyer are parties to an Asset Sales Agreement dated as
of December 23, 1998 (the "Asset Sales Agreement") pursuant to which the Buyer
has agreed to purchase from Seller the Purchased Assets (as defined in the Asset
Sales Agreement) upon the terms and conditions set forth in the Asset Sales
Agreement.
B. Section 11.1 of the Asset Sales Agreement provides that the Asset
Sales Agreement may be amended by written agreement of the Seller and the Buyer.
C. The parties desire to amend certain Sections of the Asset Sales
Agreement as set forth below:
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. All capitalized terms used in this Amendment that are
not defined elsewhere in this Amendment shall have the meanings given to those
terms in the Asset Sales Agreement.
2. Amendment of the Asset Sales Agreement. The Asset Sales Agreement
is hereby amended as follows:
(a) Ancillary Agreements. Sections 1.1(a)(2) is hereby amended by
deleting the language that is now in that Section and substituting the
following language in its place:
(2) "Ancillary Agreements" means any and all transition or
other power purchase agreements, the Site Agreement or any form
thereof, the Interconnection Agreement, as amended, and the Swaption
executed by the Seller and the Buyer or any Affiliate of the Buyer on
or before the Closing Date relating to the post-Closing conduct of the
Buyer or the Seller or any post-Closing Transactions between the Buyer
and the Seller.
(b) Purchase Price Adjustments and Proration Amounts. The following
Section 3.5 is added:
3.5 Purchase Price Adjustments and Proration Amounts.
Notwithstanding any other provision in this Article III to the
contrary, the Seller shall present to the Buyer on
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or before the Closing Date a written statement setting forth (i) the
estimated amount of all Purchase Price adjustments proposed to be made
in accordance with Section 3.2, excluding any amounts relating to the
fuel inventory, and (ii) the amounts to be paid by the Seller pursuant
to the proration provisions of Section 3.4, all of which amounts shall
be determined in good faith. The Buyer shall pay the amounts set forth
in such statement within seven (7) days following receipt of such
notice, together with interest thereon from the Closing Date calculated
at the rate of six percent (6%) per annum on the basis of a 360 day
year. As soon as practicable after the Closing, the Seller shall
deliver to the Buyer a written statement of the amount of the
Maintenance and Capital Expenditure Amount. Within three (3) days
following receipt of such statement, the Buyer shall pay such amount,
less the amount of the Employee Transition Credit, without interest.
The Buyer shall have thirty (30) days following the receipt of either
of such statements to review and object in writing to the amount of any
adjustment, proration or calculation set forth therein. If the Buyer
does object to the amount of any such adjustment or proration, and the
Buyer and the Seller have not settled the amount in dispute within
twenty (20) days following such objection, then the resolution thereof
shall be submitted to a firm of independent public accountants of
nationally recognized reputation selected by the Buyer and the Seller,
other than a firm representing either the Buyer or the Seller. The
determination by such firm of any amount shall be final. The Buyer and
the Seller shall each pay one-half of the cost of employing such firm.
(c) Collective Bargaining Agreement. Section 7.10(a) is hereby amended
by deleting the language that is now in that Section and substituting the
following language in its place:
(a) The Buyer and the Seller agree that the Buyer shall be a
successor within the meaning of the Collective Bargaining Agreement.
Each person who is included in the collective bargaining unit covered
by the Collective Bargaining Agreement, who becomes employed by the
Buyer or an Affiliate of the Buyer pursuant to this Section 7.10, and
who transitions to employment with the Buyer in accordance with the
requirements of the May 5, 1999 Memorandum of Agreement Between and
Among the Buyer, the Seller, and Local 97 of the IBEW shall be referred
to herein as an IBEW Employee. Each other person who becomes employed
by the Buyer or an Affiliate of the Buyer pursuant to this Section 7.10
who is not included in the collective bargaining unit covered by the
Collective Bargaining Agreement shall be referred to herein as a
Non-Union Employee. IBEW Employees and Non-Union Employees shall
collectively be referred to herein as Buyer Employees. The employment
of IBEW Employees shall continue in accordance with the Collective
Bargaining Agreement.
(d) Credit for Service. Section 7.10(e) is hereby amended by adding a
proviso at the end of the third sentence, and by deleting the last sentence. As
so amended, Section 7.10(e) shall read as follows:
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(e) Non-Union Employees shall be given credit for all service with
the Seller and its Affiliates under all employee benefit plans,
programs, and fringe benefit plans, programs, and fringe benefit
arrangements of the Buyer ("Buyer Benefit Plans") in which they become
participants. The service credit given is for purposes of eligibility,
vesting and service related level of benefits, but not benefit accrual
(except as provided in the following sentence). For purposes of benefit
accrual, Non-Union Employees shall be given credit for all service with
the Seller and its Affiliates under all Buyer Benefit Plans, but the
ultimate benefits provided under the Buyer Benefit Plans may be offset
by the corresponding benefits previously provided by the Seller or
benefit plans of the Seller, or by the corresponding benefits accrued
under the benefit plans of the Seller or otherwise committed to be
provided by the Seller in the future; provided, however, that such an
offset shall not be permitted with respect to Buyer's Defined Benefit
Plan described in Section 7.10(h).
(e) Trust-to-Trust Transfer. Section 7.10(f) is hereby amended by
deleting the language that is now in that Section and substituting the following
language in its place:
(f) To the extent allowable by law, the Seller shall cause to be
transferred to the Buyer's tax-qualified 401(k) plans and trusts in
which any Buyer Employee participates after the Closing Date ("Buyer
401(k) Plans"), as soon as practicable following the Closing Date,
assets representing the full account balances of all such Buyer
Employees under the corresponding tax-qualified 401(k) plans and trusts
maintained by the Seller for the benefit of the Seller's employees
("Seller 401(k) Plans"). The Buyer agrees that the assets so
transferred may include promissory notes evidencing loans from the
Seller 401(k) Plans to Buyer Employees that are outstanding as of the
transfer date. Any assets in a Niagara Mohawk Stock Fund that a Buyer
Employee has in a Seller 401(k) Plan will be transferred to a Niagara
Mohawk Stock Fund in the applicable Buyer 401(k) Plan ("Buyer Niagara
Mohawk Stock Fund"), subject to the following restrictions: the Buyer
Employee will be able to transfer assets out of the Buyer Niagara
Mohawk Stock Fund, but will not be able to make new contributions to,
or transfer any assets into, the Buyer Niagara Mohawk Stock Fund. All
transfers under this Section shall be made in accordance with
applicable Code requirements, and Buyer agrees to include in the Buyer
401(k) Plans such protected benefits from the Seller 401(k) Plans as
are required by the Code to allow such transfers to occur. The Buyer
agrees that it shall submit each Buyer 401(k) Plan to the Internal
Revenue Service for a determination letter on its tax-qualified status
under Section 401(a) of the Code as soon as practicable after the
Closing Date, and to make any amendment(s) that is, or are, determined
by the Internal Revenue Service to be necessary in order for such a
determination letter to be issued.
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(f) Buyer's Defined Benefit Plan. Section 7.10(h) is hereby amended by
deleting the language that is now in that Section and substituting the following
language in its place:
(h) Effective as of the Closing Date, the Buyer shall cause to be
established a defined benefit pension plan for the benefit of the Buyer
Employees (the "Buyer's Defined Benefit Plan"). The Buyer's Defined
Benefit Plan shall have the same terms as the Niagara Mohawk Pension
Plan as of the Closing Date, and Buyer agrees to maintain such terms
for Non-Union Employees for a period of at least seven (7) years after
the Closing Date; provided, however, that (i) if changes in the law
require any such terms to be modified, the Buyer may change such terms
to the extent necessary to comply with such laws, and (ii) if, after
consolidating the financial results of NRG Dunkirk Operations, Inc.,
NRG ▇▇▇▇▇▇▇ Operations, Inc., and NRG Oswego Harbor Power Operations,
Inc. (collectively, the "NRG Operating Companies"), the NRG Operating
Companies have two or more consecutive full calendar years of "negative
earnings" after the Closing Date, the Buyer shall have the option to
modify the level of benefits for Non-Union Employees in the Buyer's
Defined Benefit Plan in such manner as the Buyer deems appropriate and
is permitted by applicable law (for purposes of this sentence, the term
"negative earnings" means a consolidated net loss as reported on the
audited income statements of the NRG Operating Companies, for a full
calendar year before the inclusion of any one-time extraordinary items,
one-time write-off adjustments, impairment write-offs, and other
nonrecurring major adjustments booked to the income statements of the
NRG Operating Companies, as determined in accordance with generally
accepted accounting principles). The Buyer Employees shall be given
credit in the Buyer's Defined Benefit Plan for all service with and
compensation from the Seller and its Affiliates as if it were service
with and compensation from the Buyer for purposes of determining
eligibility for benefits, the amount of any benefits or benefit
accruals, vesting, and service related levels of benefits under the
Buyer's Defined Benefit Plan.
In connection with the foregoing, the following actions shall be
taken as of the Closing Date:
(1) At the time specified in subparagraph (4) below, the Seller
shall cause to be transferred to the Buyer's Defined Benefit Plan
assets equal to the Projected Benefit Obligation ("PBO"), as
determined in accordance with the 1999 actuarial assumptions as set
forth in the 1998 year-end disclosure of the Seller under Financial
Accounting Standards Board Statement 87 and listed in Section
7.10(h)(6) below (the "Assumptions"), attributable to the Buyer
Employees as of the Closing Date, together with interest at an
annual rate that is equivalent to the discount rate set forth in
the Assumptions for the period from the Closing Date to the date of
the actual transfer of assets and adjusted for benefit payments
under the Niagara Mohawk Pension Plan made pursuant to subparagraph
(5) below; provided, however, that if the Seller is unable to
transfer an amount equal to the PBO, then:
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(A) the Seller shall transfer such amount as the
Seller determines is appropriate to satisfy
the requirements of Section 414(l) of the
Code; and
(B) the Seller shall pay to the Buyer in cash
the amount of the difference between (i) the
PBO, together with interest at an annual
rate that is equivalent to the discount rate
set forth in the Assumptions for the period
from the Closing Date to the date of the
actual transfer of assets and adjusted for
benefit payments under the Niagara Mohawk
Pension Plan pursuant to subparagraph (5)
below; and (ii) the amount actually
transferred.
The transfer of the amount under this subparagraph (1) shall
be made in accordance with Section 414(l) of the Code and
Treasury Regulation Section 1.414(l)-1.
(2) The PBO shall be calculated in accordance
with the Assumptions, and assuming that 75 percent of the
Buyer Employees elect a lump sum upon retirement or
withdrawal.
(3) All assets transferred under subparagraph
(1) shall be transferred in cash, or in marketable securities
that are reasonably acceptable to the Buyer.
(4) Within 45 days after the Closing Date, the
Seller shall file or cause to be filed any Forms 5310-A that
may be required to be submitted to the Internal Revenue
Service ("IRS") in connection with the transfer described in
subparagraph (1). The transfer described in subparagraph (1)
shall be made as soon as practicable following the
determination of the amount described in subparagraph (1), but
in no event prior to the thirtieth (30th) day following the
filing of such Forms 5310-A with the IRS or, in the event that
the IRS, the Pension Benefit Guaranty Corporation ("PBGC"), or
any other governmental entity raises any objections to the
transfer, the date as of which the IRS, the PBGC, or other
governmental entity withdraws such objections or is satisfied
that the terms of the transfer have been modified to the
extent necessary to meet such objections.
(5) Upon completion of the transfer under
subparagraph (1), all benefit payments from the Buyer's
Defined Benefit Plan shall be the responsibility of the Buyer.
Pending completion of the transfer under subparagraph (1), any
benefits that are payable to the Buyer Employees under the
Buyer's Defined Benefit Plan shall be paid or continue to be
paid out of the Niagara Mohawk Pension Plan, and the amount to
be transferred under subparagraph (1) shall be reduced by the
amount of such payments. Pending the completion of such
transfer, the Seller
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will cooperate with the Buyer with respect to plan
administration, including the disbursement of benefits.
(6) The Assumptions are as follows:
Discount Rate 6.75%
Salary Scale 2.5%, plus merit table
Interest Crediting Rate 5.2%
Lump Sum Conversion 5.2% and the 1983
GATT Mortality
Basis Table
Mortality Table 1983 Interim GAM
table projected to
1988 with scale H
Other Applicable
Assumptions The other 1999
actuarial
assumptions
described in the
1998 year-end
disclosure of
Seller under
Financial
Accounting
Standards Board
Statement 87
(7) The Buyer agrees that it shall submit
the Buyer's Defined Benefit Plan to the Internal
Revenue Service for a determination letter on its
tax-qualified status under Section 401(a) of the Code
as soon as practicable after the Closing Date, and to
make any amendment(s) that is, or are, determined by
the Internal Revenue Service to be necessary in order
for such a determination letter to be issued.
The Seller agrees that it shall use its reasonable
best efforts to accomplish the transfer of assets described in
subparagraph (1) of this Section 7.10(h); provided, however,
that if Seller determines in good faith that it is unable to
make such a transfer, then, notwithstanding the language in
this Section 7.10(h), the Seller and the Buyer agree to
negotiate a mutually agreeable resolution of the defined
benefit issues in this Section 7.10(h).
(g) Allocation of Emissions Credits. Schedule 2.2(g) is hereby
amended to provide as follows:
The Excluded Assets shall include 41/153rds of the NOx
Emission Reduction Credits available to the Seller on the Closing Date
that are attributable to any of the Purchased Assets. The remainder of
such NOx Emission Reduction Credits, and all SOx
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Emission Reduction Credits available to the Seller on the Closing Date
that are attributable to any of the Purchased Assets, shall be included
in the Purchased Assets.
(h) ▇▇▇▇▇▇▇ Real Property Lease. Section 1.1(36)(i) is hereby amended
by adding the following language at the end of such Section:
, provided, however, that any provision of this Agreement to the
contrary notwithstanding, until the conveyance of the ▇▇▇▇▇▇▇ Real
Property by the Seller to the Buyer pursuant to the terms of the Lease
Agreement dated the Closing Date between the Seller as lessor and
▇▇▇▇▇▇▇ Power LLC as lessee, the rights and obligations of the Buyer
and Seller with respect to the ▇▇▇▇▇▇▇ Real Property shall be governed
by the terms of such Lease Agreement, and for all other purposes of
this Agreement, the ▇▇▇▇▇▇▇ Real Property shall be included in the
Purchased Assets
3. Confirmation of the Asset Sales Agreement. Except as amended by this
Amendment, all of the provisions of the Asset Sales Agreement remain in full
force and effect from and after the date of this Amendment, and the parties
hereby ratify and confirm the Asset Sales Agreement and each of its obligations.
From and after the date of this Amendment, all references in the Asset Sales
Agreement to "this Agreement", "hereof", "herein", or similar terms, shall mean
and refer to the Asset Sales Agreement as amended by this Amendment.
4. Counterparts. This Amendment 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.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this Amendment
to be signed by their respective duly authorized officers as of the date first
above written.
NIAGARA MOHAWK POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President Financial Planning
NRG ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and General Counsel
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