Exhibit 10(c)
ASSET PURCHASE AGREEMENT
dated as of November 1, 1998
by and between
PP&L GLOBAL, INC.
and
PORTLAND GENERAL ELECTRIC COMPANY
CONTENTS
Page
ARTICLE I SALE OF ASSETS AND CLOSING 1
1.01 The Sale 1
1.02 Liabilities 5
1.03 Purchase Price; Allocation 6
1.04 Purchase Price Adjustment 7
1.05 Closing 8
1.06 Prorations 9
1.07 Further Assurances; Post-Closing Cooperation 10
1.08 Third Party Consents 11
1.09 Insurance Proceeds 11
1.10 Inclusion/Exclusion of Certain Assets 12
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER 13
2.01 Corporate Existence of Seller 13
2.02 Authority 13
2.03 No Conflicts 13
2.04 Governmental Approvals and Filings 14
2.05 Reports 14
2.06 Taxes 15
2.07 Legal Proceedings 15
2.08 Compliance with Laws and Orders 15
2.09 Real Property 15
2.10 Tangible Personal Property 16
2.11 Intellectual Property Rights 17
2.12 Contracts 17
2.13 Licenses 18
2.14 Insurance 18
2.15 Environmental Matters 19
2.16 Absence of Condemnation Proceedings 19
2.17 Regulation as a Utility 20
2.18 Brokers 20
2.19 Acknowledgment of Purchaser 20
2.20 Disclaimers Regarding Assets 20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER 21
3.01 Corporate Existence 21
3.02 Authority 21
3.03 No Conflicts 21
3.04 Governmental Approvals and Filings 22
3.05 Legal Proceedings 22
3.06 Compliance with Laws and Orders 22
3.07 Regulation as a Utility 23
3.08 Brokers 23
3.09 Financing 23
3.10 Financial Statements 23
3.11 Opportunity to Inspect Assets 23
ARTICLE IV COVENANTS OF SELLER 24
4.01 Regulatory and Other Approvals 24
4.02 HSR Filings 25
4.03 Investigation by Purchaser 25
4.04 No Solicitations 26
4.05 Conduct of Business 26
4.06 Certain Restrictions 26
4.07 Security Deposits 28
4.08 Delivery of Books and Records, etc.; Removal of
Property 28
4.09 Fulfillment of Conditions 28
4.10 Observation, Inspection and Participation 28
4.11 Notice of Breach 29
4.12 Bridge Financing Fees 29
4.13 Special Maintenance and Capital Expenditures 29
ARTICLE V COVENANTS OF PURCHASER 30
5.01 Regulatory and Other Approvals 30
5.02 HSR Filings 31
5.03 PPUC Approval for Holding Company 31
5.04 Notice of Breach 31
5.05 Fulfillment of Conditions 31
5.06 Tax-Exempt Bond Financed Pollution Control
Facilities 32
5.07 Purchaser Financing 32
5.08 Transmission 32
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER 33
6.01 Representations and Warranties 33
6.02 Performance 34
6.03 Officers' Certificates 34
6.04 Orders and Laws 34
6.05 Regulatory Consents and Approvals 34
6.06 Colstrip Rights of First Refusal 34
6.07 Third Party Consents 34
6.08 No Seller Material Adverse Effect 35
6.09 Proceedings 35
6.10 Deliveries 35
6.11 Colstrip Operations Arrangements 35
6.12 Purchaser Financing 35
6.13 Opinion of Counsel 35
6.14 Transfer of MPC Generation Assets 35
6.15 Transmission Agreements 36
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER 36
7.01 Representations and Warranties 36
7.02 Performance 36
7.03 Officers' Certificates 36
7.04 Orders and Laws 37
7.05 Regulatory Consents and Approvals 37
7.06 Third Party Consents 37
7.07 Opinion of Counsel 37
7.08 No Purchaser Material Adverse Effect 37
7.09 Proceedings 37
7.10 Colstrip Rights of First Refusal 38
7.11 Deliveries 38
7.12 Transmission Agreements 38
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES 38
8.01 Transfer Taxes 38
8.02 Returns with respect to Prorated Taxes 38
ARTICLE IX SURVIVAL; NO OTHER REPRESENTATIONS 39
9.01 Survival of Representations, Warranties, Covenants
and Agreements 39
9.02 No Other Representations 39
ARTICLE X INDEMNIFICATION 40
10.01 Other Indemnification 40
10.02 Method of Asserting Claims 42
10.03 Exclusivity 45
10.04 Purchaser's Release of Seller Under the Colstrip
Contracts 45
ARTICLE ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
11.01 Termination 46
11.02 Effect of Termination 47
ARTICLE XII DEFINITIONS 47
12.01 Definitions 47
ARTICLE XIII MISCELLANEOUS 61
13.01 Notices 61
13.02 Bulk Sales Act 62
13.03 Entire Agreement 62
13.04 Expenses 62
13.05 Public Announcements 63
13.06 Confidentiality 63
13.07 Waiver 64
13.08 Amendment 64
13.09 No Third Party Beneficiary 64
13.10 No Assignment; Binding Effect 64
13.11 Headings 65
13.12 Invalid Provisions 65
13.13 Governing Law 65
13.14 Counterparts 65
SCHEDULES
Schedule I Pre-Closing Known Remedial Liabilities
EXHIBITS
Exhibit A General Assignment and ▇▇▇▇ of Sale
Exhibit B Assumption Agreement
Exhibit C Pollution Control Facilities
Exhibit D Officer's Certificate of Seller
Exhibit E Secretary's Certificate of Seller
Exhibit F [Intentionally Omitted]
Exhibit G-1 Opinion of Counsel to Seller
Exhibit G-2 Opinion of General Counsel of Seller
Exhibit G-3 Opinion of Outside Montana Counsel to Seller
Exhibit H Officer's Certificate of Purchaser
Exhibit I Secretary's Certificate of Purchaser
Exhibit J Opinion of Counsel to Purchaser
Exhibit K Transmission Service Agreement Principles
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of November 1, 1998
is made and entered into by and between PP&L Global, Inc., a
Pennsylvania corporation ("Purchaser"), and Portland General
Electric Company, an Oregon corporation ("Seller"). Capitalized
terms not otherwise defined herein have the meanings set forth
in Section 12.01.
WHEREAS, Seller and its Affiliates engage in a number of
diversified energy related businesses;
WHEREAS, Seller's principal business is regulated utility
operations involving the generation, purchase, transmission and
distribution of electricity in Oregon; and
WHEREAS, Seller desires to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase and acquire from
Seller, Seller's undivided interests in Colstrip Units 3 & 4 and
related transmission assets (as defined herein, the "PGE
Colstrip Interests"), Seller's rights under the Colstrip
Contracts (as defined herein) and certain other assets of Seller
relating to the PGE Colstrip Interests, and in connection
therewith, Purchaser has agreed to assume certain of the
liabilities of Seller relating to such assets, all on the terms
set forth herein;
WHEREAS, on the date hereof PP&L Resources, a Pennsylvania
corporation and the parent of Purchaser ("Parent"), has entered
into an Equity Contribution Agreement (the "Contribution
Agreement") with Purchaser and Seller;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
I.1 The Sale
(a) On the terms and subject to the conditions set forth
in this Agreement, Seller will sell, transfer, convey, assign
and deliver to Purchaser, and Purchaser will purchase and pay
for, at the Closing, free and clear of all Liens other than
Permitted Liens (as such term is defined with respect to any
date after the Closing), all of Seller's right, title and
interest in, to and under the PGE Colstrip Interests and the
Assets and Properties used or held for use principally in
connection with the operation of the Colstrip Facilities, except
as otherwise provided in Section 1.01(b), as the same shall
exist as of the Closing including, but not limited to the
following (collectively with any proceeds and awards referred to
in Section 1.09, the "Assets"):
(i) Real Property. The real property (including all
buildings, structures, fixtures and other improvements thereon)
used or held for use in connection with or related to the
operation of the Colstrip Facilities, as described in
Section 1.01(a)(i) of the Disclosure Schedule, which real
property is held in fee, easement, permit interest or other
interest, as the case may be (the "Real Property");
(ii) Real Property Leases. (A) The leases and subleases
of real property used or held for use in connection with or
related to the operation of the Colstrip Facilities, as
described in Section 1.01(a)(ii)(A) of the Disclosure Schedule,
as to which Seller is the lessor or sublessor and (B) the leases
and subleases of real property used in connection with or
related to the operation of the Colstrip Facilities, as
described in Section 1.01(a)(ii)(B) of the Disclosure Schedule,
as to which Seller is the lessee or sublessee, together with any
options to purchase the underlying property and leasehold
improvements thereon, and in each case all other rights,
subleases, licenses, permits, deposits and profits appurtenant
to or related to such leases and subleases (the leases and
subleases described in subclauses (A) and (B), the "Real
Property Leases");
(iii) Inventory. All inventories of fuels, supplies,
materials and spares used or held for use in connection with the
operation of the Colstrip Facilities located on the Real
Property or the real property subject to the Real Property
Leases, held for use principally in connection with, or in
transit to the Colstrip Facilities on the date of the Closing (a
listing of the fuel inventories, as of September 30, 1998, is
included in Section 1.01(a)(iii) of the Disclosure Schedule)
(the "Inventory");
(iv) Tangible Personal Property. All machinery,
equipment, vehicles, furniture and other personal property
located where the operation of the Colstrip Facilities is
conducted, or used or held for use in connection with the
operation of the Colstrip Facilities (including but not limited
to the items listed in Section 1.01(a)(iv) of the Disclosure
Schedule), together with all buildings and structures
("Improvements") pertaining to Colstrip Units 3 and 4, including
Seller's interest in the facilities shared by Colstrip Units 1,
2, 3 and 4 relating thereto, as to those Improvements which have
been severed from the Real Property and are to be treated as
personal property, and all warranties against manufacturers or
vendors relating thereto, to the extent that such warranties are
freely transferable (the "Tangible Personal Property");
(v) Business Contracts. All contracts, agreements and
personal property leases (other than the Real Property Leases,
the Transferable Permits, the Fuel Contracts, and the Colstrip
Contracts) used primarily in the operation of the Colstrip
Facilities, that are listed in Section 1.01(a)(v) of the
Disclosure Schedule (the "Business Contracts");
(vi) Transferable Permits. All Licenses and
Environmental Permits owned or held by Seller and used or held
for use in connection with the operation of the Colstrip
Facilities that are transferable by Seller to Purchaser as
listed in Section 1.01(a)(vi) of the Disclosure Schedule, and
the water rights owned or held by Seller, whether or not such
rights are created or evidenced by a License, and used or held
for use in connection with the operation of the Colstrip
Facilities including those listed in Section 1.01(a)(vi) of the
Disclosure Schedule (the "Transferable Permits");
(vii) Intangible Personal Property. All Intellectual
Property used or held for use principally in connection with the
operation of the Colstrip Facilities and all rights, privileges,
claims, causes of action and options relating or pertaining to
the operation of the Colstrip Facilities or the Assets,
including but not limited to the items listed in
Section 1.01(a)(vii) of the Disclosure Schedule (the "Intangible
Personal Property");
(viii) Security Deposits. All security deposits
deposited by or on behalf of Seller as lessee or sublessee under
the Real Property Leases (the "Tenant Security Deposits");
(ix) Prepaid Expenses. Except for prepaid expenses and
deposits of Seller attributable to any Excluded Asset or
Retained Liabilities, all prepaid expenses, progress payments
and deposits of or by Seller, rights to receive a prepaid
expense, deposit or progress payment, and cash in transit that
constitutes a prepaid expense, progress payment or deposit,
relating to the Assets or the ownership, operation and
maintenance of the Colstrip Facilities;
(x) Fuel Contracts. All of the fuel contracts listed
in Section 1.01(a)(x) of the Disclosure Schedule (the "Fuel
Contracts");
(xi) Colstrip Contracts. Seller's undivided interests
in and all of Seller's rights under the Contracts relating to
the Colstrip Facilities listed in Section 1.01(a)(xi) of the
Disclosure Schedule (the "Colstrip Contracts");
(xii) Allowance and Emission Reduction Credits. All of
the allowances and/or emission reduction credits described in
Section 1.01(a)(xii) of the Disclosure Schedule;
(xiii) Warranties. Any other warranties and
indemnities given by third parties relating to the Assets or to
the ownership, operation and maintenance of the Colstrip
Facilities other than in connection with any Excluded Assets or
Retained Liabilities;
(xiv) Colstrip Books and Records. All books, operating
and maintenance records, operating, safety and maintenance
manuals, engineering or design plans, drawings, blue prints and
as-built plans, specifications, procedures and similar items of
Seller relating specifically to the Colstrip Facilities (the
"Colstrip Books and Records"); and
(xv) PGE Colstrip Transmission Assets. Subject to
Sections 1.10 and 6.12, the PGE Colstrip Transmission Assets as
described in Section 1.01(a)(xv) of the Disclosure Schedule.
To the extent any of the Colstrip Books and Records are
items susceptible to duplication and are either (x) used in
connection with any of Seller's businesses other than the
Colstrip Facilities or (y) are required by Law to be retained by
Seller, Seller may deliver photostatic copies or other
reproductions from which, in the case of Colstrip Books and
Records referred to in clause (x), information solely concerning
Seller's businesses other than the Colstrip Facilities has been
deleted. To the extent that any Contract to be transferred
hereunder to Purchaser is also utilized by or is for the benefit
of any of Seller's businesses other than the Colstrip
Facilities, the rights and obligations under such Contracts
shall be to the extent practicable allocated between the
Colstrip Facilities and such other businesses in a fair and
equitable manner that is reasonably satisfactory to the parties.
(b) Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the Assets shall not include the
following assets of Seller (the "Excluded Assets"):
(i) Cash. All cash, commercial paper, certificates of
deposit and other bank deposits, treasury bills and other cash
equivalents;
(ii) Investments. Certificates of deposit, shares of
stock, securities, evidences of Indebtedness, interest in joint
ventures, partnerships, limited liability companies and other
entities;
(iii) Tax Refunds. All refunds or credits, if any, of
Taxes relating to the Assets due to Seller attributable to any
period ending on or prior to the Closing;
(iv) Real and Personal Property. The real or personal
property forming part of the Assets described in
Section 1.01(b)(iv) of the Disclosure Schedule, the delineation
and composition of which shall be subject to the Separation
Document;
(v) Corporate Records. All Books and Records of
Seller other than the Colstrip Books and Records;
(vi) Litigation Claims. Any rights (including
indemnification) and claims and recoveries under litigation of
Seller against third parties attributable to the period on or
prior to the Closing except to the extent relating to the
Assumed Liabilities;
(vii) Excluded Obligations. The rights of Seller in,
to and under all Contracts of any nature, the obligations of
Seller under which are not expressly assumed by Purchaser
pursuant to Section 1.02(a);
(viii) Tradename and Logo. All tradenames,
trademarks, service marks or logos owned by Seller or its
Subsidiaries including all of Seller's right, title and interest
in, to and under the names "PGE" "Portland General Electric
Company" or "Enron" or any related or similar trade names,
trademarks, service marks or logos;
(ix) Accounts Receivable. All trade accounts
receivable and all notes, bonds and other evidences of
Indebtedness of and rights to receive payments arising out of
sales occurring in connection with the operation of the Colstrip
Facilities prior to the Closing and the security agreements
related thereto, including any rights of Seller with respect to
any third party collection procedures or any other Actions or
Proceedings which have been commenced in connection therewith;
(x) Insurance. Life insurance policies of Seller's
Employees and all other insurance policies relating to the
Colstrip Interests;
(xi) Allowance and Emission Reduction Credits. All of
Seller's excess allowances and/or emission reduction credits
relating to the Colstrip Facilities that are not described in
Section 1.01(a)(xii) of the Disclosure Schedule;
(xii) All Other Assets. All other Assets and
Properties owned by Seller or its Affiliates not used in the
operation of the Colstrip Facilities; and
(xiii) Other. Seller's rights under this Agreement
and the Operative Agreements.
I.2 Liabilities
(a) Assumed Liabilities. In connection with the sale,
transfer, conveyance, assignment and delivery of the Assets
pursuant to this Agreement, on the terms and subject to the
conditions set forth in this Agreement, at the Closing,
Purchaser will assume and agree to pay, perform and discharge
when due all of the following Liabilities of Seller, direct or
indirect, known or unknown, absolute or contingent, which arise
and are attributable to the period after the date of the Closing
and relate solely to the Assets or which arose and relate to the
period on or prior to the date of the Closing and are
specifically referred to in this Section 1.02(a) as being
assumed by Purchaser (in all cases, except for Seller's
Liabilities in connection with the Pollution Control Bonds and
Liabilities constituting Retained Liabilities) (the "Assumed
Liabilities"):
(i) Real Property Lease Obligations. All Liabilities
of Seller under the Real Property Leases arising and to be
performed after the date of the Closing, and excluding any such
Liabilities arising or to be performed on or prior to the date
of the Closing;
(ii) Tangible Personal Property Obligations. All
Liabilities of Seller under any Contract related to the Tangible
Personal Property arising and to be performed after the date of
the Closing, and excluding any such Liabilities arising or to be
performed on or prior to the date of the Closing;
(iii) Liabilities under Business Contracts and
Transferable Permits. All Liabilities of Seller under the
Business Contracts and Transferable Permits, to the extent
transferred to Purchaser, arising and to be performed after the
date of the Closing, and excluding any such Liabilities arising
or to be performed on or prior to the date of the Closing;
(iv) Security Deposits. All Liabilities of Seller
with respect to any security deposit held by Seller as lessor or
sublessor under the Real Property Leases, to the extent and only
to the extent of the respective amount of the security deposit
delivered to Purchaser at the Closing with respect to any such
Real Property Lease (the "Landlord Security Deposits");
(v) Fuel Contracts and Colstrip Contracts. All
Liabilities of Seller under the Fuel Contracts and the Colstrip
Contracts arising and to be performed after the date of the
Closing and excluding any such Liabilities arising or to be
performed on or prior to the date of the Closing;
(vi) Pre-Closing Colstrip Contracts Liabilities. All
Liabilities of Seller described in Section 1.02(a)(vi) of the
Disclosure Schedule; and
(vii) Environmental Liabilities. Subject to
Section 10.01(b), all Environmental Liabilities; provided,
however, that nothing set forth in this Section 1.02(a) shall
require Purchaser to assume any Liability for (x) payment of any
fines or penalties imposed by a Governmental or Regulatory
Authority relating to the ownership, operation and maintenance
of the Colstrip Facilities on or prior to the Closing
("Environmental Fines and Penalties"), or (y) any Off-Site
Environmental Liabilities).
Except with respect to Environmental Liabilities that are
Assumed Liabilities, Assumed Liabilities shall not include
Liabilities to the extent such Liabilities, but for a breach or
default by Seller of its obligations, would have been paid,
performed or otherwise discharged specifically by their terms or
the terms hereof on or prior to the Closing as it relates to the
Assets or to the extent the same arise out of any such breach or
default.
(b) Retained Liabilities. Except for the Assumed
Liabilities, Purchaser shall not assume by virtue of this
Agreement or the transactions contemplated hereby, and shall
have no liability for, any Liabilities of Seller, including
Seller's Liabilities under this Agreement and the Operative
Agreements including, but not limited to, the following (the
"Retained Liabilities"):
(i) any Liabilities of Seller in connection with the
Pollution Control Bonds or claims by bondholders;
(ii) any Environmental Fines and Penalties;
(iii) any Off-Site Environmental Liabilities;
(iv) any Liabilities of Seller in respect of any
Excluded Assets;
(v) any Liabilities of Seller for Taxes;
(vi) any Liabilities of Seller with respect to
commitments for the purchase or sale of power or fuel, other
than as provided in Section 1.02(a); and
(vii) any Liabilities of Seller relating to any
Employee of Seller.
I.3 Purchase Price; Allocation
(a) Purchase Price. Subject to any adjustment required
pursuant to Sections 1.10 or 4.12, the aggregate purchase price
for the Assets shall be an amount equal to the sum of (x) the
Base Purchase Price, (y) the Adjustment Amount, and (z) subject
to Sections 1.10 and 6.12, the PGE Transmission Amount
(collectively, the "Purchase Price"), payable in immediately
available United States funds at the Closing in the manner
provided in Section 1.05 or thereafter (as provided in
Section 1.04).
(b) Allocation of Purchase Price. Purchaser and Seller
shall negotiate in good faith prior to the Closing and determine
the allocation of the consideration paid by Purchaser for the
Assets. Each party hereto agrees (i) that any such allocation
shall be consistent with the requirements of Section 1060 of the
Code and the regulations thereunder, (ii) to complete jointly
and to file separately Form 8594 with its Federal Income Tax
Return consistent with such allocation for the tax year in which
the Closing occurs and (iii) that no party will take a position
on any income, transfer or gains Tax Return, before any
Governmental or Regulatory Authority charged with the collection
of any such Tax or in any judicial proceeding, that is in any
manner inconsistent with the terms of any such allocation
without the consent of the other party.
I.4 Purchase Price Adjustment
(a) Within 30 days after the Closing, Seller shall obtain
from MPC and deliver to Purchaser a statement (each, an
"Adjustment Statement") which reflects (i) the net book value,
as reflected on the books of Seller as of the Closing of all
fuel inventory (FERC account no. 151) and stores inventory (FERC
account no. 154) used at or in connection with the PGE Colstrip
Interests (the "Inventory Adjustment Amount"), and (ii) the
Maintenance and Capital Expenditures Amount applicable to the
PGE Colstrip Interests. The Inventory Adjustment Amount and the
Maintenance and Capital Expenditures Amount for the Closing are
referred to collectively as the "Adjustment Amount." The
Inventory Adjustment Amount will be based on an inventory survey
conducted by MPC within five days prior to the Closing
consistent with MPC's current inventory procedures (the
"Inventory Survey"). Seller will request that MPC permit an
employee, or representative, of Purchaser to observe the
Inventory Survey. Each Adjustment Statement shall be prepared
using the same generally accepted accounting principles,
policies and methods as MPC has historically used in connection
with the calculation of the items reflected on such Adjustment
Statement. Purchaser agrees to cooperate with Seller and MPC in
connection with the preparation of each Adjustment Statement and
related information, and shall provide to Seller and MPC such
books, records and information as may be reasonably requested
from time to time.
(b) Purchaser may dispute an Inventory Adjustment Amount
or a Maintenance and Capital Expenditures Amount; provided,
however, that Purchaser shall notify Seller and MPC in writing
of the disputed amount, and the basis of such dispute, within
ten (10) Business Days of Purchaser's receipt of the applicable
Adjustment Statement. In the event of a dispute with respect to
any part of an Adjustment Amount, Purchaser and Seller shall
attempt to reconcile their differences and any resolution by
them as to any disputed amounts shall be final, binding and
conclusive on the parties. If Purchaser and Seller are unable
to reach a resolution of such differences within 30 days of
receipt of Purchaser's written notice of dispute to Seller,
Purchaser and Seller shall submit the amounts remaining in
dispute for determination and resolution to the Independent
Accounting Firm, which shall be instructed to determine and
report to the parties, within 30 days after such submission,
upon such remaining disputed amounts, and such report shall be
final, binding and conclusive on the parties hereto with respect
to the amounts disputed. The fees and disbursements of the
Independent Accounting Firm shall be shared equally by Purchaser
and Seller.
(c) Within ten (10) Business Days after Purchaser's
receipt of an Adjustment Statement, Purchaser shall pay all
undisputed amounts, or if there is a dispute with respect to any
amount of such Adjustment Statement within five (5) Business
Days after the final determination of any amounts on such
Adjustment Statement, Purchaser shall pay to Seller an amount
equal to the disputed Adjustment Amount as finally determined to
be payable with respect to such Adjustment Statement. All
Adjustment Statement payments shall be less the Estimated
Adjustment Amount; provided, however, that if such amount shall
be less than zero then within five (5) Business Days after the
final determination of such amount Seller will pay to Purchaser
the amount by which such amount is less than zero. Any amount
paid under this Section 1.04 shall be paid with interest for the
period commencing on the date of the Closing through the date of
payment, calculated at the prime rate for domestic banks as
published in the Wall Street Journal (Northeast Edition) in the
"Money Rates" section on the date of the Closing, and in
immediately available United States funds.
I.5 Closing
The Closing will take place at the offices of LeBoeuf,
Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as Purchaser and Seller
mutually agree, at 10:00 A.M. local time on the Closing Date.
At the Closing, Purchaser will pay an amount (the "Estimated
Purchase Price") in United States dollars equal to the sum of
(x) the Base Purchase Price, as the same may be adjusted
pursuant to Sections 1.10 and 4.12, and (y) the Estimated
Adjustment Amount for the Closing, by wire transfer of
immediately available United States funds to such account as
Seller may reasonably direct by written notice delivered to
Purchaser by Seller at least two (2) Business Days before the
Closing. Simultaneously, (a) Seller will assign and transfer to
Purchaser good and valid title in and to the Assets (free and
clear of all Liens, other than Permitted Liens, as such term is
defined with respect to periods after the Closing) by delivery
of (i) a General Assignment and ▇▇▇▇ of Sale substantially in
the form of Exhibit A hereto (the "General Assignment"), duly
executed by Seller, covering the Personal Property comprising
the Assets except for the Intellectual Property, (ii) an
assignment of the Intellectual Property in form and substance
reasonably satisfactory to Purchaser, (iii) (A) special warranty
deeds in proper statutory form for recording and otherwise in
form and substance reasonably satisfactory to Purchaser
conveying good and marketable title to the Real Property in
which Seller has a fee or easement interest (subject only to
Permitted Liens), (B) an assignment in form and substance
reasonably satisfactory to Purchaser conveying valid and
subsisting title to the Real Property in which Seller has a
permit interest or other interest (neither fee nor
easement)(subject only to Permitted Liens), and (C) all
necessary documentation to transfer and convey to Purchaser the
water rights listed in Section 1.01(a)(vi) of the Disclosure
Schedule including water rights transfer certificates executed
in proper form to be filed with the appropriate Governmental or
Regulatory Authority, and (iv) such other good and sufficient
instruments of conveyance, assignment and transfer, in form and
substance reasonably acceptable to Purchaser's counsel, as shall
be effective to vest in Purchaser good and valid title to the
Assets, good and marketable title to the Real Property in which
Seller has a fee or easement interest and valid and subsisting
title to the Real Property in which Seller has a permit interest
or other interest (neither fee nor easement), in each case
subject only to Permitted Liens (the General Assignment and the
other instruments referred to in clauses (a) (ii), (iii) and
(iv) being collectively referred to herein as the "Assignment
Instruments"), and (b) Purchaser will assume from Seller the due
payment, performance and discharge of the Assumed Liabilities by
delivery of (i) an Assumption Agreement substantially in the
form of Exhibit B hereto (the "Assumption Agreement"), duly
executed by Purchaser, and (ii) such other good and sufficient
instruments of assumption, in form and substance reasonably
acceptable to Seller's counsel, as shall be effective to cause
Purchaser to assume the Assumed Liabilities as and to the extent
provided in Section 1.02(a) (the Assumption Agreement and such
other instruments referred to in clause (b) (ii) being
collectively referred to herein as the "Assumption
Instruments"). At the Closing, there shall also be delivered to
Seller and Purchaser the opinions, certificates and other
contracts, documents and instruments required to be delivered
under Articles VI and VII.
I.6 Prorations
The following items relating to the Assets, the ownership
of the PGE Colstrip Interests, and the operation of the Colstrip
Facilities, will be allocated pro rata per diem for the tax year
that includes the date of the Closing, with Seller liable for
such items to the extent they are allocable to the period prior
to the date of the Closing and Purchaser liable for such items
to the extent they are allocable to periods beginning with and
subsequent to the date of the Closing:
(a) Property Taxes on or with respect to the Assets.
(b) Rents, additional rents, Taxes, to the extent normally
adjusted in connection with similar transactions, and other
items payable by Seller under the Real Property Leases and the
Business Contracts.
(c) The amount of rents, Taxes and charges for sewer,
water, telephone, electricity and other utilities relating to
the Real Property and the real property subject to the Real
Property Leases.
(d) All other items (excluding other Taxes) normally
adjusted in connection with similar transactions.
Except as otherwise agreed by the parties, the net amount
of all such prorations will be settled and paid on the date of
the Closing. At least ninety (90) days prior to the Closing
Date, Seller will provide Purchaser with a reasonably detailed
schedule showing a calculation of the estimated prorations as if
the Closing were occurring on such date. If the Closing shall
occur before a real estate Tax rate is fixed, the apportionment
of Taxes shall be based upon the Tax rate for the preceding year
applied to the latest assessed valuation and such Taxes shall be
reprorated upon the request of Seller, on the one hand, or
Purchaser, on the other hand, made within sixty (60) days after
the date that the actual amounts become available. Seller and
Purchaser 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 1.06.
I.7 Further Assurances; Post-Closing Cooperation
(a) Subject to the terms and conditions of this Agreement,
at any time or from time to time after the Closing, at
Purchaser's request and without further consideration, Seller
shall execute and deliver to Purchaser such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as
Purchaser may reasonably deem necessary or desirable in order
more effectively to transfer, convey and assign to Purchaser,
and to confirm Purchaser's title to, all of the Assets, and, to
the full extent permitted by Law, to put Purchaser in actual
possession and control of the Assets and to assist Purchaser in
exercising all rights with respect thereto, and otherwise to
cause Seller to fulfill its obligations under this Agreement and
the Operative Agreements. From time to time after the Closing,
at Purchaser's request and expense, Seller will reasonably
cooperate with Purchaser in its efforts to maximize any Tax
benefits associated with the Assets with respect to periods
following the Closing and to minimize the Tax costs associated
with the transactions contemplated hereby; provided such
cooperation does not adversely affect Seller's Tax position.
From time to time after the Closing, at Seller's request and
expense, Purchaser will reasonably cooperate with Seller in its
efforts to maximize any Tax benefits associated with the Assets
with respect to periods prior to the Closing and to minimize the
Tax costs associated with the transactions contemplated hereby;
provided such cooperation does not adversely affect Purchaser's
Tax position.
(b) Following the Closing, each party will afford the
other party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and
other data relating to the PGE Colstrip Interests in its
possession with respect to periods prior to the Closing and the
right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party
in connection with (i) the preparation of Tax Returns, (ii) the
determination or enforcement of rights and obligations under
this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or
enforcement of the rights and obligations of any Indemnified
Party or (v) in connection with any actual or threatened Action
or Proceeding. Further each party agrees for a period extending
six (6) years after the Closing not to destroy or otherwise
dispose of any such books, records and other data unless such
party shall first offer in writing to surrender such books,
records and other data to the other party and such other party
shall not agree in writing to take possession thereof during the
thirty (30) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns,
other documents or reports required to be filed with
Governmental or Regulatory Authorities or its financial
statements or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional information,
documents or records relating to the PGE Colstrip Interests not
referred to in paragraph (b) above, and such information,
documents or records are in the possession or control of the
other party, such other party shall use its best efforts to
furnish or make available such information, documents or records
(or copies thereof) at the recipient's request, cost and
expense. Any information obtained by such party in accordance
with this paragraph shall be held confidential by such party in
accordance with Section 13.06.
(d) Notwithstanding anything to the contrary contained in
this Section 1.07, if the parties are in an adversarial
relationship in litigation or arbitration, the furnishing of
information, documents or records in accordance with paragraph
(c) of this Section 1.07 shall be subject to applicable rules
relating to discovery.
I.8 Third Party Consents
To the extent that any Business Contract, Transferable
Permit, Fuel Contract or Colstrip Contract is not assignable
without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if
such assignment or attempted assignment would constitute a
breach thereof. Seller and Purchaser shall use their reasonable
efforts to obtain the consent of such other party to the
assignment of any such Business Contract, Transferable Permit,
Fuel Contract or Colstrip Contract to Purchaser in all cases in
which such consent is or may be required for such assignment.
If any such consent shall not be obtained, or if any attempted
assignment would be ineffective or would impair Purchaser's
rights and obligations so that Purchaser would not in effect
acquire the benefit of substantially all of such rights and
obligations, Seller shall cooperate with Purchaser in any
reasonable arrangement, to the extent legally permissible,
designed to provide for Purchaser the benefits intended to be
assigned to Purchaser under the relevant Business Contract,
Transferable Permit, Fuel Contract or Colstrip Contract,
including enforcement at the cost and for the account of
Purchaser of any and all rights of Seller against the other
party thereto arising out of the breach or cancellation thereof
by such other party or otherwise. If and to the extent that
such arrangement is not made in a manner reasonably satisfactory
to Purchaser, Purchaser shall have no obligation pursuant to
Section 1.02 or otherwise only with respect to any such Business
Contract, Transferable Permit, Fuel Contract or Colstrip
Contract. The provisions of this Section 1.08 shall not affect
the right of Purchaser not to consummate the transactions
contemplated by this Agreement as provided in Section 1.10 or if
the conditions to its obligations hereunder contained in
Sections 6.05, 6.06 and 6.07 have not been fulfilled.
I.9 Insurance Proceeds
If any of the Assets (other than an Asset excluded under
Section 1.10) is destroyed, damaged or taken in condemnation,
the insurance proceeds or condemnation award with respect
thereto shall be an Asset; provided, however, Seller agrees not
to settle or compromise any amounts concerning such Assets
during negotiations with Seller's insurance company without
Purchaser's prior consent. At the Closing, Seller shall pay or
credit to Purchaser any such insurance proceeds or condemnation
awards received by it on or prior to the Closing and shall
assign to or assert for the benefit of Purchaser all of its
rights against any insurance companies, Governmental or
Regulatory Authorities and others with respect to such damage,
destruction or condemnation. As and to the extent that there is
available insurance under policies maintained by Seller and its
Affiliates, predecessors and successors in respect of any
Assumed Liability, except for any such insurance proceeds with
respect to which the insured is directly or indirectly self-
insured or has agreed to indemnify the insurer, Seller shall
cause such insurance to be applied toward the payment of such
Assumed Liability. The provisions of this Section 1.09 shall
not affect the right of Purchaser not to consummate the
transactions contemplated by this Agreement if the conditions to
its obligations hereunder contained in Sections 6.01 or 6.08
have not been fulfilled.
I.10 Inclusion/Exclusion of Certain Assets
(a) Purchaser agrees to use its reasonable best efforts to
obtain the approval described in clause (ii) of the definition
of Purchaser Required Regulatory Approvals in a manner
reasonably satisfactory to Purchaser that will allow Purchaser
to purchase and own, operate and maintain after the Closing the
PGE Colstrip Transmission Assets, and to consult with Seller
prior to abandoning its efforts to do so. If, notwithstanding
Purchaser's compliance with the preceding sentence and with
Section 5.01, such Purchaser Required Regulatory Approval is not
obtained from FERC with respect to the proposed purchase,
ownership or operation of the PGE Colstrip Transmission Assets,
or is finally denied by FERC, within seven (7) months from the
date of execution of this Agreement or, in the event that the
condition set forth in Section 6.12 has not been satisfied on or
prior to the Closing, then (i) at the Closing, Seller and
Purchaser shall enter into the Transmission Service Agreement
and the Separation Document, (ii) the PGE Colstrip Transmission
Assets shall be Excluded Assets hereunder, (iii) the Purchase
Price shall be reduced by the PGE Colstrip Transmission Amount,
and (iv) the conditions to Closing described in Sections 6.05
and 7.05 shall be deemed satisfied with respect to such
Purchaser Required Regulatory Approval solely with respect to
the PGE Colstrip Transmission Assets but shall not be deemed
satisfied with respect to any other Assets, provided that Seller
shall have the right, in its sole discretion, to waive such
seven (7) month period and require Purchaser to continue to
pursue such approval, consistent with Purchaser's obligations
under this Section 5.01 hereof, for such time period(s) as
Seller may determine, not to exceed the time period provided for
in Section 11.01(d) hereof.
(b) Purchaser has been provided copies of title insurance
commitments covering certain of the Assets and intends to obtain
at its expense additional title commitments and title policies.
Seller agrees to use reasonable efforts to cure title objections
of which Seller is notified by Purchaser, to the extent title
would not otherwise satisfy Seller's obligations with respect to
the title to be delivered by Seller in compliance with Section
1.05(a) of this Agreement. From and after the date hereof and
through the Closing, Seller shall use reasonable efforts to cure
and remove exceptions to title to the Real Property (other than
those exceptions referred to in the preceding sentence) of which
Seller is notified by Purchaser in writing; provided, however,
that in no event shall Seller be obligated to incur expenses or
make payments of any nature in excess of $150,000 in discharging
its obligations set forth in this sentence. Nothing in the two
preceding sentences shall change or otherwise affect the nature
of the title to the Real Property that Seller is obligated to
transfer to Purchaser in compliance with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as
follows:
II.1 Corporate Existence of Seller
Seller is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of Oregon, and
has full corporate power and authority to own, use and lease the
Assets. Seller is duly qualified or licensed to do business as
a foreign corporation and is in good standing in each
jurisdiction in which the Assets make such qualification
necessary, except in each case in those jurisdictions where the
failure to be so duly qualified or licensed and in good standing
would not create a Seller Material Adverse Effect. Seller has
heretofore made available to Purchaser complete and correct
copies of its articles of incorporation, as amended, and bylaws
(or other comparable corporate charter documents), as currently
in effect.
II.2 Authority
Seller has full corporate power and authority to execute
and deliver this Agreement and the Operative Agreements to which
it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated
hereby and thereby, including to sell and transfer (pursuant to
this Agreement) the Assets. The execution and delivery by
Seller of this Agreement and the Operative Agreements to which
it is a party, and the performance by Seller of its obligations
hereunder and thereunder, have been duly and validly authorized
by the Board of Directors of Seller, no other corporate action
on the part of Seller or its shareholder being necessary. This
Agreement has been duly and validly executed and delivered by
Seller and, subject to receipt of Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals,
constitutes, and upon the execution and delivery by Seller of
the Operative Agreements to which it is a party, such Operative
Agreements will constitute, legal, valid and binding obligations
of Seller enforceable against Seller in accordance with their
terms except as the same may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar Laws relating to or affecting the rights of creditors
generally, or by general equitable principles.
II.3 No Conflicts
Except as set forth in Section 2.03 of the Disclosure
Schedule, and other than obtaining Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals, the
execution and delivery by Seller of this Agreement do not, and
the execution and delivery by Seller of the Operative Agreements
to which it is a party, the performance by Seller of its
obligations under this Agreement and such Operative Agreements
and the consummation of the transactions contemplated hereby and
thereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the articles of
incorporation, as amended, or bylaws, as amended (or other
comparable corporate charter documents) of Seller;
(b) require any consent, approval, authorization or
permit, or filing with or notification to, any Governmental or
Regulatory Authority, except (x) for the Seller Required
Regulatory Approvals and the Purchaser Required Regulatory
Approvals, or (y) for those requirements which become applicable
to Seller as a result of the specific regulatory status of
Purchaser (or any of its Affiliates) or as a result of any other
facts that specifically relate to the business or activities in
which Purchaser (or any of its Affiliates) is or proposes to be
engaged;
(c) result in a default (or give rise to any right of
termination, cancellation or acceleration or require any consent
or approval) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Seller is a party or by which
Seller, or any of the Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration
or any consent or approval) as to which requisite waivers or
consents have been obtained; or
(d) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to Seller
or any of its Assets and Properties.
II.4 Governmental Approvals and Filings
Except for (i) Seller Required Regulatory Approvals and
(ii) with respect to the PGE Colstrip Transmission Assets as set
forth in Section 1.01(a)(xv) of the Disclosure Schedule, no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Seller is
required in connection with the execution, delivery and
performance of this Agreement or any of the Operative Agreements
to which it is a party or the consummation of the transactions
contemplated hereby or thereby, except those as would be
required solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates.
II.5 Reports
Since December 31, 1995, Seller has filed or caused to be
filed with the SEC, the applicable state or local utility
commissions or regulatory bodies and FERC, all material forms,
statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it
with respect to the PGE Colstrip Interests under each of the
Securities Act, the Exchange Act, the applicable state public
utility Laws, the Federal Power Act, the Holding Company Act and
the respective rules and regulations thereunder, all of which
complied in all material respects with all applicable
requirements of the appropriate act and the rules and
regulations thereunder in effect on the date each such report
was filed, and there are no material misstatements or omissions
in respect of such reports.
II.6 Taxes
Seller has timely filed or will timely file all Tax Returns
required to be filed by Seller with respect to the ownership,
operation and maintenance of the Assets and has paid or will pay
all Taxes shown to be due on such returns with respect to all
tax periods ending prior to the Closing. Except for the
properties financed with the Pollution Control Bonds, no other
Assets have been financed using tax exempt financing. The
owners of the Colstrip Facilities have jointly made a timely and
effective affirmative election pursuant to Section 761(a) of the
Code and Treasury Regulation Section 1.761-2(b) to be excluded
from all of subchapter K of the Code, and such election has not
been modified, revoked or otherwise altered, and remains in
effect. Seller has not taken and has not been notified that any
of such owners has taken any action inconsistent with such
election.
II.7 Legal Proceedings
Except as disclosed in Section 2.07 of the Disclosure
Schedule (with paragraph references corresponding to those set
forth below):
(a) there are no Actions or Proceedings pending or, to the
Knowledge of Seller, threatened against, relating to or
affecting Seller with respect to the ownership, operation or
maintenance of the Assets which could reasonably be expected
(i) to result in the issuance of an Order restraining, enjoining
or otherwise prohibiting or making illegal the consummation of
any of the transactions contemplated by this Agreement or any of
the Operative Agreements, or (ii) individually or in the
aggregate with other such Actions or Proceedings, to create a
Seller Material Adverse Effect; and
(b) there are no Orders outstanding against Seller with
respect to the ownership, operation and maintenance of the
Assets which, individually or in the aggregate with other such
Orders, would have a Seller Material Adverse Effect.
II.8 Compliance with Laws and Orders
Except as disclosed in Section 2.08 of the Disclosure
Schedule, Seller is not in material violation of or in material
default under any Law or Order applicable to Seller's ownership
of the Assets or, to Seller's Knowledge, the operation and
maintenance of the Assets.
II.9 Real Property
(a) Section 1.01(a)(i) of the Disclosure Schedule contains
a description of, and exhibits indicating the location of, the
Real Property owned by Seller and included in the Assets, and
Section 1.01(a)(ii)(A) of the Disclosure Schedule contains a
description of, and exhibits indicating the location of, each
parcel of real property leased by Seller (as lessor, sublessor,
lessee or sublessee), or as to which Seller holds easements or
other rights, and included in the Assets.
(b) Seller, or with respect to Real Property described in
Exhibit D to Section 1.01(a)(i) of the Disclosure Schedule, MPC
or its Affiliates, as the case may be, has, and at Closing
Seller will have, good and marketable title to the Real Property
in which Seller (or with respect to the Real Property described
in the aforementioned Exhibit D, MPC or its Affiliates, as the
case may be) holds a fee or easement interest. Pursuant to the
terms and conditions of the Colstrip Contracts, Seller has, and
to Seller's Knowledge, MPC or its Affiliates has, valid and
subsisting title to the Real Property in which Seller (or MPC or
its Affiliates, as the case may be) holds a permit interest or
other interest, in each case, free and clear of all Liens other
than Permitted Liens. Except for the Permitted Liens and the
Real Property subject to Real Property Leases described in
Section 1.01(a)(ii)(A) of the Disclosure Schedule, Seller,
subject to the terms and conditions of the Colstrip Contracts,
is in possession of the Real Property and there are no third
party licenses or tenants at the sites of the Real Property or
Real Property Leases.
(c) Seller has a valid and subsisting leasehold estate in
and the right to quiet enjoyment of the real properties subject
to the Real Property Leases described in Section 1.01(a)(ii)(B)
of the Disclosure Schedule for the full term thereof. Each Real
Property Lease to which Seller is a party is a legal, valid and
binding agreement, enforceable in accordance with its terms, of
Seller and of each other Person that is a party thereto, and
except as set forth in Section 2.09(c) of the Disclosure
Schedule, there is no default (or any condition or event which,
after notice or lapse of time or both, would constitute a
default) thereunder.
(d) Seller has made available to Purchaser prior to the
execution of this Agreement true and complete copies of (i) any
current surveys in Seller's possession or any policies of title
insurance currently in force and in the possession of Seller
with respect to the Real Property, and (ii) all Real Property
Leases (including any amendments and renewal letters) and, to
the extent reasonably available, all other documents referred to
in clause (i) of this paragraph (d) with respect to the real
property subject to the Real Property Leases described in
Section 1.01(a)(ii)(B) of the Disclosure Schedule.
(e) Except set forth in Section 12.01(e) of the Disclosure
Schedule, to Seller's Knowledge all Real Properties have access
to a public road and are zoned for their current uses. No fee
ownership, lease, right of way, easement, license or other right
in real property, other than the Real Property and the Real
Property Leases, is necessary for the Purchaser to own, operate
and maintain the Asssets substantially as currently owned,
operated and maintained by or on behalf of Seller. Seller or to
Seller's Knowledge, MPC or its Affiliates, has not received any
written notice that any of the improvements on any of the Real
Property or Real Property Leases, including without limitation
the Easements, or any appurtenances thereto or equipment therein
or the operation or maintenance thereof, violate any restrictive
covenant or the terms, conditions or restrictions of any
easement.
II.10 Tangible Personal Property
Seller, subject to the terms and conditions of the Colstrip
Contracts, or, to Seller's Knowledge, MPC or its Affiliates, is
in possession of and has good and valid title to, or has valid
leasehold interests in or valid rights under Contract to use,
all the Tangible Personal Property used in and individually or
in the aggregate with other such property material to the
ownership, operation and maintenance of the Colstrip Facilities.
To Seller's Knowledge all the Tangible Personal Property is free
and clear of all Liens, other than Permitted Liens and Liens
disclosed in Section 2.10 of the Disclosure Schedule, and is in
all material respects in good working order and condition,
ordinary wear and tear excepted; provided, however, that if the
PGE Transmission Assets are not purchased by Purchaser, the
Separation Document will be considered a Permitted Lien with
respect to the property subject thereto.
II.11 Intellectual Property Rights
Seller has not received notice that Seller is infringing
any Intellectual Property of any other Person in connection with
the Assets or the operation of the Colstrip Facilities, no claim
is pending or has been made against Seller to such effect that
has not been resolved and, to its Knowledge, Seller is not
infringing any Intellectual Property of any other Person.
II.12 Contracts
(a) Section 2.12(a) of the Disclosure Schedule (with
paragraph references corresponding to those set forth below)
contains a true and complete list of each of the following
Contracts (true and complete copies of which, together with all
amendments and supplements thereto, have been made available to
Purchaser prior to the execution of this Agreement) to which
Seller is a party (other than indirectly pursuant to Seller's
obligations under the Colstrip Contracts) and which relate to
the operation of the Colstrip Facilities or by which any of the
Assets are bound:
(i) all Contracts with any Person containing any pro-
vision or covenant prohibiting or limiting the ability of Seller
to engage in any activity relating to the operation of the
Colstrip Facilities or compete with any Person in connection
with the operation of the Colstrip Facilities or prohibiting or
limiting the ability of any Person to compete with Seller in
connection with the operation of the Colstrip Facilities;
(ii) all partnership, joint venture, shareholders' or
other similar Contracts with any Person in connection with the
operation of the Colstrip Facilities;
(iii) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchises
with whom Seller deals in connection with the operation of the
Colstrip Facilities which in any case involve the payment or
potential payment, pursuant to the terms of any such Contract,
by or to Seller of more than $250,000 annually;
(iv) all Contracts relating to the future disposition
or acquisition of any Assets, other than dispositions or
acquisitions of Inventory in the ordinary course of business;
and
(v) all other Contracts (other than the Real Property
Leases) not described above that constitute Assumed Liabilities
with respect to the operation of the Colstrip Facilities that
(A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to Seller of more than
$250,000 annually and (B) cannot be terminated within sixty (60)
days after giving notice of termination without resulting in any
material cost or penalty to Seller (or, after the Closing, to
Purchaser).
(b) Each Contract required to be disclosed in
Section 2.12(a) of the Disclosure Schedule and each of the
Colstrip Contracts, the Fuel Contracts and each of the Business
Contracts which involves the payment or potential payment by or
to Seller of more than $250,000 annually is in full force and
effect and constitutes a legal, valid and binding agreement,
enforceable in accordance with its terms, of Seller and of each
other party thereto; and except as disclosed in Section 2.12(b)
of the Disclosure Schedule neither Seller nor, to the Knowledge
of Seller, any other party to such Contract is in violation or
breach of or default under any such Contract (or with notice or
lapse of time or both, would be in violation or breach of or
default under any such Contract).
II.13 Licenses
(a Seller has been and is in material compliance with all
Licenses, including without limitation those Licenses listed in
Section 2.13(b) of the Disclosure Schedule, necessary to allow
Seller to obtain the benefits of the PGE Colstrip Interests as
currently enjoyed by Seller. Except as disclosed in
Section 2.13(a) of the Disclosure Schedule, Seller has not
received any written notification that it is in violation, nor
does Seller otherwise have Knowledge of any violations, of any
of such Licenses, or any Law or Order of any Governmental or
Regulatory Authority applicable to it.
(b Section 2.13(b) of the Disclosure Schedule sets forth
all material Licenses and Environmental Permits relating to the
ownership, operation and maintenance of the Colstrip Facilities
to which Seller is a named licensee or permittee.
II.14 Insurance
Except as set forth in Section 2.14 of the Disclosure
Schedule, all material policies of fire, liability, worker's
compensation and other forms of insurance owned or held by
Seller (other than indirectly through Seller's obligations under
the Colstrip Contracts) and insuring the Assets are in full
force and effect, all premiums with respect thereto covering all
periods up to and including the date as of which this
representation is being made have been paid (other than
retroactive premiums which may be payable with respect to
comprehensive general liability and worker's compensation
insurance policies), and no notice of cancellation or
termination has been received by Seller with respect to any such
policy which was not replaced on substantially similar terms
prior to the date of such cancellation. Except as set forth in
Section 2.14 of the Disclosure Schedule, Seller has not been
refused any insurance with respect to the 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 months.
II.15 Environmental Matters
With respect to its ownership interest in the PGE Colstrip
Interests, except as disclosed in Section 2.15 of the Disclosure
Schedule:
(a Seller and, to Seller's Knowledge, MPC, holds, and is
in substantial compliance with, all Licenses which are required
for Seller to own, and for MPC to operate and maintain, the
Assets under applicable Environmental Laws ("Environmental
Permits"), and Seller has not received any written notice of any
violation of any Environmental Law that has not heretofore been
resolved and Seller, and, to Seller's Knowledge, MPC, is
otherwise in substantial compliance with applicable
Environmental Laws with respect to the ownership, operation and
maintenance of the Assets.
(b Seller has not received any written request for
information, or been notified that it is a potentially
responsible party, under any Environmental Law with respect to
any on-site location relating to the ownership, operation and
maintenance of the Assets.
(c Seller has not entered into or agreed to any consent
decree or order, and is not subject to any outstanding judgment,
decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous
Materials under any Environmental Law relating to the ownership,
operation and maintenance of the Assets.
(d There are no claims, actions, proceedings or
investigations pending or, to the Knowledge of Seller,
threatened against Seller before any court, Governmental or
Regulatory Authority relating to any Environmental Law relating
to the PGE Colstrip Interests with respect to the ownership,
operation and maintenance of the Assets.
(e To its Knowledge, Seller or MPC has made available to
Purchaser: (i) a list of all material environmental reports
and/or audits prepared by or for Seller within the past five (5)
years which discuss the environmental conditions of the Assets;
and (ii) a list of all underground storage tanks and/or surface
impoundments located on the Assets which contain or have
contained Hazardous Materials.
The representations and warranties made in this
Section 2.15 are Seller's exclusive representations and
warranties relating to environmental matters.
II.16 Absence of Condemnation Proceedings
Neither the whole nor any portion of the PGE Colstrip
Interests is subject to any pending or, to Seller's Knowledge,
threatened suit or Order for condemnation or other taking by any
public authority.
II.17 Regulation as a Utility
Seller is a public utility company within the meaning of
the Holding Company Act. Except as set forth in Section 2.17 of
the Disclosure Schedule, Seller is not subject to regulation as
a public utility or public service company (or similar
designation) by the United States, any state of the United
States, any foreign country or any municipality or any political
subdivision of the foregoing.
II.18 Brokers
Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees, commissions
and expenses are the sole responsibility of MPC, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, whose fees, commissions and expenses are the sole
responsibility of Puget and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., whose fees,
commissions and expenses are the sole responsibility of Seller,
all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Seller directly
with Purchaser without the intervention of any Person on behalf
of Seller in such manner as to give rise to any valid claim by
any Person against Purchaser for a finder's fee, brokerage
commission or similar payment.
II.19 Acknowledgment of Purchaser
Purchaser expressly acknowledges that Seller is the holder
of a non-controlling interest in the Colstrip Facilities
pursuant to the Colstrip Contracts, and that Seller (i) did not
manage the construction of the Colstrip Facilities, (ii) is not
now and has never been the operator (or otherwise in physical
possession) of the Colstrip Facilities, including with respect
to issues involving the year 2000 compliance, and (iii) was not
involved in or responsible for the creation or provision of data
or information about the Colstrip Facilities by MPC or any other
co-owner of the Colstrip Facilities.
II.20 Disclaimers Regarding Assets
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE ASSETS
ARE BEING TRANSFERRED "AS IS, WHERE IS" AND SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR
QUALITY OF THE ASSETS OR THE PROSPECTS (FINANCIAL AND
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE ASSETS AND SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS, OR ANY PART
THEREOF.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as
follows:
III.1 Corporate Existence
Purchaser is a corporation duly incorporated, validly
existing and in good standing under the Laws of the Commonwealth
of Pennsylvania and has full corporate power and authority to
conduct its business as it is now being conducted and to own,
lease and operate its Assets and Properties. Purchaser has full
corporate power and authority to enter into this Agreement and
the Operative Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Purchaser has
heretofore made available to Seller complete and correct copies
of its articles of incorporation and by-laws (or other
comparable corporate charter documents), as currently in effect.
III.2 Authority
The execution and delivery by Purchaser of this Agreement
and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and
thereunder, have been duly and validly authorized by the Board
of Directors of Purchaser, no other corporate action on the part
of Purchaser or its stockholders being necessary. This
Agreement has been duly and validly executed and delivered by
Purchaser and, subject to receipt of Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals,
constitutes, and upon the execution and delivery by Purchaser of
the Operative Agreements to which it is a party, such Operative
Agreements will constitute, legal, valid and binding obligations
of Purchaser enforceable against Purchaser in accordance with
their terms except as the same may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar Laws relating to or affecting the rights of creditors
generally, or by general equitable principles.
III.3 No Conflicts
Except as set forth in Section 3.03 of the Disclosure
Schedule, and other than obtaining Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals, the
execution and delivery by Purchaser of this Agreement do not,
and the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, the performance by Purchaser
of its obligations under this Agreement and such Operative
Agreements and the consummation of the transactions contemplated
hereby and thereby will not:
(a conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the articles of
incorporation or by-laws (or other comparable corporate charter
documents) of Purchaser;
(b require any consent, approval, authorization or
permit, or filing with or notification to, any Governmental or
Regulatory Authority except for Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals;
(c 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, license, agreement or other instrument or obligation
to which Purchaser is a party or by which any of its Assets and
Properties 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
(d conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to
Purchaser or any of its Assets and Properties.
III.4 Governmental Approvals and Filings
Except for Purchaser Required Regulatory Approvals, no
consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Purchaser is
required in connection with the execution, delivery and
performance of this Agreement or any of the Operative Agreements
to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
III.5 Legal Proceedings
Except as disclosed in Section 3.05 of the Disclosure
Schedule (with paragraph references corresponding to those set
forth below):
(a there are no Actions or Proceedings pending or, to
the Knowledge of Purchaser, threatened against, relating to or
affecting Purchaser or any of its Assets and Properties which
could reasonably be expected (i) to result in the issuance of an
Order restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated
by this Agreement or any of the Operative Agreements, or
(ii) individually or in the aggregate with other such Actions or
Proceedings, to create a Purchaser Material Adverse Effect; and
(b there are no Orders outstanding against Purchaser
which, individually or in the aggregate with other such Orders,
would have a Purchaser Material Adverse Effect.
III.6 Compliance with Laws and Orders
Except as disclosed in Section 3.06 of the Disclosure
Schedule, Purchaser is not in violation of or in default under
any Law or Order applicable to Purchaser or its Assets and
Properties.
III.7 Regulation as a Utility
Purchaser is not a public utility company within the
meaning of the Holding Company Act. As of the Closing,
Purchaser will be subject to regulation as a public utility and
as a licensee under the Federal Power Act. Purchaser is not
otherwise subject to regulation as a public utility or public
service company (or similar designation) by the United States,
any state of the United States (except to the extent that assets
acquired by Purchaser under the MPC Purchase Agreement and
related activities in connection therewith will subject
Purchaser to regulation under Montana law), any foreign country
or any municipality or any political subdivision of the
foregoing.
III.8 Brokers
Except for Chase Securities Inc., whose fees, commissions
and expenses are the sole responsibility of Purchaser, all
negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser directly
with Seller without the intervention of any Person on behalf of
Purchaser in such manner as to give rise to any valid claim by
any Person against Purchaser for a finder's fee, brokerage
commission or similar payment.
III.9 Financing
Purchaser has cash and/or commitments for equity
contributions or credit facilities sufficient (and has provided
Seller with evidence thereof) to pay the Base Purchase Price and
to make all related payments of fees and expenses in connection
with the transactions contemplated by this Agreement and the
Operative Agreements.
III.10 Financial Statements
Purchaser has delivered to Seller the financial statements
of Purchaser listed on Section 3.10 of the Disclosure Schedule,
and such financial statements and notes fairly present the
financial condition and the results of operations, changes in
stockholders' equity, and cash flow of Purchaser as of the
respective dates of and for the periods referred to therein, all
in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate,
be materially adverse) and the absence of notes and schedules.
III.11 Opportunity to Inspect Assets
Prior to its execution of this Agreement, Purchaser has
conducted an independent investigation of the Assets. In making
its decision to execute this Agreement, and to purchase the
Assets, Purchaser has relied upon the terms and provisions of
this Agreement and the results of such independent
investigation.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all
times from and after the date hereof until the Closing, and,
with respect to Section 4.08 thereafter, Seller will comply with
all covenants and provisions of this Article IV, except to the
extent Purchaser may otherwise consent in writing.
IV.1 Regulatory and Other Approvals
Seller will (a)(i) take all reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all
reasonable efforts, as promptly as practicable to obtain all
consents, approvals (including Final Orders) or actions of, to
make all filings with and to give all notices to Governmental or
Regulatory Authorities provided that the Final Order(s) of the
OPUC approving the transaction and the terms and conditions of
each of the Operative Agreements and the respective regulatory
treatment of any and all financial impacts thereof in each case
shall be in form and substance satisfactory to Seller in its
reasonable discretion and (ii) take all commercially reasonable
steps necessary or desirable to obtain all consents, approvals
or actions, and give all notices to, any other Person required
of Seller, in each case, to consummate the transactions
contemplated hereby and by the Operative Agreements, including
those described in Section 2.03 of the Disclosure Schedule and
Seller Required Regulatory Approvals, or required for Purchaser
to own, operate or maintain, on and after the Closing, the
Assets substantially as such assets are currently owned,
operated and maintained by Seller, (b) provide such other
information and communications to such Governmental or
Regulatory Authorities or other Persons as such Governmental or
Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) provide reasonable cooperation
(i) to Purchaser in obtaining all Purchaser Required Regulatory
Approvals and other consents, approvals or actions of, making
all filings with and giving all notices to Governmental or
Regulatory Authorities or other Persons required of Purchaser to
consummate the transactions contemplated hereby and by the
Operative Agreements and (ii) to Purchaser and Purchaser's
potential lenders in connection with Purchaser Financing for the
transactions contemplated by this Agreement. Prior to making
any filings with a Governmental or Regulatory Authority pursuant
to this Section 4.01, Seller agrees to provide copies of such
filings to Purchaser. Nothing in this Agreement shall require
Seller to institute litigation or to pay or agree to pay any sum
of money or make financial accommodations (other than the
payment or incurrence of customary expenses and filing or other
fees) in order to obtain any necessary consent, approval or
authorization including, without limitation, the Seller Required
Regulatory Approvals. Seller will provide prompt notification
to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made
or given, as applicable, and will advise Purchaser of any
communications (and, unless precluded by Law or Order, provide
copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding
any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
IV.2 HSR Filings
In addition to and not in limitation of Seller's covenants
contained in Section 4.01, Seller will (a) consult with
Purchaser as to appropriate timing of filings and take promptly
all actions necessary to make the filings required of Seller or
its Affiliates under the HSR Act, (b) comply at the earliest
practicable date with any request for additional information
received by Seller or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (c) cooperate with Purchaser
in connection with Purchaser's filing under the HSR Act and in
connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state
attorneys general.
IV.3 Investigation by Purchaser
Seller will (a) provide Purchaser and its officers,
employees, counsel, accountants, financial advisors, potential
lenders, Purchaser's and potential lenders' consultants and
other representatives (collectively, "Representatives") with
full access, upon reasonable prior notice and during normal
business hours, to the Employees and such other officers,
employees and agents of Seller who have any responsibility for
the PGE Colstrip Interests, to Seller's accountants, and,
subject to the terms and conditions of the Colstrip Contracts,
to the Assets (including, to the extent it is within Seller's
power to do so, access to the Colstrip Facilities site), but
only to the extent that such access does not unreasonably
interfere with Seller's business and the operation of the
Assets, (b) make available to Purchaser and its Representatives,
upon request, a copy of each report, schedule or other document
filed or received by Seller between the Bid Date and the Closing
with or from the SEC, FERC, EPA, OPUC or any other relevant
Governmental or Regulatory Authority and relating to the
ownership, operation and maintenance of the Assets or the
transactions contemplated by this Agreement, and all such
information and data (including copies of Business Contracts,
Transferable Permits, Fuel Contracts, Colstrip Contracts, and
other Books and Records) concerning the ownership, operation and
maintenance of the PGE Colstrip Interests and the Assets and the
Assumed Liabilities as Purchaser or its Representatives
reasonably may request in connection with such investigation,
except to the extent that furnishing any such report, schedule,
other documents, information or data would violate any Law,
Order (including any protective order or similar confidentiality
obligation), Contract, License or Environmental Permit
applicable to Seller or by which any of its Assets and
Properties is bound. In furtherance of the foregoing, Seller
agrees to cooperate with Purchaser in connection with
Purchaser's efforts to obtain Purchaser Financing, as defined in
Section 5.07. Seller's cooperation shall include the
negotiation and execution of a consent with the lenders with
respect to the Operative Agreements, which consent shall include
providing such lenders with rights to cure a Purchaser default
under the Operative Agreements; provided, however, that Seller
shall not be obligated, in connection with such cooperation or
consent, to take any action or enter into any agreement that
would have any adverse effect on Seller or any of its rights or
benefits under this Agreement or the Operative Agreements.
IV.4 No Solicitations
Subject to the duties imposed by applicable Law, Seller
will not take, nor will it permit any Affiliate of Seller (or
authorize or permit any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for
or on behalf of Seller or any such Affiliate) to take, directly
or indirectly, any action to solicit, encourage, receive,
negotiate, assist or otherwise facilitate (including by
furnishing confidential information with respect to the Colstrip
Facilities or permitting access to the Assets and Properties and
Books and Records of Seller) any offer or inquiry from any
Person concerning the acquisition of any of the Assets other
than Purchaser or its Affiliates or any of their
Representatives.
IV.5 Conduct of Business
(a From the Bid Date to the Closing, Seller shall,
consistent with the terms and conditions of the Colstrip
Contracts and to the extent such matters are presented to Seller
by MPC thereunder, vote or cause to be voted its Project Share
(as defined in the Colstrip Contracts) in favor of (i) the
continued operation of the Colstrip Facilities only in the
ordinary course of business consistent with Good Utility
Practice, (ii) causing MPC to use commercially reasonable
efforts to (A) maintain good relations with and keep available
(subject to dismissals and retirements in the ordinary course of
business) the services of key Employees, (B) maintain the Assets
in good working order and condition, ordinary wear and tear
excepted, (C) maintain the good will of lessors, customers,
suppliers, lenders and other Persons with whom MPC otherwise has
significant business relationships in connection with the
operation of the Colstrip Facilities, (D) materially comply with
all Laws and Orders, including Environmental Laws applicable to
the ownership, operation and maintenance of the Colstrip
Facilities and (E) keep in force at not less than their present
limits all material policies of insurance covering the Assets to
the extent reasonably practicable in light of the prevailing
market conditions in the insurance industry.
(b Without limiting the generality of the foregoing,
except with the prior written consent of Purchaser, Seller will,
with respect to the Colstrip Facilities promptly notify
Purchaser if Seller becomes aware of the cancellation of any
material insurance policy or any material modification thereto.
IV.6 Certain Restrictions
Except as set forth in Section 4.06 of the Disclosure
Schedule, Seller will refrain from agreeing to any of the
following actions:
(a creating any Lien (other than a Permitted Lien) on
the Assets except in the ordinary course of Seller's business or
as required under Seller's instruments of Indebtedness as in
effect on the date hereof and, in each case, as will be removed
on or prior to the Closing;
(b selling, leasing (as lessor), transferring or
otherwise disposing of, any of the Assets (except as
contemplated by Exhibit D to Section 1.01(a)(i) of the
Disclosure Schedule), other than Assets used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practice;
(c entering into, amending or modifying in any material
way, terminating (partially or completely), granting any waiver
of any material term under or giving any material consent with
respect to any Business Contract, Transferable Permit, Fuel
Contract, Colstrip Contract or other contract or agreement
comprising a part of the Assets or that relates to the Assets,
the Assumed Liabilities or is material to the operation of the
Colstrip Facilities;
(d other than in the ordinary course of business,
incurring, purchasing, canceling, prepaying or otherwise
providing for a complete or partial discharge in advance of a
scheduled payment date with respect to, or waiving any right
under, any Liability of or owing to Seller in connection with
the Assets, the Assumed Liabilities or the operation of the
Colstrip Facilities in an aggregate principal amount exceeding
$500,000;
(e engaging with any Person in any Business Combination,
unless such Person agrees in a written instrument to adopt and
comply with the terms and conditions of this Agreement as though
such Person was an original signatory hereto;
(f engaging in any transaction individually or in the
aggregate with other such transactions material to the ownership
or operation of the Assets with any officer, director, Affiliate
or Associate of Seller, or any Associate of any such officer,
director or Affiliate, that would be an Assumed Liability and
that would extend beyond the Closing other than in the ordinary
course of business on terms no less favorable to Seller than
could be obtained on an arm's-length basis with an unaffiliated
third party;
(g to the extent it has notice thereof and the authority
to do so pursuant to the Colstrip Contracts, making any material
change in the level of fuel inventory and stores inventory
customarily maintained by Seller with respect to the PGE
Colstrip Interests, other than consistent with Good Utility
Practice;
(h to the extent it has notice thereof and the authority
to do so pursuant to the Colstrip Contracts, entering into any
commitment for the purchase or sale of fuel having a term
greater than six months and not terminable on or before the
Closing either (i) automatically, or (ii) by option of Seller
(or, after the Closing, by Purchaser) in its sole discretion, if
the aggregate payment under such commitment and all other
outstanding commitments not previously approved by Purchaser
would be expected to exceed $500,000;
(i making any tax election or entering into or amending
any real or personal property Tax agreement, treaty or
settlement that would have a negative effect on the Tax status
of Purchaser with regard to the Assets; or
(j entering into any Contract to do or engage in any of
the foregoing.
The foregoing shall not preclude Seller from making, or
agreeing to the making of (i) Maintenance Expenditures and
Capital Expenditures and (ii) at Seller's expense under the
Colstrip Contracts, such other maintenance and capital
expenditures as Seller or MPC deems necessary, subject in all
cases to the applicable provisions of the Colstrip Contracts.
IV.7 Security Deposits
Seller will transfer to Purchaser at the Closing all of
Seller's right, title and interest in and to the Tenant Security
Deposits and the Landlord Security Deposits and any other
deposits, prepayments or progress payments made or held by
Seller in connection with the Assets or material to the
ownership, operation and maintenance of the Colstrip Facilities.
IV.8 Delivery of Books and Records, etc.; Removal of Property
(a At the Closing, Seller shall deliver or make
available to Purchaser at Seller's place of business in
Portland, Oregon, all of the Books and Records relating to the
PGE Colstrip Interests as are in Seller's possession, and if at
any time after the Closing Seller discovers in its possession or
under its control any other such Books and Records or other
Assets, it will forthwith deliver such Books and Records or
other Assets to Purchaser.
(b Except as set forth in Section 4.08(b) of the
Disclosure Schedule, within a reasonable time after the Closing,
Seller shall take all commercially reasonable steps to remove
any of Seller's Assets and Properties not being sold to
Purchaser hereunder from the Real Property except as
contemplated by the Separation Document. Such removal shall be
at the sole cost and risk of Seller, including risk of loss and
damage to such Assets and Properties and to the Assets conveyed
to Purchaser hereby.
IV.9 Fulfillment of Conditions
Seller will execute and deliver at the Closing each
Operative Agreement that Seller is required hereby to execute
and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each other condition to
the obligations of Purchaser contained in this Agreement and
will not take or fail to take any action that could reasonably
be expected to result in the nonfulfillment of any such
condition.
IV.10 Observation, Inspection and Participation
Seller agrees, subject to its rights and obligations under
the Colstrip Contracts, that between the date of this Agreement
and the date of the Closing, Purchaser shall be entitled to have
a reasonable number of representatives, all of whom shall be
employees of Purchaser or its Affiliates unless otherwise
approved by Seller in each instance, which approval shall not be
unreasonably withheld ("Site Representatives") at any of the
Assets, on a full or part time basis (whether on site or off-
site), as determined by Purchaser; provided, however, that
(a) the presence and activities of the Site Representatives
shall be conducted in a manner as not to interfere unreasonably
with the ownership, operation and maintenance of the Assets, or
with the activities of Seller and MPC not related to the Assets
and (b) the Site Representatives shall not have access to any
information that is unavailable pursuant to Section 4.03.
Reasonable office space and facilities will be made available by
Seller to such Site Representatives. Each Site Representative
shall have the right to review budgets and expenditures, audit
records (except for personnel and medical records unless
required by law), inspect equipment, advise on repairs required
for equipment, review permits, review the progress of outages,
review maintenance and operating practices and otherwise observe
all activities at the above mentioned facilities in each case to
the extent related to the operation of the Assets. Between the
date hereof and the Closing, Seller shall, to the extent it is
able to do so under the Colstrip Contracts, exercise its
reasonable efforts to invite Site Representatives to attend
internal meetings in which Seller participates and which relate
specifically to the physical operation or maintenance of the
Assets; provided, however, that such obligation shall not extend
to (i) meetings of the boards of directors, or any committees
thereof, of Seller or any of its Affiliates, (ii) meetings with
counsel, or (iii) meetings the subject matter of which, in
Seller's reasonable judgment, if disclosed to Purchaser, would
likely be detrimental to Seller (including, without limitation,
information relating to Seller's proposed business activities
following the Closing or to contractual or other matters as to
which the interests of Seller and Purchaser may diverge). Site
Representatives shall also be entitled to consult with Seller
and make recommendations as to all activities relating to the
management, operation, maintenance, construction, renewal,
addition, replacement, modification and disposal of the Assets,
including, without limitation, applications for authorizations,
permits and licenses, and fuel procurement and transportation.
IV.11 Notice of Breach
Seller shall promptly give notice to Purchaser upon
becoming aware of the occurrence of any event which would cause
or constitute a breach of any of the representations, warranties
or covenants of Seller contained in this Agreement.
IV.12 Bridge Financing Fees
In the event that Purchaser obtains bridge financing
directly or indirectly from a non-Affiliated third party in
connection with the transactions contemplated hereby, Seller
will deduct from the Base Purchase Price at the time of Closing
an amount equal to 13.01% of any financing fees paid by
Purchaser in connection with such bridge financing; provided,
however, that the deduction under this Section 4.12 shall not
exceed $2,012,647 in the aggregate.
4.13 Special Maintenance and Capital Expenditures
Within thirty (30) days after the date hereof, Seller and
Purchaser shall mutually agree on a Schedule setting forth a
month by month special maintenance and capital expenditure
budget relating to the Assets for calendar years 1999 and 2000
(the "Budget"). The Budget will be divided into two parts;
Category A items and Category B items. With respect to items
listed under Category A, Seller agrees to use commercially
reasonable efforts to cause MPC, to the extent Seller has the
right to do so under the Colstrip Contracts, to conduct and
complete such special maintenance and capital expenditures at
the times set forth in the Budget. With respect to items listed
under Category B, Seller shall cause MPC, to the extent Seller
has the right to do so under the Colstrip Contracts, to conduct
and complete such special maintenance and capital expenditures
at such times as Seller and MPC shall determine in their
reasonable discretion after consultation with Purchaser. With
respect to emergency special maintenance and capital expenditure
items not identified in the Budget that arise after the date
hereof and prior to the Closing, Seller will cause MPC, to the
extent Seller has the right to do so under the Colstrip
Contracts, to consult with Purchaser and to conduct and complete
any such emergency special maintenance and capital expenditure
items in accordance with Good Utility Practice ("Emergency
Expenditures").
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all
times from and after the date hereof until the Closing and, in
the case of Section 5.06, thereafter, Purchaser will comply with
all covenants and provisions of this Article V, except to the
extent Seller may otherwise consent in writing.
V.1 Regulatory and Other Approvals
Purchaser will (a) take all reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all
reasonable efforts, at the earliest commercially practicable
dates, to obtain all consents, approvals or actions of, to make
all filings with and to give all notices to Governmental or
Regulatory Authorities or any other Person required of Purchaser
to consummate the transactions contemplated hereby and by the
Operative Agreements, including those described in Section 3.03
of the Disclosure Schedule and Purchaser Required Regulatory
Approvals or for Purchaser to own, operate or maintain, on and
after the Closing, the Assets substantially as such assets are
currently owned, operated and maintained by Seller, (b) provide
such other information and communications to such Governmental
or Regulatory Authorities or other Persons as such Governmental
or Regulatory Authorities or other Persons may reasonably
request in connection therewith and (c) provide reasonable
cooperation to Seller in obtaining Seller Required Regulatory
Approvals and all other consents, approvals or actions of,
making all filings with and giving all notices to Governmental
or Regulatory Authorities or other Persons required of Seller to
consummate the transactions contemplated hereby and by the
Operative Agreements. Prior to making any filings with a
Governmental or Regulatory Authority pursuant to this
Section 5.01, Purchaser agrees to provide copies of such filings
to Seller. Nothing in this Agreement shall require Purchaser to
institute litigation or to pay or agree to pay any sum of money
or make financial accommodations (other than the payment or
incurrence of customary expenses and filing or other fees) in
order to obtain any necessary consent, approval or authorization
including, without limitation, the Purchaser Required Regulatory
Approvals. Purchaser will provide prompt notification to Seller
when any such consent, approval, action, filing or notice
referred to in clause (a) above is obtained, taken, made or
given, as applicable, and will advise Seller of any
communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding
any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
V.2 HSR Filings
In addition to and without limiting Purchaser's covenants
contained in Section 5.01, Purchaser will (a) consult with
Seller as to the appropriate timing of filings and take promptly
all actions necessary to make the filings required of Purchaser
or its Affiliates under the HSR Act, (b) comply at the earliest
practicable date with any request for additional information
received by Purchaser or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (c) cooperate with Seller in
connection with Seller's filing under the HSR Act and in
connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state
attorneys general.
V.3 PPUC Approval for Holding Company
From the date hereof through the Closing, Purchaser agrees
not to enter into any Contract or take any action which, when
taken together with the consummation of the transactions
contemplated by this Agreement, would violate any condition
imposed by the PPUC that limits Parent's investment in
diversified businesses without prior PPUC approval. Purchaser
further agrees that, in seeking the approval described in clause
(v) of the definition of Purchaser Required Regulatory
Approvals, Purchaser shall use commercially reasonable efforts
to seek any reasonable PPUC approval that would allow Purchaser
to consummate the transactions contemplated hereby and to own,
operate and maintain the Assets in substantially the same manner
as currently owned, operated and maintained by Seller.
V.4 Notice of Breach
Purchaser shall promptly give notice to Seller upon
becoming aware of the occurrence of any event which would cause
or constitute a breach of any of the representations, warranties
or covenants of Purchaser contained in this Agreement.
V.5 Fulfillment of Conditions
Purchaser will execute and deliver at the Closing each
Operative Agreement that Purchaser is hereby required to execute
and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each other condition to
the obligations of Seller contained in this Agreement and will
not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
V.6 Tax-Exempt Bond Financed Pollution Control Facilities
(a Following the Closing until the maturity or
redemption date of the Pollution Control Bonds,
(i) Except as otherwise permitted in (ii), Purchaser
will not materially change or permit to be changed the character
or nature of the use of those facilities listed in Exhibit C
hereto (the "Pollution Control Facilities") from the manner
Seller has used said facilities prior to the sale of the Assets,
unless such changed use would constitute a use or purpose of
said facilities for which tax-exempt bonds could be issued
pursuant to section 1313 of the Tax Reform Act of 1986 (P.L. 99-
514 or, hereinafter, the "1986 Tax Act"), to refund bonds
described in section 1312(a) of the 1986 Tax Act which, for
purposes hereof, are assumed to have been issued to finance
facilities of the same character and use or purpose as said
facilities;
(ii) Purchaser will not sell or otherwise transfer
any portion of such Pollution Control Facilities unless (A) the
transferee covenants to satisfy the conditions of
Section 5.06(a)(i) and with respect to its ownership and use of
said facilities following the date of any such purchase or (B)
the transfer relates to personal property and is exclusively for
cash the proceeds of which will be expended within six months of
the date of receipt on facilities for which tax-exempt bonds
could be issued pursuant to section 1313 of the 1986 Tax Act, to
refund bonds described in section 1312(a) of said act which, for
purposes hereof, are assumed to have been issued to finance
facilities of the same character and use or purpose as said
facilities; and
(iii) Purchaser will cooperate with Seller and use
commercially reasonable efforts to permit Seller to have access
to the Colstrip Facilities at reasonable times to examine the
Pollution Control Facilities.
Nothing herein shall be construed to prevent Purchaser from
ceasing to use any facilities or equipment that, in Purchaser's
reasonable judgment, have become obsolescent or otherwise
uneconomical to continue to use. Seller will notify Purchaser
when the Pollution Control Bonds have matured or been redeemed.
V.7 Purchaser Financing
Purchaser will proceed in good faith and use all reasonable
efforts to obtain financing on commercially reasonable terms in
amounts and structure reasonably consistent with Purchaser's
financing plan as set forth in Purchaser's written proposal to
Seller dated September 25, 1998 (the "Purchaser Financing").
V.8 Transmission
(a) Transmission Path from Colstrip Units 3 & 4 to
▇▇▇▇▇▇▇▇. If, notwithstanding Purchaser's compliance with
Section 1.10(a) and with Section 5.01, the Purchaser Required
Regulatory Approval described in clause (ii) of the definition
of Purchaser Required Regulatory Approvals is not obtained from
FERC with respect to the proposed purchase, ownership or
operation of the PGE Colstrip Transmission Assets, or is finally
denied by FERC, then the Parties contemplate that they will
enter into a Transmission Service Agreement, negotiation of
which has yet to be completed. Immediately following the date
hereof, and for the next sixty (60) days, the Parties covenant
to use their reasonable best efforts, working diligently and
cooperatively, to complete negotiations and the drafting of a
definitive Transmission Service Agreement consistent with the
Transmission Service Agreement Principles as set forth on
Exhibit K and reasonably satisfactory to both Parties.
(b) Transmission Path from ▇▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇▇.
Immediately following the date hereof, as contemplated by
Sections 6.07 and 7.06, and for the next sixty (60) days, the
Parties covenant to use their reasonable best efforts, working
diligently and cooperatively to negotiate with the Bonneville
Power Administration for its consent to the assignment at
Closing from Seller to Purchaser of the Montana Intertie
Agreement, as described on Exhibit K.
(c) Transmission Path from ▇▇▇▇▇▇▇▇ to Portland.
Immediately following the date hereof, and for the next sixty
(60) days, the Parties covenant to use their reasonable best
efforts, working diligently and cooperatively, to negotiate with
the Bonneville Power Administration to convert Seller's
transmission rights under its Integration of Resources Contract
(Contract No. DE-MS79-89BP92273 of December 5, 1989) to a point
to point transmission agreement reasonably satisfactory to
Purchaser and to negotiate a release of Seller's obligations
under such contract reasonably satisfactory to Seller.
V.9 Wholesale Transition Service Agreement
The Parties shall enter into good faith negotiations
following the date hereof with respect to an agreement for the
sale by Purchaser of energy from the Colstrip Facility to
Seller, in a quantity approximately equivalent to that of the
PGE Colstrip Interests, and having a term of up to two (2) years
("Wholesale Transition Service Agreement"), provided, however,
that neither Party shall be obligated for any reason to enter
into such an agreement.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the
Assets and to assume and pay, perform and discharge the Assumed
Liabilities are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of
which may be waived in whole or in part by Purchaser in its sole
discretion):
VI.1 Representations and Warranties
The representations and warranties made by Seller in this
Agreement and the Operative Agreements, taken as a whole, shall
be true and correct, in all material respects, on and as of the
Closing as though repeated on and as of the Closing or, in the
case of representations and warranties made as of a specified
date earlier than the Closing, on and as of such earlier date.
VI.2 Performance
Seller shall have performed and complied with, in all
material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with
by Seller at or before the Closing.
VI.3 Officers' Certificates
Seller shall have delivered to Purchaser a certificate,
dated as of the Closing and executed by the Chairman of the
Board, the President or any Vice President of Seller,
substantially in the form and to the effect of Exhibit D hereto,
and a certificate, dated as of the Closing and executed by the
Secretary or any Assistant Secretary of Seller, substantially in
the form and to the effect of Exhibit E hereto.
VI.4 Orders and Laws
There shall not be in effect on the date of the Closing any
Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative
Agreements.
VI.5 Regulatory Consents and Approvals
Subject to Section 1.10, all Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals shall have
been duly obtained, made or given and shall be in full force and
effect and shall be Final Orders reasonably satisfactory to
Purchaser and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this
Agreement and the Operative Agreements, including under the HSR
Act, shall have occurred.
VI.6 Colstrip Rights of First Refusal
Seller shall have either received the consents required
under each of the Colstrip Rights of First Refusal or the
exercise periods of such Colstrip Rights of First Refusal shall
have expired.
VI.7 Third Party Consents
The consents (or in lieu thereof waivers) listed in
Section 6.07 of the Disclosure Schedule shall have been obtained
and shall be in full force and effect and shall be reasonably
satisfactory to Purchaser.
VI.8 No Seller Material Adverse Effect
There shall not have occurred and be continuing a Seller
Material Adverse Effect.
VI.9 Proceedings
All corporate and other proceedings to be taken by Seller
in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in
form and substance to Purchaser and its counsel, and Purchaser
and its counsel shall have received all such certified or other
copies of such documents as it or they may reasonably request.
VI.10 Deliveries
Seller shall have executed and delivered to Purchaser
(i) the General Assignment, (ii) the other Assignment
Instruments, and (iii) if the PGE Colstrip Transmission Assets
are not conveyed to Purchaser at the Closing, Seller and
Purchaser shall have entered into the Separation Document.
VI.11 Colstrip Operations Arrangements
There shall be in effect (a) arrangements reasonably
satisfactory to Purchaser pursuant to which Purchaser shall be
the operator of the entire Colstrip generating facility for a
period of at least ten (10) years after the Closing, subject
only to removal for cause or (b) such other arrangements with
respect to the operation of the Colstrip generating facility as
are reasonably acceptable to Purchaser.
VI.12 Purchaser Financing
Purchaser's obligation to purchase the PGE Colstrip
Transmission Assets at the Closing is subject to the receipt by
Purchaser, on or prior to the Closing, of the Purchaser
Financing or other financing reasonably satisfactory to
Purchaser.
VI.13 Opinion of Counsel
Purchaser shall have received the opinion of (i) LeBoeuf,
Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to Seller, dated as of
the Closing, substantially in the form and to the effect of
Exhibit G-1 hereto, (ii) General Counsel of Seller, dated as of
the Closing, substantially in the form and to the effect of
Exhibit G-2 hereto, and (iii) outside Montana counsel to Seller,
dated as of the Closing, substantially in the form and to the
effect of Exhibit G-3 hereto.
VI.14 Transfer of MPC Generation Assets
That portion of the Generation Assets (as such term is
defined in the MPC Purchase Agreement) to be transferred to
Purchaser at the Closing under the MPC Purchase Agreement
consisting of, at a minimum, (i) ▇▇▇▇▇▇▇, (ii) MPC's undivided
interest in Colstrip 1, 2, and 3, and (iii) the Missouri/Madison
Hydro Units with Basin/Idaho/BPA Power Contracts (in each case
of (i), (ii), and (iii), as such terms are defined in the MPC
Purchase Agreement shall have been purchased by Purchaser,
unless such purchase has not occurred solely as a result of a
breach by Purchaser of the MPC Purchase Agreement.
6.15 Transmission Agreements
If the PGE Colstrip Transmission Assets are not conveyed to
Purchaser at Closing, then (i) Seller and Purchaser shall have
entered into a Transmission Service Agreement, (ii) MPC shall
have purchased the PGE Colstrip Transmission Assets, or (iii)
other arrangements reasonably satisfactory to Purchaser shall
have been entered into with respect to the transmission of
electric energy for the PGE Colstrip Interests.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Assets are
subject to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be waived in
whole or in part by Seller in its sole discretion):
VII.1 Representations and Warranties
The representations and warranties made by Purchaser in
this Agreement and the Operative Agreements, taken as a whole,
shall be true and correct, in all material respects on and as of
the Closing as though repeated on and as of the Closing.
VII.2 Performance
Purchaser shall have performed and complied with, in all
material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with
by Purchaser at or before the Closing.
VII.3 Officers' Certificates
Purchaser shall have delivered to Seller a certificate,
dated as of the Closing and executed by the Chairman of the
Board, the President or any Executive or Senior Vice President
of Purchaser, substantially in the form and to the effect of
Exhibit H hereto, and a certificate, dated as of the Closing and
executed by the Secretary or any Assistant Secretary of
Purchaser, substantially in the form and to the effect of
Exhibit I hereto.
VII.4 Orders and Laws
There shall not be in effect on the date of the Closing any
Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative
Agreements.
VII.5 Regulatory Consents and Approvals
Subject to Section 1.10, all Seller Required Regulatory
Approvals and Purchaser Required Regulatory Approvals shall have
been duly obtained, made or given and shall be in full force and
effect and shall be a Final Order, and all terminations or
expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative
Agreements, including under the HSR Act, shall have occurred.
VII.6 Third Party Consents
The consents (or in lieu thereof waivers) listed in
Section 7.06 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect and shall be
reasonably satisfactory to Seller.
VII.7 Opinion of Counsel
Seller shall have received the opinions of (i) Winthrop,
Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to Purchaser, dated as of the
Closing, substantially in the form and to the effect of
Exhibit J hereto, and (ii) internal counsel to Parent, under
Pennsylvania laws and the federal laws of the United States,
dated as of the Closing, with respect to the due authorization,
execution, delivery and enforceability of the Contribution
Agreement. Such counsel's opinion as provided for in clause (i)
in the preceding sentence need not cover any matter contained in
the opinions required by Exhibit J to the extent such matter
involves the laws of Montana, Oregon, Washington, Pennsylvania
or any other jurisdiction other than the federal laws of the
United States or the laws of the State of New York, and, in lieu
thereof, Seller shall have received the opinions of counsel
admitted in such other jurisdictions covering such matter.
VII.8 No Purchaser Material Adverse Effect
There shall not have occurred and be continuing a Purchaser
Material Adverse Effect.
VII.9 Proceedings
All corporate and other proceedings to be taken by
Purchaser in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Seller and its counsel and
Seller and its counsel shall have received all such certified or
other copies of such documents as it or they may reasonably
request.
VII.10 Colstrip Rights of First Refusal
Seller shall have either received the consents required
under each of the Colstrip Rights of First Refusal or the
exercise periods of such Colstrip Rights of First Refusal shall
have expired.
VII.11 Deliveries
Purchaser shall have delivered to Seller (i) the Assumption
Agreement and (ii) the other Assumption Instruments.
VII.12 Transmission Agreements
If the PGE Colstrip Transmission Assets are not conveyed to
Purchaser at Closing, then (i) Seller and Purchaser shall have
entered into a Transmission Service Agreement, (ii) MPC shall
have purchased the PGE Colstrip Transmission Assets, or (iii)
other arrangements reasonably satisfactory to Seller shall have
been entered into with respect to the transmission of electric
energy for the PGE Colstrip Interests.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
VIII.1 Transfer Taxes
All Transfer Taxes incurred in connection with this
Agreement and the transactions contemplated hereby shall be
borne by Purchaser, and Purchaser, at its own expense, will
file, to the extent required by applicable Law, all necessary
Tax Returns and other documentation with respect to all such
Transfer Taxes, and, if required by applicable Law, Seller will
join in the execution of any such Tax Returns or other
documentation and will take such positions therein as are
reasonably requested by Purchaser. Nothing in the foregoing
sentence shall require Seller to take a position adverse to its
own posture with regard to Taxes. Prior to the Closing,
Purchaser will provide to Seller, to the extent possible, an
appropriate certificate from each applicable taxing authority to
the effect that no Transfer Tax will be incurred in connection
with this Agreement and the transactions contemplated hereby.
VIII.2 Returns with respect to Prorated Taxes
With respect to those Taxes to be prorated in accordance
with Section 1.06 of this Agreement, Purchaser shall prepare and
timely file all Tax Returns required to be filed after the
Closing with respect to the Assets and shall duly and timely pay
all such Taxes shown to be due on such Tax Returns. Purchaser's
preparation of any such Tax Return shall be subject to Seller's
approval, which approval shall not be unreasonably withheld.
Purchaser shall make such Tax Returns available for Seller's
review and approval no later than twenty (20) Business Days
prior to the due date for filing such Tax Return. Within fifteen
(15) Business Days after receipt of such Tax Return, Seller
shall pay to Purchaser its proportionate share of the amount
shown as due on such Tax Return determined in accordance with
Section 1.06 of this Agreement.
ARTICLE IX
SURVIVAL; NO OTHER REPRESENTATIONS
IX.1 Survival of Representations, Warranties, Covenants and
Agreements
(a) Subject to Section 11.02, the representations and
warranties of Purchaser and Seller (other than the
representations and warranties, (x) contained in Section 2.06
(the "Tax Representation") which shall survive for the
applicable period of the applicable statute of limitation), and
(y) contained in Section 2.09(b) (the "Title Representation")
which shall survive the Closing indefinitely) (all of the
representations and warranties of Purchaser and Seller,
excluding the Tax Representation and the Title Representation,
are hereinafter referred to as the "General Representations"),
shall survive the Closing for a period of twelve (12) months;
provided, however, if Purchaser (or any successor or assign of
Purchaser) procures title insurance with respect to the Real
Property, to the extent that Purchaser (or any successor or
assign of Purchaser) actually receives proceeds from the title
insurer in respect of any matters addressed by any of the
representations and warranties contained in Section 2.09, then,
only with respect to such matters, and only to such extent, such
representations and warranties shall be deemed not to have been
made;
(b) Subject to Section 11.02, the covenants and agreements
of Seller and Purchaser contained in this Agreement (other than
the covenants and agreements contained in Articles IV (excluding
Section 4.08) and V (excluding Section 5.06) (the "Pre-Closing
Covenants"), which covenants and agreements shall survive the
Closing for a period of twelve (12) months) (all of the
covenants and agreements of Purchaser and Seller, excluding the
Pre-Closing Covenants, are hereinafter referred to as the "Post-
Closing Covenants"), shall survive the Closing indefinitely; and
(c) Any due diligence or other investigation or
examination by any party with respect to the transactions
contemplated by this Agreement shall not in any way affect or
lessen the representations and warranties of the other party
contained herein or the indemnifications with respect thereto.
IX.2 No Other Representations
Notwithstanding anything to the contrary contained in this
Agreement, it is the explicit intent of each party hereto that
Seller is making no representation or warranty whatsoever,
express or implied, including but not limited to any implied
representation or warranty as to condition, merchantability or
suitability as to any of the Assets, except those
representations and warranties contained in this Agreement and
the exhibits, schedules, documents, certificates and instruments
delivered in connection with the Closing. In particular, Seller
makes no representation or warranty to Purchaser with respect to
(i) the information set forth in the Confidential Information
Memorandum dated March 1998 and the supplements thereto, or (ii)
any financial projection or forecast relating to the PGE
Colstrip Interests or the Colstrip Facilities. With respect to
any such projection or forecast delivered by or on behalf of
Seller to Purchaser, Purchaser acknowledges that (i) there are
uncertainties inherent in attempting to make such projections
and forecasts, (ii) it is familiar with such uncertainties,
(iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections
and forecasts furnished to it and (iv) it shall have no claim
against Seller with respect to such projections and forecasts.
ARTICLE X
INDEMNIFICATION
X.1 Other Indemnification
(a) Subject to the other Sections of this Article X,
Seller shall indemnify Purchaser and its Affiliates and their
respective directors, officers, employees, agents and
representatives ("Purchaser Group") in respect of, and hold
Purchaser Group harmless from and against, any and all Losses
suffered, incurred or sustained by Purchaser Group or to which
Purchaser Group becomes subject, resulting from, arising out of
or relating to:
(i) any breach by Seller of any representation or
warranty of Seller contained in this Agreement (determined in
all cases as if the terms "material" or "materially" or the
capitalized versions thereof, were not included therein);
(ii) any breach by Seller of any covenant or
agreement of Seller contained in this Agreement (determined in
all cases as if the terms "material" or "materially" (or the
capitalized versions thereof) were not included therein); or
(iii) Retained Liability;
provided, however, that Seller shall have no liability for
Losses under clause (i) arising from a breach of a General
Representation or the Tax Representation unless and until the
aggregate amount of all Losses arising from such breaches
asserted by Purchaser equals or exceeds $1,000,000 in which
event Seller shall be liable for all such Losses; and provided,
further, that, except with respect to Losses arising from a
breach of the Title Representation, such indemnification shall
be effective only with respect to claims written notice of which
is received by Seller with respect to Losses arising under
clause (i) above relating to General Representations (or, with
respect to the Tax Representation, the date upon which the
applicable statute of limitations expires) or clause (ii) above
relating to Pre-Closing Covenants, no later than the date that
is twelve (12) months from the Closing. Except as set forth in
paragraph (b) below in, no event shall the Liability of Seller
for Losses under clause (i) of this Section 10.01(a) arising out
of breaches of the General Representations exceed, in the
aggregate, fifty percent (50%) of the Purchase Price, (or, with
respect to breaches of the Title Representation and the
covenants contained in Sections 1.01(a)(i) and 1.05 exceed, in
the aggregate, the Purchase Price).
(b) In addition to the indemnities contained in clause (a)
above, Seller shall indemnify Purchaser Group in respect of, and
hold it harmless from and against, all Losses suffered, incurred
or sustained by Purchaser Group arising from any Pre-Closing
Environmental Liability; provided, however, that
(1) indemnification for Pre-Closing Unknown Remedial Liabilities
shall be effective only with respect to Losses arising out of a
matter described in a Claim Notice received by Seller no later
than the date that is two years from the Closing, (2) Seller's
Liabilities under this paragraph for Pre-Closing Known and
Unknown Remedial Liabilities shall be limited in each case to
Seller's pro rata share (calculated pursuant to the Colstrip
Contracts) of fifty percent (50%) of any such Loss suffered,
incurred or sustained by Purchaser Group, and shall not, in any
event, exceed, in the aggregate, an amount equal to ten percent
(10%) of the Purchase Price (each such Liability of Seller shall
be paid by it at the same time that Purchaser Group has paid its
fifty percent (50%) share thereof); provided, further, that this
indemnity shall only extend to such Pre-Closing Environmental
Liabilities attributable to conditions existing at or prior to
the Closing, and Seller shall not be required to indemnify
Purchaser for Losses to the extent attributable to acts or
omissions of Purchaser resulting in an increase in or
aggravation of such Environmental Liabilities, whether arising
from a change in use of the Assets or otherwise. In the event
that Seller disputes the pro rata share of any Losses
attributable by Purchaser to Seller under this Section
10.01(b)(2) in the Claim Notice, Seller will nevertheless pay
Purchaser the amount requested by Purchaser in the Claim Notice
and Seller shall proceed to resolve any dispute with MPC and
Puget concerning allocations of pro rata shares. If Purchaser
fails to make a claim against a Potentially Responsible Party
with respect to Pre-Closing Environmental Liabilities, then upon
making an indemnity payment pursuant to this paragraph (b),
Seller shall, to the extent of such indemnity payment, be
subrogated to all rights of Purchaser against any Potentially
Responsible Party in respect of the Losses to which the
indemnity payment relates. If Purchaser makes a claim against,
and recovers from, a Potentially Responsible Party with respect
to Pre-Closing Environmental Liabilities and Seller has made an
indemnity payment with respect to such Loss, then Purchaser
shall reimburse Seller fifty percent (50%) of such amounts
recovered, net of any third party costs of collection.
(c) Subject to the other Sections of this Article X,
Purchaser shall indemnify Seller and its Affiliates and their
respective directors, officers, employees, agents and
representatives ("Seller Group") in respect of, and hold Seller
Group harmless from and against, any and all Losses suffered,
incurred or sustained by Seller Group or to which Seller Group
becomes subject, resulting from, arising out of or relating to:
(i) any breach by Purchaser of any representation or
warranty of Purchaser contained in this Agreement (determined in
all cases as if the terms "material" or "materially" (or the
capitalized versions thereof), were not included therein);
(ii) any breach by Purchaser of any covenant or
agreement of Purchaser contained in this Agreement (determined
in all cases as if the terms "material" or "materially" (or the
capitalized versions thereof) were not included therein); or
(iii) an Assumed Liability; provided, however, that
Purchaser shall have no liability for Losses under clause (i)
arising from a breach of a General Representation unless and
until the aggregate amount of all such Losses arising from such
breaches asserted by Seller equals or exceeds $1,000,000 in
which event Purchaser shall be liable for all Losses; and
provided, further, that such indemnification shall be effective
only with respect to claims written notice of which is received
by Purchaser with respect to Losses arising under clause (i)
above relating to General Representations or clause (ii) above
relating to Pre-Closing Covenants, no later than the date that
is twelve (12) months from the Closing. In no event shall the
Liability of Purchaser for Losses under this Article X arising
out of breaches of the General Representations exceed, in the
aggregate, fifty percent (50%) of the Purchase Price.
(d) To the extent that an Indemnified Party has received
insurance proceeds prior to the payment of an indemnity payment
on an indemnifiable Loss, such indemnifiable Loss shall be
reduced by an amount equal to such proceeds received by the
Indemnified Party. 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 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 prime
rate then in effect for domestic banks as published in the Wall
Street Journal (Northeast Edition) in the "Money Rates"
section), shall promptly be repaid by the Indemnified Party to
the Indemnifying Party. Nothing in this Section 10.01(d) shall
be construed to require any party hereto to obtain or maintain
any insurance coverage or make any claim under its insurance
coverage.
(e) Seller shall not be liable on account of any
obligations of any co-owners of the Colstrip Facilities to
Purchaser.
(f) Except as expressly provided above in this Section
10.01, the Indemnifying Party hereby expressly waives all rights
of subrogation in respect of any payments made by it under this
Article X.
X.2 Method of Asserting Claims
All claims for indemnification by any Indemnified Party
under Section 10.01 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which
an Indemnified Party might seek indemnity under Section 10.01 is
asserted against or sought to be collected from such Indemnified
Party by a Person other than Seller, Purchaser or any Affiliate
of Seller or Purchaser (a "Third Party Claim"), the Indemnified
Party shall deliver a Claim Notice with reasonable promptness to
the Indemnifying Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute
Period whether the Indemnifying Party disputes its liability to
the Indemnified Party under Section 10.01 and whether the
Indemnifying Party desires, at its sole cost and expense, to
defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified Party with
respect to the Third Party Claim pursuant to this
Section 10.02(a), then the Indemnifying Party will have the
right to defend, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently
prosecuted by the Indemnifying Party to a final conclusion or
will be settled at the discretion of the Indemnifying Party
(with the consent of the Indemnified Party, which consent will
not be unreasonably withheld). The Indemnifying Party will have
full control of such defense and proceedings, including any
settlement thereof; provided, however, that the Indemnified
Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party's delivery of
the notice referred to in the first sentence of this
Section 10.02(a)(i), file any motion, answer or other pleadings
or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests
and not prejudicial to the Indemnifying Party (it being
understood and agreed that, except as provided in clause
(ii) below, if an Indemnified Party takes any such action that
is prejudicial and causes a final adjudication that is adverse
to the Indemnifying Party, the Indemnifying Party will be
relieved of its obligations hereunder with respect to the
portion of such Third Party Claim prejudiced by the Indemnified
Party's action); and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost
and expense of the Indemnifying Party, cooperate with the
Indemnifying Party and its counsel in contesting any Third Party
Claim that the Indemnifying Party elects to contest, or, if
appropriate and related to the Third Party Claim in question, in
making any counterclaim against the Person asserting the Third
Party Claim, or any cross-complaint against any Person (other
than the Indemnified Party or any of its Affiliates).
Notwithstanding the foregoing, the Indemnified Party may take
over the control of the defense or settlement of a Third Party
Claim at any time if it irrevocably waives its right to
indemnity under Section 10.01 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party Claim
pursuant to Section 10.02(a), or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or
settle the Third Party Claim, or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute Period, then
the Indemnified Party will have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings will be
vigorously and diligently prosecuted by the Indemnified Party to
a final conclusion or will be settled at the discretion of the
Indemnified Party (with the consent of the Indemnifying Party,
which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and
proceedings, including (except as provided in the immediately
preceding sentence) any settlement thereof; provided, however,
that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party is
contesting, or, if appropriate and related to the Third Party
Claim in question, in making any counterclaim against the Person
asserting the Third Party Claim, or any cross-complaint against
any Person (other than the Indemnified Party or any of its
Affiliates). Notwithstanding the foregoing provisions of this
Section 10.02(a)(ii), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the
Indemnifying Party disputes its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the Indemnifying Party in
the manner provided in clause (iii) below, the Indemnifying
Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this
Section 10.02(a)(ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and
the Indemnified Party will reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party
pursuant to this Section 10.02(a)(ii), and the Indemnifying
Party will bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party Claim under
Section 10.01 or fails to notify the Indemnified Party within
the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third
Party Claim, the Loss in the amount specified in the Claim
Notice will be conclusively deemed a liability of the
Indemnifying Party under Section 10.01 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party
on demand. If the Indemnifying Party has timely disputed its
liability with respect to such claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be
resolved by litigation in a court of competent jurisdiction.
(b) In the event any Indemnified Party should have a claim
under Section 10.01 against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver
an Indemnity Notice with reasonable promptness to the
Indemnifying Party prior to the expiration of the
indemnification notice period described in this Section 10.02.
If the Indemnifying Party notifies the Indemnified Party that it
does not dispute the claim described in such Indemnity Notice or
fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Loss in the amount specified in the
Indemnity Notice will be conclusively deemed a liability of the
Indemnifying Party under Section 10.01 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party
on demand. If the Indemnifying Party disputes all or any
portion of its liability with respect to such claim, it shall
notify the Indemnified Party thereof in writing during the
Dispute Period, specifying the portion of the claim that is
disputed and the basis for such position. If the Indemnifying
Party has timely disputed its liability with respect to such
claim, the Indemnifying Party will be deemed to have accepted
and be liable for payment of the undisputed portion of such
claim on demand and the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within
the Resolution Period, such dispute shall be resolved by
litigation in a court of competent jurisdiction.
(c) In the event of any Loss resulting from a
misrepresentation, breach of warranty or nonfulfillment or
failure to be performed of any covenant or agreement contained
in this Agreement as to which an Indemnified Party would be
entitled to claim indemnity under Section 10.01 but for the Loss
limitation provisions of Section 10.01(a) and (c), such
Indemnified Party may nevertheless deliver a written notice to
the Indemnifying Party containing the information that would be
required in a Claim Notice or an Indemnity Notice, as
applicable, with respect to such Loss. In the case of a Claim
Notice, the provisions of Section 10.02(a)(i) will be
applicable. If the Indemnifying Party notifies the Indemnified
Party that it does not dispute the claim described therein or
fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in
such Claim Notice or Indemnity Notice, as the case may be, the
Loss specified in the notice will be conclusively deemed to have
been incurred by the Indemnified Party for purposes of making
the determination of the Loss limitations set forth in
Section 10.01. If the Indemnifying Party has timely disputed the
claim described in such Claim Notice or Indemnity Notice, as the
case may be, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by litigation
in a court of competent jurisdiction.
(d) In the event of any claim for indemnity under
Section 10.01(a), Purchaser agrees to give Seller and its
Representatives reasonable access to the Books and Records and
Employees in connection with the matters for which
indemnification is sought to the extent Seller reasonably deems
necessary in connection with its rights and obligations under
this Article X.
(e) All payments made pursuant to this Article X shall be
treated as an adjustment to the Purchase Price.
(f) In the event an action, dispute, claim, counterclaim
or controversy ("Dispute") arises between the parties arising
out of or relating to this Agreement, the aggrieved party shall
promptly notify the other party of the Dispute within ten
Business Days after such Dispute arises. If the parties have
failed to resolve the Dispute within ten Business Days after
delivery of such notice, each party shall, within five Business
Days thereafter, nominate a senior officer of its management to
meet to attempt to resolve the Dispute. The senior officers
shall meet within twenty Business Days after their nomination.
Should the senior officers be unable to resolve the Dispute,
either party may pursue any and all available legal remedies,
unless the parties mutually agree in writing to an alternative
dispute resolution procedure.
X.3 Exclusivity
After the Closing, to the extent permitted by Law, the
indemnities set forth in this Article X shall be the exclusive
remedies of Purchaser Group and Seller Group, or any member of
either of them, for any misrepresentation, breach of warranty or
nonfulfillment or failure to be performed of any covenant or
agreement contained in this Agreement, any schedule hereto, or
any certificate delivered by or on behalf of Seller or Purchaser
in connection herewith, and the parties shall not be entitled to
a rescission of this Agreement or to any further indemnification
rights or claims of any nature whatsoever in respect thereof,
all of which the parties hereto hereby waive.
X.4 Purchaser's Release of Seller Under the Colstrip Contracts
From and after the Closing, Purchaser, for itself and on
behalf of its Affiliates, does hereby release, hold harmless and
forever discharge Seller and its Affiliates from any and all
claims, demands, liabilities (including fines and civil
penalties) or causes of action at Law or in equity, whether
known or unknown, resulting from any claim that Seller is not
released from its obligations under the Colstrip Contracts by
virtue of Sections 1.01(a)(xi) and 1.02(a)(v); provided,
however, that nothing in this Section 10.04 shall be deemed to
affect Seller's Retained Liabilities, Purchaser's Assumed
Liabilities or the parties' indemnification obligations
hereunder.
ARTICLE XI
TERMINATION
XI.1 Termination
This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Seller and Purchaser; or
(b) at any time before the Closing, by Seller or
Purchaser, in the event that any Final Order or Law becomes
effective restraining, enjoining, or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative
Agreements, upon notification of the non-terminating party by
the terminating party; or
(c) at any time before the Closing, by Seller or
Purchaser, in the event (i) of a breach hereof by the non-
terminating party which gives rise to, as applicable, either a
Seller Material Adverse Effect (if Seller is the breaching
party) or a Purchaser Material Adverse Effect (if Purchaser is
the breaching party) if such non-terminating party fails to cure
such breach within forty-five (45) days following notification
thereof by the terminating party, provided that if, at the end
of such forty-five (45) day period, the non-terminating party is
endeavoring in good faith, and proceeding diligently, to cure
such breach, the non-terminating party shall have an additional
forty-five (45) days in which to effect such cure or (ii) upon
notification of the non-terminating party by the terminating
party that the satisfaction of any condition to the terminating
party's obligations under this Agreement becomes impossible or
impracticable with the use of commercially reasonable efforts if
the failure of such condition to be satisfied by the terminating
party is not caused by a breach hereof by the terminating party,
provided that if it is reasonably possible that the
circumstances giving rise to the impossibility or
impracticability may be removed prior to the expiration of the
time periods provided in the following subsection (d), then such
notification may not be given until such time as the removal of
such circumstances is no longer reasonably possible within such
time periods; or
(d) at any time after the date which is twelve (12) months
after the date of this Agreement, by Seller or Purchaser upon
notification of the non-terminating party by the terminating
party if the Closing shall not have occurred on or before such
date and such failure to consummate is not caused by a breach of
this Agreement by the terminating party; provided, however, that
if on such date Purchaser and Seller have not received all
Purchaser Required Regulatory Approvals and all Seller Required
Regulatory Approvals but all other conditions to the Closing
shall be fulfilled or shall be capable of being fulfilled, then
neither party may terminate this Agreement until the expiration
of such date which is eighteen (18) months after the date of
this Agreement, provided further, that if on such date Purchaser
or MPC has not received all Purchaser Required Regulatory
Approvals or all Seller Required Regulatory Approvals (in each
case as defined in the MPC Purchase Agreement) related to the
Hydro Units (as defined in the MPC Purchase Agreement) but all
other conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then neither party may terminate
this Agreement until the expiration of the date which is twenty-
four (24) months after the date of this Agreement.
XI.2 Effect of Termination
If this Agreement is validly terminated pursuant to
Section 11.01, this Agreement will forthwith become null and
void, and there will be no liability or obligation on the part
of Seller or Purchaser (or any of their respective officers,
directors, employees, agents or other representatives or
Affiliates), except as provided in the next succeeding sentence
and except that the provisions with respect to expenses in
Section 13.04 and confidentiality in Section 13.06 will continue
to apply following any such termination. Notwithstanding any
other provision in this Agreement to the contrary, upon
termination of this Agreement pursuant to Section 11.01(c) or
(d), Seller will remain liable to Purchaser for any willful
breach of Section 4.09 of this Agreement by Seller existing at
the time of such termination, and Purchaser will remain liable
to Seller for any willful breach of Section 5.05 of this
Agreement by Purchaser existing at the time of such termination,
and Seller or Purchaser may seek such remedies, including
damages and fees of attorneys, against the other with respect to
any such breach as are provided in this Agreement or as are
otherwise available at Law or in equity.
ARTICLE XII
DEFINITIONS
XII.1 Definitions
(a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Actions or Proceedings" means any action, suit,
proceeding, arbitration or Governmental or Regulatory Authority
investigation.
"Adjustment Amount" has the meaning ascribed to it in
Section 1.04.
"Adjustment Statement" has the meaning ascribed to it in
Section 1.04.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by
or is under common control with the Person specified. For
purposes of this definition, control of a Person means the
power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by Contract
or otherwise and, in any event and without limitation of the
previous sentence, any Person owning ten percent (10%) or more
of the voting securities of another Person shall be deemed to
control that Person.
"Agreement" means this Asset Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and
the certificates delivered in accordance with Sections 6.03 and
7.03, as the same shall be amended from time to time.
"Assets" has the meaning ascribed to it in Section 1.01(a).
"Asset Group" means one or more of the categories of Assets
set forth on Schedule I to the MPC Purchase Agreement.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description
(whether real, personal or mixed, whether tangible or intangible
and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person.
"Assignment Instruments" has the meaning ascribed to it in
Section 1.05.
"Associate" means, with respect to any Person, any
corporation or other business organization of which such Person
is an officer or partner or is the beneficial owner, directly or
indirectly, of ten percent (10%) or more of any class of equity
securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person
serves as a trustee or in a similar capacity and any relative or
spouse of such Person, or any relative of such spouse, who has
the same home as such Person.
"Assumed Liabilities" has the meaning ascribed to it in
Section 1.02(a).
"Assumption Agreement" has the meaning ascribed to it in
Section 1.05.
"Assumption Instruments" has the meaning ascribed to it in
Section 1.05.
"Base Purchase Price" means an amount equal to
$192,979,000.
"Bid Date" means September 28, 1998.
"Books and Records" of any Person means all files,
documents, instruments, papers, books and records relating to
the business, operations, condition of (financial or other),
results of operations and Assets and Properties of such Person,
including financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers,
Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and
environmental studies and plans.
"Budget" has the meaning ascribed to it in Section 4.13.
"Business Combination" means with respect to any Person,
any merger, consolidation or combination to which such Person is
a party, any sale, dividend, split or other disposition of
capital stock or other equity interests of such Person or any
sale, dividend or other disposition of all or substantially all
of the Assets and Properties of such Person, provided, however,
that neither (i) a divestiture by Seller of all or part of its
generating assets (provided, that no such divestiture will
operate as a release of Seller from its obligations under this
Agreement) nor (ii) any activities or transactions of any
Affiliate of Seller (so long as not involving Seller), shall be
considered a Business Combination hereunder.
"Business Contracts" has the meaning ascribed to it in
Section 1.01(a)(v).
"Business Day" means a day other than Saturday, Sunday or
any day on which banks located in the State of Oregon and the
Commonwealth of Pennsylvania are authorized or obligated to
close.
"Capital Expenditures" means those capital expenditures
which are identified in the Budget referred to in Section 4.13,
and such other emergency, non-budgeted capital expenditures made
by Seller in accordance with the provisions of Section 4.13.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the
rules and regulations promulgated thereunder.
"Claim Notice" means written notification pursuant to
Section 10.02(a) of a Third Party Claim as to which indemnity
under Section 10.01 is sought by an Indemnified Party, enclosing
a copy of all papers served, if any, and specifying the nature
of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under
Section 10.01, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in
good faith, of such Third Party Claim.
"Closing" means the closing of the transactions
contemplated by Section 1.05.
"Closing Date" means (a) the later of (x) July 1, 1999 and
(y) the date thirty (30) days after the day on which the last of
the consents, approvals, actions, filings, notices or waiting
periods described in or related to the filings described in
Sections 6.04 through 6.07 and Sections 7.04 through 7.06 has
been obtained, made or given or has expired, as applicable;
provided, that Purchaser agrees to use reasonable efforts to be
prepared to close prior to July 1, 1999, and shall give notice
to Seller in the event Purchaser determines that it is able to
do so, or (b) such other date as Purchaser and Seller mutually
agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Colstrip Books and Records" has the meaning ascribed to it
in Section 1.01(a)(xiv).
"Colstrip Contracts" has the meaning ascribed to it in
Section 1.01(a)(xi).
"Colstrip Facilities" means the thermal electric generating
facilities known as Colstrip ▇▇▇▇▇ ▇ & ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, including the Common Facilities (as defined in the
Colstrip Contracts) and the PGE Colstrip Transmission Assets..
"Colstrip Rights of First Refusal" means the rights
described in the following agreements: (i) Sections 24(b) and
24(f) of the Ownership and Operation Agreement, dated as of
May 6, 1981, as amended, by and among Seller, MPC, WWP, Puget,
and Pacific Power & Light Company ("Pacific"); and (ii)
Section 28(f) of the Colstrip Project Transmission Agreement,
dated as of May 6, 1981, as amended, by and among Seller, MPC,
WWP, Puget and Pacific.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other
contract.
"Contribution Agreement" has the meaning ascribed to it in
the forepart of this Agreement.
"Disclosure Schedule" means, as the context requires,
(a) the record delivered to Purchaser by Seller herewith and
dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required
to be included therein by Seller pursuant to this Agreement and
(b) the record delivered to Seller by Purchaser herewith and
dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required
to be included therein by Purchaser pursuant to this Agreement.
"Dispute" has the meaning ascribed to it in
Section 10.02(f).
"Dispute Period" means the period ending thirty (30) days
following receipt by an Indemnifying Party of either a Claim
Notice or an Indemnity Notice.
"Easements" means, with respect to the Assets, the
reservations of easements in favor of Seller to be included in
the deeds of conveyance with respect to such Assets,
substantially as set forth in Section 12.01(b) of the Disclosure
Schedule.
"Employee" means each employee or officer of Seller,
Purchaser or MPC, as the context may require, or any of their
Affiliates, whose employment responsibilities relate to the PGE
Colstrip Interests or the Colstrip Facilities.
"Environmental Fines and Penalties" has the meaning
ascribed to it in Section 1.02(a)(vii).
"Environmental Law" means all Federal, state, municipal and
local laws (including common laws), regulations, rules,
ordinances, codes, licenses, decrees, judgments, directives, or
judicial or administrative orders relating to pollution,
protection, preservation or restoration of human health, the
environment or natural resources, including, without limitation,
laws relating to Releases or threatened Releases of Hazardous
Materials (including, without limitation, into or through
ambient air, surface water, groundwater, land, wetlands, surface
and subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials,
including without limitation the Clean Water Act, the Clean Air
Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act, and CERCLA, in each case as amended, and
their local counterparts.
"Environmental Liabilities" means any liabilities,
obligations or responsibilities under or related to former,
current or future Environmental Laws, or the common law, whether
such liability, obligation or responsibility is known or
unknown, contingent or accrued, arising as a result of or in
connection with (a) any violation or alleged violation of
Environmental Laws relating to the Assets; (b) compliance with
applicable Environmental Laws relating to the Assets; (c) loss
of life, injury to persons or property or damage to natural
resources (whether or not such loss, injury or damage was made
manifest before or after the Closing) caused (or allegedly
caused) by the presence or Release of Hazardous Materials at,
on, in, under, adjacent to or migrating from the Assets; and (d)
the reasonable investigation and/or remediation required by Law
or constituting a reasonable response to a Governmental or
Regulatory Authority having jurisdiction (whether or not such
investigation or remediation commenced on or before the Closing)
of Hazardous Materials that are present or have been Released
at, on, in, under, adjacent to or migrating from the Assets,
including, but not limited to, Hazardous Materials in the soil,
surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Assets
("Remedial Liabilities"); provided further that the liabilities,
obligations or responsibilities described in clauses (a), (b)
and (c) shall not include those described in clause (d);
provided further that Environmental Liabilities shall not
include (x) Purchaser's internal costs or consequential damages
(including the value of employees' time, loss of use, downtime
or increased operating costs); (y) costs of capital improvements
(including the replacement of equipment that has reached its
useful life); nor (z) monitoring required by environmental
permits or the design of the Assets, except in the case of
clauses (y) and (z), as covered in clause (d) above.
"Environmental Permits" has the meaning ascribed in
Section 2.15.
"EPA" means the Environmental Protection Agency.
"Estimated Adjustment Amount" means Seller's good faith
reasonable estimate of an Adjustment Amount for the Closing,
which estimate shall be provided to Purchaser no later than five
Business Days before the Closing.
"Estimated Purchase Price" has the meaning ascribed to it
in Section 1.05.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"Excluded Assets" has the meaning ascribed to it in Section
1.01(b).
"Federal Power Act" means the Federal Power Act of 1935, as
amended, and the rules and regulations promulgated thereunder.
"FERC" means the Federal Energy Regulatory Commission.
"Final Order" means a final Order after all opportunities
for rehearing are exhausted (whether or not any appeal thereof
is pending) that has not been further revised, stayed, enjoined,
set aside, annulled or suspended, with respect to which any
required waiting period has expired, and as to which all
conditions to effectiveness prescribed therein or otherwise by
Law, regulation or Order have been satisfied.
"Fuel Contracts" has the meaning ascribed to it in
Section 1.01(a)(x).
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the
immediately prior comparable period.
"General Assignment" has the meaning ascribed to it in
Section 1.05.
"General Representations" has the meaning ascribed to it in
Section 9.01(a).
"Good Utility Practice" means any of the applicable
practices, methods and acts:
(i) required of the party to whom Good Utility
Practice is being applied under regulations of the National
Electric Safety Code (as each of such terms is defined in the
Interconnection Agreement (as such term is defined in the MPC
Purchase Agreement)) or its successor, whether or not the party
whose conduct is at issue is a member thereof; or
(ii) 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 at the time the decision
was made, could have been expected to accomplish the desired
result at a reasonable cost to the party being expected to apply
Good Utility Practice, consistent with law, regulation, good
business practices, generation, transmission, and distribution
reliability, safety, and expedition. Good Utility Practice is
intended to include practices, methods, or acts generally
accepted in the region, and is not intended to be limited to
optimum practices, methods, or acts to the exclusion of all
others. Good Utility Practice does not include intentional
disregard of contractual commitments, even if those commitments
are uneconomic under current market conditions.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States, any foreign country
or any domestic or foreign state, county, city or other
political subdivision or any Native American tribal council or
similar governing entity.
"Hazardous Material" means (A) any petrochemical, petroleum
or petroleum products, oil, flammable explosives, radioactive
materials, radon gas, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid
which may contain levels of polychlorinated biphenyls (PCBs);
(B) any chemicals or other materials or substances which are now
or hereafter become defined under any Environmental Law as or
included in the definition of "hazardous substances," "hazardous
wastes," "hazardous chemicals," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "pollutants," "contaminants," "hazardous
matter," "restricted hazardous materials" or words of similar
import ; and (C) any other chemical or other material or
substance, the discharge, emission, Release or exposure to which
is now or hereafter prohibited, limited or regulated by any
Governmental or Regulatory Authority under any Environmental
Law.
"Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended, and the rules and regulations
promulgated thereunder.
"HSR Act" means Section 7A of the ▇▇▇▇▇▇▇ Act (Title II of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended) and the rules and regulations promulgated thereunder.
"Improvements" has the meaning ascribed to it in
Section 1.01(a)(iv).
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred
purchase price of goods or services (other than trade payables
or accruals incurred in the ordinary course of business), (iv)
under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any
other Person.
"Indemnified Party" means any Person claiming
indemnification under any provision of Article X.
"Indemnifying Party" means any Person against whom a claim
for indemnification is being asserted under any provision of
Article X.
"Indemnity Notice" means written notification pursuant to
Section 10.02(b) of a claim for indemnity under Article X by an
Indemnified Party, specifying the nature of and basis for such
claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such claim.
"Indenture" means the Supplemental Indenture, dated as of
July 1, 1945, as amended and supplemented, between Seller and
The Marine Midland Trust Company of New York, Trustee.
"Independent Accounting Firm" means PriceWaterhouseCoopers
or such other independent accounting firm of national reputation
mutually appointed by Seller and Purchaser.
"Intangible Personal Property" has the meaning ascribed to
it in Section 1.01(a)(vii).
"Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, trade names and trade
name rights, service marks and service ▇▇▇▇ rights, service
names and service name rights, brand names, inventions,
copyrights and copyright rights, trade secrets, know-how,
techniques, computer programs and related documentation, and any
and all other intangible assets or proprietary information or
rights (whether registered or under common law) and all pending
applications for and registrations of patents, trademarks,
service marks and copyrights.
"Inventory" has the meaning ascribed to it in
Section 1.01(a)(iii).
"Inventory Adjustment Amount" has the meaning ascribed to
in Section 1.04.
"Inventory Survey" has the meaning ascribed to in
Section 1.04.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or similar phrases in this Agreement means:
(i) in the case of Seller, the actual knowledge of Seller's
officers and employees who are persons generally responsible for
the subject matter to which knowledge is pertinent, such persons
being listed in Section 12.01(d) of the Disclosure Schedule at
the date as of which the representation, warranty or covenant is
made or repeated, and (ii) in the case of Purchaser the actual
knowledge of Purchaser's officers and employees who are persons
generally responsible for the subject matter to which knowledge
is pertinent, such persons being listed in Section 12.01(d) of
the Disclosure Schedule at the date as of which the
representation, warranty or covenant is made or repeated.
"Landlord Security Deposits" has the meaning ascribed to it
in Section 1.02(a)(iv).
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of
the United States, any foreign country or any domestic or for-
eign state, county, city or other political subdivision or of
any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent,
fixed or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises
and similar consents granted or issued by any Governmental or
Regulatory Authority, other than Environmental Permits,
including applications for any of the foregoing.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other
encumbrance of any kind, or easement, or any conditional sale
Contract, title retention Contract or other Contract to give any
of the foregoing.
"Loss" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including interest, court
costs, reasonable fees of attorneys, accountants and other
experts or other reasonable expenses of litigation or other
proceedings or of any claim, default or assessment); provided,
however, "Loss" shall not include any consequential, incidental
or punitive damages for any reason other than in the case of
willful misconduct.
"Maintenance Expenditures" means those special maintenance
expenditures (including for plant overhauls) which are
identified in the Budget referred to in Section 4.13, and such
other emergency, non-budgeted special maintenance expenditures
made by Seller in accordance with the provisions of Section 4.13
in the exercise of Good Utility Practices.
"Maintenance and Capital Expenditures Amount" means (i) the
aggregate amount of all funds actually expended by Seller (and
amounts due from Seller to third parties at the time of the
Closing in respect of work actually performed by such third
parties, to the extent such amounts are not Assumed Liabilities)
with respect to Maintenance Expenditures and Capital
Expenditures, in each case which are identified in the Budget,
during the period beginning on the date one (1) year prior to
the Closing and ending on the Closing (or such shorter period if
the Closing occurs less than one year from the date hereof) up
to but not exceeding $1,620,000 in the aggregate; and (ii) 85%
of all Emergency Expenditures made by Seller in accordance with
Section 4.13 if any, during such one (1) year (or shorter)
period described above. The Maintenance and Capital
Expenditures Amount shall not include any Capital Expenditures,
Maintenance Expenditures or Emergency Expenditures with respect
to assets or properties that are not transferred to Purchaser
under this Agreement.
"MPC" means The Montana Power Company, a Montana
corporation and the operator of the Colstrip Facilities.
"MPC Purchase Agreement" means the Asset Purchase
Agreement, dated as of the date hereof, by and between Purchaser
and MPC, together with any amendments thereto.
"Off-Site Environmental Liabilities" means any liabilities,
obligations or responsibilities under or related to former,
current or future Environmental Laws or the common law, whether
such liability, obligation or responsibility is known or
unknown, contingent or accrued, arising as a result of or in
connection with Seller's storage, disposal, transportation,
discharge, Release or recycling of Hazardous Materials prior to
the Closing at or to locations other than the Real Property
constituting Assets, provided that liabilities attributable to
migration of Hazardous Materials from the Real Property
constituting the Assets shall not constitute Off-Site
Environmental Liabilities.
"Operative Agreements" means, collectively, this Agreement,
the General Assignment and the other Assignment Instruments, the
Assumption Agreement, the other Assumption Instruments, the
Contribution Agreement, the Wholesale Transition Service
Agreement (if entered into by the Parties), the Transmission
Service Agreement (if entered into by the Parties) and any
support or other agreements to be entered into at the Closing in
connection with the transaction.
"OPUC" means the Oregon Public Utility Commission.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in
each such case whether preliminary or final).
"Parent" has the meaning ascribed to it in the forepart of
this Agreement.
"Permitted Lien" means (i) those Liens and exceptions to
title to the Assets (except Easements) set forth in Section
12.01(e) of the Disclosure Schedule; (ii) the Easements;
(iii) when such term is used with respect to any date before the
Closing, Liens created by the Indenture; (iv) any Lien for Taxes
not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been
established in accordance with GAAP; (v) when such term is used
with respect to any date prior to the Closing, any statutory
Lien arising in the ordinary course of business by operation of
Law with respect to a Liability that is not yet due or
delinquent; (vi) zoning, entitlement, conservation restriction
and other land use and environmental regulations by any
Governmental or Regulatory Authority; and (vii) any minor
imperfection of title or similar Lien, limited in the case of
items (i) - (vii) (excluding clause (ii)) to only those matters
which, individually or in the aggregate with other such Liens do
not materially detract from the value of the Assets as currently
used or materially interfere with the ownership, operation and
maintenance of the Assets.
"Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, limited
liability company, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"PGE Colstrip Interests" means Seller's undivided 20%
interest in Colstrip Units 3 & 4, together with PGE's interest
in the Common Facilities as provided in the Colstrip Contracts
and its interest in the PGE Colstrip Transmission Assets.
"PGE Colstrip Transmission Amount" means an amount equal to
$37,464,656.
"PGE Colstrip Transmission Assets" means Seller's right,
title and interest in and to the 500 kV transmission system,
including related facilities, real property and property rights,
for the transmission of power from the Colstrip Facilities to
Bonneville Power Administration's transmission system near
Townsend, Montana, as described in Section 1.01(a)(xv) of the
Disclosure Schedule.
"Pollution Control Bonds" means those Pollution Control
Revenue Refunding Bonds, dated May 1, 1998, Series 1998 A (Non-
AMT) City of Forsyth, Montana in the original principal amount
of $97,800,000 and Series ▇▇▇▇ ▇ (▇▇▇) ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
in the original principal amount of $21,000,000.
"Pollution Control Facilities" means the facilities
financed with the Pollution Control Bonds described in Exhibit H
hereto.
"Post-Closing Covenants" has the meaning ascribed to it in
Section 9.01(b).
"Potentially Responsible Party" has the meaning ascribed to
it in CERCLA.
"PPUC Order" means the Opinion and Order adopted by PPUC on
February 9, 1995 in Pennsylvania Power & Light Company's
application for approval of certain transactions in connection
with the utility's establishment of a holding company structure.
"Pre-Closing Covenants" has the meaning ascribed to it in
Section 9.01(b).
"Pre-Closing Environmental Liabilities" means those
Environmental Liabilities attributable to the period on or prior
to the Closing;
"Pre-Closing Known Remedial Liabilities" means the subset
of Pre-Closing Environmental Liabilities that are described in
paragraph (d) of the definition of Environmental Liabilities and
that are attributable to the matters set forth in Schedule I
hereto.
"Pre-Closing Known and Unknown Remedial Liabilities" means
all Pre-Closing Known Remedial Liabilities and Pre-Closing
Unknown Remedial Liabilities arising from or relating to the
ownership, operation and maintenance of the PGE Colstrip
Interests, to the extent such PGE Colstrip Interests or any
portion thereof are acquired by Purchaser.
"Pre-Closing Unknown Remedial Liabilities" means the subset
of Pre-Closing Environmental Liabilities that are described in
paragraph (d) of the definition of Environmental Liabilities and
that are not attributable to the matters set forth in Schedule I
hereto.
"Proceedings" has the meaning ascribed in Section 13.13.
"Puget" means Puget Sound Energy, Inc., a Washington
corporation.
"Purchase Price" has the meaning ascribed to it in
Section 1.03(a).
"Purchaser" has the meaning ascribed to it in the forepart
of this Agreement.
"Purchaser Financing" has the meaning ascribed to it in
Section 5.07.
"Purchaser Group" has the meaning ascribed to it in Section
10.01(a).
"Purchaser Material Adverse Effect" means any change or
effect after the Bid Date that is individually or in the
aggregate, materially adverse to (a) the business, operations,
property or condition (financial or otherwise) of Purchaser and
its subsidiaries, taken as a whole, (b) the ability of Purchaser
and each of its subsidiaries, taken as a whole, to perform their
respective obligations under this Agreement or any of the other
Operative Agreements or (c) the validity or enforceability of
this Agreement or any of the other Operative Agreements, or the
rights or remedies of Purchaser hereunder or thereunder.
"Purchaser Required Regulatory Approvals" means (i)
pursuant to Part II of the Federal Power Act, acceptance for
filing and effectiveness or authorization by Final Order of
FERC, as applicable, to allow Purchaser to (A) implement
wholesale sales of electricity under a Wholesale Transition
Service Agreement (if one is entered into pursuant to Section
5.09) and any other jurisdictional agreements to be assigned to
Purchaser, (B) acquire, own and operate the Assets, and (C) sell
electricity at wholesale at market-based rates; (ii) a Final
Order of FERC certifying Purchaser as an exempt wholesale
generator pursuant to Section 32 of the Holding Company Act,
provided however, that in the event Purchaser does not obtain
such certification with respect to the acquisition and ownership
of the PGE Colstrip Transmission Assets, then the provisions of
Section 1.10 shall apply with respect to such Assets and
provided further, that in any case such certification will be a
Purchaser Required Regulatory Approval with respect to all other
Assets, (iii) subject to the provision of Section 1.10, a Final
Order of the FERC accepting for filing and effectiveness or
approving the Transmission Service Agreement in form and
substance satisfactory to Purchaser in its reasonable discretion
and providing for the payment by Purchaser of rates not in
excess of those as set forth on Exhibit K, (iv) a Final Order of
the OPUC, Montana Public Service Commission and the WUTC, in
each case if required, including the determinations required by
Section 32(c) of the Holding Company Act for the Assets to be
eligible facilities of Purchaser as an exempt wholesale
generator; (v) approval or authorization by Final Order of the
Pennsylvania Public Utility Commission pursuant to the PPUC
Order, if required; (vi) other Licenses, Environmental Permits
and approvals or authorizations of any other Governmental or
Regulatory Authority reasonably necessary pursuant to any Law
for Purchaser to own and operate the Assets other than
authorizations or approvals, the lack of which would not
materially detract from the value of the Assets as currently
used or materially interfere with the ownership, operation and
maintenance of the Assets; and (vii) expiration or early
termination of the HSR Act waiting period.
"Qualified Transfer" means a sale or other disposition of
the Pollution Control Facilities to a transferee who is
reasonably expected to use the Pollution Control Facilities in
such a way that they are treated as qualified pollution control
facilities within the meaning of Section 103(b)(4)(F) of the
Internal Revenue Code as in effect prior to the enactment of
Public Law No. 99-514 (the "Tax Reform Act of 1986").
"Real Property" has the meaning ascribed to it in
Section 1.01(a)(i).
"Real Property Leases" has the meaning ascribed to it in
Section 1.01(a)(ii).
"Release" means any release, spill, emission, pouring,
leaking, pumping, injection, deposit, disposal, discharge,
emptying, dispersal, dumping, leaching or migration into or
through the indoor or outdoor environment, including the
movement of Hazardous Materials through ambient air, soil,
surface water, ground water, wetlands, land, surface or
subsurface strata.
"Representatives" has the meaning ascribed to it in
Section 4.03.
"Resolution Period" means the period ending sixty (60) days
following receipt by an Indemnified Party of a written notice
from an Indemnifying Party stating that it disputes all or any
portion of a claim set forth in a Claim Notice or an Indemnity
Notice.
"Retained Liabilities" has the meaning ascribed to it in
Section 1.02(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Seller Group" has the meaning ascribed to it in Section
10.01(c).
"Seller Material Adverse Effect" means any change in or
effect on any of the Assets or the operation of any of the
Assets after the Bid Date that is materially adverse to the
ownership, business, operations or condition (financial or
otherwise) of (A) in the case of the PGE Colstrip Interests, the
PGE Colstrip Interests, or (B) in the case of the PGE Colstrip
Transmission Assets (unless the provisions of Section 1.10 or
6.12 have become effective), the PGE Colstrip Interests or the
PGE Colstrip Transmission Assets, in each case taken as a whole,
other than (i) any change resulting from changes in the
international, national, regional or local wholesale or retail
markets for electricity, (ii) any change resulting from changes
in the international, national, regional or local markets for
any fuel used at the Colstrip Facilities, (iii) any change
resulting from changes in the North American, national, regional
or local electricity transmission systems, (iv) changes in Law
that apply generally to similarly situated Persons, and (v) any
materially adverse change in the Assets which is cured
(including by payment of money) by Seller before the earlier of
the Closing and the Termination Date.
"Seller Required Regulatory Approvals" means (i) the
approval, if required, of the SEC pursuant to the Holding
Company Act, (ii) the filings by Seller and Purchaser required
by the HSR Act and the expiration or earlier termination of all
waiting periods under the HSR Act, (iii) a Final Order(s) of the
OPUC approving the transaction and the terms and conditions of
each of the Operative Agreements and the respective regulatory
treatment of any and all financial impacts thereof, in each case
in form and substance satisfactory to Seller in its reasonable
discretion, and (iv) a Final Order(s) of the FERC approving the
transaction or any aspects thereof over which FERC has
jurisdiction, including the approval, if necessary, of the
Transmission Service Agreement, and the respective regulatory
treatment of any and all financial impacts of such Final
Order(s) of FERC in form and substance satisfactory to Seller in
its reasonable discretion.
"Separation Document" means the separation document to be
agreed to by the parties in the event the PGE Transmission
Assets are not purchased by Purchaser.
"Site Representatives" has the meaning ascribed to it in
Section 4.10.
"Tangible Personal Property" has the meaning ascribed to it
in Section 1.01(a)(iv).
"Tax Representation" has the meaning ascribed to it in
Section 9.01(a).
"Tax Returns" means any return, report, information return
or other document (including any related or supporting
information) required to be supplied to any taxing authority
with respect to Taxes.
"Taxes" means all taxes, charges, fees, levies, penalties,
or other assessments imposed by any United States Federal, state
or local or foreign taxing authority, including but not limited
to, income, excise, property, sales, transfer, franchise,
payroll, withholding, social security or other taxes, including
any interest, penalties or additions attributable thereto.
"Tenant Security Deposits" has the meaning ascribed to it
in Section 1.01(a)(viii).
"Third Party Claim" has the meaning ascribed to it in
Section 10.02(a).
"Title Representation" has the meaning ascribed to it in
Section 9.01(a).
"Transferable Permits" has the meaning ascribed to it in
Section 1.01(a)(vi).
"Transfer Taxes" means all Taxes in the nature of sales,
use, transfer, recording, value added or forms of conveyance
taxes.
"Transmission Service Agreement" means an agreement between
Seller and Purchaser completed pursuant to Section 5.08 under
which Purchaser shall purchase firm point-to-point transmission
service from Seller on the PGE Colstrip Transmission Assets
pursuant to the Transmission Service Agreement Principles set
forth on Exhibit K.
"Wholesale Transition Service Agreement" has the meaning
ascribed to it in Section 5.09.
"WUTC" means the Washington Utilities and Transportation
Commission.
"WWP" means The Washington Water Power Company, a
Washington corporation.
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any
gender include each other gender; (ii) words using the singular
or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement;
(iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement; (v) "include" or
"including" means including without limiting the generality of
any description preceding such term, and (vi) the phrase
"ordinary course of business" refers to the business of Seller
in connection with the ownership of the PGE Colstrip Interests
and the performance of its obligations under the Colstrip
Contracts. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days
are specified. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them
under GAAP. Any representation or warranty contained herein as
to the enforceability of a Contract shall be subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium
or other similar law affecting the enforcement of creditors'
rights generally and to general equitable principles (regardless
of whether such enforceability is considered in a proceeding in
equity or at Law).
ARTICLE XIII
MISCELLANEOUS
XIII.1 Notices
All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given
only if delivered personally or by facsimile transmission or
mailed (first class postage prepaid) to the parties at the
following addresses or facsimile numbers:
If to Purchaser, to:
PP&L Global, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Counsel
with a copy to:
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to Seller, to:
Portland General Electric Company
▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
All such notices, requests and other communications will
(i) if delivered personally to the address as provided in this
Section, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in
this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt (in
each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered
pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
XIII.2 Bulk Sales Act
The parties hereby waive compliance with the bulk sales act
or comparable statutory provisions of each applicable
jurisdiction. Seller shall indemnify Purchaser and its officers,
directors, employees, agents and Affiliates in respect of, and
hold each of them harmless from and against, any and all Losses
suffered, occurred or sustained by any of them or to which any
of them becomes subject, resulting from, arising out of or
relating to the failure of Seller to comply with the terms of
any such provisions applicable to the transactions contemplated
by this Agreement.
XIII.3 Entire Agreement
This Agreement and the Operative Agreements and the other
exhibits, schedules, documents, certificates and instruments
executed and delivered pursuant to this Agreement supersede all
prior discussions and agreements between the parties with
respect to the subject matter hereof and thereof, including that
certain confidentiality agreement between Purchaser and MPC
dated April 8, 1998, as agreed to include Seller, and contain
the sole and entire agreement between the parties hereto with
respect to the subject matter hereof and thereof.
XIII.4 Expenses
Except as otherwise expressly provided in this Agreement
(including as provided in Section 11.02), whether or not the
transactions contemplated hereby are consummated, each party
will pay its own costs and expenses incurred in connection with
the negotiation, execution and closing of this Agreement and the
Operative Agreements and the transactions contemplated hereby
and thereby.
XIII.5 Public Announcements
At all times at or before the Closing, Seller and Purchaser
will not issue or make any reports, statements or releases to
the public or generally to the employees, customers, suppliers
or other Persons with whom Seller has significant business
relationships in connection with the PGE Colstrip Interests with
respect to this Agreement or the transactions contemplated
hereby without the consent of the other, which consent shall not
be unreasonably withheld. If either party is unable to obtain
the approval of its public report, statement or release from the
other party and such report, statement or release is, in the
opinion of legal counsel to such party, required by Law in order
to discharge such party's disclosure obligations, then such
party may make or issue the legally required report, statement
or release and promptly furnish the other party with a copy
thereof. Seller and Purchaser will also obtain the other party's
prior approval of any press release to be issued immediately
following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
XIII.6 Confidentiality
Each party hereto will hold, and will use its best efforts
to cause its Affiliates, and their respective Representatives to
hold, in strict confidence from any Person (other than any such
Affiliate or Representative), unless (i) compelled to disclose
by judicial or administrative process (including in connection
with obtaining the necessary approvals of this Agreement and the
transactions contemplated hereby of Governmental or Regulatory
Authorities) or by other requirements of Law or (ii) disclosed
in an Action or Proceeding brought by a party hereto in pursuit
of its rights or in the exercise of its remedies hereunder, all
documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other
party's Representatives in connection with this Agreement or the
transactions contemplated hereby, except to the extent that such
documents or information can be shown to have been
(a) previously known by the party receiving such documents or
information, (b) in the public domain (either prior to or after
the furnishing of such documents or information hereunder)
through no fault of such receiving party or (c) later acquired
by the receiving party from another source if the receiving
party is not aware that such source is under an obligation to
another party hereto to keep such documents and information
confidential; provided that following the Closing the foregoing
restrictions will not apply to Purchaser's use of documents and
information concerning the Assets or the Assumed Liabilities
furnished by Seller hereunder. Purchaser shall have the right to
disclose Information of Seller with respect to the Assets to
potential lenders and their respective representatives in
connection with financing the transactions contemplated by this
Agreement and to third parties in connection with planning for
operations of the Assets following the Closing, provided that
any such disclosure is made pursuant to confidentiality
obligations equivalent to those provided in this Section 13.06;
provided, further, if such third parties are involved in the
energy industry then Purchaser shall not disclose information of
Seller to such Persons without the written consent of Seller
which shall not be unreasonably withheld. In the event the
transactions contemplated hereby are not consummated, upon the
request of the other party, each party hereto will, and will
cause its Affiliates and their respective Representatives to,
promptly (and in no event later than five (5) Business Days
after such request) redeliver or cause to be redelivered all
copies of confidential documents and information furnished by
the other party in connection with this Agreement or the
transactions contemplated hereby and destroy or cause to be
destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon
prepared by the party furnished such documents and information
or its Representatives.
XIII.7 Waiver
Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any
term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any
future occasion. All remedies, either under this Agreement or by
Law or otherwise afforded, will be cumulative and not
alternative.
XIII.8 Amendment
This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of
each party hereto.
XIII.9 No Third Party Beneficiary
The terms and provisions of this Agreement are intended
solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of
the parties to confer third party beneficiary rights upon any
other Person other than any Person entitled to indemnity under
Article X.
XIII.10 No Assignment; Binding Effect
Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without
the prior written consent of the other party hereto and any
attempt to do so will be void, except (a) for assignments and
transfers by operation of Law, (b) that Seller may assign its
rights, interests or obligations hereunder, in whole or in part,
to an Affiliate and (c) that Purchaser may assign any or all of
its rights, interests and obligations hereunder (including its
rights under Article X) to (i) a direct or indirect wholly-owned
subsidiary, provided that any such subsidiary agrees in writing
to be bound by all of the terms, conditions and provisions
contained herein (in which event, from the date of such
assignment and subject to the other provisions of this Section
13.10, such assignee shall be the Purchaser for the purposes of
this Agreement), or (ii) any lender providing purchase money or
other financing to Purchaser from time to time as collateral
security for such financing, but no such assignment referred to
in clauses (b) or (c) shall relieve the assigning party of its
obligations hereunder provided that no such assignment by Seller
or Purchaser adversely affects the availability or timing of any
Federal, state or local government consent or approval required
for the consummation of the transactions contemplated hereby.
Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.
XIII.11 Headings
The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the
provisions hereof. Neither party shall be deemed to have been
the drafter of this Agreement, which is the product of detailed,
arm's-length negotiations between the parties and their
respective counsel.
XIII.12 Invalid Provisions
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby,
(a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom
and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may
be possible.
XIII.13 Governing Law
This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York.
XIII.14 Counterparts
This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officer of each party as of
the date first above written.
PP&L GLOBAL, INC.
By:______________________________
Name:
Title:
PORTLAND GENERAL ELECTRIC COMPANY
By:______________________________
Name:
Title: