▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AGREEMENT
dated as of October 31, 1998
by and between
PP&L GLOBAL, INC.
and
THE MONTANA POWER COMPANY
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it
is attached but is inserted for convenience only.
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 The Sale 1
1.02 Liabilities 6
1.03 Purchase Price; Allocation 8
1.04 Purchase Price Adjustment 8
1.05 Closing; Additional Purchase Price Payments 9
1.06 Prorations 11
1.07 Further Assurances 11
1.08 Third Party Consents 13
1.09 Insurance Proceeds 13
1.10 Inclusion/Exclusion of Certain Assets 13
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
2.01 Corporate Existence of Seller 16
2.02 Authority 16
2.03 No Conflicts 16
2.04 Governmental Approvals and Filings 17
2.05 Reports 17
2.06 Taxes 17
2.07 Legal Proceedings 18
2.08 Compliance with Laws and Orders 18
2.09 Benefit Plans; ERISA 18
2.10 Real Property 19
2.11 Tangible Personal Property 20
2.12 Intellectual Property Rights 20
2.13 Contracts 21
2.14 Licenses 22
2.15 Insurance 22
2.16 Labor Relations 23
2.17 Environmental Matters 23
2.18 Absence of Condemnation Proceedings 24
2.19 Regulation as a Utility 24
2.20 Brokers 24
2.21 Year 2000 24
2.22 Disclaimers Regarding Assets 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Corporate Existence 25
3.02 Authority 25
3.03 No Conflicts 25
3.04 Governmental Approvals and Filings 26
3.05 Legal Proceedings 26
3.06 Compliance with Laws and Orders 26
3.07 Regulation as a Utility 26
3.08 Brokers 26
3.09 Financing 27
3.10 Financial Statements 27
3.11 Opportunity to Inspect Assets 27
ARTICLE IV
COVENANTS OF SELLER
4.01 Regulatory and Other Approvals 27
4.02 HSR Filings 28
4.03 Investigation by Purchaser 28
4.04 No Solicitations 29
4.05 Conduct of Business 29
4.06 Employee Matters 29
4.07 Certain Restrictions 31
4.08 Security Deposits 32
4.09 Delivery of Books and Records, etc.; Removal of Property 32
4.10 Fulfillment of Conditions 32
4.11 Observation, Inspection and Participation 32
4.12 Notice of Breach 33
4.13 Bridge Financing Fees 33
4.14 Special Maintenance and Capital Expenditures 33
ARTICLE V
COVENANTS OF PURCHASER
5.01 Regulatory and Other Approvals 34
5.02 HSR Filings 34
5.03 Employees 35
5.04 PPUC Approval for Holding Company 38
5.05 Notice of Breach 38
5.06 Fulfillment of Conditions 38
5.07 Tax-Exempt Bond Financed Pollution Control Facilities 38
5.08 Purchaser Financing 39
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01 Representations and Warranties 39
6.02 Performance 39
6.03 Officers' Certificates 39
6.04 Orders and Laws 40
6.05 Regulatory Consents and Approvals 40
6.06 Third Party Consents 40
6.07 Colstrip Rights of First Refusal 40
6.08 No Seller Material Adverse Effect 40
6.09 Proceedings 40
6.10 Deliveries 40
6.11 Colstrip Operations Arrangements 40
6.12 Purchaser Financing 41
6.13 Opinion of Counsel 41
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
7.01 Representations and Warranties 41
7.02 Performance 41
7.03 Officers' Certificates 41
7.04 Orders and Laws 41
7.05 Regulatory Consents and Approvals 41
7.06 Third Party Consents 42
7.07 Collective Bargaining Agreements 42
7.08 No Purchaser Material Adverse Effect 42
7.09 Proceedings 42
7.10 Colstrip Rights of First Refusal 42
7.11 Opinion of Counsel 42
7.12 Deliveries 42
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 Transfer Taxes 43
8.02 Returns with respect to Prorated Taxes 43
ARTICLE IX
SURVIVAL; NO OTHER REPRESENTATIONS
9.01 Survival of Representations, Warranties, Covenants and Agreements 43
9.02 No Other Representations 44
ARTICLE X
INDEMNIFICATION
10.01 Other Indemnification 44
10.02 Method of Asserting Claims 47
10.03 Exclusivity 50
10.04 Purchaser's Release of Seller under the Colstrip Contracts. 50
ARTICLE XI
TERMINATION
11.01 Termination 50
11.02 Effect of Termination 51
ARTICLE XII
DEFINITIONS
12.01 Definitions 52
ARTICLE XIII
MISCELLANEOUS
13.01 Notices 68
13.02 Bulk Sales Act 69
13.03 Entire Agreement 69
13.04 Expenses 69
13.05 Public Announcements 69
13.06 Confidentiality 70
13.07 Waiver 70
13.08 Amendment 71
13.09 No Third Party Beneficiary 71
13.10 No Assignment; Binding Effect 71
13.11 Headings 71
13.12 Invalid Provisions 71
13.13 Governing Law 72
13.14 Counterparts 72
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-1 Colstrip Unit Number 3 Wholesale Transition Service
Agreement
Exhibit F-2 Non-Colstrip Unit Number 3 Wholesale Transition
Service Agreement
Exhibit G Interconnection Agreement
Exhibit H-1 Opinion of Counsel to Seller
Exhibit H-2 Opinion of General Counsel of Seller
Exhibit H-3 Opinion of Outside Montana Counsel to Seller
Exhibit I Officer's Certificate of Purchaser
Exhibit J Secretary's Certificate of Purchaser
Exhibit K Opinion of Counsel to Purchaser
Exhibit L Confirmation of Reciprocal Sharing Agreement
SCHEDULES
Schedule I Asset Groups
Schedule II Pre-Closing Known Environmental Liabilities
This ASSET PURCHASE AGREEMENT dated as of October 31, 1998 is
made and entered into by and between PP&L Global, Inc., a Pennsylvania
corporation ("Purchaser"), and The Montana Power Company, a Montana
corporation ("Seller"). Capitalized terms not otherwise defined herein have
the meanings set forth in Section 12.01.
WHEREAS, Seller and its subsidiaries engage in a number of
diversified energy and communication related businesses;
WHEREAS, Seller's principal business is the regulated utility
operations involving the generation, purchase, transmission and distribution
of electricity and the production, purchase, transportation and distribution
of natural gas in Montana; and
WHEREAS, Seller desires to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase and acquire from Seller, the
Thermal Units (including the Colstrip 4 Transmission Assets) and the Hydro
Units (excluding the Milltown Hydroelectric Project) (each as defined herein
and together, the "Generating Assets") and certain other assets of Seller
relating to the operation of the Generating Assets, 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, Inc., 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 tc \n \l 1 "ARTICLE I"
SALE OF ASSETS AND CLOSING tc \n \l 1 "SALE OF ASSETS AND CLOSING "
1.01 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 Generating Assets and the Assets and Properties
of Seller used or held for use principally in connection with the operation
of the Generating Assets, 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 Generating Assets, 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 Generating Assets, as described in TA \c 1 \s "1.01(a)(ii)(A)" \l
"Section 1.01(a)(ii)(A) - Real Property Leases" 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 Generating Assets, as described in TA \c 2 \s
"1.01(a)(ii)(B)" \l "Section 1.01(a)(ii)(B) - Real Property Leases" TA \c 1
\s "1.01(a)(ii)(B)" \l "Section 1.01(a)(ii)(B) - Real Property
Leases" 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
Generating Assets 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 Generating Assets on the date of 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 Generating Assets is conducted, or used or held for use in connection
with the operation of the Generating Assets (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 (as to Colstrip Unit 4 only to the extent of Seller's rights
therein), including 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, the Colstrip Contracts and the Power
Purchase/Exchange Agreements) used primarily in the operation of the
Generating Assets 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 Generating Assets 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 Generating Assets 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
Generating Assets and all rights, privileges, claims, causes of action and
options relating or pertaining to the operation of the Generating Assets 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 Generating
Assets;
(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 Thermal Units
listed in Section 1.01(a)(xi) of the Disclosure Schedule (the "Colstrip
Contracts");
(xii) Power Purchase/Exchange Agreements. All of the Power
Purchase/Exchange Agreements;
(xiii) Allowance and Emission Reduction Credits. All of the
allowances and/or emission reduction credits described in
Section 1.01(a)(xiii) of the Disclosure Schedule;
(xiv) Personnel Records of Transferring Employees. All personnel
records of the Transferring Employees;
(xv) Warranties. Any other warranties and indemnities given by third
parties relating to the Assets or to the ownership, operation and maintenance
of the Generating Assets other than in connection with any Excluded Assets or
Retained Liabilities;
(xvi) Certain Insurance Policies of Transferring Employees. All life
insurance policies of Transferring Employees owned by Seller, to the extent
such policies are transferable to Purchaser without any cost to Seller as
described in Section 1.01(a)(xvi) of the Disclosure Schedule (the
"Transferable Insurance Policies");
(xvii) 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 aforementioned assets,
other than the minute books, stock transfer books and corporate seal of
Seller (the "Business Books and Records");
(xviii) Colstrip 4 Transmission Assets. Subject to Section 1.10, the
Colstrip 4 Transmission Assets as described in Section 1.01(a)(xviii) of the
Disclosure Schedule ("Colstrip 4 Transmission Assets"); and
(xix) Colstrip 1, 2 and 3 Transmission Assets. Subject to Section 1.10,
the Colstrip 1, 2 and 3 Transmission Assets as described in Section
1.01(a)(xix) of the Disclosure Schedule ("Colstrip 1, 2 and 3 Transmission
Assets").
To the extent any of the Business Books and Records are items
susceptible to duplication and are either (x) used in connection with any of
Seller's businesses other than the operation of the Generating Assets 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 Business Books and
Records referred to in clause (x), information solely concerning Seller's
businesses other than the operation of the Generating Assets 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 operation of the Generating Assets, the rights and
obligations under such Contracts shall be to the extent practicable allocated
between the operation of the Generating Assets and such other businesses in a
fair and equitable manner that is reasonably satisfactory to the parties.
Prior to the Closing, Seller will cooperate with Purchaser to transfer the
computer equipment and software needed to operate the Generating Assets but
that can not be transferred pursuant to Section 1.01(a)(vii) due to
restrictions in third party software licenses and that are listed on Section
1.01(a) of the Disclosure Schedule or are used by Seller in connection with
its other businesses. Any computer equipment and software which cannot be
transferred to Purchaser by the Closing shall be referred to herein as the
"Non-Transferable Software". After the Closing, Seller (subject to
restrictions in third party software licenses) will process certain data of
Purchaser necessary to operate the Generating Assets on commercially
reasonable terms to be mutually agreed upon by Purchaser and Seller;
provided, however, such terms shall include the following: (x) Seller shall
process such data for the period commencing on the Closing and ending two (2)
years after the Closing, provided that Purchaser shall have no right to
modify or enhance the Non-Transferrable Software or to make derivative works
from the Non-Transferrable Software; and (y) Purchaser agrees to pay Seller
for all costs relating to future upgrades, software, hardware or otherwise
(including Year 2000 costs) relating to the Non-Transferrable Software that
are done at Purchaser's request (provided that Seller shall not be obligated
to comply with any such request) and Seller agrees to assume any Liabilities
arising therefrom.
(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
located at the sites where the Generating Assets are located described in
TA \c 1 \s "1.01(b)(v)" \l "Section 1.01(b)(v) - Personal Property" 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. The minute books, stock transfer books
and corporate seal of Seller;
(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(b);
(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 name "The Montana Power
Company" or any related or similar trade names, trademarks, service marks or
logos; provided, however, that Purchaser shall be authorized to continue to
use for internal purposes only and not for public use, materials bearing such
names, trademarks or logos (such as employee manuals) used by Seller prior to
the Closing for up to six (6) months following the Closing;
(ix) Transmission, Distribution, Communication and Software
Assets. Subject to Section 1.01(a)(xviii), the electric and gas transmission
and distribution, substation and communication facilities located at the
sites where the Generating Assets are located and related support equipment
and gas rights, interconnection rights, rights-of-way and corridor easements
related to such facilities, each as described in Section 1.01(b)(ix) of the
Disclosure Schedule; provided that communications facilities and related
support equipment that are used solely in connection with the Generating
Assets shall be a part of the Assets unless identified in Section 1.01(b)(ix)
of the Disclosure Schedule, and Purchaser shall be entitled to use
communications facilities and related support equipment that are also
utilized by Seller in connection with Seller's businesses other than the
operation of the Generating Assets pursuant to a service agreement to be
entered into between Purchaser and Seller at or prior to the Closing on
commercially reasonable mutually satisfactory terms ("Communications Service
Agreement").
(x) 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 Generating Assets 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;
(xi) Insurance. Subject to Section 1.01(a)(xvi), life insurance
policies of Transferring Employees and all other insurance policies relating
to the operation of the Generating Assets;
(xii) Employee Benefit Plans. Except as set forth in Section 5.03,
all assets owned or held by any Benefit Plans;
(xiii) Other Personnel Records. All personnel records other than
the Transferring Employee records or other records, the disclosure of which
is required by Law, legal process or subpoena;
(xiv) All Other Assets. All other Assets and Properties owned by
Seller or its Subsidiaries not used in the operation of the Generating
Assets; and
(xv) Other. Seller's rights under this Agreement and the Operative
Agreements.
1.02 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 date of the
Closing with respect to any such Real Property Lease TA \c 4 \s
"1.02(a)(viii)" \l "Section 1.02(a)(viii) - Security Deposits" TA \c 1 \s
"1.02(a)(viii)" \l "Section 1.02(a)(viii) - Security Deposits" (the "Landlord
Security Deposits");
(v) Fuel Contracts, Colstrip Contracts and Power Purchase/Exchange
Agreements. All Liabilities of Seller under the Fuel Contracts, the Colstrip
Contracts and the Power Purchase/Exchange Agreements 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 Liabilities. All Liabilities of Seller
described in Section 1.02(a)(vi) of the Disclosure Schedule;.
(vii) Transferring Employee Liabilities. All Liabilities of Seller
with respect to the Transferring Employees for which Purchaser is responsible
pursuant to Section 5.03;
(viii) Transferable Insurance Policy Liabilities. All Liabilities of
Seller with respect to the Transferable Insurance Policies to the extent
transferred to Purchaser;
(ix) Certain Employment Agreement Liabilities. All Liabilities of
Seller under the Employment Agreements described on Section 1.02(a)(ix) of
the Disclosure Schedule ("Change of Control Liabilities"); and
(x) 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
Generating Assets on or prior to the date of the Closing ("Environmental
Fines and Penalties"), (y) any Off-Site Environmental Liabilities, or (z) any
Pre-Closing Environmental Liabilities related to the ▇▇▇▇▇▇▇▇ Falls
Hydroelectric Project (including the reservoir)if, at any time on or after
the Bid Date, the DEQ changes the ▇▇▇▇▇▇▇▇ Falls Environmental Status or
requires Purchaser to remediate metals contamination that occurred on or
prior to the date of the Closing at the ▇▇▇▇▇▇▇▇ Falls Hydroelectric Project
(including the reservoir) ("▇▇▇▇▇▇▇▇ Falls 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 and 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 ▇▇▇▇▇▇▇▇ Falls Liabilities;
(v) any Liabilities of Seller in respect of any Excluded Assets;
(vi) any Liabilities of Seller for Taxes;
(vii) 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);
(viii) except as set forth in Section 5.03, any Liabilities relating to
Seller's employment of, termination of employment of, provision of benefits
to, and compensation of employees employed at the Assets, including but not
limited to an Employee whose employment principally relates to any Assets,
and any personal injury, discrimination, harassment, wrongful discharge or
other wrongful employment practice, unfair labor practice, claims for
benefits (including claims arising under ERISA or workers' compensation
laws), or similar claims or causes of action, known or unknown, absolute or
contingent, asserted or unasserted, of any such person arising out of acts or
omissions occurring or otherwise attributable to the period on or before the
Closing; and
(ix) except as set forth in Section 5.03, any Liabilities of Seller
relating to any Benefit Plan, or to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) of Seller, whether or not terminated,
established, maintained or contributed to by Seller or any of its ERISA
Affiliates at any time, or to which any of Seller or any of its ERISA
Affiliates are or have been obligated to contribute to at any time ("ERISA
Affiliate Plan"); including any liability (A) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (B) relating to a multiemployer plan;
(C) with respect to noncompliance with COBRA or HIPAA; (D) with respect to
noncompliance with any other applicable provision of the Code, ERISA or any
other applicable laws; or (E) with respect to any suit, proceeding or claim
which is brought against Purchaser with respect to any such Benefit Plan or
ERISA Affiliate Plan, against any such Benefit Plan or ERISA Affiliate Plan,
or against any fiduciary or former fiduciary of any such Benefit Plan or
ERISA Affiliate Plan.
1.03 Purchase Price; Allocation
. (a) Purchase Price. Subject to any adjustment required pursuant to
Section 1.10, the aggregate purchase price for the Assets shall be an amount
equal to the sum of (x) the Base Purchase Price, as may be adjusted pursuant
to Section 1.10, (y) the Adjustment Amount and, (z) if applicable, the
Colstrip 4 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.
1.04 Purchase Price Adjustment
. (a) Within 30 days after the Closing, Seller shall prepare 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 Thermal Units or the Hydro Units,
as the case may be (the "Inventory Adjustment Amount"), and (ii) the
Maintenance and Capital Expenditures Amount applicable to the Thermal Units
or the Hydro Units, as the case may be. The Inventory Adjustment Amount and
the Maintenance and Capital Expenditures Amount for the Closing is referred
to collectively as the "Adjustment Amount." The Inventory Adjustment Amount
will be based on an inventory survey conducted by Seller within five days
prior to the Closing consistent with Seller's current inventory procedures
(the "Inventory Survey"). Seller will 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 Seller has historically used in connection with the
calculation of the items reflected on such Adjustment Statement. Purchaser
agrees to cooperate with Seller in connection with the preparation of each
Adjustment Statement and related information, and shall provide to Seller
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 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 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 Closing, and in immediately
available United States funds.
1.05 Closing; Additional Purchase Price Payments
.
(a) Closing. The Closing will take place at the offices of Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
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 (a) the Base Purchase Price as the same may be adjusted pursuant to
Section 1.10, and, if applicable, the Colstrip 4 Transmission Amount, and (b)
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 Assets except for the Intellectual Property,
(ii) an assignment of the Intellectual Property in form and substance
reasonably satisfactory to Purchaser, (iii) (x) 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), (y) 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 (z) 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.
(b) Additional Purchase Price Payments. If the Closing hereunder has
occurred, then:
(i) In the event that the Puget Closing Date occurs prior to the
Portland Closing Date, on the Puget Closing Date Purchaser shall pay to
Seller the Puget Payment Amount;
(ii) In the event that the Portland Closing Date occurs prior to the
Puget Closing Date, on the Portland Closing Date Purchaser shall pay to
Seller the Portland Payment Amount; and
(iii) On the Final Closing Date, Purchaser shall pay to Seller the
Combined Payment Amount.
All payments made pursuant to this Section 1.05(b) shall be paid
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 applicable closing date.
1.06 Prorations
The following items relating to the Assets and the ownership and operation
of the Generating Assets will be allocated pro rata per diem for the tax year
that includes the date of 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 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 as of date of the Closing. At least
ninety (90) days prior to date of the Closing, 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.
To the extent required by any approval of the transfer of the
FERC project licenses related to the Hydro Units, Seller agrees to pay all
annual charges accrued under such licenses as of the Closing.
1.07 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
operation of the Generating Assets 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 operation of the Generating
Assets 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.
1.08 Third Party Consents
. To the extent that any Business Contract, Transferable Permit, Fuel
Contract, Colstrip Contract or Power Purchase/Exchange Agreement 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, Colstrip Contract or Power
Purchase/Exchange Agreement 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, Colstrip Contract or Power
Purchase/Exchange Agreement, 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, Colstrip Contract
or Power Purchase/Exchange Agreement. 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(e) or if the
conditions to its obligations hereunder contained in Sections 6.05, 6.06 and
6.07 have not been fulfilled.
1.09 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 condition to its
obligations hereunder contained in Sections 6.01 or 6.08 has not been
fulfilled.
1.10 Inclusion/Exclusion of Certain Assets
.
(a) Purchaser agrees to use its reasonable best efforts to obtain the
approval described in clause (iii) 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 Colstrip 4 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 and operation of the Colstrip 4 Transmission
Assets, or is finally denied by FERC, within seven (7) months of 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 subject
to Section 1.10(b),(i) at the Closing Seller and Purchaser shall enter into a
transmission service agreement for firm transmission service pursuant to
Seller's open access transmission tariff (the "Colstrip 4 Transmission
Service Agreement"), (ii) the Colstrip 4 Transmission Assets shall be
Excluded Assets hereunder, (iii) Purchaser shall not be obligated to pay the
Colstrip 4 Transmission Amount at the Closing, and (iv) the condition 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 Colstrip 4 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 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. Purchaser acknowledges that, in any event, Seller shall remain the
operator of the Colstrip 4 Transmission Assets pursuant to the Colstrip
Project Transmission Agreement dated May 6, 1981, as amended February 14,
1990, December 30, 1996, and July 13, 1998, between Seller, Puget, PGE, WWP
and Pacific.
(b) In the event that, notwithstanding Seller's compliance with
Section 4.01, Seller has been unable to obtain all consents or approvals
required in connection with the transfer of the Colstrip 4 Generation Assets,
Seller may elect to exclude from the Assets being sold to Purchaser
hereunder, all of Seller's rights, title and interest in, to and under the
Colstrip 4 Generation Assets. In such event (i) the Colstrip 4 Generation
Assets shall be Excluded Assets hereunder, (ii) the Base Purchase Price shall
be reduced by an amount equal to $40,000,000, (iii) the conditions to Closing
described in Sections 6.05, 6.06, 6.07, 7.05, and 7.06, as and only to the
extent that they relate to consents and approvals required in respect of or
pursuant to any Colstrip 4 Generation Assets, shall be deemed satisfied, and
(iv) the Colstrip 4 Transmission Assets shall become Excluded Assets and all
of the provisions of Section 1.10(a)(i)through (iv) shall become operative
with respect to the Colstrip 4 Transmission Assets.
(c) In the event that, notwithstanding Seller's and Purchaser's
compliance with Sections 4.01 and 5.01, an Asset Group identified on Schedule
I hereto cannot be conveyed at the Closing due to a failure to obtain a
Seller Required Regulatory Approval and/or a Purchaser Required Regulatory
Approval with respect to such Asset Group on terms and conditions reasonably
satisfactory to Purchaser, or the Closing conditions in Sections 6.05 and
6.06 and, if applicable, Section 6.07 are not satisfied with respect to such
Asset Group, then such Asset Group shall be excluded from the Assets being
sold to Purchaser hereunder. In such event (i) such Asset Group shall be
Excluded Assets hereunder, (ii) the Base Purchase Price shall be reduced by
the amount relating to such Asset Group identified on Schedule I hereto, and
(iii) the conditions to Closing described in Sections 6.05, 6.06,7.05 and
7.06 and, if applicable, Section 6.07 as and only to the extent that they
relate to consents and approvals required in respect of or pursuant to such
Asset Group, shall be deemed satisfied;
(d) 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 sentences)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
$1,100,000 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. In the event that (i)Seller is
unable to deliver, at the Closing, title in compliance with this Agreement
with respect to an Asset Group, (ii) an Asset Group is the subject of a
material condemnation proceeding, or (iii) an Asset Group is damaged or
destroyed in any material respect and such damage or destruction is not
remedied by Seller prior to the Closing, then the affected Asset Group shall
be Excluded Assets hereunder and the Base Purchase Price shall be adjusted by
the amount relating to such Asset Group identified on Schedule I hereto. If
any such Asset Group is treated as an Excluded Asset as provided above in
this Section 1.10(d), the conditions to Closing set forth in Articles VI and
VII shall be deemed satisfied as and only to the extent that they relate to
the title, condemnation or damage and destruction, as the case may be, with
respect to such Asset Group.
(e) In the event that the Generating Assets to be transferred
to Purchaser hereunder at the Closing do not include at a minimum (i)
▇▇▇▇▇▇▇, (ii) Seller's undivided interests in Colstrip 1, 2 and 3 Generating
Assets, and (iii) Missouri/Madison Hydro Units with Basin/Idaho/BPA Power
Contracts, then Purchaser may elect to terminate the Agreement under Section
11.01(e).
(f) In the event the closings under the PGE Asset Purchase
Agreement and the Puget Asset Purchase Agreement do not occur by the
respective "Termination Dates" thereunder, either (i) Purchaser shall acquire
the Colstrip 1, 2 and 3 Transmission Assets owned by Seller for a purchase
price of $97,100,000 (the "Colstrip 1, 2 and 3 Transmission Amount") or (ii)
in the event Purchaser has not received the Purchaser Required Regulatory
Approval described in clause (iii) of the definition of Purchaser Required
Regulatory Approvals reasonably satisfactory to Purchaser with respect to the
proposed purchase of the Colstrip 1, 2 and 3 Transmission Assets, Purchaser
shall not acquire the Colstrip 1, 2 and 3 Transmission Assets and such Assets
shall be Excluded Assets. Purchaser acknowledges that, in any event, Seller
shall remain the operator of the Colstrip 1, 2 and 3 Transmission Assets
pursuant to the Colstrip Project Transmission Agreement dated May 6, 1981, as
amended February 14, 1990, December 30, 1996, and July 13, 1998, between
Seller, Puget, PGE, WWP and Pacific.
ARTICLE II tc \n \l 1 "ARTICLE II"
REPRESENTATIONS AND WARRANTIES OF SELLER tc \n \l 1 "REPRESENTATIONS AND
WARRANTIES OF SELLER"
Seller hereby represents and warrants to Purchaser as follows:
2.01 Corporate Existence of Seller
. Seller is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Montana, and has full corporate power
and authority to own, operate and maintain the Generating Assets as and to
the extent now conducted and to own, use, lease and operate 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 and by-laws (or other comparable corporate charter documents),
as currently in effect.
2.02 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 stockholders 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.
2.03 No Conflicts
. (a) 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:
(i) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the restated articles of
incorporation, as amended, or by-laws, as amended (or other comparable
corporate charter documents) of Seller;
(ii) require any consent, approval, authorization or permit, or
filing with or notification to, any Governmental or Regulatory Authority,
except (x) for Seller Required Regulatory Approvals and 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;
(iii) 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
(iv) 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.
2.04 Governmental Approvals and Filings
. Except for Seller Required Regulatory Approvals, 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.
2.05 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 operation of the Generating Assets 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.
2.06 Taxes
. Seller has timely filed or will timely file all Tax Returns required to be
filed 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 Colstrip Units 1, 2,
3, and 4 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.
2.07 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 and 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.
2.08 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 or the ownership, operation and maintenance of the
Assets.
2.09 Benefit Plans; ERISA
. (a) Section 2.09(a) of the Disclosure Schedule contains a true and
complete list and description of each of the Benefit Plans and identifies
each of the Benefit Plans that is a Qualified Plan and relates to Employees.
(b) Except as disclosed in Section 2.09(b) of the Disclosure
Schedule, Seller does not maintain nor is it obligated to provide benefits
under any life, medical or health plan which provides benefits to retired or
other terminated Employees other than (i) benefit continuation rights under
the Consolidated Omnibus Budget Reconciliation of 1985, as amended, and
(ii) incidental benefits under any Qualified Plan.
(c) Neither Seller, any ERISA Affiliate nor any other
corporation or organization controlled by or under common control with any of
the foregoing within the meaning of Section 4001 of ERISA has at any time
contributed to, on behalf of any Employee, any "multiemployer plan", as that
term is defined in Section 4001 of ERISA.
(d) Each of the Benefit Plans relating to the Employees is, and
its administration is and has been since inception, in compliance with ERISA
and the Code in all material respects.
(e) All contributions and other payments required to be made by
Seller to any Benefit Plan relating to the Employees with respect to any
period ending before or at or including the Closing have been made or
reserves adequate for such contributions or other payments have been or will
be set aside therefor.
(f) (i) No transaction contemplated by this Agreement will
result in liability to the PBGC under Section 302(c)(ii), 4062, 4063, 4064 or
4069 of ERISA, or otherwise, with respect to Purchaser or any corporation or
organization controlled by or under common control with Purchaser within the
meaning of Section 4001 of ERISA, (ii) neither Seller nor any ERISA Affiliate
has incurred any liability under Title IV of ERISA (other than for the
payment of PBGC insurance premiums in the ordinary course), (iii) the Assets
are not subject to Lien under Title IV of ERISA or Section 412 of the Code,
and (iv) there does not exist any proceeding, fact or circumstance that might
reasonably be expected to result in Seller or any ERISA Affiliate incurring
liability under Title IV of ERISA (other than for the payment of PBGC
insurance premiums in the ordinary course) or the imposition of a Lien on the
Assets under Title IV of ERISA or Section 412 of the Code.
(g) There are no pending or, to the Knowledge of Seller,
threatened claims by or on behalf of any Benefit Plan, by any Person covered
thereby, or otherwise, which allege violations of Law.
(h) Complete and correct copies of the following documents have
been made available to Purchaser prior to the execution of this Agreement:
(i) the Benefit Plans and any related trust agreements and
insurance contracts;
(ii) current summary Plan descriptions of each Benefit Plan
subject to ERISA;
(iii) the most recent Form 5500 and Schedules thereto for each
Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination letter issued by the IRS with
respect to the qualified status of each Qualified Plan;
(v) the most recent accountings with respect to any Benefit
Plan funded through a trust; and
(vi) the most recent actuarial report of the qualified actuary
of any Subject Defined Benefit Plan or any other Benefit Plan with
respect to which actuarial valuations are conducted.
2.10 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) 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 has good and marketable title to the Real Property
in which Seller holds a fee or easement interest and valid and subsisting
title to the Real Property in which Seller 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 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 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 2.10(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 as set forth in Section 12.01(h) of the Disclosure
Schedule, 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 and the transmission, distribution, communication and
software assets described in Section 1.01(b)(ix) of the Disclosure Schedule
(which are Excluded Assets), is necessary for the Purchaser to own, operate
or maintain the Assets substantially as currently owned, operated and
maintained by Seller. Seller 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.
2.11 Tangible Personal Property
. Seller 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 Assets. All the Tangible Personal Property is free and clear of all
Liens, other than Permitted Liens and Liens disclosed in Section 2.11 of the
Disclosure Schedule, and is in all material respects in good working order
and condition, ordinary wear and tear excepted. The Assets are, and as of
the Closing will be, inclusive of all facilities and equipment in such
condition as will be sufficient for Purchaser to comply with its obligations
under the Interconnection Agreement after giving effect to the Separation
Document.
2.12 Intellectual Property Rights
. Section 1.01(a)(vii) of the Disclosure Schedule discloses all Intellectual
Property used or held for use or necessary in connection with, and
individually or in the aggregate with other such Intellectual Property,
material to the ownership, operation and maintenance of the Assets, each of
which Seller either has all right, title and interest in or valid and binding
rights under Contract to use without limitation or royalty burdens that are
not otherwise disclosed in Section 2.12 of the Disclosure Schedule. Except
as disclosed in Section 2.12 of the Disclosure Schedule, (i) all
registrations with and applications to Governmental or Regulatory Authorities
in respect of Intellectual Property owned by Seller and disclosed in
Section 1.01(a)(vii) of the Disclosure Schedule are valid and in full force
and effect, (ii) there are no restrictions on the direct or indirect transfer
of such Intellectual Property or any Contract, or any interest therein, held
by Seller in respect of such Intellectual Property, (iii) Seller is not, nor
has it received any notice that it is, in default (or with the giving of
notice or lapse of time or both, would be in default) in any material respect
under any Contract to use such Intellectual Property and (iv) to the
Knowledge of Seller, such Intellectual Property is not being infringed by any
other Person. 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 Generating Assets, no claim is pending or has been made
to such effect that has not been resolved and, to its Knowledge, Seller is
not infringing any Intellectual Property of any other Person.
2.13 Contracts
. (a) Section 2.13(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 and relate to the operation of the Generating Assets or by which any of
the Assets is bound:
(i) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term to, or otherwise relating to employment or the
termination of employment of, any Employee, the name, position and rate
of compensation of each Employee party to such a Contract and the
expiration date of each such Contract;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of Seller to engage in any
activity relating to the operation of the Generating Assets or compete
with any Person in connection with the operation of the Generating
Assets or prohibiting or limiting the ability of any Person to compete
with Seller in connection with the operation of the Generating Assets;
(iii) all partnership, joint venture, shareholders' or other
similar Contracts with any Person in connection with the operation of
the Generating Assets;
(iv) all Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchises with whom Seller deals in
connection with the operation of the Generating Assets 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;
(v) 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
(vi) all other Contracts (other than Benefit Plans, the Real
Property Leases and the collective bargaining agreements delivered to
Purchaser pursuant to Section 2.16) not described above that constitute
Assumed Liabilities with respect to the operation of the Generating
Assets 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 2.13(a)
of the Disclosure Schedule and each of the Colstrip Contracts, the Fuel
Contracts and the Power Purchase/Exchange Agreements 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
2.13(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).
2.14 Licenses
. (a) Seller has been, and is in material compliance with, all Licenses
necessary in connection with the ownership, operation and maintenance of the
Assets as currently conducted. Except as disclosed in Section 2.14(a) of the
Disclosure Schedule, Seller has not received any written notification that it
is in violation, nor does Seller know of any violations, of any of such
Licenses, or any Law or Order of any Governmental or Regulatory Authority
applicable to it.
(b) Section 2.14(b) of the Disclosure Schedule sets forth all
material Licenses and Environmental Permits relating to the ownership,
operation and maintenance of the Assets, copies of which have been made
available to Purchaser prior to the execution of this Agreement. Such
section of the Disclosure Schedule designates those Licenses and
Environmental Permits which are Transferable Permits and those which are not
Transferable Permits and also designates those Licenses and Environmental
Permits which are not Transferable Permits but which, if not held or
maintained (individually or in the aggregate) could reasonably be expected to
impair the ownership, operation and maintenance of the Assets.
2.15 Insurance
. Except as set forth in Section 2.15 of the Disclosure Schedule, all
material policies of fire, liability, worker's compensation and other forms
of insurance owned or held by Seller 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
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 2.15 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.
2.16 Labor Relations
. Seller has previously delivered to Purchaser copies of all collective
bargaining agreements to which Seller is a party or is subject and which
relate to the ownership, operation and maintenance of the Generating Assets,
all of which agreements are listed in Section 2.16 of the Disclosure Schedule
(the "Collective Bargaining Agreements"). Solely with respect to the
operation of the Generating Assets, except as disclosed in Section 2.16 of
the Disclosure Schedule:
(a) To Seller's Knowledge, Seller is in compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment, collective bargaining and wages and hours;
(b) Seller has not received written notice (or otherwise has
Knowledge) of any unfair labor practice complaint against Seller pending
before the National Labor Relations Board;
(c) There is no labor strike, slowdown or stoppage actually
pending or, to the Knowledge of Seller, threatened against or affecting
Seller;
(d) Seller has not received notice (or otherwise has Knowledge)
that any representation petition respecting the Employees has been filed with
the National Labor Relations Board;
(e) No arbitration proceeding arising out of or under
collective bargaining agreements is pending against Seller; and
(f) Seller has not experienced any primary work stoppage since
1963.
2.17 Environmental Matters
. Except as disclosed in Section 2.17 of the Disclosure Schedule:
(a) Seller holds, and is in substantial compliance with, all
Licenses which are required for Seller to own, 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 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
with respect to the ownership, operation and maintenance of the Assets.
(e) To its Knowledge, Seller 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 2.17 are Seller's
exclusive representations and warranties relating to environmental matters.
2.18 Absence of Condemnation Proceedings
. Neither the whole nor any portion of the Assets is subject to any pending
or, to Seller's Knowledge, threatened suit or order for condemnation or other
taking by any public authority.
2.19 Regulation as a Utility
. Seller is a public utility company within the meaning of the Holding
Company Act. Except as set forth in Section 2.19 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.
2.20 Brokers
. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees, commissions and expenses are
the sole responsibility of Seller, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, whose fees and
expenses are the sole responsibility of Puget and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., whose
fees, commissions and expenses are the sole responsibility of PGE, 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.
2.21 Year 2000
. Seller has put into effect practices and programs which Seller reasonably
believes will enable all system critical software, hardware and equipment
(including microprocessors) that is owned or utilized by Seller in connection
with the ownership, operation and maintenance of the Assets to be capable, by
December 31, 1999, of accounting for all calculations using a century and
date sensitive algorithm for the year 2000 and the fact that the year 2000 is
a leap year. Section 2.21 of the Disclosure Schedule identifies (a) each
material "Year 2000" audit, report or investigation that has been performed
by or on behalf of Seller with respect to the Assets or the ownership,
operation and maintenance of the Assets, and (b) the plans, schedules, and
other actions contemplated for the remediation of any problems identified in
such audits, reports and investigations and the testing of the Assets in
advance of December 31, 1999, for "Year 2000" compliance, copies of which
have been made available to Purchaser.
2.22 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 tc \n \l 1 "ARTICLE III"
REPRESENTATIONS AND WARRANTIES OF PURCHASER tc \n \l 1 "REPRESENTATIONS AND
WARRANTIES OF PURCHASER "
Purchaser hereby represents and warrants to Seller as follows:
3.01 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.
3.02 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.
3.03 No Conflicts
. (a) 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:
(i) 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;
(ii) 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;
(iii) 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
(iv) 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
respective Assets and Properties.
3.04 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.
3.05 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.
3.06 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.
3.07 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 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, any foreign country or any municipality or any political subdivision
of the foregoing.
3.08 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.
3.09 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 the Combined Payment Amount and to make all other
necessary payments of fees and expenses in connection with the transactions
contemplated by this Agreement and the Operative Agreements.
3.10 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.
3.11 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 tc \n \l 1 "ARTICLE IV"
COVENANTS OF SELLER tc \n \l 1 " 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
Sections 4.06 and 4.09, thereafter Seller will comply with all covenants and
provisions of this Article IV, except to the extent Purchaser may otherwise
consent in writing.
4.01 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 or actions of, to
make all filings with and to give all notices to Governmental or Regulatory
Authorities, 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 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.
4.02 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.
4.03 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 operation of the
Generating Assets, to Seller's accountants and to the Assets (including
access to the Generating Assets sites), but only to the extent that such
access does not unreasonably interfere with the operation of the Generating
Assets and (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, Montana Public Service Commission 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, Power
Purchase/Exchange Agreements, Benefit Plans and other Business Books and
Records) concerning the ownership, operation and maintenance of 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 document, information or data
would violate any Law, Order (including any protective order or similar
confidentiality obligation), Contract or License 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
5.08. 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.
4.04 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 operation of the Generating Assets 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.
4.05 Conduct of Business
. (a) From the Bid Date to the Closing, Seller has operated and maintained
and will operate and maintain the Generating Assets only in the ordinary
course consistent with Good Utility Practice. Without limiting the
generality of the foregoing, Seller will use commercially reasonable efforts,
to (i) maintain good relations with and keep available (subject to dismissals
and retirements in the ordinary course of business) the services of key
Employees, (ii) maintain the Assets in good working order and condition,
ordinary wear and tear excepted, (iii) maintain the good will of lessors,
customers, suppliers, lenders and other Persons with whom Seller otherwise
has significant business relationships in connection with the operation of
the Generating Assets, and (iv) materially comply with all Laws and Orders,
including Environmental Laws applicable to the ownership, operation and
maintenance of the Generating Assets.
(b) Without limiting the generality of the foregoing, except
with the prior written consent of Purchaser, Seller will, with respect
to the ownership, operation and maintenance of the Assets keep in force
at not less than their present limits all policies of insurance
covering the Assets to the extent reasonably practicable in light of
the prevailing market conditions in the insurance industry and promptly
notify Purchaser of the cancellation of any such policy or any material
modification thereto.
4.06 Employee Matters
. Except as may be required by Law and except as disclosed in Section 4.06
of the Disclosure Schedule, Seller will refrain from directly or indirectly:
(a) making any representation or promise, oral or written, to
any Employee concerning any Benefit Plan, except for statements as to the
rights or accrued benefits of any Employee under the terms of any Benefit
Plan or statements describing the employee related terms in this Agreement;
(b) making any increase in the salary, wages or other
compensation or benefits of any Employee, other than in the ordinary course
of business on such Employee's normal annual review date in an amount, if a
Non-Union Employee, not exceeding 5% of such Employee's salary, wages and
other compensation, or declare, pay or set aside for payment any amounts in
the nature of bonuses to any of its officers or Employees;
(c) adopting, entering into or becoming bound by any Benefit
Plan, employment-related Contract or collective bargaining agreement with
respect to the operation of the Generating Assets or any of the Employees, or
amending, modifying or terminating (partially or completely) any such Benefit
Plan, employment-related Contract or collective bargaining agreement, except
to the extent required by applicable Law and, in the event compliance with
legal requirements presents options, only to the extent that the option which
Seller reasonably believes to be the least costly is chosen;
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under any Benefit Plan or
any employment-related Contract or other compensation arrangement with or for
Employees or (ii) salary ranges, increase guidelines or similar provisions in
respect of any Benefit Plan or any employment-related Contract or other
compensation arrangement with or for Employees;
(e) soliciting, recruiting, making any offer of employment or
otherwise employing any of the Transferring Employees or taking any action
which could reasonably be expected to encourage or persuade the Transferring
Employees not to accept employment with Purchaser; or
(f) agreeing, whether in writing or otherwise, to take any
action described in this Section 4.06.
Seller will administer each Benefit Plan, or cause the same to be
so administered, in all material respects in accordance with the applicable
provisions of the Code, ERISA and all other applicable Laws and consistent
with past practice. Seller will promptly notify Purchaser in writing of each
receipt by Seller (and furnish Purchaser with copies) of any notice of in-
vestigation or administrative proceeding by the IRS, Department of Labor,
PBGC or other Person involving any Benefit Plan. Seller will use its
reasonable best efforts to assist Purchaser in the hiring and retention of
the Transferring Employees.
Seller agrees to timely perform and discharge all requirements
under the WARN Act, if any, and under applicable state and local laws and
regulations for the notification of its Employees arising from the sale of
the Assets to Purchaser. Seller, and not Purchaser, shall be responsible for
and shall retain any and all liability for all compensation, benefits, and
perquisites of any kind due any Transferring Employee on account of
employment by Seller before the Closing, or the termination of employment by
Seller, including, but not limited to, continuation of health care coverage
pursuant to the health continuation coverage provisions of COBRA and
compliance with HIPAA.
4.07 Certain Restrictions
. Except as set forth in Section 4.07 of the Disclosure Schedule, Seller
will refrain from:
(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 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, 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 Power
Purchase/Exchange Agreement 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 Generating Assets;
(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 Generating
Assets 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 operation of the
Generating 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) making any material change in the level of fuel inventory
and stores inventory customarily maintained by Seller with respect to the
Generating Assets, other than consistent with Good Utility Practice; or
(h) 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;
(j) entering into any Contract to do or engage in any of the
foregoing.
The foregoing shall not preclude Seller from making (i)
Maintenance Expenditures and Capital Expenditures, and (ii) at Seller's
expense, such other maintenance and capital expenditures as Seller deems
necessary.
4.08 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 Generating Assets.
4.09 Delivery of Books and Records, etc.; Removal of Property
. (a) At the Closing, Seller shall deliver or make available to Purchaser
at the locations at which the Generating Assets are operated all of the
Business Books and Records and such other Assets as are in Seller's
possession at other locations, and if at any time after the Closing, Seller
discovers in its possession or under its control any other Business Books and
Records or other Assets, it will forthwith deliver such Business Books and
Records or other Assets to Purchaser.
(b) Except as set forth in Section 4.09 of the Disclosure
Schedule, within a reasonable time after the Closing, Seller shall take all
commercially reasonable steps to remove all 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.
4.10 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.
4.11 Observation, Inspection and Participation
. Between the date of this Agreement and 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 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 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.
4.12 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.
4.13 Bridge Financing Fees
. In the event that Purchaser obtains a written commitment for bridge
financing in connection with the transactions contemplated hereby, Seller
will pay 55.88% of 50% of any financing fees payable by Purchaser in
connection with such bridge financing at the same time Purchaser pays 50% of
such financing fees; provided, however, Seller's obligation under this
Section 4.13 shall not exceed $4,322,318 in the aggregate.
4.14 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 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 conduct and complete such special maintenance and
capital expenditures at such times as Seller shall determine in its
reasonable discretion after consultation with Purchasers. 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 consult with Purchaser and will conduct and complete any such emergency
special maintenance and capital expenditure items in accordance with Good
Utility Practice ("Emergency Expenditures").
ARTICLE V tc \n \l 1 "ARTICLE V"
COVENANTS OF PURCHASER tc \n \l 1 " 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 Sections
5.03 and 5.07, thereafter, Purchaser will comply with all covenants and
provisions of this Article V, except to the extent Seller may otherwise
consent in writing.
5.01 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
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.
5.02 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.
5.03 Employees
. (a) Section 5.03 of the Disclosure Schedule sets forth a list of all
Employees as of September 30, 1998. Purchaser shall offer employment,
effective as of the Closing, to all full-time and part-time Non-Union
Employees, including Non-Union Employees who are on disability or worker's
compensation leave or on an authorized leave of absence as of the Closing.
All such offers of employment shall be made in accordance with applicable
Law, and such employment with Purchaser shall be subject to the following
requirements for the entirety of the period commencing on the Closing and
ending no less than 18 months thereafter or such other period as set forth in
this Section 5.03:
(i) Terms of Employment. Purchaser shall offer each Non-Union
Employee a position with Purchaser similar to his or her position
immediately prior to the Closing and agrees to employ each Non-Union
Employee who accepts such employment for 18 months after the Closing
(the "Employment Term") at a location in Montana and at a base pay at
least equal to his or her base pay on the Closing; provided, however,
that nothing herein shall prevent Purchaser from terminating any
Transferring Non-Union Employee "for cause" as defined by Montana Law
(a reduction in force, however, will not be considered "for cause").
Purchaser shall afford all Transferring Non-Union Employees ten paid
holidays per year and vacation and personal time under a paid time off
program substantially similar in the aggregate to the paid time off
program of Seller; provided, however, for the calendar year during
which the Closing occurs, Purchaser shall assume all accrued vacation
and personal time payable to Transferring Non-Union Employees as of the
Closing. Purchaser shall make incentive compensation awards for
calendar year during which the Closing occurs to eligible Transferring
Non-Union Employees substantially in accordance with Seller's incentive
compensation plan in effect on the Closing (except that Purchaser shall
not be obligated to pay any incentive compensation based on the
consummation of the transactions contemplated hereby).
(ii) Severance. For the period commencing on the expiration of
the Employment Term and ending on the date which is 6 months
thereafter, Purchaser shall pay each Transferring Non-Union Employee
who is terminated from employment during such period, other than "for
cause", a severance benefit in an amount equal to $6,000 plus the
greater of two weeks of base pay times such Employee's "year of
service" up to a maximum of 52 weeks of base pay, or 12 weeks of base
pay. Purchaser shall cause any subsequent purchaser(s) of the Assets to
provide such severance benefits during such six-month period. For
purposes of the foregoing, a "for cause" termination shall be as
otherwise defined by Montana Law, and "years of service" shall mean the
Employee's aggregate whole years of service for Seller, Purchaser and
any subsequent purchaser(s) of the Assets.
(iii) Welfare Benefits. Purchaser shall provide all
Transferring Non-Union Employees (other than those terminated "for
cause" as defined above) with coverage under welfare benefit plans,
programs and arrangements ("Purchaser's Welfare Plans") maintained or
sponsored by Purchaser that provide medical, dental, vision, basic life
insurance (including dependent life options), short term disability,
long term disability, relocation benefits and worker compensation
benefits that are substantially similar in the aggregate to those
available under welfare benefit plans maintained by Seller immediately
prior to the Closing. Purchaser shall cause all pre-existing condition
exclusions and waiting periods, if any, under Purchaser's Welfare Plans
to be waived for Transferring Non-Union Employees, and shall provide
each such Employee with credit thereunder for deductible, out-of-
pocket, co-payment and similar expenses incurred under similar plans of
Seller. Purchaser shall assume under Purchaser's Welfare Plans all
liabilities for continuation coverage for Transferring Non-Union
Employees and their eligible dependents pursuant to Section 4980B of
the Code and Section 601 through 609 of ERISA and any similar state
coverage, for the required duration of such coverage, provided that
such Employee's qualifying event occurs after the Closing.
(iv) 401(k) Plan. Purchaser shall establish and maintain for
Transferring Non-Union Employees a plan pursuant to Section 401(k) of
the Code ("Purchaser's 401(k) Plan") which shall provide for the same
or substantially similar elective deferral, after-tax, and employer
matching contribution levels, and loan entitlements, that are available
under the Montana Power Company Retirement Savings Plan (401(k)) ("MPC
401(k) Plan"), and which shall further provide for the acceptance of
rollover distributions from the MPC 401(k) Plan and/or conduit
individual retirement accounts established by any such employees.
Purchaser shall take all actions required to obtain, and shall obtain,
a favorable determination letter from the IRS on the tax qualified
status of Purchaser's 401(k) Plan.
(v) Retirement Plan. Purchaser shall establish and maintain for
Transferring Non-Union Employees a retirement plan pursuant to Section
401(a) of the Code ("Purchaser's Retirement Plan") which shall contain
either a defined benefit or cash balance formula that provides a
retirement benefit that is of substantially similar in the aggregate to
the retirement benefit provided under Seller's Cash Balance Retirement
Plan ("Seller's Retirement Plan"). As soon as practicable after the
Closing, but no later than sixty (60) days after the Closing, Seller
shall cause to be transferred from Seller's Retirement Plan, and
Purchaser shall cause Purchaser's Retirement Plan to accept such
transfer, assets from Seller's Retirement Plan in respect of the
accrued benefit of each Transferring Non-Union Employee who
participates in Seller's Retirement Plan and Purchaser shall assume
Liability for such accrued benefit as of the Closing. The assets
transferred to the Purchaser's Retirement Plan shall equal the
aggregate present value of the accrued benefits of Transferring Non-
Union Employees under Seller's Retirement Plan on a termination basis
as of the Closing (within the meaning of Treasury Regulation Section
1.414(l)-1(b)(5)), as certified by Seller's actuary. After such
transfer, Purchaser's Retirement Plan shall provide a benefit for each
Transferring Non-Union Employee that is substantially similar in the
aggregate to such Employee's accrued benefit under Seller's Retirement
Plan immediately prior to the Closing. Purchaser shall take all
actions required to obtain, and shall obtain, a favorable determination
letter from the IRS on the tax qualified status of Purchaser's
Retirement Plan.
(vi) Service. Any and all plans of Purchaser described in
paragraphs (i) through (v) above that determine a participant's
eligibility to participate, waiting period for benefits, vesting or
benefit accruals based on his or her length of service with Purchaser
shall credit each Transferring Non-Union Employee's service with Seller
and its Affiliates as service with Purchaser for such purposes.
(b) Purchaser shall, effective on the Closing, assume and
fulfill all of Seller's obligations under the Collective Bargaining
Agreements to the extent related to Transferring Union Employees, including,
without limitation the Letter of Agreement between Seller and IBEW Local 44
dated July 9, 1998 and the drafts (substantially in the form provided
heretofore) of the Letter of Agreements (which have been ratified by the
unions) between Seller and IBEW Local 1638 and Teamsters Union Local No. 190
dated July 2, 1998 and July 9, 1998 respectively (copies of which have been
made available to Purchaser prior to the date hereof). Purchaser shall offer
employment, effective as of the Closing, to all Union Employees, including
Union Employees who are on disability or worker's compensation leave or on an
authorized leave of absence as of the Closing. All such offers of employment
shall be made in accordance with applicable Law and all relevant Collective
Bargaining Agreements. Without limiting the generality of the foregoing, the
Purchaser's 401(k) Plan shall provide for the acceptance of rollover
distributions from or in respect of any Transferring Union Employees from the
MPC 401(k) Plan and/or any conduit individual retirement accounts established
by any such employees. Purchaser shall establish and maintain for
Transferring Union Employees a retirement plan pursuant to Section 401(a) of
the Code ("Purchaser's Retirement Plan") which shall contain either a defined
benefit or cash balance formula that provides a retirement benefit that is of
no less value in the aggregate to the retirement benefit provided under the
Seller's Defined Benefit Retirement Plan ("Seller's DB Plan"). To the extent
permitted by the Collective Bargaining Agreements, as soon as practicable
after the Closing, but no later than sixty (60) days after the Closing,
Seller shall cause to be transferred from the Seller's DB Plan, and Purchaser
shall cause the Purchaser's Retirement Plan to accept such transfer, assets
from the Seller's DB Plan in respect of the accrued benefit of each
Transferring Union Employee who participates in the Seller's DB Plan and the
Purchaser shall assume liability for such accrued benefits as of the Closing.
The assets transferred to the Purchaser's Retirement Plan shall equal the
aggregate present value of the accrued benefits of Transferring Union
Employees under the Seller's Retirement Plan on a termination basis (within
the meaning of Treasury Regulation Section 1.414(l)-1(b)(5)), as certified by
Seller's actuary. After such transfer, but subject to the terms of any
applicable collective bargaining agreement, Purchaser's Retirement Plan shall
provide a benefit for each Transferring Union Employee that is of no less
value in the aggregate to such Employee's accrued benefit under the Seller's
Retirement Plan immediately prior to the Closing. Any and all plans of
Purchaser that determine a participant's eligibility to participate, waiting
period for benefits, vesting or benefit accruals based on his or her length
of service with Purchaser shall credit each Transferring Union Employee's
service with Seller and its Affiliates as service with Purchaser for such
purposes.
(c) Purchaser shall be responsible and shall assume any and all
Liabilities for all compensation, benefits, and perquisites of any kind due
any Transferring Employee on account of employment by Purchaser after the
Closing, or the termination of employment by Purchaser, including, but not
limited to, continuation of health care coverage pursuant to COBRA and
compliance with HIPAA.
(d) Seller will remain responsible (i) for all short-term
disability, long-term disability and workers compensation benefits payable to
Transferring Non-Union Employees who, as of the close of business on the day
immediately preceding the Closing, were determined to be disabled in
accordance with the applicable provisions of the Seller's short-term or long-
term disability benefits plans or programs and (ii) for all workers
compensation claims relating to a pre-closing injury (provided such workers
compensation claims are made on or before the date that is one year after the
Closing).
5.04 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 PP&L Resources, Inc.'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.
5.05 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.
5.06 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.
5.07 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 5.07(a)(i) 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 Colstrip Units
1,2,3 and 4, as the case may be, 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.
5.08 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").
ARTICLE VI tc \n \l 1 "ARTICLE VI"
CONDITIONS TO OBLIGATIONS OF PURCHASER tc \n \l 1 " 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):
6.01 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.
6.02 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.
6.03 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.
6.04 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 con-
summation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
6.05 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
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.
6.06 Third Party Consents
. The consents (or in lieu thereof waivers) listed in Section 6.06 of the
Disclosure Schedule shall have been obtained and shall be in full force and
effect and shall be reasonably satisfactory to Purchaser.
6.07 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.
6.08 No Seller Material Adverse Effect
. There shall not have occurred and be continuing a Seller Material Adverse
Effect.
6.09 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.
6.10 Deliveries
. Seller shall have executed and delivered to Purchaser (i) the General
Assignment, (ii) the other Assignment Instruments, (iii) subject to
Section 1.10, the Colstrip Unit Number 3 Wholesale Transition Service
Agreement, dated as of the Closing, substantially in the form and to the
effect of Exhibit F-1 hereto (the "Colstrip Transition Service Agreement"),
(iv) subject to Section 1.10, the Non-Colstrip Unit Number 3 Wholesale
Transition Service Agreement, dated as of the Closing, substantially in the
form and to the effect of Exhibit F-2 hereto (the "Non-Colstrip Transition
Service Agreement"), (v) the Interconnection Agreement, dated as of the
Closing, substantially in the form and to the effect of Exhibit G hereto,
including the Separation Document (the "Interconnection Agreement") and
(vi) if the Colstrip 4 Transmission Assets are not conveyed to Purchaser at
the Closing, Seller and Purchaser shall have entered into the Colstrip 4
Transmission Service Agreement.
6.11 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.
6.12 Purchaser Financing
. Purchaser's obligation to purchase the Colstrip 4 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.
6.13 Opinion of Counsel
. Purchaser shall have received the opinions of (i) Milbank, Tweed, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel to Seller, dated as of the Closing, substantially in the form
and to the effect of Exhibit H-1 hereto,(ii) General Counsel of Seller, dated
as of the Closing, substantially to the effect of Exhibit H-2 hereto, and
(iii) outside Montana counsel to Seller, dated as of the Closing,
substantially to the effect of Exhibit H-3 hereto.
ARTICLE VII tc \n \l 1 "ARTICLE VII"
CONDITIONS TO OBLIGATIONS OF SELLER tc \n \l 1 " 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):
7.01 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.
7.02 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.
7.03 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 I 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 J hereto.
7.04 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.
7.05 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.
7.06 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.
7.07 Collective Bargaining Agreements
. Purchaser shall have assumed, as set forth in Section 5.03, all of the
applicable obligations under the Collective Bargaining Agreements as they
relate to the Union Employees who are Transferring Employees.
7.08 No Purchaser Material Adverse Effect
. There shall not have occurred and be a continuing Purchaser Material
Adverse Effect.
7.09 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.
7.10 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.
7.11 Opinion of Counsel
. Sellers shall have received an opinion of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P., counsel to Purchaser, dated as of the Closing, substantially to the
effect of Exhibit K hereto. Such counsel's opinion need not cover any matter
contained in the opinions required by Exhibit K to the extent such matter (i)
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 or (ii) involves or is related to the Colstrip
Contracts, the Colstrip 4 Generation Assets, the Colstrip 4 Transmission
Assets, the Colstrip 1, 2 and 3 Transmission Assets and any other Colstip-
related matter, and, in lieu thereof, Seller shall have received the opinions
of other counsel covering such matters (admitted in other jurisdictions to
the extent covered in clause (i)).
7.12 Deliveries
. Purchaser shall have executed and delivered to Seller (i) Assumption
Agreement, (ii) the other Assumption Instruments, (iii) subject to
Section 1.10, the Colstrip Transition Service Agreement, (iv) the Non-
Colstrip Transition Service Agreement, (v) subject to Section 1.10, the
Interconnection Agreement, and (vi) the Confirmation of the Reciprocal
Sharing Agreement, dated as of the Closing, substantially in the form and to
effect of Exhibit L hereto.
ARTICLE VIII tc \n \l 1 "ARTICLE VIII"
TAX MATTERS AND POST-CLOSING TAXES tc \n \l 1 " TAX MATTERS AND POST-
CLOSING TAXES"
8.01 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.
8.02 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 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 tc \n \l 1 "ARTICLE IX"
SURVIVAL; NO OTHER REPRESENTATIONS tc \n \l 1 " SURVIVAL; NO OTHER
REPRESENTATIONS"
9.01 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") and 2.09 (the "ERISA
Representation"), which shall survive for the applicable period of the
applicable statute of limitation, and (y) contained in Section 2.10(b) (the
"Title Representation"), which shall survive the Closing indefinitely) (all
of the representations and warranties of Purchaser and Seller, excluding the
Tax Representation, the ERISA 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 2.10, 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 Sections 4.06 and 4.09)
and V (excluding Sections 5.03 and 5.07) (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.
9.02 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
operation of the Generating Assets. 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 tc \n \l 1 "ARTICLE X"
INDEMNIFICATION tc \n \l 1 " INDEMNIFICATION"
10.01 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 it 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);
(iii) a Retained Liability; or
(iv) any Change of Control Liabilities;
provided, however, that Seller shall have no liability for Losses under
clause (i) arising from a breach of a General Representation, a Tax
Representation or an ERISA Representation unless and until the aggregate
amount of all Losses arising from such breaches asserted by Purchaser equals
or exceeds $5.0 million 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 or ERISA
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 (x) Non-Colstrip Pre-Closing Known and Unknown Remedial
Liabilities shall be limited in each case to 50% of any such Loss suffered,
incurred or sustained by Purchaser Group and (y) Colstrip 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 50% of any
such Loss suffered, incurred or sustained by Purchaser Group, and such
Liabilities referred to in clauses (x) and (y) shall not, in any event,
exceed, in the aggregate, an amount equal to 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 Section 10.01(b)(2)(y) 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 PGE 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 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 it 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 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 $5.0 million 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 (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 ▇▇▇▇▇ ▇, ▇, ▇ ▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇▇▇.
(▇) The Indemnifying Party hereby expressly waives all rights of
subrogation in respect of any payments made by it under this Article X.
10.02 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 Business 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.
10.03 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 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.
10.04 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 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 Section 1.01(a)(xi) and
1.02(a)(vi), 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 ▇▇ ▇▇ \▇ \▇ ▇ "▇▇▇▇▇▇▇ ▇▇"
TERMINATION tc \n \l 1 " TERMINATION"
11.01 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;
(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
Seller has not received all Purchaser Required Regulatory Approvals or all
Seller Required Regulatory Approvals related to the Hydro Units 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 twenty-four (24) months after the date of
this Agreement.
(e) in accordance with Section 1.10(e), by Purchaser.
11.02 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
4.10 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
5.06 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 tc \n \l 1 "ARTICLE XII"
DEFINITIONS tc \n \l 1 " DEFINITIONS"
12.01 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.
"Asset Group" means one or more of the categories of Assets set
forth on Schedule I hereto.
"Assets" has the meaning ascribed to it in Section 1.01(a).
"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 $780,000,000.
"Benefit Plan" means any Plan established by Seller, or any
predecessor or Affiliate of Seller, existing at the Closing or at any time
within the five (5) year period prior thereto, to which Seller contributes or
has contributed on behalf of any Employee, former Employee or director, or
under which any Employee, former Employee or director of Seller or any
beneficiary thereof is covered, is eligible for coverage or has benefit
rights.
"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.
"Business Books and Records" has the meaning ascribed to it in
Section 1.01(a)(xvii).
"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 no 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 Montana 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 4.14, and such other
emergency, non-budgeted capital expenditures made by Seller in accordance
with the provisions of Section 4.14.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
"Change of Control Liabilities" has the meaning ascribed to it in
Section 1.02(a)(ix).
"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.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, and the rules and regulations promulgated thereunder.
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Collective Bargaining Agreements" has the meaning ascribed to in
Section 2.16.
"Colstrip Contracts" has the meaning ascribed to it in Section
1.01(a)(xi).
"Colstrip 1, 2 and 3 Transmission Amount" has the meaning ascribed to it in
Section 1.10(f).
"Colstrip 1, 2 and 3 Transmission Assets" has the meaning
ascribed to it in Section 1.01(a)(xix).
"Colstrip 4 Generation Assets" means all Assets relating to
Seller's interest in Colstrip Unit 4 including, but not limited to, Real
Property Leases, Business Contracts, Transferable Permits, Fuel Contracts,
power sale or purchase agreements and allowances and/or emission reduction
credits described in Section 12.01(b) of the Disclosure Schedule.
"Colstrip 4 Transmission Amount" means an amount equal to
$55,918,674.
"Colstrip 4 Transmission Assets" has the meaning ascribed to it
in Section 1.01(a)(xviii).
"Colstrip 4 Transmission Service Agreement" has the meaning
ascribed to it in Section 1.10(a).
"Colstrip 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 Colstrip Units 1, 2, 3 or 4 Generating Assets or the
Colstrip Units 1, 2, 3 or 4 Transmission Assets, to the extent such Assets
are acquired by Purchaser.
"Colstrip Rights of First Refusal" means the rights described in
the following agreements: (i) Section 16(d) of the Construction and
Ownership Agreement, dated as of July 30, 1971, by and between Seller and
Puget;(ii) Sections 24(b) and 24(f) of the Ownership and Operation Agreement,
dated as of May 6, 1981, as amended, by and among Seller, Puget, The
Washington Water Power Company ("WWP"), Portland, and Pacific Power & Light
Company ("Pacific"); and (iii) Section 28(f) of the Colstrip Project
Transmission Agreement, dated as of May 6, 1981, as amended, by and among
Seller, Puget, WWP, Portland and Pacific.
"Colstrip Transition Service Agreement" has the
meaning ascribed to it in Section 6.10.
"Combined Payment Amount" means an amount equal to $932,000,000
minus (a) the amount of the Base Purchase Price (prior to any adjustment
thereto pursuant to Section 1.10) and (b) any Puget Payment Amount or
Portland Payment Amount paid to Seller prior to the Final Closing Date.
"Communications Service Agreement" has the meaning ascribed to it
in Section 1.01(b)(ix).
"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.
"Defined Benefit Plan" means each Benefit Plan which is subject
to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of ERISA.
"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.
"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 the
Interconnection Agreement (including the Separation Document).
"Employee" means each employee or officer of Seller or any of its
Affiliates whose employment responsibilities primarily relate to the
operation of the Generating Assets.
"Employment Term" has the meaning ascribed to it in Section 5.03.
"Environmental Fines and Penalties" has the meaning ascribed to
it in Section 1.02(a)(x).
"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 to it in Section
2.17.
"EPA" means the Environmental Protection Agency.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is in the same controlled
group of corporations or who is under common control with Seller (within the
meaning of Section 414 of the Code).
"ERISA Affiliate Plan" has the meaning ascribed to it in Section
1.02(b)(ix).
"ERISA Representation" has the meaning ascribed to it in
Section 9.01(a).
"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 Closing Date" means the date on which the latter of the
Puget Closing and the Portland Closing occurs.
"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).
"Generating Assets" has the meaning ascribed to it in the
forepart of this Agreement.
"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), 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.
"HIPAA" means the Health Insurance Portability and Accountability
Act of 1996, as amended, and the rules and regulations promulgated
thereunder.
"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.
"Hydro Units" means the hydroelectric generating stations owned
by Seller and associated dams and reservoirs at such locations as set forth
in Section 12.01(c) of the Disclosure Schedule.
"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.
"Indentures" means the Mortgage and Deed of Trust, dated as of
October 1, 1945, as amended and supplemented, among Seller and Guaranty Trust
Company of New York and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Trustees.
"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.
"Interconnection Agreement" has the meaning ascribed to it in
Section 6.10.
"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(e) 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 foreign 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.
"Maintenance Expenditures" means those special maintenance
expenditures which are identified in the Budget referred to in Section 4.14
and such other emergency, non-budgeted special maintenance expenditures made
by Seller in accordance with the provisions of Section 4.14 and 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 in less than one
year from the date hereof) up to but not exceeding $23 million in the
aggregate; and (ii) 85% of all Emergency Expenditures made by Seller in
accordance with Section 4.14, if any, during such one (1) year (or shorter)
period described above. The Maintenance and Capital Expenditures Amount
shall not include any Capital Expenditures or Maintenance Expenditures or
Emergency Expenditures with respect to assets or properties that are not
transferred to Purchaser under this Agreement.
"MPC 401(k) Plan" has the meaning ascribed to it in Section
5.03(a).
"Non-Colstrip Pre-Closing Known and Unknown Remedial Liabilities
means all Pre-Closing Known Remedial Liabilities and Pre-Closing Unknown
Remedial Liabilities that are not Colstrip Pre-Closing Known and Unknown
Remedial Liabilities.
"Non-Colstrip Transition Service Agreement has the meaning
ascribed to it in Section 6.10.
"Non-Transferable Software" has the meaning ascribed to it in
Section 1.01(a).
"Non-Union Employees" means all Employees, other than Union
Employees, who are employed as of the Closing in the production of
electricity at the Thermal Units or the Hydro Units, or employed in Seller's
corporate generation departments. Seller's Non-Union Employees as of the
date hereof are identified in Section 12.01(g) of the Disclosure Schedule.
"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 the Assets or
properties in the vicinity of Real Property constituting the Assets to which
Hazardous Materials have migrated.
"Operative Agreements" means, collectively, this Agreement, the
General Assignment and the other Assignment Instruments, the Assumption
Agreement and the other Assumption Instruments, the Colstrip Unit Number 3
Wholesale Transition Service Agreement, the Non-Colstrip Unit Number 3
Wholesale Transition Service Agreement, the Interconnection Agreement
(including the Separation Document), the Contribution Agreement, the
Communications Service Agreement and any support or other agreements to be
entered into at the Closing in connection with the transaction.
"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.
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"Permitted Lien" means (i) those Liens and exceptions to title to
the Assets (except Easements) set forth in Section 12.01(h) of the Disclosure
Schedule; (ii) the Easements; (iii) all exceptions, restrictions, easements,
charges, rights of way and monetary and non-monetary encumbrances which are
set forth in an applicable FERC project license, except for such encumbrances
which secure Indebtedness; (iv) when such term is used with respect to any
date before the Closing, Liens created by the Indentures; (v) 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; (vi) 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; (vii) zoning, entitlement, conservation restriction and other
land use and environmental regulations by any Governmental or Regulatory
Authority; and (viii) any minor imperfection of title or similar Lien,
limited in the case of items (i) -(viii) (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" means Portland General Electric Company, an Oregon
corporation.
"PGE Asset Purchase Agreement" means the Asset Purchase Agreement
dated the date hereof by and between PGE and Purchaser.
"Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services, cafeteria,
life, health, accident, disability, workmen's compensation or other
insurance, severance, separation or other employee benefit plan, practice,
policy or arrangement of any kind, whether written or oral, including, but
not limited to, any "employee benefit plan" within the meaning of
Section 3(3) of ERISA.
"Pollution Control Bonds" means those Pollution Control Revenue
Refunding Bonds, Series 1993A, due May 1, 2023, City of Forsyth, Montana in
the original principal amount of $90,205,000 and Series 1993B, due December
1, 2023, City of Forsyth, Montana in the original principal amount of
$80,000,000.
"Pollution Control Facilities" means the facilities financed with
the Pollution Control Bonds described in Exhibit C hereto.
"Portland Closing Date" means the date on which the closing of
the transactions contemplated by the Asset Purchase Agreement, dated as of
the date hereof, by and between Purchaser and PGE (the "Portland Closing")
occurs.
"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.
"Portland Payment Amount" means an amount equal to $897,000,000
minus the amount of the Base Purchase Price (prior to any adjustment thereto
pursuant to Section 1.10).
"Power Purchase/Exchange Agreements" means (i) the Power Purchase
Agreement, effective as of May 13, 1994, between Seller and Basin Electric
Power Cooperative; (ii) the BPA Peak/Energy Exchange, which is Exhibit L to
the Power Sales Agreement, dated as of August 27, 1982, between Seller and
the United States of America, Department of Energy, acting by and through the
Bonneville Power Administration; and (iii) the Exchange Agreement, dated as
of August 18, 1993, between Seller and Idaho Power Company.
"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 II hereto.
"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 II hereto.
"Puget" means Puget Sound Energy, Inc., a Washington corporation.
"Puget Asset Purchase Agreement" means the Asset Purchase
Agreement dated the date hereof by and between Puget and Purchaser.
"Puget Closing Date" means the date on which the closing of the
transactions contemplated by the Asset Purchase Agreement, dated as of the
date hereof, by and between Purchaser and Puget (the "Puget Closing") occurs.
"Puget Payment Amount" means an amount equal to $897,000,000
minus the amount of the Base Purchase Price (prior to any adjustment thereto
pursuant to Section 1.10).
"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 5.08.
"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 the FERC, as applicable, to allow Purchaser
to (A) implement wholesale sales of electricity under the Wholesale
Transition Service Agreements, the Power Purchase/Exchange Agreements, the
Power Purchase Agreements, 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) approval by Final Order
of the FERC under Part I of the Federal Power Act for the transfer of FERC
project licenses related to, and necessary for Purchaser to acquire, own and
operate the Hydro Units; (iii) a Final Order of the 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 either or
both of the Colstrip 4 Transmission Assets and the Colstrip 1, 2, and 3
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; (iv) a Final Order of the Montana Public Service
Commission, the Oregon Public Utility Commission and the Washington Utilities
and Transportation Commission, 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; (vii) acceptance for filing and
effectiveness or approval by Final Order of the FERC of the Interconnection
Agreement; and (viii) expiration or early termination of the HSR Act waiting
period.
"Purchaser's 401(k) Plan" has the meaning ascribed to it in
Section 5.03(a).
"Purchaser's Retirement Plan" has the meaning ascribed to it in
Section 5.03(a).
"Purchaser's Welfare Plans" has the meaning ascribed to it in
Section 5.03(a).
"Qualified Plan" means each Benefit Plan which is intended to
qualify under Section 401 of the Code.
"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(b).
"Seller Material Adverse Effect" means any change in or effect on
the Assets or the operation of the Assets after the Bid Date that is
materially adverse to the ownership, business, assets, operations or
condition (financial or otherwise) of the Assets, individually or 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 Generating Assets, (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's DB Plan" has the meaning ascribed to it in Section
5.03(b).
"Seller's Retirement Plan" has the meaning ascribed to it in
Section 5.03(a).
"Seller Required Regulatory Approvals" means (i) the approval
required by FERC to transfer the FERC licenses associated with the Hydro
Units, (ii) the approvals required by the appropriate regulatory agencies to
transfer the Transferable Permits, other than any such approvals the failure
of which would not materially detract from the value of the Assets as
currently used or materially interfere with the ownership, use, operation or
maintenance of the Assets, (iii) the approval, if required, of the SEC
pursuant to the Holding Company Act, (iv) 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, and (v) the approval by FERC pursuant to
Section 203 and 205, respectively, of the Federal Power Act relating to the
transfer of the Assets and the Interconnection Agreement.
"Separation Document" means the separation document to be
prepared under the terms of the Interconnection Agreement.
"Site Representatives" has the meaning ascribed to it in Section
4.11.
"Subject Defined Benefit Plan" means each Defined Benefit Plan
listed and described in Section 2.09(a) of the Disclosure Schedule.
"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).
"Thermal Units" means Seller's undivided interests in and
including the thermal generating stations owned by Seller at such locations
as set forth in Section 12.01(i) of the Disclosure Schedule.
"Third Party Claim" has the meaning ascribed to it in Section
10.02(a).
"▇▇▇▇▇▇▇▇ Falls Environmental Status" means that ▇▇▇▇▇▇▇▇ Falls
Reservoir has been identified as a Low Priority Site by Montana Department of
Environmental Quality ("DEQ") under the Montana Comprehensive Environmental
Cleanup and Responsibility Act because elevated levels of copper, zinc, and
possibly arsenic were found in the bottom sediments of ▇▇▇▇▇▇▇▇ Falls
Reservoir.
"▇▇▇▇▇▇▇▇ Falls Liabilities" has the meaning ascribed to it in
Section 1.02(a)(x).
"Title Representation" has the meaning ascribed to it in
Section 9.01(a).
"Transferable Insurance Policies" has the meaning ascribed to it
in Section 1.01(a)(xvi).
"Transferable Permits" has the meaning ascribed to it in
Section 1.01(a)(vi).
"Transferring Employee" means any Union or Non-Union Employee who
accepts Purchaser's offer of employment.
"Transferring Non-Union Employee" means a Non-Union Employee who
is a Transferring Employee.
"Transferring Union Employee" means a Union Employee who is a
Transferring Employee.
"Transfer Taxes" means all Taxes in the nature of sales, use,
transfer, recording, value added or forms of conveyance taxes.
"Union Employees" means all bargaining-unit Employees as of the
Closing represented by the International Brotherhood of Electrical Workers
("IBEW") Local No. 1638, IBEW Local No. 44 or the International Brotherhood
of Teamsters Local 190.
"WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended, and the rules and regulations
promulgated thereunder.
(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 operation of the Generating Assets.
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 tc \n \l 1 "ARTICLE XIII"
MISCELLANEOUS tc \n \l 1 " MISCELLANEOUS"
13.01 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:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to Seller, to:
The Montana Power Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
13.02 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.
13.03 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 the parties dated
April 8, 1998, and contain the sole and entire agreement between the parties
hereto with respect to the subject matter hereof and thereof.
13.04 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.
13.05 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 operation of the
Generating Assets 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.
13.06 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.
13.07 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.
13.08 Amendment
. This Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each party hereto.
13.09 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, provided, however, that the Transferring Employees
are intended to be third party beneficiaries solely for the purpose of claims
they may have against Purchaser under Section 5.03.
13.10 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.
13.11 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.
13.12 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.
13.13 Governing Law
. This Agreement shall be governed by and construed in accordance with the
Laws of the State of New York applicable to a contract executed and performed
in such State, without giving effect to the conflicts of laws principles
thereof.
13.14 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.
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:
THE MONTANA POWER COMPANY
By:________________________________
Name:
Title:
(..continued)
MTHM DRAFT
10/8/98
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