EXHIBIT B-1
-----------
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
BETWEEN
ALLEGHENY ENERGY, INC.
AND
[----------------]
TABLE OF CONTENTS
RECITALS.......................................................................1
ARTICLE I
DEFINITIONS
ARTICLE II
THE IPO AND ACTIONS PENDING THE IPO
Section 2.1 Preliminary Filings and Agreements in connection with IPO.....4
Section 2.2 Use of Proceeds...............................................5
Section 2.3 Cooperation...................................................5
Section 2.4 Conditions Precedent to Consummation of the IPO...............5
ARTICLE III
SEPARATION
Section 3.1 Separation Date...............................................7
Section 3.2 Closing of Transactions.......................................7
Section 3.3 Exchange of Secretary's Certificates..........................7
ARTICLE IV
DOCUMENTS AND ITEMS TO BE DELIVERED ON THE SEPARATION DATE
Section 4.1 Documents to Be Delivered By Allegheny........................7
Section 4.2 Documents to Be Delivered By Supply Holdco....................8
ARTICLE V
THE DISTRIBUTION
Section 5.1 The Distribution..............................................8
Section 5.2 Actions Prior to the Distribution.............................9
Section 5.3 Sole Discretion of Allegheny..................................9
Section 5.4 Conditions to Distribution...................................10
Section 5.5 Fractional Shares............................................10
ARTICLE VI
COVENANTS AND OTHER MATTERS
Section 6.1 Other Agreements.............................................11
Section 6.2 Further Acts and Assurances..................................11
Section 6.3 Agreement For Exchange of Information........................12
Section 6.4 Auditors and Audits; Annual and Quarterly Statements
and Accounting...............................................14
Section 6.5 Consistency with Past Practices..............................16
Section 6.6 Payment of Expenses..........................................16
Section 6.7 Dispute Resolution...........................................16
i
Section 6.8 Regulatory Approvals.........................................17
Section 6.9 Regulatory Effect of Distribution............................17
Section 6.10 Continuance of Allegheny Credit Support......................17
Section 6.11 Assignment of Agreements.....................................18
ARTICLE VII
MISCELLANEOUS
Section 7.1 LIMITATION OF LIABILITY......................................19
Section 7.2 Entire Agreement.............................................19
Section 7.3 Governing Law................................................19
Section 7.4 Termination..................................................19
Section 7.5 Notices......................................................19
Section 7.6 Counterparts.................................................20
Section 7.7 Binding Effect; Assignment...................................20
Section 7.8 Severability.................................................20
Section 7.9 Failure or Indulgence Not Waiver; Remedies Cumulative........20
Section 7.10 Amendment....................................................20
Section 7.11 Authority....................................................20
Section 7.12 Interpretation...............................................20
Section 7.13 Conflicting Agreements.......................................21
ii
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
MASTER SEPARATION AND DISTRIBUTION AGREEMENT (this "Agreement") dated as
of [________], between Allegheny Energy, Inc., a Maryland corporation
("ALLEGHENY"), and [________], a Maryland corporation ("SUPPLY HOLDCO").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in Article I hereof.
RECITALS
WHEREAS, Allegheny and Allegheny Energy Supply Company, LLC ("AE
SUPPLY"), together with other subsidiaries of Allegheny, filed an application
and declaration on Form U-1 on July 23, 2001 (such form, as amended through the
date hereof, the "U-1 APPLICATION") under the Public Utility Holding Company Act
of 1935 (the "ACT") seeking authorization to, among other things (i) restructure
AE Supply and create a new holding company, Supply Holdco, for AE Supply's
operations, (ii) effect an initial public offering of the common stock ("IPO")
of Supply Holdco, (iii) implement an employee stock option plan for Supply
Holdco, and issue options thereunder to satisfy outstanding contractual
obligations, (iv) distribute the voting securities of Supply Holdco to the
common stockholders of Allegheny within 24 months following the completion of
the IPO, and (v) engage in other transactions related to the IPO and the
Distribution;
WHEREAS, pursuant to the authority sought in the U-1 Application, it is
proposed that the Pre-IPO Reorganization Transactions (as defined below in
Section 2.4(f)) be entered into and that the other matters pertaining to the
IPO, the Separation and Distribution occur, all as more fully described in the
U-1 Application;
WHEREAS, the Boards of Directors of Allegheny and Supply Holdco have each
determined that it would be appropriate and desirable for Allegheny to separate
the Supply Holdco Business from the Allegheny Business on the Separation Date
(the separation of the businesses as contemplated by this Agreement and the
Ancillary Agreements, the "SEPARATION");
WHEREAS, Allegheny currently contemplates that, within 24 months
following the IPO, Allegheny will distribute to the holders of its common stock,
by means of a pro rata distribution, all of the voting securities of Supply
Holdco Common Stock then owned by Allegheny, as more fully described in the U-1
Application (the "DISTRIBUTION");
WHEREAS, Allegheny and Supply Holdco intend to implement the Distribution
on a tax-free basis in accordance with the requirements of Section 355 of the
Internal Revenue Code of 1986, as amended (the "CODE"); and
WHEREAS, the parties intend in this Agreement, including the Exhibits and
Schedules hereto, to set forth the principal arrangements between them regarding
the Separation and Distribution.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"Act" has the meaning specified in the first Recital.
"AE Supply" has the meaning specified in the first Recital.
"Allegheny Business" means any business and operations of Allegheny and
its Subsidiaries other than the Supply Holdco Business.
"Allegheny Group" means Allegheny and each Subsidiary of Allegheny (other
than any entity in the Supply Holdco Group) immediately after the Separation
Date and each Person that becomes a subsidiary of Allegheny (other than any
entity in the Supply Holdco Group) after the Separation Date.
"Allegheny's Auditors" means Allegheny's independent certified public
accountants referred to Section 6.4(b).
"Ancillary Agreements" has the meaning set forth in Section 4.1 hereof.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banking institutions located in the State of Maryland are authorized or
obligated by law or executive order to close.
"Code" has the meaning set forth in the fifth Recital hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means 2 billion shares of authorized common stock, par
value $0.01 per share, of Supply Holdco.
"Credit Support Arrangements" has the meaning set forth in Section 6.10.
"Disputes" has the meaning set forth in Section 6.7 hereof.
"Distribution" has the meaning set forth in the fourth Recital hereof.
"Distribution Agent" has the meaning set forth in Section 5.1(a) hereof.
"Distribution Date" has the meaning set forth in Section 5.1(a) hereof.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries,
2
ideas, concepts, know-how, techniques, designs, specifications, drawings,
blueprints, diagrams, models, prototypes, samples, flow charts, data, computer
data, disks, diskettes, tapes, computer programs or other software, marketing
plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product), and
other technical, financial, employee or business information or data.
"IPO" has the meaning set forth in the first Recital.
"IPO Closing Date" means the date of the closing of the IPO upon
satisfaction of the conditions of Article II hereof.
"IPO Registration Statement" means the registration statement relating to
the IPO on Form S-1 filed pursuant to the Securities Act of 1933.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Predecessor Transactions" means the transactions that have not, as of
the Separation Date, been consummated in connection with (a) the West Penn Power
Company, AYP Energy, Inc. and The Potomac Edison Company transfer to AE Supply
of all of their generating assets and related liabilities and (b) the
Monongahela Power Company transfer to AE Supply of all of its generating assets
and related liabilities, other than the West Virginia jurisdictional generating
assets and liabilities.
"Record Date" means the close of business on the date to be determined by
the Board of Directors of Allegheny as the record date for determining the
stockholders of Allegheny entitled to receive shares of Common Stock of Supply
Holdco at Distribution.
"Regulatory Approvals" means any notices, reports or other filings to be
made, or any consents, registrations, approvals, permits or authorizations to be
obtained from, any Regulatory Authority.
"Regulatory Authority" shall mean any federal, state or local government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or regulatory authority.
"Regulatory Proceeding" means filings, notices, adjudicatory proceedings,
rule makings, enforcement actions before an agency or in court relating to
regulatory activity, and any other proceeding at or before any regulatory or
administrative agency. The term
3
shall also refer to appellate activities with respect to any of the foregoing,
including actions seeking injunctions, writs of mandamus and appeals.
"Separation" has the meaning set forth in the third Recital hereof.
"Separation Date" has the meaning set forth in Section 3.1 hereof.
"Subsidiary" means with respect to any specified Person, any corporation,
any limited liability company, any partnership or other legal entity of which
such Person or its Subsidiaries owns, directly or indirectly, more than 50% of
the stock or other equity interest entitled to vote on the election of the
members of the board of directors or similar governing body.
"Supply Holdco Auditors" means Supply Holdco's independent certified
public accountants referred within Section 6.4(a).
"Supply Holdco Business" means (a) the business and operations of Supply
Holdco and its Subsidiaries at the Separation Date and (b) the business and
operations of Supply Holdco and its Subsidiaries after giving effect to and the
consummation of the Pre-IPO Reorganization Transactions set forth in and as
contemplated by the U-1 Application.
"Supply Holdco Group" means Supply Holdco and each Subsidiary of Supply
Holdco immediately after the Separation Date and each Person that becomes a
subsidiary of Supply Holdco after the Separation Date.
"U-1 Application" has the meaning set forth in the first Recital hereof.
"Underwriters" means the underwriters of the IPO.
"Underwriting Agreement" has the meaning set forth in Section 2.1(b)
hereof.
ARTICLE II
THE IPO AND ACTIONS PENDING THE IPO
Section 2.1 PRELIMINARY FILINGS AND AGREEMENTS IN CONNECTION WITH IPO.
Subject to the conditions specified in Section 2.4, Allegheny and Supply Holdco
shall use their reasonable commercial efforts to consummate the IPO. Such
efforts shall include, but not necessarily be limited to, those specified in
this Section 2.1:
(a) REGISTRATION STATEMENT. Supply Holdco shall prepare or
cause to be prepared and file with the Commission the IPO Registration
Statement, together with exhibits, any prospectus relating thereto, any
amendments to the IPO Registration Statement (including pre-effective and
post-effective amendments) and shall respond promptly to any comments of
the Commission, in order to cause the IPO Registration Statement to
become and remain effective as
4
required by law. Allegheny and Supply Holdco shall also cooperate in
preparing, filing with the Commission and causing to become effective a
registration statement registering the Common Stock of Supply Holdco
under the Exchange Act, and any registration statements or amendments
thereof which are required to reflect the establishment of, or amendments
to, any employee benefit and other plans necessary or appropriate in
connection with the IPO, the Separation, the Distribution or the other
transactions contemplated by this Agreement.
(b) UNDERWRITING AGREEMENT. Supply Holdco and Allegheny shall
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT"), in
form and substance reasonably satisfactory to Supply Holdco and Allegheny
and shall comply with its obligations thereunder.
(c) OTHER MATTERS. Allegheny and Supply Holdco shall consult
with each other and the Underwriters regarding the timing, pricing and
other material matters with respect to the IPO.
(d) BLUE SKY. Supply Holdco shall use its reasonable commercial
efforts to take all such action as may be necessary or appropriate under
state securities and blue sky laws of the United States in connection
with the IPO.
(e) NYSE LISTING. Supply Holdco shall prepare, file and use
reasonable commercial efforts to seek to make effective, an application
for listing of the Common Stock of Supply Holdco issued in the IPO on the
NYSE, subject to official notice of issuance.
Section 2.2 USE OF PROCEEDS. The proceeds of the IPO will be used by
Supply Holdco for (i) general corporate purposes, including supporting the
development and construction of new generating facilities and the acquisition of
existing generating facilities or development projects, (ii) repayment of
indebtedness of Supply Holdco, (iii) supporting the operations of Supply Holdco
Subsidiaries or (iv) funding environmental capital expenditures.
Section 2.3 COOPERATION. Supply Holdco shall consult with, and
cooperate in all respects with, Allegheny in connection with the pricing of the
Common Stock of Supply Holdco to be offered in the IPO and shall, at Allegheny's
direction, promptly take any and all actions necessary or desirable to
consummate the IPO as contemplated by the IPO Registration Statement and the
Underwriting Agreement.
Section 2.4 CONDITIONS PRECEDENT TO CONSUMMATION OF THE IPO. As soon as
practicable after the Separation Date, the parties hereto shall use their
reasonable commercial efforts to satisfy the conditions listed below to the
consummation of the IPO:
(a) REGISTRATION STATEMENT. The IPO Registration Statement
shall have been filed and declared effective by the Commission, and there
shall be no stop-order in effect with respect thereto.
5
(b) BLUE SKY. The actions and filings with regard to state
securities and blue sky laws of the United States described in Section
2.1(d) shall have been taken and, where applicable, have become effective
or been accepted.
(c) NYSE LISTING. The Common Stock of Supply Holdco to be
issued in the IPO shall have been accepted for listing on the NYSE, on
official notice of issuance.
(d) UNDERWRITING AGREEMENT. Supply Holdco and Allegheny shall
each have entered into an Underwriting Agreement and all conditions to
the obligations of Supply Holdco and the Underwriters shall have been
satisfied or waived.
(e) COMMON STOCK OWNERSHIP. Allegheny shall be satisfied in its
sole discretion that it will own more than 80% of the outstanding Common
Stock of Supply Holdco following the IPO. All other conditions to permit
the Distribution to qualify as a tax-free distribution to Allegheny,
Supply Holdco, and Allegheny's stockholders shall, to the extent
applicable as of the time of the IPO, be satisfied, and there shall be no
event or condition that is likely to cause any of such conditions not to
be satisfied as of the time of the Distribution or thereafter.
(f) REGULATORY APPROVALS. Any Regulatory Approval (including
approval of the U-1 Application) necessary to create Supply Holdco and
other entities and effect corporate reorganization transactions; transfer
assets and properties and reorganize the Supply Holdco Group; and
transfer related properties, rights and interests, all as more
particularly described in Section 1.4 of the U-1 Application
(collectively, the "PRE-IPO REORGANIZATION TRANSACTIONS") and approval of
the IPO as more particularly described in Section 1.5 of the U-1
Application shall continue to be in full force and effect.
(g) CONSUMMATION OF PREDECESSOR TRANSACTIONS AND PRE-IPO
REORGANIZATION TRANSACTIONS. All actions by the appropriate parties
hereto or any of their Subsidiaries necessary to give effect to the
Pre-IPO Reorganization Transactions as approved by the Commission and the
Predecessor Transactions have been taken and the transactions
contemplated thereby have been consummated.
(h) NO LEGAL RESTRAINTS. No order, injunction or decree issued
by any court or agency of competent jurisdiction or other legal
constraint or prohibition preventing the consummation of the Separation
or the IPO or any of the other transactions contemplated by this
Agreement shall be in effect.
(i) OTHER ACTIONS. Such other actions as the parties hereto
may, based upon the advice of counsel, reasonably request to be taken
prior to the IPO in order to assure the successful completion of the IPO
shall have been taken.
(j) NO TERMINATION. This Agreement shall not have been
terminated.
6
ARTICLE III
SEPARATION
Section 3.1 SEPARATION DATE. Unless otherwise provided in this
Agreement, or in any agreement to be executed in connection with this Agreement,
the Separation Date of each undertaking or agreement in connection with the
Separation shall be the later of November 1, 2001 and the date that is seven (7)
Business Days after the date the Commission grants approval of the U-1
Application (the "SEPARATION DATE").
Section 3.2 CLOSING OF TRANSACTIONS. Unless otherwise provided herein,
the closing of the transactions contemplated in Article IV shall occur by the
lodging of each of the executed agreements, instruments or other documents to be
executed pursuant to this Agreement with ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, to be held in escrow for delivery as provided in Section
4.1 of this Agreement.
Section 3.3 EXCHANGE OF SECRETARY'S CERTIFICATES. Upon receipt of a
certificate of the Secretary or an Assistant Secretary of Allegheny in the form
attached to this Agreement as EXHIBIT A, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall deliver to
Supply Holdco on behalf of Allegheny all of the items required to be delivered
by Allegheny pursuant to Section 4.1 of this Agreement and each such item shall
be deemed to be delivered to Supply Holdco as of the Separation Date upon
delivery of such certificate. Upon receipt of a certificate of the Secretary or
an Assistant Secretary of Supply Holdco in the form attached to this Agreement
as EXHIBIT B, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall deliver to Allegheny on behalf of Supply
Holdco all of the items required to be delivered by Supply Holdco pursuant to
Section 4.2 and each such item shall be deemed to be delivered to Allegheny as
of the Separation Date upon receipt of such certificate.
ARTICLE IV
DOCUMENTS AND ITEMS TO BE DELIVERED ON THE SEPARATION DATE
Section 4.1 DOCUMENTS TO BE DELIVERED BY ALLEGHENY. On the Separation
Date, Allegheny will deliver, or will cause its appropriate Subsidiaries to
deliver, to Supply Holdco all of the following agreements (collectively, and
together with all agreements and documents contemplated by this Agreement and
any agreements or documents to be delivered in connection with the Pre-IPO
Reorganization Transactions, the "ANCILLARY AGREEMENTS"):
(a) A duly executed Intellectual Property Ownership Agreement
substantially in the form attached hereto as EXHIBIT C;
(b) A duly executed Employee Matters Agreement substantially in
the form attached hereto as EXHIBIT D;
7
(c) A duly executed Tax Indemnification Agreement substantially
in the form attached hereto as EXHIBIT E;
(d) A duly executed Transitional Services Agreement
substantially in the form attached hereto as EXHIBIT F;
(e) A duly executed Confidential Disclosure Agreement
substantially in the form attached hereto as EXHIBIT G;
(f) A duly executed Indemnification and Insurance Matters
Agreement substantially in the form attached hereto as EXHIBIT H;
(g) Such other agreements, documents or instruments as the
parties may agree are necessary or desirable in order to achieve the
purposes hereof.
Section 4.2 DOCUMENTS TO BE DELIVERED BY SUPPLY HOLDCO. As of the
Separation Date, in each case where Supply Holdco or any of its Subsidiaries is
a party to any agreement, document or instrument referred to in Section 4.1,
Supply Holdco will or will cause its appropriate Subsidiaries to deliver to
Allegheny a duly executed counterpart of such agreement or instrument.
ARTICLE V
THE DISTRIBUTION
Section 5.1 THE DISTRIBUTION.
(a) DELIVERY OF SHARES FOR DISTRIBUTION. Subject to Section 5.4
hereof, on or prior to the date the Distribution is effective (the
"DISTRIBUTION DATE"), Allegheny will deliver to the distribution agent to
be appointed by Allegheny, or if no distribution agent is appointed, then
Allegheny (the "DISTRIBUTION AGENT"), will distribute to the stockholders
of Allegheny the shares of Common Stock of Supply Holdco held by
Allegheny pursuant to the Distribution for the benefit of holders of
record of common stock of Allegheny on the Record Date, a single stock
certificate, endorsed by Allegheny in blank, representing all of the
outstanding shares of Common Stock of Supply Holdco then owned by
Allegheny, and shall cause the transfer agent for the shares of common
stock of Allegheny to instruct the Distribution Agent to distribute on
the Distribution Date the appropriate number of such shares of Common
Stock of Supply Holdco to each such holder or designated transferee or
transferees of such holder.
(b) SHARES RECEIVED. Subject to Sections 5.4 and 5.5, each
holder of common stock of Allegheny on the Record Date (or such holder's
designated transferee or transferees) will be entitled to receive in the
Distribution a number of shares of Common Stock of Supply Holdco equal to
the number of shares of common stock of Allegheny held by such holder on
the Record Date multiplied by a fraction the numerator of which is the
number of shares of Common Stock of
8
Supply Holdco beneficially owned by Allegheny on the Record Date and the
denominator of which is the number of shares of common stock of Allegheny
outstanding on the Record Date.
(c) OBLIGATION TO PROVIDE INFORMATION. Supply Holdco and
Allegheny, as the case may be, will provide to the Distribution Agent all
share certificates and any information required in order to complete the
Distribution on the basis specified above.
Section 5.2 ACTIONS PRIOR TO THE DISTRIBUTION.
(a) INFORMATION STATEMENT. Allegheny and Supply Holdco shall
prepare and mail, prior to the Distribution Date, to the holders of
common stock of Allegheny such information concerning Supply Holdco and
the Distribution and such other matters as Allegheny shall reasonably
determine are necessary and as may be required by law. Allegheny and
Supply Holdco will prepare, and Supply Holdco will, to the extent
required under applicable law, file with the Commission any such
documentation which Allegheny and Supply Holdco determine is necessary or
desirable to effectuate the Distribution, and Allegheny and Supply Holdco
shall each use its reasonable commercial efforts to obtain all necessary
approvals from the Commission with respect thereto as soon as
practicable.
(b) BLUE SKY. Allegheny and Supply Holdco shall take all such
actions as may be necessary or appropriate under the securities or blue
sky laws of the United States in connection with the Distribution.
(c) NYSE LISTING. Supply Holdco shall prepare and file, and
shall use its reasonable commercial efforts to have approved, an
application for the listing of the Common Stock of Supply Holdco to be
distributed in the Distribution on the NYSE, subject to official notice
of distribution.
(d) CONDITIONS. Allegheny and Supply Holdco shall take all
reasonable steps necessary and appropriate to cause the conditions set
forth in Section 5.4 to be satisfied and to effect the Distribution on
the Distribution Date.
Section 5.3 SOLE DISCRETION OF ALLEGHENY. Allegheny currently intends,
following the consummation of the IPO, to complete the Distribution within
twenty-four (24) months of the IPO Closing Date. Allegheny shall, in its sole
and absolute discretion, determine the date of the consummation of the
Distribution and all terms of the Distribution, including, without limitation,
the form, structure and terms of any transaction(s) and/or offering(s) to effect
the Distribution and the timing of and conditions to the consummation of the
Distribution. In addition, Allegheny may at any time and from time to time until
the completion of the Distribution decide to abandon the Distribution or modify
or change the terms of the Distribution, including, without limitation, by
accelerating or delaying the timing of the consummation of all or part of the
Distribution. Supply Holdco shall cooperate with Allegheny in all respects to
9
accomplish the Distribution and shall, at Allegheny's direction, promptly take
any and all actions necessary or desirable to effect the Distribution,
including, without limitation, the registration under the Securities Act of the
Common Stock of Supply Holdco on an appropriate registration form or forms to be
designated by Allegheny. Allegheny shall select any investment banker(s) and
manager(s) in connection with the Distribution, as well as any financial
printer, solicitation and/or exchange agent and outside counsel for Allegheny;
PROVIDED, HOWEVER, that nothing herein shall prohibit Supply Holdco from
engaging (at its own expense) its own financial, legal, accounting and other
advisors in connection with the Distribution.
Section 5.4 CONDITIONS TO DISTRIBUTION. The following are conditions to
the consummation of the Distribution. The conditions are for the sole benefit of
Allegheny and shall not give rise to or create any duty on the part of Allegheny
or the Allegheny Board of Directors to waive or not waive any such condition:
(a) IRS RULING. Allegheny shall have obtained a private letter
ruling from the Internal Revenue Service in form and substance
satisfactory to Allegheny (in its sole discretion), and such ruling shall
remain in effect as of the Distribution Date, to the effect that (i) the
distribution by Allegheny of all of its Supply Holdco Common Stock to the
stockholders of Allegheny will qualify as a tax-free distribution under
Section 355 of the Code, and (ii) no gain or loss will be recognized by
(and no amount will otherwise be included in the income of) the
stockholders of Allegheny upon their receipt of Supply Holdco Common
Stock pursuant to the Distribution.
(b) REGULATORY APPROVALS. Any Regulatory Approvals necessary to
consummate the Distribution shall have been obtained and be in full force
and effect.
(c) NO LEGAL RESTRAINTS. No order, injunction or decree issued
by any court or agency of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Distribution shall be
in effect and no other event outside the control of Allegheny shall have
occurred or failed to occur that prevents the consummation of the
Distribution.
(d) NO MATERIAL ADVERSE EFFECT. No other events or developments
shall have occurred subsequent to the IPO Closing Date that, in the
judgment of the Board of Directors of Allegheny, would result in the
Distribution having a material adverse effect on Allegheny or on the
stockholders of Allegheny.
Section 5.5 FRACTIONAL SHARES. As soon as practicable after the
Distribution Date, Allegheny shall direct the Distribution Agent to determine
the number of whole shares and fractional shares of Common Stock of Supply
Holdco allocable to each holder of record or beneficial owner of common stock of
Allegheny as of the Record Date, to aggregate all such fractional shares and
sell the whole shares obtained thereby at the direction of Allegheny, in open
market transactions, at then prevailing trading prices, and to cause to be
distributed to each such holder or for the benefit of each such beneficial
10
owner to which a fractional share shall be allocable such holder's or owner's
ratable share of the proceeds of such sale, after making appropriate deductions
of the amount required to be withheld for federal income tax purposes and after
deducting an amount equal to all brokerage charges, commissions and transfer
taxes attributed to such sale. Allegheny and the Distribution Agent shall use
their reasonable commercial efforts to aggregate the shares of common stock of
Allegheny that may be held by any beneficial owner thereof through more than one
account in determining the fractional share allocable to such beneficial owner.
ARTICLE VI
COVENANTS AND OTHER MATTERS
Section 6.1 OTHER AGREEMENTS. In addition to the specific agreements,
documents and instruments annexed to this Agreement, Allegheny and Supply Holdco
agree to execute and deliver, or to use their reasonable commercial efforts to
cause to be executed and delivered by the appropriate parties, such other
agreements, instruments and other documents as may be necessary or desirable in
order to effect the purposes of this Agreement and the Ancillary Agreements.
Section 6.2 FURTHER ACTS AND ASSURANCES.
(a) At the request of Supply Holdco and without further
consideration, from time to time, Allegheny will execute and deliver, and
will cause its applicable Subsidiaries to execute and deliver, to Supply
Holdco and its Subsidiaries, as the case may be, such agreements, leases,
applications, filings and instruments of transfer, conveyance,
assignment, substitution and confirmation and take or cause to be taken
all actions, and do, or cause to be done, all things as Supply Holdco may
deem necessary, proper or advisable to consummate and make effective the
transfer, conveyance and assignment to Supply Holdco and its Subsidiaries
and confirm Supply Holdco's and its Subsidiaries' title to all of the
assets, rights and other things of value contemplated to be transferred
to Supply Holdco and its Subsidiaries pursuant to the Predecessor
Transactions, the Pre-IPO Reorganization Transactions, the terms of this
Agreement, the Ancillary Agreements, and any agreement, document or
instrument referred to in the foregoing or contemplated thereby; and to
put Supply Holdco and its Subsidiaries in actual possession and operating
control thereof and to permit Supply Holdco and its Subsidiaries to
exercise all rights with respect thereto (including, without limitation,
rights under contracts and other arrangements as to which the consent of
any third party to the transfer thereof shall not have previously been
obtained).
(b) At the request of Allegheny and without further
consideration, from time to time, Supply Holdco will execute and deliver,
and will cause its applicable Subsidiaries to execute and deliver, to
Allegheny and its Subsidiaries, as the case may be, all agreements,
leases, applications, filings, instruments,
11
assumptions, releases, novations, undertakings, substitutions or other
documents and take or cause to be taken all actions, and do, or cause to
be done, all things as Allegheny may deem necessary, proper or advisable
to have Supply Holdco fully and unconditionally assume and discharge the
liabilities contemplated to be assumed by Supply Holdco in connection
with the Predecessor Transactions, the Pre-IPO Reorganization
Transactions, the terms of this Agreement, any Ancillary Agreement, or
any agreement, document or instrument in connection with the foregoing or
contemplated thereby and to relieve the Allegheny Group of any liability
or obligation with respect thereto or contemplated thereby and evidence
the same to third parties.
(c) Neither Allegheny nor Supply Holdco shall be obligated, in
connection with the foregoing, to expend money other than reasonable
out-of-pocket expenses, attorneys' fees and recording or similar fees.
Furthermore, each party, at the request of another party hereto, shall
execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or desirable for effecting completely
the consummation of the transactions contemplated hereby.
Section 6.3 AGREEMENT FOR EXCHANGE OF INFORMATION. Subject to the
Confidential Disclosure Agreement (substantially in the form attached hereto as
EXHIBIT G) and subject to providing the contemplated information only to those
persons who require such information in the course of their duties, each of
Allegheny and Supply Holdco (each a "party" for the purposes of this Section
6.3) agree to provide, or cause to be provided, to each other, at any time
before or after the Separation Date, as soon as reasonably practicable after
written request therefor, any Information in the possession or under the control
of such party that the requesting party reasonably needs (i) to comply with
reporting, disclosure, filing or other requirements imposed on the requesting
party by a Regulatory Authority having jurisdiction over the requesting party or
otherwise required by law, (ii) for use in any Regulatory Proceeding, judicial
proceeding or other proceeding or in order to satisfy audit, accounting, claims,
regulatory, litigation or other similar requirements, (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement or (iv) in
connection with the ongoing businesses of Allegheny or Supply Holdco as it
relates to the conduct of such businesses up to and until the date specified in
Article 4 of the Transitional Services Agreement (substantially in the form
attached hereto as EXHIBIT F), as the case may be; PROVIDED, HOWEVER, that in
the event that either party determines that any such provision of Information
could be commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(a) INTERNAL ACCOUNTING CONTROLS; FINANCIAL INFORMATION. After
the Separation Date, each party shall (i) maintain in effect at its own
cost and expense adequate systems and controls for its business to the
extent necessary to enable the other party to satisfy its reporting,
accounting, audit and other obligations, and (ii) provide, or cause to be
provided, to the other party and its Subsidiaries in such form as such
requesting party shall request, at no charge to the requesting party,
12
all financial and other data and information as the requesting party
determines necessary or advisable in order to prepare its financial
statements and reports or filings with any Regulatory Authority.
(b) OWNERSHIP OF INFORMATION. Any Information owned by a party
that is provided to a requesting party pursuant to this Section 6.3 shall
be deemed to remain the property of the providing party. Unless
specifically set forth herein, nothing contained in this Agreement shall
be construed as granting or conferring rights of license or otherwise in
any such Information.
(c) RECORD RETENTION. To facilitate the possible exchange of
Information pursuant to this Section 6.3 and other provisions of this
Agreement after the Separation Date, each party agrees to use its
reasonable commercial efforts to retain all Information in its respective
possession or control on the Separation Date substantially in accordance
with its policies as in effect on the Separation Date. However, except as
set forth in the Tax Indemnification Agreement, at any time after the
Separation Date, each party hereto may amend its respective record
retention policies at such party's discretion; PROVIDED, HOWEVER, that if
a party desires to effect the amendment within three (3) years after the
Separation Date, the amending party must give thirty (30) days prior
written notice of such change in the policy to the other party to this
Agreement. No party will destroy, or permit any of its Subsidiaries to
destroy, any Information that exists on the Separation Date and
thereafter comes into existence prior to the termination date specified
in Article 4 of the Transitional Services Agreement (substantially in the
form attached hereto as EXHIBIT F) (other than Information that is
permitted to be destroyed under the current record retention policy of
such party as in effect on the Separation Date) without first using its
reasonable commercial efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take possession
of such Information prior to such destruction.
(d) LIMITATION OF LIABILITY. No party shall have any liability
to the other party in the event that any Information exchanged or
provided pursuant to this Section is found to be inaccurate, in the
absence of willful misconduct by the party providing such Information. No
party shall have any liability to the other party if any Information is
destroyed or lost after reasonable commercial efforts by such party to
comply with the provisions of Section 6.3(c).
(e) OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The
rights and obligations granted under this Section 6.3 are subject to any
specific limitations, qualifications or additional provisions on the
sharing, exchange or confidential treatment of Information set forth in
this Agreement and any Ancillary Agreement.
(f) PRODUCTION OF WITNESSES; RECORDS; COOPERATION. After the
Separation Date, except in the case of a judicial proceeding or other
proceeding by one party against another party (which shall be governed by
such discovery
13
rules as may be applicable under Section 6.7(b) or otherwise), each party
hereto shall use its reasonable commercial efforts to make available to
the other party, upon written request, the former, current and future
directors, officers, employees, other personnel and agents of such party
as witnesses and any books, records or other documents within its control
or which it otherwise has the ability to make available, to the extent
that any such person (giving consideration to business demands of such
directors, officers, employees, other personnel and agents) or books,
records or other documents may reasonably be required in connection with
any Regulatory Proceeding, judicial proceeding or other proceeding in
which the requesting party may from time to time be involved, regardless
of whether such Regulatory Proceeding, judicial proceeding or other
proceeding is a matter with respect to which indemnification may be
sought hereunder. The requesting party shall bear all costs and expenses
in connection therewith.
Section 6.4 AUDITORS AND AUDITS; ANNUAL AND QUARTERLY STATEMENTS AND
ACCOUNTING. Each party hereto agrees that, for so long as Supply Holdco remains
a Subsidiary of Allegheny, and with respect to any financial reporting period
during which Supply Holdco or AE Supply was a Subsidiary of Allegheny:
(a) SELECTION OF AUDITORS. Supply Holdco shall not select a
different accounting firm than the firm selected by Allegheny to audit
its financial statements to serve as its independent certified public
accountants (the "SUPPLY HOLDCO AUDITORS") for purposes of providing an
opinion on its consolidated financial statements without Allegheny's
prior written consent (which shall not be unreasonably withheld).
(b) DATE OF AUDITORS' OPINION AND QUARTERLY REVIEWS. Supply
Holdco shall use its reasonable commercial efforts to enable the Supply
Holdco Auditors to complete their audit such that they will date their
opinion on Supply Holdco's audited annual financial statements on the
same date that Allegheny's independent certified public accountants
("ALLEGHENY'S AUDITORS") date their opinion on Allegheny's audited annual
financial statements; and to enable Allegheny to meet its timetable for
the printing, filing and public dissemination of Allegheny's annual
financial statements. Supply Holdco shall use its reasonable commercial
efforts to enable the Supply Holdco Auditors to complete their quarterly
review procedures such that they will provide clearance on Supply
Holdco's quarterly financial statements on the same date that Allegheny's
Auditors provide clearance on Allegheny's quarterly financial statements.
(c) ANNUAL AND QUARTERLY FINANCIAL STATEMENTS. Supply Holdco
shall provide to Allegheny on a timely basis all Information that
Allegheny reasonably requires to meet its schedule for the preparation,
printing, filing, and public dissemination of Allegheny's annual and
quarterly financial statements. Without limiting the generality of the
foregoing, Supply Holdco will provide all required financial Information
with respect to Supply Holdco and its Subsidiaries to the Supply Holdco
Auditors in a sufficient and reasonable time and in sufficient detail to
permit the Supply Holdco Auditors to take all steps and perform all
14
reviews necessary to provide sufficient assistance to Allegheny's
Auditors with respect to Information to be included or contained in
Allegheny's annual and quarterly financial statements. Similarly,
Allegheny shall provide to Supply Holdco on a timely basis all
Information that Supply Holdco reasonably requires to meet its schedule
for the preparation, printing, filing, and public dissemination of Supply
Holdco's annual and quarterly financial statements. Without limiting the
generality of the foregoing, Allegheny will provide all required
financial Information with respect to Allegheny and its Subsidiaries to
Allegheny's Auditors in a sufficient and reasonable time and in
sufficient detail to permit Allegheny's Auditors to take all steps and
perform all reviews necessary to provide sufficient assistance to the
Supply Holdco Auditors with respect to Information to be included or
contained in Supply Holdco's annual and quarterly financial statements.
(d) IDENTITY OF PERSONNEL PERFORMING THE ANNUAL AUDIT AND
QUARTERLY REVIEWS. Supply Holdco shall authorize the Supply Holdco
Auditors to make available to Allegheny's Auditors both the personnel who
performed or are performing the annual audits and quarterly reviews of
Supply Holdco and work papers related to the annual audits and quarterly
reviews of Supply Holdco, in all cases within a reasonable time prior to
the Supply Holdco Auditors' opinion date, so that Allegheny's Auditors
are able to perform the procedures they consider necessary to take
responsibility for the work of the Supply Holdco Auditors as it relates
to Allegheny's Auditors' report on Allegheny's financial statements, all
within sufficient time to enable Allegheny to meet its timetable for the
printing, filing and public dissemination of Allegheny's annual and
quarterly statements. Similarly, Allegheny shall authorize Allegheny's
Auditors to make available to the Supply Holdco Auditors both the
personnel who performed or are performing the annual audits and quarterly
reviews of Allegheny and work papers related to the annual audits and
quarterly reviews of Allegheny, in all cases within a reasonable time
prior to Allegheny's Auditors' opinion date, so that the Supply Holdco
Auditors are able to perform the procedures they consider necessary to
take responsibility for the work of the Allegheny Auditors as it relates
to the Supply Holdco Auditors' report on Supply Holdco's financial
statements, all within sufficient time to enable Supply Holdco to meet
its timetable for the printing, filing and public dissemination of Supply
Holdco's annual and quarterly financial statements.
(e) NOTICE OF CHANGE IN ACCOUNTING PRINCIPLES. Supply Holdco
shall give Allegheny as much prior notice as reasonably practical of any
proposed determination of, or any significant changes in, its accounting
estimates or accounting principles from those in effect on the Separation
Date. Supply Holdco will consult with Allegheny and, if requested by
Allegheny, Supply Holdco will consult with Allegheny's Auditors with
respect thereto. Allegheny shall give Supply Holdco as much prior notice
as reasonably practical of any proposed determination of, or any
significant changes in, its accounting estimates or accounting principles
from those in effect on the Separation Date.
15
(f) CONFLICT WITH THIRD-PARTY AGREEMENTS. Nothing in Sections
6.3 and 6.4 shall require Supply Holdco to violate any agreement with any
third parties regarding the confidentiality of confidential and
proprietary information relating to that third party or its business;
PROVIDED, HOWEVER, that in the event that Supply Holdco is required under
Sections 6.3 and 6.4 to disclose any such information, Supply Holdco
shall use all commercially reasonable efforts to seek to obtain such
third party's consent to the disclosure of such information. Similarly,
nothing in Sections 6.3 and 6.4 shall require Allegheny to violate any
agreement with any third parties regarding the confidentiality of
confidential and proprietary information relating to that third party or
its business; PROVIDED, HOWEVER, that in the event that Allegheny is
required under Sections 6.3 and 6.4 to disclose such information,
Allegheny shall use all commercially reasonable efforts to seek to obtain
such party's consent to the disclosure of such information.
Section 6.5 CONSISTENCY WITH PAST PRACTICES. At all times before the
Distribution Date, Allegheny will cause Supply Holdco to continue to conduct
business in the ordinary course, including but not limited to acquisitions,
divestitures and project financings, consistent with past practices.
Section 6.6 PAYMENT OF EXPENSES. Supply Holdco shall pay all
underwriting fees, discounts and commissions incurred in connection with the
IPO. Except as otherwise provided in this Agreement, the Ancillary Agreements or
any other agreement between the parties relating to the Separation, the IPO or
the Distribution, all other out-of-pocket costs and expenses of the parties
hereto in connection with the preparation of this Agreement and the Ancillary
Agreements, the IPO and the Distribution shall be paid by Allegheny.
Notwithstanding the foregoing, Supply Holdco shall pay any internal fees, costs
and expenses incurred by Supply Holdco in connection with the Separation, the
IPO and the Distribution.
Section 6.7 DISPUTE RESOLUTION. Except as otherwise set forth in any
Ancillary Agreement, resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "DISPUTES"), shall be exclusively governed by and settled in
accordance with the provisions of this Section 6.7:
(a) NEGOTIATION. The parties shall make a good faith attempt to
resolve any Dispute arising out of or relating to this Agreement through
negotiation. Within thirty (30) days after notice of a Dispute is given
by either party to the other party, each party shall select one or more
representatives who are vice presidents, senior vice presidents or
executive vice presidents of such party, which representatives shall meet
and make a good faith attempt to resolve such Dispute and shall continue
to negotiate in good faith in an effort to resolve the Dispute or
renegotiate the applicable section or provision without the necessity of
any formal proceedings. If such representatives fail to resolve a Dispute
within thirty (30) days after the first meeting of the representatives,
such Dispute shall be referred to the chief executive officers of each of
the parties for resolution.
16
During the course of negotiations under this Section 6.7(a), all
reasonable requests made by one party to the other for information,
including requests for copies of relevant documents, will be honored. The
specific format for such negotiations will be left to the discretion of
the designated representatives but may include the preparation of agreed
upon statements of fact or written statements of position furnished to
the other party.
(b) PROCEEDINGS. Nothing herein, however, shall prohibit either
party from initiating litigation or other judicial or administrative
proceedings if such party would be substantially harmed by a failure to
act during the time that such good faith efforts are being made to
resolve the Dispute through negotiation. In the event that litigation is
commenced under this Section 6.7(b), the parties agree to continue to
attempt to resolve any Dispute according to the terms of Section 6.7(a)
during the course of such litigation proceedings under this Section
6.7(b).
Section 6.8 REGULATORY APPROVALS. Each of Allegheny and Supply Holdco
acknowledge that certain of the transactions contemplated by the Predecessor
Transactions, the Pre-IPO Reorganization Transactions, this Agreement and the
Ancillary Agreements are subject to certain conditions established by applicable
government regulations, orders, and approvals ("EXISTING AUTHORITY"). Each party
hereto intends to implement the Predecessor Transactions, Pre-IPO Reorganization
Transactions, this Agreement, the Ancillary Agreements and the transactions
contemplated thereby consistent with and to the extent permitted by Existing
Authority and to cooperate toward obtaining and maintaining in effect such
Regulatory Approvals as may be required in order to implement the Predecessor
Transactions, the Pre-IPO Reorganization Transactions, this Agreement and each
of the Ancillary Agreements as fully as possible in accordance with their
respective terms. To the extent that any of the transactions contemplated by the
Predecessor Transactions, Pre-IPO Reorganization Transactions, this Agreement or
any Ancillary Agreement require any Regulatory Approvals, each of Allegheny and
Supply Holdco will use its reasonable commercial efforts to obtain any such
Regulatory Approvals.
Section 6.9 REGULATORY EFFECT OF DISTRIBUTION. Allegheny and Supply
Holdco intend that the Distribution will result in Supply Holdco and its
Subsidiaries losing their status under the Act , as "affiliates" or
"subsidiaries" of Allegheny or of any of its Subsidiaries, and that Supply
Holdco will not be a registered holding company under the Act. To the extent a
doubt arises as to that legal effect, at the request of either Allegheny or
Supply Holdco, the parties shall cooperate in resolving such doubt to achieve
that mutual goal through reasonable changes in business practices, cooperating
towards regulatory or judicial filings or proceedings or obtaining no-action
letter relief.
Section 6.10 CONTINUANCE OF ALLEGHENY CREDIT SUPPORT Notwithstanding any
other provision of this Agreement or the provisions of any Ancillary Agreement
to the contrary, the parties hereby agree that (i) Allegheny shall maintain in
full force and effect each guarantee, letter of credit, or other credit support
document, instrument or other similar arrangement issued for the benefit of any
Person in the Supply Holdco Group by or on behalf of Allegheny (the "CREDIT
SUPPORT ARRANGEMENTS") which is outstanding as
17
of the Separation Date, until such time as such Credit Support Arrangement
terminates in accordance with its terms or is otherwise released at the request
of Supply Holdco; PROVIDED, that Supply Holdco shall use commercially reasonable
efforts, at the request of Allegheny, to attempt to release or replace any
Credit Support Arrangement for which such replacement or release is reasonably
available; and (ii) after the Separation Date and until the Distribution Date,
upon the request of Supply Holdco, Allegheny shall issue additional Credit
Support Arrangements for the benefit of Supply Holdco; PROVIDED, that Allegheny
shall not be obligated to issue any such additional Credit Support Arrangements
to the extent that the aggregate amount of all outstanding Credit Support
Arrangements for the benefit of the Supply Holdco Group would exceed the amount
permitted and approved by the Regulatory Authorities; PROVIDED, FURTHER, that
Allegheny shall not be required to provide any such additional Credit Support
Arrangements on terms that are materially more burdensome to Allegheny than the
terms of the Credit Support Arrangements outstanding on the date of this
Agreement; and PROVIDED, FURTHER, that Allegheny may condition such additional
Credit Support Arrangements such that they may expire approximately twelve (12)
months following the Distribution. In consideration of Allegheny's provision of
the Credit Support Arrangements, Supply Holdco shall pay to Allegheny, beginning
on the IPO Closing Date, a monthly credit support fee in an amount equal to 0.2%
per annum, computed on a daily basis, payable within 15 days of invoice, on the
guaranteed amounts that remain outstanding plus the out-of-pocket cost of the
Credit Support Arrangement.
Section 6.11 ASSIGNMENT OF AGREEMENTS. Effective as of the Separation
Date, Allegheny shall assign, transfer, convey and deliver to Supply Holdco, and
agrees to cause its applicable Subsidiaries to assign, transfer, convey and
deliver to Supply Holdco's applicable Subsidiaries, and Supply Holdco hereby
accepts from Allegheny, and agrees to cause its applicable Subsidiaries to
accept from Allegheny's applicable Subsidiaries, all of Allegheny's and its
applicable Subsidiaries' respective right, title and interest in and to the
documents and agreements listed on Schedule 6.11 attached hereto (each an
"ASSIGNED AGREEMENT"). To the extent that Allegheny's or its applicable
Subsidiaries' respective right, title and interest in and to any Assigned
Agreement may not be assigned without the consent of another Person which
consent has not been obtained, this provision shall not constitute an agreement
to assign the same if an attempted assignment would constitute a breach thereof
or be unlawful, and Allegheny will use, and will cause each of its Subsidiaries
to use, its commercially reasonable efforts to obtain any such required
consent(s) by the Distribution Date. The parties agree that if any consent to an
assignment of any Assigned Agreement shall not be obtained or if any attempted
assignment would be ineffective or would impair Supply Holdco's or its
applicable Subsidiaries' rights and obligations under such Assigned Agreement,
such that Supply Holdco would not in effect acquire the benefit of all such
rights and obligations, Allegheny, to the maximum extent permitted by law and
such Assigned Agreement, shall enter into such reasonable arrangements with
Supply Holdco as are necessary to provide Supply Holdco or its applicable
Subsidiary with the benefits and obligations of such Assigned Agreement from the
Separation Date. The parties shall cooperate and shall each use commercially
reasonable efforts after the Separation Date to obtain an assignment of such
Assigned Agreement to Supply Holdco.
18
ARTICLE VII
MISCELLANEOUS
Section 7.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL ANY MEMBER OF
THE ALLEGHENY GROUP OR SUPPLY HOLDCO GROUP BE LIABLE TO ANY OTHER MEMBER OF THE
ALLEGHENY GROUP OR SUPPLY HOLDCO GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT,
INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY
OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT,
WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES;
PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S
INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN
THIS AGREEMENT OR IN THE INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT.
Section 7.2 ENTIRE AGREEMENT. This Agreement, the other Ancillary
Agreements and the Exhibits and Schedules referenced or attached hereto and
thereto, constitute the entire agreement between the parties with respect to the
subject matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
Section 7.3 GOVERNING LAW. This Agreement shall be governed and
construed and enforced in accordance with the laws of the State of Maryland as
to all matters regardless of the laws that might otherwise govern under the
principles of conflicts of laws applicable thereto.
Section 7.4 TERMINATION. This Agreement and all Ancillary Agreements
may be terminated and the Distribution abandoned at any time prior to the IPO
Closing Date by and in the sole discretion of Allegheny without the approval of
Supply Holdco. This Agreement may be terminated at any time after the IPO
Closing Date and before the Distribution Date by mutual consent of Allegheny and
Supply Holdco. In the event of termination pursuant to this Section, no party
shall have any liability of any kind to the other party.
Section 7.5 NOTICES. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
U.S. mail, First Class with postage prepaid, and addressed to the attention of
the party's President at the address of its principal executive office or such
other address as a party may request by notifying the other in writing.
19
Section 7.6 COUNTERPARTS. This Agreement, including the Schedules and
Exhibits hereto and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 7.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 7.8 SEVERABILITY. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible.
Section 7.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement or the Schedules or Exhibits attached hereto are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
Section 7.10 AMENDMENT. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to such Agreement.
Section 7.11 AUTHORITY. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other actions, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
Section 7.12 INTERPRETATION. The headings contained in this Agreement,
in any Exhibit or Schedule hereto and in the table of contents to this Agreement
are for
20
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
Section 7.13 CONFLICTING AGREEMENTS. In the event of conflict between
this Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of such other agreement shall prevail.
21
WHEREFORE, the parties have signed this Master Separation and
Distribution Agreement effective as of the date first set forth above.
ALLEGHENY ENERGY, INC.
By: _________________________
Name:
Title:
[____________________________]
By: _________________________
Name:
Title:
SCHEDULE 6.11
-------------
DOCUMENTS AND AGREEMENTS
ASSIGNED BY ALLEGHENY TO SUPPLY HOLDCO
6.11-1
EXHIBIT A
---------
ALLEGHENY ENERGY, INC.
SECRETARY'S CERTIFICATE
A-1
EXHIBIT B
---------
SUPPLY HOLDCO
SECRETARY'S CERTIFICATE
B-1
EXHIBIT C
---------
INTELLECTUAL PROPERTY OWNERSHIP
AGREEMENT
C-1
EXHIBIT D
---------
EMPLOYEE MATTERS AGREEMENT
D-1
EXHIBIT E
---------
TAX INDEMNIFICATION AGREEMENT
E-1
EXHIBIT F
---------
TRANSITIONAL SERVICES AGREEMENT
F-1
EXHIBIT G
---------
CONFIDENTIAL DISCLOSURE AGREEMENT
G-1
EXHIBIT H
---------
INDEMNIFICATION AND INSURANCE
MATTERS AGREEMENT
H-1
