ASSET PURCHASE AGREEMENT
BY AND AMONG
NEW ENGLAND POWER COMPANY,
THE NARRAGANSETT ELECTRIC COMPANY
AND
USGEN ACQUISITION CORPORATION
Dated As Of August 5, 1997
ASSET PURCHASE AGREEMENT
-------------------------
ASSET PURCHASE AGREEMENT, dated as of August 5, 1997, by
and among New England Power Company, a Massachusetts corporation
("NEP"), The Narragansett Electric Company, a Rhode Island
corporation ("Narragansett," and together with NEP, the "Sellers"),
and USGen Acquisition Corporation, a Delaware corpoation (the
"Buyer").
WHEREAS, the Buyer desires to purchase, and the Sellers
desire to sell, the Fossil Assets and the Hydroelectric Assets
(each as defined herein and together, the "Purchased Assets") upon
the terms and conditions hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth,
and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the
following terms have the meanings specified in this Section 1.1(a).
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(2) "Allowance" means (i) an authorization by the
Administrator of the United States Environmental Protection Agency
under the Acid Rain Program to emit up to one ton of sulfur dioxide
during or after a specified calendar year; or (ii) an authorization
by the Massachusetts Department of Environmental Protection or the
Rhode Island Department of Environmental Management under the
respective state Nitrogen Oxides ("NOx") Budget Program authorizing
the emission of up to one ton of NOx during the ozone season, May
1 through September 1 of each year.
(3) "Ancillary Agreements" means the Continuing Site
Agreement, the PPA Transfer Agreement and the PSA Performance
Support Agreements.
(4) "▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale to be delivered at
the Closing, as the case may be, with respect to the Purchased
Assets which constitute personal property and which are to be
transferred at such Closing, both substantially in the form of
Exhibit A hereto.
(5) "▇▇▇▇▇▇▇ Point" means the electric generation facilities
known as the ▇▇▇▇▇▇▇ Point Station and located in Somerset,
Massachusetts.
(6) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which
banking institutions in Boston are authorized by law or other
governmental action to close.
(7) "Buyer Representatives" means the Buyer's accountants,
employees, counsel, environmental consultants, financial advisors
and other authorized representatives.
(8) "Capital Expenditures" means those capital expenditures
which are identified as capital expenditures with respect to the
projects identified on Schedule 7.1.
(9) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(10) [Intentionally omitted.]
(11) [Intentionally omitted.]
(12) "COBRA" means the Consolidated Omnibus Reconciliation Act
of 1985, as amended.
(13) "Code" means the Internal Revenue Code of 1986, as
amended.
(14) "Confidentiality Agreement" means the Confidentiality
Agreement, dated December 13, 1996, between ▇▇▇▇ and U.S.
Generating Company.
(15) "Continuing Site Agreement" means the Continuing
Site/Interconnection Agreement, dated on the date of this
Agreement, between NEP and the Buyer.
(16) "Easements" means, with respect to the Purchased Assets,
the reservations of easements to be included in the deeds of
conveyance with respect to such assets, substantially as set forth
in Schedule 5.14 hereto.
(17) "Emission Reduction Credits" means credits, in units that
are established by the environmental regulatory agency with
jurisdiction over the facility that has obtained the credits,
resulting from a reduction in the emissions of air pollutants from
an emitting source or facility (including, without limitation, and
to the extent allowable under applicable law, reductions from shut-
downs, control of emissions beyond that required by applicable law,
and fuel switching), that: (i) have been certified by the
Massachusetts Department of Environmental Protection as complying
with the law and regulations of the Commonwealth of Massachusetts
governing the establishment of such credits (including, without
limitation, that such emissions reductions are enforceable,
permanent, quantifiable, real and surplus); or (ii) have been
certified by any other applicable regulatory authority as complying
with the law and regulations governing the establishment of such
credits (including, without limitation, that such emissions
reductions are enforceable, permanent, quantifiable, real and
surplus). Emission Reduction Credits include certified air
emissions reductions, as described above, regardless as to whether
the regulatory agency certifying such reductions designates such
certified air emissions reductions by a name other than "emissions
reduction credits."
(18) "Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements,
activity and use limitations, conservation easements, deed
restrictions, encumbrances and charges of any kind.
(19) "Environmental Laws" means all Federal, state and local
laws, regulations, rules, ordinances, codes,
decrees, judgments, directives, or judicial or administrative
orders relating to pollution or protection of the environment,
natural resources or human health and safety, including, without
limitation, laws relating to Releases or threatened Releases of
Hazardous Substances (including, without limitation, ambient air,
surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, Release, transport or handling of
Hazardous Substances.
(20) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(21) "Estimated Adjustment Amount" means the Sellers' good
faith reasonable estimate of an Adjustment Amount for the Closing,
which estimate shall be provided to the Buyer no later than five
Business Days before the Closing.
(22) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(23) "Federal Power Act" means the Federal Power Act of 1935.
(24) "FERC" means the Federal Energy Regulatory Commission.
(25) "FIRPTA Affidavit" means the Foreign Investment in Real
Property Tax Act Certification and Affidavit substantially in the
form of Exhibit C hereto.
(26) "Fossil Assets" means the Fossil Facilities, the NERC
Stock and the NEPGen Support Operation Assets.
(27) "Fossil Facilities" means, subject to the Easements and
Section 2.2, all of the right, title and interest in, to and under
the real and personal property, tangible or intangible, owned by
the Sellers and constituting ▇▇▇▇▇▇▇ Point, Manchester Street and
Salem Harbor or used principally for generation purposes in
connection with ▇▇▇▇▇▇▇ Point, Manchester Street and Salem Harbor
including, but not limited to, the following assets owned by the
Sellers:
(i) the Real Estate (including all buildings,
structures and other improvements thereon) described on Schedule
5.14 as associated with ▇▇▇▇▇▇▇ Point, Manchester Street and
Salem Harbor (the "Fossil Facilities Real Property");
(ii) all inventories of fuels, supplies, materials
and critical spares located on or in transit to the Fossil
Facilities Real Property on the Closing Date;
(iii) the machinery, equipment, vehicles, furniture
and other personal property located on the Fossil Facilities
Real Property on the Closing Date, including, without
limitation, the items of personal property included in Schedule
1.1(a)(27)(iii) as being associated with any of ▇▇▇▇▇▇▇ Point,
Manchester Street and Salem Harbor, and all warranties against
manufacturers or vendors relating thereto, to the extent that
such warranties are freely transferable;
(iv) the contracts, agreements and personal
property leases listed on Schedules 5.16(a) and 7.10(b) and (c)
as being associated with any of ▇▇▇▇▇▇▇ Point, Manchester Street
and Salem Harbor and which are assignable;
(v) the Transferable Permits listed on Schedule
1.1(a)(70) as being associated with any of ▇▇▇▇▇▇▇ Point,
Manchester Street and Salem Harbor;
(vi) all books, operating records, operating,
safety and maintenance manuals, engineering design plans,
blueprints and as-built plans, specifications, procedures and
similar items of the Sellers relating specifically to the
aforementioned assets other than books of account;
(vii) Allowances, Emission Reduction Credits and
greenhouse gas reductions associated with (i) ▇▇▇▇▇▇▇ Point,
(ii) Manchester Street, (iii) Salem Harbor, or (iv) the former
electric generation facility known as South Street Station and
located in Providence, Rhode Island that have accrued prior to,
or that accrue on or after, the date of this Agreement,
including those
set forth on Schedule 1.1(a)(27)(vii); but excluding any
Allowances, Emission Reduction Credits and greenhouse gas
reductions associated with the diesel generators owned by
Nantucket Electric;
(viii) any assets purchased or to be purchased by
the Sellers pursuant to Section 7.4(e).
(28) [Intentionally omitted]
(29) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil or coal ash, 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; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar
meaning and regulatory effect; or (c) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated
by any applicable Environmental Law.
(30) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(31) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
(32) "Hydroelectric Assets" means, subject to the Easements
and Section 2.2, all of the right, title and interest in, to and
under the real and personal property, tangible or intangible, owned
by NEP and constituting the Bear Swamp Pumped Storage Station and
the fourteen other hydroelectric generating stations and associated
dams and reservoirs listed on Schedule 1.1(a)(32) as part of the
Hydroelectric Assets or used principally for generation purposes in
connection with such dams and reservoirs and which are located
within the applicable FERC project license boundary, including, but
not limited to, the following assets owned by NEP:
(i) the Real Estate (including all buildings,
structures and other improvements thereon) described on Schedule
5.14 as associated with the Hydroelectric Assets (the
"Hydroelectric Real Property");
(ii) inventories of supplies, materials and
critical spares located on or in transit to the Hydroelectric
Real Property on the Hydroelectric Assets Closing Date;
(iii) the machinery, equipment, vehicles, furniture
and other personal property located on the Hydroelectric Real
Property on the Closing Date, including, without limitation, the
items of personal property included in Schedule 1.1(a)(32) as
being associated with the Hydroelectric Assets, and all
warranties against manufacturers or vendors relating thereto, to
the extent that such warranties are freely transferable;
(iv) the contracts, agreements and personal
property leases listed on Schedules 5.16(a) and 7.10(b) and (c)
as being associated with the Hydroelectric Assets and which are
assignable;
(v) the Transferable Permits listed on Schedule
1.1(a)(70) as being associated with the Hydroelectric Assets;
(vi) all books, operating records, operating,
safety and maintenance manuals, engineering design plans,
blueprints and as-built plans, specifications, procedures and
similar items of NEP relating specifically to the aforementioned
assets other than books of account;
(vii) all other Purchased Assets, if any, not
conveyed to the Buyer at the Closing; and
(viii) any assets purchased or to be purchased by
the Sellers pursuant to Section 7.4(e).
(33) [Intentionally omitted]
(34) "Income Tax" means any federal, state, local or foreign
Tax (a) based upon, measured by or calculated with respect to net
income, profits or receipts (including, without limitation, capital
gains Taxes and minimum Taxes) or (b) based upon, measured by or
calculated with respect to multiple bases (including, without
limitation, corporate franchise taxes) if one or more of the bases
on which such Tax may be based, measured by or calculated with
respect to, is described in clause (a), in each case together with
any interest, penalties, or additions to such Tax.
(35) "Indentures" means (i) the General and Refunding Mortgage
Indenture and Deed of Trust, dated as of January 1, 1977, as
amended and supplemented, between NEP and State Street Bank and
Trust Company, as successor trustee to Bank of New England,
National Association (formerly New England Merchants National Bank)
and (ii) the First Mortgage Indenture and Deed of Trust, dated as
of September 1, 1944, as amended and supplemented, between
Narragansett and Rhode Island Hospital Trust Company.
(36) "Independent Accounting Firm" means Coopers & ▇▇▇▇▇▇▇ LLP
or such other independent accounting firm of national reputation
mutually appointed by the Sellers and the Buyer.
(37) "Instruments of Assumption" means the Instrument of
Assumption substantially in the form of Exhibit D-1 hereto relating
to the assumption by the Buyer of the liabilities and obligations
of the Sellers described therein and the Instrument of Assumption
substantially in the form of Exhibit D-2 hereto relating to the
assumption by the Buyer of the liabilities and obligations of the
Sellers and NEPSCO under the Main Table Agreements in each case, to
be delivered at the Closing.
(38) [Intentionally omitted]
(39) "Maintenance Expenditures" means those maintenance
expenditures which are identified as maintenance expenditures with
respect to the projects identified on Schedule 7.1.
(40) "Maintenance and Capital Expenditures Amount" means the
aggregate amount of all funds actually expended on, or for which
liabilities were accrued in accordance with generally accepted
accounting principles applied on a consistent basis with respect
to, Maintenance Expenditures and Capital Expenditures by the
Sellers, if any, during the period beginning on the date hereof and
ending on the Closing Date.
(41) "Manchester Street" means the electric generation
facilities known as the Manchester Street Station and located in
Providence, Rhode Island.
(42) "Material Adverse Effect" means any change or changes in,
or effect on, the Purchased Assets after the date of this Agreement
that is, or in the aggregate are, materially adverse to the
business, assets, operations or condition (financial or otherwise)
of the Purchased Assets, taken as a whole, other than (i) any
change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for
electric power, (ii) any change or effect resulting from changes in
the international, national, regional or local markets for any fuel
used at the Purchased Assets, (iii) any change or effect resulting
from changes in the North American, national, regional or local
electric transmission systems and (iv) any materially adverse
change in or effect on the Purchased Assets which is cured
(including by the payment of money) by the Sellers before the
Termination Date; provided, however, notwithstanding the foregoing,
any change or effect resulting from action by a legislative,
governmental or regulatory authority, other than any change or
effect resulting from the occurrence, non-occurrence, acceleration
or delay of Retail Access (as defined in Section 3.4 hereof) which
the Parties agree is fully addressed by the Additional Payment
Amount mechanism provided in Section 3.4 hereof, shall be included
in this definition of Material Adverse Effect. The parties hereto
also agree that for purposes of measuring any Material Adverse
Effect (i) with respect to the ▇▇▇▇▇▇▇ Point NPDES permit, the
change or effect shall be compared to the permit conditions
prevailing under the current NPDES permit and the Memorandum of
Agreement II, dated April 3, 1997, between and among the ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Environmental Protection Agency, the
Massachusetts Department of Environmental Protection, the
Massachusetts Executive Office of Environmental Affairs, the Rhode
Island Department of Environmental Management and NEP relating to
▇▇▇▇▇▇▇ Point whether or not the current NPDES permit is extended
or expires and (ii) any fact, circumstance or event which the
Sellers are required to disclose with respect to the
representations and warranties herein which are not disclosed
within this Agreement or the disclosure schedules attached hereto
shall be treated as if such facts constituted a change or effect
after the date of this Agreement.
(43) "MDPU" means the Massachusetts Department of Public
Utilities.
(44) "▇▇▇▇" means New England Electric System. The name "New
England Electric System" means the trustee or trustees for the time
being (as trustee or trustees but not personally) under an
Agreement and Declaration of Trust dated January 2, 1926, as
amended, which is hereby referred to, and a copy of which, as
amended, has been filed with the Secretary of The Commonwealth of
Massachusetts. Any agreement, obligation, or liability made,
entered into, or incurred by or on behalf of New England Electric
System binds only its trust estate, and no shareholder, director,
trustee, officer, or agent thereof assumes or shall be held to any
liability therefor.
(45) "NEPGen Support Operation Assets" means (i) the
machinery, personal property, software and other equipment listed
or referred to in Schedule 1.1(a)(45), and all warranties against
manufacturers or vendors relating thereto, to the extent that such
warranties are freely transferable, (ii) the contracts, agreements
and personal property leases listed on Schedule 5.16(a) as being
associated with the NEPGen Support Operation Assets and which are
assignable, (iii) all books, operating records, operating, safety
and maintenance manuals, engineering and design plans,
specifications, procedures and similar items of the Sellers
relating specifically to the aforementioned assets or, to the
extent required by law, to personnel employed at the aforementioned
assets who will become employees of the Buyer other than, in all
cases, books of account, (iv) any assets purchased or to be
purchased by the Sellers pursuant to Section 7.4(e) and (v) the
Transferring Employee Records.
(46) "NERC" means Narragansett Energy Resources Company, a
Rhode Island corporation.
(47) "NERC Note Agreements" means the Note Agreements, dated
as of November 30, 1995, between (i) NERC and Connecticut General
Life Insurance Company, (ii) NERC and Cigna Property and Casualty
Insurance Company, (iii) NERC and Insurance Company of North
America and (iv) NERC and Life Insurance Company of North America.
(48) "NERC Stock" means all of the issued and outstanding
common stock, par value $1.00 per share, of NERC.
(49) "NHPUC" means the New Hampshire Public Utility
Commission.
(50) "NPDES" means the National Pollutant Discharge
Elimination System.
(51) "Permitted Encumbrances" means (i) those Encumbrances set
forth in Schedule 1.1(a)(51); (ii) the Easements; (iii) those
exceptions to title to the Purchased Assets listed in Schedule 5.8;
(iv) 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; (v) with respect to any date before the
Closing Date, Encumbrances created by the Indentures or in
connection with the NERC Note Agreements; (vi) statutory liens for
current taxes or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate
proceedings; (vii) mechanics', carriers', workers', repairers' and
other similar liens arising or incurred in the ordinary course of
business relating to obligations as to which there is no default on
the part of the Sellers or the validity of which are being
contested in good faith by appropriate proceedings; (viii) zoning,
entitlement, conservation restriction and other land use and
environmental regulations by governmental authorities; and (ix)
such other liens, imperfections in
or failure of title, charges, easements, restrictions and
encumbrances which do not materially detract from the value of the
Purchased Assets as currently used or materially interfere with the
present use of the Purchased Assets and neither secure
indebtedness, nor individually or in the aggregate create a
Material Adverse Effect.
(52) "Person" means any individual, a partnership, a limited
liability company, a joint venture, a corporation, a trust, an
unincorporated organization and a governmental entity or any
department or agency thereof.
(53) "PPAs" means the Power Purchase Agreements described in
the PPA Transfer Agreement.
(54) "PPA Transfer Agreement" means the Amended and Restated
PPA Transfer Agreement, dated as of October 29, 1997, between NEP
and USGen New England, Inc. (formerly known as USGen Acquisition
Corporation) and the OSP PPA Transfer Agreement, dated as of
October 29, 1997, between NEP and USGen New England, Inc. (formerly
known as USGen Acquisition Corporation).
(55) "PSA Performance Support Agreements" mean the PSA
Performance Support Agreements, dated on the date of this
Agreement, each between NEP and the Buyer.
(56) "Release" means release, spill, leak, discharge, dispose
of, pump, pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to escape
into or through the environment.
(57) "RIPUC" means the Rhode Island Public Utilities
Commission.
(58) "Salem Harbor" means the electric generation facilities
known as the Salem Harbor Station and located in Salem,
Massachusetts.
(59) "SEC" means the Securities and Exchange Commission.
(60) "Securities Act" means the Securities Act of 1933, as
amended.
(61) "Sellers' Agreements" means those agreements listed on
Schedule 5.16(a) and the Main Table Agreements and BUW/CBAs (as
defined in Schedule 7.10(c)).
(62) "Settlement Agreements" means any agreement or agreements
that have been approved by the MDPU in Docket No. 96-25 and by the
FERC in Docket Nos. ER97-678-000 and ER97-680-000, together with
all conditions, terms or modifications imposed by those agencies.
Settlement Agreements shall also include all agreements and orders
between NEP and Granite State Electric Company or other non-
Affiliate customers whether or not served under NEP's FERC Electric
Tariff No. 1 for all requirements service.
(63) "Specimen Title Policy" means for each of the Purchased
Assets constituting Real Estate, an ALTA 1987 form of owner's
and/or mortgagee title insurance policy jointly issued by Lawyers
Title Insurance Corporation and Fidelity National Title Insurance
Company of New York containing endorsements (including the standard
co- insurance endorsement substantially in the form of CLTA 114.2)
and other coverages and exceptions, as more particularly set forth
in the pro forma title policies attached hereto in Schedule 5.14.
(64) "Standard Offer Bid" means a bid submitted by or on
behalf of NEP into any request for proposals issued by certain
wholesale purchasers of electricity to supply their customers with
Standard Offer Service.
(65) "Standard Offer Service" means the electric service, if
any, required to be provided by a retail electric distribution
company to its retail customers who do not elect to purchase
electricity from an alternative supplier in the market.
(66) "Subsidiary" when used in reference to any other Person
means any entity of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors or other
Persons performing similar functions of such entity are owned
directly or indirectly by such other Person.
(67) "Tax Affiliate" means any entity that is a member of an
affiliated group of corporations (within the meaning of Section
1504(a) of the Code) filing a consolidated U.S. federal Income Tax
Return, and a group
of corporations filing a consolidated or combined Tax Return for
state, local or foreign purposes (each a "Consolidated Group"), if
NERC could be held liable for the Taxes of such entity or
Consolidated Group.
(68) "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.
(69) "Tax Return" means any return, report, information return
or other document (including any related or supporting information)
required to be supplied to any authority with respect to Taxes.
(70) "Transferable Permits" means those Permits and
Environmental Permits which are transferable by the Sellers to the
Buyer and are set forth in Schedule 1.1(a)(70).
(71) "Transferring Employee Records" means all personnel files
related to the Sellers' personnel who will become employees of the
Buyer to the extent such files pertain to (i) skill and development
training and resumes, (ii) seniority histories, (iii) salary and
benefit information, (iv) Occupational, Safety and Health
Administration medical reports, and (v) active medical restriction
forms.
(72) "Transition Agreements" means the Amended and Restated
Wholesale Standard Offer Service Agreements, the NECO Wholesale
Standard Offer Service Agreement II and the MECO Wholesale Standard
Offer Service Agreement II, dated as of October 29, 1997, between
USGen New England, Inc. (formerly known as USGen Acquisition
Corporation) on the one hand and The Narragansett Electric Company,
or Massachusetts Electric Company and Nantucket Electric Company on
the other hand.
(73) "VTPSB" means the Vermont Public Service Board.
(74) "WARN Act" means the Federal Worker Adjustment Retraining
and Notification Act of 1988.
(75) "Wholesale Sales Agreement" means the Wholesale Sales
Agreement, dated on the date of this Agreement, between the Buyer
and NEP.
(b) Each of the following terms has the meaning
specified in the Section set forth opposite such term:
Term Section
---- -------
Additional Payment Amount 3.4(a)
Adjustment Amount 3.2(a)
Adjustment Statement 3.2(a)
Applicable Contracts 8.2(g)(3)
Assumed Obligations 2.3(c)
Audits 5.20(b)(v)
Benefit Plans 5.13(a)
BUW 7.10(a)
BUW CBAs 7.10(c)
BUW Employees 7.10(c)
BUW MOU 7.10(c)
Buyer Benefit Plans 7.10(f)
Buyer Required Regulatory Approvals 6.3(b)
Buyer Window 7.10(a)
Closing 4.1
Closing Date 4.1
Direct Claim 10.2(c)
Election 7.8(d)(1)(i)
Environmental Permits 5.11(a)
ERISA Affiliate 5.13(a)
ERISA Affiliate Plans 5.13(a)
Estimated Purchase Price 4.2(a)
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1(c)
Fossil Assets Conditions 4.1(a)
Fossil Employees 7.10(a)
Hydroelectric Assets Conditions 4.1(b)
Hydroelectric Employees 7.10(a)
IBEW 7.10(a)
IBEW/UWUA Employees 7.10(b)
IBEW/UWUA MOU 7.10(b)
Indemnifiable Loss 10.1(a)
Local Working Conditions 7.10(b)
Indemnifying Party 10.1(d)
Indemnitee 10.1(c)
Independent Appraiser 3.3(a)
Inventory Adjustment Amount 3.2(a)
Inventory Survey 3.2(a)
Local Working Conditions 7.10(b)
Main Table Agreements 7.10(b)
Modified ADSP 7.8(d)(1)(ii)
▇▇▇▇ Intercompany Tax Allocation
Agreement 7.8(d)(2)(ii)
NEPGen Employee 7.10(a)
NEPSCO 8.2(f)
NEPGen Non-Union Employees 7.10(d)
NRC 5.3(b)
Observers 7.1(d)(i)
OSP 5.1(a)
OSP II 5.1(a)
Permits 5.18
Plans 7.10(a)
Prior Welfare Plans 7.10(e)
Purchased Assets Recitals
Purchase Price 3.1
Real Estate 5.14
Replacement Welfare Plans 7.10(e)
Sellers Balance Sheets 5.5
Sellers Required Regulatory
Approvals 5.3(b)
Sellers' Tax Returns 7.8(d)(2)(ii)
Severance Amount 3.1
Straddle Period 7.8(d)(2)(i)
Tax Contest 7.8(d)(4)(i)
Termination Date 11.1(b)(i)
Third Party Claim 10.2(a)
Transition Committee 7.1(c)
UWUA 7.10(a)
ARTICLE II
PURCHASE AND SALE
------------------
2.1. The Sale. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the
Closing the Sellers will sell, assign, convey, transfer and deliver
to the Buyer, and the Buyer will purchase and acquire from Seller,
free and clear of all Encumbrances (except for Permitted
Encumbrances) all of the Sellers' right, title and interest in, to
and under the real and personal property, tangible or intangible,
owned by the Sellers and constituting the Purchased Assets.
2.2. Excluded Assets. Notwithstanding any provision herein
to the contrary, the Purchased Assets shall not include the
following assets of the Sellers (herein referred to as the
"Excluded Assets"):
(a) all cash, cash equivalents, bank deposits, accounts
receivable, and any income, sales, payroll or other tax
receivables;
(b) certificates of deposit, shares of stock (other than the
NERC Stock), securities, bonds, debentures, evidences of
indebtedness, interests in joint ventures, partnerships, limited
liability companies and other entities;
(c) the names "New England Electric System," "New England
Power Company," "New England Power," "▇▇▇▇," "NEP," the "▇▇▇▇
companies," "The Narragansett Electric Company" or any related or
similar trade names, trademarks, service marks or logos;
(d) the transmission, distribution, substation and
communication facilities and related support equipment described or
referred to in Schedule 2.2(d) or described or referred to as an
"Excluded Asset" or an asset of "TCo" or "Seller" in the
"Separation Document" (as defined in the Continuing Site Agreement)
or any document or exhibit referred to or incorporated by reference
in the Separation Document or which are otherwise indicated in any
such document as remaining with the Sellers or any of their
Affiliates after the Closing;
(e) any refund or credit (i) related to real or personal
property Taxes paid prior to the Closing Date in respect of the
Purchased Assets, whether such refund is received as a payment or
as a credit against future real or personal property Taxes payable,
or (ii) arising under any PPA that is subject to cost of service
regulation or Sellers' Agreement and relating to a period before
the Closing Date;
(f) all personnel records other than Transferring Employee
Records or other records, the disclosure of which is required by
law, legal process or subpoena; and
(g) the Allowances and/or Emission Reduction Credits listed
on Schedule 2.2(g).
2.3. Assumed Obligations. (a) On the Closing Date, the
Buyer shall deliver to the Sellers the Instruments of Assumption
pursuant to which the Buyer shall assume and agree to discharge all
of the liabilities and obligations of the Sellers, direct or
indirect, known or unknown, absolute or contingent, which relate to
the Purchased Assets, other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective
conditions thereof, including, without limitation, the following
liabilities and obligations:
(i) all liabilities and obligations of the
Sellers under (a) the Sellers' Agreements, the real property
leases, and the Transferable Permits associated with the
Purchased Assets in accordance with the terms thereof, (b) the
contracts, leases and other agreements entered into by the
Sellers with respect to the Purchased Assets which would be
required to be disclosed on Schedule 5.16(a) but for the
exception provided in clause (iii) of Section 5.16(a) of this
Agreement, in accordance with the terms thereof, and (c) the
contracts, leases and other agreements entered into by the
Sellers with respect to the Purchased Assets after the date
hereof consistent with the terms of this Agreement (including,
without limitation, agreements with respect to liabilities for
real or personal property Taxes on any of the
Purchased Assets or, to the extent such agreements do not
allocate such Tax liability between the Purchased Assets and the
Excluded Assets, all Tax liability under such agreements,
subject to the covenants of Seller pursuant to Section 7.8(f)
hereof, entered into by the Sellers and any local government);
except in each case, to the extent such liabilities and
obligations, but for a breach or default by the Sellers, would
have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such
breach or default or out of any event which after the giving of
notice would constitute a default;
(ii) all liabilities and obligations associated
with the Purchased Assets in respect of Taxes for which the
Buyer is liable pursuant to Section 3.5 or 7.8(a);
(iii) any liabilities and obligations associated
with the Purchased Assets for which the Buyer has indemnified
the Sellers pursuant to Section 10.1;
(iv) all liabilities and obligations with respect
to the NEPGen Employees to be employed at the Purchased Assets
after the Closing Date for which the Buyer is responsible
pursuant to Section 7.10;
(v) any liability, obligation or responsibility
under or related to former, current or future Environmental Laws
or the common law, whether such liability or 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 Law, prior to the Closing
Date, with respect to the ownership or operation of the
Purchased Assets; (b) loss of life, injury to persons or
property or damage to natural resources (whether or not such
loss, injury or damage arose or was made manifest before the
Closing Date or arises or becomes manifest after the Closing
Date), caused (or allegedly caused) by the presence or Release
of Hazardous Substances at, on, in, under, adjacent to or
migrating from the Purchased Assets prior to the Closing Date,
including, but not limited to, Hazardous
Substances contained in building materials at the Purchased
Assets or in the soil, surface water, sediments, groundwater,
landfill cells, or in other environmental media at or adjacent
to the Purchased Assets; and (c) the investigation and/or
remediation (whether or not such investigation or remediation
commenced before the Closing Date or commences after the Closing
Date) of Hazardous Substances that are present or have been
Released prior to the Closing Date at, on, in, under, adjacent
to or migrating from the Purchased Assets, including, but not
limited to, Hazardous Substances contained in building materials
at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased Assets;
provided, as to all of the above, that nothing set forth in this
subsection 2.3(a) shall require the Buyer to assume any
liabilities that are expressly excluded in Section 2.4; provided
further, however that nothing set forth in this subsection
2.3(a) shall require the Buyer to assume any obligation for
payment of any fines or penalties imposed by a governmental
agency to the extent such obligations arise out of or relate to
acts or omissions of the Sellers that constitute criminal
violations;
(vi) any liability, obligation or responsibility
under or related to former, current or future Environmental Laws
or the common law, whether such liability or 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 Law, on or after the
Closing Date, with respect to the ownership or operation of the
Purchased Assets; (b) compliance with applicable Environmental
Laws on or after the Closing Date with respect to the ownership
or operation of the Purchased Assets; (c) loss of life, injury
to persons or property or damage to natural resources caused (or
allegedly caused) by the presence or Release of Hazardous
Substances at, on, in, under, adjacent to or migrating from the
Purchased Assets on or after the Closing Date, including, but
not limited to, Hazardous Substances contained in building
materials at or adjacent to the Purchased Assets or in the soil,
surface water, sediments, groundwater, landfill cells, or in
other environmental media at the Purchased Assets; (d) loss of
life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the off-site disposal,
storage, transportation, discharge, Release, recycling, or the
arrangement for such activities, of Hazardous Substances, on or
after the Closing Date, in connection with the ownership or
operation of the Purchased Assets; (e) the investigation and/or
remediation of Hazardous Substances that are present or have
been released on or after the Closing Date at, on, in, under,
adjacent to or migrating from the Purchased Assets, including,
but not limited to, Hazardous Substances contained in building
materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells or in other environmental
media at or adjacent to the Purchased Assets; and (f) the
investigation and/or remediation of Hazardous Substances that
are disposed, stored, transported, discharged, Released,
recycled, or the arrangement of such activities, on or after the
Closing Date, in connection with the ownership or operation of
the Purchased Assets, at any off-site location; provided, that
nothing set forth in this subsection shall require the Buyer to
assume any liabilities that are expressly excluded in Section
2.4;
(vii) all liabilities and obligations of the
Sellers, including, but not limited to air emissions
commitments, associated with the Purchased Assets under the
Settlement Agreements;
(viii) all liabilities and obligations of the
Sellers with respect to the Purchased Assets under the
agreements or consent orders set forth on Schedule 5.11;
(ix) all liabilities incurred by the Sellers with
respect to Maintenance Expenditures and Capital Expenditures
associated with the Purchased Assets but only to the extent such
liabilities were not included in the Maintenance and Capital
Expenditures Amount;
and with respect to the Purchased Assets, (a) any Tax that may
be imposed by any state or local government on the ownership,
sale, operation or use of the Purchased Assets on or after the
Closing Date; except for any Income Taxes attributable to income
(including proceeds representing the Purchase Price or proceeds
of other asset sales) received by the Sellers and (b) real or
personal property Taxes to the extent assumed by the Buyer
pursuant to Section 3.5.
(b) All of the foregoing liabilities and obligations to be
assumed by the Buyer under Section 2.3(a) (excluding any Excluded
Liabilities) are referred to herein as the "Assumed Obligations."
It is understood and agreed that nothing in this Section 2.3 shall
constitute a waiver or release of any claims arising out of the
contractual relationships between the Sellers and the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following
liabilities or obligations:
(i) any liabilities or obligations of the Sellers
in respect of any Excluded Assets or other assets of the Sellers
which are not Purchased Assets;
(ii) any liabilities or obligations in respect of
Taxes attributable to the Purchased Assets for taxable periods
ending on or before the Closing Date, except for Taxes for which
the Buyer is liable pursuant to Section 3.5 or Section 7.8(a);
(iii) any liabilities, obligations, or
responsibilities relating to the disposal, storage,
transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Sellers, of Hazardous
Substances that were generated at the Fossil Assets, at any off-
site location, where the disposal, storage, transportation,
discharge, Release, recycling or the arrangement for such
activities at said off- site location occurred prior to the
Closing Date, provided that for purposes of this Section, "off-
site location" does not include any location to which Hazardous
Substances disposed of or Released at the Fossil Assets have
migrated;
(iv) any liabilities, obligations, or
responsibilities relating to the disposal, storage,
transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Sellers, of Hazardous
Substances that were generated at the Hydroelectric Assets, at
any off-site location, where the disposal, storage,
transportation, discharge, Release, recycling or the arrangement
for such activities at said off-site location occurred prior to
the Closing Date, provided that for purposes of this Section,
"off-site location" does not include any location to which
Hazardous Substances disposed of or Released at the
Hydroelectric Assets have migrated;
(v) any liabilities, obligations or
responsibilities relating to (a) the property, equipment or
machinery within the switchyards for which the Sellers will
retain an Easement, (b) the ▇▇▇▇▇▇▇ Point step-up transformers,
including, without limitation, liabilities related to the
disposal, discharge or Release of Hazardous Substances, whether
such liabilities, obligations or responsibilities arose from the
ownership or operation of said property, equipment or machinery
or the ▇▇▇▇▇▇▇ Point step-up transformers prior to or after the
Closing Date unless caused by the Buyer's operations or
equipment, (c) the transmission lines delineated in the
Easements or (d) any Seller's operations on, or usage of, the
Easements, including, without limitation, liabilities,
obligations or responsibilities arising as a result of or in
connection with (1) any violation or alleged violation of
Environmental Law and (2) loss of life, injury to persons or
property or damage to natural resources, except to the extent
caused by Buyer;
(vi) any liabilities or obligations required to be
accrued by the Sellers in accordance with generally accepted
accounting principles and the FERC Uniform System of Accounts
(A) on or before the Closing Date with respect to liabilities
related to the Purchased Assets other than any liability assumed
by Buyer under Section 2.3(a)(v) or (vi);
(vii) any liabilities or obligations relating to
any personal injury, discrimination, wrongful discharge, unfair
labor practice or similar claim or cause of action filed with or
pending before any court or administrative agency on the Closing
Date, with respect to liabilities principally relating to the
Fossil Assets or with respect to liabilities principally
relating to the Hydroelectric Assets, or any such potential
claim or incident set forth in Schedule 2.4;
(viii) any fines or penalties imposed by a
governmental agency resulting from (A) an investigation or
proceeding pending on or prior to the Closing Date or (B)
illegal acts, willful misconduct or gross negligence of the
Sellers prior to the Closing Date;
(ix) any payment obligations of the Sellers for
goods delivered or services rendered prior to the Closing;
(x) any liabilities or obligations resulting from
the Sellers' gross negligence or willful misconduct other than
any liability assumed by the Buyer under Section 2.3(a)(v) or
(vi) hereof;
(xi) any liabilities or obligations imposed upon,
assumed or retained by the Sellers or any of their Affiliates
pursuant to the Continuing Site Agreement or any other Ancillary
Agreement;
(xii) any liabilities, obligations or
responsibilities relating to any Benefit Plan or any "employee
pension benefit plan" (as defined in Section 3(2) of ERISA)
maintained by any of the Sellers and any trade or business
(whether or not incorporated) which are or have ever been under
common control, or which are or have ever been treated as a
single employer, with any of the Sellers under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate") or to which any
of the Sellers and any ERISA Affiliate contributed thereunder
(the "ERISA Affiliate Plans"), including any multiemployer plan,
maintained by, contributed to, or obligated to
contribute to, at any time, by the Sellers or any ERISA
Affiliate, 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 non-compliance with the
notice and benefit continuation requirements of COBRA; (D) with
respect to any non-compliance with ERISA or any other applicable
laws; or (E) with respect to any suit, proceeding or claim which
is brought against the Buyer, any Benefit Plan, ERISA Affiliate
Plan, any fiduciary or former fiduciary of any such Benefit Plan
or ERISA Affiliate Plan; and
(xiii) any liabilities, obligations or
responsibilities relating to the employment or termination of
employment, including a constructive termination, by the Sellers
of any individual (including, but not limited to, any employee
of the Sellers) attributable to any actions or inactions by the
Sellers prior to the Closing Date other than such actions or
inactions taken at the direction of the Buyer.
All such liabilities and obligations not being assumed
pursuant to Section 2.4 are herein called the "Excluded
Liabilities."
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased
Assets shall be an amount equal to the sum of (a) $1,365,000,000,
(b) the Adjustment Amount, (c) an amount (the "Severance Amount")
equal to $85,000,000 relating to the costs of the Sellers for
voluntary early retirements and pre-Closing employee severance
packages, (d) any amounts paid pursuant to Section 7.4(e) hereof
and (e) any amount payable at the Closing pursuant to Section
4.2(c)(i) or thereafter pursuant to Section 4.2(c)(ii) hereof (the
"Purchase Price").
3.2. Purchase Price Adjustment. (a) Within 30 days after the
Closing, the Sellers shall prepare and deliver to the Buyer a
statement (each, an "Adjustment
Statement") which reflects (i) the net book value, as reflected on
the books of the Sellers as of the Closing Date of all fuel
inventory (FERC account no. 151) (less, in the case of fuel
inventory, any amount carried on NEP's books in respect of losses
incurred by New England Energy Incorporated) and stores inventory
(FERC account no. 154) used at or in connection with either the
Fossil Assets or the Hydroelectric Assets, as the case may be (the
"Inventory Adjustment Amount"), and (ii) the Maintenance and
Capital Expenditures Amount applicable to the Fossil Assets or the
Hydroelectric Assets, 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 within five days prior to the Closing Date
consistent with current NEP inventory procedures (the "Inventory
Survey"). The Sellers will permit an employee, or representative,
of the Buyer to observe the Inventory Survey. Each Adjustment
Statement shall be prepared using the same generally accepted
accounting principles, policies and methods as the Sellers have
historically used in connection with the calculation of the items
reflected on such Adjustment Statement. The Buyer agrees to
cooperate with the Sellers in connection with the preparation of
each Adjustment Statement and related information, and shall
provide to the Sellers such books, records and information as may
be reasonably requested from time to time.
(b) The Buyer may dispute an Inventory Adjustment Amount or
a Maintenance and Capital Expenditures Amount; provided, however,
that the Buyer shall notify the Sellers in writing of the disputed
amount, and the basis of such dispute, within ten (10) Business
Days of the Buyer's receipt of the applicable Adjustment Statement.
In the event of a dispute with respect to any part of an Adjustment
Amount, the Buyer and the Sellers 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 the
Buyer and the Sellers are unable to reach a resolution of such
differences within 30 days of receipt of the Buyers' written notice
of dispute to the Sellers, the Buyer and the Sellers 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 allocated between the Buyer and the Sellers so that
the Buyer's share of such fees and disbursements shall be in the
same proportion that the aggregate amount of such remaining
disputed amounts so submitted by the Buyer to the Independent
Accounting Firm that is unsuccessfully disputed by the Buyer (as
finally determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm.
(c) Within ten (10) Business Days after the Buyer's receipt
of an Adjustment Statement, the Buyer shall pay all undisputed
amounts, or if there is a dispute with respect to any amount on
such Adjustment Statement within five (5) Business Days after the
final determination of any amounts on such Adjustment Statement,
the Buyer shall pay to NEP on behalf of the Sellers 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
the Sellers will pay to the Buyer the amount by which such amount
is less than zero. Any amount paid under this Section 3.2(c) shall
be paid with interest for the period commencing on the Closing Date
through the date of payment, calculated at the prime rate of the
Bank of Boston in effect on the Closing Date, and in cash by
federal or other wire transfer of immediately available funds.
3.3. Allocation of Purchase Price. (a) The Buyer and the
Sellers shall use their good faith best efforts to agree upon an
allocation among the Purchased Assets of the sum of the Purchase
Price and the Assumed Obligations consistent with Section 1060 of
the Code and the Treasury Regulations thereunder within 180 days of
the date of this Agreement but in no event less than 30 days prior
to
the Closing. The Buyer and the Sellers may jointly agree to obtain
the services of an independent engineer or appraiser (the
"Independent Appraiser") to assist the parties in determining the
fair value of the Purchased Assets for purposes of such allocation.
If such an appraisal is made, both the Buyer and the Sellers agree
to accept the Independent Appraiser's determination of the fair
value of the Purchased Assets. The parties shall jointly select
the Independent Appraiser. The cost of the appraisal shall be
borne equally by the Buyer and the Sellers. Each of the Buyer and
the Sellers agree to file Internal Revenue Service Form 8594, and
all federal, state, local and foreign Tax Returns, in accordance
with such agreed allocation. Each of the Buyer and the Sellers
shall report the transactions contemplated by the Agreement for
federal Income Tax and all other tax purposes in a manner
consistent with the allocation determined pursuant to this Section
3.3. Each of the Buyer and the Sellers agrees to provide the other
promptly with any other information required to complete Form 8594.
Each of the Buyer and the Sellers shall notify and provide the
other with reasonable assistance in the event of an examination,
audit or other proceeding regarding the agreed upon allocation of
the Purchase Price.
(b) With respect to the sale of the NERC Stock, the Buyer
and the Sellers shall allocate that portion of the Purchase Price
which is attributable to the NERC Stock in accordance with the
Election.
3.4. Additional Payment Amount.
(a) The Buyer shall pay the Seller an additional purchase
price of $225,000,000 (the "Additional Payment Amount") as adjusted
in the manner described below:
(i) if the Retail Choice Date (as defined below)
occurs after the later of the Closing or January 1, 1999 and
prior to January 1, 2000, the Additional Payment Amount shall be
reduced by $75,000,000 multiplied by (x) the number of days in
the calendar year 1999 before the Retail Choice Date divided by
(y) 365;
(ii) if the Retail Choice Date occurs on or after
January 1, 2000 and prior to January 1, 2003, the
Additional Payment Amount shall be reduced by (A) $75,000,000
plus (B) $50,000,000 multiplied by (x) the number of days from
January 1, 2000 to the Retail Choice Date divided by (y) 365.
(iii) if the Retail Choice Date occurs on or after
January 1, 2003, the Additional Payment Amount shall be zero.
(b) The "Retail Choice Date" shall be defined as the date on
which Retail Access (as defined below) is first available to either
(i) customers representing 89% of the 1995 kilowatthour sales of
investor-owned utilities in Massachusetts or (ii) customers
(including those of Massachusetts Electric Company) representing
50% of the 1995 kilowatthour sales of utilities in New England.
"Retail Access" shall mean the ability of retail electric customers
to purchase electric power directly from power generators, power
marketers, or any other entities at prices not subject to
regulation.
3.5. Proration. (a) The Buyer and the Sellers agree that all
of the items normally prorated, including those listed below,
relating to the business and operation of the Purchased Assets will
be prorated as of the Closing Date, with the Sellers liable to the
extent such items relate to any time period through the Closing
Date, and the Buyer liable to the extent such items relate to
periods subsequent to the Closing Date:
(i) personal property, real estate,
occupancy, sewerage and water Taxes, assessments and other
charges, if any, on or with respect to the business and
operation of the Purchased Assets;
(ii) rent, Taxes and all other items payable
by or to the Sellers under any of the PPAs that are subject to
cost of service regulation and under any of the Sellers'
Agreements assigned to and assumed by the Buyer hereunder which
are associated with the Purchased Assets;
(iii) any permit, license, registration,
compliance assurance fees or other fees with respect to any
Transferable Permit associated with the Purchased Assets;
(iv) sewer rents and charges for water,
telephone, electricity and other utilities; and
(v) rent under any leases of real or
personal property included in the Purchased Assets, including
the leases described in Schedule 5.9.
(b) In connection with the prorations referred to in (a)
above, in the event that actual figures are not available at the
Closing Date, the proration shall be based upon the actual Taxes or
fees for the preceding year (or appropriate period) for which
actual Taxes or fees are available and such Taxes or fees shall be
reprorated upon request of either the Sellers, on the one hand, or
the Buyer, on the other hand, made within sixty (60) days of the
date that the actual amounts become available. The Sellers and the
Buyer 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
3.5.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. (a) Upon the terms and
subject to the satisfaction of the conditions contained in Article
VIII of this Agreement (the "Fossil Assets Conditions") and the
conditions contained in Article IX of this Agreement (the
"Hydroelectric Assets Conditions"), the closing of the sale of the
Purchased Assets contemplated by this Agreement (the "Closing")
will take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00
A.M. (local time) on such date as the parties may agree which date
is as soon as practicable, but no later than fifteen Business Days,
following the date on which all of the Hydroelectric Assets
Conditions and the Fossil Assets Conditions have been satisfied or
waived; or at such other place or time as the parties may agree.
The date and time at which the Closing actually occurs is
hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. (a) Upon the terms and
subject to the satisfaction of the conditions contained in this
Agreement, in consideration of the aforesaid sale, assignment,
conveyance, transfer and delivery of the Purchased Assets, the
Buyer will pay or cause to be paid to NEP on behalf of the Sellers
at the Closing an amount (the "Estimated Purchase Price") in United
States dollars equal to the sum of (i) $1,365,000,000, (ii) the
Estimated Adjustment Amount for the Closing, (iii) the Severance
Amount, (iv) any amounts expended by the Sellers pursuant to
Section 7.4(e) hereof and (vi) any amounts payable under Section
4.2(c) hereof, by wire transfer of immediately available funds or
by such other means as are agreed upon by the Sellers and the
Buyer; and
(b) [intentionally left blank]
(c) Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, in consideration of the
aforesaid sale, assignment, conveyance, transfer and delivery of
the Purchased Assets, the Buyer will pay or cause to be paid to NEP
on behalf of the Sellers, the Additional Payment Amount, as set
forth in Section 3.4 hereof:
(i) if, prior to the Closing Date, either (A) the
Retail Choice Date shall have occurred and legislation
authorizing Retail Access shall have been enacted in
Massachusetts or (B) legislation has been enacted in
Massachusetts which provides for the Retail Choice Date to occur
on or prior to January 1, 1999, then the Additional Payment
Amount shall be paid on the Closing Date; and
(ii) if the conditions required in subsection 4.2
(c) (i) for the payment of the Additional Payment Amount were
not met on the Closing Date, then such payment will be made in
United States dollars by wire transfer of immediately available
funds or by such other means are agreed upon by the Sellers and
the Buyer, within five (5) Business Days of the delivery of a
certificate executed by duly authorized officers of the Sellers,
certifying that the Retail Choice Date has occurred and either
(A) legislation authorizing
Retail Access has been enacted in Massachusetts and the
requirements for the Retail Choice Date shall have been met
continuously from such date through the date of enactment of
such legislation or (B) the requirements for the Retail Choice
Date have been in continuous effect for at least two years from
the Retail Choice Date and a material portion of the customers
enjoying Retail Access are not participants in pilot programs.
If payment of the Additional Payment Amount is made after the
later of the Retail Choice Date or the Closing Date, the Buyer
will also pay the Seller, concurrent with the payment of the
Additional Payment Amount, an interest payment for the period
elapsed since the later of the Retail Choice Date and the
Closing, on the amount of the Additional Payment Amount, at an
annual interest rate equal to the sum of the yield (i) reported
on page PX1 of the Bloomberg Financial Market Services Screen
(or, if not available, any other nationally recognized trading
screen reporting on-line intraday trading in the United States
government Securities) at 4:00 p.m. (New York time) three
business days prior to the date on which payment of the
Additional Payment Amount is made, for the off the run Treasury
▇▇▇▇ or Note with a maturity equivalent to the length of time
since the later of the Retail Choice Date and the Closing plus
(ii) 0.40%. If no maturity exactly corresponds to such period,
the yields for the two published maturities most closely
corresponding to such period shall be interpolated or
extrapolated from such yields on a straight line basis.
4.3. Deliveries by the Sellers. At the Closing, the Sellers
will deliver the following to the Buyer:
(a) A ▇▇▇▇ of Sale, duly executed by the Sellers for the
personal property included in the Purchased Assets;
(b) All consents, waivers or approvals obtained by the
Seller with respect to the Purchased Assets, the transfer of any
Transferable Permit related to the Purchased Assets, or the
consummation of the transactions connected to the sale of the
Purchased Assets, contemplated by this Agreement, to the extent
specifically required hereunder;
(c) An opinion of counsel and certificate (as contemplated
by Section 8.2 and 9.2) with respect to the Purchased Assets;
(d) One or more deeds of conveyance of the Real Estate
(substantially as set forth in Schedule 5.14 hereto) related to the
Purchased Assets, to the Buyer, reserving the applicable Easements,
duly executed and acknowledged by the Sellers and in recordable
form;
(e) A FIRPTA Affidavit executed by each of the Sellers;
(f) All such other instruments of assignment or conveyance
as shall, in the reasonable opinion of the Buyer and its counsel,
be necessary to transfer to the Buyer the Purchased Assets, in
accordance with this Agreement and where necessary or desirable, in
recordable form; and
(g) Such other agreements, documents, instruments and
writings as are required to be delivered by the Sellers at or prior
to the Closing Date pursuant to this Agreement or otherwise
required in connection herewith.
4.4. Deliveries by the Buyer. At the Closing, the Buyer will
deliver the following to the Sellers:
(a) The Estimated Purchase Price by wire transfer of
immediately available funds or such other means as are agreed upon
by the Sellers and the Buyer;
(b) Opinions of counsel and certificates (as contemplated
by Section 8.3 and 9.3) with respect to the Purchased Assets;
(c) The Instruments of Assumption with respect to the
Assumed Obligations, duly executed by the Buyer;
(d) All such other instruments of assumption as shall, in
the reasonable opinion of the Sellers and its counsel, be necessary
for the Buyer to assume the Assumed Obligations related to the
Purchased Assets in accordance with this Agreement; and
(e) Such other agreements, documents, instruments and
writings as are required to be delivered by the Buyer at or prior
to the Closing Date pursuant to this Agreement or otherwise
required in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer as follows (all
such representations and warranties, except those regarding the
Sellers, being made to the best knowledge of the Sellers after
reasonable inquiry or investigation). Notwithstanding anything in
this Agreement to the contrary, Narragansett makes no
representations other than as to itself and as relates to
Manchester Street.
5.1. Organization; Qualification; Matters Regarding NERC.
(a) NEP is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts
and has all requisite corporate power and authority to own, lease,
and operate its properties and to carry on its business as is now
being conducted. Narragansett and NERC are corporations duly
organized, validly existing and in good standing under the laws of
the State of Rhode Island and have all requisite corporate power
and authority to own, lease, and operate their properties and to
carry on their businesses as are now being conducted. The Sellers
are duly qualified or licensed to do business as foreign
corporations and are in good standing in each jurisdiction in which
the property owned, leased or operated by them or the nature of the
business conducted by them makes 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 Material Adverse Effect. The Sellers and NERC have heretofore
delivered to the Buyer complete and correct copies of their
Certificates of Incorporation and Bylaws as currently in effect.
(b) The authorized capital stock of NERC consists of one (1)
share of common stock, par value $1.00 per
share, one share of which is issued and outstanding. Such share of
NERC Stock has been duly authorized and validly issued, is fully
paid and non-assessable, and has not been issued in violation of
the preemptive rights of any stockholder of NERC. At the Closing,
NEP will be the record and beneficial owner of full right and title
to such share of NERC Stock, free and clear of all Encumbrances,
options, warrants, rights, calls, pledges, trusts, voting trusts
and other stockholder agreements, assessments, covenants,
restrictions, reservations, commitments, obligations, liabilities,
and other burdens. Assuming issuance by the SEC of an appropriate
order under the Holding Company Act, as of the Closing NEP will
have the absolute and unrestricted right, power, authority and
capacity to sell the NERC Stock to the Buyer.
(c) NERC owns general partnership interests representing 20%
of the aggregate partnership interests in each of Ocean State
Power, a Rhode Island general partnership ("OSP"), and Ocean State
Power II, a Rhode Island general partnership ("OSP II"), free and
clear of all Encumbrances except for Permitted Encumbrances. NERC
(i) was organized solely for purposes of acting as a general
partner in OSP, owns no other assets and has no liabilities of any
kind, except as attributable to (A) such general partnership
interests, other than those arising in the ordinary course of
business that are not material, and (B) occasional liabilities to
NEPSCO, tax liabilities to ▇▇▇▇ under the ▇▇▇▇ Intercompany Tax
Allocation Agreement, and the NERC Note Agreements, all of which
will be discharged on or prior to the Closing (ii) does not engage,
and has never engaged in, any business other than holding such
general partnership interests, and (iii) does not have, and has
never had, any employees.
5.2. Authority Relative to this Agreement. The Sellers have
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Boards of Directors of the Sellers and will,
prior to the Closing, be duly and validly authorized by the
stockholders of NEP with
general voting rights and, assuming defeasance of the General and
Refunding Mortgage Indenture and Deed of Trust, dated as of January
1, 1977, as amended and supplemented, between NEP and State Street
Bank and Trust Company, as successor trustee to Bank of New
England, National Association (formerly New England Merchants
National Bank) and the issuance by the SEC of an order authorizing
the transaction contemplated hereby, no other corporate proceedings
on the part of the Sellers are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
the Sellers, and assuming that this Agreement constitutes a valid
and binding agreement of the Buyer, subject to the receipt of the
Sellers Required Regulatory Approvals and the Buyer Required
Regulatory Approvals, constitutes a valid and binding agreement of
the Sellers, enforceable against the Sellers in accordance with its
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to enforcement of creditors' rights generally or
general principles of equity.
5.3. Consents and Approvals; No Violation. (a) Except as
set forth in Schedule 5.3, and other than obtaining the Sellers
Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, neither the execution and delivery of this Agreement by
the Sellers nor the sale by the Sellers of the Purchased Assets
pursuant to this Agreement will (i) conflict with or result in any
breach of any provision of the Certificates of Incorporation or
Bylaws of the Sellers, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (x) where the failure
to obtain such consent, approval, authorization or permit, or to
make such filing or notification, would not, individually or in the
aggregate, create a Material Adverse Effect or (y) for those
requirements which become applicable to the Sellers as a result of
the specific regulatory status of the Buyer (or any of its
Affiliates) or as a result of any other facts that specifically
relate to the business or activities in which the Buyer (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) under any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to
which the Sellers are a party or by which the Sellers, or any of
the Purchased Assets 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 which, in the
aggregate, would not, individually or in the aggregate, create a
Material Adverse Effect; or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Sellers, or any of their assets, which violation, individually or
in the aggregate, would create a Material Adverse Effect.
(b) Except as set forth in Schedule 5.3 and except for (i)
any required approvals under the Federal Power Act, (ii) (A) notice
by NEP to, and an order by, the MDPU approving the transactions
contemplated by this Agreement, (B) the approval by the RIPUC of
the market valuation "implementation methodology" filed in RIPUC
Docket 2540, pursuant to section 39-1-27.4(g) of the Rhode Island
General Laws, (C) the approval by the RIPUC of the "Transfer Plan"
filed in RIPUC Docket 2515, pursuant to section 39-1-27(a) of the
Rhode Island General Laws, (D) the approval, if required, of the
Rhode Island Division of Public Utilities and Carriers of the
transfer of Manchester Street to Buyer, (E) the approval, if
required, of the Rhode Island Energy Facilities Siting Board of the
transfer of Manchester Street to the Buyer, (F) if required, notice
by NEP to, and an order by, each of the NHPUC and the VTPSB
approving the sale of the Hydroelectric Assets, (iii) the approval,
if required, of the SEC pursuant to the Holding Company Act, (iv)
the filings by the Sellers and the Buyer required by the HSR Act
and the expiration or earlier termination of all waiting periods
under the HSR Act, and (v) the approval, if required, of the
Nuclear Regulatory Commission (the "NRC") (the filings and
approvals referred to in clauses (i) through (v) are collectively
referred to as the "Sellers Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or
regulatory body or authority is necessary for the consummation by
the Sellers of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations,
consents
or approvals which, if not obtained or made, will not, individually
or in the aggregate, create a Material Adverse Effect.
5.4. Reports. Since January 1, 1994, the Sellers have filed
or caused to be filed with the SEC, the applicable state or local
utility commissions or regulatory bodies, the NRC or the FERC, as
the case may be, all material forms, statements, reports and
documents (including all exhibits, amendments and supplements
thereto) required to be filed by them with respect to the business
and operations of the Sellers as it relates to the Purchased 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 ▇▇▇▇▇-▇▇▇▇▇▇▇▇ 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.
5.5. Financial Statements. Sellers have made available to
the Buyer their balance sheets, as of June 30, 1997. Such balance
sheets (including the related notes thereto) are referred to herein
as the "Sellers Balance Sheets." Each of the Sellers Balance
Sheets presents fairly, as of June 30, 1997, the financial position
of such Seller in conformity with generally accepted accounting
principles applied on a consistent basis, except as otherwise noted
therein.
5.6. Undisclosed Liabilities. Except as set forth in
Schedule 5.6, the Sellers have no liability or obligation relating
to the business or operations of the Purchased Assets, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and
whether due or to become due), of a nature required by generally
accepted accounting principles as they have been consistently
applied by the Sellers to be reflected in a corporate balance sheet
or disclosed in the notes thereto, which are not accrued or
reserved against in the Sellers Balance Sheets or disclosed in the
notes thereto in accordance with generally accepted accounting
principles,
except those which either were incurred in the ordinary course of
business, whether before or after the date of the Sellers Balance
Sheets.
5.7. Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.7, or in the reports, schedules, registration
statements and definitive proxy statements filed by any of the
Sellers or ▇▇▇▇ with the SEC and (ii) as otherwise contemplated by
this Agreement, since the date of the Sellers Balance Sheets there
has not been: (a) any Material Adverse Effect; (b) any damage,
destruction or casualty loss, whether covered by insurance or not,
which, individually or in the aggregate, created a Material Adverse
Effect; (c) any entry into any agreement, commitment or transaction
(including, without limitation, any borrowing, capital expenditure
or capital financing) by the Sellers or NERC, which is material to
the business or operations of the Purchased Assets, except
agreements, commitments or transactions in the ordinary course of
business that in the aggregate are not material to the Purchased
Assets or as contemplated herein; or (d) any change by the Sellers,
with respect to the Purchased Assets or NERC, in accounting
methods, principles or practices except as required or permitted by
generally accepted accounting principles.
5.8. Title and Related Matters. Except as set forth in
Schedule 5.8 and except for Permitted Encumbrances, the Sellers
have marketable title to the Real Estate as specified in the
Specimen Title Policy for each of the Purchased Assets constituting
Real Estate. Except as set forth in Schedule 5.8 and except for
Permitted Encumbrances, the Sellers have good and valid title to
the other Purchased Assets which they purport to own that are
reflected in the Sellers Balance Sheets (other than those which
have been disposed of since the date thereof in the ordinary course
of business), free and clear of all Encumbrances.
5.9. Leases. Schedule 5.9 lists, as of the date of this
Agreement, all real property leases under which the Sellers are a
lessee or lessor and which (x) are to be transferred and assigned
to the Buyer on the Closing Date and (y) (i) provide for annual
payments of more than $500,000 or (ii) are material to the
business, operations
or financial condition of the Purchased Assets. Except as set
forth in Schedule 5.9, all such leases are valid, binding and
enforceable in accordance with their terms, and are in full force
and effect; there are no existing material defaults by the Sellers
or, to the Sellers' knowledge, any other party thereunder; and no
event has occurred which (whether with or without notice, lapse of
time or both) would constitute a material default by the Sellers
or, to the Sellers' knowledge, any other party thereunder.
5.10. Insurance. Except as set forth in Schedule 5.10, all
material policies of fire, liability, worker's compensation and
other forms of insurance owned or held by the Sellers and insuring
the Purchased 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 described in Schedule 5.10, as of the date
of this Agreement, the Sellers have not been refused any insurance
with respect to the Purchased Assets nor has their coverage been
limited by any insurance carrier to which they have applied for any
such insurance or with which they have carried insurance during the
last twelve months.
5.11. Environmental Matters. Except as disclosed in Schedule
5.11 or in any public filing by any of the Sellers or ▇▇▇▇ pursuant
to the Securities Act or the Exchange Act:
(a) The Sellers hold, and are in substantial compliance
with, all material permits, licenses and governmental
authorizations ("Environmental Permits") required for the Sellers
to conduct the business and operations of the Purchased Assets
under applicable Environmental Laws, and the Sellers are otherwise
in compliance with applicable Environmental Laws with respect to
the business and operations of the Purchased Assets except for such
failures to hold or comply with
required Environmental Permits, or such failures to be in
compliance with applicable Environmental Laws, which, individually
or in the aggregate, are not reasonably likely to create a Material
Adverse Effect;
(b) The Sellers have not received any written request for
information, or been notified that they are a potentially
responsible party, under CERCLA or any similar State law with
respect to any on-site location, except for such liability under
such laws as would not be reasonably likely to, individually or in
the aggregate, create a Material Adverse Effect; and
(c) The Sellers have not entered into or agreed to any
consent decree or order, and are not subject to any outstanding
judgment, decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous
Substances under any Environmental Law, except for such consent
decree or order, judgment, decree or judicial order that would not
be reasonably likely to, individually or in the aggregate, create
a Material Adverse Effect.
The representations and warranties made in this Section 5.11 are
the Sellers' exclusive representations and warranties relating to
environmental matters.
5.12. Labor Matters. The Sellers have previously delivered
to the Buyer copies of all collective bargaining agreements to
which the Sellers are a party or are subject and which relate to
the business or operations of the Purchased Assets. Solely (in
each of the following clauses (a) through (f)) with respect to the
business or operations of the Purchased Assets, except to the
extent set forth in Schedule 5.12 and except for such matters as
will not, individually or in the aggregate, create a Material
Adverse Effect (a) the Sellers are in compliance with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours; (b) the
Sellers have not received written notice of any unfair labor
practice complaint against the Sellers pending before the National
Labor Relations Board; (c) there is no labor strike, slowdown or
stoppage actually pending or threatened against or affecting the
Sellers; (d) the Sellers have not received notice that any
representation
petition respecting the employees of the Sellers has been filed
with the National Labor Relations Board; (e) no arbitration
proceeding arising out of or under collective bargaining agreements
is pending against the Sellers and (f) the Sellers have not
experienced any primary work stoppage since at least December 31,
1994.
5.13. ERISA; Benefit Plans. (a) Schedule 5.13(a) lists all
deferred compensation, profit-sharing, retirement and pension
plans, including multiemployer plans (of which none exist), and all
material bonus and other employee benefit or fringe benefit plans
maintained or with respect to which contributions are made by the
Sellers in respect to current or former employees employed at the
Purchased Assets ("Benefit Plans"). Accurate and complete copies
of all such Benefit Plans have been made available to the Buyer.
(b) Except as set forth in Schedule 5.13(b), the Sellers and
the ERISA Affiliates have fulfilled their respective obligations
under the minimum funding requirements of Section 302 of ERISA, and
Section 412 of the Code, with respect to each Benefit Plan which is
an "employee pension benefit plan" as defined in Section 3(2) of
ERISA and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code.
Except as set forth in Schedule 5.13(b), neither the Sellers nor
any ERISA Affiliate has incurred any liability under Section
4062(b) of ERISA to the Pension Benefit Guaranty Corporation in
connection with any Benefit Plan which is subject to Title IV of
ERISA, nor any withdrawal liability nor is there any reportable
event (as defined in Section 4043 of ERISA) except as set forth in
Schedule 5.13(b). Except as set forth in Schedule 5.13(b), the
Internal Revenue Service has issued a letter for each Benefit Plan
which is intended to be qualified determining that such plan is
exempt from United States Federal Income Tax under Sections 401(a)
and 501(a) of the Code, and there has been no occurrence since the
date of any such determination letter which has adversely affected
such qualification.
(c) None of the Sellers nor any ERISA Affiliate or parent
corporation, within the meaning of Section 4069(b) or Section
4212(c) of ERISA, has engaged in any
transaction, within the meaning of Section 4069(b) or Section
4212(c) of ERISA. No Benefit Plan and no ERISA Affiliate Plan is
a multiemployer plan.
(d) Each of the Sellers that maintains a "group health plan"
within the meaning of Section 5000(b)(1) of the Code has materially
complied in good faith with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of
Subtitle B of Title I of ERISA and the regulations thereunder.
5.14. Real Estate. Schedule 5.14 contains a description of,
and exhibits indicating the location of, the real property owned by
the Sellers and included in the Purchased Assets (the "Real
Estate"). Schedule 5.14 also describes any indebtedness secured by
a mortgage or other Encumbrance on the Real Estate. Complete and
correct copies of any current surveys in the Sellers' possession or
any policies of title insurance currently in force and in the
possession of the Sellers with respect to such real property have
heretofore been delivered by the Sellers to the Buyer.
5.15. Condemnation. Except as set forth in Schedule 5.15,
neither the whole nor any part of the Real Estate or any other real
property or rights leased, used or occupied by the Sellers in
connection with the ownership or operation of the Purchased Assets
is subject to any pending suit for condemnation or other taking by
any public authority, and, no such condemnation or other taking has
been threatened.
5.16. Certain Contracts and Arrangements. (a) Except (i) as
listed in Schedule 5.16(a) or any other Schedule to this Agreement,
(ii) for contracts, agreements, personal property leases,
commitments, understandings or instruments which will expire prior
to the Closing Date, and (iii) for agreements with suppliers
entered into in the ordinary course of business that are not
material to the Purchased Assets, the Sellers are not a party to
any written contract, agreement, personal property lease,
commitment, understanding or instrument which is material to the
business or operations of the Purchased Assets, and NERC is not a
party to any such contract which is material to the business or
operations of OSP and OSP II.
(b) Except as disclosed in Schedule 5.16(b), each of the
PPAs and each material Sellers' Agreement (i) constitutes a valid
and binding obligation of NEP or Narragansett, as the case may be,
and to the best knowledge of the Sellers constitutes a valid and
binding obligation of the other parties thereto, (ii) is in full
force and effect, and (iii) may be transferred to the Buyer
pursuant to this Agreement and will continue in full force and
effect thereafter, in each case without breaching the terms thereof
or resulting in the forfeiture or impairment of any rights
thereunder.
(c) Except as set forth in Schedule 5.16(c), there is not,
under any of the PPAs or the Sellers' Agreements, any default or
event which, with notice or lapse of time or both, would constitute
a default on the part of any of the parties thereto, except, with
respect to the Sellers' Agreements only, such events of default and
other events as to which requisite waivers or consents have been
obtained or which would not, individually or in the aggregate,
create a Material Adverse Effect.
(d) If the Continuing Site Agreement were in full force and
effect between Sellers' generation business and Sellers'
transmission business on the date of this Agreement, (i) the
Sellers' generation business would be in material compliance with
the terms thereof, and (ii) there is no event or condition that
would enable or require the Seller's transmission business to (x)
notify the Sellers' generation business of the necessity of an
addition to or modification of the Interconnection Facilities, as
defined in Section 3.1.4 of the Continuing Site Agreement, (y)
operate and/or purchase from the Sellers' generation business any
of the equipment or facilities specified in section 3.2.8(d) of the
Continuing Site Agreement, or (z) discontinue Interconnection
Service under Section 3.13.1 of the Continuing Site Agreement, as
defined therein.
5.17. Legal Proceedings, etc. Except as set forth in
Schedule 5.17 or in any filing made by ▇▇▇▇ or the Sellers pursuant
to the Securities Act or the Exchange Act, there are no claims,
actions, proceedings or investigations pending or threatened
against or relating
to the Sellers before any court, governmental or regulatory
authority or body acting in an adjudicative capacity, which, if
adversely determined, individually or in the aggregate, would
create a Material Adverse Effect. Except as set forth in Schedule
5.17 or in any filing made by ▇▇▇▇ or the Sellers pursuant to the
Securities Act or the Exchange Act, the Sellers are not subject to
any outstanding judgment, rule, order, writ, injunction or decree
of any court, governmental or regulatory authority which,
individually or in the aggregate, would create a Material Adverse
Effect.
5.18. Permits. (b) The Sellers have all permits, licenses,
franchises and other governmental authorizations, consents and
approvals, other than with respect to Environmental Laws
(collectively, "Permits") necessary to operate the business of the
Purchased Assets as presently conducted, except where the failure
to have such Permits would not, individually or in the aggregate,
create a Material Adverse Effect. Except as set forth in Schedule
5.18(a), the Sellers have not received any written notification
that they are in violation of any of such Permits, or any law,
statute, order, rule, regulation, ordinance or judgment of any
governmental or regulatory body or authority applicable to it,
except for notifications of violations which would not,
individually or in the aggregate, create a Material Adverse Effect.
The Sellers are in compliance with all Permits, laws, statutes,
orders, rules, regulations, ordinances, or judgments of any
governmental or regulatory body or authority applicable to it,
except for violations which, individually or in the aggregate, do
not create a Material Adverse Effect.
(b) Schedule 5.18(b) sets forth all material Permits and
Environmental Permits other than Transferable Permits (which are
set forth on Schedule 1.1(a)(70)).
5.19. Regulation as a Utility. Each of the Sellers is a
public utility company within the meaning of the Holding Company
Act. Except as set forth on Schedule 5.19, the Sellers are 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.
5.20. Taxes. (a) With respect to the Purchased Assets and
trades or businesses associated with the Purchased Assets other
than the NERC Stock, (i) all Tax Returns required to be filed other
than those Tax Returns the failure of which to file would not
create a Material Adverse Effect have been filed, and (ii) all
material Taxes shown to be due on such Tax Returns have been paid
in full. Except as set forth in Schedule 5.20, no notice of
deficiency or assessment has been received from any taxing
authority with respect to liabilities for Taxes of the Sellers in
respect of the Purchased Assets, which have not been fully paid or
finally settled, and any such deficiency shown in such Schedule
5.20 is being contested in good faith through appropriate
proceedings. Except as set forth in Schedule 5.20, there are no
outstanding agreements or waivers extending the applicable
statutory periods of limitation for Taxes associated with the
Purchased Assets for any period. Schedule 5.20 sets forth the
taxing jurisdictions in which the Sellers own assets or conduct
business that require a notification to a taxing authority of the
transactions contemplated by this Agreement, if the failure to make
such notification, or obtain Tax clearances in connection
therewith, would either require the Buyer to withhold any portion
of the Purchase Price or would subject Buyer to any liability for
any Taxes of the Sellers.
(b) With respect to the sale of the NERC Stock, except as
set forth on Schedule 5.20:
(i) NERC has (x) duly and timely filed (or there
has been filed on its behalf) with the appropriate taxing
authorities all Tax Returns required to be filed by it, and all
such Tax Returns are true, correct and complete and (y) timely
paid or there has been paid on its behalf all Taxes due or
claimed to be due from it by any taxing authority;
(ii) NERC has, within the time and manner
prescribed by law, withheld and paid over to the proper
governmental authorities all amounts required to be withheld and
paid over under all applicable laws;
(iii) There are no Encumbrances for Taxes upon the
assets or properties of NERC, except for statutory Encumbrances
for current Taxes not yet due;
(iv) NERC has not requested any extension of time
within which to file any Tax Return in respect of any taxable
year which has not since been filed and no outstanding waivers
or comparable consents regarding the application of the statute
of limitations with respect to any Taxes or Tax Returns has been
given by or on behalf of NERC;
(v) No federal, state, local or foreign audits or
other administrative proceedings or court proceedings ("Audits")
exist or have been initiated with regard to any Taxes or Tax
Returns of NERC and NERC has not received any written notice
that such an audit is pending or threatened with respect to any
Taxes due from or with respect to NERC or any Tax Return filed
by or with respect to NERC;
(vi) NERC has not requested or received a ruling
from any taxing authority or signed a closing or other agreement
with any taxing authority which could have a material adverse
effect on NERC;
(vii) The Tax Returns of NERC have been examined by
the appropriate taxing authorities (or the applicable statute of
limitations for the assessment of Taxes for such periods have
expired) for all periods through and including the date of this
Agreement and a list of all Audits commenced or completed with
respect to NERC for all taxable periods not yet closed by the
statute of limitations are set forth on Schedule 5.20;
(viii) All Tax deficiencies which have been claimed,
proposed or asserted against NERC have been fully paid or
finally settled, and no issue has been raised in any examination
which, by application of similar principles, could be expected
to result in the proposal or assertion of a Tax deficiency for
any other year not so examined;
(ix) Except for the ▇▇▇▇ Intercompany Tax
Allocation Agreement, NERC is not a party to, is not
bound by, and has no obligation under, any Tax sharing
agreement, Tax indemnification agreement or similar contract or
arrangement;
(x) No power of attorney has been granted with
respect to NERC as to any matter relating to Taxes;
(xi) NERC has not filed a consent pursuant to
Section 341(f) of the Code (or any predecessor provision) or
agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset, as such term is defined
in Section 341(f)(4) of the Code, owned by NERC;
(xii) No property owned by NERC (A) is property
required to be treated as being owned by another Person pursuant
to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (B) constitutes "tax-
exempt use property" within the meaning of Section 168(h)(1) of
the Code or (C) is tax-exempt bond financed property within the
meaning of Section 168(g) of the Code;
(xiii) Since December 31, 1996, NERC has not
incurred any liability for Taxes other than in the ordinary
course of business;
(xiv) NERC has no liability for Taxes of any person
pursuant to Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law) other than for the
consolidated return group of which ▇▇▇▇ is the parent;
(xv) NERC has not participated, or cooperated
with, an international boycott within the meaning of Section 999
of the Code; and
(xvi) NERC is not a party to any contract,
agreement or other arrangement which could result in the payment
of amounts that could be nondeductible by reason of Sections
280G or 162(m) of the Code.
5.21. NERC Holdings. NERC does not own fifty percent or any
greater percentage of the value of the voting power of the capital
stock of any other corporation.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS ARTICLE V, THE PURCHASED ASSETS ARE BEING SOLD AND
TRANSFERRED "AS IS, WHERE IS," AND THE SELLERS ARE NOT MAKING ANY
OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, CONCERNING SUCH PURCHASED ASSETS, INCLUDING, IN
PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows
(all such representations and warranties, except those regarding
the Buyer, being made to the best knowledge of the Buyer after
reasonable inquiry or investigation):
6.1. Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on
its business as is now being conducted. The Buyer has heretofore
delivered to the Sellers complete and correct copies of its
Certificate of Incorporation and By-laws (or other similar
governing documents), as currently in effect.
6.2. Authority Relative to this Agreement. The Buyer has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Buyer and no other
corporate proceedings on the part of the Buyer are necessary to
authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Buyer, and
assuming that this Agreement constitutes a valid and binding
agreement of the Sellers, subject to the receipt of the Buyer
Required Regulatory Approvals and the Sellers Required Regulatory
Approvals, constitutes a valid and binding agreement of the Buyer,
enforceable against the Buyer in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally or general principles
of equity.
6.3. Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 6.3, and other than
obtaining the Buyer Required Regulatory Approvals and the Sellers
Required Regulatory Approvals, neither the execution and delivery
of this Agreement by the Buyer nor the purchase by the Buyer of the
Purchased Assets pursuant to this Agreement will (i) conflict with
or result in any breach of any provision of the Certificate of
Incorporation or By-Laws (or other similar governing documents) of
the Buyer, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, (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, agreement, lease or other instrument or obligation to
which the Buyer or any of its subsidiaries is a party or by which
any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained.
(b) Except as set forth in Schedule 6.3 and except for (i)
qualification of the Buyer as an exempt wholesale generator under
the Energy Policy Act of 1992, without restriction, including no
restriction on sales to Affiliates, (ii) authorization to sell
power under Section 205 of the FPA, including (A) authorizations
required to implement sales under the Ancillary Agreements, and (B)
market-based rate approval, (iii) approval under Section 203 of the
FPA to transfer
contracts and other jurisdictional assets, (iv) approval by FERC,
under Part I of the FPA, of the transfer of FERC project licenses
related to, and necessary to operate, the Hydroelectric Assets as
currently operated, (v) any state public utility approval necessary
for the Sellers to transfer any Purchased Assets in such state and
for the Buyer to purchase the Purchased Assets in any such state,
(vi) the filings by the Buyer and the Sellers required by the HSR
Act and (vii) approval of the Continuing Site Agreement, the
Transition Agreements and the Wholesale Sales Agreement by FERC
(the filings and approvals referred to in clauses (i) through (vii)
are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental or
regulatory body or authority is necessary for the consummation by
the Buyer of the transactions contemplated hereby.
6.4. Regulation as a Utility. The Buyer is not subject to
regulation as a public utility or public service company (or
similar designation other than as an Exempt Wholesale Generator
within the meaning of the Holding Company Act) by the United
States, any State of the United States, any foreign country or any
municipality or any political subdivision of the foregoing.
6.5. Availability of Funds. The Buyer has sufficient funds
available to it or has received binding written commitments from
responsible financial institutions to provide sufficient funds on
the Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets.
(a) Except as described in Schedule 7.1, during the period from the
date of this Agreement to the Closing Date, the Sellers will
operate the Purchased Assets and related businesses in the usual,
regular and ordinary course consistent with good industry practice
and shall use all commercially reasonable efforts to preserve
intact the Purchased Assets and the businesses related thereto, and
endeavor to preserve the goodwill and relationships with customers,
suppliers and others having business dealings with them. Without
limiting the generality of the foregoing, and, except as
contemplated in this Agreement or as described in Schedule 7.1,
prior to the Closing Date, without the prior written consent of the
Buyer, the Sellers will not with respect to the Purchased Assets
and related businesses:
(i) (x) except for (1) Permitted Encumbrances and
(2) indebtedness constituting Excluded Liabilities that does not
create an Encumbrance on the Purchased Assets, create, incur,
assume or suffer to exist any indebtedness for borrowed money
(including obligations in respect of capital leases); or (y)
assume, guarantee, endorse or otherwise become directly liable
or responsible (whether directly or indirectly, contingently or
otherwise) for the obligations of any Person;
(ii) make any material change in the levels of
fuel inventory and stores inventory customarily maintained by
the Sellers with respect to the Purchased Assets, other than
consistent with good industry practice;
(iii) sell, lease (as lessor), transfer or
otherwise dispose of, any of the Purchased Assets, other than
assets used, consumed or replaced in the ordinary course of
business consistent with good industry practice;
(iv) terminate, extend or otherwise amend any of
the Sellers' Agreements, the PPAs, any leases listed in Schedule
5.9 or any other lease to the extent any such extension or
amendment would require the lease to be disclosed on Schedule
5.9, or waive any default by, or release, settle or compromise
any claim against, any other party thereto;
(v) enter into, terminate, extend or otherwise
amend any real or personal property Tax agreement, treaty or
settlement other than entering into any such agreement, treaty
or settlement with Hinsdale, NH,
Lebanon, NH, and Monroe, NH; on substantially the same terms as
reflected in the drafts heretofore delivered to the Buyer;
(vi) execute, enter into, terminate or otherwise
amend (x) any of the Permits, other than routine renewals or
non-material modifications or amendments, (y) the MOA I or the
MOA II or (z) any other agreement, order, decree or judgment
relating to the current or any new NPDES permit for ▇▇▇▇▇▇▇
Point;
(vii) enter into any commitment for the purchase or
sale of fuel (whether commodity or transportation) having a term
that extends beyond March 31, 1998 or such other date that the
parties mutually agree to be the date on which the Closing is
expected to occur;
(viii) enter into any power purchase commitment,
having a term that extends beyond March 31, 1998 or such other
date that the parties mutually agree to be the date on which the
Closing is expected to occur;
(ix) enter into any power sales commitments having
a term that extends beyond March 31, 1998 or such other date
that the parties mutually agree to be the date on which the
Closing is expected to occur;
(x) [Intentionally omitted]
(xi) with respect to the Purchased Assets and
related businesses, (x) amend or cancel any liability or
casualty insurance policies related thereto, (y) compromise,
settle, withdraw, release or ▇▇▇▇▇ any claims made or accruing
thereunder or (z) fail to maintain by self insurance or with
financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for
such assets and businesses;
(xii) with respect to NERC, permit or cause NERC to
change its capital structure; amend its charter, by-laws or
other governing documents; issue new securities; merge,
consolidate or combine with any other entity; hire any
employees; purchase or sell any assets; create or suffer to
exist; any liabilities,
contingent or otherwise, not directly attributable to its
general partnership interests in OSP and OSP II; or change its
business as presently conducted;
(xiii) enter into any commitment or contract for
goods or services not addressed in clauses (i) through (xii)
above that will be delivered or provided after March 31, 1998 or
such other date that the parties mutually agree to be the date
on which the Closing is expected to occur, in an amount greater
than $1,000,000;
(xiv) enter into any written or oral contract,
agreement, commitment or arrangement with respect to any of the
transactions set forth in the foregoing paragraphs (i) through
(xiii).
(b) Notwithstanding anything in Section 7.1(a) to the
contrary, the Sellers may, in their sole discretion, make (i)
Maintenance Expenditures and Capital Expenditures, (ii) at the
Sellers' expense, such other maintenance and capital expenditures
as the Sellers deem necessary and (iii) enter into the settlement
agreement with regard to the Fifteen Mile Falls Project,
substantially in the form heretofore delivered to the Buyer.
(c) A committee comprised of one Person designated by the
Sellers and one Person designated by the Buyer, and such additional
Persons as may be appointed by the Persons originally appointed to
such committee (the "Transition Committee") will be established as
soon after execution of this Agreement as is practicable to examine
the business issues affecting the Purchased Assets and related
businesses of the Sellers after the date hereof, giving emphasis to
cooperation between the Buyer and the Sellers after the execution
of this Agreement. From time to time, the Transition Committee
shall report its findings to the senior management of each of NEP
and the Buyer.
(d) Between the date of this Agreement and the Closing Date,
in the interest of cooperation between the Sellers and the Buyer
and to permit informed action by the Buyer regarding its rights
pursuant to Section 7.1(a) to grant, consent or to waive
prohibitions or limitations under Section 7.1(a), the parties agree
as follows:
(i) At the sole responsibility and expense of the
Buyer, the Sellers will permit designated employees
("Observers") of the Buyer to observe all operations of the
Sellers that relate to the Purchased Assets and related
businesses, and such observation will be permitted on a
cooperative basis in the presence of personnel of the Sellers
but not restricted to the normal business hours of the Sellers;
provided, however, that such observers and their actions shall
not unreasonably interfere with the operation of the Sellers
business. The Buyer's Observers may recommend or suggest
actions be taken or not be taken by the Sellers; provided,
however, that the Sellers will be under no obligation to follow
any such recommendations or suggestions and the Sellers shall be
entitled, subject to this Agreement, to conduct their business
in accordance with their own judgment and discretion. The
Buyer's Observers shall have no authority to bind or make
agreements on behalf of the Sellers; to conduct discussions with
or make representations to third parties on behalf of the
Sellers; or to issue instructions to or direct or exercise
authority over the Sellers or any of the Seller's officers,
employees, advisors or agents.
(ii) For certain specific issues, such as the
▇▇▇▇▇▇▇ Point NPDES permit negotiations and planning, the
Sellers may assign Observers to the Sellers' teams working on
these specific issues.
(iii) The Buyer shall have the right, to the extent
that it can demonstrate to NEP a legitimate business purpose, to
direct that NEP enter into contracts and commitments that exceed
the limitations imposed by Sections 7.1(a)(ii) and (vii);
provided, however, that in such event the Buyer will assume for
its own account any obligations and liabilities associated
therewith, all of which shall constitute Assumed Obligations for
purposes of this Agreement; provided, however, that NEP shall
not be required to enter into such contracts and commitments
unless the Buyer has provided NEP with a reasonable mechanism to
hold NEP harmless for any liabilities incurred in connection
with such contracts and commitments.
(e) The Buyer and Sellers each agree to consult with each
other regarding matters involving the governing arrangements or
procedures of the New England Power Pool. The Sellers shall take
the Buyer's views on such matters into account, with particular
deference to matters involving predominately the generation
business, prior to exercising Sellers' rights and obligations with
respect to the New England Power Pool.
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, the Sellers will, during ordinary
business hours and upon reasonable notice (i) give the Buyer and
the Buyer Representatives reasonable access to all books, records,
plants, offices and other facilities and properties constituting
the Purchased Assets to which the Buyer is not denied access by
law; (ii) permit the Buyer to make such reasonable inspections
thereof as the Buyer may reasonably request; (iii) furnish the
Buyer with such financial and operating data and other information
with respect to the Purchased Assets as the Buyer may from time to
time reasonably request; (iv) furnish the Buyer a copy of each
material report, schedule or other document filed or received by
them with respect to the Purchased Assets with the SEC, MDPU,
RIPUC, NHPUC, VTPSB, NRC or FERC; provided, however, that (A) any
such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Purchased Assets,
(B) the Sellers shall not be required to take any action which
would constitute a waiver of the attorney-client privilege and (C)
the Sellers need not supply the Buyer with any information which
the Sellers are under a legal obligation not to supply.
Notwithstanding anything in this Section 7.2 to the contrary, (i)
the Sellers will only furnish or provide such access to
Transferring Employee Records and personnel and medical records as
is required by law, legal process or subpoena and (ii) the Buyer
shall not have the right to perform or conduct any environmental
sampling or testing at, in, on, or underneath the Purchased Assets.
(b) The Buyer and Sellers acknowledge that Buyer is a
Representative of U.S. Generating Company under the terms of the
Confidentiality Agreement. All information furnished to or
obtained by the Buyer, U.S. Generating
Company and the Buyer Representatives pursuant to this Section 7.2
shall be subject to the provisions of the Confidentiality Agreement
and shall be treated as "Proprietary Information" (as defined in
the Confidentiality Agreement).
(c) For a period of ten years after the Closing Date, each
party and their representatives shall have reasonable access to all
of the books and records of the Purchased Assets, including all
Transferring Employee Records or other personnel and medical
records required by law, legal process or subpoena, in the
possession of the other party or parties to the extent that such
access may reasonably be required by such party in connection with
the Assumed Obligations or the Excluded Liabilities, or other
matters relating to or affected by the operation of the Purchased
Assets. Such access shall be afforded by the party or parties in
possession of such books and records upon receipt of reasonable
advance notice and during normal business hours. The party or
parties exercising this right of access shall be solely responsible
for any costs or expenses incurred by it or them pursuant to this
Section 7.2(c). If the party or parties in possession of such
books and records shall desire to dispose of any such books and
records upon or prior to the expiration of such ten-year period,
such party or parties shall, prior to such disposition, give the
other party or parties a reasonable opportunity at such other
party's or parties' expense, to segregate and remove such books and
records as such other party or parties may select.
(d) The Sellers agree to use best efforts to cause ▇▇▇▇ not
to release any Person (other than the Buyer) from any
confidentiality agreement now existing with respect to the
Purchased Assets, or waive or amend any provision thereof.
(e) Notwithstanding the terms of the Confidentiality
Agreement and Section 7.2(b) above, the parties agree that prior to
the Closing the Buyer may reveal or disclose Proprietary
Information to any other Persons in connection with financing, and
risk management if reasonably necessary, of or with respect to the
Purchased Assets, and to such Persons with whom the Buyer expects
it may have business dealings regarding the
Purchased Assets from and after the Closing Date, and, to the
extent that Sellers consent, which consent shall not be
unreasonably withheld, existing and potential customers and
suppliers. The parties further agree that clause (c) of the first
sentence of the second paragraph of the Confidentiality Agreement
is terminated, and of no further force or effect.
(f) Except as required by law, unless otherwise agreed to
in writing by the Buyer, for a period commencing on the Closing
Date and terminating three years after such date the Sellers shall
keep (i) all Proprietary Information confidential and not disclose
or reveal any Proprietary Information to any Person other than
"Sellers' Representatives" (as defined below) who are actively and
directly participating in the transactions contemplated hereby or
who otherwise need to know the Proprietary Information for such
purpose and to cause those Persons to observe the terms of this
Section 7.2(f) and (ii) not to use Proprietary Information for any
purpose other than consistent with the terms of this Agreement.
The Sellers shall continue to hold all Proprietary Information
according to the same internal security procedures and with the
same degree of care regarding its secrecy and confidentiality as
currently applicable thereto. The Sellers shall notify the Buyer
of any unauthorized disclosure to third parties that it discovers,
and shall endeavor to prevent any further such disclosures. The
Sellers shall be responsible for any breach of the terms of this
Section 7.2(f) by the Sellers or the Sellers' Representatives.
After the Closing Date, in the event that the Sellers are
requested pursuant to, or required by, applicable law or regulation
or by legal process to disclose any Proprietary Information, or any
other information concerning the Purchased Assets, or the
transactions contemplated hereby, the Sellers shall provide the
Buyer with prompt notice of such request or requirement in order to
enable the Buyer to seek an appropriate protective order or other
remedy, to consult with the Sellers with respect to taking steps to
resist or narrow the scope of such request or legal process, or to
waive compliance, in whole or in part, with the terms of this
Section 7.2(f). The Sellers agree not to oppose any action by the
Buyer to obtain a protective order or
other appropriate remedy after the Closing Date. In the event that
no such protective order or other remedy is obtained, or that the
Buyer waives compliance with the terms of this Section 7.2(f), the
Sellers shall furnish only that portion of the Proprietary
Information which the Sellers are advised by counsel is legally
required. In any such event the Sellers shall use their reasonable
best efforts to ensure that all Proprietary Information and other
information that is so disclosed will be accorded confidential
treatment.
(g) The parties agree that the last sentence of the third
paragraph of the Confidentiality Agreement shall not apply with
respect to Proprietary Information that is included in the
Purchased Assets.
(h) The parties agree that the Confidentiality Agreement
will terminate, without further act or evidence by the parties,
upon consummation of the Closing.
(i) The Sellers shall use best efforts to cause ▇▇▇▇ to
execute appropriate written evidence of its agreement to the terms
of this Section 7.2 insofar as the Confidentiality Agreement is
amended or superseded hereby.
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
borne by the party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use
its best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the sale of the Purchased Assets pursuant to this
Agreement, including without limitation using its best efforts to
ensure satisfaction of the conditions precedent to each party's
obligations hereunder. Notwithstanding anything in the previous
sentence to the contrary, the Sellers and the Buyer shall use their
commercially reasonable efforts to obtain all Permits and
Environmental Permits necessary
for the Buyer to operate the Purchased Assets. Neither of the
parties hereto will, without prior written consent of the other
party, take or fail to take any action, which would reasonably be
expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement. From time to time
after the date hereof, without further consideration, the Sellers
will, at their own expense, execute and deliver such documents to
the Buyer as the Buyer may reasonably request in order to more
effectively vest in the Buyer the Sellers' title to the Purchased
Assets subject to Permitted Encumbrances and Schedule 5.8. Without
limiting the foregoing, the Sellers shall cooperate with the Buyer
in the Buyer's efforts to cure or remove any defects or
Encumbrances existing with respect to the Real Estate that the
Buyer reasonably deems objectionable; provided, however, that in
connection therewith the Sellers shall not be under any obligation
to initiate legal action or to incur expense other than reasonable
administrative and out-of-pocket expenses. From time to time after
the date hereof, the Buyer will, at its own expense, execute and
deliver such documents to the Sellers as the Sellers may reasonably
request in order to more effectively consummate the sale of the
Purchased Assets pursuant to this Agreement.
(b) In the event that any Purchased Asset shall not have
been conveyed to the Buyer at the Closing, the Sellers shall,
subject to Section 7.4(c), the PPA Transfer Agreement and the PSA
Performance Support Agreements, use their best efforts to convey
such asset to the Buyer as promptly as is practicable after the
Closing. In the event that any Easement shall not have been
retained by the Sellers after the Closing, the Buyer shall use its
best efforts to grant such Easement to the Sellers as promptly as
is practicable after the Closing.
(c) Subject to the PPA Transfer Agreement and the PSA
Performance Support Agreements, to the extent that the Sellers'
rights under any Sellers' Agreement may not be assigned without the
consent of another Person which consent has not been obtained, this
Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be
unlawful, and the Sellers, at their expense, shall use their
commercially reasonable efforts to obtain any such
required consent(s) as promptly as possible. The Sellers and the
Buyer agree that if any consent to an assignment of any Sellers'
Agreement shall not be obtained or if any attempted assignment
would be ineffective or would impair the Buyer's rights and
obligations under the Sellers' Agreement in question so that the
Buyer would not in effect acquire the benefit of all such rights
and obligations, the Sellers, to the maximum extent permitted by
law and such Sellers' Agreement, shall after the Closing, unless
the Sellers elect to comply with Section 7.4(e) hereof, appoint the
Buyer to be the Sellers' representative and agent with respect to
such Sellers' Agreement, and the Sellers shall, to the maximum
extent permitted by law and such Sellers' Agreement, enter into
such reasonable arrangements with the Buyer as are necessary to
provide the Buyer with the benefits and obligations of such
Sellers' Agreement. The Sellers and the Buyer shall cooperate and
shall each use their commercially reasonable efforts after the
Closing to obtain an assignment of such Sellers' Agreement to the
Buyer.
(d) Sellers and Buyer covenant and agree to negotiate and
enter into in good faith such further agreements for operating the
Purchased Assets, after the Closing Date, including those
agreements described on Schedule 7.4(d).
(e) To the extent that any personal property lease, relating
to any assets which are principally used by the Sellers for
generation purposes at the Purchased Assets, cannot be assigned to
the Buyer or are not subject to arrangements described in Section
7.4(c), the Sellers will use their commercially reasonable efforts
to acquire the assets relating to such lease and to include them in
the Purchased Assets before the Closing Date.
7.5. Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such public
announcement, statement or other disclosure prior to such
consultation, except as may be required by law and except that the
parties may make public announcements, statements or other
disclosures with respect to this Agreement and the
transactions contemplated hereby to the extent and under the
circumstances in which the parties are expressly permitted by the
Confidentiality Agreement to make disclosures of "Proprietary
Information" (as defined in the Confidentiality Agreement).
7.6. Consents and Approvals. (a) The Sellers and the Buyer
shall each file or cause to be filed with the Federal Trade
Commission and the United States Department of Justice any
notifications required to be filed under the HSR Act and the rules
and regulations promulgated thereunder with respect to the
transactions contemplated hereby. The parties shall consult with
each other as to the appropriate time of filing such notifications
and shall use their best efforts to make such filings at the agreed
upon time, to respond promptly to any requests for additional
information made by either of such agencies, and to cause the
waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing.
(b) The Sellers and the Buyer shall cooperate with each
other and (i) promptly prepare and file all necessary
documentation, (ii) effect all necessary applications, notices,
petitions and filings and execute all agreements and documents,
(iii) use all commercially reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Transferable
Permits, consents, approvals and authorizations of all governmental
bodies and (iv) use all commercially reasonable efforts to obtain
all necessary consents, approvals and authorizations of all other
parties, in the case of each of the foregoing clauses (i), (ii),
(iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without
limitation, the Sellers Required Regulatory Approvals and the Buyer
Required Regulatory Approvals) or required by the terms of any
note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument to which
the Sellers or the Buyer is a party or by which any of them is
bound. Each of the Sellers and the Buyer shall have the right to
review in advance all characterizations of the information relating
to the transactions contemplated by this Agreement which appear in
any filing made in connection with the transactions contemplated
hereby.
(c) The Sellers and the Buyer shall cooperate with each
other and promptly prepare and file notifications with, and request
Tax clearances from, state and local taxing authorities in
jurisdictions in which a portion of the Purchase Price may be
required to be withheld or in which the Buyer would otherwise be
liable for any Tax liabilities of the Sellers pursuant to such
state and local Tax law.
7.7. Fees and Commissions. The Sellers and the Buyer each
represent and warrant to the other that, except for ▇▇▇▇▇▇▇ ▇▇▇▇▇
& Co., which is acting for and at the expense of the Sellers, and
▇▇▇▇ ▇▇▇▇▇▇ Associates Incorporated and Societe Generale, which are
acting for and at the expense of the Buyer, no broker, finder or
other Person is entitled to any brokerage fees, commissions or
finder's fees in connection with the transaction contemplated
hereby by reason of any action taken by the party making such
representation. The Sellers and the Buyer will pay to the other or
otherwise discharge, and will indemnify and hold the other harmless
from and against, any and all claims or liabilities for all
brokerage fees, commissions and finder's fees (other than the fees,
commissions and finder's fees payable to the parties listed above)
incurred by reason of any action taken by such party.
7.8. Tax Matters. (a) All transfer and sales taxes incurred
in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Buyer, and the Buyer, 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 or sales taxes, and, if required by applicable law,
the Sellers will join in the execution of any such Tax Returns or
other documentation. Prior to the Closing Date, the Buyer will
provide to the Sellers, to the extent possible, an appropriate
certificate of no Tax incurred in connection with this Agreement
and the transactions contemplated hereby, due from each applicable
taxing authority.
(b) With respect to Taxes to be prorated in accordance with
Section 3.5 of this Agreement only, the Buyer shall prepare and
timely file all Tax Returns
required to be filed after the Closing with respect to the
Purchased Assets, if any, and shall duly and timely pay all such
Taxes shown to be due on such Tax Returns. The Buyer's preparation
of any such Tax Returns shall be subject to the Sellers' approval,
which approval shall not be unreasonably withheld. The Buyer shall
make such Tax Returns available for the Sellers' review and
approval no later than fifteen (15) Business Days prior to the due
date for filing such Tax Return. Within ten (10) Business Days
after receipt of such Tax Return, the Sellers shall pay to the
Buyer their proportionate share of the amount shown as due on such
Tax Return determined in accordance with Section 3.5 of this
Agreement.
(c) Each of the Buyer and the Sellers shall provide the
other with such assistance as may reasonably be requested by the
other party in connection with the preparation of any Tax Return,
any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for
Taxes, and each will retain and provide the requesting party with
any records or information which may be relevant to such return,
audit or examination, proceedings or determination. Any
information obtained pursuant to this Section 7.8(c) or pursuant to
any other Section hereof providing for the sharing of information
or review of any Tax Return or other schedule relating to Taxes
shall be kept confidential by the parties hereto.
(d) NERC Tax Matters.
(1) Section 338(h)(10) Election. (i) With respect
to the sale of the NERC Stock, the Sellers and the Buyer shall
jointly make the election provided for by Section 338(h)(10) of
the Code and Section 1.338(h)(10)-1 of the Treasury Regulations
promulgated under the Code and any comparable election under
state or local tax law (the "Election"). As soon as practicable
after the Closing Date, with respect to such Election, the
Sellers and the Buyer shall mutually prepare a Form 8023-A, with
all attachments, and the Sellers shall sign such Form 8023-A.
The Buyer and the Sellers shall also cooperate with each other
to take all actions necessary and appropriate (including filing
such additional forms, returns, elections, schedules and other
documents as may be
required) to effect and preserve such Election in accordance
with the provisions of Section 1.338(h)(10)-1 of the Treasury
Regulations (or any comparable provisions of state and local tax
law) or any successor provisions.
(ii) With respect to the Election the Modified
Aggregate Deemed Sales Price as defined in Section 1.338(h)(10)-
1 of the Treasury Regulations (the "Modified ADSP") shall be
allocated among the assets of NERC pursuant to Treasury
Regulation Section 1.338(h)(10)-1. The Buyer and the Sellers
shall use their good faith best efforts to agree upon such
allocation. The Sellers shall provide to the Buyer a schedule
and supporting material reflecting such allocation for the
Buyer's review and consent, such consent not to be unreasonably
withheld. The parties shall take no action inconsistent with,
or fail to take any action necessary for the validity of, the
Election, and shall adopt and utilize the asset values
determined from such reasonable allocation for the purpose of
all Tax Returns filed by them, and shall not voluntarily take
any action inconsistent therewith upon examination of any Tax
Return, in any refund claim, in any litigation or otherwise with
respect to such Tax Returns.
(2) Return Filing, Payments, Refunds and Credits.
Notwithstanding anything to the contrary in Section 3.5 of this
Agreement,
(i) For purposes of this Agreement, (a) the
amount of Taxes of NERC attributable to the pre- Closing portion
of any taxable period beginning before and ending after the
Closing Date (the "Straddle Period") shall be determined based
upon the cumulative monthly income statements of NERC for all
months ending prior to the Closing Date and upon the relative
number of days in the pre-Closing and post-Closing portion of
the month in which the Closing Date occurs, (b) taxable income
attributable to NERC's interests in OSP and OSP II shall be
determined by reference to the relative number of days in the
pre-Closing and post- Closing portions of such Straddle Period;
provided, however, that Taxes imposed on a periodic basis shall
be determined by reference to the relative number of
days in the pre-Closing and post-Closing portions of such
Straddle Period and any extraordinary transaction shall be
allocated to the portion of such Straddle Period in which it
occurred.
(ii) The Buyer and the Sellers shall cause NERC to
join, for all pre-Closing periods and the Straddle Period for
which NERC is required or eligible to do so, in all
consolidated, combined or unitary federal, state, or local
Income Tax or franchise Tax Returns of the Sellers (or any Tax
Affiliate for all pre-Closing periods ("Sellers' Tax Returns")),
and shall, in each jurisdiction where this is required or
permissible under applicable law, cause the taxable year of NERC
to terminate as of the Closing Date. The Sellers shall cause to
be prepared and timely filed all such Sellers' Tax Returns and
shall cause to be paid all Taxes shown to be due on such
Sellers' Tax Returns; provided, however, that in the case of a
Sellers' Tax Return for the Straddle Period, the Buyer shall or
shall cause NERC to pay to the Sellers the portion of such Taxes
shown to be due thereon attributable to NERC for the post-
Closing Date portion of the Straddle Period determined in
accordance with Section 7.8(d)(2)(i) and the ▇▇▇▇ Intercompany
Tax Allocation Agreement in effect on the date of the signing of
this Agreement (the "▇▇▇▇ Intercompany Tax Allocation
Agreement").
(iii) The Buyer shall or shall cause NERC to
prepare and timely file all Income Tax Returns of NERC for all
pre-Closing periods and the Straddle Period, other than those
referred to in Section 7.8(d)(2)(ii), which Income Tax Returns
have not been filed as of the Closing Date, and shall cause to
be timely paid all Taxes shown to be due on such Tax Returns.
No later than ten days prior to the due date for the filing of
each Income Tax Return referred to in this Section
7.8(d)(2)(iii), the Sellers shall pay to NERC the amount of
Taxes shown as due thereon less any estimated Taxes paid by NERC
during the pre-Closing period; provided, however, that in the
case of an Income Tax Return for a Straddle Period, the Sellers
shall only be required to pay NERC the portion of such Taxes
that is attributable to the pre-Closing Date portion of such
Straddle Period, determined in
accordance with Section 7.8(d)(2)(i) and the ▇▇▇▇ Intercompany
Tax Allocation Agreement less any estimated Taxes paid by NERC
during the pre-Closing period. The Sellers shall fully
cooperate with the Buyer and NERC in accordance with past
practice in the preparation of the Income Tax Returns referred
to in this Section 7.8(d)(2)(iii).
(iv) The Buyer shall or shall cause NERC to
prepare and timely file all Tax Returns of NERC for all pre-
Closing periods and the Straddle Period, other than those Tax
Returns referred to in Section 7.8(d)(2)(ii) and (iii), which
Tax Returns have not been filed as of the Closing Date, and
shall cause to be timely paid all Taxes shown to be due thereon.
No later than ten days prior to the due date for the filing of
each Tax Return referred to in this Section 7.8(d)(2)(iv), the
Sellers shall pay to NERC the amount shown as due thereon
attributable to the pre- Closing Date portion of the Straddle
Period less any estimated Taxes paid by NERC during the pre-
Closing period.
(v) The Tax Returns referred to in Section
7.8(d)(2)(ii), (iii) and (iv) shall be prepared in a manner
consistent with past practice, unless a contrary treatment is
required by an intervening change in the applicable law. Except
for calendar year 1996 Tax Returns, the Sellers shall cause to
be made available to Buyer a copy of any Tax Return that is
required to be filed by the Sellers or NERC under 7.8(d)(2)(ii)
and the Buyer shall cause to be made available to the Sellers a
copy of any Tax Return that is required to be filed by the Buyer
or NERC under Section 7.8(d)(2)(iii) or (iv), in each case
together with all relevant workpapers and other information.
Each such Tax Return shall be made available for review and
approval no later than 20 Business Days prior to the due date
for the filing of such Tax Return (taking into account proper
extensions), such approval not to be unreasonably withheld. An
exact copy of any such Tax Return filed by the Buyer shall be
provided to the Sellers and any such Tax Return filed by the
Sellers shall be provided to the Buyer, in each case, no later
than ten days after such Tax Return is filed.
(vi) Any refunds or credits of the Taxes of NERC
plus any interest received with respect thereto from the
applicable taxing authorities for any Closing period (including
without limitation, refunds or credits arising from amended
returns filed after the Closing Date) shall be for the account
of the Sellers, except to the extent that such refunds or
credits are attributable to the mandatory carryback of any
deductions or credits for any Tax Period ending after a Closing
Date and, if received by the Buyer or NERC, shall be paid to the
Sellers within ten days after the Buyer or NERC receives such
refund or after the relevant Tax Return is filed within which
the credit is applied against the Buyer's or NERC's liability
for Taxes for a period which begins after the Closing Date, net
of any Taxes the Buyer or NERC is required to pay on account of
receiving such refund or credit (including a reasonable estimate
of resulting future Tax costs.) The Sellers, without the
consent of the Buyer, shall not apply for any refund that will
create a material adverse effect on any post-Closing period Tax
Return and shall not apply for any refund for any Straddle
Period Tax Return or any Tax Return for NERC that is not a
consolidated, combined, or unitary Tax Return. Any refunds or
credits of Taxes of NERC for any Straddle Period shall be
apportioned between the Sellers and the Buyer in the same manner
as the liability for such Taxes is apportioned pursuant to
Section 7.8(d)(2)(i).
(3) Tax Indemnification. (i) Without duplication,
the Sellers shall indemnify, defend and hold the Buyer harmless
from and against any and all Taxes (including interest and
penalties) which may be suffered or incurred by them in respect
of or relating to, directly or indirectly (x) Taxes of or
attributable to NERC for all pre-Closing periods, (y) Taxes of
or attributable to NERC with respect to the pre-Closing portion
of the Straddle Period, and (z) Taxes payable by NERC with
respect to any pre-Closing period or Straddle Period by reason
of NERC being severally liable for the Tax of any Tax Affiliate
pursuant to Treasury Regulation Section 1.1502-6 or any
analogous state or local Tax law.
(ii) Without duplication, the Buyer shall
indemnify, defend and hold the Sellers harmless from and against
any and all Taxes (including interest and penalties) which may
be suffered or incurred by them in respect of or relating to,
directly or indirectly (x) Taxes of or attributable to NERC with
respect to all post-Closing periods, (y) Taxes of or
attributable to NERC with respect to the post-Closing portion of
any Straddle Period.
(4) Tax Contest. (i) Each of the Sellers and the
Buyer shall notify the other party in writing within 30 days of
receipt of written notice of any pending or threatened tax
examination, audit or other administrative or judicial
proceeding (a "Tax Contest") that could reasonably be expected
to result in an indemnification obligation under this Section
7.8(d) of such other party pursuant to this Section 7.8(d). If
the recipient of such notice of a Tax Contest fails to provide
such notice to the other party, it shall not be entitled to
indemnification for any Taxes arising in connection with such
Tax Contest, but only to the extent, if any, that such failure
or delay shall have adversely affected the indemnifying party's
ability to defend against, settle, or satisfy any action, suit
or proceeding against it, or any damage, loss, claim, or demand
for which the indemnified party is entitled to indemnification
hereunder.
(ii) If a Tax Contest relates to any period ending
on or prior to the Closing Date or to any Taxes for which the
Sellers are liable in full hereunder, the Sellers shall at their
expense control the defense and settlement of such Tax Contest.
If such Tax Contest relates to any period beginning after the
Closing Date or to any Taxes for which the Buyer is liable in
full hereunder, the Buyer shall at its own expense control the
defense and settlement of such Tax Contest. The party not in
control of the defense shall have the right to observe the
conduct of any Tax Contest at its expense, including through its
own counsel and other professional experts. The Buyer and the
Sellers shall jointly represent NERC in any Tax Contest relating
to
a Straddle Period, and fees and expenses related to such
representation shall be paid equally by the Buyer and the
Sellers.
(iii) Notwithstanding anything to the contrary in
Section 7.8(d)(4)(ii), to the extent that an issue raised in any
Tax Contest controlled by one party or jointly controlled could
materially affect the liability for Taxes of the other party,
the controlling party shall not, and neither party in the case
of joint control shall, enter into a final settlement without
the consent of the other party, which consent shall not be
unreasonably withheld. Where a party withholds its consent to
any final settlement, that party may continue or initiate
further proceedings, at its own expense, and the liability of
the party that wished to settle (as between the consenting and
the non-consenting party) shall not exceed the liability that
would have resulted from the proposed final settlement
(including interest, additions to Tax, and penalties that have
accrued at that time), and the non-consenting party shall
indemnify the consenting party for such Taxes.
(5) Tax Sharing Agreements. Any Tax sharing agreement to
which NERC is a party shall be deemed terminated with respect to
NERC on, and effective as of, the Closing Date, and no Person shall
have any rights or obligations under such Tax sharing agreement
with respect to NERC after such termination; provided, however,
that the ▇▇▇▇ Intercompany Tax Allocation Agreement shall remain in
effect with respect to NERC in order to determine the portion of
the Sellers' Tax liabilities attributable to NERC, and to be paid
to the Sellers under Section 7.8(d)(2)(ii) for the post-Closing
Date portion of the Straddle Period.
(e) Disputes. In the event that a dispute arises between
the Sellers and the Buyer as to the amount of Taxes, or
indemnification, whether or not attributable to NERC, or the amount
of any allocation of Purchase Price under Sections 3.3(a) or
7.8(d)(1)(ii) hereof, the parties shall attempt in good faith to
resolve such dispute, and any agreed upon amount shall be paid to
the appropriate party. If such dispute is not resolved 30 days
thereafter, the parties shall submit the dispute to
the Independent Accounting Firm for resolution, which resolution
shall be final, conclusive and binding on the parties.
Notwithstanding anything in this Agreement to the contrary, the
fees and expenses of the Independent Accounting Firm in resolving
the dispute shall be borne equally by the Sellers and the Buyer.
Any payment required to be made as a result of the resolution of
the dispute by the Independent Accounting Firm shall be made within
ten days after such resolution, together with any interest
determined by the Independent Accounting Firm to be appropriate.
(f) Sellers will reimburse Buyer for a percentage of
payments with respect to liabilities for real or personal property
Taxes under agreements entered into by the Sellers and local
governments, as set forth in Schedule 7.8(f) hereof, within 30 days
following delivery to Sellers of evidence of such payments. With
respect to real or personal property Taxes payable in jurisdictions
in which no Tax Agreements are operative and in which both Buyer
and Sellers have property which is or is potentially subject to
property Tax, Buyer and Sellers will cooperate in the filing of
property Tax Returns with the objective of maximizing Tax and
administrative efficiency to the benefit of both parties.
7.9. Supplements to Schedules. Prior to the Closing Date,
the Sellers and the Buyer shall supplement or amend the Schedules
required by Section 2.4, Article V and Article VI, as the case may
be, with respect to any matter relating to the Purchased Assets,
hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or
described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any
breach of any representation or warranty made in this Agreement
unless the parties agree thereto in writing.
7.10. Employees. (a) The Buyer may offer employment, effective
as of the Closing Date, to those employees of the Sellers and their
Affiliates whose employment responsibilities primarily relate to
the Fossil Assets (including employees in the Fuel Services and
Risk management department and employees in the Construction
Services department) (all such employees
hereinafter referred to as "Fossil Employees"), to any other
employees of the Sellers and their Affiliates who are in a function
listed in Schedule 7.10(a) or to any other employees of the Sellers
and their Affiliates whose employment responsibilities relate to
the Fossil Assets. The Buyer may offer employment, effective as of
the Closing Date, to those employees of the Sellers and their
Affiliates whose employment responsibilities primarily relate to
the Hydroelectric Assets, hereinafter referred to as "Hydroelectric
Employees," to any remaining employees of the Sellers and their
Affiliates who are in a function listed on Schedule 7.10(a) or to
any other remaining employees whose employment responsibilities
relate to the Purchased Assets.
All such offers of employment shall be made (i) in accordance
with all applicable laws and regulations, and (ii)(x) for employees
represented by Local Nos. 326 and 486 of the International
Brotherhood of Electrical Workers ("IBEW") and Local No. 464 of the
Utility Workers Union of America ("UWUA"), in accordance with the
Main Table Agreements and the IBEW/UWUA MOU, as defined in Section
7.10(b) below, and (y) for employees represented by Local Nos. 310
and 345 of the Brotherhood of Utility Workers of New England,
Incorporated ("BUW") in accordance with the BUW MOU, as defined in
Section 7.10(c) below. Each person who becomes employed by the
Buyer pursuant to this Section 7.10 shall be referred to herein as
a "NEPGen Employee."
The Sellers or any Affiliate of the Sellers may at any time
prior to the Closing Date, offer employment to any Fossil
Employees, Hydroelectric Employees, or any other employees who are
in a function listed on Schedule 7.10(a), as long as such employees
are not participants in the New England Electric Companies'
Incentive Compensation Plans I, II, or III (collectively, the
"Plans"). Without the prior consent of the Buyer, the Sellers will
refrain, and will use their best efforts to cause their Affiliates
to refrain, from offering employment from the date of this
Agreement until February 28, 1998 (the "Buyer Window") to Fossil
Employees, Hydroelectric Employees and any other employees whose
functions are listed on Schedule 7.10(a) who are participants in
the Plans. Thereafter, the Sellers or any Affiliates of the
Sellers may offer employment to
said employees who did not accept a position with the Buyer within
the Buyer Window. Buyer may commence offering employment to said
employees 60 days after the date of this Agreement. For all other
employees Seller and Buyer shall mutually agree upon the hiring
process, transition and timing thereof.
(b) Schedule 7.10(b) sets forth the collective bargaining
agreements, and amendments thereto, to which the Sellers are a
party with the IBEW and the UWUA in connection with the Purchased
Assets (the "Main Table Agreements"), and the Memorandum of
Understanding between the Sellers and certain of their Affiliates
and the IBEW and the UWUA ("IBEW/UWUA MOU"). With respect to
NEPGen Employees who are included in the collective bargaining
units covered by the Main Table Agreements ("IBEW/UWUA Employees"),
on the Closing Date, the Buyer will assume the Main Table
Agreements as they relate to IBEW/UWUA Employees to be employed at
the Fossil Assets and comply with all applicable obligations
thereunder and will accept and fulfill all obligations under the
IBEW/UWUA MOU that are designated for the new owner, including but
not limited to the obligation of the new owner to recognize the
respective union as the collective bargaining agent. On the
Closing Date, the Buyer will assume the applicable Main Table
Agreements as they relate to IBEW/UWUA Employees to be employed at
the Hydroelectric Assets and comply with all applicable obligations
thereunder and will accept and fulfill all obligations under the
IBEW/UWUA MOU that are designated for the new owner, including but
not limited to the obligation of the new owner to recognize the
respective union as the collective bargaining agent.
The Sellers and certain of their Affiliates have established
local working conditions with the IBEW/UWUA at each facility which
are comprised of local agreements, copies of which the Buyer hereby
acknowledges that it has had the opportunity to review, and local
past practices ("Local Working Conditions"). Pursuant to the
IBEW/UWUA MOU, the Buyer shall not be required to assume any Local
Working Conditions but agrees that it shall fulfill all of its
obligations under the IBEW/UWUA MOU with respect to the creation
of, and bargaining over, new Local Working Conditions.
(c) Schedule 7.10(c) sets forth the collective bargaining
agreements to which the Sellers are a party with the BUW in
connection with the Purchased Assets (the "BUW CBAs"), and the
Memorandum of Understanding between the Sellers and certain of
their Affiliates and the BUW ("BUW MOU"). With respect to NEPGen
Employees who are represented by the BUW ("BUW Employees") and
consistent with Sellers "best efforts" obligations under the BUW
MOU, the Buyer shall assume the BUW CBA for the duration of its
term. Further, the Buyer will accept and fulfill all obligations
under the BUW MOU designated for the new owner, including, but not
limited to, recognizing the respective BUW local as the collective
bargaining agent as long as supported by law.
(d) For the period commencing on the Closing Date and ending
12 months thereafter, the Buyer shall provide all NEPGen Employees
who are not IBEW/UWUA Employees or BUW Employees ("NEPGen Non-Union
Employees") with total compensation (including, without limitation,
base pay, authorized overtime as set forth in Schedule 7.10(d),
bonuses, and benefits contained in the employee benefit plans,
programs and fringe benefit arrangements (excluding education
reimbursement)) which is, in the aggregate, at least equivalent in
value to the NEPGen Non-Union Employee's total compensation prior
to the Closing. Such total compensation shall be based upon (x)
such employee's existing individual base pay, (y) authorized
overtime, if applicable, and (z) an average bonus and benefit
component for such employee's salary plan level, as consistently
applied by Seller, apportioned according to such employee's base
pay.
(e) As of the Closing Date, all NEPGen Non-Union Employees
shall cease to participate in the employee welfare benefit plans
(as such term is defined in ERISA) maintained or sponsored by the
Sellers or their Affiliates (the "Prior Welfare Plans") and shall,
if applicable, commence to participate in welfare benefit plans of
the Buyer or its Affiliates (the "Replacement Welfare Plans"). The
Buyer shall (i) waive all limitations as to pre-existing condition
exclusions and waiting periods with respect to NEPGen Non-Union
Employees under the Replacement Welfare Plans, other than, but only
to the extent of, limitations or waiting
periods that were in effect with respect to such employees under
the Prior Welfare Plans and that have not been satisfied as of the
Closing Date, and (ii) provide each NEPGen Non-Union Employee with
credit for any copayments and deductibles paid prior to the Closing
Date in satisfying any deductible or out-of-pocket requirements
under the Replacement Welfare Plans (on a pro-rata basis in the
event of a difference in plan years).
(f) NEPGen Non-Union Employees shall be given credit for all
service with the Sellers and their Affiliates under all employee
benefit plans, programs, and fringe benefit plans, programs, and
fringe benefit arrangements of the Buyer ("Buyer Benefit Plans") in
which they become participants. The service credit given is for
purposes of eligibility, vesting and service related level of
benefits, but not benefit accrual. For purposes of benefit
accrual, NEPGen Non-Union Employees shall be given credit for all
service with the Sellers and their Affiliates under all Buyer
Benefit Plans, but the ultimate benefits provided under the Buyer
Benefit Plans may be offset by those previously provided by the
Sellers or benefit plans of the Sellers, or by the benefits accrued
under the benefit plans of the Sellers or otherwise committed to be
provided by the Sellers in the future. Nothing in this Agreement
shall preclude the use of a "Defined Contribution Plan" in
substitution for the "Defined Benefit Plans" maintained by the
Sellers.
(g) To the extent allowable by law, the Buyer shall take any
and all necessary action to cause the trustee of a defined
contribution plan of the Buyer or one of its Affiliates, if
requested to do so by a NEPGen Non-Union Employee, to accept a
direct "rollover" of all or a portion of said employee's
distribution (excluding securities) from the New England Electric
System Companies Incentive Thrift Plan.
(h) In addition to the Buyer's obligations with respect to
the Severance Amount set forth in Section 4.2, other than NEPGen
Non-Union Employees who have previously received a severance or
early retirement benefit package from NEP or its Affiliates, the
Buyer shall pay to each NEPGen Non-Union Employee whose employment
is terminated by the Buyer or one of its Affiliates within eighteen
months of the Closing Date a severance benefit package equivalent
to that which would have been provided to such individual upon such
termination by the Sellers or their Affiliates under the 1997 ▇▇▇▇
Companies Special Severance Plan had such individual remained
continuously employed by the Sellers or their Affiliates and had
been eligible under, and covered by, such plan on the date of such
termination.
(i) The Sellers agree to timely perform and discharge all
requirements under the WARN Act and under applicable state and
local laws and regulations for the notification of their employees
arising from the sale of the Purchased Assets to the Buyer up to
and including the Closing Date for those employees who will become
NEPGen Employees effective as of the Closing Date. After the
Closing Date, the Buyer shall be responsible for performing and
discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the
notification of its employees with respect to the Fossil Assets or
the Hydroelectric Assets, as the case may be.
7.11. Risk of Loss. (a) From the date hereof through the
Closing Date, all risk of loss or damage to the property included
in the Purchased Assets shall be borne by the Sellers.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain or is the subject of
a pending or (to the knowledge of the Sellers) contemplated taking
which has not been consummated, the Sellers shall notify the Buyer
promptly in writing of such fact. If such taking would create a
Material Adverse Effect, the Buyer and the Sellers shall negotiate
in good faith to settle the loss resulting from such taking
(including, without limitation, by making a fair and equitable
adjustment to the Purchase Price) and, upon such settlement,
consummate the transaction contemplated by this Agreement pursuant
to the terms of this Agreement. If no such settlement is reached
within sixty (60) days after the Sellers have notified the Buyer of
such taking, then the Buyer or the Sellers may terminate this
Agreement pursuant to Section 11.1(f).
(c) If, before the Closing Date all or any material portion
of the Purchased Assets are damaged or destroyed by fire or other
casualty, the Sellers shall notify the Buyer promptly in writing of
such fact. If such damage or destruction would create a Material
Adverse Effect and the Sellers have not notified the Buyer of their
intention to cure such damage or destruction within fifteen (15)
days after its occurrence, the Buyer and the Sellers shall
negotiate in good faith to settle the loss resulting from such
casualty (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price) and, upon such
settlement, consummate the transactions contemplated by this
Agreement pursuant to the terms of this Agreement. If no such
settlement is reached within sixty (60) days after the Sellers have
notified the Buyer of such casualty, then the Buyer or the Sellers
may terminate this Agreement pursuant to Section 11.1(f).
7.12. Transfer of the NERC Stock. NEP shall use its
reasonable best efforts to cause the transfer of the NERC Stock to
NEP by no later than the day on which all conditions to the Closing
set forth in Sections 8.1, 8.2 and 8.3 have been satisfied, other
than the condition set forth in Section 8.2(e).
7.13. Standard Offer. Prior to the Closing, the Buyer shall,
upon consultation with NEP, have the right to submit a Standard
Offer Bid on behalf of NEP; provided, however, that the Buyer shall
not submit a Standard Offer Bid on NEP's behalf for Standard Offer
Service to an Affiliate of the Sellers without the consent of NEP,
which consent shall not unreasonably be withheld. The Buyer shall
not submit a Standard Offer Bid on NEP's behalf for Standard Offer
Service to any Person who is not an Affiliate of NEP without the
consent of NEP. A successful Standard Offer Bid submitted on
behalf of the Seller shall not relieve the Buyer of its obligations
under each Transition Agreement to provide "Wholesale Standard
Offer Service" (as defined in each such Transition Agreement). NEP
shall not submit a Standard Offer Bid without the consent of the
Buyer.
7.14. Cooperation Relating to Insurance. The Sellers shall
cooperate with the Buyer's efforts to
obtain "sunrise insurance" with regard to the Purchased Assets. In
addition, the Sellers agree to use reasonable efforts to assist the
Buyer in making any claims against pre-Closing insurance policies
of the Sellers that may provide coverage related to Assumed
Obligations. The Buyer agrees that it will indemnify Sellers for
their reasonable out of pocket expenses incurred in providing such
assistance and cooperation. Notwithstanding the foregoing, the
Buyer acknowledges that Sellers and their Affiliates are entitled,
in their sole discretion, to reach settlement agreements with their
insurance carriers regarding claims of the Sellers and their
Affiliates with respect to manufactured gas waste liabilities of
the Sellers and their Affiliates, and that any such settlement
agreements may limit or eliminate any coverage that may otherwise
be available to the Buyer with respect to Assumed Liabilities
described in Sections 2.3(a)(v) and (vi) hereof. The Buyer further
agrees that it will not interfere with any efforts of the Sellers
and their Affiliates with the aforementioned settlement efforts.
7.15. Granite State Transition Agreement. On or prior to the
Closing Date, Buyer and Granite State Electric Company shall at the
request of Granite State Electric Company enter into a Wholesale
Standard Offer Service Agreement, in substantially the same form as
the Wholesale Standard Offer Service Agreement dated on the date of
this Agreement, between the Buyer and Massachusetts Electric
Company.
7.16. Tax Clearance Certificates. The Sellers and Buyer
shall cooperate and use their best efforts to cause the tax
clearance certificates described in Schedule 5.20 of this Agreement
to be issued by the appropriate taxing authorities prior to the
Closing Date or as soon as practicable thereafter.
ARTICLE VIII
FOSSIL ASSETS CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Fossil Assets Transaction. The respective obligations of each
party to effect the sale of the Fossil Assets shall be subject to
the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Fossil Assets contemplated hereby
shall have expired or been terminated;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court which prevents the
consummation of the sale of the Fossil Assets contemplated hereby
shall have been issued and remain in effect (each party agreeing to
use its reasonable best efforts to have any such injunction, order
or decree lifted) and no statute, rule or regulation shall have
been enacted by any State or Federal government or governmental
agency in the United States which prohibits the consummation of the
sale of the Fossil Assets;
(c) All Federal, State and local government consents and
approvals required for the consummation of the sale of the Fossil
Assets and the Sellers Required Regulatory Approvals applicable to
the Fossil Assets and the Buyer Required Regulatory Approvals
applicable to the Fossil Assets, shall have been obtained or become
Final Orders (a "Final Order" for all purposes of this Agreement
means a final order after all opportunities for rehearing are
exhausted (whether or not any appeal thereof is pending) that has
not been 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) and such Final Orders shall not impose materially
adverse terms or conditions;
(d) All consents and approvals for the consummation of the
sale of the Fossil Assets contemplated hereby required under the
terms of any note, bond, mortgage, indenture, contract or other
agreement to which the Sellers or the Buyer, or any of their
subsidiaries, are a party shall have been obtained, other than
those (i) which if not obtained, would not, in the aggregate,
create a Material Adverse Effect, or (ii) which are governed by the
PPA Transfer Agreement, the PSA Performance Support Agreements or
Section 7.4(c); and
(e) All conditions to the obligations of the Parties to
effect the sale of the Hydroelectric Assets shall be satisfied or
waived.
8.2. Conditions to Obligations of the Buyer. The obligation
of the Buyer to effect the sale of the Fossil Assets contemplated
by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions:
(a) There shall not have occurred and be continuing a
Material Adverse Effect;
(b) The Sellers shall have performed and complied with in
all material respects the covenants and agreements contained in
this Agreement which relate to the Fossil Assets and are required
to be performed and complied with by the Sellers on or prior to the
Closing Date, and the representations and warranties of the Sellers
which relate to the Sellers or the Fossil Assets and are set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made at and as of
the Closing Date;
(c) There shall be no Encumbrances on the Fossil Assets by
virtue of the Indentures or the NERC Note Agreements;
(d) The Buyer shall have received certificates from
authorized officers of the Sellers, dated the Closing Date, to the
effect that, to the best of such officers' knowledge, the
conditions set forth in Sections 8.2(a), (b) and (c) have been
satisfied;
(e) ▇▇▇▇ shall have transferred the NERC Stock to NEP;
(f) New England Power Service Company, a Massachusetts
corporation ("NEPSCO"), shall have assigned to the Buyer all of its
rights and obligations in (i) the Main Table Agreements as they
relate to the IBEW/UWUA Employees and (ii) the BUW CBAs as they
relate to the BUW Employees, to be employed at or in conjunction
with the Fossil Assets after the Closing Date;
(g) The Buyer shall have received an opinion from Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, or other counsel reasonably
acceptable to Buyer, dated the Closing Date and satisfactory in
form and substance to the Buyer and its counsel, substantially to
the effect that:
(1) The Sellers and NERC are each
corporations duly organized, existing and in good standing
under the laws of their respective states of incorporation and
the Sellers have the corporate power and authority to execute
and deliver this Agreement and those Ancillary Agreements
which relate to the Fossil Assets and to consummate the
transactions contemplated hereby; and the execution and
delivery of this Agreement and such Ancillary Agreements and
the consummation of the sale of the Fossil Assets contemplated
hereby have been duly authorized by all requisite corporate
action taken on the part of the Sellers;
(2) this Agreement and those Ancillary
Agreements which relate to the Fossil Assets have been duly
executed and delivered by the Sellers and (assuming that the
Sellers Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Sellers, enforceable against the Sellers in
accordance with their terms, except (A) that such enforcement
may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, and (B) that the remedy of
specific performance and injunctive and other forms of
equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary Agreements by
the Sellers do not (i) conflict with the Certificates of
Incorporation or Bylaws, as currently in effect, of the
Sellers or (ii) to our knowledge constitute a violation of or
default under the Applicable Contracts (except that we express
no
opinion as to any covenant, restriction or provision of any
such agreement or instrument with respect to financial
covenants, ratios or tests or any aspect of the financial
condition or results of operations of the Sellers).
"Applicable Contracts" mean those agreements or instruments
set forth on an attached Schedule and which have been
identified to us as all the agreements and instruments which
are material to the business or financial condition of the
Sellers;
(4) the ▇▇▇▇ of Sale and other documents
described in Section 4.3 are in proper form to transfer to the
Buyer title to the Fossil Assets;
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or approval of
any governmental authority is necessary for the consummation
by the Sellers of the Closing other than (i) the Sellers
Required Regulatory Approvals, all of such Sellers Required
Regulatory Approvals which are applicable to the sale of the
Fossil Assets hereunder having been obtained and being in full
force and effect with such terms and conditions as shall have
been imposed by any applicable governmental authority, and
(ii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained
or made, would not, in the aggregate create a Material Adverse
Effect; and
(6) The Share has been duly and validly
authorized and validly issued, is fully paid and non-
assessable, and was not issued in violation of the preemptive
rights of any stockholder of NERC. NEP is the owner of such
share of NERC Stock, free and clear of any perfected security
interest and, to our knowledge, any other security interests,
claims, liens or encumbrances. Assuming issuance by the SEC
of an appropriate order under the Holding Company Act, NEP has
the absolute and unrestricted right, power, authority and
capacity to sell the NERC Stock to the Buyer.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United
States or the laws of the
Commonwealth of Massachusetts, such counsel may rely upon opinions
of counsel admitted in such other jurisdictions. Any opinions
relied upon by such counsel as aforesaid shall be delivered
together with the opinion of such counsel. Such opinion may
expressly rely as to matters of fact upon certificates furnished by
the Sellers and appropriate officers and directors of the Sellers
and by public officials;
(h) The Buyer shall have received the qualifications or
approvals set forth in Section 6.3(b)(i) and (ii) hereof; and
(i) The Buyer shall be reasonably satisfied that all
material Environmental Permits and material Permits will be
transferred to the Buyer or obtained by the Buyer on or before the
Closing Date.
8.3. Conditions to Obligations of the Sellers. The
obligation of the Sellers to effect the sale of the Fossil Assets
contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following additional
conditions:
(a) The Buyer shall have performed in all material respects
its covenants and agreements contained in this Agreement which
relate to the Fossil Assets and are required to be performed on or
prior to the Closing Date;
(b) The representations and warranties of the Buyer which
relate to the Buyer of Fossil Assets and are set forth in this
Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made at and as of
the Closing Date;
(c) The Sellers shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the
conditions set forth in Sections 8.3(a) and (b) have been
satisfied;
(d) The Buyer shall have assumed, as set forth in Section
7.10, all of the applicable obligations under the Main Table
Agreements and the BUW CBAs as they relate to union employees to be
employed at or in conjunction with the Fossil Assets after the
Closing Date;
(e) The FERC shall have approved the Stipulation and
Agreement filed in FERC Docket No. ER-97-678-000 for Massachusetts
Electric Company dated May 28, 1997 and the Stipulation and
Agreement filed in FERC Docket No. ER-97- 680-000 for Narragansett
Electric Company dated May 30, 1997; and said Stipulation and
Agreements shall be and shall continue to be in full force and
effect; and
(f) The Sellers shall have received an opinion from Weil,
Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Buyer, dated the Closing Date
and satisfactory in form and substance to the Sellers and their
counsel, substantially to the effect that:
(1) The Buyer is a corporation duly
organized, existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to
execute and deliver this Agreement and those Ancillary
Agreements which relate to the Fossil Assets and to consummate
the transactions contemplated hereby; and the execution and
delivery of this Agreement and such Ancillary Agreements and the
consummation of the sale of the Fossil Assets contemplated
hereby have been duly authorized by all requisite corporate
action taken on the part of the Buyer;
(2) this Agreement and those Ancillary
Agreements which relate to the Fossil Assets have been duly
executed and delivered by the Buyer and (assuming that the
Sellers Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except (A) that such enforcement
may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (B) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may
be brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary
Agreements by the Buyer does not (i) conflict with the
Certificate of Incorporation or Bylaws, as currently in effect,
of the Buyer or (ii) to our knowledge constitute a violation of
or default under the Applicable Contracts (except that we
express no opinion as to any covenant, restriction or provision
of any such agreement or instrument with respect to financial
covenants, ratios or tests or any aspect of the financial
condition or results of operations of the Buyer). "Applicable
Contracts" mean those agreements or instruments set forth on an
attached Schedule and which have been identified to us as all
the agreements and instruments which are material to the
business or financial condition of the Buyer;
(4) the Instruments of Assumption and other
instruments described in Section 4.4 are in proper form for the
Buyer to assume the Assumed Fossil Obligations; and
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Buyer of the Closing other than the Buyer Required Regulatory
Approvals, all of such Buyer Required Regulatory Approvals which
are applicable to the sale of the Fossil Assets hereunder having
been obtained and being in full force and effect with such terms
and conditions as shall have been imposed by any applicable
governmental authority.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United
States and the Commonwealth of Massachusetts, such counsel may rely
upon opinions of counsel admitted in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall be
delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of facts upon certificates
furnished by appropriate officers and directors of the Buyer and
its subsidiaries and by public officials.
ARTICLE IX
HYDROELECTRIC ASSETS CONDITIONS
9.1. Conditions to Each Party's Obligations to Effect the
Hydroelectric Assets Transactions. The respective obligations of
each party to effect the sale of the Hydroelectric Assets shall be
subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(a) The waiting period under the HSR Act applicable to the
sale of the Hydroelectric Assets contemplated hereby shall have
expired or been terminated;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court which prevents the
consummation of the sale of the Hydroelectric Assets contemplated
hereby shall have been issued and remain in effect (each party
agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted by any State or Federal
government or governmental agency in the United States which
prohibits the consummation of the sale of the Hydroelectric Assets;
(c) All Federal, State and local government consents and
approvals required for the consummation of the sale of the
Hydroelectric Assets and the Sellers Required Regulatory Approvals
applicable to the Hydroelectric Assets and the Buyer Required
Regulatory Approvals applicable to the Hydroelectric Assets, shall
have been obtained or become Final Orders and such Final Orders
shall not impose materially adverse terms or conditions;
(d) All consents and approvals for the consummation of the
sale of the Hydroelectric Assets contemplated hereby required under
the terms of any note, bond, mortgage, indenture, contract or other
agreement to which the Sellers or the Buyer, or any of their
Subsidiaries, are a party shall have been obtained, other
than those (i) which if not obtained, would not, in the aggregate,
create a Material Adverse Effect, or (ii) which are governed by the
PSA Performance Support Agreements or Section 7.4(c); and
(e) All conditions to the obligations of the Parties to
effect the sale of the Fossil Assets shall be satisfied or waived.
9.2. Conditions to Obligations of the Buyer. The obligation
of the Buyer to effect the sale of the Hydroelectric Assets
contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following additional
conditions:
(a) There shall not have occurred and be continuing a
Material Adverse Effect;
(b) The Sellers shall have performed and complied with in
all material respects the covenants and agreements contained in
this Agreement which relate to the Hydroelectric Assets and are
required to be performed and complied with by the Sellers on or
prior to the Closing Date, and the representations and warranties
of the Sellers which relate to the Sellers or the Hydroelectric
Assets and are set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date
as though made at and as of the Closing Date;
(c) There shall be no Encumbrances on the Hydroelectric
Assets by virtue of the Indentures;
(d) The Buyer shall have received certificates from
authorized officers of the Sellers, dated the Closing Date, to the
effect that, to the best of such officers' knowledge, the
conditions set forth in Sections 8.2(a), (b) and (c) have been
satisfied;
(e) NEPSCO shall have assigned to the Buyer all of its
rights and obligations in the Main Table Agreements as they relate
to the IBEW/UWUA Employees to be employed at or in conjunction with
the Hydroelectric Assets after the Closing Date;
(f) The Buyer shall have received an opinion from Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that:
(1) NEP and Narragansett are corporations
duly organized, existing and in good standing under the laws of
the Commonwealth of Massachusetts and the State of Rhode Island,
respectively, and have the corporate power and authority to
execute and deliver this Agreement and those Ancillary
Agreements which relate to the Hydroelectric Assets and to
consummate the transactions contemplated hereby; and the
execution and delivery of this Agreement and such Ancillary
Agreements and the consummation of the sale of the Hydroelectric
Assets contemplated hereby have been duly authorized by all
requisite corporate action taken on the part of the Sellers;
(2) this Agreement and those Ancillary
Agreements which relate to the Hydroelectric Assets have been
duly executed and delivered by the Sellers and (assuming that
the Sellers Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Sellers, enforceable against the Sellers in
accordance with their terms, except (A) that such enforcement
may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, and (B) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may
be brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary Agreements by
the Sellers do not (i) conflict with the Certificates of
Incorporation or Bylaws, as currently in effect, of the Sellers
or (ii) to our knowledge constitute a violation of or default
under the Applicable Contracts (except that we express no
opinion as to any covenant, restriction or provision
of any such agreement or instrument with respect to financial
covenants, ratios or tests or any aspect of the financial
condition or results of operations of the Sellers). "Applicable
Contracts" mean those agreements or instruments set forth on an
attached Schedule and which have been identified to us as all
the agreements and instruments which are material to the
business or financial condition of the Sellers;
(4) the applicable ▇▇▇▇ of Sale and other
documents described in Section 4.3, are in proper form to
transfer to the Buyer title to the Hydroelectric Assets; and
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by NEP
of the Closing other than (i) the Sellers Required Regulatory
Approvals, all of such Sellers Required Regulatory Approvals
which are applicable to the sale of the Hydroelectric Assets
hereunder having been obtained and being in full force and
effect with such terms and conditions as shall have been imposed
by any applicable governmental authority, and (ii) such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not obtained or made, would not,
in the aggregate create a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United
States or the laws of the Commonwealth of Massachusetts, such
counsel may rely upon opinions of counsel admitted in such other
jurisdictions. Any opinions relied upon by such counsel as
aforesaid shall be delivered together with the opinion of such
counsel. Such opinion may expressly rely as to matters of fact
upon certificates furnished by the Sellers and appropriate officers
and directors of the Sellers and by public officials; and
(g) The Buyer shall have received the qualifications or
approvals set forth in Section 6.3(b)(i) and (ii) hereof.
9.3. Conditions to Obligations of the Sellers. The
obligation of the Sellers to effect the sale of the Hydroelectric
Assets contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed in all material respects
its covenants and agreements contained in this Agreement and which
relate to the Hydroelectric Assets and are required to be performed
on or prior to the Closing Date;
(b) The representations and warranties of the Buyer which
relate to the Buyer or the Hydroelectric Assets and are set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made at and as of
the Closing Date;
(c) The Sellers shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the
conditions set forth in Sections 9.3(a) and (b) have been
satisfied;
(d) The Buyer shall have assumed, as set forth in Section
7.10(b), all of the applicable obligations under the Main Table
Agreements as they relate to IBEW/UWUA Employees to be employed at
or in conjunction with the Hydroelectric Assets after the Closing
Date;
(e) The FERC shall have approved the Stipulation and
Agreement filed in FERC Docket No. ER-97-678-000 for Massachusetts
Electric Company dated May 28, 1997 and the Stipulation and
Agreement filed in FERC Docket No. ER-97- 680-000 for Narragansett
Electric Company dated May 30, 1997; and Stipulation and Agreement
shall be and shall continue to be in full force and effect; and
(f) The Sellers shall have received an opinion from Weil,
Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Buyer,
dated the Closing Date and satisfactory in form and substance to
the Sellers and their counsel, substantially to the effect that:
(1) The Buyer is a corporation duly
organized, existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to
execute and deliver this Agreement and those Ancillary
Agreements which relate to the Hydroelectric Assets and to
consummate the transactions contemplated hereby; and the
execution and delivery of this Agreement and such Ancillary
Agreements and the consummation of the sale of the
Hydroelectric Assets contemplated hereby have been duly
authorized by all requisite corporate action taken on the part
of the Buyer;
(2) this Agreement and those Ancillary
Agreements which relate to the Hydroelectric Assets have been
duly executed and delivered by the Buyer and (assuming that
the Sellers Required Regulatory Approvals and the Buyer
Required Regulatory Approvals are obtained) are valid and
binding obligations of the Buyer, enforceable against the
Buyer in accordance with their terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (B) that
the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary Agreements by
the Buyer does not (i) conflict with the Certificate of
Incorporation or Bylaws, as currently in effect, of the Buyer
or (ii) to our knowledge constitute a violation of or default
under the Applicable Contracts (except that we express no
opinion as to any covenant, restriction or provision of any
such agreement or instrument with respect to financial
covenants, ratios or tests or any aspect of the financial
condition or results of operations
of the Buyer). "Applicable Contracts" mean those agreements
or instruments set forth on an attached Schedule and which
have been identified to us as all the agreements and
instruments which are material to the business or financial
condition of the Buyer;
(4) the Instruments of Assumption and other
instruments described in Section 4.4 are in proper form for
the Buyer to assume the Assumed Hydroelectric Obligations; and
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or approval of
any governmental authority is necessary for the consummation
by the Buyer of the Closing other than the Buyer Required
Regulatory Approvals, all of such Buyer Required Regulatory
Approvals which are applicable to the sale of the
Hydroelectric Assets hereunder having been obtained and being
in full force and effect with such terms and conditions as
shall have been imposed by any applicable governmental
authority.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United
States and the Commonwealth of Massachusetts, such counsel may rely
upon opinions of counsel admitted in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall be
delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of facts upon certificates
furnished by appropriate officers and directors of the Buyer and
its subsidiaries and by public officials.
ARTICLE X
INDEMNIFICATION
10.1. Indemnification. The Sellers will severally, not
jointly, and not severally and jointly, indemnify, defend and hold
harmless the Buyer from and against any and all claims, demands or
suits (by any Person), losses, liabilities, damages (including
consequential or special damages), obligations, payments,
costs and expenses (including, without limitation, the costs and
expenses of any and all actions, suits, proceedings, assessments,
judgments, settlements and compromises relating thereto and
reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not covered
by insurance (each, an "Indemnifiable Loss"), asserted against or
suffered by the Buyer relating to, resulting from or arising out of
(i) any breach by the Sellers of any covenant or agreement of the
Sellers contained in this Agreement or the representations and
warranties contained in Sections 5.1, 5.2 or 5.3 hereof, (ii) the
Excluded Liabilities, (iii) any relationship or payment obligation
of the Sellers resulting from or contained in the PSA Performance
Support Agreements, or Section 7.4(c) hereof or, (iv) any
obligation imposed on the Buyer to make payments for the delivery
of electric energy from any of the Fossil Facilities or
Hydroelectric Facilities to the associated Point of Interconnection
defined and identified in the Continuing Site Agreement other than
the Annual Facilities Charge, as specified in the Continuing Site
Agreement (v) or noncompliance by the Sellers with any bulk sales
or transfer laws as provided in Section 12.11; provided, however,
that the Sellers shall have no liability pursuant to this Section
10.1(a) for Indemnifiable Losses arising from any breach or
breaches by the Sellers of Section 7.1(a) or any failure to update
Schedule 2.4 as required pursuant to Section 7.9 hereof, unless and
until the aggregate Indemnifiable Losses incurred by the Buyer and
attributable thereto exceeds $5,000,000, in which case the Sellers
shall be liable for all such losses, but only to the extent they
exceed $5,000,000.
(b) The Buyer will indemnify, defend and hold harmless the
Sellers from and against any and all Indemnifiable Losses asserted
against or suffered by the Sellers relating to, resulting from or
arising out of (i) any breach by the Buyer of any covenant or
agreement of the Buyer contained in this Agreement or the
representations and warranties contained in Sections 6.1, 6.2 and
6.3 hereof, (ii) the Assumed Obligations, (iii) any relationship or
payment obligation of the Buyer resulting from or contained in the
PSA Performance Support Agreements or Section 7.4(c) or (iv) any
liabilities incurred, directly or indirectly, in
connection with any contracts, agreements or other arrangements
entered into pursuant to Section 7.1(d)(iii).
(c) Any Person entitled to receive indemnification under
this Agreement (an "Indemnitee") having a claim under these
indemnification provisions shall make a good faith effort to
recover all losses, damages, costs and expenses from insurers of
such Indemnitee under applicable insurance policies so as to reduce
the amount of any Indemnifiable Loss hereunder. The amount of any
Indemnifiable Loss shall be reduced (i) to the extent that
Indemnitee receives any insurance proceeds with respect to an
Indemnifiable Loss and (ii) to take into account any net Tax
benefit recognized by the Indemnitee arising from the recognition
of the Indemnifiable Loss and any payment actually received with
respect to an Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any
covenant or agreement shall not affect the parties' obligations
under this Section 10.1 if the Indemnitee provided the Person
required to provide indemnification under this Agreement (the
"Indemnifying Party") with proper notice of the claim or event for
which indemnification is sought prior to such expiration,
termination or extinguishment.
(e) Except to the extent provided in Section 7.8(d)(3)
hereof, which Section shall govern the matters covered therein, the
rights and remedies of the Sellers and the Buyer under this Article
X are exclusive and in lieu of any and all other rights and
remedies which the Sellers and the Buyer may have under this
Agreement or otherwise for monetary relief with respect to (i) any
breach or failure to perform any covenant or agreement set forth in
this Agreement or (ii) the Assumed Obligations or the Excluded
Liabilities, as the case may be and (iii) any relationship or
payment obligation resulting from the PSA Performance Support
Agreements or Section 7.4(c).
(f) Buyer and Sellers each agree that notwithstanding any
provisions in this Agreement to the contrary, all parties to this
Agreement retain their remedies at law or in equity with respect to
willful or intentional breaches of this Agreement.
10.2. Defense of Claims. (a) If any Indemnitee receives notice
of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a
party to this Agreement or any Affiliate of a party to this
Agreement (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party, the
Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than ten (10)
calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the
Third Party Claim in reasonable detail and will indicate the
estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying
Party will have the right to participate in or, by giving written
notice to the Indemnitee, to elect to assume the defense of any
Third Party Claim at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, and the Indemnitee will
cooperate in good faith in such defense at such Indemnitee's own
expense.
(b) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third
Party Claim the Indemnitee receives written notice from the
Indemnifying Party that such Indemnifying Party has elected to
assume the defense of such Third Party Claim as provided in the
last sentence of Section 10.2(a), the Indemnifying Party will not
be liable for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within
twenty (20) calendar days after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has
failed to take such steps, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all
reasonable expenses thereof. Without the prior written consent of
the Indemnitee, the Indemnifying Party will not enter into any
settlement of any Third Party Claim which would lead to liability
or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a
Third Party claim without leading to liability or the creation of
a financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder
and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to
such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnitee may continue to contest or defend such
Third Party Claim and, in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will be the amount
of such settlement offer, plus reasonable costs and expenses paid
or incurred by the Indemnitee up to the date of such notice.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim
(a "Direct Claim") will be asserted by giving the Indemnifying
Party reasonably prompt written notice thereof, stating the nature
of such claim in reasonable detail and indicating the estimated
amount, if practicable, but in any event not later than ten (10)
calendar days after the Indemnitee becomes aware of such Direct
Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days within which to respond to such Direct Claim. If the
Indemnifying Party does not respond within such thirty (30)
calendar day period, the Indemnifying Party will be deemed to have
accepted such claim. If the Indemnifying Party rejects such claim,
the Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.
(d) 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
of the Bank of Boston), will promptly be repaid by the Indemnitee
to the Indemnifying Party. Upon making
any indemnity payment, the Indemnifying Party will, to the extent
of such indemnity payment, be subrogated to all rights of the
Indemnitee against any third party in respect of the Indemnifiable
Loss to which the indemnity payment relates; provided, however,
that (i) the Indemnifying Party will then be in compliance with its
obligations under this Agreement in respect of such Indemnifiable
Loss and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment
is hereby made expressly subordinated and subjected in right of
payment to the Indemnitee's rights against such third party.
Without limiting the generality or effect of any other provision
hereof, each such Indemnitee and Indemnifying Party will duly
execute upon request all instruments reasonably necessary to
evidence and perfect the above- described subrogation and
subordination rights, and otherwise cooperate in the prosecution of
such claims at the direction of the Indemnifying Party. Nothing in
this Section 10.2(d) shall be construed to require any party hereto
to obtain or maintain any insurance coverage.
(e) A failure to give timely notice as provided in this
Section 10.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of
such failure, the party which was entitled to receive such notice
was actually prejudiced as a result of such failure.
ARTICLE XI
TERMINATION AND ABANDONMENT
11.1. Termination. (a) This Agreement may be terminated at
any time prior to the Closing Date by mutual written consent of the
Sellers and the Buyer.
(b) This Agreement may be terminated by the Sellers or the
Buyer if the Closing contemplated hereby shall have not occurred on
or before the first anniversary of the date of this Agreement (the
"Termination Date"); provided that the right to terminate this
Agreement under this Section 11.1(b)(i) shall not be available to
any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted
in, the failure of either Closing to occur on or before such date;
and provided, further, that if on the first anniversary of the date
of this Agreement the conditions to the Closings set forth in
either Section 8.1(c) or Section 9.1(c) shall not have been
fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be the day which is eighteen months from the
date of this Agreement.
(c) This Agreement may be terminated by either the Sellers
or the Buyer if (i) any governmental or regulatory body, the
consent of which is a condition to the obligations of the Sellers
and the Buyer to consummate the Closing shall have determined not
to grant its or their consent and all appeals of such determination
shall have been taken and have been unsuccessful, (ii) one or more
courts of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Closing, and
such order, judgment or decree shall have become final and
nonappealable or (iii) any statute, rule or regulation shall have
been enacted by any State or Federal government or governmental
agency in the United States which prohibits the consummation of the
Closing.
(d) This Agreement may be terminated by the Buyer, if there
has been a material violation or breach by the Sellers of any
agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the
obligations of the Buyer to effect the Closing impossible and such
violation or breach has not been waived by the Buyer.
(e) This Agreement may be terminated by the Sellers, if
there has been a material violation or breach by the Buyer of any
agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the
obligations of the Sellers to effect the Closing impossible and
such violation or breach has not been waived by the Sellers.
(f) This Agreement may be terminated by either of the
Sellers or the Buyer in accordance with the provisions of Section
7.11(b) or (c).
11.2. Procedure and Effect of Termination.
In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by either or both of the
parties pursuant to Section 11.1, written notice thereof shall
forthwith be given by the terminating party to the other party and
this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided
herein:
(a) said termination shall be the sole remedy of the
parties hereto with respect to breaches of any agreement,
representation or warranty contained in this Agreement and none of
the parties hereto nor any of their respective trustees, directors,
officers or Affiliates, as the case may be, shall have any
liability or further obligation to the other party or any of their
respective trustees, directors, officers or Affiliates, as the case
may be, pursuant to this Agreement, except in each case as stated
in this Section 11.2 and in Sections 7.2(b), 7.3 and 7.7; and
(b) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other Person to which they were made.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by
written agreement of the Sellers and the Buyer.
12.2. Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to
comply with any obligation, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by
a written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent
or other failure. Notwithstanding anything in this Agreement to
the contrary, (i) the condition set forth in Section 8.3(d) cannot
be waived by the Sellers without the consent of each of the BUW,
the IBEW and the UWUA and (ii) the condition set forth in Section
9.3(d) cannot be waived by the Sellers without the consent of each
of the IBEW and the UWUA.
12.3. No Survival. Subject to the provisions of Section
11.2, each and every representation, warranty and covenant
contained in this Agreement (other than the covenants contained in
Sections 3.2, 7.2(b), 7.3, 7.4, 7.7, 7.8, 7.10, 7.14 and 7.16 and
in Articles X and XI (which covenants shall survive in accordance
with their terms) and other than the representations and warranties
contained in Sections 5.1, 5.2 and 5.3 (which representations and
warranties shall survive for eighteen months from the Closing))
shall expire with, and be terminated and extinguished by the
consummation of the sale of the Purchased Assets and the transfer
of the Assumed Obligations pursuant to this Agreement and such
representations, warranties and covenants shall not survive the
Closing Date; and none of the Sellers, the Buyer or any officer,
director, trustee or Affiliate of any of them shall be under any
liability whatsoever with respect to any such representation,
warranty or covenant.
12.4. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission, telexed or
mailed by overnight courier or registered or certified mail (return
receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall
be specified by like notice; provided that notices of a change of
address shall be effective only upon receipt thereof):
(a) If to the Sellers, to:
New England Power Company
The Narragansett Electric Company
c/o New England Power Service Company
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Buyer, to:
USGen Acquisition Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
General Counsel
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
12.5. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law without the prior written
consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights
or remedies hereunder;
provided, however that NEPGen Employees may have claims under
Sections 2.3(a)(iv) and 7.10. Notwithstanding the foregoing, no
provision of this Agreement shall create any third party
beneficiary rights in any employee or former employee of the
Sellers (including any beneficiary or dependent thereof) in respect
of continued employment or resumed employment, and no provision of
this Agreement shall create any rights in any such Persons in
respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement except
as expressly provided for thereunder. Notwithstanding the
foregoing, (i) the Buyer may assign all of its rights and
obligations hereunder to any wholly owned Subsidiary (direct or
indirect) of PG&E Corporation and upon the Sellers' receipt of
notice from Buyer of any such assignment, the Buyer will be
released from all liabilities and obligations hereunder, accrued
and unaccrued, such assignee will be deemed to have assumed,
ratified, agreed to be bound by and perform all such liabilities
and obligations, and all references herein to "Buyer" shall
thereafter be deemed references to such assignee, in each case
without the necessity for further act or evidence by the parties
hereto or such assignee; provided, however, that no such assignment
and assumption shall release the Buyer from its liabilities and
obligations hereunder unless the assignee shall have acquired all
or substantially all of the Buyer's assets; provided, further,
however, that no such assignment and assumption shall relieve or in
any way discharge PG&E Corporation from the performance of its
duties and obligations under the Guaranty dated as of the date of
this Agreement executed by PG&E Corporation, and (ii) the Buyer or
its permitted assignee may assign, transfer, pledge or otherwise
dispose of its rights and interests hereunder to a trustee or
lending institution(s) for the purposes of financing or refinancing
the Purchased Assets, including upon or pursuant to the exercise of
remedies under such financing or refinancing, or by way of
assignments, transfers, conveyances or dispositions in lieu
thereof; provided, however, that no such assignment or disposition
shall relieve or in any way discharge the Buyer or such assignee
from the performance of its duties and obligations under this
Agreement. The Sellers agree to execute and deliver such documents
as may be reasonably necessary to accomplish any such assignment,
transfer, conveyance, pledge or disposition of rights
hereunder so long as the Sellers' rights under this Agreement are
not thereby altered, amended, diminished or otherwise impaired.
12.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts (regardless of the laws that might otherwise govern
under applicable Massachusetts principles of conflicts of law) as
to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
12.7. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
12.8. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall
not in any way affect the meaning or interpretation of this
Agreement.
12.9. Schedules and Exhibits. All Exhibits and Schedules
referred to herein are intended to be and hereby are specifically
made a part of this Agreement.
12.10. Entire Agreement. This Agreement, the Confidentiality
Agreement, the Ancillary Agreements, the Wholesale Sales Agreement
and the Transition Agreements including the Exhibits, Schedules,
documents, certificates and instruments referred to herein or
therein, embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly
set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in
any material made available to the Buyer pursuant to the terms of
the Confidentiality Agreement (including the Information
Memorandum, dated January, 1997, or the Request for Proposal, dated
May, 1997, previously made available to the Buyer by the Sellers
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.). This Agreement
supersedes all prior agreements and understandings between the
parties with respect to such transactions other than the
Confidentiality Agreement.
12.11. Bulk Sales or Transfer Laws. The Buyer acknowledges
that the Sellers will not comply with the provision of any bulk
sales or transfer laws of any jurisdiction in connection with the
transactions contemplated by this Agreement. The Buyer hereby
waives compliance by the Sellers with the provisions of the bulk
sales or transfer laws of all applicable jurisdictions.
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this
agreement to be signed by their respective duly authorized officers
as of the date first above written.
NEW ENGLAND POWER COMPANY
/s/
By
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
THE NARRAGANSETT ELECTRIC
COMPANY
/s/
By
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and
Treasurer
USGEN ACQUISITION CORPORATION
/s/
By
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE
2.1. The Sale. . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 18
2.3. Assumed Obligations . . . . . . . . . . . . . . . . . . . 19
2.4. Excluded Liabilities. . . . . . . . . . . . . . . . . . . 23
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. . . . . . . . . . . . . . . . . . . . . . 26
3.2. Purchase Price Adjustment . . . . . . . . . . . . . . . . 26
3.3. Allocation of Purchase Price. . . . . . . . . . . . . . . 28
3.4. Additional Payment Amount . . . . . . . . . . . . . . . . 29
3.5. Proration . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing . . . . . . . . . . . . . . . . 32
4.2. Payment of Purchase Price . . . . . . . . . . . . . . . . 33
4.3. Deliveries by the Sellers . . . . . . . . . . . . . . . . 34
4.4. Deliveries by the Buyer . . . . . . . . . . . . . . . . . 35
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
5.1. Organization; Qualification; Matters
Regarding NERC . . . . . . . . . . . . . . . . . . 36
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5.2. Authority Relative to this Agreement. . . . . . . . . . . 37
5.3. Consents and Approvals; No Violation. . . . . . . . . . . 38
5.4. Reports . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.5. Financial Statements. . . . . . . . . . . . . . . . . . . 40
5.6. Undisclosed Liabilities . . . . . . . . . . . . . . . . . 40
5.7. Absence of Certain Changes or Events. . . . . . . . . . . 41
5.8. Title and Related Matters . . . . . . . . . . . . . . . . 41
5.9. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.10. Insurance. . . . . . . . . . . . . . . . . . . . . 42
5.11. Environmental Matters. . . . . . . . . . . . . . . 42
5.12. Labor Matters. . . . . . . . . . . . . . . . . . . 43
5.13. ERISA; Benefit Plans . . . . . . . . . . . . . . . 44
5.14. Real Estate. . . . . . . . . . . . . . . . . . . . 45
5.15. Condemnation . . . . . . . . . . . . . . . . . . . 45
5.16. Certain Contracts and Arrangements . . . . . . . . 45
5.17. Legal Proceedings, etc . . . . . . . . . . . . . . 46
5.18. Permits. . . . . . . . . . . . . . . . . . . . . . 47
5.19. Regulation as a Utility. . . . . . . . . . . . . . 47
5.20. Taxes. . . . . . . . . . . . . . . . . . . . . . . 48
5.21. NERC Holdings. . . . . . . . . . . . . . . . . . . 51
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
6.1. Organization. . . . . . . . . . . . . . . . . . . . . . . 51
6.2. Authority Relative to this Agreement. . . . . . . . . . . 51
6.3. Consents and Approvals; No Violation. . . . . . . . . . . 52
6.4. Regulation as a Utility . . . . . . . . . . . . . . . . . 53
6.5. Availability of Funds . . . . . . . . . . . . . . . . . . 53
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets. . . 53
7.2. Access to Information . . . . . . . . . . . . . . . . . . 58
7.3. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 61
7.4. Further Assurances. . . . . . . . . . . . . . . . . . . . 61
7.5. Public Statements . . . . . . . . . . . . . . . . . . . . 63
7.6. Consents and Approvals. . . . . . . . . . . . . . . . . . 64
7.7. Fees and Commissions. . . . . . . . . . . . . . . . . . . 65
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7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 65
7.9. Supplements to Schedules. . . . . . . . . . . . . . . . . 73
7.10. Employees. . . . . . . . . . . . . . . . . . . . . 73
7.11. Risk of Loss . . . . . . . . . . . . . . . . . . . 78
7.12. Transfer of the NERC Stock . . . . . . . . . . . . 79
7.13. Standard Offer . . . . . . . . . . . . . . . . . . 79
7.14. Cooperation Relating to Insurance. . . . . . . . . 79
7.15. Granite State Transition Agreement . . . . . . . . 80
7.16 Tax Clearance Certificates. . . . . . . . . . . . . . . . 80
ARTICLE VIII
FOSSIL ASSETS CONDITIONS
8.1. Conditions to Each Party's Obligations
to Effect the Fossil Assets Transactions.. . . . . 80
8.2. Conditions to Obligations of the Buyer. . . . . . . . . . 82
8.3. Conditions to Obligations of the Sellers. . . . . . . . . 85
ARTICLE IX
HYDROELECTRIC ASSETS CONDITIONS
9.1. Conditions to Each Party's Obligations to
Effect the Hydroelectric Assets Transactions.. . . 88
9.2. Conditions to Obligations of the Buyer. . . . . . . . . . 89
9.3. Conditions to Obligations of the Sellers. . . . . . . . . 92
ARTICLE X
INDEMNIFICATION
10.1. Indemnification. . . . . . . . . . . . . . . . . . 94
10.2. Defense of Claims. . . . . . . . . . . . . . . . . 97
ARTICLE XI
TERMINATION AND ABANDONMENT
11.1. Termination. . . . . . . . . . . . . . . . . . . . 99
11.2. Procedure and Effect of Termination. . . . . . . 101
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Amendment and Modification . . . . . . . . . . . 101
12.2. Waiver of Compliance; Consents . . . . . . . . . 101
12.3. No Survival. . . . . . . . . . . . . . . . . . . 102
12.4. Notices. . . . . . . . . . . . . . . . . . . . . 102
12.5. Assignment . . . . . . . . . . . . . . . . . . . 103
12.6. Governing Law. . . . . . . . . . . . . . . . . . .105
12.7. Counterparts . . . . . . . . . . . . . . . . . . .105
12.8. Interpretation . . . . . . . . . . . . . . . . . .105
12.9. Schedules and Exhibits.. . . . . . . . . . . . . .105
12.10. Entire Agreement . . . . . . . . . . . . . . . . .105
12.11. Bulk Sales or Transfer Laws. . . . . . . . . . . .106