STOCK PURCHASE AGREEMENT
dated as of August 11, 2000
Among
EXELON (FOSSIL) HOLDINGS, INC.,
as Buyer
and
THE STOCKHOLDERS OF
SITHE ENERGIES, INC.
NAMED HEREIN,
as Sellers
and
SITHE ENERGIES, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE 1. CERTAIN DEFINITIONS.............................................................................2
ARTICLE 2. PURCHASE AND SALE OF STOCK.....................................................................15
Section 2.1 Purchase and Sale of Stock..............................................................15
Section 2.2 Initial Purchase Price Adjustment.......................................................17
Section 2.3 Additional Purchase Price Adjustments Related to International Sales....................20
Section 2.4 Distribution of International Entities on the Put/Call Date.............................26
Section 2.5 Payment of Amounts Due Pursuant to Section 2.3 and Section 2.4..........................27
Section 2.6 Certain Preliminary Transactions........................................................28
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................30
Section 3.1 Organization, Qualification and Corporate Power.........................................30
Section 3.2 Authorization; Validity.................................................................31
Section 3.3 No Conflict.............................................................................32
Section 3.4 Capital Stock...........................................................................32
Section 3.5 Financial Statements....................................................................33
Section 3.6 Litigation; Compliance with Law.........................................................35
Section 3.7 Tax Matters.............................................................................36
Section 3.8 Material Contracts......................................................................39
Section 3.9 Consents and Approvals..................................................................40
Section 3.10 Brokers.................................................................................40
Section 3.11 Labor Matters...........................................................................40
Section 3.12 ERISA...................................................................................41
Section 3.13 Events Subsequent to March 31, 2000.....................................................44
Section 3.14 Title to Properties.....................................................................46
Section 3.15 Insurance...............................................................................47
Section 3.16 Transactions with Certain Persons.......................................................48
Section 3.17 Compliance With Environmental Laws......................................................48
Section 3.18 Real Property...........................................................................49
Section 3.19 Patents, Copyrights and Trademarks......................................................50
Section 3.20 Corporate Records.......................................................................50
Section 3.21 Qualifying Facilities...................................................................51
Section 3.22 Exempt Wholesale Generators and Foreign Utility Companies...............................51
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF EACH SELLER..................................................51
Section 4.1 Organization and Corporate Power........................................................52
Section 4.2 Authorization; Validity.................................................................52
Section 4.3 No Conflict.............................................................................53
Section 4.4 Ownership of Stock......................................................................53
Section 4.5 Public Utility..........................................................................54
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER........................................................54
Section 5.1 Organization and Corporate Power........................................................54
Section 5.2 Authorization of Agreement; Validity....................................................54
Section 5.3 No Conflict.............................................................................54
Section 5.4 Consents and Approvals..................................................................55
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Section 5.5 Brokers.................................................................................55
Section 5.6 Availability of Funds...................................................................55
Section 5.7 Investment Purpose; Restricted Securities...............................................55
Section 5.8 No Public Market........................................................................56
Section 5.9 Legends.................................................................................56
ARTICLE 6. ACCESS; ADDITIONAL AGREEMENTS..................................................................57
Section 6.1 Access to Information; Continuing Disclosure............................................57
Section 6.2 Regulatory Approvals....................................................................58
Section 6.3 Further Assurances......................................................................59
Section 6.4 Certain Tax Matters.....................................................................59
Section 6.5 Regular Course of Business..............................................................60
Section 6.6 Notice of Changes.......................................................................65
Section 6.7 Director and Officer Indemnification and Insurance......................................66
Section 6.8 Credit Facilities.......................................................................67
Section 6.9 No Solicitation.........................................................................67
Section 6.10 Interim Financial Statements............................................................69
Section 6.11 No Adverse Action.......................................................................69
Section 6.12 PUHCA Compliance........................................................................69
Section 6.13 Option Plans............................................................................70
Section 6.14 Development and Fuel Services Agreement and Power Purchase Agreement....................70
ARTICLE 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS....................................................70
Section 7.1 No Injunction...........................................................................70
Section 7.2 Representations and Warranties..........................................................71
Section 7.3 Performance.............................................................................72
Section 7.4 Approvals and Filings...................................................................72
Section 7.5 Amended and Restated Stockholders' Agreement............................................72
Section 7.6 Opinion of Counsel......................................................................72
Section 7.7 No Material Adverse Effect..............................................................72
Section 7.8 Ownership Percentage....................................................................73
Section 7.9 Niagara Mohawk Shares...................................................................73
ARTICLE 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERs and the company.........................73
Section 8.1 No Injunction...........................................................................73
Section 8.2 Representations and Warranties..........................................................74
Section 8.3 Performance.............................................................................74
Section 8.4 Approvals and Filings...................................................................74
Section 8.5 Amended and Restated Stockholders' Agreement............................................75
Section 8.6 Opinion of Counsel......................................................................75
Section 8.7 No Material Adverse Effect..............................................................75
Section 8.8 Credit Support Letter...................................................................75
Section 8.9 Dividend................................................................................76
ARTICLE 9. CLOSING........................................................................................76
Section 9.1 Time and Place..........................................................................76
Section 9.2 Payment for Stock.......................................................................77
Section 9.3 Deliveries..............................................................................77
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ARTICLE 10. TERMINATION AND ABANDONMENT....................................................................78
Section 10.1 Methods of Termination..................................................................78
Section 10.2 Procedure Upon Termination and Consequences.............................................79
ARTICLE 11. SURVIVAL.......................................................................................80
Section 11.1 Seller Representations and Warranties; Buyer Representations and Warranties.............80
Section 11.2 Covenants...............................................................................80
Section 11.3 Company Representations and Warranties..................................................80
Section 11.4 Survival Periods........................................................................81
ARTICLE 12. INDEMNIFICATION................................................................................81
Section 12.1 Seller Indemnification..................................................................81
Section 12.2 Buyer Indemnification...................................................................84
Section 12.3 Timing of Notice of Claim...............................................................84
Section 12.4 Limitations on Indemnification..........................................................85
Section 12.5 Procedure...............................................................................87
Section 12.6 Calculation.............................................................................88
Section 12.7 Characterization........................................................................90
ARTICLE 13. MISCELLANEOUS..................................................................................90
Section 13.1 Amendment and Modification..............................................................90
Section 13.2 Waiver of Compliance....................................................................91
Section 13.3 Notices.................................................................................91
Section 13.4 Binding Nature; Assignment..............................................................93
Section 13.5 Entire Agreement........................................................................95
Section 13.6 Expenses................................................................................96
Section 13.7 Press Releases and Announcements; Disclosure............................................96
Section 13.8 Acknowledgment..........................................................................96
Section 13.9 Disclaimer Regarding Assets.............................................................98
Section 13.10 Governing Law...........................................................................98
Section 13.11 Nonforeign Affidavit....................................................................99
Section 13.12 Counterparts............................................................................99
Section 13.13 Interpretation.........................................................................100
Section 13.14 Waiver of Right of First Refusal.......................................................100
Section 13.15 Matters Related to NEDC................................................................100
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SCHEDULES
Schedule 1 - Sellers
Schedule 1A - Executive Officers
Schedule 1B - International Entities
Schedule 3.1.2 - Significant Subsidiaries
Schedule 3.3 - Conflicts
Schedule 3.4 - Capital Stock
Schedule 3.5 - Financial Statements
Schedule 3.6 - Litigation; Compliance with Law
Schedule 3.7 - Tax Matters
Schedule 3.8 - Contracts
Schedule 3.9 - Company Consents and Approvals
Schedule 3.11 - Labor Matters
Schedule 3.12 - Employee Benefits
Schedule 3.13 - Events Subsequent to March 31, 2000
Schedule 3.14 - Certain Dispositions and Transactions
Schedule 3.15 - Insurance
Schedule 3.16 - Transactions with Certain Persons
Schedule 3.17 - Environmental Matters
Schedule 3.18 - Real Property
Schedule 5.4 - Buyer Consents and Approvals
Schedule 6.5 - Exceptions to Ordinary Course of Business
Schedule 7.4 - Consents and Approvals (Buyer's Condition)
Schedule 7.6 - Opinion of Company's and Sellers' Counsel
Schedule 8.4 - Consents and Approvals (Company's and Sellers' Condition)
Schedule 8.6 - Opinion of Buyer's Counsel
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EXHIBITS
Exhibit A - Form of Amended and Restated Stockholders' Agreement
Exhibit B - Terms of Development and Fuel Services Agreement
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of August 11, 2000 (this
"Agreement") among Exelon (Fossil) Holdings, Inc., a Delaware corporation
("Buyer"), the stockholders of Sithe Energies, Inc., a Delaware corporation (the
"Company"), listed on Schedule 1 (each individually a "Seller" and collectively,
the "Sellers") and the Company.
R E C I T A L S
A. The Sellers own shares of Common Stock (as defined herein).
B. Buyer desires to purchase from each Seller, and each Seller desires
to sell to Buyer, subject to the terms and conditions of this Agreement, that
number of shares of Common Stock set forth beside the name of such Seller on
Schedule 1 (the "Sithe Stock").
C. The Board of Directors of the Company has determined that the
consummation of the transactions contemplated by this Agreement, upon the terms
and conditions set forth in this Agreement, is in the best interests of the
Company and its stockholders.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
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ARTICLE 1. CERTAIN DEFINITIONS
For the purposes of this Agreement, the following words and phrases
shall have the following meanings:
"1998 Plan" means the Company's Amended and Restated 1998 Employee
Restricted Stock Ownership Plan, as amended, modified or supplemented.
"1999 Stock Plan" means the Company's Amended and Restated 1999 Stock
Retention Plan, as amended, modified or supplemented.
"Act" has the meaning as set forth in Section 5.7.
"Adjusted Seller" has the meaning as set forth in Section 2.3.
"Adjustment Amount" means an amount (which may be positive or negative)
equal to: (a) the result obtained by subtracting Reference Stockholders' Equity
from Closing Stockholders' Equity; less (b) the amount of the after-tax gain
(determined in accordance with GAAP) resulting from the closing of the
transactions consummated pursuant to the Reliant Purchase Agreement; plus (c)
$90.0 million related to dividends if declared and accrued prior to the Closing
Date (whether or not paid prior to the Closing Date); plus (d) the amount of any
payment by the Company pursuant to Section 2.1.2.2, to the extent such payment,
or any accrual therefor, is reflected on the Closing Balance Sheet; as the
amount determined pursuant to clauses (a) through (c) shall be adjusted to
eliminate (i) any after-tax credits (but not charges) resulting from or relating
to any restructuring, renegotiation, refinancing, buy-out or buy-down of the
contractual rights and obligations of the Qualifying Facilities owned by the
Company or any of its Subsidiaries or (ii) any after-tax non-cash charges or
credits recorded prior to the Closing Date due to changes in accounting
principles from the accounting principles utilized in preparing the Company's
1999 audited financial statements.
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"Advisors" has the meaning as set forth in Section 13.8.
"Affiliate" means any Person in control or under control of, or under
common control with, another Person. For purposes of the foregoing, "control",
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through ownership of voting securities or by contract or
otherwise.
"After-Tax Gain or Loss" has the meaning as set forth in Section 2.3.
"Agreement" has the meaning as set forth in the first paragraph of this
Agreement.
"Allegheny Entities" has the meaning as set forth in Section 12.1.
"Amended and Restated Stockholders' Agreement" means the Amended and
Restated Stockholders' Agreement, substantially in the form of Exhibit A hereto,
to be entered into among Buyer, the Sellers and the Company upon the Closing.
"Asian Assets" means the Company's common stock of, stock investments
in and loans and advances to, in each case, Sithe Asia Holdings, Limited and its
Affiliates.
"Base Purchase Price" means $682.0 million.
"BECO Facility" means that certain Credit Agreement, dated as of May
15, 1998, among Sithe New England Holdings, LLC, Bank of Montreal, as agent, and
the financial institutions party thereto, as amended, modified and supplemented.
"Benefit Arrangement" means any executive incentive arrangement
consisting of (i) any employment or individual personal services agreement
involving annual base salary of at least $250,000 (with respect to any such
agreement that is an employment agreement) or annual compensation of at least
$250,000 (with respect to any other such agreement), but excluding any agreement
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of at-will employment, (ii) any equity compensation plan, (iii) any deferred
compensation plan, and (iv) any other material employee benefit plans.
"Benefit Plan" has the meaning as set forth in Section 3.12.
"Book Value" means the net book value of any equity interests and/or
assets sold (together with any liabilities assumed by the transferee) pursuant
to an International Sale or a disposition of assets pursuant to Section 2.4, as
determined in accordance with GAAP and reflected on the general ledgers of the
Company and its consolidated subsidiaries, as of the date of such International
Sale or disposition of assets pursuant to Section 2.4 .
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banking institutions in New York, New York are authorized or
obligated by law or executive order to be closed.
"Buyer" has the meaning as set forth in the first paragraph of this
Agreement.
"Buyer Indemnified Group" has the meaning as set forth in Section 12.1.
"Buyer Representatives" has the meaning as set forth in Section 12.1.
"Charter Documents" has the meaning as set forth in Section 3.3.
"Claim" has the meaning as set forth in Section 12.3.
"Closing" has the meaning as set forth in Section 9.1.
"Closing Book Value" means the net book value as of the Closing Date of
any equity interest and/or assets sold (together with any liabilities assumed by
the transferee) after the Closing Date pursuant to an International Sale or a
disposition of assets pursuant to Section 2.4, as determined in accordance with
GAAP and reflected on the general ledgers of the Company and its consolidated
subsidiaries, except that such net book value shall be adjusted to eliminate the
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effect of non-cash write-ups or write-downs in the value of such assets during
the period beginning March 31, 2000 and ending on the Closing Date.
"Closing Date" has the meaning as set forth in Section 9.1.
"Closing Balance Sheet" means a consolidated balance sheet at the
Closing Date of the Company and its subsidiaries (including any International
Entities) to be audited by the Company's auditors and prepared in accordance
with GAAP.
"Closing Statement" has the meaning as set forth in Section 2.2.
"Closing Stockholders' Equity" means "Stockholders' Equity", as
reflected on the Closing Balance Sheet.
"Code" means the Internal Revenue Code of 1986, as amended. All
citations to the Code or to the regulations promulgated thereunder shall include
any amendments or any substitute or successor provisions thereto.
"Collective Bargaining Agreements" has the meaning as set forth in
Section 3.11.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" has the meaning as set forth in the first paragraph of this
Agreement.
"Confidentiality Agreement" has the meaning as set forth in Section
6.1.
"Contract" means a contract, lease, license, note, bond, mortgage,
indenture, instrument or other similar obligation.
"Corporate Sellers" means the Sellers identified as "Corporate Sellers"
on Schedule 1.
"Credit Support Letter" means that certain letter, dated the date
hereof, from PECO Energy Company.
"Damages" has the meaning as set forth in Section 12.1.
"D&O Claim" has the meaning as set forth in Section 6.7.
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"Development and Fuel Services Agreement" shall mean a Development and
Fuel Services Agreement, substantially in accordance with the terms attached
hereto as Exhibit B.
"Director Indemnified Party" has the meaning as set forth in Section
6.7.
"Director Termination Date" means the last date on which any director
nominated by any Seller shall serve on the board of directors of the Company.
"Divestiture Committee" has the meaning as defined in the Amended and
Restated Stockholders' Agreement.
"Dividend" has the meaning as set forth in Section 2.6.
"DOJ" has the meaning as set forth in Section 6.2.
"Employee Benefit Plan" means any employee benefit plan, as defined in
Section 3(3) of ERISA.
"Environmental Laws" means all applicable Federal, state and local laws
and regulations, relating to pollution or protection of the environment or
natural resources, including laws relating to releases or threatened releases of
hazardous substances (including, without limitation, releases to ambient air,
surface water, groundwater, land and surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
release, transport, disposal or handling of hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of the Company means any other person that, together
with the Company as of the relevant measuring date under ERISA, is required to
be treated as a single employer under Section 414 of the Code.
"Estimated Adjustment Amount" has the meaning as set forth in Section
2.2.
"Estimated Closing Statement" has the meaning as set forth in Section
2.2.
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"EWG" has the meaning as set forth in Section 3.22.
"Federal Power Act" means the Federal Power Act of 1920, as amended,
and rules promulgated thereunder.
"FERC" has the meaning as set forth in Section 6.2.
"Financial Statements" has the meaning as set forth in Section 3.5.
"FTC" has the meaning as set forth in Section 6.2.
"FUCO" has the meaning as set forth in Section 3.22.
"GAAP" means generally accepted accounting principles in the United
States.
"GPU Purchase Agreement" means the Purchase and Sale Agreement dated as
of October 29, 1998, as amended by Amendments 1 through 9, among Jersey Central
Power & Light Company, Metropolitan Edison Company, GPU, Inc. and the Company.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning as set forth in Section 12.3.
"Indemnifying Party" has the meaning as set forth in Section 12.3.
"Independent Accounting Firm" means Ernst & Young, LLP; provided, that
if Ernst & Young, LLP is not available (because of a conflict or otherwise),
then "Independent Accounting Firm" shall mean KPMG LLP; and provided further,
that if neither Ernst & Young, LLP nor KPMG LLP is available (because of a
conflict or otherwise), then "Independent Accounting Firm" shall mean another
independent accounting firm of national recognition that is mutually appointed
by the Company (at the direction of the Sellers) and Buyer (other than the
regular independent accounting firm of Buyer, the Company or any Seller).
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"Interest Rate" means the published annual yield to maturity for
two-year United States Government Treasury obligations on the Closing Date.
"International Entities" shall mean the entities listed on Schedule 1B.
"International Sale" means the sale of any assets (net of any retained
liabilities) held, directly or indirectly, by any of the International Entities
on the date hereof, whether by a sale of equity interests of any International
Entities or otherwise, which results in the recognition of After-Tax Gain or
Loss by the Company or any of its Subsidiaries. Without limiting the foregoing,
the distribution to Marubeni of any net assets held by any of the International
Entities pursuant to any Marubeni Transaction shall be deemed to be an
International Sale.
"International Survival Period" means the period commencing on the
Closing Date and ending on the earlier of (a) the third anniversary of the
occurrence of the first Put/Call Date that, together with any previous sales of
Common Stock pursuant to the Put and Call Agreement, results in the sale of more
than 662/3 percent of the shares of Common Stock subject to the Put and Call
Agreement and (b) the fifth anniversary of the Closing Date; provided however,
that with respect to any Claim arising out of any guarantee by the Company or
any of its Subsidiaries of any obligations of any of the International Entities,
or any indemnification obligation of the Company or any of its Subsidiaries
pursuant to any purchase agreement, merger agreement or similar agreement
pursuant to which any International Sale have been consummated, the
"International Survival Period" with respect to any such Claim shall terminate
on the date on which such guarantee or indemnification obligation terminates.
"knowledge" or words to such effect means, (i) with respect to any
Person that is an individual, the actual knowledge of such Person, (ii) in the
case of any Person other than the Company that is not an individual, the actual
knowledge of the executive officers of such Person,
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or (iii) in the case of the Company, the actual knowledge of the executive
officers of the Company listed on Part A of Schedule 1A after reasonable inquiry
by one or more of such executive officers of the employees listed on Part B of
Schedule 1A.
"Liens" means liens, charges, restrictions, claims or encumbrances of
any nature.
"Marubeni" has the meaning as set forth in Section 2.6.
"Marubeni America" has the meaning as set forth in Section 2.6.
"Marubeni American Power" has the meaning as set forth in Section 2.6.
"Marubeni MS Power" has the meaning as set forth in Section 2.6.
"Marubeni Transaction" has the meaning as set forth in Section 2.6.
"material" or "materially" means, when used with respect to the Company
or any of its Subsidiaries, material to the Company and its Subsidiaries, taken
as a whole.
"Material Adverse Effect" means an effect that either individually or
in the aggregate is materially adverse to the condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a whole,
excluding, in any case, (i) any changes, circumstances or effects resulting from
or relating to changes in the economy, financial markets, commodity markets,
laws, regulations or rules in the applicable electric power markets generally
(including, without limitation, changes in laws or regulations affecting owners
or providers of electric generation, transmission or distribution as a group and
not the Company exclusively) and (ii) any changes in conditions generally
applicable to the industries in which the Company or any of its Subsidiaries is
involved, and, in the case of clause (i) or (ii), not affecting the Company or
its Subsidiaries in any manner or degree significantly different from the
industry as a whole.
"Material Contracts" means each Contract to which any of the Company or
any Subsidiary of the Company is a party or by which any of them or any of their
respective property
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may be bound and which, in each case, is material to the Company and its
Subsidiaries taken as a whole, other than any Contract which relates primarily
to (i) any assets or entities sold pursuant to the Reliant Purchase Agreement,
or (ii) any assets or entities that constitute a part of the International
Entities.
"Material Encumbrances" means any liens, charges, restrictions, claims
or encumbrances of any nature, material to the Company and its Subsidiaries
taken as a whole, other than any liens, charges, restrictions, claims or
encumbrances which relate primarily to (i) any assets or entities sold pursuant
to the Reliant Purchase Agreement, or (ii) any assets or entities that
constitute a part of the International Entities.
"Multiemployer Plan" means a multiemployer plan, as defined in Sections
3(37) and 4001(a)(3) of ERISA.
"NEDC" means National Energy Development Corporation.
"NYSEG" has the meaning as set forth in Section 12.1.
"Opening Balance Sheet" means the audited consolidated balance sheet of
the Company and its subsidiaries at December 31, 1999 included in the Financial
Statements.
"Outstanding Stock" means all of the issued and outstanding Common
Stock of the Company.
"Permitted Assignees" has the meaning as set forth in Section 13.4.
"Permitted Liens" has the meaning as set forth in Section 3.14.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"Plan Restructuring" has the meaning as set forth in Section 2.6.
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"Power Purchase Agreement" means the proposed Power Purchase Agreement
between the Company and Buyer related to the purchase of electric output by
Buyer or its Affiliate from the Company or any of its Subsidiaries.
"Principal Sellers" means those Sellers identified with an asterisk
("*") on Schedule 1.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended, and rules promulgated thereunder.
"PURPA" means the Public Utility Regulatory Policies Act of 1978 and
rules promulgated thereunder.
"Put and Call Agreement" means that certain Put and Call Agreement,
dated the date hereof among the Company, the Sellers and Buyer.
"Put/Call Closing Date" means, with respect to any Seller, the earlier
of (i) the date of the closing, if any, of the sale of shares of Common Stock
held by such Seller immediately after the Closing, as contemplated by the Put
and Call Agreement or (ii) the date of a payment by Buyer to such Seller
pursuant to Section 6.10 of the Put and Call Agreement.
"Put/Call Date" means, with respect to any Seller, either (i) the
Put/Call Closing Date applicable to such Seller or (ii) if neither the Put Right
nor the Call Right (each as defined in the Put and Call Agreement) is exercised
pursuant to the Put and Call Agreement, the tenth Business Day following the
date of the termination of the Exercise Period (as defined in the Put and Call
Agreement).
"Qualifying Facilities" means generation facilities that satisfy the
requirements of Section 210 of PURPA and the rules set forth in 18 C.F.R. Part
292.
"Rades Project" means the 471 megawatt gas-fueled project in Tunisia in
which the Company has a 32.5% interest.
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"Real Property" has the meaning as set forth in Section 3.18.
"reasonable efforts" means commercially reasonable efforts.
"Reference Stockholders' Equity" means "Stockholders' Equity", as
reflected on the Opening Balance Sheet.
"Reliant Purchase Agreement" means the Purchase Agreement, dated as of
February 19, 2000, among Reliant Energy Power Generation, Inc., Reliant Energy,
Incorporated, the Company and Sithe Northeast Generating Company, Inc., as
amended, modified and supplemented.
"Reliant Survival Period" means the period commencing on the Closing
Date and ending on the earlier of (a) the first anniversary of the occurrence of
the first Put/Call Date that, together with any previous sales of Common Stock
pursuant to the Put and Call Agreement, results in the sale of more than 662/3
percent of the shares of Common Stock subject to the Put and Call Agreement, and
(b) the third anniversary of the Closing Date.
"Sale Adjustment Period" has the meaning as set forth in Section 2.3.
"Sale Notice" has the meaning as set forth in Section 2.3.
"SEC" has the meaning as set forth in Section 5.7.
"Seller" has the meaning as set forth in the first paragraph of this
Agreement.
"Sellers' Indemnified Group" has the meaning as set forth in Section
12.2.
"Sellers' Representatives" has the meaning as set forth in Section
12.2.
"Senior Credit Facility" means that certain Amended and Restated Senior
Secured Revolving Credit Agreement, dated as of December 19, 1997, as amended
and restated, among the Company, certain Subsidiaries of the Company, Bank of
Montreal, as agent, and the financial institutions party thereto, as amended,
modified and supplemented.
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"Significant Subsidiary" shall mean a Subsidiary of the Company having
total consolidated assets with a value equal to at least five percent of the
total consolidated assets of the Company and its subsidiaries as reflected on
the consolidated unaudited balance sheet of the Company and its subsidiaries at
March 31, 2000, determined on a pro forma basis after giving effect to the
disposition of the assets sold pursuant to the Reliant Purchase Agreement and
the assets owned by any International Entities.
"Sithe Stock" has the meaning as set forth in the Recitals.
"Smithfield Project" means the Company's 162 megawatt gas-fueled
project in Sydney, Australia.
"Subsidiary" of a Person means (i) any corporation, association or
other business entity of which more than 50 percent of the total voting power of
shares or other voting securities outstanding thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii) any partnership
or limited liability company (a) the sole general partner or the managing
general partner or managing member of which is such Person or one or more of the
other Subsidiaries of such Person (or any combination thereof) or (b) the only
general partners or members of which are such Person or one or more of the other
Subsidiaries of such Person (or any combination thereof). Without limiting the
generality of the foregoing and for avoidance of ambiguity, except as otherwise
expressly provided herein, none of the International Entities shall be deemed to
be a Subsidiary of the Company.
"Survival Period" has the meaning as set forth in Section 11.4.
"Target Date" means September 30, 2000.
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"Tax Returns" means all returns, declarations, reports, statements,
estimates, declarations of estimated Tax, claims for refund, information return
or other document required to be filed in respect of Taxes, including any
schedule or attachment thereto, and the term "Tax Return" means any one of the
foregoing Tax Returns, including any amendments thereof made or required to be
made.
"Taxes" mean all federal, state, local, foreign and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
capital stock, profits, license, lease, service, service use, withholding,
payroll, employment, social security (or similar), unemployment, disability,
workmen's compensation, excise, severance, stamp, occupation, premium, real
property, personal property, realty transfer and realty transfer gains taxes,
registration, alternative or add-on minimum, windfall profits, environmental
(including taxes under Code Section 59A), fuel, gas import, customs, duties or
other taxes, fees, assessments or charges of any kind whatsoever imposed by any
governmental entity, together with any interest and any penalties, additions to
tax or additional amounts with respect thereto, whether disputed or not, and the
term "Tax" means any one of the foregoing Taxes.
"Transfer Taxes" shall have the meaning as set forth in Section 6.4.
"Vivendi" means Vivendi, S.A.
"Vivendi Loan Agreement" means that certain Loan Agreement, dated as of
November 9, 1999, between the Company and Vivendi.
ARTICLE 2. PURCHASE AND SALE OF STOCK
Section 2.1 Purchase and Sale of Stock.
2.1.1 Transfer of Sithe Stock. Upon the terms and subject to the conditions
set forth in Articles 7 and 8, on the Closing Date each Seller shall sell,
convey, transfer, assign, and
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deliver to Buyer, free and clear of all Liens, other than Liens created by or
through Buyer, and Buyer shall purchase from each Seller, in the manner set
forth in Article 9, the Sithe Stock owned by such Seller and set forth opposite
such Seller's name on Schedule 1.
2.1.2 Purchase Price. Upon the terms and subject to the conditions set
forth in Articles 7 and 8, on the Closing Date, the payments set forth in this
Section 2.1.2 shall be made.
2.1.2.1 Buyer shall pay to the Sellers, in the manner set forth in
Article 9, an amount equal to the Base Purchase Price.
2.1.2.2 If the Estimated Adjusted Amount is positive, Buyer shall pay
to the Sellers, in the manner set forth in Article 9, an amount equal to 49.9
percent of the Estimated Adjustment Amount; provided that, at Buyer's election,
in lieu of such payment, the Company shall pay to the Sellers, in the manner set
forth in Article 9, an amount equal to the Estimated Adjustment Amount by
delivery of written notice of such election not more than ten (10) Business Days
prior to the Closing; provided further, however, that Buyer shall have no right
to make such an election if (a) the payment from the Company described
immediately above would have any cost or other adverse financial impact to any
Seller (other than as a result of any change in the tax liability of any Seller
resulting from the transactions contemplated hereby), or (b) such payment would
result in a violation of applicable law or a breach of the terms of any Contract
to which the Company or any of its subsidiaries (including any International
Entities) is a party. Each Seller agrees to use reasonable efforts to cause each
director of the Company nominated by such Seller to approve any action of the
Company taken in accordance with this Section 2.1.2.2, including, without
limitation, the execution of any resolution in
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connection with any such election, subject to the second proviso of the
immediately preceding sentence. The Company shall use reasonable efforts to
obtain any third-party consents needed to satisfy the requirements of clause (b)
of this Section 2.1.2.2.
2.1.2.3 If the Estimated Adjustment Amount is negative, the Sellers
shall pay to Buyer, as an offset to the payment by Buyer of the Base Purchase
Price pursuant to Section 2.1.2.1, an amount equal to 49.9 percent of the
Estimated Adjustment Amount.
2.1.2.4 The net amounts payable to the Sellers pursuant to this Section
2.1.2 shall be allocated and paid to each of the Sellers based on a fraction,
the numerator of which is the number of shares of Sithe Stock set forth beside
such Seller's name on Schedule 1 and the denominator of which is the total
number of shares of Sithe Stock set forth on Schedule 1.
Section 2.2 Initial Purchase Price Adjustment.
2.2.1 At least fifteen (15) Business Days prior to the Closing Date, the
Company shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth the Sellers' best estimate
of the Adjustment Amount (the "Estimated Adjustment Amount"), if any, including
a calculation of such Estimated Adjustment Amount in reasonable detail.
2.2.2 Within ninety (90) days following the Closing Date, the Sellers shall
direct the Company in the preparation and delivery to Buyer of a final closing
statement (the "Closing Statement") that shall include the Closing Balance Sheet
and set forth the amount of the
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Adjustment Amount. Buyer and Buyer's independent auditors shall be provided with
copies of, or access to, records and other information that Buyer may reasonably
request with respect to the information set forth on the Closing Statement.
2.2.3 Within thirty (30) days following the delivery of the Closing
Statement by the Company to Buyer, Buyer may object to the Adjustment Amount in
writing. If Buyer does not so object to the Adjustment Amount, the Adjustment
Amount as set forth in the Closing Statement shall be binding on the parties
hereto. If Buyer so objects to the Adjustment Amount, the parties shall attempt
to resolve such dispute by negotiation. If the parties are unable to resolve
such dispute within thirty (30) days of any objection by Buyer, the parties
shall appoint the Independent Accounting Firm, and shall instruct such firm, at
the Company's expense, to review the calculation of the Adjustment Amount and
determine the appropriate amount of the Adjustment Amount, in accordance with
this Agreement, within thirty (30) days of such appointment. The parties agree
to cooperate with the Independent Accounting Firm and provide it with such
information as it reasonably requests to enable it to make such determination.
The finding of such Independent Accounting Firm shall be binding on the parties
hereto.
2.2.4 Upon final determination of the Adjustment Amount pursuant to this
Section 2.2, whether by agreement of the parties or as otherwise provided above:
(a) if the Adjustment Amount is higher than the Estimated Adjustment Amount,
Buyer shall pay to each Seller, no later than five (5) Business Days after such
determination, by wire transfer of immediately available funds to an account
designated by the payee, an amount equal to (i) 49.9 percent of the difference
between the Adjustment Amount and the Estimated Adjustment Amount multiplied by
(ii) a fraction, the numerator of which is the number of shares of Sithe
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Stock sold by such Seller and the denominator of which is the total number of
shares of Sithe Stock sold by all of the Sellers; and (b) if the Adjustment
Amount is less than the Estimated Adjustment Amount, each Seller shall pay to
Buyer, no later than five (5) Business days after such determination, by wire
transfer of immediately available funds to an account designated by Buyer, an
amount equal to (i) 49.9 percent of the difference between the Adjustment Amount
and the Estimated Adjustment Amount multiplied by (ii) a fraction, the numerator
of which is the number of shares of Sithe Stock sold by such Seller and the
denominator of which is the total number of shares of Sithe Stock sold by all of
the Sellers. Notwithstanding the foregoing, if on the Closing Date, the Company
made the payment referred to in Section 2.1.2.2, then: (1) except as may be
prohibited by applicable law or by the terms of any Contract to which the
Company or any of its subsidiaries (including the International Entities) is a
party, in lieu of any payment from Buyer required pursuant to clause (a) of the
immediately preceding sentence, at Buyer's election, the Company shall pay to
each Seller, at the time and in the manner set forth in clause (a) of the
immediately preceding sentence, an amount equal to: (y) the difference between
the Adjustment Amount and the Estimated Adjustment Amount; multiplied by (z) a
fraction, the numerator of which is the number of shares of Sithe Stock sold by
such Seller and the denominator of which is the total number of shares of Sithe
Stock sold by all of the Sellers; and (2) in lieu of any payment to Buyer
pursuant to clause (b) of the immediately preceding sentence, each Seller shall
pay to the Company, at the time and in the manner set forth in clause (b) of the
immediately preceding sentence, an amount equal to (y)(i) the difference between
the Estimated Adjustment Amount and the Adjustment Amount; multiplied by (z) a
fraction, the numerator of which is the number of shares of Sithe Stock sold by
such Seller and the denominator of which is the total number of shares of Sithe
Stock sold by all the Sellers. Each Seller agrees to use reasonable efforts to
cause each director nominated by such Seller to approve any action of the
Company taken in
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accordance with clause (1) of the immediately preceding sentence, including,
without limitation, the execution of any resolution in connection with any such
payment, subject to the exception set forth in such clause (1). The Company
shall use reasonable efforts to obtain any third-party consents needed to
satisfy the requirements of such clause (1). For purposes of determining whether
the Adjustment Amount is "higher" than or "less" than the Estimated Adjustment
Amount pursuant to this Section 2.2.4, a positive amount shall be deemed to be
"higher" than a negative amount, and a negative amount shall be deemed to be
"higher" than a larger negative amount.
2.2.5 The Company shall, and Buyer and the Sellers shall use reasonable
efforts to cause the Company to, reasonably cooperate with the Sellers in the
preparation of the Closing Statement.
Section 2.3 Additional Purchase Price Adjustments Related to International
Sales.
2.3.1 In the event of the occurrence of any International Sale which occurs
during the period starting on the Closing Date and ending on the Put/Call Date
applicable to any Seller (the "Sale Adjustment Period"), the Company shall
provide written notice (a "Sale Notice") to each Seller with respect to which
the Put/Call Date shall not have occurred as of the date of such International
Sale (each an "Adjusted Seller," and together, the "Adjusted Sellers") and to
Buyer within thirty Business Days after such International Sale, which shall set
forth the amount and calculation of any after-Tax gain or loss recognized by the
Company as a result of any such International Sale (the "After-Tax Gain or
Loss"). The After-Tax Gain or Loss shall be equal to: (a) the gross sales price
of such International Sale (including the fair market value of any non-cash
consideration received, which shall be equal to the "fair market value" of such
non-cash consideration for purposes of determining the amount of the
consideration payable by each
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Adjusted Seller pursuant to Section 2.3.3(ii)); less (b) the amount of any
retained liabilities related to such assets, as reflected on the books and
records of the Company and its consolidated subsidiaries; less (c) the Book
Value of the assets sold; less (d) Tax effects applicable to such International
Sale, determined in accordance with GAAP; and the amount determined pursuant to
clauses (a) through (d) shall be adjusted to eliminate changes in the book value
of the assets sold pursuant to such International Sale from March 31, 2000 (when
the book value of the Asian Assets and the Company's investment in the Rades
Project and the Smithfield Project was $277,202,000, $8,714,000 and $19,128,000,
respectively) through the date of such International Sale that are attributable
to (y) the results of operations of such assets during such period or (z)
non-cash write-ups or write-downs in the value of any such assets during such
period in accordance with GAAP.
2.3.2 Within thirty (30) days following delivery of a Sale Notice, Buyer or
the Adjusted Sellers may object to the amount of After-Tax Gain or Loss set
forth in the Sale Notice in writing. If a party objects to the amount of
After-Tax Gain or Loss included in the Sale Notice, the parties shall attempt to
resolve such dispute by negotiation. If the parties are unable to resolve such
dispute within thirty (30) days of any objection, the parties shall appoint the
Independent Accounting Firm, and shall instruct such firm, at the Company's
expense, to determine the amount of After-Tax Gain or Loss pursuant to this
Section 2.3, in accordance with this Agreement, within thirty (30) days of such
appointment. The parties agree to cooperate with the Independent Accounting Firm
and provide it with such information as it reasonably requests to enable it to
make such determination. The finding of such Independent Accounting Firm shall
be binding on the parties hereto.
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2.3.3 No later than five (5) Business Days after the later of (a) the final
determination of the amount of After-Tax Gain or Loss with respect to any
International Sale, whether by agreement of the parties or as otherwise provided
above or (b) the Put/Call Date applicable to each Adjusted Seller: (i) the
Company shall transfer to each Adjusted Seller such Adjusted Seller's pro-rata
share (based on the number of shares of Common Stock held by each such Adjusted
Seller immediately prior to the Closing as a percentage of the number of shares
of Common Stock held by all Adjusted Sellers immediately prior to the Closing)
of any non-cash consideration received by the Company in connection with such
International Sale; (ii) as consideration for such transfer, each Adjusted
Seller shall pay to the Company, in the manner contemplated by and subject to
the provisions of Section 2.5, an amount equal to such Adjusted Seller's
pro-rata share (based on the number of shares of Common Stock held by each such
Adjusted Seller immediately prior to the Closing as a percentage of the number
of shares of Common Stock held by all Adjusted Sellers immediately prior to the
Closing) of the fair market value of such non-cash consideration, plus interest
on such pro-rata amount accrued from the date of such International Sale through
the payment date at an annual rate equal to the Interest Rate; (iii) (A) if the
After-Tax Gain or Loss with respect to such International Sale is a negative
number, each Adjusted Seller shall pay to Buyer an amount equal to such Adjusted
Seller's pro-rata share (based on the number of shares of Common Stock held by
such Adjusted Seller immediately prior to the Closing as a percentage of the
number of shares of Common Stock held by all Adjusted Sellers immediately prior
to the Closing) of such After-Tax Gain or Loss, plus interest on such pro-rata
amount accrued from the date of such International Sale through the payment date
at an annual rate equal to the Interest Rate and (B) if the After-Tax Gain or
Loss with respect to such International Sale is a positive number, Buyer shall
pay to each Adjusted
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Seller an amount equal to: (1) such Adjusted Seller's pro-rata share (based on
the number of shares of Common Stock held by such Adjusted Seller immediately
prior to the Closing as a percentage of the number of shares of Common Stock
held by all Adjusted Sellers immediately prior to the Closing) of such After-Tax
Gain or Loss, plus interest on such pro-rata amount accrued from the date of
such International Sale through the payment date at an annual rate equal to the
Interest Rate; multiplied by (2) a fraction, the numerator of which is the
number of shares of Common Stock held by Buyer on the date of such payment
(after giving effect to any one or more purchases of Common Stock by Buyer
pursuant to the Put and Call Agreement through and including the Put/Call Date
on which such payment is being made) and the denominator of which is the total
number of shares of Common Stock held by Buyer and all of the Sellers
immediately following the Closing; and (iv) each Adjusted Seller shall pay to
Buyer an amount equal to such Adjusted Seller's pro-rata share (based on the
number of shares of Common Stock held by such Adjusted Seller immediately prior
to the Closing as a percentage of the number of shares of Common Stock held by
all Adjusted Sellers immediately prior to the Closing) of (A) the interest on
the Closing Book Value of the assets sold pursuant to such International Sale
(as such Closing Book Value may be adjusted from time to time after the Closing
Date, but only to reflect additional investment by the Company or any of its
Subsidiaries in such assets, or cash distributions to the Company or any of its
Subsidiaries related to such assets), accrued from the Closing Date until the
date on which such International Sale is completed at an annual rate equal to
(x) the Interest Rate multiplied by (y) (1) one minus (2) the average of the
annual United States combined federal, state and local effective income tax rate
(expressed as a decimal) of the Company and its Subsidiaries for all completed
tax years between the Closing Date and the date of such payment, plus (B)
interest on the amount of accrued interest determined pursuant to
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clause (A) above, accrued at an annual rate equal to the Interest Rate from the
date of such International Sale through the payment date. Each Adjusted Seller
shall also pay to Buyer an amount equal to such Adjusted Seller's pro-rata share
(based on the number of shares of Common Stock held by such Adjusted Seller
immediately prior to the Closing as a percentage of the number of shares of
Common Stock held by all Adjusted Sellers immediately prior to the Closing) of
any Taxes of the Company or any of its Subsidiaries resulting from any
International Sale (except for Taxes reflected in the calculation of the
After-Tax Gain or Loss resulting from such International Sale) or from the
purchase by such Adjusted Seller of any non-cash consideration received by the
Company in connection with any International Sale.
2.3.4 In the event any International Sale occurs after the date hereof and
prior to the termination of the Sale Adjustment Period, and any payment is made
by or to the Company or any of its Subsidiaries after the later of (x) the
closing date with respect to such International Sale and (y) the Closing Date,
pursuant to any purchase price adjustment or similar provisions set forth in any
purchase agreement, merger agreement or similar agreement pursuant to which any
International Sale shall have been consummated, then, on the later of (i) the
final determination of the After-Tax Gain or Loss pursuant to this Section 2.3,
whether by agreement of the parties or as otherwise provided above or (ii) the
Put/Call Date applicable to each Adjusted Seller: (a) in the case of any such
payment to the Company or any of its Subsidiaries, Buyer shall pay to each
Adjusted Seller, in the manner contemplated by, and subject to the provisions of
Section 2.5: (1) (A) such Adjusted Seller's pro-rata share (based on the number
of shares of
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Common Stock held by such Adjusted Seller immediately prior to the Closing as a
percentage of the number of shares of Common Stock held by all of the Sellers
immediately prior to the Closing) of the amount of such payment; multiplied by
(B) a fraction, the numerator of which is the number of shares of Common Stock
held by Buyer on the date of such payment (after giving effect to any one or
more purchases of Common Stock by Buyer pursuant to the Put and Call Agreement
through and including the Put/Call Date on which such payment is being made) and
the denominator of which is the total number of shares of Common Stock held by
Buyer and all of the Sellers immediately following the Closing, plus (2)
interest on such pro-rata amount accrued from the date of such International
Sale through the payment date at an annual rate equal to the Interest Rate; and
(b) in the case of any such payment by the Company or any of its Subsidiaries,
each Adjusted Seller shall make a payment of an amount equal to such Adjusted
Seller's pro-rata share (based on the number of shares of Common Stock held by
such Adjusted Seller immediately prior to the Closing as a percentage of the
number of shares of Common Stock held by all of the Sellers immediately prior to
the Closing) of the amount of such payment, plus interest on such pro-rata
amount accrued from the date of such International Sale through the payment date
at an annual rate equal to the Interest Rate. The procedures with respect to the
resolution of disputes set forth elsewhere in this Section 2.3, mutatis
mutandis, shall apply to the resolution of disputes pursuant to this Section
2.3.4.
2.3.5 In the event that after the date of any payment pursuant to Section
2.3.3(iii), Section 2.3.3(iv), the last sentence of Section 2.3.3, Section 2.3.4
or the last sentence of Section 2.4, the Put/Call Date occurs with respect to
any other Adjusted Seller, then on such subsequent Put/Call Date, Buyer shall
pay to each Adjusted Seller: (a) the difference between (1) the amount of each
prior payment by Buyer to such Adjusted Seller pursuant to Section 2.3.3(iii)(B)
or 2.3.4(a) (including all prior adjustments pursuant to this Section 2.3.5) and
(2) the amount that Buyer would have paid to such Adjusted Seller pursuant to
Section 2.3.3(iii)(B) or 2.3.4(a), as the case may be, had Buyer held on the
date of such prior payment the number of
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shares of Common Stock held by Buyer on such subsequent Put/Call Date after
giving effect to any purchases of Common Stock pursuant to the Put and Call
Agreement; and (b) the difference, if any, between (1) the amount of each prior
payment by such Adjusted Seller to Buyer pursuant to Section 2.3.3(iii)(A),
Section 2.3.3(iv), the last sentence of Section 2.3.3, Section 2.3.4(b) or the
last sentence of Section 2.4 and (2) the amount represented by the percentage of
each such payment referred to in the immediately preceding clause 2.3.5(b) (1)
which equals the percentage of the outstanding Common Stock held by Buyer on the
date of such payment pursuant to this Section 2.3.5 (after giving effect to any
one or more purchases of Common Stock by Buyer pursuant to the Put and Call
Agreement through and including the Put/Call Date on which such payment pursuant
to this Section 2.3.5 is being made); provided that no payment shall be made
pursuant to this clause (b) until the final Put/Call Date pursuant to the Put
and Call Agreement. In addition to any payment by Buyer pursuant to this Section
2.3.5, Buyer shall also pay interest on the amount of such payment, accrued at
an annual rate equal to the Interest Rate from the date of the corresponding
payment pursuant to Section 2.3.3(iii), Section 2.3.3(iv), the last sentence of
Section 2.3.3, Section 2.3.4 or the last sentence of Section 2.4, as applicable,
through the date of the payment pursuant to this Section 2.3.5.
Section 2.4 Distribution of International Entities on the Put/Call Date. In the
event that on the Put/Call Date with respect to any Seller, an International
Sale shall not have occurred with respect to any of the assets held by the
International Entities on the date hereof, the Company shall distribute to such
Seller on such Put/Call Date a pro-rata portion (based on the number of shares
of Common Stock held by such Seller immediately prior to the Closing as a
percentage of the total number of shares of Common Stock held by all Sellers
immediately prior to the Closing) of the remaining assets held by the
International Entities (whether through a
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distribution of equity interests in the entity or entities which hold such
assets or otherwise) and as consideration for such distribution such Seller
shall make a payment, in the manner contemplated by and subject to the
provisions of Section 2.5, of an amount equal to (a) the Book Value of the
assets so distributed plus (b) an amount equal to the interest on the Closing
Book Value of the assets so distributed (as such Closing Book Value may be
adjusted from time to time after the Closing Date, but only to reflect
additional investment by the Company or any of its Subsidiaries in such assets,
or cash distributions to the Company or any of its Subsidiaries related to such
assets), accrued from the Closing Date through the date of such distribution at
an annual rate equal to (x) the Interest Rate multiplied by (y) (1) one minus
(2) the average of the annual United States combined federal, state and local
effective income tax rate (expressed as a decimal) of the Company and its
Subsidiaries for all completed tax years between the Closing Date and the date
of such payment. Each acquiring Seller shall pay to Buyer an amount equal to
such Seller's pro-rata share (based on the number of shares of Common Stock held
by such Seller immediately prior to the Closing as a percentage of the number of
shares of Common Stock held by all Sellers immediately prior to the Closing) of
any Taxes of the Company or any Subsidiary of the Company resulting from the
distribution of assets held by the International Entities to such Seller
pursuant to this Section 2.4.
Section 2.5 Payment of Amounts Due Pursuant to Section 2.3 and Section 2.4. With
respect to payments required to be made pursuant to Section 2.3 or Section 2.4:
2.5.1 The parties shall use reasonable efforts to permit offsetting of
payments where applicable, and otherwise provide for an efficient settlement of
funds on the date of any such payments.
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2.5.2 With respect to any amount payable by Buyer to any Seller, Buyer may,
in lieu of making such payment, elect to cause the Company to make such payment
to such Seller in the manner provided by, and subject to the limitations set
forth in, Section 2.1.2.2.
2.5.3 Any amounts payable by Buyer or the Company to any Seller following
the application of Section 2.5.1 and 2.5.2 shall be paid by wire transfer of
immediately available funds to an account specified by such Seller.
2.5.4 Any amounts payable by any Seller shall be paid by wire transfer of
immediately available funds to an account specified by the Company or Buyer, as
applicable; provided, that, after the second anniversary of the Closing Date,
such Seller may elect to make such payment in the form of shares of Common Stock
by so notifying the Company or Buyer, as applicable, not later than five
Business Days prior to the date on which such payment is due. For purposes of
any such election, the Common Stock shall be valued at the price that would have
been applicable had such Seller sold such Common Stock to Buyer on such date
pursuant to a "put" exercise under the terms of the Put and Call Agreement.
Section 2.6 Certain Preliminary Transactions.
2.6.1 The Company has declared a dividend payable to its stockholders in
the aggregate amount of $90.0 million (the "Dividend") pursuant to a resolution
of the Board of Directors of the Company dated August 11, 2000. The Company
expects to pay the Dividend on or prior to the Closing Date.
2.6.2 The parties anticipate that prior to the Closing, the Company may
restructure, amend or otherwise modify the 1998 Plan and the 1999 Stock Plan
(the "Plan Restructuring"). In connection with such restructuring, the Company
may take actions related to the Trust under the 1998 Plan and/or Sithe Employee
Stock Ownership, L.P., which may cause
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the shares of Common Stock held by either or both of such entities to be held by
another Seller or by the Company. The parties agree that in any such event and,
provided that the Company and each Seller has complied with Section 6.5.3(b) in
all respects: if the Trust under the 1998 Plan and/or Sithe Employee Stock
Ownership, L.P. ceases to hold shares of Common Stock, then (a) such entity will
cease to be a party to this Agreement, (b) the Seller transferee of such shares
of Common Stock will be bound by the terms hereof with respect to such shares
and (c) the Schedules to this Agreement will be updated to the extent necessary
to reflect the foregoing.
2.6.3 The parties anticipate that Marubeni America Corporation ("Marubeni
America"), Marubeni MS Power, Inc. ("Marubeni MS Power") and/or S Marubeni
American Power, Inc. ("Marubeni American Power," and collectively, "Marubeni")
may enter into arrangements with the Company and/or Vivendi which may involve a
change in ownership with respect to the shares of Common Stock held by Marubeni
on the date hereof (any such transaction, a "Marubeni Transaction"). The parties
agree that in any such event, and provided that the Company and each Seller has
complied with Section 6.5.3(b) in all respects: if Marubeni America, Marubeni MS
Power or Marubeni American Power ceases to hold shares of Common Stock, then (a)
such entity will cease to be a party to this Agreement, (b) any Seller
transferee of such shares of Common Stock will be bound by the terms hereof with
respect to such shares and (c) the Schedules to this Agreement will be updated
to the extent necessary to reflect the foregoing. Notwithstanding the
immediately preceding sentence, but subject to Section 6.5.3(b), in the event
that the Company acquires shares of Sithe Stock held by Marubeni on the date
hereof in connection with a Marubeni Transaction, such shares of Sithe Stock
shall be considered outstanding for all purposes of this Agreement and the
Company shall be bound as a Seller with respect to the obligation to sell such
shares of Sithe Stock and the right to receive payment in
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consideration for the sale of such shares of Sithe Stock at the Closing, and
Schedule 1 shall be deemed to have been amended solely for such purpose;
provided that for purposes of each other provision of this Agreement (including
without limitation the provisions of Article 2 as applicable to any payments
required to be made by or paid to any Seller after the Closing, the
representations and warranties relating to ownership of such shares of Sithe
Stock set forth in Article 3 and Article 4 relating to the period prior to the
transfer of such shares of Sithe Stock to the Company, and the indemnification
provisions set forth in Article 12), Marubeni shall be deemed to be the Seller
with respect to all such shares of Sithe Stock.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed in this Agreement, or in any Schedule, the
Company hereby represents and warrants to Buyer, as of the date hereof (except
where such representation or warranty is expressly made as of another specific
date), as follows:
Section 3.1 Organization, Qualification and Corporate Power.
3.1.1 The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly licensed or
qualified to transact business as a foreign corporation in each jurisdiction in
which the nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or qualification,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect. The Company has full corporate power and authority to
own, lease or otherwise hold its properties and assets and to carry on its
business as now conducted and to execute, deliver and perform this Agreement.
3.1.2 Each Significant Subsidiary of the Company is listed on Schedule
3.1.2. Each Significant Subsidiary which is a corporation is duly organized,
validly existing and in good
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standing under the laws of the jurisdiction of its incorporation, and each
Significant Subsidiary which is a partnership or limited liability company is
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each Significant Subsidiary is duly licensed
or qualified to transact business as a foreign corporation, limited liability
company or partnership, as applicable, in each jurisdiction in which the nature
of the business transacted by it or the character of the properties owned or
leased by it requires such licensing or qualification, except where the failure
to be so licensed or qualified would not have a Material Adverse Effect. Each
Significant Subsidiary has the requisite corporate or organizational power and
authority to own, lease or otherwise hold its properties and assets and to carry
on its business as now conducted.
Section 3.2 Authorization; Validity.
3.2.1 The execution, delivery and performance by the Company of this
Agreement have been duly authorized by all requisite corporate action on the
part of the Company.
3.2.2 This Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect relating to creditors' rights
generally, and general equitable principles (whether considered in a proceeding
in equity or at law).
Section 3.3 No Conflict. Except as set forth in Schedule 3.3, the execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby will not (i) violate,
conflict with or result in a breach of any
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provisions of the certificate of incorporation, by-laws, articles of
organization, partnership agreement, limited liability company agreement,
formation agreement or other similar organizational documents (the "Charter
Documents") of the Company or any Significant Subsidiary, (ii) violate any law
or regulation applicable to the Company or any Subsidiary of the Company, or any
order of any court or governmental agency or authority having jurisdiction over
the Company or any Subsidiary of the Company, (iii) violate or conflict with, or
constitute (with due notice or lapse of time or both) a default under, or
require the consent or approval of any party to, any Material Contract or (iv)
result in the creation or imposition of any Material Encumbrance, except, in the
case of clauses (ii), (iii) and (iv), as would not have a Material Adverse
Effect.
Section 3.4 Capital Stock.
3.4.1 The authorized, issued and outstanding capital stock of the Company
and each Significant Subsidiary are as set forth in Schedule 3.4. The
stockholders of record of the Company and each Significant Subsidiary are as set
forth in Schedule 3.4. Except as set forth in Schedule 3.4, (i) there is no
authorized or outstanding subscription, warrant, option, convertible security or
other right (contingent or other) to purchase or otherwise acquire from the
Company or from any Significant Subsidiary equity interests of the Company or
any Significant Subsidiary, (ii) there is no commitment on the part of the
Company or on the part of any Significant Subsidiary to issue shares,
subscriptions, warrants, options, convertible securities, partnership interests
or other similar rights, and (iii) no equity securities or partnership interests
of the Company or of any Significant Subsidiary are reserved for issuance for
any such purpose. Except as set forth in Schedule 3.4, neither the Company, nor
any Significant Subsidiary, has any obligation (contingent or other) to
purchase, redeem or otherwise acquire any of its equity
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securities. Except for the Charter Documents of the Company and certain
Significant Subsidiaries, and except as set forth in Schedule 3.4, this
Agreement, the Put and Call Agreement and the Amended and Restated Stockholders'
Agreement, there is no voting trust or agreement, stockholders agreement, pledge
agreement, buy-sell agreement, right of first refusal, preemptive right or proxy
relating to any equity securities of the Company or to any equity securities of
any Significant Subsidiary.
3.4.2 Except as set forth in Schedule 3.4, all shares of Outstanding Stock
have been or at the Closing will be duly authorized, validly issued, fully paid
and nonassessable and free and clear of all Liens, other than Liens on Sithe
Stock created by or through Buyer.
Section 3.5 Financial Statements. Attached as Schedule 3.5 are (i) a
consolidated audited balance sheet of the Company and its subsidiaries
(including the International Entities) at December 31, 1998 and 1999 and related
audited consolidated statements of income and cash flows of the Company and its
subsidiaries for the years then ended and (ii) a consolidated unaudited balance
sheet of the Company and its subsidiaries at March 31, 2000 and related
consolidated statements of income and cash flows of the Company and its
subsidiaries for the three month period then ended (such statements specified in
clauses (i) and (ii), together with the related notes thereto, collectively, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP consistently applied, and fairly present in all material
respects the financial condition of the Company and its consolidated
subsidiaries as of the dates thereof and the results of their consolidated
operations for the periods covered thereby except, that the financial statements
at and for the three months ended March 31, 2000 are delivered without notes and
are subject to normal recurring year-end adjustments. Neither the Company nor
any Subsidiary thereof has any liability or obligation of the type that would be
required by
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GAAP to be disclosed in the Financial Statements of the Company and its
subsidiaries (whether accrued, absolute, contingent or otherwise) which,
individually or in the aggregate, is material to the Company and its
consolidated subsidiaries, taken as a whole, other than (i) liabilities
reflected (but only to the extent so reflected) or reserved against in the
Financial Statements, (ii) liabilities or obligations that have arisen since
March 31, 2000 in the ordinary course of business consistent with past practice,
none of which, individually or in the aggregate, would have a Material Adverse
Effect, (iii) liabilities or obligations disclosed in Schedule 3.5, or (iv)
liabilities or obligations incurred in accordance with the terms of this
Agreement or any Material Contract. The books of account of the Company and
subsidiaries of the Company fairly reflect in all material respects in
accordance with GAAP consistently applied (a) all material transactions relating
to the Company and subsidiaries of the Company and (b) all material items of
income and expense, assets and liabilities and accruals relating to the Company
and subsidiaries of the Company. Neither the Company nor any subsidiary of the
Company has engaged in any material transaction, maintained any material bank
account or used any material corporate funds except for transactions, bank
accounts and funds that have been and are reflected in the normally maintained
books and records of the Company and subsidiaries of the Company.
Section 3.6 Litigation; Compliance with Law.
3.6.1 Schedule 3.6 lists (a) each material action, suit, claim or
proceeding (including, but not limited to, any arbitration proceeding) pending
or, to the Company's knowledge, threatened, (b) each material investigation
which, to the Company's knowledge, is pending or threatened, against any of the
Company or any Subsidiary of the Company, at law or in equity, or before or by
any Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign and (c) certain
other
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actions, suits, claims, proceedings or investigations that are listed for the
information of Buyer. For purposes of the preceding sentence, no representation
is made with respect to (i) any proceeding before any regulatory authority
initiated by the Company or any Subsidiary of the Company in which the Company
or such Subsidiary of the Company is an applicant for any governmental permit,
approval, certificate, authorization or license, to the extent the matters
considered in such proceeding are limited to the approval or authority requested
in such application, or (ii) proceedings initiated by a third party in which the
Company or any Subsidiary of the Company is an intervener, and the subject
matter of such intervention is of general applicability to similarly-situated
parties. Neither the Company nor any Subsidiary of the Company is in default
with respect to any material order, writ, injunction or decree known to or
served upon such entity of any court or of any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
3.6.2 Except as set forth on Schedule 3.6, the Company and each Subsidiary
of the Company is in compliance with all laws, rules, regulations and orders
applicable to its business (other than labor laws, which are addressed in
Section 3.11, and other than Environmental Laws, which are addressed in Section
3.17), except where the failure to so comply would not have, individually or in
the aggregate, a Material Adverse Effect. Except as set forth on Schedule 3.6,
the Company and each Significant Subsidiary has all permits, licenses and other
governmental authorizations necessary to own, lease or otherwise hold its
properties and assets and to conduct its business as currently conducted, except
where the failure to obtain the same would not have, individually or in the
aggregate, a Material Adverse Effect.
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Section 3.7 Tax Matters.
3.7.1 Each of the Company and its Subsidiaries (for purposes of this
Section 3.7 "Subsidiaries" shall include all International Entities) has filed
on a timely basis all material Tax Returns that it was required to file and all
such Tax Returns were correct and complete in all material respects. Except as
set forth in Schedule 3.7, all Taxes of the Company and its Subsidiaries
(whether or not shown on any Tax Return) have been paid or, if not paid, a
liability for such Taxes has been accrued on the financial statements of the
Company in accordance with GAAP. Except as set forth in Schedule 3.7, no claim
has been made by an authority in a jurisdiction where any of the Company and its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. Except as set forth in Schedule 3.7, there are no Liens on
any of the assets of any of the Company and its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax (other than
Taxes not yet due).
3.7.2 Each of the Company and its Subsidiaries has withheld and paid all
material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
3.7.3 Except as set forth in Schedule 3.7, there is no outstanding dispute
or claim concerning any material Tax liability of any of the Company and its
Subsidiaries, either (A) claimed or raised by any taxing authority in writing or
(B) as to which the Company or any of its Subsidiaries has knowledge.
3.7.4 Except as set forth in Schedule 3.7, none of the Company and its
Subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency,
including those deficiencies proposed but not yet assessed, except with respect
to waivers or extensions of time which have since expired.
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3.7.5 Except as set forth in Schedule 3.7, there are no outstanding rulings
of, or requests for rulings with, any Tax authority addressed to the Company or
its Subsidiaries that are, or if issued would be, binding on the Company and any
of its Subsidiaries.
3.7.6 None of the Company and its Subsidiaries has filed a consent under
Section 341(f) of the Code concerning collapsible corporations. None of the
Company and its Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that would obligate it to make any
payments that will not be deductible under Section 280G of the Code (assuming
the shareholder approval requirements of Code Section 280G(b)(5)(B) are
satisfied). None of the Company and its Subsidiaries has agreed to, nor is it
required to make, any adjustment under Section 481(a) of the Code by reason of a
change of accounting method or otherwise. None of the Company and its
Subsidiaries has been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. None of the assets of the
Company or its Subsidiaries directly or indirectly secures any debt the interest
on which is tax exempt under Section 103 of the Code nor are they "tax-exempt
use property" within the meaning of Section 168(h) of the Code. Each of the
Company and its Subsidiaries has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the Code. None of the
Company or its Subsidiaries has participated in, or cooperated in (or has been
asked to cooperate in) an international boycott as defined in Section 999 of the
Code.
3.7.7 Except as set forth on Schedule 3.7, and except for "intertie
gross-up provisions" in the Company's and Subsidiaries' electricity supply and
interconnection agreements, none of the Company and its Subsidiaries is a party
to any Tax indemnity, allocation
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or sharing agreement. None of the Company and its Subsidiaries (A) was a member
of an affiliated group within the meaning of Section 1504(a) of the Code filing
a consolidated federal income Tax Return (other than a group the common parent
of which was the Company) during any tax year for which the federal income tax
statute of limitations has not expired or (B) has any liability for the Taxes of
any Person (other than any of the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract, or otherwise for any tax year
for which the federal income tax statute of limitations has not expired.
3.7.8 The Company and its Subsidiaries have filed all reports and have
created and/or retained all records required under Section 6038A of the Code
with respect to its ownership by and transactions with related parties. Each
related foreign person that is controlled by the Company and that is required to
maintain records under Section 6038A of the Code with respect to transactions
between the Company or any of its Subsidiaries and the related foreign person
has maintained such records. All documents that are required to be created
and/or preserved by such related foreign person with respect to transactions
with the Company or any of its Subsidiaries are either maintained in the United
States or the Company and its Subsidiaries are exempt from the record
maintenance requirements of Section 6038A of the Code with respect to such
transactions under Treasury Regulation Section 1.6038A-1. The Company and its
Subsidiaries are not a party to any record maintenance agreement with the
Internal Revenue Service with respect to Section 6038A of the Code.
Section 3.8 Material Contracts. The Contracts listed in Schedule 3.8 include all
of the Material Contracts and certain other Contracts that are listed for the
information of Buyer, provided, however, that no Contract shall be deemed a
Material Contract solely by reason of the
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fact that it is listed on Schedule 3.8. Except as otherwise set forth in
Schedule 3.8: (i) each Material Contract is valid, binding and in full force and
effect in all material respects, and is enforceable in all material respects by
the Company or its Subsidiary, as applicable, in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
relating to creditors' rights generally, and general equitable principles
(whether considered in a proceeding in equity or at law), (ii) the Company and
each Subsidiary thereof that is a party to a Material Contract has performed in
all material respects the obligations required to be performed by it to date
under such Material Contract, and (iii) neither the Company nor any Subsidiary
thereof has received any notice of default under any Material Contract to which
it is a party, except as would not have a Material Adverse Effect. To the
knowledge of the Company, neither the Company nor any Subsidiary of the Company
has given or received any notice of cancellation or termination of any Material
Contract. To the knowledge of the Company, no party to any Material Contract is
in material default under any such Material Contract. Except as set forth in
Schedule 3.8, there are no existing Material Contracts with, or material rights
in, any third party to acquire any of the assets of the Company or any
Subsidiaries of the Company, other than in the ordinary course of business
consistent with past practice.
Section 3.9 Consents and Approvals. Except as set forth in Schedule 3.9, no
material registration or filing with, or material consent or approval of or
other action by, any Federal, state or other governmental agency or
instrumentality or any other Person is or will be necessary for the valid
execution, delivery and performance by the Company of this Agreement or the
consummation of the transactions contemplated hereby, other than filings
required pursuant to the HSR Act.
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Section 3.10 Brokers. Neither the Company nor any Subsidiary or Affiliate
thereof has any contract, arrangement or understanding with any investment
banking firm, broker or finder with respect to the transactions contemplated by
this Agreement, except for Goldman, Sachs & Co., whose fees shall be borne by
the Company and paid in full as of the Closing Date (or, to the extent unpaid at
Closing, shall be reflected as a liability on the Closing Balance Sheet).
Section 3.11 Labor Matters. The Company has delivered to Buyer true and correct
copies of the collective bargaining agreements listed on Schedule 3.11 (the
"Collective Bargaining Agreements"). The Collective Bargaining Agreements
constitute all collective bargaining agreements to which the Company or any
Subsidiary of the Company is a party or is subject and which relate to the
business and operations of the Company or any Subsidiary of the Company. Other
than as set forth in Schedule 3.11, to the Company's knowledge, the Company or
the applicable Subsidiary of the Company (a) is in compliance with all
applicable laws regarding employment and employment practices, terms and
conditions of employment, and wages and hours; (b) has not received written
notice of any unfair labor practice complaint against it pending before the
National Labor Relations Board; (c) has no arbitration proceeding pending
against it that arises out of or under any collective bargaining agreement which
relates to the business or operations of the Company, and (d) is not currently
experiencing, and has received no current threat of, any work stoppage, in each
case, except as would not have a Material Adverse Effect.
Section 3.12 ERISA.
3.12.1 Schedule 3.12 lists all Employee Benefit Plans and Benefit
Arrangements that are sponsored or contributed to by the Company or any of its
ERISA Affiliates or to which
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the Company or any of its ERISA Affiliates has an obligation to contribute
covering the employees or former employees of the Company and its Subsidiaries
("Benefit Plans").
3.12.2 All Benefit Plans subject to ERISA or the Code covering employees or
former employees of the Company and its Subsidiaries comply in all material
respects with their respective terms and the applicable provisions of ERISA and
the Code.
3.12.3 Except as set forth in Schedule 3.12, all Employee Benefit Plans
intended to be qualified under Code Section 401 maintained by the Company and
its Subsidiaries have received favorable determinations with respect to such
qualified status from the Internal Revenue Service or will be amended as
requested by the Internal Revenue Service covering all currently applicable
requirements of Code Section 401 within the remedial amendment period prescribed
under Section 401(b) of the Code so as to obtain such favorable determination.
3.12.4 No Employee Benefit Plan that is subject to Title IV of ERISA and is
sponsored by the Company or an ERISA Affiliate of the Company has (i) incurred
an accumulated funding deficiency, whether or nor waived, within the meaning of
Section 412 of the Code or Section 302 of ERISA, (ii) been terminated or (iii)
been a plan with respect to which a reportable event, as defined in Section 4043
of ERISA, to the extent that the reporting of such event to the Pension Benefit
Guaranty Corporation has not been waived, has occurred and is continuing.
3.12.5 Except as set forth in Schedule 3.12, neither the Company nor any of
its ERISA Affiliates sponsors or has previously sponsored, maintained,
contributed to or incurred an obligation to contribute to any Multiemployer
Plan.
3.12.6 Except as set forth in Schedule 3.12, to the Company's knowledge, no
fiduciary or party in interest with respect to any of the Employee Benefit Plans
covering
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employees or former employees of the Company and its Subsidiaries has engaged in
or been a party to a transaction that is prohibited under Section 4975 of the
Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or
Section 408 of ERISA, respectively.
3.12.7 Except as set forth in Schedule 3.12, no employee or former employee
of the Company or any Subsidiary of the Company shall accrue or receive
additional benefits, service or accelerated rights to payment of benefits under
any Employee Benefit Plan or Benefit Arrangement covering employees or former
employees of the Company or any Subsidiary of the Company or become entitled to
severance, termination allowance or similar payments as a result of the
transactions contemplated by this Agreement.
3.12.8 Except as set forth in Schedule 3.12 and other than claims for
benefits in the ordinary course, there is no material claim pending, or, to the
Company's knowledge, threatened, involving any Employee Benefit Plan or Benefit
Arrangement covering employees or former employees of the Company or any
Subsidiary of the Company by any person against such Employee Benefit Plan,
Benefit Arrangement, the Company or any ERISA Affiliate.
3.12.9 Except as set forth in Schedule 3.12, the Company and its ERISA
Affiliates have made full and timely payment of all amounts required to be
contributed under applicable law and the terms of each Employee Benefit Plan and
Benefit Arrangement covering employees or former employees of the Company and
its Subsidiaries.
3.12.10 Except as set forth in Schedule 3.12, no Benefit Plan provides
material health care coverage beyond termination of employment except as
required by Sections 601-608 of ERISA or Section 4980B of the Code or death
benefits coverage beyond termination of employment.
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3.12.11 Neither the execution and delivery of this Agreement, the Put and
Call Agreement or the Amended and Restated Stockholders' Agreement by the
trustees under any Benefit Plan, acting as a stockholder of the Company, nor the
performance and consummation by any such Benefit Plan of the transaction
contemplated hereby and thereby violates or will violate any of the terms and
conditions of such Benefit Plan, ERISA or the Code.
Section 3.13 Events Subsequent to March 31, 2000. Except (a) as set forth in
Schedule 3.13, (b) as specifically provided for by this Agreement or consented
to or approved by Buyer or (c) for transactions between or among the Company and
one or more of its Subsidiaries, or between or among Subsidiaries of the
Company, or involving the International Entities, from March 31, 2000 until the
date hereof, neither the Company nor any Significant Subsidiary, has:
3.13.1 incurred or guaranteed any indebtedness for borrowed money (not
including accounts payable and trade payables incurred in the ordinary course of
business consistent with past practice), other than (i) indebtedness incurred in
accordance with any Material Contract or (ii) indebtedness incurred in the
ordinary course of business consistent with past practice, none of which,
individually or in the aggregate, has a Material Adverse Effect;
3.13.2 acquired or disposed of, in either case in any manner, any material
assets or properties, other than (i) acquisitions and dispositions in the
ordinary course of business consistent with past practice, (ii) dispositions of
obsolete or surplus assets, (iii) acquisitions and dispositions in connection
with the normal repair and/or replacement of assets or properties, or property
losses covered by insurance, (iv) acquisitions or dispositions in accordance
with any Material Contract or (v) dispositions of equity interests or assets
pursuant to the Reliant Purchase Agreement or related to any of the
International Entities;
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3.13.3 amended its Certificate of Incorporation, By-Laws or governing
documents, other than amendments which do not have, individually or in the
aggregate, a Material Adverse Effect;
3.13.4 failed to pay and discharge on a timely basis consistent with past
practices any liabilities which constitute current liabilities under generally
accepted accounting principles, except for (i) liabilities not yet due, (ii)
liabilities which are subject to good faith contest for which appropriate
reserves have been established or (iii) liabilities for which the failure to pay
would not, individually or in the aggregate, have a Material Adverse Effect;
3.13.5 cancelled any material indebtedness owed to the Company or any
Subsidiary thereof or waived in an enforceable manner any rights of substantial
value to the Company or any Subsidiary thereof, except for any such
cancellations or waivers of intercompany indebtedness or which, individually or
in the aggregate, do not have a Material Adverse Effect;
3.13.6 declared or paid any dividend or distribution, except for any
dividend or distribution paid or payable by a Subsidiary of the Company to
another Subsidiary of the Company or to the Company;
3.13.7 made or agreed to make any advance (excluding advances for ordinary
and necessary business expenses and for tax payments under the Company's tax
equalization program) or loan to any of its directors or officers or employees,
or to the Sellers, or made any increase in, or any addition to, other benefits
to which any of its directors or officers, or any Seller may be entitled, except
in the ordinary course of business consistent with past practice and except for
such additional benefits which, in the judgment of the board of directors or the
senior
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management of the Company, are reasonably necessary or appropriate to retain the
services of directors, officers or employees;
3.13.8 suffered any Material Adverse Effect; or
3.13.9 entered into any agreement or commitment to take any of the actions
described in Sections 3.13.1 to 3.13.7.
Section 3.14 Title to Properties. The Company and the Significant Subsidiaries
have good and valid title to the material properties and assets (other than Real
Property) reflected on the March 31, 2000 consolidated balance sheet included in
the Financial Statements or thereafter acquired (other than material properties
and assets disposed of in the ordinary course of business since such date and
dispositions that would not result in a breach of the representations set forth
in Section 3.13), free and clear of any Material Encumbrances, except for: (i)
Liens and encumbrances set forth in Schedule 3.14; (ii) Liens for current taxes
not yet due and payable or being contested in good faith through appropriate
proceedings, Liens to lenders incurred on deposits made in the ordinary course
of business consistent with past practice in connection with maintaining bank
accounts, Liens in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, governmental permits, licenses and
approvals, performance and return-of-money bonds and other similar obligations,
and (iii) materialmen's, warehousemen's and mechanics Liens and other Liens
arising by operation of law in the ordinary course of business for sums not yet
due, none of which, individually or in the aggregate, materially interferes with
or otherwise materially impairs the present use or operation of such properties
or assets. The Liens described in the foregoing clauses (i), (ii) and (iii) are
collectively referred to as "Permitted Liens". The
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Company and the Significant Subsidiaries currently own, lease or otherwise have
a right to use all of the property necessary for the conduct of their respective
businesses as currently conducted in all material respects.
Section 3.15 Insurance. Schedule 3.15 contains a list of the material insurance
coverage applicable to the Company and Significant Subsidiaries and certain
other insurance coverage that is listed for the information of Buyer. To the
Company's knowledge, the insurance coverage listed on Schedule 3.15 is in full
force and effect, is valid, binding and enforceable in accordance with its terms
against the respective insurers, except that policies relating to director and
officer insurance will terminate in accordance with their terms on the Closing
Date. There is no material default by the Company or any Significant Subsidiary
(or to the Company's knowledge by any insurer) under any such coverage and there
has been no material failure by the Company or any Significant Subsidiary to
give notice or present any material claim under any such coverage in a due and
timely fashion. No notice of cancellation or nonrenewal of any such material
coverage has been received except as is customary during the expiration and
renewal process for those policies listed on Schedule 3.15 which expire within
30 days. During the one-year period ending on the date of the Opening Balance
Sheet, there have been no retroactive or retrospective premium adjustments that
have not been reflected on the Opening Balance Sheet. Except as set forth in
Schedule 3.15, there are no material outstanding performance bonds covering or
issued for the benefit of the Company.
Section 3.16 Transactions with Certain Persons. Except (i) for liabilities and
obligations arising out of employment relationships of any officer, director or
employee of the Company or any Significant Subsidiary thereof with the Company
and its Affiliates, (ii) for
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liabilities or obligations relating to, or arising out of, any International
Entities and (iii) as set forth in Schedules 3.8, 3.12 or 3.16; the Company has
no outstanding liabilities or obligations owing to or from any Seller, officer,
director or employee of the Company or any Significant Subsidiary thereof nor
any member of any such person's immediate family.
Section 3.17 Compliance With Environmental Laws. Except as set forth in Schedule
3.17, (i) the Company and its Subsidiaries are in compliance with the applicable
Environmental Laws in all material respects and (ii) neither the Company nor any
of its Subsidiaries has any material liability under the applicable
Environmental Laws. Except as set forth in Schedule 3.17, (i) no written notice
of any material violation of the applicable Environmental Laws or material
claims or demands by third parties relating to the operations or properties of
the Company or any Subsidiary thereof has been received by, and is pending
against, the Company or any Subsidiary thereof and (ii) there are no writs,
injunctions, decrees, orders or judgments outstanding, or any actions, suits,
claims, proceedings or investigations pending or, to the knowledge of the
Company, threatened, relating to compliance by the Company or any of its
Subsidiaries with or liability of any of them under the applicable Environmental
Laws, except where any such instance of non-compliance or liability would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 3.18 Real Property. Except as set forth in Schedule 3.18:
3.18.1 The Company or a Subsidiary of the Company, as applicable, has valid
and insurable title to all material real property owned by it and valid
leasehold interests in all material real property leased by it (collectively,
the "Real Property").
3.18.2 To the Company's knowledge, the current use of the Real Property is
in material compliance with all applicable zoning regulations or permitted as a
grandfathered non-
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conforming use. To the Company's knowledge, the completion of the transactions
contemplated hereby will not prevent the Company or any Subsidiary of the
Company from utilizing, in accordance with such zoning ordinances and
regulations, any or all of the Real Property following the Closing in the same
manner in all material respects as the Company or Subsidiary of the Company has
utilized such Real Property prior to the Closing.
3.18.3 The electric, gas and sewer utility services and the septic tank and
storm drainage facilities currently available to the Real Property are adequate
in all material respects for the present use of the Real Property by the Company
and Subsidiaries of the Company, and the Company has no knowledge of any
condition that will result in the termination of the present access from the
Real Property to any such material utility services and other facilities.
3.18.4 The Company or Subsidiaries of the Company have all materially
necessary vehicular and pedestrian ingress and egress rights to and from the
Real Property. There are no restrictions on entrance to or exit from the Real
Property that materially interfere with the current use of the Real Property and
the Company has no knowledge of any condition that might reasonably be expected
to result in the termination of any material present access from the Real
Property to existing highways and roads.
3.18.5 The Company has received no written notices, and has no knowledge of
facts or circumstances that should reasonably cause it to believe, that any
governmental body having jurisdiction over the Real Property intends to exercise
the power of eminent domain or a similar power with respect to all or any part
of the Real Property except for any such exercise that would not materially
adversely affect the present use of any Real Property by the Company or any of
its Subsidiaries.
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3.18.6 The Company has not received written notice of any proposed public
improvements that might result in any material charge being levied or assessed
against any of the Real Property or of any proposed regulation (including, but
not limited to, zoning regulations) that might reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.19 Patents, Copyrights and Trademarks. To the knowledge of the
Company, the business as formerly and presently conducted by the Company and
Subsidiaries of the Company does not conflict with or infringe upon any patents,
copyrights, trademarks, service marks or applications that are owned or claimed
by any third party, except for such conflicts or infringements that would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 3.20 Corporate Records. The corporate record books of the Company and
Significant Subsidiaries are current and contain correct and complete, in all
material respects, copies of minutes of meetings, resolutions and other actions
and proceedings of its stockholders and board of directors, and the stock
records of the Company and Significant Subsidiaries are also current, correct
and complete and reflect the issuance of all shares of capital stock of such
entities.
Section 3.21 Qualifying Facilities. All of the Company's Qualifying Facilities
are in compliance in all material respects with Section 210 of PURPA and the
regulations promulgated thereunder. The Company has not received any notice from
FERC or other regulatory authority that any of the Company's Qualifying
Facilities are in material violation of PURPA or the regulations promulgated
thereunder or otherwise fail to satisfy any material legal requirements
applicable to Qualifying Facilities.
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Section 3.22 Exempt Wholesale Generators and Foreign Utility Companies. All of
the Company's Subsidiaries and Affiliates that have received Exempt Wholesale
Generator ("EWG") determination from FERC or provided Foreign Utility Company
("FUCO") notices with the SEC are in compliance in all material respects with
the requirements imposed under PUHCA with respect to EWG's and FUCO's. The
Company and its respective EWG/FUCO Subsidiaries and Affiliates have not
received any notice from FERC, SEC or any other regulatory authority that any
EWG/FUCO is in material violation of PUHCA or otherwise fails to satisfy any
material legal requirement applicable EWGs or FUCOs.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF EACH SELLER.
Except as otherwise disclosed in this Agreement or in any Schedule, each Seller,
severally and not jointly, represents and warrants, only with respect to itself,
to Buyer, as of the date hereof (except where such representation or warranty is
expressly made as of another specific date), as follows:
Section 4.1 Organization and Corporate Power. If such Seller is a Corporate
Seller, it is a corporation, a partnership or a trust, as indicated on Schedule
1, and if it is a corporation it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to own the Sithe Stock it is agreeing to transfer
pursuant to this Agreement and to execute, deliver and perform this Agreement.
If such Corporate Seller is a partnership or a trust, it has full power and
authority to own the Sithe Stock it is agreeing to transfer pursuant to this
Agreement and to execute, deliver and perform this Agreement. If such Seller is
an individual, he has the legal capacity to execute, deliver and perform this
Agreement.
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Section 4.2 Authorization; Validity. The execution, delivery and performance of
this Agreement by such Seller, if it is a Corporate Seller, have been duly
authorized by all requisite action on the part of such Seller. If such Seller is
a Corporate Seller, this Agreement has been duly executed and delivered by such
Seller and constitutes the valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereinafter in effect relating to
creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law). If such Seller is an
individual, this Agreement constitutes the valid and binding obligation of such
Seller, enforceable against such Seller in accordance its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereinafter in effect relating to
creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law).
Section 4.3 No Conflict. If such Seller is a Corporate Seller, except as would
not materially adversely affect such Seller's ability to consummate the
transactions contemplated hereby, the execution, delivery and performance by
such Seller of this Agreement and the consummation by such Seller of the
transactions contemplated hereby will not (i) violate the Charter Documents of
such Seller, (ii) violate any law or regulation applicable to such Seller, or
(iii) violate or conflict with, or constitute (with due notice or lapse of time
or both) a default under, any material note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation by which such
Seller or any of its assets its bound.
Section 4.4 Ownership of Stock. Such Seller owns, of record and beneficially,
the number of shares of Sithe Stock set forth opposite such Seller's name on
Schedule 3.4, free and
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clear of any Liens, except as set forth in Schedule 3.4. Except as set forth in
Schedule 3.4 and except as contemplated hereby, there is no voting trust or
agreement, stockholders' agreement, pledge agreement, buy-sell agreement, right
of first refusal, preemptive right, proxy or agreement or commitment to sell
relating to such Seller's shares of Sithe Stock. On the Closing Date, upon the
consummation of the transactions contemplated by this Agreement, Buyer will own
the Sithe Stock to be sold by such Seller to Buyer pursuant to this Agreement
free and clear of any Liens, except for any Liens created by or through Buyer.
Section 4.5 Public Utility. No Seller is a "holding company," a "public-utility
company," an "electric utility company," or a "subsidiary company," an
"associate company," or an "affiliate" of a holding company within the meaning
of PUHCA, a "public utility" within the meaning of Part II of the Federal Power
Act, or otherwise subject to regulation as a public utility or public service
company (or similar designation) by the United States or any state of the United
States.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company and the Sellers that, as of the
date hereof (except where such representation or warranty is expressly made only
as of a specific date) as follows:
Section 5.1 Organization and Corporate Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Buyer has full corporate power and authority to execute, deliver and perform
this Agreement.
Section 5.2 Authorization of Agreement; Validity. The execution, delivery and
performance by Buyer of this Agreement have been duly authorized by all
requisite corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and
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constitutes the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors rights generally, and general
equitable principles (whether considered in a proceeding in equity or at law).
Section 5.3 No Conflict. The execution, delivery and performance by Buyer of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) violate the Charter Documents of Buyer; (ii) violate any law or
regulation applicable to Buyer, or any order of any court or governmental agency
or authority having jurisdiction over Buyer, or (iii) violate or conflict with,
or constitute (with due notice or lapse of time or both) a default under, any
material note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation by which Buyer or any of its assets is bound.
Section 5.4 Consents and Approvals. Except as set forth in Schedule 5.4, no
registration or filing with, or consent or approval of or other action by, any
Federal, state or other governmental agency or instrumentality or any other
Person is or will be necessary for the valid execution, delivery and performance
by Buyer of this Agreement and the consummation of the transactions contemplated
hereby, other than filings required pursuant to the HSR Act.
Section 5.5 Brokers. Neither Buyer nor any Subsidiary or Affiliate of Buyer has
any contract, arrangement or understanding with any investment banking firm,
broker, finder or similar agent with respect to the transactions contemplated by
this Agreement, except for Credit Suisse First Boston, whose fees shall be borne
by Buyer.
Section 5.6 Availability of Funds. At the Closing, Buyer will have sufficient
funds to pay the Estimated Aggregate Purchase Price and to consummate the
transactions contemplated hereby.
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Section 5.7 Investment Purpose; Restricted Securities. Buyer is purchasing the
Sithe Stock for Buyer's own account, for investment purposes only and not with a
view towards public sale or distribution thereof. Buyer understands that the
Sithe Stock has not been, will not be, and is not required to be registered
under the Securities Act of 1933 as amended (the "Act"), by reason of a specific
exemption from the registration provisions of the Act, which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
Buyer's representations as expressed herein. Buyer understands that the shares
of Sithe Stock are "restricted securities" under applicable U.S. federal and
state securities laws and that, pursuant to these laws, Buyer may be required to
hold the Sithe Stock indefinitely unless the sale of the Sithe Stock by Buyer is
registered with the Securities and Exchange Commission ("SEC") and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. Buyer further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the Sithe Stock, and on requirements relating to the Company
which are outside of Buyer's control, and which the Company is under no
obligation to, and may not be able to, satisfy.
Section 5.8 No Public Market. Buyer understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Sithe Stock.
Section 5.9 Legends. Buyer understands that the Sithe Stock, and any securities
issued in respect of or in exchange for the Sithe Stock, may bear legends as may
be set forth in the Amended and Restated Stockholders' Agreement.
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ARTICLE 6. ACCESS; ADDITIONAL AGREEMENTS
Section 6.1 Access to Information; Continuing Disclosure. The Company agrees
that from the date hereof until the Closing Date, and subject to the terms of
the Confidentiality Agreement and for purposes of transition, (i) upon
reasonable notice from Buyer, the Company shall provide to Buyer reasonable
access, at reasonable times during normal business hours, to the employees,
properties, books and records of the Company and each Subsidiary thereof and
shall promptly furnish to Buyer information as Buyer may reasonably request;
provided, that such access shall be afforded to Buyer after no less than two
Business Days' prior notice, and only in such manner so as not to unreasonably
disturb or interfere with the normal operations of the Company or such
Subsidiary; and provided further, that the Company shall not be required to take
any action that would constitute a waiver of the attorney-client privilege and
the Company need not supply to Buyer any information that the Company is under a
legal obligation not to supply, and (ii) at regular intervals prior to the
Closing Date, or at such other times as Buyer or its representatives shall
reasonably request, the Company shall consult with Buyer regarding the conduct
of the business of the Company and its Subsidiaries. All information furnished
by or on behalf of the Company hereunder shall be subject to the terms of the
Confidentiality Agreement dated as of November 11, 1999 between the Company and
Buyer (the "Confidentiality Agreement").
Section 6.2 Regulatory Approvals.
6.2.1 Antitrust Notification. Buyer shall cause its ultimate parent entity
to, and the Company and Vivendi, S.A. will, as promptly as practical, but in no
event later than thirty (30) days following the execution and delivery of this
Agreement, each file with the United States Federal Trade Commission (the "FTC")
and the United States Department of Justice (the
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"DOJ") the Notification and Report Form under the HSR Act, if any, required in
connection with the transactions contemplated hereby and as promptly as
practicable supply any additional information, if any, requested in connection
herewith pursuant to the HSR Act. Any such Notification and Report Form and
additional information, if any, submitted to the FTC or the DOJ shall be in
substantial compliance with the requirements of the HSR Act. Each of Buyer and
the Company shall furnish to the other such information and assistance as the
other may reasonably request in connection with its preparation of any filing or
submission which is necessary under the HSR Act. Each of Buyer and the Company
shall keep the other apprised in a prompt manner of the status and substance of
any communications with, and inquiries or requests for additional information
from, the FTC and the DOJ and shall comply promptly with any such inquiry or
request. Each of Buyer and the Company will use its reasonable efforts to obtain
the termination or expiration of any applicable waiting period required under
the HSR Act for the consummation of the transactions contemplated hereby.
6.2.2 Regulatory Approval Process. Buyer, the Company and, to the extent
required, the Sellers, shall as promptly as practical, but in no event later
than thirty days following the execution and delivery of this Agreement, submit
to the appropriate agency/ies or third party/ies all declarations, filings and
registrations listed on Schedules 7.4 and 8.4. With respect to any such filings
and registrations, including, without limitation, filings that will be submitted
to the Federal Energy Regulatory Commission ("FERC") and or the SEC, Buyer and
the Company shall cooperate to share and develop information necessary for such
filing(s) and drafts of such filing(s) within fifteen days following execution
and delivery of this Agreement and shall give each other reasonable opportunity
to comment on and to revise such draft filings(s) before such filing(s) are
submitted to the appropriate governmental or regulatory agency. Buyer and
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Sellers agree to the retention of the Company's choice of expert to support any
such filing(s) submitted to FERC.
Section 6.3 Further Assurances. From time to time from the date hereof until the
Closing Date, as and when requested by any party hereto, the requested party
shall use reasonable efforts to execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other party may reasonably deem
necessary to consummate the transactions contemplated by this Agreement,
including, without limitation, such actions as are reasonably necessary in
connection with obtaining any third party consent identified on Schedules 7.4 or
8.4 or any regulatory filings as any party may undertake in connection herewith.
Section 6.4 Certain Tax Matters.
6.4.1 Transfer Taxes. Payments for all stamp, documentary, recording,
transfer and sales and use taxes ("Transfer Taxes") incurred in connection with
this Agreement and the transactions contemplated hereby (which for purposes of
this Section expressly exclude any sale contemplated by the Reliant Purchase
Agreement or any International Sale, as to which all Transfer Taxes shall be
borne by the Sellers) shall be shared equally between Buyer and the Sellers, and
Buyer at its own expense shall file, to the extent required by applicable law,
all necessary Tax Returns and other documentation with respect to all such
transfer or sales and use taxes, and, if required by applicable law, the Company
shall join the execution of any such Tax Returns or other documentation.
Section 6.5 Regular Course of Business.
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6.5.1 Prior to the Closing, except (a) as set forth on Schedule 6.5, and
(b) as otherwise contemplated by this Agreement or consented to in writing by
Buyer the Company shall, and shall cause its Subsidiaries to:
6.5.1.1 operate in the ordinary course of business consistent with past
practices;
6.5.1.2 use reasonable efforts to preserve substantially intact their
business organization, retain the services of their key employees (subject to
work force requirements) and maintain their relationships with their material
customers and suppliers;
6.5.1.3 use reasonable efforts to maintain and to keep their material
properties and assets in good repair and condition, ordinary wear and tear and
insured casualty excepted;
6.5.1.4 use reasonable efforts to keep in full force and effect
material insurance and bonds substantially comparable in amount and scope of
coverage to that currently maintained; and
6.5.1.5 comply in all material respects with the covenants set forth in
any loan, debt or other agreements with its lenders; in each case, except for
any matters that, individually or in the aggregate, would not have a Material
Adverse Effect.
6.5.2 Prior to the Closing, except as set forth in Schedule 6.5, and except
as otherwise contemplated by this Agreement or as otherwise consented to in
writing by Buyer, which consent shall not to be unreasonably withheld or
delayed, the Company shall not, and shall cause its Subsidiaries not to:
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6.5.2.1 (a) increase significantly the compensation payable to or to
become payable to any director or executive officer, (b) grant any material
severance or termination pay award that would become due as a result of the
transactions contemplated hereby, (c) amend or take any other actions to
increase materially the amount of, or accelerate the payment or vesting of, any
benefit under any Benefit Plan or (d) contribute, transfer or otherwise provide
any material amount of cash, securities or other property to any grantee, trust,
escrow or other arrangement that has the effect of providing or setting aside
assets for benefits payable pursuant to any termination, severance or other
change in control agreement; except, in the case of each of clause (a) through
(d), (x) pursuant to any Contract of the Company or any of its Subsidiaries
existing on the date hereof or (y) in the case of severance, termination or
retention payments, pursuant to a policy of the Company or any of its
Subsidiaries existing on the date hereof.
6.5.2.2 (a) enter into any material employment or severance agreement
with any director or executive officer, either, individually or as part of a
class of similarly situated persons, or (b) establish, adopt or enter into any
material new Benefit Plan, except, in the case of (a) or (b), (w) for employment
and severance agreements and Benefit Plans for the benefit of any newly employed
or promoted officers or employees, in which case the terms of such agreements
and Benefit Plans shall be reasonably consistent with those existing on the date
hereof, (x) for Benefit Plans relating to welfare insurance benefits established
or adopted in the ordinary course of business consistent with past practice or
(y) for Benefit Plans as required by the terms of any Collective Bargaining
Agreement;
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6.5.2.3 (a) offer, sell, issue or grant, or authorize the offering,
sale, issuance or grant, of any material amount of equity securities of the
Company or any of its Subsidiaries or (b) grant any Lien with respect to any
equity securities of the Company or any Subsidiary, other than with respect to
shares of Common Stock held by William Kriegel in accordance with the terms and
conditions set forth in the form of Amended and Restated Stockholders' Agreement
attached as Exhibit A hereto;
6.5.2.4 acquire, whether by merger or consolidation, by purchasing any
equity interest or otherwise, any business or any corporation, partnership,
association or other business organization or division thereof except for any
such acquisition transaction that is not material;
6.5.2.5 acquire or construct any material assets or properties other
than the acquisition of assets from suppliers or vendors in the ordinary course
of business and consistent with past practice;
6.5.2.6 sell, lease, exchange or otherwise dispose of, or grant any
Lien with respect to, any material assets of the Company or any of its
Subsidiaries, except for dispositions of assets and inventories in the ordinary
course of business consistent with past practice and purchase money Liens
incurred in connection with the acquisition of assets secured by such assets;
6.5.2.7 adopt any amendments to its Charter Documents, except as
contemplated by the form of Amended and Restated Stockholders' Agreement
attached as Exhibit A hereto;
6.5.2.8 (A) make any change in any of its methods of accounting in
effect at December 31, 1999, except as may be required to comply with
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GAAP, (B) make or rescind any election relating to any Taxes (other than any
election that must be made periodically and that is made consistent with past
practice or that the Company is contractually required to make pursuant to the
Reliant Purchase Agreement or the GPU Purchase Agreement in effect as of the
date hereof or that is an entity classification election made in the ordinary
course of business) or (C) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, except, in each case, as may be required by applicable law or
as would not have a Material Adverse Effect;
6.5.2.9 enter into any Contracts, or make any commitments, for the sale
of energy or capacity to any third party relating to any period after the third
anniversary of the Closing Date;
6.5.2.10 incur any obligations for borrowed money or purchase money
indebtedness that are material, whether or not evidenced by a note, bond,
debenture or similar instrument, except purchase money indebtedness as to which
Liens may be granted pursuant to Section 6.5.2.6, drawings or other incurrences
of indebtedness under credit lines or other financing agreements existing at the
date of this Agreement and borrowings evidenced by obligations having a term of
up to five years issued in the ordinary course of business consistent with past
practice; or
6.5.2.11 agree in writing or otherwise to do any of the foregoing.
6.5.3 Notwithstanding anything herein to the contrary, the Company shall be
permitted to: (a) declare and pay dividends in an aggregate amount not to exceed
$90.0 million (plus any dividends to be paid at the election of Buyer pursuant
to Article 2); (b) consummate any one or more of (i) any Marubeni Transaction
and (ii) the Plan Restructuring, provided, in the
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case of any action described in this clause (b), that the consummation of such
action would have no cost or other adverse financial impact to the Company that
is not fully reflected in the Adjustment Amount or to Buyer; (c) take any action
in connection with the International Entities to the extent permitted to be
taken by the Divestiture Committee in the form of Amended and Restated
Stockholders' Agreement attached hereto as Exhibit A; (d) consummate any
International Sale; and (e) consummate the transactions contemplated by, and
subject to the terms and conditions of, the Letter of Intent, dated the date
hereof, between the Company and William V. Kriegel.
6.5.4 Notwithstanding anything herein to the contrary, the Company shall be
permitted to take any action which in the good faith belief of the Board of
Directors of the Company or its Chairman is in, or not opposed to, the best
interests of the Company, in connection with (i) the litigation matters set
forth in item 1 of Schedule 3.6 and item 4 of Schedule 3.6, including, without
limitation, entering into any settlement of, and otherwise managing such
litigation and (ii) any of the Allegheny Entities (as hereinafter defined). Any
action or inaction taken by the Company in connection with any matters described
in the foregoing sentence shall not be deemed to cause a breach by the Company
or any Seller of this Agreement or the failure of any condition set forth in
Article 7 to be satisfied.
Section 6.6 Notice of Changes. Prior to the Closing, Buyer and each Seller
shall, and the Sellers shall cause the Company to, promptly disclose to each
other party in writing any information set forth in the Schedules hereto which
no longer obtains and any information of the nature of that set forth in the
Schedules which arises after the date hereof and which would have been required
to be included in the Schedules if such information had obtained on the date
hereof. Such disclosure shall not limit or affect any party's rights hereunder
for or with respect
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to any misrepresentation or breach of warranty by any other party or the failure
of any other party to fulfill any covenant, agreement or condition contained in
this Agreement and shall not limit or affect any of the rights of any party
hereunder to require any other party to consummate the transactions contemplated
by this Agreement.
Section 6.7 Director and Officer Indemnification and Insurance.
6.7.1 From and after the Closing Date until the sixth anniversary of the
Director Termination Date, the Company shall indemnify, defend, and hold
harmless to the fullest extent permitted under applicable law and the Company's
certificate of incorporation and by-laws each person who is now, or has been at
any time prior to the date hereof, an officer or director of the Company
(individually, a "Director Indemnified Party," and collectively, the "Director
Indemnified Parties"), against all losses, claims, damages, liabilities, costs
or expenses (including attorney's fees), judgments, fines, penalties, and
amounts paid in settlement of or otherwise in connection with any claim, action,
suit, proceeding, or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as such
occurring at or prior to the Closing (including, without limitation, the
transactions contemplated by this Agreement) (a "D&O Claim"). In the event of
any such D&O Claim, the Company shall pay expenses in advance of the final
disposition of any such action or proceeding to each Director Indemnified Party
to the fullest extent permitted under applicable law.
6.7.2 The Company shall keep in effect provisions in its certificate of
incorporation and bylaws with respect to indemnification and director and
officer exculpation from liability identical to, or at least as favorable to the
Director Indemnified Parties as, such provisions contained in the articles of
incorporation and bylaws of the Company on the date hereof, which provisions
shall not be amended, repealed, or otherwise modified for a period of
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six years from the Director Termination Date in any manner that would adversely
affect the rights thereunder of individuals who at any time prior to the
Director Termination Date were directors or officers of the Company in respect
of actions or omissions at or prior to the Director Termination Date (including,
without limitation, the transactions contemplated by this Agreement), except as
required by applicable law or except to make changes permitted by law that would
not materially diminish the Director Indemnified Parties' right of
indemnification.
6.7.3 For a period of six years after the Director Termination Date, the
Company shall maintain in effect officers' and directors' liability insurance
policies covering the Director Indemnified Parties that are on terms no less
advantageous to the Director Indemnified Parties than the insurance maintained
by the Company on the date hereof (without regard to excess liability layers)
with respect to D&O Claims arising from facts or events that occurred prior to
the Director Termination Date.
6.7.4 This Section 6.7 shall survive the Closing, is intended to benefit
each of the Director Indemnified Parties and their respective heirs and personal
representatives (each of which shall be entitled to enforce this Section 6.7
against the Company, as a third party beneficiary of this Agreement), and shall
be binding on all successors and assigns of the Company.
Section 6.8 Credit Facilities. The Company shall use reasonable efforts to
repay, or cause its Subsidiaries to repay, the amounts outstanding under the
BECO Facility and the Vivendi Loan Agreement prior to, or simultaneously with,
the Closing. On or prior to the Closing Date, the Company shall obtain consent
of the lenders under the BECO Facility (to the extent such facility is not
repaid) and under the Senior Credit Facility to the consummation of the
transactions contemplated by this Agreement.
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Section 6.9 No Solicitation. Prior to Closing, other than with respect to any
International Sale, and other than with respect to non-binding discussions
regarding Qualifying Facilities, the Sellers and Company shall not, and shall
not permit any Subsidiary of the Company to, directly or indirectly, make,
solicit, initiate or encourage submission of proposals or offers from any Person
relating to any liquidation, dissolution, recapitalization, merger,
consolidation or acquisition or purchase of all or substantially all of the
assets of, or equity interest in, the Company or any Significant Subsidiary or
any other similar transaction or business combination. Other than with respect
to any International Sale, and other than with respect to any non-binding
discussions regarding Qualifying Facilities, prior to the Closing, the Sellers
and Company shall, and shall cause its Subsidiaries to, immediately cease and
cause to be terminated all contracts, negotiations and communications with third
parties with respect to the foregoing, if any, existing on the date hereof.
Should the Sellers, the Company or any Company Subsidiary receive any such
proposal, inquiry or contact prior to Closing, the Sellers and Company shall
within three (3) Business Days give written notice thereof to Buyer and also
shall promptly provide Buyer with such information regarding such proposal,
inquiry or contact as Buyer may reasonably request. Notwithstanding the
provisions of this Section 6.9, any Seller, the Company or any Subsidiary of the
Company may conduct non-binding discussions or any of the activities described
in this Section 6.9 that relate to the disposition or restructuring of all or
any part of any individual Qualifying Facilities, provided that neither any
Seller, the Company nor any Subsidiary of the Company shall enter into a binding
agreement to consummate any such disposition or restructuring. For avoidance of
ambiguity, a confidentiality agreement, standstill agreement or similar
arrangement which does not include a binding commitment to consummate the
disposition or restructuring of an individual Qualifying Facility shall not be
deemed a
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"binding agreement to consummate" such disposition or restructuring for purposes
of the immediately preceding sentence.
Section 6.10 Interim Financial Statements. Within 30 days after the end of each
month prior to the Closing, the Company shall deliver to Buyer a consolidated
balance sheet of the Company and subsidiaries of the Company as at the end of
such month and the related consolidated statements of income and cash flows for
the period then ended, together with a certificate of the chief accounting
officer of the Company to the effect that all such financial statements have
been prepared in accordance with GAAP consistently applied, except for the
omission of footnote information, and fairly present in all material respects
the financial condition of the Company and its consolidated subsidiaries as of
the dates thereof and the results of their consolidated operations for the
periods covered thereby.
Section 6.11 No Adverse Action. Prior to the Closing Date, neither the Company
nor any of the Sellers shall take any action which results in the loss of
Qualifying Facility status under PURPA, or EWG or FUCO status under PUHCA, of
any project, Subsidiary or Affiliate of the Company that holds such status as of
the effective date of this Agreement.
Section 6.12 PUHCA Compliance. Neither the Buyer nor any of its associate
companies shall directly or indirectly provide guarantees and other forms of
credit support for and/or acquire any securities, or interest in the business,
of any entity, including, but not limited to, exempt wholesale generators,
foreign utility companies, energy-related companies and/or exempt
telecommunications companies, prior to the Closing Date that would materially
impair the ability of the Buyer to consummate the transactions contemplated by
this Agreement and the Put and Call Agreement under PUHCA. For purposes of this
Section 6.12, the terms "associate
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companies," "exempt wholesale generators," "energy-related companies" and
"exempt telecommunications companies" shall have the meanings set forth in
PUHCA.
Section 6.13 Option Plans. The Company shall use good-faith efforts to complete
the Plan Restructuring.
Section 6.14 Development and Fuel Services Agreement and Power Purchase
Agreement. The Company and Buyer shall use reasonable efforts to negotiate and
enter into, or to cause their respective Affiliates to negotiate and enter into,
the Development and Fuel Services Agreement and the Power Purchase Agreement on
or prior to the Closing Date.
ARTICLE 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer under this Agreement shall be subject to the
satisfaction (or waiver by Buyer), at or before the Closing, of each of the
following conditions, and each Seller and the Company shall use reasonable
efforts to cause each of such conditions to be satisfied on or before the Target
Date and, in any event, as promptly as practicable:
Section 7.1 No Injunction. No Federal or state governmental agency or authority
or political subdivision thereof or Federal or state court of competent
jurisdiction shall have issued any injunction or other order (whether temporary,
preliminary or permanent) which prohibits the consummation of the transactions
contemplated hereby; provided, that if there is an injunction or such other
order, the applicable parties shall use their reasonable efforts to litigate
against, and obtain the lifting of, any such injunction or order.
Section 7.2 Representations and Warranties. The representations and warranties
of the Company contained in Article 3 and of each Seller contained in Article 4
that are qualified by materiality shall be true and correct as of the date
hereof and as of the Closing Date (in each case except where such representation
or warranty is expressly made only as of another specific date)
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and all other representations and warranties shall be true and correct in all
material respects, in each case as though such representations and warranties
were made at and as of the Closing Date, except as otherwise contemplated by
this Agreement or as may be specified in amendments to any of the Schedules
provided at the Closing to reflect changes occurring after the date hereof,
other than changes that result from the breach of any covenant of the Company or
any Seller set forth in Article 6; and Buyer shall have received at the Closing
(i) a certificate of the Company dated the Closing Date and signed on behalf of
the Company by an executive officer of the Company to such effect, but only
insofar as it is applicable to the Company, (ii) a certificate of each Seller
with respect to the matters set forth in Article 4 (other than Section 4.5)
dated the Closing Date and signed, in the case of an individual by such Seller,
and in the case of a Corporate Seller by an executive officer of such Seller, to
such effect, but only insofar as it is applicable to such Seller and (iii) a
certificate of each Seller with respect to the matters set forth in Section 4.5
dated the Closing Date and signed, in the case of an individual by such Seller,
and in the case of a Corporate Seller by an executive officer of such Seller, to
such effect, but only insofar as it is applicable to such Seller.
Section 7.3 Performance. Each Seller and the Company shall have performed and
complied with all agreements and covenants required by this Agreement to be
performed or complied with by them at or prior to the Closing in all material
respects; and Buyer shall have received at the Closing (i) a certificate of the
Company dated the Closing Date and signed on behalf of the Company by an
executive officer of the Company to such effect, but only insofar as it is
applicable to the Company, and (ii) a certificate of each Seller, dated the
Closing Date and signed, in the case of an individual by such Seller, and in the
case of a Corporate Seller by an executive officer of such Seller, to such
effect, but only insofar as it is applicable to such Seller.
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Section 7.4 Approvals and Filings. All consents, authorizations and approvals
from, and all declarations, filings and registrations with, governmental
agencies or third parties that are listed on Schedule 7.4 shall have been
obtained or made unless the failure to obtain or make the same is the result of
a breach of this Agreement by Buyer. All waiting periods under the HSR Act shall
have expired or been properly terminated.
Section 7.5 Amended and Restated Stockholders' Agreement. The Sellers and the
Company shall have executed and delivered the Amended and Restated Stockholders'
Agreement.
Section 7.6 Opinion of Counsel. Buyer shall have received an opinion or opinions
dated the Closing Date of counsel to the Company and/or the Sellers, to the
effect set forth on Schedule 7.6.
Section 7.7 No Material Adverse Effect. No Material Adverse Effect shall have
occurred and be continuing and Buyer shall have received a certificate of the
Company dated as of the Closing Date as to such effect.
Section 7.8 Ownership Percentage. Consummation of the transactions contemplated
hereby shall not result in Buyer owning more than 49.9 percent of the shares of
Common Stock outstanding as of the Closing Date.
Section 7.9 Niagara Mohawk Shares. The Company shall have sold or otherwise
disposed of its equity interests in Niagara Mohawk Power Corporation.
ARTICLE 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS AND THE
COMPANY
The obligations of each of the Sellers under this Agreement shall be subject to
the satisfaction (or waiver by each of the Principal Sellers and the Company) on
or before the
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Closing of each of the following conditions, and Buyer shall use reasonable
efforts to cause each of such conditions to be satisfied on or before the Target
Date and, in any event, as promptly as practicable:
Section 8.1 No Injunction. No Federal or state governmental agency or authority
or political subdivision thereof or Federal or state court of competent
jurisdiction shall have issued any injunction or other order (whether temporary,
preliminary or permanent) which prohibits the consummation of the transactions
contemplated hereby; provided, that if there is an injunction or such other
order, the applicable parties shall use their reasonable efforts to litigate
against, and obtain the lifting of, any such injunction or order.
Section 8.2 Representations and Warranties. The representations and warranties
of Buyer contained herein that are qualified by materiality shall be true and
correct as of the date hereof and as of the Closing Date (in each case except
where such representation or warranty is expressly made only as of another
specific date) and all other representations and warranties shall be true and in
all material respects, in each case, as though such representations and
warranties were made at and as of the Closing Date, except as otherwise
contemplated by this Agreement; and the Sellers and the Company shall have
received at the Closing a certificate, dated the Closing Date, signed on behalf
of Buyer by an executive officer of Buyer to such effect.
Section 8.3 Performance. Buyer shall have performed and complied with, in all
material respects, all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing; and the Sellers and
the Company shall have received at the Closing a certificate, dated the Closing
Date, signed on behalf of Buyer by an executive officer of Buyer to such effect.
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Section 8.4 Approvals and Filings. All consents, authorizations and approvals
from, and all declarations, filings and registrations with, governmental
agencies or third parties that are listed on Schedule 8.4 and any other material
consents, authorizations, approvals, declarations and filings that are required
to consummate the transactions contemplated hereby shall have been obtained or
made unless the failure to obtain or make the same is the result of a breach of
this Agreement the Company or any Seller. All waiting periods under the HSR Act
shall have expired or been properly terminated.
Section 8.5 Amended and Restated Stockholders' Agreement. Buyer shall have
executed and delivered the Amended and Restated Stockholders' Agreement.
Section 8.6 Opinion of Counsel. The Sellers and the Company shall have received
an opinion or opinions dated the Closing Date from counsel to Buyer, to the
effect set forth in Schedule 8.6.
Section 8.7 No Material Adverse Effect. No effect shall have occurred and be
continuing that either individually or in the aggregate is materially adverse to
the condition (financial or otherwise) or results of operations of Buyer and its
Subsidiaries, taken as a whole, excluding, in any case, (i) any changes,
circumstances or effects resulting from or relating to changes in the economy,
financial markets, commodity markets, laws, regulations or rules in the
applicable electric power markets generally (including, without limitation,
changes in laws or regulations affecting owners or providers of electric
generation, transmission or distribution as a group and not Buyer exclusively)
and (ii) any changes in conditions generally applicable to the industries in
which Buyer or any of its Subsidiaries is involved, and, in the case of clause
(i) or (ii), not affecting Buyer or its Subsidiaries in any manner or degree
significantly different from
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the industry as a whole; and Principal Sellers shall have received a certificate
of the Buyer dated as of the Closing Date as to such effect.
Section 8.8 Credit Support Letter. The Credit Support Letter shall not have been
amended, modified or rescinded, in whole or in part.
Section 8.9 Dividend. The Dividend shall have been paid by the Company and
received by the Sellers in accordance with the terms of the resolution of the
Board of Directors of the Company declaring the Dividend.
ARTICLE 9. CLOSING
Section 9.1 Time and Place. Subject to the provisions of Articles 7 and 8, the
closing of the sale by the Sellers and the purchase by Buyer of the Sithe Stock
and the consummation of the transactions contemplated by Article 2 (the
"Closing") shall take place at the offices of Latham & Watkins, 885 Third
Avenue, New York, New York 10022 on the Target Date; provided, however, that if
all of the conditions contained in Articles 7 and 8 are satisfied or waived
prior to the Target Date then the Closing shall take place on the fifth Business
Day after the date on which such conditions are satisfied (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions); and provided, further that,
if all of the conditions in Articles 7 and 8 are not satisfied by the Target
Date, then, subject to Article 10, the Closing shall take place on the fifth
Business Day after the date on which such conditions are satisfied (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions); and provided, further
that, notwithstanding the foregoing, the Closing may take place at such other
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place, at such other time, or on such other date as the parties hereto may
mutually agree (the date on which the Closing occurs being herein referred to as
the "Closing Date").
Section 9.2 Payment for Stock. At the Closing, upon the terms and subject to the
conditions set forth herein, (a) Buyer shall pay to each Seller, by wire
transfer of immediately available funds to an account designated by such Seller
the amount determined pursuant to Section 2.1.2.1 (as such amount may be
adjusted pursuant to Section 2.1.2.3) and (b) Buyer or the Company, as
applicable, shall pay to each Seller, by wire transfer of immediately available
funds to an account designated by such Seller, the amount determined pursuant to
Section 2.1.2.2.
Section 9.3 Deliveries.
9.3.1 Stock Certificates. Each Seller shall deliver to the Company
certificate(s) evidencing the number of shares of Sithe Stock set forth opposite
such Seller's name on Schedule 1, duly endorsed in blank for transfer or
accompanied by stock power duly executed in blank. The Company shall deliver to
Buyer certificate(s) evidencing the aggregate number of shares of Sithe Stock,
in such denominations as reasonably requested by Buyer not later than five
Business Days prior to the Closing.
9.3.2 Certificates; Opinions. Buyer, the Company and the Sellers shall
deliver to each other the certificates, opinions of counsel and other items
described in Articles 7 and 8.
9.3.3 Other Closing Transactions. Each of the parties shall take such other
actions required hereby to be performed by it prior to or on the Closing Date,
including, without limitation, satisfying the conditions set forth in Articles 7
and 8.
9.3.4 Additional Documents. Each party shall execute and deliver to the
other parties all documents which the other reasonably determines are necessary
to consummate the
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transactions contemplated hereby or to demonstrate or evidence compliance with
the terms or the accuracy of any representation and warranty set forth herein.
ARTICLE 10. TERMINATION AND ABANDONMENT
Section 10.1 Methods of Termination. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time prior to the
Closing Date:
10.1.1 by mutual consent of the Company, the Principal Sellers and Buyer;
or
10.1.2 by Buyer at any time after December 31, 2000 if any of the
conditions provided for in Article 7 of this Agreement shall not have been
satisfied or waived in writing by Buyer prior to such date; provided, that if
any approval, authorization or consent of any governmental agency listed on
Schedule 7.4 has not been obtained and diligent efforts are being undertaken to
obtain such approval, authorization or consent, then the references to December
31, 2000 in this Section 10.1.2 shall be extended for up to 90 days and Buyer
may not terminate this Agreement during that extended period so long as such
diligent efforts continue; or
10.1.3 by the Principal Sellers or the Company at any time after December
31, 2000 if any of the conditions provided for in Article 8 of this Agreement
shall not have been satisfied or waived in writing by the Principal Sellers or
the Company prior to such date; provided, that if any approval, authorization or
consent of any governmental agency listed on Schedule 8.4 has not been obtained
and diligent efforts are being undertaken to obtain such approval, authorization
or consent, then the references to December 31, 2000 in this Section 10.1.3
shall be extended for up to 90 days and the Principal Sellers may not terminate
this Agreement during that extended period so long as such diligent efforts
continue; or
10.1.4 (a) by Buyer, upon not less than 30 days prior written notice, if
there has been a violation or breach by the Company or the Sellers of their
agreements, representations or
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warranties contained in this Agreement which would have a Material Adverse
Effect and which is not susceptible to cure (or if so susceptible is not the
subject of diligent efforts on the part of the breaching party to cure),
provided, that Buyer is not in material violation or breach of its agreements,
representations or warranties contained in this Agreement, or (b) by the
Principal Sellers, upon not less than 30 days prior written notice, if there has
been a material violation or breach by Buyer of its agreements, representations
or warranties contained in this Agreement and which is not susceptible to cure
(or if so susceptible is not the subject of diligent efforts on the part of the
breaching party to cure), provided, that such Sellers are not in material
violation or breach of their agreements, representations or warranties contained
in this Agreement.
Section 10.2 Procedure Upon Termination and Consequences. Buyer, the Company or
the Principal Sellers, as the case may be, may terminate this Agreement when
permitted pursuant to Section 10.1 by delivering written notice of such
termination, and such termination shall be effective on the date specified in
such notice in accordance with Section 13.3. If this Agreement is terminated as
provided herein:
10.2.1 each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the parties furnishing
the same; and
10.2.2 no party hereto shall have any liability or further obligation to
any other party to this Agreement (i) except with respect to the Confidentiality
Agreement, which shall survive the termination of this Agreement, including with
respect to information that is subject to the Confidentiality Agreement pursuant
to Section 6.1, and (ii) except for such legal and equitable rights and remedies
which any party may have by reason of any breach or violation of this Agreement
by any other party prior to such termination.
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ARTICLE 11. SURVIVAL
Section 11.1 Seller Representations and Warranties; Buyer Representations and
Warranties. The several representations and warranties of each Seller contained
in Sections 4.1, 4.2, 4.3 and 4.4 (and in the certificates delivered pursuant to
Section 7.2(ii)) and the representations and warranties of Buyer contained in
Article 5 (and the certificate delivered pursuant to Section 8.2) shall survive
the Closing. The several representations and warranties of each Seller contained
in Section 4.5 (and the certificates delivered pursuant to Section 7.2(iii))
shall survive the Closing for a period of one (1) year.
Section 11.2 Covenants. The covenants and agreements of the parties that by
their terms are to be performed after the Closing (including, without
limitation, all such covenants contained in Sections 2.2, 2.3, 2.4, 2.5, 6.7,
6.11 and 6.12 and in Article 12) shall survive the Closing indefinitely unless a
specific termination date is set forth therein.
Section 11.3 Company Representations and Warranties. The representations and
warranties of the Company contained in Article 3 (other than the representations
and warranties contained in Sections 3.7 and 3.17) shall survive the Closing for
a period of one (1) year. The representations and warranties of the Company
contained in Section 3.7 shall survive the Closing until the termination of the
applicable statutes of limitations. The representations and warranties of the
Company contained in Sections 3.17 shall survive the Closing for a period of two
(2) years.
Section 11.4 Survival Periods. Each such survival period referred to in Sections
11.1 through 11.3 shall be referred to, with respect to the applicable
representations, warranties or covenants, as a "Survival Period".
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ARTICLE 12. INDEMNIFICATION
Section 12.1 Seller Indemnification
12.1.1 Subject to the limitations, qualifications and other provisions of
this Article 12, from and after the Closing, each Corporate Seller shall
indemnify and hold harmless the Company, Buyer and each of Buyer's directors,
officers and employees ("Buyer Representatives", and together with the Company
and Buyer, the "Buyer Indemnified Group"), from and against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims and damages (collectively, "Damages"), incurred by any member of the
Buyer Indemnified Group which result from (i) any breach of any representation
or warranty of the Company contained in Article 3 or (ii) the failure of the
Company to perform any covenant or agreement made by or on behalf of the Company
under this Agreement that is required to be performed prior to the Closing.
12.1.2 Subject to the limitations, qualifications and other provisions of
this Article 12, from and after the Closing, each Seller shall, severally and
not jointly, indemnify and hold harmless each member of the Buyer Indemnified
Group from and against any Damages incurred by any member of the Buyer
Indemnified Group which result from (i) any breach of any representation or
warranty of such Seller contained in Article 4 or (ii) the failure of such
Seller to perform any covenant or agreement made by such Seller under this
Agreement.
12.1.3 Subject to the limitations, qualifications and other provisions of
this Article 12, from and after the Closing, each Corporate Seller shall
indemnify and hold harmless each member of the Buyer Indemnified Group from and
against Damages incurred by such member of the Buyer Indemnified Group which
result from the ownership or operation of any assets or any entities sold by the
Company pursuant to the Reliant Purchase Agreement.
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12.1.4 Subject to the limitations, qualifications and other provisions of
this Article 12, from and after the Closing, each Corporate Seller shall
indemnify and hold harmless the Buyer Indemnified Group from and against Damages
incurred by any member of the Buyer Indemnified Group which result from the
ownership or operation of any assets or any entities that constitute a part of
any International Entity (excluding (i) any retained liabilities related to any
assets or entities that constitute a part of any International Entity, to the
extent such retained liabilities are reflected in the calculation of the
After-Tax Gain or Loss resulting from any International Sale and (ii)
discrepancies between the Closing Book Value of such assets and the Book Value
of such assets); including, without limitation, any payment made by the Company
or any Subsidiary of the Company pursuant to any indemnification provisions set
forth in any purchase agreement, merger agreement or similar agreement pursuant
to which any International Sale shall have been consummated, other than the
payment obligations described in Section 2.3.4.
12.1.5 Subject to the limitations, qualifications and other provisions of
this Article 12, from and after the Closing, each Corporate Seller shall
indemnify and hold harmless each member of the Buyer Indemnified Group (other
than Penn Hydroelectric, Inc. and its direct and indirect Subsidiaries,
Allegheny Hydro No. 8, Inc., Allegheny Hydroelectric, Inc., Allegheny Hydro No.
9, Inc., Allegheny Hydro No. 8, L.P. and Allegheny Hydro No. 9, L.P.
(collectively, the "Allegheny Entities")) from and against Damages incurred by
such member of the Buyer Indemnified Group resulting from claims by New York
State Electric and Gas Corporation ("NYSEG") against the Company or any of its
Subsidiaries (other than the Allegheny Entities) with respect to the obligations
of the Allegheny Entities under the Power Purchase Agreements
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between Allegheny and NYSEG, but excluding any litigation costs incurred by the
Company or any of its Subsidiaries in connection with the matters set forth in
item 1 of Schedule 3.6.
12.1.6 Subject to the limitations, qualifications and other provisions of
this Article 12, each Corporate Seller shall indemnify and hold harmless each
member of the Buyer Indemnified Group from and against Damages incurred by such
member of the Buyer Indemnified Group which result from the consummation of one
or more transactions described in Section 2.6.2 and 2.6.3.
12.1.7 Subject to the limitations, qualifications and other provisions of
this Article 12, Vivendi shall indemnify and hold harmless each member of the
Buyer Indemnified Group from and against Damages incurred by such member of the
Buyer Indemnified Group which result from the consummation of the transactions
described in Section 2.6.1.
12.1.8 Subject to the limitations, qualifications and other provisions of
this Article 12, each Corporate Seller shall indemnify and hold harmless each
member of the Buyer Indemnified Group any Damages incurred by such member of the
Buyer Indemnified Group in any year that are directly related to the matters set
forth in item 4 of Schedule 3.6, including, without limitation, any other
investigation, action or proceeding initiated by any Person relating to the
conduct referred to in such item 4 of the Company or any of its Subsidiaries, if
and to the extent that such Damages exceed $1,000,000 in such year. For purposes
of this Section 12.1.8, a "year" shall mean any period commencing on the Closing
Date or any anniversary thereof and ending on the date immediately prior to the
next succeeding anniversary of the Closing Date.
Section 12.2 Buyer Indemnification. Subject to the limitation, qualifications
and other provisions of this Article 12, Buyer shall indemnify and hold harmless
the Sellers and each of the directors, officers and employees of each Seller
("Sellers' Representatives", and, together with
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the Sellers, the "Sellers' Indemnified Group"), from and against any Damages
incurred by any member of the Seller Indemnified Group which result from (i) any
breach of any representation or warranty of the Buyer contained in Article 5 or
(ii) failure to perform any covenant or agreement made by or on behalf of Buyer
under this Agreement.
Section 12.3 Timing of Notice of Claim. Notwithstanding anything herein to the
contrary, no person shall be entitled to indemnification pursuant to this
Article 12 unless the person seeking indemnification shall have delivered notice
of a claim for Damages (a "Claim") in writing to Buyer (in the case of any such
Claim by the Seller Indemnified Group), the Corporate Sellers (in the case of
any such Claim by the Buyer Indemnified Group) or any Seller (in the case of any
such Claim against the Seller pursuant to Section 12.1.2), (a) during the
applicable Survival Period, in the case of any Claim pursuant to Section 12.1.1,
12.1.2 or 12.2, (b) during the Reliant Survival Period, in the case of any Claim
pursuant to Section 12.1.3, (c) during the International Survival Period, in the
case of Section 12.1.4, or (d) at any time, in the case of Section 12.1.5,
12.1.6, 12.1.7 or 12.1.8. The termination of any applicable Survival Period,
Reliant Survival Period or International Survival Period, as the case may be,
shall not affect the rights of any member of the Buyer Indemnified Group or the
Seller Indemnified Group (in either case, an "Indemnified Party") in respect of
any Claim made by such person in writing received by the indemnifying person or
persons (the "Indemnifying Party") during the applicable Survival Period,
Reliant Survival Period or International Survival Period, as the case may be.
Section 12.4 Limitations on Indemnification
12.4.1 Notwithstanding anything herein to the contrary, but subject to the
other provisions of this Section 12.4, (a) no Seller other than the Corporate
Sellers shall have any obligation to indemnify any other Person pursuant to this
Article 12, except as provided pursuant
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to Section 12.1.2, (b) subject to Section 12.4.2, the obligation of any
Corporate Seller to indemnify any Indemnified Party with respect to any Claim
pursuant to Section 12.1.1, 12.1.3, 12.1.4, 12.1.5, 12.1.6 or 12.1.8 shall be
limited (x) with respect to Vivendi to an amount equal to 70.33% of the
aggregate amount of Damages that are the subject of such Claim incurred by all
members of the Buyer Indemnified Group and (y) with respect to Marubeni to an
amount equal to 29.67% of the aggregate amount of Damages that are the subject
of such Claim incurred by all members of the Buyer Indemnified Group and (c) the
obligation of any Seller other than a Corporate Seller to indemnify any
Indemnified Party pursuant to Section 12.1.2 shall be limited to the aggregate
consideration received by such Seller under this Agreement and the Put and Call
Agreement
12.4.2 Notwithstanding anything herein to the contrary, but subject to the
other provisions of this Section 12.4, the Corporate Sellers shall have no
liability to indemnify any member of the Buyer Indemnified Group pursuant to
Section 12.1.1 and 12.1.8 for any Damages which directly or indirectly arise out
of or are a result of or relate to any breach of representations or warranties
of the Company contained in Article 3 to the extent such Damages would exceed,
in the aggregate for all Corporate Sellers, $682.0 million.
12.4.3 Notwithstanding anything herein to the contrary, but subject to the
other provisions of this Section 12.4, no Indemnifying Party shall have any
liability to indemnify any Indemnified Party for Damages pursuant to: (i)
Section 12.1.1(i); (ii) Section 12.1.2(i) insofar as it relates to the
representation and warranties contained in Sections 4.1, 4.2, 4.3 and 4.5; or
(iii) Section 12.1.5; unless and until, in the case of clauses (i) through
(iii), the amount of all such Damages in the aggregate exceeds $15.0 million, in
which case the Indemnifying Parties shall be liable in the aggregate only for
the amount of such excess.
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12.4.4 This Article 12 shall be effective as of the Closing.
Notwithstanding anything herein to the contrary, but subject to the other
provisions of this Section 12.4, after the Closing no person shall have any
right to indemnification or other right to recovery with respect to this
Agreement and the transactions contemplated hereby except pursuant to this
Article 12.
12.4.5 Notwithstanding anything herein to the contrary, but subject to the
other provisions of this Section 12.4, no party shall have any indemnification
obligation to any other Person with respect to any Damages (a) to the extent
that a reserve or allowance for such Damages is recorded on the Closing Balance
Sheet or (b) consisting of incidental, indirect, consequential or punitive
damages, or damages for lost profits, other than Damages consisting of
incidental, indirect, consequential or punitive damages, or damages for lost
profits, payable by an Indemnified Party to a third party that is not an
Indemnified Party. Section
12.5 Procedure.
12.5.1 If any Indemnified Party intends to seek indemnification pursuant to this
Article 12, such Indemnified Party shall promptly notify the Indemnifying Party
in writing of such Claim describing such Claim in reasonable detail; provided,
that the failure to provide such notice shall not affect the obligation of the
Indemnifying Party unless it is actually prejudiced thereby. In the event that
such Claim involves a Claim by a third party against any Indemnified Party, the
Indemnifying Party may elect to assume the defense of such third-party Claim by
delivering a written notice to the Indemnified Party, not more than 30 days
after the receipt by the Indemnifying Party of the notice of such third-party
Claim, stating that the Indemnifying Party will undertake, conduct and control,
through counsel of its own choosing (which shall be reasonably satisfactory to
the Indemnified Party) and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party may consult with the
Indemnifying
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Party in such settlement or defense at such Indemnified Party's sole cost and
expense through counsel chosen by the Indemnified Party. Notwithstanding
anything in this Article 12 to the contrary, the Indemnifying Party may, without
the consent of the Indemnified Party, settle or compromise any action or consent
to the entry of any judgment which includes as an unconditional term thereof the
delivery by the claimant or plaintiff to the Indemnified Party of a duly
executed and legally effective written release of the Indemnified Group from all
liability in respect of such action without imposing any covenants or agreements
on any Indemnified Party other than to grant a reciprocal release. The
Indemnifying Party shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent (which shall not be unreasonably withheld) or if there be a final
judgment for the plaintiff in any such action or proceeding, the Indemnifying
Party agrees to indemnify and hold harmless such Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
12.5.2 The Indemnified Party and the Indemnifying Party shall cooperate
fully in all aspects of any investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any Claim in respect of which indemnity
is sought pursuant to this Article 12, including, but not limited to, by
providing the other party with reasonable access to employees and officers
(including as witnesses) and other information. Except as otherwise provided in
Section 12.5.1, the Indemnifying Party shall reimburse the Indemnified Party for
any out-of-pocket costs of the Indemnified Party resulting from such
cooperation.
Section 12.6 Calculation.
12.6.1 Insurance and Indemnity Proceeds. To the extent that any of the
indemnification obligations of any Indemnifying Party pursuant to this Article
12 are covered by
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insurance or any right to indemnification (other than pursuant to this Article
12) held by any Indemnified Party, such Indemnified Party shall be entitled to
indemnification pursuant to this Article 12 only with respect to the amount of
Damages that is in excess of the cash proceeds actually received by such
Indemnified Party pursuant to such insurance or right to indemnification. Such
Indemnified Party shall use reasonable efforts to collect all amounts due to
such Indemnified Party pursuant to any such insurance or right to
indemnification. If such Indemnified Party receives such cash insurance or
indemnification proceeds prior to the time a Claim is paid, then the amount
payable by the Indemnifying Party pursuant to such Claim shall be reduced by the
amount of such proceeds. If such Indemnified Party receives such cash insurance
or indemnification proceeds after such Claim has been paid, then upon the
receipt by the Indemnified Party of any such cash proceeds, up to the amount of
Damages incurred by such Indemnified Party with respect to such Claim, such
Indemnified Party shall remit to the Indemnifying Party an amount equal to the
lesser of (a) the amount of such cash proceeds or (b) the amount which was
previously paid by the Indemnifying Party to such Indemnified Party in
satisfaction of such Claim.
12.6.2 Effect of Taxes. The amount of any Damages under this Article 12
shall be calculated giving effect to actual Tax savings, if any, to the
Indemnified Party resulting from the payments (or adjustments) giving rise to
the payment of such Damages, after giving effect to the additional Taxes, if
any, incurred by reason of such indemnification payments (other than Taxes
incurred by Buyer as a result of a reduction in Buyer's tax basis in Sithe Stock
or otherwise incurred as a result of Buyer's treatment of such payment as a
purchase price adjustment in accordance with Section 12.7). The amount shall be
reasonably determined by the Indemnified Party taking into account actual Tax
savings and actual additional Taxes realized or
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incurred or to be realized or incurred during the taxable period in which such
payment of Damages accrues and during prior periods. All such calculations shall
be subject to the reasonable review of the Indemnifying Party. Upon request by
the Indemnifying Party, the Indemnified Party shall provide a certificate
prepared by an Independent Accounting Firm regarding actual Tax savings and/or
actual additional Taxes incurred or realized in any given year. If a payment of
Damages is made prior to the filing of relevant Tax Returns, the amount shall be
determined on an estimated basis. Proper adjustments shall be made if the actual
Tax savings or actual additional Taxes differ from the estimated amount. Section
12.7 Characterization. The parties agree to report any payment made pursuant to
this Article 12 as an adjustment to the purchase price for the Sithe Stock for
federal income tax reporting purposes, unless otherwise required by applicable
law.
ARTICLE 13. MISCELLANEOUS
Section 13.1 Amendment and Modification. Subject to Section 2.4 and Section 7.2,
this Agreement may be amended, modified and supplemented only by written
agreement of Buyer, the Company and each of the Principal Sellers; provided,
however, that the number of shares of Sithe Stock set forth opposite each
Seller's name on Schedule 1 hereto may be amended in writing by William Kriegel,
so long as the total number of shares of Sithe Stock sold by all Sellers is not
changed solely as a result of such amendment; provided, further, however, that
any change in the number of shares of Sithe Stock to be sold by any of the
Corporate Sellers shall also require the written consent of such Corporate
Seller. Notwithstanding the foregoing or any other provision of this Agreement
or the Put and Call Agreement, the aggregate percentage interest represented by
the shares of Sithe Stock to be sold by Marubeni as set forth on Schedule 1
shall not be reduced in any manner that would cause the percentage interest
represented by the
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shares set forth beside the names of Marubeni America Corporation, Marubeni MS
Power and Marubeni American Power, collectively, on Schedule A to the Put and
Call Agreement as in effect on the date hereof to be increased.
Section 13.2 Waiver of Compliance. Any failure of Buyer, on the one hand, or the
Company or any Seller, on the other hand, to comply with any obligation,
covenant, agreement or condition contained herein may be expressly waived in
writing by the Company and the Principal Sellers, in the event of any such
failure by Buyer, or by Buyer, in the event of any such failure by the Company
or any Seller, but such waiver or failure to insist upon strict compliance shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Section 13.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery, (b) facsimile transmission, (c) registered or certified mail, postage
prepaid, return receipt requested, or (d) air courier service. Notices shall be
sent to the appropriate party at its address or facsimile number given below (or
at such other address or facsimile number for such party as shall be specified
by notice given hereunder).
If to a Seller, to:
such Seller
c/o Sithe Energies, Inc.
335 Madison Avenue, 28th Floor
New York, New York 10017
Attn: Chief Executive Officer
Telecopy: (212) 351-0015
General Counsel
Telecopy: (212) 351-0019
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with copies to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022-4802
Attn: Roger H. Kimmel, Esq.
Samuel A. Fishman, Esq.
Telecopy: (212) 751-4864
with copies to:
Harsha Murthy
301 East 45th Street, 6-C
New York, New York 10017
Attn: Harsha Murthy, Esq.
Telecopy: 509-691-5659
If to the Company, to:
Sithe Energies, Inc.
335 Madison Avenue, 28th Floor
New York, New York 10017
Attn: Chief Executive Officer
Telecopy: (212) 351-0015
General Counsel
Telecopy: (212) 351-0019
with copies to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022-4802
Attn: Roger H. Kimmel, Esq.
Samuel A. Fishman, Esq.
Telecopy: (212) 751-4864
or to such other Person or address as the Company shall
designate in writing.
If to Buyer to:
Exelon (Fossil) Holdings, Inc.
c/o PECO Energy Company
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2301 Market Street
Philadelphia, PA 19103
Attn: Corbin A. McNeill, Jr., Chief Executive Officer
Telecopy: (215) 841-4513
with copies to:
Morgan, Lewis and Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attn: Howard L. Meyers, Esq.
Telecopy: (215) 963-5299
or to such other Person or address as Buyer shall designate in writing.
All such notices, requests, demands, waivers and communications shall
be deemed received upon (i) actual receipt thereof by the addressee, (ii) actual
delivery thereof to the appropriate address or (iii) in the case of a facsimile
transmission, transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above by first
class mail or by an air courier service, postage prepaid. However, such mailing
shall in no way alter the time at which the facsimile notice is deemed received.
Section 13.4 Binding Nature; Assignment. This Agreement 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 of the parties
hereto without prior written consent of (i) in the case of an assignment by
Buyer, the Principal Sellers or (ii) in the case of an assignment by any Seller
or the Company, Buyer and the Principal Sellers; provided, that (x) any Seller
may assign (including an
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assignment by operation of law) such Seller's rights, interests and obligations
hereunder with respect to any shares of Sithe Stock held by such Seller without
the consent of Buyer or the Principal Sellers as provided in clause (ii) above
to any transferee of such shares in a transfer made in accordance with the form
of the Amended and Restated Stockholders' Agreement attached hereto as Exhibit A
(including an assignment by operation of law) where such transferee agrees in
writing to be bound by the terms hereof (in which case (1) such Seller shall
remain liable for all of its obligations under this Agreement (including any
breach of the obligations of the assignee to deliver at the Closing the shares
of Sithe Stock so assigned) and the assignee shall, together with such Seller,
be jointly and severally liable for such obligations and (2) the Schedules
hereto shall automatically be deemed to be updated to reflect the addition of
the assignee as a "Seller" as applicable, with respect to the shares of Sithe
Stock held by such assignee and all resulting changes in ownership of the shares
of Sithe Stock) and (y) Buyer may assign and delegate its rights, interests and
obligations hereunder to one or more wholly-owned direct or indirect
Subsidiaries of (a) PECO Energy Company, at any time prior to the merger of PECO
Energy Company and Unicom Corporation with or into Exelon Corporation and (b)
Exelon Corporation, at any time thereafter (the entities in clauses (a) and (b)
collectively the "Permitted Assignees"), upon written notice to the Sellers
(which shall contain a representation that the assignee is a Permitted Assignee)
at or before the Closing Date, in which event Buyer shall remain liable for all
of its obligations under this Agreement and such Permitted Assignee shall,
together with Buyer, be jointly and severally liable for such obligations.
Notwithstanding the foregoing, no party hereto may assign or delegate its
rights, interests and obligations hereunder if such assignment or delegation
could reasonably be expected to result in a delay or impediment to consummating
the transactions contemplated hereby, including, without
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limitation, due to the need to obtain the consent of any third party, including
any Governmental Authority, not otherwise required for such party to consummate
the transactions contemplated hereby. Except as set forth in Section 6.7.4,
nothing contained herein, express or implied, is intended to confer on any
Person other than the parties hereto or their successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
Section 13.5 Entire Agreement. This Agreement, including the Exhibits, the
Schedules and the Confidentiality Agreement, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement and the Confidentiality Agreement supersede all prior
agreements and understandings among the parties with respect to such subject
matter and supersede any letters, memoranda or other documents or
communications, whether oral, written or electronic, submitted or made by (i)
Buyer or its agents or representatives to the Sellers, the Company, Goldman,
Sachs & Co. or any of their respective agents or representatives, or (ii) the
Sellers, the Company, Goldman, Sachs & Co. or their respective agents or
representatives to Buyer or any of its agents or representatives, in connection
with the bidding process which occurred prior to the execution of this Agreement
or otherwise in connection with the negotiation and execution of this Agreement.
No communications by or on behalf of the Company, including responses to any
questions or inquiries, whether orally, in writing or electronically, and no
information provided in any data room or any copies of any information from any
data room provided to Buyer or any other information shall be deemed to (i)
constitute a representation, warranty or an agreement of the Company, or (ii) be
part of this Agreement.
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Section 13.6 Expenses. Each party to this Agreement will pay its own expenses in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated
herein.
Section 13.7 Press Releases and Announcements; Disclosure. No press release or
other public announcement or disclosure related to this Agreement or the
transactions contemplated herein (including but not limited to the terms and
conditions of this Agreement) shall be issued or made without the prior approval
of Buyer, on the one hand, and the Company and the Principal Sellers, on the
other hand. The foregoing shall not prohibit any disclosure required by law,
provided such disclosure is made pursuant to the Confidentiality Agreement and
that the disclosing party shall consult with the other parties in advance of
such disclosure.
Section 13.8 Acknowledgment.
13.8.1 Buyer acknowledges that neither any of the Sellers, the Company nor
any other Person has made any representation or warranty, expressed or implied,
as to the accuracy or completeness of any information regarding the Sellers, the
Company or any of their respective Subsidiaries not included in this Agreement
and the Schedules. Without limiting the generality of the foregoing, no
representation or warranty is made with respect to any information in the
Confidential Offering Memorandum dated November 1999 or any supplement or
amendment thereto provided in connection with the solicitation of proposals to
enter into the transactions contemplated by this Agreement, such information
having been provided for the convenience of Buyer in order to assist Buyer in
framing its due diligence efforts. Buyer further acknowledges that, except as
otherwise expressly provided in Article 3, no Person makes any representation or
warranty with respect to any of the International Entities or any Contract,
arrangement, encumbrance, liability or other obligation which relates to any of
the International Entities.
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13.8.2 Buyer further acknowledges that (i) Buyer, either alone or together
with any Persons Buyer has retained to advise it with respect to the
transactions contemplated hereby ("Advisors"), has knowledge and experience in
transactions of this type and in the business of the Company, and is therefore
capable of evaluating the risks and merits of acquiring the Sithe Stock, (ii) in
determining to enter into this Agreement, it has relied on its own independent
investigation, and has not relied on any information or representations
furnished by any of the Sellers, the Company or any representative or agent
thereof or any other Person, except as set forth in this Agreement, (iii)
neither any of the Sellers, the Company nor any representative or agent thereof
or any other Person (other than Advisors of Buyer) has given any investment,
legal or other advice or rendered any opinion as to whether the purchase of the
Sithe Stock is prudent, and Buyer is not relying on any representation or
warranty by any of the Sellers or the Company or any representative or agent
thereof except as set forth in this Agreement, (iv) Buyer has conducted
extensive due diligence, including a review of the documents contained in a data
room prepared by or on behalf of the Sellers and the Company, and (v) Buyer has
had the opportunity to visit the Company and its Subsidiaries and certain of
their facilities, plants, development sites, offices and other properties, and
to ask questions and receive answers concerning the Company, its Subsidiaries
and the terms and conditions of this Agreement.
Section 13.9 Disclaimer Regarding Assets. Except as otherwise expressly provided
herein, each of the Sellers and the Company expressly disclaim any
representations or warranties of any kind or nature, express or implied, as to
the condition, value or quality of the assets or operations of the Company or
its Subsidiaries or the prospects (financial and otherwise), risks and other
incidents of the Company or its Subsidiaries and, except as set forth herein,
each of the Sellers and the Company specifically disclaim any representation or
warranty of merchantability,
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usage, suitability or fitness for any particular purpose with respect to such
assets, or any part thereof, or as to the workmanship thereof, or the absence of
any defects therein, whether latent or patent, or compliance with environmental
requirements, or as to the condition of, or the rights of the Company or any of
its Subsidiaries in, or their title to, any of their assets, or any part
thereof, or whether the Company or any of its Subsidiaries possess sufficient
real property or personal property interests to own or operate such assets.
Except as expressly provided herein, no Schedule or exhibit to this Agreement,
nor any other material or information provided by or communications made by any
of the Sellers or the Company or any of their respective representatives will
cause or create any warranty, express or implied, as to the condition, value or
quality of such assets. Without limiting the generality of the foregoing, no
representation or warranty is made with respect to the accuracy of any
information provided in any site tours or on any web site, or in any meetings
with management or other personnel of the Company, its Subsidiaries or their
respective representatives, except as expressly set forth herein.
Section 13.10 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York without giving effect to the
choice of law principles thereof which would require the application of the laws
of a jurisdiction other than New York. Each party consents to personal
jurisdiction in any action arising out of or relating to this Agreement brought
in the U.S. District Court for the Southern District of New York, or any New
York court within the County and State of New York having subject matter
jurisdiction as to a matter arising out of or relating to this Agreement (and
the appropriate appellate courts), and each of the parties hereto agrees that
any action instituted by either of them against the other with respect to this
Agreement will be instituted exclusively in one of the above-specified courts.
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Section 13.11 Nonforeign Affidavit. At or prior to the Closing, the Company
shall furnish Buyer an affidavit, stating, under penalty of perjury, that the
Company is not and has not been a United States real property holding
corporation during the applicable period specified in accordance with Section
897(c)(1)(A)(ii) of the Code, as required by Section 1445(b)(3) of the Code. In
the event that the Company fails to furnish such affidavit to Buyer, Buyer shall
be entitled to deduct and withhold from the Estimated Aggregate Purchase Price
federal income taxes to the extent required to be withheld pursuant to Section
1445(a) of the Code.
Section 13.12 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. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.
Section 13.13 Interpretation. The article and section headings contained in this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
Section 13.14 Waiver of Right of First Refusal. With respect to the transactions
contemplated by this Agreement and the Put and Call Agreement, the Company and
each Seller hereby waives all of their respective rights pursuant to Sections
4.3 and 4.4 of the Stockholders' Agreement, dated as of April 3, 1996, among
William Kriegel, Compagnie Generale des Eaux, National Energy Development
Corporation, Marubeni Corporation, Paris Mouratoglou, IES Acquisition, Inc. and
the Company, as amended.
Section 13.15 Matters Related to NEDC. Buyer shall negotiate in good faith with
Vivendi to enter into an agreement for the purchase from Energies USA, S.A., of
an interest in NEDC in lieu of the purchase of the shares of Common Stock owned
by NEDC prior to the
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Closing Date, such sale to be effected on comparable terms to those provided for
hereunder. However, nothing in this Section 13.15 shall require Buyer to take
any action or agree to any proposal that would adversely affect Buyer in Buyer's
reasonable judgment. Vivendi agrees to reimburse Buyer for its reasonable
out-of-pocket costs and expenses (including attorneys' and accountants' fees) in
connection with the foregoing negotiation, regardless of whether an agreement is
entered into pursuant to the preceding sentence. Each Seller agrees to cooperate
in good faith with Vivendi and Buyer to the extent necessary to permit the
purchase by Buyer of an interest in NEDC; provided that no Seller shall be
required to take any action or agree to any proposal that would adversely affect
such Seller in such Seller's reasonable judgment.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
SITHE ENERGIES, INC
By: /s/ William Kriegel
-----------------------------------------
Name: William Kriegel
Title: Chairman and Chief Executive Officer
VIVENDI, S.A.
By: /s/ Jean-Marie Messier
-----------------------------------------
Name: Jean-Marie Messier
Title: Chairman and Chief Executive Officer
NATIONAL ENERGY DEVELOPMENT CORPORATION
By: /s/ Michael Avenas
-----------------------------------------
Name: Michael Avenas
Title:
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MARUBENI AMERICA CORPORATION
By: /s/ Yoshiya Toyoda
-----------------------------------------
Name: Yoshiya Toyoda
Title: President and Chief Executive Officer
MARUBENI MS POWER, INC.
By: /s/ Kiyoshi Yoshimitsu
-----------------------------------------
Name: Kiyoshi Yoshimitsu
Title: Director
S MARUBENI AMERICAN POWER, INC.
By: /s/ Kiyoshi Yoshimitsu
------------------------------------------
Name: Kiyoshi Yoshimitsu
Title: Director
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WILLIAM V. KRIEGEL
an individual
By: /s/ William V. Kriegel
-----------------------------------------
BARRY F. SULLIVAN
an individual
By: /s/ Barry F. Sullivan
-----------------------------------------
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SITHE EMPLOYEE STOCK OWNERSHIP, L.P.
By: Sithe Energies, Inc.
its General Partner
By: /s/ William Kriegel
-----------------------------------------
Name: William Kriegel
Title: Chairman and Chief Executive Officer
TRUST UNDER THE 1998 PLAN
By: /s/ Gregory M. Thomson
-----------------------------------------
Name: Gregory M. Thomson
Title: Trustee
EXELON (FOSSIL) HOLDINGS, INC.
By: /s/ Corbin A. McNeill, Jr.
-----------------------------------------
Name: Corbin A. McNeill, Jr.
Title: President
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