1
Exhibit B-2
ASSET TRANSFER AGREEMENT
BY AND BETWEEN
ATLANTIC CITY ELECTRIC COMPANY
and
CONECTIV ATLANTIC GENERATION, LLC
Dated as of May 4, 2000
2
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A Access Agreements
Exhibit B Assignment and Assumption Agreement
Exhibit C Cumberland Lease
Exhibit D Interconnection Agreement
Schedules
1.1(17) Cumberland Lease
1.1(34) Facilities
1.1(59) Permitted Encumbrances
1.1(63) Real Property
1.1(79) Transferable Permits
1.1(86) Transferor Agreements
2.1(a) Tangible Personal Property
4.3(a) No Violations - Transferor
4.3(b) Transferor Consents and Approvals
4.5 Transferor Legal Proceedings
5.3(a) No Violations - Transferee
5.3(b) Transferee Consents and Approvals
6.4(a) Transferred Employees
6.4(b) Benefit Plans
3
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS............................................................................................... 2
1.1 Definitions...................................................................................... 2
1.2 Certain Interpretive Matters..................................................................... 11
1.3 U.S. Dollars..................................................................................... 11
ARTICLE II
CONTRIBUTION OF ASSETS AND ASSUMPTION OF LIABILITIES...................................................... 11
2.1 Contribution of Transferred Assets............................................................... 11
2.2 Excluded Assets.................................................................................. 12
2.3 Assumed Liabilities.............................................................................. 14
2.4 Excluded Liabilities............................................................................. 15
2.5 Control of Litigation............................................................................ 18
ARTICLE III
THE CLOSING............................................................................................... 18
3.1 Closing.......................................................................................... 18
3.2 Prorations....................................................................................... 18
3.3 Deliveries by Transferor......................................................................... 19
3.4 Deliveries by Transferee......................................................................... 20
3.5 Relationship of this Agreement and Related Transfer Agreements................................... 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFEROR.............................................................. 21
4.1 Organization; Qualification...................................................................... 21
4.2 Authority........................................................................................ 21
4.3 Consents and Approvals; No Violation............................................................. 22
4.4 Title and Related Matters........................................................................ 22
4.5 Legal Proceedings................................................................................ 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TRANSFEREE.............................................................. 23
5.1 Organization; Qualification...................................................................... 23
5.2 Authority........................................................................................ 23
5.3 Consents and Approvals; No Violation............................................................. 24
ii
4
5.4 Legal Proceedings................................................................................ 24
ARTICLE VI
COVENANTS................................................................................................. 25
6.1 Conduct of Business Relating to the Transferred Assets........................................... 25
6.2 Books and Records................................................................................ 25
6.3 Transfer Taxes................................................................................... 25
6.4 Employees........................................................................................ 25
6.5 Qualification of Transferee under PUHCA.......................................................... 26
6.6 Further Assurances............................................................................... 26
6.7 Consents and Approvals........................................................................... 27
6.8 PJM; MAAC........................................................................................ 28
6.9 Reimbursement of Certain Metering Expenses....................................................... 28
ARTICLE VII
CONDITIONS................................................................................................ 28
7.1 Conditions to Obligation of Transferee........................................................... 28
7.2 Conditions to Obligation of Transferor........................................................... 29
ARTICLE VIII
INDEMNIFICATION........................................................................................... 30
8.1 Indemnification By Transferor and Transferee..................................................... 30
8.2 Defense of Claims................................................................................ 32
ARTICLE IX
TERMINATION............................................................................................... 33
9.1 Termination...................................................................................... 33
9.2 Effect of Termination............................................................................ 34
ARTICLE X
MISCELLANEOUS PROVISIONS.................................................................................. 34
10.1 Amendment and Modification....................................................................... 34
10.2 Expenses......................................................................................... 34
10.3 Bulk Sales Laws.................................................................................. 34
10.4 Waiver of Compliance; Consents................................................................. 34
10.5 No Survival...................................................................................... 34
10.6 Disclaimers...................................................................................... 34
10.7 Notices.......................................................................................... 35
iii
5
10.8 Assignment....................................................................................... 36
10.9 Governing Law; Forum; Service of Process......................................................... 36
10.10 Counterparts..................................................................................... 37
10.11 Interpretation................................................................................... 37
10.12 Schedules and Exhibits........................................................................... 37
10.13 Entire Agreement................................................................................. 37
iv
6
ASSET TRANSFER AGREEMENT
ASSET TRANSFER AGREEMENT, dated as of May 4, 2000 (this "Agreement"),
by and between Atlantic City Electric Company, a New Jersey corporation
("Transferor"), and Conectiv Atlantic Generation, LLC, a Delaware limited
liability company and a wholly owned subsidiary of Transferor ("Transferee").
Transferor and Transferee may be referred to herein individually as a "Party,"
and collectively as the "Parties."
W I T N E S S E T H
WHEREAS, Transferor owns and operates plants and related facilities for
the generation of electricity which is sold to wholesale and retail customers of
Transferor (the "Business");
WHEREAS, Transferor desires to transfer, upon the terms hereinafter set
forth, substantially all of its assets, properties, rights and interests
relating to the Business to Transferee (other than assets Transferor has agreed
to sell to (i) PECO Energy Company and PSEG Power LLC, pursuant to certain
Purchase and Sale Agreements, each dated as of September 29, 1999 and (ii) NRG
Energy, Inc., pursuant to certain Purchase and Sale Agreements, each dated as of
January 18, 2000, except as set forth herein;
WHEREAS, Transferee desires to acquire from Transferor, upon the terms
hereinafter set forth, substantially all of such assets, properties, rights and
interests of Transferor and to assume certain liabilities and obligations of
Transferor specifically disclosed in this Agreement;
WHEREAS, the Board of Directors of Transferor has determined that it is
appropriate and desirable to distribute to Transferor's shareholder all of
Transferor's membership interest in Transferee (the "Internal Distribution")
following the transfer of the assets, properties, rights and interests
contemplated under this Agreement (the "Transfer");
WHEREAS, for U.S. federal income tax consequences, it is intended that
the Transfer and the Internal Distribution qualify as a reorganization under the
provisions of Section 368(a)(1)(D) and Section 355 of the Internal Revenue Code
of 1986, as amended (the "Code");
WHEREAS, each of the Transfer and Internal Distribution is being
carried out for business reasons of Transferor and Transferee, including cost
savings and a reduction in the regulatory compliance burdens of the Business;
and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Transferor has executed and delivered an agreement with Conectiv
Energy Supply, Inc., a Delaware corporation ("CESI"), pursuant to which
Transferor has agreed to assign, and CESI has agreed to accept, all of
Transferor's right, title and interest in, to and under all of its fuel, energy
and capacity supply and purchase agreements relating to the Transferred Assets
(as defined herein).
7
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants representations, warranties and agreements set forth herein and
intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following capitalized
terms have the meanings specified in this Section 1.1.
(1) "Access Agreements" means the agreements between Transferor and
Transferee to be delivered at the Closing, substantially in the form of Exhibit
A hereto, pursuant to which Transferor will provide Transferee and Transferee
will provide Transferor, with access rights with respect to certain of the
Transferred Assets and real property used in connection with such Transferred
Assets.
(2) "Additional Agreements" means the Interconnection Agreement, the
Access Agreements, the Assignment and Assumption Agreement and the Cumberland
Lease.
(3) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act, provided that for the
purposes of this Agreement, each of Transferor and Transferee shall not be
considered an Affiliate of the other.
(4) "Agreement" means this Asset Transfer Agreement together with the
Schedules and Exhibits hereto.
(5) "Assignment and Assumption Agreement" means the assignment and
assumption agreement between Transferor and Transferee, to be delivered at the
Closing, substantially in the form of Exhibit B hereto, pursuant to which
Transferor shall assign the Transferor Agreements, certain intangible assets and
certain other Transferred Assets to Transferee, and Transferee shall accept such
assignment and assume the Assumed Liabilities.
(6) "Assumed Liabilities" has the meaning set forth in Section 2.3.
(7) "Benefit Plans" means all deferred compensation, profit-sharing,
retirement and pension plans, and all material bonus, fringe benefit and other
employee benefit plans, maintained or with respect to which contributions are
made or have been made by Transferor for the benefit of any Transferred Employee
prior to the Closing.
8
(8) "Business" has the meaning set forth in the preamble to this
Agreement.
(9) "Business Day" means any day other than Saturday, Sunday and any
day on which banking institutions in the State of New York are authorized or
required by law or other governmental action to close.
(10) "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time.
(11) "Closing" has the meaning set forth in Section 3.1.
(12) "Closing Date" has the meaning set forth in Section 3.1.
(13) "COBRA" means Sections 601 through 608 of ERISA and Section 4980B
of the Code.
(14) "Code" has the meaning set forth in the preamble to this
Agreement.
(15) "Commercially Reasonable Efforts" means efforts which are
reasonably within the contemplation of the Parties at the time of entering into
this Agreement and which do not require the performing Party to expend funds
other than expenditures which are customary and reasonable in transactions of
the kind and nature contemplated by this Agreement in order for the performing
Party to satisfy its obligations hereunder.
(16) "Courts" has the meaning set forth in Section 10.9.
(17) "Cumberland Lease" means the lease agreement, dated as of the
Closing Date, substantially in the form of Exhibit C hereto, pursuant to which
Transferor, as lessor, has agreed to lease the real property described on
Schedule 1.1(17), to Transferee, as lessee, subject to the terms and conditions
set forth therein.
(18) "Direct Claim" has the meaning set forth in Section 8.2(c).
(19) "Discrete Emission Reduction" means a unit of air emission
reductions generated over a finite period of time in accordance with N.J.A.C.
7:27-30.1, et seq.
(20) "Easements" means, collectively, all easements, licenses, rights
of way and other access rights to be granted by Transferor to Transferee and by
Transferee to Transferor, pursuant to the Access Agreements and the easements,
licenses, rights of way and other access rights reserved by Transferor in the
Cumberland Lease, including such as authorize access, use, maintenance,
construction, repair, replacement and other activities by Transferor or
Transferee,
9
or otherwise necessary for Transferor or Transferee to operate their respective
businesses or fulfill applicable legal requirements.
(21) "Emission Allowances" means Emission Reduction Credits, Discrete
Emission Reductions, NO(x) Allowances and SO(2) Allowances owned by Transferor
or credited to accounts maintained by or on behalf of Transferor.
(22) "Emission Reduction Credits" means credits, in units that are
established by the Governmental Authority with jurisdiction over the relevant
Site that has obtained the credits, resulting from reductions in the emissions
of air pollutants from an emitting source or facility (including and to the
extent allowable under applicable Law, reductions resulting from shutdowns or
control of emissions beyond that required by applicable Law) that have been
certified by any applicable Governmental Authority as complying with the Law and
regulations governing the establishment of such credits (including certification
that such emissions reductions are enforceable, permanent, quantifiable and
surplus), including air emissions reductions as described above that have been
approved by the applicable Governmental Authority and are awaiting USEPA
approval. The term also includes certified air emissions reductions, as
described above, regardless as to whether the Governmental Authority certifying
such reductions designates such certified air emissions reductions by a name
other than "emission reduction credits." The term also includes "Creditable
Emission Reductions," as defined by N.J.A.C. 7:27-18.1, but does not include
"Discrete Emission Reductions" which are defined elsewhere in this Agreement.
(23) "Encumbrances" means any and all mortgages, pledges, liens,
claims, security interests, agreements, easements, activity and use limitations,
restrictions, defects of title or encumbrances of any kind.
(24) "Environmental Claims" has the meaning set forth in Section
8.1(c).
(25) "Environmental Condition" means the presence or Release to the
environment, whether at the Sites or otherwise, of Hazardous Substances,
including any migration of Hazardous Substances through air, soil or groundwater
at, to or from the Sites or at, to or from any Off-Site Location, regardless of
when such presence or Release occurred or is discovered.
(26) "Environmental Laws" means all (a) Laws, in each case, as amended
from time to time, relating to pollution or protection of the environment,
natural resources or human health and safety, including Laws relating to
Releases or threatened Releases of Hazardous Substances or otherwise relating to
the manufacture, formulation, generation, processing, distribution, use,
treatment, storage, Release, transport, Remediation, abatement, cleanup or
handling of Hazardous Substances, (b) Laws with regard to recordkeeping,
notification, disclosure and
10
reporting requirements respecting Hazardous Substances and (c) Laws relating to
the management or use of natural resources.
(27) "Environmental Permits" means all permits, certificates, licenses
and authorizations of all Governmental Authorities under Environmental Laws.
(28) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(29) "ERISA Affiliate" has the meaning set forth in Section 2.4(i).
(30) "ERISA Affiliate Plans" has the meaning set forth in Section
2.4(i).
(31) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time.
(32) "Excluded Assets" has the meaning set forth in Section 2.2.
(33) "Excluded Liabilities" has the meaning set forth in Section 2.4.
(34) "Facilities" means the generators and generation stations set
forth on Schedule 1.1(34).
(35) "Fuel Inventories" means coal, oil, tire-derived fuel and other
fuel inventories which are located at or in transit to the Facilities solely
relating to the operation of the Transferred Assets.
(36) "Governmental Authority" means any executive, legislative,
judicial, regulatory or administrative agency, body, commission, department,
board, court, tribunal, arbitrating body or authority of the United States or
any foreign country, or any state, local or other governmental subdivision
thereof.
(37) "Hazardous Substances" means (a) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
polychlorinated biphenyls, (b) any chemicals, materials or substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
11
(38) "IBEW 210" means Local Union 210 of the International Brotherhood
of Electrical Workers.
(39) "IBEW Collective Bargaining Agreement" means the Number 30
Agreement between Transferor and IBEW 210 effective December 10, 1995 through
December 12, 1999, as amended and supplemented from time to time.
(40) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(41) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
(42) "Indemnitee" has the meaning set forth in Section 8.1(f).
(43) "Independent Accounting Firm" means such nationally recognized,
independent accounting firm as is mutually appointed by the Parties for purposes
of this Agreement.
(44) "Intellectual Property" means all patents, trademarks, trade
names, service marks, brands, logos, copyrights, licenses, trade secrets,
customer lists and other proprietary intellectual property rights required for,
used in or incident to the Business or owned or held by Transferor.
(45) "Interconnection Agreement" means the interconnection agreement,
between Transferor and Transferee, to be delivered at the Closing, substantially
in the form of Exhibit D hereto.
(46) "Internal Distribution" has the meaning set forth in the preamble
to this Agreement.
(47) "Inventories" means, together, the Fuel Inventories and the
Non-Fuel Inventories.
(48) "ISRA" means the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:1K-6, et seq.
(49) "Knowledge" means the actual knowledge of the directors and
executive officers of the specified Person, which directors and executive
officers are charged with responsibility for the particular function as of the
date of this Agreement, or, with respect to any certificate delivered pursuant
to this Agreement, the date of delivery of such certificate.
(50) "Laws" means all laws, statutes, rules, regulations and ordinances
of any Governmental Authority.
(51) "MAAC" means the Mid-Atlantic Area Council.
12
(52) "NJDEP" means the New Jersey Department of Environmental
Protection, and any successor agency thereto.
(53) "Non-Fuel" means limestone, materials, spare parts, capital spare
parts and consumable supplies inventories which are located at or in transit to
the Facilities solely relating to the operation of the Transferred Assets.
(54) "NO(x)" means oxides of nitrogen.
(55) "NO(x) Budget Program" means Nitrogen Oxides Budget Program, which
is a statutory or regulatory program promulgated by the United States or a state
pursuant to which the United States or state provides for a limit on the oxides
of nitrogen that can be emitted by all sources covered by the program and
establishes allowances or authorizations, which in total are equal to the amount
of oxides of nitrogen allowed by the limit, where each allowance or
authorization represents a "right" to emit a unit of oxides of nitrogen, as the
means for ensuring compliance with the limit.
(56) "NO(x) Emission Allowance" means (a) an authorization by the NJDEP
under its NOx Budget Program authorizing the emission of one ton of NO(x) during
the ozone season, as such season is defined by the NJDEP or (b) an authorization
by the USEPA under any future NO(x) Budget Program promulgated by the USEPA,
including, but not limited to, any future program implemented in lieu of a state
NO(x) Budget Program, authorizing the emission of one ton of NO(x) during the
ozone season, as such season is defined by the USEPA.
(57) "Off-Site Location" means any real property other than the Sites.
(58) "Party" and "Parties" have the respective meanings set forth in
the preamble to this Agreement.
(59) "Permitted Encumbrances" means: (a) the Easements; (b) those
exceptions to title to the Transferred Assets listed on Schedule 1.1(59); (c)
statutory liens for Taxes or other charges or assessments of Governmental
Authorities not yet due or delinquent, or which are being contested in good
faith by appropriate proceedings; (d) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary course of
business; (e) zoning, entitlement, conservation restriction and other land use
and environmental regulations by Governmental Authorities; and (f) such
Encumbrances as (i) do not materially detract from the value of the Transferred
Assets, taken as a whole, as currently used, or materially interfere with the
present use of the Transferred Assets, taken as a whole, or (ii) would not,
individually or in the aggregate, have an Transferor Material Adverse Effect.
13
(60) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, other
business association or Governmental Authority.
(61) "PJM" means the Pennsylvania-New Jersey-Maryland Power Pool, as
established and administered by Pennsylvania-New Jersey-Maryland Interconnection
L.L.C.
(62) "PJM Agreement" means the Operating Agreement dated June 2, 1997
of Pennsylvania-New Jersey-Maryland Interconnection L.L.C., as amended from time
to time.
(63) "Real Property" means the real property underlying the Facilities,
as more particularly set forth on Schedule 1.1(63).
(64) "Related Transfer Agreements" means, collectively, (i) that
certain Asset Transfer Agreement, dated as of the date hereof, entered into by
Delmarva Power & Light Company, a Delaware and Virginia corporation ("DP&L"),
and Conectiv Delmarva Generation, Inc., a Delaware corporation ("CDG"), (ii)
that certain Pipeline Transfer Agreement, dated as of the date hereof, entered
into by DP&L and CDG and (iii) that certain Assignment and Assumption Agreement
(Fuel Inventories), dated as of the date hereof, entered into by DP&L and CESI.
(65) "Release" means any release, spill, leak, discharge, disposal of,
pumping, pouring, emitting, emptying, injecting, leaching, dumping or allowing
to escape into or through the environment.
(66) "Remediation" means an action of any kind to address an
Environmental Condition or a Release of Hazardous Substances or the presence of
Hazardous Substances at the Sites or an Off-Site Location, including the
following activities to the extent they relate to, result from or arise out of
the presence of a Hazardous Substance at the Sites or an Off-Site Location: (a)
monitoring, investigation, assessment, treatment, cleanup, containment, removal,
mitigation, response or restoration work; (b) obtaining any permits, consents,
approvals or authorizations of any Governmental Authority necessary to conduct
any such activity; (c) preparing and implementing any plans or studies for any
such activity; (d) obtaining a written notice from a Governmental Authority with
jurisdiction over the Sites or an Off-Site Location under Environmental Laws
that no material additional work is required by such Governmental Authority; (e)
the use, implementation, application, installation, operation or maintenance of
removal actions on the Sites or an Off-Site Location, remedial technologies
applied to the surface or subsurface soils, excavation and treatment or disposal
of soils at an Off-Site Location, systems for long-term treatment of surface
water or groundwater, engineering controls or institutional controls; and (f)
any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws to address an Environmental
14
Condition or a Release of Hazardous Substances or the presence of Hazardous
Substances at the Sites or an Off-Site Location.
(67) "Representatives" of a Person means, collectively, such Person's
directors, officers, partners, members, employees, representatives, agents and
advisors (including accountants, legal counsel, environmental consultants,
engineering consultants and financial advisors).
(68) "SEC" means the United States Securities and Exchange Commission,
and any successor agency thereto.
(69) "Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.
(70) "Sites" means the Real Property forming a part, or used or usable
in connection with the operation, of the Transferred Assets, including any real
property used for the disposal of solid or hazardous waste that is included in
the Real Property. Any reference to the Sites shall include the surface and
subsurface elements, to the extent owned by or subject to any interest of
Transferor, including the soil and groundwater present at the Sites, and any
reference to materials or conditions "at the Sites," including Hazardous
Substances and Environmental Conditions, shall include all materials and
conditions "at, on, in, upon, over, across, under or within" the Sites.
(71) "SO(2)" means sulfur dioxide.
(72) "SO(2) Allowance" means an authorization by the Administrator of
the USEPA under the Clean Air Act, 42 U.S.C. Section 7401, et seq., to emit one
ton of sulfur dioxide during or after a specified calendar year.
(73) "Subsidiary", when used in reference to any Person, means any
entity of which outstanding securities or interests having ordinary voting power
to elect a majority of the board of directors or other governing body performing
similar functions of such entity are owned directly or indirectly by such
Person.
(74) "Tangible Personal Property" has the meaning set forth in Section
2.1(a).
(75) "Tax" or "Taxes" means all taxes, charges, fees, levies, penalties
and other assessments imposed by any Governmental Authority responsible for the
imposition of any tax, including income, gross receipts, excise, property,
sales, transfer, use, franchise, payroll, withholding, social security and other
taxes, together with any interest, penalties or additions attributable thereto.
15
(76) "Third-Party Claim" has the meaning set forth in Section 8.2(a).
(77) "Third-Party Claim Notice" has the meaning set forth in Section
8.2(a).
(78) "Transfer" has the meaning set forth in the preamble to this
Agreement.
(79) "Transferable Permits" means those Permits and Environmental
Permits (and all applications pertaining thereto) which are transferable under
applicable Laws by Transferor to Transferee (with or without a filing with,
notice to, consent or approval of any Governmental Authority), as set forth on
Schedule 1.1(79).
(80) "Transferee" has the meaning set forth in the preamble to this
Agreement.
(81) "Transferee Change of Control" means any transaction or series of
related transactions the result of which is that Transferee shall cease to be a
wholly owned subsidiary of either of (i) Conectiv, a Delaware corporation, or
(ii) any wholly owned subsidiary of Conectiv.
(82) "Transferee Indemnitee" has the meaning set forth in Section
8.1(b).
(83) "Transferee Material Adverse Effect" has the meaning set forth in
Section 5.3(a).
(84) "Transferee Required Regulatory Approvals" has the meaning set
forth in Section 5.3(b).
(85) "Transferor" has the meaning set forth in the preamble to this
Agreement.
(86) "Transferor Agreements" means, the contracts, agreements,
arrangements, licenses, leases and warranties set forth on Schedule 1.1(86).
(87) "Transferor Indemnitee" has the meaning set forth in Section
8.1(a).
(88) "Transferor Material Adverse Effect" means any change in or effect
on the Transferred Assets or the operation of the Transferred Assets after the
date hereof that is materially adverse to the operation or condition (financial
or otherwise) of the Transferred Assets, taken as a whole, other than (i) any
change or effect affecting the international, national, regional or local
electric industry as a whole and not specific and exclusive to the Transferred
Assets, (ii) any change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for electricity,
including any change in or effect on the structure, operating agreements,
operations or procedures of Pennsylvania-New Jersey-Maryland Interconnection
L.L.C. or its control area, (iii) any change or effect resulting from changes in
the international, national, regional or local markets for any fuel used at the
Transferred Assets, (iv)
16
any change or effect resulting from changes in the North American, national,
regional or local electricity transmission systems or operations thereof, (v)
changes in Law, or any judgments, orders or decrees that apply generally to
similarly situated Persons, (vi) any condition imposed on any Party or the
Transferred Assets by a Governmental Authority in connection with the grant of
such Governmental Authority's consent or approval of the transactions
contemplated hereby and by the Additional Agreements and (vii) any change or
effect to the extent constituting or involving an Excluded Asset or an Excluded
Liability.
(89) "Transferor Required Regulatory Approvals" has the meaning set
forth in Section 4.3(b).
(90) "Transferred Assets" has the meaning set forth in Section 2.1.
(91) "Transferred Employee Records" means all records of Transferor or
that relate to Transferred Employees, including records that pertain to: (i)
skill and development training, (ii) seniority histories, (iii) salary and
benefit information, (iv) Occupational, Safety and Health Administration reports
and (v) active medical restriction forms.
(92) "Transferred Employees" has the meaning set forth in Section
6.4(a).
(93) "USEPA" means the United States Environmental Protection Agency,
and any successor agency thereto.
1.2 Certain Interpretive Matters. In this Agreement, unless the context
otherwise requires, the singular words include the plural, the masculine
includes the feminine and neuter, and vice versa. In this Agreement, the term
"includes" or "including" shall be deemed followed by the words "including
without limitation." References herein to a section, article, Exhibit or
Schedule mean a section, article, Exhibit or Schedule of this Agreement, and
reference to a given agreement or instrument constitutes a reference to that
agreement or instrument as modified, amended, supplemented and restated through
the date as of which such reference is made.
1.3 U.S. Dollars. When used herein, the term "dollars" and the symbol
"$" refer to the lawful currency of the United States of America.
ARTICLE II
CONTRIBUTION OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Contribution of Transferred Assets. Upon the terms set forth in
this Agreement, at the Closing, Transferor shall assign, convey, transfer and
deliver to Transferee, and Transferee shall assume and acquire from Transferor,
free and clear of all Encumbrances, except for the
17
Permitted Encumbrances, all of Transferor's right, title and interest in, to and
under the following assets and properties, except as otherwise provided in
Section 2.2, each as of the Closing Date (collectively, the "Transferred
Assets"):
(a) Machinery, equipment, vehicles, furniture and related
personal property located on the Real Property on the Closing Date, including
certain electrical generation and transmission facilities (as opposed to
generation facilities) and vehicles set forth on Schedule 2.1(a), (collectively,
"Tangible Personal Property");
(b) The Inventories;
(c) Subject to the receipt of necessary consents and
approvals, the Transferor Agreements;
(d) Subject to the receipt of necessary consents and
approvals, the Transferable Permits;
(e) The Transferred Employee Records;
(f) All rights, claims and benefits of Transferor in, to or
under all insurance policies maintained by or for the benefit of Transferor with
respect to the Transferred Assets; and
(g) All books, operating records, operating, safety and
maintenance manuals, engineering design plans, blueprints and as-built plans,
specifications, procedures and similar items relating specifically to the
Transferred Assets (subject to the right of Transferor to retain copies of same
for its use).
2.2 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall constitute or be construed as
requiring Transferor to assign, convey, transfer or deliver, and Transferee
shall not be entitled to acquire, any right, title or interest in, to or under
any properties, assets, business, operation or division of Transferor, not set
forth in Section 2.1, including the following assets and properties which are
hereby specifically excluded from the definition of Transferred Assets
(collectively, the "Excluded Assets"):
(a) The right, title and interest of Transferor and its
successors, assigns, Affiliates and Representatives in, to and under all
electrical transmission or distribution facilities (as opposed to generation
facilities) of Transferor located at or forming a part of any of the Transferred
Assets (whether or not regarded as a "transmission" or "generation" asset for
regulatory or accounting purposes), including all switchyard facilities,
substation facilities and support equipment, as well as all permits, contracts
and warranties, to the extent they relate to such transmission and distribution
assets (other than the electrical transmission facilities
18
identified on Schedule 2.1(a), all of which are included as Transferred Assets)
(collectively, the "Transmission Assets");
(b) The Real Property;
(c) The right, title and interest of Transferor and its
successors, assigns, Affiliates and Representatives in, to and under certain
switches and meters, gas facilities, revenue meters and remote testing units,
drainage pipes and systems, pumping equipment and associated piping, in each
case, located at or forming a part of the Transferred Assets, as identified in
the Access Agreements;
(d) All certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities;
(e) All cash, cash equivalents, bank deposits, accounts and
notes receivable (trade or otherwise), prepaid expenses relating to the
operation of the Transferred Assets and any income, sales, payroll or other
receivables (in each case, whether held by Transferor or any third party);
(f) The right, title and interest of Transferor and its
successors, assigns, Affiliates and Representatives in, to and under all
Intellectual Property, including the names "Atlantic City Electric Company",
"ACE", or any derivation thereof, as well as any related or similar name, or any
other trade names, trademarks, service marks, corporate names and logos, or any
part, derivation, colorable imitation or combination thereof;
(g) The right, title and interest of Transferor and its
successors, assigns, Affiliates and Representatives in, to and under all
contracts, agreements, arrangements, licenses, tariffs and leases of any nature,
to which Transferor or its Representatives is a party, including tariffs,
contracts, agreements and arrangements for the purchase or sale of electric
capacity or energy, or for the purchase of transmission, distribution or
ancillary services or for the purchase or procurement of Fuel Inventories;
(h) The rights of Transferor and its successors, assigns,
Affiliates and Representatives in, to and under all causes of action against
third parties relating to any Transferred Asset, if any, whether accruing prior
to, on or after the Closing Date, including all claims for refunds, prepayments,
offsets, recoupment, insurance proceeds, insurance distributions, dividends or
other proceeds, condemnation awards, judgments and the like, whether received as
payment or credit against future liabilities, in each case, relating to any
period prior to the Closing Date;
19
(i) All Tax refunds or credits relating to the ownership,
lease, maintenance or operation of the Transferred Assets, which refunds or
credits are with respect to periods prior to the Closing Date, whether directly
or indirectly, regardless of when actually paid;
(j) All employment agreements and personnel records of
Transferor and its successors, assigns and Representatives, other than
Transferred Employee Records;
(k) The minute books, stock transfer books, corporate seal and
other corporate records of Transferor and its successors, assigns and
Representatives;
(l) The right, title and interest of Transferor and its
successors, assigns, Affiliates and Representatives in, to and under all
Emission Allowances; and
(m) The right, title and interest of Transferor and its
successors, assigns and Representatives under this Agreement and the Additional
Agreements.
2.3 Assumed Liabilities. On the Closing Date, Transferee shall assume
and agree to pay, perform and otherwise discharge, without recourse to
Transferor, all of the liabilities and obligations of Transferor and its
successors, assigns or Representatives, direct or indirect, known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, which
relate, directly or indirectly, to the Transferred Assets, other than Excluded
Liabilities (collectively, the "Assumed Liabilities"), including the following
such liabilities and obligations:
(a) All liabilities and obligations of Transferor under the
Transferor Agreements and the Transferable Permits in accordance with the terms
thereof;
(b) All liabilities and obligations of Transferor in respect
of Taxes for which Transferee is liable pursuant to Section 3.2 or 6.3;
(c) All liabilities and obligations of Transferor which relate
to the Transferred Employees for which Transferee is responsible on or after the
Closing Date pursuant to Section 6.4; provided that nothing set forth in this
Section 2.3(c) shall require Transferee to assume any liabilities or obligations
that are specifically excluded pursuant to Sections 2.4(i), 2.4(j) or 2.4(k);
(d) All liabilities and obligations of Transferor arising
under or relating to Environmental Laws or relating to any claim in respect of
Environmental Conditions or Hazardous Substances, whether based on common law or
Environmental Laws, whether relating to the Sites or any Off-Site Location,
relating to conditions, occurrences, actions or omissions occurring on or after
the Closing Date, including (i) any violation or alleged violation of
Environmental Laws on or after the Closing Date with respect to the ownership,
lease, maintenance or operation of any of the Transferred Assets, including any
fines or penalties that arise in connection with the ownership, lease,
maintenance or operation of the Transferred Assets on or after the Closing Date
and the costs associated with correcting any such violations; (ii) any
20
bodily injury, loss of life, property damage, or natural resource damage that
arises on or after the Closing Date caused (or allegedly caused) by any
Environmental Condition created, or the Release of Hazardous Substances at, on,
in, under, adjacent to or migrating from the Transferred Assets, on or after the
Closing Date; (iii) any Remediation of any Environmental Condition created or
Hazardous Substances that are Released on or after the Closing Date at, on, in,
under, adjacent to or migrating from, the Transferred Assets or in the soil,
surface water, sediments, groundwater, landfill cells or in other environmental
media at or adjacent to the Transferred Assets; (iv) any bodily injury, loss of
life, property damage, or natural resource damage arising from the storage,
transportation, treatment, disposal, discharge, recycling or Release, at any
Off-Site Location, or arising from the arrangement for such activities, on or
after the Closing Date, of Hazardous Substances generated in connection with the
ownership, lease, maintenance or operation of the Transferred Assets; and (v)
any Remediation of any Environmental Condition or Release of Hazardous
Substances arising from the storage, transportation, treatment, disposal,
discharge, recycling or Release, at any Off-Site Location, or arising from the
arrangement for such activities, on or after the Closing Date, of Hazardous
Substances generated in connection with the ownership, lease, maintenance or
operation of the Transferred Assets; provided that nothing set forth in this
Section 2.3(d) shall require Transferee to assume any liabilities or obligations
that are specifically excluded pursuant to Sections 2.4;
(e) In addition to the Assumed Liabilities set forth in
Section 2.3(d), from and after the earlier to occur of (i) a Transferee Change
of Control and (ii) the sale by Transferee of all or substanitally all of the
Transferred Assets or any of the Real Property to any Person other than Conectiv
or any wholly owned subsidiary of Conectiv, Transferee shall assume all
liabilities and obligations of Transferor arising under or relating to
Environmental Laws or relating to any claim in respect of Environmental
Conditions or Hazardous Substances, whether based on common law or Environmental
Laws, whether relating to the Sites or any Off-Site Location, relating to
conditions occurrences, actions or omissions occuring prior to the Closing Date,
including (i) any violation or alleged violation of Environmental Laws prior to
the Closing Date with respect to the ownership, lease, maintenance or operation
of any of such Transferred Assets, including any fines or penalties that arise
in connection with the ownership, lease, maintenance or operation of such
Transferred Assets prior to the Closing Date and the costs associated with
correcting any such violations; (ii) any bodily injury, loss of life, property
damage, or natural resource damage caused (or allegedly caused) by any
Environmental Condition or the presence or Release of Hazardous Substances at,
on, in, under, adjacent to or migrating from such Transferred Assets prior to
the Closing Date and (iii) any Remediation of any Environmental Condition or
Hazardous Substances that are present or have been Released prior to the Closing
Date at, on, in, under, adjacent to or migrating from, such Transferred Assets
or in the soil, surface water, sediments, groundwater, landfill cells or in
other environmental media at or adjacent to such Transferred Assets, it being
understood that the liabilties set forth in this Section 2.3(e) shall, from and
after the first such occurrence shall be Assumed Liabilities and shall cease to
be Excluded Liabilities pursuant to Section 2.4(h); and
21
(f) For purposes of clarification, Transferee acknowledges
that it shall assume and be fully responsible for holding in its accounts
sufficient SO(2) Allowances and NO(x) Allowances to cover emissions of SO(2) and
NO(x) from all of the Sites for all of the calendar year in which the Closing
occurs, including the period of such year prior to the Closing Date, to the
extent such requirements apply to the Transferred Assets.
2.4 Excluded Liabilities. Transferee shall not assume or be obligated
to pay, perform or otherwise discharge the following liabilities or obligations
of Transferor (the "Excluded Liabilities"):
(a) Any liabilities or obligations of Transferor in respect of
any Excluded Assets, except to the extent caused by the acts or omissions of
Transferee or its Representatives or Transferee's ownership, lease, maintenance
or operation of the Transferred Assets;
(b) Any liabilities or obligations of Transferor arising from
the breach prior to the Closing Date by Transferor of any of the Transferor
Agreements;
(c) Any and all asserted or unasserted liabilities or
obligations to third parties for personal injury or tort, or similar causes of
action arising solely out of the ownership, lease, maintenance or operation of
the Transferred Assets prior to the Closing Date, other than the liabilities or
obligations assumed by Transferee under Section 2.3;
(d) Any payment obligations of Transferor for goods delivered
or services rendered prior to the Closing Date, other than the liabilities or
obligations assumed by Transferee under Section 2.3;
(e) Any liability or obligation under or related to
Environmental Laws or common law, whether such liability or obligation is known
or unknown, contingent or accrued, arising as a result of or in connection with
the ownership, lease, maintenance or operation by Transferor of the Transmission
Assets prior to, on or after the Closing Date, except to the extent caused by
the acts or omissions of Transferee or its Representatives or Transferee's
ownership, lease, maintenance or operation of the Transferred Assets;
(f) Any liability under or related to Environmental Laws or
common law arising as a result of or in connection with bodily injury, loss of
life, property damage or natural resource damage (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest on or after the Closing Date) caused (or allegedly caused) by
the disposal, storage, transportation, discharge, migration of, Release or
recycling of Hazardous Substances at an Off-Site Location, or the arrangement
for such activities, prior to the Closing Date, in connection with the
ownership, lease, maintenance or operation of the Transferred Assets, provided
that, for purposes of this Section, "Off-Site Location" does not
22
include any location to which Hazardous Substances disposed of or Released at or
from the Transferred Assets have migrated;
(g) Any liability under or related to Environmental Laws or
common law arising as a result of or in connection with the Remediation (whether
or not such Remediation commenced before the Closing Date or commences on or
after the Closing Date) of Hazardous Substances that are disposed, stored,
transported, discharged, migrating from, Released, recycled, or the arrangement
of such activities, in connection with the ownership, lease, maintenance or
operation of the Transferred Assets, at any Off-Site Location, prior to the
Closing Date; provided that, for purposes of this Section, "Off-Site Location"
does not include any location to which Hazardous Substances disposed of or
Released at or from the Transferred Assets have migrated;
(h) Subject to Section 2.3(e), all liabilities and obligations
of Transferor arising under or relating to Environmental Laws or relating to any
claim in respect of Environmental Conditions or Hazardous Substances, whether
based on common law or Environmental Laws, whether relating to the Sites or any
Off-Site Location, relating to conditions occurrences, actions or omissions
occuring prior to the Closing Date, including (i) any violation or alleged
violation of Environmental Laws prior to the Closing Date with respect to the
ownership, lease, maintenance or operation of any of the Transferred Assets,
including any fines or penalties that arise in connection with the ownership,
lease, maintenance or operation of the Transferred Assets prior to the Closing
Date and the costs associated with correcting any such violations; (ii) any
bodily injury, loss of life, property damage, or natural resource damage caused
(or allegedly caused) by any Environmental Condition or the presence or Release
of Hazardous Substances at, on, in, under, adjacent to or migrating from the
Transferred Assets prior to the Closing Date and (iii) any Remediation of any
Environmental Condition or Hazardous Substances that are present or have been
Released prior to the Closing Date at, on, in, under, adjacent to or migrating
from, the Transferred Assets or in the soil, surface water, sediments,
groundwater, landfill cells or in other environmental media at or adjacent to
the Transferred Assets, it being understood that from and after the earlier to
occur of (i) a Transferee Change of Control and (ii) the sale by Transferee of
all or substanitally all of the Transferred Assets or any of the Real Property
to any Person other than Conectiv or any wholly owned subsidiary of Conectiv,
the liabilties set forth in this Section 2.4(h) shall be Assumed Liabilities
pursuant to Section 2.3(e) and shall cease to be Excluded Liabilities pursuant
to this Section 2.4(h);
(i) Any liabilities or obligations relating to any Benefit
Plan maintained by Transferor or any trade or business (whether or not
incorporated) which is or ever has been under common control, or which is or
ever has been treated as a single employer, with Transferor under Section
414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which Transferor
and any ERISA Affiliate contributed thereunder (the "ERISA Affiliate Plans"),
maintained by, contributed to, or obligated to contribute to, by Transferor or
any ERISA Affiliate, including any
23
liability (i) to the Pension Benefit Guaranty Corporation under Title IV of
ERISA; or (ii) with respect to any noncompliance by Transferor with ERISA or any
other applicable laws, but not including any liabilities or obligations assumed
by Transferee pursuant to Section 6.4;
(j) Any liabilities or obligations relating to the employment
or termination of employment, including, workmens compensation, discrimination,
wrongful discharge, unfair labor practices, or constructive termination by
Transferor of any individual, attributable to any actions or inactions by
Transferor prior to the Closing Date other than such actions or inactions taken
at the direction of Transferee; and
(k) Any obligation to provide continuation coverage under
COBRA (and notice of the right to elect such coverage) to Transferred Employees,
employees associated with the Transferred Assets who do not become Transferred
Employees (and their dependents or former dependents), and former dependents of
Transferred Employees who became eligible for continuation coverage under COBRA
on account of a "qualifying event" (as defined under COBRA) occurring before the
Closing Date (but not including any liabilities or obligations assumed by
Transferee pursuant to Section 6.4).
2.5 Control of Litigation. The Parties agree and acknowledge that
Transferor shall be entitled exclusively to control, defend and settle any suit,
action or proceeding, and any investigation, in each case, involving any third
party and arising out of or relating to any Excluded Assets or Excluded
Liabilities, and Transferee shall cooperate fully with Transferor in connection
therewith.
ARTICLE III
THE CLOSING
3.1 Closing. The assignment, conveyance, transfer and delivery of the
Transferred Assets by Transferor to Transferee, and the assumption and
acquisition by Transferee of the Transferred Assets and the Assumed Liabilities,
and the consummation of the other transactions contemplated hereby, shall take
place at a closing (the "Closing") to be held at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, One Xxxxxx Square, Wilmington, Delaware, at 10:00
a.m. local time on the first business day after the date on which all of the
conditions precedent to the Closing set forth in Article VII shall have been
satisfied or, to the extent permitted by applicable Law, waived by the Party for
whose benefit such conditions precedent exist, or at such other time and
location as may be agreed upon in writing by the Parties. The date on which the
Closing actually occurs is hereinafter called the "Closing Date." The Closing
shall be effective for all purposes as of 12:01 a.m., New York City time, on the
Closing Date.
3.2 Prorations.
24
(a) Transferor and Transferee agree that, except as otherwise provided
in this Agreement, all of the items customarily prorated relating to the
ownership, lease, maintenance or operation of the Transferred Assets, including
those listed below, shall be prorated as of the Closing Date, with Transferor
liable to the extent such items relate to any period prior to the Closing Date,
and Transferee liable to the extent such items relate to any period on or after
the Closing Date (measured in the same units used to compute the item in
question, otherwise measured by calendar days):
(i) Personal property, real property, occupancy and other
similar Taxes, if any, imposed on or with respect to the ownership or lease of
the Transferred Assets for a taxable period that begins before and ends after
the Closing Date;
(ii) Rent, Taxes and all other items (including prepaid services
and goods not included in Inventory), in each case, payable by or to Transferor
under any of the Transferor Agreements;
(iii) Any permit, license, registration, compliance assurance
fees or other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities;
(v) Insurance premiums paid on or with respect to the ownership,
lease, maintenance or operation of the Transferred Assets to the extent payable
under any policy or other arrangement included among the Transferor Agreements;
and
(vi) Prepaid operating and maintenance expenses.
(b) Transferor or Transferee, as the case may be, shall promptly
reimburse the other Party or Parties that portion of any amount paid by such
other Party or Parties to the extent relating to the period for which Transferor
or Transferee, as the case may be, is liable under Section 3.2(a), in each case,
upon presentation of a statement setting forth in reasonable detail the nature
and amount of any such payment. In connection with the prorations set forth in
Section 3.2(a), if actual figures are not available on the Closing Date, the
proration shall be calculated based upon the respective amounts accrued through
the Closing Date or paid for the most recent year or other appropriate period
for which such amounts paid are available. All prorated amounts shall be
recalculated and paid to the appropriate Party within sixty (60) days after the
date that the previously unavailable actual figures become available. Transferor
and Transferee shall furnish each other with such documents and other records as
may be reasonably requested in order to confirm all proration calculations made
pursuant to this Section 3.2. Notwithstanding anything to the contrary herein,
no proration shall be made under this Section
25
3.2 with respect to (i) Tax refunds that are Excluded Assets under Section
2.2(i) or (ii) Taxes payable by Transferee pursuant to Section 6.3.
3.3 Deliveries by Transferor. At the Closing, Transferor shall deliver,
or cause to be delivered, the following to Transferee:
(a) The Assignment and Assumption Agreement, duly executed by
Transferor;
(b) The Interconnection Agreement, duly executed by
Transferor;
(c) The Access Agreements, duly executed by Transferor and in
recordable form;
(d) The Cumberland Lease, duly executed by Transferor and in
recordable form;
(e) Copies, certified by the Secretary or Assistant Secretary
of Transferor, of resolutions authorizing the execution and delivery of this
Agreement, each Additional Agreement to which Transferor is a party and all of
the other agreements and instruments, in each case, to be executed and delivered
by Transferor in connection herewith;
(f) A certificate of the Secretary or Assistant Secretary of
Transferor identifying the name and title and bearing the signatures of the
officers of Transferor authorized to execute and deliver this Agreement, each
Additional Agreement to which Transferor is a party and the other agreements and
instruments contemplated hereby;
(g) All such other agreements, documents, instruments and
writings as shall, in the reasonable opinion of Transferee and its counsel, be
necessary to sell, assign, convey, transfer and deliver to Transferee the
Transferred Assets, in accordance with this Agreement and, where necessary or
desirable, in recordable form; and
(h) Such other agreements, documents, instruments and writings
as are required to be delivered by Transferor at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required by Transferee in
connection herewith.
3.4 Deliveries by Transferee. At the Closing, Transferee shall deliver,
or cause to be delivered, the following to Transferor:
(a) The Assignment and Assumption Agreement, duly executed by
Transferee;
26
(b) The Interconnection Agreement, duly executed by
Transferee;
(c) The Access Agreements, duly executed by Transferee;
(d) The Cumberland Lease, duly executed by Transferee and in
recordable form;
(e) A copy, certified by the Secretary or Assistant Secretary
of Transferee, of resolutions authorizing the execution and delivery of this
Agreement, each Additional Agreement and all of the agreements and instruments,
in each case, to be executed and delivered by Transferee in connection herewith;
(f) A certificate of the Secretary or Assistant Secretary of
Transferee identifying the name and title and bearing the signatures of the
officers of Transferee authorized to execute and deliver this Agreement, each
Additional Agreement to which Transferee is a party and the other agreements
contemplated hereby;
(g) All such other permits, agreements, documents, instruments
and writings as shall, in the reasonable opinion of Transferor and its counsel,
be necessary for Transferee to acquire the Transferred Assets, and to assume the
Assumed Liabilities, in each case, in accordance with this Agreement and, where
necessary or desirable, in recordable form; and
(h) Such other permits, agreements, documents, instruments and
writings as are required to be delivered by Transferee at or prior to the
Closing Date pursuant to this Agreement or otherwise reasonably required by
Transferor in connection herewith.
3.5 Relationship of this Agreement and Related Transfer Agreements. The
transactions contemplated by this Agreement, together with the transactions
contemplated by the Related Transfer Agreements, are intended by the Parties to
be consummated substantially simultaneously; and if any of the transactions
contemplated hereby or by any of the Related Transfer Agreements are not
consummated simultaneously on the Closing Date in accordance with the terms and
subject to the conditions set forth herein and therein, as applicable, then each
Party shall take, or cause to be taken, all actions, and do, or cause to be
done, all things, in each case, that are necessary to dissolve and invalidate
all transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFEROR
Except as set forth in any filing made prior to the date of this
Agreement by Transferor with the SEC pursuant to the Securities Act or the
Exchange Act, Transferor hereby represents
27
and warrants to Transferee as follows (all such representations and warranties,
except those set forth in Sections 4.1 and 4.2, being made to the Knowledge of
Transferor):
4.1 Organization; Qualification. Transferor is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. Transferor is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which its
business as now being conducted requires it to be so qualified, except to the
extent that the failure to be so qualified would not, individually or in the
aggregate, have an Transferor Material Adverse Effect.
4.2 Authority. Transferor has full corporate power and authority to
execute and deliver this Agreement and each Additional Agreement to which it is
a party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Transferor of this Agreement and each Additional
Agreement to which it is a party and the consummation by Transferor of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action required on the part of Transferor.
This Agreement has been duly and validly executed and delivered by Transferor
and this Agreement constitutes, and upon the execution and delivery by
Transferor of each Additional Agreement to which it is a party, each such
Additional Agreement will constitute, the legal, valid and binding obligation of
Transferor, enforceable against Transferor in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar Laws
affecting or relating to enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
4.3 Consents and Approvals; No Violation.
(a) Except as set forth on Schedule 4.3(a), subject to
obtaining or making all Transferor Required Regulatory Approvals, neither the
execution and delivery by Transferor of this Agreement or the Additional
Agreements to which it is a party nor the consummation by Transferor of the
transactions contemplated hereby or thereby will (i) conflict with or result in
any breach of any provision of the certificate of incorporation or bylaws of
Transferor; (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, material agreement or other instrument
or obligation to which Transferor is a party or by which it, or any of the
Transferred Assets, may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite consents,
approvals or waivers have been, or will be prior to the Closing obtained, or
which would not, individually or in the aggregate, have a Transferor Material
Adverse Effect; or (iii) constitute violations of any Law, order, judgment or
decree applicable to Transferor, which violations, individually or in the
aggregate, would have a Transferor Material Adverse Effect.
28
(b) Except for consents, approvals, filings and notices set
forth on Schedule 4.3(b) (such consents, approvals, filings and notices are
collectively referred to herein as the "Transferor Required Regulatory
Approvals"), no consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery by Transferor
of this Agreement and the Additional Agreements to which it is a party or the
consummation by Transferor of the transactions contemplated hereby or thereby,
other than (i) such consents, approvals, filings and notices which, if not
obtained or made, would not materially impair Transferor's ability to perform
its material obligations under this Agreement or such Additional Agreements;
(ii) such consents, approvals, filings and notices which become applicable to
Transferor or the Transferred Assets as a result of the status of Transferee or
as a result of any other facts that specifically relate to the business or
activities in which Transferee is or proposes to be engaged; and (iii) such
consents, approvals, filings and notices, the failure of which to obtain or make
would not, individually or in the aggregate, have a Transferor Material Adverse
Effect.
4.4 Title and Related Matters. Transferor has good and valid title to
all Transferred Assets, free and clear of all Encumbrances, except for Permitted
Encumbrances.
4.5 Legal Proceedings. Except as set forth on Schedule 4.5, there are
no suits, actions or proceedings pending or, to the Knowledge of Transferor,
threatened against Transferor by or before any Governmental Authority, which, if
adversely determined, would, individually or in the aggregate, have a Transferor
Material Adverse Effect or would materially impair Transferor's ability to
consummate the transactions contemplated hereby or by any Additional Agreement
to which it is a party. Except as set forth on Schedule 4.5, Transferor is not
subject to any judgment, order or decree of any Governmental Authority which
would, individually or in the aggregate, have a Transferor Material Adverse
Effect or would materially impair Transferor's ability to consummate the
transactions contemplated hereby or by any Additional Agreement to which it is a
party.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TRANSFEREE
Transferee hereby represents and warrants to Transferor as follows (all
such representations and warranties, except those set forth in Sections 5.1 and
5.2, being made to the Knowledge of Transferee):
5.1 Organization; Qualification. Transferee is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its
29
business as it is now being conducted. Transferee is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
its business as now being conducted requires it to be so qualified, except to
the extent that the failure to be so qualified would not, individually or in the
aggregate, have a Transferee Material Adverse Effect.
5.2 Authority. Transferee has full power and authority to execute and
deliver this Agreement and each Additional Agreement to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and each such Additional Agreement by Transferee
and the consummation by Transferee of the transactions contemplated hereby or
thereby have been duly and validly authorized by all necessary action required
on the part of Transferee. This Agreement has been duly and validly executed and
delivered by Transferee and, subject to the receipt of the Transferee Required
Regulatory Approvals, this Agreement constitutes, and upon the execution and
delivery by Transferee of each Additional Agreement to which it is a party, each
such Additional Agreement will constitute, the legal, valid and binding
obligation of Transferee, enforceable against Transferee in accordance with its
terms, except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
Laws affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).
5.3 Consents and Approvals; No Violation.
(a) Except as set forth on Schedule 5.3(a), and subject to
obtaining or making all Transferee Required Regulatory Approvals, neither the
execution and delivery by Transferee of this Agreement or the Additional
Agreements to which it is a party nor the consummation by Transferee of the
transactions contemplated hereby or thereby will (i) conflict with or result in
any breach of any provision of the certificate of formation or operating
agreement (or other similar governing documents) of Transferee or any of its
Subsidiaries; (ii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, material agreement or other
instrument or obligation to which Transferee or any of its Subsidiaries is a
party or by which Transferee, any such Subsidiary or any of their respective
properties and assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite consents,
approvals or waivers have been or will be prior to the Closing obtained, or
which would not, individually or in the aggregate, materially impair
Transferee's ability to consummate the transactions contemplated hereby or by
any Additional Agreement, or to perform its material obligations hereunder or
thereunder (a "Transferee Material Adverse Effect"); or (iii) constitute
violations of any Law, order, judgment or decree applicable to Transferee or any
of its Subsidiaries, which violations, individually or in the aggregate, would
have a Transferee Material Adverse Effect.
30
(b) Except for consents, approvals, filings and notices set
forth on Schedule 5.3(b) (such consents, approvals, filings and notices are
collectively referred to herein as the "Transferee Required Regulatory
Approvals"), no consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery by Transferee
of this Agreement and the Additional Agreements to which it is a party or the
consummation by Transferee of the transactions contemplated hereby or thereby,
other than such consents, approvals, filings or notices, which, if not obtained
or made, would not have a Transferee Material Adverse Effect.
5.4 Legal Proceedings. There are no suits, actions or proceedings
pending or threatened against Transferee by or before any Governmental Authority
which, if adversely determined, would, individually or in the aggregate, have a
Transferee Material Adverse Effect or would materially impair such Transferee's
ability to consummate the transactions contemplated hereby or by any Additional
Agreement to which it is a party. Transferee is not subject to any judgments,
orders or decrees of any Governmental Authority which would, individually or in
the aggregate, have a Transferee Material Adverse Effect or would materially
impair such Transferee's ability to consummate the transactions contemplated
hereby or by any Additional Agreement to which it is a party.
ARTICLE VI
COVENANTS
6.1 Conduct of Business Relating to the Transferred Assets. Except as
contemplated by this Agreement or any Additional Agreement or to the extent
Transferee otherwise consents in writing, during the period from the date of
this Agreement to the Closing Date, Transferor shall operate the Transferred
Assets in the ordinary course of business consistent with the past practices of
Transferor and shall use all Commercially Reasonable Efforts to preserve intact
the Transferred Assets, and endeavor to preserve the goodwill and relationships
with customers, vendors, suppliers, employees and others having business
dealings with it in connection with the Transferred Assets.
6.2 Books and Records. For a period of seven (7) years from and after
the Closing Date, each of Transferor and Transferee and their respective
Representatives shall have reasonable access to all of the books and records of
the Transferred Assets, including, to the extent permitted by Applicable Law,
all Transferred Employee Records, in the possession of the other Party to the
extent that such access may reasonably be required by such Party in connection
with the Assumed Liabilities or the Excluded Liabilities, or other matters
relating to or affected by the operation of the Transferred Assets or the
Excluded Assets. Such access shall be afforded by the Party in possession of any
such books and records upon receipt of reasonable advance notice and during
normal business hours. The Party exercising this right of access shall be solely
31
responsible for any costs or expenses incurred by it or the other Party with
respect to such access pursuant to this Section 6.2. If the Party in possession
of such books and records shall desire to dispose of any books and records upon
or prior to the expiration of such seven-year period, such Party shall, prior to
such disposition, give the other Party a reasonable opportunity, at such other
Party's cost and expense, to segregate and remove such books and records as such
other Party may select.
6.3 Transfer Taxes. All transfer, use, stamp, sales and similar Taxes
incurred in connection with this Agreement and the Additional Agreements, and
the transactions contemplated hereby and thereby (including, if any, (i) sales
Tax imposed by New Jersey on the transfer of the Transferred Assets and (ii)
transfer Tax imposed by New Jersey on conveyances of interests in real property
included in the Transferred Assets), shall be borne by Transferee and, to the
extent paid by Transferor, Transferee shall reimburse Transferor upon request.
6.4 Employees.
(a) From and after the Closing Date, the employees of
Transferor set forth on Schedule 6.4(a) shall be employees of Transferee (the
"Transferred Employees"). Transferee shall employ the Transferred Employees
subject to the same terms and conditions, including terms and conditions
relating to annual compensation, bonus and other incentive opportunities, to
which each such Transferred Employee was subject immediately prior to the
Closing.
(b) Transferee shall, at the Closing, adopt the Benefit Plans
set forth on Schedule 6.4(b) as the benefit plans to be maintained by Transferee
for the benefit of the Transferred Employees from and after the Closing. Each
Transferred Employee shall continue to be covered by, participate in, and
receive the benefits under each such Benefit Plan to the same extent each such
Transferred Employee was covered by, participated in and received the benefits
under each such Benefit Plan immediately prior to the Closing. In furtherance
and not in limitation of the foregoing, each Transferred Employee shall receive
from Transferee full credit for service with Transferor and its Affiliates for
eligibility, vesting and benefits entitlement purposes.
(c) Transferee shall use its best efforts to take, or cause to
be taken, all actions, or to do, or cause to be done, all things necessary,
proper or advisable with respect to the IBEW Collective Bargaining Agreement, in
each case as Transferor shall reasonably request, including becoming a party to
or otherwise agreeing to be bound by the IBEW Collective Bargaining Agreement.
Transferred Employees covered by the IBEW Collective Bargaining Agreement shall
retain their seniority and receive full credit for service with Transferor and
its Affiliates in connection with entitlement to vacation and all other benefits
and rights under the IBEW Collective Bargaining Agreement to which seniority or
years of service are applicable. On the Closing Date, Transferee shall assume
the IBEW Collective Bargaining Agreement for the duration of its term as it
relates to Transferred Employees and other employees to be
32
employed by Transferee or its Affiliates in positions covered by the IBEW
Collective Bargaining Agreement, and Transferee shall comply with all applicable
obligations under the IBEW Collective Bargaining Agreement. Transferee shall,
for the duration of the IBEW Collective Bargaining Agreement, recognize the IBEW
210 as the collective bargaining agent for the Transferred Employees in
positions covered by the IBEW Collective Bargaining Agreement.
6.5 Qualification of Transferee under PUHCA. From and after the
Closing, Transferor shall use its Commercially Reasonable Efforts as reasonably
requested by Transferee from time to time in order to enable Transferee to
qualify as an "exempt wholesale generator" under the Public Utility Holding
Company of 1935, as amended from time to time.
6.6 Further Assurances.
(a) Subject to the terms and conditions of this Agreement,
each of Transferor and Transferee shall use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective the transfer of the Transferred Assets pursuant to this Agreement and
the assumption of the Assumed Liabilities, including using its reasonable best
efforts to ensure satisfaction of the conditions precedent to each of
Transferor's and Transferee's obligations hereunder, including obtaining all
necessary consents, approvals and authorizations of, and making all required
notices or filings with, third parties required to be obtained or made in order
to consummate the transactions hereunder, including the transfer of the
Transferable Permits to Transferee. Transferor shall cooperate with Transferee
in its efforts to obtain all other permits and Environmental Permits necessary
for Transferee to operate the Transferred Assets. Transferee shall perform all
conditions required of Transferee in connection with obtaining the Transferor
Required Regulatory Approvals. Neither Transferor nor Transferee shall, without
prior written consent of the other, take or fail to take any action which might
reasonably be expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement.
(b) Without limiting the generality of Section 6.6(a):
(i) In the event that any Transferred Asset shall not
have been conveyed to Transferee at the Closing, Transferor shall, subject to
Section 6.6(b)(ii), use Commercially Reasonable Efforts after the Closing to
convey such asset to Transferee as promptly as practicable.
(ii) To the extent that Transferor's rights under any
material Transferor Agreement may not be assigned without the consent, approval
or authorization of any third party which consent, approval or authorization has
not been obtained by the Closing Date, this Agreement shall not constitute an
agreement to assign such right if an attempted assignment would constitute a
breach of such Transferor Agreement or violate any applicable Law. If any
33
consent, approval or authorization to the assignment of any material Transferor
Agreement shall not be obtained, or if any attempted assignment would be
ineffective or would impair Transferee's rights and obligations under such
Transferor Agreement, such that Transferee would not acquire and assume the
benefit and detriment of all such rights and obligations, Transferor, at its
option and to the fullest extent permitted by applicable Law and such Transferor
Agreement, shall, after the Closing Date, appoint Transferee to be Transferor's
agent with respect to such Transferor Agreement, or, to the fullest extent
permitted by applicable Law and such Transferor Agreement, enter into such
reasonable arrangements with Transferee or take such other actions as are
necessary to provide Transferee with the same or substantially similar rights
and obligations under such Transferor Agreement.
6.7 Consents and Approvals. Without limiting the generality of Section
6.6(a), as promptly as practicable after the date of this Agreement, Transferor
and Transferee shall take, or cause to be taken, all actions, and do, or cause
to be done, all things necessary, proper or advisable under applicable Laws to
obtain all required consents and approvals of all other Governmental
Authorities, and make all other filings and give all other notices required to
be made prior to the Closing with respect to the transactions contemplated
hereby and by the Additional Agreements.
6.8 PJM; MAAC. From and after the Closing Date, Transferee shall use
Commercially Reasonable Efforts to obtain membership in PJM and MAAC, and shall
submit to the governance of the independent system operator established and
administered under the PJM Agreement.
6.9 Reimbursement of Certain Metering Expenses. From and after the
Closing, Transferee shall (i) reimburse Transferor for reasonable amounts
expended by Transferor prior to the later to occur of (a) September 30, 2001 and
(b) the date which is seventeen months after the Closing Date, in connection
with the installation, renovation or improvement of revenue quality meters and
related equipment up to an aggregate amount of $1.35 million and (ii) cooperate
with Transferor as fully as reasonably possible in order to facilitate
Transferor's installation, renovation or improvement of revenue quality meters
and related equipment.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligation of Transferee. The obligation of
Transferee to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction (or the waiver, to the extent permitted by
applicable Law, by Transferee) at or prior to the Closing of the following
conditions:
(a) No preliminary or permanent injunction, order or decree by
any Governmental Authority which prevents the consummation of the transactions
contemplated
34
hereby or by the Additional Agreements shall have been issued and remain in
effect (Transferee agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted), and no applicable Law shall be in effect
which prohibits the consummation of the transactions contemplated hereby or
thereby;
(b) Transferee shall have obtained the Transferee Required
Regulatory Approvals set forth on Schedule 5.3(b), in form and substance
reasonably satisfactory to Transferee (including any adverse conditions
therein); and such Transferee Required Regulatory Approvals shall be final and
nonappealable;
(c) Transferor shall have in all material respects performed
and complied with the covenants and agreements contained in this Agreement which
are required to be performed and complied with by Transferor on or prior to the
Closing Date;
(d) (i) The representations and warranties of Transferor set
forth in this Agreement that are qualified by reference to Transferor Material
Adverse Effect shall be true and correct in all respects and (ii) the
representations and warranties of Transferor set forth in this Agreement that
are not so qualified shall be true and correct in all material respects, in each
case, as of the Closing Date as though made at and as of the Closing Date (other
than representations and warranties that are made as of a specific date which
shall have been true and correct as of such date);
(e) Transferee shall have received a certificate from an
authorized officer of Transferor, dated the Closing Date, to the effect that, to
such officer's Knowledge, the conditions set forth in Sections 7.1(c) and (d)
have been satisfied by Transferor; and
(f) The Related Transfer Agreements shall be in full force and
effect and the valid and binding obligation of each party thereto; and all
conditions to the obligations of all parties to the Related Transfer Agreements
to consummate the transactions contemplated thereby shall have been satisfied
or, to the extent permitted by applicable Law, waived.
7.2 Conditions to Obligation of Transferor. The obligation of
Transferor to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction (or the waiver, to the extent permitted by
applicable Law, by Transferor) at or prior to the Closing of the following
conditions:
(a) No preliminary or permanent injunction or other order or
decree by any Governmental Authority which prevents the consummation of the
transactions contemplated hereby or by the Additional Agreements shall have been
issued and remain in effect (Transferor agreeing to use its reasonable best
efforts to have any such injunction, order or decree lifted), and no applicable
Law shall be in effect which prohibits the consummation of the transactions
contemplated hereby or thereby;
35
(b) Transferor shall have obtained the Transferor Required
Regulatory Approvals set forth on Schedule 4.3(b), in form and substance
reasonably satisfactory to Transferor (including any adverse conditions therein)
and all conditions to effectiveness prescribed therein or otherwise by Law shall
have been satisfied in all material respects; and such Transferor Required
Regulatory Approvals shall be final and nonappealable;
(c) Transferee shall have in all material respects performed
and complied with the covenants and agreements contained in this Agreement which
are required to be performed and complied with by Transferee on or prior to the
Closing Date;
(d) (i) The representations and warranties of Transferee set
forth in this Agreement that are qualified by reference to Transferee Material
Adverse Effect shall be true and correct in all respects and (ii) the
representations and warranties of Transferee that are not so qualified shall be
true and correct in all material respects, in each case, as of the Closing Date
as though made at and as of the Closing Date (other than representations and
warranties that are made as of a specific date which shall have been true and
correct as of such date);
(e) Transferor shall have received a certificate from an
authorized officer of Transferee, dated the Closing Date, to the effect that, to
such officer's Knowledge, the conditions set forth in Sections 7.2(c) and (d)
have been satisfied by Transferee; and
(f) The Related Transfer Agreements shall be in full force and
effect and the valid and binding obligation of each party thereto; and all
conditions to the obligations of all parties to the Related Transfer Agreements
to consummate the transactions contemplated thereby shall have been satisfied
or, to the extent permitted by applicable Law, waived.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification By Transferor and Transferee.
(a) From and after the Closing Date, Transferee shall
indemnify, defend and hold harmless Transferor and its Representatives (each, a
"Transferor Indemnitee"), from and against any and all claims, demands, suits,
losses, liabilities, penalties, damages, obligations, payments, costs and
expenses (including reasonable attorneys' fees and expenses in connection
therewith) (each, an "Indemnifiable Loss"), asserted against or suffered by any
Transferor Indemnitee relating to, resulting from or arising out of (i) any
breach by Transferee of any covenant or agreement of Transferee set forth in
this Agreement, (ii) the Assumed Liabilities or (iii) any Third-Party Claim
against any Transferor Indemnitee in connection with Transferee's ownership,
lease, maintenance or operation of any of the Transferred Assets on or after the
36
Closing Date (other than to the extent such Third-Party Claim constitutes an
Excluded Liability); provided, however, that Transferee shall be liable to
Transferor pursuant to clause (i) of this Section 8.1(a) only for Indemnifiable
Losses for which any Transferor Indemnitee gives written notice to Transferee
(setting forth with reasonable specificity the nature and amount of the
Indemnifiable Loss) during the period for which such covenant or agreement
survives the Closing in accordance with Section 10.5.
(b) From and after the Closing, Transferor shall indemnify,
defend and hold harmless Transferee and its Representatives (each, a "Transferee
Indemnitee"), from and against any and all Indemnifiable Losses asserted against
or suffered by any Transferee Indemnitee relating to, resulting from or arising
out of (i) any breach by Transferor of any covenant or agreement of Transferor
set forth in this Agreement or (ii) the Excluded Liabilities; provided, however,
that Transferor shall be liable pursuant to clause (i) of this Section 8.1(b)
only for Indemnifiable Losses for which any Transferee Indemnitee gives written
notice to Transferor (setting forth with reasonable specificity the nature and
amount of the Indemnifiable Loss) during the period for which such covenants or
agreements survive the Closing in accordance with Section 10.5.
(c) In furtherance and not in limitation of the provisions set
forth in Section 8.1(a), Transferee, for itself and on behalf of its
Representatives, hereby irrevocably releases, holds harmless and forever
discharges Transferor from any and all Indemnifiable Losses of any kind or
character, whether known or unknown, contingent or accrued, arising under or
relating to Environmental Laws, or relating to any claim in respect of any
Environmental Condition or Hazardous Substance, whether based on common law or
Environmental Laws relating to the Transferred Assets, other than those
liabilities and obligations which have been retained by Transferor hereunder
(collectively, "Environmental Claims"). In furtherance of the foregoing,
Transferee, for itself and on behalf of its Representatives, hereby irrevocably
waives any and all rights and benefits with respect to such Environmental Claims
that it now has, or in the future may have conferred upon it by virtue of any
Law or common law principle, which provides that a general release does not
extend to claims which a party does not know or suspect to exist in its favor at
the time of executing the release, if knowledge of such claims would have
materially affected such party's settlement with the obligor. In this
connection, Transferee hereby acknowledges that it is aware that factual matters
now unknown to it may have given, or hereafter may give, rise to Environmental
Claims that are presently unknown, unanticipated and unsuspected, and Transferee
further agrees that this release set forth in this Section 8.1(c) has been
negotiated and agreed upon in light of that awareness, and Transferee, for
itself and on behalf of its Representatives, nevertheless hereby intends
irrevocably to release, hold harmless and forever discharge Transferor from all
such Environmental Claims.
(d) The rights and remedies of Transferor and Transferee set
forth in this Article VIII are exclusive and in lieu of any and all other rights
and remedies which Transferor and Transferee may have under this Agreement,
under applicable Law, whether at common law
37
or in equity, including for declaratory, injunctive or monetary relief, in each
case, with respect to any Indemnifiable Loss.
(e) Notwithstanding anything to the contrary herein, no Person
(including an Indemnitee) shall be entitled to recover from any other Person
(including any Party hereto required to provide indemnification under this
Agreement (an "Indemnifying Party")) any amount in excess of the actual
compensatory damages, court costs and reasonable attorneys' fees suffered by
such party. Transferee and Transferor hereby irrevocably waive any right to
recover punitive, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement (other than with respect to
indemnification for a Third-Party Claim).
(f) Any Transferor Indemnitee or Transferee Indemnitee (each,
an "Indemnitee") shall use Commercially Reasonable Efforts to mitigate all
losses, damages and the like relating to a claim under the indemnification
provisions in this Section 8.1, including availing itself of any defenses,
limitations, rights of contribution, claims against third Persons and other
rights at law or equity. For purposes of this Section 8.1(f), such Indemnitee's
Commercially Reasonable Efforts shall include the reasonable expenditure of
money to mitigate or otherwise reduce or eliminate any loss or expenses for
which indemnification would otherwise be due, and, in addition to its other
obligations hereunder, the Indemnifying Party shall reimburse the Indemnitee for
its reasonable expenditures in undertaking the mitigation.
8.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any suit, action or proceeding made or brought
by any Person who is not an Indemnitee (a "Third-Party Claim") with respect to
which indemnification is to be sought from an Indemnifying Party, the Indemnitee
shall give such Indemnifying Party reasonably prompt written notice thereof (a
"Third-Party Claim Notice"), but in no event later than ten (10) Business Days
after the Indemnitee's receipt of notice of such Third-Party Claim. Such notice
shall describe the nature of the Third-Party Claim in reasonable detail and
shall indicate the estimated amount, if practicable, of the Indemnifiable Loss
that has been or may be incurred by the Indemnitee. The Indemnifying Party shall
have the right to participate in or, by giving written notice to the Indemnitee,
to elect to assume the defense of any Third-Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel. If within twenty
(20) Business Days after receipt of the Third-Party Claim Notice, an
Indemnifying Party fails to give written notice to the Indemnitee of its
election to assume the defense of such Third-Party Claim, then the Indemnitee
may defend, compromise or settle such Third-Party Claim with counsel selected by
it, provided that, without the prior written consent of the Indemnifying Party,
the Indemnitee shall not agree to the entry of any judgment with respect to, or
any compromise or settlement of, such Third-Party Claim, which judgment,
compromise or settlement does not include the unconditional release of the
Indemnifying Party.
38
(b) If, within twenty (20) Business Days after an Indemnitee
gives written notice to the Indemnifying Party of any Third-Party Claim, such
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third-Party Claim
as provided in Section 8.2(a), then the Indemnifying Party shall not be liable
for any costs, fees or expenses subsequently incurred by the Indemnitee in
connection with the defense, compromise or settlement thereof.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not constitute a Third-Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, in no event later than twenty (20) Business Days after the Indemnitee
becomes aware of such Direct Claim, stating the nature of such claim in
reasonable detail and indicating the estimated amount, if practicable, of such
Indemnifiable Loss and the Indemnifying Party shall have a period of twenty (20)
Business Days within which to respond to such Direct Claim. If the Indemnifying
Party fails to respond during such twenty (20) Business Day period, the
Indemnifying Party shall be deemed to have accepted such claim and, subject to
this Article VIII, shall promptly reimburse the Indemnitee for the Indemnifiable
Losses set forth in the Indemnitee's notice.
(d) A failure to give timely notice as provided in this
Section 8.2 shall not affect the rights or obligations of any Party hereunder
except to the extent that, as a result of such failure, the Party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
ARTICLE IX
TERMINATION
9.1 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing by mutual written consent of the Parties.
(b) This Agreement may be terminated by Transferor, on the one
hand, or Transferee, on the other hand, upon written notice to the other Party,
(i) at any time prior to the Closing if any court of competent jurisdiction
shall have issued an order, judgment or decree permanently restraining,
enjoining or otherwise prohibiting the Closing, and such order, judgment or
decree shall have become final and nonappealable; (ii) at any time prior to the
Closing if any Law shall have been enacted or issued by any Governmental
Authority which, directly or indirectly, prohibits the consummation of the
transactions contemplated by this Agreement or by any Additional Agreement; or
(iii) at any time after July 31, 2000, if the Closing shall not have occurred on
or before such date; provided, however, that the right to
39
terminate this Agreement under this Section 9.1(b) (iii) shall not be available
to any Party whose breach of this Agreement has caused, or resulted in, the
failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by Transferee, upon
written notice to Transferor, if any of Transferee Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Transferee
to effect the transactions contemplated by this Agreement as set forth in
Section 7.1(b), shall have been denied (and a petition for rehearing or refiling
of an application initially denied without prejudice shall also have been
denied), and such denial was not caused by or the result of a breach of this
Agreement by Transferee.
(d) This Agreement may be terminated by Transferor, upon
written notice to Transferee, if any of the Transferor Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Transferor
to effect the transactions contemplated by this Agreement as set forth in
Section 7.2(b), shall have been denied (and a petition for rehearing or refiling
of an application initially denied without prejudice shall also have been
denied), and such denial was not caused by or the result of a breach of this
Agreement by Transferor.
9.2 Effect of Termination. Upon termination of this Agreement prior to
the Closing pursuant to Section 9.1, this Agreement shall be null and void and
of no further force or effect (except that the provisions set forth in this
Section 9.2 and Article X shall remain in full force and effect in accordance
with their respective terms); and no Party shall have any further liability
under this Agreement (other than for any wilful breach of its obligations
hereunder).
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification. Subject to applicable Law, this
Agreement may be amended, supplemented or otherwise modified only by written
agreement entered into by all Parties.
10.2 Expenses. Except to the extent provided herein, whether or not the
transactions contemplated hereby are consummated, all costs, fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Party incurring such costs, fees and expenses.
10.3 Bulk Sales Laws. Transferee hereby acknowledges that,
notwithstanding anything in this Agreement to the contrary, Transferor will not
comply with the provisions of the bulk sales laws of any jurisdiction in
connection with the transactions contemplated by this Agreement; and Transferee
hereby irrevocably waives compliance by Transferor with the provisions of the
bulk sales laws of all applicable jurisdictions.
40
10.4 Waiver of Compliance; Consents. To the extent permitted by
applicable Law, any failure of any of the Parties to comply with any covenant,
agreement or condition set forth herein may be waived by the Party entitled to
the benefit thereof only by a written instrument signed by such Party, but any
such waiver shall not operate as a waiver of, or estoppel with respect to, any
prior or subsequent failure to comply therewith.
10.5 No Survival. No representation or warranty contained in this
Agreement shall survive the Closing. The covenants and agreements of the Parties
contained in this Agreement shall survive the Closing in accordance with their
respective terms.
10.6 Disclaimers. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN ARTICLE IV, THE TRANSFERRED ASSETS ARE TRANSFERRED "AS IS, WHERE IS",
AND TRANSFEROR EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES OF
ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO TRANSFEROR AND THE TRANSFERRED
ASSETS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE IV: TRANSFEROR EXPRESSLY
DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES REGARDING LIABILITIES,
OWNERSHIP, LEASE, MAINTENANCE OR OPERATION OF THE TRANSFERRED ASSETS, THE TITLE,
CONDITION, VALUE OR QUALITY OF THE TRANSFERRED ASSETS OR THE PROSPECTS
(FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE TRANSFERRED ASSETS;
AND TRANSFEROR EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THE TRANSFERRED 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 THE APPLICABILITY OF ANY
GOVERNMENTAL AUTHORITY, INCLUDING ANY ENVIRONMENTAL LAWS, OR WHETHER TRANSFEROR
POSSESSES SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE
TRANSFERRED ASSETS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TRANSFEROR
FURTHER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES REGARDING THE
ABSENCE OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING
UNDER ENVIRONMENTAL LAWS WITH RESPECT TO THE TRANSFERRED ASSETS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, TRANSFEROR EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES OF ANY
KIND REGARDING THE CONDITION OF THE TRANSFERRED ASSETS OR THE SUITABILITY OF ANY
OF THE TRANSFERRED ASSETS FOR OPERATION AS A POWER PLANT OR AS A FUEL PROCESSING
FACILITY, AS APPLICABLE, AND NO
41
SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION
PROVIDED, OR COMMUNICATIONS MADE, BY TRANSFEROR OR ITS REPRESENTATIVES,
INCLUDING ANY BROKER OR INVESTMENT BANKER, WILL CAUSE OR CREATE ANY SUCH
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION,
VALUE OR QUALITY OF THE TRANSFERRED ASSETS.
10.7 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given on the day when delivered personally or by
facsimile transmission (with confirmation), on the next Business Day when
delivered to a nationally recognized overnight courier or five (5) Business Days
after deposited as registered or certified mail (return receipt requested), in
each case, postage prepaid, addressed to the recipient Party at its address set
forth below (or at such other address or facsimile number for a Party as shall
be specified by like notice; provided, however, that any notice of a change of
address or facsimile number shall be effective only upon receipt thereof):
(a) If to Transferor, to:
Atlantic City Electric Company
c/o Conectiv
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
(b) if to Transferee, to:
Conectiv Atlantic Generation, LLC
c/o Conectiv
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
10.8 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns,
provided neither this Agreement nor any of the rights, interests, obligations or
remedies hereunder shall be assigned by Transferor or Transferee, including by
operation of law, without the prior written consent of the other Party; nor is
this Agreement intended to confer upon any other Person any rights, interests,
obligations or remedies hereunder. Without limiting the generality of the
foregoing, no provision of this Agreement shall create any third-party
beneficiary rights in any Employee or former employee
42
of Transferor (including any beneficiary or dependent thereof) in respect of
continued employment or resumed employment, and no provision of this Agreement
shall create any rights in any such Persons in respect of any benefits that may
be provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder. Notwithstanding the
foregoing, without the prior written consent of Transferee, Transferor may
assign all of its rights, interests, obligations and remedies hereunder to any
of its Affiliates; provided, however, that no such assignment shall relieve or
discharge Transferor from any of its obligations hereunder.
10.9 Governing Law; Forum; Service of Process. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
(without giving effect to conflicts of law principles) as to all matters,
including validity, construction, effect, performance and remedies. Venue in any
and all suits, actions and proceedings related to the subject matter of this
Agreement shall be in the state and federal courts located in and for the State
of Delaware (the "Courts"), which shall have exclusive jurisdiction for such
purpose, and the Parties hereby irrevocably submit to the exclusive jurisdiction
of such courts and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such suit, action or proceeding. Service of process may be
made in any manner recognized by such Courts. Each of the Parties hereby
irrevocably waives its right to a jury trial arising out of any dispute in
connection with this Agreement or the transactions contemplated hereby.
10.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.11 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
construction of this Agreement. Ambiguities and uncertainties in the wording of
this Agreement shall not be construed for or against any Party, but shall be
construed in the manner that most accurately reflects the Parties' intent as of
the date of this Agreement. Each Party acknowledges that it has been represented
by counsel in connection with the review and execution of this Agreement, and,
accordingly, there shall be no presumption that this Agreement or any provision
hereof be construed against the Party that drafted this Agreement.
10.12 Schedules and Exhibits. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are made a part of this Agreement.
10.13 Entire Agreement. This Agreement (including the Schedules and
Exhibits), embodies the entire agreement and understanding of the Parties hereto
in respect of the transactions contemplated by this Agreement and the Additional
Agreements and supersedes all
43
prior agreements and understandings between or among the Parties with respect to
such transactions. There are no representations, warranties, covenants or
agreements between or among the Parties with respect to the subject matter set
forth in such agreements, other than those expressly set forth or referred to
herein or therein.
[SIGNATURE PAGE FOLLOWS]
44
IN WITNESS WHEREOF, Transferor and Transferee have caused this Asset
Transfer Agreement to be duly executed and delivered by their respective duly
authorized officers as of the date first above written.
ATLANTIC CITY ELECTRIC COMPANY
By: _____________________________________
Name:
Title:
CONECTIV ATLANTIC GENERATION, LLC
By: ______________________________________
Name:
Title:
