Exhibit 4
ASSET SALE AGREEMENT
BY AND BETWEEN
COMMONWEALTH ELECTRIC COMPANY
AND
SOUTHERN ENERGY NEW ENGLAND, L.L.C.
As of May 15, 1998
TABLE OF CONTENTS
ARTICLE I.DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . 8
2.1. The Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . 8
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . .10
ARTICLE III.PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . .11
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . .11
3.2. Purchase Price Adjustment. . . . . . . . . . . . . . . . . .11
3.3. Allocation of Purchase Price . . . . . . . . . . . . . . . .12
3.4. Proration. . . . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE IV.THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . .13
4.1. Time and Place of Closing. . . . . . . . . . . . . . . . . .13
4.2. Payment of Purchase Price. . . . . . . . . . . . . . . . . .14
4.3. Deliveries by the Seller . . . . . . . . . . . . . . . . . .14
4.4. Deliveries by the Buyer. . . . . . . . . . . . . . . . . . .14
ARTICLE V.REPRESENTATIONS AND WARRANTIES OF THE SELLER. . . . . . . . .15
5.1. Organization; Qualification. . . . . . . . . . . . . . . . .15
5.2. Authority Relative to this Agreement . . . . . . . . . . . .15
5.3. Consents and Approvals; No Violation . . . . . . . . . . . .16
5.4. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.5. Financial Statements . . . . . . . . . . . . . . . . . . . .17
5.6. Undisclosed Liabilities. . . . . . . . . . . . . . . . . . .17
5.7. Absence of Certain Changes or Events . . . . . . . . . . . .17
5.8. Title and Related Matters. . . . . . . . . . . . . . . . . .17
5.9. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . .18
5.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . .18
5.11. Environmental Matters . . . . . . . . . . . . . . . . . . .18
5.12. Real Estate . . . . . . . . . . . . . . . . . . . . . . . .19
5.13. Condemnation. . . . . . . . . . . . . . . . . . . . . . . .19
5.14. Certain Contracts and Arrangements. . . . . . . . . . . . .19
5.15. Legal Proceedings, etc. . . . . . . . . . . . . . . . . . .19
5.16. Operating Permits . . . . . . . . . . . . . . . . . . . . .20
5.17. Regulation as a Utility . . . . . . . . . . . . . . . . . .20
5.18. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.19. Entire Assets . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE VI.REPRESENTATIONS AND WARRANTIES OF THE BUYER. . . . . . . . .21
6.1. Organization. . . . . . . . . . . . . . . . . . . . . . . .21
6.2. Authority Relative to this Agreement. . . . . . . . . . . .21
6.3. Consents and Approvals: No Violation. . . . . . . . . . . .21
6.4. Availability of Funds . . . . . . . . . . . . . . . . . . .22
6.5 Independent Evaluation. . . . . . . . . . . . . . . . . . .22
ARTICLE VII.COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . .22
7.1. Conduct of Business . . . . . . . . . . . . . . . . . . . .22
7.2. Access to Information . . . . . . . . . . . . . . . . . . .23
7.3. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .24
7.4. Further Assurances. . . . . . . . . . . . . . . . . . . . .24
7.5. Public Statements . . . . . . . . . . . . . . . . . . . . .26
7.6. Consents and Approvals. . . . . . . . . . . . . . . . . . .26
7.7. Fees and Commissions. . . . . . . . . . . . . . . . . . . .27
7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . .27
7.9. Supplements to Schedules; Notice of Breach. . . . . . . . .28
7.10. Employees . . . . . . . . . . . . . . . . . . . . . . . . .28
7.11. Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . .29
7.12. Real Estate Matters . . . . . . . . . . . . . . . . . . . .30
7.13. Creditworthiness of Buyer . . . . . . . . . . . . . . . . .30
ARTICLE VIII.CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . .30
8.1. Conditions to Each Party's Obligations to Effect the
Transactions. . . . . . . . . . . . . . . . . . . . . . . .30
8.2. Conditions to Obligations of the Buyer. . . . . . . . . . .31
8.3. Conditions to Obligations of the Seller . . . . . . . . . .33
ARTICLE IX.INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . .34
9.1. Indemnification . . . . . . . . . . . . . . . . . . . . . .34
9.2. Defense of Claims . . . . . . . . . . . . . . . . . . . . .35
ARTICLE X.TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . .37
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . .37
10.2. Procedure and Effect of Termination . . . . . . . . . . . .38
ARTICLE XI.MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . .39
11.1. Amendment and Modification. . . . . . . . . . . . . . . . .39
11.2. Waiver of Compliance. . . . . . . . . . . . . . . . . . . .39
11.3. No Survival . . . . . . . . . . . . . . . . . . . . . . . .39
11.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . .39
11.5. Assignment. . . . . . . . . . . . . . . . . . . . . . . . .40
11.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . .40
11.7. Counterparts. . . . . . . . . . . . . . . . . . . . . . . .41
11.8. Interpretation. . . . . . . . . . . . . . . . . . . . . . .41
11.9. Schedules and Exhibits. . . . . . . . . . . . . . . . . . .41
11.10. Entire Agreement . . . . . . . . . . . . . . . . . . .41
11.11. No Third Party Beneficiaries . . . . . . . . . . . . .41
11.12. No Relationship. . . . . . . . . . . . . . . . . . . .41
11.13. Severability . . . . . . . . . . . . . . . . . . . . .41
EXHIBITS
Exhibit A - Assumption Agreement
Exhibit B - Bill of Sale
Exhibit C-1 - Assignment of Lease
Exhibit C-2 - Deed
Exhibit D - FIRPTA Affidavit
Exhibit E - Interconnection and Site Agreements
Exhibit F - Wholesale Transition Service Agreement
Exhibit G - Guaranty
ASSET SALE AGREEMENT
THIS ASSET SALE AGREEMENT, dated as of May 15, 1998, is by
and between Commonwealth Electric Company, a Massachusetts corporation
(the "Seller"), and Southern Energy New England, L.L.C., a Delaware
limited liability company (the "Buyer"). The Buyer and the Seller are
sometimes referred to herein as a "Party" and collectively as the
"Parties".
WHEREAS, the Buyer desires to purchase, and the Seller
desires to sell, the Assets (as defined herein) upon the terms and
conditions hereinafter set forth in this Agreement;
NOW, THEREFORE in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the
following terms have the meanings specified in this Section 1.1(a).
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(2) "Assets" means all of Seller's right, title and
interest in, to and under the real and personal property, tangible or
intangible, owned or leased by the Seller, and constituting:
(a) the Martha's Vineyard Diesels or used principally in
connection with the Martha's Vineyard Diesels, including, without
limitation, the following assets owned or leased by the Seller, but
excluding the Excluded Assets referred to in Section 2.2:
(i) the Real Estate (including all buildings, structures and
other improvements thereon) described on Schedule 5.12(i) as
being associated with the Martha's Vineyard Diesels (the "Real
Property");
(ii) all inventories of fuels, supplies, materials and spare
parts located on or in transit to Martha's Vineyard Diesels on
the Closing Date;
(iii) the machinery, equipment, vehicles, furniture and
other personal property located on the Real Property on the
Closing Date, including, without limitation, the items of
personal property included in Schedule 1.1(a)(2)(iii) as being
associated with the Martha's Vineyard Diesels;
(iv) the contracts, agreements and personal property leases
listed on Schedule 5.14(a) as being associated with the Martha's
Vineyard Diesels or described in Section 5.14(a)(iii), and which
are assignable;
(v) the Operating Permits listed on Schedule 1.1(a)(31) that
are transferred to Buyer at the Closing;
(vi) all books, operating records, engineering or design
plans, specifications, procedures and similar items of the Seller
relating specifically to the aforementioned assets other than
books of account;
(vii) any assets purchased or to be purchased by the Seller
pursuant to Section 7.4(d);
(viii) all unexpired, transferable warranties received by
the Seller from third parties with respect to any of the Assets
as of the Closing Date;
(ix) all intellectual property owned by the Seller and
relating to the Assets;
(x) all rights of the Seller in and to any causes of action
against third parties relating to any Asset or Assumed
Liabilities; and
(xi) all guarantees and indemnification rights relating to
the Assumed Liabilities; and
(b) Seller's rights, subject to Seller's obligations, under
the William F. Wyman Unit No. 4 Agreement for Joint Ownership,
Construction and Operation (the "Agreement for Joint Ownership"),
dated November 1, 1974, by and among Central Maine Power Company
("Central Maine"), and Bangor Hydro-Electric Company ("Bangor-Hydro"),
Boston Edison Company ("Boston Edison"), Fitchburg Gas and Electric
Light Company ("Fitchburg"), Montaup Electric Company ("Montaup"), New
England Power Company ("New England Power"), New Bedford Gas and
Edison Light Company ("New Bedford Gas"), Newport Electric Corporation
("Newport Electric"), Public Service Company of New Hampshire
("PSCNH"), Vermont Electric Power Company, Inc., as amended by
Amendment No. 1, dated as of June 30, 1975, Amendment No. 2, dated as
of August 16, 1976, Amendment No. 3, dated as of December 31, 1978,
and the Extension Agreement (the "Extension Agreement"), dated as of
December 31, 1976, by and between Bangor Hydro, Maine Public Service
Company, Boston Edison, Fitchburg, Montaup, New England Power, New
Bedford Gas, Newport Electric, PSCNH, Central Maine, Green Mountain
Power Corporation, Central Vermont Public Service Corporation and
Massachusetts Municipal Wholesale Electric Company (the Agreement for
Joint Ownership and the Extension Agreement are hereinafter referred
to collectively as the "Wyman Agreements") (the Assets under the Wyman
Agreements are hereinafter referred to as the "Wyman Assets").
(4) "Assumption Agreement" means the Assumption Agreement
pursuant to which the Buyer assures and agrees to pay and perform
certain obligations and liabilities of the Seller associated with the
Assets, in the form of Exhibit A hereto.
(5) "Bill of Sale" means the Bill of Sale to be delivered
at the Closing with respect to the Assets which constitute personal
property and which are to be transferred at the Closing substantially
in the form of Exhibit B hereto.
(6) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in Boston, Massachusetts, are authorized by law or other
governmental action to close.
(7) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other
authorized representatives.
(8) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(9) "CMR" means the Code of Massachusetts Regulations.
(10) "Code" means the Internal Revenue Code of 1986, as
amended.
(11) "Confidentiality Agreement" means the Confidentiality
Agreement, dated November, 1997, between the Seller and the Buyer.
(12) "Deed" means the Deed to be delivered at the Closing
with respect to the Assets located at Oak Bluffs which constitute real
property and which are to be transferred at the Closing, substantially
in the form of Exhibit C-2 hereto.
(13) "Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements,
activity and use limitations, conservation easements, deed
restrictions, encumbrances and charges of any kind.
(14) "Environmental Laws" means all Federal, state and
local laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution
or protection of the environment, natural resources or human health
and safety, including, without limitation, laws relating to Releases
or threatened Releases of Hazardous Substances (including, without
limitation, ambient air, surface water, groundwater, and surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, transport
or handling of Hazardous Substances.
(15) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(16) "ERISA Affiliate" means any person that was or is
required to be treated as a single employer with the Seller under ss
414 of the Code.
(17) "Estimated Adjustment Amount" means the Seller's good
faith reasonable estimate of the Adjustment Amount and the Capital
Improvement Amount, which estimate shall be provided to the Buyer no
later than two Business Days before the Closing.
(18) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(19) "Federal Power Act" means the Federal Power Act of
1935.
(20) "FERC" means the Federal Energy Regulatory Commission.
(21) "FIRPTA Affidavit" means the Foreign Investment in
Real Property Tax Act Certification and Affidavit substantially in the
form of Exhibit D hereto.
(22) "Good Utility Practice" means any of the applicable
practices, methods and acts (i) required by NEPOOL, the Northeast
Power Coordinating Council, the North American Electric Reliability
Council, the NEPOOL Independent System Operator or the successor of
any of them; (ii) required by the policies and standards of the MDTE
relating to emergency operations; or (iii) otherwise engaged in or
approved by a significant portion of the electric utility industry
during the relevant time period; which in each case in the exercise of
reasonable judgment in light of the facts known or that should have
been known at the time a decision was made, could have been expected
to accomplish the desired result in a manner consistent with law,
regulation, safety, environmental protection, economy, and expedition.
Good Utility Practice is intended to be acceptable practices, methods
or acts generally accepted in the region, and is not intended to be
limited to the optimum practices, methods or acts to the exclusion of
all others.
(23) "Guarantor" shall mean Southern Energy, Inc.
(24) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil or coal ash, radioactive materials, radon gas,
asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid which may contain levels of polychlorinated
biphenyls; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "restricted hazardous materials,"
"extremely hazardous substances," "toxic substances," "contaminants"
or "pollutants" or words of similar meaning and regulatory effect; or
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any applicable Environmental Law.
(25) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(26) "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(27) "Income Tax" means any federal, state, local or
foreign Tax (a) based upon, measured by or calculated with respect to
net income, profits or receipts (including, without limitation,
capital gains Taxes and minimum Taxes) or (b) based upon, measured by
or calculated with respect to multiple bases (including, without
limitation, corporate franchise taxes) if one or more of the bases on
which such Tax may be based, measured by or calculated with respect
to, is described in clause (a), in each case together with any
interest, penalties, or additions to such Tax.
(28) "Independent Accounting Firm" means such independent
accounting firm of national reputation mutually appointed by the
Seller and the Buyer.
(29) "Interconnection Agreements" means the Interconnection
and Site Agreements substantially in the form of Exhibit E hereto.
(30) "Martha's Vineyard Diesels" shall mean the electric
generation facilities located at Edgartown Road, Oak Bluffs, and West
Side Firelane No. 5, West Tisbury on Martha's Vineyard, Massachusetts.
(31) "Material Adverse Effect" means any change or changes
in or effect or effects on the Assets after the date of this Agreement
that, individually or in the aggregate, are materially adverse to the
business, operation or condition (financial or otherwise) of the
Assets, including, without limitation, any change or effect resulting
from any governmental action taken after the date hereof applicable
generally to the owners and operators of electric generating
facilities in the Commonwealth of Massachusetts; provided, that a
"Material Adverse Effect" shall not include (i) any change or effect
resulting from changes in the international, national, regional or
local wholesale or retail markets for electric power, (ii) any change
or effect resulting from changes in the international, national,
regional or local markets for any fuel used at the Assets, (iii) any
change or effect resulting from changes in the North American,
national, regional or local electric transmission or distribution
systems, (iv) any change or effect the adverse impact of which is
cured (including by the payment of money) by the Seller before the
Termination Date, (v) any change or effect on the Assets affecting
only the Seller and not the Buyer or the value of the Assets to the
Buyer, or (vi) any change or effect on the Assets resulting solely
from the Federal or state regulatory status of the Buyer or any of its
Affiliates.
(32) "MDTE" means the Massachusetts Department of
Telecommunications and Energy.
(33) "Operating Permits" means those permits, licenses and
other governmental authorizations that are necessary to operate the
Assets as owned and operated by the Seller as of the date of this
Agreement and which are listed on Schedule 1.1(a)(31).
(34) "Permitted Encumbrances" means (i) those Encumbrances
set forth in Schedule 1.1(a)(34); (ii) those exceptions to title to
the Assets listed in Schedule 5.8; (iii) all exceptions, restrictions,
easements, charges, rights of way and monetary and non-monetary
encumbrances which are matters of record as of the effective date of
the Specimen Title Policies or are set forth in an applicable FERC
project license, or Department of the Army, Army Corps of Engineers
license or Commonwealth of Massachusetts, Department of Environmental
Protection Waterways license except for such encumbrances which secure
indebtedness; (iv) with respect to any date before the Closing Date,
Encumbrances created by the Indentures; (v) Encumbrances incurred in
connection with the Seller's purchase of properties or assets after
the date of the Balance Sheets securing all or a portion of the
purchase price therefor; provided that the aggregate amount of
obligations secured by such assets does not exceed $500,000); (vi)
statutory liens for current taxes or assessments not yet due or
delinquent or the validity of which is being contested in good faith
by appropriate proceedings; provided that the aggregate amount being
so contested does not exceed $500,000; (vii) mechanics', carriers',
workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to obligations as to which
there is no default on the part of the Seller or the validity of which
are being contested in good faith by appropriate proceedings; provided
that the aggregate amount of the obligations underlying such liens
does not exceed $500,000; (viii) zoning, entitlement, conservation
restriction and other land use and environmental regulations by
governmental authorities; provided that the foregoing do not
materially interfere with the current use of the Assets; and (ix) and
such other liens, imperfections in or failure of title, charges,
easements, restrictions and encumbrances which do not materially
detract from the value of the Assets as currently used or materially
interfere with the present use of the Assets and do not, in the
aggregate, have a Material Adverse Effect.
(35) "Person" means any individual, a partnership, a
limited liability company, a joint venture, a corporation, a trust, an
unincorporated organization and a governmental entity or any
department or agency thereof.
(36) "Related Agreements" means the Interconnection
Agreements and the Transition Agreement.
(37) "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, leach, dump or allow to
escape into or through air, water or soil, or otherwise into or
through the environment.
(38) "SEC" means the Securities and Exchange Commission.
(39) "Securities Act" means the Securities Act of 1933, as
amended.
(40) "Seller's Agreements" means the Wyman Agreements and
those agreements listed on Schedule 5.14(a) or described in Section
5.14(a)(iii).
(41) "Specimen Title Policies" means the proposed forms of
title insurance policies included as Schedule 5.12(i) hereto.
(42) "Standard Offer Service" means the electric service
required to be provided by a Massachusetts retail electric
distribution company to certain retail customers who do not elect to
purchase electricity from an alternative supplier.
(43) "Subsidiary" when used in reference to any other
Person means any entity of which outstanding securities having
ordinary voting power to elect a majority of the Board of Directors or
other Persons performing similar functions of such entity are owned
directly or indirectly by such other Person.
(44) "Tax Return" means any return, report, information
return or other document (including any related or supporting
information) required to be supplied to any authority with respect to
Taxes.
(45) "Taxes" means all taxes, charges, fees, levies,
penalties or other assessments imposed by any United States federal,
state or local or foreign taxing authority, including, but not limited
to, income, gross receipts, license, stamp, occupancy, water, excise,
property, sales, transfer, use, franchise, payroll, unemployment,
withholding, social security or any other taxes of any kind
whatsoever, including any interest, penalties or additions
attributable thereto.
(46) "Transition Agreement" means the Wholesale Transition
Service Agreement of even date herewith, between the Buyer and the
Seller, in the form of Exhibit F hereto.
(47) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(b) Each of the following terms has the meaning specified
in the Section set forth opposite such term:
Term Section
Adjustment Amount 3.2(a)
Adjustment Statement 3.2(a)
Assumed Liabilities 2.3
Balance Sheet(s) 5.5
Benefit Plan 7.10(a)
Buyer Recitals
Buyer Required Regulatory
Approvals 6.3(b)
Capital Improvement Amount 3.1
Closing 4.1
Closing Amount 4.2
Closing Date 4.1
Conditions 4.1
Direct Claim 9.1(d)
Employee(s) 7.10
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1 (c)
Indemnifiable Loss 9.1(a)
Indemnifying Party 9.1(d)
Indemnitee 9.1(c)
Independent Appraiser 3.3
Inventory Adjustment Amount 3.2(a)
Purchase Price 3.1
Real Estate 5.12
Seller Recitals
Seller Required Regulatory
Approvals 5.3(b)
Termination Date 10.1(b)
Wyman Agreements 1.1(a)(2)
Wyman Assets 1.1(a)(2)
ARTICLE II.
PURCHASE AND SALE
2.1. The Sale. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the
Closing, the Seller will sell, assign, convey, transfer and deliver to
the Buyer, and the Buyer will purchase and acquire from the Seller,
free and clear of all Encumbrances (except for Permitted Encumbrances)
all of the Seller's right, title and interest in, to and under the
Assets.
2.2. Excluded Assets. Notwithstanding any provision herein
to the contrary, the Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, cash equivalents, bank deposits, accounts
receivable, and any income, sales, payroll or other tax
receivables;
(b) certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, interests in joint
ventures, partnerships, limited liability companies and other
entities;
(c) the names "Commonwealth Energy System," "COM/Energy,"
"COM/Electric," "Commonwealth Electric Company," "Canal Electric
Company," "Cambridge Electric Light Company," or any related or
similar trade names, trademarks, service marks or logos;
(d) the transmission, distribution, substation and
communication facilities and related support equipment that are
generally located at or adjacent to the Martha's Vineyard Diesels
and belonging to the Seller and utilized in the electric
transmission and distribution businesses of the Seller as
identified in the diagrams attached as Exhibits E-1 and E-2 to
the Interconnection Agreements;
(e) any refund or credit (i) related to real or personal
property Taxes paid prior to the Closing Date in respect of the
Assets, whether such refund is received as a payment or as a
credit against future real or personal property Taxes payable, or
(ii) arising under any Seller's Agreement and relating to a
period before the Closing Date;
(f) the other rights and assets, if any, described or
referred to in Schedule 2.2(f).
2.3. Assumed Liabilities. On the Closing Date, the Buyer
shall deliver to the Seller the Assumption Agreement, pursuant to
which the Buyer shall assume and agree to discharge all of the
liabilities and obligations of the Seller which relate to the Assets,
other than the Excluded Liabilities, in accordance with the respective
terms and subject to the respective conditions thereof, including,
without limitation, the following liabilities and obligations;
(i) all liabilities and obligations of the Seller under (a)
the Seller's Agreements, the real property leases, and the
Operating Permits in accordance with the terms thereof, (b) the
contracts, leases and other agreements entered into by the Seller
with respect to the Assets which would be required to be
disclosed on Schedule 5.14(a) but for the exception provided in
clause (iii) of Section 5.14(a) of this Agreement, in accordance
with the terms thereof, and (c) the contracts, leases and other
agreements entered into by the Seller with respect to the Assets
after the date hereof consistent with the terms of this Agreement
(including, without limitation, agreements with respect to
liabilities for real or personal property Taxes on any of the
Assets entered into by the Seller and any local governmental
authority); except in each case, to the extent such liabilities
and obligations, but for a breach or default by the Seller, would
have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such
breach or default;
(ii) all liabilities and obligations associated with the
Assets in respect of Taxes for which the Buyer is liable pursuant
to Section 7.8;
(iii) any liabilities and obligations associated with the
Assets for which the Buyer has indemnified the Seller pursuant to
Section 9.1(b);
(iv) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the
common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued,
arising as a result of or in connection with (a) any violation or
alleged violation of Environmental Law, prior to the Closing
Date, with respect to the ownership or operation of the Assets;
(b) loss of life, injury to persons or property or damage to
natural resources (whether or not such loss, injury or damage
arose or was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date), caused (or allegedly
caused) by the presence or Release of Hazardous Substances at,
on, in, under, adjacent to or migrating from the Assets prior to
the Closing Date, including, but not limited to, Hazardous
Substances contained in building materials at the Assets or in
the soil, surface water, sediments, groundwater, landfill cells,
or in other environmental media at or adjacent to the Assets; and
(c) the investigation and/or remediation (whether or not such
investigation or remediation commenced before the Closing Date or
commences after the Closing Date) of Hazardous Substances that
are present or have been Released prior to the Closing Date at,
on, in, under, adjacent to or migrating from the Assets,
including, but not limited to, Hazardous Substances contained in
building materials at the Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental
media at or adjacent to the Assets; provided, as to all of the
above, that nothing set forth in this subsection shall require
the Buyer to assume any liabilities that are expressly excluded
in Section 2.4; and
(v) (a) any Tax relating to any period after the Closing
Date that may be imposed by any state or local governmental
authority on the ownership, sale, operation or use of the Assets
relating to any period after the Closing Date, (b) real or
personal property Taxes relating to any period after the Closing
Date and (c) Permitted Encumbrances.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following
liabilities or obligations:
(i) any liabilities or obligations of the Seller in respect
of any Excluded Assets or other assets of the Seller which are
not Assets;
(ii) any liabilities or obligations in respect of Taxes for
which the Seller is liable pursuant to Section 7.8;
(iii) any liabilities, obligations, or responsibilities
relating to the disposal, storage, transportation, discharge,
Release or recycling, by or for the Seller, of Hazardous
Substances at any off-site location, which occurred prior to the
Closing Date, provided that "off-site location" does not include
any location contaminated by Hazardous Substances migrating from
or to the Assets;
(iv) any liabilities or obligations which are or would be
required to be accrued by the Seller on a balance sheet of the
Seller as of the Closing Date prepared in accordance with
generally accepted accounting principles;
(v) any liabilities or obligations relating to any personal
injury, discrimination, wrongful discharge, unfair labor practice
or similar claim or cause of action which relate to the ownership
or operation by the Seller of the Assets prior to the Closing
Date;
(vi) any liabilities or obligations of the Seller or any
ERISA Affiliate of the Seller under any Benefit Plan of the
Seller or any ERISA Affiliate of the Seller covering any
employees of the Seller or any ERISA Affiliate of the Seller,
including, without limitation, any liabilities or obligations
under the Consolidated Omnibus Reconciliation Act of 1985, as
amended;
(vii) any liability of the Seller arising out of a breach by
the Seller of any of its obligations under this Agreement or any
Related Agreement or the Seller Agreement;
(viii) any fines or penalties imposed by governmental
agencies resulting from an investigation or proceeding pending
prior to the Closing; or illegal acts, willful misconduct or
gross negligence of the Seller prior to the Closing, other than
with respect to the liabilities described in Sections 2.3(v) and
(vi);
(ix) any payment obligations of the Seller for goods
delivered or services rendered prior to the Closing, other than
such obligations with respect to capital improvements to the
Martha's Vineyard Diesels or the Wyman Assets which would have
been included in the Capital Improvement Amount had such payment
obligations been expended by or for the account of the Seller
prior to the Closing;
(x) any liabilities or obligations imposed upon, assumed or
retained by the Seller or any of its Affiliates pursuant to any
Related Agreement;
(xi) any liabilities or obligations of the Seller resulting
from entering into or performing its obligations pursuant to or
consummating the transactions contemplated herein or in any
Related Agreement;
(xii) any obligations for wages, overtime, employment taxes,
severance pay, transition payments in respect of compensation or
similar benefits accruing or arising prior to the Closing under
any term or provision of any contract, instrument or agreement
relating to any of the Assets, other than such obligations with
respect to capital improvements to the Martha's Vineyard Diesels
or the Wyman Assets, which would have been included in the
Capital Improvement Amount had such payment obligations been
expended by or for the account of the Seller prior to the
Closing; and
(xiii) any liabilities or obligations of the Seller arising
from the breach by the Seller on or prior to the Closing of any
term or provision of any contract, instrument or agreement
relating to any of the Assets.
All such liabilities and obligations not being assumed
pursuant to Section 2.4 are herein called the "Excluded Liabilities."
2.5. Guaranty. Certain obligations of the Buyer hereunder
shall be guaranteed by the Guarantor pursuant to the form of Guaranty
attached hereto as Exhibit G.
ARTICLE III.
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Assets
shall be an amount equal to (a) the sum of (i) $608,000, plus (ii)
the Adjustment Amount, plus (iii) any amounts expended by the Seller
under Section 7.4(d) hereof, plus (iv) any Capital Improvement Amount
(the "Purchase Price"). For purposes hereof, the Capital Improvement
Amount shall be any amounts expended by Seller between the date hereof
and the Closing for capital improvements to the Assets, provided, that
no such amounts shall be added to the Purchase Price unless the
capital improvements relating thereto were required to be made by Good
Utility Practice, and unless the Seller shall first have advised Buyer
in writing of the capital improvements proposed to be made and Buyer
shall have consented thereto in writing, which consent Buyer shall not
unreasonably withhold.
3.2. Purchase Price Adjustment. (a) Within 30 days after
the Closing, the Seller shall prepare and deliver to the Buyer a
statement (an "Adjustment Statement") which (i) reflects the net book
value, as reflected on the books of the Seller as of the Closing Date,
of all fuel inventory used at or in connection with the Assets (the
"Adjustment Amount") and (ii) the Capital Improvement Amount. The
Adjustment Statement shall be prepared using the same generally
accepted accounting principles, policies and methods as the Seller has
historically used in connection with the calculation of the items
reflected on such Adjustment Statement. The Buyer agrees to cooperate
with the Seller in connection with the preparation of each Adjustment
Statement and related information, and shall provide to the Seller
such books, records and information as may be reasonably requested
from time to time.
(b) The Buyer may dispute the Adjustment Amount or the
Capital Improvement Amount; provided, however, that the Buyer shall
notify the Seller in writing of the disputed amount, and the basis of
such dispute, within ten (10) Business Days of the Buyer's receipt of
the Adjustment Statement. In the event of a dispute with respect to
any part of the Adjustment Amount or the Capital Improvement Amount,
the Buyer and the Seller shall attempt to reconcile their differences
and any resolution by them as to any disputed amounts shall be final,
binding and conclusive on the parties. If the Buyer and the Seller
are unable to reach a resolution of such differences within 30 days of
receipt of the Buyer's written notice of dispute to the Seller, the
Buyer and the Seller shall submit the amounts remaining in dispute for
determination and resolution to the Independent Accounting Firm, which
shall be instructed to determine and report to the parties, within 30
days after such submission, upon such remaining disputed amounts, and
such report shall be final, binding and conclusive on the parties
hereto with respect to the amounts disputed. The fees and
disbursements of the Independent Accounting Firm shall be allocated
between the Buyer and the Seller so that the Buyer's share of such
fees and disbursements shall be in the same proportion that the
aggregate amount of such remaining disputed amounts so submitted by
the Buyer to the Independent Accounting Firm that is unsuccessfully
disputed by the Buyer (as finally determined by the Independent
Accounting Firm) bears to the total amount of such remaining disputed
amounts so submitted by the Buyer to the Independent Accounting Firm.
The parties shall at their own cost and expense cooperate with the
Independent Accounting Firm, provide the Independent Accounting Firm
with such books, records and information and make available to the
Independent Accounting Firm its personnel associated therewith as may
be reasonably requested from time to time.
(c) Within ten (10) Business Days after the Buyer's receipt
of the Adjustment Statement, the Buyer shall pay all undisputed
amounts, or if there is a dispute with respect to any amount on such
Adjustment Statement, within five (5) Business Days after the final
determination of such disputed amounts, the Buyer shall pay such
disputed amount as finally determined to be payable with respect to
such Adjustment Statement, less (y) the Estimated Adjustment Amount;
provided, however, that if such amount shall be less than zero then
the Seller will pay to the Buyer the amount by which such amount is
less than zero. Any amount paid under this Section 3.2(c) shall be
paid with interest for the period commencing on the Closing Date,
through the date of payment, calculated at the prime rate of
BankBoston in effect on such Closing Date, and in cash by federal or
other wire transfer of immediately available funds.
3.3. Allocation of Purchase Price. The Buyer and the Seller
shall use their good faith efforts to agree to allocate the Purchase
Price among the items constituting the Assets within 45 days of the
date of this Agreement. The Buyer or the Seller may obtain the
services of a mutually acceptable independent engineer or appraiser to
assist it in determining the fair value of the Assets for purposes of
such allocation, the cost of which shall be borne equally by the
parties. Each of the Buyer and the Seller agrees to file Internal
Revenue Service Form 8594, and all federal, state, local and foreign
Tax Returns, in accordance with any allocation agreed to pursuant to
this Section 3.3, and to report the transactions contemplated by the
Agreement for federal Income Tax and all other tax purposes in a
manner consistent with any such agreed-upon allocation. Each of the
Buyer and the Seller agrees to provide the other promptly with any
other information required to complete Form 8594. Each of the Buyer
and the Seller shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding
regarding any agreed-upon allocation of the Purchase Price.
3.4. Proration. (a) The Buyer and the Seller agree that all
of the items normally prorated, including those listed below, relating
to the business and operation of the Assets will be prorated as of the
Closing Date, with the Seller liable to the extent such items relate
to any time period through the Closing Date, and the Buyer liable to
the extent such items relate to periods subsequent to the Closing
Date:
(i) personal property, real estate, occupancy and water
Taxes, assessments and other charges, if any, on or with respect
to the business and operation of the Assets;
(ii) rent, Taxes and other items payable by or to the Seller
under any of the Seller's Agreements assigned to and assumed by
the Buyer hereunder which are associated with the Assets;
(iii) any permit, license, registration, compliance
assurance fees or other fees with respect to any Operating Permit
associated with the Assets;
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with the prorations referred to in (a)
above, in the event that actual figures are not available at the
Closing Date, the proration shall be based upon the actual Taxes or
fees for the preceding year (or appropriate period) for which actual
Taxes or fees are available and such Taxes or fees shall be reprorated
upon request of either the Seller, on the one hand, or the Buyer, on
the other hand, made within sixty (60) days of the date that the
actual amounts become available. The Seller and the Buyer agree to
furnish each other with such documents and other records as may be
reasonably requested in order to confirm all adjustment and proration
calculations made pursuant to this Section 3.4.
ARTICLE IV.
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject
to the satisfaction of the conditions contained in Article VIII of
this Agreement (the "Conditions"), the closing of the sale of the
Assets contemplated by this Agreement (the "Closing") will take place
at the offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 260 Franklin
Street, Boston, Massachusetts 02110, at 10:00 A.M. (local time) on
such date, not earlier than November 15, 1998, as the parties may
agree which date is as soon as practicable, but no later than fifteen
Business Days, following the date on which all of the Conditions have
been satisfied or waived; or at such other place or time as the
parties may agree. The date and time at which the Closing actually
occurs is hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. Upon the terms and subject
to the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer
and delivery of the Assets, the Buyer will pay or cause to be paid to
the Seller at the Closing an amount in United States dollars equal to
the sum of (i) $608,000, plus (ii) the Estimated Adjustment Amount,
plus (iii) any amounts expended by the Seller pursuant to Section
7.4(d) hereof (the "Closing Amount"), by wire transfer of immediately
available funds or by such other means as are agreed upon by the
Seller and the Buyer. The balance of the Purchase Price, or,
alternatively, any amounts owing by the Seller to the Buyer, in each
case determined in accordance with Section 3.2 hereof, shall be paid
in accordance with such Section 3.2.
4.3. Deliveries by the Seller. At the Closing, the Seller
will deliver the following to the Buyer:
(a) The Bill of Sale, duly executed by the Seller;
(b) All consents, waivers or approvals obtained by the
Seller as of the Closing with respect to the Assets, the transfer of
the Operating Permits or the consummation of the transactions
connected to the sale of the Assets contemplated by this Agreement, to
the extent specifically required hereunder;
(c) Each Related Agreement duly executed by Seller;
(d) An opinion of counsel and certificate (as contemplated
by Section 8.2(d) and 8.2(e)) with respect to the Assets;
(e) The Deed and Assignment of Lease duly executed and
acknowledged by the Seller and in recordable form;
(f) The FIRPTA Affidavit executed by the Seller;
(g) All such other instruments of assignment or conveyance
as shall, in the reasonable opinion of the Buyer and its counsel, be
necessary to transfer to the Buyer the 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 the Seller at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
4.4. Deliveries by the Buyer. At the Closing, the Buyer
will deliver the following to the Seller:
(a) The Closing Amount, by wire transfer of immediately
available funds or such other means as are agreed upon by the Seller
and the Buyer;
(b) The Assumption Agreement duly executed by the Buyer;
(c) Each Related Agreement duly executed by the Buyer;
(d) An opinion of counsel and certificate (as contemplated
by Section 8.3(c) and 8.3(e)) with respect to the Assets;
(e) All such other instruments of assumption as shall, in
the reasonable opinion of the Seller and its counsel, be necessary for
the Buyer to assume the Assumed Liabilities, in accordance with this
Agreement; and
(f) Such other agreements, documents, instruments and
writings as are required to be delivered by the Buyer at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows;
provided, that with respect to the Wyman Assets, the Buyer only makes
the representations set forth in Sections 5.1, 5.2, 5.3, 5.4, 5.5,
5.6, 5.7, 5.8 and 5.14 (all such representations and warranties,
except those regarding the Seller, being made to the best knowledge of
the Seller; for purposes hereof, the "best knowledge" of the Seller
shall mean that knowledge which the members of the Seller's management
had or should have had following the conduct of an appropriate due
diligence investigation with respect to the matter in question).
5.1. Organization; Qualification. The Seller is a
corporation duly organized, validly existing and is in good standing
under the laws of the Commonwealth of Massachusetts and has all
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as is now being conducted.
The Seller is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in each
case in those jurisdictions where the failure to be so duly qualified
or licensed and in good standing would not have a Material Adverse
Effect. The Seller has heretofore delivered to the Buyer complete and
correct copies of its Articles of Organization and Bylaws as currently
in effect.
5.2. Authority Relative to this Agreement. The Seller has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of the Seller and no other corporate
proceedings on the part of the Seller are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the
Seller, and assuming that this Agreement constitutes a valid and
binding agreement of the Buyer, and subject to the receipt of the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, constitutes a valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally or general principles of
equity.
5.3. Consents and Approvals; No Violation. (a) Other than
obtaining the Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals, neither the execution and delivery nor
the performance of this Agreement by the Seller will (i) conflict with
or result in any breach of any provision of the Articles of
Organization or Bylaws of the Seller, (ii) require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except (x) where the
failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not have a Material Adverse
Effect or (y) for those requirements which become applicable to the
owner of the Assets as a result of the specific regulatory status of
the Buyer (or any of its Affiliates) or as a result of any other facts
that specifically relate to the business or activities in which the
Buyer (or any of its Affiliates) is or proposes to be engaged; (iii)
result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which the Seller is a party or by
which the Seller or any of the Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as
to which requisite waivers or consents have been obtained or which, in
the aggregate, would not have a Material Adverse Effect; or (iv)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Seller, or any of its assets, which
violation would have a Material Adverse Effect.
(b) Except for (i) the approvals under the Federal Power
Act for the transactions contemplated by this Agreement and the
Related Agreements listed in Schedule 5.3 hereto, (ii) orders by the
MDTE approving the transactions contemplated by this Agreement and the
Related Agreements and (iii) the filings by the Seller and the Buyer
required by the HSR Act and the expiration or earlier termination of
all waiting periods under the HSR Act (the filings and approvals
referred to in clauses (i) through (iii) are collectively referred to
as the "Seller Required Regulatory Approvals"), no declaration, filing
or registration with, or notice to, or authorization, consent or
approval of any governmental or regulatory body or authority is
necessary for the execution, delivery and performance of this
Agreement by the Seller or for the consummation by the Seller of the
transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals
which, if not obtained or made, will not, in the aggregate, have a
Material Adverse Effect.
5.4. Reports. Since January 1, 1995, the Seller has filed
or caused to be filed, or will, prior to the Closing, file or cause to
be filed with the SEC, the MDTE, and the FERC, as the case may be, all
material forms, statements, reports and documents (including all
exhibits, amendments and supplements thereto) required to be filed by
it with respect to the business and operations of the Seller as it
relates to the Assets under each of the Securities Act, the Exchange
Act, applicable Massachusetts public utility laws, the Federal Power
Act, and the Price-Anderson Act and the respective rules and
regulations thereunder, all of which complied in all material respects
with all applicable requirements of the appropriate act and the rules
and regulations thereunder in effect on the date each such report was
filed, and there are no material misstatements or omissions in respect
of such reports.
5.5. Financial Statements. The Seller has made available to
the Buyer its balance sheet, as of December 31, 1997. Such balance
sheet (including the related notes thereto) is referred to herein as
the "Balance Sheet." The Balance Sheet presents fairly, as of
December 31, 1997, the financial position of the Seller in conformity
with generally accepted accounting principles applied on a consistent
basis, except as otherwise noted therein.
5.6. Undisclosed Liabilities. Except as set forth in
Schedule 5.6, the Seller has no liability or obligation relating to
the business or operations of the Assets, secured or unsecured
(whether absolute, accrued, contingent or otherwise, and whether due
or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved
against in the Balance Sheet or disclosed in the notes thereto in
accordance with generally accepted accounting principles, except those
which either (i) were incurred in the ordinary course of business
whether before or after the date of the Balance Sheet, or (ii) are not
in the aggregate material to the Assets, or (iii) are Excluded
Liabilities.
5.7. Absence of Certain Changes or Events. Except (i) as
set forth in Schedule 5.7, or in the reports, schedules, registration
statements and definitive proxy statements filed by either of the
Seller or Commonwealth Energy System with the SEC and (ii) as
otherwise contemplated by this Agreement, since the date of the
Balance Sheet there has not been: (a) any Material Adverse Effect; (b)
any damage, destruction or casualty loss, whether covered by insurance
or not, which had a Material Adverse Effect; (c) any entry into any
agreement, commitment or transaction (including, without limitation,
any borrowing, capital expenditure or capital financing) by the
Seller, which is material to the business or operations of the Assets,
except agreements, commitments or transactions in the ordinary course
of business or as contemplated herein; or (d) any change by the Seller
in accounting methods, principles or practices except as required or
permitted by generally accepted accounting principles.
5.8. Title and Related Matters. Except as set forth in
Schedule 5.8 and except for Permitted Encumbrances, the Seller has
marketable record title to the Oak Bluffs Real Estate as specified in
the Specimen Title Policy with respect thereto. Except as set forth
in Schedule 5.8 and except for Permitted Encumbrances, the Seller has
good and valid title to the other Assets which it purports to own that
are reflected in the Balance Sheet (other than those which have been
disposed of since the date thereof in the ordinary course of
business), free and clear of all Encumbrances. None of the Permitted
Encumbrances materially adversely affect the existing use of the Real
Estate.
5.9. Leases. Schedule 5.9 lists, as of the date of this
Agreement, all real property leases under which the Seller is a lessee
or lessor and which (x) are to be transferred and assigned to the
Buyer on the Closing Date, and (y) (i) provide for annual payments of
more than $500,000 or (ii) are material to the business, operations or
financial condition of the Assets. Except as set forth in Schedule
5.9, all such leases are valid, binding and enforceable in accordance
with their terms, and are in full force and effect; there are no
existing material defaults by the Seller thereunder; and no event has
occurred which (whether with or without notice, lapse of time or both)
would constitute a material default by the Seller thereunder.
5.10. Insurance. Except as set forth in Schedule 5.10,
all material policies of fire, liability, workers' compensation and
other forms of insurance owned or held by and insuring the Assets are
in full force and effect, all premiums with respect thereto covering
all periods up to and including the date as of which this
representation is being made have been paid (other than retroactive
premiums which may be payable with respect to comprehensive general
liability and workers' compensation insurance policies), and no notice
of cancellation or termination has been received with respect to any
such policy which was not replaced on substantially similar terms
prior to the date of such cancellation. Except as described in
Schedule 5.10, as of the date of this Agreement, the Seller has not in
the prior twelve month period been refused any insurance with respect
to the Assets nor has its coverage been limited by any insurance
carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve months.
5.11. Environmental Matters. Except as disclosed in
Schedule 5.11 or in any public filing by any of the Seller or
Commonwealth Energy System pursuant to the Securities Act or the
Exchange Act:
(a) The Seller as of the date of this Agreement is in
compliance with applicable Environmental Laws with respect to the
business and operation of the Assets except for such failures to be in
compliance with applicable Environmental Laws, which, in the
aggregate, are not reasonably likely to have a Material Adverse
Effect;
(b) The Seller has not received any written request for
information, or been notified that it is a potentially responsible
party under CERCLA or Chapter 21E of the Massachusetts General Laws
with respect to any portion of the Assets that has not been resolved
or settled, except for such liability under such laws as would not be
reasonably likely to have a Material Adverse Effect; and
(c) The Seller has not entered into or agreed to any
consent decree or order, and is not subject to any judgment, decree,
or judicial order relating to compliance with any Environmental Law
with respect to the Assets, except for such consent decrees, orders or
judgments that, in the aggregate, would not be reasonably likely to
have a Material Adverse Effect.
The representations and warranties made in this Section
5.11, and in Section 5.18 with respect to Operating Permits, are the
Seller's exclusive representations and warranties relating to
environmental matters.
5.12. Real Estate. The Specimen Title Policies included
herewith as Schedule 5.12(i) contain a description of, and exhibits
indicating the location of, the real property owned or leased by the
Seller and included in the Assets (the "Real Estate"). Copies of the
plans with respect to the Real Estate identified on Schedule 5.12(ii)
have heretofore been delivered by the Seller to the Buyer.
5.13. Condemnation. Except as set forth in Schedule
5.13, neither the whole nor any part of the Real Estate or any other
real property or rights leased, used or occupied by the Seller in
connection with the ownership or operation of the Assets is subject to
any pending suit for condemnation or other taking by any public
authority, and no such condemnation or other taking has been
threatened.
5.14. Certain Contracts and Arrangements. (a) Except
(i) as listed in Schedules 5.9 or 5.14(a), (ii) for contracts,
agreements, personal property leases, commitments, understandings or
instruments which will expire prior to the Closing Date, (iii) for
agreements with suppliers entered into in the ordinary course of
business, and (iv) for the Wyman Agreements, the Seller is not a party
to any written contract, agreement, personal property lease,
commitment, understanding or instrument which is material to the
business or operation of the Assets.
(b) Except as disclosed in Schedule 5.14(b), each of the
Seller's Agreements (i) constitutes a valid and binding obligation of
the Seller and of the other parties thereto, and (ii) is in full force
and effect.
(c) Except as set forth in Schedule 5.14(c), there is not,
under any of the Seller's Agreements, any default or event which, with
notice or lapse of time or both, would constitute a default on the
part of the Seller, except, with respect to the Seller's Agreements
only, such events of default and other events as to which requisite
waivers or consents have been obtained or which would not, in the
aggregate, have a Material Adverse Effect.
5.15. Legal Proceedings, etc. Except as set forth in
Schedule 5.15 or in any filing made by Commonwealth Energy System or
the Seller pursuant to the Securities Act or the Exchange Act, there
are no claims, actions, proceedings or investigations pending or
threatened against or relating to the Seller before any court,
governmental or regulatory authority, arbitration panel or body acting
in an adjudicative capacity, which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect either singly or
in the aggregate. Except as set forth in Schedule 5.15 or in any
filing made by Commonwealth Energy System or the Seller pursuant to
the Securities Act or the Exchange Act, the Seller is not subject to
any outstanding judgments, rules, orders, writs, injunctions or
decrees of any court or governmental or regulatory authority which
individually or in the aggregate have a Material Adverse Effect.
5.16. Operating Permits. (a) The Seller has all the
Operating Permits, except where the failure to have such Operating
Permits is not reasonably likely to have a Material Adverse Effect.
Except as set forth in Schedule 5.11, the Seller has not received any
written notification that it is in violation of any of such Operating
Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority
applicable to the Seller, except for notifications of violations which
would not, in the aggregate, be reasonably likely to have a Material
Adverse Effect. The Seller is in substantial compliance with all
Operating Permits, laws, statutes, orders, rules, regulations,
ordinances, or judgments of any governmental or regulatory body or
authority applicable to it, except for violations which, in the
aggregate, do not have or are not reasonably likely to have a Material
Adverse Effect.
(b) Schedule 1.1(a)(31) sets forth all Operating Permits.
5.17. Regulation as a Utility. The Seller is an
"electric company" within the meaning of Chapter 164 of the
Massachusetts General Laws, and a "public utility company" within the
meaning of the Holding Company Act.
5.18. Taxes. With respect to the Assets (i) all Tax
Returns required to be filed other than those Tax Returns the failure
of which to file would not have a Material Adverse Effect have been
filed, and (ii) all material Taxes shown to be due on such Tax Returns
have been paid in full. Except as set forth in Schedule 5.18, no
notice of deficiency or assessment has been received from any taxing
authority with respect to liabilities for Taxes of the Seller in
respect of the Assets, which have not been fully paid or finally
settled, and any such deficiency shown in such Schedule 5.18 is being
contested in good faith through appropriate proceedings. Except as
set forth in Schedule 5.18, there are no outstanding agreements or
waivers extending the applicable statutory periods of limitation for
Taxes associated with the Assets for any period. None of the Assets
is property that is required to be treated as being owned by any other
person pursuant to the so-called safe harbor lease provisions of
former Section 168(f)(8) of the Code, and none of the Assets is "tax-
exempt use" property within the meaning of Section 168(h) of the Code.
5.19. Entire Assets. Except as expressly set forth in
Schedule 5.19, the Assets (including Real Estate), but excluding the
Wyman Assets, include all of the material assets or properties that,
individually or in the aggregate, are used in, or are necessary for,
the operation of the Martha's Vineyard Diesels.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH
IN THIS ARTICLE V, THE ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS,
WHERE IS," AND THE SELLER IS NOT MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING
SUCH ASSETS, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY
EXCLUDED AND DISCLAIMED.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
6.1. Organization. The Buyer 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
business as is now being conducted. The Buyer has heretofore
delivered to the Seller complete and correct copies of its Certificate
of Organization and LLC Operating Agreement (or other similar
governing documents), as currently in effect.
6.2. Authority Relative to this Agreement. The Buyer has
full power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Members of the Buyer and no other proceedings on the part of the Buyer
are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Buyer, and assuming that this
Agreement constitutes a valid and binding agreement of the Seller,
subject to the receipt of the Buyer Required Regulatory Approvals and
the Seller Required Regulatory Approvals, constitutes a valid and
binding agreement of the Buyer, enforceable against the Buyer in
accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
6.3. Consents and Approvals: No Violation. (a) Except as
set forth in Schedule 6.3, and other than obtaining the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals,
neither the execution and delivery of this Agreement by the Buyer nor
the purchase by the Buyer of the Assets pursuant to this Agreement
will (i) conflict with or result in any breach of any provision of the
Certificate of Organization and LLC Operating Agreement (or other
similar governing documents) of the Buyer, (ii) require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, (iii) result in a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, agreement, lease or other instrument
or obligation to which the Buyer or any of its subsidiaries is a party
or by which any of their respective assets may be bound, except for
such defaults (or rights of Termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained.
(b) Except (i) as set forth in Schedule 6.3 and (ii) for
the filings by the Buyer and the Seller required by the HSR Act and
the expiration or earlier termination of all waiting periods under the
HSR Act (the filings and approvals referred to in clauses (i) and (ii)
are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental or
regulatory body or authority is necessary for the consummation by the
Buyer of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, in the aggregate, would not have a
material adverse effect on any of the Buyer's material obligations
hereunder.
6.4. Availability of Funds. The Buyer has sufficient funds
available to it or has received or will receive prior to the Closing
binding written commitments from responsible financial institutions to
provide sufficient funds on the Closing Date to pay the Purchase
Price.
6.5 Independent Evaluation. The Buyer has been afforded
an opportunity by the Seller to conduct an investigation of the
Assets, including, without limitation, the opportunity to review the
environmental reports and analyses with respect to the Assets
described in Schedule 5.11, the opportunity to conduct a physical
inspection of the Assets, and the opportunity to discuss matters with
respect to the Assets with officers and employees of, and advisors and
consultants to, the Seller, including the Seller's environmental
consultants, and has conducted an independent evaluation of the Assets
based upon the results of such investigation. The Buyer has not
relied upon any representations or warranties with respect to the
Assets other than those specifically set forth herein.
ARTICLE VII.
COVENANTS OF THE PARTIES
7.1. Conduct of Business. Except as described in Schedule
7.1, during the period from the date of this Agreement to the Closing
Date, the Seller will operate the Assets according to its ordinary and
usual course of business consistent with Good Utility Practice.
Without limiting the generality of the foregoing, and, except as
contemplated in this Agreement or as described in Schedule 7.1, prior
to the Closing Date, without the prior written consent of the Buyer,
the Seller will not with respect to the Assets:
(i) (x) create, incur or assume any amount of
indebtedness for money borrowed (including obligations in respect
of capital leases), other than in the ordinary course of business
and except for Permitted Encumbrances and indebtedness which does
not create any Encumbrance on the Assets; or (y) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations
of any other Person except in the ordinary course of business;
(ii) make any material change in the levels of fuel
inventory and stores inventory customarily maintained by the
Seller with respect to the Assets except for such changes which
are consistent with Good Utility Practice;
(iii) sell, lease (as lessor), transfer or otherwise
dispose of, any of the Assets other than assets used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practice and not mortgage or pledge, or impose or suffer
to be imposed any Encumbrance on, any of the Assets, other than
Permitted Encumbrances;
(iv) amend any of the Seller's Agreements or enter into
any other agreements for the sale of power from the Assets having
a term of more than thirty (30) days;
(v) enter into or amend any real or personal property
Tax agreement, treaty or settlement;
(vi) enter into any commitment for the purchase or sale
of fuel (whether commodity or transportation) having a term that
extends beyond the Closing Date if the aggregate payment under
such commitment following the Closing Date is expected to exceed
$10 million or if the aggregate payments under such commitment
and all other then outstanding commitments not previously
consented to by the Buyer would be expected to exceed $30 million
following the Closing Date; or
(vii) amend any Operating Permit;
(viii) enter into any agreement or commitment with any
Affiliate that survives the Closing; or
(ix) enter into any written or oral contract,
agreement, commitment or arrangement with respect to any of the
transactions set forth in the foregoing paragraphs (i) through
(ix).
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, the Seller will, during ordinary
business hours and upon reasonable notice (i) give the Buyer and the
Buyer Representatives reasonable access to its managerial personnel
and to all books, records, plants, offices and other facilities and
properties constituting the Assets to which the Buyer is permitted
access by law; (ii) permit the Buyer to make such reasonable
inspections thereof as the Buyer may reasonably request; (iii) furnish
the Buyer with such financial and operating data and other information
with respect to the Assets in the possession of the Seller as the
Buyer may from time to time reasonably request; (iv) furnish the Buyer
a copy of each material report, schedule or other document filed or
received by the Seller or any of the Seller's Affiliates with respect
to the Assets with the SEC, MDTE, or FERC; provided, however, that (A)
any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Assets, (B) the
Seller shall not be required to take any action which would constitute
a waiver of the attorney/client privilege and (C) the Seller need not
supply the Buyer with any information which the Seller is under a
legal obligation not to supply; and (v) give the Buyer access to the
environmental reports identified in Schedule 5.11 and Operating
Permits and other permits and licenses for the Assets.
Notwithstanding anything in this Section 7.2 to the contrary, (i) the
Seller will only furnish or provide such access to personnel and
medical records as is required by law, and (ii) the Buyer shall not
have the right to perform or conduct any environmental sampling or
testing at, in, on, or underneath the Assets without the approval of
the Seller.
(b) All information furnished to or obtained by the Buyer
and the Buyer Representatives pursuant to this Section 7.2 shall be
subject to the provisions of the Confidentiality Agreement and shall
be treated as "Proprietary Information" (as defined in the Confidenti-
ality Agreement).
(c) For a period of ten years after the Closing Date, the
Seller and its representatives shall have reasonable access to all of
the books and records related to the Assets transferred to the Buyer
hereunder to the extent that such access may reasonably be required by
the Seller in connection with matters relating to or affected by the
operation of the Assets prior to the Closing Date; provided, however,
that the Seller shall first enter into a definitive confidentiality
agreement with the Buyer with respect thereto on such terms and
conditions as the Buyer may reasonably require. Such access shall be
afforded by the Buyer upon receipt of reasonable advance notice and
during normal business hours. The Seller shall be solely responsible
for any costs or expenses incurred by it pursuant to this Section
7.2(c). If the Buyer shall desire to dispose of any such books and
records prior to the expiration of such ten-year period, the Buyer
shall, prior to such disposition, give the Seller a reasonable
opportunity at the Seller's expense, to segregate and remove such
books and records as the Seller may select.
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by
the party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use its
commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and
make effective the sale of the Assets pursuant to this Agreement.
Notwithstanding anything in the previous sentence to the contrary, and
pursuant to Section 7.6(c), the Seller and the Buyer shall use their
commercially reasonable efforts to transfer the existing Operating
Permits (or to obtain reissued or new Operating Permits) to the Buyer
effective as of the Closing. From time to time after the date hereof,
without further consideration, the Seller will, at its own expense,
execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order to more effectively vest in the Buyer the
Seller's title to the Assets (as described in Section 5.8). From time
to time after the date hereof, the Buyer will, at its own expense,
execute and deliver such documents to the Seller as the Seller may
reasonably request in order to more effectively consummate the sale of
the Assets pursuant to this Agreement.
(b) In the event that any Asset shall not have been
conveyed to the Buyer at the Closing, the Seller shall, subject to
Section 7.4(d), use its best efforts to convey such asset to the Buyer
as promptly as is practicable after the Closing. In the event that
any Easement shall not have been retained by the Seller after the
Closing, the Buyer shall use its best efforts to grant such Easement
to the Seller as promptly as is practicable after the Closing.
(c) To the extent that the Seller's rights under any
Seller's Agreement may not be assigned without the consent of another
Person which consent has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and the Seller, at
its expense, shall use its commercially reasonable efforts to obtain
any such required consent(s) by the Closing. The Seller and the Buyer
agree that if any consent to an assignment of any Seller's Agreement
shall not be obtained or if any attempted assignment would be
ineffective or would impair the Buyer's rights and obligations under
the Seller's Agreement in question so that the Buyer would not in
effect acquire the benefit of all such rights and obligations, the
Seller, to the maximum extent permitted by law and such Seller's
Agreement, shall after the Closing, unless the Seller elects to comply
with Section 7.4(d) hereof, appoint the Buyer to be the Seller's agent
with respect to such Seller's Agreement, and the Seller shall, to the
maximum extent permitted by law and such Seller's Agreement, enter
into such reasonable arrangements with the Buyer as are necessary to
provide the Buyer with the benefits and obligations of such Seller's
Agreement from the Closing. The Seller and the Buyer shall cooperate
and shall each use their commercially reasonable efforts after the
Closing to obtain an assignment of such Seller's Agreement to the
Buyer.
(d) To the extent that any personal property lease relating
to any assets which are principally used by the Seller for generation
purposes at the Assets and listed in Schedule 5.14(a), cannot be
assigned to the Buyer or are not subject to arrangements described in
Section 7.4(c), the Seller will use its commercially reasonable
efforts to acquire the assets relating to such lease at market terms
and conditions and to include them in the Assets before the Closing
Date. The Seller will not commit to any such acquisition that would
require the Buyer to pay more than $100,000 individually or $500,000
in the aggregate pursuant to Sections 3.1 or 4.2 without the Buyer's
prior written consent.
(e) Performance and timing of all capital improvements,
including with respect to the planning, scope and acceptance criteria
associated with such improvements, proposed to be made by the Seller
at the Canal Station after the date of this Agreement, will be subject
to the consent of the Buyer, which consent will not be unreasonably
withheld or delayed.
(f) Commencing on the execution of this Agreement, the
Buyer shall have the right to review and provide advice in connection
with the day to day operation of the Martha's Vineyard Diesels,
including, without limitation, in connection with fuel and inventory
procurement and maintenance, and have a designated representative of
the Buyer at the Martha's Vineyard Diesels, provided, however, that
the Buyer shall not unreasonably interfere with the Seller's use of
the Assets. In the event the Buyer provides such advice, the Seller
will use commercially reasonable efforts to cooperate with such
advice, provided, however, that such efforts shall not require the
Seller to incur any additional costs or expenses, and provided
further, that the Seller shall at all times prior to the Closing
retain the right to operate the Assets in accordance with Good Utility
Practice.
(g) To the extent that any of the Seller's rights under any
guaranties, warranties and indemnifications applicable to the Assets
or the Assumed Liabilities are nontransferable or nonassignable, the
Seller shall use its commercially reasonable efforts to secure to the
Buyer the benefits thereof in some other manner (including the
exercise of the rights of the Seller thereunder) upon the request of
the Buyer. At the Buyer's written request, the Seller shall pursue
claims under such guaranties, warranties and indemnifications in such
manner and to such extent as the Buyer shall from time to time direct,
and the Seller shall cooperate with the Buyer in such pursuit,
including providing the Buyer with all applicable documentation and
making the Seller's officers, employees and agents reasonably
available for the purpose of providing evidence (by affidavit,
deposition or otherwise) in connection therewith. The Buyer shall
reimburse the Seller for all reasonable costs and expenses incurred by
the Seller in connection with such pursuit and cooperation.
Notwithstanding the foregoing, the Seller shall not be obligated to
bring or file suit against any third party, provided that if the
Seller shall determine not to bring or file suit after being so
requested by the Buyer, the Seller shall assign its rights in respect
of any such claim so that the Buyer may bring or file such suit.
7.5. Public Statements. The Parties shall consult with
each other prior to issuing any public announcement, statement or
other disclosure with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such public announcement,
statement or other disclosure prior to such consultation, except as
may be required by law and except that the parties may make public
announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent and
under the circumstances in which the Parties are expressly permitted
by the Confidentiality Agreement to make disclosures of "Proprietary
Information" (as defined in the Confidentiality Agreement).
7.6. Consents and Approvals. (a) The Seller and the Buyer
shall each file or cause to be filed with the Federal Trade Commission
and the United States Department of Justice any notifications required
to be filed under the HSR Act and the rules and regulations
promulgated thereunder with respect to the transactions contemplated
hereby. The Parties shall consult with each other as to the
appropriate time of filing such notifications and shall use their best
efforts to make such filings at the agreed upon time, to respond
promptly to any requests for additional information made by either of
such agencies, and to cause the waiting periods under the HSR Act to
terminate or expire at the earliest possible date after the date of
filing.
(b) The Seller and the Buyer shall cooperate with each
other and (i) promptly prepare and file all necessary documentation,
(ii) effect all necessary applications, notices, petitions and filings
and execute all agreements and documents, and (iii) use all
commercially reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each
of the foregoing clauses (i), (ii) and (iii), necessary or advisable
to consummate the transactions contemplated by this Agreement
(including, without limitation, the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals) or required by
the terms of any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument to which the Seller or the Buyer is a party or by which any
of them is bound or to obtain any additional governmental permits,
licenses or other consents that the Buyer considers useful in
connection with the operation or ownership of the Assets. The Seller
shall have the right to review and approve in advance all
characterizations of the information relating to Assets; and each of
the Seller and the Buyer shall have the right to review in advance all
characterizations of the information relating to the transactions
contemplated by this Agreement which appear in any filing made in
connection with the transactions contemplated hereby.
(c) Buyer shall assume primary responsibility for securing
the transfer or reissuance of the Operating Permits effective as of
the Closing Date. The Seller shall cooperate with the Buyer's efforts
in this regard and the Seller shall use all commercially reasonable
efforts to assist in the transfer or reissuance when so requested by
the Buyer. In the event that the Buyer is unable, despite
commercially reasonable efforts, to obtain a transfer or reissuance of
one or more Operating Permits as of the Closing Date, the Buyer may
use the Operating Permits issued to the Seller provided (i) the Buyer
notifies the Seller prior to Closing, (ii) the Buyer continues to make
commercially reasonable efforts to obtain a transfer or reissuance of
such Operating Permits after the Closing and (iii) the Buyer
indemnifies the Seller for any losses, claims or penalties suffered by
the Seller in connection with any Operating Permit that is not
transferred or reissued as of the Closing Date resulting from the
Buyer's operation of the Assets following the Closing Date. In no
event shall the Buyer use or otherwise rely on an Operating Permit
issued to the Seller beyond one year after Closing unless the Buyer
has, after exercising its reasonable efforts, been unable to obtain
same and such reliance is not prohibited by law.
(d) The Seller shall advise, inform and consult with the
Buyer regarding all matters which may affect in any material respect
the Buyer's ownership and operation of the Assets after the Closing or
the Assumed Liabilities. In this regard, the Seller agrees not to
enter into any agreement or arrangement with respect to the Assets
with any person, including, without limitation, with any governmental
or regulatory authority, whether in connection with the obtaining of
the Seller's Required Regulatory Approvals or otherwise, which may
reasonably be expected to cause a material adverse effect for the
Buyer or the Assets without first consulting with the Buyer and
obtaining Buyer's consent; provided, that nothing herein shall be
deemed to inhibit the Seller from doing whatever it determines to be
necessary to comply with any requirements of law applicable to it or
the Assets.
7.7. Fees and Commissions. The Seller and the Buyer each
represent and warrant to the other that, except for Goldman, Sachs &
Co., which is acting for and at the expense of the Seller, and Credit
Suisse First Boston, which is acting for and at the expense of the
Buyer, no broker, finder or other Person is entitled to any brokerage
fees, commissions or finder's fees in connection with the transaction
contemplated hereby by reason of any action taken by the party making
such representation. The Seller and the Buyer will pay to the other
or otherwise discharge, and will indemnify and hold the other harmless
from and against, any and all claims or liabilities for all brokerage
fees, commissions and finder's fees (other than as described above)
incurred by reason of any action taken by such party.
7.8. Tax Matters. (a) All transfer and sales Taxes incurred
in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Buyer, and the Buyer, at its own expense,
will file, to the extent required by applicable law, all necessary Tax
Returns and other documentation with respect to all such transfer or
sales taxes, and, if required by applicable law, the Seller will join
in the execution of any such Tax Returns or other documentation.
Prior to the Closing Date, the Seller will provide to the Buyer, to
the extent possible, an appropriate certificate of no Tax due from
each applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely
file all Tax Returns required to be filed with respect to the Assets,
if any, and shall duly and timely pay all such Taxes shown to be due
on such Tax Returns. The Buyer's preparation of any such Tax Returns
shall be subject to the Seller's approval, which approval shall not be
unreasonably withheld. The Buyer shall make such Tax Returns
available for the Seller's review and approval no later than 25
Business Days prior to the due date for filing such Tax Return.
Within 20 Business Days after receipt of such Tax Return, the Seller
shall pay to the Buyer the Seller's proportionate share of the amount
shown as due on such Tax Return determined in accordance with the
Section 3.4 of this Agreement.
(c) Each of the Buyer and the Seller shall provide the
other with such assistance as may reasonably be requested by the other
party in connection with the preparation of any Tax Return, any audit
or other examination by any taxing authority, or any judicial or
administrative proceedings relating to liability for Taxes, and each
will retain and provide the requesting party with any records or
information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8(c) or pursuant to any other Section
hereof providing for the sharing of information or review of any Tax
Return or other schedule relating to Taxes shall be kept confidential
by the parties hereto.
7.9. Supplements to Schedules; Notice of Breach. Prior to
the Closing Date, the Seller shall supplement or amend the Schedules
required by Section 2.4 and Article V with respect to any matter
relating to the Assets which was or would be required to be set forth
or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any
breach of any representation or warranty made in this Agreement unless
the parties agree thereto in writing. Each party agrees to advise the
other party promptly in writing of any matter or occurrence of which
it becomes aware which may constitute a breach by either party of any
representation, warranty or covenant contained in this Agreement, or
of any reason of which it becomes aware why a condition to the
performance of either party's obligations hereunder may not be
satisfied on or before the Closing Date.
7.10. Employees. (a) The Buyer is not required to
employ any employees of the Seller provided, that with respect to any
employee who is employed by the Buyer whose employment is terminated
by the Buyer within six months following the Closing Date, the Buyer
shall pay severance benefits at least equal to those that would have
been payable by the Seller if the employee had remained employed by
the Seller until the date of such termination, under severance plans,
policies, or agreements of the Seller in effect immediately prior to
the Closing. The Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of the Seller or any ERISA Affiliate
of the Seller or any collective bargaining agreement or memorandum of
understanding or any other labor agreement of the Seller. "Benefit
Plan" shall mean any and all deferred compensation, pension, profit
sharing and retirement plans, including multi-employer plans, welfare
benefit plans and bonus and other employee benefit or fringe benefit
plans maintained or with respect to which contributions are made by
the Seller or an ERISA Affiliate of the Seller in respect of
employees employed at the Martha's Vineyard Diesels.
(b) The Seller agrees to timely perform and discharge all
requirements under the WARN Act and under applicable state and local
laws and regulations for the notification of its employees arising
from the sale of the Assets to the Buyer up to and including the
Closing Date for those employees who will become employees from and
after the Closing Date. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the
WARN Act and under applicable state and local laws and regulations for
the notification of its employees with respect to the Assets.
(c) The Seller shall pay all the Seller's employees that
are to be employed by the Buyer, all compensation, bonus, severance,
vacation and holiday compensation, workers' compensation or other
employment benefits which have accrued to such employees through and
including the Closing Date prior to the date such employees become
employees of the Buyer.
(d) To mitigate potential concerns that the Seller's
employees who may be hired by the Buyer under this Agreement may have
with respect to the Buyer, the parties will arrange meetings and
interviews with such employees (in groups and/or individually) and the
Buyer at mutually convenient times to provide the Buyer the
opportunity to address such concerns promptly after the execution of
this Agreement.
7.11. Risk of Loss. (a) From the date hereof through
the Closing Date, all risk of loss or damage to the property included
in the Assets shall be borne by the Seller.
(b) If, before the Closing Date all or any portion of the
Assets are taken by eminent domain, or is the subject of a pending or
(to the knowledge of the Seller) contemplated taking which has not
been consummated, the Seller shall notify the Buyer promptly in
writing of such fact. If such taking would have a Material Adverse
Effect, the Buyer and the Seller shall negotiate in good faith to
settle the loss resulting from such taking (including, without
limitation, by making a fair and equitable adjustment to the Purchase
Price) and, upon such settlement, consummate the transactions
contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days
after the Seller has notified the Buyer of such taking, then the Buyer
or the Seller may terminate this Agreement pursuant to Section
10.1(g).
(c) If, before the Closing Date all or any material portion
of the Assets are damaged or destroyed by fire or other casualty, the
Seller shall notify the Buyer promptly in writing of such fact. If
such damage or destruction would have a Material Adverse Effect and
the Seller has not notified the Buyer of its intention to cure such
damage or destruction within fifteen (15) days after its occurrence,
the Buyer and the Seller shall negotiate in good faith to settle the
loss resulting from such casualty (including, without limitation, by
making a fair and equitable adjustment to the Purchase Price) and,
upon such settlement, consummate the transactions contemplated by this
Agreement pursuant to the terms of this Agreement. If no such
settlement is reached within sixty (60) days after the Seller has
notified the Buyer of such casualty, then the Buyer or the Seller may
terminate this Agreement pursuant to Section 10.1(g).
7.12. Real Estate Matters. Prior to the Closing, the
Seller shall take such actions as may be specified in the Specimen
Title Policy that are to be performed by the Seller so as to enable
such Specimen Title Policy to be issued to the Buyer.
7.13. Creditworthiness of Buyer. On the Closing, Buyer
shall meet the creditworthiness criteria set forth in Section 9.1 of
the Transition Agreement, provided, however, if Buyer does not meet
such criteria, this Section 7.13 shall be satisfied if Buyer has a net
worth of $100 million at the Closing and maintains the net worth of
$100 million for two (2) years after the Closing. To the extent the
Buyer's net worth falls below $100 million during such two (2) year
period, Buyer shall provide a guarantee from a creditworthy entity or
an irrevocable letter of credit, limited in each such instance to the
amount by which $100 million exceeds Buyer's net worth. Such
guarantee or letter of credit shall terminate at the end of such two
year period.
ARTICLE VIII.
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions. The respective obligations of each party to effect the
sale of the Assets shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions:
(a) The waiting period under the HSR Act shall have expired
or been terminated with no order, decree, judgment or injunction
enjoining or prohibiting the consummation of the transactions
contemplated hereby having been issued;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court which prevents or is
reasonably likely to prevent the consummation of the sale of the
Assets contemplated hereby shall be pending or shall have been issued
and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted or interpreted by
any State or Federal government or governmental agency in the United
States which prohibits the consummation of the sale of the Assets;
(c) All Federal, State and local government consents and
approvals required for the consummation of the sale of the Assets,
including, without limitation, the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, shall have been
obtained as Final Orders, each reasonably acceptable in form and
substance to the party that sought the consent or approval granted by
such Final Order; for purposes of this Agreement, a "Final Order"
means a final order that is not subject to rehearing or judicial
review; and for purposes of this clause (c), a Final Order shall be
deemed to be reasonably acceptable to the party seeking the same if it
complies in all material respects with the terms and conditions of
such party's application therefor and contains no additional terms or
conditions which would have a material adverse effect on such party;
(d) All consents and approvals for the consummation of the
sale of the Assets contemplated hereby required under the terms of any
note, bond, mortgage, indenture, contract or other agreement to which
the Seller or the Buyer, or any of their subsidiaries, are a party
shall have been obtained, other than those (i) which if not obtained,
would not, in the aggregate, have a Material, Adverse Effect, or (ii)
which are governed by Section 7.4(c); and
(e) Chapter 164 of the Massachusetts General Laws, as
amended by Chapter 164 of the Acts of 1997, shall remain in full force
and effect in substantially the form it is in effect on the date of
this Agreement, insofar as the provisions thereof apply to the Seller,
the Buyer or the transactions contemplated by this Agreement or the
Related Agreements.
(f) Each "Closing" as defined in (i) the Asset Sale
Agreement between Canal Electric Company and the Buyer regarding the
sale and purchase of the Canal Station (as defined therein) and
related assets and (ii) the Asset Sale Agreement between Montaup
Electric Company and the Buyer regarding the sale of Montaup Electric
Company's 50% joint ownership interest in Canal Unit 2 and related
assets shall have occurred or shall occur concurrently with the
Closing hereunder.
8.2. Conditions to Obligations of the Buyer. The obligation
of the Buyer to effect the purchase of the Assets contemplated by this
Agreement shall be subject to the fulfillment at or prior to the
Closing Date of the following additional conditions:
(a) A Material Adverse Effect shall not have occurred and
be continuing;
(b) The Seller shall have performed and complied in all
material respects with the covenants and agreements contained in this
Agreement which are required to be performed and complied with by the
Seller on or prior to the Closing Date, and the representations and
warranties of the Seller which are set forth in this Agreement shall
be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made at and as of the
Closing Date;
(c) The Buyer shall have received certificates from
authorized officers of the Seller, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions
set forth in Sections 8.2(a) and (b) have been satisfied;
(d) The Buyer shall have received an opinion from counsel
to the Seller, dated the Closing Date and satisfactory in form and
substance to the Buyer, substantially to the effect that:
(1) The Seller is a corporation organized, existing
and in good standing under the laws of the Commonwealth of
Massachusetts and the Seller has the corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby; and the execution and
delivery of this Agreement and the consummation of the sale of
the Assets contemplated hereby have been duly authorized by all
requisite corporate action taken on the part of the Seller;
(2) The Affiliates of the Seller party to the Related
Agreements are corporations organized, existing and in good
standing under the laws of the Commonwealth of Massachusetts with
the requisite corporate power and authority to execute the
Related Agreements to which they are a party and to consummate
the transactions contemplated thereby; the execution and delivery
of the Related Agreements to which each is a party and the
consummation of the transactions contemplated thereby have been
duly authorized by all requisite corporate action on the part
thereof; and the Related Agreements have been executed and
delivered by each thereof.
(3) This Agreement and the Related Agreements have
been executed and delivered by the Seller and (assuming that the
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) this Agreement and the Related
Agreements are valid and binding obligations of the Seller or the
appropriate Affiliate of the Seller, as the case may be,
enforceable against them in accordance with their terms, except
(A) that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights, and (B)
that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any
proceeding therefore may be brought;
(4) The execution, delivery and performance of this
Agreement and the Related Agreements by the Seller and the
appropriate Affiliate of the Seller will not constitute a
violation of the Articles of Organization or Bylaws, as currently
in effect, of the Seller or such Affiliate;
(5) The Bill of Sale, the Deed, the Assignment of
Lease and the other documents described in Section 4.3 are in
proper form to transfer to the Buyer title to the Assets; and
(6) No declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Seller of the Closing other than (i) the Seller Required
Regulatory Approvals, all of such Seller Required Regulatory
Approvals having been obtained and being in full force and effect
with such terms and conditions as shall have been imposed by any
applicable governmental authority, and (ii) such declarations,
filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not, in the
aggregate have a Material Adverse Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the Commonwealth of Massachusetts, such counsel
may rely upon opinions of counsel admitted in such other
jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such
opinion may expressly rely as to matters of fact upon certificates
furnished by the Seller and appropriate officers and directors of the
Seller and by public officials.
8.3. Conditions to Obligations of the Seller. The
obligation of the Seller to effect the sale of the Assets contemplated
by this Agreement shall be subject to the fulfillment at or prior to
the Closing Date of the following additional conditions:
(a) The Buyer shall have performed in all material respects
its covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) The representations and warranties of the Buyer which
are set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date;
(c) The Seller shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officers' knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied;
(d) The Seller shall have received an opinion from counsel
for the Buyer, dated the Closing Date and satisfactory in form and
substance to the Seller and its counsel, substantially to the effect
that:
(1) The Buyer is a limited liability company
organized, existing and in good standing under the laws of the
State of Delaware and has the power and authority to execute and
deliver this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby; and
the execution and delivery of this Agreement and the Related
Agreements and the consummation of the sale of the Assets
contemplated hereby have been duly authorized by all requisite
action taken on the part of the Buyer;
(2) This Agreement and the Related Agreements have
been executed and delivered by the Buyer and (assuming that the
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except (A) that such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought;
(3) The execution, delivery and performance of this
Agreement and the Related Agreements by the Buyer will not
constitute a violation of the Certificate of Organization or LLC
Operating Agreement (or other similar governing documents), as
currently in effect, of the Buyer;
(4) Assumption Agreement and other instruments
described in Section 4.4 are in proper form for the Buyer to
assume the Assumed Liabilities; and
(5) No declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Buyer of the Closing other than the Buyer Required Regulatory
Approvals, all of such Buyer Required Regulatory Approvals having
been obtained and being in full force and effect with such terms
and conditions as shall have been imposed by any applicable
governmental authority.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the federal laws of the United
States and the Commonwealth of Massachusetts, such counsel may rely
upon opinions of counsel admitted to practices in such other
jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such
opinion may expressly rely as to matters of facts upon certificates
furnished by appropriate officers and directors of the Buyer and its
Affiliates and by public officials.
ARTICLE IX.
INDEMNIFICATION
9.1. Indemnification. (a) The Seller will indemnify, defend
and hold harmless the Buyer from and against any and all claims,
demands or suits (by any Person), losses, liabilities, damages
(including consequential or special damages), obligations, payments,
costs and expenses (including, without limitation, the costs and
expenses of any and all actions, suits, proceedings, assessments,
judgments, settlements and compromises relating thereto and reasonable
attorneys' fees and reasonable disbursements in connection therewith)
to the extent the foregoing are not covered by insurance (each, an
"Indemnifiable Loss"), asserted against or suffered by the Buyer
relating to, resulting from or arising out of (i) any breach by the
Seller of any covenant or agreement of the Seller contained in this
Agreement, (ii) the Excluded Liabilities, (iii) any breach by the
Seller of any representation or warranty set forth in Section 5.1, 5.2
or 5.3 hereof, (iv) the failure of the Seller to comply with any bulk
sales or transfer laws, or (v) the gross negligence or willful
misconduct of the Seller, its Affiliates or their respective
contractors while on the Buyer's property (including, without
limitation, any easement provided the Seller in the Deed or other
document) associated with the Martha's Vineyard Diesels after the
Closing.
(b) The Buyer will indemnify, defend and hold harmless the
Seller from and against any and all Indemnifiable Losses asserted
against or suffered by the Seller relating to, resulting from or
arising out of (i) any breach by the Buyer of any covenant or
agreement of the Buyer contained in this Agreement, (ii) the Assumed
Liabilities, (iii) any breach by the Buyer of any representation or
warranty set forth in Article VI hereof, or (iv) the gross negligence
or willful misconduct of the Buyer, its Affiliates or their respective
contractors while on the Seller's premises associated with the
Martha's Vineyard Diesels prior to or after the Closing.
(c) Any Person entitled to receive indemnification under
this Agreement (an "Indemnitee") having a claim under these
indemnification provisions shall make a good faith effort to recover
all losses, damages, costs and expenses from insurers of such
Indemnitee under applicable insurance policies so as to reduce the
amount of any Indemnifiable Loss hereunder. The amount of any
Indemnifiable Loss shall be reduced (i) to the extent that Indemnitee
receives any insurance proceeds with respect to an Indemnifiable Loss
and (ii) to take into account any net Tax benefit recognized by the
Indemnitee arising from the recognition of the Indemnifiable Loss and
any payment actually received with respect to an Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any
covenant, representation, warranty or agreement shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided
the Person required to provide indemnification under this Agreement
(the "Indemnifying Party") with proper notice of the claim or event
for which indemnification is sought prior to such expiration,
termination or extinguishment.
(e) Except as provided in clause (f) of this Section 9.1
and in Section 10.2, the rights and remedies of the Seller and the
Buyer under this Article IX are exclusive and in lieu of any and all
other rights and remedies which the Seller and the Buyer may have
under this Agreement or otherwise for monetary relief with respect to
(i) any breach or failure to perform any covenant or agreement set
forth in this Agreement, (ii) the Assumed Liabilities or the Excluded
Liabilities, as the case may be, (iii) the representations and
warranties of the Seller contained in Sections 5.1, 5.2 and 5.3 and
the representations and warranties of the Buyer contained in Article
VI or (iv) any liabilities described in Sections 9.1(a)(iv), 9.1(a)(v)
or 9.1(b)(iv) hereof.
(f) The Buyer and the Seller each agree that
notwithstanding any provisions in this Agreement to the contrary, all
parties to this Agreement retain their remedies at law or in equity
with respect to willful or intentional breaches of this Agreement.
9.2. Defense of Claims. (a) If any Indemnitee receives
notice of the assertion of any claim or of the commencement of any
claim, action, or proceeding made or brought by any person who is not
a party to this Agreement or any Affiliate of a party to this
Agreement (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party, the
Indemnitee shall give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than ten (10)
calendar days after the Indemnitee's receipt of notice of such Third
Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and shall indicate the estimated
amount, if practicable, of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee.
The party defending the Third Party Claim shall (a) consult
with the other party throughout the pendency of the Third Party Claim
regarding the investigation, defense, settlement, compromise, trial,
appeal or other resolution thereof; and (b) afford the other party the
opportunity, by notice, to participate and be associated in the
defense of the Third Party Claim through counsel chosen by such other
party, at its own expense, in the defense of any Third Party Claim as
to which a party has elected to conduct and control the defense
thereof. The parties shall cooperate in the defense of the Third
Party Claim. The Indemnitee shall make available to the Indemnifying
Party or its representatives all records and other materials
reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as
may be reasonably requested by the Indemnifying Party in connection
therewith. If requested by the Indemnifying Party, the Indemnitee
shall cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim that the Indemnifying Party elects to
contest or, if appropriate, in making any counterclaim against the
Person asserting the claim or demand, or any cross-complaint against
any Person. The Indemnifying Party shall reimburse the Indemnitee for
any expenses incurred by Indemnitee in cooperating with or acting at
the request of the Indemnifying Party.
(b) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party
Claim the Indemnitee receives written notice from the Indemnifying
Party that such Indemnifying Party has elected to assume the defense
of such Third Party Claim as provided in Section 9.2(a), the
Indemnifying Party shall not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense
thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party
Claim within twenty (20) calendar days after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has
failed to take such steps, the Indemnitee may assume its own defense,
and the Indemnifying Party shall be liable for all reasonable expenses
thereof. Without the prior written consent of the Indemnitee, the
Indemnifying Party shall not enter into any settlement of any Third
Party Claim which would lead to liability or create any financial or
other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm
offer is made to settle a Third Party claim without leading to
liability or the creation of a financial or other obligation on the
part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept
and agree to such offer, the Indemnifying Party shall give written
notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten (10) calendar days after its
receipt of such notice, the Indemnitee may continue to contest or
defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim shall
be the amount of such settlement offer, plus reasonable costs and
expenses paid or incurred by the Indemnitee up to the date of such
notice. Notwithstanding the foregoing, the Indemnitee shall have the
right to pay, compromise, or settle any Third Party Claim at any time,
provided that in such event the Indemnitee shall waive any right to
indemnity hereunder unless the Indemnitee shall have first sought the
consent of the Indemnifying Party in writing to such payment,
settlement or compromise and such consent was unreasonably withheld or
delayed, in which event no claim for indemnity therefor hereunder
shall be waived.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a
"Direct Claim") shall be asserted by giving the Indemnifying Party
reasonably prompt written notice thereof, stating the nature of such
claim in reasonable detail and indicating the estimated amount, if
practicable, but in any event not later than ten (10) calendar days
after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party shall have a period of thirty (30) calendar days
within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such thirty (30) calendar day period,
the Indemnifying Party shall be deemed to have accepted such claim. If
the Indemnifying Party rejects such claim, the Indemnitee shall be
free to seek enforcement of its rights to indemnification under this
Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect , thereof,
is reduced by recovery, settlement or otherwise under or pursuant to
any insurance coverage, or pursuant to any claim, recovery, settlement
or payment by or against any other entity, the amount of such
reduction, less any costs, expenses or premiums incurred in connection
therewith (together with interest thereon from the date of payment
thereof at the prime rate then in effect of BankBoston), shall
promptly be repaid by the Indemnitee to the Indemnifying Party. Upon
making any indemnity payment, the Indemnifying Party shall, to the
extent of such indemnity payment, be subrogated to all rights of the
Indemnitee against any third party in respect of the Indemnifiable
Loss to which the indemnity payment relates; provided, however, that
(i) the Indemnifying Party shall then be in compliance with its
obligations under this Agreement in respect of such Indemnifiable Loss
and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment are
hereby made expressly subordinated and subjected in right of payment
to the Indemnitee's rights against such third party. Without limiting
the generality or effect of any other provision hereof, each such
Indemnitee and Indemnifying Party shall duly execute upon request all
instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights. Nothing in this
Section 9.2(d) shall be construed to require any party hereto to
obtain or maintain any insurance coverage.
(e) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was
actually prejudiced as a result of such failure.
ARTICLE X.
TERMINATION AND ABANDONMENT
10.1. Termination. (a) This Agreement may be terminated
at any time prior to the Closing Date by mutual written consent of the
Seller and the Buyer.
(b) This Agreement may be terminated by the Seller or the
Buyer if the Closing shall not have occurred on or before eighteen
months following the date of this Agreement (the "Termination Date");
provided that the right to terminate this Agreement under this Section
10.1(b) shall not be available to any Party whose failure to fulfill
any obligation under this Agreement has been, the cause of, or
resulted in, the failure of the Closing to occur on or before such
date.
(c) This Agreement may be terminated by either the Seller
or the Buyer if (i) any governmental or regulatory body, the consent
of which is a condition to the obligations of the Seller and the Buyer
hereunder, shall have determined not to grant its consent, or shall
condition such consent upon any material change to the terms or
conditions of this Agreement or the Related Agreements or upon any
other condition that materially affects the value of the transactions
contemplated hereunder for either party, and all appeals of such
determination shall have been taken and have been unsuccessful, (ii)
one or more courts of competent jurisdiction in the United States or
any State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Closing, and such
order, judgment or decree shall have become final and nonappealable or
(iii) any statute, rule or regulation shall have been enacted by any
State or Federal government or governmental agency in the United
States which prohibits the consummation of the Closing.
(d) This Agreement may be terminated by the Buyer if there
has been a material violation or breach by the Seller of any
agreement, covenant, representation or warranty contained in this
Agreement which has not been waived by the Buyer and such violation or
breach constitutes a Material Adverse Effect.
(e) This Agreement may be terminated by the Seller if there
has been a material violation or breach by the Buyer of any agreement,
covenant, representation or warranty contained in this Agreement which
has rendered the satisfaction of any condition to the obligations of
the Seller to effect the Closing impossible and such violation or
breach has not been waived by the Seller.
(f) This Agreement may be terminated by the Seller, if
there has been a material adverse change in the financial condition of
the Buyer.
(g) This Agreement may be terminated by either of the
Seller or the Buyer in accordance with the provisions of Section
7.11(b) or (c).
10.2. Procedure and Effect of Termination. In the event
of termination of this Agreement and abandonment of the transactions
contemplated hereby by either or both of the Parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating Party to the other Party and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned,
without further action by any of the Parties hereto. If this
Agreement is terminated as provided herein, such termination shall be
without any liability of the Seller or the Buyer to the other in
respect of such termination, except as follows:
(a) In the event of termination of this Agreement by the
Seller pursuant to Section 10.1(e), then the Seller shall have the
right to pursue all remedies available to it in equity or at law in
connection with the violation or breach of this Agreement by the
Buyer.
(b) In the event of termination of this Agreement by the
Buyer pursuant to Section 10.1(d), then the Buyer shall have the
right to pursue all remedies available to it in equity or at law in
connection with the violation or breach of this Agreement by the
Seller.
(c) Notwithstanding anything herein to the contrary,
neither the Buyer nor the Seller shall be liable to the other for any
losses, damages or expenses under Section 10.2(a) or Section 10.2(b)
in an amount in excess of ten percent (10%) of the Purchase Price.
(d) Notwithstanding anything herein to the contrary,
neither party shall be liable to the other for any punitive,
consequential, special, incidental or indirect damages, including,
without limitation, loss of revenue or opportunity.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified or supplemented only by
written agreement of the Seller and the Buyer.
11.2. Waiver of Compliance. Except as otherwise
provided in this Agreement, any failure of any of the parties to
comply with any obligation, covenant, agreement or condition herein
may be waived by the party entitled to the benefit thereof only by a
written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other
failure.
11.3. No Survival. Each and every representation,
warranty and covenant contained in this Agreement (other than the
covenants and obligations contained in Sections 3.2, 3.3, 3.4, 7.2(b),
7.3, 7.4, 7.6(c), 7.7, 7.8 and 7.10 and in Articles IX, X and XI
(which covenants shall expire in accordance with their terms) and
other than the representations and warranties contained in Sections
5.1, 5.2, 5.3 and Article VI, which shall survive the Closing for a
period of one year), shall expire with, and be terminated and
extinguished by the consummation of the sale of the Assets and the
transfer of the Assumed Liabilities pursuant to this Agreement, and
such representations, warranties and covenants shall not survive the
Closing Date; and none of the Seller, the Buyer or any officer,
director, trustee or Affiliate of any of them shall be under any
liability whatsoever with respect to any such representation, warranty
or covenant.
11.4. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally or by facsimile transmission, telexed or mailed by
overnight courier or registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) If to the Seller, to:
Canal Electric Company
One Main Street
Cambridge, MA 02142
Attention: Michael Sullivan, Esq.
General Counsel
with a copy to:
David S. Balabon, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
260 Franklin Street
Boston, MA 02110
(b) if to the Buyer, to:
Southern Energy New England, L.L.C.
900 Ashwood Parkway
Suite 500
Atlanta, GA
Attention: Randall E. Harrison
Vice President
with a copy to:
Robert C. Marshall, Esq.
Troutman Sanders
NationsBank Plaza, Suite 5200
600 Peachtree Street NE
Atlanta, GA 30308
Andrew J. Newman, Esq.
Rubin and Rudman, L.L.P.
50 Rowes Wharf
Boston, MA 02110
11.5. Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto, other
than to an Affiliate, including by operation of law, without the prior
written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder.
11.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts (regardless of the laws that might otherwise govern
under applicable Massachusetts principles of conflicts of law) as to
all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
11.7. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
11.8. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement.
11.9. Schedules and Exhibits. All Exhibits and
Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement.
11.10. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the Parties hereto in respect of
the transactions contemplated by this Agreement and supersede any and
all prior oral or written expressions, understandings or agreements
between or among the Parties with respect thereto.
11.11. No Third Party Beneficiaries. Nothing in this
Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any Person
other than the Parties and their respective permitted successors and
assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third Person to any
Party, nor give any third Person any right of subrogation or action
against any Party.
11.12. No Relationship. Nothing in this Agreement
creates or is intended to create an association, trust, partnership,
joint venture or any other entity or similar legal relationship
between the Parties, or impose a trust, partnership or fiduciary duty,
obligation, or liability on or with respect to either Party. Neither
Party is or shall act as or be the agent or representative of the
other Party.
11.13. Severability. If any provision hereof is held
invalid or unenforceable by any governmental authority of competent
jurisdiction, or as a result of future legislative action, this
holding or action will be strictly construed and will not affect the
validity or effect of any other provision hereof, and the Parties
shall endeavor in good faith to replace such invalid or unenforceable
provision with a valid and enforceable provision which achieves the
purposes intended by the Parties to the greatest extent permitted by
law.
IN WITNESS WHEREOF, the Seller and the Buyer have caused
this agreement to be signed by their respective duly authorized
officers as of the date first above written.
COMMONWEALTH ELECTRIC COMPANY
By: /s/JAMES D. RAPPOLI
Name: James D. Rappoli
Title: Financial Vice President and
Treasurer
SOUTHERN ENERGY NEW ENGLAND, L.L.C.
By: /s/RANDALL E. HARRISON
Name: Randall E. Harrison
Title: Vice President