EXHIBIT 2A
ASSET PURCHASE AGREEMENT
BY AND AMONG
PP&L, INC.,
PP&L RESOURCES, INC.,
LADY JANE COLLIERIES, INC.
and
SUNBURY HOLDINGS, LLC
Dated as of May 1, 1999
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LIST OF SCHEDULES AND DISCLOSURE SCHEDULES
------------------------------------------
SCHEDULES
Schedule I Form of Assignment and Assumption Agreement
Schedule II Form of Bill of Sale
Schedule III Form of Control House Lease
Schedule IV Form of Easement Agreement
Schedule V Form of FIRPTA Affidavit
Schedule VI Form of Interchange Scheduling Agreement
Schedule VII Form of Interconnection Agreement
Schedule VIII Form of Special Warranty Deeds
Schedule IX Form of Transition Power Purchase Agreement
DISCLOSURE SCHEDULES
1.1(80) Permitted Encumbrances
1.1(118) Transferable Permits
2.1(b) Real Property at Buck Run and Forrestville
2.1(d) Tangible Personal Property
2.1(e) Sellers' Agreements
2.1(g) Emission Allowances
2.1(i) Location of Rail Spur
2.1(o) Intellectual Property
2.2(a) Description of Transmission Assets not included in Conveyance
4.3(a) Conflicts; Violations
4.3(b) Sellers' Required Regulatory Approvals
4.4 Insurance
4.5 Exceptions to Title
4.6 Environmental Matters
4.7 Labor Matters
4.8 Benefit Plans
4.9 Real Property
4.l0 Notices of Condemnation
4.11(a) Other Material Contracts
4.11(b) Non-Binding and Non-Assignable Contracts
4.11(c) Defaults under the Contracts
4.12 Legal Proceedings
4.13(a) Violations
4.13(b) Material Permits (other than Transferable Permits)
4.14 Taxes
4.16 Intellectual Property Exceptions
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4.17 Compliance with Laws
4.18 Sufficiency of Purchased Assets
4.24 Information
5.3(a) Consents and Approvals; No Violation
5.3(b) Buyer's Required Regulatory Approvals
6.1 Permitted Activities Prior to Closing
6.10(d) IBEW Collective Bargaining Agreement
6.10(e) Non-Union Employees
6.13 Post-Closing Services
7.1(n) Buyer's Closing Condition: Transfer of (or Buyer's Acquisition of
Satisfactory Substitutes for) the Following Transferable Permits
7.1(o) Buyer's Closing Condition: Assignment of the Following Sellers'
Agreements and Intellectual Property
7.1(p) Buyer's Closing Condition: Consents and Approvals
7.2(d) Sellers' Closing Condition: Consents and Approvals
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TABLE OF CONTENTS
-----------------
ARTICLE I
DEFINITIONS
1.1 Definitions...................................................2
1.2 Certain Interpretive Matters.................................14
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets...........................................15
2.2 Excluded Assets..............................................17
2.3 Assumed Liabilities..........................................19
2.4 Excluded Liabilities.........................................20
2.5 Control of Litigation........................................23
ARTICLE III
THE CLOSING
3.1 Closing......................................................23
3.2 Payment of Purchase Price....................................23
3.3 Adjustment to Purchase Price.................................23
3.4 Allocation of Purchase Price.................................25
3.5 Prorations...................................................25
3.6 Deliveries by Sellers........................................26
3.7 Deliveries by Buyer..........................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 Incorporation; Qualification.................................28
4.2 Authority....................................................28
4.3 Consents and Approvals; No Violation.........................29
4.4 Insurance....................................................29
4.5 Title and Related Matters....................................30
4.6 Environmental Matters........................................30
4.7 Labor Matters................................................31
4.8 Benefit Plans; ERISA.........................................31
4.9 Real Property................................................31
4.10 Condemnation.................................................31
4.11 Contracts and Leases.........................................32
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4.12 Legal Proceedings............................................32
4.13 Permits......................................................32
4.14 Taxes........................................................33
4.15 Year 2000....................................................33
4.16 Intellectual Property........................................33
4.17 Compliance with Laws.........................................34
4.18 Sufficiency of Purchased Assets..............................34
4.19 Conveyance of Real Property..................................34
4.20 Emission Allowances..........................................34
4.21 CTGs.........................................................34
4.22 Copies.......................................................35
4.23 Reports......................................................35
4.24 Information..................................................35
4.25 Disclaimers Regarding Purchased Assets.......................35
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization.................................................36
5.2 Authority....................................................36
5.3 Consents and Approvals; No Violation.........................37
5.4 Availability of Funds........................................37
5.5 Legal Proceedings............................................38
5.6 Qualified Buyer..............................................38
5.7 WARN Act.....................................................38
5.8 Equity Contribution Agreement................................38
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased Assets.........38
6.2 Access to Information........................................40
6.3 Public Statements............................................43
6.4 Expenses.....................................................43
6.5 Further Assurances...........................................43
6.6 Consents and Approvals.......................................44
6.7 Fees and Commissions.........................................45
6.8 Tax Matters..................................................46
6.9 Advice of Changes............................................47
6.10 Employees....................................................47
6.11 Risk of Loss.................................................51
6.12 Real Property Title; Title Insurance; Surveys................51
6.13 Post-Closing Services........................................52
6.14 Easement Agreement...........................................52
6.15 Other Covenants of Buyer.....................................52
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ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer...........................53
7.2 Conditions to Obligations of Sellers.........................56
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification..............................................58
8.2 Defense of Claims............................................60
ARTICLE IX
TERMINATION
9.1 Termination..................................................61
9.2 Procedure and Effect of No-Default Termination...............63
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification...................................63
10.2 Waiver of Compliance; Consents...............................63
10.3 No Survival..................................................63
10.4 Notices......................................................64
10.5 Assignment...................................................65
10.6 Transfer of Certain Purchased Assets to Affiliates of PP&L...65
10.7 Governing Law................................................65
10.8 Counterparts.................................................66
10.9 Interpretation...............................................66
10.10 Schedules....................................................66
10.11 Entire Agreement.............................................66
10.12 Bulk Sales Laws..............................................66
10.13 U.S. Dollars.................................................67
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ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated as of May 1, 1999, by and among PP&L,
Inc., a Pennsylvania corporation ("PP&L"), PP&L Resources, Inc., a
----
Pennsylvania corporation ("Resources"), Lady Jane Collieries, Inc., a
---------
Pennsylvania corporation ("LJC" and together with PP&L and Resources,
---
"Sellers"), and Sunbury Holdings, LLC, a Delaware limited liability company
-------
("Buyer"). PP&L, Resources, LJC and Buyer may be referred to individually as
a "Party," and collectively as the "Parties."
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, PP&L, a wholly-owned subsidiary of Resources, owns the Sunbury
Steam Electric Station ("Sunbury SES"), a four-unit coal-fired generating
-----------
station, including two black start diesel generating sets, and two oil-fired
combustion turbine generators ("CTGs," and together with Sunbury SES, "Sunbury
---- -------
Station"), located in Shamokin Dam, Pennsylvania, and certain facilities and
- -------
other assets associated therewith and ancillary thereto; and
WHEREAS, LJC, an indirectly wholly-owned subsidiary of Resources, owns a
fuel processing facility ("Lady Jane") located near Penfield, Pennsylvania;
---------
and
WHEREAS, Buyer, WPS Resources Capital Corporation, a Wisconsin
corporation ("WPSR Capital"), WPS Power Development, Inc., a Wisconsin
------------
corporation ("PDI") and a wholly-owned subsidiary of WPSR Capital, and Sellers
---
have entered into that certain Equity Contribution Agreement, dated as of the
date hereof (the "Equity Contribution Agreement"), pursuant to which PDI has
-----------------------------
agreed to make certain capital contributions into Buyer on or prior to the
Closing Date (as defined in Section 3.1 below) and WPSR Capital has agreed to
unconditionally guarantee the performance by Buyer of all of Buyer's
obligations under this Agreement due to be performed by Buyer at or prior to
the Closing and any Post-Closing Adjustments (as defined in Section 3.3(c)
below) thereafter; and
WHEREAS, Buyer desires to purchase and assume, or cause to be purchased
and assumed, and Sellers desire to sell and assign, or cause to be sold and
assigned, the Purchased Assets (as defined in Section 2.1 below) and certain
associated liabilities, 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 agree as follows:
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ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the following terms
-----------
have the meanings specified in this Section 1.1.
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
---------
the General Rules and Regulations under the Exchange Act.
(2) "Additional Agreements" means the Interconnection
---------------------
Agreement, the Easement Agreement, the Equity Contribution Agreement,
the Transition Power Purchase Agreement, the Securities Account
Control Agreement, the Generation Support Services Agreement, the
Control House Lease, the Transition Services Agreement, the
Interchange Scheduling Agreement, the Assignment and Assumption
Agreement, the Bill of Sale and the Special Warranty Deeds.
(3) "Agreement" means this Asset Purchase Agreement, as
---------
amended or supplemented, together with the Schedules hereto.
(4) "Assignment and Assumption Agreement" means the
-----------------------------------
Assignment and Assumption Agreement between Sellers and Buyer,
substantially in the form of Schedule I hereto, pursuant to which
Sellers shall assign the Sellers' Agreements, certain intangible
assets and other Purchased Assets to Buyer as required in this
Agreement and whereby Buyer shall assume the Assumed Liabilities.
(5) "Assumed Liabilities" has the meaning set forth in
-------------------
Section 2.3.
(6) "Benefit Plans" has the meaning set forth in Section
-------------
4.8.
(7) "Bill of Sale" means the Bill of Sale, substantially in
------------
the form of Schedule II hereto, to be delivered at the Closing, with
respect to the Tangible Personal Property included in the Purchased
Assets to be transferred to Buyer at the Closing.
(8) "Buck Run" means the 67-acre site located near the
--------
village of Buck Run, Schuylkill County, Pennsylvania described in
Schedule 2.1(b).
(9) "Business Day" shall mean any day other than Saturday,
------------
Sunday and any day which is a day on which banking institutions in
the Commonwealth of Pennsylvania are authorized or required by law or
other governmental action to close.
(10) "Buyer Material Adverse Effect" has the meaning set
-----------------------------
forth in Section 5.3(a).
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(11) "Buyer's Benefit Plans" has the meaning set forth in
---------------------
Section 6.10(e)(iii).
(12) "Buyer's Indemnitee" has the meaning set forth in
------------------
Section 8.1(b).
(13) "Buyer's Pension Plan" has the meaning set forth in
--------------------
Section 6.10(g).
(14) "Buyer's Required Regulatory Approvals" has the meaning
-------------------------------------
set forth in Section 5.3(b).
(15) "Capital Expenditures" has the meaning set forth in
--------------------
Section 3.3(a)(iii).
(16) "CERCLA" means the Federal Comprehensive Environmental
------
Response, Compensation, and Liability Act of 1980, as amended.
(17) "Chester Engineers Letter" means the letter, dated
------------------------
May 1, 1999, from Chester Engineers to Buyer regarding the Project Half
Moon Phase II Report referred to in Section 1.1(36) hereof.
(18) "Closing" has the meaning set forth in Section 3.1.
-------
(19) "Closing Adjustment" has the meaning set forth in
------------------
Section 3.3(b).
(20) "Closing Date" has the meaning set forth in Section
------------
3.1.
(21) "COBRA" means the Consolidated Omnibus Budget
-----
Reconciliation Act of 1985, as amended.
(22) "Code" means the Internal Revenue Code of 1986, as
----
amended.
(23) "Commercially Reasonable Efforts" means efforts which
-------------------------------
are reasonably within the contemplation of the Parties at the time of
executing this Agreement and which do not require the performing
Party to expend any funds other than expenditures which are customary
and reasonable in transactions of the kind and nature contemplated by
this Agreement in order for the performing Party to satisfy its
obligations hereunder.
(24) "Computer Systems" has the meaning set forth in Section
----------------
4.15.
(25) "Confidentiality Agreement" means the Confidentiality
-------------------------
Agreement, dated November 13, 1998, by and between PP&L and PDI.
(26) "Control House Lease" means the Lease between Buyer and
-------------------
PP&L in the form of Schedule III hereto whereby PP&L, or an Affiliate
of PP&L, will lease from Buyer certain portions of the Switchyard
Control House (as defined therein).
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(27) "Direct Claim" has the meaning set forth in Section
------------
8.2(c).
(28) "Easements" means, with respect to the Purchased
---------
Assets, the easements and access rights to be granted by Buyer to LJC
and PP&L, or an Affiliate of PP&L, pursuant to the Easement
Agreement, and the easements and access rights reserved by LJC, PP&L,
or an Affiliate of PP&L, in a Special Warranty Deed, including,
without limitation, easements authorizing access, use, maintenance,
construction, repair, replacement and other activities by LJC and
PP&L, or an Affiliate of PP&L, as further described in the Easement
Agreement and/or a Special Warranty Deed.
(29) "Easement Agreement" means the Easement Agreement
------------------
between Buyer, LJC and PP&L, or an Affiliate of PP&L, in the form of
Schedule IV hereto, whereby Buyer will provide LJC, PP&L, or an
Affiliate of PP&L, with Easements with respect to certain of the
Purchased Assets transferred to Buyer and whereby LJC and PP&L, or an
Affiliate of PP&L, will provide Buyer with certain easements and
access rights with respect to certain assets owned by LJC and PP&L,
or an Affiliate of PP&L.
(30) "Emission Allowance" means authorization by any
------------------
Governmental Authority with jurisdiction over Sunbury Station to emit
a specified amount of nitrogen oxide ("NOx") and sulfur dioxide
---
("SO2"), from a specified source during or after a specified time
---
frame. Emission Allowances for purposes of this Agreement shall
include all allowances allocated to any Sunbury Station assets by any
Governmental Authority whether allocated before, on or after the
Closing Date and which are vintage 1999 or later.
(31) "Emission Reduction Credit" means a permanent,
-------------------------
enforceable, quantifiable and surplus emissions reduction which can
be considered as a reduction for the purpose of offsetting emission
increases, pursuant to Pa. Code Ch. 127, including, without
limitation, NOx and volatile organic compound Emission Reduction
Credits.
(32) "Encumbrances" means any mortgages, pledges, liens,
------------
claims, security interests, agreements, easements, restrictions,
defects of title or encumbrances of any kind.
(33) "Environmental Condition" means the presence or Release
-----------------------
to the environment, whether at the Sites or at an off-Sites location,
of Hazardous Substances, including any migration of those Hazardous
Substances through air, soil or groundwater to or from the Sites or
any off-Sites location regardless of when such presence or Release
occurred or is discovered.
(34) "Environmental Laws" means all federal, state, local
------------------
and foreign 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, Releases to ambient air, surface
water, groundwater, land, surface and subsurface strata)
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or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, Release, transport or handling of Hazardous
Substances. "Environmental Laws" include, without limitation, CERCLA
(42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Oil Pollution Act
(33 U.S.C. Section 2701 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), the Pennsylvania
Air Pollution Control Act (35 P.S. Section 4001 et seq.), the
Pennsylvania Storage Tank and Spill Prevention Act (35 P.S. Section
6021.01 et seq.), the Pennsylvania Hazardous Sites Cleanup Act (35 P.S.
Section 6020.101 et seq.), the Pennsylvania Solid Waste Management Act
(35 P.S. Section 6018.101 et seq.), the Pennsylvania Clean Stream Law
(35 P.S. Section 691.1 et seq. ) and all other federal, state, local or
foreign laws analogous to any of the above.
(35) "Environmental Permits" has the meaning set forth in
---------------------
Section 4.6(a).
(36) "Environmental Report" means, collectively, the Project
--------------------
Half Moon Phase II Report, dated December 1998, prepared by Chester
Engineers with respect to the Sites and the Chester Engineers Letter.
(37) "Equity Contribution Agreement" has the meaning set
-----------------------------
forth in the Recitals.
(38) "ERISA" means the Employee Retirement Income Security
-----
Act of 1974, as amended.
(39) "ERISA Affiliate" has the meaning set forth in Section
---------------
2.4(k).
(40) "ERISA Affiliate Plans" has the meaning set forth in
---------------------
Section 2.4(k).
(41) "Estimated Adjustment" has the meaning set forth in
--------------------
Section 3.3(b).
(42) "Estimated Closing Statement" has the meaning set forth
---------------------------
in Section 3.3(b).
(43) "Exchange Act" means the Securities Exchange Act of
------------
1934, as amended.
(44) "Excluded Assets" has the meaning set forth in Section
---------------
2.2.
(45) "Excluded Liabilities" has the meaning set forth in
--------------------
Section 2.4.
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(46) "FERC" means the Federal Energy Regulatory Commission,
----
or any successor agency thereto.
(47) "FIRPTA Affidavit" means the Foreign Investment in Real
----------------
Property Tax Act Certification and Affidavit, substantially in the
form of Schedule V hereto.
(48) "Forrestville" means the approximately 16-acre site
------------
located near the village of Forrestville, Schuylkill County,
Pennsylvania described in Schedule 2.1(b).
(49) "Fuel Inventories" means coal, anthracite silt,
----------------
petroleum coke, fuel oil and alternative fuel inventories which are
located at, or are in transit to, Sunbury Station or Lady Jane on the
Closing Date. The term "Fuel Inventories" shall not include the
anthracite silt reserves located at Buck Run and Forrestville.
(50) "GAAP" means United States generally accepted
----
accounting principles as in effect from time to time, applied on a
consistent basis.
(51) "Generation Support Services Agreement" means the
-------------------------------------
Generation Support Services Agreement between PP&L, or an Affiliate
of PP&L, and Buyer, the terms and conditions of which shall be
negotiated prior to Closing in accordance with Section 6.13 hereof,
pursuant to which PP&L, or an Affiliate of PP&L, will provide certain
services to Buyer after the Closing Date.
(52) "Good Utility Practices" mean any of the practices,
----------------------
methods and acts engaged in or approved by a significant portion of
the electric utility industry during the relevant time period, or any
of the practices, methods or acts which, in the exercise of
reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practices are not
intended to be limited to the optimum practices, methods or acts to
the exclusion of all others, but rather to be practices, methods or
acts generally accepted in the PJM region.
(53) "Governmental Authority" means any federal, state,
----------------------
local or other governmental, regulatory or administrative agency,
commission, department, board, or other governmental subdivision,
court, tribunal, arbitrating body or other governmental authority.
(54) "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," "hazardous constituents," "restricted
hazardous materials," "extremely hazardous
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substances," "toxic substances," "contaminants," "pollutants," "toxic
pollutants" or words of similar meaning and regulatory effect under
any applicable Environmental Law; and (c) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by
any applicable Environmental Law.
(55) "HSR Act" means the Hart-Scott-Rodino Antitrust
-------
Improvements Act of 1976, as amended.
(56) "IBEW" means Local 1600 of the International
----
Brotherhood of Electrical Workers.
(57) "IBEW Collective Bargaining Agreement" has the meaning
------------------------------------
set forth in Section 6.10(d).
(58) "IBEW Grievance" means, with respect to the business or
--------------
operations of the Purchased Assets, any grievance arising out of or
under the IBEW Collective Bargaining Agreement, or other applicable
collective bargaining agreement, prior to the Closing Date, including
without limitation the grievances identified in Schedule 4.7.
(59) "IBEW Memorandum of Understanding" has the meaning set
--------------------------------
forth in Section 7.1(q).
(60) "Improvements" means all buildings, structures
------------
(including all fuel handling and storage facilities), railyard,
machinery and equipment, fixtures, construction in progress, and
other improvements, including all piping, cables and similar
equipment forming part of the mechanical, electrical, plumbing or
HVAC infrastructure of any building, structure or equipment, located
on and affixed to the Sites.
(61) "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, gross
receipts Taxes, 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.
(62) "Indemnifiable Loss" has the meaning set forth in
------------------
Section 8.1(a).
(63) "Indemnifying Party" has the meaning set forth in
------------------
Section 8.1(e).
(64) "Indemnitee" has the meaning set forth in Section
----------
8.1(d).
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(65) "Independent Accounting Firm" means such independent
---------------------------
accounting firm within the "Big Five" as is mutually appointed by
PP&L and Buyer.
(66) "Inspection" means all tests, reviews, examinations,
----------
inspections, investigations, verifications, samplings and similar
activities conducted by Buyer or its Representatives with respect to
the Purchased Assets prior to the Closing.
(67) "Interchange Scheduling Agreement" means the
--------------------------------
Interchange Scheduling Agreement, between PP&L, or an Affiliate of
PP&L, and Buyer, in the form of Schedule VI hereto.
(68) "Intellectual Property" means patents and patent
---------------------
rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, copyrights and
copyright rights, computer programs and pending applications for and
registrations of patents, trademarks, service marks and copyrights.
(69) "Interconnection Agreement" means the Interconnection
-------------------------
Agreement, between PP&L, or an Affiliate of PP&L, and Buyer, in the
form of Schedule VII hereto, pursuant to which PP&L, or an Affiliate
of PP&L, will provide Buyer with interconnection service to certain
of its transmission facilities and whereby Buyer will provide PP&L,
or an Affiliate of PP&L, with continuing access to certain of the
Purchased Assets after the Closing Date.
(70) "Knowledge" means the actual knowledge of the corporate
---------
officers of the specified Person charged with responsibility for the
particular function as of the date of this Agreement, or, with
respect to any certificate delivered pursuant to this Agreement, the
date of delivery of the certificate, after reasonable inquiry by them
of selected employees of the specified Person whom they believe, in
good faith, to be the persons generally responsible for the subject
matters to which the knowledge is pertinent.
(71) "Laws" means all laws, statutes, rules, regulations,
----
ordinances and other pronouncements having the effect of law of the
United States, any foreign country and any domestic or foreign state,
county, city or other political subdivision or of any Governmental
Authority.
(72) "Liability" or "Liabilities" means any liability or
--------- -----------
obligation (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, whether incurred or consequential, and
whether due or to become due).
(73) "Local Laws" means all laws, statutes, rules,
----------
regulations, ordinances and other pronouncements having the effect of
law of any county, city, township or other political subdivision of
the Commonwealth of Pennsylvania within which any of the Sites is
located.
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(74) "Material Adverse Effect" means any change in or effect
-----------------------
on the Purchased Assets, the operation of the Purchased Assets or the
Assumed Liabilities after the date hereof that is materially adverse
to (a) the ownership, business, assets, operations or condition
(financial or otherwise) of the Purchased Assets, individually or
taken as a whole, or (b) the magnitude, duration, timing or scope of
the Assumed Liabilities, other than (i) any change resulting from
changes in the international, national, regional or local wholesale
or retail markets for electricity, including any change in the
structure, operating agreements, operations or procedures of PJM or
its control area, (ii) any change resulting from changes in the
international, national, regional or local markets for any fuel used
at Sunbury Station, (iii) any change resulting from changes in the
North American, national, regional or local electricity transmission
systems, (iv) changes in Law that apply generally to similarly
situated Persons and (v) any materially adverse change in the
Purchased Assets which is cured (including by payment of money) to
the reasonable satisfaction of Buyer before the earlier of the
Closing Date and the Termination Date. Notwithstanding the
foregoing, the term "Material Adverse Effect" shall include any
change in Local Law after the date hereof which, in its application,
operates in a way that, because of the nature of the business
conducted at Sunbury Station or Lady Jane, uniquely results in a
change or effect described in clauses (a) or (b) above (except that
any change in Local Law that arises from or in connection with the
proposed thruway construction disclosed on Schedule 4.10 shall not
constitute a Material Adverse Effect).
(75) "Non-Fuel Inventories" means limestone, materials,
--------------------
spare parts, consumable supplies and chemical and gas supply
inventories relating to the operation of Sunbury Station or Lady Jane
which are located at, or are in transit to, Sunbury Station or Lady
Jane on the Closing Date.
(76) "Non-Union Employees" has the meaning as set forth in
-------------------
Section 6.10(e).
(77) "PaPUC" means the Pennsylvania Public Utility
-----
Commission, and any successor agency thereto.
(78) "PaDEP" means the Pennsylvania Department of
-----
Environmental Protection, and any successor agency thereto.
(79) "Permits" has the meaning set forth in Section 4.13.
-------
(80) "Permitted Encumbrances" means: (i) the Easements; (ii)
----------------------
those exceptions to title to the Purchased Assets listed in Schedule
4.5 and those Encumbrances set forth in Schedule 1.1(80); (iii)
statutory liens for Taxes or other governmental charges or
assessments not yet due or delinquent or the validity of which is
being contested in good faith in appropriate proceedings, provided,
that at or prior to the Closing, Sellers shall either (x) satisfy
such liens, (y) cause such liens to be omitted from the exceptions to
the title insurance policy being obtained by the Buyer by bonding,
escrow or otherwise or (z) cause the issuer of such title insurance
policy to insure the Buyer that such liens will
9
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not be collected out of or enforced against the Real Property;
(iv) mechanics', carriers', workers', repairers' and other similar
liens arising or incurred in the ordinary course of business securing
obligations that (A) are not overdue for a period of more than thirty
(30) days or (B) are being contested in good faith in appropriate
proceedings, provided, that at or prior to the Closing, Sellers shall
either (x) satisfy such liens, (y) cause such liens to be omitted from
the exceptions to the title insurance policy being obtained by the Buyer
by bonding, escrow or otherwise or (z) cause the issuer of such title
insurance policy to insure the Buyer that such liens will not be
collected out of or enforced against the Real Property; (v) zoning,
entitlement, conservation restriction and other land use and
environmental regulations by Governmental Authorities; and (vi) such
other liens, imperfections in or failure of title, charges, easements,
restrictions and Encumbrances which do not materially detract from
the value of the Purchased Assets as currently used or materially
interfere with the present use of the Purchased Assets or do not,
individually or in the aggregate, create a Material Adverse Effect.
(81) "Person" means any individual, partnership, limited
------
liability company, joint venture, corporation, trust, unincorporated
organization or any other business entity or governmental entity or
any department or agency thereof.
(82) "PJM" means PJM Interconnection, L.L.C., and any
---
successor thereto.
(83) "Post-Closing Adjustment" has the meaning set forth in
-----------------------
Section 3.3(c).
(84) "Post-Closing Statement" has the meaning set forth in
----------------------
Section 3.3(c).
(85) "Prior Welfare Plans" has the meaning set forth in
-------------------
Section 6.10(e)(iv).
(86) "Proposed Post-Closing Adjustment" has the meaning set
--------------------------------
forth in Section 3.3(c).
(87) "Proprietary Information" of a Party means all
-----------------------
information about the Party or its properties or operations furnished
to the other Party or its Representatives by the Party or its
Representatives, after the date hereof, regardless of the manner or
medium in which it is furnished. Proprietary Information does not
include information that: (a) is or becomes generally available to
the public, other than as a result of a disclosure by the other Party
or its Representatives; (b) was available to the other Party on a
nonconfidential basis prior to its disclosure by the Party or its
Representatives; (c) becomes available to the other Party on a
nonconfidential basis from a Person, other than the Party or its
Representatives, who, to the other Party's Knowledge, is not
otherwise bound by a confidentiality agreement with the Party or its
Representatives, or is not otherwise under any obligation to the
Party or any of its Representatives not to transmit the information
to the other Party or its Representatives; (d) is independently
developed
10
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by the other Party; or (e) was disclosed pursuant to the Confidentiality
Agreement and remains subject to the terms and conditions of the
Confidentiality Agreement.
(88) "Purchased Assets" has the meaning set forth in Section
----------------
2.1.
(89) "Purchase Price" has the meaning set forth in Section
--------------
3.2.
(90) "Rail Spur" means the rails, ties, ballasts and all
---------
related apparatus or appurtenances attached thereto which are
necessary for the operation of a railroad, beginning at the southern
property line of the Real Property at Sunbury Station and continuing
across those certain parcels of real property owned by PP&L, or an
Affiliate of PP&L, which are adjacent to such Real Property (the
"Retained Real Property") in a southerly direction to the
----------------------
southernmost property line of the Retained Real Property, as more
particularly described on Schedule 2.1(i), but specifically excluding
the underlying property interest in the Retained Real Property.
(91) "Real Property" has the meaning set forth in Section
-------------
2.1(a).
(92) "Release" means any release, spill, leak, discharge,
-------
disposal of, pumping, pouring, emitting, emptying, injecting,
leaching, dumping or allowing to escape into or through the
environment.
(93) "Remediation" means action of any kind to address a
-----------
Release or the presence of Hazardous Substances at the Sites or an
off-Sites location including, without limitation, any or all of the
following activities to the extent they relate to or arise from the
presence of a Hazardous Substance at the Sites or an off-Sites
location: (a) monitoring, investigation, assessment, treatment,
cleanup, containment, removal, mitigation, response or restoration
work; (b) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any
such activity; (c) preparing and implementing any plans or studies
for any such activity; (d) obtaining a written notice from a
Governmental Authority with jurisdiction over the Sites or an off-
Sites location under Environmental Laws that no material additional
work is required by such Governmental Authority; (e) the use,
implementation, application, installation, operation or maintenance
of removal actions on the Sites or an off-Sites location, remedial
technologies applied to the surface or subsurface soils, excavation
and off-Sites treatment or disposal of soils, systems for long-term
treatment of surface water or ground water, engineering controls or
institutional controls; and (f) any other activities reasonably
determined by a Party to be necessary or appropriate or required
under Environmental Laws to address the presence or Release of
Hazardous Substances at the Sites or an off-Sites location.
(94) "Replacement Welfare Plans" has the meaning set forth
-------------------------
in Section 6.10(e)(iv).
11
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(95) "Representatives" of a Party means the Party and its
---------------
Affiliates and their respective directors, officers, employees,
agents, partners, advisors (including, without limitation,
accountants, legal counsel, environmental consultants, engineering
consultants, financial advisors and other authorized representatives)
and parents and other controlling Persons.
(96) "SEC" means the Securities and Exchange Commission, and
---
any successor agency thereto.
(97) "Securities Account Control Agreement" means the
------------------------------------
Securities Account Control Agreement, to be dated as of the Closing
Date, by and among Buyer, PP&L and the Securities Intermediary, in
substantially the form attached as Exhibit 3 to the Transition Power
Purchase Agreement.
(98) "Securities Act" means the Securities Act of 1933, as
--------------
amended.
(99) "Securities Intermediary" shall have the meaning set
-----------------------
forth in the Transition Power Purchase Agreement.
(100) "Sellers' Actuary" has the meaning set forth in Section
----------------
6.10(g).
(101) "Sellers' Agreements" means those contracts,
-------------------
agreements, licenses (other than Permits or Intellectual Property),
leases and deeds relating to the ownership, operation and maintenance
of Sunbury Station, Lady Jane, Buck Run or Forrestville and being
assigned to Buyer as part of the Purchased Assets, including the IBEW
Collective Bargaining Agreement.
(102) "Sellers' Indemnitee" has the meaning set forth in
-------------------
Section 8.1(a).
(103) "Sellers' Pension Plan" has the meaning set forth in
---------------------
Section 6.10(g).
(104) "Sellers' Required Regulatory Approvals" has the
--------------------------------------
meaning set forth in Section 4.3(b).
(105) "Silt Reserves Real Property" has the meaning set
---------------------------
forth in Section 2.1(b).
(106) "Sites" means the real property (including
-----
Improvements) forming a part of, or used or usable in connection with
the operation of, Sunbury Station, Lady Jane, Buck Run or
Forrestville, including any disposal sites included in such real
property. Any reference to the Sites shall include, by definition,
the surface and subsurface elements, to the extent owned by a Seller,
including the soil and groundwater present at the Sites and excluding
the Excluded Assets, and any reference to items "at the Sites" shall
include all items "at, on, in, upon, over, across, under and within"
the Sites.
12
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(107) "Special Warranty Deeds" means the Special Warranty
----------------------
Deeds, in the form of Schedule VIII hereto, pursuant to which Sellers
will convey the Real Property and the Silt Reserves Real Property to
Buyer.
(108) "Subsidiary" when used in reference to any 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 Person.
(109) "Stott Mine #1" means that certain deep coal mine
-------------
underlying Lady Jane.
(110) "Sunbury Station Compliance Accounts" means those
-----------------------------------
accounts established by the USEPA for Sunbury Station for purposes of
allocating, holding, transferring or using NOx or SO2 Emission
Allowances.
(111) "Surveys" has the meaning set forth in Section 6.12(a).
-------
(112) "Tangible Personal Property" has the meaning set forth
--------------------------
in Section 2.1(d).
(113) "Taxes" means all taxes, charges, fees, levies,
-----
penalties or other assessments imposed by any federal, state, local
or foreign taxing authority, including, but not limited to, income,
gross receipts, excise, property, sales, transfer, use, franchise,
payroll, withholding, social security, taxes payable under the
Pennsylvania Public Utility Realty Tax Act ("PURTA") or other taxes,
-----
including any interest, penalties or additions attributable thereto.
(114) "Tax Return" means any return, report, information
----------
return or other document (including any related or supporting
information) required to be supplied to any taxing authority with
respect to Taxes.
(115) "Termination Date" has the meaning set forth in Section
----------------
9.1(b).
(116) "Third Party Claim" has the meaning set forth in
-----------------
Section 8.2(a).
(117) "Title Commitments" has the meaning set forth in
-----------------
Section 6.12(a).
(118) "Transferable Permits" means those Permits and
--------------------
Environmental Permits (and any applications pertaining thereto) which
are lawfully transferable by Sellers to Buyer (with or without a
filing with, notice to, consent or approval of any Governmental
Authority) and are set forth in Schedule 1.1(118).
(119) "Transferred Non-Union Employee" has the meaning set
------------------------------
forth in Section 6.10(e).
13
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(120) "Transferred Pension Employees" has the meaning set
-----------------------------
forth in Section 6.10(g).
(121) "Transferred Union Employee" has the meaning set forth
--------------------------
in Section 6.10(a).
(122) "Transferring Employee Records" means records related
-----------------------------
to Sellers' personnel who will become employees of Buyer only to the
extent such files pertain to: (i) skill and development training,
(ii) seniority histories, (iii) salary and benefit information, (iv)
Occupational, Safety and Health Administration reports, (v) active
medical restriction forms, and (vi) disciplinary and attendance
histories.
(123) "Transition Power Purchase Agreement" means the
-----------------------------------
Transition Power Purchase Agreement between PP&L, or an Affiliate of
PP&L, and Buyer, in the form of Schedule IX hereto, relating to the
sale of designated quantities of capacity and/or energy to PP&L, or
an Affiliate of PP&L, following the Closing Date.
(124) "Transition Services Agreement" means the Transition
-----------------------------
Services Agreement between PP&L, or an Affiliate of PP&L, and Buyer,
the terms and conditions of which shall be negotiated prior to
Closing in accordance with Section 6.13 hereof, pursuant to which
PP&L, or an Affiliate of PP&L, will provide certain information
technology and other services to Buyer after the Closing Date.
(125) "Transmission Assets" has the meaning set forth in
-------------------
Section 2.2(a).
(126) "Union Employees" has the meaning set forth in Section
---------------
6.10(a).
(127) "USEPA" means the United States Environmental
-----
Protection Agency, and any successor agency thereto.
(128) "Year 2000 Compliant" has the meaning set forth in
-------------------
Section 4.15.
(129) "Year 2000 Ready" has the meaning set forth in Section
---------------
4.15.
(130) "WARN Act" means the Federal Worker Adjustment
--------
Retraining and Notification Act of 1988, as amended.
1.2 Certain Interpretive Matters. In this Agreement, unless the
----------------------------
context otherwise requires, the singular shall include the plural, the
masculine shall include the feminine and neuter, and vice versa. The term
"includes" or "including" shall mean "including without limitation."
References to a Section, Article or Schedule shall mean a Section, Article or
Schedule of this Agreement, and reference to a given agreement or instrument
shall be a reference to that agreement or instrument as modified, amended,
supplemented and restated through the date as of which such reference is made.
14
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ARTICLE II
PURCHASE AND SALE
-----------------
2.1 Transfer of Assets. Upon the terms and subject to the
------------------
satisfaction of the conditions set forth in this Agreement, at the Closing,
Sellers will sell, assign, convey, transfer and deliver to Buyer, and Buyer
will purchase, assume and acquire from Sellers, free and clear of all
Encumbrances (except for Permitted Encumbrances), all of Sellers' respective
right, title and interest in, to and under the following assets constituting,
or used in connection with the operation of, Sunbury Station or Lady Jane,
except as otherwise provided in Section 2.2, each as in existence on the
Closing Date (collectively, the "Purchased Assets"):
----------------
(a) Those certain parcels of real property (including all
buildings, railyard and other facilities and other Improvements thereon and
all appurtenances thereto) described in Schedule 4.9 (the "Real Property"),
-------------
but subject to those exceptions listed in Schedule 4.5 and except as otherwise
constituting part of the Excluded Assets;
(b) Sellers' ownership interests in the real property described
in Schedule 2.1(b) (the "Silt Reserves Real Property") underlying Sellers'
---------------------------
anthracite silt reserves at Buck Run and Forrestville and the anthracite silt
reserves located thereon as of the Closing Date;
(c) The Fuel Inventories and the Non-Fuel Inventories in
existence on the Closing Date;
(d) The machinery, equipment (including communications
equipment), vehicles, locomotives, furniture and other personal property
located on the Real Property and the Silt Reserves Real Property on the
Closing Date, including, without limitation, the items of personal property
included in Schedule 2.1(d), together with all the personal property of
Sellers used principally in the operation of the Purchased Assets and
expressly listed in Schedule 2.1(d), other than property used or primarily
usable as part of the Transmission Assets or otherwise constituting part of
the Excluded Assets (collectively, "Tangible Personal Property"); provided,
-------------------------- --------
however, that the nuclear fly ash level detection system (including all
- -------
sources and detectors and related equipment) shall not be transferred to Buyer
unless Buyer has obtained, at least thirty (30) days prior to Closing, an
appropriate license for such equipment from the Nuclear Regulatory Commission;
and provided further, that if Buyer has not obtained an appropriate license
----------------
for the nuclear fly ash level detection system at least thirty (30) days prior
to Closing, Sellers may, at their sole discretion, transfer a non-nuclear fly
ash level detection system (comparable in accuracy, reliability and
maintainability) to Buyer in substitution for the nuclear fly ash level
detection system;
(e) Subject to the receipt of necessary consents and approvals,
the Sellers' Agreements included in Schedule 2.1(e);
15
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(f) Subject to the receipt of necessary consents and approvals,
the Transferable Permits;
(g) The Emission Allowances as stated in Schedule 2.1(g), and
those Emission Allowances held by the USEPA in its Special Allowance Reserve
for SO2 emissions for the year 2000 and beyond and not sold prior to the
Closing Date by the USEPA for the benefit of Sunbury Station pursuant to the
Clean Air Act; provided that if the Closing occurs during 1999, Buyer shall be
required to authorize the USEPA to deduct vintage 1999 Emission Allowances for
Sellers' use and operation of Sunbury Station as permitted pursuant to Section
6.1 hereof as follows: (1) 53.92 SO2 Emission Allowances per day for each day
from January 1, 1999 through but not including the Closing Date; and (2) 17.59
NOx Emission Allowances per day for each day from May 1, 1999 through but not
including the Closing Date or September 30, 1999, whichever occurs first.
Notwithstanding Schedule 2.1(g), if the Closing occurs during the period
October 1, 1999 through and including October 31, 1999, Sellers shall transfer
to Buyer the amount of vintage 1999 NOx Emission Allowances for Sellers' use
and operation of Sunbury Station as permitted pursuant to Section 6.1 hereof
and Buyer shall authorize the USEPA to deduct them. If the Closing occurs
during the period November 1, 1999 through and including December 31, 1999,
Buyer shall authorize the USEPA to deduct only the vintage 1999 SO2 Emission
Allowances at 53.92 Emission Allowances per day as stated above. If the
Closing occurs during 2000, Buyer shall be required to authorize the USEPA to
deduct vintage 2000 Emission Allowances for Sellers' use and operation of
Sunbury Station as permitted pursuant to Section 6.1 hereof as follows: (1)
45.21 SO2 Emission Allowances per day for each day from January 1, 2000
through but not including the Closing Date and (2) 17.59 NOx Emission
Allowances per day for each day from May 1, 2000 through but not including the
Closing Date or September 30, 2000, whichever occurs first. Notwithstanding
Schedule 2.1(g), if the Closing occurs during the period October 1, 2000
through and including October 31, 2000, Sellers shall transfer to Buyer the
amount of the vintage 2000 NOx Emission Allowances for Sellers' use and
operation of Sunbury Station as permitted pursuant to Section 6.1 hereof and
Buyer shall authorize the USEPA to deduct them. If the Closing occurs during
the period November 1, 2000 through and including December 31, 2000, Buyer
shall authorize the USEPA to deduct only the vintage 2000 SO2 Emission
Allowances at 45.21 Emission Allowances per day as stated above. In the event
Sellers' use and operation of Sunbury Station result in actual emissions
requiring surrender of a larger number of SO2 or NOx Emission Allowances than
stated above, Buyer shall be required to authorize the USEPA to deduct NOx or
SO2 Emission Allowances, as applicable, to cover such excess and Sellers shall
transfer to Buyer at Closing additional Emission Allowances equal to such
excess and having a vintage of the year of Closing or earlier;
(h) All rights of Sellers with respect to the low flow dam
adjacent to Sunbury Station pursuant to Public Law 285, 80th Congress, 1st
Session, Chapter 395 (approved July 30, 1947);
(i) The Rail Spur located on the right-of-way described on
Schedule 2.1(i);
(j) All unexpired, transferable warranties and guarantees from
third parties with respect to any item of Real Property or Tangible Personal
Property constituting part of the Purchased Assets, as of the Closing Date;
16
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(k) The interests of Sellers in and to the names "Sunbury
Station" and "Lady Jane" whatever they may be; provided, however, that LJC may
-------- -------
continue its use of "Lady Jane Collieries, Inc." as its corporate and trade
name. Buyer expressly understands that Sellers are not assigning or
transferring to Buyer any right, title or interest in or to the names
"Pennsylvania Power & Light Company", "PP&L" , "PPL", or any derivation
thereof, as well as any related or similar name, or any other trade names,
trademarks, service marks, corporate names and logos or any part, derivation,
colorable imitation or combination thereof, including, without limitation, the
trademark or other rights with respect to the name "Stabil-Fill";
(l) The Transferring Employee Records;
(m) All books, expired purchase orders, operating records,
operating, safety and maintenance manuals, engineering design plans,
blueprints and as built plans, specifications, procedures, studies, reports
(including the Environmental Report), equipment repair, safety, maintenance or
service records, and similar items, to the extent maintained by Sellers and
related specifically to the Purchased Assets (subject to the right of Sellers
to retain copies of same for its use) other than such items which are
proprietary to third parties and accounting records (to the extent that any of
the foregoing, including without limitation the Transferring Employee Records,
is contained in an electronic format, Sellers shall cooperate with Buyer to
transfer such items to Buyer in a format that is reasonably acceptable to
Buyer);
(n) Benefit Plan assets to the extent described in Section
6.10(g) hereof; and
(o) Subject to the receipt of necessary consents and approvals,
the Intellectual Property listed in Schedule 2.1(o).
2.2 Excluded Assets. Notwithstanding anything to the contrary in this
---------------
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is not acquiring, any right, title or interest
in or to (a) any properties, assets, business, operation, or division of
Sellers or their Affiliates not expressly set forth in Section 2.1, or (b) the
following specific assets which are associated with the Purchased Assets, but
which are hereby specifically excluded from the sale and the definition of
Purchased Assets herein (the "Excluded Assets"):
---------------
(a) The electrical transmission or distribution facilities (as
opposed to generation facilities) of Sellers or any of their Affiliates
located at Sunbury Station or forming part of Sunbury Station (whether or not
regarded as a "transmission" or "generation" asset for regulatory or
accounting purposes), including all switchyard facilities, substation
facilities and support equipment, as well as all permits, contracts and
warranties, to the extent they relate to such transmission and distribution
assets (other than any transmission or distribution assets expressly
identified in Schedule 2.1(d), any assets within the switchyard which are
directly associated with or necessary for the operation of any of the
Purchased Assets and which are expressly identified in Schedule 2.1(d) and any
Real Property underlying the electrical transmission or distribution
facilities expressly identified in Schedule 4.9, all of which is included as
Purchased Assets) (collectively, the "Transmission Assets"), and those certain
-------------------
assets, facilities and agreements all as identified in Schedule 2.2(a);
17
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(b) Certain switches and meters at Sunbury Station, gas
facilities, revenue meters and remote testing units, drainage pipes and
systems, as identified as "Excluded Property" in the Easement Agreement;
(c) The real property underlying the Rail Spur;
(d) Certificates of deposit, shares of stock, securities, bonds,
debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities;
(e) All cash, cash equivalents, bank deposits, accounts and
notes receivable (trade or otherwise), prepaid expenses relating to the
operation of the Purchased Assets and any income, sales, payroll or other tax
receivables;
(f) The right, title and interest of Sellers and their
successors, assigns, Affiliates and/or Representatives in and to the names
"Pennsylvania Power & Light Company", "PP&L", "PPL", or any derivation
thereof, as well as any related or similar name, or any other trade names,
trademarks, service marks, corporate names and logos, or any part, derivation,
colorable imitation or combination thereof, including, without limitation, the
trademark or other rights with respect to the name "Stabil-Fill", other than
as specified in Section 2.1(k) hereof;
(g) All tariffs, agreements and arrangements to which any Seller
is a party for the purchase or sale of electric capacity and/or energy or for
the purchase or sale of transmission or ancillary services involving the
Purchased Assets or otherwise;
(h) Except in respect of Assumed Liabilities, the rights of
Sellers in and to any causes of action against third parties relating to any
Real Property, Tangible Personal Property, Silt Reserves Real Property,
Permits, Environmental Permits, Taxes or Sellers' Agreements, if any,
including any claims for refunds (other than those Tax refunds that are
covered by Section 2.2(i) below), prepayments, offsets, recoupment, insurance
proceeds, condemnation awards, judgments and the like, whether received as
payment or credit against future liabilities, relating specifically to Sunbury
Station, Lady Jane or the Sites and relating to any period on or prior to the
Closing Date;
(i) Any refunds of real property Taxes (including interest) paid
or due with respect to Sunbury Station, Lady Jane or the Sites, which refunds
are the result of proceedings that, prior to the Closing Date, were instituted
by Sellers or their Affiliates regardless of when actually paid;
(j) All personnel records other than Transferring Employee
Records or other records the disclosure of which is required by law;
(k) The minute books, stock transfer books, corporate seal and
other corporate records of Sellers;
18
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(l) The rights of any Seller in, to and under all contracts,
arrangements, permits or licenses of any nature, of which the obligations of
such Seller under such contracts, arrangements, permits or licenses are not
expressly assumed by Buyer pursuant to Section 2.3(a) hereof;
(m) Except as set forth in Section 6.10(g) hereof, all assets
owned or held by any Benefit Plan;
(n) All insurance policies relating to the operation of the
Purchased Assets;
(o) Any and all of any Sellers' rights in any contract or
arrangement representing an intercompany transaction between such Seller and
an Affiliate of such Seller, whether or not such transaction relates to the
provision of goods and services, payment arrangements, intercompany charges or
balances, or the like, other than the agreements described on Schedule 2.1(e);
(p) Any and all of Sellers' rights relating to Stott Mine #1;
(q) Any Improvements, equipment or other tangible personal
property owned or provided by any contractor or third party at Sunbury
Station, Lady Jane or the Silt Reserves Real Property, including, without
limitation, the Electronic Pitless Vehicle Scale, the Office/Lab Trailer, the
Storage Shed and the hand tools owned by Combustion Products Management, Inc.;
(r) All other assets and properties owned by Sellers or their
Affiliates which are not used in the operation of Sunbury Station or Lady
Jane; and
(s) Sellers' rights under this Agreement and the Additional
Agreements.
2.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to
-------------------
Sellers the Assignment and Assumption Agreement pursuant to which Buyer shall
assume and agree to pay, perform and discharge, without recourse to Sellers or
their Affiliates, the following Liabilities of Sellers and their Affiliates
which relate to the Purchased Assets and which arise on or after the Closing
(except as specifically provided below), other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective conditions
thereof (collectively, "Assumed Liabilities"):
-------------------
(a) All Liabilities of Sellers and their Affiliates under the
Sellers' Agreements, the Intellectual Property identified in Schedule 2.1(o)
and the Transferable Permits in accordance with the terms thereof and the
contracts, licenses, agreements and personal property leases entered into by
Sellers or their Affiliates with respect to the Purchased Assets on or after
the date hereof consistent with the terms of this Agreement, except in each
case to the extent that such Liabilities, but for a breach or default by
Sellers or their Affiliates, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same arise out
of any such breach or default or out of any event which after the giving of
notice would constitute a default by Sellers or their Affiliates;
19
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(b) All Liabilities associated with the Purchased Assets in
respect of Taxes for which Buyer is liable pursuant to Sections 3.5 or 6.8
hereof;
(c) All Liabilities with respect to the Transferred Union
Employees and the Transferred Non-Union Employees arising on and after the
Closing Date (including, without limitation, any Liabilities relating to the
hiring, employment or termination of employment by Buyer or its Affiliates of
any individual on or after the Closing Date);
(d) Any Liability or responsibility under or related to
Environmental Laws or the common law arising as a result of or in connection
with (i) any violation or alleged violation of Environmental Laws, whether
prior to, on or after the Closing Date, with respect to the ownership or
operation of any of the Purchased Assets; (ii) 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 on or after the Closing Date) caused (or allegedly caused) by
the presence or Release of Hazardous Substances at, on, in, under, adjacent to
or migrating from the Purchased Assets prior to, on or after the Closing Date,
including, but not limited to, Hazardous Substances contained in building
materials at or adjacent to the Purchased Assets or in the soil, surface
water, sediments, groundwater, landfill cells, or in other environmental media
at or near the Purchased Assets; and (iii) the investigation and/or
Remediation (whether or not such investigation or Remediation commenced before
the Closing Date or commences on or after the Closing Date) of Hazardous
Substances that are present or have been Released prior to, on or after the
Closing Date at, on, in, under, adjacent to or migrating from, the Purchased
Assets or in the soil, surface water, sediments, groundwater, landfill cells
or in other environmental media at or adjacent to the Purchased Assets;
provided, that nothing set forth in this Section 2.3(d) shall require Buyer to
assume any Liabilities that are expressly excluded in Section 2.4(g), Section
2.4(h), Section 2.4(i) or Section 2.4(j) hereof;
(e) All Liabilities of Sellers with respect to the Purchased
Assets under the agreements or consent orders set forth on Schedule 4.6
arising on or after the Closing; and
(f) With respect to the Purchased Assets, any Tax that may be
imposed by any federal, state or local government on the ownership, sale,
operation or use of the Purchased Assets on or after the Closing Date, except
for any Income Taxes attributable to income received by Sellers.
2.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer
--------------------
shall not assume by virtue of this Agreement or the transactions contemplated
hereby, and shall have no liability for, any Liabilities of Sellers, including
without limitation any of the following Liabilities (the "Excluded
--------
Liabilities"):
- -----------
(a) Any Liabilities of Sellers or their Affiliates in respect of
any Excluded Assets or other assets of Sellers or their Affiliates which are
not Purchased Assets, except to the extent caused by the acts or omissions of
Buyer or its Affiliates or Buyer's or its Affiliates' ownership, operation or
use of the Purchased Assets;
20
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(b) Any Liabilities in respect of Taxes attributable to the
Purchased Assets for taxable periods ending before the Closing Date, except
for Taxes for which Buyer is liable pursuant to Sections 3.5 or 6.8 hereof;
(c) Any Liabilities of Sellers or their Affiliates arising from
the breach or default by Sellers or their Affiliates, prior to the Closing
Date, of any Sellers' Agreement, the Intellectual Property agreements
identified in Schedule 2.1(o), Transferable Permit or any other contract,
license, agreement or personal property lease entered into by Sellers or their
Affiliates with respect to the Purchased Assets;
(d) Any and all Liabilities to third parties for personal injury
or tort, or similar causes of action arising solely out of the ownership or
operation of the Purchased Assets prior to the Closing Date, other than any
Liabilities specifically assumed by Buyer under Section 2.3;
(e) Any fines or penalties imposed by a Governmental Authority
resulting from (i) an investigation or proceeding before a Governmental
Authority regarding acts which occurred prior to the Closing Date, or (ii)
illegal acts, willful misconduct or gross negligence of Sellers or their
Affiliates prior to the Closing Date, other than, in the case of either (i) or
(ii), any Liability specifically assumed by Buyer under Section 2.3;
(f) Any payment obligations of Sellers or their Affiliates for
goods delivered or services rendered prior to the Closing Date, including, but
not limited to, rental payments pursuant to personal property leases;
(g) Any Liability under or related to Environmental Laws or the
common law arising as a result of or in connection with 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 on or after the Closing Date) caused (or allegedly
caused) by the off-Sites disposal, storage, transportation, discharge,
Release, or recycling of Hazardous Substances, or the arrangement for such
activities, prior to the Closing Date, in connection with the ownership or
operation of the Purchased Assets, provided that for purposes of this Section
2.4 "off-Sites" does not include any location to which Hazardous Substances
disposed of or Released at the Purchased Assets have migrated;
(h) Any Liability under or related to Environmental Laws or the
common law arising as a result of or in connection with the investigation
and/or Remediation (whether or not such investigation or Remediation commenced
before the Closing Date or commences on or after the Closing Date) of
Hazardous Substances that are disposed, stored, transported, discharged,
Released, recycled, or the arrangement of such activities, prior to the
Closing Date, in connection with the ownership or operation of the Purchased
Assets, at any off-Sites location, provided that for purposes of this Section
2.4 "off-Site" does not include any location to which Hazardous Substances
disposed of or Released at the Purchased Assets have migrated;
(i) Any Liability under or related to Environmental Laws or the
common law arising as a result of or in connection with PP&L's or its
Affiliate's, ownership, operation or use of
21
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the Transmission Assets prior to, on or after the Closing Date, except to the
extent caused by the acts or omissions of Buyer or its Affiliates or Buyer's or
its Affiliates's ownership, operation or use of the Purchased Assets;
(j) Any Liability under or related to Environmental Laws or the
common law arising as a result of or in connection with Sellers', or their
respective Affiliate's, ownership, operation or use of Stott Mine #1 prior to,
on or after the Closing Date, except to the extent caused by the acts or
omissions of Buyer or its Affiliates or Buyer's or its Affiliates' ownership,
operation or use of the Purchased Assets;
(k) Any Liabilities relating to any Benefit Plan maintained by
Sellers or any trade or business (whether or not incorporated) which is or
ever has been under common control, or which is or ever has been treated as a
single employer, with any Seller under Section 414(b), (c), (m) or (o) of the
Code ("ERISA Affiliate") or to which any Seller and any ERISA Affiliate
---------------
contributed thereunder (the "ERISA Affiliate Plans"), maintained by,
---------------------
contributed to, or obligated to contribute to, by Sellers or any ERISA
Affiliate, including any Liability (i) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (ii) with respect to non-compliance with
the notice and benefit continuation requirements of COBRA; or (iii) with
respect to any noncompliance by Sellers with ERISA or any other applicable
laws, but not including any Liabilities specifically assumed pursuant to
Section 6.10 hereof;
(l) Any IBEW Grievances or any other Liabilities relating to the
employment or termination of employment, including discrimination, wrongful
discharge, unfair labor practices, or constructive termination by Sellers of
any individual, attributable to any actions or inactions by Sellers prior to
the Closing Date other than such actions or inactions taken at the direction
of Buyer or its Affiliates;
(m) Any Liability of any Seller arising from the making or
performance of this Agreement or the Additional Agreements or the transactions
contemplated hereby or thereby;
(n) Any Liabilities relating to any claim, action, suit or
proceeding regarding matters which arose prior to the Closing Date,
notwithstanding the disclosure thereof in any Schedule, or any subsequent
claim, action, suit or proceeding arising out of or relating to such matters;
(o) Any Income Taxes attributable to income received by Sellers;
and
(p) Any Liabilities relating to or arising from the fuel leak at
Sunbury SES which is described in Attachment A of the Chester Engineers
Letter; and
(q) Any Liabilities arising from the failure of Sellers to
comply with their obligations pursuant to Section 2.1(g) hereof.
22
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2.5 Control of Litigation. The Parties agree and acknowledge that
---------------------
Sellers shall be entitled exclusively to control, defend and settle any
litigation, administrative or regulatory proceeding, and any investigation or
Remediation activities (including without limitation any environmental
mitigation or Remediation activities), arising out of or related to any
Excluded Liabilities, and Buyer agrees to cooperate fully in connection
therewith; provided, however, that no Seller shall enter into any settlement
-------- -------
agreement or arrangement with respect to any IBEW Grievance that is reasonably
likely to cause a Material Adverse Effect at any time without the prior
written consent of Buyer.
ARTICLE III
THE CLOSING
-----------
3.1 Closing. The sale, assignment, conveyance, transfer and delivery
-------
of the Purchased Assets to Buyer, the payment of the Purchase Price to
Sellers, and the consummation of the other respective obligations of the
Parties contemplated by this Agreement shall take place at a closing (the
"Closing"), to be held at the offices of Skadden, Arps, Slate, Meagher & Flom
-------
LLP, 919 Third Avenue, New York, New York 10022, at 10:00 a.m. eastern
standard time, or another mutually acceptable time and location, on the date
that is fifteen (15) Business Days following the date on which the last of the
conditions precedent to Closing set forth in Article VII of this Agreement
have been either satisfied or waived by the Party for whose benefit such
conditions precedent exist or on such other date as may be mutually agreed
upon by the Parties. The date of Closing is hereinafter called the "Closing
-------
Date." The Closing shall be effective for all purposes as of 12:01 a.m. on
- ----
the Closing Date.
3.2 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
Purchased Assets, Buyer will pay or cause to be paid to Sellers at the Closing
an aggregate amount in U.S. dollars of $96,400,000 (the "Purchase Price") plus
--------------
or minus any adjustments pursuant to the provisions of this Agreement, by wire
transfer of immediately available funds denominated in U.S. dollars or by such
other means as are agreed upon by Sellers and Buyer.
3.3 Adjustment to Purchase Price. (a) Subject to Section 3.3(b), at
----------------------------
the Closing, the Purchase Price shall be adjusted to account for the items set
forth in this Section 3.3(a):
(i) The Purchase Price shall be increased to reflect the
fair market value of all Fuel Inventories held by Sellers as of the
Closing Date, calculated using the weighted average cost method consistent
with Sellers' past and current accounting practices.
(ii) The Purchase Price shall be adjusted to account for
the items prorated as of the Closing Date pursuant to Section 3.5.
(iii) The Purchase Price shall be increased by the amount
expended, or for which a commitment was made, by Sellers between the
date hereof and the Closing Date for
23
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capital additions to or replacements of property, plant and equipment
included in the Purchased Assets and other expenditures or repairs on
property, plant and equipment included in the Purchased Assets that would
be capitalized by Sellers in accordance with normal accounting policies of
Sellers and their Affiliates (together, "Capital Expenditures"), which
--------------------
Capital Expenditures either are (A) described on Schedule 6.1; (B) for
facility upgrades or changes required by law or regulation of general
application (i.e., not Sunbury specific) enacted after the date hereof
which is applicable to the post-Closing period, provided that Buyer shall
have the opportunity to review and approve the plans, specifications, and
budget for such facility upgrades or changes, which approval shall not
be unreasonably withheld or delayed; or (C) approved in writing by
Buyer.
(b) At least ten (10) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth in reasonable detail
---------------------------
Sellers' best estimate of all estimated adjustments to the Purchase Price
required by Section 3.3(a) (the "Estimated Adjustment"), together with the
--------------------
assumptions and calculations used by Sellers to estimate such adjustments.
Within five (5) Business Days following the delivery of the Estimated Closing
Statement by Sellers to Buyer, Buyer may object in good faith to the Estimated
Adjustment in writing. If Buyer objects to the Estimated Adjustment, the
Parties shall attempt to resolve their differences by negotiation. If the
Parties are unable to do so within two (2) Business Days prior to the Closing
Date (or if Buyer does not object to the Estimated Adjustment), the Purchase
Price shall be adjusted (the "Closing Adjustment") for the Closing by the
------------------
amount of the Estimated Adjustment not in dispute. The disputed portion shall
be paid as a Post-Closing Adjustment to the extent required by Section 3.3(c).
(c) Within sixty (60) days following the Closing Date, Sellers
shall prepare and deliver to Buyer a final closing statement (the
"Post-Closing Statement") that shall set forth in reasonable detail all
----------------------
adjustments to the Purchase Price required by Section 3.3(a) (the "Proposed
--------
Post-Closing Adjustment"). Within thirty (30) days following the delivery of
- -----------------------
the Post-Closing Statement by Sellers to Buyer, Buyer may object to the
Proposed Post-Closing Adjustment in writing. Sellers agree to cooperate with
Buyer to provide Buyer and Buyer's Representatives information used to prepare
the Post-Closing Statement and information relating thereto. If Buyer objects
to the Proposed Post-Closing Adjustment, the Parties shall attempt to resolve
such dispute by negotiation. If the Parties are unable to resolve such
dispute within thirty (30) days of any objection by Buyer, the Parties shall
appoint an Independent Accounting Firm, which shall be instructed to review
the Proposed Post-Closing Adjustment and determine the appropriate adjustment
to the Purchase Price, if any, within thirty (30) days thereafter. The fees
and disbursements of such Independent Accounting Firm shall be allocated
between Buyer and Sellers such that 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 Buyer to such Independent
Accounting Firm that is unsuccessfully disputed by Buyer (as finally
determined by such Independent Accounting Firm) bears to the total amount of
such remaining disputed amounts so submitted by Buyer. The finding of such
Independent Accounting Firm shall be binding on the Parties hereto. Upon
determination of the appropriate adjustment (the "Post-Closing Adjustment") by
-----------------------
agreement of the Parties or by binding determination of the Independent
Accounting Firm, if the Post-Closing Adjustment is more or less than the
Closing Adjustment, the Party owing the difference
24
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shall deliver such difference to the other Party no later than two (2) Business
Days after such determination, by wire transfer of immediately available funds
denominated in U.S. dollars or in any other manner as reasonably requested by
the payee. Any amount paid under this Section 3.3(c) to Buyer or Sellers shall
be paid with interest for the period from, and including, the Closing Date to,
but excluding, the date of payment, calculated at the "prime rate" for domestic
banks as published in The Wall Street Journal (Northeast Edition) in the
"Money Rates" section on the Closing Date.
3.4 Allocation of Purchase Price. Buyer and Sellers shall use
----------------------------
their good faith best efforts to agree upon an allocation among the Purchased
Assets of the sum of the Purchase Price and the Assumed Liabilities consistent
with Section 1060 of the Code and the Treasury Regulations thereunder within
sixty (60) days of the date of this Agreement. In the event that the Parties
cannot agree on a mutually satisfactory allocation within said time period,
the Parties shall appoint an Independent Accounting Firm which shall, at
Sellers' and Buyer's equal expense, determine the appropriate allocation with
respect to the issues in dispute. The finding of such Independent Accounting
Firm shall be binding on the Parties. After determination of the allocation
by agreement of the Parties or by binding determination of the Independent
Accounting Firm, Buyer and Sellers agree to file, for the tax year in which
Closing occurs, Internal Revenue Service Form 8594, and all federal, state,
local and foreign Tax Returns, in accordance with such allocation. Buyer and
Sellers shall report the transactions contemplated by this Agreement for
federal Tax and all other Tax purposes in a manner consistent with the
allocation determined pursuant to this Section 3.4. Buyer and Sellers agree
to provide the other promptly with any information required to complete Form
8594. Buyer and Sellers shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
the agreed upon allocation of the Purchase Price.
3.5 Prorations. (a) Buyer and Sellers agree that all of the
----------
items normally prorated, including those listed below (but not including
Income Taxes), relating to the business and operation of the Purchased Assets
shall be prorated as of the Closing Date, with Sellers liable to the extent
such items relate to any time period prior to the Closing Date, and Buyer
liable to the extent such items relate to periods commencing with the Closing
Date (measured in the same units used to compute the item in question,
otherwise measured by calendar days):
(i) Personal property, real estate and occupancy Taxes,
assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets;
(ii) Rent, Taxes and all other items (including
prepaid services or goods not included in Inventory) payable
by or to Sellers under any of the Sellers' Agreements;
(iii) Any permit, license, registration, emission fees or
other fees with respect to any Transferable Permit; and
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities.
25
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(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 other amounts accrued
through the Closing Date or paid for the most recent year (or other
appropriate period) for which actual Taxes or other amounts paid are
available. Such prorated Taxes or other amounts shall be re-prorated and paid
to the appropriate Party within sixty (60) days of the date that the
previously unavailable actual figures become available. Sellers and Buyer
agree to furnish each other with such documents and other records as may be
reasonably requested in order to confirm all adjustment and proration
calculations made pursuant to this Section 3.5.
Notwithstanding anything to the contrary herein, no proration
shall be made under this Section 3.5 with respect to (i) real property Tax
refunds described in Section 2.2(i) or (ii) transfer Taxes described in
Section 6.8(a).
3.6 Deliveries by Sellers. At the Closing, Sellers will deliver, or
---------------------
cause to be delivered, the following to Buyer:
(a) The Bill of Sale, duly executed by the appropriate Sellers;
(b) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Sellers with respect to the
transfer of the Purchased Assets, or the consummation of the transactions
contemplated by this Agreement and the Additional Agreements, to the extent
specifically required hereunder or thereunder;
(c) The Special Warranty Deeds, duly executed and acknowledged
by the appropriate Sellers and in recordable form;
(d) The Assignment and Assumption Agreement, duly executed by
the appropriate Sellers;
(e) A FIRPTA Affidavit, duly executed by the appropriate
Sellers;
(f) Copies, certified by the Secretary or Assistant Secretary of
each Seller, of corporate resolutions authorizing the execution and delivery
of this Agreement, each Additional Agreement and all of the other agreements
and instruments to be executed and delivered by such Seller in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby;
(g) A certificate of the Secretary or Assistant Secretary of
each Seller identifying the name and title and bearing the signatures of the
officers of such Seller authorized to execute and deliver this Agreement, each
Additional Agreement and the other agreements and instruments contemplated
hereby;
(h) A copy of the certificate of incorporation and by-laws of
each Seller, certified by the Secretary or Assistant Secretary of such Seller,
and a copy of the certificate of incorporation of each Seller certified by the
Secretary of the Commonwealth of Pennsylvania;
26
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(i) To the extent available, originals of all Sellers'
Agreements and Transferable Permits and, if not available, true and correct
copies thereof;
(j) All releases necessary to terminate, discharge, or waive any
Encumbrances (other than Permitted Encumbrances) on the Purchased Assets, in
recordable form;
(k) Such affidavits and, to the extent consistent with and not
in addition to the terms hereof, indemnities reasonably requested by the title
insurance company issuing the Title Commitments;
(l) Each of the other Additional Agreements, duly executed and
in recordable form, if appropriate; provided, however, that Sellers will not
-------- -------
be required to deliver, or cause to be delivered, at the Closing, a duly
executed Generation Support Services Agreement or a duly executed Transition
Services Agreement if the Parties have not agreed upon mutually acceptable
terms and conditions therefor on or prior to the Closing Date as contemplated
in Section 6.13;
(m) All such other instruments of assignment or conveyance as
shall, in the reasonable opinion of Buyer and their counsel, be necessary to
transfer to Buyer the Purchased Assets, in accordance with this Agreement and
where necessary or desirable in recordable form; and
(n) Such other agreements, documents, instruments and writings
as are required to be delivered by Sellers at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.7 Deliveries by Buyer. At the Closing, Buyer will deliver, or
-------------------
cause to be delivered, the following to Sellers:
(a) The Purchase Price, as adjusted pursuant to Section 3.3(b),
by wire transfer of immediately available funds in accordance with Sellers'
instructions or by such other means as may be agreed to by Sellers and Buyer;
(b) The Assignment and Assumption Agreement, duly executed by
Buyer;
(c) Copies, certified by the Secretary or Assistant Secretary of
Buyer, of resolutions authorizing the execution and delivery of this
Agreement, each Additional Agreement and all of the other agreements and
instruments to be executed and delivered by Buyer in connection herewith, and
the consummation of the transactions contemplated hereby and thereby;
(d) A certificate of the Secretary or Assistant Secretary of
Buyer identifying the name and title and bearing the signatures of the
officers of such Buyer authorized to execute and deliver this Agreement, each
Additional Agreement and the other agreements and instruments contemplated
hereby;
(e) A copy of the articles of organization and by-laws (or
similar governing documents) of Buyer, certified by the Secretary or Assistant
Secretary of Buyer, and a copy of the
27
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articles of organization (or similar governing document) of Buyer certified by
the Secretary of the state of organization of Buyer;
(f) Each of the other Additional Agreements, duly executed and
in recordable form, if appropriate; provided, however, that Buyer will not be
-------- -------
required to deliver, or cause to be delivered, at the Closing, a duly executed
Generation Support Services Agreement or a duly executed Transition Services
Agreement if the Parties have not agreed upon mutually acceptable terms and
conditions therefor on or prior to the Closing Date as contemplated in
Section 6.13;
(g) All such other instruments of assumption as shall, in the
reasonable opinion of Sellers and their counsel, be necessary for Buyer to
assume the Assumed Liabilities in accordance with this Agreement;
(h) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the transfer
of the Purchased Assets, or the consummation of the transactions contemplated
by this Agreement and the Additional Agreements;
(i) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
PP&L and LJC each hereby represent and warrant to Buyer on a joint and
several basis and Resources hereby represents and warrants to Buyer as to
itself, to the extent applicable, as follows:
4.1 Incorporation; Qualification. Each Seller is a corporation duly
----------------------------
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as it is now being conducted. Each Seller is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each jurisdiction in which its business as now being conducted shall require
it to be so qualified, except where the failure to be so qualified would not
have a Material Adverse Effect.
4.2 Authority. Each Seller has full corporate power and authority to
---------
execute and deliver this Agreement and each of the Additional Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and each of the
Additional Agreements by the applicable Sellers and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action required on the part of each
such Seller. This Agreement has been duly and validly executed and delivered
by each Seller and subject to the receipt of Sellers' Required Regulatory
Approvals, this Agreement constitutes, and upon the execution and delivery by
the applicable Sellers of each of the Additional Agreements, each such
Additional Agreement will constitute, legal, valid
28
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and binding obligations of each such Seller, enforceable against each such
Seller in accordance with their terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
4.3 Consents and Approvals; No Violation. (a) Except as set
------------------------------------
forth in Schedule 4.3(a), and subject to obtaining Sellers' Required
Regulatory Approvals, neither the execution and delivery of this Agreement and
the Additional Agreements by Sellers nor the consummation by Sellers of the
transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the Certificate of Incorporation or Bylaws of any
Seller; (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, material agreement or other instrument
or obligation to which any Seller is a party or by which it, or any of the
Purchased Assets, may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which, would not, individually or in the
aggregate, create a Material Adverse Effect; or (iii) constitute violations of
any law, regulation, order, judgment or decree applicable to any Seller, which
violations, individually or in the aggregate, would create a Material Adverse
Effect.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Sellers' Required Regulatory Approvals"), no consent or approval of, filing
--------------------------------------
with, or notice to, any Governmental Authority is necessary for the execution
and delivery of this Agreement and the Additional Agreements by Sellers or the
consummation by Sellers of the transactions contemplated hereby or thereby,
other than (i) such consents, approvals, filings or notices which, if not
obtained or made, will not prevent Sellers from performing its material
obligations under this Agreement and the Additional Agreements and (ii) such
consents, approvals, filings or notices which become applicable to Sellers or
the Purchased 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.
4.4 Insurance. Except as set forth in Schedule 4.4, all material
---------
policies of fire, liability, workers' compensation and other forms of
insurance owned or held by, or on behalf of, Sellers and insuring the
Purchased Assets are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date hereof 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 4.4, as of the
date of this Agreement, none of the Sellers have been refused any insurance
with respect to the Purchased Assets nor have their respective coverages been
limited by any insurance carrier to which any of them have applied for any
such insurance or with which any of them have carried insurance during the
last twelve (12) months.
29
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4.5 Title and Related Matters. (a) Except as set forth in Schedule
-------------------------
4.5 and subject to Permitted Encumbrances, PP&L is the holder of record title
to the Real Property located at Sunbury Station and is the holder of the
surface rights to the Silt Reserves Real Property it is transferring and LJC
is the holder of the surface rights to the Real Property located at Lady Jane
it is transferring and PP&L or LJC, as applicable, has good and valid title to
the other Purchased Assets which it purports to own, free and clear of all
Encumbrances.
(b) Condition. The tangible assets (real and personal) at,
---------
related to, or used in connection with each of Sunbury SES, the CTGs, Lady
Jane, Buck Run, and Forrestville, in each case taken as a whole, (i) are in
good operating and usable condition and repair, free from any defects (except
for ordinary wear and tear, in light of their respective ages and historical
usages, and except for such defects as do not materially interfere with the
use thereof in the conduct of the normal operation and maintenance of the
Purchased Assets taken as a whole) and (ii) have been maintained consistent
with Good Utility Practices.
4.6 Environmental Matters. Except as disclosed in Schedule 4.6 or in
---------------------
any public filing made by Sellers or by any of their Affiliates pursuant to
the Securities Act or the Exchange Act or in the Environmental Report:
(a) Sellers hold, and are in substantial compliance with, all
permits, certificates, certifications, licenses and governmental
authorizations under Environmental Laws ("Environmental Permits") that are
---------------------
required for them to conduct the business and operations of the Purchased
Assets, and Sellers are otherwise in compliance with applicable Environmental
Laws with respect to the business and operations of the Purchased Assets,
except for such failures to hold or comply with required Environmental
Permits, or such failures to be in compliance with applicable Environmental
Laws, as would not, individually or in the aggregate, create a Material
Adverse Effect;
(b) No Seller has received any written request for information,
or been notified of any material violation, or that it is a potentially
responsible party, under CERCLA or any other Environmental Law for
contamination or air emissions at any of the Sites, except for such requests
or notices that would result in liabilities under such laws as would not be
reasonably likely to, individually or in the aggregate, create a Material
Adverse Effect and there are no claims, actions, proceedings or investigations
pending or, to the Knowledge of Sellers, threatened against any Seller before
any Governmental Authority or body acting in an adjudicative capacity relating
in any way to any Environmental Laws and concerning contamination or air
emissions at any of the Sites, except for such claims, actions, proceedings or
investigations as would not be reasonably likely to, individually or in the
aggregate, create a Material Adverse Effect, nor does any Seller have
Knowledge of any circumstances or facts that could reasonably be expected to
result in any such claims, actions, proceedings or investigations; and
(c) There are no outstanding judgments, decrees, or judicial
orders relating to the Purchased Assets regarding compliance with any
Environmental Law or to the investigation or cleanup of Hazardous Substances
under any Environmental Law relating to the Purchased Assets, except for such
consent decrees or orders, judgments, decrees or judicial orders as would not,
individually or in the aggregate, create a Material Adverse Effect.
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The representations and warranties made in this Section 4.6 are the
Sellers' exclusive representations and warranties relating to environmental
matters.
4.7 Labor Matters. Sellers have previously delivered to Buyer true and
-------------
correct copies of all collective bargaining agreements to which any Seller is
a party or is subject and which relate to the business and operations of the
Purchased Assets owned by it. With respect to the business or operations of
the Purchased Assets, except to the extent set forth in Schedule 4.7 and
except for such matters as will not, individually or in the aggregate, create
a Material Adverse Effect, (a) each Seller is in compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (b) no Seller has received
written notice of any unfair labor practice complaint against it pending
before the National Labor Relations Board; and (c) no arbitration proceeding
arising out of or under any collective bargaining agreements is pending
against any Seller.
4.8 Benefit Plans; ERISA. Schedule 4.8 lists all deferred
---------------------
compensation, profit-sharing, retirement and pension plans and all material
bonus, fringe benefit and other employee benefit plans maintained or with
respect to which contributions are made by PP&L or LJC in respect of the
current employees of PP&L and LJC connected with the Purchased Assets
("Benefit Plans"). No Benefit Plan is a "multiemployer plan," as defined in
-------------
Section 4001(a)(3) of ERISA. True and complete copies of all such Benefit
Plans have been made available to Buyer.
4.9 Real Property. Schedule 4.9 and Schedule 2.1(b) describes all of
-------------
the real property (including easements, if any) that are owned or used by any
Seller principally in connection with, or that are necessary for, the
ownership and operation of the Purchased Assets, substantially as presently
owned and operated by Sellers. To the Knowledge of Sellers, no fact or
condition exists which would prohibit or materially adversely affect the
ordinary rights of access to and from the Real Property or the Silt Reserves
Real Property from and to the existing highways and roads, as applicable, and
there is no pending, or to the Knowledge of Sellers, threatened restriction or
denial, governmental or otherwise, upon such ingress or egress except as
indicated on Schedule 4.10. Except as indicated on Schedule 4.9, the Sellers
have not received written notice that their occupation and use of the Real
Property or the Silt Reserves Real Property is in violation of any applicable
Law. Sellers have not received any written notice of any claim of adverse
possession or prescriptive rights involving any of the Real Property or the
Silt Reserves Real Property. To the Knowledge of Sellers, no public
improvements have been commenced and, Sellers have not received written notice
that any public improvements are planned, which in either case may result in
special assessments against any of the Real Property or the Silt Reserves Real
Property or otherwise create a Material Adverse Effect. Except as indicated
in Schedule 4.9, no Seller has any Knowledge of any order, writ, injunction,
or decree requiring repair or alteration of any existing condition materially
adversely affecting any Real Property, the Silt Reserves Real Property or the
Improvements thereat.
4.10 Condemnation. Except as set forth in Schedule 4.10, there are no
------------
pending or, to the Knowledge of Sellers, threatened proceedings or
governmental actions to condemn or take by power of eminent domain all or any
part of the Purchased Assets.
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4.11 Contracts and Leases. (a) Schedule 4.11(a) lists all written
--------------------
contracts, licenses (other than Permits or Intellectual Property), agreements
or personal property leases which are material to the business or operations
of the Purchased Assets, other than contracts, licenses, agreements or
personal property leases which are listed or described on another Schedule or
which constitute Excluded Assets or which are expected to expire or terminate
prior to the Closing Date.
(b) Except as disclosed in Schedule 4.11(b), each Sellers'
Agreement (i) constitutes a legal, valid and binding obligation of each Seller
that is a party thereto and, to such Seller's Knowledge, constitutes a valid
and binding obligation of the other parties thereto, (ii) is in full force and
effect and no Seller has delivered or received any written notice of
termination thereunder, and (iii) may be transferred to Buyer pursuant to this
Agreement without the consent of the other parties thereto and will continue
in full force and effect thereafter, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights thereunder.
(c) Except as set forth in Schedule 4.11(c), there is not
under any Sellers' Agreement any default or event which, with notice or lapse
of time or both, (i) would constitute a default on the part of any Seller that
is a party thereto or, to such Sellers' Knowledge, any other party thereto,
(ii) would constitute a default on the part of any Seller that is a party
thereto or, to such Sellers' Knowledge, any other party thereto which would
give rise to an automatic termination, or the right of discretionary
termination, thereof, or (iii) would cause the acceleration of any of the
Sellers' obligations thereunder or result in the creation of any Encumbrance
(other than any Permitted Encumbrance) on any of the Purchased Assets. There
are no claims, actions, proceedings or investigations pending or, to the
Knowledge of Sellers, threatened against any Seller or any other party to any
Sellers' Agreements, before any Governmental Authority or body acting in an
adjudicative capacity relating in any way to any of Sellers' Agreements or the
subject matter thereof. Sellers have no Knowledge of any defense, offset or
counterclaim arising under any Sellers' Agreement.
4.12 Legal Proceedings. Except as set forth in Schedule 4.12 or in
-----------------
any filing made by any Seller or any of their Affiliates pursuant to the
Securities Act or the Exchange Act, there are no actions or proceedings
pending or, to the Knowledge of Sellers, threatened against any Seller before
any court, arbitrator or Governmental Authority, which could, individually or
in the aggregate, reasonably be expected to create a Material Adverse Effect
or that question the validity of this Agreement or the Additional Agreements
or of any action taken or to be taken by any Seller or any of their respective
Affiliates pursuant to or in connection with the provisions of this Agreement
or the Additional Agreements. Except as set forth in Schedule 4.12 or in any
filing made by any Seller or any of their Affiliates pursuant to the
Securities Act or the Exchange Act, no Seller is subject to any outstanding
judgments, rules, orders, writs, injunctions or decrees of any court,
arbitrator or Governmental Authority which would, individually or in the
aggregate, create a Material Adverse Effect.
4.13 Permits. (a) PP&L and LJC have all permits, licenses, franchises
-------
and other governmental authorizations, consents and approvals (other than
Environmental Permits, which are addressed in Section 4.6 hereof)
(collectively, "Permits") necessary to own and operate the Purchased Assets
-------
except where the failure to have such Permits would not, individually or in
the
32
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aggregate, create a Material Adverse Effect. Except as disclosed in
Schedule 4.13(a) or in the Environmental Report, no Seller has received any
written notification that it is in violation, nor does any Seller have
Knowledge of any violations, of any such Permits, or any Law or judgment of
any Government Authority applicable to it with respect to the Purchased
Assets, except for violations which would not, individually or in the
aggregate, create a Material Adverse Effect.
(b) Schedule 4.13(b) sets forth all material Permits and
Environmental Permits, other than Transferable Permits (which are set forth on
Schedule 1.1(118)).
4.14 Taxes. Except as disclosed on Schedule 4.14, (i) Sellers have
-----
filed all Tax Returns that are required to be filed by them with respect to
any Tax, and Sellers have paid all Taxes that have become due as indicated
thereon, except where such Tax is being contested in good faith by appropriate
proceedings, or where the failure to so file or pay would not be reasonably
likely to create a Material Adverse Effect and (ii) there are no Encumbrances
for Taxes on the Purchased Assets that are not Permitted Encumbrances.
4.15 Year 2000. PP&L and LJC have put into effect practices and
---------
programs which PP&L and LJC reasonably believe will enable any of the
hardware, software and firmware products (including embedded microcontrollers
in non-computer equipment) which may be included in the Purchased Assets to be
transferred under this Agreement (the "Computer Systems") to be Year 2000
----------------
Ready by December 31, 1999. In addition, PP&L has put into effect practices
and programs which PP&L reasonably believes will enable the continuous
emissions monitoring system at Sunbury SES to be Year 2000 Compliant by
December 31, 1999. For purposes hereof, (i) "Year 2000 Ready" has the meaning
set forth in the Nuclear Regulatory Commission's Generic Letter 98-01,
entitled "Year 2000 Readiness of Computer Systems at Nuclear Power Plants,"
and (ii) "Year 2000 Compliant" means that the Computer Systems will correctly
differentiate between years, in different centuries, that end in the same two
digits, and will accurately process date/time data (including, but not limited
to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, including leap year calculations.
4.16 Intellectual Property. Except as set forth on Schedule 4.16 or
---------------------
in Section 2.2(f), Sellers have, or will as of the Closing have, such ownership
of or such rights by license or other agreement to use all Intellectual
Property necessary to permit Sellers to conduct their business as currently
conducted, except where the failure to have such ownership, license or right
to use would not, individually or in the aggregate, have a Material Adverse
Effect. Except as disclosed in Schedule 4.16 or Schedule 2.1(o), (i) the
Sellers are not, nor have they received any notice that they are, in default
(or with the giving of notice or lapse of time or both, would be in default),
under any contract to use such Intellectual Property, (ii) there are no
material restrictions on the transfer of any material contract, or any
interest therein, held by Sellers in respect of such Intellectual Property,
and (iii) to Sellers' Knowledge, such Intellectual Property is not being
infringed by any other Person. No Seller has received notice that it is
infringing any Intellectual Property of any other Person in connection with
the operation or business of the Purchased Assets and neither Seller, to their
Knowledge, is infringing any Intellectual Property of any other Person the
effect of which, individually or in the aggregate, would have a Material
Adverse Effect.
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4.17 Compliance with Laws. Except as disclosed in Schedule 4.17,
--------------------
Sellers are in compliance with all applicable Laws with respect to the
ownership or operation of the Purchased Assets except where the failure to be
in compliance would not, individually or in the aggregate, create a Material
Adverse Effect.
4.18 Sufficiency of Purchased Assets. Except (i) as set forth on
-------------------------------
Schedule 4.18, (ii) for any real or personal property interests necessary for
or used in connection with the provision of any of the services listed on
Schedule 6.13, (iii) as stated in the Environmental Report and (iv) for any
real or personal property interests which are not material to the ownership,
operation and maintenance of the Purchased Assets as historically owned,
operated and maintained by Sellers, and subject to (A) change in applicable
Law or interpretation thereof, after the Closing Date, and (B) events beyond
the control of the Sellers which may occur after the Closing Date, no real
property interests (including flowage rights and seepage rights), buildings,
structures, machinery, equipment, supplies, materials, spares, vehicles,
boats, trailers, contracts, agreements, rights (except Permits which are not
Transferable Permits), books, records, or other real or personal property or
interests, other than the Purchased Assets, are necessary for Buyer to own,
operate, or maintain the Purchased Assets, substantially as historically
owned, operated and maintained by Sellers. Subject to Buyer's receipt of all
necessary consents and approvals and except as set forth on Schedule 4.18, the
Purchased Assets, together with the Additional Agreements, are sufficient to
allow Buyer, after the Closing, to deliver the output of the Sunbury Station
to the PJM transmission system by and through the Seller's transmission system
at the respective interconnection points specified in the Interconnection
Agreement. As of the Closing Date, the Purchased Assets will meet the
standards required thereof and will include all Interconnection Equipment (as
defined in the Interconnection Agreement) required, in each case, as of the
Closing Date under the Interconnection Agreement and the other Additional
Agreements. Notwithstanding any provision in this Section 4.18 to the
contrary, Sellers make no representations or warranties as to the sufficiency
of the Emission Allowances which will be transferred to Buyer.
4.19 Conveyance of Real Property. No state, municipal, or other
---------------------------
governmental approval regarding the division, platting, or mapping of real
estate is required as a prerequisite to the conveyance by Sellers to Buyer (or
as a prerequisite to the recording of any conveyance document) of any Real
Property and any Silt Reserves Real Property pursuant to the terms hereof.
4.20 Emission Allowances. Subject to Sections 2.1(g) and 6.1(a)(ii),
-------------------
Sellers hold, and will transfer to Buyer at Closing, all of their right, title
and interest in, free and clear of all Encumbrances (except Permitted
Encumbrances), the Emission Allowances set forth in Schedule 2.1(g). There
have been no emission increases at Sunbury Station on or prior to the Closing
Date for which Buyer will be required to hold or obtain Emission Reduction
Credits on or after the Closing Date.
4.21 CTGs. The Sellers have, or will have prior to the Closing Date,
----
taken all action necessary under all applicable Laws (including, without
limitation, 25 Pa. Code Section 127.11a), and have, or will have prior to the
Closing Date, obtained all Permits and Environmental Permits required, to
reactivate and operate the CTGs on a continuing basis, substantially as
historically operated by Sellers prior to the deactivation of the CTGs on
May 17, 1996.
34
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4.22 Copies. To the extent that Sellers provided Buyer with a copy of
------
any Permit, Environmental Permit or Sellers' Agreement, such copy was true,
correct and complete in all material respects. Sellers provided a true,
correct and complete copy of the Environmental Report to Buyer.
4.23 Reports. Since January 1, 1996, Sellers have filed or caused to
-------
be filed with the SEC or the FERC, as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by Sellers with respect to the
business and operations of Sellers as it relates to the Purchased Assets under
each of the Securities Act, the Exchange Act, the Federal Power Act, and the
respective rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the appropriate act or
acts governing each such filing and the rules and regulations thereunder in
effect on the date each such report was filed.
4.24 Information. (a) The PP&L historical information set forth on
-----------
Schedule 4.24 was prepared in good faith and, to PP&L's Knowledge, does not
contain any material errors. The total amount reflected in the Materials and
Supplies Inventory List as of April 30, 1999 for Sunbury SES provided by PP&L
to Buyer agrees with the amount reflected in PP&L's general ledger. Buyer
acknowledges that the information referred to in this Section 4.24(a) is
historical in nature and is not necessarily indicative of future events or
circumstances or the future performance of the Purchased Assets, and Sellers
do not make any representations to such effect.
(b) The Line Arrangement-Block Diagrams set forth in Schedule
2.1(d)-1 accurately reflect, in all material respects, the equipment
configurations they purport to represent.
(c) The anthracite silt reserve inventory level at Forrestville
reflected on PP&L's general ledger was calculated by multiplying: (i) 701,651
tons of anthracite silt by (ii) ninety-two (92) cents per ton.
4.25 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
--------------------------------------
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
ASSETS ARE SOLD "AS IS, WHERE IS", AND SELLERS EXPRESSLY DISCLAIM ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE PURCHASED ASSETS, THE TITLE, CONDITION, VALUE
OR QUALITY OF THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE),
RISKS AND OTHER INCIDENTS OF THE PURCHASED ASSETS AND SELLERS SPECIFICALLY
DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE PURCHASED ASSETS, OR
ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING
BUT NOT LIMITED TO ANY
35
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ENVIRONMENTAL LAWS, OR WHETHER SELLERS POSSESS SUFFICIENT REAL PROPERTY OR
PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, SELLERS FURTHER SPECIFICALLY DISCLAIM ANY
REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER
ENVIRONMENTAL LAWS WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, SELLERS EXPRESSLY DISCLAIM ANY
REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION
OF THE PURCHASED ASSETS OR THE SUITABILITY OF THE PURCHASED
ASSETS FOR OPERATION AS A POWER PLANT OR AS A FUEL PROCESSING
FACILITY, AS APPLICABLE, AND NO SCHEDULE OR EXHIBIT TO THIS
AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION PROVIDED BY
OR COMMUNICATIONS MADE BY SELLERS OR THEIR RESPECTIVE
REPRESENTATIVES, OR BY ANY BROKER OR INVESTMENT BANKER, WILL
CAUSE OR CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE
TITLE, CONDITION, VALUE OR QUALITY OF THE PURCHASED ASSETS.
IN ADDITION, SELLERS EXPRESSLY DISCLAIM ANY AND ALL REPRESENTATIONS
AND WARRANTIES WITH RESPECT TO THE NAMES "SUNBURY STATION" AND "LADY JANE",
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS OR WARRANTIES OF
(1) TITLE; (2) LENGTH, NATURE, EXCLUSIVITY AND CONTINUITY OF USE;
(3) STRENGTH OR FAME; AND (4) NONINFRINGEMENT AND NONDILUTION OF
TRADEMARK, SERVICE MARK, TRADE NAME AND/OR OTHER PROPRIETARY RIGHTS OF
ANY THIRD PARTY. MOREOVER, BUYER ACKNOWLEDGES THAT "SUNBURY" HAS A
GEOGRAPHIC CONNOTATION ASSOCIATED WITH THE LOCATION OF CERTAIN OF THE
PURCHASED ASSETS.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows:
5.1 Organization. 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 or operate
its properties and to carry on its business as it is now being conducted.
Buyer is, or by the Closing will be, qualified to do business in the
Commonwealth of Pennsylvania. Buyer has heretofore delivered to Sellers
complete and correct copies of its articles of organization and by-laws (or
other similar governing documents) as currently in effect.
5.2 Authority. Buyer has full power and authority to execute and
---------
deliver this Agreement and each of the Additional Agreements and, subject to
receipt of Buyer's Required Regulatory Approvals, to consummate the
transactions contemplated by it hereby and thereby. The execution
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and delivery of this Agreement and each of the Additional Agreements by the
Buyer and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary action required on the
part of Buyer. This Agreement has been duly and validly executed and delivered
by Buyer and subject to the receipt of Buyer's Required Regulatory Approvals,
this Agreement constitutes, and upon the execution and delivery by Buyer of
each of the Additional Agreements, each such Additional Agreement will
constitute, legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
5.3 Consents and Approvals; No Violation.
------------------------------------
(a) Except as set forth in Schedule 5.3(a), and subject to
obtaining Buyer's Required Regulatory Approvals, neither the execution and
delivery of this Agreement and the Additional Agreements by Buyer nor the
consummation by Buyer of the transactions contemplated hereby and thereby will
(i) conflict with or result in any breach of any provision of the certificate
of incorporation or articles of organization, as applicable, or by-laws (or
other similar governing documents) of Buyer or its Affiliates; (ii) result in
a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material agreement or other instrument or
obligation to which Buyer, its Affiliates or any of their 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 or which would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, operations or condition (financial or otherwise) of Buyer,
including any change or effect that is materially adverse to Buyer's ability
to own, operate, or use the Purchased Assets as so owned, operated and used by
the Sellers prior to the date hereof and any change or effect that is
materially adverse to Buyer's ability to perform its obligations under this
Agreement or any Additional Agreement ("Buyer Material Adverse Effect"); or
-----------------------------
(iii) constitute violations of any law, regulation, order, judgment or decree
applicable to Buyer, which violations, individually or in the aggregate, would
create a Buyer Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as the
"Buyer's Required Regulatory Approvals"), no consent or approval of, filing
-------------------------------------
with, or notice to, any Governmental Authority is necessary for the execution
and delivery of this Agreement and the Additional Agreements by Buyer or the
consummation by Buyer of the transactions contemplated hereby and thereby,
other than such consents, approvals, filings or notices, which, if not
obtained or made, will not prevent Buyer from performing its obligations under
this Agreement and the Additional Agreements.
5.4 Availability of Funds. Buyer has sufficient funds and lines of
---------------------
credit available to it or has received binding written commitments from
creditworthy financial institutions, copies of which have been provided to
Sellers, to provide sufficient funds on the Closing Date to pay the Purchase
Price and to permit Buyer to timely perform all of its obligations (including,
without
37
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limitation, its obligations pursuant to Article VIII) under this Agreement and
the Additional Agreements.
5.5 Legal Proceedings. There are no actions or proceedings pending
-----------------
or, to the Knowledge of Buyer, threatened against Buyer before any court,
arbitrator or Governmental Authority, which could, individually or in the
aggregate, reasonably be expected to create a Buyer Material Adverse Effect or
that question the validity of this Agreement or the Additional Agreements or
of any action taken or to be taken pursuant to or in connection with the
provisions of this Agreement or the Additional Agreements. Buyer is not
subject to any outstanding judgments, rules, orders, writs, injunctions or
decrees of any court, arbitrator or Governmental Authority which would,
individually or in the aggregate, create a Buyer Material Adverse Effect.
5.6 Qualified Buyer. Buyer is qualified to obtain any Permits and
---------------
Environmental Permits necessary for Buyer to own and operate the Purchased
Assets as of the Closing.
5.7 WARN Act. Buyer does not intend to engage in a Plant Closing or
--------
Mass Layoff as such terms are defined in the WARN Act within sixty (60) days
of the Closing Date.
5.8 Equity Contribution Agreement. A true and correct copy of the
-----------------------------
Equity Contribution Agreement has been provided to Sellers. The execution and
delivery of the Equity Contribution Agreement by WPSR Capital and PDI and the
consummation of the transactions contemplated thereby has been duly and
validly authorized by all necessary corporate or other action required on the
part of each of WPSR Capital and PDI. The Equity Contribution Agreement has
been duly and validly executed and delivered by each of WPSR Capital and PDI
and constitutes the legal, valid and binding obligations of each of WPSR
Capital and PDI enforceable against each of WPSR Capital and PDI in accordance
with its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforcement
is considered in a proceeding at law or in equity).
ARTICLE VI
COVENANTS OF THE PARTIES
------------------------
6.1 Conduct of Business Relating to the Purchased Assets. (a) Except
----------------------------------------------------
as described in Schedule 6.1 or as expressly contemplated by this Agreement or
to the extent Buyer otherwise consents in writing, during the period from the
date of this Agreement to the Closing Date, Sellers will operate the Purchased
Assets in the ordinary course of business consistent with the past practices
of Sellers or their Affiliates and with Good Utility Practices and shall use
all Commercially Reasonable Efforts to preserve intact the Purchased Assets,
and endeavor to preserve the goodwill and relationships with customers,
suppliers and others having business dealings with it. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement or
as described in Schedule 6.1 or as required under applicable law or by any
Governmental Authority,
38
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between the date hereof and the Closing Date, without the prior written consent
of Buyer, Sellers shall not with respect to the Purchased Assets:
(i) Make any material change in the levels of Fuel
Inventories or Non-Fuel Inventories customarily maintained by Sellers or
their Affiliates with respect to the Purchased Assets;
(ii) Except as contemplated by Section 2.1(g), sell,
lease (as lessor), encumber, pledge, transfer or otherwise dispose of,
any Purchased Assets (except for Purchased Assets used, consumed or
replaced in the ordinary course of business consistent with past
practices of Sellers or their Affiliates and with Good Utility
Practices; provided, however, that except for such transfers as are
-------- -------
permitted pursuant to Section 10.6 hereof, prior to Closing, Sellers
shall not, and shall not enter into any agreements to, sell, encumber or
otherwise transfer any Emission Allowances to, or in favor of, any
Person who is not a Party to this Agreement) other than to encumber
Purchased Assets with Permitted Encumbrances;
(iii) Except for Permits and Environmental Permits
required to make the CTGs operational as required by Section 4.21 or as
otherwise indicated on Schedule 1.1(118) or Schedule 2.1(e), modify,
amend or voluntarily terminate prior to the expiration date any of the
Sellers' Agreements or any of the material Permits or Environmental
Permits in any material respect, other than (a) in the ordinary course
of business, to the extent consistent with the past practices of Sellers
or their Affiliates or with Good Utility Practices, (b) with cause, to
the extent consistent with past practices of Sellers or their Affiliates
or with Good Utility Practices, or (c) as may be required in connection
with transferring Sellers' rights or obligations thereunder to Buyer
pursuant to this Agreement; provided, however, that any material
-------- -------
modifications or amendments that Sellers propose to make pursuant to
clause (a), (b) or (c) of this Section 6.1(a)(iii) shall be in form and
substance reasonably satisfactory to Buyer;
(iv) Except as otherwise provided herein, enter into any
commitment for the purchase, sale, or transportation of fuel having a
term greater than six months and not terminable on or before the Closing
Date either (a) automatically or (b) by option of Sellers (or, after the
Closing, by Buyer) in their sole discretion;
(v) Except as otherwise provided herein, enter into any
contract, agreement, commitment or arrangement relating to the Purchased
Assets (other than Capital Expenditures) that individually exceeds
$25,000 or in the aggregate exceeds $500,000 unless it is terminable by
Sellers without penalty or premium upon no more than sixty (60) days
notice;
(vi) Except as otherwise required by the terms of the
IBEW Collective Bargaining Agreement, (a) materially increase salaries
or wages of employees employed in connection with the Purchased Assets
prior to the Closing, (b) take any action prior to the Closing to effect
a material change in the IBEW Collective Bargaining Agreement, or (c)
39
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take any action prior to the Closing to materially increase the
aggregate benefits payable to the employees employed in connection with
the Purchased Assets;
(vii) Make any Capital Expenditures except as permitted by
Section 3.3(a)(iii) or for Sellers' account;
(viii) Fail to maintain, by self insurance or with
financially responsible insurance companies, insurance in such amounts
and against such risks and losses as are customary for such assets and
related business;
(ix) Enter into, amend, terminate, extend or otherwise
modify any real or personal property Tax agreement, treaty or settlement
affecting the Purchased Assets;
(x) Make any material change in the quantity of
anthracite silt located at Buck Run or Forrestville;
(xi) Enter into any settlement agreement or arrangement
with respect to any IBEW Grievance that is reasonably likely to cause a
Material Adverse Effect; or
(xii) Except as otherwise provided herein, enter into any
written or oral contract, agreement, commitment or arrangement with
respect to any of the proscribed transactions set forth in the foregoing
paragraphs (i) through (xi).
6.2 Access to Information.
---------------------
(a) Between the date of this Agreement and the Closing
Date, Sellers will (i) during ordinary business hours and upon reasonable
notice, give Buyer and its Representatives reasonable access to all books,
records, plans, offices and other facilities and properties constituting the
Purchased Assets or the Assumed Liabilities; (ii) furnish Buyer with such
financial and operating data and other information with respect to the
Purchased Assets or the Assumed Liabilities as Buyer may from time to time
reasonably request; and (iii) furnish Buyer with a copy of each material
report, schedule, or other document filed or received by each Seller with the
SEC, FERC, PaPUC, or other Governmental Authority with respect to the
Purchased Assets or the Assumed Liabilities; and (iv) furnish Buyer with all
such other information as shall be reasonably necessary to enable Buyer to
verify the accuracy of the representations and warranties of Sellers contained
in this Agreement; provided, however, that (A) any such inspections and
investigations shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) Sellers shall not
be required to take any action which would constitute a waiver of the
attorney-client or other privilege, and (C) Sellers need not supply Buyer with
any information which Sellers are under a legal or contractual obligation not
to supply. Notwithstanding anything in this Section 6.2 to the contrary,
prior to the Closing Date, Buyer shall not have the right to perform or
conduct any environmental sampling or testing at, in, on, or underneath the
Purchased Assets (except for such environmental sampling or testing as Buyer
may reasonably deem necessary to investigate (i) the validity of any claims,
actions, proceedings or investigations instigated by any Governmental
Authority on or after the date hereof with respect to any alleged violation of
Environmental Laws
40
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or (ii) any other environmental condition arising or occurring on or after the
date hereof which Buyer reasonably believes may constitute a violation of
Environmental Laws) and Sellers will only furnish or provide such access to
employee personnel records and files to the extent that such records and files
pertain to the following: (i) skill and development training; (ii) seniority
histories; (iii) salary and benefit information; (iv) Occupational, Safety and
Health Administration reports; (v) active medical restriction forms; and (vi)
disciplinary and attendance histories.
(b) All information furnished to or obtained by Buyer and
Buyer's Representatives pursuant to this Section 6.2 shall be Proprietary
Information. Each Party shall, and shall cause its Representatives to, (a)
keep all Proprietary Information of the other Party confidential and not
disclose or reveal any such Proprietary Information to any Person other than
such Party's Representatives and (b) not use such Proprietary Information
other than in connection with the consummation of the transactions
contemplated hereby. After the Closing Date, any Proprietary Information
solely related to the Purchased Assets shall no longer be subject to the
restrictions set forth herein. The obligations of the Parties under this
Section 6.2(b) shall be in full force and effect for three (3) years from the
date hereof and will survive the termination of this Agreement, the discharge
of all other obligations owed by the Parties to each other and the Closing of
the transactions contemplated by this Agreement.
(c) For a period of seven (7) years after the Closing Date, each
Party and its Representatives shall have reasonable access to all of the books
and records of the Purchased Assets, including all Transferring Employee
Records in the possession of the other Party to the extent that such access
may reasonably be required by such Party in connection with the Assumed
Liabilities or the Excluded Liabilities, or other matters relating to or
affected by the operation of the Purchased Assets. Such access shall be
afforded by the Party in possession of any such books and records upon receipt
of reasonable advance notice and during normal business hours. The Party
exercising this right of access shall be solely responsible for any costs or
expenses incurred by it or the other Party with respect to such access
pursuant to this Section 6.2(c). If the Party in possession of such books and
records shall desire to dispose of any books and records upon or prior to the
expiration of such seven-year period, such Party shall, prior to such
disposition, give the other Party a reasonable opportunity at such other
Party's expense, to segregate and remove such books and records as such other
Party may select.
(d) Notwithstanding the terms of Section 6.2(b) above, the
Parties agree that prior to the Closing, Buyer may reveal or disclose
Proprietary Information to any other Persons in connection with Buyer's
financing of its purchase of the Purchased Assets (provided that such Persons
agree in writing to maintain the confidentiality of the Proprietary
Information in accordance with this Agreement).
(e) Notwithstanding the terms of Section 6.2(b) above, any Party
may provide Proprietary Information of the other Parties to the PaPUC, the
SEC, the FERC or any other Governmental Authority with jurisdiction or any
stock exchange, as may be necessary to obtain Sellers' Required Regulatory
Approvals or Buyer's Required Regulatory Approvals, respectively, or to comply
generally with any relevant Laws. The disclosing Party will seek confidential
treatment for the Proprietary Information provided to any Governmental
Authority and the disclosing Party
41
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will notify the other Parties as far in advance as is practicable of its
intention to release to any Governmental Authority any Proprietary Information.
(f) Except as specifically provided herein or in the
Confidentiality Agreement, nothing in this Section shall impair or modify any
of the rights or obligations of Buyer or its Affiliates under the
Confidentiality Agreement, all of which remain in effect until termination of
such agreement in accordance with its terms.
(g) Except as may be permitted in the Confidentiality Agreement,
Buyer agrees that, prior to the Closing Date, it will not contact any vendors,
suppliers, employees, or other contracting parties of Sellers or their
Affiliates with respect to any aspect of the Purchased Assets or the
transactions contemplated hereby, without the prior written consent of
Sellers, which consent shall not be unreasonably withheld.
(h) A committee comprised of one Representative designated by
Sellers and one Representative designated by Buyer, and such additional
Representatives as may be appointed by the Representatives originally
appointed to such committee (the "Transition Committee") will be established,
--------------------
as soon after the execution of this Agreement as is practicable, to examine
the business issues affecting the Purchased Assets, including the operations
thereof, giving emphasis to cooperation between Buyer and Sellers after the
execution of this Agreement. From time to time, the Transition Committee
shall report its findings to the senior management of each of Sellers and
Buyer.
(i) The Parties agree that between the date hereof and the
Closing Date, at the sole responsibility and expense of Buyer, Sellers will
permit designated Representatives ("Observers") of Buyer to regularly observe,
---------
in the presence of personnel of Sellers and at Buyer's reasonable discretion,
all operations of Sellers that relate specifically to the Purchased Assets,
and the operation thereof, and to observe material discussions with third
parties relating specifically to the Purchased Assets; provided, however, that
-------- -------
(A) any such observations shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Purchased Assets, (B) Buyer
shall not be entitled to observe any discussions between any Seller and its
legal counsel or accountants and shall not otherwise be entitled to observe
any activities or discussions which may constitute a waiver of the attorney-
client or other privilege, and (C) Sellers need not permit the Observers to
observe or participate in discussions concerning any information which Sellers
are under a legal or contractual obligation not to disclose. The Observers
may recommend or suggest that actions be taken or not be taken by Sellers;
provided, however, that Sellers will be under no obligation to follow any such
- -------- -------
recommendations or suggestions (except as required to remain in compliance
with Sellers' obligations pursuant to Section 6.1 hereof) and that Sellers
shall be entitled, subject to the terms of this Agreement, to conduct their
business in accordance with their own judgment and discretion. The Observers
shall have no authority to bind or make agreements on behalf of Sellers, to
conduct discussions with or make representations to third parties on behalf of
Sellers or to issue instructions to or direct or exercise authority over
Sellers or any of their respective officers, employees, advisors or agents.
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6.3 Public Statements. Subject to the requirements imposed by any
-----------------
Governmental Authority or stock exchange, prior to the Closing Date, no press
release or other public announcement or public statement or comment in
response to any inquiry relating to the transactions contemplated by this
Agreement or the Additional Agreements shall be issued or made by any Party
without the prior approval of the other Parties (which approval shall not be
unreasonably withheld). The Parties agree to cooperate in preparing such
announcements.
6.4 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. Notwithstanding anything to the contrary herein, Sellers will be
responsible for (a) all costs and expenses associated with the obtaining of
any title insurance policy and all endorsements thereto that Buyer obtain
pursuant to Section 6.12, (b) all Survey costs and expenses, (c) all real
estate transfer taxes required pursuant to the transactions contemplated
hereby (including, without limitation, the Pennsylvania transfer tax on
conveyances of interests in real property), and (d) all filing fees under the
HSR Act, in each case within a reasonable time of Sellers' receipt of
documentation of such expenses satisfactory to Sellers.
6.5 Further Assurances.
------------------
(a) Subject to the terms and conditions of this Agreement, each
of the Parties hereto shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws to consummate and make effective the
purchase and sale of the Purchased Assets pursuant to this Agreement, the
assumption of the Assumed Liabilities and the execution and delivery of each
Additional Agreement, including, without limitation, using its best efforts to
ensure satisfaction of the conditions precedent to each Party's obligations
hereunder, including obtaining all necessary consents, approvals, and
authorizations of third parties required to be obtained in order to consummate
the transactions hereunder, and to effectuate a transfer of the Transferable
Permits to Buyer. Sellers shall cooperate with Buyer in its efforts to obtain
all other Permits and Environmental Permits necessary for Buyer to operate the
Purchased Assets. Buyer agrees to perform all conditions required of Buyer in
connection with the Sellers' Required Regulatory Approvals. Neither of the
Parties hereto shall, without prior written consent of the other Party, take
or fail to take any action, which might reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by
this Agreement.
(b) In the event that any Purchased Asset shall not have been
conveyed to Buyer at the Closing, Sellers shall, subject to Sections 6.5(c)
and 6.5(d), convey such asset to Buyer as promptly as is practicable after the
Closing.
(c) To the extent that Sellers' rights under any Sellers'
Agreement may not be assigned without the consent of another Person which
consent has not been obtained by the Closing Date, this Agreement shall not
constitute an agreement to assign the same, if an attempted assignment would
constitute a breach thereof or be unlawful. Sellers and Buyer agree that if
any consent to an assignment of any Sellers' Agreement shall not be obtained
or if any attempted
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assignment would be ineffective or would impair Buyer's rights and obligations
under the Sellers' Agreement in question, so that Buyer would not in effect
acquire the benefit of all such rights and obligations, Sellers, at their
option and to the maximum extent permitted by law and such Sellers' Agreement,
shall, after the Closing Date, (i) appoint Buyer to be Sellers' agent with
respect to such Sellers' Agreement or (ii) to the maximum extent permitted
by law and such Sellers' Agreement, enter into such reasonable arrangements
with Buyer or take such other actions as are necessary to provide Buyer
with the same or substantially similar rights and obligations of such
Sellers' Agreement. Sellers and Buyer shall cooperate and shall each use
Commercially Reasonable Efforts prior to and after the Closing Date to
obtain an assignment of such Sellers' Agreement to Buyer.
(d) To the extent that Sellers' rights under any warranty or
guaranty described in Section 2.1(j) may not be assigned without the consent
of another Person, which consent has not been obtained by the Closing Date,
this Agreement shall not constitute an agreement to assign the same, if an
attempted assignment would constitute a breach thereof or be unlawful.
Sellers and Buyer agree that if any consent to an assignment of any such
warranty or guaranty shall not be obtained or if any attempted assignment
would be ineffective or would impair Buyer's rights and obligations under the
warranty or guaranty in question, so that Buyer would not in effect acquire
the benefit of all such rights and obligations, Sellers shall use Commercially
Reasonable Efforts to the extent permitted by law and such warranty or
guaranty, to enforce such warranty or guaranty for the benefit of Buyer to the
maximum extent possible so as to provide Buyer with the benefits and
obligations of such warranty or guaranty. Notwithstanding the foregoing,
Sellers shall not be obligated to bring or file suit against any third party,
provided that if Sellers shall determine not to bring or file suit after being
requested by Buyer to do so, Seller shall assign, to the extent permitted by
law or any applicable agreement or contract, its rights in respect of the
claims so that Buyer may bring or file such suit.
(e) Notwithstanding the foregoing, nothing in this Section 6.5
shall require Sellers or Buyer to waive any conditions to Closing set forth in
Section 7.1 and 7.2 or to waive any other provision of this Agreement.
6.6 Consents and Approvals.
----------------------
(a) As promptly as possible, and in any case within thirty (30)
days, after the date of this Agreement, Sellers and Buyer shall each file, or
cause to be filed, with the Federal Trade Commission and the United States
Department of Justice any initial 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 use their respective
best efforts 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. Sellers will pay all filing fees under the HSR Act, but each Party
will bear its own costs of the preparation of any filing.
(b) As promptly as possible, and in any case within thirty (30)
days, after the date of this Agreement, Sellers and Buyer shall each file, or
cause to be filed, with the PaPUC, the FERC and any other Governmental
Authority, any initial filings required to be made with respect to the
44
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transactions contemplated hereby. The Parties shall respond promptly to any
requests for additional information made by such agencies, and use their
respective best efforts to cause regulatory approval to be obtained at the
earliest possible date after the date of filing. Each Party will bear its own
costs of the preparation of any such filing.
(c) Sellers and Buyer shall cooperate with each other and
promptly prepare and file notifications with, and request Tax clearances from,
state and local taxing authorities in jurisdictions in which a portion of the
Purchase Price may be required to be withheld or in which Buyer would
otherwise be liable for any Tax liabilities of Sellers pursuant to such state
and local Tax law.
(d) As promptly as possible, and in any case within thirty (30)
days after the date of this Agreement, Buyer and Sellers shall initiate all
necessary measures, including filing all necessary applications, and Buyer
shall post all necessary performance, surety or other bonds to effectuate (i)
the transfer of all Environmental Permits and (ii) the release of any
performance, surety or other bonds provided by any Seller with respect to any
of the Purchased Assets.
(e) Sellers and Buyer shall have the right to review in advance
all characterizations of the information relating to the transactions
contemplated by this Agreement or in any of the Additional Agreements which
will appear in any filing made in connection with the transactions
contemplated hereby or thereby.
(f) Notwithstanding anything herein to the contrary, Sellers
shall use Commercially Reasonable Efforts to assist Buyer in obtaining all
third party consents (including, without limitation, consents to the
collateral assignment in favor of Buyer's lenders of contracts or agreements
included in the Purchased Assets), agreements, certificates, opinions, and
other documents or instruments reasonably requested by Buyer's lenders in
connection with the financing, on a non- or limited recourse basis or
otherwise, of Buyer's acquisition of the Purchased Assets hereunder, all of
which shall be at Buyer's sole cost and expense to the extent that any such
items are not otherwise required of Sellers hereunder or under any of the
Additional Agreements. From time to time after the date hereof, the Sellers
will, execute and/or deliver such consents (including, without limitation,
consents to the collateral assignment in favor of Buyer's lenders of the
Additional Agreements), agreements, certificates, opinions, and other
documents or instruments to Buyer's lenders as Buyer's lenders may reasonably
request in connection with the financing, on a non- or limited recourse basis
or otherwise, of Buyer's acquisition of the Purchased Assets hereunder;
provided, however, that Buyer will reimburse Seller for all reasonable, out-
of-pocket expenses incurred in connection therewith.
6.7 Fees and Commissions. Sellers and Buyer represent and warrant to
--------------------
the other that, except for J.P. Morgan Securities Inc., which is acting for
and at the expense of Sellers, and Pricewaterhouse Coopers Securities LLC
which is acting for and at the expense of 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. Sellers, on the one hand, and
Buyer, on the other hand, will pay to the other or otherwise discharge, and
will indemnify and hold the other harmless from and against, any and all
45
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claims or liabilities for all brokerage fees, commissions and finder's fees
(other than the fees, commissions and finder's fees payable to the parties
listed above) incurred by reason of any action taken by the indemnifying
party.
6.8 Tax Matters.
-----------
(a) Other than real estate transfer taxes as provided in Section
6.4 hereof, all transfer, excise, documentary, filing, recordation and similar
taxes shall be borne 50% by Buyer and 50% by Sellers. All sales taxes
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, Pennsylvania sales tax) shall be borne
by Buyer. Sellers shall file, to the extent required by, or permissible
under, applicable law, all necessary Tax Returns and other documentation with
respect to all such transfer and sales taxes, and, if required by applicable
law, Buyer shall join in the execution of any such Tax Returns and other
documentation. Prior to the Closing Date, to the extent applicable, Buyer
shall provide to Sellers appropriate certificates of Tax exemption from each
applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with
Section 3.5 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Closing Date with respect to the
Purchased Assets, if any, and shall duly and timely pay all such Taxes shown
to be due on such Tax Returns. Buyer's preparation of any such Tax Returns
shall be subject to Sellers' approval, which approval shall not be
unreasonably withheld. Buyer shall make such Tax Returns available for
Sellers' review and approval no later than fifteen (15) Business Days prior to
the due date for filing each such Tax Return.
(c) Buyer and Sellers shall provide the other with such
assistance as may reasonably be requested by the other Party in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each shall retain and provide the requesting party
with any records or information which may be relevant to such return, audit,
examination or proceedings. Any information obtained pursuant to this Section
6.8(c) or pursuant to any other Section hereof providing for the sharing of
information or review of any Tax Return or other instrument relating to Taxes
shall be kept confidential by the parties hereto.
(d) Disputes. In the event that a dispute arises between any
--------
Seller and Buyer regarding Taxes, or any amount due under this Section 6.8,
the affected Parties shall attempt in good faith to resolve such dispute and
any agreed upon amount shall be paid to the appropriate Party. If such dispute
is not resolved within thirty (30) days, the affected Parties shall submit the
dispute to an Independent Accounting Firm for resolution within thirty (30)
days thereafter, which resolution shall be final, conclusive and binding on
such Parties. Notwithstanding anything in this Agreement to the contrary, the
fees and expenses of the Independent Accounting Firm in resolving the dispute
shall be borne 50% by the affected Seller and 50% by Buyer. Any payment
required to be made as a result of the resolution of the dispute by the
Independent Accounting Firm shall be made within ten (10) days after such
resolution, together with any interest, as required for the applicable Tax.
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6.9 Advice of Changes. (a) Prior to the Closing, each Party will
-----------------
advise the other in writing with respect to any matter arising after execution
of this Agreement of which that Party obtains Knowledge and which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto.
(b) Prior to the Closing Date, each Party shall supplement or
amend the Schedules required by this Agreement with respect to any matter
relating to the subject matter thereof hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Schedules by such Party. No supplement or amendment
of any Schedule made pursuant to this Section 6.9(b) shall be deemed to cure
any breach of, or expand or limit the scope of, or otherwise modify or affect
any representation or warranty made in this Agreement unless the Parties agree
thereto in writing.
(c) Without limiting the generality of the provisions of
Sections 6.2 and 6.9(a), each Party will advise the other in writing, promptly
upon obtaining Knowledge thereof but in any event within a reasonable period
of time prior thereto, of any hearings or proceedings before any Governmental
Authority which concern any of the Sellers' Required Regulatory Approvals or
the Buyer's Required Regulatory Approvals. Each Party agrees that the other
Parties hereto shall be permitted to participate in any such hearings or
proceedings and to use Commercially Reasonable Efforts to cooperate with such
other Parties in the advancement of any position reasonably taken by such
other Parties to protect their respective interests, and in any case shall not
take any position that may create a Material Adverse Effect or a Buyer
Material Adverse Effect in any such hearing or proceeding.
6.10 Employees.
---------
(a) Buyer shall have the right to offer employment, effective as
of the Closing Date, to any of those employees of PP&L employed at Sunbury SES
as of the Closing Date who are covered by the IBEW Collective Bargaining
Agreement (the "Union Employees"). Each person who becomes employed by Buyer
---------------
pursuant to this Section 6.10(a) shall be referred to herein as a "Transferred
-----------
Union Employee".
- --------------
(b) In order to encourage those Union Employees to whom Buyer
offers employment pursuant to Section 6.10(a) to accept Buyer's offer, Buyer
shall, concurrent with the offer of employment, offer a transition bonus equal
to $5,000 to each Union Employee who accepts employment with Buyer. Such
bonus shall be payable on the date which is fourteen (14) Business Days after
Closing.
(c) Any Union Employee who is not offered employment with Buyer
or who refuses an offer of employment from Buyer will be treated by PP&L, at
PP&L's expense, as a displaced employee under the terms of the IBEW Collective
Bargaining Agreement.
(d) (i) Schedule 6.10(d) sets forth a list of the collective
bargaining agreements and amendments thereto, to which PP&L is a party with
the IBEW in connection with the Purchased Assets (collectively, the "IBEW
----
Collective Bargaining Agreement"). Transferred Union Employees
- -------------------------------
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shall retain their seniority and receive full credit for service with PP&L in
connection with entitlement to vacation and all other benefits and rights under
the IBEW Collective Bargaining Agreement to which seniority or years of service
are applicable. On the Closing Date, Buyer shall, subject to the terms and
conditions of the IBEW Memorandum of Understanding (as hereinafter defined),
assume the IBEW Collective Bargaining Agreement for the duration of its term
as it relates to Transferred Union Employees and other employees to be
employed at Sunbury Station in positions covered by the IBEW Collective
Bargaining Agreement and shall comply with all applicable obligations under
the IBEW Collective Bargaining Agreement. Buyer shall be required to establish
a pension plan and benefit programs for the duration of the term of the IBEW
Collective Bargaining Agreement which are substantially equivalent to PP&L's
plans and provide at least the same level of benefits or coverage as do PP&L's
plans as of the Closing Date in accordance with any restrictions contained in
the IBEW Collective Bargaining Agreement, as modified by the IBEW Memorandum
of Understanding (as defined in Section 7.1(q)). Buyer further agree to
recognize the IBEW as the collective bargaining agent for the employees in
positions covered by the IBEW Collective Bargaining Agreement.
(e) Buyer shall also have the right to offer employment,
effective as of the Closing Date, to each employee of Sellers who is listed on
Schedule 6.10(e) (the "Non-Union Employees"). Each person who becomes employed
-------------------
by Buyer pursuant to this Section 6.10(e) shall be referred to herein as a
"Transferred Non-Union Employee". All such offers of employment shall be
------------------------------
subject to the following requirements:
(i) Each Non-Union Employee who is offered employment by
Buyer shall be offered a full time position with Buyer for a minimum
period of two years after the Closing Date (the "Employment Term");
---------------
provided, however, that nothing herein shall prevent Buyer from
-------- -------
terminating any Non-Union Employee for wilful misconduct as that term
has been construed under the Pennsylvania Unemployment Compensation Act.
(ii) During the Employment Term, Buyer shall pay each
Transferred Non-Union Employee such annual salary and opportunity for
bonuses or other incentive compensation and provide each Transferred
Non-Union Employee with such benefits that are not less, in the
aggregate, than the annual salary and opportunity for bonuses or other
incentive compensation and benefits that such Transferred Non-Union
Employee received from Sellers with respect to the calendar year ended
December 31, 1998.
(iii) Transferred Non-Union Employees shall be given credit
for all service with Sellers and their Affiliates under all employee
benefit plans, programs, and fringe benefit plans programs, and fringe
benefit arrangements of Buyer ("Buyer's Benefit Plans") in which they
---------------------
become participants; provided, however, that such service shall not be
-------- -------
required to be recognized to the extent that such recognition would
result in a duplication of benefits.
(iv) As of the Closing Date, all Transferred Non-Union
Employees shall cease to participate in the employee welfare benefit
plans (as such term is defined in ERISA) maintained or sponsored by
Sellers or their Affiliates (the "Prior Welfare Plans") and shall
-------------------
commence to participate in welfare benefit plans of Buyer or its
Affiliates (the "Replacement
-----------
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Welfare Plans"). Buyer shall (i) waive all limitations as to pre-existing
-------------
condition exclusions and waiting periods with respect to the Transferred
Non-Union Employees under the Replacement Welfare Plans, other than, but
only to the extent of, limitations or waiting periods that were in effect
with respect to such employees under the Prior Welfare Plans and that have
not been satisfied as of the Closing Date, and (ii) provide each
Transferred Non-Union Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any deductible or
out-of-pocket requirements under the Replacement Welfare Plans (on a
pro-rata basis in the event of a difference in plan years).
(v) Buyer shall pay each Transferred Non-Union Employee a
transition bonus equal to $5,000 on the date which is fourteen (14)
Business Days after Closing. In addition, Buyer shall pay each such
Transferred Non-Union Employee a retention bonus equal to $5,000 upon
the fifth anniversary of such Transferred Non-Union Employee's
employment with Buyer.
(vi) If a Transferred Non-Union Employee is terminated by
Buyer (other than for wilful misconduct) prior to the third anniversary
of such Transferred Non-Union Employee's employment with Buyer, then (i)
with respect to all such Non-Union Employees who were not employees of
LJC as of the Closing Date, PP&L or an Affiliate of PP&L, will either,
at its sole discretion and at its expense, (A) treat the employee as a
displaced manager under PP&L's then current policies or (B) consider the
employee for reemployment with PP&L or an Affiliate of PP&L (but with no
obligation to hire such employee), and (ii) with respect to all such
Non-Union Employees who were employees of LJC as of the Closing Date,
PP&L or an Affiliate of PP&L, at its expense, will treat the employee as
a terminated employee pursuant to the terms of any severance agreement
or policy in effect for such employees as of the Closing Date. Any
severance obligations on the part of PP&L or an Affiliate of PP&L will,
however, be reduced by the amount of any severance payments made by
Buyer.
(f) Any Non-Union Employees who are not LJC employees as of the
Closing Date, and who are not offered or do not accept employment offers from
Buyer, will be treated as displaced employees under current PP&L policies at
PP&L's expense. Any Non-Union Employees who are LJC employees as of the
Closing Date, and who are not offered or do not accept employment offers from
Buyer, will receive severance under the severance agreement or policy in
effect for such employees as of the Closing Date, at PP&L's expense. Neither
Buyer nor any of its Affiliates will hire any employee who receives severance
from PP&L or LJC for a period of one year from the date of termination giving
rise to such severance.
(g) As soon as practicable after, and in any event within ninety
(90) days after, and effective as of, the Closing Date, Buyer shall establish
a defined benefit pension plan (or plans) and trust (or trusts) intended to
qualify under Section 401(a) and Section 501(a) of the Code (such plan or
plans referred to as "Buyer's Pension Plan"). As soon as practicable
--------------------
following receipt by Sellers of written evidence of the adoption of Buyer's
Pension Plan and the trust (or trusts) thereunder by Buyer and either (A) the
receipt by Sellers of a copy of a favorable determination letter issued by the
Internal Revenue Service with respect to Buyer's Pension Plan or (B) an
opinion,
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satisfactory to Sellers' counsel, of Buyer's counsel to the effect that the
terms of Buyer's Pension Plan and its related trust qualify under Section
401(a) and Section 501(a) of the Code, Sellers shall direct the trustee or
trustees of the PP&L Retirement Plan ("Sellers' Pension Plan") to transfer
---------------------
from the trust or trusts under Sellers' Pension Plan to the trust or trusts
under Buyer's Pension Plan, an amount determined by the certified actuary
of the Sellers' Pension Plan ("Sellers' Actuary"), which shall be equal to
----------------
(i) the present value of all accrued benefits, including all ancillary
benefits, under Sellers' Pension Plan as of the Closing Date, in respect
of those Transferred Union Employees and Transferred Non-Union Employees
who are participants in Sellers' Pension Plan as of the Closing Date and
who become employees of Buyer or any subsidiary immediately following
the Closing Date ("Transferred Pension Employees") plus (ii) interest
-----------------------------
accrued from the Closing Date to the date of transfer on the amount of
assets to be transferred, determined at a rate reasonably determined by
Sellers' Actuary. The calculation of the present value of the benefits
described in clause (i) of the preceding sentence shall be determined
on an ongoing basis utilizing the current assumptions used by the
Sellers for accounting purposes (Financial Accounting Standard 87)
under Sellers' Pension Plan, except that the discount rate used
shall be 5.75%. The determination by Sellers' Actuary shall be final
and binding (it being understood, however, that Sellers' Actuary
shall consult in good faith with an actuary selected by the Buyer
prior to making any final determination). Transferred Pension
Employees shall cease to accrue benefits under Sellers' Pension
Plan as of the Closing Date. At the time of transfer of the a
mount set forth in this Section 6.10(g), Buyer's Pension Plan
shall assume all liabilities for all accrued benefits, including
all ancillary benefits, under Sellers' Pension Plan in respect of
Transferred Pension Employees and Sellers' Pension Plan shall be
relieved of all liabilities for such benefits. Notwithstanding
any other provisions in this Section 6.10(g), the amount of assets
to be transferred pursuant to this Section shall satisfy the
applicable requirements of Section 414(l) of the Code and it
is expected that the amount described in this Section 6.10(g)
will satisfy such
Code requirements.
Buyer and Sellers shall provide each other with such records and
information as may be necessary or appropriate to carry out their obligations
under this Section 6.10(g) for the purposes of administration of Buyer's
Pension Plan, and they shall cooperate in the filing of documents required by
the transfer of assets and liabilities described herein. Notwithstanding
anything contained herein to the contrary, no such transfer shall take place
until the 31st day following the filing of all required Forms 5310-A in
connection therewith.
(h) To the extent allowable by Law, Buyer shall take any and all
necessary action to cause the trustee of Buyer's defined contribution plan, if
requested to do so by a Transferred Union Employee or a Transferred Non-Union
Employee, to accept a direct "rollover" of all or a portion of said employee's
distribution from any tax qualified defined contribution plan or plans of
Sellers or any Affiliate thereof, into the tax qualified defined contribution
plan maintained by Buyer or an Affiliate of Buyer.
(i) Sellers shall be responsible, with respect to the Purchased
Assets, 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 of any "employment loss" within the meaning of the WARN Act
which occurs prior to the Closing Date.
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6.11 Risk of Loss.
------------
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the property included in the Purchased Assets shall be borne
by Sellers, other than loss or damage caused by the acts or negligence of
Buyer or any of their respective Representatives, which loss or damage shall
be the responsibility of Buyer.
(b) If, before the Closing Date, all or any portion of the
Purchased Assets is (i) taken by eminent domain or is the subject of a pending
or (to the Knowledge of Sellers) contemplated taking which has not been
consummated, or (ii) damaged or destroyed by fire or other casualty, Sellers
shall notify Buyer promptly in writing of such fact, and (x) in the case of a
condemnation, Sellers shall assign or pay, as the case may be, any proceeds
thereof to Buyer at the Closing and (y) in the case of a casualty, Sellers
shall either restore the damage to the reasonable satisfaction of Buyer or
assign the insurance proceeds therefor to Buyer at the Closing.
Notwithstanding the above, if such casualty or loss results in a Material
Adverse Effect, Buyer and Sellers shall negotiate to settle the loss resulting
from such taking (and such negotiation shall include, without limitation, the
negotiation of a fair and equitable adjustment to the Purchase Price). If no
such settlement is reached within sixty (60) days after Sellers have notified
Buyer of such casualty or loss, then Buyer or Sellers may terminate this
Agreement pursuant to Section 9.1(h).
6.12 Real Property Title; Title Insurance; Surveys.
---------------------------------------------
(a) Sellers shall deliver to Buyer a complete set of surveys
("Surveys") and title insurance commitments ("Title Commitments") for the Real
------- -----------------
Property (excluding the Silt Reserves Real Property) meeting the requirements
of this Section 6.12 within ninety (90) days after the date hereof but in any
event not less than thirty (30) days prior to the Closing Date.
(b) The Title Commitments referred to herein shall be issued by
Chicago Title Insurance Company (or another nationally recognized title
insurer selected by Sellers and reasonably acceptable to Buyer), to the extent
that Chicago Title Insurance Company (or such other title insurer) agrees to
issue to Buyer standard form owner's policies of title insurance with respect
to all Real Property (excluding the Silt Reserves Real Property), together
with a copy of each document to which reference is made in such Title
Commitments, to the extent available. Such policies shall be standard ALTA
form 1992 owner's policies in the full amount of the fair value of the Real
Property allocated respectively to each subject parcel of Real Property under
Section 3.4 hereof, insuring good and marketable title (or good and valid
leasehold estate, as the case may be) thereto (expressly including all
easements and other appurtenances) subject to Permitted Encumbrances.
(c) The Surveys shall be prepared in accordance with ALTA/ACSM
1997 urban (in the case of the Real Property identified as "Sunbury SES" in
Schedule 4.9) or mountain (in the case of the Real Property identified as
"Lady Jane" in Schedule 4.9) standards (including Table A items 1, 2, 3, 4, 5,
6, 7(a), 8, 9, 10, 11(a), 11(b), 11(d) (Sunbury SES only (excluding electric
utility facilities)), 14 (Sunbury SES only) and 15 (Lady Jane only), and any
other item reasonably agreeable between Buyer and Sellers to be omitted), each
dated no more than one hundred and eighty (180) days prior to Closing, and
each detailing the legal description, the perimeter boundaries, all
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improvements located thereon, all easements and encroachments affecting each
such parcel of Real Property and such other matters as may be reasonably
requested by Buyer or the title insurance companies, each containing a
surveyor certificate reasonably acceptable to Buyer and the title insurance
companies, and each prepared by a registered land surveyor in the jurisdiction
where the Real Property is located reasonably satisfactory to Buyer.
(d) Sellers and Buyer agree that the aggregate out-of-pocket
cost of obtaining the Title Commitments, final policy coverage (including the
endorsements referred to in Section 7.1(r) hereof) for the Real Property and
the Surveys shall be paid by Sellers, and that such Surveys shall run to the
benefit of Sellers and Buyer.
6.13 Post-Closing Services. As promptly as possible, and in any case
---------------------
within sixty (60) days after the date of this Agreement, Buyer shall send PP&L
written notification regarding which of those services listed in Schedule 6.13
hereto Buyer would like to have provided by PP&L, or an Affiliate of PP&L,
after the Closing Date and the approximate period(s) of time for which such
services are desired. Buyer and PP&L agree to cooperate and negotiate in good
faith to arrive upon mutually acceptable terms and conditions pursuant to
which PP&L, or an Affiliate of PP&L, will provide such services to Buyer and
to incorporate such terms and conditions into a Generation Support Services
Agreement and/or a Transition Services Agreement to be executed and delivered
by the respective parties thereto at Closing; provided, however, that nothing
-------- -------
herein shall obligate Buyer to purchase (or PP&L, or any Affiliate of PP&L, to
provide) any such services if Buyer and PP&L are unable to agree upon
mutually acceptable terms and conditions for the provision thereof and;
provided, further, that the Parties' inability to agree upon mutually
- -------- -------
acceptable terms and conditions for the provision of any such services shall
not relieve any Party of its obligations to consummate the transactions
otherwise contemplated by this Agreement. Buyer and Sellers agree and
acknowledge that certain of the Sellers' Agreements and Intellectual Property
will not be transferred to Buyer at Closing if those Sellers' Agreements or
Intellectual Property are necessary for or duplicative of the performance by
PP&L, or an Affiliate of PP&L, of the services agreed to between Buyer and
PP&L pursuant to this Section 6.13.
6.14 Easement Agreement. Between the date hereof and the Closing Date,
------------------
Buyer and Sellers agree to cooperate to revise the Form of Easement Agreement
attached as Schedule IV hereto, solely to separate the final Easement
Agreement into two documents, each of which shall substantially reflect the
terms and conditions in the Form of Easement Agreement except that one shall
contain the Parties' agreements with respect to Lady Jane and the other shall
contain the Parties' agreements with respect to Sunbury Station.
6.15 Other Covenants of Buyer. Within thirty (30) days after the
------------------------
Closing Date, Buyer shall inform the Susquehanna River Basin Commission, in
writing, of the change in ownership of the rights described in Section 2.1(h)
and shall take all steps necessary to register such change in ownership.
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ARTICLE VII
CONDITIONS
----------
7.1 Conditions to Obligations of Buyer. The obligation of Buyer to
----------------------------------
effect the purchase of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall
have expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or Governmental Authority which prevents
the consummation of the sale of the Purchased Assets contemplated herein shall
have been issued and remain in effect (each Party agreeing to use its
reasonable best efforts to have any such injunction, order or decree lifted)
and no statute, rule or regulation shall have been enacted by any state or
federal government or Governmental Authority which prohibits the consummation
of the sale of the Purchased Assets;
(c) Buyer shall have received all of Buyer's Required Regulatory
Approvals in form and substance reasonably satisfactory (including no unduly
burdensome conditions) to Buyer;
(d) Sellers 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 Sellers on or prior to the
Closing Date;
(e) The representations and warranties of Sellers and their
Affiliates, as applicable, set forth in this Agreement and in the Additional
Agreements shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date (except to the
extent that such representations and warranties may be modified in connection
with the transaction contemplated in Section 10.6 hereof);
(f) Buyer shall have received certificates from an authorized
officer of Sellers, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Section 7.1(d) and (e) have
been satisfied by Sellers;
(g) Buyer shall have received an opinion from Sellers' counsel
or counsels, including in-house counsel, reasonably acceptable to Buyer, dated
the Closing Date and reasonably satisfactory in form and substance to Buyer
and its counsel, substantially to the effect that:
(i) Each Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation and each Seller has the corporate power and authority to
execute and deliver this Agreement and each Additional Agreement to
which it is a party and to consummate the transactions contemplated by
it hereby and thereby; and the execution and delivery by each Seller of
this Agreement and each Additional Agreement to which it is a party and
the consummation of the sale of the
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Purchased Assets contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action required on the part of such
Seller;
(ii) This Agreement and each Additional Agreement has been
duly and validly executed and delivered by each Seller or their
respective Affiliates, as applicable, that is a party hereto and thereto
and constitutes a valid and binding agreement of each such Seller or
Affiliate, enforceable in accordance with its respective terms, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally and general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of this
Agreement and each Additional Agreement by each Seller that is a party
hereto and thereto does not (A) conflict with the Certificate of
Incorporation or Bylaws of any such Seller or (B) to the Knowledge of
such counsel, constitute a violation of or default under any agreement
or instrument which is material to the business or financial condition
of any such Seller;
(iv) The Bill of Sale and other transfer instruments
described in Section 3.6 are in proper form to transfer to Buyer such
title as was held by the applicable Seller to the Purchased Assets;
(v) No consent or approval of, filing with, or notice to,
any Governmental Authority is necessary for the execution and delivery
of this Agreement by Sellers or the consummation by Sellers of the
transactions contemplated hereby, other than (A) such consents,
approvals, filings or notices which, if not obtained or made, will not
prevent Sellers from performing its material obligations hereunder and
(B) such consents, approvals, filings or notices which become applicable
to Sellers or the Purchased 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.
(h) Sellers shall have delivered, or caused to be delivered, to
Buyer at the Closing, Sellers' closing deliveries described in Section 3.6;
(i) There shall not have occurred and be continuing a Material
Adverse Effect;
(j) The Purchased Assets shall be free and clear of all
Encumbrances except Permitted Encumbrances;
(k) The Sellers shall have delivered to Buyer Title Commitments
and Surveys meeting the requirements of Section 6.12;
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(l) There shall not be any injunction, judgment, decree, order,
ruling or Law in effect preventing consummation of any of the transactions
contemplated by this Agreement or the Additional Agreements, except as shall
not have a Material Adverse Effect;
(m) Buyer shall have been accepted for membership in PJM
effective on or before the Closing Date and shall have been granted or
obtained the benefit of all necessary approvals and agreements with PJM (other
than credit approval or support) as reasonably necessary for Buyer to buy and
sell energy, capacity and available ancillary services within or through PJM;
(n) Sellers shall have transferred to Buyer (or Buyer shall have
acquired satisfactory substitutes for) each of the Permits listed on Schedule
7.1(n);
(o) Sellers shall have received all of the consents or
approvals necessary to assign each of the Sellers' Agreements and Intellectual
Property listed on Schedule 7.1(o) to Buyer (except for those consents or
approvals which Sellers shall not be required to obtain due to the fact that
Sellers will be providing certain services to Buyer pursuant to Section 6.13);
(p) Buyer shall have received all of the consents and approvals
listed on Schedule 7.1(p);
(q) A Memorandum of Understanding or other written document in
form reasonably acceptable to Buyer and PP&L (the "IBEW Memorandum of
------------------
Understanding") shall be executed and delivered by the IBEW in favor (and for
- -------------
the benefit) of Buyer and PP&L acknowledging and agreeing that (i) Buyer is
only assuming the IBEW Collective Bargaining Agreement for purposes of Sunbury
Station, that Buyer's obligations under the IBEW Collective Bargaining
Agreement shall extend only to Buyer's operation of Sunbury Station and that
any provisions in the IBEW Collective Bargaining Agreement which relate to
generating facilities or other locations or assets of the Sellers which are
not included as Purchased Assets or which describe inter-location rights
within the PP&L system shall have no application to Buyer as a result of
Buyer's acquisition of Sunbury Station or assumption of the IBEW Collective
Bargaining Agreement in connection therewith, (ii) for the duration of the
IBEW Collective Bargaining Agreement, Buyer will provide employee benefit
programs that, in the aggregate, are substantially equivalent to the benefit
programs provided by PP&L as of the Closing Date to its employees represented
by the IBEW, and (iii) Buyer's assumption of the IBEW Collective Bargaining
Agreement as clarified by the IBEW Memorandum of Understanding fully satisfies
the requirement, set forth in the IBEW Collective Bargaining Agreement, that
Buyer assumes the terms and conditions of the IBEW Collective Bargaining
Agreement as a condition to the sale of Sunbury Station to Buyer. In order to
facilitate the fulfillment of the foregoing condition and otherwise to
facilitate the transition of ownership from Sellers to Buyer, Sellers shall
arrange such meetings between or among the IBEW, Buyer, and PP&L, prior to the
Closing Date, as Buyer may reasonably request. Nothing in this Agreement
shall constitute a warranty or other assurance by Sellers that the IBEW's
agreement to the IBEW Memorandum of Understanding can be obtained;
(r) All title policies obtained pursuant to the Title
Commitments procured in accordance with Section 6.12 shall insure title in
accordance with the representations and warranties
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set forth in this Agreement with respect thereto and shall be subject only to
such conditions and exceptions as Buyer is required to take title subject to
pursuant to the provisions of this Agreement and shall contain the following
endorsements: (i) an endorsement over rights of creditors; (ii) a "gap"
endorsement; (iii) an access endorsement; (iv) a location endorsement; (v) a
comprehensive endorsement; and (vi) a tax parcel endorsement, to the extent
available. Without limiting the foregoing, such policies shall contain a
current survey reading, no exception for parties in possession except pursuant
to the Easements and the Control House Lease and no exceptions for mechanics'
liens or statutory liens for Taxes or, in the alternative, shall insure that
such liens shall not be collected out of or enforced against the Real Property;
and
(s) Sellers shall have received all of Sellers' Required
Regulatory Approvals in form and substance reasonably satisfactory (including
no unduly burdensome conditions) to Sellers.
7.2 Conditions to Obligations of Sellers. The obligation of Sellers
------------------------------------
to effect the sale of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Sellers) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall
have expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
sale of the Purchased Assets contemplated herein shall have been issued and
remain in effect (each Party agreeing to use its reasonable best efforts to
have any such injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted by any state or federal government or
Governmental Authority in the United States which prohibits the consummation
of the sale of the Purchased Assets;
(c) Sellers shall have received all of Sellers' Required
Regulatory Approvals in form and substance reasonably satisfactory (including
no unduly burdensome conditions) to Sellers;
(d) Sellers shall have obtained all of the consents and
approvals for the consummation of the sale of the Purchased Assets listed on
Schedule 7.2(d);
(e) Buyer 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 Buyer on or prior to the
Closing Date;
(f) The representations and warranties of Buyer set forth in
this Agreement and in the Additional Agreements shall be true and correct in
all material respects as of the Closing Date as though made at and as of the
Closing Date;
(g) Sellers shall have received a certificate from an authorized
officer of Buyer, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Sections 7.2(e) and (f) have
been satisfied by Buyer;
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(h) Buyer shall have assumed, as set forth in Section 6.10 and
subject to the terms and conditions of the IBEW Memorandum of Understanding,
all of the applicable obligations under the IBEW Collective Bargaining
Agreement as they relate to Transferred Union Employees;
(i) Sellers shall have received an opinion from Buyer's counsel
reasonably acceptable to Sellers, dated the Closing Date and satisfactory in
form and substance to Sellers and their counsel, substantially to the effect
that:
(i) Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the state of
Delaware and is qualified to do business in the Commonwealth of
Pennsylvania and has the full power and authority to execute and deliver
this Agreement and the Additional Agreements and to consummate the
transactions contemplated hereby and thereby; and the execution and
delivery by Buyer of this Agreement and the Additional Agreements and
the consummation of the transactions contemplated thereby have been duly
authorized by all necessary action required on the part of Buyer;
(ii) This Agreement and the Additional Agreements have
been duly and validly executed and delivered by Buyer, and constitute
valid and binding agreements of Buyer, enforceable against Buyer in
accordance with their terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting or relating to
enforcement of creditor's rights generally and general principles of
equity (regardless of whether enforcement is considered in a proceeding
at law or in equity);
(iii) The execution, delivery and performance of this
Agreement and the Additional Agreements by Buyer does not (A) conflict
with the articles of organization or by-laws (or other organizational
documents), as currently in effect, of Buyer or (B) to the Knowledge of
such counsel, constitute a violation of or default under any agreements
and instruments which are material to the business or financial
condition of Buyer;
(iv) The Assignment and Assumption Agreement and other
transfer instruments described in Section 3.7 are in proper form for
Buyer to assume the Assumed Liabilities; and
(v) No consent or approval of, filing with, or notice to,
any Governmental Authority is necessary for Buyer's execution and
delivery of this Agreement and the Additional Agreements or the
consummation by Buyer of the transactions contemplated hereby and
thereby, other than such consents, approvals, filings or notices, which,
if not obtained or made, will not prevent Buyer from performing its
obligations under the Agreement and the Additional Agreements.
(j) Buyer shall have delivered, or caused to be delivered, to
Sellers at the Closing, Buyer's closing deliveries described in Section 3.7;
and
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(k) There shall not be any injunction, judgment, decree, order,
ruling or Law in effect preventing consummation of any of the transactions
contemplated by this Agreement or the Additional Agreements, except as shall
not have a Material Adverse Effect.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 Indemnification.
---------------
(a) Buyer shall indemnify, defend and hold harmless each Seller
and its Affiliates, and the respective officers, directors, employees,
shareholders, Representatives and agents of each (each, a "Sellers'
--------
Indemnitee"), from and against any and all claims, demands, suits, losses,
- ----------
liabilities, penalties, 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) (each, an "Indemnifiable Loss"), asserted against or
------------------
suffered by any Sellers' Indemnitee relating to, resulting from or arising out
of (i) any breach by Buyer of any representation, warranty, covenant or
agreement of Buyer contained in this Agreement (including, without
limitation, any breach by Buyer of their obligation to post any performance,
surety or other bonds required pursuant to Section 6.6(d)) , (ii) the Assumed
Liabilities, (iii) any loss or damages resulting from or arising out of any
Inspection, or (iv) any Third Party Claims against a Sellers' Indemnitee
arising out of or in connection with Buyer's ownership or operation of Sunbury
Station, Lady Jane and the other Purchased Assets on or after the Closing
Date.
(b) Sellers shall indemnify, defend and hold harmless Buyer and
its Affiliates, and the respective officers, directors, employees,
shareholders, Representatives and agents of each (each, a "Buyer's
-------
Indemnitee"), from and against any and all Indemnifiable Losses asserted
- ----------
against or suffered by any Buyer's Indemnitee relating to, resulting from or
arising out of (i) the Excluded Liabilities, (ii) any Third Party Claims
against a Buyer's Indemnitee arising out of or in connection with Sellers'
ownership or operation of the Excluded Assets, (iii) any breach by Sellers of
any representation, warranty, covenant or agreement of Sellers contained in
this Agreement or (iv) noncompliance by Sellers with any bulk sales or
transfer laws as provided in Section 10.12.
(c) Except as otherwise provided in Section 8.1(b), (i) Buyer,
for itself and on behalf of its Representatives and Affiliates, does hereby
release, hold harmless and forever discharge Sellers and each other Sellers'
Indemnitee from any and all Indemnifiable Losses of any kind or character,
whether known or unknown, hidden or concealed, resulting from or arising out
of any Environmental Condition or violation of Environmental Law relating to
the Purchased Assets other than any liabilities or obligations described in
Section 2.4(g), Section 2.4(h), Section 2.4(i) or Section 2.4(j) and (ii)
Buyer hereby waives any and all rights and benefits with respect to such
Indemnifiable Losses that it now has, or in the future may have conferred upon
it by virtue of any statute or common law principle which provides that a
general release does not extend to claims which a party does not know or
suspect to exist in its favor at the time of executing the release, if
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knowledge of such claims would have materially affected such party's
settlement with the obligor. In this connection, Buyer hereby acknowledges
that it is aware that factual matters now unknown to it may have given or may
hereafter give rise to Indemnifiable Losses to which this release relates that
are presently unknown, unanticipated and unsuspected, and it further agrees
that this release has been negotiated and agreed upon in light of that
awareness and they nevertheless hereby intend to release Sellers and each
other Sellers' Indemnitee from the Indemnifiable Losses described in the first
sentence of this paragraph.
(d) The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that any Person entitled to receive indemnification under this
Agreement (an "Indemnitee") receives any insurance proceeds with respect to
----------
such Indemnifiable Loss, (ii) to take into account any net Tax benefit
realized by the Indemnitee arising from the recognition of such Indemnifiable
Loss (but only to the extent that the Parties, following good faith
negotiations for a period of thirty (30) days, jointly agree that such Tax
benefit would be realized by the Indemnitee) and (iii) by the amount of any
payment actually received by the Indemnitee with respect to an Indemnifiable
Loss.
(e) The expiration or termination of any covenant, agreement,
representation or warranty shall not affect the Parties' obligations under
this Section 8.1 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.
(f) Except to the extent otherwise provided in Article IX, the
rights and remedies of Sellers and Buyer under this Article VIII are exclusive
and in lieu of any and all other rights and remedies which Sellers and Buyer
may have under this Agreement or otherwise for declaratory, injunctive or
monetary relief, with respect to (i) any breach of or failure to perform any
representation, warranty, covenant or agreement set forth in this Agreement,
after the occurrence of the Closing, or (ii) the Assumed Liabilities or the
Excluded Liabilities, as the case may be.
(g) Each Party waives any provision of law to the extent that it
would limit or restrict the agreements contained in this Section 8.1. Nothing
herein shall prevent either Party from terminating this Agreement in
accordance with Article IX. Notwithstanding any provisions in this Agreement
to the contrary, each Party to this Agreement shall retain its remedies at law
or in equity with respect to willful, knowing or intentional
misrepresentations or breaches of this Agreement, including a failure to
consummate the Closing hereunder when and if required to do so.
(h) Notwithstanding anything to the contrary herein, no party
(including an Indemnitee) shall be entitled to recover from any other party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments, losses, costs, or expenses under this Agreement or any amount in
excess of the actual compensatory damages, court costs and reasonable
attorney's fees suffered by such party. Buyer and Sellers waive any right to
recover punitive, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement. The provisions of this
Section 8.1(h) shall not apply to indemnification for a Third Party Claim.
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(i) Except for any willful, knowing or intentional breach or
misrepresentation, as to which claims may be brought without limitation as to
amount: (i) neither Buyer nor Sellers, as the case may be, shall have any
liability to an Indemnitee for breaches of representations or warranties
pursuant to this Section 8.1 until the aggregate indemnification obligation of
Buyer or Sellers, as the case may be, for breaches of representations or
warranties pursuant to this Section 8.1 exceeds $250,000, and then only to the
extent that the aggregate amount of such indemnification obligation exceeds
$250,000 and (ii) the liability of Buyer or Sellers, as the case may be, for
breaches of representations or warranties pursuant to this Section 8.1 shall
not exceed, in the aggregate, fifty percent (50%) of the Purchase Price, plus
or minus any adjustments to the Purchase Price pursuant to this Agreement.
(j) The rights and obligations of indemnification under this
Section 8.1 shall not be limited or subject to set-off based on any violation
or alleged violation of any obligation under this Agreement or otherwise,
including but not limited to breach or alleged breach by the Indemnitee of any
representation, warranty, covenant or agreement contained in this Agreement.
8.2 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 such notice shall not be given later than twenty (20)
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 Indemnifying Party will have the right to participate in or, by giving
written notice to the Indemnitee, to elect to assume the defense of any Third
Party Claim at such Indemnifying Party's expense and by such Indemnifying
Party's own counsel, provided that the counsel for the Indemnifying Party who
shall conduct the defense of such Third Party Claim shall be reasonably
satisfactory to the Indemnitee. The Indemnitee shall cooperate in good faith
in such defense at such Indemnitee's own expense. If an Indemnifying Party
elects not to assume the defense of any Third Party Claim, the Indemnitee may
compromise or settle such Third Party Claim over the objection of the
Indemnifying Party, which settlement or compromise shall conclusively
establish the Indemnifying Party's liability pursuant to this Agreement.
(b) If, within twenty (20) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims,
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 8.2(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party shall
fail 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
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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 Indemnifying Party shall be relieved of its obligations to defend
such Third Party Claim and the Indemnitee may contest or defend such Third
Party Claim. In such event, the maximum liability of the Indemnifying Party
as to such Third Party Claim will be the amount of such settlement offer
plus reasonable costs or expenses paid or incurred by Indemnitee up to the
date of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") 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 such notice shall not
be given later than twenty (20) 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 will be free to
seek enforcement of its right 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, from 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 publicly announced
prime rate then in effect of Mellon Bank of Philadelphia) shall promptly be
repaid by the Indemnitee to the Indemnifying Party.
(e) A failure to give timely notice as provided in this Section
8.2 shall not affect the rights or obligations of any Party hereunder except
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 IX
TERMINATION
-----------
9.1 Termination. (a) This Agreement may be terminated at any time
-----------
prior to the Closing Date by mutual written consent of Sellers and Buyer.
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(b) This Agreement may be terminated by Sellers or Buyer if (i)
any federal or state court of competent jurisdiction shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have become
final and nonappealable or (ii) any statute, rule, order or regulation shall
have been enacted or issued by any Governmental Authority which, directly or
indirectly, prohibits the consummation of the Closing; or (iii) the Closing
contemplated hereby shall have not occurred on or before the day which is nine
(9) months from the date of this Agreement (the "Termination Date"); provided,
---------------- --------
however, that the right to terminate this Agreement under this Section 9.1(b)
- -------
(iii) 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; and provided, further,
-------- -------
that if on the day which is nine (9) months from the date of this Agreement
the conditions to the Closing set forth in Section 7.1(c), (n), (o) or (p) or
7.2(c) or (d) shall not have been fulfilled but all other conditions to the
Closing shall be fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be the day which is eighteen (18) months from the date
of this Agreement.
(c) Except as otherwise provided in this Agreement, this
Agreement may be terminated by the Buyer if any of the Buyer's Required
Regulatory Approvals, the receipt of which is a condition to the obligation of
the Buyer to consummate the Closing as set forth in Section 7.1(c), shall have
been denied (and a petition for rehearing or refiling of an application
initially denied without prejudice shall also have been denied) and such
denial was not caused by a breach of this Agreement by Buyer.
(d) This Agreement may be terminated by Sellers, if any of the
Sellers' Required Regulatory Approvals, the receipt of which is a condition to
the obligation of Sellers to consummate the Closing as set forth in Section
7.2(c), shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied)
and such denial was not caused by a breach of this Agreement by any Seller.
(e) This Agreement may be terminated by Buyer if there has been
a material violation or breach by Sellers of any covenant, representation or
warranty contained in this Agreement which has rendered the satisfaction of
any condition to the obligations of Buyer to effect the Closing impossible and
such violation or breach is not cured by the earlier of the Closing Date or
the date fifteen (15) days after receipt by Sellers of notice specifying
particularly such violation or breach, and such violation or breach has not
been waived by Buyer.
(f) This Agreement may be terminated by Sellers, if there has
been a material violation or breach by Buyer of any covenant, representation
or warranty contained in this Agreement which has rendered the satisfaction of
any condition to the obligations of Sellers to effect the Closing impossible
and such violation or breach is not cured by the earlier of the Closing Date
or the date fifteen (15) days after receipt by Buyer of notice specifying
particularly such violation or breach, and such violation or breach has not
been waived by Sellers.
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(g) This Agreement may be terminated by Sellers if there shall
have occurred any event or events which materially adversely affect Buyer's
ability to satisfy its obligations pursuant to this Agreement or Buyer's, WPSR
Capital's or PDI's ability to satisfy their respective obligations pursuant to
the Equity Contribution Agreement.
(h) This Agreement may be terminated by Sellers or Buyer in
accordance with the provisions of Section 6.11(b).
(i) This Agreement may be terminated by Sellers or Buyer if the
IBEW Memorandum of Understanding, containing the acknowledgments and
agreements described in Section 7.1(q), is not executed and delivered by the
IBEW within ninety (90) days after the date of this Agreement.
(j) This Agreement may be terminated by Sellers if the Equity
Contribution Agreement ceases to be in effect.
9.2 Procedure and Effect of No-Default Termination. In the event of
----------------------------------------------
termination of this Agreement by any of the Parties pursuant to Section 9.1,
written notice thereof shall forthwith be given by the terminating Party to
the other Party, whereupon, if this Agreement is terminated pursuant to any of
Sections 9.1(a) through (d) and 9.1(g) through (i), the liabilities of the
Parties hereunder will terminate, except as otherwise expressly provided in
this Agreement, and thereafter neither Party shall have any recourse against
the other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1 Amendment and Modification. Subject to applicable Law, this
--------------------------
Agreement may be amended, modified or supplemented only by written agreement
of Sellers and Buyer.
10.2 Waiver of Compliance; Consents. Except as otherwise
--------------------------------
specifically provided in this Agreement, any failure of any of the Parties to
comply with any obligation, covenant, agreement or condition herein may be
waived by the Party entitled to the benefits thereof only by a written
instrument signed by the Party granting such waiver, but such waiver of such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent failure to comply therewith.
10.3 No Survival. Subject to the provisions of Section 9.2, each and
-----------
every representation, warranty and covenant contained in this Agreement (other
than (a) the representations, warranties or covenants contained in Sections
2.5, 3.3(c), 3.4, 3.5(b), 5.4, 5.7, 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.10, 6.13,
6.15 and in Article VIII (and any other covenant which by its terms shall
survive the Closing), which provisions shall survive the Closing in accordance
with their terms and (b) the representations and warranties contained in
Articles IV and V, which representations and warranties shall survive the
Closing for a period of one (1) year (other than the representations and
warranties contained in
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(i) Sections 4.1, 4.2, 4.3, 4.5(a), 5.1, 5.2, 5.3 and 5.8, which
representations and warranties shall continue indefinitely; (ii) the
representation and warranty in Section 4.14, which representation and
warranty shall survive for the applicable statute of limitations and
(iii) the representation and warranty in Section 4.6, which representation
and warranty shall survive for three (3) years from the Closing)) shall
expire with, and be terminated and extinguished by the consummation of the
sale of the Purchased Assets and the transfer of the Assumed Liabilities
pursuant to this Agreement and such representations, warranties and covenants
shall not survive the Closing Date; and none of Sellers, 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.
10.4 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided, however, that notices of a change of
-------- -------
address shall be effective only upon receipt thereof):
(a) If to Sellers, to:
PP&L, Inc.
2 North Ninth Street
Allentown, PA 18101
Attention: Robert J. Grey, Esq.
Facsimile: (610) 774-4455
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attention: Michael P. Rogan, Esq.
Facsimile: (202) 393-5760
(b) if to Buyer, to:
Sunbury Holdings, LLC
c/o WPS Power Development, Inc.
677 Baeten Road
Green Bay, WI 54304
Attention: Gerald L. Mroczkowski, Vice President
Facsimile: (920) 490-5999
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with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Attention: Mary Ann C. Halloin, Esq.
Facsimile: (414) 297-4900
10.5 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
Party hereto, including by operation of law, without the prior written consent
of the other Party, nor is this Agreement intended to confer upon any other
Person except the Parties hereto any rights, interests, obligations or
remedies hereunder. No provision of this Agreement shall create any third
party beneficiary rights in any employee or former employee of Sellers
(including any beneficiary or dependent thereof) in respect of continued
employment or resumed employment, and no provision of this Agreement shall
create any rights in any such Persons in respect of any benefits that may be
provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder. Notwithstanding the
foregoing, (i)(a) Sellers may assign all or any portion of its rights and
obligations hereunder to any one or more Affiliates and (b) Buyer may assign
all or any portion of their rights and obligations hereunder to any one or
more wholly owned Subsidiaries (direct or indirect) and upon Buyer's or
Sellers', as applicable, receipt of notice from Sellers or Buyer, as
applicable, of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations, and
all references herein to "Sellers" or "Buyer", as applicable shall thereafter
be deemed to be references to such assignee in each case without the necessity
for further act or evidence by the Parties hereto or such assignee, and (ii)
Buyer may assign its rights hereunder and under any Additional Agreement to
any bank, financial institution or other lender providing financing to Buyer
(on a non- or limited recourse basis or otherwise) from time to time as
collateral security for such financing; provided, however, that no assignment
-------- -------
pursuant to clause (i)(a), (i)(b) or (ii) hereof shall relieve or discharge
Buyer or Sellers, as the case may be, from any of its obligations hereunder.
10.6 Transfer of Certain Purchased Assets to Affiliates of PP&L. Prior
----------------------------------------------------------
to Closing, PP&L may sell, assign, convey, transfer and deliver to Resources
or any other Affiliate of PP&L, all or any portion of its rights, title and
interest in, to and under the Purchased Assets (the "Interim Asset Transfer").
----------------------
In such event, PP&L, Resources or such other Affiliate of PP&L, as
applicable, and Buyer shall enter into a supplemental agreement pursuant to
which (i) Resources or such other Affiliate of PP&L shall make the
representation set forth in Section 4.5 (Title and Related Matters) or Section
4.20 (Emission Allowances), as applicable, with respect to the Purchased
Assets transferred to it, as of the date of the Interim Asset Transfer and
(ii) Resources or such other Affiliate of PP&L shall agree to execute and
deliver all documents of conveyance which are necessary and appropriate for
the effective transfer of the Purchased Assets to Buyer at Closing.
10.7 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the law of the Commonwealth of Pennsylvania (without giving
effect to conflict of law
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principles) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies. The parties
hereto agree that venue in any and all actions and proceedings related
to the subject matter of this agreement shall be in the state and federal
courts in and for the Commonwealth of Pennsylvania which courts shall have
exclusive jurisdiction for such purpose, and the parties hereto irrevocably
submit to the exclusive jurisdiction of such courts and irrevocably waive the
defense of an inconvenient forum to the maintenance of any such action or
proceeding. Service of process may be made in any manner recognized by such
courts. Each of the parties hereto irrevocably waives its right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this agreement or the transactions contemplated hereby.
10.8 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.
10.9 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.
10.10 Schedules. Except as otherwise provided in this Agreement, all
---------
Schedules referred to herein are intended to be and hereby are specifically
made a part of this Agreement.
10.11 Entire Agreement. This Agreement, the Confidentiality Agreement,
----------------
and the Additional Agreements including the Schedules, exhibits, documents,
certificates and instruments referred to herein or therein, embody the entire
agreement and understanding of the Parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any
material made available to Buyer pursuant to the terms of the Confidentiality
Agreement (including the Offering Memorandum dated November 1998, previously
made available to Buyer by Sellers and J.P. Morgan Securities, Inc.). This
Agreement supersedes all prior agreements and understandings between the
Parties other than the Confidentiality Agreement with respect to such
transactions.
10.12 Bulk Sales Laws. Buyer acknowledges that, notwithstanding
---------------
anything in this Agreement to the contrary, Sellers will not comply with the
provision of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement. Buyer hereby waives compliance
by Sellers with the provisions of the bulk sales laws of all applicable
jurisdictions.
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10.13 U.S. Dollars. Unless otherwise stated, all dollar amounts set
------------
forth herein are United States (U.S.) dollars.
[signature pages follow]
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IN WITNESS WHEREOF, Sellers and Buyer have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
above written.
Sellers
-------
PP&L, INC.
By: /s/ J. J. McCabe
---------------------------
Name: Joseph J. McCabe
Title: Vice President and Controller
PP&L RESOURCES, INC.
By: /s/ J. J. McCabe
---------------------------
Name: Joseph J. McCabe
Title: Vice President and Controller
LADY JANE COLLIERIES, INC.
By: /s/ Robert J. Shovlin
---------------------------
Name: Robert J. Shovlin
Title: President
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Buyer
-----
SUNBURY HOLDINGS, LLC
By: WPS Power Development, Inc.,
as the sole member of Sunbury
Holdings, LLC
By: /s/ Gerald L. Mroczkowski
---------------------------
Name: Gerald L. Mroczkowski
Title: Vice President
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