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EXHIBIT 10.71
ASSET SALES AGREEMENT
BY AND AMONG
NIAGARA MOHAWK POWER CORPORATION,
ROCHESTER GAS AND ELECTRIC CORPORATION,
OSWEGO HARBOR POWER LLC,
AND
NRG ENERGY, INC.
Dated as of April 1, 1999
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ASSET SALES AGREEMENT
ASSET SALES AGREEMENT, dated as of April 1, 1999, (this "Agreement") by
and among Niagara Mohawk Power Corporation, a New York corporation (the
"Seller"), Rochester Gas and Electric Corporation, a New York corporation
("RG&E"), NRG Energy, Inc., a Delaware corporation ("Parent") and Oswego Harbor
Power LLC, a Delaware limited liability company and a wholly- owned subsidiary
of Parent (the "Buyer").
WHEREAS, the Buyer desires to purchase, and the Seller and RG&E desire
to sell, the Purchased Assets (as defined herein) upon the terms and conditions
hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
terms have the meanings specified in this Section 1.1(a). For capitalized
terms used in this subsection (a) but not defined herein, see subsection (b).
(1) "Affiliate" has the meaning set forth in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act.
(2) "Ancillary Agreements" means the Site
Agreement, the Transition Power Agreement, the Interconnection
Agreement, the assumption of the RG&E Agreement and such
documentation as is necessary for the Buyer to assume the
Seller's rights and obligations with respect to the Purchased
Assets under the PILOT (as defined in Section 4.3(f)) and the
COIDA Lease/Sublease (as defined in Section 4.3(e)).
(3) "Bill of Sale" means the Bill of Sale to be
delivered at the Closing with respect to the Purchased Assets
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which constitute personal property and which are to be
transferred at such Closing, substantially in the form of
Exhibit A hereto.
(4) "Business Day" shall mean any day other than
Saturday, Sunday and any day which is a legal holiday or a day
on which banking institutions in New York City are authorized by
law or other governmental action to close.
(5) "Buyer Representatives" means the Buyer's and
Parent's accountants, employees, counsel, environmental
consultants, financial advisors and other authorized
representatives.
(6) "Capital Expenditures" means (i) those capital
expenditures which are identified on Schedule 7.1 and (ii) those
anticipated environmental remediation costs, identified on
Schedule 7.1.
(7) "CERCLA" means the Federal Comprehensive
Environmental Response, Compensation and Liability Act and any
amendment thereto.
(8) "COBRA" means the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
(9) "Code" means the Internal Revenue Code of
1986, as amended.
(10) "Collective Bargaining Agreement" means the
Collective Bargaining Agreement, dated as of April 15, 1996,
between the Seller and Local 97 of the International Brotherhood
of Electrical Workers ("IBEW"), as well as the memoranda of
understanding and other documents which are incorporated by
reference and made part of the Collective Bargaining Agreement.
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(11) "Confidentiality Agreement" means the
Confidentiality Agreement, dated September 1998, between the
Seller and Parent.
(12) "Easements" means, with respect to the Real
Property, the reservations of easements to be included in the
deeds of conveyance with respect to such assets and easements
for the benefit of third parties.
(13) "Encumbrances" means any mortgage pledges,
liens, security interests, and conditional and installment sale
agreements, activity and use limitations, Easements (other than
those set forth in the Ancillary Agreements), deed restrictions,
encumbrances or charges of any kind.
(14) "Environmental Laws" means all Federal, state,
local and foreign laws, regulations, rules, ordinances, codes,
decrees, judgments, directives, or judicial or administrative
orders which relate to pollution or protection of the
environment, natural resources (including, without limitation,
ambient air, surface water, groundwater, land, surface and
subsurface strata) or human health and safety, including,
without limitation, laws which relate to Releases or threatened
Releases of Hazardous Substances or otherwise relate to the
manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Substances.
(15) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(16) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(17) "Federal Power Act" means the Federal Power
Act of 1935.
(18) "FERC" means the Federal Energy Regulatory
Commission.
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(19) "FIRPTA Affidavit" means the Foreign
Investment in Real Property Tax Act Certification and Affidavit
substantially in the form of Exhibit B hereto.
(20) "Gas Pipeline 63 Agreement" means a Gas
Pipeline Agreement which may be negotiated by the Buyer and the
Seller with respect to sale of capacity to the Buyer on such
pipeline.
(21) "Governmental Entity" means any governmental
or regulatory authority, agency, commission, body or other
governmental entity or subdivision, other than the Internal
Revenue Service or the New York Department of Taxation and
Finance.
(22) "Hazardous Substances" means any chemicals,
materials or substances defined as or included in the definition
of "hazardous substances,""hazardous wastes,""hazardous
materials,""restricted hazardous materials,""extremely hazardous
substances,""toxic substances,""contaminants"or "pollutants" or
words of similar meaning or substance found in any Environmental
Law, exposure to which is prohibited, limited or regulated by
such Environmental Law.
(23) "Holding Company Act" means the Public Utility
Holding Company Act of 1935, as amended.
(24) "HSR Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
(25) "Income Tax" means any federal, state, local
or foreign Tax (a) based upon, measured by or calculated with
respect to net income, profits or receipts (including, without
limitation, capital gains Taxes and minimum Taxes) or (b) based
upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if
one or more of the bases on which such Tax may be based,
measured by or calculated with respect to, is
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described in clause (a), in each case together with any
interest, penalties, or additions to such Tax.
(26) "Indentures" means the Mortgage Trust
Indenture, dated as of October 1, 1937 between Central New York
Power Corporation and The Marine Midland Trust Company of New
York, as amended, modified and supplemented from time to time
and the First Mortgage Indenture, dated September 1, 1918,
between Bankers Trust Co., as Trustee, and RG&E, as amended,
modified and supplemented from time to time.
(27) "Instrument of Assumption" means the
Instrument of Assumption substantially in the form of Exhibit B
hereto relating to the assumption by the Buyer of the
liabilities and obligations of the Seller.
(28) "Interconnection Agreement" means the
Interconnection Agreement, to be dated as of the Closing Date,
in substantially the form of Exhibit C hereto, between the
Seller and the Buyer (it being understood that such items as
service points, metering points, auxiliary load charges when the
station is generating and the services to be provided Seller,
will be the subject of further negotiation and agreement).
(29) "Laws" means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment,
order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity.
(30) "Maintenance Expenditures" means those
maintenance expenditures which are identified on Schedule 7.1.
(31) "Maintenance and Capital Expenditures Amount"
means the aggregate amount of all funds actually expended on, or
for which liabilities were accrued in accordance with generally
accepted accounting principles applied on a consistent basis with
respect to, Maintenance Expenditures and Capital Expenditures by
the Seller or RG&E, if any,
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during the period beginning on the date hereof and ending on the
Closing Date.
(32) "Material Adverse Effect" means any change or
changes in, or effect on, the Purchased Assets that is, or in
the aggregate are, materially adverse to the business, assets,
operations or conditions (financial or otherwise) of the
Purchased Assets, taken as a whole, other than (i) any change or
effect affecting the international, national, regional or local
electric industry as a whole, and not the Purchased Assets
exclusively and specifically, resulting from changes in the
international, national, regional or local wholesale or retail
markets for electric power, (ii) any change or effect resulting
from changes in the international, national, regional or local
markets for any fuel used at the Purchased Assets, (iii) any
change or effect resulting from changes in the North American,
national, regional or local electric transmission systems (iv)
any change or effect resulting from changes in Laws or in
industry standards, (v) any materially adverse change in or
effect on the Purchased Assets which is cured (including by the
payment of money) by the Seller before the Termination Date and
(vi) any materially adverse change resulting from this Agreement
and the transactions contemplated hereby.
(33) "Permitted Encumbrances" means (i) the
Easements, (ii) those exceptions to title to the Purchased
Assets listed in Schedule 5.8, (iii) with respect to any date
before the Closing Date, Encumbrances created by the Indentures,
(iv) statutory liens for current Taxes or assessments not yet
due or delinquent or the validity of which is being contested in
good faith by appropriate proceedings, provided that the
aggregate amount so contested does not exceed $500,000, (v)
mechanics', carriers', workers', repairers' and other similar
liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on, the
part of the Seller or the validity of which are being contested
in good faith by appropriate proceedings, provided that the
aggregate amount so contested does not exceed $500,000, (vi)
zoning, entitlement, conservation restriction and other land use
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and environmental regulations by governmental authorities, (vii)
the COIDA Lease/Sublease, (viii) the PILOT and (ix) such other
liens, imperfections in or failure of title, charges, easements,
leases, licenses, restrictions, Encumbrances, encroachments and
defects which do not materially detract from the value or
interfere with the present use of the Purchased Assets and
neither secure indebtedness, nor individually or in the
aggregate, create a Material Adverse Effect (the liens set forth
in (iv) and (v) being collectively referred to as "Indemnifiable
Liens").
(34) "Person" means an individual, a partnership, a
limited liability company, a joint venture, a corporation, a
trust, an unincorporated organization and a governmental entity
or a department or agency thereof.
(35) "PSC" means the New York Public Service
Commission.
(36) "Purchased Assets" means, subject to the
Easements and Section 2.2, all of the right, title and interest
in, to and under the real and personal property, tangible or
intangible, of the Seller and RG&E constituting the Oswego Steam
Station or used principally for generation purposes in
connection with such site including, but not limited to, the
following assets owned by the Seller and RG & E:
(i) the real estate (including all buildings,
structures and other improvements thereon) described on Schedule 5.14
as associated with the Oswego Steam Station and the South Oswego Tank
Farm (the "Real Property");
(ii) all inventories of fuels, supplies, materials and
critical spares located on or in transit to the Real Property on the
Closing Date, and all warranties against manufacturers or vendors
relating thereto, to the extent that such warranties are freely
transferable;
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(iii) the machinery, equipment, vehicles, furniture and
other personal property located on the Real Property on the Closing
Date, including, without limitation, the items of personal property
included in Schedule 1.1(a) (36) (iii) as being associated with th
Oswego Steam Station and all warranties against manufacturers or
vendors relating thereto, to the extent that such warranties are freely
transferable;
(iv) the Transferable Permits listed on Schedule 1.1(a)
(45) as being associated with the Oswego Steam Station;
(v) all books, operating records, operating, safety and
maintenance manuals, engineering design plans,. blueprints and as-
built plans, specifications, procedures and similar items in the
Seller's possession relating specifically to the aforementioned assets
other than books of account; and
(vi) certain allowances associated with the Oswego Steam
Station as set forth on Schedule 1.1(a) (36) (vi).
(37) "Release" means a release, spill, leak,
discharge, disposal of, pumping, pouring, emitting, emptying,
injecting, leaching, dumping or otherwise allowing to escape
into or through the environment.
(38) "RG&E Agreement" means the Exit Agreement,
dated as of June 8, 1998, between the Seller and RG&E.
(39) "SEC" means the Securities and Exchange
Commission.
(40) "Securities Act" means the Securities Act of
1933, as amended.
(41) "Site Agreement" means the Site Agreement, to
be dated as of the Closing Date, in substantially the form of
Exhibit D hereto, between the Seller and the Buyer (it being
understood that such items as service points, metering
points, auxiliary load charges when the station is generating
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and the services to be provided Seller, will be the subject of
further negotiation and agreement).
(42) "Subsidiary" when used in reference to any
other Person means any entity of which outstanding securities
having ordinary voting power to elect a majority of the Board of
Directors or other Persons performing similar functions of such
entity are owned directly or indirectly by such other Person.
(43) "Taxes" means all taxes, payments in lieu of
taxes under the PILOT, charges, fees, levies, penalties or other
assessments imposed by any United States federal, state or local
or foreign taxing authority, including, but not limited to,
income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto.
(44) "Tax Return" means any return, report,
information return or other document (including any related or
supporting information) required to be filed with any authority
with respect to Taxes.
(45) "Transferable Permits" means those Permits (as
hereinafter defined) which are transferable by the Seller to the
Buyer and are set forth in Schedule 1.1(a) (45).
(46) "Transferring Employee Records" means all
personnel files related to the Seller's personnel who will
become employees of the Buyer to the extent such files (a)
pertain to (i) skill and development training and resumes, (ii)
seniority histories, (iii) salary and benefit information, (iv)
Occupational Safety and Health Administration medical reports.,
and (v) active medical restriction forms and (b) are allowed to
be disclosed under applicable legal requirements.
(47) "Transition Power Agreement" means the Power
Purchase Agreement, dated as of April 1, 1999, to be
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effective as of the Closing Date between the Buyer and the
Seller, attached hereto as Exhibit E.
(48) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(b) Each of the following terms has the meaning specified in
the Section set forth opposite such term:
Term Section
- ---- -------
Assumed Obligations 2.3 (b)
Audit Date 5.5
Buyer Employee 7.10 (a)
Buyer Required Regulatory Approvals 6.3 (b)
Closing 4.1
Closing Date 4.1
COIDA 4.3 (e)
COIDA Lease/Sublease 4.3 (e)
Contracts 5.16 (a)
Direct Claim 9.2 (c)
Employee Transition Credit 3.1
Environmental Permits 5.11 (a)
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1 (c)
Indemnifiable Loss 9.1 (a)
Indemnifying Party 9.1 (d)
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Indemnitee 9.1 (c)
New York Tax 7.8 (a)
Non-Union Employee 7.10 (c)
NRC 5.3 (b)
PILOT 4.3 (f)
Permits 5.17
Purchase Price 3.1
Replacement Welfare Plans 7.10 (d)
RGE Board Approval 5.2
Seller Required Regulatory Approvals 5.3 (b)
Tax Audit 9.3 (a)
Termination Date 10.1 (b)
Third Party Claim 9.2 (a)
Transfer Taxes 7.8 (a)
Vehicle Amount 3.1 (c)
ARTICLE II
PURCHASE AND SALE
2.1 The Sale. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing the Seller and
RG&E will sell, assign, convey, transfer and deliver to the Buyer, and the
Buyer will purchase and acquire from the Seller and RG&E, free and clear of all
Encumbrances (except for Permitted Encumbrances) the Purchased Assets.
2.2 Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased, Assets shall not include the following assets of
the Seller or RG&E (herein referred to as the "Excluded Assets"):
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(a) all cash, cash equivalents, bank deposits, accounts
receivable, and any income, sales, payroll or other tax receivables;
(b) certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, interests in joint ventures,
partnerships, limited liability companies and other entities;
(c) the names "Niagara Mohawk"and "Rochester Gas & Electric"
and any related or similar trade names, trademarks, service marks or logos;
(d) the transmission, distribution, substation and
communication facilities and related support equipment described or referred to
in Schedule 2.2(d) or described or referred .to as an "Excluded Asset" or an
asset of "Seller" in the "Separation Document" (as defined in the Site
Agreement) or any document or exhibit referred to or incorporated by reference
in the Separation Document or which are otherwise indicated in any such
document as remaining with the Seller or any of its Affiliates after the
Closing;
(e) any refund or credit (i) of Taxes paid or required to be
reimbursed by the Seller prior to the Closing. Date in respect of the
Purchased Assets, whether such refund is received as a payment or as a credit
against Taxes payable or (ii) arising under any power purchase agreement that
is subject to cost of service regulation and relating to a period before the
Closing Date;
(f) all personnel records, other than Transferring Employee
Records, or other records; and
(g) the emission allowances, emission reduction credits and
greenhouse gas emissions listed on Schedule 2.2(g).
2.3 Assumed Obligations. (a) On the Closing Date, the Buyer
shall deliver to the Seller and RG&E the Instruments of Assumption pursuant to
which the Buyer shall assume and agree to discharge all of the liabilities and
obligations of the Seller and RG&E, direct or indirect, known or unknown,
absolute or contingent, which relate to the Purchased Assets, other than
Excluded Liabilities, in accordance with the respective terms and subject to
the respective conditions thereof, including, without limitation, the following
liabilities and obligations:
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(i) all liabilities and obligations of the Seller under
(a) the Transferable Permits associated with the Purchased
Assets in accordance with the terms thereof, (b) contractual
obligations of the Seller relating to the Purchased Assets which
survive following the Closing, which are transferable, which
were entered into in the ordinary course of business and which
are not, individually or in the aggregate, material to the
Purchased Assets, including the contracts referred to in Section
7.1(b) and (c) liabilities for fuel and stores in transit;
except in each case, to the extent such liabilities and
obligations, but for a breach hereunder by the Seller, would
have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such
breach;
(ii) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is
liable pursuant to Sections 3.3 or 7.8;
(iii) all liabilities and obligations associated with the
Purchased Assets for which the Buyer has agreed to indemnify the
Seller and RG&E pursuant to Section 9.1;
(iv) all liabilities and obligations with respect to the
Employees employed at the Purchased Assets after the Closing
Date for which the Buyer is responsible pursuant to Section 7.10
and the terms of the Collective Bargaining Agreement;
(v) any liability, obligation or responsibility under
or related to former, current or future Environmental Laws or
the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued,
arising as a result of or in . connection with (a) except as
set forth in Section 2.4 (iii), any violation or alleged
violation of Environmental Law, whether prior to or on or after
the Closing Date, with respect to the ownership or operation of
the Purchased Assets; (b) loss of life, injury to persons or
property or damage to natural resources (whether or not such
loss, injury or damage arose or was made manifest before the
Closing Date or arises or becomes manifest after the Closing
Date), caused (or allegedly caused) by the presence or Release
of Hazardous Substances at, on, in, under, or migrating from the
Purchased Assets either prior to or on or
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after the Closing Date, including, but not limited to, Hazardous
Substances contained in building materials at the Purchased
Assets or in the soil, surface, water, sediments, groundwater, or
in other environmental media at the Purchased Assets; (c) loss of
life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the off-site disposal,
storage, transportation, discharge, Release, recycling, or the
arrangement for such activities, of Hazardous Substances, on or
after the Closing Date, in connection with the ownership or
operation of the Purchased Assets; (d) the investigation and/or
remediation (whether or not such investigation or remediation
commenced before the Closing Date or commences after the Closing
Date) of Hazardous Substances that are present or have been
Released either prior to or on or after the Closing Date at, on,
in, under, adjacent to or migrating from the Purchased Assets,
including, but not limited to, Hazardous Substances contained in
building materials at the Purchased Assets or in the soil,
surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets
and (e) the investigation and/or remediation of Hazardous
Substances that are disposed, stored, transported, discharged,
Released, recycled, or the arrangement of such activities, on or
after the Closing Date, in connection with the ownership or
operation of the Purchased Assets, at any off-site location;
provided, as to all of the above, that nothing set forth in this
subsection 2.3(a) shall require the Buyer to assume any
liabilities that are expressly excluded in Section 2.4;
(vi) any and all liabilities and obligations, other than
fines, penalties or assessments, of the Seller and RG&E with
respect to the Purchased Assets under the agreements or consent
orders set forth on Schedules 5.l1(a)--(d);
(vii) all liabilities incurred by the Seller or RG&E with
respect to Maintenance Expenditures and Capital Expenditures
associated with the Purchased Assets but only to the extent such
liabilities were included in the Maintenance and Capital
Expenditures Amount;
(viii)any Taxes on the ownership, sale, operation or use
of the Purchased Assets on or after the Closing Date; except for
any Income
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Taxes attributable to income (including proceeds representing
the Purchase Price or proceeds of other asset sales) received by
the Seller;
(ix) all obligations of the Seller with respect to the
operation and ownership of the Purchased Assets pursuant to the
agreements described in Section 7.13;
(x) the obligations of the Seller and/or RG&E set forth
on Schedule 5.16;
(xi) the RG&E Agreement; and
(xii) all rights and obligations of the Seller with
respect to the Real Property under the COIDA Lease/Sublease and
the PILOT.
(b) All of the foregoing liabilities and obligations to be
assumed by the Buyer under Section 2.3(a) (excluding any Excluded Liabilities)
are referred to herein as the "Assumed Obligations". It is understood and
agreed that nothing in this Section 2.3 shall constitute a waiver or release of
any claims arising out of the contractual relationships between the Seller,
RG&E and the Buyer.
2.4 Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities or
obligations:
(i) any liabilities or obligations of the Seller or
RG&E in respect of any Excluded Assets or other assets of the
Seller or RG&E which are not Purchased Assets;
(ii) any liabilities or obligations in respect of Taxes
attributable to Purchased Assets for taxable periods ending on
or before the Closing Date, except for Taxes for which the Buyer
is liable pursuant to Section 3.3 or Section 7.8;
(iii) any fines, penalties or assessments imposed by a
Governmental Entity with respect to a violation or alleged
violation of Environmental Law which occurred prior to the
Closing Date and any liabilities, obligations, or
responsibilities relating to the disposal, storage,
transportation, discharge, Release, recycling, or the arrange-
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ment for such activities, by the Seller, of Hazardous Substances
that were generated at the Purchased Assets, at any off-site
location, where the disposal, storage, transportation,
discharge, Release, recycling or the arrangement for such
activities at said off-site location occurred prior to the
Closing Date, provided that for purposes of this Section 2.4,
"off-site location"does not include any location to which
Hazardous Substances disposed of or Released at the Purchased
Assets have migrated;
(iv) except as provided in Section 16.3 of the Site
Agreement, any liabilities, obligations or responsibilities
relating to (a) the property, equipment or machinery within the
switchyards for which the Seller will retain either a fee
interest or an Easement, (b) the transmission lines delineated
in the Easements or (c) any Seller's operations on, or usage of,
the Easements, including, without limitation, liabilities,
obligations or responsibilities arising as a result of or in
connection with (1) any violation or alleged violation of
Environmental Law and (2) loss of life, injury to persons or
property or damage to natural resources, except to the extent
caused by Buyer;
(v) any liabilities or obligations relating to any
personal injury, discrimination, wrongful discharge, unfair
labor practice or similar claim or cause of action resulting
from actions occurring prior to the Closing Date;
(vi) any payment obligations of the Seller for goods
delivered or services rendered prior to the Closing;
(vii) any liabilities or obligations imposed upon,
assumed or retained by the Seller pursuant to the Site Agreement
or any other Ancillary Agreement; and
(viii)any liabilities, obligations or responsibilities
relating to any Benefit Plan or any "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) maintained by the
Seller or any trade or business (whether or not incorporated)
which is under common control as a single employer, with the
Seller under Section 414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate"), including any multiemployer plan, maintained by or
contributed to by the Seller or
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any ERISA Affiliate, or as to which the Seller or any ERISA
Affiliate is obligated to contribute to, at any time, including
any such liability (A) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (B) relating to a
multiemployer plan; (C) with respect to non-compliance with the
notice and benefit continuation requirements of COBRA; (D) with
respect to any noncompliance with ERISA or any other applicable
laws; or (E) with respect to any suit, proceeding or claim which
is brought against the Buyer, any Benefit Plan, ERISA Affiliate
Plan, any fiduciary or former fiduciary of any such Benefit Plan
or ERISA Affiliate Plan.
All such liabilities and obligations not being assumed pursuant to
Section 2.4 are herein called the "Excluded Liabilities."
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The purchase price for the Purchased
Assets shall be an amount equal to the sum of (a) $66 million, (b) Assumed
Obligations, (c) the Vehicle Amount (as hereinafter defined) and (d) the
Adjustment Amount less an amount (the "Employee Transition Credit") of up to
$1,140,000, as determined pursuant to Schedule 3.1(d) (collectively, the
"Purchase Price"). The "Vehicle Amount"shall be the cost required to buy out
the leases of all vehicles which the Buyer elects to purchase which are
presently leased by the Seller for use with the Purchased Assets, which shall
be determined as set forth on Schedule 3.1(c).
3.2 Allocation of Purchase Price. The Buyer and the Seller
shall use their good faith best efforts to agree upon an allocation among the
Purchased Assets and the Ancillary Agreements of the Purchase Price consistent
with Section 1060 of the Code and the Treasury Regulations thereunder within
180 days of the date of this Agreement but in no event less than 30 days prior
to the Closing. Any post closing adjustments pursuant to Section 3.4 shall be
jointly made and agreed to within sixty (60) days following the Closing in a
manner consistent with the allocation determined pursuant to this Section 3.2.
Each of the Buyer, RG&E and the Seller agree to file Internal Revenue Service
Form 8594, and all federal, state, local and foreign Tax Returns, in accordance
with such agreed allocation. Each of the Buyer, RG&E and the Seller shall
report the transactions contemplated by the Agreement for Tax purposes in a
manner consistent with the allocation determined
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pursuant to this Section 3.2. Each of the Buyer, RG&E and the Seller agrees to
provide the other promptly with any other information reasonably required to
complete Form 8594. Each of the Buyer, RG&E and the Seller shall notify the
other in the event of an examination, audit or other proceeding regarding the
agreed upon allocation of the Purchase Price.
3.3 Proration. (a) The Buyer and the Seller agree that all
of the items normally prorated, including those listed below, relating to the
business and operation of the Purchased Assets will be prorated as of the
Closing Date, with the Seller liable to the extent such items relate to any
time period through the Closing Date, and the Buyer liable to the extent such
items relate to periods subsequent to the Closing Date:
(i) except as provided in Section 7.8(a), Taxes,
assessments and other similar charges, if any, on or with
respect to the business and operation of the Purchased Assets
and with respect to a Taxable Period that begins before but does
not end on the Closing Date shall be (1) prorated to the extent
such Tax is measured by time to the Seller based on the number
of days in such Taxable Period, up to and including the Closing
Date, and to the Buyer based on the number of days in such
Taxable Period after the Closing Date, and (2) to the extent
such Tax is measured by income, receipts or pertains to the
business and operation of the Purchased Assets, allocated
between Buyer and Seller based on a closing of the books on the
Closing Date with respect to the business and operation of the
Purchased Assets.
(ii) rent, Taxes and all other items payable by or to
the Seller under any of the power purchase agreements that are
subject to cost of service regulation;
(iii) sewer rents and charges for water, telephone,
electricity and other utilities and payments under the COIDA
Lease/Sublease; and
(iv) rent under any leases of real or personal property
included in the Purchased Assets.
(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
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upon the actual Taxes or fees for the preceding year (or appropriate period)
for which actual Taxes or fees are available and such Taxes or fees shall be
reprorated upon request of either the Seller, on the one hand, or the Buyer, on
the other hand, made within sixty (60) days of the date that the actual amounts
become available. The Seller and the Buyer agree to furnish each other with
such documents and other records as may be reasonably requested in order to
confirm all adjustment and proration calculations made pursuant to this Section
3.3.
3.4 Purchase Price Adjustments. (1) Within 60 days after the
Closing, the Seller shall prepare and deliver to the Buyer statements (each, an
"Adjustment Statement") which reflect (i) the number of barrels of petroleum
oil inventory at or in connection with the Purchased Assets as of the Closing
Date, (ii) the Maintenance and Capital Expenditures Amount applicable to the
Purchased Assets and (iii) the Employee Transition Credit for any employees who
were expected to become employees of the Buyer for purposes of the Estimated
Purchase Price but who did not (the "ETC Adjustment"). For each barrel of fuel
oil inventory at or in connection with the Purchased Assets as of the Closing
Date less than 1.5 million barrels, the Seller shall pay to the Buyer the
amount of $15.00. For each barrel of fuel oil inventory at or in connection
with the Purchased Assets as of the Closing Date in excess of 1.5 million
barrels, the Buyer shall pay to the Seller the lesser of (x) $15.00 per barrel
or (y) the Seller's actual delivered cost for each such barrel of fuel oil, as
reflected on the books of the Seller and assuming the first-in, first-out
method of inventory accounting. The aggregate amount of all such per barrel
payments is the "Oil Inventory Adjustment Amount." The Maintenance and Capital
Expenditures Amount, the Oil Inventory Adjustment Amount (if positive) and the
ETC Adjustment shall be additions to the Purchase Price and the Oil Inventory
Adjustment Amount, if negative, shall be a subtraction from the Purchase Price.
The Oil Inventory Adjustment Amount, the Maintenance and Capital
Expenditures Amount and the ETC Adjustment are referred to collectively as the
"Adjustment Amount." Each Adjustment Statement shall be prepared using the
same generally accepted accounting principles, policies and methods as the
Seller has historically used in connection with the calculation of the items
reflected on such Adjustment. The Buyer agrees to cooperate with the Seller in
connection with the preparation of each Adjustment Statement and related
information, and shall provide to the Seller such books, records, and
information as may be reasonably requested from time to time.
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(b) The Buyer or Seller may dispute an Oil Inventory
Adjustment Amount, a Maintenance and Capital Expenditures Amount or the ETC
Adjustment; provided, however, that the Buyer shall notify the Seller in
writing of the disputed amount, and the basis of such dispute, within ten (10)
Business Days of the Buyer's receipt of the applicable Adjustment Statement.
In the event of a dispute with respect to any part of any Adjustment Amount,
the parties shall attempt to reconcile their differences. If the Buyer and the
Seller are unable to reach a resolution of such differences within. 30 days of
receipt of a written notice of dispute, the Buyer shall submit the amounts
remaining in dispute for determination and resolution to a third party mutually
agreed upon by the Buyer and the Seller, which shall be instructed to determine
and report to the parties, within 30 days after such submission, upon such
remaining disputed amounts, and such report shall be final, binding and
conclusive on the parties hereto with respect to the amounts disputed. The
fees and disbursements of such third party shall be allocated between the Buyer
and the Seller so that the Buyer's share of such fees and disbursements shall
be in the same proportion that the aggregate amount of such remaining disputed
amounts so submitted by the Buyer to such third party that is unsuccessfully
disputed by the Buyer (as finally determined by such third party) bears to the
total amount of such remaining disputed amounts so submitted by the Buyer to
such third party.
(c) Within ten (10) Business Days after the Buyer's receipt
of an Adjustment Statement, the Buyer or Seller, as the case may be, shall pay
all undisputed amounts, and if there is a dispute with respect to any amount on
such Adjustment Statement, within five (5) Business Days after the final
determination of any amounts on such Adjustment Statement, the Buyer or Seller,
as the case may be, shall pay to the other party an amount equal to the
disputed Adjustment Amount as finally determined pursuant to subsection (b) to
be payable with respect to such Adjustment Statement. Any amount paid under
this Section 3.4(c) shall be paid with interest for the period commencing on
the Closing Date through the date of payment, calculated at the base rate of
Citibank N.A. in effect on the Closing Date, and in cash by federal or other
wire transfer of immediately available funds.
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in Article VIII of this Agreement,
the closing
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of the sale of the Purchased Assets contemplated by this Agreement (the
"Closing") will take place at the offices of Sullivan & Cromwell in New York,
at 10:00 A.M. (local time) on such date as the parties may agree which date is
as soon as practicable, but no later than fifteen (15) Business Days, following
the date on which all of the conditions contained in Article VIII have been
satisfied or waived, or at such other place or time as the parties may agree.
The date and time at which the Closing actually occurs is hereinafter referred
to as the "Closing Date."
4.2 Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to the
Seller and RG&E at the Closing an amount in the aggregate (the "Estimated
Purchase Price") equal to the sum of (i) $66 million and (ii) the Vehicle
Amount minus the Employee Transition Credit in United States dollars by wire
transfer of immediately available funds or by such other means as are agreed
upon by the Seller and the Buyer. Not later than five (5) Business Days prior
to the Closing Date, the Seller shall notify the Buyer of the respective
amounts to be paid to the Seller and to RG&E, which shall be determined
pursuant to the Agreement regarding the Sale of Oswego Unit 6, dated as of June
8, 1998, between the Seller and RG&E.
4.3 Deliveries by the Seller. At the Closing, the Seller and
RG&E will deliver the following to the Buyer:
(a) The Bill of Sale, duly executed by the Seller and RG&E;
(b) All consents, waivers or approvals obtained by the Seller
and/or RG&E with respect to the Purchased Assets, the transfer of any
Transferable Permit related to the Purchased Assets, or the consummation of the
transactions connected to the sale of the Purchased Assets, contemplated by
this Agreement, to the extent specifically required hereunder;
(c) An opinion of counsel and certificate (as contemplated by
Section 8.2) with respect to the Purchased Assets;
(d) One or more bargain and sale deeds with lien covenants
conveying the Real Estate related to the Purchased Assets, subject to the
applicable Easements, Permitted Encumbrances and exceptions, duly executed and
acknowl-
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edged by the Seller and RG&E and in recordable form along with TP-584 Forms and
Equalization and Transfer Reports, in the form attached hereto as Exhibit
4.3(d);
(e) An assignment of the Seller's rights and obligations with
respect to the Real Property under the Lease/Sublease, dated August 1, 1998,
between the Seller and the County of Oswego Industrial Development Agency
("COIDA"), under which the Real Property, together with other real property to
be retained by the Seller, is leased to COIDA and subleased to the Seller, (the
"COIDA - Lease/Sublease"), with an assumption by the Buyer and consent of COIDA
in recordable form, along with a TP-584 Form.
(f) An assignment of the Seller's rights and obligations with
respect to the Real Property under the Payment in Lieu of Taxes Agreement dated
September 30, 1998 ("PILOT") between the Seller and COIDA, with an assumption
by the Buyer;
(g) FIRPTA Affidavits executed by the Seller and RG&E;
(h) All such other instruments of assignment or conveyance as
shall, in the reasonable opinion of the Buyer and its counsel, be necessary to
transfer to the Buyer the Purchased Assets, in accordance with this Agreement
and where necessary or desirable, in recordable form; and
(i) Such other agreements, documents, instruments and
writings, including the Ancillary Agreements, as are required to be delivered
by the Seller and/or RG&E at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
4.4 Deliveries by the Buyer. At the Closing, the Buyer will
deliver the following to the Seller and RG&E:
(a) The Estimated Purchase Price and any amounts payable
under Section 3.3 by wire transfer of immediately available funds or such other
means as are agreed upon by the Seller and the Buyer;
(b) Opinions of counsel and certificates (as contemplated by
Section 8.3) with respect to the Purchased Assets;
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(c) The Instruments of Assumption with respect to the Assumed
Obligations, duly executed by the Buyer;
(d) All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the Buyer to
assume the Assumed Obligations related to the Purchased Assets in accordance
with this Agreement;
(e) All tax certificates applicable to the transfers
contemplated by this Agreement, including, without limitation, direct pay
permits and tax exemption certificates;
(f) The assumptions referred to in Sections 4.3(e) and
4.3(f); and
(g) Such other agreements, documents, instruments and
writings., including the Ancillary Agreements, as are required to be delivered
by the Buyer at or prior to the Closing Date pursuant to this Agreement or
otherwise required in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer with respect to itself
insofar as it relates to the Purchased Assets as follows (all such
representations and warranties, other than in Sections 5.1, 5.2, 5.3, 5.4 and
5.5, being made to the best knowledge of the Seller, after reasonable inquiry
or investigation). RG&E represents and warrants to the Buyer with respect to
itself insofar as it relates to Unit 6 of Oswego Steam Station ("Unit 6") the
matters set forth in Sections 5.1, 5.2, 5.3, 5.8, 5.14, 5.15 (only as to the
Contracts and other arrangements defined therein to which it is a party) and
5.16 (all such representations and warranties other than in Sections 5.1, 5.2
and 5.3 being true to the best knowledge after reasonable inquiry or
investigation).
5.1 Organization; Qualification. Each of the Seller and RG&E
is a corporation duly organized, validly existing and in good standing under
the laws of the State of New York and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as is now being con-
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ducted. The Seller has heretofore delivered to the Buyer complete and correct
copies of its Certificate of Incorporation and Bylaws as currently in effect.
5.2 Authority Relative to this Agreement. Each of the Seller
and RG&E has full corporate power and authority to execute and deliver this
Agreement and, as applicable, the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and, as applicable, the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors of the Seller and no other
corporate proceedings on the part of the Seller are necessary to authorize this
Agreement or the Ancillary Agreements or to consummate the transactions
contemplated hereby and thereby. With respect to RG&E, this Agreement is
subject to approval by its Board of Directors ("RGE Board Approval") and shall
be presented to the Board of Directors with management's recommendation and
approval not more than 35 days from the date hereof. This Agreement and, as
applicable, the Ancillary Agreements have been or will be duly and validly
executed and delivered by the Seller and RG&E, and, assuming that this
Agreement and the Ancillary Agreements constitute valid and binding agreements
of the Buyer, subject to the receipt of the Seller Required Regulatory
Approvals (as defined in Section 5.3), RGE Board Approval and the Buyer
Required Regulatory Approvals, constitute, to the extent such Person is a party
thereto, valid and binding agreements of the Seller and RG&E, enforceable
against the Seller and RG&E in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (the "Bankruptcy and Equity
Exception").
5.3 Consents and Approvals; No Violation. (a) Other than
obtaining the Seller Required Regulatory Approvals, RGE Board Approval and the
Buyer Required Regulatory Approvals, neither the execution and delivery of this
Agreement and the Ancillary Agreements by the Seller and RG&E nor the sale by
the Seller and RG&E of the Purchased Assets pursuant to this Agreement or
performance under the Ancillary Agreements will (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation or Bylaws of
the Seller or RG&E, (ii) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory
authority, except (x) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not,
individually or in the aggregate, create a Material Adverse Effect or (y) for
those requirements which become applicable to the Seller
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as a result of the specific regulatory status of the Buyer (or any of its
Affiliates) or as a result of any other facts that specifically relate to the
business or activities in which the Buyer (or any of its Affiliates) is or
proposes to be engaged; (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Seller or RG&E is a party or by
which the Seller, RG&E or any of the Purchased Assets may be bound, except for
such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which, in the
aggregate, would not, individually or in the aggregate, create a Material
Adverse Effect; or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Seller or RG&E, or any of their respective
assets, which violation, individually or in the aggregate, would create a
Material Adverse Effect.
(b) Except for (i) any required approvals under the Federal
Power Act, (ii) any required approvals from the PSC, (iii) the approval, if
required, of the SEC pursuant to the Holding Company Act, (iv) the filings by
the Seller, RG&E and the Buyer required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act, and (v) the
approval, if required, of the Nuclear Regulatory Commission (the "NRC") (the
filings and approvals referred to in clauses (i) through (v) are collectively
referred to as the "Seller Required Regulatory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of any governmental or regulatory body or authority is necessary for
the consummation by the Seller and RG&E of the transactions contemplated hereby
or by the Ancillary Agreements, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, will not, individually or in the aggregate, create a Material
Adverse Effect.
5.4 Reports. Since January 1, 1994, the Seller has filed or
caused to be filed with the SEC, the PSC and the FERC, as the case may be, all
material forms, statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by them with respect
to the business and operations of the Seller as it relates to the Purchased
Assets under each of the Securities Act, the Exchange Act, New York public
utility laws, the Federal Power Act, the Holding Company Act and the respective
rules and regulations thereunder, all of which complied in all material
respects with all applicable requirements of the appropriate act and the rules
and regulations thereunder in effect on the date each such report was filed,
and there are no material misstatements or omissions in respect of such
reports.
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5.5 Company Reports; Financial Statements. The Seller has
made available to the Buyer each registration statement, report, proxy
statement or information statement prepared by it since December 31, 1998 (the
"Audit Date"), including (i) the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, and (ii) the Company's Report on Form 8-K dated
March 18, 1999, each in the form (including exhibits, annexes and any
amendments thereto) filed with the SEC (collectively, including any such
reports filed subsequent to the date hereof and any amended reports, the
"Company Reports"). As of their respective dates (or, if amended, as of the
date of such amendment), insofar as the Company Reports relate to the Purchased
Assets, the Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. With respect to the financial
information relating to the Purchased Assets, each of the consolidated balance
sheets included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents, or will fairly
present, the consolidated financial position of the Company and its
subsidiaries as of its date and each of the consolidated statements of income
and of changes in financial position included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents, or will fairly present, the results of operations, retained earnings
and changes in financial position, as the case may be, of the Company and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein.
5.6 Undisclosed Liabilities. Except as set forth in the
Company Reports, the Seller has no liability or obligation relating to the
business or operations of the Purchased Assets, secured or unsecured (whether
absolute, accrued, contingent or otherwise, and whether due or to become due),
of a nature required by generally accepted accounting principles as they have
been consistently applied by the Seller to be reflected in a corporate balance
sheet or disclosed in the notes thereto, which are not accrued or reserved
against in the Company Reports or disclosed in the notes thereto in accordance
with generally accepted accounting principles, except those which were incurred
after the date of the latest Company Report, all of which have occurred in the
ordinary course of business.
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5.7 Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.7, or in the Company Reports, and (ii) as otherwise
contemplated by this Agreement, since December 31, 1998 there has not been: (a)
any Material Adverse Effect; (b) any damage, destruction or casualty loss,
whether covered by insurance or not, which, individually or in the aggregate,
created a Material Adverse Effect; (c) any entry into any agreement, commitment
or transaction (including, without limitation, any borrowing, capital
expenditure or capital financing) by the Seller, which is material to the
business or operations of the Purchased Assets; or (d) any change by the
Seller, with respect to the Purchased Assets, in accounting methods, principles
or practices except as required or permitted by generally accepted accounting
principles.
5.8 Title and Related Matters. Except for Permitted
Encumbrances, the Seller and, with respect to unit 6 the Seller and RG&E, hold
an insurable fee simple title to the Real Property (it being understood that
any title insurance would reflect Permitted Encumbrances). Insurable fee
simple title is that which is insurable under an ALTA Owner's Policy (10-17-92)
with New York Endorsement Modifications ("New York Title Insurance"). Except
for Permitted Encumbrances, the Seller has good and valid title to the other
Purchased Assets which it purports to own that are reflected in the Company
Reports (other than those which have been disposed of since the date thereof in
the ordinary course of business) and the Seller and RG&E have good and valid
title to Unit 6, in each case, free and clear of all Encumbrances.
5.9 Leases. Other than the COIDA Lease/Sublease there are
no real property leases under which the Seller is a lessee or lessor and which
(x) are to be transferred and assigned to the Buyer on the Closing Date and (y)
(i) provide for annual payments of more than $100,000 in the aggregate or
$10,000 individually or (ii) are material to the business, operations or
financial condition of the Purchased Assets.
5.10 Insurance. Except as set forth in Schedule 5.10, all
material policies of fire, liability, worker's compensation and other forms of
insurance owned or held by the Seller and insuring the Purchased Assets are in
full force and effect, subject to the terms of each policy, all premiums with
respect thereto covering all periods up to and including the date as of which
this representation is being made have been paid (other than retroactive
premiums which may be payable with respect to comprehensive general liability
and worker's compensation insurance policies),
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and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Except as described in Schedule 5.10, as of the
date of this Agreement, the Seller has not been refused insurance with respect
to the Purchased Assets nor has such coverage been limited by any insurance
carrier to which the Seller has applied for any such insurance or with which it
has carried insurance during the last five years.
5.11 Environmental Matters. Except as disclosed in Schedules
5.11 (a)-(d):
(a) The Seller holds, and is in compliance with, all material
permits, license and governmental authorizations ("Environmental Permits")
required for the Seller to conduct the business and operations of the Purchased
Assets under applicable Environmental Laws, and the Seller is otherwise in
substantial compliance with applicable Environmental Laws with respect to the
business and operations of the Purchased Assets except for such failures to
hold or comply with required Environmental Permits, or such failures to be in
compliance with applicable Environmental Laws, which, individually or in the
aggregate, are not reasonably likely to create a Material Adverse Effect;
(b) The Seller has not received any written request for
information under CERCLA or any similar State law with respect to any on-site
location, except for such liability under such laws as would not be reasonably
likely to, individually or in the aggregate, create a Material Adverse Effect
nor has it been notified in writing that it is a potentially responsible party
under CERCLA or any similar State law;
(c) The Seller has not entered into or agreed to any consent
decree or order, and is not subject to any outstanding judgment, decree, or
judicial order relating to compliance with any Environmental Law or to
investigation or cleanup of Hazardous Substances under any Environmental Law;
and
(d) To the Seller's best knowledge, except as described in
Schedule 5.11(d), no Releases of Hazardous Substances have occurred at, from,
in, on, or under any Real Property, and no Hazardous Substances are present in,
on, about or migrating from any such Real Property that could give rise to an
Environmental Loss related to the Purchased Assets for which remediation
reasonably could be required,
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except in any such case to the extent that any such Releases would not,
individually or in the aggregate, create a Material Adverse Effect.
The representations and warranties made in this Section 5.11 are the
Seller's exclusive representations and warranties relating to environmental
matters.
5.12 Labor Matters. The Seller has previously delivered to
the Buyer a copy of the Collective Bargaining Agreement which is the only
collective bargaining agreement which relates to the business or operations of
the Purchased Assets. With respect to the business or operations of the
Purchased Assets, except to the extent set forth in Schedule 5.12 and except
for such matters as will not, individually or in the aggregate, create a
Material Adverse Effect (a) the Seller is in compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours; (b) the Seller has not received written notice
of any unfair labor practice complaint against the Seller pending before the
National Labor Relations Board; (c) there is no labor strike, slowdown or
stoppage actually pending or threatened against or affecting the Seller; (d)
the Seller has not received notice that any representation petition respecting
the employees of the Seller has been filed with the National Labor Relations
Board; (e) no arbitration proceeding arising out of or under the Collective
Bargaining Agreement is pending against the Seller and (f) the Seller has not
experienced any primary work stoppage in the past five years. The Seller does
not have any knowledge of any union (other than IBES) claiming to represent the
employees associated with the Purchased Assets and the Seller does not have any
knowledge of any current union organizing activities among its employees by any
other such union, nor does any question concerning representation exist
concerning such employees.
5.13 Real Property. Schedule 5.14 contains a schedule of
title documents identifying the Real Property. True and correct copies of any
current surveys, abstracts or title opinions in the Seller's possession and any
policies of title insurance in effect and in the possession of the Seller with
respect to the Real Property have been made available to the Buyer. The Real
Property is encumbered by the Indentures, which encumbrances will be released
or discharged at the Closing. Schedule 5.13 also reflects that the Seller will
be EXCEPTING AND RESERVING to Seller fee simple title and/or a permanent
Easement over parcels of land on which the transmission, distribution,
substation and communication facilities and related support equipment described
or referred to in Section 2.2 (d) are located, together with access to those
facilities, and those fee simple titles and Easements identified as
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being reserved to seller in the deed or in Exhibit "A"to be annexed to the
deed, together with access to those parcels.
5.14 Condemnation. Neither the whole nor any part of the Real
Property or any other real property or rights leased, used or occupied by the
Seller or RG&E in connection with the ownership or operation of the Purchased
Assets is subject to any pending suit for condemnation or other taking by any
public authority or any other Person, and no such condemnation or other taking
has been threatened.
5.15 Certain Contracts and Arrangements. (a) Except for (i)
contracts, agreements, personal property leases, commitments, understandings or
instruments which will expire prior to the Closing Date, (ii) agreements
entered into in the ordinary course of business that are not material to the
Purchased Assets, (iii) the Collective Bargaining Agreement and (iv) as set
forth in Schedule 5.16 (contracts in (ii), (iii) and (iv) being the
"Contracts"), neither the Seller nor RG&E is a party to any written contract,
agreement, personal property lease, commitment, understanding or instrument
which is material to the business or operations of the Purchased Assets.
Copies of the Contracts have been made available to the Buyer.
(b) Each of the Contracts (i) constitutes a valid and binding
obligation of the Seller, and to the best knowledge of the Seller constitutes a
valid and binding obligation of the other parties thereto, (ii) is in full
force and effect, and (iii) other than the COIDA Lease/Sublease and the PILOT,
may be transferred to the Buyer pursuant to this Agreement and will continue in
full force and effect thereafter, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights thereunder.
(c) There is not, under any of the Contracts, any default or
event which, with notice or lapse of time or both, would constitute a default
on the part of any of the parties thereto, except, such events of default and
other events as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, create a Material Adverse
Effect.
(d) If the Site Agreement and Interconnection Agreement were
in full force and effect between Seller's generation business and the Seller's
transmission business on the date of this Agreement, (i) the Seller's
generation business would be in material compliance with the terms thereof, and
(ii) except as provided in the Interconnection Agreement, there is no event or
condition that would enable or require the Seller's transmission business to
(x) notify the Seller's generation business
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of the necessity of an addition to or modification of the Interconnection
Facilities, as defined in Section 1.10 of the Interconnection Agreement, (y)
operate and/or purchase from the Seller's generation business any of the
equipment or facilities specified in Section 20.0 of the Site Agreement, or (z)
discontinue Interconnection Service as provided for in the Interconnection
Agreement.
5.16 Legal Proceedings, etc. There are no claims, actions,
proceedings or investigations pending or threatened against or relating to the
Seller or RG&E before any court, governmental or regulatory authority or body
acting in an adjudicative capacity, which, if adversely determined,
individually or in the aggregate, would create a Material Adverse Effect.
Neither the Seller nor RG&E is subject to any outstanding judgment, rule,
order, writ, injunction or decree of any court, governmental or regulatory
authority which, individually or in the aggregate, would create a Material
Adverse Effect.
5.17 Permits. (a) The Seller has or will have by the Closing
Date all permits, subdivision approvals, variances, licenses, franchises and
other governmental authorizations, consents and approvals, other than with
respect to Environmental Laws, (collectively, "Permits") necessary to operate
the business of the Purchased Assets as presently conducted, except where the
failure to have such Permits would not, individually or in the aggregate,
create a Material Adverse Effect. The Seller has not received any written
notification that it is in violation of any of such Permits, or any law,
statute, order, rule, regulation, ordinance or judgment of any governmental or
regulatory body or authority applicable to it, except for notifications of
violations which would not, individually or in the aggregate, create a Material
Adverse Effect. The Seller is in compliance with all Permits, laws, statutes,
orders, rules, regulations, ordinances, or judgments of any governmental or
regulatory body or authority applicable to it, except for violations which,
individually or in the aggregate, do not create a Material Adverse Effect.
(b) Schedule 5.17 (b) sets forth all material Permits and
Environmental Permits other than Transferable Permits (which are set forth on
Schedule 1.1(a) (45)).
5.18 Tax Matters. With respect to the Purchased Assets and
trades or businesses associated with the Purchased Assets (i) all Tax Returns
required to be filed, other than those Tax Returns the failure of which to file
would not create a Material Adverse Effect, have been filed, and (ii) all
material Taxes shown to be due on such Tax Returns have been paid in full.
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5.19 Compliance with Laws. The Seller is in compliance with
all applicable laws affecting the Purchased Assets except where the failure to
be in compliance would not, individually or in the aggregate, create a Material
Adverse Effect.
5.20 Satisfaction of Required Standards.(a) The Purchased
Assets, as currently installed and operated, satisfy the requirements set forth
in the Interconnection Agreement, the Site Agreement and the Transition Power
Agreement, except as otherwise set forth in such agreements.
(b) The Excluded Assets do not include any properties,
physical assets, contracts or leases that are individually or in the aggregate,
necessary for the operation of the Purchased Assets.
5.21 Fuel Oil. At the Closing, the #6 fuel oil inventory will
be 50% .7% sulfur and 50% 1.5% sulfur, which fuel oil will be usable.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS ARTICLE V, THE PURCHASED ASSETS ARE BEING SOLD AND TRANSFERRED
"AS IS, WHERE IS,"AND THE SELLER AND RG&E ARE NOT MAKING ANY OTHER
REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
CONCERNING SUCH PURCHASED ASSETS, INCLUDING, IN PARTICULAR, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
EXPRESSLY EXCLUDED AND DISCLAIMED.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND PARENT
The Buyer and Parent represent and warrant to the Seller and RG&E as
follows (all such representations and warranties, except those regarding the
Buyer or Parent, being made to the best knowledge of the Buyer or Parent after
reasonable inquiry or investigation).
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6.1 Organization. Parent is a corporation and the Buyer is a
limited liability company in each case duly organized, validly existing and in
good standing under the laws of the State of Delaware and each has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as is now being conducted.
6.2 Authority Relative to this Agreement. Each of the Buyer
and Parent has full corporate power and authority to execute and deliver this
Agreement and, with respect to the Buyer, the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and, with respect to the Buyer, the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of the
Buyer and, where applicable, Parent and no other corporate proceedings on the
part of the Buyer or Parent are necessary to authorize this Agreement and the
Ancillary Agreements or to consummate the transaction contemplated hereby or
thereby. This Agreement and, with respect to the Buyer, the Ancillary
Agreements have been duly and validly executed and delivered by the Buyer and
Parent, and assuming that this Agreement and, with respect to the Buyer, the
Ancillary Agreements constitute valid and binding agreements of the Seller and
RG&E, this Agreement and, with respect to the Buyer, the Ancillary Agreements,
subject to the receipt of the Buyer Required Regulatory Approvals and the
Seller Required Regulatory Approvals, constitute valid and binding agreements
of the Buyer and Parent, enforceable against the Buyer and Parent in accordance
with their terms, subject to the Bankruptcy and Equity Exception.
6.3 Consents and Approvals; No Violation. (a) Other than
obtaining the Buyer Required Regulatory Approvals and the Seller Required
Regulatory Approvals, none of the execution and delivery of this Agreement by
the Buyer and Parent, the execution and delivery of the Ancillary Agreements by
the Buyer and the purchase by the Buyer of the Purchased Assets pursuant to
this Agreement or performance under the Ancillary Agreements will (i) conflict
with or result in any breach of any provision of the constituent documents of
the Buyer or Parent, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, (iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, agreement, lease or other instrument or
obligation to which Parent, the Buyer or any of their respective subsidiaries is
a party or by which any of their respective assets may be bound,
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except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained.
(b) Except for (i) qualification of the Buyer as an exempt
wholesale generator under the Energy Policy Act of 1992, without restriction,
including no restriction on sales to Affiliates, (ii) authorization to sell
power under Section 205 of the FPA, including (A) authorizations required to
implement sales under the Ancillary Agreements, and (B) market based rate
approval for capacity, energy and ancillary services, (iii) approval under
Section 203 of the FPA to transfer contracts and other jurisdictional assets,
(iv) any necessary PSC approvals, (v) the filings by the Buyer and the Seller
required by the HSR Act and (vi) approval of the Interconnection Agreement and
the Transition Power Agreements by FERC (the filings and approvals referred to
in clauses (i) through (vi) are collectively referred to as the "Buyer Required
Regulatory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental or regulatory
body or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby or by the Ancillary Agreements.
6.4 Availability of Funds. The Buyer will have sufficient
funds available to it or has received binding written commitments from
responsible financial institutions to provide sufficient funds on the Closing
Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business Relating to the Purchased Assets. (a)
Except as described in Schedule 7.1, during the period from the date of this
Agreement to the Closing Date, the Seller will operate the Purchased Assets and
related businesses in the usual, regular and ordinary course consistent with
good industry practice, will continue to implement its year 2000 compliance
program and shall use all commercially reasonable efforts to preserve intact
the Purchased Assets and the businesses related thereto, and endeavor to
preserve the goodwill and relationships with customers, suppliers and others
having business dealings with them. Without limiting the generality of the
foregoing, and, except as contemplated in this Agreement or as described in
Schedule 7.1, prior to the Closing Date, without the prior
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written consent of the Buyer, the Seller will not with respect to the Purchased
Assets:
(i) (x) except for (1) Permitted Encumbrances and (2)
indebtedness constituting Excluded Liabilities that does not
create an Encumbrance on the Purchased Assets, create, incur,
assume or suffer to exist any indebtedness for borrowed money
(including obligations in respect of capital leases); or (y)
assume, guarantee, endorse or otherwise become directly liable
or responsible (whether directly or indirectly, contingently or
otherwise) for the obligations of any Person;
(ii) make any material change in the levels of fuel
inventory and stores inventory customarily maintained by the
Seller with respect to the Purchased Assets, other than
consistent with good industry practice;
(iii) sell, lease (as lessor), transfer or otherwise
dispose of, any of the Purchased Assets, other than assets used,
consumed or replaced in the ordinary course of business
consistent with good industry practice, including the practice
of harvesting timber;
(iv) terminate, extend or otherwise amend any real
property lease to the extent any such extension or amendment
would require the lease to be disclosed pursuant to Section 5.9;
(v) execute, enter into, terminate or otherwise amend
(x) any of the Permits or Environmental Permits, other than
routine renewals or non-material modifications or amendments or
(y) any other agreement, order, decree or judgment relating to
the current or any new permit;
(vi) enter into any power sales commitment having a term
that extends beyond September 30, 1999 or such other date that
the parties mutually agree to be the date on which the Closing
is expected to occur;
(vii) with respect to the Purchased Assets and related
businesses, (x) amend or cancel any liability or casualty
insurance policies related thereto, (y) compromise, settle,
withdraw, release or abate any
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claims made or accruing thereunder or (z) fail to maintain by
self insurance or with financially responsible insurance
companies insurance in such amounts and against such risks and
losses as was in place as of the date of this Agreement for such
assets and businesses;
(viii)enter into any commitment or contract for goods or
services not addressed in clauses (i) through (vii) above that
will be delivered or provided after September 30, 1999 or such
other date that the parties mutually agree to be the date on
which the Closing is expected to occur, in an amount greater
than $25,000 or $100,000 in the aggregate; or
(ix) enter into any written or oral contract, agreement,
commitment or arrangement with respect to any of the
transactions set forth in the foregoing paragraphs (i) through
(viii).
(b) Notwithstanding anything in this Section 7.1 to the
contrary, the Seller shall allow Buyer to participate in negotiations for third
party contracts for the overhaul of Unit 5 and shall commence such overhaul no
later than September 1, 1999.
7.2 Access to Information. (a) Between the date of this
Agreement and the Closing Date, the Seller will, during ordinary business hours
and upon reasonable notice (i) give the Buyer and the Buyer Representatives
reasonable access to all books, records, plants, offices and other facilities
and properties constituting the Purchased Assets to which the Buyer is not
denied access by law; (ii) permit the Buyer to make such reasonable inspections
thereof as the Buyer may reasonably request; (iii) furnish the Buyer with such
financial and operating data and other information with respect to the
Purchased Assets as the Buyer may from time to time reasonably request,
provided, however, that the Seller will not be required to create special
reports or perform any studies; (iv) furnish the Buyer a copy of each material
report, schedule or other document filed or received by it with respect to the
Purchased Assets with or from the SEC, PSC, NRC or FERC; provided, however,
that (A) any such investigation shall be conducted in such manner as not to
interfere with the operation of the Purchased Assets, (B) the Seller shall not
be required to take any action which would constitute a waiver of the
attorney-client privilege and (C) the Seller need not supply the Buyer with any
information which the Seller is under a legal obligation not to supply.
Notwithstanding anything in this Section 7.2 to the contrary, (i) the Seller
will only furnish or provide such access to Transferring
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Employee Records and personnel and medical records as is required by law, legal
process or subpoena and (ii) the Buyer shall not have the right to perform or
conduct any environmental sampling or testing at, in, on, or underneath the
Purchased Assets.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 or the Ancillary
Agreements shall be subject to the provisions of the Confidentiality Agreement
and shall be treated as "Proprietary Information"(as defined in the
Confidentiality Agreement).
(c) After the Closing Date, each party and their
representatives shall have reasonable access to all of the books and records of
the Purchased Assets, including all Transferring Employee Records, in the
possession of the other party to the extent that such access may reasonably be
required by such party. Such access shall be afforded by the party or parties
in possession of such books and records upon receipt of reasonable advance
notice and during normal business hours. The party or parties exercising this
right of access shall be solely responsible for any costs or expenses incurred
by it or them pursuant to this Section 7.2(c). If the party or parties in
possession of such books and records shall desire to dispose of any such books
and records, such party or parties shall, prior to such disposition, give the
other party or parties a reasonable opportunity at such other party's or
parties' expense, to segregate and remove such books and records as such
other party or parties may select.
(d) The Seller agrees not to release any Person (other than
the Buyer) from any confidentiality agreement now existing with respect to the
Purchased Assets, or waive or amend any provision thereof.
(e) Notwithstanding the terms of the Confidentiality
Agreement and Section 7.2 (b) above, the parties agree that prior to the
Closing the Buyer may, if reasonably necessary, reveal or disclose Proprietary
Information to any other Persons in order to obtain financing, and for purposes
of risk management of or with respect to the Purchased Assets, and to such
Persons with whom the Buyer expects it may have business dealings regarding the
Purchased Assets from and after the Closing Date, and, to the extent that
Seller consents, which consent shall not be unreasonably withheld, existing and
potential customers and suppliers.
(f) Except as required by law, unless otherwise agreed to in
writing by the Buyer, for a period commencing on the Closing Date and
terminating three years after such date the Seller and RG&E shall keep all
Proprietary Informa-
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tion confidential and (i) shall not disclose or reveal any Proprietary
Information to any Person other than "Sellers' Representatives"(as defined
below) who are actively and directly participating in the transactions
contemplated hereby or who otherwise need to know the Proprietary Information
for such purpose and shall cause those Persons to observe the terms of this
Section 7.2 (f) and (ii) shall not use Proprietary Information for any purpose
other than consistent with the terms of this Agreement. Each of the Seller and
RG&E shall continue to hold all Proprietary Information according to the same
internal procedures and with the same degree of care regarding its secrecy and
confidentiality as currently applicable thereto. Each of the Seller and RG&E
shall notify the Buyer of any unauthorized disclosure to third parties that it
discovers, and shall endeavor to prevent any further such disclosures. Each of
the Seller and RG&E shall be responsible for any breach of the terms of this
Section 7.2 (f) by it or any of its representatives.
After the Closing Date, in the event that the Seller or RG&E is
requested pursuant to, or required by, applicable law or regulation or by legal
process to disclose any Proprietary Information, or any other information
concerning the Purchased Assets, or the transactions contemplated hereby, the
Seller or RG&E, as applicable, shall provide the Buyer with prompt notice of
such request or requirement in order to enable the Buyer to seek an appropriate
protective order or other remedy, to consult with the Seller or RG&E, as
applicable, with respect to taking steps to resist or narrow the scope of such
request or legal process, or to waive compliance, in whole or in part, with the
terms of this Section 7.2 (f). The Seller or RG&E, as applicable, agrees not
to oppose any action by the Buyer to obtain a protective order or other
appropriate remedy after the Closing Date. In the event that no such
protective order or other remedy is obtained, or that the Buyer waives
compliance with the terms of this Section 7.2 (f), the Seller or RG&E, as
applicable, shall furnish only that portion of the Proprietary Information
which the Seller or RG&E, as applicable, is advised by counsel is legally
required. In any such event the Seller or RG&E, as applicable, shall use its
reasonable best efforts to ensure that all Proprietary Information and other
information that is so disclosed will be accorded confidential treatment.
Seller's Representatives shall mean the Seller's or RG&E's accountants,
employees, counsel, environmental consultants and other authorized
representatives.
7.3 Expenses. Except to the extent specifically provided
herein and except for the cost of ALTA surveys, the cost of which shall be
shared by the Seller and the Buyer, whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in
connection with this Agreement and
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the transactions contemplated hereby shall be borne by the party incurring such
costs and expenses. Any title insurance obtained by the Buyer shall be at the
Buyer's sole expense.
7.4 Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the sale of the Purchased Assets
pursuant to this Agreement, including without limitation using its best efforts
to ensure satisfaction of the conditions precedent to each party's obligations
hereunder. Notwithstanding anything in the previous sentence to the contrary,
the Seller and the Buyer shall use commercially reasonable efforts to obtain
all Permits and Environmental Permits necessary for the Buyer to operate the
Purchased Assets. Neither of the parties hereto will, without prior written
consent of the other party, take or fail to take any action, which would
reasonably be expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement. From time to time after the
date hereof, without further consideration, the Seller and RG&E will, at their
own expense, execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order to vest more effectively in the Buyer title to the
Purchased Assets subject to Permitted Encumbrances and Schedule 5.8. From time
to time after the date hereof, the Buyer will, at its own expense, execute and
deliver such documents to the Seller and RG&E as such party may reasonably
request in order to consummate more effectively the sale of the Purchased
Assets pursuant to this Agreement.
(b) In the event that any Purchased Asset shall not have been
conveyed to the Buyer at the Closing, the Seller and RG&E shall use their best
efforts to convey such asset to the Buyer as promptly as is practicable after
the Closing. In the event that any easement necessary or desirable for the
Seller's ongoing operations shall not have been retained by the Seller after
the Closing, the Buyer shall use its best efforts to grant such Easement to the
Seller as promptly as is practicable after the Closing.
(c) The Seller agrees to provide reasonable support to the
Buyer after the Closing with respect to any action on the part of the Buyer in
connection with the proposed Multi-Fuel Burn Project, the repowering of the
Oswego facility, or changes in fuel usage at the facility.
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7.5 Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other disclosure
with respect to this Agreement or the transactions contemplated hereby and
shall not issue any such public announcement, statement or other disclosure
prior to such consultation, except as may be required by law and except that
the parties may make public announcements, statements or other disclosures with
respect to this Agreement and the transactions contemplated hereby to the
extent and under the circumstances in which the parties are expressly permitted
by the Confidentiality Agreement to make disclosures of "Proprietary
Information"(as defined in the Confidentiality Agreement).
7.6 Consents and Approvals. (a) The Seller, RG&E (if
applicable) and the Buyer shall each file or cause to be filed with the Federal
Trade Commission and the United States Department of Justice any notifications
required to be filed under the HSR Act and the rules and regulations
promulgated thereunder with respect to the transactions contemplated hereby.
The parties shall consult with each other as to the appropriate time of filing
such notifications and shall use their best efforts to make such filings at the
agreed upon time, to respond promptly to any requests for additional
information made by either of such agencies, and to cause the waiting periods
under the HSR Act to terminate or expire at the earliest possible date after
the date of filing.
(b) The Seller and the Buyer shall cooperate with each other
and (i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all commercially reasonable efforts to
obtain the transfer or reissuance to the Buyer of all necessary Transferable
Permits, consents, approvals and authorizations of all governmental bodies and
(iv) use all commercially reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each of the
foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement (including, without
limitation, the Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals) or required by the terms of any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument to which the Seller or the Buyer is a party or by
which either of them is bound. Each of the Seller and the Buyer shall have the
right to review in advance all characterizations of the information relating to
the transactions contemplated by this Agreement which appear in any filing made
in connection with the transactions contemplated hereby.
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(c) The Seller and the Buyer shall cooperate with each other
and promptly prepare and file notifications with, and request tax clearances
from, state and local taxing authorities in jurisdictions in which a portion of
the Purchase Price may be required to be withheld or in which the Buyer would
otherwise be liable for any Tax liabilities of the Seller pursuant to such
state and local Tax law.
(d) The Seller, RG&E (as applicable) and the Buyer agree to
execute and deliver the Ancillary Agreements at the Closing.
(e) Parent agrees to cause the Buyer to perform its
obligations hereunder.
7.7 Fees and Commissions. The Seller, RG&E and the Buyer
each represent and warrant to the other that, except for Merrill Lynch & Co.
and Donaldson Lufkin & Jenrette Securities Corporation, which are acting for
and at the expense of the Seller, and Chase Securities, Inc., which is acting
for and at the expense of the Buyer, no broker, finder or other Person is
entitled to any brokerage fees, commissions or finder's fees in connection with
the transaction contemplated hereby by reason of any action taken by the party
making such representation.
7.8 Tax Matters. (a) Other than the New York Real Estate
Transfer Tax (the "New York Tax"), which is the Seller's and RG&E's obligation,
the Buyer shall be solely liable for and shall pay all applicable sales,
transfer, use, stamp, conveyance, value added, recording, excise, New York
Petroleum Business Tax and other similar Taxes, if any, together with all
recording or filing fees, notarial fees and other similar costs of Closing,
that may be imposed upon, or payable, collectible or incurred in connection
with the transfer of the Purchased Assets to the Buyer or otherwise as a result
of the transfer of the Purchased Assets ("Transfer Taxes"). The Buyer shall
release, indemnify and hold harmless Seller and RG&E with respect to all
Transfer Taxes, other than the New York Tax. The Buyer, at its own expense,
will file, to the extent required by applicable law, all necessary Tax Returns
and other documentation with respect to all such Transfer Taxes, and if
required by applicable law, the Seller will join in the execution of any such
Tax Returns or other documentation.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file all
Tax Returns required to be filed after the Closing with respect to the
Purchased Assets, if
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any, and shall duly and timely pay all such Taxes shown to be due on such Tax
Returns. The Buyer's preparation of any such Tax Returns shall be subject to
the Seller's approval, which approval shall not be unreasonably withheld. The
Buyer shall make such Tax Returns available for the Seller's review and
approval not later than fifteen (15) Business Days prior to the due date for
filing such Tax Return. Within ten (10) Business Days after receipt of such
Tax Return, the Seller shall pay to the Buyer its proportionate share of the
amount shown as due on such Tax Return determined in accordance with Section
3.4 of this Agreement.
(c) Each of the Buyer and the Seller shall provide the other
with such assistance as may reasonably be requested by the other party in
connection with the preparation of any Tax Return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the requesting party with any records or information that may be relevant to
such return, audit, or examination, proceedings or determination. Any
information obtained pursuant to this Section 7.8(c) or pursuant to any other
Section hereof providing for the sharing of information or review of any Tax
Return or other schedule relating to Taxes shall be kept confidential by the
parties hereto.
(d) The Buyer shall remit to the Seller any refund or credit
of Taxes with respect to the Purchased Assets to the extent such Taxes are
attributable to any taxable period, or portion thereof, ending on or before the
Closing Date and provide notice of such remittance to RG&E.
(e) The Buyer shall pay to the Seller at Closing the portion
of any Taxes previously paid by the Seller with respect to the Purchased Assets
to the extent such Taxes are properly allocable to a taxable period, or portion
thereof, beginning after the Closing Date.
7.9 Supplements to Schedules. Prior to the Closing Date, the
Seller and the Buyer shall supplement or amend the Schedules required by
Section 2.4, Article V and Article VI, as the case may be, with respect to any
matter relating to the Purchased Assets, hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach of
any representation or warranty made in this Agreement unless the parties agree
thereto in writing.
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7.10 Employees. (a) The Buyer and the Seller agree that the
Buyer shall be a successor within the meaning of the Collective Bargaining
Agreement. Each person who becomes employed by the Buyer or an Affiliate of
Buyer pursuant to this Section 7.10 shall be referred to herein as a "Buyer
Employee." The employment of Buyer Employees who are represented by Local No.
97 of the IBEW shall continue in accordance with the Collective Bargaining
Agreement.
(b) The Seller has made available to the Buyer the Collective
Bargaining Agreement. With respect to Buyer Employees who are included in the
collective bargaining unit covered by the Collective Bargaining Agreement
("IBEW Employees"), on the Closing Date, the Buyer or any Affiliate of Buyer
who employs Buyer Employees will assume the Collective Bargaining Agreement as
it relates to such Buyer Employees employed at the Purchased Assets.
(c) For the period commencing on the Closing Date and ending
12 months thereafter, and except as the Buyer and any Buyer Employee may
otherwise agree, the Buyer shall provide all Buyer Employees who are not IBEW
Employees ("Non-Union Employees") with total compensation (including, without
limitation, base pay, authorized overtime, bonuses, and benefits contained in
the employee benefit plans, programs and fringe benefit arrangements (excluding
education reimbursement)) which is, in the aggregate, at least equivalent in
value to the Non-Union Employee's total compensation, which shall be based
upon (x) such employee's existing individual base pay, (y) authorized overtime,
if applicable, and (z) an average bonus and benefit component for such
employee's salary plan level, as consistently applied by the Seller,
apportioned according to such employee's base pay. The Buyer shall also pay
reasonable relocation costs with respect to any Non-Union Employees who shall
relocate at the Buyer's request.
(d) As of the Closing Date, all Non-Union Employees shall
cease to participate in the employee welfare benefit plans (as such term is
defined in EPJSA) maintained or sponsored by the Seller or its Affiliates (the
"Prior Welfare Plans") and shall, if applicable, commence to participate in
welfare benefit plans of the Buyer or its Affiliates (the "Replacement Welfare
Plans"). The Buyer shall (i) waive all limitations as to pre-existing
condition exclusions and waiting periods with respect to 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 Non-Union Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfy-
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ing 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).
(e) Non-Union Employees shall be given credit for all service
with the Seller and its Affiliates under all employee benefit plans, programs,
and fringe benefit plans, programs, and fringe benefit arrangements of the
Buyer ("Buyer Benefit Plans") in which they become participants. The service
credit given is for purposes of eligibility, vesting and service related level
of benefits, but not benefit accrual (except as provided in the following
sentence) For purposes of benefit accrual, Non-Union Employees shall be given
credit for all service with the Seller and its Affiliates under all Buyer
Benefit Plans, but the ultimate benefits provided under the Buyer Benefit Plans
may be offset by the corresponding benefits previously provided by the Seller
or benefit plans of the Seller, or by the corresponding benefits accrued under
the benefit plans of the Seller or otherwise committed to be provided by the
Seller in the future. Nothing in this Agreement shall preclude the use of a
"Defined Contribution Plan"in substitution for the "Defined Benefit
Plans"maintained by the Seller.
(f) To the extent allowable by law, the Buyer shall take any
and all necessary action to cause the trustee of a defined contribution plan of
the Buyer or one of its Affiliates, if requested to do so by a Non-Union
Employee, to accept a direct "rollover"of all or a portion of said employee's
distribution (excluding securities) from the Seller's Represented and
Non-Represented Employees Savings Fund Plans or the defined benefit Pension
Plan.
(g) In addition to the Buyer's obligations with respect to
the Employee Transition Cost set forth in Section 4.2, the Buyer shall pay to
each Non-Union Employee whose employment is terminated by the Buyer or one of
its Affiliates within eighteen months of the Closing Date a severance benefit
package equivalent to that which would have been provided to such individual
upon such termination by the Seller under the Niagara Mohawk Power Corporation
Involuntary Severance Plan as in effect on the Closing Date had such individual
remained continuously employed by the Seller or its Affiliates and had been
eligible for, and entitled to benefits under, such plan on the date of such
termination.
(h) The Buyer also shall provide, to each Non-Union Employee
who on the Closing Date is at least 50 years of age and has at least 10 years
of "Service" (as that term is defined in the Niagara Mohawk Pension Plan) and
who is hired by the Buyer, a benefit that is equal to the following amount
("Transition
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Benefit"): (i) the value of the "Accrued Benefit"each such employee would have
had under the Niagara Mohawk Pension Plan cash balance formula had such
employee remained employed by the Seller for five years after the Closing Date,
assuming such employee had retained the same job with the Seller as such
employee had immediately preceding the Closing Date and had the same
"Compensation,""Interest Credit" (using an annual interest rate of 6.5
percent), and rate of "Pay-Based Credit" (as those terms are defined in the
Niagara Mohawk Pension Plan) as such employee had immediately preceding the
Closing Date; less (ii) the percent value of the "Accrued Benefit" such
employee has under the Niagara Mohawk Pension Plan cash balance formula as of
the Closing Date, plus the "Interest Credit"(as that term is defined in the
Niagara Mohawk Pension Plan) that would have been received on the amount of
such present value had it remained in the Niagara Mohawk Pension Plan for five
years after the Closing Date (assuming the Interest Credit remained at an
annual interest rate of 6.5 percent throughout that five year period). The
Buyer shall provide the Transition Benefit for each eligible Non-Union Employee
in one or both of the following ways: (A) as vested accrued benefits for such
employee under a qualified retirement plan (or qualified retirement plans)
maintained by the Buyer, with such benefits accruing no later than the end of
the five year period following the Closing Date ("Five Year Period"); and/or
(B) as cash paid to such employee in a lump sum or in multiple payments (e.g.,
through a severance pay plan, a deferred compensation plan, or such other
arrangement deemed appropriate to the Buyer), with such payment(s) to commence
no later than the last day of the year in which such employee's employment with
the Buyer terminates (or, if later, 90 days after such employment terminates).
The present value of the vested accrued benefits described in (A), plus the
present value of the cash payment(s) to be made pursuant to (B), must at least
equal the total amount of the Transition Benefit for the applicable employee
(present value, for purposes of this sentence, shall be computed in the same
manner as the present value of an "Accrued Benefit"in the Niagara Mohawk
Pension Plan is computed). Notwithstanding anything in this subsection (h) to
the contrary, (1) if an eligible Non-Union Employee voluntarily terminates
employment with the Buyer before the end of the Five Year Period or dies before
the end of the Five Year Period, the Buyer shall have the right to reduce such
employee's Transition Benefit on a pro rata-basis (e.g., if such employee
voluntarily leaves employment with the Buyer after one year, the Buyer could
reduce such Employee's Transition Benefit to 20 percent of the original
Transition Benefit amount)
(i) The Buyer and the Seller do not anticipate the issuance
of any notices pursuant to the WARN Act. Notwithstanding the foregoing, the
Seller agrees to timely perform and discharge all requirements under the WARN
Act and under
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applicable state and local laws and regulations for the notification of its
employees arising from the sale of the Purchased Assets to the Buyer up to and
including the Closing Date for those employees who will become Employees
effective as of the Closing Date. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN Act
and under applicable state and local laws and regulations for the notification
of its employees with respect to the Fossil Assets or the Hydroelectric Assets,
as the case may be.
(j) The Buyer shall not be responsible for extending COBRA
continuation coverage to any employees and former employees of Seller who do
not elect to become Buyer Employees, or to any qualified beneficiaries of such
employees and former employees, who become or became entitled to COBRA
continuation coverage before the Closing, including those for whom the Closing
occurs during their COBRA election period.
(k) The Seller or the Seller's Affiliates shall remain
responsible for paying Buyer Employees for: (a) all salary, wages, bonuses
and/or incentive compensation that were earned for time worked for the Seller
or the Seller's Affiliates prior to the Closing Date; and (b) all workers'
compensation, disability benefits or other insurance benefits that were accrued
and based upon events occurring prior to the Closing Date. The Seller or
Seller's Affiliates shall pay to the Buyer as promptly as practicable following
the Closing Date for all vacation and holiday time for Buyer's Employees which
is accrued as of the Closing Date, and the Buyer shall provide to the Buyer
Employees the opportunity either to be paid for such accrued time or to take
such time.
(l) Notwithstanding any other provision in this Agreement,
the Buyer shall have no obligation of any kind, and the Seller shall indemnify
and hold the Buyer harmless from, any liability with respect to any employee of
the Seller who does not elect to become a Buyer Employee.
(m) Prior to the Closing, the Seller will not fill any open
positions relating to the Purchased Assets without the consent of the Buyer,
which shall not be unreasonably withheld, except in accordance with the
Collective Bargaining Agreement.
7.11 Risk of Loss. (a) From the date hereof through the
Closing Date, all risk of loss or damage to the property included in the
Purchased Assets shall be borne by the Seller and RG&E.
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(b) If, before the Closing Date, all or any portion of the
Purchased Assets is taken by eminent domain or is the subject of a pending or
(to the knowledge of the Seller) contemplated taking which has not been
consummated, the Seller shall notify the Buyer promptly in writing of such
fact. If the fair market value of the Purchased Assets that are the subject of
such taking is greater than $250,000, the Buyer and the Seller shall negotiate
in good faith to settle the loss resulting from such taking (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transaction contemplated by this
Agreement pursuant to the terms of this Agreement.
(c) If, before the Closing Date, all or any material portion
of the Purchased Assets is damaged or destroyed by fire or other casualty, the
Seller shall notify the Buyer promptly in writing of such fact. If such damage
or destruction would result in a loss of more than $250,000 and the Seller has
not notified the Buyer of its intention to cure such damage or destruction
within fifteen (15) days after its occurrence, the Buyer and the Seller shall
negotiate in good faith to settle the loss resulting from such casualty
(including, without limitation, by making a fair and equitable adjustment to
the Purchase Price) and, upon such settlement, consummate the transactions
contemplated by this Agreement pursuant to the terms of this Agreement. If no
such settlement is reached within sixty (60) days after the Seller has notified
the Buyer of such casualty, the Buyer or the Seller may terminate this
Agreement pursuant to Section 10.1 (f).
(d) If a taking or damage or destruction in (b) or (c) above
shall affect $250,000 or less in value of the Purchased Assets, the Buyer shall
be entitled to any compensation with respect to a taking and any insurance
proceeds with respect to damage or destruction.
7.12 Tax Clearance Certificates. The Buyer shall use
reasonable efforts to provide or obtain from any taxing authority any
certificate, permit, license, or other document necessary to mitigate, reduce
or eliminate any Taxes (including additions thereto or interest and penalties
thereon) that otherwise would be imposed with respect to the transactions
contemplated in this Agreement.
7.13 NYSERDA Compliance. Following the Closing, the Buyer
agrees to comply with the Seller's obligations with respect to the ownership
and operation of the Purchased Assets set forth in the participation agreements
and tax regulatory agreements listed on Schedule 7.13.
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7.14 Storage of the Buyer's Fuel Oil Prior to the Closing
Date. The Seller agrees that between the date of this Agreement and the
Closing Date, the Seller will (i) provide for the Buyer weekly a report
disclosing, separately with respect to different sulfur percentages, the amount
of fuel oil on hand at the Purchased Assets, the amount contracted by the
Seller for delivery and the amount of the storage capacity available to the
Buyer, and (ii) receive and store for the Buyer fuel oil in amounts not to
exceed the amount of such free storage capacity. If the Seller has received
and stored fuel oil for the Buyer, such weekly reports shall also show
separately the amounts in storage for the Buyer and the Seller. Such Buyer
fuel oil shall be deemed "received"solely for purposes of determining available
capacity when the Buyer advises the Seller in writing that it has ordered such
fuel oil for delivery. In the event that the Seller shall require, prior to
the Closing Date, for its use at the facility, fuel oil in excess of the
amounts stored for Seller, the Buyer. agrees to sell to the Seller such
reasonable amounts of the fuel oil stored for the Buyer as the Seller may
request for such purposes, at the Buyer's delivered cost. In the event the
Closing does not occur and this Agreement terminates, the Seller shall pay the
Buyer for all remaining fuel oil stored for the Buyer at the Buyer's delivered
cost.
7.15 Gas Pipeline 63 Agreement. Between the date hereof and
December 31, 1999, the Buyer shall evaluate the proposed Gas Pipeline 63
Agreement and, at Buyer's request, the Buyer and the Seller shall negotiate in
good faith the terms of such an agreement. The Seller shall promptly notify
the Buyer if it intends to negotiate with another party. The Buyer shall
promptly notify the Seller if it decides not to negotiate with the Seller.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the
Transaction. The respective obligations of each party to effect the sale of
the Purchased Assets shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
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(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 hereby shall have been issued and
remain in effect (each party agreeing to use reasonable best efforts to have
any such injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted by any State or Federal government or governmental
agency in the United States which prohibits the consummation of the sale of the
Purchased Assets;
(c) All Federal, State and local government consents and
approvals required for the consummation of the sale of the Purchased Assets and
the Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, shall have been obtained and become Final Orders (a "Final Order"
for all purposes of this Agreement means a final order after all opportunities
for rehearing are exhausted (whether or not any appeal thereof is pending) that
has not been revised, stayed, enjoined, set aside, annulled or suspended, with
respect to which any required waiting period has expired; and as to which all
conditions to effectiveness prescribed therein or otherwise by law, regulation
or order have been satisfied) and such Final Orders shall not impose materially
adverse terms or conditions on any of the Seller, RG&E or the Buyer (including
adverse ratemaking determinations as to the Seller or RG&E as to the recovery
of any losses or costs incurred or stranded as a result of the transaction),
provided that any such party may only invoke the foregoing condition if the
terms or conditions have such a material adverse effect on the benefits
expected to be derived from the consummation of the transactions contemplated
hereby that such party reasonably would not have been expected to enter into
this Agreement if such terms or conditions had been known as of the date
hereof;
(d) All consents and approvals for the consummation of the
sale of the Purchased Assets contemplated hereby required under the terms of
any note, bond, mortgage, indenture, contract or other agreement to which the
Seller, RG&E or the Buyer, or any of their subsidiaries, is a party shall have
been obtained, other than those which if not obtained, would not, in the
aggregate, create a Material Adverse Effect;
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(e) Obtaining the consent of COIDA to the severing of the
COIDA Lease/Sublease and the PILOT between the Real Property and the real
property included within the PILOT to be retained by Seller; and
(f) Obtaining the consent of COIDA to the assignment of the
sublease, as severed to cover the Real Property from Seller to Buyer and the
assumption of the sublease, as severed to cover the Real Property, by Buyer.
8.2 Conditions to Obligations of the Buyer. The obligation
of the Buyer to effect the purchase of the Purchased Assets contemplated by
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date of the following additional conditions:
(a) There shall not have occurred and be continuing a
Material Adverse Effect;
(b) The Seller shall have performed and complied with in all
material respects the covenants and agreements contained in this Agreement that
are required to be performed and complied with by the Seller on or prior to the
Closing Date, and the representations and warranties of the Seller set forth in
this Agreement shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made at and as of the Closing Date;
(c) There shall be no Encumbrances on the Purchased Assets by
virtue of the Indenture;
(d) The Buyer shall have received certificates from
authorized officers of the Seller, dated the Closing Date, to the effect that,
to the best of such officers' knowledge, the conditions set forth in Sections
8.2(a), (b) and (c) have been satisfied;
(e) The Buyer shall have received an opinion of the general
counsel of the Seller, dated the Closing Date and satisfactory in form and
substance to the Buyer and its counsel, substantially to the effect that:
(1) The Seller is a corporation duly organized,
existing and in good standing under the laws of New York and the
Seller has the corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and to
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consummate the transactions contemplated hereby and thereby; and
the execution and delivery of this Agreement and such Ancillary
Agreements and the consummation of the sale of the Purchased
Assets contemplated hereby have been duly authorized by all
requisite corporate action taken on the part of the Seller;
(2) This Agreement and those Ancillary Agreements
have been duly executed and delivered by the Seller and
(assuming that the Seller Required Regulatory Approvals and the
Buyer Required Regulatory Approvals are obtained) are valid and
binding obligations of the Seller, enforceable against the
Seller in accordance with their terms, (A) subject to the
Bankruptcy and Equity Exception and (B) except that the remedy
of specific performance and injunctive and other forms of
equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought;
(3) The execution and delivery and performance of
this Agreement and the Ancillary Agreements by the Seller do not
conflict with the Certificate of Incorporation or Bylaws, as
currently in effect, of the Seller; and
(4) No declaration, filing or registration with,
or notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Seller of the Closing other than (i) the Seller Required
Regulatory Approvals, all of such Seller Required Regulatory
Approvals hereunder having been obtained and being in full force
and effect with such terms and conditions as shall have been
imposed by any applicable governmental authority, and (ii) such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not obtained or made, would not,
in the aggregate create a Material Adverse Effect.
As to any matter contained in such opinions which involves the
laws of any jurisdiction other than the Federal laws of the United States or
the laws of the State of New York, such counsel may rely upon opinions of
counsel admitted in such
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other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinions
may expressly rely as to matters of fact upon certificates furnished by the
Seller and appropriate officers and directors of the Seller and by public
officials;
(f) The Buyer shall have received the qualifications or
approvals set forth in Section 6.3(b) (i) and (ii) hereof;
(g) The Buyer shall have obtained all material Environmental
Permits and material Permits; and
(h) The Buyer shall be able to obtain New York Title
Insurance.
8.3 Conditions to Obligations of the Seller and RG&E. The
obligation of the Seller and RG&E to effect the sale of the Purchased Assets
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions:
(a) The Buyer and Parent each shall have performed in all
material respects its covenants and agreements contained in this Agreement
which are required to be performed on or prior to the Closing Date;
(b) The representations and warranties of the Buyer and
Parent set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date;
(c) The Seller shall have received a certificate from
authorized officers of Parent and the Buyer, dated the Closing Date, to the
effect that, to the best of such officers' knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied;
(d) The Buyer shall have assumed, as set forth in Section
7.10, the Collective Bargaining Agreement and, as set forth in Section 2.3(x),
the Contracts, and in 2.3(xi), the RG&E Agreement.
(e) The Seller shall have received an opinion from the
general counsel of the Parent, dated the Closing Date and satisfactory in form
and substance to the Seller and their counsel, substantially to the effect
that:
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(1) Parent is a corporation and the Buyer is a
limited liability company, in each case duly organized, existing
and in good standing under the laws of the State of Delaware and
has the corporate power and authority to execute and deliver
this Agreement and, with respect to the Buyer, the Ancillary
Agreements and to consummate the transactions contemplated
hereby and, with respect to the Buyer, thereby; and the
execution and delivery of this Agreement and, with respect to
the Buyer, such Ancillary Agreements and the consummation of the
sale of the Purchased Assets contemplated hereby have been duly
authorized by all requisite corporate action taken on the part
of the Buyer and Parent;
(2) This Agreement and those Ancillary Agreements
have been duly executed and delivered by the Buyer and Parent
and (assuming that the Seller Required Regulatory Approvals and
the Buyer Required Regulatory Approvals are obtained) are valid
and binding obligations of the Buyer and Parent, enforceable
against the Buyer and Parent in accordance with their terms, (A)
subject to the Bankruptcy and Equity Exception and (B) except
that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(3) The execution and delivery and performance of
this Agreement and, with respect to the Buyer, the Ancillary
Agreements by the Buyer and Parent do not conflict with the
constituent documents, as currently in effect, of the Buyer or
Parent; and
(4) No declaration, filing or registration with,
or notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Buyer or Parent of the Closing other than the Buyer Required
Regulatory Approvals, all of such Buyer Required Regulatory
Approvals having been obtained and being in full
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force and effect with such terms and conditions as shall have
been imposed by any applicable governmental authority.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United States and
Delaware, such counsel may rely upon opinions of counsel admitted in such other
jurisdictions. Any opinions relied upon by such counsel as aforesaid shall be
delivered together with the opinion of such counsel. Such opinion may
expressly rely as to matters of facts upon certificates furnished by
appropriate officers and directors of the Buyer and its subsidiaries and by
public officials.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. (a) The Seller and, solely with
respect to Unit 6, RG&E will indemnify, defend and hold harmless Parent and the
Buyer from and against any and all claims, demands or suits (by any Person),
losses, liabilities, damages (including consequential or special damages),
obligations, payments, costs and expenses (including, without limitation, the
costs and expenses of any and all actions, suits, proceedings, assessments,
judgments, settlements and compromises relating thereto and reasonable
attorneys' fees and reasonable disbursements in connection therewith) (each,
an "Indemnifiable Loss"), asserted against or suffered by the Buyer relating
to, resulting from or arising out of (i) any breach by the Seller or RG&E of
any covenant or agreement of the Seller or RG&E contained in this Agreement or
the representations and warranties contained in Sections 5.1, 5.2 or 5.3 hereof
(it being understood that the Seller or RG&E, as the case may be, shall only be
responsible for breaches by itself and not for breaches by the other), (ii) the
Excluded Liabilities, (iii) noncompliance by the Seller with any bulk sales or
transfer laws as provided in Section 11.11 or (iv) the Indemnifiable Liens.
(b) Parent and the Buyer will indemnify, defend and hold
harmless the Seller and RG&E from and against any and all Indemnifiable Losses
asserted against or suffered by the Seller or RG&E relating to, resulting from
or arising out of (i) any breach by Parent or the Buyer of any covenant or
agreement of Parent or the Buyer contained in this Agreement or the
representations and warranties contained in Sections 6.1, 6.2 and 6.3 hereof
and (ii) the Assumed Obligations.
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(c) Any Person entitled to receive indemnification under this
Agreement (an "Indemnitee") having a claim under these indemnification
provisions shall make a good faith effort to mitigate and to recover all
losses, damages, costs and expenses from insurers of such Indemnitee under
applicable insurance policies so as to reduce the amount of any Indemnifiable
Loss hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to an
Indemnifiable Loss and (ii) to take into account any net Tax benefit recognized
by the Indemnitee arising from the recognition of the Indemnifiable Loss and
any payment actually received with respect to an Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any
covenant or agreement shall not affect the parties' obligations under this
Section 9.1 if the Indemnitee provided the Person required to provide
indemnification under this Agreement (the "Indemnifying Party") with proper
notice of the claim or event for which indemnification is sought prior to such
expiration, termination or extinguishment.
(e) The rights and remedies of the Seller, RG&E, Parent and
the Buyer under this Article IX are exclusive and in lieu of any and all other
rights and remedies which the Seller, RG&E, Parent and the Buyer may have under
this Agreement or otherwise for monetary relief with respect to (i) any breach
or failure to perform any covenant or agreement set forth in this Agreement or
(ii) the Assumed Obligations or the Excluded Liabilities, as the case may be.
(f) The Buyer, RG&E, Parent and the Seller each agree that
notwithstanding any provisions in this Agreement to the contrary, all parties
to this Agreement retain their remedies at law or in equity with respect to
willful or intentional breaches of this Agreement.
(g) Any indemnity payment under this Agreement shall be
treated as an adjustment to the Purchase Price for tax purposes.
9.2 Defense of Claims. (a) If any Indemnitee receives
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to this
Agreement or an Affiliate of a party to this Agreement (a "Third Party Claim")
with respect to which indemnification is to be sought from an Indemnifying
Party, the Indemnitee will give such Indemnifying party reasonably prompt
written notice thereof, but in any event
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not later than ten (10) calendar days after the Indemnitee's receipt of notice
of such Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and shall indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in or,
by giving written notice to the Indemnitee, to elect to assume the defense of
any Third Party Claim at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, and the Indemnitee will cooperate in good
faith in such defense at such Indemnitee's own expense.
(b) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in the last sentence of Section 9.2(a), the Indemnifying Party will
not be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the
Indemnifying Party fails to take reasonable steps necessary to defend
diligently such Third Party Claim within twenty (20) calendar days after
receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume its
own defense, and the Indemnifying Party will be liable for all reasonable
expenses thereof. Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party Claim
which would lead to liability or create any financial or other obligation on
the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third Party
claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party will give written notice
to the Indemnitee to that effect. If the Indemnitee fails to consent to such
firm offer within ten (10) calendar days after its receipt of such notice, the
Indemnitee may continue to contest or defend such Third Party Claim and, in
such event, the maximum liability of the Indemnifying Party as to such Third
Party claim will be the amount of such settlement offer, plus reasonable costs
and expenses paid or incurred by the Indemnitee up to the date of such notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof,
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stating the nature of such claim in reasonable detail and indicating the
estimated amount, if practicable, but in any event not later than ten (10)
calendar days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party will have a period of thirty (30) calendar days within which
to respond to such Direct Claim. If the Indemnifying Party does not respond
within such thirty (30) calendar day period, the Indemnifying Party will be
deemed to have accepted such claim. If the Indemnifying Party rejects such
claim, the Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or
against any other entity, the amount of such reduction, less any costs,
expenses or premiums incurred in connection therewith (together with interest
thereon from the date of payment thereof at the prime rate then in effect of
the Bank of Boston), will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any indemnity payment, the Indemnifying Party
will, to the extent of such indemnity payment, be subrogated to all rights of
the Indemnitee against any third party in respect of the Indemnifiable Loss to
which the indemnity payment relates; provided, however, that (i) the
Indemnifying Party will then be in compliance with its obligations under this
Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee
recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third party on account of said indemnity
payment is hereby made expressly subordinated and subject in right of payment
to the Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights, and otherwise cooperate in the prosecution of such claims
at the direction of the Indemnifying Party. Nothing in this Section 9.2(d)
shall be construed to require any party hereto to obtain or maintain any
insurance coverage.
(e) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party hereunder
except if, and only to the extent that, as a result of such failure, the party
which was entitled to receive such notice was actually prejudiced as a result
of such failure.
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9.3 Tax Contest. (a) The Buyer shall notify the Seller
and/or RG&E (as applicable) in writing within thirty (30) days of receipt of
written notice of any Federal or State pending or threatened audits,
adjustments or assessments (a "Tax Audit"), which may affect the Seller's or
RG&E's liability for Taxes. If the Buyer fails to give such notice, the Buyer
shall not be entitled to indemnification for any Taxes arising in connection
with such Tax Audit if such failure to give notice adversely affects the
Seller's or RG&E's right to participate in the Tax Audit.
(b) (i) If such Tax Audit relates to any taxable period
ending on or before the Closing or for any Taxes for which the Seller is liable
hereunder, the Seller shall at its expense control the defense and settlement
of such Tax Audit; (ii) if such Tax Audit relates to any taxable period
beginning after the Closing for any Taxes, including without limitation
Transfer Taxes as provided in Section 7.8(a), for which the Buyer is liable in
full hereunder, the Buyer shall at its expense control the defense and
settlement of such Tax Audit, provided the Seller shall be entitled to
participate in such Tax Audit at its expense in such defense and to employ
counsel of its choice at its expense; and (iii) if such Tax Audit relates to a
taxable period, or portion thereof, beginning before and ending after the
Closing and any Tax item cannot be identified as being a liability of either
party or cannot be separated from a Tax item for which the other party is
liable, the Seller shall control the defense and settlement of the Tax Audit.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination. (a) This Agreement may be terminated at
any time prior to the Closing Date by mutual written consent of the Seller,
RG&E and the Buyer.
(b) Unless Parent, the Seller and RG&E otherwise agree, this
Agreement shall be terminated with respect to RG&E if the RG&E Board Approval
is not received within 35 days after the date hereof. Upon such termination,
Parent, the Buyer and the Seller agree to appropriately amend this Agreement to
reflect only the sale of the Seller's interest in the Purchased Assets.
(c) This Agreement maybe terminated by the Seller, RG&E or
the Buyer if the Closing contemplated hereby shall have not occurred on or
before the
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first anniversary of the date of this Agreement (the "Termination Date");
provided that the right to terminate this Agreement under this Section 10.1(c)
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
first anniversary of the date of this Agreement the conditions to the Closing
set forth in Section 8.1(c) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be the day which is twenty-one
months from the date of this Agreement.
(d) This Agreement may be terminated by the Seller, RG&E or
the Buyer if (i) any governmental or regulatory body, the consent of which is a
condition to the obligations of the Seller, RG&E and the Buyer to consummate
the Closing shall have determined not to grant its or their consent and all
appeals of such determination shall have been taken and have been unsuccessful,
(ii) one or more courts of competent, jurisdiction in the United States or any
State shall have issued an order, judgment or decree permanently restraining,
enjoining or otherwise prohibiting the Closing, and such order, judgment or
decree shall have become final and nonappealable or (iii) any statute, rule or
regulation shall have been enacted by any State or Federal government or
governmental agency in the United States which prohibits the consummation of
the Closing.
(e) This Agreement may be terminated by the Buyer, if there
has been a material violation or breach by the Seller or RG&E of any agreement,
representation or warranty contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of the Buyer to effect the
Closing impossible and such violation or breach has not been waived by the
Buyer.
(f) This Agreement may be terminated by the Seller or RG&E,
if there has been a material violation or breach by the Buyer of any agreement,
representation or warranty contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of the Seller or RG&E to
effect the Closing impossible and such violation or breach has not been waived
by the Seller or RG&E.
(g) This Agreement may be terminated by the Seller or the
Buyer in accordance with the provisions of Section 7.11(b) or (c)
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(h) Notwithstanding the foregoing, RG&E's right to terminate
shall only be with respect to the sale of its ownership interest in Unit 6
hereunder and not with respect to the remaining Oswego Assets.
10.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by any party pursuant to Section 10.1, written notice thereof shall
forthwith be given by the terminating party to the other parties and, subject
to Section 10.1(h), this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided herein:
(a) Said termination shall be the sole remedy of the parties
hereto with respect to breaches of any agreement, representation or warranty
contained in this Agreement and none of the parties hereto nor any of their
respective trustees, directors, officers or Affiliates, as the case may be,
shall have any liability or further obligation to the other party or any of
their respective trustees, directors, officers or Affiliates, as the case may
be, pursuant to this Agreement, except in each case as stated in this Section
10.2 and in Sections i.2(b), 7.3 and 7.7.
(b) All filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn from
the agency or other Person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the Seller, RG&E (to the extent its interests are affected by such
amendment, modification or supplement), Parent and the Buyer.
11.2 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or
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estoppel with respect to, any subsequent or other failure. Notwithstanding
anything in this Agreement to the contrary, the condition set forth in Section
8.3(d) cannot be waived by the Seller without the consent of the IBEW.
11.3 No Survival. Subject to the provisions of Section 9.2,
each and every representation, warranty and covenant contained in this
Agreement (other than the covenants contained in Sections 3.2, 3.3, 3.4, 7.2,
7.3, 7.4, 7.7, 7.8, 7.10, 7.12, 7.13, 7.14 and 7.15 and in Articles IX and XI
(which covenants shall survive in accordance with their terms) and other than
the representations and warranties contained in Sections 5.1, 5.2 and 5.3
(which representations and warranties shall survive for eighteen months from
the Closing)) shall expire with, and be terminated and extinguished by the
consummation of the sale of the Purchased Assets and the transfer of the
Assumed Obligations pursuant to this Agreement and such representations,
warranties and covenants shall not survive the Closing Date; and none of the
Seller, RG&E, the Buyer or any officer, director, trustee or Affiliate of any
of them shall be under any liability whatsoever with respect to any such
representation, warranty or covenant.
11.4 Notices. All notices and other communications hereunder
shall be in writing an shall be deemed given if delivered personally or by
facsimile transmission, telexed or mailed by overnight courier or registered or
certified mail (return receipt requested), postage prepaid, to the parties at
the following address (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) If to the Seller, to:
Niagara Mohawk Power Corporation
300 Erie Boulevard West
Syracuse, NY 13202
Facsimile: (315) 428-5802
Attention: Michael J. Kelleher
with a copy to:
Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile: (202) 293-6330
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Attention: Janet T. Geldzahler, Esq.
Swidler & Berlin
3000 K Street, N.W.
Washington, D.C. 20007
Facsimile: (202) 424-7501
Attention: Steven Agresta
(b) If to RG&E, to:
Rochester Gas and Electric Corporation
89 East Avenue
Rochester, N.Y. 14649
Attention: Michael T. Tomaino
(c) If to the Buyer, to:
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403-2445
Facsimile: (612) 373-5430
Attention: Craig Mataczynski
with a copy to:
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN 55402-1498
Facsimile: (612) 340-8738
Attention: Frank H. Voigt
11.5 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any party hereto, including by operation of law without the prior written
consent of the other party, nor is this Agreement intended to confer upon any
other Person except the parties hereto any rights or remedies hereunder.
Notwithstanding the foregoing, no provision of this Agreement shall create any
third party beneficiary rights in any employee or former employee of the Seller
(including any beneficiary or dependent thereof) in respect of continued
employment or resumed employment, and no provision of this
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Agreement shall create any rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any employee
benefit plan or arrangement except as expressly provided for thereunder.
Notwithstanding the foregoing, (i) the Buyer may assign all of its rights and
obligations hereunder to any wholly owned Subsidiaries of Parent (direct or
indirect) provided that no such assignment will release Parent from any
liabilities or obligations hereunder, and (ii) the Buyer or its permitted
assignee may (a) assign, transfer, pledge or otherwise dispose of its rights
and interests hereunder to a trustee or lending institution(s), or (b) assign
or transfer a portion of such rights and interest to a responsible financial
partner, in either case for the purpose of financing or refinancing; provided,
however, that no such assignment or disposition shall relieve or in anyway
discharge Parent or the Buyer or such assignee from the performance of its
duties and obligations under this Agreement. The Seller and RG&E agree to
execute and deliver such documents as may be reasonably necessary to accomplish
any such assignment, transfer, conveyance, pledge or disposition of rights
hereunder so long as their rights under this Agreement are not thereby altered,
amended, diminished or otherwise impaired.
11.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable New York principles of
conflicts of law) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies, except where New York
law is preempted by federal law in which event federal law shall govern.
11.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement.
11.9 Schedules and Exhibits. All Exhibits and Schedules
referred to herein are intended to be and hereby are specifically made a part
of this Agreement.
11.10 Entire Agreement. This Agreement, the Confidentiality
Agreement, the RG&E Agreement and the Ancillary Agreements including the
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Exhibits, Schedules, documents, certificates and instruments referred to herein
or therein, embody the entire agreement and understanding of the parties hereto
in respect of the transactions contemplated by this Agreement. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein or therein. It is
expressly acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any
material made available to the Buyer pursuant to the terms of the
Confidentiality Agreement (including the Preliminary Information Memorandum,
dated April 1998, the Information Memorandum, dated May 1998, or the Request
for Proposal, dated July 1998, previously made available to the Buyer by the
Seller, Merrill Lynch & Co. and Donaldson, Lufkin & Jenrette Securities
Corporation). This Agreement supersedes all prior agreements and
understandings between the parties with respect to such transactions other than
the Confidentiality Agreement.
11.11 Bulk Sales or Transfer Laws. The Buyer acknowledges that
the Seller will not comply with the provision of any bulk sales or transfer
laws (other than Section 1141(c) of the New York State Tax Law) of any
jurisdiction in connection with the transactions contemplated by this
Agreement. The Buyer hereby waives compliance by this Seller with the
provisions of the bulk sales or transfer laws of all applicable jurisdictions.
[BALANCE OF PAGE LEFT BLANK]
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IN WITNESS WHEREOF, the Seller, RG&E, Parent and the Buyer have
caused this agreement to be signed by their respective duly authorized officers
as of the date first above written.
NIAGARA MOHAWK POWER CORPORATION
By /s/ Michael J. Kelleher
----------------------------------------------
Name: Michael J. Kelleher
Title: Vice President
ROCHESTER GAS AND ELECTRIC CORPORATION
By /s/ Michael T. Tomaino
----------------------------------------------
Name: Michael T. Tomaino
Title: Sr. Vice President & General Counsel
NRG ENERGY, INC.
By /s/ Craig A. Mataczynski
----------------------------------------------
Name: Craig A. Mataczynski
Title: President
OSWEGO HARBOR POWER LLC
By /s/ Michael O'Sullivan
----------------------------------------------
Name: Michael O'Sullivan
Title: Authorized Representative
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