Exhibit 10.60
GAS TURBINE AND HYDROELECTRIC GENERATING
STATIONS SALES AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY NY-GEN, L.L.C.
November 24, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE
2.1. The Sale . . . . . . . . . . . . . . . . . . . . . 25
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . 25
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . 26
2.4. Excluded Liabilities . . . . . . . . . . . . . . . 31
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price . . . . . . . . . . . . . . . . . . 35
3.2. Purchase Price Adjustment . . . . . . . . . . . . . 36
3.3. Allocation of Purchase Price . . . . . . . . . . . 38
3.4. Proration . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing . . . . . . . . . . . . . 40
4.2. Payment of Purchase Price . . . . . . . . . . . . . 41
4.3. Deliveries by Seller . . . . . . . . . . . . . . . 41
4.4. Deliveries by Buyer . . . . . . . . . . . . . . . . 43
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1. Organization; Qualification . . . . . . . . . . . . 45
5.2. Authority Relative to this Agreement . . . . . . . 46
5.3. Consents and Approvals; No Violation . . . . . . . 46
5.4. Reports . . . . . . . . . . . . . . . . . . . . . . 48
5.5. Financial Statements . . . . . . . . . . . . . . . 49
5.6. Undisclosed Liabilities . . . . . . . . . . . . . . 50
5.7. Absence of Certain Changes or Events . . . . . . . 50
5.8. Title . . . . . . . . . . . . . . . . . . . . . . . 51
5.9. Leasehold Interests . . . . . . . . . . . . . . . . 52
5.10. Improvements . . . . . . . . . . . . . . . . . 52
5.11. Insurance . . . . . . . . . . . . . . . . . . 53
5.12. Environmental Matters . . . . . . . . . . . . 53
5.13. Labor Matters . . . . . . . . . . . . . . . . . . 55
5.14. ERISA . . . . . . . . . . . . . . . . . . . . . . 56
5.15. Real Property Encumbrances . . . . . . . . . . . . 58
5.16. Condemnation . . . . . . . . . . . . . . . . . . . 58
5.17. Certain Contracts and Arrangements . . . . . . . . 58
5.18. Legal Proceedings, etc. . . . . . . . . . . . . . 60
5.19. Permits . . . . . . . . . . . . . . . . . . . . . 60
5.20. Regulation as a Utility . . . . . . . . . . . . . 61
5.21. Taxes . . . . . . . . . . . . . . . . . . . . . . 61
5.22. Intellectual Property . . . . . . . . . . . . . . 62
5.23. Year 2000 Readiness . . . . . . . . . . . . . . . 62
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization . . . . . . . . . . . . . . . . . . . 63
6.2. Authority Relative to this Agreement . . . . . . . 63
6.3. Consents and Approvals; No Violation . . . . . . . 64
6.4. Operating Easements . . . . . . . . . . . . . . . . 65
6.5. Regulation as a Utility . . . . . . . . . . . . . . 65
6.6. Availability of Funds . . . . . . . . . . . . . . . 65
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets 66
7.2. Access to Information . . . . . . . . . . . . . . . 69
7.3. Expenses . . . . . . . . . . . . . . . . . . . . . 72
7.4. Further Assurances . . . . . . . . . . . . . . . . 72
7.5. Public Statements . . . . . . . . . . . . . . . . . 74
7.6. Consents and Approvals . . . . . . . . . . . . . . 74
7.7. Fees and Commissions . . . . . . . . . . . . . . . 77
7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . 78
7.9. Supplements to Schedules . . . . . . . . . . . . . 80
7.10. Employees . . . . . . . . . . . . . . . . . . 80
7.11. Risk of Loss . . . . . . . . . . . . . . . . . 85
7.12. Real Estate Matters . . . . . . . . . . . . . 86
7.16. Environmental Remediation . . . . . . . . . . 90
7.17. Buyout of Leases . . . . . . . . . . . . . . . 92
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. . . . . . . . . . 93
8.2. Conditions to Obligations of Buyer . . . . . . . . 96
8.3. Conditions to Obligations of Seller . . . . . . . . 101
8.4. Extension of Closing Date. . . . . . . . . . . . . 104
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification . . . . . . . . . . . . . . . . . . 105
9.2. Defense of Claims . . . . . . . . . . . . . . . . 108
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination . . . . . . . . . . . . . . . . . 113
10.2. Procedure and Effect of Termination . . . . . 115
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification . . . . . . . . . 116
11.2. Confidentiality . . . . . . . . . . . . . . . 117
11.3. Waiver of Compliance; Consents . . . . . . . . 119
11.4. No Survival. . . . . . . . . . . . . . . . . 119
11.5. Notices . . . . . . . . . . . . . . . . . . . 120
11.6. Assignment . . . . . . . . . . . . . . . . . . 121
11.7. Governing Law . . . . . . . . . . . . . . . . 123
11.8. Specific Performance . . . . . . . . . . . . . 123
11.9. Counterparts . . . . . . . . . . . . . . . . . 124
11.10. Interpretation . . . . . . . . . . . . . . . . 124
11.11. Entire Agreement . . . . . . . . . . . . . . . 124
11.12. Bulk Sales or Transfer Laws . . . . . . . . . 125
GAS TURBINE AND HYDROELECTRIC GENERATING
STATIONS SALES AGREEMENT
GAS TURBINE AND HYDROELECTRIC GENERATING STATIONS SALES
AGREEMENT, dated as of November 24, 1998, between Orange and Rockland
Utilities, Inc., a New York corporation ("Seller" or "O&R"), and Southern
Energy NY-Gen, L.L.C., a Delaware limited liability company ("Buyer").
WHEREAS, Seller owns and operates the Gas Turbines (as defined
herein) and the Hydroelectric Assets (as defined herein) (collectively, the
"Purchased Assets"); and
WHEREAS, the Buyer desires to purchase, and Seller desires to
sell, the Purchased Assets upon the terms and conditions hereinafter set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this Gas Turbine and Hydroelectric
Generating Stations Sales Agreement together with the Schedules and
Exhibits hereto.
(3) "Ancillary Agreements" means the Operating Easement,
the Seller's Easements, the Load Pocket Agreement, the Continuing
Site/Interconnection Agreement and the Transition Agreement.
(4) "Bill of Sale" means the Bill of Sale to be delivered
at the Closing with respect to the Purchased Assets which constitute
personal property and which are to be transferred at the Closing,
substantially in the form of Exhibit A hereto.
(5) "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 the State of New York are authorized by law or other
governmental action to close.
(6) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other
authorized representatives.
(7) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(8) "Code" means the Internal Revenue Code of 1986, as
amended.
(9) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between Seller and Southern Energy,
Inc.
(10) "Continuing Site/Interconnection Agreement" means the
Continuing Site/Interconnection Agreement, dated as of the date of
this Agreement, between Seller and the Buyer.
(11) "Emission Allowances" means the nitrogen oxide
allowances to be allocated by the New York State Department of
Environmental Conservation to the Gas Turbines, as set forth in
Schedule 1.1(a)(11).
(12) "Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements,
activity and use limitations, conservation, easements, deed
restrictions, encumbrances and charges of any kind.
(13) "Environmental Laws" means all Federal, state and
local laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution
or protection of the environment, natural resources or human health
and safety, including, without limitation, laws relating to Releases
or threatened Releases of Hazardous Substances (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, transport
or handling of Hazardous Substances.
(14) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(15) "Estimated Inventory Adjustment Amount" means the value
of the JP4 fuel inventory used at or in connection with the Gas
Turbines, as published in the Journal of Commerce, on the date ten
(10) days before the Closing Date, or the most recently published date
prior to such date (ten days before the Closing) which valuation shall
be provided to the Buyer by Seller no later than five (5) days before
the Closing Date.
(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
or any successor thereto.
(19) "Gas Turbines" means the Hillburn Gas Turbine and the
Shoemaker Gas Turbine.
(20) "Good Utility Practices" means any of the practices,
methods and acts engaged in or approved by a significant portion of
the electric utility industry with respect to similar facilities
during the relevant time period which in each case, in the exercise of
reasonable judgment in light of the facts known or that should have
been known at the time the decision was made, could have been expected
to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, law, regulation,
environmental protection, and expedition. Good Utility Practices are
not intended to be limited to the optimum practices, methods or acts
to the exclusion of all others, but rather to be acceptable practices,
methods or acts generally accepted in such industry.
(21) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in
any form that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric
fluid which may contain levels of polychlorinated biphenyls; (b) any
chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (c) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any applicable Environmental Law.
(22) "Hillburn Gas Turbine" means the gas turbine generating
station which includes the real and personal property, tangible or
intangible, constituting and used principally for generation purposes
at or otherwise for the operation of the Hillburn Gas Turbine
Generating Station located in the Village of Hillburn, Town of Ramapo,
Rockland County, New York, including, but not limited to, the
following assets:
(a) all of the Seller's right, title and interest in,
to and under the Real Property (including all structures,
buildings, facilities and other improvements thereon and all
appurtenances thereto) as further described on Schedule 5.8 as
associated with the Hillburn Gas Turbine Generating Station;
(b) all of the Seller's right, title and interest in,
to and under the Leases described on Schedule 5.9(a) as
associated with the Hillburn Gas Turbine Generating Station;
(c) all inventories of fuels, supplies, spare parts
and materials located at the Hillburn Gas Turbine Generating
Station on the Closing Date;
(d) the machinery, equipment, furniture and other
personal property owned by Seller and located at the Hillburn Gas
Turbine Generating Station on the Closing Date, including,
without limitation, the items of personal property included on
Schedule 1.1(a)(22);
(e) the turbines currently leased by Seller and
located at the Hillburn Gas Turbine Generating Station (the
contract relating to this lease is listed on Schedule 5.17(a));
(f) the 69 kv transmission connections, described as
being sold to the Buyer in the separation document summary in
Exhibit C, between the Hillburn Gas Turbine Generating Station
and Seller's transmission system;
(g) all contracts, agreements and personal property
leases principally relating to the Hillburn Gas Turbine
Generating Station as further listed on Schedules 5.17(a) and
7.10(a), respectively, associated with Hillburn Gas Turbine
Generating Station;
(h) the Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Hillburn Gas Turbine Generating Station;
(i) the Emission Allowances relating to the Hillburn
Gas Turbine Generating Station;
(j) all books, operating records, reports engineering
or design plans, specifications, drawings, procedures, softwares
or tools used to process and report environmental data safety and
maintenance manuals and similar items of Seller relating
specifically to the aforementioned assets;
(k) copies of filings made with regulatory agencies,
as updated, relating to Seller's Year 2000 programs as such
filings apply to the Hillburn Gas Turbine Generating Station;
(l) all unexpired, transferable warranties and
guarantees from third parties with respect to the Hillburn Gas
Turbine Generating Station, as of the Closing Date;
(m) the Intellectual Property relating to the Hillburn
Gas Turbine Generating Station (including Seller's goodwill
therein and the rights of Seller in and to the name of Hillburn
Gas Turbine) and all rights, privileges, claims, causes of
action, indemnification rights and options pertaining solely to
the Hillburn Gas Turbine or the Assumed Liabilities, relating to
the Hillburn Gas Turbine, including, without limitation, those
items listed on Schedule 1.1(a)(22)(m);
(n) all assets acquired by Seller pursuant to
Section 7.4; and
(o) $200,000 in cash.
(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) "Hydroelectric Assets" means the Mongaup Hydroelectric
Station (Units 1, 2, 3 and 4) ("Mongaup"), the Swinging Bridge
Hydroelectric Station (Units 1 and 2) ("Swinging Bridge"), the Rio
Hydroelectric Station (Units 1 and 2) ("Rio") and an interest (the
assignment of which interest is subject to the approval of New York
City pursuant to Article XIII of an agreement between The City of New
York and The Rockland Light and Power Company, a predecessor company
to the Seller, dated February 2, 1951) in the Grahamsville
Hydroelectric Station ("Grahamsville", and with Mongaup, Swinging
Bridge and Rio, the "Hydroelectric Generating Stations") including
the real and personal property, tangible or intangible, owned by the
Seller and located at and used principally for generation purposes in
connection with such stations, including, but not limited to, the
following assets:
(a) all of the Seller's right, title and interest in,
to and under the Real Property (including all structures,
buildings, facilities and other improvements thereon and all
appurtenances thereto) described on Schedule 5.8;
(b) the machinery, equipment, furniture and other
personal property owned by the Seller and located in or on the
Hydroelectric Generating Stations on the Closing Date, including,
without limitation, the items of personal property listed or
referred to in Schedule 1.1(a)(25);
(c) all inventories of fuels, supplies, spare parts
and materials relating to the Hydroelectric Generating Stations
and located at, or in transit to, the Hydroelectric Generating
Stations on the Closing Date;
(d) the 69 kv transmission connections, described as
being sold to the Buyer in the separation document summary in
Exhibit C between the Hydroelectric Generating Stations and the
Seller's transmission system.
(e) all contracts, agreements and personal property
leases principally relating to the Hydroelectric Generating
Stations, as further listed on Schedules 5.17(a) and 7.10(a),
respectively, as being associated with the Hydroelectric
Generating Stations;
(f) all Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Hydroelectric Generating Stations;
(g) all books, operating records, reports, engineering
or design plans, specifications, drawings, procedures, software
or tools used to process and report environmental data, safety
and maintenance manuals and similar items of the Seller relating
specifically to the aforementioned assets.
(h) all of the Seller's right, title and interest in,
to and under the Leases described on Schedule 5.9(a) as
associated with the Hydroelectric Assets;
(i) copies of all filings made with regulatory
agencies, as updated, relating to Seller's Year 2000 programs as
such filings apply to the Hydroelectric Generating Station;
(j) all unexpired, transferable warranties and
guarantees from third parties with respect to the Hydroelectric
Generating Station, as of the Closing Date;
(k) the Intellectual Property relating to the
Hydroelectric Generating Station (including Seller's goodwill
therein and the rights of Seller in and to the name of the
Hydroelectric Generating Stations) and all rights, privileges,
claims, causes of action, indemnification rights and options
pertaining solely to the Hydroelectric Assets or the Assumed
Liabilities relating to the Hydroelectric Assets, including,
without limitation, those items as listed on Schedule
1.1(a)(25)(k);
(l) all assets acquired by Seller pursuant to Section
7.4; and
(m) $200,000 in cash.
(26) "Income Tax" means any tax, charge, fee, levy, penalty,
or other assessment imposed by any U.S. federal, state, local or
foreign taxing authority (a) based upon, measured by or calculated
with respect to net income, profits or receipts (including, without
limitation, capital gains taxes and alternative minimum taxes but
excluding sales, transfer and similar taxes) or (b) based upon,
measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the
bases on which such tax may be based, measured by or calculated with
respect to, is described in clause (a), in each case with any
interest, penalties, or additions attributable thereto.
(27) "Income Tax Return" means any return, report,
information return or other document (including any related or
supporting information) supplied or required to be supplied to any
authority with respect to Income Taxes.
(28) "Independent Accounting Firm" means Arthur Andersen LLP
or such other independent accounting firm of national reputation
mutually appointed by Seller and the Buyer.
(29) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit B hereto.
(30) "Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, copyrights and copyright
rights, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights other than the
names, trademarks, service marks or logos listed in Section 2.2(b)
hereof.
(31) "Internal Revenue Service" means the United States
Internal Revenue Service or any successor thereto.
(32) "ISO" means the New York Independent System Operator,
or its successor.
(33) "Load Pocket Agreement" means the Load Pocket Call
Option Agreement, dated as of the date of this Agreement, between the
Buyer and Seller.
(34) "Material Adverse Effect" means any change in or effect
on the Purchased Assets after the date of this Agreement that is,
individually or in the aggregate, materially adverse to the condition
(financial or physical) of (as compared to the condition on the date
of this Agreement), or the ability to own or operate (as compared to
the ownership and operation thereof prior to the date of this
Agreement), any material part of the Purchased Assets, other than
(i) any change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for electric
power, (ii) any change or effect resulting from changes in the
international, national, regional or local markets for any fuel used
at the 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 any
regulation, rule or order adopted or proposed by or with respect to
the ISO and its responsibility for, authority over and operation of
the wholesale and retail electric energy, capacity and ancillary
services electric power markets and (v) any materially adverse change
in or effect on the Purchased Assets which is cured (including by the
payment of money) by Seller before the Termination Date.
(35) "NJBPU" means the New Jersey Board of Public Utilities
or any successor thereto.
(36) "NYPSC" means the New York Public Service Commission or
any successor thereto.
(37) "Operating Easement" means the operating easement
providing the right to continue operating and maintaining certain
distribution facilities at the substations, which will be prepared as
described in the Continuing Site/Interconnection Agreement.
(38) "Other Sales Agreements" means the Bowline Point
Generating Station Sales Agreement between the Seller, Consolidated
Edison Company of New York, Inc. and Southern Energy Bowline, L.L.C.;
the Bowline Adjacent Property Sales Agreement between the Seller and
Southern Energy Bowline, L.L.C.; and the Lovett Generating Station
Sales Agreement between the Seller and Southern Energy Lovett, L.L.C.,
each dated as of the date of this Agreement.
(39) "PAPUC" means the Pennsylvania Public Utility
Commission or any successor thereto.
(40) "Permitted Encumbrances" means (i) those exceptions to
title to the Purchased Assets contained in the documents listed on
Schedules 5.8, 5.9(a), 5.9(b) and 5.15; (ii) all exceptions,
restrictions, easements, covenants, charges, rights of way and
monetary and non-monetary encumbrances of record or that are set forth
in an applicable FERC project license, except for such encumbrances
which secure indebtedness; (iii) the Operating Easements; (iv) any
state of facts that a current survey of the Purchased Assets would
disclose; (vi) mortgages, liens, pledges, charges, encumbrances and
restrictions which are not in excess of $50,000 incurred in connection
with the Seller's purchase of properties and assets to be conveyed to
Buyer as part of the Purchased Assets after the date of this Agreement
securing all or a portion of the purchase price therefor incurred in
the ordinary course of business; (vii) statutory liens for current
Taxes, assessments or other governmental charges not yet due or
delinquent or the validity of which is being contested in good faith
by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles, provided that the aggregate amount being so contested does
not exceed $50,000; (viii) mechanics', carriers', workers', repairers'
and other similar liens arising or incurred in the ordinary course of
business relating to Seller's obligations which are not yet due and
payable or the validity of which are being contested in good faith by
appropriate proceedings, provided that the aggregate amount of such
liens does not exceed $500,000; (ix) zoning, entitlement, conservation
restrictions and other land use and environmental regulations by
governmental authorities, provided that the foregoing do not
materially interfere with the present use of the Purchased Assets; and
(x) such other liens, imperfections in or failure of title, charges,
easements, restrictions and encumbrances which do not materially
detract from the value of or materially interfere with the present use
of the Purchased Assets and, neither secure indebtedness, nor
individually or in the aggregate have or would have a Material Adverse
Effect or which will be discharged or released prior to or
simultaneously with the Closing.
(41) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited
liability partnership, a trust, an unincorporated organization or a
governmental entity or any department or agency thereof.
(42) "Real Property" means each parcel of real property
owned in fee or by easement by Seller (or in which Seller holds an
interest), including, buildings, structures and improvements located
thereon, fixtures contained therein and appurtenances thereto and
easements and other rights relating thereto and as more fully
described on Schedule 5.8.
(43) "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, leach, dump or allow to
escape into or through the environment.
(44) "Scheduled Capital Expenditures" means those capital
expenditures listed on Schedule 1.1(a)(44).
(45) "Scheduled Maintenance Expenditures" means those
maintenance expenditures listed on Schedule 1.1(a)(45).
(46) "SEC" means the Securities and Exchange Commission, or
any successor thereto.
(47) "Securities Act" means the Securities Act of 1933, as
amended.
(48) "Seller Agreements" means those agreements listed on
Schedule 5.17(a) and the Collective Bargaining Agreements.
(49) "Separation Document" means the document, to be
negotiated in good faith by the Buyer and Seller within three (3)
months from the date of this Agreement, which will delineate the
Purchased Assets from Seller's other assets and which will be
consistent with the separation document summary attached hereto as
Exhibit C.
(50) "Shoemaker Gas Turbine" means the gas turbine
generating station which includes the personal property, tangible or
intangible, constituting or used principally for generation purposes
at, or otherwise for the operation of the Shoemaker Gas Turbine
Generating Station, located in the Towns of Wawayanda and Wallkill,
City of Middletown, Orange County, New York, including, but not
limited to, the following assets:
(a) all of the Seller's right, title and interest in,
to and under the Leases described on Schedule 5.9(a) as
associated with the Shoemaker Gas Turbine Generating Station;
(b) all inventories of fuels, supplies spare parts and
materials located at the Shoemaker Gas Turbine Generating Station
on the Closing Date;
(c) the machinery, equipment, vehicles, furniture and
other personal property owned by Seller and located at the
Shoemaker Gas Turbine Generating Station on the Closing Date,
including, without limitation, the items of personal property
included on Schedule 1.1(a)(50);
(d) the turbines currently leased by Seller and
located at the Shoemaker Gas Turbine Generating Station (the
contract relating to this lease is listed on Schedule 5.17(a));
(e) the 69 kv transmission connections, described as
being sold to the Buyer in the separation document summary in
Exhibit C, between the Shoemaker Gas Turbine Generating Station
and Seller's transmission system;
(f) all contracts, agreements and personal property
leases listed on Schedules 5.17(a) and 7.10(a), respectively, as
being associated with Shoemaker Gas Turbine Generating Station;
(g) the Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Shoemaker Gas Turbine Generating Station;
(h) the Emission Allowances relating to the Shoemaker
Gas Turbine Generating Station;
(i) all books, operating records, reports, engineering
or design plans, specifications, drawings, procedures, software
or tools used to process and report environmental data, safety
and maintenance manuals and similar items of Seller relating
specifically to the aforementioned assets.
(j) copies of all filings made with regulatory
agencies as, updated, relating to Seller's Year 2000 programs as
such filings apply to the Shoemaker Gas Turbine Generating
Station;
(k) all unexpired, transferable warranties and
guarantees from third parties with respect to the Shoemaker Gas
Turbine Generating Station, as of the Closing Date;
(l) the Intellectual Property relating to the
Shoemaker Gas Turbine Generating Station (including Seller's
goodwill therein and the rights of Seller in and to the name of
Shoemaker Gas Turbine) and all rights, privileges, claims, causes
of action, indemnification rights and options pertaining solely
to the Shoemaker Gas Turbine or the Assumed Liabilities relating
to the Shoemaker Gas Turbine, including, without limitation,
those items listed on Schedule 1.1(a)(50)(l);
(m) all assets acquired by Seller pursuant to
Section 7.4; and
(n) $200,000 in cash.
(51) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(52) "Tax" means any tax, charge, fee, levy, penalty or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority, including, but not limited to, any income, gross
receipts, license, stamp, occupation, environmental, excise, property,
sales, transfer, payroll, unemployment, withholding, social security
or any other tax of any kind whatsoever, including any interest,
penalties or additions attributable thereto.
(53) "Tax Return" means any return, report, information
return declaration, claim for refund or other document (including any
schedule or other related or supporting information) supplied or
required to be supplied to any authority with respect to Taxes and
including any supplement or amendment thereof.
(54) "Transition Agreement" means the Transition Power Sales
Agreement between the Buyer, Southern Energy Bowline, L.L.C., Southern
Energy Lovett, L.L.C. and Seller, dated as of the date of this
Agreement.
(55) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
---- -------
Adjustment Statement 3.2
ALTA 7.12
Assumed Liabilities 2.3
Benefit Plans 5.14
Buyer Preamble
Buyer Indemnitee 9.1
Buyer Required Regulatory Approvals 6.3
Buyer's Easements 4.3
CEI 11.6
Closing 4.1
Closing Date 4.1
Collective Bargaining Agreements 7.10
Condition Fulfillment Date 8.4
Confidential Information 11.2
Defect of Title 7.12
Deferred Closing Date 8.4
Designated Representative 7.2
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Insurance 7.15
Environmental Permits 5.12
EPA 7.16
ERISA Affiliate 2.4
ERISA Affiliate Plans 2.4
Estimated Purchase Price 4.2
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Hourly Employees 7.10
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
Inventory Adjustment Amount 3.2
ISO Approval 8.4
Leases 5.9
Leased Assets 7.4
Management Employees 7.10
Necessary Capital Expenditures 7.1
Necessary Maintenance Expenditures 7.1
NYSDEC 7.16
PAHs 7.16
Pension Benefit Plans 5.14
Permits 5.19
Property Interests 5.8
Purchase Price 3.1
Purchased Assets Preamble
Recipient 11.2
Seller Preamble
Seller Balance Sheet 5.5
Seller Indemnitee 9.1
Seller Required Regulatory Approvals 5.3
Seller's Easements 4.3
Termination Date 10.1
Third Party Claim 9.2
Title Company 7.13
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, Seller will
sell, assign, convey, transfer and deliver to the Buyer, and the Buyer will
purchase and acquire from Seller, free and clear of all Encumbrances
(except for Permitted Encumbrances) all of Seller's right, title and
interest in, to and under the real and personal property, tangible or
intangible, owned by Seller and constituting the Purchased Assets.
2.2. Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable (except for the cash specified in Section 1.1(a) (22) (o),
1.1(a) (25) (m) and 1.1(a) (50) (n) of this Agreement);
(b) the name "Orange and Rockland Utilities, Inc.", "Orange
and Rockland", "O&R", "ORU" or any related or similar trade names,
trademarks, service marks or logos;
(c) distribution, substation and communication facilities
and related support equipment described in Schedule 2.2(c);
(d) any refund, credit, penalty payment, adjustment or
reconciliation (i) related to personal property or other Taxes
(excluding Taxes relating to real property) paid prior to the Closing
Date in respect of the Purchased Assets, whether such refund,
adjustment or reconciliation is received as a payment or as a credit
against future Taxes payable, or (ii) arising under any of Seller
Agreements and relating to a period before the Closing Date;
(e) except to the extent specifically required by law, all
personnel records relating to any employees of Seller; and
(f) the rights and assets to be described in the Separation
Document as not part of the Purchased Assets.
2.3. Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to Seller the Instrument of Assumption pursuant to which the Buyer
shall assume and agree to discharge to the maximum extent permitted by law,
all of the following liabilities and obligations of Seller, which relate to
the Purchased Assets, other than Excluded Liabilities, in accordance with
the respective terms and subject to the respective conditions thereof;
(a) all liabilities and obligations of Seller arising or
accruing after the Closing Date under (i) Seller Agreements, the
Environmental Permits, the Permits, real property leases, contracts
and other agreements disclosed and assigned to the Buyer pursuant to
this Agreement in accordance with the terms thereof, and (ii) the
leases, contracts and other agreements entered into by Seller with
respect to the Purchased Assets after the date hereof consistent with
the terms of this Agreement; except in each case, to the extent such
liabilities and obligations, but for a breach or default by Seller,
would have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such
breach or default or in any event which after the giving of notice
would constitute a default by Seller;
(b) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is liable
pursuant to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified Seller pursuant to Section 9.1;
(d) all liabilities to employees for which the Buyer is
liable pursuant to Section 7.10, including the Collective Bargaining
Agreements;
(e) 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 (i) any violation or alleged violation of
Environmental Law, prior to the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) loss of life,
injury to persons or property or damage to natural resources (whether
or not such loss, injury or damage arose or was made manifest before
the Closing Date or arises or becomes manifest after the Closing
Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets prior to 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, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets; and
(iii) the investigation and/or remediation (whether or not such
investigation or remediation commenced before the Closing Date or
commences after the Closing Date) of Hazardous Substances that are
present or have been Released prior to the Closing Date at, on, in,
under, adjacent to, discharged from, emitted from 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;
provided, as to all of the above, that nothing set forth in this
subsection 2.3(e) shall require the Buyer to assume any liabilities
that are expressly excluded in Section 2.4;
(f) 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 (i) any violation or alleged violation of
Environmental Law, on or after the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) compliance with
applicable Environmental Laws on or after the Closing Date with
respect to the ownership or operation of the Purchased Assets; (iii)
loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets on or 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, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets; (iv)
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; (v) the investigation and/or remediation of
Hazardous Substances that are present or have been released on or
after the Closing Date at, on, in, under, adjacent to, discharged
from, emitted from 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 (vi) 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, that nothing set forth in this subsection shall
require the Buyer to assume any liabilities that are expressly
excluded in Section 2.4;
(g) all liabilities and obligations of Seller with respect
to the Purchased Assets under the agreements or consent orders set
forth on Schedule 5.12(c);
(h) all liabilities incurred by Seller with respect to
maintenance and capital expenditures made with respect to the
Purchased Assets by Seller which are requested by Buyer;
(i) all liabilities or obligations relating to leases for
the Purchased Assets; and
(j) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (i) above,
exclusively relating to the Purchased Assets no matter when the events
or occurrences giving rise to such liabilities or obligations took
place, the value of which liabilities and obligations together with
the liabilities and obligations relating to the "Purchased Asset" and
"Purchased Assets" as defined in the Other Sales Agreements, in the
aggregate, shall not exceed $3 million.
All of the foregoing liabilities and obligations to be
assumed by the Buyer hereunder (excluding any Excluded Liabilities)
are referred to herein as the "Assumed Liabilities." 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 Seller and the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of Seller in respect of
any Excluded Assets or other assets of Seller which are not Purchased
Assets;
(b) any liabilities or obligations with respect to Taxes
attributable to the Purchased Assets for taxable periods ending on or
before the Closing Date, except for Taxes for which the Buyer is
liable pursuant to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities
relating to the disposal, storage, transportation, discharge, Release,
recycling, or the arrangement for such activities, 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, "off-site location" does not include any
location to which Hazardous Substances disposed of, discharged from,
emitted from or Released at the Purchased Assets have migrated,
including, but not limited to, surface waters that have received waste
water discharges from the Purchased Assets;
(d) any liabilities, obligations or responsibilities
arising after the Closing Date relating to (i) the transmission lines
delineated in the Operating Easements or (ii) any Seller's operations
on, or usage of, the Operating 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;
(e) any liabilities, obligations or responsibilities
arising prior to or after the Closing Date relating to the easements
provided Seller under the Operating Easement, including, without
limitation: (i) the transmission lines or other facilities of Seller
delineated in the Operating Easements or (ii) Seller's ownership
rights, operations on, or usage of, the Operating 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 or Release of
Hazardous Substances and (2) loss of life, injury to persons or
property or damage to natural resources, except in the case of (1) or
(2) to the extent caused by the Buyer;
(f) any liabilities or obligations required to be accrued
by Seller in accordance with generally accepted accounting principles
and/or the FERC Uniform System of Accounts on or before the Closing
Date with respect to liabilities related to the Purchased Assets other
than any liability assumed by Buyer under Section 2.3 of this
Agreement;
(g) any liabilities or obligations with respect to
liabilities relating to the Purchased Assets relating to any personal
injury including bodily injury (including, but not limited to workers'
compensation claims), discrimination, wrongful discharge, or unfair
labor practice or similar claim or cause of action with respect to any
act or occurrence arising prior to or on the Closing Date other than
liabilities or obligations for injury to persons or loss of life
assumed by the Buyer in Sections 2.3(e) and 2.3(f);
(h) any fines or penalties imposed by a governmental agency
or authority resulting from (A) an investigation or proceeding with
respect to any act or occurrence arising prior to or on the Closing
Date or (B) illegal acts, willful misconduct or negligence of Seller
prior to or on the Closing Date;
(i) any payment obligations of Seller for goods delivered
or services rendered prior to the Closing;
(j) any liabilities or obligations imposed upon, assumed or
retained by Seller pursuant to the Continuing Site/Interconnection
Agreement or any other Ancillary Agreement;
(k) any liabilities, obligations or responsibilities
relating to any deferred compensation, pension, profit-sharing and
retirement plans, including multiemployer plans, and all welfare,
severance, stock-based, bonus and other employee benefit or fringe
benefit plans, programs and arrangements, whether written or oral,
maintained or with respect to which contributions have been in the
last five (5) years or are made by Seller and any trade or business
(whether or not incorporated) which are or have ever been under common
control, or which are or have ever been treated as a single employer,
with Seller under Section 414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate") or to which Seller and any ERISA Affiliate contributed
thereunder (the "ERISA Affiliate Plans"), including any multiemployer
plan, maintained by, contributed to, or obligated to contribute to, at
any time, by Seller or any ERISA Affiliate, including without
limitation, any liability (A) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (B) with respect to non-
compliance with the continuation requirements of COBRA; (C) with
respect to any non-compliance with ERISA, the Code, or any other
applicable laws; (D) with respect to any suit, proceeding or claim
which is brought against Seller, any ERISA Affiliate Plan, or any
fiduciary or former fiduciary of any such ERISA Affiliate Plan;
(E) relating to a multiemployer plan; or (F) for any claim or suit for
benefits accrued under an ERISA Affiliate Plan prior to Closing; and
(l) any liabilities, obligations or responsibilities
relating to the employment or termination of employment, by Seller of
any individual (including, but not limited to, any employee of Seller)
attributable to any actions or inactions by Seller prior to the
Closing Date.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Assets
shall be an amount equal to the sum of (i) $20,440,000, (ii) the Estimated
Inventory Adjustment Amount, (iii) the Inventory Adjustment Amount and (iv)
any amounts paid by Seller to acquire title to Leased Assets pursuant to
Section 7.4 (the "Purchase Price").
3.2. Purchase Price Adjustment. (a) Within sixty (60) days
after the Closing, Seller shall prepare and deliver to the Buyer a
statement (the "Adjustment Statement") which sets forth: an amount equal
to (A) the weighted average value for the twenty (20) consecutive days
prior to the Closing Date of all JP4 fuel inventory to be used at or in
connection with the Purchased Assets as determined by using the price of
fuel in the Journal of Commerce as of the Closing Date, or if no price is
available for such date, as of the most recent date such price is available
prior to the Closing Date, minus (B) the Estimated Inventory Adjustment
Amount (such difference is referred to as the "Inventory Adjustment
Amount").
The Adjustment Statement shall be prepared using the same
generally accepted accounting principles, policies and methods as Seller
has historically used in connection with the calculation of the items
reflected on the Adjustment Statement. The Buyer and Seller agree to
cooperate with Seller in connection with the preparation of the Adjustment
Statement and related information, and each shall provide to the other such
books, records and information as may be reasonably requested from time to
time.
(b) The Buyer may dispute the Inventory Adjustment Amount;
provided, however, that the Buyer shall notify Seller in writing of the
disputed amount, and the basis of such dispute, within thirty (30) days of
the Buyer's receipt of the Adjustment Statement. In the event of a dispute
with respect to the Inventory Adjustment Amount, the Buyer and Seller shall
attempt to reconcile their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties. If
the Buyer and Seller are unable to reach a resolution of such differences
within thirty (30) days of receipt of the Buyer's written notice of dispute
to Seller, the Buyer and Seller shall submit the amounts remaining in
dispute for determination and resolution to the Independent Accounting
Firm, which shall be instructed to determine and report to the parties,
within thirty (30) days after such submission, upon such remaining disputed
amounts, and such report shall be final, binding and conclusive on the
parties hereto with respect to the amounts disputed. The fees and
disbursements of the Independent Accounting Firm shall be allocated between
the Buyer and Seller so that the Buyer's share of such fees and
disbursements shall be in the same proportion that the aggregate amount of
such remaining disputed amounts so submitted by the Buyer to the
Independent Accounting Firm that is unsuccessfully disputed by the Buyer
(as finally determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed amounts so submitted by the Buyer
to the Independent Accounting Firm.
(c) If the Inventory Adjustment Amount is positive, within ten
(10) Business Days after the Buyer's receipt of the Adjustment Statement,
the Buyer shall pay Seller all undisputed portions of the Inventory
Adjustment Amount. If the Inventory Adjustment Amount is negative, within
ten (10) Business Days after the Buyer's receipt of the Adjustment
Statement, Seller shall pay the Buyer all undisputed portions of the
Inventory Adjustment Amount. If there is a dispute with respect to any
amount on the Adjustment Statement, within five (5) Business Days after the
final determination of such disputed amounts on the Adjustment Statement,
the Buyer shall pay Seller an amount equal to the disputed portion of the
Inventory Adjustment Amount as finally determined to be payable with
respect to the Adjustment Statement; provided, however, that if such amount
shall be less than zero, Seller will pay to the Buyer the amount by which
such amount is less than zero. All payments made pursuant to this Section
3.2(c) shall be paid together with interest thereon for the period
commencing on the Closing Date through the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the Closing Date,
in cash by federal or other wire transfer of immediately available funds.
3.3. Allocation of Purchase Price. The Buyer shall prepare an
allocation of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one hundred eighty (180)
days of the date of this Agreement but in no event less than forty-five
(45) days prior to the Closing and submit it to Seller. Seller may dispute
the allocation of the Purchase Price; provided, however, that Seller shall
notify the Buyer in writing of the disputed amount, and the basis of such
dispute, and follow the procedures relating to a dispute described in
Section 3.2(b) above. The Buyer and Seller agree to file Internal Revenue
Service Form 8594, and all federal, state, local and foreign Tax Returns
and Income Tax Returns, in accordance with such agreed allocation. Each of
the Buyer and Seller shall report the transactions contemplated by the
Agreement for federal Income Tax and all other Tax purposes in a manner
consistent with the allocation determined pursuant to this Section 3.3.
The Buyer and Seller agree to provide the other promptly with any other
information required to complete Form 8594. Each of the Buyer and Seller
shall notify and provide the other with reasonable assistance in the event
of an examination, audit or other proceeding regarding the agreed upon
allocation of the Purchase Price.
3.4. Proration. (a) The Buyer and 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 Seller liable to the extent such items relate to any
time period through the Closing Date, and the Buyer liable to the extent
such items relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any
other Taxes (excluding Income Taxes), assessments and other
charges, if any, on or with respect to the ownership, use or
business and operation of the Purchased Assets;
(ii) rent, Taxes (excluding Income Taxes) and other
items payable by or to Seller under any of Seller Agreements to
be assigned to and assumed by the Buyer hereunder;
(iii) any permit, license or registration fees with
respect to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either Seller or the
Buyer made within sixty (60) days of the date that the actual amounts
become available. Seller and the Buyer agree to furnish each other with
such documents and other records as may be reasonably requested in order to
confirm all adjustment and proration calculations made pursuant to this
Section 3.4.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, at 10:00 A.M. (local time) on
April 30, 1999; or at such other place or later date and 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
Seller at the Closing an amount (the "Estimated Purchase Price") in United
States dollars, equal to the sum of (i) $20,440,000, (ii) the Estimated
Inventory Adjustment Amount for the Closing, and (iii) any amounts paid to
acquire title to Leased Assets pursuant to Section 7.4 hereof, by wire
transfer of immediately available funds or by such other means as are
agreed to by Seller and the Buyer.
4.3. Deliveries by Seller. At the Closing, Seller will deliver
the following to the Buyer:
(a) The Bill of Sale, duly executed by Seller for the
personal property included in the Purchased Assets;
(b) The executed consents to transfer the Seller
Agreements, the Environmental Permits and the Permits, to the extent
specifically required hereunder;
(c) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by the Seller;
(d) The certificates and the opinions of counsel
contemplated by Sections 8.2(c), (e), (f) and (h);
(e) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring
Seller's interest in the Property Interests to the Buyer, duly
executed and acknowledged by Seller and in recordable form
substantially in the form of Exhibit D hereto;
(f) One or more easements to the extent necessary to
evidence the right of Buyer to use the real property of Seller (the
"Buyer's Easements") that comprise part of the Excluded Assets, duly
executed and acknowledged by Seller and in recordable form, each
substantially in the form of Exhibit E hereto;
(g) The Assignment of Leases in the form attached hereto as
Exhibit F assigning to Buyer all of Seller's right, title and interest
as lessor (or lessee as the case may be) under the leases;
(h) Copies of the resolutions adopted by the board of
directors of Seller, certified by the Secretary of Seller, as having
been duly and validly adopted and as being in full force and effect,
authorizing the execution and delivery by the Seller of this
Agreement, the Bill of Sale and other closing documents described in
this Agreement to which Seller is a party, and the performance by
Seller of its obligations hereunder and thereunder;
(i) 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;
(j) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to
the appropriate taxing authority any amount equal to ten (10) percent
of the total Amount Realized (as defined under Section 1445 of the
Code);
(k) $600,000 by wire transfer of immediately available
funds or by such other means as are agreed to by the Seller and the
Buyer; and
(l) Such other agreements, documents, instruments and
writings as are required to be delivered by Seller at or prior to the
Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
4.4. Deliveries by Buyer. At the Closing, the Buyer will deliver
the following to Seller:
(a) The Estimated Purchase Price by wire transfer of
immediately available funds or by such other means as are agreed to by
Seller and the Buyer;
(b) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(d) The Instrument of Assumption, duly executed by the
Buyer;
(e) All such other instruments of assumption as shall, in
the reasonable opinion of Seller and its counsel, be necessary for the
Buyer to assume the Assumed Liabilities in accordance with this
Agreement;
(f) One or more easements to the extent necessary for
Seller to continue and maintain their transmission and distribution
business, in favor of the Seller (the "Seller's Easements") with
respect to Real Property conveyed to Buyer, duly executed and
acknowledged by Buyer, each substantially in the form of Exhibit E
hereto, and Buyer shall bear any transfer or similar tax incurred in
connection herewith as set forth in Section 7.8;
(g) Copies of the resolutions adopted by the Members or
Managers or similar governing body of the Buyer, certified by a Member
of the Buyer, as having been duly and validly adopted and as being in
full force and effect, authorizing the execution and delivery by the
Buyer of this Agreement and other closing documents described in this
Agreement to which the Buyer is a party, and the performance by the
Buyer of its respective obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and
writings as are required to be delivered by the Buyer at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer as follows:
5.1. Organization; Qualification. Seller 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 conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each foreign
jurisdiction in which it operates the Purchased Assets and such foreign
jurisdiction requires it to be so qualified. Seller has heretofore
delivered to the Buyer complete and correct copies of its Certificate of
Incorporation and By-Laws as currently in effect.
5.2. Authority Relative to this Agreement. Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Seller and no other corporate proceedings on the part of
Seller or its shareholders are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller, and assuming that this
Agreement constitutes a valid and binding agreement of the Buyer, subject
to the receipt of Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals, constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally or general principles of equity.
5.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by Seller nor performance by
Seller of its obligations under this Agreement or the Ancillary Agreements
or the consummation of the transactions contemplated hereby or thereby will
(i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws of Seller, (ii) require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (x) where
the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not have a Material Adverse
Effect or would not prohibit or restrain the execution, delivery or
performance of this Agreement or the Ancillary Agreements, or the
consummation of the transactions contemplated hereby or thereby in any
material respect or (y) for those requirements which become applicable to
Seller 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
Seller, or any of its subsidiaries, is a party or by which Seller or any of
its subsidiaries, 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,
individually or in the aggregate, would not have a Material Adverse Effect;
or (iv) violate any order, writ, injunction, judgment, law, decree,
statute, rule or regulation applicable to Seller, or any of its assets,
which violation would, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) (A) notice by
Seller to, and an order by, the NYPSC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (B) notice by
Seller to, and an order by, the NJBPU approving the transactions
contemplated by this Agreement or the Ancillary Agreements and (C) notice
by Seller to, and an order by, the PAPUC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) the
approval, if required, of the SEC pursuant to the Holding Company Act, and
(iv) the filings by Seller and the Buyer required by the HSR Act and the
expiration or earlier termination of all waiting periods under the HSR Act
(the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as "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 Seller 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, in the aggregate, have a Material
Adverse Effect and other than Permits and Environmental Permits.
5.4. Reports. Since January 1, 1996, Seller pursuant to the
Securities Act, the Exchange Act, the applicable State public utility laws,
the Federal Power Act and the Holding Company Act, has filed or caused to
be filed with the SEC, the applicable state or local utility commissions or
regulatory bodies, or the FERC, as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the
business and operations of Seller as it relates to the Purchased Assets
under each of the Securities Act, the Exchange Act, the applicable State
public utility laws, the Federal Power Act and 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.
5.5. Financial Statements. Seller has previously furnished to
the Buyer (i) audited consolidated balance sheets of Seller as of December
31, 1997, and (ii) the related audited consolidated statements of income
and retained earnings and changes in financial position of Seller for the
fiscal year then ended, together with the respective reports thereon of
Arthur Andersen LLP. The consolidated balance sheet of Seller as of
December 31, 1997 is referred to as the "Seller Balance Sheet." Each of
the balance sheets included in the financial statements referred to in this
Section 5.5 (including the related notes thereto) presents fairly the
financial position of Seller as of their respective dates, and the other
related statements included therein (including the related notes thereto)
present fairly the results of operations and changes in financial position
for the periods then ended, all in conformity with generally accepted
accounting principles as applicable to a regulated utility applied on a
consistent basis, except as otherwise noted therein.
5.6. Undisclosed Liabilities. Except as set forth in Schedule
5.6, to the Seller's knowledge, 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 to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in Seller Balance Sheet or disclosed in the notes thereto in accordance
with generally accepted accounting principles, except those which either
were incurred in the ordinary course of business, after the date of Seller
Balance Sheet, or those which in the aggregate are not material to the
Purchased Assets.
5.7. Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.7, or in the reports, schedules, registration
statements and definitive proxy statements filed by Seller with the SEC and
(ii) as otherwise contemplated by this Agreement, to the Seller's
knowledge, since the date of Seller Balance Sheet there has not been:
(a) any Material Adverse Effect; (b) any damage, destruction or casualty
loss, whether covered by insurance or not, which had a Material Adverse
Effect; (c) any entry into any agreement, commitment or transaction
(including, without limitation, any borrowing or capital financing) by
Seller, which is material to the business or operations of the Purchased
Assets, except agreements, commitments or transactions in the ordinary
course of business or as contemplated herein; or (d) any change by 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. Set forth in Schedule 5.8 is a true and complete
list of all real property which is part of or material to the business or
operations of the Purchased Assets (the "Real Property") and other real
property interests which are a part of or material to the business or
operations of the Purchased Assets (together with the Real Property, the
"Property Interests"). The Seller has leasehold or other contractual
interests in all Purchased Assets identified in subsections (b), (g), (l)
and (n) of Section 1.1(a)(22) and, as of the date of this Agreement, the
Purchased Asset identified in subsection (e) of Section 1.1(a)(22);
subsections (e), (h), (j) and (l) of Section 1.1(a)(25) and subsections
(a), (f), (k) and (m) of Section 1.1(a)(50) and, as of the date of this
Agreement, the Purchased Asset identified in subsection (d) of Section
1.1(a) (50); and subject only to Permitted Encumbrances and the Leases: (i)
good and marketable record title to the real property and the Buyer's
Easements and (ii) good and valid title to all Purchased Assets identified
in subsections (c), (d), (f), (h), (i), (j), (k) and (m) of Section
1.1(a)(22); subsections (b), (c), (d), (f), (g), (i) and (k) of Section
1.1(a)(25) and subsections (b), (c), (e), (g), (h), (i), (j) and (l) of
Section 1.1(a)(50). As of the Closing Date, the Seller will have good and
valid title to the Purchased Assets identified in subsection (e) of Section
1.1(a)(22) and subsection (d) of Section 1.1(a)(50). At Closing, Seller
will have the cash available to the amounts referred to in Sections 1.1(a)
(22) (o), 1.1(a) (25) (m) and 1.1(a) (50) (n) of this Agreement.
5.9. Leasehold Interests. Schedule 5.9(a) lists, all Real
Property leases or subleases (the "Leases") relating to the Purchased
Assets under which Seller is a lessee, sublessee, lessor or sublessor and
which are to be assigned to, and assumed by, the Buyer on the Closing Date.
Except as set forth in Schedule 5.9(b), the Leases are valid, binding and
enforceable in accordance with their terms, and are in full force and
effect; there are no existing material defaults by Seller thereunder; and
no event has occurred which (whether with or without notice, lapse of time
or both) would constitute a material default thereunder. Seller has a
valid and subsisting leasehold estate in and the right to quiet enjoyment
of the Leases under which Seller is a lessee or sublessee for the full term
of such Leases which leasehold interests are unencumbered other than by
Permitted Encumbrances, and Seller has delivered to Buyer true and complete
copies of all Leases.
5.10. Improvements. Except as set for forth in Schedule
5.10(a), Seller has not received any written notices from any governmental
authority stating or alleging that any improvements with respect to the
Purchased Assets have not been constructed in compliance with applicable
law. Except as set for forth in Schedule 5.10(b), no written notice has
been received by Seller from any governmental authority requiring or
advising as to the need for any repair, alteration, restoration or
improvement in connection with the Purchased Assets.
5.11. Insurance. Except as set forth in Schedule 5.11(a),
all material policies of fire, liability, worker's compensation and other
forms of insurance purchased or held by and insuring or relating to the
Purchased Assets are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date as of which this
representation is being made have been paid, 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 5.11(b), Seller has not been
refused any insurance with respect to the Purchased Assets nor has its
coverage been limited by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last
five (5) years nor has Seller received written notice from any insurer with
respect to any Real Property or Lease of defects or inadequacies with
respect thereto or the improvements located thereon that would materially
adversely affect the insurability of same or cause the imposition of
extraordinary premiums therefor.
5.12. Environmental Matters. (a) Except as disclosed in
Schedule 5.12(a)(i), to the Seller's knowledge, Seller holds, and is in
compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for the Seller to operate
the Purchased Assets under applicable Environmental Laws, and Seller is
otherwise in compliance with applicable Environmental Laws with respect to
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 have a Material Adverse Effect. Schedule
5.12(a)(ii) sets forth all Environmental Permits relating to the ownership
or operation of the Purchased Assets.
(b) Except as disclosed in Schedule 5.12(b), Seller has not
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar State law with
respect to any on-site location related to the Purchased Assets, and no
investigation and/or remediation is being conducted or is pending at the
Purchased Assets (other than investigations or remediation conducted by or
on behalf of Seller or Buyer in connection with this transaction), except
for such liability under such laws or investigations or remediation as
would not be reasonably likely to have a Material Adverse Effect.
(c) With respect to the Purchased Assets, no action, claim,
investigation or other proceeding relating to any Environmental Law is
pending or to Seller's knowledge, threatened, and the Seller has not
entered into or agreed to any consent decree or order, and is not subject
to any judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances under any Environmental Law, except such consent
decrees or orders, judgments, decrees or administrative or judicial orders,
actions, claims, investigations or proceedings that (i) would not be
reasonably likely to have a Material Adverse Effect, (ii) appear on
Schedule 5.12(c), or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of Seller, and in the possession of the Seller, which concern
Releases of Hazardous Substances at, on, in, or under the Purchased Assets
or compliance of Purchased Assets with Environmental Laws, conducted within
the last two (2) years, are listed in Schedule 5.12(d) and have been
provided to Buyer.
(e) The representations and warranties made in this Section 5.12
are Seller's exclusive representations and warranties relating to
environmental matters.
5.13. Labor Matters. Schedule 7.10(a) lists and Seller has
previously delivered to the Buyer true and correct copies of all labor
union, Collective Bargaining Agreements and other labor agreements relating
to the Purchased Assets to which Seller is a party or subject. With
respect to the Purchased Assets, except to the extent set forth in Schedule
5.13 and except for such matters as will not have a Material Adverse
Effect, to the Seller's knowledge: (a) the Seller is in compliance with
all applicable laws respecting employment and employment practices,
occupational health and safety, and wages and hours; (b) Seller has not
received written notice of any unfair labor practice complaint against it
pending before the National Labor Relations Board; (c) there is no labor
strike, slowdown or stoppage actually pending or threatened against or
affecting Seller; (d) Seller has not received notice that any
representation petition respecting its employees has been filed with the
National Labor Relations Board; (e) no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending against
Seller; and (f) Seller has not experienced any primary work stoppage since
at least December 31, 1994.
5.14. ERISA. (a) Schedule 5.14(a) lists all deferred
compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all welfare, severance, stock-based, bonus and
other employee benefit or fringe benefit plans, programs and arrangements,
whether written or oral, maintained or with respect to which contributions
have been in the last five (5) years or are made by the Seller in respect
of employees who are employed in connection with the Purchased Assets (such
plans, programs and arrangements, collectively, the "Benefit Plans"). To
the Seller's knowledge, each Benefit Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and all other
applicable laws. Accurate and complete copies of all such Benefit Plans
and their summary descriptions, including multiemployer plans, have been
made available to the Buyer.
(b) Except as set forth in Schedule 5.14(b)(i), with respect to
employees at the Purchased Assets, to the Seller's knowledge, the Seller
and the ERISA Affiliates have fulfilled their respective obligations under
the minimum funding requirements of Section 302 of ERISA, and Section 412
of the Code, with respect to each Benefit Plan that is a pension benefit
plan as defined in Section 3(2) of ERISA (each, a "Pension Benefit Plan").
To the Seller's knowledge, neither the Seller nor any ERISA Affiliate has
incurred any liability to the Pension Benefit Guaranty Corporation in
connection with any Pension Benefit Plan which is subject to Title IV of
ERISA, including any withdrawal liability, nor is there any reportable
event (as defined in Section 4043 of ERISA), except as set forth in
Schedule 5.14(b)(ii). Except as set forth in Schedule 5.14(b)(iii), the
Internal Revenue Service has issued a letter for each Pension Benefit Plan
which is intended to be qualified under Section 401(a) of the Code,
determining that such plan is exempt from United States Federal Income Tax
under Sections 401(a) and 501(a) of the Code, and to the Sellers's
knowledge, there has been no occurrence since the date of any such
determination letter which has adversely affected such qualification, and
no withdrawal liability has been incurred by or asserted and none is
anticipated against Seller with respect to any Pension Benefit Plan which
is a "multiemployer plan" (as defined in Section 3(37) of ERISA).
(c) To the Seller's knowledge, neither the Seller nor any ERISA
Affiliate has engaged in any transaction within the meaning of Section
4069(b) or Section 4212(c) of ERISA. Except as set forth in Schedule
5.14(c), no Benefit Plan is a multi-employer plan.
(d) To the extent the Seller maintained or maintains a "group
health plan" within the meaning of Section 5000(b)(1) of the Code, to the
Seller's knowledge, the Seller has materially complied with the notice and
continuation requirements of Section 4980B of the Code, COBRA, Part 6 of
Subtitle B of Title I of ERISA and the regulations thereunder.
5.15. Real Property Encumbrances. Schedule 5.15 lists all
real property encumbrances affecting Seller's Real Property including
matters contained in deeds, easements and options. True and correct copies
of all current surveys, abstracts, title opinions and policies of title
insurance currently in force with respect to such Real Property have been
delivered by Seller to the Buyer. None of the Permitted Encumbrances
materially adversely affect the existing use of the Real Property.
5.16. Condemnation. Neither the whole nor any part of the
Real Property or any other real property or rights leased, used or occupied
by Seller 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, and, to the knowledge of Seller, no such condemnation
or other taking is threatened or contemplated.
5.17. Certain Contracts and Arrangements. (a) Except (i) as
listed in Schedule 5.17(a), (ii) for contracts, agreements, personal
property leases, commitments, understandings or instruments which will
expire prior to the Closing Date, (iii) for agreements with suppliers
entered into in the ordinary course of business (including contracts
entered into in connection with the Scheduled Capital Expenditures and the
Scheduled Maintenance Expenditures), and (iv) for contracts, agreements,
personal property leases, commitments, understandings or instruments with a
value less than $200,000 or with annual or aggregate payments less than
$200,000, Seller is not 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.
(b) Except as disclosed in Schedule 5.17(b), each Seller
Agreement listed on Schedule 5.17(a) constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and 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) Except as set forth in Schedule 5.17(c), there is not, under
any of Seller Agreements listed on Schedule 5.17(a), any default or event
which, with notice or lapse of time or both, would constitute a default on
the part of any party 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, have a Material Adverse
Effect.
5.18. Legal Proceedings, etc. Except as set forth in
Schedule 5.18 or in any filing made by Seller pursuant to the Securities
Act or the Exchange Act, there are no claims, actions, or proceedings
pending or investigations pending, or to Seller's knowledge, threatened
against Seller relating to the Purchased Assets before any court,
arbitrator, governmental or regulatory authority or body acting in an
adjudicative capacity, which, if adversely determined, would have a
Material Adverse Effect or would prohibit or restrain the execution,
delivery or performance of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby in any
material respect. Except as set forth in Schedule 5.18, Seller is not
subject to any outstanding judgment, rule, order, writ, injunction or
decree of any court, governmental or regulatory authority relating to the
Purchased Assets which would have a Material Adverse Effect.
5.19. Permits. Seller has all material permits, licenses,
franchises and other governmental authorizations, consents and approvals,
other than with respect to Environmental Laws (collectively, "Permits") as
set forth in Schedule 5.19(a), necessary to own or operate the Purchased
Assets as presently owned or operated, except where the failure to have
such Permits would not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, 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, have a Material Adverse Effect. 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 Purchased Assets, except for violations which, in the aggregate, would
not have a Material Adverse Effect.
5.20. Regulation as a Utility. The Seller and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania as set forth on Schedule 5.20(a), and in no
other state. Except as set forth on Schedule 5.20(b), Seller is not
subject to regulation as a public utility or public service company (or
similar designation) by the United States, any State of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
5.21. Taxes. Except as set forth in Schedule 5.21, (a) no
notice of deficiency or assessment has been received from any taxing
authority with respect to Seller's liabilities for Taxes in respect of the
Purchased Assets, which have not been fully paid or finally settled, and
any such deficiency shown in Schedule 5.21 is being contested in good faith
through appropriate proceedings; (b) there are no outstanding agreements or
waivers extending the applicable statutory periods of limitations for Taxes
associated with the Purchased Assets for any period; (c) there are no
rulings or closing agreements executed with any taxing authority relating
to the Purchased Assets that will be binding upon Buyer after the Closing;
(d) none of the Purchased Assets is property that is required to be treated
as being owned by any other person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code, or "tax-exempt
use" property within the meaning of Section 168(h) of the Code; and (e)
there are no powers of attorney in effect relating to Taxes relating to the
Purchased Assets for any Post-Closing period.
5.22. Intellectual Property. The Seller has all right, title
and interest in or valid and binding rights under contract to use the
Intellectual Property relating to the Purchased Assets. Seller has not
received notice that it is infringing any Intellectual Property of any
other Person in connection with the operation or business of the Purchased
Assets, no claim is pending or has been made to such effect that has not
been resolved and Seller is not infringing any Intellectual Property of any
other Person the effect of which, individually or in the aggregate, would
have Material Adverse Effect.
5.23. Year 2000 Readiness. Seller has informed Buyer of its
analysis of, the status of development of contingency plans for, and
forecasted expenditures with respect to Year 2000 readiness of material
computer software and computer firmware comprising the Purchased Assets, as
such analysis, contingency plan development and forecast of expenditures
exist on the date hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to Seller as follows:
6.1. Organization. The Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to Seller complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2. Authority Relative to this Agreement. The Buyer has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Managers
or Members of the Buyer and the Board of Directors of both Southern Energy,
Inc. and The Southern Company and no other company proceedings on the part
of the Buyer or such Affiliates are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Buyer, and assuming
that this Agreement constitutes a valid and binding agreement of Seller,
subject to the receipt of the Buyer Required Regulatory Approvals and
Seller Required Regulatory Approvals, constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
6.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and Seller Required Regulatory Approvals, neither the
execution and delivery of this Agreement by the Buyer nor the purchase by
the Buyer of the Purchased Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) and except for the
filings by the Buyer and Seller required by the HSR Act (the filings and
approvals referred to in Schedule 6.3(a) and with respect to the HSR Act
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.
6.4. Operating Easements. Buyer shall grant Operating Easements
to Seller as agreed to pursuant to the procedures set forth in the
Continuing Site/Interconnection Agreement.
6.5. Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.5, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.6. Availability of Funds. The Buyer has sufficient funds
available to it or will receive 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.
Except as described in Schedule 7.1, during the period from the date of
this Agreement to the Closing Date, Seller will operate and maintain the
Purchased Assets according to its ordinary and usual course of business
consistent with Good Utility Practice. Without limiting the generality of
the foregoing, and, except as contemplated in this Agreement or as
described in Schedule 7.1, prior to the Closing Date, without the prior
written consent of the Buyer (unless such consent would be prohibited by
law), Seller will not with respect to the Purchased Assets:
(a) make any material change in the operations of the
Purchased Assets (including, without limitation, the levels of fuel
inventory and materials and supplies customarily maintained by Seller
other than consistent with past practice);
(b) except for Scheduled Capital Expenditures, make any
capital expenditures with respect to the Purchased Assets or enter
into any contract or commitment therefor, except that (i) Seller shall
make any capital expenditures requested by the Buyer, provided that
the Buyer will reimburse Seller for such capital expenditures at least
five (5) Business Days prior to the date payment for such expenditure
is due, and (ii) Seller shall make any capital expenditures deemed
necessary by Seller in accordance with Good Utility Practices
("Necessary Capital Expenditures") at Seller's cost and expense,
provided, however, that if the Buyer requests that Seller make
enhancements/upgrades with a cost in excess of the cost of any
Necessary Capital Expenditures, the Buyer shall reimburse Seller for
the cost of such enhancements/upgrades to the extent the cost of such
enhancement/upgrade exceeds the cost of the Necessary Capital
Expenditure at the time such enhancement/upgrade is performed.
(c) 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
Utility Practice and not mortgage or pledge, or impose or suffer to be
imposed any Encumbrance on, any of the Purchased Assets other than
Permitted Encumbrances in the ordinary course of business;
(d) except for Scheduled Maintenance Expenditures, make any
maintenance expenditures, except that (i) Seller shall make any
maintenance expenditures requested by the Buyer, provided that the
Buyer will reimburse Seller for such maintenance expenditures at least
five (5) Business Days prior to the date payment for such expenditure
is due, and (ii) Seller shall make any maintenance expenditures deemed
necessary by Seller in accordance with Good Utility Practice
("Necessary Maintenance Expenditures") at Seller's cost and expense,
provided, however, that if the Buyer requests that Seller make
enhancements/upgrades with a cost in excess of the cost of any
Necessary Maintenance Expenditures, the Buyer shall reimburse Seller
for the cost of such enhancements/ upgrades to the extent the cost of
such enhancement/upgrade exceeds the cost of the Necessary Maintenance
Expenditure at the time such enhancement/upgrade is performed;
(e) amend or terminate prior to the expiration date, or
waive any material term or give consent to any material request with
respect to any of Seller's Agreements, Permits or Environmental
Permits, except to the extent that such amendment, termination, waiver
or consent (i) will not have a material impact on operations of the
Purchased Assets, including the cost of said operations or (ii) is
required by applicable law, including applicable Environmental Law;
(f) enter into agreements for the purchase or sale of fuel
(whether commodity or transportation) other than agreements entered
into in the ordinary course of business, for which commitments to
purchase or sell under such agreement would not exceed a one week time
period;
(g) enter into any power sales commitments, other than
short term contracts under which power sales commitment(s) would not
exceed a two week time period;
(h) sell, lease or otherwise dispose of Emission Allowances
except to the extent necessary to operate the Purchased Assets in
accordance with this Section 7.1;
(i) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (h); or
(j) make any new, or change any current, election with
respect to Taxes affecting the Purchased Assets.
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, Seller will, during ordinary business hours
and upon reasonable notice (i) give the Buyer and the Buyer Representatives
reasonable access to its managerial personnel and to all books, records,
plants, offices and other facilities and properties constituting the
Purchased Assets to which the Buyer is permitted access by law, (ii) permit
the Buyer to make such reasonable inspections thereof as the Buyer may
reasonably request, including conducting environmental sampling at, on and
underneath the Purchased Assets and performing compliance audits at the
Purchased Assets, if Buyer reasonably deems such sampling necessary after
reviewing further information which becomes available after the date
hereof, so long as Seller provides its consent to such sampling, which
consent shall not be unreasonably withheld, (iii) cause its officers,
engineers, operations and maintenance personnel and advisors to furnish the
Buyer with such financial and operating data, Tax Returns (other than
Income Tax Returns) and other information with respect to the Purchased
Assets as the Buyer may from time to time reasonably request and assist
Buyer in such inspections, (iv) cause its officers and advisors to furnish
the Buyer a copy of each report, schedule or other document filed or
received by it with or from the SEC, NYPSC, NJBPU, PAPUC, FERC, ISO or
other governmental authority with respect to the Purchased Assets;
provided, however, that (A) any such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operation of the
Purchased Assets, (B) Seller shall not be required to take any action which
would constitute a waiver of the attorney-client privilege and (C) Seller
need not supply the Buyer with any information which Seller is under a
legal obligation not to supply, provided, however, that Seller shall have
used commercially reasonable efforts to have such obligations waived.
Notwithstanding anything in this Section 7.2 to the contrary, (i) Seller
will furnish or provide such access to medical records only as is permitted
by law, and (ii) Seller will furnish or provide such access to personnel
records only to the extent that the employee to which the personnel record
relates has given his/her consent to the Seller.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of Section 11.2 of this Agreement shall be treated as
Confidential Information.
(c) Commencing February 1, 1999, the Buyer shall have the right
to physically locate one designated representative (the "Designated
Representative") of the Buyer at an office or in workspace at the Seller's
corporate offices to observe the operations of the Gas Turbines and the
Hydroelectric Assets, as well as the operations of the Lovett Generating
Station, and the Bowline Generating Stations, pursuant to the Lovett
Generating Sales Agreement and the Bowline Generating Stations Sales
Agreement entered into the date hereof between the Seller and the Buyer and
the Seller, Consolidated Edison Company of New York, Inc. and the Buyer,
respectively, provided, however, that the Buyer shall not unreasonably
interfere with the Seller's use of the Purchased Assets. The Seller shall
coordinate site visits and provide the Designated Representative during
such period prior to the Closing access to Seller's managerial personnel.
The Designated Representative shall coordinate the Buyer's rights to access
under Section 7.2(a) hereof during such period prior to the Closing.
(d) For a period of seven (7) years after the Closing Date,
Seller and its representatives shall have reasonable access to (i)
information on employees covered by Seller's Management Employee Transition
Program and (ii) all of the books and records of the Purchased Assets, as
the case may be, transferred to the Buyer hereunder to the extent that such
access (A) may reasonably be required by Seller in connection with matters
relating to or affected by the operation of the Purchased Assets prior to
the Closing Date and (B) is not otherwise prohibited by law. Such access
shall be afforded by the Buyer upon receipt of reasonable advance written
notice and during normal business hours. Seller shall be responsible for
any costs or expenses incurred by them pursuant to this Section 7.2(d). If
the Buyer shall desire to dispose of any such books and records prior to
the expiration of such seven (7) year period, the Buyer shall, prior to
such disposition, give Seller a reasonable opportunity at Seller's expense,
to segregate and remove such books and records as Seller may select. Any
information provided by Buyer to Seller pursuant to this Section 7.2(d)
shall be deemed Confidential Information.
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Assets pursuant to this Agreement, including without
limitation, the use of Seller's and the Buyer's commercially reasonable
efforts to obtain all Permits and Environmental Permits necessary for the
Buyer to operate the Purchased Assets. Neither of the Parties shall,
without the prior written consent of the other Party, take or fail to take
any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this
Agreement or the Ancillary Agreements. From time to time after the date
hereof, without further consideration, Seller will, at its own expense,
execute and deliver such documents to the Buyer as the Buyer may reasonably
request in order more effectively to vest in the Buyer good title to the
Purchased Assets. From time to time after the date hereof, the Buyer will,
at its own expense, execute and deliver such documents to Seller as Seller
may reasonably request in order to more effectively consummate the sale of
the Purchased Assets pursuant to this Agreement. To the extent that any
personal property lease, relating to any assets ("Leased Assets") which are
principally used by Seller for generation purposes at the Purchased Assets,
cannot be assigned to the Buyer, Seller will use its commercially
reasonable efforts to acquire title to such Leased Assets and to include
them in the Purchased Assets before the Closing Date unless Buyer directs
Seller in writing not to acquire any such Leased Asset. Seller's
documented and reasonable costs associated with acquiring title to such
Leased Assets shall be paid by the Buyer as part of the Purchase Price,
except for any and all costs of acquiring the title to the leased Gas
Turbines as described in Section 7.17. Schedule 7.4 lists all of the
Leased Assets.
(b) To the extent that any Seller's rights under any guaranties,
warranties and indemnification applicable to the Purchased Assets or the
Assumed Liabilities are nontransferable or nonassignable, Seller shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
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 or
stock exchange rules or regulations 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 that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6. Consents and Approvals. (a) Seller and the Buyer shall
each file or cause to be filed with the Federal Trade Commission and the
United States Department of Justice any notifications required to be filed
under the HSR Act and the rules and regulations promulgated thereunder with
respect to the transactions contemplated hereby. The parties shall consult
with each other as to the appropriate time of filing such notifications and
shall use their best efforts to make such filings at the agreed upon time,
to respond promptly to any requests for additional information made by
either of such agencies, and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date after the date of
filing. Buyer shall bear the cost of all filing fees under the HSR Act.
(b) 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 reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Environmental Permits,
Permits, consents, approvals and authorizations of all governmental bodies
and (iv) use all 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, 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 Seller or the Buyer is a party
or by which either of them is bound. Seller shall have the right to review
and approve in advance all characterizations of the information relating to
Purchased Assets; and each of Seller and the Buyer shall have the right to
review and approve 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.
The parties hereto agree that they will consult with each other with
respect to the transferring to the Buyer or the obtaining by the Buyer of
all such necessary Environmental Permits, Permits, consents, approvals and
authorizations of all third parties and governmental bodies. Seller and
the Buyer shall designate separate counsel with respect to all
applications, notices, petitions and filings (joint or otherwise) relating
to this Agreement and the transactions contemplated hereby on behalf of
Seller, on the one hand and the Buyer on the other hand, with all
governmental bodies. To the extent that a consent to an assignment of any
material Seller Agreement cannot be obtained before the Closing Date,
Seller will enter into all such agreements with the Buyer as are necessary
to give the Buyer the rights, obligations and burdens of such Seller
Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Seller shall cooperate with Buyer's efforts in this regard and shall use
its best efforts to assist in the transfer or reissuance when so requested
by Buyer. In the event that Buyer is unable, despite commercially
reasonable efforts, to obtain a transfer or reissuance of one or more
Permits as of the Closing Date, Buyer may use the Permits issued to Seller
to the extent permissible under applicable laws and regulations provided
(i) buyer notified Seller prior to Closing, (ii) Buyer continues to make
commercially reasonable efforts to obtain a transfer or reissuance of such
Permits after the Closing, and (iii) Buyer indemnifies Seller for any
losses, claims or penalties suffered by Seller in connection with the
Permit that is not transferred or reissued as of the Closing Date resulting
from Buyer's operation of the Purchased Assets following the Closing Date.
In no event shall Buyer use or otherwise rely on a Permit issued to Seller
beyond one year after Closing unless Buyer has, after exercising its
commercially reasonable efforts, been unable to obtain same and such
reliance is not prohibited by law.
7.7. Fees and Commissions. Seller and the Buyer each represent
and warrant to the other that, except for Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), which is acting for and at the expense of
Seller, and Credit Suisse First Boston Corporation, 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. Seller and the Buyer will pay to the other or
otherwise discharge, and will indemnify and hold the other harmless from
and against, any and all claims or liabilities for all brokerage fees,
commissions and finder's fees (other than as described above) incurred by
reason of any action taken by such party.
7.8. Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Seller will join in
the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to Seller's approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for Seller's
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, Seller shall pay to the Buyer its proportionate share of the amount
shown as due on such Tax Return determined in accordance with the Section
3.4 of this Agreement.
(c) Each of the Buyer and Seller shall provide the other with
such assistance (including access to the Purchased Assets) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 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) Seller will consult with and allow Buyer to participate in
all outstanding real property tax disputes concerning the Purchased Assets
and shall take such positions as Buyer may request consistent with the
positions previously communicated to Seller by Buyer with respect to such
tax disputes, to assist Buyer in obtaining a tax agreement with respect to
such tax disputes for periods subsequent to the Closing Date. Seller will
use its commercially reasonable efforts to assist Buyer in obtaining an
agreement with the taxing authorities pursuant to which the assessed value
for real estate tax purposes of the Purchased Assets will be the lowest
value achievable. Seller shall not enter into any agreement with the
taxing authorities with respect to such real property tax disputes relating
to periods prior to the Closing Date without the written consent of Buyer
which Buyer shall not unreasonably withhold as long as Seller has complied
with this Section 7.8(d).
7.9. Supplements to Schedules. Prior to the Closing Date,
parties shall supplement or amend the Schedules required by Articles V and
VI with respect to any matter 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.
7.10. Employees. (a) Schedule 7.10(a) sets forth all
collective bargaining agreements to which Seller is a party in connection
with the Purchased Assets and all other labor agreements and amendments
thereto, that are or may be associated with the Purchased Assets (the
"Collective Bargaining Agreements"). Buyer shall offer employment to begin
as of the Closing Date to Seller's employees who work in connection with
the Purchased Assets and who are included in the bargaining units covered
by the Collective Bargaining Agreements ("Hourly Employees"), and the Buyer
will assume the Collective Bargaining Agreements and all of Seller's
obligations thereunder, including, without limitation, the terms and
conditions of the employee benefit plans covering such hourly employees.
(b) Continued Employment; Service Credit. The Buyer shall, as
of the Closing Date, offer employment to the employees of Seller (who will
be listed on Schedule 7.10(b) by the Buyer) who worked at or directly
serviced the Purchased Assets, who were employees immediately prior to the
Closing Date, who were not Hourly Employees and who are approved by Buyer
(the "Management Employees"). The Buyer shall provide Schedule 7.10(b) to
Seller at least ninety (90) days prior to the date on which the Closing is
anticipated to occur (but in no event later than February 1, 1999, or such
other date to which the Buyer and Seller mutually agree). The Management
Employees hired by the Buyer shall be given credit for all service with
Seller or its subsidiaries (and service credited by Seller or such
subsidiary), to the same extent as such service was credited for such
purpose by Seller or such subsidiary, under all employee benefit plans,
programs and policies, and fringe benefits of the Buyer in which they
become participants for purposes of eligibility, vesting and determination
of level of benefits (but not for purposes of benefit accrual). To the
extent permissible under the terms thereof and required by applicable law,
the Buyer shall (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Management Employees under any welfare
benefit plans that such employees may be eligible to participate in after
the Closing Date, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare benefit plan maintained
for the Management Employees immediately prior to the Closing Date, and
(ii) provide each Management Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Closing Date.
(c) Subject to applicable law, the Buyer shall maintain for a
period of at least one year after the Closing Date, without interruption,
such employee compensation, welfare and benefit plans, programs, policies
and fringe benefits as will, in the aggregate, provide benefits to the
Management Employees that are no less favorable than those provided
pursuant to such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits of the Seller and its subsidiaries,
as in effect on the Closing Date. During the period between the date
hereof and the Closing Date, Seller shall use its best efforts to keep
available all current Management Employees for employment by the Buyer
(except those employees which the Buyer identifies in writing as Management
Employees which the Buyer does not intend to employ).
(d) Notwithstanding the Buyer's assumption of the Collective
Bargaining Agreement, the Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of the Seller or any ERISA Affiliate of
the Seller in connection with the assumption of such agreements or in
connection with hiring any of the Hourly Employees. All benefits accrued
under such Benefits Plans and all benefits currently payable as of the
Closing Date shall be and shall remain the obligation of Seller and any
individual covered under any such Benefit Plan that is a Group Health Plan
(as defined in Section 4980B(g)(2) of the Code and Section 607(1) of ERISA)
and who is eligible for continued coverage under such Group Health Plan as
of the Closing Date, shall continue to be covered under such Group Health
Plan after Closing pursuant to the provisions of COBRA.
(e) Seller agrees to perform timely and discharge all
requirements, if any, under the WARN Act and under applicable state and
local laws and regulations for the notification of its employees arising
from the sale of the Purchased Assets to the Buyer up to and including the
Closing Date. The Buyer will cooperate with Seller to provide Seller with
such information as may be needed from the Buyer for inclusion in such
notices, including providing Seller at least ninety (90) days prior to the
date on which the Closing is anticipated to occur (but in no event, later
than February 1, 1999 or such other date to which the Buyer and Seller
mutually agree) with a list of all of Seller's employees to whom the Buyer
will make offers of employment. 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 Purchased Assets.
(f) Seller shall be responsible for any payments required under
its severance plan, including severance payments and other benefit
enhancements, offered in connection with the transfer of the Purchased
Assets. Within thirty (30) days following the last day that any employee
may elect to participate in such plan, Seller shall provide Buyer with a
list of all electing employees. In any event, Buyer is not required to
establish this or any other severance or benefit plan.
(g) Seller shall comply with all of the requirements of COBRA
arising from this Agreement with respect to all employees of Seller
employed at the Purchased Assets who are not employed by Buyer.
(h) Seller shall pay, when due, to all Hourly Employees and
Management Employees hired by the Buyer pursuant to Section 7.10 hereof,
all compensation, bonus, severance, vacation and holiday compensation,
workers' compensation or other employment benefits which have accrued to
such Hourly Employees and Management Employees through and including the
Closing Date.
(i) Following the execution of this Agreement Seller will use
its commercially reasonable best efforts to arrange meetings and interviews
with such employees of Seller as Buyer shall reasonably request.
(j) Seller shall not, prior to the Closing Date, with respect
to the Purchased Assets, (i) hire new employees or transfer current
employees prior to the Closing to work at the Purchased Assets, other than
to fill vacancies in existing positions in the reasonable discretion of
Seller, (ii) take any action prior to the Closing to affect a material
change in the Collective Bargaining Agreement, or (iii) take any action
prior to the Closing to increase the aggregate benefits payable to the
employees employed in connection with the Purchased Assets, except (A) as
otherwise required by the terms of the Collective Bargaining Agreement
obligations to effects bargain, (B) as Seller shall reasonably deem
appropriate in order to comply with its obligations under the second
sentence of Section 7.10(c) above, (C) for retention bonuses payable to
Management Employees on or before the Closing Date and (D) increases in
salary and benefits in the ordinary course of business, consistent with
past practice.
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 Seller.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain, or is the subject of a
pending or (to the knowledge of Seller), after reasonable inquiry and
investigation contemplated taking which has not been consummated, Seller
shall notify the Buyer promptly in writing of such fact. If such taking
would have a Material Adverse Effect, the Buyer and 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. If
no such settlement is reached within sixty (60) days after Seller has
notified the Buyer of such taking, then the Buyer or Seller may, if such
taking relates to the Purchased Assets, terminate this Agreement pursuant
to Section 10.1(f).
(c) If, before the Closing Date, all or any material portion of
the Purchased Assets are damaged or destroyed by fire or other casualty,
Seller shall notify the Buyer promptly in writing of such fact. If such
damage or destruction would have a Material Adverse Effect and 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 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 assigning any insurance proceeds to Buyer at the
Closing 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 Seller has notified the
Buyer of such casualty, then the Buyer may terminate this Agreement
pursuant to Section 10.1(f).
7.12. Real Estate Matters. (a) Buyer shall obtain an
American Land Title Association ("ALTA") or New York Board of Title
Underwriters ("NYBTU") owners standard form title policy commitment with
respect to the Real Property (the "Title Commitment") from a title company
of Buyer's choice (the "Title Company") covering title to the Real Property
together with an ALTA 3.1 zoning endorsement, if available, including
parking and access, and such other endorsements as Buyer may reasonably
request. Seller shall provide the Title Company and Buyer such information
as the Title Company or Buyer may reasonably request to assist the Title
Company in connection with the Title Commitment. Without limiting the
foregoing, Seller shall provide the Title Company and Buyer a copy of the
most recent surveys in their possession regarding the Real Property.
Promptly after receiving the Title Commitment, Buyer shall notify Seller in
writing of any defects in title which are not Permitted Encumbrances and
would cause title to the Real Property to be uninsurable (any of which is
called herein a "Defect of Title"). Buyer shall be deemed to have waived
any objection to any Defect of Title that was disclosed by the Title
Commitment if Buyer fails to notify Seller of such Defect of Title within
thirty (30) days after receipt of such Title Commitment. With respect to
the existence of any Defect of Title that is not disclosed by the Title
Commitment, but which arises prior to Closing, Buyer shall immediately
notify Seller in writing of any such Defect of Title.
(b) Seller agrees that upon the written request of Buyer it will
consent and cause its affiliates to consent to the relocation of the
Operating Easements and Seller's Easements so long as (i) Buyer pays the
cost of such relocation, (ii) such relocation will be to space within
Buyer's ownership and will not materially adversely affect the operation of
Seller's or its affiliates' transmission and distribution business, except
for the minimum downtime associated with the cut over for such relocation
process in accordance with Good Utility Practices, and (iii) the Buyer's
requested relocation is consistent with Good Utility Practices. Seller
further agrees to condition any grant or assignment by it of the Operating
Easements or Sellers Easements on the express agreement of its transferee
to be bound by the terms and conditions of this Section 7.12(b).
(c) As to any Operating Easement or Sellers Easement not
currently of record or reserved or granted back to Seller at Closing, all
of which are to be granted by Buyer at Closing concurrently with the
transfer of title to Buyer and prior to any mortgage or other encumbrance,
such Operating Easements and Sellers Easements shall include standard
cross-indemnity provisions relating to personal injury, death or property
damage occurring as a result of gross negligence or willful misconduct in
the use of such Easements, whereby each party agrees to indemnify the other
for the consequences of the gross negligence or willful misconduct of those
for whom the indemnifying party is legally responsible.
7.13. Year 2000. Seller shall (a) use its best efforts to
cooperate with Buyer in formulating a plan to prepare the Purchased Assets
to be ready for Year 2000 computer-related issues with a target completion
date of October 1, 1999 and (b) perform until the Closing Date (or later,
at Seller's election pursuant to the second sentence of Section 7.14 of
this Agreement) the tasks identified in such plan, consistent with Good
Utility Practices and the expenditures contemplated in its Year 2000 plans
referred to in Section 5.23 hereof.
7.14. Scheduled Capital Expenditures and Scheduled
Maintenance Expenditures. The Seller shall perform, or caused to be
performed, the Scheduled Capital Expenditures and the Scheduled Maintenance
Expenditures, at Seller's cost, prior to the Closing Date. To the extent
that Scheduled Capital Expenditures and Scheduled Maintenance Expenditures
are not completed by the Closing Date, the Seller either (i) shall cause
the Scheduled Capital Expenditures or Scheduled Maintenance Expenditures to
be completed within a reasonable period of time following the Closing Date
or (ii) shall pay Buyer its reasonable costs to complete such unfinished
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures within
thirty (30) days of Seller's receipt from Buyer of a reasonably detailed
invoice for such cost.
7.15. Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under (i) the Purchased Assets and (ii)
the "Purchased Asset" and "Purchased Assets" as defined in each of the
Other Sales Agreements on or prior to the Closing Date ("Environmental
Insurance"), Seller shall share equally with Buyer the cost of premiums for
such Environmental Insurance, up to a maximum payment by Seller of $200,000
in the aggregate for such insurance relating to (A) the Purchased Assets
and (B) the "Purchased Asset" and "Purchased Assets" as defined in each of
the Other Sales Agreements. If Buyer purchases such Environmental
Insurance, Buyer shall add Seller as an additional insured.
7.16. Environmental Remediation.
(a) Seller will, at its own expense, be responsible for
remediating, in accordance with applicable Environmental Laws, the
following areas located at the Hillburn Gas Turbine Generating Station
identified on page 6-2 of the Report, Additional Phase II Environmental
Site Investigations Orange and Rockland prepared by URS Greiner Woodward
Clyde, dated November 1998: (i) PCB-contaminated soils in two areas at the
34.5 kv Substation; (ii) PCB-contaminated soils in the Gas Turbine
Switching Transformer Substation; (iii) stained soils and associated
contamination in the 69 kv Substation containing polyaromatic hydrocarbons
("PAHs"); and (iv) stained soils and associated contamination in the
Equipment Storage Area containing PAHs. Seller's obligation to remediate
these conditions is limited to remediation of affected soils in the areas
identified above. Seller shall remediate such soils to meet the least
stringent New York cleanup standards applicable to the Hillburn Gas Turbine
Generating Station as it is currently used; provided however, that the
cleanup standards which govern the remedial work under this subparagraph
(a) shall be at least as stringent as the New York State Department of
Environmental Conservation ("NYSDEC") soil cleanup standards to protect
groundwater. To the extent that the NYSDEC or the United States
Environmental Protection Agency ("EPA") is involved in the oversight of any
of the remediation described above, Seller shall remediate such soils to
the extent required by the NYSDEC or the EPA, as the case may be. Seller
shall prepare a work plan for the remedial work required by this
subparagraph (a) and shall submit the work plan for Buyer's review and
comment. Seller shall conduct confirmation sampling which demonstrates the
completion of the remedial work required by this subparagraph (a) and shall
prepare a report discussing the work. Except as otherwise required by
applicable Environmental Law, neither party shall notify NYSDEC or EPA
concerning the remedial work without the prior consent of the other party.
Seller shall be responsible for all negotiations with the NYSDEC or the EPA
with respect to such remedial work and, provided Seller is in substantial
compliance with this Section 7.16, Buyer shall not engage in any
discussions with NYSDEC or the EPA with respect to the remedial work,
except to the extent authorized by Seller.
(b) Seller shall exercise reasonable efforts to complete the
remedial work described in subparagraph (a) prior to the Closing. If
Seller has not completed the remedial work described in subparagraph (a) as
of the Closing, Seller will continue to be responsible for completing said
remediation as soon as reasonably possible after the Closing. In
undertaking said remedial work, Seller shall (i) comply in all material
respects with applicable Environmental Laws; (ii) provide Buyer with copies
of all final and complete data, documents, correspondence and reports
related to the remedial work; (iii) provide Buyer with at least five (5)
Business Days' advance notice prior to undertaking any field work at the
Hillburn Gas Turbine Generating Station; (iv) take all reasonable
precautions to ensure that performance of the remedial work does not
unreasonably interfere with operations at the Hillburn Gas Turbine
Generating Station; and (v) repair and restore, to the extent practicable,
any areas of the Hillburn Gas Turbine Generating Station adversely impacted
by the remedial work.
(c) If Seller is required to complete the remedial work
described in subparagraph (a) after the Closing, Buyer shall undertake
reasonable efforts to enable Seller, Seller's agents and representatives to
undertake the remedial work. To this end, Buyer shall afford Seller and
its agents and representatives, including, but not limited to,
environmental contractors and consultants, with reasonable cooperation,
including, but not limited to, reasonable access to any of the real
property upon which remedial work is to be conducted, relevant records and
utility services (including, but not limited to water and electricity);
obtaining additional environmental permits (at Seller's expense) in order
to undertake the required remediation; and filing any necessary reports (at
Seller's expense) with relevant governmental authorities.
7.17. Buyout of Leases. The Seller shall exercise its
purchase option, at Seller's cost, under the Amendment to Lease Agreement,
effective as of August 1, 1996, between Seller and Fleet Capital
Corporation, which amends the Lease Agreement, dated as of February 1,
1991, between United States Trust Company of New York, as Trustee, Lessor
and Seller, Lessee.
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have
expired or been terminated with no order, decree, judgment or
injunction enjoining or prohibiting the consummation of the
transactions contemplated hereby having been issued;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court or governmental authority
which prevents or is reasonably likely to prevent the consummation of
the transactions contemplated hereby or by the Ancillary Agreements
shall be pending or shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted or interpreted by any State or Federal
government or governmental authority in the United States which
prohibits the consummation of the transactions contemplated hereby;
(c) All Federal, State and local government orders,
consents and approvals required for the consummation of the
transactions contemplated hereby, or by the Ancillary Agreements,
including, without limitation, Seller Required Regulatory Approvals
and the Buyer Required Regulatory Approvals, shall have become Final
Orders (a "Final Order" means action by the relevant regulatory
authority which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to which any waiting period
prescribed by law before the transactions contemplated hereby may be
consummated has expired, and as to which all conditions to the
consummation of such transaction prescribed by law, regulation or
order have been satisfied) and such Final Order is in form and
substance reasonably acceptable to the party that sought the consent
or approval granted by such Final Order (for purposes of this clause
(i), a Final Order shall be deemed to be reasonably acceptable to such
party if it complies in all material respects with the terms and
conditions of such party's application therefor and contains no
additional terms or conditions which would have a Material Adverse
Effect on such party or the operation of the Purchased Assets);
provided, however, that if at the time such order, consent, or
approval would otherwise be deemed to be a Final Order, there shall be
pending or threatened any appeal or challenge thereto, which, if
adversely determined, would cause such order, consent or approval to
not be reasonably acceptable to the party that sought such order,
consent or approval, then if such party who would be adversely
affected notifies the other party that such a pending or threatened
appeal or challenge exists (such notification to be made as soon as
reasonably practicable following knowledge of such pending or
threatened appeal or challenge, but in no event later than fifteen
(15) days from date on which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired and all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied), then such
order, consent or approval shall be deemed to be a Final Order only
after all opportunities for rehearing or judicial review are exhausted
and provided, further, that if the designation of an order, consent or
approval as a Final Order shall be deferred pursuant to the foregoing
proviso, the Termination Date shall be automatically extended for a
period of time equal to the period of time for which the designation
as a Final Order has been deferred;
(d) All consents and approvals required under the terms of
any note, bond, mortgage, indenture, contract or other agreement to
which Seller or the Buyer, or any of their subsidiaries, is a party
for the consummation of the transactions contemplated hereby shall
have been obtained, other than those (i) which if not obtained, would
not, in the aggregate, have a Material Adverse Effect, or (ii) for
which an agreement which is described in the last sentence of Section
7.6(b) has been entered into.
8.2. Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions 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) Seller shall have performed and complied with the
covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and
the representations and warranties of 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, and the Buyer shall have received a certificate to that effect
signed by an authorized officer of Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of Seller, dated the Closing Date, to the effect
that to the best of such officers' knowledge, after reasonable inquiry
and investigation, the conditions set forth in Sections 8.2(a) and (b)
have been satisfied;
(d) The "Closing" as defined in each of the Lovett
Generating Station Sales Agreement between the Seller and Southern
Energy Lovett, L.L.C. and the Bowline Point Generating Station Sales
Agreement among Seller, Consolidated Edison Company of New York, Inc.
and Southern Energy Bowline, L.L.C., each dated as of the date hereof,
shall have occurred or shall occur concurrently with the Closing
hereunder.
(e) The Buyer shall have received an opinion from Skadden,
Arps, Slate, Meagher & Flom LLP, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that:
(1) Seller is a corporation organized, existing and in
good standing under the laws of the State of New York and has the
corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby; and the execution
and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate
action taken on the part of Seller.
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by Seller and (assuming that Buyer
Required Regulatory Approvals are obtained) are valid and binding
obligations of Seller, enforceable against Seller in accordance
with their terms, except that such enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, and
(B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity);
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by Seller will not (A)
constitute a violation of the Certificate of Incorporation or By-
Laws of Seller, or (B) to counsel's knowledge constitute a
violation or default under those agreements or instruments set
forth on a schedule to this opinion;
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any federal
or New York governmental authority is necessary for the
consummation by Seller of the Closing other than (i) Seller
Required Regulatory Approvals which are addressed below, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, individually or in the
aggregate have a Material Adverse Effect or prevent Seller from
performing its obligations hereunder; and
(5) The Bill of Sale, the Instrument of Assumption and
the other agreements described in Section 4.3 are in proper form
to transfer to Buyer such title to the Purchase Assets as was
held by Seller.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer and
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by Seller and appropriate officers
and directors of Seller and by public officials.
(f) The Buyer shall have received an opinion from Riker,
Danzig, Scherer, Hyland & Perretti, LLP (New Jersey Counsel), Nixon,
Hargrave, Devans & Doyle, LLP (New York Counsel) and Morgan, Lewis &
Bockius, LLP (Pennsylvania Counsel), or other local regulatory
counsel for O&R reasonably acceptable by Buyer, dated the Closing Date
and satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that no declaration, filing or
registration with, or notice to, or authorization, consent or approval
of any federal governmental authority or any governmental authority in
the States of New York, New Jersey and Pennsylvania is necessary for
the consummation by Seller of the Closing other than (i) Seller
Required Regulatory Approvals, which have been obtained and are in
full force and effect with such terms and conditions as were imposed
by the applicable governmental authorities, (ii) declarations, filings
or registrations with, or notices to, or authorizations, consents or
approvals relating to Permits and Environmental Permits and (iii) such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not obtained or made, would not,
individually or in the aggregate have a Material Adverse Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer and
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by Seller and appropriate officers
and directors of Seller and by public officials.
(g) Buyer shall have received the Title Commitment showing
the Real Property to be insured as subject only to Permitted
Encumbrances, and the effective date of the Title Commitment shall
have been updated to the Closing Date and marked to show the
satisfaction of all conditions to the issuance of the title policy
other than conditions within the control of the Buyer.
(h) Buyer shall have obtained a certificate of the
Secretary of Seller identifying by name and title and bearing the
signature of the officer of Seller authorized to execute and deliver
this Agreement and the other agreements and instruments contemplated
hereby.
8.3. Conditions to Obligations of Seller. The obligation of
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed its covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date;
(b) The representations and warranties of the Buyer 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) Seller shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officers' knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied; and
(d) Seller shall have received an opinion from Troutman
Sanders LLP, counsel for the Buyer, dated the Closing Date and
satisfactory in form and substance to Seller and its counsel,
substantially to the effect that:
(1) The Buyer is a limited liability company
organized, existing and in good standing under the laws of the
State of Delaware and has the requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements
and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by the Buyer and (assuming that
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except (A) that such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought;
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer will not
constitute a violation of the Certificate of Formation or Limited
Liability Company Agreement (or other similar governing
documents), as currently in effect, of the Buyer.
(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 of the Closing other than (i) the Buyer Required
Regulatory Approvals, all of which have been obtained and are in
full force and effect with such terms and conditions as shall
have been imposed by any applicable governmental authority, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have
a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United States
and the State of New York, such counsel may rely upon opinions of counsel
admitted to practices in such other jurisdictions. Any opinions relied
upon by such counsel as aforesaid shall be delivered together with the
opinion of such counsel. Such opinion may expressly rely as to matters of
facts upon certificates furnished by appropriate Members and Managers of
the Buyer and its subsidiaries and by public officials.
8.4. Extension of Closing Date. If the approval by the FERC of
the establishment of the ISO (the "ISO Approval") shall not have been
obtained on or prior to the Condition Fulfillment Date, the parties agree
to defer the Closing Date until the date (the "Deferred Closing Date")
which is the earlier of (a) the last day in the month in which the ISO
Approval is deemed final under applicable law, provided that if there are
less than five (5) Business Days in the month in which the ISO Approval is
deemed final, then the last day in the month which follows the month in
which the ISO Approval is deemed final, or (b) August 31, 1999; provided,
however, that all conditions set forth in Section 8.2(a) and all conditions
set forth in Section 8.2(b) regarding the representations and warranties of
Seller shall be deemed to be fulfilled on the Deferred Closing Date unless
the nonfulfillment of such conditions primarily results from the acts or
omissions of Seller or from the occurrence of facts or circumstances that
primarily relate to the Seller's ownership and/or operation, or the
physical condition of the Purchased Assets. For purposes of this
Agreement, the "Condition Fulfillment Date" shall mean the date on which
all conditions set forth in Sections 8.1 and 8.2 shall have been fulfilled
but not earlier than the later of (i) the date on which all conditions set
forth in Section 8.3 have been fulfilled or waived and (ii) April 30, 1999.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. (a) Seller will indemnify, defend and
hold harmless the Buyer, Buyer's affiliates, and their respective Managers,
Members, employees and agents (each a "Buyer Indemnitee") from and against
any and all claims, causes of action, demands or suits (by any Person),
losses, liabilities, damages (excluding consequential and special damages),
obligations, payments, costs, Taxes and expenses (including, without
limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not covered by
insurance, (collectively, "Indemnifiable Losses"), asserted against or
suffered by the Buyer Indemnitee relating to, resulting from or arising out
of (i) any breach by Seller of any covenant or agreement of Seller
contained in this Agreement, (ii) the Excluded Liabilities; (iii) the
Excluded Assets; (iv) any breach of any representation in Sections 5.1,
5.2 and 5.3 hereof; (v) Seller's non-compliance with any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement, or (vi) the gross negligence or willful
misconduct of the Seller, or its affiliates or its contractors while on
Buyer's property (including without limitation, any easement provided
Seller with respect to such property) after the Closing to the extent such
Indemnifiable Loss is not caused by a the negligence or willful misconduct
of any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless Seller,
Seller's Affiliates, and their respective directors, officers, employees
and agents (each, a "Seller Indemnitee") from and against any and all
Indemnifiable Losses asserted against or suffered by Seller relating to,
resulting from or arising out of (i) any breach by the Buyer of any
covenant or agreement of the Buyer contained in this Agreement, (ii) the
Assumed Liabilities; (iii) the operation of the Purchased Assets after the
Closing Date, (iv) any breach of any representation in Article VI, or (v)
the gross negligence or willful misconduct of Buyer, its affiliates or
their respective contractors while on Seller's property after the Closing,
to the extent such Indemnifiable Loss is not caused by the negligence or
willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) Seller and the Buyer shall have indemnification obligations
with respect to Indemnifiable Losses asserted against or suffered by Seller
or the Buyer, as the case may be, to the extent that the aggregate of all
such Indemnifiable Losses exceed the Indemnification Floor. It is agreed
and understood that neither Seller nor the Buyer, as the case may be, shall
have any liability at any time for Indemnifiable Losses asserted against or
suffered by the other party until the aggregate amount of Indemnifiable
Losses asserted or suffered by such other party under this Section 9.1
shall exceed the Indemnification Floor, and then only to the extent that
the aggregate amount of Indemnifiable Losses exceeds the Indemnification
Floor. The term "Indemnification Floor" shall mean an amount equal to
$200,000.
(g) The rights and remedies of Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and
remedies which Seller and the Buyer may have under this Agreement 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
Liabilities or the Excluded Liabilities, as the case may be; or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b). Rights and
remedies under the Ancillary Agreements are as set forth therein.
9.2. Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) 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 will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (a) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (b) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which a party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of any Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) 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 (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) 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 (a) any Third Party Claim with
respect to Income Taxes or (b) any other 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 (other than with respect to Income Taxes) 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.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim (other than with respect to
Income Taxes) at any time, provided that in such event the Indemnitee shall
waive any right to indemnity hereunder unless the Indemnitee shall have
first sought the consent of the Indemnifying Party in writing to such
payment, settlement or compromise and such consent was unreasonably
withheld or delayed, in which event no claim for indemnity therefor
hereunder shall be waived.
(d) 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, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) 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 Direct Claim. If
the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(e) 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 Chase Manhattan Bank), 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 subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination. (a) This Agreement may be terminated at
any time prior to Closing Date, by mutual written consent of the Buyer and
Seller.
(b) This Agreement may be terminated by Seller or Buyer if (i)
the Closing shall not have been consummated on or before September 30, 1999
(the "Termination Date"); provided that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to Seller or
Buyer if its failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing Date to occur
on or before such date; and provided, further, that if on September 30,
1999, 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 eighteen (18) months from the date of this
Agreement.
(c) This Agreement may be terminated by either Seller or the
Buyer if (i) any governmental or regulatory body, the consent of which is a
condition to the obligations of Seller and the Buyer to consummate the
transactions contemplated hereby, shall have determined not to grant its
consent or shall condition such consent upon any material change to the
terms of this Agreement or the Ancillary Agreements or upon any other
condition that materially and adversely affects the value of the
transactions contemplated herein or therein for either party and all
appeals of such determination shall have been taken and have been
unsuccessful; (ii) any court 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 transactions
contemplated hereby or in the Ancillary Agreements and such order, judgment
or decree shall have become final and nonappealable; or (iii) any statute,
rule or regulation shall have been enacted or interpreted by any State or
Federal government or governmental agency in the United States which
prohibits the transactions contemplated herein or in the Ancillary
Agreements.
(d) This Agreement may be terminated by the Buyer, if there has
been a material violation or breach by Seller of any agreement,
representation or warranty contained in this Agreement which (i) has
rendered the satisfaction of any condition to the obligations of the Buyer
impossible and such violation or breach has not been waived by the Buyer or
cured by the Seller within fifteen (15) days after receipt by Buyer of
notice specifying same or (ii) causes a Material Adverse Effect, of which
Buyer has notified Seller, and which Seller has not promptly exercised
commercially reasonable efforts to cure but in no event later than twenty
(20) days following such notification by Buyer.
(e) This Agreement may be terminated by Seller, 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 Seller impossible
and such violation or breach has not been waived by Seller or cured by
Buyer within fifteen (15) days after receipt by Buyer of notice specifying
same.
(f) This agreement may be terminated by either Seller or the
Buyer in accordance with the provisions of Section 7.11(b) or (c).
10.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein said termination shall be without any further liability of
either party or parties except as follows:
(a) in the event of termination of this Agreement by Seller
pursuant to Section 10.1(e), Seller shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Seller; and
(c) 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 Seller and the Buyer.
11.2. Confidentiality. (a) All information regarding a
party (the "Disclosing Party") that is furnished directly or indirectly to
the other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two (2) years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3. 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 estoppel with respect to,
any subsequent or other failure.
11.4. No Survival. Subject to the provisions of Article X,
each and every representation, warranty and covenant contained in this
Agreement other than (a) the covenants contained in Sections 3.2, 3.3, 3.4,
7.2(b), 7.2(c), 7.2(d), 7.3, 7.5, 7.6, 7.7, 7.8, 7.10, 7.14, 9.1 and 9.2
and in Article XI (which covenants shall survive in accordance with their
terms); (b) the representations and warranties contained in Sections 5.1,
5.2, 5.3, 6.1, 6.2, and 6.3 (which representations and warranties shall
survive for twelve (12) months from the Closing) and (c) the representation
and warranty in Section 5.21 (which representation and warranty shall
survive for the applicable statute of limitations) shall expire with, and
be terminated and extinguished by the consummation of the sale of the
Purchased Assets and the transfer of the Assumed Liabilities pursuant to
this Agreement and such representations, warranties and covenants shall not
survive the Closing Date; and none of Seller, the Buyer or any officer,
director, trustee or Affiliate of either of them shall be under any
liability whatsoever with respect to any such representation, warranty or
covenant.
11.5. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt on a
Business Day if during the normal business hours of the recipient, or if
not, on the next Business Day if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or
certified mail (return receipt requested), postage prepaid, to the parties
at the following addresses (or at such other address for a party as shall
be specified by like notice):
(a) If to Seller, to:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Sheldon S. Adler, Esq.
(b) if to the Buyer, to:
Southern Energy NY-Gen, L.L.C.,
c/o Southern Energy, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Randy Harrison, Vice-President
with copies to:
Troutman Sanders LLP
Nationsbank Plaza
Suite 5200
Atlanta, GA 30308
Attention: Robert C. Marshall, Esq.
and
Southern Company Services
270 Peachtree Street
Box 918
Atlanta, Georgia 30303
Attention: Vice President and Associate General Counsel
11.6. 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. The Buyer acknowledges that Seller has entered into an
Agreement and Plan of Merger whereby Seller will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly-owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Seller's receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Assets, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Seller agrees, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer,
pledge or other disposition of rights and interests hereunder so long as
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7. 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, and Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Seller,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8. Specific Performance. Seller and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10. 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.
11.11. Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement, including the Exhibits and
Schedules referred to herein or therein, and the Guaranty given to the
Seller by Southern Energy, Inc. 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 of Seller contained
in any material made available to the Buyer pursuant to the terms of the
Confidentiality Agreement (including the Information Memorandum, dated May
1998 (previously made available to the Buyer by Seller and DLJ). This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such transactions other than the Confidentiality
Agreement.
11.12. Bulk Sales or Transfer Laws. The Buyer acknowledges
that Seller will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by
Seller with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, Seller and the Buyer have caused this
agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By /s/ D. Louis Peoples
___________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive
Officer
SOUTHERN ENERGY NY-GEN, L.L.C.
By /s/ Randy Harrison
______________________________
Name: Randy Harrison
Title: Vice President