GENERATING PLANT
AND GAS TURBINE
ASSET PURCHASE AND SALE AGREEMENT
FOR
ASTORIA GENERATING PLANTS
LOCATED AT ASTORIA, QUEENS COUNTY, NEW YORK,
GOWANUS GAS TURBINES
LOCATED AT BROOKLYN, KINGS COUNTY, NEW YORK
AND
NARROWS GAS TURBINES
LOCATED AT BROOKLYN, KINGS COUNTY, NEW YORK
By and Between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
and
ASTORIA GENERATING COMPANY, L.P.
Dated as of March 2, 1999
-2 -
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms 14
ARTICLE II
Purchase and Sale; Assumption of
Certain Liabilities
SECTION 2.01. Purchase and Sale 15
SECTION 2.02. Auctioned Assets and Retained Assets 15
SECTION 2.03. Assumed Obligations and Retained Liabilities 19
SECTION 2.04. Third Party Consents 24
SECTION 2.05. Franchise Property 25
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price 26
SECTION 3.02. Post-Closing Adjustment 26
SECTION 3.03. Allocation of Purchase Price 27
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing 29
SECTION 4.02. Payment of Purchase Price and Estimated Adjustment
Amount 29
ARTICLE V
Representations and Warranties of Seller
SECTION 5.01. Organization; Qualification 29
SECTION 5.02. Authority Relative to This Agreement 29
SECTION 5.03. Consents and Approvals; No Violation 30
SECTION 5.04. Year 2000 31
SECTION 5.05. Personal Property 31
SECTION 5.06. Real Estate 31
SECTION 5.07. Leases 32
SECTION 5.08. Certain Contracts and Arrangements 32
SECTION 5.09. Legal Proceedings 32
SECTION 5.10. Permits; Compliance with Law 33
SECTION 5.11. Environmental Matters 33
SECTION 5.12. Labor Matters 34
SECTION 5.13. ERISA; Benefit Plans 35
SECTION 5.14. Taxes 36
SECTION 5.15. Independent Engineering Assessments 36
SECTION 5.16. Undisclosed Liabilities 37
SECTION 5.17. Brokers 37
SECTION 5.18. Insurance 37
ARTICLE VI
Representations and Warranties of Buyer
SECTION 6.01. Organization 38
SECTION 6.02. Authority Relative to This Agreement 38
SECTION 6.03. Consents and Approvals; No Violation 38
SECTION 6.04. Availability of Funds 40
SECTION 6.05. Brokers 40
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the Auctioned
Assets 40
SECTION 7.02. Access to Information 43
SECTION 7.03. Consents and Approvals; Transferable Permits 45
SECTION 7.04. Further Assurances 46
SECTION 7.05. Public Statements 48
SECTION 7.06. Tax Matters 48
SECTION 7.07. Bulk Sales or Transfer Laws 49
SECTION 7.08. Storage. 49
SECTION 7.09. Information Resources. 50
SECTION 7.10. Witness Services. 50
SECTION 7.11. Consent Orders 50
SECTION 7.12. Nitrogen Oxide Allowances 51
SECTION 7.13. Trade Names 51
SECTION 7.14. NYPA Agreements 51
SECTION 7.15. Narrows 51
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's Obligation To
Effect the Purchase and Sale 52
SECTION 8.02. Conditions Precedent to Obligation of Buyer To
Effect the Purchase and Sale 53
SECTION 8.03. Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale 55
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters 56
SECTION 9.02. Continuation of Equivalent Benefit Plans/Credited
Service 58
SECTION 9.03. Pension Plan 59
SECTION 9.04. 401(k) Plan 61
SECTION 9.05. Welfare Plans 61
SECTION 9.06. Short- and Long-Term Disability 63
SECTION 9.07. Life Insurance and Accidental Death and
Dismemberment Insurance 63
SECTION 9.08. Severance 63
SECTION 9.09. Workers Compensation 65
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification 65
SECTION 10.02. Third Party Claims Procedures 68
ARTICLE XI
Termination
SECTION 11.01. Termination 69
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses 69
SECTION 12.02. Amendment and Modification;Extension;Waiver 70
SECTION 12.03. No Survival of Representations or Warranties 70
SECTION 12.04. Notices 70
SECTION 12.05. Assignment; No Third Party Beneficiaries 71
SECTION 12.06. Governing Law 72
SECTION 12.07. Counterparts 72
SECTION 12.08. Interpretation 72
SECTION 12.09. Jurisdiction and Enforcement 73
SECTION 12.10. Entire Agreement 74
SECTION 12.11. Severability 74
SECTION 12.12. Conflicts 75
SCHEDULES AND EXHIBITS
Schedule 2.02(a)(ii) Spare Parts
Schedule 2.02(a)(iii)(A)Buyer Personal Property Located on Buyer Real
Estate
Schedule 2.02(a)(iii)(B)Buyer Personal Property Located on Seller Real
Estate
Schedule 2.02(a)(iii)(C)Buyer Personal Property Located on NYPA
Real Estate
Schedule 2.02(a)(iii)(D)NYPA Personal Property
Schedule 2.02(a)(iv) Assigned Contracts
Schedule 2.02(a)(v) Transferable Permits
Schedule 2.02(a)(vi) SO2 Allowances
Schedule 2.02(b)(ii)(A) Seller Personal Property Located on Buyer Real
Estate
Schedule 2.02(b)(ii)(C) Communications Equipment
Schedule 2.03(a)(iv) Seller Consent Orders
Schedule 2.03(a)(xii) Assumed Seller Obligations under NYPA Agreements
Schedule 2.05(a) Franchise Property
Schedule 5.03(a) Contracts Requiring Third Party Consents
Schedule 5.08(a) Material Contracts
Schedule 5.09 Legal Proceedings
Schedule 5.10(a)(i) Exceptions Under Permits
Schedule 5.10(a)(ii) Non-Environmental Violations
Schedule 5.10(b) Nontransferable Permits and Environmental
Permits
Schedule 5.11 Environmental Matters
Schedule 5.13 Benefit Plans
Schedule 5.15(a) Exceptions to Independent Engineering Assessment
Schedule 5.15(b) Changes to Auctioned Assets
Schedule 5.16 Other Undisclosed Liabilities
Schedule 7.14 Rights and Interests under NYPA Agreements
Schedule 7.15 Narrows
Schedule 9.01(a) Job Titles
Schedule 9.01(b) Collective Bargaining Agreements
Exhibit A-1 Form of Astoria Zoning Lot Development
Agreement between Seller and ▇▇▇▇▇▇ Kill Acquiror
Exhibit A-2 Form of Astoria Zoning Lot Development
Agreement between Seller and Buyer
Exhibit A-3 Form of Gowanus Zoning Lot Development
Agreement between Seller and Buyer
Exhibit B-1 Form of Deed of Conveyance for Queens
County
Exhibit B-2 Form of Deed of Conveyance for Kings County
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
General Counsel of Seller
Exhibit E Form of Opinion of Counsel to Buyer
Exhibit F Summary of Terms and Conditions for
License for A-10 Dock between Seller and Buyer
Exhibit G Form of Transition Capacity Agreement
between Seller and Buyer
Exhibit H Summary of Terms and Conditions for
License for A-0 Dock between Seller and Buyer
Exhibit I Form of Astoria Declaration of
Subdivision Easements
Exhibit J Form of Gowanus Declaration of
Subdivision Easements
Exhibit K Form of Guarantee Agreement
Exhibit L Form of Opinion of Counsel to Guarantor
GENERATING PLANT AND GAS TURBINE ASSET
PURCHASE AND SALE AGREEMENT (including the
Schedules hereto, this "Agreement"), dated as of
March 2, 1999, by and between CONSOLIDATED EDISON
COMPANY OF NEW YORK, INC., a New York corporation
("Seller"), and ASTORIA GENERATING COMPANY, L.P.,
a Delaware limited partnership ("Buyer",
collectively with Seller, the "Parties").
WHEREAS Seller has offered the Auctioned Assets (as defined
herein) for sale at auction pursuant to the Order Authorizing
the Process for Auctioning of Generation Plant issued by the
PSC (as defined herein) and effective as of July 21, 1998; and
WHEREAS Buyer desires to purchase, and Seller desires to sell,
the Auctioned Assets upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set
forth, and intending to be legally bound hereby, the Parties
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. (a) As used in this
Agreement, the following terms have the following meanings:
"A-0 License" means the license from Buyer to Seller in
respect of the A-0 dock at Astoria, the material terms of
which shall be substantially as set forth in Exhibit H.
"A-10 License" means the license from Seller to Buyer in
respect of the A-10 dock at Astoria, the material terms of
which shall be substantially as set forth in Exhibit F.
"Accountants" shall have the meaning set forth in Section
3.02(b).
"Adjustment Amount" shall have the meaning set forth in
Section 3.02(a).
"Adjustment Date" shall have the meaning set forth in
Section 3.02(c).
"Adjustment Statement" shall have the meaning set forth in
Section 3.02(a).
"Affected Employees" shall have the meaning set forth in
Section 9.01(a).
"Affected Union Employees" shall have the meaning set forth
in Section 9.01(b).
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended.
"Agreement" shall have the meaning set forth in the
Preamble.
"Allocation" shall have the meaning set forth in Section
3.03.
"Ancillary Agreements" means the Continuing Site Agreements,
the Declaration of Easements Agreements, the Declarations of
Subdivision Easements, the Zoning Lot Development Agreements,
the Transition Capacity Agreement, the deeds contemplated by
Section 8.02(e)(i) and any other agreement to which Buyer and
Seller are party and which is expressly identified by its
terms as an Ancillary Agreement hereunder.
"Applicable Law" shall have the meaning set forth in
Section 3.03.
"▇▇▇▇▇▇ Kill Acquiror" means the person referred to as
"Buyer" in the Generating Plant and Gas Turbine Asset
Purchase and Sale Agreement for ▇▇▇▇▇▇ Kill Generating
Plants and Astoria Gas Turbines between Seller and such
person.
"Assumed Consent Order Obligations" shall have the meaning set
forth in Section 2.03(a)(iv).
"Assumed Obligations" shall have the meaning set forth in
Section 2.03(a).
"Assumed Seller Obligations Under NYPA Agreements" shall have
the meaning set forth in Section 2.03(a)(xii). "Astoria
Continuing Site Agreement" means the Astoria Continuing Site
Agreement dated as of even date herewith
between Seller and Buyer.
"Astoria Declaration of Easements" means the Astoria
Declaration of Easements by Seller dated as of January 27,
1999, as amended.
"Astoria Declaration of Subdivision Easements" means the
Astoria Declaration of Subdivision Easements to be made by
Seller substantially in the form of Exhibit I, except for
changes required by any Governmental Authority to the extent
that no such change materially and adversely impairs the
continued use and operation of the Auctioned Assets as
currently conducted.
"Astoria Zoning Lot Development Agreement" means (a) the
Astoria Zoning Lot Development Agreement between Seller and
▇▇▇▇▇▇ Kill Acquiror, in the form of Exhibit A-1, if executed
and delivered prior to the Closing Date or (b) the Astoria
Zoning Lot Development Agreement between Seller and
Buyer, in the form of Exhibit A-2.
"Auctioned Assets" shall have the meaning set forth in
Section 2.02(a).
"Benefit Plans" shall have the meaning set forth in Section
5.13.
"Bidder Confidentiality Agreements" shall have the meaning
set forth in Section 7.02(b).
"Business Day" means any day other than Saturday, Sunday and
any day which is a legal holiday or a day on which banking
institutions in New York are authorized or required by law or
other action of a Governmental Authority to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Assets" shall have the meaning set forth in Section
2.03(a)(x).
"Buyer Benefit Plans" shall have the meaning set forth in
Section 9.02(c).
"Buyer Facilities" shall mean the "Parcel B Facilities" and
"Parcel D Facilities" under the Astoria Declaration of
Easements, together with the respective "Buyer Facilities"
under each of the Gowanus and Narrows Declaration of Easements
Agreements.
"Buyer Indemnitees" shall have the meaning set forth in
Section 10.01(a).
"Buyer Material Adverse Effect" shall have the meaning set
forth in Section 6.03(a).
"Buyer Real Estate" shall have the meaning set forth in
Section 2.02(a)(i).
"Buyer Required Regulatory Approvals" shall have the meaning
set forth in Section 6.03(b).
"Buyer's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Buyer's Pension Plans" shall have the meaning set forth in
Section 9.03(a).
"Buyer's Welfare Plans" shall have the meaning set forth in
Section 9.05(a).
"Closing" shall have the meaning set forth in Section 4.01.
"Closing Date" shall have the meaning set forth in Section
4.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" shall have the meaning
set forth in Section 9.01(b).
"Communications Equipment" means the equipment, systems,
switches and lines used in connection with voice, data and
other communications activities.
"Confidentiality Agreement" means the Confidentiality
Agreement dated September 22, 1998 between Seller and Orion
Power Holdings, Inc.
"Continued Employee" shall have the meaning set forth in
Section 9.01(a).
"Continued Non-Union Employee" shall have the meaning set
forth in Section 9.02(a).
"Continued Union Employee" shall have the meaning set forth
in Section 9.01(b).
"Continuing Site Agreements" means the Astoria Continuing
Site Agreement, the Gowanus Continuing Site Agreement and
the Narrows Continuing Site Agreement.
"Contracts" shall have the meaning set forth in Section
2.02(a)(iv).
"Conveyance Plans" shall have the meaning set forth in
Section 2.02(a)(i).
"Declaration of Easements Agreements" means the Astoria
Declaration of Easements, the Gowanus Declaration of
Easements Agreement and Narrows Declaration of Easements
Agreement.
"Declarations of Subdivision Easements" means the Astoria
Declaration of Subdivision Easements and the Gowanus
Declaration of Subdivision Easements.
"Emission Reduction Credits" means credits, in units that are
established by the environmental regulatory agency with
jurisdiction over the source or facility that has obtained the
credits, resulting from a reduction in the emissions of air
pollutants from an emitting source or facility (including, and
to the extent allowable under applicable law, reductions from
retirements, control of emissions beyond that required by
applicable law and fuel switching), that: (i) have been
certified by NYSDEC as complying with the law and regulations
of the State of New York governing the establishment of such
credits (including that such emissions reductions are real,
enforceable, permanent and quantifiable); or (ii) have been
certified by any other applicable regulatory authority as
complying with the law and regulations governing the
establishment of such credits (including that such emissions
reductions are real, enforceable, permanent and quantifiable).
Emission Reduction Credits include certified air emissions
reductions, as described above, regardless of whether the
regulatory agency certifying such reductions designates such
certified air emissions reductions by a name other than
"emissions reduction credits".
"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements,
activity and use limitations, exceptions, conservation
easements, rights-of-way, deed restrictions, encumbrances and
charges of any kind.
"Environmental Laws" means all former, current and future
Federal, state, local and foreign laws (including common law),
treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives or orders (including consent orders) and
Environmental Permits, in each case, relating to pollution or
protection of the environment or natural resources, including
laws relating to Releases or threatened Releases, or otherwise
relating to the generation, manufacture, processing,
distribution, use, treatment, storage, arrangement for
disposal, transport, recycling or handling, of Hazardous
Substances.
"Environmental Liability" means all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders,
fines, penalties, fees, expenses and costs, including: (i)
remediation costs, engineering costs, environmental consultant
fees, laboratory fees, permitting fees, investigation costs
and defense costs and reasonable attorneys' fees and expenses;
(ii) any claims, demands and causes of action relating to or
resulting from any personal injury (including wrongful death),
property damage (real or personal) or natural resource damage;
and (iii) any penalties, fines or costs associated with the
failure to comply with any Environmental Law.
"Environmental Permits" means the permits, licenses, consents,
approvals and other governmental authorizations with respect
to Environmental Laws relating primarily to the power
generation operations of the Generating Plants or the Gas
Turbines.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in
Section 5.13.
"Estimated Adjustment Amount" shall have the meaning set
forth in Section 4.02.
"FERC" means the Federal Energy Regulatory Commission.
"Federal Power Act" shall have the meaning set forth in
Section 5.03(b).
"Filed Seller SEC Documents" means the reports, schedules,
forms, statements and other documents filed by Seller with the
Securities and Exchange Commission since January 1, 1997, and
publicly available prior to the date of this Agreement. "Final
Allocation" shall have the meaning set forth in Section 3.03.
"Franchise Property" shall have the meaning set forth in
Section 2.05(a).
"GAAP" shall have the meaning set forth in Section 1.02.
"Gas Turbines" means the gas turbine units comprised of the
Astoria GT1, Gowanus GT1 through GT4 and ▇▇▇▇▇▇▇ ▇▇▇ and
GT2.
"Generating Facilities" means the Generating Plants, the Gas
Turbines and any additional generating plants, gas turbines or
other generating facilities constructed by Buyer after the
Closing Date at the site of any Auctioned Assets.
"Generating Plants" means the two retired steam turbine
generating units designated as Astoria units 1 and 2 and the
three operating steam turbine generating units designated as
Astoria units 3, 4 and 5.
"Governmental Authority" means any court, administrative or
regulatory agency or commission or other governmental entity
or instrumentality, domestic, foreign or supranational or any
department thereof.
"Gowanus Continuing Site Agreement" means the Gowanus
Continuing Site Agreement dated as of even date herewith
between Seller and Buyer.
"Gowanus Declaration of Easements Agreement" means the Gowanus
Declaration of Easements Agreement dated as of even date
herewith between Seller and Buyer.
"Gowanus Declaration of Subdivision Easements" means the
Gowanus Declaration of Subdivision Easements to be made by
Seller substantially in the form of Exhibit J, except for
changes required by any Governmental Authority to the extent
that no such change materially and adversely impairs the
continued use and operation of the Auctioned Assets as
currently conducted.
"Gowanus Zoning Lot Development Agreement" means the
Gowanus Zoning Lot Development Agreement between Seller and
Buyer in the form of Exhibit A-3.
"Guarantee Agreement" means the Guarantee Agreement dated as
of even date herewith between Guarantor and Seller
substantially in the form of Exhibit K.
"Guarantor" means Orion Power Holdings, Inc.
"Hazardous Substances" means (i) any petrochemical or
petroleum products, crude oil or any fraction thereof, ash,
radioactive materials, radon gas, asbestos in any form, urea
formaldehyde foam insulation or polychlorinated biphenyls,
(ii) any chemicals, materials, substances or wastes 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 contained in any
Environmental Law or (iii) any other chemical, material,
substance or waste which is prohibited, limited or regulated
by any Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any Federal, state, local or foreign Tax or
surtax (i) based upon, measured by or calculated with respect
to net income, profits or receipts (including the New York
State Gross Receipts Tax (including the excess dividends tax),
the New York City Public Utilities Excise Tax, any and all
municipal gross receipts Taxes, capital gains Taxes and
minimum Taxes) or (ii) based upon, measured by or calculated
with respect to multiple bases (including 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 (i), in each case, together with any interest,
penalties, or additions to such Tax.
"Indemnifiable Loss" shall have the meaning set forth in
Section 10.01(a).
"Indemnifying Party" shall have the meaning set forth in
Section 10.01(c).
"Indemnitee" shall have the meaning set forth in Section
10.01(c).
"Independent Engineering Assessments" shall have the
meaning set forth in Section 5.15.
"Interconnection Facilities" means those items of switching
equipment, switchyard controls, protective relays and related
facilities of Seller that are used by Seller in connection
with the provision of Interconnection Services.
"Interconnection Services" means the service provided by
Seller to Buyer to interconnect the Generating Facilities to
the Transmission System.
"Inventory Survey" shall have the meaning set forth in
Section 3.02(a).
"ISO" means the New York Independent System Operator.
"Local 1-2" shall have the meaning set forth in Section
9.01(a).
"Local 1-2 Collective Bargaining Agreement" shall have the
meaning set forth in Section 9.01(a).
"Material Adverse Effect" means any change, or effect on the
Auctioned Assets, that is materially adverse to the business,
operations or condition (financial or otherwise) of the
Auctioned Assets, taken as a whole, other than (i) any change
or effect resulting from changes in the international,
national, regional or local wholesale or retail energy,
capacity or ancillary services electric power markets, (ii)
any change or effect resulting from changes in the
international, national, regional or local markets for fuel,
(iii) any change or effect resulting from changes in the
national, regional or local electric transmission systems,
(iv) any change or effect resulting from any bid cap, price
limitation, market power mitigation measure, including the
Mitigation Measures, or other regulatory or legislative
measure in respect of transmission services or the wholesale
or retail energy, capacity or ancillary services markets
adopted or approved (or failed to be adopted or approved) by
FERC, the PSC or any other Governmental Authority or proposed
by any person, (v) any change or effect resulting from any
regulation, rule, procedure or order adopted or proposed (or
failed to be adopted or proposed) by or with respect to, or
related to, the ISO, (vi) any change or effect resulting from
any action or measure taken or adopted, or proposed to be
taken or adopted, by any local, state, regional, national or
international reliability organization and (vii) any
materially adverse change in or effect on the Auctioned Assets
which is cured by Seller before the Closing Date.
"Mitigation Measures" shall have the meaning set forth in
Section 6.03(b).
"MMS" means the Material Management System, which is an
information resources system served by Seller's mainframe
computer.
"Narrows Continuing Site Agreement" means the Narrows
Continuing Site Agreement dated as of even date herewith
between Seller and Buyer.
"Narrows Declaration of Easements Agreement" means the Narrows
Declaration of Easements Agreement dated as of even date
herewith between Seller and Buyer.
"Narrows Turbines" shall have the meaning set forth in
Section 7.15.
"NYPA" means the Power Authority of the State of New York.
"NYPA Agreements" means the Indenture, made as of December 13,
1974, between Seller and NYPA, and the NYPA Operating
Agreement.
"NYPA Operating Agreement" means the Astoria Operating
Agreement dated January 5, 1981, between NYPA and Seller, as
amended.
"NYSDEC" means the New York State Department of
Environmental Conservation.
"Off-Site" means any location except (i) the Auctioned Assets
and (ii) any location to or under which Hazardous Substances
present or Released at the Auctioned Assets have migrated.
"Offering Memorandum" means the Offering Memorandum dated
August 1998 describing the Generating Plants and the Gas
Turbines, and the materials delivered with such Offering
Memorandum, as such Offering Memorandum and such materials may
have been amended or supplemented.
"Operating Records" shall have the meaning set forth in
Section 2.02(a)(viii).
"Party" shall have the meaning set forth in the Preamble.
"Permits" means the permits, licenses, consents, approvals and
other governmental authorizations (other than with respect to
Environmental Laws) relating primarily to the power generation
operations of the Generating Plants or the Gas Turbines.
"Permitted Exceptions" means (i) all exceptions, restrictions,
easements, charges, rights-of-way and monetary and nonmonetary
encumbrances which are set forth in any Permits or
Environmental Permits, (ii) statutory liens for current taxes
or assessments not yet due or delinquent or the validity of
which is being contested in good faith by appropriate
proceedings, (iii) mechanics', carriers', workers', repairers'
and other similar liens arising or incurred in the ordinary
course of business relating to obligations as to which there
is no default on the part of Seller or the validity of which
are being contested in good faith by appropriate proceedings,
(iv) zoning, entitlement, conservation restriction and other
land use and environmental regulations by Governmental
Authorities, (v) such title matters set forth in the
Certificate of Title No. NY981606, as amended, the Certificate
of Title No. NY971417, as amended, and the Certificate of
Title No. NY971418, as amended, in each case, issued by the
Title Company, (vi) all matters disclosed on the Conveyance
Plans and any other facts that would be disclosed by an
accurate survey and physical inspection of the Buyer Real
Estate, (vii) Encumbrances, easements, obligations or other
restrictions created pursuant to or provided for in any
Ancillary Agreement or any NYPA Agreement, (viii) restrictions
and regulations imposed by the ISO, any Governmental Authority
or any local, state, regional, national or international
reliability council and (ix) such other Encumbrances or
imperfections in or failure of title which would not,
individually or in the aggregate, reasonably be expected to
materially impair the continued use and operation of the
Auctioned Assets as currently conducted.
"person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated
organization or Governmental Authority.
"PPMIS" means the Power Plant Maintenance Information System,
which is an information resources system served by Seller's
mainframe computer.
"Prorated Items" shall have the meaning set forth in
Section 2.03(a)(viii).
"Protective Relaying System" means the system relating to the
Generating Facilities comprised of components collectively
used to detect defective power system elements or other
conditions of an abnormal nature, initiate appropriate control
circuit action in response thereto and isolate the appropriate
system elements in order to minimize damage to equipment and
interruption to service.
"PSC" means the New York State Public Service Commission.
"Purchase Price" shall have the meaning set forth in
Section 3.01.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building,
structure, facility or fixture.
"Restraints" shall have the meaning set forth in Section
8.01(b).
"Retained Assets" shall have the meaning set forth in
Section 2.02(b).
"Retained Liabilities" shall have the meaning set forth in
Section 2.03(b).
"Revenue Meters" means all meters measuring demand, energy and
reactive components, and all pulse isolation relays, pulse
conversion relays and associated totalizing and remote access
pulse recorder equipment, in each case, required to measure
the transfer of energy between the Parties.
"Revocable Consent" shall have the meaning set forth in
Section 2.05(a).
"Segregated Reimbursement Accounts" shall have the meaning
set forth in Section 9.05(b).
"Seller" shall have the meaning set forth in the Preamble.
"Seller Assets" shall have the meaning set forth in Section
2.03(b)(x).
"Seller Consent Orders" shall have the meaning set forth in
Section 2.03(a)(iv).
"Seller Facilities" shall mean the "Parcel A Facilities" under
the Astoria Declaration of Easements, together with the
respective "Seller Facilities" under each of the Gowanus and
Narrows Declaration of Easements Agreements.
"Seller Indemnitees" shall have the meaning set forth in
Section 10.01(b).
"Seller Real Estate" means all real property and leaseholds or
other interests in real property of Seller (including the
premises on which the Substations are located), other than
Buyer Real Estate.
"Seller Required Regulatory Approvals" shall have the meaning
set forth in Section 5.03(b).
"Seller's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Seller's Pension Plans" shall have the meaning set forth
in Section 9.03(a).
"Seller's Reimbursement Account Plans" shall have the meaning
set forth in Section 9.05(b).
"SO2 Allowances" means allowances that have been allocated to
Seller for the Generating Plants or the Gas Turbines by the
Administrator of the United States Environmental Protection
Agency under Title IV of the Clean Air Act authorizing the
emission of one ton of sulfur dioxide per allowance during or
after the year 2000.
"Substations" shall have the meaning set forth in Section
2.02(b)(i).
"Tax Benefit" means, with respect to any Indemnifiable Loss
for any person, the positive excess, if any, of the Tax
liability of such person without regard to such Indemnifiable
Loss over the Tax liability of such person taking into account
such Indemnifiable Loss, with all other circumstances
remaining unchanged.
"Tax Cost" means, with respect to any indemnity payment for
any person, the positive excess, if any, of the Tax liability
of such person taking such indemnity payment into account over
the Tax liability of such person without regard to such
payment, with all other circumstances remaining unchanged.
"Tax Return" means any return, report, information return or
other document (including any related or supporting
information) required to be supplied to any authority with
respect to Taxes. "Taxes" means all taxes, surtaxes, charges,
fees, levies, penalties or other assessments imposed by any
United States Federal, state or local or foreign taxing
authority, including Income Tax, excise, property, sales,
transfer, franchise, special franchise, payroll, recording,
withholding, social security or other taxes, or any liability
for taxes incurred by reason of joining in the filing of any
consolidated, combined or unitary Tax Returns, in each case
including any interest, penalties or additions attributable
thereto; provided, however, that "Taxes" shall not include
sewer rents or charges for water.
"Termination Date" shall have the meaning set forth in
Section 11.01(b).
"Third Party Claim" shall have the meaning set forth in
Section 10.02(a).
"Title Company" means Commonwealth Land Title Insurance
Company or any other reputable title insurance company
licensed to do business in New York.
"Transferable Permits" shall have the meaning set forth in
Section 2.02(a)(v).
"Transferring Employee Records" shall have the meaning set
forth in Section 2.02(a)(viii).
"Transferring Employees" shall have the meaning set forth
in Section 2.02(a)(viii).
"Transition Capacity Agreement" means the Transition Capacity
Agreement to be entered into between Seller and Buyer
substantially in the form of Exhibit G.
"Transmission System" shall have the meaning set forth in
Section 2.02(b)(i).
"Zoning Lot Development Agreements" means the Astoria
Zoning Lot Development Agreement and the Gowanus Zoning Lot
Development Agreement.
SECTION 1.02. Accounting Terms. Any accounting terms used in
this Agreement or the Ancillary Agreements shall, unless
otherwise specifically provided, have the meanings customarily
given them in accordance with United States generally accepted
accounting principles ("GAAP") and all financial computations
hereunder or thereunder shall, unless otherwise specifically
provided, be computed in accordance with GAAP consistently
applied.
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.01. Purchase and Sale. Upon the terms and subject to
the satisfaction of the conditions contained in this
Agreement, at the Closing, Seller agrees to sell, assign,
convey, transfer and deliver to Buyer, and Buyer agrees to
purchase, assume and acquire from Seller all the Auctioned
Assets. In the case of any Auctioned Assets not located at the
Generating Plants or Gas Turbines (including supplies,
materials and spare parts inventory), Buyer agrees that (i)
from and after the Closing, except to the extent specifically
otherwise provided in the Ancillary Agreements, Buyer will
bear all risk of casualty or loss with regard to such
Auctioned Assets (regardless of whether they remain on
Seller's property or otherwise in Seller's possession) and
(ii) Seller shall store such Auctioned Assets in accordance
with Section 7.08.
SECTION 2.02. Auctioned Assets and Retained Assets. (a)
Auctioned Assets. The term "Auctioned Assets" means all the
assets, real and personal property, goodwill and rights of
Seller of whatever kind and nature, whether tangible or
intangible, in each case, primarily relating to the power
generation operations of the Generating Plants or the Gas
Turbines, other than the Retained Assets, including:
(i) subject to Section 2.05, all real property and leaseholds
or other interests in real property of Seller relating primarily to
the power generation operations of the Generating Plants or the Gas
Turbines described as (A) Parcels B and D as shown on the Astoria
Generating Station ALTA/ACSM Land Title Survey dated February 17,
1999, (B) Parcel A as shown on the Gowanus Gas Turbine Site
ALTA/ACSM Land Title Survey Conveyance Plan dated February 23, 1999
and (C) the Narrows Gas Turbine Site as shown on the Narrows Gas
Turbine Site ALTA/ACSM Land Title Survey Conveyance Plan dated
February 23, 1999, in each case, as may hereafter be amended in
immaterial respects (collectively, the "Conveyance Plans"), together
with all buildings, improvements, structures and fixtures thereon,
subject to Permitted Exceptions or Encumbrances otherwise disclosed
to Buyer in this Agreement or the Ancillary Agreements with respect
thereto (the "Buyer Real Estate");
(ii) subject to Section 2.04 and Section 2.05, all inventories
of fuels, supplies, materials and spare parts relating primarily to
the power generation operations of the Generating Plants or the Gas
Turbines, together with and subject to (A) all Permitted Exceptions
or Encumbrances otherwise disclosed to Buyer in this Agreement or
the Ancillary Agreements with respect thereto and (B) all warranties
against manufacturers and vendors relating thereto, including the
spare parts listed on Schedule 2.02(a)(ii), in each case, other than
assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iii) subject to Section 2.04 and Section 2.05, (A) the
machinery, equipment, facilities, furniture and other personal
property (other than vehicles) relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines,
including a stand-alone local area network and other items of
personal property located on Buyer Real Estate or temporarily
removed from Buyer Real Estate for repairs, servicing or maintenance
and listed on Schedule 2.02(a)(iii)(A), (B) machinery, equipment,
facilities, furniture and other personal property located on Seller
Real Estate or temporarily removed from Seller Real Estate for
repairs, servicing or maintenance and listed on Schedule
2.02(a)(iii)(B), (C) machinery, equipment, facilities, furniture and
other personal property located on real property owned by NYPA or
temporarily removed from such real property for repairs, servicing
or maintenance and listed on Schedule 2.02(a)(iii)(C) and (D)
machinery, equipment, facilities, furniture and other personal
property listed on Schedule 2.02(a)(iii)(D) to the extent Seller has
obtained title thereto from NYPA prior to Closing, in each case, (1)
together with and subject to (x) all Permitted Exceptions or
Encumbrances otherwise disclosed to Buyer in this Agreement or the
Ancillary Agreements with respect thereto and (y) all warranties
against manufacturers or vendors relating thereto and (2) other than
assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iv) subject to Section 2.04, all right, title and interest of
Seller in, to and under all contracts, agreements, personal property
leases (whether Seller is lessor or lessee thereunder), commitments
and all other legally binding arrangements (other than Seller
Consent Orders), whether oral or written (A) set forth on Schedule
2.02(a)(iv) or (B) otherwise relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines
and entered into by Seller in accordance with Section 7.01 (the
"Contracts"), in each case, to the extent in full force and effect
on the Closing Date;
(v) subject to Section 7.03(c), the Permits and Environmental
Permits that are transferred or transferable by Seller to Buyer
(collectively, the "Transferable Permits"), including the
Transferable Permits set forth on Schedule 2.02(a)(v), in each case,
to the extent in full force and effect on the Closing Date;
(vi) the SO2 Allowances listed on Schedule 2.02(a)(vi);
(vii) all nitrogen oxide allowances allocated to the
Generating Plants or the Gas Turbines by NYSDEC under the New York
State Nitrogen Oxides Budget Program that have not been used on or
prior to the Closing Date (it being understood that, for purposes of
this Agreement, one nitrogen oxide allowance shall be deemed "used"
for each ton of actual nitrogen oxide emitted from the Generating
Plants or Gas Turbines between May 1 of any year and September 30 of
such year, inclusive);
(viii) (A) all data, information, books, operating records,
operating, safety and maintenance manuals, engineering design plans,
blueprints and as-built plans, specifications, procedures, facility
compliance plans, environmental procedures and similar records of
Seller relating primarily to the power generation operations of the
Generating Plants or the Gas Turbines, to the extent in Seller's
possession or readily available (collectively, "Operating Records"),
and (B) all personnel files relating to employees of Seller to be
employed by Buyer after the Closing Date in accordance with Article
IX (the "Transferring Employees"), to the extent in Seller's
possession and readily available and to the extent such files
pertain to (1) skill and development training and resumes, (2)
seniority histories, (3) salary and benefit information, (4)
Occupational Safety and Health Act medical reports, (5) active
medical restriction forms and (6) any other matters, disclosure of
which by Seller to Buyer is permitted under applicable law without
the consent of the Transferring Employee, but not including any
performance evaluations or disciplinary records (collectively, the
"Transferring Employee Records"); provided, however, that Seller
shall be permitted to retain copies, or originals to the extent it
provides Buyer with copies of same, of all Operating Records and
Transferring Employee Records; and
(ix) (A) except as provided in Section 2.02(b)(iv), the
software relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines (provided, however, that
Buyer acknowledges that it will require licenses from third parties
in order to be legally entitled to use such software), and (B) a
non-exclusive, royalty-free license to use solely in connection with
the Auctioned Assets the software or other copyrighted material
owned by Seller located at Buyer Real Estate.
(b) Retained Assets. The term "Retained Assets" means:
(i) the transmission and distribution facilities owned,
controlled or operated by Seller for purposes of providing
point-to-point transmission service, network integration service and
distribution service and other related purposes, including the real
property and equipment located at the Astoria East Substation, the
Astoria West Substation, the North Queens Substation, the Gowanus
Substation and the Greenwood Substation (collectively, the
"Substations"), used in controlling continuity between the
Generating Plants and Gas Turbines and the transmission and
distribution facilities and for other purposes (the "Transmission
System");
(ii)(A) except as set forth in Section 2.02(a)(iii), all
Interconnection Facilities and other transmission, distribution and
substation machinery, equipment and facilities and related support
equipment located on Buyer Real Estate or Seller Real Estate or
temporarily removed from Buyer Real Estate or Seller Real Estate for
repairs, servicing or maintenance, including items listed on
Schedule 2.02(b)(ii)(A); (B) all Revenue Meters installed by Seller;
(C) Communications Equipment and related support equipment (1)
located on Buyer Real Estate or temporarily removed from Buyer Real
Estate for repairs, servicing or maintenance and listed on Schedule
2.02(b)(ii)(C) or acquired by Seller after the date of this
Agreement and designated by Seller as a Retained Asset or (2)
located on Seller Real Estate or temporarily removed from Seller
Real Estate for repairs, servicing or maintenance; and (D) all
Protective Relaying Systems not located on Buyer Real Estate;
(iii) all cash, cash equivalents, bank deposits and accounts
receivable held or owned by Seller;
(iv) (A) all mainframe computer systems of Seller, (B) the
code to all software described in Section 2.02(a)(ix)(B), and (C)
all software, copyrights, know-how or other proprietary information
relating primarily to any other Retained Assets or any Retained
Liabilities, including software, copyrights, know-how or other
proprietary information licensed to Buyer pursuant to Section
2.02(a)(ix)(B);
(v) the names "Consolidated Edison", "Con Edison", "Con Ed",
"Consolidated Edison Company", "Consolidated Edison Company of New
York, Inc.", "Consolidated Edison, Inc.", "New York Edison",
"Brooklyn Edison", "Staten Island Edison" and "Edison" and any
related or similar trade names, trademarks, service marks or logos
(and any rights to and in the same, including any right to use the
same);
(vi) subject to Section 7.06(d), any refund or credit related
to Taxes or sewer rents or water charges or any other liabilities or
obligations in respect of the Auctioned Assets, in each case,
attributable to periods (or portions thereof) prior to the Closing
Date;
(vii) all personnel records (other than Transferring Employee
Records) and all other records (other than Operating Records);
(viii) (A) all Emission Reduction Credits held or possessed by
Seller and (B) SO2 Allowances held or possessed by Seller and not
listed on Schedule 2.02(a)(vi); and
(ix) any other asset that is not described with particularity
in this Agreement as an Auctioned Asset.
SECTION 2.03. Assumed Obligations and Retained Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall assume,
and from and after the Closing, shall discharge, all of the
liabilities and obligations, direct or indirect, known or
unknown, absolute or contingent, which relate to the Auctioned
Assets or are otherwise specified below, other than the
Retained Liabilities (collectively, the "Assumed
Obligations"), including:
(i) except as set forth in Section 2.03(b)(ii), any
liabilities and obligations under the Contracts;
(ii) any liabilities and obligations for goods delivered or
services rendered on or after the Closing Date relating to the
Auctioned Assets;
(iii) except as set forth in Sections 2.03(b)(iii) or (iv),
any Environmental Liability arising out of or in connection with (A)
any violation or alleged violation of, or noncompliance or alleged
noncompliance with, any Environmental Laws, prior to, on or after
the Closing Date, with respect to the ownership or operation of the
Auctioned Assets, notwithstanding that, as contemplated by Section
7.03(c), Seller may remain the "holder of record" with respect to
certain Transferable Permits, (B) the condition of any Auctioned
Assets prior to, on or after the Closing Date, including any actual
or alleged presence, Release or threatened Release of any Hazardous
Substance at, on, in, under or migrating onto or from, the Auctioned
Assets, prior to, on or after the Closing Date (except for any such
Release from equipment or property owned or operated by Seller and
located on, or constituting, Seller Real Estate adjacent to Buyer
Real Estate that (1) occurs on or after the Closing Date and (2) is
caused by Seller or its Affiliates), (C) any Release or threatened
Release of any Hazardous Substance on or after the Closing Date from
the Buyer Facilities or otherwise originating from, or relating to,
any equipment owned or used by Buyer that is located on Seller Real
Estate or (D) the transportation, storage, Release, threatened
Release or recycling of, or arrangement for such activities with
respect to, Hazardous Substances generated in respect of the
Auctioned Assets at or to any location, on or after the Closing
Date;
(iv) any liabilities and obligations relating to the Auctioned
Assets under the consent orders listed on Schedule 2.03(a)(iv) (the
"Seller Consent Orders") and identified thereon as "Assumed Consent
Order Obligations" (the "Assumed Consent Order Obligations");
(v) except as set forth in Section 2.03(b)(iv), any
liabilities and obligations with respect to the Permits to the
extent arising or accruing on or after the Closing Date;
(vi) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing on or after the Closing Date, and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Buyer is responsible pursuant to Article IX;
(vii) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Retained Liabilities) in respect
of any personal injury or property damage claim relating to,
resulting from or arising out of the Generating Plants or Gas
Turbines or (B) any liabilities and obligations in respect of any
discrimination, wrongful discharge or unfair labor practice claim by
any Transferring Employee, in the case of each of the foregoing
clauses (A) and (B), to the extent arising or accruing on or after
the Closing Date;
(viii) any liabilities and obligations, with respect to the
periods that include the Closing Date, with respect to real or
personal property rent, taxes based on the ownership or use of
property, utilities charges and similar charges that primarily
relate to the Generating Plants or the Gas Turbines (collectively,
the "Prorated Items"), to the extent such Prorated Items relate to
the period from and after the Closing Date, including (A) personal
property taxes, real estate and occupancy taxes, assessments and
other charges (which shall be apportioned or adjusted as provided in
the Zoning Lot Development Agreements), (B) rent and all other items
payable by Seller under any Contract, (C) any fees with respect to
any Transferable Permit and (D) sewer rents and charges for water,
telephone, electricity and other utilities, in each case calculated
by multiplying the amount of any such Prorated Item by a fraction
the numerator of which is the number of days in such period from and
after the Closing Date and the denominator of which is the number of
days in such period;
(ix) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
beginning on or after the Closing Date;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Buyer or its Affiliates subject
to the Ancillary Agreements or employed by Buyer in connection with
the performance of the Ancillary Agreements ("Buyer Assets"), or any
Protective Relaying System owned by Seller as contemplated by the
Continuing Site Agreement, regardless of whether the property damage
or personal injury is caused by a Seller Indemnitee or a Buyer
Indemnitee;
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Auctioned Assets to the extent arising
on or after the Closing Date; and
(xii) any liabilities and obligations relating to the
Auctioned Assets under the NYPA Agreements and listed on Schedule
2.03(a)(xii) (the "Assumed Seller Obligations under NYPA
Agreements"); provided, however, that to the extent required for
qualification of Buyer, with respect to the Auctioned Assets, as an
exempt wholesale generator under the Energy Policy Act of 1992,
Buyer may delegate and/or assign its obligations to provide
electricity and/or steam to NYPA to an Affiliate of Buyer; provided
further, however, that no such delegation or assignment shall
relieve Buyer of such obligations.
(b) Retained Liabilities. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following
liabilities or obligations (the "Retained Liabilities"):
(i) any liabilities and obligations of Seller primarily
relating to any Retained Assets (other than as contemplated by
Section 2.03(a)(x));
(ii) any payment obligations of Seller, including under
Contracts, for goods delivered or services rendered prior to the
Closing Date;
(iii) (A) any Environmental Liability of Seller arising out of
or in connection with the transportation, storage, Release,
threatened Release or recycling of, or arrangement for such
activities with respect to, Hazardous Substances at or to any
Off-Site location, prior to the Closing Date, (B) any Environmental
Liability of Seller arising out of or in connection with any Release
or threatened Release of any Hazardous Substance on or after the
Closing Date from the Seller Facilities or otherwise originating
from, or relating to, any equipment owned or used by Seller that is
located on Buyer Real Estate and (C) any liabilities and obligations
relating to Auctioned Assets under the Seller Consent Orders, except
Assumed Consent Order Obligations;
(iv) any monetary fines (excluding (A) natural resource
damages, (B) cleanup or remediation costs and (C) other costs of a
similar nature) imposed by a Governmental Authority to the extent
arising out of or relating to acts or omissions of Seller in respect
of the Auctioned Assets prior to the Closing Date;
(v) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing prior to the Closing Date and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Seller is responsible pursuant to Article IX;
(vi) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Assumed Obligations) in respect
of any personal injury or property damage claim relating to the
Generating Plants or Gas Turbines or (B) any liabilities and
obligations in respect of any discrimination, wrongful discharge or
unfair labor practice claim by any Transferring Employee, in the
case of each of the foregoing clauses (A) and (B), to the extent
arising out of or relating to acts or omissions of Seller prior to
the Closing Date;
(vii) any liabilities and obligations, with respect to the
period prior to the Closing Date, for the Prorated Items, calculated
as set forth in Section 2.03(a)(viii);
(viii) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
ending before the Closing Date, including Income Taxes attributable
to income realized by Seller pursuant to the transactions
contemplated by this Agreement;
(ix) any liabilities and obligations arising after the date of
this Agreement in respect of which Seller has provided pursuant to
Section 7.01(d)(ii) that such liabilities and obligations shall not
be assumed or retained by Buyer;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Seller or its Affiliates subject
to the Ancillary Agreements or employed by Seller in connection with
the performance of the Ancillary Agreements ("Seller Assets"),
regardless of whether the property damage or personal injury is
caused by a Seller Indemnitee or a Buyer Indemnitee;
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Retained Assets; and
(xii) any liabilities and obligations relating to Auctioned
Assets under the NYPA Agreements, except Assumed Seller Obligations
under NYPA Agreements.
SECTION 2.04. Third Party Consents. (a) Notwithstanding
Section 2.02(a)(ii), (iii) or (iv), to the extent that
Seller's rights under any Contract or warranty may not be
assigned without the consent of another person which consent
has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its reasonable best efforts to obtain prior
to the Closing any such required consents.
(b) Seller and Buyer agree that if any consent to an
assignment of any such Contract or warranty shall not be
obtained or if any attempted assignment would in Seller's
reasonable opinion be ineffective or would impair any material
rights and obligations of Buyer under such Contract or
warranty, as applicable, so that Buyer would not acquire the
benefit of all such rights and obligations, Seller, to the
maximum extent permitted by law and such Contract or warranty,
as applicable, shall after the Closing appoint Buyer to be
Seller's representative and agent with respect to such
Contract or warranty, as applicable, and Seller shall, to the
maximum extent permitted by law and such Contract or warranty,
as applicable, enter into such reasonable arrangements with
Buyer as are necessary to provide Buyer with the benefits and
obligations of such Contract or warranty, as applicable.
Seller and Buyer shall cooperate and shall each use their
reasonable best efforts after the Closing to obtain an
assignment of each such Contract or warranty, as applicable,
to Buyer.
SECTION 2.05. Franchise Property. (a) Not withstanding Section
2.02(a)(i), (ii) and (iii), to the extent it would be unlawful
for Buyer to operate, use or maintain the machinery, equipment
and property listed on Schedule 2.05(a) (collectively, the
"Franchise Property") to Buyer without Buyer obtaining from
the City of New York a revocable consent, franchise agreement
or other arrangement permitting Buyer to hold title to the
Franchise Property (the "Revocable Consent"), Seller and Buyer
agree that (i) Buyer shall use its reasonable best efforts to
cause the Revocable Consent to be entered into prior to
Closing, including filing a petition with the City of New York
in respect of the Revocable Consent not later than 45 days
after the date of this Agreement, and Seller shall cooperate
in good faith in connection therewith, (ii) if the Revocable
Consent has not been obtained by Buyer prior to Closing (A)
title to the Franchise Property shall be deemed not to be
transferred at Closing, (B) Seller, to the maximum extent
permitted by law, shall after Closing appoint Buyer to be
Seller's representative with respect to the Franchise
Property, (C) Seller shall operate, use and maintain the
Franchise Property at Buyer's expense and Buyer shall pay all
real and personal property taxes applicable thereto and (D)
Buyer shall use its reasonable best efforts after Closing to
cause the Revocable Consent to be entered into, at which time
title to the Franchise Property shall be deemed transferred
from Seller to Buyer pursuant to this Agreement, and Seller
shall cooperate in good faith in connection therewith and
(iii) Buyer shall pay all fees, charges and other expenses in
connection with the Revocable Consent.
(b) Seller and Buyer further agree that for the purposes of
(i) the Ancillary Agreements and Sections 2.03, 10.01 and
10.02 of this Agreement, the terms "Auctioned Assets", "Buyer
Assets" and "Buyer Facilities" shall in any event each be
deemed to include the Franchise Property and (ii) the
Ancillary Agreements, the Franchise Property shall in any
event be deemed to be owned by Buyer.
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price. The purchase price for the
Auctioned Assets shall be $550,000,000 (the "Purchase
Price").
SECTION 3.02. Post-Closing Adjustment. (a) Within 20 Business
Days after the Closing, Seller shall prepare and deliver to
Buyer a statement (an "Adjustment Statement") which reflects
the book cost, as reflected on the books of Seller as of the
Closing Date, of all fuel inventory and supplies, materials
and spare parts inventory included in the Auctioned Assets
(the "Adjustment Amount") and, upon request of Buyer, related
accounting material used by Seller to prepare the Adjustment
Statement. The Adjustment Amount will be based, in respect of
fuel, on the actual fuel inventory on the Closing Date and, in
respect of supplies, materials and spare parts, on an
inventory survey conducted within ten Business Days prior to
the Closing Date, in each case, consistent with the inventory
procedures of Seller in effect as of the date of this
Agreement (the "Inventory Survey"). Seller will permit an
employee, or representative, of Buyer to observe the Inventory
Survey. The Adjustment Statement shall be prepared using (i)
GAAP and (ii) the same rolling average unit costs that Seller
has historically used to calculate the book cost of its fuel
and supplies, materials and spare parts inventory. Buyer
agrees to cooperate with Seller in connection with the
preparation of the Adjustment Statement and related
information, and shall provide to Seller such access, books,
records and information as may be reasonably requested from
time to time.
(b) Buyer may dispute the quantity delivered or quality of any
inventory item shown on the Adjustment Statement, or the
mathematical calculations reflected therein, by notifying
Seller in writing of the disputed amount, and the basis of
such dispute, within 20 Business Days of Buyer's receipt of
the Adjustment Statement; provided, however, that in respect
of the quality of any inventory item, Buyer may not dispute
Seller's normal and customary methods for accounting for
excess inventory. Buyer shall have no right to dispute any
other matter in respect of the Adjustment Statement, including
historical rolling average unit costs used to calculate the
book cost of the inventory or the appropriateness, under GAAP
or otherwise, of using such historical rolling average unit
cost to determine the book cost of any particular item of
inventory. In the event of a dispute with respect to the
quantity or quality of any inventory item shown on the
Adjustment Statement, or the mathematical calculations
reflected therein, 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 Buyer and Seller are unable to reach a resolution
of such differences within 20 Business Days of receipt of
Buyer's written notice of dispute to Seller, Buyer and Seller
shall submit the amounts remaining in dispute for
determination and resolution to PricewaterhouseCoopers LLP or
any other accounting firm of recognized national standing
reasonably acceptable to Seller and Buyer (the "Accountants"),
which shall be instructed to determine and report to the
Parties, within 20 Business Days after such submission, upon
such remaining disputed amounts, and such report shall be
final, binding and conclusive on the Parties with respect to
the amounts disputed. Buyer and Seller shall each pay one-half
of the fees and disbursements of the Accountants in connection
with the resolution of such disputed amounts.
(c) If the Adjustment Amount is greater or less than the
Estimated Adjustment Amount, then on the Adjustment Date (as
defined below), (i) to the extent that the Adjustment Amount
exceeds the Estimated Adjustment Amount, Buyer shall pay to
Seller the amount of such excess and (ii) to the extent that
the Adjustment Amount is less than the Estimated Adjustment
Amount, Seller shall pay to Buyer the amount of such
deficiency. "Adjustment Date" means (1) if Buyer does not
disagree in any respect with the Adjustment Statement, the
twenty-third Business Day following Buyer's receipt of the
Adjustment Statement or (2) if Buyer shall disagree in any
respect with the Adjustment Statement, the third Business Day
following either the resolution of such disagreement by the
Parties or a final determination by the Accountants in
accordance with Section 3.02(b). Any amount paid under this
Section 3.02(c) shall be paid with interest for the period
commencing on the Closing Date through the date of payment,
calculated at the prime rate of the Chase Manhattan Bank in
effect on the Closing Date, and in cash by wire transfer of
immediately available funds.
SECTION 3.03. Allocation of Purchase Price. Buyer shall
deliver to Seller at Closing a preliminary allocation among
the Auctioned Assets of the Purchase Price and among such
other consideration paid to Seller pursuant to this Agreement
that is properly includible in Buyer's tax basis for the
Auctioned Assets for Federal income tax purposes, and, as soon
as practicable following the Closing (but in any event within
10 Business Days following the final determination of the
Adjustment Amount), Buyer shall prepare and deliver to Seller
a final allocation of the Purchase Price and additional
consideration described in the preceding clause, and the
post-closing adjustment pursuant to Section 3.02, among the
Auctioned Assets (the "Allocation"). The Allocation shall be
consistent with Section 1060 of the Code and the Treasury
Regulations thereunder. Seller hereby agrees to accept Buyer's
Allocation unless Seller determines that such Allocation was
not prepared in accordance with Section 1060 of the Code and
the regulations thereunder ("Applicable Law"). If Seller so
determines, Seller shall within 20 Business Days thereafter
propose any changes necessary to cause the Allocation to be
prepared in accordance with Applicable Law. Within 10 Business
Days following delivery of such proposed changes, Buyer shall
provide Seller with a statement of any objections to such
proposed changes, together with a reasonably detailed
explanation of the reasons therefor. If Buyer and Seller are
unable to resolve any disputed objections within 10 Business
Days thereafter, such objections shall be referred to the
Accountants, whose review will be limited to whether Buyer's
Allocation of such disputed items regarding the Allocation was
prepared in accordance with Applicable Law. The Accountants
shall be instructed to deliver to Seller and Buyer a written
determination of the proper allocation of such disputed items
within 20 Business Days. Such determination shall be
conclusive and binding upon the parties hereto for all
purposes, and the Allocation shall be so adjusted (the
Allocation, including the adjustment, if any, to be referred
to as the "Final Allocation"). The fees and disbursements of
the Accountants attributable to the Allocation shall be shared
equally by Buyer and Seller. Each of Buyer and Seller agrees
to timely file Internal Revenue Service Form 8594, and all
Federal, state, local and foreign Tax Returns, in accordance
with such Final Allocation and to report the transactions
contemplated by this Agreement for Federal Income Tax and all
other tax purposes in a manner consistent with the Final
Allocation. Each of Buyer and Seller agrees to promptly
provide the other party with any additional information and
reasonable assistance required to complete Form 8594, or
compute Taxes arising in connection with (or otherwise
affected by) the transactions contemplated hereunder. Each of
Buyer and Seller shall timely notify the other Party and each
shall timely provide the other Party with reasonable
assistance in the event of an examination, audit or other
proceeding regarding the Final Allocation.
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing. Upon the terms and
subject to the satisfaction of the conditions contained in
Article VIII, the closing of the sale of the Auctioned Assets
contemplated by this Agreement (the "Closing") will take place
on such date as the Parties may agree, which date shall be as
soon as practicable, but no later than ten Business Days,
following the date on which all of the conditions set forth in
Article VIII have been satisfied or waived, at the offices of
Cravath, Swaine & ▇▇▇▇▇ in New York City or at such other
place or time as the Parties may agree. The date and time at
which the Closing actually occurs is hereinafter referred to
as the "Closing Date".
SECTION 4.02. Payment of Purchase Price and Estimated
Adjustment Amount. At the Closing, Buyer will pay or cause to
be paid to Seller by wire transfer of immediately available
funds to an account previously designated in writing by Seller
an amount in United States dollars equal to (a) the Purchase
Price plus (b) Seller's good faith estimate of the Adjustment
Amount (the "Estimated Adjustment Amount"), which estimate
shall be provided to Buyer no later than five Business Days
prior to the Closing.
ARTICLE V
Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
SECTION 5.01. Organization; Qualification. Seller is a
corporation duly incorporated, 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 the Auctioned Assets and to carry on the business of
the Auctioned Assets as currently conducted.
SECTION 5.02. Authority Relative to This Agreement. Seller has
all necessary corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby.
The execution and delivery by Seller of this Agreement and the
Ancillary Agreements and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Trustees of Seller or
by a committee thereof to whom such authority has been
delegated and no other corporate proceedings on the part of
Seller are necessary to authorize this Agreement or the
Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. This Agreement and the
Ancillary Agreements have been duly and validly executed and
delivered by Seller and, assuming that this Agreement and the
Ancillary Agreements constitute valid and binding agreements
of Buyer and each other party thereto, subject to the receipt
of the Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals, constitute valid and binding
agreements of Seller, enforceable against Seller in accordance
with their respective terms.
SECTION 5.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Seller Required Regulatory Approvals
and the Buyer Required Regulatory Approvals, neither the
execution and delivery of this Agreement or the Ancillary
Agreements by Seller nor the sale by Seller of the Auctioned
Assets pursuant to this Agreement will (i) conflict with or
result in any breach of any provision of the Certificate of
Incorporation or By-laws of Seller, (ii) except as set forth
on Schedule 5.03(a), result in a default (or give rise to any
right of termination, cancelation or acceleration) under any
of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Seller is a party or by
which Seller, or any of the Auctioned Assets, may be bound,
except for such defaults (or rights of termination,
cancelation or acceleration) as to which requisite waivers or
consents have been obtained or which would not, individually
or in the aggregate, create a Material Adverse Effect or (iii)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Seller, or the Auctioned Assets,
except for such violations which would not, individually or in
the aggregate, create a Material Adverse Effect.
(b) Except for (i) application by Seller to, and the approval
of, the PSC, pursuant to ss. 70 of the Public Service Law of
the State of New York, of the transfer to Buyer of the
Auctioned Assets, (ii) the filings by Seller and Buyer
required by the HSR Act and the expiration or earlier
termination of all waiting periods under the HSR Act, (iii)
application by Seller to, and the approval of, FERC under (A)
Section 203 of the Federal Power Act of 1935 (the "Federal
Power Act") with respect to the transfer of Auctioned Assets
constituting jurisdictional assets under the Federal Power Act
and (B) Section 205 of the Federal Power Act with respect to
each Continuing Site Agreement and any wholesale power sales
agreement to be entered into by Seller and Buyer, including
the Transition Capacity Agreement, (iv) the issuance of
approval by the New York City Department of Buildings and, to
the extent required, the New York City Department of Business
Services of the tax lot subdivision contemplated by this
Agreement in a form suitable for submission to the New York
City Department of Finance for the issuance of tax lot numbers
and (v) declarations, filings or registrations with, or
notices to, or authorizations, consents or approvals of, any
Governmental Authority which become applicable to Seller or
the transactions contemplated hereby or by the Ancillary
Agreements as a result of the specific regulatory status or
jurisdiction of incorporation or organization of Buyer (or any
of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which
Buyer (or any of its Affiliates) is or proposes to be engaged
(collectively, the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or
authorization, consent or approval of any Governmental
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
(A) which, if not obtained or made, would not, individually or
in the aggregate, create a Material Adverse Effect or (B)
which relate to the Transferable Permits.
(c) To the knowledge of Seller, there is no reason that it
should fail to obtain the Seller Required Regulatory
Approvals.
SECTION 5.04. Year 2000. Seller has informed Buyer of the
status, as of the date of this Agreement, of measures to
prevent computer software, hardware and embedded systems used
in connection with the Auctioned Assets from experiencing
malfunctions or other usage problems in connection with years
beginning with "20", except for such malfunctions or other
usage problems which would not, individually or in the
aggregate, create a Material Adverse Effect.
SECTION 5.05. Personal Property. Except for Permitted
Exceptions, Seller has good and marketable title, free and
clear of all Encumbrances, to all personal property
included in the Auctioned Assets.
SECTION 5.06. Real Estate. The Conveyance Plans contain
descriptions of the Buyer Real Estate. Copies of the most
recent real property surveys and title insurance information
in the possession of Seller with respect to the Buyer Real
Estate or any portion thereof have heretofore been delivered
by Seller to Buyer or made available for inspection by Buyer,
receipt of which is hereby acknowledged by Buyer.
SECTION 5.07. Leases. As of the date of this Agreement, Seller
is neither a tenant nor a licensee under any real property
leases or licenses which (a) are to be transferred and
assigned to Buyer on the Closing Date and (b) (i) provide for
annual payments of more than $100,000 or (ii) are material to
the Auctioned Assets.
SECTION 5.08. Certain Contracts and Arrangements. (a) Except
for (i) any contract or agreement listed on Schedule
2.02(a)(iv) or Schedule 5.08(a) and (ii) Contracts which will
expire prior to the Closing Date or that are permitted to be
entered into under this Agreement, Seller is not a party to
any contract which is material to the business or operations
of the Auctioned Assets. Seller has made available to Buyer
for inspection true and complete copies of all contracts
listed on Schedule 2.02(a)(iv) or Schedule 5.08(a) and each of
the NYPA Agreements.
(b) Each Contract (i) constitutes a valid and binding
obligation of Seller, and, to the knowledge of Seller,
constitutes a valid and binding obligation of the other
parties thereto, (ii) to the knowledge of Seller, is in full
force and effect and (iii) other than Contracts covered by
Section 2.04, to the knowledge of Seller, may be transferred
to 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, except for such breaches,
forfeitures or impairments which would not, individually or in
the aggregate, create a Material Adverse Effect.
(c) There is not, under any of the Contracts or any of the
NYPA Agreements, any default or event which, with notice or
lapse of time or both, would constitute a default by Seller,
except for such events of default and other events as to which
requisite waivers or consents have been obtained or which
would not, individually or in the aggregate, create a Material
Adverse Effect.
SECTION 5.09. Legal Proceedings. Except as set forth on
Schedule 5.09 or in the Filed Seller SEC Documents, as of the
date of this Agreement, there are no claims, actions,
proceedings or investigations pending or, to the knowledge of
Seller, threatened against or relating to Seller which would,
individually or in the aggregate, be reasonably expected to
create a Material Adverse Effect. With respect to the business
or operations of the Auctioned Assets, Seller is not, as of
the date of this Agreement, subject to any outstanding
judgment, rule, order, writ, injunction or decree of any
court, governmental or regulatory authority which would create
a Material Adverse Effect. The representations and warranties
of Seller set forth in this Section 5.09 shall not apply to,
and do not cover, any environmental matters which, with
respect to any representations and warranties of Seller, are
exclusively governed by Section 5.11.
SECTION 5.10. Permits; Compliance with Law. (a) Except as set
forth on Schedule 5.10(a)(i), Seller holds, and is in
compliance with, all Permits necessary to conduct the business
and operations of the Auctioned Assets as currently conducted,
and, to the knowledge of Seller, Seller is otherwise in
compliance with all laws, statutes, orders, rules,
regulations, ordinances or judgments of any Governmental
Authority applicable to the business and operations of the
Auctioned Assets, except for such failures to hold or comply
with such Permits, or such failures to be in compliance with
such laws, statutes, orders, rules, regulations, ordinances or
judgments, which would not, individually or in the aggregate,
create a Material Adverse Effect. Except as set forth on
Schedule 5.10(a)(ii), Seller has not received any written
notification that it is in violation of any of such Permits or
laws, statutes, orders, rules, regulations, ordinances or
judgments, except for notifications of violations which would
not, individually or in the aggregate, create a Material
Adverse Effect. The representations and warranties of Seller
set forth in this Section 5.10 shall not apply to, and do not
cover, any environmental matters which, with respect to any
representations and warranties of Seller, are exclusively
governed by Section 5.11.
(b) Notwithstanding the last sentence of Section 5.10(a),
except as set forth on Schedule 5.10(b), there are no material
Permits or material Environmental Permits that, in each case,
are not Transferable Permits and are required for Buyer to
conduct the business and operations of the Auctioned Assets as
currently conducted.
SECTION 5.11. Environmental Matters. (a) Except as set forth
in Schedule 5.11 or disclosed in the Filed Seller SEC
Documents, Seller holds, and is in compliance with, the
Environmental Permits required for Seller to conduct the
business and operations of the Auctioned Assets as currently
conducted under applicable Environmental Laws, and, to the
knowledge of Seller, Seller is otherwise in compliance with
applicable Environmental Laws with respect to the business and
operations of the Auctioned Assets, except for such failures
to hold or comply with such Environmental Permits, or such
failures to be in compliance with such Environmental Laws,
which would not, individually or in the aggregate, create a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, Seller has not received any
written notice of violation of any Environmental Law or any
written request for information with respect thereto, or been
notified that it is a potentially responsible party under the
Federal Comprehensive Environmental Response, Compensation,
and Liability Act or any similar state law with respect to any
real property included in the Buyer Real Estate or in any
lease forming part of the Auctioned Assets, except for such
matters under such laws as would not, individually or in the
aggregate, create a Material Adverse Effect.
(c) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, with respect to the business and
operations of the Auctioned Assets, Seller is not subject to
any outstanding judgment, decree or judicial order relating to
compliance with any Environmental Law or to investigation or
cleanup of Hazardous Substances under any applicable
Environmental Law, except for (i) the Seller Consent Orders
and (ii) such judgments, decrees or judicial orders that would
not, individually or in the aggregate, create a Material
Adverse Effect.
(d) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, as of the date of this Agreement,
there are no claims, actions, proceedings or investigations
pending, or to the knowledge of Seller, threatened against or
relating to Seller, with respect to the exposure at the
Auctioned Assets of any person to Hazardous Substances, which,
if adversely determined, would, individually or in the
aggregate, create a Material Adverse Effect.
SECTION 5.12. Labor Matters. Seller has previously made
available to Buyer copies of all collective bargaining
agreements to which Seller is a party or is subject and which
relate to the business or operations of the Auctioned Assets.
With respect to the business and operations of the Auctioned
Assets, as of the date of this Agreement, (a) Seller is in
compliance with all applicable laws regarding employment and
employment practices, terms and conditions of employment and
wages and hours, (b) Seller has not received written notice of
any unfair labor practice complaint against Seller pending
before the National Labor Relations Board, (c) there is no
labor strike, slowdown or stoppage actually pending or, to the
knowledge of Seller, threatened against or affecting Seller,
(d) Seller has not received notice that any representation
petition respecting the employees of Seller has been filed
with the National Labor Relations Board, (e) no 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, 1996, except, in the case of each of the foregoing clauses
(a) through (f), for such matters as would not, individually
or in the aggregate, create a Material Adverse Effect.
SECTION 5.13. ERISA; Benefit Plans. Schedule 5.13 sets forth a
list of all material deferred compensation, profit-sharing,
retirement and pension plans and all material bonus and other
material employee benefit or fringe benefit plans maintained,
or with respect to which contributions have been made, by
Seller with respect to current or former employees employed in
connection with the power generation operations of the
Generating Plants and the Gas Turbines (collectively, "Benefit
Plans"). Seller and each 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 (an "ERISA Affiliate") 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 which is an "employee pension
benefit plan" as defined in Section 3(2) of ERISA and each
such plan is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, except
for such failures to fulfill such obligations or comply with
such provisions which would not, individually or in the
aggregate, create a Material Adverse Effect. Neither Seller
nor any ERISA Affiliate has incurred any liability under
Section 4062(b) of ERISA, or any withdrawal liability under
Section 4201 of ERISA, to the Pension Benefit Guaranty
Corporation in connection with any Benefit Plan which is
subject to Title IV of ERISA which liability remains
outstanding, and there has not been any reportable event (as
defined in Section 4043 of ERISA) with respect to any such
Benefit Plan (other than a reportable event with respect to
which the 30-day notice requirement has been waived by the
PBGC). Neither Seller nor any ERISA Affiliate or parent
corporation, within the meaning of Section 4069(b) or Section
4212(c) of ERISA, has engaged in any transaction, within the
meaning of Section 4069(b) or Section 4212(c) of ERISA. No
Benefit Plan and no "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) maintained by Seller or any
ERISA Affiliate or to which Seller or any ERISA Affiliate has
contributed is a multiemployer plan.
SECTION 5.14. Taxes. With respect to the Auctioned Assets and
trades or businesses associated with the Auctioned Assets, (a)
all Tax Returns required to be filed have been filed and (b)
all Taxes shown to be due on such Tax Returns, and all Taxes
otherwise owed, have been paid in full, except to the extent
that any failure to file or any failure to pay any Taxes would
not, individually or in the aggregate, create a Material
Adverse Effect. No written notice of deficiency or assessment
has been received from any taxing authority with respect to
liabilities for Taxes of Seller in respect of the Auctioned
Assets which has not been fully paid or finally settled or
which is not being contested in good faith through appropriate
proceedings, except for any such notices regarding Taxes which
would not, individually or in the aggregate, create a Material
Adverse Effect. There are no outstanding agreements or waivers
extending the applicable statutory periods of limitation for
Taxes associated with the Auctioned Assets for any period,
except for any such agreements or waivers which would not,
individually or in the aggregate, create a Material Adverse
Effect.
SECTION 5.15. Independent Engineering Assessments. (a) Seller
has reviewed the 1998 assessments prepared by Stone & ▇▇▇▇▇▇▇
with respect to the Generating Plants and the Gas Turbines
(the "Independent Engineering Assessments"), and, except as
set forth on Schedule 5.15(a), to the knowledge of Seller, as
of the date of the Independent Engineering Assessments, there
was no untrue statement of a material fact or omission of any
material fact therein that would reasonably suggest that the
condition of the Generating Plants and the Gas Turbines, taken
as a whole, as of such date was materially and adversely
different from that described in such Independent Engineering
Assessments.
(b) Except as set forth on Schedule 5.15(b), since the date of
the Independent Engineering Assessments, there has not been,
subject to ordinary wear and tear and to routine maintenance,
any casualty, physical damage, destruction or physical loss
with respect to, or, to the knowledge of Seller, any adverse
change in the physical condition of, any Generating Plant or
Gas Turbine, except for such casualty, physical damage,
destruction, physical loss or adverse change which would not,
individually or in the aggregate, create a Material Adverse
Effect.
SECTION 5.16. Undisclosed Liabilities. With respect to the
Auctioned Assets, there are no liabilities or obligations of
any nature or kind (absolute, accrued, contingent or
otherwise) that would have been required to be set forth on a
balance sheet in respect of the Auctioned Assets or in the
notes thereto prepared in accordance with GAAP, as applied by
Seller in connection with its December 31, 1997 balance sheet,
except for any such liabilities or obligations which (a) are
disclosed in or contemplated or permitted by this Agreement or
the Ancillary Agreements (including the Assumed Obligations),
(b) are disclosed in the Offering Memorandum, (c) are
disclosed in the Filed Seller SEC Documents, (d) have been
incurred in the ordinary course of business, (e) are disclosed
on Schedule 5.16 or (f) which would not, individually or in
the aggregate, create a Material Adverse Effect.
SECTION 5.17. Brokers. 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 Seller, except ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated, which is acting for and at the expense of
Seller.
SECTION 5.18. Insurance. Seller carries policies of insurance
covering fire, workers' compensation, property all-risk,
comprehensive bodily injury, property damage liability,
automobile liability, product liability, completed operations,
explosion, collapse, contractual liability, personal injury
liability and other forms of insurance relating to the
Auctioned Assets, or otherwise self-insures in accordance with
all statutory and regulatory criteria against any such
liabilities, which insurance is in such amounts, has such
deductibles and retentions and is underwritten by such
companies as would be obtained by a reasonably prudent
electric power business.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING SOLD
AND TRANSFERRED "AS IS, WHERE IS", AND SELLER IS NOT MAKING
ANY OTHER REPRESENTATIONS OR WARRANTIES WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH AUCTIONED
ASSETS OR WITH RESPECT TO THIS AGREEMENT OR THE ANCILLARY
AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
INCLUDING, IN PARTICULAR WITH RESPECT TO THE AUCTIONED ASSETS,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED BY SELLER AND WAIVED BY BUYER. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SELLER MAKES NO REPRESENTATION OR
WARRANTY WITH RESPECT TO THE INFORMATION SET FORTH IN, OR
CONTEMPLATED BY, THE OFFERING MEMORANDUM (EXCEPT TO THE EXTENT
EXPRESSLY INCORPORATED BY REFERENCE INTO THIS AGREEMENT).
ARTICLE VI
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
SECTION 6.01. Organization. Buyer is a limited partnership
duly formed, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its properties and to
carry on its business as is now being conducted. Buyer shall
be duly qualified and licensed to do business as a foreign
corporation and is in good standing in the State of New York
on or prior to the Closing Date.
SECTION 6.02. Authority Relative to This Agreement. Buyer has
all necessary power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is party
and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Buyer of this Agreement
and such Ancillary Agreements and the consummation by Buyer of
the transactions contemplated hereby and thereby have been
duly and validly authorized by the Board of Directors of the
general partner of Buyer and no other proceedings on the part
of Buyer are necessary to authorize this Agreement or such
Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. This Agreement and such
Ancillary Agreements have been duly and validly executed and
delivered by Buyer and, assuming that this Agreement and the
Ancillary Agreements constitute valid and binding agreements
of Seller and each other party thereto, subject to the receipt
of the Buyer Required Regulatory Approvals and the Seller
Required Regulatory Approvals, this Agreement and the
Ancillary Agreements constitute valid and binding agreements
of Buyer, enforceable against Buyer in accordance with their
respective terms.
SECTION 6.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Buyer Required Regulatory Approvals
and the Seller Required Regulatory Approvals, neither the
execution and delivery of this Agreement or the Ancillary
Agreements to which it is party by Buyer nor the purchase by
Buyer of the Auctioned Assets pursuant to this Agreement will
(i) conflict with or result in any breach of any provision of
the limited partnership agreement (or other similar governing
documents) of Buyer, (ii) result in a default (or give rise to
any right of termination, cancelation or acceleration) under
any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Buyer or any of its
subsidiaries is a party or by which any of their respective
assets may be bound or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to
Buyer, or any of its assets, except in the case of clauses
(ii) and (iii) for such failures to obtain a necessary
consent, defaults and violations which would not, individually
or in the aggregate, have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated
by, and discharge its obligations under, this Agreement and
the Ancillary Agreements (a "Buyer Material Adverse Effect").
(b) Except for (i) approval of the PSC pursuant to ss. 70 of
the Public Service Law of the State of New York, of the
transfer to Buyer of the Auctioned Assets, (ii) the filings by
Buyer and Seller required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act,
(iii) application by Buyer to, and the approval of, FERC under
(A) Section 203 of the Federal Power Act with respect to the
transfer of Auctioned Assets constituting jurisdictional
assets under the Federal Power Act and (B) Section 205 of the
Federal Power Act with respect to (1) each Continuing Site
Agreement and any wholesale power sales agreement to be
entered into by Seller and Buyer, including the Transition
Capacity Agreement, and (2) authorization to sell capacity and
energy from Generating Plants and Gas Turbines at market-based
rates (provided, however, that Buyer acknowledges that
"market- based rates" for the purpose of this Agreement means
rates that are subject to any bid cap, price limitation or
other market power mitigation measure imposed by FERC or PSC
in respect of the New York State or New York City wholesale
and retail energy and capacity electric power markets or any
other restriction imposed by FERC or PSC with respect to the
power generation operations and assets of Buyer, including the
FERC Order Accepting Market Power Mitigation Measures dated
September 22, 1998, as modified (Docket No. ER98-3169-000)
(the "Mitigation Measures")), (iv) qualification of Buyer,
with respect to the Auctioned Assets, as an exempt wholesale
generator under the Energy Policy Act of 1992, (v) the
issuance of approval by the New York City Department of
Buildings and, to the extent required, the New York City
Department of Business Services of the tax lot subdivision
contemplated by this Agreement in a form suitable for
submission to the New York City Department of Finance for the
issuance of tax lot numbers and (vi) obtaining the Revocable
Consent from the City of New York (collectively, the "Buyer
Required Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or
approval of any Governmental Authority is necessary for the
consummation by Buyer of the transactions contemplated hereby
or by the Ancillary Agreements, other than such declarations,
filings, registrations, notices, authorizations, consents or
approvals (A) which, if not obtained or made would not,
individually or in the aggregate, have a Buyer Material
Adverse Effect or (B) which relate to the Transferable
Permits.
(c) To the knowledge of Buyer, there is no reason that it
should fail to obtain the Buyer Required Regulatory Approvals.
SECTION 6.04. Availability of Funds. Buyer will have
sufficient funds available to it or will have received binding
written commitments (copies of which will be delivered to
Seller when available) from one or more nationally recognized
financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price and Estimated
Adjustment Amount.
SECTION 6.05. Brokers. 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 Buyer.
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the Auctioned
Assets. (a) Except with the prior written consent of Buyer
(such consent not to be unreasonably withheld) or as required
to effect the purchase and sale of the Auctioned Assets and
related transactions contemplated by this Agreement, during
the period from the date of this Agreement to the Closing
Date, Seller will operate the Auctioned Assets in the usual,
regular and ordinary course and in accordance with good
industry practice and applicable legal requirements, and
continue to pay accounts payable which relate to the Auctioned
Assets in a timely manner, consistent with past practice.
(b) Notwithstanding the foregoing, except as contemplated in
this Agreement or the Ancillary Agreements, prior to the
Closing Date, without the prior written consent of Buyer (such
consent not to be unreasonably withheld), Seller will not:
(i) except for Permitted Exceptions, grant any Encumbrance on
the Auctioned Assets securing any indebtedness for borrowed money or
guarantee or other liability for the obligations of any person;
(ii) make any material change in the levels of fuel inventory
and supplies, materials and spare parts inventory customarily
maintained by Seller with respect to the Auctioned Assets, other
than consistent with past practice (including the use of spare parts
in connection with certain power generation assets of Seller
described in the Offering Memorandum other than the Generating
Plants or Gas Turbines);
(iii) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Auctioned Assets, other than assets that become
obsolete or assets used, consumed or replaced in the ordinary course
of business consistent with past practice (including the use of
spare parts in connection with certain power generation assets of
Seller described in the Offering Memorandum other than the
Generating Plants or Gas Turbines);
(iv) terminate, materially extend or otherwise materially
amend any of the Contracts (other than in accordance with their
respective terms) or waive any default by, or release, settle or
compromise any material claim against, any other party thereto;
(v) amend any of the Transferable Permits, other than (A)
Transferable Permits not material to the operations of the Auctioned
Assets as currently conducted, (B) as reasonably necessary to
complete the transfer of Permits as contemplated hereby, (C) routine
renewals or non-material modifications or amendments and (D)
modifications, alterations and amendments contemplated by Section
7.03(b);
(vi) enter into any Contract for the purchase, sale or storage
of fuel with respect to the Auctioned Assets (whether commodity or
transportation) with a term in excess of 12 months, if the aggregate
future liability or receivable outstanding on the date for
measurement for the purpose of this covenant for all such Contracts
would be in excess of $2 million, not including any such Contract
terminable by notice of not more than 30 days without penalty or
cost (other than de minimis administrative costs); provided,
however, that Seller may enter into Contracts for the storage of
fuel with respect to the Auctioned Assets with a term ending not
later than December 31, 2000 and otherwise on terms consistent with
Seller's past practice;
(vii) (A) establish, adopt, enter into or amend any Collective
Bargaining Agreement or Benefits Plans, except (1) if such action
would not create a Material Adverse Effect or (2) as required under
applicable law or under the terms of any Collective Bargaining
Agreement or (B) grant to any Affected Employee any increase in
compensation, except (1) in the ordinary course of business
consistent with past practice or (2) to the extent required by the
terms of any Collective Bargaining Agreement, employment agreement
in effect as of the date of this Agreement or applicable law;
(viii) enter into any Contract with respect to the Auctioned
Assets for goods or services not addressed in clauses (i) through
(vii) with a term in excess of 12 months, if the aggregate future
liability or receivable outstanding on the date for measurement for
the purpose of this covenant for all such Contracts would be in
excess of $2 million, not including any such Contract terminable by
notice of not more than 30 days without penalty or cost (other than
de minimis administrative costs); provided, however, that
notwithstanding any other provision of this Agreement to the
contrary, Seller may (A) enter into any Contract reasonably
necessary to effect the physical, legal or operational separation of
the sites on which the Auctioned Assets are located or to otherwise
implement the change of ownership contemplated hereby, or
subdivision, of such sites or implement the provisions of the
Ancillary Agreements and (B) enter into and record the Declarations
of Subdivision Easements; or
(ix) enter into any Contract with respect to the Auctioned
Assets relating to any of the transactions set forth in the
foregoing clauses (i) through (viii).
(c) Without limiting the generality of Sections 7.01(a) and
(b), to the extent Section 7.01(a) or (b) prohibits Seller
from entering into any Contract for goods and services in
connection with maintenance or capital expenditures, Buyer
agrees that Seller may request Buyer's consent to enter into
such Contract, such consent not to be unreasonably withheld,
and to the extent Buyer so consents, all liabilities and
obligations under such Contract shall constitute Assumed
Obligations and Buyer shall otherwise reimburse Seller for all
its expenditures thereunder.
(d) Notwithstanding anything in this Section 7.01 to the
contrary, Seller may take any action, incur any expense or
enter into any obligation with respect to the Auctioned Assets
to the extent that (i) all obligations and liabilities arising
with respect thereto do not constitute Assumed Obligations or
(ii) Seller otherwise provides that such obligations and
liabilities shall not be assumed or retained by Buyer.
(e) Notwithstanding anything in this Section 7.01 to the
contrary, Seller may (i) amend the NYPA Operating Agreement in
order to (A) provide NYPA with the use of the fuel handling
facilities related to the A-10 dock at Astoria for fuel oil
deliveries in accordance with historic fuel deliveries to NYPA
at such dock, (B) establish procedures for scheduling such
fuel oil deliveries to provide a fair allocation of the right
to use such fuel handling facilities, (C) provide for
reimbursement of NYPA for incremental, reasonable fuel costs
incurred by NYPA to obtain replacement fuel when Buyer fails
to satisfy its obligations under the NYPA Agreements assumed
pursuant to Section 2.03(a)(xii) and relating to the
obligations described in clause (A) or clause (B) above and
(D) provide for the installation by NYPA of water meters and
the allocation of charges for water as between NYPA and Buyer
based on readings therefrom and (ii) obtain title to the
machinery, equipment, facilities, furniture and other personal
property listed on Schedule 2.02(a)(iii)(D), and Buyer agrees
that the Assumed Seller Obligations under NYPA Agreements
shall be deemed amended accordingly.
SECTION 7.02. Access to Information. (a) Between the date of
this Agreement and the Closing Date, Seller will, subject to
the Confidentiality Agreement, during ordinary business hours
and upon reasonable notice (i) give Buyer and its
representatives reasonable access (A) to all books, records,
plants, offices and other facilities and properties
constituting the Auctioned Assets, including for the purpose
of observing the operation by Seller of the Auctioned Assets
and (B) to the Auctioned Assets that are not located at the
Generating Plants or Gas Turbines for the purpose of preparing
to store spare parts after the Closing, (ii) permit Buyer to
make such reasonable inspections thereof as Buyer may
reasonably request, (iii) furnish Buyer with such financial
and operating data and other information with respect to the
Auctioned Assets as Buyer may from time to time reasonably
request, (iv) furnish Buyer upon request a copy of each
material report, schedule or other document with respect to
the Auctioned Assets filed by Seller with, or received by
Seller from, the PSC or FERC; provided, however, that (A) any
such activities shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Auctioned
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 Buyer with (1) any
information or access which Seller is under a legal obligation
not to supply or (2) any information which Seller has
previously supplied to Buyer. Notwithstanding anything in this
Section 7.02 to the contrary, (I) Seller will not be required
to provide such information or access to any employee records
other than Transferring Employee Records, (II) Buyer shall not
have the right to perform or conduct any environmental
sampling or testing at, in, on, around or underneath the
Auctioned Assets and (III) Seller shall not be required to
provide such access or information with respect to any
Retained Asset or Retained Liabilities.
(b) Unless otherwise agreed to in writing by Buyer, Seller
shall, for a period commencing on the Closing Date and
terminating three years after the Closing Date, keep
confidential and shall cause its representatives to keep
confidential all Confidential Information (as defined in the
Confidentiality Agreement) on the terms set forth in the
Confidentiality Agreement. Except as contemplated by the
following sentence, Seller shall not release any person from
any confidentiality agreement now existing with respect solely
to the Auctioned Assets or waive or amend any provision
thereof. After the Closing Date, upon reasonable request of
Buyer, Seller shall, to the maximum extent permitted by law
and the applicable Bidder Confidentiality Agreement (as
defined below), appoint Buyer to be Seller's representative
and agent in respect of confidential information relating to
the Auctioned Assets under the confidentiality agreements
("Bidder Confidentiality Agreements") between Seller and
prospective purchasers of certain generation assets of Seller
of which the Auctioned Assets form part.
(c) From and after the Closing Date, Buyer shall retain all
Operating Records (whether in electronic form or otherwise)
relating to the Auctioned Assets on or prior to the Closing
Date. Buyer also agrees that, from and after the Closing Date,
Seller shall have the right, upon reasonable request to Buyer,
to receive from Buyer copies of any Operating Records or other
information in Buyer's possession relating to the Auctioned
Assets on or prior to the Closing Date and required by Seller
in order to comply with applicable law. Seller shall reimburse
Buyer for its reasonable costs and expenses incurred in
connection with the foregoing sentence.
SECTION 7.03. Consents and Approvals; Transferable Permits.
(a) Seller and Buyer shall cooperate with each other and (i)
prepare and file (or otherwise effect) as soon as practicable
all applications, notices, petitions and filings with respect
to and (ii) use their reasonable best efforts (including
negotiating in good faith modifications and amendments to this
Agreement and the Ancillary Agreements) to obtain (A) the
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals and (B) any other consents, approvals or
authorizations of any other Governmental Authorities or third
parties that are necessary to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements.
Without limiting the generality of the foregoing, (1) each
Party agrees to, upon the other Party's request, support such
other Party's applications for regulatory approvals of the
purchase and sale of the Auctioned Assets contemplated by this
Agreement, (2) Buyer agrees not to seek any relief from, or
modifications or amendments in respect of, any bid cap, price
limitation or other market power mitigation measure or other
restriction with respect to any power generation operations
and assets described in or contemplated by Section
6.03(b)(iii)(B)(2) until after the Closing Date and (3) Buyer
and Seller agree to defend any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the Ancillary Agreements, or the
consummation of the transactions contemplated hereby or
thereby, including seeking to have any stay or temporary
restraining order entered by any Governmental Authority
vacated or reversed.
(b) Upon execution of this Agreement, Seller shall commence
the process of transferring to Buyer the Transferable Permits,
including completing and filing applications and related
documents with the appropriate Governmental Authorities.
Seller hereby reserves the right to modify, alter or amend any
Transferable Permit or to refuse to correct violations or
deficiencies in respect of any Transferable Permit as long as
such modification, alteration, amendment or refusal would not,
individually or in the aggregate, create a Material Adverse
Effect. Seller shall use its reasonable best efforts to give
notice to Buyer of any modification, alteration or amendment
to any Transferable Permit.
(c) Seller shall use its reasonable best efforts to cooperate
with Buyer in the transfer of Transferable Permits to Buyer by
Closing. If the transfer of any Transferable Permit cannot be
completed by Closing, Buyer is hereby authorized, but not
required, to act as Seller's representative and agent in
respect of such Transferable Permit and to do all things
necessary for effecting transfer of such Transferable Permit
as soon after the Closing as is practicable, with Seller
remaining the Transferable Permit "holder of record" in such
case until such transfer is completed. In the case of each
such Transferable Permit, Seller shall, to the maximum extent
permitted by law and such Transferable Permit, enter into such
reasonable arrangements with Buyer as are necessary to provide
Buyer with the benefits and obligations of such Transferable
Permit. If Buyer is able to complete the transfer of any
Transferable Permit after Closing without the occurrence of
any event that, if such event had occurred between the
execution of this Agreement and the Closing, would have
created, individually or in the aggregate, a Material Adverse
Effect, Seller may substitute Buyer in its place and stead as
the Party responsible for completing the transfer of such
Transferable Permit.
SECTION 7.04. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the Parties will use its
reasonable best efforts to take, or cause to be taken, as soon
as possible, all action, and to do, or cause to be done, as
soon as possible, all things necessary, proper or advisable
under applicable laws and regulations to consummate the sale
of the Auctioned Assets pursuant to this Agreement as soon as
possible, including using its reasonable best efforts to
ensure satisfaction of the conditions precedent to each
Party's obligations hereunder. Prior to Buyer's submission of
any application with a Governmental Authority for a regulatory
approval, Buyer shall submit such application to Seller for
review and comment and Buyer shall incorporate into such
application any revisions reasonably requested by Seller.
Neither of the Parties will, without prior written consent of
the other Party, take or fail to take, or permit their
respective Affiliates to take or fail to take, any action,
which would reasonably be expected to prevent or materially
impede, interfere with or delay the consummation, as soon as
possible, of the transactions contemplated by this Agreement
or the Ancillary Agreements. Without limiting the generality
of the foregoing, each of the Parties shall use its reasonable
best efforts to negotiate in good faith as soon as possible
after the date of this Agreement, and enter into (i) the A-0
License and the A-10 License, the terms of which shall be
substantially as set forth in Exhibits H and F, respectively,
(ii) to the extent required to achieve subdivision of the
Astoria site, one or more contracts, agreements or other
arrangements satisfactory to the New York City Fire Department
regarding fire prevention at the Astoria site and (iii) any
other agreement reasonably necessary to consummate the sale of
the Auctioned Assets pursuant to this Agreement as soon as
possible.
(b) From time to time after the date hereof, without further
consideration and at its own expense, (i) Seller will execute
and deliver such instruments of assignment or conveyance as
Buyer may reasonably request to more effectively vest in Buyer
Seller's title to the Auctioned Assets (subject to Permitted
Exceptions and the other terms of this Agreement) and (ii)
Buyer will execute and deliver such instruments of assumption
as Seller may reasonably request in order to more effectively
consummate the sale of the Auctioned Assets and the assumption
of the Assumed Obligations pursuant to this Agreement.
(c) Seller shall not, and shall use its reasonable best
efforts to cause its Affiliates not to, sponsor or support any
recommendation or application to effect prior to April 1, 2002
(i) a reduction in the locational generation capacity
requirement that 80% of New York City peak electric loads must
be met with in-City generation capacity, as in effect as of
the date of this Agreement, unless such reduction is justified
by a significant change in the transmission import capability
into New York City whether as a result of actions by Seller or
others, (ii) a reduction in the $105/kW-year bid and price cap
in respect of capacity under the Mitigation Measures, as in
effect as of the date of this Agreement or (iii) a change in
the method of determining required system capability set forth
in NYPP Billing Procedure 4-11 (Installed Reserve
Requirements), as in effect as of the date of this Agreement
that would reduce the installed reserve requirements for the
winter capability period applicable to summer peaking systems
if such reduction would also reduce the annual price for
installed capacity that Buyer could otherwise obtain.
(d) Seller shall join or support Buyer's application to the
PSC for the certification required under Section 32(c) of the
Public Utility Holding Company Act of 1935 in order for Buyer
to obtain qualification, with respect to the Auctioned Assets,
as an exempt wholesale generator under the Energy Policy Act
of 1992.
(e) Seller and Buyer shall cooperate in good faith to
establish a transition committee to consider operational and
business issues related to the purchase and sale of the
Auctioned Assets.
(f) Prior to the Closing Date, Seller shall cooperate in good
faith with Buyer to enable Buyer to obtain insurance in
respect of the Auctioned Assets comparable to that maintained
by Seller as of the date of this Agreement.
(g) Seller and Buyer shall cooperate in good faith to enable
Buyer to obtain fuel storage capacity with respect to the
Auctioned Assets.
SECTION 7.05. Public Statements. The Parties shall consult
with each other prior to issuing any public announcement,
statement or other disclosure with respect to this Agreement,
the Ancillary Agreements or the transactions contemplated
hereby or thereby, including any statement appearing in any
filing contemplated hereby or thereby, and shall not issue any
such public announcement, statement or other disclosure prior
to such consultation, except as may be required by law.
SECTION 7.06. Tax Matters. (a) All transfer and sales taxes
(including any petroleum business taxes and similar excise
taxes on sales of petroleum based products) incurred in
connection with this Agreement and the transactions
contemplated hereby shall be borne by Buyer. Buyer shall
prepare and file in a timely manner any and all Tax Returns or
other documentation relating to such taxes; provided, however,
that, to the extent required by applicable law, Seller will
join in the execution of any such Tax Returns or other
documentation relating to any such taxes. Buyer shall provide
to Seller copies of each Tax Return described in the proviso
in the preceding sentence at least 30 days prior to the date
such Tax Return is required to be filed.
(b) At Seller's election, but on no less than 10 Business
Days' notice to Buyer, the transfer of the Auctioned Assets
and the receipt of the Purchase Price shall be made through a
qualified intermediary in a manner satisfying the requirements
of Treasury Regulation Section 1.1031(k)-1(g), so long as such
election by Seller does not create a Material Adverse Effect
and Seller indemnifies Buyer for its additional costs and
expenses incurred by reason of such election.
(c) Each Party shall provide the other Party with such
assistance as may reasonably be requested by the other Party
in connection with the preparation of any Tax Return, any
audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability
for Taxes, and each Party shall retain and provide the other
Party with any records or information which may be relevant to
such return, audit, examination or proceedings. Any
information obtained pursuant to this Section 7.06(c) or
pursuant to any other Section hereof providing for the sharing
of information or review of any Tax Return or other instrument
relating to Taxes shall be kept confidential by the parties
hereto.
(d) If either Buyer or Seller receives a refund of Taxes in
respect of the Auctioned Assets for a taxable period including
the Closing Date, Buyer shall pay to Seller the portion of any
such refund attributable to the portion of such taxable period
prior to the Closing Date, and Seller shall pay to Buyer the
portion of any such refund attributable to the portion of such
taxable period on and after the Closing Date.
SECTION 7.07. Bulk Sales or Transfer Laws. Buyer acknowledges
that Seller will not comply with the provisions of any bulk
sales or transfer laws of any jurisdiction in connection with
the transactions contemplated by this Agreement. Buyer hereby
waives compliance by Seller with the provisions of the bulk
sales or transfer laws of all applicable jurisdictions.
SECTION 7.08. Storage. Seller shall store for Buyer the
Auctioned Assets described in the second sentence of Section
2.01 until the date that is six months after the Closing Date
or, in respect of all or a portion of such Auctioned Assets,
until one or more earlier dates proposed by Buyer with
reasonable advance notice, which schedule shall be reasonably
acceptable to Seller. Buyer agrees to reimburse Seller for its
reasonable costs and expenses in connection with such storage.
Buyer agrees that Seller shall have no responsibility or
liability for the actual removal of such Auctioned Assets from
the actual storage location, and that Buyer shall have sole
responsibility therefor. Notwithstanding the provisions of
Section 10.01, Buyer agrees that Seller shall have no
liability for loss or damage with respect to the matters
contemplated by this Section 7.08 or such Auctioned Assets,
and Buyer agrees to hold each Seller Indemnitee harmless from
and against all loss or damage or Indemnifiable Losses, and to
indemnify each Seller Indemnitee from and against all loss or
damage or Indemnifiable Losses incurred, asserted against or
suffered as a result of any storage or other services provided
by Seller pursuant to this Section 7.08, in each case, except
to the extent any such loss or damage or Indemnifiable Loss
results in whole or in part from the gross negligence or
wilful or wanton acts or omissions to act of any Seller
Indemnitee (or any contractor or subcontractor of Seller).
SECTION 7.09. Information Resources. From the Closing Date
until the date that is three months thereafter, Seller shall
provide Buyer with access to Seller's mainframe computer only
to the extent reasonably necessary to enable Buyer to use the
PPMIS and MMS (in read only mode) systems and applications
solely in connection with the Auctioned Assets. Buyer agrees
that it will not use any such access for any purpose other
than for the use of the PPMIS and MMS systems and applications
solely in connection with the Auctioned Assets. Buyer
acknowledges that, as long as it retains access to Seller's
mainframe computer, Seller, its employees and third parties
may have access to Buyer's information resources systems and
applications (including the PPMIS and MMS systems and
applications served by Seller's mainframe computer).
Notwithstanding the provisions of Section 10.01, Buyer agrees
that Seller shall have no liability or obligation whatsoever
with respect to the matters contemplated by this Section 7.09,
and Buyer agrees to hold each Seller Indemnitee harmless from
and against all loss or damage or Indemnifiable Losses, and to
indemnify each Seller Indemnitee from and against all loss or
damage or Indemnifiable Losses incurred, asserted against or
suffered as a result of Buyer's access to Seller's mainframe
computer pursuant to this Section 7.09, in each case, except
to the extent any such loss or damage or Indemnifiable Loss
results in whole or in part from the gross negligence or
wilful or wanton acts or omissions to act of any Seller
Indemnitee (or any contractor or subcontractor of Seller).
SECTION 7.10. Witness Services. At all times from and after
the Closing Date, each Party shall use reasonable best efforts
to make available to the other Party, upon reasonable written
request, its and its subsidiaries' then current or former
officers, directors, employees (including former employees of
Seller) and agents as witnesses to the extent that (i) such
persons may reasonably be required by such requesting Party in
connection with any claim, action, proceeding or investigation
in which such requesting Party may be involved and (ii) there
is no conflict between Buyer and Seller in such claim, action,
proceeding or investigation. Such other Party shall be
entitled to receive from such requesting Party, upon the
presentation of invoices for such witness services, payments
for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses and direct and indirect costs of
employees who are witnesses, as may be reasonably incurred in
providing such witness services.
SECTION 7.11. Consent Orders. Buyer and Seller agree to
cooperate with each other and NYSDEC to facilitate the entry
of a consent order between NYSDEC and Buyer, wherein Buyer
will agree to assume and perform the Assumed Consent Order
Obligations.
SECTION 7.12. Nitrogen Oxide Allowances. Seller agrees to
negotiate in good faith with NYSDEC for nitrogen oxide
allowances to be allocated to the Auctioned Assets for any
period subsequent to the year 2002.
SECTION 7.13. Trade Names. Seller shall not object to the use
by Buyer of any trade names, trademarks, service marks or
logos (and any rights to and in the same, including any right
to use the same) primarily relating to the Generating
Facilities that contain the words "Astoria", "Gowanus" or
"Narrows".
SECTION 7.14. NYPA Agreements. (a) Seller shall, to the
maximum extent permitted by law and the NYPA Agreements, enter
into such reasonable arrangements with Buyer as are necessary
to provide Buyer with the benefits of Seller's rights and
interests under the NYPA Agreements relating to the Auctioned
Assets and set forth on Schedule 7.14.
(b) Buyer hereby acknowledges that Seller has provided it with
copies of the NYPA Agreements.
SECTION 7.15. Narrows. From the date of this Agreement to the
Closing and notwithstanding anything to the contrary contained
in Section 7.01, Seller shall use its reasonable best efforts
to obtain in the following order of preference (a) (i) fee
title, or (ii) a permanent easement to maintain and operate
the existing Narrows Gas Turbines (the "Narrows Turbines") at
the Narrows Gas Turbine Site in a manner consistent with the
operation by Seller of the Narrows Turbines in the past or (b)
if the options in clause (a) above are not capable of being
obtained within a reasonable period (which period may run
prior to Closing) a long term lease with a lease term of not
less than 20 years having terms reasonably satisfactory to
Buyer that will permit the maintenance and operation of the
Narrows Turbines at the Narrows Gas Turbine Site in a manner
consistent with the operation by Seller of the Narrows
Turbines in the past, in each case in respect of that real
property described on Schedule 7.15. From the Closing until
the third anniversary of the date of this Agreement, Buyer
shall, at its election, either (x) take over Seller's efforts
to obtain such fee title, easement or long term lease (and in
such event Buyer shall keep Seller informed of its efforts,
consult with Seller in its efforts and act in a commercially
reasonable manner in its efforts) and, in the event Buyer has
taken over the efforts referred to above, Seller shall
reimburse Buyer for its reasonable costs and expenses incurred
in pursuing such efforts, or (y) require Seller to continue to
use its reasonable best efforts to obtain such fee title,
easement or long term lease. The amounts paid or payable to
obtain such fee title, easement or long term lease shall be
the responsibility of Seller; provided, however, that the
amounts payable by Seller under this Section 7.15, including
by way of reimbursement to Buyer, shall not exceed $5 million
in the aggregate. Seller's obligations under this Section 7.15
shall cease in all respects upon such third anniversary.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's Obligation
To Effect the Purchase and Sale. The respective obligations of
each Party to effect the purchase and sale of the Auctioned
Assets shall be subject to the satisfaction or waiver by such
Party on or prior to the Closing Date of the following
conditions, unless, in the case of Section 8.01(c) below, the
PSC determines that such condition need not be included or
complied with:
(a) the Seller Required Regulatory Approvals and Buyer
Required Regulatory Approvals, other than the Revocable Consent,
shall have been obtained and all conditions to effectiveness
prescribed therein or otherwise by law, regulation or order shall
have been satisfied; provided, however, that if at the time any
Seller Required Regulatory Approval or Buyer Required Regulatory
Approval is obtained, a Party reasonably expects a request for
rehearing or a challenge thereto to be filed or if a request for
rehearing or a challenge thereto has been filed, in each case,
which, if successful, would cause such Seller Required Regulatory
Approval or Buyer Required Regulatory Approval, as the case may be,
to be reversed, stayed, enjoined, set aside, annulled, suspended or
substantially modified, then such Party may by notice to the other
Party within five Business Days after receipt of such Seller
Required Regulatory Approval or Buyer Required Regulatory Approval,
as the case may be, delay the Closing until the time for requesting
rehearing has expired or until such challenge is decided, in each
case, whether or not any appeal thereof is pending; provided
further, however, that if the Closing is delayed pursuant to the
foregoing provision, the Termination Date shall be automatically
extended for a period of time equal to the period of such delay;
(b) no preliminary or permanent injunction or other order or
decree by any Federal or state court of competent jurisdiction and
no statute or regulation enacted by any Governmental Authority
prohibiting the consummation of the purchase and sale of the
Auctioned Assets (collectively, "Restraints") shall be in effect;
(c) the ISO shall have become operational to the extent
reasonably necessary to monitor market power in respect of the
Auctioned Assets; and
(d) delivery of each Continuing Site Agreement, each
Declaration of Easements Agreement, each Declaration of Subdivision
Easements and each Zoning Lot Development Agreement
to the Title Company for recording.
SECTION 8.02. Conditions Precedent to Obligation of Buyer To
Effect the Purchase and Sale. The obligation of Buyer to
effect the purchase and sale of the Auctioned Assets
contemplated by this Agreement shall be subject to the
satisfaction or waiver by Buyer on or prior to the Closing
Date of the following additional conditions:
(a) Seller shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Seller which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not, individually
or in the aggregate, create a Material Adverse Effect;
(c) 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 officer's knowledge, the conditions set forth in
Sections 8.02(a) and (b) have been satisfied;
(d) all material Permits and Environmental Permits required
for Buyer to conduct the business and operations of the Auctioned
Assets as currently conducted shall have been transferred or will be
transferable to Buyer, or shall have been obtained or will be
obtainable by Buyer, or shall have been made available to Buyer in
accordance with Section 7.03(c), on, prior to or within a reasonable
period of time after the Closing Date;
(e) Buyer shall have received (i) the deeds of conveyance
substantially in the form of Exhibits B-1 and B-2, respectively,
(ii) a Foreign Investment in Real Property Tax Act Certification and
Affidavit substantially in the form of Exhibit C and (iii) an
opinion from ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., General Counsel of Seller or
other counsel reasonably acceptable to Buyer, dated the Closing
Date, substantially in the form set forth in Exhibit D;
(f) execution and delivery by Seller of each of (i) the
Transition Capacity Agreement and the Zoning Lot Development
Agreements and (ii) the A-10 License and the A-0 License, each in a
form reasonably satisfactory to Buyer;
(g) the Title Company shall be willing to issue to Buyer a New
York form of ALTA (1992) Owner's Title Insurance Policy insuring fee
title to the Buyer Real Estate in an amount equal to that portion of
the Purchase Price properly allocable to Buyer Real Estate, subject
only to the Permitted Exceptions;
(h) Buyer shall have received originals of the ALTA/ACSM Land
Title Surveys which include the Buyer Real Estate in addition to
other property, signed by the surveyor with Buyer's name and the
name of not more than one other Party designated by Buyer added to
the certification set forth thereon; and
(i) (x) There shall not be any New York State Governmental
Authority with jurisdiction seeking to prevent Buyer from
operating the Narrows Turbines on the Narrows Gas Turbine Site
in a manner consistent with the operation of the Narrows
Turbines by Seller in the past as a result of the state of
title in respect of the real property described in Schedule
7.15 and (y) if (x) is not satisfied, the presence of the
state of facts in (x) in and of itself and without regard to
any other facts or circumstances, will not have a reasonable
probability of materially and adversely affecting Buyer's
ability to obtain financing for the acquisition of the
Auctioned Assets (it being understood that the obtaining of a
"use permit" or equivalent Permit from the appropriate
Governmental Authority in form and substance reasonably
satisfactory to Buyer in respect of such real property and the
Narrows Turbines by Buyer shall satisfy this condition and the
obtaining of fee title, an easement or long term lease
satisfying the requirements of Section 7.15 shall also satisfy
such condition).
SECTION 8.03. Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale. The obligation of Seller to
effect the purchase and the sale of the Auctioned Assets
contemplated by this Agreement shall be subject to the
satisfaction or waiver by Seller on or prior to the Closing
Date of the following additional conditions:
(a) Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Buyer which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Buyer Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Buyer Material Adverse
Effect;
(c) Seller shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Sections 8.03(a) and (b) have been satisfied;
(d) Seller shall have received an opinion substantially in the
form of Exhibit E dated as of the Closing Date and from counsel
reasonably acceptable to Seller;
(e) execution and delivery by Buyer of each of (i) Transition
Capacity Agreement, the Gowanus Zoning Lot Development Agreement
and, unless executed and delivered prior to the Closing Date, the
Astoria Zoning Lot Development Agreement and (ii) the A-10 License
and the A-0 License, each in a form reasonably satisfactory to
Seller;
(f) Buyer shall have provided evidence in form and substance
reasonably satisfactory to Seller of compliance by Buyer with its
obligations under Article IX;
(g) the Guarantee Agreement shall be in full force and effect;
(h) Guarantor shall have performed in all material respects
its covenants and agreements contained in the Guarantee Agreement
which are required to be performed on or prior to the Closing Date;
(i) the representations and warranties of Guarantor which are
set forth in the Guarantee Agreement shall be true and correct as of
the date of the Guarantee Agreement and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such date), except where
the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality"
or "Guarantor Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Guarantor Material
Adverse Effect (as defined therein);
(j) Seller shall have received a certificate from an
authorized officer of Guarantor, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions
set forth in Sections 8.03(h) and (i) have been satisfied; and
(k) Seller shall have received an opinion substantially in the
form of Exhibit L dated the Closing Date and from counsel reasonably
acceptable to Seller.
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters. (a) Buyer shall offer
equivalent employment at the Auctioned Assets to those
employees of Seller regularly assigned by Seller to work at
the Auctioned Assets on the Closing Date in the job titles and
facilities listed in Schedule 9.01(a)(all such employees
described above and those individuals described in the
following sentence being hereinafter referred to as "Affected
Employees"). Affected Employees include each such employee of
Seller who is not actively at work on the Closing Date due
solely to a temporary short-term absence, whether paid or
unpaid, in accordance with applicable policies of Seller,
including as a result of vacation, holiday, personal time,
leave of absence, union leave, short- or long-term disability
leave, military leave or jury duty. Affected Employees whether
or not they accept an offer of employment from Buyer shall
cease to be employees of Seller on the Closing Date and, to
the extent they accept an offer of employment from Buyer,
their period of employment by Buyer shall begin on the Closing
Date. Seller shall be responsible for any obligation to
provide employee benefits to an Affected Employee prior to
such employee's period of employment by Buyer.
All such offers of employment will be made (x) in accordance
with all applicable laws and regulations, and (y) for
employees represented by Utility Workers' Union of America
AFL-CIO and its Local Union 1-2 ("Local 1-2"), in accordance
with the Local 1-2 Collective Bargaining Agreement (as defined
in Schedule 9.01(b)). Each Affected Employee who becomes
employed by Buyer pursuant to this Section 9.01(a) shall be
referred to herein as a "Continued Employee".
Buyer may commence discussions concerning offers for
employment beginning on the Closing Date to Affected Employees
at any time following the date of this Agreement.
Seller acknowledges and agrees that Buyer may discharge any of
its obligations under this Article IX through one of its
Affiliates; provided, however, that Buyer shall in no event be
relieved from the full liabilities and the full financial
responsibility under this Article IX.
(b) Schedule 9.01(b) sets forth the collective bargaining
agreement, and amendments thereto, to which Seller is a party
in connection with the Auctioned Assets (the "Collective
Bargaining Agreement"). Affected Employees who are included in
the collective bargaining unit covered by the Collective
Bargaining Agreement are referred to herein as "Affected Union
Employees". Each Continued Employee who is an Affected Union
Employee shall be referred to herein as a "Continued Union
Employee". On the Closing Date, Buyer will assume the terms
and conditions of the Collective Bargaining Agreement, except
as set forth in Section 9.02(b) below, as it relates to
Affected Union Employees until the expiration date of the
Collective Bargaining Agreement. Buyer will comply with its
legal obligations with respect to collective bargaining under
Federal labor law for the employees at the Auctioned Assets in
the job titles or related work responsibilities of the
Affected Union Employees, and Buyer will comply with all
applicable obligations thereunder as the new owner of the
Auctioned Assets. Buyer shall recognize Local 1-2 as the
exclusive collective bargaining representative of the
employees at the Auctioned Assets in the job titles or related
work responsibilities of the Affected Union Employees and
Buyer agrees that, should any other business entity
(regardless of its relationship to Buyer) acquire all or a
portion of the Auctioned Assets from Buyer prior to the
expiration date of the Collective Bargaining Agreement, Buyer
will require such business entity to (i) offer employment to
Affected Union Employees employed by Buyer at the Auctioned
Assets immediately prior to the change in ownership, (ii)
recognize Local 1-2 as the exclusive collective bargaining
representative of Buyer's employees at the Auctioned Assets in
the job titles and work responsibilities of the Affected Union
Employees, and (iii) assume the terms and conditions of the
Collective Bargaining Agreement as they relate to Affected
Union Employees from the date of such acquisition through the
expiration date of the Collective Bargaining Agreement.
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service. (a) For not less than three years
following the Closing Date, Buyer shall maintain compensation
(including base pay and bonus compensation) and employee
benefits and employee benefit plans and arrangements for each
Continued Employee who is not a Continued Union Employee (a
"Continued Non-Union Employee") which are at least equivalent
to those provided pursuant to the compensation, employee
benefits and employee benefit plans and arrangements in effect
on the Closing Date for the Affected Employees who are not
Affected Union Employees. Such total compensation shall be
based upon (x) such employee's existing individual base pay,
(y) such employee's authorized overtime, if applicable, and
(z) the average bonus and benefit component for such
employee's salary plan level, as consistently applied by
Seller, apportioned according to such employee's base pay. No
provision of this Agreement shall affect any Continued
Non-Union Employee's status as an employee-at-will.
(b) From the Closing Date until the expiration date of the
Collective Bargaining Agreement, Buyer shall provide to each
Continued Union Employee benefits and employee benefit plans
and arrangements which are equivalent to those provided under
such Collective Bargaining Agreement. Such benefits, plans and
arrangements include the following: (i) hospital, medical,
dental, vision care and prescription drug benefits (including
employee contributions to be made on a pre-tax basis), (ii)
health care and dependent care flexible spending accounts;
(iii) employer-provided basic group term life and accidental
death and dismemberment insurance; (iv) employee-paid group
universal life and spousal and dependent child life insurance;
(v) sick allowance (short term disability) and long term
disability benefits; (vi) business travel accident insurance
and crime protection insurance; (vii) occupational accidental
death insurance; (viii) adoption benefits and child care and
elder care referral benefits; (ix) tuition aid benefits; (x)
vacation and holidays; (xi) employee stock purchase plan
(including employer matching contributions) and (xii) defined
benefit pension and 401(k) plan benefits. In providing such
benefits, Buyer shall have the right, subject to any
applicable laws, to use different providers from those used by
Seller and to establish Buyer's own benefit plans or use
Buyer's existing benefit plans. For purposes hereof, except as
provided in Section 9.04(b), Buyer shall have no obligation to
maintain a fund holding or measured by common stock of
Seller's parent under any of Buyer's plans or arrangements,
notwithstanding any such fund maintained by Seller under its
plans and arrangements.
(c) Continued Employees shall be given credit by Buyer for all
service with Seller and its Affiliates under all existing or
future employee benefit and fringe benefit plans, programs and
arrangements of the Buyer ("Buyer Benefit Plans") in which
they become participants. The service credit given by Buyer
shall be for purposes of eligibility, vesting, eligibility for
early retirement and early retirement subsidies, benefit
accrual and service-related level of benefits. Buyer shall
assume and honor all vacation, sick and personal days accrued
and unused by Continued Employees through the Closing Date in
accordance with Seller's applicable policies and arrangements.
SECTION 9.03. Pension Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect defined benefit pension plans
("Buyer's Pension Plans") intended to be (i) qualified
pursuant to Section 401(a) of the Code and (ii) nonqualified,
in order to provide for benefits which would otherwise be
payable under the applicable qualified plan but for the
application of Sections 401(a)(17) and 415 of the Code,
providing benefits as of the Closing Date identical in all
material respects (except for such changes as may be required
by law) to the benefits provided to them under Seller's
Pension Plans (as defined below), in particular (x) for
Continued Non-Union Employees, such Buyer's Pension Plans to
provide benefits identical in all material respects to those
benefits provided under Seller's Retirement Plan for
Management Employees and Seller's Supplemental Retirement
Income Plan, and (y) for Continued Union Employees, such
Buyer's Pension Plans to provide benefits identical in all
material respects to those provided under Seller's Pension and
Benefits Plan (collectively, "Seller's Pension Plans"), in
each case, as of the Closing Date. Buyer acknowledges and
agrees that one such material respect is to count age after
termination of employment for purposes of satisfying
requirements for early retirement eligibility and early
retirement subsidies.
(b) Continued Employees participating in Seller's Pension
Plans immediately prior to the Closing Date shall become
participants in Buyer's Pension Plans as of the Closing Date.
Without limiting the generality of Section 9.02(c), Continued
Employees shall receive credit for all compensation and
service with Seller (subject to the terms of Seller's Pension
Plans) for purposes of eligibility for participation, vesting,
eligibility for early retirement and early retirement
subsidies and benefit accrual under Buyer's Pension Plans.
Seller shall be responsible for Continued Employees' pension
benefits accrued up to the Closing Date, and Buyer shall be
responsible for pension benefits accrued by such Continued
Employees on and after the Closing Date as provided herein.
Buyer may offset against the accrued benefits determined under
Buyer's Pension Plans the accrued benefits determined under
Seller's Pension Plans. For the purpose of this Section
9.03(b), "accrued benefit" means the amount that would be paid
as a life annuity at normal retirement age irrespective of the
date of actual distribution from either Seller's or Buyer's
Pension Plans. Seller shall make pension distributions to
Continued Employees of the vested portion of their accrued
benefits in accordance with the terms of Seller's Pension
Plans as in effect from time to time. As soon as reasonably
practicable following the Closing Date, Seller shall provide
Buyer a list showing, as of the Closing Date, the accrued
benefit of each Continued Employee under Seller's Pension
Plans.
(c) In the event that any other business entity (regardless of
its relationship to Buyer) acquires all or a portion of the
Auctioned Assets from Buyer at any time prior to the third
anniversary of the Closing Date in the case of Continued
Non-Union Employees and prior to the expiration date of the
Collective Bargaining Agreement in the case of Continued Union
Employees, Buyer will require such entity to maintain the
defined benefit plans, provide the benefits and recognize
compensation and service with Seller and Buyer to the same
extent as Buyer is required under Sections 9.03(a) and (b)
above.
SECTION 9.04. 401(k) Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect tax-qualified defined
contribution plans that include a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code
("Buyer's 401(k) Plans") that will provide benefits that are
identical in all material respects (except for such changes as
may be required by law) to those provided by (i) Seller's
Thrift Savings Plan for Management Employees, in the case of
Continued Non-Union Employees, and (ii) Seller's Retirement
Income Savings Plan for Weekly Employees, in the case of
Continued Union Employees (such Seller plans herein referred
to collectively as "Seller's 401(k) Plans"), in each case, as
of the Closing Date. Each Continued Employee participating in
Seller's 401(k) Plans immediately prior to the Closing Date
shall become a participant in Buyer's 401(k) Plans as of the
Closing Date. Continued Employees shall receive credit for all
service with Seller for purposes of eligibility and vesting
under Buyer's 401(k) Plans.
(b) At such time after the Closing Date as Seller is
reasonably satisfied that Buyer's 401(k) Plans meet the
requirements for qualification under Section 401(a) of the
Code, Seller shall cause to be transferred to Buyer's 401(k)
Plans in a trust-to-trust transfer in common stock of Seller's
parent (as provided in the following sentence) and cash (or
other property reasonably acceptable to Buyer) an amount equal
to the value of the assets held in the accounts of all
Continued Employees (including any outstanding loan balances
of Continued Employees in Seller's 401(k) Plans), subject to
any qualified domestic relations orders. In connection
therewith, Buyer shall establish an investment fund under
Buyer's 401(k) Plans to which shall be transferred the shares
of common stock of Seller's parent (or any successor thereto)
which, as of the date of transfer, are credited to the
accounts of the Continued Employees under Seller's 401(k)
Plans. After the Closing Date and prior to any such transfer,
Buyer shall cooperate with Seller in the administration of
distributions to and loan repayments by Continued Employees.
Prior to such transfer of assets, Seller shall vest any
unvested benefits of Continued Employees under Seller's 401(k)
Plans. Following any such transfer of assets, Buyer shall
assume all obligations and liabilities of Seller under
Seller's 401(k) Plans with respect to such Continued
Employees, and Seller shall have no further liability to Buyer
or any Continued Employee with respect thereto.
SECTION 9.05. Welfare Plans. (a) Continued Employees and their
dependents who are eligible to participate in Seller's current
welfare benefits plans, programs or arrangements shall be
eligible to participate in the welfare benefits plans,
programs or arrangements maintained or established by Buyer
("Buyer's Welfare Plans"), effective as of the Closing Date.
Effective as of the Closing Date, any and all limitations as
to pre-existing conditions and actively-at-work exclusions and
waiting periods under Buyer's Welfare Plans shall be waived by
Buyer with respect to Continued Employees and their eligible
dependents to the extent satisfied under Seller's applicable
Welfare Plans. In addition, effective as of the Closing Date,
Buyer shall cause Buyer's Welfare Plans to recognize any
out-of-pocket health care expenses incurred by Continued
Employees and their eligible dependents prior to the Closing
Date and during the calendar year in which such Closing Date
occurs for purposes of determining their deductibles and
out-of-pocket maximums under Buyer's Welfare Plans. Seller
shall retain responsibility under Seller's welfare plans for
claims relating to expenses incurred by Continued Employees
and their eligible dependents prior to the Closing Date. Buyer
shall have responsibility under Buyer's Welfare Plans for
claims relating to expenses incurred by Continued Employees
and their eligible dependents on and after the Closing Date.
(b) Effective as of the Closing Date, Buyer shall have in
effect health care and dependent care reimbursement account
plans for the benefit of each Continued Employee, the terms of
which shall (i) be identical in all material respects to the
Flexible Reimbursement Account Plans for Management and Weekly
Employees of Seller ("Seller's Reimbursement Account Plans")
as in effect on the Closing Date and (ii) give full effect to,
and continue in effect, salary reduction elections made under
Seller's Reimbursement Account Plans. Prior to the Closing
Date, Seller shall cause the accounts of Continued Employees
under Seller's Reimbursement Account Plans to be segregated
into separate health care and dependent care reimbursement
accounts (the "Segregated Reimbursement Accounts"), and such
Segregated Reimbursement Accounts shall be transferred to and
assumed by Buyer as of the Closing Date.
(c) Buyer shall, subject to any applicable laws, provide a
retiree health program identical in all material respects to
Seller's retiree health program as in effect on the Closing
Date to each Continued Employee who terminates his employment
with Buyer within three years after the Closing Date, in the
case of a Continued Non-Union Employee, and on or prior to the
expiration date of the Collective Bargaining Agreement, in the
case of a Continued Union Employee, and, in each case, who at
the time of such termination of employment satisfies the
eligibility requirements for such retiree health program
provided by Buyer; provided, however, that Seller shall remain
liable, pursuant to Seller's retiree health program, for all
Continued Employees who satisfy, as of the Closing Date, the
eligibility requirements then in effect for Seller's retiree
health program.
SECTION 9.06. Short- and Long-Term Disability. Effective as of
the Closing Date, Buyer shall have in effect short-and
long-term disability plans for the benefit of Continued
Employees, the cost of which to Continued Employees shall be
the same as under, and the terms of which are identical in all
material respects to, Seller's applicable plans as in effect
as of the Closing Date. Any and all waiting periods and
pre-existing condition clauses shall be waived under Buyer's
short- and long-term disability plans with respect to
Continued Employees.
SECTION 9.07. Life Insurance and Accidental Death and
Dismemberment Insurance. Effective as of the Closing Date,
Buyer shall have in effect group term life insurance, group
universal life insurance, accidental death and dismemberment
insurance, occupational accidental death insurance, business
travel accident insurance and crime protection insurance plans
for the benefit of Continued Employees, the cost of which to
Continued Employees shall be the same as under, and terms of
which are identical in all material respects to, Seller's
applicable plans that provide such benefits to Continued
Employees immediately prior to the Closing Date.
SECTION 9.08. Severance. (a) Effective as of the Closing Date,
Buyer shall have in effect a severance plan covering Continued
Non-Union Employees that contains terms identical in all
material respects to those under Seller's Severance Pay Plan
for Management Employees as of the Closing Date.
(b) Buyer shall, subject to any applicable laws, provide a
special separation allowance for any Continued Employee whose
employment with Buyer is terminated involuntarily by Buyer
other than for cause on or prior to, in the case of Continued
Non-Union Employees, three years after the Closing Date and,
in the case of Continued Union Employees, the expiration date
of the Collective Bargaining Agreement. Such allowance shall
be not less than the sum of four weeks pay plus one week pay
for each completed year of service (as determined by
aggregating each affected individual's respective service with
Seller and Buyer) and shall be payable by Buyer (to the extent
not paid pursuant to any Buyer severance plan referenced in
Section 9.08(a)) in a lump sum within 30 days after
termination of employment. In addition, in the case of each
Continued Non-Union Employee described in the first sentence
of this Section 9.08(b), Buyer shall pay (to the extent not
paid pursuant to any Buyer severance plan referenced in
Section 9.08(a)) the Continued Non-Union Employee a lump sum
equal to the excess of (i) the actuarial equivalent of the
Employee's "potential benefit" under the applicable Buyer's
Pension Plans, which such Employee would receive if such
Employee's employment continued until three years after the
Closing Date and such Employee's base and incentive
compensation for such deemed additional period was the same as
in effect on the date of such Employee's termination of
employment with Buyer, over (ii) the actuarial equivalent of
such Employee's "actual benefit" under the applicable Buyer's
Pension Plans, as of the date of such Employee's termination
of employment from Buyer. For the purpose of the foregoing
sentence, (i) the term "potential benefit" shall refer to the
monthly pension that would have been payable to the applicable
Employee commencing on the first day of the month following
the latest of (A) the last day of the deemed additional
period, (B) Employee's attainment of age 55, or (C) the
earlier of (l) the first date as of which the sum of such
Employee's age and years of service, as taken into account in
determining the actuarial reduction for commencement prior to
normal retirement age that is to be applied to his accrued
benefit under the applicable Buyer's Pension Plans, equals 75
or (2) such Employee's attainment of age 65, (ii) the term
"actual benefit" shall refer to the monthly pension payable to
such Employee under the applicable Buyer's Pension Plans
commencing as of the date determined in accordance with clause
(i) of this sentence, and (iii) the actuarial equivalent of
the "potential benefit" and the "actual benefit" shall each be
a lump sum payable as of the date of such Employee's
termination of employment from Buyer, determined on the basis
of the interest rate used to determine the amount of lump sum
distributions and, to the extent applicable, other actuarial
assumptions then in effect under the applicable Buyer's
Pension Plans. Buyer shall also provide outplacement services
to such terminated Continued Non-Union Employee appropriate to
the level of the Employee's position and job responsibilities.
Buyer shall also continue to provide or cause to be provided
to any such terminated Continued Employee health insurance
coverage and group term and universal life insurance coverage
at the same rates as for active Continued Employees for a
period equal to the number of weeks of separation allowance
which any such terminated Continued Employee is entitled to
from Buyer. Buyer shall have the right to require a release in
form reasonably satisfactory to Buyer as a condition for
eligibility to receive such separation allowance. The
allowance shall not apply to Continued Employees whose
employment is terminated due to death or expiration of sick
allowance or other authorized leave of absence or who
terminate employment voluntarily. If at any time during the
three-year period following the Closing Date, Buyer shall
assign a Continued Non-Union Employee to work on a regular
basis at a location that is more than fifty miles from the
location to which such Employee is assigned as of the Closing
Date, Buyer shall offer such Employee the option to terminate
employment and receive the severance benefits set forth in
this Section 9.08(b) in lieu of the reassignment.
SECTION 9.09. Workers Compensation. Effective as of the
Closing Date, Buyer shall have in effect a workers
compensation program for Continued Employees that shall
provide coverage identical in all material respects to
Seller's workers compensation program as of the Closing Date.
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification. (a) Seller will indemnify and
hold harmless Buyer and its Affiliates and their respective
directors, officers, employees and agents (collectively with
Buyer and its Affiliates, the "Buyer Indemnitees") from and
against any and all claims, demands or suits by any person,
and all losses, liabilities, damages, obligations, payments,
costs and expenses (including reasonable legal fees and
expenses and including costs and expenses incurred in
connection with investigations and settlement proceedings)
(each, an "Indemnifiable Loss"), as incurred, asserted against
or suffered by any 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 or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 5.01, 5.02, 5.03 and 5.17;
(ii) the Retained Liabilities;
(iii) noncompliance by Seller with any bulk sales or transfer
laws as provided in Section 7.07; or
(iv) any breach by Seller of any Ancillary Agreement.
(b) Buyer will indemnify and hold harmless Seller and its
Affiliates and their respective directors, officers, trustees,
employees and agents (collectively with Seller and its Affiliates,
the "Seller Indemnitees") from and against any and all Indemnifiable
Losses, as incurred, asserted against or suffered by any Seller
Indemnitee relating to, resulting from or arising out of:
(i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 6.01, 6.02, 6.03 and 6.05;
(ii) the Assumed Obligations;
(iii) any obligation resulting from any action or inaction of
Buyer (A) under any Contract or warranty pursuant to Section 2.04(b)
(whether acting as principal or representative and agent for Seller
pursuant to Section 2.04(b) or otherwise), (B) pursuant to Section
2.05 or Section 7.14 (in each case, whether acting as representative
or agent for Seller or otherwise) or (C) pursuant to any
Transferable Permit in respect of which Seller remains the holder of
record after the Closing Date pursuant to Section 7.03(c); or
(iv) any breach by Buyer of any Ancillary Agreement.
(c) The amount of any Indemnifiable Loss shall be reduced to
the extent that the relevant Buyer Indemnitee or Seller
Indemnitee (each, an "Indemnitee") receives any insurance
proceeds with respect to an Indemnifiable Loss and shall be
(i) increased to take account of any Tax Cost incurred by the
Indemnitee arising from the receipt of indemnity payments
hereunder (grossed up for such increase) and (ii) reduced to
take account of any Tax Benefit realized by the Indemnitee
arising from the incurrence or payment of any such
Indemnifiable Loss. 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 person, the amount of such reduction, less
any costs, expenses or premiums incurred in connection
therewith, will promptly be repaid by the Indemnitee to the
Party required to provide indemnification hereunder (the
"Indemnifying Party") with respect to such Indemnifiable Loss.
(d) To the fullest extent permitted by law, neither Party nor
any Buyer Indemnitee or any Seller Indemnitee shall be liable
to the other Party or any other Buyer Indemnitee or Seller
Indemnitee for any claims, demands or suits for consequential,
incidental, special, exemplary, punitive, indirect or multiple
damages connected with or resulting from any breach after the
Closing Date of this Agreement or the Ancillary Agreements
(other than breach of this Article X), or any actions
undertaken in connection with or related hereto or thereto,
including any such damages which are based upon breach of
contract, tort (including negligence and misrepresentation),
breach of warranty, strict liability, statute, operation of
law or any other theory of recovery.
(e) The rights and remedies of Seller and Buyer under this
Article X are, solely as between Seller and Buyer, exclusive
and in lieu of any and all other rights and remedies which
Seller and Buyer may have under this Agreement, the Ancillary
Agreements (except as expressly provided in any Continuing
Site Agreement or any Declaration of Easements Agreement) or
otherwise for monetary relief with respect to (i) any breach
of, or failure to perform, any covenant or agreement set forth
in this Agreement or the Ancillary Agreements by Seller or
Buyer, (ii) any breach of any representation or warranty by
Seller or Buyer, (iii) the Assumed Obligations or the Retained
Liabilities, (iv) noncompliance by Seller with any bulk sales
or transfer laws and (v) any obligation in respect of Section
2.04, Section 2.05, Section 7.03 or Section 7.14. Each Party
agrees that the previous sentence shall not limit or otherwise
affect any non-monetary right or remedy which either Party may
have under this Agreement or the Ancillary Agreements or
otherwise limit or affect either Party's right to seek
equitable relief, including the remedy of specific
performance.
(f) Buyer and Seller agree that, notwithstanding Section
10.01(e), each Party shall retain, subject to the other
provisions of this Agreement, including Sections 10.01(d) and
12.03, all remedies at law or in equity with respect to (i)
fraud or wilful or intentional breaches of this Agreement or
the Ancillary Agreements and (ii) gross negligence or wilful
or wanton acts or omissions to act of any Indemnitee (or any
contractor or subcontractor thereof) on or after the Closing
Date.
SECTION 10.02. Third Party Claims Procedures. (a) If any
Indemnitee receives notice of the assertion of any claim or of
the commencement of any claim, action, or proceeding made or
brought by any person who is not a Party or an Affiliate of a
Party (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
20 Business Days after the Indemnitee's receipt of notice of
such Third Party Claim; provided, however, that a failure to
give timely notice will not affect the rights or obligations
of any Indemnitee except if, and only to the extent that, as a
result of such failure, the Indemnifying Party was actually
prejudiced. 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) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party;
provided, however, that such counsel is not reasonably
objected to by the Indemnitee; and provided further that the
Indemnifying Party first admits in writing its liability to
the Indemnitee with respect to all material elements of such
claim. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will
not be liable to the Indemnitee for any legal expenses
subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party elects to assume
the defense of a Third Party Claim, the Indemnitee will (i)
cooperate in all reasonable respects with the Indemnifying
Party in connection with such defense, (ii) not admit any
liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the Indemnifying Party's prior
written consent and (iii) agree to any settlement, compromise
or discharge of a Third Party Claim which the Indemnifying
Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party
Claim. In the event the Indemnifying Party shall assume the
defense of any Third Party Claim, the Indemnitee shall be
entitled to participate in (but not control) such defense with
its own counsel at its own expense. If the Indemnifying Party
does not assume the defense of any such Third Party Claim, the
Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after
giving notice to the Indemnifying Party of the terms of the
proposed settlement and the Indemnifying Party will promptly
reimburse the Indemnitee upon written request. Anything
contained in this Agreement to the contrary notwithstanding,
no Indemnifying Party shall be entitled to assume the defense
of any Third Party Claim if such Third Party Claim seeks an
order, injunction or other equitable relief or relief for
other than monetary damages against the Indemnitee which, if
successful, would materially adversely affect the business of
the Indemnitee; provided, however, that such Indemnifying
Party shall continue to be obligated to such Indemnitee
pursuant to Section 10.01(a) or (b), as the case may be, for
all Indemnifiable Losses relating to, resulting from or
arising out of such Third Party Claim.
ARTICLE XI
Termination
SECTION 11.01. Termination. (a) This Agreement may be
terminated at any time prior to the Closing by an
instrument in writing signed on behalf of each of the
Parties.
(b) This Agreement may be terminated by Seller or Buyer if the
Closing shall not have occurred on or before the date that is
12 months from the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this
Agreement pursuant to this Section ll.01(b) shall not be
available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by either Seller or Buyer
if any Restraint having any of the effects set forth in
Section 8.01(b) shall be in effect and shall have become final
and nonappealable; provided, however, that the Party seeking
to terminate this Agreement pursuant to this Section 11.01(c)
shall have used its reasonable best efforts to prevent the
entry of and to remove such Restraint.
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses. Except to the extent specifically
provided herein, 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,
whether or not the transactions contemplated hereby are
consummated.
SECTION 12.02. Amendment and Modification; Extension; Waiver.
This Agreement may be amended, modified or supplemented only
by an instrument in writing signed on behalf of each of the
Parties. Either Party may (i) extend the time for the
performance of any of the obligations or other acts of the
other Party, (ii) waive any inaccuracies in the
representations and warranties of the other Party contained in
this Agreement or (iii) waive compliance by the other Party
with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such Party. The
failure of a Party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 12.03. No Survival of Representations or Warranties.
Each and every representation and warranty contained in this
Agreement, other than the representations and warranties
contained in Sections 5.01, 5.02, 5.03 and 5.17 and 6.01,
6.02, 6.03 and 6.05 (which representations and warranties
shall survive for 18 months from the Closing Date), shall
expire with, and be terminated and extinguished by the Closing
and no such representation or warranty shall survive the
Closing Date. From and after the Closing Date, none of Seller,
Buyer or any officer, director, trustee or Affiliate of any of
them shall have any liability whatsoever with respect to any
such representation or warranty. The expiration of the
representations and warranties contained in Sections 5.01,
5.02, 5.03 and 5.17 and 6.01, 6.02, 6.03 and 6.05 shall not
affect the Parties' obligations under Article X if the
Indemnitee provided the Indemnifying Party with proper notice
of the claim or event for which indemnification is sought
prior to such expiration.
SECTION 12.04. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (as of
the time of delivery or, in the case of a telecopied
communication, of confirmation) if delivered personally,
telecopied (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the Parties at the following
addresses (or at such other address for a Party as shall be
specified by like notice):
if to Seller, to:
Consolidated Edison Company of New
York, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy on or prior to the Closing Date to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
if to Buyer, to:
Astoria Generating Company, L.P.
c/o Orion Power Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy on or prior to the Closing Date to:
▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
SECTION 12.05. Assignment; No Third Party Beneficiaries. (a)
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties 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, including by
operation of law, without the prior written consent of the
other Party, except (i) in the case of Seller (A) to an
Affiliate of Seller or a third party in connection with the
transfer of the Transmission System to such Affiliate or third
party or (B) to a lending institution or trustee in connection
with a pledge or granting of a security interest in all or any
part of the Transmission System and this Agreement and (ii) in
the case of Buyer (A) to an Affiliate of Buyer in connection
with the transfer of the Auctioned Assets to such Affiliate
and (B) to a lending institution or trustee in connection with
a pledge or granting of a security interest in the Auctioned
Assets and this Agreement; provided, however, that no
assignment or transfer of rights or obligations by either
Party shall relieve it from the full liabilities and the full
financial responsibility, as provided for under this
Agreement, unless and until the transferee or assignee shall
agree in writing to assume such obligations and duties and the
other Party has consented in writing to such assumption.
(b) Nothing in this Agreement is intended to confer upon any
other person except the Parties any rights or remedies
hereunder or shall create any third party beneficiary rights
in any person, including, with respect to continued or resumed
employment, any employee or former employee of Seller
(including any beneficiary or dependent thereof). No provision
of this Agreement shall create any rights in any such persons
in respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement
except as expressly provided for thereunder.
SECTION 12.06. 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 principles of conflicts of law).
SECTION 12.07. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 12.08. Interpretation. When a reference is made in
this Agreement to an Article, Section, Schedule or Exhibit,
such reference shall be to an Article or Section of, or
Schedule or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation" or equivalent
words. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision
of this Agreement. All terms defined in this Agreement shall
have the defined meanings when used in the Ancillary
Agreements and any certificate or other document made or
delivered pursuant hereto or thereto unless otherwise defined
therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and
neuter genders of such term. Any agreement, instrument,
statute, regulation, rule or order defined or referred to
herein or in any agreement or instrument that is referred to
herein means such agreement, instrument, statute, regulation,
rule or order as from time to time amended, modified or
supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of
statutes, regulations, rules or orders) by succession of
comparable successor statutes, regulations, rules or orders
and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 12.09. Jurisdiction and Enforcement. (a) Each of the
Parties irrevocably submits to the exclusive jurisdiction of
(i) the Supreme Court of the State of New York, New York
County and (ii) the United States District Court for the
Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Agreement or
any transaction contemplated hereby. Each of the Parties
agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the
Southern District of New York or, if such suit, action or
proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New
York County. Each of the Parties further agrees that service
of process, summons, notice or document by hand delivery or
U.S. registered mail at the address specified for such Party
in Section 12.04 (or such other address specified by such
Party from time to time pursuant to Section 12.04) shall be
effective service of process for any action, suit or
proceeding brought against such Party in any such court. Each
of the Parties irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of
New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby
further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit
or proceeding brought in any such court has been brought in an
inconvenient forum.
(b) The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or any
Ancillary Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an
injunction or injunctions to prevent breaches of this
Agreement or any Ancillary Agreement and to enforce
specifically the terms and provisions of this Agreement or any
Ancillary Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 12.10. Entire Agreement. This Agreement, the
Confidentiality Agreement and the Ancillary Agreements
including the Exhibits, Schedules, documents, certificates and
instruments referred to herein or therein and other contracts,
agreements and instruments contemplated hereby or thereby,
embody the entire agreement and understanding of the Parties
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. This
Agreement and the Ancillary Agreements supersede all prior
agreements and understandings between the Parties with respect
to the transactions contemplated by this Agreement other than
the Confidentiality Agreement.
SECTION 12.11. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent
of the Parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 12.12. Conflicts. Except as expressly otherwise
provided herein or therein, in the event of any conflict or
inconsistency between the terms of this Agreement and the
terms of any Ancillary Agreement, the terms of this Agreement
shall prevail.
IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be signed by their respective duly authorized
officers as of the date first above written.
CONSOLIDATED EDISON COMPANY OF NEW
YORK, INC.,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice Presient and CFO
ASTORIA GENERATING COMPANY, L.P.,
BY: ORION POWER NEW YORK ▇▇ ▇▇,
INC.,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President