Exhibit 10.59
▇▇▇▇▇▇ GENERATING STATION SALES AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY ▇▇▇▇▇▇, L.L.C.
November 24, 1998
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
SALE AND PURCHASE
2.1 The Sale . . . . . . . . . . . . . . . . . . . . . 18
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . 18
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . 19
2.4 Excluded Liabilities . . . . . . . . . . . . . . . 24
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price . . . . . . . . . . . . . . . . . . 29
3.2 Purchase Price Adjustment . . . . . . . . . . . . . 29
3.3 Allocation of Purchase Price . . . . . . . . . . . 32
3.4 Proration . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing . . . . . . . . . . . . . 34
4.2 Payment of Purchase Price . . . . . . . . . . . . 35
4.3 Deliveries by Seller . . . . . . . . . . . . . . . 35
4.4 Deliveries by Buyer . . . . . . . . . . . . . . . . 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1 Organization; Qualification . . . . . . . . . . . . 39
5.2 Authority Relative to this Agreement . . . . . . . 40
5.3 Consents and Approvals; No Violation . . . . . . . 40
5.4 Reports . . . . . . . . . . . . . . . . . . . . . . 42
5.5 Financial Statements . . . . . . . . . . . . . . . 43
5.6 Undisclosed Liabilities . . . . . . . . . . . . . . 44
5.7 Absence of Certain Changes or Events . . . . . . . 44
5.8 Title . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 Leasehold Interests . . . . . . . . . . . . . . . . 45
5.10 Improvements . . . . . . . . . . . . . . . . . . . 46
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . 46
5.12 Environmental Matters . . . . . . . . . . . . . . . 47
5.13 Labor Matters . . . . . . . . . . . . . . . . . . . 49
5.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 50
5.15 Real Property Encumbrances . . . . . . . . . . . . 51
5.16 Condemnation . . . . . . . . . . . . . . . . . . . 52
5.17 Certain Contracts and Arrangements . . . . . . . . 52
5.18 Legal Proceedings, etc. . . . . . . . . . . . . . . 53
5.19 Permits . . . . . . . . . . . . . . . . . . . . . . 54
5.20 Regulation as a Utility . . . . . . . . . . . . . . 55
5.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . 55
5.22 Intellectual Property . . . . . . . . . . . . . . . 56
5.23 Year 2000 Readiness . . . . . . . . . . . . . . . . 56
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization . . . . . . . . . . . . . . . . . . . 56
6.2 Authority Relative to this Agreement . . . . . . . 57
6.3 Consents and Approvals; No Violation . . . . . . . 57
6.4 Operating Easements . . . . . . . . . . . . . . . . 59
6.5 Regulation as a Utility . . . . . . . . . . . . . . 59
6.6 Availability of Funds . . . . . . . . . . . . . . . 59
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business Relating to the Purchased
Assets. . . . . . . . . . . . . . . . . . . . . . . 59
7.2 Access to Information . . . . . . . . . . . . . . . 64
7.3 Expenses . . . . . . . . . . . . . . . . . . . . . 67
7.4 Further Assurances . . . . . . . . . . . . . . . . 68
7.5 Public Statements . . . . . . . . . . . . . . . . . 69
7.6 Consents and Approvals . . . . . . . . . . . . . . 70
7.7 Fees and Commissions . . . . . . . . . . . . . . . 73
7.8 Tax Matters . . . . . . . . . . . . . . . . . . . . 73
7.9 Supplements to Schedules . . . . . . . . . . . . . 77
7.10 Employees . . . . . . . . . . . . . . . . . . . . . 77
7.11 Risk of Loss . . . . . . . . . . . . . . . . . . . 82
7.12 Real Estate Matters . . . . . . . . . . . . . . . . 84
7.13 Year 2000 . . . . . . . . . . . . . . . . . . . . . 86
7.14 Scheduled Capital Expenditures and Scheduled
Maintenance Expenditures . . . . . . . . . . . . . 86
7.15 Expansion. . . . . . . . . . . . . . . . . . . . 86
7.16 Fuel Contract Renegotiation . . . . . . . . . . . . 87
7.17 Environmental Insurance . . . . . . . . . . . . . . 87
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby . . . . . . . . . 88
8.2 Conditions to Obligations of Buyer . . . . . . . . 91
8.3 Conditions to Obligations of Seller . . . . . . . . 96
8.4 Extension of Closing Date . . . . . . . . . . . . . 100
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification . . . . . . . . . . . . . . . . . . 101
9.2 Defense of Claims . . . . . . . . . . . . . . . . . 104
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination . . . . . . . . . . . . . . . . . . . . 109
10.2 Procedure and Effect of Termination . . . . . . . . 112
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification . . . . . . . . . . . . 113
11.2 Confidentiality . . . . . . . . . . . . . . . . . . 113
11.3 Waiver of Compliance; Consents . . . . . . . . . . 115
11.4 No Survival . . . . . . . . . . . . . . . . . . . . 115
11.5 Notices . . . . . . . . . . . . . . . . . . . . . . 116
11.6 Assignment . . . . . . . . . . . . . . . . . . . . 118
11.7 Governing Law . . . . . . . . . . . . . . . . . . . 119
11.8 Specific Performance . . . . . . . . . . . . . . . 119
11.9 Counterparts . . . . . . . . . . . . . . . . . . . 120
11.10 Interpretation. . . . . . . . . . . . . . . . . . 120
11.11 Entire Agreement. . . . . . . . . . . . . . . . . 120
11.12 Bulk Sales or Transfer Laws . . . . . . . . . . . 121
▇▇▇▇▇▇ GENERATING STATION SALES AGREEMENT
▇▇▇▇▇▇ GENERATING STATION SALES AGREEMENT, dated as of November
24, 1998, between Orange and Rockland Utilities, Inc., a New York
corporation ("Seller" or "O&R"), and Southern Energy ▇▇▇▇▇▇, L.L.C., a
Delaware limited liability company ("Buyer").
WHEREAS, the Seller owns and operates the Purchased Assets (as
defined herein); and
WHEREAS, the Buyer desires to purchase and assume from the
Seller, and the Seller desires to sell to Buyer, the Purchased Assets upon
the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this ▇▇▇▇▇▇ Generating Station Sales
Agreement together with the Schedules and Exhibits hereto.
(3) "Ancillary Agreements" means the Operating Easement,
the Load Pocket Agreement, the Continuing Site/Interconnection
Agreement and the Transition Agreement.
(4) "▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale to be delivered
at the Closing with respect to the Purchased Assets which constitute
personal property and which are to be transferred at the Closing,
substantially in the form of Exhibit A hereto.
(5) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.
(6) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other
authorized representatives.
(7) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(8) "Code" means the Internal Revenue Code of 1986, as
amended.
(9) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between the Seller and Southern
Energy, Inc.
(10) "Continuing Site/Interconnection Agreement" means the
Continuing Site/Interconnection Agreement, dated as of the date of
this Agreement, between the Seller and the Buyer.
(11) "Emission Allowances" means the sulfur dioxide
allowances already allocated by the United States Environmental
Protection Agency to ▇▇▇▇▇▇ and the nitrogen oxide allowances to be
allocated by the New York State Department of Environmental
Conservation to ▇▇▇▇▇▇, all as set forth in Schedule 1.1(a)(11).
(12) "Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements
activity and use limitations, conservation easements, deed
restrictions, encumbrances and charges of any kind.
(13) "Environmental Laws" means all Federal, state and
local laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution
or protection of the environment, natural resources or human health
and safety, including, without limitation, laws relating to Releases
or threatened Releases of Hazardous Substances or coal ash (including,
without limitation, ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Substances or coal ash.
(14) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(15) "Estimated Inventory Adjustment Amount" means the
lesser of the Seller's book value of its coal inventory, or $48.50
per ton multiplied by the number of tons of coal in the coal
inventory, used at or in connection with the Purchased Assets as of
the date ten (10) days before the Closing Date, which valuation shall
be provided to the Buyer by the Seller no later than five (5) days
before the Closing Date. For the purposes of calculating the
Estimated Inventory Adjustment Amount, the coal inventory shall
include all coal whether above or below grade, except that any below
grade coal, determined through a survey to be conducted by Seller
prior to the Closing, whose use would be non-compliant with air
emission regulations regarding SO2 emissions, shall be excluded from
such inventory.
(16) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(17) "Federal Power Act" means the Federal Power Act of
1935.
(18) "FERC" means the Federal Energy Regulatory Commission
or any successor thereto.
(19) "Good Utility Practices" means any of the practices,
methods and acts engaged in or approved by a significant portion of
the electric utility industry with respect to similar facilities
during the relevant time period which in each case, in the exercise of
reasonable judgment in light of the facts known or that should have
been known at the time the decision was made, could have been expected
to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, law, regulation,
environmental protection, and expedition. Good Utility Practices are
not intended to be limited to the optimum practices, methods or acts
to the exclusion of all others, but rather to be acceptable practices,
methods or acts generally accepted in such industry.
(20) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in
any form that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric
fluid which may contain levels of polychlorinated biphenyls; (b) any
chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (c) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any applicable Environmental Law.
(21) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(22) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
(23) "Income Tax" means any tax, charge, fee, levy, penalty,
or other assessment imposed by any U.S. federal, state, local or
foreign taxing authority (a) based upon, measured by or calculated
with respect to net income, profits or receipts (including, without
limitation, capital gains taxes and alternative minimum taxes but
excluding sales, transfer and similar taxes) or (b) based upon,
measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the
bases on which such tax may be based, measured by or calculated with
respect to, is described in clause (a), in each case together with any
interest, penalties, or additions attributable thereto.
(24) "Income Tax Return" means any return, report,
information return or other document (including any related or
supporting information) supplied or required to be supplied to any
authority with respect to Income Taxes.
(25) "Independent Accounting Firm" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
or such other independent accounting firm of national reputation
mutually appointed by the Seller and the Buyer.
(26) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit B hereto.
(27) "Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service ▇▇▇▇ rights, service names and
service name rights, brand names, inventions, copyrights and copyright
rights, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights other than the
names, trademarks, service marks or logos listed in Section 2.2(b)
hereof.
(28) "Internal Revenue Service" means the United States
Internal Revenue Service, or any successor thereto.
(29) "ISO" means the New York Independent System Operator,
or its successor.
(30) "Load Pocket Agreement" means the Load Pocket Call
Option Agreement, dated as of the date of this Agreement, between the
Buyer and Seller.
(31) "▇▇▇▇▇▇" means the ▇▇▇▇▇▇ Generating Station located in
▇▇▇▇▇▇▇ Cove, Rockland County, New York.
(32) "Material Adverse Effect" means any change in or effect
on the Purchased Assets after the date of this Agreement that is,
individually or in the aggregate, materially adverse to the condition
(financial or physical) of (as compared to the condition on the date
of this Agreement), or the ability to own or operate (as compared to
the ownership and operation thereof prior to the date of this
Agreement), any material part of the Purchased Assets, other than (i)
any change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for electric
power, (ii) any change or effect resulting from changes in the
international, national, regional or local markets for any fuel used
at the Purchased Assets, (iii) any change or effect resulting from
changes in the North American, national, regional or local electric
transmission systems, (iv) any change or effect resulting from any
regulation, rule or order adopted or proposed by or with respect to
the ISO and its responsibility for, authority over and operation of
the wholesale and retail electric energy, capacity and ancillary
services electric power markets and (v) any materially adverse change
in or effect on the Purchased Assets which is cured (including by the
payment of money) by the Seller before the Termination Date.
(33) "NJBPU" means the New Jersey Board of Public Utilities,
or any successor thereto.
(34) "NYPSC" means the New York Public Service Commission or
any successor thereto.
(35) "Operating Easement" means the operating easement
providing the right to continue operating and maintaining certain
distribution facilities at the substations, which will be prepared as
described in the Continuing Site/Interconnection Agreement.
(36) "Other Sales Agreements" means the Bowline Generating
Station Sales Agreement between the Seller and Southern Energy
Bowline, L.L.C.; the Gas Turbines and Hydroelectric Generating Station
Sales Agreement between the Seller and Southern Energy NY-Gen, L.L.C.;
and the Bowline Adjacent Property Sales Agreement between the Seller
and Southern Energy Bowline, L.L.C., each dated as of the date of this
Agreement.
(37) "PAPUC" means the Pennsylvania Public Utility
Commission or any successor thereto.
(38) "Permitted Encumbrances" means (i) those exceptions to
title to the Purchased Assets contained in the documents listed on
Schedules 5.8, 5.9(a), 5.9(b) and 5.15; (ii) any state of facts that a
current survey of the Purchased Assets would disclose; (iii)
mortgages, liens, pledges, charges, encumbrances and restrictions
which are not in excess of $100,000 incurred in connection with the
Sellers' purchase of properties and assets to be conveyed to Buyer as
part of the Purchased Assets after the date of this Agreement securing
all or a portion of the purchase price therefor incurred in the
ordinary course of business; (iv) the Operating Easement; (v)
statutory liens for current Taxes, assessments or other governmental
charges not yet due or delinquent or the validity of which is being
contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted
accounting principles, provided that the aggregate amount being so
contested does not exceed $500,000; (vi) mechanics', carriers',
workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to the Sellers' obligations
which are not yet due and payable or the validity of which are being
contested in good faith by appropriate proceedings, provided that the
aggregate amount of such liens does not exceed $500,000; (vii) zoning,
entitlement, conservation restrictions and other land use and
environmental regulations by governmental authorities, provided that
the foregoing do not materially interfere with the present use of the
Purchased Assets; and (viii) such other liens, imperfections in or
failure of title, charges, easements, restrictions and encumbrances
which do not materially detract from the value of or materially
interfere with the present use of the Purchased Assets and neither
secure indebtedness, nor individually or in the aggregate have or
would have a Material Adverse Effect or which will be discharged or
released prior to or simultaneously with the Closing.
(39) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited
liability partnership, a trust, an unincorporated organization or a
governmental entity or any department or agency thereof.
(40) "Purchased Assets" means the real and personal
property, tangible or intangible, constituting or used principally for
generation purposes at, or otherwise for, the operation of ▇▇▇▇▇▇,
including, but not limited to, the following assets:
(a) two active steam electric generating units (Units
4 and 5) fired by coal, natural gas or heavy oil, one active
steam electric generating unit fired by natural gas or oil
(Unit 3) and two retired units formerly capable of being fired by
natural gas or oil (Units 1 and 2) as listed or referred to in
Schedule 1.1(a)(40);
(b) all of the Seller's right, title and interest in,
to and under the Real Property (including all structures,
buildings, facilities and other improvements thereon and all
appurtenances thereto) as further described on Schedule 5.8;
(c) all other machinery, equipment, furniture and
other personal property owned by the Seller on the Closing Date
and located at ▇▇▇▇▇▇ and listed or referred to in Schedule
1.1(a)(40);
(d) all inventories of fuels, supplies, spare parts
and materials located at ▇▇▇▇▇▇;
(e) the 69 kV and 138 kV transmission connections,
described as being sold to Buyer in the separation document
summary in Exhibit C;
(f) all contracts, agreements and personal property
leases principally relating to ▇▇▇▇▇▇, as further listed on
Schedules 5.17(a), (b), and (c) and 7.10(a), respectively, as
being associated with the ▇▇▇▇▇▇ Generating Station;
(g) all Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the ▇▇▇▇▇▇ Generating Station;
(h) the Emission allowances;
(i) the coal ash management facility ("CAMF") located
adjacent to the ▇▇▇▇▇▇, which consists of a clay-lined partially
covered twelve (12) acre coal ash disposal area, leachate pump
station and detention pond, the coal ash and all equipment
located at such facility and used in connection with the CAMF;
(j) the gas regulator station, station bypass piping
and the 24 inch steel main downstream at the outlet of the
regulator station;
(k) all books, operating records, reports, engineering
or design plans, specifications, drawings, procedures, software
or tools used to process and report environmental data, safety
and maintenance manuals and similar items of the Seller relating
specifically to the aforementioned assets;
(l) all of the Seller's right, title and interest in,
to and under the Leases;
(m) copies of all filings made with regulatory
agencies, as updated, relating to Seller's Year 2000 programs as
such filings apply to the Purchased Assets;
(n) all unexpired, transferable warranties and
guarantees from third parties with respect to any of the
Purchased Assets, as of the Closing Date;
(o) the Intellectual Property, if any, relating to the
Purchased Assets (including Seller's goodwill therein and the
rights of Seller in and to the name of ▇▇▇▇▇▇) and all the
rights, privileges, claims, causes of action, indemnification
rights and options pertaining solely to the Purchased Assets or
the Assumed Liabilities, including without limitation, those
items listed on Schedule 1.1(a)(40)(o);
(p) the assets acquired by Seller pursuant to Section
7.4;
(q) the six inch and eight inch water mains extending
from ▇▇▇▇▇▇ to connections with United Water Company Facilities
located at (i) Park Road in Stony Point, New York and (ii) the
intersection of Elm Avenue and Route 9W in Stony Point, New York,
respectively subject to the terms of applicable easements which
would not have a materially adverse effect thereon; and
(r) $5.4 million in cash.
(41) "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to
escape into or through the environment.
(42) "Scheduled Capital Expenditures" means those capital
expenditures listed on Schedule 1.1(a)(42).
(43) "Scheduled Maintenance Expenditures" means those
maintenance expenditures listed on Schedule 1.1(a)(43).
(44) "SEC" means the Securities and Exchange Commission or
any successor thereto.
(45) "Securities Act" means the Securities Act of 1933, as
amended.
(46) "Seller Agreements" means those agreements listed on
Schedule 5.17(a) and the Collective Bargaining Agreements.
(47) "Separation Document" means the document, to be
negotiated in good faith by the Seller and the Buyer within three (3)
months from the date of this Agreement, which will delineate the
Purchased Assets from the Seller's other assets and which will be
consistent with the separation document summary attached hereto as
Exhibit C.
(48) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(49) "Tax" means any tax, charge, fee, levy, penalty or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority, including, but not limited to, any income, gross
receipts, license, stamp, occupation, environmental, excise, property,
sales, transfer, payroll, unemployment, withholding, social security
or any other tax of any kind whatsoever, including any interest,
penalties or additions attributable thereto.
(50) "Tax Return" means any return, report, information
return, declaration, claim for refund or other document (including any
schedule or other related or supporting information) supplied or
required to be supplied to any authority with respect to Taxes and
including any supplement or amendment thereof.
(51) "Transition Agreement" means the Transition Power Sales
Agreement between the Buyer, Southern Energy Bowline, L.L.C., Southern
Energy NY-Gen, L.L.C. and the Seller, dated as of the date of this
Agreement.
(52) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(b) Each of the following terms has the meaning specified
in the Section set forth opposite such term:
Term Section
---- -------
Adjustment Statement 3.2
ALTA 7.12
Assumed Liabilities 2.3
Benefit Plans 5.14
Buyer Preamble
Buyer Required Regulatory Approvals 6.3
Buyer's Easements 4.3
Buyer's Indemnitee 9.1
CEI 11.5
Closing 4.1
Closing Date 4.1
Collective Bargaining Agreements 7.10
Defect of Title 7.12
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Permits 5.12
ERISA Affiliate 2.4
ERISA Affiliate Plans 2.4
Estimated Purchase Price 4.2
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Hourly Employees 7.10
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
Inventory Adjustment Amount 3.2
Leases 5.9
Leased Assets 7.4
Management Employees 7.10
Maintenance and Capital Expenditures
Adjustment Amount 3.2
▇▇▇▇▇▇ 7.1
Materials and Supplies Adjustment Amount 3.2
Necessary Capital Expenditures 7.1(b)
Necessary Maintenance Expenditures 7.1(d)
NYBTU 7.12
Pension Benefit Plans 2.4
Permits 5.19
Pollution Control Bonds 2.4
Pollution Control Facilities 7.8
Purchase Price 3.1
Purchased Assets Preamble
Real Property 5.8
Recipient 11.2
Seller Preamble
Seller Balance Sheet 5.5
Seller Required Regulatory Approvals 5.3
Seller's Easements 4.3
Termination Date 10.1
Third Party Claim 9.2
Title Commitment 7.12
Title Company 7.12
1986 Tax Act 7.8
ARTICLE II
SALE AND PURCHASE
2.1 The Sale. Upon the terms and subject to the satisfaction of
the conditions contained in this Agreement, at the Closing, the Seller will
sell, assign, convey, transfer and deliver to the Buyer, and the Buyer will
purchase and acquire from the Seller, free and clear of all Encumbrances
(except for Permitted Encumbrances) all of the Seller's right, title and
interest in, to and under the real and personal property, tangible or
intangible, owned by the Seller and constituting the Purchased Assets.
2.2 Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable (other than the cash specified in Section 1.1(a)(40)(r) of
the Agreement);
(b) the name "Orange and Rockland Utilities, Inc.", "Orange
and Rockland", "O&R", "ORU" or any related or similar trade names,
trademarks, service marks or logos;
(c) distribution, substation and communication facilities
and related support equipment described in Schedule 2.2(c);
(d) any refund, credit, penalty payment, adjustment or
reconciliation (i) related to personal property or other Taxes
(excluding Taxes relating to Real Property) paid prior to the Closing
Date in respect of the Purchased Assets, whether such refund,
adjustment or reconciliation is received as a payment or as a credit
against future Taxes payable, or (ii) arising under any of the Seller
Agreements and relating to a period before the Closing Date;
(e) except to the extent specifically required by law, all
personnel records relating to any employees of the Seller; and
(f) the rights and assets to be described in the Separation
Document as not part of the Purchased Assets.
2.3 Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to the Seller the Instrument of Assumption pursuant to which the
Buyer shall assume and agree to discharge to the maximum extent permitted
by law, all of the following liabilities and obligations of the Seller
which relate to the Purchased Assets, other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective
conditions thereof:
(a) all liabilities and obligations of the Seller arising
or accruing after the Closing Date under (i) the Seller Agreements,
the Environmental Permits, the Permits, real property leases,
contracts and other agreements disclosed and assigned to the Buyer
pursuant to this Agreement in accordance with the terms thereof, and
(ii) the leases, contracts and other agreements entered into by the
Seller with respect to the Purchased Assets after the date hereof
consistent with the terms of this Agreement; except in each case, to
the extent such liabilities and obligations, but for a breach or
default by the Seller, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default or any event which after the
giving of notice would constitute a default by Seller;
(b) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is liable
pursuant to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified the Seller pursuant to Section 9.1;
(d) all liabilities to employees for which the Buyer is
liable pursuant to Section 7.10, including the Collective Bargaining
Agreements;
(e) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the common
law, whether such liability or obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or in
connection with (i) any violation or alleged violation of
Environmental Law, prior to the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) loss of life,
injury to persons or property or damage to natural resources (whether
or not such loss, injury or damage arose or was made manifest before
the Closing Date or arises or becomes manifest after the Closing
Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances or coal ash at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased Assets
prior to the Closing Date, including, but not limited to, Hazardous
Substances or coal ash contained in building materials at the
Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; and (iii) the investigation and/or
remediation (whether or not such investigation or remediation
commenced before the Closing Date or commences after the Closing Date)
of Hazardous Substances or coal ash that is present or has been
Released prior to the Closing Date at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased Assets,
including, but not limited to, Hazardous Substances or coal ash
contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets;
provided, as to all of the above, that nothing set forth in this
subsection 2.3(e) shall require the Buyer to assume any liabilities
that are expressly excluded in Section 2.4;
(f) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the common
law, whether such liability or obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or in
connection with (i) any violation or alleged violation of
Environmental Law, on or after the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) compliance with
applicable Environmental Laws on or after the Closing Date with
respect to the ownership or operation of the Purchased Assets; (iii)
loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the presence or Release of
Hazardous Substances or coal ash at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased Assets
on or after the Closing Date, including, but not limited to, Hazardous
Substances or coal ash contained in building materials at the
Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; (iv) loss of life, injury to persons
or property or damage to natural resources caused (or allegedly
caused) by the off-site disposal, storage, transportation, discharge,
Release, recycling, or the arrangement for such activities, of
Hazardous Substances or coal ash, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets;
(v) the investigation and/or remediation of Hazardous Substances or
coal ash that is present or has been released on or after the Closing
Date at, on, in, under, adjacent to, discharged from, emitted from or
migrating from the Purchased Assets, including, but not limited to,
Hazardous Substances or coal ash contained in building materials at
the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells or in other environmental media at or
adjacent to the Purchased Assets; and (vi) the investigation and/or
remediation of Hazardous Substances or coal ash that is disposed,
stored, transported, discharged, Released, recycled, or the
arrangement of such activities, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets, at
any off-site location; provided, that nothing set forth in this
subsection shall require the Buyer to assume any liabilities that are
expressly excluded in Section 2.4;
(g) all liabilities and obligations of the Seller with
respect to the Purchased Assets under the agreements or consent orders
set forth on Schedule 5.12(c);
(h) all liabilities incurred by the Seller with respect to
maintenance and capital expenditures made with respect to the
Purchased Assets by the Seller which are requested by Buyer;
(i) all liabilities or obligations relating to leases for
the Purchased Assets; and
(j) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (i) above,
exclusively relating to the Purchased Assets no matter when the events
or occurrences giving rise to such liabilities or obligations took
place, the value of which liabilities and obligations, together with
the liabilities and obligations relating to the "Purchased Asset" and
the "Purchased Assets" as defined in the Other Sales Agreements, in
the aggregate, shall not exceed $3 million.
All of the foregoing liabilities and obligations to be assumed by the Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as
the "Assumed Liabilities." It is understood and agreed that nothing in
this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer.
2.4 Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of the Seller in respect
of any Excluded Assets or other assets of the Seller which are not
Purchased Assets;
(b) any liabilities or obligations in respect of Taxes
attributable to the Purchased Assets for taxable periods ending on or
before the Closing Date, except for Taxes for which the Buyer is
liable pursuant to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities
relating to the disposal, storage, transportation, discharge, Release,
recycling, or the arrangement for such activities of Hazardous
Substances or coal ash that was generated at the Purchased Assets, at
any off-site location, where the disposal, storage, transportation,
discharge, Release, recycling or the arrangement for such activities
at said off-site location occurred prior to the Closing Date, provided
that for purposes of this Section, "off-site location" does not
include any location to which Hazardous Substances or coal ash
disposed of, discharged from, emitted from or Released at the
Purchased Assets have migrated, including, but not limited to, surface
waters that have received waste water discharges from the Purchased
Assets;
(d) any liabilities, obligations or responsibilities
arising after the Closing Date relating to (i) the transmission lines
delineated in the Operating Easements or (ii) any Seller's operations
on, or usage of, the Operating Easements, including, without
limitation, liabilities, obligations or responsibilities arising as a
result of or in connection with (1) any violation or alleged violation
of Environmental Law and (2) loss of life, injury to persons or
property or damage to natural resources, except to the extent caused
by Buyer;
(e) any liabilities, obligations or responsibilities
arising prior to or after the Closing Date relating to the easements
provided O&R under the Operating Easement, including, without
limitation: (i) the transmission lines or other facilities of O&R
delineated in the Operating Easements or (ii) O&R ownership rights,
operations on, or usage of, the Operating Easements, including,
without limitation, liabilities, obligations or responsibilities
arising as a result of or in connection with (1) any violation or
alleged violation of Environmental Law or Release of Hazardous
Substances or coal ash and (2) loss of life, injury to persons or
property or damage to natural resources, except in the case of (1) or
(2), to the extent caused by the Buyer.
(f) any liabilities or obligations required to be accrued
by the Seller in accordance with generally accepted accounting
principles and/or the FERC Uniform System of Accounts on or before the
Closing Date with respect to liabilities related to the Purchased
Assets other than any liability assumed by Buyer under any provision
of this Agreement, including without limitation, Section 2.3;
(g) any liabilities or obligations with respect to
liabilities relating to the Purchased Assets relating to any personal
injury including bodily injury (including, but not limited to workers'
compensation claims), discrimination, wrongful discharge, or unfair
labor practice or similar claim or cause of action with respect to any
act or occurrence arising prior to or on the Closing Date, other than
liabilities or obligations for injury to persons or loss of life
assumed by the Buyer in Sections 2.3(e) and 2.3(f);
(h) any fines or penalties imposed by a governmental agency
or authority resulting from (A) an investigation or proceeding with
respect to any act or occurrence arising prior to or on the Closing
Date or (B) illegal acts, willful misconduct or gross negligence of
the Seller prior to or on the Closing Date;
(i) any payment obligations of the Seller for goods
delivered or services rendered prior to the Closing;
(j) any liabilities or obligations imposed upon, assumed or
retained by O&R pursuant to the Continuing Site/Interconnection
Agreement or any other Ancillary Agreement;
(k) any liabilities, obligations or responsibilities
relating to any deferred compensation, pension, profit-sharing and
retirement plans, including multiemployer plans, and all welfare,
severance, stock-based, bonus and other employee benefit or fringe
benefit plans, programs and arrangements, whether written or oral,
maintained or with respect to which contributions have been in the
last five (5) years or are made by O&R and any trade or business
(whether or not incorporated) which are or have ever been under common
control, or which are or have ever been treated as a single employer,
with the Seller under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which the Seller and any ERISA Affiliate
contributed thereunder (the "ERISA Affiliate Plans"), including any
multiemployer plan, maintained by, contributed to, or obligated to
contribute to, at any time, by the Seller or any ERISA Affiliate;
including without limitation, any liability (A) to the Pension Benefit
Guaranty Corporation under Title IV of ERISA; (B) with respect to non-
compliance with the continuation requirements of COBRA; (C) with
respect to any non-compliance with ERISA, the Code or any other
applicable laws; (D) with respect to any suit, proceeding or claim
which is brought against any ERISA Affiliate Plan, or any fiduciary or
former fiduciary of any such or ERISA Affiliate Plan; (E) relating to
a multiemployer plan; or (F) for any claim or suit for benefits
accrued under an ERISA Affiliate Plan prior to Closing;
(l) any liabilities, obligations or responsibilities
relating to the employment or termination of employment, by the Seller
of any individual (including, but not limited to, any employee of the
Seller) attributable to any actions or inactions by the Seller prior
to the Closing Date; and
(m) any liabilities relating to the $55,000,000 New York
State Energy Research and Development Authority Pollution Control
Refunding Revenue Bonds (Orange and Rockland Utilities, Inc. Project)
1994 Series A and the $44,000,000 New York Energy Research and
Development Authority Pollution Control Refunding Revenue Bonds
(Orange and Rockland Utilities, Inc. Projects) 1995 Series A (the
"Pollution Control Bonds") and any agreements relating thereto.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The purchase price for the Purchased Assets
shall be an amount equal to the sum of (i) $243,500,000, (ii) the Estimated
Inventory Adjustment Amount, (iii) the Inventory Adjustment Amount and (iv)
any amounts paid by the Seller to acquire title to Leased Assets pursuant
to Section 7.4 (the "Purchase Price").
3.2 Purchase Price Adjustment. (a) Within sixty (60) days
after the Closing, the Seller shall prepare and deliver to the Buyer a
statement (the "Adjustment Statement") which sets forth an amount equal to
(i) the lesser of (A) the Seller's book value, as of the Closing Date, of
its coal inventory or (B) $48.50 per ton multiplied by the number of tons
of coal in the coal inventory, used at or in connection with the Purchased
Assets minus (ii) the Estimated Inventory Adjustment Amount (such
difference is referred to as the "Inventory Adjustment Amount"). For the
purposes of calculating the Estimated Inventory Adjustment Amount, the coal
inventory shall include all coal whether above or below grade except that
any below grade coal, determined through a survey to be conducted by Seller
prior to the Closing, whose use would be non-compliant with air emission
regulations regarding SO(2) emissions, shall be excluded from such inventory.
The Adjustment Statement shall be prepared using the same
generally accepted accounting principles, policies and methods as the
Seller has historically used in connection with the calculation of the
items reflected on the Adjustment Statement, except that the price utilized
for determining the unit price of coal in this Section 3.2(a) shall be the
lower of the price determined in accordance with such historic method or
$48.50 per ton. The Buyer and the Seller agree to cooperate with the other
in connection with the preparation of the Adjustment Statement and related
information, and each shall provide to the other such books, records and
information as may be reasonably requested from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount,
provided, however, that the Buyer shall notify the Seller in writing of the
disputed amount, and the basis of such dispute, within thirty (30) days of
the Buyer's receipt of the Adjustment Statement. In the event of a dispute
with respect to the Inventory Adjustment Amount, the Buyer and the Seller
shall attempt to reconcile their differences and any resolution by them as
to any disputed amounts shall be final, binding and conclusive on the
parties. If the Buyer and the Seller are unable to reach a resolution of
such differences within thirty (30) days of receipt of the Buyer's written
notice of dispute to the Seller, the Buyer and the Seller shall submit the
amounts remaining in dispute for determination and resolution to the
Independent Accounting Firm, which shall be instructed to determine and
report to the parties, within thirty (30) days after such submission, upon
such remaining disputed amounts, and such report shall be final, binding
and conclusive on the parties hereto with respect to the amounts disputed.
The fees and disbursements of the Independent Accounting Firm shall be
allocated between the Buyer and the Seller so that the Buyer's share of
such fees and disbursements shall be in the same proportion that the
aggregate amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm that is unsuccessfully disputed by
the Buyer (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm.
(c) If the Inventory Adjustment Amount is positive, within ten
(10) Business Days after the Buyer's receipt of the Adjustment Statement,
the Buyer shall pay the Seller all undisputed portions of the Inventory
Adjustment Amount. If the Inventory Adjustment Amount is negative, within
ten (10) Business Days after the Buyer's receipt of the Adjustment
Statement, the Seller shall pay the Buyer all undisputed portions of the
Inventory Adjustment Amount. If there is a dispute with respect to any
amount on the Adjustment Statement, within five (5) Business Days after the
final determination of such disputed amounts on the Adjustment Statement,
the Buyer shall pay the Seller an amount equal to the disputed portion of
the Inventory Adjustment Amount as finally determined to be payable with
respect to the Adjustment Statement; provided, however, that if such amount
shall be less than zero, the Seller will pay to the Buyer the amount by
which such amount is less than zero. All payments made pursuant to this
Section 3.2(c) shall be paid together with interest thereon for the period
commencing on the Closing Date through the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the Closing Date,
in cash by federal or other wire transfer of immediately available funds.
3.3 Allocation of Purchase Price. The Buyer shall prepare an
allocation of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one hundred eighty (180)
days of the date of this Agreement but in no event less than forty-five
(45) days prior to the Closing and submit it to Seller. The Seller may
dispute the allocation of the Purchase Price; provided, however, that the
Seller shall notify the Buyer in writing of the disputed amount, and the
basis of such dispute, and follow the procedures relating to a dispute
described in Section 3.2(b) above. The Buyer and the Seller each agrees to
file Internal Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns and Income Tax Returns, in accordance with such agreed
allocation. Each of the Buyer and the Seller shall report the transactions
contemplated by the Agreement for federal Income Tax and all other Tax
purposes in a manner consistent with the allocation determined pursuant to
this Section 3.3. The Buyer and the Seller each agrees to provide the
other promptly with any other information required to complete Form 8594.
Each of the Buyer and the Seller shall notify and provide the other with
reasonable assistance in the event of an examination, audit or other
proceeding regarding the agreed upon allocation of the Purchase Price.
3.4 Proration. (a) The Buyer and the Seller agree that all of
the items normally prorated, including those listed below, relating to the
business and operation of the Purchased Assets will be prorated as of the
Closing Date, with the Seller liable to the extent such items relate to any
time period through the Closing Date, and the Buyer liable to the extent
such items relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any
other Taxes (excluding Income Taxes), assessments and other
charges, if any, on or with respect to the ownership, use or
business and operation of the Purchased Assets;
(ii) rent, Taxes (excluding Income Taxes) and other
items payable by or to the Seller under any of the Seller
Agreements to be assigned to and assumed by the Buyer hereunder;
(iii) any permit, license or registration fees with
respect to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either the Seller or
the Buyer made within sixty (60) days of the date that the actual amounts
become available. The Seller and the Buyer agree to furnish each other
with such documents and other records as may be reasonably requested in
order to confirm all adjustment and proration calculations made pursuant to
this Section 3.4.
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M. (local time) on
April 30, 1999, or at such other place or later date and time as the
parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date."
4.2 Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to
the Seller at the Closing an amount (the "Estimated Purchase Price") in
United States dollars, equal to the sum of (i) $243,500,000, (ii) the
Estimated Inventory Adjustment Amount for the Closing, and (iii) any
amounts paid to acquire title to Leased Assets pursuant to Section 7.4
hereof, by wire transfer of immediately available funds or by such other
means as are agreed to by the Seller and the Buyer.
4.3 Deliveries by Seller. At the Closing, the Seller will
deliver the following to the Buyer:
(a) The ▇▇▇▇ of Sale, duly executed by the Seller for the
personal property included in the Purchased Assets;
(b) The executed consents to transfer the Seller
Agreements, the Environmental Permits and the Permits, to the extent
specifically required hereunder;
(c) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by O&R;
(d) The certificates and the opinions of counsel
contemplated by Sections 8.2(c), (e), (f) and (h);
(e) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring
Seller's interest in the Property Interests to the Buyer, duly
executed and acknowledged by O&R and in recordable form substantially
in the form of Exhibit D hereto;
(f) One or more easements to the extent necessary to
evidence the right of Buyer to use the real property of O&R (the
"Buyer's Easements") that comprise the Excluded Assets, duly executed
and acknowledged by O&R and in recordable form, each substantially in
the form of Exhibit E hereto;
(g) The Assignment of Leases in the form attached hereto as
Exhibit F assigning to Buyer all of Seller's right, title and interest
as lessor (or lessee as the case may be) under the leases;
(h) Copies of the resolutions adopted by the board of
directors of the Seller, certified by the Secretary of the Seller, as
having been duly and validly adopted and as being in full force and
effect, authorizing the execution and delivery by the Seller of this
Agreement, the ▇▇▇▇ of Sale and other closing documents described in
this Agreement to which the Seller is a party, and the performance by
the Seller of its obligations hereunder and thereunder;
(i) All such other instruments of assignment or conveyance
as shall, in the reasonable opinion of the Buyer and its counsel, be
necessary to transfer to the Buyer the Purchased Assets in accordance
with this Agreement and where necessary or desirable, in recordable
form;
(j) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if the Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to
the appropriate taxing authority any amount equal to 10% of the total
Amount Realized (as defined under Section 1445 of the Code);
(k) Such other agreements, documents, instruments and
writings as are required to be delivered by the Seller at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith; and
(l) $5.4 million by wire transfer of immediately available
funds or by such other means as are agreed to by the Seller and the
Buyer.
4.4 Deliveries by Buyer. At the Closing, the Buyer will deliver
the following to the Seller:
(a) The Estimated Purchase Price by wire transfer of
immediately available funds or by such other means as are agreed to by
the Seller and the Buyer;
(b) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(d) The Instrument of Assumption, duly executed by the
Buyer;
(e) All such other instruments of assumption as shall, in
the reasonable opinion of the Seller and its counsel, be necessary for
the Buyer to assume the Assumed Liabilities in accordance with this
Agreement;
(f) One or more easements to the extent necessary for
Seller to continue and maintain its transmission and distribution
business, in favor of the Seller (the "Seller's Easements") with
respect to real property conveyed to Buyer, duly executed and
acknowledged by Buyer, each substantially in the form of Exhibit E
hereto, and Buyer shall bear any transfer or similar tax incurred in
connection herewith as set forth in Section 7.8;
(g) Copies of the resolutions adopted by the Members or
Managers or similar governing body of the Buyer, certified by the
Member of the Buyer, as having been duly and validly adopted and as
being in full force and effect, authorizing the execution and delivery
by the Buyer of this Agreement and other closing documents described
in this Agreement to which the Buyer is a party, and the performance
by the Buyer of its obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and
writings as are required to be delivered by the Buyer at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Buyer as follows:
5.1 Organization; Qualification. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to
own, lease, and operate its properties and to carry on its business as is
now being conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which it operates the Purchased Assets and such jurisdiction requires it to
be so qualified. The Seller has heretofore delivered to the Buyer complete
and correct copies of its Certificate of Incorporation and By-Laws as
currently in effect.
5.2 Authority Relative to this Agreement. The Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Seller and no other corporate proceedings on the part of
the Seller or its shareholders are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Seller, and assuming
that this Agreement constitutes a valid and binding agreement of the Buyer,
subject to the receipt of the Seller Required Regulatory Approvals and the
Buyer Required Regulatory Approvals, constitutes a valid and binding
agreement of the Seller, enforceable against the Seller in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
5.3 Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Seller nor the
performance by the Seller of its obligations under this Agreement or the
Ancillary Agreements or the consummation of the transactions contemplated
hereby or thereby will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or By-Laws of the Seller,
(ii) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, except
(x) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not have a Material
Adverse Effect or would not prohibit or restrain the execution, delivery
or performance of this Agreement or the Ancillary Agreements, or the
consummation of the transactions contemplated hereby or thereby in any
material respect or (y) for those requirements which become applicable to
the Seller as a result of the specific regulatory status of the Buyer (or
any of its affiliates) or as a result of any other facts that specifically
relate to the business or activities in which the Buyer (or any of its
affiliates) is or proposes to be engaged; (iii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which
the Seller, or any of its subsidiaries, is a party or by which the Seller,
or any of its subsidiaries, or any of the Purchased Assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained
or which, individually or in the aggregate, would not have a Material
Adverse Effect; or (iv) violate any order, writ, injunction, judgment, law,
decree, statute, rule or regulation applicable to the Seller, or any of its
assets, which violation would, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) (A) notice by the
Seller to, and an order by, the NYPSC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (B) notice by
the Seller to, and an order by, the NJBPU approving the transactions
contemplated by this Agreement or the Ancillary Agreements and (C) notice
by the Seller to, and an order by, the PAPUC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) the
approval, if required, of the SEC pursuant to the Holding Company Act, and
(iv) the filings by the Seller and the Buyer required by the HSR Act and
the expiration or earlier termination of all waiting periods under the HSR
Act (the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any governmental or regulatory body or authority is
necessary for the consummation by the Seller of the transactions
contemplated hereby or by the Ancillary Agreements, other than such
declarations, filings, registrations, notices, authorizations consents or
approvals which, if not obtained or made, will not, in the aggregate, have
a Material Adverse Effect and other than Permits and Environmental Permits.
5.4 Reports. Since January 1, 1996, O&R, pursuant to the
Securities Act, the Exchange Act, the applicable State public utility laws,
the Federal Power Act and the Holding Company Act, has filed or caused to
be filed with the SEC, the applicable state or local utility commissions or
regulatory bodies, or the FERC, as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the
business and operations of O&R as it relates to the Purchased Assets under
each of the Securities Act, the Exchange Act, the applicable State public
utility laws, the Federal Power Act and the Holding Company Act and the
respective rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the appropriate act
and the rules and regulations thereunder in effect on the date each such
report was filed.
5.5 Financial Statements. The Seller has previously furnished
to the Buyer (i) audited consolidated balance sheets of the Seller as of
December 31, 1997, and (ii) the related audited consolidated statements of
income and retained earnings and changes in financial position of the
Seller for the fiscal year then ended, together with the respective reports
thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. The consolidated balance sheet of the
Seller as of December 31, 1997 is referred to as the "Seller Balance
Sheet." Each of the balance sheets included in the financial statements
referred to in this Section 5.5 (including the related notes thereto)
presents fairly the financial position of the Seller as of their respective
dates, and the other related statements included therein (including the
related notes thereto) present fairly the results of operations and changes
in financial position for the periods then ended, all in conformity with
generally accepted accounting principles as applicable to a regulated
utility applied on a consistent basis, except as otherwise noted therein.
5.6 Undisclosed Liabilities. Except as set forth in Schedule
5.6, to the Seller's knowledge, the Seller has no liability or obligation
relating to the business or operations of the Purchased Assets, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in the Seller Balance Sheet or disclosed in the notes thereto in accordance
with generally accepted accounting principles, except those which either
were incurred in the ordinary course of business, after the date of the
Seller Balance Sheet, or those which in the aggregate are not material to
the Purchased Assets.
5.7 Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.7, or in the reports, schedules, registration
statements and definitive proxy statements filed by the Seller with the SEC
and (ii) as otherwise contemplated by this Agreement, to the Seller's
knowledge, since the date of the Seller Balance Sheet there has not been:
(a) any Material Adverse Effect; (b) any damage, destruction or casualty
loss, whether covered by insurance or not, which had a Material Adverse
Effect; (c) any entry into any agreement, commitment or transaction
(including, without limitation, any borrowing or capital financing) by the
Seller, which is material to the business or operations of the Purchased
Assets, except agreements, commitments or transactions in the ordinary
course of business or as contemplated herein; or (d) any change by the
Seller, with respect to the Purchased Assets, in accounting methods,
principles or practices except as required or permitted by generally
accepted accounting principles.
5.8 Title. Set forth in Schedule 5.8 is a true and complete
list of all real property which is part of or material to the business or
operations of the Purchased Assets (the "Real Property") and other real
property interests which are a part of or material to the business or
operations of the Purchased Assets (together with the Real Property, the
"Property Interests"). The Seller has leasehold or other contractual
interests in all Purchased Assets identified in subsections (f), (l), (n)
and (p) of Section 1.1(a)(40) and subject only to Permitted Encumbrances
and the Leases, (i) good and marketable title to the Real Property and (ii)
good and valid title to all Purchased Assets identified in subsections (a),
(c), (d), (e), (g), (h), (i), (j), (k), (m), (o) and (q) of Section
1.1(a)(40). At the Closing, the Seller will have the cash available to pay
the amount referred to in Section 1.1(a)(40)(r) of this Agreement.
5.9 Leasehold Interests. Schedule 5.9(a) lists all Real
Property leases or subleases (the "Leases") relating to the Purchased
Assets under which the Seller is a lessee, sublessee, lessor or sublessor
and which are to be assigned to, and assumed by, the Buyer on the Closing
Date. Except as set forth in Schedule 5.9(b), the Leases are valid,
binding and enforceable in accordance with their terms, and are in full
force and effect; there are no existing material defaults by the Seller
thereunder; and no event has occurred which (whether with or without
notice, lapse of time or both) would constitute a material default
thereunder. Seller has a valid and subsisting leasehold estate in and the
right to quiet enjoyment of the Leases under which either Seller is a
lessee or sublessee for the full term of such Leases, which leasehold
interests are unencumbered other than by Permitted Encumbrances, and Seller
has delivered to Buyer true and complete copies of all Leases.
5.10 Improvements. Except as set for forth in Schedule 5.10(a),
the Seller has not received any written notices from any governmental
authority stating or alleging that any improvements with respect to the
Purchased Assets have not been constructed in compliance with applicable
law. Except as set for forth in Schedule 5.10(b), no notice has been
received by the Seller from any governmental authority requiring or
advising as to the need for any repair, alteration, restoration or
improvement in connection with the Purchased Assets.
5.11 Insurance. Except as set forth in Schedule 5.11(a), all
material policies of fire, liability, worker's compensation and other forms
of insurance purchased or held by and insuring or related to the Purchased
Assets are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date as of which this
representation is being made have been paid, and no notice of cancellation
or termination has been received with respect to any such policy which was
not replaced on substantially similar terms prior to the date of such
cancellation. Except as described in Schedule 5.11(b), the Seller has not
been refused any insurance with respect to the Purchased Assets nor has its
coverage been limited by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last
five (5) years nor have they received written notice from any insurer with
respect to any Real Property or Lease of defects or inadequacies with
respect thereto or the improvements located thereon that would materially
adversely affect the insurability of same or cause the imposition of
extraordinary premiums therefor.
5.12 Environmental Matters. (a) Except as disclosed in Schedule
5.12(a)(i), to the Seller's knowledge, the Seller holds, and is in
compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for the Seller to operate
the Purchased Assets under applicable Environmental Laws, and the Seller is
otherwise in compliance with applicable Environmental Laws with respect to
the Purchased Assets except for such failures to hold or comply with
required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws, which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect. Schedule
5.12(a)(ii) sets forth all Environmental Permits relating to the ownership
or operation of the Purchased Assets.
(b) Except as disclosed in Schedule 5.12(b), Seller has not
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar State law with
respect to any on-site location related to the Purchased Assets, and no
investigation and/or remediation is being conducted or is pending at the
Purchased Assets (other than investigations or remediation conducted by or
on behalf of Seller or Buyer in connection with this transaction) except
for such liability under such laws or investigations or remediation as
would not be reasonably likely to have a Material Adverse Effect.
(c) With respect to the Purchased Assets, no action, claim,
investigation or other proceeding relating to any Environmental Law is
pending, or to Seller's knowledge, threatened, and Seller has not entered
into or agreed to any consent decree or order, and is not subject to any
judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances or coal ash under any Environmental Law, except such
consent decrees or orders, judgments, decrees or administrative or judicial
orders, actions, claims, investigations or proceedings that (i) would not
be reasonably likely to have a Material Adverse Effect or (ii) appear on
Schedule 5.12(c), or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of Seller, and in the possession of Seller, which concern Releases
of Hazardous Substances or coal ash at, on, in, or under the Purchased
Assets or compliance of Purchased Assets with Environmental Laws conducted
within the last two (2) years are listed in Schedule 5.12(d) and have been
provided to Buyer.
(e) The representations and warranties made in this Section 5.12
are the Seller's exclusive representations and warranties to environmental
matters.
5.13 Labor Matters. Schedule 7.10(a) lists and Seller has
previously delivered to the Buyer true and correct copies of all labor
union, Collective Bargaining Agreements and other labor agreements relating
to the Purchased Assets to which Seller is a party or is subject. With
respect to the Purchased Assets, except to the extent set forth in Schedule
5.13 and except for such matters as will not have a Material Adverse
Effect, to the Seller's knowledge: (a) Seller is in compliance with all
applicable laws respecting employment and employment practices,
occupational health and safety, and wages and hours; (b) Seller has not
received written notice of any unfair labor practice complaint against it
pending before the National Labor Relations Board; (c) there is no labor
strike, slowdown or stoppage actually pending or threatened against or
affecting the Seller; (d) Seller has not received notice that any
representation petition respecting its employees has been filed with the
National Labor Relations Board; (e) no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending against
the Seller; and (f) Seller has not experienced any primary work stoppage
since at least December 31, 1994.
5.14 ERISA. (a) Schedule 5.14(a) lists all deferred
compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all welfare, severance, stock-based, bonus and
other employee benefit or fringe benefit plans, programs and arrangements,
whether written or oral, maintained or with respect to which contributions
have been in the last five (5) years or are made by O&R in respect of
employees who are employed in connection with the Purchased Assets (such
plans, programs and arrangements collectively, the "Benefit Plans"). To
the Seller's knowledge, each Benefit Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and all other
applicable laws. Accurate and complete copies of all such Benefit Plans
and their summary descriptions, including multiemployer plans, have been
made available to the Buyer.
(b) Except as set forth in Schedule 5.14(b)(i), with respect to
employees at the Purchased Assets, to the Seller's knowledge, O&R and the
ERISA Affiliates have fulfilled their respective obligations under the
minimum funding requirements of Section 302 of ERISA, and Section 412 of
the Code, with respect to each Benefit Plan that is a pension benefit plan
as defined in Section 3(2) of ERISA (each, a "Pension Benefit Plan"). To
the Seller's knowledge, neither O&R nor any ERISA Affiliate has incurred
any liability to the Pension Benefit Guaranty Corporation in connection
with any Pension Benefit Plan which is subject to Title IV of ERISA,
including any withdrawal liability, nor is there any reportable event (as
defined in Section 4043 of ERISA), except as set forth in Schedule
5.14(b)(ii). Except as set forth in Schedule 5.14(b)(iii), the Internal
Revenue Service has issued a letter for each Pension Benefit Plan which is
intended to be qualified under Section 401(a) of the Code, determining that
such plan is exempt from United States Federal Income Tax under Sections
401(a) and 501(a) of the Code, and to the Seller's knowledge there has been
no occurrence since the date of any such determination letter which has
adversely affected such qualification, and no withdrawal liability has been
incurred by or asserted and none is anticipated against O&R with respect to
any Pension Benefit Plan which is a "multiemployer plan" (as defined in
Section 3(37) of ERISA).
(c) To the Seller's knowledge, neither Seller nor any ERISA
Affiliate has engaged in any transaction within the meaning of Section
4069(b) or Section 4212(c) of ERISA. Except as set forth in Schedule
5.14(c), no Benefit Plan is a multi-employer plan.
(d) To the extent O&R maintained or maintains a "group health
plan" within the meaning of Section 5000(b)(1) of the Code, to the Seller's
knowledge, O&R has materially complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA Part 6 of Subtitle B of
Title I of ERISA and the regulations thereunder.
5.15 Real Property Encumbrances. Schedule 5.15 lists all real
property encumbrances affecting the Real Property including matters
contained in deeds, easements and options. True and correct copies of all
current surveys, abstracts, title opinions and policies of title insurance
currently in force with respect to such Real Property have been delivered
by the Seller to the Buyer. None of the Permitted Encumbrances materially
adversely affect the existing use of the Real Property.
5.16 Condemnation. Neither the whole nor any part of the Real
Property or any other real property or rights leased, used or occupied by
the Seller in connection with the ownership or operation of the Purchased
Assets is subject to any pending suit for condemnation or other taking by
any public authority, and, to the knowledge of the Seller, no such
condemnation or other taking is threatened or contemplated.
5.17 Certain Contracts and Arrangements.
(a) Except (i) as listed in Schedule 5.17(a), (ii) for
contracts, agreements, personal property leases, commitments,
understandings or instruments which will expire prior to the Closing
Date, (iii) for agreements with suppliers entered into in the ordinary
course of business (including contracts entered into in connection
with the Scheduled Capital Expenditures and the Scheduled Maintenance
Expenditures), and (iv) for contracts, agreements, personal property
leases, commitments, understandings or instruments with a value less
than $200,000 or with annual or aggregate payments less than $200,000,
the Seller is not a party to any written contract, agreement, personal
property lease, commitment, understanding or instrument which is
material to the business or operations of the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each Seller
Agreement listed on Schedule 5.17(a) constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and
may be transferred to the Buyer pursuant to this Agreement and will
continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not,
under any of the Seller Agreements listed on Schedule 5.17(a), any
default or event which, with notice or lapse of time or both, would
constitute a default on the part of any party thereto, except such
events of default and other events as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, have a Material Adverse Effect.
5.18 Legal Proceedings, etc. Except as set forth in Schedule
5.18 or in any filing made by the Seller pursuant to the Securities Act or
the Exchange Act, there are no claims, actions, or proceedings pending or
investigation pending or, to the Seller's knowledge, threatened against the
Seller relating to the Purchased Assets before any court, arbitrator,
governmental or regulatory authority or body acting in an adjudicative
capacity, which, if adversely determined, would have a Material Adverse
Effect or would prohibit or restrain the execution, delivery or performance
of this Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby in any material respect.
Except as set forth in Schedule 5.18, the Seller is not subject to any
outstanding judgment, rule, order, writ, injunction or decree of any court,
governmental or regulatory authority relating to the Purchased Assets which
would have a Material Adverse Effect.
5.19 Permits. The Seller has all material permits, licenses,
franchises and other governmental authorizations, consents and approvals,
other than with respect to Environmental Laws (collectively, "Permits") as
set forth in Schedule 5.19(a), necessary to own or operate the Purchased
Assets as presently owned or operated, except where the failure to have
such Permits would not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, the Seller has
not received any written notification that it is in violation of any of
such Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority applicable to
it, except for notifications of violations which would not, individually or
in the aggregate, have a Material Adverse Effect. The Seller is in
compliance with all Permits, laws, statutes, orders, rules, regulations,
ordinances, or judgments of any governmental or regulatory body or
authority applicable to Purchased Assets, except for violations which, in
the aggregate, would not have a Material Adverse Effect.
5.20 Regulation as a Utility. O&R and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania as set forth on Schedule 5.20(a), and in no
other state. Except as set forth on Schedule 5.20(b), the Seller is not
subject to regulation as a public utility or public service company (or
similar designation) by the United States, any State of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
5.21 Taxes. Except as set forth in Schedule 5.21: (a) no notice
of deficiency or assessment has been received from any taxing authority
with respect to liabilities for Taxes of Seller in respect of the Purchased
Assets, which have not been fully paid or finally settled, and any such
deficiency shown in Schedule 5.21 is being contested in good faith through
appropriate proceedings; (b) there are no outstanding agreements or waivers
extending the applicable statutory periods of limitation for Taxes
associated with the Purchased Assets for any period; (c) there are no
rulings or closing agreements executed with any taxing authority relating
to the Purchased Assets that will be binding upon Buyer after the Closing;
(d) none of the Purchased Assets is property that is required to be treated
as being owned by any other person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code or "tax-exempt
use" property within the meaning of Section 168(h) of the Code; and (e)
there are no powers of attorney in effect relating to Taxes relating to the
Purchased Assets for any Post-Closing period.
5.22 Intellectual Property. Seller has all right, title and
interest in or valid and binding rights under contract to use the
Intellectual Property relating to the Purchased Assets. Seller has not
received notice that it is infringing any Intellectual Property of any
other Person in connection with the operation or business of the Purchased
Assets, no claim is pending or has been made to such effect that has not
been resolved and Seller is not infringing any Intellectual Property of any
other Person the effect of which, individually or in the aggregate, would
have a Material Adverse Effect.
5.23 Year 2000 Readiness. Seller has informed Buyer of its
analysis of, the status of development of contingency plans for, and
forecasted expenditures with respect to Year 2000 readiness of material
computer software and computer firmware comprising the Purchased Assets, as
such analysis, contingency plan development and forecast of expenditures
exist on the date hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Seller as follows:
6.1 Organization. The Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to the Seller complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2 Authority Relative to this Agreement. The Buyer has full
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Managers or Members of the Buyer
and the Board of Directors of both Southern Energy, Inc. and The Southern
Company and no other company proceedings on the part of the Buyer or such
Affiliates of the Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Buyer, and assuming that
this Agreement constitutes a valid and binding agreement of the Seller,
subject to the receipt of the Buyer Required Regulatory Approvals and the
Seller Required Regulatory Approvals, constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
6.3 Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Buyer nor the purchase
by the Buyer of the Purchased Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) and except for the
filings by the Buyer and the Seller required by the HSR Act (the filings
and approvals referred to in Schedule 6.3(a) and with respect to the HSR
Act are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby.
6.4 Operating Easements. Buyer will grant Operating Easements
to Seller as agreed to pursuant to the procedures set forth in the
Continuing Site/Interconnection Agreement.
6.5 Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.5, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.6 Availability of Funds. The Buyer has sufficient funds
available to it or will receive binding written commitments from
responsible financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business Relating to the Purchased Assets.
Except as described in Schedule 7.1, during the period from the date of
this Agreement to the Closing Date, the Seller will operate and maintain
the Purchased Assets according to its ordinary and usual course of business
consistent with Good Utility Practice. Without limiting the generality of
the foregoing, and, except as contemplated in this Agreement or as
described in Schedule 7.1, prior to the Closing Date, without the prior
written consent of the Buyer (unless such consent would be prohibited by
law), the Seller will not with respect to the Purchased Assets:
(a) make any material change in the operations of the
Purchased Assets (including, without limitation, the levels of fuel
inventory and materials and supplies customarily maintained by the
Seller other than consistent with past practice);
(b) except for Scheduled Capital Expenditures, make any
capital expenditures with respect to the Purchased Assets or enter
into any contract or commitment therefor, except that (i) the Seller
shall make any capital expenditures requested by the Buyer, provided
that the Buyer will reimburse Seller for such capital expenditures at
least five (5) Business Days prior to the date payment for such
expenditure is due, and (ii) the Seller shall make any capital
expenditures deemed necessary by the Seller in accordance with Good
Utility Practices ("Necessary Capital Expenditures") at Seller's cost
and expense, provided, however, that if the Buyer requests that the
Seller make enhancements/upgrades with a cost in excess of the cost of
any Necessary Capital Expenditures, the Buyer shall reimburse the
Seller for the cost of such enhancements/upgrades to the extent the
cost of such an enhancement/upgrade exceeds the cost of the Necessary
Capital Expenditure at the time such enhancement/upgrade is performed;
(c) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Purchased Assets, other than assets used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practice and not mortgage or pledge, or impose or suffer to be
imposed any Encumbrance on, any of the Purchased Assets other than
Permitted Encumbrances in the ordinary course of business;
(d) except for Scheduled Maintenance Expenditures, make any
maintenance expenditures, except that (i) the Seller shall make any
maintenance expenditures requested by the Buyer provided that the
Buyer will reimburse Seller for such maintenance expenditures at least
five (5) Business Days prior to the date payment for such expenditure
is due, and (ii) the Seller shall make any maintenance expenditures
deemed necessary by the Seller in accordance with Good Utility
Practices ("Necessary Maintenance Expenditures") at Seller's cost and
expense, provided, however, that if the Buyer requests that the Seller
make enhancements/upgrades with a cost in excess of the cost of any
Necessary Maintenance Expenditures, the Buyer shall reimburse the
Seller for the cost of such enhancements/upgrades to the extent the
cost of such enhancement/upgrade exceeds the cost of the Necessary
Maintenance Expenditure at the time such enhancement/upgrade is
performed;
(e) amend or terminate prior to the expiration date, or
waive any material term or give consent to any material request with
respect to any of the Seller's Agreements, Permits or Environmental
Permits except to the extent that such amendment, termination, waiver
or consent (i) will not have a material impact on operations of the
Purchased Assets, including the cost of said operations or (ii) is
required by applicable law, including applicable Environmental Law;
(f) enter into any agreements for the purchase or sale of
fuel (whether commodity or transportation):
(i) that extend more than sixty (60) days beyond April
30, 1999 if, in the aggregate such agreements have remaining
payment obligations of more than $20 million after April 30, 1999
in each case, other than any agreements that are entered into
pursuant to (A) the Letter of Intent for transportation of coal
between Seller and CSX dated as of October 20, 1998 and (B) the
letter between Seller and ▇▇▇▇▇▇ Coal Sales Company, Inc.
("▇▇▇▇▇▇") which memorializes the price reopener agreement in
connection with the Coal Purchase and Sales Agreement between
▇▇▇▇▇▇ and Seller dated March 9, 1984, as amended.
(ii) that extend more than thirty (30) days beyond
October 31, 1999 if, in the aggregate, such agreements have
remaining payment obligations of more than $10 million after
October 31, 1999 provided, however, that O&R shall consult with
the Buyer regarding purchases or sales of fuel in excess of $10
million if such commitments to purchase or sell will extend
beyond April 30, 1999. The parties further agree to adjust the
dates in this Section 7.1(f) if the Closing is anticipated to
occur after April 30, 1999. Such adjustment will reflect the
amount of time beyond April 30, 1999 by which the Closing is
expected to occur at the time such an agreement is entered;
(g) enter into any power sales commitments:
(i) having a term greater than six (6) months and that
extends beyond April 30, 1999 if the aggregate energy under such
commitment and all other then outstanding commitments not
previously consented to by the Buyer would in Seller's judgment
reasonably be expected to exceed 100,000 MW hours delivered after
April 30, 1999; or
(ii) having a term greater than six (6) months and
that extends beyond October 31, 1999 if the aggregate energy
under such commitment and all other then outstanding commitments
not previously consented to by the Buyer would in Seller's
judgment reasonably be expected to exceed 45,000 MW hours
delivered after October 31, 1999;
provided, however, Seller shall consult with the Buyer regarding entering
into any power sales commitments in excess of $3 million if such
commitments will extend beyond April 30, 1999. The parties further agree to
adjust the dates in this Section 7.1(g) if the Closing is anticipated to
occur after April 30, 1999. Such adjustment will reflect the amount of
time beyond April 30, 1999 by which the Closing is expected to occur at the
time such an agreement is entered;
(h) sell, lease or otherwise dispose of Emission Allowances
except to the extent necessary to operate the Purchased Assets in
accordance with this Section 7.1;
(i) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (h); or
(j) make any new, or change any current, election with
respect to Taxes affecting the Purchased Assets.
7.2 Access to Information. (a) Between the date of this
Agreement and the Closing Date, the Seller will, during ordinary business
hours and upon reasonable notice (i) give the Buyer and the Buyer
Representatives reasonable access to its managerial personnel and to all
books, records, plants, offices and other facilities and properties
constituting the Purchased Assets to which the Buyer is permitted access by
law, (ii) permit the Buyer to make such reasonable inspections thereof as
the Buyer may reasonably request, including conducting environmental
sampling at, on and underneath the Purchased Assets and performing
compliance audits at the Purchased Assets, if Buyer reasonably deems such
sampling necessary after reviewing further information which becomes
available after the date hereof, so long as Seller provides its consent to
such sampling, which consent shall not be unreasonably withheld,
(iii) cause its officers, engineers, operations and maintenance personnel
and advisors to furnish the Buyer with such financial and operating data,
Tax Returns (other than Income Tax Returns) and other information with
respect to the Purchased Assets as the Buyer may from time to time
reasonably request and assist Buyer in such inspections, (iv) cause its
officers and advisors to furnish the Buyer a copy of each report, schedule
or other document filed or received by them with the SEC, NYPSC, NJBPU,
PAPUC, FERC, ISO, or other governmental authority with respect to the
Purchased Assets; provided, however, that (A) any such investigation shall
be conducted in such a manner as not to interfere unreasonably with the
operation of the Purchased Assets, (B) the Seller shall not be required to
take any action which would constitute a waiver of the attorney-client
privilege and (C) the Seller need not supply the Buyer with any information
which the Seller is under a legal obligation not to supply, provided,
however, that Seller shall have used commercially reasonable efforts to
have such obligations waived. Notwithstanding anything in this Section 7.2
to the contrary, (i) the Seller will furnish or provide such access to
medical records only as is permitted by law, and (ii) the Seller will
furnish or provide such access to personnel records only to the extent that
the employee to which the personnel record relates has given his/her
consent to the Seller.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of Section 11.2 hereof and shall be treated as Confidential
Information.
(c) Commencing February 1, 1999, the Buyer shall have the right
to physically locate one designated representative (the "Designated
Representative") of the Buyer at an office or in workspace at Seller's
corporate offices to observe the operations of ▇▇▇▇▇▇, as well as the
operations of the Bowline Point Generating Station, the hydroelectric
generating stations and the gas turbine generating stations, pursuant to
the Other Sales Agreements; provided, however, that the Buyer shall not
unreasonably interfere with the Seller's use of the Purchased Assets. The
Seller shall coordinate site visits and provide the Designated
Representative during such period prior to the Closing access to Seller's
managerial personnel. The Designated Representative shall coordinate the
Buyer's rights to access under Section 7.2(a) hereof during the period
prior to the Closing.
(d) For a period of seven (7) years after the Closing Date, the
Seller and its representatives shall have reasonable access to (i)
information on employees covered by the Seller's Management Employee
Transition Program and (ii) all of the books and records of the Purchased
Assets, as the case may be, transferred to the Buyer hereunder to the
extent that such access (A) may reasonably be required by the Seller in
connection with matters relating to or affected by the operation of the
Purchased Assets prior to the Closing Date and (B) is not otherwise
prohibited by law. Such access shall be afforded by the Buyer upon receipt
of reasonable advance written notice and during normal business hours. The
Seller shall be responsible for any costs or expenses incurred by it
pursuant to this Section 7.2(d). If the Buyer shall desire to dispose of
any such books and records prior to the expiration of such seven (7) year
period, the Buyer shall, prior to such disposition, give the Seller a
reasonable opportunity at the Seller's expense, to segregate and remove
such books and records as the Seller may select. Any information provided
by Buyer to Seller pursuant to this Section 7.2(d) shall be deemed
Confidential Information.
7.3 Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4 Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Assets pursuant to this Agreement, including without
limitation, the use of the Seller's and the Buyer's commercially reasonable
efforts to obtain all Permits and Environmental Permits necessary for the
Buyer to operate the Purchased Assets. Neither of the Parties shall,
without the prior written consent of the other Party, take or fail to take
any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this
Agreement or the Ancillary Agreements. From time to time after the date
hereof, without further consideration, the Seller will, at its own expense,
execute and deliver such documents to the Buyer as the Buyer may reasonably
request in order more effectively to vest in the Buyer good title to the
Purchased Assets. From time to time after the date hereof, the Buyer will,
at its own expense, execute and deliver such documents to the Seller as the
Seller may reasonably request in order to more effectively consummate the
sale of the Purchased Assets pursuant to this Agreement. To the extent
that any personal property lease, relating to any assets ("Leased Assets")
which are principally used by the Seller for generation purposes at the
Purchased Assets, cannot be assigned to the Buyer, the Seller will use its
commercially reasonable efforts to acquire title to such Leased Assets and
to include them in the Purchased Assets before the Closing Date unless
Buyer directs Seller in writing not to acquire any such Leased Asset. The
Seller's documented and reasonable costs associated with acquiring title to
such Leased Assets shall be paid by the Buyer as part of the Purchase
Price. Schedule 7.4 lists all of the Leased Assets.
(b) To the extent that any Seller's rights under any guaranties,
warranties and indemnification applicable to the Purchased Assets or the
Assumed Liabilities are nontransferable or nonassignable, Seller shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
7.5 Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or
stock exchange rules or regulations and except that the parties may make
public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6 Consents and Approvals. (a) The Seller and the Buyer shall
each file or cause to be filed with the Federal Trade Commission and the
United States Department of Justice any notifications required to be filed
under the HSR Act and the rules and regulations promulgated thereunder with
respect to the transactions contemplated hereby. The parties shall consult
with each other as to the appropriate time of filing such notifications and
shall use their best efforts to make such filings at the agreed upon time,
to respond promptly to any requests for additional information made by
either of such agencies, and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date after the date of
filing. Buyer shall bear the cost of all filing fees under the HSR Act.
(b) The Seller and the Buyer shall cooperate with each other and
(i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Environmental Permits,
Permits, consents, approvals and authorizations of all governmental bodies
and (iv) use all reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each of
the foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, the Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which the Seller or the Buyer is a
party or by which either of them is bound. The Seller shall have the right
to review and approve in advance all characterizations of the information
relating to Purchased Assets; and the Seller and the Buyer shall have the
right to review and approve in advance all characterizations of the
information relating to the transactions contemplated by this Agreement
which appear in any filing made in connection with the transactions
contemplated hereby. The parties hereto agree that they will consult with
each other with respect to the transferring to the Buyer or the obtaining
by the Buyer of all such necessary Environmental Permits, Permits,
consents, approvals and authorizations of all third parties and
governmental bodies. The Seller and the Buyer shall designate separate
counsel with respect to all applications, notices, petitions and filings
(joint or otherwise) relating to this Agreement and the transactions
contemplated hereby on behalf of the Seller, on the one hand and the Buyer
on the other hand, with all governmental bodies. To the extent that a
consent to an assignment of any material Seller Agreement cannot be
obtained before the Closing Date, the Seller will enter into all such
agreements with the Buyer as are necessary to give the Buyer the rights,
obligations and burdens of such Seller Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Seller shall cooperate with Buyer's efforts in this regard and shall use
its best efforts to assist in the transfer or reissuance when so requested
by Buyer. In the event that Buyer is unable, despite commercially
reasonable efforts, to obtain a transfer or reissuance of one or more
Permits as of the Closing Date, Buyer may use the Permits issued to Seller
to the extent permissible under applicable laws and regulations provided
(i) Buyer notified Seller prior to Closing, (ii) Buyer continues to make
commercially reasonable efforts to obtain a transfer or reissuance of such
Permits after the Closing, and (iii) Buyer indemnifies Seller for any
losses, claims or penalties suffered by Seller in connection with the
Permit that is not transferred or reissued as of the Closing Date resulting
from Buyer's operation of the Purchased Assets following the Closing Date.
In no event shall Buyer use or otherwise rely on a Permit issued to Seller
beyond one year after Closing unless Buyer has, after exercising its
commercially reasonable efforts, been unable to obtain same and such
reliance is not prohibited by law.
7.7 Fees and Commissions. The Seller and the Buyer each
represent and warrant to the other that, except for ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation ("DLJ"), which is acting for and at the
expense of the Seller, and Credit Suisse First Boston Corporation, which is
acting for and at the expense of the Buyer, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Seller and the Buyer
will pay to the other or otherwise discharge, and will indemnify and hold
the other harmless from and against, any and all claims or liabilities for
all brokerage fees, commissions and finder's fees (other than as described
above) incurred by reason of any action taken by such party.
7.8 Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Seller will join in
the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to the Seller's approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for the Seller's
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, the Seller shall pay to the Buyer its proportionate share of the
amount shown as due on such Tax Return determined in accordance with the
Section 3.4 of this Agreement.
(c) On and after the Closing Date until the maturity or
redemption date of the Pollution Control Bonds which were issued to finance
or refinance all or a portion of the cost of the Pollution Control
Facilities (as defined hereinafter):
(i) Except as otherwise permitted in clause (ii) below,
Buyer will not change or permit to be changed the character or nature
of the use of those facilities listed in Schedule 7.8(c) hereto (the
"Pollution Control Facilities") from the manner Seller has used said
facilities prior to the sale of the Purchased Assets, unless such
changed use would constitute a use or purpose of the Pollution Control
Facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the Tax Reform Act of 1986, P.L. 99-514, or (the "1986
Tax Act"), to refund bonds described in section 1312(a) of the 1986
Tax Act which, for purposes hereof, are assumed to have been issued to
finance facilities of the same character and use or purpose as the
Pollution Control Facilities;
(ii) Buyer and any transferee which becomes subject to the
provisions of the foregoing clause (i) by reason of this clause (ii)
will not sell or otherwise transfer any portion of the Pollution
Control Facilities unless (A) the transferee covenants to satisfy the
conditions of the foregoing clause (i) with respect to its ownership
and use of the Pollution Control Facilities or (B) the transfer
relates to personal property and is exclusively for cash the proceeds
of which will be expended within six (6) months of the date of receipt
on facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the 1986 Tax Act, to refund bonds described in section
1312(a) of said act which, for purposes hereof, are assumed to have
been issued to finance facilities of the same character and use or
purpose as said facilities;
(iii) Buyer will cooperate with Seller and use commercially
reasonable efforts to permit Seller to have access to the Pollution
Control Facilities at reasonable times to examine them; and
(iv) The foregoing clause shall not be construed to prevent
Buyer (or any transferee) from ceasing to operate, maintain or repair
any element or item of the Pollution Control Facilities, the
operation, maintenance or repair of which becomes uneconomic to Buyer
because of damage or destruction or obsolescence (including physical,
functional or economic obsolescence), or because of any change in
government standards and regulations or the termination of the
operation of the Purchased Assets to which the element or item is an
adjunct. Seller shall notify Buyer when the Pollution Control Bonds
have matured or been redeemed.
(d) Each of the Buyer and the Seller shall provide the other
with such assistance (including access to the Purchased Assets) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
(e) Seller will consult with and allow Buyer to participate in
all outstanding real property tax disputes concerning the Purchased Assets
and shall take such positions as Buyer may request consistent with the
positions previously communicated to Seller by Buyer with respect to such
tax disputes, to assist Buyer in obtaining a tax agreement with respect to
such tax disputes for periods subsequent to the Closing Date. Seller will
use its commercially reasonable efforts to assist Buyer in obtaining an
agreement with the taxing authorities pursuant to which the assessed value
for real estate tax purposes of the Purchased Assets will be the lowest
value achievable. Seller shall not enter into any agreement with the
taxing authorities with respect to such real property tax disputes relating
to periods prior to the Closing Date without the written consent of Buyer
which Buyer shall not unreasonably withhold as long as Seller has complied
with this Section 7.8(e).
7.9 Supplements to Schedules. Prior to the Closing Date, the
parties shall supplement or amend the Schedules required by Article V and
VI with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10 Employees. (a) Schedule 7.10(a) sets forth all collective
bargaining agreements to which O&R is a party in connection with the
Purchased Assets and all other labor agreements and amendments thereto,
that are or may be associated with the Purchased Assets (the "Collective
Bargaining Agreements"). Buyer shall offer employment to begin as of the
Closing Date to the Seller's employees who work in connection with the
Purchased Assets and who are included in the bargaining units covered by
the Collective Bargaining Agreements ("Hourly Employees"), and the Buyer
will assume the Collective Bargaining Agreements and all of the Seller's
obligations thereunder, including, without limitation, the terms and
conditions of the employee benefit plans covering such hourly employees.
(b) Continued Employment; Service Credit. The Buyer shall, as
of the Closing Date, offer employment to the employees of the Seller (who
will be listed on Schedule 7.10(b) by the Buyer), who worked at or directly
serviced the Purchased Assets, who were employees immediately prior to the
Closing Date and who were not Hourly Employees and who are approved by
Buyer (the "Management Employees"). The Buyer shall provide Schedule
7.10(b) at least ninety (90) days prior to the date on which the Closing is
anticipated to occur (but in no event later than February 1, 1999, or such
other date to which the Buyer and O&R mutually agree). The Management
Employees hired by the Buyer shall be given credit for all service with
Seller or its subsidiaries (and service credited by Seller or such
subsidiary), to the same extent as such service was credited for such
purpose by Seller or such subsidiary, under all employee benefit plans,
programs and policies, and fringe benefits of the Buyer in which they
become participants for purposes of eligibility, vesting and determination
of level of benefits (but not for purposes of benefit accrual). To the
extent permissible under the terms thereof and required by applicable law,
the Buyer shall (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Management Employees under any welfare
benefit plans that such employees may be eligible to participate in after
the Closing Date, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare benefit plan maintained
for the Management Employees immediately prior to the Closing Date, and
(ii) provide each Management Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Closing Date.
(c) Subject to applicable law, the Buyer shall maintain for a
period of at least one year after the Closing Date, without interruption,
such employee compensation, welfare and benefit plans, programs, policies
and fringe benefits as will, in the aggregate, provide benefits to the
Management Employees that are no less favorable than those provided
pursuant to such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits of the Seller and its subsidiaries,
as in effect on the Closing Date. During the period between the date
hereof and the Closing Date, the Seller shall use its best efforts to keep
available all current Management Employees for employment by the Buyer
(except those employees which the Buyer identifies in writing as Management
Employees which the Buyer does not intend to employ).
(d) Notwithstanding the Buyer's assumption of the Collective
Bargaining Agreement, the Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of O&R or any ERISA Affiliate of the
Seller in connection with the assumption of such agreements or in
connection with hiring any of the Hourly Employees. All benefits accrued
under such Benefits Plans and all benefits currently payable as of the
Closing Date shall be and shall remain the obligation of O&R and any
individual covered under any such Benefit Plan that is a Group Health Plan
(as defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA)
and who is eligible for continued coverage under such Group Health Plan as
of the Closing Date, shall continue to be covered under such Group Health
Plan after Closing, pursuant to the provisions of COBRA.
(e) The Seller agrees to perform timely and discharge all
requirements, if any, under the WARN Act and under applicable state and
local laws and regulations for the notification of its employees arising
from the sale of the Purchased Assets to the Buyer up to and including the
Closing Date. The Buyer will cooperate with Seller to provide Seller with
such information as may be needed from the Buyer for inclusion in such
notices, including providing Seller at least ninety (90) days prior to the
date on which the Closing is anticipated to occur (but in no event, later
than February 1, 1999 or such other date to which the Buyer and O&R
mutually agree) with a list of all of Seller's employees to whom the Buyer
will make offers of employment. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN
Act and under applicable state and local laws and regulations for the
notification of its employees with respect to the Purchased Assets.
(f) O&R shall be responsible for any payments required under its
severance plan, including severance payment and other benefit enhancements,
offered in connection with the transfer of the Purchased Assets. Within
thirty (30) days following the last day that any employee may elect to
participate in such plan, O&R shall provide Buyer with a list of all
electing employees. In any event, Buyer is not required to establish this
or any other severance or benefit plan.
(g) O&R shall comply with all of the requirements of COBRA
arising from this Agreement with respect to all employees of O&R employed
at the Purchased Assets who are not employed by Buyer.
(h) O&R shall pay, when due, to all Hourly Employees and
Management Employees hired by the Buyer pursuant to Section 7.10 hereof,
all compensation, bonus, severance, vacation and holiday compensation,
workers' compensation or other employment benefits which have accrued to
such Hourly Employees and Management Employees through and including the
Closing Date.
(i) Following the execution of this Agreement, O&R will use its
commercially reasonable best efforts to arrange meetings and interviews
with such employees of O&R as Buyer shall reasonably request.
(j) O&R shall not, prior to the Closing Date, with respect to
the Purchased Assets, (i) hire new employees or transfer current employees
prior to the Closing to work at the Purchased Assets, other than to fill
vacancies in existing positions in the reasonable discretion of Seller,
(ii) take any action prior to the Closing to affect a material change in
the Collective Bargaining Agreement, or (iii) take any action prior to the
Closing to increase the aggregate benefits payable to the employees
employed in connection with the Purchased Assets, except (A) as otherwise
required by the terms of the Collective Bargaining Agreement obligations to
effects bargain, (B) as O&R shall reasonably deem appropriate in order to
comply with its obligations under the second sentence of Section 7.10(c)
above, (C) for retention bonuses payable to Management Employees on or
before the Closing Date and (D) increases in salary and benefits in the
ordinary course of business, consistent with past practice.
7.11 Risk of Loss. (a) From the date hereof through the Closing
Date, all risk of loss or damage to the property included in the Purchased
Assets shall be borne by the Seller.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain, or is the subject of a
pending or (to the knowledge of the Seller after reasonable inquiry and
investigation) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If such
taking would have a Material Adverse Effect, the Buyer and the Seller shall
negotiate in good faith to settle the loss resulting from such taking
(including, without limitation, by making a fair and equitable adjustment
to the Purchase Price) and, upon such settlement, consummate the
transaction contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Seller has notified the Buyer of such taking, then the Buyer or the
Seller may, if such taking relates to the Purchased Assets, terminate this
Agreement pursuant to Section 10.1(f).
(c) If, before the Closing Date, all or any material portion of
the Purchased Assets are damaged or destroyed by fire or other casualty,
the Seller shall notify the Buyer promptly in writing of such fact. If
such damage or destruction would have a Material Adverse Effect and the
Seller has not notified the Buyer of its intention to cure such damage or
destruction within fifteen (15) days after its occurrence, the Buyer and
the Seller shall negotiate in good faith to settle the loss resulting from
such casualty (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price) and assigning any insurance
proceeds to Buyer at the Closing and, upon such settlement, consummate the
transactions contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Seller has notified the Buyer of such casualty, then the Buyer may
terminate this Agreement pursuant to Section 10.1(f).
7.12 Real Estate Matters. (a) Buyer shall obtain an American
Land Title Association ("ALTA") or New York Board of Title Underwriters
("NYBTU") owners standard form title policy commitment with respect to the
Real Property (the "Title Commitment") from a title company of Buyer's
choice (the "Title Company") covering title to the Real Property, together
with an ALTA 3.1 zoning endorsement, if available, including parking and
access, and such other endorsements as Buyer may reasonably request.
Seller shall provide the Title Company and Buyer such information as the
Title Company or Buyer may reasonably request to assist the Title Company
in connection with the Title Commitment. Without limiting the foregoing,
Seller shall provide the Title Company and Buyer a copy of the most recent
surveys in their possession regarding the Real Property. Promptly after
receiving the Title Commitment, Buyer shall notify Seller in writing of any
defects in title which are not Permitted Encumbrances and would cause title
to the Real Property to be uninsurable (any of which is called herein a
"Defect of Title"). Buyer shall be deemed to have waived any objection to
any Defect of Title that was disclosed by the Title Commitment if Buyer
fails to notify Seller of such Defect of Title within thirty (30) days
after receipt of such Title Commitment. With respect to the existence of
any Defect of Title that is not disclosed by the Title Commitment, but
which arises prior to Closing, Buyer shall immediately notify the Seller in
writing of any such Defect of Title.
(b) O&R agrees that upon the written request of Buyer it will
consent and cause its affiliates to consent to the relocation of the
Operating Easements and Seller's Easements so long as (i) Buyer pays the
cost of such relocation, (ii) such relocation will be to space within
Buyer's ownership and will not materially adversely affect the operation of
Seller's or its respective affiliates' transmission and distribution
business, except for the minimum downtime associated with the cut over for
such relocation process in accordance with Good Utility Practices and
(iii) the Buyer's requested relocation is consistent with Good Utility
Practices. Seller further agrees to condition any grant or assignment by
it of the Operating Easements or Seller's Easements on the express
agreement of its transferee to be bound by the terms and conditions of this
Section 7.12(b).
(c) As to any Operating Easement or Seller's Easement not
currently of record or reserved or granted back to O&R at Closing, all of
which are to be granted by Buyer at Closing concurrently with the transfer
of title to Buyer and prior to any mortgage or other encumbrance, such
Operating Easements and Seller's Easements shall include standard cross-
indemnity provisions relating to personal injury, death or property damage
occurring as a result of gross negligence or willful misconduct in the use
of such Easements, whereby each party agrees to indemnify the other for the
consequences of the gross negligence or willful misconduct of those for
whom the indemnifying party is legally responsible.
7.13 Year 2000. O&R shall (a) use its best efforts to cooperate
with Buyer in formulating a plan to prepare the Purchased Assets to be
ready for Year 2000 computer-related issues with a target completion date
of October 1, 1999 and (b) perform until the Closing Date (or later, at
Seller's election, pursuant to the second sentence of Section 7.14 of this
Agreement) the tasks identified in such plan, consistent with Good Utility
Practices and the expenditures contemplated in itsYear 2000 plans referred
to in Section 5.23 hereof.
7.14 Scheduled Capital Expenditures and Scheduled Maintenance
Expenditures. The Seller shall perform, or caused to be performed, the
Scheduled Capital Expenditures and the Scheduled Maintenance Expenditures,
at Seller's cost, prior to the Closing Date. To the extent that Scheduled
Capital Expenditures and Scheduled Maintenance Expenditures are not
completed by the Closing Date, the Seller either (i) shall cause the
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures to be
completed within a reasonable time following the Closing Date, or (ii)
shall pay Buyer its reasonable costs to complete such unfinished Scheduled
Capital Expenditures or Scheduled Maintenance Expenditures within thirty
(30) days of Seller's receipt from Buyer of a reasonably detailed invoice
for such cost.
7.15 Expansion. The parties recognize that the Buyer may wish to
add additional generating capacity at the ▇▇▇▇▇▇ site ("Intended Use") and
the value to Buyer for such Intended Use is included in the Purchase Price.
Accordingly, to the extent such action or inaction does not interfere with
or adversely affect the Seller's transmission and distribution business,
Seller agrees that, at Buyer's cost, they: (a) will use commercially
reasonable efforts to cooperate with Buyer's reasonable request to remove
or modify any (i) Permitted Encumbrances which materially adversely affect
Buyer's Intended Use, or (ii) conditions (either physical or otherwise)
which exist at Bowline or at any of the Purchased Assets which would
prevent, hinder, or otherwise interfere with the Buyer's Intended Use, and
(b) shall not, and shall ensure that their respective affiliates shall not,
oppose, hinder, or interfere with Buyer's efforts to add such additional
capacity and shall cooperate with Buyer's other reasonable requests with
respect thereto.
7.16 Fuel Contract Renegotiation. At Buyers' request, Seller
shall exercise commercially reasonable efforts to cooperate with Buyer in
Buyer's efforts to renegotiate (i) the Service Agreement for Service under
OPT Rate schedule, between Columbia Gas Contract Transmission Corp. and
O&R, dated July 1, 1991 and (ii) Coal Purchase and Sales Agreement between
▇▇▇▇▇▇ and Seller dated March 9, 1984, as amended.
7.17 Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under (i) the Purchased Assets and (ii)
the "Purchased Asset" and "Purchased Assets," as defined in each of the
Other Sales Agreements on or prior to the Closing Date ("Environmental
Insurance"), Seller shall share equally with Buyer the cost of premiums for
such Environmental Insurance, up to a maximum payment by Seller of $200,000
in the aggregate for such insurance relating to (A) the Purchased Assets
and (B) the "Purchased Asset" and "Purchased Assets" as defined in each of
the Other Sales Agreements. If Buyer purchases such Environmental
Insurance, Buyer shall add Seller as an additional insured.
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the
transactions contemplated hereby shall be subject to
fulfillment at or
prior to the Closing Date of the following condition
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have
expired or been terminated with no order, decree, judgment or
injunction enjoining or prohibiting the consummation of the
transactions contemplated hereby having been issued;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court or governmental authority
which prevents or is reasonably likely to prevent the consummation of
the transactions contemplated hereby or by the Ancillary Agreements
shall be pending or shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted or interpreted by any State or Federal
government or governmental authority in the United States which
prohibits the consummation of the transactions contemplated hereby;
(c) All Federal, State and local government, orders,
consents and approvals required for the consummation of the
transactions contemplated hereby or by the Ancillary Agreements,
including, without limitation, the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, shall have
become Final Orders (a "Final Order" means action by the relevant
regulatory authority which has not been reversed, stayed, enjoined,
set aside, annulled or suspended, with respect to which any waiting
period prescribed by law before the transactions contemplated hereby
may be consummated has expired, and as to which all conditions to the
consummation of such transaction prescribed by law, regulation or
order have been satisfied), and such Final Order is in form and
substance reasonably acceptable to the party that sought the consent
or approval granted by such Final Order (for purposes of this clause
(i), a Final Order shall be deemed to be reasonably acceptable to such
party if it complies in all material respects with the terms and
conditions of such party's application therefor and contains no
additional terms or conditions which would have a Material Adverse
Effect on such party or the operation of the Purchased Assets)
provided, however, that if at the time such order, consent, or
approval would otherwise be deemed to be a Final Order, there shall be
pending or threatened any appeal or challenge thereto, which, if
adversely determined, would cause such order, consent or approval to
not be reasonably acceptable to the party that sought such order,
consent or approval, then if such party who would be adversely
affected notifies the other party that such a pending or threatened
appeal or challenge exists (such notification to be made as soon as
reasonably practicable following knowledge of such pending or
threatened appeal or challenge, but in no event later than fifteen
(15) days from date on which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired and all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied), then such
order, consent or approval shall be deemed to be a Final Order only
after all opportunities for rehearing or judicial review are exhausted
and provided, further, that if the designation of an order, consent or
approval as a Final Order shall be deferred pursuant to the foregoing
proviso, the Termination Date shall be automatically extended for a
period of time equal to the period of time for which the designation
as a Final Order has been deferred; and
(d) All consents and approvals required under the terms of
any note, bond, mortgage, indenture, contract or other agreement to
which the Seller or the Buyer, or any of their subsidiaries, is a
party for the consummation of the transactions contemplated hereby
shall have been obtained, other than those (i) which if not obtained,
would not, in the aggregate, have a Material Adverse Effect, or (ii)
for which an agreement which is described in the last sentence of
Section 7.6(b) has been entered into.
8.2 Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) There shall not have occurred and be continuing, a
Material Adverse Effect;
(b) The Seller shall have performed and complied with the
covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and
the representations and warranties of the Seller set forth in this
Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing
Date, and the Buyer shall have received a certificate to that effect
signed by an authorized officer of the Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of the Seller, dated the Closing Date, to the
effect that to the best of such officer's knowledge, after reasonable
inquiry and investigation, the conditions set forth in Sections 8.2(a)
and (b) have been satisfied;
(d) The "Closing" as defined in the Bowline Point
Generating Station Sales Agreement between the Seller, Consolidated
Edison Company of New York, Inc. and the Buyer, dated as of the date
hereof, shall have occurred or shall occur concurrently with the
Closing hereunder;
(e) The Buyer shall have received an opinion from Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that:
(1) the Seller is a corporation organized, existing
and in good standing under the laws of the State of New York and
has the corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby; and the execution
and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and
thereby have been duly authorized by requisite corporate action
taken on the part of the Seller.
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by the Seller and (assuming that the
Buyer Required Regulatory Approvals are obtained) are valid and
binding obligations of the Seller, enforceable against the Seller
in accordance with their terms, except that such enforcement
thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally, and (B) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity);
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Seller will not (A)
constitute a violation of the Certificate of Incorporation or By-
Laws of the Seller or (B) to counsel's knowledge constitute a
violation or default under those agreements or instruments set
forth on a schedule to this opinion;
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any federal
or New York governmental authority is necessary for the
consummation by the Seller of the Closing other than (i) the
Seller Required Regulatory Approvals which are addressed below,
(ii) declarations, filings or registrations with, or notices to,
or authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, individually or in the
aggregate have a Material Adverse Effect or prevent Seller from
performing its obligations hereunder; and
(5) the ▇▇▇▇ of Sale, the Instrument of Assumption and
the other agreements described in Section 4.3 are in proper form
to transfer to Buyer such title to the Purchase Assets as was
held by Seller.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by the Seller and appropriate
officers and directors of the Seller and by public officials.
(f) The Buyer shall have received an opinion from ▇▇▇▇▇,
Danzig, Scherer, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP (New Jersey Counsel), Nixon,
Hargrave, Devans & ▇▇▇▇▇, LLP (New York Counsel) and ▇▇▇▇▇▇, ▇▇▇▇▇ &
Bockius, LLP (Pennsylvania Counsel), or other local regulatory counsel
for O&R reasonably acceptable by Buyer, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that no declaration, filing or
registration with, or notice to, or authorization, consent or approval
of any federal governmental authority or any governmental authority in
the States of New York, New Jersey and Pennsylvania is necessary for
the consummation by the Seller of the Closing other than (i) the
Seller Required Regulatory Approvals, which have been obtained and are
in full force and effect with such terms and conditions as were
imposed by the applicable governmental authorities, (ii) declarations,
filings or registrations with, or notices to, or authorizations,
consents or approvals relating to Permits and Environmental Permits
and (iii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made,
would not, individually or in the aggregate have a Material Adverse
Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer and
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by the Seller and appropriate
officers and directors of the Seller and by public officials.
(g) Buyer shall have received the Title Commitment showing
the Real Property to be insured as subject only to Permitted
Encumbrances, and the effective date of the Title Commitment shall
have been updated to the Closing Date and marked to show the
satisfaction of all conditions to the issuance of the title policy
other than conditions within the control of the Buyer; and
(h) Buyer shall have obtained a certificate of the
Secretary of Seller identifying by name and title and bearing the
signature of the officer of Seller authorized to execute and deliver
this Agreement and the other agreements and instruments contemplated
hereby.
8.3 Conditions to Obligations of Seller. The obligation of the
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed its covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date;
(b) The representations and warranties of the Buyer set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made at and as of
the Closing Date;
(c) The Seller shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied; and
(d) The Seller shall have received an opinion from ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP, counsel for the Buyer, dated the Closing Date and
satisfactory in form and substance to the Seller and its counsel,
substantially to the effect that:
(1) The Buyer is a limited liability company
organized, existing and in good standing under the laws of the
State of Delaware and has the requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements
and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by the Buyer and (assuming that the
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except (A) that such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought;
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer will not
constitute a violation of the Certificate of Formation or Limited
Liability Company Agreement (or other similar governing
documents), as currently in effect, of the Buyer; and
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Buyer of the Closing other than (i) the Buyer Required Regulatory
Approvals, all of which have been obtained and are in full force
and effect with such terms and conditions as shall have been
imposed by any applicable governmental authority, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have
a Material Adverse Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the federal laws of the United
States and the State of New York, such counsel may rely upon opinions
of counsel admitted to practices in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall be delivered
together with the opinion of such counsel. Such opinion may expressly
rely as to matters of facts upon certificates furnished by appropriate
Members and Managers of the Buyer and its subsidiaries and by public
officials.
8.4 Extension of Closing Date. If the approval by the FERC of
the establishment of the ISO (the "ISO Approval") shall not have been
obtained on or prior to the Condition Fulfillment Date, the parties agree
to defer the Closing Date until the date (the "Deferred Closing Date")
which is the earlier of (a) the last day in the month in which the ISO
Approval is deemed final under applicable law, provided that if there are
less than five (5) Business Days in the month in which the ISO Approval is
deemed final, then the last day in the month which follows the month in
which the ISO Approval is deemed final, or (b) August 31, 1999; provided,
however, that all conditions set forth in Section 8.2(a) and all conditions
set forth in Section 8.2(b) regarding the representations and warranties of
Seller shall be deemed to be fulfilled on the Deferred Closing Date unless
the nonfulfillment of such conditions primarily results from the acts or
omissions of Seller or from the occurrence of facts or circumstances that
primarily relate to the Seller's ownership and/or operation, or the
physical condition, of the Purchased Assets. For purposes of this
Agreement, the "Condition Fulfillment Date" shall mean the date on which
all conditions set forth in Sections 8.1 and 8.2 shall have been fulfilled
but not earlier than the later of (i) the date on which all conditions set
forth in Section 8.3 have been fulfilled or waived and (ii) April 30, 1999.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. (a) The Seller will indemnify, defend and
hold harmless the Buyer, Buyer's affiliates, and their respective Members,
Managers, employees and agents (each. a "Buyer's Indemnitee") from and
against any and all causes of action, claims, demands or suits (by any
Person), losses, liabilities, damages (excluding consequential and special
damages), obligations, payments, costs, Taxes and expenses (including,
without limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not covered by
insurance, (collectively, "Indemnifiable Losses"), asserted against or
suffered by the Buyer Indemnitee relating to, resulting from or arising out
of (i) any breach by the Seller of any covenant or agreement of the Seller
contained in this Agreement, (ii) the Excluded Liabilities, (iii) the
Excluded Assets, (iv) any breach of any representation in Sections 5.1, 5.2
and 5.3 hereof, (v) Seller's non-compliance with any bulk sales or transfer
laws of any jurisdiction in connection with the transactions contemplated
by this Agreement, or (vi) the gross negligence or willful misconduct of
Seller, or its affiliates or their best respective contractors while on
Buyer's property (including, without limitation, any easement provided the
Seller with respect to such property) after the Closing to the extent such
Indemnifiable Loss is not caused by the negligence or willful misconduct of
any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless the
Seller, Seller's Affiliates, and their respective directors, officers,
employees and agents (each, a "Seller Indemnitee") from and against any and
all Indemnifiable Losses asserted against or suffered by the Seller
relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement,
(ii) the Assumed Liabilities, (iii) the operation of the Purchased Assets
after the Closing Date, (iv) any breach of any representation in Article
VI, or (v) the gross negligence or willful misconduct of Buyer, its
affiliates or their respective contractors while on Seller's property after
the Closing, to the extent such Indemnifiable Loss is not caused by the
negligence or willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) The Seller and the Buyer shall have indemnification
obligations with respect to Indemnifiable Losses asserted against or
suffered by the Seller or the Buyer, as the case may be, to the extent that
the aggregate of all such Indemnifiable Losses exceed the Indemnification
Floor. It is agreed and understood that neither the Seller nor the Buyer,
as the case may be, shall have any liability at any time for Indemnifiable
Losses asserted against or suffered by the other party until the aggregate
amount of Indemnifiable Losses asserted or suffered by such other party
under this Section 9.1 shall exceed the Indemnification Floor, and then
only to the extent that the aggregate amount of Indemnifiable Losses
exceeds the Indemnification Floor. The term "Indemnification Floor" shall
mean an amount equal to $200,000.
(g) The rights and remedies of the Seller and the Buyer under
this Article IX are exclusive and in lieu of any and all other rights and
remedies which the Seller and the Buyer may have under this Agreement for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement, or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b). Rights and
remedies under the Ancillary Agreements are as set forth therein.
9.2 Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (i) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (ii) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of the Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that
such Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 9.2(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty
(20) calendar days (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed
to take such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable expenses thereof.
Without the prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any settlement of (i) any Third Party Claim with
respect to Income Taxes or (ii) any other Third Party Claim which would
lead to liability or create any financial or other obligation on the part
of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third Party
claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party will give written
notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer (other than with respect to Income Taxes) within
ten (10) calendar days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim and, in such event,
the maximum liability of the Indemnifying Party as to such Third Party
Claim will be the amount of such settlement offer, plus reasonable costs
and expenses paid or incurred by the Indemnitee up to the date of such
notice. Notwithstanding the foregoing, the Indemnitee shall have the right
to pay, compromise, or settle any Third Party Claim (other than with
respect to Income Taxes) at any time, provided that in such event the
Indemnitee shall waive any right to indemnity hereunder unless the
Indemnitee shall have first sought the consent of the Indemnifying Party in
writing to such payment, settlement or compromise and such consent was
unreasonably withheld or delayed, in which event no claim for indemnity
therefor hereunder shall be waived.
(d) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) days)
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the
Indemnifying Party will be deemed to have accepted such Direct Claim. If
the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination. (a) This Agreement may be terminated at any
time prior to Closing Date, by mutual written consent of the Buyer and the
Seller.
(b) This Agreement may be terminated by the Seller or Buyer
if (i) the Closing shall not have been consummated on or before
September 30, 1999 (the "Termination Date"); provided that the right
to terminate this Agreement under this Section 10.1(b) shall not be
available to Seller or Buyer if its failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Closing Date to occur on or before such date; and
provided, further, that if on September 30, 1999 the conditions to the
Closing set forth in Section 8.1(c) shall not have been fulfilled but
all other conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then the Termination Date shall be the day
which is eighteen (18) months from the date of this Agreement.
(c) This Agreement may be terminated by either the Seller
or the Buyer if (i) any governmental or regulatory body, the consent
of which is a condition to the obligations of the Seller and the Buyer
to consummate the transactions contemplated hereby, shall have
determined not to grant its consent or shall condition such consent
upon any material change to the terms of this Agreement or the
Ancillary Agreements or upon any other condition that materially and
adversely affects the value of the transactions contemplated herein or
therein for either party, and all appeals of such determination shall
have been taken and have been unsuccessful, (ii) any court of
competent jurisdiction in the United States or any State shall have
issued an order, judgment or decree permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated hereby or the
Ancillary Agreements and such order, judgment or decree shall have
become final and nonappealable, or (iii) any statute, rule or
regulation shall have been enacted or interpreted by any State or
Federal government or governmental agency in the United States which
prohibits the transactions contemplated herein or in the Ancillary
Agreements.
(d) This Agreement may be terminated by the Buyer, if there
has been a material violation or breach by the Seller of any
agreement, representation or warranty contained in this Agreement
which (i) has rendered the satisfaction of any condition to the
obligations of the Buyer impossible and such violation or breach has
not been waived by the Buyer or cured by Seller within fifteen (15)
days after receipt by Buyer of notice specifying same or (ii) causes a
Material Adverse Effect, of which Buyer has notified Seller, and which
Seller has not promptly exercised commercially reasonable efforts to
cure but in no event later than twenty (20) days following such
notification by Buyer.
(e) This Agreement may be terminated by the Seller, if
there has been a material violation or breach by the Buyer of any
agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the
obligations of the Seller impossible and such violation or breach has
not been waived by the Seller or cured by Seller within fifteen (15)
days after receipt by Buyer of notice specifying same.
(f) This Agreement may be terminated by either the Seller
or the Buyer in accordance with the provisions of Section 7.11(b) or
(c).
10.2 Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein, such termination shall be without any further liability of
either party or parties except as follows:
(a) in the event of termination of this Agreement by Seller
pursuant to Section 10.1(e), Seller shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Seller; and
(c) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written
agreement of the Seller and the Buyer.
11.2 Confidentiality. (a) All information regarding a party
(the "Disclosing Party") that is furnished directly or indirectly to the
other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two years (2) from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.4 No Survival. Subject to the provisions of Article X, each
and every representation, warranty and covenant contained in this Agreement
(other than (a) the covenants contained in Sections 3.2, 3.3, 3.4, 7.2(b),
7.2(c), 7.2(d), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10, 7.12, 7.14, 7.15, 7.16,
7.17, 9.1 and 9.2 and in Article XI (which covenants shall survive in
accordance with their terms), (b) the representations and warranties
contained in Sections 5.1, 5.2, 5.3, 6.1, 6.2 and 6.3 (which
representations and warranties shall survive for twelve (12) months from
the Closing) and (c) the representation and warranty in Section 5.21 (which
representation and warranty shall survive for the applicable statute of
limitations) shall expire with, and be terminated and extinguished by the
consummation of the sale of the Purchased Assets and the transfer of the
Assumed Liabilities pursuant to this Agreement and such representations,
warranties and covenants shall not survive the Closing Date; and none of
the Seller, the Buyer or any officer, director, trustee or Affiliate of
either of them shall be under any liability whatsoever with respect to any
such representation, warranty or covenant.
11.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt on a Business
Day if during the normal business hours of the recipient, or if not, on the
next Business Day, if delivered personally or by facsimile transmission,
telexed or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice:
(a) If to the Seller, to:
Orange and Rockland Utilities, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Buyer, to:
Southern Energy ▇▇▇▇▇▇, L.L.C.
c/o Southern Energy, Inc.
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice-President
with copies to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
and
Southern Company Services
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▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Associate
General Counsel
11.6 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder. The Buyer acknowledges that O&R has entered into an
Agreement and Plan of Merger whereby O&R will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Seller's receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Assets, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided, however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Seller agrees, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer
pledge or other disposition of rights and interests hereunder so long as
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Seller,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8 Specific Performance. Sellers and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement.
11.11 Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement, including the Exhibits and
Schedules referred to herein or therein, and the Guaranty given to Seller
by Southern Energy, Inc. embody the entire agreement and understanding of
the parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein or therein. It is expressly acknowledged and agreed
that there are no restrictions, promises, representations, warranties,
covenants or undertakings of Seller contained in any material made
available to the Buyer pursuant to the terms of the Confidentiality
Agreement (including the Information Memorandum, dated May 1998, previously
made available to the Buyer by the Seller and DLJ). This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions other than the Confidentiality Agreement.
11.12 Bulk Sales or Transfer Laws. The Buyer acknowledges
that the Seller will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by the
Seller with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
Name: D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice Chairman and Chief Executive
Officer
SOUTHERN ENERGY ▇▇▇▇▇▇, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President