EXH.10(i)94
CONFORMED COPY
ASSET PURCHASE AND SALE AGREEMENT
FOR
THE DANSKAMMER GENERATING STATION AND RELATED ASSETS
BY AND BETWEEN
CENTRAL ▇▇▇▇▇▇ GAS & ELECTRIC CORPORATION
and
DYNEGY POWER CORP.
Dated August 7, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I - Definitions..................................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Accounting Terms.......................................................................1
ARTICLE II - Purchase and Sale; Assumption of Certain Liabilities........................................1
Section 2.1 Purchase and Sale......................................................................1
Section 2.2 Auctioned Assets and Retained Assets...................................................2
Section 2.3 Assumed Obligations and Retained Liabilities...........................................5
Section 2.4 Third Party Consents...................................................................9
ARTICLE III - Purchase Price............................................................................10
Section 3.1 Purchase Price........................................................................10
Section 3.2 Post-Closing Adjustment...............................................................10
Section 3.3 Allocation of Purchase Price..........................................................12
ARTICLE IV - The Closing................................................................................13
Section 4.1 Time and Place of Closing.............................................................13
Section 4.2 Payment of Purchase Price, Estimated Adjustment Amount
and Permitted Capital Expenditure Amount ...........................................13
ARTICLE V - Representations and Warranties of Seller....................................................14
Section 5.1 Organization; Qualification...........................................................14
Section 5.2 Authority Relative to This Agreement..................................................14
Section 5.3 Consents and Approvals; No Violation..................................................14
Section 5.4 Personal Property.....................................................................15
Section 5.5 Real Estate...........................................................................15
Section 5.6 Leases................................................................................15
Section 5.7 Certain Contracts and Arrangements....................................................16
Section 5.8 Legal Proceedings.....................................................................16
Section 5.9 Permits; Compliance with Law..........................................................16
Section 5.10 Environmental Matters................................................................17
Section 5.11 Labor Matters........................................................................18
Section 5.12 ERISA; Benefit Plans.................................................................18
Section 5.13 Taxes................................................................................19
Section 5.14 Undisclosed Liabilities..............................................................19
Section 5.15 Brokers..............................................................................20
Section 5.16 Insurance............................................................................20
Section 5.17 Disclaimers..........................................................................20
ARTICLE VI - Representations and Warranties of Buyer....................................................21
Section 6.1 Organization..........................................................................21
Section 6.2 Authority Relative to This Agreement..................................................21
Section 6.3 Consents and Approvals; No Violation..................................................22
Section 6.4 Availability of Funds.................................................................22
Section 6.5 Brokers...............................................................................22
Section 6.6 No Knowledge of Seller's Breach.......................................................23
Section 6.7 Qualified Buyer.......................................................................23
Section 6.8 WARN Act..............................................................................23
Section 6.9 Financial Representations.............................................................23
Section 6.10 Legal Proceedings....................................................................23
ARTICLE VII - Covenants of the Parties..................................................................23
Section 7.1 Conduct of Business Relating to the Auctioned Assets..................................23
Section 7.2 Access to Information.................................................................26
Section 7.3 Consents and Approvals; Transferable Permits..........................................27
Section 7.4 Further Assurances....................................................................28
Section 7.5 Public Statements.....................................................................29
Section 7.6 Tax Matters...........................................................................29
Section 7.7 Bulk Sales or Transfer Laws...........................................................30
Section 7.8 Witness Services......................................................................30
Section 7.9 Consent Orders........................................................................31
Section 7.10 Control of Litigation................................................................31
Section 7.11 Confidentiality......................................................................31
Section 7.12 Risk of Loss..........................................................................32
Section 7.13 Tax Exempt Financing..................................................................33
Section 7.14 Compliance with Governmental Agreements..............................................36
Section 7.15 Trade Names..........................................................................36
Section 7.16 Separation Modifications.............................................................36
ARTICLE VIII - Conditions...............................................................................37
Section 8.1 Conditions Precedent to Each Party's Obligation to Effect
the Purchase and Sale...............................................................37
Section 8.2 Conditions Precedent to Obligation of Buyer to Effect the
Purchase and Sale..................................................................38
Section 8.3 Conditions Precedent to Obligation of Seller to Effect the
Purchase and Sale...............................................................39
ARTICLE IX - Employee Matters...........................................................................40
Section 9.1 Transferred Employees.................................................................40
Section 9.2 Employment-at-Will....................................................................47
Section 9.3 WARN Act...............................................................................48
Section 9.4 COBRA.................................................................................48
ARTICLE X - Indemnification and Dispute Resolution......................................................48
Section 10.1 Indemnification.......................................................................48
Section 10.2 Third Party Claims Procedures.........................................................51
ARTICLE XI - Termination................................................................................52
Section 11.1 Termination...........................................................................52
ARTICLE XII - Miscellaneous Provisions..................................................................52
Section 12.1 Expenses..............................................................................52
Section 12.2 Amendment and Modification; Extension; Waiver.........................................53
Section 12.3 No Survival of Representations or Warranties..........................................53
Section 12.4 Notices...............................................................................53
Section 12.5 Assignment; No Third Party Beneficiaries..............................................54
Section 12.6 Governing Law.........................................................................55
Section 12.7 Counterparts..........................................................................55
Section 12.8 Interpretation........................................................................55
Section 12.9 Jurisdiction and Enforcement..........................................................56
Section 12.10 Entire Agreement......................................................................57
Section 12.11 Severability..........................................................................57
SCHEDULES, APPENDICES AND EXHIBITS
SCHEDULES TITLE
Schedule 2.2(a)(i) Buyer Real Estate
Schedule 2.2(a)(ii) Capital Spare Parts
Schedule 2.2(a)(iii)(A) Tangible Personal Property on Buyer Real Estate
Schedule 2.2(a)(iii)(B) Tangible Personal Property on Seller Real Estate
Schedule 2.2(a)(iv) Material Contracts
Schedule 2.2(a)(v) Certain Transferable Permits
Schedule 2.2(a)(vi) Transferred SO2 Allowances
Schedule 2.2(a)(vii) Transferred NOx Allowances
Schedule 2.2(b)(i) Transmission System
Schedule 2.2(b)(ii)(A) Interconnection Facilities
Schedule 2.2(b)(ii)(B) Communications Equipment
Schedule 2.2(b)(iv)(D) Retained Flyash Royalty Agreements
Schedule 2.3(a)(iv) Seller Consent Orders
Schedule 5.3(a) Contracts Requiring Third Party Consents
Schedule 5.3(b) Seller Required Regulatory Approvals
Schedule 5.5(a) Legal Description of Buyer Real Estate
Schedule 5.5(b) Map of Buyer Real Estate
Schedule 5.5(c) Title Report for Buyer Real Estate
Schedule 5.7 Defaults Under Contracts
Schedule 5.8 Legal Proceedings
Schedule 5.9 Permits; Compliance with Law
Schedule 5.10 Environmental Matters
Schedule 5.11 Labor Matters
Schedule 5.12 ERISA; Benefit Plans
Schedule 5.13 Taxes
Schedule 6.3(b) Buyer Required Regulatory Approvals
Schedule 7.1(b)(vii) Employee Benefit Changes
Schedule 7.1(b)(ix) Capital Expenditures
Schedule 7.13 Exempt Facilities; Revenue Bonds
Schedule 7.16 Separation Modifications
Schedule 9.1 Benefit Plans Applicable to Transferred Employees
APPENDICES AND EXHIBITS TITLE
Appendix A Definitions
Exhibit A Form of Bargain and Sale Deed
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of ▇▇▇▇ of Sale
Exhibit D Form of Easement Agreement
Exhibit E Form of Guarantee Agreement
Exhibit F Form of Interconnection Agreement
Exhibit G Form of Local Area Support Agreement
Exhibit H Form of Purchase Price Agreement
Exhibit I Form of Transition Power Agreement
Exhibit J Opinion of Counsel to Seller
Exhibit K Opinion of Counsel to Buyer
Exhibit L Opinion of Counsel to Guarantor
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (including the Appendices, Exhibits
and Schedules hereto, this "AGREEMENT"), dated August 7, 2000, by and between
Central ▇▇▇▇▇▇ Gas & Electric Corporation, a New York corporation ("SELLER"),
and DYNEGY POWER CORP., a Delaware corporation ("BUYER," collectively with
Seller, the "PARTIES").
WHEREAS, Seller owns the approximately 500 MW Danskammer Generating Station
located in Newburgh, New York (described herein as the "DANSKAMMER STATION") and
other assets associated therewith; and
WHEREAS, Buyer desires to purchase and assume, and Seller desire to sell
and assign, the Auctioned Assets (as defined in Section 2.2 below) and certain
related liabilities, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
---------
Definitions
Section 1.1 DEFINITIONS. Capitalized terms used but not otherwise defined
in this Agreement shall have the respective meanings given to such terms in
APPENDIX A hereto.
Section 1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement
or the Ancillary Agreements shall, unless otherwise specifically provided, have
the meanings customarily given them in accordance with United States generally
accepted accounting principles ("GAAP") and all financial computations hereunder
or thereunder shall, unless otherwise specifically provided, be computed in
accordance with GAAP consistently applied.
ARTICLE II
----------
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
Section 2.1 PURCHASE AND SALE. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Closing,
Seller agrees to sell, assign, convey, transfer and deliver to Buyer, and Buyer
agrees to purchase, assume and acquire from Seller all of Seller's right, title
and interest in the Auctioned Assets. In the case of any Auctioned Assets not
located at the Danskammer Station (including supplies, materials and spare parts
inventory), Buyer agrees that following the Closing, Buyer will bear all risk of
casualty or loss with regard to such Auctioned Assets (regardless of whether
they remain on Seller Real Estate or otherwise in Seller's possession).
Section 2.2 AUCTIONED ASSETS AND RETAINED ASSETS.
(a) AUCTIONED ASSETS. The term "Auctioned Assets" means all of the
assets, real and personal property, goodwill and rights of Seller of whatever
kind and nature, whether tangible or intangible, in each case, primarily
relating to the power generation operations of the Generating Facilities, other
than the Retained Assets, including the following:
(i) all real property and leaseholds and other interests in real
property of Seller described on SCHEDULE 2.2(a)(i) hereto, together with all
buildings, improvements, structures and fixtures thereon, subject to all
Permitted Exceptions (the "BUYER REAL ESTATE");
(ii) subject to Section 2.4, all inventories of fuels, supplies,
materials and spare parts, including Capital Spare Parts, together with and
subject to (A) all Permitted Exceptions and (B) all warranties against and
guarantees by manufacturers and vendors relating thereto, in each case, other
than assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past practice or as
permitted by this Agreement;
(iii) (A) the machinery (mobile or otherwise), equipment,
facilities, vehicles, tools, furniture and other tangible personal property
located on Buyer Real Estate, or temporarily removed from Buyer Real Estate for
repairs, servicing or maintenance, including the items of tangible personal
property listed on SCHEDULE 2.2(a)(iii)(A), and (B) the machinery (mobile or
otherwise), equipment, facilities and other tangible personal property located
on Seller Real Estate, or temporarily removed from Seller Real Estate for
repairs, servicing or maintenance, to the extent listed on SCHEDULE
2.2(a)(iii)(B), in each case, together with and subject to (1) all Permitted
Exceptions, and (2) subject to Section 2.4, all warranties against and
guarantees by manufacturers or vendors relating thereto, in each case, other
than assets that become obsolete or that are used, consumed, replaced or
disposed of in the ordinary course of business consistent with past practice or
as permitted by this Agreement;
(iv) subject to Section 2.4, all right, title and interest of Seller
in, to and under all contracts, agreements, personal property leases (whether as
a lessor or lessee thereunder), commitments and all other legally binding
arrangements, whether oral or written, (A) set forth on SCHEDULE 2.2(a)(iv), (B)
if not listed on SCHEDULE 2.2(a)(iv) would not affect the accuracy of the
representation and warranty made by Seller in Section 5.7(a) hereof, or (C)
otherwise entered into by Seller in accordance with Section 7.1 (collectively,
the "CONTRACTS"), in each case, to the extent in full force and effect on the
Closing Date;
(v) subject to Section 7.3(c), the Permits and Environmental Permits
that are transferred or transferable by Seller to Buyer (collectively, the
"TRANSFERABLE PERMITS"), including the Transferable Permits set forth on
SCHEDULE 2.2(a)(v), in each case, to the extent in full force and effect on the
Closing Date;
(vi) the SO2 Allowances listed on SCHEDULE 2.2(a)(vi) ("TRANSFERRED
SO2 ALLOWANCES");
(vii) the NOx Allowances listed on SCHEDULE 2.2(a)(vii)
("TRANSFERRED NOx ALLOWANCES");
(viii) (A) all data, information, books, operating records,
operating, safety and maintenance manuals, engineering and design plans,
blueprints and as-built plans, specifications, drawings, reports, procedures,
facility compliance plans, test records and results (including tests performed
in accordance with NYISO and NYSRC rules), other records and filings made with
regulatory agencies regarding operations at the Generating Facilities,
environmental procedures and similar records of Seller necessary for the
operation of the Auctioned Assets, to the extent in Seller's possession or
readily available, other than such items that are proprietary to third parties
and accounting records (collectively, the "OPERATING RECORDS"), and (B) to the
extent permitted under applicable law, all personnel files relating to the
Transferred Employees, to the extent in Seller's possession and readily
available and to the extent such files pertain to (1) skill and development
training and resumes, (2) seniority histories, (3) salary and benefit
information, (4) active Occupational Safety and Health Act medical reports, and
(5) active medical restriction forms, but not including any performance
evaluations or disciplinary records (collectively, the "TRANSFERRED EMPLOYEE
RECORDS"); provided, however, that Seller shall be permitted to retain copies,
or originals to the extent it provides Buyer with copies of same, of all
Operating Records and Transferred Employee Records; and
(ix) (A) except as excluded by Section 2.2(b)(iv), software
(provided, however, that Buyer acknowledges that it will require licenses from
third parties in order to be legally entitled to use such software), and (B) a
non-exclusive, perpetual, royalty-free license to use solely in connection with
the Auctioned Assets the software or other copyrighted material owned by Seller
located at Buyer Real Estate.
(b) RETAINED ASSETS. The term "Retained Assets" means:
(i) the electric and gas transmission and distribution facilities
owned, controlled or operated by Seller for purposes of providing point-to-point
transmission service, network integration service and distribution service and
other related purposes, including the real property and equipment located at the
Danskammer Substation, used in controlling continuity between the Generating
Facilities and the transmission and distribution facilities and for other
purposes, including those described on SCHEDULE 2.2(b)(i) hereto (the
"TRANSMISSION SYSTEM");
(ii) (A) except as set forth in Section 2.2(a)(iii), all
Interconnection Facilities and other transmission, distribution and substation
machinery, equipment and facilities and related support equipment located on
Buyer Real Estate or Seller Real Estate or temporarily removed from Buyer Real
Estate or Seller Real Estate for repairs, servicing or maintenance, including
items listed on SCHEDULE 2.2(b)(ii)(A); (B) all Interchange Meters installed by
Seller; (C) Communications Equipment and related support equipment (1) located
on Buyer Real Estate or temporarily removed from Buyer Real Estate for repairs,
servicing or maintenance and listed on SCHEDULE 2.2(b)(ii)(B) or acquired by
Seller after the date of this Agreement and designated by Seller as a Retained
Asset or (2) located on Seller Real Estate or temporarily removed from Seller
Real Estate for repairs, servicing or maintenance; and (D) all Protective
Relaying Systems not located on Buyer Real Estate;
(iii) (A) all cash, cash equivalents, bank deposits and accounts
receivable, and any income, sales, payroll or other tax receivables; and (B)
certificates of deposit, shares of stock, securities, bonds, debentures,
evidence of indebtedness, interests in joint ventures, partnerships, limited
liability companies and other entities;
(iv) (A) all mainframe computer systems of Seller, (B) the code to all
software described in Section 2.2(a)(ix)(B), (C) all software, copyrights,
know-how or other proprietary information not primarily relating to the power
generation operations of the Generating Facilities, including software,
copyrights, know-how or other proprietary information licensed to Buyer pursuant
to Section 2.2(a)(ix)(B) and (D) the flyash royalty agreements listed on
Schedule 2.2(b)(iv)(D);
(v) the names "Central ▇▇▇▇▇▇ Gas & Electric Corporation" and
"Central ▇▇▇▇▇▇" and any related or similar trade names, trademarks, service
marks or logos (and any rights to and in the same, including any right to use
the same);
(vi) (A) any refund, credit, adjustment or reconciliation arising
out of or relating to the activities of Seller prior to or on the Closing Date
(including any refund, credit, adjustment or reconciliation from the NYISO), and
(B) subject to Section 7.6(d), any refund or credit related to Taxes
attributable to taxable periods (or portions thereof) prior to or on the Closing
Date, and sewer rents or water charges or any other liabilities or obligations
paid prior to or on the Closing Date in respect of the Auctioned Assets;
(vii) personnel records (other than Transferred Employee Records)
and all other records (other than Operating Records);
(viii) (A) all Emission Reduction Credits or Greenhouse Gas Emission
Reduction Credits that are attributable to (1) any emission reduction activities
of Seller which occurred prior to or on the Closing Date, and (2) any emission
reduction activities of Seller which occur following the Closing Date at any
locations (other than the Generating Facilities), (B) any SO2 Allowances that
are not Transferred SO2 Allowances, and (C) any NOx Allowances that are not
Transferred NOx Allowances;
(ix) the Seller Real Estate;
(x) all of Seller's rights and interests in any intracompany
transaction involving Seller and its Affiliates including any ownership or
operating agreements, whether or not such transaction relates to the provision
of goods and services, payment arrangements, charges or balances, or the like
unless specifically included in the Auctioned Assets;
(xi) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind in favor of Seller arising out of or
relating to activities of Seller prior to or on the Closing Date other than
those pertaining to the Assumed Obligations; and
(xii) any other asset that is not described with particularity in
this Agreement as an Auctioned Asset.
Section 2.3 ASSUMED OBLIGATIONS AND RETAINED LIABILITIES.
(a) ASSUMED OBLIGATIONS. At the Closing, Buyer shall assume, and
following the Closing, shall discharge, all of the liabilities and obligations,
direct or indirect, known or unknown, absolute or contingent, which relate to
the Auctioned Assets or are otherwise specified below, other than the Retained
Liabilities (collectively, the "ASSUMED OBLIGATIONS"), including:
(i) except as set forth in Section 2.3(b)(ii), any liabilities and
obligations under the Contracts;
(ii) any liabilities and obligations for goods and fuels delivered
or services rendered following the Closing Date relating to the Auctioned
Assets;
(iii) except as set forth in Section 2.3(b)(iii) or (iv), any
Environmental Liability, including but not limited to any Environmental
Liability arising out of or in connection with: (i) any actual or alleged
violation of, noncompliance with, or failure to act in accordance with any
standard of conduct of, any Environmental Law prior to, on or after the Closing
with respect or relating to the ownership or operation of the Auctioned Assets;
(ii) the condition of any Auctioned Assets prior to, on or after the Closing,
including any actual or alleged presence, discharge, disposal, Release or
threatened Release of any Hazardous Substance at, on, in, under or migrating
onto or from the Auctioned Assets prior to, on or after the Closing; (iii) any
alleged or actual personal or bodily injury or property damage of any kind
(including but not limited to wrongful death, loss of consortium, diminution of
value, nuisance and trespass) arising out of or relating to any actual or
alleged exposure to any Hazardous Substance in, on, from or relating to the
Auctioned Assets prior to, on or after the Closing; (iv) any Release or
threatened Release of any Hazardous Substance following the Closing from the
Buyer Facilities or otherwise originating from or relating to equipment owned or
used by Buyer that is located on any Seller Real Estate; and (v) the
transportation, storage, recycling, Release or threatened Release of any
Hazardous Substance in any way arising from or associated with the Auctioned
Assets at or to any location, following the Closing;
(iv) any liabilities and obligations under all the consent orders
listed on SCHEDULE 2.3(a)(iv) (the "SELLER CONSENT ORDERS") and identified
thereon as the "Assumed Consent Order Obligations" (the "ASSUMED CONSENT ORDER
OBLIGATIONS");
(v) except as set forth in Section 2.3(b)(iv), any liabilities and
obligations with respect to the Permits to the extent arising or accruing after
the Closing Date;
(vi) (A) all wages, overtime, employment taxes, workers compensation
benefits, occupational safety and health liabilities or other similar
liabilities and obligations in respect of Transferred Employees arising or
accruing following the Closing Date, and (B) all other liabilities and
obligations with respect to the Transferred Employees for which Buyer is
responsible pursuant to Article IX;
(vii) (A) any liabilities and obligations in respect of any personal
or bodily injury (including but not limited to any claims based on wrongful
death and loss of consortium) or property (real or personal) damage claim
relating to, resulting from, or arising out of the Auctioned Assets, or (B) any
liabilities and obligations in respect of any discrimination, wrongful discharge
or unfair labor practice claim by any Transferred Employee, in the case of each
of the foregoing clauses (A) and (B) to the extent arising or accruing after the
Closing Date;
(viii) any liabilities and obligations, with respect to the periods
that include the Closing Date, with respect to real or personal property rent,
Taxes based on the ownership or use of property, utilities charges and similar
charges that primarily relate to the Generating Facilities (collectively, the
"PRORATED ITEMS"), to the extent such Prorated Items relate to the period
following the Closing Date, including (A) personal property taxes, real estate
and occupancy taxes, assessments and other charges, (B) rent and all other items
payable by Seller under any Contract, (C) any fees with respect to any
Transferable Permit and (D) sewer rents and charges for water, telephone,
electricity and other utilities, in each case calculated by multiplying the
amount of any such Prorated Item by a fraction the numerator of which is the
number of days in such period beginning after the Closing Date and the
denominator of which is the number of days in such period;
(ix) any liabilities and obligations in respect of Taxes (other than
Prorated Items) attributable to the Auctioned Assets arising or accruing during
taxable periods (or portions thereof) beginning after the Closing Date; and
(x) any liabilities and obligations under the Ancillary Agreements
in respect of the Auctioned Assets arising after the Closing Date.
(b) RETAINED LIABILITIES. Buyer shall not assume or be obligated to pay,
perform or otherwise discharge the following liabilities or obligations (the
"RETAINED LIABILITIES"):
(i) any liabilities and obligations of Seller primarily relating to
any Retained Assets;
(ii) any liabilities and obligations of Seller under the Contracts
for (A) goods and fuels delivered or services rendered prior to or on the
Closing Date, and (B) breaches by the Seller of its obligations thereunder
occurring prior to or on the Closing Date;
(iii) (A) any cost of environmental remediation or natural resource
damages in connection with the Release or threatened Release of Hazardous
Substances that were disposed of by or on behalf of Seller at any Off-Site
location prior to or on the Closing; (B) any Environmental Liability of Seller
arising out of or in connection with any Release or threatened Release of any
Hazardous Substance following the Closing Date from the Seller Facilities or any
equipment owned or used by Seller that is located on Buyer Real Estate, (C) any
liability of Seller in respect of any bodily injury claim relating to the actual
or alleged exposure of a third party to asbestos at the Auctioned Assets prior
to or on the Closing Date but only if such claim has been filed prior to or on
the Closing Date in a state or federal court having jurisdiction to hear such
claim (the claims described in clause (C) above are the "RETAINED
ASBESTOS-RELATED CLAIMS"), and (D) the liabilities and obligations relating to
the Auctioned Assets under the Seller Consent Orders, except the Assumed Consent
Order Obligations;
(iv) any monetary fines, punitive damages, penalties and interest
thereon (excluding (A) natural resource damages, (B) clean up or remediation
costs, and (C) other costs of a similar nature) imposed by a Governmental
Authority to the extent arising out of or relating to acts or omissions of
Seller in respect of the Auctioned Assets prior to or on the Closing Date;
(v) (A) all wages, pensions, benefits, severance pay, overtime,
employment taxes, workers compensation benefits, occupational safety and health
liabilities or other similar liabilities and obligations in respect of
Transferred Employees to the extent arising or accruing prior to or on the
Closing Date and (B) all other liabilities and obligations with respect to the
Transferred Employees for which Seller is responsible pursuant to Article IX;
(vi) any liabilities and obligations (A) in respect of any personal
injury or property damage claim (other than any Environmental Liabilities which
are Assumed Obligations pursuant to Section 2.3(a)(iii) above) relating to the
Auctioned Assets or (B) in respect of any actual or alleged discrimination,
wrongful discharge, violations of any collective bargaining agreements,
contested claims for pension or welfare benefits, contested unemployment
insurance claims, unfair labor practice, harassment, retaliation, constructive
termination or any similar claim by any Transferred Employee, in the case of
each of the foregoing clauses (A) and (B), to the extent arising out of or
relating to acts or omissions of Seller prior to or on the Closing Date;
(vii) any liabilities and obligations, with respect to periods prior
to or on the Closing Date, for the Prorated Items, calculated as set forth in
Section 2.3(a)(viii);
(viii) any liabilities and obligations in respect of Taxes (other
than Prorated Items) attributable to the Auctioned Assets arising or accruing
during taxable periods (or portions thereof) ending before the Closing Date;
(ix) any liabilities and obligations for money borrowed relating to
a Permitted Exception (except to the extent expressly included as an Assumed
Obligation);
(x) any liabilities and obligations arising after the date of this
Agreement in respect of which Seller has provided pursuant to Section 7.1(d)(ii)
that such liabilities and obligations shall not be assumed or retained by Buyer;
and
(xi) any liabilities and obligations of Seller under the Ancillary
Agreements in respect of the Retained Assets.
Section 2.4 THIRD PARTY CONSENTS.
(a) Notwithstanding Section 2.2(a)(ii), (iii) or (iv), to the extent
that Seller's rights under any Contract or warranty may not be assigned without
the consent of another person, which consent has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its reasonable best efforts to obtain prior to the Closing
any such required consents with respect to any Material Contracts or material
warranties.
(b) The Parties agree that if any consent to an assignment of any such
Material Contract or material warranty shall not be obtained or if any attempted
assignment would in Seller's reasonable opinion be ineffective or would impair
any material rights and obligations of Buyer under such Material Contract or
material warranty, as applicable, so that Buyer would not acquire the benefit of
all such rights and obligations, Seller's, to the maximum extent permitted by
law and such Material Contract or material warranty, as applicable, shall after
the Closing appoint Buyer to be Seller's representative and agent with respect
to such Material Contract or material warranty, as applicable, and Seller shall,
to the maximum extent permitted by law and such Material Contract or material
warranty, as applicable, enter into such reasonable arrangements with Buyer as
are necessary to provide Buyer with the benefits and obligations of such
Material Contract or material warranty, as applicable. Seller and Buyer shall
cooperate and shall each use their reasonable best efforts after the Closing to
obtain an assignment of each such Material Contract or material warranty, as
applicable, to Buyer.
ARTICLE III
-----------
PURCHASE PRICE
Section 3.1 PURCHASE PRICE. The purchase price for the Auctioned Assets
shall be as set forth in the Purchase Price Agreement. In addition to the
Purchase Price (as defined in the Purchase Price Agreement), Buyer shall pay
Seller the Inventory Adjustment Amount and the Permitted Capital Expenditures
Amount pursuant to the provisions of this Article III and Article IV herein.
Section 3.2 POST-CLOSING ADJUSTMENT.
(a) Within twenty (20) Business Days after the Closing, Seller shall
prepare and deliver to Buyer a statement (an "INVENTORY ADJUSTMENT STATEMENT")
which reflects the book cost, as reflected on the books of Seller, as maintained
by Seller, as of the Closing Date, of all fuel inventory and supplies, materials
and spare parts (other than Capital Spare Parts) inventory included in the
Auctioned Assets (the "INVENTORY ADJUSTMENT AMOUNT") and, upon request of Buyer,
related accounting material used by Seller to prepare the Inventory Adjustment
Statement. The Inventory Adjustment Amount will be based, in respect of fuel, on
the actual fuel inventory on the Closing Date and, in respect of supplies,
materials and spare parts (other than Capital Spare Parts), on an inventory
survey conducted within ten (10) Business Days prior to the Closing Date, in
each case, consistent with the inventory procedures of Seller in effect as of
the date of this Agreement (the "INVENTORY SURVEY"). Seller shall provide
reasonable notice to Buyer of the date and time of the Inventory Survey and will
permit an employee, or representative, of Buyer to observe the Inventory Survey.
The Inventory Adjustment Statement shall be prepared using (i) GAAP, and (ii)
the same rolling average unit costs that Seller has historically used to
calculate the book cost of the Auctioned Assets' fuel and supplies, materials
and spare parts (other than Capital Spare Parts) inventory. Buyer agrees to
cooperate with Seller in connection with the preparation of the Inventory
Adjustment Statement and related information, and shall provide to Seller such
access, books, records and information as may be reasonably requested from time
to time. Buyer hereby acknowledges that (i) the book value of the fuel inventory
as reflected on the books of Seller does not include any petroleum business
taxes and similar excise taxes on sales of petroleum based products imposed by
Governmental Authorities and (ii) any such taxes shall be paid by Buyer pursuant
to Section 7.6(a) herein.
(b) Buyer may dispute the quantity delivered or quality of any inventory
item shown on the Inventory Adjustment Statement, or the mathematical
calculations reflected therein, by notifying Seller in writing of the disputed
amount, and the basis of such dispute, within twenty (20) Business Days of
Buyer's receipt of the Inventory Adjustment Statement; provided, however, that
in respect of the quality of any inventory item, Buyer may not dispute Seller's
normal and customary methods for accounting for excess inventory nor the quality
of any item if such item functions for its intended purpose. Buyer shall have no
right to dispute any other matter in respect of the Inventory Adjustment
Statement, including historical rolling average unit costs used to calculate the
book cost of the inventory or the appropriateness, under GAAP or otherwise, of
using such historical rolling average unit cost to determine the book cost of
any particular item of inventory. In the event of a dispute with respect to the
quantity or quality of any inventory item shown on the Inventory Adjustment
Statement, or the mathematical calculations reflected therein, Buyer and Seller
shall attempt to reconcile their differences and any resolution by them as to
any disputed amounts shall be final, binding and conclusive on the Parties. If
Buyer and Seller are unable to reach a resolution of such differences within
twenty (20) Business Days of receipt of Buyer's written notice of dispute to
Seller, Buyer and Seller shall submit the amounts remaining in dispute for
determination and resolution to PricewaterhouseCoopers LLP or any other
accounting firm of recognized national standing reasonably acceptable to Seller
and Buyer (the "ACCOUNTANTS"), which shall be instructed to determine and report
to the Parties, within twenty (20) Business Days after such submission, upon
such remaining disputed amounts, and such report shall be final, binding and
conclusive on the Parties with respect to the amounts disputed. The fees and
disbursements of the Accountants shall be allocated between Buyer and Seller so
that Buyer's share of such fees and disbursements shall be in the same
proportion that the aggregate amount of the remaining disputed amounts so
submitted by Buyer to the Accountants that is unsuccessfully disputed by Buyer
(as finally determined by the Accountants) bears to the total amount of such
remaining disputed amounts so submitted by Buyer to the Accountants.
(c) If the Inventory Adjustment Amount is greater or less than the
Estimated Inventory Adjustment Amount, then on the Inventory Adjustment Date (as
defined below), (i) to the extent that the Inventory Adjustment Amount exceeds
the Estimated Inventory Adjustment Amount, Buyer shall pay to Seller the amount
of such excess, and (ii) to the extent that the Inventory Adjustment Amount is
less than the Estimated Inventory Adjustment Amount, Seller shall pay to Buyer
the amount of such deficiency. "Inventory Adjustment Date" means (1) if Buyer
does not disagree in any respect with the Inventory Adjustment Statement, the
twenty-third (23rd) Business Day following Buyer's receipt of the Inventory
Adjustment Statement or (2) if Buyer shall disagree in any respect with the
Inventory Adjustment Statement, the third Business Day following either the
resolution of such disagreement by the Parties or a final determination by the
Accountants in accordance with Section 3.2(b). Any amount paid under this
Section 3.2(c) shall be paid with interest for the period commencing on the
Closing Date through the date of payment, calculated based on a 360-day year at
the prime rate of Citibank, N.A. in effect on the Closing Date, and in cash by
wire transfer of immediately available funds to an account or accounts
designated in writing by Buyer or Seller, as the case may be.
Section 3.3 ALLOCATION OF PURCHASE PRICE. Buyer shall deliver to Seller at
Closing a preliminary allocation among the Auctioned Assets of the amount
payable by Buyer to Seller pursuant to Section 3.1 hereof, and, as soon as
practicable following the Closing (but in any event within 10 Business Days
following the final determination of the Closing Adjustment Amount), Buyer shall
prepare and deliver to Seller a final allocation of the amount payable by Buyer
to Seller pursuant to Section 3.1 hereof, and the post-closing adjustment
pursuant to Section 3.2, among the Auctioned Assets (the "ALLOCATION"). The
Allocation shall be consistent with Section 1060 of the Code and the Treasury
Regulations thereunder. Seller hereby agrees to accept Buyer's Allocation unless
Seller determines that such Allocation was not prepared in accordance with
Section 1060 of the Code and the regulations thereunder ("APPLICABLE LAW"). If
Seller so determines, Seller shall within 20 Business Days thereafter propose
any changes necessary to cause the Allocation to be prepared in accordance with
Applicable Law. Within 10 Business Days following delivery of such proposed
changes, Buyer shall provide Seller with a statement of any objections to such
proposed changes, together with a reasonably detailed explanation of the reasons
therefor. If Buyer and Seller are unable to resolve any disputed objections
within 10 Business Days thereafter, such objections shall be referred to the
Accountants, whose review will be limited to whether Buyer's Allocation of such
disputed items regarding the Allocation was prepared in accordance with
Applicable Law. The Accountants shall be instructed to deliver to Seller and
Buyer a written determination of the proper allocation of such disputed items
within 20 Business Days. Such determination shall be conclusive and binding upon
the parties hereto for all purposes, and the Allocation shall be so adjusted
(the Allocation, including the adjustment, if any, to be referred to as the
"FINAL ALLOCATION"). Fees and disbursements of the Accountants attributable to
the Allocation shall be shared by Buyer and Seller on the basis of their
respective percentages of the disputed items which were allocated by the
Accountants to the other Party hereunder. Each of Buyer and Seller agrees to
timely file Internal Revenue Service Form 8594, and all Federal, state, local
and foreign Tax Returns, in accordance with such Final Allocation and to report
the transactions contemplated by this Agreement for Federal Income Tax and all
other tax purposes in a manner consistent with the Final Allocation. Each of
Buyer and Seller agrees to promptly provide the other party with any additional
information and reasonable assistance required to complete Form 8594, or compute
Taxes arising in connection with (or otherwise affected by) the transactions
contemplated hereunder. Each of Buyer and Seller shall timely notify the other
Party and each shall timely provide the other Party with reasonable assistance
in the event of an examination, audit or other proceeding regarding the Final
Allocation.
ARTICLE IV
----------
THE CLOSING
Section 4.1 TIME AND PLACE OF CLOSING. Upon the terms and subject to the
satisfaction of the conditions contained in Article VIII, the closing of the
sale of the Auctioned Assets contemplated by this Agreement (the "CLOSING") will
take place on such date as the Parties may agree, which date shall be as soon as
practicable, but no later than ten (10) Business Days, following the date on
which all of the conditions set forth in Article VIII have been satisfied or
waived, at 10 a.m., local time, at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP in New York, New York, or at such other place or time as the
Parties may agree. The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date"; provided, however, that if the Closing occurs
and the payments by Buyer pursuant to Section 4.2 hereof (including any amounts
payable by Buyer under the Purchase Price Agreement) are not received in the
accounts designated by Seller pursuant to Section 4.2(a) prior to 4:00 p.m.,
local time, on such date, then the "Closing Date" shall be the immediately
following Business Day. The time at which the Closing shall be deemed effective
shall be midnight on the Closing Date. For the avoidance of doubt, midnight
means the end of the day on the Closing Date.
Section 4.2 PAYMENT OF PURCHASE PRICE,ESTIMATED ADJUSTMENT AMOUNT AND
PERMITTED CAPITAL EXPENDITURES AMOUNT.
(a) At the Closing, in addition to any amounts payable by Buyer under the
Purchase Price Agreement, Buyer will pay or cause to be paid to Seller by wire
transfer of immediately available funds to an account or accounts previously
designated in writing by Seller an amount in United States dollars equal to the
sum of (a) the Estimated Inventory Adjustment Amount, plus (b) the amount
expended by Seller between the date hereof and the Closing Date for Permitted
Capital Expenditures (the "PERMITTED CAPITAL EXPENDITURES AMOUNT") as set forth
in the Permitted Capital Expenditures Report.
(b) At least five (5) Business Days prior to the Closing Date, Seller shall
provide to Buyer its good faith estimate of the Inventory Adjustment Amount,
which estimate shall be certified in writing by an appropriate officer of Seller
(the "ESTIMATED INVENTORY ADJUSTMENT AMOUNT"). On or before the Closing Date,
Seller shall provide to Buyer a report, which details the Permitted Capital
Expenditures Amount (the "PERMITTED CAPITAL EXPENDITURES REPORT").
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
Section 5.1 ORGANIZATION; QUALIFICATION. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New York and has all requisite corporate power and authority to own, lease
and operate the Auctioned Assets and to carry on the business of the Auctioned
Assets as currently conducted.
Section 5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has all necessary
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which Seller is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Seller of this Agreement and the Ancillary Agreements to which Seller is a party
and the consummation by Seller of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Seller or by a committee thereof to whom such authority has been delegated and
no other corporate proceedings on the part of Seller are necessary to authorize
this Agreement or the Ancillary Agreements to which Seller is a party or the
consummation of the transactions contemplated hereby or thereby. This Agreement
and the Ancillary Agreements to which Seller is a party have been duly and
validly executed and delivered by Seller and, assuming that this Agreement and
the Ancillary Agreements to which Seller is a party constitute valid and binding
agreements of Buyer, subject to the receipt of the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, constitute valid and
binding agreements of Seller, enforceable against Seller in accordance with
their respective terms.
Section 5.3 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Subject to obtaining the Seller Required Regulatory Approvals and
the Buyer Required Regulatory Approvals, neither the execution and delivery by
Seller of this Agreement or the Ancillary Agreements to which Seller is a party
nor the consummation by Seller of any of the transactions contemplated hereby or
thereby will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-laws of Seller, (ii) except as set forth on
SCHEDULE 5.3(A), 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, lease or other
instrument or obligation to which Seller is a party or by which Seller, or any
of the Auctioned Assets, may be bound, except (x) for such defaults (or rights
of termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, create a Material Adverse Effect or (y) for those requirements which
become applicable to Seller as the result of the specific regulatory status of
Buyer (or any of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which Buyer (or any of its
Affiliates) is or proposes to be engaged, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller, or the
Auctioned Assets, except for such violations which would not, individually or in
the aggregate, create a Material Adverse Effect.
(b) Except for (i) the filings by Seller and Buyer required by the HSR
Act and the expiration or earlier termination of all waiting periods under the
HSR Act, and (ii) the Required Regulatory Approvals set forth on SCHEDULE 5.3(b)
attached hereto (collectively, the "SELLER REQUIRED REGULATORY APPROVALS"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any Governmental Authority is necessary for the
consummation by Seller of the transactions contemplated hereby or by the
Ancillary Agreements to which Seller is a party, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals (A)
which, if not obtained or made, would not individually or in the aggregate,
create a Material Adverse Effect or (B) which relate to the Transferable
Permits.
Section 5.4 PERSONAL PROPERTY. Except for Permitted Exceptions, Seller has
good and marketable title, free and clear of all Encumbrances, to all personal
property included in the Auctioned Assets.
Section 5.5 REAL ESTATE. Except for Permitted Exceptions, Seller has good
and marketable title, free and clear of all Encumbrances, to the Buyer Real
Estate. SCHEDULE 5.5(a) contains a legal description of the Buyer Real Estate.
Copies of the most recent real property map and certificate of title and title
report in the possession of Seller with respect to the Buyer Real Estate or any
portion thereof are listed on SCHEDULE 5.5(b) and SCHEDULE 5.5(c), respectively.
Section 5.6 LEASES. Except as set forth on SCHEDULE 2.2(a)(iv) or on the
title report referenced on SCHEDULE 5.5(c), as of the date of this Agreement,
Seller is neither a tenant nor a licensee, landlord or lessor under any real
property leases or licenses which (a) are to be transferred and assigned to
Buyer on the Closing Date, and (b) (i) provide for annual payments of more than
$100,000 or (ii) are material to the Auctioned Assets.
Section 5.7 CERTAIN CONTRACTS AND ARRANGEMENTS. (a) Except for (i) any
contract or agreement listed on SCHEDULE 2.2(a)(iv) (the "MATERIAL CONTRACTS"),
(ii) Contracts which will expire prior to the Closing Date or that are permitted
to be entered into under this Agreement and (iii) Contracts that provide for
annual payments after the date hereof of less than $100,000, Seller is not a
party to any contract which is material to the business or operations of the
Auctioned Assets.
(b) Each Contract to which Seller is a party (i) constitutes a valid and
binding obligation of Seller, and, to the Knowledge of Seller, of the other
parties thereto, and (ii) to the Knowledge of Seller, is in full force and
effect.
(c) Except as set forth on SCHEDULE 5.7 attached hereto, to the
Knowledge of Seller, there is not, under any of the Contracts to which Seller is
a party, any default or event which, with notice or lapse of time or both, would
constitute a material default by Seller, except for such events of default and
other events as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, create a Material Adverse
Effect.
Section 5.8 LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 5.8 or in
Seller's Filed Seller SEC Documents, as of the date of this Agreement, there are
no claims, actions, proceedings or investigations (including condemnation
proceedings) pending or, to the Knowledge of Seller, threatened against or
relating to Seller with respect to the business or operations of the Auctioned
Assets, before any Governmental Authority which would, individually or in the
aggregate, be reasonably expected to create a Material Adverse Effect. Except
for the Assumed Consent Order Obligations, with respect to the business or
operations of the Auctioned Assets, Seller is not, as of the date of this
Agreement, subject to any outstanding judgment, rule, order, writ, injunction or
decree of any Governmental Authority which could create a Material Adverse
Effect. The representations and warranties of Seller set forth in this Section
5.8 shall not apply to, and do not cover, any environmental matters which, with
respect to any representations and warranties of Seller, are exclusively
governed by Section 5.10.
Section 5.9 PERMITS; COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
5.9 or in Seller's Filed Seller SEC Documents, Seller holds, and is in
compliance with, all Permits necessary to conduct the business and operations of
the Auctioned Assets as currently conducted, and, to the Knowledge of Seller,
Seller is otherwise in compliance with all laws, statutes, orders, rules,
regulations, ordinances or judgments of any Governmental Authority applicable to
the business and operations of the Auctioned Assets, except for such failures to
comply with Permits, or such failures to be in compliance with such laws,
statutes, orders, rules, regulations, ordinances or judgments, which would not,
individually or in the aggregate, create a Material Adverse Effect. Except as
set forth on SCHEDULE 5.9, Seller has not received any written notification that
it is in violation of any of such Permits or laws, statutes, orders, rules,
regulations, ordinances or judgments, except for notifications of violations
which would not, individually or in the aggregate, create a Material Adverse
Effect. The representations and warranties of Seller set forth in this Section
5.9 shall not apply to, and do not cover, any environmental matters which, with
respect to any representations and warranties of Seller, are exclusively
governed by Section 5.10.
Section 5.10 ENVIRONMENTAL MATTERS.
(a) Except as set forth in SCHEDULE 5.10 or disclosed in Seller's Filed
Seller SEC Documents, Seller holds, and is in compliance with, the Environmental
Permits required for Seller to conduct the business and operations of the
Auctioned Assets as currently conducted under applicable Environmental Laws,
and, to the Knowledge of Seller, Seller is otherwise in compliance with
applicable Environmental Laws on the date hereof with respect to the business
and operations of the Auctioned Assets, except for such failures to hold or
comply with such Environmental Permits, or such failures to be in compliance
with such applicable Environmental Laws on the date hereof, which would not,
individually or in the aggregate, create a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 5.10 or disclosed in Seller's Filed
Seller SEC Documents, Seller has not received any written notice of a violation,
proceeding or investigation of any Environmental Law, or been notified that it
is a potentially responsible party under the Federal Comprehensive Environmental
Response, Compensation, and Liability Act or any similar state law with respect
to any real property included in the Buyer Real Estate or in any lease forming
part of the Auctioned Assets, except for such matters under such Environmental
Laws as would not, individually or in the aggregate, create a Material Adverse
Effect.
(c) Except as set forth in SCHEDULE 5.10 or disclosed in Seller's Filed
Seller SEC Documents, with respect to the business and operations of the
Auctioned Assets, Seller is not subject to any outstanding judgment, decree or
judicial order relating to compliance with any Environmental Law or to
investigation or cleanup of Hazardous Substances under any applicable
Environmental Law, except for (i) the Seller Consent Orders and (ii) such
judgments, decrees or judicial orders that would not, individually or in the
aggregate, create a Material Adverse Effect.
(d) Except as set forth in SCHEDULE 5.10 or disclosed in Seller's Filed
Seller SEC Documents, as of the date of this Agreement, there are no claims,
actions, proceedings or investigations pending, or to the Knowledge of Seller,
threatened against or relating to Seller, with respect to the exposure at the
Auctioned Assets of any person to Hazardous Substances, except for (i) the
Retained Asbestos-Related Claims and (ii) such claims, actions, proceedings or
investigations which, if adversely determined, would not, individually or in the
aggregate, create a Material Adverse Effect.
For purposes of the representations and warranties made in this Article
V, Seller specifically disclaims any representations and warranties with respect
to standards of performance for new stationary sources promulgated under Section
111 of the Federal Clean Air Act, 42 U.S.C. ss. 7411. The representations and
warranties made in this Section 5.10 are the exclusive representations and
warranties of Seller relating to environmental matters as of the date hereof.
Section 5.11 LABOR MATTERS. Seller has previously made available to Buyer
copies of all collective bargaining agreements, and amendments thereto, to which
Seller is a party or is subject and which relate to the business or operations
of the Auctioned Assets. Except as set forth on SCHEDULE 5.11, with respect to
the business and operations of the Auctioned Assets, as of the date of this
Agreement, (a) Seller is in compliance with all applicable laws regarding
employment and employment practices, terms and conditions of employment, health
and safety, and wages and hours, occupational safety and health, plant closings,
mass layoffs, (b) Seller has not received written notice of any unfair labor
practice charge or complaint against Seller pending before the National Labor
Relations Board, (c) there is no labor strike, dispute, slowdown or stoppage
actually pending or, to the Knowledge of Seller, threatened against or affecting
Seller, (d) Seller has not received notice that any representation petition
respecting the employees of Seller has been filed with the National Labor
Relations Board, (e) no arbitration proceeding arising out of or under
collective bargaining agreements is pending against Seller and (f) Seller has
not experienced any primary work stoppage since December 31, 1998, except, in
the case of each of the foregoing clauses, for such matters as would not,
individually or in the aggregate, create a Material Adverse Effect.
Section 5.12 ERISA; BENEFIT PLANS. SCHEDULE 5.12 sets forth a list of all
material deferred compensation, profit-sharing, retirement and pension plans and
all material bonus and other material employee benefit or fringe benefit plans
maintained, or with respect to which contributions have been made, by Seller
with respect to current or former employees employed in connection with the
power generation operations of the Generating Facilities (collectively, "BENEFIT
PLANS"). True and complete copies of all Benefit Plans, and all amendments
thereto, have been provided or made available to Buyer. Except as set forth on
SCHEDULE 5.12, Seller and each trade or business (whether or not incorporated)
which are or have ever been under common control, or which are or have ever been
treated as a single employer, with Seller under Section 414(b), (c), (m) or (o)
of the Code (an "ERISA AFFILIATE") have fulfilled their respective obligations
under the minimum funding requirements of Section 302 of ERISA, and Section 412
of the Code, with respect to each Benefit Plan which is an "employee pension
benefit plan" as defined in Section 3(2) of ERISA and to which Section 302 of
ERISA applies and each such plan is in compliance in all respects with the
presently applicable provisions of ERISA and the Code, except for such failures
to fulfill such obligations or comply with such provisions which would not,
individually or in the aggregate, create a Material Adverse Effect. Except as
set forth on SCHEDULE 5.12, neither Seller nor any ERISA Affiliate has incurred
any liability under Section 4062(b) of ERISA, or any withdrawal liability under
Section 4201 of ERISA, to the Pension Benefit Guaranty Corporation (the "PBGC")
in connection with any Benefit Plan which is subject to Title IV of ERISA which
liability remains outstanding, and there has not been any reportable event (as
defined in Section 4043 of ERISA) with respect to any such Benefit Plan (other
than a reportable event with respect to which the 30-day notice requirement has
been waived by the PBGC). Neither Seller nor any ERISA Affiliate or parent
corporation, within the meaning of Section 4069(b) or Section 4212(c) of ERISA,
has engaged in any transaction, within the meaning of Section 4069(b) or Section
4212(c) of ERISA. No Benefit Plan and no "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) maintained by Seller or any ERISA Affiliate or
to which Seller or any ERISA Affiliate has contributed is a multiemployer plan.
Section 5.13 TAXES. With respect to the Auctioned Assets and trades or
businesses associated with the Auctioned Assets, (a) all Tax Returns required to
be filed have been filed and (b) all Taxes shown to be due on such Tax Returns,
and all Taxes otherwise owed, have been paid in full, except to the extent that
any failure to file or any failure to pay any Taxes would not, individually or
in the aggregate, create a Material Adverse Effect. Except as set forth on
SCHEDULE 5.13, no written notice of deficiency or assessment has been received
from any taxing authority with respect to liabilities for Taxes of Seller in
respect of the Auctioned Assets which has not been fully paid or finally settled
or which is not being contested in good faith through appropriate proceedings,
except for any such notices regarding Taxes which would not, individually or in
the aggregate, create a Material Adverse Effect. Except as set forth on SCHEDULE
5.13, there are no outstanding agreements or waivers extending the applicable
statutory periods of limitation for Taxes associated with the Auctioned Assets
for any period, except for any such agreements or waivers which would not,
individually or in the aggregate, create a Material Adverse Effect.
Section 5.14 UNDISCLOSED LIABILITIES. With respect to the Auctioned Assets,
there are no liabilities or obligations of any nature or kind (absolute,
accrued, contingent or otherwise) that would have been required to be set forth
on a balance sheet in respect of the Auctioned Assets or in the notes thereto
prepared in accordance with GAAP, as applied by Seller in connection with its
December 31, 1999 balance sheet, except for any liabilities or obligations which
(a) are disclosed in or contemplated or permitted by this Agreement or the
Ancillary Agreements to which Seller is a party (including the Assumed
Obligations), (b) are disclosed in the Confidential Memorandum, (c) are
disclosed in Seller's Filed Seller SEC Documents, (d) have been incurred in the
ordinary course of business, or (e) which would not, individually or in the
aggregate, create a Material Adverse Effect.
Section 5.15 BROKERS. No broker, finder or other person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transaction
contemplated hereby by reason of any action taken by Seller, except Navigant
Consulting, Inc., which is acting for and at the expense of Seller.
Section 5.16 INSURANCE. Seller carries policies of insurance covering fire,
workers' compensation, property all-risk, comprehensive bodily injury, property
damage liability, automobile liability, product liability, completed operations,
explosion, collapse, contractual liability, personal injury liability and other
forms of insurance relating to the Auctioned Assets, or otherwise self-insures
in accordance with all statutory and regulatory criteria against any such
liabilities, which insurance is in such amounts, has such deductibles and
retentions and is underwritten by such companies as would be obtained by a
reasonably prudent electric power business. All such insurance policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date of this Agreement have been paid, and no notice of
cancellation or termination has been received by Seller with respect to such
policy.
Section 5.17 DISCLAIMERS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING SOLD AND
TRANSFERRED "AS IS, WHERE IS", AND SELLER IS NOT MAKING ANY OTHER
REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
CONCERNING SUCH AUCTIONED ASSETS (INCLUDING ANY RELATING TO LIABILITIES,
OPERATIONS OF THE GENERATING FACILITIES, CONDITION, VALUE OR QUALITY OF THE
AUCTIONED ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS OR OTHER
INCIDENTS OF THE AUCTIONED ASSETS) OR WITH RESPECT TO THIS AGREEMENT OR THE
ANCILLARY AGREEMENTS TO WHICH SELLER IS A PARTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY
OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO THE AUCTIONED ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP
THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR
COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS, OR THE APPLICABILITY OF ANY
GOVERNMENTAL REQUIREMENTS, INCLUDING BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS,
OR WHETHER SELLER POSSESSES SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO
OPERATE THE AUCTIONED ASSETS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION
5.10 HEREOF, SELLER FURTHER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY REGARDING THE ABSENCE OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL
LIABILITY ARISING UNDER ENVIRONMENTAL LAWS WITH RESPECT TO THE AUCTIONED ASSETS,
ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY BUYER. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY WITH
RESPECT TO THE INFORMATION SET FORTH IN, OR CONTEMPLATED BY, THE CONFIDENTIAL
MEMORANDUM.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 6.1 ORGANIZATION. Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware 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. Buyer is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in the State of New York.
Section 6.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has all necessary
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Buyer of this
Agreement and such Ancillary Agreements and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of Buyer and no other corporate proceedings
on the part of Buyer are necessary to authorize this Agreement or such Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby. This Agreement and such Ancillary Agreements have been duly and validly
executed and delivered by Buyer and, assuming that this Agreement and such
Ancillary Agreements constitute valid and binding agreements of Seller, subject
to the receipt of the Buyer Required Regulatory Approvals and the Seller
Required Regulatory Approvals, this Agreement and the Ancillary Agreements
constitute valid and binding agreements of Buyer, enforceable against Buyer in
accordance with their respective terms.
Section 6.3 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Subject to obtaining the Buyer Required Regulatory Approvals and the
Seller Required Regulatory Approvals, neither the execution and delivery by
Buyer of this Agreement or the Ancillary Agreements to which it is a party nor
the consummation by Buyer of any 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 Buyer, (ii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which Buyer or
any of its subsidiaries is a party or by which any of their respective assets
may be bound or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Buyer, or any of its assets, except, in the case of
clause (ii) and (iii), for such failures to obtain a necessary consent, defaults
and violations which would not, individually or in the aggregate, have a Buyer
Material Adverse Effect.
(b) Except for (i) the filings by Buyer and Seller required by the HSR Act
and the expiration or earlier termination of all waiting periods under the HSR
Act, and (ii) the Required Regulatory Approvals set forth on SCHEDULE 6.3(b)
attached hereto (collectively, the "BUYER REQUIRED REGULATORY APPROVALS"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any Governmental Authority is necessary for the
consummation by Buyer of the transactions contemplated hereby or by the
Ancillary Agreements, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which relate to the Transferable
Permits.
Section 6.4 AVAILABILITY OF FUNDS. At the Closing, Buyer will have
sufficient funds available to it or have received binding written commitments
(copies of which have heretofore been delivered to Seller) from one or more
nationally recognized financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price, the Estimated Inventory Adjustment
Amount and the Permitted Capital Expenditures Amount.
Section 6.5 BROKERS. No broker, finder or other person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transaction
contemplated hereby by reason of any action taken by Buyer, except Bank of
America Securities, which is acting for and at the expense of Buyer.
Section 6.6 NO KNOWLEDGE OF SELLER'S BREACH. Buyer has no Knowledge of any
breach by Seller of any representation or warranty of Seller, or of any other
condition or circumstance that would excuse Buyer from its timely performance of
its obligations hereunder. Buyer shall promptly notify Seller with respect to
Seller's representations and warranties or such other conditions or
circumstances if any such information comes to Buyer's attention prior to the
Closing.
Section 6.7 QUALIFIED BUYER. Buyer is qualified to obtain any Permits and
Environmental Permits necessary for Buyer to own and operate the Auctioned
Assets as of the Closing Date. Without limiting the foregoing, to the Knowledge
of Buyer, there is no reason or circumstance that would prevent Buyer from
procuring the Buyer Required Regulatory Approvals.
Section 6.8 WARN ACT. Buyer does not intend to engage in a "Plant Closing"
or "Mass Lay-off" as such terms are defined in the WARN Act within sixty (60)
days of the Closing Date.
Section 6.9 FINANCIAL REPRESENTATIONS. Buyer has provided Seller with the
Guarantor's most recent balance sheet, income statement and statement of changes
in cash flows and independent auditors reports for each of the preceding three
fiscal years and most recent interim period. Such financial statements have been
prepared in accordance with GAAP and fairly reflect the financial position and
results of operations of Guarantor as at and for the periods therein.
Section 6.10 LEGAL PROCEEDINGS. There are no claims, actions, proceedings
or investigations pending or, to the Knowledge of Buyer, threatened against or
relating to Buyer before any Governmental Authority which would, individually or
in the aggregate, be reasonably expected to create a Buyer Material Adverse
Effect. Buyer is not subject to any outstanding judgment, rule, order, writ,
injunction or decree of any Governmental Authority which could create a Buyer
Material Adverse Effect.
ARTICLE VII
-----------
COVENANTS OF THE PARTIES
Section 7.1 CONDUCT OF BUSINESS RELATING TO THE AUCTIONED ASSETS.
(a) Except with the prior written consent of Buyer (such consent not to
be unreasonably withheld), as required to effect the purchase and sale of the
Auctioned Assets and related transactions contemplated by this Agreement or as
otherwise required by law (including Environmental Laws), during the period from
the date of this Agreement to the Closing Date, Seller will operate the
Auctioned Assets in the usual, regular and ordinary course and in accordance
with Good Utility Practice, and continue to pay accounts payable, salaries,
wages, benefits, and other amounts incurred in the operation of the Auctioned
Assets which relate to the Auctioned Assets in a timely manner, consistent with
past practice.
(b) Notwithstanding the foregoing, except as contemplated in this
Agreement or the Ancillary Agreements, prior to the Closing Date, without the
prior written consent of Buyer (such consent not to be unreasonably withheld or
delayed), Seller will not:
(i) except for Permitted Exceptions, grant any Encumbrance on the
Auctioned Assets securing any indebtedness for borrowed money or guarantee or
other liability for the obligations of any person;
(ii) make any material change in the levels of fuel inventory and
supplies, materials and spare parts inventory customarily maintained by Seller
with respect to the Auctioned Assets, other than consistent with past practice;
(iii) sell, lease (as lessor), transfer or otherwise dispose of, any
of the Auctioned Assets, other than assets that become obsolete or assets used,
consumed or replaced in the ordinary course of business consistent with past
practice;
(iv) terminate, materially extend or otherwise materially amend any
of the Material Contracts (other than in accordance with their respective terms)
or waive any default by, or release, settle or compromise any material claim
against, any other party thereto;
(v) amend any of the Transferable Permits, other than (A)
Transferable Permits not material to the operations of the Auctioned Assets as
currently conducted, (B) as reasonably necessary to complete the transfer of
Transferable Permits as contemplated hereby, (C) routine renewals or
non-material modifications or amendments, and (D) modifications, alterations and
amendments contemplated by Section 7.3(b);
(vi) enter into any Contract for the purchase, sale or storage of
fuel with respect to the Auctioned Assets (whether commodity or transportation)
with a term in excess of 12 months, if the aggregate future liability or
receivable outstanding on the date for measurement for the purpose of this
covenant for all such Contracts would be in excess of $2 million, not including
any such Contract terminable by notice of not more than 30 days without penalty
or cost (other than DE MINIMIS administrative costs);
(vii) except as set forth on SCHEDULE 7.1(b)(vii), (A) establish,
adopt, enter into or amend any collective bargaining agreement or Benefit Plan,
except (1) if such action would not create a Material Adverse Effect or (2) as
required under applicable law or under the terms of any collective bargaining
agreement, or (B) grant to any employee of the Auctioned Assets any increase in
compensation, except (1) in the ordinary course of business consistent with past
practice or (2) to the extent required by the terms of any collective bargaining
agreement, employment agreement in effect as of the date of this Agreement or
applicable law;
(viii) except in the case of capital expenditures covered by clause
(ix) below, enter into any Contract with respect to the Auctioned Assets for
goods or services not addressed in clauses (i) through (vii) with a term in
excess of 12 months, if the aggregate future liability or receivable outstanding
on the date for measurement for the purpose of this covenant for all such
Contracts would be in excess of one million dollars ($1,000,000), not including
any such Contract terminable by notice of not more than 30 days without penalty
or cost (other than DE MINIMIS administrative costs); PROVIDED, HOWEVER, that
notwithstanding any other provision of this Agreement to the contrary, Seller
may enter into any Contract reasonably necessary to effect the physical, legal
or operational separation of the sites on which the Auctioned Assets are located
or to otherwise implement the change of ownership contemplated hereby, or
subdivision, of such sites or implement the provisions of the Ancillary
Agreements;
(ix) make, or commit to make, any capital expenditures except (A)
those capital expenditures described on SCHEDULE 7.1(b)(ix), (B) those capital
expenditures which do not exceed in the aggregate one million dollars
($1,000,000) (in addition to those other capital expenditures permitted under
this subsection (ix)), (C) those capital expenditures which are approved by
Buyer, or (D) those capital expenditures which are mandated by a law or
regulation of a Governmental Authority; provided, however, that, in the case of
clause (D), Seller will not make any such mandated capital expenditures (unless
the failure by Seller to make such capital expenditures would have an adverse
impact upon the Auctioned Assets) if (y) such mandated capital expenditures are
not required to be made by Seller prior to the Closing Date, and (z) Buyer
assumes responsibility, at its sole cost, to make such mandated capital
expenditures after the Closing (any capital expenditures described above are the
"PERMITTED CAPITAL EXPENDITURES");
(x) enter into any Contract with Affiliates of Seller which would
become an Assumed Obligation unless the terms of which are indicative of an
arms-length arrangement; or
(xi) enter into any Contract with respect to the Auctioned Assets
relating to any of the transactions prohibited by the foregoing clauses (i)
through (x).
(c) Without limiting the generality of Sections 7.1(a) and (b), to the
extent Section 7.1(a) or (b) prohibits Seller from entering into any Contract
for goods and services in connection with maintenance or capital expenditures,
Buyer agrees that Seller may request Buyer's consent to enter into such
Contract, such consent not to be unreasonably withheld or delayed, and to the
extent Buyer so consents, all liabilities and obligations under such Contract
shall constitute Assumed Obligations and, at the Closing, Buyer shall otherwise
reimburse Seller for all its expenditures thereunder. In the event that Buyer
does not provide consent for maintenance or capital expenditures requested by
Seller pursuant to this Section 7.1(c), Seller's failure to undertake such
maintenance or capital expenditures shall not constitute a breach of Section
7.1(a) nor shall any change or effect on the Auctioned Assets resulting from, or
related to, not making such maintenance or capital expenditures constitute a
Material Adverse Effect.
(d) Notwithstanding anything in this Section 7.1 to the contrary, Seller
may take any action, incur any expense or enter into any obligation with respect
to the Auctioned Assets to the extent that (i) all obligations and liabilities
arising with respect thereto do not constitute Assumed Obligations, or (ii)
Seller otherwise provide that such obligations and liabilities shall not be
assumed or retained by Buyer.
Section 7.2 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Closing Date, Seller
will, subject to the terms of Section 7.11 hereof, during ordinary business
hours and upon reasonable notice (i) give Buyer and its representatives
reasonable access to appropriate personnel, all books, records, plants, offices
and other facilities and properties constituting the Auctioned Assets, including
for the purpose of observing the operation by Seller of the Auctioned Assets,
(ii) permit Buyer to make such reasonable inspections thereof as Buyer may
reasonably request, (iii) furnish Buyer with such financial and operating data
and other information with respect to the Auctioned Assets as Buyer may from
time to time reasonably request, (iv) furnish Buyer upon request a copy of each
material report, schedule or other document with respect to the Auctioned Assets
filed by Seller with, or received by Seller from, the PSC, FERC or any other
Governmental Authority; PROVIDED, HOWEVER, that (A) any such activities shall be
conducted in such a manner as not to interfere unreasonably with the operation
of the Auctioned Assets, (B) Seller shall not be required to take any action
which would constitute a waiver of any legal privilege, including the
attorney-client privilege, the work product privilege and the self-critical
investigation privilege and (C) Seller need not supply Buyer with (1) any
information or access which Seller are under a legal obligation not to supply or
(2) any information which Seller have previously supplied to Buyer.
Notwithstanding anything in this Section 7.2 to the contrary, (i) Seller will
not be required to provide such information or access to any employee records
other than Transferred Employee Records, (ii) Buyer shall not have the right to
perform or conduct any environmental sampling or testing at, in, on, around or
underneath the Auctioned Assets and (iii) Seller shall not be required to
provide such access or information with respect to any Retained Asset or
Retained Liabilities.
(b) Following the Closing Date, Buyer shall retain all Operating Records
(whether in electronic form or otherwise) relating to the Auctioned Assets on or
prior to the Closing Date. Buyer also agrees that, following the Closing Date,
Seller shall have the right, upon reasonable request to Buyer, to have access
to, or receive from Buyer copies of, any Operating Records or other information
in Buyer's possession relating to the Auctioned Assets on or prior to the
Closing Date and required by Seller in order to comply with applicable law.
Seller shall reimburse Buyer for its reasonable costs and expenses incurred in
connection with the foregoing sentence. If the Buyer shall desire to dispose of
any Operating Records or other information contemplated above, Buyer shall,
prior to such disposition, give Seller a reasonable opportunity to segregate and
remove such records and information as they may select.
Section 7.3 CONSENTS AND APPROVALS; TRANSFERABLE PERMITS.
(a) The Parties shall cooperate with each other and (i) prepare and file
(or otherwise effect) as soon as practicable all applications, notices,
petitions and filings with respect to and (ii) use their reasonable best efforts
to obtain (A) the Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals and (B) any other consents, approvals or authorizations of
any other Governmental Authorities or third parties that are necessary to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements. Without limiting the generality of the foregoing, (1) each Party
agrees to, upon the other party's request, support such other Party's
applications for regulatory approvals of the purchase and sale of the Auctioned
Assets contemplated by this Agreement, and (2) the Parties agree to defend any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Ancillary Agreements, or the consummation of
the transactions contemplated hereby or thereby, including seeking to have any
stay or temporary restraining order entered by any Governmental Authority
vacated or reversed.
(b) Upon execution of this Agreement, Seller shall commence the process
of transferring to Buyer the Transferable Permits, including completing and
filing applications and related documents with the appropriate Governmental
Authorities. Seller hereby reserves the right to modify, alter or amend any
Transferable Permit or to refuse to correct violations or deficiencies in
respect of any Transferable Permit as long as such modification, alteration,
amendment or refusal would not, individually or in the aggregate, create a
Material Adverse Effect. Seller shall use its reasonable efforts to give notice
to Buyer of any modification, alteration or amendment to any Transferable
Permit.
(c) Seller shall use its reasonable best efforts to cooperate with Buyer
in the transfer of Transferable Permits to Buyer by Closing. If, as determined
in the sole discretion of Seller, the transfer of any Transferable Permit cannot
be completed by Closing, Buyer is hereby authorized, but not required, to act as
Seller's representative and agent in respect of such Transferable Permit and to
do all things necessary for effecting transfer of such Transferable Permit as
soon after the Closing as is practicable, with Seller remaining the Transferable
Permit "holder of record" in such case until such transfer is completed. In the
case of each such Transferable Permit, Seller shall, to the maximum extent
permitted by law and such Transferable Permit, enter into such reasonable
arrangements with Buyer as are necessary to provide Buyer with the benefits and
obligations of such Transferable Permit. If, as determined in the sole
discretion of Seller, Buyer is able to complete the transfer of any Transferable
Permit after Closing without the occurrence of any event that, if such event had
occurred between the execution of this Agreement and the Closing, would have
created, individually or in the aggregate, a Material Adverse Effect, Seller may
substitute Buyer in its place and stead as the Party responsible for completing
the transfer of such Transferable Permit.
Section 7.4 FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement, each of the
Parties will use its reasonable best efforts to take, or cause to be taken, as
soon as possible, all action, and to do, or cause to be done, as soon as
possible, all things necessary, proper or advisable under applicable laws and
regulations to consummate the sale of the Auctioned Assets pursuant to this
Agreement as soon as possible, including using its reasonable best efforts to
ensure satisfaction of the conditions precedent to each Party's obligations
hereunder. Prior to submission by any Party of any application with a
Governmental Authority for a regulatory approval, such Party shall submit such
application to the other Party for review and comment and shall incorporate into
such application any revisions reasonably requested by the other Party. None of
the Parties will, without prior written consent of the other Parties, take or
fail to take, or permit their respective Affiliates to take or fail to take, any
action, which would reasonably be expected to prevent or materially impede,
interfere with or delay the consummation, as soon as possible, of the
transactions contemplated by this Agreement or the Ancillary Agreements.
(b) Following the Closing Date, without further consideration and at its
own expense, (i) Seller will execute and deliver such instruments of assignment
or conveyance as Buyer may reasonably request to more effectively vest in Buyer
Seller's title to the Auctioned Assets (subject to Permitted Exceptions and the
other terms of this Agreement), and (ii) Buyer will execute and deliver such
instruments of assumption as Seller may reasonably request in order to more
effectively consummate the sale of the Auctioned Assets and the assumption of
the Assumed Obligations pursuant to this Agreement.
(c) Seller shall join or support Buyer's application to the PSC for the
certification required under Section 32(c) of PUHCA in order for Buyer to obtain
qualification, with respect to the Auctioned Assets, as an exempt wholesale
generator under Section 32 of PUHCA.
(d) Seller and Buyer shall cooperate in good faith to establish a
transition committee to consider operational and business issues related to the
purchase and sale of the Auctioned Assets.
Section 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, the Ancillary Agreements or the transactions
contemplated hereby or thereby, and shall not issue any such public
announcement, statement or other disclosure prior to such consultation, except
as may be required by law.
Section 7.6 TAX MATTERS.
(a) All transfer and sales taxes (including (i) sales tax on the sale or
purchase of the Auctioned Assets imposed by Governmental Authorities, (ii)
transfer tax on the conveyance of interest in real property imposed by
Governmental Authorities, and (iii) any petroleum business taxes and similar
excise taxes on sales of petroleum based products imposed by Governmental
Authorities) incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by Buyer. Buyer shall prepare and file in a
timely manner any and all Tax Returns or other documentation relating to such
taxes; PROVIDED, HOWEVER, that, to the extent required by applicable law, Seller
will join in the execution of any such Tax Returns or other documentation
relating to any such taxes. Buyer shall provide to Seller copies of each Tax
Return described in the proviso in the preceding sentence at least thirty (30)
days prior to the date such Tax Return is required to be filed. Seller shall not
file any refund request, protest, petition for reassessment or take any similar
action with respect to property Taxes imposed on the Auctioned Assets without
the consent of Buyer.
(b) At Seller's election, but on no less than 10 Business Days' notice
to Buyer, the transfer of some or all of the Auctioned Assets and the receipt of
the amount payable by Buyer to Seller pursuant to Section 3.1 hereof shall be
made through a qualified intermediary in a manner satisfying the requirements of
Treasury Regulation Section 1.1031(k)-1(g); provided, however, that Seller shall
pay and be responsible for any incremental costs associated with such use of a
qualified intermediary.
(c) Each Party shall provide the other Party with such assistance as may
reasonably be requested by the other Party in connection with the preparation of
any Tax Return, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for Taxes, and each
Party shall retain and provide the other Party with any records or information
which may be relevant to such return, audit, examination or proceedings. Any
information obtained pursuant to this Section 7.6(c) or pursuant to any other
Section hereof providing for the sharing of information or review of any Tax
Return or other instrument relating to Taxes shall be kept confidential by the
parties hereto.
(d) If Buyer or Seller receives a refund of Taxes in respect of the
Auctioned Assets for a taxable period including the Closing Date, Buyer shall
pay to Seller the portion of any such refund attributable to the portion of such
taxable period prior to or on the Closing Date, and Seller shall pay to Buyer
the portion of any such refund attributable to the portion of such taxable
period on and after the Closing Date.
Section 7.7 BULK SALES OR TRANSFER LAWS. Buyer acknowledges that Seller
will not comply with the provisions of any bulk sales or transfer laws of any
jurisdiction in connection with the transactions contemplated by this Agreement.
Buyer hereby waives compliance by Seller with the provisions of the bulk sales
or transfer laws of all applicable jurisdictions.
Section 7.8 WITNESS SERVICES. At all times following the Closing Date, each
Party shall use reasonable best efforts to make available to the other Party,
upon reasonable written request, its and its subsidiaries' then current or
former officers, directors, employees (including former employees of Seller) and
agents as witnesses to the extent that (i) such persons may reasonably be
required by such requesting Party in connection with any claim, action,
proceeding or investigation in which such requesting Party may be involved and
(ii) there is no conflict between Buyer and Seller in such claim, action,
proceeding or investigation. Such other Party shall be entitled to receive from
such requesting Party, upon the presentation of invoices for such witness
services, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses and direct and indirect costs of employees who are
witnesses, as may be reasonably incurred in providing such witness services.
Section 7.9 CONSENT ORDERS. Buyer and Seller agree to cooperate with each
other and any applicable Governmental Authority to facilitate the entry of a
consent order between such Governmental Authority and Buyer, wherein Buyer will
agree to assume and perform the Assumed Consent Order Obligations.
Section 7.10 CONTROL OF LITIGATION. At all times from and after the date
hereof, the Parties agree and acknowledge that Seller shall be entitled
exclusively to control, defend and settle any litigation, administrative or
regulatory proceeding, and any investigation or remediation activity arising out
of or related to any Retained Assets or Retained Liabilities, and Buyer agrees
to cooperate fully in connection therewith.
Section 7.11 CONFIDENTIALITY. Each Party agrees that it shall not use any
Confidential Information of the other Party or its Affiliates for any purpose
other than in connection with the consummation of the transactions contemplated
by this Agreement or any Ancillary Agreement. Each Party further agrees that it
shall not divulge any such Confidential Information to any Person (i) except to
its employees, agents, lenders, financial and other advisors and representatives
to the extent required in connection with the transactions contemplated by this
Agreement or any Ancillary Agreement, (ii) except as required to comply with
applicable laws, ordinances, decrees or judicial or administrative orders (and
then only that portion of the Confidential Information that is legally required
to be disclosed), and (iii) except as otherwise agreed to by the Parties in
writing. Each Party shall inform its employees, agents, lenders, financial and
other advisors and representatives of the confidential nature of such
information and the obligation to keep such information confidential, and shall
take such other action as shall be reasonable required to cause such information
to be kept confidential. For purposes of this Agreement, "Confidential
Information" shall mean any confidential or proprietary information including
any information relating to any Party or its Affiliates' properties or
operations, which has been disclosed by such Party to another Party in
connection with the transactions contemplated hereby or by any of the Ancillary
Agreements; provided, however, that Confidential Information shall not include
any information if:
(i) the receiving Party shall have had knowledge of such information
prior to the date on which such Party received it from the other Party, and such
information was free from any limitation on disclosure;
(ii) such information shall have entered the public domain through
no fault of the receiving Party; or
(iii) such information shall have been independently developed by
the receiving Party.
(b) In the event that this Agreement is terminated for any reason, the
covenants under this Section 7.11 shall survive the termination of this
Agreement. At the time of such termination, if requested by any Party, the other
Party shall use its reasonable efforts to return to the other Party, or destroy,
all documents in its possession which contain Confidential Information of the
other Party.
Section 7.12 RISK OF LOSS.
(a) Except as otherwise provided for in this Section 7.12, from the date
hereof through the Closing Date, all risk of loss or damage to the assets and
properties included in the Auctioned Assets shall be borne by Seller (other than
loss or damage caused by the acts or negligence of Buyer or any of its
employees, officers, agents or representatives, which loss or damage shall be
the responsibility of Buyer).
(b) If, before the Closing Date, all or any portion of the Auctioned
Assets are (1) taken by eminent domain or are the subject of a pending or (to
the Knowledge of Seller) contemplated taking which has not been consummated, or
(2) damaged or destroyed by fire or other casualty, Seller shall notify Buyer
promptly in writing of such fact. If the fair market value of the Auctioned
Assets that are the subject of, or are adversely affected by, such taking or
loss is five percent (5%) of the Purchase Price or less, (as estimated in good
faith by Seller), the Parties agree that such taking or loss shall not have any
effect on (or otherwise impede in any manner) the transactions contemplated
hereby, and Seller shall, at its election, either cure the taking or loss prior
to Closing or assign to Buyer all of Seller's rights, title and interest in and
to any related award or insurance proceeds. If (1) the fair market value of the
Auctioned Assets that are the subject of, are adversely affected by such taking
or loss is in excess of five percent (5%) of the Purchase Price (as estimated in
good faith by Seller) and (2) Seller has not notified Buyer of its intention to
cure such taking or loss within twenty (20) Business Days after its occurrence,
the Parties shall negotiate in good faith a fair and equitable adjustment to the
Purchase Price and, upon such settlement, consummate the transactions
contemplated by this Agreement pursuant to the terms of this Agreement. If no
such settlement is reached within sixty (60) days after Seller has notified
Buyer of such taking or casualty, Buyer or Seller may terminate this Agreement
pursuant to Section 11.1(d). If Seller notifies Buyer of its intention to cure
such taking or loss in accordance with this Section 7.12(b), Seller shall have
the right to delay the Closing Date for up to six (6) months to effect such
cure.
Section 7.13 TAX EXEMPT FINANCING.
(a) Buyer understands and agrees that:
(i) those certain facilities of Seller listed on SCHEDULE 7.13
hereto (the "EXEMPT FACILITIES") have been financed, and refinanced, in whole or
in part, with the proceeds of the issuance and sale by various Governmental
Authorities of industrial development revenue bonds or private activity bonds as
set forth on SCHEDULE 7.13 attached hereto (collectively, the "REVENUE BONDS")
the interest on which, with certain exceptions, is excluded from gross income
for purposes of federal income taxation; and Seller is the economic obligor in
respect of such bonds;
(ii) The basis for such exclusion is the use of the Exempt
Facilities for the purpose of (A) the abatement or control of atmospheric or
water pollution or contamination and/or (B) the collection, storage, treatment,
utilization, processing or final disposal of solid waste and/or the collection,
storage, treatment, utilization, processing or final disposal of sewage, such
qualifying purposes being discussed in more detail in (b) below;
(iii) The use of the Exempt Facilities for a purpose other than a
qualifying purpose indicated in subsection (ii) above could impair (A) such
exclusion from gross income of the interest on such bonds, possibly with
retroactive effect, unless appropriate remedial action were taken (which could
include prompt defeasance or redemption of such bonds) and/or (B) the
deductibility of payment by Seller of interest based on the restrictions in
Section 150 (b) of the Code; and
(iv) Any breach by Buyer of its obligations under this Section 7.13
could result in the incurrence by Seller of additional costs and expenses,
including without limitation, increased interest costs, loss of the interest
deduction for tax purposes and transaction costs relating to any refinancing,
redemption and/or defeasance of all or part of the Revenue Bonds, and Buyer will
indemnify Seller for such additional costs and expenses.
(b) (i) Buyer agrees that it shall not use, or permit the use of, the
Exempt Facilities for any purpose other than the continuing use of such Exempt
Facilities, and in accordance with the respective tax and/or other compliance
documents for each of the Revenue Bonds, for:
(A) abating or controlling atmospheric or water pollution or contamination
by removing, altering, disposing of or storing pollutants, contaminants, waste
or heat, all as contemplated in U.S. Treasury Regulations Section 1.103-8(g);
(B) the collection, storage, treatment, utilization, processing or final
disposal of solid waste, all as contemplated in U.S. Treasury Regulations
Section 1.103-8(f); or
(C) the collection, storage, treatment, utilization, processing or final
disposal of sewage, all as contemplated in U.S. Treasury Regulations Section
1.103-8(f)
unless Buyer has obtained at its own expense an opinion addressed to
Seller of nationally recognized bond counsel reasonably acceptable to Seller
("BOND COUNSEL") that such use will not impair (x) the exclusion from gross
income of the interest on any issue of Revenue Bonds for Federal income tax
purposes or (y) the deductibility of Seller's payments of interest based on the
restrictions in Section 150(b) of the Code.
(ii) Buyer reasonably expects, as of the date of this Agreement,
that the Exempt Facilities will continue to be used for the qualifying purposes
set forth in subsection (i) above, and for no other purpose, for the remainder
of their useful lives.
(c) It is expressly understood and agreed that the provisions of clause
(b) above shall not prohibit Buyer from (i) suspending the operation of the
Exempt Facilities on a temporary basis and/or (ii) selling exclusively for cash
the Exempt Facilities consisting of personal property, in whole or in part,
including any sale for scrap, provided that in the case of suspension of
operation under clause (i) above, the operation of the Generating Facilities
served by such Exempt Facilities shall not theretofore have been, and is not
then being, terminated on a permanent basis, and provided further that in the
case of a sale under clause (ii) above the proceeds of such sale of the Exempt
Facilities shall within six months from the date of sale be expended to acquire
replacement property to be used for the same qualifying purpose as the Exempt
Facilities so sold or be otherwise applied and provided further that Buyer has
obtained at its own expense an opinion of Bond Counsel addressed to and
reasonably satisfactory to Seller as to the exact application of the proceeds of
such sale and that any such application will not impair (x) the exclusion from
gross income of the interest on any issue of Revenue Bonds for Federal income
tax purposes or (y) the deductibility of Seller's payments of interest based on
the restrictions in Section 150(b) of the Code.
(d) Buyer agrees that it shall not issue, or have issued on its behalf,
any tax-exempt bonds to finance or refinance its acquisition of the Exempt
Facilities; provided that it is expressly understood and agreed that this clause
(d) shall not prohibit the use of tax-exempt bonds to finance or refinance any
improvement to the Exempt Facilities made after the date of acquisition or to
any assets other than the Exempt Facilities.
(e) Buyer agrees that it shall give Seller at least 180 days' prior
written notice of any suspension or termination of the operation of the Exempt
Facilities, or any part thereof, and of any sale, exchange, transfer or other
disposition of the Exempt Facilities, or any part thereof, including, but not
limited to, a sale for scrap, such written notice to be provided whether or not
an opinion of Bond Counsel is required to be obtained in accordance with clause
(c).
(f) If Seller shall desire to refund any Revenue Bonds, Buyer shall
cooperate with Seller and with Bond Counsel with respect to such refunding bonds
and shall provide upon request any representations, agreements or covenants that
are reasonably requested concerning its compliance to such date and/or in the
future with the representations, agreements and covenants made herein.
(g) If Buyer shall sell, exchange, transfer or otherwise dispose of the
Exempt Facilities to a third party, Buyer shall cause to be included in the
documentation relating to such transaction covenants and agreements on the part
of such third party for the benefit of Seller, and as requested by Seller, the
trustee for the holders of any Revenue Bonds, substantially identical to those
on the part of Buyer contained in this Section 7.13.
(h) The covenants and agreements on the part of Buyer contained in this
Section 7.13 shall continue in effect so long as any of the Revenue Bonds,
including any refunding bonds issued hereafter to refund any Revenue Bonds,
shall remain outstanding. Seller shall notify Buyer promptly when there shall be
no Revenue Bonds outstanding, and, at the request of Seller, Buyer shall execute
further documentation to provide that such covenants and agreements are also for
the benefit of the trustee of the holders of any Revenue Bonds.
(i) No later than five (5) Business Days prior to the Closing, Buyer
shall execute and deliver to Seller and the New York State Energy Research and
Development Authority (the "Authority") the agreement required pursuant to
Section 3.08 of that certain Participation Agreement, dated as of June 1, 1977,
by and between Seller and the Authority.
(j) Subject to the agreement referenced in paragraph (i) above and
Buyer's compliance with this Section 7.13, Buyer shall have no liability under
the Revenue Bonds.
Section 7.14 COMPLIANCE WITH GOVERNMENTAL AGREEMENTS. Following the Closing
Date, Buyer agrees that it will abide by, and comply with, all existing permit
conditions, provisions in existing rulings and regulations issued to Seller by
the PSC, and any other existing agreements or arrangements between Seller and
the State of New York (or any political subdivision thereof), including
provisions or agreements relating to environmental compliance and mitigation, in
each case to the extent any such condition, provision, agreement or arrangement
relates to the Auctioned Assets or the Assumed Obligations, unless and to the
extent Buyer is exempt by law, regulation or order from compliance with any such
condition, provision, agreement or arrangement.
Section 7.15 TRADE NAMES. Seller shall not object to the use by Buyer of
the name "Danskammer Point Steam Electric Generating Station" or any trade
names, trademarks, service marks or logos (and any rights to and in the same,
including any right to use the same) primarily relating to the power generation
operations of the Generating Facilities that are not Retained Assets or that
contain the word "Danskammer".
Section 7.16 SEPARATION MODIFICATIONS. Seller has made or is making, at its
own expense, certain modifications to the Auctioned Assets and the Danskammer
Substation to enhance the separation of the Auctioned Assets and the Danskammer
Substation following the Closing (the "Separation Modifications"). The
Separation Modifications are described on SCHEDULE 7.16 hereto. In the event any
Separation Modification is not completed prior to Closing, Buyer shall cooperate
in good faith with Seller to enable Seller to complete such Separation
Modification in a timely manner. Buyer acknowledges that Seller has undertaken
to construct such Separation Modifications for the mutual benefit of the Parties
and that Seller makes no representation or warranty relating to any Separation
Modification, including any representation or warranty regarding the efficacy of
any Separation Modification except that such Separation Modifications will be
effectuated iN Accordance With Good Utility Practice in All Material Respects.
ARTICLE VIII
------------
CONDITIONS
Section 8.1 CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATION TO EFFECT THE
PURCHASE AND SALE. The respective obligations of each Party to effect the
purchase and sale of the Auctioned Assets shall be subject to the satisfaction
or waiver by such Party on or prior to the Closing Date of the following
conditions:
(a) all Seller Required Regulatory Approvals and Buyer Required
Regulatory Approvals shall have been obtained by Seller and Buyer, as the case
may be, and all conditions to effectiveness prescribed therein or otherwise by
law, regulation or order shall have been satisfied by such Parties; PROVIDED,
HOWEVER, that if at the time any Seller Required Regulatory Approval or Buyer
Required Regulatory Approval is obtained, any Party reasonably expects a request
for rehearing or a challenge thereto to be filed or if a request for rehearing
or a challenge thereto has been filed, in each case, which, if successful, would
cause Seller Required Regulatory Approval or Buyer Required Regulatory Approval,
as the case may be, to be reversed, stayed, enjoined, set aside, annulled,
suspended or substantially modified, then such Party may by notice to the other
Parties within five (5) Business Days after receipt of Seller Required
Regulatory Approval or Buyer Required Regulatory Approval, as the case may be,
delay the Closing until the time for requesting rehearing has expired or until
such challenge is decided, in each case, whether or not any appeal thereof is
pending; PROVIDED FURTHER, HOWEVER, that if the Closing is delayed pursuant to
the foregoing provision, the Termination Date shall be automatically extended
for a period of time equal to the period of such delay but in no event later
than the date that is eighteen (18) months from the date of this Agreement; and
provided further, however, Seller will not be required to close if any Seller
Required Regulatory Approval contains terms and conditions that create a
Regulatory Material Adverse Effect;
(b) no preliminary or permanent injunction or other order or decree by
any Federal or state court of competent jurisdiction and no statute or
regulation enacted by any Governmental Authority prohibiting the consummation of
the purchase and sale of the Auctioned Assets (collectively, "RESTRAINTS") shall
be in effect;
(c) the execution and delivery of each Ancillary Agreement by each Party
thereto; and
(d) the simultaneous closing of the transactions contemplated by the
Roseton Asset Sale Agreement.
Section 8.2 CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO EFFECT THE
PURCHASE AND SALE. The obligation of Buyer to effect the purchase and sale of
the Auctioned Assets contemplated by this Agreement shall be subject to the
satisfaction by Seller or waiver by Buyer on or prior to the Closing Date of the
following additional conditions:
(a) Seller shall have performed in all material respects the covenants
and agreements contained in this Agreement which are required to be performed by
Seller on or prior to the Closing Date;
(b) the representations and warranties of Seller which are set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not, individually or in the
aggregate, create a Material Adverse Effect;
(c) Buyer shall have received a certificate from an authorized officer
of Seller, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.2(a) and (b) have
been satisfied with respect to Seller;
(d) Buyer shall have received (i) the bargain and sale deed
substantially in the form of EXHIBIT A hereto (the "Deed"), and (ii) an opinion
from each of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, each
counsel for Seller, or other counsel reasonably acceptable to Buyer, dated the
Closing Date, reasonably satisfactory in form and substance to Buyer covering
the matters set forth in EXHIBIT J hereto;
(e) Buyer shall have obtained (or Seller shall have made available to
Buyer pursuant to Section 7.3 hereof) all material Permits and Environmental
Permits, the absence of which would materially adversely affect Buyer's ability
to operate the Auctioned Assets on the Closing Date;
(f) Buyer shall have received a Foreign Investment in Real Property Tax
Act certification and affidavit, executed by Seller; and
(g) Seller shall have delivered to Buyer all such other instruments as
shall, in the reasonable opinion of Buyer and its counsel, be (i) necessary to
transfer to Buyer the Auctioned Assets in accordance with this Agreement or (ii)
otherwise required to consummate the transactions contemplated by this
Agreement.
Section 8.3 CONDITIONS PRECEDENT TO OBLIGATION OF SELLER TO EFFECT THE
PURCHASE AND SALE. The obligation of Seller to effect the purchase and the sale
of the Auctioned Assets contemplated by this Agreement shall be subject to the
satisfaction by Buyer or waiver by Seller on or prior to the Closing Date of the
following additional conditions:
(a) Buyer shall have performed in all material respects the covenants
and agreements contained in this Agreement which are required to be performed on
or prior to the Closing Date;
(b) the representations and warranties of Buyer which are set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or "Buyer
Material Adverse Effect" set forth therein) would not, individually or in the
aggregate, create a Buyer Material Adverse Effect;
(c) Seller shall have received a certificate from an authorized officer
of Buyer, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.3(a) and (b) have
been satisfied;
(d) Seller shall have received an opinion from ▇▇▇▇▇, Liddell & ▇▇▇▇,
L.L.P. or other counsel reasonably acceptable to Seller, dated the Closing Date,
and reasonably satisfactory in form and substance to Seller covering the matters
set forth in EXHIBIT K hereto;
(e) Buyer shall have provided evidence in form and substance reasonably
satisfactory to Seller of compliance by Buyer with its obligations under Article
IX;
(f) If a Guarantee Agreement has been entered into:
(i) the Guarantee Agreement shall be in full force and effect;
(ii) the Guarantor shall have performed in all material respects its
covenants and agreements contained in the Guarantee Agreement which are required
to be performed on or prior to the Closing Date;
(iii) the representations and warranties of the Guarantor which are
set forth in the Guarantee Agreement shall be true and correct as of the date of
the Guarantee Agreement and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which case
as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to "materiality" or "Guarantor Material Adverse Effect" set forth therein) would
not, individually or in the aggregate, create a Guarantor Material Adverse
Effect (as defined therein);
(iv) Seller shall have received a certificate from an authorized
officer of the Guarantor, dated the Closing Date, to the effect that, to the
best of such officer's knowledge, the conditions set forth in Sections
8.3(f)(ii) and (iii) have been satisfied; and
(v) Seller shall have received an opinion from ▇▇▇▇▇, Liddell &
▇▇▇▇, L.L.P. or other counsel reasonably acceptable to Seller, dated the Closing
Date, and reasonably satisfactory in form and substance to Seller covering the
matters set forth in EXHIBIT L hereto.
(g) Buyer shall have delivered to Seller all such other instruments as
shall, in the reasonable opinion of Seller and its respective counsel, be (i)
necessary for Buyer to assume the Assumed Obligations in accordance with this
Agreement or (ii) otherwise required to consummate the transactions contemplated
by the Agreement.
ARTICLE IX
----------
EMPLOYEE MATTERS
Section 9.1 TRANSFERRED EMPLOYEES.
(a) Buyer shall offer employment to each full time employee of Seller at
the Closing Date covered by the Fossil Production Plant Agreement, effective
July 1, 1998, between Seller, and Local Union 320 of the International
Brotherhood of Electrical Workers A.F. of L. - C.I.O. (the "IBEW") (the "IBEW
Collective Bargaining Agreement"). Each such employee who becomes employed by
Buyer in accordance with this Article IX is referred to herein as a "Transferred
Union Employee". Each full-time employee of Seller employed at the Generating
Facilities and not covered by the IBEW Collective Bargaining Agreement (a
"Management Employee") who is offered and accepts employment with Buyer, as
hereinafter described, is referred to herein as a "Transferred Management
Employee". Collectively, Transferred Management Employees and Transferred Union
Employees are referred to herein as "Transferred Employees". Transferred
Employees shall cease to be employees of Seller on the Closing Date and their
period of employment with Buyer shall begin on the Closing Date.
(b) Buyer agrees to recognize the IBEW as the exclusive collective
bargaining representative for the Transferred Union Employees and agrees to
assume and be the successor to Seller under and within the meaning of, the IBEW
Collective Bargaining Agreement from and after the Closing Date which includes
providing the employee benefits provided by the plans/programs listed in
SCHEDULE 9.1 hereto (as amended or modified by Seller prior to the Closing Date
in accordance with the terms hereof). Buyer shall meet with the IBEW, no less
than 120 days prior to the Closing Date, to review with the IBEW the benefit
plans which Buyer shall be obligated to provide to the Transferred Union
Employees pursuant to the IBEW Collective Bargaining Agreement and this
Agreement. If Buyer does not have in effect as of the Closing Date the required
health benefit plans covering the Transferred Union Employees and Seller is
required to pay premiums during the 120 day period following the Closing Date
for COBRA coverage under Seller's Health Benefit Plan for any such employees,
Buyer shall reimburse Seller for such premiums within ten (10) days after
receiving an invoice from Seller.
(c) Buyer shall within ninety (90) days from the date hereof make
written employment offers to at least 30 Management Employees (inclusive of
employment offers to be made by Buyer under Section 9.1(c) of the Roseton Asset
Sale Agreement) (the "Management Package") upon the terms described below in
accordance with all applicable laws and regulations:
(i) Each Transferred Management Employee shall be guaranteed a
salary at or greater than his/her base rate of pay and benefits equivalent to
those provided by Seller at the Closing Date, as set forth in the plans listed
in SCHEDULE 9.1 hereof (as amended or modified by Seller prior to the Closing
Date in accordance with the terms hereof). Position assignments shall be within
a 50 mile radius of the Generating Facilities unless otherwise agreed to by such
Transferred Management Employee. If such offer is for a location which will
involve an unreasonable commuting distance from such Transferred Management
Employee's home, such Employee will be provided relocation benefits by Buyer
equivalent to that of Seller in effect at the Closing Date. Such offer shall
also provide that Buyer shall not change any terms of the Management Package or
other conditions of service for any Transferred Management Employee for a period
of twenty-four months following the Closing Date, and no Transferred Management
Employee shall be terminated by Buyer within such twenty-four month period other
than for cause.
(ii) All employment offers by Buyer in accordance with this Section
9.1(c) will remain open for a period of fourteen (14) calendar days from the
date of the offer. Any offer accepted in such period shall be irrevocable. Buyer
shall promptly provide written notice of all such offers and acceptances to
Seller. Notwithstanding any provision hereof to the contrary, the "social
security" supplement benefit contained in Section 4.5 of the Retirement Income
Plan shall be part of vested benefits, in the manner of a QSUPP as defined under
Treas. Reg. ss.1.401(a)(4)-12, in the Buyer's Defined Benefit Plan and shall
continue in effect so long as there are Transferred Management Employees
eligible for such benefit.
(d) In addition, but not as part of the Management Package, all
Transferred Management Employees, will be provided by Buyer with a lump sum
payment ("Bonus") equivalent to thirty-five percent (35%) of each Transferred
Management Employees' base salary from Seller at the Closing Date (plus any
income thereon as provided below) as follows:
(i) At Closing, Buyer will segregate in immediately available funds
an amount equal to thirty-five percent (35%) of the aggregate base salary at the
Closing Date of all Transferred Management Employees and hold such amount in
escrow, as escrow agent ("Escrow Agent") for the benefit of the Transferred
Management Employees ("Escrow Fund"). The Escrow Agent will distribute his/her
Bonus (together with a pro-rata share based on the Bonus payable to such
Transferred Management Employee of the income earned on the Escrow Fund) within
ten (10) days following the first anniversary of the Closing Date to each
Transferred Management Employee who either is employed with the Buyer on such
anniversary of the Closing Date, or whose employment by Buyer has been
terminated by Buyer other than for cause prior to such anniversary or by such
employee's death. A Transferred Management Employee who is terminated for cause,
resigns or retires prior to such anniversary date will not be eligible for the
Bonus. A Transferred Management Employee whose employment by Buyer is terminated
prior to such anniversary date by his/her death will have his/her Bonus paid to
his/her estate at the same time that the Bonuses are paid to eligible
Transferred Management Employees. All amounts held in escrow by the Escrow Agent
and not distributable to a Transferred Management Employee in accordance with
this Section 9.1(d) shall be released to Seller within ten (10) days after the
first anniversary of the Closing Date.
(ii) The Escrow Agent shall establish an escrow account with a
commercial bank of its choosing ("Bank") and shall deposit the Escrow Fund with
the Bank and invest and reinvest the Escrow Fund in a money market fund
maintained by the Bank. All income derived from the investment and reinvestment
of the Escrow Fund shall become part of the Escrow Fund. Any costs incurred by
Buyer in administering and distributing the Escrow Fund shall be borne by Buyer.
The Escrow Agent shall be responsible for all investment or other losses with
respect to the Escrow Fund.
(iii) The Escrow Agent's (in its capacity as such) duties,
obligations and liabilities under this Section 9.1(d) are limited solely to the
functions specifically required of the Escrow Agent. The Escrow Agent (in its
capacity as such) shall have no other duties, obligations or liabilities,
implied or otherwise.
(e) As of the Closing Date, all Transferred Employees shall cease to
participate in all of Seller's employee benefit plans and programs, including
those described in SCHEDULE 9.1. As of the Closing Date, Buyer shall establish
and maintain, and all Transferred Employees shall commence, as applicable,
participation in, the (i) welfare benefit plans of Buyer ("Replacement Welfare
Plans") and (ii) Buyers' Defined Benefit Plan and Buyer's Defined Contribution
Plan (collectively, the "Buyer Benefit Plans") that will provide benefits, in
the case of the Transferred Union Employees, as required under the IBEW
Collective Bargaining Agreement, and, in the case of the Transferred Management
Employees, as part of the Management Package. Buyer agrees to maintain the terms
of Buyer's Benefit Plans (i) for Transferred Management Employees for a period
of twenty-four (24) months after the Closing Date, and (ii) for Transferred
Union Employees for such period as may be required by the IBEW Collective
Bargaining Agreement.
(f) Transferred Employees shall be given credit by Buyer for all service
with Seller and its Affiliates under all employee benefit plans, programs and
arrangements and all fringe benefit plans, programs and arrangements of Buyer
including the Replacement Welfare Plans, the Buyer's Defined Benefit Plan and
the Buyer's Defined Contribution Plan in which they become participants. Buyer
shall waive any limitations as to pre-existing condition or actively at-work
exclusions and waiting periods with respect to the Transferred Employees under
the Buyer Benefit Plans.
(g) Buyer shall cause to be established and Transferred Employees shall
as of the Closing Date commence participation in, as applicable (i) a
tax-qualified defined benefit pension plan or plans for the benefit of the
Transferred Employees (collectively, the "Buyer's Defined Benefit Plan") and
(ii) a tax-qualified defined contribution plan or plans for the benefit of the
Transferred Employees (collectively, the "Buyer's Defined Contribution Plan").
The Buyer's Defined Benefit Plan and the Buyer's Defined Contribution Plan shall
provide the same level of benefits and have the same terms, respectively, as
Seller's Retirement Income Plan, a tax qualified defined benefit plan
("Retirement Income Plan") and Savings Incentive Plan, a tax-qualified defined
contribution plan ("Savings Incentive Plan"), as in effect as of the Closing
Date, provided that, except as required by law or by the terms of the Retirement
Income Plan and/or Savings Incentive Plan or by the terms of the IBEW Collective
Bargaining Agreement, or as permitted in accordance with Section 7.1(b)(vii)
above, no amendments or modifications shall be made with respect to such plans
after the date hereof and prior to the Closing Date without the written consent
of Buyer, which consent shall not be unreasonably withheld except that no
consent shall be required for amendments adopted (y) prior to the date hereof
which are to become effective after the date hereof and (z) after the date
hereof which effect the transfers of assets in subclauses (A) and (B) below.
To the extent not covered by (f) above, Transferred Employees shall be
given credit in the Buyer's Defined Benefit Plan and/or in the Buyer's Defined
Contribution Plan for the following as applicable: for all service and
compensation from Seller and its Affiliates as if they were service with and
compensation from Buyer for purposes of determining eligibility for benefits,
periods of participation, eligibility and/or entry dates, the amount of any
benefits or benefit accruals, vesting, and service related levels of benefits
under the Buyer's Defined Benefit Plan and/or Buyer's Defined Contribution Plan.
In the event that the asset transfer described below does not occur with respect
to Buyer's Defined Benefit Plan, prior service with Seller will not be
recognized for benefit accrual purposes or for determining levels of benefits.
In connection with the foregoing, the following actions shall be taken
as of the Closing Date:
(A) At the time specified in subparagraph (D) below, Seller shall cause to
be transferred from the Retirement Income Plan to the corresponding Buyer's
Defined Benefit Plan (1) assets attributable to the accrued benefits (excluding
"Cash Balance Accounts" described in Article 17 of the Retirement Income Plan,
but including said "social security" supplement benefit referred to in paragraph
(c) above) under the Retirement Income Plan of Transferred Employees (whether or
not vested) equal to the actuarial liabilities determined, as of the Closing
Date, for the Retirement Income Plan in accordance with the interest rate,
retirement ages and mortality tables in effect as of the Closing Date for
purposes of determining single-employer plan termination annuity rates as
published by the PBGC ("PBGC Rates"), and (2) assets equal to the amount as of
the Closing Date in the Cash Balance Accounts, if any, of Transferred Employees
(whether or not vested), (3) interest, on the assets referred to in clause (1)
above, for the period from the Closing Date to the date of the actual transfer
of such assets (the "Adjustment Period") at an annual rate that is equal to the
interest discount during the Adjustment Period reflected in the PBGC Rates, and
(4) interest credited on the asset referred to in clause (2) above for the
Adjustment Period determined under Article 17 of the Retirement Income Plan, all
adjusted to reflect the applicable Adjustments pursuant to subparagraph (E)
below.
The transfers of assets described in this subparagraph (A) shall be made
in accordance with the provisions of the Code, including, but not limited to,
Sections 401(a)(12), 411(d)(6) and 414(l) of the Code and Treasury Regulation
Section 1.414(l)-1. No Transferred Employee shall be entitled to receive any
benefits under the Retirement Income Plan, including his/her Cash Balance
Account, because of his/her employment by Buyer unless the asset transfer does
not occur. All actuarial determinations shall be made by the actuaries appointed
by Seller for the Retirement Income Plan. Such determinations shall be in
accordance with the subparagraph (A) above, and reviewed for reasonableness with
the actuaries for Buyer, but, in the event of a dispute, determinations made by
such actuaries for the Retirement Income Plan shall be final.
(B) Contributions to the Savings Incentive Plan with respect to the
Transferred Employees shall cease effective as of the Closing Date. Seller shall
amend the Savings Incentive Plan to afford each Transferred Employee the option
of transferring his/her Account Balance into the Buyer's Defined Contribution
Plan, including any outstanding loans ("Loans") made to such Transferred
Employees pursuant to Section 7.2 of the Savings Incentive Plan; such option to
be exercised within two (2) months of the Closing Date. Any such transfers shall
be made in compliance with the Code, including Section 401(a)(12), 411(d)(6) and
414(l).
Prior to any such transfer, Buyer will provide Seller with such
documents and other information as Seller shall reasonably request to assure
itself that Buyer's Defined Contribution Plan and the trust or trusts
established pursuant thereto (i) provide for acceptance of the Aggregate
Accounts (as defined in Section 1.5 of the Savings Incentive Plan) of
Transferred Employees under the Savings Incentive Plan and related Loans and
(ii) contain participant loan provisions and procedures necessary to effect the
orderly transfer of Loans associated with such transfer. In the event that a
Transferred Employee shall elect to leave his or her Aggregate Account balance
in the Savings Incentive Plan, Buyer shall cooperate with Seller in providing
that any outstanding loan attributable to such account balance shall be repaid
through payroll deductions from Buyer's payroll. (C) All assets transferred
under subparagraphs (A) or (B) (other than relating to Loans) shall be
transferred in cash, or in marketable securities that are reasonably acceptable
to Buyer.
(D) Within forty-five (45) days after the Closing Date, Seller and Buyer
shall file or cause to be filed any Forms 5310-A that may be required to be
submitted to the IRS in connection with the transfers described in subparagraphs
(A) and (B). The transfer described in subparagraph (A) shall be made as soon as
practicable following the determination of the amount described in subparagraph
(A) and the transfer described in subparagraph (B) shall be made as soon as
practicable after the Closing Date, but in each case in no event prior to the
thirtieth (30) day following the filing of such Forms 5310-A with the IRS or, in
the event that the IRS, the PBGC or any other governmental entity raises any
objections to the transfer, the date as of which the IRS, the PBGC or other
governmental entity withdraws such objections or is satisfied that the terms of
the transfer have been modified to the extent necessary to meet such objections.
Each such transfer shall be made pursuant to such instruments as Seller shall
approve.
(E) Upon completion of the transfer under subparagraph (A), all benefits
accrued by Transferred Employees to the Closing Date under the Retirement Income
Plan shall be assumed by and become the sole responsibility of Buyer. Upon
completion of the transfer under subparagraph (B), all such Aggregate Account
amounts under, and Loans made by, the Savings Incentive Plan attributable to the
Transferred Employees, shall, as of the Closing Date, be assumed by and become
the sole responsibility of Buyer.
The assets transferred under subparagraphs (A) and (B) shall be subject
to the following adjustments (collectively, the "Adjustments") and
administration matters occurring during, and for, the period from the Closing
Date to the date of transfer of such assets:
(i) Any benefits that would otherwise be payable to the Transferred
Employees under the Buyer's Defined Benefit Plan and/or Buyer's
Defined Contribution Plan shall be paid or continued to be paid
out of the Retirement Income Plan and/or Savings Incentive Plan,
as the case may be, and the assets to be transferred under
subparagraphs (A) and/or (B) shall be reduced by the amount of
such payments.
(ii) The assets to be so transferred shall be increased or decreased
to reflect applicable losses, earnings, appreciation and/or
depreciation thereon.
(iii) Any Loans repaid shall reduce the right as lender of Loans to be
transferred to Buyer.
Pending the completion of such transfers, Seller will cooperate with Buyer with
respect to plan administration, including administration of Loans. Pending the
completion of such transfers (i) investment elections under the Savings
Incentive Plan will be available to Transferred Employees and (ii) payments due
with respect to any Loans, which would otherwise be satisfied by payroll
deduction by Seller, must be made directly by the Transferred Employee obligated
with respect to any such Loan. Seller agrees that it shall use commercially
reasonable efforts to accomplish the transfer of assets described in
subparagraphs (A) and (B) of this paragraph. All Adjustments shall be reviewed
by Seller with the Buyer prior to becoming effective, however, in the event of
any disagreement, Seller's determination shall be final. The assets transferred
under subparagraphs (A) and (B) of this subparagraph (g) shall be subject to any
applicable qualified domestic relations orders.
Notwithstanding anything in this Section 9.1 to the contrary, no
transfer under subparagraphs (A) or (B) shall take place unless and until Seller
has received written evidence of the adoption of Buyer's Defined Contribution
Plan and Buyer's Defined Benefit Plan, and the trust (or trusts) thereunder by
Buyer and either (A) a copy of a favorable determination letter issued by the
IRS and satisfactory to Seller's counsel with respect to each such plan of Buyer
or (B) an opinion, satisfactory to Seller's counsel, of Buyer's counsel to the
effect that the terms of Buyer's Defined Contribution Plan and Buyer's Defined
Benefit Plan and their related trust or trusts qualify under ERISA and Section
401(a) and 501(a) of the Code.
(h) Seller shall remain responsible for all salary, wages, and a pro
rata portion of any bonuses or incentive compensation accrued by any Transferred
Employee for periods prior to the Closing Date; except that Buyer shall give all
Transferred Employees full credit for all vacation accrued and not taken as of
the Closing Date. Seller shall retain responsibility under the Welfare Plans for
claims relating to treatment received by Transferred Employees and their
eligible dependents prior to the Closing Date. Buyer shall have responsibility
under the Replacement Welfare Plans for claims relating to treatment received by
Transferred Employees and their eligible dependents on and after the Closing
Date.
(i) Individuals who are otherwise employees of Central ▇▇▇▇▇▇, but who
on any date are not actively at work due to a leave of absence covered by the
Family and Medical Leave Act, or due to any other authorized absence, shall
nevertheless be treated as "Transferred Union Employees" or as "Management
Employees", as the case may be, on such date if they are able to (i) return to
work within the protected period under the Family and Medical Leave Act or such
other leave whichever is applicable, and (ii) perform the essential functions of
their job, with or without a reasonable accommodation.
(j) On the Closing Date, Buyer shall have in effect a workers'
compensation program for Transferred Employees that complies with the
requirements of the New York State Workers' Compensation Law and, as applicable,
the IBEW Collective Bargaining Agreement and the Management Package.
Section 9.2 EMPLOYMENT-AT-WILL. No provision of this Agreement shall affect
any Transferred Management Employee's status as an employee-at-will.
Section 9.3 WARN ACT. Buyer shall be responsible, with respect to the
Auctioned Assets, for performing and disclosing all requirements under the WARN
Act and applicable state and local laws and regulations for the notification of
its employees of any "employment loss" within the meaning of the WARN Act which
occurs following the Closing Date.
Section 9.4 COBRA. Buyer shall provide notice of and the opportunity to
purchase continuation coverage as required by COBRA to any dependent or former
dependent of a Transferred Employee who incurs a "qualifying event" (as such
term is defined in COBRA) on or after the Closing Date, or who incurs a
"qualifying event" prior to the Closing Date (other than termination of
employment or death of the employee) as to which notice is not provided to
Seller or Buyer until the Closing Date or thereafter.
ARTICLE X
---------
INDEMNIFICATION AND DISPUTE RESOLUTION
Section 10.1 INDEMNIFICATION.
(a) Seller shall indemnify, defend and hold harmless Buyer and its
Affiliates and their respective directors, officers, employees and agents
(collectively with Buyer and its Affiliates, the "BUYER INDEMNITEES") from and
against any and all claims, demands or suits by any person, and all losses,
liabilities, damages, obligations, payments, costs and expenses (including
reasonable legal fees and expenses and including costs and expenses incurred in
connection with investigations and settlement proceedings) (each, an
"INDEMNIFIABLE LOSS"), as incurred, asserted against or suffered by any Buyer
Indemnitee relating to, resulting from or arising out of:
(i) any breach by Seller of any covenant or agreement of Seller
contained in this Agreement or, prior to their expiration in accordance with
Section 12.3, the representations and warranties contained in Sections 5.1, 5.2,
5.3 and 5.15 hereof;
(ii) the Retained Liabilities;
(iii) noncompliance by Seller with any applicable bulk sales or
transfer laws as provided in Section 7.7; or
(iv) any breach by Seller of any Ancillary Agreement to which Seller
is a party to the extent such Ancillary Agreement does not contain express
indemnification provisions.
(b) Buyer will indemnify, defend and hold harmless Seller and its
Affiliates and their respective directors, officers, trustees, employees and
agents (collectively with Seller and its Affiliates, the "SELLER INDEMNITEES")
from and against any and all Indemnifiable Losses, as incurred, asserted against
or suffered by any Seller Indemnitee relating to, resulting from or arising out
of:
(i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or, prior to their expiration in accordance with
Section 12.3, the representations and warranties contained in Sections 6.1, 6.2,
6.3 and 6.5 hereof;
(ii) the Assumed Obligations;
(iii) any obligation resulting from any action or inaction of Buyer
(A) under any Contract or warranty pursuant to Section 2.4(b) (whether acting as
principal or representative and agent for Seller pursuant to Section 2.4(b) or
otherwise) or (B) pursuant to any Transferable Permit in respect of which Seller
remains the holder of record after the Closing Date pursuant to Section 7.3(c);
(iv) any transfer, sales or excise tax obligations imposed on Seller
for which Buyer is responsible under the terms of this Agreement or any
Ancillary Agreement; or
(v) any breach by Buyer of any Ancillary Agreement to the extent
such Ancillary Agreement does not contain express indemnification provisions.
(c) Any person entitled to receive indemnification under this Agreement
having a claim under these indemnification provisions shall make a good faith
effort to recover any Indemnifiable Losses 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 to the extent that the relevant Buyer Indemnitee or Seller Indemnitee
(each, an "INDEMNITEE") receives any insurance proceeds with respect to an
Indemnifiable Loss and shall be (i) increased to take account of any Tax Cost
incurred by the Indemnitee arising from the receipt of indemnity payments
hereunder (grossed up for such increase) and (ii) reduced to take account of any
Tax Benefit realized by the Indemnitee arising from the incurrence or payment of
any such Indemnifiable Loss. If the amount of any Indemnifiable Loss, at any
time subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or
against any other person, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith, will promptly be repaid by the
Indemnitee to the Party required to provide indemnification hereunder (the
"INDEMNIFYING PARTY") with respect to such Indemnifiable Loss.
(d) To the fullest extent permitted by law, no Party nor any Buyer
Indemnitee or any Seller Indemnitee shall be liable to any other Party or any
other Buyer Indemnitee or Seller Indemnitee for any claims, demands or suits for
consequential, incidental, special, exemplary, punitive, indirect or multiple
damages connected with or resulting from any breach after the Closing Date of
this Agreement (other than breach of this Article X) or the Ancillary Agreements
(except to the extent expressly provided to the contrary in any Ancillary
Agreement), or any actions undertaken in connection with or related hereto or
thereto, including any such damages which are based upon breach of contract,
tort (including negligence and misrepresentation), breach of warranty, strict
liability, statute, operation of law or any other theory of recovery.
(e) The rights and remedies of Seller and Buyer under this Article X
are, solely as between Seller and Buyer, exclusive and in lieu of any and all
other rights and remedies which Seller and Buyer may have under this Agreement,
the Ancillary Agreements (except to the extent expressly provided to the
contrary in any Ancillary Agreement) or otherwise for monetary relief with
respect to (i) any breach of, or failure to perform, any covenant or agreement
set forth in this Agreement or the Ancillary Agreements by Seller or Buyer, (ii)
any breach of any representation or warranty by Seller or Buyer, (iii) the
Assumed Obligations or the Retained Liabilities, (iv) noncompliance by Seller
with any bulk sales or transfer laws and (v) any obligation in respect of
Section 2.4 or Section 7.3. Each Party agrees that the previous sentence shall
not limit or otherwise affect any non-monetary right or remedy which a Party may
have under this Agreement or the Ancillary Agreements or otherwise limit or
affect any Party's right to seek equitable relief, including the remedy of
specific performance.
(f) Buyer and Seller agree that, notwithstanding Section 10.1(e), each
Party shall retain, subject to the other provisions of this Agreement, including
Sections 10.1(d) and 12.3, all remedies at law or in equity with respect to (i)
fraud or willful or intentional breaches of this Agreement or the Ancillary
Agreements and (ii) gross negligence or willful or wanton acts or omissions to
act of any Indemnitee (or any contractor or subcontractor thereof) after the
Closing Date.
Section 10.2 THIRD PARTY CLAIMS PROCEDURES.
(a) If any Indemnitee receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought by any
person who is not a Party or an Affiliate of a Party (a "THIRD PARTY CLAIM")
with respect to which indemnification is to be sought from an Indemnifying
Party, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than ten (10) Business Days
after the Indemnitee's receipt of notice of such Third Party Claim; PROVIDED,
HOWEVER, that a failure to give timely notice will not affect the rights or
obligations of any Indemnitee except if, and only to the extent that, as a
result of such failure, the Indemnifying Party was actually prejudiced. Such
notice shall describe the nature of the Third Party Claim in reasonable detail
and will indicate the estimated amount, if practicable, of the Indemnifiable
Loss that has been or may be sustained by the Indemnitee.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party; PROVIDED, HOWEVER, that such counsel is not reasonably
objected to by the Indemnitee; and PROVIDED FURTHER that the Indemnifying Party
first admits in writing its liability to the Indemnitee with respect to all
material elements of such claim. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party will not be
liable to the Indemnitee for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the Indemnifying Party
elects to assume the defense of a Third Party Claim, the Indemnitee will (i)
cooperate in all reasonable respects with the Indemnifying Party in connection
with such defense, (ii) not admit any liability with respect to, or settle,
compromise or discharge, any Third Party Claim without the Indemnifying Party's
prior written consent and (iii) agree to any settlement, compromise or discharge
of a Third Party Claim which the Indemnifying Party may recommend and which by
its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases the Indemnitee
completely in connection with such Third Party Claim. In the event the
Indemnifying Party shall assume the defense of any Third Party Claim, the
Indemnitee shall be entitled to participate in (but not control) such defense
with its own counsel at its own expense. If the Indemnifying Party does not
assume the defense of any such Third Party Claim, the Indemnitee may defend the
same in such manner as it may deem appropriate, including settling such claim or
litigation after giving notice to the Indemnifying Party of the terms of the
proposed settlement and the Indemnifying Party will promptly reimburse the
Indemnitee upon written request. Anything contained in this Agreement to the
contrary notwithstanding, no Indemnifying Party shall be entitled to assume the
defense of any Third Party Claim if such Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than monetary damages
against the Indemnitee which, if successful, would materially adversely affect
the business of the Indemnitee.
ARTICLE XI
----------
TERMINATION
Section 11.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the Closing by
an instrument in writing signed on behalf of each of the Parties.
(b) Except as provided for in Section 8.1(a), this Agreement may be
terminated by Seller or Buyer if the Closing shall not have occurred on or
before the date that is 12 months from the date of this Agreement (the
"TERMINATION DATE"); PROVIDED, HOWEVER, that the right to terminate this
Agreement pursuant to this Section 11.1(b) shall not be available to any Party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by any Party if any Restraint
having any of the effects set forth in Section 8.1(b) shall be in effect and
shall have become final and nonappealable; PROVIDED, HOWEVER, that the Party
seeking to terminate this Agreement pursuant to this Section 11.1(c) shall have
used its reasonable best efforts to prevent the entry of and to remove such
Restraint.
(d) This Agreement may be terminated by Seller, on the one hand, or
Buyer, on the other hand, upon written notice to the other Parties, in
accordance with the provisions of Section 7.12(b), provided that the Party
seeking to so terminate shall have complied with its obligations under Section
7.12.
ARTICLE XII
-----------
MISCELLANEOUS PROVISIONS
Section 12.1 EXPENSES. Except to the extent specifically provided herein,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Party incurring such
costs and expenses, whether or not the transactions contemplated hereby are
consummated.
Section 12.2 AMENDMENT AND MODIFICATION; EXTENSION; WAIVER. This Agreement
may be amended, modified or supplemented only by an instrument in writing signed
on behalf of each of the Parties. The Parties may (i) extend the time for the
performance of any of the obligations or other acts of a Party, (ii) waive any
inaccuracies in the representations and warranties of a Party contained in this
Agreement or (iii) waive compliance by a Party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of the Parties
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of all Parties. The failure of a Party to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
Section 12.3 NO SURVIVAL OF REPRESENTATIONS OR WARRANTIES; SURVIVAL OF
COVENANTS. Each and every representation and warranty contained in this
Agreement, other than the representations and warranties contained in Sections
5.1, 5.2, 5.3 and 5.15 and Sections 6.1, 6.2, 6.3 and 6.5 (which representations
and warranties shall survive for 18 months from the Closing Date), shall expire
with, and be terminated and extinguished by the Closing and no such
representation or warranty shall survive the Closing Date. From and after the
Closing Date, none of Seller, Buyer or any officer, director, trustee or
Affiliate of any of them shall have any liability whatsoever with respect to any
such representation or warranty. The expiration of the representations and
warranties contained in Sections 5.1, 5.2, 5.3 and 5.15 and Sections 6.1, 6.2,
6.3 and 6.5 shall not affect the Parties' obligations under Article X if the
Indemnitee provided the Indemnifying Party with proper notice of the claim or
event for which indemnification is sought prior to such expiration. All
agreements and covenants of the Parties herein shall survive the Closing.
Section 12.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given (as of the time of delivery or, in the
case of a telecopied communication, of confirmation) if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery) to the Parties at the following addresses (or at such other address
for a Party as shall be specified by like notice):
if to Seller, to:
Central ▇▇▇▇▇▇ Gas & Electric Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Brand, Senior Vice President
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
if to Buyer, to:
Dynegy Power Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Director - Project Acquisitions
with a copy to:
Dynegy Power Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Section 12.5 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any Party, including by operation
of law, without the prior written consent of the other Parties, except (i) in
the case of Seller (A) to an Affiliate of Seller or a third party in connection
with the transfer of any of the Retained Assets to such Affiliate or third
party, or (B) to a lending institution or trustee in connection with a pledge or
granting of a security interest in all or any part of any of the Retained Assets
or this Agreement and (ii) in the case of Buyer (A) prior to the Closing, to one
or more wholly-owned subsidiaries of Buyer or lending institutions or other
institutional investors acting as lessor to Buyer or one or more wholly-owned
subsidiaries of Buyer, so long as Guarantor shall have duly executed and
delivered a guarantee of such assigned obligations in the form of the Guarantee
Agreement and such assignment is for all of Buyer's rights, interests and
obligations hereunder associated with the asset(s) subject to any such
assignment, (B) to an Affiliate of Buyer in connection with the transfer of the
Auctioned Assets to such Affiliate and (C) to a lending institution or trustee
in connection with a pledge or granting of a security interest in the Auctioned
Assets and this Agreement; PROVIDED, HOWEVER, that no assignment or transfer of
rights or obligations by any Party shall relieve it from the full liabilities
and the full financial responsibility, as provided for under this Agreement,
unless and until the transferee or assignee shall agree in writing to assume
such obligations and duties and the other Party has consented in writing to such
assumption.
(b) Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
third party beneficiary rights in any person, including, with respect to
continued or resumed employment, any employee or former employee of Seller
(including any beneficiary or dependent thereof). No provision of this Agreement
shall create any rights in any such persons in respect of any benefits that may
be provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder.
Section 12.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law).
Section 12.7 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
Section 12.8 INTERPRETATION. When a reference is made in this Agreement to
an Article, Section, Schedule or Exhibit, such reference shall be to an Article
or Section of, or Schedule or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation" or equivalent words. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in the Ancillary Agreements and any certificate or other document made
or delivered pursuant hereto or thereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument, statute,
regulation, rule or order defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument, statute,
regulation, rule or order as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes, regulations, rules or orders) by
succession of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns. Each
Party acknowledges that it has been represented by counsel in connection with
the review and execution of this Agreement and, accordingly, there shall be no
presumption that this Agreement or any provision hereof be construed against the
Party that drafted this Agreement.
Section 12.9 JURISDICTION AND ENFORCEMENT.
(a) Each of the Parties irrevocably submits to the exclusive
jurisdiction of (i) the Supreme Court of the State of New York, Dutchess County
and (ii) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto in the United States
District Court for the Southern District of New York or, if such suit, action or
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, Dutchess County. Each of the Parties
further agrees that service of process, summons, notice or document by hand
delivery or U.S. registered mail at the address specified for such Party in
Section 12.4 (or such other address specified by such Party from time to time
pursuant to Section 12.4) shall be effective service of process for any action,
suit or proceeding brought against such Party in any such court. Each of the
Parties irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, Dutchess County and (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
(b) The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement or any Ancillary Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or any Ancillary Agreement and
to enforce specifically the terms and provision of this Agreement or any
Ancillary Agreement, this being in addition to any other remedy to which they
are entitled at law or in equity.
Section 12.10 ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements
including the Appendices, Exhibits, Schedules, documents, certificates and
instruments referred to herein or therein and other contracts, agreements and
instruments contemplated hereby or thereby, embody the entire agreement and
understanding of the Seller, on the one hand, and Buyer, on the other, in
respect of the transactions contemplated by this Agreement. There are no
restrictions, promises, representations, warranties, covenants or undertakings
other than those expressly set forth or referred to herein or therein. This
Agreement and the Ancillary Agreements supersede all prior agreements and
understandings between Seller, on the one hand, and Buyer, on the other, with
respect to the transactions contemplated by this Agreement. The Parties
acknowledge and agree that the Confidentiality Agreement dated April 3, 2000
entered into by them remains in full force and effect.
Section 12.11 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties have caused this Asset Purchase and Sale
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
CENTRAL ▇▇▇▇▇▇ GAS & ELECTRIC CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. BRAND
-----------------------------------
Name:
Title:
DYNEGY POWER CORP.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
------------------------------------
Name:
Title:
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 4th day of August 2000, before me personally appeared
▇▇▇▇▇▇ ▇. Brand, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s), or the person on behalf of which the
individual(s) acted, executed the instrument.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
Notary
[Notary Stamp]
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 4th day of August 2000, before me, the undersigned,
personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
on behalf of which the individual(s) acted, executed the instrument.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
Notary
[Notary Stamp]
Appendix A
Definitions
As used in this Agreement, the following terms have the meanings
set forth below:
"ACCOUNTANTS" shall have the meaning set forth in Section 3.2(b).
"ADJUSTMENT PERIOD" shall have the meaning set forth in Section
9.1.
"ADJUSTMENTS" shall have the meaning set forth in Section 9.1.
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"AGGREGATE ACCOUNT" shall have the meaning set forth in Section
9.1.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ALLOCATION" shall have the meaning set forth in Section 3.3.
"ANCILLARY AGREEMENTS" means the Purchase Price Agreement, the
Assignment and Assumption Agreement, the ▇▇▇▇ of Sale, the Guarantee Agreement,
the Interconnection Agreement, the Local Area Support Agreement, the Transition
Power Agreement, the Easement Agreement, the Deed and any other agreement to
which Buyer and Seller are party and which is expressly identified by its terms
as an Ancillary Agreement hereunder.
"APPLICABLE LAW" shall have the meaning set forth in Section 3.3.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means that Assignment and
Assumption Agreement, to be entered into at the Closing by Buyer and Seller, in
substantially the form as EXHIBIT B hereto.
"ASSUMED CONSENT ORDER OBLIGATIONS" shall have the meaning set
forth in Section 2.3(a)(iv).
"ASSUMED OBLIGATIONS" shall have the meaning set forth in Section
2.3(a).
"AUCTIONED ASSETS" shall have the meaning set forth in Section
2.2(a).
"BANK" shall have the meaning set forth in Section 9.1.
"BENEFIT PLANS" shall have the meaning set forth in Section 5.12.
"▇▇▇▇ OF SALE" means that certain ▇▇▇▇ of Sale, to be entered into
at the Closing by Buyer and Seller, in substantially the form as EXHIBIT C
hereto.
"BOND COUNSEL" shall have the meaning set forth in Section 7.13.
"BONUS" shall have the meaning set forth in Section 9.1.
"BUSINESS DAY" means any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in New York
City, New York are authorized or required by law or other action of a
Governmental Authority to close.
"BUYER" shall have the meaning set forth in the Preamble.
"BUYER BENEFIT PLANS" shall have the meaning set forth in Section
9.1.
"BUYER FACILITIES" means the facilities owned or operated by Buyer
which are located on that portion of the Seller Real Estate subject to the
easement or right-of-way granted to Buyer by Seller under the Easement
Agreement.
"BUYER INDEMNITEES" shall have the meaning set forth in Section
10.1(a).
"BUYER MATERIAL ADVERSE EFFECT" means any change or event which
would have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated by, and discharge its obligations under, the Agreement
and the Ancillary Agreements.
"BUYER REAL ESTATE" shall have the meaning set forth in Section
2.2(a)(i).
"BUYER REQUIRED REGULATORY APPROVALS" shall have the meaning set
forth in Section 6.3(b).
"BUYER'S DEFINED BENEFIT PLAN" shall have the meaning set forth in
Section 9.1.
"BUYER'S DEFINED CONTRIBUTION PLAN" shall have the meaning set
forth in Section 9.1.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1984.
"CAPITAL SPARE PARTS" means the major equipment items that are
listed on SCHEDULE 2.2(a)(ii).
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS EQUIPMENT" means the equipment, systems, switches
and lines used in connection with voice, data and other communications
activities.
"CON EDISON" means Consolidated Edison Company of New York, Inc.,
a New York corporation.
"CONFIDENTIAL MEMORANDUM" means the Confidential Offering
Memorandum, prepared on behalf of Seller, describing, among other things, the
Generating Facilities, and the materials delivered with such Confidential
Offering Memorandum, as such Confidential Offering Memorandum and such materials
may have been amended or supplemented.
"CONTRACTS" shall have the meaning set forth in Section 2.2(a)(iv).
"DANSKAMMER STATION" means the Danskammer Generating Station,
consisting of four steam generating units, two emergency diesel generators and
associated generating facilities, located in Newburgh, New York.
"DANSKAMMER SUBSTATION" means the electric substation located at
the Danskammer Station.
"DEED" shall have the meaning set forth in Section 8.2(d)(i).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall have the meaning set forth in Section 5.12.
"EASEMENT AGREEMENT" mean the Easement Agreement, to be entered
into at the Closing by Buyer and Seller, in substantially the form of EXHIBIT D
hereto.
"EMISSION REDUCTION CREDITS" means credits, in units that are
established by the environmental regulatory agency with jurisdiction over the
source or facility that has obtained the credits, resulting from a reduction in
the emissions of air pollutants from an emitting source or facility (including,
and to the extent allowable under applicable law, reductions from retirements,
control of emissions beyond that required by applicable law and fuel switching),
that: (i) have been certified by NYSDEC, as complying with the law and
regulations of the State of New York governing the establishment of such
credits; or (ii) have been certified by any other applicable regulatory
authority as complying with the law and regulations governing the establishment
of such credits. Emission Reduction Credits include certified air emissions
reductions, as described above, regardless of whether the regulatory agency
certifying such reductions designates such certified air emissions reductions by
a name other than "emissions reduction credits", but do not include SO2
Allowances or NOx Allowances.
"ENCUMBRANCES" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, exceptions, conservation easements, rights-of-way, easements,
licenses, deed covenants, deed restrictions, encumbrances and charges of any
kind.
"ENVIRONMENTAL LAWS" means all former, current and future Federal,
state, local and foreign laws (including common law), treaties, regulations,
rules, ordinances, codes, decrees, judgments, directives or orders (including
consent orders) and Environmental Permits, in each case, relating to pollution
or protection of the environment or natural resources, including laws relating
to Releases or threatened Releases, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, arrangement for
disposal, transport, recycling or handling, of Hazardous Substances.
"ENVIRONMENTAL LIABILITY" means all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders, fines, penalties,
fees, expenses and costs, including: (i) remediation costs, engineering costs,
environmental consultant fees, laboratory fees, permitting fees, investigation
costs and defense costs and attorneys' fees and expenses; (ii) any claims,
demands and causes of action relating to or resulting from any personal or
bodily injury (including but not limited to wrongful death, pain, suffering and
loss of consortium), property damage (real or personal) (including but not
limited to nuisance, trespass and diminution of value) or natural resource
damage; and (iii) any penalties, fines or costs of any kind associated in any
way with the failure to comply with any Environmental Law.
"ENVIRONMENTAL PERMITS" means the permits, licenses, consents,
approvals and other governmental authorizations with respect to Environmental
Laws relating primarily to the power generation operations of the Generating
Facilities.
"ESCROW AGENT" shall have the meaning set forth in Section 9.1.
"ESCROW FUND" shall have the meaning set forth in Section 9.1.
"ESTIMATED INVENTORY ADJUSTMENT AMOUNT" shall have the meaning set
forth in Section 4.2(b).
"EXEMPTED FACILITIES" shall have the meaning set forth in Section
7.13(a).
"FERC" means the Federal Energy Regulatory Commission.
"FILED SELLER SEC DOCUMENTS" means the reports, schedules, forms,
statements and other documents filed after December 31, 1997 by Seller with the
Securities and Exchange Commission, and publicly available prior to the date of
the Agreement.
"FINAL ALLOCATION" shall have the meaning set forth in Section 3.3.
"GAAP" shall have the meaning set forth in Section 1.2.
"GENERATING FACILITIES" means the Danskammer Station and related
facilities, as more fully described on SCHEDULE 2.2(a)(iii) and SCHEDULE 5.5(A)
hereto.
"GOOD UTILITY PRACTICE" means any of the applicable practices,
methods and acts:
(i) required by FERC, NPCC, NERC, NYSRC, the NYISO, or the successor
of any of them, whether or not the Party whose conduct is at issue is a member
thereof;
(ii) required by applicable law or regulation;
(iii) required by the policies and standards of Seller relating to
emergency operations;
(iv) otherwise engaged in or approved by a significant portion of
the electric utility industry during the relevant time period;
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with applicable law, regulation, good
business practices, reliability, safety, and expedition. Good Utility Practice
is not intended to be limited to the optimum practice, method, or act to the
exclusion of all others, but rather to be acceptable practices, methods, or acts
generally accepted in the region.
"GOVERNMENTAL AUTHORITY" means any court, administrative or
regulatory agency or commission or other governmental entity or instrumentality,
domestic, foreign or supranational or any department thereof.
"GREENHOUSE GAS EMISSION REDUCTION CREDITS" mean with respect to a
Federal or state law or regulation that imposes, or may at any time after the
Closing Date impose, a quantitative limitation on greenhouse gas emissions, or
taxes such emissions, an authorization to emit a unit of greenhouse gases or a
credit against such quantitative limit or taxes with respect to recognized
reductions in greenhouse gases, where greenhouse gases include carbon dioxide,
methane, nitrous oxide, hydrofluorcarbons, perfluorocarbons, and/or sulfur
hexafluoride.
"GUARANTEE AGREEMENT" means the Guarantee Agreement to be entered
into by Guarantor, Seller, Con Edison and Niagara Mohawk substantially in the
form of EXHIBIT E hereto.
"GUARANTOR" means the "Guarantor" under the Guarantee Agreement.
"HAZARDOUS SUBSTANCES" means (i) any petrochemical or petroleum
products, crude oil or any fraction thereof, ash, radioactive materials, radon
gas, asbestos in any form or concentration, urea formaldehyde foam insulation or
polychlorinated biphenyls in any concentration, (ii) any chemicals, materials,
substances or wastes defined as, included in, or that are alleged or determined
by any person or Governmental Authority to be included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"PCBs," "contaminants," "asbestos" or "pollutants" or similar term in any
Environmental Law, (iii) any other chemical, material, substance or waste which
is prohibited, limited or regulated by any Environmental Law, or (iv) any noise,
electromagnetic radiation, and any other substance or energy which causes or is
alleged to cause any Environmental Liability.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"IBEW" shall have the meaning set forth in Section 9.1.
"IBEW COLLECTIVE BARGAINING AGREEMENT" shall have the meaning set
forth in Section 9.1.
"IRS" means the United States Internal Revenue Service.
"INCOME TAX" means any Federal, state, local or foreign Tax or
surtax (i) based upon, measured by or calculated with respect to income, profits
or receipts (including the New York State Gross Receipts Tax (including the
excess dividends tax), any and all municipal gross receipt Taxes, capital gains
Taxes and minimum Taxes) or (ii) based upon, measured by or calculated with
respect to multiple bases (including corporate franchise Taxes) if one or more
of the bases on which such Tax may be based, measured by or calculated with
respect to, is described in clause (i), in each case, together with any
interest, penalties, or additions to such Tax.
"INDEMNIFIABLE LOSS" shall have the meaning set forth in Section
10.1(a).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
10.1(c).
"INDEMNITEE" shall have the meaning set forth in Section 10.1(c).
"INTERCHANGE METERS" means all MWh and MVarh meters, pulse
isolation relays, pulse conversion relays, transducers required by Central
▇▇▇▇▇▇ or the NYISO for billing or other purposes, and associated totalizing
equipment, appurtenances and compensation, required to measure the transfer of
energy across the Point of Interconnection.
"INTERCONNECTION AGREEMENT" means the Interconnection Agreement, to
be entered into at the Closing by Seller and Buyer, substantially in the form of
EXHIBIT F hereto.
"INTERCONNECTION FACILITIES" means those items of switching
equipment, switchyard controls, protective relays and related facilities of
Seller that are used by Seller in connection with the provision of
Interconnection Services.
"INTERCONNECTION SERVICES" shall have the meaning set forth in the
Interconnection Agreement.
"INVENTORY ADJUSTMENT AMOUNT" shall have the meaning set forth in
Section 3.2(a).
"INVENTORY ADJUSTMENT DATE" shall have the meaning set forth in
Section 3.2(c).
"INVENTORY ADJUSTMENT STATEMENT" shall have the meaning set forth
in Section 3.2(a).
"INVENTORY SURVEY" shall have the meaning set forth in Section
3.2(a).
"KNOWLEDGE" means the actual knowledge (without independent
inquiry) of the senior officers of the specified person, which senior officers
are charged with the responsibility for the particular function as of the date
of the Agreement, or with respect to any certificate delivered pursuant to the
Agreement, the date of delivery of such certificate.
"LOANS" shall have the meaning set forth in Section 9.1.
"LOCAL AREA SUPPORT AGREEMENT" means the Local Area Support
Agreement, to be entered into at the Closing by Seller and Buyer, substantially
in the form of EXHIBIT G hereto.
"MANAGEMENT EMPLOYEE" shall have the meaning set forth in Section
9.1.
"MANAGEMENT PACKAGE" shall have the meaning set forth in Section
9.1.
"MATERIAL ADVERSE EFFECT" means any change, or effect on the
Auctioned Assets, that, is materially adverse to the business, operations or
condition (financial or otherwise), of the Auctioned Assets, taken as a whole,
other than (i) any change or effect resulting from changes in the international,
national, regional or local wholesale or retail energy, capacity or ancillary
services electric power markets, (ii) any change or effect resulting from
changes in the international, national, regional or local markets for fuel,
(iii) any change or effect resulting from changes in the national, regional or
local electric transmission systems, (iv) any change or effect resulting from
any bid cap, price limitation, market power mitigation measure, or other
regulatory or legislative measure in respect of transmission services, rights or
access or the wholesale or retail energy, capacity or ancillary services markets
adopted or approved (or failed to be adopted or approved) by FERC, the PSC or
any other Governmental Authority or proposed (or failed to be adopted or
proposed) by any person, (v) any change or effect resulting from any regulation,
rule, procedure or order adopted or proposed by or with respect to, or related
to, the NYISO, (vi) any change or effect resulting from any action or measure
taken or adopted, or proposed to be taken or adopted, by any local, state,
regional, national or international reliability organization, (vii) any change
resulting from the failure of any employees not to be employed by Buyer
following the Closing, (viii) any changes in law, or any judgments, orders or
decrees that apply generally to similarly situated persons, and (ix) any
materially adverse change in or effect on the Auctioned Assets which is cured by
Seller before the Closing Date (which cure for purposes hereof shall include any
reduction by Seller in the Purchase Price substantially equal to the reduction
in value of the Auctioned Assets resulting from such change or effect).
"MATERIAL CONTRACTS" shall have the meaning set forth in Section
5.7(a).
"NERC" means the North American Electric Reliability Council and
any successor entity thereto.
"NPCC" means the Northeast Power Coordinating Council or any
successor thereto.
"NOx ALLOWANCES" means nitrogen oxide allowances that have been
allocated to Seller for the Danskammer Station by NYSDEC under the State of New
York's NOx Budget Program authorizing the emission of one ton of nitrogen oxide
during the specified control period.
"NYISO" means (i) the New York Independent System Operator and (ii)
if the New York Independent System Operator is no longer the independent system
operator for the bulk power transmission system, then any successor thereto
performing similar functions in the Mid-Hudson Region of the State of New York,
including any regional transmission organization, independent system operator,
transco, and any other independent system administrator that possesses
operational control over the bulk power transmission system.
"NYSDEC" means the New York State Department of Environmental
Conservation and any successor thereto.
"NYSRC" means the New York State Reliability Council and any
successor thereto.
"NIAGARA MOHAWK" means Niagara Mohawk Power Corporation,
a New York corporation.
"OFF-SITE" means any location at which Seller prior to the Closing
Date disposed or arranged for the disposal of Hazardous Substances, provided
that "Off-Site" shall not include the Auctioned Assets or any location to or
under which Hazardous Substances at any time disposed of, present or Released
on, at, under or from the Auctioned Assets have migrated or may migrate in the
future.
"OPERATING RECORDS" shall have the meaning set forth in Section
2.2(a)(viii).
"PBGC" shall have the meaning set forth in Section 5.12.
"PBGC RATES" shall have the meaning set forth in Section 9.1.
"PSC" means the New York State Public Service Commission.
"PUHCA" means the Public Utility Holding Company Act of 1935.
"PARTY" shall have the meaning set forth in the Preamble.
"PERMITS" means the permits, licenses, consents, approvals and
other governmental authorizations (other than with respect to Environmental
Laws) relating primarily to the power generation operations of the Generating
Facilities.
"PERMITTED CAPITAL EXPENDITURES" shall have the meaning set forth
in Section 7.1(b)(ix).
"PERMITTED CAPITAL EXPENDITURES AMOUNT" shall have the meaning set
forth in Section 4.2(a).
"PERMITTED CAPITAL EXPENDITURES REPORT" shall have the meaning set
forth in Section 4.2(b).
"PERMITTED EXCEPTIONS" means (i) all exceptions, restrictions,
easements, charges, rights-of-way and monetary and nonmonetary encumbrances
which are set forth in any Permits or Environmental Permits, (ii) statutory
liens for current taxes or assessments not yet due or delinquent or the validity
of which is being contested in good faith by appropriate proceedings, (iii)
mechanics', carriers', workers', repairers' and other similar liens arising or
incurred in the ordinary course of business relating to obligations as to which
there is no default on the part of Seller or the validity of which are being
contested in good faith by appropriate proceedings, (iv) purchase money security
interests in respect of personal property arising or incurred in the ordinary
course of business, (v) zoning, entitlement, conservation restriction and other
land use and environmental regulations by Governmental Authorities, (vi) the
title matters listed on SCHEDULE 5.5(c) to the Agreement (other than
Encumbrances securing Seller's indebtedness for borrowed money other than those
covered by clause (xi) below), (vii) all matters disclosed on that map listed on
SCHEDULE 5.5(b) to the Agreement and any other facts that would be disclosed by
an accurate survey and physical inspection of the Buyer Real Estate, (viii)
Encumbrances, easements or other restrictions created pursuant to or
contemplated by any Ancillary Agreement, (ix) Encumbrances of record (other than
Encumbrances securing Seller's indebtedness for borrowed money other than those
covered by clause (xi) below) or Encumbrances otherwise disclosed to Buyer in
the Agreement or the Ancillary Agreements with respect thereto, (x) restrictions
and regulations imposed by the NYISO, any Governmental Authority or any local,
state, regional, national or international reliability council, (xi) any
Encumbrances that are released or otherwise terminated at or prior to Closing,
and (xii) such other Encumbrances or imperfections in or failure of title which
would not, individually or in the aggregate, reasonably be expected to
materially impair the continued use and operation of the Auctioned Assets as
currently conducted and do not create a Material Adverse Effect.
"PERSON" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or
Governmental Authority.
"POINT OF INTERCONNECTION" shall have the meaning set forth in the
Interconnection Agreement.
"PRORATED ITEMS" shall have the meaning set forth in Section
2.3(a)(viii).
"PROTECTIVE RELAYING SYSTEM" means the system relating to the
Generating Facilities comprised of components collectively used to detect
defective power system elements or other conditions of an abnormal nature,
initiate appropriate control circuit action in response thereto and isolate the
appropriate system elements in order to minimize damage to equipment and
interruption to service.
"PURCHASE PRICE" shall have the meaning set forth in the Purchase
Price Agreement.
"PURCHASE PRICE AGREEMENT" means the Purchase Price Agreement
entered into on the date hereof by Seller, Con Edison, Niagara Mohawk and Buyer,
substantially in the form of EXHIBIT H hereto.
"REGULATORY MATERIAL ADVERSE EFFECT" shall occur where the Required
Regulatory Approval contains terms and conditions that are materially adverse to
Seller taken as a whole.
"RELEASE" means any release, spill, emission, emanation, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
or migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
"REPLACEMENT WELFARE PLANS" shall have the meaning set forth in
Section 9.1.
"REQUIRED REGULATORY APPROVALS" means with respect to a Party, any
consent or approval of, filing with, or notice to, any Governmental Authority
that is necessary for the execution and delivery of the Agreement and the
Ancillary Agreements by such Party or the consummation thereby of the
transactions contemplated hereby.
"RESTRAINTS" shall have the meaning set forth in Section 8.1(b).
"RETAINED ASBESTOS-RELATED CLAIMS" shall have the meaning set forth
in Section 2.3(b)(iii).
"RETAINED ASSETS" shall have the meaning set forth in Section
2.2(b).
"RETAINED LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"RETIREMENT INCOME PLAN" shall have the meaning set forth in
Section 9.1.
"REVENUE BONDS" shall have the meaning set forth in Section 7.13.
"ROSETON ASSET SALE AGREEMENT" means the Asset Purchase and Sale
Agreement for the sale of the Roseton Generating Station, dated the date hereof,
by and among Seller, Con Edison, Niagara Mohawk and Buyer.
"SELLER" shall have the meaning set forth in the Preamble.
"SELLER CONSENT ORDERS" shall have the meaning set forth in Section
2.3(a)(iv).
"SELLER FACILITIES" means those facilities owned or operated by
Central ▇▇▇▇▇▇ which are located on that portion of the Buyer Real Estate
subject to the easement and right-of-way granted to Central ▇▇▇▇▇▇ by Buyer
under the Easement Agreement.
"SELLER INDEMNITEES" shall have the meaning set forth in Section
10.1(b).
"SELLER REAL ESTATE" means all real property and leaseholds or
other interests in real property of Seller (including the premises on which the
Danskammer Substation is located), other than Buyer Real Estate.
"SELLER REQUIRED REGULATORY APPROVALS" shall have the meaning set
forth in Section 5.3(b).
"SO2 ALLOWANCES" mean sulfur dioxide allowances that have been
allocated to Seller for the Generating Facilities by the Administrator of the
United States Environmental Protection Agency under Title IV of the Clean Air
Act authorizing the emission of one ton of sulfur dioxide per allowance during
or after a specified calendar year.
"TAX BENEFIT" means, with respect to any Indemnifiable Loss for any
person, the positive excess, if any, of the Tax liability of such person without
regard to such Indemnifiable Loss over the Tax liability of such person taking
into account such Indemnifiable Loss, with all other circumstances remaining
unchanged.
"TAX COST" means, with respect to any indemnity payment for any
person, the positive excess, if any, of the Tax liability of such person taking
such indemnity payment into account over the Tax liability of such person
without regard to such payment, with all other circumstances remaining
unchanged.
"TAX RETURN" means any return, report, information return or other
document (including any related or supporting information) required to be
supplied to any authority with respect to Taxes, including amendments thereto.
"TAXES" means all taxes, surtaxes, charges, fees, levies, penalties
or other assessments imposed by any United States Federal, state or local or
foreign taxing authority, including Income Taxes, excise, property, sales,
transfer, franchise, special franchise, payroll, recording, withholding, social
security or other taxes, or any liability for taxes incurred by reason of
joining in the filing of any consolidated, combined or unitary Tax Returns, in
each case including any interest, penalties or additions attributable thereto;
PROVIDED, HOWEVER, that "Taxes" shall not include sewer rents or charges for
water.
"TERMINATION DATE" shall have the meaning set forth in Section
11.1(b).
"THIRD PARTY CLAIM" shall have the meaning set forth in Section
10.2(a).
"TRANSFERABLE PERMITS" shall have the meaning set forth in Section
2.2(a)(v).
"TRANSFERRED NOx ALLOWANCES" shall have the meaning set forth in
Section 2.2(a)(vii).
"TRANSFERRED SO2 ALLOWANCES" shall have the meaning set forth in
Section 2.2(a)(vi).
"TRANSFERRED EMPLOYEE RECORDS" shall have the meaning set forth in
Section 2.2(a)(viii).
"TRANSFERRED EMPLOYEES" shall have the meaning set forth in Section
9.1.
"TRANSFERRED MANAGEMENT EMPLOYEE" shall have the meaning set forth
in Section 9.1.
"TRANSFERRED UNION EMPLOYEE" shall have the meaning set forth in
Section 9.1.
"TRANSITION POWER AGREEMENT" means the Transition Power Agreement,
to be entered into at the Closing by Seller and Buyer, substantially in the form
of EXHIBIT I hereto.
"TRANSMISSION SYSTEM" shall have the meaning set forth in Section
2.2(b)(i).
"WARN ACT" means the Worker Adjustment Retraining and Notification
Act of 1988, as amended.