Exhibit 10.58
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BOWLINE POINT GENERATING STATION SALES AGREEMENT
AMONG
ORANGE AND ROCKLAND UTILITIES, INC.,
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
AND
SOUTHERN ENERGY BOWLINE, L.L.C.
November 24, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
SALE AND PURCHASE
2.1. The Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 18
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . 19
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . 24
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 28
3.2. Purchase Price Adjustment . . . . . . . . . . . . . . . . . 29
3.3. Allocation of Purchase Price . . . . . . . . . . . . . . . . 32
3.4. Proration . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing . . . . . . . . . . . . . . . . . 34
4.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . 34
4.3. Deliveries by the Sellers . . . . . . . . . . . . . . . . . 35
4.4. Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
5.1. Organization; Qualification . . . . . . . . . . . . . . . . 39
5.2. Authority Relative to this Agreement . . . . . . . . . . . . 39
5.3. Consents and Approvals; No Violation . . . . . . . . . . . . 40
5.4. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.5. Financial Statements . . . . . . . . . . . . . . . . . . . . 43
5.6. Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 44
5.7. Absence of Certain Changes . . . . . . . . . . . . . . . . . 45
5.8. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9. Leasehold Interests . . . . . . . . . . . . . . . . . . . . 46
5.10. Improvements . . . . . . . . . . . . . . . . . . . . . . . 47
5.11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.12. Environmental Matters . . . . . . . . . . . . . . . . . . . 48
5.13. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 50
5.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.15. Real Property Encumbrances . . . . . . . . . . . . . . . . 53
5.16. Condemnation . . . . . . . . . . . . . . . . . . . . . . . 53
5.17. Certain Contracts and Arrangements . . . . . . . . . . . . 53
5.18. Legal Proceedings, etc. . . . . . . . . . . . . . . . . . . 55
5.19. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.20. Regulation as a Utility . . . . . . . . . . . . . . . . . . 56
5.21. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.22. Intellectual Property . . . . . . . . . . . . . . . . . . . 57
5.23. Year 2000 Readiness . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . 58
6.2. Authority Relative to this Agreement . . . . . . . . . . . . 58
6.3. Consents and Approvals; No Violation . . . . . . . . . . . . 59
6.4. Operating Easements . . . . . . . . . . . . . . . . . . . . 60
6.5. Regulation as a Utility . . . . . . . . . . . . . . . . . . 60
6.6. Availability of Funds . . . . . . . . . . . . . . . . . . . 61
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets . . . . 61
7.2. Access to Information . . . . . . . . . . . . . . . . . . . 66
7.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . 69
7.5. Public Statements . . . . . . . . . . . . . . . . . . . . . 70
7.6. Consents and Approvals . . . . . . . . . . . . . . . . . . . 71
7.7. Fees and Commissions . . . . . . . . . . . . . . . . . . . . 74
7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 74
7.9. Supplements to Schedules . . . . . . . . . . . . . . . . . . 78
7.10. Employees . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.11. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . 84
7.12. Compliance with Cooling Water Usage Obligations . . . . . . 85
7.13. Real Estate Matters . . . . . . . . . . . . . . . . . . . . 87
7.14. Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . 89
7.15. Scheduled Capital Expenditures and Scheduled Maintenance
Expenditures . . . . . . . . . . . . . . . . . . . . . . 89
7.16. Expansion. . . . . . . . . . . . . . . . . . . . . . . . 90
7.17. Fuel Contract Renegotiation . . . . . . . . . . . . . . . . 90
7.18. Environmental Insurance . . . . . . . . . . . . . . . . . . 91
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions
Contemplated Hereby. . . . . . . . . . . . . . . . . . . . 91
8.2. Conditions to Obligations of Buyer . . . . . . . . . . . . . 94
8.3. Conditions to Obligations of the Sellers . . . . . . . . . . 102
8.4. Extension of Closing Date . . . . . . . . . . . . . . . . . 104
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification . . . . . . . . . . . . . . . . . . . . . . 105
9.2. Defense of Claims . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 115
10.2. Procedure and Effect of Termination . . . . . . . . . . . . 117
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification . . . . . . . . . . . . . . . . 118
11.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 118
11.3. Waiver of Compliance; Consents . . . . . . . . . . . . . . 120
11.4. No Survival . . . . . . . . . . . . . . . . . . . . . . . . 121
11.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 121
11.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 124
11.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 125
11.8. Specific Performance . . . . . . . . . . . . . . . . . . . 125
11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 126
11.10. Interpretation . . . . . . . . . . . . . . . . . . . . . . 126
11.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 126
11.12. Bulk Sales or Transfer Laws . . . . . . . . . . . . . . . ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ GENERATING STATION SALES AGREEMENT
BOWLINE POINT GENERATING STATION SALES AGREEMENT, dated as of
November 24, 1998, among Orange and Rockland Utilities, Inc., a New York
corporation ("O&R"), Consolidated Edison Company of New York, Inc., a New
York corporation ("Con Edison") (each of O&R and Con Edison individually
may be referred to as a "Seller" and collectively as the "Sellers" herein)
and Southern Energy Bowline, L.L.C., a Delaware limited liability company
("Buyer").
WHEREAS, the Sellers own the Purchased Assets (as defined
herein), and O&R operates under the terms of the Operating Agreement, dated
October 10, 1969, a certain electric power generation station known as
Bowline Point Generating Station that is part of the Purchased Assets; and
WHEREAS, the Buyer desires to purchase and assume from the
Sellers, and the Sellers desire to sell to Buyer, the Purchased Assets upon
the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this Bowline Point Generating Station
Sales Agreement together with the Schedules and Exhibits hereto.
(3) "Ancillary Agreements" means (i) the Operating Easement,
(ii) the Seller's Easements, (iii) the Continuing Site/Interconnection
Agreement, and (iv) the Transition Agreement, (v) the Transition Capacity
Sales Agreement, dated as of the date of this Agreement, between Con Edison
and Buyer relating to the purchase from Buyer of installed electric
capacity at Bowline.
(4) "▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale to be delivered at the
Closing with respect to the Purchased Assets which constitute personal
property and which are to be transferred at the Closing, substantially in
the form of Exhibit A hereto.
(5) "Bowline" means the Bowline Point Generating Station located
in the Village of West Haverstraw, Rockland County, New York.
(6) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.
(7) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other authorized
representatives.
(8) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(9) "Code" means the Internal Revenue Code of 1986, as amended.
(10) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between O&R and Southern Energy, Inc.
(11) "Continuing Site/Interconnection Agreement" means the
Continuing Site/Interconnection Agreement, dated as of the date of this
Agreement, between O&R and the Buyer.
(12) "Emission Allowances" means the sulfur dioxide allowances
already allocated by the United States Environmental Protection Agency to
Bowline and the nitrogen oxide allowances to be allocated by the New York
State Department of Environmental Conservation to Bowline, each as set
forth in Schedule 1.1(a)(12).
(13) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and
charges of any kind.
(14) "Environmental Laws" means all Federal, state and local
laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution or
protection of the environment, natural resources or human health and
safety, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Substances (including, without limitation,
ambient air, surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, Release, transport or handling of Hazardous
Substances.
(15) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(16) "Estimated Inventory Adjustment Amount" means the value of
oil inventory and propane inventory used at or in connection with the
Purchased Assets as of the date ten (10) days before the Closing Date, as
determined by using the average price for residual 0.3% sulphur high pour
New York cargo spot index for no. 6 oil - New York Harbor published in
Bloomberg Energy during the consecutive ten (10) day period preceding the
date which is ten (10) days before the Closing Date, and the average price
for propane published in the Journal of Commerce for Propane-Mt. Belvieu
during such consecutive ten (10) day period plus five cents ($0.05) per
gallon, which valuations shall be provided to the Buyer by the Sellers no
later than five (5) days before the Closing Date.
(17) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(18) "Federal Power Act" means the Federal Power Act of 1935.
(19) "FERC" means the Federal Energy Regulatory Commission or any
successor thereto.
(20) "Good Utility Practices" means any of the practices, methods
and acts engaged in or approved by a significant portion of the electric
utility industry with respect to similar facilities during the relevant
time period which in each case, in the exercise of reasonable judgment in
light of the facts known or that should have been known at the time the
decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety, law, regulation, environmental protection, and
expedition. Good Utility Practices are not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others, but
rather to be acceptable practices, methods or acts generally accepted in
such industry.
(21) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may
contain levels of polychlorinated biphenyls; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and regulatory
effect; or (c) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any applicable Environmental Law.
(22) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(23) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
(24) "Income Tax" means any tax, charge, fee, levy, penalty, or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority (a) based upon, measured by or calculated with respect to
net income, profits or receipts (including, without limitation, capital
gains taxes and alternative minimum taxes but excluding sales, transfer and
similar taxes) or (b) based upon, measured by or calculated with respect to
multiple bases (including, without limitation, corporate franchise taxes)
if one or more of the bases on which such tax may be based, measured by or
calculated with respect to, is described in clause (a), in each case
together with any interest, penalties, or additions attributable thereto.
(25) "Income Tax Return" means any return, report, information
return or other document (including any related or supporting information)
supplied or required to be supplied to any authority with respect to Income
Taxes.
(26) "Independent Accounting Firm" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
such other independent accounting firm of national reputation mutually
appointed by the Sellers and the Buyer.
(27) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit B hereto.
(28) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service ▇▇▇▇ rights, service names and service name rights, brand
names, inventions, copyrights and copyright rights, know-how and all
pending applications for and registrations of patents, trademarks, service
marks and copyrights other than the names, trademarks, service marks or
logos listed in Section 2.2(b) and (c) hereof.
(29) "Internal Revenue Service" means the United States Internal
Revenue Service, or any successor thereto.
(30) "ISO" means the New York Independent System Operator, or its
successor.
(31) "Material Adverse Effect" means any change in or effect on
the Purchased Assets after the date of this Agreement that is, individually
or in the aggregate, materially adverse to the condition (financial or
physical) of (as compared to the condition on the date of this Agreement),
or the ability to own or operate (as compared to the ownership and
operation thereof prior to the date of this Agreement), any material part
of the Purchased Assets, other than (i) any change or effect resulting from
changes in the international, national, regional or local wholesale or
retail markets for electric power, (ii) any change or effect resulting from
changes in the international, national, regional or local markets for any
fuel used at the Purchased Assets, (iii) any change or effect resulting
from changes in the North American, national, regional or local electric
transmission systems, (iv) any change or effect resulting from any
regulation, rule or order adopted or proposed by or with respect to the ISO
and its responsibility for, authority over and operation of the wholesale
and retail electric energy, capacity and ancillary services electric power
markets and (v) any materially adverse change in or effect on the Purchased
Assets which is cured (including by the payment of money) by the Sellers
before the Termination Date.
(32) "NJBPU" means the New Jersey Board of Public Utilities, or
any successor thereto.
(33) "NYPSC" means the New York Public Service Commission, or any
successor thereto.
(34) "Operating Easement" means the operating easement providing
the right to continue operating and maintaining certain distribution
facilities at the substations, which will be prepared as described in the
Continuing Site/Interconnection Agreement.
(35) "Other Sales Agreements" means the ▇▇▇▇▇▇ Generating Station
Sales Agreement between O&R and Southern Energy ▇▇▇▇▇▇, L.L.C.; the Gas
Turbines and Hydroelectric Generating Station Sales Agreement between O&R
and Southern Energy NY-Gen, L.L.C.; and the Bowline Adjacent Property Sales
Agreement, between O&R and the Buyer, each dated as of the date of this
Agreement.
(36) "PAPUC" means the Pennsylvania Public Utility Commission, or
any successor thereto.
(37) "Permitted Encumbrances" means (i) those exceptions to title
to the Purchased Assets contained in the documents listed on Schedules 5.8,
5.9(a), 5.9(b) and 5.15; (ii) any state of facts that a current survey of
the Purchased Assets would disclose; (iii) mortgages, liens, pledges,
charges, encumbrances and restrictions which are not in excess of $100,000
incurred in connection with the Sellers' purchase of properties and assets
to be conveyed to Buyer as part of the Purchased Assets after the date of
this Agreement securing all or a portion of the purchase price therefor
incurred in the ordinary course of business; (iv) the Operating Easement;
(v) statutory liens for current Taxes, assessments or other governmental
charges not yet due or delinquent or the validity of which is being
contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted
accounting principles, provided that the aggregate amount being so
contested does not exceed $500,000; (vi) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary
course of business relating to the Sellers' obligations which are not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings, provided that the aggregate amount of such
liens does not exceed $500,000; (vii) zoning, entitlement, conservation
restrictions and other land use and environmental regulations by
governmental authorities, provided that the foregoing do not materially
interfere with the present use of the Purchased Assets; and (viii) such
other liens, imperfections in or failure of title, charges, easements,
restrictions and encumbrances which do not materially detract from the
value of or materially interfere with the present use of the Purchased
Assets and neither secure indebtedness, nor individually or in the
aggregate have or would have a Material Adverse Effect or which will be
discharged or released prior to or simultaneously with the Closing.
(38) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an unincorporated organization or a governmental
entity or any department or agency thereof.
(39) "Purchased Assets" means the real and personal property,
tangible or intangible, constituting or used principally for generation
purposes at, or otherwise for the operation of, Bowline, including, but not
limited to, the following assets:
(a) the two 600 MW natural gas- or oil-fired steam electric
generating units listed in Schedule 1.1(a)(39);
(b) all of Sellers' right, title and interest in, to and under
the Real Property (including all structures, buildings, facilities and
other improvements thereon and all appurtenances thereto) as further
described on Schedule 5.8;
(c) all other machinery, equipment, furniture and other personal
property owned by the Sellers located at Bowline on the Closing Date,
including, without limitation, the items of personal property listed
or referred to in Schedule 1.1(a)(39);
(d) the underground portion of 345 kV transmission feeders that
connect the electric generating units at Bowline to O&R's West
Haverstraw 345 kV substation and approximately 7,400 feet of 16 inch
gas main between Bowline and Garnerville, New York gas meter and
regulator station subject to the terms of applicable easements which
would not have a materially adverse effect thereon;
(e) the Garnerville, New York gas meter and regulator station;
(f) all inventories of fuels, supplies, spare parts and
materials located at Bowline on the Closing Date;
(g) all contracts, agreements and personal property leases
principally relating to Bowline, as further listed on Schedules
5.17(a), (b), and (c) and 7.10(a), respectively;
(h) the Environmental Permits and Permits listed on Schedules
5.12(a)(ii) and 5.19(a), respectively;
(i) the Emission Allowances;
(j) all books, operating records, reports, engineering or design
plans, specifications, drawings, procedures, software or tools used to
process and report environmental data, safety and maintenance manuals
and similar items of the Sellers relating specifically to the
aforementioned assets;
(k) all of Sellers' right, title and interest in, to and under
the Leases;
(l) copies of all filings made with regulatory agencies, as
updated, relating to O&R's Year 2000 programs as such filings apply to
the Purchased Assets;
(m) the existing cross-plant water outage credits points
generated by Bowline under the Settlement Agreement or the Consent
Order, if any exist on the Closing Date;
(n) all unexpired, transferable warranties and guarantees from
third parties with respect to any of the Purchased Assets, as of the
Closing Date;
(o) the Intellectual Property, if any, relating to the Purchased
Assets (including Sellers' goodwill therein and the rights of Sellers
in and to the name of Bowline) and all rights, privileges, claims,
causes of action, indemnification rights and options pertaining solely
to the Purchased Assets or the Assumed Liabilities, including, without
limitation, those items listed on Schedule 1.1(a)(39)(o);
(p) the assets acquired by Sellers pursuant to Section 7.4; and
(q) $4.0 million in cash.
(40) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to escape into or
through the environment.
(41) "Scheduled Capital Expenditures" means those capital
expenditures listed on Schedule 1.1(a)(41).
(42) "Scheduled Maintenance Expenditures" means those
maintenance expenditures listed on Schedule 1.1(a)(42).
(43) "SEC" means the Securities and Exchange Commission, or any
successor thereto.
(44) "Securities Act" means the Securities Act of 1933, as
amended.
(45) "Sellers Agreements" means those agreements listed on
Schedule 5.17(a) and the Collective Bargaining Agreements.
(46) "Separation Document" means the document, to be negotiated
in good faith by the Buyer and O&R within three (3) months from the date of
this Agreement, which will delineate the Purchased Assets from O&R's other
assets, and which will be consistent with the separation document summary
attached hereto as Exhibit C.
(47) "Settlement Agreement" means that certain Settlement
Agreement entered into on December 19, 1980, by the following entities to
settle their disputes relating to the National Pollutant Discharge
Elimination System permits issued to certain utilities in 1975: the
Sellers; Central ▇▇▇▇▇▇ Gas & Electric Corporation; Niagara Mohawk Power
Corporation; the Power Authority of the State of New York (currently the
New York Power Authority); the New York State Department of Environmental
Conservation; the Attorney General of the State of New York; the United
States Environmental Protection Agency; ▇▇▇▇▇▇ River Fisherman's
Association, Inc. (currently d/b/a the ▇▇▇▇▇▇ Riverkeeper Fund, Inc.);
Scenic ▇▇▇▇▇▇ Preservation Conference (currently Scenic ▇▇▇▇▇▇, Inc.); and
the National Resources Defense Council, as amended.
(48) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(49) "Tax" means any tax, charge, fee, levy, penalty or other
assessment imposed by any U.S. federal, state, local or foreign taxing
authority, including, but not limited to, any income, gross receipts,
license, stamp, occupation, environmental, excise, property, sales,
transfer, payroll, unemployment, withholding, social security or any other
tax of any kind whatsoever, including any interest, penalties or additions
attributable thereto.
(50) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
other related or supporting information) supplied or required to be
supplied to any authority with respect to Taxes and including any
supplement or amendment thereof.
(51) "Transition Agreement" means the Transition Power Sales
Agreement between the Buyer, Southern Energy ▇▇▇▇▇▇, L.L.C. and Southern
Energy NY-Gen, L.L.C. and O&R, dated as of the date of this Agreement.
(52) "WARN Act" means the Federal Worker Adjustment Retraining
and Notification Act of 1988.
(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
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Adjustment Statement 3.2
Assumed Liabilities 2.3
Benefit Plans 5.14
Buyer Preamble
Buyer Indemnitee 9.1
Buyer Required Regulatory Approvals 6.3
Buyer's Easements 4.3
CEI 11.6
Closing 4.1
Closing Date 4.1
Collective Bargaining Agreements 7.10
Con Edison Preamble
Condition Fulfillment Date 8.4
Confidential Information 11.2
Consent Order 7.12
Defect of Title 7.13
Deferred Closing Date 8.4
Designated Representative 7.2
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Insurance 7.18
Environmental Permits 5.12
ERISA Affiliate 2.4
ERISA Affiliate Plans 2.4
Estimated Purchase Price 4.2
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Hourly Employees 7.10
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
Intended Use 7.16
Inventory Adjustment Amount 3.2
ISO Approval 8.4
Leases 5.9
Leased Assets 7.4
Management Employees 7.10
Necessary Capital Expenditures 7.1
Necessary Maintenance Expenditures 7.1
O&R Preamble
Participation Agreement 7.8
Pension Benefit Plans 5.14
Permits 5.19
Pollution Control Bond 2.4
Pollution Control Facilities 7.8
Property Interests 5.8
Purchase Price 3.1
Real Property 5.8
Recipient 11.2
Seller Preamble
Seller Indemnitee 9.1
Sellers Preamble
Sellers Balance Sheet 5.5
Sellers Required Regulatory Approvals 5.3
Seller's Easements 4.4
Termination Date 10.1
Third Party Claim 9.2
Title Commitment 7.13
Title Company 7.13
1986 Tax Act 7.8
ARTICLE II
SALE AND PURCHASE
2.1. The Sale. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing, the Sellers
will sell, assign, convey, transfer and deliver to the Buyer, and the Buyer
will purchase and acquire from the Sellers, free and clear of all
Encumbrances (except for Permitted Encumbrances) all of the Sellers' right,
title and interest in, to and under the real and personal property,
tangible or intangible, owned by the Sellers and constituting the Purchased
Assets.
2.2. Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable (other than the cash specified in Section 1.1(a)(39)(q) of this
Agreement);
(b) the name "Orange and Rockland Utilities, Inc.", "Orange and
Rockland", "O&R", "ORU" or any related or similar trade names, trademarks,
service marks or logos;
(c) the name "Con Ed", "Con Edison", "Consolidated Edison",
"Consolidated Edison, Inc." "Consolidated Edison Company of New York,
Inc.", "New York Edison," Brooklyn Edison," "States Island Edison,"
"Edison" or any related or similar names, trademarks, service marks or
logos;
(d) distribution, substation and communication facilities and
related support equipment described in Schedule 2.2(d);
(e) any refund, credit, penalty payment, adjustment or
reconciliation (i) related to personal property or other Taxes (excluding
Taxes relating to real property) paid prior to the Closing Date in respect
of the Purchased Assets, whether such refund, adjustment or reconciliation
is received as a payment or as a credit against future Taxes payable, or
(ii) arising under any of the Sellers Agreements and relating to a period
before the Closing Date;
(f) except to the extent specifically required by law, all
personnel records relating to any employees of the Sellers; and
(g) the rights and assets to be described in the Separation
Document as not part of the Purchased Assets.
2.3. Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to the Sellers the Instrument of Assumption pursuant to which the
Buyer shall assume and agree to discharge to the maximum extent permitted
by law, all of the following liabilities and obligations of the Sellers
which relate to the Purchased Assets, other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective
conditions thereof:
(a) all liabilities and obligations of the Sellers arising or
accruing after the Closing Date under (i) the Sellers Agreements, the
Environmental Permits, the Permits, real property leases, contracts and
other agreements disclosed and assigned to the Buyer pursuant to this
Agreement in accordance with the terms thereof, and (ii) the leases,
contracts and other agreements entered into by the Sellers with respect to
the Purchased Assets after the date hereof consistent with the terms of
this Agreement; except in each case, to the extent such liabilities and
obligations, but for a breach or default by either Seller, would have been
paid, performed or otherwise discharged on or prior to the Closing Date or
to the extent the same arise out of any such breach or default or any event
which after the giving of notice would constitute a default by either
Seller;
(b) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is liable pursuant
to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified the Sellers pursuant to Section 9.1;
(d) all liabilities to employees for which the Buyer is liable
pursuant to Section 7.10, including the Collective Bargaining Agreements;
(e) any liability, obligation or responsibility under or related
to former, current or future Environmental Laws or the common law, whether
such liability or obligation or responsibility is known or unknown,
contingent or accrued, arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to the Closing
Date, with respect to the ownership or operation of the Purchased Assets;
(ii) loss of life, injury to persons or property or damage to natural
resources (whether or not such loss, injury or damage arose or was made
manifest before the Closing Date or arises or becomes manifest after the
Closing Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets prior to the Closing
Date, including, but not limited to, Hazardous Substances contained in
building materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at
or adjacent to the Purchased Assets; and (iii) the investigation and/or
remediation (whether or not such investigation or remediation commenced
before the Closing Date or commences after the Closing Date) of Hazardous
Substances that are present or have been Released prior to the Closing Date
at, on, in, under, adjacent to, discharged from, emitted from or migrating
from the Purchased Assets, including, but not limited to, Hazardous
Substances contained in building materials at the Purchased Assets or in
the soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets; provided,
as to all of the above, that nothing set forth in this subsection 2.3(e)
shall require the Buyer to assume any liabilities that are expressly
excluded in Section 2.4;
(f) any liability, obligation or responsibility under or related
to former, current or future Environmental Laws or the common law, whether
such liability or obligation or responsibility is known or unknown,
contingent or accrued, arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, on or after the
Closing Date, with respect to the ownership or operation of the Purchased
Assets; (ii) compliance with applicable Environmental Laws on or after the
Closing Date with respect to the ownership or operation of the Purchased
Assets; (iii) loss of life, injury to persons or property or damage to
natural resources caused (or allegedly caused) by the presence or Release
of Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets on or after the Closing
Date, including, but not limited to, Hazardous Substances contained in
building materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at
or adjacent to the Purchased Assets; (iv) loss of life, injury to persons
or property or damage to natural resources caused (or allegedly caused) by
the off-site disposal, storage, transportation, discharge, Release,
recycling, or the arrangement for such activities, of Hazardous Substances,
on or after the Closing Date, in connection with the ownership or operation
of the Purchased Assets; (v) the investigation and/or remediation of
Hazardous Substances that are present or have been released on or after
the Closing Date at, on, in, under, adjacent to, discharged from, emitted
from or migrating from the Purchased Assets, including, but not limited to,
Hazardous Substances contained in building materials at the Purchased
Assets or in the soil, surface water, sediments, groundwater, landfill
cells or in other environmental media at or adjacent to the Purchased
Assets; and (vi) the investigation and/or remediation of Hazardous
Substances that are disposed, stored, transported, discharged, Released,
recycled, or the arrangement of such activities, on or after the Closing
Date, in connection with the ownership or operation of the Purchased
Assets, at any off-site location; provided, that nothing set forth in this
subsection shall require the Buyer to assume any liabilities that are
expressly excluded in Section 2.4;
(g) all liabilities and obligations of the Sellers with respect
to the Purchased Assets under the agreements or consent orders set forth on
Schedule 5.12(c);
(h) all liabilities incurred by the Sellers with respect to
maintenance and capital expenditures made with respect to the Purchased
Assets by the Sellers which are requested by Buyer;
(i) all liabilities or obligations relating to leases for the
Purchased Assets; and
(j) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (i) above, exclusively
relating to the Purchased Assets no matter when the events or occurrences
giving rise to such liabilities or obligations took place, the value of
which liabilities and obligations, together with the liabilities and
obligations relating to the "Purchased Asset" and the "Purchased Assets" as
defined in each of the Other Sales Agreements, in the aggregate, shall not
exceed $3 million.
All of the foregoing liabilities and obligations to be assumed by
the Buyer hereunder (excluding any Excluded Liabilities) are referred to
herein as the "Assumed Liabilities." It is understood and agreed that
nothing in this Section 2.3 shall constitute a waiver or release of any
claims arising out of the contractual relationships between the Sellers and
the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of either Seller in respect
of any Excluded Assets or other assets of the Sellers which are not
Purchased Assets;
(b) any liabilities or obligations with respect to Taxes
attributable to the Purchased Assets for taxable periods ending on or
before the Closing Date, except for Taxes for which the Buyer is liable
pursuant to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities relating
to the disposal, storage, transportation, discharge, Release, recycling, or
the arrangement for such activities, of Hazardous Substances that were
generated at the Purchased Assets, at any off-site location, where the
disposal, storage, transportation, discharge, Release, recycling or the
arrangement for such activities at said off-site location occurred prior to
the Closing Date, provided that for purposes of this Section, "off-site
location" does not include any location to which Hazardous Substances
disposed of, discharged from, emitted from or Released at the Purchased
Assets have migrated, including, but not limited to, surface waters that
have received waste water discharges from the Purchased Assets;
(d) any liabilities, obligations or responsibilities arising
after the Closing Date relating to: (i) the transmission lines delineated
in the Operating Easements or (ii) O&R's operations on, or usage of, the
Operating Easements, including, without limitation, liabilities,
obligations or responsibilities arising as a result of or in connection
with (1) any violation or alleged violation of Environmental Law and (2)
loss of life, injury to persons or property or damage to natural resources,
except to the extent caused by the Buyer;
(e) any liabilities, obligations or responsibilities arising
prior to or after the Closing Date relating to the easements provided O&R
under the Operating Easement, including, without limitation: (i) the
transmission lines or other facilities of O&R delineated in the Operating
Easements or (ii) O&R's ownership rights, operations on, or usage of, the
Operating Easements, including, without limitation, liabilities,
obligations or responsibilities arising as a result of or in connection
with (1) any violation or alleged violation of Environmental Law or Release
of Hazardous Substances and (2) loss of life, injury to persons or
property or damage to natural resources, except in the case of (1) or (2)
to the extent caused by the Buyer;
(f) any liabilities or obligations required to be accrued by
either Seller in accordance with generally accepted accounting principles
and/or the FERC Uniform System of Accounts on or before the Closing Date
with respect to liabilities related to the Purchased Assets, other than any
liability assumed by Buyer under Section 2.3;
(g) any liabilities or obligations with respect to liabilities
relating to the Purchased Assets relating to any personal injury including
bodily injury (including, but not limited to workers' compensation claims),
discrimination, wrongful discharge, unfair labor practice or similar claim
or cause of action with respect to any act or occurrence arising prior to
or on the Closing Date, other than liabilities or obligations for injury to
persons or loss of life assumed by the Buyer in Sections 2.3(e) and 2.3(f);
(h) any fines or penalties imposed by a governmental agency or
authority resulting from (A) an investigation or proceeding with respect to
any act or occurrence arising prior to or on the Closing Date or (B)
illegal acts, willful misconduct or gross negligence of either Seller prior
to or on the Closing Date;
(i) any payment obligations of either Seller for goods delivered
or services rendered prior to the Closing;
(j) any liabilities or obligations imposed upon, assumed or
retained by O&R pursuant to the Continuing Site/Interconnection Agreement
or any other Ancillary Agreement;
(k) any liabilities, obligations or responsibilities relating to
any deferred compensation, pension, profit-sharing and retirement plans,
including multiemployer plans, and all welfare, severance, stock-based,
bonus and other employee benefit or fringe benefit plans, programs and
arrangements, whether written or oral, maintained or with respect to which
contributions have been in the last five (5) years or are made by O&R and
any trade or business (whether or not incorporated) which are or have ever
been under common control, or which are or have ever been treated as a
single employer, with O&R under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which O&R and any ERISA Affiliate contributed
thereunder (the "ERISA Affiliate Plans"), including any multiemployer plan,
maintained by, contributed to, or obligated to contribute to, at any time,
by O&R or any ERISA Affiliate; including, without limitation, any liability
(A) to the Pension Benefit Guaranty Corporation under Title IV of ERISA;
(B) with respect to non-compliance with the continuation requirements of
COBRA; (C) with respect to any non-compliance with ERISA, the Code, or any
other applicable laws; (D) with respect to any suit, proceeding or claim
which is brought against either Seller, any ERISA Affiliate Plan, or any
fiduciary or former fiduciary of any such ERISA Affiliate Plan; (E)
relating to a multiemployer plan; or (F) for any claim or suit for benefits
accrued under an ERISA Affiliate Plan prior to Closing;
(l) any liabilities, obligations or responsibilities relating to
the employment or termination of employment, by O&R of any individual
(including, but not limited to, any employee of O&R) attributable to any
actions or inactions by O&R prior to the Closing Date; and
(m) any liabilities relating to the $55,000,000 New York State
Energy Research and Development Authority Pollution Control Refunding
Revenue Bonds (Orange and Rockland Utilities, Inc. Projects) 1994 Series A
(the "Pollution Control Bond") and any agreements relating thereto.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased
Assets shall be an amount equal to the sum of (i) $199,850,000, (ii) the
Estimated Inventory Adjustment Amount, (iii) the Inventory Adjustment
Amount and (iv) any amounts paid by the Sellers to acquire title to Leased
Assets pursuant to Section 7.4(a) ( the "Purchase Price").
3.2. Purchase Price Adjustment. (a) Within sixty (60) days
after the Closing, the Sellers shall prepare and deliver to the Buyer a
statement (the "Adjustment Statement") which sets forth an amount equal to
(A) the value as of the Closing Date, of all oil inventory and propane
inventory to be used at or in connection with the Purchased Assets
determined by using (i) the average price for residual 0.3% surplus high
pour New York cargo spot index for No. 6 oil - New York Harbor published in
Bloomberg Energy for the consecutive ten (10) days prior to the Closing
Date, the Closing Date and the nine (9) consecutive days following the
Closing Date, and (ii) the average price for propane published in the
Journal of Commerce for Propane Mt. Belvieu during such consecutive
twenty (20) day period plus five cents ($0.05) per gallon minus (B) the
Estimated Inventory Adjustment Amount (such difference is referred to as
the "Inventory Adjustment Amount");
The Adjustment Statement shall be prepared using the same
generally accepted accounting principles, policies and methods as the
Sellers have historically used in connection with the calculation of the
items reflected on the Adjustment Statement. The Buyer and the Sellers
agree to cooperate with the other in connection with the preparation of the
Adjustment Statement and related information, and each shall provide to the
other such books, records and information as may be reasonably requested
from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount;
provided, however, that the Buyer shall notify the Sellers in writing of
the disputed amount, and the basis of such dispute, within thirty (30) days
of the Buyer's receipt of the Adjustment Statement. In the event of a
dispute with respect to the Inventory Adjustment Amount, the Buyer and the
Sellers shall attempt to reconcile their differences and any resolution by
them as to any disputed amounts shall be final, binding and conclusive on
the parties. If the Buyer and the Sellers are unable to reach a resolution
of such differences within thirty (30) days of receipt of the Buyer's
written notice of dispute to the Sellers, the Buyer and the Sellers shall
submit the amounts remaining in dispute for determination and resolution to
the Independent Accounting Firm, which shall be instructed to determine and
report to the parties, within thirty (30) days after such submission, upon
such remaining disputed amounts, and such report shall be final, binding
and conclusive on the parties hereto with respect to the amounts disputed.
The fees and disbursements of the Independent Accounting Firm shall be
allocated between the Buyer and the Sellers so that the Buyer's share of
such fees and disbursements shall be in the same proportion that the
aggregate amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm that is unsuccessfully disputed by
the Buyer (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm.
(c) If the Inventory Adjustment Amount is positive, within ten
(10) Business Days after the Buyer's receipt of the Adjustment Statement,
the Buyer shall pay to the Sellers all undisputed portions of the Inventory
Adjustment Amount. If the Inventory Adjustment Amount is negative, within
ten (10) Business Days after the Buyer's receipt of the Adjustment
Statement, the Sellers shall pay to the Buyer all undisputed portions of
the Inventory Adjustment Amount. If there is a dispute with respect to any
amount on the Adjustment Statement, within five (5) Business Days after the
final determination of such disputed amounts on the Adjustment Statement,
the Buyer shall pay the Sellers an amount equal to the disputed portion of
the Inventory Adjustment Amount as finally determined to be payable with
respect to the Adjustment Statement; provided, however, that if such amount
shall be less than zero, the Sellers will pay to the Buyer the amount by
which such amount is less than zero. All payments made pursuant to this
Section 3.2(c) shall be paid together with interest thereon for the period
commencing on the Closing Date through the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the Closing Date,
in cash by federal or other wire transfer of immediately available funds.
For any payments made by the Buyer to the Sellers pursuant to this section,
the Sellers shall provide the necessary information to the Buyer so that
the Buyer may allocate payments due to Sellers between O&R and Con Edison.
3.3. Allocation of Purchase Price. The Buyer shall prepare an
allocation of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one hundred eighty (180)
days of the date of this Agreement but in no event less than forty-five
(45) days prior to the Closing and submit it to the Sellers. The Sellers
may dispute the allocation of the Purchase Price; provided, however, that
the Sellers shall notify the Buyer in writing of the disputed amount, and
the basis of such dispute, and follow the procedures relating to a dispute
described in Section 3.2(b) above. The Buyer and the Sellers each agree to
file Internal Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns and Income Tax Returns, in accordance with such agreed
allocation. Each of the Buyer and the Sellers shall report the
transactions contemplated by the Agreement for federal Income Tax and all
other Tax purposes in a manner consistent with the allocation determined
pursuant to this Section 3.3. The Buyer and the Sellers each agree to
provide the other promptly with any other information required to complete
Form 8594. Each of the Buyer and the Sellers shall notify and provide the
other with reasonable assistance in the event of an examination, audit or
other proceeding regarding the agreed upon allocation of the Purchase
Price.
3.4. Proration. (a) The Buyer and the Sellers agree that all
of the items normally prorated, including those listed below, relating to
the business and operation of the Purchased Assets will be prorated as of
the Closing Date, with the Sellers liable to the extent such items relate
to any time period through the Closing Date, and the Buyer liable to the
extent such items relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any
other Taxes (excluding Income Taxes), assessments and other charges,
if any, on or with respect to the ownership, use or business and
operation of the Purchased Assets;
(ii) rent, Taxes (excluding Income Taxes) and other items
payable by or to the Sellers under any of the Sellers Agreements to be
assigned to and assumed by the Buyer hereunder;
(iii) any permit, license or registration fees with respect
to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either the Sellers
or the Buyer made within sixty (60) days of the date that the actual
amounts become available. The Sellers and the Buyer agree to furnish each
other with such documents and other records as may be reasonably requested
in order to confirm all adjustment and proration calculations made pursuant
to this Section 3.4.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M. (local time) on
April 30, 1999, or at such other place or later date and time as the
parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to
the Sellers at the Closing an amount (the "Estimated Purchase Price") in
United States dollars, equal to the sum of (i) $199,850,000, (ii) the
Estimated Inventory Adjustment Amount for the Closing, and (iii) any
amounts paid to acquire title to Leased Assets pursuant to Section 7.4(a)
hereof, by wire transfer of immediately available funds or by such other
means as are agreed to by the Sellers and the Buyer. The Sellers shall
provide the necessary information to the Buyer so that the Buyer may
allocate the Estimated Purchase Price between O&R and Con Edison.
4.3. Deliveries by the Sellers. At the Closing, the Sellers
will deliver the following to the Buyer:
(a) The ▇▇▇▇ of Sale, duly executed by the Sellers for the
personal property included in the Purchased Assets;
(b) The executed consents to transfer the Sellers Agreements,
the Environmental Permits and the Permits, to the extent specifically
required hereunder.
(c) Each Ancillary Agreement, required to be delivered under
this Agreement, duly executed by O&R or Con Edison;
(d) The certificates and the opinions of counsel contemplated by
Sections 8.2(c), (e), (f), (g) and (i);
(e) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring Sellers'
interest in the Property Interests to the Buyer, duly executed and
acknowledged by O&R and in recordable form substantially in the form of
Exhibit D hereto;
(f) One or more easements to the extent necessary to evidence
the right of Buyer to use the real property of O&R (the "Buyer's
Easements") that comprise part of the Excluded Assets, duly executed and
acknowledged by O&R and in recordable form, each substantially in the form
of Exhibit E hereto;
(g) The Assignment of Leases in the form attached hereto as
Exhibit F assigning to Buyer all of the Sellers' right, title and interest
as lessor (or lessee as the case may be) under the leases;
(h) Copies of the resolutions adopted by the Board of Directors
or Board of Trustees, and/or a committee of the Board of Directors or Board
of Trustees to whom the Board has delegated its authority, of each of the
Sellers, certified by the Secretary of each Seller, as having been duly and
validly adopted and as being in full force and effect, authorizing the
execution and delivery by each Seller of this Agreement, the ▇▇▇▇ of Sale
and other closing documents described in this Agreement to which such
Seller is a party, and the performance by such Seller of its respective
obligations hereunder and thereunder;
(i) All such other instruments of assignment or conveyance as
shall, in the reasonable opinion of the Buyer and its counsel, be necessary
to transfer to the Buyer the Purchased Assets in accordance with this
Agreement and where necessary or desirable, in recordable form;
(j) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if either Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to the
appropriate taxing authority any amount equal to ten (10) percent of the
portion to be allocated to such Seller of the total Amount Realized (as
defined under Section 1445 of the Code);
(k) Such other agreements, documents, instruments and writings
as are required to be delivered by the Sellers at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith; and
(1) $4.0 million by wire transfer of immediately available funds
or by such other means as are agreed to by O&R and the Buyer.
4.4. Deliveries by Buyer. At the Closing, the Buyer will
deliver the following to the Sellers:
(a) The Estimated Purchase Price by wire transfer of immediately
available funds or by such other means as are agreed to by the Sellers and
the Buyer;
(b) Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(d) The Instrument of Assumption, duly executed by the Buyer;
(e) All such other instruments of assumption as shall, in the
reasonable opinion of the Sellers and their counsel, be necessary for the
Buyer to assume the Assumed Liabilities in accordance with this Agreement;
(f) One or more easements to the extent necessary for O&R to
continue and maintain their transmission and distribution business, in
favor of the O&R (the "Seller's Easements") with respect to Real Property
conveyed to Buyer, duly executed and acknowledged by Buyer, each
substantially in the form of Exhibit E hereto, and Buyer shall bear any
transfer or similar tax incurred in connection herewith as set forth in
Section 7.8;
(g) Copies of the resolutions adopted by the Members or
Managers, or similar governing body, of the Buyer, certified by the Member
of the Buyer, as having been duly and validly adopted and as being in full
force and effect, authorizing the execution and delivery by the Buyer of
this Agreement and other closing documents described in this Agreement to
which the Buyer is a party, and the performance by the Buyer of its
respective obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and writings
as are required to be delivered by the Buyer at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of O&R and Con Edison represents on behalf of itself only,
and not on behalf of the other Seller, and warrants on behalf of itself
only, and not on behalf of the other Seller, to the Buyer as follows:
5.1. Organization; Qualification. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation 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. Each Seller is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each foreign jurisdiction in which it operates the Purchased Assets and
such foreign jurisdiction requires it to be so qualified. Each Seller has
heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and By-Laws as currently in effect.
5.2. Authority Relative to this Agreement. Each Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors or Board of Trustees, or a committee of the Board of Directors or
the Board of Trustees to whom the Board has designated its authority, of
each Seller and no other corporate proceedings on the part of either Seller
or its shareholders is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by such Seller, and assuming that
this Agreement constitutes a valid and binding agreement of the Buyer,
subject to the receipt of the Sellers Required Regulatory Approvals and the
Buyer Required Regulatory Approvals, constitutes a valid and binding
agreement of such Seller, enforceable against such Seller in accordance
with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
5.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining the Sellers Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by such Seller nor the
performance by such Seller of its respective obligations under this
Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation
or By-Laws of such Seller, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (x) where the failure to
obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not have a Material Adverse Effect or would
not prohibit or restrain the execution, delivery or performance of this
Agreement or the Ancillary Agreements, or the consummation of the
transactions contemplated hereby or thereby in any material respect or (y)
for those requirements which become applicable to such Seller as a result
of the specific regulatory status of the Buyer (or any of its affiliates)
or as a result of any other facts that specifically relate to the business
or activities in which the Buyer (or any of its affiliates) is or proposes
to be engaged; (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which such Seller, or any of
its subsidiaries, is a party or by which such Seller, or any of its
subsidiaries, or any of the Purchased Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which,
individually or in the aggregate, would not have a Material Adverse Effect;
or (iv) violate any order, writ, injunction, judgment, law, decree,
statute, rule or regulation applicable to such Seller, or any of its
assets, which violation would, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) as may be required
by applicable law (A) notice by the Sellers to, and an order by, the NYPSC
approving the transactions contemplated by this Agreement or the Ancillary
Agreements, (B) notice by O&R to, and an order by, the NJBPU approving the
transactions contemplated by this Agreement or the Ancillary Agreements and
(C) notice by O&R to, and an order by, the PAPUC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) the
approval, if required, of the SEC pursuant to the Holding Company Act, and
(iv) the filings by the Sellers and the Buyer required by the HSR Act and
the expiration or earlier termination of all waiting periods under the HSR
Act (the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "Sellers Required Regulatory Approvals"),
no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by such Seller of the
transactions contemplated hereby or by the Ancillary Agreements, other than
such declarations, filings, registrations, notices, authorizations consents
or approvals which, if not obtained or made, will not, in the aggregate,
have a Material Adverse Effect and other than Permits and Environmental
Permits.
5.4. Reports. Since January 1, 1996, O&R and Con Edison,
pursuant to the Securities Act, the Exchange Act, the applicable State
public utility laws, the Federal Power Act and the Holding Company Act, has
filed or caused to be filed with the SEC, the applicable state or local
utility commissions or regulatory bodies, or the FERC, as the case may be,
all material forms, statements, reports and documents (including all
exhibits, amendments and supplements thereto) required to be filed by them
with respect to the business and operations of O&R and Con Edison as it
relates to the Purchased Assets under each of the Securities Act, the
Exchange Act, the applicable State public utility laws, the Federal Power
Act and the Holding Company Act and the respective rules and regulations
thereunder, all of which complied in all material respects with all
applicable requirements of the appropriate act and the rules and
regulations thereunder in effect on the date each such report was filed.
5.5. Financial Statements. The Sellers have previously
furnished to the Buyer (i) audited statements of assets, liabilities and
owners' interest of Bowline Point Tenants in Common relating to the
Sellers' interest in Bowline as of December 31, 1997, and (ii) the related
audited statements of operating expenses and changes in owners' interests
relating to the Sellers' interest in Bowline for the fiscal year then
ended, together with the respective reports thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
The statements of assets, liabilities and owners' interest of Bowline Point
Tenants in Common relating to the Sellers' interest in Bowline as of
December 31, 1997 is referred to as the "Sellers Balance Sheet." Each of
the balance sheets included in the financial statements referred to in this
Section 5.5 (including the related notes thereto) presents fairly, in all
material respects, the assets, liabilities, and owners' interests of
Bowline Point Tenants in Common (Bowline Point Facility) as of December 31,
1997, and the operating expenses and changes in owners' interests for the
year then ended, all in conformity with the General Agreement between O&R
and Con Edison, dated October 10, 1969, as amended, and on the basis of
accounting followed by the owners who are subject to regulation by the FERC
and various state regulatory authorities with respect to their rates and
accounting, except as otherwise noted therein.
5.6. Undisclosed Liabilities. Except as set forth in Schedule
5.6, to the Sellers' knowledge, the Sellers have no liability or obligation
relating to the business or operations of the Purchased Assets, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in the Sellers Balance Sheet or disclosed in the notes thereto in
accordance with generally accepted accounting principles, except those
which either were incurred in the ordinary course of business, after the
date of the Sellers Balance Sheet, or those which in the aggregate are not
material to the Purchased Assets.
5.7. Absence of Certain Changes. Except (i) as set forth in
Schedule 5.7, or in the reports, schedules, registration statements and
definitive proxy statements filed by such Seller with the SEC and (ii) as
otherwise contemplated by this Agreement, to the Sellers' knowledge, since
the date of the Sellers Balance Sheet there has not been: (a) any Material
Adverse Effect; (b) any damage, destruction or casualty loss, whether
covered by insurance or not, which had a Material Adverse Effect; (c) any
entry into any agreement, commitment or transaction (including, without
limitation, any borrowing or capital financing) by either Seller, which is
material to the business or operations of the Purchased Assets, except
agreements, commitments or transactions in the ordinary course of business
or as contemplated herein; or (d) any change by either Seller, with respect
to the Purchased Assets, in accounting methods, principles or practices
except as required or permitted by generally accepted accounting
principles.
5.8. Title. Set forth in Schedule 5.8 is a true and complete
list of all real property which is part of or material to the business or
operations of the Purchased Assets (the "Real Property") and other real
property interests which are a part of or material to the business or
operations of the Purchased Assets (together with the Real Property, the
"Property Interests"). One or both Sellers have leasehold or other
contractual interests in all Purchased Assets identified in subsections
(g), (k), (m), (n) and (p) of Section 1.1(a)(39) and, subject only to
Permitted Encumbrances and the Leases: (i) good and marketable record
title to the Real Property and the Buyer's Easements and (ii) good and
valid title to all Purchased Assets identified in subsections (a), (c),
(d), (e), (f), (h), (i), (j), (l) and (o) of Section 1.1(a)(39). At the
Closing, O&R will have the cash available to pay the amount referred to in
Section 1.1(a)(39)(q) of this Agreement.
5.9. Leasehold Interests. Schedule 5.9(a) lists all Real
Property leases or subleases (the "Leases") relating to the Purchased
Assets under which either or both of the Sellers are a lessee, sublessee,
lessor, or sublessor and which are to be assigned to, and assumed by, the
Buyer on the Closing Date. Except as set forth in Schedule 5.9(b), the
Leases are valid, binding and enforceable in accordance with their terms,
and are in full force and effect; there are no existing material defaults
by the applicable Seller or Sellers thereunder; and no event has occurred
which (whether with or without notice, lapse of time or both) would
constitute a material default thereunder. One or both Sellers have a valid
and subsisting leasehold estate in and the right to quiet enjoyment of the
Leases under which either Seller is a lessee or sublessee for the full term
of such Leases, which leasehold interests are unencumbered other than by
Permitted Encumbrances, and Sellers have delivered to Buyer true and
complete copies of all Leases.
5.10. Improvements. Except as set forth in Schedule 5.10(a),
O&R has not received, and to Con Edison's knowledge, Con Edison has not
received, any notices from any governmental authority stating or alleging
that any improvements with respect to the Purchased Assets have not been
constructed in compliance with applicable law. Except as set for forth in
Schedule 5.10(b), to the Sellers' knowledge, no notice has been received by
either Seller from any governmental authority requiring or advising as to
the need for any repair, alteration, restoration or improvement in
connection with the Purchased Assets.
5.11. Insurance. O&R represents and warrants that except as set
forth in Schedule 5.11(a), all material policies of fire, liability,
worker's compensation and other forms of insurance purchased or held by and
insuring or related to the Purchased Assets are in full force and effect,
all premiums with respect thereto covering all periods up to and including
the date as of which this representation is being made have been paid, and
no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior
to the date of such cancellation. Except as described in Schedule 5.11(b),
neither Seller has been refused any insurance with respect to the Purchased
Assets nor has its coverage been limited by any insurance carrier to which
it has applied for any such insurance or with which it has carried
insurance during the last five (5) years nor have they received written
notice from any insurer with respect to any Real Property or Lease of
defects or inadequacies with respect thereto or the improvements located
thereon that would materially adversely affect the insurability of same or
cause the imposition of extraordinary premiums therefor.
5.12. Environmental Matters. (a) Except as disclosed in
Schedule 5.12(a)(i), to the Sellers' knowledge, the Sellers hold, and are
in compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for either Seller to
operate the Purchased Assets under applicable Environmental Laws, and the
Sellers are otherwise in compliance with applicable Environmental Laws with
respect to the Purchased Assets except for such failures to hold or comply
with required Environmental Permits, or such failures to be in compliance
with applicable Environmental Laws, which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
Schedule 5.12(a) (ii) sets forth all Environmental Permits relating to the
ownership or operation of the Purchased Assets.
(b) Except as disclosed in Schedule 5.12(b), neither Seller has
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar State law with
respect to any on-site location related to the Purchased Assets, and no
investigation and/or remediation is being conducted or is pending at the
Purchased Assets (other than investigations or remediation conducted by or
on behalf of Seller or Buyer in connection with this transaction), except
for such liability under such laws or investigations or remediation as
would not be reasonably likely to have a Material Adverse Effect.
(c) With respect to the Purchased Assets, no action, claim,
investigation or other proceeding relating to any Environmental Law is
pending, or to Seller's knowledge, threatened, and neither Seller has
entered into or agreed to any consent decree or order, and are not subject
to any judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances under any Environmental Law, except such consent
decrees or orders, judgments, decrees or administrative or judicial orders,
actions, claims, investigations or proceedings that (i) would not be
reasonably likely to have a Material Adverse Effect, (ii) appear on
Schedule 5.12(c), or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of either Seller, and in the possession of either Seller, which
concern Releases of Hazardous Substances at, on, in, or under the Purchased
Assets or compliance of Purchased Assets with Environmental Laws, conducted
within the last two (2) years, are listed in Schedule 5.12(d) and have been
provided to Buyer.
(e) The representations and warranties made in this Section 5.12
are the Sellers' exclusive representations and warranties relating to
environmental matters.
5.13. Labor Matters. O&R represents and warrants that Schedule
7.10(a) lists, and O&R has previously delivered to the Buyer, true and
correct copies of all labor union, Collective Bargaining Agreements and
other labor agreements relating to the Purchased Assets to which O&R is a
party or subject. Neither Con Edison nor any other party (except for the
parties to the agreements listed in Schedule 7.10(a)) is a party to, or is
subject to any labor union, collective bargaining agreement or other labor
agreement which relates to the Purchased Assets. Con Ed has no employees
employed at the Purchased Assets. With respect to the Purchased Assets,
except to the extent set forth in Schedule 5.13 and except for such matters
as will not have a Material Adverse Effect, to O&R's knowledge: (a) O&R is
in compliance with all applicable laws respecting employment and employment
practices, occupational health and safety, and wages and hours; (b) O&R has
not received written notice of any unfair labor practice complaint against
it pending before the National Labor Relations Board; (c) there is no labor
strike, slowdown or stoppage actually pending or threatened against or
affecting O&R; (d) O&R has not received notice that any representation
petition respecting its employees has been filed with the National Labor
Relations Board; (e) no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending against O&R; and (f)
O&R has not experienced any primary work stoppage since at least December
31, 1994.
5.14. ERISA. (a) O&R represents and warrants that Schedule
5.14(a) lists all deferred compensation, pension, profit-sharing and
retirement plans, including multiemployer plans, and all welfare,
severance, stock-based, bonus and other employee benefit or fringe benefit
plans, programs and arrangements, whether written or oral, maintained or
with respect to which contributions have been in the last five (5) years or
are made by O&R in respect of employees who are employed in connection with
the Purchased Assets (such plans, programs and arrangements collectively,
the "Benefit Plans"). To O&R's knowledge, each Benefit Plan is in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable laws. Accurate and complete
copies of all such Benefit Plans and their summary descriptions, including
multiemployer plans, have been made available to the Buyer.
(b) Except as set forth in Schedule 5.14(b)(i), with respect to
employees at the Purchased Assets, to O&R's knowledge, O&R and the ERISA
Affiliates have fulfilled their respective obligations under the minimum
funding requirements of Section 302 of ERISA, and Section 412 of the Code,
with respect to each Benefit Plan that is a pension benefit plan as defined
in Section 3(2) of ERISA (each, a "Pension Benefit Plan"). To the O&R's
knowledge, neither O&R nor any ERISA Affiliate has incurred any liability
to the Pension Benefit Guaranty Corporation in connection with any Pension
Benefit Plan which is subject to Title IV of ERISA, including any
withdrawal liability, nor is there any reportable event (as defined in
Section 4043 of ERISA), except as set forth in Schedule 5.14(b)(ii).
Except as set forth in Schedule 5.14(b)(iii), the Internal Revenue Service
has issued a letter for each Pension Benefit Plan which is intended to be
qualified under Section 401(a) of the Code, determining that such plan is
exempt from United States Federal Income Tax under Sections 401(a) and
501(a) of the Code, and to the O&R's knowledge, there has been no
occurrence since the date of any such determination letter which has
adversely affected such qualification, and no withdrawal liability has been
incurred by or asserted and none is anticipated against O&R with respect to
any Pension Benefit Plan which is a "multiemployer plan" (as defined in
Section 3(37) of ERISA).
(c) To the O&R's knowledge, neither O&R nor any ERISA Affiliate
has engaged in any transaction within the meaning of Section 4069(b) or
Section 4212(c) of ERISA. Except as set forth in Schedule 5.14(c), no
Benefit Plan is a multi-employer plan.
(d) To the extent O&R maintained or maintains a "group health
plan" within the meaning of Section 5000(b)(1) of the Code, to the O&R's
knowledge, O&R has materially complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA Part 6 of Subtitle B of
Title I of ERISA and the regulations thereunder.
5.15. Real Property Encumbrances. Schedule 5.15 lists all real
property encumbrances affecting the Real Property including matters
contained in deeds, easements and options. O&R represents and warrants
that true and correct copies of all current surveys, abstracts, title
opinions and policies of title insurance currently in force with respect to
such Real Property have been delivered by O&R to the Buyer. None of the
Permitted Encumbrances materially adversely affect the existing use of the
Real Property.
5.16. Condemnation. Neither the whole nor any part of the Real
Property or any other real property or rights leased, used or occupied by
the Sellers in connection with the ownership or operation of the Purchased
Assets is subject to any pending suit for condemnation or other taking by
any public authority, and, to the knowledge of the Sellers, no such
condemnation or other taking is threatened or contemplated.
5.17. Certain Contracts and Arrangements.
(a) Except (i) as listed in Schedule 5.17(a), (ii) for
contracts, agreements, personal property leases, commitments,
understandings or instruments which will expire prior to the Closing Date,
(iii) for agreements with suppliers entered into in the ordinary course of
business (including contracts entered into in connection with the Scheduled
Capital Expenditures and the Scheduled Maintenance Expenditures), and (iv)
for contracts, agreements, personal property leases, commitments,
understandings or instruments with a value less than $200,000 or with
annual or aggregate payments less than $200,000, neither Seller is a party
to any written contract, agreement, personal property lease, commitment,
understanding or instrument which is material to the business or operations
of the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each Sellers
Agreement listed on Schedule 5.17(a) constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and may
be transferred to the Buyer pursuant to this Agreement and will continue in
full force and effect thereafter, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights
thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not, under
any of the Sellers Agreements listed on Schedule 5.17(a), any default or
event which, with notice or lapse of time or both, would constitute a
default on the part of any party thereto, except such events of default and
other events as to which requisite waivers or consents have been obtained
or which would not, individually or in the aggregate, have a Material
Adverse Effect.
5.18. Legal Proceedings, etc. Except as set forth in Schedule
5.18 or in any filing made by either Seller pursuant to the Securities Act
or the Exchange Act, there are no claims, actions, or proceedings pending
or investigation pending or, to the Sellers' knowledge, threatened against
either Seller relating to the Purchased Assets before any court,
arbitrator, governmental or regulatory authority or body acting in an
adjudicative capacity, which, if adversely determined, would have a
Material Adverse Effect or would prohibit or restrain the execution,
delivery or performance of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby in any
material respect. Except as set forth in Schedule 5.18, the Sellers are
not subject to any outstanding judgment, rule, order, writ, injunction or
decree of any court, governmental or regulatory authority relating to the
Purchased Assets which would have a Material Adverse Effect.
5.19. Permits. Sellers have all material permits, licenses,
franchises and other governmental authorizations, consents and approvals,
other than with respect to Environmental Laws (collectively, "Permits") as
set forth in Schedule 5.19(a), necessary to own or operate the Purchased
Assets as presently owned or operated, except where the failure to have
such Permits would not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, neither Seller
has received any written notification that it is in violation of any of
such Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority applicable to
it, except for notifications of violations which would not, individually or
in the aggregate, have a Material Adverse Effect. The Sellers are in
compliance with all Permits, laws, statutes, orders, rules, regulations,
ordinances, or judgments of any governmental or regulatory body or
authority applicable to Purchased Assets, except for violations which, in
the aggregate, would not have a Material Adverse Effect.
5.20. Regulation as a Utility. O&R and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania as set forth on Schedule 5.20(a)(i), and in no
other State. Con Edison is regulated as a public utility in the State of
New York as set forth on Schedule 5.20(a)(ii), and in no other state.
Except as set forth on Schedule 5.20(b), the Sellers are not subject to
regulation as a public utility or public service company (or similar
designation) by the United States, any State of the United States, any
foreign country or any municipality or any political subdivision of the
foregoing.
5.21. Taxes. Except as set forth in Schedule 5.21: (a) no
notice of deficiency or assessment has been received from any taxing
authority with respect to liabilities for Taxes of Sellers in respect of
the Purchased Assets, which have not been fully paid or finally settled,
and any such deficiency shown in Schedule 5.21 is being contested in good
faith through appropriate proceedings; (b) there are no outstanding
agreements or waivers extending the applicable statutory periods of
limitation for Taxes associated with the Purchased Assets for any period;
(c) there are no rulings or closing agreements executed with any taxing
authority relating to the Purchased Assets that will be binding upon Buyer
after the Closing; (d) none of the Purchased Assets is property that is
required to be treated as being owned by any other person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the
Code or "tax-exempt use" property within the meaning of Section 168(h) of
the Code; and (e) there are no powers of attorney in effect relating to
Taxes relating to the Purchased Assets for any Post-Closing period.
5.22. Intellectual Property. Sellers have all right, title
and interest in or valid and binding rights under contract to use the
Intellectual Property relating to the Purchased Assets. Sellers have not
received notice that it is infringing any Intellectual Property of any
other Person in connection with the operation or business of the Purchased
Assets, no claim is pending or has been made to such effect that has not
been resolved and neither Seller is infringing any Intellectual Property of
any other Person the effect of which, individually or in the aggregate,
would have a Material Adverse Effect.
5.23. Year 2000 Readiness. O&R has have informed Buyer of
its analysis of, the status of development of contingency plans for, and
forecasted expenditures with respect to Year 2000 readiness of material
computer software and computer firmware comprising the Purchased Assets, as
such analysis, contingency plan development and forecast of expenditures
exist on the date hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Sellers as follows:
6.1. Organization. The Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to the Sellers complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2. Authority Relative to this Agreement. The Buyer has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Managers
or Members of the Buyer and the Board of Directors of both Southern Energy,
Inc. and The Southern Company and no other company proceedings on the part
of the Buyer or such Affiliates are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Buyer, and assuming
that this Agreement constitutes a valid and binding agreement of the
Sellers, subject to the receipt of the Buyer Required Regulatory Approvals
and the Sellers Required Regulatory Approvals, constitutes a valid and
binding agreement of the Buyer, enforceable against the Buyer in accordance
with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
6.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and the Sellers Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Buyer nor the purchase
by the Buyer of the Purchased Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) and except for the
filings by the Buyer and the Sellers required by the HSR Act (the filings
and approvals referred to in Schedule 6.3(a) and with respect to the HSR
Act are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby.
6.4. Operating Easements. Buyer shall grant Operating Easements
to O&R as agreed to pursuant to the procedures set forth in the Continuing
Site/Interconnection Agreement.
6.5. Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.5, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.6. Availability of Funds. The Buyer has sufficient funds
available to it or will receive binding written commitments from
responsible financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets.
Except as described in Schedule 7.1, during the period from the date of
this Agreement to the Closing Date, the Sellers will operate and maintain
the Purchased Assets according to their ordinary and usual course of
business consistent with Good Utility Practice. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement
or as described in Schedule 7.1, prior to the Closing Date, without the
prior written consent of the Buyer (unless such consent would be prohibited
by law), the Sellers will not with respect to the Purchased Assets:
(a) make any material change in the operations of the Purchased
Assets (including, without limitation, the levels of fuel inventory and
materials and supplies customarily maintained by the Sellers other than
consistent with past practice);
(b) except for the Scheduled Capital Expenditures, make any
capital expenditures with respect to the Purchased Assets or enter into any
contract or commitment therefor, except that (i) the Sellers shall make any
capital expenditures requested by the Buyer, provided that the Buyer will
reimburse Sellers for such capital expenditures at least five (5) Business
Days prior to the date payment for such expenditure is due, and (ii) the
Sellers shall make any capital expenditures deemed necessary by the Sellers
in accordance with Good Utility Practices ("Necessary Capital
Expenditures"), at Sellers' cost and expense, provided, however, that if
the Buyer requests that the Sellers make enhancements/upgrades with a cost
in excess of the cost of any Necessary Capital Expenditures, the Buyer
shall reimburse the Sellers for the cost of such enhancements/upgrades to
the extent the cost of such enhancement/upgrade exceeds the cost of the
Necessary Capital Expenditure at the time such enhancement/upgrade is
performed;
(c) sell, lease (as lessor), transfer or otherwise dispose of,
any of the Purchased Assets, other than assets used, consumed or replaced
in the ordinary course of business consistent with Good Utility Practice
and not mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Assets other than Permitted
Encumbrances in the ordinary course of business;
(d) except for the Scheduled Maintenance Expenditures, make any
maintenance expenditures, except that (i) the Sellers shall make any
maintenance expenditures requested by the Buyer provided that the Buyer
will reimburse Sellers for such maintenance expenditures at least five (5)
Business Days prior to the date payment for such expenditure is due, and
(ii) the Sellers shall make any maintenance expenditures deemed necessary
by the Sellers in accordance with Good Utility Practice ("Necessary
Maintenance Expenditures") at Sellers' cost and expense, provided, however,
that if the Buyer requests that the Sellers make enhancements / upgrades
with a cost in excess of the cost of any Necessary Maintenance
Expenditures, the Buyer shall reimburse the Sellers for the cost of such
enhancements / upgrades to the extent the cost of such enhancement /
upgrade exceeds the cost of the necessary maintenance expenditure at the
time such enhancement/upgrade is performed;
(e) amend or terminate prior to the expiration date, or waive
any material term or give consent to any material request with respect to
any of the Sellers Agreements, Permits or Environmental Permits, except to
the extent that such amendment, termination, waiver or consent (i) will not
have a material impact on operations of the Purchased Assets, including the
cost of said operations or (ii) is required by Applicable Law, including
Applicable Environmental Law;
(f) enter into agreements for the purchase or sale of fuel
(whether commodity or transportation):
(i) that extend more than sixty (60) days beyond April 30,
1999 if, in the aggregate, such agreements have remaining payment
obligations of more than $30 million after April 30, 1999; or
(ii) that extend more than thirty (30) days beyond October
31, 1999 if, in the aggregate, such agreements have remaining
payment obligations of more than $10 million after October 31,
1999; provided, however, that O&R shall consult with the Buyer
regarding purchases or sales of fuel in excess of $15 million if
such commitments to purchase or sell will extend beyond April 30,
1999. The parties further agree to adjust the dates in this
Section 7.1(f) if the Closing is anticipated to occur after
April 30, 1999. Such adjustment will reflect the amount of time
beyond April 30, 1999 by which the Closing is expected to occur
at the time such an agreement is entered;
(g) enter into any power sales commitments:
(i) having a term greater than six (6) months and that
extends beyond April 30, 1999 if the aggregate energy under such
commitment and all other then outstanding commitments not
previously consented to by the Buyer would in Sellers' judgment
reasonably be expected to exceed 150,000 MW hours delivered after
April 30, 1999; or
(ii) having a term greater than six (6) months and that
extends beyond October 31, 1999 if the aggregate energy under
such commitment and all other then outstanding commitments not
previously consented to by the Buyer would in Sellers' judgment
reasonably be expected to exceed 75,000 MW hours delivered after
October 31, 1999;
provided, however, Sellers shall consult with the Buyer regarding entering
into any power sales commitments in excess of $5 million if such
commitments will extend beyond April 30, 1999. The parties further agree to
adjust the dates in this Section 7.1(g) if the Closing is anticipated to
occur after April 30, 1999. Such adjustment will reflect the amount of
time beyond April 30, 1999 by which the Closing is expected to occur at the
time such an agreement is entered;
(h) sell, lease or otherwise dispose of Emission Allowances
except to the extent necessary to operate the Purchased Assets in
accordance with this Section 7.1;
(i) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (h); or
(j) make any new, or change any current, election with respect
to Taxes affecting the Purchased Assets.
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, during ordinary business hours and upon
reasonable notice (i) O&R will give the Buyer and the Buyer Representatives
reasonable access to its managerial personnel who are employed in
connection with the Purchased Assets and to all books, records, plants,
offices and other facilities and properties constituting the Purchased
Assets to which the Buyer is permitted access by law, (ii) Sellers shall
permit the Buyer to make such reasonable inspections thereof as the Buyer
may reasonably request, including conducting environmental sampling at, on
and underneath the Purchased Assets and performing compliance audits at the
Purchased Assets, if Buyer reasonably deems such sampling necessary after
reviewing further information which becomes available after the date
hereof, so long as Sellers provide their consent to such sampling, which
consent shall not be unreasonably withheld, (iii) O&R will cause its
officers, engineers, operations and maintenance personnel and advisors to
furnish the Buyer with such financial and operating data, Tax Returns
(other than Income Tax Returns) and other information with respect to the
Purchased Assets as the Buyer may from time to time reasonably request and
assist Buyer in such inspections; (iv) Sellers cause its officers and
advisors to furnish the Buyer a copy of each report, schedule or other
document filed or received by either Seller with or from the SEC, NYPSC,
NJBPU, PAPUC, FERC, ISO or other governmental authority with respect to the
Purchased Assets; provided, however, that (A) any such investigation shall
be conducted in such a manner as not to interfere unreasonably with the
operation of the Purchased Assets, (B) neither Seller shall be required to
take any action which would constitute a waiver of the attorney-client
privilege and (C) neither Seller need supply the Buyer with any information
which it is under a legal obligation not to supply; provided, however, that
Sellers shall have used commercially reasonable efforts to have such
obligations waived. Notwithstanding anything in this Section 7.2 to the
contrary, (i) O&R will only furnish or provide such access to employee
medical records only as is permitted by law, and (ii) O&R will furnish or
provide such access to personnel records only to the extent that the
employee to which the personnel record relates has given its consent to the
Sellers.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of Section 11.2 of this Agreement shall be treated as
Confidential Information.
(c) Commencing February 1, 1999, the Buyer shall have the right
to physically locate one designated representative (the "Designated
Representative") of the Buyer at an office or in workspace at O&R's
corporate offices to observe the operations of Bowline, as well as the
operations of the ▇▇▇▇▇▇ Generating Station, the hydroelectric generating
stations and the gas turbine generating stations, pursuant to the Other
Sales Agreements; provided, however, that the Buyer shall not unreasonably
interfere with the Seller's use of the Purchased Assets. O&R shall
coordinate site visits and provide the Designated Representative during
such period prior to the Closing access to O&R's managerial personnel. The
Designated Representative shall coordinate the Buyer's rights to access
under Section 7.2(a) hereof during such period prior to the Closing.
(d) For a period of seven (7) years after the Closing Date,
Sellers and their representatives shall have reasonable access to (i)
information on employees covered by the O&R Management Employee Transition
Program and (ii) all of the books and records of the Purchased Assets, as
the case may be, transferred to the Buyer hereunder to the extent that such
access (A) may reasonably be required by the Sellers in connection with
matters relating to or affected by the operation of the Purchased Assets
prior to the Closing Date and (B) is not otherwise prohibited by law. Such
access shall be afforded by the Buyer upon receipt of reasonable advance
written notice and during normal business hours. The Sellers shall be
responsible for any costs or expenses incurred by them pursuant to this
Section 7.2(d). If the Buyer shall desire to dispose of any such books and
records prior to the expiration of such seven (7) year period, the Buyer
shall, prior to such disposition, give the Sellers a reasonable opportunity
at the Sellers' expense, to segregate and remove such books and records as
the Sellers may select. Any information provided by Buyer to Sellers
pursuant to this Section 7.2(d) shall be deemed Confidential Information..
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Assets pursuant to this Agreement, including without
limitation, the use of the Sellers' and the Buyer's commercially reasonable
efforts to obtain all Permits and Environmental Permits necessary for the
Buyer to operate the Purchased Assets. Neither of the Parties shall,
without the prior written consent of the other Party, take or fail to take
any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this
Agreement or the Ancillary Agreements. From time to time after the date
hereof, without further consideration, the Sellers will, at their own
expense, execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order more effectively to vest in the Buyer good
title to the Purchased Assets. From time to time after the date hereof,
the Buyer will, at its own expense, execute and deliver such documents to
the Sellers as the Sellers may reasonably request in order to more
effectively consummate the sale of the Purchased Assets pursuant to this
Agreement. To the extent that any personal property lease, relating to any
assets ("Leased Assets") which are principally used by the Sellers for
generation purposes at the Purchased Assets, cannot be assigned to the
Buyer, the Sellers will use their commercially reasonable efforts to
acquire title to such Leased Assets and to include them in the Purchased
Assets before the Closing Date unless Buyer directs Sellers in writing not
to acquire any such Leased Asset. The Sellers' documented and reasonable
costs associated with acquiring title to such Leased Assets shall be paid
by the Buyer as part of the Purchase Price. Schedule 7.4 lists all of the
Leased Assets.
(b) To the extent that any Sellers' rights under any guaranties,
warranties and indemnification applicable to the Purchased Assets or the
Assumed Liabilities are nontransferable or nonassignable, Sellers shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
7.5. Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or
stock exchange rules or regulations and except that the parties may make
public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6. Consents and Approvals. (a) The Sellers and the Buyer
shall each file or cause to be filed with the Federal Trade Commission and
the United States Department of Justice any notifications required to be
filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The
parties shall consult with each other as to the appropriate time of filing
such notifications and shall use their best efforts to make such filings at
the agreed upon time, to respond promptly to any requests for additional
information made by either of such agencies, and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible
date after the date of filing. Buyer shall bear the cost of all filing
fees under the HSR Act.
(b) The Sellers and the Buyer shall cooperate with each other
and (i) promptly prepare and file all necessary documentation, (ii) effect
all necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Environmental Permits,
Permits, consents, approvals and authorizations of all governmental bodies
and (iv) use all reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each of
the foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, the Sellers Required Regulatory Approvals and the Buyer
Required Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which the Sellers or the Buyer is a
party or by which either of them is bound. The Sellers shall have the
right to review and approve in advance all characterizations of the
information relating to Purchased Assets; and each of the Sellers and the
Buyer shall have the right to review and approve in advance all
characterizations of the information relating to the transactions
contemplated by this Agreement which appear in any filing made in
connection with the transactions contemplated hereby. The parties hereto
agree that they will consult with each other with respect to the
transferring to the Buyer or the obtaining by the Buyer of all such
necessary Environmental Permits, Permits, consents, approvals and
authorizations of all third parties and governmental bodies. The Sellers
and the Buyer shall designate separate counsel with respect to all
applications, notices, petitions and filings (joint or otherwise) relating
to this Agreement and the transactions contemplated hereby on behalf of the
Sellers, on the one hand and the Buyer on the other hand, with all
governmental bodies. To the extent that a consent to an assignment of any
material Sellers Agreement cannot be obtained before the Closing Date, the
Sellers will enter into all such agreements with the Buyer as are necessary
to give the Buyer the rights, obligations and burdens of such Sellers
Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Sellers shall cooperate with Buyer's efforts in this regard and shall use
their best efforts to assist in the transfer or reissuance when so
requested by Buyer. In the event that Buyer is unable, despite
commercially reasonable efforts, to obtain a transfer or reissuance of one
or more Permits as of the Closing Date, Buyer may use the Permits issued to
Sellers to the extent permissible under applicable laws and regulations
provided (i) Buyer notified Sellers prior to Closing, (ii) Buyer continues
to make commercially reasonable efforts to obtain a transfer or reissuance
of such Permits after the Closing, and (iii) Buyer indemnifies Sellers for
any losses, claims or penalties suffered by Sellers in connection with the
Permit that is not transferred or reissued as of the Closing Date resulting
from Buyer's operation of the Purchased Assets following the Closing Date.
In no event shall Buyer use or otherwise rely on a Permit issued to Sellers
beyond one year after Closing unless Buyer has, after exercising its
commercially reasonable efforts, been unable to obtain same and such
reliance is not prohibited by law.
7.7. Fees and Commissions. The Sellers and the Buyer each
represent and warrant to the other that, except for ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation ("DLJ"), which is acting for and at the
expense of the Sellers, and Credit Suisse First Boston Corporation, which
is acting for and at the expense of the Buyer, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Sellers and the Buyer
will pay to the other or otherwise discharge, and will indemnify and hold
the other harmless from and against, any and all claims or liabilities for
all brokerage fees, commissions and finder's fees (other than as described
above) incurred by reason of any action taken by such party.
7.8. Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Sellers will join
in the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to the Sellers' approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for the Sellers'
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, the Sellers shall pay to the Buyer its proportionate share of the
amount shown as due on such Tax Return determined in accordance with the
Section 3.4 of this Agreement.
(c) On and after the Closing Date until the maturity or
redemption date of the Pollution Control Bonds which were issued to finance
or refinance all or a portion of the cost of the Pollution Control
Facilities (as defined hereinafter):
(i) Except as otherwise permitted in clause (ii) below,
Buyer will not change or permit to be changed the character or nature
of the use of those facilities listed in Schedule 7.8(c) hereto (the
"Pollution Control Facilities") from the manner Seller has used said
facilities prior to the sale of the Purchased Assets, unless such
changed use would constitute a use or purpose of the Pollution Control
Facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the Tax Reform Act of 1986, P.L. 99-514 (the "1986 Tax
Act"), to refund bonds described in section 1312(a) of the 1986 Tax
Act which, for purposes hereof, are assumed to have been issued to
finance facilities of the same character and use or purpose as the
Pollution Control Facilities;
(ii) Buyer and any transferee which becomes subject to the
provisions of the foregoing clause (i) by reason of this clause (ii)
will not sell or otherwise transfer any portion of the Pollution
Control Facilities unless (A) the transferee covenants to satisfy the
conditions of the foregoing clause (i) with respect to its ownership
and use of the Pollution Control Facilities or (B) the transfer
relates to personal property and is exclusively for cash the proceeds
of which will be expended within six (6) months of the date of receipt
on facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the 1986 Tax Act, to refund bonds described in section
1312(a) of said act which, for purposes hereof, are assumed to have
been issued to finance facilities of the same character and use or
purpose as said facilities;
(iii) Buyer will cooperate with O&R and use commercially
reasonable efforts to permit O&R to have access to the Pollution
Control Facilities at reasonable times to examine them; and
(iv) The foregoing clause (i) shall not be construed to
prevent Buyer (or any transferee) from ceasing to operate, maintain or
repair any element or item of the Pollution Control Facilities, the
operation, maintenance or repair of which becomes uneconomic to Buyer
because of damage or destruction or obsolescence (including physical,
functional or economic obsolescence), or because of any change in
government standards and regulations or the termination of the
operation of the Purchased Assets to which the element or item is an
adjunct. O&R shall notify Buyer when the Pollution Control Bonds have
matured or been redeemed.
(d) Each of the Buyer and the Sellers shall provide the other
with such assistance (including access to the Purchased Assets) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
(e) O&R will consult with and allow Buyer to participate in all
outstanding real property tax disputes concerning the Purchased Assets and
shall take such positions as Buyer may request consistent with the
positions previously communicated to Sellers by Buyer with respect to such
tax disputes, to assist Buyer in obtaining a tax agreement with respect to
such tax disputes for periods subsequent to the Closing Date. O&R will use
its commercially reasonable efforts to assist Buyer in obtaining an
agreement with the taxing authorities pursuant to which the assessed value
for real estate tax purposes of the Purchased Assets will be the lowest
value achievable. O&R shall not enter into any agreement with the taxing
authorities with respect to such real property tax disputes relating to
periods prior to the Closing Date without the written consent of Buyer
which Buyer shall not unreasonably withhold as long as O&R has complied
with this Section 7.8(e).
7.9. Supplements to Schedules. Prior to the Closing Date, the
parties shall supplement or amend the Schedules required by Articles V and
VI with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10. Employees. (a) Schedule 7.10(a) sets forth all collective
bargaining agreements to which O&R is a party in connection with the
Purchased Assets and all other labor agreements and amendments thereto,
that are or may be associated with the Purchased Assets (the "Collective
Bargaining Agreements"). Buyer shall offer employment to begin as of the
Closing Date to the O&R's employees who work in connection with the
Purchased Assets and who are included in the bargaining units covered by
the Collective Bargaining Agreements ("Hourly Employees"), and the Buyer
will assume the Collective Bargaining Agreements and all of O&R's
obligations thereunder, including, without limitation, the terms and
conditions of the employee benefit plans covering such hourly employees.
(b) Continued Employment; Service Credit. The Buyer shall, as
of the Closing Date, offer employment to the employees of O&R (who will be
listed on Schedule 7.10(b) by the Buyer), who worked at or directly
serviced the Purchased Assets, who were employees immediately prior to the
Closing Date, who were not Hourly Employees and who are approved by Buyer
(the "Management Employees"). The Buyer shall provide Schedule 7.10(b) to
O&R at least ninety (90) days prior to the date which the Closing is
anticipated to occur (but in no event later than February 1, 1999, or such
other date to which the Buyer and O&R mutually agree). The Management
Employees hired by the Buyer shall be given credit for all service with O&R
or its subsidiaries (and service credited by O&R or such subsidiary), to
the same extent as such service was credited for such purpose by O&R or
such subsidiary, under all employee benefit plans, programs and policies,
and fringe benefits of the Buyer in which they become participants for
purposes of eligibility, vesting and determination of level of benefits
(but not for purposes of benefit accrual). To the extent permissible under
the terms thereof and required by applicable law, the Buyer shall (i) waive
all limitations as to preexisting conditions exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Management Employees under any welfare benefit plans that such employees
may be eligible to participate in after the Closing Date, other than
limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Closing Date
under any welfare benefit plan maintained for the Management Employees
immediately prior to the Closing Date, and (ii) provide each Management
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Closing Date.
(c) Subject to applicable law, the Buyer shall maintain for a
period of at least one year after the Closing Date, without interruption,
such employee compensation, welfare and benefit plans, programs, policies
and fringe benefits as will, in the aggregate, provide benefits to the
Management Employees that are no less favorable than those provided
pursuant to such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits of the Sellers and their
subsidiaries, as in effect on the Closing Date. During the period between
the date hereof and the Closing Date, O&R shall use its best efforts to
keep available all current Management Employees for employment by the Buyer
(except those employees which the Buyer identifies in writing as Management
Employees which the Buyer does not intend to employ).
(d) Notwithstanding the Buyer's assumption of the Collective
Bargaining Agreement, the Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of O&R or any ERISA Affiliate of the
Sellers in connection with the assumption of such agreements or in
connection with hiring any of the Hourly Employees. All benefits accrued
under such Benefits Plans and all benefits currently payable as of the
Closing Date shall be and shall remain the obligation of O&R and any
individual covered under any such Benefit Plan that is a Group Health Plan
(as defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA)
and who is eligible for continued coverage under such Group Health Plan as
of the Closing Date, shall continue to be covered under such Group Health
Plan after Closing pursuant to the provisions of COBRA.
(e) O&R agrees to perform timely and discharge all requirements,
if any, under the WARN Act and under applicable state and local laws and
regulations for the notification of their employees arising from the sale
of the Purchased Assets to the Buyer up to and including the Closing Date.
The Buyer will cooperate with O&R to provide O&R with such information as
may be needed from the Buyer for inclusion in such notices, including
providing O&R at least ninety (90) days prior to the date on which the
Closing is anticipated to occur (but in no event, later than February 1,
1999 or such other date to which the Buyer and O&R mutually agree) with a
list of all of O&R's employees to whom the Buyer will make offers of
employment. After the Closing Date, the Buyer shall be responsible for
performing and discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the notification of its
employees with respect to the Purchased Assets.
(f) O&R shall be responsible for any payments required under its
severance plan, including severance payment and other benefit enhancements,
offered in connection with the transfer of the Purchased Assets. Within
thirty (30) days following the last day that any employee may elect to
participate in such plan, O&R shall provide Buyer with a list of all
electing employees. In any event, Buyer is not required to establish this
or any other severance or benefit plan.
(g) O&R shall comply with all of the requirements of COBRA
arising from this Agreement with respect to all employees of O&R employed
at the Purchased Assets who are not employed by Buyer.
(h) O&R shall pay, when due, to all Hourly Employees and
Management Employees hired by the Buyer pursuant to Section 7.10 hereof,
all compensation, bonus, severance, vacation and holiday compensation,
workers' compensation or other employment benefits which have accrued to
such Hourly Employees and Management Employees through and including the
Closing Date.
(i) Following the execution of this Agreement, O&R will use its
commercially reasonable best efforts to arrange meetings and interviews
with such employees of O&R as Buyer shall reasonably request.
(j) O&R shall not, prior to the Closing Date, with respect to the
Purchased Assets, (i) hire new employees or transfer current employees
prior to the Closing to work at the Purchased Assets, other than to fill
vacancies in existing positions in the reasonable discretion of Sellers,
(ii) take any action prior to the Closing to affect a material change in
the Collective Bargaining Agreement, or (iii) take any action prior to the
Closing to increase the aggregate benefits payable to the employees
employed in connection with the Purchased Assets, except (A) as otherwise
required by the terms of the Collective Bargaining Agreement obligations to
effects bargain, (B) as O&R shall reasonably deem appropriate in order to
comply with its obligations under the second sentence of Section 7.10(c)
above, (C) for retention bonuses payable to Management Employees on or
before the Closing Date and (D) increases in salary and benefits in the
ordinary course of business, consistent with past practice.
7.11. Risk of Loss. (a) From the date hereof through the
Closing Date, all risk of loss or damage to the property included in the
Purchased Assets shall be borne by the Sellers.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain, or is the subject of a
pending or (to the knowledge of the Sellers after reasonable inquiry and
investigation) contemplated taking which has not been consummated, the
Sellers shall notify the Buyer promptly in writing of such fact. If such
taking would have a Material Adverse Effect, the Buyer and the Sellers
shall negotiate in good faith to settle the loss resulting from such taking
(including, without limitation, by making a fair and equitable adjustment
to the Purchase Price) and, upon such settlement, consummate the
transaction contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Sellers has notified the Buyer of such taking, then the Buyer or the
Sellers may, if such taking relates to the Purchased Assets, terminate this
Agreement pursuant to Section 10.1(f).
(c) If, before the Closing Date all or any material portion of
the Purchased Assets are damaged or destroyed by fire or other casualty,
the Sellers shall notify the Buyer promptly in writing of such fact. If
such damage or destruction would have a Material Adverse Effect and the
Sellers have not notified the Buyer of its intention to cure such damage or
destruction within fifteen (15) days after its occurrence, the Buyer and
the Sellers shall negotiate in good faith to settle the loss resulting from
such casualty (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price and assigning any insurance
proceeds to Buyer at the Closing) and, upon such settlement, consummate the
transactions contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Sellers have notified the Buyer of such casualty, then the Buyer may
terminate this Agreement pursuant to Section 10.1(f).
7.12. Compliance with Cooling Water Usage Obligations. (a)
The Buyer shall assume and agree to perform any environmental cooling water
usage obligations that are imposed on Bowline under the Fourth Amended
Stipulation of Settlement and Judicial Consent Order in NRDC v. NYSDEC
among the New York State Department of Environmental Conservation, O&R, Con
Edison, Central ▇▇▇▇▇▇ Gas and Electric Corporation, New York Power
Authority, Natural Resources Defense Council, Scenic ▇▇▇▇▇▇, Inc., and the
▇▇▇▇▇▇ Riverkeeper Fund, Inc., executed by the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ on October 23, 1997 (the "Consent Order") in a manner consistent
with the cross-plant outage credit chart set forth in Attachment E to the
Consent Order.
(b) Notwithstanding the expiration of the Consent Order, for so
long as the July outage requirement at Bowline, as specified in paragraph 3
of the Consent Order, may be met by drawing 2.8 unit-days of outage from
Indian Point Unit No. 2's existing balance of unit-days of outage that were
accrued in excess of those required under the Settlement Agreement, as
provided for under paragraph 3 of the Consent Order, Con Edison shall
provide Buyer with such 2.8 unit-days of outage for use at Bowline at no
additional cost to either party.
(c) In subsequent permits, permit applications, and regulatory
and judicial proceedings pertaining to cooling water usage obligations at
Bowline which mandate outages at Bowline, including without limitation
obligations imposed pursuant to the Clean Water Act section402, New York
State Environmental Conservation Law Title 8, the Consent Order, or any
successor order or permits, the parties shall take all commercially
reasonable efforts to support, effect and implement arrangements for
allocating cross-plant outage credits among the facilities subject to the
Consent Order. Neither party shall be required to pay the other party for
such credits (or comparable rights) other than the actual incremental
costs, if any, incurred by one party to create and transfer such credits
(or comparable rights) to the other party.
(d) The parties shall take such actions as may be necessary to
(i) include Buyer in the working group composed of the electric generation
companies who are parties to the Consent Order, and (ii) impose the
conditions and provisions of this Section 7.12 upon all of its successors
and assigns.
7.13. Real Estate Matters. (a) Buyer shall obtain an American
Land Title Association ("ALTA") or New York Board of Title Underwriters
("NYBTU") owners standard form title policy commitment with respect to the
Real Property (the "Title Commitment") from a title company of Buyer's
choice (the "Title Company") covering title to the Real Property, together
with an ALTA 3.1 zoning endorsement, if available, including parking and
access, and such other endorsements as Buyer may reasonably request.
Sellers shall provide the Title Company and Buyer such information as the
Title Company or Buyer may reasonably request to assist the Title Company
in connection with the Title Commitment. Without limiting the foregoing,
Sellers shall provide the Title Company and Buyer a copy of the most recent
surveys in their possession regarding the Real Property. Promptly after
receiving the Title Commitment, Buyer shall notify Sellers in writing of
any defects in title which are not Permitted Encumbrances and would cause
title to the Real Property to be uninsurable (any of which is called herein
a "Defect of Title"). Buyer shall be deemed to have waived any objection
to any Defect of Title that was disclosed by the Title Commitment if Buyer
fails to notify Sellers of such Defect of Title within thirty (30) days
after receipt of such Title Commitment. With respect to the existence of
any Defect of Title that is not disclosed by the Title Commitment, but
which arises prior to Closing, Buyer shall immediately notify the Sellers
in writing of any such Defect of Title.
(b) O&R agrees that upon the written request of Buyer it will
consent and cause its affiliates to consent to the relocation of the
Operating Easements and Seller's Easements so long as (i) Buyer pays the
cost of such relocation, (ii) such relocation will be to space within
Buyer's ownership and will not materially adversely affect the operation of
O&R's or its respective affiliates' transmission and distribution business
except for the minimum downtime associated with the cut over for such
relocation process in accordance with Good Utility Practice, and (iii) the
Buyer's requested relocation is consistent with Good Utility Practices.
O&R further agrees to condition any grant or assignment by O&R of the
Operating Easements or Seller's Easements on the express agreement of its
transferee to be bound by the terms and conditions of this Section 7.13(b).
(c) As to any Operating Easement or Sellers' Easement not
currently of record or reserved or granted back to O&R at Closing, all of
which are to be granted by Buyer at Closing concurrently with the transfer
of title to Buyer and prior to any mortgage or other encumbrance, such
Operating Easements and Seller's Easements shall include standard cross-
indemnity provisions relating to personal injury, death or property damage
occurring as a result of gross negligence or willful misconduct in the use
of such Easements, whereby each party agrees to indemnify the other for the
consequences of the gross negligence or willful misconduct of those for
whom the indemnifying party is legally responsible.
7.14. Year 2000. O&R shall (a) use its best efforts to
cooperate with Buyer in formulating a plan to prepare the Purchased Assets
to be ready for Year 2000 computer-related issues with a target completion
date of October 1, 1999 and (b) perform until the Closing Date (or later,
at O&R's election, pursuant to the second sentence of Section 7.15 of this
Agreement) the tasks identified in such plan, consistent with Good Utility
Practices and the expenditures contemplated in O&R's Year 2000 plans
referred to in Section 5.23 hereof.
7.15. Scheduled Capital Expenditures and Scheduled Maintenance
Expenditures. The Sellers shall perform, or caused to be performed, the
Scheduled Capital Expenditures and the Scheduled Maintenance Expenditures,
at Sellers' cost, prior to the Closing Date. To the extent that Scheduled
Capital Expenditures and Scheduled Maintenance Expenditures are not
completed by the Closing Date, the Sellers either (i) shall cause the
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures to be
completed within a reasonable period of time following the Closing Date or
(ii) shall pay Buyer its reasonable costs to complete such unfinished
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures within
thirty (30) days of Sellers' receipt from Buyer of a reasonably detailed
invoice for such cost.
7.16. Expansion. The parties recognize that the Buyer may wish
to add additional generating capacity at Bowline site ("Intended Use") and
the value to Buyer for such Intended Use is included in the Purchase Price.
Accordingly, to the extent such action or inaction does not interfere with
or adversely affect O&R transmission and distribution business, O&R's
agrees that, at Buyer's cost, it: (a) will use commercially reasonable
efforts to cooperate with Buyer's reasonable request to remove or modify
any (i) Permitted Encumbrances which materially adversely affect Buyer's
Intended Use, or (ii) conditions (either physical or otherwise) which exist
at Bowline or at any of the Purchased Assets which would prevent, hinder,
or otherwise interfere with the Buyer's Intended Use, and (b) shall not,
and shall ensure that their respective affiliates shall not, oppose,
hinder, or interfere with Buyer's efforts to add such additional capacity
and shall cooperate with Buyer's other reasonable requests with respect
thereto.
7.17. Fuel Contract Renegotiation. At Buyers' request, O&R
shall exercise commercially reasonable efforts to cooperate with Buyer in
Buyer's efforts to renegotiate the Service Agreement for Service under OPT
Rate schedule, between Columbia Gas Contract Transmission Corp. and O&R,
dated July 1, 1991.
7.18. Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under the (i) Purchased Assets and (ii)
the "Purchased Asset" or "Purchased Assets," as defined in each of the
Other Sales Agreements, on or prior to the Closing Date ("Environmental
Insurance"), Sellers shall share equally with Buyer the cost of premiums
for such Environmental Insurance, up to a maximum payment by Sellers of
$200,000 in the aggregate for such insurance relating to (A) the Purchased
Assets and (B) the "Purchased Asset" and "Purchased Assets" as defined in
each of the Other Sales Agreements. If Buyer purchases such Environmental
Insurance, Buyer shall add each Seller as an additional insured.
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or
been terminated with no order, decree, judgment or injunction enjoining or
prohibiting the consummation of the transactions contemplated hereby having
been issued;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or governmental authority which
prevents or is reasonably likely to prevent the consummation of the
transactions contemplated hereby or by the Ancillary Agreements shall be
pending or shall have been issued and remain in effect (each party agreeing
to use its reasonable efforts to have any such injunction, order or decree
lifted) and no statute, rule or regulation shall have been enacted or
interpreted by any State or Federal government or governmental authority in
the United States which prohibits the consummation of the transactions
contemplated hereby;
(c) All Federal, State and local government orders, consents and
approvals required for the consummation of the transactions contemplated
hereby or by the Ancillary Agreements, including, without limitation, the
Sellers Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, shall have become Final Orders (a "Final Order" means action by
the relevant regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which any
waiting period prescribed by law before the transactions contemplated
hereby may be consummated has expired, and as to which all conditions to
the consummation of such transaction prescribed by law, regulation or order
have been satisfied), and such Final Order is in form and substance
reasonably acceptable to the party that sought the consent or approval
granted by such Final Order (for purposes of this clause (i), a Final Order
shall be deemed to be reasonably acceptable to such party if it complies in
all material respects with the terms and conditions of such party's
application therefor and contains no additional terms or conditions which
would have a Material Adverse Effect on such party or the operation of the
Purchased Assets); provided, however, that if at the time such order,
consent, or approval would otherwise be deemed to be a Final Order, there
shall be pending or threatened any appeal or challenge thereto, which, if
adversely determined, would cause such order, consent or approval to not be
reasonably acceptable to the party that sought such order, consent or
approval, then if such party who would be adversely affected notifies the
other parties that such a pending or threatened appeal or challenge exists
(such notification to be made as soon as reasonably practicable following
knowledge of such pending or threatened appeal or challenge, but in no
event later than fifteen (15) days from date on which any waiting period
prescribed by law before the transactions contemplated hereby may be
consummated has expired and all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied),
then such order, consent or approval shall be deemed to be a Final Order
only after all opportunities for rehearing or judicial review are exhausted
and provided, further, that if the designation of an order, consent or
approval as a Final Order shall be deferred pursuant to the foregoing
provision, the Termination Date shall be automatically extended for a
period of time equal to the period of time for which the designation as a
Final Order has been deferred; and
(d) All consents and approvals required under the terms of any
note, bond, mortgage, indenture, contract or other agreement to which the
Sellers or the Buyer, or any of their subsidiaries, is a party for the
consummation of the transactions contemplated hereby shall have been
obtained, other than those (i) which if not obtained, would not, in the
aggregate, have a Material Adverse Effect, or (ii) for which an agreement
which is described in the last sentence of Section 7.6(b) has been entered
into.
8.2. Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) There shall not have occurred and be continuing, a Material
Adverse Effect, including, without limitation, any Material Adverse Effect
regarding water usage at Bowline;
(b) The Sellers shall have performed and complied with the
covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and the
representations and warranties of the Sellers set forth in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date, and the Buyer
shall have received a certificate to that effect signed by an authorized
officer of each Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of each Seller, dated the Closing Date, to the effect
that to the best of such officers' knowledge, after reasonable inquiry and
investigation, the conditions relating to such Seller and set forth in
Sections 8.2(a) and (b) have been satisfied;
(d) The "Closing" as defined in the ▇▇▇▇▇▇ Generating Station
Sales Agreement between O&R and Southern Energy ▇▇▇▇▇▇, L.L.C., dated as of
the date hereof, shall have occurred or shall occur concurrently with the
Closing hereunder;
(e) The Buyer shall have received an opinion from Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, dated the Closing Date and satisfactory in form
and substance to the Buyer and its counsel, substantially to the effect
that:
(1) O&R is a corporation organized, existing and in good
standing under the laws of the State of New York and has the corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action taken
on the part of O&R.
(2) this Agreement and the Ancillary Agreements have been
executed and delivered by O&R and (assuming that the Buyer Required
Regulatory Approvals are obtained) are valid and binding obligations of
O&R, enforceable against O&R in accordance with their terms, except that
such enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity);
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by O&R will not (A) constitute a
violation of the Certificate of Incorporation or By-Laws of O&R, or (B) to
counsel's knowledge constitute a violation or default under those
agreements or instruments set forth on a schedule to this opinion;
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any federal or New York
governmental authority is necessary for the consummation by O&R of the
Closing other than (i) the Sellers Required Regulatory Approvals, which are
addressed below, (ii) declarations, filings or registrations with, or
notices to, or authorizations, consents or approvals relating to Permits
and Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, would not, individually or in the aggregate have a
Material Adverse Effect or prevent O&R from performing its obligations
hereunder; and
(5) The ▇▇▇▇ of Sale, the Instrument of Assumption and the
other agreements described in Section 4.3 are in proper form to transfer to
Buyer such title to the Purchase Assets as was held by O&R.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel which are reasonably acceptable to Buyer and admitted in such
other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of fact upon certificates furnished by O&R
and appropriate officers and directors of O&R and by public officials.
(f) The Buyer shall have received an opinion from ▇▇▇▇▇, Danzig,
Scherer, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP (New Jersey Counsel), Nixon, Hargrave,
Devans & ▇▇▇▇▇, LLP (New York Counsel) and ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
(Pennsylvania Counsel), or other local regulatory counsel for O&R
reasonably acceptable by Buyer, dated the Closing Date and satisfactory in
form and substance to the Buyer and its counsel, substantially to the
effect that: no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any federal governmental authority or
any governmental authority in the States of New York, New Jersey and
Pennsylvania is necessary for the consummation by O&R of the Closing other
than (i) the Sellers Required Regulatory Approvals, which have been
obtained and are in full force and effect with such terms and conditions as
were imposed by the applicable governmental authorities, (ii) declarations,
filings or registrations with, or notices to, or authorizations, consents
or approvals relating to Permits and Environmental Permits and (iii) such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not, individually or in the
aggregate, have a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel which are reasonably acceptable to Buyer and admitted in such
other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of fact upon certificates furnished by O&R
and appropriate officers and directors of O&R and by public officials.
(g) The Buyer shall have received an opinion from the General
Counsel of Con Edison, which shall be reasonably acceptable to Buyer, dated
the Closing Date and satisfactory in form and substance to the Buyer and
its counsel, substantially to the effect that:
(1) Con Edison is a corporation organized, existing and in
good standing under the laws of the State of New York and has the corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby; and the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by requisite corporate action taken on the part
of Con Edison;
(2) this Agreement has been executed and delivered by Con
Edison and (assuming that the Sellers Required Regulatory Approvals and the
Buyer Required Regulatory Approvals are obtained) is a valid and binding
obligation of Con Edison, enforceable against Con Edison in accordance with
its terms, except that such enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity);
(3) the execution, delivery and performance of this
Agreement by Con Edison will not constitute a violation of the Certificate
of Incorporation or By-Laws of Con Edison;
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any federal governmental
authority is necessary for the consummation by Con Edison of the Closing
other than (i) the Sellers Required Regulatory Approvals, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and Environmental
Permits and (iii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made, would
not, in the aggregate have a Material Adverse Effect.
(5) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any federal governmental
authority or any governmental authority in the State of New York is
necessary for the consummation by Con Edison of the Closing other than (i)
the Sellers Required Regulatory Approvals, which have been obtained and are
in full force and effect with such terms and conditions as were imposed by
the applicable governmental authorities, (ii) declarations, filings or
registrations with, or notices to, or authorizations, consents or approvals
relating to Permits and Environmental Permits and (iii) such declarations,
filings, registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel admitted in such other jurisdictions. Any opinions relied upon
by such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of fact
upon certificates furnished by Con Edison and appropriate officers and
directors of Con Edison and by public officials.
(h) Buyer shall have received the Title Commitment showing the
Real Property to be insured as subject only to Permitted Encumbrances, and
the effective date of the Title Commitment shall have been updated to the
Closing Date and marked to show the satisfaction of all conditions to the
issuance of the title policy other than conditions within the control of
the Buyer; and
(i) Buyer shall have obtained a certificate of the Secretary of
each Seller identifying by name and title and bearing the signature of the
officer of such Seller authorized to execute and deliver this Agreement and
the other agreements and instruments contemplated hereby.
8.3. Conditions to Obligations of the Sellers. The obligation
of the Sellers to effect the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) The Buyer shall have performed its covenants and agreements
contained in this Agreement required to be performed on or prior to the
Closing Date;
(b) The representations and warranties of the Buyer set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date;
(c) The Sellers shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officers' knowledge, the conditions set forth in
Sections 8.3(a) and (b) have been satisfied; and
(d) The Sellers shall have received an opinion from ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP, counsel for the Buyer, dated the Closing Date and satisfactory
in form and substance to the Sellers and their counsel, substantially to
the effect that:
(1) The Buyer is a limited liability company organized,
existing and in good standing under the laws of the State of Delaware and
has the requisite power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby; and the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have been
executed and delivered by the Buyer and (assuming that the Sellers Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are
obtained) are valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought;
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer will not constitute a
violation of the Certificate of Formation or Limited Liability Company
Agreement (or other similar governing documents), as currently in effect,
of the Buyer; and
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental authority is
necessary for the consummation by the Buyer of the Closing other than (i)
the Buyer Required Regulatory Approvals, all of which have been obtained
and are in full force and effect with such terms and conditions as shall
have been imposed by any applicable governmental authority, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and Environmental
Permits and (iii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made, would
not, in the aggregate have a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United States
and the State of New York, such counsel may rely upon opinions of counsel
admitted to practices in such other jurisdictions. Any opinions relied
upon by such counsel as aforesaid shall be delivered together with the
opinion of such counsel. Such opinion may expressly rely as to matters of
facts upon certificates furnished by appropriate Members and Managers of
the Buyer and its subsidiaries and by public officials.
8.4. Extension of Closing Date. If the approval by the FERC of
the establishment of the ISO (the "ISO Approval") shall not have been
obtained on or prior to the Condition Fulfillment Date, the parties agree
to defer the Closing Date until the date (the "Deferred Closing Date")
which is the earlier of (a) the last day in the month in which the ISO
Approval is deemed final under applicable law, provided that if there are
less than five (5) Business Days in the month in which the ISO Approval is
deemed final, then the last day in the month which follows the month in
which the ISO Approval is
deemed final, and (b) August 31, 1999; provid
however, that all
conditions set forth in Section 8.2(a) and all conditi
set forth in
Section 8.2(b) regarding the representations and warran
of Seller shall
be deemed to be fulfilled on the Deferred Closing D
unless the nonfulfillment of such conditions primarily results from the acts
or
omissions of Sellers or from the occurrence of facts or circumstances
primarily relate to the Sellers' ownership and/or operation, or the
physical condition, of the Purchased Assets. For purposes of this
Agreement, the "Condition Fulfillment Date" shall mean the date on which
all conditions set forth in Sections 8.1 and 8.2 shall have been fulfilled
but not earlier than the later of (i) the date on which all conditions set
forth in Section 8.3 have been fulfilled or waived and (ii) April 30, 1999.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. The Sellers shall share all
indemnification obligations and benefits arising under this Article 9 in
proportion to their ownership of the Purchased Assets; two-thirds (66.667%)
of all such benefits and obligations shall be allocated to Con Edison and
one-third (33.333%) of all such benefits and obligations shall be allocated
to O&R. In each instance the term "Sellers" is used in this Article 9,
such term shall mean each Seller in proportion to the allocation described
in the previous sentence.
(a) The Sellers generally, and not joint and severally will
indemnify, defend and hold harmless the Buyer, Buyer's affiliates, and
their respective Members, Managers, employees and agents (each a "Buyer
Indemnitee") from and against any and all causes of action, claims, demands
or suits (by any Person), losses, liabilities, damages (excluding
consequential and special damages), obligations, payments, costs, Taxes and
expenses (including, without limitation, the costs and expenses of any and
all actions, suits, proceedings, assessments, judgments, settlements and
compromises relating thereto and reasonable attorneys' fees and reasonable
disbursements in connection therewith) to the extent the foregoing are not
covered by insurance, (collectively, "Indemnifiable Losses"), asserted
against or suffered by the Buyer Indemnitee relating to, resulting from or
arising out of (i) any breach by the Sellers of any covenant or agreement
of the Sellers contained in this Agreement; (ii) the Excluded Liabilities;
(iii) the Excluded Assets; (iv) any breach of any representation in
Sections 5.1, 5.2 and 5.3 hereof; (v) Sellers' non-compliance with any bulk
sales or transfer laws of any jurisdiction in connection with the
transactions contemplated by this Agreement; or (vi) the gross negligence
or willful misconduct of Sellers, or their affiliates or their best
respective contractors while on Buyer's property (including, without
limitation, any easement provided the Sellers with respect to such
property) after the Closing to the extent such Indemnifiable Loss is not
caused by the negligence or willful misconduct of any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless the
Sellers, Sellers' Affiliates, and their respective directors, officers,
employees and agents (each, a "Seller Indemnitee") from and against any and
all Indemnifiable Losses asserted against or suffered by the Sellers
relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement or
(ii) the Assumed Liabilities; (iii) the operation of the Purchased Assets
after the Closing Date, (iv) any breach of any representation in Article VI
or (v) the gross negligence or willful misconduct of Buyer, its affiliates
or their respective contractors while on Seller's property after the
Closing, to the extent such Indemnifiable Loss is not caused by the
negligence or willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) The Sellers and the Buyer shall have indemnification
obligations with respect to Indemnifiable Losses asserted against or
suffered by the Sellers or the Buyer, as the case may be, to the extent
that the aggregate of all such Indemnifiable Losses exceed the
Indemnification Floor. It is agreed and understood that neither the
Sellers nor the Buyer, as the case may be, shall have any liability at any
time for Indemnifiable Losses asserted against or suffered by the other
party until the aggregate amount of Indemnifiable Losses asserted or
suffered by such other party under this Section 9.1 shall exceed the
Indemnification Floor, and then only to the extent that the aggregate
amount of Indemnifiable Losses exceeds the Indemnification Floor. The term
"Indemnification Floor" shall mean an amount equal to $200,000.
(g) The rights and remedies of the Sellers and the Buyer under
this Article IX are exclusive and in lieu of any and all other rights and
remedies which the Sellers and the Buyer may have under this Agreement for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement; (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be; or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b). Rights and
remedies under the Ancillary Agreements are as set forth therein.
9.2. Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (i) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (ii) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which a party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of any Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that
such Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 9.2(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty
(20) calendar days (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed
to take such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable expenses thereof.
Without the prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any settlement of (a) any Third Party Claim with
respect to Income Taxes or (b) any other Third Party Claim which would lead
to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party claim without
leading to liability or the creation of a financial or other obligation on
the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer (other than with respect to Income Taxes) within ten (10) calendar
days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim (other than with respect to
Income Taxes) at any time, provided that in such event the Indemnitee shall
waive any right to indemnity hereunder unless the Indemnitee shall have
first sought the consent of the Indemnifying Party in writing to such
payment, settlement or compromise and such consent was unreasonably
withheld or delayed, in which event no claim for indemnity therefor
hereunder shall be waived.
(d) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) days)
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the
Indemnifying Party will be deemed to have accepted such Direct Claim. If
the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination. (a) This Agreement may be terminated at any
time prior to Closing Date, by mutual written consent of the Buyer and the
Sellers.
(b) This Agreement may be terminated by the Sellers jointly or
Buyer if (i) the Closing shall not have been consummated on or before
September 30, 1999 (the "Termination Date"); provided that the right to
terminate this Agreement under this Section 10.1(b) shall not be available
to either Seller or Buyer if its failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Closing Date to occur on or before such date; and provided, further, that
if on September 30, 1999 the conditions to the Closing set forth in Section
8.1(c) shall not have been fulfilled but all other conditions to the
Closing shall be fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be the day which is eighteen (18) months from the
date of this Agreement.
(c) This Agreement may be terminated by either the Sellers
jointly or the Buyer if (i) any governmental or regulatory body, the
consent of which is a condition to the obligations of the Sellers and the
Buyer to consummate the transactions contemplated hereby, shall have
determined not to grant its consent, or shall condition such consent upon
any material change to the terms of this Agreement or the Ancillary
Agreements or upon any other condition that materially and adversely
affects the value of the transactions contemplated herein or therein for
either party, and all appeals of such determination shall have been taken
and have been unsuccessful; (ii) any court of competent jurisdiction in the
United States or any State shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby or in the Ancillary Agreements and such
order, judgment or decree shall have become final and nonappealable; or
(iii) any statute, rule or regulation shall have been enacted or
interpreted by any State or Federal government or governmental agency in
the United States which prohibits the transactions contemplated herein or
in the Ancillary Agreements.
(d) This Agreement may be terminated by the Buyer, if there has
been a material violation or breach by the Sellers of any agreement,
representation or warranty contained in this Agreement which (i) has
rendered the satisfaction of any condition to the obligations of the Buyer
impossible and such violation or breach has not been waived by the Buyer or
cured by Sellers within fifteen (15) days after receipt by Buyer of notice
specifying same or (ii) causes a Material Adverse Effect, of which Buyer
has notified Sellers, and which Sellers have not promptly exercised
commercially reasonable efforts to cure but in no event later than twenty
(20) days following such notification by Buyer.
(e) This Agreement may be terminated by the Sellers jointly, if
there has been a material violation or breach by the Buyer of any
agreement, representation or warranty contained in this Agreement which has
rendered the satisfaction of any condition to the obligations of the
Sellers impossible and such violation or breach has not been waived by the
Sellers or cured by Buyer within fifteen (15) days after receipt by Buyer
of notice specifying same.
(f) This Agreement may be terminated by either the Sellers
jointly or the Buyer in accordance with the provisions of Section 7.11(b)
or (c).
10.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein, such termination shall be without any further liability of
either party or parties to the other party or parties except as follows:
(a) in the event of termination of this Agreement by Sellers
pursuant to Section 10.1(e), Sellers shall have the right to pursue all
remedies available to them in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Sellers; and
(c) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn
from the agency or other person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the Sellers and the Buyer.
11.2. Confidentiality. (a) All information regarding a party
(the "Disclosing Party") that is furnished directly or indirectly to the
other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two (2) years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that,
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3. Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.4. No Survival. Subject to the provisions of Article X, each
and every representation, warranty and covenant contained in this Agreement
(other than (a) the covenants contained in Sections 3.2, 3.3, 3.4, 7.2(b),
7.2(c), 7.2(d), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10, 7.12, 7.13, 7.15, 7.16,
7.18, 9.1 and 9.2 and in Article XI (which covenants shall survive in
accordance with their terms), (b) the representations and warranties
contained in Sections 5.1, 5.2, 5.3, 6.1, 6.2 and 6.3 (which
representations and warranties shall survive for twelve (12) months from
the Closing) and (c) the representation and warranty in Section 5.21 (which
representation and warranty shall survive for the applicable statute of
limitations) shall expire with, and be terminated and extinguished by the
consummation of the sale of the Purchased Assets and the transfer of the
Assumed Liabilities pursuant to this Agreement and such representations,
warranties and covenants shall not survive the Closing Date; and none of
the Sellers, the Buyer or any officer, director, trustee or Affiliate of
either of them shall be under any liability whatsoever with respect to any
such representation, warranty or covenant.
11.5. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt on a Business
Day if during the normal business hours of the recipient, or if not, on the
next Business Day, if delivered personally or by facsimile transmission,
telexed or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to O&R, to:
Orange and Rockland Utilities, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to Con Edison, to:
Consolidated Edison Company of New York, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President
and General Counsel
with copies to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
(c) If to Buyer, to:
Southern Energy Bowline LLC
c/o Southern Energy, Inc.
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice-President
with copies to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
and
Southern Company Services
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Associate General Counsel
11.6. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder. The Buyer acknowledges that O&R has entered into an
Agreement and Plan of Merger whereby O&R will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Sellers' receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Assets, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided, however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Sellers agree, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer
pledge or other disposition of rights and interests hereunder so long as
Sellers' rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Sellers and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Sellers,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8. Specific Performance. Sellers and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement.
11.11. Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement, including the Exhibits and
Schedules referred to herein or therein, and the Guaranty given to Sellers
by Southern Energy, Inc. embody the entire agreement and understanding of
the parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein or therein. It is expressly acknowledged and agreed
that there are no restrictions, promises, representations, warranties,
covenants or undertakings of the Sellers contained in any material made
available to the Buyer pursuant to the terms of the Confidentiality
Agreement (including the Information Memorandum, dated May 1998, previously
made available to the Buyer by the Sellers and DLJ). This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions other than the Confidentiality Agreement.
11.12. Bulk Sales or Transfer Laws. The Buyer acknowledges that
the Sellers will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by the
Sellers with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this
agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By /s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice Chairman and Chief Executive Officer
CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
By /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Operating Offider
SOUTHERN ENERGY BOWLINE, L.L.C.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President