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EXHIBIT 10.19
ASSET SALES AGREEMENT
BY AND BETWEEN
NIAGARA MOHAWK POWER CORPORATION
AND
NRG ENERGY, INC.
Dated as of December 23, 1998
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1. Definition ........................................................-1-
ARTICLE II
PURCHASE AND SALE
2.1. The Sale ......................................................... -9-
2.2. Exclude Assets ................................................... -9-
2.3. Assumed Obligations ..............................................-10-
2.4. Excluded Liabilities .............................................-13-
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price ...................................................-15-
3.2. Purchase Price Adjustment ........................................-15-
3.3. Allocation of Purchase Price .....................................-15-
3.4. Proration ........................................................-16-
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing ........................................-17-
4.2. Payment of Purchase Price ........................................-17-
4.3. Deliveries by the Seller .........................................-18-
4.4 Deliveries by the Buyer ..........................................-19-
ARTICLE V
REPRESENTATIONS AND WARRANTS OF THE SELLER
5.1. Organization; Qualification .......................................-19-
5.2. Authority Relative to this Agreement ..............................-20-
5.3. Consents and Approvals; No Violation ..............................-20-
5.4. Reports............................................................-21-
5.5. Company Reports; Financial Statements..............................-22-
5.6. Undisclosed Liabilities............................................-23-
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5.7. Absence of Certain Changes or Events...............................-23-
5.8. Title and Related Matters..........................................-23-
5.9. Leases.............................................................-24-
5.10. Insurance..........................................................-24-
5.11. Environmental Matters..............................................-24-
5.12. Labor Matters......................................................-25-
5.13. Real Estate........................................................-26-
5.14. Condemnation.......................................................-26-
5.15. Certain Contracts and Arrangements.................................-26-
5.16. Legal Proceedings, etc.............................................-27-
5.17. Permits............................................................-28-
5.18. Tax Matters........................................................-28-
5.19. Compliance with Laws...............................................-28-
5.20. Satisfaction of Required Standards.................................-28-
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
6.1. Organization.......................................................-29-
6.2. Authority Relative to this Agreement...............................-29-
6.3. Consents and Approvals; No Violation...............................-30-
6.4. Availability of Funds..............................................-31-
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets...............-31-
7.2. Access to Information..............................................-33-
7.3. Expenses...........................................................-36-
7.4. Further Assurances.................................................-36-
7.5. Public Statements..................................................-37-
7.6. Consents and Approvals.............................................-37-
7.7. Fees and Commissions...............................................-38-
7.8. Tax Matters........................................................-38-
7.9. Supplements to Schedules...........................................-42-
7.10. Employees..........................................................-42-
7.11. Risk of Loss.......................................................-46-
7.12. Tax Clearance Certificates.........................................-47-
7.13. NYSERDA Compliance.................................................-47-
7.14. Units 63 and 64....................................................-47-
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ARTICLE VIII
CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the Transaction...-48-
8.2. Conditions to Obligations of the Buyer.............................-49-
8.3. Conditions to Obligations of the Seller............................-51-
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification....................................................-53-
9.2. Defense of Claims..................................................-54-
9.3. Tax Contest........................................................-57-
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination........................................................-58-
10.2. Procedure and Effect of Termination................................-59-
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification.........................................-60-
11.2. Waiver of Compliance; Consents.....................................-60-
11.3. No Survival........................................................-60-
11.4. Notices............................................................-60-
11.5. Assignment.........................................................-61-
11.6. Governing Law......................................................-62-
11.7. Counterparts.......................................................-62-
11.8. Interpretation.....................................................-62-
11.9. Schedules and Exhibits.............................................-63-
11.10. Entire Agreement...................................................-63-
11.11. Bulk Sales or Transfer Laws........................................-63-
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ASSET SALES AGREEMENT
ASSET SALES AGREEMENT, dated as of December 23, 1998, (this
"Agreement") by and between Niagara Mohawk Power Corporation, a New York
corporation (the "Seller") and NRG Energy, Inc., a Delaware corporation (the
"Buyer")
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell,
the Purchased Assets (as defined herein) 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, 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 in this Section 1.1(a). For capitalized terms used
in this subsection (a) but not defined herein, see subsection (b).
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(2) "Ancillary Agreements" means the Site Agreement, the Swaption, the
Interconnection Agreement and the ▇▇▇▇▇▇▇ Agreement.
(3) "▇▇▇▇ 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 such Closing, substantially in the form of
Exhibit A hereto.
(4) "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 New
York City are authorized by law or other governmental action to close.
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(5). "Buyer Representatives" means the Buyer's accountants, employees,
counsel, environmental consultants, financial advisors and other authorized
representatives.
(6) "Capital Expenditures" means (i) those capital expenditures which
are identified on Schedule 7.1 and (ii) those anticipated environmental
remediation costs identified on Schedule 7.1.
(7) "CERCLA" means the Federal Comprehensive Environmental Response,
Compensation and Liability Act and any amendment thereto.
(8) "COBRA" means the Consolidated Omnibus Reconciliation Act of 1985,
as amended'
(9) "Code" means the Internal Revenue Code of 1986, as amended.
(10) "Collective Bargaining Agreement" means the Collective Bargaining
Agreement, dated as of April 15, 1996, between the Seller and Local 97 of the
International Brotherhood of Electrical Workers ("IBEW").
(11) "Confidentiality Agreement" means the Confidentiality Agreement,
dated September 1998, between the Seller and the Buyer.
(12) "Easements" means, with respect to the Real Estate, the
reservations of easements to be included in the deeds of conveyance with respect
to such assets and easements for the benefit of third parties.
(13) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, Easements. (other than those set forth in the Ancillary
Agreements), deed restrictions, encumbrances or charges of any kind.
(14) "Environmental Laws" means all Federal, state, local and foreign
laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or
judicial or administrative orders which relate to pollution or protection of the
environment, natural resources (including, without limitation, ambient air,
surface water, groundwater, land, surface and subsurface strata) or human health
and safety, including, without limitation, laws which
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relate to Releases or threatened Releases of Hazardous Substances or otherwise
relate 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) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(17) "Federal Power Act" means the Federal Power Act of 1935.
(18) "FERC" means the Federal Energy Regulatory Commission.
(19) "FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit substantially in the form of Exhibit B
hereto.
(20) "Governmental Entity" means any governmental or regulatory
authority, agency, commission, body or other governmental entity or subdivision,
other than the Internal Revenue Service or the New York Department of Taxation
and Finance.
(21) "Hazardous Substances" means 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 or substance found in any Environmental
Law, exposure to which is prohibited, limited or regulated by such 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) "▇▇▇▇▇▇▇ Agreement" means the power purchase Agreement, dated as
of the date hereof, between the Buyer and the Seller.
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(25) "Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum 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 to such Tax.
(26) "Indenture" means the Mortgage Trust Indenture, dated as of
October 1, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Power Corporation and The Marine
Midland Trust Company of New York, as amended, modified and supplemented from
time to time.
(27) "Instrument of Assumption" means the Instrument of Assumption
substantially in the form of Exhibit C hereto relating to the assumption by the
Buyer of the liabilities and obligations of the Seller.
(28) "Interconnection Agreement" means the Interconnection Agreement,
to be dated as of the Closing Date, in the form attached hereto as Exhibit D,
between the Seller and the Buyer.
(29) "Laws" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Entity.
(30) "Maintenance Expenditures" means those maintenance expenditures
which are identified on Schedule
(31) "Maintenance and Capital Expenditures Amount" means the aggregate
amount of all funds actually expended on, or for which liabilities were accrued
in accordance with generally accepted accounting principles applied on a
consistent basis with respect to, Maintenance Expenditures and Capital
Expenditures by the Seller, if any, during the period beginning on the date
hereof and ending on the Closing Date.
(32) "Material Adverse Effect" means any change or changes in, or
effect on, the Purchased Assets that is,
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or in the aggregate are, materially adverse to the business, assets, operations
or conditions (financial or otherwise) of the Purchased Assets, taken as a
whole, other than (i) any change or effect affecting the international,
national, regional or local electric industry as a whole, and not Seller
exclusively, and specifically 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 changes in Laws or in industry standards, (v) any materially
adverse change in or effect on the Purchased Assets which is cured (including by
the payment of money) by the Seller before the Termination Date and (vi) any
materially adverse change resulting from this Agreement and the transactions
contemplated hereby.
(33) "Permitted Encumbrances" means (i) the Easements, (ii) those
exceptions to title to the Purchased Assets listed in Schedule 5.8 or 5.14,
(iii) with respect to any date before the Closing Date, Encumbrances created by
the Indenture, (iv) statutory liens for current Taxes or assessments not yet due
or delinquent or the validity of which is being contested in good faith by
appropriate proceedings, provided that the aggregate amount so contested -does
not exceed $500,000, (v) mechanics', carriers', workers', repairers' and other
similar liens arising or incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of the Seller or the
validity of which are being contested in good faith by appropriate proceedings,
provided that the aggregate amount so contested does not. exceed $500,000, (vi)
zoning, entitlement, conservation restriction and other land use and
environmental regulations by governmental authorities, and (vii) such other
liens, imperfections in or failure of title, charges, easements, leases,
licenses, restrictions, Encumbrances, encroachments and defects which do not
materially detract from the value of or interfere with the present use of the
Purchased Assets and neither secure indebtedness, nor individually or in the
aggregate, create a Material Adverse Effect (the liens set forth in (iv) and (v)
being collectively referred to as "Indemnifiable Liens").
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(34) "Person" means an individual, a partnership, a limited liability
company, a joint venture, a corporation, a trust, an unincorporated organization
and a governmental entity or a department or agency thereof.
(35) "PSC" means the New York Public Service Commission.
(36) "Purchased Assets" means, subject to the Easements and Section
2.2, all of the right, title and interest in, to and under the real and
personal property, tangible or intangible, of the Seller and constituting
Dunkirk Steam Station and ▇▇▇▇▇▇▇ Steam Station or used principally for
generation purposes in connection with such sites including, but not limited to,
the following assets owned by the Seller:
(i) the real estate (including all buildings, structures and other
improvements thereon) described on Schedule 5.14 as associated with Dunkirk
Steam Station or ▇▇▇▇▇▇▇ Steam Station (the "Real Property");
(ii) all inventories of fuels, supplies, materials and spares located
on or in transit to the Real Property on the Closing Date, and all
warranties against manufacturers or vendors relating thereto, to the extent
that such warranties are freely transferable;
(iii) the machinery, equipment, vehicles, tools, furniture, furnishings
and other personal property located on the Real Property on the Closing
Date, including, without limitation, the items of personal property included
in Schedule 1.1.(a)(21)(iii) as being associated with Dunkirk Steam Station
or ▇▇▇▇▇▇▇ Steam Station and all warranties against manufacturers or vendors
relating thereto, to the extent that such warranties are freely
transferable;
(iv) the Transferable Permits listed on Schedule 1.1(a)(47) as being
associated with Dunkirk Steam Station or ▇▇▇▇▇▇▇ Steam Station;
(v) all books, operating records, operating, safety and maintenance
manuals, engineering design plans, blueprints, reproducibles, cad files and
as-built plans, specifications, procedures and similar
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items in the Seller's possession relating specifically to the aforementioned
assets other than books of account;
(vi) certain allowances associated with Dunkirk Steam Station and
▇▇▇▇▇▇▇ Steam Station as set forth on Schedule 1.1(a)(21)(vi); and
(vii) those vehicles which are leased and not owned by the Seller as to
which the Buyer elects to pay the Vehicle Amount pursuant to Section 3.2.
(37) "Release" means a release, spill, leak, discharge, disposal of,
pumping, pouring, emitting, emptying, injecting, leaching, dumping or otherwise
allowing to escape into or through the environment.
(38) "SEC" means the Securities and Exchange Commission.
(39) "Securities Act" means the Securities Act of 1933, as amended.
(40) "Site Agreement" means the Site Agreement, to be dated as of the
Closing Date, between the Seller and the Buyer, in substantially the form of
Exhibit E hereto (it being understood that such items as service points,
metering points, auxiliary load charges when the station is generating, and
services to be provided Seller, will be the subject of further negotiation and
agreement).
(41) "Subsidiary" when used in reference to any other Person means any
entity of which outstanding securities having ordinary voting power to elect a
majority of the Board of Directors or other Persons performing similar functions
of such entity are owned directly or indirectly by such other Person.
(42) "Swaption" means the International Swap Dealers Association, Inc.
Master Agreement, together with the Schedule (Multicurrency-Cross Border) and
the Confirmation, in the form of Exhibit F hereto between NRG Power Marketing
Inc. and the Seller, to be dated as of the Closing Date.
(43) "Taxes" means all taxes, charges, fees, levies, penalties or other
assessments imposed by any United
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States federal, state or local or foreign taxing authority, including, but not
limited to, income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto.
(44) "Tax Return" means any return, report, information return or other
document (including any related or supporting information) required to be filed
with any authority with respect to Taxes.
(45) "Transferable Permits" means those Permits (as hereinafter
defined) which are transferable by the Seller to the Buyer and are set forth in
Schedule 1.1(a)(47).
(46) "Transferring Employee Records" means all personnel files related
to the Seller's personnel who will become employees of the Buyer to the extent
such files pertain to (i) skill and development training and resumes, (ii)
seniority histories, (iii) salary and benefit information, (iv) Occupational
Safety and Health Administration medical reports, and (v) active medical
restriction forms.
(47) "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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Assumed Obligations 2.3(b)
Audit Date 5.5
Buyer Employee 7.10(a)
Buyer Required Regulatory Approvals 6.3(b)
Closing 4.1
Closing Date 4.1
Contracts 5.16(a)
Direct Claim 9.2(c)
Environmental Losses 9.1(a)
Environmental Permits 5.11(a)
ERISA Affiliate 5.13(a)
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1(c)
Indemnifiable Loss 9.1(a)
Indemnifying Party 9.1(d)
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Indemnitee 9.1(c)
Independent Appraiser 3.3
Inventory Adjustment Amount 3.2(a)
Non-Union Employee 7.10(c)
Permits 5.18
Purchased Assets Recitals
Purchase Price 3.1
Replacement Welfare Plans 7.10(d)
Seller Required Regulatory Approvals 5.3(b)
Tax Audit 9.3(a)
Termination Date 10.1(b)
Third Party Claim 9.2(a)
Transfer Taxes 7.8(a)
ARTICLE II
PURCHASE AND SALE
2.1. The Sale. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, at the Closing the Seller will sell,
assign, convey, transfer and deliver to the Buyer, and the Buyer will purchase
and acquire from the Seller, free and clear of all Encumbrances (except for
Permitted Encumbrances) the Purchased Assets.
2.2. Excluded Assets. Notwithstanding any provision herein to the
contrary, the Purchased Assets shall not include the following assets of the
Seller (herein referred to as the "Excluded Assets"):
(a) all cash, cash equivalents, bank deposits, accounts receivable, and
any income, sales, payroll or other tax receivables;
(b) certificates of deposit, shares of stock, securities, bonds,
debentures, evidences of indebtedness, interests in joint ventures,
partnerships, limited liability companies and other entities;
(c) the name "Niagara Mohawk" and any related or similar trade names,
trademarks, service marks or logos;
(d) the transmission, distribution, substation and communication
facilities and related support equipment
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described or referred to in Schedule 2.2(d) or described or referred to as an
"Excluded Asset" or an asset of "Seller" in the "Separation Document" (as
defined in the Site Agreement) or any document or exhibit referred to or
incorporated by reference in the Separation Document or which are otherwise
indicated in any such document as remaining with the Seller or any of its
Affiliates after the Closing,'
(e) any refund or credit (i) of Taxes paid or required to be reimbursed
by the Seller prior to the Closing Date in respect of the Purchased Assets,
whether such refund is received as a payment or as a credit against Taxes
payable or (ii) arising under any power purchase agreement that is subject to
cost of service regulation and relating to a period before the Closing Date;
(f) all personnel records, other than Transferring Employee Records, or
other records;
(g) the emission allowances, emission reduction credits and greenhouse
gas emissions listed on
Schedule 2.2(g) and
(h) the real property tax litigation listed on Schedule 2.2(h).
(i) the equipment installed at Dunkirk station relating to the biomass
system for utilization of biomass as an alternative/supplemental fuel, if Buyer
does not elect to purchase the biomass system and equipment.
2.3. Assumed Obligations. (a) On the Closing Date, the Buyer shall
deliver to the Seller the Instruments of Assumption pursuant to which the Buyer
shall assume and agree to discharge all of the liabilities and obligations of
the Seller, direct or indirect, known or unknown, absolute or contingent, which
relate to the Purchased Assets, other than Excluded Liabilities, in accordance
with the respective terms and subject to the respective conditions thereof,
including, without limitation, the following liabilities and obligations:
(i) all liabilities and obligations of the Seller under (a) the
Transferable Permits associated with the Purchased Assets in accordance with
the terms thereof, (b) contractual obligations of the Seller relating to
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the Purchased Assets which survive following the Closing, which are
transferable, which were entered into in the ordinary course of business and
which are not, individually or in the aggregate, material to the Purchased
Assets, and (c) liabilities for fuel and stores in transit; except in each
case, to the extent such liabilities and obligations, but for a breach
hereunder by the Seller, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same arise
out of any such breach;
(ii) all liabilities and obligations associated with the Purchased
Assets in respect of Taxes for which the Buyer is liable pursuant to
Sections 3.4 or 7.8;
(iii) all liabilities and obligations associated with the Purchased
Assets for which the Buyer has agreed to indemnify the Seller pursuant to
Section 9.1;
(iv) all liabilities and obligations with respect to the Employees
employed at the Purchased Assets after the Closing Date for which the Buyer
is responsible pursuant to Section 7.10 and the terms of the Collective
Bargaining Agreement;
(v) 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 (a) except as set
forth in Section 2.4(iii), any violation or alleged violation of
Environmental Law, whether prior to or on or after the Closing Date, with
respect to the ownership or operation of the Purchased Assets; (b) 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 or migrating from the Purchased Assets either
prior to or 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,
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or in other environmental media at or adjacent to the Purchased Assets; (c)
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; (d) 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 either
prior to or on or after the Closing Date at, on, in, under, adjacent to 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 (e) 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, as to all of the above, that nothing set forth in this subsection
2.3(a) shall require the Buyer to assume any liabilities that are expressly
excluded in Section 2.4;
(vi) all liabilities and obligations, other than fines, penalties or
assessments, of the Seller with respect to the Purchased Assets under the
agreements or consent orders set forth on Schedule 5.11;
(vii) all liabilities incurred by the Seller with respect to
Maintenance Expenditures and Capital Expenditures associated with the
Purchased Assets but only to the extent such liabilities were included in
the Maintenance and Capital Expenditures Amount;
(viii) any Taxes on the ownership, sale, operation or use of the
Purchased. Assets on or after the Closing Date; except for any Income Taxes
attributable to income (including, proceeds representing the Purchase Price
or proceeds of other asset sales) received by the Seller;
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(ix) all obligations of the Seller with respect to the operation and
ownership of the Purchased Assets pursuant to the agreements described in
Section 7.13; and
(x) the obligations of the Seller set forth on Schedule 5.16.
(b) All of the foregoing liabilities and obligations to be assumed by
the Buyer under Section 2.3(a) (excluding any Excluded Liabilities) are referred
to herein as the "Assumed obligations." It is understood and agreed that nothing
in this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be obligated
to pay, perform or otherwise discharge the following liabilities or obligations:
(i) any liabilities or obligations of the Seller in respect of any
Excluded Assets or other assets of the Seller which are not Purchased
Assets;
(ii) any liabilities or obligations in respect of Taxes attributable to
Purchased. Assets for taxable periods ending on or before the Closing Date,
except for Taxes for which the Buyer is liable pursuant to Section 3.4 or
Section 7.8;
(iii) any fines, penalties or assessments imposed by a Governmental
Entity with respect to a violation or alleged violation of Environmental Law
which occurred prior to the Closing Date and any liabilities, obligations,
or responsibilities relating to the disposal, storage, transportation,
discharge, Release, recycling, or the arrangement for such activities, by
the Seller, 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 2.4, "off-site location" does not
include any location to which Hazardous Substances disposed of or Released
at the Purchased Assets have migrated;
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(iv) except as provided in Section 16.3 of the Site Agreement, any
liabilities, obligations or responsibilities relating to (a) the property,
equipment or machinery within the switchyards for which the Seller will
retain either a fee interest or an Easement, (b) the transmission lines
delineated in the Easements or (c) any Seller's operations on, or usage of,
the Easements, including, without limitation, liabilities, obligations or
responsibilities arising as a result of or in connection with (1) any
violation or alleged violation of Environmental Law and (2) loss of life,
injury to persons or property or damage to natural resources, except to the
extent caused by Buyer;
(v) any liabilities or obligations relating to any personal injury,
discrimination, wrongful discharge, unfair labor practice or similar claim
or cause of action resulting from actions occurring prior to the Closing
Date;
(vi) any payment obligations of the Seller for goods delivered or
services rendered prior to the Closing;
(vii) any liabilities or obligations imposed upon, assumed or retained
by the Seller pursuant to the Site Agreement or any other Ancillary
Agreement; and
(viii) any liabilities, obligations or responsibilities relating to any
Benefit Plan or any "employee pension benefit plan" (as defined in Section
3(2) of ERISA) maintained by the Seller or any trade or business (whether or
not incorporated) which is under common control as a single employer, with
the Seller under Section 414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate"), including any multiemployer plan, maintained by or contributed
to by the Seller or any ERISA Affiliate, or as to which the Seller or any
ERISA Affiliate is obligated to contribute to, at any time, including any
such liability (A) to the Pension Benefit Guaranty Corporation under Title
IV of ERISA; (B) relating to a multiemployer plan; (C) with respect to
non-compliance with the notice and benefit continuation requirements of
COBRA; (D) with respect to any noncompliance with ERISA or any other
applicable laws; or (E) with respect to any suit, proceeding or claim which
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is brought against the Buyer, any Benefit Plan, ERISA Affiliate Plan, any
fiduciary or former fiduciary of any such Benefit Plan or ERISA Affiliate
Plan.
All such liabilities and obligations not being assumed pursuant to
Section 2.4 are herein called the "Excluded Liabilities."
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the. Purchased Assets shall
be $355,000,000, which may be adjusted pursuant to Section 3.2 hereof.
3.2. Purchase Price Adjustment. The Purchase Price shall be adjusted by
the following. If at Closing, the fuel inventory at the ▇▇▇▇▇▇▇ Steam Station
shall be more or less than 140,000 tons or the fuel inventory at the Dunkirk
Steam Station shall be more or less than 125,000 tons, as promptly as possible
following the Closing, the value of any shortfall shall be paid to the Buyer at
a rate of $35.65 per ton at ▇▇▇▇▇▇▇ and $33.60 per ton at Dunkirk and the value
of any excess shall be paid by the Buyer to the Seller at the same rates. If the
Buyer shall elect to purchase any leased vehicles listed on Schedule 3.2, it
shall pay the cost of such leases at Closing to the Buyer at the Closing. The
Seller shall pay to the Buyer any applicable Employee Transition Credit (as
determined pursuant to Exhibit 3.2) within one week following the Closing.
Within 3 days after receipt from the Seller of written notice of the amount
thereof, the Buyer shall pay to the Seller the Maintenance and Capital
Expenditures Amount applicable to the Purchased Assets.
3.3. Allocation of Purchase Price. The Buyer and the Seller shall use
their good faith best efforts to agree upon an allocation among the Purchased
Assets and the Ancillary Agreements of the Purchase Price consistent with
Section 1060 of the Code and the Treasury Regulations thereunder within 180 days
of the date of this Agreement but in no event less than 30 days prior to the
closing. Any post closing adjustments pursuant to Section 3.2 shall be jointly
made and agreed to within sixty (60) days following the Closing in a manner
consistent with the allocation
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determined pursuant to this Section 3.3. Each of the Buyer and the Seller agree
to file Internal. Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns, in accordance with such agreed allocation. Each of the
Buyer and the Seller shall report the transactions contemplated by the Agreement
for Tax purposes in a manner consistent with the allocation determined pursuant
to this Section 3.3 Each of the Buyer and the Seller agrees to provide the other
promptly with any other information reasonably required to complete Form 8594.
Each of the Buyer and the Seller shall notify the other in the event of an
examination, audit or other proceeding regarding the agreed upon allocation of
the Purchase Price.
3.4. Proration. (a) The Buyer and the Seller agree that all of the
items normally prorated, including those listed below, relating to the business
and operation of the Purchased Assets will be prorated as of the Closing Date,
with the Seller liable to the extent such items relate to any time period
through the Closing Date, and the Buyer liable to the extent such items relate
to periods subsequent to the Closing Date:
(i) except as provided in Section 7.8(a), Taxes, assessments and other
similar charges, if any, on or with respect to the business and operation of
the Purchased Assets and with respect to a Taxable Period that begins before
but does not end on the Closing Date shall be (1) prorated to the extent
such Tax is measured by time to the Seller biased on the number of days in
such Taxable Period, up to and including the Closing Date, and to the Buyer
biased on the number of days in such Taxable Period after the Closing Date,
and (2) to the extent such Tax is measured by income, receipts or pertains
to the business and operation of the Purchased Assets, allocated between
Buyer and Seller based on a closing of the books on the Closing Date with
respect to the business and operation of the Purchased Assets;
(ii) rent, Taxes and all other items payable by or to the Seller under
any of the power purchase agreements that are subject to cost of service
regulation;
(iii) sewer rents and charges for water, telephone, electricity and
other utilities; and
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(iv) rent under any leases of real or personal property included in the
Purchased Assets.
(b) In connection with the prorations referred to in (a) above, in the
event that actual figures are not available at the Closing Date, the proration
shall be based upon the actual Taxes or fees for the preceding year (or
appropriate period) for which actual Taxes or fees are available and such Taxes
or fees shall be reprorated upon request of either the Seller, on the one hand,
or the Buyer, on the other hand, made within sixty (60) days of the date that
the actual amounts become available. Recoveries from tax certiorari proceedings
shall be reduced by all costs and expenses, including attorneys' fees, prior to
proration. The Buyer shall cooperate with the Seller in the prosecution of tax
certiorari proceedings which have not been completed by the Closing Date. The
Seller and the Buyer agree to furnish each other with such documents and other
records as may be reasonably requested in order to confirm all adjustment and
proration calculations made pursuant to this Section 3.4.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject to the
satisfaction of the conditions contained in Article VIII of this Agreement, the
closing of the sale of the Purchased Assets contemplated by this Agreement (the
"Closing") will take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ in New York, at
10:00 A.M. (local time) on such date as the parties may agree which date is as
soon as practicable, but no later than fifteen (15) Business Days, following the
date on which all of the conditions contained in Article VIII have been
satisfied or waived; or at such other place or time as the parties may agree.
The date and time at which the Closing actually occurs is hereinafter referred
to as the "Closing Date."
4.2. Payment of Purchase Price. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, the Buyer will pay or cause to be paid to the Seller at the
Closing the Purchase Price in United
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States dollars by wire transfer of immediately available funds or by such other
means as are agreed upon by the Seller and the Buyer.
4.3. Deliveries by the Seller. At the Closing, the Seller will deliver
the following to the Buyer:
(a) A ▇▇▇▇ of Sale, duly executed by the Seller for the personal
property included in the Purchased Assets, in the form attached hereto as
Exhibit A;
(b) All consents, waivers or approvals obtained by the Seller with
respect to the Purchased Assets, the transfer of any Transferable Permit related
to the Purchased Assets, or the consummation of the transactions connected to
the sale of the Purchased Assets, contemplated by this Agreement, to the extent
specifically required hereunder;
(c) An opinion of counsel and certificate (as contemplated by Section
8.2) with respect to the Purchased Assets;
(d) One or more bargain and sale deeds with lien covenants conveying
the Real Estate related to the Purchased Assets, subject to the applicable
Easements and exceptions, duly executed and acknowledged by the Seller and in
recordable form along with TP-584 Forms and Equalization and Transfer Reports,
in the form attached hereto as Exhibit 4.3(d);
(e) A FIRPTA Affidavit executed by the Seller;
(f) 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; and
(g) Such other agreements, documents, instruments and writings,
including the Interconnection Agreement, the Site Agreement and Swaption, as are
required to be delivered by the Seller at or prior to the Closing Date pursuant
to this Agreement or otherwise required in connection herewith.
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4.4. Deliveries by the Buyer. At the Closing, the Buyer will deliver
the following to the Seller:
(a) The Estimated Purchase Price and any amounts payable under Section
3.4 by wire transfer of immediately available funds or such other means as are
agreed upon by the Seller and the Buyer;
(b) Opinions of counsel and certificates (as contemplated by Section
8.3) with respect to the Purchased Assets;
(c) The Instruments of Assumption with respect to the Assumed
Obligations, duly executed by the Buyer;
(d) All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the Buyer to
assume the Assumed Obligations related to the Purchased Assets in accordance
with this Agreement;
(e) All tax certificates applicable to the transfers contemplated by
this Agreement, including, without limitation, direct pay permits and tax
exemption certificates; and
(f) Such other agreements, documents, instruments and writings,
including the Interconnection Agreement, the Site Agreement and the Swaption, 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 SELLER
The Seller represents and warrants to the Buyer as follows (all such
representations and warranties, other than in Sections 5.1, 5.2, 5.3, 5.4 and
5.5, being made to the best knowledge of the Seller after reasonable inquiry or
investigation).
5.1. Organization; Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all
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requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as is now being conducted. The Seller
has heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect.
5.2. Authority Relative to this Agreement. The Seller has full
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
the Seller, and, assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Buyer, subject to the receipt of
the Seller Required Regulatory Approvals (as defined in Section 5.3) and the
Buyer Required Regulatory Approvals, constitute valid and binding agreements of
the Seller, enforceable against the Seller in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
5.3. Consents and Approvals; No Violation. (a) Other than obtaining
the Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, neither the execution and delivery of this Agreement and the
Ancillary Agreements by the Seller nor the sale by the Seller of the Purchased
Assets pursuant to this Agreement or performance under the Ancillary Agreements
will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of the Seller, (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (x) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not, individually or in the aggregate, create a Material
Adverse Effect or (y) for
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those requirements which become applicable to the Seller as a result of the
specific regulatory status of the Buyer (or any of its Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which the Buyer (or any of its Affiliates) is or proposes to be engaged;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation to which the Seller is a party or by which the Seller, 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, in the aggregate, would not, individually
or in the aggregate, create a Material Adverse Effect; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Seller, or any of its assets, which violation, individually or in the aggregate,
would create a Material Adverse Effect.
(b) Except for (i) any required approvals under the Federal Power Act,
(ii) any required approvals from the PSC, (iii) the approval, if required, of
the SEC pursuant to the Holding Company Act and (iv) the filings by the Seller
and the Buyer required by the HSR Act and the expiration or earlier termination
of all waiting periods under the HSR Act (the filings and approvals referred to
in clauses (i) through (iv) are collectively referred to as the "Seller Required
Regulatory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Seller of the transactions
contemplated hereby or by the Ancillary Agreements, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, will not, individually or in the
aggregate, create a Material Adverse Effect.
5.4. Reports. Since January 1, 1994, the Seller has filed or caused to
be filed with the SEC, the PSC and 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 the Seller as it relates to the purchased assets under each of
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the Securities Act, the Exchange Act, New York public utility laws, the Federal
Power Act, 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, and there are no material
misstatements or omissions in respect of such reports.
5.5. Company Reports; Financial Statements. The Seller has made
available to the Buyer each registration statement, report, proxy statement or
information statement prepared by it since December 31, 1997 (the "Audit
Date"), including (i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, (ii) the Company's Quarterly Reports on Form 10-Q for
the periods ended March 31, 1998, June 30, 1998 and September 30, 1998 and (iii)
the Company's Reports on Form 8-K dated February 18, 1998, June 30, 1998, July
2, 1998, September 28, 1998, October 23, 1998 and December 3, 1998, each in the
form (including exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed subsequent to the date hereof
and any amended reports, the "Company Reports"). As of their respective dates
(or, if amended, as of the date of such amendment), insofar as the Company
Reports relate to the Purchased Assets, the Company Reports did not, and any
Company Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. With
respect to the financial information relating to the Purchased Assets, each of
the consolidated balance sheets included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presents,
or will fairly present, the consolidated financial position of the Company and
its subsidiaries as of its date and each of the consolidated statements of
income and of changes in financial position included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents, or will fairly present, the results of operations, retained
earnings and changes in financial position, as the case may be, of the Company
and its subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be
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material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein.
5.6. Undisclosed Liabilities. Except as set forth in the Company
Reports, the Seller has no liability or obligation relating to the business or
operations of the Purchased Assets, secured or unsecured (whether absolute,
accrued, contingent or otherwise, and whether due or to become due), of a nature
required by generally accepted accounting principles as they have been
consistently applied by the Seller to be reflected in a corporate balance sheet
or disclosed in the notes thereto, which are not accrued or reserved against in
the Company Reports or disclosed in the notes thereto in accordance with
generally accepted accounting principles, except those which were incurred after
the date of the latest Company Report, all of which have been incurred in the
ordinary course of business.
5.7. Absence of Certain Chances or Events. Except as otherwise
contemplated by this Agreement, since September 30, 1998 there has not been: (a)
any Material Adverse Effect; (b) any damage, destruction or casualty loss,
whether covered by insurance or not, which, individually or in the aggregate,
created a Material Adverse Effect; (c) any entry into any agreement, commitment
or transaction (including, without limitation, any borrowing, capital
expenditure or capital financing) by the Seller, which is material to the
business or operations of the Purchased Assets; or (d) any change by the Seller,
with, respect to the Purchased Assets, in accounting methods, principles or
practices except as required or permitted by generally accepted accounting
principles.
5.8. Title And Related Matters. Seller holds an insurable fee simple
title to the Fossil Assets Real Property (it being understood that any title
insurance would reflect Permitted Encumbrances). Insurable fee simple title is
that which is insurable under an ALTA Owner's Policy (10-7-92) with New York
Endorsement Modifications ("New York Title Insurance"). Except for Permitted
Encumbrances, the Seller has good and valid title to the other Purchased Assets
which it purports to own that are reflected in the Company Reports (other than
those which have been disposed of since the date thereof in the ordinary course
of business), free and clear of all Encumbrances.
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5.9. Leases. There are no real property leases under which the Seller
is a lessee or lessor and which (x) are to be transferred and assigned to the
Buyer on the Closing Date and (y) (i) provide for annual payments of more than
$500,000 in the aggregate or $100,000 individually or (ii) are material to the
business, operations or financial condition of the Purchased Assets.
5.10. Insurance. Except as set forth in Schedule 5.10, all material
policies of fire, liability, worker's compensation and other forms of insurance
owned or held by the Seller and insuring the Purchased Assets are in full force
and effect, subject to the terms of each policy, 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 (other than retroactive premiums
which may be payable with respect to comprehensive general liability and
worker's compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which was riot
replaced on substantially similar terms prior to the date of such cancellation.
Except as described in Schedule 5.10, as of the date of this Agreement, the
Seller has not been refused insurance with respect to the Purchased Assets nor
has such coverage been limited by any insurance! carrier to which the Seller has
applied for any such insurance or with which it has carried insurance during the
last five years.
5.11. Environmental Matters. Except as disclosed in Schedule 5.11:
(a) The Seller holds, and is in compliance with, all material permits,
license and governmental authorizations ("Environmental Permits") required for
the Seller to conduct the business and operations of the Purchased Assets under
applicable Environmental Laws, and the Seller is otherwise in substantial
compliance with applicable Environmental Laws with respect to the business and
operations of 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 create a Material Adverse Effect;
(b) The Seller has not received any written request for information
under CERCLA or any similar State
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law with respect to any on-site location, except for such liability under such
laws as would not be reasonably likely to, individually or in the aggregate,
create a Material Adverse Effect nor has it been notified in writing that it is
a potentially responsible party under CERCLA or any similar State law; and
(c) The Seller has not entered into or agreed to any consent decree or
order, and is not subject to any outstanding judgment, decree, or judicial order
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Substances under any Environmental Law.
(d) To the Seller's best knowledge, except as described in Schedule
5.11, no Releases of Hazardous Substances have occurred at, from, in, on, or
under any Real Property, and no Hazardous Substances are present in, on, about
or migrating from any such Real Property that could give rise to an
Environmental Loss related to the Purchased Assets for which remediation
reasonably could be required, except in any such case to the extent that any
such Releases would not, individually or in the aggregate? create a Material
Adverse Effect.
The representations and warranties made in this Section 5.11 are the
Seller's exclusive representations and warranties relating to environmental
matters.
5.12. Labor Matters. The Seller delivered to the Buyer a copy of the
Collective Bargaining Agreement which is the only collective bargaining
agreement which relates to the business or operations of the Purchased Assets.
With respect to the business or operations of the Purchased Assets, except to
the extent set forth in Schedule 5.12 and except for such matters as will not,
individually or in the aggregate, create a Material Adverse Effect (a) the
Seller is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours;
(b) the Seller has not received written notice of any unfair labor practice
complaint against the Seller pending before the National Labor Relations Board;
(c) there is no labor strike, slowdown or stoppage actually pending or
threatened against or affecting the Seller; (d) the Seller has not received
notice that any representation petition respecting the employees of the Seller
has been filed with the National Labor Relations Board; (e) no arbitration
proceeding arising
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out of or under the Collective Bargaining Agreement is pending against the
Seller and (f) the Seller has not experienced any primary work stoppage in the
past five years. The Seller does not have any knowledge of any union (other
than IBEW) claiming to represent the employees associated with the Purchased
Assets and the Seller does not have any knowledge of any current union
organizing activities among its employees by any other such union, nor does any
question concerning representation exist concerning such employees.
5.13. Real Estate. Schedule 5.14 contains a schedule of title documents
identifying the Real Property. True and correct copies of any current surveys,
abstracts or title opinions in the Seller's possession and any policies of title
insurance in effect and in the possession of the Seller with respect to the Real
Property have been made available to the Buyer. The Real Property is encumbered
by the lien of a mortgage held by Bankers Trust Company, as successor trustee
under the Indenture which will be released or discharged at the Closing.
Schedule 5.14 also reflects that the Seller will be EXCEPTING AND RESERVING to
Seller fee simple title and/or a permanent Easement over parcels of land on
which the transmission, distribution, substation and communication facilities
and related support, equipment described or referred to in Section 2.2(d) are
located, together with access to those facilities, and those fee simple titles
and Easements identified as being reserved to seller in the deed or in Exhibit
"A" to be annexed to the deed, together with access to those parcels.
5.14. Condemnation. Neither the whole nor any part of the Real Estate
or any other real property or rights leased, used or occupied by the Seller in
connection with the ownership or operation of the Purchased Assets is subject to
any pending suit for condemnation or other taking by any public authority or any
other Person, and no such condemnation or other taking has been threatened.
5.15. Certain Contracts and Arrangements. (a) Except for (i) contracts,
agreements, personal property leases, commitments, understandings or instruments
which will expire prior to the Closing Date, (ii) agreements entered into in the
ordinary course of business that are not material to the Purchased Assets, (iii)
the Collective Bargaining Agreement and (iv) as set forth in Section 5.16
(contracts in (ii), (iii) and (iv) being the "Contracts"),
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the Seller is not a party to any written contract, agreement, personal property
lease, commitment, understanding or instrument which is material to the business
or operations of the Purchased Assets. Copies of the Contracts have been
available to the Buyer.
(b) Each of the Contracts (i) constitutes a valid and binding
obligation of the Seller, and to the best knowledge of the Seller constitutes a
valid and binding obligation of the other parties thereto, (ii) is in full force
and effect, and (iii) 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) There is not, under any of the Contracts, any default or event
which, with notice or lapse of time or both, would constitute a default on the
part of any of the parties 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, create a Material Adverse Effect.
(d) If the Site Agreement and Interconnection Agreement were in full
force and effect between Seller's generation business and the Seller's
transmission business on the date of this Agreement, (i) the, Seller's
generation business would be in material compliance with the terms thereof, and
(ii) except as provided in the Interconnection Agreement, there is no event or
condition that would enable or require the Seller's transmission business to (x)
notify the Seller's generation business of the necessity of an addition to or
modification of the Interconnection Facilities, as defined in Section 1.10 of
the Interconnection Agreement, (y) operate and/or purchase from the Seller's
generation business any of the equipment or facilities specified in Section 20.0
of the Site Agreement, or (z) discontinue Interconnection Service as provided
for in the Interconnection Agreement.
5.16. Legal Proceeding, etc. There are no claims, actions,
proceedings or investigations pending or threatened against or relating to the
Seller before any court, governmental or regulatory authority or body acting in
an adjudicative capacity, which, if adversely determined, individually or in the
aggregate, would create a Material
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Adverse Effect. The Seller is not subject to any outstanding judgment, rule,
order, writ, injunction or decree of any court, governmental or regulatory
authority which, individually or in the aggregate, would create a Material
Adverse Effect.
5.17. Permit. (a) The Seller has or will have by the Closing Date all
permits, subdivision approvals, variances, licenses, franchises and other
governmental authorizations, consents and approvals, other than with respect to
Environmental Laws, (collectively, "Permits") necessary to operate the business
of the Purchased Assets as presently conducted, except where the failure to have
such Permits would not, individually or in the aggregate, create a Material
Adverse Effect. The Seller has not received any written notification that it is
in violation of any of such Permits, or any law, statute, order, rule,
regulation, ordinance or judgment of any governmental or regulatory body or
authority applicable to it, except for notifications of violations which would
not, individually or in the aggregate, create a Material Adverse Effect. The
Seller is in compliance with all Permits, laws, statutes, orders, rules,
regulations, ordinances, or judgments of any governmental or regulatory body
or authority applicable to it, except for violations which, individually or in
the aggregate, do not create a Material Adverse Effect.
(b) Schedule 5.18(b) sets forth all material Permits and Environmental
Permits other than Transferable Permits (which are set forth on Schedule
1.1(a)(47)).
5.18. Tax Matters. With respect to the Purchased Assets and trades or
businesses associated with the Purchased Assets (i) all Tax Returns required to
be filed, other than those Tax Returns the failure of which to file would not
create a Material Adverse Effect, have been filed, and (ii) all material Taxes
shown to be due on such Tax Returns have been paid in full.
5.19. Compliance with Laws. The Seller is in compliance with all
applicable laws affecting the Purchased Assets except where the failure to be
in compliance would not, individually or in the aggregate, create a Material
Adverse Effect.
5.20. Satisfaction of Required Standards. (a) The Purchased Assets, as
currently installed and operated,
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satisfy the requirements set forth in the Interconnection Agreement, the Site
Agreement and the ▇▇▇▇▇▇▇ Agreement, except as otherwise set forth in such
agreements.
(b) The Excluded Assets do not include any properties, physical assets,
contracts or leases that are individually or in the aggregate, necessary for the
operation of the Purchased Assets.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS ARTICLE V, THE PURCHASED ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS,
WHERE IS, " AND THE SELLER IS NOT MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH
PURCHASED ASSETS, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows (all such
representations and warranties, except those regarding the Buyer, being made to
the best knowledge of the Buyer after reasonable inquiry or investigation).
6.1. Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted. The Buyer has
heretofore delivered to the Seller complete and correct copies of its
Certificate of Incorporation and By-laws (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 the Ancillary
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby have been
duly
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and validly authorized by the Board of Directors of the Buyer and its parent
corporation and no other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement and the Ancillary Agreements or to
consummate the transaction contemplated hereby or thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by,
the Buyer, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Seller, this Agreement and the
Ancillary Agreements, subject to the receipt of the Buyer Required Regulatory
Approvals and the Seller Required Regulatory Approvals, constitute valid and
binding agreements of the Buyer, enforceable against the Buyer in accordance
with their terms, subject to the Bankruptcy and Equity Exception.
6.3. Consents and Approvals; No Violation. (a) Other than obtaining
the Buyer Required Regulatory Approvals and the Seller Required Regulatory
Approvals, neither the execution and delivery of this Agreement and the
Ancillary Agreements by the Buyer nor the purchase by the Buyer of the Purchased
Assets pursuant to this Agreement or performance under the Ancillary Agreements
will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws (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 for (i) qualification of the Buyer as an exempt wholesale
generator under the Energy Policy Act of 1992, without restriction, including no
restriction on sales to Affiliates, (ii) authorization to sell power under
Section 205 of the FPA, including (A) authorizations required to implement sales
under the Ancillary Agreements, and (B) market-based rate approval for capacity,
energy and ancillary services, (iii) approval under Section 203 of the FPA to
transfer contracts and other jurisdictional assets,
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(iv) any necessary PSC approvals, (v) the filings by the Buyer and the Seller
required by the HSR Act and (vi) approval of the Interconnection Agreement and
the Transition Power Agreement by FERC (the filings and approvals referred to
in clauses (i) through (vi) 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 or by the Ancillary Agreements.
6.4. Availability of Funds. The Buyer will have sufficient funds
available to it or has received 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. (a) Except
as described in Schedule 7.1, during the period from the date of this Agreement
to the Closing Date, the Seller will operate the Purchased Assets and related
businesses in the usual, regular and ordinary course consistent with good
industry practice and shall use all commercially reasonable efforts to preserve
intact the Purchased Assets and the businesses related thereto, and endeavor to
preserve the goodwill and relationships with customers, suppliers and others
having business dealings with them. 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, the Seller will not with respect to the Purchased Assets;
(i) (x) except for (1) Permitted Encumbrances and (2) indebtedness
constituting Excluded Liabilities that does not create an Encumbrance on the
Purchased Assets, create, incur, assume or suffer to exist any indebtedness
for borrowed money (including obligations in respect of capital leases); or
(y) assume, guarantee, endorse or otherwise become directly liable or
respon-
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sible (whether directly or indirectly, contingently or otherwise) for the
obligations of any Person;
(ii) make any material change in the levels of fuel inventory and
stores inventory customarily maintained by the Seller with respect to the
Purchased Assets, other than consistent with good industry practice;
(iii) 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 industry practice,
including the practice of harvesting timber;
(iv) terminate, extend or otherwise amend any real property lease to
the extent any such extension or amendment would require the lease to be
disclosed pursuant to Section 5.9;
(v) execute, enter into, terminate or otherwise amend (x) any of the
Permits or Environmental Permits, other than routine renewals or
non-material modifications or amendments or (y) any other agreement, order,
decree or judgment relating to the current or any new permit;
(vi) enter into any power sales commitments having a term that extends
beyond June 30, 1999 or such other date that the parties mutually agree to
be the date on which the Closing is expected to occur;
(vii) with respect to the Purchased Assets and related businesses, (x)
amend or cancel any liability or casualty insurance policies related
thereto, (y) compromise, settle, withdraw, release or ▇▇▇▇▇ any claims made
or accruing thereunder or (z) fail to maintain by self insurance or with
financially responsible insurance companies insurance in such amounts and
against such risks and losses as was in place as of the date of this
Agreement for such assets and businesses;
(viii) enter into any commitment or contract for goods or services not
addressed in clauses (i) through (vii) above that will be delivered or
provided after June 30, 1999 or such other date that the parties
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mutually agree to be the date on which the Closing is expected to occur, in
an amount greater than $100,000 or $1,000,000 in the aggregate; or
(ix) enter into any written or oral contract, agreement, commitment or
arrangement with respect to any of the transactions set forth in the
foregoing paragraphs (i) through (viiii).
(b) Notwithstanding anything in Section 7.1 (a) to the contrary, the
Seller may, in its sole discretion, make (i) Maintenance Expenditures and
Capital Expenditures and (ii) at the Seller's expense, such other maintenance
and. capital expenditures as the Seller deems necessary;
7.2. Access to Information. (a) Between the date of this Agreement and
the Closing Date, the Seller will, during ordinary business hours and upon
reasonable notice (i) give the Buyer and the Buyer Representatives reasonable
access to all books, records, plants, offices and other facilities and
properties constituting the Purchased Assets to which the Buyer is not denied
access by law; (ii) permit the Buyer to make such reasonable inspections thereof
as the' Buyer may reasonably request; (iii) furnish the Buyer with such
financial and operating data and other information with respect to the Purchased
Assets as the Buyer may from time to time reasonably request, provided, however,
that the Seller will not be required to create special reports or perform any
studies; (iv) furnish the Buyer a copy of each material report, schedule or
other document filed or received by it with respect to the Purchased Assets with
or from the SEC, PSC or FERC; provided, however, that (A) any such investigation
shall be conducted in such manner as not to interfere with the operation of the
Purchased Assets, (B) the Seller shall not be required to take any action which
would constitute a waiver of the attorney-client privilege and (C) the Seller
need not supply the Buyer with any information which the Seller is under a legal
obligation not to supply. Notwithstanding anything in this Section 7.2 to the
contrary, (i) the Seller will only furnish or provide such access to
Transferring Employee Records and personnel and medical records as is required
by law, legal process or subpoena and (ii) the Buyer shall not have the right to
perform or conduct any environmental sampling or testing at, in, on, or
underneath the Purchased Assets.
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(b) All information furnished to or obtained by the Buyer and the Buyer
Representatives pursuant to this Section 7.2 or the Ancillary Agreements shall
be subject to the provisions of the Confidentiality Agreement and shall be
treated as "Proprietary Information" (as defined in the Confidentiality
Agreement).
(c) For a period of six years after the Closing Date, each party and
their representatives shall have reasonable access to all of the books and
records of the Purchased Assets, including all Transferring Employee Records, in
the possession of the other party to the extent that such access may reasonably
be required by such party. Such access shall be afforded by the party or parties
in possession of such books and records upon receipt of reasonable advance
notice and during normal business hours. The party or parties exercising this
right of access shall be solely responsible for any costs or expenses incurred
by it or them pursuant to this Section 7.2(c). If the party or parties in
possession of such books and records shall desire to dispose of any such books
and records upon or prior to the expiration of such six-year period, such party
or parties shall, prior to such disposition, give the other party or parties a
reasonable opportunity at such other party's or parties' expense, to segregate
and remove such books and records as such other party or parties may select.
During such six-year period, the Seller and its representatives and the
respondent parties and their representatives in the real property tax litigation
listed on Schedule 2.2(h) shall have physical access during normal business
hours to the Purchased Assets to the extent such access may reasonably be
required in connection with that litigation.
(d) The Seller agrees not to release any Person (other than the Buyer)
from any confidentiality agreement now existing with respect to the Purchased
Assets, or waive or amend any provision thereof.
(e) Notwithstanding the terms of the Confidentiality Agreement and
Section 7.2(b) above, the parties agree that prior to the Closing the Buyer may,
if reasonably necessary, reveal or disclose Proprietary Information to any other
Persons in order to obtain financing, and for purposes of risk management of or
with respect to the Purchased Assets, and to such Persons with whom the buyer
expects it may have business dealings regarding the Purchased Assets
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from and after the Closing Date, and, to the extent that Seller consents, which
consent shall not be unreasonably withheld, existing and potential customers
and suppliers.
(f) Except as required by law, unless otherwise agreed to in writing by
the Buyer, for a period commencing on the Closing Date and terminating three
years after such date the Seller shall keep all Proprietary Information
confidential and (i) shall not disclose or reveal any Proprietary Information to
any Person other than "Seller's Representatives" (as defined below) who are
actively and directly participating in the transactions contemplated hereby or
who otherwise need to know the Proprietary Information for such purpose and
shall cause those Persons to observe the terms of this Section 7.2(f) and (ii)
shall not use Proprietary Information for any purpose other than consistent with
the terms of this Agreement. The Seller shall continue to hold all Proprietary
Information according to the same internal procedures and with the same degree
of care regarding its secrecy and confidentiality as currently applicable
thereto. The Seller shall notify the Buyer of any unauthorized disclosure to
third parties that it discovers, and shall endeavor to prevent any further such
disclosures. The Seller shall be responsible for any breach of the terms of this
Section 7.2(f) by the Seller or the Seller's Representatives.
After the Closing Date, in the event that the Seller is requested
pursuant to, or required by, applicable law or regulation or by legal process to
disclose any Proprietary Information, or any other information concerning the
Purchased Assets, or the transactions contemplated hereby, the Seller shall
provide the Buyer with prompt notice of such request or requirement in order to
enable the Buyer to seek an appropriate protective order or other remedy, to
consult with the Seller with respect to taking steps to resist or narrow the
scope of such request or legal process, or to waive compliance, in whole or in
part, with the terms of this Section 7.2(f). The Seller agrees not to oppose any
action by the Buyer to obtain a protective order or other appropriate remedy
after the Closing Date. In the event that no such protective order or other
remedy is obtained, or that the Buyer waives compliance with the terms of this
Section 7.2(f), the Seller shall furnish only that portion of the Proprietary
Information which the Seller is advised by counsel is legally required. In any
such event the seller shall use its reasonable best efforts to ensure
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that all Proprietary Information and other information that is so disclosed will
be accorded confidential treatment.
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. Any title insurance obtained by the Buyer shall be at the Buyer's sole
expense.
7.4. Further Assurances. a) Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its best 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 using its best efforts to ensure
satisfaction of the conditions precedent to each party's obligations hereunder.
Notwithstanding anything in the previous sentence to the contrary, the Seller
and the Buyer shall use commercially reasonable efforts to obtain all Permits
and Environmental Permits necessary for the Buyer to operate the Purchased
Assets. Neither of the parties hereto will, without prior written consent of the
other party, take or fail to take any action, which would reasonably be expected
to prevent or materially impede, interfere with or delay the transactions
contemplated by this Agreement. From time to time after the date hereof, without
further consideration, the Seller will, at its own expense, execute and deliver
such documents to the Buyer as the Buyer may reasonably request in order to vest
more effectively in the Buyer the Seller's title to the Purchased Assets subject
to Permitted Encumbrances and Schedule 5.8. From time to time after the date
hereof, the Buyer will, at its own expense, execute and deliver such documents
to the Seller as the Seller may reasonably request in order to consummate more
effectively the sale of the Purchased Assets pursuant to this Agreement.
(b) In the event that any Purchased Asset shall not have been conveyed
to the Buyer at the Closing, the Seller shall use its best efforts to convey
such asset to the Buyer as promptly as is practicable after the Closing. In the
event that any easement necessary or desirable for the Seller's ongoing
operations shall not have been retained
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by the Seller after the Closing, the Buyer shall use its best efforts to grant
such Easement to the Seller as promptly as is practicable after the Closing.
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 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 and under the
circumstances in which the parties are expressly permitted by the
Confidentiality Agreement to make disclosures of "Proprietary Information" (as
defined in the Confidentiality Agreement).
7.6. Consents and Approvals. (a) The Seller and the Buyer shall each
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed under the
HSR Act and the rules and regulations promulgated thereunder with respect to
the transactions contemplated hereby. The parties shall consult with each other
as to the appropriate time of filing such notifications and shall use their best
efforts to make such filings at the agreed upon time, to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing.
(b) The Seller and the Buyer shall cooperate with each other and (i)
promptly prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use all commercially reasonable efforts to obtain the transfer
or reissuance to the Buyer of all necessary Transferable Permits, consents,
approvals and authorizations of all governmental bodies and (iv) use all
commercially reasonable efforts to obtain all necessary consents, approvals and
authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without limitation, the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals) or required by
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the terms of any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument to which the
Seller or the Buyer is a party or by which either of them is bound. Each of the
Seller and the Buyer shall have the right to review 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.
(c) The Seller and the Buyer shall cooperate with each other and
promptly prepare and file notifications with, and request tax clearances from,
state and local taxing authorities in jurisdictions in which a portion of the
Purchase Price may be required to be withheld or in which the Buyer would
otherwise be liable for any Tax liabilities of the Seller pursuant to such state
and local Tax law.
(d) The Seller and the Buyer agree to execute and deliver the
Interconnection Agreement, the Site Agreement and the Swaption at the Closing.
7.7. Fees and Commissions. The Seller and the Buyer each represent and
warrant to the other that, except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇▇▇ Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation, which are acting for and at the expense of the
Seller, and Chase Securities Inc., 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.
7.8. Tax Matters. (a) Other than the New York Real Estate Transfer Tax
(the "New York Tax"), which is the Seller's obligation, the Buyer shall be
solely liable for and shall pay all applicable sales, transfer, use, stamp,
conveyance, value added, recording, excise, New York Petroleum Business Tax and
other similar Taxes, if any, together with all recording or filing fees,
notarial fees and other similar costs of Closing, that may be imposed upon, or
payable, collectible or incurred in connection with the transfer of the
Purchased Assets to the Buyer or otherwise as a result of the transfer of the
Purchased Assets ("Transfer Taxes"). The Buyer shall release, indemnify and hold
harmless Seller with respect to all Transfer Taxes, other than the New York Tax.
The Buyer, at
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its own expense, will file, to the extent required by applicable law, all
necessary Tax Returns and other documentation with respect to all such Transfer
Taxes, and if required by applicable law, the Seller will join in the execution
of any such Tax Returns or other documentation.
(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 after the Closing with respect to the Purchased Assets, if
any, and shall duly and timely pay all such Taxes shown to be due on such Tax
Returns. The Buyer's preparation of any such Tax Returns shall be subject to the
Seller's approval, which approval shall not be unreasonably, withheld. The Buyer
shall make such Tax Returns available for the Seller's review and approval not
later than fifteen (15) Business Days prior to the due date for filing such Tax
Return. Within ten (10) Business Days after receipt of such Tax Return, the
Seller shall pay to the Buyer its proportionate share of the amount shown as due
on such Tax Return determined in accordance with Section 3.4 of this Agreement.
(c) Each of the Buyer and the Seller shall provide the other with such
assistance as may reasonably be requested by the other party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each will retain and provide the requesting party with any
records or information that may be relevant to such return, audit, or
examination, proceedings or determination. Any information obtained pursuant to
this Section 7.8(c) or pursuant to any other Section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the parties hereto.
(d) The Buyer shall remit to the Seller any refund or credit of Taxes
with respect to the Purchased Assets to the extent such Taxes are attributable
to any taxable period, or portion thereof, ending on or before the Closing Date.
(e) The Buyer shall pay to the Seller at Closing the portion of any
Taxes previously paid by the Seller with respect to the Purchased Assets to the
extent such taxes are
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properly allocable to a taxable period, or portion thereof, beginning after the
Closing Date.
(f) The Buyer shall prepare and timely file all real property tax
administrative and judicial proceedings which must be filed pursuant to any
existing settlement agreements or those which are negotiated with respect to the
litigation on Schedule 2.2(h). The Seller will provide all reasonable and
necessary assistance in preparing such filings.
(g)(i) Prior to Closing, the Seller shall have the right to control any
and all real property tax litigation relating to the Dunkirk and ▇▇▇▇▇▇▇ Steam
Station Real Property. The Buyer shall have the right to receive reasonable
advance notice of all meetings, proceedings and conferences relating thereto
and, to the extent not prohibited by the relevant taxing authority, to observe
and attend all such meetings, proceedings or conferences, to receive copies of
all notices, determinations, and filings received by the Seller in connection
therewith promptly after the Seller's receipt thereof, to receive copies of
pleadings, filings, and other submissions to be made by the Seller no later than
5 Business Days in advance of the Seller's submission thereof, and to consent to
all settlements or consent orders entered into by the Seller with respect to
real property tax litigation relating to the Real Property, such consent not to
be unreasonably withheld.
(ii) From and after the Closing, the Buyer shall have the right to
assume control of all real property tax litigation relating to the Real
Property pending as of the Closing Date. The Seller shall cooperate with,
and provide reasonable assistance to, the Buyer in connection with the
conduct of such litigation, including the right to use and consult with
personnel of the Seller principally responsible for management of Seller's
relationships with the relevant real property taxing authorities and
negotiation and litigation which such authorities regarding real property
tax assessments. With respect to any such litigation, the Seller shall have
the right to receive reasonable advance notice of all meetings, proceedings
and conferences relating thereto and, to the extent not prohibited by the
relevant taxing authority, to observe all such meetings, conferences and
proceedings, to receive copies of all notices, determinations, and
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filings received by the Buyer in connection therewith promptly after the
Buyer's receipt thereof, to receive copies of pleadings, filings, and other
submissions to be made by the Buyer not later than five (5) Business Days
in advance of the Buyer's submission thereof, and to consent to all
settlements or consent orders entered into by the Buyer with respect to
real property tax litigation relating to the Real Property, such consent
not to be unreasonably withheld.
(iii) The Buyer and the Seller will work together to negotiate the
PILOT Agreements or multi-year tax settlements for the Dunkirk and ▇▇▇▇▇▇▇
Steam Stations. Such settlements (i.e. PILOTs and or Multi-year
settlements) as they are negotiated for this agreement, are hereinafter
referred to as "Actual Real Estate Taxes Paid." Actual Real Estate Taxes
Paid will apply to the Real Property being purchased, and do not include
any taxes on incremental investment (including repowering) at the site for
these calculations.
(iv) The Buyer shall pay to Seller fifty percent (50%) of the first
$10,000,000 net reduction difference Between Actual Real Estate Taxes Paid
and those shown in Schedule 7.8(g) and twenty percent (20%) of any net
reduction difference greater than $10,000,000 between Actual Tax Payments
Paid and Schedule 7.8(g). The Seller shall pay the Buyer twenty percent
(20%) of the net increase difference between Actual Real Estate Taxes Paid
and those shown in Schedule 7.8(g). All calculations made pursuant to this
Section 7.8(g)(iv) shall be on an after tax net present value basis, using
a 9% discount rate, as of the Closing Date. It will be assumed that the
scheduled payments in the last year of any PILOT Agreement or multi-year
real property tax settlement which has a term of 5 years or more would stay
in place from the end of the settlement through 2013.
The reconciliation and payment as provided for by Section 7.8(g)(iv)
shall occur no later than sixty (60) days after the finalization of any PILOT
and/or multi-year tax settlement. Final calculations will be provided to the
Buyer by the Seller within this time frame. Any Real Estate taxes relating to
the Dunkirk and ▇▇▇▇▇▇▇ Stations paid by the Buyer after the Closing but before
the implementation of any PILOT and/or multi-year tax settlement will be
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incorporated into the calculations set forth in this agreement.
7.9. Supplements to Schedules. Prior to the Closing Date, the Seller
and the Buyer shall supplement or amend the Schedules required by Section 2.4,
Article V and Article VI as the case may be, with respect to any matter relating
to the Purchased Assets, 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) The Buyer and the Seller agree that the Buyer
shall be a successor within the meaning of the Collective Bargaining Agreement.
Each person who becomes employed by the Buyer or an Affiliate of Buyer pursuant
to this Section 7.10 shall be referred to herein as a "Buyer Employee." The
employment of employees who are represented by Local No. 97 of the IBEW shall
continue in accordance with the Collective Bargaining Agreement.
(b) The Seller has made available to the Buyer the Collective
Bargaining Agreement. With respect to Buyer Employees who are included in the
collective bargaining unit by the Collective Bargaining Agreement ("IBEW
Employees"), on the Closing Date, the Buyer and any Affiliate of Buyer who
employs Buyer Employees will assume the Collective Bargaining Agreement as it
relates to such Buyer Employees employed at the Purchased Assets.
(c) For the period commencing on the Closing Date and ending 12 months
thereafter, and except as the Buyer and any Buyer Employee may otherwise agree,
the Buyer shall provide all Buyer Employees who are not IBEW Employees
("Non-Union Employees") with total compensation (including, without limitation,
base pay, authorized overtime, bonuses, and benefits contained in the employee
benefit plans, programs and fringe benefit arrangements (excluding education
reimbursement)) which is, in the aggregate, at least equivalent in value to the
Non-Union Employee's total compensation, which shall be based upon (x) such
employee's existing individual base pay, (y) authorized overtime, if applicable,
and (z) an average bonus and benefit component
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for such employee's salary plan level, as consistently applied by the Seller,
apportioned according to such employee's base pay. The Buyer shall also pay
reasonable relocation costs with respect to any Non-Union Employees who shall
relocate at the Buyer's request.
(d) As of the Closing Date, all Non-Union Employees shall cease to
participate in the employee welfare benefit plans (as such term is defined in
ERISA) maintained or sponsored by the Seller or its Affiliates (the "Prior
Welfare Plans") and shall, if applicable, commence to participate in welfare
benefit plans of the Buyer or its Affiliates (the "Replacement Welfare Plans").
The Buyer shall (i) waive all limitations as to pre-existing condition
exclusions and waiting periods with respect to Non-Union Employees under the
Replacement Welfare Plans, other than, but only to the extent of, limitations or
waiting periods that were in effect with respect to such employees under the
Prior Welfare Plans and that have not been satisfied as of the Closing Date, and
(ii) provide each Non-Union Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any deductible or
out-of-pocket requirements under the Replacement Welfare Plans (on a pro-rata
basis in the event of a difference in plan years).
(e) Non-Union Employees shall be given credit for all service with the
Seller and its Affiliates under all employee benefit plans, programs, and fringe
benefit plans, programs, and fringe benefit arrangements of the Buyer ("Buyer
Benefit Plans") in which they become participants. The service credit given is
for purposes of eligibility, vesting and service related level of benefits, but
not benefit accrual (except as provided in the following sentence). For purposes
of benefit accrual, Non-Union Employees shall be given credit for all service
with the Seller and its Affiliates under all Buyer Benefit Plans, but the
ultimate benefits provided under the Buyer Benefit Plans may be offset by the
corresponding benefits previously provided by the Seller or benefit plans of the
Seller, or by the corresponding benefits accrued under the benefit plans of the
Seller or otherwise committed to be provided by the Seller in the future.
Nothing in this Agreement shall preclude the use of a "Defined Contribution
Plan" in substitution for the "Defined Benefit Plans" maintained by the Seller.
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(f) To the extent allowable by law, the Buyer shall take any and all
necessary action to cause the trustee of a defined contribution plan of the
Buyer or one of its Affiliates, if requested to do so by a Non-Union Employee,
to accept a direct "rollover" of all or a portion of said employee's
distribution (excluding securities) from the Seller's Represented and
Non-Represented Employees Savings Fund Plans or the defined benefit Pension
Plan.
(g) The Buyer shall pay to each Non-Union Employee whose employment is
terminated by the Buyer or one of its Affiliates within eighteen months of the
Closing Date a severance benefit package equivalent to that which would have
been provided to such individual upon such termination by the Seller under the
Niagara Mohawk Power Corporation Involuntary Severance Plan as in effect on the
Closing Date had such individual remained continuously employed by the Seller or
its Affiliates and had been eligible for, and entitled to benefits under, such
plan on the date of such termination.
(h) The Buyer also shall provide, to each Non-Union Employee who on the
Closing Date is at least 50 years of age and has at least 10 years of "Service"
(as that term is defined in the Niagara Mohawk Pension Plan) and who is hired by
the Buyer, a benefit that is equal to the following amount ("Transition
Benefit"): (i) the value of the "Accrued Benefit" each such employee would have
had under the Niagara Mohawk Pension Plan cash balance formula had such employee
remained employed by the Seller for five years after the Closing Date, assuming
such employee had retained the same job with the Seller as such employee had
immediately preceding the Closing Date and had the same "Compensation,"
"Interest Credit" (using an annual interest rate of 6.5 percent), and rate of
"Pay-Based Credit" (as those terms are defined in the Niagara Mohawk Pension
Plan) as such employee had immediately preceding the Closing Date; less (ii) the
percent value of the "Accrued Benefit" such employee has under the Niagara
Mohawk Pension Plan cash balance formula as of the Closing Date, plus the
"Interest Credit" (as that term is defined in the Niagara Mohawk Pension Plan)
that would have been received on the amount of such present value had it
remained in the Niagara mohawk pension plan for five years after the closing
Date (assuming the Interest Credit remained at an annual interest rate of 6.5
percent throughout that five year period). The Buyer shall provide the
Transition Benefit for each eligible Non-Union Employee
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in one or both of the following ways: (A) as vested accrued benefits for such
employee under a qualified retirement plan (or qualified retirement plans)
maintained by the Buyer, with such benefits accruing no later than the end of
the five year period following the Closing Date ("Five Year Period"); and/or (B)
as cash paid to such employee in a lump sum or in multiple payments (e.g.,
through a severance pay plan, a deferred compensation plan, or such other
arrangement deemed appropriate to the Buyer), with such payment(s) to commence
no later than the last day of the year in which such employee's employment with
the Buyer terminates (or, if later, 90 days after such employment terminates).
The present value of the vested accrued benefits described in (A), plus the
present value of the cash payment(s) to be made pursuant to (B), must at least
equal the total amount of the Transition Benefit for the applicable Non-Union
Employee (present value, for purposes of this sentence, shall be computed in the
same manner as the present value of an "Accrued Benefit" in the Niagara Mohawk
Pension Plan is computed). Notwithstanding anything in this subsection (h) to
the contrary, (1) if an eligible Non-Union Employee voluntarily terminates
employment with the Buyer before the end of the Five Year Period or dies before
the end of the Five Year Period, the Buyer shall have the right to reduce such
employee's Transition Benefit on a pro rata basis (e.g., if such employee
voluntarily leaves employment with the Buyer after one year, the Buyer could
reduce such employee's Transition Benefit to 20 percent of the original
Transition Benefit amount).
(i) The Buyer and the Seller do not anticipate the issuance of any
notices pursuant to the WARN Act. Notwithstanding the foregoing, the Seller
agrees to timely perform and discharge all requirements under the WARN Act and
under applicable state and local laws and regulations for the notification of
its employees arising from the sale of the Purchased Assets to the Buyer up to
and including the Closing Date for those employees who will become Buyer
Employees effective as of the Closing Date. 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.
(j) The Buyer shall not be responsible for extending COBRA continuation
coverage to any employees and
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former employees of Seller who do not elect to become Buyer Employees, or to any
qualified beneficiaries of such employees and former employees, who become or
became entitled to COBRA continuation coverage before the Closing, including
those for whom the Closing occurs during their COBRA election period.
(k) The Seller or the Seller's Affiliates shall remain responsible for
paying Buyer Employees for: (a) all salary, wages, bonuses and/or incentive
compensation that were earned for time worked for the Seller or the Seller's
Affiliates prior to the Closing Date; and (b) all workers' compensation,
disability benefits or other insurance benefits that were accrued and based upon
events occurring prior to the Closing Date. The Seller or Seller's Affiliates
shall pay to the Buyer as promptly as practicable following the Closing Date for
all vacation and holiday time for Buyer's Employees which is accrued as of the
Closing Date, and the Buyer shall provide to the Buyer Employees the opportunity
either to be paid for such accrued time or to take such time.
(1) Notwithstanding any other provision in this Agreement, the Buyer
shall have no obligation of any kind, and the Seller shall indemnify and hold
the Buyer harmless from, any liability with respect to any employee of the
Seller who does not elect to become a Buyer Employee.
7.11. Risk of Loss. (a) From the date hereof through the Closing Date,
all risk of loss or damage to the property included in the Purchased Assets
shall be borne by the Seller.
(b) If, before the Closing Date, all or any portion of the Purchased
Assets is taken by eminent domain or is the subject of a pending or (to the
knowledge of the Seller) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If the fair
market value of the Purchased Assets that are the subject of such taking is
greater than $1,000,000, the Buyer and the Seller shall negotiate in good faith
to settle the loss resulting from such taking (including, without limitation, by
making a fair and equitable adjustment to the Purchase Price) and, upon such
settlement, consummate the transaction contemplated by this Agreement pursuant
to the terms of this Agreement.
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(c) If, before the Closing Date, all or any material portion of the
Purchased Assets is damaged or destroyed by fire or other casualty, the Seller
shall notify the Buyer promptly in writing of such fact. If such damage or
destruction would result in a loss of more than $1,000,000 and the Seller has
not notified the Buyer of its intention to cure such damage or destruction
within fifteen (15) days after its occurrence, the Buyer and the Seller shall
negotiate in good faith to settle the loss resulting from such casualty
(including, without limitation, by making a fair and equitable adjustment to the
Purchase Price) and, upon such settlement, consummate the transactions
contemplated by this Agreement pursuant to the terms of this Agreement.
(d) If a taking or damage or destruction in (b) or (c) above shall
affect $1,000,000 or less in value of the Purchased Assets, the Buyer shall be
entitled to any compensation with respect to a taking and any insurance proceeds
with respect to damage or destruction.
7.12. Tax Clearance Certificates. The Buyer shall use reasonable
efforts to provide or obtain from any taxing authority any certificate, permit,
license, or other document necessary to mitigate, reduce or eliminate any Taxes
(including additions thereto or interest and penalties thereon) that otherwise
would be imposed with respect to the transactions contemplated in this
Agreement.
7.13. NYSERDA Compliance. Following the Closing, the Buyer agrees to
comply with the Seller's obligations with respect to the ownership and operation
of the Purchased Assets set forth in the participation agreements and tax
regulatory agreements listed on Schedule 7.13.
7.14. Units 63 and 64. Within two years, following the date hereof, the
Buyer agrees to repower or retire ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇. Upon
the retirement of ▇▇▇▇ ▇▇ or Unit 64, the Buyer shall provide the Seller the
right of first negotiation with respect to acquiring such Units' NOx credits.
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ARTICLE VIII
CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the Transaction.
The respective obligations of each party to effect the sale of the Purchased
Assets 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 sale of the Purchased Assets contemplated hereby shall have expired or
been terminated;
(b) No preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the sale of the
Purchased Assets contemplated hereby shall have been issued and remain in effect
(each party agreeing to use reasonable best efforts to have any such injunction,
order or decree lifted) and no statute, rule or regulation shall have been
enacted by any State or Federal government or governmental agency in the United
States which prohibits the consummation of the sale of the Purchased Assets;
(c) All Federal, State and local government consents and approvals
required for the consummation of the sale of the Purchased Assets and the Seller
Required Regulatory Approvals and the Buyer Required Regulatory Approvals, shall
have been obtained or become Final Orders (a "Final Order" for all purposes of
this Agreement means a final order after all opportunities for rehearing are
exhausted (whether or not any appeal thereof is pending) that has not been
revised, stayed, enjoined, set aside, annulled or suspended, with respect to
which any required waiting period has expired; and as to which all conditions to
effectiveness prescribed therein or otherwise by law, regulation or order have
been satisfied) and such Final Orders shall not impose materially adverse terms
or conditions on either the Seller or the Buyer, provided that either such party
may only invoke the foregoing condition if the terms or conditions have such a
material adverse effect on the benefits expected to be derived from the
consummation of the transactions contemplated hereby that such party reasonably
would not have been expected to enter into this Agreement if such terms or
conditions had been known as of the date hereof; and
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(d) All consents and approvals for the consummation of the sale of the
Purchased Assets contemplated hereby required under the terms of any note, bond,
mortgage, indenture, contract or other agreement to which the Seller or the
Buyer, or any of their subsidiaries, is a party shall have been obtained, other
than those which if not obtained, would not, in the aggregate, create a Material
Adverse Effect.
8.2. Conditions to Obligations of the Buyer. The obligation of the
Buyer to effect the purchase of the Purchased Assets contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
the following additional conditions:
(a) There shall not have occurred and be continuing a Material Adverse
Effect;
(b) The Seller shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement that are
required to be performed and complied with by the Seller on or prior to the
Closing Date, and the representations and warranties of the Seller set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Closing Date as though made at and as of the Closing Date;
(c) There shall be no Encumbrances on the Purchased Assets by virtue of
the Indenture;
(d) The Buyer shall have received certificates from authorized officers
of the Seller, dated the Closing Date, to the effect that, to the best of such
officers' knowledge, the conditions set forth in Sections 8.2(a), (b) and (c)
have been satisfied;
(e) The Buyer shall have received an opinion of the general counsel of
the Seller, dated the Closing Date and satisfactory in form and substance to
the Buyer and its counsel, substantially to the effect that:
(1) The Seller is a corporation duly organized, existing and in
good standing under the laws of New York and the seller has the corporate
power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby
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and thereby; and the execution and delivery of this Agreement and such
Ancillary Agreements and the consummation of the sale of the Purchased
Assets contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Seller;
(2) This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Seller and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are
obtained) are valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their terms, (A) subject to the
Bankruptcy and Equity Exception and (B) except 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 therefor may be brought;
(3) The execution and delivery and performance of this
Agreement and the Ancillary Agreements by the Seller do not conflict with
the Certificate of Incorporation or Bylaws, as currently in effect, of the
Seller; 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 Seller of the Closing other than (i)
the Seller Required Regulatory Approvals, all of such Seller Required
Regulatory Approvals hereunder having been obtained and being in full force
and effect with such terms and conditions as shall have been imposed by any
applicable governmental authority, and (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, would not, in the aggregate create a Material Adverse
Effect.
As to any matter contained in such opinions which involves the laws of
any jurisdiction other than the Federal laws of the United States or the laws of
the State of
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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 opinions may expressly
rely as to matters of fact upon certificates furnished by the Seller and
appropriate officers and directors of the Seller and by public officials;
(f) The Buyer shall have received the qualifications or approvals set
forth in Section 6.3(b)(i) and (ii) hereof;
(g) The Buyer shall have obtained all material Environmental Permits
and material Permits; and
(h) The Buyer shall be able to obtain New York Title Insurance.
8.3. Conditions to Obligations of the Seller. The obligation of the
Seller to effect the sale of the Purchased Assets 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 in all material respects its
covenants and agreements contained in this Agreement which are required to be
performed on or prior to the Closing Date;
(b) The representations and warranties of the Buyer set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made at and as of the Closing Date;
(c) The Seller shall have received a certificate from an authorized
officer of the Buyer, dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in Sections 8.3(a) and (b)
have been satisfied;
(d) The Buyer shall have assumed, as set forth in Section 7.10, the
Collective Bargaining Agreement; and
(e) The Seller shall have received an opinion from the general counsel
of the Buyer, dated the Closing
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Date and satisfactory in form and substance to the Seller and their counsel,
substantially to the effect that:
(1) The Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware 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 such
Ancillary Agreements and the consummation of the sale of the Purchased
Assets 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 duly
executed and delivered by the Buyer and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are
obtained) are valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their terms, (A) subject to the
Bankruptcy and Equity Exception and (B) except 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 therefor may be brought;
(3) The execution and delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer does not conflict with
the Certificate of Incorporation or Bylaws, 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 the
Buyer Required Regulatory Approvals, all of such Buyer Required Regulatory
Approvals having been obtained and being in full force and effect with such
terms and conditions as shall have been imposed by any applicable
governmental authority.
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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 Delaware,
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 facts upon certificates furnished by appropriate officers
and directors of the Buyer and its subsidiaries and by public officials.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. (a) The Seller will indemnify, defend and hold
harmless the Buyer from and against any and all claims, demands or suits (by any
Person), losses, liabilities, damages (including consequential or special
damages), obligations, payments, costs 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)
(each, an "Indemnifiable Loss"), asserted against or suffered by the Buyer
relating to, resulting from or arising out of (i) any breach by the Seller of
any covenant or agreement of the Seller contained in this Agreement or the
representations and warranties contained in Sections 5.1, 5.2 or 5.3 hereof,
(ii) the Excluded Liabilities, (iii) noncompliance by the Seller with any bulk
sales or transfer laws as provided in Section 11.11 or (iv) the Indemnifiable
Liens.
(b) The Buyer will indemnify, defend and hold harmless the Seller from
and against any and all Indemnifiable Losses asserted against or suffered by the
Seller relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement or the
representations and warranties contained in Sections 6.1, 6.2 and 6.3 hereof and
(ii) the Assumed Obligations.
(c) Any Person entitled to receive indemnification under this Agreement
(an "Indemnitee") having a claim under these indemnification provisions shall
make a good
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faith effort to mitigate and 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 net Tax benefit recognized by the Indemnitee arising from the
recognition of the Indemnifiable Loss and any payment actually received with
respect to an Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any covenant or
agreement shall not affect the parties' obligations under this Section 9.1 if
the Indemnitee provided the Person required to provide indemnification under
this Agreement (the "Indemnifying Party") with proper notice of the claim or
event for which indemnification is sought prior to such expiration, termination
or extinguishment.
(e) The rights and remedies of the Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and remedies
which the Seller and the Buyer may have under this Agreement or otherwise for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement or (ii) the Assumed
Obligations or the Excluded Liabilities, as the case may be.
(f) The Buyer and the Seller each agree that notwithstanding any
provisions in this Agreement to the contrary, all parties to this Agreement
retain their remedies at law or in equity with respect to willful or intentional
breaches of this Agreement.
(g) Any indemnity payment under this Agreement shall be treated as an
adjustment to the Purchase Price for tax purposes.
9.2. Defense of Claims. (a) If any Indemnitee receives notice of the
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a party to this Agreement or
an 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 ten (10) calendar
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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 shall indicate the estimated amount, if practicable, of the Indemnifiable
Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party
will have the right to participate in or, by giving written notice to the
Indemnitee, to elect to assume the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel,
and the Indemnitee will cooperate in good faith in such defense at such
Indemnitee's own expense.
(b) 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 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 any
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 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.
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(c) 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 ten (10)
calendar days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party will have a period of thirty (30) calendar 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 claim. If the Indemnifying Party rejects such
claim, the Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.
(d) 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 Bank of Boston), 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 subject 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, and otherwise cooperate in the prosecution of such claims
at the direction of the Indemnifying Party. Nothing in this Section 9.2(d) shall
be construed to
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require any party hereto to obtain or maintain any insurance coverage.
(e) 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.
9.3. Tax Contest. (a) The Buyer shall notify the Seller in writing
within thirty (30) days of receipt of written notice of any Federal or State
pending or threatened audits, adjustments or assessments (a "Tax Audit"), which
may affect the Seller's liability for Taxes. If the Buyer fails to give such
notice to the Seller, the Buyer shall not be entitled to indemnification for any
Taxes arising in connection with such Tax Audit if such failure to give notice
adversely affects the Seller's right to participate in the Tax Audit.
(b) (i) If such Tax Audit relates to any taxable period ending on or
before the Closing or for any Taxes for which the Seller is liable hereunder,
the Seller shall at its expense control the defense and settlement of such Tax
Audit; (ii) if such Tax Audit relates to any taxable period beginning after the
Closing for any Taxes, including without limitation Transfer Taxes as provided
in Section 7.8(a), for which the Buyer is liable in full hereunder, the Buyer
shall at its expense control the defense and settlement of such Tax Audit,
provided the Seller shall be entitled to participate in such Tax Audit at its
expense in such defense and to employ counsel of its choice at its expense; and
(iii) if such Tax Audit relates to a taxable period, or portion thereof,
beginning before and ending after the Closing and any Tax item cannot be
identified as being a liability of either party or cannot be separated from a
Tax item for which the other party is liable, the Seller shall control the
defense and settlement of the Tax Audit.
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ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination. (a) This Agreement may be terminated at any time
prior to the Closing Date by mutual written consent of the Seller and the
Buyer.
(b) This Agreement may be terminated by the Seller or the Buyer if the
Closing contemplated hereby shall have not occurred on or before the first
anniversary of the date of this Agreement (the "Termination Date"); provided
that the right to terminate this Agreement under this Section 10.1(b)(i) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date; and provided further, that if on the first
anniversary of the date of this Agreement 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 twenty-one months from the date
of this Agreement.
(c) This Agreement may be terminated by the Seller or the Buyer if (i)
any governmental or regulatory body, the consent of which is a condition to the
obligations of the Seller and the Buyer to consummate the Closing shall have
determined not to grant its or their consent and all appeals of such
determination shall have been taken and have been unsuccessful, (ii) one or more
courts 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 Closing, and such order, judgment or decree shall have
become final and nonappealable or (iii) any statute, rule or regulation shall
have been enacted by any State or Federal government or governmental agency in
the United States which prohibits the consummation of the Closing.
(d) This Agreement may be terminated by the Buyer, if there has been a
material violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the
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Buyer to effect the Closing impossible and such violation or breach has not been
waived by the Buyer.
(e) This Agreement may be terminated by the Seller, if there has been a
material violation or breach by the Buyer of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Seller to effect the Closing impossible and
such violation or breach has not been waived by the Seller.
(f) This Agreement may be terminated by the Seller or the Buyer in
accordance with the provisions of Section 7.11(b) or (c).
10.2. Procedure and Effect of Termination. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby 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:
(a) Said termination shall be the sole remedy of the parties hereto
with respect to breaches of any agreement, representation or warranty contained
in this Agreement and none of the parties hereto nor any of their respective
trustees, directors, officers or Affiliates, as the case may be, shall have any
liability or further obligation to the other party or any of their respective
trustees, directors, officers or Affiliates, as the case may be, pursuant to
this Agreement, except in each case as stated in this Section 10.2 and in
Sections 7.2(b), 7.3 and 7.7.
(b) 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.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
the Seller and the Buyer.
11.2. 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. Notwithstanding anything in this Agreement to the contrary, the
condition set forth in Section 8.3(d) cannot be waived by the Seller without the
consent of the IBEW.
11.3. No Survival. Subject to the provisions of Section 9.2, each and
every representation, warranty and covenant contained in this Agreement (other
than the covenants contained in Sections 3.2, 3.2, 3.4, 7.2, 7.3, 7.4, 7.7, 7.8,
7.10, 7.12, 7.13 and 7.14 and in Articles IX and XI (which covenants shall
survive in accordance with their terms) and other than the representations and
warranties contained in Sections 5.1, 5.2 and 5.3 (which representations and
warranties shall survive for eighteen months from the Closing)) shall expire
with, and be terminated and extinguished by the consummation of the sale of the
Purchased Assets and the transfer of the Assumed Obligations pursuant to this
Agreement and such representations, warranties and covenants shall not survive
the Closing Date; and none of the Seller, the Buyer or any officer, director,
trustee or Affiliate of any of them shall be under any liability whatsoever with
respect to any such representation, warranty or covenant.
11.4. Notices. All notices an other communications hereunder shall be
in writing an shall be deemed given if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or certified
mail (return receipt requested),
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postage prepaid, to the parties at the following address (or at such other
address for a party as shall be specified by like notice; provided that notices
of a change of address shall be effective only upon receipt thereof):
(a) If to the Seller, to:
Niagara Mohawk Power Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
(b) If to the Buyer, to:
NRG Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Whitney LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
11.5. 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 an 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. Notwithstanding the
foregoing, no provision of this Agreement shall create any third party
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beneficiary rights in any employee or former employee of the Seller (including
any beneficiary or dependent thereof) in respect of continued employment or
resumed employment, and no provision of this Agreement shall create any rights
in any such Persons in respect of any benefits that may be provided, directly
or indirectly, under any employee benefit plan or arrangement except as
expressly provided for thereunder. Notwithstanding the foregoing, (i) the Buyer
may assign all of its rights and obligations hereunder to any of its wholly
owned Subsidiaries (direct or indirect) provided but no such assignment will
release the Buyer from any liabilities or obligations hereunder, and (ii) the
Buyer or its permitted assignee may assign, transfer, pledge or otherwise
dispose of its rights and interests hereunder to a trustee or lending
institution (s) for the purposes of financing or refinancing, or by way of
assignments, transfers, conveyances or dispositions in lieu thereof; provided,
however, that no such assignment or disposition shall relieve or in any way
discharge the Buyer or such assignee from the performance of its duties and
obligations under this Agreement. The Seller agrees to execute and deliver such
documents as may be reasonably necessary to accomplish any such assignment,
transfer, conveyance, pledge or disposition of rights hereunder so long as the
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable New York principles of
conflicts of law) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies, except where New York
law is preempted by federal law in which event federal law shall govern.
11.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8. 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.
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11.9. Schedules and Exhibits. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
11.10. Entire Agreement. This Agreement, the Confidentiality
Agreement and the Ancillary Agreements including the Exhibits, Schedules,
documents, certificates and instruments referred to herein or therein, 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 under takings contained in any
material made available to the Buyer pursuant to the terms of the
Confidentiality Agreement (including the Preliminary Information Memorandum,
dated April 1998, the Information Memorandum, dated May 1998, or the Request for
Proposal, dated July 1998, previously made available to the Buyer by the
Seller, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation). This Agreement supersedes all prior agreements and understandings
between the parties with respect to such transactions other than the
Confidentiality Agreement.
11.11. Bulk Sales or Transfer Laws. The Buyer acknowledges that the
Seller will not comply with the provision of any bulk sales or transfer laws
(other than sec. 1141(c) of the New York State Tax Law) of any jurisdiction in
connection with the transactions contemplated by this Agreement. The Buyer
hereby waives compliance by this Seller with the provisions of the bulk sales or
transfer laws of all applicable jurisdictions.
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IN WITNESS WHEREOF, the Seller and the Buyer have caused this agreement
to be signed by their respective duly authorized officers as of the date first
above written.
NIAGARA MOHAWK POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President Financial Planning
NRG ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President
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