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Exhibit 10.7
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ASSET PURCHASE AGREEMENT
by and between
EAST SYRACUSE GENERATING
COMPANY, L.P.
and
▇▇▇▇ STREET GENERATING STATION, L.P.
Dated
June 23, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ Project
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS ................................................ 1
1.1 Definitions ................................................ 1
ARTICLE II PURCHASE AND SALE .......................................... 12
2.1 The Sale ................................................... 12
2.2 Excluded Assets ............................................ 13
2.3 Assumed Liabilities ........................................ 13
2.4 Excluded Liabilities ....................................... 14
ARTICLE III PURCHASE PRICE ............................................. 15
3.1 Purchase Price ............................................. 15
3.2 Inventory Purchase Price Adjustment ........................ 16
3.3 Proration .................................................. 16
ARTICLE IV THE CLOSING ................................................ 17
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 .................................... 18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE
SELLER ..................................................... 19
5.1 Organization; Qualification ................................ 19
5.2 Authority Relative to this Agreement ....................... 20
5.3 Consents and Approvals; No Violation ....................... 20
5.4 Real Estate ................................................ 21
5.5 Legal Proceedings. etc. .................................... 21
5.6 Taxes ...................................................... 21
5.7 Agreements and Contracts; Project Documents ................ 21
5.8 Fixed Assets and Inventory ................................. 22
5.9 Title to Assets ............................................ 22
5.10 Labor Matters .............................................. 23
5.11 ERISA Matters .............................................. 23
5.12 Legal Compliance ........................................... 23
5.13 Hazardous Substances ....................................... 24
5.14 Access to Records .......................................... 24
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE
BUYER ...................................................... 25
6.1 Organization ............................................... 25
6.2 Authority Relative to this Agreement ....................... 25
6.3 Consents and Approvals; No Violation ....................... 25
6.4 Availability of Funds ...................................... 26
ARTICLE VII COVENANTS OF THE PARTIES ................................... 26
7.1 Conduct of Business of the Company ......................... 26
7.2 Insurance .................................................. 27
7.3 Access to Information ...................................... 28
7.4 Expenses ................................................... 29
7.5 Public Statements .......................................... 29
7.6 Consents and Approvals ..................................... 29
7.7 Fees and Commissions ....................................... 30
7.8 Tax Matters ................................................ 30
7.9 Supplements to Schedules and Representations ............... 31
7.10 Employees .................................................. 31
7.11 Risk of Loss ............................................... 32
7.12 Commercially Reasonable Efforts To Consummate
Acquisition; Further Assurances ............................ 33
7.13 Buyer Representatives ...................................... 34
7.14 No Shopping ................................................ 35
7.15 Bulk Sales or Transfer Laws ................................ 35
ARTICLE VIII CLOSING CONDITIONS ......................................... 35
8.1 Conditions to Each Party's Obligations to Effect the
Transaction ................................................ 35
8.2 Conditions to Obligations of the Buyer ..................... 36
8.3 Conditions to Obligations of the Seller .................... 39
8.4 Breakage Fee ............................................... 41
8.5 PILOT Agreements ........................................... 41
8.6 Assignment of O&M Agreement ................................ 43
ARTICLE IX INDEMNIFICATION ............................................ 43
9.1 Indemnification ............................................ 43
9.2 Defense of Claims .......................................... 45
ARTICLE X ERMINATION AND ABANDONMENT ................................. 48
10.1 Termination ................................................ 48
10.2 Procedure and Effect of Termination ........................ 49
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ARTICLE XI MISCELLANEOUS PROVISIONS ................................... 49
11.1 Amendment and Modification ................................. 49
11.2 Waiver of Compliance; Consents ............................. 49
11.3 Notices .................................................... 50
11.4 Assignment ................................................. 51
11.5 Governing Law .............................................. 51
11.6 Counterparts ............................................... 51
11.7 Interpretation ............................................. 51
11.8 Entire Agreement ........................................... 51
11.9 Severability ............................................... 52
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EXHIBITS
Exhibit A Form of Instrument of Assignment and Assumption
Exhibit B Form of LDC Gas Transportation Agreement
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Seller Guaranty
Exhibit E Form of Deed and ▇▇▇▇ of Sale
Exhibit F Form of Buyer Guaranty
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SCHEDULES
Schedule 1.1(a)(3) Applicable Permits
Schedule 1.1(a)(14) Easements
Schedule 1.1(a)(24) Fixed Assets
Schedule 1.1(a)(31) Insurance
Schedule 1.1(a)(33) Inventory
Schedule 1.1(a)(42) Permitted Encumbrances
Schedule 1.1(a)(49) Seller Agreements
Schedule 2.3(a) Buyer PILOT Payments
Schedule 3.1 Allocation of Purchase Price
Schedule 5.3 Required Seller Consents
Schedule 5.4 Real Estate
Schedule 5.5 Seller Litigation and Administrative Proceedings
Schedule 5.6 Certain Tax Matters
Schedule 5.11 Seller Employee Plans and Programs
Schedule 5.12 Seller Exceptions to Legal Compliance
Schedule 5.13 Hazardous Substances and Related Matters
Schedule 7.1 Conduct of Seller's Business Prior to Closing
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated June 23, 1998, by and between East
Syracuse Generating Company, L.P., a Delaware limited partnership (the
"Seller"), and ▇▇▇▇ Street Generating Station, L.P., a Delaware limited
partnership (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, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. (a) As used in this Agreement, the following terms
have the meanings specified in this Section 1.1(a).
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(2) "Applicable Law" means, with reference to any Person, all laws,
treaties, judgments, decrees, injunctions, writs and orders of any Governmental
Authority and all rules, regulations, directives and Permits of any Governmental
Authority applicable to such Person or its property or in respect of its
operations, including in the case of the Seller all rules and regulations of any
Governmental Authority relating to the ownership, use, maintenance and operation
of East Syracuse and all Environmental Laws.
(3) "Applicable Permits" means those Permits required for the
ownership, use, operation, management or maintenance of East Syracuse, as owned,
used, operated, managed and maintained by the Seller prior to the Closing, each
as set forth in Schedule 1.1(a)(3).
(4) "Assigned Contracts" means (i) the Site Lease Documents, (ii)
the NIMO Agreements (iii) the License Agreement for Wire, Pipe and Cable
Transverse Crossings and Longitudinal Occupations, between Consolidated Rail
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Corporation and East Syracuse Generating Company, L.P., dated as of November 22,
1991, (iv) the Bailment Agreement by and among East Syracuse Generating Company,
L.P., Alpco Cycling Company, Inc. and Concrete Pipe and Products Corporation and
(v) the O&M Agreement to the extent the Buyer elects to assume such agreement
pursuant to Section 8.6.
(5) "Books and Records" means, collectively, all papers, databases,
computer programs, disks, software, records, and other books, records, documents
and materials in the Seller's or the Operator's care, custody or control
relating to ownership, use, management, operation or maintenance of East
Syracuse, but excluding any market studies performed by, or on behalf of, Seller
or its Affiliates.
(6) "Business Day" shall mean any day other than Saturday, Sunday
and any day which is a legal holiday or a day on which banking institutions in
New York are authorized by law or other governmental action to close.
(7) "Buyer Guarantor" means Orion Power Holdings, Inc. a Delaware
corporation.
(8) "Buyer Guaranty" means the Guaranty in the form of Exhibit F
hereto, executed and delivered by the Buyer Guarantor.
(9) "Buyer Parties" means each of the Buyer and the Buyer Guarantor.
(10) "Buyer Representatives" means the Buyer's accountants, counsel,
environmental consultants, financial advisors and other authorized
representatives.
(11) "Code" means the Internal Revenue Code of 1986, as amended.
(12) "Confidentiality Agreement" means the Confidentiality
Agreement, dated March 16, 1998, between the Seller and the Buyer.
(13) "Consent" means each consent and approval, and any estoppel
agreement, required to be obtained by the Seller or the Buyer for the
consummation of the transactions contemplated by the Operative Documents
pursuant to Section 8.1(c).
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(14) "Easements" means each of the easements, rights of way, and
other similar rights more particularly described in Schedule 1.1(a)(14) hereto
and which are all of the easements, rights of way and similar rights necessary,
to the Seller's knowledge, to provide the Seller with such rights appurtenant to
the Site that are required for the Seller to own, use, operate and maintain East
Syracuse and the Purchased Assets consistent with the Seller's past practice.
(15) "East Syracuse" means the gas-fired combined-cycle cogeneration
facility, which includes two approximately 40 megawatt gas turbines and one
approximately 25 megawatt steam turbine, known as the East Syracuse Station and
located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
(16) "Emission Allowances" means the emission allowances for oxides
of nitrogen (NOx) that the Seller or any of its Affiliates may be allocated from
time to time with respect to East Syracuse pursuant to applicable New York state
laws, rules and regulations or agreements relating thereto, including but not
limited to the Agreement Regarding Allocation Amounts that will be Proposed in
Regulation Amongst the Independent Power Producers of New York, the New York
Power Pool, and the New York State Department of Environmental Conservation
executed as of November 6, 1997.
(17) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, easements, conservation easements, deed restrictions, encumbrances
and charges of any kind.
(18) "Environmental Costs" means all claims, judgments, damages,
losses, penalties, fines, liabilities (including but not limited to strict
liability), Encumbrances, costs and expenses of (i) investigation and defense of
any claim, whether or not such claim is ultimately defeated, and (ii) any good
faith settlement, of whatever kind or nature, including but not limited to
reasonable attorneys' fees and disbursements and consultants' fees which are
incurred at any time as a result of the existence, prior to or after the
Closing, of any Hazardous Substances upon, about or beneath the Purchased Assets
or Released from the Purchased Assets, or migrating to or from the Purchased
Assets, or as a result of any violation of Environmental Laws pertaining to the
Purchased Assets, regardless of whether the existence of such Hazardous
Substances or the violation of Environmental Laws arose after, during or prior
to the Seller's construction, ownership or operation of the Purchased Assets,
and including but not limited to:
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(22) "FERC" means the Federal Energy Regulatory Commission.
(23) "FIRPTA Affidavit" means the Foreign Investment in Real Estate
Tax Act Certification and Affidavit substantially in the form of Exhibit C
hereto.
(24) "Fixed Assets" means, collectively, all of the equipment,
machinery, tools, supplies, computers, office equipment, fixtures and other
fixed assets and consumables, if any, owned by the Seller and (excluding all
Excluded Assets) relating to the ownership, use, management, operation and
maintenance of East Syracuse, a list of the general categories of which is
attached hereto as Schedule 1.1(a)(24).
(25) "GAAP" means generally accepted accounting principles in effect
in the United States from time to time, consistently applied.
(26) "Governmental Authority" means any federal, state, local,
foreign or other governmental or quasi-governmental, regulatory or
administrative agency, governmental commission, department, board, bureau or
instrumentality, subdivision, court, tribunal, arbitrator or arbitral body.
(27) "Hazardous Substances" means (a) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form, urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid which may contain levels of polychlorinated biphenyls;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning and
regulatory effect; or (c) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any applicable Environmental Law.
(28) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
(29) "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
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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.
(30) "Instrument of Assignment and Assumption" means the Instrument
of Assignment and Assumption, dated the Closing Date, substantially in the form
of Exhibit A hereto relating to the assignment by the Seller of all of its
right, title and interest in, to and under the Assigned Contracts and, to the
extent assignable under Applicable Law, the Applicable Permits to the Buyer and
the assumption by the Buyer of the Assumed Liabilities, to be delivered at the
Closing.
(31) "Insurance " means the insurance maintained by the Seller or
its Affiliates applicable to the Purchased Assets and the Seller's ownership,
operation and maintenance thereof, all as further described in Schedule
1.1(a)(31), including types and amounts of coverage and deductibles.
(32) "Intangible Rights" means, collectively, all of the trade
names, trademarks, service marks, copyrights, patents, patent rights, licenses,
trade secrets, technical know-how, goodwill and other intangible assets owned by
the Seller or in which the Seller has an interest and which relate to the
ownership, management, operation and maintenance of East Syracuse or the
Purchased Assets, excluding all Excluded Assets.
(33) "Inventory" means, collectively, all of the inventory and spare
parts owned by the Seller and relating to the ownership, management, operation
and maintenance of East Syracuse, a list of which is attached hereto as Schedule
1.1(a)(33).
(34) "LDC Gas Transportation Agreement" means that certain Gas
Transportation Agreement to be entered into between the Seller and Niagara
Mohawk Power Corporation.
(35) "Master Restructuring Agreement" means the Master Restructuring
Agreement, dated as of July 9, 1997, as amended, among Niagara Mohawk Power
Corporation, the Seller and 15 other independent power producers, including the
Settlement Agreement related thereto approved by the New York Public Service
Commission.
(36) "Material Adverse Effect" means any change in or effect on the
Purchased Assets or the ability of any Seller Party to consummate the
transactions contemplated by the Operative Documents or to fulfill its material
obligations under
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any of the Operative Documents to which it is a party after the date of this
Agreement and, with respect to the performance capabilities of the electrical
generating facility included in the Purchased Assets, after April 1, 1998, that
is materially adverse to (a) the business, assets, operations or condition
(financial or otherwise) of the Purchased Assets, taken as a whole, or (b) the
ability of any Seller Party to consummate the transactions contemplated by the
Operative Documents or to fulfill its material obligations under any of the
Operative Documents to which it is a party, as applicable, other than, in the
case of clause (a) and (b), (i) any change or effect resulting from changes in
the international, national, regional or local wholesale or retail markets for
electric power, (ii) any change or effect resulting from changes in the
international, national, regional or local markets for any fuel used at the
Purchased Assets, (iii) any change or effect resulting from changes in the North
American, national, regional or local electric transmission systems, and (iv)
any materially adverse change in or effect on the Purchased Assets that is cured
(including by the payment of money) by the Seller to the Buyer's reasonable
satisfaction before the Termination Date. Without limiting the foregoing, the
Buyer and the Seller acknowledge and agree that (x) solely for purposes of
Section 8.2(a), any change in or effect of $500,000 or more with respect to the
Purchased Assets, taken as a whole, shall constitute a "Material Adverse Effect"
and any change in or effect of less than $500,000 with respect to the Purchased
Assets, taken as a whole, shall not constitute a "Material Adverse Effect" and
(y) for all other purposes of this Agreement, (A) with respect to claims made on
or before the date that is 90 days after the Closing Date, any individual change
in or effect of $125,000 or more with respect to the Purchased Assets shall
constitute a "Material Adverse Effect" and any individual change in or effect of
less than $125,000 with respect to the Purchased Assets shall not constitute a
"Material Adverse Effect" and (B) with respect to claims made after the date
that is 90 days after the Closing Date, any individual change in or effect of
$250,000 or more with respect to the Purchased Assets shall constitute a
"Material Adverse Effect" and any individual change in or effect of less than
$250,000 with respect to the Purchased Assets shall not constitute a "Material
Adverse Effect."
(37) "NIMO Agreements" means, collectively, (i) the LDC Gas
Transportation Agreement and (ii) the Interconnection Agreement made as of
January 13, 1992, in each case, entered into between the Seller and Niagara
Mohawk Power Corporation, and approved by the Buyer, such approval not to be
unreasonably withheld.
(38) "O&M Agreement" means the Operation and Maintenance Agreement,
dated as of January 14, 1991, between East Syracuse Generating
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Company, L.P. and U.S. Operating Services Company, as amended, supplemented or
otherwise modified from time to time.
(39) "Operative Documents" means this Agreement, the Instrument of
Assignment and Assumption, the Deed and ▇▇▇▇ of Sale, each Seller Guaranty, the
Buyer Guaranty and each Consent.
(40) "Operator" means U.S. Operating Services Company, a California
general partnership.
(41) "Permit" means any action, approval, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from a Governmental Authority.
(42) "Permitted Encumbrances" means, collectively, the (i)
Encumbrances set forth in Part A of Schedule 1.1(a)(42); (ii) with respect to
any date before the Closing Date, Encumbrances set forth in Part B of Schedule
1.1(a)(42); (iii) purchase money Encumbrances securing all or a portion of the
purchase price of any assets acquired by the Seller after the date of this
Agreement, so long as such purchase of assets is in accordance with the Seller's
ordinary course of business, consistent with past practices; (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, diligently
pursued, and for which adequate reserves in accordance with GAAP have been
established and are maintained; (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, diligently pursued, and for which adequate reserves in accordance
with GAAP have been established and are maintained; and (vi) zoning,
entitlement, conservation restriction and other land use and environmental
regulations by Governmental Authorities.
(43) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or other
entity, or any governmental entity or any department or agency thereof.
(44) "PILOT Agreements" means each of (i) the Agreement for Payment
in Lieu of County Taxes, dated as of January 15, 1992, between the Seller and
Onondaga County Industrial Development Agency, (ii) the Agreement for Payment in
Lieu of School District Taxes, dated as of December 18, 1991, between
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the Seller and the Board of Education of the East Syracuse-Minoa Central School
District, (iii) the Agreement for Payment in Lieu of Town Taxes, dated as of
December 18, 1991, between the Seller and the Town of ▇▇▇▇▇▇, and (iv) the
Agreement for Payment in Lieu of Village Taxes, dated as of December 18, 1991,
between the Seller and the Village of East Syracuse.
(45) "PILOT Determination Date" means the sixtieth day following the
date of this Agreement.
(46) "Purchased Assets" means, subject to Section 2.2. all of the
Seller's right, title and interest in, to and under (i) the Real Estate, the
Assigned Contracts, the Applicable Permits (to the extent assignable under
Applicable Law), the Fixed Assets, the Inventory, the Emission Allowances, and
the Books and Records and (ii) all other tangible or intangible property used in
connection with the ownership, use, operation or maintenance of East Syracuse,
but excluding all Excluded Assets.
(47) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to escape into or through
the environment.
(48) "Securities Act" means the Securities Act of 1933, as amended.
(49) "Seller Agreements" means any note, bond, mortgage, indenture,
license or other material agreement to which Seller is a party or by which any
of its properties or assets may be bound.
(50) "Seller Environmental Responsibility" means any Environmental
Costs to the extent attributable to (i) a Release by the Seller or the Operator
of a Hazardous Substance upon, about or beneath the Site prior to Closing that
exceeds the levels or amounts permitted by Applicable Law or (ii) Hazardous
Substances present upon, about or beneath the Site on or prior to the Closing
that exceed the levels or amounts permitted by Applicable Law as to which
presence of excess levels the Seller or the Operator has actual knowledge on the
Closing Date.
(51) "Seller Guarantors" means U.S. Generating Company, a California
general partnership and Bechtel Generating Company, Inc., a Delaware
corporation.
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(52) "Seller Guaranty" means each Guaranty, in the form of Exhibit D
hereto, executed and delivered by a Seller Guarantor, respectively.
(53) "Seller Parties" means each of the Seller and the Seller
Guarantors.
(54) "Site" means the real property demised to the Seller under the
Agreement of Lease made as of the 15th day of January 1992 between ▇▇▇▇▇▇ Family
Partnership, as Landlord, and East Syracuse Generating Company, L.P., as Tenant,
as amended by Modification of Agreement of Lease made as of the 15th day of
January, 1992 between ▇▇▇▇▇▇ Family Partnership, as Landlord, and East Syracuse
Generating Company, L.P., as Tenant
(55) "Site Lease Documents" means:
(i) the Agreement of Lease made as of the 15th day of January
1992 between ▇▇▇▇▇▇ Family Partnership, as Landlord, and East
Syracuse Generating Company, L.P., as Tenant, as amended by
Modification of Agreement of Lease made as of the 15th day of
January, 1992 between ▇▇▇▇▇▇ Family Partnership, as Landlord, and
East Syracuse Generating Company, L.P., as Tenant;
(ii) the NiMo Interconnection Facility and Interconnection
Facility Premises Sublease, from East Syracuse Generating Company,
L.P., Sublessor, to Niagara Mohawk Power Corporation, Sublessee,
dated as of July 30, 1993;
(iii) the License by and between Niagara Mohawk Power
Corporation and East Syracuse Generating Company, L.P., dated as of
December 9, 1991, as amended by License Agreement No. 1 between
Niagara Mohawk Power Corporation and East Syracuse Generating
Company, L.P., dated July 30, 1993; and
(iv) the Sublease Agreement originally made between the
Onondaga County Industrial Development Agency, as Landlord, and
Wilmington Trust Company, as Owner Trustee, as Tenant, dated as of
January 15, 1992 and the Assignment of Sublease Agreement by which
Wilmington Trust Company, as Owner Trustee, assigns its interests as
tenant to East Syracuse Generating Company, L.P.
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(56) "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.
(57) "Tax Return" means any return, report, information return or
other document (including but not limited to any related or supporting
information) required to be supplied to any authority with respect to Taxes.
(58) "Taxes" means all taxes, charges, fees, levies, penalties or
other assessments imposed by any United States federal, state or local or
foreign taxing authority, including, but not limited to, income, excise,
utility, property, sales, transfer, franchise, payroll, withholding, social
security or other taxes, including any interest, penalties or additions
attributable thereto.
(59) "Termination Date" means the date on which written notice of
the termination of this Agreement is given by one party to the other party in
accordance with the provisions of Article X.
(60) "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) Occupational, Safety and Health Administration
medical reports, and (iv) active medical restriction forms.
(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 Liabilities 2.3(b)
Buyer Recitals
Buyer Regulatory Approvals 6.3
Closing 4.1
Closing Date 4.1
Conditions 4.1
Deed and ▇▇▇▇ of Sale 4.3(e)
Direct Claim 9.2(c)
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Employees 7.10(a)
ERISA 5.11
Excluded Assets 2.2
Excluded Liabilities 2.4
Indemnifiable Loss 9.1(a)
Indemnifying Party 9.2(a)
Indemnitee 9.2(a)
Maximum Buyer PILOT Obligations 2.3(a)
Non-Solicitation Period 7.10(c)
PILOT Notification Date 8.5
Purchase Price 3.1
Real Estate 5.4
Seller Recitals
Seller ERISA Liabilities 5.11
Seller Window 7.10(a)
Third Party Claim 9.2(a)
(c) Reference to a given Article, Section, Subsection, Exhibit
or Schedule is a reference to an Article, Section, Subsection, Exhibit or
Schedule of this Agreement, unless otherwise specified. Except where otherwise
expressly provided or unless the context otherwise necessarily requires: (i) any
reference to a given agreement or instrument is a reference to that agreement or
instrument as originally executed, and as modified, amended, supplemented and
restated through the date as of which reference is made to that agreement or
instrument, (ii) accounting terms have the meanings given to them by GAAP, (iii)
all terms defined in this Agreement or by reference in this Agreement which are
in the singular have the same meanings when used in the plural and vice versa,
and (iv) unless used in conjunction with the word "either," the term "or" is not
exclusive.
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), all of the Purchased Assets.
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2.2 Excluded Assets. Notwithstanding any provision herein to the
contrary, the Purchased Assets shall not include the following assets and
properties of Seller (herein referred to as the "Excluded Assets"):
(a) all (i) cash, cash equivalents and bank deposits, and (ii)
accounts receivable, and any income, sales, payroll or other tax receivables, in
each case, attributable to any period prior to the Closing;
(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) any refund or credit (i) related to real or personal
property Taxes to the extent attributable to periods prior to the Closing Date
in respect of the Purchased Assets, whether such refund is or was received as a
payment or as a credit against future real or personal property Taxes payable,
or (ii) arising under any Seller Agreement to the extent attributable to periods
prior to the Closing Date;
(d) all personnel records other than (i) Transferring Employee
Records or (ii) other records, the disclosure of which is required by law, legal
process or subpoena; and
(e) all fuel oil stored at the Site at the Closing and owned
by Seller or ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Squibb Company.
2.3 Assumed Liabilities.
(a) On the Closing Date, the Buyer shall deliver to the Seller
the Instrument of Assignment and Assumption pursuant to which (i) the Seller
shall assign to the Buyer and the Buyer shall accept, all of the Seller's right,
title and interest in, to and under the Assigned Contracts and, to the extent
assignable under Applicable Law, the Applicable Permits, and (ii) solely as
between the Buyer and the Seller, the Buyer shall assume, in each case, to the
extent attributable to events, conditions or circumstances arising or existing
during any period from and after the Closing Date, 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 terms and subject to the conditions thereof,
including, without limitation, the following liabilities and obligations:
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(i) all liabilities and obligations of the Sellers under the
Assigned Contracts to the extent attributable to events, conditions or
circumstances arising or existing during any period from and after the Closing
Date;
(ii) the obligation to make the payments specified in Schedule
2.3(a) on the dates specified therein to, or at the direction of, the Seller
(the "Maximum Buyer PILOT Obligations");
(iii) all liabilities and obligations in respect of Taxes for
which the Buyer is liable pursuant to Section 7.8;
(iv) all Environmental Costs that do not constitute a Seller
Environmental Responsibility, whether or not arising from the presence of
Hazardous Substances upon, about or beneath the Purchased Assets or migrating to
or from the Purchased Assets, or whether or not arising in any manner whatsoever
out of the violation of any Environmental Laws pertaining to the Purchased
Assets or the Buyer's operation of the Purchase Assets and whether or not the
conditions giving rise to the Environmental Costs existed at the Closing Date;
and
(v) all liabilities and obligations arising out of or relating
to the employment practices of the Buyer and its Affiliates, including but not
limited to (A) the hiring, employment, promotion, termination, work environment
and other labor practices of the Buyer or any of its Affiliates or any violation
of Applicable Law related thereto and (B) all employee benefit plans, programs
and practices of the Buyer and its ERISA Affiliates.
(b) All of the foregoing liabilities and obligations to be
assumed by the Buyer under Section 2.3(a) (excluding any Excluded Liabilities),
in each case, to the extent attributable to events, conditions or circumstances
arising, occurring or existing during any period from and after the Closing
Date, are referred to herein as the "Assumed Liabilities." It is understood and
agreed that nothing in this Section 2.3 shall constitute a waiver or release of
any claims arising out of the contractual relationships between the Seller and
the Buyer.
2.4 Excluded Liabilities. The Buyer shall not assume or be obligated
to pay, perform or otherwise discharge the following liabilities or obligations:
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(i) any liabilities or obligations of the Seller or the
Operator in respect of any Excluded Assets or other assets of the Seller that
are not Purchased Assets;
(ii) any liabilities or obligations in respect of Taxes for
which the Seller is liable pursuant to Section 7.8, which shall include, without
limitation, any Taxes arising out of the matters set forth on Schedule 5.6
hereto;
(iii) any Environmental Costs that constitute a Seller
Environmental Responsibility;
(iv) any liabilities or obligations arising out of or relating
to (A) except to the extent otherwise expressly limited or conditioned in any of
the Operative Documents, any of the Purchased Assets to the extent attributable
to events, conditions or circumstances arising, occurring or existing during any
period prior to the Closing Date, (B) any Seller Agreement (other than the
Assigned Contracts), which shall include, without limitation, each of the Seller
Agreements referenced in Part B of Schedule 1.1(a)(42), (C) the employment
practices of the Seller and its Affiliates, including but not limited to (1) the
hiring, employment, promotion, termination, work environment and other labor
practices of the Seller or any of its Affiliates or any violation of any
Applicable Law relating thereto and (2) all employee benefit plans, programs and
practices of the Seller and its ERISA Affiliates, including but not limited to
the Seller ERISA Liabilities, and (D) any of the matters disclosed on Schedule
5.12.
All such liabilities and obligations are herein called the "Excluded
Liabilities." The Seller hereby releases and discharges the Buyer from each of
the Excluded Liabilities without the requirement of any further act by the
Seller, the Buyer or any other Person.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The purchase price for the Purchased Assets
shall be an amount equal to $17,300,000 (the "Purchase Price") payable in
accordance with Section 4.2 hereof. The Purchase Price shall be allocated among
the Purchased Assets as set forth in Schedule 3.1 hereto. To the extent
applicable, the Purchase Price shall be adjusted (a) with respect to Inventory,
as set forth in Section 3.2 and (b) pursuant to Section 7.11.
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3.2 Inventory Purchase Price Adjustment. Within ten Business Days
after the Closing and upon not less than three days' prior notice to the Seller,
the Buyer shall have the right to conduct a review of the spare parts Inventory
to verify the number and type of spare parts located at the Site as of the
Closing Date. The Seller or its representatives shall have the right to attend
and monitor such review: provided, that Seller and its representatives shall
comply with all safety practices and procedures maintained by the Buyer at the
Site and the Seller will indemnify, defend and hold harmless the Buyer from and
against any and all Indemnifiable Losses asserted against or suffered by the
Buyer relating to, resulting from or arising out of any acts of omissions of the
Seller and its representatives at the Site. In the event that such review
indicates any difference between the actual number or type of spare parts
Inventory located at the Site at the Closing and the number and type of spare
parts set forth on Schedule 1.1(a)(33), the Buyer shall notify the Seller in
writing and the Purchase Price shall be appropriately adjusted. Such adjustment
shall be based upon the "average cost" per unit of spare parts listed in
Schedule 1.1(a)(33) unless otherwise agreed by the Buyer and the Seller. The
Purchase Price shall not be adjusted (a) downward by an amount in excess of
$1,000,000 or (b) upward by any amount; provided, however, that the value of any
items of Inventory set forth on Schedule 1.1(a)(33) but not located at the Site
at the Closing shall be offset against the value of any items of Inventory
located at the Site at the Closing but not set forth on Schedule 1.1(a)(33).
3.3 Proration.
(a) The Buyer and the Seller agree that all of the items
normally prorated, including but not limited to those listed below, relating to
the business and operation of the Purchased Assets will be prorated as of the
Closing Date, with the Seller liable to the extent such items relate to any time
period through the Closing Date, and the Buyer liable to the extent such items
relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy, use,
water and other similar taxes and assessments, and all other charges, if any, on
or with respect to the business and operation of the Purchased Assets,
including, without limitation, amounts paid by the Seller under the PILOT
Agreements for calendar year 1998;
(ii) rent, taxes and other items payable by or to the
Seller under any of the Assigned Contracts;
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(iii) any Permit, registration, compliance assurance
fees or other fees with respect to any Applicable Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(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. The Seller and the Buyer agree to
cooperate and 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 3.3.
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
"Conditions") and subject to Section 10.1 hereof, the closing of the sale of the
Purchased Assets contemplated by this Agreement (the "Closing") will take place
at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. (local time) on such date as the parties may agree,
which date shall be the later of (a) the date that is no later than five
Business Days following the date on which all of the Conditions (other than
those Conditions set forth in Section 8.1(e), Sections 8.2(b), (d), (e), (g) and
(h) and Sections 8.3(b), (c), (d) and (e) and such other Conditions that the
Seller and the Buyer agree will be satisfied at the Closing) have been satisfied
or waived and (b) the date which is eighty-five (85) days after the earlier to
occur of (i) the PILOT Notification Date and (ii) the PILOT Determination Date;
or at such other place or time as the parties may agree. The date and time at
which the Closing actually occurs is referred to herein 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 (i) at
the Closing an amount in United States dollars equal to $16,300,000 and (ii)
subject to any adjustment of that
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portion of the Purchase Price allocated to the Inventory pursuant to Section
3.2, on each of the first, second and third anniversaries of the Closing Date,
an amount in United States dollars equal to $333,333.33. All of such payments
shall be made 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. The Seller will deliver the following
to the Buyer at the Closing:
(a) Counterpart signature pages for the applicable Seller
Party of each other Operative Document to which any Seller Party is a party duly
executed by each Seller Party which is intended to be a party thereto;
(b) All consents, waivers or approvals required to be obtained
by the Seller with respect to the sale, transfer and assignment of the Purchased
Assets to, and the assumption of the Assumed Liabilities by, the Buyer, or the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents, including the Consents to be provided by the Seller, each
of which shall be in form and substance reasonably acceptable to the Buyer;
(c) An opinion of counsel and certificate (as contemplated by
Sections 8.2(d) and 8.2(g)) with respect to the Purchased Assets and the
Operative Documents;
(d) One or more deeds and bills of sale or other instruments
of conveyance of the Real Estate and personal property included in the Purchased
Assets, substantially as set forth in Exhibit E hereto (collectively, the "Deed
and ▇▇▇▇ of Sale"), related to the sale and transfer of the Purchased Assets to
the Buyer, duly executed and acknowledged by the Seller and in recordable form;
(e) A FIRPTA Affidavit executed by the Seller; and
(f) Such other agreements, documents, instruments and writings
as are required to be delivered by the Seller or any Seller Guarantor on or
prior to the Closing Date pursuant to any of the Operative Documents.
4.4 Deliveries by the Buyer. The Buyer will deliver the following to
the Seller at the Closing:
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(a) The applicable portion of the Purchase Price by wire
transfer of immediately available funds or such other means as are agreed upon
by the Seller and the Buyer;
(b) An opinion of counsel and certificate (as contemplated by
Sections 8.3(c) and 8.3(d)) with respect to the Purchased Assets;
(c) Counterpart signature pages of the Buyer for each other
Operative Document to which the Buyer or the Buyer Guarantor is a party, duly
executed by the Buyer or the Buyer Guarantor, as applicable;
(d) All consents, waivers or approvals required to be obtained
by the Buyer with respect to the sale, transfer and assignment of the Purchased
Assets to, and the assumption of the Assumed Liabilities by, the Buyer, or the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents, including the Consents to be provided by the Buyer, each of
which shall be in form and substance reasonably acceptable to the Seller; and
(e) Such other agreements, documents, instruments and writings
as are required to be delivered by the Buyer or the Buyer Guarantor on or prior
to the Closing Date pursuant to any of the Operative Documents or otherwise
required in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as of the date of
this Agreement as follows.
5.1 Organization; Qualification. The Seller is a limited partnership
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite power and authority to own, lease, and operate its
properties and to carry on its business as is now being conducted. The Seller is
duly qualified or licensed to do business as a foreign partnership and is in
good standing in New York and in each other jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in each case in those jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect. The Seller has heretofore delivered to the
Buyer complete and correct copies of its Certificate of Limited Partnership and
Partnership Agreement as currently in effect.
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5.2 Authority Relative to this Agreement. The Seller has full power
and authority to execute and deliver this Agreement and the other Operative
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the other
Operative Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Seller and no other proceedings on the part of the Seller or
its general partners are necessary to authorize this Agreement, such other
Operative Documents or to consummate the transactions contemplated hereby or
thereby. Each of this Agreement and the other Operative Documents to which the
Seller is a party has been or will on or prior to Closing be duly and validly
executed and delivered by the Seller, and (assuming that this Agreement and the
other Operative Documents to which the Buyer is also a party constitute a valid
and binding agreement of the Buyer) each Operative Document to which the Seller
is a party constitutes or will on or prior to Closing constitute a valid and
binding agreement of the Seller and is or will on or prior to Closing be
enforceable against the Seller in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
5.3 Consents and Approvals; No Violation. Except as set forth in
Schedule 5.3 and the filings by the Buyer and the Seller required by the HSR
Act, neither the execution and delivery of this Agreement by the Seller nor the
sale by the Seller of the Purchased Assets and the assumption by the Buyer of
the Assumed Liabilities pursuant to this Agreement will (a) conflict with or
result in any breach of any provision of the Seller's Partnership Agreement, (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except for those requirements that
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 which is different from the
business or activities of the Seller prior to Closing; (c) as of the Closing
Date, result in a breach or default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any Assigned Contract, any other Seller Agreement or any other note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Seller or any of its subsidiaries is a party or by which any of their
respective properties or assets may be bound, except for such breaches or
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained and remain in full force and
effect, and a complete and correct copy of
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which has been provided to the Buyer prior to Closing; or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Seller,
or any of its assets, which violation would have a Material Adverse Effect.
5.4 Real Estate. Schedule 5.4 contains a description of, and
exhibits indicating the location of, all of the Easements and other real
property interests legally or beneficially owned by the Seller, all of which is
included in the Purchased Assets (collectively, the "Real Estate"). To Seller's
knowledge, the Real Estate and the Site Lease Documents constitute all of the
real property rights necessary to use or operate the Purchased Assets as used or
operated by the Seller prior to the Closing, consistent with past practices.
Complete and correct copies of any current surveys in the Seller's possession or
any policies of title insurance currently in force and in the possession of the
Seller with respect to such real property have heretofore been delivered by the
Seller to the Buyer.
5.5 Legal Proceedings, etc. Except as set forth in Schedule 5.5,
there are no claims, actions, proceedings or investigations pending or, to the
Seller's knowledge, threatened against the Seller before any Governmental
Authority or other body acting in an adjudicative capacity, which, if adversely
determined, would have a Material Adverse Effect. Except as set forth in
Schedule 5.5, the Seller is not subject to any outstanding judgment, rule,
order, writ, injunction or decree of any Governmental Authority that has a
Material Adverse Effect.
5.6 Taxes. With respect to the Purchased Assets, (a) all material
Tax Returns required to be filed have been filed, and (b) all Taxes shown to be
due on such Tax Returns have been paid in full. Except as set forth in Schedule
5.6, (i) no notice of deficiency or assessment has been received or, to the
Seller's knowledge, threatened in writing to be delivered from any taxing
authority with respect to liabilities for Taxes of the Seller in respect of the
Purchased Assets, which have not been fully paid or finally settled, (ii) any
such deficiency or assessment shown in such Schedule 5.6 is being contested in
good faith through appropriate proceedings, and (iii) no such Taxes or Tax
Returns are being audited or, to the Seller's knowledge, questioned by any such
taxing authority. Except as set forth in Schedule 5.6, there are no outstanding
agreements or waivers extending the applicable statutory periods of limitation
for Taxes associated with the Purchased Assets for any period.
5.7 Agreements and Contracts; Project Documents. Set forth on
Schedule 1.1(a)(3) is a complete and accurate list of all Applicable Permits. To
Seller's knowledge, set forth on Schedule 1.1(a)(49) is a complete and accurate
list of
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all material Seller Agreements. A true, correct and complete copy of each
Applicable Permit and each Assigned Contract has been delivered to the Buyer on
or before the date of this Agreement and a true, correct and complete copy of
each of the other Seller Agreements has been made available to the Buyer on or
before the date of this Agreement and:
(a) (i) each Assigned Contract is, or will on or prior to the
Closing be, in full force and effect and no material default, breach or failure
of a condition by the Seller nor to the Seller's knowledge by any other Person
has occurred and is continuing under any Assigned Contract, and (ii) each
Applicable Permit is in full force and effect and except for proceedings and
conditions related to the renewal of Applicable Permits in the ordinary course
of business or the transfer or assignment of Applicable Permits, to the Seller's
knowledge, no Applicable Permit is subject to any appeal, further proceeding or
unsatisfied condition, nor has any variance been applied for with respect
thereto; and
(b) the Assigned Contracts constitute, or on or prior to the
Closing will constitute, the legal, valid and binding obligations of the Seller,
are, or on or prior to the Closing will be, in full force and effect and
enforceable as to the Seller, and to the Seller's knowledge, constitute, or on
or prior to the Closing will constitute, the legal, valid and binding obligation
of, and are, or on or prior to the Closing will be, enforceable against, the
other third party signatories to such Assigned Contracts in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting or relating to enforcement of creditors' rights generally or general
principles of equity.
5.8 Fixed Assets and Inventory. Schedule 1.1(a)(25) and Schedule
1.1(a)(33), respectively, set forth a complete and accurate list of all material
Fixed Assets and all material Inventory, other than the Excluded Assets. Except
as set forth on Schedule 1.1(a)(25) or Schedule l.1(a)(33), all of the Fixed
Assets and Inventory are located on the Site.
5.9 Title to Assets. Except for Permitted Encumbrances, to the
knowledge of the Seller, the Seller has marketable title to the Real Estate free
and clear of all Encumbrances. Except for Permitted Encumbrances, the Seller has
good and valid title to the other Purchased Assets that it purports to own. Upon
the Closing, the Seller will convey all of its right, title and interest in, to
and under the Purchased Assets to the Buyer pursuant to the Deed and ▇▇▇▇ of
Sale, the Instrument of Assignment and Assumption and the other Operative
Documents.
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5.10 Labor Matters. To the extent related to the Seller's ownership,
use or management of the Purchased Assets, or the operation and maintenance of
the Purchased Assets by the Operator on behalf of the Seller, (a) neither the
Seller nor the Operator is a party to any collective bargaining agreement, (b)
no employee of the Seller or the Operator is a member of or represented by a
collective bargaining unit with respect to such employee's employment with the
Seller, and (c) to the knowledge of the Seller, there are no labor controversies
or grievances pending or threatened against the Seller or the Operator that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
5.11 ERISA Matters. The Seller and each of its subsidiaries is in
compliance with the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), except where the failure to so comply would not, individually or in
the aggregate, have a Material Adverse Effect. None of the Seller or its
subsidiaries has any obligation with respect to any employee benefit plan,
program or practice other than pursuant to the employee plans and programs
described on Schedule 5.11, the Seller and its ERISA Affiliates have complied
with all of their respective obligations under such plans, programs and
practices and neither the Seller nor any of its ERISA Affiliates has any
liabilities in respect of any such plan, program or practice other than (a) the
obligation to make contributions and pay benefits in the ordinary course, and
(b) the additional liabilities set forth in Schedule 5.11, which in the
aggregate would not have a Material Adverse Effect. None of the execution,
delivery or performance of the Operative Documents to which the Seller Parties
are party or the consummation of the transactions contemplated hereby or thereby
will result in any payment of any nature becoming due, any benefits becoming
payable or any other liability, in each case, under or pursuant to any employee
benefit plan, program or practice of the Seller or any of its ERISA Affiliates
(collectively "Seller ERISA Liabilities"), for which the Buyer is or may become
liable or which may result in any Encumbrance upon any Purchased Asset.
5.12 Legal Compliance. Except as set forth in Schedule 5.12, the
Seller has not received any written notification that it is in violation of any
Applicable Laws (including but not limited to Environmental Laws) or Permits
applicable to it or any of the Purchased Assets. The Seller is in compliance
with all Applicable Laws (including but not limited to Environmental Laws) and
Permits applicable to it and the Purchased Assets except for violations which,
individually or in the aggregate, do not have a Material Adverse Effect. The
representations in this Section 5.12 with respect to Environmental Laws are
given to the Seller's knowledge.
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5.13 Hazardous Substances. Except as set forth on Schedule 5.13 and
as disclosed in that certain Phase I Environmental Site Assessment, dated April
23, 1998, prepared by Dames & ▇▇▇▇▇, to the Seller's knowledge, (a) there are no
Hazardous Substances present on, under or about the Site that exceed the levels
or amounts permitted by Applicable Law; (b) there has been no sudden or
non-sudden, accidental or non-accidental Release of any Hazardous Substances by
the Seller or East Syracuse into the environment which exceeds the levels or
amounts permitted by Applicable Law, (c) the Seller has not engaged in, or is
not engaged in, the generation, manufacture, treatment, storage or disposal of
Hazardous Substances which exceeds the levels or amounts permitted by Applicable
Law, and (d) the Site does not contain and has not contained any underground or
above-ground tanks for the storage of fuel oil, gasoline and/or other petroleum
products or by-products or Hazardous Substances. Except as set forth in Schedule
5.12, the Seller has received no notice of any violation that, as of the date
hereof, remains uncured of any Environmental Laws relating to Hazardous
Substances, and, to the Seller's knowledge, there are no writs, injunctions,
decrees, orders or judgments outstanding, no suits, claims, actions, proceedings
or investigations have been instituted or filed, and none are pending or
threatened, under any Environmental Laws with respect to the ownership, use,
maintenance or operation of the Purchased Assets.
5.14 Access to Records. The Seller has given the Buyer full and
complete access to all books and records owned or controlled by Seller relating
to the operation or maintenance of East Syracuse or to any Assumed Liability.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS ARTICLE V, IN SECTION 7.7 OR IN ANY CERTIFICATE DELIVERED BY THE SELLER
PURSUANT TO ANY OPERATIVE DOCUMENT, 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.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as of the date of
this Agreement as follows:
6.1 Organization. The Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted. The Buyer has
heretofore delivered to the Seller complete and correct copies of its
Certificate of Limited Partnership and Partnership Agreement as currently in
effect.
6.2 Authority Relative to this Agreement. The Buyer has full power
and authority to execute and deliver this Agreement and the other Operative
Documents to which the Buyer is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Operative Documents to which the Buyer is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Buyer and no other proceedings on the part of the
Buyer are necessary to authorize this Agreement and the other Operative
Documents to which the Buyer is a party or to consummate the transactions
contemplated hereby and thereby. Each of this Agreement and the other Operative
Documents to which the Buyer is a party has been or will on or prior to Closing
be duly and validly executed and delivered by the Buyer, and (assuming that this
Agreement and the other Operative Documents to which any Seller Party is a party
constitute a valid and binding agreement of such Seller Party) each of the
Operative Documents to which the Buyer is a party constitutes or will on or
prior to Closing constitute a valid and binding agreement of the Buyer and is or
will on or prior to Closing be enforceable against the Buyer in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally or general principles of equity.
6.3 Consents and Approvals; No Violation. Except for (i) the filings
by the Buyer and the Seller required by the HSR Act and (ii) the approval by
FERC of a market-based rate schedule filed by the Buyer and the determination by
FERC on behalf of the Buyer of exempt wholesale generator status for East
Syracuse (the "Buyer Regulatory Approvals"), neither the execution and delivery
of this Agreement by the Buyer nor the purchase by the Buyer of the Purchased
Assets
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pursuant to this Agreement will (a) conflict with or result in any breach of any
provision of the partnership agreement of the Buyer, (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, except for those requirements that become applicable to
the Buyer as a result of the specific regulatory status of any Seller Party (or
any of their respective Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which any Seller Party (or
any of their respective Affiliates) is or proposes to be engaged which is
different from the business or activities the Buyer will engage in after the
Closing; (c) result in a breach or 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 properties or assets may be bound,
except for such breaches or defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained and
remain in full force and effect, and a complete and correct copy of which has
been provided to the Buyer prior to the Closing.
6.4 Availability of Funds. The Buyer has 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 of the Company. Except as described in
Schedule 7.1 or deemed necessary by Seller to facilitate the negotiation of, or
the consummation of the transactions contemplated by, the Master Restructuring
Agreement and the other transactions related thereto, during the period from the
date of this Agreement to the Closing Date, the Seller will operate and use, or
will cause the Operator to operate and use East Syracuse and the Purchased
Assets in the ordinary and usual course of the Seller's business consistent with
past practices and, in all material respects, in accordance with the O&M
Agreement, all Permits and all Applicable Laws, including but not limited to
maintenance, repair, replacement of parts and spare parts and similar activities
in accordance with the schedule therefor and in accordance with past practices.
Without limiting the generality of the foregoing, and, except as contemplated in
this Agreement, as described in Schedule 7.1, or deemed necessary by Seller to
facilitate the negotiation of, or the consummation of the transactions
contemplated by, the Master Restructuring Agreement and the other transactions
related thereto, prior to the Closing Date,
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without the prior written consent of the Buyer, the Seller will not with respect
to the Purchased Assets:
(a) make any material change in the conduct of its business or
operations, provided that Seller can operate the Purchased Assets as a merchant
power plant;
(b) mortgage, pledge or subject to any new Encumbrance (other
than Permitted Encumbrances) any of the Purchased Assets, tangible or
intangible, or sell, transfer or dispose of all or any of the Purchased Assets,
except for sales, transfers or dispositions in the ordinary course of business
and other dispositions of equipment or Inventory items that are obsolete or not
of material value
(c) enter into any settlement of or commence any material
pending or threatened litigation;
(d) consent to the entry of any decree or order by a
Governmental Authority;
(e) amend, modify, terminate or waive compliance with any
provision of, any Assigned Contract or the O&M Agreement; or
(f) file a market-based rate schedule under Section 205 of the
Federal Power Act of 1935.
The Seller shall consult, and shall use commercially reasonable efforts to cause
the Operator to consult, with the Buyer with respect to any negotiations with
third parties with respect to any amendments, modifications or waiver of or
compliance with any provision of any Assigned Contract contemplated by the
matters listed on Schedule 7.1, and the Seller shall use commercially reasonable
efforts to incorporate any revisions to such agreements requested by the Buyer
in such negotiations.
7.2 Insurance. From the date hereof through the Closing Date, the
Seller will use commercially reasonable efforts to maintain the Insurance for
itself and the Purchased Assets. The Buyer recognizes and acknowledges that the
Insurance will terminate upon the Closing and that the Buyer will need to obtain
new insurance. All insured claims or losses arising or occurring on or before
the Closing Date with respect to the Purchased Assets shall be for the account
of the Seller under the Insurance, regardless of when such claims or losses are
reported to the applicable insurance carrier.
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7.3 Access to Information.
(a) Without limiting Section 2.2(e), 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 plants, offices and other facilities and properties
constituting the Purchased Assets or on or at which any Purchased Asset
(including but not limited to the Books and Records) may be located; and (ii)
furnish the Buyer with such operating, maintenance and other applicable records
with respect to the Purchased Assets or the Assumed Liabilities as the Buyer may
from time to time reasonably request; provided, however, that (A) any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) the Seller shall
not be required to take any action that would constitute a waiver of the
attorney-client privilege, (C) the Seller need not supply the Buyer with any
information that the Seller is under a legal obligation not to supply and (D)
the Buyer shall not have access to any market studies prepared by, or on behalf
of, Seller or its Affiliates. Notwithstanding anything in this Section 7.3 to
the contrary, the Buyer shall not have the right to perform or conduct any (i)
tests to measure the performance capabilities of East Syracuse or (ii)
environmental sampling or testing at, in, on or underneath the Purchased Assets.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.3 shall be subject to the
provisions of the Confidentiality Agreement and shall be treated as
"Information" (as defined in the Confidentiality Agreement).
(c) For a period of (i) with respect to the Books and Records
related to Taxes or Tax Returns, five years after the Closing Date and (ii) with
respect to all other Books and Records, two years after the Closing Date, the
Seller and its representatives shall have reasonable access to all of the Books
and Records transferred to the Buyer by the Seller to the extent that such
access may reasonably be required by the Seller in connection with matters
relating to or affected by the operation of the Purchased Assets prior to the
Closing Date. Such access shall be afforded by the Buyer upon receipt of
reasonable advance notice and during normal business hours. If the Buyer shall
desire to dispose of any such Books and Records prior to the expiration of such
two-year or five-year period, as applicable, the Buyer shall, prior to such
disposition, give the Seller a reasonable opportunity to segregate and remove
such Books and Records as the Seller may select. After expiration of such
two-year and five-year periods, respectively, the Buyer shall have no duty to
notify the Seller or to permit the Seller access to or the right to copy any
such Books
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and Records prior to any disposal or destruction thereof. The Seller shall be
solely responsible for any costs or expenses incurred by it pursuant to this
Section 7.3(c).
7.4 Expenses. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such costs and
expenses.
7.5 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 no party
hereto shall issue or cause to be issued any such public announcement, statement
or other disclosure except with the prior written consent of the other party or
except as may be required by Applicable 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 "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 reasonably cooperate to
develop forms of each Consent reasonably satisfactory to the Buyer and the
Seller and, without limiting the foregoing, each party shall provide drafts of
each Consent prepared on its behalf to the other party for its review, comment
and approval prior to distribution to any third party.
(c) The Buyer shall file or cause to be filed with the FERC
and all other applicable regulatory authorities all filings and notices required
in connection with the Buyer Regulatory Approvals within 30 days after the
earlier to
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occur of (i) the PILOT Notification Date and (ii) the PILOT Determination Date
or at such earlier time as the Seller shall reasonably request. The Seller shall
have the right to review and comment on all such filings and notices and any
other regulatory filings related to East Syracuse made by the Buyer prior to the
Closing and no such filings or notices shall be filed with the FERC or with
other regulatory authorities unless the Seller is reasonably satisfied with the
form and substance thereof. The Seller shall promptly review and comment on all
such filings and notices so as not to unreasonably delay the Buyer's delivery
thereof. The Buyer shall retain legal counsel that is reasonably satisfactory to
the Seller to assist the Buyer in the preparation and filing of all such filings
and notices.
7.7 Fees and Commissions. The Seller and the Buyer each represent
and warrant to the other that 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 this representation or its Affiliates or representatives.
7.8 Tax Matters.
(a) All transfer and sales taxes incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
Buyer, and the Buyer, at 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 or sales taxes, and, if required by Applicable Law, the
Seller will join in the execution of any such Tax Returns or other
documentation. Prior to the Closing Date, the Buyer will provide to the Seller,
to the extent possible, an appropriate certificate of no Tax due from each
applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with
Section 3.3 of this Agreement only, the Buyer shall prepare and timely file all
Tax Returns required to be filed with respect to the Purchased Assets, if any,
and shall duly and timely pay all such Taxes shown to be due on such Tax
Returns. The Buyer's preparation of any such Tax Returns shall be subject to the
Seller's approval, which approval shall not be unreasonably withheld or delayed.
The Buyer shall make such Tax Returns available for the Seller's review and
approval no later than 15 Business Days prior to the due date for filing such
Tax Return. Within 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 3.3 of this Agreement.
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(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, in each case relating to the
transactions contemplated hereby, and, subject to Section 7.3(c), each will
retain and provide the requesting party with any records or information which
may be relevant to such return, audit or examination, proceedings or
determination. Any information obtained pursuant to this Section 7.8(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 in accordance with the Confidentiality
Agreement, except that all such information may be disclosed to applicable
taxing authorities to the extent deemed reasonably necessary by the party making
such disclosure and after reasonable prior notice to the non-disclosing party.
Nothing in this Section 7.8 (or any other provision of this Agreement) shall
permit the disclosure by any party of any Tax Return of the other party relating
to taxes on, based on or measured by net income.
7.9 Supplements to Schedules and Representations. Prior to the
Closing Date, the Seller and the Buyer shall supplement or amend their
respective representations and related Schedules required by Article V and
Article VI and Sections 8.2(d) and 8.3(c) promptly upon acquiring actual
knowledge of any matter relating to the subject matter of such representation,
warranty or Schedule which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
representations, warranties or Schedules in order to make such representations,
warranties or Schedules complete and correct. No supplement or amendment of any
representation, warranty or 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) For a period of 30 days after the date of this Agreement
(the "Seller Window"), the Buyer will refrain, and will use commercially
reasonable efforts to cause its Affiliates to refrain, from offering employment
to those employees of the Seller and its Affiliates whose employment
responsibilities primarily relate to the operation of the Purchased Assets (all
such employees herein referred to as "Employees"). At any time after the Seller
Window, the Buyer or its Affiliates may offer employment, effective as of the
Closing Date, to Employees who did not accept a position with the Seller within
the Seller Window. All such offers of employment
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or continued employment, as applicable, by the Seller and the Buyer pursuant to
this Section 7.10 shall be made in accordance with Applicable Law.
(b) The Seller agrees to timely perform and discharge all
requirements under Applicable Law 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 employees of the Buyer or its
Affiliates or which will not continue as employees of the Seller and will not
become employees of the Buyer effective as of the Closing Date. Except to the
extent set forth in the previous sentence, after the Closing Date, the Buyer
shall be responsible for performing and discharging all requirements under
Applicable Law for the notification of the employees of the Buyer with respect
to the Purchased Assets.
(c) During that period beginning on the Closing Date and
ending at 11:59 p.m. (New York time) on the last day of the first anniversary of
the Closing Date (the "Non-Solicitation Period"), the Seller will refrain, and
will use commercially reasonable efforts to cause its Affiliates to refrain,
from soliciting the services of any employees of the Buyer or any of its
Affiliates whose employment responsibilities primarily relate to the operation
of the Purchased Assets; provided, however, that nothing contained herein shall
prohibit the Seller and its Affiliates from engaging the services of any such
employees who, without any solicitation of any kind on the part of the Seller or
any of its Affiliates during the Non-Solicitation Period, have contacted the
Seller or its Affiliates for the express purpose of discussing the possibility
of employment with the Seller or any of its Affiliates.
7.11 Risk of Loss.
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the real or personal property (whether tangible or intangible)
included in the Purchased Assets shall be borne by the Seller.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain (or is the subject of a pending or
(to the knowledge of the Seller) contemplated taking which has not been
consummated, the Seller shall notify the Buyer promptly in writing of such fact
and the Buyer and the Seller shall negotiate in good faith to settle the loss
resulting from such taking (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price) and, upon such settlement,
consummate the transaction contemplated by this Agreement pursuant to the terms
of this Agreement. If no such settlement is reached within sixty (60) days after
(or if earlier, by the Termination Date) the Seller
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has notified the Buyer of such taking, then the Buyer or the Seller may
terminate this Agreement pursuant to Section 10.1(f).
(c) If, before the Closing Date all or any portion of the
Purchased Assets are damaged or destroyed by fire or other casualty, the Seller
shall notify the Buyer promptly in writing of such fact. The Buyer and the
Seller shall negotiate in good faith to settle the loss resulting from such fire
or casualty (including, without limitation, by, at the Seller's option, the
Seller curing such casualty to the Buyer's reasonable satisfaction or the Seller
and the Buyer 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. If no such settlement is reached within
sixty (60) days after (or if earlier, by the Termination Date) the Seller has
notified the Buyer of such casualty, then the Buyer or the Seller may terminate
this Agreement pursuant to Section 10.1(f).
7.12 Commercially Reasonable Efforts To Consummate Acquisition;
Further Assurances.
(a) Each of the Seller and the Buyer shall use, and shall use
its commercially reasonable efforts to cause their respective Affiliates to use,
commercially reasonable efforts to consummate the transactions contemplated by
this Agreement and the other Operative Documents and to fulfill and cause to be
fulfilled the conditions to the Closing under this Agreement applicable to such
party and its Affiliates, and to comply promptly with all legal requirements
that may be imposed on the parties hereto or on any of their respective
Affiliates, with respect to the consummation of such transactions. Without
limiting the foregoing, each party hereto, at the request of another party
hereto, shall execute and deliver, and shall use its commercially reasonable
efforts to cause its applicable Affiliates to execute and deliver, such other
instruments and do and perform, and shall use its commercially reasonable
efforts to cause its Affiliates to do and perform, such other acts and things as
may be reasonably necessary or desirable from time to time for effecting
completely the consummation of the transactions contemplated by this Agreement
and the other Operative Documents or to fulfill the intent thereof, including
but not limited to the transfer to the Buyer of all of the Emission Allowances
and the other Purchased Assets and the restructuring of any of the PILOT
Agreements as contemplated by Section 8.5 hereof and, at the Buyer's expense for
all reasonable out-of-pocket costs incurred by the Seller in connection with any
request by the Buyer with respect to, and facilitating in or cooperating with
the transfer to the Buyer of, the Applicable Permits, to the extent assignable
under Applicable Law. Notwithstanding
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the foregoing, however, (i) no party hereto nor any Affiliate of such party
shall be required to pay any money to any third party or suffer any diminution
in value of any Purchased Asset in exchange for the granting by a third party of
any consent, other than reasonable and customary amounts paid as amendment fees,
filing or registration fees (with respect to the HSR Act) and attorneys' fees
incurred by such third party and (ii) Seller shall have absolute discretion with
respect to performing, or refusing to perform, any acts or things deemed
necessary by Seller in its sole discretion to facilitate the negotiation of, or
the consummation of the transactions contemplated by, the Master Restructuring
Agreement.
(b) The Seller shall use its commercially reasonable efforts
to resolve the matters described in Schedule 5.12 as soon as practicable and, in
any event, within 17 months and 15 days following the Closing Date. In the event
that the Seller is unable to resolve such matters prior to the date that is 17
months and 15 days following the Closing Date, the Seller shall, on or prior to
the date that is 17 months and 15 days following the Closing Date, provide
security to the Buyer that is reasonably satisfactory to the Buyer to ensure
that neither the Buyer nor its assets will be subject to any claim, liability,
cost or expense in respect of such dispute.
7.13 Buyer Representatives. Without limiting Section 7.3, the Seller
agrees that, during the period between the date of this Agreement and the
Closing Date, the Seller will permit the Buyer, at the Buyer's sole
responsibility and expense, to maintain from time to time one or more Buyer
Representatives at the Site for purposes of monitoring the use, operations and
maintenance of the Purchased Assets, so long as such monitoring does not
unreasonably interfere with the Seller's use, operation or maintenance of the
Purchased Assets. Such Buyer Representatives shall have no authority to bind or
make agreements on behalf of the Seller; to conduct discussions with or make
representations to third parties on behalf of the Seller; or to issue
instructions to or direct or exercise authority over the Seller or any of the
Seller's officers, employees, advisors or agents. Such Buyer Representatives
shall comply with all safety practices and procedures maintained by Seller at
the Site. Subject to the foregoing, the Seller and its Affiliates (including,
but not limited to, the Operator) shall reasonably cooperate with the Buyer and
the Buyer Representatives in connection with such monitoring. 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 any acts of omissions of the Buyer
Representatives at the Site.
7.14 No Shopping. From the date of this Agreement until the earlier
of (i) the Termination Date and (ii) the Closing Date, the Seller shall not, and
shall
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cause its agents, representatives and any other person acting on its behalf not
to, directly or indirectly solicit, negotiate with respect to, facilitate, or
accept any offers for the purchase of the Purchased Assets by any party other
than the Buyer and its Affiliates, agents and representatives.
7.15 Bulk Sales or Transfer Laws. The Seller shall comply with the
applicable provisions of Article 6 of the New York Uniform Commercial Code on or
prior to the date which is 20 days prior to the Closing Date.
ARTICLE VIII
CLOSING 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 and the Buyer Regulatory Approvals shall have been
obtained or become final orders;
(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 its reasonable best efforts to have any such
injunction, order or decree lifted) and no Applicable Law shall have been
enacted by any Governmental Authority which prohibits the consummation of the
transactions contemplated by the Operative Documents;
(c) All consents and approvals required for the consummation
of the transactions contemplated by the Operative Documents under the terms of
any note, bond, mortgage, indenture, contract or other agreement to which the
Seller or the Buyer, or any of their Affiliates, are a party shall have been
obtained, including but not limited to the Seller Agreements;
(d) The respective obligations of each of the parties to the
Master Restructuring Agreement (other than the Seller) shall be binding and
enforceable and the Seller shall have received from Niagara Mohawk Power
Corporation the consideration to which it is entitled to receive pursuant to the
Master
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Restructuring Agreement or adequate assurances that it will receive such
consideration in accordance with the terms of the Master Restructuring
Agreement; and
(e) Each of the Seller Agreements, other than the Assigned
Contracts and the PILOT Agreements, shall be terminated and the Seller shall
have been released from all liabilities and obligations thereunder and the Buyer
shall have received such evidence of the foregoing as the Buyer shall reasonably
request.
8.2 Conditions to Obligations of the Buyer. The obligation of the
Buyer to effect the sale of the Purchased Assets and consummate the other
transactions contemplated by the Operative Documents 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 its
covenants and agreements under Section 4.3 (other than Section 4.3(f)) and in
all material respects the other covenants and agreements contained in the
Operative Documents (including Section 4.3(f)) that are required to be performed
and complied with by the Seller or any other Seller Party on or prior to the
Closing Date; the representations and warranties of the Seller Parties set forth
in this Agreement, the other Operative Documents to which any of the Seller
Parties is a party and in any certificate delivered pursuant hereto or thereto
that are not otherwise subject to a materiality qualification shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date; and the
representations and warranties of the Seller Parties set forth in this
Agreement, the other Operative Documents to which any of the Seller Parties is a
party and in any certificate delivered pursuant hereto or thereto that are
otherwise subject to a materiality qualification shall be true and correct in
all respects 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
other than Permitted Encumbrances.
(d) The Buyer shall have received a certificate from the
Seller, dated the Closing Date, to the effect that the conditions set forth in
Sections 8.2(a) and (c) have been satisfied, that the representations and
warranties of the Seller set forth in the Operative Documents to which the
Seller is a party that are not
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otherwise subject to a materiality qualification are true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made at and as of the Closing Date and that the representations and
warranties of the Seller set forth in the Operative Documents to which the
Seller is a party that are otherwise subject to a materiality qualification are
true and correct in all respects as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date;
(e) The Buyer shall have received at its own expense an
A.L.T.A. policy of title insurance, together with such endorsements as are
reasonably required by the Buyer, showing title to the Real Property conveyed to
the Buyer at the Closing, subject only to (i) nondelinquent taxes and
assessments; (ii) exceptions created by or resulting from the acts or omissions
of Buyer; (iii) the Permitted Encumbrances and (iv) any state of facts that an
accurate survey would show or an inspection of the premises would show;
(f) The Seller and Niagara Mohawk Power Corporation shall have
executed and delivered the LDC Gas Transportation Agreement substantially in the
form attached hereto as Exhibit B;
(g) The Buyer shall have received an opinion (i) with respect
to the Seller, from Well, Gotshal & ▇▇▇▇▇▇ LLP and (ii) with respect to each of
the Seller Guarantors, from their respective counsel, each dated the Closing
Date and satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that, as applicable:
(1) each of the Seller Parties is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and each such Seller Party has the power and authority to execute
and deliver the Operative Documents to which it is a party and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Operative Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
action on the part of such Seller Party;
(2) each of the Operative Documents to which such Seller
Party is a party has been executed and delivered by such Seller Party and is a
legal, valid and binding obligation of such Seller Party, enforceable against
such Seller Party in accordance with its terms, except (A) that such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws
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now or hereafter in effect relating to creditors' rights, and (B) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefore may be brought;
(3) the execution, delivery and performance of the
Operative Documents to which such Seller Party is a party will not (A)
constitute a violation of the partnership agreement, charter, bylaws or other
governing documents, as currently in effect, of such Seller Party, as
applicable, (B) result in any violation of any existing New York or federal law
or regulation or injunction or decree known to such counsel after due inquiry of
the Seller Parties, and applicable to any Seller Party or any of its properties,
which violation would have a Material Adverse Effect, or (C) to the knowledge of
such counsel, result in a breach or default (or give rise to any right of
termination, cancellation or acceleration) under any Applicable Contracts
(excluding any covenant, restriction or provision of any such agreement or
instrument with respect to financial covenants, ratios or tests or any aspect of
the financial condition or results of operations of the Seller Parties).
"Applicable Contracts" mean those agreements or instruments set forth on an
attached schedule and which have been identified to such counsel as all the
agreements and instruments that are material to the business or financial
condition of any of the Seller Parties;
(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
filings by the Buyer and the Seller required by the HSR Act or the Buyer
Regulatory Approvals; and
(5) except as set forth in Schedule 5.5 to this
Agreement, to the knowledge of such counsel, there is no litigation, proceeding
or governmental investigation pending or overtly threatened against any Seller
Party, which, if adversely determined, would have a material adverse effect on
the business, assets or financial condition of each such Seller Party, taken as
a whole.
As to any matter contained in such opinion which involves the laws
of any jurisdiction other than the Federal laws of the United States or the laws
of the State of New York, such counsel may rely upon opinions of counsel
admitted in such other jurisdictions. Any opinions relied upon by such counsel
as aforesaid shall be delivered together with the opinion of such counsel. Such
opinion may expressly rely as to matters of fact upon certificates furnished by
the Seller and appropriate officers and directors of the Seller and by public
officials; and
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(h) All fuel oil stored at the Site shall have been removed
from the Site in accordance with Applicable Law.
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 its covenants and
agreements under Section 4.4 (other than Section 4.4(e)) and in all material
respects the other covenants and agreements contained in the Operative Documents
(including Section 4.4(e)) that are required to be performed and complied with
by the Buyer on or prior to the Closing Date;
(b) The representations and warranties of the Buyer Parties
set forth in the Operative Documents to which any of the Buyer Parties is a
party and in any certificate delivered pursuant thereto that are not otherwise
subject to a materiality qualification shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made at and as of the Closing Date; and the representations and warranties of
the Buyer Parties set forth in the Operative Documents to which any of the Buyer
Parties is a party and in any certificate delivered pursuant hereto or thereto
that are otherwise subject to a materiality qualification shall be true and
correct in all respects 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 the
Buyer, dated the Closing Date, certifying that the conditions set forth in
Section 8.3(a) have been satisfied and that the representations and warranties
of the Buyer set forth in the Operative Documents to which the Buyer is a party
that are not otherwise subject to a materiality qualification are true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date; and the
representations and warranties of the Buyer set forth in the Operative Documents
to which the Buyer is a party that are otherwise subject to a materiality
qualification are true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made at and as of the Closing
Date;
(d) The Seller shall have received an opinion from Thelen,
Marrin, ▇▇▇▇▇▇▇ & Bridges LLP, counsel for the Buyer Parties, dated the Closing
Date and satisfactory in form and substance to the Seller and its counsel,
substantially to the effect that:
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(1) each of the Buyer Parties is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and each Buyer Party has the power and authority to execute and
deliver the Operative Documents to which it is a party and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Operative Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
action on the part of such Buyer Party;
(2) each of the Operative Documents to which such Buyer
Party is a party has been executed and delivered by such Buyer Party and is a
legal, valid and binding obligation of such Buyer Party, enforceable against
such Buyer in accordance with its terms, except (A) that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (B) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefore may be brought;
(3) the execution, delivery and performance of the
Operative Documents to which such Buyer Party is a party will not (A) constitute
a violation of the partnership agreement, charter, bylaws or other governing
documents, as currently in effect, of such Buyer Party (B) result in any
violation of any existing Applicable Law or injunction or decree known to such
counsel after due inquiry of the Buyer Parties, and applicable to any Buyer
Party or any of its properties, which violation would have a Material Adverse
Effect, or (C) result in a breach or default (or give rise to any right of
termination, cancellation or acceleration) under, any note, bond, mortgage,
indenture, license, agreement or other instrument to which, to the knowledge of
such counsel after due inquiry of each of the Buyer Parties, any Buyer Party is
a party or by which it or any of its properties or assets is bound or to which
it is subject;
(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 filings
required by the Buyer and the Seller required by the HSR Act and the Buyer
Required Regulatory Approvals; and
(5) to the knowledge of such counsel, after due inquiry
of the Buyer Parties, there are no pending or threatened actions, suits,
proceedings or investigations before any court, board of arbitration,
governmental
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agency, commission or official against or affecting any Buyer Party, which if
adversely determined, would have a material adverse effect on the business
assets or financial condition of such Buyer Party, taken as a whole.
As to any matter contained in such opinion which involves the laws
of any jurisdiction other than the federal laws of the United States and the
State of New York, such counsel may rely upon opinions of counsel admitted to
practices in such other jurisdictions. Any opinions relied upon by such counsel
as aforesaid shall be delivered together with the opinion of such counsel. Such
opinion may expressly rely as to matters of facts upon certificates furnished by
appropriate officers and directors of the Buyer and its subsidiaries and by
public officials; and
(e) The Seller shall have received evidence that the Buyer has
caused to be issued any letters of credit required pursuant to the Assigned
Contracts.
8.4 Breakage Fee. Notwithstanding any provision of any Operative
Document, if the Seller fails to effect the sale of the Purchased Assets solely
as a result of the Seller's decision not to participate in the transactions
contemplated by the Master Restructuring Agreement, the Seller shall pay to the
Buyer, within 15 days after the Termination Date, the amount of $250,000 by wire
transfer of immediately available funds or by such other means as are agreed
upon by the Seller and the Buyer. The Buyer's right to receive such payment is
exclusive and in lieu of any and all other rights and remedies that the Buyer
may have under this Agreement or otherwise with respect to the foregoing.
8.5 PILOT Agreements.
(a) For a period of 60 days following the date of this
Agreement, the Seller shall use commercially reasonable efforts to reach a
satisfactory agreement with each of the other parties to the PILOT Agreements
with respect to the Seller's liabilities and obligations thereunder, which
agreements shall not, without the Buyer's prior written consent, result in
liabilities or obligations on the part of the Buyer or any Encumbrance (other
than the Permitted Encumbrances) on any of its properties (including, without
limitation, the Purchased Assets) in excess of the Maximum Buyer PILOT
Obligations for any calendar year. Notwithstanding the foregoing, nothing in
this Section 8.5(a) shall be deemed to (i) require the Buyer to enter into any
agreement or instrument acknowledging or confessing to any liability made or
with respect to the PILOT Agreements in excess of the Maximum Buyer PILOT
Obligations for any calendar year or (ii) limit, reduce or affect any of the
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Seller's liabilities or obligations under Section 9.1(a)(iii). The Seller shall
keep the Buyer apprised of the status of such negotiations. If the Seller
reaches an agreement with such parties that is satisfactory to it in its sole
discretion on or before the PILOT Determination Date, the Seller shall promptly
notify Buyer of the terms of such agreement (the "PILOT Notification Date"). If
the Seller shall have determined in good faith that it is not reasonably likely
to reach such an agreement prior to the PILOT Determination Date, it shall have
the right to terminate this Agreement pursuant to Section 10.1(e) at any time on
or prior to the PILOT Determination Date. In the event that Seller terminates
this Agreement in accordance with the preceding sentence, it shall pay to the
Buyer, within 15 days after the Termination Date, up to $100,000 in
reimbursement for reasonable out-of-pocket expenses incurred by the Buyer in
connection with the negotiation and review of the Operative Documents, the
consummation of the transactions contemplated by this Agreement and the
negotiating, drafting and reviewing of replacement project documents, including
but not limited to legal fees and expenses, consulting expenses, regulatory
filing fees and the fees and expenses of any lender providing financing to the
Buyer of its acquisition of the Purchased Assets, including but not limited to
fees and expenses of any counsel to such lender. The Buyer shall, for the period
prior to the earlier of (i) the PILOT Notification Date and (ii) the PILOT
Determination Date, use commercially reasonable efforts to minimize the expenses
incurred by it and by any lender in connection with the financing of the
acquisition of the Purchased Assets. The Buyer's right to receive such payment
is exclusive and in lieu of any and all other rights and remedies that the Buyer
may have under this Agreement or otherwise with respect to the foregoing.
(b) In the event the Seller does not terminate this Agreement
pursuant to Section 8.5(a), the Seller shall to the extent required for the
Seller to obtain any consent of the parties to the PILOT Agreements to
consummate the transactions contemplated by this Agreement, offer to the parties
to the PILOT Agreements, to continue to pay and perform after the Closing the
same payments and obligations as are required to be paid and performed by the
Seller under the PILOT Agreements as of the date of this Agreement, and in the
event the parties to the PILOT Agreements agree to such structure, the Buyer
shall agree to promptly reimburse any amounts paid by the Seller under the PILOT
Agreements in any calendar year (commencing with calendar year 1999) up to the
Maximum Buyer PILOT Obligations for such year. If the Seller makes the offer
described in the preceding sentence and the other parties to the PILOT
Agreements do not accept such offer, the Seller shall not be obligated to
consummate the transactions contemplated by the Operative Documents if any
consent of the parties to the PILOT Agreements required to consummate the
transactions contemplated by this Agreement is not
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obtained on or prior to the end of the 90-day period specified in Section
10.1(a) hereof.
8.6 Assignment of O&M Agreement. The Buyer shall have the option to
assume, and receive an assignment of, all of Seller's right, title and interest
in, to and under the O&M Agreement on the Closing Date. The Buyer shall exercise
such option by notifying the Seller in writing at any time within ten Business
Days prior to the Closing Date of the Buyer's intent to assume the O&M
Agreement. If the Buyer opts to assume the O&M Agreement, the O&M Agreement
shall be an "Assigned Contract" for all purposes under this Agreement.
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 other
than the applicable Indemnitee's Affiliates or representatives), losses,
liabilities, damages (including but not limited to 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 or inaccuracy of
any representation or warranty of the Seller in any Operative Document or
certificate delivered pursuant to any Operative Document; (ii) any breach by the
Seller of any covenant or agreement of the Seller contained in any Operative
Document; or (iii) any of the Excluded Liabilities.
(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 or inaccuracy of any representation or warranty of the Buyer in any
Operative Document to which the Buyer is a party or in any certificate executed
and delivered by the Buyer pursuant to any such Operative Document, (ii) any
breach by the Buyer of any covenant or agreement of the Buyer contained in any
Operative Document or (iii) the Assumed Liabilities.
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(C) The representations and warranties in this Agreement, the
other Operative Documents and in any other document or certificate to be
delivered at the Closing pursuant thereto or thereto shall survive the Closing
solely for purposes of this Article IX and shall terminate on the first
anniversary of the Closing Date, except for (i) Sections 5.6 (to the extent
relating to matters set forth in Schedule 5.6 hereto) and 5.9 which, solely for
purposes of this Article IX, shall survive indefinitely, and (ii) the indemnity
obligations of (A) the Seller set forth in Section 9.1(a)(iii), and (B) the
Buyer set forth in Section 9.1(b)(iii), each of which shall survive the Closing
indefinitely. Subject to the provisions of Section 10.2, each and every covenant
contained in this Agreement (other than the covenants contained in Section 3.3,
7.3(b) and (c), 7.4, 7.5, 7.8 and 7.10 and in Articles IX and XI (which
covenants shall survive indefinitely unless such covenants expire in accordance
with their express terms)) shall expire with, and be terminated and extinguished
by the consummation of the transactions contemplated by the Operative Documents.
No action can be brought with respect to any breach of any representation and
warranty under this Agreement or any other document or certificate to be
delivered at the Closing pursuant hereto or thereto unless a notice specifying
the breach of the representation or warranty forming the basis of such claim has
been delivered to the party alleged to have breached such representation or
warranty prior to the termination date of such representation or warranty as
described in this Section 9.1(c).
(d) Any Person entitled to receive indemnification under this
Agreement (an "Indemnitee") having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages, costs
and expenses from insurers of such Indemnitee under applicable insurance
policies so as to reduce the amount of any Indemnifiable Loss hereunder. The
amount of any Indemnifiable Loss shall be reduced (i) to the extent that
Indemnitee receives any insurance proceeds with respect to an Indemnifiable Loss
and (ii) to take into account any net Tax benefit recognized by the Indemnitee
arising from the recognition of the Indemnifiable Loss.
(e) Excluding (i) the Buyer's obligation to pay the Maximum
Buyer PILOT Obligations and (ii) the Seller's obligation to pay all amounts due
and owing under the PILOT Agreements in excess of the Maximum Buyer PILOT
Obligations, the indemnification obligations of the Seller or the Buyer, as
applicable, shall not exceed the Purchase Price.
(f) The right 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 inaccuracy of
any representation or
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warranty set forth in any Operative Document or in any document or certificate
delivered in connection therewith, (ii) any breach or failure to perform any
covenant or agreement set forth in any Operative Document, and (iii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be.
(g) The Buyer and the Seller each agree that notwithstanding
any provisions in this Agreement to the contrary, all parties to the Operative
Documents retain their remedies at law or in equity with respect to willful or
intentional breaches of any provision of any Operative Document.
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 any Affiliate of a party
to this Agreement (a "Third Party Claim") with respect to which indemnification
is to be sought from the party required to provide indemnification under this
Agreement (the "Indemnifying Party"), the Indemnitee will give such Indemnifying
Party reasonably prompt written notice thereof, but in any event not later than
ten (10) calendar days after the Indemnitee's receipt of notice of such Third
Party Claim. Such notice shall describe the nature of the Third Party Claim in
reasonable detail, include a copy of all papers served with respect to such
claim (if any) and will 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 certifying that the Indemnifying Party does not dispute
its potential liability to the Indemnitee under this Article IX, 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, which shall be reasonably
acceptable to the Indemnitee, and the Indemnitee will cooperate in good faith in
such defense at the Indemnifying Party's expense. Notwithstanding the foregoing,
the Indemnifying Party shall not be entitled to control and assume
responsibility for the defense of such claim or liability if, in the good faith
opinion of such Indemnitee, there exists a conflict of interest such that it is
advisable for such Indemnitee to retain control of such proceeding or such claim
or liability involves the possibility of criminal sanctions or criminal
liability to such Indemnitee. In such circumstances, the Indemnitee shall be
entitled to control and assume responsibility for the defense of such claim or
liability and the Indemnifying Party shall pay the reasonable costs and expenses
of such defense.
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(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 third 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 and by
appropriate proceedings 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 or which involves any criminal liability, any
affirmative obligation on the part of the Indemnitee (other than the payment of
money which is fully indemnified pursuant to this Article IX) or any material
restriction on the conduct of the Indemnitee's business. If a firm offer is made
to settle a Third Party Claim without leading to any such liability, obligation,
restriction 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; provided, that 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, at the Indemnitee's
expense, 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.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss that 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 obtains actual knowledge 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
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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 published by The Wall
Street Journal), 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 the Indemnifying Party will
not be in compliance with its obligations under this Agreement in respect of
such Indemnifiable Loss until the Indemnitee recovers full payment of its
Indemnifiable Loss, and any and all claims of the Indemnifying Party against any
such third party on account of said indemnity payment is hereby made expressly
subordinated and subjected in right of payment to the Indemnitee's rights
against such third party. Without limiting the generality or effect of any other
provision hereof, each such Indemnitee and Indemnifying party will duly execute
upon request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights, 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 required 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 received such notice was actually prejudiced as a result
of such failure.
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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 not have occurred on or before 90
days after the earlier to occur of (i) the PILOT Notification Date and (ii) the
PILOT Determination Date; provided that the right to terminate this Agreement
under this Section 10.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by either the Seller or
the Buyer if (i) 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 (ii) 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 that has rendered the
satisfaction of any condition to the obligations of the 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 (i) if
there has been a material violation or breach by the Buyer of any agreement,
representation or warranty contained in this Agreement that 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, (ii) if the Seller shall have determined in good faith that the
condition set forth in Section 8.1(d) is not reasonably likely to be satisfied
and shall have informed the Buyer of the basis for such determination or (iii)
in accordance with the provisions of Section 8.5 at any time on or prior to the
PILOT Determination Date.
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(f) This Agreement may be terminated by either of 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 7.3(b), 7.4, 7.5, 8.4, 8.5 or, with respect to Third Party
Claims related to Excluded Liabilities, in Article IX; and
(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.
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.
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11.3 Notices. All notices and other communications hereunder shall
be in writing and 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), postage prepaid, to the parties at the
following addresses (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):
If to the Seller, to:
East Syracuse Generating Company, L.P.
c/o U.S. Generating Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
if to the Buyer, to:
▇▇▇▇ Street Generating Station, L.P.
c/o Orion Power Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
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with a copy to:
Thelen, Marrin, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
11.4 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law, without the prior written consent of the
other party, nor is this Agreement intended to confer upon any other Person
except the parties hereto any rights or remedies hereunder; provided, however,
that for periods after the Closing Date, the Buyer may, without the Seller's
consent, assign its rights under this Agreement to any lender or lenders who
provide financing to the Buyer for the acquisition of the Purchased Assets.
11.5 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.
11.6 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.
11.7 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.8 Entire Agreement. This Agreement and the Operative Documents
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof. Any previous agreement or understanding between the
parties with respect to the subject matter hereof, whether written or oral, is
superseded hereby and thereby.
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11.9 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
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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.
EAST SYRACUSE GENERATING COMPANY,
L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
▇▇▇▇ STREET GENERATING STATION, L.P.
By: ORION POWER NEW YORK GP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title:
---------------------------------
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EXHIBIT A
TO ASSET PURCHASE AGREEMENT
FORM OF
INSTRUMENT OF ASSIGNMENT AND ASSUMPTION
Instrument of Assignment and Assumption (together with each appendix
hereto, the "Instrument") made, executed and delivered on this day of
_____________, by and between ▇▇▇▇ Street Generating Station, L.P., a Delaware
limited partnership (the "Buyer"), and East Syracuse Generating Company, L.P., a
Delaware limited partnership (the "Seller").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as
of June 23, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Asset Purchase Agreement"), by and among the Seller and the Buyer,
the Seller is concurrently herewith selling, assigning, conveying, transferring
and delivering to the Buyer the Purchased Assets (as defined in the Asset
Purchase Agreement), which include the Seller's right, title and interest to and
under certain contracts and permits; and
WHEREAS, in partial consideration therefor, the Asset Purchase
Agreement requires that the Buyer assume certain liabilities and obligations of
the Seller;
NOW, THEREFORE, in consideration of these premises and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Buyer and the Seller agree as follows:
1. Capitalized terms which are used in this Instrument (including
Appendices I and II hereto) but are not defined in this Instrument shall have
the meaning ascribed to such terms in the Asset Purchase Agreement.
2. Solely as between the Buyer and the Seller, the Buyer hereby
assumes in accordance with their terms, and subject to the limitations contained
in this
60
Instrument, the liabilities and obligations of the Seller, which are described
in Appendix I hereto (the "Assumed Liabilities").
3. The Seller hereby assigns to the Buyer, and the Buyer hereby
accepts, all of the Seller's right, title and interest in, to and under the
Assigned Contracts and, to the extent assignable under Applicable Law, the
Applicable Permits, each of which are described in Appendix II hereto.
4. The assumption by the Buyer of the Assumed Liabilities shall not
be construed to defeat, impair or limit in any way the rights, claims or
remedies of the Buyer or the Seller under the Asset Purchase Agreement.
5. Other than as specifically set forth in this Instrument or in
Section 2.3 of the Asset Purchase Agreement, the Buyer shall not assume any
liability or obligation of the Seller, direct or indirect, known or unknown,
absolute or contingent, other than the Assumed Liabilities.
6. This Instrument shall be enforceable against the successors and
assigns of the Buyer and the Seller and shall inure to the benefit of the
successors and assigns of the Buyer and the Seller.
7. This Instrument 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 laws).
8. This Instrument is delivered pursuant to and is subject to the
Asset Purchase Agreement. In the event of any conflict between the terms of the
Asset Purchase Agreement and the terms of this Instrument, the terms of the
Asset Purchase Agreement shall prevail.
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APPENDIX I
TO INSTRUMENT OF ASSIGNMENT AND ASSUMPTION
Liabilities and Obligations Assumed
To the extent attributable to events, conditions or circumstances
arising or existing during any period from and after the Closing Date, 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 (as defined in the Asset Purchase Agreement), in
accordance with the terms and subject to the respective conditions thereof,
including, without limitation, the following liabilities and obligations:
[insert paragraphs (i) through (v) of Section 2.3(a) of the Asset Purchase
Agreement]
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APPENDIX II
TO INSTRUMENT OF ASSIGNMENT AND ASSUMPTION
Assigned Contracts
[List Assigned Contracts]
Applicable Permits
[List Applicable Permits assignable under Applicable Law]
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EXHIBIT B
GAS TRANSPORTATION AGREEMENT
BETWEEN
NIAGARA MOHAWK POWER CORPORATION AND
EAST SYRACUSE GENERATING COMPANY, L.P.
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GAS TRANSPORTATION AGREEMENT
This Agreement ("Agreement") is made as of June 26, 1998, by and between
EAST SYRACUSE GENERATING COMPANY, L.P., a Partnership duly organized and validly
existing under the laws of the State of Delaware having offices at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and NIAGARA MOHAWK POWER CORPORATION
("Niagara Mohawk"), a corporation duly organized and validly existing under the
laws of the State of New York, having offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Customer and Niagara Mohawk each are referred to
herein as "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, the Customer has secured or will secure the transportation of
certain quantities of natural gas to existing points of interconnection to
Niagara Mohawk;
WHEREAS, the Customer desires transportation for said natural gas pursuant
to Service Classification No. 9 (Transportation Service for Long-Term
Large-Volume Customers) ("SC-9") of the Niagara Mohawk tariff, P.S.C. No. 218
Gas ("Tariff"), from the Receipt Point defined herein to the Customer's facility
("Facility") in East Syracuse, New York;
WHEREAS, Niagara Mohawk agrees to provide such transportation subject to
the terms and conditions of this Agreement.
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NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained in this Agreement, the Parties agree as follows:
ARTICLE I - CONDITIONS
The Parties shall determine that payments from the Customer to Niagara
Mohawk for service are current, prior to executing this Agreement. This
Agreement is subject to a condition that (i) the transactions contemplated by
the certain Master Restructuring Agreement, dated as of July 9, 1997, as
amended, by and among Customer, Niagara Mohawk and certain other independent
power producers ("MRA") close and (ii) Customer remains a party to the MRA.
ARTICLE II - INCORPORATION OF TARIFF PROVISIONS
The transportation service under this Agreement will be provided under the
terms of Niagara Mohawk's SC-9. This Agreement will operate as the Service
Agreement (as defined in the Tariff) that must be executed and filed with the
New York Public Service Commission under the terms of SC-9. Except as provided
in this Agreement, the provisions of the Tariff (including, without limitation,
definitions applicable thereto and the provisions of SC-9) currently in effect,
as such Tariff may be amended from time to time, are hereby incorporated into
this Agreement and made a part hereof. In the event of conflict between the
terms of this Agreement as executed or amended and the provisions of the Tariff,
including, without limitation, the definitions set forth in this Agreement, this
Agreement will prevail; provided that, modifications to the Tariff to reflect
changes in Niagara Mohawk's system operations may be
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implemented to the extent such implementation will not adversely affect the
rights of either Party; provided further, Niagara Mohawk and/or the Customer
will have the right to contest or oppose before the New York Public Service
Commission any provision or amendment to the Tariff.
ARTICLE III - DEFINITIONS
Throughout this Agreement, references to the plural include the singular
and references to the singular include the plural, where appropriate. Whenever
in this Agreement any agreement, instrument, license, permit or other document
is defined or referred to, it shall be deemed to be defined or referred to as
the same may be amended, modified, clarified or supplemented from time to time.
Whenever this Agreement refers to any entity or person, it shall be deemed to
refer to such entity or person and their directors, officers, employees, agents,
successors and permitted assigns. The following words or terms used in this
Agreement have the meanings indicated:
3.1 Contract Year - The 365 consecutive Days beginning on the Effective Date,
and each subsequent 365-Day period, or 366 Days for leap years.
3.2 Consummation Date - The date as defined as such in the MRA.
3.3 Day - Any consecutive twenty-four (24) hour period commencing at 10 a.m.
Eastern Time.
3.4 Dekatherm (Dt) - 1,000,000 British Thermal Units (1 MMBTU).
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3.5 Delivery Point - The metered interconnection owned and maintained by Niagara
Mohawk between the facilities of Niagara Mohawk and the Customer at the
Facility.
3.6 Delivery Quantity - The quantity of Customer-owned gas transported by
Niagara Mohawk and actually delivered to the Customer at the Delivery Point.
3.7 Effective Date - The later of thirty (30) days after an executed contract
has been on file with the New York Public Service Commission ("PSC") or the
consummation, with respect to Customer, of the transactions contemplated by the
MRA.
3.8 Governmental Authority - Any federal, state, municipal or local governmental
authority, department, commission, board, agency, body or official, whether
executive, legislative, administrative, regulatory or judicial, including but
not limited to the Federal Energy Regulatory Commission and the PSC.
3.9 Losses - In connection with any deliveries made by it to Niagara Mohawk
hereunder, the Customer shall deliver to Niagara Mohawk an amount of gas equal
to Niagara Mohawk's allowance for losses, which shall be deemed to be
five-tenths of one percent (0.5%).
3.10 Maximum Daily Delivery Quantity ("MDDQ") - Twenty thousand (20,000) Dt per
day, measured at the Delivery Point. The MDDQ may be adjusted annually on a
seasonal basis (6 months winter, 6 months summer) upon request of Customer.
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3.11 Month - The period of time beginning at 10 o'clock a.m. Eastern Time on the
first calendar day of a month and ending at 10 o'clock a.m. on the first
calendar day of the subsequent calendar month.
3.12 Receipt Point - The point at which NMGas receives gas from Customer for
delivery under this Agreement. Customer may elect (a) any of NMGas's
interconnections unless (i) the pipeline is unable to deliver gas for Customer's
account at the elected interconnection or (ii) NMGas is unable to accept gas for
Customer's account at the elected interconnection; (b) or any other point
mutually agreed upon by NMGas and the Customer in writing.
ARTICLE IV - CHARACTER OF SERVICE
4.1 Transportation Service - Subject to the terms and conditions of this
Agreement, Niagara Mohawk agrees to receive from the Customer at the Receipt
Point on any Day such quantity of natural gas up to the MDDQ, plus Losses, as
the Customer may tender or cause to be tendered for transportation, and to
deliver on an interruptible basis, as defined in accordance with the provisions
of Section 4.2, such quantity of gas, less Losses, at the Delivery Point.
4.2 Interruption of Service - Transportation service under this Agreement is
subject to interruption by Niagara Mohawk in its sole discretion on a not unduly
discriminatory basis. Niagara Mohawk will provide at least eight (8) hours prior
notice to the Customer, either in writing or orally (by telephone or otherwise)
unless an emergency requires a shorter notice period; provided that, unless
otherwise agreed by the Customer, Niagara Mohawk will provide no less than two
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(2) hours notice. The Customer agrees that if it fails to discontinue use of
service as ordered by Niagara Mohawk, Niagara Mohawk may suspend service. In
addition, all usage of gas taken during such period of requested interruption
shall be billed at the stated rate in effect at the time, plus a penalty rate of
$25.00 per Dt for such unauthorized usage.
4.3 Upstream Transportation and Gas Supply - The Customer will be responsible
for obtaining all gas supply and transportation upstream of the Receipt Point.
If Customer will have upstream gas supply and transportation arrangements after
the Consummation Date, and Niagara Mohawk (i) interrupts gas transportation
service in accordance with Article 4.2, above, and (ii) in its sole discretion
notifies Customer not later than at the time it provides notice of interruption
pursuant to Article 4.2 that Niagara Mohawk elects to retain the Customer's gas,
then Customer will continue to deliver gas to the Receipt Point and Niagara
Mohawk will retain that gas and in return the amount that Customer is required
to pay to Niagara Mohawk under this Agreement will be reduced by an amount
determined in accordance with the provisions of Rule 3.3 of the Tariff. If the
reduction in charges for any Month is greater than the charges to Customer in
that Month, Niagara Mohawk will pay the excess to Customer.
4.4 Limitation of Service - The Customer agrees that all gas transported
pursuant to this Agreement will be used by Customer for operation of facilities
owned by the Customer at this service location.
4.5 Limitations - (a) Nothing in this Agreement shall be deemed to restrict in
any way Customer's discretion in arranging gas supplies and upstream
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transportation. Without limiting the foregoing, Niagara Mohawk expressly
acknowledges and agrees that Customer shall not be required to contract for firm
gas supply and transportation or to seek to obtain firm or interruptible gas
supply and transportation on any Day, except that the Customer's daily delivery
quantity should be equal to daily consumption of Customer-owned gas by the
Customer. If Customer's gas supply and/or upstream gas transportation is
interrupted for any reason, Customer shall have no liability under Section 4.3,
notwithstanding Niagara Mohawk's notice of its intention to retain Customer's
gas pursuant to Section 4.3.
(b) Without limiting its right to interrupt deliveries under this Agreement,
Niagara Mohawk's right to retain Customer's gas pursuant to Section 4.3 shall be
subject to the additional limitations set forth in this Section 4.5(b). Niagara
Mohawk may retain Customer's gas only during the "Peak Period," which shall mean
the following: the period beginning at 10:00 a.m. Eastern Time on November 15 of
each year and ending at 10:00 a.m. Eastern Time on April 16 of the following
year, so long as the term of this Agreement continues in effect. Except with
Customer's prior consent, Niagara Mohawk may purchase no more and no less than
the "Peak Shaving Quantity," which shall mean: all of Customer's gas nominated
on any day by customer for transportation service under this Agreement up to the
MDDQ. Niagara Mohawk may retain the Peak Shaving Quantity for a total of no more
than 35 Days during any one Peak Period. Niagara Mohawk will not retain the Peak
Shaving Quantity for more than three consecutive Days (referred to as the
"Consecutive Day Limitation"). Any period of gas retention by Niagara
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Mohawk of any duration will be followed by a minimum of three consecutive Days
of release in order to facilitate Customer's resupply of its on-site storage
tanks (referred to as the "Release Limitation"). For the period between November
15 - February 29, the Consecutive Day Limitation and the Release Limitation will
not apply if the mean daily temperature in Syracuse, New York, is forecast to be
15(degrees)F or less. For the period March 1 - April 15, the Consecutive Day
Limitation and Release Limitation will not apply. During a period in which
Niagara Mohawk need not adhere to the Consecutive Day Limitation or Release
Limitation, if Customer is unable to secure fuel oil because of weather
conditions or other emergency condition, Niagara Mohawk will use its reasonable
efforts to avoid retaining the gas by seeking to use all other available sources
of supply; provided that, such sources of supply do not include purchases of gas
from pipeline suppliers for which significant overrun penalties will be
incurred. In addition, notwithstanding any other provision of this Agreement,
if, during any period of retention of gas by Niagara Mohawk under the terms of
Article IV that continues for more than seven (7) consecutive Days, Customer is
unable to procure fuel oil at any cost for use after such seventh consecutive
Day despite its reasonable best efforts, and as a consequence Customer's
facility will not operate because Niagara Mohawk has retained the gas, then
Customer will have no obligation to make available to Niagara Mohawk the gas
under this Agreement after such seventh consecutive Day unless Niagara Mohawk
elects to pay to Customer an amount equal to the net revenue that Customer will
lose from not operating on each such Day it is unable to
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operate because of inability to procure fuel oil; provided that, such losses
will not exceed $50,000 per Day, which amount will be adjusted on a cumulative
basis from December 1991 by the annual percentage change in the implicit price
deflator for GNP published by the U.S. Department of Commerce. All limitations
in this Section may be waived from time to time by mutual agreement, but may be
permanently altered only by written amendment of this Agreement.
ARTICLE V - SCHEDULING
No later than one (1) day prior to the nomination deadline
requirement of the pipeline that the Customer will use to deliver gas to
the Receipt Point, the Customer will transmit information to Niagara
Mohawk that will provide an informal forecast of the quantities of gas
that the Customer believes it will nominate for transportation by Niagara
Mohawk for each Day during the succeeding calendar Month. On the same Day
and manner in which the Customer nominates the actual quantities of gas to
be transported by the transporting pipeline or marketer for delivery to
Niagara Mohawk, or to an aggregator for delivery on Niagara Mohawk, the
Customer will formally notify Niagara Mohawk of said nomination. All such
notifications will be in accordance with such guidelines and practices as
will be mutually acceptable to the Parties.
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ARTICLE VI - PRICE AND PAYMENT
6.1 Price - Each Month, the Customer will pay to Niagara Mohawk the sum of (i) a
"Fixed Charge" plus (ii) the product of a "Commodity Charge" multiplied by the
quantity of dekatherms received by the Customer at the Delivery Point in that
Month.
6.1.1 The Fixed Charge is equal to $6,700 per Month.
6.1.2 Subject to 6.1.3 below, the Commodity Charge is equal to $0.175 per
dekatherm for all gas transported pursuant to this Agreement. Customer has no
minimum transportation quantity.
6.1.3 The Commodity Charge is fixed for one year from the Effective Date
of this Agreement. Thereafter, the Commodity Charge shall be escalated or
de-escalated annually on the anniversary of the Effective Date in accordance
with the Gross Domestic Product Price Deflator published by the United States
Department of Commerce or, in its absence, another comparable index. In no
event, however, will the Commodity Charge be reduced below the levels specified
in Section 6.1.2 of this Agreement.
6.2 Taxes or Surcharges - In addition to the charges provided in Section 6.1,
the Customer will pay Niagara Mohawk such taxes or surcharges as Niagara Mohawk
will be authorized or required to collect from transportation customers such as
the Customer.
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6.3 Fuel - Niagara Mohawk will be entitled to retain, at no charge, from the
quantities of gas tendered by the Customer at the Receipt Point, a quantity of
gas equal to Losses.
6.4 Billing and Payment - Billing and payment will be made in accordance with
the terms of the Tariff.
ARTICLE VII - CONSTRUCTION OF FACILITIES
[SECTION INTENTIONALLY LEFT BLANK]
ARTICLE VIII -TERM
The term of this Agreement (the "Term") will commence as of the date
entered into, and will continue for a period of one (1) year from the Effective
Date, unless terminated in accordance with Section 17.7 below. The Term will
continue automatically for successive one (1) year periods thereafter unless (i)
at any time after the initial one-year term either Party notifies the other in
writing not less than thirty (30) days prior to the effective date of such
termination, or (ii) terminated in accordance with Section 17.7 below.
ARTICLE IX - PRESSURE AND QUALITY
9.1 Pressure and Quality Specifications - All gas tendered or caused to be
tendered by Customer to Niagara Mohawk for transportation under this Agreement
will meet the pressure and quality specifications contained in Niagara Mohawk's
Tariff. In the event such gas does not meet any of those specifications, Niagara
Mohawk is entitled to reject such gas and refuse to
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perform any further transportation services under this Agreement until the
Customer's gas meets all such specifications.
9.2 Liability for Pressure and Quality - As between the Customer and Niagara
Mohawk, the Customer will be solely responsible and liable for any charges,
penalties, costs or expenses incurred or payable by either Party for the
Customer's failure to provide gas that conforms to the pressure and quality
requirements of Section 9.1.
9.3 Delivery Point Pressure - Delivery point pressure from Niagara Mohawk shall
be between three hundred forty (340) psig minimum and three hundred eighty (380)
psig maximum.
ARTICLE X - IMBALANCES
10.1 Governing Standards - the Customer's aggregate consumption and deliveries
to Niagara Mohawk's system of Customer-owned gas will be reconciled in order to
achieve a balance on Niagara Mohawk's system. The Customer may elect one of two
options as listed in Sections 10.1(a) and 10.1(b), below, to provide the
required balancing services and if, after having selected one option, Customer
cancels it and chooses the other option, Customer will remain on the substitute
option for a period of at least one (1) year. Notwithstanding the foregoing, if
Customer assigns or transfers its rights and obligations under this Agreement in
accordance with Article XIV below, then the successor, purchaser, or transferee
of Customer will be permitted to change the election at the time of such
transfer or assignment; provided that, if Niagara
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Mohawk is not able (because of physical, operational, or regulatory limitations)
to offer the balancing service described in Section 10.1(b) below, then no
election of that option will be available.
(a) The Customer may choose to provide for and pay for its own balancing
service. If it does so, on each Day the Customer's deliveries to
Niagara Mohawk at the Receipt Point must equal the Delivery
Quantity, plus losses. Niagara Mohawk agrees to provide daily meter
readings to the party designated by the Customer in writing to
facilitate balancing by such party, but Niagara Mohawk will not
provide balancing service to the Customer in this case. This service
may be canceled by the Customer upon thirty (30) days written
notice, subject to the Customer accepting Niagara Mohawk's balancing
service and charges under the Tariff;
(b) The Customer may choose to purchase balancing service from Niagara
Mohawk, in which case the Customer will pay a Monthly Balancing
Charge as provided in accordance with Rule 17.5.1 of the Tariff,
which is currently $0.2838 per MDDQ per month. If Niagara Mohawk
provides balancing service, underdeliveries/overdeliveries will be
subject to monthly
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cashout in accordance with Rule 29 and the Forced Balancing
Operational Flow Order provisions of the Tariff. Notwithstanding the
provisions of Section 4.4, above, the Customer or its agent may
engage in monthly imbalance trading in accordance with the Tariff.
This service may be canceled by the Customer upon 30 days written
notice, subject to Customer providing and paying for its own
balancing service.
ARTICLE XI - LIABILITY AND INDEMNIFICATION
The Customer and Niagara Mohawk will indemnify and hold the other harmless
against any and all claims, actions or damages to the extent caused by or
resulting from its control and possession of gas transported under this
Agreement, except to the extent any such claim, action, or damages is caused by
or results from the negligence or willful misconduct of the party seeking
indemnification. As between the Parties, the Customer will be presumed to be in
control and possession of the gas transported under this Agreement at any time
prior to the time Niagara Mohawk receives the gas at the Receipt Point and at
any time after Niagara Mohawk delivers the gas at the Delivery Point, Niagara
Mohawk will be in control and possession of such gas after it has received the
gas at the Receipt Point and up to the time it delivers gas at the Delivery
Point. Title to gas transported under this Agreement will, at all times, vest in
the Customer.
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ARTICLE XII - FORCE MAJEURE
12.1 Definition of Force Majeure Events - The term Force Majeure means an event
(i) that was not within the control of the party claiming its occurrence; (ii)
that could not have been prevented or avoided by such party through the exercise
of due diligence; and (iii) that prohibits or prevents such party from
performing its obligations under this Agreement. Events that may give rise to a
claim of Force Majeure include:
a) Acts of God, including earthquakes, epidemics, fires, floods,
hurricanes, landslides, lightning, storms, washouts, blowouts, freezing of
▇▇▇▇▇ or lines of pipe used to supply the gas described in this Agreement
and other similar unusual and severe natural calamities;
b) Acts of the public enemy, wars, blockage, insurrections, riots, civil
disturbances and arrests;
c) Strikes, lockouts or other industrial labor disturbances;
d) Explosions, breakage, accidents to equipment or lines of pipe used to
supply or affecting the use of the gas described in this Agreement;
e) The imposition by a Governmental Authority having jurisdiction of
binding laws, conditions, limitations, orders, rules or regulations that
prevent or prohibit a party from performing,
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provided such governmental action has been resisted in good faith by all
reasonable legal means;
f) Any other cause of a similar nature; or
g) Any outage of the Facility arising from any of the events listed in a)
through f) above.
12.2 Notice and Limitation on Obligations Under Force Majeure - If either party
because of Force Majeure is rendered wholly or partly unable to perform its
obligations under this Agreement, except for the obligation to make payments of
money for services previously rendered or to make payment of the Fixed Charge
under Section 6.1, such party will be excused from whatever performance is
affected by the Force Majeure, but only to the extent so affected, provided
that:
(1) the non-performing party, as soon as reasonably practicable, will
provide oral notice of the Force Majeure event to the other party in
accordance with Article XV, followed by written notice (via facsimile,
telex, or telecopy or computer hook-up, if available) within forty-eight
(48) hours after provision of the oral notice;
(2) within five (5) days after the commencement of the Force Majeure, the
non-performing party will give the other party written notice describing
the particulars of the occurrence;
(3) the suspension of performance is of no greater scope and of no longer
duration than is required by the Force Majeure;
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(4) no obligations of either party which arose before the occurrence
causing the suspension of performance are excused as a result of the
occurrence;
(5) the non-performing party uses reasonable diligence to remedy its
inability to perform;
(6) the non-performing party will give the other party oral notice of
the date the Force Majeure is no longer in effect as soon as
practicable, and will provide written notice within twenty-four (24)
hours after the provision of the oral notice; and
(7) if the duration of Force Majeure exceeds sixty consecutive days or,
when aggregated with any other events of Force Majeure, ninety days
during the term of this Agreement, either party may terminate this
Agreement on ten business days advance written notice, subject to
cure during such ten business day notice period which termination
right is in addition to a Party's right to terminate under Article
VIII.
12.3 Requirements to Claim Force Majeure - No party will be entitled to the
benefit of Force Majeure under any of the following circumstances:
12.3.1 To the extent such party was negligent, in whole or in part, in
causing such Force Majeure or to the extent that such Force Majeure is the
result of acts, omissions or the negligence of such party's corporate
affiliates;
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12.3.2 To the extent such party failed to use due diligence or failed to
utilize all reasonable dispatch and reasonable efforts in removing or overcoming
such Force Majeure to again put itself in a position to carry out all of the
obligations which it has assumed;
12.3.3 In the event such party claiming Force Majeure fails to give
reasonable written notice as described in Section 12.2; or
12.3.4 To the extent such party's inability to perform was caused by that
party's lack of funds.
12.4 Settlement of Labor Disputes - Settlement of strikes and lockouts will be
entirely within the discretion of the party affected, and the requirements that
any event of Force Majeure will be remedied with all reasonable dispatch will
not require the settlement of strikes and lockouts by acceding to the demands of
the parties directly or indirectly involved in such strikes or lockouts when
such course is inadvisable in the discretion of the party having such
difficulty.
ARTICLE XIII - SECURITY
[SECTION INTENTIONALLY LEFT BLANK]
ARTICLE XIV - ASSIGNMENT OR TRANSFER
This Agreement may not be assigned by either Party without the prior
written consent of the other, which consent shall not be unreasonably withheld,
except that no such consent shall be required for an assignment (a) of the right
to receive revenue in connection with an accounts receivable financing, (b) as
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collateral in connection with the financing or refinancing of the Facility, (c)
to an affiliate of such assigning Party, provided that, unless otherwise agreed,
such assignment to an affiliate will not relieve the assigning Party from its
obligations under this Agreement, or (d) to a successor to, or purchaser or
transferee of, all or substantially all of the assets of the assigning Party
where such successor, purchaser or transferee of the assigning Party (i)
indicates in writing its willingness to perform under the terms of this
Agreement, and (ii) any default under this Agreement is cured on or before the
effectiveness of such assignment. In the event consent is not required, the
assigning Party will provide written notice to the non-assigning Party of such
assignment.
ARTICLE XV - NOTICES
15.1 Unless otherwise specified in this Agreement, any notice to be given under
this Agreement will be in writing and will be deemed to have been properly given
(i) when actually received by the party to whom the notice is addressed or its
authorized representative, or (ii) when mailed by United States registered or
certified mail, postage prepaid, return receipt requested, to the party to be
notified. Routine communications and Monthly billing statements will be
considered as duly delivered when mailed by either registered, certified, or
ordinary mail. Such communications will be addressed to the respective parties
as follows:
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To Niagara Mohawk: Niagara Mohawk Power Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Director, Energy Transactions
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Customer: East Syracuse Generating Company, L.P.
C/o U.S. Generating Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Fuels
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: East Syracuse Generating Company, L.P.
C/o U.S. Generating Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as may be designated in writing by either party.
ARTICLE XVI - CONFIDENTIALITY
The terms of this Agreement are considered confidential and shall not be
disclosed to any third party except those third parties who are granted third
party status under the terms of Section 14.14 of the MRA, but such disclosure
will be provided only to the extent those third parties have executed a written
non-disclosure agreement in accordance with that section of the MRA. Any
disclosure required by a Governmental Authority, or by law will be limited to
the extent permitted by law and Parties will seek appropriate trade
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secret/confidential status for the Agreement from any Governmental Authority.
This Agreement may also be disclosed to a party negotiating to purchase the
Facility or to provide financing for the Facility, if it requests disclosure and
it executes a written nondisclosure agreement on terms not less restrictive than
those set forth in this Article XVI.
ARTICLE XVII - MISCELLANEOUS
17.1 Binding Effect - This Agreement will benefit and will be binding upon, the
parties and their respective successors and permitted assigns.
17.2 Severability - If any portion of this Agreement will for any reason be held
or adjudged to be invalid or illegal or unenforceable by any court of competent
jurisdiction, such portion so adjudged will be deemed separate, distinct and
independent and the remainder of this Agreement will be and remain in full force
and effect and will not be invalidated or rendered illegal or unenforceable or
otherwise affected by such holding or adjudication.
17.3 Modification - No modifications or amendments of the terms and provisions
of this Agreement will be or become effective except by the execution of a
written agreement executed by the Parties hereto.
17.4 Prior Agreements Superseded - This Agreement will completely and fully
supersede all other prior understandings or agreements, both written and oral,
between the Parties relating to the subject matter hereof, including without
limitation the Agreement on Principal Terms Gas Transportation Service between
the Parties dated May 5, 1998.
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17.5 Applicable Law and Regulations - This Agreement will be governed by and
construed in accordance with the laws and regulations of the State of New York,
excluding any law that would require the application of the law or regulation of
a different jurisdiction.
17.6 Waiver - No waiver by any party of any one or more uncorrected defaults by
the other in the performance of any provisions of this Agreement will operate or
be construed as a waiver of any other default or defaults.
17.7 Termination Right for Regulatory Changes - If changes in laws, rulings or
regulations by any Governmental Authority renders Niagara Mohawk unable to
perform in the manner contemplated under this Agreement, or in the alternative,
requires Niagara Mohawk to modify this Agreement to conform to such regulatory
change, then either Party may terminate this Agreement upon 30-days prior
written notice; provided that, Customer may request that Niagara Mohawk agree to
a modification of this Agreement to conform to such regulatory change. Customer
and Niagara Mohawk will each have the right to contest or oppose before the
Governmental Authority any such regulatory change.
17.8 Cancellation - Notwithstanding any other provision of this Agreement,
Customer may cancel this Agreement by written notice to Niagara Mohawk at any
time prior to June 30, 1998. Upon such cancellation, the obligations of both
Parties under this Agreement are terminated.
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17.9 Limitations of Liability - In no event shall Niagara Mohawk or Customer be
liable to the other Party for special, indirect, punitive, or consequential
damages.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
EAST SYRACUSE GENERATING COMPANY, L.P.
Signature /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Title
NIAGARA MOHAWK POWER CORPORATION
Signature
Title
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TABLE OF CONTENTS
Page
ARTICLE I - CONDITIONS .................................................... 2
ARTICLE II - INCORPORATION OF TARIFF PROVISIONS ........................... 2
ARTICLE III - DEFINITIONS ................................................. 3
3.1 CONTRACT YEAR ..................................................... 3
3.2 CONSUMATION DATE .................................................. 3
3.3 DAY ............................................................... 3
3.4 DEKATHERM (DT) .................................................... 3
3.5 DELIVERY POINT .................................................... 4
3.6 DELIVERY QUANTITY ................................................. 4
3.7 EFFECTIVE DATE .................................................... 4
3.8 GOVERNMENTAL AUTHORITY ............................................ 4
3.9 LOSSES ............................................................ 4
3.10 MAXIMUM DAILY DELIVERY QUANTITY ................................... 4
3.11 MONTH ............................................................. 5
3.12 RECEIPT POINT ..................................................... 5
ARTICLE IV - CHARACTER OF SERVICE ......................................... 5
4.1 TRANSPORTATION SERVICE ............................................ 5
4.2 INTERRUPTION OF SERVICE ........................................... 5
4.3 UPSTREAM TRANSPORTATION AND GAS SUPPLY ............................ 6
4.4 LIMITATION OF SERVICE ............................................. 6
4.4 LIMITATION OF SERVICE ............................................. 6
ARTICLE V - SCHEDULING .................................................... 9
ARTICLE VI - PRICE AND PAYMENT ............................................ 10
6.1 PRICE ............................................................. 10
6.2 TAXES OR SURCHARGES ............................................... 10
6.3 FUEL .............................................................. 11
6.4 BILLING AND PAYMENT ............................................... 11
ARTICLE VII - CONSTRUCTION OF FACILITIES .................................. 11
ARTICLE VIII - TERM ....................................................... 11
ARTICLE IX - PRESSURE AND QUALITY ......................................... 11
9.1 PRESSURE AND QUALITY SPECIFICATIONS ............................... 11
9.2 LIABILITY FOR PRESSURE AND QUALITY ................................ 12
9.3 DELIVERY POINT PRESSURE ........................................... 12
ARTICLE X - IMBALANCES .................................................... 12
10.1 GOVERNING STANDARDS ............................................... 12
ARTICLE XI - LIABILITY AND INDEMNIFICATION ................................ 14
ARTICLE XII - FORCE MAJEURE ............................................... 15
12.1 DEFINITION OF FORCE MAJEURE EVENTS ................................ 15
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12.2 NOTICE AND LIMITATION ON OBLIGATIONS UNDER FORCE MAJEURE .......... 16
12.3 REQUIREMENTS TO CLAIM FORCE MAJEURE ............................... 17
12.4 SETTLEMENT OF LABOR DISPUTES ...................................... 18
ARTICLE XIII - SECURITY ................................................... 18
ARTICLE XIV - ASSIGNMENT OR TRANSFER ...................................... 18
ARTICLE XV - NOTICES ...................................................... 19
ARTICLE XVI - CONFIDENTIALITY ............................................. 20
ARTICLE XVII - MISCELLANEOUS .............................................. 21
17.1 BINDING EFFECT .................................................... 21
17.2 SEVERABILITY ...................................................... 21
17.3 MODIFICATION ...................................................... 21
17.4 PRIOR AGREEMENTS SUPERSEDED ....................................... 21
17.5 APPLICABLE LAW AND REGULATIONS .................................... 22
17.6 WAIVER ............................................................ 22
17.7 TERMINATION RIGHT FOR REGULATORY CHANGES .......................... 22
17.8 CANCELLATION ...................................................... 22
25
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Exhibit C
TO ASSET PURCHASE AGREEMENT
FIRPTA Affidavit
Section 1445 of the Internal Revenue Code provides that a transferee
of a U.S. real property interest must withhold tax if the transferor is a
foreign person. To inform the transferee that withholding tax is not required
upon the disposition of a U.S. real property interest by East Syracuse
Generating Company, L.P. (the "Company"), the undersigned hereby certifies the
following on behalf of the Company:
1. The Company is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and the Income Tax Regulations);
2. The Company's U.S. employer identification number is
_____________________; and
3. The Company's office address is:
_____________________________________________________
The Company understands that this certification may be disclosed to
the Internal Revenue Service by a transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury I declare that I have examined this
certificate and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Company.
By: _____________________________________
Name:
Title:
90
EXHIBIT D
TO ASSET PURCHASE AGREEMENT
SELLER GUARANTY
1. Reference is made to the Asset Purchase Agreement, dated as of June 23,
1998 (the "Purchase Agreement"), by and between East Syracuse Generating
Company, L.P., a Delaware limited partnership (the "Seller") and ▇▇▇▇
Street Generating Station, L.P., a Delaware limited partnership (the
"Buyer"). Unless otherwise defined in this Guaranty, all capitalized terms
used in this Guaranty shall have the respective meanings assigned to them
in the Purchase Agreement (including by incorporation by reference).
2. Subject to the remaining provisions of this Section 2, for good and
valuable consideration received, _________________, a ________________
corporation (the "Guarantor") hereby irrevocably and unconditionally
guarantees to the Buyer and its successors and permitted assigns (a) the
payment in full when due of all amounts required to be paid by the Seller
pursuant to Article IX (Indemnification) of the Purchase Agreement, and
(b) the performance in full when due of all of the Seller's obligations
under 7.12(b) of the Purchase Agreement (such payments and other
obligations, collectively, the "Obligations"), and in the event that the
Seller shall fail to fully pay or perform such Obligations at the times
and in the manner provided in the Purchase Agreement, any other Operative
Document or any other agreement or instrument relating thereto, following
(i) the occurrence of a Triggering Event (as defined below) or (ii) the
exercise, in good faith, by the Buyer of reasonably diligent efforts to
enforce the payment and performance by the Seller of the Obligations
(which shall not require the filing of a complaint or the institution of
other applicable legal proceedings or first proceeding to enforce or
collect any such Obligation from any other guarantor of any of the
Obligations pursuant to the terms of any such guaranty), the Guarantor,
within thirty (30) days of receipt of written notice from the Buyer of the
Seller's failure to pay or perform, shall duly pay or perform or cause to
be paid or performed the same, to the extent such Obligations would not
have been excused were the Guarantor the direct obligor thereof.
Notwithstanding anything to the contrary in this Guaranty, the Guarantor
shall in no event be liable under this Guaranty or otherwise for any
amount in excess of fifty percent (50%) of the Obligations.
91
As used herein, the term "Triggering Event" shall mean any or all of the
following events or circumstances: (a) execution of a judgment against the
Seller by the Buyer that has been returned unsatisfied; (b) insolvency of
the Seller or the existence of an insolvency proceeding against the
Seller; (c) the Seller cannot be served by the Buyer with legal process;
or (d) the existence of any other fact or circumstance that makes it
readily apparent that payment or performance by the Seller of the
Obligations cannot be obtained by the Buyer despite the exercise, in good
faith, by the Buyer of reasonably diligent efforts to enforce payment and
performance by the Seller of the Obligations.
Subject to the foregoing provisions, the Guaranty provided by this Section
2 shall be an absolute, unconditional, present and continuing guaranty of
payment and performance (not merely of collection or collectibility),
which shall remain in full force and effect until the first to occur of
(i) the date that each and all of the Obligations guaranteed under this
Section 2 shall have been fully and satisfactorily discharged in
accordance with the terms and provisions of the Purchase Agreement and the
other Operative Documents and (ii) (x) with respect to any breach or
inaccuracy of any representation or warranty of the Seller in any
Operative Document or certificate delivered pursuant to any Operative
Document or any breach by the Seller of any covenant or agreement of the
Seller contained in any Operative Document (other than as set forth in
clauses (y) and (z) below), the date that is 12 months after the Closing
Date, (y) with respect to the Excluded Liabilities (other than as set
forth in clause (z) below) and the Seller's obligations under Section
7.12(b) of the Purchase Agreement, the date that is 18 months after the
Closing Date and (z) with respect to the payment and other obligations of
the Seller under each of the PILOT Agreements, the termination of the
Seller's obligations under each of the PILOT Agreements, which termination
shall be evidenced to Buyer's reasonable satisfaction. For the avoidance
of doubt, notwithstanding any provision of this Guaranty or any other
Operative Document to the contrary, in the event the Seller fails to fully
perform each of its covenants and agreements set forth in Section 7.12(b)
of the Purchase Agreement on or prior to the date set forth therein and
the Buyer notifies the Guarantor thereof on or prior to the expiration of
such 18 month period, the Guarantor shall be fully obligated to perform
such unperformed covenants and agreements of the Seller under Section
7.12(b) of the Purchase Agreement.
3. Except as provided above, the liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable, irrespective
of:
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(a) any lack of validity or enforceability of the Purchase Agreement,
the other Operative Documents or any other agreement or instrument
relating thereto;
(b) any change in time, manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or
waiver of, or any consent to departure from, the Purchase Agreement,
the other Operative Documents or any other agreement or instrument
relating thereto;
(c) any change in ownership of the Guarantor or the Seller;
(d) any bankruptcy, insolvency or reorganization of, or other similar
proceedings involving the Guarantor, the Seller or any other Person;
or
(e) any other circumstances which might otherwise constitute a legal or
equitable defense available to, or a discharge of, a surety or a
guarantor, or of the Seller in respect of the Obligations or a legal
or equitable discharge of the Seller in respect thereof.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by the Buyer upon the insolvency,
bankruptcy, reorganization, liquidation or dissolution of the Seller or
otherwise, all as though such payment had not been made. Guarantor shall
not commence or join in any involuntary case under any federal or state
bankruptcy law or in any petition seeking to take advantage of any other
law relating to bankruptcy, insolvency or reorganization with respect to
the Seller.
4. The Guarantor hereby irrevocably, unconditionally and expressly waives, to
the fullest extent permitted by applicable law and in each case except as
otherwise provided in Section 2 above, promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and
this Guaranty, any requirement that the Buyer protect, secure or perfect
any security interest or exhaust any right or first proceed against the
Seller or any other Person, including but not limited to any other
guarantor of any of the Obligations.
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5. This Guaranty constitutes a primary obligation of the Guarantor and is a
continuing guaranty and shall (a) be binding upon the Guarantor and its
successors and assigns and (b) inure to the benefit of and be enforceable
by the Buyer and its successors and permitted assigns.
6. The Guarantor hereby represents and warrants that (a) it has full
corporate power and authority to execute and deliver this Guaranty, (b)
this Guaranty has been duly and validly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies, and (c) the execution of this Guaranty by the
Guarantor will not (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 Guarantor, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority or any other Person, or (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 Guarantor is a party, or by which its assets are bound, except
for such defaults as to which requisite waivers or consents have been
obtained.
7. Guarantor will (a) preserve and maintain its corporate existence and (b)
comply with the requirements of all applicable governmental approvals and
applicable laws if the failure to comply with such requirements would have
a material adverse effect on Guarantor's ability to perform hereunder or
on the Buyer's rights or remedies under this Guaranty.
8. All notices and other communications hereunder shall be in writing and
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), postage prepaid, to the parties
at the following addresses (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):
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94
(a) If to the Buyer, to:
▇▇▇▇ Street Generating Station, L.P.
c/o Orion Power Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Thelen, Marrin, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to the Guarantor, to:
__________________________________
__________________________________
__________________________________
Facsimile:________________________
Attention: _______________________
with a copy to:
East Syracuse Generating Company, L.P.
c/o U.S. Generating Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
5
95
and:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
9. This Guaranty 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.
10. No failure or delay by the Buyer in exercising any remedy, right, power or
privilege under this Guaranty or under any other Operative Document shall
operate as a waiver of such remedy, right, power or privilege, nor shall
any single or partial exercise of such remedy, right, power or privilege
preclude any other or further exercise of such remedy, right, power or
privilege or the exercise of any other remedy, right, power or privilege.
The remedies, rights, powers and privileges provided by this Guaranty are
cumulative and not exclusive of any remedies, rights, powers or privileges
provided by the other Operative Documents or by law.
11. Guarantor agrees to pay or to reimburse the Buyer upon demand for all
reasonable costs and expenses (including attorneys' fees and expenses)
that may be incurred by the Buyer in enforcing any of the obligations of
Guarantor under this Guaranty, whether or not any lawsuit is filed,
including all such costs and expenses incurred by the Buyer in any
bankruptcy, reorganization, workout or similar proceeding with respect to
the Seller or the Guarantor.
12. Any provision of this Guaranty may be modified, supplemented or waived
only by an instrument in writing signed by Guarantor and the Buyer. Any
modification, supplement or waiver shall be for such period and subject to
such conditions as shall be specified in the written instrument effecting
the same and shall be binding upon the Buyer, each holder of the
Obligations and Guarantor, and any such waiver shall be effective only in
the specific instance and for the purpose for which given.
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96
13. All representations and warranties made in this Guaranty or in any
certificate or other document delivered pursuant to or in connection with
this Guaranty shall survive the execution and delivery of this Guaranty or
such certificate or other document (as the case may be) or any deemed
repetition of any such representation or warranty.
14. This Guaranty supersedes all prior agreements and understandings, written
or oral, among the parties with respect to the subject matter of this
Guaranty. Any previous agreement or understanding between the parties with
respect to the subject matter hereof, whether written or oral, is
superseded by this Guaranty.
15. Any provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Guaranty, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
16. Nothing expressed or referred to in this Guaranty shall be construed to
give any Person other than Guarantor and the Buyer any legal or equitable
right, remedy, or claim under or with respect to this Guaranty or any
provision of this Guaranty. This Guaranty and all of its provisions and
conditions are for the sole and exclusive benefit of such parties and
their respective successors and permitted assigns.
17. The captions and section headings appearing in this Guaranty are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Guaranty.
_________________________________________
By:______________________________________
Name:______________________________
Title:_____________________________
Date: June 23, 1998
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EXHIBIT E
ASSIGNMENT OF SUBLEASE AGREEMENT
THIS ASSIGNMENT OF SUBLEASE AGREEMENT (the "Assignment") is made as of the
____ day of _________, 1998 by EAST SYRACUSE GENERATING COMPANY, L.P., a limited
partnership organized and existing under the laws of the State of Delaware
having an office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Company") to ▇▇▇▇ STREET GENERATING STATION, L.P., a Delaware
limited partnership having an office c/o Orion Power Holdings, Inc, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer").
RECITALS:
WHEREAS, Company is the tenant under and leases a certain industrial
development facility (the "Facility") under that certain Sublease Agreement
originally by and between the Onondaga County Industrial Development Agency (the
"▇▇▇") and Wilmington Trust Company, as Owner Trustee, dated as of January 15,
1992, a memorandum of which was recorded January 17, 1992 in the Onondaga County
Clerk's Office in Book 3746 of Deeds, at page 119, which leasehold was assigned
to Company by Assignment of Sublease Agreement from Wilmington Trust Company, as
Owner Trustee, to Company dated __________, 1998 and recorded __________, 1998
in the Onondaga County Clerk's Office in Book _____ of Deeds, at page ______ (as
amended, modified and in effect as of the date hereof, the "▇▇▇ Lease"); and
WHEREAS, the Facility is located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ in the Town of ▇▇▇▇▇▇
and Village of East Syracuse, County of Onondaga and State of New York, improved
by a gas-fired combined cycle cogeneration facility, together with appurtenances
and other improvements located thereon, as such premises are more particularly
described on Schedule A, attached hereto and made a part hereof (the
"Premises"); and
WHEREAS, Company desires to assign all of its right, title and interest
under the ▇▇▇ Lease to Buyer; and
WHEREAS, Buyer will assume certain of Company's obligations under the ▇▇▇
Lease upon the terms, covenants and conditions set forth in that certain Asset
Purchase Agreement (the "APA") dated as of ____________, 1998 by and between the
Company and Buyer.
NOW, THEREFORE, for a good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Assignment and Transfer of ▇▇▇ Lease. Company hereby assigns, without
recourse or warranty, except as provided in the APA, to Buyer all of the
Company's rights, title and interests as tenant under the terms of the ▇▇▇
Lease, together with all rights, title and interests of Company in and to (a)
all easements, licenses, rights-of-way, privileges, appurtenances and rights
belonging to and inuring to the benefit of the Facility and the Premises, (b)
any and all land lying in the bed of any streets, roads,
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highways, alleys or driveways, open or proposed, in front of or adjoining the
Facility and the Premises, and (c) any and all strips or gores adjacent to or
abutting the Facility and the Premises, in each case, to the Company's
knowledge, free and clear of Encumbrances other than Permitted Encumbrances (as
defined in the APA).
2. Assumption of Obligations. Buyer hereby assumes, to the extent
attributable to events, conditions or circumstances arising or existing from and
after the Closing Date (as defined in the APA), all obligations of Company under
the terms and conditions of the ▇▇▇ Lease, excluding Excluded Liabilities (as
defined in the APA), and subject to the express terms and conditions of the APA.
It is expressly understood and agreed that notwithstanding any provision of this
Assignment Buyer shall retain the full right to assert and enforce any and all
rights, remedies and defenses of Seller and otherwise available to Buyer under
the terms and conditions of the ▇▇▇ Lease and that nothing in this Assignment or
in any other Operative Document (as defined in the APA) shall or shall be deemed
to waive, limit or otherwise affect any such right, remedy or defense available
to Buyer under the ▇▇▇ Lease.
3. Binding Effect. This Assignment shall inure to the benefit of and shall
be binding upon the parties and their respective successors and assigns and/or
successors in interest.
4. Execution of Counterparts. This Assignment may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
5. Applicable Law. This Assignment shall be governed exclusively by the
applicable laws of the State of New York.
6. Recording. Buyer shall record this Assignment in the appropriate land
records of Onondaga County.
7. Nonmerger. It is expressly understood that there shall be no merger of
the leasehold estate conveyed hereunder with any other interest owned, either
directly or beneficially, or held by Buyer in and to the Facility or the
Premises, or any portion thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of
the date hereof.
EAST SYRACUSE GENERATING COMPANY, L.P.
By: __________________________________
Name: __________________________________
Title: __________________________________
▇▇▇▇ STREET GENERATING STATION, L.P.
By: Orion Power New York GP, Inc., its
general partner
By: _____________________________
Name: _____________________________
Title: _____________________________
▇▇▇
-▇-
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
:SS.:
COUNTY OF ________ )
On this ____ day of ____________, 1998, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that (s)he is the ________________________ of EAST SYRACUSE
GENERATING COMPANY, L.P., the limited partnership described in and which
executed the foregoing instrument and that (s)he signed his (her) name thereto
on behalf of said limited partnership.
_____________________________________
Notary Public
STATE OF ________ )
:SS.:
COUNTY OF _______ )
On this ____ day of ___________________, 1998, before me personally
came ______________________________, to me known, who, being by me duly sworn,
did depose and say that (s)he is a ______________________ of Orion Power New
York GP, Inc., a General Partner of ▇▇▇▇ STREET GENERATING STATION, L.P., the
limited partnership described in and which executed the foregoing instrument and
that (s)he signed his (her) name thereto on behalf of said limited partnership.
_____________________________________
Notary Public
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EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
102
EXHIBIT E
DEED AND ▇▇▇▇ OF SALE
THIS DEED AND ▇▇▇▇ OF SALE, dated as of __________, 1998 between
EAST SYRACUSE GENERATING COMPANY, L.P., a limited partnership organized and
existing under the laws of the State of Delaware having an office at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company") and ▇▇▇▇
STREET GENERATING STATION, L.P., a Delaware limited partnership having an office
c/o Orion Power Holdings, Inc, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Buyer").
WITNESSETH
WHEREAS, the Company is currently the tenant under that certain
Sublease Agreement dated as of January 15, 1992, originally by and between the
Onondaga County Industrial Development Agency ("OCIDA"), as landlord, and
Wilmington Trust Company, as Owner Trustee (the "▇▇▇ Lease"), a memorandum of
which was recorded January 17, 1992 in the Onondaga County Clerk's Office in
Book 3746 of Deeds at page 119, which leasehold was assigned to Company by
Assignment of Sublease Agreement from Wilmington Trust Company, as Owner
Trustee, to Company dated __________, 1998 and recorded _________, 1998 in the
Onondaga County Clerk's Office in Book _____ of Deeds at page _____, relating to
a certain industrial development facility (the "Facility") located on certain
premises located in the Town of ▇▇▇▇▇▇ and Village of East Syracuse, Onondaga
County, New York (the "Site"); and
WHEREAS, Company as tenant under the ▇▇▇ Lease holds certain
interests in and to the Facility and the Site; and
WHEREAS, Company is as of the date hereof assigning to Buyer all of
Company's right, title and interest as tenant under the ▇▇▇ Lease and Buyer is
assuming certain of the Company's obligations thereunder pursuant to the terms
and conditions of a certain Assignment of Sublease Agreement between the Company
and Buyer dated the date hereof (the "Assignment") and Asset Purchase Agreement
dated ___________, 1998 between Company and Buyer (the "APA"); and
WHEREAS, the parties hereto desire to assure that all right, title
and interest in and to the Facility and the Property (as defined below) held by
the Company shall be transferred to Buyer.
NOW, WITNESSETH, that Company, in consideration of the payment by
Buyer to it or for its account of $10.00, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, does
hereby sell, grant, convey, assign, transfer and deliver to Buyer, its
successors and assigns, without recourse, representation or warranty except as
provided in the APA, in the other Operative Documents (as defined in the APA)
and herein, all of the estate, right, title and interest of the Company in and
to (a) the personal property described in Exhibit A attached hereto (the
"Personal
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Property"), (b) the real property improvements and appurtenances located upon
the Site. described in Exhibit B attached hereto (collectively, the Site and
such real property the "Real Property"), and (c) all privileges, appurtenances
and rights belonging to and inuring to the benefit of the Site, including
without limitation those easements, licenses and rights of way described in
Exhibit C attached hereto (collectively, all such property, including the
Personal Property and the Real Property, the "Property").
SUBJECT to any and all covenants, easements and restrictions of record affecting
the Property.
Tax Map Nos.: 10-08-1.1 and 12-02-10.1
Tax Mailing Address: _________________________________________
_________________________________________
TOGETHER with the appurtenances and all estate and rights of the Company in and
to the Property; it being expressly understood that the Property is being
conveyed "as is", without recourse, representation or warranty, except as
provided in the APA, and the other Operative Documents (as defined in the APA)
and herein.
TO HAVE AND TO HOLD the premises herein granted unto Buyer, its successors and
assigns forever.
IT BEING expressly understood that there shall be no merger of the interest
conveyed hereunder with any other interest owned, either directly or
beneficially, or held by Buyer in and to the Property or any portion thereof.
AND the Company represents and covenants that upon execution and delivery of
this Deed and ▇▇▇▇ of Sale to Buyer by the Company, the Company shall have duly
sold, assigned, transferred and conveyed to Buyer all of the Company's right,
title and interest in and to the Property to Buyer, with the Personal Property
free and clear of all Encumbrances other than Permitted Encumbrances (as such
terms are defined in the APA) and the Real Property and the other Property
(other than the Personal Property) to the Company's knowledge, free and clear of
all Encumbrances other than Permitted Encumbrances.
AND the Company, in compliance with ss. 13 of the Lien Law, covenants that the
Company will receive the consideration for this conveyance and will hold the
right to receive such consideration as a trust fund to be applied first for the
purpose of paying the cost of the improvement and will apply the same first to
the payment of the cost of improvement before using any part of the total of the
same for any other purpose.
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IN WITNESS WHEREOF, the Company has duly executed this Deed and ▇▇▇▇ of Sale the
day and year first above written.
EAST SYRACUSE GENERATING COMPANY, L.P.
By: __________________________________
Name: __________________________________
Title: __________________________________
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
:SS.:
COUNTY OF_________ )
On this ___ day of ___________________ 1998 before me personally
came ____________________________, to me known, who, being by me duly sworn, did
depose and say that (s)he is the ________________________ of EAST SYRACUSE
GENERATING COMPANY, L.P., the limited partnership described in and which
executed the foregoing instrument and that (s)he signed his (her) name thereto
on behalf of said limited partnership.
_____________________________________
Notary Public
106
EXHIBIT A
PERSONAL PROPERTY
107
EXHIBIT B
LEGAL DESCRIPTION OF REAL PROPERTY
108
EXHIBIT C
EASEMENTS, LICENSES AND RIGHTS OF WAY
1. Right of Way and Easement between Onondaga County and East Syracuse
Generating Company, L.P., dated January 13, 1992 and recorded January 17, 1992
in the Onondaga County Clerk's Office in Book 3746 of Deeds, page 109.
2. Agreement between County of Onondaga and East Syracuse Generating
Company, L.P., dated as of January 13, 1992 and recorded January 17, 1992 in the
Onondaga County Clerk's Office in Book 3746 of Deeds at page 115.
3. Right of Way and Easement between ▇▇▇▇ Paving Inc. and East Syracuse
Generating Company, L.P., dated as of January 10, 1992 and recorded January 17,
1992 in the Onondaga County Clerk's Office in Book 3746 of Deeds at page 159.
4. Right of Way and Easement between the Village of East Syracuse and East
Syracuse Generating Company, L.P., dated January 13, 1992 and recorded January
17, 1992 in the Onondaga County Clerk's Office in Book 3746 of Deeds page 165,
as amended by Easement Amendment Agreement between the Village of East Syracuse
and East Syracuse Generating Company, L.P., dated October 21, 1993 and recorded
December 22, 1993 in the Onondaga County Clerk's Office in Book 3845 of Deeds at
page 79.
5. Right of Way and Easement between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ and
East Syracuse Generating Company, L.P., dated as of January 10, 1992 and
recorded January 17, 1992 in the Onondaga County Clerk's Office in Book 3746 of
Deeds at page 173.
6. License by and between Niagara Mohawk Power Corporation and East
Syracuse Company, L.P., dated as of December 9, 1991 and recorded January 17,
1992 in the Onondaga County Clerk's Office in Book 3746 of Deeds, page 43, as
amended by License Amendment No. 1 between Niagara Mohawk Power Corporation and
East Syracuse Generating Company, L.P. dated July 20, 1993 and recorded December
22, 1993 in the Onondaga County Clerk's Office in Book 3895 of Deeds at page 81.
7. License Agreement for Wire, Pipe and Cable Transverse Crossings and
Longitudinal Occupations, between Consolidated Rail Corporation and East
Syracuse Generating Company, L.P., dated as of November 22, 1991 and recorded
January 17, 1992 in the Onondaga County Clerk's Office in Liber 3746 of Deeds,
page 150.
8. Bailment Agreement by and among East Syracuse Generating Company, L.P.,
Alpco Recycling, Inc. and Concrete Pipe and Products Corporation.
9. Certain of the above instruments were amended by Omnibus Amendment
Agreement entered into and dated as of October 18, 1993, among General Electric
Capital Corporation, East Syracuse Generating Company, L.P., Wilmington Trust
Company, as Owner Trustee, and the Onondaga County Industrial Development
Agency, and recorded December 22, 1993 in the Onondaga County Clerk's Office in
Book 3895 of Deeds, page 97.
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EXHIBIT F
TO ASSET PURCHASE AGREEMENT
BUYER GUARANTY
1. Reference is made to the Asset Purchase Agreement, dated as of June 23,
1998 (the "Purchase Agreement"), by and between East Syracuse Generating
Company, L.P., a Delaware limited partnership (the "Seller") and ▇▇▇▇
Street Generating Station, L.P., a Delaware limited partnership (the
"Buyer"). Unless otherwise defined in this Guaranty, all capitalized terms
used in this Guaranty shall have the respective meanings assigned to them
in the Purchase Agreement (including by incorporation by reference).
2. Subject to the remaining provisions of this Section 2, for good and
valuable consideration received, Orion Power Holdings, Inc., a Delaware
corporation (the "Guarantor") hereby irrevocably and unconditionally
guarantees to the Seller and its successors and permitted assigns the
payment in full when due of all amounts required to be paid by the Buyer
pursuant to (a) Article IX (Indemnification) of the Purchase Agreement and
(b) Section 4.2 of the Purchase Agreement (such payments and other
obligations, collectively, the "Obligations"), and in the event that the
Buyer shall fail to fully pay or perform such Obligations at the times and
in the manner provided in the Purchase Agreement, any other Operative
Document or any other agreement or instrument relating thereto, following
(i) the occurrence of a Triggering Event (as defined below) or (ii) the
exercise, in good faith, by the Seller of reasonably diligent efforts to
enforce the payment and performance by the Buyer of the Obligations (which
shall not require the filing of a complaint or the institution of other
applicable legal proceedings), the Guarantor, within thirty (30) days of
receipt of written notice from the Seller of the Buyer's failure to pay or
perform, shall duly pay or perform or cause to be paid or performed the
same, to the extent such Obligations would not have been excused were the
Guarantor the direct obligor thereof.
As used herein, the term "Triggering Event" shall mean any or all of the
following events or circumstances: (a) execution of a judgment against the
Buyer by the Seller that has been returned unsatisfied; (b) insolvency of
the Buyer or the existence of an insolvency proceeding against the Buyer;
(c) the Buyer cannot be served by the Seller with legal process; or (d)
the existence of any other fact or circumstance that makes it readily
apparent that payment or performance by the Buyer of the Obligations
cannot be obtained by the Seller
110
despite the exercise, in good faith, by the Seller of reasonably diligent
efforts to enforce payment and performance by the Buyer of the
Obligations.
Subject to the foregoing provisions, the Guaranty provided by this Section
2 shall be an absolute, unconditional, present and continuing guaranty of
payment and performance (not merely of collection or collectibility),
which shall remain in full force and effect until the first to occur of
(i) the date that each and all of the Obligations guaranteed under this
Section 2 shall have been fully and satisfactorily discharged in
accordance with the terms and provisions of the Purchase Agreement and the
other Operative Documents and (ii) (w) with respect to any breach or
inaccuracy of any representation or warranty of the Buyer in any Operative
Document or certificate delivered pursuant to any Operative Document or
any breach by the Buyer of any covenant or agreement of the Buyer
contained in any Operative Document (other than as set forth in clauses
(x), (y) or (z) below), the date that is 12 months after the Closing Date,
(x) with respect to the Assumed Liabilities (other than as set forth in
clause (z) below), the date that is 18 months after the Closing Date, (y)
with respect to Section 4.2 of the Purchase Agreement, the date that is
three years and 60 days after the Closing Date and (z) with respect to the
obligations of the Buyer under Section 2.3(a)(ii) of the Purchase
Agreement, the earlier of (A) August 1, 2009 and (B) the date on which the
Buyer's obligations under Section 2.3(a)(ii) of the Purchase Agreement
have terminated, which termination shall be evidenced to the Seller's
reasonable satisfaction.
3. Except as provided above, the liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable, irrespective
of:
(a) any lack of validity or enforceability of the Purchase Agreement,
the other Operative Documents or any other agreement or instrument
relating thereto;
(b) any change in time, manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or
waiver of, or any consent to departure from, the Purchase Agreement,
the other Operative Documents or any other agreement or instrument
relating thereto;
(c) any change in ownership of the Guarantor or the Buyer;
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(d) any bankruptcy, insolvency or reorganization of, or other similar
proceedings involving the Guarantor, the Buyer or any other Person;
or
(e) any other circumstances which might otherwise constitute a legal or
equitable defense available to, or a discharge of, a surety or a
guarantor, or of the Buyer in respect of the Obligations or a legal
or equitable discharge of the Buyer in respect thereof.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by the Seller upon the insolvency,
bankruptcy, reorganization, liquidation or dissolution of the Buyer or
otherwise, all as though such payment had not been made. Guarantor shall
not commence or join in any involuntary case under any federal or state
bankruptcy law or in any petition seeking to take advantage of any other
law relating to bankruptcy, insolvency or reorganization with respect to
the Buyer.
4. The Guarantor hereby irrevocably, unconditionally and expressly waives, to
the fullest extent permitted by applicable law and in each case except as
otherwise provided in Section 2 above, promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and
this Guaranty, any requirement that the Seller protect, secure or perfect
any security interest or exhaust any right or first proceed against the
Buyer or any other Person, including but not limited to any other
guarantor of any of the Obligations.
5. This Guaranty constitutes a primary obligation of the Guarantor and is a
continuing guaranty and shall (a) be binding upon the Guarantor and its
successors and assigns and (b) inure to the benefit of and be enforceable
by the Seller and its successors and permitted assigns.
6. The Guarantor hereby represents and warrants that (a) it has full
corporate power and authority to execute and deliver this Guaranty, (b)
this Guaranty has been duly and validly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies, and (c) the execution of this Guaranty by the
Guarantor will not (i) conflict with or result
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in any breach of any provision of the Certificate of Incorporation or
By-Laws (or other similar governing documents) of the Guarantor, (ii)
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority or any other Person, or
(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 Guarantor is a party, or by
which its assets are bound, except for such defaults as to which requisite
waivers or consents have been obtained.
7. Guarantor will (a) preserve and maintain its corporate existence and (b)
comply with the requirements of all applicable governmental approvals and
applicable laws if the failure to comply with such requirements would have
a material adverse effect on Guarantor's ability to perform hereunder or
on the Seller's rights or remedies under this Guaranty.
8. All notices and other communications hereunder shall be in writing and
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), postage prepaid, to the parties
at the following addresses (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:
East Syracuse Generating Company, L.P.
c/o U.S. Generating Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
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with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(b) If to the Guarantor, to:
Orion Power Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Thelen, Marrin, ▇▇▇▇▇▇▇ & Bridges LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
9. This Guaranty 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.
10. No failure or delay by the Seller in exercising any remedy, right, power
or privilege under this Guaranty or under any other Operative Document
shall operate as a waiver of such remedy, right, power or privilege, nor
shall any single or partial exercise of such remedy, right, power or
privilege preclude any other or further exercise of such remedy, right,
power or privilege or the exercise of any other remedy, right, power or
privilege. The remedies, rights, powers and privileges provided by this
Guaranty are cumulative and not exclusive of any remedies, rights, powers
or privileges provided by the other Operative Documents or by law.
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114
11. Guarantor agrees to pay or to reimburse the Seller upon demand for all
reasonable costs and expenses (including attorneys' fees and expenses)
that may be incurred by the Seller in enforcing any of the obligations of
Guarantor under this Guaranty, whether or not any lawsuit is filed,
including all such costs and expenses incurred by the Seller in any
bankruptcy, reorganization, workout or similar proceeding with respect to
the Buyer or the Guarantor.
12. Any provision of this Guaranty may be modified, supplemented or waived
only by an instrument in writing signed by Guarantor and the Seller. Any
modification, supplement or waiver shall be for such period and subject to
such conditions as shall be specified in the written instrument effecting
the same and shall be binding upon the Seller, each holder of the
Obligations and Guarantor, and any such waiver shall be effective only in
the specific instance and for the purpose for which given.
13. All representations and warranties made in this Guaranty or in any
certificate or other document delivered pursuant to or in connection with
this Guaranty shall survive the execution and delivery of this Guaranty or
such certificate or other document (as the case may be) or any deemed
repetition of any such representation or warranty.
14. This Guaranty supersedes all prior agreements and understandings, written
or oral, among the parties with respect to the subject matter of this
Guaranty. Any previous agreement or understanding between the parties with
respect to the subject matter hereof, whether written or oral, is
superseded by this Guaranty.
15. Any provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Guaranty, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
16. Nothing expressed or referred to in this Guaranty shall be construed to
give any Person other than Guarantor and the Seller any legal or equitable
right, remedy, or claim under or with respect to this Guaranty or any
provision of this Guaranty. This Guaranty and all of its provisions and
conditions are for
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115
the sole and exclusive benefit of such parties and their respective
successors and permitted assigns.
17. The captions and section headings appearing in this Guaranty are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Guaranty.
ORION POWER HOLDINGS, INC.
By:______________________________________
Name:______________________________
Title:_____________________________
Date: June 23, 1998
7
