SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 24, 1998
________________________________________________
Date of Report (Date of Earliest Event Reported)
Orange and Rockland Utilities, Inc.
________________________________________________
(Exact Name of Registrant as Specified in Charter)
New York 1-4315 13-1727729
__________________ ______________ _____________
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
One Blue Hill Plaza
Pearl River, New York 10965
___________________________________________________
(Address of Principal Executive Offices and Zip Code)
(914) 352-6000
___________________________________________________
(Registrant's Telephone Number, Including Area Code)
N/A
________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On November 24, 1998, Orange and Rockland Utilities, Inc. ("O&R")
announced that it had signed definitive agreements with three subsidiaries
of Southern Energy, Inc. ("SEI"), an affiliate of the Southern Company, to
sell its generating assets for $476,290,000 in cash. SEI was the
successful bidder in an auction process that was established pursuant to
O&R's New York Electric Rate and Restructuring Plan, which was approved by
the New York Public Service Commission (the "Commission") in December 1997,
and the subsequent Divestiture Plan, which was approved by the Commission
in May 1998. The sale is expected to close in April 1999. A copy of the
press release relating to the agreements entered into with Southern Energy
Bowline, L.L.C., Southern Energy Lovett, L.L.C. and Southern Energy NY-Gen,
L.L.C. is filed herewith as Exhibit 99.16.
Pursuant to the Bowline Point Generating Station Sales Agreement by
and between O&R, Consolidated Edison Company of New York, Inc. ("Con
Edison") and Southern Energy Bowline, L.L.C. ("Bowline LLC"), dated as of
November 24, 1998 (the "Bowline ASA"), Bowline LLC agreed to acquire O&R's
one-third interest and Con Edison's two-thirds interest in the Bowline
Point Generating Station for $199,850,000 in cash. The Bowline ASA is
filed herewith as Exhibit 10.58 and is incorporated herein by reference.
Pursuant to the Lovett Generating Station Sales Agreement by and
between O&R and Southern Energy Lovett, L.L.C. ("Lovett LLC"), dated as of
November 24, 1998 (the "Lovett ASA"), Lovett LLC agreed to acquire the
Lovett Generating Station for $243,500,000 in cash. The Lovett ASA is
filed herewith as Exhibit 10.59 and is incorporated herein by reference.
Pursuant to the Gas Turbine and Hydroelectric Generating Stations
Sales Agreement by and between O&R and Southern Energy NY-Gen, L.L.C. ("NY-
Gen LLC" and together with Bowline LLC and Lovett LLC, the "SEI Subs"),
dated as of November 24, 1998 (the "NY-Gen ASA" and together with the
Bowline ASA and the Lovett ASA, the "ASA's"), NY-Gen LLC agreed to acquire
O&R's Gas Turbine and Hydroelectric Generating Stations for $20,440,000 in
cash. The NY-Gen ASA is filed herewith as Exhibit 10.60 and is
incorporated herein by reference.
The principal terms of the ASA's include:
(a) the SEI Subs will assume future environmental liabilities (other
than off-site environmental liabilities incurred prior to the transfer of
title) relating to any of the purchased assets;
(b) the SEI Subs will assume existing collective bargaining
agreements through their expiration covering employees that work at the
purchased assets; and
(c) the purchase price of each of the ASA's will be subject to a
post-closing adjustment for fuel inventory present at the purchased assets.
The sale of generating assets is subject to certain customary closing
conditions, including, without limitation, the receipt of all necessary
governmental approvals and the making of all necessary governmental
filings, including the approval of state utility regulators in New York,
New Jersey and Pennsylvania, the approval of the Federal Energy Regulatory
Commission, the approval of the Securities and Exchange Commission under
the Public Utility Holding Company Act of 1935, as amended, and the filing
of the requisite notification with the Federal Trade Commission and the
Department of Justice under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the expiration of the applicable waiting
period thereunder.
Pursuant to the Bowline Adjacent Property Sales Agreement by and
between O&R and Bowline LLC, dated as of November 24, 1998 (the "Adjacent
Property ASA"), Bowline LLC agreed to acquire a parcel of land adjacent to
the Bowline Point Generating Station for $12,500,000 in cash. The Adjacent
Property ASA is filed herewith as Exhibit 10.61 and is incorporated herein
by reference.
In addition to the ASA's, O&R and one or more of the SEI Subs entered
into a Transition Power Sales Agreement, two Load Pocket Call Option
Agreements and three Continuing Site/Interconnection Agreements (the
"Ancillary Agreements") in order to ensure reliable supply and distribution
of electricity to O&R's customers in the transition period and into the
future. The Transition Power Sales Agreement, the Eastern Load Pocket Call
Option Agreement and the Western Load Pocket Call Option Agreement are
filed herewith as Exhibits 10.62, 10.63 and 10.64, respectively, and are
incorporated herein by reference.
SEI executed two separate Guarantees (the "Bowline Guaranty" and the
"Lovett, Gas Turbine and Hydroelectric Facilities Guaranty") whereby SEI
guarantees the payment by and performance of Bowline LLC, Lovett LLC and
NY-Gen LLC under the ASA's and the Ancillary Agreements. The Guarantees
are filed herewith as Exhibits 10.65 and 10.66, respectively, and are
incorporated herein by reference.
The descriptions of the agreements entered into set forth herein do
not purport to be complete and are qualified in their entirety by the
provisions set forth in each of the agreements.
ITEM 7. EXHIBITS.
(c) Exhibits.
10.58 Bowline Point Generating Station Sales Agreement by and
between Orange and Rockland Utilities, Inc., Consolidated
Edison Company of New York, Inc. and Southern Energy
Bowline, L.L.C., dated as of November 24, 1998.
10.59 Lovett Generating Station Sales Agreement between Orange and
Rockland Utilities, Inc. and Southern Energy Lovett, L.L.C.,
dated as of November 24, 1998.
10.60 Gas Turbine and Hydroelectric Generating Stations Sales
Agreement between Orange and Rockland Utilities, Inc. and
Southern Energy NY-Gen, L.L.C., dated as of November 24,
1998 .
10.61 Bowline Adjacent Property Sales Agreement by and between
Orange and Rockland Utilities, Inc. and Southern Energy
Bowline, L.L.C., dated as of November 24, 1998.
10.62 Transition Power Sales Agreement by and between Orange and
Rockland Utilities, Inc., Southern Energy Bowline, L.L.C.,
Southern Energy Lovett, L.L.C. and Southern Energy NY-Gen,
L.L.C., dated as of November 24, 1998.
10.63 Eastern Load Pocket Call Option Agreement between Orange and
Rockland Utilities, Inc. and Southern Energy Lovett, L.L.C.,
dated as of November 24, 1998.
10.64 Western Load Pocket Call option Agreement between Orange and
Rockland Utilities, Inc. and Southern Energy NY-Gen, L.L.C.,
dated as of November 24, 1998.
10.65 Bowline Guaranty, dated as of November 24, 1998, given by
Southern Energy, Inc. in favor of Orange and Rockland
Utilities, Inc. and Consolidated Edison Company of New York,
Inc.
10.66 Lovett, Gas Turbine and Hydroelectric Generating Facilities
Guaranty, dated as of November 24, 1998, given by Southern
Energy, Inc. in favor of Orange and Rockland Utilities, Inc.
99.16 Orange and Rockland Utilities, Inc. Press Release issued
November 24, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: November 25, 1998
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ Robert J. McBennett
_________________________________
Robert J. McBennett
Treasurer
Exhibit Index
Exhibit Description
10.58 Bowline Point Generating Station Sales Agreement by and
between Orange and Rockland Utilities, Inc., Consolidated
Edison Company of New York, Inc. and Southern Energy
Bowline, L.L.C., dated as of November 24, 1998.
10.59 Lovett Generating Station Sales Agreement between Orange and
Rockland Utilities, Inc. and Southern Energy Lovett, L.L.C.,
dated as of November 24, 1998.
10.60 Gas Turbine and Hydroelectric Generating Stations Sales
Agreement between Orange and Rockland Utilities, Inc. and
Southern Energy NY-Gen, L.L.C., dated as of November 24,
1998 .
10.61 Bowline Adjacent Property Sales Agreement by and between
Orange and Rockland Utilities, Inc. and Southern Energy
Bowline, L.L.C., dated as of November 24, 1998.
10.62 Transition Power Sales Agreement by and between Orange and
Rockland Utilities, Inc., Southern Energy Bowline, L.L.C.,
Southern Energy Lovett, L.L.C. and Southern Energy NY-Gen,
L.L.C., dated as of November 24, 1998.
10.63 Eastern Load Pocket Call Option Agreement between Orange and
Rockland Utilities, Inc. and Southern Energy Lovett, L.L.C.,
dated as of November 24, 1998.
10.64 Western Load Pocket Call option Agreement between Orange and
Rockland Utilities, Inc. and Southern Energy NY-Gen, L.L.C.,
dated as of November 24, 1998.
10.65 Bowline Guaranty, dated as of November 24, 1998, given by
Southern Energy, Inc. in favor of Orange and Rockland
Utilities, Inc. and Consolidated Edison Company of New York,
Inc.
10.66 Lovett, Gas Turbine and Hydroelectric Generating Facilities
Guaranty, dated as of November 24, 1998, given by Southern
Energy, Inc. in favor of Orange and Rockland Utilities, Inc.
99.16 Orange and Rockland Utilities, Inc. Press Release issued
November 24, 1998.
Exhibit 10.58
-----------------------------------
BOWLINE POINT GENERATING STATION SALES AGREEMENT
AMONG
ORANGE AND ROCKLAND UTILITIES, INC.,
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
AND
SOUTHERN ENERGY BOWLINE, L.L.C.
November 24, 1998
-----------------------------------
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
SALE AND PURCHASE
2.1. The Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 18
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . 19
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . 24
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 28
3.2. Purchase Price Adjustment . . . . . . . . . . . . . . . . . 29
3.3. Allocation of Purchase Price . . . . . . . . . . . . . . . . 32
3.4. Proration . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing . . . . . . . . . . . . . . . . . 34
4.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . 34
4.3. Deliveries by the Sellers . . . . . . . . . . . . . . . . . 35
4.4. Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
5.1. Organization; Qualification . . . . . . . . . . . . . . . . 39
5.2. Authority Relative to this Agreement . . . . . . . . . . . . 39
5.3. Consents and Approvals; No Violation . . . . . . . . . . . . 40
5.4. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.5. Financial Statements . . . . . . . . . . . . . . . . . . . . 43
5.6. Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 44
5.7. Absence of Certain Changes . . . . . . . . . . . . . . . . . 45
5.8. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9. Leasehold Interests . . . . . . . . . . . . . . . . . . . . 46
5.10. Improvements . . . . . . . . . . . . . . . . . . . . . . . 47
5.11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.12. Environmental Matters . . . . . . . . . . . . . . . . . . . 48
5.13. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 50
5.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.15. Real Property Encumbrances . . . . . . . . . . . . . . . . 53
5.16. Condemnation . . . . . . . . . . . . . . . . . . . . . . . 53
5.17. Certain Contracts and Arrangements . . . . . . . . . . . . 53
5.18. Legal Proceedings, etc. . . . . . . . . . . . . . . . . . . 55
5.19. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.20. Regulation as a Utility . . . . . . . . . . . . . . . . . . 56
5.21. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.22. Intellectual Property . . . . . . . . . . . . . . . . . . . 57
5.23. Year 2000 Readiness . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . 58
6.2. Authority Relative to this Agreement . . . . . . . . . . . . 58
6.3. Consents and Approvals; No Violation . . . . . . . . . . . . 59
6.4. Operating Easements . . . . . . . . . . . . . . . . . . . . 60
6.5. Regulation as a Utility . . . . . . . . . . . . . . . . . . 60
6.6. Availability of Funds . . . . . . . . . . . . . . . . . . . 61
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets . . . . 61
7.2. Access to Information . . . . . . . . . . . . . . . . . . . 66
7.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . 69
7.5. Public Statements . . . . . . . . . . . . . . . . . . . . . 70
7.6. Consents and Approvals . . . . . . . . . . . . . . . . . . . 71
7.7. Fees and Commissions . . . . . . . . . . . . . . . . . . . . 74
7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 74
7.9. Supplements to Schedules . . . . . . . . . . . . . . . . . . 78
7.10. Employees . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.11. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . 84
7.12. Compliance with Cooling Water Usage Obligations . . . . . . 85
7.13. Real Estate Matters . . . . . . . . . . . . . . . . . . . . 87
7.14. Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . 89
7.15. Scheduled Capital Expenditures and Scheduled Maintenance
Expenditures . . . . . . . . . . . . . . . . . . . . . . 89
7.16. Expansion. . . . . . . . . . . . . . . . . . . . . . . . 90
7.17. Fuel Contract Renegotiation . . . . . . . . . . . . . . . . 90
7.18. Environmental Insurance . . . . . . . . . . . . . . . . . . 91
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions
Contemplated Hereby. . . . . . . . . . . . . . . . . . . . 91
8.2. Conditions to Obligations of Buyer . . . . . . . . . . . . . 94
8.3. Conditions to Obligations of the Sellers . . . . . . . . . . 102
8.4. Extension of Closing Date . . . . . . . . . . . . . . . . . 104
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification . . . . . . . . . . . . . . . . . . . . . . 105
9.2. Defense of Claims . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 115
10.2. Procedure and Effect of Termination . . . . . . . . . . . . 117
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification . . . . . . . . . . . . . . . . 118
11.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 118
11.3. Waiver of Compliance; Consents . . . . . . . . . . . . . . 120
11.4. No Survival . . . . . . . . . . . . . . . . . . . . . . . . 121
11.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 121
11.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 124
11.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 125
11.8. Specific Performance . . . . . . . . . . . . . . . . . . . 125
11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 126
11.10. Interpretation . . . . . . . . . . . . . . . . . . . . . . 126
11.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 126
11.12. Bulk Sales or Transfer Laws . . . . . . . . . . . . . . . 127
BOWLINE POINT GENERATING STATION SALES AGREEMENT
BOWLINE POINT GENERATING STATION SALES AGREEMENT, dated as of
November 24, 1998, among Orange and Rockland Utilities, Inc., a New York
corporation ("O&R"), Consolidated Edison Company of New York, Inc., a New
York corporation ("Con Edison") (each of O&R and Con Edison individually
may be referred to as a "Seller" and collectively as the "Sellers" herein)
and Southern Energy Bowline, L.L.C., a Delaware limited liability company
("Buyer").
WHEREAS, the Sellers own the Purchased Assets (as defined
herein), and O&R operates under the terms of the Operating Agreement, dated
October 10, 1969, a certain electric power generation station known as
Bowline Point Generating Station that is part of the Purchased Assets; and
WHEREAS, the Buyer desires to purchase and assume from the
Sellers, and the Sellers desire to sell to Buyer, the Purchased Assets upon
the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this Bowline Point Generating Station
Sales Agreement together with the Schedules and Exhibits hereto.
(3) "Ancillary Agreements" means (i) the Operating Easement,
(ii) the Seller's Easements, (iii) the Continuing Site/Interconnection
Agreement, and (iv) the Transition Agreement, (v) the Transition Capacity
Sales Agreement, dated as of the date of this Agreement, between Con Edison
and Buyer relating to the purchase from Buyer of installed electric
capacity at Bowline.
(4) "Bill of Sale" means the Bill of Sale to be delivered at the
Closing with respect to the Purchased Assets which constitute personal
property and which are to be transferred at the Closing, substantially in
the form of Exhibit A hereto.
(5) "Bowline" means the Bowline Point Generating Station located
in the Village of West Haverstraw, Rockland County, New York.
(6) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.
(7) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other authorized
representatives.
(8) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(9) "Code" means the Internal Revenue Code of 1986, as amended.
(10) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between O&R and Southern Energy, Inc.
(11) "Continuing Site/Interconnection Agreement" means the
Continuing Site/Interconnection Agreement, dated as of the date of this
Agreement, between O&R and the Buyer.
(12) "Emission Allowances" means the sulfur dioxide allowances
already allocated by the United States Environmental Protection Agency to
Bowline and the nitrogen oxide allowances to be allocated by the New York
State Department of Environmental Conservation to Bowline, each as set
forth in Schedule 1.1(a)(12).
(13) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and
charges of any kind.
(14) "Environmental Laws" means all Federal, state and local
laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution or
protection of the environment, natural resources or human health and
safety, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Substances (including, without limitation,
ambient air, surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, Release, transport or handling of Hazardous
Substances.
(15) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(16) "Estimated Inventory Adjustment Amount" means the value of
oil inventory and propane inventory used at or in connection with the
Purchased Assets as of the date ten (10) days before the Closing Date, as
determined by using the average price for residual 0.3% sulphur high pour
New York cargo spot index for no. 6 oil - New York Harbor published in
Bloomberg Energy during the consecutive ten (10) day period preceding the
date which is ten (10) days before the Closing Date, and the average price
for propane published in the Journal of Commerce for Propane-Mt. Belvieu
during such consecutive ten (10) day period plus five cents ($0.05) per
gallon, which valuations shall be provided to the Buyer by the Sellers no
later than five (5) days before the Closing Date.
(17) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(18) "Federal Power Act" means the Federal Power Act of 1935.
(19) "FERC" means the Federal Energy Regulatory Commission or any
successor thereto.
(20) "Good Utility Practices" means any of the practices, methods
and acts engaged in or approved by a significant portion of the electric
utility industry with respect to similar facilities during the relevant
time period which in each case, in the exercise of reasonable judgment in
light of the facts known or that should have been known at the time the
decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety, law, regulation, environmental protection, and
expedition. Good Utility Practices are not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others, but
rather to be acceptable practices, methods or acts generally accepted in
such industry.
(21) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may
contain levels of polychlorinated biphenyls; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and regulatory
effect; or (c) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any applicable Environmental Law.
(22) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(23) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
(24) "Income Tax" means any tax, charge, fee, levy, penalty, or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority (a) based upon, measured by or calculated with respect to
net income, profits or receipts (including, without limitation, capital
gains taxes and alternative minimum taxes but excluding sales, transfer and
similar taxes) or (b) based upon, measured by or calculated with respect to
multiple bases (including, without limitation, corporate franchise taxes)
if one or more of the bases on which such tax may be based, measured by or
calculated with respect to, is described in clause (a), in each case
together with any interest, penalties, or additions attributable thereto.
(25) "Income Tax Return" means any return, report, information
return or other document (including any related or supporting information)
supplied or required to be supplied to any authority with respect to Income
Taxes.
(26) "Independent Accounting Firm" means Arthur Andersen LLP or
such other independent accounting firm of national reputation mutually
appointed by the Sellers and the Buyer.
(27) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit B hereto.
(28) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, copyrights and copyright rights, know-how and all
pending applications for and registrations of patents, trademarks, service
marks and copyrights other than the names, trademarks, service marks or
logos listed in Section 2.2(b) and (c) hereof.
(29) "Internal Revenue Service" means the United States Internal
Revenue Service, or any successor thereto.
(30) "ISO" means the New York Independent System Operator, or its
successor.
(31) "Material Adverse Effect" means any change in or effect on
the Purchased Assets after the date of this Agreement that is, individually
or in the aggregate, materially adverse to the condition (financial or
physical) of (as compared to the condition on the date of this Agreement),
or the ability to own or operate (as compared to the ownership and
operation thereof prior to the date of this Agreement), any material part
of the Purchased Assets, other than (i) any change or effect resulting from
changes in the international, national, regional or local wholesale or
retail markets for electric power, (ii) any change or effect resulting from
changes in the international, national, regional or local markets for any
fuel used at the Purchased Assets, (iii) any change or effect resulting
from changes in the North American, national, regional or local electric
transmission systems, (iv) any change or effect resulting from any
regulation, rule or order adopted or proposed by or with respect to the ISO
and its responsibility for, authority over and operation of the wholesale
and retail electric energy, capacity and ancillary services electric power
markets and (v) any materially adverse change in or effect on the Purchased
Assets which is cured (including by the payment of money) by the Sellers
before the Termination Date.
(32) "NJBPU" means the New Jersey Board of Public Utilities, or
any successor thereto.
(33) "NYPSC" means the New York Public Service Commission, or any
successor thereto.
(34) "Operating Easement" means the operating easement providing
the right to continue operating and maintaining certain distribution
facilities at the substations, which will be prepared as described in the
Continuing Site/Interconnection Agreement.
(35) "Other Sales Agreements" means the Lovett Generating Station
Sales Agreement between O&R and Southern Energy Lovett, L.L.C.; the Gas
Turbines and Hydroelectric Generating Station Sales Agreement between O&R
and Southern Energy NY-Gen, L.L.C.; and the Bowline Adjacent Property Sales
Agreement, between O&R and the Buyer, each dated as of the date of this
Agreement.
(36) "PAPUC" means the Pennsylvania Public Utility Commission, or
any successor thereto.
(37) "Permitted Encumbrances" means (i) those exceptions to title
to the Purchased Assets contained in the documents listed on Schedules 5.8,
5.9(a), 5.9(b) and 5.15; (ii) any state of facts that a current survey of
the Purchased Assets would disclose; (iii) mortgages, liens, pledges,
charges, encumbrances and restrictions which are not in excess of $100,000
incurred in connection with the Sellers' purchase of properties and assets
to be conveyed to Buyer as part of the Purchased Assets after the date of
this Agreement securing all or a portion of the purchase price therefor
incurred in the ordinary course of business; (iv) the Operating Easement;
(v) statutory liens for current Taxes, assessments or other governmental
charges not yet due or delinquent or the validity of which is being
contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted
accounting principles, provided that the aggregate amount being so
contested does not exceed $500,000; (vi) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary
course of business relating to the Sellers' obligations which are not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings, provided that the aggregate amount of such
liens does not exceed $500,000; (vii) zoning, entitlement, conservation
restrictions and other land use and environmental regulations by
governmental authorities, provided that the foregoing do not materially
interfere with the present use of the Purchased Assets; and (viii) such
other liens, imperfections in or failure of title, charges, easements,
restrictions and encumbrances which do not materially detract from the
value of or materially interfere with the present use of the Purchased
Assets and neither secure indebtedness, nor individually or in the
aggregate have or would have a Material Adverse Effect or which will be
discharged or released prior to or simultaneously with the Closing.
(38) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an unincorporated organization or a governmental
entity or any department or agency thereof.
(39) "Purchased Assets" means the real and personal property,
tangible or intangible, constituting or used principally for generation
purposes at, or otherwise for the operation of, Bowline, including, but not
limited to, the following assets:
(a) the two 600 MW natural gas- or oil-fired steam electric
generating units listed in Schedule 1.1(a)(39);
(b) all of Sellers' right, title and interest in, to and under
the Real Property (including all structures, buildings, facilities and
other improvements thereon and all appurtenances thereto) as further
described on Schedule 5.8;
(c) all other machinery, equipment, furniture and other personal
property owned by the Sellers located at Bowline on the Closing Date,
including, without limitation, the items of personal property listed
or referred to in Schedule 1.1(a)(39);
(d) the underground portion of 345 kV transmission feeders that
connect the electric generating units at Bowline to O&R's West
Haverstraw 345 kV substation and approximately 7,400 feet of 16 inch
gas main between Bowline and Garnerville, New York gas meter and
regulator station subject to the terms of applicable easements which
would not have a materially adverse effect thereon;
(e) the Garnerville, New York gas meter and regulator station;
(f) all inventories of fuels, supplies, spare parts and
materials located at Bowline on the Closing Date;
(g) all contracts, agreements and personal property leases
principally relating to Bowline, as further listed on Schedules
5.17(a), (b), and (c) and 7.10(a), respectively;
(h) the Environmental Permits and Permits listed on Schedules
5.12(a)(ii) and 5.19(a), respectively;
(i) the Emission Allowances;
(j) all books, operating records, reports, engineering or design
plans, specifications, drawings, procedures, software or tools used to
process and report environmental data, safety and maintenance manuals
and similar items of the Sellers relating specifically to the
aforementioned assets;
(k) all of Sellers' right, title and interest in, to and under
the Leases;
(l) copies of all filings made with regulatory agencies, as
updated, relating to O&R's Year 2000 programs as such filings apply to
the Purchased Assets;
(m) the existing cross-plant water outage credits points
generated by Bowline under the Settlement Agreement or the Consent
Order, if any exist on the Closing Date;
(n) all unexpired, transferable warranties and guarantees from
third parties with respect to any of the Purchased Assets, as of the
Closing Date;
(o) the Intellectual Property, if any, relating to the Purchased
Assets (including Sellers' goodwill therein and the rights of Sellers
in and to the name of Bowline) and all rights, privileges, claims,
causes of action, indemnification rights and options pertaining solely
to the Purchased Assets or the Assumed Liabilities, including, without
limitation, those items listed on Schedule 1.1(a)(39)(o);
(p) the assets acquired by Sellers pursuant to Section 7.4; and
(q) $4.0 million in cash.
(40) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, leach, dump or allow to escape into or
through the environment.
(41) "Scheduled Capital Expenditures" means those capital
expenditures listed on Schedule 1.1(a)(41).
(42) "Scheduled Maintenance Expenditures" means those
maintenance expenditures listed on Schedule 1.1(a)(42).
(43) "SEC" means the Securities and Exchange Commission, or any
successor thereto.
(44) "Securities Act" means the Securities Act of 1933, as
amended.
(45) "Sellers Agreements" means those agreements listed on
Schedule 5.17(a) and the Collective Bargaining Agreements.
(46) "Separation Document" means the document, to be negotiated
in good faith by the Buyer and O&R within three (3) months from the date of
this Agreement, which will delineate the Purchased Assets from O&R's other
assets, and which will be consistent with the separation document summary
attached hereto as Exhibit C.
(47) "Settlement Agreement" means that certain Settlement
Agreement entered into on December 19, 1980, by the following entities to
settle their disputes relating to the National Pollutant Discharge
Elimination System permits issued to certain utilities in 1975: the
Sellers; Central Hudson Gas & Electric Corporation; Niagara Mohawk Power
Corporation; the Power Authority of the State of New York (currently the
New York Power Authority); the New York State Department of Environmental
Conservation; the Attorney General of the State of New York; the United
States Environmental Protection Agency; Hudson River Fisherman's
Association, Inc. (currently d/b/a the Hudson Riverkeeper Fund, Inc.);
Scenic Hudson Preservation Conference (currently Scenic Hudson, Inc.); and
the National Resources Defense Council, as amended.
(48) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(49) "Tax" means any tax, charge, fee, levy, penalty or other
assessment imposed by any U.S. federal, state, local or foreign taxing
authority, including, but not limited to, any income, gross receipts,
license, stamp, occupation, environmental, excise, property, sales,
transfer, payroll, unemployment, withholding, social security or any other
tax of any kind whatsoever, including any interest, penalties or additions
attributable thereto.
(50) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
other related or supporting information) supplied or required to be
supplied to any authority with respect to Taxes and including any
supplement or amendment thereof.
(51) "Transition Agreement" means the Transition Power Sales
Agreement between the Buyer, Southern Energy Lovett, L.L.C. and Southern
Energy NY-Gen, L.L.C. and O&R, dated as of the date of this Agreement.
(52) "WARN Act" means the Federal Worker Adjustment Retraining
and Notification Act of 1988.
(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
---- -------
Adjustment Statement 3.2
Assumed Liabilities 2.3
Benefit Plans 5.14
Buyer Preamble
Buyer Indemnitee 9.1
Buyer Required Regulatory Approvals 6.3
Buyer's Easements 4.3
CEI 11.6
Closing 4.1
Closing Date 4.1
Collective Bargaining Agreements 7.10
Con Edison Preamble
Condition Fulfillment Date 8.4
Confidential Information 11.2
Consent Order 7.12
Defect of Title 7.13
Deferred Closing Date 8.4
Designated Representative 7.2
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Insurance 7.18
Environmental Permits 5.12
ERISA Affiliate 2.4
ERISA Affiliate Plans 2.4
Estimated Purchase Price 4.2
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Hourly Employees 7.10
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
Intended Use 7.16
Inventory Adjustment Amount 3.2
ISO Approval 8.4
Leases 5.9
Leased Assets 7.4
Management Employees 7.10
Necessary Capital Expenditures 7.1
Necessary Maintenance Expenditures 7.1
O&R Preamble
Participation Agreement 7.8
Pension Benefit Plans 5.14
Permits 5.19
Pollution Control Bond 2.4
Pollution Control Facilities 7.8
Property Interests 5.8
Purchase Price 3.1
Real Property 5.8
Recipient 11.2
Seller Preamble
Seller Indemnitee 9.1
Sellers Preamble
Sellers Balance Sheet 5.5
Sellers Required Regulatory Approvals 5.3
Seller's Easements 4.4
Termination Date 10.1
Third Party Claim 9.2
Title Commitment 7.13
Title Company 7.13
1986 Tax Act 7.8
ARTICLE II
SALE AND PURCHASE
2.1. The Sale. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing, the Sellers
will sell, assign, convey, transfer and deliver to the Buyer, and the Buyer
will purchase and acquire from the Sellers, free and clear of all
Encumbrances (except for Permitted Encumbrances) all of the Sellers' right,
title and interest in, to and under the real and personal property,
tangible or intangible, owned by the Sellers and constituting the Purchased
Assets.
2.2. Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable (other than the cash specified in Section 1.1(a)(39)(q) of this
Agreement);
(b) the name "Orange and Rockland Utilities, Inc.", "Orange and
Rockland", "O&R", "ORU" or any related or similar trade names, trademarks,
service marks or logos;
(c) the name "Con Ed", "Con Edison", "Consolidated Edison",
"Consolidated Edison, Inc." "Consolidated Edison Company of New York,
Inc.", "New York Edison," Brooklyn Edison," "States Island Edison,"
"Edison" or any related or similar names, trademarks, service marks or
logos;
(d) distribution, substation and communication facilities and
related support equipment described in Schedule 2.2(d);
(e) any refund, credit, penalty payment, adjustment or
reconciliation (i) related to personal property or other Taxes (excluding
Taxes relating to real property) paid prior to the Closing Date in respect
of the Purchased Assets, whether such refund, adjustment or reconciliation
is received as a payment or as a credit against future Taxes payable, or
(ii) arising under any of the Sellers Agreements and relating to a period
before the Closing Date;
(f) except to the extent specifically required by law, all
personnel records relating to any employees of the Sellers; and
(g) the rights and assets to be described in the Separation
Document as not part of the Purchased Assets.
2.3. Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to the Sellers the Instrument of Assumption pursuant to which the
Buyer shall assume and agree to discharge to the maximum extent permitted
by law, all of the following liabilities and obligations of the Sellers
which relate to the Purchased Assets, other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective
conditions thereof:
(a) all liabilities and obligations of the Sellers arising or
accruing after the Closing Date under (i) the Sellers Agreements, the
Environmental Permits, the Permits, real property leases, contracts and
other agreements disclosed and assigned to the Buyer pursuant to this
Agreement in accordance with the terms thereof, and (ii) the leases,
contracts and other agreements entered into by the Sellers with respect to
the Purchased Assets after the date hereof consistent with the terms of
this Agreement; except in each case, to the extent such liabilities and
obligations, but for a breach or default by either Seller, would have been
paid, performed or otherwise discharged on or prior to the Closing Date or
to the extent the same arise out of any such breach or default or any event
which after the giving of notice would constitute a default by either
Seller;
(b) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is liable pursuant
to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified the Sellers pursuant to Section 9.1;
(d) all liabilities to employees for which the Buyer is liable
pursuant to Section 7.10, including the Collective Bargaining Agreements;
(e) any liability, obligation or responsibility under or related
to former, current or future Environmental Laws or the common law, whether
such liability or obligation or responsibility is known or unknown,
contingent or accrued, arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to the Closing
Date, with respect to the ownership or operation of the Purchased Assets;
(ii) loss of life, injury to persons or property or damage to natural
resources (whether or not such loss, injury or damage arose or was made
manifest before the Closing Date or arises or becomes manifest after the
Closing Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets prior to the Closing
Date, including, but not limited to, Hazardous Substances contained in
building materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at
or adjacent to the Purchased Assets; and (iii) the investigation and/or
remediation (whether or not such investigation or remediation commenced
before the Closing Date or commences after the Closing Date) of Hazardous
Substances that are present or have been Released prior to the Closing Date
at, on, in, under, adjacent to, discharged from, emitted from or migrating
from the Purchased Assets, including, but not limited to, Hazardous
Substances contained in building materials at the Purchased Assets or in
the soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets; provided,
as to all of the above, that nothing set forth in this subsection 2.3(e)
shall require the Buyer to assume any liabilities that are expressly
excluded in Section 2.4;
(f) any liability, obligation or responsibility under or related
to former, current or future Environmental Laws or the common law, whether
such liability or obligation or responsibility is known or unknown,
contingent or accrued, arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, on or after the
Closing Date, with respect to the ownership or operation of the Purchased
Assets; (ii) compliance with applicable Environmental Laws on or after the
Closing Date with respect to the ownership or operation of the Purchased
Assets; (iii) loss of life, injury to persons or property or damage to
natural resources caused (or allegedly caused) by the presence or Release
of Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets on or after the Closing
Date, including, but not limited to, Hazardous Substances contained in
building materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at
or adjacent to the Purchased Assets; (iv) loss of life, injury to persons
or property or damage to natural resources caused (or allegedly caused) by
the off-site disposal, storage, transportation, discharge, Release,
recycling, or the arrangement for such activities, of Hazardous Substances,
on or after the Closing Date, in connection with the ownership or operation
of the Purchased Assets; (v) the investigation and/or remediation of
Hazardous Substances that are present or have been released on or after
the Closing Date at, on, in, under, adjacent to, discharged from, emitted
from or migrating from the Purchased Assets, including, but not limited to,
Hazardous Substances contained in building materials at the Purchased
Assets or in the soil, surface water, sediments, groundwater, landfill
cells or in other environmental media at or adjacent to the Purchased
Assets; and (vi) the investigation and/or remediation of Hazardous
Substances that are disposed, stored, transported, discharged, Released,
recycled, or the arrangement of such activities, on or after the Closing
Date, in connection with the ownership or operation of the Purchased
Assets, at any off-site location; provided, that nothing set forth in this
subsection shall require the Buyer to assume any liabilities that are
expressly excluded in Section 2.4;
(g) all liabilities and obligations of the Sellers with respect
to the Purchased Assets under the agreements or consent orders set forth on
Schedule 5.12(c);
(h) all liabilities incurred by the Sellers with respect to
maintenance and capital expenditures made with respect to the Purchased
Assets by the Sellers which are requested by Buyer;
(i) all liabilities or obligations relating to leases for the
Purchased Assets; and
(j) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (i) above, exclusively
relating to the Purchased Assets no matter when the events or occurrences
giving rise to such liabilities or obligations took place, the value of
which liabilities and obligations, together with the liabilities and
obligations relating to the "Purchased Asset" and the "Purchased Assets" as
defined in each of the Other Sales Agreements, in the aggregate, shall not
exceed $3 million.
All of the foregoing liabilities and obligations to be assumed by
the Buyer hereunder (excluding any Excluded Liabilities) are referred to
herein as the "Assumed Liabilities." It is understood and agreed that
nothing in this Section 2.3 shall constitute a waiver or release of any
claims arising out of the contractual relationships between the Sellers and
the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of either Seller in respect
of any Excluded Assets or other assets of the Sellers which are not
Purchased Assets;
(b) any liabilities or obligations with respect to Taxes
attributable to the Purchased Assets for taxable periods ending on or
before the Closing Date, except for Taxes for which the Buyer is liable
pursuant to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities relating
to the disposal, storage, transportation, discharge, Release, recycling, or
the arrangement for such activities, of Hazardous Substances that were
generated at the Purchased Assets, at any off-site location, where the
disposal, storage, transportation, discharge, Release, recycling or the
arrangement for such activities at said off-site location occurred prior to
the Closing Date, provided that for purposes of this Section, "off-site
location" does not include any location to which Hazardous Substances
disposed of, discharged from, emitted from or Released at the Purchased
Assets have migrated, including, but not limited to, surface waters that
have received waste water discharges from the Purchased Assets;
(d) any liabilities, obligations or responsibilities arising
after the Closing Date relating to: (i) the transmission lines delineated
in the Operating Easements or (ii) O&R's operations on, or usage of, the
Operating Easements, including, without limitation, liabilities,
obligations or responsibilities arising as a result of or in connection
with (1) any violation or alleged violation of Environmental Law and (2)
loss of life, injury to persons or property or damage to natural resources,
except to the extent caused by the Buyer;
(e) any liabilities, obligations or responsibilities arising
prior to or after the Closing Date relating to the easements provided O&R
under the Operating Easement, including, without limitation: (i) the
transmission lines or other facilities of O&R delineated in the Operating
Easements or (ii) O&R's ownership rights, operations on, or usage of, the
Operating Easements, including, without limitation, liabilities,
obligations or responsibilities arising as a result of or in connection
with (1) any violation or alleged violation of Environmental Law or Release
of Hazardous Substances and (2) loss of life, injury to persons or
property or damage to natural resources, except in the case of (1) or (2)
to the extent caused by the Buyer;
(f) any liabilities or obligations required to be accrued by
either Seller in accordance with generally accepted accounting principles
and/or the FERC Uniform System of Accounts on or before the Closing Date
with respect to liabilities related to the Purchased Assets, other than any
liability assumed by Buyer under Section 2.3;
(g) any liabilities or obligations with respect to liabilities
relating to the Purchased Assets relating to any personal injury including
bodily injury (including, but not limited to workers' compensation claims),
discrimination, wrongful discharge, unfair labor practice or similar claim
or cause of action with respect to any act or occurrence arising prior to
or on the Closing Date, other than liabilities or obligations for injury to
persons or loss of life assumed by the Buyer in Sections 2.3(e) and 2.3(f);
(h) any fines or penalties imposed by a governmental agency or
authority resulting from (A) an investigation or proceeding with respect to
any act or occurrence arising prior to or on the Closing Date or (B)
illegal acts, willful misconduct or gross negligence of either Seller prior
to or on the Closing Date;
(i) any payment obligations of either Seller for goods delivered
or services rendered prior to the Closing;
(j) any liabilities or obligations imposed upon, assumed or
retained by O&R pursuant to the Continuing Site/Interconnection Agreement
or any other Ancillary Agreement;
(k) any liabilities, obligations or responsibilities relating to
any deferred compensation, pension, profit-sharing and retirement plans,
including multiemployer plans, and all welfare, severance, stock-based,
bonus and other employee benefit or fringe benefit plans, programs and
arrangements, whether written or oral, maintained or with respect to which
contributions have been in the last five (5) years or are made by O&R and
any trade or business (whether or not incorporated) which are or have ever
been under common control, or which are or have ever been treated as a
single employer, with O&R under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which O&R and any ERISA Affiliate contributed
thereunder (the "ERISA Affiliate Plans"), including any multiemployer plan,
maintained by, contributed to, or obligated to contribute to, at any time,
by O&R or any ERISA Affiliate; including, without limitation, any liability
(A) to the Pension Benefit Guaranty Corporation under Title IV of ERISA;
(B) with respect to non-compliance with the continuation requirements of
COBRA; (C) with respect to any non-compliance with ERISA, the Code, or any
other applicable laws; (D) with respect to any suit, proceeding or claim
which is brought against either Seller, any ERISA Affiliate Plan, or any
fiduciary or former fiduciary of any such ERISA Affiliate Plan; (E)
relating to a multiemployer plan; or (F) for any claim or suit for benefits
accrued under an ERISA Affiliate Plan prior to Closing;
(l) any liabilities, obligations or responsibilities relating to
the employment or termination of employment, by O&R of any individual
(including, but not limited to, any employee of O&R) attributable to any
actions or inactions by O&R prior to the Closing Date; and
(m) any liabilities relating to the $55,000,000 New York State
Energy Research and Development Authority Pollution Control Refunding
Revenue Bonds (Orange and Rockland Utilities, Inc. Projects) 1994 Series A
(the "Pollution Control Bond") and any agreements relating thereto.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased
Assets shall be an amount equal to the sum of (i) $199,850,000, (ii) the
Estimated Inventory Adjustment Amount, (iii) the Inventory Adjustment
Amount and (iv) any amounts paid by the Sellers to acquire title to Leased
Assets pursuant to Section 7.4(a) ( the "Purchase Price").
3.2. Purchase Price Adjustment. (a) Within sixty (60) days
after the Closing, the Sellers shall prepare and deliver to the Buyer a
statement (the "Adjustment Statement") which sets forth an amount equal to
(A) the value as of the Closing Date, of all oil inventory and propane
inventory to be used at or in connection with the Purchased Assets
determined by using (i) the average price for residual 0.3% surplus high
pour New York cargo spot index for No. 6 oil - New York Harbor published in
Bloomberg Energy for the consecutive ten (10) days prior to the Closing
Date, the Closing Date and the nine (9) consecutive days following the
Closing Date, and (ii) the average price for propane published in the
Journal of Commerce for Propane Mt. Belvieu during such consecutive
twenty (20) day period plus five cents ($0.05) per gallon minus (B) the
Estimated Inventory Adjustment Amount (such difference is referred to as
the "Inventory Adjustment Amount");
The Adjustment Statement shall be prepared using the same
generally accepted accounting principles, policies and methods as the
Sellers have historically used in connection with the calculation of the
items reflected on the Adjustment Statement. The Buyer and the Sellers
agree to cooperate with the other in connection with the preparation of the
Adjustment Statement and related information, and each shall provide to the
other such books, records and information as may be reasonably requested
from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount;
provided, however, that the Buyer shall notify the Sellers in writing of
the disputed amount, and the basis of such dispute, within thirty (30) days
of the Buyer's receipt of the Adjustment Statement. In the event of a
dispute with respect to the Inventory Adjustment Amount, the Buyer and the
Sellers shall attempt to reconcile their differences and any resolution by
them as to any disputed amounts shall be final, binding and conclusive on
the parties. If the Buyer and the Sellers are unable to reach a resolution
of such differences within thirty (30) days of receipt of the Buyer's
written notice of dispute to the Sellers, the Buyer and the Sellers shall
submit the amounts remaining in dispute for determination and resolution to
the Independent Accounting Firm, which shall be instructed to determine and
report to the parties, within thirty (30) days after such submission, upon
such remaining disputed amounts, and such report shall be final, binding
and conclusive on the parties hereto with respect to the amounts disputed.
The fees and disbursements of the Independent Accounting Firm shall be
allocated between the Buyer and the Sellers so that the Buyer's share of
such fees and disbursements shall be in the same proportion that the
aggregate amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm that is unsuccessfully disputed by
the Buyer (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm.
(c) If the Inventory Adjustment Amount is positive, within ten
(10) Business Days after the Buyer's receipt of the Adjustment Statement,
the Buyer shall pay to the Sellers all undisputed portions of the Inventory
Adjustment Amount. If the Inventory Adjustment Amount is negative, within
ten (10) Business Days after the Buyer's receipt of the Adjustment
Statement, the Sellers shall pay to the Buyer all undisputed portions of
the Inventory Adjustment Amount. If there is a dispute with respect to any
amount on the Adjustment Statement, within five (5) Business Days after the
final determination of such disputed amounts on the Adjustment Statement,
the Buyer shall pay the Sellers an amount equal to the disputed portion of
the Inventory Adjustment Amount as finally determined to be payable with
respect to the Adjustment Statement; provided, however, that if such amount
shall be less than zero, the Sellers will pay to the Buyer the amount by
which such amount is less than zero. All payments made pursuant to this
Section 3.2(c) shall be paid together with interest thereon for the period
commencing on the Closing Date through the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the Closing Date,
in cash by federal or other wire transfer of immediately available funds.
For any payments made by the Buyer to the Sellers pursuant to this section,
the Sellers shall provide the necessary information to the Buyer so that
the Buyer may allocate payments due to Sellers between O&R and Con Edison.
3.3. Allocation of Purchase Price. The Buyer shall prepare an
allocation of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one hundred eighty (180)
days of the date of this Agreement but in no event less than forty-five
(45) days prior to the Closing and submit it to the Sellers. The Sellers
may dispute the allocation of the Purchase Price; provided, however, that
the Sellers shall notify the Buyer in writing of the disputed amount, and
the basis of such dispute, and follow the procedures relating to a dispute
described in Section 3.2(b) above. The Buyer and the Sellers each agree to
file Internal Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns and Income Tax Returns, in accordance with such agreed
allocation. Each of the Buyer and the Sellers shall report the
transactions contemplated by the Agreement for federal Income Tax and all
other Tax purposes in a manner consistent with the allocation determined
pursuant to this Section 3.3. The Buyer and the Sellers each agree to
provide the other promptly with any other information required to complete
Form 8594. Each of the Buyer and the Sellers shall notify and provide the
other with reasonable assistance in the event of an examination, audit or
other proceeding regarding the agreed upon allocation of the Purchase
Price.
3.4. Proration. (a) The Buyer and the Sellers agree that all
of the items normally prorated, including those listed below, relating to
the business and operation of the Purchased Assets will be prorated as of
the Closing Date, with the Sellers liable to the extent such items relate
to any time period through the Closing Date, and the Buyer liable to the
extent such items relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any
other Taxes (excluding Income Taxes), assessments and other charges,
if any, on or with respect to the ownership, use or business and
operation of the Purchased Assets;
(ii) rent, Taxes (excluding Income Taxes) and other items
payable by or to the Sellers under any of the Sellers Agreements to be
assigned to and assumed by the Buyer hereunder;
(iii) any permit, license or registration fees with respect
to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either the Sellers
or the Buyer made within sixty (60) days of the date that the actual
amounts become available. The Sellers and the Buyer agree to furnish each
other with such documents and other records as may be reasonably requested
in order to confirm all adjustment and proration calculations made pursuant
to this Section 3.4.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, at 10:00 A.M. (local time) on
April 30, 1999, or at such other place or later date and time as the
parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to
the Sellers at the Closing an amount (the "Estimated Purchase Price") in
United States dollars, equal to the sum of (i) $199,850,000, (ii) the
Estimated Inventory Adjustment Amount for the Closing, and (iii) any
amounts paid to acquire title to Leased Assets pursuant to Section 7.4(a)
hereof, by wire transfer of immediately available funds or by such other
means as are agreed to by the Sellers and the Buyer. The Sellers shall
provide the necessary information to the Buyer so that the Buyer may
allocate the Estimated Purchase Price between O&R and Con Edison.
4.3. Deliveries by the Sellers. At the Closing, the Sellers
will deliver the following to the Buyer:
(a) The Bill of Sale, duly executed by the Sellers for the
personal property included in the Purchased Assets;
(b) The executed consents to transfer the Sellers Agreements,
the Environmental Permits and the Permits, to the extent specifically
required hereunder.
(c) Each Ancillary Agreement, required to be delivered under
this Agreement, duly executed by O&R or Con Edison;
(d) The certificates and the opinions of counsel contemplated by
Sections 8.2(c), (e), (f), (g) and (i);
(e) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring Sellers'
interest in the Property Interests to the Buyer, duly executed and
acknowledged by O&R and in recordable form substantially in the form of
Exhibit D hereto;
(f) One or more easements to the extent necessary to evidence
the right of Buyer to use the real property of O&R (the "Buyer's
Easements") that comprise part of the Excluded Assets, duly executed and
acknowledged by O&R and in recordable form, each substantially in the form
of Exhibit E hereto;
(g) The Assignment of Leases in the form attached hereto as
Exhibit F assigning to Buyer all of the Sellers' right, title and interest
as lessor (or lessee as the case may be) under the leases;
(h) Copies of the resolutions adopted by the Board of Directors
or Board of Trustees, and/or a committee of the Board of Directors or Board
of Trustees to whom the Board has delegated its authority, of each of the
Sellers, certified by the Secretary of each Seller, as having been duly and
validly adopted and as being in full force and effect, authorizing the
execution and delivery by each Seller of this Agreement, the Bill of Sale
and other closing documents described in this Agreement to which such
Seller is a party, and the performance by such Seller of its respective
obligations hereunder and thereunder;
(i) All such other instruments of assignment or conveyance as
shall, in the reasonable opinion of the Buyer and its counsel, be necessary
to transfer to the Buyer the Purchased Assets in accordance with this
Agreement and where necessary or desirable, in recordable form;
(j) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if either Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to the
appropriate taxing authority any amount equal to ten (10) percent of the
portion to be allocated to such Seller of the total Amount Realized (as
defined under Section 1445 of the Code);
(k) Such other agreements, documents, instruments and writings
as are required to be delivered by the Sellers at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith; and
(1) $4.0 million by wire transfer of immediately available funds
or by such other means as are agreed to by O&R and the Buyer.
4.4. Deliveries by Buyer. At the Closing, the Buyer will
deliver the following to the Sellers:
(a) The Estimated Purchase Price by wire transfer of immediately
available funds or by such other means as are agreed to by the Sellers and
the Buyer;
(b) Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(d) The Instrument of Assumption, duly executed by the Buyer;
(e) All such other instruments of assumption as shall, in the
reasonable opinion of the Sellers and their counsel, be necessary for the
Buyer to assume the Assumed Liabilities in accordance with this Agreement;
(f) One or more easements to the extent necessary for O&R to
continue and maintain their transmission and distribution business, in
favor of the O&R (the "Seller's Easements") with respect to Real Property
conveyed to Buyer, duly executed and acknowledged by Buyer, each
substantially in the form of Exhibit E hereto, and Buyer shall bear any
transfer or similar tax incurred in connection herewith as set forth in
Section 7.8;
(g) Copies of the resolutions adopted by the Members or
Managers, or similar governing body, of the Buyer, certified by the Member
of the Buyer, as having been duly and validly adopted and as being in full
force and effect, authorizing the execution and delivery by the Buyer of
this Agreement and other closing documents described in this Agreement to
which the Buyer is a party, and the performance by the Buyer of its
respective obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and writings
as are required to be delivered by the Buyer at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of O&R and Con Edison represents on behalf of itself only,
and not on behalf of the other Seller, and warrants on behalf of itself
only, and not on behalf of the other Seller, to the Buyer as follows:
5.1. Organization; Qualification. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as is now being conducted. Each Seller is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each foreign jurisdiction in which it operates the Purchased Assets and
such foreign jurisdiction requires it to be so qualified. Each Seller has
heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and By-Laws as currently in effect.
5.2. Authority Relative to this Agreement. Each Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors or Board of Trustees, or a committee of the Board of Directors or
the Board of Trustees to whom the Board has designated its authority, of
each Seller and no other corporate proceedings on the part of either Seller
or its shareholders is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by such Seller, and assuming that
this Agreement constitutes a valid and binding agreement of the Buyer,
subject to the receipt of the Sellers Required Regulatory Approvals and the
Buyer Required Regulatory Approvals, constitutes a valid and binding
agreement of such Seller, enforceable against such Seller in accordance
with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
5.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining the Sellers Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by such Seller nor the
performance by such Seller of its respective obligations under this
Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation
or By-Laws of such Seller, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (x) where the failure to
obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not have a Material Adverse Effect or would
not prohibit or restrain the execution, delivery or performance of this
Agreement or the Ancillary Agreements, or the consummation of the
transactions contemplated hereby or thereby in any material respect or (y)
for those requirements which become applicable to such Seller as a result
of the specific regulatory status of the Buyer (or any of its affiliates)
or as a result of any other facts that specifically relate to the business
or activities in which the Buyer (or any of its affiliates) is or proposes
to be engaged; (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which such Seller, or any of
its subsidiaries, is a party or by which such Seller, or any of its
subsidiaries, or any of the Purchased Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which,
individually or in the aggregate, would not have a Material Adverse Effect;
or (iv) violate any order, writ, injunction, judgment, law, decree,
statute, rule or regulation applicable to such Seller, or any of its
assets, which violation would, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) as may be required
by applicable law (A) notice by the Sellers to, and an order by, the NYPSC
approving the transactions contemplated by this Agreement or the Ancillary
Agreements, (B) notice by O&R to, and an order by, the NJBPU approving the
transactions contemplated by this Agreement or the Ancillary Agreements and
(C) notice by O&R to, and an order by, the PAPUC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) the
approval, if required, of the SEC pursuant to the Holding Company Act, and
(iv) the filings by the Sellers and the Buyer required by the HSR Act and
the expiration or earlier termination of all waiting periods under the HSR
Act (the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "Sellers Required Regulatory Approvals"),
no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by such Seller of the
transactions contemplated hereby or by the Ancillary Agreements, other than
such declarations, filings, registrations, notices, authorizations consents
or approvals which, if not obtained or made, will not, in the aggregate,
have a Material Adverse Effect and other than Permits and Environmental
Permits.
5.4. Reports. Since January 1, 1996, O&R and Con Edison,
pursuant to the Securities Act, the Exchange Act, the applicable State
public utility laws, the Federal Power Act and the Holding Company Act, has
filed or caused to be filed with the SEC, the applicable state or local
utility commissions or regulatory bodies, or the FERC, as the case may be,
all material forms, statements, reports and documents (including all
exhibits, amendments and supplements thereto) required to be filed by them
with respect to the business and operations of O&R and Con Edison as it
relates to the Purchased Assets under each of the Securities Act, the
Exchange Act, the applicable State public utility laws, the Federal Power
Act and the Holding Company Act and the respective rules and regulations
thereunder, all of which complied in all material respects with all
applicable requirements of the appropriate act and the rules and
regulations thereunder in effect on the date each such report was filed.
5.5. Financial Statements. The Sellers have previously
furnished to the Buyer (i) audited statements of assets, liabilities and
owners' interest of Bowline Point Tenants in Common relating to the
Sellers' interest in Bowline as of December 31, 1997, and (ii) the related
audited statements of operating expenses and changes in owners' interests
relating to the Sellers' interest in Bowline for the fiscal year then
ended, together with the respective reports thereon of Arthur Andersen LLP.
The statements of assets, liabilities and owners' interest of Bowline Point
Tenants in Common relating to the Sellers' interest in Bowline as of
December 31, 1997 is referred to as the "Sellers Balance Sheet." Each of
the balance sheets included in the financial statements referred to in this
Section 5.5 (including the related notes thereto) presents fairly, in all
material respects, the assets, liabilities, and owners' interests of
Bowline Point Tenants in Common (Bowline Point Facility) as of December 31,
1997, and the operating expenses and changes in owners' interests for the
year then ended, all in conformity with the General Agreement between O&R
and Con Edison, dated October 10, 1969, as amended, and on the basis of
accounting followed by the owners who are subject to regulation by the FERC
and various state regulatory authorities with respect to their rates and
accounting, except as otherwise noted therein.
5.6. Undisclosed Liabilities. Except as set forth in Schedule
5.6, to the Sellers' knowledge, the Sellers have no liability or obligation
relating to the business or operations of the Purchased Assets, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in the Sellers Balance Sheet or disclosed in the notes thereto in
accordance with generally accepted accounting principles, except those
which either were incurred in the ordinary course of business, after the
date of the Sellers Balance Sheet, or those which in the aggregate are not
material to the Purchased Assets.
5.7. Absence of Certain Changes. Except (i) as set forth in
Schedule 5.7, or in the reports, schedules, registration statements and
definitive proxy statements filed by such Seller with the SEC and (ii) as
otherwise contemplated by this Agreement, to the Sellers' knowledge, since
the date of the Sellers Balance Sheet there has not been: (a) any Material
Adverse Effect; (b) any damage, destruction or casualty loss, whether
covered by insurance or not, which had a Material Adverse Effect; (c) any
entry into any agreement, commitment or transaction (including, without
limitation, any borrowing or capital financing) by either Seller, which is
material to the business or operations of the Purchased Assets, except
agreements, commitments or transactions in the ordinary course of business
or as contemplated herein; or (d) any change by either Seller, with respect
to the Purchased Assets, in accounting methods, principles or practices
except as required or permitted by generally accepted accounting
principles.
5.8. Title. Set forth in Schedule 5.8 is a true and complete
list of all real property which is part of or material to the business or
operations of the Purchased Assets (the "Real Property") and other real
property interests which are a part of or material to the business or
operations of the Purchased Assets (together with the Real Property, the
"Property Interests"). One or both Sellers have leasehold or other
contractual interests in all Purchased Assets identified in subsections
(g), (k), (m), (n) and (p) of Section 1.1(a)(39) and, subject only to
Permitted Encumbrances and the Leases: (i) good and marketable record
title to the Real Property and the Buyer's Easements and (ii) good and
valid title to all Purchased Assets identified in subsections (a), (c),
(d), (e), (f), (h), (i), (j), (l) and (o) of Section 1.1(a)(39). At the
Closing, O&R will have the cash available to pay the amount referred to in
Section 1.1(a)(39)(q) of this Agreement.
5.9. Leasehold Interests. Schedule 5.9(a) lists all Real
Property leases or subleases (the "Leases") relating to the Purchased
Assets under which either or both of the Sellers are a lessee, sublessee,
lessor, or sublessor and which are to be assigned to, and assumed by, the
Buyer on the Closing Date. Except as set forth in Schedule 5.9(b), the
Leases are valid, binding and enforceable in accordance with their terms,
and are in full force and effect; there are no existing material defaults
by the applicable Seller or Sellers thereunder; and no event has occurred
which (whether with or without notice, lapse of time or both) would
constitute a material default thereunder. One or both Sellers have a valid
and subsisting leasehold estate in and the right to quiet enjoyment of the
Leases under which either Seller is a lessee or sublessee for the full term
of such Leases, which leasehold interests are unencumbered other than by
Permitted Encumbrances, and Sellers have delivered to Buyer true and
complete copies of all Leases.
5.10. Improvements. Except as set forth in Schedule 5.10(a),
O&R has not received, and to Con Edison's knowledge, Con Edison has not
received, any notices from any governmental authority stating or alleging
that any improvements with respect to the Purchased Assets have not been
constructed in compliance with applicable law. Except as set for forth in
Schedule 5.10(b), to the Sellers' knowledge, no notice has been received by
either Seller from any governmental authority requiring or advising as to
the need for any repair, alteration, restoration or improvement in
connection with the Purchased Assets.
5.11. Insurance. O&R represents and warrants that except as set
forth in Schedule 5.11(a), all material policies of fire, liability,
worker's compensation and other forms of insurance purchased or held by and
insuring or related to the Purchased Assets are in full force and effect,
all premiums with respect thereto covering all periods up to and including
the date as of which this representation is being made have been paid, and
no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior
to the date of such cancellation. Except as described in Schedule 5.11(b),
neither Seller has been refused any insurance with respect to the Purchased
Assets nor has its coverage been limited by any insurance carrier to which
it has applied for any such insurance or with which it has carried
insurance during the last five (5) years nor have they received written
notice from any insurer with respect to any Real Property or Lease of
defects or inadequacies with respect thereto or the improvements located
thereon that would materially adversely affect the insurability of same or
cause the imposition of extraordinary premiums therefor.
5.12. Environmental Matters. (a) Except as disclosed in
Schedule 5.12(a)(i), to the Sellers' knowledge, the Sellers hold, and are
in compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for either Seller to
operate the Purchased Assets under applicable Environmental Laws, and the
Sellers are otherwise in compliance with applicable Environmental Laws with
respect to the Purchased Assets except for such failures to hold or comply
with required Environmental Permits, or such failures to be in compliance
with applicable Environmental Laws, which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
Schedule 5.12(a) (ii) sets forth all Environmental Permits relating to the
ownership or operation of the Purchased Assets.
(b) Except as disclosed in Schedule 5.12(b), neither Seller has
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar State law with
respect to any on-site location related to the Purchased Assets, and no
investigation and/or remediation is being conducted or is pending at the
Purchased Assets (other than investigations or remediation conducted by or
on behalf of Seller or Buyer in connection with this transaction), except
for such liability under such laws or investigations or remediation as
would not be reasonably likely to have a Material Adverse Effect.
(c) With respect to the Purchased Assets, no action, claim,
investigation or other proceeding relating to any Environmental Law is
pending, or to Seller's knowledge, threatened, and neither Seller has
entered into or agreed to any consent decree or order, and are not subject
to any judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances under any Environmental Law, except such consent
decrees or orders, judgments, decrees or administrative or judicial orders,
actions, claims, investigations or proceedings that (i) would not be
reasonably likely to have a Material Adverse Effect, (ii) appear on
Schedule 5.12(c), or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of either Seller, and in the possession of either Seller, which
concern Releases of Hazardous Substances at, on, in, or under the Purchased
Assets or compliance of Purchased Assets with Environmental Laws, conducted
within the last two (2) years, are listed in Schedule 5.12(d) and have been
provided to Buyer.
(e) The representations and warranties made in this Section 5.12
are the Sellers' exclusive representations and warranties relating to
environmental matters.
5.13. Labor Matters. O&R represents and warrants that Schedule
7.10(a) lists, and O&R has previously delivered to the Buyer, true and
correct copies of all labor union, Collective Bargaining Agreements and
other labor agreements relating to the Purchased Assets to which O&R is a
party or subject. Neither Con Edison nor any other party (except for the
parties to the agreements listed in Schedule 7.10(a)) is a party to, or is
subject to any labor union, collective bargaining agreement or other labor
agreement which relates to the Purchased Assets. Con Ed has no employees
employed at the Purchased Assets. With respect to the Purchased Assets,
except to the extent set forth in Schedule 5.13 and except for such matters
as will not have a Material Adverse Effect, to O&R's knowledge: (a) O&R is
in compliance with all applicable laws respecting employment and employment
practices, occupational health and safety, and wages and hours; (b) O&R has
not received written notice of any unfair labor practice complaint against
it pending before the National Labor Relations Board; (c) there is no labor
strike, slowdown or stoppage actually pending or threatened against or
affecting O&R; (d) O&R has not received notice that any representation
petition respecting its employees has been filed with the National Labor
Relations Board; (e) no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending against O&R; and (f)
O&R has not experienced any primary work stoppage since at least December
31, 1994.
5.14. ERISA. (a) O&R represents and warrants that Schedule
5.14(a) lists all deferred compensation, pension, profit-sharing and
retirement plans, including multiemployer plans, and all welfare,
severance, stock-based, bonus and other employee benefit or fringe benefit
plans, programs and arrangements, whether written or oral, maintained or
with respect to which contributions have been in the last five (5) years or
are made by O&R in respect of employees who are employed in connection with
the Purchased Assets (such plans, programs and arrangements collectively,
the "Benefit Plans"). To O&R's knowledge, each Benefit Plan is in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable laws. Accurate and complete
copies of all such Benefit Plans and their summary descriptions, including
multiemployer plans, have been made available to the Buyer.
(b) Except as set forth in Schedule 5.14(b)(i), with respect to
employees at the Purchased Assets, to O&R's knowledge, O&R and the ERISA
Affiliates have fulfilled their respective obligations under the minimum
funding requirements of Section 302 of ERISA, and Section 412 of the Code,
with respect to each Benefit Plan that is a pension benefit plan as defined
in Section 3(2) of ERISA (each, a "Pension Benefit Plan"). To the O&R's
knowledge, neither O&R nor any ERISA Affiliate has incurred any liability
to the Pension Benefit Guaranty Corporation in connection with any Pension
Benefit Plan which is subject to Title IV of ERISA, including any
withdrawal liability, nor is there any reportable event (as defined in
Section 4043 of ERISA), except as set forth in Schedule 5.14(b)(ii).
Except as set forth in Schedule 5.14(b)(iii), the Internal Revenue Service
has issued a letter for each Pension Benefit Plan which is intended to be
qualified under Section 401(a) of the Code, determining that such plan is
exempt from United States Federal Income Tax under Sections 401(a) and
501(a) of the Code, and to the O&R's knowledge, there has been no
occurrence since the date of any such determination letter which has
adversely affected such qualification, and no withdrawal liability has been
incurred by or asserted and none is anticipated against O&R with respect to
any Pension Benefit Plan which is a "multiemployer plan" (as defined in
Section 3(37) of ERISA).
(c) To the O&R's knowledge, neither O&R nor any ERISA Affiliate
has engaged in any transaction within the meaning of Section 4069(b) or
Section 4212(c) of ERISA. Except as set forth in Schedule 5.14(c), no
Benefit Plan is a multi-employer plan.
(d) To the extent O&R maintained or maintains a "group health
plan" within the meaning of Section 5000(b)(1) of the Code, to the O&R's
knowledge, O&R has materially complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA Part 6 of Subtitle B of
Title I of ERISA and the regulations thereunder.
5.15. Real Property Encumbrances. Schedule 5.15 lists all real
property encumbrances affecting the Real Property including matters
contained in deeds, easements and options. O&R represents and warrants
that true and correct copies of all current surveys, abstracts, title
opinions and policies of title insurance currently in force with respect to
such Real Property have been delivered by O&R to the Buyer. None of the
Permitted Encumbrances materially adversely affect the existing use of the
Real Property.
5.16. Condemnation. Neither the whole nor any part of the Real
Property or any other real property or rights leased, used or occupied by
the Sellers in connection with the ownership or operation of the Purchased
Assets is subject to any pending suit for condemnation or other taking by
any public authority, and, to the knowledge of the Sellers, no such
condemnation or other taking is threatened or contemplated.
5.17. Certain Contracts and Arrangements.
(a) Except (i) as listed in Schedule 5.17(a), (ii) for
contracts, agreements, personal property leases, commitments,
understandings or instruments which will expire prior to the Closing Date,
(iii) for agreements with suppliers entered into in the ordinary course of
business (including contracts entered into in connection with the Scheduled
Capital Expenditures and the Scheduled Maintenance Expenditures), and (iv)
for contracts, agreements, personal property leases, commitments,
understandings or instruments with a value less than $200,000 or with
annual or aggregate payments less than $200,000, neither Seller is a party
to any written contract, agreement, personal property lease, commitment,
understanding or instrument which is material to the business or operations
of the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each Sellers
Agreement listed on Schedule 5.17(a) constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and may
be transferred to the Buyer pursuant to this Agreement and will continue in
full force and effect thereafter, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights
thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not, under
any of the Sellers Agreements listed on Schedule 5.17(a), any default or
event which, with notice or lapse of time or both, would constitute a
default on the part of any party thereto, except such events of default and
other events as to which requisite waivers or consents have been obtained
or which would not, individually or in the aggregate, have a Material
Adverse Effect.
5.18. Legal Proceedings, etc. Except as set forth in Schedule
5.18 or in any filing made by either Seller pursuant to the Securities Act
or the Exchange Act, there are no claims, actions, or proceedings pending
or investigation pending or, to the Sellers' knowledge, threatened against
either Seller relating to the Purchased Assets before any court,
arbitrator, governmental or regulatory authority or body acting in an
adjudicative capacity, which, if adversely determined, would have a
Material Adverse Effect or would prohibit or restrain the execution,
delivery or performance of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby in any
material respect. Except as set forth in Schedule 5.18, the Sellers are
not subject to any outstanding judgment, rule, order, writ, injunction or
decree of any court, governmental or regulatory authority relating to the
Purchased Assets which would have a Material Adverse Effect.
5.19. Permits. Sellers have all material permits, licenses,
franchises and other governmental authorizations, consents and approvals,
other than with respect to Environmental Laws (collectively, "Permits") as
set forth in Schedule 5.19(a), necessary to own or operate the Purchased
Assets as presently owned or operated, except where the failure to have
such Permits would not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, neither Seller
has received any written notification that it is in violation of any of
such Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority applicable to
it, except for notifications of violations which would not, individually or
in the aggregate, have a Material Adverse Effect. The Sellers are in
compliance with all Permits, laws, statutes, orders, rules, regulations,
ordinances, or judgments of any governmental or regulatory body or
authority applicable to Purchased Assets, except for violations which, in
the aggregate, would not have a Material Adverse Effect.
5.20. Regulation as a Utility. O&R and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania as set forth on Schedule 5.20(a)(i), and in no
other State. Con Edison is regulated as a public utility in the State of
New York as set forth on Schedule 5.20(a)(ii), and in no other state.
Except as set forth on Schedule 5.20(b), the Sellers are not subject to
regulation as a public utility or public service company (or similar
designation) by the United States, any State of the United States, any
foreign country or any municipality or any political subdivision of the
foregoing.
5.21. Taxes. Except as set forth in Schedule 5.21: (a) no
notice of deficiency or assessment has been received from any taxing
authority with respect to liabilities for Taxes of Sellers in respect of
the Purchased Assets, which have not been fully paid or finally settled,
and any such deficiency shown in Schedule 5.21 is being contested in good
faith through appropriate proceedings; (b) there are no outstanding
agreements or waivers extending the applicable statutory periods of
limitation for Taxes associated with the Purchased Assets for any period;
(c) there are no rulings or closing agreements executed with any taxing
authority relating to the Purchased Assets that will be binding upon Buyer
after the Closing; (d) none of the Purchased Assets is property that is
required to be treated as being owned by any other person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the
Code or "tax-exempt use" property within the meaning of Section 168(h) of
the Code; and (e) there are no powers of attorney in effect relating to
Taxes relating to the Purchased Assets for any Post-Closing period.
5.22. Intellectual Property. Sellers have all right, title
and interest in or valid and binding rights under contract to use the
Intellectual Property relating to the Purchased Assets. Sellers have not
received notice that it is infringing any Intellectual Property of any
other Person in connection with the operation or business of the Purchased
Assets, no claim is pending or has been made to such effect that has not
been resolved and neither Seller is infringing any Intellectual Property of
any other Person the effect of which, individually or in the aggregate,
would have a Material Adverse Effect.
5.23. Year 2000 Readiness. O&R has have informed Buyer of
its analysis of, the status of development of contingency plans for, and
forecasted expenditures with respect to Year 2000 readiness of material
computer software and computer firmware comprising the Purchased Assets, as
such analysis, contingency plan development and forecast of expenditures
exist on the date hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Sellers as follows:
6.1. Organization. The Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to the Sellers complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2. Authority Relative to this Agreement. The Buyer has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Managers
or Members of the Buyer and the Board of Directors of both Southern Energy,
Inc. and The Southern Company and no other company proceedings on the part
of the Buyer or such Affiliates are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Buyer, and assuming
that this Agreement constitutes a valid and binding agreement of the
Sellers, subject to the receipt of the Buyer Required Regulatory Approvals
and the Sellers Required Regulatory Approvals, constitutes a valid and
binding agreement of the Buyer, enforceable against the Buyer in accordance
with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
6.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and the Sellers Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Buyer nor the purchase
by the Buyer of the Purchased Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) and except for the
filings by the Buyer and the Sellers required by the HSR Act (the filings
and approvals referred to in Schedule 6.3(a) and with respect to the HSR
Act are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby.
6.4. Operating Easements. Buyer shall grant Operating Easements
to O&R as agreed to pursuant to the procedures set forth in the Continuing
Site/Interconnection Agreement.
6.5. Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.5, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.6. Availability of Funds. The Buyer has sufficient funds
available to it or will receive binding written commitments from
responsible financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets.
Except as described in Schedule 7.1, during the period from the date of
this Agreement to the Closing Date, the Sellers will operate and maintain
the Purchased Assets according to their ordinary and usual course of
business consistent with Good Utility Practice. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement
or as described in Schedule 7.1, prior to the Closing Date, without the
prior written consent of the Buyer (unless such consent would be prohibited
by law), the Sellers will not with respect to the Purchased Assets:
(a) make any material change in the operations of the Purchased
Assets (including, without limitation, the levels of fuel inventory and
materials and supplies customarily maintained by the Sellers other than
consistent with past practice);
(b) except for the Scheduled Capital Expenditures, make any
capital expenditures with respect to the Purchased Assets or enter into any
contract or commitment therefor, except that (i) the Sellers shall make any
capital expenditures requested by the Buyer, provided that the Buyer will
reimburse Sellers for such capital expenditures at least five (5) Business
Days prior to the date payment for such expenditure is due, and (ii) the
Sellers shall make any capital expenditures deemed necessary by the Sellers
in accordance with Good Utility Practices ("Necessary Capital
Expenditures"), at Sellers' cost and expense, provided, however, that if
the Buyer requests that the Sellers make enhancements/upgrades with a cost
in excess of the cost of any Necessary Capital Expenditures, the Buyer
shall reimburse the Sellers for the cost of such enhancements/upgrades to
the extent the cost of such enhancement/upgrade exceeds the cost of the
Necessary Capital Expenditure at the time such enhancement/upgrade is
performed;
(c) sell, lease (as lessor), transfer or otherwise dispose of,
any of the Purchased Assets, other than assets used, consumed or replaced
in the ordinary course of business consistent with Good Utility Practice
and not mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Assets other than Permitted
Encumbrances in the ordinary course of business;
(d) except for the Scheduled Maintenance Expenditures, make any
maintenance expenditures, except that (i) the Sellers shall make any
maintenance expenditures requested by the Buyer provided that the Buyer
will reimburse Sellers for such maintenance expenditures at least five (5)
Business Days prior to the date payment for such expenditure is due, and
(ii) the Sellers shall make any maintenance expenditures deemed necessary
by the Sellers in accordance with Good Utility Practice ("Necessary
Maintenance Expenditures") at Sellers' cost and expense, provided, however,
that if the Buyer requests that the Sellers make enhancements / upgrades
with a cost in excess of the cost of any Necessary Maintenance
Expenditures, the Buyer shall reimburse the Sellers for the cost of such
enhancements / upgrades to the extent the cost of such enhancement /
upgrade exceeds the cost of the necessary maintenance expenditure at the
time such enhancement/upgrade is performed;
(e) amend or terminate prior to the expiration date, or waive
any material term or give consent to any material request with respect to
any of the Sellers Agreements, Permits or Environmental Permits, except to
the extent that such amendment, termination, waiver or consent (i) will not
have a material impact on operations of the Purchased Assets, including the
cost of said operations or (ii) is required by Applicable Law, including
Applicable Environmental Law;
(f) enter into agreements for the purchase or sale of fuel
(whether commodity or transportation):
(i) that extend more than sixty (60) days beyond April 30,
1999 if, in the aggregate, such agreements have remaining payment
obligations of more than $30 million after April 30, 1999; or
(ii) that extend more than thirty (30) days beyond October
31, 1999 if, in the aggregate, such agreements have remaining
payment obligations of more than $10 million after October 31,
1999; provided, however, that O&R shall consult with the Buyer
regarding purchases or sales of fuel in excess of $15 million if
such commitments to purchase or sell will extend beyond April 30,
1999. The parties further agree to adjust the dates in this
Section 7.1(f) if the Closing is anticipated to occur after
April 30, 1999. Such adjustment will reflect the amount of time
beyond April 30, 1999 by which the Closing is expected to occur
at the time such an agreement is entered;
(g) enter into any power sales commitments:
(i) having a term greater than six (6) months and that
extends beyond April 30, 1999 if the aggregate energy under such
commitment and all other then outstanding commitments not
previously consented to by the Buyer would in Sellers' judgment
reasonably be expected to exceed 150,000 MW hours delivered after
April 30, 1999; or
(ii) having a term greater than six (6) months and that
extends beyond October 31, 1999 if the aggregate energy under
such commitment and all other then outstanding commitments not
previously consented to by the Buyer would in Sellers' judgment
reasonably be expected to exceed 75,000 MW hours delivered after
October 31, 1999;
provided, however, Sellers shall consult with the Buyer regarding entering
into any power sales commitments in excess of $5 million if such
commitments will extend beyond April 30, 1999. The parties further agree to
adjust the dates in this Section 7.1(g) if the Closing is anticipated to
occur after April 30, 1999. Such adjustment will reflect the amount of
time beyond April 30, 1999 by which the Closing is expected to occur at the
time such an agreement is entered;
(h) sell, lease or otherwise dispose of Emission Allowances
except to the extent necessary to operate the Purchased Assets in
accordance with this Section 7.1;
(i) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (h); or
(j) make any new, or change any current, election with respect
to Taxes affecting the Purchased Assets.
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, during ordinary business hours and upon
reasonable notice (i) O&R will give the Buyer and the Buyer Representatives
reasonable access to its managerial personnel who are employed in
connection with the Purchased Assets and to all books, records, plants,
offices and other facilities and properties constituting the Purchased
Assets to which the Buyer is permitted access by law, (ii) Sellers shall
permit the Buyer to make such reasonable inspections thereof as the Buyer
may reasonably request, including conducting environmental sampling at, on
and underneath the Purchased Assets and performing compliance audits at the
Purchased Assets, if Buyer reasonably deems such sampling necessary after
reviewing further information which becomes available after the date
hereof, so long as Sellers provide their consent to such sampling, which
consent shall not be unreasonably withheld, (iii) O&R will cause its
officers, engineers, operations and maintenance personnel and advisors to
furnish the Buyer with such financial and operating data, Tax Returns
(other than Income Tax Returns) and other information with respect to the
Purchased Assets as the Buyer may from time to time reasonably request and
assist Buyer in such inspections; (iv) Sellers cause its officers and
advisors to furnish the Buyer a copy of each report, schedule or other
document filed or received by either Seller with or from the SEC, NYPSC,
NJBPU, PAPUC, FERC, ISO or other governmental authority with respect to the
Purchased Assets; provided, however, that (A) any such investigation shall
be conducted in such a manner as not to interfere unreasonably with the
operation of the Purchased Assets, (B) neither Seller shall be required to
take any action which would constitute a waiver of the attorney-client
privilege and (C) neither Seller need supply the Buyer with any information
which it is under a legal obligation not to supply; provided, however, that
Sellers shall have used commercially reasonable efforts to have such
obligations waived. Notwithstanding anything in this Section 7.2 to the
contrary, (i) O&R will only furnish or provide such access to employee
medical records only as is permitted by law, and (ii) O&R will furnish or
provide such access to personnel records only to the extent that the
employee to which the personnel record relates has given its consent to the
Sellers.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of Section 11.2 of this Agreement shall be treated as
Confidential Information.
(c) Commencing February 1, 1999, the Buyer shall have the right
to physically locate one designated representative (the "Designated
Representative") of the Buyer at an office or in workspace at O&R's
corporate offices to observe the operations of Bowline, as well as the
operations of the Lovett Generating Station, the hydroelectric generating
stations and the gas turbine generating stations, pursuant to the Other
Sales Agreements; provided, however, that the Buyer shall not unreasonably
interfere with the Seller's use of the Purchased Assets. O&R shall
coordinate site visits and provide the Designated Representative during
such period prior to the Closing access to O&R's managerial personnel. The
Designated Representative shall coordinate the Buyer's rights to access
under Section 7.2(a) hereof during such period prior to the Closing.
(d) For a period of seven (7) years after the Closing Date,
Sellers and their representatives shall have reasonable access to (i)
information on employees covered by the O&R Management Employee Transition
Program and (ii) all of the books and records of the Purchased Assets, as
the case may be, transferred to the Buyer hereunder to the extent that such
access (A) may reasonably be required by the Sellers in connection with
matters relating to or affected by the operation of the Purchased Assets
prior to the Closing Date and (B) is not otherwise prohibited by law. Such
access shall be afforded by the Buyer upon receipt of reasonable advance
written notice and during normal business hours. The Sellers shall be
responsible for any costs or expenses incurred by them pursuant to this
Section 7.2(d). If the Buyer shall desire to dispose of any such books and
records prior to the expiration of such seven (7) year period, the Buyer
shall, prior to such disposition, give the Sellers a reasonable opportunity
at the Sellers' expense, to segregate and remove such books and records as
the Sellers may select. Any information provided by Buyer to Sellers
pursuant to this Section 7.2(d) shall be deemed Confidential Information..
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Assets pursuant to this Agreement, including without
limitation, the use of the Sellers' and the Buyer's commercially reasonable
efforts to obtain all Permits and Environmental Permits necessary for the
Buyer to operate the Purchased Assets. Neither of the Parties shall,
without the prior written consent of the other Party, take or fail to take
any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this
Agreement or the Ancillary Agreements. From time to time after the date
hereof, without further consideration, the Sellers will, at their own
expense, execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order more effectively to vest in the Buyer good
title to the Purchased Assets. From time to time after the date hereof,
the Buyer will, at its own expense, execute and deliver such documents to
the Sellers as the Sellers may reasonably request in order to more
effectively consummate the sale of the Purchased Assets pursuant to this
Agreement. To the extent that any personal property lease, relating to any
assets ("Leased Assets") which are principally used by the Sellers for
generation purposes at the Purchased Assets, cannot be assigned to the
Buyer, the Sellers will use their commercially reasonable efforts to
acquire title to such Leased Assets and to include them in the Purchased
Assets before the Closing Date unless Buyer directs Sellers in writing not
to acquire any such Leased Asset. The Sellers' documented and reasonable
costs associated with acquiring title to such Leased Assets shall be paid
by the Buyer as part of the Purchase Price. Schedule 7.4 lists all of the
Leased Assets.
(b) To the extent that any Sellers' rights under any guaranties,
warranties and indemnification applicable to the Purchased Assets or the
Assumed Liabilities are nontransferable or nonassignable, Sellers shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
7.5. Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or
stock exchange rules or regulations and except that the parties may make
public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6. Consents and Approvals. (a) The Sellers and the Buyer
shall each file or cause to be filed with the Federal Trade Commission and
the United States Department of Justice any notifications required to be
filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The
parties shall consult with each other as to the appropriate time of filing
such notifications and shall use their best efforts to make such filings at
the agreed upon time, to respond promptly to any requests for additional
information made by either of such agencies, and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible
date after the date of filing. Buyer shall bear the cost of all filing
fees under the HSR Act.
(b) The Sellers and the Buyer shall cooperate with each other
and (i) promptly prepare and file all necessary documentation, (ii) effect
all necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Environmental Permits,
Permits, consents, approvals and authorizations of all governmental bodies
and (iv) use all reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each of
the foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, the Sellers Required Regulatory Approvals and the Buyer
Required Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which the Sellers or the Buyer is a
party or by which either of them is bound. The Sellers shall have the
right to review and approve in advance all characterizations of the
information relating to Purchased Assets; and each of the Sellers and the
Buyer shall have the right to review and approve in advance all
characterizations of the information relating to the transactions
contemplated by this Agreement which appear in any filing made in
connection with the transactions contemplated hereby. The parties hereto
agree that they will consult with each other with respect to the
transferring to the Buyer or the obtaining by the Buyer of all such
necessary Environmental Permits, Permits, consents, approvals and
authorizations of all third parties and governmental bodies. The Sellers
and the Buyer shall designate separate counsel with respect to all
applications, notices, petitions and filings (joint or otherwise) relating
to this Agreement and the transactions contemplated hereby on behalf of the
Sellers, on the one hand and the Buyer on the other hand, with all
governmental bodies. To the extent that a consent to an assignment of any
material Sellers Agreement cannot be obtained before the Closing Date, the
Sellers will enter into all such agreements with the Buyer as are necessary
to give the Buyer the rights, obligations and burdens of such Sellers
Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Sellers shall cooperate with Buyer's efforts in this regard and shall use
their best efforts to assist in the transfer or reissuance when so
requested by Buyer. In the event that Buyer is unable, despite
commercially reasonable efforts, to obtain a transfer or reissuance of one
or more Permits as of the Closing Date, Buyer may use the Permits issued to
Sellers to the extent permissible under applicable laws and regulations
provided (i) Buyer notified Sellers prior to Closing, (ii) Buyer continues
to make commercially reasonable efforts to obtain a transfer or reissuance
of such Permits after the Closing, and (iii) Buyer indemnifies Sellers for
any losses, claims or penalties suffered by Sellers in connection with the
Permit that is not transferred or reissued as of the Closing Date resulting
from Buyer's operation of the Purchased Assets following the Closing Date.
In no event shall Buyer use or otherwise rely on a Permit issued to Sellers
beyond one year after Closing unless Buyer has, after exercising its
commercially reasonable efforts, been unable to obtain same and such
reliance is not prohibited by law.
7.7. Fees and Commissions. The Sellers and the Buyer each
represent and warrant to the other that, except for Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), which is acting for and at the
expense of the Sellers, and Credit Suisse First Boston Corporation, which
is acting for and at the expense of the Buyer, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Sellers and the Buyer
will pay to the other or otherwise discharge, and will indemnify and hold
the other harmless from and against, any and all claims or liabilities for
all brokerage fees, commissions and finder's fees (other than as described
above) incurred by reason of any action taken by such party.
7.8. Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Sellers will join
in the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to the Sellers' approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for the Sellers'
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, the Sellers shall pay to the Buyer its proportionate share of the
amount shown as due on such Tax Return determined in accordance with the
Section 3.4 of this Agreement.
(c) On and after the Closing Date until the maturity or
redemption date of the Pollution Control Bonds which were issued to finance
or refinance all or a portion of the cost of the Pollution Control
Facilities (as defined hereinafter):
(i) Except as otherwise permitted in clause (ii) below,
Buyer will not change or permit to be changed the character or nature
of the use of those facilities listed in Schedule 7.8(c) hereto (the
"Pollution Control Facilities") from the manner Seller has used said
facilities prior to the sale of the Purchased Assets, unless such
changed use would constitute a use or purpose of the Pollution Control
Facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the Tax Reform Act of 1986, P.L. 99-514 (the "1986 Tax
Act"), to refund bonds described in section 1312(a) of the 1986 Tax
Act which, for purposes hereof, are assumed to have been issued to
finance facilities of the same character and use or purpose as the
Pollution Control Facilities;
(ii) Buyer and any transferee which becomes subject to the
provisions of the foregoing clause (i) by reason of this clause (ii)
will not sell or otherwise transfer any portion of the Pollution
Control Facilities unless (A) the transferee covenants to satisfy the
conditions of the foregoing clause (i) with respect to its ownership
and use of the Pollution Control Facilities or (B) the transfer
relates to personal property and is exclusively for cash the proceeds
of which will be expended within six (6) months of the date of receipt
on facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the 1986 Tax Act, to refund bonds described in section
1312(a) of said act which, for purposes hereof, are assumed to have
been issued to finance facilities of the same character and use or
purpose as said facilities;
(iii) Buyer will cooperate with O&R and use commercially
reasonable efforts to permit O&R to have access to the Pollution
Control Facilities at reasonable times to examine them; and
(iv) The foregoing clause (i) shall not be construed to
prevent Buyer (or any transferee) from ceasing to operate, maintain or
repair any element or item of the Pollution Control Facilities, the
operation, maintenance or repair of which becomes uneconomic to Buyer
because of damage or destruction or obsolescence (including physical,
functional or economic obsolescence), or because of any change in
government standards and regulations or the termination of the
operation of the Purchased Assets to which the element or item is an
adjunct. O&R shall notify Buyer when the Pollution Control Bonds have
matured or been redeemed.
(d) Each of the Buyer and the Sellers shall provide the other
with such assistance (including access to the Purchased Assets) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
(e) O&R will consult with and allow Buyer to participate in all
outstanding real property tax disputes concerning the Purchased Assets and
shall take such positions as Buyer may request consistent with the
positions previously communicated to Sellers by Buyer with respect to such
tax disputes, to assist Buyer in obtaining a tax agreement with respect to
such tax disputes for periods subsequent to the Closing Date. O&R will use
its commercially reasonable efforts to assist Buyer in obtaining an
agreement with the taxing authorities pursuant to which the assessed value
for real estate tax purposes of the Purchased Assets will be the lowest
value achievable. O&R shall not enter into any agreement with the taxing
authorities with respect to such real property tax disputes relating to
periods prior to the Closing Date without the written consent of Buyer
which Buyer shall not unreasonably withhold as long as O&R has complied
with this Section 7.8(e).
7.9. Supplements to Schedules. Prior to the Closing Date, the
parties shall supplement or amend the Schedules required by Articles V and
VI with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10. Employees. (a) Schedule 7.10(a) sets forth all collective
bargaining agreements to which O&R is a party in connection with the
Purchased Assets and all other labor agreements and amendments thereto,
that are or may be associated with the Purchased Assets (the "Collective
Bargaining Agreements"). Buyer shall offer employment to begin as of the
Closing Date to the O&R's employees who work in connection with the
Purchased Assets and who are included in the bargaining units covered by
the Collective Bargaining Agreements ("Hourly Employees"), and the Buyer
will assume the Collective Bargaining Agreements and all of O&R's
obligations thereunder, including, without limitation, the terms and
conditions of the employee benefit plans covering such hourly employees.
(b) Continued Employment; Service Credit. The Buyer shall, as
of the Closing Date, offer employment to the employees of O&R (who will be
listed on Schedule 7.10(b) by the Buyer), who worked at or directly
serviced the Purchased Assets, who were employees immediately prior to the
Closing Date, who were not Hourly Employees and who are approved by Buyer
(the "Management Employees"). The Buyer shall provide Schedule 7.10(b) to
O&R at least ninety (90) days prior to the date which the Closing is
anticipated to occur (but in no event later than February 1, 1999, or such
other date to which the Buyer and O&R mutually agree). The Management
Employees hired by the Buyer shall be given credit for all service with O&R
or its subsidiaries (and service credited by O&R or such subsidiary), to
the same extent as such service was credited for such purpose by O&R or
such subsidiary, under all employee benefit plans, programs and policies,
and fringe benefits of the Buyer in which they become participants for
purposes of eligibility, vesting and determination of level of benefits
(but not for purposes of benefit accrual). To the extent permissible under
the terms thereof and required by applicable law, the Buyer shall (i) waive
all limitations as to preexisting conditions exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Management Employees under any welfare benefit plans that such employees
may be eligible to participate in after the Closing Date, other than
limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Closing Date
under any welfare benefit plan maintained for the Management Employees
immediately prior to the Closing Date, and (ii) provide each Management
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Closing Date.
(c) Subject to applicable law, the Buyer shall maintain for a
period of at least one year after the Closing Date, without interruption,
such employee compensation, welfare and benefit plans, programs, policies
and fringe benefits as will, in the aggregate, provide benefits to the
Management Employees that are no less favorable than those provided
pursuant to such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits of the Sellers and their
subsidiaries, as in effect on the Closing Date. During the period between
the date hereof and the Closing Date, O&R shall use its best efforts to
keep available all current Management Employees for employment by the Buyer
(except those employees which the Buyer identifies in writing as Management
Employees which the Buyer does not intend to employ).
(d) Notwithstanding the Buyer's assumption of the Collective
Bargaining Agreement, the Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of O&R or any ERISA Affiliate of the
Sellers in connection with the assumption of such agreements or in
connection with hiring any of the Hourly Employees. All benefits accrued
under such Benefits Plans and all benefits currently payable as of the
Closing Date shall be and shall remain the obligation of O&R and any
individual covered under any such Benefit Plan that is a Group Health Plan
(as defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA)
and who is eligible for continued coverage under such Group Health Plan as
of the Closing Date, shall continue to be covered under such Group Health
Plan after Closing pursuant to the provisions of COBRA.
(e) O&R agrees to perform timely and discharge all requirements,
if any, under the WARN Act and under applicable state and local laws and
regulations for the notification of their employees arising from the sale
of the Purchased Assets to the Buyer up to and including the Closing Date.
The Buyer will cooperate with O&R to provide O&R with such information as
may be needed from the Buyer for inclusion in such notices, including
providing O&R at least ninety (90) days prior to the date on which the
Closing is anticipated to occur (but in no event, later than February 1,
1999 or such other date to which the Buyer and O&R mutually agree) with a
list of all of O&R's employees to whom the Buyer will make offers of
employment. After the Closing Date, the Buyer shall be responsible for
performing and discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the notification of its
employees with respect to the Purchased Assets.
(f) O&R shall be responsible for any payments required under its
severance plan, including severance payment and other benefit enhancements,
offered in connection with the transfer of the Purchased Assets. Within
thirty (30) days following the last day that any employee may elect to
participate in such plan, O&R shall provide Buyer with a list of all
electing employees. In any event, Buyer is not required to establish this
or any other severance or benefit plan.
(g) O&R shall comply with all of the requirements of COBRA
arising from this Agreement with respect to all employees of O&R employed
at the Purchased Assets who are not employed by Buyer.
(h) O&R shall pay, when due, to all Hourly Employees and
Management Employees hired by the Buyer pursuant to Section 7.10 hereof,
all compensation, bonus, severance, vacation and holiday compensation,
workers' compensation or other employment benefits which have accrued to
such Hourly Employees and Management Employees through and including the
Closing Date.
(i) Following the execution of this Agreement, O&R will use its
commercially reasonable best efforts to arrange meetings and interviews
with such employees of O&R as Buyer shall reasonably request.
(j) O&R shall not, prior to the Closing Date, with respect to the
Purchased Assets, (i) hire new employees or transfer current employees
prior to the Closing to work at the Purchased Assets, other than to fill
vacancies in existing positions in the reasonable discretion of Sellers,
(ii) take any action prior to the Closing to affect a material change in
the Collective Bargaining Agreement, or (iii) take any action prior to the
Closing to increase the aggregate benefits payable to the employees
employed in connection with the Purchased Assets, except (A) as otherwise
required by the terms of the Collective Bargaining Agreement obligations to
effects bargain, (B) as O&R shall reasonably deem appropriate in order to
comply with its obligations under the second sentence of Section 7.10(c)
above, (C) for retention bonuses payable to Management Employees on or
before the Closing Date and (D) increases in salary and benefits in the
ordinary course of business, consistent with past practice.
7.11. Risk of Loss. (a) From the date hereof through the
Closing Date, all risk of loss or damage to the property included in the
Purchased Assets shall be borne by the Sellers.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain, or is the subject of a
pending or (to the knowledge of the Sellers after reasonable inquiry and
investigation) contemplated taking which has not been consummated, the
Sellers shall notify the Buyer promptly in writing of such fact. If such
taking would have a Material Adverse Effect, the Buyer and the Sellers
shall negotiate in good faith to settle the loss resulting from such taking
(including, without limitation, by making a fair and equitable adjustment
to the Purchase Price) and, upon such settlement, consummate the
transaction contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Sellers has notified the Buyer of such taking, then the Buyer or the
Sellers may, if such taking relates to the Purchased Assets, terminate this
Agreement pursuant to Section 10.1(f).
(c) If, before the Closing Date all or any material portion of
the Purchased Assets are damaged or destroyed by fire or other casualty,
the Sellers shall notify the Buyer promptly in writing of such fact. If
such damage or destruction would have a Material Adverse Effect and the
Sellers have not notified the Buyer of its intention to cure such damage or
destruction within fifteen (15) days after its occurrence, the Buyer and
the Sellers shall negotiate in good faith to settle the loss resulting from
such casualty (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price and assigning any insurance
proceeds to Buyer at the Closing) and, upon such settlement, consummate the
transactions contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Sellers have notified the Buyer of such casualty, then the Buyer may
terminate this Agreement pursuant to Section 10.1(f).
7.12. Compliance with Cooling Water Usage Obligations. (a)
The Buyer shall assume and agree to perform any environmental cooling water
usage obligations that are imposed on Bowline under the Fourth Amended
Stipulation of Settlement and Judicial Consent Order in NRDC v. NYSDEC
among the New York State Department of Environmental Conservation, O&R, Con
Edison, Central Hudson Gas and Electric Corporation, New York Power
Authority, Natural Resources Defense Council, Scenic Hudson, Inc., and the
Hudson Riverkeeper Fund, Inc., executed by the Honorable Justice Joseph C.
Teresi on October 23, 1997 (the "Consent Order") in a manner consistent
with the cross-plant outage credit chart set forth in Attachment E to the
Consent Order.
(b) Notwithstanding the expiration of the Consent Order, for so
long as the July outage requirement at Bowline, as specified in paragraph 3
of the Consent Order, may be met by drawing 2.8 unit-days of outage from
Indian Point Unit No. 2's existing balance of unit-days of outage that were
accrued in excess of those required under the Settlement Agreement, as
provided for under paragraph 3 of the Consent Order, Con Edison shall
provide Buyer with such 2.8 unit-days of outage for use at Bowline at no
additional cost to either party.
(c) In subsequent permits, permit applications, and regulatory
and judicial proceedings pertaining to cooling water usage obligations at
Bowline which mandate outages at Bowline, including without limitation
obligations imposed pursuant to the Clean Water Act section402, New York
State Environmental Conservation Law Title 8, the Consent Order, or any
successor order or permits, the parties shall take all commercially
reasonable efforts to support, effect and implement arrangements for
allocating cross-plant outage credits among the facilities subject to the
Consent Order. Neither party shall be required to pay the other party for
such credits (or comparable rights) other than the actual incremental
costs, if any, incurred by one party to create and transfer such credits
(or comparable rights) to the other party.
(d) The parties shall take such actions as may be necessary to
(i) include Buyer in the working group composed of the electric generation
companies who are parties to the Consent Order, and (ii) impose the
conditions and provisions of this Section 7.12 upon all of its successors
and assigns.
7.13. Real Estate Matters. (a) Buyer shall obtain an American
Land Title Association ("ALTA") or New York Board of Title Underwriters
("NYBTU") owners standard form title policy commitment with respect to the
Real Property (the "Title Commitment") from a title company of Buyer's
choice (the "Title Company") covering title to the Real Property, together
with an ALTA 3.1 zoning endorsement, if available, including parking and
access, and such other endorsements as Buyer may reasonably request.
Sellers shall provide the Title Company and Buyer such information as the
Title Company or Buyer may reasonably request to assist the Title Company
in connection with the Title Commitment. Without limiting the foregoing,
Sellers shall provide the Title Company and Buyer a copy of the most recent
surveys in their possession regarding the Real Property. Promptly after
receiving the Title Commitment, Buyer shall notify Sellers in writing of
any defects in title which are not Permitted Encumbrances and would cause
title to the Real Property to be uninsurable (any of which is called herein
a "Defect of Title"). Buyer shall be deemed to have waived any objection
to any Defect of Title that was disclosed by the Title Commitment if Buyer
fails to notify Sellers of such Defect of Title within thirty (30) days
after receipt of such Title Commitment. With respect to the existence of
any Defect of Title that is not disclosed by the Title Commitment, but
which arises prior to Closing, Buyer shall immediately notify the Sellers
in writing of any such Defect of Title.
(b) O&R agrees that upon the written request of Buyer it will
consent and cause its affiliates to consent to the relocation of the
Operating Easements and Seller's Easements so long as (i) Buyer pays the
cost of such relocation, (ii) such relocation will be to space within
Buyer's ownership and will not materially adversely affect the operation of
O&R's or its respective affiliates' transmission and distribution business
except for the minimum downtime associated with the cut over for such
relocation process in accordance with Good Utility Practice, and (iii) the
Buyer's requested relocation is consistent with Good Utility Practices.
O&R further agrees to condition any grant or assignment by O&R of the
Operating Easements or Seller's Easements on the express agreement of its
transferee to be bound by the terms and conditions of this Section 7.13(b).
(c) As to any Operating Easement or Sellers' Easement not
currently of record or reserved or granted back to O&R at Closing, all of
which are to be granted by Buyer at Closing concurrently with the transfer
of title to Buyer and prior to any mortgage or other encumbrance, such
Operating Easements and Seller's Easements shall include standard cross-
indemnity provisions relating to personal injury, death or property damage
occurring as a result of gross negligence or willful misconduct in the use
of such Easements, whereby each party agrees to indemnify the other for the
consequences of the gross negligence or willful misconduct of those for
whom the indemnifying party is legally responsible.
7.14. Year 2000. O&R shall (a) use its best efforts to
cooperate with Buyer in formulating a plan to prepare the Purchased Assets
to be ready for Year 2000 computer-related issues with a target completion
date of October 1, 1999 and (b) perform until the Closing Date (or later,
at O&R's election, pursuant to the second sentence of Section 7.15 of this
Agreement) the tasks identified in such plan, consistent with Good Utility
Practices and the expenditures contemplated in O&R's Year 2000 plans
referred to in Section 5.23 hereof.
7.15. Scheduled Capital Expenditures and Scheduled Maintenance
Expenditures. The Sellers shall perform, or caused to be performed, the
Scheduled Capital Expenditures and the Scheduled Maintenance Expenditures,
at Sellers' cost, prior to the Closing Date. To the extent that Scheduled
Capital Expenditures and Scheduled Maintenance Expenditures are not
completed by the Closing Date, the Sellers either (i) shall cause the
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures to be
completed within a reasonable period of time following the Closing Date or
(ii) shall pay Buyer its reasonable costs to complete such unfinished
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures within
thirty (30) days of Sellers' receipt from Buyer of a reasonably detailed
invoice for such cost.
7.16. Expansion. The parties recognize that the Buyer may wish
to add additional generating capacity at Bowline site ("Intended Use") and
the value to Buyer for such Intended Use is included in the Purchase Price.
Accordingly, to the extent such action or inaction does not interfere with
or adversely affect O&R transmission and distribution business, O&R's
agrees that, at Buyer's cost, it: (a) will use commercially reasonable
efforts to cooperate with Buyer's reasonable request to remove or modify
any (i) Permitted Encumbrances which materially adversely affect Buyer's
Intended Use, or (ii) conditions (either physical or otherwise) which exist
at Bowline or at any of the Purchased Assets which would prevent, hinder,
or otherwise interfere with the Buyer's Intended Use, and (b) shall not,
and shall ensure that their respective affiliates shall not, oppose,
hinder, or interfere with Buyer's efforts to add such additional capacity
and shall cooperate with Buyer's other reasonable requests with respect
thereto.
7.17. Fuel Contract Renegotiation. At Buyers' request, O&R
shall exercise commercially reasonable efforts to cooperate with Buyer in
Buyer's efforts to renegotiate the Service Agreement for Service under OPT
Rate schedule, between Columbia Gas Contract Transmission Corp. and O&R,
dated July 1, 1991.
7.18. Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under the (i) Purchased Assets and (ii)
the "Purchased Asset" or "Purchased Assets," as defined in each of the
Other Sales Agreements, on or prior to the Closing Date ("Environmental
Insurance"), Sellers shall share equally with Buyer the cost of premiums
for such Environmental Insurance, up to a maximum payment by Sellers of
$200,000 in the aggregate for such insurance relating to (A) the Purchased
Assets and (B) the "Purchased Asset" and "Purchased Assets" as defined in
each of the Other Sales Agreements. If Buyer purchases such Environmental
Insurance, Buyer shall add each Seller as an additional insured.
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or
been terminated with no order, decree, judgment or injunction enjoining or
prohibiting the consummation of the transactions contemplated hereby having
been issued;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or governmental authority which
prevents or is reasonably likely to prevent the consummation of the
transactions contemplated hereby or by the Ancillary Agreements shall be
pending or shall have been issued and remain in effect (each party agreeing
to use its reasonable efforts to have any such injunction, order or decree
lifted) and no statute, rule or regulation shall have been enacted or
interpreted by any State or Federal government or governmental authority in
the United States which prohibits the consummation of the transactions
contemplated hereby;
(c) All Federal, State and local government orders, consents and
approvals required for the consummation of the transactions contemplated
hereby or by the Ancillary Agreements, including, without limitation, the
Sellers Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, shall have become Final Orders (a "Final Order" means action by
the relevant regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which any
waiting period prescribed by law before the transactions contemplated
hereby may be consummated has expired, and as to which all conditions to
the consummation of such transaction prescribed by law, regulation or order
have been satisfied), and such Final Order is in form and substance
reasonably acceptable to the party that sought the consent or approval
granted by such Final Order (for purposes of this clause (i), a Final Order
shall be deemed to be reasonably acceptable to such party if it complies in
all material respects with the terms and conditions of such party's
application therefor and contains no additional terms or conditions which
would have a Material Adverse Effect on such party or the operation of the
Purchased Assets); provided, however, that if at the time such order,
consent, or approval would otherwise be deemed to be a Final Order, there
shall be pending or threatened any appeal or challenge thereto, which, if
adversely determined, would cause such order, consent or approval to not be
reasonably acceptable to the party that sought such order, consent or
approval, then if such party who would be adversely affected notifies the
other parties that such a pending or threatened appeal or challenge exists
(such notification to be made as soon as reasonably practicable following
knowledge of such pending or threatened appeal or challenge, but in no
event later than fifteen (15) days from date on which any waiting period
prescribed by law before the transactions contemplated hereby may be
consummated has expired and all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied),
then such order, consent or approval shall be deemed to be a Final Order
only after all opportunities for rehearing or judicial review are exhausted
and provided, further, that if the designation of an order, consent or
approval as a Final Order shall be deferred pursuant to the foregoing
provision, the Termination Date shall be automatically extended for a
period of time equal to the period of time for which the designation as a
Final Order has been deferred; and
(d) All consents and approvals required under the terms of any
note, bond, mortgage, indenture, contract or other agreement to which the
Sellers or the Buyer, or any of their subsidiaries, is a party for the
consummation of the transactions contemplated hereby shall have been
obtained, other than those (i) which if not obtained, would not, in the
aggregate, have a Material Adverse Effect, or (ii) for which an agreement
which is described in the last sentence of Section 7.6(b) has been entered
into.
8.2. Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) There shall not have occurred and be continuing, a Material
Adverse Effect, including, without limitation, any Material Adverse Effect
regarding water usage at Bowline;
(b) The Sellers shall have performed and complied with the
covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and the
representations and warranties of the Sellers set forth in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date, and the Buyer
shall have received a certificate to that effect signed by an authorized
officer of each Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of each Seller, dated the Closing Date, to the effect
that to the best of such officers' knowledge, after reasonable inquiry and
investigation, the conditions relating to such Seller and set forth in
Sections 8.2(a) and (b) have been satisfied;
(d) The "Closing" as defined in the Lovett Generating Station
Sales Agreement between O&R and Southern Energy Lovett, L.L.C., dated as of
the date hereof, shall have occurred or shall occur concurrently with the
Closing hereunder;
(e) The Buyer shall have received an opinion from Skadden, Arps,
Slate, Meagher & Flom LLP, dated the Closing Date and satisfactory in form
and substance to the Buyer and its counsel, substantially to the effect
that:
(1) O&R is a corporation organized, existing and in good
standing under the laws of the State of New York and has the corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action taken
on the part of O&R.
(2) this Agreement and the Ancillary Agreements have been
executed and delivered by O&R and (assuming that the Buyer Required
Regulatory Approvals are obtained) are valid and binding obligations of
O&R, enforceable against O&R in accordance with their terms, except that
such enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity);
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by O&R will not (A) constitute a
violation of the Certificate of Incorporation or By-Laws of O&R, or (B) to
counsel's knowledge constitute a violation or default under those
agreements or instruments set forth on a schedule to this opinion;
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any federal or New York
governmental authority is necessary for the consummation by O&R of the
Closing other than (i) the Sellers Required Regulatory Approvals, which are
addressed below, (ii) declarations, filings or registrations with, or
notices to, or authorizations, consents or approvals relating to Permits
and Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, would not, individually or in the aggregate have a
Material Adverse Effect or prevent O&R from performing its obligations
hereunder; and
(5) The Bill of Sale, the Instrument of Assumption and the
other agreements described in Section 4.3 are in proper form to transfer to
Buyer such title to the Purchase Assets as was held by O&R.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel which are reasonably acceptable to Buyer and admitted in such
other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of fact upon certificates furnished by O&R
and appropriate officers and directors of O&R and by public officials.
(f) The Buyer shall have received an opinion from Riker, Danzig,
Scherer, Hyland & Perretti, LLP (New Jersey Counsel), Nixon, Hargrave,
Devans & Doyle, LLP (New York Counsel) and Morgan, Lewis & Bockius, LLP
(Pennsylvania Counsel), or other local regulatory counsel for O&R
reasonably acceptable by Buyer, dated the Closing Date and satisfactory in
form and substance to the Buyer and its counsel, substantially to the
effect that: no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any federal governmental authority or
any governmental authority in the States of New York, New Jersey and
Pennsylvania is necessary for the consummation by O&R of the Closing other
than (i) the Sellers Required Regulatory Approvals, which have been
obtained and are in full force and effect with such terms and conditions as
were imposed by the applicable governmental authorities, (ii) declarations,
filings or registrations with, or notices to, or authorizations, consents
or approvals relating to Permits and Environmental Permits and (iii) such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not, individually or in the
aggregate, have a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel which are reasonably acceptable to Buyer and admitted in such
other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of fact upon certificates furnished by O&R
and appropriate officers and directors of O&R and by public officials.
(g) The Buyer shall have received an opinion from the General
Counsel of Con Edison, which shall be reasonably acceptable to Buyer, dated
the Closing Date and satisfactory in form and substance to the Buyer and
its counsel, substantially to the effect that:
(1) Con Edison is a corporation organized, existing and in
good standing under the laws of the State of New York and has the corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby; and the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by requisite corporate action taken on the part
of Con Edison;
(2) this Agreement has been executed and delivered by Con
Edison and (assuming that the Sellers Required Regulatory Approvals and the
Buyer Required Regulatory Approvals are obtained) is a valid and binding
obligation of Con Edison, enforceable against Con Edison in accordance with
its terms, except that such enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity);
(3) the execution, delivery and performance of this
Agreement by Con Edison will not constitute a violation of the Certificate
of Incorporation or By-Laws of Con Edison;
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any federal governmental
authority is necessary for the consummation by Con Edison of the Closing
other than (i) the Sellers Required Regulatory Approvals, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and Environmental
Permits and (iii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made, would
not, in the aggregate have a Material Adverse Effect.
(5) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any federal governmental
authority or any governmental authority in the State of New York is
necessary for the consummation by Con Edison of the Closing other than (i)
the Sellers Required Regulatory Approvals, which have been obtained and are
in full force and effect with such terms and conditions as were imposed by
the applicable governmental authorities, (ii) declarations, filings or
registrations with, or notices to, or authorizations, consents or approvals
relating to Permits and Environmental Permits and (iii) such declarations,
filings, registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel admitted in such other jurisdictions. Any opinions relied upon
by such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of fact
upon certificates furnished by Con Edison and appropriate officers and
directors of Con Edison and by public officials.
(h) Buyer shall have received the Title Commitment showing the
Real Property to be insured as subject only to Permitted Encumbrances, and
the effective date of the Title Commitment shall have been updated to the
Closing Date and marked to show the satisfaction of all conditions to the
issuance of the title policy other than conditions within the control of
the Buyer; and
(i) Buyer shall have obtained a certificate of the Secretary of
each Seller identifying by name and title and bearing the signature of the
officer of such Seller authorized to execute and deliver this Agreement and
the other agreements and instruments contemplated hereby.
8.3. Conditions to Obligations of the Sellers. The obligation
of the Sellers to effect the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) The Buyer shall have performed its covenants and agreements
contained in this Agreement required to be performed on or prior to the
Closing Date;
(b) The representations and warranties of the Buyer set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date;
(c) The Sellers shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officers' knowledge, the conditions set forth in
Sections 8.3(a) and (b) have been satisfied; and
(d) The Sellers shall have received an opinion from Troutman
Sanders LLP, counsel for the Buyer, dated the Closing Date and satisfactory
in form and substance to the Sellers and their counsel, substantially to
the effect that:
(1) The Buyer is a limited liability company organized,
existing and in good standing under the laws of the State of Delaware and
has the requisite power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby; and the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have been
executed and delivered by the Buyer and (assuming that the Sellers Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are
obtained) are valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought;
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer will not constitute a
violation of the Certificate of Formation or Limited Liability Company
Agreement (or other similar governing documents), as currently in effect,
of the Buyer; and
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental authority is
necessary for the consummation by the Buyer of the Closing other than (i)
the Buyer Required Regulatory Approvals, all of which have been obtained
and are in full force and effect with such terms and conditions as shall
have been imposed by any applicable governmental authority, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and Environmental
Permits and (iii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made, would
not, in the aggregate have a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United States
and the State of New York, such counsel may rely upon opinions of counsel
admitted to practices in such other jurisdictions. Any opinions relied
upon by such counsel as aforesaid shall be delivered together with the
opinion of such counsel. Such opinion may expressly rely as to matters of
facts upon certificates furnished by appropriate Members and Managers of
the Buyer and its subsidiaries and by public officials.
8.4. Extension of Closing Date. If the approval by the FERC of
the establishment of the ISO (the "ISO Approval") shall not have been
obtained on or prior to the Condition Fulfillment Date, the parties agree
to defer the Closing Date until the date (the "Deferred Closing Date")
which is the earlier of (a) the last day in the month in which the ISO
Approval is deemed final under applicable law, provided that if there are
less than five (5) Business Days in the month in which the ISO Approval is
deemed final, then the last day in the month which follows the month in
which the ISO Approval is
deemed final, and (b) August 31, 1999; provid
however, that all
conditions set forth in Section 8.2(a) and all conditi
set forth in
Section 8.2(b) regarding the representations and warran
of Seller shall
be deemed to be fulfilled on the Deferred Closing D
unless the nonfulfillment of such conditions primarily results from the acts
or
omissions of Sellers or from the occurrence of facts or circumstances
primarily relate to the Sellers' ownership and/or operation, or the
physical condition, of the Purchased Assets. For purposes of this
Agreement, the "Condition Fulfillment Date" shall mean the date on which
all conditions set forth in Sections 8.1 and 8.2 shall have been fulfilled
but not earlier than the later of (i) the date on which all conditions set
forth in Section 8.3 have been fulfilled or waived and (ii) April 30, 1999.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. The Sellers shall share all
indemnification obligations and benefits arising under this Article 9 in
proportion to their ownership of the Purchased Assets; two-thirds (66.667%)
of all such benefits and obligations shall be allocated to Con Edison and
one-third (33.333%) of all such benefits and obligations shall be allocated
to O&R. In each instance the term "Sellers" is used in this Article 9,
such term shall mean each Seller in proportion to the allocation described
in the previous sentence.
(a) The Sellers generally, and not joint and severally will
indemnify, defend and hold harmless the Buyer, Buyer's affiliates, and
their respective Members, Managers, employees and agents (each a "Buyer
Indemnitee") from and against any and all causes of action, claims, demands
or suits (by any Person), losses, liabilities, damages (excluding
consequential and special damages), obligations, payments, costs, Taxes and
expenses (including, without limitation, the costs and expenses of any and
all actions, suits, proceedings, assessments, judgments, settlements and
compromises relating thereto and reasonable attorneys' fees and reasonable
disbursements in connection therewith) to the extent the foregoing are not
covered by insurance, (collectively, "Indemnifiable Losses"), asserted
against or suffered by the Buyer Indemnitee relating to, resulting from or
arising out of (i) any breach by the Sellers of any covenant or agreement
of the Sellers contained in this Agreement; (ii) the Excluded Liabilities;
(iii) the Excluded Assets; (iv) any breach of any representation in
Sections 5.1, 5.2 and 5.3 hereof; (v) Sellers' non-compliance with any bulk
sales or transfer laws of any jurisdiction in connection with the
transactions contemplated by this Agreement; or (vi) the gross negligence
or willful misconduct of Sellers, or their affiliates or their best
respective contractors while on Buyer's property (including, without
limitation, any easement provided the Sellers with respect to such
property) after the Closing to the extent such Indemnifiable Loss is not
caused by the negligence or willful misconduct of any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless the
Sellers, Sellers' Affiliates, and their respective directors, officers,
employees and agents (each, a "Seller Indemnitee") from and against any and
all Indemnifiable Losses asserted against or suffered by the Sellers
relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement or
(ii) the Assumed Liabilities; (iii) the operation of the Purchased Assets
after the Closing Date, (iv) any breach of any representation in Article VI
or (v) the gross negligence or willful misconduct of Buyer, its affiliates
or their respective contractors while on Seller's property after the
Closing, to the extent such Indemnifiable Loss is not caused by the
negligence or willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) The Sellers and the Buyer shall have indemnification
obligations with respect to Indemnifiable Losses asserted against or
suffered by the Sellers or the Buyer, as the case may be, to the extent
that the aggregate of all such Indemnifiable Losses exceed the
Indemnification Floor. It is agreed and understood that neither the
Sellers nor the Buyer, as the case may be, shall have any liability at any
time for Indemnifiable Losses asserted against or suffered by the other
party until the aggregate amount of Indemnifiable Losses asserted or
suffered by such other party under this Section 9.1 shall exceed the
Indemnification Floor, and then only to the extent that the aggregate
amount of Indemnifiable Losses exceeds the Indemnification Floor. The term
"Indemnification Floor" shall mean an amount equal to $200,000.
(g) The rights and remedies of the Sellers and the Buyer under
this Article IX are exclusive and in lieu of any and all other rights and
remedies which the Sellers and the Buyer may have under this Agreement for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement; (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be; or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b). Rights and
remedies under the Ancillary Agreements are as set forth therein.
9.2. Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (i) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (ii) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which a party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of any Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that
such Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 9.2(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty
(20) calendar days (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed
to take such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable expenses thereof.
Without the prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any settlement of (a) any Third Party Claim with
respect to Income Taxes or (b) any other Third Party Claim which would lead
to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party claim without
leading to liability or the creation of a financial or other obligation on
the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer (other than with respect to Income Taxes) within ten (10) calendar
days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim (other than with respect to
Income Taxes) at any time, provided that in such event the Indemnitee shall
waive any right to indemnity hereunder unless the Indemnitee shall have
first sought the consent of the Indemnifying Party in writing to such
payment, settlement or compromise and such consent was unreasonably
withheld or delayed, in which event no claim for indemnity therefor
hereunder shall be waived.
(d) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) days)
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the
Indemnifying Party will be deemed to have accepted such Direct Claim. If
the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination. (a) This Agreement may be terminated at any
time prior to Closing Date, by mutual written consent of the Buyer and the
Sellers.
(b) This Agreement may be terminated by the Sellers jointly or
Buyer if (i) the Closing shall not have been consummated on or before
September 30, 1999 (the "Termination Date"); provided that the right to
terminate this Agreement under this Section 10.1(b) shall not be available
to either Seller or Buyer if its failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Closing Date to occur on or before such date; and provided, further, that
if on September 30, 1999 the conditions to the Closing set forth in Section
8.1(c) shall not have been fulfilled but all other conditions to the
Closing shall be fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be the day which is eighteen (18) months from the
date of this Agreement.
(c) This Agreement may be terminated by either the Sellers
jointly or the Buyer if (i) any governmental or regulatory body, the
consent of which is a condition to the obligations of the Sellers and the
Buyer to consummate the transactions contemplated hereby, shall have
determined not to grant its consent, or shall condition such consent upon
any material change to the terms of this Agreement or the Ancillary
Agreements or upon any other condition that materially and adversely
affects the value of the transactions contemplated herein or therein for
either party, and all appeals of such determination shall have been taken
and have been unsuccessful; (ii) any court of competent jurisdiction in the
United States or any State shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby or in the Ancillary Agreements and such
order, judgment or decree shall have become final and nonappealable; or
(iii) any statute, rule or regulation shall have been enacted or
interpreted by any State or Federal government or governmental agency in
the United States which prohibits the transactions contemplated herein or
in the Ancillary Agreements.
(d) This Agreement may be terminated by the Buyer, if there has
been a material violation or breach by the Sellers of any agreement,
representation or warranty contained in this Agreement which (i) has
rendered the satisfaction of any condition to the obligations of the Buyer
impossible and such violation or breach has not been waived by the Buyer or
cured by Sellers within fifteen (15) days after receipt by Buyer of notice
specifying same or (ii) causes a Material Adverse Effect, of which Buyer
has notified Sellers, and which Sellers have not promptly exercised
commercially reasonable efforts to cure but in no event later than twenty
(20) days following such notification by Buyer.
(e) This Agreement may be terminated by the Sellers jointly, if
there has been a material violation or breach by the Buyer of any
agreement, representation or warranty contained in this Agreement which has
rendered the satisfaction of any condition to the obligations of the
Sellers impossible and such violation or breach has not been waived by the
Sellers or cured by Buyer within fifteen (15) days after receipt by Buyer
of notice specifying same.
(f) This Agreement may be terminated by either the Sellers
jointly or the Buyer in accordance with the provisions of Section 7.11(b)
or (c).
10.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein, such termination shall be without any further liability of
either party or parties to the other party or parties except as follows:
(a) in the event of termination of this Agreement by Sellers
pursuant to Section 10.1(e), Sellers shall have the right to pursue all
remedies available to them in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Sellers; and
(c) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn
from the agency or other person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the Sellers and the Buyer.
11.2. Confidentiality. (a) All information regarding a party
(the "Disclosing Party") that is furnished directly or indirectly to the
other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two (2) years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that,
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3. Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.4. No Survival. Subject to the provisions of Article X, each
and every representation, warranty and covenant contained in this Agreement
(other than (a) the covenants contained in Sections 3.2, 3.3, 3.4, 7.2(b),
7.2(c), 7.2(d), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10, 7.12, 7.13, 7.15, 7.16,
7.18, 9.1 and 9.2 and in Article XI (which covenants shall survive in
accordance with their terms), (b) the representations and warranties
contained in Sections 5.1, 5.2, 5.3, 6.1, 6.2 and 6.3 (which
representations and warranties shall survive for twelve (12) months from
the Closing) and (c) the representation and warranty in Section 5.21 (which
representation and warranty shall survive for the applicable statute of
limitations) shall expire with, and be terminated and extinguished by the
consummation of the sale of the Purchased Assets and the transfer of the
Assumed Liabilities pursuant to this Agreement and such representations,
warranties and covenants shall not survive the Closing Date; and none of
the Sellers, the Buyer or any officer, director, trustee or Affiliate of
either of them shall be under any liability whatsoever with respect to any
such representation, warranty or covenant.
11.5. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt on a Business
Day if during the normal business hours of the recipient, or if not, on the
next Business Day, if delivered personally or by facsimile transmission,
telexed or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to O&R, to:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Sheldon S. Adler, Esq.
(b) If to Con Edison, to:
Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, NY 10003
Attention: Senior Vice President
and General Counsel
with copies to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: George W. Bilicic, Jr., Esq.
(c) If to Buyer, to:
Southern Energy Bowline LLC
c/o Southern Energy, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Randy Harrison, Vice-President
with copies to:
Troutman Sanders LLP
Nationsbank Plaza
Suite 5200
Atlanta, GA 30308
Attention: Robert C. Marshall, Esq.
and
Southern Company Services
270 Peachtree Street
Bin 918
Atlanta, Georgia 30303
Attention: Vice President and Associate General Counsel
11.6. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder. The Buyer acknowledges that O&R has entered into an
Agreement and Plan of Merger whereby O&R will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Sellers' receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Assets, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided, however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Sellers agree, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer
pledge or other disposition of rights and interests hereunder so long as
Sellers' rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Sellers and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Sellers,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8. Specific Performance. Sellers and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement.
11.11. Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement, including the Exhibits and
Schedules referred to herein or therein, and the Guaranty given to Sellers
by Southern Energy, Inc. embody the entire agreement and understanding of
the parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein or therein. It is expressly acknowledged and agreed
that there are no restrictions, promises, representations, warranties,
covenants or undertakings of the Sellers contained in any material made
available to the Buyer pursuant to the terms of the Confidentiality
Agreement (including the Information Memorandum, dated May 1998, previously
made available to the Buyer by the Sellers and DLJ). This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions other than the Confidentiality Agreement.
11.12. Bulk Sales or Transfer Laws. The Buyer acknowledges that
the Sellers will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by the
Sellers with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this
agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By /s/ D. Louis Peoples
-------------------------------------------
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive Officer
CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
By /s/ J. Michael Evans
-------------------------------------------
Name: J. Michael Evans
Title: President and Chief Operating Offider
SOUTHERN ENERGY BOWLINE, L.L.C.
By /s/ Randy Harrison
-------------------------------------------
Name: Randy Harrison
Title: Vice President
Exhibit 10.59
LOVETT GENERATING STATION SALES AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY LOVETT, L.L.C.
November 24, 1998
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
SALE AND PURCHASE
2.1 The Sale . . . . . . . . . . . . . . . . . . . . . 18
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . 18
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . 19
2.4 Excluded Liabilities . . . . . . . . . . . . . . . 24
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price . . . . . . . . . . . . . . . . . . 29
3.2 Purchase Price Adjustment . . . . . . . . . . . . . 29
3.3 Allocation of Purchase Price . . . . . . . . . . . 32
3.4 Proration . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing . . . . . . . . . . . . . 34
4.2 Payment of Purchase Price . . . . . . . . . . . . 35
4.3 Deliveries by Seller . . . . . . . . . . . . . . . 35
4.4 Deliveries by Buyer . . . . . . . . . . . . . . . . 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1 Organization; Qualification . . . . . . . . . . . . 39
5.2 Authority Relative to this Agreement . . . . . . . 40
5.3 Consents and Approvals; No Violation . . . . . . . 40
5.4 Reports . . . . . . . . . . . . . . . . . . . . . . 42
5.5 Financial Statements . . . . . . . . . . . . . . . 43
5.6 Undisclosed Liabilities . . . . . . . . . . . . . . 44
5.7 Absence of Certain Changes or Events . . . . . . . 44
5.8 Title . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 Leasehold Interests . . . . . . . . . . . . . . . . 45
5.10 Improvements . . . . . . . . . . . . . . . . . . . 46
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . 46
5.12 Environmental Matters . . . . . . . . . . . . . . . 47
5.13 Labor Matters . . . . . . . . . . . . . . . . . . . 49
5.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 50
5.15 Real Property Encumbrances . . . . . . . . . . . . 51
5.16 Condemnation . . . . . . . . . . . . . . . . . . . 52
5.17 Certain Contracts and Arrangements . . . . . . . . 52
5.18 Legal Proceedings, etc. . . . . . . . . . . . . . . 53
5.19 Permits . . . . . . . . . . . . . . . . . . . . . . 54
5.20 Regulation as a Utility . . . . . . . . . . . . . . 55
5.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . 55
5.22 Intellectual Property . . . . . . . . . . . . . . . 56
5.23 Year 2000 Readiness . . . . . . . . . . . . . . . . 56
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization . . . . . . . . . . . . . . . . . . . 56
6.2 Authority Relative to this Agreement . . . . . . . 57
6.3 Consents and Approvals; No Violation . . . . . . . 57
6.4 Operating Easements . . . . . . . . . . . . . . . . 59
6.5 Regulation as a Utility . . . . . . . . . . . . . . 59
6.6 Availability of Funds . . . . . . . . . . . . . . . 59
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business Relating to the Purchased
Assets. . . . . . . . . . . . . . . . . . . . . . . 59
7.2 Access to Information . . . . . . . . . . . . . . . 64
7.3 Expenses . . . . . . . . . . . . . . . . . . . . . 67
7.4 Further Assurances . . . . . . . . . . . . . . . . 68
7.5 Public Statements . . . . . . . . . . . . . . . . . 69
7.6 Consents and Approvals . . . . . . . . . . . . . . 70
7.7 Fees and Commissions . . . . . . . . . . . . . . . 73
7.8 Tax Matters . . . . . . . . . . . . . . . . . . . . 73
7.9 Supplements to Schedules . . . . . . . . . . . . . 77
7.10 Employees . . . . . . . . . . . . . . . . . . . . . 77
7.11 Risk of Loss . . . . . . . . . . . . . . . . . . . 82
7.12 Real Estate Matters . . . . . . . . . . . . . . . . 84
7.13 Year 2000 . . . . . . . . . . . . . . . . . . . . . 86
7.14 Scheduled Capital Expenditures and Scheduled
Maintenance Expenditures . . . . . . . . . . . . . 86
7.15 Expansion. . . . . . . . . . . . . . . . . . . . 86
7.16 Fuel Contract Renegotiation . . . . . . . . . . . . 87
7.17 Environmental Insurance . . . . . . . . . . . . . . 87
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby . . . . . . . . . 88
8.2 Conditions to Obligations of Buyer . . . . . . . . 91
8.3 Conditions to Obligations of Seller . . . . . . . . 96
8.4 Extension of Closing Date . . . . . . . . . . . . . 100
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification . . . . . . . . . . . . . . . . . . 101
9.2 Defense of Claims . . . . . . . . . . . . . . . . . 104
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination . . . . . . . . . . . . . . . . . . . . 109
10.2 Procedure and Effect of Termination . . . . . . . . 112
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification . . . . . . . . . . . . 113
11.2 Confidentiality . . . . . . . . . . . . . . . . . . 113
11.3 Waiver of Compliance; Consents . . . . . . . . . . 115
11.4 No Survival . . . . . . . . . . . . . . . . . . . . 115
11.5 Notices . . . . . . . . . . . . . . . . . . . . . . 116
11.6 Assignment . . . . . . . . . . . . . . . . . . . . 118
11.7 Governing Law . . . . . . . . . . . . . . . . . . . 119
11.8 Specific Performance . . . . . . . . . . . . . . . 119
11.9 Counterparts . . . . . . . . . . . . . . . . . . . 120
11.10 Interpretation. . . . . . . . . . . . . . . . . . 120
11.11 Entire Agreement. . . . . . . . . . . . . . . . . 120
11.12 Bulk Sales or Transfer Laws . . . . . . . . . . . 121
LOVETT GENERATING STATION SALES AGREEMENT
LOVETT GENERATING STATION SALES AGREEMENT, dated as of November
24, 1998, between Orange and Rockland Utilities, Inc., a New York
corporation ("Seller" or "O&R"), and Southern Energy Lovett, L.L.C., a
Delaware limited liability company ("Buyer").
WHEREAS, the Seller owns and operates the Purchased Assets (as
defined herein); and
WHEREAS, the Buyer desires to purchase and assume from the
Seller, and the Seller desires to sell to Buyer, the Purchased Assets upon
the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this Lovett Generating Station Sales
Agreement together with the Schedules and Exhibits hereto.
(3) "Ancillary Agreements" means the Operating Easement,
the Load Pocket Agreement, the Continuing Site/Interconnection
Agreement and the Transition Agreement.
(4) "Bill of Sale" means the Bill of Sale to be delivered
at the Closing with respect to the Purchased Assets which constitute
personal property and which are to be transferred at the Closing,
substantially in the form of Exhibit A hereto.
(5) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.
(6) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other
authorized representatives.
(7) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(8) "Code" means the Internal Revenue Code of 1986, as
amended.
(9) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between the Seller and Southern
Energy, Inc.
(10) "Continuing Site/Interconnection Agreement" means the
Continuing Site/Interconnection Agreement, dated as of the date of
this Agreement, between the Seller and the Buyer.
(11) "Emission Allowances" means the sulfur dioxide
allowances already allocated by the United States Environmental
Protection Agency to Lovett and the nitrogen oxide allowances to be
allocated by the New York State Department of Environmental
Conservation to Lovett, all as set forth in Schedule 1.1(a)(11).
(12) "Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements
activity and use limitations, conservation easements, deed
restrictions, encumbrances and charges of any kind.
(13) "Environmental Laws" means all Federal, state and
local laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution
or protection of the environment, natural resources or human health
and safety, including, without limitation, laws relating to Releases
or threatened Releases of Hazardous Substances or coal ash (including,
without limitation, ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Substances or coal ash.
(14) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(15) "Estimated Inventory Adjustment Amount" means the
lesser of the Seller's book value of its coal inventory, or $48.50
per ton multiplied by the number of tons of coal in the coal
inventory, used at or in connection with the Purchased Assets as of
the date ten (10) days before the Closing Date, which valuation shall
be provided to the Buyer by the Seller no later than five (5) days
before the Closing Date. For the purposes of calculating the
Estimated Inventory Adjustment Amount, the coal inventory shall
include all coal whether above or below grade, except that any below
grade coal, determined through a survey to be conducted by Seller
prior to the Closing, whose use would be non-compliant with air
emission regulations regarding SO2 emissions, shall be excluded from
such inventory.
(16) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(17) "Federal Power Act" means the Federal Power Act of
1935.
(18) "FERC" means the Federal Energy Regulatory Commission
or any successor thereto.
(19) "Good Utility Practices" means any of the practices,
methods and acts engaged in or approved by a significant portion of
the electric utility industry with respect to similar facilities
during the relevant time period which in each case, in the exercise of
reasonable judgment in light of the facts known or that should have
been known at the time the decision was made, could have been expected
to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, law, regulation,
environmental protection, and expedition. Good Utility Practices are
not intended to be limited to the optimum practices, methods or acts
to the exclusion of all others, but rather to be acceptable practices,
methods or acts generally accepted in such industry.
(20) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in
any form that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric
fluid which may contain levels of polychlorinated biphenyls; (b) any
chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (c) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any applicable Environmental Law.
(21) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(22) "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(23) "Income Tax" means any tax, charge, fee, levy, penalty,
or other assessment imposed by any U.S. federal, state, local or
foreign taxing authority (a) based upon, measured by or calculated
with respect to net income, profits or receipts (including, without
limitation, capital gains taxes and alternative minimum taxes but
excluding sales, transfer and similar taxes) or (b) based upon,
measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the
bases on which such tax may be based, measured by or calculated with
respect to, is described in clause (a), in each case together with any
interest, penalties, or additions attributable thereto.
(24) "Income Tax Return" means any return, report,
information return or other document (including any related or
supporting information) supplied or required to be supplied to any
authority with respect to Income Taxes.
(25) "Independent Accounting Firm" means Arthur Andersen LLP
or such other independent accounting firm of national reputation
mutually appointed by the Seller and the Buyer.
(26) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit B hereto.
(27) "Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, copyrights and copyright
rights, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights other than the
names, trademarks, service marks or logos listed in Section 2.2(b)
hereof.
(28) "Internal Revenue Service" means the United States
Internal Revenue Service, or any successor thereto.
(29) "ISO" means the New York Independent System Operator,
or its successor.
(30) "Load Pocket Agreement" means the Load Pocket Call
Option Agreement, dated as of the date of this Agreement, between the
Buyer and Seller.
(31) "Lovett" means the Lovett Generating Station located in
Tomkins Cove, Rockland County, New York.
(32) "Material Adverse Effect" means any change in or effect
on the Purchased Assets after the date of this Agreement that is,
individually or in the aggregate, materially adverse to the condition
(financial or physical) of (as compared to the condition on the date
of this Agreement), or the ability to own or operate (as compared to
the ownership and operation thereof prior to the date of this
Agreement), any material part of the Purchased Assets, other than (i)
any change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for electric
power, (ii) any change or effect resulting from changes in the
international, national, regional or local markets for any fuel used
at the Purchased Assets, (iii) any change or effect resulting from
changes in the North American, national, regional or local electric
transmission systems, (iv) any change or effect resulting from any
regulation, rule or order adopted or proposed by or with respect to
the ISO and its responsibility for, authority over and operation of
the wholesale and retail electric energy, capacity and ancillary
services electric power markets and (v) any materially adverse change
in or effect on the Purchased Assets which is cured (including by the
payment of money) by the Seller before the Termination Date.
(33) "NJBPU" means the New Jersey Board of Public Utilities,
or any successor thereto.
(34) "NYPSC" means the New York Public Service Commission or
any successor thereto.
(35) "Operating Easement" means the operating easement
providing the right to continue operating and maintaining certain
distribution facilities at the substations, which will be prepared as
described in the Continuing Site/Interconnection Agreement.
(36) "Other Sales Agreements" means the Bowline Generating
Station Sales Agreement between the Seller and Southern Energy
Bowline, L.L.C.; the Gas Turbines and Hydroelectric Generating Station
Sales Agreement between the Seller and Southern Energy NY-Gen, L.L.C.;
and the Bowline Adjacent Property Sales Agreement between the Seller
and Southern Energy Bowline, L.L.C., each dated as of the date of this
Agreement.
(37) "PAPUC" means the Pennsylvania Public Utility
Commission or any successor thereto.
(38) "Permitted Encumbrances" means (i) those exceptions to
title to the Purchased Assets contained in the documents listed on
Schedules 5.8, 5.9(a), 5.9(b) and 5.15; (ii) any state of facts that a
current survey of the Purchased Assets would disclose; (iii)
mortgages, liens, pledges, charges, encumbrances and restrictions
which are not in excess of $100,000 incurred in connection with the
Sellers' purchase of properties and assets to be conveyed to Buyer as
part of the Purchased Assets after the date of this Agreement securing
all or a portion of the purchase price therefor incurred in the
ordinary course of business; (iv) the Operating Easement; (v)
statutory liens for current Taxes, assessments or other governmental
charges not yet due or delinquent or the validity of which is being
contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted
accounting principles, provided that the aggregate amount being so
contested does not exceed $500,000; (vi) mechanics', carriers',
workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to the Sellers' obligations
which are not yet due and payable or the validity of which are being
contested in good faith by appropriate proceedings, provided that the
aggregate amount of such liens does not exceed $500,000; (vii) zoning,
entitlement, conservation restrictions and other land use and
environmental regulations by governmental authorities, provided that
the foregoing do not materially interfere with the present use of the
Purchased Assets; and (viii) such other liens, imperfections in or
failure of title, charges, easements, restrictions and encumbrances
which do not materially detract from the value of or materially
interfere with the present use of the Purchased Assets and neither
secure indebtedness, nor individually or in the aggregate have or
would have a Material Adverse Effect or which will be discharged or
released prior to or simultaneously with the Closing.
(39) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited
liability partnership, a trust, an unincorporated organization or a
governmental entity or any department or agency thereof.
(40) "Purchased Assets" means the real and personal
property, tangible or intangible, constituting or used principally for
generation purposes at, or otherwise for, the operation of Lovett,
including, but not limited to, the following assets:
(a) two active steam electric generating units (Units
4 and 5) fired by coal, natural gas or heavy oil, one active
steam electric generating unit fired by natural gas or oil
(Unit 3) and two retired units formerly capable of being fired by
natural gas or oil (Units 1 and 2) as listed or referred to in
Schedule 1.1(a)(40);
(b) all of the Seller's right, title and interest in,
to and under the Real Property (including all structures,
buildings, facilities and other improvements thereon and all
appurtenances thereto) as further described on Schedule 5.8;
(c) all other machinery, equipment, furniture and
other personal property owned by the Seller on the Closing Date
and located at Lovett and listed or referred to in Schedule
1.1(a)(40);
(d) all inventories of fuels, supplies, spare parts
and materials located at Lovett;
(e) the 69 kV and 138 kV transmission connections,
described as being sold to Buyer in the separation document
summary in Exhibit C;
(f) all contracts, agreements and personal property
leases principally relating to Lovett, as further listed on
Schedules 5.17(a), (b), and (c) and 7.10(a), respectively, as
being associated with the Lovett Generating Station;
(g) all Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Lovett Generating Station;
(h) the Emission allowances;
(i) the coal ash management facility ("CAMF") located
adjacent to the Lovett, which consists of a clay-lined partially
covered twelve (12) acre coal ash disposal area, leachate pump
station and detention pond, the coal ash and all equipment
located at such facility and used in connection with the CAMF;
(j) the gas regulator station, station bypass piping
and the 24 inch steel main downstream at the outlet of the
regulator station;
(k) all books, operating records, reports, engineering
or design plans, specifications, drawings, procedures, software
or tools used to process and report environmental data, safety
and maintenance manuals and similar items of the Seller relating
specifically to the aforementioned assets;
(l) all of the Seller's right, title and interest in,
to and under the Leases;
(m) copies of all filings made with regulatory
agencies, as updated, relating to Seller's Year 2000 programs as
such filings apply to the Purchased Assets;
(n) all unexpired, transferable warranties and
guarantees from third parties with respect to any of the
Purchased Assets, as of the Closing Date;
(o) the Intellectual Property, if any, relating to the
Purchased Assets (including Seller's goodwill therein and the
rights of Seller in and to the name of Lovett) and all the
rights, privileges, claims, causes of action, indemnification
rights and options pertaining solely to the Purchased Assets or
the Assumed Liabilities, including without limitation, those
items listed on Schedule 1.1(a)(40)(o);
(p) the assets acquired by Seller pursuant to Section
7.4;
(q) the six inch and eight inch water mains extending
from Lovett to connections with United Water Company Facilities
located at (i) Park Road in Stony Point, New York and (ii) the
intersection of Elm Avenue and Route 9W in Stony Point, New York,
respectively subject to the terms of applicable easements which
would not have a materially adverse effect thereon; and
(r) $5.4 million in cash.
(41) "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, leach, dump or allow to
escape into or through the environment.
(42) "Scheduled Capital Expenditures" means those capital
expenditures listed on Schedule 1.1(a)(42).
(43) "Scheduled Maintenance Expenditures" means those
maintenance expenditures listed on Schedule 1.1(a)(43).
(44) "SEC" means the Securities and Exchange Commission or
any successor thereto.
(45) "Securities Act" means the Securities Act of 1933, as
amended.
(46) "Seller Agreements" means those agreements listed on
Schedule 5.17(a) and the Collective Bargaining Agreements.
(47) "Separation Document" means the document, to be
negotiated in good faith by the Seller and the Buyer within three (3)
months from the date of this Agreement, which will delineate the
Purchased Assets from the Seller's other assets and which will be
consistent with the separation document summary attached hereto as
Exhibit C.
(48) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(49) "Tax" means any tax, charge, fee, levy, penalty or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority, including, but not limited to, any income, gross
receipts, license, stamp, occupation, environmental, excise, property,
sales, transfer, payroll, unemployment, withholding, social security
or any other tax of any kind whatsoever, including any interest,
penalties or additions attributable thereto.
(50) "Tax Return" means any return, report, information
return, declaration, claim for refund or other document (including any
schedule or other related or supporting information) supplied or
required to be supplied to any authority with respect to Taxes and
including any supplement or amendment thereof.
(51) "Transition Agreement" means the Transition Power Sales
Agreement between the Buyer, Southern Energy Bowline, L.L.C., Southern
Energy NY-Gen, L.L.C. and the Seller, dated as of the date of this
Agreement.
(52) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(b) Each of the following terms has the meaning specified
in the Section set forth opposite such term:
Term Section
---- -------
Adjustment Statement 3.2
ALTA 7.12
Assumed Liabilities 2.3
Benefit Plans 5.14
Buyer Preamble
Buyer Required Regulatory Approvals 6.3
Buyer's Easements 4.3
Buyer's Indemnitee 9.1
CEI 11.5
Closing 4.1
Closing Date 4.1
Collective Bargaining Agreements 7.10
Defect of Title 7.12
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Permits 5.12
ERISA Affiliate 2.4
ERISA Affiliate Plans 2.4
Estimated Purchase Price 4.2
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Hourly Employees 7.10
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
Inventory Adjustment Amount 3.2
Leases 5.9
Leased Assets 7.4
Management Employees 7.10
Maintenance and Capital Expenditures
Adjustment Amount 3.2
Massey 7.1
Materials and Supplies Adjustment Amount 3.2
Necessary Capital Expenditures 7.1(b)
Necessary Maintenance Expenditures 7.1(d)
NYBTU 7.12
Pension Benefit Plans 2.4
Permits 5.19
Pollution Control Bonds 2.4
Pollution Control Facilities 7.8
Purchase Price 3.1
Purchased Assets Preamble
Real Property 5.8
Recipient 11.2
Seller Preamble
Seller Balance Sheet 5.5
Seller Required Regulatory Approvals 5.3
Seller's Easements 4.3
Termination Date 10.1
Third Party Claim 9.2
Title Commitment 7.12
Title Company 7.12
1986 Tax Act 7.8
ARTICLE II
SALE AND PURCHASE
2.1 The Sale. Upon the terms and subject to the satisfaction of
the conditions contained in this Agreement, at the Closing, the Seller will
sell, assign, convey, transfer and deliver to the Buyer, and the Buyer will
purchase and acquire from the Seller, free and clear of all Encumbrances
(except for Permitted Encumbrances) all of the Seller's right, title and
interest in, to and under the real and personal property, tangible or
intangible, owned by the Seller and constituting the Purchased Assets.
2.2 Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable (other than the cash specified in Section 1.1(a)(40)(r) of
the Agreement);
(b) the name "Orange and Rockland Utilities, Inc.", "Orange
and Rockland", "O&R", "ORU" or any related or similar trade names,
trademarks, service marks or logos;
(c) distribution, substation and communication facilities
and related support equipment described in Schedule 2.2(c);
(d) any refund, credit, penalty payment, adjustment or
reconciliation (i) related to personal property or other Taxes
(excluding Taxes relating to Real Property) paid prior to the Closing
Date in respect of the Purchased Assets, whether such refund,
adjustment or reconciliation is received as a payment or as a credit
against future Taxes payable, or (ii) arising under any of the Seller
Agreements and relating to a period before the Closing Date;
(e) except to the extent specifically required by law, all
personnel records relating to any employees of the Seller; and
(f) the rights and assets to be described in the Separation
Document as not part of the Purchased Assets.
2.3 Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to the Seller the Instrument of Assumption pursuant to which the
Buyer shall assume and agree to discharge to the maximum extent permitted
by law, all of the following liabilities and obligations of the Seller
which relate to the Purchased Assets, other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective
conditions thereof:
(a) all liabilities and obligations of the Seller arising
or accruing after the Closing Date under (i) the Seller Agreements,
the Environmental Permits, the Permits, real property leases,
contracts and other agreements disclosed and assigned to the Buyer
pursuant to this Agreement in accordance with the terms thereof, and
(ii) the leases, contracts and other agreements entered into by the
Seller with respect to the Purchased Assets after the date hereof
consistent with the terms of this Agreement; except in each case, to
the extent such liabilities and obligations, but for a breach or
default by the Seller, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default or any event which after the
giving of notice would constitute a default by Seller;
(b) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is liable
pursuant to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified the Seller pursuant to Section 9.1;
(d) all liabilities to employees for which the Buyer is
liable pursuant to Section 7.10, including the Collective Bargaining
Agreements;
(e) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the common
law, whether such liability or obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or in
connection with (i) any violation or alleged violation of
Environmental Law, prior to the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) loss of life,
injury to persons or property or damage to natural resources (whether
or not such loss, injury or damage arose or was made manifest before
the Closing Date or arises or becomes manifest after the Closing
Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances or coal ash at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased Assets
prior to the Closing Date, including, but not limited to, Hazardous
Substances or coal ash contained in building materials at the
Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; and (iii) the investigation and/or
remediation (whether or not such investigation or remediation
commenced before the Closing Date or commences after the Closing Date)
of Hazardous Substances or coal ash that is present or has been
Released prior to the Closing Date at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased Assets,
including, but not limited to, Hazardous Substances or coal ash
contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets;
provided, as to all of the above, that nothing set forth in this
subsection 2.3(e) shall require the Buyer to assume any liabilities
that are expressly excluded in Section 2.4;
(f) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the common
law, whether such liability or obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or in
connection with (i) any violation or alleged violation of
Environmental Law, on or after the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) compliance with
applicable Environmental Laws on or after the Closing Date with
respect to the ownership or operation of the Purchased Assets; (iii)
loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the presence or Release of
Hazardous Substances or coal ash at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased Assets
on or after the Closing Date, including, but not limited to, Hazardous
Substances or coal ash contained in building materials at the
Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; (iv) loss of life, injury to persons
or property or damage to natural resources caused (or allegedly
caused) by the off-site disposal, storage, transportation, discharge,
Release, recycling, or the arrangement for such activities, of
Hazardous Substances or coal ash, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets;
(v) the investigation and/or remediation of Hazardous Substances or
coal ash that is present or has been released on or after the Closing
Date at, on, in, under, adjacent to, discharged from, emitted from or
migrating from the Purchased Assets, including, but not limited to,
Hazardous Substances or coal ash contained in building materials at
the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells or in other environmental media at or
adjacent to the Purchased Assets; and (vi) the investigation and/or
remediation of Hazardous Substances or coal ash that is disposed,
stored, transported, discharged, Released, recycled, or the
arrangement of such activities, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets, at
any off-site location; provided, that nothing set forth in this
subsection shall require the Buyer to assume any liabilities that are
expressly excluded in Section 2.4;
(g) all liabilities and obligations of the Seller with
respect to the Purchased Assets under the agreements or consent orders
set forth on Schedule 5.12(c);
(h) all liabilities incurred by the Seller with respect to
maintenance and capital expenditures made with respect to the
Purchased Assets by the Seller which are requested by Buyer;
(i) all liabilities or obligations relating to leases for
the Purchased Assets; and
(j) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (i) above,
exclusively relating to the Purchased Assets no matter when the events
or occurrences giving rise to such liabilities or obligations took
place, the value of which liabilities and obligations, together with
the liabilities and obligations relating to the "Purchased Asset" and
the "Purchased Assets" as defined in the Other Sales Agreements, in
the aggregate, shall not exceed $3 million.
All of the foregoing liabilities and obligations to be assumed by the Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as
the "Assumed Liabilities." It is understood and agreed that nothing in
this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer.
2.4 Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of the Seller in respect
of any Excluded Assets or other assets of the Seller which are not
Purchased Assets;
(b) any liabilities or obligations in respect of Taxes
attributable to the Purchased Assets for taxable periods ending on or
before the Closing Date, except for Taxes for which the Buyer is
liable pursuant to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities
relating to the disposal, storage, transportation, discharge, Release,
recycling, or the arrangement for such activities of Hazardous
Substances or coal ash that was generated at the Purchased Assets, at
any off-site location, where the disposal, storage, transportation,
discharge, Release, recycling or the arrangement for such activities
at said off-site location occurred prior to the Closing Date, provided
that for purposes of this Section, "off-site location" does not
include any location to which Hazardous Substances or coal ash
disposed of, discharged from, emitted from or Released at the
Purchased Assets have migrated, including, but not limited to, surface
waters that have received waste water discharges from the Purchased
Assets;
(d) any liabilities, obligations or responsibilities
arising after the Closing Date relating to (i) the transmission lines
delineated in the Operating Easements or (ii) any Seller's operations
on, or usage of, the Operating Easements, including, without
limitation, liabilities, obligations or responsibilities arising as a
result of or in connection with (1) any violation or alleged violation
of Environmental Law and (2) loss of life, injury to persons or
property or damage to natural resources, except to the extent caused
by Buyer;
(e) any liabilities, obligations or responsibilities
arising prior to or after the Closing Date relating to the easements
provided O&R under the Operating Easement, including, without
limitation: (i) the transmission lines or other facilities of O&R
delineated in the Operating Easements or (ii) O&R ownership rights,
operations on, or usage of, the Operating Easements, including,
without limitation, liabilities, obligations or responsibilities
arising as a result of or in connection with (1) any violation or
alleged violation of Environmental Law or Release of Hazardous
Substances or coal ash and (2) loss of life, injury to persons or
property or damage to natural resources, except in the case of (1) or
(2), to the extent caused by the Buyer.
(f) any liabilities or obligations required to be accrued
by the Seller in accordance with generally accepted accounting
principles and/or the FERC Uniform System of Accounts on or before the
Closing Date with respect to liabilities related to the Purchased
Assets other than any liability assumed by Buyer under any provision
of this Agreement, including without limitation, Section 2.3;
(g) any liabilities or obligations with respect to
liabilities relating to the Purchased Assets relating to any personal
injury including bodily injury (including, but not limited to workers'
compensation claims), discrimination, wrongful discharge, or unfair
labor practice or similar claim or cause of action with respect to any
act or occurrence arising prior to or on the Closing Date, other than
liabilities or obligations for injury to persons or loss of life
assumed by the Buyer in Sections 2.3(e) and 2.3(f);
(h) any fines or penalties imposed by a governmental agency
or authority resulting from (A) an investigation or proceeding with
respect to any act or occurrence arising prior to or on the Closing
Date or (B) illegal acts, willful misconduct or gross negligence of
the Seller prior to or on the Closing Date;
(i) any payment obligations of the Seller for goods
delivered or services rendered prior to the Closing;
(j) any liabilities or obligations imposed upon, assumed or
retained by O&R pursuant to the Continuing Site/Interconnection
Agreement or any other Ancillary Agreement;
(k) any liabilities, obligations or responsibilities
relating to any deferred compensation, pension, profit-sharing and
retirement plans, including multiemployer plans, and all welfare,
severance, stock-based, bonus and other employee benefit or fringe
benefit plans, programs and arrangements, whether written or oral,
maintained or with respect to which contributions have been in the
last five (5) years or are made by O&R and any trade or business
(whether or not incorporated) which are or have ever been under common
control, or which are or have ever been treated as a single employer,
with the Seller under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which the Seller and any ERISA Affiliate
contributed thereunder (the "ERISA Affiliate Plans"), including any
multiemployer plan, maintained by, contributed to, or obligated to
contribute to, at any time, by the Seller or any ERISA Affiliate;
including without limitation, any liability (A) to the Pension Benefit
Guaranty Corporation under Title IV of ERISA; (B) with respect to non-
compliance with the continuation requirements of COBRA; (C) with
respect to any non-compliance with ERISA, the Code or any other
applicable laws; (D) with respect to any suit, proceeding or claim
which is brought against any ERISA Affiliate Plan, or any fiduciary or
former fiduciary of any such or ERISA Affiliate Plan; (E) relating to
a multiemployer plan; or (F) for any claim or suit for benefits
accrued under an ERISA Affiliate Plan prior to Closing;
(l) any liabilities, obligations or responsibilities
relating to the employment or termination of employment, by the Seller
of any individual (including, but not limited to, any employee of the
Seller) attributable to any actions or inactions by the Seller prior
to the Closing Date; and
(m) any liabilities relating to the $55,000,000 New York
State Energy Research and Development Authority Pollution Control
Refunding Revenue Bonds (Orange and Rockland Utilities, Inc. Project)
1994 Series A and the $44,000,000 New York Energy Research and
Development Authority Pollution Control Refunding Revenue Bonds
(Orange and Rockland Utilities, Inc. Projects) 1995 Series A (the
"Pollution Control Bonds") and any agreements relating thereto.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The purchase price for the Purchased Assets
shall be an amount equal to the sum of (i) $243,500,000, (ii) the Estimated
Inventory Adjustment Amount, (iii) the Inventory Adjustment Amount and (iv)
any amounts paid by the Seller to acquire title to Leased Assets pursuant
to Section 7.4 (the "Purchase Price").
3.2 Purchase Price Adjustment. (a) Within sixty (60) days
after the Closing, the Seller shall prepare and deliver to the Buyer a
statement (the "Adjustment Statement") which sets forth an amount equal to
(i) the lesser of (A) the Seller's book value, as of the Closing Date, of
its coal inventory or (B) $48.50 per ton multiplied by the number of tons
of coal in the coal inventory, used at or in connection with the Purchased
Assets minus (ii) the Estimated Inventory Adjustment Amount (such
difference is referred to as the "Inventory Adjustment Amount"). For the
purposes of calculating the Estimated Inventory Adjustment Amount, the coal
inventory shall include all coal whether above or below grade except that
any below grade coal, determined through a survey to be conducted by Seller
prior to the Closing, whose use would be non-compliant with air emission
regulations regarding SO(2) emissions, shall be excluded from such inventory.
The Adjustment Statement shall be prepared using the same
generally accepted accounting principles, policies and methods as the
Seller has historically used in connection with the calculation of the
items reflected on the Adjustment Statement, except that the price utilized
for determining the unit price of coal in this Section 3.2(a) shall be the
lower of the price determined in accordance with such historic method or
$48.50 per ton. The Buyer and the Seller agree to cooperate with the other
in connection with the preparation of the Adjustment Statement and related
information, and each shall provide to the other such books, records and
information as may be reasonably requested from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount,
provided, however, that the Buyer shall notify the Seller in writing of the
disputed amount, and the basis of such dispute, within thirty (30) days of
the Buyer's receipt of the Adjustment Statement. In the event of a dispute
with respect to the Inventory Adjustment Amount, the Buyer and the Seller
shall attempt to reconcile their differences and any resolution by them as
to any disputed amounts shall be final, binding and conclusive on the
parties. If the Buyer and the Seller are unable to reach a resolution of
such differences within thirty (30) days of receipt of the Buyer's written
notice of dispute to the Seller, the Buyer and the Seller shall submit the
amounts remaining in dispute for determination and resolution to the
Independent Accounting Firm, which shall be instructed to determine and
report to the parties, within thirty (30) days after such submission, upon
such remaining disputed amounts, and such report shall be final, binding
and conclusive on the parties hereto with respect to the amounts disputed.
The fees and disbursements of the Independent Accounting Firm shall be
allocated between the Buyer and the Seller so that the Buyer's share of
such fees and disbursements shall be in the same proportion that the
aggregate amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm that is unsuccessfully disputed by
the Buyer (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm.
(c) If the Inventory Adjustment Amount is positive, within ten
(10) Business Days after the Buyer's receipt of the Adjustment Statement,
the Buyer shall pay the Seller all undisputed portions of the Inventory
Adjustment Amount. If the Inventory Adjustment Amount is negative, within
ten (10) Business Days after the Buyer's receipt of the Adjustment
Statement, the Seller shall pay the Buyer all undisputed portions of the
Inventory Adjustment Amount. If there is a dispute with respect to any
amount on the Adjustment Statement, within five (5) Business Days after the
final determination of such disputed amounts on the Adjustment Statement,
the Buyer shall pay the Seller an amount equal to the disputed portion of
the Inventory Adjustment Amount as finally determined to be payable with
respect to the Adjustment Statement; provided, however, that if such amount
shall be less than zero, the Seller will pay to the Buyer the amount by
which such amount is less than zero. All payments made pursuant to this
Section 3.2(c) shall be paid together with interest thereon for the period
commencing on the Closing Date through the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the Closing Date,
in cash by federal or other wire transfer of immediately available funds.
3.3 Allocation of Purchase Price. The Buyer shall prepare an
allocation of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one hundred eighty (180)
days of the date of this Agreement but in no event less than forty-five
(45) days prior to the Closing and submit it to Seller. The Seller may
dispute the allocation of the Purchase Price; provided, however, that the
Seller shall notify the Buyer in writing of the disputed amount, and the
basis of such dispute, and follow the procedures relating to a dispute
described in Section 3.2(b) above. The Buyer and the Seller each agrees to
file Internal Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns and Income Tax Returns, in accordance with such agreed
allocation. Each of the Buyer and the Seller shall report the transactions
contemplated by the Agreement for federal Income Tax and all other Tax
purposes in a manner consistent with the allocation determined pursuant to
this Section 3.3. The Buyer and the Seller each agrees to provide the
other promptly with any other information required to complete Form 8594.
Each of the Buyer and the Seller shall notify and provide the other with
reasonable assistance in the event of an examination, audit or other
proceeding regarding the agreed upon allocation of the Purchase Price.
3.4 Proration. (a) The Buyer and the Seller agree that all of
the items normally prorated, including those listed below, relating to the
business and operation of the Purchased Assets will be prorated as of the
Closing Date, with the Seller liable to the extent such items relate to any
time period through the Closing Date, and the Buyer liable to the extent
such items relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any
other Taxes (excluding Income Taxes), assessments and other
charges, if any, on or with respect to the ownership, use or
business and operation of the Purchased Assets;
(ii) rent, Taxes (excluding Income Taxes) and other
items payable by or to the Seller under any of the Seller
Agreements to be assigned to and assumed by the Buyer hereunder;
(iii) any permit, license or registration fees with
respect to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either the Seller or
the Buyer made within sixty (60) days of the date that the actual amounts
become available. The Seller and the Buyer agree to furnish each other
with such documents and other records as may be reasonably requested in
order to confirm all adjustment and proration calculations made pursuant to
this Section 3.4.
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, at 10:00 A.M. (local time) on
April 30, 1999, or at such other place or later date and time as the
parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date."
4.2 Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to
the Seller at the Closing an amount (the "Estimated Purchase Price") in
United States dollars, equal to the sum of (i) $243,500,000, (ii) the
Estimated Inventory Adjustment Amount for the Closing, and (iii) any
amounts paid to acquire title to Leased Assets pursuant to Section 7.4
hereof, by wire transfer of immediately available funds or by such other
means as are agreed to by the Seller and the Buyer.
4.3 Deliveries by Seller. At the Closing, the Seller will
deliver the following to the Buyer:
(a) The Bill of Sale, duly executed by the Seller for the
personal property included in the Purchased Assets;
(b) The executed consents to transfer the Seller
Agreements, the Environmental Permits and the Permits, to the extent
specifically required hereunder;
(c) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by O&R;
(d) The certificates and the opinions of counsel
contemplated by Sections 8.2(c), (e), (f) and (h);
(e) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring
Seller's interest in the Property Interests to the Buyer, duly
executed and acknowledged by O&R and in recordable form substantially
in the form of Exhibit D hereto;
(f) One or more easements to the extent necessary to
evidence the right of Buyer to use the real property of O&R (the
"Buyer's Easements") that comprise the Excluded Assets, duly executed
and acknowledged by O&R and in recordable form, each substantially in
the form of Exhibit E hereto;
(g) The Assignment of Leases in the form attached hereto as
Exhibit F assigning to Buyer all of Seller's right, title and interest
as lessor (or lessee as the case may be) under the leases;
(h) Copies of the resolutions adopted by the board of
directors of the Seller, certified by the Secretary of the Seller, as
having been duly and validly adopted and as being in full force and
effect, authorizing the execution and delivery by the Seller of this
Agreement, the Bill of Sale and other closing documents described in
this Agreement to which the Seller is a party, and the performance by
the Seller of its obligations hereunder and thereunder;
(i) All such other instruments of assignment or conveyance
as shall, in the reasonable opinion of the Buyer and its counsel, be
necessary to transfer to the Buyer the Purchased Assets in accordance
with this Agreement and where necessary or desirable, in recordable
form;
(j) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if the Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to
the appropriate taxing authority any amount equal to 10% of the total
Amount Realized (as defined under Section 1445 of the Code);
(k) Such other agreements, documents, instruments and
writings as are required to be delivered by the Seller at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith; and
(l) $5.4 million by wire transfer of immediately available
funds or by such other means as are agreed to by the Seller and the
Buyer.
4.4 Deliveries by Buyer. At the Closing, the Buyer will deliver
the following to the Seller:
(a) The Estimated Purchase Price by wire transfer of
immediately available funds or by such other means as are agreed to by
the Seller and the Buyer;
(b) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(d) The Instrument of Assumption, duly executed by the
Buyer;
(e) All such other instruments of assumption as shall, in
the reasonable opinion of the Seller and its counsel, be necessary for
the Buyer to assume the Assumed Liabilities in accordance with this
Agreement;
(f) One or more easements to the extent necessary for
Seller to continue and maintain its transmission and distribution
business, in favor of the Seller (the "Seller's Easements") with
respect to real property conveyed to Buyer, duly executed and
acknowledged by Buyer, each substantially in the form of Exhibit E
hereto, and Buyer shall bear any transfer or similar tax incurred in
connection herewith as set forth in Section 7.8;
(g) Copies of the resolutions adopted by the Members or
Managers or similar governing body of the Buyer, certified by the
Member of the Buyer, as having been duly and validly adopted and as
being in full force and effect, authorizing the execution and delivery
by the Buyer of this Agreement and other closing documents described
in this Agreement to which the Buyer is a party, and the performance
by the Buyer of its obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and
writings as are required to be delivered by the Buyer at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Buyer as follows:
5.1 Organization; Qualification. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to
own, lease, and operate its properties and to carry on its business as is
now being conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which it operates the Purchased Assets and such jurisdiction requires it to
be so qualified. The Seller has heretofore delivered to the Buyer complete
and correct copies of its Certificate of Incorporation and By-Laws as
currently in effect.
5.2 Authority Relative to this Agreement. The Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Seller and no other corporate proceedings on the part of
the Seller or its shareholders are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Seller, and assuming
that this Agreement constitutes a valid and binding agreement of the Buyer,
subject to the receipt of the Seller Required Regulatory Approvals and the
Buyer Required Regulatory Approvals, constitutes a valid and binding
agreement of the Seller, enforceable against the Seller in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
5.3 Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Seller nor the
performance by the Seller of its obligations under this Agreement or the
Ancillary Agreements or the consummation of the transactions contemplated
hereby or thereby will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or By-Laws of the Seller,
(ii) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, except
(x) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not have a Material
Adverse Effect or would not prohibit or restrain the execution, delivery
or performance of this Agreement or the Ancillary Agreements, or the
consummation of the transactions contemplated hereby or thereby in any
material respect or (y) for those requirements which become applicable to
the Seller as a result of the specific regulatory status of the Buyer (or
any of its affiliates) or as a result of any other facts that specifically
relate to the business or activities in which the Buyer (or any of its
affiliates) is or proposes to be engaged; (iii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which
the Seller, or any of its subsidiaries, is a party or by which the Seller,
or any of its subsidiaries, or any of the Purchased Assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained
or which, individually or in the aggregate, would not have a Material
Adverse Effect; or (iv) violate any order, writ, injunction, judgment, law,
decree, statute, rule or regulation applicable to the Seller, or any of its
assets, which violation would, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) (A) notice by the
Seller to, and an order by, the NYPSC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (B) notice by
the Seller to, and an order by, the NJBPU approving the transactions
contemplated by this Agreement or the Ancillary Agreements and (C) notice
by the Seller to, and an order by, the PAPUC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) the
approval, if required, of the SEC pursuant to the Holding Company Act, and
(iv) the filings by the Seller and the Buyer required by the HSR Act and
the expiration or earlier termination of all waiting periods under the HSR
Act (the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any governmental or regulatory body or authority is
necessary for the consummation by the Seller of the transactions
contemplated hereby or by the Ancillary Agreements, other than such
declarations, filings, registrations, notices, authorizations consents or
approvals which, if not obtained or made, will not, in the aggregate, have
a Material Adverse Effect and other than Permits and Environmental Permits.
5.4 Reports. Since January 1, 1996, O&R, pursuant to the
Securities Act, the Exchange Act, the applicable State public utility laws,
the Federal Power Act and the Holding Company Act, has filed or caused to
be filed with the SEC, the applicable state or local utility commissions or
regulatory bodies, or the FERC, as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the
business and operations of O&R as it relates to the Purchased Assets under
each of the Securities Act, the Exchange Act, the applicable State public
utility laws, the Federal Power Act and the Holding Company Act and the
respective rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the appropriate act
and the rules and regulations thereunder in effect on the date each such
report was filed.
5.5 Financial Statements. The Seller has previously furnished
to the Buyer (i) audited consolidated balance sheets of the Seller as of
December 31, 1997, and (ii) the related audited consolidated statements of
income and retained earnings and changes in financial position of the
Seller for the fiscal year then ended, together with the respective reports
thereon of Arthur Andersen LLP. The consolidated balance sheet of the
Seller as of December 31, 1997 is referred to as the "Seller Balance
Sheet." Each of the balance sheets included in the financial statements
referred to in this Section 5.5 (including the related notes thereto)
presents fairly the financial position of the Seller as of their respective
dates, and the other related statements included therein (including the
related notes thereto) present fairly the results of operations and changes
in financial position for the periods then ended, all in conformity with
generally accepted accounting principles as applicable to a regulated
utility applied on a consistent basis, except as otherwise noted therein.
5.6 Undisclosed Liabilities. Except as set forth in Schedule
5.6, to the Seller's knowledge, the Seller has no liability or obligation
relating to the business or operations of the Purchased Assets, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in the Seller Balance Sheet or disclosed in the notes thereto in accordance
with generally accepted accounting principles, except those which either
were incurred in the ordinary course of business, after the date of the
Seller Balance Sheet, or those which in the aggregate are not material to
the Purchased Assets.
5.7 Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.7, or in the reports, schedules, registration
statements and definitive proxy statements filed by the Seller with the SEC
and (ii) as otherwise contemplated by this Agreement, to the Seller's
knowledge, since the date of the Seller Balance Sheet there has not been:
(a) any Material Adverse Effect; (b) any damage, destruction or casualty
loss, whether covered by insurance or not, which had a Material Adverse
Effect; (c) any entry into any agreement, commitment or transaction
(including, without limitation, any borrowing or capital financing) by the
Seller, which is material to the business or operations of the Purchased
Assets, except agreements, commitments or transactions in the ordinary
course of business or as contemplated herein; or (d) any change by the
Seller, with respect to the Purchased Assets, in accounting methods,
principles or practices except as required or permitted by generally
accepted accounting principles.
5.8 Title. Set forth in Schedule 5.8 is a true and complete
list of all real property which is part of or material to the business or
operations of the Purchased Assets (the "Real Property") and other real
property interests which are a part of or material to the business or
operations of the Purchased Assets (together with the Real Property, the
"Property Interests"). The Seller has leasehold or other contractual
interests in all Purchased Assets identified in subsections (f), (l), (n)
and (p) of Section 1.1(a)(40) and subject only to Permitted Encumbrances
and the Leases, (i) good and marketable title to the Real Property and (ii)
good and valid title to all Purchased Assets identified in subsections (a),
(c), (d), (e), (g), (h), (i), (j), (k), (m), (o) and (q) of Section
1.1(a)(40). At the Closing, the Seller will have the cash available to pay
the amount referred to in Section 1.1(a)(40)(r) of this Agreement.
5.9 Leasehold Interests. Schedule 5.9(a) lists all Real
Property leases or subleases (the "Leases") relating to the Purchased
Assets under which the Seller is a lessee, sublessee, lessor or sublessor
and which are to be assigned to, and assumed by, the Buyer on the Closing
Date. Except as set forth in Schedule 5.9(b), the Leases are valid,
binding and enforceable in accordance with their terms, and are in full
force and effect; there are no existing material defaults by the Seller
thereunder; and no event has occurred which (whether with or without
notice, lapse of time or both) would constitute a material default
thereunder. Seller has a valid and subsisting leasehold estate in and the
right to quiet enjoyment of the Leases under which either Seller is a
lessee or sublessee for the full term of such Leases, which leasehold
interests are unencumbered other than by Permitted Encumbrances, and Seller
has delivered to Buyer true and complete copies of all Leases.
5.10 Improvements. Except as set for forth in Schedule 5.10(a),
the Seller has not received any written notices from any governmental
authority stating or alleging that any improvements with respect to the
Purchased Assets have not been constructed in compliance with applicable
law. Except as set for forth in Schedule 5.10(b), no notice has been
received by the Seller from any governmental authority requiring or
advising as to the need for any repair, alteration, restoration or
improvement in connection with the Purchased Assets.
5.11 Insurance. Except as set forth in Schedule 5.11(a), all
material policies of fire, liability, worker's compensation and other forms
of insurance purchased or held by and insuring or related to the Purchased
Assets are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date as of which this
representation is being made have been paid, and no notice of cancellation
or termination has been received with respect to any such policy which was
not replaced on substantially similar terms prior to the date of such
cancellation. Except as described in Schedule 5.11(b), the Seller has not
been refused any insurance with respect to the Purchased Assets nor has its
coverage been limited by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last
five (5) years nor have they received written notice from any insurer with
respect to any Real Property or Lease of defects or inadequacies with
respect thereto or the improvements located thereon that would materially
adversely affect the insurability of same or cause the imposition of
extraordinary premiums therefor.
5.12 Environmental Matters. (a) Except as disclosed in Schedule
5.12(a)(i), to the Seller's knowledge, the Seller holds, and is in
compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for the Seller to operate
the Purchased Assets under applicable Environmental Laws, and the Seller is
otherwise in compliance with applicable Environmental Laws with respect to
the Purchased Assets except for such failures to hold or comply with
required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws, which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect. Schedule
5.12(a)(ii) sets forth all Environmental Permits relating to the ownership
or operation of the Purchased Assets.
(b) Except as disclosed in Schedule 5.12(b), Seller has not
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar State law with
respect to any on-site location related to the Purchased Assets, and no
investigation and/or remediation is being conducted or is pending at the
Purchased Assets (other than investigations or remediation conducted by or
on behalf of Seller or Buyer in connection with this transaction) except
for such liability under such laws or investigations or remediation as
would not be reasonably likely to have a Material Adverse Effect.
(c) With respect to the Purchased Assets, no action, claim,
investigation or other proceeding relating to any Environmental Law is
pending, or to Seller's knowledge, threatened, and Seller has not entered
into or agreed to any consent decree or order, and is not subject to any
judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances or coal ash under any Environmental Law, except such
consent decrees or orders, judgments, decrees or administrative or judicial
orders, actions, claims, investigations or proceedings that (i) would not
be reasonably likely to have a Material Adverse Effect or (ii) appear on
Schedule 5.12(c), or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of Seller, and in the possession of Seller, which concern Releases
of Hazardous Substances or coal ash at, on, in, or under the Purchased
Assets or compliance of Purchased Assets with Environmental Laws conducted
within the last two (2) years are listed in Schedule 5.12(d) and have been
provided to Buyer.
(e) The representations and warranties made in this Section 5.12
are the Seller's exclusive representations and warranties to environmental
matters.
5.13 Labor Matters. Schedule 7.10(a) lists and Seller has
previously delivered to the Buyer true and correct copies of all labor
union, Collective Bargaining Agreements and other labor agreements relating
to the Purchased Assets to which Seller is a party or is subject. With
respect to the Purchased Assets, except to the extent set forth in Schedule
5.13 and except for such matters as will not have a Material Adverse
Effect, to the Seller's knowledge: (a) Seller is in compliance with all
applicable laws respecting employment and employment practices,
occupational health and safety, and wages and hours; (b) Seller has not
received written notice of any unfair labor practice complaint against it
pending before the National Labor Relations Board; (c) there is no labor
strike, slowdown or stoppage actually pending or threatened against or
affecting the Seller; (d) Seller has not received notice that any
representation petition respecting its employees has been filed with the
National Labor Relations Board; (e) no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending against
the Seller; and (f) Seller has not experienced any primary work stoppage
since at least December 31, 1994.
5.14 ERISA. (a) Schedule 5.14(a) lists all deferred
compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all welfare, severance, stock-based, bonus and
other employee benefit or fringe benefit plans, programs and arrangements,
whether written or oral, maintained or with respect to which contributions
have been in the last five (5) years or are made by O&R in respect of
employees who are employed in connection with the Purchased Assets (such
plans, programs and arrangements collectively, the "Benefit Plans"). To
the Seller's knowledge, each Benefit Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and all other
applicable laws. Accurate and complete copies of all such Benefit Plans
and their summary descriptions, including multiemployer plans, have been
made available to the Buyer.
(b) Except as set forth in Schedule 5.14(b)(i), with respect to
employees at the Purchased Assets, to the Seller's knowledge, O&R and the
ERISA Affiliates have fulfilled their respective obligations under the
minimum funding requirements of Section 302 of ERISA, and Section 412 of
the Code, with respect to each Benefit Plan that is a pension benefit plan
as defined in Section 3(2) of ERISA (each, a "Pension Benefit Plan"). To
the Seller's knowledge, neither O&R nor any ERISA Affiliate has incurred
any liability to the Pension Benefit Guaranty Corporation in connection
with any Pension Benefit Plan which is subject to Title IV of ERISA,
including any withdrawal liability, nor is there any reportable event (as
defined in Section 4043 of ERISA), except as set forth in Schedule
5.14(b)(ii). Except as set forth in Schedule 5.14(b)(iii), the Internal
Revenue Service has issued a letter for each Pension Benefit Plan which is
intended to be qualified under Section 401(a) of the Code, determining that
such plan is exempt from United States Federal Income Tax under Sections
401(a) and 501(a) of the Code, and to the Seller's knowledge there has been
no occurrence since the date of any such determination letter which has
adversely affected such qualification, and no withdrawal liability has been
incurred by or asserted and none is anticipated against O&R with respect to
any Pension Benefit Plan which is a "multiemployer plan" (as defined in
Section 3(37) of ERISA).
(c) To the Seller's knowledge, neither Seller nor any ERISA
Affiliate has engaged in any transaction within the meaning of Section
4069(b) or Section 4212(c) of ERISA. Except as set forth in Schedule
5.14(c), no Benefit Plan is a multi-employer plan.
(d) To the extent O&R maintained or maintains a "group health
plan" within the meaning of Section 5000(b)(1) of the Code, to the Seller's
knowledge, O&R has materially complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA Part 6 of Subtitle B of
Title I of ERISA and the regulations thereunder.
5.15 Real Property Encumbrances. Schedule 5.15 lists all real
property encumbrances affecting the Real Property including matters
contained in deeds, easements and options. True and correct copies of all
current surveys, abstracts, title opinions and policies of title insurance
currently in force with respect to such Real Property have been delivered
by the Seller to the Buyer. None of the Permitted Encumbrances materially
adversely affect the existing use of the Real Property.
5.16 Condemnation. Neither the whole nor any part of the Real
Property or any other real property or rights leased, used or occupied by
the Seller in connection with the ownership or operation of the Purchased
Assets is subject to any pending suit for condemnation or other taking by
any public authority, and, to the knowledge of the Seller, no such
condemnation or other taking is threatened or contemplated.
5.17 Certain Contracts and Arrangements.
(a) Except (i) as listed in Schedule 5.17(a), (ii) for
contracts, agreements, personal property leases, commitments,
understandings or instruments which will expire prior to the Closing
Date, (iii) for agreements with suppliers entered into in the ordinary
course of business (including contracts entered into in connection
with the Scheduled Capital Expenditures and the Scheduled Maintenance
Expenditures), and (iv) for contracts, agreements, personal property
leases, commitments, understandings or instruments with a value less
than $200,000 or with annual or aggregate payments less than $200,000,
the Seller is not a party to any written contract, agreement, personal
property lease, commitment, understanding or instrument which is
material to the business or operations of the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each Seller
Agreement listed on Schedule 5.17(a) constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and
may be transferred to the Buyer pursuant to this Agreement and will
continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not,
under any of the Seller Agreements listed on Schedule 5.17(a), any
default or event which, with notice or lapse of time or both, would
constitute a default on the part of any party thereto, except such
events of default and other events as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, have a Material Adverse Effect.
5.18 Legal Proceedings, etc. Except as set forth in Schedule
5.18 or in any filing made by the Seller pursuant to the Securities Act or
the Exchange Act, there are no claims, actions, or proceedings pending or
investigation pending or, to the Seller's knowledge, threatened against the
Seller relating to the Purchased Assets before any court, arbitrator,
governmental or regulatory authority or body acting in an adjudicative
capacity, which, if adversely determined, would have a Material Adverse
Effect or would prohibit or restrain the execution, delivery or performance
of this Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby in any material respect.
Except as set forth in Schedule 5.18, the Seller is not subject to any
outstanding judgment, rule, order, writ, injunction or decree of any court,
governmental or regulatory authority relating to the Purchased Assets which
would have a Material Adverse Effect.
5.19 Permits. The Seller has all material permits, licenses,
franchises and other governmental authorizations, consents and approvals,
other than with respect to Environmental Laws (collectively, "Permits") as
set forth in Schedule 5.19(a), necessary to own or operate the Purchased
Assets as presently owned or operated, except where the failure to have
such Permits would not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, the Seller has
not received any written notification that it is in violation of any of
such Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority applicable to
it, except for notifications of violations which would not, individually or
in the aggregate, have a Material Adverse Effect. The Seller is in
compliance with all Permits, laws, statutes, orders, rules, regulations,
ordinances, or judgments of any governmental or regulatory body or
authority applicable to Purchased Assets, except for violations which, in
the aggregate, would not have a Material Adverse Effect.
5.20 Regulation as a Utility. O&R and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania as set forth on Schedule 5.20(a), and in no
other state. Except as set forth on Schedule 5.20(b), the Seller is not
subject to regulation as a public utility or public service company (or
similar designation) by the United States, any State of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
5.21 Taxes. Except as set forth in Schedule 5.21: (a) no notice
of deficiency or assessment has been received from any taxing authority
with respect to liabilities for Taxes of Seller in respect of the Purchased
Assets, which have not been fully paid or finally settled, and any such
deficiency shown in Schedule 5.21 is being contested in good faith through
appropriate proceedings; (b) there are no outstanding agreements or waivers
extending the applicable statutory periods of limitation for Taxes
associated with the Purchased Assets for any period; (c) there are no
rulings or closing agreements executed with any taxing authority relating
to the Purchased Assets that will be binding upon Buyer after the Closing;
(d) none of the Purchased Assets is property that is required to be treated
as being owned by any other person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code or "tax-exempt
use" property within the meaning of Section 168(h) of the Code; and (e)
there are no powers of attorney in effect relating to Taxes relating to the
Purchased Assets for any Post-Closing period.
5.22 Intellectual Property. Seller has all right, title and
interest in or valid and binding rights under contract to use the
Intellectual Property relating to the Purchased Assets. Seller has not
received notice that it is infringing any Intellectual Property of any
other Person in connection with the operation or business of the Purchased
Assets, no claim is pending or has been made to such effect that has not
been resolved and Seller is not infringing any Intellectual Property of any
other Person the effect of which, individually or in the aggregate, would
have a Material Adverse Effect.
5.23 Year 2000 Readiness. Seller has informed Buyer of its
analysis of, the status of development of contingency plans for, and
forecasted expenditures with respect to Year 2000 readiness of material
computer software and computer firmware comprising the Purchased Assets, as
such analysis, contingency plan development and forecast of expenditures
exist on the date hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Seller as follows:
6.1 Organization. The Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to the Seller complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2 Authority Relative to this Agreement. The Buyer has full
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Managers or Members of the Buyer
and the Board of Directors of both Southern Energy, Inc. and The Southern
Company and no other company proceedings on the part of the Buyer or such
Affiliates of the Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Buyer, and assuming that
this Agreement constitutes a valid and binding agreement of the Seller,
subject to the receipt of the Buyer Required Regulatory Approvals and the
Seller Required Regulatory Approvals, constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
6.3 Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Buyer nor the purchase
by the Buyer of the Purchased Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) and except for the
filings by the Buyer and the Seller required by the HSR Act (the filings
and approvals referred to in Schedule 6.3(a) and with respect to the HSR
Act are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby.
6.4 Operating Easements. Buyer will grant Operating Easements
to Seller as agreed to pursuant to the procedures set forth in the
Continuing Site/Interconnection Agreement.
6.5 Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.5, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.6 Availability of Funds. The Buyer has sufficient funds
available to it or will receive binding written commitments from
responsible financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business Relating to the Purchased Assets.
Except as described in Schedule 7.1, during the period from the date of
this Agreement to the Closing Date, the Seller will operate and maintain
the Purchased Assets according to its ordinary and usual course of business
consistent with Good Utility Practice. Without limiting the generality of
the foregoing, and, except as contemplated in this Agreement or as
described in Schedule 7.1, prior to the Closing Date, without the prior
written consent of the Buyer (unless such consent would be prohibited by
law), the Seller will not with respect to the Purchased Assets:
(a) make any material change in the operations of the
Purchased Assets (including, without limitation, the levels of fuel
inventory and materials and supplies customarily maintained by the
Seller other than consistent with past practice);
(b) except for Scheduled Capital Expenditures, make any
capital expenditures with respect to the Purchased Assets or enter
into any contract or commitment therefor, except that (i) the Seller
shall make any capital expenditures requested by the Buyer, provided
that the Buyer will reimburse Seller for such capital expenditures at
least five (5) Business Days prior to the date payment for such
expenditure is due, and (ii) the Seller shall make any capital
expenditures deemed necessary by the Seller in accordance with Good
Utility Practices ("Necessary Capital Expenditures") at Seller's cost
and expense, provided, however, that if the Buyer requests that the
Seller make enhancements/upgrades with a cost in excess of the cost of
any Necessary Capital Expenditures, the Buyer shall reimburse the
Seller for the cost of such enhancements/upgrades to the extent the
cost of such an enhancement/upgrade exceeds the cost of the Necessary
Capital Expenditure at the time such enhancement/upgrade is performed;
(c) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Purchased Assets, other than assets used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practice and not mortgage or pledge, or impose or suffer to be
imposed any Encumbrance on, any of the Purchased Assets other than
Permitted Encumbrances in the ordinary course of business;
(d) except for Scheduled Maintenance Expenditures, make any
maintenance expenditures, except that (i) the Seller shall make any
maintenance expenditures requested by the Buyer provided that the
Buyer will reimburse Seller for such maintenance expenditures at least
five (5) Business Days prior to the date payment for such expenditure
is due, and (ii) the Seller shall make any maintenance expenditures
deemed necessary by the Seller in accordance with Good Utility
Practices ("Necessary Maintenance Expenditures") at Seller's cost and
expense, provided, however, that if the Buyer requests that the Seller
make enhancements/upgrades with a cost in excess of the cost of any
Necessary Maintenance Expenditures, the Buyer shall reimburse the
Seller for the cost of such enhancements/upgrades to the extent the
cost of such enhancement/upgrade exceeds the cost of the Necessary
Maintenance Expenditure at the time such enhancement/upgrade is
performed;
(e) amend or terminate prior to the expiration date, or
waive any material term or give consent to any material request with
respect to any of the Seller's Agreements, Permits or Environmental
Permits except to the extent that such amendment, termination, waiver
or consent (i) will not have a material impact on operations of the
Purchased Assets, including the cost of said operations or (ii) is
required by applicable law, including applicable Environmental Law;
(f) enter into any agreements for the purchase or sale of
fuel (whether commodity or transportation):
(i) that extend more than sixty (60) days beyond April
30, 1999 if, in the aggregate such agreements have remaining
payment obligations of more than $20 million after April 30, 1999
in each case, other than any agreements that are entered into
pursuant to (A) the Letter of Intent for transportation of coal
between Seller and CSX dated as of October 20, 1998 and (B) the
letter between Seller and Massey Coal Sales Company, Inc.
("Massey") which memorializes the price reopener agreement in
connection with the Coal Purchase and Sales Agreement between
Massey and Seller dated March 9, 1984, as amended.
(ii) that extend more than thirty (30) days beyond
October 31, 1999 if, in the aggregate, such agreements have
remaining payment obligations of more than $10 million after
October 31, 1999 provided, however, that O&R shall consult with
the Buyer regarding purchases or sales of fuel in excess of $10
million if such commitments to purchase or sell will extend
beyond April 30, 1999. The parties further agree to adjust the
dates in this Section 7.1(f) if the Closing is anticipated to
occur after April 30, 1999. Such adjustment will reflect the
amount of time beyond April 30, 1999 by which the Closing is
expected to occur at the time such an agreement is entered;
(g) enter into any power sales commitments:
(i) having a term greater than six (6) months and that
extends beyond April 30, 1999 if the aggregate energy under such
commitment and all other then outstanding commitments not
previously consented to by the Buyer would in Seller's judgment
reasonably be expected to exceed 100,000 MW hours delivered after
April 30, 1999; or
(ii) having a term greater than six (6) months and
that extends beyond October 31, 1999 if the aggregate energy
under such commitment and all other then outstanding commitments
not previously consented to by the Buyer would in Seller's
judgment reasonably be expected to exceed 45,000 MW hours
delivered after October 31, 1999;
provided, however, Seller shall consult with the Buyer regarding entering
into any power sales commitments in excess of $3 million if such
commitments will extend beyond April 30, 1999. The parties further agree to
adjust the dates in this Section 7.1(g) if the Closing is anticipated to
occur after April 30, 1999. Such adjustment will reflect the amount of
time beyond April 30, 1999 by which the Closing is expected to occur at the
time such an agreement is entered;
(h) sell, lease or otherwise dispose of Emission Allowances
except to the extent necessary to operate the Purchased Assets in
accordance with this Section 7.1;
(i) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (h); or
(j) make any new, or change any current, election with
respect to Taxes affecting the Purchased Assets.
7.2 Access to Information. (a) Between the date of this
Agreement and the Closing Date, the Seller will, during ordinary business
hours and upon reasonable notice (i) give the Buyer and the Buyer
Representatives reasonable access to its managerial personnel and to all
books, records, plants, offices and other facilities and properties
constituting the Purchased Assets to which the Buyer is permitted access by
law, (ii) permit the Buyer to make such reasonable inspections thereof as
the Buyer may reasonably request, including conducting environmental
sampling at, on and underneath the Purchased Assets and performing
compliance audits at the Purchased Assets, if Buyer reasonably deems such
sampling necessary after reviewing further information which becomes
available after the date hereof, so long as Seller provides its consent to
such sampling, which consent shall not be unreasonably withheld,
(iii) cause its officers, engineers, operations and maintenance personnel
and advisors to furnish the Buyer with such financial and operating data,
Tax Returns (other than Income Tax Returns) and other information with
respect to the Purchased Assets as the Buyer may from time to time
reasonably request and assist Buyer in such inspections, (iv) cause its
officers and advisors to furnish the Buyer a copy of each report, schedule
or other document filed or received by them with the SEC, NYPSC, NJBPU,
PAPUC, FERC, ISO, or other governmental authority with respect to the
Purchased Assets; provided, however, that (A) any such investigation shall
be conducted in such a manner as not to interfere unreasonably with the
operation of the Purchased Assets, (B) the Seller shall not be required to
take any action which would constitute a waiver of the attorney-client
privilege and (C) the Seller need not supply the Buyer with any information
which the Seller is under a legal obligation not to supply, provided,
however, that Seller shall have used commercially reasonable efforts to
have such obligations waived. Notwithstanding anything in this Section 7.2
to the contrary, (i) the Seller will furnish or provide such access to
medical records only as is permitted by law, and (ii) the Seller will
furnish or provide such access to personnel records only to the extent that
the employee to which the personnel record relates has given his/her
consent to the Seller.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of Section 11.2 hereof and shall be treated as Confidential
Information.
(c) Commencing February 1, 1999, the Buyer shall have the right
to physically locate one designated representative (the "Designated
Representative") of the Buyer at an office or in workspace at Seller's
corporate offices to observe the operations of Lovett, as well as the
operations of the Bowline Point Generating Station, the hydroelectric
generating stations and the gas turbine generating stations, pursuant to
the Other Sales Agreements; provided, however, that the Buyer shall not
unreasonably interfere with the Seller's use of the Purchased Assets. The
Seller shall coordinate site visits and provide the Designated
Representative during such period prior to the Closing access to Seller's
managerial personnel. The Designated Representative shall coordinate the
Buyer's rights to access under Section 7.2(a) hereof during the period
prior to the Closing.
(d) For a period of seven (7) years after the Closing Date, the
Seller and its representatives shall have reasonable access to (i)
information on employees covered by the Seller's Management Employee
Transition Program and (ii) all of the books and records of the Purchased
Assets, as the case may be, transferred to the Buyer hereunder to the
extent that such access (A) may reasonably be required by the Seller in
connection with matters relating to or affected by the operation of the
Purchased Assets prior to the Closing Date and (B) is not otherwise
prohibited by law. Such access shall be afforded by the Buyer upon receipt
of reasonable advance written notice and during normal business hours. The
Seller shall be responsible for any costs or expenses incurred by it
pursuant to this Section 7.2(d). If the Buyer shall desire to dispose of
any such books and records prior to the expiration of such seven (7) year
period, the Buyer shall, prior to such disposition, give the Seller a
reasonable opportunity at the Seller's expense, to segregate and remove
such books and records as the Seller may select. Any information provided
by Buyer to Seller pursuant to this Section 7.2(d) shall be deemed
Confidential Information.
7.3 Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4 Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Assets pursuant to this Agreement, including without
limitation, the use of the Seller's and the Buyer's commercially reasonable
efforts to obtain all Permits and Environmental Permits necessary for the
Buyer to operate the Purchased Assets. Neither of the Parties shall,
without the prior written consent of the other Party, take or fail to take
any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this
Agreement or the Ancillary Agreements. From time to time after the date
hereof, without further consideration, the Seller will, at its own expense,
execute and deliver such documents to the Buyer as the Buyer may reasonably
request in order more effectively to vest in the Buyer good title to the
Purchased Assets. From time to time after the date hereof, the Buyer will,
at its own expense, execute and deliver such documents to the Seller as the
Seller may reasonably request in order to more effectively consummate the
sale of the Purchased Assets pursuant to this Agreement. To the extent
that any personal property lease, relating to any assets ("Leased Assets")
which are principally used by the Seller for generation purposes at the
Purchased Assets, cannot be assigned to the Buyer, the Seller will use its
commercially reasonable efforts to acquire title to such Leased Assets and
to include them in the Purchased Assets before the Closing Date unless
Buyer directs Seller in writing not to acquire any such Leased Asset. The
Seller's documented and reasonable costs associated with acquiring title to
such Leased Assets shall be paid by the Buyer as part of the Purchase
Price. Schedule 7.4 lists all of the Leased Assets.
(b) To the extent that any Seller's rights under any guaranties,
warranties and indemnification applicable to the Purchased Assets or the
Assumed Liabilities are nontransferable or nonassignable, Seller shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
7.5 Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or
stock exchange rules or regulations and except that the parties may make
public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6 Consents and Approvals. (a) The Seller and the Buyer shall
each file or cause to be filed with the Federal Trade Commission and the
United States Department of Justice any notifications required to be filed
under the HSR Act and the rules and regulations promulgated thereunder with
respect to the transactions contemplated hereby. The parties shall consult
with each other as to the appropriate time of filing such notifications and
shall use their best efforts to make such filings at the agreed upon time,
to respond promptly to any requests for additional information made by
either of such agencies, and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date after the date of
filing. Buyer shall bear the cost of all filing fees under the HSR Act.
(b) The Seller and the Buyer shall cooperate with each other and
(i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Environmental Permits,
Permits, consents, approvals and authorizations of all governmental bodies
and (iv) use all reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each of
the foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, the Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which the Seller or the Buyer is a
party or by which either of them is bound. The Seller shall have the right
to review and approve in advance all characterizations of the information
relating to Purchased Assets; and the Seller and the Buyer shall have the
right to review and approve in advance all characterizations of the
information relating to the transactions contemplated by this Agreement
which appear in any filing made in connection with the transactions
contemplated hereby. The parties hereto agree that they will consult with
each other with respect to the transferring to the Buyer or the obtaining
by the Buyer of all such necessary Environmental Permits, Permits,
consents, approvals and authorizations of all third parties and
governmental bodies. The Seller and the Buyer shall designate separate
counsel with respect to all applications, notices, petitions and filings
(joint or otherwise) relating to this Agreement and the transactions
contemplated hereby on behalf of the Seller, on the one hand and the Buyer
on the other hand, with all governmental bodies. To the extent that a
consent to an assignment of any material Seller Agreement cannot be
obtained before the Closing Date, the Seller will enter into all such
agreements with the Buyer as are necessary to give the Buyer the rights,
obligations and burdens of such Seller Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Seller shall cooperate with Buyer's efforts in this regard and shall use
its best efforts to assist in the transfer or reissuance when so requested
by Buyer. In the event that Buyer is unable, despite commercially
reasonable efforts, to obtain a transfer or reissuance of one or more
Permits as of the Closing Date, Buyer may use the Permits issued to Seller
to the extent permissible under applicable laws and regulations provided
(i) Buyer notified Seller prior to Closing, (ii) Buyer continues to make
commercially reasonable efforts to obtain a transfer or reissuance of such
Permits after the Closing, and (iii) Buyer indemnifies Seller for any
losses, claims or penalties suffered by Seller in connection with the
Permit that is not transferred or reissued as of the Closing Date resulting
from Buyer's operation of the Purchased Assets following the Closing Date.
In no event shall Buyer use or otherwise rely on a Permit issued to Seller
beyond one year after Closing unless Buyer has, after exercising its
commercially reasonable efforts, been unable to obtain same and such
reliance is not prohibited by law.
7.7 Fees and Commissions. The Seller and the Buyer each
represent and warrant to the other that, except for Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), which is acting for and at the
expense of the Seller, and Credit Suisse First Boston Corporation, which is
acting for and at the expense of the Buyer, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Seller and the Buyer
will pay to the other or otherwise discharge, and will indemnify and hold
the other harmless from and against, any and all claims or liabilities for
all brokerage fees, commissions and finder's fees (other than as described
above) incurred by reason of any action taken by such party.
7.8 Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Seller will join in
the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to the Seller's approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for the Seller's
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, the Seller shall pay to the Buyer its proportionate share of the
amount shown as due on such Tax Return determined in accordance with the
Section 3.4 of this Agreement.
(c) On and after the Closing Date until the maturity or
redemption date of the Pollution Control Bonds which were issued to finance
or refinance all or a portion of the cost of the Pollution Control
Facilities (as defined hereinafter):
(i) Except as otherwise permitted in clause (ii) below,
Buyer will not change or permit to be changed the character or nature
of the use of those facilities listed in Schedule 7.8(c) hereto (the
"Pollution Control Facilities") from the manner Seller has used said
facilities prior to the sale of the Purchased Assets, unless such
changed use would constitute a use or purpose of the Pollution Control
Facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the Tax Reform Act of 1986, P.L. 99-514, or (the "1986
Tax Act"), to refund bonds described in section 1312(a) of the 1986
Tax Act which, for purposes hereof, are assumed to have been issued to
finance facilities of the same character and use or purpose as the
Pollution Control Facilities;
(ii) Buyer and any transferee which becomes subject to the
provisions of the foregoing clause (i) by reason of this clause (ii)
will not sell or otherwise transfer any portion of the Pollution
Control Facilities unless (A) the transferee covenants to satisfy the
conditions of the foregoing clause (i) with respect to its ownership
and use of the Pollution Control Facilities or (B) the transfer
relates to personal property and is exclusively for cash the proceeds
of which will be expended within six (6) months of the date of receipt
on facilities for which tax-exempt bonds could be issued pursuant to
section 1313 of the 1986 Tax Act, to refund bonds described in section
1312(a) of said act which, for purposes hereof, are assumed to have
been issued to finance facilities of the same character and use or
purpose as said facilities;
(iii) Buyer will cooperate with Seller and use commercially
reasonable efforts to permit Seller to have access to the Pollution
Control Facilities at reasonable times to examine them; and
(iv) The foregoing clause shall not be construed to prevent
Buyer (or any transferee) from ceasing to operate, maintain or repair
any element or item of the Pollution Control Facilities, the
operation, maintenance or repair of which becomes uneconomic to Buyer
because of damage or destruction or obsolescence (including physical,
functional or economic obsolescence), or because of any change in
government standards and regulations or the termination of the
operation of the Purchased Assets to which the element or item is an
adjunct. Seller shall notify Buyer when the Pollution Control Bonds
have matured or been redeemed.
(d) Each of the Buyer and the Seller shall provide the other
with such assistance (including access to the Purchased Assets) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
(e) Seller will consult with and allow Buyer to participate in
all outstanding real property tax disputes concerning the Purchased Assets
and shall take such positions as Buyer may request consistent with the
positions previously communicated to Seller by Buyer with respect to such
tax disputes, to assist Buyer in obtaining a tax agreement with respect to
such tax disputes for periods subsequent to the Closing Date. Seller will
use its commercially reasonable efforts to assist Buyer in obtaining an
agreement with the taxing authorities pursuant to which the assessed value
for real estate tax purposes of the Purchased Assets will be the lowest
value achievable. Seller shall not enter into any agreement with the
taxing authorities with respect to such real property tax disputes relating
to periods prior to the Closing Date without the written consent of Buyer
which Buyer shall not unreasonably withhold as long as Seller has complied
with this Section 7.8(e).
7.9 Supplements to Schedules. Prior to the Closing Date, the
parties shall supplement or amend the Schedules required by Article V and
VI with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10 Employees. (a) Schedule 7.10(a) sets forth all collective
bargaining agreements to which O&R is a party in connection with the
Purchased Assets and all other labor agreements and amendments thereto,
that are or may be associated with the Purchased Assets (the "Collective
Bargaining Agreements"). Buyer shall offer employment to begin as of the
Closing Date to the Seller's employees who work in connection with the
Purchased Assets and who are included in the bargaining units covered by
the Collective Bargaining Agreements ("Hourly Employees"), and the Buyer
will assume the Collective Bargaining Agreements and all of the Seller's
obligations thereunder, including, without limitation, the terms and
conditions of the employee benefit plans covering such hourly employees.
(b) Continued Employment; Service Credit. The Buyer shall, as
of the Closing Date, offer employment to the employees of the Seller (who
will be listed on Schedule 7.10(b) by the Buyer), who worked at or directly
serviced the Purchased Assets, who were employees immediately prior to the
Closing Date and who were not Hourly Employees and who are approved by
Buyer (the "Management Employees"). The Buyer shall provide Schedule
7.10(b) at least ninety (90) days prior to the date on which the Closing is
anticipated to occur (but in no event later than February 1, 1999, or such
other date to which the Buyer and O&R mutually agree). The Management
Employees hired by the Buyer shall be given credit for all service with
Seller or its subsidiaries (and service credited by Seller or such
subsidiary), to the same extent as such service was credited for such
purpose by Seller or such subsidiary, under all employee benefit plans,
programs and policies, and fringe benefits of the Buyer in which they
become participants for purposes of eligibility, vesting and determination
of level of benefits (but not for purposes of benefit accrual). To the
extent permissible under the terms thereof and required by applicable law,
the Buyer shall (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Management Employees under any welfare
benefit plans that such employees may be eligible to participate in after
the Closing Date, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare benefit plan maintained
for the Management Employees immediately prior to the Closing Date, and
(ii) provide each Management Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Closing Date.
(c) Subject to applicable law, the Buyer shall maintain for a
period of at least one year after the Closing Date, without interruption,
such employee compensation, welfare and benefit plans, programs, policies
and fringe benefits as will, in the aggregate, provide benefits to the
Management Employees that are no less favorable than those provided
pursuant to such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits of the Seller and its subsidiaries,
as in effect on the Closing Date. During the period between the date
hereof and the Closing Date, the Seller shall use its best efforts to keep
available all current Management Employees for employment by the Buyer
(except those employees which the Buyer identifies in writing as Management
Employees which the Buyer does not intend to employ).
(d) Notwithstanding the Buyer's assumption of the Collective
Bargaining Agreement, the Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of O&R or any ERISA Affiliate of the
Seller in connection with the assumption of such agreements or in
connection with hiring any of the Hourly Employees. All benefits accrued
under such Benefits Plans and all benefits currently payable as of the
Closing Date shall be and shall remain the obligation of O&R and any
individual covered under any such Benefit Plan that is a Group Health Plan
(as defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA)
and who is eligible for continued coverage under such Group Health Plan as
of the Closing Date, shall continue to be covered under such Group Health
Plan after Closing, pursuant to the provisions of COBRA.
(e) The Seller agrees to perform timely and discharge all
requirements, if any, under the WARN Act and under applicable state and
local laws and regulations for the notification of its employees arising
from the sale of the Purchased Assets to the Buyer up to and including the
Closing Date. The Buyer will cooperate with Seller to provide Seller with
such information as may be needed from the Buyer for inclusion in such
notices, including providing Seller at least ninety (90) days prior to the
date on which the Closing is anticipated to occur (but in no event, later
than February 1, 1999 or such other date to which the Buyer and O&R
mutually agree) with a list of all of Seller's employees to whom the Buyer
will make offers of employment. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN
Act and under applicable state and local laws and regulations for the
notification of its employees with respect to the Purchased Assets.
(f) O&R shall be responsible for any payments required under its
severance plan, including severance payment and other benefit enhancements,
offered in connection with the transfer of the Purchased Assets. Within
thirty (30) days following the last day that any employee may elect to
participate in such plan, O&R shall provide Buyer with a list of all
electing employees. In any event, Buyer is not required to establish this
or any other severance or benefit plan.
(g) O&R shall comply with all of the requirements of COBRA
arising from this Agreement with respect to all employees of O&R employed
at the Purchased Assets who are not employed by Buyer.
(h) O&R shall pay, when due, to all Hourly Employees and
Management Employees hired by the Buyer pursuant to Section 7.10 hereof,
all compensation, bonus, severance, vacation and holiday compensation,
workers' compensation or other employment benefits which have accrued to
such Hourly Employees and Management Employees through and including the
Closing Date.
(i) Following the execution of this Agreement, O&R will use its
commercially reasonable best efforts to arrange meetings and interviews
with such employees of O&R as Buyer shall reasonably request.
(j) O&R shall not, prior to the Closing Date, with respect to
the Purchased Assets, (i) hire new employees or transfer current employees
prior to the Closing to work at the Purchased Assets, other than to fill
vacancies in existing positions in the reasonable discretion of Seller,
(ii) take any action prior to the Closing to affect a material change in
the Collective Bargaining Agreement, or (iii) take any action prior to the
Closing to increase the aggregate benefits payable to the employees
employed in connection with the Purchased Assets, except (A) as otherwise
required by the terms of the Collective Bargaining Agreement obligations to
effects bargain, (B) as O&R shall reasonably deem appropriate in order to
comply with its obligations under the second sentence of Section 7.10(c)
above, (C) for retention bonuses payable to Management Employees on or
before the Closing Date and (D) increases in salary and benefits in the
ordinary course of business, consistent with past practice.
7.11 Risk of Loss. (a) From the date hereof through the Closing
Date, all risk of loss or damage to the property included in the Purchased
Assets shall be borne by the Seller.
(b) If, before the Closing Date all or any portion of the
Purchased Assets are taken by eminent domain, or is the subject of a
pending or (to the knowledge of the Seller after reasonable inquiry and
investigation) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If such
taking would have a Material Adverse Effect, the Buyer and the Seller shall
negotiate in good faith to settle the loss resulting from such taking
(including, without limitation, by making a fair and equitable adjustment
to the Purchase Price) and, upon such settlement, consummate the
transaction contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Seller has notified the Buyer of such taking, then the Buyer or the
Seller may, if such taking relates to the Purchased Assets, terminate this
Agreement pursuant to Section 10.1(f).
(c) If, before the Closing Date, all or any material portion of
the Purchased Assets are damaged or destroyed by fire or other casualty,
the Seller shall notify the Buyer promptly in writing of such fact. If
such damage or destruction would have a Material Adverse Effect and the
Seller has not notified the Buyer of its intention to cure such damage or
destruction within fifteen (15) days after its occurrence, the Buyer and
the Seller shall negotiate in good faith to settle the loss resulting from
such casualty (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price) and assigning any insurance
proceeds to Buyer at the Closing and, upon such settlement, consummate the
transactions contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Seller has notified the Buyer of such casualty, then the Buyer may
terminate this Agreement pursuant to Section 10.1(f).
7.12 Real Estate Matters. (a) Buyer shall obtain an American
Land Title Association ("ALTA") or New York Board of Title Underwriters
("NYBTU") owners standard form title policy commitment with respect to the
Real Property (the "Title Commitment") from a title company of Buyer's
choice (the "Title Company") covering title to the Real Property, together
with an ALTA 3.1 zoning endorsement, if available, including parking and
access, and such other endorsements as Buyer may reasonably request.
Seller shall provide the Title Company and Buyer such information as the
Title Company or Buyer may reasonably request to assist the Title Company
in connection with the Title Commitment. Without limiting the foregoing,
Seller shall provide the Title Company and Buyer a copy of the most recent
surveys in their possession regarding the Real Property. Promptly after
receiving the Title Commitment, Buyer shall notify Seller in writing of any
defects in title which are not Permitted Encumbrances and would cause title
to the Real Property to be uninsurable (any of which is called herein a
"Defect of Title"). Buyer shall be deemed to have waived any objection to
any Defect of Title that was disclosed by the Title Commitment if Buyer
fails to notify Seller of such Defect of Title within thirty (30) days
after receipt of such Title Commitment. With respect to the existence of
any Defect of Title that is not disclosed by the Title Commitment, but
which arises prior to Closing, Buyer shall immediately notify the Seller in
writing of any such Defect of Title.
(b) O&R agrees that upon the written request of Buyer it will
consent and cause its affiliates to consent to the relocation of the
Operating Easements and Seller's Easements so long as (i) Buyer pays the
cost of such relocation, (ii) such relocation will be to space within
Buyer's ownership and will not materially adversely affect the operation of
Seller's or its respective affiliates' transmission and distribution
business, except for the minimum downtime associated with the cut over for
such relocation process in accordance with Good Utility Practices and
(iii) the Buyer's requested relocation is consistent with Good Utility
Practices. Seller further agrees to condition any grant or assignment by
it of the Operating Easements or Seller's Easements on the express
agreement of its transferee to be bound by the terms and conditions of this
Section 7.12(b).
(c) As to any Operating Easement or Seller's Easement not
currently of record or reserved or granted back to O&R at Closing, all of
which are to be granted by Buyer at Closing concurrently with the transfer
of title to Buyer and prior to any mortgage or other encumbrance, such
Operating Easements and Seller's Easements shall include standard cross-
indemnity provisions relating to personal injury, death or property damage
occurring as a result of gross negligence or willful misconduct in the use
of such Easements, whereby each party agrees to indemnify the other for the
consequences of the gross negligence or willful misconduct of those for
whom the indemnifying party is legally responsible.
7.13 Year 2000. O&R shall (a) use its best efforts to cooperate
with Buyer in formulating a plan to prepare the Purchased Assets to be
ready for Year 2000 computer-related issues with a target completion date
of October 1, 1999 and (b) perform until the Closing Date (or later, at
Seller's election, pursuant to the second sentence of Section 7.14 of this
Agreement) the tasks identified in such plan, consistent with Good Utility
Practices and the expenditures contemplated in itsYear 2000 plans referred
to in Section 5.23 hereof.
7.14 Scheduled Capital Expenditures and Scheduled Maintenance
Expenditures. The Seller shall perform, or caused to be performed, the
Scheduled Capital Expenditures and the Scheduled Maintenance Expenditures,
at Seller's cost, prior to the Closing Date. To the extent that Scheduled
Capital Expenditures and Scheduled Maintenance Expenditures are not
completed by the Closing Date, the Seller either (i) shall cause the
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures to be
completed within a reasonable time following the Closing Date, or (ii)
shall pay Buyer its reasonable costs to complete such unfinished Scheduled
Capital Expenditures or Scheduled Maintenance Expenditures within thirty
(30) days of Seller's receipt from Buyer of a reasonably detailed invoice
for such cost.
7.15 Expansion. The parties recognize that the Buyer may wish to
add additional generating capacity at the Lovett site ("Intended Use") and
the value to Buyer for such Intended Use is included in the Purchase Price.
Accordingly, to the extent such action or inaction does not interfere with
or adversely affect the Seller's transmission and distribution business,
Seller agrees that, at Buyer's cost, they: (a) will use commercially
reasonable efforts to cooperate with Buyer's reasonable request to remove
or modify any (i) Permitted Encumbrances which materially adversely affect
Buyer's Intended Use, or (ii) conditions (either physical or otherwise)
which exist at Bowline or at any of the Purchased Assets which would
prevent, hinder, or otherwise interfere with the Buyer's Intended Use, and
(b) shall not, and shall ensure that their respective affiliates shall not,
oppose, hinder, or interfere with Buyer's efforts to add such additional
capacity and shall cooperate with Buyer's other reasonable requests with
respect thereto.
7.16 Fuel Contract Renegotiation. At Buyers' request, Seller
shall exercise commercially reasonable efforts to cooperate with Buyer in
Buyer's efforts to renegotiate (i) the Service Agreement for Service under
OPT Rate schedule, between Columbia Gas Contract Transmission Corp. and
O&R, dated July 1, 1991 and (ii) Coal Purchase and Sales Agreement between
Massey and Seller dated March 9, 1984, as amended.
7.17 Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under (i) the Purchased Assets and (ii)
the "Purchased Asset" and "Purchased Assets," as defined in each of the
Other Sales Agreements on or prior to the Closing Date ("Environmental
Insurance"), Seller shall share equally with Buyer the cost of premiums for
such Environmental Insurance, up to a maximum payment by Seller of $200,000
in the aggregate for such insurance relating to (A) the Purchased Assets
and (B) the "Purchased Asset" and "Purchased Assets" as defined in each of
the Other Sales Agreements. If Buyer purchases such Environmental
Insurance, Buyer shall add Seller as an additional insured.
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the
transactions contemplated hereby shall be subject to
fulfillment at or
prior to the Closing Date of the following condition
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have
expired or been terminated with no order, decree, judgment or
injunction enjoining or prohibiting the consummation of the
transactions contemplated hereby having been issued;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court or governmental authority
which prevents or is reasonably likely to prevent the consummation of
the transactions contemplated hereby or by the Ancillary Agreements
shall be pending or shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted or interpreted by any State or Federal
government or governmental authority in the United States which
prohibits the consummation of the transactions contemplated hereby;
(c) All Federal, State and local government, orders,
consents and approvals required for the consummation of the
transactions contemplated hereby or by the Ancillary Agreements,
including, without limitation, the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, shall have
become Final Orders (a "Final Order" means action by the relevant
regulatory authority which has not been reversed, stayed, enjoined,
set aside, annulled or suspended, with respect to which any waiting
period prescribed by law before the transactions contemplated hereby
may be consummated has expired, and as to which all conditions to the
consummation of such transaction prescribed by law, regulation or
order have been satisfied), and such Final Order is in form and
substance reasonably acceptable to the party that sought the consent
or approval granted by such Final Order (for purposes of this clause
(i), a Final Order shall be deemed to be reasonably acceptable to such
party if it complies in all material respects with the terms and
conditions of such party's application therefor and contains no
additional terms or conditions which would have a Material Adverse
Effect on such party or the operation of the Purchased Assets)
provided, however, that if at the time such order, consent, or
approval would otherwise be deemed to be a Final Order, there shall be
pending or threatened any appeal or challenge thereto, which, if
adversely determined, would cause such order, consent or approval to
not be reasonably acceptable to the party that sought such order,
consent or approval, then if such party who would be adversely
affected notifies the other party that such a pending or threatened
appeal or challenge exists (such notification to be made as soon as
reasonably practicable following knowledge of such pending or
threatened appeal or challenge, but in no event later than fifteen
(15) days from date on which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired and all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied), then such
order, consent or approval shall be deemed to be a Final Order only
after all opportunities for rehearing or judicial review are exhausted
and provided, further, that if the designation of an order, consent or
approval as a Final Order shall be deferred pursuant to the foregoing
proviso, the Termination Date shall be automatically extended for a
period of time equal to the period of time for which the designation
as a Final Order has been deferred; and
(d) All consents and approvals required under the terms of
any note, bond, mortgage, indenture, contract or other agreement to
which the Seller or the Buyer, or any of their subsidiaries, is a
party for the consummation of the transactions contemplated hereby
shall have been obtained, other than those (i) which if not obtained,
would not, in the aggregate, have a Material Adverse Effect, or (ii)
for which an agreement which is described in the last sentence of
Section 7.6(b) has been entered into.
8.2 Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) There shall not have occurred and be continuing, a
Material Adverse Effect;
(b) The Seller shall have performed and complied with the
covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and
the representations and warranties of the Seller set forth in this
Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing
Date, and the Buyer shall have received a certificate to that effect
signed by an authorized officer of the Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of the Seller, dated the Closing Date, to the
effect that to the best of such officer's knowledge, after reasonable
inquiry and investigation, the conditions set forth in Sections 8.2(a)
and (b) have been satisfied;
(d) The "Closing" as defined in the Bowline Point
Generating Station Sales Agreement between the Seller, Consolidated
Edison Company of New York, Inc. and the Buyer, dated as of the date
hereof, shall have occurred or shall occur concurrently with the
Closing hereunder;
(e) The Buyer shall have received an opinion from Skadden,
Arps, Slate, Meagher & Flom LLP, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that:
(1) the Seller is a corporation organized, existing
and in good standing under the laws of the State of New York and
has the corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby; and the execution
and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and
thereby have been duly authorized by requisite corporate action
taken on the part of the Seller.
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by the Seller and (assuming that the
Buyer Required Regulatory Approvals are obtained) are valid and
binding obligations of the Seller, enforceable against the Seller
in accordance with their terms, except that such enforcement
thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally, and (B) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity);
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Seller will not (A)
constitute a violation of the Certificate of Incorporation or By-
Laws of the Seller or (B) to counsel's knowledge constitute a
violation or default under those agreements or instruments set
forth on a schedule to this opinion;
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any federal
or New York governmental authority is necessary for the
consummation by the Seller of the Closing other than (i) the
Seller Required Regulatory Approvals which are addressed below,
(ii) declarations, filings or registrations with, or notices to,
or authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, individually or in the
aggregate have a Material Adverse Effect or prevent Seller from
performing its obligations hereunder; and
(5) the Bill of Sale, the Instrument of Assumption and
the other agreements described in Section 4.3 are in proper form
to transfer to Buyer such title to the Purchase Assets as was
held by Seller.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by the Seller and appropriate
officers and directors of the Seller and by public officials.
(f) The Buyer shall have received an opinion from Riker,
Danzig, Scherer, Hyland & Perretti, LLP (New Jersey Counsel), Nixon,
Hargrave, Devans & Doyle, LLP (New York Counsel) and Morgan, Lewis &
Bockius, LLP (Pennsylvania Counsel), or other local regulatory counsel
for O&R reasonably acceptable by Buyer, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that no declaration, filing or
registration with, or notice to, or authorization, consent or approval
of any federal governmental authority or any governmental authority in
the States of New York, New Jersey and Pennsylvania is necessary for
the consummation by the Seller of the Closing other than (i) the
Seller Required Regulatory Approvals, which have been obtained and are
in full force and effect with such terms and conditions as were
imposed by the applicable governmental authorities, (ii) declarations,
filings or registrations with, or notices to, or authorizations,
consents or approvals relating to Permits and Environmental Permits
and (iii) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made,
would not, individually or in the aggregate have a Material Adverse
Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer and
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by the Seller and appropriate
officers and directors of the Seller and by public officials.
(g) Buyer shall have received the Title Commitment showing
the Real Property to be insured as subject only to Permitted
Encumbrances, and the effective date of the Title Commitment shall
have been updated to the Closing Date and marked to show the
satisfaction of all conditions to the issuance of the title policy
other than conditions within the control of the Buyer; and
(h) Buyer shall have obtained a certificate of the
Secretary of Seller identifying by name and title and bearing the
signature of the officer of Seller authorized to execute and deliver
this Agreement and the other agreements and instruments contemplated
hereby.
8.3 Conditions to Obligations of Seller. The obligation of the
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed its covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date;
(b) The representations and warranties of the Buyer set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made at and as of
the Closing Date;
(c) The Seller shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied; and
(d) The Seller shall have received an opinion from Troutman
Sanders LLP, counsel for the Buyer, dated the Closing Date and
satisfactory in form and substance to the Seller and its counsel,
substantially to the effect that:
(1) The Buyer is a limited liability company
organized, existing and in good standing under the laws of the
State of Delaware and has the requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements
and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by the Buyer and (assuming that the
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except (A) that such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought;
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer will not
constitute a violation of the Certificate of Formation or Limited
Liability Company Agreement (or other similar governing
documents), as currently in effect, of the Buyer; and
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Buyer of the Closing other than (i) the Buyer Required Regulatory
Approvals, all of which have been obtained and are in full force
and effect with such terms and conditions as shall have been
imposed by any applicable governmental authority, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have
a Material Adverse Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the federal laws of the United
States and the State of New York, such counsel may rely upon opinions
of counsel admitted to practices in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall be delivered
together with the opinion of such counsel. Such opinion may expressly
rely as to matters of facts upon certificates furnished by appropriate
Members and Managers of the Buyer and its subsidiaries and by public
officials.
8.4 Extension of Closing Date. If the approval by the FERC of
the establishment of the ISO (the "ISO Approval") shall not have been
obtained on or prior to the Condition Fulfillment Date, the parties agree
to defer the Closing Date until the date (the "Deferred Closing Date")
which is the earlier of (a) the last day in the month in which the ISO
Approval is deemed final under applicable law, provided that if there are
less than five (5) Business Days in the month in which the ISO Approval is
deemed final, then the last day in the month which follows the month in
which the ISO Approval is deemed final, or (b) August 31, 1999; provided,
however, that all conditions set forth in Section 8.2(a) and all conditions
set forth in Section 8.2(b) regarding the representations and warranties of
Seller shall be deemed to be fulfilled on the Deferred Closing Date unless
the nonfulfillment of such conditions primarily results from the acts or
omissions of Seller or from the occurrence of facts or circumstances that
primarily relate to the Seller's ownership and/or operation, or the
physical condition, of the Purchased Assets. For purposes of this
Agreement, the "Condition Fulfillment Date" shall mean the date on which
all conditions set forth in Sections 8.1 and 8.2 shall have been fulfilled
but not earlier than the later of (i) the date on which all conditions set
forth in Section 8.3 have been fulfilled or waived and (ii) April 30, 1999.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. (a) The Seller will indemnify, defend and
hold harmless the Buyer, Buyer's affiliates, and their respective Members,
Managers, employees and agents (each. a "Buyer's Indemnitee") from and
against any and all causes of action, claims, demands or suits (by any
Person), losses, liabilities, damages (excluding consequential and special
damages), obligations, payments, costs, Taxes and expenses (including,
without limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not covered by
insurance, (collectively, "Indemnifiable Losses"), asserted against or
suffered by the Buyer Indemnitee relating to, resulting from or arising out
of (i) any breach by the Seller of any covenant or agreement of the Seller
contained in this Agreement, (ii) the Excluded Liabilities, (iii) the
Excluded Assets, (iv) any breach of any representation in Sections 5.1, 5.2
and 5.3 hereof, (v) Seller's non-compliance with any bulk sales or transfer
laws of any jurisdiction in connection with the transactions contemplated
by this Agreement, or (vi) the gross negligence or willful misconduct of
Seller, or its affiliates or their best respective contractors while on
Buyer's property (including, without limitation, any easement provided the
Seller with respect to such property) after the Closing to the extent such
Indemnifiable Loss is not caused by the negligence or willful misconduct of
any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless the
Seller, Seller's Affiliates, and their respective directors, officers,
employees and agents (each, a "Seller Indemnitee") from and against any and
all Indemnifiable Losses asserted against or suffered by the Seller
relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement,
(ii) the Assumed Liabilities, (iii) the operation of the Purchased Assets
after the Closing Date, (iv) any breach of any representation in Article
VI, or (v) the gross negligence or willful misconduct of Buyer, its
affiliates or their respective contractors while on Seller's property after
the Closing, to the extent such Indemnifiable Loss is not caused by the
negligence or willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) The Seller and the Buyer shall have indemnification
obligations with respect to Indemnifiable Losses asserted against or
suffered by the Seller or the Buyer, as the case may be, to the extent that
the aggregate of all such Indemnifiable Losses exceed the Indemnification
Floor. It is agreed and understood that neither the Seller nor the Buyer,
as the case may be, shall have any liability at any time for Indemnifiable
Losses asserted against or suffered by the other party until the aggregate
amount of Indemnifiable Losses asserted or suffered by such other party
under this Section 9.1 shall exceed the Indemnification Floor, and then
only to the extent that the aggregate amount of Indemnifiable Losses
exceeds the Indemnification Floor. The term "Indemnification Floor" shall
mean an amount equal to $200,000.
(g) The rights and remedies of the Seller and the Buyer under
this Article IX are exclusive and in lieu of any and all other rights and
remedies which the Seller and the Buyer may have under this Agreement for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement, or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b). Rights and
remedies under the Ancillary Agreements are as set forth therein.
9.2 Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (i) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (ii) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of the Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that
such Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 9.2(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty
(20) calendar days (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed
to take such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable expenses thereof.
Without the prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any settlement of (i) any Third Party Claim with
respect to Income Taxes or (ii) any other Third Party Claim which would
lead to liability or create any financial or other obligation on the part
of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third Party
claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party will give written
notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer (other than with respect to Income Taxes) within
ten (10) calendar days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim and, in such event,
the maximum liability of the Indemnifying Party as to such Third Party
Claim will be the amount of such settlement offer, plus reasonable costs
and expenses paid or incurred by the Indemnitee up to the date of such
notice. Notwithstanding the foregoing, the Indemnitee shall have the right
to pay, compromise, or settle any Third Party Claim (other than with
respect to Income Taxes) at any time, provided that in such event the
Indemnitee shall waive any right to indemnity hereunder unless the
Indemnitee shall have first sought the consent of the Indemnifying Party in
writing to such payment, settlement or compromise and such consent was
unreasonably withheld or delayed, in which event no claim for indemnity
therefor hereunder shall be waived.
(d) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) days)
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the
Indemnifying Party will be deemed to have accepted such Direct Claim. If
the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination. (a) This Agreement may be terminated at any
time prior to Closing Date, by mutual written consent of the Buyer and the
Seller.
(b) This Agreement may be terminated by the Seller or Buyer
if (i) the Closing shall not have been consummated on or before
September 30, 1999 (the "Termination Date"); provided that the right
to terminate this Agreement under this Section 10.1(b) shall not be
available to Seller or Buyer if its failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Closing Date to occur on or before such date; and
provided, further, that if on September 30, 1999 the conditions to the
Closing set forth in Section 8.1(c) shall not have been fulfilled but
all other conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then the Termination Date shall be the day
which is eighteen (18) months from the date of this Agreement.
(c) This Agreement may be terminated by either the Seller
or the Buyer if (i) any governmental or regulatory body, the consent
of which is a condition to the obligations of the Seller and the Buyer
to consummate the transactions contemplated hereby, shall have
determined not to grant its consent or shall condition such consent
upon any material change to the terms of this Agreement or the
Ancillary Agreements or upon any other condition that materially and
adversely affects the value of the transactions contemplated herein or
therein for either party, and all appeals of such determination shall
have been taken and have been unsuccessful, (ii) any court of
competent jurisdiction in the United States or any State shall have
issued an order, judgment or decree permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated hereby or the
Ancillary Agreements and such order, judgment or decree shall have
become final and nonappealable, or (iii) any statute, rule or
regulation shall have been enacted or interpreted by any State or
Federal government or governmental agency in the United States which
prohibits the transactions contemplated herein or in the Ancillary
Agreements.
(d) This Agreement may be terminated by the Buyer, if there
has been a material violation or breach by the Seller of any
agreement, representation or warranty contained in this Agreement
which (i) has rendered the satisfaction of any condition to the
obligations of the Buyer impossible and such violation or breach has
not been waived by the Buyer or cured by Seller within fifteen (15)
days after receipt by Buyer of notice specifying same or (ii) causes a
Material Adverse Effect, of which Buyer has notified Seller, and which
Seller has not promptly exercised commercially reasonable efforts to
cure but in no event later than twenty (20) days following such
notification by Buyer.
(e) This Agreement may be terminated by the Seller, if
there has been a material violation or breach by the Buyer of any
agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the
obligations of the Seller impossible and such violation or breach has
not been waived by the Seller or cured by Seller within fifteen (15)
days after receipt by Buyer of notice specifying same.
(f) This Agreement may be terminated by either the Seller
or the Buyer in accordance with the provisions of Section 7.11(b) or
(c).
10.2 Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein, such termination shall be without any further liability of
either party or parties except as follows:
(a) in the event of termination of this Agreement by Seller
pursuant to Section 10.1(e), Seller shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Seller; and
(c) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written
agreement of the Seller and the Buyer.
11.2 Confidentiality. (a) All information regarding a party
(the "Disclosing Party") that is furnished directly or indirectly to the
other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two years (2) from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.4 No Survival. Subject to the provisions of Article X, each
and every representation, warranty and covenant contained in this Agreement
(other than (a) the covenants contained in Sections 3.2, 3.3, 3.4, 7.2(b),
7.2(c), 7.2(d), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10, 7.12, 7.14, 7.15, 7.16,
7.17, 9.1 and 9.2 and in Article XI (which covenants shall survive in
accordance with their terms), (b) the representations and warranties
contained in Sections 5.1, 5.2, 5.3, 6.1, 6.2 and 6.3 (which
representations and warranties shall survive for twelve (12) months from
the Closing) and (c) the representation and warranty in Section 5.21 (which
representation and warranty shall survive for the applicable statute of
limitations) shall expire with, and be terminated and extinguished by the
consummation of the sale of the Purchased Assets and the transfer of the
Assumed Liabilities pursuant to this Agreement and such representations,
warranties and covenants shall not survive the Closing Date; and none of
the Seller, the Buyer or any officer, director, trustee or Affiliate of
either of them shall be under any liability whatsoever with respect to any
such representation, warranty or covenant.
11.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt on a Business
Day if during the normal business hours of the recipient, or if not, on the
next Business Day, if delivered personally or by facsimile transmission,
telexed or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice:
(a) If to the Seller, to:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Sheldon S. Adler, Esq.
(b) if to the Buyer, to:
Southern Energy Lovett, L.L.C.
c/o Southern Energy, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Randy Harrison, Vice-President
with copies to:
Troutman Sanders LLP
Nationsbank Plaza
Suite 5200
Atlanta, GA 30308
Attention: Robert C. Marshall, Esq.
and
Southern Company Services
270 Peachtree Street
Bin 918
Atlanta, Georgia 30303
Attention: Vice President and Associate
General Counsel
11.6 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder. The Buyer acknowledges that O&R has entered into an
Agreement and Plan of Merger whereby O&R will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Seller's receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Assets, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided, however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Seller agrees, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer
pledge or other disposition of rights and interests hereunder so long as
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Seller,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8 Specific Performance. Sellers and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement.
11.11 Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement, including the Exhibits and
Schedules referred to herein or therein, and the Guaranty given to Seller
by Southern Energy, Inc. embody the entire agreement and understanding of
the parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein or therein. It is expressly acknowledged and agreed
that there are no restrictions, promises, representations, warranties,
covenants or undertakings of Seller contained in any material made
available to the Buyer pursuant to the terms of the Confidentiality
Agreement (including the Information Memorandum, dated May 1998, previously
made available to the Buyer by the Seller and DLJ). This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions other than the Confidentiality Agreement.
11.12 Bulk Sales or Transfer Laws. The Buyer acknowledges
that the Seller will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by the
Seller with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. Louis Peoples
_____________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive
Officer
SOUTHERN ENERGY LOVETT, L.L.C.
By: /s/ Randy Harrison
__________________________
Name: Randy Harrison
Title: Vice President
Exhibit 10.60
GAS TURBINE AND HYDROELECTRIC GENERATING
STATIONS SALES AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY NY-GEN, L.L.C.
November 24, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE
2.1. The Sale . . . . . . . . . . . . . . . . . . . . . 25
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . 25
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . 26
2.4. Excluded Liabilities . . . . . . . . . . . . . . . 31
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price . . . . . . . . . . . . . . . . . . 35
3.2. Purchase Price Adjustment . . . . . . . . . . . . . 36
3.3. Allocation of Purchase Price . . . . . . . . . . . 38
3.4. Proration . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing . . . . . . . . . . . . . 40
4.2. Payment of Purchase Price . . . . . . . . . . . . . 41
4.3. Deliveries by Seller . . . . . . . . . . . . . . . 41
4.4. Deliveries by Buyer . . . . . . . . . . . . . . . . 43
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1. Organization; Qualification . . . . . . . . . . . . 45
5.2. Authority Relative to this Agreement . . . . . . . 46
5.3. Consents and Approvals; No Violation . . . . . . . 46
5.4. Reports . . . . . . . . . . . . . . . . . . . . . . 48
5.5. Financial Statements . . . . . . . . . . . . . . . 49
5.6. Undisclosed Liabilities . . . . . . . . . . . . . . 50
5.7. Absence of Certain Changes or Events . . . . . . . 50
5.8. Title . . . . . . . . . . . . . . . . . . . . . . . 51
5.9. Leasehold Interests . . . . . . . . . . . . . . . . 52
5.10. Improvements . . . . . . . . . . . . . . . . . 52
5.11. Insurance . . . . . . . . . . . . . . . . . . 53
5.12. Environmental Matters . . . . . . . . . . . . 53
5.13. Labor Matters . . . . . . . . . . . . . . . . . . 55
5.14. ERISA . . . . . . . . . . . . . . . . . . . . . . 56
5.15. Real Property Encumbrances . . . . . . . . . . . . 58
5.16. Condemnation . . . . . . . . . . . . . . . . . . . 58
5.17. Certain Contracts and Arrangements . . . . . . . . 58
5.18. Legal Proceedings, etc. . . . . . . . . . . . . . 60
5.19. Permits . . . . . . . . . . . . . . . . . . . . . 60
5.20. Regulation as a Utility . . . . . . . . . . . . . 61
5.21. Taxes . . . . . . . . . . . . . . . . . . . . . . 61
5.22. Intellectual Property . . . . . . . . . . . . . . 62
5.23. Year 2000 Readiness . . . . . . . . . . . . . . . 62
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization . . . . . . . . . . . . . . . . . . . 63
6.2. Authority Relative to this Agreement . . . . . . . 63
6.3. Consents and Approvals; No Violation . . . . . . . 64
6.4. Operating Easements . . . . . . . . . . . . . . . . 65
6.5. Regulation as a Utility . . . . . . . . . . . . . . 65
6.6. Availability of Funds . . . . . . . . . . . . . . . 65
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets 66
7.2. Access to Information . . . . . . . . . . . . . . . 69
7.3. Expenses . . . . . . . . . . . . . . . . . . . . . 72
7.4. Further Assurances . . . . . . . . . . . . . . . . 72
7.5. Public Statements . . . . . . . . . . . . . . . . . 74
7.6. Consents and Approvals . . . . . . . . . . . . . . 74
7.7. Fees and Commissions . . . . . . . . . . . . . . . 77
7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . 78
7.9. Supplements to Schedules . . . . . . . . . . . . . 80
7.10. Employees . . . . . . . . . . . . . . . . . . 80
7.11. Risk of Loss . . . . . . . . . . . . . . . . . 85
7.12. Real Estate Matters . . . . . . . . . . . . . 86
7.16. Environmental Remediation . . . . . . . . . . 90
7.17. Buyout of Leases . . . . . . . . . . . . . . . 92
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. . . . . . . . . . 93
8.2. Conditions to Obligations of Buyer . . . . . . . . 96
8.3. Conditions to Obligations of Seller . . . . . . . . 101
8.4. Extension of Closing Date. . . . . . . . . . . . . 104
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification . . . . . . . . . . . . . . . . . . 105
9.2. Defense of Claims . . . . . . . . . . . . . . . . 108
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination . . . . . . . . . . . . . . . . . 113
10.2. Procedure and Effect of Termination . . . . . 115
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification . . . . . . . . . 116
11.2. Confidentiality . . . . . . . . . . . . . . . 117
11.3. Waiver of Compliance; Consents . . . . . . . . 119
11.4. No Survival. . . . . . . . . . . . . . . . . 119
11.5. Notices . . . . . . . . . . . . . . . . . . . 120
11.6. Assignment . . . . . . . . . . . . . . . . . . 121
11.7. Governing Law . . . . . . . . . . . . . . . . 123
11.8. Specific Performance . . . . . . . . . . . . . 123
11.9. Counterparts . . . . . . . . . . . . . . . . . 124
11.10. Interpretation . . . . . . . . . . . . . . . . 124
11.11. Entire Agreement . . . . . . . . . . . . . . . 124
11.12. Bulk Sales or Transfer Laws . . . . . . . . . 125
GAS TURBINE AND HYDROELECTRIC GENERATING
STATIONS SALES AGREEMENT
GAS TURBINE AND HYDROELECTRIC GENERATING STATIONS SALES
AGREEMENT, dated as of November 24, 1998, between Orange and Rockland
Utilities, Inc., a New York corporation ("Seller" or "O&R"), and Southern
Energy NY-Gen, L.L.C., a Delaware limited liability company ("Buyer").
WHEREAS, Seller owns and operates the Gas Turbines (as defined
herein) and the Hydroelectric Assets (as defined herein) (collectively, the
"Purchased Assets"); and
WHEREAS, the Buyer desires to purchase, and Seller desires to
sell, the Purchased Assets upon the terms and conditions hereinafter set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this Gas Turbine and Hydroelectric
Generating Stations Sales Agreement together with the Schedules and
Exhibits hereto.
(3) "Ancillary Agreements" means the Operating Easement,
the Seller's Easements, the Load Pocket Agreement, the Continuing
Site/Interconnection Agreement and the Transition Agreement.
(4) "Bill of Sale" means the Bill of Sale to be delivered
at the Closing with respect to the Purchased Assets which constitute
personal property and which are to be transferred at the Closing,
substantially in the form of Exhibit A hereto.
(5) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.
(6) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other
authorized representatives.
(7) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(8) "Code" means the Internal Revenue Code of 1986, as
amended.
(9) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between Seller and Southern Energy,
Inc.
(10) "Continuing Site/Interconnection Agreement" means the
Continuing Site/Interconnection Agreement, dated as of the date of
this Agreement, between Seller and the Buyer.
(11) "Emission Allowances" means the nitrogen oxide
allowances to be allocated by the New York State Department of
Environmental Conservation to the Gas Turbines, as set forth in
Schedule 1.1(a)(11).
(12) "Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements,
activity and use limitations, conservation, easements, deed
restrictions, encumbrances and charges of any kind.
(13) "Environmental Laws" means all Federal, state and
local laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution
or protection of the environment, natural resources or human health
and safety, including, without limitation, laws relating to Releases
or threatened Releases of Hazardous Substances (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, transport
or handling of Hazardous Substances.
(14) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(15) "Estimated Inventory Adjustment Amount" means the value
of the JP4 fuel inventory used at or in connection with the Gas
Turbines, as published in the Journal of Commerce, on the date ten
(10) days before the Closing Date, or the most recently published date
prior to such date (ten days before the Closing) which valuation shall
be provided to the Buyer by Seller no later than five (5) days before
the Closing Date.
(16) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(17) "Federal Power Act" means the Federal Power Act of
1935.
(18) "FERC" means the Federal Energy Regulatory Commission
or any successor thereto.
(19) "Gas Turbines" means the Hillburn Gas Turbine and the
Shoemaker Gas Turbine.
(20) "Good Utility Practices" means any of the practices,
methods and acts engaged in or approved by a significant portion of
the electric utility industry with respect to similar facilities
during the relevant time period which in each case, in the exercise of
reasonable judgment in light of the facts known or that should have
been known at the time the decision was made, could have been expected
to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, law, regulation,
environmental protection, and expedition. Good Utility Practices are
not intended to be limited to the optimum practices, methods or acts
to the exclusion of all others, but rather to be acceptable practices,
methods or acts generally accepted in such industry.
(21) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in
any form that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric
fluid which may contain levels of polychlorinated biphenyls; (b) any
chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (c) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any applicable Environmental Law.
(22) "Hillburn Gas Turbine" means the gas turbine generating
station which includes the real and personal property, tangible or
intangible, constituting and used principally for generation purposes
at or otherwise for the operation of the Hillburn Gas Turbine
Generating Station located in the Village of Hillburn, Town of Ramapo,
Rockland County, New York, including, but not limited to, the
following assets:
(a) all of the Seller's right, title and interest in,
to and under the Real Property (including all structures,
buildings, facilities and other improvements thereon and all
appurtenances thereto) as further described on Schedule 5.8 as
associated with the Hillburn Gas Turbine Generating Station;
(b) all of the Seller's right, title and interest in,
to and under the Leases described on Schedule 5.9(a) as
associated with the Hillburn Gas Turbine Generating Station;
(c) all inventories of fuels, supplies, spare parts
and materials located at the Hillburn Gas Turbine Generating
Station on the Closing Date;
(d) the machinery, equipment, furniture and other
personal property owned by Seller and located at the Hillburn Gas
Turbine Generating Station on the Closing Date, including,
without limitation, the items of personal property included on
Schedule 1.1(a)(22);
(e) the turbines currently leased by Seller and
located at the Hillburn Gas Turbine Generating Station (the
contract relating to this lease is listed on Schedule 5.17(a));
(f) the 69 kv transmission connections, described as
being sold to the Buyer in the separation document summary in
Exhibit C, between the Hillburn Gas Turbine Generating Station
and Seller's transmission system;
(g) all contracts, agreements and personal property
leases principally relating to the Hillburn Gas Turbine
Generating Station as further listed on Schedules 5.17(a) and
7.10(a), respectively, associated with Hillburn Gas Turbine
Generating Station;
(h) the Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Hillburn Gas Turbine Generating Station;
(i) the Emission Allowances relating to the Hillburn
Gas Turbine Generating Station;
(j) all books, operating records, reports engineering
or design plans, specifications, drawings, procedures, softwares
or tools used to process and report environmental data safety and
maintenance manuals and similar items of Seller relating
specifically to the aforementioned assets;
(k) copies of filings made with regulatory agencies,
as updated, relating to Seller's Year 2000 programs as such
filings apply to the Hillburn Gas Turbine Generating Station;
(l) all unexpired, transferable warranties and
guarantees from third parties with respect to the Hillburn Gas
Turbine Generating Station, as of the Closing Date;
(m) the Intellectual Property relating to the Hillburn
Gas Turbine Generating Station (including Seller's goodwill
therein and the rights of Seller in and to the name of Hillburn
Gas Turbine) and all rights, privileges, claims, causes of
action, indemnification rights and options pertaining solely to
the Hillburn Gas Turbine or the Assumed Liabilities, relating to
the Hillburn Gas Turbine, including, without limitation, those
items listed on Schedule 1.1(a)(22)(m);
(n) all assets acquired by Seller pursuant to
Section 7.4; and
(o) $200,000 in cash.
(23) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(24) "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(25) "Hydroelectric Assets" means the Mongaup Hydroelectric
Station (Units 1, 2, 3 and 4) ("Mongaup"), the Swinging Bridge
Hydroelectric Station (Units 1 and 2) ("Swinging Bridge"), the Rio
Hydroelectric Station (Units 1 and 2) ("Rio") and an interest (the
assignment of which interest is subject to the approval of New York
City pursuant to Article XIII of an agreement between The City of New
York and The Rockland Light and Power Company, a predecessor company
to the Seller, dated February 2, 1951) in the Grahamsville
Hydroelectric Station ("Grahamsville", and with Mongaup, Swinging
Bridge and Rio, the "Hydroelectric Generating Stations") including
the real and personal property, tangible or intangible, owned by the
Seller and located at and used principally for generation purposes in
connection with such stations, including, but not limited to, the
following assets:
(a) all of the Seller's right, title and interest in,
to and under the Real Property (including all structures,
buildings, facilities and other improvements thereon and all
appurtenances thereto) described on Schedule 5.8;
(b) the machinery, equipment, furniture and other
personal property owned by the Seller and located in or on the
Hydroelectric Generating Stations on the Closing Date, including,
without limitation, the items of personal property listed or
referred to in Schedule 1.1(a)(25);
(c) all inventories of fuels, supplies, spare parts
and materials relating to the Hydroelectric Generating Stations
and located at, or in transit to, the Hydroelectric Generating
Stations on the Closing Date;
(d) the 69 kv transmission connections, described as
being sold to the Buyer in the separation document summary in
Exhibit C between the Hydroelectric Generating Stations and the
Seller's transmission system.
(e) all contracts, agreements and personal property
leases principally relating to the Hydroelectric Generating
Stations, as further listed on Schedules 5.17(a) and 7.10(a),
respectively, as being associated with the Hydroelectric
Generating Stations;
(f) all Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Hydroelectric Generating Stations;
(g) all books, operating records, reports, engineering
or design plans, specifications, drawings, procedures, software
or tools used to process and report environmental data, safety
and maintenance manuals and similar items of the Seller relating
specifically to the aforementioned assets.
(h) all of the Seller's right, title and interest in,
to and under the Leases described on Schedule 5.9(a) as
associated with the Hydroelectric Assets;
(i) copies of all filings made with regulatory
agencies, as updated, relating to Seller's Year 2000 programs as
such filings apply to the Hydroelectric Generating Station;
(j) all unexpired, transferable warranties and
guarantees from third parties with respect to the Hydroelectric
Generating Station, as of the Closing Date;
(k) the Intellectual Property relating to the
Hydroelectric Generating Station (including Seller's goodwill
therein and the rights of Seller in and to the name of the
Hydroelectric Generating Stations) and all rights, privileges,
claims, causes of action, indemnification rights and options
pertaining solely to the Hydroelectric Assets or the Assumed
Liabilities relating to the Hydroelectric Assets, including,
without limitation, those items as listed on Schedule
1.1(a)(25)(k);
(l) all assets acquired by Seller pursuant to Section
7.4; and
(m) $200,000 in cash.
(26) "Income Tax" means any tax, charge, fee, levy, penalty,
or other assessment imposed by any U.S. federal, state, local or
foreign taxing authority (a) based upon, measured by or calculated
with respect to net income, profits or receipts (including, without
limitation, capital gains taxes and alternative minimum taxes but
excluding sales, transfer and similar taxes) or (b) based upon,
measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the
bases on which such tax may be based, measured by or calculated with
respect to, is described in clause (a), in each case with any
interest, penalties, or additions attributable thereto.
(27) "Income Tax Return" means any return, report,
information return or other document (including any related or
supporting information) supplied or required to be supplied to any
authority with respect to Income Taxes.
(28) "Independent Accounting Firm" means Arthur Andersen LLP
or such other independent accounting firm of national reputation
mutually appointed by Seller and the Buyer.
(29) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit B hereto.
(30) "Intellectual Property" means all patents and patent
rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, copyrights and copyright
rights, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights other than the
names, trademarks, service marks or logos listed in Section 2.2(b)
hereof.
(31) "Internal Revenue Service" means the United States
Internal Revenue Service or any successor thereto.
(32) "ISO" means the New York Independent System Operator,
or its successor.
(33) "Load Pocket Agreement" means the Load Pocket Call
Option Agreement, dated as of the date of this Agreement, between the
Buyer and Seller.
(34) "Material Adverse Effect" means any change in or effect
on the Purchased Assets after the date of this Agreement that is,
individually or in the aggregate, materially adverse to the condition
(financial or physical) of (as compared to the condition on the date
of this Agreement), or the ability to own or operate (as compared to
the ownership and operation thereof prior to the date of this
Agreement), any material part of the Purchased Assets, other than
(i) any change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for electric
power, (ii) any change or effect resulting from changes in the
international, national, regional or local markets for any fuel used
at the Purchased Assets, (iii) any change or effect resulting from
changes in the North American, national, regional or local electric
transmission systems, (iv) any change or effect resulting from any
regulation, rule or order adopted or proposed by or with respect to
the ISO and its responsibility for, authority over and operation of
the wholesale and retail electric energy, capacity and ancillary
services electric power markets and (v) any materially adverse change
in or effect on the Purchased Assets which is cured (including by the
payment of money) by Seller before the Termination Date.
(35) "NJBPU" means the New Jersey Board of Public Utilities
or any successor thereto.
(36) "NYPSC" means the New York Public Service Commission or
any successor thereto.
(37) "Operating Easement" means the operating easement
providing the right to continue operating and maintaining certain
distribution facilities at the substations, which will be prepared as
described in the Continuing Site/Interconnection Agreement.
(38) "Other Sales Agreements" means the Bowline Point
Generating Station Sales Agreement between the Seller, Consolidated
Edison Company of New York, Inc. and Southern Energy Bowline, L.L.C.;
the Bowline Adjacent Property Sales Agreement between the Seller and
Southern Energy Bowline, L.L.C.; and the Lovett Generating Station
Sales Agreement between the Seller and Southern Energy Lovett, L.L.C.,
each dated as of the date of this Agreement.
(39) "PAPUC" means the Pennsylvania Public Utility
Commission or any successor thereto.
(40) "Permitted Encumbrances" means (i) those exceptions to
title to the Purchased Assets contained in the documents listed on
Schedules 5.8, 5.9(a), 5.9(b) and 5.15; (ii) all exceptions,
restrictions, easements, covenants, charges, rights of way and
monetary and non-monetary encumbrances of record or that are set forth
in an applicable FERC project license, except for such encumbrances
which secure indebtedness; (iii) the Operating Easements; (iv) any
state of facts that a current survey of the Purchased Assets would
disclose; (vi) mortgages, liens, pledges, charges, encumbrances and
restrictions which are not in excess of $50,000 incurred in connection
with the Seller's purchase of properties and assets to be conveyed to
Buyer as part of the Purchased Assets after the date of this Agreement
securing all or a portion of the purchase price therefor incurred in
the ordinary course of business; (vii) statutory liens for current
Taxes, assessments or other governmental charges not yet due or
delinquent or the validity of which is being contested in good faith
by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles, provided that the aggregate amount being so contested does
not exceed $50,000; (viii) mechanics', carriers', workers', repairers'
and other similar liens arising or incurred in the ordinary course of
business relating to Seller's obligations which are not yet due and
payable or the validity of which are being contested in good faith by
appropriate proceedings, provided that the aggregate amount of such
liens does not exceed $500,000; (ix) zoning, entitlement, conservation
restrictions and other land use and environmental regulations by
governmental authorities, provided that the foregoing do not
materially interfere with the present use of the Purchased Assets; and
(x) such other liens, imperfections in or failure of title, charges,
easements, restrictions and encumbrances which do not materially
detract from the value of or materially interfere with the present use
of the Purchased Assets and, neither secure indebtedness, nor
individually or in the aggregate have or would have a Material Adverse
Effect or which will be discharged or released prior to or
simultaneously with the Closing.
(41) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited
liability partnership, a trust, an unincorporated organization or a
governmental entity or any department or agency thereof.
(42) "Real Property" means each parcel of real property
owned in fee or by easement by Seller (or in which Seller holds an
interest), including, buildings, structures and improvements located
thereon, fixtures contained therein and appurtenances thereto and
easements and other rights relating thereto and as more fully
described on Schedule 5.8.
(43) "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, leach, dump or allow to
escape into or through the environment.
(44) "Scheduled Capital Expenditures" means those capital
expenditures listed on Schedule 1.1(a)(44).
(45) "Scheduled Maintenance Expenditures" means those
maintenance expenditures listed on Schedule 1.1(a)(45).
(46) "SEC" means the Securities and Exchange Commission, or
any successor thereto.
(47) "Securities Act" means the Securities Act of 1933, as
amended.
(48) "Seller Agreements" means those agreements listed on
Schedule 5.17(a) and the Collective Bargaining Agreements.
(49) "Separation Document" means the document, to be
negotiated in good faith by the Buyer and Seller within three (3)
months from the date of this Agreement, which will delineate the
Purchased Assets from Seller's other assets and which will be
consistent with the separation document summary attached hereto as
Exhibit C.
(50) "Shoemaker Gas Turbine" means the gas turbine
generating station which includes the personal property, tangible or
intangible, constituting or used principally for generation purposes
at, or otherwise for the operation of the Shoemaker Gas Turbine
Generating Station, located in the Towns of Wawayanda and Wallkill,
City of Middletown, Orange County, New York, including, but not
limited to, the following assets:
(a) all of the Seller's right, title and interest in,
to and under the Leases described on Schedule 5.9(a) as
associated with the Shoemaker Gas Turbine Generating Station;
(b) all inventories of fuels, supplies spare parts and
materials located at the Shoemaker Gas Turbine Generating Station
on the Closing Date;
(c) the machinery, equipment, vehicles, furniture and
other personal property owned by Seller and located at the
Shoemaker Gas Turbine Generating Station on the Closing Date,
including, without limitation, the items of personal property
included on Schedule 1.1(a)(50);
(d) the turbines currently leased by Seller and
located at the Shoemaker Gas Turbine Generating Station (the
contract relating to this lease is listed on Schedule 5.17(a));
(e) the 69 kv transmission connections, described as
being sold to the Buyer in the separation document summary in
Exhibit C, between the Shoemaker Gas Turbine Generating Station
and Seller's transmission system;
(f) all contracts, agreements and personal property
leases listed on Schedules 5.17(a) and 7.10(a), respectively, as
being associated with Shoemaker Gas Turbine Generating Station;
(g) the Environmental Permits and Permits listed on
Schedules 5.12(a)(ii) and 5.19(a), respectively, as being
associated with the Shoemaker Gas Turbine Generating Station;
(h) the Emission Allowances relating to the Shoemaker
Gas Turbine Generating Station;
(i) all books, operating records, reports, engineering
or design plans, specifications, drawings, procedures, software
or tools used to process and report environmental data, safety
and maintenance manuals and similar items of Seller relating
specifically to the aforementioned assets.
(j) copies of all filings made with regulatory
agencies as, updated, relating to Seller's Year 2000 programs as
such filings apply to the Shoemaker Gas Turbine Generating
Station;
(k) all unexpired, transferable warranties and
guarantees from third parties with respect to the Shoemaker Gas
Turbine Generating Station, as of the Closing Date;
(l) the Intellectual Property relating to the
Shoemaker Gas Turbine Generating Station (including Seller's
goodwill therein and the rights of Seller in and to the name of
Shoemaker Gas Turbine) and all rights, privileges, claims, causes
of action, indemnification rights and options pertaining solely
to the Shoemaker Gas Turbine or the Assumed Liabilities relating
to the Shoemaker Gas Turbine, including, without limitation,
those items listed on Schedule 1.1(a)(50)(l);
(m) all assets acquired by Seller pursuant to
Section 7.4; and
(n) $200,000 in cash.
(51) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(52) "Tax" means any tax, charge, fee, levy, penalty or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority, including, but not limited to, any income, gross
receipts, license, stamp, occupation, environmental, excise, property,
sales, transfer, payroll, unemployment, withholding, social security
or any other tax of any kind whatsoever, including any interest,
penalties or additions attributable thereto.
(53) "Tax Return" means any return, report, information
return declaration, claim for refund or other document (including any
schedule or other related or supporting information) supplied or
required to be supplied to any authority with respect to Taxes and
including any supplement or amendment thereof.
(54) "Transition Agreement" means the Transition Power Sales
Agreement between the Buyer, Southern Energy Bowline, L.L.C., Southern
Energy Lovett, L.L.C. and Seller, dated as of the date of this
Agreement.
(55) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
---- -------
Adjustment Statement 3.2
ALTA 7.12
Assumed Liabilities 2.3
Benefit Plans 5.14
Buyer Preamble
Buyer Indemnitee 9.1
Buyer Required Regulatory Approvals 6.3
Buyer's Easements 4.3
CEI 11.6
Closing 4.1
Closing Date 4.1
Collective Bargaining Agreements 7.10
Condition Fulfillment Date 8.4
Confidential Information 11.2
Defect of Title 7.12
Deferred Closing Date 8.4
Designated Representative 7.2
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Insurance 7.15
Environmental Permits 5.12
EPA 7.16
ERISA Affiliate 2.4
ERISA Affiliate Plans 2.4
Estimated Purchase Price 4.2
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Hourly Employees 7.10
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
Inventory Adjustment Amount 3.2
ISO Approval 8.4
Leases 5.9
Leased Assets 7.4
Management Employees 7.10
Necessary Capital Expenditures 7.1
Necessary Maintenance Expenditures 7.1
NYSDEC 7.16
PAHs 7.16
Pension Benefit Plans 5.14
Permits 5.19
Property Interests 5.8
Purchase Price 3.1
Purchased Assets Preamble
Recipient 11.2
Seller Preamble
Seller Balance Sheet 5.5
Seller Indemnitee 9.1
Seller Required Regulatory Approvals 5.3
Seller's Easements 4.3
Termination Date 10.1
Third Party Claim 9.2
Title Company 7.13
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, Seller will
sell, assign, convey, transfer and deliver to the Buyer, and the Buyer will
purchase and acquire from Seller, free and clear of all Encumbrances
(except for Permitted Encumbrances) all of Seller's right, title and
interest in, to and under the real and personal property, tangible or
intangible, owned by Seller and constituting the Purchased Assets.
2.2. Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable (except for the cash specified in Section 1.1(a) (22) (o),
1.1(a) (25) (m) and 1.1(a) (50) (n) of this Agreement);
(b) the name "Orange and Rockland Utilities, Inc.", "Orange
and Rockland", "O&R", "ORU" or any related or similar trade names,
trademarks, service marks or logos;
(c) distribution, substation and communication facilities
and related support equipment described in Schedule 2.2(c);
(d) any refund, credit, penalty payment, adjustment or
reconciliation (i) related to personal property or other Taxes
(excluding Taxes relating to real property) paid prior to the Closing
Date in respect of the Purchased Assets, whether such refund,
adjustment or reconciliation is received as a payment or as a credit
against future Taxes payable, or (ii) arising under any of Seller
Agreements and relating to a period before the Closing Date;
(e) except to the extent specifically required by law, all
personnel records relating to any employees of Seller; and
(f) the rights and assets to be described in the Separation
Document as not part of the Purchased Assets.
2.3. Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to Seller the Instrument of Assumption pursuant to which the Buyer
shall assume and agree to discharge to the maximum extent permitted by law,
all of the following liabilities and obligations of Seller, which relate to
the Purchased Assets, other than Excluded Liabilities, in accordance with
the respective terms and subject to the respective conditions thereof;
(a) all liabilities and obligations of Seller arising or
accruing after the Closing Date under (i) Seller Agreements, the
Environmental Permits, the Permits, real property leases, contracts
and other agreements disclosed and assigned to the Buyer pursuant to
this Agreement in accordance with the terms thereof, and (ii) the
leases, contracts and other agreements entered into by Seller with
respect to the Purchased Assets after the date hereof consistent with
the terms of this Agreement; except in each case, to the extent such
liabilities and obligations, but for a breach or default by Seller,
would have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such
breach or default or in any event which after the giving of notice
would constitute a default by Seller;
(b) all liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which the Buyer is liable
pursuant to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified Seller pursuant to Section 9.1;
(d) all liabilities to employees for which the Buyer is
liable pursuant to Section 7.10, including the Collective Bargaining
Agreements;
(e) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the common
law, whether such liability or obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or in
connection with (i) any violation or alleged violation of
Environmental Law, prior to the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) loss of life,
injury to persons or property or damage to natural resources (whether
or not such loss, injury or damage arose or was made manifest before
the Closing Date or arises or becomes manifest after the Closing
Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets prior to the
Closing Date, including, but not limited to, Hazardous Substances
contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets; and
(iii) the investigation and/or remediation (whether or not such
investigation or remediation commenced before the Closing Date or
commences after the Closing Date) of Hazardous Substances that are
present or have been Released prior to the Closing Date at, on, in,
under, adjacent to, discharged from, emitted from or migrating from
the Purchased Assets, including, but not limited to, Hazardous
Substances contained in building materials at the Purchased Assets or
in the soil, surface water, sediments, groundwater, landfill cells, or
in other environmental media at or adjacent to the Purchased Assets;
provided, as to all of the above, that nothing set forth in this
subsection 2.3(e) shall require the Buyer to assume any liabilities
that are expressly excluded in Section 2.4;
(f) any liability, obligation or responsibility under or
related to former, current or future Environmental Laws or the common
law, whether such liability or obligation or responsibility is known
or unknown, contingent or accrued, arising as a result of or in
connection with (i) any violation or alleged violation of
Environmental Law, on or after the Closing Date, with respect to the
ownership or operation of the Purchased Assets; (ii) compliance with
applicable Environmental Laws on or after the Closing Date with
respect to the ownership or operation of the Purchased Assets; (iii)
loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Assets on or after the
Closing Date, including, but not limited to, Hazardous Substances
contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets; (iv)
loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the off-site disposal,
storage, transportation, discharge, Release, recycling, or the
arrangement for such activities, of Hazardous Substances, on or after
the Closing Date, in connection with the ownership or operation of the
Purchased Assets; (v) the investigation and/or remediation of
Hazardous Substances that are present or have been released on or
after the Closing Date at, on, in, under, adjacent to, discharged
from, emitted from or migrating from the Purchased Assets, including,
but not limited to, Hazardous Substances contained in building
materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells or in other environmental media
at or adjacent to the Purchased Assets; and (vi) the investigation
and/or remediation of Hazardous Substances that are disposed, stored,
transported, discharged, Released, recycled, or the arrangement of
such activities, on or after the Closing Date, in connection with the
ownership or operation of the Purchased Assets, at any off-site
location; provided, that nothing set forth in this subsection shall
require the Buyer to assume any liabilities that are expressly
excluded in Section 2.4;
(g) all liabilities and obligations of Seller with respect
to the Purchased Assets under the agreements or consent orders set
forth on Schedule 5.12(c);
(h) all liabilities incurred by Seller with respect to
maintenance and capital expenditures made with respect to the
Purchased Assets by Seller which are requested by Buyer;
(i) all liabilities or obligations relating to leases for
the Purchased Assets; and
(j) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (i) above,
exclusively relating to the Purchased Assets no matter when the events
or occurrences giving rise to such liabilities or obligations took
place, the value of which liabilities and obligations together with
the liabilities and obligations relating to the "Purchased Asset" and
"Purchased Assets" as defined in the Other Sales Agreements, in the
aggregate, shall not exceed $3 million.
All of the foregoing liabilities and obligations to be
assumed by the Buyer hereunder (excluding any Excluded Liabilities)
are referred to herein as the "Assumed Liabilities." It is understood
and agreed that nothing in this Section 2.3 shall constitute a waiver
or release of any claims arising out of the contractual relationships
between Seller and the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of Seller in respect of
any Excluded Assets or other assets of Seller which are not Purchased
Assets;
(b) any liabilities or obligations with respect to Taxes
attributable to the Purchased Assets for taxable periods ending on or
before the Closing Date, except for Taxes for which the Buyer is
liable pursuant to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities
relating to the disposal, storage, transportation, discharge, Release,
recycling, or the arrangement for such activities, of Hazardous
Substances that were generated at the Purchased Assets, at any off-
site location, where the disposal, storage, transportation, discharge,
Release, recycling or the arrangement for such activities at said off-
site location occurred prior to the Closing Date, provided that for
purposes of this Section, "off-site location" does not include any
location to which Hazardous Substances disposed of, discharged from,
emitted from or Released at the Purchased Assets have migrated,
including, but not limited to, surface waters that have received waste
water discharges from the Purchased Assets;
(d) any liabilities, obligations or responsibilities
arising after the Closing Date relating to (i) the transmission lines
delineated in the Operating Easements or (ii) any Seller's operations
on, or usage of, the Operating Easements, including, without
limitation, liabilities, obligations or responsibilities arising as a
result of or in connection with (1) any violation or alleged violation
of Environmental Law and (2) loss of life, injury to persons or
property or damage to natural resources, except to the extent caused
by Buyer;
(e) any liabilities, obligations or responsibilities
arising prior to or after the Closing Date relating to the easements
provided Seller under the Operating Easement, including, without
limitation: (i) the transmission lines or other facilities of Seller
delineated in the Operating Easements or (ii) Seller's ownership
rights, operations on, or usage of, the Operating Easements,
including, without limitation, liabilities, obligations or
responsibilities arising as a result of or in connection with (1) any
violation or alleged violation of Environmental Law or Release of
Hazardous Substances and (2) loss of life, injury to persons or
property or damage to natural resources, except in the case of (1) or
(2) to the extent caused by the Buyer;
(f) any liabilities or obligations required to be accrued
by Seller in accordance with generally accepted accounting principles
and/or the FERC Uniform System of Accounts on or before the Closing
Date with respect to liabilities related to the Purchased Assets other
than any liability assumed by Buyer under Section 2.3 of this
Agreement;
(g) any liabilities or obligations with respect to
liabilities relating to the Purchased Assets relating to any personal
injury including bodily injury (including, but not limited to workers'
compensation claims), discrimination, wrongful discharge, or unfair
labor practice or similar claim or cause of action with respect to any
act or occurrence arising prior to or on the Closing Date other than
liabilities or obligations for injury to persons or loss of life
assumed by the Buyer in Sections 2.3(e) and 2.3(f);
(h) any fines or penalties imposed by a governmental agency
or authority resulting from (A) an investigation or proceeding with
respect to any act or occurrence arising prior to or on the Closing
Date or (B) illegal acts, willful misconduct or negligence of Seller
prior to or on the Closing Date;
(i) any payment obligations of Seller for goods delivered
or services rendered prior to the Closing;
(j) any liabilities or obligations imposed upon, assumed or
retained by Seller pursuant to the Continuing Site/Interconnection
Agreement or any other Ancillary Agreement;
(k) any liabilities, obligations or responsibilities
relating to any deferred compensation, pension, profit-sharing and
retirement plans, including multiemployer plans, and all welfare,
severance, stock-based, bonus and other employee benefit or fringe
benefit plans, programs and arrangements, whether written or oral,
maintained or with respect to which contributions have been in the
last five (5) years or are made by Seller and any trade or business
(whether or not incorporated) which are or have ever been under common
control, or which are or have ever been treated as a single employer,
with Seller under Section 414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate") or to which Seller and any ERISA Affiliate contributed
thereunder (the "ERISA Affiliate Plans"), including any multiemployer
plan, maintained by, contributed to, or obligated to contribute to, at
any time, by Seller or any ERISA Affiliate, including without
limitation, any liability (A) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (B) with respect to non-
compliance with the continuation requirements of COBRA; (C) with
respect to any non-compliance with ERISA, the Code, or any other
applicable laws; (D) with respect to any suit, proceeding or claim
which is brought against Seller, any ERISA Affiliate Plan, or any
fiduciary or former fiduciary of any such ERISA Affiliate Plan;
(E) relating to a multiemployer plan; or (F) for any claim or suit for
benefits accrued under an ERISA Affiliate Plan prior to Closing; and
(l) any liabilities, obligations or responsibilities
relating to the employment or termination of employment, by Seller of
any individual (including, but not limited to, any employee of Seller)
attributable to any actions or inactions by Seller prior to the
Closing Date.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Assets
shall be an amount equal to the sum of (i) $20,440,000, (ii) the Estimated
Inventory Adjustment Amount, (iii) the Inventory Adjustment Amount and (iv)
any amounts paid by Seller to acquire title to Leased Assets pursuant to
Section 7.4 (the "Purchase Price").
3.2. Purchase Price Adjustment. (a) Within sixty (60) days
after the Closing, Seller shall prepare and deliver to the Buyer a
statement (the "Adjustment Statement") which sets forth: an amount equal
to (A) the weighted average value for the twenty (20) consecutive days
prior to the Closing Date of all JP4 fuel inventory to be used at or in
connection with the Purchased Assets as determined by using the price of
fuel in the Journal of Commerce as of the Closing Date, or if no price is
available for such date, as of the most recent date such price is available
prior to the Closing Date, minus (B) the Estimated Inventory Adjustment
Amount (such difference is referred to as the "Inventory Adjustment
Amount").
The Adjustment Statement shall be prepared using the same
generally accepted accounting principles, policies and methods as Seller
has historically used in connection with the calculation of the items
reflected on the Adjustment Statement. The Buyer and Seller agree to
cooperate with Seller in connection with the preparation of the Adjustment
Statement and related information, and each shall provide to the other such
books, records and information as may be reasonably requested from time to
time.
(b) The Buyer may dispute the Inventory Adjustment Amount;
provided, however, that the Buyer shall notify Seller in writing of the
disputed amount, and the basis of such dispute, within thirty (30) days of
the Buyer's receipt of the Adjustment Statement. In the event of a dispute
with respect to the Inventory Adjustment Amount, the Buyer and Seller shall
attempt to reconcile their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties. If
the Buyer and Seller are unable to reach a resolution of such differences
within thirty (30) days of receipt of the Buyer's written notice of dispute
to Seller, the Buyer and Seller shall submit the amounts remaining in
dispute for determination and resolution to the Independent Accounting
Firm, which shall be instructed to determine and report to the parties,
within thirty (30) days after such submission, upon such remaining disputed
amounts, and such report shall be final, binding and conclusive on the
parties hereto with respect to the amounts disputed. The fees and
disbursements of the Independent Accounting Firm shall be allocated between
the Buyer and Seller so that the Buyer's share of such fees and
disbursements shall be in the same proportion that the aggregate amount of
such remaining disputed amounts so submitted by the Buyer to the
Independent Accounting Firm that is unsuccessfully disputed by the Buyer
(as finally determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed amounts so submitted by the Buyer
to the Independent Accounting Firm.
(c) If the Inventory Adjustment Amount is positive, within ten
(10) Business Days after the Buyer's receipt of the Adjustment Statement,
the Buyer shall pay Seller all undisputed portions of the Inventory
Adjustment Amount. If the Inventory Adjustment Amount is negative, within
ten (10) Business Days after the Buyer's receipt of the Adjustment
Statement, Seller shall pay the Buyer all undisputed portions of the
Inventory Adjustment Amount. If there is a dispute with respect to any
amount on the Adjustment Statement, within five (5) Business Days after the
final determination of such disputed amounts on the Adjustment Statement,
the Buyer shall pay Seller an amount equal to the disputed portion of the
Inventory Adjustment Amount as finally determined to be payable with
respect to the Adjustment Statement; provided, however, that if such amount
shall be less than zero, Seller will pay to the Buyer the amount by which
such amount is less than zero. All payments made pursuant to this Section
3.2(c) shall be paid together with interest thereon for the period
commencing on the Closing Date through the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the Closing Date,
in cash by federal or other wire transfer of immediately available funds.
3.3. Allocation of Purchase Price. The Buyer shall prepare an
allocation of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one hundred eighty (180)
days of the date of this Agreement but in no event less than forty-five
(45) days prior to the Closing and submit it to Seller. Seller may dispute
the allocation of the Purchase Price; provided, however, that Seller shall
notify the Buyer in writing of the disputed amount, and the basis of such
dispute, and follow the procedures relating to a dispute described in
Section 3.2(b) above. The Buyer and Seller agree to file Internal Revenue
Service Form 8594, and all federal, state, local and foreign Tax Returns
and Income Tax Returns, in accordance with such agreed allocation. Each of
the Buyer and Seller shall report the transactions contemplated by the
Agreement for federal Income Tax and all other Tax purposes in a manner
consistent with the allocation determined pursuant to this Section 3.3.
The Buyer and Seller agree to provide the other promptly with any other
information required to complete Form 8594. Each of the Buyer and Seller
shall notify and provide the other with reasonable assistance in the event
of an examination, audit or other proceeding regarding the agreed upon
allocation of the Purchase Price.
3.4. Proration. (a) The Buyer and Seller agree that all of the
items normally prorated, including those listed below, relating to the
business and operation of the Purchased Assets will be prorated as of the
Closing Date, with Seller liable to the extent such items relate to any
time period through the Closing Date, and the Buyer liable to the extent
such items relate to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any
other Taxes (excluding Income Taxes), assessments and other
charges, if any, on or with respect to the ownership, use or
business and operation of the Purchased Assets;
(ii) rent, Taxes (excluding Income Taxes) and other
items payable by or to Seller under any of Seller Agreements to
be assigned to and assumed by the Buyer hereunder;
(iii) any permit, license or registration fees with
respect to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either Seller or the
Buyer made within sixty (60) days of the date that the actual amounts
become available. Seller and the Buyer agree to furnish each other with
such documents and other records as may be reasonably requested in order to
confirm all adjustment and proration calculations made pursuant to this
Section 3.4.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, at 10:00 A.M. (local time) on
April 30, 1999; or at such other place or later date and time as the
parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to
Seller at the Closing an amount (the "Estimated Purchase Price") in United
States dollars, equal to the sum of (i) $20,440,000, (ii) the Estimated
Inventory Adjustment Amount for the Closing, and (iii) any amounts paid to
acquire title to Leased Assets pursuant to Section 7.4 hereof, by wire
transfer of immediately available funds or by such other means as are
agreed to by Seller and the Buyer.
4.3. Deliveries by Seller. At the Closing, Seller will deliver
the following to the Buyer:
(a) The Bill of Sale, duly executed by Seller for the
personal property included in the Purchased Assets;
(b) The executed consents to transfer the Seller
Agreements, the Environmental Permits and the Permits, to the extent
specifically required hereunder;
(c) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by the Seller;
(d) The certificates and the opinions of counsel
contemplated by Sections 8.2(c), (e), (f) and (h);
(e) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring
Seller's interest in the Property Interests to the Buyer, duly
executed and acknowledged by Seller and in recordable form
substantially in the form of Exhibit D hereto;
(f) One or more easements to the extent necessary to
evidence the right of Buyer to use the real property of Seller (the
"Buyer's Easements") that comprise part of the Excluded Assets, duly
executed and acknowledged by Seller and in recordable form, each
substantially in the form of Exhibit E hereto;
(g) The Assignment of Leases in the form attached hereto as
Exhibit F assigning to Buyer all of Seller's right, title and interest
as lessor (or lessee as the case may be) under the leases;
(h) Copies of the resolutions adopted by the board of
directors of Seller, certified by the Secretary of Seller, as having
been duly and validly adopted and as being in full force and effect,
authorizing the execution and delivery by the Seller of this
Agreement, the Bill of Sale and other closing documents described in
this Agreement to which Seller is a party, and the performance by
Seller of its obligations hereunder and thereunder;
(i) All such other instruments of assignment or conveyance
as shall, in the reasonable opinion of the Buyer and its counsel, be
necessary to transfer to the Buyer the Purchased Assets in accordance
with this Agreement and where necessary or desirable, in recordable
form;
(j) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to
the appropriate taxing authority any amount equal to ten (10) percent
of the total Amount Realized (as defined under Section 1445 of the
Code);
(k) $600,000 by wire transfer of immediately available
funds or by such other means as are agreed to by the Seller and the
Buyer; and
(l) Such other agreements, documents, instruments and
writings as are required to be delivered by Seller at or prior to the
Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
4.4. Deliveries by Buyer. At the Closing, the Buyer will deliver
the following to Seller:
(a) The Estimated Purchase Price by wire transfer of
immediately available funds or by such other means as are agreed to by
Seller and the Buyer;
(b) Each Ancillary Agreement required to be delivered under
this Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(d) The Instrument of Assumption, duly executed by the
Buyer;
(e) All such other instruments of assumption as shall, in
the reasonable opinion of Seller and its counsel, be necessary for the
Buyer to assume the Assumed Liabilities in accordance with this
Agreement;
(f) One or more easements to the extent necessary for
Seller to continue and maintain their transmission and distribution
business, in favor of the Seller (the "Seller's Easements") with
respect to Real Property conveyed to Buyer, duly executed and
acknowledged by Buyer, each substantially in the form of Exhibit E
hereto, and Buyer shall bear any transfer or similar tax incurred in
connection herewith as set forth in Section 7.8;
(g) Copies of the resolutions adopted by the Members or
Managers or similar governing body of the Buyer, certified by a Member
of the Buyer, as having been duly and validly adopted and as being in
full force and effect, authorizing the execution and delivery by the
Buyer of this Agreement and other closing documents described in this
Agreement to which the Buyer is a party, and the performance by the
Buyer of its respective obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and
writings as are required to be delivered by the Buyer at or prior to
the Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer as follows:
5.1. Organization; Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to
own, lease, and operate its properties and to carry on its business as is
now being conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each foreign
jurisdiction in which it operates the Purchased Assets and such foreign
jurisdiction requires it to be so qualified. Seller has heretofore
delivered to the Buyer complete and correct copies of its Certificate of
Incorporation and By-Laws as currently in effect.
5.2. Authority Relative to this Agreement. Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Seller and no other corporate proceedings on the part of
Seller or its shareholders are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller, and assuming that this
Agreement constitutes a valid and binding agreement of the Buyer, subject
to the receipt of Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals, constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally or general principles of equity.
5.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by Seller nor performance by
Seller of its obligations under this Agreement or the Ancillary Agreements
or the consummation of the transactions contemplated hereby or thereby will
(i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws of Seller, (ii) require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (x) where
the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not have a Material Adverse
Effect or would not prohibit or restrain the execution, delivery or
performance of this Agreement or the Ancillary Agreements, or the
consummation of the transactions contemplated hereby or thereby in any
material respect or (y) for those requirements which become applicable to
Seller as a result of the specific regulatory status of the Buyer (or any
of its affiliates) or as a result of any other facts that specifically
relate to the business or activities in which the Buyer (or any of its
affiliates) is or proposes to be engaged; (iii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which
Seller, or any of its subsidiaries, is a party or by which Seller or any of
its subsidiaries, or any of the Purchased Assets may be bound, except for
such defaults (or rights of termination, cancellation or acceleration) as
to which requisite waivers or consents have been obtained or which,
individually or in the aggregate, would not have a Material Adverse Effect;
or (iv) violate any order, writ, injunction, judgment, law, decree,
statute, rule or regulation applicable to Seller, or any of its assets,
which violation would, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) (A) notice by
Seller to, and an order by, the NYPSC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (B) notice by
Seller to, and an order by, the NJBPU approving the transactions
contemplated by this Agreement or the Ancillary Agreements and (C) notice
by Seller to, and an order by, the PAPUC approving the transactions
contemplated by this Agreement or the Ancillary Agreements, (iii) the
approval, if required, of the SEC pursuant to the Holding Company Act, and
(iv) the filings by Seller and the Buyer required by the HSR Act and the
expiration or earlier termination of all waiting periods under the HSR Act
(the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any governmental or regulatory body or authority is
necessary for the consummation by Seller of the transactions contemplated
hereby or by the Ancillary Agreements, other than such declarations,
filings, registrations, notices, authorizations consents or approvals
which, if not obtained or made, will not, in the aggregate, have a Material
Adverse Effect and other than Permits and Environmental Permits.
5.4. Reports. Since January 1, 1996, Seller pursuant to the
Securities Act, the Exchange Act, the applicable State public utility laws,
the Federal Power Act and the Holding Company Act, has filed or caused to
be filed with the SEC, the applicable state or local utility commissions or
regulatory bodies, or the FERC, as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the
business and operations of Seller as it relates to the Purchased Assets
under each of the Securities Act, the Exchange Act, the applicable State
public utility laws, the Federal Power Act and the Holding Company Act and
the respective rules and regulations thereunder, all of which complied in
all material respects with all applicable requirements of the appropriate
act and the rules and regulations thereunder in effect on the date each
such report was filed.
5.5. Financial Statements. Seller has previously furnished to
the Buyer (i) audited consolidated balance sheets of Seller as of December
31, 1997, and (ii) the related audited consolidated statements of income
and retained earnings and changes in financial position of Seller for the
fiscal year then ended, together with the respective reports thereon of
Arthur Andersen LLP. The consolidated balance sheet of Seller as of
December 31, 1997 is referred to as the "Seller Balance Sheet." Each of
the balance sheets included in the financial statements referred to in this
Section 5.5 (including the related notes thereto) presents fairly the
financial position of Seller as of their respective dates, and the other
related statements included therein (including the related notes thereto)
present fairly the results of operations and changes in financial position
for the periods then ended, all in conformity with generally accepted
accounting principles as applicable to a regulated utility applied on a
consistent basis, except as otherwise noted therein.
5.6. Undisclosed Liabilities. Except as set forth in Schedule
5.6, to the Seller's knowledge, the Seller has no liability or obligation
relating to the business or operations of the Purchased Assets, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in Seller Balance Sheet or disclosed in the notes thereto in accordance
with generally accepted accounting principles, except those which either
were incurred in the ordinary course of business, after the date of Seller
Balance Sheet, or those which in the aggregate are not material to the
Purchased Assets.
5.7. Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.7, or in the reports, schedules, registration
statements and definitive proxy statements filed by Seller with the SEC and
(ii) as otherwise contemplated by this Agreement, to the Seller's
knowledge, since the date of Seller Balance Sheet there has not been:
(a) any Material Adverse Effect; (b) any damage, destruction or casualty
loss, whether covered by insurance or not, which had a Material Adverse
Effect; (c) any entry into any agreement, commitment or transaction
(including, without limitation, any borrowing or capital financing) by
Seller, which is material to the business or operations of the Purchased
Assets, except agreements, commitments or transactions in the ordinary
course of business or as contemplated herein; or (d) any change by Seller,
with respect to the Purchased Assets, in accounting methods, principles or
practices except as required or permitted by generally accepted accounting
principles.
5.8. Title. Set forth in Schedule 5.8 is a true and complete
list of all real property which is part of or material to the business or
operations of the Purchased Assets (the "Real Property") and other real
property interests which are a part of or material to the business or
operations of the Purchased Assets (together with the Real Property, the
"Property Interests"). The Seller has leasehold or other contractual
interests in all Purchased Assets identified in subsections (b), (g), (l)
and (n) of Section 1.1(a)(22) and, as of the date of this Agreement, the
Purchased Asset identified in subsection (e) of Section 1.1(a)(22);
subsections (e), (h), (j) and (l) of Section 1.1(a)(25) and subsections
(a), (f), (k) and (m) of Section 1.1(a)(50) and, as of the date of this
Agreement, the Purchased Asset identified in subsection (d) of Section
1.1(a) (50); and subject only to Permitted Encumbrances and the Leases: (i)
good and marketable record title to the real property and the Buyer's
Easements and (ii) good and valid title to all Purchased Assets identified
in subsections (c), (d), (f), (h), (i), (j), (k) and (m) of Section
1.1(a)(22); subsections (b), (c), (d), (f), (g), (i) and (k) of Section
1.1(a)(25) and subsections (b), (c), (e), (g), (h), (i), (j) and (l) of
Section 1.1(a)(50). As of the Closing Date, the Seller will have good and
valid title to the Purchased Assets identified in subsection (e) of Section
1.1(a)(22) and subsection (d) of Section 1.1(a)(50). At Closing, Seller
will have the cash available to the amounts referred to in Sections 1.1(a)
(22) (o), 1.1(a) (25) (m) and 1.1(a) (50) (n) of this Agreement.
5.9. Leasehold Interests. Schedule 5.9(a) lists, all Real
Property leases or subleases (the "Leases") relating to the Purchased
Assets under which Seller is a lessee, sublessee, lessor or sublessor and
which are to be assigned to, and assumed by, the Buyer on the Closing Date.
Except as set forth in Schedule 5.9(b), the Leases are valid, binding and
enforceable in accordance with their terms, and are in full force and
effect; there are no existing material defaults by Seller thereunder; and
no event has occurred which (whether with or without notice, lapse of time
or both) would constitute a material default thereunder. Seller has a
valid and subsisting leasehold estate in and the right to quiet enjoyment
of the Leases under which Seller is a lessee or sublessee for the full term
of such Leases which leasehold interests are unencumbered other than by
Permitted Encumbrances, and Seller has delivered to Buyer true and complete
copies of all Leases.
5.10. Improvements. Except as set for forth in Schedule
5.10(a), Seller has not received any written notices from any governmental
authority stating or alleging that any improvements with respect to the
Purchased Assets have not been constructed in compliance with applicable
law. Except as set for forth in Schedule 5.10(b), no written notice has
been received by Seller from any governmental authority requiring or
advising as to the need for any repair, alteration, restoration or
improvement in connection with the Purchased Assets.
5.11. Insurance. Except as set forth in Schedule 5.11(a),
all material policies of fire, liability, worker's compensation and other
forms of insurance purchased or held by and insuring or relating to the
Purchased Assets are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date as of which this
representation is being made have been paid, and no notice of cancellation
or termination has been received with respect to any such policy which was
not replaced on substantially similar terms prior to the date of such
cancellation. Except as described in Schedule 5.11(b), Seller has not been
refused any insurance with respect to the Purchased Assets nor has its
coverage been limited by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last
five (5) years nor has Seller received written notice from any insurer with
respect to any Real Property or Lease of defects or inadequacies with
respect thereto or the improvements located thereon that would materially
adversely affect the insurability of same or cause the imposition of
extraordinary premiums therefor.
5.12. Environmental Matters. (a) Except as disclosed in
Schedule 5.12(a)(i), to the Seller's knowledge, Seller holds, and is in
compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for the Seller to operate
the Purchased Assets under applicable Environmental Laws, and Seller is
otherwise in compliance with applicable Environmental Laws with respect to
the Purchased Assets except for such failures to hold or comply with
required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws, which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect. Schedule
5.12(a)(ii) sets forth all Environmental Permits relating to the ownership
or operation of the Purchased Assets.
(b) Except as disclosed in Schedule 5.12(b), Seller has not
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar State law with
respect to any on-site location related to the Purchased Assets, and no
investigation and/or remediation is being conducted or is pending at the
Purchased Assets (other than investigations or remediation conducted by or
on behalf of Seller or Buyer in connection with this transaction), except
for such liability under such laws or investigations or remediation as
would not be reasonably likely to have a Material Adverse Effect.
(c) With respect to the Purchased Assets, no action, claim,
investigation or other proceeding relating to any Environmental Law is
pending or to Seller's knowledge, threatened, and the Seller has not
entered into or agreed to any consent decree or order, and is not subject
to any judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances under any Environmental Law, except such consent
decrees or orders, judgments, decrees or administrative or judicial orders,
actions, claims, investigations or proceedings that (i) would not be
reasonably likely to have a Material Adverse Effect, (ii) appear on
Schedule 5.12(c), or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of Seller, and in the possession of the Seller, which concern
Releases of Hazardous Substances at, on, in, or under the Purchased Assets
or compliance of Purchased Assets with Environmental Laws, conducted within
the last two (2) years, are listed in Schedule 5.12(d) and have been
provided to Buyer.
(e) The representations and warranties made in this Section 5.12
are Seller's exclusive representations and warranties relating to
environmental matters.
5.13. Labor Matters. Schedule 7.10(a) lists and Seller has
previously delivered to the Buyer true and correct copies of all labor
union, Collective Bargaining Agreements and other labor agreements relating
to the Purchased Assets to which Seller is a party or subject. With
respect to the Purchased Assets, except to the extent set forth in Schedule
5.13 and except for such matters as will not have a Material Adverse
Effect, to the Seller's knowledge: (a) the Seller is in compliance with
all applicable laws respecting employment and employment practices,
occupational health and safety, and wages and hours; (b) Seller has not
received written notice of any unfair labor practice complaint against it
pending before the National Labor Relations Board; (c) there is no labor
strike, slowdown or stoppage actually pending or threatened against or
affecting Seller; (d) Seller has not received notice that any
representation petition respecting its employees has been filed with the
National Labor Relations Board; (e) no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending against
Seller; and (f) Seller has not experienced any primary work stoppage since
at least December 31, 1994.
5.14. ERISA. (a) Schedule 5.14(a) lists all deferred
compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all welfare, severance, stock-based, bonus and
other employee benefit or fringe benefit plans, programs and arrangements,
whether written or oral, maintained or with respect to which contributions
have been in the last five (5) years or are made by the Seller in respect
of employees who are employed in connection with the Purchased Assets (such
plans, programs and arrangements, collectively, the "Benefit Plans"). To
the Seller's knowledge, each Benefit Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and all other
applicable laws. Accurate and complete copies of all such Benefit Plans
and their summary descriptions, including multiemployer plans, have been
made available to the Buyer.
(b) Except as set forth in Schedule 5.14(b)(i), with respect to
employees at the Purchased Assets, to the Seller's knowledge, the Seller
and the ERISA Affiliates have fulfilled their respective obligations under
the minimum funding requirements of Section 302 of ERISA, and Section 412
of the Code, with respect to each Benefit Plan that is a pension benefit
plan as defined in Section 3(2) of ERISA (each, a "Pension Benefit Plan").
To the Seller's knowledge, neither the Seller nor any ERISA Affiliate has
incurred any liability to the Pension Benefit Guaranty Corporation in
connection with any Pension Benefit Plan which is subject to Title IV of
ERISA, including any withdrawal liability, nor is there any reportable
event (as defined in Section 4043 of ERISA), except as set forth in
Schedule 5.14(b)(ii). Except as set forth in Schedule 5.14(b)(iii), the
Internal Revenue Service has issued a letter for each Pension Benefit Plan
which is intended to be qualified under Section 401(a) of the Code,
determining that such plan is exempt from United States Federal Income Tax
under Sections 401(a) and 501(a) of the Code, and to the Sellers's
knowledge, there has been no occurrence since the date of any such
determination letter which has adversely affected such qualification, and
no withdrawal liability has been incurred by or asserted and none is
anticipated against Seller with respect to any Pension Benefit Plan which
is a "multiemployer plan" (as defined in Section 3(37) of ERISA).
(c) To the Seller's knowledge, neither the Seller nor any ERISA
Affiliate has engaged in any transaction within the meaning of Section
4069(b) or Section 4212(c) of ERISA. Except as set forth in Schedule
5.14(c), no Benefit Plan is a multi-employer plan.
(d) To the extent the Seller maintained or maintains a "group
health plan" within the meaning of Section 5000(b)(1) of the Code, to the
Seller's knowledge, the Seller has materially complied with the notice and
continuation requirements of Section 4980B of the Code, COBRA, Part 6 of
Subtitle B of Title I of ERISA and the regulations thereunder.
5.15. Real Property Encumbrances. Schedule 5.15 lists all
real property encumbrances affecting Seller's Real Property including
matters contained in deeds, easements and options. True and correct copies
of all current surveys, abstracts, title opinions and policies of title
insurance currently in force with respect to such Real Property have been
delivered by Seller to the Buyer. None of the Permitted Encumbrances
materially adversely affect the existing use of the Real Property.
5.16. Condemnation. Neither the whole nor any part of the
Real Property or any other real property or rights leased, used or occupied
by Seller in connection with the ownership or operation of the Purchased
Assets is subject to any pending suit for condemnation or other taking by
any public authority, and, to the knowledge of Seller, no such condemnation
or other taking is threatened or contemplated.
5.17. Certain Contracts and Arrangements. (a) Except (i) as
listed in Schedule 5.17(a), (ii) for contracts, agreements, personal
property leases, commitments, understandings or instruments which will
expire prior to the Closing Date, (iii) for agreements with suppliers
entered into in the ordinary course of business (including contracts
entered into in connection with the Scheduled Capital Expenditures and the
Scheduled Maintenance Expenditures), and (iv) for contracts, agreements,
personal property leases, commitments, understandings or instruments with a
value less than $200,000 or with annual or aggregate payments less than
$200,000, Seller is not a party to any written contract, agreement,
personal property lease, commitment, understanding or instrument which is
material to the business or operations of the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each Seller
Agreement listed on Schedule 5.17(a) constitutes a valid and binding
obligation of the parties thereto and is in full force and effect and may
be transferred to the Buyer pursuant to this Agreement and will continue in
full force and effect thereafter, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights
thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not, under
any of Seller Agreements listed on Schedule 5.17(a), any default or event
which, with notice or lapse of time or both, would constitute a default on
the part of any party thereto, except such events of default and other
events as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, have a Material Adverse
Effect.
5.18. Legal Proceedings, etc. Except as set forth in
Schedule 5.18 or in any filing made by Seller pursuant to the Securities
Act or the Exchange Act, there are no claims, actions, or proceedings
pending or investigations pending, or to Seller's knowledge, threatened
against Seller relating to the Purchased Assets before any court,
arbitrator, governmental or regulatory authority or body acting in an
adjudicative capacity, which, if adversely determined, would have a
Material Adverse Effect or would prohibit or restrain the execution,
delivery or performance of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby in any
material respect. Except as set forth in Schedule 5.18, Seller is not
subject to any outstanding judgment, rule, order, writ, injunction or
decree of any court, governmental or regulatory authority relating to the
Purchased Assets which would have a Material Adverse Effect.
5.19. Permits. Seller has all material permits, licenses,
franchises and other governmental authorizations, consents and approvals,
other than with respect to Environmental Laws (collectively, "Permits") as
set forth in Schedule 5.19(a), necessary to own or operate the Purchased
Assets as presently owned or operated, except where the failure to have
such Permits would not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, Seller has not
received any written notification that it is in violation of any of such
Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority applicable to
it, except for notifications of violations which would not, individually or
in the aggregate, have a Material Adverse Effect. Seller is in compliance
with all Permits, laws, statutes, orders, rules, regulations, ordinances,
or judgments of any governmental or regulatory body or authority applicable
to Purchased Assets, except for violations which, in the aggregate, would
not have a Material Adverse Effect.
5.20. Regulation as a Utility. The Seller and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania as set forth on Schedule 5.20(a), and in no
other state. Except as set forth on Schedule 5.20(b), Seller is not
subject to regulation as a public utility or public service company (or
similar designation) by the United States, any State of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
5.21. Taxes. Except as set forth in Schedule 5.21, (a) no
notice of deficiency or assessment has been received from any taxing
authority with respect to Seller's liabilities for Taxes in respect of the
Purchased Assets, which have not been fully paid or finally settled, and
any such deficiency shown in Schedule 5.21 is being contested in good faith
through appropriate proceedings; (b) there are no outstanding agreements or
waivers extending the applicable statutory periods of limitations for Taxes
associated with the Purchased Assets for any period; (c) there are no
rulings or closing agreements executed with any taxing authority relating
to the Purchased Assets that will be binding upon Buyer after the Closing;
(d) none of the Purchased Assets is property that is required to be treated
as being owned by any other person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code, or "tax-exempt
use" property within the meaning of Section 168(h) of the Code; and (e)
there are no powers of attorney in effect relating to Taxes relating to the
Purchased Assets for any Post-Closing period.
5.22. Intellectual Property. The Seller has all right, title
and interest in or valid and binding rights under contract to use the
Intellectual Property relating to the Purchased Assets. Seller has not
received notice that it is infringing any Intellectual Property of any
other Person in connection with the operation or business of the Purchased
Assets, no claim is pending or has been made to such effect that has not
been resolved and Seller is not infringing any Intellectual Property of any
other Person the effect of which, individually or in the aggregate, would
have Material Adverse Effect.
5.23. Year 2000 Readiness. Seller has informed Buyer of its
analysis of, the status of development of contingency plans for, and
forecasted expenditures with respect to Year 2000 readiness of material
computer software and computer firmware comprising the Purchased Assets, as
such analysis, contingency plan development and forecast of expenditures
exist on the date hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to Seller as follows:
6.1. Organization. The Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to Seller complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2. Authority Relative to this Agreement. The Buyer has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Managers
or Members of the Buyer and the Board of Directors of both Southern Energy,
Inc. and The Southern Company and no other company proceedings on the part
of the Buyer or such Affiliates are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Buyer, and assuming
that this Agreement constitutes a valid and binding agreement of Seller,
subject to the receipt of the Buyer Required Regulatory Approvals and
Seller Required Regulatory Approvals, constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
6.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and Seller Required Regulatory Approvals, neither the
execution and delivery of this Agreement by the Buyer nor the purchase by
the Buyer of the Purchased Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) and except for the
filings by the Buyer and Seller required by the HSR Act (the filings and
approvals referred to in Schedule 6.3(a) and with respect to the HSR Act
are collectively referred to as the "Buyer Required Regulatory Approvals"),
no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby.
6.4. Operating Easements. Buyer shall grant Operating Easements
to Seller as agreed to pursuant to the procedures set forth in the
Continuing Site/Interconnection Agreement.
6.5. Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.5, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.6. Availability of Funds. The Buyer has sufficient funds
available to it or will receive binding written commitments from
responsible financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Assets.
Except as described in Schedule 7.1, during the period from the date of
this Agreement to the Closing Date, Seller will operate and maintain the
Purchased Assets according to its ordinary and usual course of business
consistent with Good Utility Practice. Without limiting the generality of
the foregoing, and, except as contemplated in this Agreement or as
described in Schedule 7.1, prior to the Closing Date, without the prior
written consent of the Buyer (unless such consent would be prohibited by
law), Seller will not with respect to the Purchased Assets:
(a) make any material change in the operations of the
Purchased Assets (including, without limitation, the levels of fuel
inventory and materials and supplies customarily maintained by Seller
other than consistent with past practice);
(b) except for Scheduled Capital Expenditures, make any
capital expenditures with respect to the Purchased Assets or enter
into any contract or commitment therefor, except that (i) Seller shall
make any capital expenditures requested by the Buyer, provided that
the Buyer will reimburse Seller for such capital expenditures at least
five (5) Business Days prior to the date payment for such expenditure
is due, and (ii) Seller shall make any capital expenditures deemed
necessary by Seller in accordance with Good Utility Practices
("Necessary Capital Expenditures") at Seller's cost and expense,
provided, however, that if the Buyer requests that Seller make
enhancements/upgrades with a cost in excess of the cost of any
Necessary Capital Expenditures, the Buyer shall reimburse Seller for
the cost of such enhancements/upgrades to the extent the cost of such
enhancement/upgrade exceeds the cost of the Necessary Capital
Expenditure at the time such enhancement/upgrade is performed.
(c) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Purchased Assets, other than assets used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practice and not mortgage or pledge, or impose or suffer to be
imposed any Encumbrance on, any of the Purchased Assets other than
Permitted Encumbrances in the ordinary course of business;
(d) except for Scheduled Maintenance Expenditures, make any
maintenance expenditures, except that (i) Seller shall make any
maintenance expenditures requested by the Buyer, provided that the
Buyer will reimburse Seller for such maintenance expenditures at least
five (5) Business Days prior to the date payment for such expenditure
is due, and (ii) Seller shall make any maintenance expenditures deemed
necessary by Seller in accordance with Good Utility Practice
("Necessary Maintenance Expenditures") at Seller's cost and expense,
provided, however, that if the Buyer requests that Seller make
enhancements/upgrades with a cost in excess of the cost of any
Necessary Maintenance Expenditures, the Buyer shall reimburse Seller
for the cost of such enhancements/ upgrades to the extent the cost of
such enhancement/upgrade exceeds the cost of the Necessary Maintenance
Expenditure at the time such enhancement/upgrade is performed;
(e) amend or terminate prior to the expiration date, or
waive any material term or give consent to any material request with
respect to any of Seller's Agreements, Permits or Environmental
Permits, except to the extent that such amendment, termination, waiver
or consent (i) will not have a material impact on operations of the
Purchased Assets, including the cost of said operations or (ii) is
required by applicable law, including applicable Environmental Law;
(f) enter into agreements for the purchase or sale of fuel
(whether commodity or transportation) other than agreements entered
into in the ordinary course of business, for which commitments to
purchase or sell under such agreement would not exceed a one week time
period;
(g) enter into any power sales commitments, other than
short term contracts under which power sales commitment(s) would not
exceed a two week time period;
(h) sell, lease or otherwise dispose of Emission Allowances
except to the extent necessary to operate the Purchased Assets in
accordance with this Section 7.1;
(i) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (h); or
(j) make any new, or change any current, election with
respect to Taxes affecting the Purchased Assets.
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, Seller will, during ordinary business hours
and upon reasonable notice (i) give the Buyer and the Buyer Representatives
reasonable access to its managerial personnel and to all books, records,
plants, offices and other facilities and properties constituting the
Purchased Assets to which the Buyer is permitted access by law, (ii) permit
the Buyer to make such reasonable inspections thereof as the Buyer may
reasonably request, including conducting environmental sampling at, on and
underneath the Purchased Assets and performing compliance audits at the
Purchased Assets, if Buyer reasonably deems such sampling necessary after
reviewing further information which becomes available after the date
hereof, so long as Seller provides its consent to such sampling, which
consent shall not be unreasonably withheld, (iii) cause its officers,
engineers, operations and maintenance personnel and advisors to furnish the
Buyer with such financial and operating data, Tax Returns (other than
Income Tax Returns) and other information with respect to the Purchased
Assets as the Buyer may from time to time reasonably request and assist
Buyer in such inspections, (iv) cause its officers and advisors to furnish
the Buyer a copy of each report, schedule or other document filed or
received by it with or from the SEC, NYPSC, NJBPU, PAPUC, FERC, ISO or
other governmental authority with respect to the Purchased Assets;
provided, however, that (A) any such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operation of the
Purchased Assets, (B) Seller shall not be required to take any action which
would constitute a waiver of the attorney-client privilege and (C) Seller
need not supply the Buyer with any information which Seller is under a
legal obligation not to supply, provided, however, that Seller shall have
used commercially reasonable efforts to have such obligations waived.
Notwithstanding anything in this Section 7.2 to the contrary, (i) Seller
will furnish or provide such access to medical records only as is permitted
by law, and (ii) Seller will furnish or provide such access to personnel
records only to the extent that the employee to which the personnel record
relates has given his/her consent to the Seller.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of Section 11.2 of this Agreement shall be treated as
Confidential Information.
(c) Commencing February 1, 1999, the Buyer shall have the right
to physically locate one designated representative (the "Designated
Representative") of the Buyer at an office or in workspace at the Seller's
corporate offices to observe the operations of the Gas Turbines and the
Hydroelectric Assets, as well as the operations of the Lovett Generating
Station, and the Bowline Generating Stations, pursuant to the Lovett
Generating Sales Agreement and the Bowline Generating Stations Sales
Agreement entered into the date hereof between the Seller and the Buyer and
the Seller, Consolidated Edison Company of New York, Inc. and the Buyer,
respectively, provided, however, that the Buyer shall not unreasonably
interfere with the Seller's use of the Purchased Assets. The Seller shall
coordinate site visits and provide the Designated Representative during
such period prior to the Closing access to Seller's managerial personnel.
The Designated Representative shall coordinate the Buyer's rights to access
under Section 7.2(a) hereof during such period prior to the Closing.
(d) For a period of seven (7) years after the Closing Date,
Seller and its representatives shall have reasonable access to (i)
information on employees covered by Seller's Management Employee Transition
Program and (ii) all of the books and records of the Purchased Assets, as
the case may be, transferred to the Buyer hereunder to the extent that such
access (A) may reasonably be required by Seller in connection with matters
relating to or affected by the operation of the Purchased Assets prior to
the Closing Date and (B) is not otherwise prohibited by law. Such access
shall be afforded by the Buyer upon receipt of reasonable advance written
notice and during normal business hours. Seller shall be responsible for
any costs or expenses incurred by them pursuant to this Section 7.2(d). If
the Buyer shall desire to dispose of any such books and records prior to
the expiration of such seven (7) year period, the Buyer shall, prior to
such disposition, give Seller a reasonable opportunity at Seller's expense,
to segregate and remove such books and records as Seller may select. Any
information provided by Buyer to Seller pursuant to this Section 7.2(d)
shall be deemed Confidential Information.
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Assets pursuant to this Agreement, including without
limitation, the use of Seller's and the Buyer's commercially reasonable
efforts to obtain all Permits and Environmental Permits necessary for the
Buyer to operate the Purchased Assets. Neither of the Parties shall,
without the prior written consent of the other Party, take or fail to take
any action which might reasonably be expected to prevent or materially
impede, interfere with or delay the transactions contemplated by this
Agreement or the Ancillary Agreements. From time to time after the date
hereof, without further consideration, Seller will, at its own expense,
execute and deliver such documents to the Buyer as the Buyer may reasonably
request in order more effectively to vest in the Buyer good title to the
Purchased Assets. From time to time after the date hereof, the Buyer will,
at its own expense, execute and deliver such documents to Seller as Seller
may reasonably request in order to more effectively consummate the sale of
the Purchased Assets pursuant to this Agreement. To the extent that any
personal property lease, relating to any assets ("Leased Assets") which are
principally used by Seller for generation purposes at the Purchased Assets,
cannot be assigned to the Buyer, Seller will use its commercially
reasonable efforts to acquire title to such Leased Assets and to include
them in the Purchased Assets before the Closing Date unless Buyer directs
Seller in writing not to acquire any such Leased Asset. Seller's
documented and reasonable costs associated with acquiring title to such
Leased Assets shall be paid by the Buyer as part of the Purchase Price,
except for any and all costs of acquiring the title to the leased Gas
Turbines as described in Section 7.17. Schedule 7.4 lists all of the
Leased Assets.
(b) To the extent that any Seller's rights under any guaranties,
warranties and indemnification applicable to the Purchased Assets or the
Assumed Liabilities are nontransferable or nonassignable, Seller shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
7.5. Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or
stock exchange rules or regulations and except that the parties may make
public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6. Consents and Approvals. (a) Seller and the Buyer shall
each file or cause to be filed with the Federal Trade Commission and the
United States Department of Justice any notifications required to be filed
under the HSR Act and the rules and regulations promulgated thereunder with
respect to the transactions contemplated hereby. The parties shall consult
with each other as to the appropriate time of filing such notifications and
shall use their best efforts to make such filings at the agreed upon time,
to respond promptly to any requests for additional information made by
either of such agencies, and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date after the date of
filing. Buyer shall bear the cost of all filing fees under the HSR Act.
(b) Seller and the Buyer shall cooperate with each other and
(i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain the
transfer or reissuance to the Buyer of all necessary Environmental Permits,
Permits, consents, approvals and authorizations of all governmental bodies
and (iv) use all reasonable efforts to obtain all necessary consents,
approvals and authorizations of all other parties, in the case of each of
the foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which Seller or the Buyer is a party
or by which either of them is bound. Seller shall have the right to review
and approve in advance all characterizations of the information relating to
Purchased Assets; and each of Seller and the Buyer shall have the right to
review and approve in advance all characterizations of the information
relating to the transactions contemplated by this Agreement which appear in
any filing made in connection with the transactions contemplated hereby.
The parties hereto agree that they will consult with each other with
respect to the transferring to the Buyer or the obtaining by the Buyer of
all such necessary Environmental Permits, Permits, consents, approvals and
authorizations of all third parties and governmental bodies. Seller and
the Buyer shall designate separate counsel with respect to all
applications, notices, petitions and filings (joint or otherwise) relating
to this Agreement and the transactions contemplated hereby on behalf of
Seller, on the one hand and the Buyer on the other hand, with all
governmental bodies. To the extent that a consent to an assignment of any
material Seller Agreement cannot be obtained before the Closing Date,
Seller will enter into all such agreements with the Buyer as are necessary
to give the Buyer the rights, obligations and burdens of such Seller
Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Seller shall cooperate with Buyer's efforts in this regard and shall use
its best efforts to assist in the transfer or reissuance when so requested
by Buyer. In the event that Buyer is unable, despite commercially
reasonable efforts, to obtain a transfer or reissuance of one or more
Permits as of the Closing Date, Buyer may use the Permits issued to Seller
to the extent permissible under applicable laws and regulations provided
(i) buyer notified Seller prior to Closing, (ii) Buyer continues to make
commercially reasonable efforts to obtain a transfer or reissuance of such
Permits after the Closing, and (iii) Buyer indemnifies Seller for any
losses, claims or penalties suffered by Seller in connection with the
Permit that is not transferred or reissued as of the Closing Date resulting
from Buyer's operation of the Purchased Assets following the Closing Date.
In no event shall Buyer use or otherwise rely on a Permit issued to Seller
beyond one year after Closing unless Buyer has, after exercising its
commercially reasonable efforts, been unable to obtain same and such
reliance is not prohibited by law.
7.7. Fees and Commissions. Seller and the Buyer each represent
and warrant to the other that, except for Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), which is acting for and at the expense of
Seller, and Credit Suisse First Boston Corporation, which is acting for and
at the expense of the Buyer, no broker, finder or other Person is entitled
to any brokerage fees, commissions or finder's fees in connection with the
transaction contemplated hereby by reason of any action taken by the party
making such representation. Seller and the Buyer will pay to the other or
otherwise discharge, and will indemnify and hold the other harmless from
and against, any and all claims or liabilities for all brokerage fees,
commissions and finder's fees (other than as described above) incurred by
reason of any action taken by such party.
7.8. Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Seller will join in
the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to Seller's approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for Seller's
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, Seller shall pay to the Buyer its proportionate share of the amount
shown as due on such Tax Return determined in accordance with the Section
3.4 of this Agreement.
(c) Each of the Buyer and Seller shall provide the other with
such assistance (including access to the Purchased Assets) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
(d) Seller will consult with and allow Buyer to participate in
all outstanding real property tax disputes concerning the Purchased Assets
and shall take such positions as Buyer may request consistent with the
positions previously communicated to Seller by Buyer with respect to such
tax disputes, to assist Buyer in obtaining a tax agreement with respect to
such tax disputes for periods subsequent to the Closing Date. Seller will
use its commercially reasonable efforts to assist Buyer in obtaining an
agreement with the taxing authorities pursuant to which the assessed value
for real estate tax purposes of the Purchased Assets will be the lowest
value achievable. Seller shall not enter into any agreement with the
taxing authorities with respect to such real property tax disputes relating
to periods prior to the Closing Date without the written consent of Buyer
which Buyer shall not unreasonably withhold as long as Seller has complied
with this Section 7.8(d).
7.9. Supplements to Schedules. Prior to the Closing Date,
parties shall supplement or amend the Schedules required by Articles V and
VI with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10. Employees. (a) Schedule 7.10(a) sets forth all
collective bargaining agreements to which Seller is a party in connection
with the Purchased Assets and all other labor agreements and amendments
thereto, that are or may be associated with the Purchased Assets (the
"Collective Bargaining Agreements"). Buyer shall offer employment to begin
as of the Closing Date to Seller's employees who work in connection with
the Purchased Assets and who are included in the bargaining units covered
by the Collective Bargaining Agreements ("Hourly Employees"), and the Buyer
will assume the Collective Bargaining Agreements and all of Seller's
obligations thereunder, including, without limitation, the terms and
conditions of the employee benefit plans covering such hourly employees.
(b) Continued Employment; Service Credit. The Buyer shall, as
of the Closing Date, offer employment to the employees of Seller (who will
be listed on Schedule 7.10(b) by the Buyer) who worked at or directly
serviced the Purchased Assets, who were employees immediately prior to the
Closing Date, who were not Hourly Employees and who are approved by Buyer
(the "Management Employees"). The Buyer shall provide Schedule 7.10(b) to
Seller at least ninety (90) days prior to the date on which the Closing is
anticipated to occur (but in no event later than February 1, 1999, or such
other date to which the Buyer and Seller mutually agree). The Management
Employees hired by the Buyer shall be given credit for all service with
Seller or its subsidiaries (and service credited by Seller or such
subsidiary), to the same extent as such service was credited for such
purpose by Seller or such subsidiary, under all employee benefit plans,
programs and policies, and fringe benefits of the Buyer in which they
become participants for purposes of eligibility, vesting and determination
of level of benefits (but not for purposes of benefit accrual). To the
extent permissible under the terms thereof and required by applicable law,
the Buyer shall (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Management Employees under any welfare
benefit plans that such employees may be eligible to participate in after
the Closing Date, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare benefit plan maintained
for the Management Employees immediately prior to the Closing Date, and
(ii) provide each Management Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Closing Date.
(c) Subject to applicable law, the Buyer shall maintain for a
period of at least one year after the Closing Date, without interruption,
such employee compensation, welfare and benefit plans, programs, policies
and fringe benefits as will, in the aggregate, provide benefits to the
Management Employees that are no less favorable than those provided
pursuant to such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits of the Seller and its subsidiaries,
as in effect on the Closing Date. During the period between the date
hereof and the Closing Date, Seller shall use its best efforts to keep
available all current Management Employees for employment by the Buyer
(except those employees which the Buyer identifies in writing as Management
Employees which the Buyer does not intend to employ).
(d) Notwithstanding the Buyer's assumption of the Collective
Bargaining Agreement, the Buyer shall not assume sponsorship or any other
obligation under any Benefit Plan of the Seller or any ERISA Affiliate of
the Seller in connection with the assumption of such agreements or in
connection with hiring any of the Hourly Employees. All benefits accrued
under such Benefits Plans and all benefits currently payable as of the
Closing Date shall be and shall remain the obligation of Seller and any
individual covered under any such Benefit Plan that is a Group Health Plan
(as defined in Section 4980B(g)(2) of the Code and Section 607(1) of ERISA)
and who is eligible for continued coverage under such Group Health Plan as
of the Closing Date, shall continue to be covered under such Group Health
Plan after Closing pursuant to the provisions of COBRA.
(e) Seller agrees to perform timely and discharge all
requirements, if any, under the WARN Act and under applicable state and
local laws and regulations for the notification of its employees arising
from the sale of the Purchased Assets to the Buyer up to and including the
Closing Date. The Buyer will cooperate with Seller to provide Seller with
such information as may be needed from the Buyer for inclusion in such
notices, including providing Seller at least ninety (90) days prior to the
date on which the Closing is anticipated to occur (but in no event, later
than February 1, 1999 or such other date to which the Buyer and Seller
mutually agree) with a list of all of Seller's employees to whom the Buyer
will make offers of employment. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN
Act and under applicable state and local laws and regulations for the
notification of its employees with respect to the Purchased Assets.
(f) Seller shall be responsible for any payments required under
its severance plan, including severance payments and other benefit
enhancements, offered in connection with the transfer of the Purchased
Assets. Within thirty (30) days following the last day that any employee
may elect to participate in such plan, Seller shall provide Buyer with a
list of all electing employees. In any event, Buyer is not required to
establish this or any other severance or benefit plan.
(g) Seller shall comply with all of the requirements of COBRA
arising from this Agreement with respect to all employees of Seller
employed at the Purchased Assets who are not employed by Buyer.
(h) Seller shall pay, when due, to all Hourly Employees and
Management Employees hired by the Buyer pursuant to Section 7.10 hereof,
all compensation, bonus, severance, vacation and holiday compensation,
workers' compensation or other employment benefits which have accrued to
such Hourly Employees and Management Employees through and including the
Closing Date.
(i) Following the execution of this Agreement Seller will use
its commercially reasonable best efforts to arrange meetings and interviews
with such employees of Seller as Buyer shall reasonably request.
(j) Seller shall not, prior to the Closing Date, with respect
to the Purchased Assets, (i) hire new employees or transfer current
employees prior to the Closing to work at the Purchased Assets, other than
to fill vacancies in existing positions in the reasonable discretion of
Seller, (ii) take any action prior to the Closing to affect a material
change in the Collective Bargaining Agreement, or (iii) take any action
prior to the Closing to increase the aggregate benefits payable to the
employees employed in connection with the Purchased Assets, except (A) as
otherwise required by the terms of the Collective Bargaining Agreement
obligations to effects bargain, (B) as Seller shall reasonably deem
appropriate in order to comply with its obligations under the second
sentence of Section 7.10(c) above, (C) for retention bonuses payable to
Management Employees on or before the Closing Date and (D) increases in
salary and benefits in the ordinary course of business, consistent with
past practice.
7.11. Risk of Loss. (a) From the date hereof through the
Closing Date, all risk of loss or damage to the property included in the
Purchased Assets shall be borne by 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 Seller), after reasonable inquiry and
investigation contemplated taking which has not been consummated, Seller
shall notify the Buyer promptly in writing of such fact. If such taking
would have a Material Adverse Effect, the Buyer and 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 Seller has
notified the Buyer of such taking, then the Buyer or Seller may, if such
taking relates to the Purchased Assets, terminate this Agreement pursuant
to Section 10.1(f).
(c) If, before the Closing Date, all or any material portion of
the Purchased Assets are damaged or destroyed by fire or other casualty,
Seller shall notify the Buyer promptly in writing of such fact. If such
damage or destruction would have a Material Adverse Effect and Seller has
not notified the Buyer of its intention to cure such damage or destruction
within fifteen (15) days after its occurrence, the Buyer and Seller shall
negotiate in good faith to settle the loss resulting from such casualty
(including, without limitation, by making a fair and equitable adjustment
to the Purchase Price) and assigning any insurance proceeds to Buyer at the
Closing and, upon such settlement, consummate the transactions contemplated
by this Agreement pursuant to the terms of this Agreement. If no such
settlement is reached within sixty (60) days after Seller has notified the
Buyer of such casualty, then the Buyer may terminate this Agreement
pursuant to Section 10.1(f).
7.12. Real Estate Matters. (a) Buyer shall obtain an
American Land Title Association ("ALTA") or New York Board of Title
Underwriters ("NYBTU") owners standard form title policy commitment with
respect to the Real Property (the "Title Commitment") from a title company
of Buyer's choice (the "Title Company") covering title to the Real Property
together with an ALTA 3.1 zoning endorsement, if available, including
parking and access, and such other endorsements as Buyer may reasonably
request. Seller shall provide the Title Company and Buyer such information
as the Title Company or Buyer may reasonably request to assist the Title
Company in connection with the Title Commitment. Without limiting the
foregoing, Seller shall provide the Title Company and Buyer a copy of the
most recent surveys in their possession regarding the Real Property.
Promptly after receiving the Title Commitment, Buyer shall notify Seller in
writing of any defects in title which are not Permitted Encumbrances and
would cause title to the Real Property to be uninsurable (any of which is
called herein a "Defect of Title"). Buyer shall be deemed to have waived
any objection to any Defect of Title that was disclosed by the Title
Commitment if Buyer fails to notify Seller of such Defect of Title within
thirty (30) days after receipt of such Title Commitment. With respect to
the existence of any Defect of Title that is not disclosed by the Title
Commitment, but which arises prior to Closing, Buyer shall immediately
notify Seller in writing of any such Defect of Title.
(b) Seller agrees that upon the written request of Buyer it will
consent and cause its affiliates to consent to the relocation of the
Operating Easements and Seller's Easements so long as (i) Buyer pays the
cost of such relocation, (ii) such relocation will be to space within
Buyer's ownership and will not materially adversely affect the operation of
Seller's or its affiliates' transmission and distribution business, except
for the minimum downtime associated with the cut over for such relocation
process in accordance with Good Utility Practices, and (iii) the Buyer's
requested relocation is consistent with Good Utility Practices. Seller
further agrees to condition any grant or assignment by it of the Operating
Easements or Sellers Easements on the express agreement of its transferee
to be bound by the terms and conditions of this Section 7.12(b).
(c) As to any Operating Easement or Sellers Easement not
currently of record or reserved or granted back to Seller at Closing, all
of which are to be granted by Buyer at Closing concurrently with the
transfer of title to Buyer and prior to any mortgage or other encumbrance,
such Operating Easements and Sellers Easements shall include standard
cross-indemnity provisions relating to personal injury, death or property
damage occurring as a result of gross negligence or willful misconduct in
the use of such Easements, whereby each party agrees to indemnify the other
for the consequences of the gross negligence or willful misconduct of those
for whom the indemnifying party is legally responsible.
7.13. Year 2000. Seller shall (a) use its best efforts to
cooperate with Buyer in formulating a plan to prepare the Purchased Assets
to be ready for Year 2000 computer-related issues with a target completion
date of October 1, 1999 and (b) perform until the Closing Date (or later,
at Seller's election pursuant to the second sentence of Section 7.14 of
this Agreement) the tasks identified in such plan, consistent with Good
Utility Practices and the expenditures contemplated in its Year 2000 plans
referred to in Section 5.23 hereof.
7.14. Scheduled Capital Expenditures and Scheduled
Maintenance Expenditures. The Seller shall perform, or caused to be
performed, the Scheduled Capital Expenditures and the Scheduled Maintenance
Expenditures, at Seller's cost, prior to the Closing Date. To the extent
that Scheduled Capital Expenditures and Scheduled Maintenance Expenditures
are not completed by the Closing Date, the Seller either (i) shall cause
the Scheduled Capital Expenditures or Scheduled Maintenance Expenditures to
be completed within a reasonable period of time following the Closing Date
or (ii) shall pay Buyer its reasonable costs to complete such unfinished
Scheduled Capital Expenditures or Scheduled Maintenance Expenditures within
thirty (30) days of Seller's receipt from Buyer of a reasonably detailed
invoice for such cost.
7.15. Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under (i) the Purchased Assets and (ii)
the "Purchased Asset" and "Purchased Assets" as defined in each of the
Other Sales Agreements on or prior to the Closing Date ("Environmental
Insurance"), Seller shall share equally with Buyer the cost of premiums for
such Environmental Insurance, up to a maximum payment by Seller of $200,000
in the aggregate for such insurance relating to (A) the Purchased Assets
and (B) the "Purchased Asset" and "Purchased Assets" as defined in each of
the Other Sales Agreements. If Buyer purchases such Environmental
Insurance, Buyer shall add Seller as an additional insured.
7.16. Environmental Remediation.
(a) Seller will, at its own expense, be responsible for
remediating, in accordance with applicable Environmental Laws, the
following areas located at the Hillburn Gas Turbine Generating Station
identified on page 6-2 of the Report, Additional Phase II Environmental
Site Investigations Orange and Rockland prepared by URS Greiner Woodward
Clyde, dated November 1998: (i) PCB-contaminated soils in two areas at the
34.5 kv Substation; (ii) PCB-contaminated soils in the Gas Turbine
Switching Transformer Substation; (iii) stained soils and associated
contamination in the 69 kv Substation containing polyaromatic hydrocarbons
("PAHs"); and (iv) stained soils and associated contamination in the
Equipment Storage Area containing PAHs. Seller's obligation to remediate
these conditions is limited to remediation of affected soils in the areas
identified above. Seller shall remediate such soils to meet the least
stringent New York cleanup standards applicable to the Hillburn Gas Turbine
Generating Station as it is currently used; provided however, that the
cleanup standards which govern the remedial work under this subparagraph
(a) shall be at least as stringent as the New York State Department of
Environmental Conservation ("NYSDEC") soil cleanup standards to protect
groundwater. To the extent that the NYSDEC or the United States
Environmental Protection Agency ("EPA") is involved in the oversight of any
of the remediation described above, Seller shall remediate such soils to
the extent required by the NYSDEC or the EPA, as the case may be. Seller
shall prepare a work plan for the remedial work required by this
subparagraph (a) and shall submit the work plan for Buyer's review and
comment. Seller shall conduct confirmation sampling which demonstrates the
completion of the remedial work required by this subparagraph (a) and shall
prepare a report discussing the work. Except as otherwise required by
applicable Environmental Law, neither party shall notify NYSDEC or EPA
concerning the remedial work without the prior consent of the other party.
Seller shall be responsible for all negotiations with the NYSDEC or the EPA
with respect to such remedial work and, provided Seller is in substantial
compliance with this Section 7.16, Buyer shall not engage in any
discussions with NYSDEC or the EPA with respect to the remedial work,
except to the extent authorized by Seller.
(b) Seller shall exercise reasonable efforts to complete the
remedial work described in subparagraph (a) prior to the Closing. If
Seller has not completed the remedial work described in subparagraph (a) as
of the Closing, Seller will continue to be responsible for completing said
remediation as soon as reasonably possible after the Closing. In
undertaking said remedial work, Seller shall (i) comply in all material
respects with applicable Environmental Laws; (ii) provide Buyer with copies
of all final and complete data, documents, correspondence and reports
related to the remedial work; (iii) provide Buyer with at least five (5)
Business Days' advance notice prior to undertaking any field work at the
Hillburn Gas Turbine Generating Station; (iv) take all reasonable
precautions to ensure that performance of the remedial work does not
unreasonably interfere with operations at the Hillburn Gas Turbine
Generating Station; and (v) repair and restore, to the extent practicable,
any areas of the Hillburn Gas Turbine Generating Station adversely impacted
by the remedial work.
(c) If Seller is required to complete the remedial work
described in subparagraph (a) after the Closing, Buyer shall undertake
reasonable efforts to enable Seller, Seller's agents and representatives to
undertake the remedial work. To this end, Buyer shall afford Seller and
its agents and representatives, including, but not limited to,
environmental contractors and consultants, with reasonable cooperation,
including, but not limited to, reasonable access to any of the real
property upon which remedial work is to be conducted, relevant records and
utility services (including, but not limited to water and electricity);
obtaining additional environmental permits (at Seller's expense) in order
to undertake the required remediation; and filing any necessary reports (at
Seller's expense) with relevant governmental authorities.
7.17. Buyout of Leases. The Seller shall exercise its
purchase option, at Seller's cost, under the Amendment to Lease Agreement,
effective as of August 1, 1996, between Seller and Fleet Capital
Corporation, which amends the Lease Agreement, dated as of February 1,
1991, between United States Trust Company of New York, as Trustee, Lessor
and Seller, Lessee.
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have
expired or been terminated with no order, decree, judgment or
injunction enjoining or prohibiting the consummation of the
transactions contemplated hereby having been issued;
(b) No preliminary or permanent injunction or other order
or decree by any federal or state court or governmental authority
which prevents or is reasonably likely to prevent the consummation of
the transactions contemplated hereby or by the Ancillary Agreements
shall be pending or shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted or interpreted by any State or Federal
government or governmental authority in the United States which
prohibits the consummation of the transactions contemplated hereby;
(c) All Federal, State and local government orders,
consents and approvals required for the consummation of the
transactions contemplated hereby, or by the Ancillary Agreements,
including, without limitation, Seller Required Regulatory Approvals
and the Buyer Required Regulatory Approvals, shall have become Final
Orders (a "Final Order" means action by the relevant regulatory
authority which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to which any waiting period
prescribed by law before the transactions contemplated hereby may be
consummated has expired, and as to which all conditions to the
consummation of such transaction prescribed by law, regulation or
order have been satisfied) and such Final Order is in form and
substance reasonably acceptable to the party that sought the consent
or approval granted by such Final Order (for purposes of this clause
(i), a Final Order shall be deemed to be reasonably acceptable to such
party if it complies in all material respects with the terms and
conditions of such party's application therefor and contains no
additional terms or conditions which would have a Material Adverse
Effect on such party or the operation of the Purchased Assets);
provided, however, that if at the time such order, consent, or
approval would otherwise be deemed to be a Final Order, there shall be
pending or threatened any appeal or challenge thereto, which, if
adversely determined, would cause such order, consent or approval to
not be reasonably acceptable to the party that sought such order,
consent or approval, then if such party who would be adversely
affected notifies the other party that such a pending or threatened
appeal or challenge exists (such notification to be made as soon as
reasonably practicable following knowledge of such pending or
threatened appeal or challenge, but in no event later than fifteen
(15) days from date on which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired and all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied), then such
order, consent or approval shall be deemed to be a Final Order only
after all opportunities for rehearing or judicial review are exhausted
and provided, further, that if the designation of an order, consent or
approval as a Final Order shall be deferred pursuant to the foregoing
proviso, the Termination Date shall be automatically extended for a
period of time equal to the period of time for which the designation
as a Final Order has been deferred;
(d) All consents and approvals required under the terms of
any note, bond, mortgage, indenture, contract or other agreement to
which Seller or the Buyer, or any of their subsidiaries, is a party
for the consummation of the transactions contemplated hereby shall
have been obtained, other than those (i) which if not obtained, would
not, in the aggregate, have a Material Adverse Effect, or (ii) for
which an agreement which is described in the last sentence of Section
7.6(b) has been entered into.
8.2. Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) There shall not have occurred and be continuing, a
Material Adverse Effect;
(b) Seller shall have performed and complied with the
covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and
the representations and warranties of Seller set forth in this
Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing
Date, and the Buyer shall have received a certificate to that effect
signed by an authorized officer of Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of Seller, dated the Closing Date, to the effect
that to the best of such officers' knowledge, after reasonable inquiry
and investigation, the conditions set forth in Sections 8.2(a) and (b)
have been satisfied;
(d) The "Closing" as defined in each of the Lovett
Generating Station Sales Agreement between the Seller and Southern
Energy Lovett, L.L.C. and the Bowline Point Generating Station Sales
Agreement among Seller, Consolidated Edison Company of New York, Inc.
and Southern Energy Bowline, L.L.C., each dated as of the date hereof,
shall have occurred or shall occur concurrently with the Closing
hereunder.
(e) The Buyer shall have received an opinion from Skadden,
Arps, Slate, Meagher & Flom LLP, dated the Closing Date and
satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that:
(1) Seller is a corporation organized, existing and in
good standing under the laws of the State of New York and has the
corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby; and the execution
and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate
action taken on the part of Seller.
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by Seller and (assuming that Buyer
Required Regulatory Approvals are obtained) are valid and binding
obligations of Seller, enforceable against Seller in accordance
with their terms, except that such enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, and
(B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity);
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by Seller will not (A)
constitute a violation of the Certificate of Incorporation or By-
Laws of Seller, or (B) to counsel's knowledge constitute a
violation or default under those agreements or instruments set
forth on a schedule to this opinion;
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any federal
or New York governmental authority is necessary for the
consummation by Seller of the Closing other than (i) Seller
Required Regulatory Approvals which are addressed below, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, individually or in the
aggregate have a Material Adverse Effect or prevent Seller from
performing its obligations hereunder; and
(5) The Bill of Sale, the Instrument of Assumption and
the other agreements described in Section 4.3 are in proper form
to transfer to Buyer such title to the Purchase Assets as was
held by Seller.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer and
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by Seller and appropriate officers
and directors of Seller and by public officials.
(f) The Buyer shall have received an opinion from Riker,
Danzig, Scherer, Hyland & Perretti, LLP (New Jersey Counsel), Nixon,
Hargrave, Devans & Doyle, LLP (New York Counsel) and Morgan, Lewis &
Bockius, LLP (Pennsylvania Counsel), or other local regulatory
counsel for O&R reasonably acceptable by Buyer, dated the Closing Date
and satisfactory in form and substance to the Buyer and its counsel,
substantially to the effect that no declaration, filing or
registration with, or notice to, or authorization, consent or approval
of any federal governmental authority or any governmental authority in
the States of New York, New Jersey and Pennsylvania is necessary for
the consummation by Seller of the Closing other than (i) Seller
Required Regulatory Approvals, which have been obtained and are in
full force and effect with such terms and conditions as were imposed
by the applicable governmental authorities, (ii) declarations, filings
or registrations with, or notices to, or authorizations, consents or
approvals relating to Permits and Environmental Permits and (iii) such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not obtained or made, would not,
individually or in the aggregate have a Material Adverse Effect.
As to any matter contained in such opinion which involves
the laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of New York, such counsel may rely
upon opinions of counsel which are reasonably acceptable to Buyer and
admitted in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion
of such counsel. Such opinion may expressly rely as to matters of
fact upon certificates furnished by Seller and appropriate officers
and directors of Seller and by public officials.
(g) Buyer shall have received the Title Commitment showing
the Real Property to be insured as subject only to Permitted
Encumbrances, and the effective date of the Title Commitment shall
have been updated to the Closing Date and marked to show the
satisfaction of all conditions to the issuance of the title policy
other than conditions within the control of the Buyer.
(h) Buyer shall have obtained a certificate of the
Secretary of Seller identifying by name and title and bearing the
signature of the officer of Seller authorized to execute and deliver
this Agreement and the other agreements and instruments contemplated
hereby.
8.3. Conditions to Obligations of Seller. The obligation of
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed its covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date;
(b) The representations and warranties of the Buyer set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made at and as of
the Closing Date;
(c) Seller shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officers' knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied; and
(d) Seller shall have received an opinion from Troutman
Sanders LLP, counsel for the Buyer, dated the Closing Date and
satisfactory in form and substance to Seller and its counsel,
substantially to the effect that:
(1) The Buyer is a limited liability company
organized, existing and in good standing under the laws of the
State of Delaware and has the requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements
and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have
been executed and delivered by the Buyer and (assuming that
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except (A) that such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought;
(3) the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer will not
constitute a violation of the Certificate of Formation or Limited
Liability Company Agreement (or other similar governing
documents), as currently in effect, of the Buyer.
(4) no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
governmental authority is necessary for the consummation by the
Buyer of the Closing other than (i) the Buyer Required
Regulatory Approvals, all of which have been obtained and are in
full force and effect with such terms and conditions as shall
have been imposed by any applicable governmental authority, (ii)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals relating to Permits and
Environmental Permits and (iii) such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have
a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the federal laws of the United States
and the State of New York, such counsel may rely upon opinions of counsel
admitted to practices in such other jurisdictions. Any opinions relied
upon by such counsel as aforesaid shall be delivered together with the
opinion of such counsel. Such opinion may expressly rely as to matters of
facts upon certificates furnished by appropriate Members and Managers of
the Buyer and its subsidiaries and by public officials.
8.4. Extension of Closing Date. If the approval by the FERC of
the establishment of the ISO (the "ISO Approval") shall not have been
obtained on or prior to the Condition Fulfillment Date, the parties agree
to defer the Closing Date until the date (the "Deferred Closing Date")
which is the earlier of (a) the last day in the month in which the ISO
Approval is deemed final under applicable law, provided that if there are
less than five (5) Business Days in the month in which the ISO Approval is
deemed final, then the last day in the month which follows the month in
which the ISO Approval is deemed final, or (b) August 31, 1999; provided,
however, that all conditions set forth in Section 8.2(a) and all conditions
set forth in Section 8.2(b) regarding the representations and warranties of
Seller shall be deemed to be fulfilled on the Deferred Closing Date unless
the nonfulfillment of such conditions primarily results from the acts or
omissions of Seller or from the occurrence of facts or circumstances that
primarily relate to the Seller's ownership and/or operation, or the
physical condition of the Purchased Assets. For purposes of this
Agreement, the "Condition Fulfillment Date" shall mean the date on which
all conditions set forth in Sections 8.1 and 8.2 shall have been fulfilled
but not earlier than the later of (i) the date on which all conditions set
forth in Section 8.3 have been fulfilled or waived and (ii) April 30, 1999.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. (a) Seller will indemnify, defend and
hold harmless the Buyer, Buyer's affiliates, and their respective Managers,
Members, employees and agents (each a "Buyer Indemnitee") from and against
any and all claims, causes of action, demands or suits (by any Person),
losses, liabilities, damages (excluding consequential and special damages),
obligations, payments, costs, Taxes and expenses (including, without
limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not covered by
insurance, (collectively, "Indemnifiable Losses"), asserted against or
suffered by the Buyer Indemnitee relating to, resulting from or arising out
of (i) any breach by Seller of any covenant or agreement of Seller
contained in this Agreement, (ii) the Excluded Liabilities; (iii) the
Excluded Assets; (iv) any breach of any representation in Sections 5.1,
5.2 and 5.3 hereof; (v) Seller's non-compliance with any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement, or (vi) the gross negligence or willful
misconduct of the Seller, or its affiliates or its contractors while on
Buyer's property (including without limitation, any easement provided
Seller with respect to such property) after the Closing to the extent such
Indemnifiable Loss is not caused by a the negligence or willful misconduct
of any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless Seller,
Seller's Affiliates, and their respective directors, officers, employees
and agents (each, a "Seller Indemnitee") from and against any and all
Indemnifiable Losses asserted against or suffered by Seller relating to,
resulting from or arising out of (i) any breach by the Buyer of any
covenant or agreement of the Buyer contained in this Agreement, (ii) the
Assumed Liabilities; (iii) the operation of the Purchased Assets after the
Closing Date, (iv) any breach of any representation in Article VI, or (v)
the gross negligence or willful misconduct of Buyer, its affiliates or
their respective contractors while on Seller's property after the Closing,
to the extent such Indemnifiable Loss is not caused by the negligence or
willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) Seller and the Buyer shall have indemnification obligations
with respect to Indemnifiable Losses asserted against or suffered by Seller
or the Buyer, as the case may be, to the extent that the aggregate of all
such Indemnifiable Losses exceed the Indemnification Floor. It is agreed
and understood that neither Seller nor the Buyer, as the case may be, shall
have any liability at any time for Indemnifiable Losses asserted against or
suffered by the other party until the aggregate amount of Indemnifiable
Losses asserted or suffered by such other party under this Section 9.1
shall exceed the Indemnification Floor, and then only to the extent that
the aggregate amount of Indemnifiable Losses exceeds the Indemnification
Floor. The term "Indemnification Floor" shall mean an amount equal to
$200,000.
(g) The rights and remedies of Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and
remedies which Seller and the Buyer may have under this Agreement for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be; or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b). Rights and
remedies under the Ancillary Agreements are as set forth therein.
9.2. Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (a) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (b) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which a party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of any Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that
such Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 9.2(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty
(20) calendar days (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed
to take such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable expenses thereof.
Without the prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any settlement of (a) any Third Party Claim with
respect to Income Taxes or (b) any other Third Party Claim which would lead
to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party claim without
leading to liability or the creation of a financial or other obligation on
the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer (other than with respect to Income Taxes) within ten (10) calendar
days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim (other than with respect to
Income Taxes) at any time, provided that in such event the Indemnitee shall
waive any right to indemnity hereunder unless the Indemnitee shall have
first sought the consent of the Indemnifying Party in writing to such
payment, settlement or compromise and such consent was unreasonably
withheld or delayed, in which event no claim for indemnity therefor
hereunder shall be waived.
(d) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) days)
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty (30) calendar day period, the
Indemnifying Party will be deemed to have accepted such Direct Claim. If
the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination. (a) This Agreement may be terminated at
any time prior to Closing Date, by mutual written consent of the Buyer and
Seller.
(b) This Agreement may be terminated by Seller or Buyer if (i)
the Closing shall not have been consummated on or before September 30, 1999
(the "Termination Date"); provided that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to Seller or
Buyer if its failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing Date to occur
on or before such date; and provided, further, that if on September 30,
1999, the conditions to the Closing set forth in Section 8.1(c) shall not
have been fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Termination Date
shall be the day which is eighteen (18) months from the date of this
Agreement.
(c) This Agreement may be terminated by either Seller or the
Buyer if (i) any governmental or regulatory body, the consent of which is a
condition to the obligations of Seller and the Buyer to consummate the
transactions contemplated hereby, shall have determined not to grant its
consent or shall condition such consent upon any material change to the
terms of this Agreement or the Ancillary Agreements or upon any other
condition that materially and adversely affects the value of the
transactions contemplated herein or therein for either party and all
appeals of such determination shall have been taken and have been
unsuccessful; (ii) any court of competent jurisdiction in the United States
or any State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby or in the Ancillary Agreements and such order, judgment
or decree shall have become final and nonappealable; or (iii) any statute,
rule or regulation shall have been enacted or interpreted by any State or
Federal government or governmental agency in the United States which
prohibits the transactions contemplated herein or in the Ancillary
Agreements.
(d) This Agreement may be terminated by the Buyer, if there has
been a material violation or breach by Seller of any agreement,
representation or warranty contained in this Agreement which (i) has
rendered the satisfaction of any condition to the obligations of the Buyer
impossible and such violation or breach has not been waived by the Buyer or
cured by the Seller within fifteen (15) days after receipt by Buyer of
notice specifying same or (ii) causes a Material Adverse Effect, of which
Buyer has notified Seller, and which Seller has not promptly exercised
commercially reasonable efforts to cure but in no event later than twenty
(20) days following such notification by Buyer.
(e) This Agreement may be terminated by Seller, if there has
been a material violation or breach by the Buyer of any agreement,
representation or warranty contained in this Agreement which has rendered
the satisfaction of any condition to the obligations of Seller impossible
and such violation or breach has not been waived by Seller or cured by
Buyer within fifteen (15) days after receipt by Buyer of notice specifying
same.
(f) This agreement may be terminated by either Seller or the
Buyer in accordance with the provisions of Section 7.11(b) or (c).
10.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein said termination shall be without any further liability of
either party or parties except as follows:
(a) in the event of termination of this Agreement by Seller
pursuant to Section 10.1(e), Seller shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Seller; and
(c) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn
from the agency or other person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of Seller and the Buyer.
11.2. Confidentiality. (a) All information regarding a
party (the "Disclosing Party") that is furnished directly or indirectly to
the other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two (2) years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3. Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.4. No Survival. Subject to the provisions of Article X,
each and every representation, warranty and covenant contained in this
Agreement other than (a) the covenants contained in Sections 3.2, 3.3, 3.4,
7.2(b), 7.2(c), 7.2(d), 7.3, 7.5, 7.6, 7.7, 7.8, 7.10, 7.14, 9.1 and 9.2
and in Article XI (which covenants shall survive in accordance with their
terms); (b) the representations and warranties contained in Sections 5.1,
5.2, 5.3, 6.1, 6.2, and 6.3 (which representations and warranties shall
survive for twelve (12) months from the Closing) and (c) the representation
and warranty in Section 5.21 (which representation and warranty shall
survive for the applicable statute of limitations) shall expire with, and
be terminated and extinguished by the consummation of the sale of the
Purchased Assets and the transfer of the Assumed Liabilities pursuant to
this Agreement and such representations, warranties and covenants shall not
survive the Closing Date; and none of Seller, the Buyer or any officer,
director, trustee or Affiliate of either of them shall be under any
liability whatsoever with respect to any such representation, warranty or
covenant.
11.5. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt on a
Business Day if during the normal business hours of the recipient, or if
not, on the next Business Day if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or
certified mail (return receipt requested), postage prepaid, to the parties
at the following addresses (or at such other address for a party as shall
be specified by like notice):
(a) If to Seller, to:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Sheldon S. Adler, Esq.
(b) if to the Buyer, to:
Southern Energy NY-Gen, L.L.C.,
c/o Southern Energy, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Randy Harrison, Vice-President
with copies to:
Troutman Sanders LLP
Nationsbank Plaza
Suite 5200
Atlanta, GA 30308
Attention: Robert C. Marshall, Esq.
and
Southern Company Services
270 Peachtree Street
Box 918
Atlanta, Georgia 30303
Attention: Vice President and Associate General Counsel
11.6. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder. The Buyer acknowledges that Seller has entered into an
Agreement and Plan of Merger whereby Seller will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly-owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Seller's receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Assets, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Seller agrees, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer,
pledge or other disposition of rights and interests hereunder so long as
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Seller,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8. Specific Performance. Seller and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement.
11.11. Entire Agreement. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement, including the Exhibits and
Schedules referred to herein or therein, and the Guaranty given to the
Seller by Southern Energy, Inc. embody the entire agreement and
understanding of the parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings of Seller contained
in any material made available to the Buyer pursuant to the terms of the
Confidentiality Agreement (including the Information Memorandum, dated May
1998 (previously made available to the Buyer by Seller and DLJ). This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such transactions other than the Confidentiality
Agreement.
11.12. Bulk Sales or Transfer Laws. The Buyer acknowledges
that Seller will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by
Seller with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, Seller and the Buyer have caused this
agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By /s/ D. Louis Peoples
___________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive
Officer
SOUTHERN ENERGY NY-GEN, L.L.C.
By /s/ Randy Harrison
______________________________
Name: Randy Harrison
Title: Vice President
Exhibit 10.61
-------------------------------
BOWLINE ADJACENT PROPERTY SALES AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY BOWLINE, L.L.C.
November 24, 1998
-------------------------------
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE
2.1. The Sale . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . 10
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . . 11
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . 15
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . 17
3.2. Proration. . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing . . . . . . . . . . . . . . 18
4.2. Payment of Purchase Price . . . . . . . . . . . . . . 19
4.3. Deliveries by Seller . . . . . . . . . . . . . . . . . 19
4.4. Deliveries by Buyer . . . . . . . . . . . . . . . . . 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1. Organization; Qualification . . . . . . . . . . . . . 22
5.2. Authority Relative to this Agreement . . . . . . . . . 22
5.3. Consents and Approvals; No Violation . . . . . . . . . 23
5.4. Undisclosed Liabilities . . . . . . . . . . . . . . . 25
5.5. Absence of Certain Changes or Events . . . . . . . . . 25
5.6. Title . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7. Insurance . . . . . . . . . . . . . . . . . . . . . . 26
5.8. Environmental Matters . . . . . . . . . . . . . . . . 27
5.9. Real Property Encumbrances . . . . . . . . . . . . . . 29
5.10. Condemnation . . . . . . . . . . . . . . . . . . . . 29
5.11. Certain Contracts and Arrangements . . . . . . . . . 29
5.12. Legal Proceedings, etc. . . . . . . . . . . . . . . . 29
5.13. Regulation as a Utility . . . . . . . . . . . . . . . 30
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization . . . . . . . . . . . . . . . . . . . . . 30
6.2. Authority Relative to this Agreement . . . . . . . . . 31
6.3. Consents and Approvals; No Violation . . . . . . . . . 31
6.4. Regulation as a Utility . . . . . . . . . . . . . . . 33
6.5. Availability of Funds . . . . . . . . . . . . . . . . 33
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Asset . 33
7.2. Access to Information . . . . . . . . . . . . . . . . 35
7.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . 36
7.4. Further Assurances . . . . . . . . . . . . . . . . . . 37
7.5. Public Statements . . . . . . . . . . . . . . . . . . 38
7.6. Consents and Approvals . . . . . . . . . . . . . . . . 38
7.7. Fees and Commissions . . . . . . . . . . . . . . . . . 41
7.8. Tax Matters . . . . . . . . . . . . . . . . . . . . . 41
7.9. Supplements to Schedules . . . . . . . . . . . . . . . 43
7.10. Risk of Loss . . . . . . . . . . . . . . . . . . . . 44
7.11. Real Estate Matters . . . . . . . . . . . . . . . . . 45
7.12. Condemnation . . . . . . . . . . . . . . . . . . . . 47
7.13. Environmental Insurance. . . . . . . . . . . . . . 47
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. . . . . . . . . . . 48
8.2. Conditions to Obligations of Buyer . . . . . . . . . . 51
8.3. Conditions to Obligations of Seller . . . . . . . . . 56
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification . . . . . . . . . . . . . . . . . . . 58
9.2. Defense of Claims . . . . . . . . . . . . . . . . . . 61
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2. Procedure and Effect of Termination . . . . . . . . . 69
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification . . . . . . . . . . . . . 70
11.2. Confidentiality . . . . . . . . . . . . . . . . . . . 70
11.3. Waiver of Compliance; Consents . . . . . . . . . . . 72
11.4. No Survival . . . . . . . . . . . . . . . . . . . . . 72
11.5. Notices . . . . . . . . . . . . . . . . . . . . . . . 73
11.6. Assignment . . . . . . . . . . . . . . . . . . . . . 74
11.7. Governing Law . . . . . . . . . . . . . . . . . . . . 76
11.8. Specific Performance . . . . . . . . . . . . . . . . 76
11.9. Counterparts . . . . . . . . . . . . . . . . . . . . 77
11.10. Interpretation . . . . . . . . . . . . . . . . . . 77
11.11. Entire Agreement . . . . . . . . . . . . . . . . . 77
11.12. Bulk Sales or Transfer Laws . . . . . . . . . . . . 78
BOWLINE ADJACENT PROPERTY SALES AGREEMENT
BOWLINE ADJACENT PROPERTY SALES AGREEMENT, dated as of November
24, 1998, between Orange and Rockland Utilities, Inc., a New York
corporation ("Seller"), and Southern Energy Bowline, L.L.C., a Delaware
limited liability company ("Buyer").
WHEREAS, the Seller owns certain real property, which includes
the Purchased Asset (as defined herein); and
WHEREAS, the Buyer desires to purchase, and the Seller desires to
sell, the Purchased Asset upon the terms and conditions hereinafter set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement, the following
terms have the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(2) "Agreement" means this Bowline Adjacent Property Sales
Agreement.
(3) "Business Day" shall mean any day other than Saturday,
Sunday or any day which is a legal holiday or a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.
(4) "Buyer Representatives" means the Buyer's accountants,
counsel, environmental consultants, financial advisors and other authorized
representatives.
(5) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(6) "Code" means the Internal Revenue Code of 1986, as amended.
(7) "Confidentiality Agreement" means the Confidentiality
Agreement, dated June 19, 1998, between the Seller and Southern Energy,
Inc.
(8) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and
charges of any kind.
(9) "Environmental Laws" means all Federal, state and local
laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders relating to pollution or
protection of the environment, natural resources or human health and
safety, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Substances (including, without limitation,
ambient air, surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, Release, transport or handling of Hazardous
Substances.
(10) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(11) "Federal Power Act" means the Federal Power Act of 1935.
(12) "FERC" means the Federal Energy Regulatory Commission or any
successor thereto.
(13) "Good Utility Practices" mean any of the practices, methods
and acts engaged in or approved by a significant portion of the electric
utility industry with respect to similar facilities during the relevant
time period which in each case, in the exercise of reasonable judgment in
light of the facts known or that should have been known at the time the
decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety, law, regulation, environmental protection, and
expedition. Good Utility Practices are not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others, but
rather to be acceptable practices, methods or acts generally accepted in
such industry.
(14) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may
contain levels of polychlorinated biphenyls; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and regulatory
effect; or (c) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any applicable Environmental Law.
(15) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(16) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
(17) "Income Tax" means any tax, charge, fee, levy, penalty, or
other assessment imposed by any U.S. federal, state, local or foreign
taxing authority (a) based upon, measured by or calculated with respect to
net income, profits or receipts (including, without limitation, capital
gains taxes and alternative minimum taxes but excluding sales, transfer and
similar taxes) or (b) based upon, measured by or calculated with respect to
multiple bases (including, without limitation, corporate franchise taxes)
if one or more of the bases on which such tax may be based, measured by or
calculated with respect to, is described in clause (a), in each case
together with any interest, penalties, or additions attributable thereto.
(18) "Income Tax Return" means any return, report, information
return or other document (including any related or supporting information)
supplied or required to be supplied to any authority with respect to Income
Taxes.
(19) "Instrument of Assumption" means the Instrument of
Assumption in the form of Exhibit A hereto.
(20) "Internal Revenue Service" means the United States Internal
Revenue Service, or any successor thereto.
(21) "Material Adverse Effect" means any change in or effect on
the Purchased Asset after the date of this Agreement that is, individually
or in the aggregate, materially adverse to the condition (financial or
physical, as compared to the condition on the date of this Agreement) of
the Purchased Asset other than any materially adverse change in or effect
on the Purchased Asset which is cured (including by the payment of money)
by the Seller before the Termination Date.
(22) "NJBPU" means the New Jersey Board of Public Utilities or
any successor thereto.
(23) "NYPSC" means the New York Public Service Commission or any
successor thereto.
(24) "Other Sales Agreements" means the Bowline Generating
Station Sales Agreement between the Seller, Consolidated Edison Company of
New York and the Buyer; the Lovett Generating Station Sales Agreement
between the Seller and Southern Energy Lovett, L.L.C.; and the Gas Turbines
and Hydroelectric Generating Station Sales Agreement between the Seller and
Southern Energy NY-Gen, L.L.C., each dated as of the date of this
Agreement.
(25) "PAPUC" means the Pennsylvania Public Utility Commission or
any successor thereto.
(26) "Permitted Encumbrances" means (i) those exceptions to title
to the Purchased Asset contained in the documents listed on Schedules 5.6
and 5.9, (ii) any state of facts that a current survey of the Purchased
Asset would disclose; (iii) statutory liens for current Taxes, assessments
or other governmental charges not yet due or delinquent or the validity of
which is being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally
accepted accounting principles, provided that the aggregate amount being so
contested does not exceed $50,000; (iv) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary
course of business relating to the Seller's obligations which are not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings, provided that the aggregate amount of such
liens does not exceed $50,000; (v) zoning, entitlement, conservation
restrictions and other land use and environmental regulations by
governmental authorities; provided that the foregoing do not materially
interfere with the present use of the Purchased Asset; and (vi) such other
liens, imperfections in or failure of title, charges, easements,
restrictions and encumbrances which do not materially detract from the
value of or materially interfere with the present use of the Purchased
Asset and neither secure indebtedness nor individually or in the aggregate
have or would have a Material Adverse Effect or which will be discharged or
released prior to or simultaneously with the Closing.
(27) "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an unincorporated organization or a governmental
entity or any department or agency thereof.
(28) "Purchased Asset" means all of Seller's right, title and
interest in, to and under the property adjacent to the Bowline Point
Generating Station, located in the Town of Haverstraw, Rockland County, New
York and identified as Section 21.17, Block 1, Lots 2 through 5 and Section
27.05, Block 1, Lots 1 and 3 in the records of the Town of Haverstraw,
consisting of a total of approximately 98 acres along the Hudson River,
including some 68 acres of upland area and 23 acres under the waters of the
Hudson River, all as described in Schedule 5.6.
(29) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, leach, dump or allow to escape into or
through the environment.
(30) "SEC" means the Securities and Exchange Commission or any
successor thereto.
(31) "Securities Act" means the Securities Act of 1933, as
amended.
(32) "Subsidiary" when used in reference to any other person
means any corporation of which outstanding securities having ordinary
voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person.
(33) "Tax" means any tax, charge, fee, levy, penalty or other
assessment imposed by any U.S. federal, state, local or foreign taxing
authority, including, but not limited to, any income, gross receipts,
license, stamp, occupation, environmental, excise, property, sales,
transfer, payroll, withholding, social security or any other tax of any
kind whatsoever, including any interest, penalties or additions
attributable thereto.
(34) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
other related or supporting information) supplied or required to be
supplied to any authority with respect to Taxes and including any
supplement or amendment thereof.
(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
---- -------
ALTA 7.11
Assumed Liabilities 2.3
Buyer Preamble
Buyer Indemnitee 9.1
Buyer Required Regulatory Approvals 6.3
CEI 11.6
Closing 4.1
Closing Date 4.1
Confidential Information 11.2
Defect of Title 7.11
Direct Claim 9.2
Disclosing Party 11.2
DLJ 7.7
Environmental Insurance 7.13
Environmental Permits 5.8
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1
Indemnifiable Losses 9.1
Indemnification Floor 9.1
Indemnifying Party 9.1
Indemnitee 9.1
NYBTU 7.11
Permits 3.2
Purchase Price 3.1
Purchased Asset Preamble
Recipiant 11.2
Rockland County 7.12
Seller Preamble
Seller Balance Sheet 5.4
Seller Indemnitee 9.1
Seller Required Regulatory Approvals 5.3
Seller's Easements 4.4
Termination Date 10.1
Third Party Claim 9.2
Title Commitment 7.11
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 Seller's right, title and
interest in, to and under the real and personal property, tangible or
intangible, owned by the Seller and constituting the Purchased Asset.
2.2. Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Asset shall not include the following (herein
referred to as the "Excluded Assets"):
(a) all cash, bank deposits, cash equivalents and accounts
receivable;
(b) the name "Orange and Rockland Utilities, Inc.", "Orange and
Rockland", "O&R", "ORU" or any related or similar trade names, trademarks,
service marks or logos; and
(c) any refund, credit, penalty payment, adjustment or
reconciliation related to Taxes (excluding Taxes relating to real property)
paid prior to the Closing Date in respect of the Purchased Asset, whether
such refund, adjustment or reconciliation is received as a payment or as a
credit against future Taxes payable.
2.3. Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to the Seller the Instrument of Assumption pursuant to which the
Buyer shall assume and agree to discharge to the maximum extent permitted
by law, all of the following liabilities and obligations of the Seller,
which relate to the Purchased Asset, other than Excluded Liabilities, in
accordance with the respective terms and subject to the respective
conditions thereof:
(a) all liabilities and obligations of the Seller arising or
accruing after the Closing Date under the contracts and other agreements
disclosed and entered into by the Seller with respect to the Purchased
Asset after the date hereof consistent with the terms of this Agreement;
except in each case, to the extent such liabilities and obligations, but
for a breach or default by the Seller, would have been paid, performed or
otherwise discharged on or prior to the Closing Date or to the extent the
same arise out of any such breach or default or any event which after the
giving of notice would constitute a default by Seller;
(b) all liabilities and obligations associated with the
Purchased Asset in respect of Taxes for which the Buyer is liable pursuant
to Section 7.8;
(c) any liabilities and obligations for which the Buyer has
indemnified the Seller pursuant to Section 9.1;
(d) any liability, obligation or responsibility under or related
to former, current or future Environmental Laws or the common law, whether
such liability or obligation or responsibility is known or unknown,
contingent or accrued, arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to the Closing
Date, with respect to the ownership or operation of the Purchased Asset;
(ii) loss of life, injury to persons or property or damage to natural
resources (whether or not such loss, injury or damage arose or was made
manifest before the Closing Date or arises or becomes manifest after the
Closing Date), caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, discharged from,
emitted from or migrating from the Purchased Asset prior to the Closing
Date, including, but not limited to, Hazardous Substances contained in
building materials at the Purchased Asset or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at
or adjacent to the Purchased Asset; and (iii) the investigation and/or
remediation (whether or not such investigation or remediation commenced
before the Closing Date or commences after the Closing Date) of Hazardous
Substances that are present or have been Released prior to the Closing Date
at, on, in, under, adjacent to, discharged from, emitted from or migrating
from the Purchased Asset, including, but not limited to, Hazardous
Substances contained in building materials at the Purchased Asset or in the
soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased Asset; provided, as to
all of the above, that nothing set forth in this subsection 2.3(d) shall
require the Buyer to assume any liabilities that are expressly excluded in
Section 2.4;
(e) any liability, obligation or responsibility under or related
to former, current or future Environmental Laws or the common law, whether
such liability or obligation or responsibility is known or unknown,
contingent or accrued, arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, on or after the
Closing Date, with respect to the ownership or use of the Purchased Asset;
(ii) compliance with applicable Environmental Laws on or after the Closing
Date with respect to the ownership or use of the Purchased Asset; (iii)
loss of life, injury to persons or property or damage to natural resources
caused (or allegedly caused) by the presence or Release of Hazardous
Substances at, on, in, under, adjacent to, discharged from, emitted from or
migrating from the Purchased Asset on or after the Closing Date, including,
but not limited to, Hazardous Substances contained in building materials at
the Purchased Asset or in the soil, surface water, sediments, groundwater,
landfill cells, or in other environmental media at or adjacent to the
Purchased Asset; (iv) loss of life, injury to persons or property or damage
to natural resources caused (or allegedly caused) by the off-site disposal,
storage, transportation, discharge, Release, recycling, or the arrangement
for such activities, of Hazardous Substances, on or after the Closing Date,
in connection with the ownership or operation of the Purchased Asset; (v)
the investigation and/or remediation of Hazardous Substances that are
present or have been released on or after the Closing Date at, on, in,
under, adjacent to, discharged from, emitted from or migrating from the
Purchased Asset, including, but not limited to, Hazardous Substances
contained in building materials at the Purchased Asset or in the soil,
surface water, sediments, groundwater, landfill cells or in other
environmental media at or adjacent to the Purchased Asset; and (vi) the
investigation and/or remediation of Hazardous Substances that are disposed,
stored, transported, discharged, Released, recycled, or the arrangement of
such activities, on or after the Closing Date, in connection with the
ownership or use of the Purchased Asset, at any off-site location;
provided, that nothing set forth in this subsection 2.3(e) shall require
the Buyer to assume any liabilities that are expressly excluded in Section
2.4;
(f) all liabilities and obligations of the Seller with respect
to the Purchased Asset under the agreements or consent orders set forth on
Schedule 5.8(c); and
(g) all other liabilities or obligations other than those
liabilities and obligations noted in (a) through (f) above, exclusively
relating to the Purchased Asset no matter when the events or occurrences
giving rise to such liabilities or obligations took place, the value of
which liabilities and obligations, together with the liabilities and
obligations relating to the "Purchased Assets" as defined in each of the
Other Sales Agreements in the aggregate, shall not exceed $3 million.
All of the foregoing liabilities and obligations to be assumed by
the Buyer hereunder (excluding any Excluded Liabilities) are referred to
herein as the "Assumed Liabilities." It is understood and agreed that
nothing in this Section 2.3 shall constitute a waiver or release of any
claims arising out of the contractual relationships between the Seller and
the Buyer.
2.4. Excluded Liabilities. The Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
(the "Excluded Liabilities"):
(a) any liabilities or obligations of the Seller in respect of
any Excluded Assets or other assets of the Seller which are not part of the
Purchased Asset;
(b) any liabilities or obligations in respect of Taxes
attributable to the Purchased Asset for taxable periods ending on or before
the Closing Date, except for Taxes for which the Buyer is liable pursuant
to Section 7.8(a);
(c) any liabilities, obligations, or responsibilities relating
to the disposal, storage, transportation, discharge, Release, recycling, or
the arrangement for such activities, of Hazardous Substances that were
generated at the Purchased Asset, at any off-site location, where the
disposal, storage, transportation, discharge, Release, recycling or the
arrangement for such activities at said off-site location occurred prior to
the Closing Date, provided that for purposes of this Section, "off-site
location" does not include any location to which Hazardous Substances
disposed of, discharged from, emitted from or Released at the Purchased
Asset have migrated, including, but not limited to, surface waters that
have received waste water discharges from the Purchased Asset;
(d) any liabilities or obligations required to be accrued by the
Seller in accordance with generally accepted accounting principles and/or
the FERC Uniform System of Accounts on or before the Closing Date with
respect to liabilities related to the Purchased Asset other than any
liability assumed by Buyer under any provision of this Agreement, including
without limitation, Section 2.3;
(e) any liabilities or obligations with respect to liabilities
relating to the Purchased Asset relating to any personal injury, including
bodily injury, (including, but not limited to workers' compensation
claims), discrimination, wrongful discharge, unfair labor practice or
similar claim or cause of action with respect to any act or occurrence
arising prior to or on the Closing Date other than liabilities or
obligations for injury to persons or loss of life assumed by the Buyer in
Sections 2.3(d) and 2.3(e);
(f) any fines or penalties imposed by a governmental agency or
authority resulting from (A) an investigation or proceeding with respect to
any act or occurrence arising prior to or on the Closing Date or (B)
illegal acts, willful misconduct or gross negligence of the Seller prior to
or on the Closing Date.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Asset
shall be an amount equal to the sum of $12,500,000 (the "Purchase Price").
3.2. Proration. (a) The Buyer and the Seller agree that all of
the items normally prorated, including those listed below, relating to the
Purchased Asset 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) real estate, occupancy and any other Taxes (excluding
Income Taxes), assessments and other charges, if any, on or with
respect to the ownership or use of the Purchased Asset;
(ii) rent, Taxes (excluding Income Taxes) and other items
payable by or to the Seller; and
(iii) any permit, license or registration fees with
respect to any Environmental Permit or other permit relating to the
ownership or use of the Purchased Asset ("Permit").
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based
upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and
such Taxes or fees shall be reprorated upon request of either the Seller or
the Buyer made within sixty (60) days of the date that the actual amounts
become available. The Seller and the Buyer agree to furnish each other
with such documents and other records as may be reasonably requested in
order to confirm all proration calculations made pursuant to this Section
3.2.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, at 10:00 A.M. (local time) on April
30, 1999; or at such other place or later date and time as the parties may
agree. The date and time at which the Closing actually occurs is
hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Asset, the Buyer will pay or cause to be paid to
the Seller at the Closing in United States dollars by wire transfer of
immediately available funds or by such other means as are agreed to by the
Seller and the Buyer.
4.3. Deliveries by Seller. At the Closing, the Seller will
deliver the following to the Buyer:
(a) The certificates and the opinions of counsel contemplated by
Sections 8.2(c), (e), and (f);
(b) One or more bargain and sale deeds of conveyance in
statutory form, with covenant against grantor's acts, transferring Seller's
interest in the Purchased Asset to the Buyer, duly executed and
acknowledged by the Seller and in recordable form substantially in the form
of Exhibit B hereto;
(c) Copies of the resolutions adopted by the board of directors
of the Seller, certified by the Secretary of the Seller, as having been
duly and validly adopted and as being in full force and effect, authorizing
the execution and delivery by the Seller of this Agreement and other
closing documents described in this Agreement to which the Seller is a
party, and the performance by the Seller of its obligations hereunder and
thereunder;
(d) All such other instruments of assignment or conveyance as
shall, in the reasonable opinion of the Buyer and its counsel, be necessary
to transfer to the Buyer the Purchased Asset in accordance with this
Agreement and where necessary or desirable, in recordable form;
(e) A certification of non-foreign status in a form which
complies with Section 1445 of the Code and the regulations thereunder;
provided, however, that if the Seller shall fail to deliver such
certification, the Buyer shall withhold at the Closing and pay over to the
appropriate taxing authority any amount equal to ten (10) percent of the
total Amount Realized (as defined under Section 1445 of the Code); and
(f) Such other agreements, documents, instruments and writings
as are required to be delivered by the Seller at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith.
4.4. Deliveries by Buyer. At the Closing, the Buyer will deliver
the following to the Seller:
(a) The Purchase Price by wire transfer of immediately available
funds or by such other means as are agreed to by the Seller and the Buyer;
(b) The certificate and opinion of counsel contemplated by
Sections 8.3(c) and (d);
(c) The Instrument of Assumption, duly executed by the Buyer;
(d) All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the
Buyer to assume the Assumed Liabilities in accordance with this Agreement;
(e) Copies of the resolutions adopted by the Members or Managers
or other similar governing body of the Buyer, certified by the Member of
the Buyer, as having been duly and validly adopted and as being in full
force and effect, authorizing the execution and delivery by the Buyer of
this Agreement and other closing documents described in this Agreement to
which the Buyer is a party, and the performance by the Buyer of its
obligations hereunder and thereunder;
(f) Such other agreements, documents, instruments and writings
as are required to be delivered by the Buyer at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith; and
(g) One or more easements to the extent necessary for Seller to
continue and maintain their transmission and distribution business, in
favor of the Seller (the "Seller's Easements") with respect to the
Purchased Asset conveyed to Buyer, duly executed and acknowledged by Buyer,
each substantially in the form of Exhibit C hereto, and Buyer shall bear
any transfer or similar tax incurred in connection herewith as set forth in
Section 7.8.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Buyer as follows:
5.1. Organization; Qualification. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to
own, lease, and operate its properties and to carry on its business as is
now being conducted. The Seller has heretofore delivered to the Buyer
complete and correct copies of its Certificate of Incorporation and By-Laws
as currently in effect.
5.2. Authority Relative to this Agreement. The Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Seller and no other corporate proceedings on the part of
the Seller are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Seller, and assuming that this Agreement
constitutes a valid and binding agreement of the Buyer, subject to the
receipt of the Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals, constitutes a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally or general principles of equity.
5.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 5.3(a), and other than obtaining the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Seller nor the
performance by Seller of its obligations under this Agreement or the
consummation of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the Certificate of
Incorporation or By-Laws of the Seller, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (x) where the failure to
obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not have a Material Adverse Effect or would
not prohibit or restrain the execution, delivery or performance of this
Agreement, or the consummation of the transactions contemplated hereby in
any material respect or (y) for those requirements which become applicable
to the Seller as a result of the specific regulatory status of the Buyer
(or any of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which the Buyer (or
any of its Affiliates) is or proposes to be engaged; (iii) result in a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which the Seller, or any of its subsidiaries, is a party or
by which the Seller, or any of its subsidiaries or any of the Purchased
Asset may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents
have been obtained or which, individually or in the aggregate, would not
have a Material Adverse Effect; or (iv) violate any order, writ,
injunction, judgment, law, decree, statute, rule or regulation applicable
to the Seller, or any of its assets, which violation would, individually or
in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i)
any required approvals under the Federal Power Act, (ii) (A) notice by the
Seller to, and an order by, the NYPSC approving the transactions
contemplated by this Agreement, (B) notice by the Seller to, and an order
by, the NJBPU approving the transactions contemplated by this Agreement and
(C) notice by the Seller to, and an order by, the PAPUC approving the
transactions contemplated by this Agreement, (iii) the approval, if
required, of the SEC pursuant to the Holding Company Act, and (iv) the
filings by the Seller and the Buyer required by the HSR Act and the
expiration or earlier termination of all waiting periods under the HSR Act
(the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any governmental or regulatory body or authority is
necessary for the consummation by the Seller of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations consents or approvals which, if not obtained or
made, will not, in the aggregate, have a Material Adverse Effect.
5.4. Undisclosed Liabilities. The balance sheet of the Seller as
of December 31, 1997 is referred to herein as the "Seller Balance Sheet."
Except as set forth in Schedule 5.4, to the Seller's knowledge, the Seller
has no liability or obligation relating to the Purchased Asset, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet or
disclosed in the notes thereto, which are not accrued or reserved against
in the Seller Balance Sheet or disclosed in the notes thereto in accordance
with generally accepted accounting principles, except those which either
were incurred in the ordinary course of business, after the date of the
Seller Balance Sheet, or those which in the aggregate are not material to
the Purchased Asset.
5.5. Absence of Certain Changes or Events. Except (i) as set
forth in Schedule 5.5, or in the reports, schedules, registration
statements and definitive proxy statements filed by the Seller with the SEC
and (ii) as otherwise contemplated by this Agreement, to the Seller's
knowledge, since the date of the Seller Balance Sheet there has not been:
(a) any Material Adverse Effect; (b) any damage, destruction or casualty
loss, whether covered by insurance or not, which had a Material Adverse
Effect; (c) any entry into any agreement, commitment or transaction
(including, without limitation, any borrowing or capital financing) by the
Seller, which is material to the Purchased Asset, except agreements,
commitments or transactions in the ordinary course of business or as
contemplated herein; or (d) any change by the Seller, with respect to the
Purchased Asset, in accounting methods, principles or practices except as
required or permitted by generally accepted accounting principles.
5.6. Title. Set forth in Schedule 5.6 is a true and complete
list of all real property which is part of the Purchased Asset. The Seller
has good and marketable record title to the Purchased Asset, subject only
to Permitted Encumbrances.
5.7. Insurance. Except as set forth in Schedule 5.7(a), all
material policies of fire, liability, and other forms of insurance
purchased or held by and insuring or related to the Purchased Asset are in
full force and effect, all premiums with respect thereto covering all
periods up to and including the date as of which this representation is
being made have been paid, and no notice of cancellation or termination has
been received with respect to any such policy which was not replaced on
substantially similar terms prior to the date of such cancellation. Except
as described in Schedule 5.7(b), the Seller has not been refused any
insurance with respect to the Purchased Asset nor has its coverage been
limited by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last five (5)
years nor has it received written notice from any insurer with respect to
the Purchased Asset of defects or inadequacies with respect thereto or the
improvements located thereon that would materially adversely affect the
insurability of the same or cause the imposition of extraordinary premiums
therefor.
5.8. Environmental Matters. (a) Except as disclosed in Schedule
5.8(a)(i), to the Seller's knowledge, the Seller holds, and is in
compliance with, all permits, licenses, certificates and governmental
authorizations ("Environmental Permits") required for Seller to own or use
the Purchased Asset under applicable Environmental Laws, and the Seller is
otherwise in compliance with applicable Environmental Laws with respect to
the Purchased Asset except for such failures to hold or comply with
required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws, which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect. Schedule
5.8(a)(ii) sets forth all Environmental Permits relating to the ownership
or use of the Purchased Asset.
(b) The Seller has not received any written request for
information, or been notified that it is a potentially responsible party,
under CERCLA or any similar State law with respect to any on-site or off-
site location related to the Purchased Asset, and no investigation and/or
remediation is being conducted or is pending at the Purchased Asset (other
than investigations or remediation conducted by or on behalf of Seller or
Buyer in connection with this transaction), except for such liability under
such laws or investigation or remediation as would not be reasonably likely
to have a Material Adverse Effect.
(c) With respect to the Purchased Asset, no action, claim
investigation or other proceeding relating to any Environmental Law is
pending or, to the Seller's knowledge, threatened, and Seller has not
entered into or agreed to any consent decree or order, and are not subject
to any judgment, decree, or administrative or judicial order relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances under any Environmental Law, except such consent
decrees or orders, judgments, decrees or administrative or judicial orders,
actions, claims, investigations or proceedings that (i) would not be
reasonably likely to have a Material Adverse Effect, (ii) appear on
Schedule 5.8(c) or (iii) relate to off-site disposal locations.
(d) All written reports of audits and studies performed by or on
behalf of Seller, and in the possession of Seller, which concern Releases
of Hazardous Substances at, on, in, or under the Purchased Asset or
compliance of Purchased Asset with Environmental Laws, conducted within the
last two (2) years, are listed in Schedule 5.8(d) and have been provided to
Buyer.
(e) The representations and warranties made in this Section 5.8
are the Seller's exclusive representations and warranties relating to
environmental matters.
5.9. Real Property Encumbrances. Schedule 5.9 lists real
property encumbrances affecting the Purchased Asset including matters
contained in deeds, easements and options. True and correct copies of all
current surveys, abstracts, title opinions and policies of title insurance
currently in force with respect to the Purchased Asset have been delivered
by the Seller to the Buyer. None of the Permitted Encumbrances materially
adversely affect the existing use of the Purchased Asset.
5.10. Condemnation. Except as set forth on Schedule 5.10,
neither the whole nor any part of the Purchased Asset or any other real
property or rights leased, used or occupied by the Seller in connection
with the ownership of the Purchased Asset is subject to any pending suit
for condemnation or other taking by any public authority, and, to the
knowledge of the Seller, no such condemnation or other taking is threatened
or contemplated.
5.11. Certain Contracts and Arrangements. Except as listed
in Schedule 5.11(a), the Seller is not a party to any written contract,
agreement, commitment, understanding or instrument which is material to the
Purchased Asset.
5.12. Legal Proceedings, etc. Except as set forth in
Schedule 5.12 or in any filing made by the Seller pursuant to the
Securities Act or the Exchange Act, there are no claims, actions, or
proceedings pending or investigation pending or, to the Seller's knowledge,
threatened against the Seller relating to the Purchased Asset before any
court, arbitrator, governmental or regulatory authority or body acting in
an adjudicative capacity, which, if adversely determined, would have a
Material Adverse Effect or would prohibit or restrain the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby. Except as set forth in Schedule 5.12,
the Seller is not subject to any outstanding judgment, rule, order, writ,
injunction or decree of any court, governmental or regulatory authority
relating to the Purchased Asset which has a Material Adverse Effect.
5.13. Regulation as a Utility. The Seller and certain of its
subsidiaries are regulated as public utilities in the States of New York,
New Jersey and Pennsylvania, as set forth on Schedule 5.13(a). Except as
set forth on Schedule 5.13(b), the Seller is not subject to regulation as a
public utility or public service company (or similar designation) by the
United States, any State of the United States, any foreign country or any
municipality or any political subdivision of the foregoing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Seller as follows:
6.1. Organization. The Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Buyer has heretofore delivered to the Seller complete and
correct copies of its Certificate of Formation and Limited Liability
Company Agreement (or other similar governing documents), as currently in
effect.
6.2. Authority Relative to this Agreement. The Buyer has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Manager or
Members of the Buyer and the Board of Directors of both Southern Energy,
Inc. and The Southern Company and no other company proceedings on the part
of the Buyer or such Affiliates are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Buyer, and assuming
that this Agreement constitutes a valid and binding agreement of the
Seller, subject to the receipt of the Buyer Required Regulatory Approvals
and the Seller Required Regulatory Approvals, constitutes a valid and
binding agreement of the Buyer, enforceable against the Buyer in accordance
with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
6.3. Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 6.3(a), and other than obtaining the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Buyer nor the purchase
by the Buyer of the Purchased Asset pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Formation or Limited Liability Company Agreement (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which the
Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in Schedule 6.3(a) , the filings by the
Buyer and the Seller required by the HSR Act (the filings and approvals
referred to in Schedule 6.3(a) and with respect to the HSR Act are
collectively referred to as the "Buyer Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any governmental or regulatory body or authority is
necessary for the consummation by the Buyer of the transactions
contemplated hereby.
6.4. Regulation as a Utility. On the Closing Date, the Buyer
will be an exempt wholesale generator under the Holding Company Act,
although it is a subsidiary of a registered public utility holding company
under the Holding Company Act. On the Closing Date, the Buyer also will be
a public utility under the Federal Power Act. Except as set forth in
Schedule 6.4, the Buyer is not subject to regulation as a public utility or
public service company (or similar designation) by the United States, any
State of the United States, any foreign country or any municipality or any
political subdivision of the foregoing.
6.5. Availability of Funds. The Buyer has sufficient funds
available to it or will receive binding written commitments from
responsible financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Asset. Except
as described in Schedule 7.1, during the period from the date of this
Agreement to the Closing Date, the Seller will maintain the Purchased Asset
according to its ordinary and usual course of business consistent with Good
Utility Practices. Without limiting the generality of the foregoing, and,
except as contemplated in this Agreement or as described in Schedule 7.1,
prior to the Closing Date, without the prior written consent of the Buyer
(unless such consent would be prohibited by law), the Seller will not with
respect to the Purchased Asset:
(a) make any material change in the maintenance of the Purchased
Asset;
(b) make any capital expenditures with respect to the Purchased
Asset or enter into any contract or commitment therefor;
(c) sell, lease (as lessor), transfer or otherwise dispose of,
any part of the Purchased Asset, other than assets used, consumed or
replaced in the ordinary course of business consistent with Good Utility
Practices and not mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Asset;
(d) amend or terminate prior to the expiration date, or waive
any material term or give consent to any material request with respect to
any of the Permits or Environmental Permits, except to the extent that such
amendment, termination, waiver or consent (i) will not have a material
impact on operations of the Purchased Asset, including the cost of said
operations or (ii) is required by applicable law, including applicable
Environmental Law; and
(e) enter into any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the
transactions set forth in the foregoing paragraphs (a) through (d).
7.2. Access to Information. (a) Between the date of this
Agreement and the Closing Date, the Seller will, during ordinary business
hours and upon reasonable notice (i) give the Buyer and the Buyer
Representatives reasonable access to its managerial personnel and all
books, records, and property constituting the Purchased Asset to which the
Buyer is permitted access by law, (ii) permit the Buyer to make such
reasonable inspections thereof as the Buyer may reasonably request,
including conducting environmental sampling at, on and underneath the
Purchased Asset and performing compliance audits at the Purchased Asset, if
Buyer reasonably deems such sampling necessary after reviewing further
information which becomes available after the date hereof, so long as
Seller provides its consent to such sampling, which consent shall not be
unreasonably withheld; (iii) cause its officers and advisors to furnish the
Buyer with such information with respect to the Purchased Asset as the
Buyer may from time to time reasonably request and assist Buyer in such
inspections; (iv) cause its officers and advisors to furnish the Buyer a
copy of each report, schedule or other document filed or received by them
with or from the SEC, NYPSC, NJBPU, PAPUC, FERC, New York Independent
System Operator or other governmental authority with respect to the
Purchased Asset; provided, however, that (A) any such investigation shall
be conducted in such a manner as not to interfere unreasonably with the
Purchased Asset, (B) the Seller shall not be required to take any action
which would constitute a waiver of the attorney-client privilege and (C)
the Seller need not supply the Buyer with any information which the Seller
is under a legal obligation not to supply; provided, however, that Seller
shall have used commercially reasonable efforts to have such obligations
waived.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be subject to
the provisions of the Section 11.2 hereof and shall be treated as
Confidential Information.
(c) For a period of seven (7) years after the Closing Date, the
Seller and its representatives shall have reasonable access to (i) all of
the books and records of the Purchased Asset, as the case may be,
transferred to the Buyer hereunder to the extent that such access (A) may
reasonably be required by the Seller in connection with matters relating to
the Purchased Asset prior to the Closing Date and (B) is not otherwise
prohibited by law. Such access shall be afforded by the Buyer upon receipt
of reasonable advance written notice and during normal business hours. The
Seller shall be responsible for any costs or expenses incurred by them
pursuant to this Section 7.2(c). If the Buyer shall desire to dispose of
any such books and records prior to the expiration of such seven (7) year
period, the Buyer shall, prior to such disposition, give the Seller a
reasonable opportunity at the Seller's expense, to segregate and remove
such books and records as the Seller may select. Any information provided
by Buyer to Seller pursuant to this Section 7.2(c) shall be deemed
Confidential Information.
7.3. Expenses. Except to the extent specifically provided
herein, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such costs and expenses.
7.4. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
sale of the Purchased Asset pursuant to this Agreement. From time to time
after the date hereof, without further consideration, the Seller will, at
its own expense, execute and deliver such documents to the Buyer as the
Buyer may reasonably request in order more effectively to vest in the Buyer
good title to the Purchased Asset. Neither party shall, without the prior
written consent of the other party, take or fail to take any action which
might reasonably be expected to prevent or materially impede, interfere
with or delay the transactions contemplated by this Agreement. From time
to time after the date hereof, the Buyer will, at its own expense, execute
and deliver such documents to the Seller as the Seller may reasonably
request in order to more effectively consummate the sale of the Purchased
Asset pursuant to this Agreement.
(b) To the extent that any Seller's rights under any guaranties,
warranties and indemnification applicable to the Purchased Asset or the
Assumed Liabilities are nontransferable or nonassignable, Seller shall use
its commercially reasonable efforts to provide to Buyer the benefits
thereof in some other manner upon the request of Buyer.
7.5. Public Statements. The parties shall consult with each
other prior to issuing any public announcement, statement or other
disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or
stock exchange rules or regulations and except that the parties may make
public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent that such
public announcements, statements or other disclosures do not violate
Section 11.2 of this Agreement.
7.6. Consents and Approvals. (a) The Seller and the Buyer shall
each file or cause to be filed with the Federal Trade Commission and the
United States Department of Justice any notifications required to be filed
under the HSR Act and the rules and regulations promulgated thereunder with
respect to the transactions contemplated hereby. The parties shall consult
with each other as to the appropriate time of filing such notifications and
shall use their best efforts to make such filings at the agreed upon time,
to respond promptly to any requests for additional information made by
either of such agencies, and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date after the date of
filing. Buyer shall bear the cost of all filing fees under the HSR Act.
(b) The Seller and the Buyer shall cooperate with each other and
(i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all reasonable efforts to obtain the
transfer or reissuance to the Buyer of all consents, approvals and
authorizations of all governmental bodies and (iv) use all reasonable
efforts to obtain all necessary consents, approvals and authorizations of
all other parties, in the case of each of the foregoing clauses (i), (ii),
(iii) and (iv), necessary or advisable to consummate the transactions
contemplated by this Agreement (including, without limitation, the Seller
Required Regulatory Approvals and the Buyer Required Regulatory Approvals)
or required by the terms of any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument to which the Seller or the Buyer is a party or by which either
of them is bound. The Seller shall have the right to review and approve in
advance all characterizations of the information relating to Purchased
Asset; and each of the Seller and the Buyer shall have the right to review
and approve in advance all characterizations of the information relating to
the transactions contemplated by this Agreement which appear in any filing
made in connection with the transactions contemplated hereby. The parties
hereto agree that they will consult with each other with respect to the
transferring to the Buyer or the obtaining by the Buyer of all such
consents, approvals and authorizations of all third parties and
governmental bodies. The Seller and the Buyer shall designate separate
counsel with respect to all applications, notices, petitions and filings
(joint or otherwise) relating to this Agreement and the transactions
contemplated hereby on behalf of the Seller, on the one hand and the Buyer
on the other hand, with all governmental bodies.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal,
State or local governmental authority or agency or any third party in
connection with any Federal, State or local governmental consents and
approvals legally required for the consummation of the transactions
contemplated hereby and shall not propose or enter into any such
stipulation or agreement without the other party's prior written consent,
which consent shall not be unreasonably withheld.
(d) Buyer shall assume primary responsibility for securing the
transfer or reissuance of the Permits effective as of the Closing Date.
Seller shall cooperate with Buyer's efforts in this regard and shall use
its best efforts to assist in the transfer or reissuance when so requested
by Buyer. In the event that Buyer is unable, despite commercially
reasonable efforts, to obtain a transfer or reissuance of one or more
Permits as of the Closing Date, Buyer may use the Permits issued to Seller
to the extent permissible under applicable laws and regulations provided
(i) Buyer notified Seller prior to Closing, (ii) Buyer continues to make
commercially reasonable efforts to obtain a transfer or reissuance of such
Permits after the Closing, and (iii) Buyer indemnifies Seller for any
losses, claims or penalties suffered by Seller in connection with the
Permit that is not transferred or reissued as of the Closing Date
resulting from Buyer's ownership or use of the Purchased Asset following
the Closing Date. In no event shall Buyer use or otherwise rely on a
Permit issued to Seller beyond one (1) year after Closing unless Buyer has,
after exercising its commercially reasonable efforts, been unable to obtain
same and such reliance is not prohibited by law.
7.7. Fees and Commissions. The Seller and the Buyer each
represent and warrant to the other that, except for Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), which is acting for and at the
expense of the Seller, and Credit Suisse First Boston Corporation, which is
acting for and at the expense of the Buyer, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Seller and the Buyer
will pay to the other or otherwise discharge, and will indemnify and hold
the other harmless from and against, any and all claims or liabilities for
all brokerage fees, commissions and finder's fees (other than as described
above) incurred by reason of any action taken by such party.
7.8. Tax Matters. (a) Notwithstanding any other provision of
this Agreement, all transfer, sales and similar Taxes incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer, and the Buyer will, at its own expense, file,
to the extent required by law, all necessary Tax Returns with respect to
all such Taxes, and, if required by applicable law, the Seller will join in
the execution of any such Tax Returns.
(b) With respect to Taxes to be prorated in accordance with
Section 3.2 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Asset,
if any, and shall duly and timely pay all such Taxes shown to be due on
such Tax Returns. The Buyer's preparation of any such Tax Returns shall be
subject to the Seller's approval, which approval shall not be unreasonably
withheld. The Buyer shall make such Tax Returns available for the Seller's
review and approval no later than twenty (20) days prior to the due date
for filing such Tax Return. Within ten (10) days after receipt of such Tax
Return, the Seller shall pay to the Buyer its proportionate share of the
amount shown as due on such Tax Return determined in accordance with the
Section 3.2 of this Agreement.
(c) Each of the Buyer and the Seller shall provide the other
with such assistance (including access to the Purchased Asset) as may
reasonably be requested by the other party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Any information obtained
pursuant to this Section 7.8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
(d) The Seller will consult with and allow Buyer to participate
in all outstanding real property tax disputes concerning the Purchased
Asset and shall take such positions as Buyer may request consistent with
the positions previously communicated to Seller by Buyer with respect to
such tax disputes, to assist Buyer in obtaining a tax agreement for periods
subsequent to the Closing Date. The Seller will use its commercially
reasonable efforts to assist Buyer in obtaining an agreement with the
taxing authorities pursuant to which the assessed value of the Purchased
Asset will be the lowest value achievable. The Seller shall not enter into
any agreement with the taxing authorities with respect to such tax disputes
relating to periods prior to the Closing Date without the written consent
of Buyer which Buyer shall not unreasonably withhold as long as the Seller
has complied with this Section 7.8(d).
7.9. Supplements to Schedules. Prior to the Closing Date, the
Parties shall supplement or amend the Schedules required by Articles V and
VI with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedules. No supplement or amendment of any
Schedule made pursuant to this Section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10. Risk of Loss. (a) From the date hereof through the
Closing Date, all risk of loss or damage to the property included in the
Purchased Asset shall be borne by the Seller.
(b) If, before the Closing Date all or any portion of the
Purchased Asset are taken by eminent domain, or is the subject of a pending
or (to the knowledge of the Seller after reasonable inquiry and
investigation) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If such
taking would have a Material Adverse Effect, subject to Section 7.12 of
this Agreement, the Buyer and the Seller shall negotiate in good faith to
settle the loss resulting from such taking (including, without limitation,
by making a fair and equitable adjustment to the Purchase Price) and, upon
such settlement, consummate the transaction contemplated by this Agreement
pursuant to the terms of this Agreement. If no such settlement is reached
within sixty (60) days after the Seller has notified the Buyer of such
taking, then the Buyer may, if such taking relates to the Purchased Asset,
terminate this Agreement pursuant to Section 10.1(f).
(c) If, before the Closing Date all or any material portion of
the Purchased Asset are damaged or destroyed by fire or other casualty, the
Seller shall notify the Buyer promptly in writing of such fact. If such
damage or destruction would have a Material Adverse Effect and the Seller
has not notified the Buyer of its intention to cure such damage or
destruction within fifteen (15) days after its occurrence, the Buyer and
the Seller shall negotiate in good faith to settle the loss resulting from
such casualty (including, without limitation, by making a fair and
equitable adjustment to the Purchase Price and assigning any insurance
proceeds to Buyer at the Closing) and, upon such settlement, consummate the
transactions contemplated by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty (60) days after
the Seller has notified the Buyer of such casualty, then the Buyer may
terminate this Agreement pursuant to Section 10.1(f).
7.11. Real Estate Matters. (a) Buyer shall obtain an
American Land Title Association ("ALTA") or New York Board of Title
Underwriters ("NYBTU") owners standard form title policy commitment with
respect to the Purchased Asset (the "Title Commitment") from a title
company of Buyer's choice (the "Title Company") covering title to the
Purchased Asset, together with an ALTA 3.1 zoning endorsement, if
available, including parking and access, and such other endorsements as
Buyer may reasonably request. Seller shall provide the Title Company and
Buyer such information as the Title Company or Buyer may reasonably request
to assist the Title Company in connection with the Title Commitment.
Without limiting the foregoing, Seller shall provide the Title Company and
Buyer a copy of the most recent surveys in their possession regarding the
Purchased Asset. Promptly after receiving the Title Commitment, Buyer
shall notify Seller in writing of any defects in title which are not
Permitted Encumbrances that would cause title to the Purchased Asset to be
uninsurable (any of which is called herein a "Defect of Title"). Buyer
shall be deemed to have waived any objection to any Defect of Title that
was disclosed by the Title Commitment if Buyer fails to notify Seller of
such Defect of Title within thirty (30) days after receipt of such Title
Commitment. With respect to the existence of any Defect of Title that is
not disclosed by the Title Commitment, but which arises prior to Closing,
Buyer shall immediately notify the Seller in writing of any such Defect of
Title.
(b) Seller agrees that upon the written request of Buyer it will
consent and cause its Affiliates to consent to the relocation of the
Seller's Easements so long as (i) Buyer pays the cost of such relocation,
(ii) such relocation will be to space within Buyer's ownership and will not
materially adversely affect the operation of Seller's or its Affiliates'
transmission and distribution business (except for the minimum amount of
downtime associated with the cut over for such relocation process in
accordance with Good Utility Practices), and (iii) the Buyer's requested
relocation is consistent with Good Utility Practices. Seller further
agrees to condition any grant or assignment by it of the Seller's Easements
on the express agreement of its transferee to be bound by the terms and
conditions of this Section 7.11(b).
(c) As to any Seller's Easement which is to be granted by Buyer
at Closing concurrently with the transfer of title to Buyer and prior to
any mortgage or other encumbrance, such Seller's Easements shall include
standard cross-indemnity provisions relating to personal injury, death or
property damage occurring as a result of gross negligence or willful
misconduct in the use of such Easements, whereby each party agrees to
indemnify the other for the consequences of the gross negligence or wilful
misconduct of those for whom the indemnifying party is legally responsible.
7.12. Condemnation. The Seller shall consult with and allow
Buyer to participate in all negotiations with the County of Rockland, New
York ("Rockland County") concerning Rockland County's threat to condemn a
portion of the Purchased Asset. Seller shall use commercially reasonable
efforts to assist Buyer in preventing Rockland County from condemning such
portion of the Purchased Asset. The Seller shall not enter into any
agreement with Rockland County regarding the threatened condemnation
without the prior consent of Buyer, which consent Buyer shall not
unreasonably withhold.
7.13. Environmental Insurance. If Buyer elects to purchase
insurance coverage to cover liabilities arising from Hazardous Substances
present or Released at, on, in or under (i) the Purchased Asset and (ii)
the "Purchased Asset" and "Purchased Asset," as defined in each of the
Other Sales Agreements on or prior to the Closing Date ("Environmental
Insurance"), Seller shall share equally with Buyer the cost of premiums for
such Environmental Insurance, up to a maximum payment by Seller of $200,000
in the aggregate for such insurance relating to (A) the Purchased Asset and
(B) the "Purchased Assets" as defined in each of the Other Sales
Agreements. If Buyer purchases such Environmental Insurance, Buyer shall
add Seller as an additional insured.
7.14. Expansion. The parties recognize that the Buyer may
wish to add additional generating capacity at Bowline Generating Station
("Intended Use") and the value to Buyer for such Intended Use is included
in the Purchase Price. Accordingly, to the extent such action or inaction
does not interfere with or adversely affect the Seller's transmission and
distribution business, Seller agrees that, at Buyer's cost, they: (a) will
use commercially reasonable efforts to cooperate with Buyer's reasonable
request to remove or modify any (i) Permitted Encumbrances which materially
adversely affect Buyer's Intended Use, or (ii) conditions (either physical
or otherwise) which exist at the Purchased Asset which would prevent,
hinder, or otherwise interfere with the Buyer's Intended Use, and (b) shall
not, and shall ensure that their respective affiliates shall not, oppose,
hinder, or interfere with Buyer's efforts to add such additional capacity
and shall cooperate with Buyer's other reasonable requests with respect
thereto.
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the
transactions contemplated hereby shall be subject to t
fulfillment at or
prior to the Closing Date of the following condition
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or
been terminated with no order, decree, judgment or injunction enjoining or
prohibiting the consummation of the transactions contemplated hereby having
been issued;
(b) No preliminary or permanent injunction or other order or
decree by any Federal or State court or governmental authority which
prevents or is reasonably likely to prevent the consummation of the
transactions contemplated hereby shall be pending or shall have been issued
and remain in effect (each party agreeing to use its reasonable efforts to
have any such injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted or interpreted by any State or Federal
government or governmental authority in the United States which prohibits
the consummation of the transactions contemplated hereby;
(c) All Federal, State and local government orders, consents and
approvals required for the consummation of the transactions contemplated
hereby including, without limitation, the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, shall have become
Final Orders (a "Final Order" means action by the relevant regulatory
authority which has not been reversed, stayed, enjoined, set aside,
annulled or suspended with respect to which any waiting period prescribed
by law before the transactions contemplated hereby may be consummated has
expired, and as to which all conditions to the consummation of such
transaction prescribed by law, regulation or order have been satisfied),
and such Final Order is in form and substance reasonably acceptable to the
party that sought the consent or approval granted by such Final Order (for
purposes of this clause (i), a Final Order shall be deemed to be reasonably
acceptable to such party if it complies in all material respects with the
terms and conditions of such party's application therefor and contains no
additional terms or conditions which would have a Material Adverse Effect
on such party or the ownership or use of the Purchased Asset); provided,
however, that if at the time such order, consent, or approval would
otherwise be deemed to be a Final Order, there shall be pending or
threatened any appeal or challenge thereto, which, if adversely determined,
would cause such order, consent or approval to not be reasonably acceptable
to the party that sought such order, consent or approval, then if such
party who would be adversely affected notifies the other party that such a
pending or threatened appeal or challenge exists (such notification to be
made as soon as reasonably practicable following knowledge of such pending
or threatened appeal or challenge, but in no event later than fifteen (15)
days from date on which any waiting period prescribed by law before the
transactions contemplated hereby may be consummated has expired and all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied), then such order, consent or
approval shall be deemed to be a Final Order only after all opportunities
for rehearing or judicial review are exhausted and provided, further, that
if the designation of an order, consent or approval as a Final Order shall
be deferred pursuant to the foregoing proviso, the Termination Date shall
be automatically extended for a period of time equal to the period of time
for which the designation as a Final Order has been deferred; and
(d) All consents and approvals required under the terms of any
note, bond, mortgage, indenture, contract or other agreement to which the
Seller or the Buyer, or any of their subsidiaries, is a party for the
consummation of the transactions contemplated hereby shall have been
obtained, other than those which if not obtained, would not, in the
aggregate, have a Material Adverse Effect.
8.2. Conditions to Obligations of Buyer. The obligation of the
Buyer to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) There shall not have occurred and be continuing, a Material
Adverse Effect;
(b) The Seller shall have performed and complied with in all
respects the covenants and agreements contained in this Agreement required
to be performed and complied with by it on or prior to the Closing Date,
and the representations and warranties of the Seller set forth in this
Agreement shall be true and correct as of the date of this Agreement and as
of the Closing Date as though made at and as of the Closing Date, and the
Buyer shall have received a certificate to that effect signed by an
authorized officer of the Seller;
(c) The Buyer shall have received a certificate from an
authorized officer of the Seller, dated the Closing Date, to the effect
that to the best of such officers' knowledge, after reasonable inquiry and
investigation, the conditions set forth in Sections 8.2(a) and (b) have
been satisfied;
(d) The "Closing" as defined in the Bowline Generating Station
Sales Agreement among the Seller, Consolidated Edison Company of New York
and the Buyer, dated as of the date hereof as such Closing Date may be
extended pursuant to Section 8.4 of the Bowline Generating Station Sales
Agreement, shall have occurred or shall occur concurrently with the Closing
hereunder; and
(e) The Buyer shall have received an opinion from Skadden, Arps,
Slate, Meagher & Flom LLP, dated the Closing Date and satisfactory in form
and substance to the Buyer and its counsel, substantially to the effect
that:
(1) The Seller is a corporation organized, existing and in
good standing under the laws of the State of New York and has the
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby; and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby has been duly authorized by all
requisite corporate action taken on the part of the Seller.
(2) this Agreement has been executed and delivered by the
Seller and (assuming that the Buyer Required Regulatory Approvals are
obtained) is a valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except that such
enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity);
(3) the execution, delivery and performance of this
Agreement by the Seller will not (A) constitute a violation of the
Certificate of Incorporation or By-Laws of the Seller, or (B) to
counsel's knowledge constitute a violation or default under those
agreements or instruments set forth on a schedule to this opinion; and
(4) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any Federal or New York
governmental authority is necessary for the consummation by the Seller
of the Closing other than (i) the Seller Required Regulatory
Approvals, which are addressed below, (ii) declarations, filings or
registrations with, or notices to, or authorizations, consents or
approvals relating to Permits and Environmental Permits and (iii) such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not obtained or made, would not,
individually or in the aggregate have a Material Adverse Effect or
prevent Seller from performing its obligations hereunder.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel which are reasonably acceptable to Buyer and admitted in such
other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of fact upon certificates furnished by the
Seller and appropriate officers and directors of the Seller and by public
officials.
(f) The Buyer shall have received an opinion from Riker, Danzig,
Scherer, Hyland & Perretti, LLP (New Jersey Counsel), Nixon, Hargrave,
Devans & Doyle, LLP (New York Counsel) and Morgan, Lewis & Bockius, LLP
(Pennsylvania Counsel), or other local regulatory counsel for Seller
reasonably acceptable by Buyer, dated the Closing Date and satisfactory in
form and substance to the Buyer and its counsel, substantially to the
effect that:
(1) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any Federal governmental
authority or any governmental authority in the States of New York, New
Jersey and Pennsylvania is necessary for the consummation by the
Seller of the Closing other than (i) the Seller Required Regulatory
Approvals, which have been obtained and are in full force and effect
with such terms and conditions as were imposed by the applicable
governmental authorities and (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which,
if not obtained or made, would not, individually or in the aggregate
have a Material Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
or the laws of the State of New York, such counsel may rely upon opinions
of counsel which are reasonably acceptable to Buyer and admitted in such
other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion
may expressly rely as to matters of fact upon certificates furnished by the
Seller and appropriate officers and directors of the Seller and by public
officials.
(g) Buyer shall have received a Title Commitment showing the
Real Property to be insured as subject only to Permitted Encumbrances, and
the effective date of the Title Commitment shall have been updated to the
Closing Date and marked to show the satisfaction of all conditions to the
issuance of the title policy other than conditions within the control of
the Buyer.
8.3. Conditions to Obligations of Seller. The obligation of the
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed its covenants and agreements
contained in this Agreement required to be performed on or prior to the
Closing Date;
(b) The representations and warranties of the Buyer set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date;
(c) The Seller shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set forth in
Sections 8.3(a) and (b) have been satisfied; and
(d) The Seller shall have received an opinion from Troutman
Sanders LLP, counsel for the Buyer, dated the Closing Date and satisfactory
in form and substance to the Seller and its counsel, substantially to the
effect that:
(i) The Buyer is a limited liability company organized,
existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; and
the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby has been duly authorized by all
requisite corporate action taken on the part of the Buyer;
(ii) this Agreement has been executed and delivered by the
Buyer and (assuming that the Seller Required Regulatory Approvals and
the Buyer Required Regulatory Approvals are obtained) is a valid and
binding obligation of the Buyer, enforceable against the 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;
(iii) the execution, delivery and performance of this
Agreement by the Buyer will not constitute a violation of the
Certificate of Formation or Limited Liability Company Agreement (or
other similar governing documents), as currently in effect, of the
Buyer; and
(iv) no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental
authority is necessary for the consummation by the Buyer of the
Closing other than (i) the Buyer Required Regulatory Approvals, all of
which have been obtained and are in full force and effect with such
terms and conditions as shall have been imposed by any applicable
governmental authority; and (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which,
if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United States
and the State of New York, such counsel may rely upon opinions of counsel
admitted to practices in such other jurisdictions. Any opinions relied
upon by such counsel as aforesaid shall be delivered together with the
opinion of such counsel. Such opinion may expressly rely as to matters of
facts upon certificates furnished by appropriate Members and Managers of
the Buyer and its subsidiaries and by public officials.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification. (a) The Seller will indemnify, defend and
hold harmless the Buyer, Buyer's Affiliates, and their respective Members,
Managers, employees and agents (each a "Buyer Indemnitee") from and against
any and all causes of action, claims, demands or suits (by any Person),
losses, liabilities, damages (excluding consequential and special damages),
obligations, payments, costs, Taxes and expenses (including, without
limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not covered by
insurance, (collectively, "Indemnifiable Losses"), asserted against or
suffered by the Buyer Indemnitee relating to, resulting from or arising out
of (i) any breach by the Seller of any covenant or agreement of the Seller
contained in this Agreement; (ii) the Excluded Liabilities; (iii) the
Excluded Assets; (iv) any breach of the representation in Sections 5.1, 5.2
and 5.3 hereof or (v) the gross negligence or willful misconduct of Seller,
its Affiliates or its contractors while on Buyer's property (including,
without limitation, any easement provided the Seller with respect to such
property) after the Closing to the extent such Indemnifiable Loss is not
caused by the negligence or willful misconduct of any Buyer Indemnitee.
(b) The Buyer will indemnify, defend and hold harmless the
Seller, Seller's Affiliates, and their respective directors, officers,
employees and agents (each a "Seller Indemnitee") from and against any and
all Indemnifiable Losses asserted against or suffered by the Seller
relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement, (ii)
the Assumed Liabilities, (iii) its use of the Purchased Asset after the
Closing Date, (iv) any breach of any representation in Article VI or (v)
the gross negligence or willful misconduct of Buyer, its Affiliates or
their respective contractors while on Seller's property after the Closing,
to the extent such Indemnifiable Loss is not caused by the negligence or
willful misconduct of any Seller Indemnitee.
(c) Either the party required to provide indemnification under
this Agreement (the "Indemnifying Party") or the entity or person entitled
to receive indemnification under this Agreement (the "Indemnitee") may
assert any offset or similar right in respect of its obligations under this
Section 9.1 based upon any actual or alleged breach of any covenant or
agreement contained in this Agreement.
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that Indemnitee receives any insurance proceeds with respect to
an Indemnifiable Loss and (ii) to take into account any Tax or Income Tax
benefit recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss, net of any Tax or Income Tax detriment, and any payment
actually received with respect to an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any
covenant, agreement, representation or warranty shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(f) The Seller and the Buyer shall have indemnification
obligations with respect to Indemnifiable Losses asserted against or
suffered by the Seller or the Buyer, as the case may be, to the extent that
the aggregate of all such Indemnifiable Losses exceed the Indemnification
Floor. It is agreed and understood that neither the Seller nor the Buyer,
as the case may be, shall have any liability at any time for Indemnifiable
Losses asserted against or suffered by the other party until the aggregate
amount of Indemnifiable Losses asserted or suffered by such other party
under this Section 9.1 shall exceed the Indemnification Floor, and then
only to the extent that the aggregate amount of Indemnifiable Losses
exceeds the Indemnification Floor. The term "Indemnification Floor" shall
mean an amount equal to $200,000.
(g) The rights and remedies of the Seller and the Buyer under
this Article IX are exclusive and in lieu of any and all other rights and
remedies which the Seller and the Buyer may have under this Agreement for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement; (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be; or (iii) any
other liabilities described in Section 9.1(a) or 9.1(b).
9.2. Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a party to
this Agreement or any affiliate of a party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
thirty (30) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.
(b) The party defending the Third Party Claim shall (a) consult
with the other throughout the pendency of the Third Party Claim regarding
the investigation, defense, settlement, compromise, trial, appeal or other
resolution thereof; and (b) afford the other party the opportunity, by
notice, to participate and be associated in the defense of any Third Party
Claim through counsel chosen by such other party, at its own expense, in
the defense of any Third Party Claim as to which a party has elected to
conduct and control the defense thereof. The parties shall cooperate in
the defense of the Third Party Claim. The Indemnitee shall make available
to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any Third Party Claim
(subject to such confidentiality provisions as the Indemnitee may
reasonably require) and shall furnish such testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnifying Party in connection therewith. If
requested by the Indemnifying Party, the Indemnitee shall cooperate with
the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the claim or demand, or any
cross-complaint against any Person. The Indemnifying Party shall reimburse
the Indemnitee for any expenses incurred by Indemnitee in cooperating with
or acting at the request of the Indemnifying Party.
(c) If within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that
such Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 9.2(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within twenty
(20) calendar days (unless waiting twenty (20) calendar days would
prejudice the Indemnitee's rights) after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed
to take such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable expenses thereof.
Without the prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any settlement of (a) any Third Party Claim with
respect to Income Taxes or (b) any other Third Party Claim which would lead
to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party claim without
leading to liability or the creation of a financial or other obligation on
the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer (other than with respect to Income Taxes) within ten (10) calendar
days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim (other than with respect to
Income Taxes) at any time, provided that in such event the Indemnitee shall
waive any right to indemnity hereunder unless the Indemnitee shall have
first sought the consent of the Indemnifying Party in writing to such
payment, settlement, compromise and such consent was unreasonably withheld
or delayed, in which event no claim for indemnity therefor hereunder shall
be waived.
(d) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than thirty (30) calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will have a period of thirty (30)
calendar days (unless waiting thirty (30) days would prejudice the
Indemnitee's rights, in which case such period as would likely not
prejudice the Indemnitee's rights, but in no event less than ten (10) days)
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such thirty calendar day period, the Indemnifying
Party will be deemed to have accepted such Direct Claim. If the
Indemnifying Party rejects such Direct Claim, the Indemnitee will be free
to seek enforcement of its rights to indemnification under this Agreement.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 9.2(e) shall
be construed to require any party hereto to obtain or maintain any
insurance coverage.
(f) A failure to give timely notice as provided in this
Section 9.2 will not affect the rights or obligations of any party
hereunder except if, and only to the extent that, as a result of such
failure, the party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. (a) This Agreement may be terminated at any time prior
to Closing Date, by mutual written consent of the Buyer and the Seller.
(b) This Agreement may be terminated by the Seller or Buyer if
(i) the Closing shall not have been consummated on or before September 30,
1999 (the "Termination Date"); provided that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to Seller or
Buyer if its failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on
or before such date; and provided, further, that if on September 30, 1999
the conditions to the Closing set forth in Section 8.1(c) shall not have
been fulfilled but all other conditions to the Closing shall be fulfilled
or shall be capable of being fulfilled, then the Termination Date shall be
the day which is eighteen (18) months from the date of this Agreement.
(c) This Agreement may be terminated by either the Seller or the
Buyer if (i) any governmental or regulatory body, the consent of which is a
condition to the obligations of the Seller and the Buyer to consummate the
transactions contemplated hereby, shall have determined not to grant its
consent, or shall condition such consent upon any material change to the
terms of this Agreement or upon any other condition that materially and
adversely affects the value of the transactions contemplated herein or
therein for either party, and all appeals of such determination shall have
been taken and have been unsuccessful; (ii) any court of competent
jurisdiction in the United States or any State shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, judgment
or decree shall have become final and nonappealable; or (iii) any statute,
rule or regulation shall have been enacted or interpreted by any State or
Federal government or governmental agency in the United States which
prohibits the transactions contemplated herein.
(d) This Agreement may be terminated by the Buyer, if there has
been a material violation or breach by the Seller of any agreement,
representation or warranty contained in this Agreement which (i) has
rendered the satisfaction of any condition to the obligations of the Buyer
impossible and such violation or breach has not been waived by the Buyer or
(ii) causes a Material Adverse Effect, of which Buyer has notified Seller,
and which Seller has not promptly exercised commercially reasonable efforts
to cure but in no event later than twenty (20) days following such
notification by Buyer.
(e) This Agreement may be terminated by the Seller, if there has
been a material violation or breach by the Buyer of any agreement,
representation or warranty contained in this Agreement which has rendered
the satisfaction of any condition to the obligations of the Seller
impossible and such violation or breach has not been waived by the Seller
or cured by Buyer within fifteen (15) days after receipt by Buyer of notice
specifying same.
(f) This Agreement may be terminated by either the Seller or the
Buyer in accordance with the provisions of Section 7.10(b) or (c) hereof.
10.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the parties pursuant to
Section 10.1, written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein, such termination shall be without any further liability of
either party or parties to the other party or parties except as follows:
(a) in the event of termination of this Agreement by Seller
pursuant to Section 10.1(e), Seller shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Buyer;
(b) in the event of termination of this Agreement by Buyer
pursuant to Section 10.1(d), Buyer shall have the right to pursue all
remedies available to it in equity or at law in connection with the
violation or breach of this Agreement by Seller; and
(c) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn
from the agency or other person to which they were made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the Seller and the Buyer.
11.2. Confidentiality. (a) All information regarding a
party (the "Disclosing Party") that is furnished directly or indirectly to
the other party (the "Recipient") pursuant to this Agreement and marked
"Confidential" shall be deemed "Confidential Information." Notwithstanding
the foregoing, Confidential Information does not include information that
(i) is rightfully received from Recipient from a third party having an
obligation of confidence to the Disclosing Party, (ii) is or becomes in the
public domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two (2) years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information to its
and its Affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that
in the event that a protective order or other remedy is not obtained, the
Recipient will furnish only that portion of the Confidential Information
which, in the written opinion of the Recipient's counsel, is legally
required to be disclosed and, upon the Disclosing Party's request, use
commercially reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
(e) Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing Party's request, or (ii) the termination or expiration of this
Agreement.
11.3. Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.4. No Survival. Subject to the provisions of Article X,
each and every representation, warranty and covenant contained in this
Agreement (other than the covenants contained in Sections 3.2, 7.2(b),
7.2(c), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 9.1 and 9.2) and in Article XI (which
covenants shall survive in accordance with their terms) and other than the
representations and warranties contained in Sections 5.1, 5.2, 5.3, 6.1,
6.2 and 6.3 (which representations and warranties shall survive for twelve
(12) months from the Closing) shall expire with, and be terminated and
extinguished by the consummation of the sale of the Purchased Asset and the
transfer of the Assumed Liabilities pursuant to this Agreement and such
representations, warranties and covenants shall not survive the Closing
Date; and none of the Seller, the Buyer or any officer, director, trustee
or Affiliate of either of them shall be under any liability whatsoever with
respect to any such representation, warranty or covenant.
11.5. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt on a
Business Day if during the normal business hours of the recipient, or if
not, on the next Business Day, if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or
certified mail (return receipt requested), postage prepaid, to the parties
at the following addresses (or at such other address for a party as shall
be specified by like notice):
(a) If to the Seller, to:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
Attention: Legal Department
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Sheldon S. Adler, Esq.
(b) If to Buyer, to:
Southern Energy Bowline LLC
c/o Southern Energy, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Randy Harrison, Vice-President
with copies to:
Troutman Sanders LLP
Nationsbank Plaza
Suite 5200
Atlanta, GA 30308
Attention: Robert C. Marshall, Esq.
and
Southern Company Services
270 Peachtree Street
Bin 918
Atlanta, GA 30303
Attention: Vice President and Associate General
Counsel
11.6. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder. The Buyer acknowledges that Seller has entered into an
Agreement and Plan of Merger whereby Seller will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Section 11.6, the Buyer agrees that this Agreement may be
assigned to CEI, or a wholly-owned affiliate of CEI without the Buyer's
consent. Notwithstanding the foregoing, (a) Buyer may assign all of its
rights and obligations hereunder to any wholly-owned subsidiary (direct or
indirect) of Buyer or Buyer's parent and upon Seller's receipt of notice
from Buyer of any such assignment, such assignee will be deemed to have
assumed, ratified, agreed to be bound by and perform all such obligations,
and all references herein to "Buyer" shall thereafter be deemed to be
references to such assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee; and (b) Buyer or
its permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending institutions for
the purposes of financing or refinancing the Purchased Asset, including
upon or pursuant to the exercise of remedies with respect to such financing
or refinancing, or by way of assignments, transfers, pledges, or other
dispositions in lieu thereof; provided, however, that no such assignment or
other disposition shall relieve or in any way discharge Buyer or such
assignee from the performance of Buyer's obligations under this Agreement.
Seller agrees, at Buyer's expense, to execute and deliver such documents as
may be reasonably necessary to accomplish any such assignment, transfer,
pledge or other disposition of rights and interests hereunder so long as
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
11.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by Seller,
Buyer will consent to appointing an agent for service of process in New
York City.
11.8. Specific Performance. Seller and Buyer agree that a
material breach of this Agreement will cause the non-breaching party
immediate and irreparable harm that monetary damages cannot adequately
remedy, and therefore, in addition to all other remedies hereunder, the
parties agree that, upon any actual or impending material breach of this
Agreement, the non-breaching party shall be entitled to equitable relief,
including injunctive relief and specific performance, without bond or proof
of damages, and in addition to any other remedies that the non-breaching
party may have under applicable law.
11.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement.
11.11. Entire Agreement. This Agreement including the
Exhibits and Schedules referred to herein, the Confidentiality Agreement
and the Guaranty given to Seller by Southern Energy, Inc. embody the entire
agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other
than those expressly set forth or referred to herein or therein. It is
expressly acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings of Seller contained
in any material made available to the Buyer pursuant to the terms of the
Confidentiality Agreement (including the Information Memorandum, dated May
1998, previously made available to the Buyer by the Seller and DLJ). This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such transactions other than the Confidentiality
Agreement.
11.12. Bulk Sales or Transfer Laws. The Buyer acknowledges
that the Seller will not comply with the provision of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives compliance by the
Seller with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
agreement to be signed by their respective duly authorized officers as of
the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By /s/ D. Louis Peoples
---------------------------------
Name: D. Louis Peoples
Title: Vice Chairman and
Chief Executive Officer
SOUTHERN ENERGY BOWLINE, L.L.C.
By /s/ Randy Harrison
---------------------------------
Name: Randy Harrison
Title: Vice President
Exhibit 10.62
TRANSITION POWER SALES AGREEMENT
BETWEEN
SOUTHERN ENERGY BOWLINE, L.L.C.,
SOUTHERN ENERGY LOVETT, L.L.C.,
SOUTHERN ENERGY NY-GEN, L.L.C.,
AND
ORANGE AND ROCKLAND UTILITIES, INC.
Dated as of November 24, 1998
TABLE OF CONTENTS
Page
1. DEFINITIONS......................................................3
2. TERM AND TERMINATION.............................................6
3. INSTALLED CAPACITY REQUIREMENTS, QUANTITY AND PRICE..............7
4. ENERGY REQUIREMENTS, QUANTITY AND PRICE..........................9
5. SCHEDULING......................................................10
6. BILLING AND PAYMENT PROCEDURES..................................12
7. INDEMNIFICATION.................................................14
8. LIMITATION OF LIABILITY.........................................18
9. FORCE MAJEURE...................................................19
10. DEFAULT AND TERMINATION.........................................20
11. ADDITIONAL REMEDIES.............................................20
12. DISPUTES........................................................21
13. REPRESENTATIONS.................................................21
14. ASSIGNMENT OR OTHER CHANGE IN CORPORATE IDENTITY................23
15. WAIVER..........................................................24
16. COUNTERPARTS....................................................24
17. GOVERNING LAW...................................................25
18. SEVERABILITY....................................................25
19. AMENDMENT.......................................................25
20. ENTIRE AGREEMENT................................................26
21. FURTHER ASSURANCES..............................................26
22. NO THIRD PARTY BENEFICIARIES....................................26
23. CONFIDENTIALITY.................................................26
24. NOTICES.........................................................27
TRANSITION POWER SALES AGREEMENT BETWEEN
BOWLINE LLC, LOVETT LLC, NY-GEN LLC AND
ORANGE AND ROCKLAND UTILITIES, INC.
This Agreement is made and entered into as of this 24th day of
November, 1998, by and between Southern Energy Bowline, L.L.C. ("Bowline
LLC"), Southern Energy Lovett, L.L.C. ("Lovett LLC"), and Southern Energy
NY-Gen, L.L.C. ("NY-Gen LLC"), each a Delaware limited liability company
and having their principal place of business at 900 Ashwood Parkway, Suite
500, Atlanta, Georgia 30338 (individually a "Generator" and collectively,
the "Generators"), and Orange and Rockland Utilities, Inc. ("O&R"), a New
York corporation having a principal place of business at One Blue Hill
Plaza, Pearl River, New York 10965. The Generators and O&R shall each be
referred to as a "Party", and shall be referred to collectively as the
"Parties."
WHEREAS, as a consequence of the comprehensive restructuring of the
electric power industry in New York State, O&R has offered all its electric
generating assets located in New York for sale by auction;
WHEREAS, O&R, ConEdison and Bowline LLC have entered into the Bowline
Point Generating Station Sales Agreement dated as of the date hereof, O&R
and Lovett LLC have entered into the Lovett Generating Station Sales
Agreement dated as of the date hereof and O&R and NY-Gen LLC have entered
into the Gas Turbine and Hydroelectric Generation Station Sales Agreement
dated as of the date hereof (the "ASA's") pursuant to which the respective
Generators shall purchase such electric generating assets;
WHEREAS, the rights and obligations of buyers and generators of
electric generating capacity, energy, transmission and ancillary services
may be modified by a proposal (the "Proposal") currently pending before the
Federal Energy Regulatory Commission ("FERC") to restructure the New York
Power Pool, which contemplates the formation of the New York Independent
System Operator ("ISO") and the implementation of the ISO Tariff filed on
December 19, 1997, as approved by FERC in FERC Docket Nos. ER97-1523-000,
OA97-470-000 and ER97-4234-000, as such tariff may be amended from
time-to-time;
WHEREAS, FERC may approve, accept, modify, or reject the Proposal,
and its actions may affect the rights and obligations under this Agreement;
and
WHEREAS, in consideration of the sale of the Purchased Assets to the
Generators, and in recognition of O&R's installed capacity requirements for
its remaining native load customers, the Generators and O&R agree to enter
into this Transition Power Sales Agreement, whereby O&R will purchase from
the Generators, and the Generators will sell to O&R, various amounts of MW
of Installed Capacity and Energy (as defined herein) for the term of this
Agreement.
NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, the Generators and O&R hereby agree as
follows:
1. DEFINITIONS
(a) The following terms shall have the meanings set forth
below. Any term used in this Agreement that is not defined herein shall
have the meaning customarily attributed to such term by the electric
utility industry in New York.
"Agreement" shall mean this Transition Power Sales Agreement Between the
Generators and O&R, dated as of November 24, 1998, as it may be amended
from time to time.
"Ancillary Agreements" shall mean (i) the Eastern Load Pocket Call Option
Agreement by and between O&R and Lovett LLC, (ii) the Western Load Pocket
Call Option Agreement by and between O&R and NY-Gen LLC, (iii) the
Continuing Site/Interconnection Agreement by and between O&R and Bowline
LLC, (iv) the Continuing Site/Interconnection Agreement by and between O&R
and Lovett LLC and (v) the Continuing Site/Interconnection Agreement by and
between O&R and NY-Gen LLC, each dated as of the date hereof.
"Auction" shall mean the sale of O&R's electric generating units described
in the "Confidential Information Memorandum" issued by O&R for the sale of
all of O&R's electric generating units, dated May 1998.
"Business Day" shall mean any day other than Saturday, Sunday or any day
which is a legal holiday or a day on which banking institutions in the
State of New York are authorized by law or other governmental action to
close.
"Closing Date" shall mean the date and time at which the closing of the
transactions contemplated by the ASA's actually occurs.
"ConEdison" shall mean Consolidated Edison Company of New York, Inc.
"Delivery Point" means the physical point where Energy will be delivered
and measured for purposes of this Agreement. With respect to power
generated from any of the Purchased Assets, the Delivery Point shall mean
the generator terminals at the applicable Purchased Asset. With respect to
power generated from non-Purchased Assets, the Delivery Point shall mean
the O&R Load Zone.
"Energy" shall mean the amount of energy in GWH that the Generators are
required to deliver to O&R pursuant to Schedule A.
"FERC" shall mean the Federal Energy Regulatory Commission or its
successor.
"Good Utility Practices" mean any of the practices, methods or acts engaged
in or approved by a significant portion of the electric utility industry
with respect to similar facilities during the relevant time period which in
each case, in the exercise of reasonable judgment in light of the facts
known or that should have been known at the time the decision was made,
could have been expected to accomplish the desired result at a reasonable
cost consistent with good business practices, reliability, safety, law,
regulation, environmental protection, and expedition. Good Utility
Practices are not intended to be limited to the optimum practices, methods
or acts to the exclusion of all others, but rather to delineate the
acceptable practices, methods or acts generally accepted in such industry.
"Installed Capacity" shall mean electric generating capacity that satisfies
all of the applicable Installed Capacity requirements established by the
NYPP or ISO, as they apply to O&R.
"ISO" shall mean the New York Independent System Operator, as described in
the Supplemental Filing, or its successors.
"ISO Tariff" shall mean the tariff described in the Supplemental Filing, as
it may be amended from time to time.
"NERC" shall mean the North American Electric Reliability Council or its
successors.
"NYPP" shall mean the New York Power Pool or its successors.
"O&R" shall mean Orange and Rockland Utilities, Inc. or its
successor.
"O&R Load Zone" shall mean the load zone as designated by the ISO which
encompasses the O&R service territory.
"Off-Peak" shall mean all hours not classified as On-Peak hours.
"On-Peak" shall mean those hours Monday through Friday, from hour beginning
7:00 AM through hour beginning 10:00 PM excluding NERC holidays.
"Purchased Assets" shall mean the Bowline, Lovett, Gas Turbines and
Hydroelectric Assets as described in the respective ASA's.
"Replacement Capacity" shall mean Installed Capacity under this Agreement
from a source different from the source identified by the Generators or O&R
and subsequently identified to the NYPP or ISO in O&R's periodic reports
required under applicable procedures to the extent such Installed Capacity
satisfies NYPP or ISO Installed Capacity requirements applicable to O&R
including any applicable delivery requirements.
"Replacement Capacity Costs" shall mean the incremental cost of Replacement
Capacity to the extent it exceeds the cost of ICAP calculated in accordance
with Section 3.2.
"Summer Capability Period" shall have the meaning provided by the NYPP, the
ISO or their successor(s), as may be modified from time to time. Summer
Capability Period is currently each May 1 through October 31 of each year.
"Supplemental Filing" shall mean the December 19, 1997 Supplemental Filing
to the Comprehensive Proposal to Restructure the New York Wholesale
Electric Market in FERC Docket Nos. ER97-1523-000, OA97-470-000, and
ER97-4234-000.
"Winter Capability Period" shall have the meaning provided by the NYPP, the
ISO or their successor(s), as may be modified from time to time. Winter
Capability Period is currently each November 1 through April 30 of the
following calendar year.
(b) Each of the following terms has the meaning specified in
the Section set forth opposite such term:
Term Section
- ---- -------
ASA's Recitals
Capacity Payment 3.2
Confidential Information 23(a)
CEI 14(b)
Direct Claim 7.4
Disclosing Party 23(a)
Deficiency Capacity Payment 3.4
Deficiency Energy Payment 4.4
Energy Payment 4.2
Event of Default 10.1
Force Majeure Event 9.1
Generators Indemnifiable Losses 7.2
ICAP 3.2
Indemnifiable Loss 7.3
Indemnifying Party 7.4
Indemnitee 7.3
Net Worth 14(a)
O&R Indemnifiable Losses 7.1
Recipient 23(a)
Third Party Claim 7.4
2. TERM AND TERMINATION
2.1 Subject to all necessary regulatory authorizations, this
Agreement shall become effective when signed by the Parties. O&R's right
and obligation to purchase Installed Capacity and Energy and the
Generators' obligation to provide and sell Installed Capacity and Energy
shall begin on the Closing Date. This Agreement shall terminate on October
31, 2000.
2.2 This Agreement is subject to all necessary regulatory
authorizations without any material modifications or conditions. If any
regulatory agency having jurisdiction over this Agreement requires any
modification to, or imposes any condition of acceptance or approval of,
this Agreement, then the Parties shall engage in good faith negotiations
for a period of 30 days following the issuance of that modified or
conditional acceptance or approval in order to agree to revisions to this
Agreement to satisfy, or otherwise address, such modification or condition.
If the Parties fail to agree mutually to such changes, then the Generators
may make a unilateral filing to satisfy the modification or condition,
which filing shall attempt to satisfy the intent of the Parties under this
Agreement; provided, however, that O&R shall have the right to protest the
manner in which the Generators have attempted to satisfy such modification
or condition.
3. INSTALLED CAPACITY REQUIREMENTS, QUANTITY AND PRICE
3.1 Unless excused by the provisions of Article 9, O&R shall
purchase from the Generators and the Generators shall provide to O&R
Installed Capacity in the amounts specified in Schedule A for the term of
this Agreement. Subject to the provisions of this Article 3, O&R shall
compensate the Generators for Installed Capacity at a price of $130/MW-Day
for the term of this Agreement.
3.2 Subject to the crediting mechanism of Section 3.4, O&R
shall pay the Capacity Payment to the Generators monthly as follows:
"Capacity Payment" = ICAP multiplied by $130/MW-Day multiplied by
number of days in month (or part of month, if applicable during any
month of this Agreement)
Where:
"ICAP" is the amount of Installed Capacity in MW, including
Replacement Capacity, not to exceed the amounts in Schedule A, for
the term of this Agreement, that is actually provided by the
Generators to O&R.
3.3 Except as otherwise provided in this Article 3, O&R shall
make no other payment to the Generators for Installed Capacity actually
provided under this Agreement.
3.4 Capacity Requirement
(a) Whenever ICAP delivered by the Generators to O&R is
less than the amount of Installed Capacity that the Generators are required
to supply under Section 3.1, the Generators shall pay O&R for reasonable
and documented costs incurred by O&R as a direct result of the Generators'
failure to supply all or part of the Installed Capacity requirement,
calculated as follows:
The sum of (i) all installed capacity deficiency charges
imposed by the NYPP or ISO on O&R, to the extent they exceed
charges that would have been due under Sections 3.1 and 3.2 had
the Generators performed with respect to the amount of
Installed Capacity by which the Generators were deficient and
on which O&R incurred such NYPP or ISO installed capacity
deficiency charges; (ii) if the Generators fail to provide
Replacement Capacity, and O&R obtains Replacement Capacity from
a source other than the Generators in accordance with Good
Utility Practices, then O&R's Replacement Capacity Costs that
are reasonably incurred, to the extent not included in (i); and
(iii) all directly related transaction costs, to the extent not
included in (i) and (ii), that are reasonably incurred as a
direct result of the Generators' failure to provide O&R with
the required amount of Installed Capacity.
Such sum shall be referred to as the "Deficiency Capacity Payment."
(b) If O&R purchases more Replacement Capacity than the
amount by which the Generators are deficient, then O&R shall be solely
responsible for the cost of the purchased Replacement Capacity that is more
than the amount by which the Generators are deficient.
(c) If O&R incurs any reasonable and documented costs
described in Section 3.4(a) over a period greater than one calendar month
as a direct result of the Generators' deficiencies described in Section
3.4(a), subject to the Generators' approval, which shall not be
unreasonably withheld, O&R shall allocate those costs on a monthly basis.
3.5 O&R shall pay all taxes, surcharges, adjustments or other
assessments imposed by law, rule or regulation which are of general
applicability and imposed on the sales of Installed Capacity hereunder
unless O&R can demonstrate, based on a ruling from the New York Public
Service Commission, that it cannot collect such taxes, surcharges,
adjustments or other assessments from its customers.
3.6 Billing and payments of the Capacity Payment and the
Deficiency Capacity Payment shall be made in accordance with Article 6.
3.7 Subject to the terms and conditions set forth herein, the
Generators shall satisfy all requirements applicable to suppliers of
Installed Capacity established by the NYPP or the ISO (including any
applicable locational requirements and compliance with and satisfaction of
all applicable tariffs, rules and practices) so that O&R will receive the
levels of Installed Capacity specified in Schedule A for the term of this
Agreement; and
3.8 Subject to the terms and conditions set forth herein, each
Party shall reasonably cooperate with the other Party at the other Party's
request in arranging any necessary interfaces or protocols to satisfy NYPP
or ISO requirements associated with any services provided under this
Agreement.
3.9 Subject to the terms and conditions set forth herein, O&R
shall satisfy all requirements applicable to purchasers of Installed
Capacity established by the NYPP or the ISO.
4. ENERGY REQUIREMENTS, QUANTITY AND PRICE
4.1 Unless excused by the provisions of Article 9, O&R shall
take and purchase from the Generators and the Generators shall deliver and
sell to O&R at the Delivery Point, the full amount of Energy specified in
Schedule A for the term of this Agreement. The Energy to be delivered by
the Generators to O&R may be generated at the Purchased Assets or any other
generating facility, whether owned by third parties or the Generators.
Title to the Energy shall pass to O&R at the Delivery Point and the
Generators shall incur no expense or risk beyond the Delivery Point.
Subject to the provisions of this Article 4, O&R shall compensate the
Generators at the price levels specified in Schedule A.
4.2 Subject to the crediting mechanism of 4.4, O&R shall pay
the Energy Payment to the Generators monthly as follows:
"Energy Payment" = ER multiplied by EP
Where:
"ER" is the amount of Energy in MWH that must be taken by O&R from
the Generators for any given month during the capability period and
on-peak or off-peak period specified in Schedule A; and "EP" is the
Energy price for the capability period and On-Peak or Off-Peak period
specified in Schedule A.
4.3 Except as otherwise provided in this Article 4, O&R shall
make no other payment to the Generators for Energy actually provided under
this Agreement.
4.4 Energy Requirements and Replacement Costs
Whenever the amount of Energy delivered to O&R by the
Generators during any month is less than the amount of Energy that the
Generators are required to supply under Schedule A for that month, the
Generators shall pay O&R monthly for reasonable and documented costs
incurred by O&R in accordance with Good Utility Practices as a direct
result of the Generators' failure to supply all or part of the Energy
requirement, calculated as follows.
The sum of (i) all reasonable and documented costs incurred by
O&R for third-party energy purchases in lieu of Energy amounts
that the Generators should have supplied had the Generators
performed with respect to the Energy specified in Schedule A
and;
(ii) All directly related transaction costs not included in
Section 4.4 (i) above that are reasonably incurred by O&R as
direct result of the Generators' failure to provide the Energy
specified in Schedule A.
Such sum is referred to as the "Deficiency Energy Payment."
4.5 If the Closing Date occurs after May 1, 1999, the Energy
specified in Schedule A for the Summer 1999 Capability Period shall be
prorated on a daily basis for the month that the Closing occurs. If the
Closing Date occurs after November 1, 1999, the Energy specified in
Schedule A for the Winter 1999 Capability Period shall be prorated on a
daily basis for the month that the Closing occurs.
4.6 Billing and payment of the Energy Payment and the
Deficiency Energy Payment shall be made in accordance with Article 6. O&R
shall pay all taxes, surcharges, adjustments or other assessments imposed
by law, rule or regulation which are of general applicability and imposed
on the sales of Energy hereunder unless O&R can demonstrate, based on a
ruling from the New York Public Service Commission, that it cannot collect
such taxes, surcharges, adjustments or other assessments from its
customers.
5. SCHEDULING
5.1 Schedule Dates for Installed Capacity
Subject to Section 5.3, O&R and the Generators shall comply
with the following scheduling procedures with respect to Installed
Capacity:
(a) The Generators shall notify O&R in writing 30 days
prior to the anticipated Closing Date of the location and name of each
generating unit at the Purchased Assets that the Generators intend to use
to supply the Installed Capacity required pursuant to this Agreement and
the estimated amount of Installed Capacity the Generators expect to supply
from each unit for the period from the Closing Date to and including
October 31, 2000;
(b) By September 1, 1999, and March 1, 2000, the
Generators shall notify O&R in writing of the location and name of each
generating unit at the Purchased Assets that the Generators intend to use
to supply the Installed Capacity required pursuant to this Agreement and
the estimated amount of Installed Capacity the Generators expect to supply
from each unit for the periods from November 1, 1999 through April 30,
2000, and from May 1, 2000 through October 31, 2000, respectively; and
(c) To the extent permitted by ISO or NYPP procedures and
consistent with the Generators' obligations under Section 3.1 and 3.6, the
Generators shall notify O&R of any changes in the name and location of, and
the amount of Installed Capacity from, any generating unit to be used by
the Generators to supply the Installed Capacity required pursuant to this
Agreement at least 30 days before the date O&R is required to report such
change to the NYPP or ISO.
5.2 Scheduling Energy
The Generators and O&R shall comply in all material respects with
applicable energy scheduling requirements under NYPP or ISO rules
and regulations.
5.3 Notification Changes
If the NYPP or ISO modifies the notification schedules or the
definition of Summer Capability Period or Winter Capability Period such
that the schedule dates contained in this Section 5 are inconsistent with
the modified schedule or definition, then O&R shall provide reasonable
notice thereof to the Generators and the Parties shall revise the dates in
this Section 5 to be consistent with said modification.
6. BILLING AND PAYMENT PROCEDURES
6.1 Billing and Payments
(a) Beginning in the calendar month following the Closing
Date, the Generators shall render a bill for the Capacity Payment and the
Energy Payment to O&R for the previous calendar month in accordance with
Sections 3.2 and 4.2 on or before the 20th day of each month. The Capacity
Payment and the Energy Payment owed, unless otherwise agreed, shall be due
and payable on or before the later of (i) the last day of the month, or
(ii) 10 days after O&R receives a bill.
(b) After the Closing Date, O&R shall render bills to the
Generators for any Deficiency Capacity Payment or Deficiency Energy Payment
owed by the Generators to O&R calculated in accordance with Sections 3.4
and 4.4 on or before the 20th day of each month. All Deficiency Capacity
Payments or Deficiency Energy Payments owed, unless otherwise agreed, shall
be due and payable on or before the later of (i) the last day of the month,
or (ii) 10 days after the Generators receives a bill.
(c) Each Party may set off any undisputed amount owed to
the other Party against any undisputed amount owed pursuant to this
Agreement or other arrangement(s) agreed to between the Parties including,
without limitation, amounts owed under Sections 3.4 and 4.4.
(d) If any payment under Sections 6.1(a) or (b) falls due
on a day that is not a Business Day, then the payment shall be made on the
next Business Day.
(e) Interest on unpaid amounts or payments received after
the due date shall accrue at a rate equal to the lesser of (i) two percent
per annum over the prime commercial lending rate established from time to
time by Chase Manhattan Bank, N.A., New York, New York, or its successor,
or (ii) the highest rate per annum permitted by law, from the due date
until the date upon which payment is made.
(f) All billings to O&R shall be sent to:
Orange and Rockland Utilities, Inc.
390 West Route 59
Spring Valley, New York 10977
Attn: Manager - Energy Resources
(g) All billings to the Generators shall be sent to:
Southern Energy Bowline, L.L.C.
Southern Energy Lovett, L.L.C.
Southern Energy NY-Gen, L.L.C.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Steve Gillis
Finance Director
North American Operations
(h) Any payments owed directly by the Generators to the
ISO or the NYPP shall be made pursuant to the procedures established in the
ISO Tariff, by the ISO or in the NYPP procedures. The Generators shall be
solely responsible for making all such payments to the ISO or the NYPP.
(i) The Parties shall maintain records, accounts and
other documents sufficient to reflect accurately all transactions hereunder
for a period of four years from the time of the transactions. Each Party
shall, at its own expense, have the right to audit such records, accounts
and other documents of the other Party during such four-year period upon
reasonable prior notice to the other Party.
6.2 Billing Disputes
If a Party contests the amount billed in accordance with
Section 6.1(a) or (b) before the bill is due, the contesting Party shall
pay the undisputed billed amount when due and promptly provide written
notice to the other Party of the relevant bill identifying the reason for
the dispute. If neither Party disputes a bill within six months after the
due date of such bill, such bill shall be deemed correct. The Parties shall
engage in good faith negotiations to resolve any disputed amounts within 30
days. If the Parties are unable to resolve a dispute within such period,
disputed amounts shall be paid into an escrow account pending resolution of
the dispute. Thereafter, either Party may exercise such remedies as may be
available under this Agreement, at law or in equity. In addition to any
other remedies available to the Generators in the event O&R fails to pay a
disputed bill into such escrow account within 30 days after its due date,
the Generators may withhold Installed Capacity and Energy until such bill
is paid. Interest at the rate specified in Section 6.1(e) shall accrue on
the portion, if any, that is refunded or credited to the contesting Party
or that is released from escrow to the non-contesting Party, when the
contested amount is resolved.
6.3 Survival
The provisions of Sections 3 and 4 and this Section 6 shall
survive termination, expiration, cancellation, suspension, or completion of
this Agreement to the extent necessary to allow for final billing and
payment.
7. INDEMNIFICATION
7.1 Generators' Indemnification
The Generators shall indemnify, hold harmless and defend O&R,
its parent, affiliates, and successors, and their officers, directors,
employees, agents, subcontractors, and successors, from and against any and
all claims, demands, liabilities, costs, losses, judgments, damages and
expenses (including, without limitation, reasonable attorney and expert
fees, and disbursements incurred by O&R in any actions or proceedings
between O&R and a third party, the Generators, or any other party) to the
extent the foregoing are not covered by insurance ("O&R Indemnifiable
Losses") asserted against or suffered by O&R for (i) damage to property, or
(ii) injury to or death of any person, including O&R employees, the
Generators' employees and their affiliates' employees, or any third
parties, in such case to the extent caused by the gross negligence or
willful misconduct of the Generators and/or their respective officers,
directors, employees, agents, and subcontractors and arising out of this
Agreement and not caused by the negligence or willful misconduct of any
such Indemnitee.
7.2 O&R's Indemnification
O&R shall indemnify, hold harmless and defend the Generators,
their parent, affiliates, and successors, and their officers, directors,
employees, agents, subcontractors, and successors, from and against any and
all claims, demands, liabilities, costs, losses, judgments, damages and
expenses (including, without limitation, reasonable attorney and expert
fees, and disbursements incurred by the Generators in any actions or
proceedings between the Generators and a third party, O&R, or any other
party) to the extent the foregoing are not covered by insurance
("Generators Indemnifiable Losses") asserted against or suffered by the
Generators for (i) damage to property, or (ii) injury to or death of any
person, including the Generators employees, O&R's employees and their
affiliates' employees, or any third parties, in each case to the extent
caused by the gross negligence or willful misconduct of O&R and/or its
officers, directors, employees, agents, and subcontractors and arising out
of or connected with this Agreement and not caused by the negligence or
willful misconduct of any such Indemnitee.
7.3 Indemnification Procedures
Any Party 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 O&R Indemnifiable Loss
or Generators Indemnifiable Loss, as appropriate, hereunder. The amount of
any O&R Indemnifiable Loss or Generators Indemnifiable Loss, as
appropriate, shall be reduced to the extent that Indemnitee receives any
insurance proceeds with respect to an O&R Indemnifiable Loss or Generators
Indemnifiable Loss, as appropriate (either may be referred to as an
"Indemnifiable Loss").
7.4 Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceeding made or brought by any Person who is not a Party to
this Agreement or any affiliate of a Party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be sought from a
person required to provide indemnification under this Agreement (an
"Indemnifying Party"), the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
30 days after the Indemnitee's receipt of written notice of such Third
Party Claim. Such notice shall describe the nature of the Third Party Claim
in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee. The Indemnifying Party will have the right to participate
in or, by giving written notice to the Indemnitee, to elect to assume the
defense of any Third Party Claim at such Indemnifying Party's own expense
and by such Indemnifying Party's own counsel, and the Indemnitee will
cooperate in good faith in such defense at such Indemnitee's own expense.
(b) If within ten calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claim
the Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party
Claim as provided in the last sentence of Section 7.4(a), the Indemnifying
Party will not be liable for any legal expenses subsequently incurred by
the Indemnitee in connection with the defense thereof; provided, however,
that if the Indemnifying Party fails to take reasonable steps necessary to
defend diligently such Third Party Claim within 20 calendar days (unless
waiting 20 calendar days would prejudice the Indemnitee's rights) after
receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume
its own defense, and the Indemnifying Party will be liable for all
reasonable expenses thereof. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of
any Third Party Claim which would lead to liability or create any financial
or other obligation on the part of the Indemnitee for which the Indemnitee
is not entitled to indemnification hereunder. If a firm offer is made to
settle a Third Party claim without leading to liability or the creation of
a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within ten
business days after its receipt of such notice, the Indemnitee may continue
to contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise or settle any Third Party Claim at any time, provided that in
such event the Indemnitee shall waive any right to indemnity hereunder
unless the Indemnitee shall have first sought the consent of the
Indemnifying Party in writing to such payment, settlement or compromise and
such consent was unreasonably withheld or delayed, in which event no claim
for indemnity therefor hereunder shall be waived.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party
reasonably prompt written notice thereof, stating the nature of such claim
in reasonable detail and indicating the estimated amount, if practicable,
but in any event not later than thirty calendar days after the Indemnitee
becomes aware of such Direct Claim, and the Indemnifying Party will have a
period of 30 calendar days within which to respond to such Direct Claim. If
the Indemnifying Party does not respond within such 30 calendar day period,
the Indemnifying Party will be deemed to have accepted such Direct Claim.
If the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this
Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank, N.A.), will promptly be repaid
by the Indemnitee to the Indemnifying Party. Upon making any indemnity
payment, the Indemnifying Party will, to the extent of such indemnity
payment, be subrogated to all rights of the Indemnitee against any third
party in respect of the Indemnifiable Loss to which the indemnity payment
relates; provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 7.4(d) shall
be construed to require any Party hereto to obtain or maintain any
insurance coverage.
(e) A failure to give timely notice as provided in this
Section 7.4 will not affect the rights or obligations of any Party
hereunder except if, and only to the extent that, as a result of such
failure, the Party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
7.5 Survival
The indemnification obligations of each Party under this
Article 7 shall become effective upon the occurrence of the Closing Date,
and, for acts and occurrences prior to expiration, termination, completion,
suspension or cancellation of this Agreement shall continue in full force
and effect regardless of whether this Agreement expires, terminates, or is
suspended, completed or canceled. Such obligations shall not be limited in
any way by any limitation on insurance, by the amount or types of damages
(except as otherwise limited under Section 8.1), or by any compensation or
benefits payable by the Parties under workers' compensation acts,
disability benefit acts or other employee acts, or otherwise.
8. LIMITATION OF LIABILITY
8.1 Limitation on Damages
Neither O&R nor the Generators, nor their respective officers,
directors, agents, employees, successors, assigns, or subcontractors nor
their respective officers, directors, agents, employees, successors,
assigns, or subcontractors shall be liable to the other Party or its
parent, subsidiaries, affiliates, officers, directors, agents, employees,
successors, assigns, or subcontractors for claims, suits, actions, causes
of action or otherwise for incidental, punitive, special, indirect,
multiple or consequential damages (including attorneys' fees or litigation
costs) connected with, or resulting from, performance or non-performance of
this Agreement, or any actions undertaken in connection with, or related to
this Agreement, including, without limitation, any such damages which are
based upon causes of action for breach of contract, statutory (including
negligence and misrepresentation), breach of warranty or strict liability.
8.2 Subject to indemnity obligations set forth in Article 7,
upon an Event of Default by O&R under this Agreement, which Event of
Default is not excusable due to a Force Majeure Event or due to an Event of
Default by the Generators under this Agreement, O&R's liability to the
Generators shall be limited to the Generators' direct damages incurred by
the Generators as a result of such Event of Default by O&R.
8.3 Subject to indemnity obligations set forth in Article 7,
upon an Event of Default by the Generators under this Agreement, which
Event of Default is not excusable due to a Force Majeure Event or due to an
Event of Default by O&R under this Agreement, the Generators' liability to
O&R shall be limited to O&R's direct damages incurred by O&R as a result of
such Event of Default by the Generators.
8.4 The provisions of this Article 8 shall survive termination,
cancellation, suspension, completion, or expiration of this Agreement.
9. FORCE MAJEURE
9.1 Force Majeure Event
A Party shall not be considered to be in default or breach of
this Agreement, and shall be excused from performance, or liability for
damages to the other Party, to the extent it shall be delayed in or
prevented from performing or carrying out any of the obligations or
responsibilities of this Agreement because of Force Majeure Event. "Force
Majeure Event" means any occurrence beyond the reasonable control of a
Party which causes such Party to be delayed in or prevented from performing
or carrying out any of its obligations under this Agreement and which by
the exercise of due diligence in accordance with Good Utility Practices,
that Party is unable to prevent, avoid, mitigate, or overcome, including
any of the following: any act of God, labor disturbance, act of the public
enemy, war, insurrection, riot, fire, storm or flood, ice, explosion,
breakage or accident to machinery or equipment, order, regulation or
restriction imposed by governmental military or lawfully established
civilian authorities provided that a Force Majeure Event shall not include
lack of finances or change in market conditions, and provided further that
any failure by the Generators to obtain fuel or services for the Facility
due to the failure of any supplier or subcontractor of the Generators to
perform any obligation to the Generators will not constitute a Force
Majeure Event hereunder unless such subcontractor or supplier is unable to
perform for reasons that would constitute a "Force Majeure Event"
hereunder.
9.2 Obligations to Make Payment
Nothing contained in this Article 9 shall relieve any Party of
the obligation to make payments when due pursuant to this Agreement,
provided that O&R shall not be required to pay Installed Capacity Payments
or Energy Payments due under Sections 3 and 4 to the extent that (i) with
respect to Installed Capacity Payments, the Generators are unable to
provide ICAP because of a Force Majeure Event experienced by the Generators
and O&R is unable to receive Installed Capacity credit as a result thereof
and (ii) with respect to Energy Payments, the Generators are unable to
deliver Energy because of a Force Majeure Event experienced by the
Generators.
9.3 Notice and Due Diligence
Any Party claiming that a Force Majeure Event has occurred
shall (i) provide prompt written notice of such Force Majeure Event to the
other Party giving a detailed written explanation of the event and estimate
of its expected duration and probable effect on the performance of that
Party's obligations hereunder; and (ii) use commercially reasonable efforts
in accordance with Good Utility Practices to mitigate the effect of the
Force Majeure Event on the other Party, including the provision of
Replacement Capacity, if available; except that settlement of any labor
dispute shall be in the sole judgment of the affected Party.
9.4 Survival
The provisions in this Article 9 shall survive termination,
cancellation, suspension, completion or expiration of this Agreement.
10. DEFAULT AND TERMINATION
10.1 Event of Default Defined
Unless excused by a Force Majeure Event, or the other Party's
Event of Default, each of the following events shall be deemed to be an
"Event of Default" hereunder: failure of either Party, in a material
respect, to comply with, observe, or perform any covenant, warranty or
obligation under this Agreement, without limitation, including the
obligation to pay amounts due under Article 3 and 4 in accordance with
Article 6, and such failure is not cured or rectified within 30 days after
receipt of written notice of such failure from the other Party or such
longer period as may be reasonably required, provided that the defaulting
Party diligently attempts to cure the Event of Default; provided, however,
that in any event, O&R shall have no more than five Business Days to pay
any past due bill.
10.2 This Agreement shall terminate if the ASA's are
terminated.
10.3 The provisions of this Section 10 are subject to the
occurrence of the Closing Date and shall survive termination, cancellation,
suspension, completion or expiration of this Agreement.
11. ADDITIONAL REMEDIES
Subject to Section 8.1, and to the extent permitted by law, the
Parties shall be entitled to injunctive relief to prevent breaches by a
Party, and specific performance to enforce the terms of this Agreement, in
addition to any other remedy to which a Party is entitled under this
Agreement, at law, or in equity. In addition, the non-defaulting Party may
pursue any remedies and may begin proceedings at the FERC to terminate this
Agreement by giving at least ten days advance written notice to the
defaulting Party, such termination to be effective as of the date specified
in such notice, subject to the approval of the FERC, in accordance with
FERC regulations.
12. DISPUTES
Any disagreement between O&R and the Generators as to their
rights and obligations under this Agreement shall first be addressed by the
Parties. If representatives of the Parties are unable in good faith to
satisfactorily resolve their disagreement, the Parties shall refer to the
matter to their respective senior management. If after using their best
efforts to try to resolve the dispute, senior management cannot resolve the
dispute in 30 days, either Party may exercise any right or remedy available
pursuant to this Agreement.
13. REPRESENTATIONS
13.1 Representations of O&R
O&R represents and warrants to Generators as follows:
(a) Organization. O&R is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
York and O&R has the requisite corporate power and authority to carry on
its business as now being conducted;
(b) Authority Relative to this Agreement. O&R has the
requisite power and authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory approvals, to carry out
the actions required of it by this Agreement. The execution and delivery of
this Agreement and the actions it contemplates have been duly and validly
authorized by all required corporate action. The Agreement has been duly
and validly executed and delivered by O&R and constitutes a valid and
binding Agreement of O&R;
(c) Regulatory Approval. O&R has obtained or will obtain
by the Closing Date any and all approvals of, and given any notice to, any
public authority that are required for O&R to execute and deliver this
Agreement; and
(d) Compliance With Law.
(i) O&R represents and warrants
that it is not in violation of any applicable law, statute, order,
rule, or regulation promulgated or judgment entered by any Federal,
state, or local governmental authority, which violation would affect
O&R's performance of its obligations under this Agreement.
(ii) O&R represents and warrants
that it will comply in all material respects with all applicable
laws, rules, regulations, codes and standards of all Federal, state,
and local governmental agencies having jurisdiction over this
Agreement and all applicable rules, requirements and procedures of
the ISO and NYPP, except to the extent that a failure to so comply
would not have a material adverse effect on O&R's obligations
hereunder.
13.2 Representations of Generators
Each Generator represents and warrants to O&R as follows:
(a) Organization. Each Generator is a limited liability
company, validly existing and in good standing under the laws of the State
of Delaware and each Generator has the requisite power and authority to
carry on its business as now being conducted;
(b) Authority Relative to this Agreement. Each Generator
has the requisite power and authority to execute and deliver this Agreement
and, subject to the procurement of applicable regulatory approvals, to
carry out the actions required of it by this Agreement. The execution and
delivery of this Agreement and the actions it contemplates have been duly
and validly authorized by the Managers or Members of each Generator and no
other company proceedings on the part of the Generators are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. The Agreement has been duly and validly executed and delivered by
each Generator and constitutes a valid and binding Agreement of each
Generator;
(c) Regulatory Approval. Each Generator has obtained or
will obtain by the Closing Date any and all approvals of, and given any
notice to, any public authority that are required for it to execute and
deliver this Agreement; and
(d) Compliance With Law.
(i) Each Generator represents and
warrants that it is not in violation of any applicable law, statute,
order, rule, or regulation promulgated or judgment entered by any
Federal, state, or local governmental authority, which violation
would affect its performance of its obligations under this Agreement.
(ii) Each Generator represents and
warrants that it will comply in all material respects with all
applicable laws, rules, regulations, codes and standards of all
Federal, state, and local governmental agencies having jurisdiction
over this Agreement and all applicable rules, requirements and
procedures of the ISO and NYPP, except to the extent that a failure
to so comply would not have a material adverse effect on its
obligations hereunder.
13.3 The representations and warranties in Sections 13.1 and
13.2 shall continue in full force and effect for the term of this
Agreement.
14. ASSIGNMENT OR OTHER CHANGE IN CORPORATE IDENTITY
(a) This Agreement and all of the provisions hereof shall
be binding upon, and inure to the benefit of the Parties and their
respective successors and permitted assigns, but assignment of any right,
interest or obligation under this Agreement may not be made without the
other Party's written consent, which may not be unreasonably withheld.
Assignments that are not consented to may be voided by the non-assigning
Party. This Agreement shall be binding upon and inure to the benefit of
O&R, the Generators and their respective successors and assigns.
Notwithstanding the foregoing, (a) O&R may assign this Agreement to an
affiliate of O&R that has a contractual or statutory obligation to supply
Installed Capacity and Energy to O&R's retail customers, provided, however,
that no such assignment, transfer, pledge, conveyance, or disposition shall
relieve or in any way discharge O&R from the performance of its duties and
obligations under this Agreement; and (b) the Generators may assign,
transfer, pledge or otherwise dispose of their respective rights and
interests hereunder to (i) a trustee or lending institution(s) for the
purposes of financing or refinancing the acquisition of the Purchased
Assets, including upon or pursuant to the exercise of remedies under such
financing or refinancing, or by way of assignments, transfers, pledges,
conveyances, or dispositions in lieu thereof; provided, however, that no
such assignment, transfer, pledge, conveyance, or disposition shall relieve
or in any way discharge the Generators from the performance of their
respective duties and obligations under this Agreement; or (ii) an
affiliate of the Generators or (iii) a purchaser, transferee or
lessor of all or substantially all of a Generator's right, title and
interest in and to the Purchased Assets, provided such purchaser,
transferee or lessor (A) (1) has a "net worth", or "consolidated net
worth", if applicable, as determined in accordance with U.S. generally
accepted accounting principles and reflected in an audited balance sheet
(or consolidated balance sheet, if applicable) ("Net Worth") at least equal
to an amount equal to (x) with regard to Bowline LLC, one-third of the
Purchase Price (as described in Section 3.1 of the Bowline Point Generating
Station Sales Agreement), (y) with regard to Lovett LLC, one-third of the
Purchase Price (as described in Section 3.1 of the Lovett Generating
Station Sales Agreement) and (z) with regard to NY-Gen LLC, one-third of
the Purchase Price (as described in Section 3.1 of the Gas Turbine and
Hydroelectric Generating Station Sales Agreement), or (2) provides a
guaranty from an affiliate which has a Net Worth at least equal to the
amount specified in (A)(1) above and (B) demonstrates its ability to
operate the Purchased Assets to O&R's reasonable satisfaction in accordance
with Good Utility Practices.
(b) The Generators acknowledge that O&R has entered into
an Agreement and Plan of Merger whereby O&R will become a wholly-owned
subsidiary of Consolidated Edison, Inc. ("CEI"). Notwithstanding any other
provision of this Article 14, the Generators agree that this Agreement may
be assigned to CEI, or a wholly-owned affiliate of CEI without the
Generators' consent provided, however, that no such assignment, transfer,
pledge, conveyance, or disposition shall relieve or in any way discharge
O&R from the performance of its duties and obligations under this
Agreement.
15. WAIVER
Except as otherwise provided in this Agreement, any failure of
a Party to comply with any obligation, covenant, agreement, or condition
herein may be waived by the Party entitled to the benefit thereof only by a
written instrument signed by the Party granting such waiver, but such
waiver shall not operate as a waiver of, or estoppel with respect to any
subsequent failure of the first Party to comply with such obligation,
covenant, agreement, or condition.
16. COUNTERPARTS
This Agreement may be executed in two or more counterparts, all
of which will be considered one and the same Agreement and each of which
will be deemed an original.
17. GOVERNING LAW
This Agreement and all rights, obligations, and performances of
the Parties hereunder, are subject to all applicable Federal and state
laws, and to all duly-promulgated orders and other duly-authorized action
of governmental authorities having jurisdiction. When not in conflict with
or preempted by Federal law, this Agreement will be governed by and
construed in accordance with the law of the State of New York, without
giving effect to the conflict of law principles thereof. Except for those
matters covered in this Agreement that are jurisdictional to the FERC and
the federal appellate courts to the extent of any appeals from FERC
proceedings, any action arising out of or concerning this Agreement must be
brought in the federal and state courts of the State of New York. Both
Parties hereby consent to the exclusive jurisdiction of the courts of the
State of New York for the purpose of hearing and determining any action not
preempted by Federal law or not within the jurisdiction of the FERC. If
requested by O&R, each Generator will consent to appointing an agent for
service of process in New York City.
18. SEVERABILITY
If any of the provisions of this Agreement are held to be
unenforceable or invalid by any court or regulatory authority of competent
jurisdiction, the Parties shall, to the extent possible, negotiate an
equitable adjustment to the provisions of this Agreement with a view toward
effecting the purpose of this Agreement, and the validity and enforcability
of the remaining provisions hereof shall not be affected thereby.
19. AMENDMENT
If the applicable provisions of the ISO Tariff, or any other
ISO or NYPP rules relating to Installed Capacity and Energy or the
implementation of this Agreement are changed materially from the ISO Tariff
filed with FERC by the Member Systems of NYPP on December 19, 1997, the
Parties shall endeavor in good faith to make conforming changes to this
Agreement with the intent to fulfill the purposes of this Agreement,
provided, however, that in no event shall such change excuse O&R from
paying the Capacity Payment in accordance with Section 3.2. Any such
conforming change to this Agreement shall be subject to filing with FERC.
Except as provided above in this Section 19 and subject to Section 2.2, the
rates, terms and conditions contained in this Agreement are not subject to
change under Sections 205 or 206 of the Federal Power Act, as either
section may be amended or superseded, absent the mutual written agreement
of the Partes. It is the intent of this Section 19 that, except as provided
above in this Section 19 and subject to Section 2.2, to the maximum extent
permitted by law, the rates, terms and conditions in this Agreement shall
not be subject to change, regardless of whether such change is sought (a)
by the FERC acting sua sponte on behalf of a Party or third party, (b) by a
Party, (c) by a third party, or (d) in any other manner and that this
Agreement may be amended, modified, or supplemented only by written
agreement of both O&R and the Generators.
20. ENTIRE AGREEMENT
This Agreement, the ASA's and the Ancillary Agreements
constitute the entire understanding between the Parties, and supersedes any
and all previous understandings, oral or written, which pertain to the
subject matter contained herein or therein.
21. FURTHER ASSURANCES
The Parties hereto agree to promptly execute and deliver, at
the expense of the Party requesting such action, any and all other and
further instruments and documents which may be reasonably requested in
order to effectuate the transactions contemplated hereby.
22. NO THIRD PARTY BENEFICIARIES
Nothing in this Agreement, express or implied, is intended to
confer on any person, other than the Parties, any rights or remedies under
or by reason of this Agreement.
23. CONFIDENTIALITY
(a) All information regarding a Party (the "Disclosing
Party") that is furnished directly or indirectly to the other Party (the
"Recipient") pursuant to this Agreement and marked "Confidential" shall be
deemed "Confidential Information". Notwithstanding the foregoing,
Confidential Information does not include information that (i) is
rightfully received from Recipient from a third party having an obligation
of confidence to the Disclosing Party, (ii) is or becomes in the public
domain through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
(b) Recipient shall keep the Confidential Information
strictly confidential and not disclose any Confidential Information to any
third party for a period of two years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
(c) Recipient may disclose the Confidential Information
to its and its affiliates' respective directors, officers, employees,
consultants, advisors and agents who need to know the Confidential
Information for the purpose of assisting Recipient with respect to its
obligations under this Agreement. Recipient shall inform all such parties,
in advance, of the confidential nature of the Confidential Information.
Recipient shall cause such parties to comply with the requirements of this
Agreement and shall be responsible for the actions, uses, and disclosures
of all such parties.
(d) If Recipient becomes legally compelled or required to
disclose any of the Confidential Information (including, without
limitation, pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will provide the Disclosing Party with prompt written notice
thereof so that the Disclosing Party may seek a protective order or other
appropriate remedy. Recipient will furnish only that portion of the
Confidential Information which its counsel considers legally required, and
Recipient will cooperate, at the Disclosing Party's expense, with the
Disclosing Party's counsel to enable the Disclosing Party to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded the Confidential Information. It is further agreed that,
if in the absence of a protective order, Recipient is nonetheless required
to disclose any Confidential Information, Recipient will furnish only that
portion of the Confidential Information which its counsel considers is
legally required.
(e) Recipient shall promptly return to the Disclosing
Party all items containing or constituting Confidential Information,
together with all copies, extracts, or summaries thereof, upon the earlier
of (i) the Disclosing Party's request, or (ii) the termination or
expiration of this Agreement.
24. NOTICES
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed effective upon receipt
when delivered either by hand delivery, cable, telecopy (confirmed in
writing) or telex, or by mail (registered or certified, postage prepaid) to
the respective Parties as follows:
If to O&R, to:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Attention: Legal Department
Fax: (914) 577-2959
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Sheldon S. Adler, Esq.
If to the Generators to:
Southern Energy Bowline, L.L.C.
Southern Energy Lovett, L.L.C.
Southern Energy NY-Gen, L.L.C.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: Randy Harrison, Vice President
Southern Company Services
276 Peachtree Street
Bin 918
Atlanta, Georgia 30303
Attention: Vice President and Associate General Counsel
and
Troutman Sanders LLP
Nationsbank Plaza
Suite 5200
Atlanta, Georgia 30308
Attention: Robert C. Marshall, Esq.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duly executed as of the date and year first above written.
SOUTHERN ENERGY BOWLINE, L.L.C.
By: /s/ Randy Harrison
_____________________________
Name: Randy Harrison
Title: Vice President
SOUTHERN ENERGY LOVETT, L.L.C.
By: /s/ Randy Harrison
____________________________
Name: Randy Harrison
Title: Vice President
SOUTHERN ENERGY NY-GEN, L.L.C.
By: /s/ Randy Harrison
_____________________________
Name: Randy Harrison
Title: Vice President
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. Louis Peoples
______________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive
Officer
Exhibit 10.63
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EASTERN LOAD POCKET CALL OPTION AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY LOVETT, L.L.C.
November 24, 1998
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TABLE OF CONTENTS
Article I. Definitions and Interpretation..............................2
Article II. Representations, Warranties and Covenants..................13
Article III. Term.......................................................16
Article IV. O&R's Right to Dispatch the Facility.......................17
Article V. Delivery by Lovett LLC.....................................21
Article VI. Price......................................................21
Article VII. Payment Terms..............................................23
Article VIII. Testing and Capacity Ratings...............................25
Article IX. Generation Commitments.....................................26
Article X. Start-up Lead Times and Other Operating Constraints........26
Article XI. Metering...................................................26
Article XII. Coordination of Facility and System Maintenance............27
Article XIII. Modifications..............................................28
Article XIV. Termination................................................28
Article XV. Indemnification............................................31
Article XVI. Limitation of Liability....................................37
Article XVII. Insurance..................................................38
Article XVII. Force Majeure..............................................41
Article XIX. Contract Documents.........................................43
Article XX. Dispute Resolution.........................................44
Article XXI. Taxes......................................................44
Article XXII. Assignment or Transfer.....................................45
Article XXII. Regulatory Approval; Effective Date........................46
Article XXI. Confidentiality............................................46
Article XXV. Amendments.................................................49
Article XXVI. Books and Records: Audit Rights...........................49
Article XXVII. Miscellaneous Provisions...................................50
THIS LOAD POCKET CALL OPTION AGREEMENT ("Agreement"), dated as of the
24th day of November 1998, between ORANGE AND ROCKLAND UTILITIES, INC., a
New York corporation ("O&R") with an office at One Blue Hill Plaza, Pearl
River, New York 10965 and SOUTHERN ENERGY LOVETT, L.L.C. a Delaware limited
liability company ("Lovett LLC") with offices at 900 Ashwood Parkway, Suite
500, Atlanta, Georgia 30338.
W I T N E S S E T H :
WHEREAS, O&R is authorized by its certificate of incorporation and by
the State of New York to engage in the production, transmission, sale and
distribution of electricity for heat, light and power to the public;
WHEREAS, pursuant to an Electric Rate and Restructuring Plan dated
November 6, 1997 O&R has agreed to divest by auction all its electric
generating facilities;
WHEREAS, pursuant to this auction process, O&R has agreed to sell the
Facility (as defined below) to Lovett LLC;
WHEREAS, O&R desires to have the ability to call on and dispatch the
Facility under the terms of this Agreement in those hours when the
operation of the Facility is required by O&R to ensure the reliability of
the Load Pocket (as hereinafter defined) ("Load Pocket Hours");
WHEREAS, Lovett LLC agrees to dispatch the Facility during Load
Pocket Hours on the terms and conditions set forth herein and therefore is
willing to enter into this Agreement with O&R; and
WHEREAS, O&R agrees to pay Lovett LLC to dispatch the Facility during
Load Pocket Hours on the terms and conditions set forth herein and
therefore is willing to enter into this Agreement with Lovett LLC.
NOW, THEREFORE, in consideration of the premises and other
valuable consideration given the one to the other, the sufficiency of which
each Party acknowledges, O&R and Lovett LLC agree as follows:
Article I. Definitions and Interpretation
1.1 The following terms when used herein (and in the schedules
attached hereto) with initial capitalization, shall have the meaning
specified in this Article. The singular shall include the plural and the
masculine shall include the feminine and neuter, and vice versa. "Includes"
or "including" shall mean "including without limitation". References to a
section, article or schedule shall mean a section, article or schedule of
this Agreement, as the case may be, unless the context requires otherwise,
and reference to a given Agreement or instrument shall be a reference to
that Agreement or instrument as modified, amended, supplemented or restated
through the date as of which such reference is made. Unless the context
otherwise requires, references to any Law shall be deemed references to
such Law as it may be amended, replaced or restated from time to time.
Unless the context otherwise requires, any reference to a "person" includes
any individual, partnership, firm, company, corporation, joint venture,
trust, association, organization or other entity, in each case whether or
not having separate legal personality.
1.2 The following terms shall have the meanings set forth below:
(a) ASA: The Lovett Generating Station Sales Agreement dated
as of November 24, 1998 by and between Lovett LLC and O&R.
(b) Available: That the Facility is capable, in real time
(subject to Start-up Lead Times), of producing Energy which can be
Delivered up to the Availability Limit.
(c) Availability: The capability of the Facility at any given
time to produce Energy measured in MW.
(d) Availability Limit: For any hour the maximum number of MW
which Lovett LLC is obligated to make Available from the Facility pursuant
to this Agreement, as identified in Schedule A.
(e) Business Day: Any day other than Saturday, Sunday or any
day which is a legal holiday or a day on which banking institutions in the
State of New York are authorized by law or other governmental action to
close.
(f) Capacity: The capability to generate or transmit
electrical power measured in megawatts ("MW").
(g) Capital Improvement: A material addition or modification
to, change in, or replacement or renewal of plant or equipment which
comprises a Facility or any other plant, equipment or facilities used by
Lovett LLC for the production of Energy at the Facility.
(h) Closing DateThe date and time at which the closing of the
transactions contemplated by the ASA actually occurs.
(i) Commission: The New York State Public Service Commission.
(j) Contract Year: Each 12-month period commencing on the
Effective Date or on any anniversary of the Effective Date occurring during
the term of this Agreement.
(k) Daily Dispatch Notice: A notice requesting dispatch of
the Facility to provide Energy delivered by O&R to Lovett LLC's Scheduling
Coordinator on the day before a Requested Operation Period pursuant to this
Agreement, in a form which complies with the requirements of Section 4.2.
(l) Deliver: To deliver Energy to the Delivery Point in
compliance with the requirements described in Section 5.1 and the term
"Delivered" shall be construed accordingly.
(m) Delivered MW or Delivered MWhs: The MW or MWhs of Energy,
as the case may be, Delivered by Lovett LLC pursuant to O&R's request.
(n) Delivery Point: The generator terminals at the Facility,
which are the physical points where Energy will be delivered and measured
for purposes of this Agreement.
(o) Dispatch Notice: A Daily Dispatch Notice, an Hourly
Dispatch Notice and/or a Dispatch Notice given by O&R in real time to
Lovett LLC's Scheduling Coordinator.
(p) DMNC: Dependable Maximum Net Capability.
(q) Due Date: The date which is 30 days after the
date on which a Party submits an invoice to the other Party.
(r) Effective Date: The same date as the Closing Date.
(s) Emergency: A condition or situation which is likely to
result in degradation or disruption of service to O&R's customers, or is
likely to endanger life or property.
(t) Emission Costs: Lovett LLC's emissions' related costs as
calculated pursuant to Schedule E.
(u) Energy: Electrical energy.
(v) Energy Costs: Lovett LLC's costs for Delivered MWhs which
are Delivered pursuant to a Dispatch Notice as calculated pursuant to
Section 6.2 and Schedule C.
(w) Facility: The electrical generating facilities more
particularly described in Schedule A.
(x) FERC: Federal Energy Regulatory Commission.
(y) Forced Outage: Any outage of the Facility other than (i) a
Planned Outage, (ii) a Planned Overhaul, (iii) an outage caused by a Force
Majeure Event, (iv) an outage caused by an act or omission of O&R,
including any O&R Event of Default, (v) an outage caused by an ISO order or
request to take a unit off line as a result of an emergency or as a result
of any abnormal transmission condition on O&R's System, or (vi) any outage
required to comply with any environmental restrictions, that fully or
partially curtails its ability to produce Energy when dispatched by O&R in
accordance with the terms of this Agreement.
(z) Good Utility Practices: Any of the practices, methods or
acts engaged in or approved by a significant portion of the electric
utility industry with respect to similar facilities during the relevant
time period, which in each case, in the exercise of reasonable judgment in
light of the facts known or that should have been known at the time the
decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety, law, regulation, environmental protection and
expedition. Good Utility Practices are not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others, but
rather to delineate the acceptable practices, methods, or acts generally
accepted in such industry.
(aa) Governmental Authority: Any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to a government.
(bb) Hourly Dispatch Notice: A notice, delivered by O&R to
Lovett LLC's Scheduling Coordinator, requesting dispatch of the Facility to
provide Energy pursuant to this Agreement, other than a Daily Dispatch
Notice, in such form as may be adopted by the Parties, provided that such
form complies with the requirements of Section 4.2 of this Agreement.
(cc) Interest Rate: The rate of interest at the prime rate of
The Chase Manhattan Bank in effect on the applicable date.
(dd) ISO: The New York Independent System Operator.
(ee) ISO Protocols: The rules, protocols, procedures and
standards promulgated by the ISO (as amended from time to time) to be
complied with by the ISO and all market participants in relation to
participation in the market for Energy in accordance with the ISO Operating
Agreement and Tariff.
(ff) ISO Tariff: The open access transmission operating
agreement and tariff approved by the FERC, in FERC Docket Nos.
ER97-1523-000, OA97-470-000, and ER97-4234-000, as it may be modified and
in effect from time to time.
(gg) Law: Any law, treaty, code, rule, regulation, or order or
determination of an arbitrator, court or other Governmental Authority, or
any franchise, license, lease, permit, certificate, authorization,
qualification, right or approval issued or granted by a Governmental
Authority and binding on a Party or any of its property.
(hh) Load Pocket: The electric load required by O&R's customers
in the area of O&R's service territory outlined on the attached diagram on
Schedule H, provided, however, that, (i) because of transmission
constraints on O&R's transmission and distribution system as of the date
hereof, such area requires generating resources internal to such area to
ensure reliable service to such electric load and (ii) the Facility is a
generating resource internal to such area that is necessary to ensure such
reliable service.
(ii) Lovett LLC's Scheduling Coordinator: The Scheduling
Coordinator identified by Lovett LLC.
(jj) Market Transaction: A delivery of Energy and/or
capacity from the Facility, other than pursuant to this Agreement.
(kk) Maximum Requested MW: The highest MW output of the
Facility which O&R can request Lovett LLC to dispatch, as shown on Schedule
A.
(ll) Minimum Requested MW: The lowest MW output needed
to maintain stable continuous operation of the Facility, as shown on
Schedule A.
(mm) NERC: North American Electric Reliability Council or its
successors.
(nn) Nonmarket Transaction: A delivery of Energy from the
Facility pursuant to a Dispatch Notice under this Agreement.
(oo) NYPP: The New York Power Pool or its successors.
(pp) NYPP Procedures: The most current methods and procedures
of the NYPP, including those for determining DMNC, as amended.
(qq) Off-Peak: All hours not classified as On-Peak hours.
(rr) On-Peak: The hours in Monday through Friday from hour
beginning 7:00 a.m. through hour beginning 10:00 p.m. excluding NERC
holidays.
(ss) O&R Load Zone: The load zone as designated by the ISO
which encompasses the O&R service territory.
(tt) O&R's System: O&R's electric transmission and distribution
system.
(uu) Party: Either O&R or Lovett LLC and Parties means O&R and
Lovett LLC.
(vv) Planned Outage: A planned interruption in the electrical
output of the Facility or a planned transmission interruption of the O&R
System, as the case may be, to perform routine maintenance pursuant to the
Planned Outage schedule provided under Section 12.3.
(ww) Planned Overhaul: A planned interruption in the electrical
output of the Facility or a planned transmission interruption of the O&R
System, as the case may be, to perform a major equipment overhaul and
inspections or major transmission facilities maintenance and inspection at
the dates and times provided under Section 12.3.
(xx) Requested MW : The MW of generation capability which O&R
requests be made available from the Facility pursuant to a
Dispatch Notice.
(yy) Requested Operation Period: The hours during which O&R
requests that the Facility be dispatched pursuant to a Dispatch Notice.
(zz) Shutdown: The condition of the Facility where the
generator rotor is at rest.
(aaa) Start-up: The action of bringing the Facility from
Shutdown to Synchronous Speed, to its Minimum Requested MW and having it
unconditionally released for ramping to full load if required, and
"Started-up" and "Starting-up" shall be construed accordingly.
(bbb) Start-up Lead Time: The amount of time required to
Start-up the Facility, as shown on Schedule A.
(ccc) Start-up Costs: Lovett LLC's costs for Starting-up the
Facility in response to a Dispatch Notice, as described in Section 6.2 and
Schedule D.
(ddd) Summer Capability Period: The meaning provided by the
NYPP, the ISO or their successor(s), as may be modified from time to time.
Summer Capability Period is currently each May 1 through October 31 of each
year.
(eee) Synchronized: The condition where the Facility is
connected to the Transmission Grid.
(fff) Synchronous Speed: That speed required by the Facility to
enable it to be Synchronized to the Transmission Grid.
(ggg) Transmission Grid: The electric transmission system (as
it may be modified or expanded from time to time) under control of the NYPP
or the ISO.
(hhh) Winter Capability Period: The meaning provided by the
NYPP, the ISO or their successor(s), as may be modified from time to time.
Winter Capability Period is currently each November 1 through April 30 of
the following calendar year.
1.3 Each of the following terms has the meaning specified in
the Section set forth opposite such term:
Term Section
- ---- -------
Adjustment Invoice 7.4
Agreement Preamble
Annual Forecast 4.1
Availability Payment 6.1
Direct Claim 15.4
Disclosing Party 24.1
Estimated Invoice 7.1
Event of Default 14.1
Force Majeure Event 18.1
Forecast 4.1
Generation Costs 6.2
Indemnifiable Loss 15.3
Indemnifying Party 15.3
Indemnitee 15.3
Load Pocket Dispatch Log Schedule J
Load Pocket Hours Recitals
Lovett LLC Indemnifiable Loss 15.2
Lovett LLC Preamble
Net Worth 22.1
O&R Preamble
O&R Indemnifiable Loss 15.1
Occurrence Schedule G
Recipient 24.1
Shed Load Schedule G
Taxes 21.1
Third Party Claim 15.4
Article II. Representations, Warranties and Covenants
2.1 Lovett LLC makes the following representations, warranties
and covenants as the basis for the benefits and obligations contained in
this Agreement.
(a) Lovett LLC represents that it is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the power and authority to own its
properties, to carry on its business as now being conducted and to enter
into this Agreement and carry out the transactions contemplated hereby and
perform and carry out all covenants and obligations on its part to be
performed under and pursuant to this Agreement.
(b) Lovett LLC represents and warrants that (i) it is duly
authorized to enter into this Agreement and discharge and perform all
covenants and obligations on its part to be performed under and pursuant to
this Agreement, (ii) the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of
and compliance with the provisions of this Agreement will not conflict with
or constitute a breach of or a default under, any of the terms, conditions
or provisions of any law, any order of any court or other agency of
government, or any contractual limitation, deed of trust, mortgage,
partnership agreement, loan agreement, other evidence of indebtedness or
any other agreement or instrument to which Lovett LLC is a party or by
which it or any of its property is bound, or result in a breach of or a
default under any of the foregoing, except for such conflicts, breaches or
defaults, as to which requisite waivers have been obtained or which would
not have a material adverse effect on Lovett LLC's ability to perform its
obligations under this Agreement, and (iii) this Agreement is the legal,
valid and binding obligation of Lovett LLC enforceable in accordance with
its terms, except that such enforceability may be limited by applicable
laws affecting or relating to enforcement of creditors' rights and general
principles of equity.
(c) Lovett LLC represents and warrants that all consents and
authorizations required for Lovett LLC to execute and deliver this
Agreement have been obtained, except for such consents and authorizations
which, if not obtained, would not be reasonably likely to have a material
adverse affect on Lovett LLC's ability to perform its obligations under
this Agreement.
2.2 O&R makes the following representations, warranties and covenants
as the basis for the benefits and obligations contained in this
Agreement.
(a) O&R represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York, has the corporate power and authority to own its
properties, to carry on its business as now being conducted and to enter
into this Agreement and the transactions contemplated hereby and perform
and carry out all covenants and obligations on its part to be performed
under and pursuant to this Agreement.
(b) O&R represents and warrants that it is duly authorized to
enter into this Agreement and discharge and perform all covenants and
obligations on its part to be performed under and pursuant to this
Agreement and that the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of
and compliance with the provisions of this Agreement will not conflict with
or constitute a breach of or a default under, any of the terms, conditions,
or provisions of any law, any order of any court or other agency of
government, the certificate of incorporation or by-laws of O&R, or any
contractual limitation, corporate restriction or outstanding trust
indenture, deed of trust, mortgage, loan agreement, other evidence of
indebtedness or any other agreement or instrument to which O&R is a party
or by which it or any of its property is bound, or result in a breach of or
default under any of the foregoing except for such conflicts, breaches or
defaults, as to which requisite waivers have been obtained or which would
not have a material adverse effect on O&R's ability to perform its
obligations under this Agreement, and (iii), and this Agreement is the
legal, valid and binding obligation of O&R enforceable in accordance with
its terms except that such enforceability may be limited by applicable laws
affecting or relating to enforcement of creditors' rights and general
principles of equity.
(c) O&R represents and warrants that all consents and
authorizations required to execute this Agreement have been obtained except
for such consents and authorizations which, if not obtained, would not be
reasonably likely to have a material adverse affect on O&R's ability to
perform its obligations under this Agreement.
(d) O&R represents and warrants that as of the Closing Date the
Facilities are capable of meeting the operating requirements specified
herein in accordance with Good Utility Practices, including the Maximum
Requested MW, the Minimum Requested MW, the Requested MW, the heat rates
set forth in Schedule A, the Start-up Lead Time, the Synchronous Speed and
the requirements to be set forth in a Dispatch Notice, and O&R has no
knowledge of any conditions at the Facilities that could cause such
Facilities to be unable to satisfy such requirements during the term of
this Agreement.
Article III.Term
3.1 This Agreement shall remain in full force and effect for a period
of one year from the Closing Date. O&R may, in its sole discretion, extend
the term of this Agreement for a maximum of four additional consecutive one
year terms. In order for O&R to exercise its option to extend the term of
this Agreement, O&R must provide Lovett LLC with written notice, at least
120 days prior to the termination of this Agreement, of its intention to
extend the term of this Agreement for another year. Applicable provisions
of this Agreement shall continue in effect after termination to the extent
necessary to provide for final billings and adjustments. Upon each one year
extension of this Agreement, the Availability Payments in Schedule B shall
be increased in accordance with the Consumer Price Index for all Urban
consumers, U.S. City Average, all times, unadjusted (base date January
1998) released by the U.S. Government Department of Labor, Bureau of Labor
Statistics or its successor, or should such price index be discontinued, or
the bases of its calculation be substantially modified, such other price
index as is mutually agreed upon by O&R and Lovett LLC.
Article IV. O&R's Right to Dispatch the Facility
4.1 On the Effective Date and, if the term of this Agreement has been
extended pursuant to Section 3.1, on the anniversary of the Effective Date,
O&R will provide Lovett LLC with a non-binding forecast ("Annual Forecast")
representing O&R's then current best estimate of the Capacity that O&R will
require the Facility to provide during the next 12 months for the Load
Pocket. Not less than 30 days prior to the beginning of every calendar
month during the term of this Agreement, O&R shall provide Lovett LLC with
a non-binding forecast ("Forecast") representing O&R's then current best
estimate of the Capacity that O&R will require the Facility to provide from
the beginning of that calendar month through the end of the following two
calendar months (a three month period) for the Load Pocket. The Forecast
and Annual Forecast will take into account the Planned Outages and Planned
Overhauls. O&R shall use its best efforts to prepare its estimate but shall
have no liability to Lovett LLC for the accuracy or completeness of the
Forecast or the Annual Forecast.
4.2 Subject to the terms and conditions described in this Agreement,
O&R shall have the right to direct that the Facility be available to
Deliver Energy during Load Pocket Hours for the Load Pocket. O&R shall
direct the dispatch of the Facility by delivering, in accordance with the
communication protocols from time to time established by the Parties, a
Daily Dispatch Notice to Lovett LLC's Scheduling Coordinator not later than
10:00 a.m. of the day before the commencement of the Requested Operation
Period specified in such notice and/or delivering an Hourly Dispatch Notice
to Lovett LLC's Scheduling Coordinator at least one half hour prior to the
commencement of the Requested Operation Period specified in such notice
and/or delivering a Dispatch Notice in real time. Each Dispatch Notice
shall comply with the Start-up Lead Times and the other operational
limitations described in Schedule A, and, Lovett LLC shall have no
liability, nor shall Lovett LLC suffer any reductions in payments, for
failure to comply with a Dispatch Notice which is not in compliance with
such limitations. Each Daily Dispatch Notice or Hourly Dispatch Notice may
be modified by a subsequent Daily Dispatch Notice or a subsequent Hourly
Dispatch Notice, subject to the restrictions of this subsection. O&R may,
subject to the restrictions of this subsection, issue a Dispatch Notice
directing dispatch of the Facility in real time for the Load Pocket.
4.3 Each Dispatch Notice shall specify the time of commencement and
termination of the Requested Operation Period and, for each hour of the
Requested Operation Period, the Minimum Requested MW which O&R requests to
be dispatched and the Maximum Requested MW O&R requests to be available for
the Load Pocket. All hours of operation in each Dispatch Notice shall be
consecutive Load Pocket Hours, unless otherwise agreed to in writing by
Lovett LLC. O&R may not direct Lovett LLC to conduct more than one
dispatchable start-up per calendar day per generating unit. Each Party
shall record the applicable information from the Dispatch Notices in the
Load Pocket Dispatch Log, a form of which is attached hereto in the Form of
Schedule J.
4.4 If Lovett LLC considers that a Dispatch Notice does not comply
with the limitations set forth in Schedule A or that Lovett LLC is
otherwise not required to dispatch the Facility in accordance with a
Dispatch Notice, it shall forthwith give written notice to O&R to that
effect. This notice shall specify in detail why Lovett LLC believes the
Dispatch Notice does not comply or Lovett LLC is not otherwise required to
dispatch the Facility, as the case may be, and shall include, without
limitation, the following bases for the notice as applicable:
(i) any amount of Capacity requested by O&R that Lovett
LLC is not obligated to provide pursuant to Section
9.1;
(ii) whether the Start-up Lead Time or any other
operating constraint as described in Schedule A is
inconsistent with Delivery of the Requested MW in
accordance with the Dispatch Notice;
(iii) any operation of the Facility necessary to comply
with the Dispatch Notice which would be in breach
of any applicable Law or would conflict with Good
Utility Practices.
4.5 Upon receipt of Lovett LLC's notice issued pursuant to Section
4.4, O&R may, by delivering a notice to Lovett LLC's Scheduling Coordinator
promptly thereafter, but in no event later than half an hour prior to
commencement of the Requested Operation Period, modify the Dispatch Notice
in accordance with Lovett LLC's notice.
4.6 At or about 9:00 a.m. each day, Lovett LLC shall provide O&R with
a daily status report regarding the operating characteristics and current
status of the Facility, substantially in the form attached hereto as
Schedule L. This report will include information that pertains to the
reliable performance of the Facility such as response rate, start up time,
minimum run time, minimum down time, minimum loading point, full load point
and available choice of fuels. The report also will describe the Facility's
current availability, deratings and planned operations for the next 24
hours. Lovett LLC shall notify O&R immediately of any actual or planned
change to this data.
Article V. Delivery by Lovett LLC
5.1 Lovett LLC shall, in response to a Dispatch Notice from O&R,
dispatch the Facility at the Minimum Requested MW and make available the
Maximum Requested MW in accordance with the Dispatch Notice, subject to the
limits described in this Agreement.
5.2 Lovett LLC shall, in response to a Dispatch Notice from
O&R, provide reactive supply and voltage control for the Load Pocket by
making available the minimum MVARs at full MW load as set forth in
Schedule A.
Article VI. Price
6.1 Following the Effective Date, O&R shall make Availability
payments as described in Schedule B ("Availability Payments") to Lovett LLC
in accordance with Section 7.1.
6.2 When Lovett LLC dispatches a Facility into the ISO during Load
Pocket Hours pursuant to a Dispatch Notice, O&R shall pay Lovett LLC its
Generation Costs as set forth below ("Generation Costs"), to the extent
that the revenue received by such Facility from the ISO is less than the
Generation Costs during such time period. For purposes of determining such
payment described in the preceding sentence, (i) the revenue received by
the Facility shall include all revenue received from all energy and
ancillary services markets, during the period the Facility operates as
recorded in the Load Pocket Dispatch Log, but shall exclude any capacity
payments and (ii) such revenue shall not be reduced by any penalties
assessed by the ISO for non-performance. Generation Costs shall be the sum
of all applicable Energy Costs for both minimum generation and above
minimum generation (as calculated pursuant to Schedule C), Start-up Costs
(as calculated pursuant to Schedule D) and Emissions Costs (as calculated
pursuant to Schedule E). Schedule F illustrates how payment will be
calculated when a Facility is operating pursuant to Market and Nonmarket
Transactions. In addition, to the extent that O&R issues a notice modifying
the Dispatch Notice pursuant to Section 4.2 or 4.5, O&R shall compensate
Lovett LLC for any incremental costs including, but not limited to,
imbalance or scheduling charges and/or penalties imposed on or incurred by
Lovett LLC as a result of the modification.
6.3 If Lovett LLC fails to be available to provide Energy during Load
Pocket Hours, Lovett LLC shall be assessed the penalties as calculated in
accordance with Schedule G to this Agreement. Such penalties shall be O&R's
sole and exclusive remedy with respect to any failure to be available or to
provide Energy during Load Pocket Hours.
6.4 Nothing in this Agreement shall restrict Lovett LLC from entering
into Market Transactions either inside or outside of a Requested Operation
Period.
6.5 O&R is not purchasing from and accordingly makes no payment to
Lovett LLC for either capacity or ancillary services pursuant to this
Agreement. If the Parties wish to engage in the purchase or sale of
capacity and/or ancillary services, they will do so pursuant to a separate
agreement(s).
Article VII.Payment Terms
7.1 Within 14 days after the end of each calendar month during the
term of this Agreement (and, if termination of this Agreement does not
occur at the end of a month, within 14 days after the end of the month in
which termination occurs), Lovett LLC shall submit an estimated invoice
("Estimated Invoice") to O&R for all charges properly due under this
Agreement for that month using reasonable estimates of actual data. Such
invoice shall set out or be supported by detailed calculations and
breakdowns of the estimated amounts due. The Estimated Invoice shall be
paid by O&R no later than the Due Date.
7.2 All payments shall be made by wire transfer in accordance with
instructions from the Party making payment or by memorandum accounts. Each
Party may set off any undisputed amount owed to the other Party against any
undisputed amount owed pursuant to this Agreement or other arrangement(s)
agreed to between the Parties.
7.3 If any sum or part of a sum shown on an invoice is disputed by
either Party, payment of the undisputed sums on that invoice shall not be
withheld. Interest on any unpaid amounts shall be charged at the Interest
Rate plus 2 percent per annum calculated from the Due Date of the invoice
to the date of payment.
7.4 Lovett LLC shall submit to O&R an adjusted or supplemental
invoice ("Adjustment Invoice") within 60 days after the date of the
Estimated Invoice which Adjustment Invoice should reflect the actual
amounts due from O&R to Lovett LLC for the months covered by the
appropriate Estimated Invoice. If the Adjustment Invoice reflects an amount
that is less than the amount charged to O&R under the Estimated Invoice,
Lovett LLC shall pay the difference between the amount in the Adjustment
Invoice and the amount in the Estimated Invoice to O&R together with interest
at the Interest Rate from the Due Date of the Estimated Invoice to the
effective date of repayment by Lovett LLC no later than the Due Date and the
provisions of Section 7.2 shall apply to any such payment.
If the Adjustment Invoice reflects an amount that is greater than the
amount charged to O&R under the Estimated Invoice, O&R shall pay the
difference between the amount in the Adjustment Invoice and the amount in
the Estimated Invoice to Lovett LLC together, with interest from the Due
Date of the Estimated Invoice to the date of payment by O&R.
7.5 If the Due Date is not a Business Day, then the next following
Business Day will be the Due Date.
7.6 If O&R does not dispute the amount in an Estimated Invoice or an
Adjustment Invoice in a writing provided to Lovett LLC identifying in
reasonable detail the reasons therefor within six months after receipt of
such invoice, such invoice shall be deemed correct. Each Party shall at its
own cost provide the other Party with such information and assistance as
the other Party reasonably requests to resolve the dispute, subject to the
confidentiality provisions herein. If O&R has disputed the amount prior to
its due date in a writing provided to Lovett LLC identifying in reasonable
detail the reasons thereof, O&R shall not be obligated to pay the disputed
amount until such dispute is resolved. The Parties shall engage in good
faith negotiations to resolve any disputed amounts within 30 days. If the
Parties are unable to resolve the dispute within such 30-day period, either
Party may exercise such rights and remedies available to it under law or at
equity. If the dispute is finally settled or determined in favor of Lovett
LLC, Lovett LLC shall include the amount settled or determined in an
invoice under Section 7.1 or 7.4 plus interest. If the settlement or
determination of the dispute results in an amount being due to O&R, Lovett
LLC shall pay O&R or credit the rebate to O&R at the time the next invoice
is issued to O&R plus interest. Interest on disputed amounts will be
calculated in accordance with Section 7.3.
Article VIII. Testing and Capacity Ratings
8.1 During the term of this Agreement, Lovett LLC shall provide O&R
with the results of the DMNC test which Lovett LLC performs for each
capability period (as defined by the NYPP or the ISO or their successors)
in accordance with NYPP Procedures or any similar test established by the
ISO Protocols.
Article IX. Generation Commitments
9.1 O&R shall not have the right under this Agreement to dispatch the
Facility (i) in excess of the Maximum Requested MW, (ii) less than the
Minimum Requested MW, (iii) to provide Energy to customers outside of the
Load Pocket or to support O&R's System outside of the Load Pocket, or (iv)
during any outage that is included as an exception to the definition of
"Forced Outage".
Article X. Start-up Lead Times and Other Operating Constraints
10.1 Lovett LLC shall not be obligated under this Agreement to
Start-up the Facility unless the amount of time between the delivery of the
Dispatch Notice requesting such Start-up and the commencement of the
applicable Requested Operation Period shall at least equal the Start-up
Lead Time.
10.2 Lovett LLC shall not be obligated to operate the Facility
pursuant to this Agreement in excess of the other operational limits as set
forth in Schedule A or in a manner inconsistent with Good Utility Practices
or Law.
Article XI. Metering
11.1 Metering services shall be performed as provided for in the
Continuing Site/Interconnection Agreement, by and between O&R and Lovett
LLC, dated November 24, 1998.
Article XII.Coordination of Facility and System Maintenance
12.1 Lovett LLC shall use its commercially reasonable efforts to
fuel, operate and maintain the Facility, or cause the Facility to be
fueled, operated and maintained, in accordance with all material Laws and
Good Utility Practices so that Lovett LLC is able to perform its
obligations under this Agreement. Lovett LLC shall also notify O&R of any
derating greater than 5% of the Facility's nominal ratings, as set forth in
Schedule A, that will cause Lovett LLC to be unable to perform its
obligations during a Load Pocket Hour.
12.2 Other than unscheduled maintenance, each Party shall use
reasonable efforts to coordinate with the other Party the maintenance of
the Facility and the O&R System, as the case may be, as well as any
electric transmission lines, required in order to ensure the sound
operation of the Facility and O&R's System. Except in cases of Emergency
and Good Utility Practices, neither Planned Outages, including planned
partial outages, and Planned Overhauls shall be scheduled or performed at
the Facility or the O&R System, as the case may be, during the On-Peak
hours in the months of June through September, inclusive, without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld or delayed.
12.3 Within 60 days after the Effective Date, each Party shall
provide the other Party, a non-binding schedule of Planned Outages and
Planned Overhauls (including expected commencement date and duration) for
the following calendar year. In addition, each Party shall provide a
non-binding two-year forecast of Planned Overhauls in accordance with ISO
procedures. Each Party may make such changes to such schedules and
forecasts as it considers appropriate, at its sole discretion, subject to
the restrictions set forth herein.
Article XIII. Modifications
13.1 In the event of any material loss or damage to the Facility that
would substantially impair the capability of the Facility to Deliver Energy
during a Load Pocket Hour, Lovett LLC shall at its own expense make such
repairs or replacements as it considers necessary in accordance with Good
Utility Practices in order to perform its obligations hereunder.
Article XIV. Termination
14.1 Unless otherwise caused by a Force Majeure Event or an act or
omission of the non-defaulting Party, any one or more of the following
events shall constitute an Event of Default under this Agreement, and the
terms "Event of Default" or "Events of Default" shall mean, whenever they
are used in this Agreement, any one or more of the following events:
(a) Failure by either Party to pay any material amount due and
payable by it pursuant to this Agreement after the same shall have become
due and payable;
(b) A material breach by either Party of any covenant,
condition or obligation on its part to be performed (other than as referred
to in paragraph (a) above) and such failure shall materially and adversely
affect such Party's performance under this Agreement and such breach is not
cured within 30 days after the breaching Party receives written notice
thereof from the non-breaching Party, or within such longer cure period as
may reasonably be required if such breach cannot be reasonably cured within
such 30-day period and the defaulting Party has instituted corrective
action and diligently attempts to cure such default and continues such
action until the cure is complete;
(c) The dissolution or liquidation of either Party, or the
admission in writing by either Party of its inability to pay its debts as
they become due, or the failure by either Party to lift any execution,
garnishment or attachment of such consequences as will impair such Party's
ability to perform substantially its obligations pursuant to this
Agreement, or the commission by either Party of any act of bankruptcy, or
the adjudication of either Party as a bankrupt, or the making of any
assignment by either Party for the benefit of its creditors or the entry by
either Party into an agreement of composition with its creditors, or the
approval by a court of competent jurisdiction of a petition applicable to
either Party in any proceeding for the reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar proceeding
instituted under the provisions of any bankruptcy act or under any similar
act in any domestic or foreign jurisdiction which may now be in effect or
hereafter enacted, or within 60 days after the commencement of any such
proceeding against either Party such proceeding shall have been dismissed,
or the filing of an answer admitting or not contesting the material
allegations of a petition against it in such proceeding, or the appointment
without the consent or acquiescence of either Party, of any trustee,
receiver or liquidator of either Party or of any material part of its
properties, if within 60 days thereafter such appointment shall not have
been vacated, or if either Party shall seek or consent or acquiesce in the
appointment of any trustee, receiver or liquidator of itself or of any
material part of its properties;
(d) If any material representation or warranty made by or on
behalf of either Party shall prove to have been false or incorrect in any
material respect on the date as of which made.
14.2 Whenever any Event of Default shall have occurred and be
continuing, the non-defaulting Party, to the extent permitted by law, may,
upon written notice to the defaulting Party, terminate this Agreement and
thereupon this Agreement shall cease and terminate.
14.3 In addition to the foregoing remedies, whenever any Event of
Default, which materially affects the defaulting Party's performance under
this Agreement, shall have occurred and be continuing, the non-defaulting
Party, to the extent permitted by law, shall be entitled to suspend
immediately its performance under this Agreement, until such Event of
Default is corrected. If the Event of Default does not cease or is not
corrected, the non-defaulting Party may proceed to terminate this Agreement
in accordance with the provisions of this Agreement.
14.4 No termination of this Agreement shall relieve the defaulting
Party of its liability and obligations hereunder accruing or arising prior
to such termination, and the non-defaulting Party may take wherever action
at law or in equity as may appear necessary or desirable to enforce
performance and observance of any obligations, agreements, or covenants
under this Agreement, and the rights given hereunder shall be in addition
to all other remedies available to the Parties, either in law, at equity or
otherwise, for the breach of this Agreement.
Article XV. Indemnification
15.1 Lovett LLC's Indemnification
Lovett LLC shall indemnify, hold harmless and defend O&R, its
parent, affiliates, and successors, and their officers, directors,
employees, agents, subcontractors, and successors, from and against any and
all claims, demands, liabilities, costs, losses, judgments, damages and
expenses (including, without limitation, reasonable attorney and expert
fees, and disbursements incurred by O&R in any actions or proceedings
between O&R and a third party, Lovett LLC, or any other party) to the
extent the foregoing are not covered by insurance ("O&R Indemnifiable
Losses") asserted against or suffered by O&R for (i) damage to property, or
(ii) injury to or death of any person, including O&R employees, Lovett
LLC's employees and their affiliates' employees, or any third parties, in
such case to the extent caused by the gross negligence or willful
misconduct of Lovett LLC and/or its officers, directors, employees, agents,
and subcontractors and arising out of this Agreement and not caused by the
negligence or willful misconduct of any such Indemnitee.
15.2 O&R's Indemnification
O&R shall indemnify, hold harmless and defend Lovett LLC, its
parent, affiliates, and successors, and their officers, directors,
employees, agents, subcontractors, and successors, from and against any and
all claims, demands, liabilities, costs, losses, judgments, damages and
expenses (including, without limitation, reasonable attorney and expert
fees, and disbursements incurred by Lovett LLC in any actions or
proceedings between Lovett LLC and a third party, O&R, or any other party)
to the extent the foregoing are not covered by insurance ("Lovett LLC
Indemnifiable Losses") asserted against or suffered by Lovett LLC for (i)
damage to property, or (ii) injury to or death of any person, including
Lovett LLC employees, O&R's employees and their affiliates' employees, or
any third parties, in each case to the extent caused by the gross
negligence or willful misconduct of O&R and/or its officers, directors,
employees, agents, and subcontractors and arising out of this Agreement and
not caused by the negligence or willful misconduct of any such Indemnitee.
15.3 Indemnification Procedures
Either Party 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 O&R Indemnifiable Loss
or Lovett LLC Indemnifiable Loss, as appropriate, hereunder. The amount of
any O&R Indemnifiable Loss or Lovett LLC Indemnifiable Loss, as
appropriate, shall be reduced to the extent that Indemnitee receives any
insurance proceeds with respect to an O&R Indemnifiable Loss or Lovett LLC
Indemnifiable Loss, as appropriate (either may be referred to as an
"Indemnifiable Loss").
15.4 Defense of Claims. (a) If any Indemnitee receives written notice
of the assertion of any claim or of the commencement of any claim, action,
or proceeding made or brought by any Person who is not a Party to this
Agreement or any affiliate of a Party to this Agreement (a "Third Party
Claim") with respect to which indemnification is to be sought from a person
required to provide indemnification under this Agreement (an "Indemnifying
Party"), the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 days after the
Indemnitee's receipt of written notice of such Third Party Claim. Such
notice shall describe the nature of the Third Party Claim in reasonable
detail and will indicate the estimated amount, if practicable, of the
Indemnifiable Loss that has been or may be sustained by the Indemnitee. The
Indemnifying Party will have the right to participate in or, by giving
written notice to the Indemnitee, to elect to assume the defense of any
Third Party Claim at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, and the Indemnitee will cooperate in good
faith in such defense at such Indemnitee's own expense.
(b) If within ten calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party
Claim as provided in the last sentence of Section 15.4(a), the Indemnifying
Party will not be liable for any legal expenses subsequently incurred by
the Indemnitee in connection with the defense thereof; provided, however,
that if the Indemnifying Party fails to take reasonable steps necessary to
defend diligently such Third Party Claim within 20 calendar days (unless
waiting 20 calendar days would prejudice the Indemnitee's rights) after
receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume
its own defense, and the Indemnifying Party will be liable for all
reasonable expenses thereof. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of
any Third Party Claim which would lead to liability or create any financial
or other obligation on the part of the Indemnitee for which the Indemnitee
is not entitled to indemnification hereunder. If a firm offer is made to
settle a Third Party claim without leading to liability or the creation of
a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within ten
business days after its receipt of such notice, the Indemnitee may continue
to contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim at any time, provided that in
such event the Indemnitee shall waive any right to indemnity hereunder
unless the Indemnitee shall have first sought the consent of the
Indemnifying Party in writing to such payment, settlement, or compromise
and such consent was unreasonably withheld or delayed, in which event no
claim for indemnity therefor hereunder shall be waived.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later
than 30 calendar days after the Indemnitee becomes aware of such Direct
Claim, and the Indemnifying Party will have a period of 30 calendar days
within which to respond to such Direct Claim. If the Indemnifying Party
does not respond within such 30 calendar day period, the Indemnifying Party
will be deemed to have accepted such Direct Claim. If the Indemnifying
Party rejects such Direct Claim, the Indemnitee will be free to seek
enforcement of its rights to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank, N.A.), will promptly be repaid
by the Indemnitee to the Indemnifying Party. Upon making any indemnity
payment, the Indemnifying Party will, to the extent of such indemnity
payment, be subrogated to all rights of the Indemnitee against any third
party in respect of the Indemnifiable Loss to which the indemnity payment
relates; provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 15.4(d) shall
be construed to require any Party hereto to obtain or maintain any
insurance coverage.
(e) A failure to give timely notice as provided in this Section
15.4 will not affect the rights or obligations of any Party hereunder
except if, and only to the extent that, as a result of such failure, the
Party which was entitled to receive such notice was actually prejudiced as
a result of such failure.
15.5 Each Party shall be responsible for protecting its facilities
from possible damage by reason of electrical disturbances or faults caused
by the operation, faulty operation, or non-operation of the other Party's
facilities, and such other Party shall not be liable for any such damages
so caused.
Article XVI. Limitation of Liability
16.1 Neither Party shall be liable to the other Party or its
affiliates for any consequential, incidental, punitive, special or indirect
damages arising out of or relating to the performance or breach of this
Agreement including, without limitation, replacement power costs, loss of
revenue, loss of anticipated profits or loss of use of the Facility, the
O&R System or other property, whether or not such damages are based upon
causes of action for breach of contract, statutory (including negligence
and misrepresentation), breach of warranty, or strict liability.
16.2 The benefits of this Article shall also extend to each Party's
affiliates and their respective officers, directors, employees, and agents
and, to the extent they are acting on behalf of such Party, such Party's
contractors, subcontractors, suppliers and vendors of every tier, and shall
survive termination or suspension of this Agreement, as well as the
fulfillment of the obligations of the Parties hereunder.
Article XVII. Insurance
17.1 Lovett LLC or its affiliate, at its cost and expense, shall
maintain and keep in full force and effect during the term of this
Agreement the following insurance in connection with the Facility:
(a) Workers' Compensation Insurance for statutory obligations
imposed by Workers' Compensation or Occupational Disease Laws, and
Employer's Liability Insurance with a minimum limit of $1,000,000. When
applicable, coverage shall include the United States Longshoreman's and
Harbor Workers' Compensation Act and the Jones Act.
(b) General Liability Insurance including Personal Injury,
Broad Form Property Damage, Products/Completed Operations, Explosion,
Collapse and Underground (XCU) Liability, Contractual Liability and
Contractors Protective Liability Insurance with minimum limits of liability
of $2,000,000 per occurrence.
(c) Automobile Liability Insurance, including coverage for all
owned, non-owned and hired automotive equipment used by Lovett LLC with
minimum limits of liability of $5,000,000 per occurrence.
(d) All risk property damage insurance, including boiler and
machinery coverage, with minimum limits of $275,000,000.
(e) Business interruption and extra expense insurance covering
expenses and losses due to business interruption, resulting from damage to
the Facility, in amounts to be determined by Lovett LLC.
17.2 In the event the Facility is substantially damaged or destroyed,
O&R shall have the right to cause the proceeds of insurance policies
required under Section 17.1(d) to be used to repair or rebuild the
Facility; provided, however, that Lovett LLC may control the disbursement
of such insurance proceeds for such purpose.
17.3 For all insurance required under Section 17.1, except Workers'
Compensation and Employers Liability, O&R, its directors, officers and
employees shall be named as additional insureds, as their interest may
appear.
17.4 Consistent with the terms of the indemnities provided for
hereunder, all of the insurance required under Section 17.1 shall be
primary to any or all other insurance coverage and shall not contribute
with similar insurance in effect for O&R.
17.5 All insurance required under Section 17.1 shall contain
provisions wherein all rights of subrogation or recovery of any kind
against O&R, its agents, employees, officers, successors and assigns are
specifically waived by Lovett LLC and the insuring entity.
17.6 The General Liability insurance specified in Section 17.1(b)
shall contain a cross liability provision. All insurance required hereunder
shall provide insurance for occurrences during the performance of services
by Lovett LLC and all subcontractors pursuant to this Agreement and for a
period of two years after termination of this Agreement. In the event that
any insurance as required herein is available only on a "claims-made"
basis, such insurance shall provide for a retroactive date not later than
the date of this Agreement and such insurance shall be maintained by Lovett
LLC, with a retroactive date not later than the retroactive date required
above, for a minimum period of five years after the termination of this
Agreement.
17.7 All insurance required herein shall be issued by an insurer
admitted to do business in the State of New York and shall have a Best's
Rating of not less than "A" and a net surplus of not less than $25,000,000.
17.8 Lovett LLC's insurance carrier shall notify O&R of any material
change in, or cancellation of, the insurance required hereunder at least 30
days prior to the effective date of any such change or cancellation.
17.9 Self-insurance may be utilized by Lovett LLC.
17.10 Prior to the Closing Date, Lovett LLC shall provide, for O&R's
review and approval, a Certificate of Insurance verifying the existence of
insurance coverages in compliance with the requirements of this Agreement.
The Certificate of Insurance should be mailed to:
Risk Management Department
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Article XVIII. Force Majeure
18.1 "Force Majeure Event" means any occurrence beyond the reasonable
control of a Party which causes such Party to be delayed in or prevented
from performing or carrying out any of its obligations under this Agreement
and which by the exercise of due diligence in accordance with Good Utility
Practices, that Party is unable to prevent, avoid, mitigate, or overcome,
including the following: any act of God, labor disturbance, act of the
public enemy, war, insurrection, riot, fire, storm or flood, ice,
explosion, breakage or accident to machinery or equipment, order,
regulation or restriction imposed by governmental, military or lawfully
established civilian authorities, provided that a Force Majeure Event shall
not include lack of finances, or change in market conditions, and provided
further that any failure of Lovett LLC to obtain fuel or services for the
Facility due to the failure of any supplier or subcontractor of Lovett LLC
to perform any obligation to Lovett LLC will not constitute a Force Majeure
Event hereunder unless such subcontractor or supplier is unable to perform
for reasons that would constitute a "Force Majeure Event" hereunder.
18.2 If either Party because of a Force Majeure Event is rendered
wholly or partly unable to perform its obligations under this Agreement,
that Party shall be excused from whatever performance is affected by the
Force Majeure Event to the extent so affected, and shall not be liable for
damages caused by such non-performance provided that:
(a) The non-performing Party, within seven days after it
becomes aware or should have become aware that it would be unable to
perform, gives the other Party written notice of the occurrence of the
Force Majeure Event, including an estimation of its expected duration and
probable impact on the performance of its obligations hereunder and
submitting satisfactory evidence of the existence of the Force Majeure
Event;
(b) The suspension of performance is of no greater scope and of
no longer duration than is required by the Force Majeure Event;
(c) No obligations of either Party which arose before the
occurrence causing the suspension of performance are excused as a result of
the occurrence; and
(d) The non-performing Party uses its commercially reasonable
efforts to remedy expeditiously its inability to perform. This subparagraph
shall not require the settlement of any strike, walkout, lockout or other
labor dispute on terms which, in the sole judgment of the Party involved in
the dispute, are contrary to its interest. It is understood and agreed that
the settlement of strikes, walkouts, lockouts or other labor disputes shall
be entirely within the discretion of the Party involved in the strike,
walkout, lockout or other labor dispute.
(e) When the non-performing Party is able to resume performance
of its obligations under this Agreement, that Party shall give the other
Party written notice to that effect.
(f) The Force Majeure Event was not caused by any negligent
acts, or omissions, or failure to comply with any Law or for any breach or
default of this Agreement.
Article XIX. Contract Documents
19.1 The contract documents which comprise the contract between the
Parties are referenced hereto and made a part hereof and consist of the
following:
(a) This Agreement; and
(b) Schedules to this Agreement as follows:
(i) Schedule A: Description of Units and
Performance Requirements;
(ii) Schedule B: Availability Payment ;
(iii) Schedule C: Energy Costs;
(iv) Schedule D: Start-up Costs;
(v) Schedule E: Emissions Costs;
(vi) Schedule F: Payment Examples;
(vii) Schedule G: Penalties;
(viii) Schedule H: Load Pocket Diagram;
(ix) Schedule I: Dispute Resolution Procedures;
(x) Schedule J: Load Pocket Dispatch Log;
(xi) Schedule K: Operating Instructions; and
(xii) Schedule L: Daily Status Report.
Article XX. Dispute Resolution
20.1 The Parties shall make reasonable efforts to settle all disputes
arising out of or in connection with this Agreement. In the event any
dispute is not settled, the Parties shall follow the alternative dispute
resolution procedures set forth in Schedule I.
Article XXI. Taxes
21.1 O&R shall pay all taxes, surcharges, adjustments or other
assessments imposed by law, rule or regulation which are of general
applicability and imposed on sales of Energy from Lovett LLC to O&R
pursuant to this Agreement, unless O&R can demonstrate, based on a ruling
from the Commission, that it cannot collect such taxes, surcharges,
adjustments or other assessments from its customers ("Taxes").
Article XXII. Assignment or Transfer
22.1 The Parties acknowledge that any assignment of this Agreement is
subject to approval by the FERC and the NYPSC. Neither Party shall assign
this Agreement or any portion thereof without the prior written consent of
the other Party, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, (a) O&R may assign this Agreement
to an affiliate of O&R that has a contractual or statutory obligation to
supply Energy to O&R's retail customers in the Load Pocket, provided,
however, that no such assignment, transfer, pledge, conveyance, or
disposition shall relive or in any way discharge O&R from the performance
of its duties and obligations under this Agreement; and (b) Lovett LLC may
assign, transfer, pledge or otherwise dispose of its rights and interests
hereunder to (i) a trustee or lending institution(s) for the purposes of
financing or refinancing the acquisition of the Purchased Assets, including
upon or pursuant to the exercise of remedies under such financing or
refinancing, or by way of assignments, transfers, pledges, conveyances, or
dispositions in lieu thereof; provided, however, that no such assignment,
transfer, pledge, conveyance, or disposition shall relieve or in any way
discharge Lovett LLC from the performance of its duties and obligations
under this Agreement; or (ii) an affiliate of Lovett LLC or (iii) a
purchaser, transferee or lessor of all or substantially all of Lovett LLC's
right, title and interest in and to the Purchased Assets, provided such
purchaser, transferee or lessor (A)(1) has a "net worth", or "consolidated
net worth", if applicable, as determined in accordance with U.S. generally
accepted accounting principles and reflected in an audited balance sheet
(or consolidated balance sheet, if applicable) ("Net Worth") at least equal
to an amount equal to one-third of the Purchase Price (as described in
Section 3.1 of the ASA) or (2) provides a guaranty from an affiliate which
has a Net Worth at least equal to the amount specified in (A)(1) above and
(B) demonstrates its ability to operate the Purchased Assets to O&R's
reasonable satisfaction in accordance with Good Utility Practices.
Article XXIII. Regulatory Approval; Effective Date
23.1 This Agreement shall not become effective and binding upon the
Parties until it has been: (i) signed by each of the Parties hereto, and
(ii) the FERC and the NYPSC have entered a final order in form and
substance satisfactory to O&R and to Lovett LLC approving this Agreement
and the recovery by O&R from its customers of all payments made to Lovett
LLC pursuant to the terms of this Agreement. O&R and Lovett LLC agree to
use their commercially reasonable efforts to obtain such regulatory
approval as promptly as practicable following execution of this Agreement.
Article XXIV. Confidentiality
24.1 All information regarding a Party (the "Disclosing Party") that
is furnished directly or indirectly to the other Party (the "Recipient")
pursuant to this Agreement and marked "Confidential" shall be deemed
"Confidential Information." Notwithstanding the foregoing, Confidential
Information does not include information that (i) is rightfully received
from Recipient from a third party having no obligation of confidence to the
Disclosing Party, (ii) is or becomes in the public domain, through no
action on Recipient's part in violation of this Agreement, (iii) is already
known by Recipient as of the date hereof, or (iv) is developed by Recipient
independently of any Confidential Information of the Disclosing Party.
Information that is specific as to certain data shall not be deemed to be
in the public domain merely because such information is embraced by more
general disclosure in the public domain.
24.2 Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two years from the date the Confidential Information
to any third party for a period of two years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
24.3 Recipient may disclose the Confidential Information to its and
its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipient with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
24.4 If Recipient becomes legally compelled or required to disclose
any of the Confidential Information (including, without limitation,
pursuant to the rules or regulations of the NYPP, ISO or FERC), Recipient
will provide the Disclosing Party with prompt written notice thereof so
that the Disclosing Party may seek a protective order or other appropriate
remedy. Recipient will furnish only that portion of the Confidential
Information which its counsel considers legally required, and Recipient
will cooperate, at the Disclosing Party's expense, with the Disclosing
Party's counsel to enable the Disclosing Party to obtain a protective order
or other reliable assurance that confidential treatment will be accorded
the Confidential Information. It is further agreed that, if in the absence
of a protective order, Recipient is nonetheless required to disclose any
Confidential Information, Recipient will furnish only that portion of the
Confidential Information which its counsel considers is legally required.
24.5 Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing party's request, or (ii) the termination or expiration of this
Agreement.
Article XXV. Amendments
25.1 This Agreement shall not be amended unless such amendment shall
be in writing and signed by a duly authorized representative of each of the
Parties. Such amendments or modifications shall become effective only after
the Parties have received any authorizations required from the FERC or the
NYPSC. Nothing contained in this Agreement shall be construed as affecting
in any way the right of either of the Parties furnishing or receiving
service under this Agreement to unilaterally make application to the FERC
for a change in rates under Sections 205 or 206 of the Federal Power Act
and pursuant to the FERC rules and regulations promulgated thereunder.
Article XXVI. Books and Records: Audit Rights
26.1 Lovett LLC shall maintain for four years the information
utilized to determine the payments pursuant to Schedules C, D, and E. Such
records shall be available at all reasonable times for inspection and audit
by O&R. O&R shall have the right to inspect and audit such records and
supporting documents for any calendar year at any time within the 24 month
period following the end of such year, provided that with respect to
invoices, O&R disputes the amounts of such invoices in the time period
provided in Section 7.6. No adjustments to payments shall be required as a
result of such audit unless and to the extent that O&R makes a claim upon
Lovett LLC for any discrepancies disclosed by such audit within two months
following expiration of such 24 month period. The expense of any such audit
shall be borne solely by O&R.
Article XXVII. Miscellaneous Provisions
27.1 Binding Effect. This Agreement and any extension shall inure to
the benefit of and shall be binding upon the Parties and their respective
successors and assigns.
27.2 Counterparts. This Agreement 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.
27.3 Notices. Where written notice is required by this Agreement, all
notices, certificates or other communications hereunder shall be in writing
and shall be deemed delivered (i) when personally delivered (by courier or
otherwise) to the recipient and receipt is confirmed in writing, (ii) three
days after being mailed by United Sates registered or certified mail,
postage prepaid, return receipt requested, or (iii) when faxed to recipient
during the normal business hours of the recipient on a Business Day (or if
not faxed at such time, during the next Business Day) and receipt is
confirmed on the sender's fax machine, addressed or faxed and a copy is
mailed to the other Party on the same Business Day, as follows:
(a) To Lovett LLC:
Southern Energy Lovett, L.L.C.
900 Ashwood Parkway, Suite 500
Atlanta, Georgia 30338
Attention: Steve Gillis
Finance Director, North American
Operations
Fax: (770) 379-7272
(b) To O&R:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Attention: Legal Department
Fax: (914) 577-2959
or to such other and different address as may be designated by the
Parties.
27.4 Prior Agreements Superseded. This Agreement shall completely and
fully supersede all other prior understandings or agreements, both written
and oral, between the Parties relating to the subject matter hereto.
27.5 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by O&R, Lovett
LLC will consent to appointing an agent for service of process in New York
City.
27.6 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.
27.7 Headings. The headings contained in this Agreement are used
solely for convenience and do not constitute a part of the agreement
between the Parties hereto, nor should they be used to aid in any manner in
the construction of this Agreement.
27.8 Third Parties. This Agreement is intended solely for the benefit
of the Parties hereto. Nothing in this Agreement shall be construed to
create any duty to, or standard of care with reference to, or any liability
to, any person not a Party to this Agreement.
27.9 No Survival of Reps and Warranties. Each and every
representation and warranty contained in this Agreement and each and every
covenant contained in this Agreement shall expire with, and be terminated
and extinguished by, (i) the expiration of the term of this Agreement
pursuant to Article III, or (ii) the termination of this Agreement pursuant
to Article XIV or otherwise; and neither the Seller, the Buyer nor any
officer, director, trustee or affiliate of either the Seller or the Buyer
shall have any liability whatsoever with respect to any such
representation, warranty or covenant.
27.10 Agency. This Agreement shall not be interpreted or construed to
create an association, joint venture, or partnership between the Parties or
to impose any partnership obligation or liability upon either Party.
Neither Party shall have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or to act as or be an
agent or representative of, or to otherwise bind, the other Party.
IN WITNESS WHEREOF, Lovett LLC and O&R have caused this
Agreement to be executed as of the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. Louis Peoples
_________________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive Officer
SOUTHERN ENERGY LOVETT, L.L.C.
By: /s/ Randy Harrison
________________________________
Name: Randy Harrison
Title: Vice President
Exhibit 10.64
WESTERN LOAD POCKET CALL OPTION AGREEMENT
BETWEEN
ORANGE AND ROCKLAND UTILITIES, INC.
AND
SOUTHERN ENERGY NY-GEN, L.L.C.
November 24, 1998
TABLE OF CONTENTS
Article I. Definitions and Interpretation............................2
Article II. Representations, Warranties and Covenants................13
Article III. Term.....................................................16
Article IV. O&R's Right to Dispatch the Facility.....................17
Article V. Delivery by NY-Gen LLC...................................21
Article VI. Price....................................................21
Article VII. Payment Terms............................................23
Article VIII. Testing and Capacity Ratings.............................26
Article IX. Generation Commitments...................................26
Article X. Start-up Lead Times and Other Operating Constraints......26
Article XI. Metering.................................................27
Article XII. Coordination of Facility and System Maintenance..........27
Article XIII. Modifications............................................28
Article XIV. Termination..............................................28
Article XV. Indemnification..........................................31
Article XVI. Limitation of Liability..................................38
Article XVII. Insurance................................................39
Article XVIII. Force Majeure............................................42
Article XIX. Contract Documents.......................................44
Article XX. Dispute Resolution.......................................45
Article XXI. Taxes....................................................45
Article XXII. Assignment or Transfer...................................45
Article XXIII. Regulatory Approval; Effective Date......................47
Article XXIV. Confidentiality..........................................47
Article XXV. Amendments...............................................49
Article XXVI. Books and Records: Audit Rights.........................50
Article XXVII. Miscellaneous Provisions.................................50
THIS LOAD POCKET CALL OPTION AGREEMENT ("Agreement"), dated as of
the 24th day of November 1998 , between ORANGE AND ROCKLAND UTILITIES,
INC., a New York corporation ("O&R") with an office at One Blue Hill Plaza,
Pearl River, New York 10965 and SOUTHERN ENERGY NY-GEN, L.L.C. a Delaware
limited liability company ("NY-Gen LLC") with offices at 900 Ashwood
Parkway, Suite 500 Atlanta, Georgia 30338.
W I T N E S S E T H :
WHEREAS, O&R is authorized by its certificate of incorporation and
by the State of New York to engage in the production, transmission, sale
and distribution of electricity for heat, light and power to the public;
WHEREAS, pursuant to an Electric Rate and Restructuring Plan dated
November 6, 1997 O&R has agreed to divest by auction all its electric
generating facilities;
WHEREAS, pursuant to this auction process, O&R has agreed to sell
the Facility (as defined below) to NY-Gen LLC;
WHEREAS, O&R desires to have the ability to call on and dispatch
the Facility under the terms of this Agreement in those hours when the
operation of the Facility is required by O&R to ensure the reliability of
the Load Pocket (as hereinaf ter defined) ("Load Pocket Hours");
WHEREAS, NY-Gen LLC agrees to dispatch the Facility during Load
Pocket Hours on the terms and conditions set forth herein and therefore is
willing to enter into this Agreement with O&R; and
WHEREAS, O&R agrees to pay NY-Gen LLC to dispatch the Facility
during Load Pocket Hours on the terms and conditions set forth herein and
therefore is willing to enter into this Agreement with NY-Gen LLC.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration given the one to the other, the sufficiency of which each
Party ac knowledges, O&R and NY-Gen LLC agree as follows:
Article I. Definitions and Interpretation
1.1 The following terms when used herein (and in the schedules
attached hereto) with initial capitalization, shall have the meaning
specified in this Article. The singular shall include the plural and the
masculine shall include the feminine and neuter, and vice versa. "Includes"
or "including" shall mean "including without limitation". References to a
section, article or schedule shall mean a section, article or schedule of
this Agreement, as the case may be, unless the context requires otherwise,
and reference to a given Agreement or instrument shall be a reference to
that Agreement or instrument as modified, amended, supplemented or restated
through the date as of which such reference is made. Unless the context
otherwise requires, references to any Law shall be deemed references to
such Law as it may be amended, replaced or restated from time to time.
Unless the context otherwise requires, any reference to a "person" includes
any individual, partnership, firm, company, corporation, joint venture,
trust, association, organization or other entity, in each case whether or
not having separate legal personality.
1.2 The following terms shall have the meanings set forth below:
(a) ASA: The Gas Turbine and Hydroelectric Generating
Stations Sales Agreement dated as of November 24, 1998 by and between
NY-Gen LLC and O&R.
(b) Available: That the Facility is capable, in real time
(subject to Start-up Lead Times), of producing Energy which can be
Delivered up to the Availability Limit.
(c) Availability: The capability of the Facility at any
given time to produce Energy measured in MW.
(d) Availability Limit: For any hour the maximum number of
MW which NY-Gen LLC is obligated to make Available from the Facility
pursuant to this Agreement, as identified in Schedule A.
(e) Business Day: Any day other than Saturday, Sunday or any
day which is a legal holiday or a day on which banking institutions in the
State of New York are authorized by law or other governmental action to
close.
(f) Capacity: The capability to generate or transmit
electrical power measured in megawatts ("MW").
(g) Capital Improvement: A material addition or modification
to, change in, or replacement or renewal of plant or equipment which
comprises a Facility or any other plant, equipment or facilities used by
NY-Gen LLC for the production of Energy at the Facility.
(h) Closing Date: The date and time at which the closing of
the transactions contemplated by the ASA actually occurs.
(i) Commission: The New York State Public Service Commission.
(j) Contract Year: Each 12-month period commencing on the
Effective Date or on any anniversary of the Effective Date occurring during
the term of this Agreement.
(k) Daily Dispatch Notice: A notice requesting dispatch of
the Facility to provide Energy delivered by O&R to NY-Gen LLC's Scheduling
Coordi nator on the day before a Requested Operation Period pursuant to
this Agreement, in a form which complies with the requirements of Section
4.2.
(l) Deliver: To deliver Energy to the Delivery Point in
compli ance with the requirements described in Section 5.1 and the term
"Delivered" shall be construed accordingly.
(m) Delivered MW or Delivered MWhs: The MW or MWhs of
Energy, as the case may be, Delivered by NY-Gen LLC pursuant to O&R's
request.
(n) Delivery Point: The generator terminals at the Facility,
which are the physical points where Energy will be delivered and measured
for purposes of this Agreement.
(o) Dispatch Notice: A Daily Dispatch Notice, an Hourly
Dispatch Notice and/or a Dispatch Notice given by O&R in real time to
NY-Gen LLC's Scheduling Coordinator.
(p) DMNC: Dependable Maximum Net Capability.
(q) Due Date: The date which is 30 days after the date on
which a Party submits an invoice to the other Party.
(r) Effective Date: The same date as the Closing Date.
(s) Emergency: A condition or situation which is likely to
result in degradation or disruption of service to O&R's customers, or is
likely to endanger life or property.
(t) Emission Costs: NY-Gen LLC's emissions' related costs as
calculated pursuant to Schedule E.
(u) Energy: Electrical energy.
(v) Energy Costs: NY-Gen LLC's costs for Delivered MWhs
which are Delivered pursuant to a Dispatch Notice as calculated pursuant to
Section 6.2 and Schedule C.
(w) Facility: The electrical generating facilities more
particularly described in Schedule A, individually or collectively as the
case may be.
(x) FERC: Federal Energy Regulatory Commission.
(y) Forced Outage: Any outage of the Facility other than (i)
a Planned Outage, (ii) a Planned Overhaul, (iii) an outage caused by a
Force Majeure Event, (iv) an outage caused by an act or omission of O&R,
including any O&R Event of Default, (v) an outage caused by an ISO order or
request to take a unit off line as a result of an emergency or as a result
of any abnormal transmission condition on O&R's System, or (vi) any outage
required to comply with any environmental restrictions, that fully or
partially curtails its ability to produce Energy when dis patched by O&R in
accordance with the terms of this Agreement.
(z) Good Utility Practices: Any of the practices, methods or
acts engaged in or approved by a significant portion of the electric
utility industry with respect to similar facilities during the relevant
time period, which in each case, in the exercise of reasonable judgment in
light of the facts known or that should have been known at the time the
decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety, law, regulation, environmental protection and
expedition. Good Utility Practices are not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others, but
rather to delineate the acceptable practices, methods, or acts generally
accepted in such industry.
(aa) Governmental Authority: Any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to a government.
(bb) Hourly Dispatch Notice: A notice, delivered by O&R to
NY-Gen LLC's Scheduling Coordinator, requesting dispatch of the Facility to
provide Energy pursuant to this Agreement, other than a Daily Dispatch
Notice, in such form as may be adopted by the Parties, provided that such
form complies with the require ments of Section 4.2 of this Agreement.
(cc) Interest Rate: The rate of interest at the prime rate
of The Chase Manhattan Bank in effect on the applicable date.
(dd) ISO: The New York Independent System Operator.
(ee) ISO Protocols: The rules, protocols, procedures and
standards promulgated by the ISO (as amended from time to time) to be
complied with by the ISO and all market participants in relation to
participation in the market for Energy in accordance with the ISO Operating
Agreement and Tariff.
(ff) ISO Tariff: The open access transmission operating
agree ment and tariff approved by the FERC, in FERC Docket Nos.
ER97-1523-000, OA97-470-000, and ER97-4234-000, as it may be modified and
in effect from time to time.
(gg) Law: Any law, treaty, code, rule, regulation, or order
or determination of an arbitrator, court or other Governmental Authority,
or any franchise, license, lease, permit, certificate, authorization,
qualification, right or approval issued or granted by a Governmental
Authority and binding on a Party or any of its property.
(hh) Load Pocket: The electric load required by O&R's
customers in the area of O&R's service territory outlined on the attached
diagram on Schedule H, provided, however, that, (i) because of transmission
constraints on O&R's transmission and distribution system as of the date
hereof, such area requires generating resources internal to such area to
ensure reliable service to such electric load and (ii) the Facility is a
generating resource internal to such area that is neces sary to ensure such
reliable service.
(ii) Market Transaction: A delivery of Energy and/or
capacity from the Facility, other than pursuant to this Agreement.
(jj) Maximum Requested MW: The highest MW output of the
Facility which O&R can request NY-Gen LLC to dispatch, as shown on Schedule
A.
(kk) Minimum Requested MW: The lowest MW output needed to
maintain stable continuous operation of the Facility, as shown on Schedule
A.
(ll) NERC: North American Electric Reliability Council or its
successors.
(mm) Nonmarket Transaction: A delivery of Energy from the
Facility pursuant to a Dispatch Notice under this Agreement.
(nn) NY-Gen LLC's Scheduling Coordinator: The Scheduling
Coordinator identified by NY-Gen LLC.
(oo) NYPP: The New York Power Pool or its successors.
(pp) NYPP Procedures: The most current methods and procedures
of the NYPP, including those for determining DMNC, as amended.
(qq) Off-Peak: All hours not classified as On-Peak hours.
(rr) On-Peak: The hours in Monday through Friday from hour
beginning 7:00 a.m. through hour beginning 10:00 p.m. excluding NERC holidays.
(ss) O&R Load Zone: The load zone as designated by the ISO
which encompasses the O&R service territory.
(tt) O&R's System: O&R's electric transmission and
distribution system.
(uu) Party: Either O&R or NY-Gen LLC and Parties means O&R
and NY-Gen LLC.
(vv) Planned Outage: A planned interruption in the
electrical output of the Facility or a planned transmission interruption of
the O&R System, as the case may be, to perform routine maintenance pursuant
to the Planned Outage schedule provided under Section 12.3.
(ww) Planned Overhaul: A planned interruption in the
electrical output of the Facility or a planned transmission interruption of
the O&R System, as the case may be, to perform a major equipment overhaul
and inspections or major transmission facilities maintenance and inspection
at the dates and times provided under Section 12.3.
(xx) Requested MW : The MW of generation capability which
O&R requests be made available from the Facility pursuant to a Dispatch
Notice.
(yy) Requested Operation Period: The hours during which O&R
requests that the Facility be dispatched pursuant to a Dispatch Notice.
(zz) Shutdown: The condition of the Facility where the
generator rotor is at rest.
(aaa) Start-up: The action of bringing the Facility from
Shutdown to Synchronous Speed, to its Minimum Requested MW and having it
unconditionally released for ramping to full load if required, and
"Started-up" and "Starting-up" shall be construed accordingly.
(bbb) Start-up Lead Time: The amount of time required to
Start-up the Facility, as shown on Schedule A.
(ccc) Start-up Costs: NY-Gen LLC's costs for Starting-up the
Facility in response to a Dispatch Notice, as described in Section 6.2 and
Schedule D.
(ddd) Summer Capability Period: The meaning provided by the
NYPP, the ISO or their successor(s), as may be modified from time to time.
Summer Capability Period is currently each May 1 through October 31 of each
year.
(eee) Synchronized: The condition where the Facility is
connected to the Transmission Grid.
(fff) Synchronous Speed: That speed required by the Facility
to enable it to be Synchronized to the Transmission Grid.
(ggg) Transmission Grid: The electric transmission system
(as it may be modified or expanded from time to time) under control of the
NYPP or the ISO.
(hhh) Winter Capability Period: The meaning provided by the
NYPP, the ISO or their successor(s), as may be modified from time to time.
Winter Capability Period is currently each November 1 through April 30 of
the following calendar year.
1.3 Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
- ---- -------
Adjustment Invoice 7.4
Agreement Preamble
Annual Forecast 4.1
Availability Payment 6.1
Direct Claim 15.4
Disclosing Party 24.1
Estimated Invoice 7.1
Event of Default 14.1
Force Majeure Event 18.1
Forecast 4.1
Generation Costs 6.2
Indemnifiable Loss 15.3
Indemnifying Party 15.3
Indemnitee 15.3
Load Pocket Dispatch Log Schedule J
Load Pocket Hours Recitals
Net Worth 22.1
NY-Gen LLC Indemnifiable Loss 15.2
NY-Gen LLC Preamble
O&R Preamble
O&R Indemnifiable Loss 15.1
Occurrence Schedule G
Recipient 24.1
Shed Load Schedule G
Taxes 21.1
Third Party Claim 15.4
Article II. Representations, Warranties and Covenants
2.1 NY-Gen LLC makes the following representations, warranties and
covenants as the basis for the benefits and obligations contained in this
Agreement.
(a) NY-Gen LLC represents that it is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the power and authority to own its
properties, to carry on its business as now being conducted and to enter
into this Agreement and carry out the transactions contemplated hereby and
perform and carry out all covenants and obligations on its part to be
performed under and pursuant to this Agreement.
(b) NY-Gen LLC represents and warrants that (i) it is duly
authorized to enter into this Agreement and discharge and perform all
covenants and obligations on its part to be performed under and pursuant to
this Agreement, (ii) the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of
and compliance with the provisions of this Agreement will not conflict with
or constitute a breach of or a default under, any of the terms, conditions
or provisions of any law, any order of any court or other agency of
government, or any contractual limitation, deed of trust, mortgage,
partnership agreement, loan agreement, other evidence of indebtedness or
any other agreement or instrument to which NY-Gen LLC is a party or by
which it or any of its property is bound, or result in a breach of or a
default under any of the foregoing, except for such conflicts, breaches or
defaults, as to which requisite waivers have been obtained or which would
not have a material adverse effect on NY-Gen LLC's ability to perform its
obligations under this Agreement, and (iii) this Agreement is the legal,
valid and binding obligation of NY-Gen LLC enforceable in accordance with
its terms, except that such enforceability may be limited by applicable
laws affecting or relating to enforcement of creditors' rights and general
principles of equity.
(c) NY-Gen LLC represents and warrants that all consents and
authorizations required for NY-Gen LLC to execute and deliver this
Agreement have been obtained, except for such consents and authorizations
which, if not obtained, would not be reasonably likely to have a material
adverse affect on NY-Gen LLC's ability to perform its obligations under
this Agreement.
2.2 O&R makes the following representations, warranties and
covenants as the basis for the benefits and obligations contained in this
Agreement.
(a) O&R represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, has the corporate power and authority to own its
properties, to carry on its business as now being conducted and to enter
into this Agreement and the transac tions contemplated hereby and perform
and carry out all covenants and obligations on its part to be performed
under and pursuant to this Agreement.
(b) O&R represents and warrants that it is duly authorized
to enter into this Agreement and discharge and perform all covenants and
obligations on its part to be performed under and pursuant to this
Agreement and that the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of
and compliance with the provisions of this Agreement will not conflict with
or constitute a breach of or a default under, any of the terms, conditions,
or provisions of any law, any order of any court or other agency of
government, the certificate of incorporation or by-laws of O&R, or any
contractual limitation, corporate restriction or outstanding trust
indenture, deed of trust, mort gage, loan agreement, other evidence of
indebtedness or any other agreement or instrument to which O&R is a party
or by which it or any of its property is bound, or result in a breach of or
default under any of the foregoing except for such conflicts, breaches or
defaults, as to which requisite waivers have been obtained or which would
not have a material adverse effect on O&R's ability to perform its
obligations under this Agreement, and (iii), and this Agreement is the
legal, valid and binding obligation of O&R enforceable in accordance with
its terms except that such enforceability may be limited by applicable laws
affecting or relating to enforcement of creditors' rights and general
principles of equity.
(c) O&R represents and warrants that all consents and
authoriza tions required to execute this Agreement have been obtained
except for such consents and authorizations which, if not obtained, would
not be reasonably likely to have a material adverse affect on O&R's ability
to perform its obligations under this Agreement.
(d) O&R represents and warrants that as of the Closing Date
the Facilities are capable of meeting the operating requirements specified
herein in accordance with Good Utility Practices, including the Maximum
Requested MW, the Minimum Requested MW, the Requested MW, the heat rates
set forth in Schedule A, the Start-up Lead Time, the Synchronous Speed and
the requirements to be set forth in a Dispatch Notice, and O&R has no
knowledge of any conditions at the Facilities that could cause such
Facilities to be unable to satisfy such requirements during the term of
this Agreement.
Article III. Term
3.1 This Agreement shall remain in full force and effect for a
period of one year from the Closing Date. O&R may, in its sole discretion,
extend the term of this Agreement for a maximum of four additional
consecutive one year terms. In order for O&R to exercise its option to
extend the term of this Agreement, O&R must provide NY-Gen LLC with written
notice, at least 120 days prior to the termination of this Agreement, of
its intention to extend the term of this Agreement for another year.
Applicable provisions of this Agreement shall continue in effect after
termination to the extent necessary to provide for final billings and
adjustments. Upon each one year extension of this Agreement, the
Availability Payments in Schedule B shall be increased in accordance with
the Consumer Price Index for all Urban consumers, U.S. City Average, all
times, unadjusted (base date January 1998) released by the U.S. Government
Department of Labor, Bureau of Labor Statistics or its successor, or should
such price index be discontinued, or the bases of its calcula tion be
substantially modified, such other price index as is mutually agreed upon
by O&R and NY-Gen LLC.
Article IV. O&R's Right to Dispatch the Facility
4.1 On the Effective Date and, if the term of this Agreement has
been extended pursuant to Section 3.1, on the anniversary of the Effective
Date, O&R will provide NY-Gen LLC with a non-binding forecast ("Annual
Forecast") representing O&R's then current best estimate of the Capacity
that O&R will require the Facility to provide during the next 12 months for
the Load Pocket. Not less than 30 days prior to the beginning of every
calendar month during the term of this Agreement, O&R shall provide NY-Gen
LLC with a non-binding forecast ("Forecast") represent ing O&R's then
current best estimate of the Capacity that O&R will require the Facility to
provide from the beginning of that calendar month through the end of the
following two calendar months (a three month period) for the Load Pocket.
The Forecast and Annual Forecast will take into account the Planned Outages
and Planned Overhauls. O&R shall use its best efforts to prepare its
estimate but shall have no liability to NY-Gen LLC for the accuracy or
completeness of the Forecast or the Annual Forecast.
4.2 Subject to the terms and conditions described in this
Agreement, O&R shall have the right to direct that the Facility be
available to Deliver Energy during Load Pocket Hours for the Load Pocket.
O&R shall direct the dispatch of the Facility by delivering, in accordance
with the communication protocols from time to time established by the
Parties, a Daily Dispatch Notice to NY-Gen LLC's Schedul ing Coordinator
not later than 10:00 a.m. of the day before the commencement of the
Requested Operation Period specified in such notice and/or delivering an
Hourly Dispatch Notice to NY-Gen LLC's Scheduling Coordinator at least one
half hour prior to the commencement of the Requested Operation Period
specified in such notice and/or delivering a Dispatch Notice in real time.
Each Dispatch Notice shall comply with the Start-up Lead Times and the
other operational limitations described in Schedule A, and, NY-Gen LLC
shall have no liability, nor shall NY-Gen LLC suffer any reductions in
payments, for failure to comply with a Dispatch Notice which is not in
compliance with such limitations. Each Daily Dispatch Notice or Hourly
Dispatch Notice may be modified by a subsequent Daily Dispatch Notice or a
subsequent Hourly Dispatch Notice, subject to the restrictions of this
subsection. O&R may, subject to the restrictions of this subsection, issue
a Dispatch Notice directing dispatch of the Facility in real time for the
Load Pocket.
4.3 Each Dispatch Notice shall specify the time of commencement and
termination of the Requested Operation Period and, for each hour of the
Requested Operation Period, the Minimum Requested MW which O&R requests to
be dis patched and the Maximum Requested MW O&R requests to be available
for the Load Pocket. All hours of operation in each Dispatch Notice shall
be consecutive Load Pocket Hours, unless otherwise agreed to in writing by
NY-Gen LLC. O&R may not direct NY-Gen LLC to conduct more than one
dispatchable start-up per calendar day per generating unit. Each Party
shall record the applicable information from the Dispatch Notices in the
Load Pocket Dispatch Log, a form of which is attached hereto in the Form of
Schedule J.
4.4 If NY-Gen LLC considers that a Dispatch Notice does not comply
with the limitations set forth in Schedule A or that NY-Gen LLC is
otherwise not required to dispatch the Facility in accordance with a
Dispatch Notice, it shall forthwith give written notice to O&R to that
effect. This notice shall specify in detail why NY-Gen LLC believes the
Dispatch Notice does not comply or NY-Gen LLC is not otherwise required to
dispatch the Facility, as the case may be, and shall include, without
limitation, the following bases for the notice as applicable:
(i) any amount of Capacity requested by O&R that
NY-Gen LLC is not obligated to provide
pursuant to Sec tion 9.1;
(ii) whether the Start-up Lead Time or any other
operating constraint as described in Schedule
A is inconsistent with Delivery of the
Requested MW in accordance with the Dispatch
Notice;
(iii) any operation of the Facility necessary to
comply with the Dispatch Notice which would be
in breach of any applicable Law or would
conflict with Good Utility Practices.
4.5 Upon receipt of NY-Gen LLC's notice issued pursuant to Section
4.4, O&R may, by delivering a notice to NY-Gen LLC's Scheduling Coordinator
promptly thereafter, but in no event later than half an hour prior to
commencement of the Requested Operation Period, modify the Dispatch Notice
in accordance with NY-Gen LLC's notice.
4.6 At or about 9:00 a.m. each day, NY-Gen LLC shall provide O&R
with a daily status report regarding the operating characteristics and
current status of the Facility, substantially in the form attached hereto
as Schedule L. This report will include information that pertains to the
reliable performance of the Facility such as response rate, start up time,
minimum run time, minimum down time, minimum loading point, full load point
and available choice of fuels. The report also will describe the Facility's
current availability, deratings and planned operations for the next 24
hours. NY-Gen LLC shall notify O&R immediately of any actual or planned
change to this data.
Article V. Delivery by NY-Gen LLC
5.1 NY-Gen LLC shall, in response to a Dispatch Notice from O&R,
dispatch the Facility at the Minimum Requested MW and make available the
Maximum Requested MW in accordance with the Dispatch Notice, subject to the
limits described in this Agreement.
5.2 NY-Gen LLC shall, in response to a Dispatch Notice from O&R,
provide reactive supply and voltage control for the Load Pocket by making
available the minimum MVARs at full MW load as set forth in Schedule A.
Article VI. Price
6.1 Following the Effective Date, O&R shall make Availability
payments as described in Schedule B ("Availability Payments") to NY-Gen LLC
in accordance with Section 7.1.
6.2 When NY-Gen LLC dispatches a Facility into the ISO during Load
Pocket Hours pursuant to a Dispatch Notice, O&R shall pay NY-Gen LLC its
Generation Costs as set forth below ("Generation Costs"), to the extent
that the revenue received by such Facility from the ISO is less than the
Generation Costs during such time period. For purposes of determining such
payment described in the preceding sentence, (i) the revenue received by
the Facility shall include all revenue received from all energy and
ancillary services markets, during the period the Facility operates as
recorded in the Load Pocket Dispatch Log, but shall exclude any capacity
payments and (ii) such revenue shall not be reduced by any penalties
assessed by the ISO for non-performance. Generation Costs shall be the sum
of all applicable Energy Costs for both minimum generation and above
minimum genera tion (as calculated pursuant to Schedule C), Start-up Costs
(as calculated pursuant to Schedule D) and Emissions Costs (as calculated
pursuant to Schedule E). Schedule F illustrates how payment will be
calculated when a Facility is operating pursuant to Market and Nonmarket
Transactions. In addition, to the extent that O&R issues a notice modifying
the Dispatch Notice pursuant to Section 4.2 or 4.5, O&R shall compensate
NY-Gen LLC for any incremental costs including, but not limited to,
imbalance or scheduling charges and/or penalties imposed on or incurred by
NY-Gen LLC as a result of the modification.
6.3 If NY-Gen LLC fails to be available to provide Energy during
Load Pocket Hours, NY-Gen LLC shall be assessed the penalties as calculated
in accor dance with Schedule G to this Agreement. Such penalties shall be
O&R's sole and exclusive remedy with respect to any failure to be available
or to provide Energy during Load Pocket Hours.
6.4 Nothing in this Agreement shall restrict NY-Gen LLC from
entering into Market Transactions either inside or outside of a Requested
Operation Period.
6.5 O&R is not purchasing from and accordingly makes no payment to
NY-Gen LLC for either capacity or ancillary services pursuant to this
Agreement. If the Parties wish to engage in the purchase or sale of
capacity and/or ancillary services, they will do so pursuant to a separate
agreement(s).
Article VII. Payment Terms
7.1 Within 14 days after the end of each calendar month during the
term of this Agreement (and, if termination of this Agreement does not
occur at the end of a month, within 14 days after the end of the month in
which termination occurs), NY-Gen LLC shall submit an estimated invoice
("Estimated Invoice") to O&R for all charges properly due under this
Agreement for that month using reasonable estimates of actual data. Such
invoice shall set out or be supported by detailed calculations and
breakdowns of the estimated amounts due. The Estimated Invoice shall be
paid by O&R no later than the Due Date.
7.2 All payments shall be made by wire transfer in accordance with
instructions from the Party making payment or by memorandum accounts. Each
Party may set off any undisputed amount owed to the other Party against any
undisputed amount owed pursuant to this Agreement or other arrangement(s)
agreed to between the Parties.
7.3 If any sum or part of a sum shown on an invoice is disputed by
either Party, payment of the undisputed sums on that invoice shall not be
withheld. Interest on any unpaid amounts shall be charged at the Interest
Rate plus 2 percent per annum calculated from the Due Date of the invoice
to the date of payment.
7.4 NY-Gen LLC shall submit to O&R an adjusted or supplemental
invoice ("Adjustment Invoice") within 60 days after the date of the
Estimated Invoice which Adjustment Invoice should reflect the actual
amounts due from O&R to NY-Gen LLC for the months covered by the
appropriate Estimated Invoice. If the Adjustment Invoice reflects an amount
that is less than the amount charged to O&R under the Estimated Invoice,
NY-Gen LLC shall pay the difference between the amount in the Adjustment
Invoice and the amount in the Estimated Invoice to O&R together with
interest at the Interest Rate from the Due Date of the Estimated Invoice to
the effective date of repayment by NY-Gen LLC no later than the Due Date
and the provisions of Section 7.2 shall apply to any such payment.
If the Adjustment Invoice reflects an amount that is greater than
the amount charged to O&R under the Estimated Invoice, O&R shall pay the
difference between the amount in the Adjustment Invoice and the amount in
the Estimated Invoice to NY-Gen LLC together, with interest from the Due
Date of the Estimated Invoice to the date of payment by O&R.
7.5 If the Due Date is not a Business Day, then the next following
Business Day will be the Due Date.
7.6 If O&R does not dispute the amount in an Estimated Invoice or
an Adjustment Invoice in a writing provided to NY-Gen LLC identifying in
reasonable detail the reasons therefor within six months after receipt of
such invoice, such invoice shall be deemed correct. Each Party shall at its
own cost provide the other Party with such information and assistance as
the other Party reasonably requests to resolve the dispute, subject to the
confidentiality provisions herein. If O&R has disputed the amount prior to
its due date in a writing provided to NY-Gen LLC identifying in reasonable
detail the reasons thereof, O&R shall not be obligated to pay the disputed
amount until such dispute is resolved. The Parties shall engage in good
faith negotiations to resolve any disputed amounts within 30 days. If the
Parties are unable to resolve the dispute within such 30-day period, either
Party may exercise such rights and remedies available to it under law or at
equity. If the dispute is finally settled or determined in favor of NY-Gen
LLC, NY-Gen LLC shall include the amount settled or determined in an
invoice under Section 7.1 or 7.4 plus interest. If the settlement or
determination of the dispute results in an amount being due to O&R, NY-Gen
LLC shall pay O&R or credit the rebate to O&R at the time the next invoice
is issued to O&R plus interest. Interest on disputed amounts will be calcu
lated in accordance with Section 7.3.
Article VIII. Testing and Capacity Ratings
8.1 During the term of this Agreement, NY-Gen LLC shall provide O&R
with the results of the DMNC test which NY-Gen LLC performs for each
capability period (as defined by the NYPP or the ISO or their successors)
in accordance with NYPP Procedures or any similar test established by the
ISO Protocols.
Article IX. Generation Commitments
9.1 O&R shall not have the right under this Agreement to dispatch
the Facility (i) in excess of the Maximum Requested MW, (ii) less than the
Minimum Requested MW, (iii) to provide Energy to customers outside of the
Load Pocket or to support O&R's System outside of the Load Pocket, or (iv)
during any outage that is included as an exception to the definition of
"Forced Outage".
Article X. Start-up Lead Times and Other Operating Constraints
10.1 NY-Gen LLC shall not be obligated under this Agreement to
Start-up the Facility unless the amount of time between the delivery of the
Dispatch Notice requesting such Start-up and the commencement of the
applicable Requested Operation Period shall at least equal the Start-up
Lead Time.
10.2 NY-Gen LLC shall not be obligated to operate the Facility
pursuant to this Agreement in excess of the other operational limits as set
forth in Schedule A or in a manner inconsistent with Good Utility Practices
or Law.
Article XI. Metering
11.1 Metering services shall be performed as provided for in the
Continuing Site/Interconnection Agreement, by and between O&R and NY-Gen LLC,
dated November 24, 1998.
Article XII. Coordination of Facility and System Maintenance
12.1 NY-Gen LLC shall use its commercially reasonable efforts to
fuel, operate and maintain the Facility, or cause the Facility to be
fueled, operated and maintained, in accordance with all material Laws and
Good Utility Practices so that NY-Gen LLC is able to perform its
obligations under this Agreement. NY-Gen LLC shall also notify O&R of any
derating greater than 5% of the Facility's nominal ratings, as set forth in
Schedule A, that will cause NY-Gen LLC to be unable to perform its
obligations during a Load Pocket Hour.
12.2 Other than unscheduled maintenance, each Party shall use
reasonable efforts to coordinate with the other Party the maintenance of
the Facility and the O&R System, as the case may be, as well as any
electric transmission lines, required in order to ensure the sound
operation of the Facility and O&R's System. Except in cases of Emergency
and Good Utility Practices, neither Planned Outages, including planned
partial outages, and Planned Overhauls shall be scheduled or performed at
the Facility or the O&R System, as the case may be, during the On-Peak
hours in the months of June through September, inclusive, without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld or delayed.
12.3 Within 60 days after the Effective Date, each Party shall
provide the other Party, a non-binding schedule of Planned Outages and
Planned Overhauls (including expected commencement date and duration) for
the following calendar year. In addition, each Party shall provide a
non-binding two-year forecast of Planned Overhauls in accordance with ISO
procedures. Each Party may make such changes to such schedules and
forecasts as it considers appropriate, at its sole discretion, subject to
the restrictions set forth herein.
Article XIII. Modifications
13.1 In the event of any material loss or damage to the Facility
that would substantially impair the capability of the Facility to Deliver
Energy during a Load Pocket Hour, NY-Gen LLC shall at its own expense make
such repairs or replace ments as it considers necessary in accordance with
Good Utility Practices in order to perform its obligations hereunder.
Article XIV. Termination
14.1 Unless otherwise caused by a Force Majeure Event or an act or
omission of the non-defaulting Party, any one or more of the following
events shall constitute an Event of Default under this Agreement, and the
terms "Event of Default" or "Events of Default" shall mean, whenever they
are used in this Agree ment, any one or more of the following events:
(a) Failure by either Party to pay any material amount due
and payable by it pursuant to this Agreement after the same shall have
become due and payable;
(b) A material breach by either Party of any covenant,
condition or obligation on its part to be performed (other than as referred
to in paragraph (a) above) and such failure shall materially and adversely
affect such Party's perfor mance under this Agreement and such breach is
not cured within 30 days after the breaching Party receives written notice
thereof from the non-breaching Party, or within such longer cure period as
may reasonably be required if such breach cannot be reasonably cured within
such 30-day period and the defaulting Party has instituted corrective
action and diligently attempts to cure such default and continues such
action until the cure is complete;
(c) The dissolution or liquidation of either Party, or the
admission in writing by either Party of its inability to pay its debts as
they become due, or the failure by either Party to lift any execution,
garnishment or attachment of such consequences as will impair such Party's
ability to perform substantially its obliga tions pursuant to this
Agreement, or the commission by either Party of any act of bankruptcy, or
the adjudication of either Party as a bankrupt, or the making of any
assignment by either Party for the benefit of its creditors or the entry by
either Party into an agreement of composition with its creditors, or the
approval by a court of competent jurisdiction of a petition applicable to
either Party in any proceeding for the reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar proceeding
instituted under the provisions of any bankruptcy act or under any similar
act in any domestic or foreign jurisdiction which may now be in effect or
hereafter enacted, or within 60 days after the commencement of any such
proceeding against either Party such proceeding shall have been dismissed,
or the filing of an answer admitting or not contesting the material
allegations of a petition against it in such proceeding, or the appointment
without the consent or acquiescence of either Party, of any trustee,
receiver or liquidator of either Party or of any material part of its
properties, if within 60 days thereafter such appointment shall not have
been vacated, or if either Party shall seek or consent or acquiesce in the
appointment of any trustee, receiver or liquidator of itself or of any
material part of its properties;
(d) If any material representation or warranty made by or on
behalf of either Party shall prove to have been false or incorrect in any
material respect on the date as of which made.
14.2 Whenever any Event of Default shall have occurred and be
continu ing, the non-defaulting Party, to the extent permitted by law, may,
upon written notice to the defaulting Party, terminate this Agreement and
thereupon this Agree ment shall cease and terminate.
14.3 In addition to the foregoing remedies, whenever any Event of
Default, which materially affects the defaulting Party's performance under
this Agreement, shall have occurred and be continuing, the non-defaulting
Party, to the extent permitted by law, shall be entitled to suspend
immediately its performance under this Agreement, until such Event of
Default is corrected. If the Event of Default does not cease or is not
corrected, the non-defaulting Party may proceed to terminate this Agreement
in accordance with the provisions of this Agreement.
14.4 No termination of this Agreement shall relieve the defaulting
Party of its liability and obligations hereunder accruing or arising prior
to such termination, and the non-defaulting Party may take wherever action
at law or in equity as may appear necessary or desirable to enforce
performance and observance of any obliga tions, agreements, or covenants
under this Agreement, and the rights given hereunder shall be in addition
to all other remedies available to the Parties, either in law, at equity or
otherwise, for the breach of this Agreement.
Article XV. Indemnification
15.1 NY-Gen LLC's Indemnification
NY-Gen LLC shall indemnify, hold harmless and defend O&R,
its parent, affiliates, and successors, and their officers, directors,
employees, agents, subcontractors, and successors, from and against any and
all claims, demands, liabilities, costs, losses, judgments, damages and
expenses (including, without limitation, reasonable attorney and expert
fees, and disbursements incurred by O&R in any actions or proceedings
between O&R and a third party, NY-Gen LLC, or any other party) to the
extent the foregoing are not covered by insurance ("O&R Indemnifiable
Losses") asserted against or suffered by O&R for (i) damage to property, or
(ii) injury to or death of any person, including O&R employees, NY-Gen
LLC's employees and their affiliates' employees, or any third parties, in
such case to the extent caused by the gross negligence or willful
misconduct of NY-Gen LLC and/or its officers, directors, employees, agents,
and subcontractors and arising out of this Agreement and not caused by the
negligence or willful misconduct of any such Indemnitee.
15.2 O&R's Indemnification
O&R shall indemnify, hold harmless and defend NY-Gen LLC,
its parent, affiliates, and successors, and their officers, directors,
employees, agents, subcontractors, and successors, from and against any and
all claims, demands, liabilities, costs, losses, judgments, damages and
expenses (including, without limitation, reasonable attorney and expert
fees, and disbursements incurred by NY-Gen LLC in any actions or
proceedings between NY-Gen LLC and a third party, O&R, or any other party)
to the extent the foregoing are not covered by insurance ("NY-Gen LLC
Indemnifiable Losses") asserted against or suffered by NY-Gen LLC for (i)
damage to property, or (ii) injury to or death of any person, including
NY-Gen LLC employees, O&R's employees and their affiliates' employees, or
any third parties, in each case to the extent caused by the gross
negligence or willful miscon duct of O&R and/or its officers, directors,
employees, agents, and subcontractors and arising out of this Agreement and
not caused by the negligence or willful misconduct of any such Indemnitee.
15.3 Indemnification Procedures
Either Party 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 O&R Indemnifiable Loss
or NY-Gen LLC Indemnifiable Loss, as appropriate, hereunder. The amount of
any O&R Indemnifiable Loss or NY-Gen LLC Indemnifiable Loss, as
appropriate, shall be reduced to the extent that Indemnitee receives any
insurance proceeds with respect to an O&R Indemnifiable Loss or NY-Gen LLC
Indemnifiable Loss, as appropriate (either may be referred to as an
"Indemnifiable Loss").
15.4 Defense of Claims. (a) If any Indemnitee receives written
notice of the assertion of any claim or of the commencement of any claim,
action, or proceed ing 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 a
person required to provide indemnification under this Agreement (an
"Indemnifying Party"), the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
30 days after the Indemnitee's receipt of written notice of such Third
Party Claim. Such notice shall describe the nature of the Third Party Claim
in reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee. The Indemnifying Party will have the right to participate
in or, by giving written notice to the Indemnitee, to elect to assume the
defense of any Third Party Claim at such Indemnifying Party's own expense
and by such Indemnifying Party's own counsel, and the Indemnitee will
cooperate in good faith in such defense at such Indemnitee's own expense.
(b) If within ten calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party
Claim as provided in the last sentence of Section 15.4(a), the Indemnifying
Party will not be liable for any legal expenses subsequently incurred by
the Indemnitee in connection with the defense thereof; provided, however,
that if the Indemnifying Party fails to take reasonable steps necessary to
defend diligently such Third Party Claim within 20 calendar days (unless
waiting 20 calendar days would prejudice the Indemnitee's rights) after
receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume
its own defense, and the Indemnifying Party will be liable for all
reasonable expenses thereof. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of
any Third Party Claim which would lead to liability or create any financial
or other obligation on the part of the Indemnitee for which the Indemnitee
is not entitled to indemnification hereunder. If a firm offer is made to
settle a Third Party claim without leading to liability or the creation of
a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within ten
business days after its receipt of such notice, the Indemnitee may continue
to contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnify ing Party as to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses
paid or incurred by the Indemnitee up to the date of such notice.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay,
compromise, or settle any Third Party Claim at any time, provided that in
such event the Indemnitee shall waive any right to indemnity hereunder
unless the Indemnitee shall have first sought the consent of the
Indemnifying Party in writing to such payment, settlement, or compromise
and such consent was unreasonably withheld or delayed, in which event no
claim for indemnity therefor hereunder shall be waived.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party
reasonably prompt written notice thereof, stating the nature of such claim
in reasonable detail and indicating the estimated amount, if practicable,
but in any event not later than 30 calendar days after the Indemnitee
becomes aware of such Direct Claim, and the Indemnifying Party will have a
period of 30 calendar days within which to respond to such Direct Claim. If
the Indemnify ing Party does not respond within such 30 calendar day
period, the Indemnifying Party will be deemed to have accepted such Direct
Claim. If the Indemnifying Party rejects such Direct Claim, the Indemnitee
will be free to seek enforcement of its rights to indemnification under
this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Chase Manhattan Bank, N.A.), will promptly be repaid
by the Indemnitee to the Indemnifying Party. Upon making any indemnity
payment, the Indemnifying Party will, to the extent of such indemnity
payment, be subrogated to all rights of the Indemnitee against any third
party in respect of the Indemnifiable Loss to which the indemnity payment
relates; provided, however, that (i) the Indemnifying Party will then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of
its Indemnifiable Loss, any and all claims of the Indemnify ing Party
against any such third party on account of said indemnity payment is hereby
made expressly subordinated and subjected in right of payment to the
Indemnitee's rights against such third party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Nothing in this Section 15.4(d) shall
be construed to require any Party hereto to obtain or maintain any
insurance coverage.
(e) A failure to give timely notice as provided in this
Section 15.4 will not affect the rights or obligations of any Party
hereunder except if, and only to the extent that, as a result of such
failure, the Party which was entitled to receive such notice was actually
prejudiced as a result of such failure.
15.5 Each Party shall be responsible for protecting its facilities
from possible damage by reason of electrical disturbances or faults caused
by the opera tion, faulty operation, or non-operation of the other Party's
facilities, and such other Party shall not be liable for any such damages
so caused.
Article XVI. Limitation of Liability
16.1 Neither Party shall be liable to the other Party or its
affiliates for any consequential, incidental, punitive, special or indirect
damages arising out of or relating to the performance or breach of this
Agreement including, without limita tion, replacement power costs, loss of
revenue, loss of anticipated profits or loss of use of the Facility, the
O&R System or other property, whether or not such damages are based upon
causes of action for breach of contract, statutory (including negli gence
and misrepresentation), breach of warranty, or strict liability.
16.2 The benefits of this Article shall also extend to each Party's
affiliates and their respective officers, directors, employees, and agents
and, to the extent they are acting on behalf of such Party, such Party's
contractors, subcontractors, suppliers and vendors of every tier, and shall
survive termination or suspension of this Agree ment, as well as the
fulfillment of the obligations of the Parties hereunder.
Article XVII. Insurance
17.1 NY-Gen LLC or its affiliate, at its cost and expense, shall
maintain and keep in full force and effect during the term of this
Agreement the following insurance in connection with the Facility:
(a) Workers' Compensation Insurance for statutory
obligations imposed by Workers' Compensation or Occupational Disease Laws,
and Employer's Liability Insurance with a minimum limit of $1,000,000. When
applicable, coverage shall include the United States Longshoreman's and
Harbor Workers' Compensation Act and the Jones Act.
(b) General Liability Insurance including Personal Injury,
Broad Form Property Damage, Products/Completed Operations, Explosion,
Collapse and Underground (XCU) Liability, Contractual Liability and
Contractors Protective Liability Insurance with minimum limits of liability
of $2,000,000 per occurrence.
(c) Automobile Liability Insurance, including coverage for
all owned, non-owned and hired automotive equipment used by NY-Gen LLC with
minimum limits of liability of $5,000,000 per occurrence.
(d) All risk property damage insurance, including boiler and
machinery coverage, with minimum limits of $125,000,000.
(e) Business interruption and extra expense insurance
covering expenses and losses due to business interruption, resulting from
damage to the Facility, in amounts to be determined by NY-Gen LLC.
17.2 In the event the Facility is substantially damaged or
destroyed, O&R shall have the right to cause the proceeds of insurance
policies required under Section 17.1(d) to be used to repair or rebuild the
Facility; provided, however, that NY-Gen LLC may control the disbursement
of such insurance proceeds for such purpose.
17.3 For all insurance required under Section 17.1, except Workers'
Compensation and Employers Liability, O&R, its directors, officers and
employees shall be named as additional insureds, as their interest may
appear.
17.4 Consistent with the terms of the indemnities provided for
hereunder, all of the insurance required under Section 17.1 shall be
primary to any or all other insurance coverage and shall not contribute
with similar insurance in effect for O&R.
17.5 All insurance required under Section 17.1 shall contain
provisions wherein all rights of subrogation or recovery of any kind
against O&R, its agents, employees, officers, successors and assigns are
specifically waived by NY-Gen LLC and the insuring entity.
17.6 The General Liability insurance specified in Section 17.1(b)
shall contain a cross liability provision. All insurance required hereunder
shall provide insurance for occurrences during the performance of services
by NY-Gen LLC and all subcontractors pursuant to this Agreement and for a
period of two years after termination of this Agreement. In the event that
any insurance as required herein is available only on a "claims-made"
basis, such insurance shall provide for a retroac tive date not later than
the date of this Agreement and such insurance shall be maintained by NY-Gen
LLC, with a retroactive date not later than the retroactive date required
above, for a minimum period of five years after the termination of this
Agreement.
17.7 All insurance required herein shall be issued by an insurer
admitted to do business in the State of New York and shall have a Best's
Rating of not less than "A" and a net surplus of not less than $25,000,000.
17.8 NY-Gen LLC's insurance carrier shall notify O&R of any
material change in, or cancellation of, the insurance required hereunder at
least 30 days prior to the effective date of any such change or
cancellation.
17.9 Self-insurance may be utilized by NY-Gen LLC.
17.10 Prior to the Closing Date, NY-Gen LLC shall provide, for
O&R's review and approval, a Certificate of Insurance verifying the
existence of insurance coverages in compliance with the requirements of
this Agreement. The Certificate of Insurance should be mailed to:
Risk Management Department
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Article XVIII. Force Majeure
18.1 "Force Majeure Event" means any occurrence beyond the
reasonable control of a Party which causes such Party to be delayed in or
prevented from performing or carrying out any of its obligations under this
Agreement and which by the exercise of due diligence in accordance with
Good Utility Practices, that Party is unable to prevent, avoid, mitigate,
or overcome, including the following: any act of God, labor disturbance,
act of the public enemy, war, insurrection, riot, fire, storm or flood,
ice, explosion, breakage or accident to machinery or equipment, order,
regulation or restriction imposed by governmental, military or lawfully
established civilian authorities, provided that a Force Majeure Event shall
not include lack of finances, or change in market conditions, and provided
further that any failure of NY-Gen LLC to obtain fuel or services for the
Facility due to the failure of any supplier or subcontractor of NY-Gen LLC
to perform any obligation to NY-Gen LLC will not constitute a Force Majeure
Event hereunder unless such subcontractor or supplier is unable to perform
for reasons that would constitute a "Force Majeure Event" hereunder.
18.2 If either Party because of a Force Majeure Event is rendered
wholly or partly unable to perform its obligations under this Agreement,
that Party shall be excused from whatever performance is affected by the
Force Majeure Event to the extent so affected, and shall not be liable for
damages caused by such non-performance provided that:
(a) The non-performing Party, within seven days after it
becomes aware or should have become aware that it would be unable to
perform, gives the other Party written notice of the occurrence of the
Force Majeure Event, including an estimation of its expected duration and
probable impact on the performance of its obligations hereunder and
submitting satisfactory evidence of the existence of the Force Majeure
Event;
(b) The suspension of performance is of no greater scope and
of no longer duration than is required by the Force Majeure Event;
(c) No obligations of either Party which arose before the
occur rence causing the suspension of performance are excused as a result
of the occur rence; and
(d) The non-performing Party uses its commercially
reasonable efforts to remedy expeditiously its inability to perform. This
subparagraph shall not require the settlement of any strike, walkout,
lockout or other labor dispute on terms which, in the sole judgment of the
Party involved in the dispute, are contrary to its interest. It is
understood and agreed that the settlement of strikes, walkouts, lockouts or
other labor disputes shall be entirely within the discretion of the Party
involved in the strike, walkout, lockout or other labor dispute.
(e) When the non-performing Party is able to resume
performance of its obligations under this Agreement, that Party shall give
the other Party written notice to that effect.
(f) The Force Majeure Event was not caused by any negligent
acts, or omissions, or failure to comply with any Law or for any breach or
default of this Agreement.
Article XIX. Contract Documents
19.1 The contract documents which comprise the contract between the
Parties are referenced hereto and made a part hereof and consist of the
following:
(a) This Agreement; and
(b) Schedules to this Agreement as follows:
(i) Schedule A: Description of Units and
Performance Requirements;
(ii) Schedule B: Availability Payment ;
(iii) Schedule C: Energy Costs;
(iv) Schedule D: Start-up Costs;
(v) Schedule E: Emissions Costs;
(vi) Schedule F: Payment Examples;
(vii) Schedule G: Penalties;
(viii) Schedule H: Load Pocket Diagram;
(ix) Schedule I: Dispute Resolution Procedures;
(x) Schedule J: Load Pocket Dispatch Log;
(xi) Schedule K: Operating Instructions; and
(xii) Schedule L: Daily Status Report.
Article XX. Dispute Resolution
20.1 The Parties shall make reasonable efforts to settle all
disputes arising out of or in connection with this Agreement. In the event
any dispute is not settled, the Parties shall follow the alternative
dispute resolution procedures set forth in Schedule I.
Article XXI. Taxes
21.1 O&R shall pay all taxes, surcharges, adjustments or other
assessments imposed by law, rule or regulation which are of general
applicability and imposed on sales of Energy from NY-Gen LLC to O&R
pursuant to this Agreement, unless O&R can demonstrate, based on a ruling
from the Commission, that it cannot collect such taxes, surcharges,
adjustments or other assessments from its customers ("Taxes").
Article XXII. Assignment or Transfer
22.1 The Parties acknowledge that any assignment of this Agreement
is subject to approval by the FERC and the NYPSC. Neither Party shall
assign this Agreement or any portion thereof without the prior written
consent of the other Party, which consent shall not be unreasonably
withheld or delayed. Notwithstand ing the foregoing, (a) O&R may assign
this Agreement to an affiliate of O&R that has a contractual or statutory
obligation to supply Energy to O&R's retail customers in the Load Pocket,
provided, however, that no such assignment, transfer, pledge, conveyance,
or disposition shall relive or in any way discharge O&R from the
performance of its duties and obligations under this Agreement; and (b)
NY-Gen LLC may assign, transfer, pledge or otherwise dispose of its rights
and interests hereunder to (i) a trustee or lending institution(s) for the
purposes of financing or refinancing the acquisition of the Purchased
Assets, including upon or pursuant to the exercise of remedies under such
financing or refinancing, or by way of assign ments, transfers, pledges,
conveyances, or dispositions in lieu thereof; provided, however, that no
such assignment, transfer, pledge, conveyance, or disposition shall relieve
or in any way discharge NY-Gen LLC from the performance of its duties and
obligations under this Agreement; or (ii) an affiliate of NY-Gen LLC or
(iii) a purchaser, transferee or lessor of all or substantially all of
NY-Gen LLC's right, title and interest in and to the Purchased Assets,
provided such purchaser, transferee or lessor (A)(1) has a "net worth", or
"consolidated net worth", if applicable, as deter mined in accordance with
U.S. generally accepted accounting principles and re flected in an audited
balance sheet (or consolidated balance sheet, if applicable) ("Net Worth")
at least equal to an amount equal to one-third of the Purchase Price (as
described in Section 3.1 of the ASA) or (2) provides a guaranty from an
affiliate which has a Net Worth at least equal to the amount specified in
(A)(1) above and (B) demonstrates its ability to operate the Purchased
Assets to O&R's reasonable satisfaction in accordance with Good Utility
Practices.
Article XXIII. Regulatory Approval; Effective Date
23.1 This Agreement shall not become effective and binding upon the
Parties until it has been: (i) signed by each of the Parties hereto, and
(ii) the FERC and the NYPSC have entered a final order in form and
substance satisfactory to O&R and to NY-Gen LLC approving this Agreement
and the recovery by O&R from its customers of all payments made to NY-Gen
LLC pursuant to the terms of this Agreement. O&R and NY-Gen LLC agree to
use their commercially reasonable efforts to obtain such regulatory
approval as promptly as practicable following execution of this Agreement.
Article XXIV. Confidentiality
24.1 All information regarding a Party (the "Disclosing Party")
that is furnished directly or indirectly to the other Party (the
"Recipient") pursuant to this Agreement and marked "Confidential" shall be
deemed "Confidential Information." Notwithstanding the foregoing,
Confidential Information does not include informa tion that (i) is
rightfully received from Recipient from a third party having no obligation
of confidence to the Disclosing Party, (ii) is or becomes in the public
domain, through no action on Recipient's part in violation of this
Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential
Information of the Disclosing Party. Information that is specific as to
certain data shall not be deemed to be in the public domain merely because
such information is embraced by more general disclosure in the public
domain.
24.2 Recipient shall keep the Confidential Information strictly
confidential and not disclose any Confidential Information to any third
party for a period of two years from the date the Confidential Information
to any third party for a period of two years from the date the Confidential
Information was received by Recipient, except as otherwise provided herein.
24.3 Recipient may disclose the Confidential Information to its and
its affiliates' respective directors, officers, employees, consultants,
advisors and agents who need to know the Confidential Information for the
purpose of assisting Recipi ent with respect to its obligations under this
Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause
such parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.
24.4 If Recipient becomes legally compelled or required to disclose
any of the Confidential Information (including, without limitation,
pursuant to the rules or regulations of the NYPP, ISO or FERC), Recipient
will provide the Disclosing Party with prompt written notice thereof so
that the Disclosing Party may seek a protective order or other appropriate
remedy. Recipient will furnish only that portion of the Confidential
Information which its counsel considers legally required, and Recipient
will cooperate, at the Disclosing Party's expense, with the Disclosing
Party's counsel to enable the Disclosing Party to obtain a protective order
or other reliable assurance that confidential treatment will be accorded
the Confidential Information. It is further agreed that, if in the absence
of a protective order, Recipient is nonetheless required to disclose any
Confidential Information, Recipient will furnish only that portion of the
Confidential Information which its counsel considers is legally required.
24.5 Recipient shall promptly return to the Disclosing Party all
items containing or constituting Confidential Information, together with
all copies, extracts, or summaries thereof, upon the earlier of (i) the
Disclosing party's request, or (ii) the termination or expiration of this
Agreement.
Article XXV. Amendments
25.1 This Agreement shall not be amended unless such amendment
shall be in writing and signed by a duly authorized representative of each
of the Parties. Such amendments or modifications shall become effective
only after the Parties have received any authorizations required from the
FERC or the NYPSC. Nothing contained in this Agreement shall be construed
as affecting in any way the right of either of the Parties furnishing or
receiving service under this Agreement to unilater ally make application to
the FERC for a change in rates under Sections 205 or 206 of the Federal
Power Act and pursuant to the FERC rules and regulations promulgated
thereunder.
Article XXVI. Books and Records: Audit Rights
26.1 NY-Gen LLC shall maintain for four years the information
utilized to determine the payments pursuant to Schedules C, D, and E. Such
records shall be available at all reasonable times for inspection and audit
by O&R. O&R shall have the right to inspect and audit such records and
supporting documents for any calendar year at any time within the 24 month
period following the end of such year, provided that with respect to
invoices, O&R disputes the amounts of such invoices in the time period
provided in Section 7.6. No adjustments to payments shall be required as a
result of such audit unless and to the extent that O&R makes a claim upon
NY-Gen LLC for any discrepancies disclosed by such audit within two months
following expiration of such 24 month period. The expense of any such audit
shall be borne solely by O&R.
Article XXVII. Miscellaneous Provisions
27.1 Binding Effect. This Agreement and any extension shall inure
to the benefit of and shall be binding upon the Parties and their
respective successors and assigns.
27.2 Counterparts. This Agreement may be executed in several
counter parts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
27.3 Notices. Where written notice is required by this Agreement,
all notices, certificates or other communications hereunder shall be in
writing and shall be deemed delivered (i) when personally delivered (by
courier or otherwise) to the recipient and receipt is confirmed in writing,
(ii) three days after being mailed by United Sates registered or certified
mail, postage prepaid, return receipt requested, or (iii) when faxed to
recipient during the normal business hours of the recipient on a Business
Day (or if not faxed at such time, during the next Business Day) and
receipt is confirmed on the sender's fax machine, addressed or faxed and a
copy is mailed to the other Party on the same Business Day, as follows:
(a) To NY-Gen LLC:
Southern Energy NY-Gen LLC
900 Ashwood Parkway, Suite 500
Atlanta, Georgia 30338
Attention: Steve Gillis
Finance Director, North American
Operations
Fax: (770) 379-7272
(b) To O&R:
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Attention: Legal Department
Fax: (914) 577-2959
or to such other and different address as may be designated by the Parties.
27.4 Prior Agreements Superseded. This Agreement shall completely
and fully supersede all other prior understandings or agreements, both
written and oral, between the Parties relating to the subject matter
hereto.
27.5 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless
of the laws that might otherwise govern under applicable New York
principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies, and the Seller and the Buyer hereby agree to irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or
Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Agreement. If requested by O&R, NY-Gen
LLC will consent to appointing an agent for service of process in New York
City.
27.6 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 obliga tion, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
27.7 Headings. The headings contained in this Agreement are used
solely for convenience and do not constitute a part of the agreement
between the Parties hereto, nor should they be used to aid in any manner in
the construction of this Agreement.
27.8 Third Parties. This Agreement is intended solely for the
benefit of the Parties hereto. Nothing in this Agreement shall be construed
to create any duty to, or standard of care with reference to, or any
liability to, any person not a Party to this Agreement.
27.9 No Survival of Reps and Warranties. Each and every
representation and warranty contained in this Agreement and each and every
covenant contained in this Agreement shall expire with, and be terminated
and extinguished by, (i) the expiration of the term of this Agreement
pursuant to Article III, or (ii) the termina tion of this Agreement
pursuant to Article XIV or otherwise; and neither the Seller, the Buyer nor
any officer, director, trustee or affiliate of either the Seller or the
Buyer shall have any liability whatsoever with respect to any such
representation, warranty or covenant.
27.10 Agency. This Agreement shall not be interpreted or construed
to create an association, joint venture, or partnership between the Parties
or to impose any partnership obligation or liability upon either Party.
Neither Party shall have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or to act as or be an
agent or representative of, or to otherwise bind, the other Party.
IN WITNESS WHEREOF, NY-Gen LLC and O&R have caused this
Agreement to be executed as of the date first above written.
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. Louis Peoples
________________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief Executive Officer
SOUTHERN ENERGY NY-GEN, L.L.C.
By: /s/ Randy Harrison
________________________________
Name: Randy Harrison
Title: Vice President
Exhibit 10.65
BOWLINE GUARANTY
This Guaranty (this "Guaranty"), dated as of November 24, 1998,
is given by Southern Energy, Inc., a Delaware corporation (the
"Guarantor"), in favor of Orange and Rockland Utilities, Inc., a New York
corporation ("O&R") and Consolidated Edison Company of New York, Inc., a
New York corporation ("Con Edison").
RECITALS
WHEREAS, Southern Energy Bowline, L.L.C., a Delaware limited
liability company and a direct or indirect wholly-owned subsidiary of the
Guarantor (the "Buyer"), has entered into the Bowline Point Generating
Station Sales Agreement (the "Asset Sales Agreement"), dated as of the date
hereof with O&R and Con Edison, pursuant to which the Buyer has agreed to
purchase and O&R and Con Edison have agreed to sell certain electric
generating assets, as more particularly set forth therein; and
WHEREAS, the Buyer has entered into the Bowline Adjacent Property
Sales Agreement (the "Property Sales Agreement"), dated as of the date
hereof with O&R, pursuant to which the Buyer has agreed to purchase and O&R
has agreed to sell certain property, as more particularly set forth
therein; and
WHEREAS, Guarantor has agreed to guarantee the payment and
performance obligations of the Buyer under the Asset Sales Agreement and
the Property Sales Agreement.
NOW, THEREFORE, the Guarantor agrees as follows:
Section 1. Definitions. (a) Capitalized terms used herein
shall have the meanings assigned to them herein or, if not defined herein,
then such terms shall have the meanings assigned to them in the Asset Sales
Agreement.
Section 2. Guaranty. (a) Guarantor hereby absolutely and
irrevocably guarantees to O&R and Con Edison and their successors and
permitted assigns, as primary obligor and not merely as a surety, that the
Buyer shall: (i) be bound by and perform, (A) the provisions of Sections
3.1 (Purchase Price), 3.2 (Purchase Price Adjustment), Section 3.4
(Proration) and Section 4.2 (Payment of Purchase Price) of the Asset Sales
Agreement; (ii) pay (A) the amounts required to be paid by the Buyer
pursuant to Article IX (Indemnification) of the Asset Sales Agreement and
the Indemnification provisions of each of the Ancillary Agreements, where
applicable and (B) all other amounts required to be paid by the Buyer under
the Ancillary Agreements and any other agreement or instrument relating
thereto not described in (ii)(A) above; and (iii) promptly perform, observe
and comply with all other obligations, covenants, and undertakings and
representations and warranties of the Buyer contained in the Asset Sales
Agreement, the Ancillary Agreement and any other agreement or instrument
relating thereto (all of such obligations collectively, the "Guaranteed
Obligations"). Guarantor agrees that such Guaranteed Obligations shall
forthwith become due and payable by Guarantor or be required to be
performed by the Guarantor for the purposes of this Guaranty upon the
occurrence of any event or condition giving rise to the obligation of the
Buyer so to pay or be performed under the Asset Sales Agreement, Ancillary
Agreements or any other agreement or instrument relating thereto.
(b) Guarantor hereby absolutely and irrevocably guarantees
to O&R and its successors and permitted assigns, as primary obligor and not
merely as a surety, that the Buyer shall: (i) be bound by and perform, (A)
the provisions of Sections 3.1 (Purchase Price), Section 3.2 (Proration)
and Section 4.2 (Payment of Purchase Price) of the Property Sales
Agreement; (ii) pay (A) the amounts required to be paid by the Buyer
pursuant to Article IX (Indemnification) of the Property Sales Agreement
and (iii) promptly perform, observe and comply with all other obligations,
covenants, and undertakings and representations and warranties of the Buyer
contained in the Property Sales Agreement or any other agreement or
instrument relating thereto (the "Guaranteed Property Obligations").
Guarantor agrees that such Guaranteed Property Obligations shall forthwith
become due and payable by Guarantor or be required to be performed by the
Guarantor for the purposes of this Guaranty upon the occurrence of any
event or condition giving rise to the obligation of the Buyer so to pay or
be performed under the Property Sales Agreement or any other agreement or
instrument relating thereto.
(c) In the event that the Buyer shall fail to perform such
Guaranteed Obligations or Guaranteed Property Obligations at the times and
in the manner provided in the Asset Sales Agreement, the Property Sales
Agreement, the Ancillary Agreements and any other agreement or instrument
relating thereto, the Guarantor, within thirty (30) days of receipt of
written notice from O&R and/or Con Edison, as applicable, of the Buyer's
failure to perform, shall duly perform or cause to be performed the same.
(d) Subject to the foregoing provisions, this Guaranty
shall be an absolute, unconditional, present and continuing guaranty of
payment and performance (not merely of collection or collectability) which
shall remain in full force and effect until the first to occur of (i) the
date that each and all of the Guaranteed Obligations and Guaranteed
Property Obligations shall have been fully and satisfactorily discharged in
accordance with the terms and provisions of the Asset Sales Agreement, the
Property Sales Agreement, the Ancillary Agreements and any other agreement
or instrument relating thereto or (ii) such date (the "Attainment Date") on
or after the second anniversary of the Closing Date (as defined in the
Asset Sales Agreement) that the Buyer shall have attained for at least four
(4) consecutive fiscal quarters (A) "net worth", as determined in
accordance with U.S. generally accepted accounting principles and reflected
in a balance sheet certified by an independent certified public accounting
firm of national reputation, at least equal to an amount equal to one-third
of the sum of the Purchase Price (as described in Section 3.1 of the Asset
Sales Agreement) and the Purchase Price (as described in Section 3.1 of the
Property Sales Agreement).
Section 3. Guaranty Absolute. The liability of Guarantor under
this Guaranty shall be unaffected by:
(a) any lack of validity of the Asset Sales Agreement or
the Property Sales Agreement which is caused by an act or failure to act of
Buyer or the Guarantor;
(b) the occurrence or continuance of any event of
bankruptcy, reorganization or insolvency with respect to Buyer or any other
Person (for purposes hereof, "Person" shall include any natural person,
corporation, partnership, firm, association, governmental authority or any
other entity whether acting in an individual, fiduciary or other capacity),
or the dissolution, liquidation or winding up of Buyer or any other Person;
(c) any amendment, supplement, reformation or other
modification of the Asset Sales Agreement or the Property Sales Agreement;
(d) the exercise, non-exercise or delay in exercising, by
O&R or Con Edison, as applicable, or any other Person of any of their
rights and remedies under this Guaranty, the Asset Sales Agreement or the
Property Sales Agreement;
(e) any permitted assignment or other transfer of this
Guaranty by O&R or Con Edison, as applicable, or any permitted assignment
or other transfer of the Asset Sales Agreement or the Property Sales
Agreement in whole or in part;
(f) any change in control of the Buyer;
(g) any sale, transfer or other disposition by Guarantor of
any direct or indirect interest it may have in Buyer; or
(h) the absence of any notice to, or knowledge by,
Guarantor of the existence or occurrence of any of the matters or events
set forth in the foregoing clauses.
Section 4. Waiver. In addition to waiving any defenses to which
clauses (a) through (h) of Section 3 may refer:
(a) Guarantor waives, and agrees that it shall not at any
time insist upon, plead or in any manner whatever claim or take the benefit
or advantage of, any appraisal, valuation, stay, extension, marshalling of
assets or redemption laws, or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the
performance by Guarantor of its obligations under, or the enforcement by
O&R or Con Edison, as applicable, of, this Guaranty.
(b) Guarantor waives all notices, diligence, presentment
and demand (whether for nonpayment or protest or of acceptance, maturity,
extension of time, change in nature or form of the Guaranteed Obligations
or the Guaranteed Property Obligations, acceptance of security, release of
security, composition or agreement arrive at as to the amount of, or the
terms of, the Guaranteed Obligations or the Guaranteed Property
Obligations, notice of adverse change in Buyer's financial condition, or
any other fact which might materially increase the risk to Guarantor
hereunder) with respect to the Guaranteed Obligations or the Guaranteed
Property Obligations which are not specifically provided for in the Asset
Sales Agreement or the Property Sales Agreement, and any other demands
whatsoever which are not specifically provided for in the Asset Sales
Agreement or the Property Sales Agreement, and waives the benefit of all
provisions of law which are in conflict with the terms of this Guaranty.
(c) Until payment and satisfaction in full of all
Guaranteed Obligations and the Guaranteed Property Obligations, Guarantor
irrevocably waives any right it may have to bring a case or proceeding
against Buyer by reason of their performance under this Guaranty or with
respect to any other obligation of Buyer to Guarantor, under any state or
federal bankruptcy, insolvency, reorganization, moratorium or similar laws
for the relief of debtors.
Section 5. Representations and Warranties. Guarantor represents
and warrants as follows:
(a) Due Organization. Guarantor is a corporation duly
organized and validly existing under the laws of Delaware.
(b) Power and Authority. Guarantor has full corporate
power, authority and legal right to enter into this Guaranty and to perform
its obligations hereunder.
(c) Due Authorization. This Guaranty has been duly
authorized, executed and delivered by Guarantor.
(d) Enforceability. This Guaranty constitutes the legal,
valid and binding obligation of Guarantor enforceable against Guarantor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally.
(e) No Conflicts. The execution and delivery by Guarantor
of this Guaranty and the performance by Guarantor of its obligations
hereunder will not (i) violate the provisions of Guarantor's certificate of
incorporation or bylaws; (ii) violate the provisions of any law applicable
to Guarantor or the transactions contemplated hereby; or (iii) result in a
breach of or constitute a default under any agreement to which Guarantor is
a party or by which it or its assets or property are bound which breach or
default would have a material adverse effect on Guarantor's ability to
perform its obligations hereunder.
(f) No Proceedings. There is no action, suit or proceeding
at law or in equity or by or before any governmental authority or arbitral
tribunal now pending or, to the best knowledge of Guarantor, threatened
against Guarantor which reasonably could be expected to have a material
adverse effect on Guarantor's ability to perform its obligations under this
Guaranty.
(g) No Claims. Guarantor's obligations under this Guaranty
are not subject to any offsets or claims of any kind against Buyer, O&R or
Con Edison, as applicable, or any other Person.
Section 6. Repayment and Reinstatement. If any claim is ever
made upon O&R or Con Edison, as applicable, or any Person claiming through
O&R or Con Edison, as applicable, for repayment or disgorgement of any
amount or amounts received by O&R or Con Edison, as applicable, from the
Buyer in payment of the Guaranteed Obligations or the Guaranteed Property
Obligations and O&R or Con Edison, as applicable, or such Person, as the
case may be, repays or disgorges all or any part of said amount, then,
notwithstanding any revocation or termination of this Guaranty, Guarantor
shall be and remain liable to O&R or Con Edison, as applicable, or such
Person, as the case may be, under the terms of this Guaranty for the amount
so repaid, to the same extent as if such amount had never originally been
received by O&R or Con Edison, as applicable, or such Person, as the case
may be.
Section 7. Amendments; Waivers; Etc. Neither this instrument
nor any term hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by O&R or Con Edison,
as applicable, and Guarantor, as the case may be. No delay or failure by
O&R or Con Edison, as applicable, to exercise any remedy against Buyer or
Guarantor will be construed as a waiver of that right or remedy. No
failure on the part of O&R or Con Edison, as applicable, to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by any applicable law.
Section 8. Severability. In the event that the provisions of
this Guaranty are claimed or held to be inconsistent with any other
instrument evidencing or securing O&R or the Guaranteed Obligations, the
terms of this Guaranty shall remain fully valid and effective. If any one
or more of the provisions of this Guaranty should be determined to be
illegal or unenforceable, all other provisions shall remain effective.
Section 9. Assignment.
(a) Assignability. Guarantor shall not have the right to
assign any of Guarantor's rights or obligations under this Guaranty. O&R
or Con Edison, as applicable, may, at any time and from time to time,
assign, in whole or in part, their respective rights hereunder to any
Person to whom O&R or Con Edison, as applicable, has the right to assign
their rights or obligations under and, pursuant to the terms of the Asset
Sales Agreement or the Property Sales Agreement, whereupon such assignee
shall succeed to all rights of O&R or Con Edison, as applicable, hereunder,
as the case may be.
(b) Successors and Assigns. Subject to Section 9(a)
hereof, all of the terms of this instrument shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
Section 10. Addresses for Notices. All notices and other
communications provided for hereunder shall be given in accordance with the
notice requirements of the Asset Sales Agreement and if to Guarantor, at
the address specified below the space for its execution of this Guaranty.
Section 11. Jurisdiction.
(a) To the extent permitted by applicable law, Guarantor
hereby irrevocably submits to the jurisdiction of any state or federal
court sitting in New York City in any action or proceeding arising out of
or relating to this Guaranty, and Guarantor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and
determined in such a court. Guarantor, O&R and Con Edison hereby
irrevocably waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. To the extent permitted by applicable law, Guarantor
irrevocably consents to the service of any and all process in any such
action or proceedings by the mailing of copies of such process to Guarantor
at its address specified below the space for its execution of this
Guaranty. Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law.
(b) To the extent that Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal
process otherwise consented to in paragraph (a) of this section (whether
through service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its
property, to the extent permitted by law, Guarantor hereby irrevocably
waives such immunity in respect of its obligations under this Guaranty.
Section 12. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the state of New York except
the choice of law rules.
Section 13. Entire Agreement. This Guaranty contains the
complete agreement of Guarantor with respect to the matters contained
herein and supersedes all other negotiations or agreements, whether written
or oral, with respect to the subject matter hereof.
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal
effective as of the date first above written.
SOUTHERN ENERGY, INC.
By: /s/ Randy Harrison
__________________________
Name: Randy Harrison
Title: Vice President - Project
Development
Address: 900 Ashwood Parkway
Suite 500
Atlanta, GA 30308
ACCEPTED AND AGREED:
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. Louis Peoples
__________________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief
Executive Officer
Address: One Blue Hill Plaza
Pearl River, New York 10965
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
By: /s/ J. Michael Evans
_________________________________
Name: J. Michael Evans
Title: President and Chief Operating Officer
Address: 4 Irving Place
New York, New York 10003
Exhibit 10.66
LOVETT, GAS TURBINE AND HYDROELECTRIC
GENERATING FACILITIES GUARANTY
This Guaranty (this "Guaranty"), dated as of November 24, 1998,
is given by Southern Energy, Inc., a Delaware corporation (the
"Guarantor"), in favor of Orange and Rockland Utilities, Inc., a New York
corporation ("O&R").
RECITALS
WHEREAS, Southern Energy Lovett, L.L.C., a Delaware limited
liability company and a direct or indirect wholly-owned subsidiary of the
Guarantor ("SEL"), has entered into the Lovett Generating Station Sales
Agreement (the "Lovett Sales Agreement"), dated as of the date hereof with
O&R pursuant to which SEL has agreed to purchase and O&R has agreed to sell
certain electric generating assets, as more particularly set forth therein;
and
WHEREAS, Southern Energy NY-Gen, L.L.C. ("NY-Gen" and together
with SEL, the "Buyers" and each individually, a "Buyer") entered into the
Gas Turbine and Hydroelectric Generating Station Sales Agreement (the "Gas
and Hydro Sales Agreement," together with the Lovett Sales Agreement, the
"Asset Sales Agreements"), dated as of the date hereof with O&R, pursuant
to which NY-Gen has agreed to purchase and O&R has agreed to sell certain
property, as more particularly set forth therein; and
WHEREAS, Guarantor has agreed to guarantee the payment and
performance obligations of (i) SEL under the Lovett Sales Agreements and
(ii) NY-Gen under the Gas and Hydro Sales Agreement.
NOW, THEREFORE, the Guarantor agrees as follows:
Section 1. Definitions. (a) Capitalized terms used herein
shall have the meanings assigned to them herein or, if not defined herein,
then such terms shall have the meanings assigned to them in the Lovett
Sales Agreement and/or the Gas and Hydro Sales Agreement, as applicable.
Section 2. Guaranty. (a) Guarantor hereby absolutely and
irrevocably guarantees to O&R and its successors and permitted assigns, as
primary obligor and not merely as a surety, that SEL shall: (i) be bound
by and perform (A) the provisions of Sections 3.1 (Purchase Price), 3.2
(Purchase Price Adjustment), Section 3.4 (Proration) and Section 4.2
(Payment of Purchase Price) of the Lovett Sales Agreement; (ii) pay (A) the
amounts required to be paid by SEL pursuant to Article IX (Indemnification)
of the Lovett Sales Agreement and the Indemnification provisions of each of
the Ancillary Agreements, where applicable and (B) all other amounts
required to be paid by SEL under the Ancillary Agreements and any other
agreement or instrument relating thereto not described in (ii)(A) above;
and (iii) promptly perform, observe and comply with all other obligations,
covenants, and undertakings and representations and warranties of SEL
contained in the Lovett Sales Agreement, the Ancillary Agreement and any
other agreement or instrument relating thereto (all of such obligations
collectively, the "Guaranteed Lovett Obligations"). Guarantor agrees that
such Guaranteed Lovett Obligations shall forthwith become due and payable
by Guarantor or be required to be performed by the Guarantor for the
purposes of this Guaranty upon the occurrence of any event or condition
giving rise to the obligation of SEL so to pay or be performed under the
Lovett Sales Agreement, the Ancillary Agreements or any other agreement or
instrument relating thereto.
(b) Guarantor hereby absolutely and irrevocably guarantees
to O&R and its successors and permitted assigns, as primary obligor and not
merely as a surety, that NY-Gen shall: (i) be bound by and perform, (A)
the provisions of Sections 3.1 (Purchase Price), Section 3.2 (Purchase
Price Adjustment), Section 3.4 (Proration) and Section 4.2 (Payment of
Purchase Price) of the Gas and Hydro Sales Agreement; (ii) pay (A) the
amounts required to be paid by NY-Gen pursuant to Article IX
(Indemnification) of the Gas and Hydro Sales Agreement and the
indemnification provisions of each of the Ancillary Agreements, where
applicable and (B) all other amounts required to be paid by NY-Gen under
the Ancillary Agreements and any other agreement or instrument relating
thereto not described in (ii)(A) above; and (iii) promptly perform, observe
and comply with all other obligations, covenants, and undertakings and
representations and warranties of NY-Gen contained in the Gas and Hydro
Sales Agreement or any other agreement or instrument relating thereto (the
"Guaranteed Gas and Hydro Obligations"). Guarantor agrees that such
Guaranteed Gas and Hydro Obligations shall forthwith become due and payable
by Guarantor or be required to be performed by the Guarantor for the
purposes of this Guaranty upon the occurrence of any event or condition
giving rise to the obligation of the Buyer so to pay or be performed under
the Gas and Hydro Sales Agreement or any other agreement or instrument
relating thereto.
(c) In the event that the Buyers shall fail to perform any
such Guaranteed Lovett Obligations or Guaranteed Gas and Hydro Obligations
at the times and in the manner provided in the Lovett Sales Agreement, the
Gas and Hydro Sales Agreement, the Ancillary Agreements and any other
agreement or instrument relating thereto, as applicable, the Guarantor,
within thirty (30) days of receipt of written notice from O&R of a Buyer's
failure to perform, shall duly perform or cause to be performed the same.
(d) Subject to the foregoing provisions, this Guaranty
shall be an absolute, unconditional, present and continuing guaranty of
payment and performance (not merely of collection or collectability) which
shall remain in full force and effect until the first to occur of (i) the
date that each and all of the Guaranteed Lovett Obligations and Guaranteed
Gas and Hydro Obligations shall have been fully and satisfactorily
discharged in accordance with the terms and provisions of the Lovett Sales
Agreement, the Gas and Hydro Sales Agreement, the Ancillary Agreements and
any other agreement or instrument relating thereto or (ii) such date (the
"Attainment Date") on or after the second anniversary of the Closing Date
(which shall mean the later of the "Closing Date," as defined in the Lovett
Sales Agreement and the "Closing Date" as defined in the Gas and Hydro
Sales Agreement) that the Buyers together shall have attained for at least
four (4) consecutive fiscal quarters (A) a "net worth", as determined in
accordance with U.S. generally accepted accounting principles and reflected
in a balance sheet certified by an independent certified public accounting
firm of national reputation, at least equal to an amount equal to one-third
of the sum of the Purchase Price (as described in Section 3.1 of the Lovett
Sales Agreement) and the Purchase Price (as described in Section 3.1 of the
Gas and Hydro Sales Agreement).
Section 3. Guaranty Absolute. The liability of Guarantor under
this Guaranty shall be unaffected by:
(a) any lack of validity of the Lovett Sales Agreement or
the Gas and Hydro Sales Agreement which is caused by an act or failure to
act of either Buyer or the Guarantor;
(b) the occurrence or continuance of any event of
bankruptcy, reorganization or insolvency with respect to either Buyer or
any other Person (for purposes hereof, "Person" shall include any natural
person, corporation, partnership, firm, association, governmental authority
or any other entity whether acting in an individual, fiduciary or other
capacity), or the dissolution, liquidation or winding up of either Buyer or
any other Person;
(c) any amendment, supplement, reformation or other
modification of the Lovett Sales Agreement or the Gas and Hydro Sales
Agreement;
(d) the exercise, non-exercise or delay in exercising, by
O&R or any other Person of any of their rights and remedies under this
Guaranty, the Lovett Sales Agreement or the Gas and Hydro Sales Agreement;
(e) any permitted assignment or other transfer of this
Guaranty by O&R or any permitted assignment or other transfer of the Lovett
Sales Agreement or the Gas and Hydro Sales Agreement in whole or in part;
(f) any change in control of either Buyer;
(g) any sale, transfer or other disposition by Guarantor of
any direct or indirect interest it may have in Buyer; or
(h) the absence of any notice to, or knowledge by,
Guarantor of the existence or occurrence of any of the matters or events
set forth in the foregoing clauses.
Section 4. Waiver. In addition to waiving any defenses to which
clauses (a) through (h) of Section 3 may refer:
(a) Guarantor waives, and agrees that it shall not at any
time insist upon, plead or in any manner whatever claim or take the benefit
or advantage of, any appraisal, valuation, stay, extension, marshalling of
assets or redemption laws, or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the
performance by Guarantor of its obligations under, or the enforcement by
O&R of, this Guaranty.
(b) Guarantor waives all notices, diligence, presentment
and demand (whether for nonpayment or protest or of acceptance, maturity,
extension of time, change in nature or form of the Guaranteed Lovett
Obligations or the Guaranteed Gas and Hydro Obligations, acceptance of
security, release of security, composition or agreement arrive at as to the
amount of, or the terms of, the Guaranteed Lovett Obligations or the
Guaranteed Gas and Hydro Obligations, notice of adverse change in either
Buyer's financial condition, or any other fact which might materially
increase the risk to Guarantor hereunder) with respect to the Guaranteed
Lovett Obligations or the Guaranteed Gas and Hydro Obligations which are
not specifically provided for in the Lovett Sales Agreement or the Gas and
Hydro Sales Agreement, and any other demands whatsoever which are not
specifically provided for in the Lovett Sales Agreement or the Gas and
Hydro Sales Agreement, and waives the benefit of all provisions of law
which are in conflict with the terms of this Guaranty.
(c) Until payment and satisfaction in full of all
Guaranteed Lovett Obligations and the Guaranteed Gas and Hydro Obligations,
Guarantor irrevocably waives any right it may have to bring a case or
proceeding against either Buyer by reason of their performance under this
Guaranty or with respect to any other obligation of either Buyer to
Guarantor, under any state or federal bankruptcy, insolvency,
reorganization, moratorium or similar laws for the relief of debtors.
Section 5. Representations and Warranties. Guarantor represents
and warrants as follows:
(a) Due Organization. Guarantor is a corporation duly
organized and validly existing under the laws of Delaware.
(b) Power and Authority. Guarantor has full corporate
power, authority and legal right to enter into this Guaranty and to perform
its obligations hereunder.
(c) Due Authorization. This Guaranty has been duly
authorized, executed and delivered by Guarantor.
(d) Enforceability. This Guaranty constitutes the legal,
valid and binding obligation of Guarantor enforceable against Guarantor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally.
(e) No Conflicts. The execution and delivery by Guarantor
of this Guaranty and the performance by Guarantor of its obligations
hereunder will not (i) violate the provisions of Guarantor's certificate of
incorporation or bylaws; (ii) violate the provisions of any law applicable
to Guarantor or the transactions contemplated hereby; or (iii) result in a
breach of or constitute a default under any agreement to which Guarantor is
a party or by which it or its assets or property are bound which breach or
default would have a material adverse effect on Guarantor's ability to
perform its obligations hereunder.
(f) No Proceedings. There is no action, suit or proceeding
at law or in equity or by or before any governmental authority or arbitral
tribunal now pending or, to the best knowledge of Guarantor, threatened
against Guarantor which reasonably could be expected to have a material
adverse effect on Guarantor's ability to perform its obligations under this
Guaranty.
(g) No Claims. Guarantor's obligations under this Guaranty
are not subject to any offsets or claims of any kind against either Buyer,
O&R or any other Person.
Section 6. Repayment and Reinstatement. If any claim is ever
made upon O&R or any Person claiming through O&R for repayment or
disgorgement of any amount or amounts received by O&R from SEL or NY-Gen,
as applicable in payment of the Guaranteed Lovett Obligations or the
Guaranteed Gas and Hydro Obligations and O&R or such Person, as the case
may be, repays or disgorges all or any part of said amount, then,
notwithstanding any revocation or termination of this Guaranty, Guarantor
shall be and remain liable to O&R or such Person, as the case may be, under
the terms of this Guaranty for the amount so repaid, to the same extent as
if such amount had never originally been received by O&R or such Person, as
the case may be.
Section 7. Amendments; Waivers; Etc. Neither this instrument
nor any term hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by O&R and Guarantor,
as the case may be. No delay or failure by O&R to exercise any remedy
against either Buyer or Guarantor will be construed as a waiver of that
right or remedy. No failure on the part of O&R to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by any applicable law.
Section 8. Severability. In the event that the provisions of
this Guaranty are claimed or held to be inconsistent with any other
instrument evidencing or securing O&R or the Guaranteed Lovett Obligations,
the Guaranteed Gas and Hydro Obligations, the terms of this Guaranty shall
remain fully valid and effective. If any one or more of the provisions of
this Guaranty should be determined to be illegal or unenforceable, all
other provisions shall remain effective.
Section 9. Assignment.
(a) Assignability. Guarantor shall not have the right to
assign any of Guarantor's rights or obligations under this Guaranty. O&R
may, at any time and from time to time, assign, in whole or in part, their
respective rights hereunder to any Person to whom O&R has the right to
assign their rights or obligations under and, pursuant to the terms of the
Lovett Sales Agreement or the Gas and Hydro Sales Agreement, whereupon such
assignee shall succeed to all rights of O&R hereunder, as the case may be.
(b) Successors and Assigns. Subject to Section 9(a)
hereof, all of the terms of this instrument shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
Section 10. Addresses for Notices. All notices and other
communications provided for hereunder shall be given in accordance with the
notice requirements of the Lovett Sales Agreement, the Gas and Hydro Sales
Agreement, and if to Guarantor, at the address specified below the space
for its execution of this Guaranty.
Section 11. Jurisdiction.
(a) To the extent permitted by applicable law, Guarantor
hereby irrevocably submits to the jurisdiction of any state or federal
court sitting in New York City in any action or proceeding arising out of
or relating to this Guaranty, and Guarantor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and
determined in such a court. Guarantor and O&R hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. To the
extent permitted by applicable law, Guarantor irrevocably consents to the
service of any and all process in any such action or proceedings by the
mailing of copies of such process to Guarantor at its address specified
below the space for its execution of this Guaranty. Guarantor agrees that
a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(b) To the extent that Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal
process otherwise consented to in paragraph (a) of this section (whether
through service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its
property, to the extent permitted by law, Guarantor hereby irrevocably
waives such immunity in respect of its obligations under this Guaranty.
Section 12. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the state of New York except
the choice of law rules.
Section 13. Entire Agreement. This Guaranty contains the
complete agreement of Guarantor with respect to the matters contained
herein and supersedes all other negotiations or agreements, whether written
or oral, with respect to the subject matter hereof.
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal
effective as of the date first above written.
SOUTHERN ENERGY, INC.
By: /s/ Randy Harrison
_____________________________
Name: Randy Harrison
Title: Vice President - Project Development
Address: 900 Ashwood Parkway
Suite 500
Atlanta, GA 30308
ACCEPTED AND AGREED:
ORANGE AND ROCKLAND UTILITIES, INC.
By: /s/ D. Louis Peoples
______________________________
Name: D. Louis Peoples
Title: Vice Chairman and Chief
Executive Officer
Address: One Blue Hill Plaza
Pearl River, New York 10965
Exhibit 99.16
914-577-2430
Contact:
Michael Donovan
SOUTHERN ENERGY TO PURCHASE
ORANGE AND ROCKLAND GENERATING FACILITIES
FOR $480 MILLION
Pearl River, NY, November 24, 1998 - Orange and Rockland Utilities, Inc.
today announced that the Company has signed a definitive agreement to sell
all its electric generating facilities, including the Bowline Point
Generating Plant owned jointly with Consolidated Edison of New York, Inc.,
to Southern Energy, Inc., a subsidiary of Southern Company. The sales price
for all generating facilities is approximately $480 million, including
plant equipment and spare parts inventory. Orange and Rockland's portion of
the sales price is approximately $345 million.
Southern Energy has announced plans to spend an additional $390
million to upgrade the plants and build up to 710 megawatts of new natural
gas-fired generation.
Total generation for the assets sold is 1,776 megawatts, with
Orange and Rockland's portion being 962 MW.
Southern Energy, one of the nation's top energy production firms,
was the successful bidder in a process for the auction of the plants
established under Orange and Rockland's New York Electric Rate and
Restructuring Plan, approved by the New York Public Service Commission in
December 1997, and the subsequent Divestiture Plan approved by the
Commission in May 1998.
The transaction has been approved by the Boards of Orange and
Rockland and Southern Company. Consolidated Edison Company of New York,
Inc., which has a two-thirds interest in the Bowline Point Generating Plant
in West Haverstraw, NY, also approved the sale of that facility. The sale
of the generating plants is subject to federal and state regulatory review,
and is expected to be completed by April 30, 1999.
The Divestiture Plan provides that any gain in excess of Orange and
Rockland's portion of the plants' net book value, applicable sales expenses
and taxes will be shared among Orange and Rockland customers and
shareholders. Orange and Rockland's portion of the net book value,
applicable sales expenses and taxes totaled approximately $330 million.
Under the Sales Agreement, Southern Energy subsidiaries agreed to
honor the current union contract between Orange and Rockland and IBEW Local
503.
For Orange and Rockland employees hired by Southern Energy
subsidiaries, their years of Orange and Rockland service will be utilized
to determine the level of benefits to which they may be entitled under any
Southern Energy employee benefit plan - including pension plans in which
such hired employees participate. Orange and Rockland Electric Production
Division management employees who may suffer a loss of employment as a
result of the divestiture are covered under the terms of Orange and
Rockland's Management Employee Transition Program outlined to employees in
December 1997.
Originating as a utility in Alabama, Georgia, Florida and
Mississippi, Southern Company currently serves over 12 million customers in
ten countries on four continents. It has vast experience in providing
competitive energy and energy services, and it has earned an outstanding
reputation for its environmental commitment and shareholder value.
Although it has facilities worldwide, Southern Company strongly
endorses local community involvement. Since 1927, the company's motto of "A
Citizen Wherever We Serve" has been a guiding principle. According to Tom
Boren, President of Southern Energy, the new owners of the generating
facilities will work closely with community leaders and others to sustain
high levels of corporate and charitable involvement.
Today's announcement represents a historic milestone in New York's
deregulation of the State's electric utility industry and in O&R's
transition from being a regulated generation, transmission and distribution
company to one that focuses on transmission and distribution.
Orange and Rockland Utilities, Inc., and its subsidiaries, Rockland
Electric Company and Pike County Light & Power Company, serve approximately
269,600 electric customers in a 1,350-square-mile region with a population
of more than 675,000 in southeastern New York State, northern New Jersey
and northeastern Pennsylvania. O&R and PCL&P also distribute natural gas to
approximately 114,500 customers in New York and Pennsylvania.
