Xxxxxxx 00-0
XXXXX XXXXXXXX AGREEMENT
BY AND AMONG
NGE GENERATION, INC., SELLER,
NEW YORK STATE ELECTRIC & GAS CORPORATION,
AND
AES NY, L.L.C., BUYER
Dated As Of August 3, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions 1
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets 13
2.2 Excluded Assets 14
2.3 Assumed Liabilities 17
2.4 Excluded Liabilities 19
ARTICLE III
THE CLOSING
3.1 Closing 21
3.2 Payment of Purchase Price 21
3.3 Adjustment to Purchase Price 21
3.4 Allocation of Purchase Price 23
3.5 Prorations 23
3.6 Deliveries by the Sellers 24
3.7 Deliveries by the Buyer 25
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF
THE SELLERS
4.1 Organization; Qualification; Matters Regarding SRC 27
4.2 Authority Relative to this Agreement 27
4.3 Consents and Approvals; No Violation 28
4.4 Insurance 28
4.5 Title 29
4.6 Real Property Leases 29
4.7 Environmental Matters 29
4.8 Labor Matters 30
4.9 Benefit Plans: ERISA 31
4.10 Real Property 32
4.11 Condemnation 32
4.12 Contracts and Personal Property Leases 32
4.13 Legal Proceedings 33
4.14 Permits 33
4.15 Taxes 34
4.16 Disclaimers Regarding Purchased Assets 36
4.17 Intellectual Property 37
4.18 Additional Representations 37
4.19 No Work Stoppages or Grievances 38
4.20 Financial Representations 38
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
5.1 Organization 39
5.2 Authority Relative to this Agreement 39
5.3 Consents and Approvals; No Violation 39
5.4 Availability of Funds 40
5.5 Financial Representations 41
5.6 Legal Proceedings. 41
5.7 Qualified Buyer 42
5.8 Inspections 42
5.9 "AS IS" Sale 42
5.10 Purchase for Investment 43
5.11 WARN Act 43
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the
Purchased Assets 43
6.2 Access to Information 46
6.3 Expenses 49
6.4 Further Assurances 49
6.5 Public Statements 51
6.6 Consents and Approvals 51
6.7 Fees and Commissions 53
6.8 Tax Matters 54
6.9 Advice of Changes 60
6.10 Employees 60
6.11 Risk of Loss 63
6.12 Additional Covenants of the Buyer 65
6.13 Insurance 65
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of the Buyer 67
7.2 Conditions to Obligations of the Sellers 69
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification 72
8.2 Defense of Claims 74
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination 77
9.2 [RESERVED] 78
9.3 Effect of Termination Without Default 78
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Dispute Resolution 78
10.2 Amendment and Modification 79
10.3 Waiver of Compliance; Consents 79
10.4 No Survival 79
10.5 Notices 79
10.6 Assignment 80
10.7 Governing Law 81
10.8 Counterparts 81
10.9 Interpretation 81
10.10 Schedules and Exhibits 81
10.11 Entire Agreement 82
10.12 Bulk Sales Laws 82
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Deed
Exhibit D FIRPTA Affidavit
Exhibit E Reciprocal Easement Agreement
Exhibit F Interconnection Agreement
Exhibit G Xxxxxxxx Operating Agreement
Exhibit H New York Transition Agreement
Exhibit I Agreement to Assign Transmission Rights and
Obligations
Exhibit J Buyer's Parent Guaranty
SCHEDULES
1.1(a)(15) Description of Deeds to Seller containing Easements
and Access Rights Reserved to NYSEG
1.1(a)(40) Managerial Representatives
1.1(a)(46) Permitted Encumbrances (other than with respect to
Real Property)
1.1(a)(66) Transferable Permits (both environmental and non-
environmental)
2.1 Schedule of Plants
2.1(c) Schedule of Tangible Personal Property to be Conveyed
to Buyer
2.1(d) Schedule of Agreements between Seller and its
Affiliates to be Assigned to Buyer
2.1(k) Schedule of Plant Names
2.1(m) Intellectual Property and Technology Hardware
2.2(a)(i) Description of Transmission Assets not included in
Conveyance
2.2(a)(ii) Description of Certain Other Excluded Assets
2.2(l) Description of Cooperative Agreements
3.3(a)(i) Schedule of book value of Inventories as of March 31,
1998
4.3(a) Seller's Third Party Consents
4.3(b) Seller's Regulatory Approvals
4.4 Insurance Schedule
4.5 Exceptions to Title with respect to the Real Property
4.6 Real Property Leases
4.7 Schedule of Environmental Matters
4.8 Schedule of Labor Matters
4.9(a) Schedule of Benefit Plans
4.9(b) Schedule of ERISA Non-Compliance
4.10 Description of Real Property
4.11 Notices of Condemnation
4.12(a) List of Sellers' Agreements
4.12(b) List of Material Contracts Requiring Consents
4.12(c) List of Defaults under the Material Contracts
4.13 List of Litigation
4.14(b) List of material Permits (other than Transferable
Permits)
4.15 Tax Schedules
4.17 Intellectual Property Exceptions
5.3(b) Buyer's Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
6.10(a) Schedule of Transferred Hourly Paid Employees
6.10(b) Schedule of Transferred Salaried Employees
6.10(d) Schedule of IBEW Collective Bargaining Agreement and
Memoranda relating thereto
6.10(e) Schedule of Authorized Overtime
6.10(l) Schedule of Corporate Salaried Employees
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 3, 1998,
by and among NGE Generation, Inc., a New York corporation (the
"Seller"), New York State Electric & Gas Corporation, a New York
corporation ("NYSEG"), and AES NY, L.L.C., a Delaware limited
liability company (the "Buyer"). Seller and NYSEG from time to
time shall be collectively referred to as the "Sellers". The
Sellers and the Buyer from time to time shall each be referred to
individually as a "Party," and collectively as the "Parties."
WHEREAS, the Buyer desires to purchase and assume from
the Sellers, and the Sellers desire to sell and assign to the
Buyer, the Purchased Assets (as defined in Section 2.1 below)
which constitute the Sellers' fossil generation assets and
associated liabilities, 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
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. (a) As used in this Agreement, the
following terms have the meanings specified in this Section
1.1(a).
(1) "Affiliate" has the meaning set forth in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act.
(2) "Agreement" means this Asset Purchase Agreement
together with the Schedules and Exhibits hereto, as the same may
be from time to time amended.
(3) "Agreement to Assign Transmission Rights and
Obligations" means the assignment and assumption agreement
whereby NYSEG will assign certain of its rights pursuant to
certain transmission agreements to the Buyer and whereby the
Buyer will assume certain obligations, dated as of the date of
this Agreement and in the form attached hereto as Exhibit "I".
(4) "Allowance" means an authorization to emit up to
one ton of sulfur dioxide or one ton of nitrogen oxide as defined
in the Federal Clean Air Act (42 U.S.C. ' 7401 et. seq) or as may
in the future be defined in regulations issued by the United
States Environmental Protection Agency or the New York State
Department of Environmental Conservation ("DEC").
(5) "Ancillary Agreements" mean the Reciprocal
Easement Agreement, the Interconnection Agreement, the Xxxxxxxx
Operating Agreement, the Agreement to Assign Transmission Rights
and Obligations, the New York Transition Agreement and the
Guaranty.
(6) "Assignment and Assumption Agreement" means the
Assignment and Assumption Agreement between the Sellers and the
Buyer, by which the Sellers shall assign the Assigned Contracts,
certain intangible assets and other Purchased Assets to the Buyer
and whereby the Buyer will assume the Assumed Liabilities,
substantially in the form of Exhibit "A" attached hereto.
(7) "Xxxx of Sale" means the Xxxx of Sale to be
delivered at the Closing, with respect to the Tangible Personal
Property included in the Purchased Assets which is to be
transferred at the Closing, substantially in the form of Exhibit
"B" attached hereto.
(8) "Business Day" shall mean any day other than
Saturday, Sunday or any day which is a day on which banking
institutions in New York State are authorized by law or obligated
by other governmental action to close.
(9) "CERCLA" means the Federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended.
(10) "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(11) "Code" means the Internal Revenue Code of 1986,
as amended.
(12) "Commercially Reasonable Efforts" means efforts
which are reasonably within the contemplation of the Parties at
the time of executing this Agreement and which do not require the
performing Party to expend any funds other than expenditures
which are customary and reasonable in transactions of the kind
and nature contemplated by this Agreement in order for the
performing Party to satisfy its obligations hereunder.
(13) "Confidentiality Agreement" means the
Confidentiality Agreement, dated March 26, 1998, executed by The
AES Corporation prior to the auction of the Plants.
(14) "Deed" means the Bargain and Sale Deed, with
covenants against grantor's acts, by which the Real Property is
to be conveyed to the Buyer from the Seller, substantially in the
form of Exhibit "C" attached hereto.
(15) "Easements" means, with respect to the Purchased
Assets, the easements and access rights to be granted by the
Buyer to NYSEG pursuant to the Reciprocal Easement Agreement,
including, without limitation, easements authorizing access, use,
maintenance, construction, repair, replacement and other
activities by NYSEG relating to the Transmission Assets, as
further described in the Reciprocal Easement Agreement, and the
easements and access rights reserved to NYSEG in those certain
deeds to the Seller dated February 11, 1998, which deeds are
described on Schedule 1.1(a)(15).
(16) "Emission Reduction Credits" means credits, in
units that have, prior to the date of this Agreement, been
established by a Governmental Authority with jurisdiction over
the Plants that have obtained the credits, resulting from
reductions in the emissions of air pollutants from an emitting
source or facility (including, without limitation, and to the
extent allowable under applicable law, reductions from shut-
downs, control of emissions beyond that required by applicable
law, and fuel switching), that: (a) have been certified by the
DEC as complying with the law and regulations of the State of New
York governing the establishment of such credits (including,
without limitation, that such emissions reductions are enforce
able, permanent, quantifiable, real and surplus) and listed in
the Certified Emissions Reduction Credit Registry maintained by
the DEC; or (b) have been certified by any other applicable
Governmental Authority as complying with the law and regulations
governing the establishment of such credits (including, without
limitation, certification that such emissions reductions are
enforceable, permanent, quantifiable, real and surplus).
Emission Reduction Credits include certified air emissions
reductions, as described above, regardless as to whether the
Governmental Authority certifying such reductions designates such
certified air emissions reductions by a name other than "emission
reduction credits."
(17) "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.
(18) "Environmental Claim" means any and all pending
and/or threatened administrative or judicial actions, suits,
orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or
civil, pursuant to or relating to any applicable Environmental
Law by any person (including, but not limited to, any
Governmental Authority, private person and citizens' group) based
upon, alleging, asserting, or claiming any actual or potential
(a) violation of, or liability under any Environmental Law, (b)
violation of any Environmental Permit, or (c) liability for
investigatory costs, cleanup costs, removal costs, remedial
costs, response costs, natural resource damages, property damage,
personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, Release, or
threatened Release into the environment of any Hazardous
Substances at any location related to the Purchased Assets,
including, but not limited to, any off-Site location to which
Hazardous Substances, or materials containing Hazardous
Substances, were sent for handling, storage, treatment, or
disposal.
(19) "Environmental Clean-up Site" means any location
which is listed or proposed for listing on the National
Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System, or on any similar
state list of sites requiring investigation or cleanup, or which
is the subject of any Environmental Claim, or at which there has
been a threatened or actual Release of a Hazardous Substance.
(20) "Environmental Condition" means the presence or
Release to the environment, whether at a Site or at an off-Site
location, of Hazardous Substances, including any migration of
those Hazardous Substances through air, soil or groundwater to or
from a Site or any off-Site location.
(21) "Environmental Laws" means all present or future
Federal, state and local, provincial and foreign, civil and
criminal 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, Releases to
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. "Environmental
Laws" include, without limitation, CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. '' 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. '' 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), the Clean Air Act (42 U.S.C. '' 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. '' 2601 et seq.), the Oil
Pollution Act (33 U.S.C. '' 2701 et seq.), the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. '' 11001 et seq.), the
Occupational Safety and Health Act (29 U.S.C. '' 651 et seq.),
all state laws analogous to any of the above and the New York
State Environmental Conservation Law.
(22) "Environmental Reports" means the "Phase I" and
"Phase II" environmental site assessments prepared by Pilko and
Associates and made available for inspection by the Buyer.
(23) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(24) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(25) "Federal Power Act" means the Federal Power Act
of 1935, as amended.
(26) "FERC" means the Federal Energy Regulatory
Commission.
(27) "FIRPTA Affidavit" means the Foreign Investment
in Real Property Tax Act Certification and Affidavit,
substantially in the form of Exhibit "D" attached hereto.
(28) "Good Utility Practices" mean any of the
applicable practices, methods and acts engaged in or approved by
a significant portion of the electric generation, transmission,
and distribution industry in the region during the relevant time
period, or any of the practices, methods or acts which, in the
exercise of reasonable judgment in light of the facts known at
the time the decision is made, could be expected to accomplish
the desired result at a reasonable cost consistent with law,
regulation, good business practices, reliability, safety 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 practices, methods or acts
generally accepted by the electric generation, transmission, and
distribution industry in the region.
(29) "Governmental Authority" means any federal,
state, local, provincial, foreign or other governmental,
legislature, regulatory or administrative agency, commission,
official, department, board, or other governmental subdivision,
court, tribunal, arbitral body or other governmental authority.
(30) "Guaranty" means the Guaranty executed by The AES
Corporation (ABuyer's Parent@), dated the date of this Agreement
and in the form attached hereto as Exhibit "J."
(31) "Hazardous Substances" means: (a) any
petrochemical or petroleum products, oil or coal ash, radioactive
materials, radon gas other than in the form of a naturally
occurring radioactive material, 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," "hazardous constituents," "restricted
hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants," "pollutants," "toxic pollutants" or
words of similar meaning and regulatory effect under any
applicable Environmental Law; or (c) any other chemical, material
or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
(32) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(33) "Income Tax" means any federal, state, local or
foreign Tax (a) based upon, measured by or calculated with
respect to net income, profits or receipts (including, without
limitation, capital gains Taxes and minimum Taxes), or (b) based
upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one
or more of the bases on which such Tax may be based, measured by
or calculated with respect to, is described in clause (a), in
each case together with any interest, penalties, or additions to
such Tax.
(34) "Independent Accounting Firm" means such
independent accounting firm of national reputation as is mutually
appointed by the Seller and the Buyer.
(35) "Inspection" means all reviews, examinations,
inspections, investigations, verifications, and similar
activities conducted by the Buyer or its agents or
Representatives with respect to the Purchased Assets prior to the
Closing.
(36) "Intellectual Property" means all patents and
patent rights, trademarks and trademark rights, inventions,
computer software, copyrights and copyright rights owned by the
Sellers and necessary for the operation and maintenance of the
Purchased Assets, and all pending applications for registrations
of patents, trademarks, and copyrights, as set forth as part of
Schedule 2.1(m).
(37) "Interconnection Agreement" means the
Interconnection Agreement between NYSEG and the Buyer, under
which NYSEG will provide the Buyer with interconnection service
to certain of its transmission facilities dated as of the date of
this Agreement and in the form attached hereto as Exhibit "F".
(38) "Inventories" means coal, fuel oil or alternative
fuel inventories, limestone, materials, spare parts, consumable
supplies and chemical and gas inventories relating to the
operation of the Plants located at, on, or in transit to, the
Plants.
(39) "ISO" means the Independent System Operator, as
established by NYPP.
(40) "Knowledge" means the actual knowledge of the
managerial representatives of the specified Person charged with
responsibility for the particular function as of the date of this
Agreement, or, with respect to any certificate delivered pursuant
to this Agreement, the date of delivery of the certificate, which
representatives are set forth in Schedule 1.1(a)(40).
(41) "Material Adverse Effect" means any change in, or
effect on the Purchased Assets that is materially adverse to the
operations or condition (financial or otherwise) of the Purchased
Assets, taken as a whole, other than: (a) any change affecting
the international, national, regional or local electric industry
as a whole and not Seller specifically and exclusively; (b) any
change or effect resulting from changes in the international,
national, regional or local wholesale or retail markets for
electric power; (c) any change or effect resulting from changes
in the international, national, regional or local markets for any
fuel used in connection with the Purchased Assets; (d) any change
or effect resulting from, changes in the North American,
national, regional or local electric transmission systems or
operations thereof; (e) 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; (f)
any order of any court or Governmental Authority or legislature
applicable to providers of generation, transmission or
distribution of electricity generally that imposes restrictions,
regulations or other requirements thereon; and (g) any change or
effect resulting from action or inaction by a Governmental
Authority with respect to an ISO in New York or Retail Access.
(42) "Xxxxxxxx Operating Agreement" means the
agreement between the Buyer and NYSEG, with respect to the
Buyer's operation of the Xxxxxxxx Station on and after the
Closing Date, dated as of the date of this Agreement and in the
form attached hereto as Exhibit "G".
(43) "New York Transition Agreement" means the
agreement between NYSEG and the Buyer whereby the Buyer agrees to
sell installed capacity to NYSEG for a specified period of time
on and after the Closing Date, dated as of the date of this
Agreement and in the form attached hereto as Exhibit "H".
(44) "NYPP" means the New York Power Pool.
(45) "NYPSC" means the Public Service Commission of
the State of New York .
(46) "Permitted Encumbrances" means: (a) the
Easements; (b) those exceptions to title to the Real Property
listed in Schedule 4.5 and those Encumbrances with respect to the
other Purchased Assets set forth in Schedule 1.1(a)(46); (c)
statutory liens for Taxes or other governmental charges or
assessments not yet due or delinquent or the validity of which is
being contested in good faith by appropriate proceedings; (d)
mechanics', carriers', workers', repairers' and other similar
liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the
part of the Seller or the validity of which are being contested
in good faith, and which do not, individually or in the
aggregate, exceed $500,000; (e) zoning, entitlement, conservation
restriction and other land use and environmental regulations by
Governmental Authorities; and (f) such other liens, imperfections
in or failure of title, charges, easements, restrictions and
Encumbrances which do not materially detract from the value of
the Purchased Assets as currently used or materially interfere
with the present use of the Purchased Assets and neither secure
indebtedness, nor individually or in the aggregate create a
Material Adverse Effect.
(47) "Person" means any individual, a partnership, a
limited liability company, a joint venture, a corporation, a
trust, an unincorporated organization, or a governmental entity
or any department or agency thereof.
(48) "Plants" means the fossil fuel generating plants
identified on Schedule 2.1 attached hereto.
(49) "Proprietary Information" of a Party means all
information about that Party or its properties or operations
furnished to the other Party or its Representatives by the first
Party or its Representatives, after the date hereof, regardless
of the manner or medium in which it is furnished. Proprietary
Information does not include information that: (a) is or becomes
generally available to the public, other than as a result of a
disclosure by the other Party or its Representatives; (b) was
available to the other Party on a nonconfidential basis prior to
its disclosure by the first Party or its Representatives; (c)
becomes available to the other Party on a nonconfidential basis
from a person, other than the first Party or its Representatives,
who is not otherwise bound by a confidentiality agreement with
the first Party or its Representatives, or is not otherwise under
any obligation to the first Party or any of its Representatives
or otherwise not to transmit the information to the other Party
or its Representatives; (d) is independently developed by the
other Party; or (e) was disclosed pursuant to the Confidentiality
Agreement and remains subject to the terms and conditions of the
Confidentiality Agreement.
(50) "Reciprocal Easement Agreement" means the
Reciprocal Easement Agreement between the Buyer and NYSEG,
whereby the Buyer will provide NYSEG with Easements with respect
to the Real Property and Tangible Personal Property transferred
to the Buyer and whereby NYSEG will provide the Buyer with
certain easements and access rights with respect to certain real
property and personal property owned by NYSEG, dated as of the
date of this Agreement and in the form attached hereto as Exhibit
"E".
(51) "Release" means release, spill, leak, discharge,
dispose of, pump, pour, emit, empty, inject, xxxxx, dump or allow
to escape into or through the environment.
(52) "Remediation" means action of any kind to address
a Release or the presence of Hazardous Substances at a Site or an
off-Site location including, without limitation, any or all of
the following activities to the extent they relate to or arise
from the presence of a Hazardous Substance at a Site or off-Site
location: (a) monitoring, investigation, assessment, treatment,
cleanup, containment, removal, mitigation, response or
restoration work; (b) obtaining any permits, consents, approvals
or authorizations of any Governmental Authority necessary to
conduct any such activity; (c) preparing and implementing any
plans or studies for any such activity; (d) obtaining a written
notice from a Governmental Authority with jurisdiction over the
Site or off-Site location under Environmental Laws that no
material additional work is required by such Governmental
Authority; (e) the use, implementation, application,
installation, operation or maintenance of removal actions, in-
situ or ex-situ remedial technologies applied to the surface or
subsurface soils, excavation and off-Site treatment or disposal
of soils, systems for long term treatment of surface water or
ground water, engineering controls or institutional controls; and
(f) any other activities reasonably determined by a Party to be
necessary or appropriate or required under Environmental Laws to
address the presence or Release of Hazardous Substances at a Site
or off-Site location.
(53) "Representatives" of a Party means the Party's
Affiliates and its and their directors, officers, employees,
agents, partners, advisors (including, without limitation,
accountants, counsel, environmental consultants, financial
advisors and other authorized representatives) and parents and
other controlling persons.
(54) "Retail Access" means the ability of retail
electric customers to purchase electric power directly from power
generators, power marketers, or any other entities at prices not
subject to regulation.
(55) "SEC" means the Securities and Exchange
Commission.
(56) "Securities Act" means the Securities Act of
1933, as amended.
(57) "Sellers' Agreements" means those contracts
listed on Schedule 4.12(a) and the IBEW Collective Bargaining
Agreement and IBEW Memoranda (as defined in Section 6.10(d)) and
the Memorandum of Agreement referred to in Schedule 6.10(d).
(58) "Site" means the Real Property (including
improvements) forming a part of, or used or usable in connection
with the operation of, a Plant, including any disposal sites
included in Real Property. Any reference to the Site shall
include, by definition, the surface and subsurface elements,
including the soils and groundwater present at the Site, and any
reference to items "at the Site" shall include all items "at, on,
in, upon, over, across, under and within" the Site.
(59) "SRC" means Somerset Railroad Corporation, a New
York corporation.
(60) "SRC Stock" means the 2,000 shares of common
stock, no par value, of SRC owned, beneficially and of record, by
the Seller.
(61) "Subsidiary" when used in reference to any Person
means any entity with respect to which outstanding securities
having ordinary voting power to elect a majority of the board of
directors (or other individuals performing similar functions) of
such entity are owned directly or indirectly by such Person.
(62) "Tax Affiliate" means any entity that is a member
of the same affiliated group of corporations (within the meaning
of Section 1504(a) of the Code) ("Consolidated Group") as the
Seller.
(63) "Tax" or "Taxes" means all taxes, charges, fees,
levies, penalties or other assessments imposed by any federal,
state or local or foreign taxing authority, including, but not
limited to, income, excise, property, sales, use, transfer,
franchise, employment, unemployment, railroad retirement,
environmental, payroll, withholding, social security, gross
receipts, stamp, real estate, use, business, license, occupation
or other taxes, including any interest, penalties or additions
attributable thereto.
(64) "Tax Return" means any return, report,
information return, declaration, claim for refund or other
document (including any schedule or related or supporting
information) required to be supplied to any authority with
respect to Taxes, including amendments thereto.
(65) "Tax Sharing Agreement" means the tax sharing
agreement for the Consolidated Group of which the Seller and SRC
are members.
(66) "Transferable Permits" means those Permits and
Environmental Permits (and any applications pertaining thereto)
which are lawfully transferable by the Sellers to the Buyer (with
or without a filing with, notice to, consent or approval of any
Governmental Authority) and are set forth in Schedule 1.1(a)(66).
(67) "Transferred Employees" means all Transferred
Union Employees and Transferred Non-Union Employees.
(68) "Transferring Employee Records" means records
related to Transferred Employees only to the extent such files
pertain to: (a) skill and development training and biographies,
(b) seniority histories, (c) salary and benefit information, (d)
Occupational, Safety and Health Administration reports, and (e)
active medical restriction forms.
(69) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988, as amended.
(b) Each of the following terms has the meaning
specified in the Section set forth opposite such term:
Term Section
Assigned Contracts 2.1(d)
Assumed Liabilities 2.3
Audits 4.15(b)(v)
Benefit Plans 4.9(a)
Buyer Applicable Contracts 7.2(i)(3)
Buyer Benefit Plans 6.10(g)
Buyer Material Adverse Effect 5.3(a)
Buyer Indemnitee 8.1(b)
Buyer Parent's SEC Reports 5.5
Buyer Required Regulatory Approvals 5.3(b)
Buyer's Parent 1.1(a)(30)
Capital Expenditures 6.1(b)
Closing 3.1
Closing Adjustment 3.3(b)
Closing Date 3.1
Computer Systems 4.16
Consolidated Group 1.1(a)(62)
Cooperative Agreements 2.2(l)
DEC 1.1(a)(4)
Direct Claim 8.2(c)
DOE 2.2(l)
Election 6.8(d)(1)(A)
Environmental Permits 4.7(a)
ERISA Affiliate 2.4(g)
ERISA Affiliate Plans 2.4(g)
Estimated Adjustment 3.3(b)
Estimated Closing Statement 3.3(b)
Excluded Assets 2.2
Excluded Liabilities 2.4
IBEW 6.10(c)
IBEW Collective Bargaining Agreement 6.10(d)
IBEW Employees 6.10(d)
IBEW Memoranda 6.10(d)
Indemnifiable Loss 8.1(a)
Indemnifying Party 8.1(e)
Indemnitee 8.1(d)
Insurance Policies 6.13(a)
Modified ADSP 6.8(d)(1)(B)
OM Expenditures 6.1(b)
Permits 4.14
Post-Closing Adjustment 3.3(c)
Post-Closing Statement 3.3(c)
Prior Welfare Plans 6.10(f)
Proposed Post-Closing Adjustment 3.3(c)
Purchased Assets 2.1
Purchase Price 3.2
Real Property 2.1(a)
Real Property Leases 4.6
Replacement Welfare Plans 6.10(f)
Seller Applicable Contracts 7.1(h)(3)
Seller Indemnitee 8.1(a)
Seller Required Regulatory Approvals 4.3(b)
Seller's Tax Returns 6.8(d)(2)(B)
SEC Reports 4.20
Straddle Period 6.8(d)(2)(A)
Tax Contest 6.8(d)(4)(A)
Tangible Personal Property 2.1(c)
Termination Date 9.1(b)
Third Party Claim 8.2(a)
Transferred Non-Union Employee 6.10(b)
Transferred Union Employee 6.10(b)
Transmission Assets 2.2(a)
Year 2000 Compliant 4.16
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets.
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, assume and acquire from the
Sellers, free and clear of all Encumbrances (except for Permitted
Encumbrances), and subject to Section 2.2, all of the right,
title and interest that the Sellers possess and have in and to
the assets and property of every kind and description
constituting, or used in and necessary to the ownership,
operation or maintenance of, the Plants identified in Schedule
2.1, each as in existence on the Closing Date (collectively,
"Purchased Assets"), including, but not limited to, the
following:
(a) Those certain parcels of real property (including all
buildings, structures, fixtures, handling and storage facilities,
other improvements thereon and all appurtenances thereto)
described on Schedule 4.10 (the "Real Property"), subject to the
Permitted Encumbrances and those exceptions listed in Schedule
4.5, and except as otherwise constituting part of the Excluded
Assets;
(b) All Inventories in existence on the Closing Date;
(c) All machinery, mobile or otherwise, equipment (including
communications equipment), vehicles, tools, furniture and
furnishings, and other personal property located on the Real
Property or leased real property on the Closing Date including
without limitation, the items of personal property included in
Schedule 2.1(c), together with all the personal property of the
Seller used principally in the operation of the Plants and
expressly listed in Schedule 2.1(c), other than property used or
primarily usable as part of the Transmission Assets or otherwise
constituting part of the Excluded Assets (collectively, "Tangible
Personal Property");
(d) Subject to the provisions of Section 6.4(c), all
contracts, agreements, licenses and personal property leases
relating to the Seller's operation and maintenance of the Plants
and which are assignable, and the agreements between the Seller
and its Affiliates described on Schedule 2.1(d) (collectively,
"Assigned Contracts");
(e) Subject to the provisions of Section 6.4(c), all Real
Property Leases;
(f) Subject to the provisions of Section 6.6(g), all
Transferable Permits;
(g) All books, operating records, operating, safety and
maintenance manuals, engineering design plans, documents,
drawings, blueprints and as-built plans, specifications,
procedures and similar items of the Seller relating specifically
to the aforementioned assets and necessary for the operation of
the Plants regardless of the type of medium in which stored
(subject to the right of the Sellers to retain copies of same for
their use), other than such items which are proprietary to third
parties and books of account;
(h) All Allowances associated with the Plants whether
accrued prior to, or that accrue on or after, the date of this
Agreement but prior to the Closing Date;
(i) The SRC Stock, stock books, stock ledger, minutes books,
corporate seal and all other books and records of the type
described in Section 2.1(g) above and relating to SRC;
(j) All unexpired, transferable warranties and guarantees
from third parties with respect to any item of Real Property or
personal property constituting part of the Purchased Assets, as
of the Closing Date, if any;
(k) The rights of the Sellers in and to the name(s) of the
Plants, if any, set forth on Schedule 2.1(k). It is expressly
understood that the Sellers are not assigning or transferring to
the Buyer any right to use the names "New York State Electric &
Gas Corporation," "NYSEG," "NGE" or "NGE Generation" or any
related or similar trade names, trademarks, service marks,
corporate names and logos or any part, derivative or combination
thereof;
(l) All drafts, memoranda, reports, information, technology,
and specifications relating to the Seller's plans for Year 2000
compliance; and
(m) The rights of the Sellers to the Intellectual Property,
computer hardware, computer systems and dispatch, environmental
and management information systems necessary for the operation
and maintenance of the Purchased Assets; all as further described
in Schedule 2.1(m).
2.2 Excluded Assets.
Notwithstanding anything to the contrary in this Agreement,
nothing in this Agreement will be construed as conferring on the
Buyer, and the Buyer is not acquiring, any right, title or
interest in or to the following specific assets which are
associated with the Purchased Assets, but which are hereby
specifically excluded from the sale and the definition of
Purchased Assets herein (the "Excluded Assets"):
(a) (i) The real and personal property comprising or
constituting a part of any of the electrical transmission or
distribution facilities (as opposed to generation facilities) of
Sellers located at the Sites or forming part of the Plants
(whether or not regarded as a "transmission" or "generation"
asset for regulatory or accounting purposes), including all
switchyard facilities, NYSEG Improvements (as defined in the
Reciprocal Easement Agreement), substation facilities, support
equipment, Transmission Facilities (as defined in the Reciprocal
Easement Agreement) and Distribution Facilities (as defined in
the Reciprocal Easement Agreement), as well as all permits,
contracts and warranties, relating to such transmission and
distribution assets (collectively, the "Transmission Assets"),
including, without limitation, the real and personal property
described on Schedule 2.2(a)(i), and (ii) those certain assets,
facilities and agreements all as further described on Schedule
2.2(a)(ii);
(b) The Gas Facilities, Communication Facilities and
drainage pipes and systems, as defined or referred to in the
Reciprocal Easement Agreement;
(c) All cash, cash equivalents, bank deposits,
accounts and notes receivable (trade or otherwise), and any
income, sales, payroll or other tax receivables (except in each
case, with respect to SRC);
(d) Certificates of deposit, shares of stock (other
than the SRC Stock), securities, bonds, debentures, evidences of
indebtedness, and interests in joint ventures, partnerships,
limited liability companies and other entities of the Seller and
any of its Affiliates;
(e) The rights of the Sellers and their Affiliates to
the names "New York State Electric & Gas Corporation", "NYSEG",
"NGE" and "NGE Generation" or any related or similar trade names,
trademarks, service marks, corporate names and logos or any part,
derivative or combination thereof;
(f) Except as specifically provided by the Agreement
to Assign Transmission Rights and Obligations, all tariffs,
agreements and arrangements to which the Seller or any of its
Affiliates is a party for the purchase or sale of electric
capacity, energy transmission and/or ancillary services;
(g) The rights of the Sellers in and to any causes of
action against third parties (including indemnification and
contribution) relating to any Real Property, Tangible Personal
Property, Permits, Environmental Permits, Taxes, Real Property
Leases, or Assigned Contracts, if any, including any claims for
refunds (other than those Tax refunds that are covered by Section
2.2(h) below), prepayments, offsets, recoupment, insurance
proceeds, condemnation awards, judgments and the like, whether
received as payment or credit against future liabilities,
relating specifically to the Plants or the Sites and relating to
any period prior to the Closing Date, subject to the Sellers'
agreements set forth in Sections 6.13 and 8.2(d);
(h) Any refunds of real property Taxes (including
interest) paid or due with respect to the Plants or the Sites,
which refunds are the result of proceedings that, prior to the
Closing Date, were instituted by the Sellers under Article VII of
the New York Real Property Tax Law, regardless of when actually
paid, to the extent that such refunds relate to periods before
the Closing Date, and any refunds of real property Taxes
(including interest) paid or due with respect to the Plants or
the Sites, which refunds are the result of proceedings that,
prior to the Closing Date, were instituted by the Seller or its
Affiliates under Article VII of the New York Real Property Tax
Law, regardless of when actually paid to the extent that such
refunds relate to periods after the Closing Date and do not
exceed a pro-rata (based upon the amount of the refunds
attributable to the periods before and after the Closing Date)
amount of the costs incurred in obtaining all such refunds
(irrespective of whether relating to periods before or after the
Closing Date) (all such proceedings under Article VII of the New
York Real Property Tax Law shall be in the sole and exclusive
control of the Seller who shall make all decisions relevant to
the conduct of the proceedings, including, without limitation,
whether to settle any such proceedings; provided, however, that
no settlement of any such proceedings shall be made without the
Buyer's consent if that settlement would result in (i) the ratio
that (a) the tax refunds that are attributable to periods after
the Closing Date bears (b) to the real property Taxes that were
paid for those periods being less than (ii) the ratio that (c)
the tax refunds that are attributable to periods before the
Closing Date bears (d) to the real property Taxes that were paid
for that period);
(i) All personnel records of the Sellers other than
Transferring Employee Records or other records, the disclosure of
which is required by law;
(j) Any and all Emission Reduction Credits associated
with the Plants;
(k) Any and all of the Seller's rights in any contract
representing an intercompany transaction between the Seller and
an Affiliate of the Seller, whether or not such transaction
relates to the provision of goods and services, tax sharing
arrangements, payment arrangements, intercompany charges or
balances, or the like, other than the agreements described on
Schedule 2.1(d); and
(l) All books, records and accounts relating to the
Excluded Liabilities, including, but not limited to, those
required by the Seller and its Affiliates to meet various
reporting, demonstration and other obligations under research and
development contracts with the United States Department of Energy
("DOE") and others, as described in Schedule 2.2(l) ("Cooperative
Agreements").
2.3 Assumed Liabilities.
On the Closing Date, the Buyer shall deliver to the Sellers
the Assignment and Assumption Agreement pursuant to which the
Buyer shall assume and agree to discharge when due, without
recourse to the Sellers all of the following liabilities and
obligations of the Sellers direct or indirect, known or unknown,
absolute or contingent, that relate to the Purchased Assets,
other than Excluded Liabilities, in accordance with the
respective terms and subject to the respective conditions thereof
(collectively, "Assumed Liabilities"):
(a) All liabilities and obligations of the Sellers
arising or accruing on and after the Closing Date under the
Assigned Contracts (including the Sellers' Agreements), the
Real Property Leases, and the Transferable Permits in
accordance with the terms thereof, including, without
limitation, (i) the contracts, licenses, agreements and
personal property leases entered into by the Sellers with
respect to the Purchased Assets which would be required to
be disclosed on Schedule 4.12(a) but for the exceptions
provided in clauses (ii)(B) or (C) of Section 4.12(a) of
this Agreement and (ii) the contracts, licenses, agreements
and personal property leases 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 the Sellers, 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 out of any event which after the giving of
notice would constitute a default by the Seller;
(b) All liabilities and obligations associated with
the Purchased Assets in respect of Taxes for which the Buyer
is liable pursuant to Sections 3.5 or 6.8(a) hereof;
(c) All liabilities and obligations with respect to
(i) the Transferred Employees on and after the Closing Date
for which the Buyer is responsible pursuant to Section 6.10
and (ii) the grievances and arbitration proceedings arising
out of or under the Collective Bargaining Agreement prior
to, on or after the Closing Date (as set forth in Schedule
4.8);
(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 Laws,
whether prior to, on or after the Closing Date, with respect
to the ownership or operation of the Purchased Assets; (ii)
compliance with applicable Environmental Laws, whether prior
to, 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 or migrating from the Purchased Assets prior to, on or
after the Closing Date, including, but not limited to,
Hazardous Substances contained in building materials at or
adjacent to the Purchased Assets or in the soil, surface
water, sediments, groundwater, landfill cells, or in other
environmental media at or near 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, treatment, transportation,
discharge, Release or recycling of Hazardous Substances, or
the arrangement for such activities, on or after the Closing
Date, in connection with the ownership or operation of the
Purchased Assets; (v) the Remediation of Hazardous
Substances that are present or have been Released prior to,
on or after the Closing Date at, on, in, under, adjacent to
or migrating from the Purchased Assets, including, but not
limited to, Hazardous Substances contained in building
materials at or adjacent to the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells
or in other environmental media at or near the Purchased
Assets; and (vi) the Remediation of Hazardous Substances
that are disposed, stored, treated, transported, discharged,
Released, recycled, or the arrangement for such activities,
prior to, 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 2.3(d) shall require the Buyer to assume any
liabilities or obligations that are expressly excluded in
Section 2.4; provided, further, however, that nothing set
forth in this subsection 2.3(d) shall require the Buyer to
assume any obligation for payment of criminal fines or
penalties imposed by a Governmental Authority to the extent
such obligations arise out of or relate to acts or omissions
of the Sellers prior to closing that constitute violations
of any Environmental Law;
(e) All liabilities and obligations of the Sellers
with respect to the Purchased Assets under the agreements or
consent orders set forth on Schedule 4.7 arising on or after
the Closing Date; and
(f) With respect to the Purchased Assets, any Tax that
may be imposed by any federal, state or local government on
the ownership, sale, operation or use of the Purchased
Assets on or after the Closing Date; except for any Income
Taxes attributable to income received by the Sellers
(including proceeds representing the Purchase Price or
proceeds of other asset sales).
2.4 Excluded Liabilities.
The Buyer shall not assume or be obligated to pay, perform or
otherwise discharge any liabilities or obligations of the
Sellers, or with respect to the Purchased Assets, of any kind or
nature other than the Assumed Liabilities (collectively,
"Excluded Liabilities"). The Excluded Liabilities include, but
are not limited to:
(a) Any liabilities or obligations of the Sellers 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 before the Closing Date, except for all or the pro-
rated portion of Taxes for which the Buyer is liable
pursuant to Sections 3.5 or 6.8(a) hereof;
(c) Any liabilities or obligations of the Sellers
arising from the breach by Sellers of any of the Assigned
Contracts or Real Property Leases prior to the Closing Date;
(d) Any and all asserted or unasserted liabilities or
obligations to third parties for personal injury, tort,
death, or similar causes of action arising solely out of the
ownership or operation of the Purchased Assets prior to the
Closing Date, other than any liabilities or obligations
assumed by the Buyer under Section 2.3(d);
(e) Any fines or penalties imposed by a Governmental
Authority resulting from (i) an investigation or proceeding
before a Governmental Authority pending prior to the Closing
Date but only as such fines or penalties relate to acts or
occurrences prior to the Closing Date, or (ii) illegal acts,
willful misconduct or gross negligence of the Sellers prior
to the Closing Date, other than, in the case of either (i)
or (ii), any liability or obligation assumed by the Buyer
under Section 2.3(d);
(f) Any payment obligations of the Seller or its
Affiliates (but not SRC) for goods delivered or services
rendered prior to the Closing Date;
(g) Any liabilities or obligations accruing under or
relating to any Benefit Plan sponsored, maintained or
contributed to by the Seller or any trade or business
(whether or not incorporated) which is or ever has been
under common control, or which is or ever has 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, but not limited
to, any liability: (i) relating to any benefits payable
under any Benefit Plan; (ii) under Title IV of ERISA; (iii)
with respect to the continuation coverage requirements of
COBRA; (iv) with respect to any noncompliance with ERISA,
the Code or any other applicable laws; (v) arising from the
termination of any Benefit Plan; (vi) with respect to any
suit, proceeding or claim which is brought against the
Buyer, any Benefit Plan, ERISA Affiliate Plan, any fiduciary
or former fiduciary of any such Benefit Plan or ERISA Affil-
iate Plan; or (vii) with respect to any Benefit Plan, any
liability resulting from any vesting of benefits, severance,
termination or other payments or liabilities as a result of
the transactions contemplated by this Agreement;
(h) Any liabilities or obligations, including wages,
overtime pay, employment taxes, vacation pay and workers
compensation payments, relating to the employment or
termination of employment, including a constructive
termination, by the Sellers of any individual attributable
to any actions or inactions by the Sellers prior to the
Closing Date other than such actions or inactions taken at
the direction of the Buyer (other than any liabilities or
obligations assumed by the Buyer under Section 2.3(c)(ii));
(i) Any liability, obligation or responsibility under
or related to former, current or future Environmental Laws
or the common law, or any 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 after the
Closing Date) to the extent caused by, relating or arising
from the disposal, storage, transportation, treatment,
Release, or recycling of Hazardous Substances prior to the
Closing Date at any off-Site location and the Remediation of
such Hazardous Substances (whether or not the Remediation
commenced before or commences after the Closing Date); and
(j) Any liability, obligation or responsibility for
reporting, recoupment and commercialization of various
development projects arising out of or related to the
Cooperative Agreements.
The Parties agree and acknowledge that the Sellers or their
Affiliates shall be entitled exclusively to control, defend and
settle any litigation, administrative or regulatory proceeding,
and any investigation or Remediation activities (including
without limitation any environmental mitigation or Remediation
activities) arising out of or related to any Excluded
Liabilities, and the Buyer agrees to cooperate fully with the
Sellers in connection therewith.
ARTICLE III
THE CLOSING
3.1 Closing
Upon the terms and subject to the satisfaction of the conditions
contained in Article VII of this Agreement, the closing of the
sale, assignment, conveyance, transfer and delivery of the
Purchased Assets to the Buyer, the payment of the Purchase Price
to the Seller, and the consummation of the other respective
obligations of the Parties contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxx Xxxxxxxx &
Xxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx , Xxx Xxxx at 10:00 a.m. local
time, or another mutually acceptable hour and location, on the
date that is fifteen (15) Business Days following the date on
which all of the conditions precedent to Closing set forth in
Article VII of this Agreement have been either satisfied or
waived by the Party for whose benefit such conditions precedent
exist, or such other date as the Parties may mutually agree. The
date of Closing is hereinafter called the "Closing Date." The
Closing shall be effective for all purposes as of 12:01 A.M. on
the Closing Date.
3.2 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 in United States dollars of
Nine Hundred and Fifty Million (U.S. $950,000,000.00) (the
"Purchase Price") plus or minus any adjustments pursuant to the
provisions of this Agreement, by wire transfer of immediately
available funds denominated in U.S. dollars or by such other
means as are agreed upon by the Seller and the Buyer.
3.3 Adjustment to Purchase Price
(a) Subject to Section 3.3(b), at the Closing, the Purchase
Price shall be adjusted, without duplication, to account for the
items set forth in this Section 3.3(a):
(i) The Purchase Price shall be adjusted to reflect
the difference between the book value of all Inventories held by
the Sellers as of the Closing Date and the book value of all
Inventories as of March 31, 1998, as reflected on Schedule
3.3(a)(i). Schedule 3.3(a)(i) has been prepared from and is in
accordance with the books and records of the Sellers;
(ii) The Purchase Price shall be adjusted to account
for the items prorated as of the Closing Date pursuant to Section
3.5; and
(iii) To the extent applicable, the Purchase Price
shall be decreased to reflect any settlement reached by the
Parties pursuant to the provisions of Section 6.11(b).
(b) At least ten (10) Business Days prior to the
Closing Date, the Seller shall prepare and deliver to the Buyer
an estimated closing statement (the "Estimated Closing
Statement") that shall set forth the Seller's best estimate of
all estimated adjustments to the Purchase Price required by
Section 3.3(a) (the "Estimated Adjustment"). Within five (5)
Business Days following the delivery of the Estimated Closing
Statement by the Seller to the Buyer, the Buyer may object in
good faith to the Estimated Adjustment in writing. If the Buyer
objects to the Estimated Adjustment, the Parties shall attempt to
resolve such dispute by negotiation. If the Parties are unable
to resolve such dispute before two (2) Business Days prior to the
Closing Date (or if the Buyer does not object to the Estimated
Adjustment), the Purchase Price shall be adjusted (the "Closing
Adjustment") for the Closing by the amount of the Estimated
Adjustment not in dispute.
(c) Within sixty (60) days following the Closing Date,
the Seller shall prepare and deliver to the Buyer a Post-Closing
Statement (the "Post-Closing Statement") that shall set forth all
adjustments to the Purchase Price required by Section 3.3(a) (the
"Proposed Post-Closing Adjustment"). The Post-Closing Statement
shall be prepared using the same accounting principles, policies
and methods as the Sellers have historically used in connection
with the calculation of the terms reflected on such Post-Closing
Statement. Within thirty (30) days following the delivery of the
Post-Closing Statement by the Seller to the Buyer, the Buyer may
object to the Proposed Post-Closing Adjustment in writing. The
Sellers agree to cooperate with the Buyer to provide the Buyer
and the Buyer's Representatives information used to prepare the
Post-Closing Statement and information relating thereto. If the
Buyer objects to the Proposed Post-Closing Adjustment, the
Parties shall attempt to resolve such dispute by negotiation. If
the Parties are unable to resolve such dispute within thirty (30)
days of any objection by the Buyer, the Parties shall appoint the
Independent Accounting Firm, which shall, at the Seller's and the
Buyer's joint expense (to be shared equally), review the Proposed
Post-Closing Adjustment and determine the appropriate adjustment
to the Purchase Price, if any, within thirty (30) days of such
appointment. The Parties agree to cooperate with the Independent
Accounting Firm and provide it with such information as it
reasonably requests to enable it to make such determination. The
finding of such Independent Accounting Firm shall be binding on
the Parties. Upon determination of the appropriate adjustment
(the "Post-Closing Adjustment") by agreement of the Parties or by
binding determination of the Independent Accounting Firm, if the
Post-Closing Adjustment is more or less than the Closing
Adjustment, the Party owing the difference shall deliver such
difference to the other Party no later than five (5) Business
Days after such determination in immediately available funds or
in any other manner as reasonably requested by the payee.
3.4 Allocation of Purchase Price
(a) The Buyer and the Seller shall endeavor in
good faith to agree upon an allocation among the Purchased Assets
of the sum of the Purchase Price and the Assumed Liabilities
consistent with Section 1060 of the Code and the Treasury
Regulations thereunder within sixty (60) days of the date of this
Agreement. In the event that the Parties cannot agree on a
mutually satisfactory allocation within said time period, the
Independent Accounting Firm shall, at the Seller's and the
Buyer's joint expense (to be shared equally), determine the
appropriate allocation. The finding of such Independent
Accounting Firm shall be binding on the Parties. Upon
determination of the allocation by agreement of the Parties or by
binding determination of the Independent Accounting Firm, the
Buyer and the Seller agree to file Internal Revenue Service Form
8594, and all federal, state, local and foreign Tax Returns, in
accordance with such allocation. The Buyer and the Seller shall
report the transactions contemplated by this Agreement for
federal Tax and all other Tax purposes in a manner consistent
with the allocation determined pursuant to this Section 3.4. The
Buyer and the Seller agree to provide the other promptly with any
information required to complete Form 8594. The Buyer and the
Seller shall notify and provide the other Party with reasonable
assistance in the event of an examination, audit or other
proceeding regarding the agreed upon allocation of the Purchase
Price.
(b) With respect to the sale of the SRC Stock, the
Buyer and the Seller shall allocate that portion of the Purchase
Price which is attributable to the SRC Stock in accordance with
the allocation determined in Section 3.4(a).
3.5 Prorations
(a) The Buyer and the Seller agree that all of the
items normally prorated, including those listed below (but not
including Income Taxes), relating to the business and operation
of the Purchased Assets shall be prorated as of the Closing Date,
with the Seller liable to the extent such items relate to the
Purchased Assets for any time period prior to the Closing Date,
and the Buyer liable to the extent such items relate to the
Purchased Assets for periods commencing on and after the Closing
Date (measured in the same units used to compute the item in
question, otherwise measured by calendar days):
(i) Personal property, real estate, occupancy,
sewerage and water Taxes, assessments and other charges, if
any, on or with respect to the business and operation of the
Purchased Assets;
(ii) Rent, Taxes and all other items payable by or to
the Seller under any of the Assigned Contracts;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any
Transferable Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities; and
(v) Rent, Taxes and other items payable by the Seller
under the Real Property Leases assigned to the Buyer.
(b) In connection with the prorations referred to in
(a) above, in the event that actual figures are not available at
the Closing Date, the proration shall be based upon the actual
Taxes or other amounts paid for the most recent year (or other
appropriate period) for which actual Taxes or other amounts paid
are available, as mutually agreed by the Buyer and the Seller.
Such prorated Taxes or other amounts shall be re-prorated and
paid to the appropriate Party within sixty (60) days of the date
that the previously unavailable actual figures become available.
The prorations shall be based upon the number of days in a year
(or other appropriate period) (i) before the Closing Date and
(ii) including and after the Closing Date. The Seller and the
Buyer agree to furnish each other with such documents and other
records as may be reasonably requested in order to confirm all
adjustment and proration calculations made pursuant to this
Section 3.5.
Notwithstanding anything that may be to the contrary herein,
this Section 3.5 does not apply to Tax refunds described in
Section 2.2(h).
3.6 Deliveries by the Sellers
At the Closing, the Seller will deliver, or cause to be
delivered, the following to the Buyer:
(a) The Xxxx of Sale, duly executed by the Seller;
(b) Copies of any and all governmental and other
third party consents, waivers or approvals obtained by the Seller
with respect to the transfer of the Purchased Assets, or the
consummation of the transactions connected to the sale of the
Purchased Assets contemplated by this Agreement;
(c) The opinion of counsel and officer's certificate
contemplated by Section 7.1;
(d) The Deeds, duly executed and acknowledged by the
Seller and in recordable form;
(e) The Assignment and Assumption Agreement, duly
executed by the Sellers;
(f) A stock certificate or certificates representing
the SRC Stock, together with stock powers duly endorsed to the
Buyer;
(g) A FIRPTA Affidavit, duly executed by the Seller;
(h) Copies, certified by the Secretary of the Seller
and NYSEG, respectively, of resolutions duly adopted by the Board
of Directors of the Seller and NYSEG, respectively, authorizing
the execution and delivery of this Agreement and all of the
agreements and instruments to be executed and delivered by the
Seller and NYSEG, respectively, in connection herewith, and the
consummation of the transactions contemplated hereby;
(i) Certificates of the Secretary of the Seller and,
NYSEG, respectively, which shall identify by name and title and
bear the signatures of the officers of the Seller and NYSEG,
respectively, authorized to execute and deliver this Agreement
and the other agreements and instruments contemplated hereby;
(j) To the extent available, originals of all
Sellers' Agreements, Real Property Leases and Transferable
Permits and, if not available, true and correct copies thereof;
(k) Resignations of all directors and officers of
SRC;
(l) Certificates of Good Standing with respect to the
Seller, NYSEG and SRC issued by the Secretary of the State of New
York;
(m) Reliance letters from Pilko and Associates with
respect to the Environmental Reports;
(n) Such other instruments of assignment, transfer
and conveyance as shall, in the reasonable opinion of the Buyer
and its counsel, be necessary for the Sellers to transfer to the
Buyer the Purchased Assets in accordance with this Agreement and
in order to consummate the transactions contemplated by this
Agreement and, where necessary or desirable, in recordable form;
and
(o) 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.
3.7 Deliveries by the Buyer
At the Closing, the Buyer will deliver, or cause to be
delivered, the following to the Seller:
(a) The Purchase Price, as adjusted pursuant to the
provisions of Section 3.3(a), by wire transfer of immediately
available funds in accordance with Seller's instructions or by
such other means as are agreed upon by the Seller and the Buyer;
(b) The opinion of counsel and officer's certificate
contemplated by Section 7.2;
(c) The Assignment and Assumption Agreement, duly
executed by the Buyer;
(d) Copies, certified by the Secretary (or other
authorized representative performing similar functions) of the
Buyer and the Buyer's Parent, respectively, of resolutions
authorizing the execution and delivery of this Agreement and all
of the agreements and instruments to be executed and delivered by
the Buyer and Buyer's Parent, respectively, in connection
herewith, and the consummation of the transactions contemplated
hereby;
(e) Certificates of the Secretary of the Buyer and
the Buyer's Parent, respectively, which shall identify by name
and title and bear the signatures of the officers or managers of
the Buyer and Buyer's Parent, respectively, authorized to execute
and deliver this Agreement and the other agreements contemplated
hereby to which the Buyer or the Buyer's Parent is a party;
(f) Certificates of Good Standing with respect to the
Buyer and Buyer's Parent issued by the Secretary of State of such
entity's organization;
(g) 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;
(h) Copies of any and all governmental and other
third party consents, waivers or approvals obtained by the Buyer
with respect to transfer of the Purchased Assets, or the
consummation of the transactions contemplated by this Agreement;
(i) Certificates of Insurance relating to the
insurance policies required pursuant to Article 10 of the
Interconnection Agreement;
(j) 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; and
(k) The payment, in a manner specified by the Seller,
for any Capital Expenditures, OM Expenditures or related lost
margin costs incurred by the Seller pursuant to Section 6.1(c).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS
OF THE SELLERS
The Seller (and to the extent the representations or
warranty relate to NYSEG, NYSEG) represents and warrants to the
Buyer as follows:
4.1 Organization; Qualification; Matters Regarding SRC
(a) Each of the Seller, NYSEG and SRC is a corporation duly orga
nized, 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 it is now being conducted. Each of the
Seller, NYSEG and SRC is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction in which its business as now being conducted
shall require it to be so qualified, except where the failure to
be so qualified would not have a Material Adverse Effect. The
Seller has heretofore made available to the Buyer complete and
correct copies of the Certificates of Incorporation and Bylaws of
the Seller, NYSEG and SRC, as currently in effect.
(b) The authorized capital stock of SRC consists of
2,000 shares of common stock, no par value, all of which shares
are issued and outstanding and owned beneficially and of record
by the Seller, free and clear of all Encumbrances. The SRC Stock
has been duly authorized and validly issued, and is fully paid
and non-assessable. There are no outstanding (i) securities
convertible into or exchangeable for the capital stock of SRC or
(ii) options, warrants, calls, right of first refusal, "phantom
stock" rights, preemptive rights or other rights to purchase or
subscribe for capital stock of SRC or securities convertible or
exchangeable for capital stock thereof.
4.2 Authority Relative to this Agreement
The Seller and NYSEG have full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and
delivery of this Agreement by the Seller and NYSEG and the
consummation of the transactions contemplated hereby by the
Seller and NYSEG have been duly and validly authorized by all
necessary corporate action required on the part of the Seller and
NYSEG. This Agreement has been duly and validly executed and
delivered by the Seller and NYSEG. Subject to the receipt of the
Seller Required Regulatory Approvals, and assuming that this
Agreement constitutes a legal, valid and binding agreement of the
Buyer, this Agreement constitutes a legal, valid and binding
agreement of the Seller and NYSEG, enforceable against the Seller
and NYSEG in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding
at law or in equity).
4.3 Consents and Approvals; No Violation
(a) Except as set forth in Schedule 4.3(a), and subject to
obtaining the Seller Required Regulatory Approvals, neither the
execution and delivery of this Agreement by the Seller or NYSEG
nor the consummation by the Seller or NYSEG of the transactions
contemplated hereby will: (i) conflict with or result in any
breach of any term, condition or provision of the Certificate of
Incorporation or Bylaws of the Seller or NYSEG, (ii) result (with
or without notice or lapse of time or both) in a default or
creation of a lien (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, material
agreement or other instrument or obligation to which the Seller
or NYSEG is a party or by which the Seller or NYSEG, 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, would
not, individually or in the aggregate, create a Material Adverse
Effect, or (iii) constitute violations of any law, regulation,
order, judgment or decree applicable to the Seller, which
violations, individually or in the aggregate, would create a
Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b) (the
filings and approvals set forth in Schedule 4.3(b) are
collectively referred to as the "Seller Required Regulatory
Approvals"), no consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for the execution and
delivery of this Agreement by the Seller or NYSEG or the
consummation by the Seller or NYSEG of the transactions
contemplated hereby, other than such consents, approvals, filings
or notices which, if not obtained or made, will not prevent
Seller or NYSEG from performing its material obligations
hereunder and other than such consents, approvals, filings or
notices which become applicable to the Seller or NYSEG or the
Purchased Assets 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.
4.4 Insurance
Except as set forth in Schedule 4.4, all material policies
of fire, liability, worker's compensation and other forms of
insurance owned or held by, or on behalf of, Sellers 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 hereof have been paid (other than retroactive
premiums which may be payable with respect to comprehensive
general liability and workers' compensation insurance policies),
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 4.4, as of the
date of this Agreement, the Sellers have 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 carried insurance
during the last twelve months.
4.5 Title
Except for Permitted Encumbrances (including those
exceptions to title to the Real Property set forth in Schedule
4.5) (a) the Seller and SRC each hold and Seller shall convey
such title with respect to the Real Property as a reputable title
company doing business in the State of New York would insure,
subject to such exceptions as would not materially affect the use
of the Real Property as historically used by the Seller and SRC
and their Affiliates and (b) the Seller and SRC each has good and
valid title to the other Purchased Assets which it purports to
own, free and clear of all Encumbrances.
4.6 Real Property Leases
Schedule 4.6 lists, as of the date of this Agreement, all real
property leases under which the Sellers or SRC is a lessee or
lessor and which are to be transferred and assigned to the Buyer
on the Closing Date, other that those real property leases which
are not material to the business or operations of the Purchased
Assets ("Real Property Leases"). Except as set forth in Schedule
4.6, all such 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 Sellers or SRC or,
to the Sellers' Knowledge, any other party thereunder; and no
event has occurred which (whether with or without notice, lapse
of time or both) would constitute a material default by the
Sellers or SRC or, to the Seller's Knowledge, any other party
thereunder.
4.7 Environmental Matters
Except as disclosed in Schedule 4.7 or in any public
filing by any Affiliate of the Seller pursuant to the Securities
Act or the Exchange Act or in the Environmental Reports:
(a) The Sellers and SRC hold, and are in substantial
compliance with, all permits, certificates, certifications,
licenses and governmental authorizations under Environmental Laws
("Environmental Permits") that are material and required for the
Sellers to conduct the business and operations of the Purchased
Assets, and the Sellers and SRC are otherwise in compliance with
applicable Environmental Laws with respect to the business and
operations of the Purchased Assets except for such failures to
hold or comply with required Environmental Permits, or such
failures to be in compliance with applicable Environmental Laws,
as would not, individually or in the aggregate, create a Material
Adverse Effect;
(b) Neither the Sellers nor SRC 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 or off-Site location related to
the Purchased Assets;
(c) Neither the Sellers nor SRC (i) have entered into
or agreed to any consent decree or order relating to the
Purchased Assets, (ii) are subject to any outstanding judgment,
decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous
Substances under any Environmental Law relating to the Purchased
Assets, or (iii) are currently involved in any negotiation
relating to compliance;
(d) No Releases of Hazardous Substances have occurred
at, from, in, to, on, or under any Site, and no Hazardous
Substances are present in, on, about or migrating to or from any
Site that could give rise to an Environmental Claim related to
the Purchased Assets, except to the extent that any such Releases
would not, individually or in the aggregate, create a Material
Adverse Effect;
(e) Neither the Sellers nor SRC have transported or
arranged for the treatment, storage, handling, disposal, or
transportation of any Hazardous Material related to Purchased
Assets to any off-Site location which is an Environmental
Clean-up Site, except to the extent that any Environmental Claims
related to the Environmental Clean-up Site would not,
individually or in the aggregate, create a Material Adverse
Effect; and
(f) There are no liens arising under or pursuant to
any Environmental Law on any Site and there are no facts,
circumstances, or conditions that could reasonably be expected to
restrict, encumber, or result in the imposition of special
conditions under any Environmental Law with respect to the
ownership, occupancy, development, use, or transferability of any
of the Purchased Assets.
The representations and warranties made in this Section 4.7 are
the Sellers' exclusive representations and warranties relating to
environmental matters.
4.8 Labor Matters
The Sellers have previously delivered to the Buyer true and
correct copies of all collective bargaining agreements to which
the Sellers are a party or are subject and which relate to the
business or operations of the Purchased Assets. Solely (in each
of the following clauses (a) through (c)) with respect to the
business or operations of the Purchased Assets, except to the
extent set forth in Schedule 4.8 and except for such matters as
would not, individually or in the aggregate, create a Material
Adverse Effect, (a) the Sellers are in compliance with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours; (b) the
Sellers have not received written notice of any unfair labor
practice complaint against the Sellers pending before the
National Labor Relations Board; and (c) no arbitration proceeding
arising out of or under any collective bargaining agreements is
pending against the Sellers.
4.9 Benefit Plans: ERISA
(a) Schedule 4.9(a) lists all deferred compensation,
profit-sharing, retirement and pension plans, including
multi-employer plans (of which none exist), and all material
bonus, fringe benefit and other employee benefit plans maintained
or with respect to which contributions are made by the Seller or
its Affiliates in respect to the current employees employed in
connection with the Purchased Assets ("Benefit Plans"). True and
complete copies of all such Benefit Plans have been made
available to the Buyer.
(b) Except as set forth in Schedule 4.9(b), 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 which is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Code. Except as set forth in
Schedule 4.9(b), neither the Seller nor any ERISA Affiliate has
incurred any liability under Section 4062(b) of ERISA to the
Pension Benefit Guaranty Corporation in connection with any
Benefit Plan which is subject to Title IV of ERISA, or any
withdrawal liability, nor is there any reportable event (as
defined in Section 4043 of ERISA), except as set forth in
Schedule 4.9(b). Except as set forth in Schedule 4.9(b), the
Internal Revenue Service has issued a letter for each Benefit
Plan which is intended to be qualified under Section 401(a) of
the Code, which letter determines that such plan is exempt from
United States Federal Income Tax under Sections 401(a) and 501(a)
of the Code, and there has been no occurrence since the date of
any such determination letter which has affected adversely such
qualification.
(c) 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. No Benefit Plan is a multi-employer
plan.
(d) To the extent Sellers maintain a "group health
plan" within the meaning of Section 5000(b)(1) of the Code,
Sellers have materially complied in good faith 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.
4.10 Real Property
Schedule 4.10 contains a description of, and exhibits
indicating the location of, the Real Property owned by the Seller
and included in the Purchased Assets or owned by SRC. True and
correct copies of any current surveys, abstracts or title
opinions in the Seller's possession or any policies of title
insurance currently in force and in the possession of the Seller
with respect to the Real Property have heretofore been made
available to the Buyer. No other fee simple interest in real
property, other than a fee simple interest in the fee simple
estates included in the Real Property, is necessary for the Buyer
to use the Purchased Assets substantially as historically used by
the Seller or its Affiliates.
4.11 Condemnation
Except as set forth in Schedule 4.11, the Seller have
received no written notices of, nor do the Sellers have Knowledge
of, any pending or threatened proceedings or governmental actions
to condemn or take by power of eminent domain all or any part of
the Purchased Assets.
4.12 Contracts and Personal Property Leases
(a) Schedule 4.12(a) lists (i) all written contracts,
licenses, agreements, or personal property leases which are
material to the business or operations of the Purchased Assets
and which are expected to continue in force and effect after the
Closing Date, other than contracts, licenses, agreements or
personal property leases which constitute Excluded Assets, and
(ii) all other contracts, licenses, agreements and personal
property leases of the Sellers or SRC relating to the Purchased
Assets other than (A) contracts, licenses, agreements and
personal property leases which are expected to expire prior to
the Closing Date, (B) any contract, license, agreement, and
personal property lease which provides for annual payments by the
Sellers or SRC after the date hereof of less than $100,000 or
aggregate payments by the Sellers or SRC after the date hereof of
less than $1,000,000, and (C) agreements of the Sellers or SRC
with suppliers entered into in the ordinary course of business
that are not material to the Purchased Assets.
(b) Except as set forth in Schedule 4.12(b), each
material Sellers' Agreement (i) constitutes a legal, valid and
binding obligation of Sellers or SRC, as the case may be,
enforceable in accordance with its terms, and, to the Seller's
Knowledge, constitutes a legal, valid and binding obligation of
the other parties thereto, (ii) is in full force and effect and
(iii) may be transferred to the Buyer pursuant to this Agreement
without the consent of the other parties thereto 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 4.12(c), there is
not, under any of the material Sellers' Agreements, any default
or event which, with notice or lapse of time or both, would
constitute a default on the part of the Sellers or SRC or, to the
Seller's Knowledge, any of the other parties thereto, except such
events of default and other events as to which requisite waivers
or consents have been obtained, or which would not, individually
or in the aggregate, create a Material Adverse Effect.
4.13 Legal Proceedings
Except as set forth in Schedule 4.13 or in any filing made by
any Affiliate of the Seller pursuant to the Securities Act or the
Exchange Act and except for matters which are Excluded
Liabilities, there are no actions or proceedings pending (or to
the Sellers' Knowledge, threatened as of the date of this
Agreement) against the Seller or SRC before any court or
Governmental Authority acting in an adjudicative capacity, which,
could reasonably be expected to, individually or in the
aggregate, create a Material Adverse Effect or prohibit or
restrain the execution, delivery or performance of this
Agreement, or the consummation of the transactions contemplated
hereby in any material respect. Except as set forth in Schedule
4.13 or in any filing made by any Affiliate of the Seller
pursuant to the Securities Act or the Exchange Act and except for
matters which are Excluded Liabilities, the Seller is not subject
to any outstanding judgments, rules, orders, writs, injunctions
or decrees of any court or Governmental Authority which would,
individually or in the aggregate, create a Material Adverse
Effect. Sellers shall advise Buyer of any actions or proceedings
which shall be commenced against Sellers, or either of them, or
SRC from and after the date hereof as soon as practicable after
the commencement of same, and shall further advise Buyer upon
Seller or NYSEG obtaining knowledge from and after the date
hereof of any threatened action or proceeding against the
Sellers, or either of them, or SRC which, in each case, could
reasonably be expected to, individually or in the aggregate,
create a Material Adverse Effect or prohibit or restrain the
performance of this Agreement, or the consummation of the
transactions contemplated hereby in any material respect.
4.14 Permits
(a) The Sellers and SRC own or validly hold all permits,
licenses, franchises and other governmental authorizations,
consents and approvals (other than with respect to Environmental
Laws, which are addressed in Section 4.7 hereto) (collectively,
"Permits") necessary to own and operate the Purchased Assets as
presently conducted except where any failure to have such Permits
would not, individually or in the aggregate, create a Material
Adverse Effect.
(b) Schedule 4.14(b) sets forth all material Permits
and Environmental Permits, other than Transferable Permits (which
are set forth on Schedule 1.1(a)(66)).
4.15 Taxes
(a) The Seller has filed all returns, reports and
declarations that are required to have been filed by it with
respect to any material Tax, and the Seller has paid all Taxes
that have become due as indicated thereon, except where Seller is
contesting the same in good faith by appropriate proceedings.
Seller has complied in all material respects with all applicable
laws, rules and regulations relating to withholding Taxes. All
Tax returns are true, correct and complete in all material
respects. Except as set forth in Schedule 4.15, 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
4.15 is being contested in good faith through appropriate
proceedings. Except as set forth in Schedule 4.15, there are no
outstanding agreements or waivers extending the applicable
statutory periods of limitation for Taxes associated with the
Purchased Assets for any period. There are no Encumbrances for
Taxes (other than for current Taxes not yet due and payable) on
the Purchased Assets. There are no rulings or closing agreements
executed with any taxing authority relating to the Purchased
Assets that will be binding upon the Buyer after the Closing.
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, and none of the Purchased Assets is
"tax-exempt use" property within the meaning of Section 168(h) of
the Code. Schedule 4.15 sets forth the taxing jurisdictions in
which the Seller owns assets or conducts business that require a
notification to a taxing authority of the transactions
contemplated by this Agreement, if the failure to make such
notification, or obtain Tax clearance certificates in connection
therewith, would either require the Buyer to withhold any portion
of the Purchase Price or subject the Buyer to any liability for
any Taxes of the Seller.
(b) Except as set forth on Schedule 4.15:
(i) SRC has (A) duly and timely filed (or there have
been filed on its behalf) with the appropriate taxing
authorities all material Tax Returns required to be filed by
it, and all such Tax Returns are true, correct and complete
in all material respects and (B) timely paid or there have
been paid on its behalf all material Taxes due or claimed to
be due from it by any taxing authority (whether or not shown
on any tax return), and SRC currently is not the beneficiary
of any extension of time within which to file any Tax
Return;
(ii) SRC has, within the time and manner prescribed
by law, withheld and paid over to the proper governmental
authorities all material amounts required to be withheld and
paid over under all applicable laws;
(iii) There are no Encumbrances for Taxes upon the
assets or properties of SRC, except for Permitted
Encumbrances;
(iv) No outstanding waivers or comparable consents
regarding the application of the statute of limitations with
respect to any material Taxes or material Tax Returns have
been given by or on behalf of SRC;
(v) No federal, state, local or foreign audits or
other administrative proceedings or court proceedings
("Audits") exist or have been initiated with regard to any
material Taxes or material Tax Returns of SRC and SRC has
not received any written notice that such an audit is
pending or threatened with respect to any material Taxes due
from or with respect to SRC or any material Tax Return filed
by or with respect to SRC;
(vi) SRC has not requested or received a ruling from
any taxing authority or signed a closing or other agreement
with any taxing authority which would cause a material
adverse effect on the business or financial condition of
SRC;
(vii) All Audits commenced with respect to SRC have
been completed;
(viii) All Tax deficiencies which have been claimed,
proposed or asserted against SRC have been fully paid or
jointly settled;
(ix) Except for the Tax Sharing Agreement (a true copy
of which has been made available to the Buyer prior to the
date hereof), SRC is not a party to, is not bound by, and
has no obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or
arrangement;
(x) SRC has not filed a consent pursuant to Section
341(f) of the Code (or any predecessor provision) or agreed
to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset, as such term is
defined in Section 341(f)(4) of the Code, owned by SRC;
(xi) No property owned by SRC (A) is property required
to be treated as being owned by another Person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (B) constitutes
"tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (C) is tax exempt bond financed
property within the meaning of Section 168(g) of the Code;
(xii) SRC has not incurred any liability for Taxes
other than in the ordinary course of business;
(xiii) SRC has no liability for Taxes of any person
pursuant to Treasury Regulation ' 1.1502-6 (or any similar
provision of state, local or foreign law) other than for the
Consolidated Group of which SRC is a member;
(xiv) SRC has not participated in, or cooperated with,
an international boycott within the meaning of Section 999
of the Code;
(xv) SRC is not a party to any contract, agreement or
other arrangement which, as a result of the transactions
contemplated hereunder, could result in the payment of
amounts that could be nondeductible by reason of Sections
28OG or 162(m) of the Code; and
(xvi) SRC has been consistently treated, through the
date hereof, as a corporation subject to New York franchise
tax as a transportation and transmission corporation under
New York Tax Law, Ch. 60, Art. 9, Sections 183 and 184, and
has not taken any actions (or any omissions thereof)
inconsistent with such treatment.
4.16 Disclaimers Regarding Purchased Assets
Except for the representations and warranties set forth in
this Article IV, the Purchased Assets are sold "as is, where is",
and the Sellers expressly disclaim any representations or
warranties of any kind or nature, express or implied, as to
liabilities, operations of the Plants, or the title, condition
(financial or otherwise), value or quality of the Purchased
Assets, or the prospects, risks and other incidents of the
Purchased Assets and Sellers specifically disclaim any
representation or warranty of merchantability, usage, suitability
or fitness for any particular purpose with respect to the
Purchased Assets, or any part thereof, or as to the workmanship
thereof, or the presence or absence of any defects therein,
whether latent or patent, or compliance with environmental
requirements, or the applicability of any governmental
requirements, including, but not limited to, any Environmental
Laws, or whether the Sellers possess sufficient real property or
personal property to operate the Purchased Assets. Except as
otherwise expressly provided herein, the Sellers further
specifically disclaim any representation or warranty regarding
the presence or absence of Hazardous Substances or liability or
potential liability arising under Environmental Laws with respect
to the Purchased Assets. Without limiting the generality of the
foregoing, except as otherwise expressly provided herein, the
Sellers expressly disclaim any representation or warranty of any
kind regarding the condition of the Purchased Assets or the
suitability of the Purchased Assets for operation as power plants
and no schedule or exhibit to this Agreement, nor any other
material or information provided by or communications made by
Sellers or their Representatives, or by any broker or investment
banker, will cause or create any warranty, express or implied, as
to the title, condition, value or quality of the Purchased
Assets.
The Sellers make no warranties and representations of any
kind, whether direct or implied, that any of the hardware,
software, and firmware product (including embedded
microcontrollers in non-computer equipment) which may be included
in the Purchased Assets to be transferred under this Agreement
(the "Computer Systems") is Year 2000 Compliant.
For purposes of this provision, "Year 2000 Compliant" shall
mean that the Computer Systems will correctly differentiate
between years, in different centuries, that end in the same two
digits, and will accurately process date/time data (including,
but not limited to, calculating, comparing, and sequencing) from,
into, and between the twentieth and twenty-first centuries,
including leap year calculations. It shall also include any
remediation necessary to correct software problems which may
result from so-called "magic numbers", such as "9999".
4.17 Intellectual Property
Schedule 2.1(m) sets forth all Intellectual Property
used in and, individually or in the aggregate with other such
Intellectual Property, material to the operation or business of
the Purchased Assets, each of which Seller or its Affiliates
either has all right, title and interest in or valid and binding
rights under contract to use. Except as disclosed in Schedule
4.17, (i) the Seller is not, nor has it received any notice that
it is, in default (or with the giving of notice or lapse of time
or both, would be in default) under any contract to use such
Intellectual Property, and (ii), to Seller's Knowledge, such
Intellectual Property is not being infringed by any other Person.
Seller has not received notice that Seller is infringing any
Intellectual Property of any other Person in connection with the
operation or business of the Purchased Assets, and Seller, to its
Knowledge, 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.
4.18 Additional Representations
(a) Except as set forth in Schedule 4.9(b),
with respect to each Benefit Plan which is an "employee pension
benefit plan" as defined in Section 3(2) of ERISA, the Seller and
the ERISA Affiliates have made timely contributions to each such
plan.
(b) Neither the Seller nor any ERISA Affiliate has
ever been obligated to contribute to any multi-employer plan
(within the meaning of Section 4001(a)(3) of ERISA).
(c) No Benefit Plan contains any provision or is
subject to any law that would prohibit the transactions
contemplated by this Agreement.
(d) SRC has no employees.
4.19 No Work Stoppages or Grievances. Solely (in each
of the following clauses (a) through (b) with respect to the
business or operations of the Purchased Assets, except as set
forth in Schedule 4.8, (a) there is no labor strike, slowdown or
stoppage occurring or, to the Sellers' Knowledge, threatened, and
(b) no grievance proceeding arising out of or under the
Collective Bargaining Agreement is pending.
4.20 Financial Representations. NYSEG has made
available to the Buyer true and complete copies of each
registration statement, report and proxy or information statement
(including exhibits and any amendments thereto) filed by NYSEG
with the SEC since January 1, 1995 (collectively, the "SEC
Reports") all of which, as of their respective filing dates,
complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder. None of such SEC
Reports, as of the respective dates they were filed, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of the audited
consolidated financial statements of NYSEG (including any related
notes and schedules) included (or incorporated by reference) in
its Annual Report on Form 10-K for the fiscal year ended December
31, 1997, present fairly, in conformity with GAAP applied on a
consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of NYSEG as of the
dates thereof and the consolidated results of their operations
and their cash flows for the periods then ended. Each of the
unaudited financial statements of NYSEG (including any related
notes and schedules) included in its quarterly report on Form 10-
Q for the quarter ended March 31, 1998, present fairly, in
conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial
position of NYSEG as of the dates thereof and the consolidated
results of its operations and its cash flows for the periods then
ended.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
The Buyer represents and warrants to the Sellers as
follows:
5.1 Organization The Buyer is a
limited liability company duly organized, validly existing and in
good standing under the laws of the state of its organization and
has all requisite limited liability company power and authority
to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Buyer is, or before
the Closing Date will be, qualified to do business in the State
of New York . The Buyer has heretofore delivered to the Seller
complete and correct copies of the Certificate of formation,
Operating Agreement, Certificate of Incorporation and Bylaws of
Buyer and Buyer's Parent (or other similar governing documents),
as currently in effect.
5.2 Authority Relative to this Agreement
Each of the Buyer and Buyer's Parent has full power and
authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to consummate the
transactions contemplated by them hereby and thereby. The
execution and delivery of this Agreement and the Ancillary
Agreements by the Buyer and Buyer's Parent, as the case may be,
and the consummation of the transactions contemplated hereby and
thereby by the Buyer and Buyer's Parent have been duly and
validly authorized by all necessary action required on the part
of the Buyer and Buyer's Parent. This Agreement and the
Ancillary Agreements have been duly and validly executed and
delivered by the Buyer and the Guaranty has been duly and validly
executed and delivered by Buyer's Parent, as the case may be.
Subject to the receipt of the Buyer Required Regulatory Approvals
and assuming that this Agreement and the Ancillary Agreements
constitute legal, valid and binding agreements of the other party
executing the same, this Agreement and the Ancillary Agreements
constitute legal, valid and binding agreements of the Buyer and
Buyer's Parent, as the case may be, enforceable against the Buyer
and Buyer's Parent in accordance with their terms, except that
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding
at law or in equity).
5.3 Consents and Approvals; No Violation
(a) Except as set forth in Schedule 5.3(a),
and subject to obtaining the Buyer Required Regulatory
Approvals, neither the execution and delivery of this
Agreement and the Ancillary Agreements by the Buyer or Buyer's
Parent, as the case may be, nor the consummation by the Buyer
and Buyer's Parent of the transactions contemplated hereby and
thereby, as the case may be, will (i) conflict with or result in
any breach of any term, condition or provision of the Certificate
of Formation, Operating Agreement, Certificate of Incorporation
or Bylaws (or other similar governing documents) of the Buyer or
Buyer's Parent, (ii) result (with or without notice or lapse of
time or both) in a default or creation of a lien (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, material agreement or other instrument or
obligation to which the Buyer or Buyer's Parent 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 or which would not, individually or in the aggregate,
have a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of the Buyer or
Buyer's Parent ("Buyer Material Adverse Effect"), or (iii)
constitute violations of any law, regulation, order, judgment or
decree applicable to the Buyer or Buyer's Parent, which
violations, individually or in the aggregate, would create a
Buyer Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the
filings and approvals referred to in Schedule 5.3(b) are
collectively referred to as the "Buyer Required Regulatory
Approvals"), no consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for the Buyer's or
the Buyer's Parent's execution and delivery of this Agreement and
the Ancillary Agreements to which it is a party or the consum
mation by the Buyer, or the Buyer's Parent, as the case may be,
of the transactions contemplated hereby and thereby, other than
such consents, approvals, filings or notices, which, if not
obtained or made, will not prevent the Buyer from performing its
obligations under this Agreement and the Ancillary Agreements.
(c) The Buyer is not aware of any reason or
circumstance that would prevent the Buyer from procuring the
Buyer Required Regulatory Approvals associated with Exempt
Wholesale Generator status and market-based rate authorization
specified as items 2 and 3 in Schedule 5.3(b).
(d) The Buyer is not a "rail carrier", does not own or
control any "rail carrier" as defined in Title 49, Section
10102(5) of the United State Code, as amended, and is not
"affiliated" as defined in Title 49, Section 11323(c) of the
United States Code, as amended, with a "rail carrier".
5.4 Availability of Funds
The Buyer has sufficient funds available to it, or will have
sufficient funds on the Closing Date, to pay the Purchase Price
and to permit the Buyer to perform timely all of its obligations
under this Agreement and the Ancillary Agreements.
5.5 Financial Representations
Buyer's Parent has made available to the Seller
true and complete copies of each registration statement, report
and proxy or information statement (including exhibits and any
amendments thereto) filed by the Buyer's Parent with the SEC
since January 1, 1995 (collectively, the ABuyer Parent's SEC
Reports@) all of which, as of their respective filing dates,
complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder. None of such Buyer
Parent's SEC Reports, as of the respective dates they were filed,
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each
of the audited consolidated financial statements of the Buyer's
Parent (including any related notes and schedules) included (or
incorporated by reference) in its Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, present fairly, in
conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial
position of the Buyer's Parent and the Buyer as of the dates
thereof and the consolidated results of their operations and
their cash flows for the periods then ended. Each of the
unaudited financial statements of the Buyer's Parent (including
any related notes and schedules) included in its quarterly report
on Form 10-Q for the quarter ended March 31, 1998, present
fairly, in conformity with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto), the
consolidated financial position of the Buyer's Parent and its
subsidiaries as of the dates thereof and the consolidated results
of their operations and their cash flows for the periods then
ended.
5.6 Legal Proceedings
There are no actions or proceedings pending (or to the Buyer's
Knowledge, threatened as of the date of this Agreement) against
the Buyer or Buyer's Parent before any court or Governmental
Authority acting in an adjudicative capacity, which, could
individually or in the aggregate, reasonably be expected to
create a Buyer Material Adverse Effect or prohibit or restrain
the execution, delivery or performance of this Agreement or any
of the Ancillary Agreements, or the consummation of the
transactions contemplated hereby or thereby in any material
respect. The Buyer and Buyer's Parent are not subject to any
outstanding judgments, rules, orders, writs, injunctions or
decrees of any court or Governmental Authority which would,
individually or in the aggregate, create a Buyer Material Adverse
Effect. Buyer shall advise Sellers of any actions or proceedings
which shall be commenced against Buyer or the Buyer's Parent from
and after the date hereof as soon as practicable after the
commencement of same, and shall further advise Sellers upon Buyer
obtaining knowledge from and after the date hereof of any
threatened action or proceeding against the Buyer or the Buyer's
Parent which, in each case, could reasonably be expected to,
individually or in the aggregate, create a Buyer Material Adverse
Effect or prohibit or restrain the performance of this Agreement,
or the consummation of the transactions contemplated hereby in
any material respect.
5.7 Qualified Buyer
The Buyer is qualified to obtain any Permits and
Environmental Permits necessary for the Buyer to own and operate
the Purchased Assets as of the Closing.
5.8 Inspections
(a) The Buyer acknowledges and agrees that each of the
Buyer and Buyer's Parent has, prior to the Buyer's execution of
this Agreement, (i) reviewed the Phase I and Phase II reports,
(ii) had full opportunity to conduct to its satisfaction
Inspections of the Purchased Assets, including the Sites, and
(iii) fully completed, and approved the results of, all
Inspections of the Purchased Assets. The Buyer acknowledges that
each of the Buyer and Buyer's Parent is satisfied through such
review and Inspections that no further investigation and study on
or of the Purchased Assets is necessary for the purposes of
acquiring the Purchased Assets for the Buyer's intended use, and
the Buyer hereby waives any and all objections to or claims with
respect to any and all physical characteristics and existing
Environmental Conditions of the Sites, including without
limitation, any Hazardous Substances in, at, on, under or related
to the Sites. The Buyer acknowledges and agrees that it hereby
assumes the risk that adverse past, present, and future physical
characteristics and Environmental Conditions may not have been
revealed by its Inspections and the investigations of the
Purchased Assets contained in the Phase I and Phase II reports.
In making its decision to execute this Agreement, and to purchase
the Purchased Assets, the Buyer has relied and will rely upon the
results of its Inspections and the Phase I and Phase II reports.
(b) The Buyer acknowledges that its obligation to
consummate this transaction is not conditioned on or subject to
any further Inspections of the Purchased Assets, or the existence
of, or the absence of, any physical condition or circumstance
with respect to the Purchased Assets. Notwithstanding the
foregoing, the Buyer may conduct due diligence to confirm the
accuracy of the Sellers' representations and warranties. Such
due diligence shall not include the performance or conduct of any
environmental sampling or testing at, in, on or underneath the
Purchased Assets.
5.9 "AS IS" Sale
The Buyer acknowledges that the representations and
warranties set forth in Article IV constitute the sole and
exclusive representations and warranties of the Sellers in
connection with the transactions contemplated hereby. The
Buyer acknowledges that there are no representations,
warranties, covenants, understandings or agreements between the
Parties regarding the Purchased Assets or their transfer
other than those incorporated in this Agreement.
Except for the representations and warranties expressly set forth
in Article IV, the Buyer disclaims reliance on any
representations or warranties, either express or implied, by the
Sellers or their Representatives. Buyer acknowledges and agrees
that the Purchased Assets are being acquired "as is, where is" on
the Closing Date, and in their condition on the Closing Date, and
that the Buyer is relying on its own examination of the Purchased
Assets, and is not relying on any representation or warranty made
by the Sellers (other than those made by Sellers under this
Agreement) or their Representatives, or any broker or investment
banker.
5.10 Purchase for Investment
The Buyer is acquiring the SRC Stock for its own
account for investment and not with a view to or for sale or
distribution thereof within the meaning the Securities Act. The
Buyer (i) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of investing in the SRC Stock and protecting its own
interests in connection with the investment and purchase; (ii)
has been provided with the opportunity to ask questions and
receive answers concerning SRC and has had all such questions
answered to its satisfaction; (iii) notwithstanding Section 6.2,
has reviewed all information provided by the Seller and SRC
regarding SRC and has completed such review to its satisfaction
as of the date hereof; (iv) is aware that the SRC Stock is not
registered under the Securities Act or any state securities laws;
and (v) understands that the transfer of the SRC Stock may not be
transferred, directly or indirectly, unless the SRC Stock is
registered under the Securities Act or an exemption under the
Securities Act and the rules and regulations thereunder is
available with respect to such transfer and applicable state
securities laws are complied with.
5.11 WARN Act
The Buyer does not intend to engage in a Plant Closing or
Mass Layoff, as such terms are defined in the WARN Act, with
respect to the business or operations of the Purchased Assets,
within sixty days after the Closing Date.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1(a) Conduct of Business Relating to the Purchased
Assets
Except as described in Schedule 6.1 or as expressly
contemplated by this Agreement or to the extent the Buyer
otherwise consents in writing, during the period from the date of
this Agreement to the Closing Date, the Seller will operate the
Purchased Assets in the ordinary course of business consistent
with Good Utility Practices and shall use all Commercially
Reasonable Efforts to preserve and maintain intact the Purchased
Assets in good working order, and endeavor to preserve the
goodwill and relationships with customers, suppliers and others
having business dealings with it. Without limiting the
generality of the foregoing, and, except as contemplated in this
Agreement or as described in Schedule 6.1, or as required under
applicable law or by any Governmental Authority, prior to the
Closing Date, without the prior written consent of the Buyer, the
Sellers shall not (and shall not suffer or permit SRC to) with
respect to the Purchased Assets:
(i) Make any material change in the levels of
Inventories customarily maintained by the Seller or its
Affiliates with respect to the Purchased Assets, other than
changes which are consistent with Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge, or
transfer or otherwise dispose of any Purchased Assets
(except for Purchased Assets used, consumed or replaced in
the ordinary course of business consistent with Good Utility
Practices), other than to encumber Purchased Assets with
Permitted Encumbrances;
(iii) Modify, amend or terminate prior to the
expiration date any of the material Seller's Agreements,
Real Property Leases or any of the Permits or Environmental
Permits in any material respect, other than (a) as may be
required in connection with transferring the Sellers' rights
or obligations thereunder to Buyer pursuant to this
Agreement, or (b) as Buyer may consent.
(iv) Except as otherwise provided herein, enter into
any commitment for the purchase, sale, or transportation of
fuel having a term greater than six months and not
terminable on or before the Closing Date either (i)
automatically, or (ii) by option of the Seller (or, after
the Closing, by the Buyer) in its sole discretion, if the
aggregate payment under such commitment for fuel and all
other outstanding commitments for fuel not previously
approved by Buyer would exceed $5 million;
(v) Sell, lease or otherwise dispose of Allowances;
(vi) With respect to SRC, permit or cause SRC to
change its capital structure; amend its charter, by-laws or
other governing documents; issue new securities; declare any
dividends; merge, consolidate or combine with any other
entity; hire any employees; purchase or sell any assets in
an amount greater than $500,000; create or suffer to exist
any liabilities, contingent or otherwise, not directly
attributable to its business as presently conducted; or
change its business as presently conducted;
(vii) Except as otherwise provided herein, enter into
any contract, agreement, commitment or arrangement relating
to the Purchased Assets that individually exceeds $1,000,000
or in the aggregate exceeds $10,000,000 unless it is
terminable by Seller (or after the Closing, by the Buyer)
without penalty or premium upon no more than sixty (60) days
notice;
(viii) Except as otherwise required by the terms of
the IBEW Collective Bargaining Agreement (as defined in
Section 6.10(d)), (a) hire at, or transfer to the Purchased
Assets, any new employees prior to the Closing Date, other
than to fill vacancies in existing positions in the
reasonable discretion of Seller and other than the transfer
of employees identified by Buyer pursuant to Section 6.10(l)
from NYSEG to Seller, (b) materially increase salaries or
wages of employees employed in connection with the Purchased
Assets prior to the Closing Date, (c) take any action prior
to the Closing Date to effect a material change in the IBEW
Collective Bargaining Agreement, or (d) take any action
prior to the Closing to materially increase the aggregate
benefits payable to the employees employed in connection
with the Purchased Assets; and
(ix) Except as otherwise provided herein, enter into
any written or oral contract, agreement, commitment or
arrangement with respect to any of the proscribed
transactions set forth in the foregoing paragraphs (i)
through (viii).
(b) The Seller shall have the right to expend amounts
and incur liabilities from the date of this Agreement to the
Closing Date, including, but not limited to, capital additions to
or replacements of property, plant and equipment included in the
Purchased Assets and other expenditures or repairs on property,
plant and equipment included in the Purchased Assets that would
be capitalized by the Seller in accordance with normal
capitalization policies of the Seller and its Affiliates
(together, "Capital Expenditures"), and amounts to operate and
maintain the Purchased Assets ("OM Expenditures"), in order to
fulfill its obligation under Section 6.1(a) to preserve and
maintain intact the Purchased Assets in good working order.
(c) If the Seller incurs a Capital Expenditure and/or
an OM Expenditure from the date of this Agreement to the Closing
Date (i) at the reasonable request of the Buyer, then the Buyer
shall promptly reimburse the Seller for such expenditures and
related lost margin resulting from reduced output of the Plant(s)
during the time that such expenditures are made, pursuant to an
arrangement reasonably acceptable to the Seller, or (ii) pursuant
to an order or directive of a Governmental Authority, then (AA)
the Seller shall notify the Buyer of that order or directive, and
(BB) the Buyer shall reimburse the Seller for such expenditures
at the Closing.
(d) Notwithstanding any provision of this Agreement
that may be to the contrary, the Seller shall have no obligation
to commence any proceeding or proceedings under Article VII of
the New York Real Property Tax Law with respect to any of the
Purchased Assets.
6.2 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 its
Representatives reasonable access to all books, records, plans,
offices and other facilities and properties constituting the Pur
chased Assets; (ii) furnish the Buyer with such financial and
operating data and other information with respect to the
Purchased Assets as the Buyer may from time to time reasonably re
quest; (iii) furnish the Buyer, upon its request, with a copy
each material report or other document filed by Seller or any of
its Affiliates with respect to the Purchased Assets with the SEC,
FERC or NYPSC, and (iv) furnish the Buyer with all such other
information as shall be reasonably necessary to enable the Buyer
to verify the accuracy of the representations and warranties of
Seller contained in this Agreement; provided, however, that (A)
any such inspections and investigations 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 or
contractual obligation not to supply. Notwithstanding anything
in this Section 6.2 to the contrary, the Seller will only furnish
or provide access to Transferring Employee Records and will not
furnish or provide access to other employee personnel records or
employee medical information unless required by law or
specifically authorized by the affected employee, and the Buyer
shall not have the right to perform or conduct any environmental
sampling or testing at, in, on, or underneath the Purchased
Assets.
(b) All information furnished to or obtained by the
Buyer and the Buyer Representatives pursuant to this Section 6.2
shall be "Proprietary Information" (as defined herein). Each
Party shall, and shall use its reasonable efforts to cause its
Representatives to, (i) keep all Proprietary Information of the
other Party confidential and not to disclose or reveal any such
Proprietary Information to any person other than such Party's
Representatives and (ii) not to use such Proprietary Information
other than in connection with the consummation of the
transactions contemplated hereby. After the Closing Date, any
Proprietary Information solely related to the Purchased Assets
shall no longer be subject to the restrictions set forth herein.
The obligations of the Parties under this Section 6.2(b) shall be
in full force and effect for three (3) years from the date hereof
and will survive the termination of this Agreement, the discharge
of all other obligations owed by the Parties to each other and
the Closing.
(c) For a period of seven (7) years after the Closing
Date, each Party and its Representatives shall have reasonable
access to all of the books and records related to the Purchased
Assets with respect to the periods prior to the Closing,
including all Transferring Employee Records in the possession of
the other Party to the extent that such access may reasonably be
required in connection with the Assumed Liabilities or the
Excluded Liabilities, or other matters relating to or affected by
the business or operation of the Purchased Assets. Such access
shall be afforded by the Party in possession of any such books
and records upon receipt of reasonable advance written notice and
during normal business hours. The Party exercising this right of
access shall be solely responsible for any costs or expenses
incurred by it or the other party with respect to such access
pursuant to this Section 6.2(c). If the Party in possession of
such books and records shall desire to dispose of any such books
and records upon or prior to the expiration of such seven-year
period, such Party shall, prior to such disposition, give the
other Party a reasonable opportunity, at such other Party's
expense, to segregate and remove such books and records as such
other Party may select.
Notwithstanding any provision herein to the contrary,
Buyer agrees that subsequent to the Closing Date, Sellers shall
have access to (i) Xxxxxxxx Station, at reasonable times, as
requested by Seller and its Affiliates, the DOE, the DOE
contracting officer or the DOE contracting officer's Technical
Project Officer for the purposes of allowing government officials
and interested members of the public, as determined by Seller and
its Affiliates or the DOE, to observe the work and the effect of
the work performed pursuant to the Cooperative Agreements on the
operation of Xxxxxxxx Station and, (ii) Xxxxxxxx Station, as
requested by NYSEG or Seller, for the purpose of allowing members
of the public to observe the operation of the Topaz System, and
(iii) Xxxxxxx Station, as requested by NYSEG or Seller, for the
purpose of allowing members of the public to observe the
operation of the carbon separator.
(d) Notwithstanding the terms of Section 6.2(b)
above, the Parties agree that prior to the Closing the Buyer may
reveal or disclose Proprietary Information to any other Persons
in connection with the Buyer's financing of its purchase of the
Purchased Assets (provided that such Persons agree in writing to
maintain the confidentiality of the Proprietary Information in
accordance with terms and conditions consistent with those
contained in this Agreement).
(e) Upon the other Party's prior written approval
(which will not be unreasonably withheld), either Party may
provide Proprietary Information of the other Party to the NYPSC,
the FERC or any other Governmental Authority with jurisdiction,
as necessary to obtain the Seller Required Regulatory Approvals,
or the Buyer Required Regulatory Approvals or comply generally
with any relevant laws or regulation. The disclosing Party will
seek confidential treatment for the Proprietary Information
provided to any Governmental Authority and the disclosing Party
will notify the other Party as far in advance as is practicable
of its intention to release to any Governmental Authority any
Proprietary Information.
(f) Except as specifically provided herein or in the
Confidentiality Agreement, nothing in this Section shall impair
or modify any of the rights or obligations of the Buyer or its
Affiliates under the Confidentiality Agreement, all of which
remain in effect until termination of such agreement in
accordance with its terms.
(g) Except as may be permitted in the Confidentiality
Agreement, the Buyer agrees that, prior to the Closing Date, it
will not contact any vendors, suppliers, employees, or other
contracting parties of the Sellers with respect to any aspect of
the Purchased Assets or the transactions contemplated hereby,
without the prior written consent of the Seller, which shall not
be unreasonably withheld.
(h) (i) The Buyer shall be entitled to inspect, in
accordance with this Section 6.2(h), all of the Purchased Assets
located adjacent to any Point of Interconnection (as defined in
the Interconnection Agreement), as shown in Schedule A to the
Interconnection Agreement, to verify and/or determine the
accuracy of the data, drawings, and records described in such
Schedule. The Parties shall cooperate to schedule the Buyer's
inspection at the Plants so that any interference with the
operation of the Plants is minimized, to the extent reasonably
feasible, and so that the Buyer may complete its inspections of
the Plants within thirty (30) working days of commencement of
inspections and within two (2) months after the execution of this
Agreement.
(ii) The Seller shall provide, or shall cause to
be provided, to the Buyer, access to the Plants at the times
scheduled for the inspections. The Seller shall provide
qualified engineering, operations, and maintenance personnel to
escort the Buyer's personnel and to assist the Buyer's personnel
in conducting the inspections. The Seller and the Buyer shall
each bear their own costs of participating in the inspections.
At a mutually convenient time not more than one (1) month after
the Buyer has completed its inspections, the Parties shall meet
to discuss whether, as a result of the inspections, it is
appropriate to modify Schedule A to the Interconnection Agreement
to portray more accurately the Points of Interconnection. Any
modification to any portion of Schedule A of the Interconnection
Agreement to which the Parties agree shall thereafter be deemed
part of Schedule A of the Interconnection Agreement for all
purposes under the Interconnection Agreement.
6.3 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.
Notwithstanding anything to the contrary herein, the Buyer will
be responsible for (a) all costs and expenses associated with the
obtaining of any title insurance policy and all endorsements
thereto that the Buyer elects to obtain and (b) all filing fees
under the Federal Power Act and HSR Act.
6.4 Further Assurances
(a)Subject to the terms and conditions of this Agreement, each of
the Parties hereto shall use its best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all
things as may be reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the purchase and sale of the Purchased Assets pursuant to this
Agreement and the assumption of the Assumed Liabilities,
including, without limitation, using its best efforts to ensure
satisfaction of the conditions precedent to the obligations of
the Parties hereunder, to obtain all necessary consents,
approvals and authorizations of third parties (including, without
limitation, the Seller Required Regulatory Approvals and the
Buyer Required Regulatory Approvals) and to effectuate a transfer
of the Transferable Permits to the Buyer. Neither of the Parties
hereto shall, without 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. Buyer further
agrees that prior to the Closing Date, it will neither enter into
any other contract to acquire, nor acquire, electric generation
facilities or uncommitted capacity located in New York State if
the Buyer's proposed acquisition of such additional electric
generation facilities or uncommitted capacity might reasonably be
expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement. Buyer shall
give Sellers reasonable advance written notice (and in any event
not less than 10 days) before Buyer contracts, prior to the
Closing, to acquire or acquires any electric generation facility
or uncommitted capacity located in New York .
(b) In the event that any Purchased Asset shall not
have been conveyed to the Buyer at the Closing, the Seller shall,
subject to Sections 6.4(c) and (e), use Commercially Reasonable
Efforts to convey such asset to the Buyer as promptly as is
practicable after the Closing. In the event that any Easement
shall not have been granted by the Buyer to NYSEG at the Closing,
the Buyer shall use Commercially Reasonable Efforts to grant such
Easement to NYSEG as promptly as is practicable after the
Closing.
(c) To the extent that the Sellers' rights under any
material Seller's Agreement, or Real Property Lease, may not be
assigned without the consent of another Person which consent has
not been obtained by the Closing Date, this Agreement shall not
constitute an agreement to assign the same if an attempted
assignment thereof would constitute a breach thereof or be
unlawful and (i) the Seller shall use Commercially Reasonable
Efforts to obtain any such required consent(s) as promptly as
possible, or (ii) if the terms of such material Seller's
Agreement or Real Property Lease provide for termination of such
agreement without liability to Seller, Buyer may direct the
Seller, and the Seller shall agree, to terminate such material
Sellers' Agreement or Real Property Lease on the Closing Date in
accordance with its terms. The Seller and the Buyer agree that
if any consent to an assignment of any material Seller's
Agreement, or Real Property Lease, shall not be obtained or if
any attempted assignment would be ineffective or would impair the
Buyer's rights and obligations under the material Seller's
Agreement, or Real Property Lease, in question so that the Buyer
would not in effect acquire the benefit of all such rights and
obligations, the Seller, at its option and to the maximum extent
permitted by law and such material Seller's Agreement, or Real
Property Lease, shall, after the Closing Date, appoint the Buyer
to be the Seller's representative and agent with respect to such
material Seller's Agreement, or Real Property Lease, or, to the
maximum extent permitted by law and such material Seller's
Agreement, or Real Property Lease, enter into such reasonable
arrangements with the Buyer or take such other actions as are
necessary to provide the Buyer with the same or substantially
similar rights and obligations under such material Seller's
Agreement, or Real Property Lease, and provided further, that
Seller shall not make any agreement, arrangement or other
understanding that would have a Material Adverse Effect as a
condition for obtaining a consent(s) without the prior written
consent of the Buyer. The Seller and the Buyer shall cooperate
and shall each use Commercially Reasonable Efforts prior to and
after the Closing Date to obtain an assignment of such material
Seller's Agreement, or Real Property Lease, to the Buyer.
(d) From time to time after the date hereof, without
further consideration, the Seller will cooperate with the Buyer
in its efforts to maximize any tax benefits associated with the
Purchased Assets with respect to periods following the Closing
Date and to minimize the tax costs associated with the
transactions contemplated hereby, and will, at its own expense,
execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order to more effectively vest in the Buyer
the Seller's title to the Purchased Assets. From time to time
after the date hereof, without further consideration, the Buyer
will cooperate with the Seller in its efforts to maximize any tax
benefits associated with the Purchased Assets with respect to
periods following the Closing Date and to minimize the tax costs
associated with the transactions contemplated hereby, and 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.
(e) To the extent that the Sellers' rights under any
warranty or guaranty described in Section 2.1(j) may not be
assigned without the consent of another Person, which consent has
not been obtained by the Closing Date, this Agreement shall not
constitute an agreement to assign same, if an attempted
assignment would constitute a breach thereof, or be unlawful.
The Seller and the Buyer agree that if any consent to an
assignment of any such warranty or guaranty shall not be
obtained, or if any attempted assignment would be ineffective or
would impair the Buyer's rights and obligations under the
warranty or guaranty in question, so that the Buyer would not in
effect acquire the benefit of all such rights and obligations,
the Seller, at the Buyer's expense, shall use Commercially
Reasonable Efforts, to the extent permitted by law and such
warranty or guaranty, to enforce such warranty or guaranty for
the benefit of the Buyer so as to provide the Buyer to the
maximum extent possible with the benefits and obligations of such
warranty or guaranty.
6.5 Public Statements
Subject to the requirements imposed by applicable law or any
Governmental Authority or stock exchange, prior to the Closing
Date, no press release or other public announcement or public
statement or comment in response to any inquiry relating to the
transactions contemplated by this Agreement shall be issued or
made by either Party without the approval of the other Party
(which approval shall not be unreasonably withheld). The Parties
agree to cooperate in preparing such announcements.
6.6 Consents and Approvals
(a) As promptly as possible after the date of this
Agreement, 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 use their best efforts 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. The Buyer will pay all filing fees under the HSR Act,
but each Party will bear its own costs of the preparation of any
filing.
(b) As promptly as possible after the date of this
Agreement, the Seller shall file with the FERC an application
requesting Exempt Wholesale Generator status for the Buyer, which
filing may be made individually by the Buyer or jointly with the
Seller in conjunction with other filings to be made with the FERC
under this Agreement, as reasonably determined by the Parties.
Prior to the Buyer's submission of that application with the
FERC, the Buyer shall submit such application to the Seller for
review and comment and the Buyer shall incorporate into the
application any revisions reasonably requested by the Seller. The
Buyer shall be solely responsible for the cost of preparing and
filing this application, any petition(s) for rehearing, or any
re-application. If the Buyer's initial application for Exempt
Wholesale Generator status is rejected by the FERC, the Buyer
shall be required to petition the FERC for rehearing and/or to
re-submit an application with the FERC, as reasonably required by
the Seller, provided that in either case the action directed by
the Seller does not create a Buyer Material Adverse Effect.
(c) As promptly as possible after the date of this
Agreement, the Buyer shall file with the FERC an application
requesting authorization under Section 205 of the Federal Power
Act to sell electric generating capacity and energy, but not
other services, including, without limitation, ancillary
services, and excluding those sales of electric generating
capacity and energy under the Xxxxxxxx Operating Agreement and
the New York Transition Agreement at wholesale at market-based
rates, which filing may be made individually by the Buyer or
jointly with the Seller in conjunction with other filings to be
made with the FERC under this Agreement, as reasonably determined
by the Parties. Prior to the filing of that application with the
FERC, the Buyer shall submit such application to the Seller for
review and comment and the Buyer shall incorporate into the
application any revisions reasonably requested by the Seller. The
Buyer shall be solely responsible for the cost of preparing and
filing this application, any petition(s) for rehearing, or any
re- application. If the Buyer's initial application for market-
based rate authorization results in a FERC request for additional
information or is rejected by the FERC, the Buyer shall be
required to provide that information promptly, to petition the
FERC for rehearing and/or to re-submit an application with the
FERC, as reasonably required by the Seller, provided that the
Seller shall have a reasonable opportunity to make changes to
such a petition or re-submission application and, provided
further, that the action directed by the Seller does not create a
Buyer Material Adverse Effect.
(d) As promptly as possible after the date of this
Agreement, the Seller and the Buyer shall jointly file with the
NYPSC and the FERC any filings required to be made with respect
to the transactions contemplated hereby other than those filings
referred to in Section 6.6(b) and (c). The Parties shall use
their best efforts to respond promptly to any requests for
additional information made by either of such agencies, and to
cause regulatory approval to be obtained at the earliest possible
date after the date of filing. Each Party will bear its own
costs of the preparation of any joint filing.
(e) The Seller and the Buyer shall cooperate with
each other and promptly prepare and file notifications with, and
request Tax clearances from, state and local taxing authorities
in jurisdictions in which a portion of the Purchase Price may
otherwise be required to be withheld or in which the Buyer would
otherwise be liable for any Tax liabilities of the Seller
pursuant to state and local Tax law.
(f) Within thirty (30) days following the date of
this Agreement, the Buyer shall provide to the Sellers, at the
Buyer's expense, all necessary information, documents, analyses
and studies (including "Hub and Spoke" and "Appendix A" analyses)
requested by the Sellers to permit the Sellers to make the
certification as described in, and otherwise in accordance with,
the NYPSC's April 24, 1998 order approving NYSEG's auction
process, and to secure the FERC's approval or acceptance of the
transactions contemplated by this Agreement.
(g) The Buyer shall have the primary responsibility
for securing the transfer or reissuance of the Transferable
Permits and the procurement of any other Permit effective as of
the Closing Date. The Sellers and SRC shall cooperate with the
Buyer's efforts in this regard and assist in any transfer or
reissuance of a Transferable Permit or the procurement of any
other Permit when so requested by the Buyer. In the event that
the Buyer is unable, despite its Commercially Reasonable Efforts,
to obtain a transfer or reissuance of one or more Transferable
Permits as of the Closing Date, the Buyer may use the Permits
issued to the Seller, provided (i) such use is not unlawful, (ii)
the Buyer notifies the Seller prior to the Closing Date, (iii)
the Buyer continues to make Commercially Reasonable Efforts to
obtain a transfer or reissuance of such Permits after the Closing
Date, and (iv) the Buyer indemnifies the Sellers for any losses,
claims or penalties suffered by the Sellers in connection with
the Transferable Permit that is not transferred or reissued as of
the Closing Date resulting from the Buyer's ownership and
operation of the Purchased Assets following the Closing Date. In
no event shall Buyer use or otherwise rely on a Transferable
Permit issued to the Seller beyond one year after the Closing
Date.
6.7 Fees and Commissions
The Seller and the Buyer each represent and warrant to the other
that, except for Xxxxxxx, Sachs & Co., which is acting for and at
the expense of the Seller, no broker, finder or other Person is
entitled to any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated hereby by reason of
any action taken by the Party making such representation and
warranty. The Seller, on the one hand, and the Buyer, on the
other hand, shall 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 the fees, commissions and finder's
fees payable to the parties listed above) incurred by reason of
any action taken by the indemnifying Party.
6.8 Tax Matters
(a) All transfer and sales taxes incurred in connection with
this Agreement and the transactions contemplated hereby
(including, without limitation, (i) New York sales tax and (ii)
the New York transfer tax on conveyances of interests in real
property) shall be borne by the Buyer. The Seller shall file, to
the extent required by, or permissible under, applicable law, all
necessary Tax Returns and other documentation with respect to all
such transfer and sales taxes, and, if required by applicable
law, the Buyer shall join in the execution of any such Tax
Returns and other documentation. The Buyer and the Seller shall
use their respective best efforts to provide cooperation and
assistance (including documents and information) in order to
minimize the amount of applicable transfer and sales taxes to the
extent permitted by law. Prior to the Closing Date, to the
extent applicable, the Buyer shall provide to the Seller
appropriate certificates of Tax exemption from each applicable
taxing authority.
(b) With respect to Taxes to be prorated in
accordance with Section 3.5 of this Agreement, the Buyer shall
prepare and timely file all Tax Returns required to be filed
after the Closing Date 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 fifteen (15) Business Days prior to the due date for
filing each such Tax Return. Within fifteen (15) Business Days
after receipt of such Tax Return, the Seller shall pay to the
Buyer the Seller's share (appropriately adjusted to reflect any
payments previously made by the Seller) of the amount shown on
such Tax Return. With respect to real estate taxes, evidence of
payment shall be delivered by the Seller to the Buyer at closing.
(c) The Buyer and the Seller shall each provide the
other Party with such assistance as may reasonably be requested
by the other Party in connection with the preparation of any Tax
Return, any audit or other examination by any taxing authority,
or any judicial or administrative proceedings relating to
liability for Taxes, and each shall retain and provide the
requesting party with any records or information which may be
relevant to such return, audit, examination, or proceedings.
Any information obtained pursuant to this Section 6.8(c) or
pursuant to any other Section hereof providing for the sharing of
information or review of any Tax Return or other instrument
relating to Taxes shall be kept confidential by the parties
hereto. The Seller shall not destroy any records related to the
Purchased Assets or SRC without first giving notice to, and
obtaining the written consent (which consent shall not be
unreasonably withheld), of the Buyer.
(d) SRC Tax Matters.
(1) Section 338(h)(10) Election. (A) With respect to
the sale of the SRC Stock, if requested by the Buyer, the
Seller and the Buyer shall jointly make the election
provided for by Section 338(h)(10) of the Code and Section
1.338(h)(10)-1 of the Treasury Regulations promulgated under
the Code and any permissible comparable election under state
and local tax law (the "Election"). As soon as practicable
after the Closing Date, with respect to the Election, the
Seller and the Buyer shall mutually prepare a Form 8023-A,
with all attachments, and the Seller and the Buyer shall
sign such Form 8023-A. The Buyer and the Seller shall also
cooperate with each other to take all actions necessary and
appropriate (including filing such additional forms,
returns, elections, schedules and other documents as may be
required) to effect and preserve the Election in accordance
with the provisions of Section 1.338(h)(10)-1 of the
Treasury Regulations (or any comparable provisions of state
or local law) or any successor provision.
(B) With respect to the Election, the Modified
Aggregate Deemed Sales Price as defined in Section
1.338(h)(10)-1 of the Treasury Regulations (the "Modified
ADSP") shall be allocated among the assets of SRC pursuant
to Treasury Regulation ' 1.338(h)(10)-1. The Buyer and the
Seller shall use their good faith best efforts to agree upon
such allocation. The Seller may provide to the Buyer a
schedule and supporting material reflecting such allocation
for the Buyer's review and consent. Such consent is not to
be unreasonably withheld. The Parties shall take no action
inconsistent with, or fail to take any action necessary for
the validity of, the Election, and shall adopt and utilize
the asset values determined from such reasonable allocation
for the purpose of all Tax Returns filed by them, and shall
not voluntarily take any action inconsistent therewith upon
examination of any Tax Return, in any refund claim, in any
litigation or otherwise with respect to such Tax Returns.
(2) Return Filing, Payments, Refunds and Credits.
(A) For purposes of this Agreement, the amount of
Taxes of SRC attributable to the pre-Closing portion of any
taxable period beginning before and ending after the Closing
Date (the "Straddle Period") shall be determined based upon
the cumulative monthly income statements of SRC for all
months ending prior to the Closing Date and upon the monthly
income statement of SRC for the month in which the Closing
Date occurs based upon the relative number of days in the
pre-Closing and post-Closing portion of the month in which
the Closing Date occurs; provided, however, that Taxes
imposed on a periodic basis shall be determined by reference
to the relative number of days in the pre-Closing and post-
Closing portions of such Straddle Period and any
extraordinary transaction shall be allocated to the portion
of such Straddle Period in which it occurred; provided,
further, that the taxes of SRC that are attributable to the
pre-Closing portion of any taxable period shall include any
Taxes resulting from the gain on any deemed sale of assets
by SRC pursuant to Section 338 of the Code or any comparable
provision under the laws of any other jurisdiction with
respect to the transactions contemplated by this Agreement.
(B) The Buyer and the Seller shall cause SRC to
join, for all periods for which SRC is required or eligible
to do so, in all consolidated federal Tax Returns of the
Seller ("Seller's Tax Returns"). The Seller shall cause to
be prepared and timely filed all of Seller's Tax Returns and
shall cause SRC to pay, in accordance with the Tax Sharing
Agreement, SRC's share of all Taxes shown to be due on
Seller's Tax Returns; except that, as to Taxes attributable
to the Election, SRC's share of such Taxes shall be paid by
the Seller. The Buyer shall, or shall cause SRC to, pay to
the Seller the portion of such Taxes shown to be due thereon
that are attributable to SRC for the post-Closing Date
portion of the Straddle Period determined in accordance with
Section 6.8(d)(2)(A) and the Tax Sharing Agreement in effect
on the date of the signing of this Agreement.
(C) The Buyer shall, or shall cause SRC to, prepare
and timely file all Tax Returns of SRC for all pre-Closing
periods and the Straddle Period, other than those referred
to in Section 6.8(d)(2)(B), which Tax Returns have not been
filed as of the Closing Date, and shall cause to be timely
paid all Taxes shown to be due on such Tax Returns. The
Seller shall fully cooperate with the Buyer and SRC in
accordance with past practice in the preparation of the Tax
Returns referred to in this Section 6.8(d)(2)(C).
(D) The Tax Returns referred to in Section
6.8(d)(2)(B) and (C), other than such Tax Returns that
include not only SRC but also one or more other affiliates
of the Buyer or the Seller (as the case may be), shall be
prepared in a manner consistent with past practice, unless a
contrary treatment is required by applicable law. Upon
request by the other Party, the Seller shall cause a copy of
any Tax Return that is required to be filed by the Seller
under Section 6.8(d)(2)(B), and the Buyer shall cause a copy
of any Tax Return that is required to be filed by the Buyer
or SRC under Section 6.8(d)(2)(C) (other than such Tax
Returns that include not only SRC but also one or more other
affiliates of the Buyer or the Seller, as the case may be),
in each case together with all relevant work papers and
other information, to be made available to the other Party
for review and approval no later than 20 Business Days
prior to the due date for the filing of such Tax Return
(taking into account proper extensions). Such approval
shall not be unreasonably withheld. An exact copy of any
such Tax Return filed by the Buyer shall be provided to the
Seller and any such Tax Return filed by the Seller shall be
provided to the Buyer, in each case, no later than ten days
after such Tax Return is filed.
(E) Any refunds or credits of the Taxes of SRC plus
any interest received with respect thereto from the
applicable taxing authorities for any pre-Closing period
(including without limitation, refunds or credits arising
from an amended return filed after the Closing Date) shall
be for the account of the Seller, except to the extent that
such refunds or credits are attributable to the mandatory
carryback of any deductions or credits for any Tax Period
ending after the Closing Date and, if received by the Buyer
or SRC, shall be paid to the Seller within ten days after
the Buyer or SRC receives such refund or after the relevant
Tax Return is filed within which the credit is applied
against the Buyer's or SRC's liability for Taxes for a
period which begins after the Closing Date, net of any Taxes
the Buyer or SRC is required to pay on account of receiving
such refund or credit (including a reasonable estimate of
resulting future Tax costs). The Seller, without the
consent of the Buyer (which consent shall not be
unreasonably withheld), shall not apply for any refund that
would create a material adverse effect on any post-Closing
period Tax Return and shall not apply for any refund for any
Straddle Period Tax Return or any Tax Return for SRC that is
not a consolidated, combined, or unitary Tax Return. Any
refunds or credits of Taxes of SRC for any Straddle Period
shall be apportioned between the Seller and the Buyer in the
same manner as the liability for such Taxes is apportioned
pursuant to Section 6.8(d)(2)(A).
(3) Tax Indemnification. (A) The Seller and NYSEG
shall, jointly and severally, indemnify, defend and hold the
Buyer harmless from and against any and all Taxes (including
interest and penalties) which may be suffered or incurred by
the Buyer or SRC in respect of or relating to, directly or
indirectly (i) Taxes of or attributable to SRC for all pre-
Closing periods, (ii) Taxes of or attributable to SRC with
respect to the pre-Closing portion of the Straddle Period,
and (iii) Taxes payable by SRC with respect to any pre-
Closing period or Straddle Period by reason of SRC being
severally liable for the Tax of any Tax Affiliate pursuant
to Treasury Regulation ' 1.1502-6 or any analogous state or
local tax law.
(B) The Buyer shall indemnify, defend and hold the
Sellers harmless from and against any and all Taxes,
(including interest and penalties) which may be suffered or
incurred by the Seller in respect of or relating to,
directly or indirectly (i) Taxes of or attributable to SRC
with respect to all post-Closing periods, (ii) Taxes of or
attributable to SRC with respect to the post-Closing portion
of any Straddle Period, and (iii) Taxes of or attributable
to SRC with respect to pre-Closing periods but only to the
extent relating to a breach by Buyer of any covenant of this
Agreement relating to Tax.
(C) An indemnity payment due under this Section
6.8(d)(3) shall be made within thirty (30) days after (i) if
the Party in control of the issue under Section 6.8(d)(4)
determines not to contest the issue, the receipt of a formal
notice or assessment from a taxing authority or the
occurrence of any other event giving rise to the payment
subject to an indemnity, or (ii) if the Party in control of
the issue under Section 6.8(d)(4) determines to contest the
issue, the earlier of the signing of a closing agreement or
settlement agreement or any other similar agreement with the
relevant tax authorities, the receipt of a deficiency notice
with respect to which the period for filing a petition with
the relevant court has expired, or a decision of any court
of competent jurisdiction which is not subject to appeal or
as to which the time for appeal has expired.
(4) Tax Contest. (A) The Seller and the Buyer shall
notify the other party in writing within 30 days of the
notifying Party's receipt of written notice of any pending
or threatened tax examination, Audit or other administrative
or judicial proceeding (a "Tax Contest") that could
reasonably be expected to result in an indemnification
obligation of such other Party pursuant to this Section
6.8(d). If the recipient of such notice of a Tax Contest
fails to provide such notice to the other Party, the
recipient shall not be entitled to indemnification for any
Taxes arising in connection with such Tax Contest, but only
to the extent, if any, that such failure or delay shall have
adversely affected the indemnifying Party's ability to
defend against, settle, or satisfy any action, suit or
proceeding for which the indemnified Party is entitled to
indemnification hereunder.
(B) To the extent that a Tax Contest relates to any
period ending prior to the Closing Date (and does not relate
to any Taxes for which the Buyer is liable in full
hereunder) or to any Taxes for which the Seller is liable in
full hereunder, the Seller shall at its expense control the
defense and settlement of that part of such Tax Contest. If
such Tax Contest relates to any period beginning on or after
the Closing Date (and does not relate to any Taxes for which
the Seller is liable in full hereunder) or if a Tax Contest
relates to any Taxes for which the Buyer is liable in full
hereunder, the Buyer shall at its own expense control the
defense and settlement of that part of such Tax Contest.
The Party not in control of the defense shall have the right
to observe the conduct of any Tax Contest at its expense,
including through its own counsel and other professional
experts. The Buyer and the Seller shall jointly represent
SRC in any Tax Contest relating to a Straddle Period, and
fees and expenses related to such representation shall be
paid equally by the Buyer and the Seller.
(C) Notwithstanding anything to the contrary in
Section 6.8(d)(4)(B), to the extent that an issue raised in
any Tax Contest controlled by one Party or jointly
controlled could materially affect the liability for Taxes
of the Party not in sole control, the controlling Party
shall not, and neither party in the case of joint control
shall, enter into a final settlement of such Tax Contest
without the consent of the other Party, which consent shall
not be unreasonably withheld. Where a Party withholds its
consent to any final settlement, that Party may continue or
initiate further proceedings, at its own expense, and (as be
tween the consenting and the non-consenting party) the lia
bility of the Party that wished to settle shall not exceed
the liability to it that would have resulted from the
proposed final settlement (including additions to Tax and
penalties that have accrued at that time), and the non-
consenting party shall indemnify the consenting party for
any amount in excess of such liability. This Section
6.8(d)(4) shall not apply to any issue relating to the
allocation of the Purchase Price pursuant to Section 3.4.
(5) Tax Sharing Agreements. Any Tax sharing
agreement to which SRC is a party shall be deemed terminated
with respect to SRC on, and effective as of, the Closing
Date, and no Person shall have any rights or obligations
under such Tax sharing agreement with respect to SRC after
such termination; provided, however, that the Tax Sharing
Agreement shall remain in effect with respect to SRC in
order to determine the portion of the Seller's Tax
liabilities that are attributable to SRC and that are to be
paid to the Seller under Section 6.8(d)(2)(B) for the post-
Closing Date portion of the Straddle Period.
(e) Disputes. In the event that a dispute arises
between the Seller and the Buyer regarding Taxes, or any amount
due under Section 6.8(d) hereof, the Parties shall attempt in
good faith to resolve such dispute, and any agreed upon amount
shall be paid to the appropriate Party. If such dispute is not
resolved within 30 days, the Parties shall submit the dispute to
the Independent Accounting Firm for resolution, which resolution
shall be final, conclusive and binding on the Parties.
Notwithstanding anything in this Agreement to the contrary, the
fees and expenses of the Independent Accounting Firm in resolving
the dispute shall be borne equally by the Seller and the Buyer.
Any payment required to be made as a result of the resolution of
the dispute by the Independent Accounting Firm shall be made
within ten days after such resolution, together with any interest
determined by the Independent Accounting Firm to be appropriate.
6.9 Advice of Changes
Prior to the Closing, each Party will advise the other in
writing with respect to any matter arising after execution of
this Agreement of which that Party becomes aware and which, if
existing or occurring at the date of this Agreement, would have
been required to be set forth in this Agreement, including any of
the Schedules hereto. The Seller shall promptly notify the Buyer
of any such development, including any such development causing a
breach of any of its representations and warranties in Article
IV. Unless the Buyer has the right to terminate this Agreement
pursuant to Section 9.1(e) below by reason of the development and
exercises that right within the period of fifteen (15) days after
such right accrues, the written notice pursuant to this Section
6.9 will be deemed to have amended this Agreement, including the
appropriate Schedule, to have qualified the representations and
warranties contained in Article IV above, and to have cured any
misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
6.10 Employees
(a) The Buyer is required to offer employment, effective as
of the Closing Date, to those hourly- paid employees of the
Sellers: (i) who are covered by the IBEW Collective Bargaining
Agreement, as defined in Section 6.10(d) below; and (ii) who are
listed in, or are in a function or whose employment
responsibilities are listed in, Schedule 6.10(a).
(b) The Buyer is also required to offer employment,
effective as of the Closing Date, to those salaried employees of
the Seller who are listed in, or in a function or whose
employment responsibilities are listed in, Schedule 6.10(b).
Each person who becomes employed by the Buyer pursuant to
Section 6.10(a) or (b) shall be referred to herein as a
"Transferred Union Employee" or "Transferred Non-Union Employee",
respectively.
(c) All offers of employment made pursuant to Sections
6.10(a) or (b) shall be made (i) in accordance with all
applicable laws and regulations, and (ii) for employees
represented by System Council U-7 of the International
Brotherhood of Electrical Workers ("IBEW") in accordance with the
IBEW Collective Bargaining Agreement and IBEW Memoranda, as
defined in Section 6.10(d) below. Transferred Union Employees
shall retain their seniority and receive full credit for service
with the Seller, NYSEG and their Affiliates in connection with
entitlement to vacation and all other benefits and rights under
the IBEW Collective Bargaining Agreement and the IBEW Memoranda,
as defined in Section 6.10(d), below. Transferred Non-Union
Employees shall also be given credit for all service with Seller,
NYSEG and their Affiliates for purposes of benefits entitlement.
(d) Schedule 6.10(d) sets forth the collective
bargaining agreement, and amendments thereto, to which NYSEG is a
party with the IBEW in connection with the Purchased Assets
("IBEW Collective Bargaining Agreement"), together with the
Memoranda or Letters Renewed for the Term of the 1997 Agreement
between NYSEG and System Council U-7 of the IBEW ("IBEW
Memoranda"). With respect to Transferred Union Employees who
are included in the collective bargaining units covered by the
IBEW Collective Bargaining Agreement ("IBEW Employees"), on the
Closing Date, the Buyer shall assume the IBEW Collective
Bargaining Agreement and the IBEW Memoranda for the duration of
its term as it relates to IBEW Employees to be employed at the
Purchased Assets and shall comply with all applicable obligations
under the IBEW Collective Bargaining Agreement and the IBEW
Memoranda. The Buyer further agrees to recognize the IBEW as the
collective bargaining agent for the Transferred Union Employees.
(e) For the period commencing on the Closing Date and
ending on June 30, 2000, the Buyer shall provide all Transferred
Non-Union Employees with total compensation and benefits
including, without limitation, base pay, authorized overtime as
set forth in Schedule 6.10(e), bonuses, and benefits contained in
the employee benefit plans, programs, and fringe benefit
arrangements (including education reimbursement and vacation
entitlement) which are in the aggregate at least comparable in
value and nature to the Transferred Non-Union Employee's total
compensation and benefits prior to the Closing. Such total
compensation shall be based upon (1) such employee's existing
individual base pay, (2) authorized overtime, if applicable, and
(3) an average bonus and benefit component for such employee's
salary plan level, as consistently applied by Seller or its
Affiliates, apportioned according to such employee's base pay.
(f) As of the Closing Date, all Transferred Non-Union
Employees shall cease to participate in the employee welfare
benefit plans (as such term is defined in ERISA), maintained or
sponsored by the Seller or its Affiliates (the "Prior Welfare
Plans") and shall commence to participate in welfare benefit
plans of the Buyer or its Affiliates (the "Replacement Welfare
Plans"). The Buyer shall (i) waive all limitations as to pre-
existing condition exclusions and waiting periods with respect to
the Transferred Non-Union Employees under the Replacement Welfare
Plans, other than, but only to the extent of, limitations or
waiting periods that were in effect with respect to such
employees under the Prior Welfare Plans and that have not been
satisfied as of the Closing Date, and (ii) provide each
Transferred Non-Union Employee with credit for any co-payments
and deductibles paid prior to the Closing Date in satisfying any
deductible or out-of-pocket requirements under the Replacement
Welfare Plans (on a pro-rata basis in the event of a difference
in plan years).
(g) Transferred Non-Union Employees shall be given
credit for all service with the Seller and its Affiliates under
all employee benefit plans, programs, and fringe benefit plans,
programs, and fringe benefit arrangements of the Buyer
established for the Transferred Non-Union Employees ("Buyer
Benefit Plans") in which they become participants, to the extent
such service was recognized for comparable purposes under the
corresponding Benefit Plan of Seller or NYSEG. The service
credit given is for purposes of eligibility, vesting, service
related level of benefits, and benefit accrual. Although
Transferred Non-Union Employees shall be given credit for all
service with the Seller and its Affiliates under all Buyer
Benefit Plans, the ultimate benefits provided under the Buyer
Benefit Plans may be offset by those previously provided by the
Seller or its Affiliates or the Benefit Plans, or by the benefits
accrued under the Benefit Plans or otherwise committed to be
provided by the Seller or its Affiliates in the future,
regardless of whether such accrued benefits actually are paid.
(h) The Buyer shall establish a "defined benefit plan"
which is identical to the "Retirement Benefit Plan for Employees
of NYSEG" under which the ultimate benefits provided to the
Transferred Non-Union Employees and Transferred Union Employees
shall be offset by the benefits accrued under the "Retirement
Benefit Plan for Employees of NYSEG" or provided by the
"Retirement Benefit Plan for Employees of NYSEG" in the future.
(i) To the extent allowable by law, the Buyer shall
take any and all necessary action to cause the trustee of a
defined contribution plan of the Buyer or one of its Affiliates,
if requested to do so by a Transferred Employee, to accept a
direct "rollover" of all or a portion of said employee's
distribution (excluding securities) from the New York State
Electric & Gas Corporation Tax Deferred Savings Plan for Hourly
Paid Employees and the New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees.
(j) The Buyer shall pay to each Transferred Non-Union
Employee whose employment is terminated by the Buyer or one of
its Affiliates before June 30, 2000 a severance benefit package
equal to the following:
Each Transferred Non-Union Employee whose
employment is terminated by the Buyer for other than inability to
perform normally assigned duties, unsatisfactory job performance,
or for cause will be entitled to a severance payment based on the
following schedule:
Service Severance Payment
Less than 2 years l/2 month's base pay
2 but less than 4 years l month's base pay
4 but less than 6 years l l/2 month's base pay
6 but less than 8 years 2 month's base pay
8 but less than 10 years 2 l/2 month's base pay
10 but less than 12 years 3 month's base pay
12 but less than 15 years 3 2 month's base pay
15 or more 3 2 month's base pay plus 1
additional week's base pay for
each full year of service
beyond 14 years
(k) The Seller agrees to perform timely and discharge
all requirements under the WARN Act and under applicable state
and local laws and regulations for the notification of its
employees arising from the sale of the Purchased Assets to the
Buyer up to and including the Closing Date for those employees
who will become Transferred Employees effective as of the Closing
Date. After the Closing, 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.
(l) The Buyer may offer employment, effective as of
the Closing Date, to those salaried employees of the Seller or
its Affiliates who are listed in, or whose employment functions
and responsibilities are listed in, Schedule 6.10(l). The Buyer
shall notify the Seller no later than ninety (90) days after the
date of this Agreement as to which salaried employees shall be
offered employment. Each person who becomes employed by the
Buyer pursuant to this Section 6.10(l) shall be considered a
"Transferred Non-Union Employee" for all purposes under this
Agreement.
6.11 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, other than loss or damage
caused by the acts or negligence of the Buyer or any Buyer
Representative, which loss or damage shall be the responsibility
of the Buyer.
(b) If, before the Closing Date, all or any material
portion of the Purchased Assets is taken by eminent domain or is
the subject of a pending or (to the Knowledge of the Seller)
contemplated taking which has not been consummated, or if all or
any material portion of the Purchased Assets is damaged or
destroyed by fire or other casualty, the Seller shall notify the
Buyer promptly in writing of such fact. If such taking,
contemplated taking, damage or destruction would create a
Material Adverse Effect, the Seller shall have the option,
exercised by notice to the Buyer, to restore, repair or replace
the taken or damaged Purchased Assets prior to the Closing. Upon
any taking, damage or destruction of less than a material portion
of the Purchased Assets, the Buyer and the Sellers shall
negotiate in good faith to settle the loss resulting from such
taking, damage or destruction by making a fair and equitable
adjustment to the Purchase Price and, upon such settlement,
consummate the transactions contemplated by this Agreement
pursuant to the terms of this Agreement. If no such settlement is
reached within sixty (60) days after the Seller has notified the
Buyer of such taking, damage or destruction, then the Purchase
Price shall be adjusted by an amount determined by the
Independent Accounting Firm.
(c) If the Seller elects to restore, repair or
replace the Purchased Assets, which election shall be made by
notice to the Buyer within fifteen (15) days following the
occurrence of the casualty or taking, the completion of the
repair, replacement or restoration will be a condition to the
Closing and the Closing Date shall be postponed at the election
of the Seller for the amount of time reasonably necessary to
complete the restoration, repair or replacement, not to exceed
one hundred twenty (120) days after receipt by the Buyer of such
notice, without Buyer's consent. The Buyer, and the Buyer's
representatives, shall have the right to observe the restoration,
repair, or replacement that the Seller elects to undertake. In
the event that the Seller elects not to restore, repair or
replace such damaged Purchased Assets, or in the event that the
Seller, having elected to repair, replace or restore such damaged
Purchased Assets, fails to complete the repair, replacement or
restoration within one hundred twenty (120) days, then the
Parties shall, within thirty (30) days following the Seller's
election, or failure to complete, whichever is later, negotiate
in good faith an equitable adjustment in the Purchase Price to
reflect the impact of the casualty or taking, as mitigated by any
repair, replacement or restoration work actually completed by the
Seller, on the Purchased Assets being sold to the Buyer, and
proceed to the Closing. To assist the Buyer in its evaluation of
any casualty or taking, the Seller shall provide the Buyer such
information as the Buyer may reasonably request in connection
therewith.
(d) In the event that the Parties fail to reach
agreement on an equitable adjustment of the Purchase Price within
the thirty (30) days provided in Section 6.11(c), then the Buyer
shall have the election, exercisable by notice to the Seller,
within fifteen (15) days immediately following the expiration of
the thirty (30) day period to either (i) proceed with the
consummation of the transaction at Closing, with a reduction in
the Purchase Price consistent with the Seller's last offer
communicated to the Buyer, in which event the Seller shall assign
over or deliver to the Buyer at Closing all condemnation proceeds
or insurance proceeds which the Seller receives, or to which
Seller becomes entitled by virtue of the casualty or taking, less
any costs and expenses reasonably incurred by the Seller in
obtaining such condemnation proceeds or insurance proceeds, or
(ii) terminate this Agreement, in which event this Agreement
shall terminate and neither Party shall thereafter have any
obligation or liability to the other by reason of this Agreement.
If the Buyer fails to make the election within such fifteen (15)
day period, the Buyer will be deemed to have made the election to
proceed with the Closing.
6.12 Additional Covenants of the Buyer
Notwithstanding any other provision hereof, the
Buyer covenants and agrees that, after the Closing Date, the
Buyer will not make any modifications to the Purchased
Assets or take any action which would result in a loss of the
exclusion of interest on the pollution control bonds or the solid
waste disposal bonds issued on behalf of NYSEG in connection with
the Kintigh, Milliken, Goudey, Greenidge, Hickling, and Xxxxxxxx
Generating Stations from gross income for federal income purposes
under Section 103 of the Code. The Buyer further covenants and
agrees that, in the event that the Buyer transfers any of the
Purchased Assets, the Buyer shall obtain from its transferee a
covenant and agreement that is analogous to the Buyer's covenant
and agreement pursuant to the immediately preceding sentence, as
well as a covenant and agreement that is analogous to that of
this sentence. This covenant shall survive Closing and shall
continue in effect so long as the pollution control bonds or
solid waste disposal bonds remain outstanding.
6.13 Insurance
(a) After the Closing Date, upon the assertion of an
Environmental Claim against the Buyer and/or the Sellers relating
to an Assumed Liability of the Buyer hereunder, the Sellers, upon
written request from the Buyer, agrees to authorize and empower
the Buyer, on the Seller's behalf, to pursue any coverage
available for such Environmental Claim against each and every
insurance company which has issued comprehensive general
liability insurance and/or property damage insurance to and for
the benefit of the Seller or NYSEG and which may apply to such
Environmental Claim and the damages resulting therefrom
(individually an "Insurance Policy" and collectively the
"Insurance Policies").
(b) Such authorization will be made upon, and subject to,
the following terms and conditions: (i) the Buyer will direct
the conduct and prosecution of any such Environmental Claim,
consult with the Seller on the strategy and progress of such
Environmental Claim, and furnish the Seller with periodic reports
on the status of such Environmental Claim; (ii) the Buyer may
select its own legal counsel, provided the Seller and NYSEG may
participate in the prosecution of such Environmental Claim with
legal counsel of their choice provided they will be responsible
for any legal charges and expenses associated therewith; (iii)
the Buyer will be solely responsible for all costs, expenses, and
other charges associated with the prosecution of such
Environmental Claim, including but not limited to all attorneys'
fees and legal charges (other than Seller's and NYSEG's) and
court costs; (iv) the Buyer will diligently prosecute and pursue
such Environmental Claim; (v) the Buyer will pursue and prosecute
such Environmental Claim in a manner which will not prejudice
Seller's or NYSEG's residual rights under the Insurance Policies;
(vi) any proceeds, payment, judgment, or settlement amounts
received by the Buyer with respect to such Environmental Claim
will first be applied toward satisfying any indemnity obligation
of the Buyer relating to such Environmental Claim as set forth in
Section 8.1(a) of this Agreement, and, following the Seller's
receipt of same, the Seller and NYSEG will assign their right,
title, and interest in and to the remainder of such proceeds,
payment, judgment, or settlement to the Buyer; and (vii) the
Buyer will not settle or confess judgment with respect to such
Environmental Claim without the Seller's consent, which consent
will not be unreasonably withheld, provided, however, that the
Buyer acknowledges and agrees that it will be reasonable for the
Seller to withhold or delay its consent if such settlement or
confession prejudices the Seller's or NYSEG's residual rights
under the Insurance Policies and/or otherwise violates any term
or condition set forth in this Agreement.
(c) The Seller agrees, with respect to any such
Environmental Claim, (i) to cooperate with the Buyer and
participate to the extent reasonably necessary in the prosecution
of such Environmental Claim and to comply with all reasonable
requests for assistance and cooperation from the Buyer in the
prosecution of such Environmental Claim, (ii) that upon the
reasonable request of the Buyer, the Seller will make available
to the Buyer any employees and officers of the Seller and NYSEG
having knowledge of or expertise relating to such Environmental
Claims or Insurance Policies for the purpose of assisting Buyer
in the prosecution of such Environmental Claim, (iii) that upon
the reasonable request of the Buyer, the Seller will make
available to the Buyer and its counsel documents and physical
evidence in the possession or control of the Seller and NYSEG,
and that such documents and physical evidence will be preserved
in accordance with the respective document retention policies of
the Seller and NYSEG, (iv) that the Seller will assist the Buyer
in obtaining the execution of documents necessary for the
prosecution or settlement of any such Claim from employees and
officers of the Seller and NYSEG, and (v) that so long as the
Buyer fulfills its obligations set forth in subsection 6.13(b)
above, the Seller and NYSEG will not seek coverage for any such
Environmental Claim from the Insurance Policies without the prior
written consent of the Buyer, which consent shall not be
unreasonably withheld. The Sellers' agreements to cooperate and
assist the Buyer stated in this subparagraph will be furnished
without charge to the Buyer insofar as it relates to cooperation
and assistance that is reasonable.
(d) Notwithstanding the foregoing, or any
representation or warranty made by the Seller or NYSEG in this
Agreement, the Seller and NYSEG, individually and collectively,
make no representation or warranty as to the validity or
enforceability of any claim against the Insurance Policies for
any Environmental Claims, particularly but not by way of
limitation, that the Seller or NYSEG have furnished any insurance
company which has issued any Insurance Policy with adequate or
timely notice of (i) any occurrence or condition which may give
rise to an Environmental Claim, whether known or unknown, or (ii)
any Environmental Claim within the Knowledge of the Seller or
NYSEG.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of the Buyer
The obligation of the Buyer to effect the purchase of
the Purchased Assets and the other transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to
the Closing Date (or the waiver by the Buyer) of the following
conditions:
(a) The waiting period under the HSR Act applicable
to the consummation of the sale of the Purchased Assets
contemplated hereby shall have expired or been terminated.
(b) No preliminary or permanent injunction or other
order or decree by any federal or state court or Government
Authority which prevents the consummation of the sale of the
Purchased Assets contemplated herein shall have been issued and
remain in effect (each Party agreeing to use its reasonable best
efforts to have any such injunction, order or decree lifted) and
no statute, rule or regulation shall have been enacted by any
state or federal government or Governmental Authority in the
United States which prohibits the consummation of the sale of the
Purchased Assets;
(c) The Buyer shall have received all of the Buyer
Required Regulatory Approvals (other than those approvals which
if not obtained, would not individually or in the aggregate,
create a Material Adverse Effect), in each case subject to terms
and conditions that could not reasonably be expected to, in the
aggregate, have a Buyer Material Adverse Effect
(d) The Sellers shall have performed and complied
with in all material respects the covenants, agreements and
obligations contained in this Agreement which are required to be
performed and complied with by the Sellers on or prior to the
Closing Date;
(e) The representations and warranties of the Sellers
set forth in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made at and as
of the Closing Date, except that any representations and
warranties made as of a specified date shall continue on the
Closing Date to be true and correct in all material respects as
of such specified date;
(f) The Buyer shall have received a certificate from
an authorized officer of the Sellers, dated the Closing Date, to
the effect that, to such officers' Knowledge, the conditions set
forth in Sections 7.1(d) and (e) have been satisfied by the
Sellers;
(g) Since the date of this Agreement, no Material
Adverse Effect shall have occurred and be continuing;
(h) The Buyer shall have received an opinion from the
Seller's counsel reasonably acceptable to the Buyer, dated the
Closing Date and satisfactory in form and substance to the Buyer
and its counsel, substantially to the effect that:
(1) The Seller, NYSEG and SRC are each corporations
duly incorporated, validly existing and in good standing
under the laws of their respective jurisdictions of
incorporation and the Seller and NYSEG have full corporate
power and authority to execute and deliver the Agreement and
each of the Ancillary Agreements, as applicable, and to
consummate the transactions contemplated by them thereby;
and the execution and delivery of the Agreement and each of
the Ancillary Agreements by the Seller and NYSEG and the
consummation of the sale of the Purchased Assets and the
other transactions contemplated thereby by the Seller and
NYSEG have been duly and validly authorized by all necessary
corporate action required on the part of the Seller and
NYSEG;
(2) The Agreement and each of the Ancillary
Agreements have been duly and validly executed and delivered
by the Seller and NYSEG, as the case may be, and constitute
legal, valid and binding agreements of the Seller and NYSEG,
enforceable against the Seller and NYSEG in accordance with
its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting
or relating to enforcement of creditors' rights generally
and general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in
equity);
(3) The execution, delivery and performance of the
Agreement and each of the Ancillary Agreements by the
Seller and NYSEG do not (A) conflict with the Certificate of
Incorporation or Bylaws, as currently in effect, of the
Seller or NYSEG or (B) to the knowledge of such counsel
constitute a violation of or default under the Seller
Applicable Contracts. "Seller Applicable Contracts" means
those agreements or instruments set forth on a Schedule
attached to the opinion and which have been identified to
such counsel as all the agreements and instruments which are
material to the business or financial condition of the
Seller or NYSEG;
(4) The Xxxx of Sale and other transfer instruments
described in Section 3.6 have been duly executed and
delivered and are in proper form to transfer to the Buyer
such title as was held by Seller to the Purchased Assets;
(5) No declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
Governmental Authority is necessary for the consummation by
the Seller and NYSEG of the Closing other than (A) the
Seller Required Regulatory Approvals, all of which have been
obtained and are in full force and effect with such terms
and conditions as have been imposed by any applicable
Governmental Authority, and (B) such declarations, filings,
registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not, in the
aggregate create a Material Adverse Effect; and
(6) The SRC Stock has been duly authorized and
validly issued and is fully paid and non-assessable. The
Seller is the holder of record of the SRC Stock; and
(h) The Seller shall have delivered, or caused to be
delivered, to the Buyer at the Closing, the Seller's closing
deliveries described in Section 3.6.
7.2 Conditions to Obligations of the Sellers
The obligation of the Sellers to effect the sale of the
Purchased Assets and the other transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the
Closing Date (or the waiver by the Seller) of the following
conditions:
(a) The waiting period under the HSR Act applicable
to the consummation of the sale of the Purchased Assets
contemplated hereby shall have expired or been terminated;
(b) No preliminary or permanent injunction or other
order or decree by any federal or state court which prevents the
consummation of the sale of the Purchased Assets contemplated
herein shall have been issued and remain in effect (each Party
agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted by any state or federal
government or governmental agency in the United States which
prohibits the consummation of the sale of the Purchased Assets;
(c) The Seller shall have received all of the Seller
Required Regulatory Approvals (other than those approvals which
if not obtained, would not individually or in the aggregate,
create a Material Adverse Effect) in each case, subject to terms
and conditions that could not reasonably be expected, in the
aggregate, to have a material adverse effect on the business,
assets, operations or conditions (financial or otherwise) of the
Sellers;
(d) All consents and approvals for the consummation
of the sale of the Purchased Assets and the performance of the
Ancillary Agreements contemplated hereby required under the terms
of any note, bond, mortgage, indenture, material agreement or
other instrument or obligation to which Seller or NYSEG is party
or by which the Seller or NYSEG, or any of the Purchased Assets
may be bound, shall have been obtained, other than those which if
not obtained, would not, individually and in the aggregate,
create a Material Adverse Effect;
(e) The Buyer shall have performed and complied with
in all material respects the covenants, agreements and
obligations contained in this Agreement that are required to be
performed and complied with by the Buyer on or prior to the
Closing Date;
(f) The representations and warranties of the Buyer
set forth in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made at and as
of the Closing Date, except that any representations and
warranties made as of a specified date shall continue on the
Closing Date to be true and correct in all material respects as
of such specified date;
(g) The Sellers shall have received a certificate
from an authorized officer of the Buyer, dated the Closing Date,
to the effect that, to such officers' Knowledge, the conditions
set forth in Sections 7.2(e) and (f) have been satisfied by the
Buyer;
(h) The Buyer shall have assumed, as set forth in
Section 6.10, effective on and after the Closing Date, all of the
applicable obligations under the IBEW Collective Bargaining
Agreement and IBEW Memoranda as they relate to Transferred Union
Employees;
(i) The Seller shall have received an opinion from
the Buyer's counsel reasonably acceptable to the Seller, 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 and the
Buyer's Parent is a corporation, each of which is duly
organized, existing and in good standing under the laws of
the state of their respective jurisdiction of organization
and in such foreign jurisdictions where qualification is
necessary to conduct their business, and Buyer is qualified
to do business in the State of New York , and each has full
power and authority to execute and deliver the Agreement and
each of the Ancillary Agreements and to consummate the
transactions contemplated by them thereby; and the execution
and delivery of the Agreement and each of the Ancillary
Agreements by the Buyer, or the Buyer's Parent, as the case
may be, and the consummation of the transactions
contemplated thereby by the Buyer and Buyer's Parent have
been duly authorized by all necessary action required on the
part of the Buyer and Buyer's Parent;
(2) The Agreement and each of the Ancillary
Agreements have been duly and validly executed and delivered
by the Buyer and Buyer's Parent, as the case may be, and
constitute legal, valid and binding agreements of the Buyer
and Buyer's Parent, enforceable against each of them in
accordance with their terms, except that such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a
proceeding at law or in equity);
(3) The execution, delivery and performance of this
Agreement and each of the Ancillary Agreements by the Buyer
or the Buyer's Parent, as the case may be, do not (A)
conflict with the Certificate of Formation, Operating
Agreement, Certificate of Incorporation or Bylaws (or other
organizational documents) as currently in effect, of the
Buyer or Buyer's Parent or (B) to the knowledge of such
counsel, constitute a violation of or default under the
Buyer Applicable Contracts. "Buyer Applicable Contracts"
mean those agreements or instruments set forth on a Schedule
attached to the opinion and which have been identified to
such counsel as all the agreements and instruments which are
material to the business or financial condition of the Buyer
and Buyer's Parent;
(4) The Assignment and Assumption Agreement and other
transfer instruments described in Section 3.7 have been duly
executed and delivered and are in proper form for the Buyer
to assume the Assumed Liabilities; and
(5) 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 and the performance by Buyer and
Buyer's Parent, as applicable, of its obligations under the
Ancillary Agreements other than the Buyer Required
Regulatory Approvals, all of which have been obtained and
are in full force and effect.
(j) Buyer shall have delivered, or caused to be
delivered, to the Seller at the Closing, Buyer's closing
deliveries described in Section 3.7.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification
(a) The Buyer shall indemnify, defend and hold harmless the
Seller, its officers, directors, employees, shareholders,
Affiliates and agents (each, a "Seller Indemnitee") from and
against any and all claims, demands, suits, losses, liabilities,
damages, obligations, payments, costs and expenses (including,
without limitation, the costs and expenses of any and all
actions, suits, proceedings, assessments, judgments, settlements
and compromises relating thereto and reasonable attorneys' fees
and reasonable disbursements in connection therewith) (each, an
"Indemnifiable Loss") asserted against or suffered by any Seller
Indemnitee relating to, resulting from or arising out of (i) any
breach by the Buyer of any covenant or agreement of the Buyer
contained in this Agreement or the representations and warranties
contained in Sections 5.1, 5.2 and 5.3, (ii) the Assumed
Liabilities, (iii) any loss or damages resulting from or arising
out of any Inspection, or (iv) any Third Party Claims against a
Seller Indemnitee arising out of or in connection with the
Buyer's ownership or operation of the Plants and other Purchased
Assets on or after the Closing Date.
(b) The Seller and NYSEG shall, jointly and
severally, indemnify, defend and hold harmless the Buyer, its
officers, directors, employees, shareholders, Affiliates and
agents (each, a "Buyer Indemnitee") from and against any and all
Indemnifiable Losses asserted against or suffered by any 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 or the representations and warranties
contained in Sections 4.1, 4.2 and 4.3, (ii) the Excluded
Liabilities, (iii) noncompliance by the Seller with any bulk
sales laws as provided in Section 10.11, or (iv) any Third Party
Claims against a Buyer Indemnitee arising out of, or in
connection with, the Seller's ownership or operation of the
Excluded Assets.
(c) The Buyer for itself and on behalf of its
Representatives and Affiliates, does hereby release, hold
harmless and forever discharge the Seller, its Representatives
and Affiliates, from any and all Indemnifiable Losses of any kind
or character, whether known or unknown, hidden or concealed,
resulting from or arising out of any Environmental Condition or
violation of Environmental Law relating to the Purchased Assets
other than any liabilities or obligations related to
Environmental Conditions or Violations of Environmental Law
described in Section 2.4. The Buyer hereby waives any and all
rights and benefits with respect to such Indemnifiable Losses
that it now has, or in the future may have conferred upon it by
virtue of any statute or common law principle which provides that
a general release does not extend to claims which a party does
not know or suspect to exist in its favor at the time of
executing the release, if knowledge of such claims would have
materially affected such party's settlement with the obligor. In
this connection, the Buyer hereby acknowledges that it is aware
that factual matters now unknown to it may have given or may
hereafter give rise to Indemnifiable Losses that are presently
unknown and unsuspected, and it further agrees that this release
has been negotiated and agreed upon in light of that awareness
and it nevertheless hereby intends to release the Seller and its
Representatives and Affiliates from the Indemnifiable Losses
described in the first sentence of this paragraph.
(d) Any Person entitled to receive indemnification
under this Agreement (an "Indemnitee") having a claim under these
indemnification provisions shall make a reasonable good faith
effort (or authorize the Indemnifying Party in accordance with
the terms of Section 6.13, in the event of indemnification of any
Environmental Claims) to make such 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 an
Indemnitee receives any insurance proceeds with respect to such
Indemnifiable Loss and (ii) to take into account any net Tax
benefit realized by the Indemnitee arising from the recognition
of such Indemnifiable Loss and any payment actually received by
the Indemnitee with respect to such Indemnifiable Loss.
(e) The expiration, termination or extinguishment of
any covenant or agreement shall not affect the Parties'
obligations under this Section 8.1 if the Indemnitee provided the
Person required to provide indemnification under this Agreement
(the "Indemnifying Party") with proper notice of the claim or
event for which indemnification is sought prior to such
expiration, termination or extinguishment.
(f) Except to the extent provided in Section
6.8(d)(3) hereof, which Section shall govern the matters covered
therein, and except to the extent provided in Article IX, which
Article governs the matters covered therein, the rights and
remedies of the Sellers and the Buyer under this Article VIII are
exclusive and in lieu of any and all other rights and remedies
which the Sellers and the Buyer may have under this Agreement or
otherwise for monetary relief with respect to (i) any breach of
or failure to perform any covenant or agreement or representation
or warranty set forth in this Agreement or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be.
(g) The indemnification obligations of the Parties
described in this Article VIII apply only to matters arising out
of this Agreement, excluding the Ancillary Agreements. Any
Indemnifiable Loss arising under or pursuant to an Ancillary
Agreement shall be governed by the indemnification obligations,
if any, in the Ancillary Agreement under which the Indemnifiable
Loss arises.
(h) No Indemnitee shall be entitled to recover from
an Indemnifying Party for any liabilities, damages, obligations,
payments, losses, costs or expenses as to which indemnification
is provided under this Agreement any amount in excess of the
direct damages, court costs and reasonable attorney's fees
suffered by such Indemnified Party. The Buyer and the Sellers
waive any right to recover punitive, special, incidental,
exemplary and consequential damages arising in connection with or
with respect to the indemnification provisions hereof. The
provisions of this Section 8.1(h) shall not apply to
indemnification for a Third Party Claim.
(i) Buyer and Sellers agree that notwithstanding any
provision to this Agreement to the contrary, all Parties to the
Agreement retain their remedies at law or in equity with respect
to willful or intentional breaches of this Agreement.
8.2 Defense of Claims
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding
made or brought by any Person who is not a party to this
Agreement or any Affiliate of a Party to this Agreement (a "Third
Party Claim") with respect to which indemnification is to be
sought from an Indemnifying Party, the Indemnitee shall give such
Indemnifying Party reasonably prompt written notice thereof, but
in any event such notice shall not be given later than twenty
(20) 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 shall indicate the
estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying
Party will have the right to participate in or, by giving written
notice to the Indemnitee, to elect to assume the defense of any
Third Party Claim at such Indemnifying Party's expense and by
such Indemnifying Party's own counsel, provided that the counsel
for the Indemnifying Party who shall conduct the defense of such
Third Party Claim shall be reasonably satisfactory to the
Indemnitee. The Indemnitee shall cooperate in good faith in such
defense at such Indemnitee's own expense. If an Indemnifying
Party elects not to assume the defense of any Third Party Claim,
the Indemnitee may compromise or settle such Third Party Claim
over the objection of the Indemnifying Party, which settlement or
compromise shall conclusively establish the Indemnifying Party's
liability pursuant to this Agreement.
(b) If, within ten (10) calendar days after an
Indemnitee provides written notice to the Indemnifying Party of
any Third Party Claim, the Indemnitee receives written notice
from the Indemnifying Party that such Indemnifying Party has
elected to assume the defense of such Third Party Claim as
provided in Section 8.2(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 shall fail to take
reasonable steps necessary to defend diligently such Third Party
Claim within twenty (20) calendar days after receiving notice
from the Indemnitee that the Indemnitee believes the Indemnifying
Party has failed to take such steps, the Indemnitee may assume
its own defense, and the Indemnifying Party shall be liable for
all reasonable expenses thereof. Without the prior written
consent of the Indemnitee, the Indemnifying Party shall 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 shall give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to
such firm offer within ten (10) calendar days after its receipt
of such notice, the Indemnifying Party shall be relieved of its
obligations to defend such Third Party Claim and the Indemnitee
may contest or defend such Third Party Claim. In such event, the
maximum liability of the Indemnifying Party as to such Third
Party Claim will be the amount of such settlement offer plus
reasonable costs and expenses paid or incurred by the Indemnitee
up to the date of such notice.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim
(a "Direct Claim") shall 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 such notice
shall not be given later than ten (10) calendar days after the
Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party shall have a period of thirty (30) calendar
days within which to respond to such Direct Claim. If the
Indemnifying Party does not respond within such thirty (30)
calendar day period, the Indemnifying Party shall be deemed to
have accepted such claim. If the Indemnifying Party rejects such
claim, the Indemnitee will be free to seek enforcement of its
right 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, from 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 publicly
announced prime rate then in effect of The Chase Manhattan Bank)
shall promptly be repaid by the Indemnitee to the Indemnifying
Party. Except as otherwise provided in Section 8.2(e) below,
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 with
respect to 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 8.2(d) shall be construed to require any party
hereto to obtain or maintain any insurance coverage.
(e) Notwithstanding anything else to the contrary set
forth in subsection 8.2(d), the Buyer will not be subrogated to
the rights of the Seller and NYSEG with respect to any
Environmental Claim against any insurance company upon making any
indemnity payments as required hereunder; the Buyer's right to
pursue coverage against the Insurance Policies with respect to
any Environmental Claim will be governed strictly by the terms of
Section 6.13.
(f) A failure to give timely notice as provided in
this Section 8.2 shall 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 IX
TERMINATION AND ABANDONMENT
9.1 Termination
(a) This Agreement may be terminated at any time prior to
the Closing Date by mutual written consent of the Seller and the
Buyer.
(b) This Agreement may be terminated by the Seller or
the Buyer if (i) any federal or state court of competent
jurisdiction shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the
Closing, and such order, judgment or decree shall have become
final and nonappealable, or (ii) any statute, rule, order or
regulation shall have been enacted or issued by any Governmental
Authority which, directly or indirectly, prohibits the
consummation of the Closing, or (iii) the Closing contemplated
hereby shall have not occurred on or before the day which is
twelve months from the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this Agree
ment under Section 9.1(b)(iii) shall not be available to any
Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date; and provided,
further, however, that if on the day which is twelve months from
the date of this Agreement the conditions to the Closing set
forth in Section 7.1(c) or 7.2(c) shall not have been fulfilled
but all other conditions to the Closing shall have been fulfilled
or shall be capable of being fulfilled, then the Termination Date
shall be the day which is eighteen months from the date of this
Agreement.
(c) Except as otherwise provided in this Agreement or
as otherwise provided in an Ancillary Agreement, this Agreement
may be terminated by the Buyer if any of the Buyer Required
Regulatory Approvals, the receipt of which is a condition to the
obligation of the Buyer to consummate the Closing as set forth in
Section 7.1 (b), shall have been denied or shall have been
granted subject to terms or conditions that, in the aggregate,
could reasonably be expected to have a Buyer Material Adverse
Effect.
(d) Except as otherwise provided in an Ancillary
Agreement, this Agreement may be terminated by the Seller if any
of the Seller Required Regulatory Approvals, the receipt of which
is a condition to the obligation of the Seller to consummate the
Closing as set forth in Section 7.2(c), shall have been denied or
shall have been granted subject to terms or conditions that, in
the aggregate, could reasonably be expected to have a material
adverse effect on the business, assets, operations or conditions
(financial or otherwise) of the Sellers.
(e) This Agreement may be terminated by the Buyer, if
(i) there has been a violation or breach by the Seller or NYSEG
of any covenant, representation or warranty contained in this
Agreement which also results in a Material Adverse Effect and
such violation or breach is not cured by the earlier of the
Closing Date or the date fifteen (15) days after receipt by the
Seller of notice specifying particularly such violation or
breach, and such violation or breach has not been waived by the
Buyer, or (ii) there has been an advice given pursuant to Section
6.9 of a development which results in a Material Adverse Effect
which is not cured by the earlier of the Closing Date or the date
fifteen (15) days after the giving of such advice, and such
Material Adverse Effect has not been waived by the Buyer.
(f) This Agreement may be terminated by the Seller,
if there has been a material violation or breach by the Buyer or
Buyer's Parent of any covenant, representation or warranty
contained in this Agreement and such violation or breach is not
cured by the earlier of the Closing Date or the date fifteen (15)
days after receipt by the Buyer of notice specifying particularly
such violation or breach, and such violation or breach has not
been waived by the Seller.
(g) This Agreement may be terminated by the Buyer in
accordance with the provisions of Section 6.11(d).
9.2 [Reserved]
9.3 Effect of Termination Without Default
If this Agreement is terminated pursuant to any of
Sections 9.1(a) through (d) and 9.1(g) through (h), then all
further obligations and liabilities of the Parties hereunder will
terminate, except as otherwise expressly provided in this
Agreement, and thereafter neither Party shall have any recourse
against the other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Dispute Resolution
Except as otherwise provided in this Agreement, prior to
instituting any litigation or other action, the Parties will
attempt in good faith to resolve any dispute or claim promptly by
referring any such matter to their respective chief executive
officers. Either Party may give the other Party written notice
of any dispute or claim. Within twenty (20) days after delivery
of that notice, the executives will meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem
necessary to exchange information and to attempt to resolve the
dispute or claim within thirty (30) days.
10.2 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.
10.3 Waiver of Compliance; Consents
Except as otherwise provided in this Agreement,
any failure of either 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 of such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to,
any subsequent failure to comply therewith.
10.4 No Survival
Subject to the provisions of Section 9.3, each and every
representation, warranty and covenant contained in this Agreement
(other than the covenants contained in Sections 3.3(c), 3.4,
3.5(b), 6.1(c), 6.2, 6.3, 6.4, 6.6(g), 6.7, 6.8, 6.10, 6.12,
6.13, 10.6 and in Article VIII, which covenants shall survive in
accordance with their terms, (and the representations and
warranties set forth in Section 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3,
which representations and warranties shall survive for eighteen
(18) months from the Closing Date), 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, manager, trustee or
Affiliate of either of them shall be under any liability
whatsoever with respect to any such representation, warranty or
covenant.
10.5 Notices
All notices and other communications hereunder shall be
in writing and shall be deemed given and effective if delivered
personally or by facsimile transmission or mailed by overnight
courier or registered or certified mail (return receipt
requested), postage prepaid, to the recipient Party at its
following address (or at such other address or facsimile number
for a party as shall be specified by like notice; provided
however, that notices of a change of address shall be effective
only upon receipt thereof):
(a) If to the Sellers, to:
NYSEG
NEW YORK STATE ELECTRIC & GAS CORPORATION
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Vice President and Secretary
NGE
NGE Generation, Inc.
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Secretary
With a Copy to:
Xxxxx Xxxxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx , Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxxx, Esq.
Xxxxx X. Xxxxxxxxx, Esq.
(b) if to the Buyer, to:
AES NY, L.L.C.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Project Manager
with a copy to:
Xxxxxxxxxx & Xxxxx, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
10.6 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, obligations or
remedies 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 Person except the Parties hereto any rights, interests,
obligations or remedies hereunder. No provision of this
Agreement shall create any third party beneficiary rights in any
employee or former employee of the Sellers (including any
beneficiary or dependent thereof) in respect of continued
employment or resumed employment, and no provision of this
Agreement shall create any rights in any such Persons in respect
of any benefits that may be provided, directly or indirectly,
under any employee benefit plan or arrangement except as
expressly provided for thereunder. Notwithstanding the
foregoing, (a) the Buyer may assign any or all of its rights,
interests and obligations hereunder to one or more of its
Affiliates (in which case the Buyer and such Affiliate or
Affiliates shall nonetheless remain jointly and severally
responsible for the performance of all such obligations) so long
as any such assignment does not adversely affect the availability
or timing of any consent or approval of Governmental Authority
required for the consummation of the sale of the Purchased
Assets; (b) the 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 the Buyer or such assignee from
the performance of its obligations under this Agreement. The
Seller agrees, at the 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 the Sellers' rights under this
Agreement are not thereby altered, amended, diminished or
otherwise impaired.
10.7 Governing Law
This Agreement shall be governed by and construed in accordance
with the law of the State of New York (regardless of the law 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. The Parties hereto agree that venue in any and all
actions and proceedings related to the subject matter of this
Agreement shall be in the state and federal courts in and for New
York County, New York , which courts shall have exclusive
jurisdiction for such purpose, and the parties hereto irrevocably
submit to the exclusive jurisdiction of such courts and
irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding. Service of process
may be made in any manner recognized by such courts. Each of the
Parties hereto irrevocably waives its right to a jury trial with
respect to any action or claim arising out of any dispute in
connection with this Agreement or the transactions contemplated
hereby.
10.8 Counterparts
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
10.9 Interpretation
The article, section and schedule 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.
10.10 Schedules and Exhibits
Except as otherwise provided in this Agreement, all
Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.11 Entire Agreement
This Agreement, the Confidentiality Agreement, and the Ancillary
Agreements, including the Exhibits, Schedules, documents, certifi
xxxxx and instruments referred to herein or therein, embody the
entire agreement and understanding of the Parties hereto in
respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth
or referred to herein or therein. It is expressly acknowledged
and agreed that there are no restrictions, promises, repre
sentations, warranties, covenants or undertakings contained in
any material made available to the Buyer pursuant to the terms of
the Confidentiality Agreement (including the Offering Memorandum
dated April 1998, previously made available to the Buyer by the
Seller and Xxxxxxx Sachs). This Agreement supersedes all prior
agreements and understandings between the Parties, other than the
Confidentiality Agreement, with respect to such transactions.
10.12 Bulk Sales Laws
The Buyer acknowledges that, notwithstanding anything in this
Agreement to the contrary, the Sellers will not comply with the
provision of the bulk sales 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 laws of all applicable
jurisdictions.
IN WITNESS WHEREOF, the Seller, NYSEG, and the Buyer
have caused this Agreement to be signed by their respective duly
authorized officers as of the date first above written.
NGE GENERATION, INC.
By:
Xxxxxxx X. Xxxxxxxx
Executive Vice President
NEW YORK STATE ELECTRIC
& GAS CORPORATION
By:
Xxxxxxx X. Xxxxxxxx
Executive Vice President
AES NY, L.L.C.
By:
Xxxxx Xxxxxxx
Manager
