-74-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, each Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
By JOAN S. FREILICH
Joan S. Freilich
Executive Vice President
and Chief Financial Officer
Date: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of each Registrant and
in the capacities and on the dates indicated.
Date Signature Title (CEI and Con Edison,
unless otherwise noted)
March 29, 1999 Eugene R. McGrath* Chairman of the Board,
President, Chief Executive
Officer and Director of CEI;
Chairman of the Board,
Chief Executive Officer and Trustee
of Con Edison
(Principal Executive Officer)
March 29, 1999 Joan S. Freilich* Executive Vice President,
Chief Financial Officer and
Director (Trustee)
(Principal Financial Officer)
March 29, 1999 Hyman Schoenblum* Vice President, Controller
and Chief Accounting Officer
(Principal Accounting Officer)
E. Virgil Conway* Director (Trustee)
Gordon J. Davis* Director (Trustee)
Ruth M. Davis* Director (Trustee)
Ellen V. Futter* Director (Trustee)
Sally Hernandez-Pinero* Director (Trustee)
Peter W. Likins* Director (Trustee)
Robert G. Schwartz* Director (Trustee)
Richard A. Voell* Director (Trustee)
Stephen R. Volk* Director (Trustee)
March 29, 1999 *By JOAN S. FREILICH Attorney-in-Fact
Joan S. Freilich
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
EXECUTIVE INCENTIVE PLAN
As Amended and Restated
Effective as of April 1, 1999
( i )
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC
EXECUTIVE INCENTIVE PLAN
PURPOSE
In its original form, the Consolidated Edison Company of New York, Inc.
Executive Incentive Plan (the "Plan") was effective as of March 23, 1982. This
document reflects the revisions to the Plan which are effective as of April 1,
1999. As to a Participant who is in the employ of the Company or its Affiliated
Companies on April 1, 1999, the Mandatory Deferral Portions and Optional
Deferral Portions of Incentive Awards credited on the Participant's behalf prior
to April 1, 1999 and deferred to a date beyond April 1, 1999 shall be
transferred to and administered under the Deferred Income Plan as soon as
practicable after April 1, 1999.
The purpose of the Plan is to provide executives designated by the Company's
Board of Trustees as eligible to participate in the Plan with incentives to
achieve goals which are important to shareholders and customers of the Company,
to supplement the Company's salary and benefit programs so as to provide overall
compensation for such executives which is more competitive with corporations
with which the Company must compete for the best executive talent, and to assist
the Company in attracting and retaining executives who are important to the
continued success of the Company.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
EXECUTIVE INCENTIVE PLAN
TABLE OF CONTENTS
Page
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
EXECUTIVE INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS......................................................1
1.01 Adjusted Maximum Incentive Fund..................................1
1.02 Affiliated Company...............................................1
1.03 Award Date.......................................................1
1.04 Board or Board of Trustees.......................................1
1.05 Change in Control................................................1
1.06 Company..........................................................4
1.07 Deferred Income Plan.............................................4
1.08 Disability.......................................................4
1.09 Equivalent Stock Account.........................................5
1.10 Equivalent Stock Unit............................................5
1.11 Incentive Award..................................................5
1.12 Incentive Percentage.............................................5
1.13 Management Retirement Plan.......................................5
1.14 Mandatory Deferral Portion.......................................5
1.15 Maximum Incentive Fund...........................................5
1.16 Normal Retirement Age............................................5
1.17 Optional Deferral Portion........................................5
1.18 Participant......................................................5
1.19 Plan.............................................................6
1.20 Plan Administrator...............................................6
1.21 Potential Award..................................................6
1.22 Potential Change in Control......................................6
1.23 Valuation Date...................................................6
ARTICLE II. ELIGIBILITY.....................................................6
ARTICLE III. ADMINISTRATION.................................................7
ARTICLE IV. DETERMINATION OF AWARDS.........................................7
4.01 Incentive Percentages............................................7
4.02 Maximum Incentive Fund...........................................8
4.03 Adjusted Maximum Incentive Fund..................................9
4.04 Incentive Awards.................................................9
ARTICLE V. DEFERRAL OF AWARDS..............................................10
5.01 Mandatory Deferral Portion......................................10
5.02 Optional Deferral Portion.......................................11
5.03 Transfer to Deferred Income Plan................................11
ARTICLE VI. VALUATION OF AWARD.............................................12
6.01 Non-Deferred Awards.............................................12
6.02 Equivalent Stock Account........................................12
6.03 Common Stock Value..............................................13
ARTICLE VII. PAYMENT OF AWARDS.............................................14
7.01 Time of Payment.................................................14
7.02 Amount of Payment...............................................14
7.03 Manner of Payment...............................................15
7.04 Forfeiture......................................................15
7.05 Posthumous Payments.............................................15
7.06 Payment Upon the Occurrence of a Change in Control..............16
ARTICLE VIII. ELECTIONS....................................................17
8.01 Manner..........................................................17
8.02 Timing..........................................................17
8.03 Presumptions....................................................17
ARTICLE IX. MISCELLANEOUS..................................................18
9.01 Amendment and Termination.......................................18
9.02 Effect of Plan..................................................18
9.03 Withholding.....................................................19
9.04 Funding.........................................................19
9.05 Facility of Payment.............................................20
9.06 Nonalienation...................................................20
Page 1
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
EXECUTIVE INCENTIVE PLAN
ARTICLE I. DEFINITIONS
The following terms when capitalized herein shall have the meanings set forth
below.
1.01 Adjusted Maximum Incentive Fund shall have the meaning set forth in
Section 4.03(c).
1.02 Affiliated Company shall mean any company other than the Company which is
a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which also includes as a member the Company; any trade
or business under common control (as defined in Section 414(c) of the
Code) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section
414(m) of the Code) which includes the Company; and any other entity
required to be aggregated with the Company pursuant to regulations under
Section 414(o) of the Code.
1.03 Award Date shall mean, with respect to any Incentive Award, January 1 of
the year following the year to which such Incentive Award relates.
1.04 Board or Board of Trustees shall mean the Board of Trustees of the
Company.
1.05 Change in Control shall mean an event which shall occur if:
(a) any person, as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 ("Exchange Act"), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act (other than (i) any
employee plan established by any "Corporation" (which for these
purposes shall be deemed to be the Company and any corporation,
association, joint
venture, proprietorship or partnership which is
connected with the Company either through stock ownership or through
common control, within the meaning of Sections 414(b) and (c) and
1563 of the Code), (ii) the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act), (iii) an
underwriter temporarily holding securities pursuant to an offering
of such securities, or (iv) a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company) (a "Person"), is or
becomes the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of
the Company (excluding from the securities beneficially owned by
such Person any securities directly acquired from the Company or its
affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 20 percent or
more of either the then outstanding shares of Common Stock of the
Company or the combined voting power of the Company's then
outstanding voting securities;
(b) during any period of up to two consecutive years (not including
any period prior to April 1, 1999) individuals who, at the
beginning of such period, constitute the Board cease for any
reason to constitute a majority of the directors then serving on
the Board, provided that any person who becomes a director
subsequent to the beginning of such period and whose appointment
or election by the Board or nomination for election by the
Company's shareholders was approved by at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose appointment, election or
nomination for election was previously so approved (other than a
director (i) whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used
in Rule 14a-11 of Regulation 14A under the Exchange Act, or (ii)
who was designated by a
person who has entered into an agreement
with the Company to effect a transaction described in paragraph
(a), (c) or (d) of this Section 1.05) shall be deemed a director
as of the beginning of such period;
(c) consummation of a merger or consolidation of the Company with any
other corporation or approval of the issuance of voting
securities of the Company in connection with a merger or
consolidation of the Company occurs (other than (i) a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of any Corporation, at least 51 percent of the combined voting
power of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the
beneficial owner (as defined in paragraph (a) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates other than
in connection with the acquisition by the Company or the
affiliates of a business) representing 20 percent or more of
either the then outstanding shares of Common Stock of the Company
or the combined voting power of the Company's then outstanding
voting securities); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 65 percent of the
combined voting power of the
voting securities of which are owned by persons in substantially
the same proportions as their ownership of the Company
immediately prior to the sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed to have
occurred if there is consummated any transaction, or series of integrated
transactions, immediately following which the record holders of the Common Stock
immediately prior to such transaction, or series of integrated transactions,
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of integrated transactions.
1.06 Company shall mean Consolidated Edison Company of New York, Inc. or any
successor by merger, purchase or otherwise; provided, however, that for
purposes of Section 1.05, Section 1.22, the second paragraph of Section
5.01(b), Section 6.02 (with the exception of the next to last sentence
thereof), Section 6.03, and Section 7.06, "Company" shall mean the highest
level holding company of Consolidated Edison Company of New York, Inc. (or
any successor thereto which continues this Plan) which has publicly traded
common stock.
1.07 Deferred Income Plan shall mean the Consolidated Edison Company of New
York, Inc. Deferred Income Plan, as amended from time to time.
1.08 Disability shall mean circumstances under which a Participant would be
entitled to receive a pension by reason of disability (or would be so
entitled but for failure to satisfy vesting, age, or length-of-service
requirements) under the Management Retirement Plan.
1.09 Equivalent Stock Account shall mean an account established for a
Participant pursuant to Section 6.02.
1.10 Equivalent Stock Unit shall have the meaning set forth in Section 6.02.
1.11 Incentive Award shall have the meaning set forth in Section 4.04.
1.12 Incentive Percentage shall have the meaning set forth in Section 4.01.
1.13 Management Retirement Plan shall mean The Consolidated Edison Retirement
Plan for Management Employees, as amended from time to time.
1.14 Mandatory Deferral Portion shall mean the one-third of each Incentive
Award that is required to be deferred pursuant to Section 5.01.
1.15 Maximum Incentive Fund shall have the meaning set forth in Section
4.02(a).
1.16 Normal Retirement Age shall mean the later of the Participant's 65th
birthday or the fifth anniversary of the Participant's participation in
the Management Retirement Plan.
1.17 Optional Deferral Portion shall mean the two-thirds of each Incentive
Award that is permitted to be deferred pursuant to Section 5.02.
1.18 Participant shall mean any executive who at any time shall be eligible to
participate in the Plan.
1.19 Plan shall mean the Consolidated Edison Company of New York, Inc.
Executive Incentive Plan, as in effect from time to time.
1.20 Plan Administrator shall mean the individual appointed by the Company's
Chief Executive Officer to administer the Plan as provided in Article III.
1.21 Potential Award shall have the meaning set forth in Section 4.02(c).
1.22 Potential Change in Control shall mean an event which shall occur if: (a)
the Company enters into a definitive written agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(b) the Company or any Person (as defined in Section 1.05(a)) publicly
announces an intention to take or to consider taking actions which,
if consummated, would constitute a Change in Control; or
(c) any Person becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of the Company representing 15 percent or more of the
then outstanding shares of Common Stock of the Company or the
combined voting power of the Company's then outstanding securities.
1.23 Valuation Date shall have the meaning set forth in Section 6.01 or 6.02,
whichever is applicable.
ARTICLE II. ELIGIBILITY
The Board, in its discretion, from time to time, may designate and change the
designation of the executives or executive position levels eligible to
participate in the Plan. To be eligible to receive an
award under the Plan for a particular year, an executive must (a) have been
employed by the Company during any portion of such year and (b) achieve an
eligible position level or be designated by the Board as eligible not later than
September 30 of such year.
ARTICLE III. ADMINISTRATION
Except as otherwise provided in the Plan, all determinations in connection with
the Plan shall be made by the Plan Administrator, whose decisions shall be final
and conclusive upon all Participants and any persons asserting any claim derived
from a Participant. The Plan Administrator shall make such determinations after
receiving the recommendations of the Company's Chief Executive Officer (except
as to matters relating to the participation of the Company's Chief Executive
Officer in the Plan). The Plan Administrator shall abstain from any
determination under the Plan in which he or she has a personal interest, in
which case such determination shall be made by the Company's Chief Executive
Officer. The Plan Administrator shall be responsible for the administration of
the Plan under the direction of the Company's Chief Executive Officer.
ARTICLE IV. DETERMINATION OF AWARDS
4.01 Incentive Percentages
The Board shall determine a percentage of annual salary deemed to
constitute an appropriate incentive for each executive or executive
position level eligible to participate in the Plan. Each such percentage
is herein called an "Incentive Percentage". The Board may, from time to
time, increase or decrease any Incentive Percentage, as the Board may deem
appropriate.
4.02 Maximum Incentive Fund
(a) At the end of each year, the annual rate of salary of each executive
eligible to participate in the Plan for such year, as such salary is in effect
at the end of such year, shall be multiplied by the Incentive Percentage
applicable to such person at such time. The sum of such products for all
executives eligible to participate As Amended and Restated Effective as of April
1, 1999in the Plan for such year is herein called the
"Maximum Incentive Fund" for such year.
(b) For purposes of calculating the Maximum Incentive Fund for any year: (i)
In the case of an executive whose employment with the Company has
terminated during the year, the annual salary rate of such executive
in effect at the time of such termination shall be deemed to be the
annual salary rate of such executive at the end of such year,
subject to paragraph (ii) next following.
(ii) The annual salary rate, at the end of the year, for any executive
who became eligible to participate during the year or whose
employment with the Company terminated during the year shall be
deemed reduced by one-twelfth for each whole calendar month of such
year before such executive became eligible or after such executive's
employment terminated.
(iii) Deferred compensation, at the annual rate in effect at the end of
the year pursuant to an agreement between the Company and an
executive, shall be considered part of such executive's annual rate
of salary at the end of such year.
(iv) An executive's annual rate of salary shall be determined without any
deduction for pre-tax contributions or after-tax contributions made
pursuant to the Con Edison Thrift Savings Plan for Management
Employees, the Con Edison Flexible Reimbursement
Account Plan for Management Employees, the Con Edison OPTIONS Program for
Management Employees, or the Deferred Income Plan.
(c) The amount included in the Maximum Incentive Fund for any year with
respect to each executive (determined without regard to Section 4.02(d))
is called such executive's "Potential Award".
(d) Notwithstanding any other provision of the Plan, the Maximum Incentive
Fund for any year may not exceed one-half of 1 percent of the Company's
net income for common stock for such year.
4.03 Adjusted Maximum Incentive Fund
(a) In January of each year the Board shall determine whether award of the
Maximum Incentive Fund for the preceding year is appropriate or whether
and to what extent such Maximum Incentive Fund shall be reduced or
eliminated entirely. In making such determination, the Board shall
consider the Company's performance during the preceding year, taking into
account such factors as the Board deems relevant.
(b) The Maximum Incentive Fund for any year in which the Company omits a
dividend on its common stock shall be reduced to zero.
(c) The Maximum Incentive Fund for a year, reduced by any adjustments pursuant
to this Section 4.03, is herein called the "Adjusted Maximum Incentive
Fund".
4.04 Incentive Awards
After the Adjusted Maximum Incentive Fund for a year has been determined
as provided in Section 4.03, the Executive Personnel and Pension Committee
of the Board, upon the
recommendations of the Company's Chief Executive Officer (except with respect to
his own award), shall make, subject to confirmation by the Board, awards to
individual Participants who are eligible to participate in the Plan for such
year. Such awards are herein called "Incentive Awards". Incentive Awards shall
be determined in the following manner:
(a) Each Incentive Award shall be determined in the light of the contribution
of the Participant's group to the overall performance of the Company, the
Participant's contribution to the performance of the Participant's group,
and the Participant's individual performance.
(b) An Incentive Award may range from zero to 150 percent of the Participant's
Potential Award for the year in question.
(c) The aggregate of all Incentive Awards for a year may not exceed the
Adjusted Maximum Incentive Fund for such year.
ARTICLE V. DEFERRAL OF AWARDS
5.01 Mandatory Deferral Portion
(a) One-third of each Incentive Award shall be allocated to the Participant's
Equivalent Stock Account and shall be deferred until the earlier of (i)
the fifth anniversary of the Award Date or (ii) the date of the
Participant's termination of employment with the Company and Affiliated
Companies, except as otherwise provided in Section 7.06.
(b) Notwithstanding the provisions of paragraph (a) above, the Participant
may elect to defer all or any part of such one-third for a further
period ending on the earlier of (i) the sixth or any later anniversary
of the Award Date or (ii) the date of the Participant's termination of
employment with the Company and Affiliated Companies; provided however,
that if the Participant makes a deferral election with respect to any
portion of the Mandatory Deferral Portion of an Incentive
Awardpursuant to this paragraph (b), on the fifth anniversary of the Award
Date of such Incentive Award, the value of the portion of the Mandatory Deferral
Portion of an Incentive Award so deferred shall be administered and accounted
for under the Deferred Income Plan.
The value of such Mandatory Deferral Portion or part thereof to be
administered and accounted for under the Deferred Income Plan shall be the
value on the fifth anniversary of the Award Date of such Mandatory
Deferral Portion of a number of shares of common stock of the Company
equal to the number of Equivalent Stock Units in the respective subaccount
for the Mandatory Deferral Portion or part thereof to be administered and
accounted for under the Deferral Income Plan.
5.02 Optional Deferral Portion
Up to two-thirds of each Incentive Award may, at the Participant's
election, be deferred to the earlier of (a) the third or later anniversary
of the Award Date of such Incentive Award, or (b) the date of the
Participant's termination of employment with the Company and Affiliated
Companies; provided however, that if the Participant makes a deferral
election with respect to any portion of the Optional Deferral Portion of
an Incentive Award pursuant to this Section 5.02, on the Award Date of
such Incentive Award the value of the portion of the Optional Deferral
Portion so deferred shall be administered and accounted for under the
Deferred Income Plan.
5.03 Transfer to Deferred Income Plan
The portion of a Participant's accounts deferred hereunder prior to April
1, 1999, which are no longer subject to potential forfeiture pursuant to
Section 7.04 as of such date, shall be transferred to the Deferred Income
Plan and thereafter be administered and accounted for thereunder. As of
the date that other amounts deferred hereunder prior to April 1, 1999 are
no longer subject to
potential forfeiture pursuant to Section 7.04, such
amounts shall be transferred to the Deferred Income Plan and thereafter be
administered and accounted for thereunder.
ARTICLE VI. VALUATION OF AWARD
6.01 Non-Deferred Awards
The Valuation Date of any portion of the Optional Deferral Portion of an
Incentive Award that is not deferred pursuant to Section 5.02 shall be the
Award Date, and the value on the Valuation Date shall be equal to the
amount of such portion.
6.02 Equivalent Stock Account
An Equivalent Stock Account shall be established for each Participant. A
separate subaccount within such Equivalent Stock Account shall be
established for each Mandatory Deferral Portion allocated to such
Equivalent Stock Account. Each Mandatory Deferral Portion so allocated
shall be converted to a number of Equivalent Stock Units calculated (to
the nearest thousandth) by dividing (x) such portion by (y) the value of
one share of the Company's common stock on the Award Date, and the number
of Equivalent Stock Units so calculated shall be credited to the
respective subaccount within the Participant's Equivalent Stock Account.
On each dividend payment date for the Company's common stock occurring
between the Award Date and the Valuation Date of such Mandatory Deferral
Portion, there shall be credited to such subaccount the number of
additional Equivalent Stock Units calculated (to the nearest thousandth)
by dividing (x) the amount of the total dividend which would have been
paid on a number of shares (including fractional shares) of the Company's
common stock equal to the closing balance (in Equivalent Stock Units) in
such subaccount on the record date for such dividend payment date, by (y)
the value of one share of the Company's common stock on the dividend
payment date. In the
event of a dividend payable in shares of the
Company's common stock, a like number of Equivalent Stock Units shall be
added to the subaccount. The Valuation Date of such Mandatory Deferral
Portion of an Incentive Award shall be the date on which occurs the
earliest of: (a) the Participant's termination of employment with the
Company and
Affiliated Companies on or after the Participant's Normal
Retirement Age;
(b) the Participant's death;
(c) the Participant's Disability; or
(d) the fifth anniversary of the Award Date of such Incentive Award if
the Participant has not terminated employment with the Company and
Affiliated Companies on or prior to such date;
provided, however, that if the Participant's date of termination of
employment with the Company and Affiliated Companies occurs prior to the
earliest of the dates specified in (a) through (d) above but the Chief
Executive Officer of the Company makes a determination pursuant to Section
7.04 that no forfeiture shall occur, the Valuation Date shall be such date
of termination. The value of such Mandatory Deferral Portion on the
Valuation Date shall be the value, on the Valuation Date, of a number of
shares of the Company's common stock equal to the number of Equivalent
Stock Units in the respective subaccount on the Valuation Date.
6.03 Common Stock Value
For all purposes of the Plan, the value of a share of the Company's common
stock, as of any date, shall be deemed to be the mean of the high and low
sale price for such a share reported on the New York Stock Exchange for
trading on such date (or, if there was no reported trade for such date, on
the first day of trading thereafter). Appropriate adjustments shall be
made in the event of a stock split, reclassification or reorganization.
ARTICLE VII. PAYMENT OF AWARDS
7.01 Time of Payment
(a) Each portion of a Mandatory Deferral Portion of an Incentive Award (i)
for which the deferral election in Section 5.01(b) has not been made or
(ii) for which such deferral election has been made and the Participant
(A) does not terminate employment with the Company and Affiliated
Companies until on or after the earliest of the dates specified in (a)
through (d) of Section 6.02 or (B) terminates employment with the
Company and Affiliated Companies prior to the earliest of the dates
specified in (a) through (d) of Section 6.02 but the Chief Executive
Officer of the Company makes a determination pursuant to Section 7.04
that no forfeiture shall be made, shall become payable as soon as
administratively practicable after its respective Valuation Date, as
provided in this Article VII.
(b) Each portion of an Optional Deferral Portion for which a deferral election
under Section 5.02 has not been made shall become payable as soon as
administratively practicable after its respective Valuation Date, as
provided in this Article VII.
7.02 Amount of Payment
Each portion of (a) the Mandatory Deferral Portion of an Incentive Award
(i) for which the deferral election in Section 5.01(b) has not been made
or (ii) for which such deferral election has been made and the Participant
(A) does not terminate employment with the Company and Affiliated
Companies until on or after the earliest of the dates specified in (a)
through (d) of Section 6.02 or (B) terminates employment with the Company
and Affiliated Companies prior to the earliest of the dates specified in
(a) through (d) of Section 6.02 but the Chief Executive Officer of the
Company makes a determination pursuant to Section 7.04 that no forfeiture
shall be
made, and (b) an Optional Deferral Portion for which a deferral
election under Section 5.02 has not been made, shall be paid at its value
on the Valuation Date, as determined pursuant to Article VI.
7.03 Manner of Payment
(a) Any portion of the Mandatory Deferral Portion of an Incentive Award which
becomes payable on or prior to the fifth anniversary of the Award Date of
such Incentive Award shall be paid to the Participant in a single lump
sum.
(b) Any portion of the Optional Deferral Portion of an Incentive Award for
which a deferral election under Section 5.02 has not been made shall be
paid to the Participant in a single lump sum.
7.04 Forfeiture
Unless the Chief Executive Officer of the Company shall otherwise
determine, the Mandatory Deferral Portion of an Incentive Award shall be
forfeited, and no amount shall be payable to the Participant in respect of
such portion, if the employment of the Participant with the Company and
Affiliated Companies shall be terminated, other than on or after the
Participant's Normal Retirement Age or by reason of death or Disability,
prior to the fifth anniversary of the Award Date of such Incentive Award.
Notwithstanding the prior sentence, no forfeiture shall occur after the
date a Change in Control occurs.
7.05 Posthumous Payments
Subject to Section 7.04 and Section 9.05, if a Participant shall die
before all payments to be made to the Participant under this Plan have
been made, the remaining payment or payments shall be made to the
Participant's estate or personal representative in a single lump sum, with
such
posthumous payment to be made as soon as administratively practicable
after the Participant's death.
7.06 Payment Upon the Occurrence of a Change in Control (a) Unless a Participant
elects otherwise prior to the date a Change in
Control occurs, upon the occurrence of a Change in Control the Participant
shall automatically receive the value, as of the date the Change in
Control occurs, of a number of shares of common stock of the Company equal
to the number of Equivalent Stock Units in the respective subaccount as of
the date the Change in Control occurs. Such payment will be made in a
single lump sum as soon as administratively practicable after the date the
Change in Control occurs.
(b) If, due to an election pursuant to paragraph (a) above, a Participant
is not to receive a single lump sum upon a Change in Control, the
Participant may elect, within 30 days after the date the Change in
Control occurs, to receive, in a single lump sum, the value, on the
date the Change in Control occurs, of a number of shares of common
stock of the Company equal to the number of Equivalent Stock Units in
the respective subaccount on the date the Change in Control occurs,
reduced by the prime rate as published in the Wall Street Journal on
the date the Change in Control occurs plus 100 basis points. Such
payment will be made as soon as administratively practicable after the
Participant's election is received by the Plan Administrator.
(c) The elections permitted to Participants by paragraphs (a) and (b) above
shall be made by a writing signed by the Participant and delivered to the
Plan Administrator.
ARTICLE VIII. ELECTIONS
8.01 Manner
The elections permitted to Participants by Section 5.01 and Section 5.02
shall be made by a writing signed by the Participant and delivered to the
Plan Administrator. A separate election may be made with respect to each
Incentive Award. An election made for any Incentive Award shall govern all
subsequent Incentive Awards, unless a new election is timely made as to
subsequent Incentive Awards.
8.02 Timing
The elections pursuant to Section 5.01 and Section 5.02 with respect to
any Incentive Award must be made prior to the Award Date. An election may
be changed at any time up to the deadline for making such election, but
not thereafter.
8.03 Presumptions
In the absence of a valid election to the contrary by the Participant, the
following presumptions shall apply:
(a) The Participant elects not to defer any portion of the Mandatory Deferral
Portion of an Incentive Award pursuant to Section 5.01 beyond the minimum
mandatory deferral.
(b) The Participant elects not to defer any portion of the Optional Deferral
Portion of an Incentive Award pursuant to Section 5.02.
ARTICLE IX. MISCELLANEOUS
9.01 Amendment and Termination
The Company reserves the right, by action of the Board of Trustees, to
terminate the Plan entirely, or to temporarily or permanently discontinue
the making of awards under the Plan; and further reserves the right, by
action of the Board of Trustees or the Plan Administrator, to otherwise
modify the Plan from time to time; provided that no such modification,
termination, or discontinuance shall adversely affect the rights of
Participants with respect to Incentive Awards previously determined; and
provided further, that no modification by action of the Plan Administrator
shall have a material effect on the benefits payable under the Plan. Upon
termination of the Plan, the Board of Trustees may elect to continue the
Plan with respect to deferred portions of Incentive Awards, or may elect
to distribute immediately such deferred portions in single lump sum
payments, with appropriate adjustments in valuation, as determined by the
Board.
9.02 Effect of Plan
The establishment and continuance of the Plan shall not constitute a
contract of employment between the Company and any employee. No person
shall have any claim to be granted an award under the Plan and there is no
obligation for uniformity of treatment of employees or Participants under
the Plan. Neither the Plan nor any action taken under the Plan shall be
construed as giving to any employees the right to be retained in the
employ of the Company, nor any right to examine the books of the Company,
or to require an accounting.
9.03 Withholding
The Company shall deduct from any payment under the Plan any federal,
state, or local taxes required by law to be withheld with respect to such
payment.
9.04 Funding
(a) All amounts payable in accordance with this Plan shall constitute a
general unsecured obligation of the Company. Such amounts, as well as any
administrative costs relating to the Plan, shall be paid out of the
general assets of the Company, to the extent not paid from the assets of
any trust established pursuant to paragraph (b) below.
(b) The Company may, for administrative reasons, establish a grantor trust
for the benefit of Participants in the Plan. Notwithstanding the
foregoing sentence, the Company shall, upon a Potential Change in
Control, establish a grantor trust for the benefit of the Participants
in the Plan and shall fund such trust at a level at least equal to the
liabilities of the Plan as of the day before the Potential Change in
Control occurred. The assets placed in such trust shall be held
separate and apart from other Company funds and shall be used
exclusively for the purposes set forth in the Plan and the applicable
trust agreement, subject to the following conditions:
(i) the creation of such trust shall not cause the Plan to be other
than "unfunded" for purposes of Title I of ERISA;
(ii) the Company shall be treated as "grantor" of such trust for
purposes of Section 677 of the Code; and
(iii) the agreement of such trust shall provide that its assets may be
used upon the insolvency or bankruptcy of the Company to satisfy
claims of the Company's general creditors and that the rights of
such general creditors are enforceable by them under federal and
state law.
9.05 Facility of Payment
In the event that the Plan Administrator shall find that a Participant is
unable to care for such Participant's affairs because of illness or
accident or because he or she is a minor or has died, the Plan
Administrator may, unless claim shall have been made therefor by a duly
appointed legal representative, direct that any benefit payment due the
Participant, to the extent not payable from a grantor trust, be paid on
the Participant's behalf to the Participant's spouse, a child, a parent or
other blood relative, or to a person with whom the Participant resides or
a legal guardian, and any such payment so made shall be a complete
discharge of the liabilities of the Company and the Plan therefor.
9.06 Nonalienation
Subject to any applicable law, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void, nor
shall any such benefit be in any manner liable for or subject to
garnishment, attachment, execution or levy, or liable for or subject to
the debts, contracts, liabilities, engagements or torts of the person
entitled to such benefits.
IN WITNESS WHEREOF, Consolidated Edison Company of New York, Inc. has
caused this instrument to be executed by its officer thereunto duly authorized
as of the 25th day of March, 1999.
By: Richard P. Cowie
Vice President-Employee Relations
Consolidated Edison Company of
New York, Inc.
Amendment No. 5
To
The Consolidated Edison
Retirement Plan for
Management Employees
-------------------------------------
Dated December 30, 1998
Pursuant to authority granted to the Plan Administrator under the terms of
The Consolidated Edison Retiree Health Program (the "Program") to amend the
Program, the undersigned hereby approves the following amendments to the Program
as set forth in The Consolidated Edison Retirement Plan for Management
Employees:
1. A new subdivision (f), which shall read as follows, shall be added to
Paragraph 23 E effective January 1, 1999:
"(f) Effective January 1, 1999, Employees who retire and defer receipt of
their retirement Pension under the Management Plan and the spouses and
surviving spouses of such Employees shall be eligible to participate in
the Program and to defer participation in the Program to the same extent
as Employees who retire and commence receiving an immediate retirement
Pension under the Management Plan and their spouses and surviving
spouses. Effective such date Employees who retire shall no longer be
required to commence receipt of an immediate retirement Pension to be
eligible to participate in the Program."
IN WITNESS WHEREOF, the undersigned has executed this instrument this 30th
day of December, 1998.
Richard P. Cowie
Vice President-Employee Relations
and Plan Administrator
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
Effective as of January 1, 1987
As Amended and Restated as of April 1, 1999
( ii )
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
PURPOSE
The Con Edison Supplemental Retirement Income Plan was effective as of January
1, 1987. Effective as of April 1, 1999, the Con Edison Supplemental Retirement
Income Plan has been amended and restated in its entirety and renamed the
Consolidated Edison Company of New York, Inc. Supplemental Retirement Income
Plan (the "Plan"). The purpose of the Plan is to provide those employees
participating in The Consolidated Edison Retirement Plan for Management
Employees or any successor plan thereto (the "Management Retirement Plan")
benefits which would have been payable under the Management Retirement Plan (i)
but for the limitations imposed on qualified plans by Sections 401(a)(17) and
415 of the Internal Revenue Code (the "Code") and (ii) if certain portions of
Incentive Awards under the Consolidated Edison Company of New York, Inc.
Executive Incentive Plan (the "Executive Incentive Plan") and Basic and
Supplemental Salary Deferrals under the Consolidated Edison Company of New York,
Inc. Deferred Income Plan (the "Deferred Income Plan") were included in
pensionable earnings under the Management Retirement Plan.
The inclusion of portions of Incentive Awards in pensionable earnings shall be
effective as of January 1, 1997, and only with respect to Participants who
retire under the Management Retirement Plan on or after January 1, 1997.
All benefits payable under this Plan, which is intended to constitute both an
unfunded excess benefit plan under Section 3(36) of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and a
nonqualified, unfunded deferred compensation plan for a select group of
management employees under Title I of ERISA, shall be paid out of the general
assets of the Company. The Company may establish and fund a trust in order to
aid it in providing benefits due under the Plan.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
TABLE OF CONTENTS
Page
PURPOSE..................................................................( i )
ARTICLE I. DEFINITIONS......................................................1
ARTICLE II. PARTICIPATION; AMOUNT AND PAYMENT OF BENEFITS...................7
2.01 Participation....................................................7
2.02 Amount of Benefits...............................................7
2.03 Vesting..........................................................9
2.04 Payment of Benefits..............................................9
2.05 Reemployment of Former Participant or Retired Participant.......12
2.06 Additional Benefits.............................................12
2.07 Transfer to Affiliated Company..................................12
ARTICLE III. GENERAL PROVISIONS............................................13
3.01 Funding.........................................................13
3.02 Discontinuance and Amendment....................................14
3.03 Termination of Plan.............................................14
3.04 Plan Not a Contract of Employment...............................15
3.05 Facility of Payment.............................................15
3.06 Withholding Taxes...............................................15
3.07 Nonalienation...................................................16
3.08 Assumption of Liabilities.......................................16
3.09 Claims Procedure................................................16
3.10 Construction....................................................17
ARTICLE IV. PLAN ADMINISTRATION............................................17
4.01 Responsibility for Benefit Determination........................17
4.02 Duties of Plan Administrator....................................18
4.03 Procedure for Payment of Benefits Under the Plan................18
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
ARTICLE I. DEFINITIONS
The following terms when capitalized herein shall have the meanings assigned
below.
1.01 Affiliated Company shall mean any company other than the Company which is
a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which also includes as a member the Company; any trade
or business under common control (as defined in Section 414(c) of the
Code) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section
414(m) of the Code) which includes the Company; and any other entity
required to be aggregated with the Company pursuant to regulations under
Section 414(o) of the Code.
1.02 Annuity Starting Date shall mean a Participant's "Annuity Starting Date",
as that term is defined in the Management Retirement Plan, with respect to
benefits payable to the Participant or on the Participant's behalf under
the Management Retirement Plan.
1.03 Basic Salary Deferrals shall mean "Basic Salary Deferrals", as that term
is defined in the Deferred Income Plan.
1.04 Beneficiary shall mean the person determined in accordance with the
provisions of the Management Retirement Plan to receive benefits under the
Management Retirement Plan after a Participant's death, such determination
to be made without regard to the provisions of any qualified domestic
relations order, as defined in Section 414(p) of the Code, applicable to
the Management Retirement Plan.
1.05 Board of Trustees shall mean the Board of Trustees of Consolidated
Edison Company of New York, Inc. or any successor thereto.
1.06 Change in Control shall mean an event which shall occur if:
(a) any person, as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 ("Exchange Act"), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act (other than (i) any
employee plan established by any "Corporation" (which for these
purposes shall be deemed to be the Company and any corporation,
association, joint venture, proprietorship or partnership which is
connected with the Company either through stock ownership or through
common control, within the meaning of Sections 414(b) and (c) and
1563 of the Code), (ii) the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act), (iii) an
underwriter temporarily holding securities pursuant to an offering
of such securities, or (iv) a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company) (a "Person"), is or
becomes the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of
the Company (excluding from the securities beneficially owned by
such Person any securities directly acquired from the Company or its
affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 20% or more of
either the then outstanding shares of Common Stock of the Company or
the combined voting power of the Company's then outstanding voting
securities;
(b) during any period of up to two consecutive years (not including
any period prior to April 1, 1999) individuals who, at the
beginning of such period, constitute the Board cease for any
reason to constitute a majority of the directors then serving on
the Board, provided that any person who becomes a director
subsequent to the beginning of such period and whose appointment
or election by the Board or nomination for election by the
Company's shareholders was approved by at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose appointment, election or
nomination for election was previously so approved (other than a
director (i) whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used
in Rule 14a-11 of Regulation 14A under the Exchange Act, or (ii)
who was designated by a person who has entered into an agreement
with the Company to effect a transaction described in paragraph
(a), (c) or (d) of this Section 1.06) shall be deemed a director
as of the beginning of such period;
(c) consummation of a merger or consolidation of the Company with any
other corporation or approval of the issuance of voting
securities of the Company in connection with a merger or
consolidation of the Company occurs (other than (i) a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of any Corporation, at least 51% of the combined voting power of
the voting securities of the Company or such surviving entity or
any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the beneficial
owner (as defined in paragraph (a) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates other than
in connection with the acquisition by the Company or the
affiliates of a business) representing 20% or more of either the
then outstanding shares of Common Stock of the Company or the
combined voting power of the Company's then outstanding voting
securities); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 65% of the combined voting power of the voting
securities of which are owned by persons in substantially the
same proportions as their ownership of the Company immediately
prior to the sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed to
have occurred if there is consummated any transaction, or series of
integrated transactions, immediately following which the record holders of
the Common Stock immediately prior to such transaction, or series of
integrated transactions, continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all
of the assets of the Company immediately following such transaction or
series of integrated transactions.
1.07 Code shall mean the Internal Revenue Code of 1986, as amended from time to
time.
1.08 Company shall mean Consolidated Edison Company of New York, Inc. or any
successor thereto by merger, purchase or otherwise; provided, however,
that for purposes of Section 1.06, "Company" shall mean the highest level
holding company of Consolidated Edison Company of New York, Inc. (or any
successor thereto which continues this Plan) which has publicly traded
common stock.
1.09 Deferred Income Plan shall mean the Consolidated Edison Company of New
York, Inc. Deferred Income Plan, as amended from time to time.
1.10 Eligible Employee shall mean any person employed by the Company who is
participating in the Management Retirement Plan or any other person
designated by the Chief Executive Officer of the Company as eligible to
participate in the Plan.
1.11 ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.12 Excess Benefit Portion shall mean the portion of the Plan which is
intended to constitute an unfunded excess benefit plan under Sections
3(36) and 4(b)(5) of Title I of ERISA which provides benefits not
otherwise payable under the Management Retirement Plan due to restrictions
imposed by Section 415 of the Code.
1.13 Executive Incentive Plan shall mean the Consolidated Edison Company of New
York, Inc. Executive Incentive Plan, as amended from time to time.
1.14 Incentive Award shall mean the "Incentive Award", as that term is defined
in the Executive Incentive Plan.
1.15 Management Retirement Plan shall mean The Consolidated Edison Retirement
Plan for Management Employees, as amended from time to time.
1.16 Mandatory Deferral Portion shall mean the "Mandatory Deferral Portion", as
that term is defined in the Executive Incentive Plan.
1.17 Participant shall mean an Eligible Employee who is participating in the
Plan pursuant to Section 2.01 hereof.
1.18 Plan shall mean the Consolidated Edison Company of New York, Inc.
Supplemental Retirement Income Plan, as set forth herein or as amended
from time to time.
1.19 Plan Administrator shall mean the individual appointed by the Chief
Executive Officer of the Company to administer the Plan as provided in
Article IV.
1.20 Plan Year shall mean the calendar year.
1.21 Select Management Portion shall mean the portion of the Plan, other than
the Excess Benefit Portion, which is intended to constitute an unfunded
deferred compensation plan for a select group of management or
highly-compensated employees under Title I of ERISA.
1.22 Supplemental Salary Deferrals shall mean "Supplemental Salary Deferrals",
as that term is defined in the Deferred Income Plan.
ARTICLE II. PARTICIPATION; AMOUNT AND PAYMENT OF BENEFITS
2.01 Participation
(a) An Eligible Employee shall participate in the Excess Benefit Portion of
the Plan provided such Eligible Employee's pension at the time of payment
under the Management Retirement Plan exceeds the limitations imposed by
Code Section 415(b) or 415(e).
(b) An Eligible Employee shall participate in the Select Management Portion
of the Plan provided (i) such Eligible Employee's pension at the time
of payment under the Management Retirement Plan is limited by reason of
the Code Section 401(a)(17) limitation on compensation, (ii) such
Eligible Employee's pension at the time of payment under the Management
Retirement Plan would have been limited by reason of the Code
Section 401(a)(17) limitation on compensation if Basic Salary Deferrals
and/or Supplemental Salary Deferrals under the Deferred Income Plan had
not been made, (iii) such Eligible Employee is awarded an Incentive
Award under the Executive Incentive Plan, or (iv) such Eligible
Employee meets any other terms and conditions for participation
specified by the Chief Executive Officer of the Company.
(c) Participation in the Plan shall terminate upon the Participant's death or
other termination of employment with the Company and Affiliated Companies,
unless a benefit is payable under the Plan with respect to the Participant
or the Participant's Beneficiary under the provisions of this Article II.
2.02 Amount of Benefits
A Participant's benefit under the Plan shall be a monthly payment for the
life of the Participant and shall, subject to Section 2.07, equal the
excess, if any, of (a) over (b) as determined below. In both Sections
2.02(a) and (b), the pension shall be determined prior to any offsets
under the Management Retirement Plan for duplicate plan coverage. (a) the
monthly pension which would have been payable under the
Management Retirement Plan, commencing at the Participant's Annuity
Starting Date and determined:
(i) without regard to the provisions of Section 415 of the Code
relating to the maximum limitation on benefits;
(ii) without regard to the limitation on compensation set forth in
Section 401(a)(17) of the Code and its applicable regulations; and
(iii) as if the definition of compensation (or term of similar import)
used for purposes of determining an Eligible Employee's pension
benefit under the Management Retirement Plan using the Participant's
Final Average Salary included any Basic Salary Deferrals or
Supplemental Salary Deferrals under the Deferred Income Plan and any
Incentive Award credited on the Participant's behalf under the
Executive Incentive Plan; provided, however, that if any portion of
the Mandatory Deferral Portion of any Incentive Award credited on
the Participant's behalf under the Executive Incentive Plan has been
forfeited pursuant to the provisions of the Executive Incentive
Plan, such forfeited amount shall not be included; and provided that
where Incentive Awards shall be included in determining average
compensation, the number of Incentive Awards recognized shall not
exceed the averaging period (expressed in whole years); and provided
further, however, that with respect to a Participant who is entitled
to a deferred pension under the Management Retirement Plan due to
cessation of employment because of Disability, the Participant's
compensation for the period after such cessation shall not include
any Incentive Award credited on the Participant's behalf under the
Executive Incentive Plan with respect to any period after such
cessation; over
(b) the monthly pension actually payable to the Participant under the
Management Retirement Plan, commencing at the Participant's
Annuity Starting Date.
(c) If, after a Participant's Annuity Starting Date, changes to the Code
or ERISA permit the Management Retirement Plan to provide for
payment of the Participant's pension in an amount greater than that
permissible at his Annuity Starting Date, the Participant's monthly
benefit, if any, under this Plan shall be reduced by the portion of
the Participant's pension thereafter paid from the Management
Retirement Plan.
(d) If the provisions, if any, of the Management Retirement Plan
relating to cost-of-living adjustments result in an increase in
the benefit payable to a Participant or the Participant's
surviving spouse, the percentage of such increase shall be
applied to the Participant's or surviving spouse's benefit under
this Plan at the same time and by the same percentage such
increase is applicable to the Participant's or surviving spouse's
benefit under the Management Retirement Plan.
2.03 Vesting
Subject to the reduction in a Participant's benefit payable under Section
2.02 due to the forfeiture of any portion of the Mandatory Deferral
Portion of any Incentive Award credited on the Participant's behalf under
the Executive Incentive Plan as set forth in Section 2.02(a)(iii), a
Participant shall be vested in, and have a nonforfeitable right to, the
benefit payable under Section 2.02 at the same time and to the same extent
as the Participant is vested in the Participant's "Accrued Pension", as
that term is defined in the Management Retirement Plan.
2.04 Payment of Benefits
(a) Retirement or Termination of Employment
(i) Following a Participant's termination of employment with the
Company and Affiliated Companies, other than by reason of death,
the Participant shall receive the benefit payable under
Section 2.02, to the extent vested pursuant to Section 2.03, at
the same time and, except as provided in subparagraph (ii) below,
in the same form as the Participant receives a pension under the
Management Retirement Plan; provided, however, that the
determination of such form and timing is made without regard to
the provisions of any qualified domestic relations order (as
defined in Section 414(p) of the Code) applicable to the
Management Retirement Plan. If the form of payment is other than
a single life annuity over the life of the Participant, such
benefit shall be adjusted as provided in the Management
Retirement Plan to reflect such different payment form.
(ii) Notwithstanding the foregoing provisions of clause (i) above and
any election the Participant may make under the Management
Retirement Plan with respect to a form of payment, a Participant
shall receive the benefit provided under this Plan in the form of
a lump sum if the value of such lump sum, determined in
accordance with subparagraph (iii) below, does not exceed $25,000
and the Plan Administrator determines, in his or her sole
discretion, that such lump sum payment is to be made. A lump sum
payment pursuant to this subparagraph (ii) shall be made as soon
as administratively practicable following the later of the
Participant's termination of employment or Annuity Starting
Date. If a Participant receives a pension under the Management
Retirement Plan in the form of a lump sum but the Plan
Administrator does not determine that a lump sum will be payable
to such Participant under the Plan, payment of the Participant's
benefits under the Plan shall be made in any form that may be
payable under the Management Retirement Plan, as the Participant
elects, other than a lump sum; provided, however, that if the
Participant fails to make an election, benefits shall be paid in
the form of a single life annuity over the life of the
Participant. If a Participant who is to receive the benefit
payable under the Plan in the form of a single lump sum payment
dies after the later of the Participant's termination of
employment or Annuity Starting Date but prior to receiving the
lump sum payment, the payment shall be made to the Participant's
Beneficiary with the calculation of such payment based on the
assumption that payment had been made immediately preceding the
Participant's date of death.
(iii) The calculation of a lump sum payment hereunder shall be based on
the Participant's pension determined pursuant to Section 2.02 as if
it were paid in the form of a single life annuity to the Participant
using the same conversion basis as then in effect under the
Management Retirement Plan. The calculation of a lump sum payment
hereunder shall be made without regard to the possibility of any
future changes after the Participant's Annuity Starting Date in the
amount of benefits payable under the Management Retirement Plan
because of future changes in the limitations referred to in Section
2.02. The lump sum payment represents a complete settlement of all
benefits due on the Participant's behalf under the Plan.
(b) Death Prior to a Participant's Annuity Starting Date
If a Participant entitled to a vested benefit under the Management
Retirement Plan dies (i) while in active service with the Company after
meeting the eligibility requirements for a Preretirement Surviving
Spouse Benefit under the Management Retirement Plan, or (ii) after
terminating employment with entitlement to a pension hereunder but
prior to the Participant's Annuity Starting Date, the Participant's
spouse shall receive a monthly payment for life commencing at the same
time the spouse receives payment under the Preretirement Surviving
Spouse Benefit of the Management Retirement Plan. The amount of
benefit payable hereunder to such spouse shall be equal to the monthly
income which would have been payable to such spouse under the
Management Retirement Plan based on the hypothetical benefit as
calculated under Section 2.02 hereof.
2.05 Reemployment of Former Participant or Retired Participant If a Participant
who terminated employment with the Company is reemployed by the Company,
any payment of a benefit shall cease. Upon the Participant's subsequent
termination of employment (by death or otherwise), the Participant's
pension shall be recomputed and any benefits then payable hereunder shall
be reduced, but not below zero, by a benefit of equivalent actuarial value
(as determined in accordance with provisions of the Management Retirement
Plan) to any benefit previously paid under the Plan.
2.06 Additional Benefits
The Chief Executive Officer of the Company may authorize such other
benefits for any Eligible Employee, or class of Eligible Employees, as he
or she deems advisable, including, but not limited to, accelerated
vesting, increasing age for retirement purposes, and crediting additional
service.
2.07 Transfer to Affiliated Company
If a Participant is transferred to employment with an Affiliated Company
and, as a result of such transfer, is no longer an Eligible Employee, the
amount under Section 2.02(a) shall be determined as if the Participant
terminated employment with the Company and all Affiliated Companies on the
date of such transfer.
ARTICLE III. GENERAL PROVISIONS
3.01 Funding
(a) All amounts payable in accordance with this Plan shall constitute a
general unsecured obligation of the Company. Such amounts, as well as any
administrative costs relating to the Plan, shall be paid out of the
general assets of the Company to the extent not paid from the assets of
any trust established pursuant to paragraph (b) below.
(b) The Company may, for administrative reasons, establish a grantor trust
for the benefit of Participants in the Plan. Notwithstanding the
foregoing sentence, the Company shall, if not already existing upon a
Change in Control, within 30 days subsequent to the Change in Control
establish a grantor trust for the benefit of the Participants and fund
such trust at a level at least equal to the value of the liabilities of
the Plan as of the day before the Change in Control occurred. The
assets placed in the trust shall be held separate and apart from other
Company funds and shall be used for the purposes set forth in the Plan
and the applicable trust agreement, subject to the following conditions:
(i) the creation of the trust shall not cause the Plan to be other
than "unfunded" for purposes of Title I of ERISA;
(ii) the Company shall be treated as "grantor" of the trust for
purposes of Section 677 of the Code; and
(iii) the agreement of the trust shall provide that its assets may be used
upon the insolvency or bankruptcy of the Company to satisfy claims
of the Company's general creditors and that the rights of such
general creditors are enforceable by them under federal and state
law.
3.02 Discontinuance and Amendment
The Company reserves the right, by action of the Board of Trustees, to
discontinue benefit accruals under the Plan at any time; and further
reserves the right, by action of the Board of Trustees or the Plan
Administrator, to modify or amend the Plan, in whole or in part, at any
time. However, no modification, amendment, or discontinuance shall
adversely affect the right of any Participant to receive the benefits
credited on his behalf under the Plan as of the date of such modification,
amendment or discontinuance, and no modification or amendment by action of
the Plan Administrator shall have a material effect on the benefits
payable under the Plan. Notwithstanding the foregoing, following any
amendment and except as provided in Article II with respect to lump sum
payments hereunder, benefits may be adjusted as required to take into
account the amount of benefits payable under the Management Retirement
Plan after the application of the limitations referred to in Section 2.02
hereof.
3.03 Termination of Plan
The Company reserves the right, by action of the Board of Trustees, to
terminate the Plan at any time, provided, however, that no termination
shall be effective retroactively. As of the effective date of termination
of the Plan: (a) the benefits of any Participant, spouse or Beneficiary
whose
benefit payments have commenced shall continue to be paid; and
(b) no further benefits shall accrue on behalf of any Participant
whose benefits have not commenced, and such Participant and the
Participant's spouse or Beneficiary shall retain the right to
benefits hereunder, provided that on or after the effective date of
termination the Participant is vested under the Management
Retirement Plan.
All other provisions of this Plan shall remain in effect.
3.04 Plan Not a Contract of Employment
This Plan is not a contract of employment, and the terms of employment of
any Participant shall not be affected in any way by this Plan or related
instruments, except as specifically provided therein. The establishment of
this Plan shall not be construed as conferring any legal rights upon any
person for a continuation of employment, nor shall it interfere with the
rights of the Company to discharge any person and to treat such person
without regard to the effect which such treatment might have upon such
person under this Plan. Each Participant and all persons who may have or
claim any right by reason of the Participant's participation in this Plan
shall be bound by the terms of this Plan and all agreements entered into
pursuant thereto.
3.05 Facility of Payment
In the event that the Plan Administrator shall find that a Participant is
unable to care for such Participant's affairs because of illness or
accident or because he or she is a minor or has died, the Plan
Administrator may, unless claim shall have been made therefor by a duly
appointed legal representative, direct that any benefit payment due the
Participant, to the extent not payable from a grantor trust, be paid on
the Participant's behalf to the Participant's spouse, a child, a parent or
other blood relative, or to a person with whom the Participant resides or
a legal guardian, and any such payment so made shall be a complete
discharge of the liabilities of the Company and the Plan therefor.
3.06 Withholding Taxes
The Company shall have the right to deduct from each payment to be made
under the Plan any required withholding taxes.
3.07 Nonalienation
Subject to any applicable law, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void, nor
shall any such benefit be in any manner liable for or subject to
garnishment, attachment, execution or levy, or liable for or subject to
the debts, contracts, liabilities, engagements or torts of the person
entitled to such benefits.
3.08 Assumption of Liabilities
Notwithstanding any Plan provision to the contrary, at the sole discretion
and direction of the Board of Trustees, the Plan may assume liabilities
with respect to benefits accrued by a Participant under a plan maintained
by such Participant's former employer, and upon such assumption such
liabilities shall become the obligation of the Company.
3.09 Claims Procedure
(a) Submission of Claims
Claims for benefits under the Plan shall be submitted in writing to the
Plan Administrator or to an individual designated by the Plan
Administrator for this purpose.
(b) Exhaustion of Remedy
No claimant shall institute any action or proceeding in any state or
federal court of law or equity or before any administrative tribunal or
arbitrator for a claim for benefits under the Plan until the claimant has
first exhausted the procedures promulgated by the Plan Administrator for
review of claims.
3.10 Construction
(a) The Plan is intended to constitute both an excess benefit arrangement
and an unfunded deferred compensation arrangement maintained for a
select group of management or highly-compensated employees within the
meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and all
rights under this Plan shall be governed by ERISA. Subject to the
preceding sentence, the Plan shall be construed, regulated and
administered under the laws of the State of New York, to the extent
such laws are not superseded by applicable federal law.
(b) The illegality of any particular provision of this document shall not
affect the other provisions and the document shall be construed in all
respects as if such invalid provision were omitted.
(c) The headings and subheadings in the Plan have been inserted for
convenience of reference only, and are to be ignored in any construction
of the provisions thereof.
ARTICLE IV. PLAN ADMINISTRATION
4.01 Responsibility for Benefit Determination
The benefit of a Participant, spouse, or Beneficiary under this Plan shall
be determined either by the Plan Administrator, as provided in Section
4.02 below, or such other party as is authorized under the terms of any
grantor trust.
4.02 Duties of Plan Administrator
The Plan Administrator shall calculate, in accordance with Article II, the
benefit of each Participant, spouse or Beneficiary under the Plan. To the
extent a Participant's, spouse's or Beneficiary's benefit is payable from
the Plan, the Plan Administrator shall have full discretionary authority
to resolve any question which shall arise under the Plan as to any
person's eligibility for benefits, the calculation of benefits, the form,
commencement date, frequency, duration of payment, or the identity of the
Beneficiary. Such question shall be resolved by the Plan Administrator
under rules uniformly applicable to all person(s) or employee(s) similarly
situated.
4.03 Procedure for Payment of Benefits Under the Plan
With respect to any benefit to which a Participant, spouse or Beneficiary
is entitled under this Plan, the Plan Administrator (a) shall direct the
commencement of benefit payments hereunder in accordance with the
applicable procedures established by the Company and/or the Plan
Administrator regarding the disbursement of amounts from the general funds
of the Company and (b) shall arrange, in conjunction with any other
applicable excess benefit plan, for the payment of benefits under this
Plan and/or any other applicable excess benefit plan.
IN WITNESS WHEREOF, Consolidated Edison Company of New York, Inc. has caused
this instrument to be executed by its officer thereunto duly authorized as of
the 25th day of March, 1999.
By: Richard P. Cowie
Vice President - Employee Relations
Consolidated Edison Company
of New York, Inc.
Amendment No. 6
To
The Consolidated Edison
Retiree Health Program for
Management Employees
-------------------------------------
Dated December 30, 1998
Pursuant to authority granted to the Plan Administrator under the terms of
The Consolidated Edison Retiree Health Program for Management Employees (the
"Program") to amend the Program, the undersigned hereby approves the following
amendments to the Program:
1. A new subdivision (e), which shall read as follows, shall be added to
Section 3.01 effective January 1, 1999:
"(e) Effective January 1, 1999, Employees who retire and defer receipt of
their retirement Pension under the Management Plan and the spouses and
surviving spouses of such Employees shall be eligible to participate in
the Program and to defer participation in the Program to the same extent
as Employees who retire and commence receiving an immediate retirement
Pension under the Management Plan and their spouses and surviving
spouses. Effective such date Employees who retire shall no longer be
required to commence receipt of an immediate retirement Pension to be
eligible to participate in the Program."
IN WITNESS WHEREOF, the undersigned has executed this instrument this 30th
day of December, 1998.
Richard P. Cowie
Vice President-Employee Relations
and Plan Administrator
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
DEFERRED INCOME PLAN
Effective January 1, 1994
Amended and Restated Effective as of April 1, 1999
Page 1
( i )
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
DEFERRED INCOME PLAN
The Supplemental Thrift Savings Plan of Consolidated Edison Company of New York,
Inc., effective as of January 1, 1994, has been amended and restated in its
entirety and renamed the Consolidated Edison Company of New York, Inc. Deferred
Income Plan (the "Plan"), effective as of April 1, 1999. The purpose of the Plan
is to provide a means (i) for receiving employer matching contributions for
those employees participating in The Con Edison Thrift Savings Plan for
Management Employees (the "Savings Plan") with respect to whom salary deferral
and matching contributions under the Savings Plan are or will be limited by
application of the limitations imposed on qualified plans by certain sections of
the Internal Revenue Code, as amended from time to time; (ii) of providing such
employees with an opportunity to defer a portion of their salary in accordance
with the terms of the Plan as hereinafter set forth; and (iii) of providing
employees who receive an "Incentive Award," as such term is defined in the
Consolidated Edison Company of New York, Inc. Executive Incentive Plan (the
"Executive Incentive Plan") on or after April 1, 1999 with an opportunity to
defer receipt of all or a portion of such Incentive Award.
All benefits payable under this Plan, which is intended to constitute a
nonqualified, unfunded deferred compensation plan for a select group of
management employees under Title I of ERISA, shall be paid out of the general
assets of the Company. The Company may establish and fund a trust in order to
aid it in providing benefits due under the Plan.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
DEFERRED INCOME PLAN
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS......................................................1
1.01 Accounts.........................................................1
1.02 Affiliated Company...............................................1
1.03 Basic Salary Deferral Account....................................1
1.04 Basic Salary Deferrals...........................................2
1.05 Beneficiary......................................................2
1.06 Board or Board of Trustees.......................................2
1.07 Change in Administration Date....................................2
1.08 Change in Control................................................2
1.09 Code.............................................................5
1.10 Company..........................................................5
1.11 Company Contribution Account.....................................5
1.12 Company Contributions............................................6
1.13 Compensation.....................................................6
1.14 Deemed Investment Option.........................................6
1.15 Deferred Compensation Agreement..................................7
1.16 Disability.......................................................7
1.17 Effective Date...................................................7
1.18 Eligible Employee................................................7
1.19 ERISA............................................................7
1.20 Executive Incentive Plan.........................................8
1.21 Incentive Award..................................................8
1.22 Mandatory Bonus Deferral Contributions...........................8
1.23 Mandatory Bonus Deferral Account.................................8
1.24 Mandatory Deferral Portion.......................................8
1.25 Matching Company Contributions...................................9
1.26 Optional Bonus Deferral Contributions............................9
1.27 Optional Bonus Deferral Account..................................9
1.28 Optional Deferral Portion........................................9
1.29 Participant......................................................9
1.30 Plan............................................................10
1.31 Plan Administrator..............................................10
1.32 Plan Year.......................................................10
1.33 Potential Change in Control.....................................10
1.34 Retirement......................................................11
1.35 Savings Plan....................................................11
1.36 Statutory Compensation Limitation...............................11
1.37 Statutory Limitations...........................................11
1.38 Supplemental Company Contributions..............................11
1.39 Supplemental Salary Deferral Account............................12
1.40 Supplemental Salary Deferrals...................................12
1.41 Supplemental Thrift Plan........................................12
1.42 Valuation Date..................................................12
ARTICLE II. PARTICIPATION..................................................12
2.01 Participation...................................................12
2.02 Deferred Compensation Agreement.................................13
2.03 Termination of Participation....................................16
ARTICLE III. ACCOUNTS......................................................16
3.01 Amount of Contributions to be Credited..........................16
3.02 Investment of Accounts..........................................21
3.03 Vesting of Accounts.............................................23
3.04 Individual Accounts.............................................23
ARTICLE IV. PAYMENT OF BENEFITS............................................24
4.01 Commencement of Payment.........................................24
4.02 Method of Payment...............................................26
4.03 Payment Upon the Occurrence of a Change in Control..............28
4.04 Payment Upon Hardship...........................................29
4.05 Additional Death Benefits.......................................29
ARTICLE V. PLAN ADMINISTRATION.............................................30
5.01 Responsibility for Account Determination........................30
5.02 Duties of Plan Administrator....................................30
5.03 Procedure for Payment of Benefits Under the Plan................30
ARTICLE VI. GENERAL PROVISIONS.............................................31
6.01 Funding.........................................................31
6.02 Discontinuance and Amendment....................................32
6.03 Termination of Plan.............................................32
6.04 Plan Not a Contract of Employment...............................33
6.05 Facility of Payment.............................................34
6.06 Withholding Taxes...............................................34
6.07 Nonalienation...................................................34
6.08 Assumption of Liabilities.......................................34
6.09 Claims Procedure................................................35
6.10 Construction....................................................35
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
DEFERRED INCOME PLAN
ARTICLE I. DEFINITIONS
1.01 Accounts shall mean the aggregate of a Participant's Basic Salary Deferral
Account, the Company Contribution Account, the Mandatory Bonus Deferral
Account, the Optional Bonus Deferral Account and the
Supplemental Salary Deferral Account.
1.02 Affiliated Company shall mean any company other than the Company which is
a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which also includes as a member the Company; any trade
or business under common control (as defined in Section 414(c) of the
Code) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section
414(m) of the Code) which includes the Company; and any other entity
required to be aggregated with the Company pursuant to regulations under
Section 414(o) of the Code.
1.03 Basic Salary Deferral Account shall mean the bookkeeping account
maintained for each Participant to record all amounts credited on such
Participant's behalf as Basic Salary Deferrals, earnings, gains and losses
on those amounts pursuant to Section 3.02, and debits for administrative
expenses allocated pursuant to Section 6.01(a).
1.04 Basic Salary Deferrals shall mean the amount of contributions credited on
a Participant's behalf under Section 3.01(a) and those deemed as Basic
Salary Deferrals under Section 3.01(b).
1.05 Beneficiary shall mean the person, persons, or entity designated by the
Participant to receive the benefits credited to the Participant's Accounts
under the Plan in the event of the Participant's death, or in the absence
of such election, or in the event such designated person or persons are
not alive on the date payment is to be made, the person, persons, or
entity determined in accordance with procedures established by the Plan
Administrator. A Participant may make a separate designation of
Beneficiary for amounts payable pursuant to Section 4.05.
1.06 Board or Board of Trustees shall mean the Board of Trustees of the
Company.
1.07 Change in Administration Date shall mean the date the portion of the
applicable Mandatory Deferral Portion or Optional Deferral Portion of an
Incentive Award granted under the Executive Incentive Plan is first
administered and accounted for as a liability under this Plan in
accordance with the Executive Incentive Plan.
1.08 Change in Control shall mean an event which shall occur if:
(a) any person, as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934 ("Exchange Act"), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act (other than (i) any
employee plan established by any "Corporation" (which for these
purposes shall be deemed to be the Company and any corporation,
association, joint venture, proprietorship or partnership which is
connected with the Company either through stock ownership or through
common control, within the meaning of Sections 414(b) and (c) and 1563
of the Code), (ii) the Company or any of its affiliates (as defined in
Rule 12b-2 promulgated under the Exchange Act), (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as
their ownership of the Company) (a "Person"), is or becomes the
beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company
(excluding from the securities beneficially owned by such Person any
securities directly acquired from the Company or its affiliates other
than in connection with the acquisition by the Company or its
affiliates of a business) representing 20 percent or more of either the
then outstanding shares of Common Stock of the Company or the combined
voting power of the Company's then outstanding voting securities;
(b) during any period of up to two consecutive years (not including any
period prior to April 1, 1999) individuals who, at the beginning of
such period, constitute the Board cease for any reason to constitute a
majority of the directors then serving on the Board, provided that any
person who becomes a director subsequent to the beginning of such
period and whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by at least
two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose appointment,
election or nomination for election was previously so approved (other
than a director (i) whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act, or (ii) who was designated by
a person who has entered into an agreement with the Company to effect a
transaction described in paragraph (a), (c) or (d) of this
Section 1.08) shall be deemed a director as of the beginning of such
period;
(c) consummation of a merger or consolidation of the Company with any other
corporation or approval of the issuance of voting securities of the
Company in connection with a merger or consolidation of the Company
occurs (other than (i) a merger or consolidation that would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of
any Corporation, at least 51 percent of the combined voting power of
the voting securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the beneficial owner (as defined in paragraph (a)
above), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates other
than in connection with the acquisition by the Company or the
affiliates of a business) representing 20 percent or more of either the
then outstanding shares of Common Stock of the Company or the combined
voting power of the Company's then outstanding voting securities); or
(d) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least
65 percent of the combined voting power of the voting securities of
which are owned by persons in substantially the same proportions as
their ownership of the Company immediately prior to the sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed to have
occurred if there is consummated any transaction, or series of integrated
transactions, immediately following which the record holders of the Common Stock
immediately prior to such transaction, or series of integrated transactions,
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of integrated transactions.
1.09 Code shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any regulations issued thereunder. Reference to any section of
the Code shall include any successor provision thereto.
1.10 Company shall mean Consolidated Edison Company of New York, Inc. or any
successor thereto by merger, purchase or otherwise; provided, however,
that for purposes of Sections 1.08 and 1.33, "Company" shall mean the
highest level holding company of Consolidated Edison Company of New York,
Inc. (or any successor thereto which continues this Plan) which has
publicly traded common stock.
1.11 Company Contribution Account shall mean the bookkeeping account maintained
for each Participant to record all amounts credited on such Participant's
behalf under Sections 3.01(c) and (d) and all amounts credited on such
Participant's behalf under the Supplemental Thrift Plan as of March 31,
1999 or such later date as of which such amounts are administered under
this Plan, earnings, gains and losses on those amounts pursuant to Section
3.02, and debits for administrative expenses allocated pursuant to Section
6.01(a).
1.12 Company Contributions shall mean "Company Contributions," as such term is
defined in the Savings Plan.
1.13 Compensation shall mean an Eligible Employee's "Compensation" (as such
term is defined in the Savings Plan), determined without regard to the
Statutory Compensation Limitation (except as otherwise provided in Section
3.01(a) and (b)). Compensation shall be calculated on a monthly basis by
dividing Compensation by 12 and be determined prior to any reduction
pursuant to an Eligible Employee's election to make (i) pre-tax
contributions under the Savings Plan, (ii) pre-tax contributions to a
cafeteria plan under Section 125 of the Code, or (iii) Basic Salary
Deferrals or Supplemental Salary Deferrals to this Plan.
1.14 Deemed Investment Option shall mean the investment funds as may from time
to time be selected by the Plan Administrator in accordance with Section
3.02.
1.15 Deferred Compensation Agreement shall mean the agreement entered into
between the Company and the Participant pursuant to Section 2.02(a), (b),
(c), or (d) and Section 3.02 under which the Participant elects to reduce
his or her Compensation otherwise payable for a Plan Year and have that
amount contributed to the Plan by the Company as Basic Salary Deferrals
and Supplemental Salary Deferrals and/or designates his or her preferences
with regard to the allocation among the available Deemed Investment
Options of the aggregate of the Participant's Basic Salary Deferrals,
Supplemental Salary Deferrals, Matching Company Contributions,
Supplemental Company Contributions, Mandatory Bonus Deferral Contributions
and Optional Bonus Deferral Contributions made in such Plan Year, if any.
1.16 Disability shall mean "Disability," as such term is defined under the
Savings Plan.
1.17 Effective Date shall mean January 1, 1994.
1.18 Eligible Employee shall mean an employee of the Company whose Compensation
for the Plan Year exceeds the Statutory Compensation Limitation and who is
eligible to participate in the Savings Plan, or any other person
designated by the Chief Executive Officer of the Company as eligible to
participate in the Plan.
1.19 ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.20 Executive Incentive Plan shall mean the Consolidated Edison Company of New
York, Inc. Executive Incentive Plan as amended from time to time.
1.21 Incentive Award shall mean an "Incentive Award," as such term is defined
in the Executive Incentive Plan.
1.22 Mandatory Bonus Deferral Contributions shall mean the amount of
contributions credited on a Participant's behalf pursuant to Section
3.01(e).
1.23 Mandatory Bonus Deferral Account shall mean the bookkeeping account
maintained for each Participant to record all amounts credited on such
Participant's behalf under Section 3.01(e), earnings, gains and losses on
those amounts pursuant to Section 3.02, and debits for administrative
expenses allocated pursuant to Section 6.01(a).
1.24 Mandatory Deferral Portion shall mean the "Mandatory Deferral Portion," as
such term is defined in the Executive Incentive Plan, of an Incentive
Award.
1.25 Matching Company Contributions shall mean the amount of contributions
credited on a Participant's behalf under Section 3.01(c).
1.26 Optional Bonus Deferral Contributions shall mean the amount of
contributions credited on a Participant's behalf pursuant to Section
3.01(f).
1.27 Optional Bonus Deferral Account shall mean the bookkeeping account
maintained for each Participant to record all amounts credited on such
Participant's behalf under Section 3.01(f), earnings, gains and losses on
those amounts pursuant to Section 3.02, and debits for administrative
expenses allocated pursuant to Section 6.01(a).
1.28 Optional Deferral Portion shall mean the "Optional Deferral Portion," as
such term is defined in the Executive Incentive Plan, of an Incentive
Award.
1.29 Participant shall mean (a) each Eligible Employee who has made an election
described in Section 2.02(a), (b), (c), or (d); (b) each person who has
made a deferral election under the Executive Incentive Plan which has
resulted in all or any portion of any of the Eligible Employee's Incentive
Awards granted under the Executive Incentive Plan to be administered and
accounted for as a liability under this Plan; (c) each person who has had
all or any portion of his or her Incentive Awards granted under the
Executive Incentive Plan administered and accounted for as a liability
under this Plan; (d) such other Eligible Employee who is credited with
Supplemental Company Contributions; and (e) such other Eligible Employee
who is covered by the provisions of Section 4.05.
1.30 Plan shall mean the Consolidated Edison Company of New York, Inc. Deferred
Income Plan as set forth in this document and as amended from time to
time.
1.31 Plan Administrator shall mean the individual appointed by the Chief
Executive Officer of the Company to administer the Plan as provided in
Article V.
1.32 Plan Year shall mean the calendar year.
1.33 Potential Change in Control shall mean an event which shall occur if: (a)
the Company enters into a definitive written agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(b) the Company or any Person (as defined in Section 1.08(a)) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control; or
(c) any Person becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities
of the Company representing 15 percent or more of the then outstanding
shares of Common Stock of the Company or the combined voting power of the
Company's then outstanding securities.
1.34 Retirement shall mean termination of service either (a) under
circumstances in which the Participant is entitled to receive a retirement
pension under any "defined benefit plan" (as defined in Section 414(j) of
the Code) which is maintained by the Company or an Affiliated Company or
(b) in the case of any Participant who is employed after age 60 and who is
not entitled to receive a retirement pension under any defined benefit
plan, on or after the Participant's 65th birthday.
1.35 Savings Plan shall mean The Con Edison Thrift Savings Plan for Management
Employees as amended from time to time.
1.36 Statutory Compensation Limitation shall mean the limitation set forth in
Section 401(a)(17) of the Code as in effect each year for the Savings
Plan.
1.37 Statutory Limitations shall mean the limitations set forth in Section
401(a)(17) and Section 402(g)(1) of the Code.
1.38 Supplemental Company Contributions shall mean the amount of contributions
credited on a Participant's behalf under Section 3.01(d).
1.39 Supplemental Salary Deferral Account shall mean the bookkeeping account
maintained for each Participant to record all amounts credited on such
Participant's behalf under Section 3.01(b), earnings, gains and losses on
those amounts pursuant to Section 3.02, and debits for administrative
expenses allocated pursuant to Section 6.01(a).
1.40 Supplemental Salary Deferrals shall mean the amount of contributions
credited on a Participant's behalf under Section 3.01(b).
1.41 Supplemental Thrift Plan shall mean the Supplemental Thrift Savings Plan of
Consolidated Edison Company of New York, Inc. as effective on March 31, 1999.
1.42 Valuation Date shall mean the last day of each calendar month, commencing
with the calendar month in which the Effective Date occurs, and any other date
designated as a Valuation Date by the Plan Administrator.
ARTICLE II. PARTICIPATION
2.01 Participation
An Eligible Employee shall become a Participant in the Plan on the
earliest of:
(a) the date the Eligible Employee first has Basic Salary Deferrals
credited on such Eligible Employee's behalf under the Plan
pursuant to Sections 2.02 and 3.01(a);
(b) the date the Eligible Employee first has Supplemental Salary
Deferrals credited on such Eligible Employee's behalf under the Plan
pursuant to Sections 2.02 and 3.01(b);
(c) the date the Eligible Employee first has Mandatory Bonus Deferral
Contributions or Optional Bonus Deferral Contributions administered
and accounted for as a liability under the Plan pursuant to Section
3.01(e) or 3.01(f); or
(d) the date the Eligible Employee first has Supplemental Company
Contributions credited on such individual's behalf under the Plan
pursuant to Section 3.01(d).
2.02 Deferred Compensation Agreements
(a) (i) An individual who is an Eligible Employee before April 1, 1999 and
who wishes to have salary reduction contributions credited on such
Eligible Employee's behalf to a Basic Salary Deferral Account under the
Plan in the 1999 Plan Year must, within 30 days after April 1, 1999
(the effective date of the amended and restated Plan), or the date the
amended and restated Pan was approved by the Company, if later, and
(ii) any Eligible Employee who wishes to have salary reduction
contributions credited on such Eligible Employee's behalf to a Basic
Salary Deferral Account under the Plan in a Plan Year commencing on or
after April 1, 1999 must, prior to the beginning of that Plan Year,
complete, execute and file with the Plan Administrator an irrevocable
Deferred Compensation Agreement authorizing Basic Salary Deferrals
under this Plan for such Plan Year in accordance with the provisions of
paragraph (c)(i) below and Section 3.01(a). Such Deferred Compensation
Agreement may also authorize Supplemental Salary Deferrals under this
Plan in accordance with the provisions of paragraph (c)(ii) below and
Section 3.01(b) for such Plan Year if (i) the Eligible Employee is an
officer of the Company or is designated by the Chief Executive Officer
as eligible to make Supplemental Salary Deferrals and (ii) the Eligible
Employee authorizes on such Deferred Compensation Agreement the Basic
Salary Deferrals permitted to be made to this Plan.
(b) Notwithstanding the provisions of paragraph (a) above, an individual
who becomes an Eligible Employee after April 1, 1999 who wishes to have
salary reduction contributions credited on such Eligible Employee's
behalf to a Salary Deferral Account under the Plan in the calendar year
such individual first becomes an Eligible Employee must, no later than
30 days following the date such individual becomes an Eligible
Employee, complete, execute and file with the Plan Administrator an
irrevocable Deferred Compensation Agreement authorizing Basic Salary
Deferrals under this Plan for such Plan Year in accordance with the
provisions of paragraph (c)(i) below and Section 3.01(a). Such
Deferred Compensation Agreement may also authorize Supplemental Salary
Deferrals under this Plan in accordance with the provisions of
paragraph (c)(ii) below and Section 3.01(b) for such Plan Year if (i)
the Eligible Employee is an officer of the Company or is designated by
the Chief Executive Officer as eligible to make Supplemental Salary
Deferrals and (ii) the Eligible Employee authorizes on such Deferred
Compensation Agreement the Basic Salary Deferrals permitted to be made
to this Plan.
(c) A Deferred Compensation Agreement for a Plan Year shall be in writing
and be properly completed upon a form approved by the Plan
Administrator, who shall be the sole judge of the proper completion
thereof. Such Deferred Compensation Agreement shall specify:
(i) the percentage of the Participant's Compensation to be reduced
and credited on the Participant's behalf to the Plan by the Company as
Basic Salary Deferrals, such percentage to be 6 percent (or such other
percentage as specified for such purpose by the Plan Administrator);
(ii) the percentage of the Participant's Compensation to be reduced
and credited on the Participant's behalf to the Plan by the Company as
Supplemental Salary Deferrals, such percentage to be in multiples of
1 percent and to not exceed 25 percent (or such other percentage as
specified for such purpose by the Plan Administrator); and
(iii) the Participant's preferences with regard to the allocation among
the Deemed Investment Options of the aggregate of Participant's Basic
Salary Deferrals, Supplemental Salary Deferrals, Company Matching
Contributions, Supplemental Company Contributions, Mandatory Bonus
Deferral Contributions and Optional Bonus Deferral Contributions, if
any, to be credited for such Plan Year.
(d) Any Deferred Compensation Agreement made by an Eligible Employee shall
only be effective with respect to Compensation to be earned and Basic
Salary Deferrals, Supplemental Salary Deferrals, Company Matching
Contributions, Supplemental Company Contributions, Mandatory Bonus
Deferral Contributions and Optional Bonus Deferral Contributions
credited in the Plan Year to which such Deferred Compensation Agreement
relates. The terms of an Eligible Employee's Deferred Compensation
Agreements may differ from Plan Year to Plan Year with respect to:
(i) the deferral percentage with respect to Supplemental Salary
Deferrals;
(ii) the deferral period with respect to Supplemental Salary Deferrals,
which must end on a January 1 not sooner than the fourth anniversary of
the first day of the Plan Year for which such Supplemental Salary
Deferrals are made; (iii) the effective date of Supplemental Salary
Deferrals pursuant to
Section 3.01(b); and
(iv) the Participant's preferences with respect to allocation among the
Deemed Investment Options.
(e) Notwithstanding the foregoing, if a Participant receives a hardship
withdrawal of pre-tax contributions from the Savings Plan or any other
plan which is maintained by the Company and which meets the
requirements of Section 401(k) of the Code (or any successor thereof)
and is precluded from making contributions to such 401(k) plan for at
least 12 months after receipt of the hardship withdrawal, the
Participant's Deferred Compensation Agreement, if any, shall be
suspended during the 12-month period commencing on the date the
Participant receives the hardship withdrawal distribution from such
plan. Any Compensation payment which would have been deferred pursuant
to the Participant's Deferred Compensation Agreement but for the
application of this paragraph (e) shall be paid to the Participant as
if the Participant had not entered into the Deferred Compensation
Agreement.
2.03 Termination of Participation
A Participant's participation in the Plan shall terminate when the vested
portion of the Participant's Accounts under the Plan is totally
distributed to the Participant or on the Participant's behalf.
ARTICLE III. ACCOUNTS
3.01 Amount of Contributions to be Credited
For any Plan Year, the amount of contributions to be recorded on the books
of the Company on behalf of a Participant pursuant to this Article III
shall be equal to the sum of the Basic Salary Deferrals, Supplemental
Salary Deferrals, Matching Company Contributions, Supplemental Company
Contributions, Mandatory Bonus Deferral Contributions and Optional Bonus
Deferral Contributions determined under paragraphs (a), (b), (c), (d), (e)
and (f) below. In addition, the amounts credited on a Participant's behalf
under the Supplemental Thrift Plan shall be recorded on the books of the
Company on behalf of such Participant pursuant to paragraph (g)(v) below.
(a) Basic Salary Deferrals
The amount of Basic Salary Deferrals for a Plan Year shall be equal
to the designated percentage of Compensation elected by the
Participant in the Participant's Deferred Compensation Agreement in
accordance with Section 2.02, provided that the reduction in the
Participant's Compensation corresponding to the Basic Salary
Deferrals elected by the Participant shall be made only with respect
to Compensation payable after the date the Participant's Deferred
Compensation Agreement becomes effective.
Except as provided in Section 3.01(b), Basic Salary Deferrals shall
be permitted under this paragraph (a) only with respect to the
Participant's Compensation for which pre-tax contributions could not
be contributed to the Savings Plan because of the Statutory
Limitations.
(b) Supplemental Salary Deferrals
The amount of Supplemental Salary Deferrals for a Plan Year shall be
equal to the designated percentage of Compensation elected by the
Participant in the Participant's Deferred Compensation Agreement in
accordance with Section 2.02, provided that the reduction in the
Participant's Compensation corresponding to the Supplemental Salary
Deferrals elected by the Participant shall be made only with respect
to Compensation payable after the date the Participant's Deferred
Compensation Agreement becomes effective or, if the Participant so
elects on the Participant's Deferred Compensation Agreement, only
with respect to the Participant's Compensation for which pre-tax
contributions could not be contributed to the Savings Plan because
of the Statutory Limitations. If the reduction in the Participant's
Compensation corresponding to the Supplemental Salary Deferrals
elected by the Participant shall reduce the Participant's
Compensation below one-twelfth of the Statutory Compensation
Limitation, a portion of such Supplemental Salary Deferrals shall be
matched by Company Contributions under Section 3.02(c). Such matched
Supplemental Salary Deferrals shall be deemed Basic Salary Deferrals
for all other provisions of this Plan.
(c) Matching Company Contributions
The amount of Matching Company Contributions for a Plan Year shall
be equal to the sum of the Basic Salary Deferrals and Supplemental
Salary Deferrals made on the Participant's behalf for the Plan Year
multiplied by the rate at which Company Contributions are made under
the Savings Plan; provided, however, that such amount shall not
exceed the result of (i) minus (ii) as follows: (i) the product of
(A), (B) and (C) as follows:
(A) is an amount equal to the Participant's Compensation
for the Plan Year;
(B) is the maximum percentage of "Compensation" (as such
term is defined under the Savings Plan) with respect to
which Company Contributions under the Savings Plan may
be made; and
(C) is the rate at which Company Contributions are made
under the Savings Plan; and
(ii) is the actual amount of the Company Contributions made by the
Company on behalf of the Participant under the Savings Plan
for such Plan Year.
(d) Supplemental Company Contributions
The Chief Executive Officer of the Company may authorize that
Supplemental Company Contributions shall be made for a Plan Year,
which shall be allocated in such amounts and to such Participants as
the Chief Executive Officer of the Company shall determine.
(e) Mandatory Bonus Deferral Contributions
The amount of Mandatory Bonus Deferral Contributions for a Plan Year
shall be equal to the value on the Change of Administration Date of
any portion of the Mandatory Deferral Portion of an Incentive Award
granted under the Executive Incentive Plan that is administered and
accounted for as a liability under this Plan in accordance with the
Executive Incentive Plan.
(f) Optional Bonus Deferral Contributions
The amount of Optional Bonus Deferral Contributions for a Plan Year
shall be equal to the value on the Change of Administration Date of
any portion of the Optional Deferral Portion of an Incentive Award
granted under the Executive Incentive Plan that is administered and
accounted for as a liability under this Plan in accordance with the
Executive Incentive Plan.
(g) (i) The contributions recorded on the books of the
Company pursuant to paragraphs (a) and (b) above shall be
credited to a Participant's Basic Salary Deferral Account
and Supplemental Salary Deferral Account, respectively, at
the same time as they would have been credited to the
Participant's account under the Savings Plan had such
contributions been made under the Savings Plan.
(ii) The contributions recorded on the books of the
Company pursuant to paragraph (c) above shall be credited
to a Participant's Company Contribution Account at the same
time as they would have been credited to the Participant's
account under the Savings Plan had such contributions been
made under the Savings Plan.
(iii) The contributions recorded on the books of the
Company pursuant to paragraph (d) above shall be credited
to a Participant's Company Contribution Account at the time
designated for such purpose by the Chief Executive Officer.
(iv) The contributions recorded on the books of the
Company pursuant to paragraphs (e) and (f) above shall be
credited to a Participant's Mandatory Bonus Deferral
Account and Optional Bonus Deferral Account, respectively,
on the date such contributions are first administered and
accounted for as a liability under this Plan pursuant to
the Executive Incentive Plan.
(v) As of April 1, 1999, or the date thereafter on which
it is administratively practicable as determined by the
Plan Administrator, the contributions recorded on the books
of the Company on account of amounts credited under the
Supplemental Thrift Plan shall be credited to a
Participant's Company Contribution Account.
(h) Unless the Plan Administrator determines otherwise, no future Basic
Salary Deferrals or Supplemental Salary Deferrals by a Participant
shall be permitted and no future Matching Company Contributions or
Supplemental Company Contributions shall be made on behalf of such
Participant if such Participant is no longer an
Eligible Employee.
3.02 Investment of Accounts
(a) Accounts shall be credited with earnings, gains and losses of the
Deemed Investment Options selected by the Plan Administrator, with such
allocation among the Deemed Investment Options as the Plan
Administrator selects. However, a Participant shall designate on each
Deferred Compensation Agreement his or her preferences with regard to
the allocation among the Deemed Investment Options of the aggregate of
his or her Basic Salary Deferrals, Supplemental Salary Deferrals,
Company Matching Contributions, Supplemental Company Contributions,
Mandatory Bonus Deferral Contributions and Optional Bonus Deferral
Contributions made pursuant to such Deferred Compensation Agreement or
to be credited in the Plan Year to which such Deferred Compensation
Agreement relates. A Participant may designate a preference with
respect to the allocation in the aggregate of his or her Basic Salary
Deferrals, Supplemental Salary Deferrals, Company Matching
Contributions, Supplemental Company Contributions, Mandatory Bonus
Deferral Contributions and Optional Bonus Deferral Contributions made
pursuant to a Deferred Compensation Agreement or to be credited in the
Plan Year to which such Deferred Compensation Agreement relates
entirely in any one of the Deemed Investment Options or may designate
any combination in such multiples as specified by the Plan
Administrator. The amounts credited on a Participant's behalf under
the Supplemental Thrift Plan shall be allocated to the Deemed
Investment Option selected for the Participant's Company Matching
Contributions for the Plan Year commencing January 1, 1999. The
amounts credited on a Participant's behalf under the Executive
Incentive Plan as of March 31, 1999 and transferred to this Plan in
accordance with the Executive Incentive Plan shall be allocated to the
Deemed Investment Option selected for the Participant's Mandatory and
Optional Bonus Deferral Contributions, respectively, for the Plan Year
transferred.
The Plan Administrator may from time to time make additional Deemed
Investment Options available as a performance measure under this Plan and
may determine that any Deemed Investment Option that it has previously
established be terminated as a performance measure under this Plan.
(b) A Participant may elect to change his or her preferences with respect to
the allocation among the Deemed Investment Options for a Plan Year for the
aggregate of future Basic Salary Deferrals, Supplemental Salary Deferrals,
Company Matching Contributions, Supplemental Company Contributions,
Mandatory Bonus Deferral Contributions, and Optional Bonus Deferral
Contributions in that Plan Year at such times and in accordance with such
procedures specified by Plan Administrator.
(c) With regard to the aggregate of a Participant's existing Accounts, a
Participant may designate a preference to transfer balances among the
available Deemed Investment Options at such times and in accordance
with such procedures specified by the Plan Administrator. Any
transfers must be made in such multiples as specified by the Plan
Administrator. The Plan Administrator may impose such additional rules
and limitations upon transfers between Deemed Investment Options as the
Plan Administrator may consider necessary or appropriate.
(d) Notwithstanding any other provision of the Plan, the Plan Administrator
shall have sole and absolute discretion with regard to the investment
returns credited to a Participant's Accounts.
3.03 Vesting of Accounts
(a) A Participant shall at all times be fully vested in the Participant's
Basic Salary Deferral Account, Supplemental Salary Deferral Account,
Mandatory Bonus Deferral Account, and Optional Bonus Deferral Account
(including amounts transferred from the Executive Incentive Plan).
(b) A Participant shall vest in the Matching Company Contributions made on the
Participant's behalf and earnings thereon at the same time and to the same
extent as such Participant is vested in Company Contributions under the
Savings Plan.
(c) A Participant shall vest in the Supplemental Company Contributions made on
the Participant's behalf and earnings thereon in accordance with Section
3.02 under the vesting schedule established for such contributions by the
Plan Administrator.
3.04 Individual Accounts
The Plan Administrator shall maintain, or cause to be maintained, records
showing the individual balances of each Participant's Accounts and the
vested portion thereof. At least once a year, each Participant shall be
furnished with a statement setting forth the value of the Participant's
Accounts.
ARTICLE IV. PAYMENT OF BENEFITS
4.01 Commencement of Payment
(a) Except as provided in Section 4.01(b), 4.02(c) or Section 4.03, payment of
any portion of a Participant's Accounts payable for a reason other than
the Participant's termination of employment with the Company and
Affiliated Companies shall commence as follows: (i) in accordance with the
Participant's election in the applicable
Deferred Compensation Agreement, with respect to payment of a
Participant's Supplemental Salary Deferral Account attributable to
Supplemental Salary Deferrals made on the Participant's behalf
for a Plan Year and earnings thereon;
(ii) in accordance with the Participant's election relating to the
Mandatory Deferral Portion of any Incentive Award granted under the
Executive Incentive Plan, with respect to payment of a Participant's
Mandatory Bonus Deferral Account attributable to Mandatory Bonus
Deferral Contributions relating to such Mandatory
Deferral Portion and earnings thereon;
(iii) in accordance with the Participant's election relating to the
Optional Deferral Portion of any Incentive Award granted under the
Executive Incentive Plan, with respect to payment of a Participant's
Optional Bonus Deferral Account attributable to Optional Bonus
Deferral Contributions relating to such Optional Deferral Portion
and earnings thereon; and
(iv) in accordance with the Participant's election in effect under the
Executive Incentive Plan immediately prior to the transfer of any
Incentive Award granted under such Executive Incentive Plan with
respect to payment of such amounts transferred on the Participant's
behalf which were credited under the Executive Incentive Plan prior
to April 1, 1999 and earnings thereon.
(b) Notwithstanding the provisions of paragraph (a)
above, a Participant who has not terminated
employment with the Company and Affiliated Companies
may make an irrevocable election at any time to
accelerate payment of all of his or her Supplemental
Salary Deferral Account, Mandatory Bonus Deferral
Account and Optional Bonus Deferral Account to a date
prior to the date such Accounts would otherwise have
been payable pursuant to paragraph (a) above. Such
payment shall be made in a single lump sum, as soon
as administratively practicable after such election,
and shall equal the entire value of his or her
Supplemental Salary Deferral Account, Mandatory Bonus
Deferral Account and Optional Bonus Deferral Account
as of the date of such distribution, reduced by the
prime rate as published in the Wall Street Journal as
of the date of distribution plus 100 basis points.
Except as provided in Section 4.02(c) or Section 4.03, payment of a
Participant's Basic Salary Deferral Account and Company Contribution
Account shall not be made before the Participant's termination of
employment.
(c) Except as provided in Section 4.02(c) or Section 4.03, payment of a
Participant's Accounts payable on account of the Participant's termination
of employment with the Company and Affiliated Companies shall commence as
follows:
(i) if payment of a Participant's Accounts is to be made in the form
of a lump sum, such payment shall commence as soon as
administratively practicable after the Participant's termination of
employment with the Company and Affiliated Companies; or (ii) if
payment of a Participant's Accounts is to be made in the form of
installments pursuant to the Participant's election in accordance
with Section 4.02(b), such payments shall commence as soon as
administratively practicable after the January 1 coincident with or
next following the Participant's termination of employment with the
Company and Affiliated Companies.
4.02 Method of Payment
(a) Payment of any portion of a Participant's Accounts payable prior to a
Participant's termination of employment with the Company and Affiliated
Companies shall be made in the form of a single lump sum.
(b) (i) Unless a Participant elects otherwise in accordance with
subparagraph (iii) below, payment of the Participant's Accounts
payable on account of such Participant's termination of
employment with the Company or an Affiliated Company shall be
made in the form of a single lump sum.
(ii) A Participant may elect that payment of a Participant's
Accounts attributable to the amounts credited to Participant's
Mandatory Bonus Deferral Account and Optional Bonus Deferral
Account from the Executive Incentive Plan, which were credited
thereunder prior to April 1, 1999 and for which Participant had
elected an annuity benefit payable under the Executive Incentive
Plan, be paid in the form of annual cash installments for a
period of years not to exceed ten.
(iii) If a Participant's total Accounts balance exceeds $25,000,
a Participant may elect that payment of the Participant's
Accounts payable on account of such Participant's termination of
employment with the Company or an Affiliated Company, including
Executive Incentive Plan transfers, be made in the form of annual
cash installments for a period of years, not to exceed ten, in
lieu of a single lump sum.
A Participant may revoke such election, or may designate a different
installment period, not to exceed ten years, by duly completing, executing
and filing such election, revocation, or change of installment period with
the Plan Administrator. Such election, or the revocation of such election,
or the designation of a different installment period, shall be made by the
Participant on a form designated by the Plan Administrator for such
purpose; provided, however, for any such election, revocation or change of
installment period to be effective, a full calendar year must pass between
the calendar year during which the Participant duly makes such election,
revocation or change of period and the calendar year in which the payment
is to commence.
During an installment payment period, the Participant's Accounts shall
continue to be credited with earnings, gains and losses as provided in
Section 3.02. The first installment shall be made as soon as
administratively practicable following the January 1 coincident with or
next following the Participant's termination of employment with the
Company or an Affiliated Company. Subsequent installments, if any, shall
be paid as soon as practicable following the beginning of the following
calendar year and each subsequent year of the installment period. The
amount of each installment shall equal the sum of the balance in the
Participant's Accounts as of the Valuation Date coincident with or
immediately preceding the date of such installment's distribution divided
by the number of remaining installments (including the installment being
determined).
(c) If a Participant dies before payment of the entire vested balance of the
Participant's Accounts, an amount equal to the unpaid portion thereof as
of the Valuation Date coincident with or immediately preceding the
Participant's date of death shall be payable in one lump sum to the
Participant's Beneficiary as soon as administratively practicable after
the Participant's death.
4.03 Payment Upon the Occurrence of a Change in Control
(a) Unless a Participant elects otherwise prior to the date a Change in
Control occurs, upon the occurrence of a Change in Control the Participant
shall automatically receive, in a single lump sum as soon as
administratively practicable after the date the Change in Control occurs,
the amount credited to the Participant's Accounts as of the Valuation Date
coincident with or immediately preceding the date the Change in Control
occurs.
(b) If, due to an election pursuant to paragraph (a) above, a Participant
is not to receive a single lump sum upon a Change in Control, the
Participant may elect, within 30 days after the date the Change in
Control occurs, to receive, in a single lump sum, the value, on the
date the Change in Control occurs, of the Participant's vested
Accounts, determined in accordance with paragraph (a) above, reduced by
the prime rate as published in the Wall Street Journal on the date the
Change in Control occurs plus 100 basis points. Such payment will be
made as soon as administratively practicable after the Participant's
election is received by the Plan Administrator.
(c) The elections permitted to Participants by paragraphs (a) and (b) above
shall be made by a writing signed by the Participant and delivered to the
Plan Administrator.
4.04 Payment Upon Hardship
The Participant may request, in such manner as the Plan Administrator
shall prescribe, to withdraw from his Accounts such amount as is necessary
to meet an unforeseen financial hardship. The Plan Administrator shall
have the sole and absolute discretion to grant or deny such a request. Any
such withdrawal shall result in a penalty against the Participant's
Accounts equal to 1 percent above the prime rate reported in The Wall
Street Journal for the last business day of the quarter preceding the
calendar quarter in which the withdrawal is processed.
4.05 Additional Death Benefits
An Eligible Employee who is an officer of the Company or is designated by
the Chief Executive Officer as eligible shall be covered by an additional
death benefit over and above any death benefit payable pursuant to Section
4.02(c). Such benefit shall be equal to such Participant's salary (which
for this Section 4.05 is the Participant's annual base rate of salary,
including any pre-tax contributions to the Savings Plan, the Company's
FLEX Plan, and deferrals made pursuant to Sections 3.01(a) and 3.01(b)
hereof, and excluding overtime, bonuses, variable or incentive pay, or any
other special payments) as long as such Participant remains in the employ
of the Company. Upon the Participant's Retirement, such death benefit
coverage shall continue in effect after the date of Retirement. Upon the
Participant's death, the benefit shall be paid, in a manner designated by
the Plan Administrator, to the Beneficiary last designated by the
Participant.
ARTICLE V. PLAN ADMINISTRATION
5.01 Responsibility for Account Determination
The Accounts credited on behalf of a Participant or Beneficiary under this
Plan shall be determined either by the Plan Administrator, as provided in
Section 5.02 below, or such other party as is authorized under the terms
of any grantor trust.
5.02 Duties of Plan Administrator
The Plan Administrator shall calculate, in accordance with Article IV, the
Accounts credited on behalf of each Participant or Beneficiary under the
Plan. To the extent a Participant's or Beneficiary's vested Account
balance is payable from the Plan, the Plan Administrator shall have full
discretionary authority to resolve any question which shall arise under
the Plan as to any person's eligibility for benefits, the calculation of
benefits, the form, commencement date, frequency, duration of payment, or
the identity of the Beneficiary. Such question shall be resolved by the
Plan Administrator under rules uniformly applicable to all person(s) or
employee(s) similarly situated.
5.03 Procedure for Payment of Benefits Under the Plan
With respect to any benefit to which a Participant or Beneficiary is
entitled under this Plan, the Plan Administrator (a) shall direct the
commencement of benefit payments hereunder in accordance with the
applicable procedures established by the Company and/or the Plan
Administrator regarding the disbursement of amounts from the general funds
of the Company and (b) shall arrange, in conjunction with any other
applicable plan, for the payment of benefits under this Plan and/or any
other applicable plan.
ARTICLE VI. GENERAL PROVISIONS
6.01 Funding
(a) All amounts payable in accordance with this Plan shall constitute a
general unsecured obligation of the Company. Such amounts shall be paid
out of the general assets of the Company, to the extent not paid from the
assets of any trust established pursuant to paragraph (b) below. The Plan
Administrator may determine that any administrative costs relating to the
Plan shall be allocated to Participants' Accounts, and such Accounts shall
be reduced by the allocated costs.
(b) The Company may, for administrative reasons, establish a grantor trust
for the benefit of Participants in the Plan. Notwithstanding the
foregoing sentence, the Company shall, upon a Potential Change in
Control, (1) establish a grantor trust for the benefit of the
Participants in the Plan if one is not already in existence and (2)
assure that the funds in such trust are at least equal to the sum of
the Participant's Accounts in the Plan, as well as any other
liabilities of the Plan in excess of such Accounts, if any, incurred as
of the date of the Potential Change in Control. The assets placed in
such trust shall be held separate and apart from other Company funds
and shall be used for the purposes set forth in the Plan and the
applicable trust agreement, subject to the following conditions:
(i) the creation of such trust shall not cause the Plan to be other
than "unfunded" for purposes of Title I of ERISA;
(ii) the Company shall be treated as "grantor" of such trust for
purposes of Section 677 of the Code; and
(iii) the agreement of such trust shall provide that its assets may be
used upon the insolvency or bankruptcy of the Company to satisfy
claims of the Company's general creditors and that the rights of
such general creditors are enforceable by them under federal and
state law; and
(iv) without in any way limiting the choice of assets thereunder, such
trust may invest in life insurance policies, including so-called
"split dollar" policies.
6.02 Discontinuance and Amendment
The Company reserves the right, by action of the Board of Trustees, to
discontinue the crediting of benefits under the Plan at any time; and
further reserves the right, by action of the Board of Trustees or the Plan
Administrator, to modify or amend the Plan, in whole or in part, at any
time. However, no modification, amendment, or discontinuance shall
adversely affect the right of any Participant to receive the benefits
credited under the Plan as of the date of such modification, amendment or
discontinuance, and no modification or amendment by action of the Plan
Administrator shall have a material effect of the benefits payable under
the Plan.
6.03 Termination of Plan
The Company reserves the right, by action of the Board of Trustees, to
terminate the Plan at any time, provided, however, that no termination
shall be effective retroactively. As of the effective date of termination
of the Plan:
(a) the benefits of any Participant or Beneficiary whose benefit
payments have commenced shall continue to be paid; and
(b) no further Basic Salary Deferrals, Supplemental Salary
Deferrals, Mandatory Bonus Deferral Contributions, Optional
Bonus Deferral Contributions, Matching Company
Contributions, or Supplemental Company Contributions shall
be credited on behalf of any Participant whose benefits
have not commenced, and such Participant and the
Participant's Beneficiary shall retain the right to
benefits hereunder. Earnings, gains and losses shall
continue to be credited in accordance with Section 3.02
until payment of a Participant's Accounts has been made
under the terms of the Plan in effect immediately prior to
the date the Plan is terminated.
All other provisions of this Plan shall remain in effect.
6.04 Plan Not a Contract of Employment
This Plan is not a contract of employment, and the terms of employment of
any Participant shall not be affected in any way by this Plan or related
instruments, except as specifically provided therein. The establishment of
this Plan shall not be construed as conferring any legal rights upon any
person for a continuation of employment, nor shall it interfere with the
rights of the Company to discharge any person and to treat such person
without regard to the effect which such treatment might have upon such
person under this Plan. Each Participant and all persons who may have or
claim any right by reason of the Participant's participation in this Plan
shall be bound by the terms of this Plan and all agreements entered into
pursuant thereto.
6.05 Facility of Payment
In the event that the Plan Administrator shall find that a Participant is
unable to care for such Participant's affairs because of illness or
accident or because the Participant is a minor or has died, the Plan
Administrator may, unless claim shall have been made therefor by a duly
appointed legal representative, direct that any benefit payment due the
Participant, to the extent not payable from a grantor trust, be paid on
the Participant's behalf to the Participant's spouse, a child, a parent or
other blood relative, a person with whom the Participant resides, or a
legal guardian, and any such payment so made shall be a complete discharge
of the liabilities of the Company and the Plan therefor.
6.06 Withholding Taxes
The Company shall have the right to deduct from each payment to be made
under the Plan any required withholding taxes.
6.07 Nonalienation
Subject to any applicable law, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void, nor
shall any such benefit be in any manner liable for or subject to
garnishment, attachment, execution or levy, or liable for or subject to
the debts, contracts, liabilities, engagements or torts of the person
entitled to such benefits.
6.08 Assumption of Liabilities
Notwithstanding any Plan provision to the contrary, at the discretion and
direction of the Board of Trustees, the Plan may assume liabilities with
respect to benefits accrued by a Participant under a plan maintained by
such Participant's former employer, and upon such assumption such
liabilities shall become the obligation of the Company.
6.09 Claims Procedure
(a) Submission of Claims
Claims for benefits under the Plan shall be submitted in writing to the
Plan Administrator or to an individual designated by the Plan
Administrator for this purpose.
(b) Exhaustion of Remedy
No claimant shall institute any action or proceeding in any state or
federal court of law or equity or before any administrative tribunal or
arbitrator for a claim for benefits under the Plan until the claimant has
first exhausted the procedures promulgated by the Plan Administrator for
review of claims.
6.10 Construction
(a) The Plan is intended to constitute an unfunded deferred compensation
arrangement maintained for a select group of management or
highly-compensated employees within the meaning of Sections 201(2),
301(a)(3), and 401(a)(1) of ERISA, and all rights under this Plan shall
be governed by ERISA. Subject to the preceding sentence, the Plan
shall be construed, regulated and administered under the laws of the
State of New York, to the extent such laws are not superseded by
applicable federal law.
(b) The illegality of any particular provision of this document shall not
affect the other provisions and the document shall be construed in all
respects as if such invalid provision were omitted.
(c) The headings and subheadings in the Plan have been inserted for
convenience of reference only, and are to be ignored in any construction
of the provisions thereof.
IN WITNESS WHEREOF, Consolidated Edison Company of New York, Inc. has
caused this instrument to be executed by is officer thereunto duly authorized as
of the 25th day of March, 1999.
By: Richard P. Cowie
Vice President-Employee Relations
Consolidated Edison Company of
New York, Inc.
CONSOLIDATED EDISON, INC.
RESTRICTED STOCK PLAN FOR NON-OFFICER DIRECTORS
EFFECTIVE OCTOBER 1, 1998
I. PURPOSE. The purpose of the Plan is to advance the interests of
Consolidated Edison, Inc. and its stockholders by assisting the Company in
attracting and retaining individuals of superior talent, ability and achievement
to serve on its Board of Directors.
II. DEFINITIONS. The following words and phrases shall have the meanings
set forth below unless a different meaning is required by the context:
(a)Adjustment Shares: New or additional or different shares of Common
Stock or other securities (other than rights or warrants to purchase
securities) received or entitled to be received by an owner of
Restricted Stock as a result of a change in capitalization of the
Company as set forth in Article VII hereof.
(b) Annual Meeting: The Annual Meeting of Stockholders of the Company.
(c) Beneficial Owner: As set forth in Rule 13d-3 under the Exchange Act.
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following:
(i)any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates other than in connection
with the acquisition by the Company or its affiliates of a business)
representing 20% or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
outstanding securities; or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving on the Board;
individuals who, on the Effective Date hereof, constitute the Board
and any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company (as such terms
are used in Rule 14a-11 of Regulation 14A under the Exchange Act))
whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors on the Effective Date hereof or whose
appointment, election or nomination for election was previously so
approved; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation or approve the issuance of
voting securities of the Company in connection with a merger or
consolidation of the Company (or any direct or indirect subsidiary
of the Company) pursuant to applicable stock exchange requirements,
other than (A) a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any affiliate of
the Company, at least 65% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its affiliates other than in connection with the
acquisition by the Company or its affiliates of a business)
representing 20% or more of either the then outstanding shares of
Common Stock of the Company or the combined voting power of the
Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 65% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to
such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders
of the Common Stock immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the
assets of the Company immediately following such transaction or series
of transactions.
(f) Committee: The Company's Nominating Committee.
(g) Common Stock: The Company's Common Shares, $.10 par value.
(h) Company: Consolidated Edison, Inc., or its successor or successors.
(i) Effective Date: October 1, 1998.
(j)Exchange Act: The Securities Exchange Act of 1934, as amended, or as
it may be amended from time to time.
(k)Non-Officer Director: A member of the Board who is not also an officer
or employee of the Company.
(l)Person: As defined in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its affiliates (as defined
in Rule 12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or any of its affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv)
a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company.
(m)Plan: Consolidated Edison, Inc. Restricted Stock Plan for Non-Officer
Directors, as it may be amended from time to time.
(n)Restriction Termination Date: as to each Non-Officer Director, the
earlier of (i) five years from the date of grant (determined in
accordance with Article IV hereof), (ii) retirement from Service at age
72 (or earlier with the consent of the Board or Committee), (iii) the
death of the Director, or (iv) a Change in Control.
(o)Restricted Stock: Shares of Common Stock subject to restrictions
awarded pursuant to Article IV hereof.
(p)Securities Act: The Securities Act of 1933, as amended, or as it may
be amended from time to time.
(q) Service: A Non-Officer Director's service as a member of the Board.
(r)Year of Service: The annual period of Service commencing the day of
each Annual Meeting and ending on the day before the next Annual
Meeting. For any person first appointed a member of the Board after the
date of an Annual Meeting, his or her first Year of Service shall
commence upon his or her appointment as a Director and shall end on the
day before the next Annual Meeting.
III. SHARES SUBJECT TO THE PLAN. Shares of Restricted Stock awarded under
the Plan shall be purchased on the open market by or on behalf of the Company or
its agent.
IV. RESTRICTED STOCK AWARDS.
A. On the Effective Date, each Non-Officer Director shall be granted an
award of 200 shares of Restricted Stock.
B. After the Effective Date, each Non-Officer Director shall be granted an
award of 200 shares of Restricted Stock upon the commencement of each Year of
Service. The date of grant shall be the first business day of the month
following the Annual Meeting or the Non-Officer Director's first appointment as
a member of the Board.
C. The award of shares of Restricted Stock, including the restrictions
thereon, shall be consistent with the following:
(i)Shares of Restricted Stock will be issued in the name of the
Non-Officer Director receiving the award, but prior to the Restriction
Termination Date the shares will be held by the Company or an agent
appointed by the Company for the account of such Non-Officer Director
(together with a blank stock power which the Non-Officer Director shall
execute and deliver to the Company).
(ii) Upon the Restriction Termination Date, the restrictions on the
Restricted Stock shall lapse and the Company shall deliver to the
Non-Officer Director, or such other person as may be designated
pursuant to Article IV.C (iii) a certificate for the shares which have
been awarded to him or her without any legend or restriction of any
kind and the Company shall return to the Non-Officer Director or
destroy any and all blank stock powers previously provided to it by
such Non-Officer Director. The Company shall use its reasonable best
efforts to ensure that the shares are freely transferable after the
Restriction Termination Date, including, if necessary, registering the
shares under the Securities Act and obtaining such listing,
qualification and compliance as may be required by state or federal
law, or the securities exchange or exchanges on which the Common Stock
is listed.
(iii) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, prior to the
Restriction Termination Date except with the consent of the Committee
or the Board and provided that a Director may direct that the shares of
Restricted Stock be registered jointly with another person or
transferred to a family member or to a trust or other entity for estate
planning purposes. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition in contravention of the foregoing
shall be null and void and without effect.
(iv) Except as otherwise provided herein, a Non-Officer Director receiving
an award of shares of Restricted Stock shall have all rights of a
stockholder with respect to shares of Restricted Stock issued in his or
her name, including the right to vote and to receive dividends and
other distributions.
(v)If a Non-Officer Director, as owner of shares of Restricted Stock,
receives or shall be entitled to receive Adjustment Shares, the
certificates representing the Adjustment Shares (together with a blank
stock power executed by such Non-Officer Director) shall be delivered
to and held by the Company or its agent. Any Adjustment Shares shall be
Restricted Stock for all purposes of the Plan, subject to the same
restrictions as the shares of Restricted Stock to which they relate. If
a Non-Officer Director shall receive rights or warrants with respect to
any shares of Restricted Stock or any Adjustment Shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of by the
Non-Officer Director, and any shares or other securities acquired by
the Non-Officer Director as a result of the exercise of such rights or
warrants likewise may be held, sold, or otherwise disposed of by the
Non-Officer Director, free and clear of any restrictions.
V. FURTHER CONDITIONS.
A. A Non-Officer Director granted an award of shares of Restricted Stock
shall, unless the Company is otherwise advised in writing by the Non-Officer
Director, be deemed to represent to the Company that the shares are being
acquired for investment purposes only and not with a view towards the further
resale or distribution thereof.
B. The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that the Company
is required by any law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
award of any Restricted Stock, including, but not limited to (i) the withholding
of delivery of certificates for shares of Common Stock until the Non-Officer
Director reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, (ii) the canceling of any number of shares
of Common Stock issuable in an amount sufficient to reimburse the Company for
the amount it is required to so withhold or (iii) withholding the amount due
from any such Non-Officer Director's other compensation.
VI. ADMINISTRATION. The Plan shall be administered by the Committee, which
shall have full and final authority to interpret the provisions of the Plan and,
subject to Article VIII hereof, to establish rules and regulations and otherwise
make determinations regarding the administration and operation of the Plan. All
decisions and determinations by the Committee with respect to the Plan or awards
payable thereunder shall be final and binding upon all parties.
VII. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event that the
outstanding shares of Common Stock are hereafter changed by reason of
recapitalization, reclassification, stock split, combination or exchange of
shares of Common Stock or the like, or by the issuance of dividends payable in
shares of Common Stock, an appropriate adjustment shall be made by the Committee
in the number of shares of Restricted Stock outstanding.
VIII. TERMINATION, MODIFICATION AND AMENDMENT.
A. The Board may, at any time, terminate the Plan or, from time to time,
make such modifications or amendments of the Plan as it may deem advisable.
B. Subject to Article X.C hereof, no termination, modification or
amendment of the Plan may adversely affect the rights under any outstanding
shares of Restricted Stock without the consent of the Non-Officer Director to
whom such shares of Restricted Stock shall have been previously awarded.
IX. NOT A CONTRACT FOR CONTINUED SERVICE. Nothing contained in the Plan or
shall be deemed to confer upon any Non-Officer Director to whom shares of
Restricted Stock are or may be awarded hereunder any right to remain a member of
the Board or in any way limit the right of the Board or the stockholders to
terminate or fail to re-nominate or reelect any Non-Officer Director as a member
of the Board.
X. MISCELLANEOUS.
A. The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any award nor to any Non-Officer
Director receiving an award.
B. This Plan and actions taken in connection herewith shall be governed
and construed in accordance with the laws of the State of New York.
C. In the event of a merger, consolidation or other business combination,
liquidation or reorganization of the Company, the Committee may provide for
appropriate adjustments, including rescinding any grant of Restricted Stock
under this Plan within not more than two years after the grant and only to the
extent deemed necessary in the opinion of the Company's independent public
accountants to permit the Company to engage in a merger, consolidation or
business combination intended to be accounted for as a pooling of interests
transaction.
GENERATING PLANT
AND GAS TURBINE
ASSET PURCHASE AND SALE AGREEMENT
FOR
RAVENSWOOD GENERATING PLANTS AND GAS TURBINES
LOCATED AT LONG ISLAND CITY, QUEENS COUNTY, NEW YORK
By and Between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
and
MARKETSPAN CORPORATION
doing business as
KEYSPAN ENERGY
Dated as of January 28, 1999
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions.................................. 1
SECTION 1.02. Accounting Terms............................. 13
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.01. Purchase and Sale............................ 13
SECTION 2.02. Auctioned Assets and Retained Assets....... 13
SECTION 2.03. Assumed Obligations and Retained
Liabilities............................. 18
SECTION 2.04. Third Party Consents......................... 22
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price............................... 22
SECTION 3.02. Post-Closing Adjustment...................... 22
SECTION 3.03. Allocation of Purchase Price................. 24
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing.................... 25
SECTION 4.02. Payment of Purchase Price and
Estimated Adjustment Amount............. 26
ARTICLE V
Representations and Warranties of Seller
SECTION 5.01. Organization; Qualification.................. 26
SECTION 5.02. Authority Relative to This Agreement....... 26
SECTION 5.03. Consents and Approvals; No
Violation.............................. 26
SECTION 5.04. Year 2000.................................... 28
SECTION 5.05. Personal Property............................ 28
SECTION 5.06. Real Estate.................................. 28
SECTION 5.07. Leases....................................... 28
SECTION 5.08. Certain Contracts and
Arrangements........................... 28
SECTION 5.09. Legal Proceedings............................ 29
SECTION 5.10. Permits; Compliance with Law................. 29
SECTION 5.11. Environmental Matters........................ 30
SECTION 5.12. Labor Matters................................ 31
SECTION 5.13. ERISA; Benefit Plans......................... 31
SECTION 5.14. Taxes ..................................... 32
SECTION 5.15. Independent Engineering
Assessments............................ 33
SECTION 5.16. Undisclosed Liabilities...................... 33
SECTION 5.17. Brokers...................................... 33
SECTION 5.18. Insurance.................................... 33
ARTICLE VI
Representations and Warranties of Buyer
SECTION 6.01. Organization................................. 34
SECTION 6.02. Authority Relative to This
Agreement.............................. 34
SECTION 6.03. Consents and Approvals; No
Violation.............................. 35
SECTION 6.04. Availability of Funds........................ 36
SECTION 6.05. Brokers...................................... 36
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to
the Auctioned Assets.................... 37
SECTION 7.02. Access to Information........................ 39
SECTION 7.03. Consents and Approvals;
Transferable Permits................... 40
SECTION 7.04. Further Assurances........................... 42
SECTION 7.05. Public Statements............................ 44
SECTION 7.06. Tax Matters.................................. 44
SECTION 7.07. Bulk Sales or Transfer Laws.................. 45
SECTION 7.08. Storage...................................... 45
SECTION 7.09. Information Resources........................ 45
SECTION 7.10. Witness Services............................. 46
SECTION 7.11. Consent Orders............................... 46
SECTION 7.12. Nitrogen Oxide Allowances.................... 46
SECTION 7.13. Trade Names............................... 47
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's
Obligation To Effect the Purchase
and Sale................................ 47
SECTION 8.02. Conditions Precedent to Obligation
of Buyer To Effect the Purchase
and Sale................................ 48
SECTION 8.03. Conditions Precedent to Obligation
of Seller To Effect the Purchase
and Sale................................ 49
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters............................. 51
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service.................. 52
SECTION 9.03. Pension Plan................................. 54
SECTION 9.04. 401(k) Plan.................................. 55
SECTION 9.05. Welfare Plans................................ 56
SECTION 9.06. Short- and Long-Term Disability.............. 57
SECTION 9.07. Life Insurance and Accidental Death
and Dismemberment Insurance............. 57
SECTION 9.08. Severance.................................... 57
SECTION 9.09. Workers Compensation......................... 59
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification............................. 59
SECTION 10.02. Third Party Claims Procedures............... 62
ARTICLE XI
Termination
SECTION 11.01. Termination................................. 63
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses.................................... 63
SECTION 12.02. Amendment and Modification;
Extension; Waiver...................... 64
SECTION 12.03. No Survival of Representations or
Warranties............................. 64
SECTION 12.04. Notices..................................... 64
SECTION 12.05. Assignment; No Third Party
Beneficiaries.......................... 65
SECTION 12.06. Governing Law............................... 66
SECTION 12.07. Counterparts................................ 66
SECTION 12.08. Interpretation.............................. 66
SECTION 12.09. Jurisdiction and Enforcement................ 67
SECTION 12.10. Entire Agreement............................ 68
SECTION 12.11. Severability................................ 68
SECTION 12.12. Conflicts................................... 69
SCHEDULES AND EXHIBITS
Schedule 2.02(a)(ii) Spare Parts
Schedule 2.02(a)(iii)(A) Buyer Personal Property Located on
Buyer Real Estate
Schedule 2.02(a)(iii)(B) Buyer Personal Property Located on
Seller Real Estate
Schedule 2.02(a)(iv) Assigned Contracts
Schedule 2.02(a)(v) Transferable Permits
Schedule 2.02(a)(vi) SO2 Allowances
Schedule 2.02(b)(ii)(A) Seller Personal Property Located on
Buyer Real Estate
Schedule 2.02(b)(ii)(C) Communications Equipment
Schedule 2.03(a)(iv) Seller Consent Orders
Schedule 5.03(a) Contracts Requiring Third
Party Consents
Schedule 5.08(a) Material Contracts
Schedule 5.10(a)(i) Exceptions Under Permits
Schedule 5.10(a)(ii) Non-Environmental Violations
Schedule 5.10(b) Nontransferable Permits and
Environmental Permits
Schedule 5.11 Environmental Matters
Schedule 5.13 Benefit Plans
Schedule 5.15(a) Exceptions to Independent Engineering
Assessment
Schedule 5.15(b) Changes to Auctioned Assets
Schedule 5.16 Other Undisclosed Liabilities
Schedule 9.01(a) Job Titles
Schedule 9.01(b) Collective Bargaining Agreements
Exhibit A-1 Form of Ravenswood-Vernon Zoning Lot
Development Agreement between Seller
and Buyer
Exhibit A-2 Form of Ravenswood-Rainey Zoning Lot
Development Agreement between Seller
and Buyer
Exhibit B Form of Deed of Conveyance
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Opinion of John D. McMahon,
Esq., General Counsel of Seller
Exhibit E Form of Opinion of Counsel to Buyer
Exhibit F Summary of Terms and Conditions for "A"
House Ground Lease and Easement between
Seller and Buyer
Exhibit G Form of Transition Capacity Agreement
between Seller and Buyer
Exhibit H Summary of Terms and Conditions for
Fuel Supply Agreement for 74th Street
Generating Station between Seller and
Buyer
Exhibit I Summary of Terms and Conditions for "A"
House Operation and Maintenance
Agreement between Seller and Buyer
Exhibit J Form of Ravenswood-Rainey Declaration
of Subdivision Easements
Exhibit K Form of Ravenswood-Vernon Declaration
of Subdivision Easements
Exhibit L Form of Guarantee Agreement
Exhibit M Form of Opinion of Counsel to Guarantor
GENERATING PLANT AND GAS TURBINE ASSET PURCHASE
AND SALE AGREEMENT (including the Schedules hereto, this
"Agreement"), dated as of January 28, 1999, by and
between CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., a
New York corporation ("Seller"), and MARKETSPAN
CORPORATION doing business as KEYSPAN ENERGY, a New York
corporation ("Buyer", collectively with Seller, the
"Parties").
WHEREAS Seller has offered the Auctioned Assets (as defined
herein) for sale at auction pursuant to the Order Authorizing the Process
for Auctioning of Generation Plant issued by the PSC (as defined herein)
and effective as of July 21, 1998; and
WHEREAS Buyer desires to purchase, and Seller desires to sell,
the Auctioned Assets upon the terms and conditions hereinafter set forth.
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
SECTION 1.01. Definitions. (a) As used in this
Agreement, the following terms have the following meanings:
""A" House Ground Lease and Easement" means the ground lease
and easement in respect of certain land underlying and surrounding the
Ravenswood "A" Steam House to be entered into between Buyer and Seller,
the material terms of which shall be substantially as set forth in Exhibit
F.
""A" House Operation and Maintenance Agreement" means the
operation and maintenance agreement in respect of the Ravenswood "A" steam
house to be entered into between Buyer and Seller, the material terms of
which shall be substantially as set forth in Exhibit I.
"Accountants" shall have the meaning set forth in Section
3.02(b).
"Adjustment Amount" shall have the meaning set forth in
Section 3.02(a).
"Adjustment Date" shall have the meaning set forth in
Section 3.02(c).
"Adjustment Statement" shall have the meaning set forth in
Section 3.02(a).
"Affected Employees" shall have the meaning set forth in
Section 9.01(a).
"Affected Union Employees" shall have the meaning set forth
in Section 9.01(b).
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
"Agreement" shall have the meaning set forth in the
Preamble.
"Allocation" shall have the meaning set forth in Section
3.03.
"Ancillary Agreements" means the Continuing Site Agreement,
the Declaration of Easements Agreement, the Declarations of Subdivision
Easements, the Zoning Lot Development Agreements, the Transition Capacity
Agreement, the deeds contemplated by Section 8.02(e)(i) and any other
agreement to which Buyer and Seller are party and which is expressly
identified by its terms as an Ancillary Agreement hereunder.
"Applicable Law" shall have the meaning set forth in
Section 3.03.
"Assumed Consent Order Obligations" shall have the meaning set
forth in Section 2.03(a)(iv).
"Assumed Obligations" shall have the meaning set forth in
Section 2.03(a).
"Auctioned Assets" shall have the meaning set forth in
Section 2.02(a).
"Benefit Plans" shall have the meaning set forth in Section
5.13.
"Bidder Confidentiality Agreements" shall have the meaning
set forth in Section 7.02(b).
"Business Day" means any day other than Saturday, Sunday and
any day which is a legal holiday or a day on which banking institutions in
New York are authorized or required by law or other action of a
Governmental Authority to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Assets" shall have the meaning set forth in Section
2.03(a)(x).
"Buyer Benefit Plans" shall have the meaning set forth in
Section 9.02(c).
"Buyer Facilities" shall have the meaning given to such term
in the Declaration of Easements Agreement.
"Buyer Indemnitees" shall have the meaning set forth in
Section 10.01(a).
"Buyer Material Adverse Effect" shall have the meaning set
forth in Section 6.03(a).
"Buyer Real Estate" shall have the meaning set forth in
Section 2.02(a)(i).
"Buyer Required Regulatory Approvals" shall have the meaning
set forth in Section 6.03(b).
"Buyer's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Buyer's Pension Plans" shall have the meaning set forth in
Section 9.03(a).
"Buyer's Welfare Plans" shall have the meaning set forth in
Section 9.05(a).
"Closing" shall have the meaning set forth in Section 4.01.
"Closing Date" shall have the meaning set forth in Section
4.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" shall have the meaning
set forth in Section 9.01(b).
"Communications Equipment" means the equipment, systems,
switches and lines used in connection with voice, data and other
communications activities.
"Confidentiality Agreement" means the Confidentiality
Agreement dated August 24, 1998 between Seller and Buyer.
"Continued Employee" shall have the meaning set forth in
Section 9.01(a).
"Continued Non-Union Employee" shall have the meaning set
forth in Section 9.02(a).
"Continued Union Employee" shall have the meaning set forth
in Section 9.01(b).
"Continuing Site Agreement" means the Continuing Site
Agreement dated as of even date herewith between Seller and Buyer.
"Contracts" shall have the meaning set forth in Section
2.02(a)(iv).
"Conveyance Plans" shall have the meaning set forth in
Section 2.02(a)(i).
"Declaration of Easements Agreement" means the Declaration of
Easements Agreement dated as of even date herewith between Seller and
Buyer.
"Declarations of Subdivision Easements" means the
Ravenswood-Vernon Declaration of Subdivision Easements and the
Ravenswood-Rainey Declaration of Subdivision Easements.
"Emission Reduction Credits" means credits, in units that are
established by the environmental regulatory agency with jurisdiction over
the source or facility that has obtained the credits, resulting from a
reduction in the emissions of air pollutants from an emitting source or
facility (including, and to the extent allowable under applicable law,
reductions from retirements, control of emissions beyond that required by
applicable law and fuel switching), that: (i) have been certified by
NYSDEC as complying with the law and regulations of the State of New York
governing the establishment of such credits (including that such emissions
reductions are real, enforceable, permanent and quantifiable); or (ii)
have been certified by any other applicable regulatory authority as
complying with the law and regulations governing the establishment of such
credits (including that such emissions reductions are real, enforceable,
permanent and quantifiable). Emission Reduction Credits include certified
air emissions reductions, as described above, regardless of whether the
regulatory agency certifying such reductions designates such certified air
emissions reductions by a name other than "emissions reduction credits".
"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, exceptions, conservation easements, rights-of-way, deed
restrictions, encumbrances and charges of any kind.
"Environmental Laws" means all former, current and future
Federal, state, local and foreign laws (including common law), treaties,
regulations, rules, ordinances, codes, decrees, judgments, directives or
orders (including consent orders) and Environmental Permits, in each case,
relating to pollution or protection of the environment or natural
resources, including laws relating to Releases or threatened Releases, or
otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, arrangement for disposal,
transport, recycling or handling, of Hazardous Substances.
"Environmental Liability" means all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders, fines,
penalties, fees, expenses and costs, including: (i) remediation costs,
engineering costs, environmental consultant fees, laboratory fees,
permitting fees, investigation costs and defense costs and reasonable
attorneys' fees and expenses; (ii) any claims, demands and causes of
action relating to or resulting from any personal injury (including
wrongful death), property damage (real or personal) or natural resource
damage; and (iii) any penalties, fines or costs associated with the
failure to comply with any Environmental Law.
"Environmental Permits" means the permits, licenses, consents,
approvals and other governmental authorizations with respect to
Environmental Laws relating primarily to the power generation operations
of the Generating Plants or the Gas Turbines.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in
Section 5.13.
"Estimated Adjustment Amount" shall have the meaning set
forth in Section 4.02.
"FERC" means the Federal Energy Regulatory Commission.
"Federal Power Act" shall have the meaning set forth in
Section 5.03(b).
"Filed Seller SEC Documents" means the reports, schedules,
forms, statements and other documents filed by Seller with the Securities
and Exchange Commission since January 1, 1997, and publicly available
prior to the date of this Agreement.
"Final Allocation" shall have the meaning set forth in
Section 3.03.
"Fuel Supply Agreement" means the fuel supply agreement to be
entered into between Buyer and Seller, the material terms of which shall
be substantially as set forth in Exhibit H.
"GAAP" shall have the meaning set forth in Section 1.02.
"Guarantee Agreement" means the Guarantee Agreement to be
entered into between Guarantor and Seller substantially in the form of
Exhibit L.
"Guarantor" means MarketSpan Corporation doing business as
KeySpan Energy.
"Gas Turbines" means the gas turbine units comprised of the
Ravenswood GT1 through GT11 units.
"Generating Facilities" means the Generating Plants, the Gas
Turbines and any additional generating plants, gas turbines or other
generating facilities constructed by Buyer after the Closing Date at the
site of any Auctioned Assets.
"Generating Plants" means the three steam turbine generating
units designated as Ravenswood units 1, 2 and 3.
"Governmental Authority" means any court, administrative or
regulatory agency or commission or other governmental entity or
instrumentality, domestic, foreign or supranational or any department
thereof.
"Hazardous Substances" means (i) any petrochemical or
petroleum products, crude oil or any fraction thereof, ash, radioactive
materials, radon gas, asbestos in any form, urea formaldehyde foam
insulation or polychlorinated biphenyls, (ii) any chemicals, materials,
substances or wastes defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning
and regulatory effect contained in any Environmental Law or (iii) any
other chemical, material, substance or waste which is prohibited, limited
or regulated by any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any Federal, state, local or foreign Tax or
surtax (i) based upon, measured by or calculated with respect to net
income, profits or receipts (including the New York State Gross Receipts
Tax (including the excess dividends tax), the New York City Public
Utilities Excise Tax, any and all municipal gross receipts Taxes, capital
gains Taxes and minimum Taxes) or (ii) based upon, measured by or
calculated with respect to multiple bases (including 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 (i), in
each case, together with any interest, penalties, or additions to such
Tax.
"Indemnifiable Loss" shall have the meaning set forth in
Section 10.01(a).
"Indemnifying Party" shall have the meaning set forth in
Section 10.01(c).
"Indemnitee" shall have the meaning set forth in Section
10.01(c).
"Independent Engineering Assessments" shall have the
meaning set forth in Section 5.15.
"Interconnection Facilities" means those items of switching
equipment, switchyard controls, protective relays and related facilities
of Seller that are used by Seller in connection with the provision of
Interconnection Services.
"Interconnection Services" means the service provided by
Seller to Buyer to interconnect the Generating Facilities to the
Transmission System.
"Inventory Survey" shall have the meaning set forth in
Section 3.02(a).
"ISO" means the New York Independent System Operator.
"Local 1-2" shall have the meaning set forth in Section
9.01(a).
"Local 1-2 Collective Bargaining Agreement" shall have the
meaning set forth in Section 9.01(a).
"Material Adverse Effect" means any change, or effect on the
Auctioned Assets, that is materially adverse to the business, operations
or condition (financial or otherwise) of the Auctioned Assets, taken as a
whole, other than (i) any change or effect resulting from changes in the
international, national, regional or local wholesale or retail energy,
capacity or ancillary services electric power markets, (ii) any change or
effect resulting from changes in the international, national, regional or
local markets for fuel, (iii) any change or effect resulting from changes
in the national, regional or local electric transmission systems, (iv) any
change or effect resulting from any bid cap, price limitation, market
power mitigation measure, including the Mitigation Measures, or other
regulatory or legislative measure in respect of transmission services or
the wholesale or retail energy, capacity or ancillary services markets
adopted or approved (or failed to be adopted or approved) by FERC, the PSC
or any other Governmental Authority or proposed by any person, (v) any
change or effect resulting from any regulation, rule, procedure or order
adopted or proposed (or failed to be adopted or proposed) by or with
respect to, or related to, the ISO, (vi) any change or effect resulting
from any action or measure taken or adopted, or proposed to be taken or
adopted, by any local, state, regional, national or international
reliability organization and (vii) any materially adverse change in or
effect on the Auctioned Assets which is cured by Seller before the Closing
Date.
"Mitigation Measures" shall have the meaning set forth in
Section 6.03(b).
"MMS" means the Material Management System, which is an
information resources system served by Seller's mainframe computer.
"NYSDEC" means the New York State Department of
Environmental Conservation.
"Off-Site" means any location except (i) the Auctioned Assets
and (ii) any location to or under which Hazardous Substances present or
Released at the Auctioned Assets have migrated.
"Offering Memorandum" means the Offering Memorandum dated
August 1998 describing the Generating Plants and the Gas Turbines, and the
materials delivered with such Offering Memorandum, as such Offering
Memorandum and such materials may have been amended or supplemented.
"Operating Records" shall have the meaning set forth in
Section 2.02(a)(viii).
"Party" shall have the meaning set forth in the Preamble.
"Permits" means the permits, licenses, consents, approvals and
other governmental authorizations (other than with respect to
Environmental Laws) relating primarily to the power generation operations
of the Generating Plants or the Gas Turbines.
"Permitted Exceptions" means (i) all exceptions, restrictions,
easements, charges, rights-of-way and monetary and nonmonetary
encumbrances which are set forth in any Permits or Environmental Permits,
(ii) statutory liens for current taxes or assessments not yet due or
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, (iii) 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 Seller or the validity of which are being contested in good faith
by appropriate proceedings, (iv) zoning, entitlement, conservation
restriction and other land use and environmental regulations by
Governmental Authorities, (v) the title matters set forth in the
Certificate of Title No. NY971420 issued by the Title Company, as amended,
(vi) all matters disclosed on the survey prepared by GEOD Corporation and
any other facts that would be disclosed by an accurate survey and physical
inspection of the Buyer Real Estate,(vii) Encumbrances, easements or other
restrictions created pursuant to or provided for in any Ancillary
Agreement, (viii) restrictions and regulations imposed by the ISO, any
Governmental Authority or any local, state, regional, national or
international reliability council and (ix) such other Encumbrances or
imperfections in or failure of title which would not, individually or in
the aggregate, reasonably be expected to materially impair the continued
use and operation of the Auctioned Assets as currently conducted.
"person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or
Governmental Authority.
"PPMIS" means the Power Plant Maintenance Information System,
which is an information resources system served by Seller's mainframe
computer.
"Prorated Items" shall have the meaning set forth in
Section 2.03(a)(viii).
"Protective Relaying System" means the system relating to the
Generating Facilities comprised of components collectively used to detect
defective power system elements or other conditions of an abnormal nature,
initiate appropriate control circuit action in response thereto and
isolate the appropriate system elements in order to minimize damage to
equipment and interruption to service.
"PSC" means the New York State Public Service Commission.
"Purchase Price" shall have the meaning set forth in
Section 3.01.
"Ravenswood-Rainey Declaration of Subdivision Easements" means
the Ravenswood-Rainey Declaration of Subdivision Easements to be made by
Seller substantially in the form of Exhibit J, except for changes required
by any Governmental Authority to the extent that no such change materially
and adversely impairs the continued use and operation of the Auctioned
Assets as currently conducted.
"Ravenswood-Vernon Declaration of Subdivision Easements" means
the Ravenswood-Vernon Declaration of Subdivision Easements to be made by
Seller substantially in the form of Exhibit K, except for changes required
by any Governmental Authority to the extent that no such change materially
and adversely impairs the continued use and operation of the Auctioned
Assets as currently conducted.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) or within any
building, structure, facility or fixture.
"Restraints" shall have the meaning set forth in Section
8.01(b).
"Retained Assets" shall have the meaning set forth in
Section 2.02(b).
"Retained Liabilities" shall have the meaning set forth in
Section 2.03(b).
"Revenue Meters" means all meters measuring demand, energy and
reactive components, and all pulse isolation relays, pulse conversion
relays and associated totalizing and remote access pulse recorder
equipment, in each case, required to measure the transfer of energy
between the Parties.
"Segregated Reimbursement Accounts" shall have the meaning
set forth in Section 9.05(b).
"Seller" shall have the meaning set forth in the Preamble.
"Seller Assets" shall have the meaning set forth in Section
2.03(b)(x).
"Seller Consent Orders" shall have the meaning set forth in
Section 2.03(a)(iv).
"Seller Facilities" shall have the meaning given to such term
in the Declaration of Easements Agreement.
"Seller Indemnitees" shall have the meaning set forth in
Section 10.01(b).
"Seller Real Estate" means all real property and leaseholds or
other interests in real property of Seller (including the premises on
which the Substations are located), other than Buyer Real Estate.
"Seller Required Regulatory Approvals" shall have the meaning
set forth in Section 5.03(b).
"Seller's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Seller's Pension Plans" shall have the meaning set forth
in Section 9.03(a).
"Seller's Reimbursement Account Plans" shall have the meaning
set forth in Section 9.05(b).
"SO2 Allowances" means allowances that have been allocated to
Seller for the Generating Plants or the Gas Turbines by the Administrator
of the United States Environmental Protection Agency under Title IV of the
Clean Air Act authorizing the emission of one ton of sulfur dioxide per
allowance during or after the year 2000.
"Substations" shall have the meaning set forth in Section
2.02(b)(i).
"Tax Benefit" means, with respect to any Indemnifiable Loss
for any person, the positive excess, if any, of the Tax liability of such
person without regard to such Indemnifiable Loss over the Tax liability of
such person taking into account such Indemnifiable Loss, with all other
circumstances remaining unchanged.
"Tax Cost" means, with respect to any indemnity payment for
any person, the positive excess, if any, of the Tax liability of such
person taking such indemnity payment into account over the Tax liability
of such person without regard to such payment, with all other
circumstances remaining unchanged.
"Tax Return" means any return, report, information return or
other document (including any related or supporting information) required
to be supplied to any authority with respect to Taxes.
"Taxes" means all taxes, surtaxes, charges, fees, levies,
penalties or other assessments imposed by any United States Federal, state
or local or foreign taxing authority, including Income Tax, excise,
property, sales, transfer, franchise, special franchise, payroll,
recording, withholding, social security or other taxes, or any liability
for taxes incurred by reason of joining in the filing of any consolidated,
combined or unitary Tax Returns, in each case including any interest,
penalties or additions attributable thereto; provided, however, that
"Taxes" shall not include sewer rents or charges for water.
"Termination Date" shall have the meaning set forth in
Section 11.01(b).
"Third Party Claim" shall have the meaning set forth in
Section 10.02(a).
"Title Company" means Commonwealth Land Title Insurance
Company or any other reputable title insurance company licensed to do
business in New York.
"Transferable Permits" shall have the meaning set forth in
Section 2.02(a)(v).
"Transferring Employee Records" shall have the meaning set
forth in Section 2.02(a)(viii).
"Transferring Employees" shall have the meaning set forth
in Section 2.02(a)(viii).
"Transition Capacity Agreement" means the Transition Capacity
Agreement to be entered into between Seller and Buyer, substantially in
the form of Exhibit G.
"Transmission System" shall have the meaning set forth in
Section 2.02(b)(i).
"Zoning Lot Development Agreements" means the
Ravenswood-Vernon Zoning Lot Development Agreement between Seller and
Buyer in the form of Exhibit A-1 and the Ravenswood-Rainey Zoning Lot
Development Agreement between Seller and Buyer in the form of Exhibit
A-2 hereto.
SECTION 1.02. Accounting Terms. Any accounting terms used in
this Agreement or the Ancillary Agreements shall, unless otherwise
specifically provided, have the meanings customarily given them in
accordance with United States generally accepted accounting principles
("GAAP") and all financial computations hereunder or thereunder shall,
unless otherwise specifically provided, be computed in accordance with
GAAP consistently applied.
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.01. Purchase and Sale. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, at the
Closing, Seller agrees to sell, assign, convey, transfer and deliver to
Buyer, and Buyer agrees to purchase, assume and acquire from Seller all
the Auctioned Assets. In the case of any Auctioned Assets not located at
the Generating Plants or Gas Turbines (including supplies, materials and
spare parts inventory), Buyer agrees that (i) from and after the Closing,
except to the extent specifically otherwise provided in the Ancillary
Agreements, Buyer will bear all risk of casualty or loss with regard to
such Auctioned Assets (regardless of whether they remain on Seller's
property or otherwise in Seller's possession) and (ii) Seller shall store
such Auctioned Assets in accordance with Section 7.08.
SECTION 2.02. Auctioned Assets and Retained Assets. (a)
Auctioned Assets. The term "Auctioned Assets" means all the assets, real
and personal property, goodwill and rights of Seller of whatever kind and
nature, whether tangible or intangible, in each case, primarily relating
to the power generation operations of the Generating Plants or the Gas
Turbines, other than the Retained Assets, including:
(i) all real property and leaseholds or other interests in
real property of Seller relating primarily to the power generation
operations of the Generating Plants or the Gas Turbines described as
Parcel A and D as shown on ALTA/ACSM Land Title Survey Conveyance
Plan relating to the Ravenswood Generating Station, dated January 9,
1999, in each case, as may hereafter be amended in immaterial
respects (collectively, the "Conveyance Plans"), together with all
buildings, improvements, structures and fixtures thereon, subject to
Permitted Exceptions or Encumbrances otherwise disclosed to Buyer in
this Agreement or the Ancillary Agreements with respect thereto (the
"Buyer Real Estate");
(ii) subject to Section 2.04, all inventories of fuels,
supplies, materials and spare parts relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines,
together with and subject to (A) all Permitted Exceptions or
Encumbrances otherwise disclosed to Buyer in this Agreement or the
Ancillary Agreements with respect thereto and (B) all warranties
against manufacturers and vendors relating thereto, including the
spare parts listed on Schedule 2.02(a)(ii), in each case, other than
assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iii) subject to Section 2.04, (A) the machinery, equipment,
facilities, furniture and other personal property (other than
vehicles) relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines, including a stand-alone
local area network, coal handling equipment and other items of
personal property located on Buyer Real Estate or temporarily
removed from Buyer Real Estate for repairs, servicing or maintenance
and listed on Schedule 2.02(a)(iii)(A) and (B) machinery, equipment,
facilities, furniture and other personal property located on Seller
Real Estate or temporarily removed from Seller Real Estate for
repairs, servicing or maintenance and listed on Schedule
2.02(a)(iii)(B), in each case, (1) together with and subject to (x)
all Permitted Exceptions or Encumbrances otherwise disclosed to
Buyer in this Agreement or the Ancillary Agreements with respect
thereto and (y) all warranties against manufacturers or vendors
relating thereto and (2) other than assets that become obsolete or
that are used, consumed, replaced or disposed in the ordinary course
of business consistent with past practice or as permitted by this
Agreement;
(iv) subject to Section 2.04, all right, title and interest of
Seller in, to and under all contracts, agreements, personal property
leases (whether Seller is lessor or lessee thereunder), commitments
and all other legally binding arrangements (other than Seller
Consent Orders), whether oral or written, set forth on Schedule
2.02(a)(iv) or otherwise relating primarily to the power generation
operations of the Generating Plants or the Gas Turbines and entered
into by Seller in accordance with Section 7.01 (the "Contracts"), in
each case, to the extent in full force and effect on the Closing
Date;
(v) subject to Section 7.03(c), the Permits and Environmental
Permits that are transferred or transferable by Seller to Buyer
(collectively, the "Transferable Permits"), including the
Transferable Permits set forth on Schedule 2.02(a)(v), in each case,
to the extent in full force and effect on the Closing Date;
(vi) the SO2 Allowances listed on Schedule 2.02(a)(vi);
(vii) all nitrogen oxide allowances allocated to the Generating
Plants or the Gas Turbines by NYSDEC under the New York State
Nitrogen Oxides Budget Program that have not been used on or prior
to the Closing Date (it being understood that, for purposes of this
Agreement, one nitrogen oxide allowance shall be deemed "used" for
each ton of actual nitrogen oxide emitted from the Generating Plants
or Gas Turbines between May 1 of any year and September 30 of such
year, inclusive);
(viii) (A) all data, information, books, operating records,
operating, safety and maintenance manuals, engineering design plans,
blueprints and as-built plans, specifications, procedures, facility
compliance plans, environmental procedures and similar records of
Seller relating primarily to the power generation operations of the
Generating Plants or the Gas Turbines, to the extent in Seller's
possession or readily available (collectively, "Operating Records"),
and (B) all personnel files relating to employees of Seller to be
employed by Buyer after the Closing Date in accordance with Article
IX (the "Transferring Employees"), to the extent in Seller's
possession and readily available and to the extent such files
pertain to (1) skill and development training and resumes, (2)
seniority histories, (3) salary and benefit information, (4)
Occupational Safety and Health Act medical reports, (5) active
medical restriction forms and (6) any other matters, disclosure of
which by Seller to Buyer is permitted under applicable law without
the consent of the Transferring Employee, but not including any
performance evaluations or disciplinary records (collectively, the
"Transferring Employee Records"); provided, however, that Seller
shall be permitted to retain copies, or originals to the extent it
provides Buyer with copies of same, of all Operating Records and
Transferring Employee Records; and
(ix) (A) except as provided in Section 2.02(b)(iv), the
software relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines (provided, however, that
Buyer acknowledges that it will require licenses from third parties
in order to be legally entitled to use such software), and (B) a
non-exclusive, royalty-free license to use solely in connection with
the Auctioned Assets the software or other copyrighted material
owned by Seller located at Buyer Real Estate.
(b) Retained Assets. The term "Retained Assets" means:
(i) the transmission and distribution facilities owned,
controlled or operated by Seller for purposes of providing
point-to-point transmission service, network integration service and
distribution service and other related purposes, including the real
property and equipment located at the Vernon Substation and the
Rainey Substation (collectively, the "Substations"), used in
controlling continuity between the Generating Plants and Gas
Turbines and the transmission and distribution facilities and for
other purposes (the "Transmission System");
(ii)(A) except as set forth in Section 2.02(a)(iii), all
Interconnection Facilities and other transmission, distribution and
substation machinery, equipment and facilities and related support
equipment located on Buyer Real Estate or Seller Real Estate or
temporarily removed from Buyer Real Estate or Seller Real Estate for
repairs, servicing or maintenance, including items listed on
Schedule 2.02(b)(ii)(A); (B) all Revenue Meters installed by Seller;
(C) Communications Equipment and related support equipment (1)
located on Buyer Real Estate or temporarily removed from Buyer Real
Estate for repairs, servicing or maintenance and listed on Schedule
2.02(b)(ii)(C) or acquired by Seller after the date of this
Agreement and designated by Seller as a Retained Asset or (2)
located on Seller Real Estate or temporarily removed from Seller
Real Estate for repairs, servicing or maintenance; and (D) all
Protective Relaying Systems not located on Buyer Real Estate;
(iii) all cash, cash equivalents, bank deposits and accounts
receivable held or owned by Seller;
(iv) (A) all mainframe computer systems of Seller, (B) the
code to all software described in Section 2.02(a)(ix)(B), and (C)
all software, copyrights, know-how or other proprietary information
relating primarily to any other Retained Assets or any Retained
Liabilities, including software, copyrights, know-how or other
proprietary information licensed to Buyer pursuant to Section
2.02(a)(ix)(B);
(v) the names "Consolidated Edison", "Con Edison", "Con Ed",
"Consolidated Edison Company", "Consolidated Edison Company of New
York, Inc.", "Consolidated Edison, Inc.", "New York Edison",
"Brooklyn Edison", "Staten Island Edison" and "Edison" and any
related or similar trade names, trademarks, service marks or logos
(and any rights to and in the same, including any right to use the
same);
(vi) subject to Section 7.06(d), any refund or credit related
to Taxes attributable to taxable periods (or portions thereof) prior
to the Closing Date, and sewer rents or water charges or any other
liabilities or obligations paid prior to the Closing Date in respect
of the Auctioned Assets;
(vii) all personnel records (other than Transferring Employee
Records) and all other records (other than Operating Records);
(viii) (A) all Emission Reduction Credits held or possessed by
Seller and (B) SO2 Allowances held or possessed by Seller and not
listed on Schedule 2.02(a)(vi); and
(ix) any other asset that is not described with particularity
in this Agreement as an Auctioned Asset.
SECTION 2.03. Assumed Obligations and Retained Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall assume, and from and
after the Closing, shall discharge, all of the liabilities and
obligations, direct or indirect, known or unknown, absolute or contingent,
which relate to the Auctioned Assets or are otherwise specified below,
other than the Retained Liabilities (collectively, the "Assumed
Obligations"), including:
(i) except as set forth in Section 2.03(b)(ii), any
liabilities and obligations under the Contracts;
(ii) any liabilities and obligations for goods delivered or
services rendered on or after the Closing Date relating to the
Auctioned Assets;
(iii) except as set forth in Sections 2.03(b)(iii) or (iv),
any Environmental Liability arising out of or in connection with (A)
any violation or alleged violation of, or noncompliance or alleged
noncompliance with, any Environmental Laws, prior to, on or after
the Closing Date, with respect to the ownership or operation of the
Auctioned Assets, notwithstanding that, as contemplated by Section
7.03(c), Seller may remain the "holder of record" with respect to
certain Transferable Permits, (B) the condition of any Auctioned
Assets prior to, on or after the Closing Date, including any actual
or alleged presence, Release or threatened Release of any Hazardous
Substance at, on, in, under or migrating onto or from, the Auctioned
Assets, prior to, on or after the Closing Date (except for any such
Release from equipment or property owned or operated by Seller and
located on, or constituting, Seller Real Estate adjacent to Buyer
Real Estate that (1) occurs on or after the Closing Date and (2) is
caused by Seller or its Affiliates), (C) any Release or threatened
Release of any Hazardous Substance on or after the Closing Date from
the Buyer Facilities or otherwise originating from, or relating to,
any equipment owned or used by Buyer that is located on Seller Real
Estate or (D) the transportation, storage, Release, threatened
Release or recycling of, or arrangement for such activities with
respect to, Hazardous Substances generated in respect of the
Auctioned Assets at or to any location, on or after the Closing
Date;
(iv) any liabilities and obligations relating to the Auctioned
Assets under the consent orders listed on Schedule 2.03(a)(iv) (the
"Seller Consent Orders") and identified thereon as "Assumed Consent
Order Obligations" (the "Assumed Consent Order Obligations");
(v) except as set forth in Section 2.03(b)(iv), any
liabilities and obligations with respect to the Permits to the
extent arising or accruing on or after the Closing Date;
(vi) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing on or after the Closing Date, and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Buyer is responsible pursuant to Article IX;
(vii) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Retained Liabilities) in respect
of any personal injury or property damage claim relating to,
resulting from or arising out of the Generating Plants or Gas
Turbines or (B) any liabilities and obligations in respect of any
discrimination, wrongful discharge or unfair labor practice claim by
any Transferring Employee, in the case of each of the foregoing
clauses (A) and (B), to the extent arising or accruing on or after
the Closing Date;
(viii) any liabilities and obligations, with respect to the
periods that include the Closing Date, with respect to real or
personal property rent, taxes based on the ownership or use of
property, utilities charges and similar charges that primarily
relate to the Generating Plants or the Gas Turbines (collectively,
the "Prorated Items"), to the extent such Prorated Items relate to
the period from and after the Closing Date, including (A) personal
property taxes, real estate and occupancy taxes, assessments and
other charges (which shall be apportioned as provided in the Zoning
Lot Development Agreements),(B) rent and all other items payable by
Seller under any Contract, (C) any fees with respect to any
Transferable Permit and (D) sewer rents and charges for water,
telephone, electricity and other utilities, in each case calculated
by multiplying the amount of any such Prorated Item by a fraction
the numerator of which is the number of days in such period from and
after the Closing Date and the denominator of which is the number of
days in such period;
(ix) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
beginning on or after the Closing Date;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Buyer or its Affiliates subject
to the Ancillary Agreements or employed by Buyer in connection with
the performance of the Ancillary Agreements ("Buyer Assets"), or any
Protective Relaying System owned by Seller as contemplated by the
Continuing Site Agreement, regardless of whether the property damage
or personal injury is caused by a Seller Indemnitee or a Buyer
Indemnitee; and
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Auctioned Assets to the extent arising
on or after the Closing Date.
(b) Retained Liabilities. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
or obligations (the "Retained Liabilities"):
(i) any liabilities and obligations of Seller primarily
relating to any Retained Assets (other than as contemplated by
Section 2.03(a)(x));
(ii) any payment obligations of Seller, including under
Contracts, for goods delivered or services rendered prior to the
Closing Date;
(iii) (A) any Environmental Liability of Seller arising out of
or in connection with the transportation, storage, Release,
threatened Release or recycling of, or arrangement for such
activities with respect to, Hazardous Substances at or to any
Off-Site location, prior to the Closing Date, (B) any Environmental
Liability of Seller arising out of or in connection with any Release
or threatened Release of any Hazardous Substance on or after the
Closing Date from the Seller Facilities or otherwise originating
from, or relating to, any equipment owned or used by Seller that is
located on Buyer Real Estate and (C) any liabilities and obligations
relating to Auctioned Assets under the Seller Consent Orders, except
Assumed Consent Order Obligations;
(iv) any monetary fines (excluding (A) natural resource
damages, (B) cleanup or remediation costs and (C) other costs of a
similar nature) imposed by a Governmental Authority to the extent
arising out of or relating to acts or omissions of Seller in respect
of the Auctioned Assets prior to the Closing Date;
(v) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing prior to the Closing Date and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Seller is responsible pursuant to Article IX;
(vi) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Assumed Obligations) in respect
of any personal injury or property damage claim relating to the
Generating Plants or Gas Turbines or (B) any liabilities and
obligations in respect of any discrimination, wrongful discharge or
unfair labor practice claim by any Transferring Employee, in the
case of each of the foregoing clauses (A) and (B), to the extent
arising out of or relating to acts or omissions of Seller prior to
the Closing Date;
(vii) any liabilities and obligations, with respect to the
period prior to the Closing Date, for the Prorated Items, calculated
as set forth in Section 2.03(a)(viii);
(viii) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
ending before the Closing Date, including Income Taxes attributable
to income realized by Seller pursuant to the transactions
contemplated by this Agreement;
(ix) any liabilities and obligations arising after the date of
this Agreement in respect of which Seller has provided pursuant to
Section 7.01(d)(ii) that such liabilities and obligations shall not
be assumed or retained by Buyer;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Seller or its Affiliates subject
to the Ancillary Agreements or employed by Seller in connection with
the performance of the Ancillary Agreements ("Seller Assets"),
regardless of whether the property damage or personal injury is
caused by a Seller Indemnitee or a Buyer Indemnitee; and
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Retained Assets.
SECTION 2.04. Third Party Consents. (a) Notwithstanding
Section 2.02(a)(ii), (iii) or (iv), to the extent that Seller's rights
under any Contract or warranty may not be assigned without the consent of
another person which consent has not been obtained, this Agreement shall
not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its reasonable best efforts to obtain prior to the
Closing any such required consents.
(b) Seller and Buyer agree that if any consent to an
assignment of any such Contract or warranty shall not be obtained or if
any attempted assignment would in Seller's reasonable opinion be
ineffective or would impair any material rights and obligations of Buyer
under such Contract or warranty, as applicable, so that Buyer would not
acquire the benefit of all such rights and obligations, Seller, to the
maximum extent permitted by law and such Contract or warranty, as
applicable, shall after the Closing appoint Buyer to be Seller's
representative and agent with respect to such Contract or warranty, as
applicable, and Seller shall, to the maximum extent permitted by law and
such Contract or warranty, as applicable, enter into such reasonable
arrangements with Buyer as are necessary to provide Buyer with the
benefits and obligations of such Contract or warranty, as applicable.
Seller and Buyer shall cooperate and shall each use their reasonable best
efforts after the Closing to obtain an assignment of each such Contract or
warranty, as applicable, to Buyer.
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price. The purchase price for the
Auctioned Assets shall be $596,840,000 (the "Purchase Price").
SECTION 3.02. Post-Closing Adjustment. (a) Within 20 Business
Days after the Closing, Seller shall prepare and deliver to Buyer a
statement (an "Adjustment Statement") which reflects the book cost, as
reflected on the books of Seller as of the Closing Date, of all fuel
inventory and supplies, materials and spare parts inventory included in
the Auctioned Assets (the "Adjustment Amount") and, upon request of Buyer,
related accounting material used by Seller to prepare the Adjustment
Statement. The Adjustment Amount will be based, in respect of fuel, on the
actual fuel inventory on the Closing Date and, in respect of supplies,
materials and spare parts, on an inventory survey conducted within ten
Business Days prior to the Closing Date, in each case, consistent with the
inventory procedures of Seller in effect as of the date of this Agreement
(the "Inventory Survey"). Seller will permit an employee, or
representative, of Buyer to observe the Inventory Survey. The Adjustment
Statement shall be prepared using (i) GAAP and (ii) the same rolling
average unit costs that Seller has historically used to calculate the book
cost of its fuel and supplies, materials and spare parts inventory. Buyer
agrees to cooperate with Seller in connection with the preparation of the
Adjustment Statement and related information, and shall provide to Seller
such access, books, records and information as may be reasonably requested
from time to time.
(b) Buyer may dispute the quantity delivered or quality of any
inventory item shown on the Adjustment Statement, or the mathematical
calculations reflected therein, by notifying Seller in writing of the
disputed amount, and the basis of such dispute, within 20 Business Days of
Buyer's receipt of the Adjustment Statement; provided, however, that in
respect of the quality of any inventory item, Buyer may not dispute
Seller's normal and customary methods for accounting for excess inventory.
Buyer shall have no right to dispute any other matter in respect of the
Adjustment Statement, including historical rolling average unit costs used
to calculate the book cost of the inventory or the appropriateness, under
GAAP or otherwise, of using such historical rolling average unit cost to
determine the book cost of any particular item of inventory. In the event
of a dispute with respect to the quantity or quality of any inventory item
shown on the Adjustment Statement, or the mathematical calculations
reflected therein, Buyer and Seller shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the Parties. If Buyer and Seller are
unable to reach a resolution of such differences within 20 Business Days
of receipt of Buyer's written notice of dispute to Seller, Buyer and
Seller shall submit the amounts remaining in dispute for determination and
resolution to PricewaterhouseCoopers LLP or any other accounting firm of
recognized national standing reasonably acceptable to Seller and Buyer
(the "Accountants"), which shall be instructed to determine and report to
the Parties, within 20 Business Days after such submission, upon such
remaining disputed amounts, and such report shall be final, binding and
conclusive on the Parties with respect to the amounts disputed. Buyer and
Seller shall each pay one-half of the fees and disbursements of the
Accountants in connection with the resolution of such disputed amounts.
(c) If the Adjustment Amount is greater or less than the
Estimated Adjustment Amount, then on the Adjustment Date (as defined
below), (i) to the extent that the Adjustment Amount exceeds the Estimated
Adjustment Amount, Buyer shall pay to Seller the amount of such excess and
(ii) to the extent that the Adjustment Amount is less than the Estimated
Adjustment Amount, Seller shall pay to Buyer the amount of such
deficiency. "Adjustment Date" means (1) if Buyer does not disagree in any
respect with the Adjustment Statement, the twenty-third Business Day
following Buyer's receipt of the Adjustment Statement or (2) if Buyer
shall disagree in any respect with the Adjustment Statement, the third
Business Day following either the resolution of such disagreement by the
Parties or a final determination by the Accountants in accordance with
Section 3.02(b). Any amount paid under this Section 3.02(c) shall be paid
with interest for the period commencing on the Closing Date through the
date of payment, calculated at the prime rate of the Chase Manhattan Bank
in effect on the Closing Date, and in cash by wire transfer of immediately
available funds.
SECTION 3.03. Allocation of Purchase Price. Buyer shall
deliver to Seller at Closing a preliminary allocation among the Auctioned
Assets of the Purchase Price and among such other consideration paid to
Seller pursuant to this Agreement that is properly includible in Buyer's
tax basis for the Auctioned Assets for Federal income tax purposes, and,
as soon as practicable following the Closing (but in any event within 10
Business Days following the final determination of the Adjustment Amount),
Buyer shall prepare and deliver to Seller a final allocation of the
Purchase Price and additional consideration described in the preceding
clause, and the post-closing adjustment pursuant to Section 3.02, among
the Auctioned Assets (the "Allocation"). The Allocation shall be
consistent with Section 1060 of the Code and the Treasury Regulations
thereunder. Seller hereby agrees to accept Buyer's Allocation unless
Seller determines that such Allocation was not prepared in accordance with
Section 1060 of the Code and the regulations thereunder ("Applicable
Law"). If Seller so determines, Seller shall within 20 Business Days
thereafter propose any changes necessary to cause the Allocation to be
prepared in accordance with Applicable Law. Within 10 Business Days
following delivery of such proposed changes, Buyer shall provide Seller
with a statement of any objections to such proposed changes, together with
a reasonably detailed explanation of the reasons therefor. If Buyer and
Seller are unable to resolve any disputed objections within 10 Business
Days thereafter, such objections shall be referred to the Accountants,
whose review will be limited to whether Buyer's Allocation of such
disputed items regarding the Allocation was prepared in accordance with
Applicable Law. The Accountants shall be instructed to deliver to Seller
and Buyer a written determination of the proper allocation of such
disputed items within 20 Business Days. Such determination shall be
conclusive and binding upon the parties hereto for all purposes, and the
Allocation shall be so adjusted (the Allocation, including the adjustment,
if any, to be referred to as the "Final Allocation"). The fees and
disbursements of the Accountants attributable to the Allocation shall be
shared equally by Buyer and Seller. Each of Buyer and Seller agrees to
timely file Internal Revenue Service Form 8594, and all Federal, state,
local and foreign Tax Returns, in accordance with such Final Allocation
and to report the transactions contemplated by this Agreement for Federal
Income Tax and all other tax purposes in a manner consistent with the
Final Allocation. Each of Buyer and Seller agrees to promptly provide the
other party with any additional information and reasonable assistance
required to complete Form 8594, or compute Taxes arising in connection
with (or otherwise affected by) the transactions contemplated hereunder.
Each of Buyer and Seller shall timely notify the other Party and each
shall timely provide the other Party with reasonable assistance in the
event of an examination, audit or other proceeding regarding the Final
Allocation.
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing. Upon the terms and
subject to the satisfaction of the conditions contained in Article VIII,
the closing of the sale of the Auctioned Assets contemplated by this
Agreement (the "Closing") will take place on such date as the Parties may
agree, which date shall be as soon as practicable, but no later than ten
Business Days, following the date on which all of the conditions set forth
in Article VIII have been satisfied or waived, at the offices of Cravath,
Swaine & Moore in New York City or at such other place or time as the
Parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date".
SECTION 4.02. Payment of Purchase Price and Estimated
Adjustment Amount. At the Closing, Buyer will pay or cause to be paid to
Seller by wire transfer of immediately available funds to an account
previously designated in writing by Seller an amount in United States
dollars equal to (a) the Purchase Price plus or minus (b) Seller's good
faith estimate of the Adjustment Amount (the "Estimated Adjustment
Amount"), which estimate shall be provided to Buyer no later than five
Business Days prior to the Closing.
ARTICLE V
Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
SECTION 5.01. Organization; Qualification. Seller is a
corporation duly incorporated, 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 the Auctioned Assets and to carry
on the business of the Auctioned Assets as currently conducted.
SECTION 5.02. Authority Relative to This Agreement. Seller has
all necessary corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Seller of
this Agreement and the Ancillary Agreements and the consummation by Seller
of the transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Trustees of Seller or by a committee
thereof to whom such authority has been delegated and no other corporate
proceedings on the part of Seller are necessary to authorize this
Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby. This Agreement and the
Ancillary Agreements have been duly and validly executed and delivered by
Seller and, assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of Buyer and each other party
thereto, subject to the receipt of the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, constitute valid
and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms.
SECTION 5.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Seller Required Regulatory Approvals and the
Buyer Required Regulatory Approvals, neither the execution and delivery of
this Agreement or the Ancillary Agreements by Seller nor the sale by
Seller of the Auctioned Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Incorporation or By-laws of Seller, (ii) except as set forth on
Schedule 5.03(a), result in a default (or give rise to any right of
termination, cancelation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Seller is a
party or by which Seller, or any of the Auctioned Assets, may be bound,
except for such defaults (or rights of termination, cancelation 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) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller, or the Auctioned Assets,
except for such violations which would not, individually or in the
aggregate, create a Material Adverse Effect.
(b) Except for (i) application by Seller to, and the approval
of, the PSC, pursuant to ss. 70 of the Public Service Law of the State of
New York, of the transfer to Buyer of the Auctioned Assets, (ii) the
filings by Seller and Buyer required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act, (iii)
application by Seller to, and the approval of, FERC under (A) Section 203
of the Federal Power Act of 1935 (the "Federal Power Act") with respect to
the transfer of Auctioned Assets constituting jurisdictional assets under
the Federal Power Act and (B) Section 205 of the Federal Power Act with
respect to the Continuing Site Agreement (to the extent necessary) and any
wholesale power sales agreement to be entered into by Seller and Buyer,
including the Transition Capacity Agreement,(iv) the issuance of approval
by the New York City Department of Buildings and, to the extent required,
the New York City Department of Business Services of the tax lot
subdivision contemplated by this Agreement in a form suitable for
submission to the New York City Department of Finance for the issuance of
tax lot numbers and (v) declarations, filings or registrations with, or
notices to, or authorizations, consents or approvals of, any Governmental
Authority which become applicable to Seller or the transactions
contemplated hereby or by the Ancillary Agreements as a result of the
specific regulatory status or jurisdiction of incorporation or
organization of Buyer (or any of its Affiliates) or as a result of any
other facts that specifically relate to the business or activities in
which Buyer (or any of its Affiliates) is or proposes to be engaged
(collectively, the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any Governmental Authority is necessary for the
consummation by Seller of the transactions contemplated hereby or by the
Ancillary Agreements, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals (A) which,
if not obtained or made, would not, individually or in the aggregate,
create a Material Adverse Effect or (B) which relate to the Transferable
Permits.
(c) To the knowledge of Seller, there is no reason that it
should fail to obtain the Seller Required Regulatory Approvals.
SECTION 5.04. Year 2000. Seller has informed Buyer of the
status, as of the date of this Agreement, of measures to prevent computer
software, hardware and embedded systems used in connection with the
Auctioned Assets from experiencing malfunctions or other usage problems in
connection with years beginning with "20", except for such malfunctions or
other usage problems which would not, individually or in the aggregate,
create a Material Adverse Effect.
SECTION 5.05. Personal Property. Except for Permitted
Exceptions, Seller has good and marketable title, free and clear of all
Encumbrances, to all personal property included in the Auctioned Assets.
SECTION 5.06. Real Estate. The Conveyance Plans contain
descriptions of the Buyer Real Estate. Copies of the most recent real
property surveys and title insurance information in the possession of
Seller with respect to the Buyer Real Estate or any portion thereof have
heretofore been delivered by Seller to Buyer or made available for
inspection by Buyer, receipt of which is hereby acknowledged by Buyer.
SECTION 5.07. Leases. As of the date of this Agreement, Seller
is neither a tenant nor a licensee under any real property leases which
(a) are to be transferred and assigned to Buyer on the Closing Date and
(b) (i) provide for annual payments of more than $100,000 or (ii) are
material to the Auctioned Assets.
SECTION 5.08. Certain Contracts and Arrangements. (a) Except
for (i) any contract or agreement listed on Schedule 2.02(a)(iv) or
Schedule 5.08(a) and (ii) Contracts which will expire prior to the Closing
Date or that are permitted to be entered into under this Agreement, Seller
is not a party to any contract which is material to the business or
operations of the Auctioned Assets.
(b) Each Contract (i) constitutes a valid and binding
obligation of Seller, and, to the knowledge of Seller, constitutes a valid
and binding obligation of the other parties thereto, (ii) to the knowledge
of Seller, is in full force and effect and (iii) other than Contracts
covered by Section 2.04, to the knowledge of Seller, may be transferred to
Buyer pursuant to this Agreement and will continue in full force and
effect thereafter, in each case, without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder, except
for such breaches, forfeitures or impairments which would not,
individually or in the aggregate, create a Material Adverse Effect.
(c) There is not, under any of the Contracts, any default or
event which, with notice or lapse of time or both, would constitute a
default by Seller, except for 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.
SECTION 5.09. Legal Proceedings. Except as set forth in the
Filed Seller SEC Documents, as of the date of this Agreement, there are no
claims, actions, proceedings or investigations pending or, to the
knowledge of Seller, threatened against or relating to Seller which would,
individually or in the aggregate, be reasonably expected to create a
Material Adverse Effect. With respect to the business or operations of the
Auctioned Assets, Seller is not, as of the date of this Agreement, subject
to any outstanding judgment, rule, order, writ, injunction or decree of
any court, governmental or regulatory authority which would create a
Material Adverse Effect. The representations and warranties of Seller set
forth in this Section 5.09 shall not apply to, and do not cover, any
environmental matters which, with respect to any representations and
warranties of Seller, are exclusively governed by Section 5.11.
SECTION 5.10. Permits; Compliance with Law. (a) Except as set
forth on Schedule 5.10(a)(i), Seller holds, and is in compliance with, all
Permits necessary to conduct the business and operations of the Auctioned
Assets as currently conducted, and, to the knowledge of Seller, Seller is
otherwise in compliance with all laws, statutes, orders, rules,
regulations, ordinances or judgments of any Governmental Authority
applicable to the business and operations of the Auctioned Assets, except
for such failures to hold or comply with such Permits, or such failures to
be in compliance with such laws, statutes, orders, rules, regulations,
ordinances or judgments, which would not, individually or in the
aggregate, create a Material Adverse Effect. Except as set forth on
Schedule 5.10(a)(ii), Seller has not received any written notification
that it is in violation of any of such Permits or laws, statutes, orders,
rules, regulations, ordinances or judgments, except for notifications of
violations which would not, individually or in the aggregate, create a
Material Adverse Effect. The representations and warranties of Seller set
forth in this Section 5.10 shall not apply to, and do not cover, any
environmental matters which, with respect to any representations and
warranties of Seller, are exclusively governed by Section 5.11.
(b) Notwithstanding the last sentence of Section 5.10(a),
except as set forth on Schedule 5.10(b), there are no material Permits or
material Environmental Permits that, in each case, are not Transferable
Permits and are required for Buyer to conduct the business and operations
of the Auctioned Assets as currently conducted.
SECTION 5.11. Environmental Matters. (a) Except as set forth
in Schedule 5.11 or disclosed in the Filed Seller SEC Documents, Seller
holds, and is in compliance with, the Environmental Permits required for
Seller to conduct the business and operations of the Auctioned Assets as
currently conducted under applicable Environmental Laws, and, to the
knowledge of Seller, Seller is otherwise in compliance with applicable
Environmental Laws with respect to the business and operations of the
Auctioned Assets, except for such failures to hold or comply with such
Environmental Permits, or such failures to be in compliance with such
Environmental Laws, which would not, individually or in the aggregate,
create a Material Adverse Effect.
(b) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, Seller has not received any written notice of
violation of any Environmental Law or any written request for information
with respect thereto, or been notified that it is a potentially
responsible party under the Federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar state law with respect to
any real property included in the Buyer Real Estate or in any lease
forming part of the Auctioned Assets, except for such matters under such
laws as would not, individually or in the aggregate, create a Material
Adverse Effect.
(c) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, with respect to the business and operations of
the Auctioned Assets, Seller is not subject to any outstanding judgment,
decree or judicial order relating to compliance with any Environmental Law
or to investigation or cleanup of Hazardous Substances under any
applicable Environmental Law, except for (i) the Seller Consent Orders and
(ii) such judgments, decrees or judicial orders that would not,
individually or in the aggregate, create a Material Adverse Effect.
(d) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, as of the date of this Agreement, there are no
claims, actions, proceedings or investigations pending, or to the
knowledge of Seller, threatened against or relating to Seller, with
respect to the exposure at the Auctioned Assets of any person to Hazardous
Substances, which, if adversely determined, would, individually or in the
aggregate, create a Material Adverse Effect.
SECTION 5.12. Labor Matters. Seller has previously made
available to Buyer copies of all collective bargaining agreements to which
Seller is a party or is subject and which relate to the business or
operations of the Auctioned Assets. With respect to the business and
operations of the Auctioned Assets, as of the date of this Agreement, (a)
Seller is in compliance with all applicable laws regarding employment and
employment practices, terms and conditions of employment and wages and
hours, (b) Seller has not received written notice of any unfair labor
practice complaint against Seller pending before the National Labor
Relations Board, (c) there is no labor strike, slowdown or stoppage
actually pending or, to the knowledge of Seller, threatened against or
affecting Seller, (d) Seller has not received notice that any
representation petition respecting the employees of Seller has been filed
with the National Labor Relations Board, (e) no arbitration proceeding
arising out of or under collective bargaining agreements is pending
against Seller and (f) Seller has not experienced any primary work
stoppage since at least December 31, 1996, except, in the case of each of
the foregoing clauses (a) through (f), for such matters as would not,
individually or in the aggregate, create a Material Adverse Effect.
SECTION 5.13. ERISA; Benefit Plans. Schedule 5.13 sets forth a
list of all material deferred compensation, profit-sharing, retirement and
pension plans and all material bonus and other material employee benefit
or fringe benefit plans maintained, or with respect to which contributions
have been made, by Seller with respect to current or former employees
employed in connection with the power generation operations of the
Generating Plants and the Gas Turbines (collectively, "Benefit Plans").
Seller and each trade or business (whether or not incorporated) which are
or have ever been under common control, or which are or have ever been
treated as a single employer, with Seller under Section 414(b), (c), (m)
or (o) of the Code (an "ERISA Affiliate") 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 for such
failures to fulfill such obligations or comply with such provisions which
would not, individually or in the aggregate, create a Material Adverse
Effect. Neither Seller nor any ERISA Affiliate has incurred any liability
under Section 4062(b) of ERISA, or any withdrawal liability under Section
4201 of ERISA, to the Pension Benefit Guaranty Corporation in connection
with any Benefit Plan which is subject to Title IV of ERISA which
liability remains outstanding, and there has not been any reportable event
(as defined in Section 4043 of ERISA) with respect to any such Benefit
Plan (other than a reportable event with respect to which the 30-day
notice requirement has been waived by the PBGC). Neither Seller nor any
ERISA Affiliate or parent corporation, within the meaning of Section
4069(b) or Section 4212(c) of ERISA, has engaged in any transaction,
within the meaning of Section 4069(b) or Section 4212(c) of ERISA. No
Benefit Plan and no "employee pension benefit plan" (as defined in Section
3(2) of ERISA) maintained by Seller or any ERISA Affiliate or to which
Seller or any ERISA Affiliate has contributed is a multiemployer plan.
SECTION 5.14. Taxes. With respect to the Auctioned Assets and
trades or businesses associated with the Auctioned Assets, (a) all Tax
Returns required to be filed have been filed and (b) all Taxes shown to be
due on such Tax Returns, and all Taxes otherwise owed, have been paid in
full, except to the extent that any failure to file or any failure to pay
any Taxes would not, individually or in the aggregate, create a Material
Adverse Effect. No written notice of deficiency or assessment has been
received from any taxing authority with respect to liabilities for Taxes
of Seller in respect of the Auctioned Assets which has not been fully paid
or finally settled or which is not being contested in good faith through
appropriate proceedings, except for any such notices regarding Taxes which
would not, individually or in the aggregate, create a Material Adverse
Effect. There are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for Taxes associated with the
Auctioned Assets for any period, except for any such agreements or waivers
which would not, individually or in the aggregate, create a Material
Adverse Effect.
SECTION 5.15. Independent Engineering Assessments. (a) Seller
has reviewed the 1998 assessments prepared by Stone & Webster with respect
to the Generating Plants and the Gas Turbines (the "Independent
Engineering Assessments"), and, except as set forth on Schedule 5.15(a),
to the knowledge of Seller, as of the date of the Independent Engineering
Assessments, there was no untrue statement of a material fact or omission
of any material fact therein that would reasonably suggest that the
condition of the Generating Plants and the Gas Turbines, taken as a whole,
as of such date was materially and adversely different from that described
in such Independent Engineering Assessments.
(b) Except as set forth on Schedule 5.15(b), since the date of
the Independent Engineering Assessments, there has not been, subject to
ordinary wear and tear and to routine maintenance, any casualty, physical
damage, destruction or physical loss with respect to, or, to the knowledge
of Seller, any adverse change in the physical condition of, any Generating
Plant or Gas Turbine, except for such casualty, physical damage,
destruction, physical loss or adverse change which would not, individually
or in the aggregate, create a Material Adverse Effect.
SECTION 5.16. Undisclosed Liabilities. With respect to the
Auctioned Assets, there are no liabilities or obligations of any nature or
kind (absolute, accrued, contingent or otherwise) that would have been
required to be set forth on a balance sheet in respect of the Auctioned
Assets or in the notes thereto prepared in accordance with GAAP, as
applied by Seller in connection with its December 31, 1997 balance sheet,
except for any such liabilities or obligations which (a) are disclosed in
or contemplated or permitted by this Agreement or the Ancillary Agreements
(including the Assumed Obligations), (b) are disclosed in the Offering
Memorandum, (c) are disclosed in the Filed Seller SEC Documents, (d) have
been incurred in the ordinary course of business, (e) are disclosed on
Schedule 5.16 or (f) which would not, individually or in the aggregate,
create a Material Adverse Effect.
SECTION 5.17. Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in connection
with the transaction contemplated hereby by reason of any action taken by
Seller, except Morgan Stanley & Co. Incorporated, which is acting for and
at the expense of Seller.
SECTION 5.18. Insurance. Seller carries policies of insurance
covering fire, workers' compensation, property all-risk, comprehensive
bodily injury, property damage liability, automobile liability, product
liability, completed operations, explosion, collapse, contractual
liability, personal injury liability and other forms of insurance relating
to the Auctioned Assets, or otherwise self-insures in accordance with all
statutory and regulatory criteria against any such liabilities, which
insurance is in such amounts, has such deductibles and retentions and is
underwritten by such companies as would be obtained by a reasonably
prudent electric power business.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING SOLD AND
TRANSFERRED "AS IS, WHERE IS", AND SELLER IS NOT MAKING ANY OTHER
REPRESENTATIONS OR WARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS OR
IMPLIED, CONCERNING SUCH AUCTIONED ASSETS OR WITH RESPECT TO THIS
AGREEMENT OR THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, INCLUDING, IN PARTICULAR WITH RESPECT TO THE AUCTIONED
ASSETS, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED BY
SELLER AND WAIVED BY BUYER. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE
INFORMATION SET FORTH IN, OR CONTEMPLATED BY, THE OFFERING MEMORANDUM
(EXCEPT TO THE EXTENT EXPRESSLY INCORPORATED BY REFERENCE INTO THIS
AGREEMENT).
ARTICLE VI
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
SECTION 6.01. Organization. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as is
now being conducted.
SECTION 6.02. Authority Relative to This Agreement. Buyer has
all necessary corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is party and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery by Buyer of this Agreement and such Ancillary Agreements and
the consummation by Buyer of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Buyer and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or such Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby. This
Agreement and such Ancillary Agreements have been duly and validly
executed and delivered by Buyer and, assuming that this Agreement and the
Ancillary Agreements constitute valid and binding agreements of Seller and
each other party thereto, subject to the receipt of the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, this
Agreement and the Ancillary Agreements constitute valid and binding
agreements of Buyer, enforceable against Buyer in accordance with their
respective terms.
SECTION 6.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Buyer Required Regulatory Approvals and the
Seller Required Regulatory Approvals, neither the execution and delivery
of this Agreement or the Ancillary Agreements to which it is party by
Buyer nor the purchase by Buyer of the Auctioned Assets pursuant to this
Agreement will (i) conflict with or result in any breach of any provision
of the Certificate of Incorporation or By-laws (or other similar governing
documents) of Buyer, (ii) result in a default (or give rise to any right
of termination, cancelation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Buyer or any
of its subsidiaries is a party or by which any of their respective assets
may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, or any of its assets,
except in the case of clauses (ii) and (iii) for such failures to obtain a
necessary consent, defaults and violations which would not, individually
or in the aggregate, have a material adverse effect on the ability of
Buyer to consummate the transactions contemplated by, and discharge its
obligations under, this Agreement and the Ancillary Agreements (a "Buyer
Material Adverse Effect").
(b) Except for (i) approval of the PSC pursuant to ss. 70 of
the Public Service Law of the State of New York, of the transfer to Buyer
of the Auctioned Assets, (ii) the filings by Buyer and Seller required by
the HSR Act and the expiration or earlier termination of all waiting
periods under the HSR Act, (iii) application by Buyer to, and the approval
of, FERC under (A) Section 203 of the Federal Power Act with respect to
the transfer of Auctioned Assets constituting jurisdictional assets under
the Federal Power Act and (B) Section 205 of the Federal Power Act with
respect to (1) the Continuing Site Agreement (to the extent necessary) and
any wholesale power sales agreement to be entered into by Seller and
Buyer, including the Transition Capacity Agreement, and (2) authorization
to sell capacity and energy from Generating Plants and Gas Turbines at
market-based rates (provided, however, that Buyer acknowledges that
"market-based rates" for the purpose of this Agreement means rates that
are subject to any bid cap, price limitation or other market power
mitigation measure imposed by FERC or PSC in respect of the New York State
or New York City wholesale and retail energy and capacity electric power
markets or any other restriction imposed by FERC or PSC with respect to
the power generation operations and assets of Buyer, including the FERC
Order Accepting Market Power Mitigation Measures dated September 22, 1998,
as modified (Docket No. ER98-3169-000) (the "Mitigation Measures")), (iv)
qualification of Buyer, with respect to the Auctioned Assets, as an exempt
wholesale generator under the Energy Policy Act of 1992 and (v) the
issuance of approval by the New York City Department of Buildings and, to
the extent required, the New York City Department of Business Services of
the tax lot subdivision contemplated by this Agreement in a form suitable
for submission to the New York City Department of Finance for the issuance
of tax lot numbers (collectively, the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any Governmental Authority is
necessary for the consummation by Buyer of the transactions contemplated
hereby or by the Ancillary Agreements, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals (A)
which, if not obtained or made would not, individually or in the
aggregate, have a Buyer Material Adverse Effect or (B) which relate to the
Transferable Permits.
(c) To the knowledge of Buyer, there is no reason that it
should fail to obtain the Buyer Required Regulatory Approvals.
SECTION 6.04. Availability of Funds. Buyer has sufficient
funds available to it or has received binding written commitments (copies
of which have heretofore been delivered to Seller) from one or more
nationally recognized financial institutions to provide sufficient funds
on the Closing Date to pay the Purchase Price and Estimated Adjustment
Amount.
SECTION 6.05. Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in connection
with the transaction contemplated hereby by reason of any action taken by
Buyer, except Merrill Lynch & Co., Inc., which is acting for and at the
expense of Buyer.
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the Auctioned
Assets. (a) Except with the prior written consent of Buyer (such consent
not to be unreasonably withheld) or as required to effect the purchase and
sale of the Auctioned Assets and related transactions contemplated by this
Agreement, during the period from the date of this Agreement to the
Closing Date, Seller will operate the Auctioned Assets in the usual,
regular and ordinary course and in accordance with good industry practice
and applicable legal requirements, and continue to pay accounts payable
which relate to the Auctioned Assets in a timely manner, consistent with
past practice.
(b) Notwithstanding the foregoing, except as contemplated in
this Agreement or the Ancillary Agreements, prior to the Closing Date,
without the prior written consent of Buyer (such consent not to be
unreasonably withheld), Seller will not:
(i) except for Permitted Exceptions, grant any Encumbrance on
the Auctioned Assets securing any indebtedness for borrowed money or
guarantee or other liability for the obligations of any person;
(ii) make any material change in the levels of fuel inventory
and supplies, materials and spare parts inventory customarily
maintained by Seller with respect to the Auctioned Assets, other
than consistent with past practice (including the use of spare parts
in connection with certain power generation assets of Seller
described in the Offering Memorandum other than the Generating
Plants or Gas Turbines);
(iii) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Auctioned Assets, other than assets that become
obsolete or assets used, consumed or replaced in the ordinary course
of business consistent with past practice (including the use of
spare parts in connection with certain power generation assets of
Seller described in the Offering Memorandum other than the
Generating Plants or Gas Turbines);
(iv) terminate, materially extend or otherwise materially
amend any of the Contracts (other than in accordance with their
respective terms) or waive any default by, or release, settle or
compromise any material claim against, any other party thereto;
(v) amend any of the Transferable Permits, other than (A)
Transferable Permits not material to the operations of the Auctioned
Assets as currently conducted, (B) as reasonably necessary to
complete the transfer of Permits as contemplated hereby, (C) routine
renewals or non-material modifications or amendments and (D)
modifications, alterations and amendments contemplated by Section
7.03(b);
(vi) enter into any Contract for the purchase, sale or storage
of fuel with respect to the Auctioned Assets (whether commodity or
transportation) with a term in excess of 12 months, if the aggregate
future liability or receivable outstanding on the date for
measurement for the purpose of this covenant for all such Contracts
would be in excess of $2 million, not including any such Contract
terminable by notice of not more than 30 days without penalty or
cost (other than de minimis administrative costs); provided,
however, that Seller may enter into Contracts for the storage of
fuel with respect to the Auctioned Assets with a term ending not
later than December 31, 2000 and otherwise on terms consistent with
Seller's past practice;
(vii) (A) establish, adopt, enter into or amend any Collective
Bargaining Agreement or Benefits Plans, except (1) if such action
would not create a Material Adverse Effect or (2) as required under
applicable law or under the terms of any Collective Bargaining
Agreement or (B) grant to any Affected Employee any increase in
compensation, except (1) in the ordinary course of business
consistent with past practice or (2) to the extent required by the
terms of any Collective Bargaining Agreement, employment agreement
in effect as of the date of this Agreement or applicable law;
(viii) enter into any Contract with respect to the Auctioned
Assets for goods or services not addressed in clauses (i) through
(vii) with a term in excess of 12 months, if the aggregate future
liability or receivable outstanding on the date for measurement for
the purpose of this covenant for all such Contracts would be in
excess of $2 million, not including any such Contract terminable by
notice of not more than 30 days without penalty or cost (other than
de minimis administrative costs); provided, however, that
notwithstanding any other provision of this Agreement to the
contrary, Seller may (A) enter into any Contract reasonably
necessary to effect the physical, legal or operational separation of
the sites on which the Auctioned Assets are located or to otherwise
implement the change of ownership contemplated hereby, or
subdivision, of such sites or implement the provisions of the
Ancillary Agreements and (B) enter into and record the Declarations
of Subdivision Easements; or
(ix) enter into any Contract with respect to the Auctioned
Assets relating to any of the transactions set forth in the
foregoing clauses (i) through (viii).
(c) Without limiting the generality of Sections 7.01(a) and
(b), to the extent Section 7.01(a) or (b) prohibits Seller from entering
into any Contract for goods and services in connection with maintenance or
capital expenditures, Buyer agrees that Seller may request Buyer's consent
to enter into such Contract, such consent not to be unreasonably withheld,
and to the extent Buyer so consents, all liabilities and obligations under
such Contract shall constitute Assumed Obligations and Buyer shall
otherwise reimburse Seller for all its expenditures thereunder.
(d) Notwithstanding anything in this Section 7.01 to the
contrary, Seller may take any action, incur any expense or enter into any
obligation with respect to the Auctioned Assets to the extent that (i) all
obligations and liabilities arising with respect thereto do not constitute
Assumed Obligations or (ii) Seller otherwise provides that such
obligations and liabilities shall not be assumed or retained by Buyer.
SECTION 7.02. Access to Information. (a) Between the date of
this Agreement and the Closing Date, Seller will, subject to the
Confidentiality Agreement, during ordinary business hours and upon
reasonable notice (i) give Buyer and its representatives reasonable access
(A) to all books, records, plants, offices and other facilities and
properties constituting the Auctioned Assets, including for the purpose of
observing the operation by Seller of the Auctioned Assets and (B) to the
Auctioned Assets that are not located at the Generating Plants or Gas
Turbines and to applicable employees of the Seller, in each case for the
purpose of preparing to store spare parts after the Closing, (ii) permit
Buyer to make such reasonable inspections thereof as Buyer may reasonably
request, (iii) furnish Buyer with such financial and operating data and
other information with respect to the Auctioned Assets as Buyer may from
time to time reasonably request, (iv) furnish Buyer upon request a copy of
each material report, schedule or other document with respect to the
Auctioned Assets filed by Seller with, or received by Seller from, the PSC
or FERC; provided, however, that (A) any such activities shall be
conducted in such a manner as not to interfere unreasonably with the
operation of the Auctioned Assets, (B) Seller shall not be required to
take any action which would constitute a waiver of the attorney-client
privilege and (C) Seller need not supply Buyer with (1) any information or
access which Seller is under a legal obligation not to supply or (2) any
information which Seller has previously supplied to Buyer. Notwithstanding
anything in this Section 7.02 to the contrary, (I) Seller will not be
required to provide such information or access to any employee records
other than Transferring Employee Records, (II) Buyer shall not have the
right to perform or conduct any environmental sampling or testing at, in,
on, around or underneath the Auctioned Assets and (III) Seller shall not
be required to provide such access or information with respect to any
Retained Asset or Retained Liabilities.
(b) Unless otherwise agreed to in writing by Buyer, Seller
shall, for a period commencing on the Closing Date and terminating three
years after the Closing Date, keep confidential and shall cause its
representatives to keep confidential all Confidential Information (as
defined in the Confidentiality Agreement) on the terms set forth in the
Confidentiality Agreement. Except as contemplated by the following
sentence, Seller shall not release any person from any confidentiality
agreement now existing with respect solely to the Auctioned Assets or
waive or amend any provision thereof. After the Closing Date, upon
reasonable request of Buyer, Seller shall, to the maximum extent permitted
by law and the applicable Bidder Confidentiality Agreement (as defined
below), appoint Buyer to be Seller's representative and agent in respect
of confidential information relating to the Auctioned Assets under the
confidentiality agreements ("Bidder Confidentiality Agreements") between
Seller and prospective purchasers of certain generation assets of Seller
of which the Auctioned Assets form part.
(c) From and after the Closing Date, Buyer shall retain all
Operating Records (whether in electronic form or otherwise) relating to
the Auctioned Assets on or prior to the Closing Date. Buyer also agrees
that, from and after the Closing Date, Seller shall have the right, upon
reasonable request to Buyer, to receive from Buyer copies of any Operating
Records or other information in Buyer's possession relating to the
Auctioned Assets on or prior to the Closing Date and required by Seller in
order to comply with applicable law. Seller shall reimburse Buyer for its
reasonable costs and expenses incurred in connection with the foregoing
sentence.
SECTION 7.03. Consents and Approvals; Transferable Permits.
(a) Seller and Buyer shall cooperate with each other and (i) prepare and
file (or otherwise effect) as soon as practicable all applications,
notices, petitions and filings with respect to and (ii) use their
reasonable best efforts (including (x) negotiating in good faith
modifications and amendments to this Agreement and the Ancillary
Agreements and (y) Buyer agreeing, and causing its Affiliates to agree, to
propose and implement procedures for processing requests for gas
transportation in an expeditious manner (including procedures for
evaluating requests to connect with local gas delivery facilities in New
York City and for dispute resolution relating thereto) and such other
market power mitigation measures as may be appropriate) to obtain (A) the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals and (B) any other consents, approvals or authorizations of any
other Governmental Authorities or third parties that are necessary to
consummate the transactions contemplated by this Agreement or the
Ancillary Agreements. Without limiting the generality of the foregoing,
(1) each Party agrees to, upon the other Party's request, support such
other Party's applications for regulatory approvals of the purchase and
sale of the Auctioned Assets contemplated by this Agreement, (2) Buyer
agrees not to seek any relief from, or modifications or amendments in
respect of, any bid cap, price limitation or other market power mitigation
measure or other restriction with respect to any power generation
operations and assets described in or contemplated by Section
6.03(b)(iii)(B)(2) until after the Closing Date and (3) Buyer and Seller
agree to defend any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the Ancillary Agreements,
or the consummation of the transactions contemplated hereby or thereby,
including seeking to have any stay or temporary restraining order entered
by any Governmental Authority vacated or reversed.
(b) Upon execution of this Agreement, Seller shall commence
the process of transferring to Buyer the Transferable Permits, including
completing and filing applications and related documents with the
appropriate Governmental Authorities. Seller hereby reserves the right to
modify, alter or amend any Transferable Permit or to refuse to correct
violations or deficiencies in respect of any Transferable Permit as long
as such modification, alteration, amendment or refusal would not,
individually or in the aggregate, create a Material Adverse Effect. Seller
shall use its reasonable best efforts to give notice to Buyer of any
modification, alteration or amendment to any Transferable Permit.
(c) Seller shall use its reasonable best efforts to cooperate
with Buyer in the transfer of Transferable Permits to Buyer by Closing. If
the transfer of any Transferable Permit cannot be completed by Closing,
Buyer is hereby authorized, but not required, to act as Seller's
representative and agent in respect of such Transferable Permit and to do
all things necessary for effecting transfer of such Transferable Permit as
soon after the Closing as is practicable, with Seller remaining the
Transferable Permit "holder of record" in such case until such transfer is
completed. In the case of each such Transferable Permit, Seller shall, to
the maximum extent permitted by law and such Transferable Permit, enter
into such reasonable arrangements with Buyer as are necessary to provide
Buyer with the benefits and obligations of such Transferable Permit. If
Buyer is able to complete the transfer of any Transferable Permit after
Closing without the occurrence of any event that, if such event had
occurred between the execution of this Agreement and the Closing, would
have created, individually or in the aggregate, a Material Adverse Effect,
Seller may substitute Buyer in its place and stead as the Party
responsible for completing the transfer of such Transferable Permit.
SECTION 7.04. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the Parties will use its reasonable
best efforts to take, or cause to be taken, as soon as possible, all
action, and to do, or cause to be done, as soon as possible, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the sale of the Auctioned Assets pursuant to this Agreement as
soon as possible, including using its reasonable best efforts to ensure
satisfaction of the conditions precedent to each Party's obligations
hereunder. Prior to Buyer's submission of any application with a
Governmental Authority for a regulatory approval, Buyer shall submit such
application to Seller for review and comment and Buyer shall incorporate
into such application any revisions reasonably requested by Seller.
Neither of the Parties will, without prior written consent of the other
Party, take or fail to take, or permit their respective Affiliates to take
or fail to take, any action, which would reasonably be expected to prevent
or materially impede, interfere with or delay the consummation, as soon as
possible, of the transactions contemplated by this Agreement or the
Ancillary Agreements. Without limiting the generality of the foregoing,
each of the Parties shall use its reasonable best efforts to negotiate in
good faith as soon as possible after the date of this Agreement, and enter
into (i) the "A" House Ground Lease and Easement, the "A" House Operation
and Maintenance Agreement and the Fuel Supply Agreement, the terms of
which shall be substantially as set forth in Exhibits F, I and H,
respectively and (ii) any other agreement reasonably necessary to
consummate the sale of the Auctioned Assets pursuant to this Agreement as
soon as possible.
(b) From time to time after the date hereof, without further
consideration and at its own expense, (i) Seller will execute and deliver
such instruments of assignment or conveyance as Buyer may reasonably
request to more effectively vest in Buyer Seller's title to the Auctioned
Assets (subject to Permitted Exceptions and the other terms of this
Agreement) and (ii) Buyer will execute and deliver such instruments of
assumption as Seller may reasonably request in order to more effectively
consummate the sale of the Auctioned Assets and the assumption of the
Assumed Obligations pursuant to this Agreement.
(c) Seller shall not sponsor or support any recommendation or
application to effect prior to April 1, 2002 (i) a reduction in the
locational generation capacity requirement that 80% of New York City peak
electric loads must be met with in-City generation capacity, as in effect
as of the date of this Agreement, unless such reduction is justified by a
significant change in the transmission import capability into New York
City whether as a result of actions by Seller or others, (ii) a reduction
in the $105/kW-year bid and price cap in respect of capacity under the
Mitigation Measures, as in effect as of the date of this Agreement or
(iii) a change in the method of determining required system capability set
forth in NYPP Billing Procedure 4-11 (Installed Reserve Requirements), as
in effect as of the date of this Agreement that would reduce the installed
reserve requirements for the winter capability period applicable to summer
peaking systems if such reduction would also reduce the annual price for
installed capacity that Buyer could otherwise obtain.
(d) Seller shall join or support Buyer's application to the
PSC for the certification required under Section 32(c) of the Public
Utility Holding Company Act of 1935 in order for Buyer to obtain
qualification, with respect to the Auctioned Assets, as an exempt
wholesale generator under the Energy Policy Act of 1992.
(e) Seller and Buyer shall cooperate in good faith to
establish a transition committee to consider operational and business
issues related to the purchase and sale of the Auctioned Assets.
(f) Prior to the Closing Date, Seller shall cooperate in good
faith with Buyer to enable Buyer to obtain insurance in respect of the
Auctioned Assets comparable to that maintained by Seller as of the date of
this Agreement.
(g) Seller and Buyer shall cooperate in good faith to enable
Buyer to obtain fuel storage capacity with respect to the Auctioned
Assets.
SECTION 7.05. Public Statements. The Parties shall consult
with each other prior to issuing any public announcement, statement or
other disclosure with respect to this Agreement, the Ancillary Agreements
or the transactions contemplated hereby or thereby, including any
statement appearing in any filing contemplated hereby or thereby, and
shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law.
SECTION 7.06. Tax Matters. (a) All transfer and sales taxes
(including any petroleum business taxes and similar excise taxes on sales
of petroleum based products) incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by Buyer. Buyer
shall prepare and file in a timely manner any and all Tax Returns or other
documentation relating to such taxes; provided, however, that, to the
extent required by applicable law, Seller will join in the execution of
any such Tax Returns or other documentation relating to any such taxes.
Buyer shall provide to Seller copies of each Tax Return described in the
proviso in the preceding sentence at least 30 days prior to the date such
Tax Return is required to be filed.
(b) At Seller's election, but on no less than 10 Business
Days' notice to Buyer, the transfer of the Auctioned Assets and the
receipt of the Purchase Price shall be made through a qualified
intermediary in a manner satisfying the requirements of Treasury
Regulation Section 1.1031(k)-1(g), so long as such election by Seller does
not create a Material Adverse Effect and Seller indemnifies Buyer for its
additional costs and expenses incurred by reason of such election.
(c) Each Party shall 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 Party shall retain and provide
the other Party with any records or information which may be relevant to
such return, audit, examination or proceedings. Any information obtained
pursuant to this Section 7.06(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.
(d) If either Buyer or Seller receives a refund of Taxes in
respect of the Auctioned Assets for a taxable period including the Closing
Date, Buyer shall pay to Seller the portion of any such refund
attributable to the portion of such taxable period prior to the Closing
Date, and Seller shall pay to Buyer the portion of any such refund
attributable to the portion of such taxable period on and after the
Closing Date.
SECTION 7.07. Bulk Sales or Transfer Laws. Buyer acknowledges
that Seller will not comply with the provisions of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. Buyer hereby waives compliance by Seller
with the provisions of the bulk sales or transfer laws of all applicable
jurisdictions.
SECTION 7.08. Storage. Seller shall store for Buyer the
Auctioned Assets described in the second sentence of Section 2.01 until
the date that is six months after the Closing Date or, in respect of all
or a portion of such Auctioned Assets, until one or more earlier dates
proposed by Buyer with reasonable advance notice, which schedule shall be
reasonably acceptable to Seller. Buyer agrees to reimburse Seller for its
reasonable costs and expenses in connection with such storage. Buyer
agrees that Seller shall have no responsibility or liability for the
actual removal of such Auctioned Assets from the actual storage location,
and that Buyer shall have sole responsibility therefor. Notwithstanding
the provisions of Section 10.01, Buyer agrees that Seller shall have no
liability for loss or damage with respect to the matters contemplated by
this Section 7.08 or such Auctioned Assets, and Buyer agrees to hold each
Seller Indemnitee harmless from and against all loss or damage or
Indemnifiable Losses, and to indemnify each Seller Indemnitee from and
against all loss or damage or Indemnifiable Losses incurred, asserted
against or suffered as a result of any storage or other services provided
by Seller pursuant to this Section 7.08, in each case, except to the
extent any such loss or damage or Indemnifiable Loss results in whole or
in part from the gross negligence or wilful or wanton acts or omissions to
act of any Seller Indemnitee (or any contractor or subcontractor of
Seller).
SECTION 7.09. Information Resources. From the Closing Date
until the date that is three months thereafter, Seller shall provide Buyer
with access to Seller's mainframe computer only to the extent reasonably
necessary to enable Buyer to use the PPMIS and MMS (in read only mode)
systems and applications solely in connection with the Auctioned Assets.
Buyer agrees that it will not use any such access for any purpose other
than for the use of the PPMIS and MMS systems and applications solely in
connection with the Auctioned Assets. Buyer acknowledges that, as long as
it retains access to Seller's mainframe computer, Seller, its employees
and third parties may have access to Buyer's information resources systems
and applications (including the PPMIS and MMS systems and applications
served by Seller's mainframe computer). Notwithstanding the provisions of
Section 10.01, Buyer agrees that Seller shall have no liability or
obligation whatsoever with respect to the matters contemplated by this
Section 7.09, and Buyer agrees to hold each Seller Indemnitee harmless
from and against all loss or damage or Indemnifiable Losses, and to
indemnify each Seller Indemnitee from and against all loss or damage or
Indemnifiable Losses incurred, asserted against or suffered as a result of
Buyer's access to Seller's mainframe computer pursuant to this Section
7.09, in each case, except to the extent any such loss or damage or
Indemnifiable Loss results in whole or in part from the gross negligence
or wilful or wanton acts or omissions to act of any Seller Indemnitee (or
any contractor or subcontractor of Seller).
SECTION 7.10. Witness Services. At all times from and after
the Closing Date, each Party shall use reasonable best efforts to make
available to the other Party, upon reasonable written request, its and its
subsidiaries' then current or former officers, directors, employees
(including former employees of Seller) and agents as witnesses to the
extent that (i) such persons may reasonably be required by such requesting
Party in connection with any claim, action, proceeding or investigation in
which such requesting Party may be involved and (ii) there is no conflict
between Buyer and Seller in such claim, action, proceeding or
investigation. Such other Party shall be entitled to receive from such
requesting Party, upon the presentation of invoices for such witness
services, payments for such amounts, relating to supplies, disbursements
and other out-of-pocket expenses and direct and indirect costs of
employees who are witnesses, as may be reasonably incurred in providing
such witness services.
SECTION 7.11. Consent Orders. Buyer and Seller agree to
cooperate with each other and NYSDEC to facilitate the entry of a consent
order between NYSDEC and Buyer, wherein Buyer will agree to assume and
perform the Assumed Consent Order Obligations.
SECTION 7.12. Nitrogen Oxide Allowances. Seller agrees to
negotiate in good faith with NYSDEC for nitrogen oxide allowances to be
allocated to the Auctioned Assets for any period subsequent to the year
2002.
SECTION 7.13. Trade Names. Seller shall not object to the use
by Buyer of any trade names, trademarks, service marks or logos (and any
rights to and in the same, including any right to use the same) primarily
relating to the Generating Facilities that contain the word "Ravenswood".
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's Obligation
To Effect the Purchase and Sale. The respective obligations of each Party
to effect the purchase and sale of the Auctioned Assets shall be subject
to the satisfaction or waiver by such Party on or prior to the Closing
Date of the following conditions, unless, in the case of Section 8.01(c)
below, the PSC determines that such condition need not be included or
complied with:
(a) the Seller Required Regulatory Approvals and Buyer
Required Regulatory Approvals shall have been obtained and all
conditions to effectiveness prescribed therein or otherwise by law,
regulation or order shall have been satisfied; provided, however,
that if at the time any Seller Required Regulatory Approval or Buyer
Required Regulatory Approval is obtained, a Party reasonably expects
a request for rehearing or a challenge thereto to be filed or if a
request for rehearing or a challenge thereto has been filed, in each
case, which, if successful, would cause such Seller Required
Regulatory Approval or Buyer Required Regulatory Approval, as the
case may be, to be reversed, stayed, enjoined, set aside, annulled,
suspended or substantially modified, then such Party may by notice
to the other Party within five Business Days after receipt of such
Seller Required Regulatory Approval or Buyer Required Regulatory
Approval, as the case may be, delay the Closing until the time for
requesting rehearing has expired or until such challenge is decided,
in each case, whether or not any appeal thereof is pending; provided
further, however, that if the Closing is delayed pursuant to the
foregoing provision, the Termination Date shall be automatically
extended for a period of time equal to the period of such delay;
(b) no preliminary or permanent injunction or other order or
decree by any Federal or state court of competent jurisdiction and
no statute or regulation enacted by any Governmental Authority
prohibiting the consummation of the purchase and sale of the
Auctioned Assets (collectively, "Restraints") shall be in effect;
(c) the ISO shall have become operational to the extent
reasonably necessary to monitor market power in respect of the
Auctioned Assets; and
(d) delivery of the Continuing Site Agreement, the Declaration
of Easements Agreement, each Declaration of Subdivision Easements,
each Zoning Lot Development Agreement and the "A" House Ground Lease
and Easement to the Title Company for
recording.
SECTION 8.02. Conditions Precedent to Obligation of Buyer To
Effect the Purchase and Sale. The obligation of Buyer to effect the
purchase and sale of the Auctioned Assets contemplated by this Agreement
shall be subject to the satisfaction or waiver by Buyer on or prior to the
Closing Date of the following additional conditions:
(a) Seller shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Seller which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not, individually
or in the aggregate, create a Material Adverse Effect;
(c) Buyer shall have received a certificate from an authorized
officer of Seller, dated the Closing Date, to the effect that, to
the best of such officer's knowledge, the conditions set forth in
Sections 8.02(a) and (b) have been satisfied;
(d) all material Permits and Environmental Permits required
for Buyer to conduct the business and operations of the Auctioned
Assets as currently conducted shall have been transferred or will be
transferable to Buyer, or shall have been obtained or will be
obtainable by Buyer, or shall have been made available to Buyer in
accordance with Section 7.03(c), on, prior to or within a reasonable
period of time after the Closing Date;
(e) Buyer shall have received (i) the deeds of conveyance
substantially in the form of Exhibit B, (ii) a Foreign Investment in
Real Property Tax Act Certification and Affidavit substantially in
the form of Exhibit C and (iii) an opinion from John D. McMahon,
Esq., General Counsel of Seller or other counsel reasonably
acceptable to Buyer, dated the Closing Date, substantially in the
form set forth in Exhibit D;
(f) execution and delivery by Seller of each of (i) the
Transition Capacity Agreement and the Zoning Lot Development
Agreements and (ii) the Fuel Supply Agreement, the "A" House Ground
Lease and Easement and the "A" House Operation and Maintenance
Agreement, each in a form and on terms reasonably satisfactory to
Buyer;
(g) the Title Company shall be willing to issue to Buyer a New
York form of ALTA (1992) Owner's Title Insurance Policy insuring fee
title to the Buyer Real Estate in an amount equal to that portion of
the Purchase Price properly allocable to Buyer Real Estate, subject
only to the Permitted Exceptions; and
(h) Buyer shall have received originals of the ALTA/ACSM Land
Title Surveys which include the Buyer Real Estate in addition to
other property signed by the surveyor with Buyer's name and the name
of not more than one other Party designated by Buyer added to the
certification set forth thereon.
SECTION 8.03. Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale. The obligation of Seller to effect the
purchase and the sale of the Auctioned Assets contemplated by this
Agreement shall be subject to the satisfaction or waiver by Seller on or
prior to the Closing Date of the following additional conditions:
(a) Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Buyer which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Buyer Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Buyer Material Adverse
Effect;
(c) Seller shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Sections 8.03(a) and (b) have been satisfied;
(d) Seller shall have received an opinion substantially in the
form of Exhibit E dated as of the Closing Date and from counsel
reasonably acceptable to Seller;
(e) execution and delivery by Buyer of each of (i) the
Transition Capacity Agreement and the Zoning Lot Development
Agreements and (ii) the Fuel Supply Agreement, the "A" House Ground
Lease and Easement and the "A" House Operation and Maintenance
Agreement, each in a form reasonably satisfactory to
Seller;
(f) Buyer shall have provided evidence in form and substance
reasonably satisfactory to Seller of compliance by Buyer with its
obligations under Article IX;
(g) if Buyer has assigned its rights, interests and
obligations in accordance with Section 12.05(a)(ii)(A),
(i) the Guarantee Agreement shall be in full force
and effect;
(ii) the Guarantor shall have performed in all material
respects its covenants and agreements contained in the
Guarantee Agreement which are required to be performed on or
prior to the Closing Date;
(iii) the representations and warranties of the
Guarantor which are set forth in the Guarantee Agreement shall
be true and correct as of the date of the Guarantee Agreement
and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in
which case as of such date), except where the failure of such
representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality"
or "Guarantor Material Adverse Effect" set forth therein)
would not, individually or in the aggregate, create a
Guarantor Material Adverse Effect (as defined therein);
(iv) Seller shall have received a certificate from an
authorized officer of the Guarantor, dated the Closing Date,
to the effect that, to the best of such officer's knowledge,
the conditions set forth in Sections 8.03(g)(ii) and (iii)
have been satisfied; and
(v) Seller shall have received an opinion substantially
in the form of Exhibit M dated the Closing Date and from
counsel reasonably acceptable to Seller.
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters. (a) Buyer shall offer
equivalent employment at the Auctioned Assets to those employees of Seller
regularly assigned by Seller to work at the Auctioned Assets or at the
Ravenswood "A" Steam House on the Closing Date in the job titles and
facilities listed in Schedule 9.01(a)(all such employees described above
and those individuals described in the following sentence being
hereinafter referred to as "Affected Employees"). Affected Employees
include each such employee of Seller who is not actively at work on the
Closing Date due solely to a temporary short-term absence, whether paid or
unpaid, in accordance with applicable policies of Seller, including as a
result of vacation, holiday, personal time, leave of absence, union leave,
short- or long-term disability leave, military leave or jury duty.
Affected Employees shall cease to be employees of Seller on the Closing
Date and their period of employment by Buyer shall begin on the Closing
Date. Seller shall be responsible for any obligation to provide employee
benefits to an Affected Employee prior to such employee's period of
employment by Buyer.
All such offers of employment will be made (i) in accordance
with all applicable laws and regulations, and (ii) for employees
represented by Utility Workers' Union of America AFL-CIO and its Local
Union 1-2 ("Local 1-2"), in accordance with the Local 1-2 Collective
Bargaining Agreement (as defined in Schedule 9.01(b)). Each Affected
Employee who becomes employed by Buyer pursuant to this Section 9.01(a)
shall be referred to herein as a "Continued Employee".
Buyer may commence discussions concerning offers for
employment beginning on the Closing Date to Affected Employees at any time
following the date of this Agreement.
(b) Schedule 9.01(b) sets forth the collective bargaining
agreements, and amendments thereto, to which Seller is a party in
connection with the Auctioned Assets (the "Collective Bargaining
Agreement"). Affected Employees who are included in the collective
bargaining unit covered by the Collective Bargaining Agreement are
referred to herein as "Affected Union Employees". Each Continued Employee
who is an Affected Union Employee shall be referred to herein as a
"Continued Union Employee". On the Closing Date, Buyer will assume the
terms and conditions of the Collective Bargaining Agreement, except as set
forth in Section 9.02(b) below, as it relates to Affected Union Employees
until the expiration date of the Collective Bargaining Agreement. Buyer
will comply with its legal obligations with respect to collective
bargaining under Federal labor law for the employees at the Auctioned
Assets in the job titles or related work responsibilities of the Affected
Union Employees, and Buyer will comply with all applicable obligations
thereunder as the new owner of the Auctioned Assets. Buyer shall recognize
Local 1-2 as the exclusive collective bargaining representative of the
employees at the Auctioned Assets in the job titles or related work
responsibilities of the Affected Union Employees and Buyer agrees that,
should any other business entity (regardless of its relationship to Buyer)
acquire all or a portion of the Auctioned Assets from Buyer prior to the
expiration date of the Collective Bargaining Agreement, Buyer will require
such business entity to (i) offer employment to Affected Union Employees
employed by Buyer at the Auctioned Assets immediately prior to the change
in ownership, (ii) recognize Local 1-2 as the exclusive collective
bargaining representative of Buyer's employees at the Auctioned Assets in
the job titles and work responsibilities of the Affected Union Employees,
and (iii) assume the terms and conditions of the Collective Bargaining
Agreement as it relates to Affected Union Employees from the date of such
acquisition through the expiration date of the Collective Bargaining
Agreement.
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service. (a) For not less than three years following the
Closing Date, Buyer shall maintain compensation (including base pay and
bonus compensation) and employee benefits and employee benefit plans and
arrangements for each Continued Employee who is not a Continued Union
Employee (a "Continued Non-Union Employee") which are at least equivalent
to those provided pursuant to the compensation, employee benefits and
employee benefit plans and arrangements in effect on the Closing Date for
the Affected Employees who are not Affected Union Employees. Such total
compensation shall be based upon (x) such employee's existing individual
base pay, (y) such employee's authorized overtime, if applicable, and (z)
the average bonus and benefit component for such employee's salary plan
level, as consistently applied by Seller, apportioned according to such
employee's base pay. No provision of this Agreement shall affect any
Continued Non-Union Employee's status as an employee-at-will.
(b) From the Closing Date until the expiration date of the
Collective Bargaining Agreement, Buyer shall provide to each Continued
Union Employee benefits and employee benefit plans and arrangements which
are equivalent to those provided under such Collective Bargaining
Agreement. Such benefits, plans and arrangements include the following:
(i) hospital, medical, dental, vision care and prescription drug benefits
(including employee contributions to be made on a pre-tax basis), (ii)
health care and dependent care flexible spending accounts; (iii)
employer-provided basic group term life and accidental death and
dismemberment insurance; (iv) employee-paid group universal life and
spousal and dependent child life insurance; (v) sick allowance (short term
disability) and long term disability benefits; (vi) business travel
accident insurance and crime protection insurance; (vii) occupational
accidental death insurance; (viii) adoption benefits and child care and
elder care referral benefits; (ix) tuition aid benefits; (x) vacation and
holidays; (xi) employee stock purchase plan (including employer matching
contributions) and (xii) defined benefit pension and 401(k) plan benefits.
In providing such benefits, Buyer shall have the right, subject to any
applicable laws, to use different providers from those used by Seller and
to establish Buyer's own benefit plans or use Buyer's existing benefit
plans. For purposes hereof, except as provided in Section 9.04(b), Buyer
shall have no obligation to maintain a fund holding or measured by common
stock of Seller's parent under any of Buyer's plans or arrangements,
notwithstanding any such fund maintained by Seller under its plans and
arrangements.
(c) Continued Employees shall be given credit by Buyer for all
service with Seller and its Affiliates under all existing or future
employee benefit and fringe benefit plans, programs and arrangements of
the Buyer ("Buyer Benefit Plans") in which they become participants. The
service credit given by Buyer shall be for purposes of eligibility,
vesting, eligibility for early retirement and early retirement subsidies,
benefit accrual and service-related level of benefits. Buyer shall assume
and honor all vacation, sick and personal days accrued and unused by
Continued Employees through the Closing Date in accordance with Seller's
applicable policies and arrangements.
SECTION 9.03. Pension Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect defined benefit pension plans ("Buyer's
Pension Plans") intended to be (i) qualified pursuant to Section 401(a) of
the Code and (ii) nonqualified, in order to provide for benefits which
would otherwise be payable under the applicable qualified plan but for the
application of Sections 401(a)(17) and 415 of the Code, providing benefits
as of the Closing Date identical in all material respects (except for such
changes as may be required by law) to the benefits provided to them under
Seller's Pension Plans (as defined below), in particular (x) for Continued
Non-Union Employees, such Buyer's Pension Plans to provide benefits
identical in all material respects to those benefits provided under
Seller's Retirement Plan for Management Employees and Seller's
Supplemental Retirement Income Plan, and (y) for Continued Union
Employees, such Buyer's Pension Plans to provide benefits identical in all
material respects to those provided under Seller's Pension and Benefits
Plan (collectively, "Seller's Pension Plans"), in each case, as of the
Closing Date. Buyer acknowledges and agrees that one such material respect
is to count age after termination of employment for purposes of satisfying
requirements for early retirement eligibility and early retirement
subsidies.
(b) Continued Employees participating in Seller's Pension
Plans immediately prior to the Closing Date shall become participants in
Buyer's Pension Plans as of the Closing Date. Without limiting the
generality of Section 9.02(c), Continued Employees shall receive credit
for all compensation and service with Seller (subject to the terms of
Seller's Pension Plans) for purposes of eligibility for participation,
vesting, eligibility for early retirement and early retirement subsidies
and benefit accrual under Buyer's Pension Plans. Seller shall be
responsible for Continued Employees' pension benefits accrued up to the
Closing Date, and Buyer shall be responsible for pension benefits accrued
by such Continued Employees on and after the Closing Date as provided
herein. Buyer may offset against the accrued benefits determined under
Buyer's Pension Plans the accrued benefits determined under Seller's
Pension Plans. For the purpose of this Section 9.03(b), "accrued benefit"
means the amount that would be paid as a life annuity at normal retirement
age irrespective of the date of actual distribution from either Seller's
or Buyer's Pension Plans. Seller shall make pension distributions to
Continued Employees of the vested portion of their accrued benefits in
accordance with the terms of Seller's Pension Plans as in effect from time
to time. As soon as reasonably practicable following the Closing Date,
Seller shall provide Buyer a list showing, as of the Closing Date, the
accrued benefit of each Continued Employee under Seller's Pension Plans.
(c) In the event that any other business entity (regardless of
its relationship to Buyer) acquires all or a portion of the Auctioned
Assets from Buyer at any time prior to the third anniversary of the
Closing Date in the case of Continued Non-Union Employees and prior to the
expiration date of the Collective Bargaining Agreement in the case of
Continued Union Employees, Buyer will require such entity to maintain the
defined benefit plans, provide the benefits and recognize compensation and
service with Seller and Buyer to the same extent as Buyer is required
under Sections 9.03(a) and (b) above.
SECTION 9.04. 401(k) Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect tax-qualified defined contribution plans
that include a qualified cash or deferred arrangement within the meaning
of Section 401(k) of the Code ("Buyer's 401(k) Plans") that will provide
benefits that are identical in all material respects (except for such
changes as may be required by law) to those provided by (i) Seller's
Thrift Savings Plan for Management Employees, in the case of Continued
Non-Union Employees, and (ii) Seller's Retirement Income Savings Plan for
Weekly Employees, in the case of Continued Union Employees (such Seller
plans herein referred to collectively as "Seller's 401(k) Plans"), in each
case, as of the Closing Date. Each Continued Employee participating in
Seller's 401(k) Plans immediately prior to the Closing Date shall become a
participant in Buyer's 401(k) Plans as of the Closing Date. Continued
Employees shall receive credit for all service with Seller for purposes of
eligibility and vesting under Buyer's 401(k) Plans.
(b) At such time after the Closing Date as Seller is
reasonably satisfied that Buyer's 401(k) Plans meet the requirements for
qualification under Section 401(a) of the Code, Seller shall cause to be
transferred to Buyer's 401(k) Plans in a trust-to-trust transfer in common
stock of Seller's parent (as provided in the following sentence) and cash
(or other property reasonably acceptable to Buyer) an amount equal to the
value of the assets held in the accounts of all Continued Employees
(including any outstanding loan balances of Continued Employees in
Seller's 401(k) Plans), subject to any qualified domestic relations
orders. In connection therewith, Buyer shall establish an investment fund
under Buyer's 401(k) Plans to which shall be transferred the shares of
common stock of Seller's parent (or any successor thereto) which, as of
the date of transfer, are credited to the accounts of the Continued
Employees under Seller's 401(k) Plans. After the Closing Date and prior to
any such transfer, Buyer shall cooperate with Seller in the administration
of distributions to and loan repayments by Continued Employees. Prior to
such transfer of assets, Seller shall vest any unvested benefits of
Continued Employees under Seller's 401(k) Plans. Following any such
transfer of assets, Buyer shall assume all obligations and liabilities of
Seller under Seller's 401(k) Plans with respect to such Continued
Employees, and Seller shall have no further liability to Buyer or any
Continued Employee with respect thereto.
SECTION 9.05. Welfare Plans. (a) Continued Employees and their
dependents who are eligible to participate in Seller's current welfare
benefits plans, programs or arrangements shall be eligible to participate
in the welfare benefits plans, programs or arrangements maintained or
established by Buyer ("Buyer's Welfare Plans"), effective as of the
Closing Date. Effective as of the Closing Date, any and all limitations as
to pre-existing conditions and actively-at-work exclusions and waiting
periods under Buyer's Welfare Plans shall be waived by Buyer with respect
to Continued Employees and their eligible dependents to the extent
satisfied under Seller's applicable Welfare Plans. In addition, effective
as of the Closing Date, Buyer shall cause Buyer's Welfare Plans to
recognize any out-of-pocket health care expenses incurred by Continued
Employees and their eligible dependents prior to the Closing Date and
during the calendar year in which such Closing Date occurs for purposes of
determining their deductibles and out-of-pocket maximums under Buyer's
Welfare Plans. Seller shall retain responsibility under Seller's welfare
plans for claims relating to expenses incurred by Continued Employees and
their eligible dependents prior to the Closing Date. Buyer shall have
responsibility under Buyer's Welfare Plans for claims relating to expenses
incurred by Continued Employees and their eligible dependents on and after
the Closing Date.
(b) Effective as of the Closing Date, Buyer shall have in
effect health care and dependent care reimbursement account plans for the
benefit of each Continued Employee, the terms of which shall (i) be
identical in all material respects to the Flexible Reimbursement Account
Plans for Management and Weekly Employees of Seller ("Seller's
Reimbursement Account Plans") as in effect on the Closing Date and (ii)
give full effect to, and continue in effect, salary reduction elections
made under Seller's Reimbursement Account Plans. Prior to the Closing
Date, Seller shall cause the accounts of Continued Employees under
Seller's Reimbursement Account Plans to be segregated into separate health
care and dependent care reimbursement accounts (the "Segregated
Reimbursement Accounts"), and such Segregated Reimbursement Accounts shall
be transferred to and assumed by Buyer as of the Closing Date.
(c) Buyer shall, subject to any applicable laws, provide a
retiree health program identical in all material respects to Seller's
retiree health program as in effect on the Closing Date to each Continued
Employee who terminates his employment with Buyer within three years after
the Closing Date, in the case of a Continued Non-Union Employee, and on or
prior to the expiration date of the Collective Bargaining Agreement, in
the case of a Continued Union Employee, and, in each case, who at the time
of such termination of employment satisfies the eligibility requirements
for such retiree health program provided by Buyer; provided, however, that
Seller shall remain liable, pursuant to Seller's retiree health program,
for all Continued Employees who satisfy, as of the Closing Date, the
eligibility requirements then in effect for Seller's retiree health
program.
SECTION 9.06. Short- and Long-Term Disability. Effective as of
the Closing Date, Buyer shall have in effect short- and long-term
disability plans for the benefit of Continued Employees, the cost of which
to Continued Employees shall be the same as under, and the terms of which
are identical in all material respects to, Seller's applicable plans as in
effect as of the Closing Date. Any and all waiting periods and
pre-existing condition clauses shall be waived under Buyer's short-and
long-term disability plans with respect to Continued Employees.
SECTION 9.07. Life Insurance and Accidental Death and
Dismemberment Insurance. Effective as of the Closing Date, Buyer shall
have in effect group term life insurance, group universal life insurance,
accidental death and dismemberment insurance, occupational accidental
death insurance, business travel accident insurance and crime protection
insurance plans for the benefit of Continued Employees, the cost of which
to Continued Employees shall be the same as under, and terms of which are
identical in all material respects to, Seller's applicable plans that
provide such benefits to Continued Employees immediately prior to the
Closing Date.
SECTION 9.08. Severance. (a) Effective as of the Closing Date,
Buyer shall have in effect a severance plan covering Continued Non-Union
Employees that contains terms identical in all material respects to those
under Seller's Severance Pay Plan for Management Employees as of the
Closing Date.
(b) Buyer shall, subject to any applicable laws, provide a
special separation allowance for any Continued Employee whose employment
with Buyer is terminated involuntarily by Buyer other than for cause on or
prior to, in the case of Continued Non-Union Employees, three years after
the Closing Date and, in the case of Continued Union Employees, the
expiration date of the Collective Bargaining Agreement. Such allowance
shall be not less than the sum of four weeks pay plus one week pay for
each completed year of service (as determined by aggregating each affected
individual's respective service with Seller and Buyer) and shall be
payable by Buyer in a lump sum within 30 days after termination of
employment. In addition, in the case of each Continued Non-Union Employee
described in the first sentence of this Section 9.08(b), Buyer shall pay
the Continued Non-Union Employee a lump sum equal to the excess of (i) the
actuarial equivalent of the Employee's "potential benefit" under the
applicable Buyer's Pension Plans, which such Employee would receive if
such Employee's employment continued until three years after the Closing
Date and such Employee's base and incentive compensation for such deemed
additional period was the same as in effect on the date of such Employee's
termination of employment with Buyer, over (ii) the actuarial equivalent
of such Employee's "actual benefit" under the applicable Buyer's Pension
Plans, as of the date of such Employee's termination of employment from
Buyer. For the purpose of the foregoing sentence, (i) the term "potential
benefit" shall refer to the monthly pension that would have been payable
to the applicable Employee commencing on the first day of the month
following the latest of (A) the last day of the deemed additional period,
(B) Employee's attainment of age 55, or (C) the earlier of (l) the first
date as of which the sum of such Employee's age and years of service, as
taken into account in determining the actuarial reduction for commencement
prior to normal retirement age that is to be applied to his accrued
benefit under the applicable Buyer's Pension Plans, equals 75 or (2) such
Employee's attainment of age 65, (ii) the term "actual benefit" shall
refer to the monthly pension payable to such Employee under the applicable
Buyer's Pension Plans commencing as of the date determined in accordance
with clause (i) of this sentence, and (iii) the actuarial equivalent of
the "potential benefit" and the "actual benefit" shall each be a lump sum
payable as of the date of such Employee's termination of employment from
Buyer, determined on the basis of the interest rate used to determine the
amount of lump sum distributions and, to the extent applicable, other
actuarial assumptions then in effect under the applicable Buyer's Pension
Plans. Buyer shall also provide outplacement services to such terminated
Continued Non-Union Employee appropriate to the level of the Employee's
position and job responsibilities. Buyer shall also continue to provide or
cause to be provided to any such terminated Continued Employee health
insurance coverage and group term and universal life insurance coverage at
the same rates as for active Continued Employees for a period equal to the
number of weeks of separation allowance which any such terminated
Continued Employee is entitled to from Buyer. Buyer shall have the right
to require a release in form reasonably satisfactory to Buyer as a
condition for eligibility to receive such separation allowance. The
allowance shall not apply to Continued Employees whose employment is
terminated due to death or expiration of sick allowance or other
authorized leave of absence or who terminate employment voluntarily. If at
any time during the three-year period following the Closing Date, Buyer
shall assign a Continued Non-Union Employee to work on a regular basis at
a location that is more than fifty miles from the location to which such
Employee is assigned as of the Closing Date, Buyer shall offer such
Employee the option to terminate employment and receive the severance
benefits set forth in this Section 9.08(b) in lieu of the reassignment.
SECTION 9.09. Workers Compensation. Effective as of the
Closing Date, Buyer shall have in effect a workers compensation program
for Continued Employees that shall provide coverage identical in all
material respects to Seller's workers compensation program as of the
Closing Date.
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification. (a) Seller will indemnify and
hold harmless Buyer and its Affiliates and their respective directors,
officers, employees and agents (collectively with Buyer and its
Affiliates, the "Buyer Indemnitees") from and against any and all claims,
demands or suits by any person, and all losses, liabilities, damages,
obligations, payments, costs and expenses (including reasonable legal fees
and expenses and including costs and expenses incurred in connection with
investigations and settlement proceedings) (each, an "Indemnifiable
Loss"), as incurred, asserted against or suffered by any Buyer Indemnitee
relating to, resulting from or arising out of:
(i) any breach by Seller of any covenant or agreement of
Seller contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 5.01, 5.02, 5.03 and 5.17;
(ii) the Retained Liabilities;
(iii) noncompliance by Seller with any bulk sales or transfer
laws as provided in Section 7.07; or
(iv) any breach by Seller of any Ancillary Agreement.
(b) Buyer will indemnify and hold harmless Seller and its
Affiliates and their respective directors, officers, trustees, employees
and agents (collectively with Seller and its Affiliates, the "Seller
Indemnitees") from and against any and all Indemnifiable Losses, as
incurred, asserted against or suffered by any Seller Indemnitee relating
to, resulting from or arising out of:
(i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 6.01, 6.02, 6.03 and 6.05;
(ii) the Assumed Obligations;
(iii) any obligation resulting from any action or inaction of
Buyer (A) under any Contract or warranty pursuant to Section 2.04(b)
(whether acting as principal or representative and agent for Seller
pursuant to Section 2.04(b) or otherwise) or (B) pursuant to any
Transferable Permit in respect of which Seller remains the holder of
record after the Closing Date pursuant to Section 7.03(c); or
(iv) any breach by Buyer of any Ancillary Agreement.
(c) The amount of any Indemnifiable Loss shall be reduced to
the extent that the relevant Buyer Indemnitee or Seller Indemnitee (each,
an "Indemnitee") receives any insurance proceeds with respect to an
Indemnifiable Loss and shall be (i) increased to take account of any Tax
Cost incurred by the Indemnitee arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any Tax Benefit realized by the Indemnitee arising from the
incurrence or payment of any such Indemnifiable Loss. If the amount of any
Indemnifiable Loss, at any time subsequent to the making of an indemnity
payment in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any
claim, recovery, settlement or payment by or against any other person, the
amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith, will promptly be repaid by the Indemnitee to the
Party required to provide indemnification hereunder (the "Indemnifying
Party") with respect to such Indemnifiable Loss.
(d) To the fullest extent permitted by law, neither Party nor
any Buyer Indemnitee or any Seller Indemnitee shall be liable to the other
Party or any other Buyer Indemnitee or Seller Indemnitee for any claims,
demands or suits for consequential, incidental, special, exemplary,
punitive, indirect or multiple damages connected with or resulting from
any breach after the Closing Date of this Agreement or the Ancillary
Agreements (other than breach of this Article X), or any actions
undertaken in connection with or related hereto or thereto, including any
such damages which are based upon breach of contract, tort (including
negligence and misrepresentation), breach of warranty, strict liability,
statute, operation of law or any other theory of recovery.
(e) The rights and remedies of Seller and Buyer under this
Article X are, solely as between Seller and Buyer, exclusive and in lieu
of any and all other rights and remedies which Seller and Buyer may have
under this Agreement, the Ancillary Agreements (except as expressly
provided in the Continuing Site Agreement or the Declaration of Easements
Agreement) or otherwise for monetary relief with respect to (i) any breach
of, or failure to perform, any covenant or agreement set forth in this
Agreement or the Ancillary Agreements by Seller or Buyer, (ii) any breach
of any representation or warranty by Seller or Buyer, (iii) the Assumed
Obligations or the Retained Liabilities, (iv) noncompliance by Seller with
any bulk sales or transfer laws and (v) any obligation in respect of
Section 2.04 or Section 7.03. Each Party agrees that the previous sentence
shall not limit or otherwise affect any non-monetary right or remedy which
either Party may have under this Agreement or the Ancillary Agreements or
otherwise limit or affect either Party's right to seek equitable relief,
including the remedy of specific performance.
(f) Buyer and Seller agree that, notwithstanding Section
10.01(e), each Party shall retain, subject to the other provisions of this
Agreement, including Sections 10.01(d) and 12.03, all remedies at law or
in equity with respect to (i) fraud or wilful or intentional breaches of
this Agreement or the Ancillary Agreements and (ii) gross negligence or
wilful or wanton acts or omissions to act of any Indemnitee (or any
contractor or subcontractor thereof) on or after the Closing Date.
SECTION 10.02. Third Party Claims Procedures. (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 or an Affiliate of a Party (a "Third Party
Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
20 Business Days after the Indemnitee's receipt of notice of such Third
Party Claim; provided, however, that a failure to give timely notice will
not affect the rights or obligations of any Indemnitee except if, and only
to the extent that, as a result of such failure, the Indemnifying Party
was actually prejudiced. Such notice shall describe the nature of the
Third Party Claim in reasonable detail and will indicate the estimated
amount, if practicable, of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected
by the Indemnifying Party; provided, however, that such counsel is not
reasonably objected to by the Indemnitee; and provided further that the
Indemnifying Party first admits in writing its liability to the Indemnitee
with respect to all material elements of such claim. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party will not be liable to the Indemnitee for any legal
expenses subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party elects to assume the defense of
a Third Party Claim, the Indemnitee will (i) cooperate in all reasonable
respects with the Indemnifying Party in connection with such defense, (ii)
not admit any liability with respect to, or settle, compromise or
discharge, any Third Party Claim without the Indemnifying Party's prior
written consent and (iii) agree to any settlement, compromise or discharge
of a Third Party Claim which the Indemnifying Party may recommend and
which by its terms obligates the Indemnifying Party to pay the full amount
of the liability in connection with such Third Party Claim and releases
the Indemnitee completely in connection with such Third Party Claim. In
the event the Indemnifying Party shall assume the defense of any Third
Party Claim, the Indemnitee shall be entitled to participate in (but not
control) such defense with its own counsel at its own expense. If the
Indemnifying Party does not assume the defense of any such Third Party
Claim, the Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after giving
notice to the Indemnifying Party of the terms of the proposed settlement
and the Indemnifying Party will promptly reimburse the Indemnitee upon
written request. Anything contained in this Agreement to the contrary
notwithstanding, no Indemnifying Party shall be entitled to assume the
defense of any Third Party Claim if such Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than monetary
damages against the Indemnitee which, if successful, would materially
adversely affect the business of the Indemnitee.
ARTICLE XI
Termination
SECTION 11.01. Termination. (a) This Agreement may be
terminated at any time prior to the Closing by an instrument in writing
signed on behalf of each of the Parties.
(b) This Agreement may be terminated by Seller or Buyer if the
Closing shall not have occurred on or before the date that is 12 months
from the date of this Agreement (the "Termination Date"); provided,
however, that the right to terminate this Agreement pursuant to this
Section ll.01(b) shall not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by either Seller or Buyer
if any Restraint having any of the effects set forth in Section 8.01(b)
shall be in effect and shall have become final and nonappealable;
provided, however, that the Party seeking to terminate this Agreement
pursuant to this Section 11.01(c) shall have used its reasonable best
efforts to prevent the entry of and to remove such Restraint.
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses. Except to the extent specifically
provided herein, 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, whether or not the transactions
contemplated hereby are consummated.
SECTION 12.02. Amendment and Modification; Extension; Waiver.
This Agreement may be amended, modified or supplemented only by an
instrument in writing signed on behalf of each of the Parties. Either
Party may (i) extend the time for the performance of any of the
obligations or other acts of the other Party, (ii) waive any inaccuracies
in the representations and warranties of the other Party contained in this
Agreement or (iii) waive compliance by the other Party with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a Party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such Party. The
failure of a Party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 12.03. No Survival of Representations or Warranties.
Each and every representation and warranty contained in this Agreement,
other than the representations and warranties contained in Sections 5.01,
5.02, 5.03 and 5.17 and 6.01, 6.02, 6.03 and 6.05 (which representations
and warranties shall survive for 18 months from the Closing Date), shall
expire with, and be terminated and extinguished by the Closing and no such
representation or warranty shall survive the Closing Date. From and after
the Closing Date, none of Seller, Buyer or any officer, director, trustee
or Affiliate of any of them shall have any liability whatsoever with
respect to any such representation or warranty. The expiration of the
representations and warranties contained in Sections 5.01, 5.02, 5.03 and
5.17 and 6.01, 6.02, 6.03 and 6.05 shall not affect the Parties'
obligations under Article X if the Indemnitee provided the Indemnifying
Party with proper notice of the claim or event for which indemnification
is sought prior to such expiration.
SECTION 12.04. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (as of the time of
delivery or, in the case of a telecopied communication, of confirmation)
if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the Parties at the
following addresses (or at such other address for a Party as shall be
specified by like notice):
if to Seller, to:
Consolidated Edison Company of New
York, Inc.
4 Irving Place
New York, NY 10003
Telecopy No.: (212) 677-0601
Attention: General Counsel
with a copy on or prior to the Closing Date to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: George W. Bilicic, Jr., Esq.
if to Buyer, to:
MarketSpan Corporation d/b/a
KeySpan Energy
One MetroTech Center
Brooklyn, New York 11201-3850
Telecopy No.: (718) 696-7139
Attention: General Counsel
with a copy on or prior to the Closing Date to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street NW
Washington, D.C. 20037-1526
Telecopy No.: (202) 887-0689
Attention: Kenneth Simon, Esq.
SECTION 12.05. Assignment; No Third Party Beneficiaries. (a)
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party,
including by operation of law, without the prior written consent of the
other Party, except (i) in the case of Seller (A) to an Affiliate of
Seller or a third party in connection with the transfer of the
Transmission System to such Affiliate or third party or (B) to a lending
institution or trustee in connection with a pledge or granting of a
security interest in all or any part of the Transmission System and this
Agreement and (ii) in the case of Buyer (A) prior to the Closing, to a
wholly-owned subsidiary so long as Buyer shall have duly executed and
delivered the Guarantee Agreement and such assignment is for all of
Buyer's rights, interests and obligations hereunder, (B) to an Affiliate
of Buyer in connection with the transfer of the Auctioned Assets to such
Affiliate and (C) to a lending institution or trustee in connection with a
pledge or granting of a security interest in the Auctioned Assets and this
Agreement; provided, however, that no assignment or transfer of rights or
obligations by either Party shall relieve it from the full liabilities and
the full financial responsibility, as provided for under this Agreement,
unless and until the transferee or assignee shall agree in writing to
assume such obligations and duties and the other Party has consented in
writing to such assumption; provided, further, that such consent shall not
be required with respect to any assignment by Buyer pursuant to subclause
(ii)(A) above.
(b) Notwithstanding any provision in this Agreement to the
contrary, prior to the Closing Buyer may, with the prior written consent
of Seller, assign its rights, interests or obligations hereunder to a
special purpose entity for financing purposes in connection with the
acquisition of the Auctioned Assets; provided, however, that no such
assignment of rights, interests or obligations by Buyer shall relieve it
from the full liabilities and obligations hereunder unless Buyer shall
deliver a guarantee agreement in form and substance satisfactory to Seller
in respect of such liabilities and obligations.
(c) Nothing in this Agreement is intended to confer upon any
other person except the Parties any rights or remedies hereunder or shall
create any third party beneficiary rights in any person, including, with
respect to continued or resumed employment, any employee or former
employee of Seller (including any beneficiary or dependent thereof). 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.
SECTION 12.06. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable
principles of conflicts of law).
SECTION 12.07. 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.
SECTION 12.08. Interpretation. When a reference is made in
this Agreement to an Article, Section, Schedule or Exhibit, such reference
shall be to an Article or Section of, or Schedule or Exhibit to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation" or equivalent words. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in the Ancillary Agreements and any certificate or
other document made or delivered pursuant hereto or thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and
to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument, statute, regulation, rule or order
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument, statute, regulation,
rule or order as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent
and (in the case of statutes, regulations, rules or orders) by succession
of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
SECTION 12.09. Jurisdiction and Enforcement. (a) Each of the
Parties irrevocably submits to the exclusive jurisdiction of (i) the
Supreme Court of the State of New York, New York County and (ii) the
United States District Court for the Southern District of New York, for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties
agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York
or, if such suit, action or proceeding may not be brought in such court
for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County. Each of the Parties further agrees that service of
process, summons, notice or document by hand delivery or U.S. registered
mail at the address specified for such Party in Section 12.04 (or such
other address specified by such Party from time to time pursuant to
Section 12.04) shall be effective service of process for any action, suit
or proceeding brought against such Party in any such court. Each of the
Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Supreme Court of the
State of New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
(b) The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or any Ancillary
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement or any Ancillary Agreement and to enforce specifically the terms
and provisions of this Agreement or any Ancillary Agreement, this being in
addition to any other remedy to which they are entitled at law or in
equity.
SECTION 12.10. Entire Agreement. This Agreement, the
Confidentiality Agreement and the Ancillary Agreements including the
Exhibits, Schedules, documents, certificates and instruments referred to
herein or therein and other contracts, agreements and instruments
contemplated hereby or thereby, embody the entire agreement and
understanding of the Parties 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. This Agreement and the Ancillary
Agreements supersede all prior agreements and understandings between the
Parties with respect to the transactions contemplated by this Agreement
other than the Confidentiality Agreement.
SECTION 12.11. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties
as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 12.12. Conflicts. Except as expressly otherwise
provided herein or therein, in the event of any conflict or inconsistency
between the terms of this Agreement and the terms of any Ancillary
Agreement, the terms of this Agreement shall prevail.
IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of
the date first above written.
CONSOLIDATED EDISON COMPANY OF NEW
YORK, INC.,
by /s/Joan S. Freilich
Name: Joan S. Freilich
Title:Executive Vice President
and CFO
MARKETSPAN CORPORATION doing
business as KEYSPAN ENERGY,
by /s/ Howard A. Kosel
Name: Howard A. Kosel
Title:Vice President
========================================================================
GENERATING PLANT
AND GAS TURBINE
ASSET PURCHASE AND SALE AGREEMENT
FOR
ARTHUR KILL GENERATING PLANTS
LOCATED AT STATEN ISLAND, RICHMOND COUNTY, NEW YORK
AND
ASTORIA GAS TURBINES
LOCATED AT ASTORIA, QUEENS COUNTY, NEW YORK
By and Between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
and
NRG ENERGY, INC.
Dated as of January 27, 1999
========================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions....................................... 1
SECTION 1.02. Accounting Terms.................................. 14
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.01. Purchase and Sale................................. 15
SECTION 2.02. Auctioned Assets and Retained Assets.............. 15
SECTION 2.03. Assumed Obligations and Retained
Liabilities.................................. 19
SECTION 2.04. Third Party Consents.............................. 24
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price ................................. 24
SECTION 3.02. Post-Closing Adjustment........................... 24
SECTION 3.03. Allocation of Purchase Price...................... 26
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing......................... 27
SECTION 4.02. Payment of Purchase Price and
Estimated Adjustment Amount.................. 28
ARTICLE V
Representations and Warranties of Seller
SECTION 5.01. Organization; Qualification....................... 28
SECTION 5.02. Authority Relative to This Agreement.............. 28
SECTION 5.03. Consents and Approvals; No Violation.............. 28
SECTION 5.04. Year 2000......................................... 30
SECTION 5.05. Personal Property................................. 30
SECTION 5.06. Real Estate....................................... 30
SECTION 5.07. Leases .......................................... 30
SECTION 5.08. Certain Contracts and Arrangements................ 30
SECTION 5.09. Legal Proceedings................................. 31
SECTION 5.10. Permits; Compliance with Law...................... 31
SECTION 5.11. Environmental Matters............................. 32
SECTION 5.12. Labor Matters..................................... 33
SECTION 5.13. ERISA; Benefit Plans.............................. 33
SECTION 5.14. Taxes ......................................... 34
SECTION 5.15. Independent Engineering Assessments;
Condition of Auctioned Assets................ 35
SECTION 5.16. Undisclosed Liabilities........................... 35
SECTION 5.17. Brokers ......................................... 36
SECTION 5.18. Insurance......................................... 36
ARTICLE VI
Representations and Warranties of Buyer
SECTION 6.01. Organization...................................... 36
SECTION 6.02. Authority Relative to This Agreement.............. 37
SECTION 6.03. Consents and Approvals; No Violation.............. 37
SECTION 6.04. Brokers ........................................ 39
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the
Auctioned Assets............................ 39
SECTION 7.02. Access to Information............................ 41
SECTION 7.03. Consents and Approvals; Transferable
Permits..................................... 43
SECTION 7.04. Further Assurances............................... 44
SECTION 7.05. Public Statements................................ 46
SECTION 7.06. Tax Matters...................................... 46
SECTION 7.07. Bulk Sales or Transfer Laws...................... 47
SECTION 7.08. Storage ....................................... 47
SECTION 7.09. Information Resources............................ 48
SECTION 7.10. Witness Services................................. 48
SECTION 7.11. Consent Orders................................... 49
SECTION 7.12. Nitrogen Oxide Allowances........................ 49
SECTION 7.13. Trade Names...................................... 49
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each
Party's Obligation To Effect the
Purchase and Sale.......................... 49
SECTION 8.02. Conditions Precedent to Obligation of
Buyer To Effect the Purchase
and Sale.................................... 50
SECTION 8.03. Conditions Precedent to Obligation
of Seller To Effect the Purchase
and Sale.................................... 52
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters................................. 54
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service..................... 55
SECTION 9.03. Pension Plan..................................... 56
SECTION 9.04. 401(k) Plan...................................... 58
SECTION 9.05. Welfare Plans.................................... 59
SECTION 9.06. Short- and Long-Term Disability.................. 60
SECTION 9.07. Life Insurance and Accidental Death
and Dismemberment Insurance................. 60
SECTION 9.08. Severance........................................ 60
SECTION 9.09. Workers Compensation............................. 62
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification................................. 62
SECTION 10.02. Third Party Claims Procedures................... 65
ARTICLE XI
Termination
SECTION 11.01. Termination..................................... 66
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses......................................... 67
SECTION 12.02. Amendment and Modification; Extension;
Waiver ................................... 67
SECTION 12.03. No Survival of Representations or
Warranties................................... 67
SECTION 12.04. Notices.......................................... 67
SECTION 12.05. Assignment; No Third Party
Beneficiaries................................ 68
SECTION 12.06. Governing Law.................................... 69
SECTION 12.07. Counterparts..................................... 69
SECTION 12.08. Interpretation................................... 69
SECTION 12.09. Jurisdiction and Enforcement..................... 70
SECTION 12.10. Entire Agreement................................. 71
SECTION 12.11. Severability..................................... 71
SECTION 12.12. Conflicts........................................ 72
SCHEDULES AND EXHIBITS
Schedule 2.02(a)(ii) Spare Parts
Schedule 2.02(a)(iii)(A) Buyer Personal Property Located on Buyer
Real Estate
Schedule 2.02(a)(iii)(B) Buyer Personal Property Located on Seller
Real Estate
Schedule 2.02(a)(iv) Assigned Contracts
Schedule 2.02(a)(v) Transferable Permits
Schedule 2.02(a)(vi) SO2 Allowances
Schedule 2.02(b)(ii)(A) Seller Personal Property Located on Buyer
Real Estate
Schedule 2.02(b)(ii)(C) Communications Equipment
Schedule 2.03(a)(iv) Seller Consent Orders
Schedule 2.03(b)(iii)(C) Retained Environmental Liabilities
Schedule 5.03(a) Contracts Requiring Third Party Consents
Schedule 5.08(a) Material Contracts
Schedule 5.09 Legal Proceedings
Schedule 5.10(a)(i) Exceptions Under Permits
Schedule 5.10(a)(ii) Non-Environmental Violations
Schedule 5.10(b) Nontransferable Permits and Environmental
Permits
Schedule 5.11 Environmental Matters
Schedule 5.13 Benefit Plans
Schedule 5.15(a) Exceptions to Independent Engineering
Assessment
Schedule 5.15(b) Changes to Auctioned Assets
Schedule 5.16 Other Undisclosed Liabilities
Schedule 9.01(a) Job Titles
Schedule 9.01(b) Collective Bargaining Agreements
Exhibit A-1 Form of Arthur Kill Zoning Lot Development
Agreement between Seller and Buyer
Exhibit A-2 Form of Astoria Zoning Lot Development
Agreement between Seller and Astoria Buyer
Exhibit A-3 Form of Astoria Zoning Lot Development
Agreement between Seller and Buyer
Exhibit B-1 Form of Deed of Conveyance for Richmond Cty
Exhibit B-2 Form of Deed of Conveyance for Queens Cty
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Opinion of John D. McMahon, Esq.,
General Counsel of Seller
Exhibit E Form of Opinion of Counsel to Buyer
Exhibit F Summary of Terms and Conditions for License
for A-11 Dock between Seller and Buyer
Exhibit G Form of Transition Capacity Agreement
between Seller and Buyer
Exhibit H Form of Arthur Kill Declaration of
Subdivision Easements
Exhibit I Form of Astoria Declaration of Subdivision
Easements
Exhibit J Form of Guarantee Agreement
Exhibit K Form of Opinion of Counsel to Guarantor
GENERATING PLANT AND GAS TURBINE ASSET
PURCHASE AND SALE AGREEMENT (including the
Schedules hereto, this "Agreement"), dated as of
January 27, 1999, by and between CONSOLIDATED
EDISON COMPANY OF NEW YORK, INC., a New York
corporation ("Seller"), and NRG ENERGY, INC., a
Delaware corporation ("Buyer", collectively with
Seller, the "Parties").
WHEREAS Seller has offered the Auctioned Assets (as defined
herein) for sale at auction pursuant to the Order Authorizing the Process
for Auctioning of Generation Plant issued by the PSC (as defined herein)
and effective as of July 21, 1998; and
WHEREAS Buyer desires to purchase, and Seller desires to sell,
the Auctioned Assets upon the terms and conditions hereinafter set forth.
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
SECTION 1.01. Definitions. (a) As used in this Agreement,
the following terms have the following meanings:
"A-11 License" means the license from Seller to Buyer in
respect of the A-11 dock at Astoria, the material terms of which shall be
substantially as set forth in Exhibit F.
"Accountants" shall have the meaning set forth in Section
3.02(b).
"Adjustment Amount"shall have the meaning set forth in Section
3.02(a).
"Adjustment Date" shall have the meaning set forth in Section
3.02(c).
"Adjustment Statement" shall have the meaning set forth in
Section 3.02(a).
"Affected Employees" shall have the meaning set forth in
Section 9.01(a).
"Affected Union Employees" shall have the meaning set forth in
Section 9.01(b).
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
"Agreement" shall have the meaning set forth in the Preamble.
"Allocation" shall have the meaning set forth in Section 3.03.
"Ancillary Agreements" means the Continuing Site Agreements,
the Declaration of Easements Agreements, the Declarations of Subdivision
Easements, the Zoning Lot Development Agreements, the Transition Capacity
Agreement, the deeds contemplated by Section 8.02(e)(i) and any other
agreement to which Buyer and Seller are party and which is expressly
identified by its terms as an Ancillary Agreement hereunder.
"Applicable Law" shall have the meaning set forth in Section
3.03.
"Arthur Kill Continuing Site Agreement" means the Arthur Kill
Continuing Site Agreement dated as of even date herewith between Seller
and Buyer.
"Arthur Kill Declaration of Easements Agreement" means the
Arthur Kill Declaration of Easements Agreement dated as of even date
herewith between Seller and Buyer.
"Arthur Kill Declaration of Subdivision Easements" means the
Arthur Kill Declaration of Subdivision Easements to be made by Seller
substantially in the form of Exhibit H, except for changes required by any
Governmental Authority to the extent that no such change materially and
adversely impairs the continued use and operation of the Auctioned Assets
as currently conducted.
"Arthur Kill Zoning Lot Development Agreement" means the
Arthur Kill Zoning Lot Development Agreement between Seller and Buyer in
the form of Exhibit A-1.
"Assumed Consent Order Obligations" shall have the meaning set
forth in Section 2.03(a)(iv).
"Assumed Obligations" shall have the meaning set forth in
Section 2.03(a).
"Astoria Acquiror" means the person referred to as "Buyer"
under the Generating Plant and Gas Turbine Asset Purchase and Sale
Agreement for Astoria Generating Plants, Gowanus Gas Turbines and Narrows
Gas Turbines between Seller and such person.
"Astoria Declaration of Easements" means the Astoria
Declaration of Easements by Seller dated as of even date herewith, as may
be modified in accordance with changes requested by the Astoria Acquiror
to the extent that no such change materially and adversely impairs the
continued use and operation of the Auctioned Assets as currently
conducted.
"Astoria Declaration of Subdivision Easements" means the
Astoria Declaration of Subdivision Easements to be made by Seller
substantially in the form of Exhibit I, except for changes required by any
Governmental Authority or requested by the Astoria Acquiror to the extent
that no such change materially and adversely impairs the continued use and
operation of the Auctioned Assets as currently conducted.
"Astoria Gas Turbine Continuing Site Agreement" means the
Astoria Gas Turbine Continuing Site Agreement dated as of even date
herewith between Seller and Buyer.
"Astoria Zoning Lot Development Agreement" means (a) the
Astoria Zoning Lot Development Agreement between Seller and Astoria
Acquiror, in the form of Exhibit A-2, if executed and delivered prior to
the Closing Date or (b) the Astoria Zoning Lot Development Agreement
between Seller and Buyer, in the form of Exhibit A-3.
"Auctioned Assets" shall have the meaning set forth in Section
2.02(a).
"Benefit Plans" shall have the meaning set forth in Section
5.13.
"Bidder Confidentiality Agreements" shall have the meaning set
forth in Section 7.02(b).
"Business Day" means any day other than Saturday, Sunday and
any day which is a legal holiday or a day on which banking institutions in
New York are authorized or required by law or other action of a
Governmental Authority to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Assets" shall have the meaning set forth in Section
2.03(a)(x).
"Buyer Benefit Plans" shall have the meaning set forth in
Section 9.02(c).
"Buyer Facilities" shall mean the "Buyer Facilities" under the
Arthur Kill Declaration of Easements Agreement, together with the "Parcel
C Facilities" under the Astoria Declaration of Easements.
"Buyer Indemnitees" shall have the meaning set forth in
Section 10.01(a).
"Buyer Material Adverse Effect" shall have the meaning set
Section forth in Section 6.03(a).
"Buyer Real Estate" shall have the meaning set forth in
2.02(a)(i).
"Buyer Required Regulatory Approvals" shall have the meaning
set forth in Section 6.03(b).
"Buyer's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Buyer's Pension Plans" shall have the meaning set forth in
Section 9.03(a).
"Buyer's Welfare Plans" shall have the meaning set forth in
Section 9.05(a).
"Closing" shall have the meaning set forth in Section 4.01.
"Closing Date"shall have the meaning setforth in Section 4.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreements" shall have the meaning set
forth in Section 9.01(b).
"Communications Equipment" means the equipment, systems,
switches and lines used in connection with voice, data and other
communications activities.
"Confidentiality Agreement" means the Confidentiality
Agreement dated August 19, 1998 between Seller and Buyer.
"Continued Employee" shall have the meaning set forth in
Section 9.01(a).
"Continued Non-Union Employee" shall have the meaning set
forth in Section 9.02(a).
"Continued Union Employee" shall have the meaning set forth in
Section 9.01(b).
"Continuing Site Agreements" means the Arthur Kill Continuing
Site Agreement and the Astoria Gas Turbine Continuing Site Agreement.
"Contracts" shall have the meaning set forth in Section
2.02(a)(iv).
"Conveyance Plans" shall have the meaning set forth in Section
2.02(a)(i).
"Declaration of Easements Agreements" means the Arthur Kill
Declaration of Easements Agreement and the Astoria Declaration of
Easements.
"Declarations of Subdivision Easements" means the Arthur Kill
Declaration of Subdivision Easements and the Astoria Declaration of
Subdivision Easements.
"Emission Reduction Credits" means credits, in units that are
established by the environmental regulatory agency with jurisdiction over
the source or facility that has obtained the credits, resulting from a
reduction in the emissions of air pollutants from an emitting source or
facility (including, and to the extent allowable under applicable law,
reductions from retirements, control of emissions beyond that required by
applicable law and fuel switching), that: (i) have been certified by
NYSDEC as complying with the law and regulations of the State of New York
governing the establishment of such credits (including that such emissions
reductions are real, enforceable, permanent and quantifiable); or (ii)
have been certified by any other applicable regulatory authority as
complying with the law and regulations governing the establishment of such
credits (including that such emissions reductions are real, enforceable,
permanent and quantifiable). Emission Reduction Credits include certified
air emissions reductions, as described above, regardless of whether the
regulatory agency certifying such reductions designates such certified air
emissions reductions by a name other than "emissions reduction credits".
"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, exceptions, conservation easements, rights-of-way, deed
restrictions, encumbrances and charges of any kind.
"Environmental Laws" means all former, current and future
Federal, state, local and foreign laws (including common law), treaties,
regulations, rules, ordinances, codes, decrees, judgments, directives or
orders (including consent orders) and Environmental Permits, in each case,
relating to pollution or protection of the environment or natural
resources, including laws relating to Releases or threatened Releases, or
otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, arrangement for disposal,
transport, recycling or handling, of Hazardous Substances.
"Environmental Liability" means all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders, fines,
penalties, fees, expenses and costs, including: (i) remediation costs,
engineering costs, environmental consultant fees, laboratory fees,
permitting fees, investigation costs and defense costs and reasonable
attorneys' fees and expenses; (ii) any claims, demands and causes of
action relating to or resulting from any personal injury (including
wrongful death), property damage (real or personal) or natural resource
damage; and (iii) any penalties, fines or costs associated with the
failure to comply with any Environmental Law.
"Environmental Permits" means the permits, licenses, consents,
approvals and other governmental authorizations with respect to
Environmental Laws relating primarily to the power generation operations
of the Generating Plants or the Gas Turbines.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section
5.13.
"Estimated Adjustment Amount" shall have the meaning set forth
in Section 4.02.
"FERC" means the Federal Energy Regulatory Commission.
"Federal Power Act" shall have the meaning set forth in
Section 5.03(b).
"Filed Seller SEC Documents" means the reports, schedules,
forms, statements and other documents filed by Seller with the Securities
and Exchange Commission since January 1, 1997, and publicly available
prior to the date of this Agreement.
"Final Allocation" shall have the meaning set forth in Section
3.03.
"GAAP" shall have the meaning set forth in Section 1.02.
"Gas Turbines" means the gas turbine units comprised of the
Arthur Kill GT1, Astoria GT2 through GT5 and GT7 through GT13.
"Generating Facilities" means the Generating Plants, the Gas
Turbines and any additional generating plants, gas turbines or other
generating facilities constructed by Buyer after the Closing Date at the
site of any Auctioned Assets.
"Generating Plants" means the two steam turbine generating
units designated as Arthur Kill units 2 and 3.
"Governmental Authority" means any court, administrative or
regulatory agency or commission or other governmental entity or
instrumentality, domestic, foreign or supranational or any department
thereof.
"Guarantee Agreement" means the Guarantee Agreement to be
entered into between Guarantor and Seller substantially in the form of
Exhibit J.
"Guarantor" means NRG Energy, Inc.
"Hazardous Substances" means (i) any petrochemical or
petroleum products, crude oil or any fraction thereof, ash, radioactive
materials, radon gas, asbestos in any form, urea formaldehyde foam
insulation or polychlorinated biphenyls, (ii) any chemicals, materials,
substances or wastes defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning
and regulatory effect contained in any Environmental Law or (iii) any
other chemical, material, substance or waste which is prohibited, limited
or regulated by any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Income Tax" means any Federal, state, local or foreign Tax or
surtax (i) based upon, measured by or calculated with respect to net
income, profits or receipts (including the New York State Gross Receipts
Tax (including the excess dividends tax), the New York City Public
Utilities Excise Tax, any and all municipal gross receipts Taxes, capital
gains Taxes and minimum Taxes) or (ii) based upon, measured by or
calculated with respect to multiple bases (including 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 (i), in
each case, together with any interest, penalties, or additions to such
Tax.
"Indemnifiable Loss" shall have the meaning set forth in
Section 10.01(a).
"Indemnifying Party" shall have the meaning set forth in
Section 10.01(c).
"Indemnitee" shall have the meaning set forth in Section
10.01(c).
"Independent Engineering Assessments" shall have the meaning
set forth in Section 5.15.
"Interconnection Facilities" means those items of switching
equipment, switchyard controls, protective relays and related facilities
of Seller that are used by Seller in connection with the provision of
Interconnection Services.
"Interconnection Services" means the service provided by
Seller to Buyer to interconnect the Generating Facilities to the
Transmission System.
"Inventory Survey" shall have the meaning set forth in Section
3.02(a).
"ISO" means the New York Independent System Operator.
"Local 1-2" shall have the meaning set forth in
Section 9.01(a).
"Local 1-2 Collective Bargaining Agreement" shall have the
meaning set forth in Section 9.01(a).
"Local 3" shall have the meaning set forth in Section 9.01(a).
"Local 3 Collective Bargaining Agreement" shall have the
meaning set forth in Section 9.01(a).
"Material Adverse Effect" means any change, or effect on the
Auctioned Assets, that is materially adverse to the business, operations
or condition (financial or otherwise) of the Auctioned Assets, taken as a
whole, other than (i) any change or effect resulting from changes in the
international, national, regional or local wholesale or retail energy,
capacity or ancillary services electric power markets, (ii) any change or
effect resulting from changes in the international, national, regional or
local markets for fuel, (iii) any change or effect resulting from changes
in the national, regional or local electric transmission systems, (iv) any
change or effect resulting from any bid cap, price limitation, market
power mitigation measure, including the Mitigation Measures, or other
regulatory or legislative measure in respect of transmission services or
the wholesale or retail energy, capacity or ancillary services markets
adopted or approved (or failed to be adopted or approved) by FERC, the PSC
or any other Governmental Authority or proposed by any person, (v) any
change or effect resulting from any regulation, rule, procedure or order
adopted or proposed (or failed to be adopted or proposed) by or with
respect to, or related to, the ISO, (vi) any change or effect resulting
from any action or measure taken or adopted, or proposed to be taken or
adopted, by any local, state, regional, national or international
reliability organization and (vii) any materially adverse change in or
effect on the Auctioned Assets which is cured by Seller before the Closing
Date.
"Mitigation Measures" shall have the meaning set forth in
Section 6.03(b).
"MMS" means the Material Management System, which is an
information resources system served by Seller's mainframe computer.
"NYPA" means the Power Authority of the State of New York.
"NYPA Assignment" means the assignment to be entered into by
Buyer, Seller and NYPA pursuant to which certain rights and obligations
under the NYPA Agreements shall be assigned and amended.
"NYPA Agreements" means the Post Closing Agreement dated as of
December 13, 1974, between Seller and NYPA, as amended, and the Astoria
Operating Agreement dated January 5, 1981, between Seller and NYPA, as
amended.
"NYSDEC" means the New York State Department of Environmental
Conservation.
"Off-Site" means any location except (i) the Auctioned Assets
and (ii) any location to or under which Hazardous Substances present or
Released at the Auctioned Assets have migrated.
"Offering Memorandum" means the Offering Memorandum dated
August 1998 describing the Generating Plants and the Gas Turbines, and the
materials delivered with such Offering Memorandum, as such Offering
Memorandum and such materials may have been amended or supplemented.
"Operating Records" shall have the meaning set forth in
Section 2.02(a)(viii).
"Party" shall have the meaning set forth in the Preamble.
"Permits" means the permits, licenses, consents, approvals and
other governmental authorizations (other than with respect to
Environmental Laws) relating primarily to the power generation operations
of the Generating Plants or the Gas Turbines.
"Permitted Exceptions" means (i) all exceptions, restrictions,
easements, charges, rights-of-way and monetary and nonmonetary
encumbrances which are set forth in any Permits or Environmental Permits,
(ii) statutory liens for current taxes or assessments not yet due or
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, (iii) 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 Seller or the validity of which are being contested in good faith
by appropriate proceedings, (iv) zoning, entitlement, conservation
restriction and other land use and environmental regulations by
Governmental Authorities, (v) such title matters set forth in the
Certificate of Title No. NY981785, as amended, and the Certificate of
Title No. NY981605, as amended, in each case issued by the Title Company
and which would not, individually or in the aggregate, reasonably be
expected to materially impair the continued use and operation of the
Auctioned Assets as currently conducted, (vi) all matters disclosed on the
surveys prepared by GEOD Corporation and any other facts that would be
disclosed by an accurate survey and physical inspection of the Buyer Real
Estate, (vii) the VISY Option Agreement, (viii) Encumbrances, easements or
other restrictions created pursuant to or provided for in any Ancillary
Agreement, (ix) restrictions and regulations imposed by the ISO, any
Governmental Authority or any local, state, regional, national or
international reliability council and (x) such other Encumbrances or
imperfections in or failure of title which would not, individually or in
the aggregate, reasonably be expected to materially impair the continued
use and operation of the Auctioned Assets as currently conducted.
"person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or
Governmental Authority.
"PPMIS" means the Power Plant Maintenance Information System,
which is an information resources system served by Seller's mainframe
computer.
"Prorated Items" shall have the meaning set forth in Section
2.03(a)(viii).
"Protective Relaying System" means the system relating to the
Generating Facilities comprised of components collectively used to detect
defective power system elements or other conditions of an abnormal nature,
initiate appropriate control circuit action in response thereto and
isolate the appropriate system elements in order to minimize damage to
equipment and interruption to service.
"PSC" means the New York State Public Service Commission.
"Purchase Price" shall have the meaning set forth in Section
3.01.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) or within any
building, structure, facility or fixture.
"Restraints" shall have the meaning set forth in Section
8.01(b).
"Retained Assets" shall have the meaning set forth in Section
2.02(b).
"Retained Liabilities" shall have the meaning set forth in
Section 2.03(b).
"Revenue Meters" means all meters measuring demand, energy and
reactive components, and all pulse isolation relays, pulse conversion
relays and associated totalizing and remote access pulse recorder
equipment, in each case, required to measure the transfer of energy
between the Parties.
"Segregated Reimbursement Accounts" shall have the meaning set
forth in Section 9.05(b).
"Seller" shall have the meaning set forth in the Preamble.
"Seller Assets" shall have the meaning set forth in Section
2.03(b)(x).
"Seller Consent Orders" shall have the meaning set forth in
Section 2.03(a)(iv).
"Seller Facilities" shall mean the "Seller Facilities" under
the Arthur Kill Declaration of Easements Agreement, together with the
"Parcel A Facilities" under the Astoria Declaration of Easements.
"Seller Indemnitees" shall have the meaning set forth in
Section 10.01(b).
"Seller Real Estate" means all real property and leaseholds or
other interests in real property of Seller (including the premises on
which the Substations are located), other than Buyer Real Estate.
"Seller Required Regulatory Approvals" shall have the meaning
set forth in Section 5.03(b).
"Seller's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Seller's Pension Plans" shall have the meaning set forth in
Section 9.03(a).
"Seller's Reimbursement Account Plans" shall have the meaning
set forth in Section 9.05(b).
"SO2 Allowances" means allowances that have been allocated to
Seller for the Generating Plants or the Gas Turbines by the Administrator
of the United States Environmental Protection Agency under Title IV of the
Clean Air Act authorizing the emission of one ton of sulfur dioxide per
allowance during or after the year 2000.
"Substations" shall have the meaning set forth in Section
2.02(b)(i).
"Tax Benefit" means, with respect to any Indemnifiable Loss
for any person, the positive excess, if any, of the Tax liability of such
person without regard to such Indemnifiable Loss over the Tax liability of
such person taking into account such Indemnifiable Loss, with all other
circumstances remaining unchanged.
"Tax Cost" means, with respect to any indemnity payment for
any person, the positive excess, if any, of the Tax liability of such
person taking such indemnity payment into account over the Tax liability
of such person without regard to such payment, with all other
circumstances remaining unchanged.
"Tax Return" means any return, report, information return or
other document (including any related or supporting information) required
to be supplied to any authority with respect to Taxes.
"Taxes" means all taxes, surtaxes, charges, fees, levies,
penalties or other assessments imposed by any United States Federal, state
or local or foreign taxing authority, including Income Tax, excise,
property, sales, transfer, franchise, special franchise, payroll,
recording, withholding, social security or other taxes, or any liability
for taxes incurred by reason of joining in the filing of any consolidated,
combined or unitary Tax Returns, in each case including any interest,
penalties or additions attributable thereto; provided, however, that
"Taxes" shall not include sewer rents or charges for water.
"Termination Date" shall have the meaning set forth in Section
11.01(b).
"Third Party Claim" shall have the meaning set forth in
Section 10.02(a).
"Title Company" means Commonwealth Land Title Insurance
Company or any other reputable title insurance company licensed to do
business in New York.
"Transferable Permits" shall have the meaning set forth in
Section 2.02(a)(v).
"Transferring Employee Records" shall have the meaning set
forth in Section 2.02(a)(viii).
"Transferring Employees" shall have the meaning set forth in
Section 2.02(a)(viii).
"Transition Capacity Agreement" means the Transition Capacity
Agreement to be entered into between Seller and Buyer substantially in the
form of Exhibit G.
"Transmission System" shall have the meaning set forth in
Section 2.02(b)(i).
"VISY" means VISY Paper (NY), Inc.
"VISY Option Agreement" means the Option Agreement, executed
as of December 28, 1995, between Seller and VISY.
"VISY Option Parcel" means that certain parcel of real
property defined in the VISY Option Agreement as the "Option Parcel".
"Zoning Lot Development Agreements" means the Arthur Kill
Zoning Lot Development Agreement and the Astoria Zoning Lot Development
Agreement.
SECTION 1.02. Accounting Terms. Any accounting terms used in
this Agreement or the Ancillary Agreements shall, unless otherwise
specifically provided, have the meanings customarily given them in
accordance with United States generally accepted accounting principles
("GAAP") and all financial computations hereunder or thereunder shall,
unless otherwise specifically provided, be computed in accordance with
GAAP consistently applied.
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.01. Purchase and Sale. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, at the
Closing, Seller agrees to sell, assign, convey, transfer and deliver to
Buyer, and Buyer agrees to purchase, assume and acquire from Seller all
the Auctioned Assets. In the case of any Auctioned Assets not located at
the Generating Plants or Gas Turbines (including supplies, materials and
spare parts inventory), Buyer agrees that (i) from and after the Closing,
except to the extent specifically otherwise provided in the Ancillary
Agreements, Buyer will bear all risk of casualty or loss with regard to
such Auctioned Assets (regardless of whether they remain on Seller's
property or otherwise in Seller's possession) and (ii) Seller shall store
such Auctioned Assets in accordance with Section 7.08.
SECTION 2.02. Auctioned Assets and Retained Assets. (a)
Auctioned Assets. The term "Auctioned Assets" means all the assets, real
and personal property, goodwill and rights of Seller of whatever kind and
nature, whether tangible or intangible, in each case, primarily relating
to the power generation operations of the Generating Plants or the Gas
Turbines, other than the Retained Assets, including:
(i) all real property and leaseholds or other interests in
real property of Seller relating primarily to the power generation
operations of the Generating Plants or the Gas Turbines described
(A) as Parcel A, Parcel C and Parcel D as shown on the Arthur Kill
Generating Station Conveyance Plan dated January 9, 1999 and (B)
Parcel C as shown on the Astoria Generating Station Conveyance Plan
dated January 9, 1999, in each case, as may hereafter be amended in
immaterial respects (collectively, the "Conveyance Plans"), together
with all buildings, improvements, structures and fixtures thereon,
subject to Permitted Exceptions or Encumbrances otherwise disclosed
to Buyer in this Agreement or the Ancillary Agreements with respect
thereto (the "Buyer Real Estate"); provided, however, that "Buyer
Real Estate" shall not include the VISY Option Parcel if the sale
thereof by Seller to VISY pursuant to the VISY Option Agreement is
consummated prior to the Closing;
(ii) subject to Section 2.04, all inventories of fuels,
supplies, materials and spare parts relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines,
together with and subject to (A) all Permitted Exceptions or
Encumbrances otherwise disclosed to Buyer in this Agreement or the
Ancillary Agreements with respect thereto and (B) all warranties
against manufacturers and vendors relating thereto, including the
spare parts listed on Schedule 2.02(a)(ii), in each case, other than
assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iii) subject to Section 2.04, (A) the machinery, equipment,
facilities, furniture and other personal property (other than
vehicles) relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines, including a stand-alone
local area network, coal handling equipment and other items of
personal property located on Buyer Real Estate or temporarily
removed from Buyer Real Estate for repairs, servicing or maintenance
and listed on Schedule 2.02(a)(iii)(A) and (B) machinery, equipment,
facilities, furniture and other personal property located on Seller
Real Estate or temporarily removed from Seller Real Estate for
repairs, servicing or maintenance and listed on Schedule
2.02(a)(iii)(B), in each case, (1) together with and subject to (x)
all Permitted Exceptions or Encumbrances otherwise disclosed to
Buyer in this Agreement or the Ancillary Agreements with respect
thereto and (y) all warranties against manufacturers or vendors
relating thereto and (2) other than assets that become obsolete or
that are used, consumed, replaced or disposed in the ordinary course
of business consistent with past practice or as permitted by this
Agreement;
(iv) subject to Section 2.04, all right, title and interest of
Seller in, to and under all contracts, agreements, personal property
leases (whether Seller is lessor or lessee thereunder), commitments
and all other legally binding arrangements (other than Seller
Consent Orders), whether oral or written (A) set forth on Schedule
2.02(a)(iv) or (B) otherwise relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines
and entered into by Seller in accordance with Section 7.01 (the
"Contracts"), in each case, to the extent in full force and effect
on the Closing Date;
(v) subject to Section 7.03(c), the Permits and Environmental
Permits that are transferred or transferable by Seller to Buyer
(collectively, the "Transferable Permits"), including the
Transferable Permits set forth on Schedule 2.02(a)(v), in each case,
to the extent in full force and effect on the Closing Date;
(vi) the SO2 Allowances listed on Schedule 2.02(a)(vi);
(vii) all nitrogen oxide allowances allocated to the
Generating Plants or the Gas Turbines by NYSDEC under the New York
State Nitrogen Oxides Budget Program that have not been used on or
prior to the Closing Date (it being understood that, for purposes of
this Agreement, one nitrogen oxide allowance shall be deemed "used"
for each ton of actual nitrogen oxide emitted from the Generating
Plants or Gas Turbines between May 1 of any year and September 30 of
such year, inclusive);
(viii) (A) all data, information, books, operating records,
operating, safety and maintenance manuals, engineering design plans,
blueprints and as-built plans, specifications, procedures, facility
compliance plans, environmental procedures and similar records of
Seller relating primarily to the power generation operations of the
Generating Plants or the Gas Turbines, to the extent in Seller's
possession or readily available (collectively, "Operating Records"),
and (B) all personnel files relating to employees of Seller to be
employed by Buyer after the Closing Date in accordance with Article
IX (the "Transferring Employees"), to the extent in Seller's
possession and readily available and to the extent such files
pertain to (1) skill and development training and resumes, (2)
seniority histories, (3) salary and benefit information, (4)
Occupational Safety and Health Act medical reports, (5) active
medical restriction forms and (6) any other matters, disclosure of
which by Seller to Buyer is permitted under applicable law without
the consent of the Transferring Employee, but not including any
performance evaluations or disciplinary records (collectively, the
"Transferring Employee Records"); provided, however, that Seller
shall be permitted to retain copies, or originals to the extent it
provides Buyer with copies of same, of all Operating Records and
Transferring Employee Records; and
(ix) (A) except as provided in Section 2.02(b)(iv), the
software relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines (provided, however, that
Buyer acknowledges that it will require licenses from third parties
in order to be legally entitled to use such software), and (B) a
non-exclusive, royalty-free license to use solely in connection with
the Auctioned Assets the software or other copyrighted material
owned by Seller located at Buyer Real Estate.
(b) Retained Assets. The term "Retained Assets" means:
(i) the transmission and distribution facilities owned,
controlled or operated by Seller for purposes of providing
point-to-point transmission service, network integration service and
distribution service and other related purposes, including the real
property and equipment located at the Fresh Kills Substations, the
Astoria East Substation, the Astoria West Substation and the North
Queens Substation (collectively, the "Substations"), used in
controlling continuity between the Generating Plants and Gas
Turbines and the transmission and distribution facilities and for
other purposes (the "Transmission System");
(ii) (A) except as set forth in Section 2.02(a)(iii), all
Interconnection Facilities and other transmission, distribution and
substation machinery, equipment and facilities and related support
equipment located on Buyer Real Estate or Seller Real Estate or
temporarily removed from Buyer Real Estate or Seller Real Estate for
repairs, servicing or maintenance, including items listed on
Schedule 2.02(b)(ii)(A); (B) all Revenue Meters installed by Seller;
(C) Communications Equipment and related support equipment (1)
located on Buyer Real Estate or temporarily removed from Buyer Real
Estate for repairs, servicing or maintenance and listed on Schedule
2.02(b)(ii)(C) or acquired by Seller after the date of this
Agreement and designated by Seller as a Retained Asset or (2)
located on Seller Real Estate or temporarily removed from Seller
Real Estate for repairs, servicing or maintenance; and (D) all
Protective Relaying Systems not located on Buyer Real Estate;
(iii) all cash, cash equivalents, bank deposits and accounts
receivable held or owned by Seller;
(iv) (A) all mainframe computer systems of Seller, (B) the
code to all software described in Section 2.02(a)(ix)(B), and (C)
all software, copyrights, know-how or other proprietary information
relating primarily to any other Retained Assets or any Retained
Liabilities, including software, copyrights, know-how or other
proprietary information licensed to Buyer pursuant to Section
2.02(a)(ix)(B);
(v) the names "Consolidated Edison", "Con Edison", "Con Ed",
"Consolidated Edison Company", "Consolidated Edison Company of New
York, Inc.", "Consolidated Edison, Inc.", "New York Edison",
"Brooklyn Edison", "Staten Island Edison" and "Edison" and any
related or similar trade names, trademarks, service marks or logos
(and any rights to and in the same, including any right to use the
same);
(vi) subject to Section 7.06(d), any refund or credit related
to Taxes attributable to taxable periods (or portions thereof) prior
to the Closing Date, and sewer rents or water charges or any other
liabilities or obligations paid prior to the Closing Date in respect
of the Auctioned Assets;
(vii) all personnel records (other than Transferring Employee
Records) and all other records (other than Operating Records);
(viii) (A) all Emission Reduction Credits held or possessed by
Seller and (B) SO2 Allowances held or possessed by Seller and not
listed on Schedule 2.02(a)(vi); and
(ix) any other asset that is not described in this Agreement
as an Auctioned Asset.
SECTION 2.03. Assumed Obligations and Retained Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall assume, and from and
after the Closing, shall discharge, all of the liabilities and
obligations, direct or indirect, known or unknown, absolute or contingent,
which relate to the Auctioned Assets or are otherwise specified below,
other than the Retained Liabilities (collectively, the "Assumed
Obligations"), including:
(i) except as set forth in Section 2.03(b)(ii), any
liabilities and obligations under the Contracts;
(ii) any liabilities and obligations for goods delivered or
services rendered on or after the Closing Date relating to the
Auctioned Assets;
(iii) except as set forth in Sections 2.03(b)(iii) or (iv),
any Environmental Liability arising out of or in connection with (A)
any violation or alleged violation of, or noncompliance or alleged
noncompliance with, any Environmental Laws, prior to, on or after
the Closing Date, with respect to the ownership or operation of the
Auctioned Assets, notwithstanding that, as contemplated by Section
7.03(c), Seller may remain the "holder of record" with respect to
certain Transferable Permits, (B) the condition of any Auctioned
Assets prior to, on or after the Closing Date, including any actual
or alleged presence, Release or threatened Release of any Hazardous
Substance at, on, in, under or migrating onto or from, the Auctioned
Assets, prior to, on or after the Closing Date (except for any such
Release from equipment or property owned or operated by Seller and
located on, or constituting, Seller Real Estate adjacent to Buyer
Real Estate that occurs on or after the Closing Date), (C) any
Release or threatened Release of any Hazardous Substance on or after
the Closing Date from the Buyer Facilities or otherwise originating
from, or relating to, any equipment owned or used by Buyer that is
located on Seller Real Estate or (D) the transportation, storage,
Release, threatened Release or recycling of, or arrangement for such
activities with respect to, Hazardous Substances generated in
respect of the Auctioned Assets at or to any location, on or after
the Closing Date;
(iv) any liabilities and obligations relating to the Auctioned
Assets under the consent orders listed on Schedule 2.03(a)(iv) (the
"Seller Consent Orders") and identified thereon as "Assumed Consent
Order Obligations" (the "Assumed Consent Order Obligations");
(v) except as set forth in Section 2.03(b)(iv), any
liabilities and obligations with respect to the Permits to the
extent arising or accruing on or after the Closing Date;
(vi) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing on or after the Closing Date, and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Buyer is responsible pursuant to Article IX;
(vii) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Retained Liabilities) in respect
of any personal injury or property damage claim relating to,
resulting from or arising out of the Generating Plants or Gas
Turbines or (B) any liabilities and obligations in respect of any
discrimination, wrongful discharge or unfair labor practice claim by
any Transferring Employee, in the case of each of the foregoing
clauses (A) and (B), to the extent arising or accruing on or after
the Closing Date;
(viii) any liabilities and obligations, with respect to the
periods that include the Closing Date, with respect to real or
personal property rent, taxes based on the ownership or use of
property, utilities charges and similar charges that primarily
relate to the Generating Plants or the Gas Turbines (collectively,
the "Prorated Items"), to the extent such Prorated Items relate to
the period from and after the Closing Date, including (A) personal
property taxes, real estate and occupancy taxes, assessments and
other charges (which shall be apportioned as provided in the Zoning
Lot Development Agreements), (B) rent and all other items payable by
Seller under any Contract, (C) any fees with respect to any
Transferable Permit and (D) sewer rents and charges for water,
telephone, electricity and other utilities, in each case calculated
by multiplying the amount of any such Prorated Item by a fraction
the numerator of which is the number of days in such period from and
after the Closing Date and the denominator of which is the number of
days in such period;
(ix) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
beginning on or after the Closing Date;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Buyer or its Affiliates subject
to the Ancillary Agreements or employed by Buyer in connection with
the performance of the Ancillary Agreements ("Buyer Assets"), or any
Protective Relaying System owned by Seller as contemplated by the
Continuing Site Agreement, regardless of whether the property damage
or personal injury is caused by a Seller Indemnitee or a Buyer
Indemnitee; and
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Auctioned Assets to the extent arising
on or after the Closing Date.
(b) Retained Liabilities. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following liabilities
or obligations (the "Retained Liabilities"):
(i) any liabilities and obligations of Seller primarily
relating to any Retained Assets (other than as contemplated by
Section 2.03(a)(x));
(ii) any payment obligations of Seller, including under
Contracts, for goods delivered or services rendered prior to the
Closing Date;
(iii) (A) any Environmental Liability of Seller arising out of
or in connection with the transportation, storage, Release,
threatened Release or recycling of, or arrangement for such
activities with respect to, Hazardous Substances at or to any
Off-Site location, prior to the Closing Date, (B) any Environmental
Liability of Seller arising out of or in connection with any Release
or threatened Release of any Hazardous Substance on or after the
Closing Date from the Seller Facilities or otherwise originating
from, or relating to, any equipment owned or used by Seller that is
located on Buyer Real Estate, (C) all liabilities and obligations of
Seller arising out of or in connection with matters set forth on
Schedule 2.03(b)(iii)(C) and (D) any liabilities and obligations
relating to Auctioned Assets under the Seller Consent Orders, except
Assumed Consent Order Obligations;
(iv) any monetary fines (excluding (A) natural resource
damages, (B) cleanup or remediation costs and (C) other costs of a
similar nature) imposed by a Governmental Authority to the extent
arising out of or relating to acts or omissions of Seller in respect
of the Auctioned Assets prior to the Closing Date;
(v) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing prior to the Closing Date and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Seller is responsible pursuant to Article IX;
(vi) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Assumed Obligations) in respect
of any personal injury or property damage claim relating to the
Generating Plants or Gas Turbines or (B) any liabilities and
obligations in respect of any discrimination, wrongful discharge or
unfair labor practice claim by any Transferring Employee, in the
case of each of the foregoing clauses (A) and (B), to the extent
arising out of or relating to acts or omissions of Seller prior to
the Closing Date;
(vii) any liabilities and obligations, with respect to the
period prior to the Closing Date, for the Prorated Items, calculated
as set forth in Section 2.03(a)(viii);
(viii) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
ending before the Closing Date, including Income Taxes attributable
to income realized by Seller pursuant to the transactions
contemplated by this Agreement;
(ix) any liabilities and obligations arising after the date of
this Agreement in respect of which Seller has provided pursuant to
Section 7.01(d)(ii) that such liabilities and obligations shall not
be assumed or retained by Buyer;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Seller or its Affiliates subject
to the Ancillary Agreements or employed by Seller in connection with
the performance of the Ancillary Agreements ("Seller Assets"),
regardless of whether the property damage or personal injury is
caused by a Seller Indemnitee or a Buyer Indemnitee; and
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Retained Assets.
SECTION 2.04. Third Party Consents. (a) Not withstanding
Section 2.02(a)(ii), (iii) or (iv), to the extent that Seller's rights
under any Contract or warranty may not be assigned without the consent of
another person which consent has not been obtained, this Agreement shall
not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its reasonable best efforts to obtain prior to the
Closing any such required consents.
(b) Seller and Buyer agree that if any consent to an
assignment of any such Contract or warranty shall not be obtained or if
any attempted assignment would in Seller's reasonable opinion be
ineffective or would impair any material rights and obligations of Buyer
under such Contract or warranty, as applicable, so that Buyer would not
acquire the benefit of all such rights and obligations, Seller, to the
maximum extent permitted by law and such Contract or warranty, as
applicable, shall after the Closing appoint Buyer to be Seller's
representative and agent with respect to such Contract or warranty, as
applicable, and Seller shall, to the maximum extent permitted by law and
such Contract or warranty, as applicable, enter into such reasonable
arrangements with Buyer as are necessary to provide Buyer with the
benefits and obligations of such Contract or warranty, as applicable.
Seller and Buyer shall cooperate and shall each use their reasonable best
efforts after the Closing to obtain an assignment of each such Contract or
warranty, as applicable, to Buyer.
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price. The purchase price for the
Auctioned Assets shall be $505,000,000 minus the net proceeds received by
Seller pursuant to the sale of the VISY Option Parcel by Seller to VISY if
the sale thereof is consummated prior to the Closing (the "Purchase
Price").
SECTION 3.02. Post-Closing Adjustment. (a) Within 20 Business
Days after the Closing, Seller shall prepare and deliver to Buyer a
statement (an "Adjustment Statement") which reflects the book cost, as
reflected on the books of Seller as of the Closing Date, of all fuel
inventory and supplies, materials and spare parts inventory included in
the Auctioned Assets (the "Adjustment Amount") and, upon request of Buyer,
related accounting material used by Seller to prepare the Adjustment
Statement. The Adjustment Amount will be based, in respect of fuel, on the
actual fuel inventory on the Closing Date and, in respect of supplies,
materials and spare parts, on an inventory survey conducted within ten
Business Days prior to the Closing Date, in each case, consistent with the
inventory procedures of Seller in effect as of the date of this Agreement
(the "Inventory Survey"). Seller will permit an employee, or
representative, of Buyer to observe the Inventory Survey. The Adjustment
Statement shall be prepared using (i) GAAP and (ii) the same rolling
average unit costs that Seller has historically used to calculate the book
cost of its fuel and supplies, materials and spare parts inventory. Buyer
agrees to cooperate with Seller in connection with the preparation of the
Adjustment Statement and related information, and shall provide to Seller
such access, books, records and information as may be reasonably requested
from time to time.
(b) Buyer may dispute the quantity delivered or quality of any
inventory item shown on the Adjustment Statement, or the mathematical
calculations reflected therein, by notifying Seller in writing of the
disputed amount, and the basis of such dispute, within 20 Business Days of
Buyer's receipt of the Adjustment Statement; provided, however, that in
respect of the quality of any inventory item, Buyer may not dispute
Seller's normal and customary methods for accounting for excess inventory.
Buyer shall have no right to dispute any other matter in respect of the
Adjustment Statement, including historical rolling average unit costs used
to calculate the book cost of the inventory or the appropriateness, under
GAAP or otherwise, of using such historical rolling average unit cost to
determine the book cost of any particular item of inventory. In the event
of a dispute with respect to the quantity or quality of any inventory item
shown on the Adjustment Statement, or the mathematical calculations
reflected therein, Buyer and Seller shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the Parties. If Buyer and Seller are
unable to reach a resolution of such differences within 20 Business Days
of receipt of Buyer's written notice of dispute to Seller, Buyer and
Seller shall submit the amounts remaining in dispute for determination and
resolution to PricewaterhouseCoopers LLP or any other accounting firm of
recognized national standing reasonably acceptable to Seller and Buyer
(the "Accountants"), which shall be instructed to determine and report to
the Parties, within 20 Business Days after such submission, upon such
remaining disputed amounts, and such report shall be final, binding and
conclusive on the Parties with respect to the amounts disputed. Buyer and
Seller shall each pay one-half of the fees and disbursements of the
Accountants in connection with the resolution of such disputed amounts.
(c) If the Adjustment Amount is greater or less than the
Estimated Adjustment Amount, then on the Adjustment Date (as defined
below), (i) to the extent that the Adjustment Amount exceeds the Estimated
Adjustment Amount, Buyer shall pay to Seller the amount of such excess and
(ii) to the extent that the Adjustment Amount is less than the Estimated
Adjustment Amount, Seller shall pay to Buyer the amount of such
deficiency. "Adjustment Date" means (1) if Buyer does not disagree in any
respect with the Adjustment Statement, the twenty-third Business Day
following Buyer's receipt of the Adjustment Statement or (2) if Buyer
shall disagree in any respect with the Adjustment Statement, the third
Business Day following either the resolution of such disagreement by the
Parties or a final determination by the Accountants in accordance with
Section 3.02(b). Any amount paid under this Section 3.02(c) shall be paid
with interest for the period commencing on the Closing Date through the
date of payment, calculated at the prime rate of the Chase Manhattan Bank
in effect on the Closing Date, and in cash by wire transfer of immediately
available funds.
SECTION 3.03. Allocation of Purchase Price. Buyer shall
deliver to Seller at Closing a preliminary allocation among the Auctioned
Assets of the Purchase Price and among such other consideration paid to
Seller pursuant to this Agreement that is properly includible in Buyer's
tax basis for the Auctioned Assets for Federal income tax purposes, and,
as soon as practicable following the Closing (but in any event within 10
Business Days following the final determination of the Adjustment Amount),
Buyer shall prepare and deliver to Seller a final allocation of the
Purchase Price and additional consideration described in the preceding
clause, and the post-closing adjustment pursuant to Section 3.02, among
the Auctioned Assets (the "Allocation"). The Allocation shall be
consistent with Section 1060 of the Code and the Treasury Regulations
thereunder. Seller hereby agrees to accept Buyer's Allocation unless
Seller determines that such Allocation was not prepared in accordance with
Section 1060 of the Code and the regulations thereunder ("Applicable
Law"). If Seller so determines, Seller shall within 20 Business Days
thereafter propose any changes necessary to cause the Allocation to be
prepared in accordance with Applicable Law. Within 10 Business Days
following delivery of such proposed changes, Buyer shall provide Seller
with a statement of any objections to such proposed changes, together with
a reasonably detailed explanation of the reasons therefor. If Buyer and
Seller are unable to resolve any disputed objections within 10 Business
Days thereafter, such objections shall be referred to the Accountants,
whose review will be limited to whether Buyer's Allocation of such
disputed items regarding the Allocation was prepared in accordance with
Applicable Law. The Accountants shall be instructed to deliver to Seller
and Buyer a written determination of the proper allocation of such
disputed items within 20 Business Days. Such determination shall be
conclusive and binding upon the parties hereto for all purposes, and the
Allocation shall be so adjusted (the Allocation, including the adjustment,
if any, to be referred to as the "Final Allocation"). The fees and
disbursements of the Accountants attributable to the Allocation shall be
shared equally by Buyer and Seller. Each of Buyer and Seller agrees to
timely file Internal Revenue Service Form 8594, and all Federal, state,
local and foreign Tax Returns, in accordance with such Final Allocation
and to report the transactions contemplated by this Agreement for Federal
Income Tax and all other tax purposes in a manner consistent with the
Final Allocation. Each of Buyer and Seller agrees to promptly provide the
other party with any additional information and reasonable assistance
required to complete Form 8594, or compute Taxes arising in connection
with (or otherwise affected by) the transactions contemplated hereunder.
Each of Buyer and Seller shall timely notify the other Party and each
shall timely provide the other Party with reasonable assistance in the
event of an examination, audit or other proceeding regarding the Final
Allocation.
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing. Upon the terms and
subject to the satisfaction of the conditions contained in Article VIII,
the closing of the sale of the Auctioned Assets contemplated by this
Agreement (the "Closing") will take place on such date as the Parties may
agree, which date shall be as soon as practicable, but no later than ten
Business Days, following the date on which all of the conditions set forth
in Article VIII have been satisfied or waived, at the offices of Cravath,
Swaine & Moore in New York City or at such other place or time as the
Parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date".
SECTION 4.02. Payment of Purchase Price and Estimated
Adjustment Amount. At the Closing, Buyer will pay or cause to be paid to
Seller by wire transfer of immediately available funds to an account
previously designated in writing by Seller an amount in United States
dollars equal to (a) the Purchase Price plus or minus (b) Seller's good
faith estimate of the Adjustment Amount (the "Estimated Adjustment
Amount"), which estimate shall be provided to Buyer no later than five
Business Days prior to the Closing.
ARTICLE V
Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
SECTION 5.01. Organization; Qualification. Seller is a
corporation duly incorporated, 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 the Auctioned Assets and to carry
on the business of the Auctioned Assets as currently conducted.
SECTION 5.02. Authority Relative to This Agreement. Seller has
all necessary corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Seller of
this Agreement and the Ancillary Agreements and the consummation by Seller
of the transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Trustees of Seller or by a committee
thereof to whom such authority has been delegated and no other corporate
proceedings on the part of Seller are necessary to authorize this
Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby. This Agreement and the
Ancillary Agreements have been duly and validly executed and delivered by
Seller and, assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of Buyer and each other party
thereto, subject to the receipt of the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, constitute valid
and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms.
SECTION 5.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Seller Required Regulatory Approvals and the
Buyer Required Regulatory Approvals, neither the execution and delivery of
this Agreement or the Ancillary Agreements by Seller nor the sale by
Seller of the Auctioned Assets pursuant to this Agreement will (i)
conflict with or result in any breach of any provision of the Certificate
of Incorporation or By-laws of Seller, (ii) except as set forth on
Schedule 5.03(a), result in a default (or give rise to any right of
termination, cancelation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Seller is a
party or by which Seller, or any of the Auctioned Assets, may be bound,
except for such defaults (or rights of termination, cancelation 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) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller, or the Auctioned Assets,
except for such violations which would not, individually or in the
aggregate, create a Material Adverse Effect.
(b) Except for (i) application by Seller to, and the approval
of, the PSC, pursuant to ss. 70 of the Public Service Law of the State of
New York, of the transfer to Buyer of the Auctioned Assets, (ii) the
filings by Seller and Buyer required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act, (iii)
application by Seller to, and the approval of, FERC under (A) Section 203
of the Federal Power Act of 1935 (the "Federal Power Act") with respect to
the transfer of Auctioned Assets constituting jurisdictional assets under
the Federal Power Act and (B) Section 205 of the Federal Power Act with
respect to each Continuing Site Agreement and any wholesale power sales
agreement to be entered into by Seller and Buyer, including the Transition
Capacity Agreement, (iv) the issuance of approval by the New York City
Department of Buildings and, to the extent required, the New York City
Department of Business Services of the tax lot subdivision contemplated by
this Agreement in a form suitable for submission to the New York City
Department of Finance for the issuance of tax lot numbers and (v)
declarations, filings or registrations with, or notices to, or
authorizations, consents or approvals of, any Governmental Authority which
become applicable to Seller or the transactions contemplated hereby or by
the Ancillary Agreements as a result of the specific regulatory status or
jurisdiction of incorporation or organization of Buyer (or any of its
Affiliates) or as a result of any other facts that specifically relate to
the business or activities in which Buyer (or any of its Affiliates) is or
proposes to be engaged (collectively, the "Seller Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any Governmental Authority is
necessary for the consummation by Seller of the transactions contemplated
hereby or by the Ancillary Agreements, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals (A)
which, if not obtained or made, would not, individually or in the
aggregate, create a Material Adverse Effect or (B) which relate to the
Transferable Permits.
(c) To the knowledge of Seller, there is no reason that it
should fail to obtain the Seller Required Regulatory Approvals.
SECTION 5.04. Year 2000. Seller has informed Buyer of the
status, as of the date of this Agreement, of measures to prevent computer
software, hardware and embedded systems used in connection with the
Auctioned Assets from experiencing malfunctions or other usage problems in
connection with years beginning with "20", except for such malfunctions or
other usage problems which would not, individually or in the aggregate,
create a Material Adverse Effect.
SECTION 5.05. Personal Property. Except for Permitted
Exceptions, Seller has good and marketable title, free and clear of all
Encumbrances, to all personal property included in the Auctioned Assets.
SECTION 5.06. Real Estate. The Conveyance Plans contain
descriptions of the Buyer Real Estate. Copies of the most recent real
property surveys and title insurance information in the possession of
Seller with respect to the Buyer Real Estate or any portion thereof have
heretofore been delivered by Seller to Buyer or made available for
inspection by Buyer, receipt of which is hereby acknowledged by Buyer.
SECTION 5.07. Leases. As of the date of this Agreement, Seller
is neither a tenant nor a licensee under any real property leases which
(a) are to be transferred and assigned to Buyer on the Closing Date and
(b) (i) provide for annual payments of more than $100,000 or (ii) are
material to the Auctioned Assets.
SECTION 5.08. Certain Contracts and Arrangements. (a) Except
for (i) any contract or agreement listed on Schedule 2.02(a)(iv) or
Schedule 5.08(a) and (ii) Contracts which will expire prior to the Closing
Date or that are permitted to be entered into under this Agreement, Seller
is not a party to any contract which is material to the business or
operations of the Auctioned Assets.
(b) Each Contract (i) constitutes a valid and binding
obligation of Seller, and, to the knowledge of Seller, constitutes a valid
and binding obligation of the other parties thereto, (ii) to the knowledge
of Seller, is in full force and effect and (iii) other than Contracts
covered by Section 2.04, to the knowledge of Seller, may be transferred to
Buyer pursuant to this Agreement and will continue in full force and
effect thereafter, in each case, without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder, except
for such breaches, forfeitures or impairments which would not,
individually or in the aggregate, create a Material Adverse Effect.
(c) There is not, under any of the Contracts, any default or
event which, with notice or lapse of time or both, would constitute a
default by Seller, except for 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.
SECTION 5.09. Legal Proceedings. Except as set forth on
Schedule 5.09 or in the Filed Seller SEC Documents, as of the date of this
Agreement, there are no claims, actions, proceedings or investigations
pending or, to the knowledge of Seller, threatened against or relating to
Seller which would, individually or in the aggregate, be reasonably
expected to create a Material Adverse Effect. With respect to the business
or operations of the Auctioned Assets, Seller is not, as of the date of
this Agreement, subject to any outstanding judgment, rule, order, writ,
injunction or decree of any court, governmental or regulatory authority
which would create a Material Adverse Effect. The representations and
warranties of Seller set forth in this Section 5.09 shall not apply to,
and do not cover, any environmental matters which, with respect to any
representations and warranties of Seller, are exclusively governed by
Section 5.11.
SECTION 5.10. Permits; Compliance with Law. (a) Except as set
forth on Schedule 5.10(a)(i), Seller holds, and is in compliance with, all
Permits necessary to conduct the business and operations of the Auctioned
Assets as currently conducted, and, to the knowledge of Seller, Seller is
otherwise in compliance with all laws, statutes, orders, rules,
regulations, ordinances or judgments of any Governmental Authority
applicable to the business and operations of the Auctioned Assets, except
for such failures to hold or comply with such Permits, or such failures to
be in compliance with such laws, statutes, orders, rules, regulations,
ordinances or judgments, which would not, individually or in the
aggregate, create a Material Adverse Effect. Except as set forth on
Schedule 5.10(a)(ii), Seller has not received any written notification
that it is in violation of any of such Permits or laws, statutes, orders,
rules, regulations, ordinances or judgments, except for notifications of
violations which would not, individually or in the aggregate, create a
Material Adverse Effect. The representations and warranties of Seller set
forth in this Section 5.10 shall not apply to, and do not cover, any
environmental matters which, with respect to any representations and
warranties of Seller, are exclusively governed by Section 5.11.
(b) Notwithstanding the last sentence of Section 5.10(a),
except as set forth on Schedule 5.10(b), there are no material Permits or
material Environmental Permits that, in each case, are not Transferable
Permits and are required for Buyer to conduct the business and operations
of the Auctioned Assets as currently conducted.
SECTION 5.11. Environmental Matters. (a) Except as set forth
in Schedule 5.11 or disclosed in the Filed Seller SEC Documents, Seller
holds, and is in compliance with, the Environmental Permits required for
Seller to conduct the business and operations of the Auctioned Assets as
currently conducted under applicable Environmental Laws, and, to the
knowledge of Seller, Seller is otherwise in compliance with applicable
Environmental Laws with respect to the business and operations of the
Auctioned Assets, except for such failures to hold or comply with such
Environmental Permits, or such failures to be in compliance with such
Environmental Laws, which would not, individually or in the aggregate,
create a Material Adverse Effect.
(b) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, Seller has not received any written notice of
violation of any Environmental Law or any written request for information
with respect thereto, or been notified that it is a potentially
responsible party under the Federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar state law with respect to
any real property included in the Buyer Real Estate or in any lease
forming part of the Auctioned Assets, except for such matters under such
laws as would not, individually or in the aggregate, create a Material
Adverse Effect.
(c) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, with respect to the business and operations of
the Auctioned Assets, Seller is not subject to any outstanding judgment,
decree or judicial order relating to compliance with any Environmental Law
or to investigation or cleanup of Hazardous Substances under any
applicable Environmental Law, except for (i) the Seller Consent Orders and
(ii) such judgments, decrees or judicial orders that would not,
individually or in the aggregate, create a Material Adverse Effect.
(d) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, as of the date of this Agreement, there are no
claims, actions, proceedings or investigations pending, or to the
knowledge of Seller, threatened against or relating to Seller, with
respect to the exposure at the Auctioned Assets of any person to Hazardous
Substances, which, if adversely determined, would, individually or in the
aggregate, create a Material Adverse Effect.
SECTION 5.12. Labor Matters. Seller has previously made
available to Buyer copies of all collective bargaining agreements to which
Seller is a party or is subject and which relate to the business or
operations of the Auctioned Assets. With respect to the business and
operations of the Auctioned Assets, as of the date of this Agreement, (a)
Seller is in compliance with all applicable laws regarding employment and
employment practices, terms and conditions of employment and wages and
hours, (b) Seller has not received written notice of any unfair labor
practice complaint against Seller pending before the National Labor
Relations Board, (c) there is no labor strike, slowdown or stoppage
actually pending or, to the knowledge of Seller, threatened against or
affecting Seller, (d) Seller has not received notice that any
representation petition respecting the employees of Seller has been filed
with the National Labor Relations Board, (e) no arbitration proceeding
arising out of or under collective bargaining agreements is pending
against Seller and (f) Seller has not experienced any primary work
stoppage since at least December 31, 1996, except, in the case of each of
the foregoing clauses (a) through (f), for such matters as would not,
individually or in the aggregate, create a Material Adverse Effect.
SECTION 5.13. ERISA; Benefit Plans. Schedule 5.13 sets forth a
list of all material deferred compensation, profit-sharing, retirement and
pension plans and all material bonus and other material employee benefit
or fringe benefit plans maintained, or with respect to which contributions
have been made, by Seller with respect to current or former employees
employed in connection with the power generation operations of the
Generating Plants and the Gas Turbines (collectively, "Benefit Plans").
Seller and each trade or business (whether or not incorporated) which are
or have ever been under common control, or which are or have ever been
treated as a single employer, with Seller under Section 414(b), (c), (m)
or (o) of the Code (an "ERISA Affiliate") 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 for such
failures to fulfill such obligations or comply with such provisions which
would not, individually or in the aggregate, create a Material Adverse
Effect. Neither Seller nor any ERISA Affiliate has incurred any liability
under Section 4062(b) of ERISA, or any withdrawal liability under Section
4201 of ERISA, to the Pension Benefit Guaranty Corporation in connection
with any Benefit Plan which is subject to Title IV of ERISA which
liability remains outstanding, and there has not been any reportable event
(as defined in Section 4043 of ERISA) with respect to any such Benefit
Plan (other than a reportable event with respect to which the 30-day
notice requirement has been waived by the PBGC). Neither Seller nor any
ERISA Affiliate or parent corporation, within the meaning of Section
4069(b) or Section 4212(c) of ERISA, has engaged in any transaction,
within the meaning of Section 4069(b) or Section 4212(c) of ERISA. No
Benefit Plan and no "employee pension benefit plan" (as defined in Section
3(2) of ERISA) maintained by Seller or any ERISA Affiliate or to which
Seller or any ERISA Affiliate has contributed is a multiemployer plan.
SECTION 5.14. Taxes. With respect to the Auctioned Assets and
trades or businesses associated with the Auctioned Assets, (a) all Tax
Returns required to be filed have been filed and (b) all Taxes shown to be
due on such Tax Returns, and all Taxes otherwise owed, have been paid in
full, except to the extent that any failure to file or any failure to pay
any Taxes would not, individually or in the aggregate, create a Material
Adverse Effect. No written notice of deficiency or assessment has been
received from any taxing authority with respect to liabilities for Taxes
of Seller in respect of the Auctioned Assets which has not been fully paid
or finally settled or which is not being contested in good faith through
appropriate proceedings, except for any such notices regarding Taxes which
would not, individually or in the aggregate, create a Material Adverse
Effect. There are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for Taxes associated with the
Auctioned Assets for any period, except for any such agreements or waivers
which would not, individually or in the aggregate, create a Material
Adverse Effect.
SECTION 5.15. Independent Engineering Assessments; Condition
of Auctioned Assets. (a) Seller has reviewed the 1998 assessments prepared
by Stone & Webster with respect to the Generating Plants and the Gas
Turbines (the "Independent Engineering Assessments"), and, except as set
forth on Schedule 5.15(a), to the knowledge of Seller, as of the date of
the Independent Engineering Assessments, there was no untrue statement of
a material fact or omission of any material fact therein that would
reasonably suggest that the condition of the Generating Plants and the Gas
Turbines, taken as a whole, as of such date was materially and adversely
different from that described in such Independent Engineering Assessments.
(b) Except as set forth on Schedule 5.15(b), since the date of
the Independent Engineering Assessments, there has not been, subject to
ordinary wear and tear and to routine maintenance, any casualty, physical
damage, destruction or physical loss with respect to, or any adverse
change in the physical condition of, any Generating Plant or Gas Turbine,
except for such casualty, physical damage, destruction, physical loss or
adverse change which would not, individually or in the aggregate, create a
Material Adverse Effect.
(c) The condition of the Auctioned Assets is sufficient to
permit compliance in all material respects with the Ancillary Agreements,
assuming the Ancillary Agreements are in full force and effect.
SECTION 5.16. Undisclosed Liabilities. With respect to the
Auctioned Assets, there are no liabilities or obligations of any nature or
kind (absolute, accrued, contingent or otherwise) that would have been
required to be set forth on a balance sheet in respect of the Auctioned
Assets or in the notes thereto prepared in accordance with GAAP, as
applied by Seller in connection with its December 31, 1997 balance sheet,
except for any such liabilities or obligations which (a) are disclosed in
or contemplated or permitted by this Agreement or the Ancillary Agreements
(including the Assumed Obligations), (b) are disclosed in the Offering
Memorandum, (c) are disclosed in the Filed Seller SEC Documents, (d) have
been incurred in the ordinary course of business, (e) are disclosed on
Schedule 5.16 or (f) which would not, individually or in the aggregate,
create a Material Adverse Effect.
SECTION 5.17. Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in connection
with the transaction contemplated hereby by reason of any action taken by
Seller, except Morgan Stanley & Co. Incorporated, which is acting for and
at the expense of Seller.
SECTION 5.18. Insurance. Seller carries policies of insurance
covering fire, workers' compensation, property all-risk, comprehensive
bodily injury, property damage liability, automobile liability, product
liability, completed operations, explosion, collapse, contractual
liability, personal injury liability and other forms of insurance relating
to the Auctioned Assets, or otherwise self-insures in accordance with all
statutory and regulatory criteria against any such liabilities, which
insurance is in such amounts, has such deductibles and retentions and is
underwritten by such companies as would be obtained by a reasonably
prudent electric power business.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING SOLD AND
TRANSFERRED "AS IS, WHERE IS", AND SELLER IS NOT MAKING ANY OTHER
REPRESENTATIONS OR WARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS OR
IMPLIED, CONCERNING SUCH AUCTIONED ASSETS OR WITH RESPECT TO THIS
AGREEMENT OR THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, INCLUDING, IN PARTICULAR WITH RESPECT TO THE AUCTIONED
ASSETS, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED BY
SELLER AND WAIVED BY BUYER. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE
INFORMATION SET FORTH IN, OR CONTEMPLATED BY, THE OFFERING MEMORANDUM
(EXCEPT TO THE EXTENT EXPRESSLY INCORPORATED BY REFERENCE INTO THIS
AGREEMENT).
ARTICLE VI
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
SECTION 6.01. Organization. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as is
now being conducted. Buyer is duly qualified and licensed to do business
as a foreign corporation and is in good standing in the State of New York.
SECTION 6.02. Authority Relative to This Agreement. Buyer has
all necessary corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is party and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery by Buyer of this Agreement and such Ancillary Agreements and
the consummation by Buyer of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Buyer and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or such Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby. This
Agreement and such Ancillary Agreements have been duly and validly
executed and delivered by Buyer and, assuming that this Agreement and the
Ancillary Agreements constitute valid and binding agreements of Seller and
each other party thereto, subject to the receipt of the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, this
Agreement and the Ancillary Agreements constitute valid and binding
agreements of Buyer, enforceable against Buyer in accordance with their
respective terms.
SECTION 6.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Buyer Required Regulatory Approvals and the
Seller Required Regulatory Approvals, neither the execution and delivery
of this Agreement or the Ancillary Agreements to which it is party by
Buyer nor the purchase by Buyer of the Auctioned Assets pursuant to this
Agreement will (i) conflict with or result in any breach of any provision
of the Certificate of Incorporation or By-laws (or other similar governing
documents) of Buyer, (ii) result in a default (or give rise to any right
of termination, cancelation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Buyer or any
of its subsidiaries is a party or by which any of their respective assets
may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, or any of its assets,
except in the case of clauses (ii) and (iii) for such failures to obtain a
necessary consent, defaults and violations which would not, individually
or in the aggregate, have a material adverse effect on the ability of
Buyer to consummate the transactions contemplated by, and discharge its
obligations under, this Agreement and the Ancillary Agreements (a "Buyer
Material Adverse Effect").
(b) Except for (i) approval of the PSC pursuant to ss. 70 of
the Public Service Law of the State of New York, of the transfer to Buyer
of the Auctioned Assets, (ii) the filings by Buyer and Seller required by
the HSR Act and the expiration or earlier termination of all waiting
periods under the HSR Act, (iii) application by Buyer to, and the approval
of, FERC under (A) Section 203 of the Federal Power Act with respect to
the transfer of Auctioned Assets constituting jurisdictional assets under
the Federal Power Act and (B) Section 205 of the Federal Power Act with
respect to (1) each Continuing Site Agreement and any wholesale power
sales agreement to be entered into by Seller and Buyer, including the
Transition Capacity Agreement, and (2) authorization to sell capacity and
energy from Generating Plants and Gas Turbines at market-based rates
(provided, however, that Buyer acknowledges that "market- based rates" for
the purpose of this Agreement means rates that are subject to any bid cap,
price limitation or other market power mitigation measure imposed by FERC
or PSC in respect of the New York State or New York City wholesale and
retail energy and capacity electric power markets or any other restriction
imposed by FERC or PSC with respect to the power generation operations and
assets of Buyer, including the FERC Order Accepting Market Power
Mitigation Measures dated September 22, 1998, as modified (Docket No.
ER98-3169-000) (the "Mitigation Measures")), (iv) qualification of Buyer,
with respect to the Auctioned Assets, as an exempt wholesale generator
under the Energy Policy Act of 1992 and (v) the issuance of approval by
the New York City Department of Buildings and, to the extent required, the
New York City Department of Business Services of the tax lot subdivision
contemplated by this Agreement in a form suitable for submission to the
New York City Department of Finance for the issuance of tax lot numbers
(collectively, the "Buyer Required Regulatory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of any Governmental Authority is necessary for the consummation
by Buyer of the transactions contemplated hereby or by the Ancillary
Agreements, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals (A) which, if not obtained or made
would not, individually or in the aggregate, have a Buyer Material Adverse
Effect or (B) which relate to the Transferable Permits.
(c) To the knowledge of Buyer, there is no reason that it
should fail to obtain the Buyer Required Regulatory Approvals.
SECTION 6.04. Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in connection
with the transaction contemplated hereby by reason of any action taken by
Buyer, except Salomon Smith Barney Inc., which is acting for and at the
expense of Buyer.
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the Auctioned
Assets. (a) Except with the prior written consent of Buyer (such consent
not to be unreasonably withheld) or as required to effect the purchase and
sale of the Auctioned Assets and related transactions contemplated by this
Agreement, during the period from the date of this Agreement to the
Closing Date, Seller will operate the Auctioned Assets in the usual,
regular and ordinary course and in accordance with good industry practice
and applicable legal requirements, and continue to pay accounts payable
which relate to the Auctioned Assets in a timely manner, consistent with
past practice.
(b) Notwithstanding the foregoing, except as contemplated in
this Agreement or the Ancillary Agreements, prior to the Closing Date,
without the prior written consent of Buyer (such consent not to be
unreasonably withheld), Seller will not:
(i) except for Permitted Exceptions, grant any Encumbrance on
the Auctioned Assets securing any indebtedness for borrowed money or
guarantee or other liability for the obligations of any person;
(ii) make any material change in the levels of fuel inventory
and supplies, materials and spare parts inventory customarily
maintained by Seller with respect to the Auctioned Assets, other
than consistent with past practice (including the use of spare parts
in connection with certain power generation assets of Seller
described in the Offering Memorandum other than the Generating
Plants or Gas Turbines);
(iii) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Auctioned Assets, other than assets (except coal
handling equipment) that become obsolete or assets used, consumed or
replaced in the ordinary course of business consistent with past
practice (including the use of spare parts in connection with
certain power generation assets of Seller described in the Offering
Memorandum other than the Generating Plants or Gas Turbines);
provided, however, that notwithstanding any other provision of this
Agreement to the contrary, Seller may sell the VISY Option Parcel to
VISY pursuant to the exercise by VISY of the option under the VISY
Option Agreement;
(iv) terminate, materially extend or otherwise materially
amend any of the Contracts (other than in accordance with their
respective terms) or waive any default by, or release, settle or
compromise any material claim against, any other party thereto;
(v) amend any of the Transferable Permits, other than (A)
Transferable Permits not material to the operations of the Auctioned
Assets as currently conducted, (B) as reasonably necessary to
complete the transfer of Permits as contemplated hereby, (C) routine
renewals or non-material modifications or amendments and (D)
modifications, alterations and amendments contemplated by Section
7.03(b);
(vi) enter into any Contract for the purchase, sale or storage
of fuel with respect to the Auctioned Assets (whether commodity or
transportation) with a term in excess of 12 months, if the aggregate
future liability or receivable outstanding on the date for
measurement for the purpose of this covenant for all such Contracts
would be in excess of $2 million, not including any such Contract
terminable by notice of not more than 30 days without penalty or
cost (other than de minimis administrative costs); provided,
however, that Seller may enter into Contracts for the storage of
fuel with respect to the Auctioned Assets with a term ending not
later than December 31, 2000 and otherwise on terms consistent with
Seller's past practice;
(vii) (A) establish, adopt, enter into or amend any Collective
Bargaining Agreement or Benefits Plans, except (1) if such action
would not create a Material Adverse Effect or (2) as required under
applicable law or under the terms of any Collective Bargaining
Agreement or (B) grant to any Affected Employee any increase in
compensation, except (1) in the ordinary course of business
consistent with past practice or (2) to the extent required by the
terms of any Collective Bargaining Agreement, employment agreement
in effect as of the date of this Agreement or applicable law;
(viii) enter into any Contract with respect to the Auctioned
Assets for goods or services not addressed in clauses (i) through
(vii) with a term in excess of 12 months, if the aggregate future
liability or receivable outstanding on the date for measurement for
the purpose of this covenant for all such Contracts would be in
excess of $2 million, not including any such Contract terminable by
notice of not more than 30 days without penalty or cost (other than
de minimis administrative costs); provided, however, that
notwithstanding any other provision of this Agreement to the
contrary, Seller may (A) enter into any Contract reasonably
necessary to effect the physical, legal or operational separation of
the sites on which the Auctioned Assets are located or to otherwise
implement the change of ownership contemplated hereby, or
subdivision, of such sites or implement the provisions of the
Ancillary Agreements and (B) enter into and record the Declarations
of Subdivision Easements; or
(ix) enter into any Contract with respect to the Auctioned
Assets relating to any of the transactions set forth in the
foregoing clauses (i) through (viii).
(c) Without limiting the generality of Sections 7.01(a) and
(b), to the extent Section 7.01(a) or (b) prohibits Seller from entering
into any Contract for goods and services in connection with maintenance or
capital expenditures, Buyer agrees that Seller may request Buyer's consent
to enter into such Contract, such consent not to be unreasonably withheld,
and to the extent Buyer so consents, all liabilities and obligations under
such Contract shall constitute Assumed Obligations and Buyer shall
otherwise reimburse Seller for all its expenditures thereunder.
(d) Notwithstanding anything in this Section 7.01 to the
contrary, Seller may take any action, incur any expense or enter into any
obligation with respect to the Auctioned Assets to the extent that (i) all
obligations and liabilities arising with respect thereto do not constitute
Assumed Obligations or (ii) Seller otherwise provides that such
obligations and liabilities shall not be assumed or retained by Buyer.
SECTION 7.02. Access to Information. (a) Between the date of
this Agreement and the Closing Date, Seller will, subject to the
Confidentiality Agreement, during ordinary business hours and upon
reasonable notice (i) give Buyer and its representatives reasonable access
to all books, records, plants, offices and other facilities and properties
constituting the Auctioned Assets, including for the purpose of observing
the operation by Seller of the Auctioned Assets, (ii) permit Buyer to make
such reasonable inspections thereof as Buyer may reasonably request, (iii)
furnish Buyer with such financial and operating data and other information
with respect to the Auctioned Assets as Buyer may from time to time
reasonably request, (iv) furnish Buyer upon request a copy of each
material report, schedule or other document with respect to the Auctioned
Assets filed by Seller with, or received by Seller from, the PSC or FERC;
provided, however, that (A) any such activities shall be conducted in such
a manner as not to interfere unreasonably with the operation of the
Auctioned Assets, (B) Seller shall not be required to take any action
which would constitute a waiver of the attorney-client privilege and (C)
Seller need not supply Buyer with (1) any information or access which
Seller is under a legal obligation not to supply or (2) any information
which Seller has previously supplied to Buyer. Notwithstanding anything in
this Section 7.02 to the contrary, (I) Seller will not be required to
provide such information or access to any employee records other than
Transferring Employee Records, (II) Buyer shall not have the right to
perform or conduct any environmental sampling or testing at, in, on,
around or underneath the Auctioned Assets and (III) Seller shall not be
required to provide such access or information with respect to any
Retained Asset or Retained Liabilities.
(b) Unless otherwise agreed to in writing by Buyer, Seller
shall, for a period commencing on the Closing Date and terminating three
years after the Closing Date, keep confidential and shall cause its
representatives to keep confidential all Confidential Information (as
defined in the Confidentiality Agreement) on the terms set forth in the
Confidentiality Agreement. Except as contemplated by the following
sentence, Seller shall not release any person from any confidentiality
agreement now existing with respect solely to the Auctioned Assets or
waive or amend any provision thereof. After the Closing Date, upon
reasonable request of Buyer, Seller shall, to the maximum extent permitted
by law and the applicable Bidder Confidentiality Agreement (as defined
below), appoint Buyer to be Seller's representative and agent in respect
of confidential information relating to the Auctioned Assets under the
confidentiality agreements ("Bidder Confidentiality Agreements") between
Seller and prospective purchasers of certain generation assets of Seller
of which the Auctioned Assets form part.
(c) From and after the Closing Date, Buyer shall retain all
Operating Records (whether in electronic form or otherwise) relating to
the Auctioned Assets on or prior to the Closing Date. Buyer also agrees
that, from and after the Closing Date, Seller shall have the right, upon
reasonable request to Buyer, to receive from Buyer copies of any Operating
Records or other information in Buyer's possession relating to the
Auctioned Assets on or prior to the Closing Date and required by Seller in
order to comply with applicable law. Seller shall reimburse Buyer for its
reasonable costs and expenses incurred in connection with the foregoing
sentence.
SECTION 7.03. Consents and Approvals; Transferable Permits.
(a) Seller and Buyer shall cooperate with each other and (i) prepare and
file (or otherwise effect) as soon as practicable all applications,
notices, petitions and filings with respect to and (ii) use their
reasonable best efforts (including negotiating in good faith modifications
and amendments to this Agreement and the Ancillary Agreements) to obtain
(A) the Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals and (B) any other consents, approvals or
authorizations of any other Governmental Authorities or third parties that
are necessary to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements. Without limiting the generality of
the foregoing, (1) each Party agrees to, upon the other Party's request,
support such other Party's applications for regulatory approvals of the
purchase and sale of the Auctioned Assets contemplated by this Agreement,
(2) Buyer agrees not to seek any relief from, or modifications or
amendments in respect of, any bid cap, price limitation or other market
power mitigation measure or other restriction with respect to any power
generation operations and assets described in or contemplated by Section
6.03(b)(iii)(B)(2) until after the Closing Date and (3) Buyer and Seller
agree to defend any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the Ancillary Agreements,
or the consummation of the transactions contemplated hereby or thereby,
including seeking to have any stay or temporary restraining order entered
by any Governmental Authority vacated or reversed.
(b) Upon execution of this Agreement, Seller shall commence
the process of transferring to Buyer the Transferable Permits, including
completing and filing applications and related documents with the
appropriate Governmental Authorities. Seller hereby reserves the right to
modify, alter or amend any Transferable Permit or to refuse to correct
violations or deficiencies in respect of any Transferable Permit as long
as such modification, alteration, amendment or refusal would not,
individually or in the aggregate, create a Material Adverse Effect. Seller
shall use its reasonable best efforts to give notice to Buyer of any
modification, alteration or amendment to any Transferable Permit.
(c) Seller shall use its reasonable best efforts to cooperate
with Buyer in the transfer of Transferable Permits to Buyer by Closing. If
the transfer of any Transferable Permit cannot be completed by Closing,
Buyer is hereby authorized, but not required, to act as Seller's
representative and agent in respect of such Transferable Permit and to do
all things necessary for effecting transfer of such Transferable Permit as
soon after the Closing as is practicable, with Seller remaining the
Transferable Permit "holder of record" in such case until such transfer is
completed. In the case of each such Transferable Permit, Seller shall, to
the maximum extent permitted by law and such Transferable Permit, enter
into such reasonable arrangements with Buyer as are necessary to provide
Buyer with the benefits and obligations of such Transferable Permit. If
Buyer is able to complete the transfer of any Transferable Permit after
Closing without the occurrence of any event that, if such event had
occurred between the execution of this Agreement and the Closing, would
have created, individually or in the aggregate, a Material Adverse Effect,
Seller may substitute Buyer in its place and stead as the Party
responsible for completing the transfer of such Transferable Permit.
SECTION 7.04. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the Parties will use its reasonable
best efforts to take, or cause to be taken, as soon as possible, all
action, and to do, or cause to be done, as soon as possible, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the sale of the Auctioned Assets pursuant to this Agreement as
soon as possible, including using its reasonable best efforts to ensure
satisfaction of the conditions precedent to each Party's obligations
hereunder. Prior to Buyer's submission of any application with a
Governmental Authority for a regulatory approval, Buyer shall submit such
application to Seller for review and comment and Buyer shall incorporate
into such application any revisions reasonably requested by Seller.
Neither of the Parties will, without prior written consent of the other
Party, take or fail to take, or permit their respective Affiliates to take
or fail to take, any action, which would reasonably be expected to prevent
or materially impede, interfere with or delay the consummation, as soon as
possible, of the transactions contemplated by this Agreement or the
Ancillary Agreements. Without limiting the generality of the foregoing,
each of the Parties shall use its reasonable best efforts to negotiate in
good faith as soon as possible after the date of this Agreement, and enter
into (i) the A-11 License, the terms of which shall be substantially as
set forth in Exhibit F, (ii) the NYPA Assignment, the terms of which shall
be reasonably satisfactory to Buyer and Seller, (iii) to the extent
required to achieve subdivision of the Astoria site, one or more
contracts, agreements or other arrangements satisfactory to the New York
City Fire Department regarding fire prevention at the Astoria site and
(iv) any other agreement reasonably necessary to consummate the sale of
the Auctioned Assets pursuant to this Agreement as soon as possible.
(b) From time to time after the date hereof, without further
consideration and at its own expense, (i) Seller will execute and deliver
such instruments of assignment or conveyance as Buyer may reasonably
request to more effectively vest in Buyer Seller's title to the Auctioned
Assets (subject to Permitted Exceptions and the other terms of this
Agreement) and (ii) Buyer will execute and deliver such instruments of
assumption as Seller may reasonably request in order to more effectively
consummate the sale of the Auctioned Assets and the assumption of the
Assumed Obligations pursuant to this Agreement.
(c) Seller shall not sponsor or support any recommendation or
application to effect prior to April 1, 2002 (i) a reduction in the
locational generation capacity requirement that 80% of New York City peak
electric loads must be met with in-City generation capacity, as in effect
as of the date of this Agreement, unless such reduction is justified by a
significant change in the transmission import capability into New York
City whether as a result of actions by Seller or others, (ii) a reduction
in the $105/kW-year bid and price cap in respect of capacity under the
Mitigation Measures, as in effect as of the date of this Agreement, or
(iii) a change in the method of determining required system capability set
forth in NYPP Billing Procedure 4-11 (Installed Reserve Requirements), as
in effect as of the date of this Agreement that would reduce the installed
reserve requirements for the winter capability period applicable to summer
peaking systems if such reduction would also reduce the annual price for
installed capacity that Buyer could otherwise obtain.
(d) Seller shall join or support Buyer's application to the
PSC for the certification required under Section 32(c) of the Public
Utility Holding Company Act of 1935 in order for Buyer to obtain
qualification, with respect to the Auctioned Assets, as an exempt
wholesale generator under the Energy Policy Act of 1992.
(e) Seller and Buyer shall cooperate in good faith to
establish a transition committee to consider operational and business
issues related to the purchase and sale of the Auctioned Assets.
(f) Prior to the Closing Date, Seller shall cooperate in good
faith with Buyer to enable Buyer to obtain insurance in respect of the
Auctioned Assets comparable to that maintained by Seller as of the date of
this Agreement.
(g) Seller and Buyer shall cooperate in good faith to enable
Buyer to obtain fuel storage capacity with respect to the Auctioned
Assets.
SECTION 7.05. Public Statements. The Parties shall consult
with each other prior to issuing any public announcement, statement or
other disclosure with respect to this Agreement, the Ancillary Agreements
or the transactions contemplated hereby or thereby, including any
statement appearing in any filing contemplated hereby or thereby, and
shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law.
SECTION 7.06. Tax Matters. (a) All transfer and sales taxes
(including any petroleum business taxes and similar excise taxes on sales
of petroleum based products) incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by Buyer. Buyer
shall prepare and file in a timely manner any and all Tax Returns or other
documentation relating to such taxes; provided, however, that, to the
extent required by applicable law, Seller will join in the execution of
any such Tax Returns or other documentation relating to any such taxes.
Buyer shall provide to Seller copies of each Tax Return described in the
proviso in the preceding sentence at least 30 days prior to the date such
Tax Return is required to be filed.
(b) At Seller's election, but on no less than 10 Business
Days' notice to Buyer, the transfer of the Auctioned Assets and the
receipt of the Purchase Price shall be made through a qualified
intermediary in a manner satisfying the requirements of Treasury
Regulation Section 1.1031(k)-1(g), so long as such election by Seller does
not create a Material Adverse Effect and Seller indemnifies Buyer for its
additional costs and expenses incurred by reason of such election.
(c) Each Party shall 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 Party shall retain and provide
the other Party with any records or information which may be relevant to
such return, audit, examination or proceedings. Any information obtained
pursuant to this Section 7.06(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.
(d) If either Buyer or Seller receives a refund of Taxes in
respect of the Auctioned Assets for a taxable period including the Closing
Date, Buyer shall pay to Seller the portion of any such refund
attributable to the portion of such taxable period prior to the Closing
Date, and Seller shall pay to Buyer the portion of any such refund
attributable to the portion of such taxable period on and after the
Closing Date.
SECTION 7.07. Bulk Sales or Transfer Laws. Buyer acknowledges
that Seller will not comply with the provisions of any bulk sales or
transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. Buyer hereby waives compliance by Seller
with the provisions of the bulk sales or transfer laws of all applicable
jurisdictions.
SECTION 7.08. Storage. Seller shall store for Buyer the
Auctioned Assets described in the second sentence of Section 2.01 until
the date that is six months after the Closing Date or, in respect of all
or a portion of such Auctioned Assets, until one or more earlier dates
proposed by Buyer with reasonable advance notice, which schedule shall be
reasonably acceptable to Seller. Buyer agrees to reimburse Seller for its
reasonable costs and expenses in connection with such storage. Buyer
agrees that Seller shall have no responsibility or liability for the
actual removal of such Auctioned Assets from the actual storage location,
and that Buyer shall have sole responsibility therefor. Notwithstanding
the provisions of Section 10.01, Buyer agrees that Seller shall have no
liability for loss or damage with respect to the matters contemplated by
this Section 7.08 or such Auctioned Assets, and Buyer agrees to hold each
Seller Indemnitee harmless from and against all loss or damage or
Indemnifiable Losses, and to indemnify each Seller Indemnitee from and
against all loss or damage or Indemnifiable Losses incurred, asserted
against or suffered as a result of any storage or other services provided
by Seller pursuant to this Section 7.08, in each case, except to the
extent any such loss or damage or Indemnifiable Loss results in whole or
in part from the gross negligence or wilful or wanton acts or omissions to
act of any Seller Indemnitee (or any contractor or subcontractor of
Seller).
SECTION 7.09. Information Resources. From the Closing Date
until the date that is three months thereafter, Seller shall provide Buyer
with access to Seller's mainframe computer only to the extent reasonably
necessary to enable Buyer to use the PPMIS and MMS (in read only mode)
systems and applications solely in connection with the Auctioned Assets.
Buyer agrees that it will not use any such access for any purpose other
than for the use of the PPMIS and MMS systems and applications solely in
connection with the Auctioned Assets. Buyer acknowledges that, as long as
it retains access to Seller's mainframe computer, Seller, its employees
and third parties may have access to Buyer's information resources systems
and applications (including the PPMIS and MMS systems and applications
served by Seller's mainframe computer). Notwithstanding the provisions of
Section 10.01, Buyer agrees that Seller shall have no liability or
obligation whatsoever with respect to the matters contemplated by this
Section 7.09, and Buyer agrees to hold each Seller Indemnitee harmless
from and against all loss or damage or Indemnifiable Losses, and to
indemnify each Seller Indemnitee from and against all loss or damage or
Indemnifiable Losses incurred, asserted against or suffered as a result of
Buyer's access to Seller's mainframe computer pursuant to this Section
7.09, in each case, except to the extent any such loss or damage or
Indemnifiable Loss results in whole or in part from the gross negligence
or wilful or wanton acts or omissions to act of any Seller Indemnitee (or
any contractor or subcontractor of Seller).
SECTION 7.10. Witness Services. At all times from and after
the Closing Date, each Party shall use reasonable best efforts to make
available to the other Party, upon reasonable written request, its and its
subsidiaries' then current or former officers, directors, employees
(including former employees of Seller) and agents as witnesses to the
extent that (i) such persons may reasonably be required by such requesting
Party in connection with any claim, action, proceeding or investigation in
which such requesting Party may be involved and (ii) there is no conflict
between Buyer and Seller in such claim, action, proceeding or
investigation. Such other Party shall be entitled to receive from such
requesting Party, upon the presentation of invoices for such witness
services, payments for such amounts, relating to supplies, disbursements
and other out-of-pocket expenses and direct and indirect costs of
employees who are witnesses, as may be reasonably incurred in providing
such witness services.
SECTION 7.11. Consent Orders. Buyer and Seller agree to
cooperate with each other and NYSDEC to facilitate the entry of a consent
order between NYSDEC and Buyer, wherein Buyer will agree to assume and
perform the Assumed Consent Order Obligations.
SECTION 7.12. Nitrogen Oxide Allowances. Seller agrees to
negotiate in good faith with NYSDEC for nitrogen oxide allowances to be
allocated to the Auctioned Assets for any period subsequent to the year
2002.
SECTION 7.13. Trade Names. Seller shall not object to the use
by Buyer of any trade names, trademarks, service marks or logos (and any
rights to and in the same, including any right to use the same) primarily
relating to the Generating Facilities that contain the words "Arthur
Kill", "Astoria Gas Turbine" or "Astoria Gas Turbines"; provided, however,
that Buyer shall not use any trade names, trademarks, service marks or
logos containing the word "Astoria" unless in each case immediately
followed by the words "Gas Turbine" or "Gas Turbines".
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's Obligation
To Effect the Purchase and Sale. The respective obligations of each Party
to effect the purchase and sale of the Auctioned Assets shall be subject
to the satisfaction or waiver by such Party on or prior to the Closing
Date of the following conditions, unless, in the case of Section 8.01(c)
below, the PSC determines that such condition need not be included or
complied with:
(a) the Seller Required Regulatory Approvals and Buyer
Required Regulatory Approvals shall have been obtained and all
conditions to effectiveness prescribed therein or otherwise by law,
regulation or order shall have been satisfied; provided, however,
that if at the time any Seller Required Regulatory Approval or Buyer
Required Regulatory Approval is obtained, a Party reasonably expects
a request for rehearing or a challenge thereto to be filed or if a
request for rehearing or a challenge thereto has been filed, in each
case, which, if successful, would cause such Seller Required
Regulatory Approval or Buyer Required Regulatory Approval, as the
case may be, to be reversed, stayed, enjoined, set aside, annulled,
suspended or substantially modified, then such Party may by notice
to the other Party within five Business Days after receipt of such
Seller Required Regulatory Approval or Buyer Required Regulatory
Approval, as the case may be, delay the Closing until the time for
requesting rehearing has expired or until such challenge is decided,
in each case, whether or not any appeal thereof is pending; provided
further, however, that if the Closing is delayed pursuant to the
foregoing provision, the Termination Date shall be automatically
extended for a period of time equal to the period of such delay;
(b) no preliminary or permanent injunction or other order or
decree by any Federal or state court of competent jurisdiction and
no statute or regulation enacted by any Governmental Authority
prohibiting the consummation of the purchase and sale of the
Auctioned Assets (collectively, "Restraints") shall be in effect;
(c) the ISO shall have become operational to the extent
reasonably necessary to monitor market power in respect of the
Auctioned Assets;
(d) delivery of each Continuing Site Agreement, each
Declaration of Easements Agreement, each Declaration of Subdivision
Easements and each Zoning Lot Development Agreement to the Title
Company for recording; and
(e) execution and delivery by NYPA of the NYPA Assignment.
SECTION 8.02. Conditions Precedent to Obligation of Buyer To
Effect the Purchase and Sale. The obligation of Buyer to effect the
purchase and sale of the Auctioned Assets contemplated by this Agreement
shall be subject to the satisfaction or waiver by Buyer on or prior to the
Closing Date of the following additional conditions:
(a) Seller shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Seller which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not, individually
or in the aggregate, create a Material Adverse Effect;
(c) Buyer shall have received a certificate from an authorized
officer of Seller, dated the Closing Date, to the effect that, to
the best of such officer's knowledge, the conditions set forth in
Sections 8.02(a) and (b) have been satisfied;
(d) all material Permits and Environmental Permits required
for Buyer to conduct the business and operations of the Auctioned
Assets as currently conducted shall have been transferred or will be
transferable to Buyer, or shall have been obtained or will be
obtainable by Buyer, or shall have been made available to Buyer in
accordance with Section 7.03(c), on, prior to or within a reasonable
period of time after the Closing Date;
(e) Buyer shall have received (i) the deeds of conveyance
substantially in the form of Exhibits B-1 and B-2, respectively,
(ii) a Foreign Investment in Real Property Tax Act Certification and
Affidavit substantially in the form of Exhibit C and (iii) an
opinion from John D. McMahon, Esq., General Counsel of Seller or
other counsel reasonably acceptable to Buyer, dated the Closing
Date, substantially in the form set forth in Exhibit D;
(f) execution and delivery by Seller of each of (i) the
Transition Capacity Agreement and the Zoning Lot Development
Agreements, (ii) the A-11 License in a form reasonably satisfactory
to Buyer and (iii) the NYPA Assignment, in a form and on terms
reasonably satisfactory to Buyer;
(g) the Title Company shall be willing to issue to Buyer a New
York form of ALTA (1992) Owner's Title Insurance Policy insuring fee
title to the Buyer Real Estate in an amount equal to that portion of
the Purchase Price properly allocable to Buyer Real Estate, subject
only to the Permitted Exceptions; and
(h) Buyer shall have received originals of the ALTA/ ACSM Land
Title Surveys which include the Buyer Real Estate in addition to
other property, signed by the surveyor with Buyer's name and the
name of not more than one other Party designated by Buyer added to
the certification set forth thereon.
SECTION 8.03. Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale. The obligation of Seller to effect the
purchase and the sale of the Auctioned Assets contemplated by this
Agreement shall be subject to the satisfaction or waiver by Seller on or
prior to the Closing Date of the following additional conditions:
(a) Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Buyer which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Buyer Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Buyer Material Adverse
Effect;
(c) Seller shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Sections 8.03(a) and (b) have been satisfied;
(d) Seller shall have received an opinion substantially in the
form of Exhibit E dated as of the Closing Date and from counsel
reasonably acceptable to Seller;
(e) execution and delivery by Buyer of each of (i) the
Transition Capacity Agreement, the Arthur Kill Zoning Lot
Development Agreement and, unless executed and delivered prior to
the Closing Date, the Astoria Zoning Lot Development Agreement, (ii)
the A-11 License in a form reasonably satisfactory to Seller and
(iii) the NYPA Assignment, in a form and on terms reasonably
satisfactory to Seller;
(f) Buyer shall have provided evidence in form and substance
reasonably satisfactory to Seller of compliance by Buyer with its
obligations under Article IX; and
(g) if Buyer has assigned its rights, interests and
obligations under this Agreement in accordance with the terms
hereof,
(i) Buyer and Seller shall have executed and delivered
the Guarantee Agreement;
(ii) Guarantor shall have performed in all material
respects its covenants and agreements contained in the
Guarantee Agreement which are required to be performed on or
prior to the Closing Date;
(iii) the representations and warranties of Guarantor
which are set forth in the Guarantee Agreement shall be true
and correct as of the date of the Guarantee Agreement and as
of the Closing Date, as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such
representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality"
or "Guarantor Material Adverse Effect" set forth therein)
would not, individually or in the aggregate, create a
Guarantor Material Adverse Effect (as defined therein);
(iv) Seller shall have received a certificate from an
authorized officer of Guarantor, dated the Closing Date, to
the effect that, to the best of such officer's knowledge, the
conditions set forth in Sections 8.03(g)(ii) and (iii) have
been satisfied; and
(v) Seller shall have received an opinion substantially
in the form of Exhibit K dated the Closing Date and from
counsel reasonably acceptable to Seller.
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters. (a) Buyer shall offer
equivalent employment at the Auctioned Assets to those employees of Seller
regularly assigned by Seller to work at the Auctioned Assets on the
Closing Date in the job titles and facilities listed in Schedule
9.01(a)(all such employees described above and those individuals described
in the following sentence being hereinafter referred to as "Affected
Employees"). Affected Employees include each such employee of Seller who
is not actively at work on the Closing Date due solely to a temporary
short-term absence, whether paid or unpaid, in accordance with applicable
policies of Seller, including as a result of vacation, holiday, personal
time, leave of absence, union leave, short- or long-term disability leave,
military leave or jury duty. Affected Employees shall cease to be
employees of Seller on the Closing Date and their period of employment by
Buyer shall begin on the Closing Date. Seller shall be responsible for any
obligation to provide employee benefits to an Affected Employee prior to
such employee's period of employment by Buyer.
All such offers of employment will be made (i) in accordance
with all applicable laws and regulations, and (ii) for employees
represented by Utility Workers' Union of America AFL-CIO and its Local
Union 1-2 ("Local 1-2"), in accordance with the Local 1-2 Collective
Bargaining Agreement (as defined in Schedule 9.01(b)) and (iii) for
employees represented by Local Union No. 3 of the International
Brotherhood of Electrical Workers, AFL-CIO ("Local 3"), in accordance with
the Local 3 Collective Bargaining Agreement (as defined in Schedule
9.01(b)). Each Affected Employee who becomes employed by Buyer pursuant to
this Section 9.01(a) shall be referred to herein as a "Continued
Employee".
Buyer may commence discussions concerning offers for
employment beginning on the Closing Date to Affected Employees at any time
following the date of this Agreement.
(b) Schedule 9.01(b) sets forth the collective bargaining
agreements, and amendments thereto, to which Seller is a party in
connection with the Auctioned Assets (the "Collective Bargaining
Agreements"). Affected Employees who are included in the collective
bargaining units covered by the Collective Bargaining Agreements are
referred to herein as "Affected Union Employees". Each Continued Employee
who is an Affected Union Employee shall be referred to herein as a
"Continued Union Employee". On the Closing Date, Buyer will assume the
terms and conditions of the Collective Bargaining Agreements, except as
set forth in Section 9.02(b) below, as they relate to Affected Union
Employees until the respective expiration dates of the Collective
Bargaining Agreements. Buyer will comply with its legal obligations with
respect to collective bargaining under Federal labor law for the employees
at the Auctioned Assets in the job titles or related work responsibilities
of the Affected Union Employees, and Buyer will comply with all applicable
obligations thereunder as the new owner of the Auctioned Assets. Buyer
shall recognize Local 1-2 and Local 3 as the exclusive collective
bargaining representatives of the employees at the Auctioned Assets in the
job titles or related work responsibilities of the Affected Union
Employees and Buyer agrees that, should any other business entity
(regardless of its relationship to Buyer) acquire all or a portion of the
Auctioned Assets from Buyer prior to the expiration date of the respective
Collective Bargaining Agreements, Buyer will require such business entity
to (i) offer employment to Affected Union Employees employed by Buyer at
the Auctioned Assets immediately prior to the change in ownership, (ii)
recognize Local 1-2 and Local 3 as the exclusive collective bargaining
representatives of Buyer's employees at the Auctioned Assets in the job
titles and work responsibilities of the Affected Union Employees, and
(iii) assume the terms and conditions of the Collective Bargaining
Agreements as they relate to Affected Union Employees from the date of
such acquisition through the expiration date of the Collective Bargaining
Agreements.
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service. (a) For not less than three years following the
Closing Date, Buyer shall maintain compensation (including base pay and
bonus compensation) and employee benefits and employee benefit plans and
arrangements for each Continued Employee who is not a Continued Union
Employee (a "Continued Non-Union Employee") which are at least equivalent
to those provided pursuant to the compensation, employee benefits and
employee benefit plans and arrangements in effect on the Closing Date for
the Affected Employees who are not Affected Union Employees. Such total
compensation shall be based upon (x) such employee's existing individual
base pay, (y) such employee's authorized overtime, if applicable, and (z)
the average bonus and benefit component for such employee's salary plan
level, as consistently applied by Seller, apportioned according to such
employee's base pay. No provision of this Agreement shall affect any
Continued Non-Union Employee's status as an employee-at-will.
(b) From the Closing Date until the expiration date of the
applicable Collective Bargaining Agreement, Buyer shall provide to each
Continued Union Employee benefits and employee benefit plans and
arrangements which are equivalent to those provided under such Collective
Bargaining Agreement or any other collective bargaining agreement entered
into between Buyer and the applicable collective bargaining
representatives for the employees at the Auctioned Assets in effect from
time to time after the Closing Date. Such benefits, plans and arrangements
include the following: (i) hospital, medical, dental, vision care and
prescription drug benefits (including employee contributions to be made on
a pre-tax basis), (ii) health care and dependent care flexible spending
accounts; (iii) employer-provided basic group term life and accidental
death and dismemberment insurance; (iv) employee-paid group universal life
and spousal and dependent child life insurance; (v) sick allowance (short
term disability) and long term disability benefits; (vi) business travel
accident insurance and crime protection insurance; (vii) occupational
accidental death insurance; (viii) adoption benefits and child care and
elder care referral benefits; (ix) tuition aid benefits; (x) vacation and
holidays; (xi) employee stock purchase plan (including employer matching
contributions) and (xii) defined benefit pension and 401(k) plan benefits.
In providing such benefits, Buyer shall have the right, subject to any
applicable laws, to use different providers from those used by Seller and
to establish Buyer's own benefit plans or use Buyer's existing benefit
plans. For purposes hereof, except as provided in Section 9.04(b), Buyer
shall have no obligation to maintain a fund holding or measured by common
stock of Seller's parent under any of Buyer's plans or arrangements,
notwithstanding any such fund maintained by Seller under its plans and
arrangements.
(c) Continued Employees shall be given credit by Buyer for all
service with Seller and its Affiliates under all existing or future
employee benefit and fringe benefit plans, programs and arrangements of
the Buyer ("Buyer Benefit Plans") in which they become participants. The
service credit given by Buyer shall be for purposes of eligibility,
vesting, eligibility for early retirement and early retirement subsidies,
benefit accrual and service-related level of benefits. Buyer shall assume
and honor all vacation, sick and personal days accrued and unused by
Continued Employees through the Closing Date in accordance with Seller's
applicable policies and arrangements.
SECTION 9.03. Pension Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect defined benefit pension plans ("Buyer's
Pension Plans") intended to be (i) qualified pursuant to Section 401(a) of
the Code and (ii) nonqualified, in order to provide for benefits which
would otherwise be payable under the applicable qualified plan but for the
application of Sections 401(a)(17) and 415 of the Code, providing benefits
as of the Closing Date identical in all material respects (except for such
changes as may be required by law) to the benefits provided to them under
Seller's Pension Plans (as defined below), in particular (x) for Continued
Non-Union Employees, such Buyer's Pension Plans to provide benefits
identical in all material respects to those benefits provided under
Seller's Retirement Plan for Management Employees and Seller's
Supplemental Retirement Income Plan, and (y) for Continued Union
Employees, such Buyer's Pension Plans to provide benefits identical in all
material respects to those provided under Seller's Pension and Benefits
Plan (collectively, "Seller's Pension Plans"), in each case, as of the
Closing Date. Buyer acknowledges and agrees that one such material respect
is to count age after termination of employment for purposes of satisfying
requirements for early retirement eligibility and early retirement
subsidies.
(b) Continued Employees participating in Seller's Pension
Plans immediately prior to the Closing Date shall become participants in
Buyer's Pension Plans as of the Closing Date. Without limiting the
generality of Section 9.02(c), Continued Employees shall receive credit
for all compensation and service with Seller (subject to the terms of
Seller's Pension Plans) for purposes of eligibility for participation,
vesting, eligibility for early retirement and early retirement subsidies
and benefit accrual under Buyer's Pension Plans. Seller shall be
responsible for Continued Employees' pension benefits accrued up to the
Closing Date, and Buyer shall be responsible for pension benefits accrued
by such Continued Employees on and after the Closing Date as provided
herein. Buyer may offset against the accrued benefits determined under
Buyer's Pension Plans the accrued benefits determined under Seller's
Pension Plans. For the purpose of this Section 9.03(b), "accrued benefit"
means the amount that would be paid as a life annuity at normal retirement
age irrespective of the date of actual distribution from either Seller's
or Buyer's Pension Plans. Seller shall make pension distributions to
Continued Employees of the vested portion of their accrued benefits in
accordance with the terms of Seller's Pension Plans as in effect from time
to time. As soon as reasonably practicable following the Closing Date,
Seller shall provide Buyer a list showing, as of the Closing Date, the
accrued benefit of each Continued Employee under Seller's Pension Plans.
(c) In the event that any other business entity (regardless of
its relationship to Buyer) acquires all or a portion of the Auctioned
Assets from Buyer at any time prior to the third anniversary of the
Closing Date in the case of Continued Non-Union Employees and prior to the
expiration date of the applicable Collective Bargaining Agreement in the
case of Continued Union Employees, Buyer will require such entity to
maintain the defined benefit plans, provide the benefits and recognize
compensation and service with Seller and Buyer to the same extent as Buyer
is required under Sections 9.03(a) and (b) above.
SECTION 9.04. 401(k) Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect tax-qualified defined contribution plans
that include a qualified cash or deferred arrangement within the meaning
of Section 401(k) of the Code ("Buyer's 401(k) Plans") that will provide
benefits that are identical in all material respects (except for such
changes as may be required by law) to those provided by (i) Seller's
Thrift Savings Plan for Management Employees, in the case of Continued
Non-Union Employees, and (ii) Seller's Retirement Income Savings Plan for
Weekly Employees, in the case of Continued Union Employees (such Seller
plans herein referred to collectively as "Seller's 401(k) Plans"), in each
case, as of the Closing Date. Each Continued Employee participating in
Seller's 401(k) Plans immediately prior to the Closing Date shall become a
participant in Buyer's 401(k) Plans as of the Closing Date. Continued
Employees shall receive credit for all service with Seller for purposes of
eligibility and vesting under Buyer's 401(k) Plans.
(b) At such time after the Closing Date as Seller is
reasonably satisfied that Buyer's 401(k) Plans meet the requirements for
qualification under Section 401(a) of the Code, Seller shall cause to be
transferred to Buyer's 401(k) Plans in a trust-to-trust transfer in common
stock of Seller's parent (as provided in the following sentence) and cash
(or other property reasonably acceptable to Buyer) an amount equal to the
value of the assets held in the accounts of all Continued Employees
(including any outstanding loan balances of Continued Employees in
Seller's 401(k) Plans), subject to any qualified domestic relations
orders. In connection therewith, Buyer shall establish an investment fund
under Buyer's 401(k) Plans to which shall be transferred the shares of
common stock of Seller's parent (or any successor thereto) which, as of
the date of transfer, are credited to the accounts of the Continued
Employees under Seller's 401(k) Plans. After the Closing Date and prior to
any such transfer, Buyer shall cooperate with Seller in the administration
of distributions to and loan repayments by Continued Employees. Prior to
such transfer of assets, Seller shall vest any unvested benefits of
Continued Employees under Seller's 401(k) Plans. Following any such
transfer of assets, Buyer shall assume all obligations and liabilities of
Seller under Seller's 401(k) Plans with respect to such Continued
Employees, and Seller shall have no further liability to Buyer or any
Continued Employee with respect thereto.
SECTION 9.05. Welfare Plans. (a) Continued Employees and their
dependents who are eligible to participate in Seller's current welfare
benefits plans, programs or arrangements shall be eligible to participate
in the welfare benefits plans, programs or arrangements maintained or
established by Buyer ("Buyer's Welfare Plans"), effective as of the
Closing Date. Effective as of the Closing Date, any and all limitations as
to pre-existing conditions and actively-at-work exclusions and waiting
periods under Buyer's Welfare Plans shall be waived by Buyer with respect
to Continued Employees and their eligible dependents to the extent
satisfied under Seller's applicable Welfare Plans. In addition, effective
as of the Closing Date, Buyer shall cause Buyer's Welfare Plans to
recognize any out-of-pocket health care expenses incurred by Continued
Employees and their eligible dependents prior to the Closing Date and
during the calendar year in which such Closing Date occurs for purposes of
determining their deductibles and out-of-pocket maximums under Buyer's
Welfare Plans. Seller shall retain responsibility under Seller's welfare
plans for claims relating to expenses incurred by Continued Employees and
their eligible dependents prior to the Closing Date. Buyer shall have
responsibility under Buyer's Welfare Plans for claims relating to expenses
incurred by Continued Employees and their eligible dependents on and after
the Closing Date.
(b) Effective as of the Closing Date, Buyer shall have in
effect health care and dependent care reimbursement account plans for the
benefit of each Continued Employee, the terms of which shall (i) be
identical in all material respects to the Flexible Reimbursement Account
Plans for Management and Weekly Employees of Seller ("Seller's
Reimbursement Account Plans") as in effect on the Closing Date and (ii)
give full effect to, and continue in effect, salary reduction elections
made under Seller's Reimbursement Account Plans. Prior to the Closing
Date, Seller shall cause the accounts of Continued Employees under
Seller's Reimbursement Account Plans to be segregated into separate health
care and dependent care reimbursement accounts (the "Segregated
Reimbursement Accounts"), and such Segregated Reimbursement Accounts shall
be transferred to and assumed by Buyer as of the Closing Date.
(c) Buyer shall, subject to any applicable laws, provide a
retiree health program identical in all material respects to Seller's
retiree health program as in effect on the Closing Date to each Continued
Employee who terminates his employment with Buyer within three years after
the Closing Date, in the case of a Continued Non-Union Employee, and on or
prior to the expiration date of the applicable Collective Bargaining
Agreement, in the case of a Continued Union Employee, and, in each case,
who at the time of such termination of employment satisfies the
eligibility requirements for such retiree health program provided by
Buyer; provided, however, that Seller shall remain liable, pursuant to
Seller's retiree health program, for all Continued Employees who satisfy,
as of the Closing Date, the eligibility requirements then in effect for
Seller's retiree health program.
SECTION 9.06. Short- and Long-Term Disability. Effective as of
the Closing Date, Buyer shall have in effect short- and long-term
disability plans for the benefit of Continued Employees, the cost of which
to Continued Employees shall be the same as under, and the terms of which
are identical in all material respects to, Seller's applicable plans as in
effect as of the Closing Date. Any and all waiting periods and
pre-existing condition clauses shall be waived under Buyer's short- and
long-term disability plans with respect to Continued Employees.
SECTION 9.07. Life Insurance and Accidental Death and
Dismemberment Insurance. Effective as of the Closing Date, Buyer shall
have in effect group term life insurance, group universal life insurance,
accidental death and dismemberment insurance, occupational accidental
death insurance, business travel accident insurance and crime protection
insurance plans for the benefit of Continued Employees, the cost of which
to Continued Employees shall be the same as under, and terms of which are
identical in all material respects to, Seller's applicable plans that
provide such benefits to Continued Employees immediately prior to the
Closing Date.
SECTION 9.08. Severance. (a) Effective as of the Closing Date,
Buyer shall have in effect a severance plan covering Continued Non-Union
Employees that contains terms identical in all material respects to those
under Seller's Severance Pay Plan for Management Employees as of the
Closing Date.
(b) Buyer shall, subject to any applicable laws, provide a
special separation allowance for any Continued Employee whose employment
with Buyer is terminated involuntarily by Buyer other than for cause on or
prior to, in the case of Continued Non-Union Employees, three years after
the Closing Date and, in the case of Continued Union Employees, the
expiration date of the applicable Collective Bargaining Agreement. Such
allowance shall be not less than the sum of four weeks pay plus one week
pay for each completed year of service (as determined by aggregating each
affected individual's respective service with Seller and Buyer) and shall
be payable by Buyer in a lump sum within 30 days after termination of
employment. In addition, in the case of each Continued Non-Union Employee
described in the first sentence of this Section 9.08(b), Buyer shall pay
the Continued Non-Union Employee a lump sum equal to the excess of (i) the
actuarial equivalent of the Employee's "potential benefit" under the
applicable Buyer's Pension Plans, which such Employee would receive if
such Employee's employment continued until three years after the Closing
Date and such Employee's base and incentive compensation for such deemed
additional period was the same as in effect on the date of such Employee's
termination of employment with Buyer, over (ii) the actuarial equivalent
of such Employee's "actual benefit" under the applicable Buyer's Pension
Plans, as of the date of such Employee's termination of employment from
Buyer. For the purpose of the foregoing sentence, (i) the term "potential
benefit" shall refer to the monthly pension that would have been payable
to the applicable Employee commencing on the first day of the month
following the latest of (A) the last day of the deemed additional period,
(B) Employee's attainment of age 55, or (C) the earlier of (l) the first
date as of which the sum of such Employee's age and years of service, as
taken into account in determining the actuarial reduction for commencement
prior to normal retirement age that is to be applied to his accrued
benefit under the applicable Buyer's Pension Plans, equals 75 or (2) such
Employee's attainment of age 65, (ii) the term "actual benefit" shall
refer to the monthly pension payable to such Employee under the applicable
Buyer's Pension Plans commencing as of the date determined in accordance
with clause (i) of this sentence, and (iii) the actuarial equivalent of
the "potential benefit" and the "actual benefit" shall each be a lump sum
payable as of the date of such Employee's termination of employment from
Buyer, determined on the basis of the interest rate used to determine the
amount of lump sum distributions and, to the extent applicable, other
actuarial assumptions then in effect under the applicable Buyer's Pension
Plans. Buyer shall also provide outplacement services to such terminated
Continued Non-Union Employee appropriate to the level of the Employee's
position and job responsibilities. Buyer shall also continue to provide or
cause to be provided to any such terminated Continued Employee health
insurance coverage and group term and universal life insurance coverage at
the same rates as for active Continued Employees for a period equal to the
number of weeks of separation allowance which any such terminated
Continued Employee is entitled to from Buyer. Buyer shall have the right
to require a release in form reasonably satisfactory to Buyer as a
condition for eligibility to receive such separation allowance. The
allowance shall not apply to Continued Employees whose employment is
terminated due to death or expiration of sick allowance or other
authorized leave of absence or who terminate employment voluntarily. If at
any time during the three-year period following the Closing Date, Buyer
shall assign a Continued Non-Union Employee to work on a regular basis at
a location that is more than fifty miles from the location to which such
Employee is assigned as of the Closing Date, Buyer shall offer such
Employee the option to terminate employment and receive the severance
benefits set forth in this Section 9.08(b) in lieu of the reassignment.
SECTION 9.09. Workers Compensation. Effective as of the
Closing Date, Buyer shall have in effect a workers compensation program
for Continued Employees that shall provide coverage identical in all
material respects to Seller's workers compensation program as of the
Closing Date.
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification. (a) Seller will indemnify and
hold harmless Buyer and its Affiliates and their respective directors,
officers, employees and agents (collectively with Buyer and its
Affiliates, the "Buyer Indemnitees") from and against any and all claims,
demands or suits by any person, and all losses, liabilities, damages,
obligations, payments, costs and expenses (including reasonable legal fees
and expenses and including costs and expenses incurred in connection with
investigations and settlement proceedings) (each, an "Indemnifiable
Loss"), as incurred, asserted against or suffered by any Buyer Indemnitee
relating to, resulting from or arising out of:
(i) any breach by Seller of any covenant or agreement of
Seller contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 5.01, 5.02, 5.03 and 5.17;
(ii) the Retained Liabilities;
(iii) noncompliance by Seller with any bulk sales or transfer
laws as provided in Section 7.07; or
(iv) any breach by Seller of any Ancillary Agreement.
(b) Buyer will indemnify and hold harmless Seller and its
Affiliates and their respective directors, officers, trustees, employees
and agents (collectively with Seller and its Affiliates, the "Seller
Indemnitees") from and against any and all Indemnifiable Losses, as
incurred, asserted against or suffered by any Seller Indemnitee relating
to, resulting from or arising out of:
(i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 6.01, 6.02, 6.03 and 6.04;
(ii) the Assumed Obligations;
(iii) any obligation resulting from any action or inaction of
Buyer (A) under any Contract or warranty pursuant to Section 2.04(b)
(whether acting as principal or representative and agent for Seller
pursuant to Section 2.04(b) or otherwise) or (B) pursuant to any
Transferable Permit in respect of which Seller remains the holder of
record after the Closing Date pursuant to Section 7.03(c); or
(iv) any breach by Buyer of any Ancillary Agreement.
(c) The amount of any Indemnifiable Loss shall be reduced to
the extent that the relevant Buyer Indemnitee or Seller Indemnitee (each,
an "Indemnitee") receives any insurance proceeds with respect to an
Indemnifiable Loss and shall be (i) increased to take account of any Tax
Cost incurred by the Indemnitee arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any Tax Benefit realized by the Indemnitee arising from the
incurrence or payment of any such Indemnifiable Loss. If the amount of any
Indemnifiable Loss, at any time subsequent to the making of an indemnity
payment in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any
claim, recovery, settlement or payment by or against any other person, the
amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith, will promptly be repaid by the Indemnitee to the
Party required to provide indemnification hereunder (the "Indemnifying
Party") with respect to such Indemnifiable Loss.
(d) To the fullest extent permitted by law, neither Party nor
any Buyer Indemnitee or any Seller Indemnitee shall be liable to the other
Party or any other Buyer Indemnitee or Seller Indemnitee for any claims,
demands or suits for consequential, incidental, special, exemplary,
punitive, indirect or multiple damages connected with or resulting from
any breach after the Closing Date of this Agreement or the Ancillary
Agreements (other than breach of this Article X), or any actions
undertaken in connection with or related hereto or thereto, including any
such damages which are based upon breach of contract, tort (including
negligence and misrepresentation), breach of warranty, strict liability,
statute, operation of law or any other theory of recovery.
(e) The rights and remedies of Seller and Buyer under this
Article X are, solely as between Seller and Buyer, exclusive and in lieu
of any and all other rights and remedies which Seller and Buyer may have
under this Agreement, the Ancillary Agreements (except as expressly
provided in either Continuing Site Agreement or either Declaration of
Easements Agreement) or otherwise for monetary relief with respect to (i)
any breach of, or failure to perform, any covenant or agreement set forth
in this Agreement or the Ancillary Agreements by Seller or Buyer, (ii) any
breach of any representation or warranty by Seller or Buyer, (iii) the
Assumed Obligations or the Retained Liabilities, (iv) noncompliance by
Seller with any bulk sales or transfer laws and (v) any obligation in
respect of Section 2.04 or Section 7.03. Each Party agrees that the
previous sentence shall not limit or otherwise affect any non-monetary
right or remedy which either Party may have under this Agreement or the
Ancillary Agreements or otherwise limit or affect either Party's right to
seek equitable relief, including the remedy of specific performance.
(f) Buyer and Seller agree that, notwithstanding Section
10.01(e), each Party shall retain, subject to the other provisions of this
Agreement, including Sections 10.01(d) and 12.03, all remedies at law or
in equity with respect to (i) fraud or wilful or intentional breaches of
this Agreement or the Ancillary Agreements and (ii) gross negligence or
wilful or wanton acts or omissions to act of any Indemnitee (or any
contractor or subcontractor thereof) on or after the Closing Date.
SECTION 10.02. Third Party Claims Procedures. (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 or an Affiliate of a Party (a "Third Party
Claim") with respect to which indemnification is to be sought from an
Indemnifying Party, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than
20 Business Days after the Indemnitee's receipt of notice of such Third
Party Claim; provided, however, that a failure to give timely notice will
not affect the rights or obligations of any Indemnitee except if, and only
to the extent that, as a result of such failure, the Indemnifying Party
was actually prejudiced. Such notice shall describe the nature of the
Third Party Claim in reasonable detail and will indicate the estimated
amount, if practicable, of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected
by the Indemnifying Party; provided, however, that such counsel is not
reasonably objected to by the Indemnitee; and provided further that the
Indemnifying Party first admits in writing its liability to the Indemnitee
with respect to all material elements of such claim. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party will not be liable to the Indemnitee for any legal
expenses subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party elects to assume the defense of
a Third Party Claim, the Indemnitee will (i) cooperate in all reasonable
respects with the Indemnifying Party in connection with such defense, (ii)
not admit any liability with respect to, or settle, compromise or
discharge, any Third Party Claim without the Indemnifying Party's prior
written consent and (iii) agree to any settlement, compromise or discharge
of a Third Party Claim which the Indemnifying Party may recommend and
which by its terms obligates the Indemnifying Party to pay the full amount
of the liability in connection with such Third Party Claim and releases
the Indemnitee completely in connection with such Third Party Claim. In
the event the Indemnifying Party shall assume the defense of any Third
Party Claim, the Indemnitee shall be entitled to participate in (but not
control) such defense with its own counsel at its own expense. If the
Indemnifying Party does not assume the defense of any such Third Party
Claim, the Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after giving
notice to the Indemnifying Party of the terms of the proposed settlement
and the Indemnifying Party will promptly reimburse the Indemnitee upon
written request. Anything contained in this Agreement to the contrary
notwithstanding, no Indemnifying Party shall be entitled to assume the
defense of any Third Party Claim if such Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than monetary
damages against the Indemnitee which, if successful, would materially
adversely affect the business of the Indemnitee.
ARTICLE XI
Termination
SECTION 11.01. Termination. (a) This Agreement may be
terminated at any time prior to the Closing by an instrument in writing
signed on behalf of each of the Parties.
(b) This Agreement may be terminated by Seller or Buyer if the
Closing shall not have occurred on or before the date that is 12 months
from the date of this Agreement (the "Termination Date"); provided,
however, that the right to terminate this Agreement pursuant to this
Section ll.01(b) shall not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by either Seller or Buyer
if any Restraint having any of the effects set forth in Section 8.01(b)
shall be in effect and shall have become final and nonappealable;
provided, however, that the Party seeking to terminate this Agreement
pursuant to this Section 11.01(c) shall have used its reasonable best
efforts to prevent the entry of and to remove such Restraint.
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses. Except to the extent specifically
provided herein, 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, whether or not the transactions
contemplated hereby are consummated.
SECTION 12.02. Amendment and Modification; Extension; Waiver.
This Agreement may be amended, modified or supplemented only by an
instrument in writing signed on behalf of each of the Parties. Either
Party may (i) extend the time for the performance of any of the
obligations or other acts of the other Party, (ii) waive any inaccuracies
in the representations and warranties of the other Party contained in this
Agreement or (iii) waive compliance by the other Party with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a Party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such Party. The
failure of a Party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 12.03. No Survival of Representations or Warranties.
Each and every representation and warranty contained in this Agreement,
other than the representations and warranties contained in Sections 5.01,
5.02, 5.03 and 5.17 and 6.01, 6.02, 6.03 and 6.04 (which representations
and warranties shall survive for 18 months from the Closing Date), shall
expire with, and be terminated and extinguished by the Closing and no such
representation or warranty shall survive the Closing Date. From and after
the Closing Date, none of Seller, Buyer or any officer, director, trustee
or Affiliate of any of them shall have any liability whatsoever with
respect to any such representation or warranty. The expiration of the
representations and warranties contained in Sections 5.01, 5.02, 5.03 and
5.17 and 6.01, 6.02, 6.03 and 6.04 shall not affect the Parties'
obligations under Article X if the Indemnitee provided the Indemnifying
Party with proper notice of the claim or event for which indemnification
is sought prior to such expiration.
SECTION 12.04. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (as of the time of
delivery or, in the case of a telecopied communication, of confirmation)
if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the Parties at the
following addresses (or at such other address for a Party as shall be
specified by like notice):
if to Seller, to:
Consolidated Edison Company of New
York, Inc.
4 Irving Place
New York, NY 10003
Telecopy No.: (212) 677-0601
Attention: General Counsel
with a copy on or prior to the Closing Date to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: George W. Bilicic, Jr., Esq.
if to Buyer, to:
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403-2445
Telecopy No.: (612) 373-5392
Attention: General Counsel
with a copy to:
NRG North America
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403-2445
Telecopy No.: (612) 373-5430
Attention: President & CEO
with a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402-1498
Telecopy No.: (612) 340-8738
Attention: Frank H. Voigt
SECTION 12.05. Assignment; No Third Party Beneficiaries. (a)
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party,
including by operation of law, without the prior written consent of the
other Party, except (i) in the case of Seller (A) to an Affiliate of
Seller or a third party in connection with the transfer of the
Transmission System to such Affiliate or third party or (B) to a lending
institution or trustee in connection with a pledge or granting of a
security interest in all or any part of the Transmission System and this
Agreement and (ii) in the case of Buyer (A) to an Affiliate of Buyer in
connection with the transfer of the Auctioned Assets to such Affiliate and
(B) to a lending institution or trustee in connection with a pledge or
granting of a security interest in the Auctioned Assets and this
Agreement; provided, however, that no assignment or transfer of rights or
obligations by either Party shall relieve it from the full liabilities and
the full financial responsibility, as provided for under this Agreement,
unless and until the transferee or assignee shall agree in writing to
assume such obligations and duties and the other Party has consented in
writing to such assumption.
(b) Nothing in this Agreement is intended to confer upon any
other person except the Parties any rights or remedies hereunder or shall
create any third party beneficiary rights in any person, including, with
respect to continued or resumed employment, any employee or former
employee of Seller (including any beneficiary or dependent thereof). 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.
SECTION 12.06. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable
principles of conflicts of law).
SECTION 12.07. 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.
SECTION 12.08. Interpretation. When a reference is made in
this Agreement to an Article, Section, Schedule or Exhibit, such reference
shall be to an Article or Section of, or Schedule or Exhibit to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation" or equivalent words. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in the Ancillary Agreements and any certificate or
other document made or delivered pursuant hereto or thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and
to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument, statute, regulation, rule or order
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument, statute, regulation,
rule or order as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent
and (in the case of statutes, regulations, rules or orders) by succession
of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
SECTION 12.09. Jurisdiction and Enforcement. (a) Each of the
Parties irrevocably submits to the exclusive jurisdiction of (i) the
Supreme Court of the State of New York, New York County and (ii) the
United States District Court for the Southern District of New York, for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties
agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York
or, if such suit, action or proceeding may not be brought in such court
for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County. Each of the Parties further agrees that service of
process, summons, notice or document by hand delivery or U.S. registered
mail at the address specified for such Party in Section 12.04 (or such
other address specified by such Party from time to time pursuant to
Section 12.04) shall be effective service of process for any action, suit
or proceeding brought against such Party in any such court. Each of the
Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Supreme Court of the
State of New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
(b) The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or any Ancillary
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement or any Ancillary Agreement and to enforce specifically the terms
and provisions of this Agreement or any Ancillary Agreement, this being in
addition to any other remedy to which they are entitled at law or in
equity.
SECTION 12.10. Entire Agreement. This Agreement, the
Confidentiality Agreement and the Ancillary Agreements including the
Exhibits, Schedules, documents, certificates and instruments referred to
herein or therein and other contracts, agreements and instruments
contemplated hereby or thereby, embody the entire agreement and
understanding of the Parties 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. This Agreement and the Ancillary
Agreements supersede all prior agreements and understandings between the
Parties with respect to the transactions contemplated by this Agreement
other than the Confidentiality Agreement.
SECTION 12.11. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties
as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 12.12. Conflicts. Except as expressly otherwise
provided herein or therein, in the event of any conflict or inconsistency
between the terms of this Agreement and the terms of any Ancillary
Agreement, the terms of this Agreement shall prevail.
IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of
the date first above written.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.,
by /s/ Joan S. Freilich
Name: Joan S. Freilich
Title: Executive Vice Presient and CFO
NRG ENERGY, INC.,
by /s/ Craig A. Mataczynski
Name: Craig A. Mataczynski
Title: Senior Vice President
GENERATING PLANT
AND GAS TURBINE
ASSET PURCHASE AND SALE AGREEMENT
FOR
ASTORIA GENERATING PLANTS
LOCATED AT ASTORIA, QUEENS COUNTY, NEW YORK,
GOWANUS GAS TURBINES
LOCATED AT BROOKLYN, KINGS COUNTY, NEW YORK
AND
NARROWS GAS TURBINES
LOCATED AT BROOKLYN, KINGS COUNTY, NEW YORK
By and Between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
and
ASTORIA GENERATING COMPANY, L.P.
Dated as of March 2, 1999
-2 -
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms 14
ARTICLE II
Purchase and Sale; Assumption of
Certain Liabilities
SECTION 2.01. Purchase and Sale 15
SECTION 2.02. Auctioned Assets and Retained Assets 15
SECTION 2.03. Assumed Obligations and Retained Liabilities 19
SECTION 2.04. Third Party Consents 24
SECTION 2.05. Franchise Property 25
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price 26
SECTION 3.02. Post-Closing Adjustment 26
SECTION 3.03. Allocation of Purchase Price 27
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing 29
SECTION 4.02. Payment of Purchase Price and Estimated Adjustment
Amount 29
ARTICLE V
Representations and Warranties of Seller
SECTION 5.01. Organization; Qualification 29
SECTION 5.02. Authority Relative to This Agreement 29
SECTION 5.03. Consents and Approvals; No Violation 30
SECTION 5.04. Year 2000 31
SECTION 5.05. Personal Property 31
SECTION 5.06. Real Estate 31
SECTION 5.07. Leases 32
SECTION 5.08. Certain Contracts and Arrangements 32
SECTION 5.09. Legal Proceedings 32
SECTION 5.10. Permits; Compliance with Law 33
SECTION 5.11. Environmental Matters 33
SECTION 5.12. Labor Matters 34
SECTION 5.13. ERISA; Benefit Plans 35
SECTION 5.14. Taxes 36
SECTION 5.15. Independent Engineering Assessments 36
SECTION 5.16. Undisclosed Liabilities 37
SECTION 5.17. Brokers 37
SECTION 5.18. Insurance 37
ARTICLE VI
Representations and Warranties of Buyer
SECTION 6.01. Organization 38
SECTION 6.02. Authority Relative to This Agreement 38
SECTION 6.03. Consents and Approvals; No Violation 38
SECTION 6.04. Availability of Funds 40
SECTION 6.05. Brokers 40
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the Auctioned
Assets 40
SECTION 7.02. Access to Information 43
SECTION 7.03. Consents and Approvals; Transferable Permits 45
SECTION 7.04. Further Assurances 46
SECTION 7.05. Public Statements 48
SECTION 7.06. Tax Matters 48
SECTION 7.07. Bulk Sales or Transfer Laws 49
SECTION 7.08. Storage. 49
SECTION 7.09. Information Resources. 50
SECTION 7.10. Witness Services. 50
SECTION 7.11. Consent Orders 50
SECTION 7.12. Nitrogen Oxide Allowances 51
SECTION 7.13. Trade Names 51
SECTION 7.14. NYPA Agreements 51
SECTION 7.15. Narrows 51
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's Obligation To
Effect the Purchase and Sale 52
SECTION 8.02. Conditions Precedent to Obligation of Buyer To
Effect the Purchase and Sale 53
SECTION 8.03. Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale 55
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters 56
SECTION 9.02. Continuation of Equivalent Benefit Plans/Credited
Service 58
SECTION 9.03. Pension Plan 59
SECTION 9.04. 401(k) Plan 61
SECTION 9.05. Welfare Plans 61
SECTION 9.06. Short- and Long-Term Disability 63
SECTION 9.07. Life Insurance and Accidental Death and
Dismemberment Insurance 63
SECTION 9.08. Severance 63
SECTION 9.09. Workers Compensation 65
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification 65
SECTION 10.02. Third Party Claims Procedures 68
ARTICLE XI
Termination
SECTION 11.01. Termination 69
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses 69
SECTION 12.02. Amendment and Modification;Extension;Waiver 70
SECTION 12.03. No Survival of Representations or Warranties 70
SECTION 12.04. Notices 70
SECTION 12.05. Assignment; No Third Party Beneficiaries 71
SECTION 12.06. Governing Law 72
SECTION 12.07. Counterparts 72
SECTION 12.08. Interpretation 72
SECTION 12.09. Jurisdiction and Enforcement 73
SECTION 12.10. Entire Agreement 74
SECTION 12.11. Severability 74
SECTION 12.12. Conflicts 75
SCHEDULES AND EXHIBITS
Schedule 2.02(a)(ii) Spare Parts
Schedule 2.02(a)(iii)(A)Buyer Personal Property Located on Buyer Real
Estate
Schedule 2.02(a)(iii)(B)Buyer Personal Property Located on Seller Real
Estate
Schedule 2.02(a)(iii)(C)Buyer Personal Property Located on NYPA
Real Estate
Schedule 2.02(a)(iii)(D)NYPA Personal Property
Schedule 2.02(a)(iv) Assigned Contracts
Schedule 2.02(a)(v) Transferable Permits
Schedule 2.02(a)(vi) SO2 Allowances
Schedule 2.02(b)(ii)(A) Seller Personal Property Located on Buyer Real
Estate
Schedule 2.02(b)(ii)(C) Communications Equipment
Schedule 2.03(a)(iv) Seller Consent Orders
Schedule 2.03(a)(xii) Assumed Seller Obligations under NYPA Agreements
Schedule 2.05(a) Franchise Property
Schedule 5.03(a) Contracts Requiring Third Party Consents
Schedule 5.08(a) Material Contracts
Schedule 5.09 Legal Proceedings
Schedule 5.10(a)(i) Exceptions Under Permits
Schedule 5.10(a)(ii) Non-Environmental Violations
Schedule 5.10(b) Nontransferable Permits and Environmental
Permits
Schedule 5.11 Environmental Matters
Schedule 5.13 Benefit Plans
Schedule 5.15(a) Exceptions to Independent Engineering Assessment
Schedule 5.15(b) Changes to Auctioned Assets
Schedule 5.16 Other Undisclosed Liabilities
Schedule 7.14 Rights and Interests under NYPA Agreements
Schedule 7.15 Narrows
Schedule 9.01(a) Job Titles
Schedule 9.01(b) Collective Bargaining Agreements
Exhibit A-1 Form of Astoria Zoning Lot Development
Agreement between Seller and Arthur Kill Acquiror
Exhibit A-2 Form of Astoria Zoning Lot Development
Agreement between Seller and Buyer
Exhibit A-3 Form of Gowanus Zoning Lot Development
Agreement between Seller and Buyer
Exhibit B-1 Form of Deed of Conveyance for Queens
County
Exhibit B-2 Form of Deed of Conveyance for Kings County
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Opinion of John D. McMahon, Esq.,
General Counsel of Seller
Exhibit E Form of Opinion of Counsel to Buyer
Exhibit F Summary of Terms and Conditions for
License for A-10 Dock between Seller and Buyer
Exhibit G Form of Transition Capacity Agreement
between Seller and Buyer
Exhibit H Summary of Terms and Conditions for
License for A-0 Dock between Seller and Buyer
Exhibit I Form of Astoria Declaration of
Subdivision Easements
Exhibit J Form of Gowanus Declaration of
Subdivision Easements
Exhibit K Form of Guarantee Agreement
Exhibit L Form of Opinion of Counsel to Guarantor
GENERATING PLANT AND GAS TURBINE ASSET
PURCHASE AND SALE AGREEMENT (including the
Schedules hereto, this "Agreement"), dated as of
March 2, 1999, by and between CONSOLIDATED EDISON
COMPANY OF NEW YORK, INC., a New York corporation
("Seller"), and ASTORIA GENERATING COMPANY, L.P.,
a Delaware limited partnership ("Buyer",
collectively with Seller, the "Parties").
WHEREAS Seller has offered the Auctioned Assets (as defined
herein) for sale at auction pursuant to the Order Authorizing
the Process for Auctioning of Generation Plant issued by the
PSC (as defined herein) and effective as of July 21, 1998; and
WHEREAS Buyer desires to purchase, and Seller desires to sell,
the Auctioned Assets upon the terms and conditions hereinafter
set forth.
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
SECTION 1.01. Definitions. (a) As used in this
Agreement, the following terms have the following meanings:
"A-0 License" means the license from Buyer to Seller in
respect of the A-0 dock at Astoria, the material terms of
which shall be substantially as set forth in Exhibit H.
"A-10 License" means the license from Seller to Buyer in
respect of the A-10 dock at Astoria, the material terms of
which shall be substantially as set forth in Exhibit F.
"Accountants" shall have the meaning set forth in Section
3.02(b).
"Adjustment Amount" shall have the meaning set forth in
Section 3.02(a).
"Adjustment Date" shall have the meaning set forth in
Section 3.02(c).
"Adjustment Statement" shall have the meaning set forth in
Section 3.02(a).
"Affected Employees" shall have the meaning set forth in
Section 9.01(a).
"Affected Union Employees" shall have the meaning set forth
in Section 9.01(b).
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended.
"Agreement" shall have the meaning set forth in the
Preamble.
"Allocation" shall have the meaning set forth in Section
3.03.
"Ancillary Agreements" means the Continuing Site Agreements,
the Declaration of Easements Agreements, the Declarations of
Subdivision Easements, the Zoning Lot Development Agreements,
the Transition Capacity Agreement, the deeds contemplated by
Section 8.02(e)(i) and any other agreement to which Buyer and
Seller are party and which is expressly identified by its
terms as an Ancillary Agreement hereunder.
"Applicable Law" shall have the meaning set forth in
Section 3.03.
"Arthur Kill Acquiror" means the person referred to as
"Buyer" in the Generating Plant and Gas Turbine Asset
Purchase and Sale Agreement for Arthur Kill Generating
Plants and Astoria Gas Turbines between Seller and such
person.
"Assumed Consent Order Obligations" shall have the meaning set
forth in Section 2.03(a)(iv).
"Assumed Obligations" shall have the meaning set forth in
Section 2.03(a).
"Assumed Seller Obligations Under NYPA Agreements" shall have
the meaning set forth in Section 2.03(a)(xii). "Astoria
Continuing Site Agreement" means the Astoria Continuing Site
Agreement dated as of even date herewith
between Seller and Buyer.
"Astoria Declaration of Easements" means the Astoria
Declaration of Easements by Seller dated as of January 27,
1999, as amended.
"Astoria Declaration of Subdivision Easements" means the
Astoria Declaration of Subdivision Easements to be made by
Seller substantially in the form of Exhibit I, except for
changes required by any Governmental Authority to the extent
that no such change materially and adversely impairs the
continued use and operation of the Auctioned Assets as
currently conducted.
"Astoria Zoning Lot Development Agreement" means (a) the
Astoria Zoning Lot Development Agreement between Seller and
Arthur Kill Acquiror, in the form of Exhibit A-1, if executed
and delivered prior to the Closing Date or (b) the Astoria
Zoning Lot Development Agreement between Seller and
Buyer, in the form of Exhibit A-2.
"Auctioned Assets" shall have the meaning set forth in
Section 2.02(a).
"Benefit Plans" shall have the meaning set forth in Section
5.13.
"Bidder Confidentiality Agreements" shall have the meaning
set forth in Section 7.02(b).
"Business Day" means any day other than Saturday, Sunday and
any day which is a legal holiday or a day on which banking
institutions in New York are authorized or required by law or
other action of a Governmental Authority to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Assets" shall have the meaning set forth in Section
2.03(a)(x).
"Buyer Benefit Plans" shall have the meaning set forth in
Section 9.02(c).
"Buyer Facilities" shall mean the "Parcel B Facilities" and
"Parcel D Facilities" under the Astoria Declaration of
Easements, together with the respective "Buyer Facilities"
under each of the Gowanus and Narrows Declaration of Easements
Agreements.
"Buyer Indemnitees" shall have the meaning set forth in
Section 10.01(a).
"Buyer Material Adverse Effect" shall have the meaning set
forth in Section 6.03(a).
"Buyer Real Estate" shall have the meaning set forth in
Section 2.02(a)(i).
"Buyer Required Regulatory Approvals" shall have the meaning
set forth in Section 6.03(b).
"Buyer's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Buyer's Pension Plans" shall have the meaning set forth in
Section 9.03(a).
"Buyer's Welfare Plans" shall have the meaning set forth in
Section 9.05(a).
"Closing" shall have the meaning set forth in Section 4.01.
"Closing Date" shall have the meaning set forth in Section
4.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" shall have the meaning
set forth in Section 9.01(b).
"Communications Equipment" means the equipment, systems,
switches and lines used in connection with voice, data and
other communications activities.
"Confidentiality Agreement" means the Confidentiality
Agreement dated September 22, 1998 between Seller and Orion
Power Holdings, Inc.
"Continued Employee" shall have the meaning set forth in
Section 9.01(a).
"Continued Non-Union Employee" shall have the meaning set
forth in Section 9.02(a).
"Continued Union Employee" shall have the meaning set forth
in Section 9.01(b).
"Continuing Site Agreements" means the Astoria Continuing
Site Agreement, the Gowanus Continuing Site Agreement and
the Narrows Continuing Site Agreement.
"Contracts" shall have the meaning set forth in Section
2.02(a)(iv).
"Conveyance Plans" shall have the meaning set forth in
Section 2.02(a)(i).
"Declaration of Easements Agreements" means the Astoria
Declaration of Easements, the Gowanus Declaration of
Easements Agreement and Narrows Declaration of Easements
Agreement.
"Declarations of Subdivision Easements" means the Astoria
Declaration of Subdivision Easements and the Gowanus
Declaration of Subdivision Easements.
"Emission Reduction Credits" means credits, in units that are
established by the environmental regulatory agency with
jurisdiction over the source or facility that has obtained the
credits, resulting from a reduction in the emissions of air
pollutants from an emitting source or facility (including, and
to the extent allowable under applicable law, reductions from
retirements, control of emissions beyond that required by
applicable law and fuel switching), that: (i) have been
certified by NYSDEC as complying with the law and regulations
of the State of New York governing the establishment of such
credits (including that such emissions reductions are real,
enforceable, permanent and quantifiable); or (ii) have been
certified by any other applicable regulatory authority as
complying with the law and regulations governing the
establishment of such credits (including that such emissions
reductions are real, enforceable, permanent and quantifiable).
Emission Reduction Credits include certified air emissions
reductions, as described above, regardless of whether the
regulatory agency certifying such reductions designates such
certified air emissions reductions by a name other than
"emissions reduction credits".
"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements,
activity and use limitations, exceptions, conservation
easements, rights-of-way, deed restrictions, encumbrances and
charges of any kind.
"Environmental Laws" means all former, current and future
Federal, state, local and foreign laws (including common law),
treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives or orders (including consent orders) and
Environmental Permits, in each case, relating to pollution or
protection of the environment or natural resources, including
laws relating to Releases or threatened Releases, or otherwise
relating to the generation, manufacture, processing,
distribution, use, treatment, storage, arrangement for
disposal, transport, recycling or handling, of Hazardous
Substances.
"Environmental Liability" means all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders,
fines, penalties, fees, expenses and costs, including: (i)
remediation costs, engineering costs, environmental consultant
fees, laboratory fees, permitting fees, investigation costs
and defense costs and reasonable attorneys' fees and expenses;
(ii) any claims, demands and causes of action relating to or
resulting from any personal injury (including wrongful death),
property damage (real or personal) or natural resource damage;
and (iii) any penalties, fines or costs associated with the
failure to comply with any Environmental Law.
"Environmental Permits" means the permits, licenses, consents,
approvals and other governmental authorizations with respect
to Environmental Laws relating primarily to the power
generation operations of the Generating Plants or the Gas
Turbines.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in
Section 5.13.
"Estimated Adjustment Amount" shall have the meaning set
forth in Section 4.02.
"FERC" means the Federal Energy Regulatory Commission.
"Federal Power Act" shall have the meaning set forth in
Section 5.03(b).
"Filed Seller SEC Documents" means the reports, schedules,
forms, statements and other documents filed by Seller with the
Securities and Exchange Commission since January 1, 1997, and
publicly available prior to the date of this Agreement. "Final
Allocation" shall have the meaning set forth in Section 3.03.
"Franchise Property" shall have the meaning set forth in
Section 2.05(a).
"GAAP" shall have the meaning set forth in Section 1.02.
"Gas Turbines" means the gas turbine units comprised of the
Astoria GT1, Gowanus GT1 through GT4 and Narrows GT1 and
GT2.
"Generating Facilities" means the Generating Plants, the Gas
Turbines and any additional generating plants, gas turbines or
other generating facilities constructed by Buyer after the
Closing Date at the site of any Auctioned Assets.
"Generating Plants" means the two retired steam turbine
generating units designated as Astoria units 1 and 2 and the
three operating steam turbine generating units designated as
Astoria units 3, 4 and 5.
"Governmental Authority" means any court, administrative or
regulatory agency or commission or other governmental entity
or instrumentality, domestic, foreign or supranational or any
department thereof.
"Gowanus Continuing Site Agreement" means the Gowanus
Continuing Site Agreement dated as of even date herewith
between Seller and Buyer.
"Gowanus Declaration of Easements Agreement" means the Gowanus
Declaration of Easements Agreement dated as of even date
herewith between Seller and Buyer.
"Gowanus Declaration of Subdivision Easements" means the
Gowanus Declaration of Subdivision Easements to be made by
Seller substantially in the form of Exhibit J, except for
changes required by any Governmental Authority to the extent
that no such change materially and adversely impairs the
continued use and operation of the Auctioned Assets as
currently conducted.
"Gowanus Zoning Lot Development Agreement" means the
Gowanus Zoning Lot Development Agreement between Seller and
Buyer in the form of Exhibit A-3.
"Guarantee Agreement" means the Guarantee Agreement dated as
of even date herewith between Guarantor and Seller
substantially in the form of Exhibit K.
"Guarantor" means Orion Power Holdings, Inc.
"Hazardous Substances" means (i) any petrochemical or
petroleum products, crude oil or any fraction thereof, ash,
radioactive materials, radon gas, asbestos in any form, urea
formaldehyde foam insulation or polychlorinated biphenyls,
(ii) any chemicals, materials, substances or wastes defined as
or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of
similar meaning and regulatory effect contained in any
Environmental Law or (iii) any other chemical, material,
substance or waste which is prohibited, limited or regulated
by any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any Federal, state, local or foreign Tax or
surtax (i) based upon, measured by or calculated with respect
to net income, profits or receipts (including the New York
State Gross Receipts Tax (including the excess dividends tax),
the New York City Public Utilities Excise Tax, any and all
municipal gross receipts Taxes, capital gains Taxes and
minimum Taxes) or (ii) based upon, measured by or calculated
with respect to multiple bases (including 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 (i), in each case, together with any interest,
penalties, or additions to such Tax.
"Indemnifiable Loss" shall have the meaning set forth in
Section 10.01(a).
"Indemnifying Party" shall have the meaning set forth in
Section 10.01(c).
"Indemnitee" shall have the meaning set forth in Section
10.01(c).
"Independent Engineering Assessments" shall have the
meaning set forth in Section 5.15.
"Interconnection Facilities" means those items of switching
equipment, switchyard controls, protective relays and related
facilities of Seller that are used by Seller in connection
with the provision of Interconnection Services.
"Interconnection Services" means the service provided by
Seller to Buyer to interconnect the Generating Facilities to
the Transmission System.
"Inventory Survey" shall have the meaning set forth in
Section 3.02(a).
"ISO" means the New York Independent System Operator.
"Local 1-2" shall have the meaning set forth in Section
9.01(a).
"Local 1-2 Collective Bargaining Agreement" shall have the
meaning set forth in Section 9.01(a).
"Material Adverse Effect" means any change, or effect on the
Auctioned Assets, that is materially adverse to the business,
operations or condition (financial or otherwise) of the
Auctioned Assets, taken as a whole, other than (i) any change
or effect resulting from changes in the international,
national, regional or local wholesale or retail energy,
capacity or ancillary services electric power markets, (ii)
any change or effect resulting from changes in the
international, national, regional or local markets for fuel,
(iii) any change or effect resulting from changes in the
national, regional or local electric transmission systems,
(iv) any change or effect resulting from any bid cap, price
limitation, market power mitigation measure, including the
Mitigation Measures, or other regulatory or legislative
measure in respect of transmission services or the wholesale
or retail energy, capacity or ancillary services markets
adopted or approved (or failed to be adopted or approved) by
FERC, the PSC or any other Governmental Authority or proposed
by any person, (v) any change or effect resulting from any
regulation, rule, procedure or order adopted or proposed (or
failed to be adopted or proposed) by or with respect to, or
related to, the ISO, (vi) any change or effect resulting from
any action or measure taken or adopted, or proposed to be
taken or adopted, by any local, state, regional, national or
international reliability organization and (vii) any
materially adverse change in or effect on the Auctioned Assets
which is cured by Seller before the Closing Date.
"Mitigation Measures" shall have the meaning set forth in
Section 6.03(b).
"MMS" means the Material Management System, which is an
information resources system served by Seller's mainframe
computer.
"Narrows Continuing Site Agreement" means the Narrows
Continuing Site Agreement dated as of even date herewith
between Seller and Buyer.
"Narrows Declaration of Easements Agreement" means the Narrows
Declaration of Easements Agreement dated as of even date
herewith between Seller and Buyer.
"Narrows Turbines" shall have the meaning set forth in
Section 7.15.
"NYPA" means the Power Authority of the State of New York.
"NYPA Agreements" means the Indenture, made as of December 13,
1974, between Seller and NYPA, and the NYPA Operating
Agreement.
"NYPA Operating Agreement" means the Astoria Operating
Agreement dated January 5, 1981, between NYPA and Seller, as
amended.
"NYSDEC" means the New York State Department of
Environmental Conservation.
"Off-Site" means any location except (i) the Auctioned Assets
and (ii) any location to or under which Hazardous Substances
present or Released at the Auctioned Assets have migrated.
"Offering Memorandum" means the Offering Memorandum dated
August 1998 describing the Generating Plants and the Gas
Turbines, and the materials delivered with such Offering
Memorandum, as such Offering Memorandum and such materials may
have been amended or supplemented.
"Operating Records" shall have the meaning set forth in
Section 2.02(a)(viii).
"Party" shall have the meaning set forth in the Preamble.
"Permits" means the permits, licenses, consents, approvals and
other governmental authorizations (other than with respect to
Environmental Laws) relating primarily to the power generation
operations of the Generating Plants or the Gas Turbines.
"Permitted Exceptions" means (i) all exceptions, restrictions,
easements, charges, rights-of-way and monetary and nonmonetary
encumbrances which are set forth in any Permits or
Environmental Permits, (ii) statutory liens for current taxes
or assessments not yet due or delinquent or the validity of
which is being contested in good faith by appropriate
proceedings, (iii) 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 Seller or the validity of which
are being contested in good faith by appropriate proceedings,
(iv) zoning, entitlement, conservation restriction and other
land use and environmental regulations by Governmental
Authorities, (v) such title matters set forth in the
Certificate of Title No. NY981606, as amended, the Certificate
of Title No. NY971417, as amended, and the Certificate of
Title No. NY971418, as amended, in each case, issued by the
Title Company, (vi) all matters disclosed on the Conveyance
Plans and any other facts that would be disclosed by an
accurate survey and physical inspection of the Buyer Real
Estate, (vii) Encumbrances, easements, obligations or other
restrictions created pursuant to or provided for in any
Ancillary Agreement or any NYPA Agreement, (viii) restrictions
and regulations imposed by the ISO, any Governmental Authority
or any local, state, regional, national or international
reliability council and (ix) such other Encumbrances or
imperfections in or failure of title which would not,
individually or in the aggregate, reasonably be expected to
materially impair the continued use and operation of the
Auctioned Assets as currently conducted.
"person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated
organization or Governmental Authority.
"PPMIS" means the Power Plant Maintenance Information System,
which is an information resources system served by Seller's
mainframe computer.
"Prorated Items" shall have the meaning set forth in
Section 2.03(a)(viii).
"Protective Relaying System" means the system relating to the
Generating Facilities comprised of components collectively
used to detect defective power system elements or other
conditions of an abnormal nature, initiate appropriate control
circuit action in response thereto and isolate the appropriate
system elements in order to minimize damage to equipment and
interruption to service.
"PSC" means the New York State Public Service Commission.
"Purchase Price" shall have the meaning set forth in
Section 3.01.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building,
structure, facility or fixture.
"Restraints" shall have the meaning set forth in Section
8.01(b).
"Retained Assets" shall have the meaning set forth in
Section 2.02(b).
"Retained Liabilities" shall have the meaning set forth in
Section 2.03(b).
"Revenue Meters" means all meters measuring demand, energy and
reactive components, and all pulse isolation relays, pulse
conversion relays and associated totalizing and remote access
pulse recorder equipment, in each case, required to measure
the transfer of energy between the Parties.
"Revocable Consent" shall have the meaning set forth in
Section 2.05(a).
"Segregated Reimbursement Accounts" shall have the meaning
set forth in Section 9.05(b).
"Seller" shall have the meaning set forth in the Preamble.
"Seller Assets" shall have the meaning set forth in Section
2.03(b)(x).
"Seller Consent Orders" shall have the meaning set forth in
Section 2.03(a)(iv).
"Seller Facilities" shall mean the "Parcel A Facilities" under
the Astoria Declaration of Easements, together with the
respective "Seller Facilities" under each of the Gowanus and
Narrows Declaration of Easements Agreements.
"Seller Indemnitees" shall have the meaning set forth in
Section 10.01(b).
"Seller Real Estate" means all real property and leaseholds or
other interests in real property of Seller (including the
premises on which the Substations are located), other than
Buyer Real Estate.
"Seller Required Regulatory Approvals" shall have the meaning
set forth in Section 5.03(b).
"Seller's 401(k) Plans" shall have the meaning set forth in
Section 9.04(a).
"Seller's Pension Plans" shall have the meaning set forth
in Section 9.03(a).
"Seller's Reimbursement Account Plans" shall have the meaning
set forth in Section 9.05(b).
"SO2 Allowances" means allowances that have been allocated to
Seller for the Generating Plants or the Gas Turbines by the
Administrator of the United States Environmental Protection
Agency under Title IV of the Clean Air Act authorizing the
emission of one ton of sulfur dioxide per allowance during or
after the year 2000.
"Substations" shall have the meaning set forth in Section
2.02(b)(i).
"Tax Benefit" means, with respect to any Indemnifiable Loss
for any person, the positive excess, if any, of the Tax
liability of such person without regard to such Indemnifiable
Loss over the Tax liability of such person taking into account
such Indemnifiable Loss, with all other circumstances
remaining unchanged.
"Tax Cost" means, with respect to any indemnity payment for
any person, the positive excess, if any, of the Tax liability
of such person taking such indemnity payment into account over
the Tax liability of such person without regard to such
payment, with all other circumstances remaining unchanged.
"Tax Return" means any return, report, information return or
other document (including any related or supporting
information) required to be supplied to any authority with
respect to Taxes. "Taxes" means all taxes, surtaxes, charges,
fees, levies, penalties or other assessments imposed by any
United States Federal, state or local or foreign taxing
authority, including Income Tax, excise, property, sales,
transfer, franchise, special franchise, payroll, recording,
withholding, social security or other taxes, or any liability
for taxes incurred by reason of joining in the filing of any
consolidated, combined or unitary Tax Returns, in each case
including any interest, penalties or additions attributable
thereto; provided, however, that "Taxes" shall not include
sewer rents or charges for water.
"Termination Date" shall have the meaning set forth in
Section 11.01(b).
"Third Party Claim" shall have the meaning set forth in
Section 10.02(a).
"Title Company" means Commonwealth Land Title Insurance
Company or any other reputable title insurance company
licensed to do business in New York.
"Transferable Permits" shall have the meaning set forth in
Section 2.02(a)(v).
"Transferring Employee Records" shall have the meaning set
forth in Section 2.02(a)(viii).
"Transferring Employees" shall have the meaning set forth
in Section 2.02(a)(viii).
"Transition Capacity Agreement" means the Transition Capacity
Agreement to be entered into between Seller and Buyer
substantially in the form of Exhibit G.
"Transmission System" shall have the meaning set forth in
Section 2.02(b)(i).
"Zoning Lot Development Agreements" means the Astoria
Zoning Lot Development Agreement and the Gowanus Zoning Lot
Development Agreement.
SECTION 1.02. Accounting Terms. Any accounting terms used in
this Agreement or the Ancillary Agreements shall, unless
otherwise specifically provided, have the meanings customarily
given them in accordance with United States generally accepted
accounting principles ("GAAP") and all financial computations
hereunder or thereunder shall, unless otherwise specifically
provided, be computed in accordance with GAAP consistently
applied.
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.01. Purchase and Sale. Upon the terms and subject to
the satisfaction of the conditions contained in this
Agreement, at the Closing, Seller agrees to sell, assign,
convey, transfer and deliver to Buyer, and Buyer agrees to
purchase, assume and acquire from Seller all the Auctioned
Assets. In the case of any Auctioned Assets not located at the
Generating Plants or Gas Turbines (including supplies,
materials and spare parts inventory), Buyer agrees that (i)
from and after the Closing, except to the extent specifically
otherwise provided in the Ancillary Agreements, Buyer will
bear all risk of casualty or loss with regard to such
Auctioned Assets (regardless of whether they remain on
Seller's property or otherwise in Seller's possession) and
(ii) Seller shall store such Auctioned Assets in accordance
with Section 7.08.
SECTION 2.02. Auctioned Assets and Retained Assets. (a)
Auctioned Assets. The term "Auctioned Assets" means all the
assets, real and personal property, goodwill and rights of
Seller of whatever kind and nature, whether tangible or
intangible, in each case, primarily relating to the power
generation operations of the Generating Plants or the Gas
Turbines, other than the Retained Assets, including:
(i) subject to Section 2.05, all real property and leaseholds
or other interests in real property of Seller relating primarily to
the power generation operations of the Generating Plants or the Gas
Turbines described as (A) Parcels B and D as shown on the Astoria
Generating Station ALTA/ACSM Land Title Survey dated February 17,
1999, (B) Parcel A as shown on the Gowanus Gas Turbine Site
ALTA/ACSM Land Title Survey Conveyance Plan dated February 23, 1999
and (C) the Narrows Gas Turbine Site as shown on the Narrows Gas
Turbine Site ALTA/ACSM Land Title Survey Conveyance Plan dated
February 23, 1999, in each case, as may hereafter be amended in
immaterial respects (collectively, the "Conveyance Plans"), together
with all buildings, improvements, structures and fixtures thereon,
subject to Permitted Exceptions or Encumbrances otherwise disclosed
to Buyer in this Agreement or the Ancillary Agreements with respect
thereto (the "Buyer Real Estate");
(ii) subject to Section 2.04 and Section 2.05, all inventories
of fuels, supplies, materials and spare parts relating primarily to
the power generation operations of the Generating Plants or the Gas
Turbines, together with and subject to (A) all Permitted Exceptions
or Encumbrances otherwise disclosed to Buyer in this Agreement or
the Ancillary Agreements with respect thereto and (B) all warranties
against manufacturers and vendors relating thereto, including the
spare parts listed on Schedule 2.02(a)(ii), in each case, other than
assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iii) subject to Section 2.04 and Section 2.05, (A) the
machinery, equipment, facilities, furniture and other personal
property (other than vehicles) relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines,
including a stand-alone local area network and other items of
personal property located on Buyer Real Estate or temporarily
removed from Buyer Real Estate for repairs, servicing or maintenance
and listed on Schedule 2.02(a)(iii)(A), (B) machinery, equipment,
facilities, furniture and other personal property located on Seller
Real Estate or temporarily removed from Seller Real Estate for
repairs, servicing or maintenance and listed on Schedule
2.02(a)(iii)(B), (C) machinery, equipment, facilities, furniture and
other personal property located on real property owned by NYPA or
temporarily removed from such real property for repairs, servicing
or maintenance and listed on Schedule 2.02(a)(iii)(C) and (D)
machinery, equipment, facilities, furniture and other personal
property listed on Schedule 2.02(a)(iii)(D) to the extent Seller has
obtained title thereto from NYPA prior to Closing, in each case, (1)
together with and subject to (x) all Permitted Exceptions or
Encumbrances otherwise disclosed to Buyer in this Agreement or the
Ancillary Agreements with respect thereto and (y) all warranties
against manufacturers or vendors relating thereto and (2) other than
assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iv) subject to Section 2.04, all right, title and interest of
Seller in, to and under all contracts, agreements, personal property
leases (whether Seller is lessor or lessee thereunder), commitments
and all other legally binding arrangements (other than Seller
Consent Orders), whether oral or written (A) set forth on Schedule
2.02(a)(iv) or (B) otherwise relating primarily to the power
generation operations of the Generating Plants or the Gas Turbines
and entered into by Seller in accordance with Section 7.01 (the
"Contracts"), in each case, to the extent in full force and effect
on the Closing Date;
(v) subject to Section 7.03(c), the Permits and Environmental
Permits that are transferred or transferable by Seller to Buyer
(collectively, the "Transferable Permits"), including the
Transferable Permits set forth on Schedule 2.02(a)(v), in each case,
to the extent in full force and effect on the Closing Date;
(vi) the SO2 Allowances listed on Schedule 2.02(a)(vi);
(vii) all nitrogen oxide allowances allocated to the
Generating Plants or the Gas Turbines by NYSDEC under the New York
State Nitrogen Oxides Budget Program that have not been used on or
prior to the Closing Date (it being understood that, for purposes of
this Agreement, one nitrogen oxide allowance shall be deemed "used"
for each ton of actual nitrogen oxide emitted from the Generating
Plants or Gas Turbines between May 1 of any year and September 30 of
such year, inclusive);
(viii) (A) all data, information, books, operating records,
operating, safety and maintenance manuals, engineering design plans,
blueprints and as-built plans, specifications, procedures, facility
compliance plans, environmental procedures and similar records of
Seller relating primarily to the power generation operations of the
Generating Plants or the Gas Turbines, to the extent in Seller's
possession or readily available (collectively, "Operating Records"),
and (B) all personnel files relating to employees of Seller to be
employed by Buyer after the Closing Date in accordance with Article
IX (the "Transferring Employees"), to the extent in Seller's
possession and readily available and to the extent such files
pertain to (1) skill and development training and resumes, (2)
seniority histories, (3) salary and benefit information, (4)
Occupational Safety and Health Act medical reports, (5) active
medical restriction forms and (6) any other matters, disclosure of
which by Seller to Buyer is permitted under applicable law without
the consent of the Transferring Employee, but not including any
performance evaluations or disciplinary records (collectively, the
"Transferring Employee Records"); provided, however, that Seller
shall be permitted to retain copies, or originals to the extent it
provides Buyer with copies of same, of all Operating Records and
Transferring Employee Records; and
(ix) (A) except as provided in Section 2.02(b)(iv), the
software relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines (provided, however, that
Buyer acknowledges that it will require licenses from third parties
in order to be legally entitled to use such software), and (B) a
non-exclusive, royalty-free license to use solely in connection with
the Auctioned Assets the software or other copyrighted material
owned by Seller located at Buyer Real Estate.
(b) Retained Assets. The term "Retained Assets" means:
(i) the transmission and distribution facilities owned,
controlled or operated by Seller for purposes of providing
point-to-point transmission service, network integration service and
distribution service and other related purposes, including the real
property and equipment located at the Astoria East Substation, the
Astoria West Substation, the North Queens Substation, the Gowanus
Substation and the Greenwood Substation (collectively, the
"Substations"), used in controlling continuity between the
Generating Plants and Gas Turbines and the transmission and
distribution facilities and for other purposes (the "Transmission
System");
(ii)(A) except as set forth in Section 2.02(a)(iii), all
Interconnection Facilities and other transmission, distribution and
substation machinery, equipment and facilities and related support
equipment located on Buyer Real Estate or Seller Real Estate or
temporarily removed from Buyer Real Estate or Seller Real Estate for
repairs, servicing or maintenance, including items listed on
Schedule 2.02(b)(ii)(A); (B) all Revenue Meters installed by Seller;
(C) Communications Equipment and related support equipment (1)
located on Buyer Real Estate or temporarily removed from Buyer Real
Estate for repairs, servicing or maintenance and listed on Schedule
2.02(b)(ii)(C) or acquired by Seller after the date of this
Agreement and designated by Seller as a Retained Asset or (2)
located on Seller Real Estate or temporarily removed from Seller
Real Estate for repairs, servicing or maintenance; and (D) all
Protective Relaying Systems not located on Buyer Real Estate;
(iii) all cash, cash equivalents, bank deposits and accounts
receivable held or owned by Seller;
(iv) (A) all mainframe computer systems of Seller, (B) the
code to all software described in Section 2.02(a)(ix)(B), and (C)
all software, copyrights, know-how or other proprietary information
relating primarily to any other Retained Assets or any Retained
Liabilities, including software, copyrights, know-how or other
proprietary information licensed to Buyer pursuant to Section
2.02(a)(ix)(B);
(v) the names "Consolidated Edison", "Con Edison", "Con Ed",
"Consolidated Edison Company", "Consolidated Edison Company of New
York, Inc.", "Consolidated Edison, Inc.", "New York Edison",
"Brooklyn Edison", "Staten Island Edison" and "Edison" and any
related or similar trade names, trademarks, service marks or logos
(and any rights to and in the same, including any right to use the
same);
(vi) subject to Section 7.06(d), any refund or credit related
to Taxes or sewer rents or water charges or any other liabilities or
obligations in respect of the Auctioned Assets, in each case,
attributable to periods (or portions thereof) prior to the Closing
Date;
(vii) all personnel records (other than Transferring Employee
Records) and all other records (other than Operating Records);
(viii) (A) all Emission Reduction Credits held or possessed by
Seller and (B) SO2 Allowances held or possessed by Seller and not
listed on Schedule 2.02(a)(vi); and
(ix) any other asset that is not described with particularity
in this Agreement as an Auctioned Asset.
SECTION 2.03. Assumed Obligations and Retained Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall assume,
and from and after the Closing, shall discharge, all of the
liabilities and obligations, direct or indirect, known or
unknown, absolute or contingent, which relate to the Auctioned
Assets or are otherwise specified below, other than the
Retained Liabilities (collectively, the "Assumed
Obligations"), including:
(i) except as set forth in Section 2.03(b)(ii), any
liabilities and obligations under the Contracts;
(ii) any liabilities and obligations for goods delivered or
services rendered on or after the Closing Date relating to the
Auctioned Assets;
(iii) except as set forth in Sections 2.03(b)(iii) or (iv),
any Environmental Liability arising out of or in connection with (A)
any violation or alleged violation of, or noncompliance or alleged
noncompliance with, any Environmental Laws, prior to, on or after
the Closing Date, with respect to the ownership or operation of the
Auctioned Assets, notwithstanding that, as contemplated by Section
7.03(c), Seller may remain the "holder of record" with respect to
certain Transferable Permits, (B) the condition of any Auctioned
Assets prior to, on or after the Closing Date, including any actual
or alleged presence, Release or threatened Release of any Hazardous
Substance at, on, in, under or migrating onto or from, the Auctioned
Assets, prior to, on or after the Closing Date (except for any such
Release from equipment or property owned or operated by Seller and
located on, or constituting, Seller Real Estate adjacent to Buyer
Real Estate that (1) occurs on or after the Closing Date and (2) is
caused by Seller or its Affiliates), (C) any Release or threatened
Release of any Hazardous Substance on or after the Closing Date from
the Buyer Facilities or otherwise originating from, or relating to,
any equipment owned or used by Buyer that is located on Seller Real
Estate or (D) the transportation, storage, Release, threatened
Release or recycling of, or arrangement for such activities with
respect to, Hazardous Substances generated in respect of the
Auctioned Assets at or to any location, on or after the Closing
Date;
(iv) any liabilities and obligations relating to the Auctioned
Assets under the consent orders listed on Schedule 2.03(a)(iv) (the
"Seller Consent Orders") and identified thereon as "Assumed Consent
Order Obligations" (the "Assumed Consent Order Obligations");
(v) except as set forth in Section 2.03(b)(iv), any
liabilities and obligations with respect to the Permits to the
extent arising or accruing on or after the Closing Date;
(vi) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing on or after the Closing Date, and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Buyer is responsible pursuant to Article IX;
(vii) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Retained Liabilities) in respect
of any personal injury or property damage claim relating to,
resulting from or arising out of the Generating Plants or Gas
Turbines or (B) any liabilities and obligations in respect of any
discrimination, wrongful discharge or unfair labor practice claim by
any Transferring Employee, in the case of each of the foregoing
clauses (A) and (B), to the extent arising or accruing on or after
the Closing Date;
(viii) any liabilities and obligations, with respect to the
periods that include the Closing Date, with respect to real or
personal property rent, taxes based on the ownership or use of
property, utilities charges and similar charges that primarily
relate to the Generating Plants or the Gas Turbines (collectively,
the "Prorated Items"), to the extent such Prorated Items relate to
the period from and after the Closing Date, including (A) personal
property taxes, real estate and occupancy taxes, assessments and
other charges (which shall be apportioned or adjusted as provided in
the Zoning Lot Development Agreements), (B) rent and all other items
payable by Seller under any Contract, (C) any fees with respect to
any Transferable Permit and (D) sewer rents and charges for water,
telephone, electricity and other utilities, in each case calculated
by multiplying the amount of any such Prorated Item by a fraction
the numerator of which is the number of days in such period from and
after the Closing Date and the denominator of which is the number of
days in such period;
(ix) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
beginning on or after the Closing Date;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Buyer or its Affiliates subject
to the Ancillary Agreements or employed by Buyer in connection with
the performance of the Ancillary Agreements ("Buyer Assets"), or any
Protective Relaying System owned by Seller as contemplated by the
Continuing Site Agreement, regardless of whether the property damage
or personal injury is caused by a Seller Indemnitee or a Buyer
Indemnitee;
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Auctioned Assets to the extent arising
on or after the Closing Date; and
(xii) any liabilities and obligations relating to the
Auctioned Assets under the NYPA Agreements and listed on Schedule
2.03(a)(xii) (the "Assumed Seller Obligations under NYPA
Agreements"); provided, however, that to the extent required for
qualification of Buyer, with respect to the Auctioned Assets, as an
exempt wholesale generator under the Energy Policy Act of 1992,
Buyer may delegate and/or assign its obligations to provide
electricity and/or steam to NYPA to an Affiliate of Buyer; provided
further, however, that no such delegation or assignment shall
relieve Buyer of such obligations.
(b) Retained Liabilities. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge the following
liabilities or obligations (the "Retained Liabilities"):
(i) any liabilities and obligations of Seller primarily
relating to any Retained Assets (other than as contemplated by
Section 2.03(a)(x));
(ii) any payment obligations of Seller, including under
Contracts, for goods delivered or services rendered prior to the
Closing Date;
(iii) (A) any Environmental Liability of Seller arising out of
or in connection with the transportation, storage, Release,
threatened Release or recycling of, or arrangement for such
activities with respect to, Hazardous Substances at or to any
Off-Site location, prior to the Closing Date, (B) any Environmental
Liability of Seller arising out of or in connection with any Release
or threatened Release of any Hazardous Substance on or after the
Closing Date from the Seller Facilities or otherwise originating
from, or relating to, any equipment owned or used by Seller that is
located on Buyer Real Estate and (C) any liabilities and obligations
relating to Auctioned Assets under the Seller Consent Orders, except
Assumed Consent Order Obligations;
(iv) any monetary fines (excluding (A) natural resource
damages, (B) cleanup or remediation costs and (C) other costs of a
similar nature) imposed by a Governmental Authority to the extent
arising out of or relating to acts or omissions of Seller in respect
of the Auctioned Assets prior to the Closing Date;
(v) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational
safety and health liabilities or other similar liabilities and
obligations in respect of Transferring Employees to the extent
arising or accruing prior to the Closing Date and (B) all other
liabilities and obligations with respect to the Transferring
Employees for which Seller is responsible pursuant to Article IX;
(vi) (A) any liabilities and obligations (other than any
Environmental Liabilities which are Assumed Obligations) in respect
of any personal injury or property damage claim relating to the
Generating Plants or Gas Turbines or (B) any liabilities and
obligations in respect of any discrimination, wrongful discharge or
unfair labor practice claim by any Transferring Employee, in the
case of each of the foregoing clauses (A) and (B), to the extent
arising out of or relating to acts or omissions of Seller prior to
the Closing Date;
(vii) any liabilities and obligations, with respect to the
period prior to the Closing Date, for the Prorated Items, calculated
as set forth in Section 2.03(a)(viii);
(viii) any liabilities and obligations in respect of Taxes
(other than Prorated Items) attributable to the Auctioned Assets
arising or accruing during taxable periods (or portions thereof)
ending before the Closing Date, including Income Taxes attributable
to income realized by Seller pursuant to the transactions
contemplated by this Agreement;
(ix) any liabilities and obligations arising after the date of
this Agreement in respect of which Seller has provided pursuant to
Section 7.01(d)(ii) that such liabilities and obligations shall not
be assumed or retained by Buyer;
(x) any liabilities and obligations in respect of damage to
property or personal injury or death relating to, resulting from or
arising out of any property, machinery, equipment, facilities or
systems from time to time owned by Seller or its Affiliates subject
to the Ancillary Agreements or employed by Seller in connection with
the performance of the Ancillary Agreements ("Seller Assets"),
regardless of whether the property damage or personal injury is
caused by a Seller Indemnitee or a Buyer Indemnitee;
(xi) any liabilities and obligations under the Ancillary
Agreements in respect of the Retained Assets; and
(xii) any liabilities and obligations relating to Auctioned
Assets under the NYPA Agreements, except Assumed Seller Obligations
under NYPA Agreements.
SECTION 2.04. Third Party Consents. (a) Notwithstanding
Section 2.02(a)(ii), (iii) or (iv), to the extent that
Seller's rights under any Contract or warranty may not be
assigned without the consent of another person which consent
has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its reasonable best efforts to obtain prior
to the Closing any such required consents.
(b) Seller and Buyer agree that if any consent to an
assignment of any such Contract or warranty shall not be
obtained or if any attempted assignment would in Seller's
reasonable opinion be ineffective or would impair any material
rights and obligations of Buyer under such Contract or
warranty, as applicable, so that Buyer would not acquire the
benefit of all such rights and obligations, Seller, to the
maximum extent permitted by law and such Contract or warranty,
as applicable, shall after the Closing appoint Buyer to be
Seller's representative and agent with respect to such
Contract or warranty, as applicable, and Seller shall, to the
maximum extent permitted by law and such Contract or warranty,
as applicable, enter into such reasonable arrangements with
Buyer as are necessary to provide Buyer with the benefits and
obligations of such Contract or warranty, as applicable.
Seller and Buyer shall cooperate and shall each use their
reasonable best efforts after the Closing to obtain an
assignment of each such Contract or warranty, as applicable,
to Buyer.
SECTION 2.05. Franchise Property. (a) Not withstanding Section
2.02(a)(i), (ii) and (iii), to the extent it would be unlawful
for Buyer to operate, use or maintain the machinery, equipment
and property listed on Schedule 2.05(a) (collectively, the
"Franchise Property") to Buyer without Buyer obtaining from
the City of New York a revocable consent, franchise agreement
or other arrangement permitting Buyer to hold title to the
Franchise Property (the "Revocable Consent"), Seller and Buyer
agree that (i) Buyer shall use its reasonable best efforts to
cause the Revocable Consent to be entered into prior to
Closing, including filing a petition with the City of New York
in respect of the Revocable Consent not later than 45 days
after the date of this Agreement, and Seller shall cooperate
in good faith in connection therewith, (ii) if the Revocable
Consent has not been obtained by Buyer prior to Closing (A)
title to the Franchise Property shall be deemed not to be
transferred at Closing, (B) Seller, to the maximum extent
permitted by law, shall after Closing appoint Buyer to be
Seller's representative with respect to the Franchise
Property, (C) Seller shall operate, use and maintain the
Franchise Property at Buyer's expense and Buyer shall pay all
real and personal property taxes applicable thereto and (D)
Buyer shall use its reasonable best efforts after Closing to
cause the Revocable Consent to be entered into, at which time
title to the Franchise Property shall be deemed transferred
from Seller to Buyer pursuant to this Agreement, and Seller
shall cooperate in good faith in connection therewith and
(iii) Buyer shall pay all fees, charges and other expenses in
connection with the Revocable Consent.
(b) Seller and Buyer further agree that for the purposes of
(i) the Ancillary Agreements and Sections 2.03, 10.01 and
10.02 of this Agreement, the terms "Auctioned Assets", "Buyer
Assets" and "Buyer Facilities" shall in any event each be
deemed to include the Franchise Property and (ii) the
Ancillary Agreements, the Franchise Property shall in any
event be deemed to be owned by Buyer.
ARTICLE III
Purchase Price
SECTION 3.01. Purchase Price. The purchase price for the
Auctioned Assets shall be $550,000,000 (the "Purchase
Price").
SECTION 3.02. Post-Closing Adjustment. (a) Within 20 Business
Days after the Closing, Seller shall prepare and deliver to
Buyer a statement (an "Adjustment Statement") which reflects
the book cost, as reflected on the books of Seller as of the
Closing Date, of all fuel inventory and supplies, materials
and spare parts inventory included in the Auctioned Assets
(the "Adjustment Amount") and, upon request of Buyer, related
accounting material used by Seller to prepare the Adjustment
Statement. The Adjustment Amount will be based, in respect of
fuel, on the actual fuel inventory on the Closing Date and, in
respect of supplies, materials and spare parts, on an
inventory survey conducted within ten Business Days prior to
the Closing Date, in each case, consistent with the inventory
procedures of Seller in effect as of the date of this
Agreement (the "Inventory Survey"). Seller will permit an
employee, or representative, of Buyer to observe the Inventory
Survey. The Adjustment Statement shall be prepared using (i)
GAAP and (ii) the same rolling average unit costs that Seller
has historically used to calculate the book cost of its fuel
and supplies, materials and spare parts inventory. Buyer
agrees to cooperate with Seller in connection with the
preparation of the Adjustment Statement and related
information, and shall provide to Seller such access, books,
records and information as may be reasonably requested from
time to time.
(b) Buyer may dispute the quantity delivered or quality of any
inventory item shown on the Adjustment Statement, or the
mathematical calculations reflected therein, by notifying
Seller in writing of the disputed amount, and the basis of
such dispute, within 20 Business Days of Buyer's receipt of
the Adjustment Statement; provided, however, that in respect
of the quality of any inventory item, Buyer may not dispute
Seller's normal and customary methods for accounting for
excess inventory. Buyer shall have no right to dispute any
other matter in respect of the Adjustment Statement, including
historical rolling average unit costs used to calculate the
book cost of the inventory or the appropriateness, under GAAP
or otherwise, of using such historical rolling average unit
cost to determine the book cost of any particular item of
inventory. In the event of a dispute with respect to the
quantity or quality of any inventory item shown on the
Adjustment Statement, or the mathematical calculations
reflected therein, Buyer and Seller shall attempt to reconcile
their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the
Parties. If Buyer and Seller are unable to reach a resolution
of such differences within 20 Business Days of receipt of
Buyer's written notice of dispute to Seller, Buyer and Seller
shall submit the amounts remaining in dispute for
determination and resolution to PricewaterhouseCoopers LLP or
any other accounting firm of recognized national standing
reasonably acceptable to Seller and Buyer (the "Accountants"),
which shall be instructed to determine and report to the
Parties, within 20 Business Days after such submission, upon
such remaining disputed amounts, and such report shall be
final, binding and conclusive on the Parties with respect to
the amounts disputed. Buyer and Seller shall each pay one-half
of the fees and disbursements of the Accountants in connection
with the resolution of such disputed amounts.
(c) If the Adjustment Amount is greater or less than the
Estimated Adjustment Amount, then on the Adjustment Date (as
defined below), (i) to the extent that the Adjustment Amount
exceeds the Estimated Adjustment Amount, Buyer shall pay to
Seller the amount of such excess and (ii) to the extent that
the Adjustment Amount is less than the Estimated Adjustment
Amount, Seller shall pay to Buyer the amount of such
deficiency. "Adjustment Date" means (1) if Buyer does not
disagree in any respect with the Adjustment Statement, the
twenty-third Business Day following Buyer's receipt of the
Adjustment Statement or (2) if Buyer shall disagree in any
respect with the Adjustment Statement, the third Business Day
following either the resolution of such disagreement by the
Parties or a final determination by the Accountants in
accordance with Section 3.02(b). Any amount paid under this
Section 3.02(c) shall be paid with interest for the period
commencing on the Closing Date through the date of payment,
calculated at the prime rate of the Chase Manhattan Bank in
effect on the Closing Date, and in cash by wire transfer of
immediately available funds.
SECTION 3.03. Allocation of Purchase Price. Buyer shall
deliver to Seller at Closing a preliminary allocation among
the Auctioned Assets of the Purchase Price and among such
other consideration paid to Seller pursuant to this Agreement
that is properly includible in Buyer's tax basis for the
Auctioned Assets for Federal income tax purposes, and, as soon
as practicable following the Closing (but in any event within
10 Business Days following the final determination of the
Adjustment Amount), Buyer shall prepare and deliver to Seller
a final allocation of the Purchase Price and additional
consideration described in the preceding clause, and the
post-closing adjustment pursuant to Section 3.02, among the
Auctioned Assets (the "Allocation"). The Allocation shall be
consistent with Section 1060 of the Code and the Treasury
Regulations thereunder. Seller hereby agrees to accept Buyer's
Allocation unless Seller determines that such Allocation was
not prepared in accordance with Section 1060 of the Code and
the regulations thereunder ("Applicable Law"). If Seller so
determines, Seller shall within 20 Business Days thereafter
propose any changes necessary to cause the Allocation to be
prepared in accordance with Applicable Law. Within 10 Business
Days following delivery of such proposed changes, Buyer shall
provide Seller with a statement of any objections to such
proposed changes, together with a reasonably detailed
explanation of the reasons therefor. If Buyer and Seller are
unable to resolve any disputed objections within 10 Business
Days thereafter, such objections shall be referred to the
Accountants, whose review will be limited to whether Buyer's
Allocation of such disputed items regarding the Allocation was
prepared in accordance with Applicable Law. The Accountants
shall be instructed to deliver to Seller and Buyer a written
determination of the proper allocation of such disputed items
within 20 Business Days. Such determination shall be
conclusive and binding upon the parties hereto for all
purposes, and the Allocation shall be so adjusted (the
Allocation, including the adjustment, if any, to be referred
to as the "Final Allocation"). The fees and disbursements of
the Accountants attributable to the Allocation shall be shared
equally by Buyer and Seller. Each of Buyer and Seller agrees
to timely file Internal Revenue Service Form 8594, and all
Federal, state, local and foreign Tax Returns, in accordance
with such Final Allocation and to report the transactions
contemplated by this Agreement for Federal Income Tax and all
other tax purposes in a manner consistent with the Final
Allocation. Each of Buyer and Seller agrees to promptly
provide the other party with any additional information and
reasonable assistance required to complete Form 8594, or
compute Taxes arising in connection with (or otherwise
affected by) the transactions contemplated hereunder. Each of
Buyer and Seller shall timely notify the other Party and each
shall timely provide the other Party with reasonable
assistance in the event of an examination, audit or other
proceeding regarding the Final Allocation.
ARTICLE IV
The Closing
SECTION 4.01. Time and Place of Closing. Upon the terms and
subject to the satisfaction of the conditions contained in
Article VIII, the closing of the sale of the Auctioned Assets
contemplated by this Agreement (the "Closing") will take place
on such date as the Parties may agree, which date shall be as
soon as practicable, but no later than ten Business Days,
following the date on which all of the conditions set forth in
Article VIII have been satisfied or waived, at the offices of
Cravath, Swaine & Moore in New York City or at such other
place or time as the Parties may agree. The date and time at
which the Closing actually occurs is hereinafter referred to
as the "Closing Date".
SECTION 4.02. Payment of Purchase Price and Estimated
Adjustment Amount. At the Closing, Buyer will pay or cause to
be paid to Seller by wire transfer of immediately available
funds to an account previously designated in writing by Seller
an amount in United States dollars equal to (a) the Purchase
Price plus (b) Seller's good faith estimate of the Adjustment
Amount (the "Estimated Adjustment Amount"), which estimate
shall be provided to Buyer no later than five Business Days
prior to the Closing.
ARTICLE V
Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
SECTION 5.01. Organization; Qualification. Seller is a
corporation duly incorporated, 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 the Auctioned Assets and to carry on the business of
the Auctioned Assets as currently conducted.
SECTION 5.02. Authority Relative to This Agreement. Seller has
all necessary corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby.
The execution and delivery by Seller of this Agreement and the
Ancillary Agreements and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Trustees of Seller or
by a committee thereof to whom such authority has been
delegated and no other corporate proceedings on the part of
Seller are necessary to authorize this Agreement or the
Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. This Agreement and the
Ancillary Agreements have been duly and validly executed and
delivered by Seller and, assuming that this Agreement and the
Ancillary Agreements constitute valid and binding agreements
of Buyer and each other party thereto, subject to the receipt
of the Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals, constitute valid and binding
agreements of Seller, enforceable against Seller in accordance
with their respective terms.
SECTION 5.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Seller Required Regulatory Approvals
and the Buyer Required Regulatory Approvals, neither the
execution and delivery of this Agreement or the Ancillary
Agreements by Seller nor the sale by Seller of the Auctioned
Assets pursuant to this Agreement will (i) conflict with or
result in any breach of any provision of the Certificate of
Incorporation or By-laws of Seller, (ii) except as set forth
on Schedule 5.03(a), result in a default (or give rise to any
right of termination, cancelation or acceleration) under any
of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Seller is a party or by
which Seller, or any of the Auctioned Assets, may be bound,
except for such defaults (or rights of termination,
cancelation 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)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Seller, or the Auctioned Assets,
except for such violations which would not, individually or in
the aggregate, create a Material Adverse Effect.
(b) Except for (i) application by Seller to, and the approval
of, the PSC, pursuant to ss. 70 of the Public Service Law of
the State of New York, of the transfer to Buyer of the
Auctioned Assets, (ii) the filings by Seller and Buyer
required by the HSR Act and the expiration or earlier
termination of all waiting periods under the HSR Act, (iii)
application by Seller to, and the approval of, FERC under (A)
Section 203 of the Federal Power Act of 1935 (the "Federal
Power Act") with respect to the transfer of Auctioned Assets
constituting jurisdictional assets under the Federal Power Act
and (B) Section 205 of the Federal Power Act with respect to
each Continuing Site Agreement and any wholesale power sales
agreement to be entered into by Seller and Buyer, including
the Transition Capacity Agreement, (iv) the issuance of
approval by the New York City Department of Buildings and, to
the extent required, the New York City Department of Business
Services of the tax lot subdivision contemplated by this
Agreement in a form suitable for submission to the New York
City Department of Finance for the issuance of tax lot numbers
and (v) declarations, filings or registrations with, or
notices to, or authorizations, consents or approvals of, any
Governmental Authority which become applicable to Seller or
the transactions contemplated hereby or by the Ancillary
Agreements as a result of the specific regulatory status or
jurisdiction of incorporation or organization of Buyer (or any
of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which
Buyer (or any of its Affiliates) is or proposes to be engaged
(collectively, the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or
authorization, consent or approval of any Governmental
Authority is necessary for the consummation by Seller of the
transactions contemplated hereby or by the Ancillary
Agreements, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals
(A) which, if not obtained or made, would not, individually or
in the aggregate, create a Material Adverse Effect or (B)
which relate to the Transferable Permits.
(c) To the knowledge of Seller, there is no reason that it
should fail to obtain the Seller Required Regulatory
Approvals.
SECTION 5.04. Year 2000. Seller has informed Buyer of the
status, as of the date of this Agreement, of measures to
prevent computer software, hardware and embedded systems used
in connection with the Auctioned Assets from experiencing
malfunctions or other usage problems in connection with years
beginning with "20", except for such malfunctions or other
usage problems which would not, individually or in the
aggregate, create a Material Adverse Effect.
SECTION 5.05. Personal Property. Except for Permitted
Exceptions, Seller has good and marketable title, free and
clear of all Encumbrances, to all personal property
included in the Auctioned Assets.
SECTION 5.06. Real Estate. The Conveyance Plans contain
descriptions of the Buyer Real Estate. Copies of the most
recent real property surveys and title insurance information
in the possession of Seller with respect to the Buyer Real
Estate or any portion thereof have heretofore been delivered
by Seller to Buyer or made available for inspection by Buyer,
receipt of which is hereby acknowledged by Buyer.
SECTION 5.07. Leases. As of the date of this Agreement, Seller
is neither a tenant nor a licensee under any real property
leases or licenses which (a) are to be transferred and
assigned to Buyer on the Closing Date and (b) (i) provide for
annual payments of more than $100,000 or (ii) are material to
the Auctioned Assets.
SECTION 5.08. Certain Contracts and Arrangements. (a) Except
for (i) any contract or agreement listed on Schedule
2.02(a)(iv) or Schedule 5.08(a) and (ii) Contracts which will
expire prior to the Closing Date or that are permitted to be
entered into under this Agreement, Seller is not a party to
any contract which is material to the business or operations
of the Auctioned Assets. Seller has made available to Buyer
for inspection true and complete copies of all contracts
listed on Schedule 2.02(a)(iv) or Schedule 5.08(a) and each of
the NYPA Agreements.
(b) Each Contract (i) constitutes a valid and binding
obligation of Seller, and, to the knowledge of Seller,
constitutes a valid and binding obligation of the other
parties thereto, (ii) to the knowledge of Seller, is in full
force and effect and (iii) other than Contracts covered by
Section 2.04, to the knowledge of Seller, may be transferred
to Buyer pursuant to this Agreement and will continue in full
force and effect thereafter, in each case, without breaching
the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder, except for such breaches,
forfeitures or impairments which would not, individually or in
the aggregate, create a Material Adverse Effect.
(c) There is not, under any of the Contracts or any of the
NYPA Agreements, any default or event which, with notice or
lapse of time or both, would constitute a default by Seller,
except for 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.
SECTION 5.09. Legal Proceedings. Except as set forth on
Schedule 5.09 or in the Filed Seller SEC Documents, as of the
date of this Agreement, there are no claims, actions,
proceedings or investigations pending or, to the knowledge of
Seller, threatened against or relating to Seller which would,
individually or in the aggregate, be reasonably expected to
create a Material Adverse Effect. With respect to the business
or operations of the Auctioned Assets, Seller is not, as of
the date of this Agreement, subject to any outstanding
judgment, rule, order, writ, injunction or decree of any
court, governmental or regulatory authority which would create
a Material Adverse Effect. The representations and warranties
of Seller set forth in this Section 5.09 shall not apply to,
and do not cover, any environmental matters which, with
respect to any representations and warranties of Seller, are
exclusively governed by Section 5.11.
SECTION 5.10. Permits; Compliance with Law. (a) Except as set
forth on Schedule 5.10(a)(i), Seller holds, and is in
compliance with, all Permits necessary to conduct the business
and operations of the Auctioned Assets as currently conducted,
and, to the knowledge of Seller, Seller is otherwise in
compliance with all laws, statutes, orders, rules,
regulations, ordinances or judgments of any Governmental
Authority applicable to the business and operations of the
Auctioned Assets, except for such failures to hold or comply
with such Permits, or such failures to be in compliance with
such laws, statutes, orders, rules, regulations, ordinances or
judgments, which would not, individually or in the aggregate,
create a Material Adverse Effect. Except as set forth on
Schedule 5.10(a)(ii), Seller has not received any written
notification that it is in violation of any of such Permits or
laws, statutes, orders, rules, regulations, ordinances or
judgments, except for notifications of violations which would
not, individually or in the aggregate, create a Material
Adverse Effect. The representations and warranties of Seller
set forth in this Section 5.10 shall not apply to, and do not
cover, any environmental matters which, with respect to any
representations and warranties of Seller, are exclusively
governed by Section 5.11.
(b) Notwithstanding the last sentence of Section 5.10(a),
except as set forth on Schedule 5.10(b), there are no material
Permits or material Environmental Permits that, in each case,
are not Transferable Permits and are required for Buyer to
conduct the business and operations of the Auctioned Assets as
currently conducted.
SECTION 5.11. Environmental Matters. (a) Except as set forth
in Schedule 5.11 or disclosed in the Filed Seller SEC
Documents, Seller holds, and is in compliance with, the
Environmental Permits required for Seller to conduct the
business and operations of the Auctioned Assets as currently
conducted under applicable Environmental Laws, and, to the
knowledge of Seller, Seller is otherwise in compliance with
applicable Environmental Laws with respect to the business and
operations of the Auctioned Assets, except for such failures
to hold or comply with such Environmental Permits, or such
failures to be in compliance with such Environmental Laws,
which would not, individually or in the aggregate, create a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, Seller has not received any
written notice of violation of any Environmental Law or any
written request for information with respect thereto, or been
notified that it is a potentially responsible party under the
Federal Comprehensive Environmental Response, Compensation,
and Liability Act or any similar state law with respect to any
real property included in the Buyer Real Estate or in any
lease forming part of the Auctioned Assets, except for such
matters under such laws as would not, individually or in the
aggregate, create a Material Adverse Effect.
(c) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, with respect to the business and
operations of the Auctioned Assets, Seller is not subject to
any outstanding judgment, decree or judicial order relating to
compliance with any Environmental Law or to investigation or
cleanup of Hazardous Substances under any applicable
Environmental Law, except for (i) the Seller Consent Orders
and (ii) such judgments, decrees or judicial orders that would
not, individually or in the aggregate, create a Material
Adverse Effect.
(d) Except as set forth in Schedule 5.11 or disclosed in the
Filed Seller SEC Documents, as of the date of this Agreement,
there are no claims, actions, proceedings or investigations
pending, or to the knowledge of Seller, threatened against or
relating to Seller, with respect to the exposure at the
Auctioned Assets of any person to Hazardous Substances, which,
if adversely determined, would, individually or in the
aggregate, create a Material Adverse Effect.
SECTION 5.12. Labor Matters. Seller has previously made
available to Buyer copies of all collective bargaining
agreements to which Seller is a party or is subject and which
relate to the business or operations of the Auctioned Assets.
With respect to the business and operations of the Auctioned
Assets, as of the date of this Agreement, (a) Seller is in
compliance with all applicable laws regarding employment and
employment practices, terms and conditions of employment and
wages and hours, (b) Seller has not received written notice of
any unfair labor practice complaint against Seller pending
before the National Labor Relations Board, (c) there is no
labor strike, slowdown or stoppage actually pending or, to the
knowledge of Seller, threatened against or affecting Seller,
(d) Seller has not received notice that any representation
petition respecting the employees of Seller has been filed
with the National Labor Relations Board, (e) no arbitration
proceeding arising out of or under collective bargaining
agreements is pending against Seller and (f) Seller has not
experienced any primary work stoppage since at least December
31, 1996, except, in the case of each of the foregoing clauses
(a) through (f), for such matters as would not, individually
or in the aggregate, create a Material Adverse Effect.
SECTION 5.13. ERISA; Benefit Plans. Schedule 5.13 sets forth a
list of all material deferred compensation, profit-sharing,
retirement and pension plans and all material bonus and other
material employee benefit or fringe benefit plans maintained,
or with respect to which contributions have been made, by
Seller with respect to current or former employees employed in
connection with the power generation operations of the
Generating Plants and the Gas Turbines (collectively, "Benefit
Plans"). Seller and each trade or business (whether or not
incorporated) which are or have ever been under common
control, or which are or have ever been treated as a single
employer, with Seller under Section 414(b), (c), (m) or (o) of
the Code (an "ERISA Affiliate") 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
for such failures to fulfill such obligations or comply with
such provisions which would not, individually or in the
aggregate, create a Material Adverse Effect. Neither Seller
nor any ERISA Affiliate has incurred any liability under
Section 4062(b) of ERISA, or any withdrawal liability under
Section 4201 of ERISA, to the Pension Benefit Guaranty
Corporation in connection with any Benefit Plan which is
subject to Title IV of ERISA which liability remains
outstanding, and there has not been any reportable event (as
defined in Section 4043 of ERISA) with respect to any such
Benefit Plan (other than a reportable event with respect to
which the 30-day notice requirement has been waived by the
PBGC). Neither Seller nor any ERISA Affiliate or parent
corporation, within the meaning of Section 4069(b) or Section
4212(c) of ERISA, has engaged in any transaction, within the
meaning of Section 4069(b) or Section 4212(c) of ERISA. No
Benefit Plan and no "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) maintained by Seller or any
ERISA Affiliate or to which Seller or any ERISA Affiliate has
contributed is a multiemployer plan.
SECTION 5.14. Taxes. With respect to the Auctioned Assets and
trades or businesses associated with the Auctioned Assets, (a)
all Tax Returns required to be filed have been filed and (b)
all Taxes shown to be due on such Tax Returns, and all Taxes
otherwise owed, have been paid in full, except to the extent
that any failure to file or any failure to pay any Taxes would
not, individually or in the aggregate, create a Material
Adverse Effect. No written notice of deficiency or assessment
has been received from any taxing authority with respect to
liabilities for Taxes of Seller in respect of the Auctioned
Assets which has not been fully paid or finally settled or
which is not being contested in good faith through appropriate
proceedings, except for any such notices regarding Taxes which
would not, individually or in the aggregate, create a Material
Adverse Effect. There are no outstanding agreements or waivers
extending the applicable statutory periods of limitation for
Taxes associated with the Auctioned Assets for any period,
except for any such agreements or waivers which would not,
individually or in the aggregate, create a Material Adverse
Effect.
SECTION 5.15. Independent Engineering Assessments. (a) Seller
has reviewed the 1998 assessments prepared by Stone & Webster
with respect to the Generating Plants and the Gas Turbines
(the "Independent Engineering Assessments"), and, except as
set forth on Schedule 5.15(a), to the knowledge of Seller, as
of the date of the Independent Engineering Assessments, there
was no untrue statement of a material fact or omission of any
material fact therein that would reasonably suggest that the
condition of the Generating Plants and the Gas Turbines, taken
as a whole, as of such date was materially and adversely
different from that described in such Independent Engineering
Assessments.
(b) Except as set forth on Schedule 5.15(b), since the date of
the Independent Engineering Assessments, there has not been,
subject to ordinary wear and tear and to routine maintenance,
any casualty, physical damage, destruction or physical loss
with respect to, or, to the knowledge of Seller, any adverse
change in the physical condition of, any Generating Plant or
Gas Turbine, except for such casualty, physical damage,
destruction, physical loss or adverse change which would not,
individually or in the aggregate, create a Material Adverse
Effect.
SECTION 5.16. Undisclosed Liabilities. With respect to the
Auctioned Assets, there are no liabilities or obligations of
any nature or kind (absolute, accrued, contingent or
otherwise) that would have been required to be set forth on a
balance sheet in respect of the Auctioned Assets or in the
notes thereto prepared in accordance with GAAP, as applied by
Seller in connection with its December 31, 1997 balance sheet,
except for any such liabilities or obligations which (a) are
disclosed in or contemplated or permitted by this Agreement or
the Ancillary Agreements (including the Assumed Obligations),
(b) are disclosed in the Offering Memorandum, (c) are
disclosed in the Filed Seller SEC Documents, (d) have been
incurred in the ordinary course of business, (e) are disclosed
on Schedule 5.16 or (f) which would not, individually or in
the aggregate, create a Material Adverse Effect.
SECTION 5.17. Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees
in connection with the transaction contemplated hereby by
reason of any action taken by Seller, except Morgan Stanley &
Co. Incorporated, which is acting for and at the expense of
Seller.
SECTION 5.18. Insurance. Seller carries policies of insurance
covering fire, workers' compensation, property all-risk,
comprehensive bodily injury, property damage liability,
automobile liability, product liability, completed operations,
explosion, collapse, contractual liability, personal injury
liability and other forms of insurance relating to the
Auctioned Assets, or otherwise self-insures in accordance with
all statutory and regulatory criteria against any such
liabilities, which insurance is in such amounts, has such
deductibles and retentions and is underwritten by such
companies as would be obtained by a reasonably prudent
electric power business.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING SOLD
AND TRANSFERRED "AS IS, WHERE IS", AND SELLER IS NOT MAKING
ANY OTHER REPRESENTATIONS OR WARRANTIES WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH AUCTIONED
ASSETS OR WITH RESPECT TO THIS AGREEMENT OR THE ANCILLARY
AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
INCLUDING, IN PARTICULAR WITH RESPECT TO THE AUCTIONED ASSETS,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED BY SELLER AND WAIVED BY BUYER. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SELLER MAKES NO REPRESENTATION OR
WARRANTY WITH RESPECT TO THE INFORMATION SET FORTH IN, OR
CONTEMPLATED BY, THE OFFERING MEMORANDUM (EXCEPT TO THE EXTENT
EXPRESSLY INCORPORATED BY REFERENCE INTO THIS AGREEMENT).
ARTICLE VI
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
SECTION 6.01. Organization. Buyer is a limited partnership
duly formed, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its properties and to
carry on its business as is now being conducted. Buyer shall
be duly qualified and licensed to do business as a foreign
corporation and is in good standing in the State of New York
on or prior to the Closing Date.
SECTION 6.02. Authority Relative to This Agreement. Buyer has
all necessary power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is party
and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Buyer of this Agreement
and such Ancillary Agreements and the consummation by Buyer of
the transactions contemplated hereby and thereby have been
duly and validly authorized by the Board of Directors of the
general partner of Buyer and no other proceedings on the part
of Buyer are necessary to authorize this Agreement or such
Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. This Agreement and such
Ancillary Agreements have been duly and validly executed and
delivered by Buyer and, assuming that this Agreement and the
Ancillary Agreements constitute valid and binding agreements
of Seller and each other party thereto, subject to the receipt
of the Buyer Required Regulatory Approvals and the Seller
Required Regulatory Approvals, this Agreement and the
Ancillary Agreements constitute valid and binding agreements
of Buyer, enforceable against Buyer in accordance with their
respective terms.
SECTION 6.03. Consents and Approvals; No Violation. (a)
Subject to obtaining the Buyer Required Regulatory Approvals
and the Seller Required Regulatory Approvals, neither the
execution and delivery of this Agreement or the Ancillary
Agreements to which it is party by Buyer nor the purchase by
Buyer of the Auctioned Assets pursuant to this Agreement will
(i) conflict with or result in any breach of any provision of
the limited partnership agreement (or other similar governing
documents) of Buyer, (ii) result in a default (or give rise to
any right of termination, cancelation or acceleration) under
any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Buyer or any of its
subsidiaries is a party or by which any of their respective
assets may be bound or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to
Buyer, or any of its assets, except in the case of clauses
(ii) and (iii) for such failures to obtain a necessary
consent, defaults and violations which would not, individually
or in the aggregate, have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated
by, and discharge its obligations under, this Agreement and
the Ancillary Agreements (a "Buyer Material Adverse Effect").
(b) Except for (i) approval of the PSC pursuant to ss. 70 of
the Public Service Law of the State of New York, of the
transfer to Buyer of the Auctioned Assets, (ii) the filings by
Buyer and Seller required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act,
(iii) application by Buyer to, and the approval of, FERC under
(A) Section 203 of the Federal Power Act with respect to the
transfer of Auctioned Assets constituting jurisdictional
assets under the Federal Power Act and (B) Section 205 of the
Federal Power Act with respect to (1) each Continuing Site
Agreement and any wholesale power sales agreement to be
entered into by Seller and Buyer, including the Transition
Capacity Agreement, and (2) authorization to sell capacity and
energy from Generating Plants and Gas Turbines at market-based
rates (provided, however, that Buyer acknowledges that
"market- based rates" for the purpose of this Agreement means
rates that are subject to any bid cap, price limitation or
other market power mitigation measure imposed by FERC or PSC
in respect of the New York State or New York City wholesale
and retail energy and capacity electric power markets or any
other restriction imposed by FERC or PSC with respect to the
power generation operations and assets of Buyer, including the
FERC Order Accepting Market Power Mitigation Measures dated
September 22, 1998, as modified (Docket No. ER98-3169-000)
(the "Mitigation Measures")), (iv) qualification of Buyer,
with respect to the Auctioned Assets, as an exempt wholesale
generator under the Energy Policy Act of 1992, (v) the
issuance of approval by the New York City Department of
Buildings and, to the extent required, the New York City
Department of Business Services of the tax lot subdivision
contemplated by this Agreement in a form suitable for
submission to the New York City Department of Finance for the
issuance of tax lot numbers and (vi) obtaining the Revocable
Consent from the City of New York (collectively, the "Buyer
Required Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or
approval of any Governmental Authority is necessary for the
consummation by Buyer of the transactions contemplated hereby
or by the Ancillary Agreements, other than such declarations,
filings, registrations, notices, authorizations, consents or
approvals (A) which, if not obtained or made would not,
individually or in the aggregate, have a Buyer Material
Adverse Effect or (B) which relate to the Transferable
Permits.
(c) To the knowledge of Buyer, there is no reason that it
should fail to obtain the Buyer Required Regulatory Approvals.
SECTION 6.04. Availability of Funds. Buyer will have
sufficient funds available to it or will have received binding
written commitments (copies of which will be delivered to
Seller when available) from one or more nationally recognized
financial institutions to provide sufficient funds on the
Closing Date to pay the Purchase Price and Estimated
Adjustment Amount.
SECTION 6.05. Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees
in connection with the transaction contemplated hereby by
reason of any action taken by Buyer.
ARTICLE VII
Covenants of the Parties
SECTION 7.01. Conduct of Business Relating to the Auctioned
Assets. (a) Except with the prior written consent of Buyer
(such consent not to be unreasonably withheld) or as required
to effect the purchase and sale of the Auctioned Assets and
related transactions contemplated by this Agreement, during
the period from the date of this Agreement to the Closing
Date, Seller will operate the Auctioned Assets in the usual,
regular and ordinary course and in accordance with good
industry practice and applicable legal requirements, and
continue to pay accounts payable which relate to the Auctioned
Assets in a timely manner, consistent with past practice.
(b) Notwithstanding the foregoing, except as contemplated in
this Agreement or the Ancillary Agreements, prior to the
Closing Date, without the prior written consent of Buyer (such
consent not to be unreasonably withheld), Seller will not:
(i) except for Permitted Exceptions, grant any Encumbrance on
the Auctioned Assets securing any indebtedness for borrowed money or
guarantee or other liability for the obligations of any person;
(ii) make any material change in the levels of fuel inventory
and supplies, materials and spare parts inventory customarily
maintained by Seller with respect to the Auctioned Assets, other
than consistent with past practice (including the use of spare parts
in connection with certain power generation assets of Seller
described in the Offering Memorandum other than the Generating
Plants or Gas Turbines);
(iii) sell, lease (as lessor), transfer or otherwise dispose
of, any of the Auctioned Assets, other than assets that become
obsolete or assets used, consumed or replaced in the ordinary course
of business consistent with past practice (including the use of
spare parts in connection with certain power generation assets of
Seller described in the Offering Memorandum other than the
Generating Plants or Gas Turbines);
(iv) terminate, materially extend or otherwise materially
amend any of the Contracts (other than in accordance with their
respective terms) or waive any default by, or release, settle or
compromise any material claim against, any other party thereto;
(v) amend any of the Transferable Permits, other than (A)
Transferable Permits not material to the operations of the Auctioned
Assets as currently conducted, (B) as reasonably necessary to
complete the transfer of Permits as contemplated hereby, (C) routine
renewals or non-material modifications or amendments and (D)
modifications, alterations and amendments contemplated by Section
7.03(b);
(vi) enter into any Contract for the purchase, sale or storage
of fuel with respect to the Auctioned Assets (whether commodity or
transportation) with a term in excess of 12 months, if the aggregate
future liability or receivable outstanding on the date for
measurement for the purpose of this covenant for all such Contracts
would be in excess of $2 million, not including any such Contract
terminable by notice of not more than 30 days without penalty or
cost (other than de minimis administrative costs); provided,
however, that Seller may enter into Contracts for the storage of
fuel with respect to the Auctioned Assets with a term ending not
later than December 31, 2000 and otherwise on terms consistent with
Seller's past practice;
(vii) (A) establish, adopt, enter into or amend any Collective
Bargaining Agreement or Benefits Plans, except (1) if such action
would not create a Material Adverse Effect or (2) as required under
applicable law or under the terms of any Collective Bargaining
Agreement or (B) grant to any Affected Employee any increase in
compensation, except (1) in the ordinary course of business
consistent with past practice or (2) to the extent required by the
terms of any Collective Bargaining Agreement, employment agreement
in effect as of the date of this Agreement or applicable law;
(viii) enter into any Contract with respect to the Auctioned
Assets for goods or services not addressed in clauses (i) through
(vii) with a term in excess of 12 months, if the aggregate future
liability or receivable outstanding on the date for measurement for
the purpose of this covenant for all such Contracts would be in
excess of $2 million, not including any such Contract terminable by
notice of not more than 30 days without penalty or cost (other than
de minimis administrative costs); provided, however, that
notwithstanding any other provision of this Agreement to the
contrary, Seller may (A) enter into any Contract reasonably
necessary to effect the physical, legal or operational separation of
the sites on which the Auctioned Assets are located or to otherwise
implement the change of ownership contemplated hereby, or
subdivision, of such sites or implement the provisions of the
Ancillary Agreements and (B) enter into and record the Declarations
of Subdivision Easements; or
(ix) enter into any Contract with respect to the Auctioned
Assets relating to any of the transactions set forth in the
foregoing clauses (i) through (viii).
(c) Without limiting the generality of Sections 7.01(a) and
(b), to the extent Section 7.01(a) or (b) prohibits Seller
from entering into any Contract for goods and services in
connection with maintenance or capital expenditures, Buyer
agrees that Seller may request Buyer's consent to enter into
such Contract, such consent not to be unreasonably withheld,
and to the extent Buyer so consents, all liabilities and
obligations under such Contract shall constitute Assumed
Obligations and Buyer shall otherwise reimburse Seller for all
its expenditures thereunder.
(d) Notwithstanding anything in this Section 7.01 to the
contrary, Seller may take any action, incur any expense or
enter into any obligation with respect to the Auctioned Assets
to the extent that (i) all obligations and liabilities arising
with respect thereto do not constitute Assumed Obligations or
(ii) Seller otherwise provides that such obligations and
liabilities shall not be assumed or retained by Buyer.
(e) Notwithstanding anything in this Section 7.01 to the
contrary, Seller may (i) amend the NYPA Operating Agreement in
order to (A) provide NYPA with the use of the fuel handling
facilities related to the A-10 dock at Astoria for fuel oil
deliveries in accordance with historic fuel deliveries to NYPA
at such dock, (B) establish procedures for scheduling such
fuel oil deliveries to provide a fair allocation of the right
to use such fuel handling facilities, (C) provide for
reimbursement of NYPA for incremental, reasonable fuel costs
incurred by NYPA to obtain replacement fuel when Buyer fails
to satisfy its obligations under the NYPA Agreements assumed
pursuant to Section 2.03(a)(xii) and relating to the
obligations described in clause (A) or clause (B) above and
(D) provide for the installation by NYPA of water meters and
the allocation of charges for water as between NYPA and Buyer
based on readings therefrom and (ii) obtain title to the
machinery, equipment, facilities, furniture and other personal
property listed on Schedule 2.02(a)(iii)(D), and Buyer agrees
that the Assumed Seller Obligations under NYPA Agreements
shall be deemed amended accordingly.
SECTION 7.02. Access to Information. (a) Between the date of
this Agreement and the Closing Date, Seller will, subject to
the Confidentiality Agreement, during ordinary business hours
and upon reasonable notice (i) give Buyer and its
representatives reasonable access (A) to all books, records,
plants, offices and other facilities and properties
constituting the Auctioned Assets, including for the purpose
of observing the operation by Seller of the Auctioned Assets
and (B) to the Auctioned Assets that are not located at the
Generating Plants or Gas Turbines for the purpose of preparing
to store spare parts after the Closing, (ii) permit Buyer to
make such reasonable inspections thereof as Buyer may
reasonably request, (iii) furnish Buyer with such financial
and operating data and other information with respect to the
Auctioned Assets as Buyer may from time to time reasonably
request, (iv) furnish Buyer upon request a copy of each
material report, schedule or other document with respect to
the Auctioned Assets filed by Seller with, or received by
Seller from, the PSC or FERC; provided, however, that (A) any
such activities shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Auctioned
Assets, (B) Seller shall not be required to take any action
which would constitute a waiver of the attorney-client
privilege and (C) Seller need not supply Buyer with (1) any
information or access which Seller is under a legal obligation
not to supply or (2) any information which Seller has
previously supplied to Buyer. Notwithstanding anything in this
Section 7.02 to the contrary, (I) Seller will not be required
to provide such information or access to any employee records
other than Transferring Employee Records, (II) Buyer shall not
have the right to perform or conduct any environmental
sampling or testing at, in, on, around or underneath the
Auctioned Assets and (III) Seller shall not be required to
provide such access or information with respect to any
Retained Asset or Retained Liabilities.
(b) Unless otherwise agreed to in writing by Buyer, Seller
shall, for a period commencing on the Closing Date and
terminating three years after the Closing Date, keep
confidential and shall cause its representatives to keep
confidential all Confidential Information (as defined in the
Confidentiality Agreement) on the terms set forth in the
Confidentiality Agreement. Except as contemplated by the
following sentence, Seller shall not release any person from
any confidentiality agreement now existing with respect solely
to the Auctioned Assets or waive or amend any provision
thereof. After the Closing Date, upon reasonable request of
Buyer, Seller shall, to the maximum extent permitted by law
and the applicable Bidder Confidentiality Agreement (as
defined below), appoint Buyer to be Seller's representative
and agent in respect of confidential information relating to
the Auctioned Assets under the confidentiality agreements
("Bidder Confidentiality Agreements") between Seller and
prospective purchasers of certain generation assets of Seller
of which the Auctioned Assets form part.
(c) From and after the Closing Date, Buyer shall retain all
Operating Records (whether in electronic form or otherwise)
relating to the Auctioned Assets on or prior to the Closing
Date. Buyer also agrees that, from and after the Closing Date,
Seller shall have the right, upon reasonable request to Buyer,
to receive from Buyer copies of any Operating Records or other
information in Buyer's possession relating to the Auctioned
Assets on or prior to the Closing Date and required by Seller
in order to comply with applicable law. Seller shall reimburse
Buyer for its reasonable costs and expenses incurred in
connection with the foregoing sentence.
SECTION 7.03. Consents and Approvals; Transferable Permits.
(a) Seller and Buyer shall cooperate with each other and (i)
prepare and file (or otherwise effect) as soon as practicable
all applications, notices, petitions and filings with respect
to and (ii) use their reasonable best efforts (including
negotiating in good faith modifications and amendments to this
Agreement and the Ancillary Agreements) to obtain (A) the
Seller Required Regulatory Approvals and the Buyer Required
Regulatory Approvals and (B) any other consents, approvals or
authorizations of any other Governmental Authorities or third
parties that are necessary to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements.
Without limiting the generality of the foregoing, (1) each
Party agrees to, upon the other Party's request, support such
other Party's applications for regulatory approvals of the
purchase and sale of the Auctioned Assets contemplated by this
Agreement, (2) Buyer agrees not to seek any relief from, or
modifications or amendments in respect of, any bid cap, price
limitation or other market power mitigation measure or other
restriction with respect to any power generation operations
and assets described in or contemplated by Section
6.03(b)(iii)(B)(2) until after the Closing Date and (3) Buyer
and Seller agree to defend any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the Ancillary Agreements, or the
consummation of the transactions contemplated hereby or
thereby, including seeking to have any stay or temporary
restraining order entered by any Governmental Authority
vacated or reversed.
(b) Upon execution of this Agreement, Seller shall commence
the process of transferring to Buyer the Transferable Permits,
including completing and filing applications and related
documents with the appropriate Governmental Authorities.
Seller hereby reserves the right to modify, alter or amend any
Transferable Permit or to refuse to correct violations or
deficiencies in respect of any Transferable Permit as long as
such modification, alteration, amendment or refusal would not,
individually or in the aggregate, create a Material Adverse
Effect. Seller shall use its reasonable best efforts to give
notice to Buyer of any modification, alteration or amendment
to any Transferable Permit.
(c) Seller shall use its reasonable best efforts to cooperate
with Buyer in the transfer of Transferable Permits to Buyer by
Closing. If the transfer of any Transferable Permit cannot be
completed by Closing, Buyer is hereby authorized, but not
required, to act as Seller's representative and agent in
respect of such Transferable Permit and to do all things
necessary for effecting transfer of such Transferable Permit
as soon after the Closing as is practicable, with Seller
remaining the Transferable Permit "holder of record" in such
case until such transfer is completed. In the case of each
such Transferable Permit, Seller shall, to the maximum extent
permitted by law and such Transferable Permit, enter into such
reasonable arrangements with Buyer as are necessary to provide
Buyer with the benefits and obligations of such Transferable
Permit. If Buyer is able to complete the transfer of any
Transferable Permit after Closing without the occurrence of
any event that, if such event had occurred between the
execution of this Agreement and the Closing, would have
created, individually or in the aggregate, a Material Adverse
Effect, Seller may substitute Buyer in its place and stead as
the Party responsible for completing the transfer of such
Transferable Permit.
SECTION 7.04. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each of the Parties will use its
reasonable best efforts to take, or cause to be taken, as soon
as possible, all action, and to do, or cause to be done, as
soon as possible, all things necessary, proper or advisable
under applicable laws and regulations to consummate the sale
of the Auctioned Assets pursuant to this Agreement as soon as
possible, including using its reasonable best efforts to
ensure satisfaction of the conditions precedent to each
Party's obligations hereunder. Prior to Buyer's submission of
any application with a Governmental Authority for a regulatory
approval, Buyer shall submit such application to Seller for
review and comment and Buyer shall incorporate into such
application any revisions reasonably requested by Seller.
Neither of the Parties will, without prior written consent of
the other Party, take or fail to take, or permit their
respective Affiliates to take or fail to take, any action,
which would reasonably be expected to prevent or materially
impede, interfere with or delay the consummation, as soon as
possible, of the transactions contemplated by this Agreement
or the Ancillary Agreements. Without limiting the generality
of the foregoing, each of the Parties shall use its reasonable
best efforts to negotiate in good faith as soon as possible
after the date of this Agreement, and enter into (i) the A-0
License and the A-10 License, the terms of which shall be
substantially as set forth in Exhibits H and F, respectively,
(ii) to the extent required to achieve subdivision of the
Astoria site, one or more contracts, agreements or other
arrangements satisfactory to the New York City Fire Department
regarding fire prevention at the Astoria site and (iii) any
other agreement reasonably necessary to consummate the sale of
the Auctioned Assets pursuant to this Agreement as soon as
possible.
(b) From time to time after the date hereof, without further
consideration and at its own expense, (i) Seller will execute
and deliver such instruments of assignment or conveyance as
Buyer may reasonably request to more effectively vest in Buyer
Seller's title to the Auctioned Assets (subject to Permitted
Exceptions and the other terms of this Agreement) and (ii)
Buyer will execute and deliver such instruments of assumption
as Seller may reasonably request in order to more effectively
consummate the sale of the Auctioned Assets and the assumption
of the Assumed Obligations pursuant to this Agreement.
(c) Seller shall not, and shall use its reasonable best
efforts to cause its Affiliates not to, sponsor or support any
recommendation or application to effect prior to April 1, 2002
(i) a reduction in the locational generation capacity
requirement that 80% of New York City peak electric loads must
be met with in-City generation capacity, as in effect as of
the date of this Agreement, unless such reduction is justified
by a significant change in the transmission import capability
into New York City whether as a result of actions by Seller or
others, (ii) a reduction in the $105/kW-year bid and price cap
in respect of capacity under the Mitigation Measures, as in
effect as of the date of this Agreement or (iii) a change in
the method of determining required system capability set forth
in NYPP Billing Procedure 4-11 (Installed Reserve
Requirements), as in effect as of the date of this Agreement
that would reduce the installed reserve requirements for the
winter capability period applicable to summer peaking systems
if such reduction would also reduce the annual price for
installed capacity that Buyer could otherwise obtain.
(d) Seller shall join or support Buyer's application to the
PSC for the certification required under Section 32(c) of the
Public Utility Holding Company Act of 1935 in order for Buyer
to obtain qualification, with respect to the Auctioned Assets,
as an exempt wholesale generator under the Energy Policy Act
of 1992.
(e) Seller and Buyer shall cooperate in good faith to
establish a transition committee to consider operational and
business issues related to the purchase and sale of the
Auctioned Assets.
(f) Prior to the Closing Date, Seller shall cooperate in good
faith with Buyer to enable Buyer to obtain insurance in
respect of the Auctioned Assets comparable to that maintained
by Seller as of the date of this Agreement.
(g) Seller and Buyer shall cooperate in good faith to enable
Buyer to obtain fuel storage capacity with respect to the
Auctioned Assets.
SECTION 7.05. Public Statements. The Parties shall consult
with each other prior to issuing any public announcement,
statement or other disclosure with respect to this Agreement,
the Ancillary Agreements or the transactions contemplated
hereby or thereby, including any statement appearing in any
filing contemplated hereby or thereby, and shall not issue any
such public announcement, statement or other disclosure prior
to such consultation, except as may be required by law.
SECTION 7.06. Tax Matters. (a) All transfer and sales taxes
(including any petroleum business taxes and similar excise
taxes on sales of petroleum based products) incurred in
connection with this Agreement and the transactions
contemplated hereby shall be borne by Buyer. Buyer shall
prepare and file in a timely manner any and all Tax Returns or
other documentation relating to such taxes; provided, however,
that, to the extent required by applicable law, Seller will
join in the execution of any such Tax Returns or other
documentation relating to any such taxes. Buyer shall provide
to Seller copies of each Tax Return described in the proviso
in the preceding sentence at least 30 days prior to the date
such Tax Return is required to be filed.
(b) At Seller's election, but on no less than 10 Business
Days' notice to Buyer, the transfer of the Auctioned Assets
and the receipt of the Purchase Price shall be made through a
qualified intermediary in a manner satisfying the requirements
of Treasury Regulation Section 1.1031(k)-1(g), so long as such
election by Seller does not create a Material Adverse Effect
and Seller indemnifies Buyer for its additional costs and
expenses incurred by reason of such election.
(c) Each Party shall 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 Party shall retain and provide the other
Party with any records or information which may be relevant to
such return, audit, examination or proceedings. Any
information obtained pursuant to this Section 7.06(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.
(d) If either Buyer or Seller receives a refund of Taxes in
respect of the Auctioned Assets for a taxable period including
the Closing Date, Buyer shall pay to Seller the portion of any
such refund attributable to the portion of such taxable period
prior to the Closing Date, and Seller shall pay to Buyer the
portion of any such refund attributable to the portion of such
taxable period on and after the Closing Date.
SECTION 7.07. Bulk Sales or Transfer Laws. Buyer acknowledges
that Seller will not comply with the provisions of any bulk
sales or transfer laws of any jurisdiction in connection with
the transactions contemplated by this Agreement. Buyer hereby
waives compliance by Seller with the provisions of the bulk
sales or transfer laws of all applicable jurisdictions.
SECTION 7.08. Storage. Seller shall store for Buyer the
Auctioned Assets described in the second sentence of Section
2.01 until the date that is six months after the Closing Date
or, in respect of all or a portion of such Auctioned Assets,
until one or more earlier dates proposed by Buyer with
reasonable advance notice, which schedule shall be reasonably
acceptable to Seller. Buyer agrees to reimburse Seller for its
reasonable costs and expenses in connection with such storage.
Buyer agrees that Seller shall have no responsibility or
liability for the actual removal of such Auctioned Assets from
the actual storage location, and that Buyer shall have sole
responsibility therefor. Notwithstanding the provisions of
Section 10.01, Buyer agrees that Seller shall have no
liability for loss or damage with respect to the matters
contemplated by this Section 7.08 or such Auctioned Assets,
and Buyer agrees to hold each Seller Indemnitee harmless from
and against all loss or damage or Indemnifiable Losses, and to
indemnify each Seller Indemnitee from and against all loss or
damage or Indemnifiable Losses incurred, asserted against or
suffered as a result of any storage or other services provided
by Seller pursuant to this Section 7.08, in each case, except
to the extent any such loss or damage or Indemnifiable Loss
results in whole or in part from the gross negligence or
wilful or wanton acts or omissions to act of any Seller
Indemnitee (or any contractor or subcontractor of Seller).
SECTION 7.09. Information Resources. From the Closing Date
until the date that is three months thereafter, Seller shall
provide Buyer with access to Seller's mainframe computer only
to the extent reasonably necessary to enable Buyer to use the
PPMIS and MMS (in read only mode) systems and applications
solely in connection with the Auctioned Assets. Buyer agrees
that it will not use any such access for any purpose other
than for the use of the PPMIS and MMS systems and applications
solely in connection with the Auctioned Assets. Buyer
acknowledges that, as long as it retains access to Seller's
mainframe computer, Seller, its employees and third parties
may have access to Buyer's information resources systems and
applications (including the PPMIS and MMS systems and
applications served by Seller's mainframe computer).
Notwithstanding the provisions of Section 10.01, Buyer agrees
that Seller shall have no liability or obligation whatsoever
with respect to the matters contemplated by this Section 7.09,
and Buyer agrees to hold each Seller Indemnitee harmless from
and against all loss or damage or Indemnifiable Losses, and to
indemnify each Seller Indemnitee from and against all loss or
damage or Indemnifiable Losses incurred, asserted against or
suffered as a result of Buyer's access to Seller's mainframe
computer pursuant to this Section 7.09, in each case, except
to the extent any such loss or damage or Indemnifiable Loss
results in whole or in part from the gross negligence or
wilful or wanton acts or omissions to act of any Seller
Indemnitee (or any contractor or subcontractor of Seller).
SECTION 7.10. Witness Services. At all times from and after
the Closing Date, each Party shall use reasonable best efforts
to make available to the other Party, upon reasonable written
request, its and its subsidiaries' then current or former
officers, directors, employees (including former employees of
Seller) and agents as witnesses to the extent that (i) such
persons may reasonably be required by such requesting Party in
connection with any claim, action, proceeding or investigation
in which such requesting Party may be involved and (ii) there
is no conflict between Buyer and Seller in such claim, action,
proceeding or investigation. Such other Party shall be
entitled to receive from such requesting Party, upon the
presentation of invoices for such witness services, payments
for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses and direct and indirect costs of
employees who are witnesses, as may be reasonably incurred in
providing such witness services.
SECTION 7.11. Consent Orders. Buyer and Seller agree to
cooperate with each other and NYSDEC to facilitate the entry
of a consent order between NYSDEC and Buyer, wherein Buyer
will agree to assume and perform the Assumed Consent Order
Obligations.
SECTION 7.12. Nitrogen Oxide Allowances. Seller agrees to
negotiate in good faith with NYSDEC for nitrogen oxide
allowances to be allocated to the Auctioned Assets for any
period subsequent to the year 2002.
SECTION 7.13. Trade Names. Seller shall not object to the use
by Buyer of any trade names, trademarks, service marks or
logos (and any rights to and in the same, including any right
to use the same) primarily relating to the Generating
Facilities that contain the words "Astoria", "Gowanus" or
"Narrows".
SECTION 7.14. NYPA Agreements. (a) Seller shall, to the
maximum extent permitted by law and the NYPA Agreements, enter
into such reasonable arrangements with Buyer as are necessary
to provide Buyer with the benefits of Seller's rights and
interests under the NYPA Agreements relating to the Auctioned
Assets and set forth on Schedule 7.14.
(b) Buyer hereby acknowledges that Seller has provided it with
copies of the NYPA Agreements.
SECTION 7.15. Narrows. From the date of this Agreement to the
Closing and notwithstanding anything to the contrary contained
in Section 7.01, Seller shall use its reasonable best efforts
to obtain in the following order of preference (a) (i) fee
title, or (ii) a permanent easement to maintain and operate
the existing Narrows Gas Turbines (the "Narrows Turbines") at
the Narrows Gas Turbine Site in a manner consistent with the
operation by Seller of the Narrows Turbines in the past or (b)
if the options in clause (a) above are not capable of being
obtained within a reasonable period (which period may run
prior to Closing) a long term lease with a lease term of not
less than 20 years having terms reasonably satisfactory to
Buyer that will permit the maintenance and operation of the
Narrows Turbines at the Narrows Gas Turbine Site in a manner
consistent with the operation by Seller of the Narrows
Turbines in the past, in each case in respect of that real
property described on Schedule 7.15. From the Closing until
the third anniversary of the date of this Agreement, Buyer
shall, at its election, either (x) take over Seller's efforts
to obtain such fee title, easement or long term lease (and in
such event Buyer shall keep Seller informed of its efforts,
consult with Seller in its efforts and act in a commercially
reasonable manner in its efforts) and, in the event Buyer has
taken over the efforts referred to above, Seller shall
reimburse Buyer for its reasonable costs and expenses incurred
in pursuing such efforts, or (y) require Seller to continue to
use its reasonable best efforts to obtain such fee title,
easement or long term lease. The amounts paid or payable to
obtain such fee title, easement or long term lease shall be
the responsibility of Seller; provided, however, that the
amounts payable by Seller under this Section 7.15, including
by way of reimbursement to Buyer, shall not exceed $5 million
in the aggregate. Seller's obligations under this Section 7.15
shall cease in all respects upon such third anniversary.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions Precedent to Each Party's Obligation
To Effect the Purchase and Sale. The respective obligations of
each Party to effect the purchase and sale of the Auctioned
Assets shall be subject to the satisfaction or waiver by such
Party on or prior to the Closing Date of the following
conditions, unless, in the case of Section 8.01(c) below, the
PSC determines that such condition need not be included or
complied with:
(a) the Seller Required Regulatory Approvals and Buyer
Required Regulatory Approvals, other than the Revocable Consent,
shall have been obtained and all conditions to effectiveness
prescribed therein or otherwise by law, regulation or order shall
have been satisfied; provided, however, that if at the time any
Seller Required Regulatory Approval or Buyer Required Regulatory
Approval is obtained, a Party reasonably expects a request for
rehearing or a challenge thereto to be filed or if a request for
rehearing or a challenge thereto has been filed, in each case,
which, if successful, would cause such Seller Required Regulatory
Approval or Buyer Required Regulatory Approval, as the case may be,
to be reversed, stayed, enjoined, set aside, annulled, suspended or
substantially modified, then such Party may by notice to the other
Party within five Business Days after receipt of such Seller
Required Regulatory Approval or Buyer Required Regulatory Approval,
as the case may be, delay the Closing until the time for requesting
rehearing has expired or until such challenge is decided, in each
case, whether or not any appeal thereof is pending; provided
further, however, that if the Closing is delayed pursuant to the
foregoing provision, the Termination Date shall be automatically
extended for a period of time equal to the period of such delay;
(b) no preliminary or permanent injunction or other order or
decree by any Federal or state court of competent jurisdiction and
no statute or regulation enacted by any Governmental Authority
prohibiting the consummation of the purchase and sale of the
Auctioned Assets (collectively, "Restraints") shall be in effect;
(c) the ISO shall have become operational to the extent
reasonably necessary to monitor market power in respect of the
Auctioned Assets; and
(d) delivery of each Continuing Site Agreement, each
Declaration of Easements Agreement, each Declaration of Subdivision
Easements and each Zoning Lot Development Agreement
to the Title Company for recording.
SECTION 8.02. Conditions Precedent to Obligation of Buyer To
Effect the Purchase and Sale. The obligation of Buyer to
effect the purchase and sale of the Auctioned Assets
contemplated by this Agreement shall be subject to the
satisfaction or waiver by Buyer on or prior to the Closing
Date of the following additional conditions:
(a) Seller shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Seller which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not, individually
or in the aggregate, create a Material Adverse Effect;
(c) Buyer shall have received a certificate from an authorized
officer of Seller, dated the Closing Date, to the effect that, to
the best of such officer's knowledge, the conditions set forth in
Sections 8.02(a) and (b) have been satisfied;
(d) all material Permits and Environmental Permits required
for Buyer to conduct the business and operations of the Auctioned
Assets as currently conducted shall have been transferred or will be
transferable to Buyer, or shall have been obtained or will be
obtainable by Buyer, or shall have been made available to Buyer in
accordance with Section 7.03(c), on, prior to or within a reasonable
period of time after the Closing Date;
(e) Buyer shall have received (i) the deeds of conveyance
substantially in the form of Exhibits B-1 and B-2, respectively,
(ii) a Foreign Investment in Real Property Tax Act Certification and
Affidavit substantially in the form of Exhibit C and (iii) an
opinion from John D. McMahon, Esq., General Counsel of Seller or
other counsel reasonably acceptable to Buyer, dated the Closing
Date, substantially in the form set forth in Exhibit D;
(f) execution and delivery by Seller of each of (i) the
Transition Capacity Agreement and the Zoning Lot Development
Agreements and (ii) the A-10 License and the A-0 License, each in a
form reasonably satisfactory to Buyer;
(g) the Title Company shall be willing to issue to Buyer a New
York form of ALTA (1992) Owner's Title Insurance Policy insuring fee
title to the Buyer Real Estate in an amount equal to that portion of
the Purchase Price properly allocable to Buyer Real Estate, subject
only to the Permitted Exceptions;
(h) Buyer shall have received originals of the ALTA/ACSM Land
Title Surveys which include the Buyer Real Estate in addition to
other property, signed by the surveyor with Buyer's name and the
name of not more than one other Party designated by Buyer added to
the certification set forth thereon; and
(i) (x) There shall not be any New York State Governmental
Authority with jurisdiction seeking to prevent Buyer from
operating the Narrows Turbines on the Narrows Gas Turbine Site
in a manner consistent with the operation of the Narrows
Turbines by Seller in the past as a result of the state of
title in respect of the real property described in Schedule
7.15 and (y) if (x) is not satisfied, the presence of the
state of facts in (x) in and of itself and without regard to
any other facts or circumstances, will not have a reasonable
probability of materially and adversely affecting Buyer's
ability to obtain financing for the acquisition of the
Auctioned Assets (it being understood that the obtaining of a
"use permit" or equivalent Permit from the appropriate
Governmental Authority in form and substance reasonably
satisfactory to Buyer in respect of such real property and the
Narrows Turbines by Buyer shall satisfy this condition and the
obtaining of fee title, an easement or long term lease
satisfying the requirements of Section 7.15 shall also satisfy
such condition).
SECTION 8.03. Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale. The obligation of Seller to
effect the purchase and the sale of the Auctioned Assets
contemplated by this Agreement shall be subject to the
satisfaction or waiver by Seller on or prior to the Closing
Date of the following additional conditions:
(a) Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement which are
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of Buyer which are set
forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Buyer Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Buyer Material Adverse
Effect;
(c) Seller shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Sections 8.03(a) and (b) have been satisfied;
(d) Seller shall have received an opinion substantially in the
form of Exhibit E dated as of the Closing Date and from counsel
reasonably acceptable to Seller;
(e) execution and delivery by Buyer of each of (i) Transition
Capacity Agreement, the Gowanus Zoning Lot Development Agreement
and, unless executed and delivered prior to the Closing Date, the
Astoria Zoning Lot Development Agreement and (ii) the A-10 License
and the A-0 License, each in a form reasonably satisfactory to
Seller;
(f) Buyer shall have provided evidence in form and substance
reasonably satisfactory to Seller of compliance by Buyer with its
obligations under Article IX;
(g) the Guarantee Agreement shall be in full force and effect;
(h) Guarantor shall have performed in all material respects
its covenants and agreements contained in the Guarantee Agreement
which are required to be performed on or prior to the Closing Date;
(i) the representations and warranties of Guarantor which are
set forth in the Guarantee Agreement shall be true and correct as of
the date of the Guarantee Agreement and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such date), except where
the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality"
or "Guarantor Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Guarantor Material
Adverse Effect (as defined therein);
(j) Seller shall have received a certificate from an
authorized officer of Guarantor, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions
set forth in Sections 8.03(h) and (i) have been satisfied; and
(k) Seller shall have received an opinion substantially in the
form of Exhibit L dated the Closing Date and from counsel reasonably
acceptable to Seller.
ARTICLE IX
Employee Matters
SECTION 9.01. Employee Matters. (a) Buyer shall offer
equivalent employment at the Auctioned Assets to those
employees of Seller regularly assigned by Seller to work at
the Auctioned Assets on the Closing Date in the job titles and
facilities listed in Schedule 9.01(a)(all such employees
described above and those individuals described in the
following sentence being hereinafter referred to as "Affected
Employees"). Affected Employees include each such employee of
Seller who is not actively at work on the Closing Date due
solely to a temporary short-term absence, whether paid or
unpaid, in accordance with applicable policies of Seller,
including as a result of vacation, holiday, personal time,
leave of absence, union leave, short- or long-term disability
leave, military leave or jury duty. Affected Employees whether
or not they accept an offer of employment from Buyer shall
cease to be employees of Seller on the Closing Date and, to
the extent they accept an offer of employment from Buyer,
their period of employment by Buyer shall begin on the Closing
Date. Seller shall be responsible for any obligation to
provide employee benefits to an Affected Employee prior to
such employee's period of employment by Buyer.
All such offers of employment will be made (x) in accordance
with all applicable laws and regulations, and (y) for
employees represented by Utility Workers' Union of America
AFL-CIO and its Local Union 1-2 ("Local 1-2"), in accordance
with the Local 1-2 Collective Bargaining Agreement (as defined
in Schedule 9.01(b)). Each Affected Employee who becomes
employed by Buyer pursuant to this Section 9.01(a) shall be
referred to herein as a "Continued Employee".
Buyer may commence discussions concerning offers for
employment beginning on the Closing Date to Affected Employees
at any time following the date of this Agreement.
Seller acknowledges and agrees that Buyer may discharge any of
its obligations under this Article IX through one of its
Affiliates; provided, however, that Buyer shall in no event be
relieved from the full liabilities and the full financial
responsibility under this Article IX.
(b) Schedule 9.01(b) sets forth the collective bargaining
agreement, and amendments thereto, to which Seller is a party
in connection with the Auctioned Assets (the "Collective
Bargaining Agreement"). Affected Employees who are included in
the collective bargaining unit covered by the Collective
Bargaining Agreement are referred to herein as "Affected Union
Employees". Each Continued Employee who is an Affected Union
Employee shall be referred to herein as a "Continued Union
Employee". On the Closing Date, Buyer will assume the terms
and conditions of the Collective Bargaining Agreement, except
as set forth in Section 9.02(b) below, as it relates to
Affected Union Employees until the expiration date of the
Collective Bargaining Agreement. Buyer will comply with its
legal obligations with respect to collective bargaining under
Federal labor law for the employees at the Auctioned Assets in
the job titles or related work responsibilities of the
Affected Union Employees, and Buyer will comply with all
applicable obligations thereunder as the new owner of the
Auctioned Assets. Buyer shall recognize Local 1-2 as the
exclusive collective bargaining representative of the
employees at the Auctioned Assets in the job titles or related
work responsibilities of the Affected Union Employees and
Buyer agrees that, should any other business entity
(regardless of its relationship to Buyer) acquire all or a
portion of the Auctioned Assets from Buyer prior to the
expiration date of the Collective Bargaining Agreement, Buyer
will require such business entity to (i) offer employment to
Affected Union Employees employed by Buyer at the Auctioned
Assets immediately prior to the change in ownership, (ii)
recognize Local 1-2 as the exclusive collective bargaining
representative of Buyer's employees at the Auctioned Assets in
the job titles and work responsibilities of the Affected Union
Employees, and (iii) assume the terms and conditions of the
Collective Bargaining Agreement as they relate to Affected
Union Employees from the date of such acquisition through the
expiration date of the Collective Bargaining Agreement.
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service. (a) For not less than three years
following the Closing Date, Buyer shall maintain compensation
(including base pay and bonus compensation) and employee
benefits and employee benefit plans and arrangements for each
Continued Employee who is not a Continued Union Employee (a
"Continued Non-Union Employee") which are at least equivalent
to those provided pursuant to the compensation, employee
benefits and employee benefit plans and arrangements in effect
on the Closing Date for the Affected Employees who are not
Affected Union Employees. Such total compensation shall be
based upon (x) such employee's existing individual base pay,
(y) such employee's authorized overtime, if applicable, and
(z) the average bonus and benefit component for such
employee's salary plan level, as consistently applied by
Seller, apportioned according to such employee's base pay. No
provision of this Agreement shall affect any Continued
Non-Union Employee's status as an employee-at-will.
(b) From the Closing Date until the expiration date of the
Collective Bargaining Agreement, Buyer shall provide to each
Continued Union Employee benefits and employee benefit plans
and arrangements which are equivalent to those provided under
such Collective Bargaining Agreement. Such benefits, plans and
arrangements include the following: (i) hospital, medical,
dental, vision care and prescription drug benefits (including
employee contributions to be made on a pre-tax basis), (ii)
health care and dependent care flexible spending accounts;
(iii) employer-provided basic group term life and accidental
death and dismemberment insurance; (iv) employee-paid group
universal life and spousal and dependent child life insurance;
(v) sick allowance (short term disability) and long term
disability benefits; (vi) business travel accident insurance
and crime protection insurance; (vii) occupational accidental
death insurance; (viii) adoption benefits and child care and
elder care referral benefits; (ix) tuition aid benefits; (x)
vacation and holidays; (xi) employee stock purchase plan
(including employer matching contributions) and (xii) defined
benefit pension and 401(k) plan benefits. In providing such
benefits, Buyer shall have the right, subject to any
applicable laws, to use different providers from those used by
Seller and to establish Buyer's own benefit plans or use
Buyer's existing benefit plans. For purposes hereof, except as
provided in Section 9.04(b), Buyer shall have no obligation to
maintain a fund holding or measured by common stock of
Seller's parent under any of Buyer's plans or arrangements,
notwithstanding any such fund maintained by Seller under its
plans and arrangements.
(c) Continued Employees shall be given credit by Buyer for all
service with Seller and its Affiliates under all existing or
future employee benefit and fringe benefit plans, programs and
arrangements of the Buyer ("Buyer Benefit Plans") in which
they become participants. The service credit given by Buyer
shall be for purposes of eligibility, vesting, eligibility for
early retirement and early retirement subsidies, benefit
accrual and service-related level of benefits. Buyer shall
assume and honor all vacation, sick and personal days accrued
and unused by Continued Employees through the Closing Date in
accordance with Seller's applicable policies and arrangements.
SECTION 9.03. Pension Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect defined benefit pension plans
("Buyer's Pension Plans") intended to be (i) qualified
pursuant to Section 401(a) of the Code and (ii) nonqualified,
in order to provide for benefits which would otherwise be
payable under the applicable qualified plan but for the
application of Sections 401(a)(17) and 415 of the Code,
providing benefits as of the Closing Date identical in all
material respects (except for such changes as may be required
by law) to the benefits provided to them under Seller's
Pension Plans (as defined below), in particular (x) for
Continued Non-Union Employees, such Buyer's Pension Plans to
provide benefits identical in all material respects to those
benefits provided under Seller's Retirement Plan for
Management Employees and Seller's Supplemental Retirement
Income Plan, and (y) for Continued Union Employees, such
Buyer's Pension Plans to provide benefits identical in all
material respects to those provided under Seller's Pension and
Benefits Plan (collectively, "Seller's Pension Plans"), in
each case, as of the Closing Date. Buyer acknowledges and
agrees that one such material respect is to count age after
termination of employment for purposes of satisfying
requirements for early retirement eligibility and early
retirement subsidies.
(b) Continued Employees participating in Seller's Pension
Plans immediately prior to the Closing Date shall become
participants in Buyer's Pension Plans as of the Closing Date.
Without limiting the generality of Section 9.02(c), Continued
Employees shall receive credit for all compensation and
service with Seller (subject to the terms of Seller's Pension
Plans) for purposes of eligibility for participation, vesting,
eligibility for early retirement and early retirement
subsidies and benefit accrual under Buyer's Pension Plans.
Seller shall be responsible for Continued Employees' pension
benefits accrued up to the Closing Date, and Buyer shall be
responsible for pension benefits accrued by such Continued
Employees on and after the Closing Date as provided herein.
Buyer may offset against the accrued benefits determined under
Buyer's Pension Plans the accrued benefits determined under
Seller's Pension Plans. For the purpose of this Section
9.03(b), "accrued benefit" means the amount that would be paid
as a life annuity at normal retirement age irrespective of the
date of actual distribution from either Seller's or Buyer's
Pension Plans. Seller shall make pension distributions to
Continued Employees of the vested portion of their accrued
benefits in accordance with the terms of Seller's Pension
Plans as in effect from time to time. As soon as reasonably
practicable following the Closing Date, Seller shall provide
Buyer a list showing, as of the Closing Date, the accrued
benefit of each Continued Employee under Seller's Pension
Plans.
(c) In the event that any other business entity (regardless of
its relationship to Buyer) acquires all or a portion of the
Auctioned Assets from Buyer at any time prior to the third
anniversary of the Closing Date in the case of Continued
Non-Union Employees and prior to the expiration date of the
Collective Bargaining Agreement in the case of Continued Union
Employees, Buyer will require such entity to maintain the
defined benefit plans, provide the benefits and recognize
compensation and service with Seller and Buyer to the same
extent as Buyer is required under Sections 9.03(a) and (b)
above.
SECTION 9.04. 401(k) Plan. (a) Effective as of the Closing
Date, Buyer shall have in effect tax-qualified defined
contribution plans that include a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code
("Buyer's 401(k) Plans") that will provide benefits that are
identical in all material respects (except for such changes as
may be required by law) to those provided by (i) Seller's
Thrift Savings Plan for Management Employees, in the case of
Continued Non-Union Employees, and (ii) Seller's Retirement
Income Savings Plan for Weekly Employees, in the case of
Continued Union Employees (such Seller plans herein referred
to collectively as "Seller's 401(k) Plans"), in each case, as
of the Closing Date. Each Continued Employee participating in
Seller's 401(k) Plans immediately prior to the Closing Date
shall become a participant in Buyer's 401(k) Plans as of the
Closing Date. Continued Employees shall receive credit for all
service with Seller for purposes of eligibility and vesting
under Buyer's 401(k) Plans.
(b) At such time after the Closing Date as Seller is
reasonably satisfied that Buyer's 401(k) Plans meet the
requirements for qualification under Section 401(a) of the
Code, Seller shall cause to be transferred to Buyer's 401(k)
Plans in a trust-to-trust transfer in common stock of Seller's
parent (as provided in the following sentence) and cash (or
other property reasonably acceptable to Buyer) an amount equal
to the value of the assets held in the accounts of all
Continued Employees (including any outstanding loan balances
of Continued Employees in Seller's 401(k) Plans), subject to
any qualified domestic relations orders. In connection
therewith, Buyer shall establish an investment fund under
Buyer's 401(k) Plans to which shall be transferred the shares
of common stock of Seller's parent (or any successor thereto)
which, as of the date of transfer, are credited to the
accounts of the Continued Employees under Seller's 401(k)
Plans. After the Closing Date and prior to any such transfer,
Buyer shall cooperate with Seller in the administration of
distributions to and loan repayments by Continued Employees.
Prior to such transfer of assets, Seller shall vest any
unvested benefits of Continued Employees under Seller's 401(k)
Plans. Following any such transfer of assets, Buyer shall
assume all obligations and liabilities of Seller under
Seller's 401(k) Plans with respect to such Continued
Employees, and Seller shall have no further liability to Buyer
or any Continued Employee with respect thereto.
SECTION 9.05. Welfare Plans. (a) Continued Employees and their
dependents who are eligible to participate in Seller's current
welfare benefits plans, programs or arrangements shall be
eligible to participate in the welfare benefits plans,
programs or arrangements maintained or established by Buyer
("Buyer's Welfare Plans"), effective as of the Closing Date.
Effective as of the Closing Date, any and all limitations as
to pre-existing conditions and actively-at-work exclusions and
waiting periods under Buyer's Welfare Plans shall be waived by
Buyer with respect to Continued Employees and their eligible
dependents to the extent satisfied under Seller's applicable
Welfare Plans. In addition, effective as of the Closing Date,
Buyer shall cause Buyer's Welfare Plans to recognize any
out-of-pocket health care expenses incurred by Continued
Employees and their eligible dependents prior to the Closing
Date and during the calendar year in which such Closing Date
occurs for purposes of determining their deductibles and
out-of-pocket maximums under Buyer's Welfare Plans. Seller
shall retain responsibility under Seller's welfare plans for
claims relating to expenses incurred by Continued Employees
and their eligible dependents prior to the Closing Date. Buyer
shall have responsibility under Buyer's Welfare Plans for
claims relating to expenses incurred by Continued Employees
and their eligible dependents on and after the Closing Date.
(b) Effective as of the Closing Date, Buyer shall have in
effect health care and dependent care reimbursement account
plans for the benefit of each Continued Employee, the terms of
which shall (i) be identical in all material respects to the
Flexible Reimbursement Account Plans for Management and Weekly
Employees of Seller ("Seller's Reimbursement Account Plans")
as in effect on the Closing Date and (ii) give full effect to,
and continue in effect, salary reduction elections made under
Seller's Reimbursement Account Plans. Prior to the Closing
Date, Seller shall cause the accounts of Continued Employees
under Seller's Reimbursement Account Plans to be segregated
into separate health care and dependent care reimbursement
accounts (the "Segregated Reimbursement Accounts"), and such
Segregated Reimbursement Accounts shall be transferred to and
assumed by Buyer as of the Closing Date.
(c) Buyer shall, subject to any applicable laws, provide a
retiree health program identical in all material respects to
Seller's retiree health program as in effect on the Closing
Date to each Continued Employee who terminates his employment
with Buyer within three years after the Closing Date, in the
case of a Continued Non-Union Employee, and on or prior to the
expiration date of the Collective Bargaining Agreement, in the
case of a Continued Union Employee, and, in each case, who at
the time of such termination of employment satisfies the
eligibility requirements for such retiree health program
provided by Buyer; provided, however, that Seller shall remain
liable, pursuant to Seller's retiree health program, for all
Continued Employees who satisfy, as of the Closing Date, the
eligibility requirements then in effect for Seller's retiree
health program.
SECTION 9.06. Short- and Long-Term Disability. Effective as of
the Closing Date, Buyer shall have in effect short-and
long-term disability plans for the benefit of Continued
Employees, the cost of which to Continued Employees shall be
the same as under, and the terms of which are identical in all
material respects to, Seller's applicable plans as in effect
as of the Closing Date. Any and all waiting periods and
pre-existing condition clauses shall be waived under Buyer's
short- and long-term disability plans with respect to
Continued Employees.
SECTION 9.07. Life Insurance and Accidental Death and
Dismemberment Insurance. Effective as of the Closing Date,
Buyer shall have in effect group term life insurance, group
universal life insurance, accidental death and dismemberment
insurance, occupational accidental death insurance, business
travel accident insurance and crime protection insurance plans
for the benefit of Continued Employees, the cost of which to
Continued Employees shall be the same as under, and terms of
which are identical in all material respects to, Seller's
applicable plans that provide such benefits to Continued
Employees immediately prior to the Closing Date.
SECTION 9.08. Severance. (a) Effective as of the Closing Date,
Buyer shall have in effect a severance plan covering Continued
Non-Union Employees that contains terms identical in all
material respects to those under Seller's Severance Pay Plan
for Management Employees as of the Closing Date.
(b) Buyer shall, subject to any applicable laws, provide a
special separation allowance for any Continued Employee whose
employment with Buyer is terminated involuntarily by Buyer
other than for cause on or prior to, in the case of Continued
Non-Union Employees, three years after the Closing Date and,
in the case of Continued Union Employees, the expiration date
of the Collective Bargaining Agreement. Such allowance shall
be not less than the sum of four weeks pay plus one week pay
for each completed year of service (as determined by
aggregating each affected individual's respective service with
Seller and Buyer) and shall be payable by Buyer (to the extent
not paid pursuant to any Buyer severance plan referenced in
Section 9.08(a)) in a lump sum within 30 days after
termination of employment. In addition, in the case of each
Continued Non-Union Employee described in the first sentence
of this Section 9.08(b), Buyer shall pay (to the extent not
paid pursuant to any Buyer severance plan referenced in
Section 9.08(a)) the Continued Non-Union Employee a lump sum
equal to the excess of (i) the actuarial equivalent of the
Employee's "potential benefit" under the applicable Buyer's
Pension Plans, which such Employee would receive if such
Employee's employment continued until three years after the
Closing Date and such Employee's base and incentive
compensation for such deemed additional period was the same as
in effect on the date of such Employee's termination of
employment with Buyer, over (ii) the actuarial equivalent of
such Employee's "actual benefit" under the applicable Buyer's
Pension Plans, as of the date of such Employee's termination
of employment from Buyer. For the purpose of the foregoing
sentence, (i) the term "potential benefit" shall refer to the
monthly pension that would have been payable to the applicable
Employee commencing on the first day of the month following
the latest of (A) the last day of the deemed additional
period, (B) Employee's attainment of age 55, or (C) the
earlier of (l) the first date as of which the sum of such
Employee's age and years of service, as taken into account in
determining the actuarial reduction for commencement prior to
normal retirement age that is to be applied to his accrued
benefit under the applicable Buyer's Pension Plans, equals 75
or (2) such Employee's attainment of age 65, (ii) the term
"actual benefit" shall refer to the monthly pension payable to
such Employee under the applicable Buyer's Pension Plans
commencing as of the date determined in accordance with clause
(i) of this sentence, and (iii) the actuarial equivalent of
the "potential benefit" and the "actual benefit" shall each be
a lump sum payable as of the date of such Employee's
termination of employment from Buyer, determined on the basis
of the interest rate used to determine the amount of lump sum
distributions and, to the extent applicable, other actuarial
assumptions then in effect under the applicable Buyer's
Pension Plans. Buyer shall also provide outplacement services
to such terminated Continued Non-Union Employee appropriate to
the level of the Employee's position and job responsibilities.
Buyer shall also continue to provide or cause to be provided
to any such terminated Continued Employee health insurance
coverage and group term and universal life insurance coverage
at the same rates as for active Continued Employees for a
period equal to the number of weeks of separation allowance
which any such terminated Continued Employee is entitled to
from Buyer. Buyer shall have the right to require a release in
form reasonably satisfactory to Buyer as a condition for
eligibility to receive such separation allowance. The
allowance shall not apply to Continued Employees whose
employment is terminated due to death or expiration of sick
allowance or other authorized leave of absence or who
terminate employment voluntarily. If at any time during the
three-year period following the Closing Date, Buyer shall
assign a Continued Non-Union Employee to work on a regular
basis at a location that is more than fifty miles from the
location to which such Employee is assigned as of the Closing
Date, Buyer shall offer such Employee the option to terminate
employment and receive the severance benefits set forth in
this Section 9.08(b) in lieu of the reassignment.
SECTION 9.09. Workers Compensation. Effective as of the
Closing Date, Buyer shall have in effect a workers
compensation program for Continued Employees that shall
provide coverage identical in all material respects to
Seller's workers compensation program as of the Closing Date.
ARTICLE X
Indemnification and Dispute Resolution
SECTION 10.01. Indemnification. (a) Seller will indemnify and
hold harmless Buyer and its Affiliates and their respective
directors, officers, employees and agents (collectively with
Buyer and its Affiliates, the "Buyer Indemnitees") from and
against any and all claims, demands or suits by any person,
and all losses, liabilities, damages, obligations, payments,
costs and expenses (including reasonable legal fees and
expenses and including costs and expenses incurred in
connection with investigations and settlement proceedings)
(each, an "Indemnifiable Loss"), as incurred, asserted against
or suffered by any Buyer Indemnitee relating to, resulting
from or arising out of:
(i) any breach by Seller of any covenant or agreement of
Seller contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 5.01, 5.02, 5.03 and 5.17;
(ii) the Retained Liabilities;
(iii) noncompliance by Seller with any bulk sales or transfer
laws as provided in Section 7.07; or
(iv) any breach by Seller of any Ancillary Agreement.
(b) Buyer will indemnify and hold harmless Seller and its
Affiliates and their respective directors, officers, trustees,
employees and agents (collectively with Seller and its Affiliates,
the "Seller Indemnitees") from and against any and all Indemnifiable
Losses, as incurred, asserted against or suffered by any Seller
Indemnitee relating to, resulting from or arising out of:
(i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or, prior to their expiration in
accordance with Section 12.03, the representations and warranties
contained in Sections 6.01, 6.02, 6.03 and 6.05;
(ii) the Assumed Obligations;
(iii) any obligation resulting from any action or inaction of
Buyer (A) under any Contract or warranty pursuant to Section 2.04(b)
(whether acting as principal or representative and agent for Seller
pursuant to Section 2.04(b) or otherwise), (B) pursuant to Section
2.05 or Section 7.14 (in each case, whether acting as representative
or agent for Seller or otherwise) or (C) pursuant to any
Transferable Permit in respect of which Seller remains the holder of
record after the Closing Date pursuant to Section 7.03(c); or
(iv) any breach by Buyer of any Ancillary Agreement.
(c) The amount of any Indemnifiable Loss shall be reduced to
the extent that the relevant Buyer Indemnitee or Seller
Indemnitee (each, an "Indemnitee") receives any insurance
proceeds with respect to an Indemnifiable Loss and shall be
(i) increased to take account of any Tax Cost incurred by the
Indemnitee arising from the receipt of indemnity payments
hereunder (grossed up for such increase) and (ii) reduced to
take account of any Tax Benefit realized by the Indemnitee
arising from the incurrence or payment of any such
Indemnifiable Loss. If the amount of any Indemnifiable Loss,
at any time subsequent to the making of an indemnity payment
in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or
pursuant to any claim, recovery, settlement or payment by or
against any other person, the amount of such reduction, less
any costs, expenses or premiums incurred in connection
therewith, will promptly be repaid by the Indemnitee to the
Party required to provide indemnification hereunder (the
"Indemnifying Party") with respect to such Indemnifiable Loss.
(d) To the fullest extent permitted by law, neither Party nor
any Buyer Indemnitee or any Seller Indemnitee shall be liable
to the other Party or any other Buyer Indemnitee or Seller
Indemnitee for any claims, demands or suits for consequential,
incidental, special, exemplary, punitive, indirect or multiple
damages connected with or resulting from any breach after the
Closing Date of this Agreement or the Ancillary Agreements
(other than breach of this Article X), or any actions
undertaken in connection with or related hereto or thereto,
including any such damages which are based upon breach of
contract, tort (including negligence and misrepresentation),
breach of warranty, strict liability, statute, operation of
law or any other theory of recovery.
(e) The rights and remedies of Seller and Buyer under this
Article X are, solely as between Seller and Buyer, exclusive
and in lieu of any and all other rights and remedies which
Seller and Buyer may have under this Agreement, the Ancillary
Agreements (except as expressly provided in any Continuing
Site Agreement or any Declaration of Easements Agreement) or
otherwise for monetary relief with respect to (i) any breach
of, or failure to perform, any covenant or agreement set forth
in this Agreement or the Ancillary Agreements by Seller or
Buyer, (ii) any breach of any representation or warranty by
Seller or Buyer, (iii) the Assumed Obligations or the Retained
Liabilities, (iv) noncompliance by Seller with any bulk sales
or transfer laws and (v) any obligation in respect of Section
2.04, Section 2.05, Section 7.03 or Section 7.14. Each Party
agrees that the previous sentence shall not limit or otherwise
affect any non-monetary right or remedy which either Party may
have under this Agreement or the Ancillary Agreements or
otherwise limit or affect either Party's right to seek
equitable relief, including the remedy of specific
performance.
(f) Buyer and Seller agree that, notwithstanding Section
10.01(e), each Party shall retain, subject to the other
provisions of this Agreement, including Sections 10.01(d) and
12.03, all remedies at law or in equity with respect to (i)
fraud or wilful or intentional breaches of this Agreement or
the Ancillary Agreements and (ii) gross negligence or wilful
or wanton acts or omissions to act of any Indemnitee (or any
contractor or subcontractor thereof) on or after the Closing
Date.
SECTION 10.02. Third Party Claims Procedures. (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 or an Affiliate of a
Party (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party,
the Indemnitee will give such Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than
20 Business Days after the Indemnitee's receipt of notice of
such Third Party Claim; provided, however, that a failure to
give timely notice will not affect the rights or obligations
of any Indemnitee except if, and only to the extent that, as a
result of such failure, the Indemnifying Party was actually
prejudiced. Such notice shall describe the nature of the Third
Party Claim in reasonable detail and will indicate the
estimated amount, if practicable, of the Indemnifiable Loss
that has been or may be sustained by the Indemnitee.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party;
provided, however, that such counsel is not reasonably
objected to by the Indemnitee; and provided further that the
Indemnifying Party first admits in writing its liability to
the Indemnitee with respect to all material elements of such
claim. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will
not be liable to the Indemnitee for any legal expenses
subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party elects to assume
the defense of a Third Party Claim, the Indemnitee will (i)
cooperate in all reasonable respects with the Indemnifying
Party in connection with such defense, (ii) not admit any
liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the Indemnifying Party's prior
written consent and (iii) agree to any settlement, compromise
or discharge of a Third Party Claim which the Indemnifying
Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party
Claim. In the event the Indemnifying Party shall assume the
defense of any Third Party Claim, the Indemnitee shall be
entitled to participate in (but not control) such defense with
its own counsel at its own expense. If the Indemnifying Party
does not assume the defense of any such Third Party Claim, the
Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after
giving notice to the Indemnifying Party of the terms of the
proposed settlement and the Indemnifying Party will promptly
reimburse the Indemnitee upon written request. Anything
contained in this Agreement to the contrary notwithstanding,
no Indemnifying Party shall be entitled to assume the defense
of any Third Party Claim if such Third Party Claim seeks an
order, injunction or other equitable relief or relief for
other than monetary damages against the Indemnitee which, if
successful, would materially adversely affect the business of
the Indemnitee; provided, however, that such Indemnifying
Party shall continue to be obligated to such Indemnitee
pursuant to Section 10.01(a) or (b), as the case may be, for
all Indemnifiable Losses relating to, resulting from or
arising out of such Third Party Claim.
ARTICLE XI
Termination
SECTION 11.01. Termination. (a) This Agreement may be
terminated at any time prior to the Closing by an
instrument in writing signed on behalf of each of the
Parties.
(b) This Agreement may be terminated by Seller or Buyer if the
Closing shall not have occurred on or before the date that is
12 months from the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this
Agreement pursuant to this Section ll.01(b) shall not be
available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such date.
(c) This Agreement may be terminated by either Seller or Buyer
if any Restraint having any of the effects set forth in
Section 8.01(b) shall be in effect and shall have become final
and nonappealable; provided, however, that the Party seeking
to terminate this Agreement pursuant to this Section 11.01(c)
shall have used its reasonable best efforts to prevent the
entry of and to remove such Restraint.
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Expenses. Except to the extent specifically
provided herein, 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,
whether or not the transactions contemplated hereby are
consummated.
SECTION 12.02. Amendment and Modification; Extension; Waiver.
This Agreement may be amended, modified or supplemented only
by an instrument in writing signed on behalf of each of the
Parties. Either Party may (i) extend the time for the
performance of any of the obligations or other acts of the
other Party, (ii) waive any inaccuracies in the
representations and warranties of the other Party contained in
this Agreement or (iii) waive compliance by the other Party
with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such Party. The
failure of a Party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 12.03. No Survival of Representations or Warranties.
Each and every representation and warranty contained in this
Agreement, other than the representations and warranties
contained in Sections 5.01, 5.02, 5.03 and 5.17 and 6.01,
6.02, 6.03 and 6.05 (which representations and warranties
shall survive for 18 months from the Closing Date), shall
expire with, and be terminated and extinguished by the Closing
and no such representation or warranty shall survive the
Closing Date. From and after the Closing Date, none of Seller,
Buyer or any officer, director, trustee or Affiliate of any of
them shall have any liability whatsoever with respect to any
such representation or warranty. The expiration of the
representations and warranties contained in Sections 5.01,
5.02, 5.03 and 5.17 and 6.01, 6.02, 6.03 and 6.05 shall not
affect the Parties' obligations under Article X if the
Indemnitee provided the Indemnifying Party with proper notice
of the claim or event for which indemnification is sought
prior to such expiration.
SECTION 12.04. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (as of
the time of delivery or, in the case of a telecopied
communication, of confirmation) if delivered personally,
telecopied (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the Parties at the following
addresses (or at such other address for a Party as shall be
specified by like notice):
if to Seller, to:
Consolidated Edison Company of New
York, Inc.
4 Irving Place
New York, NY 10003
Telecopy No.: (212) 677-0601
Attention: General Counsel
with a copy on or prior to the Closing Date to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: George W. Bilicic, Jr., Esq.
if to Buyer, to:
Astoria Generating Company, L.P.
c/o Orion Power Holdings, Inc.
111 Market Place
Suite 520
Baltimore, MD 21202
Telecopy No.: (410) 468-3699
Attention: General Counsel
with a copy on or prior to the Closing Date to:
Thelen Reid & Priest LLP
Two Embarcadero Center
Suite 2100
San Francisco, CA 94111
Telecopy No.: (415) 421-1068
Attention: Thomas B. Glascock, Esq.
SECTION 12.05. Assignment; No Third Party Beneficiaries. (a)
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any Party, including by
operation of law, without the prior written consent of the
other Party, except (i) in the case of Seller (A) to an
Affiliate of Seller or a third party in connection with the
transfer of the Transmission System to such Affiliate or third
party or (B) to a lending institution or trustee in connection
with a pledge or granting of a security interest in all or any
part of the Transmission System and this Agreement and (ii) in
the case of Buyer (A) to an Affiliate of Buyer in connection
with the transfer of the Auctioned Assets to such Affiliate
and (B) to a lending institution or trustee in connection with
a pledge or granting of a security interest in the Auctioned
Assets and this Agreement; provided, however, that no
assignment or transfer of rights or obligations by either
Party shall relieve it from the full liabilities and the full
financial responsibility, as provided for under this
Agreement, unless and until the transferee or assignee shall
agree in writing to assume such obligations and duties and the
other Party has consented in writing to such assumption.
(b) Nothing in this Agreement is intended to confer upon any
other person except the Parties any rights or remedies
hereunder or shall create any third party beneficiary rights
in any person, including, with respect to continued or resumed
employment, any employee or former employee of Seller
(including any beneficiary or dependent thereof). 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.
SECTION 12.06. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
New York (regardless of the laws that might otherwise govern
under applicable principles of conflicts of law).
SECTION 12.07. 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.
SECTION 12.08. Interpretation. When a reference is made in
this Agreement to an Article, Section, Schedule or Exhibit,
such reference shall be to an Article or Section of, or
Schedule or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation" or equivalent
words. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision
of this Agreement. All terms defined in this Agreement shall
have the defined meanings when used in the Ancillary
Agreements and any certificate or other document made or
delivered pursuant hereto or thereto unless otherwise defined
therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and
neuter genders of such term. Any agreement, instrument,
statute, regulation, rule or order defined or referred to
herein or in any agreement or instrument that is referred to
herein means such agreement, instrument, statute, regulation,
rule or order as from time to time amended, modified or
supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of
statutes, regulations, rules or orders) by succession of
comparable successor statutes, regulations, rules or orders
and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 12.09. Jurisdiction and Enforcement. (a) Each of the
Parties irrevocably submits to the exclusive jurisdiction of
(i) the Supreme Court of the State of New York, New York
County and (ii) the United States District Court for the
Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Agreement or
any transaction contemplated hereby. Each of the Parties
agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the
Southern District of New York or, if such suit, action or
proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New
York County. Each of the Parties further agrees that service
of process, summons, notice or document by hand delivery or
U.S. registered mail at the address specified for such Party
in Section 12.04 (or such other address specified by such
Party from time to time pursuant to Section 12.04) shall be
effective service of process for any action, suit or
proceeding brought against such Party in any such court. Each
of the Parties irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of
New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby
further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit
or proceeding brought in any such court has been brought in an
inconvenient forum.
(b) The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or any
Ancillary Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an
injunction or injunctions to prevent breaches of this
Agreement or any Ancillary Agreement and to enforce
specifically the terms and provisions of this Agreement or any
Ancillary Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 12.10. Entire Agreement. This Agreement, the
Confidentiality Agreement and the Ancillary Agreements
including the Exhibits, Schedules, documents, certificates and
instruments referred to herein or therein and other contracts,
agreements and instruments contemplated hereby or thereby,
embody the entire agreement and understanding of the Parties
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. This
Agreement and the Ancillary Agreements supersede all prior
agreements and understandings between the Parties with respect
to the transactions contemplated by this Agreement other than
the Confidentiality Agreement.
SECTION 12.11. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent
of the Parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 12.12. Conflicts. Except as expressly otherwise
provided herein or therein, in the event of any conflict or
inconsistency between the terms of this Agreement and the
terms of any Ancillary Agreement, the terms of this Agreement
shall prevail.
IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be signed by their respective duly authorized
officers as of the date first above written.
CONSOLIDATED EDISON COMPANY OF NEW
YORK, INC.,
by /s/ Joan S. Freilich
Name: Joan S. Freilich
Title: Executive Vice Presient and CFO
ASTORIA GENERATING COMPANY, L.P.,
BY: ORION POWER NEW YORK GP II,
INC.,
by /s/ Jack A. Fusco
Name: Jack A. Fusco
Title: President
CONSOLIDATED EDISON, INC.
Ratio of Earnings to Fixed Charges
Twelve Months Ended
(Thousands of Dollars)
DECEMBER DECEMBER
1998 1997
---------- ---------
Earnings
Net Income Available for Common $712,742 $694,479
Preferred Dividends 17,007 18,344
Federal Income Tax 318,980 357,100
Federal Income Tax Deferred 95,140 31,450
Investment Tax Credits Deferred (8,710) (8,830)
---------- ----------
Total Earnings Before Federal Income Tax 1,135,159 1,092,543
Fixed Charges* 345,513 353,689
---------- ----------
Total Earnings Before Federal Income Tax
and Fixed Charges $1,480,672 $1,446,232
========== ==========
* Fixed Charges
Interest on Long-Term Debt $294,894 $306,109
Amort. of Debt Discount, Premium & Expense 13,777 12,049
Interest on Component of Rentals 18,442 18,448
Other Interest 18,400 17,083
---------- ----------
Total Fixed Charges $345,513 $353,689
========== ==========
Ratio of Earnings to Fixed Charges 4.29 4.09
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
Ratio of Earnings to Fixed Charges
Twelve Months Ended
(Thousands of Dollars)
DECEMBER DECEMBER
1998 1997
--------- ---------
Earnings
Net Income $745,140 $712,823
Federal Income Tax 327,805 357,100
Federal Income Tax Deferred 95,140 31,450
Investment Tax Credits Deferred (8,710) (8,830)
---------- ----------
Total Earnings Before Federal Income Tax 1,159,375 1,092,543
Fixed Charges* 345,513 353,689
---------- ----------
Total Earnings Before Federal Income Tax
and Fixed Charges $1,504,888 $1,446,232
========== ==========
* Fixed Charges
Interest on Long-Term Debt $294,894 $306,109
Amort. of Debt Discount, Premium & Expense 13,777 12,049
Interest on Component of Rentals 18,442 18,448
Other Interest 18,400 17,083
---------- ----------
Total Fixed Charges $345,513 $353,689
========== ==========
Ratio of Earnings to Fixed Charges 4.36 4.09
Consent of Independent Accountants
We hereby consent to the incorporation by reference of our report dated February
23, 1999, except as to Note K, which is as of March 2, 1999, appearing on page
39 of this combined Annual Report on Form 10-K of Consolidated Edison, Inc.
("CEI") and Consolidated Edison Company of New York, Inc. ("Con Edison") in (i)
the Prospectus constituting part of CEI's Registration Statement on Form S-3
(No. 333-69013) relating to the CEI Automatic Dividend Reinvestment and Cash
Payment Plan; (ii) the Prospectus constituting part of CEI's Registration
Statement on Form S-8 (No. 333-04463-99) relating to the CEI 1996 Stock Option
Plan; (iii) the Prospectus constituting part of CEI's Registration Statement on
Form S-8 (No. 333-48475) relating to The Consolidated Edison Discount Stock
Purchase Plan; and (iv) the Prospectus constituting part of Con Edison's
Registration Statement on Form S-3 (No.333-45745) relating to Con Edison's
unsecured debt securities.
PricewaterhouseCoopers LLP
New York, New York
March 29, 1999
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
E Virgil Conway
E. Virgil Conway
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 28th
day of March 1999.
Gordon J. Davis
Gordon J. Davis
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 26th
day of March 1999.
Ruth M. Davis
Ruth M. Davis
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
Joan S. Freilich
Joan S. Freilich
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
Ellen V. Futter
Ellen V. Futter
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
Sally Hernandez-Pinero
Sally Hernandez-Pinero
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
Peter W. Likins
Peter W. Likins
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
Eugene R. McGrath
Eugene R. McGrath
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 23rd
day of March 1999.
Robert G. Schwartz
Robert G. Schwartz
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 27th
day of March 1999.
Richard A. Voell
Richard A. Voell
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 19th
day of March 1999.
Stephen R. Volk
Stephen R. Volk
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
POWER OF ATTORNEY
WHEREAS Consolidated Edison, Inc. ("CEI") and Consolidated Edison Company
of New York, Inc. ("Con Edison") each intends to file with the Securities and
Exchange Commission, under the Securities Exchange Act of 1934, as amended (the
"Act"), its Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with any and all exhibits and other documents having relation thereto, as
prescribed by the Securities and Exchange Commission pursuant to the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder ("Form 10-K").
NOW, THEREFORE,
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, in his or her
capacity as a Director or officer, or both, of CEI (the "CEI Delegated
Capacity") and/or a Trustee or officer, or both, of Con Edison (the "Con Edison
Delegated Capacity"), as the case may be, does hereby constitute and appoint
Eugene R. McGrath, Joan S. Freilich, Hyman Schoenblum and Peter A. Irwin, and
each of them severally, his or her true and lawful attorneys-in-fact, with power
to act with or without the others and with full power of substitution and
resubstitution, to execute in his or her name, place and stead, in the CEI
Delegated Capacity the CEI Form 10-K and/or in the Con Edison Delegated Capacity
the Con Edison Form 10-K, as the case may be, and any and all amendments
thereto, and all instruments necessary or incidental in connection therewith,
and to file or cause to be filed the same with the Securities and Exchange
Commission. Each of said attorneys shall have full power and authority to do and
perform, in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, the undersigned hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 29th
day of March 1999.
Hyman Schoenblum
Hyman Schoenblum
UT
0001047862
Consolidated Edison, Inc.
1,000
Dec-31-1998
Dec-31-1998
12-Mos
Per-Book
11,406,543
378,445
1,093,543
551,856
951,016
14,381,403
588,720
857,175
4,700,500
6,025,605
37,050
212,563
4,050,108
0
0
0
225,000
0
37,295
2,584
3,791,198
14,381,403
7,093,048
407,639
5,632,084
6,039,723
1,053,325
2,249
1,055,574
325,825
729,749
17,007
712,742
496,945
308,671
1,365,757
3.04
3.04
UT
0000023632
Consolidated Edison Company of New York, Inc.
1,000
Dec-31-1998
Dec-31-1998
12-Mos
Per-Book
11,406,543
279,813
983,569
551,856
951,016
14,172,797
588,720
857,265
4,517,529
5,842,724
37,050
212,563
4,050,108
0
0
0
225,000
0
37,295
2,584
3,765,473
14,172,797
6,998,660
414,810
5,516,778
5,931,588
1,067,072
3,893
1,070,965
325,825
745,140
17,007
728,133
496,945
308,671
1,436,774
0
0
