EXHIBIT 10-GG
OYSTER CREEK NUCLEAR GENERATING STATION
PURCHASE AND SALE AGREEMENT
BY AND AMONG
GPU NUCLEAR, INC.,
JERSEY CENTRAL POWER & LIGHT COMPANY, as SELLERS,
and
AMERGEN ENERGY COMPANY, L.L.C., as BUYER
Dated as of October 15, 1999
PORTIONS OF THE TEXT IN THIS
DOCUMENT HAVE BEEN REDACTED
BECAUSE THEY CONTAIN CONFIDENTIAL
INFORMATION WITHHELD FROM PUBLIC
DISCLOSURE PURSUANT TO 10 CFR
SECTIONS 2.790 AND 9.17(a)(4)
REDACTED TEXT CONTAINS CONFIDENTIAL INFORMATION WITHHELD FROM PUBLIC DISCLOSURE
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PURSUANT TO 10 CFR SECTIONS 2.790 AND 9.17(a)(4)
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PURCHASE AND SALE AGREEMENT
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PURCHASE AND SALE AGREEMENT, dated as of October 15, 1999, by and among
GPU Nuclear, Inc. a New Jersey corporation ("GPUN"), Jersey Central Power &
Light Company, a New Jersey corporation ("JCP&L") (GPUN and JCP&L are each
referred to as a "Seller" collectively referred to as "Sellers"), and AmerGen
Energy Company, L.L.C., a Delaware limited liability company ("Buyer"). Sellers
and Buyer are referred to individually as a "Party," and collectively as the
"Parties."
W I T N E S S E T H
-------------------
WHEREAS, JCP&L owns the Plant (as defined herein), Purchased Assets (as
defined herein) and certain facilities and other assets associated therewith and
ancillary thereto;
WHEREAS, GPUN is responsible for the daily operations of the Plant for
JCP&L ; and
WHEREAS, Buyer desires to purchase, and JCP&L desires to sell, the
Purchased Assets upon the terms and conditions hereinafter set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
terms have the meanings specified in this Section 1.1.
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934.
(2) "Agreement" means this Purchase and Sale Agreement together with
the Schedules and Exhibits hereto, as the same may be from time to time amended.
(3) "Ancillary Agreements" means the Interconnection Agreement, the
Reciprocal Services Agreement, the Power Purchase Agreement, the EOF Lease, the
Remote Assembly Area Access Agreement and the SBO Service Agreement, as the same
may be from time to time amended.
(4) "Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Sellers and Buyer substantially in the form of
Exhibit A hereto, by which Sellers shall, subject to the terms and conditions
hereof, assign Sellers' Agreements, the Real Property Leases, Transferable
Permits, certain intangible assets and other Purchased Assets to Buyer and
whereby Buyer shall assume the Assumed Liabilities.
(5) "Assumed Liabilities" has the meaning set forth in Section 2.3.
(6) "Atomic Energy Act" means the Atomic Energy Act of 1954, as
amended.
(7) "Benefit Plans" has the meaning set forth in Section 4.9.
(8) "▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale, substantially in the form of
Exhibit B hereto, to be delivered at the Closing, with respect to the Tangible
Personal Property included in the Purchased Assets transferred to Buyer at the
Closing.
(9) "Business Day" shall mean any day other than Saturday, Sunday and
any day on which banking institutions in the State of New York are authorized by
law or other governmental action to close.
(10) "Buyer Benefit Plans" has the meaning set forth in
Section 6.10(f).
(11) "Buyer NQF" means the external trust fund not meeting the
requirements of section 468A of the Code and Treas. Reg. Section 1.468A-5, that
will be maintained by Buyer with respect to the Plant after the Closing pursuant
to the Post-Closing Decommissioning Trust Agreement.
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(12) "Buyer Indemnitee" has the meaning set forth in Section 8.1(b).
(13) "Buyer Material Adverse Effect" has the meaning set forth in
Section 5.3(a).
(14) "Buyer Required Regulatory Approvals" has the meaning set forth
in Section 5.3(b).
(15) "Buyer QF" means the external trust fund meeting the
requirements of section 468A of the Code and Treas. Reg.
Section 1.468A-5, that will be maintained by Buyer with respect to the Plant
after the Closing pursuant to the Post-Closing Decommissioning Trust Agreement.
(16) "Buyer's Environmental Inspection" has the meaning set forth in
Section 6.2(i).
(17) "Capital Expenditures" has the meaning set forth in
Section 3.3(a)(ii).
(18) [Intentionally Omitted)
(19) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation, and Liability Act, as amended.
(20) "Class I Assets" shall have the meaning set forth in Temp.
Treas. Reg. Section 1.1060-IT(d)(1).
(21) "Closing" has the meaning set forth in Section 3.1.
(22) "Closing Adjustment" has the meaning set forth in
Section 3.3(b).
(23) "Closing Date" has the meaning set forth in Section 3.1.
(24) "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
(25) "Code" means the Internal Revenue Code of 1986, as amended.
(26) "Collective Bargaining Agreement" has the meaning set forth in
Section 6.10(d).
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(27) "Commercially Reasonable Efforts" means efforts which are
reasonably necessary to cause, or assist in, the consummation of the
transactions contemplated by, this Agreement and which do not require the
performing Party to expend funds, incur expenses or assume liabilities other
than those which are reasonable in nature and amount in the context of the
transactions contemplated by this Agreement in order for the performing Party to
satisfy its obligations hereunder.
(28) "Confidentiality Agreement" means the Confidentiality Agreement,
dated March 29, 1999, by and between Sellers and Buyer.
(29) "Decommissioning" means the complete retirement and removal of the
Plant from service and the restoration of the Site, as well as any planning and
administrative activities incidental thereto, including but not limited to (a)
the dismantlement, decontamination, storage, and/or entombment of the Plant, in
whole or in part, and any reduction or removal, whether before or after
termination of the NRC license for the Plant, of radioactivity at the Site, and
(b) all activities necessary for the retirement, dismantlement and
decontamination of the Plant to comply with all applicable requirements of the
Atomic Energy Act and the NRC's rules, regulations, orders and pronouncements
thereunder, the NRC Operating License for the Plant and any related
decommissioning plan.
(30) "Decommissioning Trust Funds" means the Seller Qualified
Decommissioning Trust Fund and the Seller Nonqualified Decommissioning Trust
Fund, collectively.
(31) "Decommissioning Indenture" means the Indenture and Second
Amendment to Indenture dated October 25, 1990 regarding the Seller Qualified
Decommissioning Trust Fund and the Seller Nonqualified Decommissioning Trust
Fund between JCP&L and Bank of New York, as amended.
(32) "Department of Energy" or "DOE" means the United States
Department of Energy and any successor agency thereto.
(33) "Department of Energy Decommissioning and Decontamination Fees"
means all fees related to the Department of Energy's Special Assessment of
utilities for the Uranium Enrichment Decontamination and Decommissioning Trust
Fund pursuant to Sections 1801, 1802 and 1803 of the Atomic Energy Act and the
Department of Energy's implementing regulations at 10 CFR Part 766, or any
similar fees assessed under amended or
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superseding statutes or regulations applicable to separative work units
purchased from the Department of Energy in order to decontaminate and
decommission the Department's gaseous diffusion enrichment facilities.
(34) "Direct Claim" has the meaning set forth in Section 8.2(c).
(35) "Easements" means, with respect to the Purchased Assets, the
easements and access rights to be granted pursuant to the Easement Agreement and
the Interconnection Agreement, including, without limitation, easements
authorizing access, use, maintenance, construction, repair, replacement and
other activities, as further described in the Easement Agreement and the
Interconnection Agreement.
(36) "Easement Agreement" means the Easement Agreement between JCP&L
and Sithe, whereby Buyer will be provided with certain Easements with respect to
the Real Property being transferred to Buyer and the adjacent Forked River site
sufficient to operate the Plant substantially as currently operated.
(37) "18R Outage" has the meaning set forth in Section 6.17(a).
(38) "Emission Allowance" means all present and future authorizations
to emit specified units of pollutants or Hazardous Substances, which units are
established by the Governmental Authority with jurisdiction over the Plant under
(i) an air pollution control and emission reduction program designed to mitigate
global warming, interstate or intra-state transport of air pollutants; (ii) a
program designed to mitigate impairment of surface waters, watersheds, or
groundwater; or (iii) any pollution reduction program with a similar purpose.
Emission Allowances include allowances, as described above, regardless as to
whether the Governmental Authority establishing such Emission Allowances
designates such allowances by a name other than "allowances."
(39) "Emission Reduction Credits" means credits, in units that are
established by the Governmental Authority with jurisdiction over the Plant that
have obtained the credits, resulting from reductions in the emissions of air
pollutants from an emitting source or facility (including, without limitation,
and to the extent allowable under applicable law, reductions from shut-downs or
control of emissions beyond that
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required by applicable law) that: (i) have been identified by the NJDEP as
complying with applicable New Jersey law governing the establishment of such
credits (including, without limitation, that such emissions reductions are
enforceable, permanent, quantifiable and surplus) and listed in the Emissions
Reduction Credit Registry maintained by the NJDEP or with respect to which such
identification and listing are pending; or (ii) have been certified by any other
applicable Governmental Authority as complying with the law and regulations
governing the establishment of such credits (including, without limitation,
certification that such emissions reductions are enforceable, permanent,
quantifiable and surplus). The term includes Emission Reduction Credits that
have been approved by the NJDEP and are awaiting USEPA approval. The term also
includes certified air emissions reductions, as described above, regardless as
to whether the Governmental Authority certifying such reductions designates such
certified air emissions reductions by a name other than "emission reduction
credits."
(40) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation or other easements, deed restrictions, encumbrances
and charges of any kind.
(41) "Energy Reorganization Act" means the Energy Reorganization Act of
1974, as amended.
(42) "Environmental Claim" means any and all pending and/or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law by any person (including, but
not limited to, any Governmental Authority, private person and citizens' group)
based upon, alleging, asserting, or claiming any actual or potential (a)
violation of, or liability under any Environmental Law, (b) violation of any
Environmental Permit, or (c) liability for investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, Release, or threatened Release into
the environment of any Hazardous Substances at any location related to the
Purchased Assets, including, but not limited to, any off-Site location to which
Hazardous Substances, or materials containing Hazardous
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Substances, were sent for handling, storage, treatment, or disposal.
(43) "Environmental Condition" means the presence or Release to the
environment, whether at the Site or at an off-Site location, of Hazardous
Substances, including any migration of those Hazardous Substances through air,
soil or groundwater to or from the Site or any off-Site location regardless of
when such presence or Release occurred or is discovered.
(44) "Environmental Laws" means all applicable Federal, state
and local, provincial and foreign, civil and criminal laws, regulations, rules,
ordinances, codes, decrees, judgments, directives, or judicial or administrative
orders relating to pollution or protection of the environment, natural resources
or human health and safety, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances (including, without
limitation, Releases to ambient air, surface water, groundwater, land, surface
and subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport, disposal or handling
of Hazardous Substances. "Environmental Laws" include, without limitation,
CERCLA, the Hazardous Materials Transportation Act (49 U.S.C.ss.ss.1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.), the Clean Air Act (42 U.S.C. Sections 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Sections 2601 et seq.), the Oil Pollution Act (33 U.S.C.
Sections 2701 et seq.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Sections 11001 et seq.), the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.), the New Jersey Water Pollution Control Act,
(N.J.S.A. 58:10-23.11 et seq.), the Spill Compensation and Control Act (N.J.S.A.
13:1E-1 et seq.), the Solid Waste Management Act (N.J.S.A. 58:4A-4.1 et seq.),
the Subsurface and Percolating Waters Act (N.J.S.A. 13:1K-6 et seq.), the
Industrial Site Recovery Act (N.J.S.A. 13:1k-6 et seq.), the ▇▇▇▇▇▇▇▇▇▇ and
Contaminated Site Remediation Act (N.J.S.A. 58:10 B-1) and all applicable other
state laws analogous to any of the above. Notwithstanding the foregoing,
Environmental Laws do not include the Atomic Energy Act, NRC rules, regulations
and orders promulgated or issued thereunder, or the Energy Reorganization Act
and applicable regulations thereunder.
(45) "Environmental Permits" has the meaning set forth in
Section 4.7(a).
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(46) "Environmental Reports" has the meaning set forth in Section 4.7.
(47) "EOF Facility" means the Emergency Operations Facility used in
connection with the Plant and located at JCP&L's premises in Lakewood, New
Jersey.
(48) "EOF Lease" means the agreement pursuant to which JCP&L will lease
the EOF Facility to Buyer for use in connection with Plant emergencies
consistent with the general terms and conditions set forth in Schedule 1.1(48).
(49) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(50) "ERISA Affiliate" has the meaning set forth in Section 2.4(n).
(51) "ERISA Affiliate Plans" has the meaning set forth in
Section 2.4(n).
(52) "Estimated Adjustment" has the meaning set forth in
Section 3.3(b).
(53) "Estimated Closing Statement" has the meaning set forth in
Section 3.3(b).
(54) "Excluded Assets" has the meaning set forth in Section 2.2.
(55) "Excluded Liabilities" has the meaning set forth in Section 2.4.
(56) "FERC" means the Federal Energy Regulatory Commission or any
successor agency thereto.
(57) "FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit, substantially in the form of Exhibit C
hereto.
(58) "Good Utility Practices" mean any of the practices, methods and
acts engaged in or approved by a significant portion of the electric utility
industry as good practices applicable to nuclear generating facilities of
similar design, size and capacity or any of the practices, methods or activities
which, in the exercise of reasonable judgment by a prudent nuclear operator in
light of the facts known at the time the decision
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was made, could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety,
expedition and applicable law. Good Utility Practices are not intended to be
limited to the optimum practices, methods or acts to the exclusion of all
others, but rather to be acceptable practices, methods or acts generally
accepted in the electric utility industry.
(59) "Governmental Authority" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitrating body or
other governmental authority.
(60) "GPU" means GPU, Inc., a Pennsylvania corporation and parent
company of Sellers.
(61) "GPUN" means GPU Nuclear, Inc., a New Jersey corporation and a
wholly-owned subsidiary of GPU.
(62) "Hazardous Substances" means (a) any petrochemical or petroleum
products, coal ash, oil, radioactive materials, radon gas, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law; excluding, however, any "source",
"special nuclear" and "by product" material, as such terms are defined in and to
the extent regulated under the Atomic Energy Act.
(63) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
(64) "Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (b) based upon, measured by or calculated with respect to multiple bases
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(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (a), in each case together with any interest, penalties,
or additions to such Tax.
(65) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(66) "Indemnifying Party" has the meaning set forth in Section 8.1(d).
(67) "Indemnitee" has the meaning set forth in Section 8.1(c)(i).
(68) "Independent Accounting Firm" means such independent accounting
firm of national reputation as is mutually appointed by Sellers and Buyer.
(69) "Inspection" means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the Purchased Assets.
(70) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, copyrights and copyright rights owned by
Sellers and necessary for the operation and maintenance of the Purchased Assets,
and all pending applications for registrations of patents, trademarks, and
copyrights, as set forth on Schedule 2.1(l).
(71) "Interconnection Agreement" means the Interconnection Agreement,
between JCP&L and Buyer, the form of which is attached as Exhibit D hereto,
under which JCP&L will provide Buyer with interconnection service to JCP&L's
transmission facilities and whereby Buyer will provide Sellers with continuing
access to certain of the Purchased Assets after the Closing Date.
(72) "Inventories" means nuclear fuel or alternative fuel inventories,
materials, spare parts, consumable supplies and chemical and gas inventories
relating to the operation of the Plant located at, or in transit to, the Plant.
(73) "IRS" means the United States Internal Revenue Service or any
successor agency thereto.
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(74) "ISFSI" means the Independent Spent Fuel Storage Installation
currently installed at the Plant.
(75) "ISRA" means the New Jersey Industrial Site Recovery Act,
as amended.
(76) "ISRA Termination Date" has the meaning as set forth in
Section 9.1(j).
(77) "Knowledge" means the actual knowledge of the corporate officers
or managerial representatives of the specified Person charged with
responsibility for the particular function, after reasonable inquiry by them of
selected employees of such Person whom they believe, in good faith, to be the
persons responsible for the subject matter of the inquiry.
(78) "Material Adverse Effect" means any change (or changes taken
together) in, or effect on, the Purchased Assets that is materially adverse to
the operations or condition (financial or otherwise) of the Purchased Assets,
taken as a whole, other than any change (or changes taken together) generally
affecting the international, national, regional or local electric industry as a
whole and not affecting the Purchased Assets or the Parties in any manner or
degree significantly different than the industry as a whole, including changes
in local wholesale or retail markets for electric power; national, regional or
local electric transmission systems or operations thereof, and any change or
effect resulting from action or inaction by a Governmental Authority with
respect to an independent system operator or retail access in New Jersey.
(79) "Mortgage Indenture" means the mortgage originally granted to City
Bank ▇▇▇▇▇▇'▇ Trust Company by JCP&L, dated as of March 1, 1946, as amended and
supplemented.
(80) "NJBPU" means the New Jersey Board of Public Utilities and any
successor agency thereto.
(81) "NJDEP" means the New Jersey Department of Environmental
Protection and any successor agency thereto.
(82) "Non-Union Employees" has the meaning as set forth in
Sections 6.10(b) and (l).
(83) "NYPSC" means the New York Public Service Commission and any
successor agency thereto.
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(84) "Nonqualified Decommissioning Trust Fund" means an external trust
fund that does not meet the requirements of Code section 468A and Treas. Reg.
Section 1.468A-5.
(85) "NRC" means the United States Nuclear Regulatory Commission and
any successor agency thereto.
(86) "Nuclear Laws" means all Federal, state, and local civil and
criminal laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders, to the extent enforceable
against Sellers and applicable to the Purchased Assets, relating to the
regulation of commercial nuclear power plants, Source Material, Byproduct
Material and Special Nuclear Materials; the regulation of Low--Level Radioactive
Waste and High-Level Radioactive Waste; the transportation and storage of such
Nuclear Materials; the regulation of the Safeguards Information; the regulation
of nuclear fuel; the enrichment of uranium; and the disposal and storage of
High-Level Radioactive Waste and Spent Nuclear Fuel, including contracts
therefor and payments into the Nuclear Waste Fund; but shall not include
Environmental Laws. "Nuclear Material" means Source Material, Special Nuclear
Material, Byproduct Material, Low-Level Radioactive Waste, High-Level
Radioactive Waste, and Spent Nuclear Fuel. As used herein, the terms "Source
Material," "Special Nuclear Material," "Byproduct Material," "Low-Level
Radioactive Waste," "High-Level Radioactive Waste," "Spent Nuclear Fuel" and
"Safeguards Information" have the meanings ascribed to them in the regulations
of the NRC. To the extent that they govern this subject matter, "Nuclear Laws"
include the Atomic Energy Act of 1954, as amended (42 U.S.C. Section 2011 et
seq.), the ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Act (Section 170 of the Atomic Energy Act of 1954, as
amended); the Energy Reorganization Act of 1974 (42 U.S.C. Section 5801 et
seq.); Convention on the Physical Protection of Nuclear Material Implementation
Act of 1982 (Public Law 97 - 351; 96 Stat. 1663); the Nuclear Non-Proliferation
Act of 1978 (22 U.S.C. Section 3201) the Low-Level Radioactive Waste Policy Act
(42 U.S.C. Section 2021b et seq.); the Nuclear Waste Policy Act, (42 U.S.C.
Section 10101 et seq., as amended); the Low-Level Radioactive Waste Policy
Amendments Act of 1985 (42 U.S.C. Section 2021d, 471); and the Energy Policy Act
of 1992 (4 U.S.C. Section 13201 et seq.) and any applicable and enforceable
state or local laws analogous to the foregoing.
(87) "Nuclear Waste Policy Act" means the Nuclear Waste Policy Act of
1982, as amended.
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(88) "Operational Recovery Work" has the meaning set forth in
Section 7.1(p).
(89) "Outage Plan" has the meaning set forth in Section 6.17(a).
(90) "Outage Cost Cap" has the meaning set forth in the Outage Plan.
(91) "Outage Costs" means the costs, including additional nuclear fuel
costs, associated with the 18R Outage and as set forth in the Outage Plan, as
the same may be amended from time to time in accordance with the Outage Plan.
(92) "PaPUC" means the Pennsylvania Public Utility Commission and any
successor agency thereto.
(93) "Parent Guaranty" means the agreement in the form of which is
attached as Exhibit G hereto, separately executed by each of PECO Energy Company
and British Energy, plc, severally guarantying the full and timely performance
by Buyer of its obligations under this Agreement, including, but not limited to
Buyer's obligations under Section 6.17.
(94) "PBGC" means the Pension Benefit Guaranty Corporation.
(95) "Permits" has the meaning set forth in Section 4.14.
(96) "Permitted Encumbrances" means: (i) the Easements; (ii) those
Encumbrances set forth in Schedule 1.1(96); (iii) statutory liens for Taxes or
other governmental charges or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
provided that the aggregate amount for all Purchased Assets being so contested
does not exceed $250,000; (iv) 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 Sellers
or the validity of which are being contested in good faith, and which do not,
individually or in the aggregate with respect to all Purchased Assets exceed
$250,000; (v) zoning, entitlement, conservation restriction and other land use
and environmental regulations by Governmental Authorities; and (vi) such other
imperfections in title and restrictions which do not materially, individually or
in the aggregate, detract from the value of the Purchased Assets as currently
used or unreasonably interfere with the present use of the Purchased Assets and
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neither secure indebtedness, nor individually or in the aggregate create a
Material Adverse Effect.
(97) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
(98) "PJM" means the Pennsylvania-New Jersey-Maryland Interconnection,
LLC.
(99) "Plant" means the Oyster Creek 619 megawatt boiling water nuclear
generating station located in Lacey Township, New Jersey and identified in NRC
Operating License No. DPR-16, Docket No. 50-219 and related assets as described
in Section 2.1.
(100) "Pollution Control Revenue Bonds" means the outstanding bonds
listed on Schedule 6.15, but excluding any bonds issued in connection with the
refinancing or refunding thereof.
(101) "Post-Closing Decommissioning Trust Agreement" means the trust
agreement between Buyer and a trust company to be designated by Buyer, as
Trustee, establishing the Buyer QF and the Buyer NQF.
(102) "Post-Closing Adjustment" has the meaning set forth in
Section 3.3(c).
(103) "Post-Closing Statement" has the meaning set forth in
Section 3.3(c).
(104) "Power Purchase Agreement" means the agreement between JCP&L and
Buyer, a copy of which is attached as Exhibit E hereto, executed on the date
hereof, relating to the sale of installed capacity and associated energy to
JCP&L for a specified period of time following the Closing Date.
(105) "Proprietary Information" of a Party means all information about
the Party or its Affiliates, including their respective properties or
operations, furnished to the other Party or its Representatives by the Party or
its Representatives, after the date hereof, regardless of the manner or medium
in which it is furnished, including information provided to a Party pursuant to
the Confidentiality Agreement. In addition, after the Closing Date, Proprietary
Information
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includes any non-public information regarding the Purchased Assets or the
transactions contemplated by this Agreement. Proprietary Information does not
include information that: (a) is or becomes generally available to the public
(other than as a result of a disclosure by the other Party or its
Representatives in violation of a confidentiality agreement); (b) was available
to the other Party on a nonconfidential basis prior to its disclosure by the
Party or its Representatives; (c) becomes available to the other Party on a
nonconfidential basis from a person, other than the Party or its
Representatives, who is not otherwise bound by a confidentiality agreement with
the Party or its Representatives, or is not under any obligation to the Party or
any of its Representatives not to transmit the information to the other Party or
its Representatives; or (d) is independently developed by the other Party.
(106) "Purchased Assets" has the meaning set forth in Section 2.1.
(107) "Purchase Price" has the meaning set forth in Section 3.2.
(108) "Qualified Decommissioning Trust Fund" means an external trust
fund that meets the requirements of section 468A of the Code and Treas. Reg.
Section 1.468A-5.
(109) "Real Property" has the meaning set forth in Section 2.1(a).
(110) "Real Property Leases" has the meaning set forth in Section 4.6.
(111) "Reciprocal Services Agreement" means the agreement between
Sellers and Buyer, a copy of which is attached as Exhibit F hereto, executed on
the date hereof, relating to Buyer's performance of certain management and
consulting services relating to the 18R Outage and Sellers' performance of
certain administrative and other services after the Closing.
(112) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to escape into or through
the environment.
(113) "Remediation" means action of any kind to address a Release,
threatened Release or the presence of Hazardous Substances at a Site or an
off-Site location including, without
15
limitation, any or all of the following activities to the extent they relate to
or arise from the presence of a Hazardous Substance at a Site or an off-Site
location: (a) monitoring, investigation, assessment, treatment, cleanup,
containment, removal, mitigation, response or restoration work; (b) obtaining
any permits, consents, approvals or authorizations of any Governmental Authority
necessary to conduct any such activity; (c) preparing and implementing any plans
or studies for any such activity; (d) obtaining a written notice from a
Governmental Authority with jurisdiction over a Site or an off-Site location
under Environmental Laws that no material additional work is required by such
Governmental Authority; (e) the use, implementation, application, installation,
operation or maintenance of removal actions on a Site or an off-Site location,
remedial technologies applied to the surface or subsurface soils, excavation and
off-Site treatment or disposal of soils, systems for long term treatment of
surface water or ground water, engineering controls or institutional controls;
and (f) any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws to address the presence or
Release of Hazardous Substances at a Site or an off-Site location.
(114) "Remediation Agreement" means an agreement between a Party and
the NJDEP providing for the Remediation of all or a portion of the Purchased
Assets in a manner necessary to comply with ISRA.
(115) "Remote Assembly Area" means the Site Evacuation and Personnel
Mustering facility used in connection with the Plant and located at the GPU
Energy, Berkley Operations Headquarters on ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇.
(116) "Remote Assembly Area Access Agreement" means the agreement to be
executed by the Parties giving Buyer access and use rights to the Remote
Assembly Area in connection with Plant emergencies consistent with the general
terms and conditions set forth in Schedule 1.1(116).
(117) "Replacement Welfare Plans" has the meaning set forth in
Section 6.10(e).
(118) "Representatives" of a Party means the Party's Affiliates and
their directors, officers, employees, agents, partners, advisors (including,
without limitation, accountants, counsel, environmental consultants, financial
advisors and other
16
authorized representatives) and parents and other controlling persons.
(119) "SEC" means the Securities and Exchange Commission and any
successor agency thereto.
(120) "Seller Nonqualified Decommissioning Trust Fund" means the
external trust fund maintained by JCP&L and designated as a Nonqualified
Decommissioning Trust Fund with respect to the Plant prior to Closing pursuant
to the Decommissioning Indenture.
(121) "Seller Qualified Decommissioning Trust Fund" means the external
trust fund maintained by JCP&L and designated as a Qualified Decommissioning
Trust Fund with respect to the Plant prior to Closing pursuant to the
Decommissioning Indenture.
(122) "Sellers' Agreements" means those contracts, agreements, licenses
and leases relating to the ownership, operation and maintenance of the Plant and
being assigned to Buyer as part of the Purchased Assets, as more particularly
described in Section 4.12.
(123) "Sellers' Indemnitee" has the meaning set forth in
Section 8.1(a).
(124) "Sellers' Required Regulatory Approvals" has the meaning set
forth in Section 4.3(b).
(125) "Settlement Agreement" means the Settlement Agreement effective
as of September 1, 1994 between Sellers and GPU, on the one hand, and General
Electric Company, on the other hand.
(126) "Site" means, with respect to the Plant, the Real Property
(including improvements) forming a part of, or used or usable in connection with
the operation of, the Plant, including any disposal sites included in the Real
Property. Any reference to the Site shall include, by definition, the surface
and subsurface elements, including the soils and groundwater present at the
Site, and any reference to items "at the Site" shall include all items "at, on,
in, upon, over, across, under and within" the Site.
(127) "Sithe" means Sithe Energies, Inc., a Delaware corporation, or
any Affiliate thereof or successor thereto.
17
(128) "Spent Fuel Fees" means those fees assessed on electricity
generated at the Plant and sold pursuant to the Standard Contract for Disposal
of Spent Nuclear Fuel and/or High Level Waste, as provided in Section 302 of the
Nuclear Waste Policy Act and 10 CFR Part 961, as the same may be amended from
time to time.
(129) "SBO Service" means the provision of station blackout service to
the Plant in order to comply with applicable NRC requirements.
(130) "SBO Service Agreement" means the agreement pursuant to which
JCP&L will provide or cause to be provided SBO Service to the Plant.
(131) "Subsidiary" when used in reference to any Person means any
entity of which outstanding securities having ordinary voting power to elect a
majority of the Board of Directors or other Persons performing similar functions
of such entity are owned directly or indirectly by such Person.
(132) "System Council" means System Council U-3 of the International
Brotherhood of Electrical Workers.
(133) "Tangible Personal Property" has the meaning set forth in
Section 2.1(c).
(134) "Tax Basis" means the adjusted tax basis determined for federal
income tax purposes under Code section 1011(a).
(135) "Taxes" means all taxes, charges, fees, levies, penalties or
other assessments imposed by any federal, state or local or foreign taxing
authority, including, but not limited to, income, excise, real or personal
property, sales, transfer, franchise, payroll, withholding, social security,
gross receipts, license, stamp, occupation, employment or other taxes, including
any interest, penalties or additions attributable thereto.
(136) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
(137) "Termination Date" has the meaning set forth in Section 9.1(b).
18
(138) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(139) "Transferable Permits" means those Permits and Environmental
Permits which may be lawfully transferred to or assumed by Buyer without a
filing with, notice to, consent or approval of any Governmental Authority, and
are set forth in Schedule 1.1 (139).
(140) "Transferred Employees" means Transferred Non-Union Employees and
Transferred Union Employees.
(141) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(142) "Transferred Union Employees" has the meaning set forth in
Section 6.10(b).
(143) "Transferring Employee Records" means all records related to
Transferred Employees, including records pertaining to: (i) skill and
development training and biographies, (ii) seniority histories, (iii) salary and
benefit information, including benefit census and valuation data, (iv)
Occupational, Safety and Health Administration reports, (v) active medical
restriction forms, (vi) fitness for duty and (vii) disciplinary actions, but
excluding prior medical histories except to the extent related to specific job
qualification.
(144) "Transmission Assets" has the meaning set forth in
Section 2.2(a).
(145) "Trustee" means the trustee of the Decommissioning Trust Funds
appointed by Sellers pursuant to the Decommissioning Indenture.
(146) "Union Employees" has the meaning set forth in Sections 6.10(a)
and (l).
(147) "USEPA" means the United States Environmental Protection Agency
and any successor agency thereto.
(148) "Year 2000 Qualified" means computer software applications that
have been qualified in accordance with a program based on NEI/NUSMG 97-07
Nuclear Utility Year 2000 Readiness to accurately process date/time data
(including but not limited to calculating, comparing and sequencing) from, into
19
and between the twentieth and twenty-first centuries, the years 1999 and 2000,
and leap-year calculations.
(149) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
1.2 Certain Interpretive Matters. In this Agreement, unless the context
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa. The term "includes" or
"including" shall mean "including without limitation." References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing Sellers will sell,
assign, convey, transfer and deliver to Buyer, and Buyer will purchase, assume
and acquire from Sellers, free and clear of all Encumbrances (except for
Permitted Encumbrances), and subject to Sections 2.2 and the other terms and
conditions of this Agreement, all of Sellers' right, title and interest in and
to all assets constituting, or used in and necessary for the operation of, the
Plant as more fully identified in Schedules 2.1(h), 2.1(l) and 4.10(b),
including, without limitation, those assets described below (but excluding the
Excluded Assets), each as in existence on the Closing Date (collectively,
"Purchased Assets"):
(a) Those certain parcels of real property (including all
buildings, facilities and other improvements thereon and all appurtenances
thereto) described in Schedule 4.10(a) (the "Real Property"), except as
otherwise constituting part of the Excluded Assets;
(b) All Inventories;
(c) All machinery, mobile or otherwise, equipment (including
computer hardware and software and communications equipment), vehicles, tools,
spare parts, fixtures, furniture
20
and furnishings and other personal property relating to or used in the operation
of the Plant, including, without limitation, the items of personal property
included in Schedule 4.10(b), other than property used or primarily usable as
part of the Transmission Assets or otherwise constituting part of the Excluded
Assets (collectively, "Tangible Personal Property");
(d) Subject to the provisions of Section 6.5(d), all Sellers'
Agreements;
(e) Subject to the provisions of Section 6.5(d), all Real
Property Leases;
(f) All Transferable Permits;
(g) All books, operating records, Transferring Employee
Records, operating, safety and maintenance manuals, inspection reports,
engineering design plans, documents, blueprints and as built plans,
specifications, procedures and similar items of Sellers, wherever located,
relating to the Plant and other Purchased Assets (subject to the right of
Sellers to retain copies of same for their use) other than general ledger
accounting records;
(h) Subject to Section 6.1, all Emission Reduction Credits
associated with the Plant and identified in Schedule 2.1(h), and all Emission
Allowances that have accrued prior to, or that accrue on or after, the date of
this Agreement but prior to the Closing Date;
(i) All unexpired, transferable warranties and guarantees from
third parties with respect to any item of Real Property or personal property
constituting part of the Purchased Assets as of the Closing Date and all claims
against third parties relating to Assumed Liabilities;
(j) The name "Oyster Creek Nuclear Generating Station". It is
expressly understood that Sellers are not assigning or transferring to Buyer any
right to use the names "Jersey Central Power & Light Company", "JCP&L", "GPU",
"GPU Energy", "GPU Nuclear" or "GPU Service" or any related or similar trade
names, trademarks, service marks, corporate names and logos or any part,
derivative or combination thereof; provided, however, that Sellers will grant to
Buyer a non-assignable (except to Affiliates), royalty-free, non-exclusive
license to use "GPU Nuclear" and any related or similar trade names, trademarks,
service marks, corporate names and logos on
21
signs and displays affixed to the Purchased Assets on the Closing Date for a
period of three (3) months thereafter in order to allow Buyer adequate time to
change the signage to the name of Buyer;
(k) All drafts, memoranda, reports, information, technology,
and specifications relating to Sellers' plans for Year 2000 Qualification with
respect to the Purchased Assets;
(l) A non-assignable (except to Affiliates), royalty-free
non-exclusive license to the Intellectual Property described on Schedule 2.1(l);
(m) The substation equipment set forth in Schedule A to the
Interconnection Agreement and designated therein as being transferred to Buyer;
(n) The assets comprising the Decommissioning Trust Funds; and
(o) All spent fuel canisters now installed or subsequently
acquired by Sellers after the date hereof (or the net proceeds from Sellers'
sale or return thereof) as part of the ISFSI.
2.2 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is not acquiring, any right, title or interest in
or to the following specific assets which are associated with the Purchased
Assets, but which are hereby specifically excluded from the sale and the
definition of Purchased Assets herein (the "Excluded Assets"):
(a) Except as set forth in Schedule A to the Interconnection
Agreement, the electrical transmission or distribution facilities (as opposed to
generation facilities) of Sellers or any of their Affiliates located at the Site
or forming part of the Plant (whether or not regarded as a "transmission" or
"generation" asset for regulatory or accounting purposes), including all
switchyard facilities, substation facilities and support equipment, as well as
all permits, contracts and warranties, to the extent they relate to such
transmission and distribution assets (collectively, the "Transmission Assets"),
all as identified on Schedule 2.2(a);
22
(b) Certain revenue meters and remote testing units, drainage
pipes and systems, as identified in the Easement Agreement;
(c) Certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities except the assets
comprising the Decommissioning Trust Funds;
(d) All cash, cash equivalents, bank deposits, accounts and
notes receivable (trade or otherwise), and any income, sales, payroll or other
tax receivables except the assets comprising the Decommissioning Trust Funds;
(e) Subject to the license referred to in Section 2.1(j), the
rights of Sellers and their Affiliates to the names "Jersey "Central Power &
Light Company", "JCP&L", "GPU", "GPU Energy", "GPU Nuclear" and "GPU Service" or
any related or similar trade names, trademarks, service marks, corporate names
or logos, or any part, derivative or combination thereof;
(f) All tariffs, agreements and arrangements to which either
of Sellers is a party for the purchase or sale of electric capacity and/or
energy or for the purchase of transmission or ancillary services;
(g) The rights of Sellers in and to any causes of action
against third parties (including indemnification and contribution), other than
to the extent relating to any Assumed Liability, relating to any Real Property
or personal property, Permits, Environmental Permits, Taxes, Real Property
Leases or Sellers' Agreements, if any, including any claims for refunds,
prepayments, offsets, recoupment, insurance proceeds, condemnation awards,
judgments and the like, whether received as payment or credit against future
liabilities, relating specifically to the Plant or the Site and relating to any
period prior to the Closing Date;
(h) All personnel records of Sellers or their Affiliates
relating to the Transferred Employees, the disclosure of which is prohibited by
law, or legal or regulatory process or subpoena;
(i) Any and all of Sellers' rights in any contract
representing an intercompany transaction between Sellers and an Affiliate of
Sellers, whether or not such transaction relates to
23
the provision of goods and services, payment arrangements, intercompany charges
or balances, or the like, except for any contracts listed on Schedule 4.12(a);
(j) Sellers' account balances for the Plant with Nuclear
Electric Insurance Limited and insurance premium refunds from American Nuclear
Insurance relating to periods prior to the Closing Date;
(k) Sellers' pension plan and other employee benefit plan
assets relating to their employees; and
(l) All claims, rights and causes of action which Sellers have
or may have against the DOE arising prior to the Closing in connection with or
in any way related to Sellers' ownership, operation, maintenance or
Decommissioning of the Plant, including any and all proceeds thereof.
2.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to
Sellers the Assignment and Assumption Agreement pursuant to which Buyer shall
assume and agree to discharge when due, all of the following liabilities and
obligations of Sellers, direct or indirect, known or unknown, absolute or
contingent, which relate to the Purchased Assets, other than Excluded
Liabilities, in accordance with the respective terms and subject to the
respective conditions thereof (collectively, "Assumed Liabilities"):
(a) All liabilities and obligations of Sellers arising on or
after the Closing Date under Sellers' Agreements, the Real Property Leases, and
the Transferable Permits in accordance with the terms thereof, including,
without limitation, (i) the contracts, licenses, agreements and personal
property leases entered into by Sellers with respect to the Purchased Assets,
which are disclosed on Schedule 4.12(a) or not required by Section 4.12(a) to be
so disclosed, and (ii) the contracts, licenses, agreements and personal property
leases entered into by Sellers with respect to the Purchased Assets after the
date hereof consistent with the terms of this Agreement, except in each case to
the extent such liabilities and obligations, but for a breach or default by
Sellers, would have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such breach or
default or out of any event which after the giving of notice would constitute a
default by Sellers;
24
(b) All liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which Buyer is liable pursuant to
Sections 3.5 or 6.8(a) hereof;
(c) All liabilities and obligations with respect to the
Transferred Employees arising on or after the Closing Date (i) for which Buyer
is responsible pursuant to Section 6.10 and (ii) relating to the grievance and
arbitration proceedings arising out of or under the Collective Bargaining
Agreement on or after the Closing Date;
(d) Subject to the exceptions set forth in this Section
2.3(d), any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is contingent or accrued, arising as a result of or in connection
with (i) any violation or alleged violation of Environmental Laws, whether prior
to, on or after the Closing Date, with respect to the ownership or operation of
any of the Purchased Assets; (ii) loss of life, injury to persons or property or
damage to natural resources (whether or not such loss, injury or damage arose or
was made manifest before the Closing Date or arises or becomes manifest on or
after the Closing Date) caused (or allegedly caused) by the presence or Release
of Hazardous Substances at, on, in, under, adjacent to or migrating from the
Purchased Assets prior to, on or after the Closing Date, including, but not
limited to, Hazardous Substances contained in building materials at or adjacent
to the Purchased Assets or in the soil, surface water, sediments, groundwater,
landfill cells, or in other environmental media at or near the Purchased Assets;
and (iii) the Remediation (whether or not such Remediation commenced before the
Closing Date or commences on or after the Closing Date) of Hazardous Substances
that are present or have been Released prior to, on or after the Closing Date
at, on, in, under, adjacent to or migrating from, the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells or in other
environmental media at or adjacent to the Purchased Assets; provided, however,
that Buyer shall not assume any such liability, responsibility or obligation in
respect of the foregoing items (i) through (iii) inclusive to the extent (x)
disclosed in the Environmental Reports or (y) disclosed on Schedule 4.7 hereof;
and provided further, that nothing set forth in this subsection 2.3(d) shall
require Buyer to assume any liabilities or obligations that are expressly
excluded in Section 2.4 including, without limitation, liability for off-Site
disposal of Hazardous Substances or for toxic torts as set forth in Sections
2.4(h), (i) and (j);
25
(e) All liabilities and obligations of Sellers with respect to
the Purchased Assets arising on or after the Closing Date under the agreements
or consent orders set forth on Schedule 2.3(e);
(f) With respect to the Purchased Assets, any Tax that may be
imposed by any federal, state or local government on the ownership, sale,
operation or use of the Purchased Assets on or after the Closing Date, except
for any Income Taxes attributable to income received by Sellers; and
(g) All liabilities and obligations of Sellers for the
Decommissioning of the Plant.
2.4 Excluded Liabilities. Buyer shall not assume or be obligated
to pay, perform or otherwise discharge the following liabilities or obligations
(the "Excluded Liabilities"):
(a) Any liabilities or obligations of Sellers that are not
expressly set forth as liabilities or obligations being assumed by Buyer in
Section 2.3 and any liabilities or obligations in respect of any Excluded Assets
or other assets of Sellers which are not Purchased Assets;
(b) Any liabilities or obligations in respect of Taxes
attributable to the ownership, operation or use of Purchased Assets for taxable
periods, or portions thereof, ending before the Closing Date, except for Taxes
for which Buyer is liable pursuant to Sections 3.5 or 6.8(a) hereof;
(c) Any liabilities or obligations of Sellers accruing under
any of Sellers' Agreements , the Real Property Leases and the Transferable
Permits prior to the Closing Date;
(d) Any fines, penalties or costs imposed by a Governmental
Authority resulting from (i) an investigation, proceeding, request for
information or inspection before or by a Governmental Authority either pending
prior to or arising after the Closing Date but only regarding acts which
occurred prior to the Closing Date, or (ii) illegal acts, willful misconduct or
gross negligence of Sellers prior to the Closing Date, other than, any such
fines, penalties or costs which have been assumed by Buyer in Section 2.3;
(e) Any payment obligations of Sellers for goods delivered or
services rendered prior to the Closing Date, including, but not limited to,
rental payments pursuant to the
26
Real Property Leases and any leases relating to Tangible Personal Property;
(f) Any liability, obligation or responsibility in respect of
environmental matters disclosed in the Environmental Reports or disclosed on
Schedule 4.7;
(g) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with loss of life, injury to persons or property
or damage to natural resources (whether or not such loss, injury or damage arose
or was made manifest before the Closing Date or arises or becomes manifest on or
after the Closing Date) to the extent caused (or allegedly caused) by the
off-Site disposal, storage, transportation, discharge, Release, or recycling of
Hazardous Substances, or the arrangement for such activities, of Hazardous
Substances, prior to the Closing Date, in connection with the ownership or
operation of the Purchased Assets, provided that for purposes of this Section
"off-Site" does not include any location to which Hazardous Substances disposed
of or Released at the Purchased Assets have migrated;
(h) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with the investigation and/or Remediation
(whether or not such investigation or Remediation commenced before the Closing
Date or commences on or after the Closing Date) of Hazardous Substances that are
disposed, stored, transported, discharged, Released, recycled, or the
arrangement of such activities, prior to the Closing Date, in connection with
the ownership or operation of the Purchased Assets, at any off-Site location,
provided that for purposes of this Section "off-Site" does not include any
location to which Hazardous Substances disposed of or Released at the Purchased
Assets have migrated;
(i) Third party liability for toxic torts arising as a result
of or in connection with loss of life or injury to persons (whether or not such
loss or injury arose or was made manifest on or after the Closing Date) caused
(or allegedly caused) by the presence or Release of Hazardous Substances at, on,
in, under, adjacent to or migrating from the Purchased Assets prior to the
Closing Date;
27
(j) Any liability, obligation or responsibility relating to
(a) the property, equipment or machinery within the switchyards for which
Sellers will retain an Easement, (b) the disposal, discharge or Release of
Hazardous Substances, whether such liability, obligation or responsibility arose
from the ownership or operation of said property, equipment or machinery prior
to or after the Closing Date unless caused by Buyer's operations or equipment,
(c) the transmission lines delineated in the Easements or (d) any Sellers'
operations on, or usage of, the Easements, including, without limitation,
liabilities, obligations or responsibilities arising as a result of or in
connection with (1) any violation or alleged violation of Environmental Law and
(2) loss of life, injury to persons or property or damage to natural resources,
except to the extent caused by Buyer or its Representatives;
(k) Any liability or obligation relating to personal injury,
discrimination, wrongful discharge, unfair labor practice or similar claim or
cause of action filed with or pending before any court or administrative agency
on the Closing Date with respect to the Purchased Assets or the Transferred
Employees or where the material facts of such claim or cause of action occurred
prior to the Closing Date except to the extent such liability or obligation
directly results from Buyer's unlawful acts or omissions;
(l) Any and all asserted or unasserted liabilities or
obligations to third parties (including employees) for personal injury or tort,
or similar causes of action arising out of the ownership or operation of the
Purchased Assets prior to the Closing Date, including liabilities or obligations
arising out of or resulting from a "nuclear incident" or "precautionary
evacuation" (as such terms are defined in the Atomic Energy Act) at the Site, or
any other licensed nuclear reactor site in the United States, or in the course
of the transportation of radioactive materials to or from the Site or any other
site prior to the Closing Date, including, without limitation, liability for any
deferred premiums assessed in connection with such a nuclear incident or
precautionary evacuation under any applicable NRC or industry retrospective
rating plan or insurance policy, including any mutual insurance pools
established in compliance with the requirements imposed under Section 170 of the
Atomic Energy Act and 10 C.F.R. Part 140, 10 C.F.R. Section50.54(w), other than
any liabilities or obligations which have been expressly assumed by Buyer under
Section 2.3;
28
(m) Civil or criminal fines or penalties wherever assessed or
incurred for violations of Environmental Laws arising from the operation of the
Purchased Assets prior to the Closing Date;
(n) Subject to Section 6.10, any liabilities or obligations
relating to any Benefit Plan maintained by Sellers or any trade or business
(whether or not incorporated) which is or ever has been under common control, or
which is or ever has been treated as a single employer, with Sellers under
section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which a
Seller or any ERISA Affiliate contributed (the "ERISA Affiliate Plans"),
including but not limited to any liability with respect to any such plan (i) for
benefits payable under such plan; (ii) to the PBGC under Title IV of ERISA;
(iii) relating to any such plan that is a multi-employer plan within the meaning
of Section 3(37) of ERISA; (iv) for non-compliance with the notice and benefit
continuation requirements of COBRA; (v) for noncompliance with ERISA or any
other applicable laws; or (vi) arising out of or in connection with any suit,
proceeding or claim which is brought against Buyer, any Benefit Plan, ERISA
Affiliate Plan, or any fiduciary or former fiduciary of any such Benefit Plan or
ERISA Affiliate Plan;
(o) Subject to Section 6.10, any liabilities or obligations
relating to the employment or termination of employment, by Sellers, or any
Affiliate of Sellers, of any individual, that is attributable to any actions or
inactions (including discrimination, wrongful discharge, unfair labor practices
or constructive termination) by Sellers prior to the Closing Date other than
such actions or inactions taken at the written direction of Buyer;
(p) Subject to Section 6.10, any obligations for wages,
overtime, employment taxes, severance pay, transition payments, accumulated
vacation and holiday leave time in respect of compensation or similar benefits
accruing or arising prior to the Closing under any term or provision of any
contract, plan, instrument or agreement relating to any of the Purchased Assets;
(q) Any liability of Sellers arising out of a breach by
Sellers or any of their Affiliates of any of their respective obligations under
this Agreement or the Ancillary Agreements;
(r) Any liability relating to the Pollution Control Revenue
Bonds except as provided in Section 6.15; and
29
(s) Any liability for Spent Fuel Fees accruing prior to the
Closing in accordance with Section 6.13.
2.5 Control of. The Parties agree and acknowledge that Sellers
shall be entitled exclusively to control, defend and settle any litigation,
administrative or regulatory proceeding, and any investigation or Remediation
activities (including without limitation any environmental mitigation or
Remediation activities), arising out of or related to any Excluded Liabilities,
and Buyer agrees to cooperate fully in connection therewith; provided, however,
that (i) such defense, settlement or other activities do not unreasonably
interfere with Buyer's operation of the Plant and (ii) without Buyer's written
consent, Sellers shall not settle any such litigation, administrative or
regulatory proceeding which would result in a Material Adverse Effect on the
related Purchased Assets.
ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the satisfaction of the
conditions contained in Article VII of this Agreement, the sale, assignment,
conveyance, transfer and delivery of the Purchased Assets to Buyer, the payment
of the Purchase Price to Sellers, and the consummation of the other respective
obligations of the Parties contemplated by this Agreement shall take place at a
closing (the "Closing"), to be held at the offices of Berlack, Israels &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. local time,
or another mutually acceptable time and location, on the date that is fifteen
(15) Business Days following the date on which the last of the conditions
precedent to Closing set forth in Article VII of this Agreement have been either
satisfied or waived by the Party for whose benefit such conditions precedent
exist or such other date as the Parties may mutually agree. The date of Closing
is hereinafter called the "Closing Date." The Closing shall be effective for all
purposes as of 12:01 a.m. on the Closing Date.
3.2 Payment of Purchase Price. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, Buyer will pay or cause to be paid to Sellers at the Closing
an aggregate amount of Ten Million United States Dollars (U.S.
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$10,000,000) (the "Purchase Price") plus or minus any adjustments pursuant to
the provisions of this Agreement, by wire transfer of immediately available
funds denominated in U.S. dollars or by such other means as are agreed upon by
Sellers and Buyer.
3.3 Adjustment to Purchase Price. (a) Subject to Section 3.3(b),
at the Closing, the Purchase Price shall be adjusted, without duplication, to
account for the items set forth in this Section 3.3(a):
(i) The Purchase Price shall be adjusted to account
for the items prorated as of the Closing Date pursuant to Section 3.5.
(ii) The Purchase Price shall be increased by the
amount expended, or for which liabilities are incurred, by Sellers
between the date hereof and the Closing Date for capital additions to
or replacements of property, plant and equipment included in the
Purchased Assets and other expenditures or repairs on property, plant
and equipment included in the Purchased Assets that would be
capitalized by Sellers in accordance with normal accounting policies,
provided, that such expenditures: (A) are not described in the capital
budgets listed on Schedule 6.1; (B) are not required (1) for the
customary operation and maintenance of the Plant, (2) to replace
equipment which has failed for any other reason, or (3) to comply with
applicable laws, rules and regulations; and (C) Buyer has specifically
requested or approved such expenditures in writing (collectively,
"Capital Expenditures"). Nothing in this paragraph shall be construed
to limit Sellers' rights and obligations to make all capital
expenditures necessary to comply with NRC licenses and other Permits.
(ii) The Purchase Price shall be decreased by the
cost of Buyer's payment obligation with respect to Transferred Union
Employees Carried-Over Sick Days, as determined under Section 6.10(k).
(b) At least ten (10) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth Sellers' best estimate of
the adjustments to the Purchase Price required by Section 3.3(a) (the "Estimated
Adjustment"). Within five (5) Business Days following the delivery of the
Estimated Closing Statement by Sellers to Buyer,
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Buyer may object in good faith to the Estimated Adjustment in writing. If Buyer
objects to the Estimated Adjustment, the Parties shall attempt to resolve their
differences by negotiation. If the Parties are unable to do so within three (3)
Business Days prior to the Closing Date (or if Buyer does not object to the
Estimated Adjustment), the Purchase Price shall be adjusted (the "Closing
Adjustment") for the Closing by the amount of the Estimated Adjustment not in
dispute. The disputed portion shall be paid as a Post-Closing Adjustment to the
extent required by Section 3.3(c).
(c) Within sixty (60) days following the Closing Date, Sellers
shall prepare and deliver to Buyer a final closing statement (the "Post-Closing
Statement") that shall set forth all adjustments to the Purchase Price required
by Section 3.3(a) (the "Post-Closing Adjustment"). The Post-Closing Statement
shall be prepared using the same accounting principles, policies and methods as
Sellers have historically used in connection with the calculation of the items
reflected on such Post-Closing Statement. Within thirty (30) days following the
delivery of the Post-Closing Statement by Sellers to Buyer, Buyer may object to
the Post-Closing Adjustment in writing. Sellers agree to cooperate with Buyer to
provide Buyer and Buyer's Representatives information used to prepare the
Post-Closing Statement and information relating thereto. If Buyer objects to the
Post-Closing Adjustment, the Parties shall attempt to resolve such dispute by
negotiation. If the Parties are unable to resolve such dispute within thirty
(30) days of any objection by Buyer, the Parties shall appoint the Independent
Accounting Firm, which shall, at Sellers' and Buyer's joint expense, review the
Post-Closing Adjustment and determine the appropriate adjustment to the Purchase
Price, if any, within thirty (30) days of such appointment. The Parties agree to
cooperate with the Independent Accounting Firm and provide it with such
information as it reasonably requests to enable it to make such determination.
The finding of such Independent Accounting Firm shall be binding on the Parties
hereto. Upon determination of the appropriate adjustment by agreement of the
Parties or by binding determination of the Independent Accounting Firm, if the
Post-Closing Adjustment is more or less than the Closing Adjustment, the Party
owing the difference shall deliver such difference to the other Party no later
than two (2) Business Days after such determination, in immediately available
funds or in any other manner as reasonably requested by the payee.
(d) The Purchase Price shall be increased following the
Closing Date (i) to the extent required under Section
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6.12(e) and (ii) as and to the extent Buyer obtains discounts from time to time
for goods and services under the Settlement Agreement. Buyer hereby agrees to
accept assignment of the Settlement Agreement (subject to Seller's obtaining any
requisite consent thereto) unless it would have an adverse economic impact on
Buyer and shall advise Sellers of the amount of any such discounts received by
Buyer and shall make acceptance payment to Sellers of such amounts within ten
(10) Business Days following any such receipt.
3.4 Allocation of Purchase Price. Buyer and Sellers shall endeavor to
agree upon an allocation among the Purchased Assets of the sum of the Purchase
Price and the Assumed Liabilities in a manner consistent with the provisions of
section 1060 of the Code and the Treasury Regulations thereunder within sixty
(60) days of the Closing Date. Buyer and Sellers shall treat the transactions
contemplated by Article II as the acquisition by Buyer of a trade or business
for United States federal income tax purposes and agree that no portion of those
transactions shall be treated in whole or in part as a payment by Buyer for
services (or future services) for United States federal income tax purposes.
Each of Buyer and Sellers agrees to file IRS Form 8594, and all federal, state,
local and foreign Tax Returns, in accordance with any such agreed upon
allocation. Each of Buyer and Sellers shall report the transactions contemplated
by this Agreement for federal Tax and all other Tax purposes in a manner
consistent with any such agreed upon allocation determined pursuant to this
Section 3.4. Each of Buyer and Sellers agrees to provide the other promptly with
any information required to complete IRS Form 8594. Buyer and Sellers shall
notify and provide the other with reasonable assistance in the event of an
examination, audit or other proceeding regarding any allocation of the Purchase
Price agreed upon pursuant to this Section 3.4. Buyer and Sellers shall not take
any position in any tax return, tax proceeding or audit that is inconsistent
with such allocation.
3.5 Prorations. (a) Buyer and Sellers agree that all of the items
normally prorated, including those listed below (but not including Income
Taxes), relating to the business and operation of the Purchased Assets shall be
prorated as of the Closing Date, with Sellers liable to the extent such items
relate to any time period prior to the Closing Date, and Buyer liable to the
extent such items relate to periods commencing with the Closing Date (measured
in the same units used to compute the item in question, otherwise measured by
calendar days):
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(i) Personal property, real estate and occupancy
Taxes, assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets;
(ii) Rent, Taxes and all other items (including
prepaid services or goods not included in Inventory) payable by or
to Sellers under any of Sellers' Agreements;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities;
(v) Rent and Taxes and other items payable by
Sellers under the Real Property Leases assigned to Buyer; and
(vi) Dues and fees payable to the Institute of
Nuclear Power Operations, the Nuclear Energy Institute, the Electric
Power Research Institute (to the extent allocable to the Plant's
operations) and the Boiling Water Reactor Owners Group to the extent
proration is permitted by such organizations and periodic fees charged
by the NRC.
(b) In connection with the prorations referred to in (a)
above, in the event that actual figures are not available at the Closing Date,
the proration shall be based upon the actual Taxes or other amounts accrued
through the Closing Date or paid for the most recent year (or other appropriate
period) for which actual Taxes or other amounts paid are available. Such
prorated Taxes or other amounts shall be re-prorated and paid to the appropriate
Party within sixty (60) days of the date that the previously unavailable actual
figures become available. The prorations shall be based on the number of days in
a year or other appropriate period (i) before the Closing Date and (ii)
including and after the Closing Date. Sellers and Buyer agree to furnish each
other with such documents and other records as may be reasonably requested in
order to confirm all adjustment and proration calculations made pursuant to this
Section 3.5.
3.6 Deliveries by Sellers. At the Closing, Sellers will deliver,
or cause to be delivered, the following to Buyer:
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(a) The ▇▇▇▇ of Sale, duly executed by Sellers, as
appropriate;
(b) Copies of any and all governmental and other third party
consents, waivers or approvals required with respect to the transfer of the
Purchased Assets, or the consummation of the transactions contemplated by this
Agreement;
(c) The opinions of counsel and officer's certificates
contemplated by Section 7.1;
(d) One or more bargain and sale deeds with covenants against
grantors acts, conveying the Real Property to Buyer, in a form reasonably
satisfactory to the Parties (including environmental disclosure required by law
and any provisions regarding grantors covenants necessary to conform them to the
terms hereof), duly executed and acknowledged by Sellers, as appropriate, and in
recordable form;
(e) The Assignment and Assumption Agreement and any Ancillary
Agreements which are not executed on the date hereof, duly executed by Sellers,
as appropriate;
(f) A FIRPTA Affidavit, duly executed by JCP&L ;
(g) Copies, certified by the Secretary or Assistant Secretary
of Sellers, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by Sellers in connection herewith, and the consummation of the
transactions contemplated hereby;
(h) A certificate of the Secretary or Assistant Secretary of
each Seller identifying the name and title and bearing the signatures of the
officers of such Seller authorized to execute and deliver this Agreement and the
other agreements and instruments contemplated hereby;
(i) Certificates of Good Standing with respect to Sellers,
issued by the Secretary of the State of Sellers' state of incorporation;
(j) Tax clearance certificates for each jurisdiction
identified on Schedule 4.16;
(k) To the extent available, originals of all Sellers'
Agreements, Real Property Leases, Permits,
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Environmental Permits, and Transferable Permits and, if not available, true and
correct copies thereof, together with the items referred to in Section 2.1(g);
(l) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary or desirable to transfer to Buyer the Purchased Assets, in accordance
with this Agreement and where necessary or desirable in recordable form;
(m) Notices, signed by Sellers, to all other parties to the
Sellers' Agreements listed under Schedule 4.12(a) where notice to such parties
is required under the terms of such Sellers' Agreements or pursuant to Section
6.5(d) hereof;
(n) Reliance letters from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ with respect to the
Environmental Reports prepared by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ concerning the Purchased
Assets and made available for review by Buyer;
(o) The assets of the Decommissioning Trust Funds to be
transferred pursuant to Section 6.12(b), shall be delivered to Buyer (or to the
Trustee of any trust specified by Buyer); and
(p) Such other agreements, documents, instruments and
writings, including without limitation the Transferring Employee Records, as are
required to be delivered by Sellers at or prior to the Closing Date pursuant to
this Agreement or otherwise reasonably required in connection herewith.
3.7 Deliveries by Buyer. At the Closing, Buyer will deliver, or
cause to be delivered, the following to Sellers:
(a) The Purchase Price, as adjusted pursuant to Section 3.3,
by wire transfer of immediately available funds in accordance with Sellers'
instructions or by such other means as may be agreed to by Sellers and Buyer;
(b) The opinions of counsel and officer's certificates
contemplated by Section 7.2;
(c) The Assignment and Assumption Agreement and any Ancillary
Agreements which are not executed on the date hereof, duly executed by Buyer;
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(d) Copies, certified by the Secretary or Assistant Secretary
of Buyer, of resolutions authorizing the execution and delivery of this
Agreement, and all of the agreements and instruments to be executed and
delivered by Buyer in connection herewith, and the consummation of the
transactions contemplated hereby;
(e) A certificate of the Secretary or Assistant Secretary of
Buyer, identifying the name and title and bearing the signatures of the officers
of Buyer authorized to execute and deliver this Agreement, and the other
agreements contemplated hereby;
(f) All such other instruments of assumption as shall, in the
reasonable opinion of Sellers and their counsel, be necessary for Buyer to
assume the Assumed Liabilities in accordance with this Agreement;
(g) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the transfer of
the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement and where necessary or desirable in recordable form;
(h) Certificates of Insurance relating to the insurance
policies required pursuant to Article 10 of the Interconnection Agreement;
(i) A certificate of an appropriate officer of each of PECO
Energy Company and British Energy, plc certifying the due authorization,
execution and delivery of the Parent Guaranty; and
(j) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.8 Ancillary Agreements. The Parties acknowledge that the Ancillary
Agreements, other than the EOF Lease, the Remote Assembly Area Access Agreement
and the SBO Service Agreement, have been executed on the date hereof.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLERS
Sellers represent and warrant to Buyer as follows:
4.1 Incorporation;. Each Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation and has all requisite corporate power and authority to own, lease,
and operate its material properties and assets and to carry on its business as
is now being conducted. Each Seller is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which its business as now being conducted requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse
Effect. Sellers have heretofore delivered to Buyer true, complete and correct
copies of their Certificates of Incorporation and Bylaws as currently in effect.
4.2 Authority Relative to this Agreement. Sellers have full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and delivery of this
Agreement by Sellers and the consummation by Sellers of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action required on the part of Sellers and this Agreement has been
duly and validly executed and delivered by Sellers. Subject to the receipt of
Sellers' Required Regulatory Approvals, this Agreement constitutes the legal,
valid and binding agreement of Sellers, enforceable against Sellers in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4.3(a), and other than obtaining Sellers' Required Regulatory
Approvals, neither the execution and delivery of this Agreement by Sellers nor
the consummation by Sellers of the transactions contemplated hereby will (i)
conflict with or result in any breach or violation of any provision of the
respective Certificate of Incorporation or Bylaws of Sellers, or (ii) require
any consent, approval,
38
authorization or permit of, or filing with or notification to, any Governmental
Authority, or (iii) result in a default (or give rise to any right of
termination, consent, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, material
agreement or other instrument or obligation to which Sellers are a party or by
which it, or any of the Purchased Assets may be bound, except for such defaults
(or rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which, would not, individually or in
the aggregate, create a Material Adverse Effect; or (iv) constitute violations
of any law, regulation, order, judgment or decree applicable to Sellers, which
violations, individually or in the aggregate, would create a Material Adverse
Effect, or create any Encumbrance other than a Permitted Encumbrance.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Sellers' Required Regulatory Approvals"), no consent or approval of, filing
with, or notice to, any Governmental Authority by or for Sellers is necessary
for the execution and delivery of this Agreement by Sellers, or the consummation
by Sellers of the transactions contemplated hereby, other than (i) such
consents, approvals, filings or notices which, if not obtained or made, will
neither prevent Sellers from performing their material obligations hereunder
nor, individually or in the aggregate, create a Material Adverse Effect and (ii)
such consents, approvals, filings or notices which become applicable to Sellers
or the Purchased Assets as a result of the specific regulatory status 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.
4.4 Insurance. Except as set forth in Schedule 4.4, all material
policies of fire, liability, workers' compensation and other forms of insurance
owned or held by, or on behalf of, Sellers with respect to the business,
operations or employees at the Plant or the Purchased Assets are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the date hereof have been paid (other than retroactive premiums which
may be payable with respect to comprehensive general liability and workers'
compensation insurance policies), and no notice of cancellation or termination
has been received with respect to any such policy which was not replaced on
substantially similar terms prior to the date of such cancellation. Except as
described in Schedule 4.4, within the
39
thirty-six (36) months preceding the date of this Agreement, Sellers have not
been refused any insurance with respect to the Purchased Assets nor has coverage
been limited by any insurance carrier to which Sellers have applied for any such
insurance or with which Sellers have carried insurance during the last twelve
(12) months.
4.5 Title and Related. Other than set forth in Schedule 4.5 and except
for Permitted Encumbrances, JCP&L has good and marketable title to the Real
Property to be conveyed to Buyer hereunder free and clear of all Encumbrances.
The Real Property constitutes all of the real property necessary to operate the
Plant as currently operated. Other than as set forth in Schedule 4.5 and except
for Permitted Encumbrances, Sellers have good and marketable title to each of
the Purchased Assets not constituting Real Property free and clear of all
Encumbrances. JCP&L possesses all such rights in and to the EOF Facility and the
Remote Assembly Area in order to lease the EOF Facility and provide access to
the Remote Assembly Area to Buyer.
4.6 Real Property Leases. Schedule 4.6 lists, as of the date of this
Agreement, all real property leases, easements, licenses and other rights in
real property (collectively, the "Real Property Leases") to which either Seller
is a party and which (i) are to be transferred and assigned to Buyer on the
Closing Date, (ii) affect all or any part of any Real Property and (iii)(A)
provide for annual payments of more than $100,000 or (B) are material to the
ownership or operation of the Purchased Assets. Except as set forth in Schedule
4.6, all such Real Property Leases are valid, binding and enforceable in
accordance with their terms, and are in full force and effect; there are no
existing material defaults by Sellers or any other party thereunder; and no
event has occurred which (whether with or without notice, lapse of time or both)
would constitute a material default by Sellers or any other party thereunder.
4.7 Environmental. Except as disclosed in (x) Schedule 4.7, (y)
Schedule 2.3(e) or (z) in the "Phase I" and "Phase II" environmental site
assessments prepared by Sellers' outside environmental consultants or in Buyer's
Environmental Inspection (collectively the "Environmental Reports") and made
available for inspection by Buyer:
(a) Sellers hold, and are in compliance with, all permits,
certificates, certifications, licenses and governmental authorizations under
applicable Environmental Laws ("Environmental Permits") that are required for
Sellers to own
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and conduct the business and operations of the Purchased Assets, and Sellers are
otherwise in compliance with applicable Environmental Laws with respect to the
business and operations of such Purchased Assets except for such failures to
hold or comply with required Environmental Permits, or such failures to be in
compliance with applicable Environmental Laws, as would not, individually or in
the aggregate, create a Material Adverse Effect;
(b) Sellers have not received any written request for
information, or been notified that either of them is a potentially responsible
party, under CERCLA or any similar state law with respect to the Real Property
or any other Purchased Assets, except for such liability under such laws as
would not create, individually or in the aggregate, a Material Adverse Effect;
(c) Sellers have neither entered into or agreed to any consent
decree or order relating to the Purchased Assets, nor are subject to any
outstanding judgment, decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous Substances under
any Environmental Law relating to the Purchased Assets, except for such consent
decree or order, judgment decree or judicial order that would not create,
individually or in the aggregate a Material Adverse Effect;
(d) There are no underground storage tanks on the Real
Property; and
(e) There is no Environmental Condition in violation of
applicable Environmental Laws (other than ISRA and the regulations of the NJDEP
thereunder) which requires Remediation.The representations and warranties made
in this Section 4.7 are Sellers' exclusive representations and warranties
relating to environmental matters.
4.8 Labor Matters. Sellers have previously delivered to Buyer a true
and correct copy of the Collective Bargaining Agreement, as currently in effect,
which is the only collective bargaining agreement to which they are a party or
is subject and which relates to the business and operations of the Purchased
Assets. With respect to the business or operations of such Purchased Assets,
except to the extent set forth in Schedule 4.8 and except for such matters as
will not, individually or in the aggregate, create a Material Adverse Effect,
(a) Sellers are in compliance with all applicable laws respecting employment and
41
employment practices, terms and conditions of employment and wages and hours;
(b) Sellers have not received written notice of any unfair labor practice
complaint against them pending before the National Labor Relations Board; (c) no
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against Sellers; (d) no labor strike, slow down or stoppage
is actually pending or to Sellers' Knowledge threatened by any representative of
any union or other representation of employees against or affecting Sellers; and
(e) Sellers have not experienced any work stoppage within the three-year period
prior to the date hereof and to Sellers' Knowledge none is currently threatened.
4.9 Benefit Plans; ERISA. (a) Schedule 4.9(a) lists all deferred
compensation, profit-sharing, retirement and pension plans, including
multi-employer plans, and all material bonus, fringe benefit and other employee
benefit plans maintained or with respect to which contributions are made by
Sellers in respect of the current employees of Sellers connected with the
Purchased Assets ("Benefit Plans"). True and complete copies of all Benefit
Plans have been made available to Buyer.
(b) Except as set forth in Schedule 4.9(b), Sellers and their
ERISA Affiliates have fulfilled their respective obligations under the minimum
funding requirements of Section 302 of ERISA and section 412 of the Code, with
respect to each Benefit Plan which is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA and to which section 412 of the Code or Section
302 of ERISA applies, and each such plan is in compliance in all material
respects with the currently applicable provisions of ERISA and the Code and has
been administered in all material respects in accordance with its terms as set
forth in the documents governing such Benefit Plan. Except as set forth in
Schedule 4.9(b), neither Sellers nor any ERISA Affiliate has incurred any
liability under Section 4062(b) of ERISA to the PBGC in connection with any
Benefit Plan which is subject to Title IV of ERISA or any withdrawal liability,
within the meaning of Section 4201 of ERISA with respect to any Benefit Plan,
nor has there been any reportable event (as defined in Section 4043 of ERISA),
the reporting of which has not been waived by the PBGC, in respect of any
Benefit Plan. Except as set forth in Schedule 4.9(b), the IRS has issued for
each Benefit Plan which is intended to be qualified under section 401(a) of the
Code, a letter which determines that such plan is qualified and exempt from
United States Federal Income Tax under sections 401(a) and 501(a) of the Code,
and Sellers are not aware of any occurrence since the date of any such
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determination letter which would affect adversely such qualification or tax
exemption.
(c) Neither Sellers nor any ERISA Affiliate has engaged in any
transaction described in Section 4069(a) or Section 4212(c) of ERISA. No Benefit
Plan is a multi-employer plan.
(d) Sellers and Sellers' Affiliates have materially complied
in good faith with any notice and continuation requirements of Title X of COBRA
with respect to any Benefit Plan subject to such requirements. Sellers and each
ERISA Affiliate have complied in all material respects with any applicable
requirements of Part 7 of Title I of ERISA.
4.10 Real Property; Plant and Equipment. (a) Schedule 4.10(a) contains
a description of the Real Property included in the Purchased Assets. Copies of
any current surveys, abstracts or title opinions in Sellers' possession and any
policies of title insurance in force and in the possession of Sellers with
respect to the Real Property have heretofore been made available to Buyer
(without making any representation or warranty as to the accuracy or
completeness thereof). Except as set forth in Schedule 4.10(a)-1, no real
property other than the Real Property is necessary for Buyer to own, maintain
and operate the Purchased Assets as they are currently used.
(b) Schedule 4.10(b) contains a description of the major
equipment components and personal property (other than Inventories) comprising
the Purchased Assets as of the date hereof.
(c) Other than the exceptions listed in Schedule 4.10(c), the
Purchased Assets conform in all material respects to the Technical
Specifications and the Updated Final Safety Analysis Report ("UFSAR") to the
extent required and are being operated and are in material conformance with all
applicable requirements under Nuclear Laws.
4.11 Condemnation. Except as set forth in Schedule 4.11, neither the
whole nor any part of the Real Property or any other real property or rights
leased, used or occupied by Sellers in connection with the ownership or
operation of the Purchased Assets is subject to any pending suit for
condemnation or other taking by any Governmental Authority, and no such
condemnation or other taking has been threatened.
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4.12 Contracts and Leases (a) Schedule 4.12(a) lists each written
contract, license, agreement, or personal property lease which is material to
the business or operations of the Purchased Assets, other than any contract,
license, agreement or personal property lease which is listed or described on
another Schedule, or which is expected to expire or terminate prior to the
Closing Date, or which provides for annual payments by Sellers after the date
hereof of less than $100,000 or payments by Sellers after the date hereof of
less than $500,000 in the aggregate.
(b) Except as disclosed in Schedule 4.12(b), each Sellers'
Agreement listed on such Schedule (i) constitutes a legal, valid and binding
obligation of the Seller party thereto and, to such Seller's Knowledge,
constitutes a valid and binding obligation of the other parties thereto, (ii) is
in full force and effect and (iii) may be transferred to Buyer at Closing
pursuant to this Agreement without the consent of the other parties thereto and
will continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or impairment of any
material rights thereunder.
(c) Except as set forth in Schedule 4.12(c), there is not,
under Sellers' Agreements, any default or event which, with notice or lapse of
time or both, would constitute a default on the part of Sellers or to Sellers'
Knowledge, any of the other parties thereto, except such events of default and
other events which would not, individually or in the aggregate, create a
Material Adverse Effect.
4.13 Legal Proceedings, etc. Except as set forth in Schedule 4.13,
there are no actions or proceedings pending (or to Sellers' Knowledge overtly
threatened) against Sellers before any court, arbitrator or Governmental
Authority, which could, individually or in the aggregate, reasonably be expected
to create a Material Adverse Effect. Except as set forth in Schedule 4.13,
Sellers are not subject to any outstanding judgments, rules, orders, writs,
injunctions or decrees of any court, arbitrator or Governmental Authority which
would, individually or in the aggregate, create a Material Adverse Effect.
4.14 Permits. (a) Sellers have all permits, licenses, franchises and
other governmental authorizations, consents and approvals (other than
Environmental Permits, which are addressed in Section 4.7 hereof) (collectively,
"Permits") necessary to permit Sellers to own and operate the Purchased Assets
as
44
presently conducted except where the failure to have such Permits would not,
individually or in the aggregate, have a material adverse effect on the
ownership, operation or maintenance of the Purchased Assets. Except as disclosed
on Schedule 4.14(a), Sellers have not received any notification that either of
them is in violation of any such Permits, except notifications of violations
which would not, individually or in the aggregate, create a Material Adverse
Effect. Sellers are in compliance with all such Permits except where
non-compliance would not, individually or in the aggregate, create a Material
Adverse Effect.
(b) Schedule 4.14(b) sets forth all material Permits and
Environmental Permits, other than Transferable Permits (which are set forth on
Schedule 1.1(139)) related to the Purchased Assets.
4.15 NRC Licenses.
(a) Sellers have all permits, licenses, and other consents and
approvals issued by the NRC necessary to own and operate the Purchased Assets as
presently operated, pursuant to the requirements of Nuclear Laws. Except as set
forth in Schedule 4.15(a), Sellers have not received any written notification
that either of them is in violation of any of such license, or any order, rule,
regulation, or decision of the NRC with respect to the Purchased Assets, except
for notifications of violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Sellers are in compliance with all
Nuclear Laws applicable to them with respect to the Purchased Assets, except for
violations which, individually or in the aggregate, could not have a Material
Adverse Effect.
(b) Schedule 4.15(b) sets forth all material permits,
licenses, and other consents and approvals issued by the NRC applicable to the
Purchased Assets.
4.16 Taxes. Sellers have filed all returns required to be filed by them
with respect to any Tax relating to the Purchased Assets, and Sellers have paid
all Taxes that have become due as indicated thereon, except where such Tax is
being contested in good faith by appropriate proceedings, or where the failure
to so file or pay would not reasonably be expected to create a Material Adverse
Effect. Sellers have complied in all material respects with all applicable laws,
rules and regulations relating to withholding Taxes relating to Transferred
Employees. All Tax Returns filed with respect to the Purchased Assets are
45
true and complete in all material respects. Except as set forth in Schedule
4.16, no notice of deficiency or assessment has been received from any taxing
authority with respect to liabilities for Taxes of Sellers in respect of the
Purchased Assets, which have not been fully paid or finally settled, and any
such deficiency shown in Schedule 4.16 is being contested in good faith through
appropriate proceedings. Except as set forth in Schedule 4.16, there are no
outstanding agreements or waivers extending the applicable statutory periods of
limitation for Taxes associated with the Purchased Assets that will be binding
upon Buyer after the Closing. Schedule 4.16 sets forth the taxing jurisdictions
in which Sellers own assets or conducts business that require a notification to
a taxing authority of the transactions contemplated by this Agreement, if the
failure to make such notification, or obtain Tax clearance certificates in
connection therewith, would either require Buyer to withhold any portion of the
Purchase Price or subject Buyer to any liability for any Taxes of Sellers.
4.17 Intellectual Property. Schedule 2.1(l) sets forth all Intellectual
Property used in and, individually or in the aggregate with other Intellectual
Property, material to the operation or business of the Purchased Assets, each of
which is owned by Seller.
4.18 Compliance With Laws. Sellers are in compliance with all
applicable laws, rules and regulations with respect to the ownership or
operation of the Purchased Assets except where the failure to be in compliance
would not, individually or in the aggregate, create a Material Adverse Effect.
4.19 PUHCA. Sellers are wholly owned subsidiaries of GPU, which is a
holding company registered under the Public Utility Holding Company Act of 1935.
4.20 Qualified Decommissioning Trust Fund.
(a)The Seller Qualified Decommissioning Trust Fund is a trust,
validly existing and in good standing under the laws of the State of New York
with all requisite authority to conduct its affairs as it now does. Sellers have
heretofore delivered to Buyer a copy of the Decommissioning Indenture as in
effect on the date of this Agreement. Sellers agree to furnish Buyer with copies
of all amendments of the Decommissioning Indenture adopted after the date of
this Agreement promptly after each such amendment has been adopted. The Seller
Qualified Decommissioning Trust Fund satisfies the requirements necessary
46
for such Fund to be treated as a "Nuclear Decommissioning Reserve Fund" within
the meaning of Code section 468A(a) and as a "Nuclear Decommissioning Fund" and
a "Qualified Nuclear Decommissioning Fund" within the meaning of Treas. Reg.
Section 1.468A-1(b)(3). Such Fund is in compliance in all material respects with
all applicable rules and regulations of the NRC, the NJBPU and the IRS. The
Seller Qualified Decommissioning Trust Fund has not engaged in any acts of
"self-dealing" as defined in Treas. Reg. Section 1.468A-5(b)(2). No "excess
contribution," as defined in Treas. Reg. Section 1.468A-5(c)(2)(ii), has been
made to the Seller Qualified Decommissioning Trust Fund which has not been
withdrawn within the period provided under Treas. Reg. Section 1.468A-5(c)(2)(i)
for withdrawals of excess contributions to be made without resulting in a
disqualification of the Fund under Treas. Reg Section 1.468A-5(c)(1). JCP&L has
made timely and valid elections to make annual contributions to the Seller
Qualified Decommissioning Trust Fund since its establishment. Sellers have
heretofore delivered copies of such elections to Buyer.
(b) Subject only to Sellers' Required Regulatory Approvals,
Sellers have all requisite authority to cause the assets of the Seller Qualified
Decommissioning Trust Fund to be transferred to Buyer in accordance with the
provisions of this Agreement.
(c Sellers and/or the Trustee of the Seller Qualified
Decommissioning Trust Fund have filed or caused to be filed with the NRC, the
IRS and any state or local authority all material forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by either of them. Sellers have delivered to Buyer a copy of the
schedule of ruling amounts most recently issued by the IRS for the Seller
Qualified Decommissioning Trust Fund, a copy of the request that was filed to
obtain such schedule of ruling amounts and a copy of any pending requests for
revised ruling amounts, in each case together with all exhibits, amendments and
supplements thereto. As of the Closing, Sellers will have timely filed all
requests for revised schedules of ruling amounts for the Seller Qualified
Decommissioning Trust Fund in accordance with Treas. Reg. Section 1.468A-3(i).
Sellers shall furnish Buyer with copies of such requests for revised schedules
of ruling amounts, together with all exhibits, amendments and supplements
thereto, promptly after they have been filed with the IRS. Any amounts
contributed to the Seller Qualified Decommissioning Trust Fund while such
requests are pending before the IRS and which turn out to be in excess of the
47
applicable amounts provided in the schedule of ruling amounts issued by the IRS
will be withdrawn from the Seller Qualified Decommissioning Trust Fund within
the period provided under Treas. Reg. Section 1.468A-5(c)(2)(i) for withdrawals
of excess contributions to be made without resulting in a disqualification of
the Funds under Treas. Reg. Section 1.468A-5(c)(1). There are no interim rate
orders that may be retroactively adjusted or retroactive adjustments to interim
rate orders that may affect amounts that JCP&L may contribute to the Seller
Qualified Decommissioning Trust Fund or may require distributions to be made
from the Seller Qualified Decommissioning Trust Fund.
(d) Sellers have made available to Buyer the balance sheets
for the Seller Qualified Decommissioning Trust Fund as of December 31, 1998 and
as of the last Business Day before the Closing, and they present fairly as of
December 31, 1998 and as of the last Business Day before Closing, the financial
position of the Seller Qualified Decommissioning Trust Fund in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein. Sellers have made available to Buyer information
from which Buyer can determine the Tax Basis of all assets in the Seller
Qualified Decommissioning Trust Fund as of the last Business Day before Closing.
There are no liabilities (whether absolute, accrued, contingent or otherwise and
whether due or to become due), including, but not limited to, any acts of
"self-dealing" as defined in Treas. Reg. Section1.468A-5(b)(2) or agency or
other legal proceedings that may materially affect the financial position of the
Seller Qualified Decommissioning Trust Fund other than those, if any, that are
disclosed on Schedule 4.20.
(e) Sellers have made available to Buyer all contracts and
agreements to which the Trustee of the Seller Qualified Decommissioning Trust
Fund, in its capacity as such, is a party.
(f) The Seller Qualified Decommissioning Trust Fund has filed
all Tax Returns required to be filed and all material Taxes shown to be due on
such Tax Returns have been paid in full. Except as shown in Schedule 4.20, no
notice of deficiency or assessment has been received from any taxing authority
with respect to liability for Taxes of the Seller Qualified Decommissioning
Trust Fund which have not been fully paid or finally settled, and any such
deficiency shown in such Schedule 4.20 is being contested in good faith through
appropriate proceedings. Except as set forth in Schedule 4.20, there are no
outstanding agreements or waivers extending the applicable
48
statutory periods of limitations for Taxes associated with the Seller Qualified
Decommissioning Trust Fund for any period.
(g) To the extent Sellers have pooled the assets of the Seller
Qualified Decommissioning Trust Fund for investment purposes in periods prior to
Closing, such pooling arrangement is a partnership for federal income tax
purposes and Sellers have filed all Tax Returns required to be filed with
respect to such pooling arrangement for such periods.
4.21 Nonqualified Decommissioning Trust Fund.
(a) The Seller Nonqualified Decommissioning Trust Fund is a
trust validly existing and in good standing under the laws of the State of New
York with all requisite authority to conduct its affairs as it now does. The
Seller Nonqualified Decommissioning Trust Fund is in full compliance with all
applicable rules and regulations of the NRC and the NJBPU.
(b) Subject only to Sellers' Required Regulatory Approvals,
Sellers have all requisite authority to cause the assets of the Seller
Nonqualified Decommissioning Trust Fund to be transferred to Buyer in accordance
with the provisions of this Agreement.
(c) Sellers and/or the Trustee of the Seller Nonqualified
Decommissioning Trust Fund have filed or caused to be filed with the NRC and any
state or local authority all material forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by either of them.
(d) Sellers have made available to Buyer the balance sheet for
the Seller Nonqualified Decommissioning Trust Fund as of December 31, 1998 and
as of the last Business Day before the Closing, and they present fairly as of
December 31, 1998 and as of the last Business Day before Closing, the financial
position of the Seller Nonqualified Decommissioning Trust Fund in conformity
with generally accepted accounting principles applied on a consistent basis,
except as otherwise noted therein. There are no liabilities (whether absolute,
accrued, contingent or otherwise and whether due or to become due) including,
but not limited to, agency or other legal proceedings, that may materially
affect the financial position of the Seller Nonqualified Decommissioning Trust
Fund other than those, if any, that are disclosed on Schedule 4.21.
49
(e) Sellers have made available to Buyer all contracts and
agreements to which the Trustee of the Seller Nonqualified Decommissioning Trust
Fund, in its capacity as such, is a party.
(f) To the extent Sellers have pooled the assets of the Seller
Nonqualified Decommissioning Trust Fund for investment purposes in periods prior
to the Closing, such pooling arrangement is not a corporation for federal income
tax purposes and Sellers have filed all Tax Returns required to be filed with
respect to such pooling arrangement for such periods.
4.22 Undisclosed Liabilities. Except as set forth in Schedule 4.22, the
Purchased Assets are not subject to any material liability or obligation
(whether absolute, contingent or otherwise) that has not been accrued or
reserved against in Sellers' financial statements as of the end of the most
recent fiscal quarter for which such statements are available or disclosed in
the notes thereto in accordance with generally accepted accounting principles
consistently applied.
4.23 Year 2000 Qualified. Sellers have taken, and will continue to
take, all reasonable steps necessary to address the computer software and
application issues raised by Year 2000 and as of the Closing Date all of
Sellers' computer software and applications affecting the Purchased Assets will
be Year 2000 Qualified, except to the extent that any non-qualification does not
create a Material Adverse Effect.
4.24 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV OR AS MAY BE
EXPRESSLY SET FORTH IN THE ANCILLARY AGREEMENTS, THE PURCHASED ASSETS ARE BEING
SOLD AND TRANSFERRED "AS IS, WHERE IS", AND EXCEPT FOR SUCH REPRESENTATIONS AND
WARRANTIES SELLERS EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND OR NATURE, EXPRESS OR IMPLIED, AS TO LIABILITIES, OPERATIONS OF THE PLANT,
THE TITLE, CONDITION, VALUE OR QUALITY OF THE PURCHASED ASSETS OR THE PROSPECTS
(FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE PURCHASED ASSETS AND
SELLERS SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY,
USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE
PURCHASED ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE
ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH
ENVIRONMENTAL REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL
REQUIREMENTS, INCLUDING BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER
SELLERS POSSESS SUFFICIENT REAL
50
PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLERS FURTHER SPECIFICALLY DISCLAIM ANY
REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS SUBSTANCES OR
LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS WITH RESPECT
TO THE PURCHASED ASSETS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLERS EXPRESSLY DISCLAIM ANY
REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF THE PURCHASED
ASSETS OR THE SUITABILITY OF THE PURCHASED ASSETS FOR OPERATION AS A POWER PLANT
AND NO MATERIAL OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY SELLERS OR
THEIR REPRESENTATIVES, OR BY ANY BROKER OR INVESTMENT BANKER, WILL CAUSE OR
CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR
QUALITY OF THE PURCHASED ASSETS.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
5.1 Organization. Buyer is a Delaware limited liability company, duly
organized, validly existing and in good standing under the laws of the state of
its organization 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, or by the Closing will be, qualified to do business in the
State of New Jersey. Buyer has heretofore delivered to Sellers complete and
correct copies of its Certificate of Formation and Operating Agreement (or other
similar governing documents) as currently in effect.
5.2 Authority Relative to this Agreement. Buyer has full organizational
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action required
on the part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer. Subject to the receipt of Buyer Required Regulatory
Approvals, this Agreement constitutes a legal, valid and binding agreement of
Buyer, enforceable against Buyer in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
51
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).
5.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 5.3(a), and other than
obtaining Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement by Buyer nor the consummation by Buyer of the
transactions contemplated hereby will (i) conflict with or result in any breach
or violation of any provision of the Certificate of Formation or Operating
Agreement (or other similar governing documents) of Buyer, or (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, or (iii) result in a default (or give rise to
any right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, material
agreement 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,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, have a material adverse
effect on the business, assets, operations or condition (financial or otherwise)
of Buyer ("Buyer Material Adverse Effect") or (iv) violate any law, regulation,
order, judgment or decree applicable to Buyer, which violations, individually or
in the aggregate, would create a Buyer Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as the
"Buyer Required Regulatory Approvals"), no consent or approval of, filing with,
or notice to, any Governmental Authority is necessary for Buyer's execution and
delivery of this Agreement, or the consummation by Buyer of the transactions
contemplated hereby, other than such consents, approvals, filings or notices,
which, if not obtained or made, will not prevent Buyer from performing its
obligations under this Agreement.
5.4 Legal Proceedings. There are no actions or proceedings pending
against Buyer before any court or arbitrator or Governmental Authority, which,
individually or in the aggregate, could reasonably be expected to create a Buyer
Material Adverse Effect. Buyer is not subject to any outstanding judgments,
rules, orders, writs, injunctions or
52
decrees of any court, arbitrator or Governmental Authority which would,
individually or in the aggregate, create a Buyer Material Adverse Effect.
5.5 Inspections. Buyer acknowledges and agrees that it has, prior to
its execution of this Agreement, (i) reviewed the Environmental Reports (other
than Buyer's Environmental Inspection), and (ii) except as contemplated by
Section 6.2, has had full opportunity to conduct and has completed to its
satisfaction Inspections of the Purchased Assets. Subject to Sections 6.2(a),
(h) and (i) , Buyer acknowledges that it is satisfied through such review and
Inspections that no further investigation and study on or of the Site is
necessary for the purposes of acquiring the Purchased Assets for Buyer's
intended use. Buyer acknowledges and agrees that subject to Sellers'
representations, warranties and covenants contained in this Agreement and the
Ancillary Agreements and the terms, conditions, limitations and indemnities
provided herein, it will assume at the Closing the risk that adverse past,
present, and future physical characteristics and Environmental Conditions may
not have been revealed by the Inspections and the investigations of the
Purchased Assets contained in the Environmental Reports.
5.6 WARN Act. Buyer does not intend to engage in a Plant Closing or
Mass Layoff as such terms are defined in the WARN Act within sixty (60) days of
the Closing Date.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased Assets
(a) Except as described in Schedule 6.1 or as expressly
contemplated by this Agreement or to the extent Buyer otherwise consents in
writing, during the period from the date of this Agreement to the Closing Date,
Sellers (i) will operate the Purchased Assets in the ordinary course of business
consistent with Good Utility Practices, (ii) shall use all Commercially
Reasonable Efforts to preserve intact such Purchased Assets, and endeavor to
preserve the goodwill and relationships with customers, suppliers and others
having business dealings with them, (iii) shall maintain the insurance coverage
described in Section 4.4, (iv) shall comply in all material respects with all
applicable laws relating to the Purchased Assets, including without limitation,
all Nuclear Laws
53
and Environmental Laws, and (v) shall continue with Sellers' program, or (at
Buyer's expense) as Buyer may direct, to install such equipment or software with
respect to Year 2000 Qualification in accordance with Sellers' plans referred to
in Section 2.1(k). Without limiting the generality of the foregoing, and, except
as (x) contemplated in this Agreement, (y) described in Schedule 6.1, or (z)
required under applicable law or by any Governmental Authority, prior to the
Closing Date, without the prior written consent of Buyer, Sellers shall not with
respect to the Purchased Assets:
(i) Make any material change in the levels of
Inventories customarily maintained by Sellers or their Affiliates with
respect to the Purchased Assets, other than changes which are
consistent with Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge,
transfer or otherwise dispose of, any material Purchased Assets
individually or in the aggregate (except for Purchased Assets used,
consumed or replaced in the ordinary course of business consistent with
past practices of Sellers or their Affiliates or with Good Utility
Practices) other than to encumber Purchased Assets with Permitted
Encumbrances;
(iii) Modify, amend or voluntarily terminate prior to
the expiration date any of Sellers' Agreements or Real Property Leases
or any of the Permits or Environmental Permits or waive any default by,
or release, settle or compromise and claim against, any other party
thereto, in any material respect, other than (a) in the ordinary course
of business, to the extent consistent with Good Utility Practices, (b)
with cause, to the extent consistent with Good Utility Practices, or
(c) as may be required in connection with transferring Sellers' rights
or obligations thereunder to Buyer pursuant to this Agreement;
(iv) Sell, lease or otherwise dispose of Emission
Allowances, or Emission Reduction Credits identified in Schedule
2.1(h), except to the extent necessary to operate the Purchased Assets
in accordance with this Section 6.1;
(v) Except as otherwise provided herein or in
connection with the 18R Outage and consistent with the Outage Plan,
enter into any commitment for the purchase or sale of nuclear fuel
having a term that extends beyond
54
March 31, 2000 or such other date that the Parties mutually agree;
(vi) Enter into any power sales agreement having a
term that extends beyond March 31, 2000 or such other date that the
Parties mutually agree to be the date on which the Closing is expected
to occur;
(vii) Except as otherwise provided herein or in
connection with the 18R Outage and consistent with the Outage Plan,
enter into any contract, agreement, commitment or arrangement relating
to the Purchased Assets for goods or services not addressed in clauses
(i) through (vi) that individually requires the payment for or delivery
of goods or services with a value exceeding $100,000 per annum and
extends beyond March 31, 2000, unless it is terminable by Sellers (or,
after the Closing, by Buyer) without penalty or premium upon no more
than sixty (60) days notice;
(viii) Except as otherwise required by the terms of
the Collective Bargaining Agreement, (a) hire at, or transfer to the
Purchased Assets, any new employees prior to the Closing, other than to
fill vacancies in existing positions in the reasonable discretion of
Sellers, (b) increase salaries or wages of employees employed in
connection with the Purchased Assets prior to the Closing other than in
the ordinary course of business and in accordance with Sellers' past
practices, (c) take any action prior to the Closing to effect a change
in the Collective Bargaining Agreement or any other Employee agreement
being assumed by Buyer, or (d) take any action prior to the Closing to
increase the aggregate benefits payable to the employees employed in
connection with the Purchased Assets other than increases for Non-Union
Employees in the ordinary course of business and in accordance with
Sellers' past practices or (e) enter into any employment contracts with
employees at the Purchased Assets or any collective bargaining
agreements with labor organizations representing such employees;
(ix) Make any Capital Expenditures except as
permitted by Section 3.3(a)(ii) or for Sellers' account; and
(x) Except as otherwise provided herein, enter
into any written or oral contract, agreement, commitment or arrangement
with respect to any of the proscribed
55
transactions set forth in the foregoing paragraphs (i) through (ix).
(b) Subject to applicable NRC rules and regulations, a
committee comprised of one or more senior representatives designated by Sellers
and one or more senior representatives designated by Buyer (the "Transition
Committee") will be established as soon as practicable after the execution of
this Agreement to permit Buyer to observe and advise Sellers regarding the
operation of the Purchased Assets and to facilitate the transfer of the
Purchased Assets to Buyer at the Closing. The Transition Committee will be kept
fully apprised by GPUN of all the Plant's management and operating developments.
The Transition Committee shall arrange for Buyer to assess the Plant's
management and employees and shall have access to the management and board of
directors of GPUN. The Transition Committee shall be accountable directly to the
respective chief executive officers of Buyer and GPUN and shall from time to
time report its findings to the senior management of each of Sellers and Buyer.
(c) Sellers shall advise Buyer regarding implementation or
changes in PJM rules or procedures which are reasonably likely to have a
Material Adverse Effect on the Plant. Sellers agree that they will not take or
cause to be taken any action to reduce the current installed capacity credit PJM
has assigned to the Plant under PJM rules, regulations or policies in effect on
the date hereof; provided, however, that the foregoing shall in no way restrict
or prohibit Sellers from taking or causing to take any such action which
generally affects Sellers' generating facilities.
6.2 Access to Information.
(a) Between the date of this Agreement and the Closing Date,
Sellers will, at reasonable times and upon reasonable notice and subject to
compliance with all applicable NRC rules and regulations: (i) give Buyer and its
Representatives reasonable access to its managerial personnel and to all books,
records, plans, equipment, offices and other facilities and properties
constituting the Purchased Assets; (ii) furnish Buyer with such financial and
operating data and other information with respect to the Purchased Assets as
Buyer may from time to time reasonably request, and permit Buyer to make such
reasonable Inspections thereof as Buyer may request; (iii) furnish Buyer at its
request a copy of each material report, schedule or other document filed by
Sellers or any of
56
their Affiliates with respect to the Purchased Assets with the NRC, SEC, FERC,
NJDEP, NJBPU or any other Governmental Authority; and (iv) furnish Buyer with
all such other information as shall be reasonably necessary to enable Buyer to
verify the accuracy of the representations and warranties of Sellers contained
in this Agreement; provided, however, that (A) any such inspections and
investigations shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) Sellers shall not
be required to take any action which would constitute a waiver of the
attorney-client privilege, and (C) Sellers need not supply Buyer with any
information which Sellers are under a legal or contractual obligation not to
supply. Notwithstanding anything in this Section 6.2 to the contrary, Sellers
will furnish or provide such access to Transferring Employee Records or access
to other employee personnel records or medical information only to the extent
not prohibited by law, regulatory process or subpoena unless specifically
authorized by the affected employee, and Buyer shall not have the right to
administer to any of Sellers' employees any skills, aptitudes, psychological
profile, or other employment related test except that Buyer may administer such
tests to Sellers' Non-Union Employees if specifically authorized by the affected
employee.
(b) Each Party shall, and shall use its best efforts to cause
its Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party's Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of the
transactions contemplated hereby. After the Closing Date, any Proprietary
Information to the extent related to the Purchased Assets shall no longer be
subject to the restrictions set forth herein. The obligations of the Parties
under this Section 6.2(b) shall be in full force and effect for three (3) years
from the date hereof and will survive the termination of this Agreement, the
discharge of all other obligations owed by the Parties to each other and the
closing of the transactions contemplated by this Agreement.
(c) For a period of seven (7) years after the Closing Date (or
such longer period as may be required by applicable law or Section 6.8(f)), each
Party and its Representatives shall have reasonable access to all of the books
and records of the Purchased Assets, including all Transferring Employee Records
in the possession of the other Party to the extent that such access may
reasonably be required by such Party in connection with the
57
Assumed Liabilities or the Excluded Liabilities, or other matters relating to or
affected by the operation of the Purchased Assets. Such access shall be afforded
by the Party in possession of any such books and records upon receipt of
reasonable advance written notice and during normal business hours. The Party
exercising this right of access shall be solely responsible for any costs or
expenses incurred by it or the other Party with respect to such access pursuant
to this Section 6.2(c). If the Party in possession of such books and records
shall desire to dispose of any books and records upon or prior to the expiration
of such seven-year period (or any such longer period), such Party shall, prior
to such disposition, give the other Party a reasonable opportunity at such other
Party's reasonable expense, to segregate and remove such books and records as
such other Party may select.
(d) Notwithstanding the terms of Section 6.2(b) above, the
Parties agree that prior to the Closing Buyer may reveal or disclose Proprietary
Information to any other Persons in connection with Buyer's financing of its
purchase of the Purchased Assets or any equity participation in Buyer's purchase
of the Purchased Assets (provided that such Persons agree in writing to maintain
the confidentiality of the Proprietary Information in accordance with this
Agreement).
(e) Upon the other Party's prior written approval (which will
not be unreasonably withheld or delayed), either Party may provide Proprietary
Information of the other Party to the NJBPU, NYPSC, PaPUC, SEC, NRC, FERC or any
other Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Sellers' Required Regulatory Approvals, or Buyer Required
Regulatory Approvals, respectively, or to comply generally with any relevant law
or regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other Party as far in advance as is practicable
of its intention to release to any Governmental Authority any Proprietary
Information.
(f) Except as specifically provided herein or in the
Confidentiality Agreement, nothing in this Section shall impair or modify any of
the rights or obligations of Buyer or its Affiliates under the Confidentiality
Agreement, all of which remain in effect until termination of such agreement in
accordance with its terms.
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(g) Except as may be permitted in the Confidentiality
Agreement, Buyer agrees that, prior to the Closing Date, it will not contact any
vendors, suppliers, employees, or other contracting parties of Sellers or their
Affiliates with respect to any aspect of the Purchased Assets or the
transactions contemplated hereby, without the prior written consent of Sellers,
which consent shall not be unreasonably withheld.
(h) (i) Buyer shall be entitled to inspect, in accordance with
this Section 6.2(h), all of the Purchased Assets located adjacent to any Point
of Interconnection (as defined in the Interconnection Agreement), as shown in
Schedule A to the Interconnection Agreement, to verify and/or determine the
accuracy of the data, drawings, and records described in such Schedule. The
Parties shall cooperate to schedule Buyer's Inspection at the Plant so that any
interference with the operation of the Plant is minimized, to the extent
reasonably feasible, and so that Buyer may complete its Inspections of the Plant
within thirty (30) working days of commencement of Inspections and within two
(2) months after the execution of this Agreement.
(ii) Sellers shall provide, or shall cause to be provided,
to Buyer, access to the Plant at the times scheduled for the Inspections
referred to in clause (i) above. Sellers shall provide qualified engineering,
operations, and maintenance personnel to escort Buyer's personnel and to assist
Buyer's personnel in conducting the Inspections. Sellers and Buyer shall each
bear their own costs of participating in the Inspections. At a mutually
convenient time not more than one (1) month after Buyer has completed its
Inspections, the Parties shall meet to discuss whether, as a result of the
Inspections, it is appropriate to modify Schedule A to the Interconnection
Agreement to portray more accurately the Points of Interconnection. Any
modification to any portion of Schedule A of the Interconnection Agreement to
which the Parties agree shall thereafter be deemed part of Schedule A of the
Interconnection Agreement for all purposes under the Interconnection Agreement.
(i) Between the date hereof and the Closing Date, Sellers
shall, permit Buyer or Buyer's Representatives upon Buyer's request and at
Buyer's sole cost and expense to perform additional environmental testing on the
Site ("Buyer's Environmental Inspection") at reasonable times and upon
reasonable notice to Sellers. The general nature and scope of the initial
Buyer's Environmental Inspection is set forth on
59
Schedule 6.2(i). Buyer may, subject to Sellers' consent, which consent shall not
be unreasonably withheld, conduct further Inspections if, based on the results
of the initial Buyer's Environmental Inspection, such further Inspection is
reasonably warranted. Buyer agrees to comply, and cause its Representatives to
comply, with all safety and security policies adopted by Sellers relating to the
Purchased Assets. All environmental testing performed by Buyer or Buyer's
Representatives on the Site shall be performed in accordance with all applicable
NRC and other legal or regulatory requirements of Governmental Authorities and
in any event shall not unreasonably interfere with the operation of the Plant or
the Purchased Assets.
6.3 Public Statements. Subject to the requirements imposed by any
applicable law or any Governmental Authority or stock exchange, prior to the
Closing Date, no press release or other public announcement or public statement
or comment in response to any inquiry relating to the transactions contemplated
by this Agreement shall be issued or made by any Party without the prior
approval of the other Parties (which approval shall not be unreasonably
withheld). The Parties agree to cooperate in preparing such announcements.
6.4 Expenses. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the obtaining of any
title insurance policy and all endorsements thereto that Buyer elects to obtain
and (b) all filing fees under the HSR Act.
6.5 Further Assurances
(a) Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use its Commercially Reasonable Efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the purchase and sale of the Purchased Assets
pursuant to this Agreement and the assumption of the Assumed Liabilities,
including without limitation using its best efforts to ensure satisfaction of
the conditions precedent to each Party's obligations hereunder, including
obtaining all necessary
60
consents, approvals, and authorizations of third parties and Governmental
Authorities required to be obtained in order to consummate the transactions
hereunder, and to effectuate a transfer of the Transferable Permits to Buyer.
Buyer agrees to perform all conditions required of Buyer in connection with
Sellers' Required Regulatory Approvals, other than those conditions which would
create a Buyer Material Adverse Effect. None of the Parties hereto shall,
without prior written consent of the other Party, take or fail to take any
action, which might reasonably be expected to prevent or materially impede,
interfere with or delay the transactions contemplated by this Agreement.
(b) Buyer agrees that prior to the Closing Date, neither Buyer
nor any of its Affiliates will enter into any other contract to acquire, nor
acquire, electric generation facilities located in the control area recognized
by the North American Reliability Council as the PJM Control Area if the
proposed acquisition of such additional electric generation facilities might
reasonably be expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement; provided, however, that the
foregoing shall not prohibit Buyer or any of its Affiliates either from
acquiring or agreeing to acquire an ownership interest in the Peach Bottom
Nuclear Generating Station from Conectiv, Inc. or adding generating capacity to
their present generating facilities. Buyer shall give Sellers reasonable advance
notice (and in any event not less than ten (10) days) before Buyer enters into
any contract to acquire or acquires any electric generation facility located in
said PJM Control Area.
(c) In the event that any Purchased Asset shall not have been
conveyed to Buyer at the Closing, Sellers shall, subject to Section 6.5(d) and
(e), use Commercially Reasonable Efforts to convey such asset to Buyer as
promptly as is practicable after the Closing. In the event that any Easement
shall not have been granted by Buyer to Sellers at the Closing, Buyer shall use
Commercially Reasonable Efforts to grant such Easement to Sellers as promptly as
is practicable after the Closing.
(d) To the extent that Sellers' rights under any Sellers'
Agreement or Real Property Lease may not be assigned without the consent of
another Person which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign the same, if an attempted
assignment would constitute a breach thereof or be unlawful.
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Sellers and Buyer agree that if any consent to an assignment of any material
Sellers' Agreement or Real Property Lease shall not be obtained or if any
attempted assignment would be ineffective or would impair Buyer's rights and
obligations under the material Sellers' Agreement or Real Property Lease in
question, so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Sellers, at Buyer's option and to the maximum extent
permitted by law and such material Sellers' Agreement or Real Property Lease,
shall, after the Closing Date, appoint Buyer to be Sellers' agent with respect
to such material Sellers' Agreement or Real Property Lease, or, to the maximum
extent permitted by law and such material Sellers' Agreement or Real Property
Lease, enter into such reasonable arrangements with Buyer or take such other
actions as are necessary to provide Buyer with the same or substantially similar
rights and obligations of such material Sellers' Agreement or Real Property
Lease as Buyer may reasonably request. Sellers and Buyer shall cooperate and
shall each use Commercially Reasonable Efforts prior to and after the Closing
Date to obtain an assignment of such material Sellers' Agreement or Real
Property Lease to Buyer.
(e) To the extent that Sellers' rights under any warranty or
guaranty described in Section 2.1(i) may not be assigned without the consent of
another Person, which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign same, if an attempted
assignment would constitute a breach thereof, or be unlawful. Sellers and Buyer
agree that if any consent to an assignment of any such warranty or guaranty
shall not be obtained, or if any attempted assignment would be ineffective or
would impair Buyer's rights and obligations under the warranty or guaranty in
question, so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Sellers, at Buyer's expense, shall use Commercially
Reasonable Efforts, to the extent permitted by law and such warranty or
guaranty, to enforce such warranty or guaranty for the benefit of Buyer so as to
provide Buyer to the maximum extent possible with the benefits and obligations
of such warranty or guaranty.
6.6 Consents and Approvals.
(a) As promptly as practicable after the date of this
Agreement, Sellers and Buyer, as applicable, shall each file or cause to be
filed with the Federal Trade Commission and the United States Department of
Justice any notifications required to be filed under the HSR Act and the rules
and regulations
62
promulgated thereunder with respect to the transactions contemplated hereby. The
Parties shall use their respective best efforts to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing. Buyer will pay all filing fees
under the HSR Act but each Party will bear its own costs of the preparation of
any filing.
(b) As promptly as practicable after the date of this
Agreement and following receipt of any requisite determinations by other
Governmental Authorities which are a precondition thereto, Buyer shall file with
the FERC an application requesting Exempt Wholesale Generator status for Buyer,
which filing may be made individually or in conjunction with other filings to be
made with the FERC under this Agreement, as reasonably determined by the
Parties. Prior to Buyer's submission of that application with the FERC, Buyer
shall submit such application to Sellers for review and comment and Buyer shall
incorporate into the application any revisions reasonably requested by Sellers.
Buyer shall be solely responsible for the cost of preparing and filing this
application, any petition(s) for rehearing, or any re-application. If Buyer's
initial application for Exempt Wholesale Generator status is rejected by the
FERC, Buyer agrees to petition the FERC for rehearing and/or to re-submit an
application with the FERC, as reasonably required by Sellers, provided that in
either case the action directed by Sellers does not create a Buyer Material
Adverse Effect.
(c) As promptly as practicable after the date of this
Agreement, Buyer shall file with the FERC pursuant to Section 205 of the Federal
Power Act a notification of change in status concerning its market-based rate
authority by which Buyer shall notify the FERC of the change in status
associated with its purchase of the Plant's additional generating capacity and
request the FERC to confirm that such change in status will not affect Buyer's
authority to engage in market-based rate wholesale power sale transactions,
which filing may be made individually by Buyer or jointly with Sellers in
conjunction with other filings to be made with the FERC under this Agreement, as
reasonably determined by the Parties. Prior to the filing of that application
with the FERC, Buyer shall submit such application to Sellers for review and
comment and Buyer shall incorporate into the application any revisions
reasonably requested by Sellers. Buyer shall be solely responsible for the cost
of preparing and filing this application, any petition(s)
63
for rehearing, or any reapplication. If Buyer's filing results in a FERC request
for additional information or is rejected by the FERC, Buyer shall provide that
information promptly, petition the FERC for rehearing and/or to re-submit the
filing with the FERC, as reasonably required by Sellers, provided that Sellers
shall have a reasonable opportunity to make changes to such a filing or
re-submission and, provided further, that the action directed by Sellers does
not create a Buyer Material Adverse Effect.
(d) As promptly as practicable, and in any case within sixty
(60) days after the date of this Agreement, Sellers and Buyer, as applicable,
shall file with the NJBPU, the NYPSC, the FERC and any other Governmental
Authority, and any other filings required to be made with respect to the
transactions contemplated hereby. The Parties shall respond promptly to any
requests for additional information made by such agencies, and use their
respective best efforts to cause regulatory approval to be obtained at the
earliest possible date after the date of filing. Each Party will bear its own
costs of the preparation of any such filing.
(e) Without limitation of Section 10.11, Sellers and Buyer
shall cooperate with each other and promptly prepare and file notifications
with, and request Tax clearances from, state and local taxing authorities in
jurisdictions in which a portion of the Purchase Price may be required to be
withheld or in which Buyer would otherwise be liable for any Tax liabilities of
Sellers pursuant to such state and local Tax law.
(f) Buyer shall have the primary responsibility for securing
the transfer, reissuance or procurement of the Permits and Environmental Permits
(other than Transferable Permits) effective as of the Closing Date. Sellers
shall cooperate with Buyer's efforts in this regard and assist in any transfer
or reissuance of a Permit or Environmental Permit held by Sellers or the
procurement of any other Permit or Environmental Permit when so requested by
Buyer.
(g) As promptly as practicable after the date of this
Agreement, Buyer and Sellers shall file with the NRC an application requesting
consent under Section 184 of the Atomic Energy Act and 10 CFR ss.50.80 for the
transfer of the Plant license from Sellers to Buyer, and any associated
licenses, amendments or approvals. The Parties shall respond promptly to any
requests for additional information made by the NRC and use their respective
best efforts to cause regulatory approval to be
64
obtained at the earliest possible date after the date of filing. Each Party will
bear its own costs of the preparation of any such filing.
(h) As promptly as practicable after the date of this
Agreement, Sellers and Buyer, as applicable, shall file with the IRS the
requests for private letter rulings described in Sections 7.1(m) and 7.2(j). The
Parties shall respond promptly to any requests for additional information made
by the IRS, and use their respective Commercially Reasonable Efforts to cause
the private letter rulings to be obtained at the earliest possible date after
the date of filing. Each of Sellers and Buyer shall cooperate with one another
to secure the private letter rulings described in Sections 7.1(m) and 7.2(j) and
each shall have the right to review in advance all information included in the
requests for private letter rulings and supplemental submissions to the IRS.
Each Party will bear its own costs of the preparation of such requests.
6.7 Fees and Commissions. Sellers, on the one hand, and Buyer, on the
other hand, represent and warrant to the other that, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the Party making such representation. Sellers, on the one hand, and
Buyer, on the other hand, will pay to the other or otherwise discharge, and will
indemnify and hold the other harmless from and against, any and all claims or
liabilities for all brokerage fees, commissions and finder's fees incurred by
reason of any action taken by the indemnifying party.
6.8 Tax Matters.
(a) All transfer and sales taxes incurred in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, (a) New Jersey sales tax; and (b) the New Jersey realty transfer
taxes on conveyances of interests in real property, shall be borne equally by
Buyer and Sellers. Sellers shall file, to the extent required by, or permissible
under, applicable law, all necessary Tax Returns and other documentation with
respect to all such transfer and sales taxes, and, if required by applicable
law, Buyer shall join in the execution of any such Tax Returns and other
documentation. Prior to the Closing Date, to the extent applicable, Buyer shall
provide to Sellers appropriate certificates of Tax exemption from each
applicable taxing authority.
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(b) With respect to Taxes to be prorated in accordance with
Section 3.5 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Closing Date with respect to the
Purchased Assets, if any, and shall duly and timely pay all such Taxes shown to
be due on such Tax Returns. Buyer's preparation of any such Tax Returns shall be
subject to Sellers' approval, which approval shall not be unreasonably withheld.
Buyer shall make such Tax Returns available for Sellers' review and approval no
later than fifteen (15) Business Days prior to the due date for filing each such
Tax Return.
(c) Within fifteen (15) Business Days after receipt of a Tax
Return referred to in Section 6.8(b), Sellers shall pay to Buyer Sellers' share
of the amount shown on such Tax Return, less payments on account of such Taxes
previously made by Sellers. To the extent that Sellers' previous payments exceed
Sellers' share, the Buyer shall pay such excess to Sellers. With respect to real
estate taxes, evidence of payment shall be delivered by Sellers to Buyer at the
Closing.
(d) Buyer and Sellers shall provide the other with such
assistance as may reasonably be requested by the other Party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each shall retain and provide the requesting party with any
records or information which may be relevant to such return, audit, examination
or proceedings. Any information obtained pursuant to this Section 6.8(d) 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. Schedule 6.8 sets forth procedures to be
followed with respect to the tax appeals and audits referred to therein.
(e) In the event that a dispute arises between Sellers and
Buyer as to the amount of Taxes, or indemnification, or the amount of any
allocation of Purchase Price under Section 3.4 hereof, the Parties shall attempt
in good faith to resolve such dispute, and any agreed upon amount shall be paid
to the appropriate Party. If such dispute is not resolved thirty (30) days
thereafter, the Parties shall submit the dispute to the Independent Accounting
Firm for resolution, which resolution shall be final, conclusive and binding on
the Parties. Notwithstanding anything in this Agreement to the contrary, the
fees and expenses of the Independent Accounting Firm in
66
resolving the dispute shall be borne equally by Sellers and Buyer. Any payment
required to be made as a result of the resolution of the dispute by the
Independent Accounting Firm shall be made within ten days after such resolution,
together with any interest determined by the Independent Accounting Firm to be
appropriate.
(f) Buyer and Sellers shall cooperate fully, as and to the
extent reasonably requested by the other Party, in connection with the filing of
Tax Returns pursuant to this Agreement and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other Party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees (to the extent such employees were responsible for the
preparation, maintenance or interpretation of information and documents relevant
to Tax matters or to the extent required as witnesses in any Tax proceedings),
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Parties agree to give the
other Party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other Party so requests, Buyer
or Sellers, as the case may be, shall allow the other Party to take possession
of such books and records.
Buyer and Sellers further agree, upon request, to use Commercially
Reasonable Efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
6.9 Advice of Changes. Prior to the Closing, each Party will promptly
advise the other in writing with respect to any matter arising after execution
of this Agreement of which that Party obtains Knowledge and which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto, or of any breach
of any representation or warranty or of any other condition or circumstance that
would excuse a Party of timely performance of its obligations hereunder. Sellers
may at any time notify Buyer of any development causing a breach of any of their
representations and warranties in Article IV. Unless Buyer has the right to
terminate this Agreement pursuant to Section 9.1(e) below by reason of the
developments and exercises
67
that right within the period of fifteen (15) days after such right accrues, the
written notice pursuant to this Section 6.9 will be deemed to have amended this
Agreement, including the appropriate Schedule, to have qualified the
representations and warranties contained in Article IV above; provided, however,
that no such change in Schedule 2.3(e) may be made without Buyer's consent.
Sellers shall be entitled to amend, substitute or otherwise modify any Sellers'
Agreement to the extent that such Sellers' Agreement expires by its terms prior
to the Closing Date or is terminable without liability to Buyer on or after the
Closing Date, or if the terms and conditions of such modified Sellers' Agreement
constituting the Assumed Liabilities are on terms and conditions not less
favorable to Buyer than the original Sellers' Agreement. Nothing contained
herein shall relieve Sellers or Buyer of any breach of representation, warranty
or covenant under this Agreement existing as of the date hereof or any
subsequent date as of which such representation, warranty or covenant shall have
been made.
6.10 Employees.
(a) At least ninety (90) days prior to the Closing Date, Buyer
shall provide Sellers with notice of its Union Employee staffing level
requirements (which Buyer may determine in its sole discretion), listed by
classification and operation, and shall offer employment to that number of Union
Employees necessary to satisfy such staffing level requirements. As used herein,
"Union Employees" means such employees of Sellers who are covered by the
Collective Bargaining Agreement as defined in Section 6.10(d) below, and who are
listed in, or whose employment responsibilities are listed in, Schedule
6.10(a)(i) as "Plant Employees" or as "Dedicated Support Staff" as associated
with the Plant.
(b) As used herein, "Non-Union Employees" means such salaried
employees of Sellers who are listed in, or whose employment responsibilities are
listed in, Schedule 6.10(b) as "Plant Employees" or "GPUN Parsippany Support
Staff". At least ninety (90) days prior to the Closing Date, Buyer shall provide
Sellers with notice of their staffing level requirements (which Buyer may
determine in its sole discretion), listed by classification and operation, for
those employees who are listed in, or whose employment responsibilities are
listed in, Schedule 6.10(b) as Plant Employees, and Buyer shall offer employment
to that number of such employees necessary to satisfy such staffing level
requirements. Buyer shall also have the opportunity to interview and make offers
of employment to such
68
of the employees listed in, or whose employment responsibilities are listed in,
Schedule 6.10(b) as GPUN Parsippany Support Staff, as Buyer determines in its
discretion. Each person who becomes employed by Buyer or any of its Affiliates
as a result of an offer of employment made pursuant to Section 6.10(a) or this
Section 6.10(b) shall be referred to herein as a "Transferred Union Employee" or
"Transferred Non-Union Employee", respectively.
(c) All offers of employment made pursuant to Sections 6.10(a)
or (b) shall be made in accordance with all applicable laws and regulations, and
in addition, for Union Employees, in accordance with seniority and all other
applicable provisions of the Collective Bargaining Agreement. Each of Sellers
agrees that it will not, during the period from January 1, 2000 to the Closing
Date, terminate the employment of any Union Employee, or any Non-Union Employee
who is listed in, or whose employment responsibilities are listed in, Schedule
6.10(b), for any reason except for cause, without the prior written consent of
Buyer.
(d) Schedule 6.10(d) sets forth the collective bargaining
agreement, the Agreement Resulting from the Sale of Oyster Creek Nuclear
Generating Station dated July 13, 1999, and amendments thereto, to which Sellers
are a party with the System Council and/or with IBEW Local 1289 in connection
with the Purchased Assets ("Collective Bargaining Agreement"). Transferred Union
Employees shall retain their seniority and receive full credit for service with
Sellers in connection with entitlement to vacation and all other benefits and
rights under the Collective Bargaining Agreement and under each compensation,
retirement or other employee benefit plan or program Buyer is required to
maintain for Transferred Union Employees pursuant to the Collective Bargaining
Agreement. For purposes of Buyer's pension plan, the service credit so given
shall be for purposes of eligibility and vesting, but shall not be for purposes
of level of benefits and benefit accrual except to the extent Buyer Benefit Plan
provides otherwise. With respect to Transferred Union Employees, effective as of
the Closing Date, Buyer shall assume the Collective Bargaining Agreement for the
duration of its term as it relates to Transferred Union Employees to be employed
at the Plant in positions covered by the Collective Bargaining Agreement and
shall thereafter comply with all applicable obligations under the Collective
Bargaining Agreement. Consistent with its obligations under the Collective
Bargaining Agreement and applicable laws, Buyer shall be required to establish
and maintain a pension plan and other
69
employee benefit programs for the Transferred Union Employees for the duration
of the term of the Collective Bargaining Agreement which are substantially
equivalent to Sellers' plans and programs in effect for the Transferred Union
Employees immediately prior to the Closing Date (the "Sellers' Plans"), and
which provide at least the same level of benefits or coverage as do Sellers'
Plans for the duration of the Collective Bargaining Agreement. Buyer further
agrees to recognize IBEW Local 1289 as the collective bargaining agent for the
Transferred Union Employees.
(e) In connection with the welfare benefit plans that Buyer or
its Affiliates will provide for the Transferred Non-Union Employees pursuant to
Sections 6.10(d) and 6.10(f) (the "Replacement Welfare Plans"), Buyer shall (i)
waive all limitations as to pre-existing condition exclusions and waiting
periods with respect to the Transferred Employees under the Replacement Welfare
Plans, other than, but only to the extent of, limitations or waiting periods
that were in effect with respect to such employees under the welfare plans
maintained by Sellers or their Affiliates and that have not been satisfied as of
the Closing Date, and (ii) provide each Transferred Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfying any
deductible or out-of-pocket requirements under the Replacement Welfare Plans (on
a pro-rata basis in the event of a difference in plan years).
(f) As of the Closing Date, Buyer shall adopt employee benefit
plans that will provide the Transferred Non-Union Employees with benefits or
coverage substantially similar to the benefits or coverage provided under
Sellers' plans and programs in effect for the Transferred Non-Union Employees
immediately prior to the Closing Date ("Buyer's Benefit Plans"). Under each of
the Buyer's Benefit Plans, the Transferred Non-Union Employees shall be given
credit for all of their service with GPUN and its Affiliates. The service credit
so given shall be for purposes of eligibility and vesting, but shall not be for
purposes of level of benefits and benefit accrual except to the extent that the
Buyer Benefit Plans otherwise provide.
(g) To the extent allowable by law, Buyer shall take any and
all necessary action to cause the trustee of any defined contribution plan of
Buyer or its Affiliates in which any Transferred Employee becomes a participant
to accept a direct "rollover" of all or a portion of said employee's "eligible
rollover distribution" within the meaning of section 402 of the
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Code from the GPU Companies Employee Savings Plan for Non-Bargaining Employees
or from the GPU Companies Employee Savings Plan for Employees represented by the
System Council or by IBEW Local 1289 if requested to do so by the Transferred
Employee.
(h) (1) Buyer shall provide the severance benefits described
in Section 1 of Schedule 6.10(h) to (x) each Transferred Employee whose
employment with Buyer is "Involuntarily Terminated" (as that term is defined
below) at any time within 24 months after the Closing Date, and (y) each
Transferred Non-Union Employee who has attained age 50 and completed at least 10
years of "Creditable Service" (as that term is defined below) prior to the
Closing Date and whose employment with Buyer is Involuntarily Terminated on or
at any time prior to December 31, 2004. Subject to the limitations and
conditions described below, Seller will reimburse Buyer for all of the costs it
incurs in providing such severance benefits.
(2) Sellers shall cause the "bridged" pension benefits and the
"bridged" and retiree welfare benefits described in Sections 2(c) and (d) of
Schedule 6.10(h) to be provided under the appropriate plans maintained by
Sellers and/or their Affiliates to each Transferred Non-Union Employee who (i)
has attained age 50 and completed at least 10 years of Creditable Service before
the Closing Date, and is Involuntarily Terminated by Buyer on or prior to
December 31, 2004 and before he or she has attained age 55, or (ii) is
Involuntarily Terminated by Buyer at any time within 24 months after the Closing
Date and before he or she has attained age 55, and has attained age 50 and
completed at least 10 years of Total Creditable Service (as defined below) as of
the date on which he or she is Involuntarily Terminated, and (iii) has executed
a release as described in Section 1(g) of Schedule 6.10(h).
(3) Sellers shall cause the severance and other benefits described in
Section 2(a) or 2(b) of Schedule 6.10(h), as applicable, to be provided to each
Union Employee and Non-Union Employee (i) who does not receive an offer of
employment from Buyer and (ii) whose employment with JCP&L or GPUN is
Involuntarily Terminated at any time prior to the end of the third calendar
month following the Closing Date.
(4) Sellers shall not be obligated to reimburse Buyer for any amount
pursuant to paragraph (1) above, to the extent that such amount, when added to
the sum of (i) all reimbursement payments previously made by Sellers to Buyer
under Section
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6.10(h), plus (ii) the aggregate estimated cost that Sellers have incurred or
may incur in the future in providing the benefits described in paragraphs (2)
and (3) above to the Union Employees and Non-Union Employees therein referred
to, as determined in accordance with paragraph (6) below, does not exceed $30
million.
(5) The following will not be included in determining the amount to be
applied against the $30 million limitation on Sellers' reimbursement obligation
provided for in paragraph (4) above: (i) any benefits provided by Buyer or by
GPUN to any Non-Union Employees who are listed in, or whose employment
responsibilities are listed in, Schedule 6.10(b) as "GPUN Parsippany Support
Staff"; (ii) any benefits provided by Buyer or Sellers to any Union Employee or
Non-Union Employee whose employment is Involuntarily Terminated at any time
after the second anniversary of the Closing Date; (iii) any "bridged" pension
benefits and any "bridged" and retiree welfare benefits provided by Sellers to
any Transferred Non-Union Employee at any time after the second anniversary of
the Closing Date; and (iv) any benefits provided by Sellers to any Union
Employee or Non-Union Employee whose employment with JCP&L or GPUN is
Involuntarily Terminated at any time prior to January 1, 2000.
(6) As of the date of any reimbursement request made by Buyer pursuant
to paragraph (9) below, the aggregate estimated cost that Sellers and their
Affiliates have incurred, or may incur in the future, in providing the benefits
described in paragraphs (2) and (3) above to the Union Employees and Non-Union
Employees described therein whose employment with Buyer or Sellers has been
Involuntarily Terminated on or prior to the date of such reimbursement request,
shall be determined as of the date of each such employee's termination of
employment, and shall be calculated by the actuarial factors regularly engaged
to provide actuarial services to the GPU Companies with respect to their
pension, health care and severance plans. Such cost shall be determined using
the same assumptions as to mortality, turnover, interest rate and other
actuarial assumption as used by such actuarial firm in determining the cost of
benefits under the GPU Companies' pension, health care and severance plans for
purposes of their most recently issued financial statements prior to the Closing
Date. In the case of the "bridged" pension benefits described in Section 2(c) of
Schedule 6.10(h), the estimated cost of providing such benefits shall be the
amount equal to the excess of (A) the actuarial present value of the pension
payable to the employee under the applicable Sellers' pension plan starting at
age 55, using the plan's early
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(7) retirement reduction factors to determine the employee's pension
amount, over (B) the actuarial present value of the pension that otherwise would
be so payable to the employee, using the plan's full actuarial reduction factors
to determine the employee's pension amount; and in each such case, the
employee's pension amount shall be determined by taking into account only the
employee's periods of service and pay with Sellers and their Affiliates. Sellers
shall furnish Buyer with copies of all cost estimates made by Seller's actuarial
firm pursuant to this paragraph (6)
(8) For purposes of this Section 6.10(h) and Schedule 6.10(h), an
employee shall be treated as being "Involuntarily Terminated" from Buyer, JCP&L,
or GPUN, if his or her employment with Buyer and all of its Affiliates, or with
JCP&L or GPUN and all of their Affiliates, is terminated by Buyer or any of its
Affiliates, or by JCP&L or GPUN or any of their Affiliates, for any reason other
than for cause or disability. A Union Employee or Non-Union Employee who
receives an offer of employment from Buyer prior to the Closing Date and who
fails to accept such offer and who is thereafter terminated by JCP&L or GPUN
shall not be treated as "Involuntarily Terminated".
(9) For purposes of this Section 6.10(h) and Schedule 6.10(h), (i) an
employee's years of "Creditable Service" shall be determined in accordance with
the definition of such term contained in the GPU Companies Employee Pension Plan
in the case of any Non-Union Employee, or contained in the GPU Companies Plan
for Retirement Annuities for Employees Represented by IBEW System Council U-3 in
the case of any Union Employee, and (ii) an employee's "Total Creditable
Service" shall mean the sum of his Creditable Service, plus all periods of his
or her employment with Buyer and its Affiliates.
(10) From time to time after the Closing Date (but no more frequently
than at 3-month intervals) Buyer may request reimbursement hereunder by
furnishing Sellers with a written statement setting forth the following
information:
(i) the name of each Transferred Employee whose employment
with Buyer has been Involuntarily Terminated,
(ii) the date of such employee's termination of employment
with Buyer,
(iii) the total amount of costs actually incurred by Buyer in
providing each of the benefits described in
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Sections 1(a) through (f) of Schedule 6.10(h) to such employee
since the date of his or her termination of employment, and
(iv) the portion of the costs so incurred remaining
unreimbursed as of the date of Buyer's reimbursement request.
The Buyer's reimbursement request with respect to any Transferred Employee shall
be accompanied by a copy of the release executed by such employee as required
under Section 1(g) of Schedule 6.10(h), if one has not previously been furnished
to Sellers. Within 30 days after receipt of a request for reimbursement from
Buyer, Sellers shall pay to Buyer the total amount of the unreimbursed costs
shown on the written statement furnished by Buyer in connection with such
request, subject to the limitation set forth in paragraph (4).
(10) Notwithstanding any other provision herein, Sellers' obligation to
make payments with respect to any cost reimbursements requested by Buyer
hereunder shall be subject to Sellers' receipt of such substantiation of the
costs incurred by Buyer as Sellers may reasonably request in writing.
(i) Sellers shall be responsible, with respect to the
Purchased Assets, for performing and discharging all requirements under the WARN
Act and under applicable state and local laws and regulations for the
notification of their employees of any "employment loss" within the meaning of
the WARN Act which occurs prior to the Closing Date.
(j) Sellers shall be responsible for extending COBRA
continuation coverage to any employees and former employees of JCP&L or GPUN, or
to any qualified beneficiaries of such employees and former employees, who
become or became entitled to COBRA continuation coverage before the Closing,
including those for whom the Closing occurs during their COBRA election period.
Buyer shall be responsible for providing COBRA continuation coverage to all
Transferred Employees and qualified beneficiaries of such employees who become
entitled to such COBRA continuation coverage on or after the Closing Date.
(k) (i) Sellers or their Affiliates shall pay to all
Transferred Employees all compensation, bonus, vacation and holiday
compensation, pension, profit sharing and other deferred compensation benefits,
workers' compensation, or other
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employment benefits to which they are entitled under the terms of the applicable
compensation or benefit programs at such times as are provided therein.
(ii) Under the sick leave program Buyer will maintain
for Transferred Union Employees pursuant to its obligations under Section
6.10(d), (A) each Transferred Union Employee who was hired by JCP&L before
December 31, 1994 shall be credited with the number of accumulated unused sick
leave days standing to the employee's credit under JCP&L's sick leave program
for Union Employees as of the Closing Date (the employee's "Carried-Over Sick
Days"), and (B) each such employee who has completed at least 15 "Years of
Service" as defined in Section 1(b) of Schedule 6.10(h) shall be entitled to
receive from Buyer, upon his or her termination of employment with Buyer and its
Affiliates for any reason other than for cause, a lump-sum payment in an amount
determined by multiplying the number of the employee's Carried-Over Sick Days
remaining unused at the date of such termination of his or her employment, by
75% of the daily rate of base pay in effect for the employee immediately prior
to such termination of his or her employment.
(iii) The Purchase Price shall be decreased by an
amount equal to the estimated cost of the payments Buyer is required to make
hereunder with respect to the Transferred Union Employees' Carried-Over Sick
Days. In the case of each such Transferred Union Employee who has not completed
at least 15 Years of Service as of the Closing Date, such estimated cost shall
be calculated by the actuarial firm regularly engaged to provide actuarial
services to the GPU Companies with respect to their pension, health care and
life insurance plans, and shall be determined as of the Closing Date using the
same assumptions as to interest rate and as to mortality, turnover, and other
actuarial factors as used by such firm in determining the cost of benefits under
the GPU Companies' plans for purposes of their most recently issued financial
statements prior to the Closing Date; provided, however, that base pay rates in
effect for the Transferred Union Employees immediately prior to the Closing Date
shall be used to value the Buyer's payment obligation hereunder. In the case of
each such Transferred Union Employee who has completed at least 15 Years of
Service as of the Closing Date, such estimated cost shall be the amount
determined by multiplying (A) the number of the employee's Carried-Over Sick
Days by (B) 75% of the daily rate of base pay in effect for the employee
immediately prior to the Closing Date.
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(l) Individuals who are otherwise "Union Employees" as defined
in Section 6.10(a) or "Non-Union Employees" as defined in Section 6.10(b) but
who on any date are not actively at work due to a leave of absence covered by
the Family and Medical Leave Act ("FMLA"), or due to any other authorized leave
of absence, shall nevertheless be treated as "Union Employees" or as "Non-Union
Employees", as the case may be, on such date if they are able (i) to return to
work within the protected period under the FMLA or such other leave (which in
any event shall not extend more than twelve (12) weeks after the Closing Date),
whichever is applicable, and (ii) to perform the essential functions of their
jobs, with or without a reasonable accommodation.
(m) To the extent permitted by applicable law, all Transferred
Employee Records shall be delivered promptly after the Closing Date to Buyer.
(n) Sellers shall provide documentation, affidavits and any
other information reasonably requested in support of Buyer's application for
"successor employer" status for purposes of the New Jersey Unemployment, New
Jersey Disability Insurance and FICA and FUTA taxes.
6.11 Risk of Loss.
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the property included in the Purchased Assets shall be borne
by Sellers; provided, however, that except for services provided by the
Reciprocal Services Agreement, any such loss or damage directly caused by the
negligence or willful misconduct of Buyer or any Buyer Representative shall be
the responsibility of Buyer.
(b) If, before the Closing Date, all or any portion of the
Purchased Assets is (i) taken by eminent domain or is the subject of a pending
or (to the Knowledge of Sellers) contemplated taking which has not been
consummated, or (ii) damaged or destroyed by fire or other casualty, Sellers
shall notify Buyer promptly in writing of such fact, and (x) in the case of a
condemnation, Sellers shall assign or pay, as the case may be, any proceeds
thereof to Buyer at the Closing and (y) in the case of a casualty, Sellers shall
either restore the damage or assign the insurance proceeds therefor (and pay the
amount of any deductible and/or self-insured amount in respect of such casualty)
to Buyer at the Closing. Notwithstanding the above, if such casualty or loss
results in a Material Adverse Effect, Buyer and Sellers shall negotiate to
settle the loss resulting
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from such taking (and such negotiation shall include, without limitation, the
negotiation of a fair and equitable adjustment to the Purchase Price). If no
such settlement is reached within sixty (60) days after Sellers have notified
Buyer of such casualty or loss, then Buyer or Sellers may terminate this
Agreement pursuant to Section 9.1(h). In the event of damage or destruction
which Sellers elect to restore, Sellers will have the right to postpone the
Closing for up to ninety (90) days. Buyer will have the right to inspect and
observe, or have its Representatives inspect or observe, all repairs
necessitated by any such damage or destruction.
6.12 Decommissioning Trust Funds.
[Intentionally Omitted]
6.13 Spent Fuel Fees. Between the date hereof and the Closing Date, and
at all times thereafter, Sellers will pay all Spent Fuel Fees and any other fees
associated with electricity generated at the Plant sold prior to the Closing
Date, and Buyer shall have no liability or responsibility therefor. Buyer shall
pay and discharge all fees and expenses associated with the nuclear fuel
consumed in the Plant and associated with electricity generated and sold from
and after the Closing Date, and Sellers shall have no liability or
responsibility therefor. Buyer shall assume title to, and responsibility for the
storage and disposal of, the spent nuclear fuel in the Plant as of the Closing
Date. Sellers shall assign to Buyer the DOE Standard Spent Fuel Disposal
Contract and shall provide the required notice to DOE within ninety (90) days of
transfer of title to spent fuel.
6.14 Department of Energy Decontamination and Decommissioning Fees.
Sellers will continue to pay all Department of Energy Decontamination and
Decommissioning Fees relating to nuclear fuel purchased and consumed at the
Plant prior to the Closing Date, including but not limited to all annual Special
Assessment invoices to be issued after the Closing Date by the Department of
Energy, as contemplated by its regulations at 10 CFR Part 766 implementing
Sections 1801, 1802, and 1803 of the Atomic Energy Act.
6.15 Additional Covenants of Buyer. Notwithstanding any other provision
hereof, Buyer covenants and agrees that, after the Closing Date, Buyer will not
make any modifications to the facilities financed by the Pollution Control
Revenue Bonds (the "Pollution Control Facilities") or take any action which, in
and
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of itself, results in a loss of the exclusion of interest on the Pollution
Control Revenue Bonds issued on behalf of JCP&L in connection with the Purchased
Assets from gross income for federal income purposes under section 103 of the
Code. Actions with respect to the Pollution Control Facilities shall not
constitute a breach by the Buyer of this Section 6.15 in the following
circumstances: (i) Buyer ceases to use or decommissions any of the Purchased
Assets or subsequently repowers such Purchased Assets that are no longer used or
decommissioned (but does not hold such Purchased Assets for sale); (ii) Buyer
acts with respect to the Purchased Assets in order to comply with requirements
under applicable federal, state or local environmental or other laws or
regulations; (iii) Buyer transfers an ownership interest in the Purchased
Assets; or (iv) Buyer acts in a manner the Sellers (i.e. a reasonable private
provider of electricity of similar stature as JCP&L) would have acted during the
term of the Pollution Control Revenue Bonds (including, but not limited to,
applying new technology). In the event Buyer acts or anticipates acting in a
manner that will cause a loss of the exclusion of interest on the Pollution
Control Revenue Bonds from gross income for federal income tax purposes, at the
request of Buyer, Sellers shall take any remedial actions permitted under the
federal income tax law that would prevent a loss of such inclusion of interest
from gross income on the Pollution Control Revenue Bonds. Buyer further
covenants and agrees that, in the event that Buyer transfers any of the
Purchased Assets or an ownership interest therein, Buyer shall obtain from its
transferee a covenant and agreement that is analogous to Buyer's covenant and
agreement pursuant to the immediately preceding sentence, as well as a covenant
and agreement that is analogous to that of this sentence. In addition, Buyer
shall not, without 60 days advance written notice to Sellers (to the extent
practicable under the circumstances), take any action which would result in (x)
a change in the use of the assets financed with the Pollution Revenue Control
Bonds from the use in which such assets were originally intended, or (y) a sale
of such assets separate from the generating assets to which they relate provided
that no notice is required of the events set forth in clauses (i),(ii), or (iii)
above. This covenant shall survive the Closing and shall continue in effect so
long as the Pollution Control Revenue Bonds remain outstanding.
6.16 Cooperation Relating to Insurance and ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Act.
Sellers shall cooperate with Buyer's efforts to ensure continuity of insurance
coverage and to obtain or, to the extent practicable, effect (but subject to the
provisions of Section
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2.2(j)) the transfer of insurance, including, insurance required under the
▇▇▇▇▇-▇▇▇▇▇▇▇▇ Act with respect to the Purchased Assets. In addition, Sellers
agree to use reasonable efforts to assist Buyer in making any claims against
pre-Closing insurance policies of Sellers that may provide coverage related to
Assumed Liabilities. Buyer agrees that it will indemnify Sellers for their
reasonable out of pocket expenses incurred in providing such assistance and
cooperation.
6.17 Refueling.
(a) Schedule 6.17 sets forth the plan, scope, milestones and
budget (the "Outage Plan") for the Plant's 18R Refueling Outage (the "18R
Outage"). The Parties agree that any proposed change in the Outage Plan may only
be made in accordance with the procedures set forth in the Outage Plan.
Notwithstanding the foregoing, however, except as otherwise expressly provided
in the Outage Plan, no such change shall be made in the Outage Plan if such
change would be a "Material Change" as defined in the Outage Plan.
(b) Irrespective of when the Closing Date occurs, Sellers
shall be solely responsible for the funding of the Outage Costs as incurred from
time to time and Buyer hereby agrees to reimburse Sellers for payment of the
"Relevant Percentage" of any Outage Costs (whether incurred prior to or after
the Closing Date); provided, however, that Sellers shall have no liability or
obligation to fund, and Buyer have no liability or obligation to reimburse
Sellers for, any Outage Costs incurred in excess of the amount of the Outage
Cost Cap. Buyer and Sellers agree that the Party which is the owner of the Plant
at the start of the 18R Outage shall be solely responsible for the payment of
any Outage Costs incurred in excess of the Outage Cost Cap, and that the other
Party shall have no responsibility or obligation therefor. For purposes hereof,
the "Relevant Percentage" shall mean (i) if the Closing occurs prior to the
commencement of the 18R Outage, one hundred percent (100%), and (ii) if the
Closing occurs after completion of the 18R Outage, sixty percent (60%);
provided, however, that if the Closing occurs after the completion of the 18R
Outage, then the Total CV required for the Decommissioning Trust Funds and the
aggregate Cash Value required for the assets of the Seller Nonqualified
Decommissioning Trust Fund as of the Closing Date pursuant to Section 6.12
hereof shall be decreased by the product of (a) the Outage Costs and (b) forty
percent (40%).
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(c) All Outage Costs shall be budgeted, tracked and reported
in accordance with procedures established by the Parties and set forth in the
Outage Plan.
(d) Buyer hereby agrees to reimburse Sellers for all Outage
Costs funded by Sellers (but in no event in excess of Outage Cost Cap) in nine
equal annual installments (but without interest) beginning on the first
anniversary date of the Closing Date.
(e) The Reciprocal Services Agreement will provide, among
other things, for Buyer's direct participation in the planning, organization,
support and coordination of the 18R Outage and for the costs thereof to be
included in the Outage Costs to be reimbursed by Buyer, but only if the Closing
occurs.
6.18 ISRA Compliance.
(a) As promptly as practicable following the date hereof, the Parties
shall jointly prepare and submit to the NJDEP an application for a Letter of
Non-Applicability ("LNA") or other appropriate exemption or limitation on the
scope of ISRA review by the NJDEP with respect to the transactions contemplated
hereby. The Parties shall cooperate and consult with each other in the
preparation and submission of such application and shall jointly participate in
any meetings with NJDEP representatives.
(b) Pending action by the NJDEP on any such LNA or similar exemption
request, Seller may prepare and file with the NJDEP a General Information Notice
(as such term is defined in ISRA). In the event the NJDEP denies such
application or issues a LNA or other exemption from ISRA not reasonably
satisfactory to each of the Parties, then the Parties shall as promptly as
practicable prepare and file with the NJDEP all such other information, forms
and other documents and filings as may be necessary or appropriate to comply
with ISRA and the requests of the NJDEP. During the period prior to the Closing,
the Parties shall cooperate and consult with each other regarding requests made
by the NJDEP and compliance with ISRA, including with respect to the negotiation
of the terms and conditions of any required Remediation Agreement with the
NJDEP.
(c) The Parties acknowledge and agree that if the NJDEP does not issue
a LNA or other ISRA exemption which is reasonably acceptable to each of the
Parties, it will be necessary to enter
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into one or more Remediation Agreements with the NJDEP in order to consummate
the transactions contemplated hereby and comply with ISRA. Accordingly, each
Party hereby agrees to negotiate in good faith and use Commercially Reasonable
Efforts to enter into a Remediation Agreement with the NJDEP in order to comply
with ISRA, including the provision of such financial assurance in support of
such Party's obligations under any such Remediation Agreement; provided,
however, that it is understood and agreed that neither Party shall be required
to enter into any such Remediation Agreement unless the terms and conditions
thereof, together with any related Site Investigation Report (as defined under
ISRA and the regulations thereunder) and Remedial Action Work Plan (as defined
under ISRA and the regulations thereunder), in each case as finally approved by
the NJDEP (collectively, the "ISRA Remediation Program") are reasonably
satisfactory to such Party.
(d) The Parties hereby acknowledge and agree that their respective
obligations and liabilities for Remediation required to comply with ISRA and the
requirements of the NJDEP thereunder pursuant to any Remediation Agreements
shall be as follows:
(1) Ssellers shall be liable for the Remediation of any
Environmental Condition arising out of the matters disclosed in the
Environmental Reports and for the matters set forth on Schedule 4.7, all of
which are Excluded Liabilities hereunder, and with respect to their
indemnification liability to Buyer as set forth in Article VIII hereof (subject,
however, to the limitation on such indemnification as provided in Section 8.1(g)
hereof), and Sellers shall be responsible for and shall indemnify Buyer pursuant
to said Article VIII from and against any loss, claim, action, cost, damage and
expense or liability resulting therefrom including any failure by Sellers to
comply with their obligations under any Remediation Agreement or ISRA
Remediation Program.
(2) Buyer shall be liable for the Remediation of the other
Environmental Condition, all of which are Assumed Liabilities, and Buyer shall
be responsible for and shall indemnify Sellers pursuant to Article VIII hereof,
from and against any loss, claim, action, cost, damage and expense or liability
resulting therefrom including any failure by Buyer to comply with its
obligations under any Remediation Agreement or ISRA Remediation Program.
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(a) If the NJDEP determines that ISRA is applicable to the transactions
contemplated by this Agreement, the Parties shall as promptly as practicable
conduct, and shall equally share the cost and expense of, a Preliminary
Assessment and submit a Preliminary Assessment Report to the NJDEP.
(b) Each Party shall bear its own costs and expenses incurred in
connection with the actions (including without limitation the cost of Buyer's
Environmental Inspection) they are required to take to comply with ISRA prior to
Closing; provided, however, that the Parties shall equally share all costs and
expenses of attorneys, environmental consultants, engineers and other
consultants they may jointly retain to comply with ISRA. Any such third party
consultants, counsel or engineers shall only be retained upon mutual agreement
of the Parties.
(c) In the event Sellers enter into a Remediation Agreement with the
NJDEP, Buyer agrees to provide Sellers and their Representatives with such
access to the Site (but consistent with Buyer's safety and security requirements
and in a manner that does not unreasonably interfere with Plant operations), to
related records and documents and further agrees to cooperate with Sellers and
their Representatives from time to time following the Closing as may be
necessary or appropriate in order for Sellers to fully and timely discharge
their obligations to the NJDEP under the Remediation Agreement; provided,
however, that Sellers shall reimburse Buyer for any significant expenses or
costs which Buyer may be obligated to incur in connection with the foregoing.
(d) Buyer and Sellers hereby agree that no environmental condition at
the Site need be remediated to residential or unrestricted remediation standards
(or other more stringent standard), but only to non-residential or restricted
standards, or such other standards as NJDEP or other Governmental Authority
approves (including the use of institutional and/or engineering controls, deed
notices, natural remediation and biodegradation and classification exception
areas), provided in all events that the use of any such standard, and the
receipt of any no further action letter conditioned on such standard, does not
actually materially interfere with Buyer's ability to operate on the Site as a
nuclear power generation station.
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6.19 Future Interconnection Access. Buyer hereby acknowledges and
confirms that JCP&L has advised Buyer that under a certain Purchase and Sale
Agreement dated October 29, 1998 between JCP&L and Sithe, JCP&L has agreed to
use commercially reasonable efforts as therein defined (consistent with the PJM
Regional Transmission Expansion Protocol) to allow new generation capacity which
Sithe may install at the Forked River Combustion Turbine site JCP&L is selling
to Sithe to replace (by assignment or otherwise) Plant generation capacity (for
PJM interconnection purposes) which JCP&L may decommission from time to time in
order to minimize Sithe's interconnection costs for such new Forked River
generation capacity. Buyer hereby undertakes and agrees that at such time as
Buyer determines to decommission all or a portion of the Plant's capacity, at
JCP&L's written request Buyer will enter into good faith negotiations with JCP&L
if and to the extent it may be necessary or appropriate in order to enable JCP&L
to discharge any such continuing obligation it may have to Sithe. It is
understood and agreed, however, that the foregoing shall not impose any
obligation or commitment on Buyer to sell, transfer, assign or otherwise dispose
of any such interconnection rights to JCP&L or to any third party.
6.20 SBO Service. JCP&L agrees that from and after the Closing Date it
will provide or cause to be provided to Buyer SBO Service for the Plant as
currently provided by the Forked River combustion turbines located on the
adjacent Forked River site as and to the extent necessary to satisfy all
applicable NRC requirements for the Plant and on such commercially reasonable
terms and conditions as the Parties shall mutually agree.
6.21 Easement Agreement JCP&L agree that it shall not consummate, or
permit the consummation of, the sale, transfer or conveyance of the real
property constituting the Forked River site adjacent to the Plant unless and
until (i) the Easement Agreement is properly recorded in the land records of any
relevant jurisdiction, and (ii) such Easement Agreement is in a form sufficient
to operate the Plant substantially as currently operated and otherwise with
terms and conditions reasonably satisfactory to Buyer, including, among others,
the following:
(a) a term continuing through Decommissioning;
(b) Buyer shall enjoy the easements and access rights granted
pursuant thereto at no additional cost other than for
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its portion of shared maintenance expenses related to its use of access roads
and similar facilities that would customarily be shared;
Buyer's authority to control activities within the "exclusion area"
relating to the Plant, including the exclusion of personnel and property, to the
extent necessary to comply with applicable NRC requirements; and
Such other terms as are consistent with Good Utility Practice.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer. The obligation of Buyer to
effect the purchase of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or Governmental Authority which prevents
the consummation of the sale of the Purchased Assets contemplated herein shall
have been issued and remain in effect (each Party agreeing to use its reasonable
best efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted by any state or federal
government or Governmental Authority which prohibits the consummation of the
sale of the Purchased Assets;
(c) Buyer shall have received all of Buyer's Required
Regulatory Approvals, and such approvals shall be in form and substance
reasonably satisfactory (including no materially adverse conditions) to Buyer
and either (i) final and not subject to further rights of review or appeal or
(ii) if not final and non-appealable, shall not be subject to any pending or
overtly threatened appeal or request for review or reconsideration which, if
adversely determined, would be reasonably expected to have (x) a Material
Adverse Effect or (y) a material adverse effect on the Buyer or its members;
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(d) Sellers shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Sellers on or prior to the Closing
Date;
(e) The representations and warranties of Sellers set forth in
this Agreement that are qualified by materiality shall be true and correct as of
the Closing Date and all other representations and warranties shall be true and
correct in all material respects as of the Closing Date, in each case as though
made at and as of the Closing Date unless otherwise specified herein to the
contrary;
(f) Buyer shall have received certificates from an authorized
officer of Sellers, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Section 7.1(d) and (e) have
been satisfied by Sellers;
(g) Buyer shall have received an opinion from Sellers' counsel
reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially to
the effect that:
(i) Each of Sellers is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation and has the corporate power and authority to own, lease
and operate its material assets and properties and to carry on its
business as is now conducted, and to execute and deliver the Agreement
and each Ancillary Agreement and to consummate the transactions
contemplated thereby; and the execution and delivery of the Agreement
by Sellers and the consummation of the sale of the Purchased Assets and
the other transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action required on the part of
Sellers;
(ii) The Agreement and each Ancillary Agreement have been duly
and validly executed and delivered by Sellers and constitute legal,
valid and binding agreements of Sellers enforceable in accordance with
their terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and general principles of
equity (regardless of whether
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enforcement is considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the Agreement
and each Ancillary Agreement by Sellers do not (A) conflict with the
Certificate of Incorporation or Bylaws of Sellers or (B) to the
knowledge of such counsel, constitute a violation of or default under
those agreements or instruments set forth on a Schedule attached to the
opinion and which have been identified to such counsel as all the
agreements and instruments which are material to the business or
financial condition of Sellers;
(iv) The ▇▇▇▇ of Sale, the deed, the Assignment and
Assumption Agreement and other transfer instruments described in
Section 3.6 have been duly executed and delivered and are in proper
form to transfer to Buyer such title as was held by Sellers to the
Purchased Assets; and
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for the execution and
delivery of this Agreement by Sellers, or the consummation by Sellers
of the transactions contemplated hereby, other than (i) such consents,
approvals, filings or notices set forth in Schedule 4.3(b) each of
which have been obtained or made or which, if not obtained or made,
will not prevent Sellers from performing their material obligations
hereunder and (ii) such consents, approvals, filings or notices which
become applicable to Sellers or the Purchased Assets as a result of the
specific regulatory status 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.
In rendering the foregoing opinion, Sellers' counsel may rely on
opinions of counsel as to local laws reasonably acceptable to Buyer.
(h) Sellers shall have delivered, or caused to be delivered,
to Buyer at the Closing, Sellers' closing deliveries described in Section 3.6;
(i) Since the date of this Agreement, no Material Adverse
Effect shall have occurred and be continuing;
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(j) Buyer shall have received (at Buyer's cost) from a title
insurance company and surveyor reasonably acceptable to Buyer an ALTA owner's
title policy, and ALTA survey together with all endorsements reasonably
requested by Buyer as are available, insuring good and marketable title to all
of the Real Property included in the Purchased Assets, subject only to Permitted
Encumbrances. Sellers shall provide Buyer with a copy of a preliminary title
report and survey for the Real Property as soon as available;
(k) Buyer shall have received all Permits and Environmental
Permits, to the extent necessary, to own and operate the Plant in accordance
with current operating practices, except for those Permits and Environmental
Permits, the absence of which would not in the aggregate have a Material Adverse
Effect;
(l) Sellers' Required Regulatory Approvals shall contain
no conditions or terms which would result in a Material Adverse Effect;
(m) [Intentionally omitted]
(n) The Total CV of the Decommissioning Trust Funds shall
be $430 million, adjusted pursuant to Section 6.12(b) and 6.17(b) hereof;
(o) Sellers shall have completed in all material respects and
in accordance with Good Utility Practices the work required to be accomplished
as of the milestone dates set forth in the Outage Plan occurring prior to the
Closing Date;
(p) Sellers shall have completed in accordance with Good
Utility Practices the work required to be accomplished as of the milestone dates
occurring prior to the Closing the operational recovery work set forth on
Schedule 7.1(p) (the "Operational Recovery Work");
(q) All low-level radioactive waste, as defined in NRC
regulations, and mixed radioactive waste that has been generated in the
operations of the Plant and has been removed from service more than ninety (90)
days prior to the Closing Date shall have been properly inventoried and shipped
off-Site by Sellers for permanent disposal in accordance with all applicable
legal requirements;
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(r) Buyer shall have received regulatory approval of the
Post-Closing Decommissioning Trust Agreement reasonably satisfactory to Buyer;
(s) The lien of the Mortgage Indenture on the Purchased
Assets shall have been released;
(t) JCP&L and Sithe shall have entered into the Easement
Agreement in form and substance satisfactory to Buyer and such agreement shall
be in full force and effect;
(u) JCP&L shall have entered into the EOF Lease and the
Remote Assembly Area Access Agreement each in a form reasonably satisfactory to
Buyer and such agreements shall be in full force and effect;
(v) JCP&L shall have entered into an agreement in form and
substance reasonably satisfactory to Buyer to provide SBO Service to the Plant
and such agreement shall be in full force and effect;
(w) Sellers shall have obtained all necessary Governmental
Approvals to subdivide, convey and operate the Real Property separately from the
parcel pertaining to the Forked River site and such approvals shall be final and
non-appealable; and
(x) In the event the NJDEP determines that ISRA applies to
the transactions contemplated hereby, (1) Buyer and Sellers shall have entered
into one or more Remediation Agreements with the NJDEP and (2) there shall be an
ISRA Remediation Program, in each case in form and substance reasonably
satisfactory to Buyer on or before the ISRA Termination Date.
7.2 Conditions to Obligations of Sellers. The obligation of Sellers to
effect the sale of the Purchased Assets and the other transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to the Closing
Date (or the waiver by Sellers) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated;
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(b) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the sale
of the Purchased Assets contemplated herein shall have been issued and remain in
effect (each Party agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted by any state or federal government or Governmental Authority
in the United States which prohibits the consummation of the sale of the
Purchased Assets;
(c) Sellers shall have received all of Sellers' Required
Regulatory Approvals applicable to them, in form and substance reasonably
satisfactory (including no materially adverse conditions) to Sellers and either
(i) final and not subject to further rights of review or appeal, or (ii) if not
final and non-appealable, shall not be subject to any pending or overtly
threatened appeal or request for review or reconsideration which, if adversely
determined, would be reasonably expected to have a material adverse effect on
Sellers;
(d) All consents and approvals for the consummation of the
sale of the Purchased Assets contemplated hereby required under the terms of any
note, bond, mortgage, indenture, material agreement or other instrument or
obligation to which Sellers are party or by which Sellers, or any of the
Purchased Assets, may be bound, shall have been obtained, other than those which
if not obtained, would not, individually and in the aggregate, create a Material
Adverse Effect;
(e) Buyer shall have performed and complied with in all
material respects the covenants and agreements contained in this Agreement which
are required to be performed and complied with by Buyer on or prior to the
Closing Date;
(f) The representations and warranties of Buyer that are
qualified by materiality shall be true and correct as of the Closing Date and
all other representations and warranties shall be true and correct in all
material respects as of the Closing Date, in each case as though made at and as
of the Closing Date unless otherwise specified herein to the contrary;
(g) Sellers shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Sections 7.2(e) and (f) have
been satisfied by Buyer;
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(h) Effective upon Closing, Buyer shall have assumed, as set
forth in Section 6.10, all of the applicable obligations under the Collective
Bargaining Agreement as they relate to Transferred Union Employees;
(i) Sellers shall have received an opinion from Buyer's
counsel reasonably acceptable to Sellers, dated the Closing Date and
satisfactory in form and substance to Sellers and their counsel, substantially
to the effect that:
(i) Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
state of its organization and is qualified to do business in the State
of New Jersey and has the full organizational power and authority to
own, lease and operate its material assets and properties and to carry
on its business as is now conducted, and to execute and deliver the
Agreement and the Ancillary Agreements and to consummate the
transactions contemplated thereby; and the execution and delivery of
the Agreement and the Ancillary Agreements by Buyer and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action required on the part of
Buyer;
(ii) The Agreement and the Ancillary Agreements have
been duly and validly executed and delivered by Buyer, and constitute
legal, valid and binding agreements of Buyer, enforceable against
Buyer, in accordance with their terms, except that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting or
relating to enforcement of creditor's rights generally and general
principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the
Agreement and the Ancillary Agreements by Buyer do not (A) conflict
with the Certificate of Formation or Operating Agreement (or other
organizational documents), as currently in effect, of Buyer or (B) to
the knowledge of such counsel, constitute a violation of or default
under those agreements or instruments set forth on a Schedule attached
to the opinion and which have been identified to such counsel as all
the agreements and instruments which
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are material to the business or financial condition of Buyer;
(iv) The Assignment and Assumption Agreement and
other transfer instruments described in Section 3.7 are in proper form
for Buyer to assume the Assumed Liabilities; and
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for Buyer's execution and
delivery of the Agreement and the Ancillary Agreements, or the
consummation by Buyer of the transactions contemplated hereby and
thereby, other than (a) Buyer's Required Regulatory Approvals each of
which has been obtained or made and (b) such consents, approvals,
filings or notices, which, if not obtained or made, will not prevent
Buyer, PECO Energy Company or British Energy Company, plc from
performing their respective obligations under the Agreement, the
Ancillary Agreements or the Parent Guaranties, as the case may be.
(j) [Intentionally omitted]
(k) Buyer shall have delivered, or caused to be
delivered, to Sellers at the Closing, Buyer's closing deliveries described in
Section 3.7; and
(l) In the event the NJDEP determines that ISRA applies to the
transactions contemplated hereby, (1) Buyer and Sellers shall have entered into
one or more Remediation Agreements with the NJDEP and (2) there shall be an ISRA
Remediation Program, in each case in form and substance reasonably satisfactory
to Sellers on or before the ISRA Termination Date.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Buyer shall indemnify, defend and hold harmless Sellers,
their officers, directors, employees, shareholders, Affiliates and agents (each,
a "Sellers' Indemnitee") from and against any and all claims, demands, suits,
losses, liabilities, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) (each, an "Indemnifiable Loss"), asserted against or
suffered by any Sellers' Indemnitee relating to, resulting from or arising out
of (i) any breach by Buyer of any representation, warranty, covenant or
agreement of Buyer contained in this Agreement, (ii) the Assumed Liabilities,
(iii) any loss or damages directly resulting from or arising out of any
negligent act or omission or willful misconduct of Buyer or Buyer's
Representatives in connection with Buyer's Inspections, or (iv) any Third Party
Claims against Sellers' Indemnitee arising out of or in connection with Buyer's
ownership or operation of the Plant and other Purchased Assets on or after the
Closing Date (other than Third Party Claims which arise out of acts by Buyer
permitted by Section 6.12 hereof).
(b) Sellers shall jointly and severally indemnify, defend and
hold harmless Buyer, its officers, directors, employees, shareholders,
Affiliates and agents (each, a "Buyer Indemnitee") from and against any and all
Indemnifiable Losses asserted against or suffered by any Buyer Indemnitee
relating to, resulting from or arising out of (i) any breach by Sellers of any
representation, warranty, covenant or agreement of Sellers contained in this
Agreement, (ii) the Excluded Liabilities, (iii) noncompliance by Sellers with
any bulk sales or transfer laws as provided in Section 10.11, or (iv) any Third
Party Claims against a Buyer Indemnitee arising out of or in connection with
Sellers' ownership or operation of the Purchased Assets prior to the Closing
Date or the Excluded Assets on or after the Closing Date.
(c) Notwithstanding anything to the contrary contained herein:
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(i) Any Person entitled to receive indemnification
under this Agreement (an "Indemnitee") shall use Commercially
Reasonable Efforts to mitigate all losses, damages and the like
relating to a claim under these indemnification provisions, including
availing itself of any defenses, limitations, rights of contribution,
claims against third Persons and other rights at law or equity. The
Indemnitee's Commercially Reasonable Efforts shall include the
reasonable expenditure of money to mitigate or otherwise reduce or
eliminate any loss or expenses for which indemnification would
otherwise be due, and the Indemnitor shall reimburse the Indemnitee for
the Indemnitee's reasonable expenditures in undertaking the mitigation
(together with interest thereon from the date of payment thereof to the
date of repayment at the "prime rate" as published in The Wall Street
Journal); and
(ii) Any Indemnifiable Loss shall be net of (A) the
dollar amount of any insurance or other proceeds actually received by
the Indemnitee or any of its Affiliates with respect to the
Indemnifiable Loss, and (B) income tax benefits to the Indemnitee , to
the extent realized by the Indemnitee, but such net amount shall be
increased to give effect to the Income Taxes attributable to the
receipt of any indemnification payments hereunder. Any Party seeking
indemnity hereunder shall use Commercially Reasonable Efforts to seek
coverage (including both costs of defense and indemnity) under
applicable insurance policies with respect to any such Indemnifiable
Loss.
(d) The expiration or termination of any covenant or agreement
shall not affect the Parties' obligations under this Section 8.1 if the
Indemnitee provided the Person required to provide indemnification under this
Agreement (the "Indemnifying Party") with proper notice of the claim or event
for which indemnification is sought prior to such expiration, termination or
extinguishment.
(e) Except to the extent otherwise provided in Article IX, the
rights and remedies of Sellers and Buyer under this Article VIII are exclusive
and in lieu of any and all other rights and remedies which Sellers and Buyer may
have under this Agreement or otherwise for monetary relief, with respect to (i)
any breach of or failure to perform any covenant, agreement, or representation
or warranty set forth in this Agreement, after the occurrence of the Closing, or
(ii) the Assumed Liabilities
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or the Excluded Liabilities, as the case may be. The indemnification obligations
of the Parties set forth in this Article VIII apply only to matters arising out
of this Agreement, excluding the Ancillary Agreements. Any Indemnifiable Loss
arising under or pursuant to an Ancillary Agreement shall be governed by the
indemnification obligations, if any, contained in the Ancillary Agreement under
which the Indemnifiable Loss arises.
(f) Notwithstanding anything to the contrary herein, no Party
(including an Indemnitee) shall be entitled to recover from any other Party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments losses, costs, or expenses under this Agreement any amount in excess of
the actual compensatory damages, court costs and reasonable attorney's and other
advisor fees suffered by such Party. Buyer and Sellers waive any right to
recover punitive, incidental, special, exemplary and consequential damages
arising in connection with or with respect to this Agreement. The provisions of
this Section 8.1(f) shall not apply to indemnification for a Third Party Claim.
(g) Notwithstanding anything to the contrary herein, (i)
except as provided in (ii) below, each Party's liability and obligation to the
other Party for an Indemnifiable Loss relating to, resulting from or arising out
of a breach of representation or warranty shall be [intentionally omitted] and
must be asserted by the other Party on or before the [intentionally omitted] of
the Closing Date, and (ii) Sellers' liability and obligation to Buyer for an
Indemnifiable Loss relating to, resulting from or arising out of a breach of
representation or warranty with respect to [intentionally omitted] shall not be
limited in amount but must be asserted by Buyer on or before the termination of
the related survival period set forth in Section 10.4. Nothing in this
subparagraph (g) is intended to modify or limit Sellers' liability or obligation
hereunder for any other Indemnifiable Loss or to constitute an assumption by
Buyer of any Excluded Liability.
8.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or brought
by any Person who is not a party to this Agreement or any Affiliate of a Party
to this Agreement (a "Third Party Claim") with respect to which indemnification
is to be sought from an Indemnifying Party, the Indemnitee shall give
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such Indemnifying Party reasonably prompt written notice thereof, but in any
event such notice shall not be given later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnitee, to
elect to assume the defense of any Third Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel, provided that the
counsel for the Indemnifying Party who shall conduct the defense of such Third
Party Claim shall be reasonably satisfactory to the Indemnitee. The Indemnitee
shall cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnitee may compromise or settle such Third Party Claim over the
objection of the Indemnifying Party, which settlement or compromise shall
conclusively establish the Indemnifying Party's liability pursuant to this
Agreement.
(b) (i) If, within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof. (ii) Without the prior written
consent of the Indemnitee, the Indemnifying Party shall not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying
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Party shall give written notice to the Indemnitee to that effect. If the
Indemnitee fails to consent to such firm offer within ten (10) calendar days
after its receipt of such notice, the Indemnifying Party shall be relieved of
its obligations to defend such Third Party Claim and the Indemnitee may contest
or defend such Third Party Claim. In such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will be the amount of such
settlement offer plus reasonable costs and expenses paid or incurred by
Indemnitee up to the date of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not be
given later than ten (10) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of thirty (30)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such thirty (30) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such claim, the Indemnitee will be free to seek
enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by, from or
against any other entity, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith (together with interest thereon
from the date of payment thereof at the publicly announced prime rate then in
effect of Chase Manhattan Bank) shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(e) A failure to give timely notice as provided in this
Section 8.2 shall not affect the rights or obligations of any Party hereunder
except if, and only to the extent that, as a result of such failure, the Party
which was entitled to receive such notice was actually prejudiced as a result of
such failure.
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ARTICLE IX
TERMINATION
9.1 Termination.(a) This Agreement may be terminated at any time prior
to the Closing Date by mutual written consent of Sellers and Buyer.
(b) This Agreement may be terminated by Sellers or Buyer if
(i) any Federal or state court of competent jurisdiction shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have become
final and nonappeallable or (ii) any statute, rule, order or regulation shall
have been enacted or issued by any Governmental Authority which, directly or
indirectly, prohibits the consummation of the Closing; or (iii) the Closing
contemplated hereby shall have not occurred on or before the day which is
eighteen (18) months from the date of this Agreement (the "Termination Date");
provided that the right to terminate this Agreement under this Section 9.1(b)
(iii) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date.
(c) Except as otherwise provided in this Agreement, this
Agreement may be terminated by Buyer if any of Buyer Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Buyer to
consummate the Closing as set forth in Section 7.1(c), shall have been denied
(and a petition for rehearing or refiling of an application initially denied
without prejudice shall also have been denied) or shall have been granted but
contains terms or conditions which do not satisfy the closing condition in
Section 7.1(c).
(d) This Agreement may be terminated by Sellers, if any of
Sellers' Required Regulatory Approvals, the receipt of which is a condition to
the obligation of Sellers to consummate the Closing as set forth in Section
7.2(c), shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied) or
shall have been granted but contains terms or conditions which do not satisfy
the closing condition in Section 7.2(c).
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(e) This Agreement may be terminated by Buyer if there has
been a violation or breach by Sellers of any covenant, representation or
warranty contained in this Agreement which has resulted in a Material Adverse
Effect and such violation or breach is not cured by the earlier of the Closing
Date or the date thirty (30) days after receipt by Sellers of notice specifying
particularly such violation or breach, and such violation or breach has not been
waived by Buyer.
(f) This Agreement may be terminated by Sellers, if there has
been a material violation or breach by Buyer of any covenant, representation or
warranty contained in this Agreement and such violation or breach is not cured
by the earlier of the Closing Date or the date thirty (30) days after receipt by
Buyer of notice specifying particularly such violation or breach, and such
violation or breach has not been waived by Sellers.
(g) This Agreement may be terminated by Sellers if there shall
have occurred any change that is materially adverse to the business, operations
or conditions (financial or otherwise) of Buyer.
(h) This Agreement may be terminated by either of Sellers or
Buyer in accordance with the provisions of Section 6.11(b).
(i) This Agreement may be terminated by Sellers in the event
that Buyer's Environmental Inspection requires Sellers to assume liability for
Remediation which in Sellers' judgment is materially in excess of Sellers'
liability for Remediation of those environmental conditions disclosed in the
Environmental Reports (other than Buyer's Environmental Inspection) or in
Schedule 4.7 on the date hereof.
(j) This Agreement may be terminated by either Sellers or
Buyer if the NJDEP determines that ISRA applies to the transactions contemplated
hereby and such Party has not entered into a Remediation Agreement with the
NJDEP and there is not in place an ISRA Remediation Program, in each case in
form and substance reasonably satisfactory to such Party, on or before (A) the
first anniversary date hereof or (B) fifteen (15) Business Days following the
date on which the last of the conditions precedent to Closing set forth in
Sections 7.1(a), (c), (j), (k), (l), (m), (q), (r) and (w) and Section 7.2 (a),
(c), (d) and (j), of this Agreement have been either satisfied or waived,
whichever shall first occur (the "ISRA Termination Date").
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9.2 Procedure and Effect of No-Default Termination. In the event of
termination of this Agreement by either or both of the Parties pursuant to
Section 9.1, written notice thereof shall forthwith be given by the terminating
Party to the other Party, whereupon, if this Agreement is terminated pursuant to
any of Sections 9.1(a) through (d) and 9.1(g) and (h), the liabilities of the
Parties hereunder will terminate, except as otherwise expressly provided in this
Agreement, and thereafter neither Party shall have any recourse against the
other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
Sellers and Buyer.
10.2 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith.
10.3 Environmental Waiver; Release.
Each Party, for itself and on behalf of its Representatives
and Affiliates, agrees effective as of the Closing Date to release and forever
discharge the other Party, its Representatives and Affiliates, from any and all
Indemnifiable Losses of any kind or character, whether known or unknown, hidden
or concealed, resulting from or arising out of any Environmental Condition or
violation of Environmental Law relating to the Purchased Assets; provided, that
Sellers' release of Buyer shall not extend to any of Buyer's Assumed Liabilities
set forth in Section 2.3, and provided further, that Buyer's release of Sellers
shall not extend to any of Sellers' Excluded Liabilities set forth in Section
2.4 or to any breach by Sellers of their representations, warranties and
covenants under this Agreement. Subject to the foregoing proviso, each Party
hereby agrees to waive any and all rights and benefits
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with respect to such Indemnifiable Losses that it now has, or in the future may
have conferred upon it by virtue of any statute or common law principle which
provides that a general release does not extend to claims which a Party does not
know or suspect to exist in its favor at the time of executing the release, if
knowledge of such claims would have materially affected such Party's settlement
with the obligor. In this connection, each Party hereby acknowledges that it is
aware that factual matters, now unknown to it, may have given or may hereafter
give rise to Indemnifiable Losses that are presently unknown, unanticipated and
unsuspected, including, without limitation, due to solid wastes or landfilling
on the Site which may be subject to regulation under the New Jersey Solid Waste
Management Act and the regulations thereunder, and each Party further agrees
that this release has been negotiated and agreed upon in light of that awareness
and it nevertheless hereby intends to release the other Party and its
Representatives and Affiliates subject to the proviso in the first sentence of
this paragraph.
10.4 Survival. The representations and warranties given or made by any
Party to this Agreement or in any certificate or other writing furnished in
connection herewith shall survive the Closing for a period of [intentionally
omitted] after the Closing Date and shall thereafter terminate and be of no
further force or effect, except that (a) all representations and warranties
relating to Taxes and Tax Returns shall survive the Closing for the period of
the applicable statutes of limitation plus any extensions or waivers thereof,
[intentionally omitted] (b) all representations and warranties relating to the
Decommissioning Trust Funds shall survive indefinitely.
The covenants and obligations of Sellers and Buyer set
forth in this Agreement, including without limitation the indemnification
obligations of the parties under Article VIII hereof, shall survive the Closing
indefinitely, and the Parties shall be entitled to the full performance thereof
by the other Parties hereto without limitation as to time or amount (except as
otherwise specifically set forth herein).
10.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided, however,
100
that notices of a change of address shall be effective only upon receipt
thereof):
(a) If to Sellers, to:
c/o GPU Service, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Berlack, Israels & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Buyer, to:
AmerGen Energy Company, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇-▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
AmerGen Energy Company, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Assistant General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
101
10.6 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any Party
hereto, including by operation of law, without the prior written consent of each
other Party, nor is this Agreement intended to confer upon any other Person
except the Parties hereto any rights, interests, obligations or remedies
hereunder. No provision of this Agreement shall create any third party
beneficiary rights in any employee or former employee of Sellers (including any
beneficiary or dependent thereof) in respect of continued employment or resumed
employment, and no provision of this Agreement shall create any rights in any
such Persons in respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement except as expressly
provided for thereunder. Notwithstanding the foregoing, without the prior
written consent of Sellers, (i) Buyer may assign all of its rights and
obligations hereunder to any majority owned Subsidiary (direct or indirect) and
upon Sellers' receipt of notice from Buyer of any such assignment, such assignee
will be deemed to have assumed, ratified, agreed to be bound by and perform all
such obligations, and all references herein to "Buyer" shall thereafter be
deemed to be references to such assignee, in each case without the necessity for
further act or evidence by the Parties hereto or such assignee, and (ii) Buyer
or its permitted assignee may assign, transfer, pledge or otherwise dispose of
(absolutely or as security) its rights and interests hereunder to a trustee,
lending institutions or other party for the purposes of leasing, financing or
refinancing the Purchased Assets, including such an assignment, transfer or
other disposition upon or pursuant to the exercise of remedies with respect to
such leasing, financing or refinancing, or by way of assignments, transfers,
pledges, or other dispositions in lieu thereof (and any such assignee may fully
exercise its rights hereunder or under any other agreement and pursuant to such
assignment without any further prior consent of any party hereto); provided,
however, that no such assignment in clause (i) or (ii) shall relieve or
discharge the assignor from any of its obligations hereunder. Sellers agree, at
Buyer's expense, to execute and deliver such documents as may be reasonably
necessary to accomplish any such assignment, transfer, pledge or other
disposition of rights and interests hereunder so long as Sellers' rights under
this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
102
10.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. THE PARTIES
HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL COURTS IN AND
FOR NEW YORK COUNTY, NEW YORK, WHICH COURTS SHALL HAVE EXCLUSIVE JURISDICTION
FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS
MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Interpretation. The articles, section and schedule headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
10.10 Schedules and Exhibits. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.11 Entire Agreement. This Agreement, the Confidentiality Agreement,
and the Ancillary Agreements including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, embody the entire
agreement and understanding of the Parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any material
made available to Buyer pursuant to the terms of the Confidentiality Agreement
(including the Offering Memorandum
103
dated March 29, 1999, previously delivered to Buyer by Sellers). This Agreement
supersedes all prior agreements and understandings between the Parties
(including, without limitation, the Letter of Intent between the Parties dated
September 10, 1999) other than the Confidentiality Agreement with respect to
such transactions.
10.12 Bulk Sales Laws. Buyer acknowledges that, notwithstanding
anything in this Agreement to the contrary, Sellers may, in their sole
discretion, not comply with the provision of the bulk sales laws of any
jurisdiction in connection with the transactions contemplated by this Agreement.
Buyer hereby waives compliance by Sellers with the provisions of the bulk sales
laws of all applicable jurisdictions.
10.13 U.S. Dollars. Unless otherwise stated, all dollar amounts set
forth herein are United States (U.S.) dollars.
10.14 Zoning Classification. Buyer acknowledges that the Real
Properties are zoned as set forth in Schedule 10.14.
10.15 Sewage Facilities. Except as set forth in Schedule 10.15, Buyer
acknowledges that there is no community (municipal) sewage system available to
serve the Real Property.
104
IN WITNESS WHEREOF, Sellers and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
AMERGEN ENERGY COMPANY, L.L.C. JERSEY CENTRAL POWER &
LIGHT COMPANY
By:_---------------------------- By: ---------------------
Name: Name:
Title: Title:
GPU NUCLEAR, INC.
By: ----------------------
Name:
Title:
105
LIST OF EXHIBITS AND SCHEDULES
------------------------------
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of ▇▇▇▇ of Sale
Exhibit C Form of FIRPTA Affidavit
Exhibit D Form of Interconnection Agreement
Exhibit E Form of Power Purchase Agreement
Exhibit F Form of Reciprocal Services Agreement
Exhibit G Form of Parent Guaranty
SCHEDULES
1.1(48) Terms of EOF Lease
1.1(96) Permitted Encumbrances
1.1(116) Access Terms for Remote Assembly Area
1.1(139) Transferable Permits (both environmental and non-environmental)
2.1(h) Schedule of Emission Reduction Credits
2.1(l) Intellectual Property
2.2(a) Description of Transmission and other Assets Not Included in
Conveyance
2.3(e) Consent Decrees Assumed by Buyer
4.3(a) Third Party Consents
4.3(b) Sellers' Required Regulatory Approvals
4.4 Insurance Exceptions
4.5 Exceptions to Title
4.6 Real Property Leases
4.7 Schedule of Environmental Matters
4.8 Schedule of Noncompliance with Employment Laws
4.9(a) Schedule of Benefit Plans
4.9(b) Benefit Plan Exceptions
4.l0(a) Description of Real Property
4.10(a)-1 Real Property Matters
4.10(b) Major Equipment Components and Personal Property
4.10(c) Technical Specifications and FSAR
4.11 Notices of Condemnation
4.12(a) List of Contracts
4.12(b) List of Non-assignable Contracts
4.12(c) List of Defaults under the Contracts
4.13 List of Litigation
4.14(a) List of Permit Violations
4.14(b) List of Material Permits (other than Transferable Permits)
4.15(a) NRC Violations
4.15(b) NRC Licenses
4.16 Tax Matters
4.20 Qualified Decommissioning Trust Fund
4.21 Non-Qualified Decommissioning Trust Fund
4.22 Undisclosed Liabilities
5.3(a) Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
6.2(i) Initial Buyer's Environmental Inspection
6.8 Tax Appeals
6.10(a)(i) Schedule of Union Employees
6.10(b) Schedule of Non-Union Employees
6.10(d) Collective Bargaining Agreements
6.10(h) Schedule of Severance Benefits
6.15 Pollution Control Revenue Bonds
6.17 Outage Plan
7.1(p) Operational Recovery Work
10.14 Zoning
10.15 Sewage Matters
TABLE OF CONTENTS
ARTICLE I..................................................................1
1.1 Definitions.......................................................1
1.2 Certain Interpretive Matters.....................................20
ARTICLE II................................................................20
2.1 Transfer of Assets...............................................20
2.2 Excluded Assets..................................................22
2.3 Assumed Liabilities..............................................24
2.4 Excluded Liabilities.............................................26
2.5 Control of Litigation............................................30
ARTICLE III...............................................................30
3.1 Closing..........................................................30
3.2 Payment of Purchase Price........................................30
3.3 Adjustment to Purchase Price.....................................31
3.4 Allocation of Purchase Price.....................................33
3.5 Prorations.......................................................33
3.6 Deliveries by Sellers............................................34
3.7 Deliveries by Buyer..............................................36
3.8 Ancillary Agreements.............................................37
ARTICLE IV................................................................38
4.1 Incorporation; Qualification.....................................38
4.2 Authority Relative to this Agreement.............................38
4.3 Consents and Approvals; No Violation.............................38
4.4 Insurance........................................................39
4.5 Title and Related Matters........................................40
4.6 Real Property Leases.............................................40
4.7 Environmental Matters............................................40
4.8 Labor Matters....................................................41
4.9 Benefit Plans; ERISA.............................................42
4.10 Real Property; Plant and Equipment..............................43
4.11 Condemnation....................................................43
4.12 Contracts and Leases............................................44
4.13 Legal Proceedings, etc..........................................44
4.14 Permits.........................................................44
4.15 NRC Licenses....................................................45
4.16 Taxes...........................................................45
4.17 Intellectual Property...........................................46
4.18 Compliance With Laws............................................46
4.19 PUHCA...........................................................46
4.20 Qualified Decommissioning Trust Funds...........................46
4.21 Nonqualified Decommissioning Trust Funds........................49
4.22 Undisclosed Liabilities.........................................50
4.23 Year 2000 Qualification.........................................50
4.24 DISCLAIMERS REGARDING PURCHASED ASSETS..........................50
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER.......................51
5.1 Organization.....................................................51
5.2 Authority Relative to this Agreement.............................51
5.3 Consents and Approvals; No Violation.............................52
5.4 Legal Proceedings................................................52
5.6 Inspections......................................................53
5.7 WARN Act........................................................53
ARTICLE VI................................................................53
6.1 Conduct of Business Relating to the Purchased Assets.............53
6.2 Access to Information............................................56
6.3 Public Statements................................................60
6.4 Expenses.........................................................60
6.5 Further Assurances...............................................60
6.6 Consents and Approvals...........................................62
6.7 Fees and Commissions.............................................65
6.8 Tax Matters......................................................65
6.9 Advice of Changes................................................67
6.10 Employees.......................................................68
6.11 Risk of Loss....................................................76
6.12 Decommissioning Trust Funds.....................................77
6.13 Spent Fuel Fees.................................................77
6.14 Department of Energy Decontamination and Decommissioning Fees...77
6.15 Additional Covenants of Buyer...................................77
6.16 Cooperation Relating to Insurance and ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Act .......78
6.17 Refueling Outage................................................79
6.18 ISRA Compliance.................................................80
6.19 Future Interconnection Access...................................83
6.20 SBO Service.....................................................83
6.21 Easement Agreement..............................................83
ARTICLE VII...............................................................84
7.1 Conditions to Obligations of Buyer...............................84
7.2 Conditions to Obligations of Sellers.............................88
ARTICLE VIII..............................................................92
894.1 Indemnification................................................92
8.297 Defense of Claims..............................................94
ARTICLE IX................................................................97
9.1 Termination......................................................97
9.2 Procedure and Effect of No-Default Termination..................99
ARTICLE X.................................................................99
10.1 Amendment and Modification......................................99
10.2 Waiver of Compliance; Consents................................99
10.3 Environmental Waiver; Release...................................99
10.4 Survival.......................................................100
10.5 Notices........................................................100
10.6 Assignment.....................................................102
10.7 Governing Law..................................................103
10.8 Counterparts...................................................103
10.9 Interpretation.................................................103
10.10 Schedules and Exhibits........................................106
10.11 Entire Agreement..............................................103
10.12 Bulk Sales Laws...............................................104
10.13 U.S. Dollars..................................................104
10.14 Zoning Classification.........................................104
10.15 Sewage Facilities.............................................104