EXHIBIT 10-QQ
THREE MILE ISLAND UNIT 1 NUCLEAR GENERATING FACILITY
ASSET PURCHASE AGREEMENT
BY AND AMONG
GPU NUCLEAR, INC., JERSEY CENTRAL POWER & LIGHT COMPANY,
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY, as SELLERS,
AND
AMERGEN ENERGY COMPANY, LLC, as BUYER
Dated as of October 15, 1998
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1 Definitions 1
1.2 Certain Interpretive Matters 20
ARTICLE II PURCHASE AND SALE 20
2.1 Transfer of Assets 20
2.2 Excluded Assets 22
2.3 Assumed Liabilities and Obligations 23
2.4 Excluded Liabilities 24
2.5 Control of Litigation 28
ARTICLE III THE CLOSING 28
3.1 Closing 28
3.2 Payment of Purchase Price 28
3.3 Adjustment to Purchase Price 29
3.4 Allocation of Purchase Price 31
3.5 Prorations 32
3.6 Deliveries by Sellers 33
3.7 Deliveries by Buyer 35
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS 35
4.1 Organization; Qualification 36
4.2 Authority Relative to this Agreement 36
4.3 Consents and Approvals; No Violation 36
4.4 Reports 37
4.5 Undisclosed Liabilities 38
4.6 Absence of certain Changes or Events 38
4.7 Title and Related Matters 38
4.8 Leases 38
4.9 Insurance 39
4.10 Environmental Matters 39
4.11 Labor Matters 40
4.12 ERISA; Benefit Plans 40
4.13 Real Property; Plant and Equipment 41
4.14 Condemnation 42
4.15 Certain Contracts and Arrangements 42
4.16 Legal Proceedings, etc. 43
4.17 Permits 43
4.18 NRC Licenses 43
4.19 Regulation as a Utility 44
4.20 Taxes 44
4.21 Year 2000 Qualification 45
4.22 Qualified Decommissioning Funds 45
4.23 Nonqualified Decommissioning Funds 48
Page
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER 49
5.1 Organization 50
5.2 Authority Relative to this agreement 50
5.3 Consents and Approvals; No Violation 50
5.4 Regulation as a Utility 51
5.5 Availability of Funds 51
5.6 Legal Proceedings 51
5.7 WARN Act 51
ARTICLE VI COVENANTS OF THE PARTIES 52
6.1 Conduct of Business Relating to the
Purchased Assets 52
6.2 Access to Information 55
6.3 Expenses 58
6.4 Further Assurances; Cooperation 59
6.5 Public Statements 61
6.6 Consents and Approvals 61
6.7 Fees and Commissions 63
6.8 Tax Matters 64
6.9 Advice of Changes 65
6.10 Employees 65
6.11 Risk of Loss 70
6.12 Decommissioning Funds .71
6.13 Spent Fuel Fees 75
6.14 Department of Energy Decontamination
Decommissioning Fees 75
6.15 Cooperation Relating to Insurance and
Price-Anderson Act 75
6.16 Tax Clearance Certificates 75
6.17 TMI-2 Monitoring Agreement 75
6.18 TMI-2 Decommissioning 76
6.19 Spent Fuel Acceptance 76
6.20 Residual Waste Landfill 76
6.21 Easement, License and Attachment Agreement 76
ARTICLE VII CONDITIONS 77
7.1 Conditions to Obligations of Buyer 77
7.2 Conditions to Obligations of Sellers 80
ARTICLE VIII INDEMNIFICATION 82
8.1 Indemnification 82
8.2 Defense of Claims 85
ARTICLE IX TERMINATION 87
9.1 Termination 87
9.2 Procedure and Effect of No-Default
Termination 88
Page
ARTICLE X MISCELLANEOUS PROVISIONS 89
10.1 Amendment and Modification 89
10.2 Waiver of Compliance; Consents 89
10.3 Survival of Representations, Warranties,
Covenants 89
10.4 Notices 90
10.5 Assignment 90
10.6 Governing Law 91
10.7 Counterparts 92
10.8 Interpretation 92
10.9 Schedules and Exhibits 92
10.10 Entire Agreement 92
10.11 Bulk Sales Laws 92
10.12 U.S. Dollars 92
10.13 Zoning Classification 93
10.14 Sewage Facilities 93
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Bill of Sale
Exhibit C List of Principal Terms for the Easement, License and
Attachment Agreement
Exhibit D Form of FIRPTA Affidavit
Exhibit E Form of Interconnection Agreement
Exhibit F Form of Deal Strike Price Adjustment Agreement
Exhibit G Form of Special Warranty Deed
Exhibit H Form of TMI-2 Monitoring Agreement
Exhibit I Form of Power Purchase Agreement
Exhibit J Form of Decommissioning Trust Agreement
Exhibit K Form of Exclusion Area Agreement
Exhibit L Form of GPU Service Agreement
Exhibit M Form of Opinion from Each of Seller's Counsel
Exhibit N Form of Opinion from Each of Buyer's Counsel
Exhibit O Form of Investment Manager Agreement
SCHEDULES
1.1(151) Transferable Permits
2.1(h) Emission Reduction Credits
2.1(l) Intellectual Property
2.2(a) Excluded Transmission and other Assets
2.2(i) Excluded Real Property (TMI-2)
3.3(a)(ii) Closing Date Purchase Price Adjustment
4.3(a) Sellers' Third Party Consents
4.3(b) Sellers' Required Regulatory Approvals
4.5 Liabilities
4.6 Absence of Certain Changes or Events
4.7(a) Exceptions to Title to Real Property
4.7(b) Exceptions to Title to other Purchased Assets
4.7(c) Ownership Percentage
4.8 Real Property Leases
4.9 Insurance Exceptions
4.10 Environmental Matters
4.11 Noncompliance with Employment Laws
4.12(a) Benefit Plans
4.12(b) Benefit Plan Exceptions
4.13(a) Description of Real Property
4.13(b) Description of Major Equipment Components and
Personal Property
4.13(c) List of Defects of Purchased Assets
4.14 Notices of Condemnation
4.15(a) List of Sellers' Agreements
4.15(b) Agreement Exceptions
4.15(c) Agreement Defaults
4.16 List of Litigation
4.17(a) List of Permit Violations
4.17(b) List of Material Permits (other than Transferable
Permits)
4.18(a) List of License Violations
4.18(b) List of Material NRC Licenses
4.19 Utility Matters regarding Sellers
4.20 Tax Matters
4.22 Tax and Financial Matters Relating to Qualified
Decommissioning Funds
4.23 Financial Matters Relating to Nonqualified
Decommissioning Funds
5.3(a) Buyer's Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
5.4 Utility Matters regarding Buyer
6.1 Permitted Activities Prior to Closing
6.10(d) IBEW Collective Bargaining Agreement
7.1(o) Required Work
7.1(s) Year 2000 Qualification Program
10.13 Zoning Classification
10.14 Sewage Facilities
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of October 15, 1998, by and among GPU
Nuclear, Inc., a New Jersey corporation ("GPU Nuclear"), Jersey Central Power &
Light Company, a New Jersey corporation ("JCP&L"), Metropolitan Edison Company,
a Pennsylvania corporation ("Met-Ed"), and Pennsylvania Electric Company, a
Pennsylvania corporation ("Penelec") (GPU Nuclear, JCP&L, Met-Ed and Penelec,
each a "Seller" and, collectively, "Sellers"), and AmerGen Energy Company, LLC,
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, each of JCP&L, Met-Ed and Penelec (collectively, the "Owners")
owns as tenant-in-common in percentages of 25%, 50% and 25%, respectively, an
undivided interest in the Three Mile Island Unit 1 Nuclear Generating Facility
("TMI-1"), NRC Operating License No. DPR-50, Docket No. 50-289, located near
Middletown, Pennsylvania, and certain facilities and other assets associated
therewith and ancillary thereto;
WHEREAS, GPU Nuclear is responsible for the daily operations of TMI-1
for the Owners;
WHEREAS, Sellers have heretofore agreed jointly to divest themselves of
TMI-1; and
WHEREAS, Buyer desires to purchase and assume, and Sellers desire to sell
and assign, the Purchased Assets (as defined in Section 2.1 below) and certain
associated liabilities, upon the terms and conditions hereinafter set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. 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.
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(2) "Agreement" means this Asset Purchase Agreement together with the
Schedules and Exhibits hereto, as the same may be from time to time amended.
(3) "Ancillary Agreements" means the Assignment and Assumption Agreement,
the Easement, License and Attachment Agreement, the Interconnection Agreement,
the Deal Strike Price Adjustment Agreement, the TMI-2 Monitoring Agreement, the
Power Purchase Agreement, the Decommissioning Trust Agreement, the GPU Service
Agreement, and the Exclusion Area Agreement, as the same may amended be from
time to time.
(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, subject to the terms and conditions hereof,
shall assign Sellers' Agreements, the Real Property Leases, the Transferable
Permits, certain intangible assets and other Purchased Assets to Buyer and
whereby Buyer shall assume the Assumed Liabilities and Obligations.
(5) "Assumed Liabilities and Obligations" 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 4.12(a).
(8) "Bill of Sale" means the Bill 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 Commonwealth of Pennsylvania 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 Indemnitee" has the meaning set forth in Section 8.1(b).
(12) "Buyer Material Adverse Effect" has the meaning set forth in Section
5.3(a).
(13) "Buyer's Required Regulatory Approvals" has the meaning set forth in
Section 5.3(b).
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(14) "Capital Expenditures" has the meaning set forth in Section
3.3(a)(iii).
(15) "CERCLA" means the Federal Comprehensive Environmental Response,
Compensation, and Liability Act, as amended.
(16) "Closing" has the meaning set forth in Section 3.1.
(17) "Closing Adjustment" has the meaning set forth in Section 3.3(b).
(18) "Closing Payment" has the meaning set forth in Section 3.2.
(19) "Closing Date" has the meaning set forth in Section 3.1.
(20) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
(21) "Code" means the Internal Revenue Code of 1986, as amended.
(22) "Commercially Reasonable Efforts" means efforts which are designed to
enable a Party, directly or indirectly, to satisfy a condition to, or otherwise
assist in the consummation of, the transactions contemplated by this Agreement
and which do not require the performing Party to expend any funds or assume
liabilities other than expenditures and liabilities which are reasonable in
nature and amount in the context of the transactions contemplated by this
Agreement.
(23) "Confidentiality Agreement" means the Non-Disclosure Agreement, dated
August 1997, by and among Sellers and the members of Buyer.
(24) "Cowanesque Reservoir Agreements" means all agreements between
Sellers and the SRBC relating to the consumptive use of Susquehanna River water
at the Site; such agreements are separately identified on Schedule 4.15(a)
hereto.
(25) "Deal Strike Price Adjustment" means the adjustment to the Purchase
Price calculated and paid in accordance with the Deal Strike Price Adjustment
Agreement.
(26) "Deal Strike Price Adjustment Agreement" means the agreement between
Sellers and Buyer substantially in the form of Exhibit F hereto.
(27) "Decommissioning" means the complete retirement and removal of the
Facilities from service and the restoration of the
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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 Facilities, in whole or in part, and any reduction or
removal, whether before or after termination of the NRC license for the
Facilities, of radioactivity at the Site, and (b) all activities necessary for
the retirement, dismantlement and decontamination of the Facilities 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 Facilities and any related decommissioning plan.
(28) "Decommissioning Funds" means the Qualified Decommissioning Funds and
the Nonqualified Decommissioning Funds, collectively.
(29) "Decommissioning Indenture" means the Indenture and Second Amendment
to Indenture dated October 25, 1990 regarding the Qualified Decommissioning
Funds and the Nonqualified Decommissioning Funds between Metropolitan Edison
Company, Pennsylvania Electric Company, Jersey Central Power & Light Company and
Bank of New York, as amended on March 12, 1994 and on December 1, 1996 and as
further amended from time to time thereafter.
(30) "Decommissioning Trust Agreement" means the Decommissioning Trust
Agreement, between any Seller and the Trustee under the Decommissioning Trust
Agreement, pursuant to which any assets of any of the Decommissioning Funds
retained by any Seller after Closing pursuant to Section 6.12(c) hereof will be
held in trust, which agreement shall be substantially in the form of Exhibit J
hereto except that (i) the provisions thereof shall be appropriately modified to
reflect the fact that the agreement provides for a continuation of the Qualified
Decommissioning Fund and/or the Nonqualified Decommissioning Fund maintained by
the Sellers pursuant to the Decommissioning Indenture, and to reflect the
provisions of Section 4.14 of the Decommissioning Indenture relating to the
appointment of a successor Trustee; (ii) the provisions thereof relating to
contributions made to the Decommissioning Fund by the Sellers shall be deleted
or appropriately modified to reflect the fact that no contributions will be made
by the Sellers under the agreement; (iii) the provisions thereof relating to the
"Qualified Fund" shall be deleted or appropriately modified if the assets of
just the Sellers' Nonqualified Decommissioning Fund are to be maintained
pursuant to such agreement; and (iv) the provisions thereof relating to the
"Nonqualified Fund" shall be deleted or appropriately modified if the assets of
just the Sellers' Qualified Decommissioning Fund are to be maintained pursuant
to such agreement.
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(31) "Department of Energy" means the United States Department of Energy
and any successor agency thereto.
(32) "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 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 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.
(33) "Department of Justice" means the United States Department of Justice
and any successor agency thereto.
(34) "Diked Area" has the meaning set forth in Section 7.1(s).
(35) "Direct Claim" has the meaning set forth in Section 8.2(c).
(36) "Easements" means the easements, licenses and access rights to be
granted by Buyer, Sellers or York Haven, or reserved by Sellers, in connection
with the Interconnection Agreement , the TMI-2 Monitoring Agreement or the
Easement Agreements, including easements authorizing access, use, maintenance,
construction, repair, replacement and other activities by Sellers, York Haven or
Buyer, as the case may be, or otherwise necessary for Sellers, York Haven and
Buyer to operate their respective businesses and to fulfill all applicable legal
requirements (including FERC and other licensing requirements and requirements
imposed in connection with applications for new and subsequent licenses).
(37) "Easement, License and Attachment Agreement" means both (i) the
Easement, License and Attachment Agreement to be negotiated in good faith
between Sellers and Buyer, whereby Buyer and Sellers will provide each other
with Easements with respect to the Real Property transferred to Buyer or
retained by Sellers and whereby Sellers will provide Buyer with certain
attachment rights with respect to Real Property owned by Sellers, and (ii) the
York Haven Easement Agreement to be negotiated in good faith between York Haven
and Buyer, whereby Buyer and York Haven will provide each other with Easements
with respect to the Real Property transferred to Buyer or retained by York
Haven. In the event of any conflict between the Easement, License and Attachment
Agreement and the Exclusion Area Agreement, the terms
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of the Exclusion Area Agreement shall govern. The Easements to be provided in
the Easement, License and Attachment Agreement which are contemplated by the
Parties as of the date hereof are listed on Exhibit C hereto. However, such
listing shall not be binding on the Parties or York Haven, and the Parties may
eliminate from, or add to, the listing of easements on said Exhibit C in the
course of their negotiations.
(38) "Emission Allowance" means all present and future authorizations to
emit specified units of pollutants or Hazardous Substances from the Purchased
Assets, which units are established by the Governmental Authority with
jurisdiction over the Purchased Assets under (i) an air pollution control and
emission reduction program designed to mitigate global warming, interstate or
intrastate 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. Allowances include allowances, as
described above, regardless as to whether the Governmental Authority
establishing such 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 Purchased
Assets that has 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
shutdowns or control of emissions beyond that required by applicable law) that:
(i) have been identified by the PaDEP as complying with applicable Pennsylvania
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
PaDEP 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 PaDEP 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,
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activity and use limitations, conservation easements, deed restrictions,
easements, 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 violation, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law by any person (including, but
not limited to, any Governmental Authority, private person and citizens' group)
based upon, alleging, asserting, or claiming any actual or potential (a)
violation of, or liability under any Environmental Law, (b) violation of any
Environmental Permit, or (c) liability for investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, Release, or threatened Release into
the environment of any Hazardous Substances at any location related to the
Purchased Assets, including, but not limited to, any off-Site location to which
Hazardous Substances, or materials containing Hazardous Substances, were sent
for handling, storage, treatment, or disposal.
(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 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. Section 1801 et
seq.) , the Resource Conservation and Recovery Act (42 U.S.C. Section
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6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S. C. Section 7401 et seq.) , the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Oil Pollution Act
(33 U.S.C. Section 2701 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.), the Pennsylvania Hazardous Sites
Cleanup Act (35 P.S. Section 6020.101 et seq.), the Pennsylvania Solid Waste
Management Act (35 P.S. 6018.101 et seq.), the Pennsylvania Clean Stream Law (35
P.S. 691.1 et seq. ), the Pennsylvania Radiation Act and all 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 4.10(a).
(46) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(47) "ERISA Affiliate" has the meaning set forth in Section 2.4(l).
(48) "ERISA Affiliate Plans" has the meaning set forth in Section 2.4(l).
(49) "Estimated Adjustment" has the meaning set forth in Section 3.3(b).
(50) "Estimated Closing Statement" has the meaning set forth in Section
3.3(b).
(51) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(52) "Excluded Assets" has the meaning set forth in Section 2.2.
(53) "Excluded Liabilities" has the meaning set forth in Section 2.4.
(54) "Exclusion Area Agreement" means the Exclusion Area Agreement,
between Sellers and Buyer, in the form of Exhibit K hereto, under which Sellers
will provide Buyer with authority, within those parts of the Exclusion Area for
TMI-1 (as described on Schedule A to the Exclusion Area Agreement, the
"Exclusion Area") which are owned and controlled by Sellers, to determine
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and control all activities in the Exclusion Area, including exclusion of
personnel and property from the Exclusion Area, to the extent necessary to
comply with applicable NRC requirements.
(55) "Exempt Wholesale Generator" means an exempt wholesale generator as
defined in Section 32 of the Holding Company Act and the regulations issued
thereunder.
(56) "Facilities" means the plant, facilities, equipment, supplies and
improvements owned by Sellers and included in the Purchased Assets.
(57) "Facilities Act" has the meaning as set forth in Section 10.14.
(58) "Fair Market Value" means with respect to the assets of the
Decommissioning Funds, the value reflected in a statement prepared by the
Trustee under the Decommissioning Indenture listing the assets as of the close
of the Business Day before Closing, including purchase price and FMV of each
asset.
(59) "Federal Power Act" means the Federal Power Act, as amended.
(60) "Federal Trade Commission" means the United States Federal Trade
Commission or any successor agency thereto.
(61) "FERC" means the United States Federal Energy Regulatory Commission
or any successor agency thereto.
(62) "Final Safety Analysis Report" or ("FSAR") means the report, as
updated, that is required to be maintained for TMI-1 in accordance with the
requirements of 10 CFR Section 50.71(e).
(63) "FIRPTA Affidavit" means the Foreign Investment in Real Property Tax
Act Certification and Affidavit, substantially in the form of Exhibit D hereto.
(64) "Good Utility Practices" means any of the practices, methods and
activities 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 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 optimal practices, methods or
acts
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to the exclusion of all others, but rather to be practices, methods or acts
generally accepted in the electric utility industry.
(65) "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.
(66) "GPU" means GPU, Inc., a Pennsylvania corporation which is the parent
company of GPU Nuclear, JCP&L, Met-Ed and Penelec.
(67) "GPU Nuclear" means GPU Nuclear, Inc., a New Jersey corporation which
is a wholly owned subsidiary of GPU.
(68) "GPU Service Agreement" means the GPU Service Agreement, between the
Owners and Buyer, in the form of Exhibit L, under which the Owners will provide
certain administrative and other services to Buyer for a specified period after
the Closing Date.
(69) "Hazardous Substances" means (a) any petrochemical or petroleum
products, oil or coal ash, 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 "byproduct" material, as such terms are defined in and to
the extent regulated under the Atomic Energy Act.
(70) "Holding Company Act" means the Public Utility Holding Company Act of
1935, as amended.
(71) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
(72) "IBEW" means Local 777 of the International Brotherhood of Electrical
Workers.
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(73) "IBEW Collective Bargaining Agreement" has the meaning set forth in
Section 6.10(d).
(74) "Income Tax" means any federal, state, local or foreign Tax (a) based
upon, measured by or calculated with respect to net income, profits or receipts
(including, without limitation, capital gains Taxes and minimum Taxes) or (b)
based upon, measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the bases on
which such Tax may be based, measured by or calculated with respect to, is
described in clause (a), in each case together with any interest, penalties, or
additions to such Tax.
(75) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(76) "Indemnifying Party" has the meaning set forth in Section 8.1(d) .
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(77) "Indemnitee" has the meaning set forth in Section 8.1(c).
(78) "Independent Accounting Firm" means such independent accounting firm
of national reputation as is mutually appointed by Sellers and Buyer.
(79) "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
prior to the Closing.
(80) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, inventions, 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 in Schedule 2.1(1)
(81) "Interconnection Agreement" means the Interconnection Agreement,
between Sellers and Buyer, in the form of Exhibit E hereto, under which Sellers
will provide Buyer after the Closing Date with interconnection services
consistent with NRC requirements relating to offsite power availability and grid
reliability and access to Sellers' transmission facilities for the transmission
of power from TMI-1.
(82) "Interconnection Facilities" has the meaning set forth in the
Interconnection Agreement.
11
(83) "Inventories" means nuclear fuel or alternative fuel inventories,
materials, spare parts, consumable supplies and chemical and gas inventories
relating to the operation of the Facilities located at, or in transit to, the
Facilities.
(84) "Investment Manager Agreement" means one or more Investment Manager
Agreements, between any Seller and one or more professional investment managers
substantially in the form of Exhibit O hereto, pursuant to which any assets of
the Decommissioning Funds retained by Sellers after Closing pursuant to Section
6.12(c) hereof will be invested.
(85) "IRS" means the United States Internal Revenue Service or any
successor agency thereto.
(86) "JCP&L" means Jersey Central Power & Light Company, a New Jersey
corporation which is a wholly owned subsidiary of GPU.
(87) "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.
(88) "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 Pennsylvania.
(89) "Member Letters" means letters from the members of Buyer, dated the
date hereof and addressed to Sellers, regarding the respective financial
responsibility of each such member for the financial obligations of Buyer under
this Agreement.
(90) "Met-Ed" means Metropolitan Edison Company, a Pennsylvania
corporation which is a wholly owned subsidiary of GPU.
12
(91) "Mortgage Indenture" means collectively, the mortgage originally
granted to City Bank Farmer's Trust Company by Jersey Central Power & Light
Company, dated as of March 1, 1946, as amended and supplemented, the mortgage
originally granted to Guaranty Trust Company of New York by Metropolitan Edison
Company, dated as of November 1, 1944, as amended and supplemented, and the
mortgage originally granted to Bankers Trust Company by Pennsylvania Electric
Company, dated as of January 1, 1942, as amended and supplemented.
(92) "National Labor Relations Board" means the United States National
Labor Relations Board or any successor agency thereto.
(93) "Net Unrealized Gain" means the amount by which the Fair Market Value
as of the close of the Business Day before the Closing of any asset of the
Nonqualified Decommissioning Funds exceeds the Tax Basis of such asset.
(94) "NJBPU" means the New Jersey Board of Public Utilities and any
successor agency thereto.
(95) "Nonqualified Decommissioning Funds" means the external trust funds,
that do not meet the requirements of Code section 468A and Treasury Regulations
section 1.468A-5, maintained by Sellers with respect to the Facilities prior to
the Closing pursuant to the Decommissioning Indenture and maintained by Sellers
after the Closing pursuant to the Decommissioning Trust Agreement to the extent
assets of such Funds are retained by Sellers pursuant to Section 6.12(c).
(96) "Non-Union Employees" has the meaning as set forth in Sections 6.10(b)
and (n).
(97) "NRC" means the United States Nuclear Regulatory Commission and any
successor agency thereto.
(98) "Nuclear Waste Policy Act" means the Nuclear Waste Policy Act of
1982, as amended.
(99) "NYPSC" means the Public Service Commission of the State of New York
and any successor agency thereto.
(100) "Observers" has the meaning set forth in Section 6.1(c).
(101) "Owners" has the meaning set forth in the recitals.
(102) "Oyster Creek" means the Oyster Creek Nuclear Generating Station,
located in Lacey Township, New Jersey and
13
identified in NRC Operating License No. DPR-16, Docket No. 50-219.
(103) "PaPUC" means the Pennsylvania Public Utility Commission and any
successor agency thereto.
(104) "PaDEP" means the Pennsylvania Department of Environmental
Protection and any successor agency thereto.
(105) "Party" (and the corresponding term "Parties") has the meaning set
forth in the preamble.
(106) "Penelec" means Pennsylvania Electric Company, a Pennsylvania
corporation and a wholly owned subsidiary of GPU.
(107) "PBGC" means the Pension Benefit Guaranty Corporation established by
ERISA.
(108) "Permits" has the meaning set forth in Section 4.17.
(109) "Permitted Encumbrances" means: (i) the Easements; (ii) those
exceptions to title to the Purchased Assets listed in Schedule 4.7(a) with
respect to Real Property and Schedule 4.7(b) with respect to Tangible Personal
Property; (iii) with respect to any date before the Closing Date, Encumbrances
created by the Mortgage Indenture and Easements by and among the Sellers; (iv)
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 being so contested
does not exceed $100,000; (v) mechanics', carriers', workers', repairers' and
other similar liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part of Sellers
or the validity of which are being contested in good faith, and which do not,
individually or in the aggregate, exceed $100,000; and (vi) zoning, entitlement,
conservation restriction and other land use and environmental regulations by
Governmental Authorities, which do not materially, individually or in the
aggregate, detract from the value of the Purchased Assets as currently used or
interfere with the present use of the Purchased Assets and neither secure
indebtedness, nor individually or in the aggregate create a Material Adverse
Effect.
(110) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
(111) "PJM" means the Pennsylvania-New Jersey-Maryland
Interconnection, LLC.
14
(112) "Post-Closing Adjustment" has the meaning set forth in Section
3.3(c).
(113) "Post-Closing Statement" has the meaning set forth in Section
3.3(c).
(114) "PPA" means the Power Purchase Agreement between Sellers and Buyer,
in the form of Exhibit I hereto, under which Sellers will agree to purchase
capacity and energy from Buyer for a period after the Closing Date.
(115) "Price-Anderson Act" means Section 170 of the Atomic Energy Act of
1954, as amended.
(116) "Proposed Post-Closing Adjustment" has the meaning set forth in
Section 3.3(c).
(117) "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" 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 otherwise 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.
(118) "Purchased Assets" has the meaning set forth in Section 2.1.
(119) "Purchase Price" has the meaning set forth in Section 3.2.
(120) "Qualified Decommissioning Funds" means the three external trust
funds, that meet the requirements of Code section468A and Treasury Regulations
section 1.468A-5, maintained by Sellers with respect to the Facilities prior to
closing
15
pursuant to the Decommissioning Indenture and maintained by Sellers after the
Closing pursuant to the Decommissioning Trust Agreement to the extent assets of
such funds are retained by Sellers pursuant to Section 6.12(c).
(121) "Real Property" has the meaning set forth in Section 4.13(a).
(122) "Real Property Leases" has the meaning set forth in Section 4.8.
(123) "Refueling Outage" means the refueling outage for TMI-1 referred to
by the Parties as "13R" and currently scheduled for September-October 1999,
including the refueling of TMI-1 and the performance of certain maintenance,
inspection and other work, all of which shall be completed in accordance with
Good Utility Practices and applicable NRC requirements.
(124) "Release" means release, spill, leak, discharge, dispose of, pump,
pour, emit, empty, inject, leach, dump or allow to escape into or through the
environment.
(125) "Remediation" means action of any kind to address a Release, the
threat of a Release or the presence of Hazardous Substances at the Site or an
off-Site location including, without limitation, any or all of the following
activities to the extent they relate to or arise from the presence of a
Hazardous Substance at the 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 the 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 the 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 the Site or an off-Site location.
(126) "Replacement Welfare Plans" has the meaning set forth in Section
6.10(e).
16
(127) "Representatives" of a Party means the Party and its Affiliates and
their directors, officers, employees, agents, partners, advisors (including,
without limitation, accountants, counsel, environmental consultants, financial
advisors and other authorized representatives) and parents and other controlling
persons.
(128) "Residual Waste Landfill" means the waste landfill on the Real
Property that is identified on Schedule 4.13(a) and is subject to an
Environmental Permit issued by PaDEP (Permit No. 301029).
(129) "SEC" means the United States Securities and Exchange Commission and
any successor agency thereto.
(130) "SRBC" means the Susquehanna River Basin Commission and any
successor agency thereto.
(131) "Securities Act" means the Securities Act of 1933, as amended.
(132) "Seller" (and the corresponding term "Sellers") has the meaning set
forth in the preamble.
(133) "Sellers' Agreements" means those contracts, agreements, licenses
and leases relating to the ownership, operation and maintenance of the Purchased
Assets that are being assigned to Buyer as part of the Purchased Assets, as more
particularly described on Schedule 4.15(a).
(134) "Sellers' Indemnitee" has the meaning set forth in Section 8.1(a).
(135) "Sellers' Required Regulatory Approvals" has the meaning set forth
in Section 4.3(b).
(136) "Sellers' Savings Plans" has the meaning set forth in Section
6.10(g).
(137) "Site" means the Real Property (described in Schedule 4.13(a))
forming a part of, or used or usable in connection with the operation of, the
Purchased Assets. The Site specifically excludes those parcels of real property
described on Schedule 2.2(i). 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.
(138) "Spent Fuel Fees" means those fees assessed on electricity generated
at TMI-1 and sold pursuant to the Standard Contract for Disposal of Spent
Nuclear Fuel and/or High Level
17
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.
(139) "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.
(140) "Tangible Personal Property" has the meaning set forth in Section
2.1(c).
(141) "Tax Basis" means the adjusted tax basis determined for federal
income tax purposes under Code section 1011(a).
(142) "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.
(143) "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.
(144) "Technical Specifications"means the technical specifications
included in the NRC License for TMI-1 in accordance with the requirements of 10
CFR Section 50.36.
(145) "Termination Date" has the meaning set forth in Section 9.1(b).
(146) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(147) "TMI-1" means the Three Mile Island Unit 1 Nuclear Generating
Facility, located near Middletown, Pennsylvania and identified in NRC Operating
License No. DPR-50, Docket No. 50-289.
(148) "TMI-2 Monitoring Agreement" means the agreement between Sellers and
Buyer, substantially in the form of Exhibit H hereto.
(149) "TMI-2" has the meaning set forth in Section 2.2(i).
18
(150) "Total FMV" has the meaning set forth in Section 6.12(a).
(151) "Transferable Permits" means those Permits and Environmental Permits
identified in Schedule 1.1(151), which may be transferred to Buyer without a
filing with, notice to, consent or approval of any Governmental Authority.
(152) "Transferred Employee Records" means all records related to
Transferred Employees, including but not limited to the following information:
(i) skill and development training, (ii) biographies, (iii) seniority histories,
(iv) salary and benefit information, (v) Occupational, Safety and Health
Administration reports, (vi) active medical restriction forms, (vii) fitness for
duty, and (viii) disciplinary actions.
(153) "Transferred Employees" has the meaning set forth in Section
6.10(b).
(154) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(155) "Transferred Union Employees" has the meaning set forth in Section
6.10(b).
(156) "Transition Committee" has the meaning set forth in Section 6.1(b).
(157) "Transmission Assets" has the meaning set forth in Section 2.2(a).
(158) "Trustee" means prior to the Closing the trustee of the
Decommissioning Funds appointed by Sellers pursuant to the Decommissioning
Indenture or after the Closing in the event any assets of the Decommissioning
Funds are retained by Sellers pursuant to Section 6.12(c) appointed pursuant to
the Decommissioning Trust Agreement.
(159) "Union Employees" has the meaning set forth in Sections 6.10(a) and
(n).
(160) "USEPA" means the United States Environmental Protection Agency and
any successor agency thereto.
(161) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
(162) "Year 2000 Compliant," "Year 2000 Qualified" and "Year 2000 Ready"
have the meanings set forth in Section 4.21. "Year 2000 Qualification" has a
meaning correlative to Year 2000 Qualified.
19
(163) "York Haven" means York Haven Power & Light Company, a Pennsylvania
corporation which is a wholly owned subsidiary of Met-Ed.
(164) "York Haven Dam Agreements" means the agreements between York Haven
and Sellers providing for the ownership, operation and maintenance of the York
Haven Hydroelectric Project (FERC Project No. 1888) on the Susquehanna River;
such agreements are separately identified on Schedule 4.15(a) hereto.
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 each of Sellers will
sell, assign, convey, transfer and deliver to Buyer, and Buyer will purchase,
assume and acquire from each such Seller, free and clear of all Encumbrances
(except for Permitted Encumbrances), and subject to Section 2.2, all of such
Seller's right, title and interest in and to all of the assets constituting, or
used in and necessary for the operation of, the Facilities, including without
limitation those assets identified in Schedules 2.1(h) and (l) and Schedule
4.13(b) and those assets described below (but excluding the Excluded Assets),
each as in existence on the Closing Date (collectively, "Purchased Assets"):
(a) The real property (including all buildings, facilities and other
improvements thereon, all appurtenances thereto and rights of ingress and
egress) described on Schedule 4.13(a) (including parcels owned by York Haven but
excluding those parcels identified in Section 2.2(i) below), but subject to the
Permitted Encumbrances and except as otherwise constituting part of the Excluded
Assets;
(b) All Inventories and Emission Allowances;
(c) All machinery, mobile or otherwise, equipment (including
computer hardware and software and communications
20
equipment), vehicles, tools, spare parts, fixtures, furniture and furnishings
and other personal property relating to or used in the operation of the
Facilities, including, without limitation, the items of personal property
included in Schedule 4.13(b), together with all the personal property of Sellers
used principally in the operation of the Facilities, other than property used or
primarily usable as part of the Transmission Assets or otherwise constituting
part of the Excluded Assets (collectively, "Tangible Personal Property");
(d) Subject to the provisions of Section 6.4(b), all Sellers'
Agreements;
(e) Subject to the provisions of Section 6.4(b), all Real Property
Leases;
(f) All Transferable Permits;
(g) All books, operating 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 Facilities and the other Purchased Assets
(subject to the right of Sellers to retain copies of same for their use) other
than general ledger accounting records;
(h) All Emission Reduction Credits associated with the Facilities
and identified in Schedule 2.1(h) that have accrued prior to, or that accrue on
or after, the date of this Agreement;
(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;
(j) The name "Three Mile Island Unit 1". It is expressly understood
that Sellers are not assigning or transferring to Buyer any right to use the
name "GPU", "GPU Energy", "GPU Nuclear", "Jersey Central Power & Light Company",
"JCP&L", "Metropolitan Edison Company" or "Met-Ed", or "Pennsylvania Electric
Company" or "Penelec", 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 signs and displays affixed to the Purchased Assets on the
Closing Date for a period of three months thereafter in order to allow Buyer
adequate time to change the signage to the name of Buyer.
21
(k) All drafts, memoranda, reports, information, technology, and
specifications relating to Sellers' plans for Year 2000 Compliance with respect
to the Facilities;
(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;
and
(n) Whether transferred to Buyer pursuant to Section 6.12(b) or
retained by Sellers pursuant to Section 6.12(c), the assets comprising the
Decommissioning Funds together with all related accounting and other records
other than general ledger accounting records.
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 expressly identified in Schedule 4.13(b) or 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 Facilities (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"), and those certain assets, facilities and agreements
identified on Schedule 2.2(a);
(b) Certain switches and meters in the Facilities, gas facilities,
revenue meters and remote testing units, drainage pipes and systems, as
identified in the Easement, License and Attachment 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 (including, without
limitation, Sellers' account balances with Nuclear Electric Insurance Limited),
except the assets comprising the Decommissioning Funds;
22
(d) All cash, cash equivalents, bank deposits, accounts and notes
receivable (trade or otherwise), and any income, sales, payroll or other tax
receivables (including, without limitation, Sellers' account balances with
Nuclear Electric Insurance Limited), except the assets comprising the
Decommissioning Funds;
(e) Subject to the license referred to in Section 2.1(j) hereof, the
rights of Sellers and their Affiliates to the names "GPU", "GPU Energy", "GPU
Nuclear", "Jersey Central Power & Light Company", "JCP&L", "Metropolitan Edison
Company" or "Met-Ed", "Pennsylvania Electric Company" or "Penelec", 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 Sellers are 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) 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 Facilities or the Site and
relating to any period prior to the Closing Date;
(h) 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 the provision of goods and services, payment
arrangements, intercompany charges or balances, or the like; and
(i) Any right, title and interest in (A) those certain parcels of
real property (including all buildings, facilities and other improvements
thereon and all appurtenances thereto) pertaining to Three Mile Island Unit 2
Nuclear Generating Facility, including those described in Schedule 2.2(i)
("TMI-2"), or (B) the structures and improvements comprising the dams referred
to in the York Haven Dam Agreements, except that this paragraph shall not be
construed to limit in any way the rights conveyed to Buyer in accordance with
the Exclusion Area Agreement between Buyer and Sellers.
2.3 Assumed Liabilities and Obligations. On the Closing Date, Buyer shall
deliver to Sellers the Assignment and Assumption Agreement pursuant to which
Buyer shall assume and 23
agree to discharge when due, all of the following liabilities and obligations of
Sellers (collectively, "Assumed Liabilities and Obligations"):
(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 and disclosed on
the relevant schedule 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;
(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 on and after the Closing Date for which Buyer is responsible pursuant
to Section 6.10;
(d) All liabilities and obligations of Sellers with respect to the
Purchased Assets under the agreements set forth on Schedule 4.15(a) arising
after the Closing;
(e) 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;
(f) All liabilities and obligations of Sellers for Decommissioning
of the Facilities; and
(g) All liabilities and obligations of Sellers to SRBC or any third
party to pay the annual operation and maintenance expense provided for in the
Cowanesque Reservoir Agreements.
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"):
24
(a) Any liabilities or obligations of Sellers in respect of any
Excluded Assets (including TMI-2) or other assets of Sellers which are not
Purchased Assets, including any liability or obligation for the Decommissioning
of TMI-2;
(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 prior to the Closing Date;
(d) 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. Section 50.54(w), other than
any liabilities or obligations which have been expressly assumed by Buyer under
Section 2.3;
(e) Any fines, penalties or costs imposed by a Governmental
Authority with respect to the Purchased Assets resulting from (i) an
investigation, proceeding, request for information or inspection before or by a
Governmental Authority relating to actions or omissions prior to the Closing
Date, or (ii) illegal acts, willful misconduct or gross negligence of Sellers;
(f) Any payment obligations of Sellers for goods delivered or
services rendered prior to the Closing Date, including, but not limited to,
rental or lease payments pursuant to the Real Property Leases and any leases
relating to Tangible Personal Property;
(g) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability, obligation or
responsibility is known or unknown,
25
contingent or accrued (whether or not arising or made manifest before the
Closing Date or on or after the Closing Date), arising as a result of or in
connection with (i) the Residual Waste Landfill, (ii) the Real Property
pertaining to TMI-2, as described in Schedule 2.2(i), (iii) the Real Property
identified as the "Substation" on the map included in Schedule 4.13(a), (iv)
loss of life, injury to persons or property or damage to natural resources 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; (v)
any violation or alleged violation of Environmental Laws prior to the Closing
Date with respect to the ownership or operation of any of the other Purchased
Assets; (vi) loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the presence or Release of, or the
Remediation (whether or not such Remediation commenced before the Closing Date
or commences on or after the Closing Date) of Hazardous Substances at, on, in,
under, adjacent to or migrating from the Purchased Assets prior to 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;
(h) 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;
(i) Any liabilities, obligations or responsibilities 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 liabilities, obligations or responsibilities 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;
(j) Any liabilities or obligations relating to personal injury,
discrimination, wrongful discharge, unfair labor
26
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;
(k) 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 a Seller 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 any
multi-employer plan contributed to at any time by a Seller or any ERISA
Affiliate, or any multi-employer plan to which a Seller or ERISA Affiliate is or
was obligated at any time to contribute, including but not limited to any
liability (i) relating to benefits payable under any Benefit Plans; (ii)
relating to the PBGC under Title IV of ERISA; (iii) relating to a multi-employer
plan; (iv) with respect to non-compliance with the notice and benefit
continuation requirements of COBRA; (v) with respect to any noncompliance with
ERISA or any other applicable laws; or (vi) with respect to any suit, proceeding
or claim which is brought against Buyer, any Benefit Plan, ERISA Affiliate Plan,
any fiduciary or former fiduciary of any such Benefit Plan or ERISA Affiliate
Plan;
(l) Subject to Section 6.10, any liabilities or obligations relating
to the employment or termination of employment, including discrimination,
wrongful discharge, unfair labor practices, or constructive termination by a
Seller of any individual, attributable to any actions or inactions by Sellers
prior to the Closing Date other than such actions or inactions taken at the
written direction of Buyer;
(m) Subject to Section 6.10, any obligations for wages, overtime,
employment taxes, severance pay, transition payments 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;
(n) All liabilities and obligations of Sellers to SRBC or any third
party to pay the construction costs provided for in the Cowanesque Reservoir
Agreements;
(o) Any liability of a Seller arising out of a breach by a Seller or
any of its Affiliates of any of their respective obligations under this
Agreement or the Ancillary Agreements; and
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(p) Any other liability or obligation of a Seller not specifically
assumed hereunder.
2.5 Control of Litigation. 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,
so long as such defense, settlement or other activities do not unreasonably
interfere with Buyer's operation of the Facilities, and Buyer agrees to
cooperate with Sellers (at Sellers' expense) in connection therewith.
ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the satisfaction of the
conditions contained in Article VII of this Agreement, the 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 Morgan Lewis & Bockius
LLP, 1701 Market Street, Philadelphia, Pennsylvania, 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, but in any event not before the completion of the Refueling Outage
(unless the Parties otherwise agree pursuant to Section 6.1(e)), 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
in consideration of the Purchased Assets other than the nuclear fuel in the
TMI-1 reactor core on the Closing Date, an aggregate amount of Twenty-Three
Million Dollars ($23,000,000) (the "Closing Payment"), plus or minus any
adjustments pursuant to the provisions of this Agreement, by wire transfer of
immediately
28
available funds denominated in U.S. dollars or by such other means as are agreed
upon by Sellers and Buyer. In addition, in consideration of the nuclear fuel in
the TMI-1 reactor core on the Closing Date, Buyer will pay or cause to be paid
to Seller annually in five equal installments (each a "Fuel Payment" and
together with the Closing Payment, the "Purchase Price"), commencing on the
first anniversary of the Closing Date and on each subsequent anniversary of the
Closing Date until the fifth Fuel Payment has been paid, the sum of Fifteen
Million Four Hundred Fifty-Three Thousand Four Hundred Dollars ($15,453,400)
(which amount shall be deemed to include interest from the Closing Date at the
lowest rate permitted by Treas. Reg. Section 1.483-3 to avoid the imputation of
interest thereon), 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 adjusted if the Closing Date
occurs on a date other than December 31, 1999, as set forth on Schedule
3.3(a)(ii).
(iii) The Purchase Price shall be increased by the amount
expended 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 are
capitalized by Sellers in accordance with their 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 TMI-1, (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 ("Capital Expenditures"). Nothing in
this paragraph should be construed to limit Sellers' rights and
obligations to make all capital expenditures necessary to comply with NRC
licenses and other Permits.
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(iv) The Purchase Price shall be adjusted from time to time
following the Closing Date by the payment of an amount (the "Deal Strike
Price Adjustment") for the period of January 1, 2002 through December 31,
2010, under the Deal Strike Price Adjustment Agreement.
(v) In the event the assets of any of the Nonqualified
Decommissioning Funds are retained by Sellers after the Closing pursuant
to Section 6.12(c), the Purchase Price shall be adjusted downward by an
amount equal to the sum of (i) the net present value of the tax on the Net
Unrealized Gains of such retained assets at Closing using a discount rate
of 7%, an assumed tax rate of 41.49% and assuming that all Net Unrealized
Gains are realized in 2014, and (ii) the amount in clause (i) divided by
0.5851.
(vi) The Purchase Price shall be adjusted downward by Five
Million Dollars ($5,000,000) on the Closing Date to account for
anticipated repairs or replacement of the Facility's low pressure
turbines.
(b) At least thirty (30) calendar 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
all estimated adjustments to the Purchase Price required by Section 3.3(a)
(other than with respect to subparagraph (a) (iv) thereof) (the "Estimated
Adjustment"). Within ten (10) calendar days following the delivery of the
Estimated Closing Statement by Sellers to Buyer, 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 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 resolved as
part of the Proposed Post-Closing Adjustment set forth in Section 3.3(c) and
paid as part of any 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) (other than with respect to subparagraph (a) (iv) thereof)
(the "Proposed 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
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delivery of the Post-Closing Statement by Sellers to Buyer, Buyer may object to
the Proposed Post-Closing Adjustment in writing. Sellers agree to cooperate with
Buyer to provide Buyer with the information used to prepare the Post-Closing
Statement and information relating thereto. If Buyer objects to the Proposed
Post-Closing Adjustment, the Parties shall attempt to resolve such dispute by
negotiation. If the Parties are unable to resolve such dispute within thirty
(30) days of any objection by Buyer, the Parties shall appoint the Independent
Accounting Firm, which shall, at Sellers' and Buyer's joint expense, review the
Proposed Post-Closing Adjustment and determine the appropriate adjustment to the
Purchase Price, if any, within thirty (30) days of such appointment. The Parties
agree to cooperate with the Independent Accounting Firm and provide it with such
information as it reasonably requests to enable it to make such determination.
The finding of such Independent Accounting Firm shall be binding on the Parties
hereto. Upon determination of the appropriate adjustment (the "Post-Closing
Adjustment") by agreement of the Parties or by binding determination of the
Independent Accounting Firm, the Party owing the difference shall deliver such
amount 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.
3.4 Allocation of Purchase Price. Buyer and Sellers shall agree upon an
allocation among the Purchased Assets of the sum of the Purchase Price and the
Assumed Liabilities and Obligations consistent with Section 1060 of the Code and
the Treasury Regulations thereunder within sixty (60) days of the Closing Date.
In addition, prior to the Closing Date Buyer and Sellers shall allocate between
items which are "real estate" and items which are personal property or
"permanently attached machinery and equipment in an industrial plant", as those
terms are used in the Pennsylvania realty transfer tax statute, Act of July 2,
1996 P.L. 318, as amended, and the regulations promulgated pursuant thereto by
the Pennsylvania Department of Revenue at Chapter 91 of the Pennsylvania Code.
If Buyer and Sellers cannot agree on any such allocation, such dispute shall be
resolved in accordance with Section 6.8(d) of this Agreement. Each of Buyer and
Sellers agree to file Internal Revenue Service Form 8594, and all federal,
state, local and foreign Tax Returns, in accordance with any such agreed
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 allocation determined pursuant to this Section
3.4. Each of Buyer and Sellers agree to provide the other promptly with any
information required to complete Form 8594. Buyer and Sellers shall notify and
provide the other with reasonable assistance in the event of an examination,
audit or
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other proceeding regarding any allocation of the Purchase Price agreed to
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):
(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; and
(v) Rent and Taxes and other items payable by Sellers under the
Real Property Leases assigned to Buyer.
(b) In connection with the prorations referred to in (a) above, in
the event that actual figures are not available at the Closing Date, the
proration shall be based upon the actual Taxes or other amounts 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.
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(c)(i) Each of Sellers shall be responsible for any Pennsylvania
public utility realty tax pursuant to 72 P.S. Section 8102-A ("PURTA"),
additional PURTA assessments pursuant to 72 P.S. Section 8104-A, or any
successor tax or fee relating to calendar years ending prior to the Closing. In
addition, Sellers shall reimburse Buyer, in accordance with this Section 3.5(c),
for its proportionate share of PURTA, additional PURTA assessments or any
successor tax or fee levied or assessed, with respect to the Purchased Assets,
against Buyer for the calendar year in which the Closing occurs. The proration
shall be based upon the number of days within the Closing year that Sellers
owned the Purchased Assets. For example, if Closing occurs on December 1, 1999,
and Buyer incurs $1,000,000 in PURTA, additional PURTA assessments or any
successor tax or fee, then Sellers' proportionate share of such tax or fee shall
be calculated by multiplying $1,000,000 by a fraction, the numerator of which is
the amount of calendar days in 1999 which Seller owned the Purchased Assets
(335), and the denominator of which is the amount of days in 1999 (365).
Therefore, Sellers' proportionate share to be reimbursed to Buyer will be
$1,000,000 multiplied by 335/365, or $917,808.20. The reimbursement payable by
Sellers to Buyer hereunder shall be paid by Sellers within sixty (60) days after
Sellers' receipt from Buyer of documentation showing the imposition of PURTA,
additional PURTA assessment, or any successor tax or fee on the Purchased Assets
in the Closing year.
(ii) If Sellers are required to pay PURTA, additional PURTA or any
successor tax or fee relating to the Purchased Assets, in the year of sale,
Buyer shall reimburse Sellers, using the proration method described above, for
the portion of the amount so payable by Sellers that is attributable to the
number of days during such year that Buyer owned the Purchased Assets during
such year; provided, however, that the amount of the Buyer's required
reimbursement shall be reduced by the amount of any real estate, personal
property and ad valorem taxes on the Purchased Assets that the Buyer is required
to pay for the year of sale.
3.6 Deliveries by Sellers. At the Closing, each of Sellers will deliver,
or cause to be delivered, the following to Buyer:
(a) The Bill of Sale, duly executed by each of Sellers;
(b) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Sellers with respect to the transfer
of the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement;
33
(c) The opinions of counsel and officer's certificates contemplated
by Section 7.1;
(d) One or more special warranty deeds conveying the Real Property
to Buyer, in substantially the form of Exhibit G hereto, duly executed and
acknowledged by the appropriate Sellers or York Haven in recordable form, and
any owner's affidavits or similar documents reasonably required by the title
company;
(e) All Ancillary Agreements, duly executed by each of Sellers;
(f) A FIRPTA Affidavit, duly executed by each of Sellers;
(g) Copies, certified by the Secretary or Assistant Secretary of
each Seller, 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 each Sellers' state of incorporation, as
applicable;
(j) Tax clearance certificates for each jurisdiction identified on
Schedule 4.20;
(k) To the extent available, originals of all Sellers' Agreements,
Real Property Leases and Transferable Permits and, if not available, true and
correct copies thereof;
(l) The assets of the Decommissioning 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/or, the assets of the Decommissioning Funds
to be retained by Sellers pursuant to Section 6.12(c), shall be delivered to the
Trustee under the Decommissioning Trust Agreement;
(m) 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; and
34
(n) Such other agreements, documents, instruments and writings 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 Closing Payment, as adjusted pursuant to Section 3.3;
(b) The opinions of counsel and certificates contemplated by Section
7.2;
(c) All Ancillary Agreements, duly executed by Buyer;
(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 and Obligations 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;
(h) 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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
GPU Nuclear, jointly and severally with the other Sellers, and each of the
other Sellers, severally as to matters involving
35
such Seller only and in accordance with their respective pro rata ownership
interests in the Purchased Assets as to all other representations and
warranties, hereby represent and warrant to Buyer as follows (all such
representations and warranties, except those regarding Sellers individually,
being made to the Knowledge of Sellers):
4.1 Organization; Qualification. Each of JCP&L and GPU Nuclear is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey and has all requisite corporate power and authority
to own, lease, and operate its properties and to carry on its business as is now
being conducted. Each of Met-Ed and Penelec is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania 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. Sellers are duly qualified or licensed to do business as foreign
corporations and are in good standing in each jurisdiction in which the property
owned, leased or operated by them or the nature of the business conducted by
them makes such qualification necessary, except in each case in those
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not create a Material Adverse Effect. Sellers have heretofore
delivered to Buyer complete and correct copies of their Certificates or Articles
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 hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action required on the part of
Sellers and no other corporate proceedings on the part of Sellers are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Sellers, andassuming that this Agreement constitutes a valid and binding
agreement of Buyer, subject to the receipt of Sellers' Required Regulatory
Approvals, 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 the enforcement of creditors rights generally or
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.
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(a) Except as set forth in Schedule 4.3(a), and subject to the
receipt of Sellers' Required Regulatory Approvals, neither the execution and
delivery of this Agreement by Sellers nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in the breach or violation
of any provision of the Certificates or Articles of Incorporation or Bylaws of
Sellers, (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(x) where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, individually or in the aggregate, would
not create a Material Adverse Effect or (y) for those requirements which become
applicable to Sellers 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; (iii) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Sellers are a party or by
which Sellers, 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 order, writ, injunction, decree, statute, rule or
regulation applicable to Sellers, or any of their assets, which violation,
individually or in the aggregate, would create a Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b) (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Sellers' Required Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of
anygovernmental or regulatory body or authority is necessary for the
consummation by Sellers of the transactions contemplated hereby, other than (i)
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, will not, individually or in the
aggregate, create a Material Adverse Effect or (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which become
applicable to Sellers as a result of the specific regulatory status of Buyer (or
any of its Affiliates) or the 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 Reports. Since January 1, 1994, Sellers have filed or caused to be
filed with the SEC, the applicable state or local utility commissions or
regulatory bodies, the NRC and the FERC,
37
as the case may be, all material forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by them with respect to the Purchased Assets or the operation thereof
under each of the Securities Act, the Exchange Act, the applicable state public
utility laws, the Federal Power Act, the Holding Company Act, the Atomic Energy
Act, the Energy Reorganization Act, and the Price-Anderson Act and the
respective rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder in effect on the date each such report was
filed, and there are no material misstatements or omissions in respect of such
reports; provided however, that Sellers shall not be deemed to be making any
representation or warranty to Buyer hereunder concerning the financial
statements of Sellers or any such Affiliate contained in any such reports.
4.5 Undisclosed Liabilities. Except as set forth in Schedule 4.5, the
Purchased Assets are not subject to any material liability or obligation
(whether absolute, accrued, 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.
4.6 Absence of Certain Changes or Events. Since January 1, 1998, except as
set forth in Schedule 4.6, there has not been: (a) any Material Adverse Effect;
(b) any damage, destruction or casualty loss, whether or not covered by
insurance, which, individually or in the aggregate, created a Material Adverse
Effect or (c) any agreement, commitment or transaction entered into by Sellers
that is material to the ownership or operation of the Purchased Assets and
remains in full force and effect on the date hereof.
4.7 Title and Related Matters. Except for Permitted Encumbrances, each
Seller and York Haven has good and marketable title to the Real Property to be
conveyed by it hereunder free and clear of all Encumbrances. The Real Property
constitutes all of the real property necessary to operate the Facilities as
currently operated. 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. The Sellers own the Purchased Assets (other
than the Real Property identified on Schedule 4.13(a) as being owned by York
Haven) in the respective percentage amounts set forth on Schedule 4.7(c).
4.8 Leases. Schedule 4.8 lists, as of the date of this Agreement, all real
property leases, easements, licenses and
38
other rights in real property (collectively, the "Real Property Leases") to
which any 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 4.8, 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.
4.9 Insurance. Except as set forth in Schedule 4.9, all material policies
of fire, liability, worker's compensation and other forms of insurance owned or
held by Sellers and insuring the Purchased Assets are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
date as of which this representation is being made have been paid (other than
retroactive premiums which may be payable with respect to comprehensive general
liability and worker's 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 4.9, as of the date of this
Agreement, Sellers have not been refused any insurance with respect to the
Purchased Assets nor has their coverage been limited by any insurance carrier to
which they have applied for any such insurance or with which they have carried
insurance during the last twelve months.
4.10 Environmental Matters. Except as disclosed in Schedule 4.10 or in the
"Phase I" or supplemental environmental site assessments prepared by Buyer's
environmental consultants and made available for inspection by Sellers:
(a) Sellers hold, and are in compliance with, all permits,
certificates, licenses and governmental authorizations under applicable
Environmental Laws ("Environmental Permits") required for Sellers to own and
operate the Purchased Assets, and Sellers are otherwise in compliance with
applicable Environmental Laws with respect to their ownership and operation of
the Purchased Assets except for such failures to hold or comply with required
Environmental Permits, or such failures to be in compliance with applicable
Environmental Laws, which, individually or in the aggregate, would not create a
Material Adverse Effect;
(b) None of Sellers have received any written request for
information, or been notified that they are a potentially
39
responsible party, under CERCLA or any similar state law with respect to the
Site, except for such liability under such laws as would not create,
individually or in the aggregate, a Material Adverse Effect; and
(c) None of Sellers have entered into or agreed to any consent
decree or order with respect to or affecting the Purchased Assets 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, 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.
4.11 Labor Matters. Sellers have previously delivered to Buyer true,
correct and complete copies of all collective bargaining agreements to which
Sellers are a party or are subject and which relate to the Purchased Assets.
With respect to the ownership or operation of the Purchased Assets, except to
the extent set forth in Schedule 4.11 (which matters shall remain the sole
responsibility of Sellers): (a) Sellers are in compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours; (b) none of Sellers have received notice of any
unfair labor practice complaint pending before the National Labor Relations
Board; (c) there is no labor strike, slowdown or stoppage actually pending or
threatened by any authorized representative of any union or other representative
of employees against or affecting Sellers; (d) none of Sellers have received
notice that any representation petition respecting the employees of Sellers has
been filed with the National Labor Relations Board; (e) no arbitration
proceeding arising out of or under collective bargaining agreements is pending
against Sellers; and (f) Sellers have not experienced any primary work stoppage
since at least December 31, 1994.
4.12 ERISA; Benefit Plans.
(a) Schedule 4.12(a) lists all deferred compensation,
profit-sharing, retirement and pension plans, including multi-employer plans (of
which none exist), and all material bonus and other employee benefit or fringe
benefit plans, including multi-employer plans (of which none exist), maintained
or with respect to which contributions are made by Sellers in respect to current
or former employees employed at the Purchased Assets ("Benefit Plans"). True,
correct, and complete copies of all such Benefit Plans have been made available
to Buyer.
40
(b) Except as set forth in Schedule 4.12(b), Sellers and the ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
requirements of Section 302 of ERISA and Section 412 of the Code with respect to
each Benefit Plan which is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA and to which Section 302 of ERISA applies, and each such
plan is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code. Except as set forth in Schedule 4.12(b),
neither Sellers nor any ERISA Affiliate has incurred any liability under
Sections 4062(b), 4063 or 4064 of ERISA to the Pension Benefit Guaranty
Corporation in connection with any Benefit Plan which is subject to Title IV of
ERISA, nor any withdrawal liability to any multi-employer pension plan under
Section 4201 et. seq. of ERISA or to any multi-employer welfare benefit plan,
nor is there or has there been any reportable event (as defined in Section 4043
of ERISA) with respect to any Benefit Plan except as set forth in Schedule
4.12(b). Except as set forth in Schedule 4.12(b), the IRS has issued a letter
for each Benefit Plan which is intended to be qualified determining that such
plan is exempt from United States Federal Income Tax under Sections 401(a) and
501(a) of the Code, and there has been no occurrence since the date of any such
determination letter (including but not limited to statutory or regulatory
changes to the requirements of Section 401(a) of the Code for which the remedial
amendment period has expired) which has or could have adversely affected such
qualification.
(c) None of Sellers nor any ERISA Affiliate or parent or successor
corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction which may be disregarded under Section 4069 or Section 4212(c) of
ERISA. No Benefit Plan ERISA Affiliate Plan is a multi-employer plan.
(d) Each of Sellers that maintains a "group health plan" within the
meaning of Section 5000(b)(1) of the Code or Sections 607(1) and 733(a) of ERISA
and related regulations, has materially complied with all reporting, disclosure,
notice, election, coverage and other benefit requirements of Sections 4980B and
9801-9833 of the Code and Sections 601-734 of ERISA as and when applicable to
such plans.
4.13 Real Property; Plant and Equipment.
(a) Schedule 4.13(a) contains a description of, and exhibits
indicating the location of, the real property owned by Sellers or York Haven and
included in the Purchased Assets (the "Real Property"). For purposes of this
Agreement, all of the Real Property titled in the name of York Haven shall be
deemed to be owned by Sellers, and Sellers shall cause York Haven to convey such
Real Property to Buyer at the Closing, free and clear of all
41
Encumbrances other than Permitted Encumbrances, as if such Real Property were
owned directly by Sellers. All Encumbrances on the Real Property (other than
Permitted Encumbrances) shall be released on or before the Closing Date.
Complete and correct copies of any current surveys in Sellers' possession or any
policies of title insurance currently in force and in the possession of Sellers
with respect to the Real Property have heretofore been delivered by Sellers to
Buyer.
(b) Schedule 4.13(b) contains a description of the major equipment
components and personal property comprising the Purchased Assets as of the date
hereof.
(c) Except for the exceptions listed in Schedule 4.13(c), the
Purchased Assets conform in all material respects to the Technical
Specifications and the Final Safety Analysis Report (FSAR) and are being
operated and are in material conformance with all applicable requirements under
the Atomic Energy Act, the Energy Reorganization Act, and the rules,
regulations, orders, and licenses issued thereunder.
4.14 Condemnation. Except as set forth in Schedule 4.14, 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.
4.15 Certain Contracts and Arrangements.
(a) Except (i) as listed in Schedule 4.15(a) or the other schedules
to this Agreement ("Sellers' Agreements") or (ii) for contracts, agreements,
personal property leases, commitments, understandings or instruments in which
all obligations of Sellers will expire prior to the Closing Date, Sellers are
not a party to any written contract, agreement, personal property lease,
commitment, understanding or instrument which is material to the ownership or
operation of the Purchased Assets.
(b) Except as disclosed in Schedule 4.15(b), each of Sellers'
Agreements (i) constitutes the legal, valid and binding obligation of one or
more of Sellers, and constitutes the legal, valid and binding obligation of the
other parties thereto, (ii) is in full force and effect, and (iii) may be
transferred or assigned to Buyer at the Closing without consent or approval 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.
42
(c) Except as set forth in Schedule 4.15(c), there is not, under any
of Sellers' Agreements, any default or event which, with notice or lapse of time
or both, would constitute a default on the part of any of the parties thereto,
except such events of default and other events as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, create a Material Adverse Effect.
4.16 Legal Proceedings, etc. Except as set forth in Schedule 4.16 or in
any filing made by Sellers or any of their Affiliates pursuant to the Securities
Act, the Exchange Act or the Atomic Energy Act, there are no claims, actions,
proceedings or investigations pending or threatened against or relating to
Sellers before any court, governmental or regulatory authority or body which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 4.16 or in any filing
made by Sellers or any of their Affiliates pursuant to the Securities Act, the
Exchange Act or the Atomic Energy Act, Sellers are not subject to any
outstanding judgment, rule, order, writ, injunction or decree of any court,
governmental or regulatory authority which, individually or in the aggregate,
could have a Material Adverse Effect.
4.17 Permits
(a) Sellers have all permits, licenses, franchises and other
governmental authorizations, consents and approvals, other than with respect to
permits under Environmental Laws referred to in Section 4.10 hereof or permits
issued by the NRC referred to in Section 4.18 hereof (collectively, "Permits"),
used in or necessary for the ownership and operation of the Purchased Assets as
presently conducted. Except as set forth in Schedule 4.17(a), Sellers have not
received any written notification that they are in violation of any of such
Permits, or any law, statute, order, rule, regulation, ordinance or judgment of
any governmental or regulatory body or authority applicable to it, except for
notifications of violations which would not, individually or in the aggregate,
have a Material Adverse Effect. Sellers are in compliance with all Permits,
laws, statutes, orders, rules, regulations, ordinances, or judgments of any
governmental or regulatory body or authority applicable to the Purchased Assets,
except for violations which, individually or in the aggregate, could not have a
Material Adverse Effect.
(b) Schedule 4.17(b) sets forth all material Permits and
Environmental Permits other than Transferable Permits (which are set forth on
Schedule 1.1(149) applicable to the Purchased Assets.
4.18 NRC Licenses.
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(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 the Atomic Energy Act and
the Energy Reorganization Act. Except as set forth in Schedule 4.18(a), Sellers
have not received any written notification that they are 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 the Atomic Energy Act, the Energy Reorganization
Act, and all orders, rules, regulations, or decisions of NRC 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 4.18(b) sets forth all material permits, licenses, and
other consents and approvals issued by the NRC applicable to the Purchased
Assets.
4.19 Regulation as a Utility. Each of JCP&L, Met-Ed and Penelec is an
electric utility company within the meaning of the Holding Company Act, a public
utility within the meaning of the Federal Power Act and an electric utility
within the meaning of the NRC regulations implementing the Atomic Energy Act.
Except as set forth on Schedule 4.19 or with respect to local tax and zoning
laws, Sellers are not subject to regulation as a public utility or public
service company (or similar designation) by the United States, any state of the
United States, any foreign country or any municipality or any political
subdivision of the foregoing.
4.20 Taxes. With respect to the Purchased Assets (i) all Tax Returns
required to be filed have been filed, and (ii) all material Taxes shown to be
due on such Tax Returns have been paid in full. Except as set forth in Schedule
4.20, 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 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 statutory periods
of limitation for Taxes associated with the Purchased Assets for any period.
Schedule 4.20 sets forth the taxing jurisdictions in which Sellers own assets or
conduct 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 clearances in connection therewith, would either
require Buyer to withhold
44
any portion of the Purchase Price or would subject Buyer to any liability for
any Taxes of Sellers.
4.21 Year 2000 Qualification. Subject to the timely completion of the work
program contained in Schedule 7.1(s), all of the hardware, software and firmware
products (including embedded microcontrollors in non-computer equipment) which
are included in the Purchased Assets are Year 2000 Qualified based on
implementation of a program similar to that outlined in Nuclear Utility Year
2000 Readiness, NEI/NUSMG 97-07. For purposes of this Agreement, "Year 2000
Qualified" shall mean that all constituent software, controllers, central
processing units, and other computer equipment, including all components,
applications and modules thereof, are either "Year 2000 Compliant" or "Year 2000
Ready" as defined in NEI/NUSMG 97-07 and as restated below. Notwithstanding the
following definitions, an item required to be Year 2000 Qualified that does not
satisfy the definition of Year 2000 Compliant shall only be considered Year 2000
Ready (and consequently Year 2000 Qualified) if (i) the item maintains its
function as it crosses any key date even if there may be date errors or some
form of compensatory action required to maintain valid functional operation;
(ii) a deficiency can be addressed by pre-defined manual action; and (iii) the
integration of all manual actions required are confirmed to be reasonably within
the capability of the facility resources and can be accomplished without any
material risk of loss, damage or destruction to facility equipment or the
operation of the Facilities. As used herein (and as defined in NEI/NUSMG 97-07)
(i) the term "Year 2000 Compliant" means computer systems or applications that
accurately process date/time data (including but not limited to calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, the years 1999 and 2000, and leap-year calculations; and
(ii) the term "Year 2000 Ready" means a computer system or application that has
been determined to be suitable for continued use into the year 2000 even though
the computer system or application is not fully Year 2000 Compliant.
4.22 Qualified Decommissioning Funds.
(a) Each of Sellers' Qualified Decommissioning Funds 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. Each of
Sellers' Qualified Decommissioning Funds satisfies the requirements necessary
for
45
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). Each such Fund is in compliance in all material respects
with all applicable rules and regulations of the NRC, the PaPUC, the NJBPU and
the IRS. None of Sellers' Qualified Decommissioning Funds has 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 Sellers' Qualified Decommissioning Funds 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 Funds under Treas. Reg Section 1.468A-5(c)(1). Sellers
have made timely and valid elections to make annual contributions to the
Qualified Decommissioning Funds since 1984. 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 Qualified
Decommissioning Funds to be transferred to Buyer in accordance with the
provisions of this Agreement.
(c) Sellers and/or the Trustee of each of the Qualified
Decommissioning Funds have filed or caused to be filed with the NRC, the IRS and
any state or local authority all material forms, statements, reports, 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 each of the Qualified
Decommissioning Funds, 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 Qualified Decommissioning Funds 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 supplementals thereto, promptly after they
have been filed with the IRS. Any amounts contributed to the Qualified
Decommissioning Funds while such requests are pending before the IRS and which
turn out to be in excess of the applicable amounts provided in the schedule of
ruling amounts issued by the IRS will be withdrawn from the Qualified
Decommissioning Funds 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
46
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 Buyer may contribute to the Qualified
Decommissioning Funds or may require distributions to be made from the Qualified
Decommissioning Funds.
(d) Sellers have made available to Buyer the balance sheets for each
of the Qualified Decommissioning Funds as of December 31, 1997 and as of the
last Business Day before Closing, and they present fairly as of December 31,
1997 and as of the last Business Day before Closing, the financial position of
each of the Qualified Decommissioning Funds 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 Qualified
Decommissioning Funds 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. Section 1.468A-5(b)(2) or agency or other legal
proceedings that may materially affect the financial position of each of the
Qualified Decommissioning Funds other than those, if any, that are disclosed on
Schedule 4.22.
(e) Sellers have made available to Buyer all contracts and
agreements to which the Trustee of each of the Qualified Decommissioning Funds,
in its capacity as such, is a party.
(f) Each of the Qualified Decommissioning Funds 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 4.22, no notice of
deficiency or assessment has been received from any taxing authority with
respect to liability for Taxes of each of the Qualified Decommissioning Funds
which have not been fully paid or finally settled, and any such deficiency shown
in such Schedule 4.22 is being contested in good faith through appropriate
proceedings. Except as set forth in Schedule 4.22, there are no outstanding
agreements or waivers extending the applicable statutory periods of limitations
for Taxes associated with each of the Qualified Decommissioning Funds for any
period.
(g) To the extent Sellers have pooled the assets of the Qualified
Decommissioning Funds 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.
47
(h) In the event Sellers retain any of the assets of the Qualified
Decommissioning Funds after the Closing Date pursuant to the provisions of
Section 6.12(c) hereof, the representations and warranties set forth in
paragraphs (a) through (g) of this Section 4.22 shall survive the Closing Date
and shall remain continuing obligations of Sellers and Sellers shall comply with
all the conditions therein until the assets of the Qualified Decommissioning
Funds are transferred to Buyer pursuant to Section 6.12(d)(iv) or expended in
full for Decommissioning the Facilities. Notwithstanding the foregoing, in the
case of any Decommissioning Funds, the assets of which are retained by Sellers
after the Closing pursuant to Section 6.12(c), Sellers shall be liable for a
breach of or a failure to comply with any of the representations, warranties or
conditions set forth in paragraphs (a) through (g) of this Section 4.22 that
occurs after the Closing only if such failure results from either (i) any action
taken by Sellers without the written consent of Buyer, or (ii) failure by
Sellers to take any action they are directed in writing by Buyer to take.
4.23 Nonqualified Decommissioning Funds.
(a) Each of Sellers' Nonqualified Decommissioning Funds 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. Each of
Sellers' Nonqualified Decommissioning Funds is in full compliance with all
applicable rules and regulations of the NRC, the PaPUC and the NJBPU.
(b) Subject only to Sellers' Required Regulatory Approvals, Sellers
have all requisite authority to cause the assets of the Nonqualified
Decommissioning Funds to be transferred to Buyer in accordance with the
provisions of this Agreement.
(c) Sellers and/or the Trustee of the Nonqualified Decommissioning
Funds have filed or caused to be filed with the NRC and any state or local
authority all material forms, statements, reports, 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 sheets for the
Nonqualified Decommissioning Funds as of December 31, 1997 and as of the last
Business Day before Closing, and they present fairly as of December 31, 1997 and
as of the last Business Day before Closing, the financial position of the
Nonqualified Decommissioning Funds in conformity with generally accepted
accounting principles applied on a consistent basis,
48
except as otherwise noted therein. Sellers have made available to Buyer
information from which Buyer can determine the Tax Basis as of the last Business
Day before Closing of all assets (other than cash) of the Nonqualified
Decommissioning Funds transferred to Buyer pursuant to Section 6.12(b). 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
Nonqualified Decommissioning Funds other than those, if any, that are disclosed
on Schedule 4.23.
(e) Sellers have made available to Buyer all contracts and
agreements to which the Trustee of the Nonqualified Decommissioning Funds, in
its capacity as such, is a party.
(f) In the event Sellers retain any of the assets of the
Nonqualified Decommissioning Funds after the Closing Date pursuant to the
provisions of Section 6.12(c) hereof, the representations and warranties set
forth in paragraphs (a) through (e) of this Section 4.23 shall survive the
Closing Date and shall remain continuing obligations of Sellers and Sellers
shall comply with all the conditions therein until the assets of the
Nonqualified Decommissioning Funds are transferred to Buyer pursuant to Section
6.12(d)(iv) or expended in full for Decommissioning the Facilities.
Notwithstanding the foregoing, in the case of any Decommissioning Funds, the
assets of which are retained by Sellers after the Closing pursuant to Section
6.12(c), Sellers shall be liable for a breach of or a failure to comply with any
of the representations, warranties or conditions set forth in paragraphs (a)
through (g) of this Section 4.22 that occurs after the Closing only if such
failure results from either (i) any action taken by Sellers without the written
consent of Buyer, or (ii) failure by Sellers to take any action they are
directed in writing by Buyer to take.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
ARTICLE IV, THE PURCHASED ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS, WHERE
IS," AND SELLERS ARE NOT MAKING ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN
OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH PURCHASED ASSETS,
INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows (all such
representations and warranties, except those regarding Buyer, being made to the
Knowledge of Buyer):
49
5.1 Organization. Buyer is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as is now being conducted. Buyer 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
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action required on the part of
Buyer and no other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Buyer, and
assuming that this Agreement constitutes a valid and binding agreement of
Sellers, subject to the receipt of Buyer Required Regulatory Approvals,
constitutes a 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 or general principles of equity.
5.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 5.3(a), and other than obtaining
Buyer Required Regulatory Approvals, neither the execution and delivery of this
Agreement by Buyer nor the purchase by Buyer of the Purchased Assets pursuant to
this Agreement will (i) conflict with or result in any breach of any provision
of the Certificate of Formation or Operating Agreement (or other similar
governing documents) of Buyer, (ii) require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Authority,
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, agreement, lease or other instrument or
obligation to which Buyer is a party or by which any of its 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
50
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 such Schedule are collectively referred to as the "Buyer's
Required Regulatory Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any Governmental Authority
is necessary for the consummation by Buyer of the transactions contemplated
hereby.
5.4 Regulation as a Utility. As of the date hereof, Buyer is not subject
to regulation as a public utility or public service company by the United
States, any State of the United States, any foreign country or any municipality
or any political subdivision of the foregoing; however, upon the receipt of
certain of the Buyer's Required Regulatory Approvals and the Closing, Buyer is
expected to be a public utility company within the meaning of the Federal Power
Act and may be an electric utility within the meaning of NRC regulations
implementing the Atomic Energy Act. In addition, as a result of certain such
filings and the Closing, Buyer may be a public utility under the Pennsylvania
Public Utility Code, but Buyer expects that any regulation of Buyer under the
Pennsylvania Public Utility Code as a public utility would be preempted by
federal law. Except as set forth in this Section 5.4, on Schedule 5.4, or with
respect to local tax and zoning laws, Buyer is not subject to regulation as a
public utility or public service company by the United States, any State of the
United States, any foreign country or any municipality or any political
subdivision of the foregoing.
5.5 Availability of Funds. Buyer has sufficient funds available to it or
has received binding written commitments from third parties (copies of which
have been provided to Sellers) to provide sufficient funds on the Closing Date
to pay the Purchase Price and to enable Buyer timely to perform all of its
obligations under this Agreement and Ancillary Agreements.
5.6 Legal Proceedings. There are no actions, suits or proceedings pending
against Buyer or its members before any court, arbitrator or governmental or
regulatory body or authority which, individually or in the aggregate, could have
a Buyer Material Adverse Effect. Neither Buyer nor its members is subject to any
outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or governmental or regulatory body or authority which,
individually or in the aggregate, have a Buyer Material Adverse Effect.
5.7 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 60 days of the
Closing Date.
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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 the extent Buyer
otherwise consents in writing, during the period from the date of this Agreement
to the Closing Date, Sellers (i) shall operate the Purchased Assets in the
ordinary course consistent with Good Utility Practices; (ii) shall use
Commercially Reasonable Efforts to preserve intact the Purchased Assets and
preserve the goodwill and relationships with customers, employees, suppliers and
others having business dealings with them with respect thereto; (iii) shall
maintain the insurance coverage described in Section 4.9; (iv) shall comply with
all applicable laws, rules and regulations relating to the Purchased Assets,
including without limitation, all nuclear regulatory and Environmental Laws; and
(v) shall continue to implement in accordance with Good Utility Practice
Sellers' Year 2000 Qualification program as set forth on Schedule 7.1(s).
Without limiting the generality of the foregoing, and, except as contemplated in
this Agreement or as described in Schedule 6.1, or as required under applicable
law or by any Governmental Authority, prior to the Closing Date, without the
prior written consent of Buyer, Sellers will not with respect to the Purchased
Assets:
(i) make any material change in the levels of fuel inventory
customarily maintained by Sellers with respect to the Purchased Assets;
(ii) except for Permitted Encumbrances, sell, lease (as lessor),
pledge, encumber, restrict, transfer or otherwise dispose of, or grant any right
with respect to, any of the Purchased Assets, other than assets used, consumed
or replaced in the ordinary course of business consistent with Good Utility
Practices;
(iii) modify, amend or voluntarily terminate prior to the
expiration date thereof any of Sellers' Agreements, and leases listed in
Schedule 4.8 (or any other lease to the extent any such extension or amendment
thereof would require the lease to be disclosed on Schedule 4.8) or any material
Permit or Environmental Permits or waive any default by, or release, settle or
compromise any claim against, any other party thereto, 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 Sellers' obligations to Buyer under
this Agreement;
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(iv) enter into any commitment for the purchase or sale of
nuclear fuel having a term that extends beyond December 31, 1999 or such other
date that the Parties mutually agree to be the date on which the Closing is
expected to occur;
(v) enter into any power sales agreement having a term that
extends beyond December 31, 1999 or such other date that the Parties mutually
agree to be the date on which the Closing is expected to occur;
(vi) amend in any material respect or cancel any liability or
casualty insurance policies related thereto, or fail to maintain by self
insurance or with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for such assets and
businesses;
(vii) enter into any commitment or contract for goods or services
not addressed in clauses (i) through (vii) above that will be delivered or
provided after December 31, 1999 or such other date that the parties mutually
agree to be the date on which the Closing is expected to occur that exceeds
$100,000 in the aggregate, unless such commitment or contract is terminable by
Sellers (or after the Closing Date by Buyer) without further liability, upon not
more than 60 days notice;
(viii) except as required by the terms of the IBEW Collective
Bargaining Agreement or regulatory requirements (a) hire any new employees, or
transfer any existing employees, other than to fill vacancies in existing
positions, (b) other than consistent with past practice, increase salaries or
wages of employees employed in connection with the Purchased Assets prior to
Closing, (c) take any action prior to Closing to effect a material change in the
IBEW Collective Bargaining Agreement or enter into any other collective
bargaining or representation agreement for employees, or (d) take any action
prior to the Closing to increase materially the aggregate benefits payable to
employees;
(ix) enter into any written or oral contract, agreement,
commitment or arrangement with respect to any of the transactions set forth in
the foregoing paragraphs (i) through (ix).
(b) 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 the operation of the
Purchased Assets and to facilitate the transfer of the Purchased
53
Assets to Buyer at the Closing. The Transition Committee will be kept fully
apprised by GPU Nuclear of all TMI-1 management and operating developments. The
Transition Committee shall arrange for Buyer to assess TMI-1's management and
employees and shall have access to the management and board of directors of GPU
Nuclear. The Transition Committee shall be accountable directly to the
respective chief executive officers of Buyer and GPU Nuclear and shall from time
to time report its findings to the senior management of each of Sellers and
Buyer.
(c) Between the date of this Agreement and the Closing Date, in the
interest of cooperation between Sellers and Buyer and to permit informed action
by Buyer regarding its rights pursuant to Section 6.1(a), the parties agree that
at the sole responsibility and expense of Buyer, and subject to compliance with
all applicable NRC rules and regulations, Sellers will permit designated
employees ("Observers") of Buyer to observe all operations of Sellers that
relate to the Purchased Assets, and such observation will be permitted on a
cooperative basis in the presence of personnel of Sellers but not restricted to
the normal business hours of Sellers; provided, however, that such observers and
their actions shall not interfere with the operation of TMI-1. Buyer's Observers
may recommend or suggest actions be taken or not be taken by Sellers; provided,
however, that Sellers will be under no obligation to follow any such
recommendations or suggestions and Sellers shall be entitled, subject to this
Agreement, to conduct their business in accordance with their own judgment and
discretion. Buyer's Observers shall have no authority to bind or make agreements
on behalf of Sellers; to conduct discussions with or make representations to
third parties on behalf of Sellers; or to issue instructions to or direct or
exercise authority over Sellers or any of Sellers' officers, employees, advisors
or agents.
(d) Sellers shall advise Buyer regarding implementation or changes
in PJM rules or procedures which are reasonably likely to have a Material
Adverse Effect on TMI-1. 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 TMI-1 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.
(e) This Agreement contemplates that the Closing shall occur after
TMI-1 has successfully completed the Refueling Outage and has returned to full
licensed capacity operation. Sellers shall conduct the Refueling Outage in
accordance with Good Utility Practice and all applicable NRC requirements,
including
54
the work identified on Schedule 7.1(o) hereof. The Parties recognize, however,
that it may be possible to satisfy all of the conditions precedent to Closing
prior to the commencement of the Refueling Outage. In such event, the Parties
desire to proceed with the Closing prior to the Refueling Outage; provided,
however, that the Parties in their discretion are able to agree on acceptable
terms and conditions for the allocation of liabilities and obligations
associated with the Refueling Outage. Accordingly, as promptly as practicable
after the date of this Agreement, the Parties shall negotiate in good faith the
terms and conditions under which the Closing Date could be advanced to a date
prior to the Refueling Outage. The topics to be negotiated include, among other
things, the following:
(i) The work schedule contemplated for the Refueling Outage,
including the number of scheduled days that TMI-1 would be out of service;
(ii) The capital, operating and maintenance budgets for the
Refueling Outage;
(iii) Criteria to distinguish between delays in the work schedule
attributable to various factors (e.g., performance delays, equipment delays,
etc.) and the assignment of financial responsibility to Buyer or Sellers for
such delays;
(iv) A mechanism to adjust the Fuel Payments to reflect the
purchase of the Purchased Assets prior to the Refueling Outage;
(v) An amendment to the PPA to increase the amount of time during
which the PPA would be in effect during calendar year 1999 at the price set
forth therein for the year 2000;
(vi) The representation of both Parties on a joint committee to
monitor the conduct of the Refueling Outage; and
(vii) A provision for expedited, non-judicial resolution of
disputes related to the Refueling Outage.
Nothing herein shall require any of the Parties to consummate the transaction
contemplated by this Agreement prior to the Refueling Outage.
6.2 Access to Information.
(a) In addition to the rights granted by Sections 6.1 (b), (c) and
(d), between the date of this Agreement and the Closing Date, Sellers will,
during ordinary business hours and
55
upon reasonable notice and subject to compliance with all applicable NRC rules
and regulations (i) give Buyer and Buyer Representatives reasonable access to
all books, records, plants, offices and other facilities and properties
constituting the Purchased Assets; (ii) permit Buyer to make such reasonable
inspections thereof as Buyer may reasonably request; (iii) furnish Buyer with
such financial and operating data and other information with respect to the
Purchased Assets as Buyer may from time to time reasonably request; (iv) furnish
Buyer a copy of each material report, schedule or other document filed or
received by them with respect to the Purchased Assets with the SEC, NRC, FERC,
PaPUC, NYPSC, the NJBPU or any other Governmental Authority having jurisdiction
over the Purchased Assets; provided, however, that (A) any such investigation
shall be conducted in such a manner as not to interfere unreasonably with the
operation of the Purchased Assets, (B) 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 that Sellers are legally
prohibited to supply. Sellers will provide Buyer with access to the Transferring
Employee Records, but Sellers shall not be required to provide access to other
employee records or medical information unless required by law or specifically
authorized by the affected employee.
(b) Buyer and Sellers acknowledge that all information furnished to
or obtained by Buyer or Buyer Representatives pursuant to this Section 6.2 shall
be subject to the provisions of the Confidentiality Agreement and shall be
treated as "Proprietary Information" (as defined in the Confidentiality
Agreement).
(c) For a period of seven (7) years after the Closing Date, each
Party and their respective Representatives shall have reasonable access to all
of the books and records of the Purchased Assets, including all Transferring
Employee Records or other personnel and medical records required by law, legal
process or subpoena, in the possession of the other Party or Parties to the
extent that such access may reasonably be required by such Party in connection
with the Assumed Liabilities and Obligations 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 or Parties in possession of such
books and records upon receipt of reasonable advance notice and during normal
business hours. The Party or Parties exercising this right of access shall be
solely responsible for any costs or expenses incurred by it or them pursuant to
this Section 6.2(c). If the Party or Parties in possession of such books and
records shall desire to dispose of any such books and records upon or prior to
the expiration of
56
such seven-year period, such Party or Parties shall, prior to such disposition,
give the other Party or Parties a reasonable opportunity at such other Party's
or Parties' expense, to segregate and remove such books and records as such
other Party or Parties may select.
(d) Sellers agree (i) not to release any Person (other than Buyer)
from any confidentiality agreement now existing with respect to the Purchased
Assets, or waive or amend any provision thereof, and (ii) to assign any rights
arising under any such confidentiality agreement (to the extent assignable) to
Buyer.
(e) Notwithstanding the terms of the Confidentiality Agreement and
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 and risk management of the Purchased Assets, and, to the
extent that Sellers consent, which consent shall not be unreasonably withheld,
to existing and potential customers and suppliers, and to such Persons with whom
Buyer expects it may have business dealings regarding the Purchased Assets from
and after the Closing Date; provided, however, that all such Persons agree in
writing to maintain the confidentiality of the Proprietary Information on
substantially the same terms and conditions as the Confidentiality Agreement.
(f) Except as may be permitted in the Confidentiality Agreement or
during the course of Buyer's due diligence investigation of the Purchased Assets
prior to the date hereof, 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.
(g) Upon the other Party's prior written approval (which approval
shall not be unreasonably withheld or delayed) either Party may provide
Proprietary Information of the other Party to the SEC, NRC, FERC, PaPUC, NYPSC,
the NJBPU or any other Governmental Authority having jurisdiction over the
Purchased Assets or any stock exchange, as may be necessary to obtain Sellers'
Required Regulatory Approvals or Buyer's Required Regulatory Approvals,
respectively, or to comply generally with any relevant law, rule or regulation.
The disclosing Party shall seek confidential treatment for the Proprietary
Information provided to any such Governmental Authority and the disclosing Party
shall notify the other Party as far in advance as practical of its intention to
release to any Governmental Authority any such Proprietary Information.
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(h) Except as required by law, unless otherwise agreed to in writing
by Buyer, Sellers shall keep (i) all Proprietary Information confidential and
not disclose or reveal any Proprietary Information to any Person other than
Representatives of Sellers who are actively and directly participating in the
transactions contemplated hereby or who otherwise need to know the Proprietary
Information for such purpose and to cause those Persons to observe the terms of
this Section 6.2(g) and (ii) not to use Proprietary Information for any purpose
other than consistent with the terms of this Agreement. Sellers shall continue
to hold all Proprietary Information according to the same internal security
procedures and with the same degree of care regarding its secrecy and
confidentiality as currently applicable thereto. Sellers shall notify Buyer of
any unauthorized disclosure to third parties that it discovers, and shall
endeavor to prevent any further such disclosures. Sellers shall be responsible
for any breach of the terms of this Section 6.2(g) by Sellers or Sellers'
Representatives.
After the Closing Date, in the event that Sellers are requested
pursuant to, or required by, applicable law or regulation or by legal process to
disclose any Proprietary Information, Sellers shall provide Buyer with prompt
notice of such request or requirement in order to enable Buyer to seek an
appropriate protective order or other remedy, to consult with Sellers with
respect to taking steps to resist or narrow the scope of such request or legal
process, or to waive compliance, in whole or in part, with the terms of this
Section 6.2(g). Sellers agree not to oppose any action by Buyer to obtain a
protective order or other appropriate remedy after the Closing Date. In the
event that no such protective order or other remedy is obtained, or that Buyer
waives compliance with the terms of this Section 6.2(g), Sellers shall furnish
only that portion of the Proprietary Information which Sellers are advised by
counsel is legally required. In any such event Sellers shall use their
Commercially Reasonable Efforts to ensure that all Proprietary Information that
is so disclosed will be accorded confidential treatment.
(i) The Parties agree that the Confidentiality Agreement will
terminate in accordance with its terms, without further act or evidence by the
Parties.
6.3 Expenses. Except to the extent specifically provided herein, whether
or not the transactions contemplated hereby are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the
58
obtaining of any title insurance policy and all endorsements thereto that Buyer
elects to obtain and (b) all filing fees under the HSR Act.
6.4 Further Assurances; Cooperation.
(a) Subject to the terms and conditions of this Agreement, each of
the Parties hereto will use Commercially Reasonable Efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the sale of the Purchased Assets pursuant to this Agreement, including
without limitation using Commercially Reasonable Efforts to ensure satisfaction
of the conditions precedent to each Party's obligations hereunder.
Notwithstanding anything in the previous sentence to the contrary, Sellers and
Buyer shall use Commercially Reasonable Efforts to obtain all Permits and
Environmental Permits necessary for Buyer to acquire and operate the Purchased
Assets. Neither of the Parties hereto will, without the prior written consent of
the other Party, take or fail to take any action, which would reasonably be
expected to prevent or materially impede, interfere with or delay the
transactions contemplated by this Agreement. Buyer further agrees that prior to
the Closing Date, neither it nor any of its members or their respective
Affiliates will enter into any other contract to acquire, nor acquire, electric
generation facilities or uncommitted generation capacity located in the PJM area
if the proposed acquisition of such additional electric generation facilities or
uncommitted generation capacity are reasonably likely to prevent or materially
interfere with the transactions contemplated by this Agreement; provided,
however, that nothing herein shall prohibit Buyer or its members or their
respective Affiliates from increasing capacity at any of their existing
generation facilities or increasing their percentage ownership of generation
facilities that are partially owned (to the extent of at least 40 percent) as of
the date hereof.
(b) From time to time after the Closing Date, without further
consideration, Sellers will, at their own expense, execute and deliver such
documents to Buyer as Buyer may reasonably request in order to more effectively
consummate the sale and purchase of the Purchased Assets or to more effectively
vest in Buyer good and marketable title to the Purchased Assets subject to the
Permitted Encumbrances. Seller shall cooperate with Buyer, at Buyer's expense,
in Buyer's efforts to cure or remove any Permitted Encumbrances that Buyer
reasonably deems objectionable. From time to time after the Closing Date,
without further consideration, Buyer will, at its own expense, execute and
deliver such documents to Sellers as Sellers may reasonably request in order to
evidence Buyer's assumption of the Assumed Liabilities and Obligations.
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(c) To the extent that Sellers' rights under any Sellers' Agreement
may not be assigned without the consent of another Person which consent has not
been obtained, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and Sellers, at their expense, shall use Commercially Reasonable
Efforts to obtain any such required consent(s) as promptly as possible. Sellers
and Buyer agree that if any consent to an assignment of any Sellers' Agreement
shall not be obtained or if any attempted assignment would be ineffective or
would impair Buyer's rights and obligations under the applicable Sellers'
Agreement so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Sellers, to the maximum extent permitted by law and such
Sellers' Agreement, shall after the Closing appoint Buyer to be Sellers'
representative and agent with respect to such Sellers' Agreement, and Sellers
shall, to the maximum extent permitted by law and such Sellers' Agreement, enter
into such reasonable arrangements with Buyer as are necessary to provide Buyer
with the benefits and obligations of such Sellers' Agreement. Sellers and Buyer
shall cooperate and shall each use Commercially Reasonable Efforts after the
Closing to obtain an assignment of such Sellers' Agreement to Buyer.
(d) Sellers shall continue after the Closing Date to implement at
their expense Sellers' Year 2000 Qualification program as set forth on Schedule
7.1 (s). All such work and any additional work required to complete Year 2000
Qualification pursuant to such program shall be completed in accordance with
Good Utility Practice on or before the milestone dates set forth on such
Schedule 7.1 (s). Buyer shall cooperate with Sellers' personnel in such
activities, and Buyer shall be reimbursed for all reasonable costs thereof in
accordance with established accounting procedures or on an alternative cost
reimbursement basis as mutually agreed by the Parties.
(e) For a reasonable time after the Closing Date and in addition to
the services contemplated by the GPU Services Agreement, Buyer and Sellers agree
to provide services to each other as reasonably required to the extent necessary
to ensure the continuity of support for both TMI-1 and Sellers' other nuclear
facilities and the orderly completion of projects or other work in progress that
would be adversely affected if those services were interrupted. Such support by
one Party to the other will not be unreasonably withheld, provided that requests
for such support are made in a timely manner. The Party providing the requested
support will be reimbursed for all reasonable costs thereof in accordance with
established accounting procedures or on an alternative cost reimbursement basis
as mutually agreed by the Parties.
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6.5 Public Statements. Prior to the Closing Date, the Parties shall
consult with each other before issuing any public announcement, statement or
other disclosure with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such public announcement, statement or other
disclosure prior to such consultation, except as may be required by law or stock
exchange rules.
6.6 Consents and Approvals.
(a) Sellers and Buyer shall each file or cause to be filed with the
Federal Trade Commission and the Department of Justice any notifications
required to be filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The Parties
shall consult with each other as to the appropriate time of filing such
notifications and shall agree upon the timing of such filings, 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 for the
preparation of any such filing.
(b) As promptly as practicable after the date of this Agreement and
after the receipt of any findings required to be made by any other Governmental
Authority as a condition to Buyer making the filing contemplated by this
paragraph, Buyer shall file with FERC an application requesting Exempt Wholesale
Generator status for Buyer, which filing may be made individually by Buyer or
jointly with Sellers, as reasonably determined by the Parties. Buyer shall be
solely responsible for the cost of preparing and filing this application, any
petition(s) for rehearing, or any reapplication(s).
(c) As promptly as practicable after the date of this Agreement,
Sellers and Buyer, as applicable, shall file with PaPUC, NYPSC, NJBPU, or any
other Governmental Authority having jurisdiction over the Purchased Assets,
applications requesting (i) a determination that allowing the Purchased Assets
to be an eligible facility under Section 32 of the Holding Company Act (1) will
benefit consumers, (2) is in the public interest, and (3) does not violate state
law, and (ii) a determination required by Section 32 of the Holding Company Act
to exempt PECO Energy Company from the prohibition against purchasing electric
energy or capacity at wholesale from an affiliated Exempt Wholesale Generator.
(d) As promptly as practicable after the date of this Agreement,
Buyer shall file with FERC an application requesting authorization under Section
205 of the Federal Power Act to sell
61
electric generating capacity and energy at wholesale at market-based rates,
which filing may be made individually by Buyer or jointly with Sellers, as
reasonably determined by the Parties. Buyer shall be solely responsible for the
cost of preparing and filing this application, any petition(s) for rehearing, or
any reapplication(s).
(e) As promptly as practicable after the date of this Agreement,
Buyer and Sellers shall file with NRC an application requesting consent under
Section 184 of the Atomic Energy Act and 10 CFR Section 50.80 for the transfer
of the TMI-1 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 NRC 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.
(f) On or before November 1, 1998, Sellers shall file with NRC an
application requesting clarification of the dimensions of the Exclusion Area for
TMI-1 under Sellers' TMI-1 license. Sellers shall respond promptly to any
request for additional information made by NRC and shall use their respective
best efforts to cause such clarification to be obtained at the earliest possible
date after the date of filing. Sellers will bear all costs of the preparation of
any such filing.
(g) As promptly as practicable after the date of this Agreement,
Sellers and Buyer (or with respect to the Member Letters, Buyer's members), as
applicable, shall file with FERC, PaPUC, NYPSC, NJBPU, or any other Governmental
Authority having jurisdiction over the Purchased Assets, 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.
(h) Sellers and Buyer shall cooperate with each other and (i)
promptly prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use best efforts to obtain the transfer or reissuance to Buyer
of all necessary Transferable Permits, consents, approvals and authorizations of
all Governmental Authority and (iv) use best efforts to obtain all necessary
consents, approvals and authorizations of all other parties, in the case of each
of the foregoing clauses (i), (ii), (iii) and (iv), necessary or
62
advisable to consummate the transactions contemplated by this Agreement
(including, without limitation, Sellers' Required Regulatory Approvals and Buyer
Required Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which Sellers or Buyer is a party or by
which any of them is bound. Each of Sellers and Buyer shall have the right to
review in advance all characterizations of the information relating to the
transactions contemplated by this Agreement which appear in any filing made in
connection with the transactions contemplated hereby.
(i) 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.
(j) 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 6.12(b), 6.12(c), 7.1(k) and
7.2(l). 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 6.12(b), 6.12(c), 7.1(k) and 7.2(l) 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.
(k) 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.
6.7 Fees and Commissions. Sellers and Buyer each represent and warrant to
the other that no broker, finder or other Person is entitled to any brokerage
fees, commissions or finder's fees in connection with the transaction
contemplated hereby by reason of any action taken by the Party making such
representation. Sellers and Buyer will pay to the other or otherwise discharge,
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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 shall be borne equally by
Buyer and Sellers. Buyer will file, to the extent required by applicable law,
all necessary Tax Returns and other documentation with respect to all such
transfer or sales taxes, and Sellers will be entitled to review such returns in
advance and, if required by applicable law, will join in the execution of any
such Tax Returns or other documentation. Prior to the Closing Date, Buyer will
provide to Sellers, to the extent possible, an appropriate exemption certificate
in connection with this Agreement and the transactions contemplated hereby, due
from each applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with Section
3.5 of this Agreement (other than PURTA, additional PURTA assessments and any
successor tax or fee described in Section 3.5(c)), Buyer shall prepare and
timely file all Tax Returns required to be filed after the Closing 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 such Tax Return. Within ten (10) Business Days after receipt of such Tax
Return, Sellers shall pay to Buyer their proportionate share of the amount shown
as due on such Tax Return determined in accordance with Section 3.5 of this
Agreement.
(c) Buyer and Sellers shall provide the other Parties 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 will retain and provide the requesting Party with any
records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section 6.8(c) or pursuant to any other Section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the Parties hereto
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(d) In the event that a dispute arises between Sellers and Buyer as
to the amount of Taxes, or the amount of any allocation of Purchase Price under
Section 3.4, the Parties shall attempt in good faith to resolve such dispute,
and any amount so agreed amount shall be paid to the appropriate party. If such
dispute is not resolved 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 resolving the dispute shall be borne 50 percent by Sellers and 50
percent by Buyer. Any payment required to be made as a result of the resolution
of the dispute by the Independent Accounting Firm shall be made within ten days
after such resolution, together with any interest determined by the Independent
Accounting Firm to be appropriate.
6.9 Advice of Changes. Prior to the Closing Date, each Party will promptly
advise the other in writing with respect to any matter arising after execution
of this Agreement 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. If Sellers advise Buyer in writing of any change occurring
after the date of this Agreement but prior to Closing that is material to any
representation, warranty or covenant of Sellers under this Agreement, Buyer
shall have the right to terminate this Agreement pursuant to Section 9.1(e). If
Buyer fails to exercise its termination right, Sellers' written notice under
this Section 6.9 will be deemed to have amended this Agreement, including the
appropriate schedule, or to have qualified the representations and warranties
contained in Article IV. 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 and Obligations 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) Buyer will offer employment, effective on the Closing Date, to
all employees of Sellers who are covered by the IBEW Collective Bargaining
Agreement and are actively employed as of the Closing Date in positions relating
to the Purchased Assets except those who are assigned to TMI-2 ("Union
Employees").
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(b) (i) Buyer will offer employment, effective on the Closing Date,
to all employees of Sellers located at the Purchased Assets who are not covered
by the IBEW Collective Bargaining Agreement except those who are assigned to
TMI-2, and (ii) Buyer will be entitled to offer employment to any employee of
Sellers located in Sellers' Parsippany headquarters (collectively, the
"Non-Union Employees"). Each person who becomes employed by Buyer pursuant to
Section 6.10(a) or (b) shall be referred to herein as a "Transferred Union
Employee" or "Transferred Non-Union Employee", respectively, and collectively as
"Transferred Employees".
(c) All offers of employment made pursuant to Sections 6.10(a) or
(b) shall be made (i) in accordance with all applicable laws, rules and
regulations, and (ii) for Union Employees, in accordance with the IBEW
Collective Bargaining Agreement. Buyer shall not administer as a pre-condition
of employment any skills, aptitude, psychological profile or other
employment-related tests to any of Seller's employees.
(d) Schedule 6.10(d) sets forth the collective bargaining agreement,
and all amendments thereto, to which Sellers are a party with the IBEW in
connection with the Purchased Assets ("IBEW 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 IBEW 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
IBEW Collective Bargaining Agreement. With respect to Transferred Union
Employees, on the Closing Date Buyer shall assume the IBEW Collective Bargaining
Agreement for the duration of its term as it relates to Transferred Union
Employees to be employed at TMI-1 in positions covered by the IBEW Collective
Bargaining Agreement and shall comply with all applicable obligations under the
IBEW Collective Bargaining Agreement. Buyer shall establish and maintain a
pension plan and other employee benefit programs for the Transferred Union
Employees for the duration of the term of the IBEW Collective Bargaining
Agreement which are consistent with Sellers' pension plans and other employee
benefit programs in effect for the Transferred Union Employees immediately prior
to the Closing Date (the "GPU Plans") for the duration of the IBEW Collective
Bargaining Agreement and comply with the obligations of the employer under the
IBEW Collective Bargaining Agreement and applicable law. Buyer further agrees to
recognize the IBEW as the collective bargaining agent for the Transferred Union
Employees.
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(e) As of the Closing Date, all Transferred Non-Union Employees
shall commence participation in welfare benefit plans of Buyer or its Affiliates
(the "Replacement Welfare Plans") that will provide benefits or coverage
substantially similar to the benefits or coverage provided to the Transferred
Non-Union Employees under the Sellers' plans and programs in effect for the
Transferred Non-Union Employees immediately prior to the Closing Date. Buyer
shall (i) waive all limitations as to pre-existing condition exclusions and
waiting periods with respect to the Transferred Non-Union Employees under the
Replacement Welfare Plans, other than, but only to the extent of, limitations or
waiting periods that were in effect with respect to such employees under the
welfare plans maintained by Sellers and that have not been satisfied as of the
Closing Date, and (ii) provide each Transferred Non-Union Employee with credit
for any co-payments and deductibles paid prior to the Closing Date in satisfying
any deductible or out-of-pocket requirements under the Replacement Welfare Plans
(on a pro-rata basis in the event of a difference in plan years).
(f) As of the Closing Date, Transferred Non-Union Employees shall be
offered employment on substantially the same terms and conditions under which
they are employed by Sellers and shall be given credit for all service with
Sellers under all deferred compensation, profit-sharing, 401(k), retirement and
pension plans, incentive compensation, bonus, fringe benefit and other employee
benefit plans, programs and arrangements of Buyer ("Buyer Benefit Plans") in
which they become participants. The Buyer Benefit Plans will provide 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. The service credit so given shall be for
purposes of eligibility and vesting, but not for level of benefits and benefit
accrual except to the extent 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" in cash (except as provided in the immediately
following sentence) of all or a portion of said employee's "eligible rollover
distribution" within the meaning of Section 402 of the Code from the GPU
Companies Employee Savings Plan for Non-Bargaining Employees or the Metropolitan
Edison Company Savings Plan for Bargaining Unit Employees (the "Sellers' Savings
Plans") if requested to do so by the Transferred Employee. Buyer agrees that the
assets so rolled over may include promissory notes evidencing loans from
Sellers' Savings Plans to Transferred Employees that are outstanding as of the
Closing Date. However,
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except as otherwise provided in Section 6.10(d), any defined contribution plan
of Buyer or its Affiliates accepting such a rollover shall not be required to
(x) make any further loans to any Transferred Employee after the Closing Date or
(y) permit any investment to be made in GPU common stock on behalf of any
Transferred Employee after the Closing Date.
(h) Sellers shall retain any obligation to make, and shall indemnify
Buyer in respect of, all severance payments to any Transferred Employee whose
employment is terminated by Buyer for any reason other than for cause or
disability within (i) the period from the Closing Date to the first anniversary
thereof, or (ii) the period from the first anniversary of the Closing Date to
the second anniversary thereof if prior to the first anniversary of the Closing
Date the Buyer has notified Sellers of its intent to terminate a specified
number of Transferred Employees during the period between such first and second
anniversaries (and Sellers' obligations under this subparagraph (ii) shall be
limited to such specified number of employees). All severance payments shall be
made pursuant to a severance program to be adopted by Sellers prior to the
Closing Date.
(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
its employees of any "employment loss" within the meaning of the WARN Act which
occurs prior to the Closing Date.
(j) Sellers are responsible for extending COBRA continuation
coverage to all employees and former employees, and qualified beneficiaries of
such employees and former employees, who become or became entitled to such COBRA
continuation coverage on or before the Closing Date, including those for whom
the Closing Date 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) Sellers 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 employment
benefits to which they are entitled under the terms of the applicable
compensation or benefit programs at such times as are provided therein.
(l) Prior to the Closing Date Sellers will implement a program of
retirement protection benefits, as described below, that will be provided under
the pension plans of Sellers or
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Sellers' Affiliates to each Transferred Employee (i) who has at least five years
of "Creditable Service," as defined in Sellers' pension plans, as of the Closing
Date, and (ii) who will attain age 55 and complete at least 10 years (or 20
years, in the case of any Transferred Union Employee) of Creditable Service
after the Closing Date but before his or her employment with Buyer and all of
its Affiliates terminates for any reason. Employment with Buyer and its
Affiliates shall be treated as service with Sellers and Sellers' Affiliates for
purposes of the service requirements referred to in the preceding sentence. The
retirement protection benefits to be provided to each such Transferred Employee
shall consist of the right on the part of such employee to receive his or her
pension under Sellers' pension plans starting when the employee's employment
with Buyer and all of its Affiliates terminates, with the amount of the
employee's pension determined by using the plan's employer-subsidized early
retirement reduction factors instead of the full actuarial factors that would
otherwise apply in determining the amount of the employee's pension. In the case
of any such Transferred Employee who is a Non-Union Employee, the pension so
payable to the employee shall be based on his or her service and salary with
Sellers and Sellers' Affiliates prior to the Closing Date. In the case of any
such Transferred Employee who is a Union Employee and who first attains age 55
and completes at least 20 years of total Creditable Service on or prior to May
14, 2002 (and while still employed with Buyer or any of its Affiliates), the
pension so payable to the employee shall be based on his or her service with
Sellers and Sellers' Affiliates prior to the Closing Date but shall take into
account the employee's pay during his or her period of service with Buyer and
its Affiliates.
(m) In the case of (i) each Transferred Employee who has met the Age
and Service Requirements (as defined below) as of the Closing Date, and (ii)
each Transferred Employee who first meets the Age and Service Requirements after
the Closing Date but on or prior to the earlier of (A) the date on which his or
her employment with Buyer and all of its Affiliates terminates for any reason,
or (B) December 31, 2004 if such Transferred Employee is a Non-Union Employee,
or May 14, 2002 if such Transferred Employee is a Union Employee, Sellers will
cause such Transferred Employee to be provided with retiree coverage under the
health care plans and group term life insurance programs of Sellers or Sellers'
Affiliates on the same terms and conditions as would be applicable to the
employee if he or she actually retired from Sellers or any of their Affiliates,
under the retirement provisions of Sellers' pension plans, on the date of the
employee's termination of employment with Buyer and its Affiliates. For purposes
of the foregoing, "Age and Service Requirements" shall mean, in the case of any
Transferred Employee, the attainment of age 55 and the completion of 10 years
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of Creditable Service if the Transferred Employee is a Non-Union Employee, or 20
years of Creditable Service if the Transferred Employee is a Union Employee.
Employment with Buyer and its Affiliates shall be treated as service with
Sellers and Sellers' Affiliates for purposes of the foregoing service
requirements.
(n) 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, 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 Family Medical Leave Act 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 job, with or without a reasonable accommodation.
(o) All Transferred Employee Records shall be delivered promptly
after the Closing Date to Buyer.
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. Sellers shall replace or repair any damage to the Purchased Assets in
accordance with Good Utility Practices, except as otherwise provided in
paragraphs (b) or (c) below.
(b) If, before the Closing Date all or any portion of the Purchased
Assets are taken by eminent domain or is the subject of a pending or (to the
Knowledge of Sellers) contemplated taking which has not been consummated,
Sellers shall notify Buyer promptly in writing of such fact. If such taking
would create a Material Adverse Effect, Buyer and Sellers shall negotiate in
good faith to settle the loss resulting from such taking (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transactions contemplated by this
Agreement pursuant to the terms of this Agreement. If no such settlement is
reached within sixty (60) days after Sellers have notified Buyer of such taking,
then Buyer or Sellers may terminate this Agreement pursuant to Section 9.1(g).
(c) If, before the Closing Date all or any portion of the Purchased
Assets are damaged or destroyed by fire or other casualty, Sellers shall notify
Buyer promptly in writing of such
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fact. If such damage or destruction would create a Material Adverse Effect and
Sellers have not notified Buyer of their intention to cure such damage or
destruction within fifteen (15) days after its occurrence, Buyer and Sellers
shall negotiate in good faith to settle the loss resulting from such casualty
(including, without limitation, by making a fair and equitable adjustment to the
Purchase Price) and, upon such settlement, consummate the transactions
contemplated by this Agreement pursuant to the terms of this Agreement. If no
such settlement is reached within sixty (60) days after Sellers have notified
Buyer of such casualty, then Buyer may terminate this Agreement pursuant to
Section 9.1(g).
6.12 Decommissioning Funds.
(a) Between the date hereof and the Closing Date, Sellers will make
additional cash deposits from time to time to the Qualified Decommissioning
Funds and the Nonqualified Decommissioning Funds such that, on the Closing Date,
Sellers shall have accumulated assets in the Decommissioning Funds with an
aggregate Fair Market Value of $320 million ("Total FMV"). Between the date
hereof and the Closing Date, Sellers shall make additional cash deposits to the
Qualified Decommissioning Funds equal to as much of the Total FMV as is eligible
to be contributed during such period to the Qualified Decommissioning Funds
under Code section 468A and applicable Treasury Regulations as they exist on the
Closing Date. On or before the Closing Date, Sellers shall make additional cash
deposits to the Nonqualified Decommissioning Funds such that the aggregate Fair
Market Value of the assets of the Nonqualified Decommissioning Funds equals the
difference between the Total FMV and the aggregate Fair Market Value of the
assets of the Qualified Decommissioning Funds. To the extent that the aggregate
Fair Market Value of the assets of the Qualified Decommissioning Funds as of the
Closing Date is greater than $260 million, Sellers' required Fair Market Value
asset accumulation to be contained in the Non-Qualified Decommissioning Fund of
$60 million (such that the Total FMV equals $320 million) shall be decreased by
$1.14 for every additional dollar that the Qualified Decommissioning Fund is
above $260 million. To the extent that the aggregate Fair Market Value of the
assets of the Qualified Decommissioning Funds as of the Closing Date is less
than $138 million, Sellers' required Fair Market Value asset accumulation to be
contained in the Non-Qualified Decommissioning Fund of $182 million (such that
the Total FMV equals $320 million) shall be increased by $1.14 for every
additional dollar that the Qualified Decommissioning Fund is below $138 million.
In the event the Closing Date occurs other than on December 31, 1999, the Total
FMV and the respective amounts of each Decommissioning Fund shall be adjusted up
or down as the case may be using an annual after-tax, net of expenses, rate of
return of four percent (4%).
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(b) At the Closing, Sellers shall cause all of the assets of the
Qualified Decommissioning Funds and all of the assets of the Nonqualified
Decommissioning Funds to be transferred to Buyer (or, if directed in writing to
do so by Buyer, to the trustee of any trust specified in such written
direction), provided that, prior to the Closing Date (i) with respect to the
Qualified Decommissioning Funds, the Parties have received rulings issued by the
IRS or an opinion of counsel satisfactory to each of the Parties to the effect
that the Parties and the Qualified Decommissioning Funds shall not recognize any
gain or otherwise take into account any income for federal income tax purposes
by reason of the transfer of the assets of the Qualified Decommissioning Funds
to Buyer and that the trust established by Buyer into which the assets of the
Qualified Decommissioning Funds are to be transferred at Closing will be treated
as a nuclear decommissioning reserve fund within the meaning of Code section
468A(a) and Treas. Reg. Section 1.468A-1(b)(3); and (ii) with respect to the
Nonqualified Decommissioning Funds, Buyer has received a ruling issued by the
IRS, or an opinion of counsel satisfactory to it, to the effect that Buyer will
not recognize any gain or otherwise take into account any income for federal
income tax purposes by reason of the transfer of the assets of the Nonqualified
Decommissioning Funds to Buyer.
(c) If any of the conditions specified in Section 6.12(b) above have
not been met as of the Closing Date with respect to either or both of the
Qualified Decommissioning Funds and Nonqualified Decommissioning Funds, the
assets of the Qualified Decommissioning Funds and/or the assets of the
Nonqualified Decommissioning Funds, as the case may be, shall not be transferred
to Buyer at the Closing, but instead shall be retained by Sellers in accordance
with the provisions of Section 6.12(d), provided that (i) the Parties have
received a ruling issued by the IRS to the effect that the assets of the
Decommissioning Funds that are to be so retained by Sellers will not be treated
as having been transferred to Buyer in a transaction taxable to Buyer for
federal income tax purposes; and (ii) the ruling described in the first sentence
of Section 7.2(k) has been issued by the IRS to Sellers, and such ruling
expressly provides that Sellers' retention of the assets of the applicable
Decommissioning Funds will not prevent Sellers from being allowed current
ordinary deductions for federal income tax purposes for any amounts realized by
Sellers, or otherwise recognized as income to Sellers, as a result of Buyer's
assumption of decommissioning liabilities with respect to the Facilities
pursuant to Section 2.3(a); and (iii) if the assets of the Qualified
Decommissioning Funds are to be so retained by Sellers, the Parties have
received a ruling issued by the IRS to the effect that the Qualified
Decommissioning Funds shall not be disqualified by reason of Sellers' sale of
TMI-1 to Buyer.
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(d) In the event Sellers retain any assets in the Decommissioning
Funds after Closing, Sellers shall undertake and implement the following
actions:
(i) Each of Sellers shall appoint Mellon Bank, N.A., or such
other entity as provided in writing by Buyer to Sellers, as trustee, to
hold the retained assets of the Decommissioning Funds in trust, pursuant
to the terms of the Decommissioning Trust Agreement. The retained assets
of the Decommissioning Funds shall be segregated from funds for other
nuclear plants of Sellers, for the exclusive purpose of Decommissioning
the Facilities and paying the administrative expenses (including taxes) of
the Decommissioning Funds. Sellers shall not amend, modify or change the
Decommissioning Trust Agreement nor appoint a successor trustee without
the prior written consent of Buyer. At the written request of Buyer,
Sellers shall amend, modify or change the Decommissioning Trust Agreement
in the manner specified in such written request. Notwithstanding anything
else to the contrary in the Agreement or in the Decommissioning Trust
Agreement, each of Sellers shall have the right to exercise the powers
specified in Code Section 675(4) in its sole discretion with respect to
the retained assets of the Decommissioning Funds.
(ii) Each of Sellers shall appoint one or more investment
managers, acceptable to Buyer, to manage the retained assets of the
Decommissioning Funds pursuant to the terms of the Investment Manager
Agreement until such assets either are transferred to Buyer or are
expended for Decommissioning the Facilities. Sellers shall not amend,
modify or change the Investment Manager Agreement nor appoint a successor
investment manager without the prior written consent of Buyer. At the
written request of Buyer, Sellers shall amend, modify or change the
Investment Manager Agreement in the manner specified in such written
request.
(iii) Each of Sellers shall provide Buyer promptly with all
information relating to Taxes or accounting treatment of the retained
assets of the Decommissioning Funds as Buyer shall request. Such
information shall include, but not be limited to, Trustee statements, Tax
Returns of the Qualified Decommissioning Funds and information from each
of Sellers' Tax Returns to verify the Taxes to be paid to Sellers by Buyer
pursuant to Section 8.1 hereof, and investment statements. Sellers shall
authorize and instruct the Trustee and investment manager to make the
books and records of the retained Decommissioning Funds available for
inspection by the Buyer at all reasonable times.
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(iv) If at any time after the Closing Date and prior to the
completion of Decommissioning of the Facilities, the conditions specified
in Section 6.12(b) can be met, the assets of the Decommissioning Funds so
retained by Sellers shall be transferred to Buyer (or, if directed in
writing to do so by Buyer, to the trustee of any trust specified in such
written direction) upon receipt of the rulings or opinions of counsel
referred to in Section 6.12(b)(i) or (ii) as applicable.
(v) If the assets of the Nonqualified Decommissioning Funds have
been retained by Sellers pursuant to Section 6.12(c), Sellers will cause
assets of the Nonqualified Decommissioning Funds to be transferred to the
Qualified Decommissioning Funds, if directed to do so by Buyer, provided
Buyer furnishes to Sellers assurances satisfactory to Sellers that such
transfers will not result in any adverse tax consequence to Sellers or
constitute a violation of any applicable law or regulation.
(vi) After the Closing Date, Sellers shall disburse monies from
the retained assets of the Decommissioning Funds as directed by Buyer to
pay for Decommissioning of the Facilities or administrative expenses
(including taxes) of the Decommissioning Funds. After the Closing Date,
Sellers shall not authorize or instruct the Trustee to disburse any monies
from the retained assets of the Decommissioning Funds except at the
direction of Buyer.
(vii) Each Seller severally and not jointly shall use all
Commercially Reasonable Efforts to obtain the release of any lien, claim
or attachment of any third party who files such lien, claim or attachment
against the retained assets of the Decommissioning Funds and each Seller
severally shall indemnify Buyer pursuant to Section 8.2 hereof, for any
such lien, claim or attachment. If requested by Buyer (but, in the case of
any Qualified Decommissioning Funds, only if permissible under Section
468A of the Code and the regulations issued thereunder), Sellers shall
grant a security interest in the retained assets of the Decommissioning
Funds in favor of Buyer;
(viii) Any assets retained by Sellers in respect of
Decommissioning of the Facilities after all Decommissioning activities
have been completed shall be paid to Buyer or expended as Buyer shall
direct.
(e) From and after the Closing Date, Buyer shall assume all
liabilities and obligations for the Decommissioning of the Facilities, and
Sellers shall have no further liabilities or obligations with respect to the
Decommissioning of the Facilities.
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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 TMI-1 and 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 TMI-1 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 TMI-1
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 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 TMI-1
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 Cooperation Relating to Insurance and Price-Anderson Act. Sellers
shall cooperate with Buyer's efforts to obtain insurance, including insurance
required under the Price-Anderson Act with respect to the Purchased Assets.
Buyer will, to the extent available, obtain separate insurance on the Purchased
Assets. If, however, insurers do not agree to separately insure TMI-1 and TMI-2,
Sellers and Buyer shall agree on a reasonable allocation of insurance costs and
expenses between TMI-1 and TMI-2. 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 and
Obligations. Buyer agrees that it will indemnify Sellers for their reasonable
out of pocket expenses incurred in providing such assistance and cooperation.
6.16 Tax Clearance Certificates. Sellers and Buyer shall cooperate and use
their best efforts to cause the tax clearance certificates described in Schedule
4.20 of this Agreement to be issued by the appropriate taxing authorities prior
to the Closing Date or as soon as practicable thereafter.
6.17 TMI-2 Monitoring Agreement. Sellers and Buyer shall enter into an
agreement substantially in the form of Exhibit H hereto to be effective at
Closing pursuant to which Buyer will provide ongoing post-defueling monitored
storage, maintenance and other services for TMI-2.
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6.18 TMI-2 Decommissioning. Prior to the date six months after Buyer makes
the written certification to the NRC regarding the permanent cessation of
operations at TMI-1 pursuant to 10 CFR 50.82(a)(1) and 50.4(b)(8) (or any future
comparable regulation or requirement), Buyer and Sellers shall attempt in good
faith to negotiate a commercially acceptable agreement pursuant to which Buyer
will perform certain decommissioning activities at TMI-2. Notwithstanding the
foregoing, Sellers shall retain ultimate safety-related decision-making
authority with respect to TMI-2 consistent with NRC requirements and applicable
guidance criteria for concluding either that no NRC review under 10 CFR 50.80 is
necessary, or upon such review, that there is no transfer of control of the
TMI-2 license.
6.19 Spent Fuel Acceptance. Buyer will permit Sellers, at no cost, to
utilize TMI-1 spent fuel acceptance allowances as determined by the Department
of Energy in connection with the decommissioning of Oyster Creek; provided,
however, Buyer will have no obligation to transfer such allowances to the extent
prohibited by applicable law or to the extent any such transfer would, in the
reasonable judgment of Buyer, have any adverse consequences to Buyer in respect
of its ownership or operation of the Purchased Assets. To the extent TMI-1 waste
acceptance priority allowances are utilized for Oyster Creek, Sellers will cause
the transfer to Buyer for use in shipment of TMI-1 spent fuel for disposal by
the Department of Energy an amount of spent fuel acceptance allowances equal to
the amount of TMI-1 allowances utilized for Oyster Creek.
6.20 Residual Waste Landfill. As promptly as is practicable following the
date hereof and in any event prior to the Closing Date, Sellers shall have (a)
closed the Residual Waste Landfill, (b) caused all residual wastes to be removed
therefrom to an off-Site landfill qualified to accept such residual wastes and
(c) submitted to the PaDEP an amended Closure and Post-Closure Plan in order to
obtain a Closure Certification from the PaDEP. Sellers further agree to use
Commercially Reasonable Efforts promptly to obtain such Closure Certification
and will comply with the terms and conditions of any PaDEP approved Closure and
Post-Closure Plan for the Residual Waste Landfill at Sellers' expense.
6.21 Easement, License and Attachment Agreement. Sellers and Buyer shall
in good faith negotiate as soon as practicable after the date hereof an
agreement containing the principal items referred to in Exhibit C hereto and
such other matters relating to the Easements as shall be customary for similar
agreements and reasonably acceptable to the Parties hereto.
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ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer. The obligations of Buyer to
purchase the Purchased Assets and to consummate 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 cooperate in all
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, in form and substance reasonably satisfactory (including no material
adverse conditions) to it and such approvals shall be final and non-appealable;
(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;
(f) Buyer shall have received certificates from an authorized
officer of each Seller, 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 such Seller;
(g) Buyer shall have received an opinion from each Seller's counsel
reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially in
the form of Exhibit M hereto;
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(h) Sellers shall have delivered, or caused to be delivered, to
Buyer at the Closing, Sellers' closing deliveries described in Section 3.6,
including, without limitation, special warranty deeds from York Haven for any
Real Property titled in York Haven;
(i) Buyer shall have received from a title insurance company
reasonably acceptable to Buyer ALTA owner's title insurance policies on the Real
Property insuring title as described in Section 4.7, subject only to the
Permitted Encumbrances. Buyer shall provide Sellers with a copy of a preliminary
title report and an updated survey for the Real Property to the extent obtained
by Buyer;
(j) Since the date of this Agreement, no Material Adverse Effect
shall have occurred and be continuing;
(k) The IRS rulings or opinions of counsel applicable to Buyer set
forth in Sections 6.12(b) and/or (c), as the case may be, shall have been
received;
(l) Sellers shall have entered into the Easement, License and
Attachment Agreement, and such Agreement shall be in full force and effect.
(m) (1) Sellers shall have assigned the Cowanesque Reservoir
Agreements (other than the Excluded Liability portion thereof) and the York
Haven Dam Agreements to Buyer, and the Cowanesque Reservoir Agreements and the
York Haven Dam Agreements shall not have been amended and shall be in full force
and effect; and (2) the Sellers shall have obtained from the SRBC an amendment
to their groundwater pumping permit (Permit No. 19961102), as described in
Schedule 4.10, to increase the daily quantity of groundwater pumped from the
three on-site wells to an amount sufficient to satisfy normal operating
requirements for the Facilities, and such amended permit shall be final and
nonappealable;
(n) Any lease or other Encumbrance (other than non-financial
restrictions imposed by applicable law that are inherent to nuclear material)
relating to the nuclear fuel in the TMI-1 reactor core shall have been paid in
full by Sellers;
(o) Sellers shall have performed the maintenance, repair and
replacement work on the Facilities set forth on Schedule 7.1(o) in accordance
with the previously established schedule for the completion of such work, and
such work shall have been completed in accordance with Good Utility Practices
and in conformity with all applicable legal requirements;
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(p) Sellers shall have obtained from the NRC written confirmation
that the Exclusion Area set forth in Technical Specification 5.1 complies with
applicable NRC requirements or Sellers shall have undertaken, at their expense
and by an agreement in form and substance satisfactory to Buyer in its
discretion, to modify the Exclusion Area to conform to NRC requirements;
(q) (1) Sellers shall have proceeded with their plans to seek from
the NRC and shall have obtained from the NRC written confirmation of an increase
in the tube plugging limit applicable to TMI-1's steam generators to 20 percent
of the total number of tubes. Alternatively, NRC shall have approved an increase
in the tube plugging limit to such lesser amount as Buyer shall have approved in
its discretion as adequate in order for TMI-1 to operate at its currently
licensed capacity (2568 MWth) until the scheduled expiration of its NRC license
in 2014; and (2) Sellers shall have proceeded with their plans to seek from the
NRC and shall also have obtained from NRC written confirmation of approval of
the extension of the tube repair criteria currently limited in the Technical
Specifications to the prior refueling outage (referred to by the Parties as
"12R") and the current operating cycle for use in the Refueling Outage and
subsequent operating cycle. Alternatively, if such approval has not been
obtained, Buyer at its discretion shall determine the extent to which the
applicable tube repair criteria as provided for in the Technical Specifications
is acceptable;
(r) Sellers shall have obtained all approvals necessary from any
Governmental Authority having jurisdiction to subdivide , convey and operate the
Real Property separately from the parcels pertaining to TMI-2 and such approvals
shall be final and non-appealable;
(s) Sellers shall have completed in accordance with Good Utility
Practice all work required to be accomplished as of the milestone dates set
forth on Schedule 7.1(s) occurring prior to the Closing Date in order for the
Purchased Assets to be Year 2000 Qualified, and any work relating to subsequent
milestone dates or any additional work in order to complete Year 2000
Qualification shall be undertaken by Sellers at their expense pursuant to
Section 6.4(d);
(t) All radioactive waste stored or otherwise located on the Real
Property outside the area enclosed by the dikes referenced in Section 3.14 of
the TMI-1 Technical Specifications (the "Diked Area"), including, without
limitation, all radioactive filter cake waste that has been stored in a building
outside the Diked Area, shall have been shipped off-Site by Sellers for
permanent disposal, and all buildings outside the Diked Area shall have been
decontaminated in accordance with all applicable legal requirements;
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(u) All low-level radioactive waste that has been generated in the
operations of the Facilities more than 90 days prior to the Closing Date shall
have been shipped off-Site by Sellers for permanent disposal in accordance with
all applicable legal requirements, and all low-level radioactive waste generated
in the operations of the Facilities within 90 days prior to the Closing Date
shall have been properly bagged, tagged, packaged and/or stored by Sellers at
the Facilities in accordance with Good Utility Practice for handling low-level
radioactive waste;
(v) The lien of the Mortgage Indenture on the Purchased Assets shall
have been released; and
(w) The Total FMV of the Decommissioning Funds shall be $320
million, adjusted pursuant to Section 6.12(a) hereof,
7.2 Conditions to Obligations of Sellers. The obligation of Sellers to
sell the Purchased Assets and to consummate 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;
(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 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, in form and substance reasonably satisfactory (including no material
adverse conditions) to them and such approvals shall be final and
non-appealable;
(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 any Seller is party or by which any Seller, 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;
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(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 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;
(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(d), (e) and (f) have been
satisfied by Buyer;
(h) Effective upon Closing, Buyer shall have assumed, as set forth
in Section 6.10, all of the applicable obligations under the IBEW 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 in the form of
Exhibit N hereto;
(j) Buyer shall have delivered, or caused to be delivered, to
Sellers at the Closing, Buyer's closing deliveries described in Section 3.7;
(k) Sellers shall have received from Buyer's members copies of all
required consents and approvals from Governmental Authorities relating to the
Member Letters, and the Member Letters shall not have been amended and shall be
in full force and effect;
(l) Sellers shall have received a ruling from the IRS to the effect
that Sellers will be allowed current ordinary deductions for federal income tax
purposes for any amounts treated as realized by Sellers, or otherwise recognized
as income to Sellers, as a result of Buyer's assumption of Decommissioning
liabilities with respect to TMI-1 pursuant to Section 2.3(f). In addition, the
IRS rulings or opinions of counsel applicable to Sellers set forth in Section
6.12(b) and/or (c), as the case may be, shall be received; and
(m) Buyer shall have entered into the Easement, License and
Attachment Agreement, and such Agreement shall be in full force and effect.
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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 representations, warranties or covenants
contained in this Agreement, (ii) the Assumed Liabilities and Obligations, (iii)
any loss or damages resulting from or arising out of any Inspection, or the use
by Buyer of the non-exclusive license granted under Section 2.1(j) or (iv) any
Third Party Claims against a Sellers' Indemnitee arising out of or in connection
with Buyer's ownership or operation of TMI-1 and other Purchased Assets on or
after the Closing Date, (v) any Taxes asserted against Seller by reason of any
act of "self-dealing" as defined in Treas. Reg. Section 1.468A-5(b)(2) that is
determined to have occurred after the Closing, except for any acts of
self-dealing that constitute a breach by Sellers of this Agreement, or (vi) if
the Nonqualified Decommissioning Funds are retained by Sellers after the Closing
pursuant to Section 6.12(c), the amount of Taxes arising after the Closing Date
attributable to amounts required to be included in Sellers' income with respect
to income and net gains realized by the Nonqualified Decommissioning Funds
except to the extent such Taxes have not been paid to Sellers out of the
Nonqualified Decommissioning Funds, (vii) all Taxes attributable to any amounts
required to be included in Sellers' income by reason of any payments or
distributions made or deemed to have been made from the Qualified
Decommissioning Funds after the Closing, but only to the extent such amounts are
not offset by deductions allowable to Sellers with respect to such payments or
distributions, and only to the extent such payments or distributions are not
caused by any Sellers' breach of this Agreement; or (viii) if any of the
Decommissioning Funds are retained by Sellers after the Closing, any actions or
inaction by Sellers in connection with the administration of the Decommissioning
Funds pursuant to the Decommissioning Trust Agreement or under the Investment
Management Agreement (including any supplement or amendment thereto or
replacement thereof) as contemplated by Section 6.12(d) hereof or as Buyer may
otherwise direct in writing.
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(b) Sellers, severally with respect to the Owners in accordance with
their pro rata ownership interests in the Purchased Assets, and jointly and
severally with respect to GPU Nuclear, shall indemnify, defend and hold harmless
Buyer, its officers, directors, members, 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
representations, warranties or covenants 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, (iv) any Third Party Claims against
a Buyer Indemnitee arising out of or in connection with Sellers' ownership or
operation of the Purchased Assets on or prior to the Closing Date, (v) any Third
Party Claims against a Buyer Indemnitee arising out of or in connection with
Sellers' ownership or operation of the Excluded Assets, (vi) any Indemnifiable
Loss relating to TMI-2, (vii) all Taxes incurred, either by reason of any act of
Sellers after Closing that constitutes an act of "self-dealing" as defined in
Treas. Reg. Section 1.468A-5(b)(2) and that constitutes a breach of this
Agreement by any Seller or by reason of any act of any Seller that results in
the disqualification of the Qualified Decommissioning Funds under Treas. Reg.
Section 1.468A-5 and that constitutes a breach of this Agreement by any Seller
or (viii) any claims or attachments of any Seller against the Decommissioning
Funds after the Closing Date.
(c) Notwithstanding anything to the contrary contained herein:
(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 Indemnitee shall advise
Indemnitor promptly of such expenditure (or provide Indemnitor with the
opportunity to pay such expenditures directly). The Indemnitor shall
promptly 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).
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(ii) Any Indemnifiable Loss shall be net of (i) 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 (ii)
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 best efforts to
make claims (including both costs of defense and indemnity) under
applicable insurance policies with respect to any such Indemnifiable Loss.
(iii) Sellers' liability and obligation to Buyer for an
Indemnifiable Loss relating to, resulting from or arising out of (A) a
breach of representation or warranty (other than with respect to Taxes and
Tax Returns, environmental matters or the matters set forth in Sections
4.22 and 4.23 hereof) shall be the amount thereof in excess of $250,000 in
the aggregate (cumulative) up to the amount of Ten Million Dollars
($10,000,000) and must be asserted by Buyer on or before the first
anniversary of the Closing Date, and (B) a breach of representation or
warranty with respect to environmental matters under Section 4.10 of the
type described in Section 2.4(g)(v) or (vi) hereof shall be the amount
thereof in excess of $250,000 in the aggregate (cumulative) up to the
amount of Ten Million Dollars ($10,000,000) and must be asserted by Buyer
on or before the second anniversary of the Closing Date. Nothing in this
subparagraph (iii) 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.
(d) The expiration or termination of any representation or warranty
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 and
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Obligations 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.
8.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any claim
or of the commencement of any claim, action, or proceeding made or brought by
any Person who is not a Party to this Agreement or any Affiliate of a Party to
this Agreement (a "Third Party Claim") with respect to which indemnification is
to be sought from an Indemnifying Party, the Indemnitee shall give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
such notice shall not be given later than twenty (20) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnitee, to
elect to assume the defense of any Third Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel, provided that the
counsel for the Indemnifying Party who shall conduct the defense of such Third
Party Claim shall be reasonably satisfactory to the Indemnitee. The Indemnitee
shall cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnitee may compromise or settle such Third Party Claim over the
objection of the Indemnifying Party, which settlement or compromise shall
conclusively establish the Indemnifying Party's liability pursuant to this
Agreement.
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(b) (i) If, within twenty (20) 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 Party shall give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm offer
within twenty (20) 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 twenty (20) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of twenty (20)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such twenty (20) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such
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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 to the date or repayment at the "prime rate" as
published in The Wall Street Journal) 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.
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
nonappealable or (ii) any statute, rule, order or regulation shall have been
enacted or issued by any Governmental Authority which, directly or indirectly,
prohibits the consummation of the Closing; or (iii) the Closing contemplated
hereby shall have not occurred on or before the day which is 24 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
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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 are not in form and substance reasonably
satisfactory to Buyer because such Approval contains conditions that would have
a material adverse effect on the operations or condition (financial or
otherwise) of the Purchased Assets or a material adverse effect on the business,
assets, operations or condition (financial or otherwise) of Buyer or its
members.
(d) This Agreement may be terminated by Sellers, if any of Sellers'
Required Regulatory Approvals applicable to Sellers, 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 are not in form and substance reasonably
satisfactory to Sellers, because such Approval contains conditions that would
have a material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Sellers.
(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 Buyer or Sellers in
accordance with the provisions of Sections 6.11(b) or (c).
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 this
Section 9, 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), the liabilities of the Parties
hereunder will terminate, except as otherwise expressly
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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 Survival of Representations, Warranties, Covenants and Obligations.
(i) 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 one (1) year 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, (b) all representations
and warranties with respect to environmental matters shall survive the Closing
for a period of two (2) years after the Closing Date; (c) all representations
and warranties set forth in Sections 4.22 and 4.23 hereof shall survive the
Closing indefinitely, and (d) any representation or warranty as to which a claim
(including without limitation a contingent claim) shall have been asserted
during the survival period shall continue in effect with respect to such claim
until such claim shall have been finally resolved or settled. Each Party shall
be entitled to rely upon the representations and warranties of the other Party
or Parties set forth herein, notwithstanding any investigation or audit
conducted before or after the Closing Date or the decision of any Party to
complete the Closing.
(ii) 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
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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).
10.4 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, that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Sellers, to:
GPU Service, Inc.
300 Madison Ave.
P.O. Box 8699
Morristown, NJ 07962
Attention: David C. Brauer, Vice President
with a copy to:
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, NY 10036
Attention: Douglas E. Davidson, Esq.
(b) if to Buyer, to:
AmerGen Energy Company, LLC
965 Chesterbrook Blvd., 63C-3
Wayne, PA 19087
Attention: Dickinson M. Smith, Chief Executive
Officer
with a copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Attention: Howard L. Meyers, Esq.
10.5 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
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hereto, including by operation of law, without the prior written consent of each
other Party, such consent not to be unreasonably withheld, 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, but subject to all applicable legal requirements, (i) 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 (ii) Buyer or its permitted
assignee may assign, transfer, pledge or otherwise dispose of its rights and
interests to cause Sellers to perform in accordance with the provisions of
Section 6.12(d) hereof in connection with any subsequent disposition by Buyer of
the Purchased Assets; provided, however, that no such assignment shall relieve
or discharge Buyer 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.
10.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania (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 CHESTER COUNTY, PENNSYLVANIA, 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
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RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.7 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.
10.8 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.
10.9 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.
10.10 Entire Agreement. This Agreement, the Confidentiality Agreement, the
Ancillary Agreements and the Member Letters, 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.
This Agreement supersedes all prior agreements and understandings between the
Parties (including without limitation, the letter of intent between the Parties
dated July 17, 1998) other than the Confidentiality Agreement with respect to
such transactions.
10.11 Bulk Sales Laws. Buyer acknowledges that, notwithstanding anything
in this Agreement to the contrary, Sellers will 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.
10.12 U.S. Dollars. Unless otherwise stated, all dollar amounts set forth
herein are United States (U.S.) dollars.
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10.13 Zoning Classification. Buyer acknowledges that the Real Properties
are zoned
as set forth in Schedule 10.13.
10.14 Sewage Facilities. Except as set forth in Schedule 10.14, Buyer
acknowledges that there is no community (municipal) sewage system available to
serve the Real Property. Accordingly, any additional sewage disposal planned by
Buyer will require an individual (on-site) sewage system and all necessary
permits as required by the Pennsylvania Sewage Facilities Act (the "Facilities
Act"). Buyer recognizes that certain of the existing individual sewage systems
on the Real Property may have been installed pursuant to exemptions from the
requirements of the Facilities Act or prior to the enactment of the Facilities
Act and that soils and site testing may not have been performed in connection
therewith. The owner of the property or properties served by such a system, at
the time of any malfunction, may be held liable for any contamination,
pollution, public health hazard or nuisance which occurs as the result of such
malfunction.
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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.
GPU NUCLEAR, INC. JERSEY CENTRAL POWER &
LIGHT COMPANY
By: By:
--------------------------- -------------------------
Name: Terrance G. Howson Name: Terrance G. Howson
Title: Vice President & Treasurer Title: Vice President &
Treasurer
METROPOLITAN EDISON COMPANY PENNSYLVANIA ELECTRIC
COMPANY
By By:
--------------------------- -------------------------
Name: Terrance G. Howson Name: Terrance G. Howson
Title: Vice President & Tresurer Title: Vice President &
Treasurer
AMERGEN ENERGY COMPANY, LLC
By:
--------------------------------
Name: Dickinson M. Smith
Title: Chief Executive Officer