Execution Copy
ASSET PURCHASE AND SALE AGREEMENT
(Conemaugh Station)
By and Among
POTOMAC ELECTRIC POWER COMPANY,
ALLEGHENY ENERGY SUPPLY COMPANY, LLC,
and
PPL GLOBAL, INC.
Dated as of May 18, 2000
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TABLE OF CONTENTS
Page
ARTICLE I - Definitions 1
Section 1.1 Definitions 1
Section 1.2 Accounting Terms 1
ARTICLE II - Purchase and Sale; Assumption of Certain
Liabilities 1
Section 2.1 Purchase and Sale 1
Section 2.2 Auctioned Assets and Retained Assets 2
Section 2.3 Assumed Obligations and Retained
Liabilities 5
Section 2.4 Third Party Consents 8
ARTICLE III - Purchase Price 8
Section 3.1 Purchase Price 8
Section 3.2 Post-Closing Adjustment 8
Section 3.3 Allocation of Purchase Price 10
ARTICLE IV - The Closing 11
Section 4.1 Time and Place of Closing 11
Section 4.2 Payment of Purchase Price and Estimated
Adjustment Amount 11
ARTICLE V - Representations and Warranties of Seller 12
Section 5.1 Organization; Qualification 12
Section 5.2 Authority Relative to This Agreement 12
Section 5.3 Consents and Approvals; No Violation 12
Section 5.4 Personal Property 13
Section 5.5 Real Estate 13
Section 5.6 Certain Contracts and Arrangements 13
Section 5.7 Legal Proceedings 13
Section 5.8 Permits; Compliance with Law 14
Section 5.9 Environmental Matters 14
Section 5.10 Brokers 15
Section 5.11 Insurance 15
Section 5.12 Disclaimers 15
ARTICLE VI - Representations and Warranties of Buyers 16
Section 6.1 Organization 16
Section 6.2 Authority Relative to This Agreement 16
Section 6.3 Consents and Approvals; No Violation 16
Section 6.4 Availability of Funds 17
Section 6.5 Brokers 17
Section 6.6 No Knowledge of Seller's Breach 17
Section 6.7 Qualified Buyers 17
Section 6.8 Securities Laws 18
Section 6.9 Financial Representations 18
Section 6.10 Legal Proceedings 18
ARTICLE VII - Covenants of the Parties 18
Section 7.1 Tax Exempt Financing 18
Section 7.2 Access to Information 21
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Section 7.3 Consents and Approvals; Transferable
Permits 22
Section 7.4 Further Assurances 23
Section 7.5 Public Statements 23
Section 7.6 Tax Matters 23
Section 7.7 Control of Litigation 24
Section 7.8 Confidentiality 24
Section 7.9 Risk of Loss 24
ARTICLE VIII - Conditions 24
Section 8.1 Conditions Precedent to Each Party's
Obligation To Effect the Purchase and
Sale 24
Section 8.2 Conditions Precedent to Obligation of Buyer
To Effect the Purchase and Sale 25
Section 8.3 Conditions Precedent to Obligation of
Seller To Effect the Purchase and
Sale 26
ARTICLE IX - Indemnification and Dispute Resolution 27
Section 9.1 Indemnification 27
Section 9.2 Third Party Claims Procedures 29
ARTICLE X - Termination 31
Section 10.1 Termination 31
ARTICLE XI - Miscellaneous Provisions 31
Section 11.1 Expenses 31
Section 11.2 Amendment and Modification; Extension;
Waiver 31
Section 11.3 No Survival of Representations or
Warranties 32
Section 11.4 Notices 32
Section 11.5 Assignment; No Third Party Beneficiaries33
Section 11.6 Governing Law 34
Section 11.7 Counterparts 34
Section 11.8 Interpretation 34
Section 11.9 Jurisdiction and Enforcement 36
Section 11.10 Entire Agreement 36
Section 11.11 Severability 36
Section 11.12 Conflicts 37
Section 11.13 Seller's Interest in Conemaugh Station 37
Section 11.14 Joint and Several Liability. 37
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SCHEDULES AND EXHIBITS
Schedules Title
Schedule 1.1 Definitions
Schedule 2.2(a)(iii) Personal Property
Schedule 2.2(a)(iv) Assigned Contracts
Schedule 2.2(a)(vi) Transferred SO2 Allowances
Schedule 2.2(b)(i) Transmission System
Schedule 2.3(a)(iv) Assumed Consent Order
Obligations
Schedule 4.2(c) Capital Expenditures
Schedule 5.3(a) Contract Approvals; No
Violation
Schedule 5.3(b) Seller Required Regulatory
Approvals
Schedule 5.5(a) Real Estate
Schedule 5.6 Material Contract Defaults
Schedule 5.7 Legal Proceedings
Schedule 5.8 Permits
Schedule 5.9(a) Environmental Matters
Schedule 5.9(b) Environmental Notice
Schedule 5.9(c) Environmental Reports
Schedule 5.11 Insurance
Schedule 6.3 Buyer Regulatory Approvals
Schedule 7.1 Revenue Bonds
Exhibits Title
Exhibit A Assignment and Assumption
Agreement
Exhibit B Bill of Sale
Exhibit C Limited Warranty Deed of
Conveyance
Exhibit D Opinion of Seller's Counsel
Exhibit E Opinion of Buyers' Counsel
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ASSET PURCHASE AND SALE AGREEMENT (including the
Schedules hereto, this "Agreement"), dated as of __________ __,
2000, by and among POTOMAC ELECTRIC POWER COMPANY, a District of
Columbia and Virginia corporation ("Seller"), Allegheny Energy
Supply Company, LLC, a Delaware limited liability company
("Allegheny"), and PPL Global, Inc., a Pennsylvania corporation
("PPL Global," and together with Allegheny are the "Buyers") (the
Buyers, are referred to herein collectively with Seller, as the
"Parties").
WHEREAS, Seller owns a minority undivided co-ownership
interest in a certain power generating facility (described herein
as the "Generating Facility") and other assets associated
therewith; and
WHEREAS, Buyers desire to purchase and assume, jointly
and severally, and Seller desires to sell and assign, the
Auctioned Assets (as defined in Section 2.2 below) and certain
associated liabilities, upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth,
and intending to be legally bound hereby, the Parties agree as
follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions. Any capitalized terms which are used
but not defined in this Agreement shall have the meaning given to
such terms in the attached Schedule 1.1.
SECTION 1.2 Accounting Terms. Any accounting terms used in
this Agreement or the Ancillary Agreements shall, unless
otherwise specifically provided, have the meanings customarily
given them in accordance with United States generally accepted
accounting principles ("GAAP") and all financial computations
hereunder or thereunder shall, unless otherwise specifically
provided, be computed in accordance with GAAP consistently
applied.
ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities
SECTION 2.1 Purchase and Sale. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement,
at the Closing, Seller agrees to sell, assign, convey, transfer
and deliver to Buyers (as acquirors of fifty percent (50%) each
tenant-in-common interests in Seller's Interest) and Buyers agree
jointly and severally to purchase and acquire from Seller all of
the Auctioned Assets. In the case of any Auctioned Assets not
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located at the Generating Facility (including supplies, materials
and spare parts inventory), Buyers agree that from and after the
Closing, Buyers will bear all risk of casualty or loss with
regard to such Auctioned Assets.
SECTION 2.2 Auctioned Assets and Retained Assets.
(a) Auctioned Assets. The term "Auctioned Assets" means
all of the Seller's right, title and interest in, to and under
all assets, real and personal property, goodwill and rights of
Seller of whatever kind and nature, whether tangible or
intangible, in each case, primarily relating to the power
generation operations of the Generating Facility, other than the
Retained Assets, but only to the extent of the Seller's Interest:
(i) the real property, together with all buildings,
improvements, structures and fixtures thereon, described
on Schedule 5.5 attached hereto, subject to any Permitted
Exceptions (the "Buyer Real Estate");
(ii) the inventories of fuels, supplies, materials and spare
parts, together with and subject to (A) all Permitted Exceptions, and
(B) all warranties against manufacturers and vendors relating thereto,
in each case, other than assets that are used,
consumed, replaced or disposed of in
the ordinary course of business consistent with past
practice or as permitted by this Agreement;
(iii) the machinery, equipment, facilities, furniture and
other tangible personal property located on the Buyer Real Estate
or temporarily removed from the Buyer Real Estate for repairs, servicing or
maintenance, including those facilities described on Schedule 2.2(a)(iii)
attached hereto, together with and subject to (A) any
Permitted Exceptions, and (B) all warranties against
manufacturers or vendors relating thereto, in each case,
other than assets that are used, consumed, replaced or
disposed of in the ordinary course of business consistent
with past practice or as permitted by this Agreement;
(iv) subject to Section 2.4, those contracts,
agreements, personal property leases, commitments and all other
legally binding arrangements, whether oral or written, to
which Seller is a party, or by which the Seller or its
Auctioned Assets is bound or subject, relating to the
ownership, operation and maintenance of the Generating
Facility, including those contracts and agreements set
forth on Schedule 2.2(a)(iv) attached hereto (but
excluding any such contracts, agreements, personal
property leases, commitments and other legally binding
arrangements to the
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extent the same relate to any of the Retained Assets)
(collectively, the "Contracts"), to the extent in
full force and effect on the Closing Date;
(v) the Permits and Environmental Permits that are
transferred or transferable by Seller to Buyers
(collectively, the "Transferable Permits"), in each case,
to the extent in full force and effect on the Closing
Date;
(vi) the amount of SO2 Allowances set forth on Schedule
2.2(a)(vi) attached hereto ("Transferred SO2
Allowances");
(vii) the amount of NOx Allowances allocated to the
Generating Facility by applicable laws or regulations of
any Governmental Authority for control periods, or parts
thereof, that commence after the Closing Date; plus, the
amount of NOx Allowances that is sufficient to cover
emissions obligations for which Buyers are responsible,
as owners of a tenant-in-common interest in Seller's
Interest for the control period that includes the Closing
Date (based on historic levels); plus any NOx Allowances
allocated for control periods that commenced prior to the
Closing Date and which remain unused prior to the Closing
Date ("Transferred NOx Allowances");
(viii) all data, information, books, operating records,
operating, safety and maintenance manuals, engineering
design plans, blueprints and as-built plans,
specifications, procedures, facility compliance plans,
environmental procedures and similar records, to the
extent in Seller's possession (subject to the right of
Seller to retain copies of the same for its use), other
than such items as are proprietary to third parties and
accounting records (collectively, the "Operating
Records");
(ix) the software (provided, however, that each Buyer
acknowledges that it will require licenses from third
parties in order to be legally entitled to use such software); and
(x) the name "Conemaugh Station"; provided, however, that
each Buyer expressly acknowledges and agrees that the
Auctioned Assets do not include any right, title or interest in or
to the names "Pepco," "Potomac Electric Power Company," and any related
or similar trade names, trademarks, service marks
or logos (and any rights to and in the same, including any right
to use the same).
(b) Retained Assets. The term "Retained Assets" means:
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(i) all electric interconnection, transmission and
distribution facilities and communication facilities
owned, controlled or operated by Seller for purposes of
providing interconnection service, point-to-point
transmission service, network integration service and
distribution service and other related purposes, used
in controlling continuity between the Generating
Facility and the transmission and distribution facilities and for
other purposes (including the Seller's undivided ownership
interest in the Conemaugh Switchyard and the
Conemaugh Transmission Line), as described on Schedule
2.2(b)(i) attached hereto (the "Transmission System");
(ii) all rights of Seller under the Contracts relating to
interconnection, transmission and distribution rights,
including rights of Seller under any Contract in Seller's
capacity as a Transmission System owner or switching
station owner (including those rights granted to Seller
under the Easement and License Agreement and the
Transmission Line Easement Agreement);
(iii) all cash, cash equivalents, bank deposits and accounts
receivable;
(iv) the names "Pepco," "Potomac Electric Power Company," and
any related or similar trade names, trademarks, service
marks or logos (and any rights to and in the same,
including any right to use the same);
(v) any refunds or credits related to Taxes
attributable to taxable periods (or portions thereof) prior to the
Closing Date, and any other rents, charges, liabilities
or obligations paid prior to the Closing Date in respect
of the Auctioned Assets whether directly or indirectly,
under the Contracts or otherwise, regardless of when
actually paid;
(vi) (A) all Emission Reduction Credits or Greenhouse Gas
Emission Reduction Credits that are attributable to
(1) any emission reduction activities of the
Generating Facility which occurred prior to the Closing Date, and
(2) any emission reduction activities of the Seller which occur
following the Closing Date at any locations (other
than the Generating Facility), (B) any SO2 Allowances
that are not Transferred SO2 Allowances, and (C) any NOx
Allowances that are not Transferred NOx Allowances;
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(vii) all claims, causes of action, choses in action, rights
of recovery and rights of set-off of any kind in favor of
the Seller arising prior to the Closing Date other than those pertaining to
the Assumed Obligations; and
(viii) any other asset that is not described with particularity
in this Agreement as an Auctioned Asset.
SECTION 2.3 Assumed Obligations and Retained Liabilities.
(a) Assumed Obligations. At the Closing, Buyers shall
assume, and from and after the Closing, shall discharge, and be
responsible for, on a joint and several basis, all of the
liabilities and obligations, direct or indirect, known or
unknown, absolute or contingent, which relate to the Auctioned
Assets, other than the Retained Liabilities (collectively, the
"Assumed Obligations"), including the following:
(i) except as set forth in Section 2.3(b)(ii), any and all
liabilities and obligations under the Contracts;
(ii) any liabilities and obligations for goods delivered or
services rendered on or after the Closing Date relating to
the Auctioned Assets;
(iii) except as set forth in Section 2.3(b)(iii) or (iv), any
Environmental Liability including any Environmental
Liability (A) arising out of or in connection with any
violation or alleged violation of, or noncompliance or
alleged noncompliance with, any Environmental Laws, prior
to, on or after the Closing Date, relating to or arising
in connection with the Auctioned Assets, (B) arising out
of or in connection with the condition of any Auctioned
Assets prior to, on or after the Closing Date, including
any actual or alleged presence, Release or threatened
Release of any Hazardous Substances at, on, in, under or
migrating onto or from, the Auctioned Assets, prior to, on
or after the Closing Date, (C) arising out of or in
connection with any Release or threatened Release of any
Hazardous Substance prior to, on or after the Closing Date
relating to any equipment, Hazardous Substance, product or
recyclable or recycled material (collectively, the
"Disposed Items") which remains on or has been removed
from the Auctioned Assets, (D) in respect of any property
damage relating to or arising from the presence, exposure
to, or proximity to any Hazardous Substance, prior to, on
or after the Closing Date, (E) in respect of any personal
injury relating to or arising from the presence, exposure
to, or proximity to any
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Hazardous Substance, on or after the Closing Date,and (F)
of any sort whatsoever arising or occurring on or after
the Closing Date;
(iv) any liabilities and obligations under all consent orders
including those listed on Schedule 2.3(a)(iv) (the
"Assumed Consent Order Obligations");
(v) except as set forth in Section 2.3(b)(iv), any liabilities
and obligations with respect to the Permits to the extent arising or
accruing on or after the Closing Date;
(vi) any liabilities and obligations in respect of any personal
injury or property (real or personal) damage claim
(including any claim based on wrongful death) relating to,
resulting from, or arising out of the Auctioned Assets,
arising or occurring on or after the Closing Date;
(vii) any liabilities and obligations, with respect to the periods
that include the Closing Date, with respect to real or personal property
rent, Taxes based on the ownership or use of property, utilities charges
and similar charges that primarily relate to the
Generating Facility (collectively, the "Prorated
Items"), including (A) personal property taxes, real
estate and occupancy taxes, assessments and other
charges, (B) rent and all other items payable by
Seller under any Contract, (C) any fees with respect
to any Transferable Permit and (D) sewer
rents and charges for water, telephone, electricity and
other utilities, in each case calculated by multiplying
the amount of any such Prorated Item by a fraction the
numerator of which is the number of days in such period
beginning on and after the Closing Date and the
denominator of which is the number of days in such period;
(viii) any liabilities and obligations in respect of Taxes
(other than as provided for by Section 2.3 (a)(vii))
attributable to the Auctioned Assets arising or accruing
during taxable periods (or portions thereof) beginning on
or after the Closing Date; and
(ix) any liabilities and obligations under the Ancillary
Agreements in respect of the Auctioned Assets
arising on or after the Closing Date.
(b) Retained Liabilities. Buyers shall not assume or be
obligated to pay, perform or otherwise discharge the following
liabilities or obligations (the "Retained Liabilities"):
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(i) any liabilities and obligations of Seller exclusively
relating to any Retained Assets;
(ii) any liabilities and obligations under the Contracts which
relate to (A) goods delivered or services rendered
prior to the Closing Date, and (B) breaches by the
Seller of its obligations thereunder occurring prior
to the Closing Date (other than breaches by Seller
of obligations relating to any Environmental
Liabilities which are Assumed Obligations pursuant
to Section 2.3(a)(iii) above);
(iii) (A) any Environmental Liability of Seller arising out
of or in connection with the disposal by, or on
behalf of, Seller and Release or threatened Release,
prior to the Closing Date of Hazardous Substances of
any Off-Site location, (B) any Environmental
Liability of Seller arising out of or in connection
with any Release or threatened Release of any
Hazardous Substance on or after the Closing Date from the Seller Facilities
or otherwise originating from, or relating to, any
equipment owned or used by Seller that is located on
Buyer Real Estate, and (C) any Environmental
Liability in respect of any personal injury relating
to or arising from the presence, exposure to, or
proximity to any Hazardous Substance prior to the losing Date;
(iv) any monetary fines imposed by a Governmental
Authority to the extent arising out of or relating to acts or
omissions of Seller in respect of the Auctioned
Assets prior to the Closing Date;
(v) any liabilities and obligations in respect of any
personal injury or property damage claim (other than any
Environmental Liabilities which are Assumed Obligations
pursuant to Section 2.3(a)(iii) above) relating to the
Auctioned Assets arising or occurring prior to the Closing
Date;
(vi) any liabilities and obligations, with respect to
periods prior to the Closing Date, for the Prorated Items,
calculated as set forth in Section 2.3(a)(vii);
(vii) any liabilities and obligations in respect of Taxes
(other than as provided for by Section 2.3(b)(vi))
attributable to the Auctioned Assets arising or accruing
during taxable periods (or portions thereof) ending before
the Closing Date; and
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(viii) any liabilities and obligations of Seller under the
Ancillary Agreements in respect of the Retained Assets.
SECTION 2.4 Third Party Consents.
(a) Notwithstanding Section 2.2(a)(ii), (iii) or (iv), to
the extent that Seller's rights under any Contract or warranty
may not be assigned without the consent of another person which
consent has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and
Seller, at its expense, shall use its reasonable best efforts to
obtain prior to the Closing any such required consents with
respect to any Material Contracts or material warranties.
(b) The Parties agree that if any consent to an assignment
of any such Material Contract or material warranty shall not be
obtained or if any attempted assignment would in Seller's
reasonable opinion be ineffective or would impair any material
rights and obligations of Buyers under such Material Contract or
material warranty, as applicable, so Buyers would not in effect
acquire the benefit of all such rights and obligations, Seller,
to the maximum extent permitted by law and such Material Contract
or material warranty, as applicable, shall after the Closing
appoint Buyers to be Seller's representatives and agents with
respect to such Material Contract or material warranty, as
applicable, and Seller shall, to the maximum extent permitted by
law and such Material Contract or material warranty, as
applicable, enter into such reasonable arrangements with such
Buyers as are necessary to provide Buyers with the benefits and
obligations of such Material Contract or material warranty, as
applicable. The Parties shall cooperate and shall each use their
reasonable best efforts after the Closing to obtain an assignment
of each such Material Contract or material warranty, as
applicable, to Buyers.
ARTICLE III
Purchase Price
SECTION 3.1 Purchase Price. Subject to adjustment pursuant to
Section 3.2, the amount payable by Buyers to Seller for the
Auctioned Assets shall be the sum of (a) $152,500,000 (the
"Purchase Price"), (b) an amount equal to the Final Fuel Related
Adjustment Amount, (c) an amount equal to the Final Non-Fuel
Related Adjustment Amount, and (d) an amount expended by Seller
between the date hereof and the Closing Date for Permitted
Capital Expenditures pursuant to Section 4.2(c).
SECTION 3.2 Post-Closing Adjustment.
(a) Within 60 Business Days after the last day of the month
in which Closing occurs, Seller shall prepare and deliver to
Buyers a statement (an "Adjustment Statement") which reflects (i)
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an amount equal to the book cost, as reflected on the books of
Seller as of the Closing Date, of all inventories, materials,
spare parts and supplies (excluding any fuel supplies) included
in the Auctioned Assets (the "Final Non-Fuel Related Adjustment
Amount") and (ii) an amount equal to the book value, as
determined using Seller's historical moving average method, of
all fuel supplies included in the Auctioned Assets (the "Final
Fuel Related Adjustment Amount"). The Adjustment Statement shall
be prepared using (i) GAAP and (ii) with respect to the Final Non-
Fuel Related Adjustment Amount the same moving average price that
Seller has historically used to calculate the book cost of its
supplies, materials and spare parts inventory. Buyers agree to
cooperate with Seller in connection with the preparation of the
Adjustment Statement and related information, and shall provide
to Seller such access, books, records and information as may be
reasonably requested from time to time.
(b) Buyers may jointly dispute the quantity delivered or
quality of any inventory item shown on the Adjustment Statement,
or the mathematical calculations reflected therein, by notifying
Seller in writing of the disputed amount, and the basis of such
dispute, within 20 Business Days of Buyers' receipt of the
Adjustment Statement; provided, however, that in respect of the
quality of any inventory item, Buyers may not dispute Seller's
normal and customary methods for accounting for excess inventory.
Buyers shall have no right to dispute any other matter in respect
of the Adjustment Statement, including historical moving average
price used to calculate the book cost of the inventory and the
Final Non-Fuel Related Adjustment Amount or the appropriateness,
under GAAP or otherwise, of using such historical moving average
price to determine the book cost of any particular item of
inventory. In the event of a dispute with respect to the
quantity or quality of any inventory item shown on the Adjustment
Statement, or the mathematical calculations reflected therein,
the Parties shall attempt to reconcile their differences and any
resolution by them as to any disputed amounts shall be final,
binding and conclusive on the Parties. If the Parties are unable
to reach a resolution of such differences within 20 Business Days
of receipt of Buyers' written notice of dispute to Seller, the
Parties shall submit the amounts remaining in dispute for
determination and resolution to PricewaterhouseCoopers or any
other accounting firm of recognized national standing reasonably
acceptable to the Parties (the "Accountants"), which shall be
instructed to determine and report to the Parties, within 20
Business Days after such submission, upon such remaining disputed
amounts, and such report shall be final, binding and conclusive
on the Parties with respect to the amounts disputed. Buyers, on
the one hand, and Seller, on the other hand, shall each pay an
amount, if any, equal to that percentage of the fees and
disbursements of the Accountants incurred in connection with the
resolution of such disputed amounts that corresponds to the
percentage of disputed amounts awarded to the other by the
Accountants hereunder.
(c) For purposes of this Agreement, the "Closing Adjustment
Amount" shall be the sum of (A) the amount of the Final Non-Fuel
Related Adjustment Amount, and (B) the amount of the Final Fuel
Related Adjustment Amount minus (ii) the amount of the Estimated
Non-Fuel Related Adjustment Amount. If the Closing Adjustment
Amount is a positive number, then on the Adjustment Date (as
defined below), Buyers shall pay to Seller the amount of such
positive number. If the Closing Adjustment Amount is a negative
number, then on the Adjustment Date, Seller shall pay to Buyers
the amount of such negative number. For purposes of this
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Agreement, the "Adjustment Date" means (1) if Buyers do not
disagree in any respect with the Adjustment Statement, the 23rd
Business Day following Buyers' receipt of the Adjustment
Statement or (2) if Buyers shall disagree in any respect with the
Adjustment Statement, the third Business Day following either the
resolution of such disagreement by the Parties or a final
determination by the Accountants in accordance with
Section 3.2(b). Any amount paid under this Section 3.2(c) shall
be paid with interest for the period commencing on the Closing
Date up to but not including the date of payment, calculated at
the prime rate of The Chase Manhattan Bank in effect on the
Closing Date, and in cash by wire transfer of immediately
available funds.
SECTION 3.3 Allocation of Purchase Price. Buyers shall
deliver to Seller at Closing a preliminary allocation among the
Auctioned Assets of the amount payable by Buyers to Seller
pursuant to Section 3.1 hereof, and, as soon as practicable
following the Closing (but in any event within 10 Business Days
following the final determination of the Closing Adjustment
Amount), Buyers shall prepare and deliver to Seller a final
allocation of the amount payable by Buyers to Seller pursuant to
Section 3.1 hereof, and the post-closing adjustment pursuant to
Section 3.2, among the Auctioned Assets (the "Allocation"). The
Allocation shall be consistent with Section 1060 of the Code and
the Treasury Regulations thereunder. Seller hereby agrees to
accept Buyers' Allocation unless Seller determines that such
Allocation was not prepared in accordance with Section 1060 of
the Code and the regulations thereunder ("Applicable Law"). If
Seller so determines, Seller shall within 20 Business Days
thereafter propose any changes necessary to cause the Allocation
to be prepared in accordance with Applicable Law. Within 10
Business Days following delivery of such proposed changes, Buyers
shall provide Seller with a statement of any objections to such
proposed changes, together with a reasonably detailed explanation
of the reasons therefor. If Buyers, on the one hand, and Seller,
on the other hand, are unable to resolve any disputed objections
within 10 Business Days thereafter, such objections shall be
referred to the Accountants, whose review will be limited to
whether Buyers' Allocation of such disputed items regarding the
Allocation was prepared in accordance with Applicable Law. The
Accountants shall be instructed to deliver to the Parties a
written determination of the proper allocation of such disputed
items within 20 Business Days. Such determination shall be
conclusive and binding upon the parties hereto for all purposes,
and the Allocation shall be so adjusted (the Allocation,
including the adjustment, if any, to be referred to as the "Final
Allocation"). Fees and disbursements of the Accountants
attributable to the Allocation shall be shared by Buyers, on the
one hand, and Seller, on the other hand, on the basis of the
respective percentages of the disputed items which were
allocated by the Accountants to the other hereunder. Each Party
agrees to timely file Internal Revenue Service Form 8594, and all
Federal, state, local and foreign Tax Returns, in accordance with
such Final Allocation and to report the transactions contemplated
by this Agreement for Federal Income Tax and all other tax
purposes in a manner consistent with the Final Allocation. Each
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Party agrees to promptly provide the other party with any
additional information and reasonable assistance required to
complete Form 8594, or compute Taxes arising in connection with
(or otherwise affected by) the transactions contemplated
hereunder. Buyers and Seller shall timely notify each other and
each shall timely provide the other Party or Parties, as the case
may be, with reasonable assistance in the event of an
examination, audit or other proceeding regarding the Final
Allocation.
ARTICLE IV
The Closing
SECTION 4.1 Time and Place of Closing. Upon the terms and
subject to the satisfaction of the conditions contained in
Article VIII, the closing of the sale of the Auctioned Assets
contemplated by this Agreement (the "Closing") will take place on
such date as the Parties may agree, which date shall be as soon
as practicable, but no later than ten Business Days, following
the date on which all of the conditions set forth in Article VIII
have been satisfied or waived, at the Washington, D.C. offices of
Dickstein Shapiro Morin & Oshinsky LLP, or at such other place or
time as the Parties may agree. The date and time at which the
Closing actually occurs is hereinafter referred to as the
"Closing Date".
SECTION 4.2 Payment of Estimated Purchase Price. (a) At the
Closing, Buyers will pay or cause to be paid to Seller by wire
transfer of immediately available funds to an account previously
designated in writing by Seller an amount in United States
dollars equal to the sum of (a) $152,500,000, (b) an amount equal
to the Estimated Non-Fuel Related Adjustment Amount, (c) an
amount expended by Seller between the date hereof and the Closing
Date for Permitted Capital Expenditures pursuant to Section
4.2(c) (the "Estimated Purchase Price").
(b) At least 5 Business Days prior to the Closing
Date, Seller shall provide to Buyers its good faith estimate of
the Final Non-Fuel Related Adjustment Amount as of the last day
of the month preceding the Closing Date, which estimate shall be
certified in writing by an appropriate officer of Seller (the
"Estimated Non-Fuel Related Adjustment Amount").
(c) The amount payable by Buyers to Seller pursuant to
Section 3.1(d) shall consist of the amount expended, or for which
liabilities are incurred, by Seller between the date hereof and
the Closing Date for capital expenditures which (i) are described
on Schedule 4.2(c), (ii) are approved by Buyers, (iii) are
required to be made under the Conemaugh Operating Agreement or
any other Contracts to which the Seller is bound listed on
Schedule 2.2(a)(iv), or (iv) are mandated by a law or regulation
of a Governmental Authority (any capital expenditures described
above are the "Permitted Capital Expenditures"). On or before
the Closing Date, Seller shall provide to Buyers a report which
details the amounts expended by Seller between the date hereof
and the Closing Date for Permitted Capital Expenditures (the
"Permitted Capital Expenditure Report").
<PAGE>
ARTICLE V
Representations and Warranties of Seller
Seller represents and warrants to Buyers as follows (all
such representations and warranties, except those set forth in
Section 5.1 and 5.2, being made to the Knowledge of Seller):
SECTION 5.1 Organization; Qualification. Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Virginia and the
District of Columbia and has all requisite corporate power and
authority to own, lease and operate the Auctioned Assets and to
carry on the business of the Auctioned Assets as currently
conducted.
SECTION 5.2 Authority Relative to This Agreement. Seller has
all necessary corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery by Seller of this Agreement and the
Ancillary Agreements and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Directors of Seller or by a
committee thereof to whom such authority has been delegated and
no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or the Ancillary Agreements
or the consummation of the transactions contemplated hereby or
thereby. This Agreement and the Ancillary Agreements have been
duly and validly executed and delivered by Seller and, assuming
that this Agreement and the Ancillary Agreements constitute valid
and binding agreements of Buyers and each other party thereto,
subject to the receipt of the Seller Required Regulatory
Approvals and the Buyers Required Regulatory Approvals,
constitute valid and binding agreements of Seller, enforceable
against Seller in accordance with their respective terms.
SECTION 5.3 Consents and Approvals; No Violation.
(a) Subject to obtaining the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, neither
the execution and delivery of this Agreement or the Ancillary
Agreements by Seller nor the sale by Seller of the Auctioned
Assets pursuant to this Agreement will (i) conflict with or
result in any breach of any provision of the Certificate of
Incorporation or By-laws of Seller, (ii) except as set forth on
Schedule 5.3(a), 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, lease or other instrument or
obligation to which Seller is a party or by which Seller, or any
of the Auctioned Assets, may be bound, except for such defaults
(or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which
would not, individually or in the aggregate, create a Material
Adverse Effect, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Seller, or the
Auctioned Assets, except for such violations which would not,
<PAGE>
individually or in the aggregate, create a Material Adverse
Effect.
(b) Except for (i) the filings by Seller and Buyers (or
Affiliates thereof) required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act, and
(ii) the Required Regulatory Approvals set forth on Schedule
5.3(b) attached hereto (collectively, the "Seller Required
Regulatory Approvals"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of any
Governmental Authority is necessary for the consummation by
Seller of the transactions contemplated hereby or by the
Ancillary Agreements, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals
(A) which, if not obtained or made, would not individually or in
the aggregate, create a Material Adverse Effect or (B) which
relate to the Transferable Permits.
SECTION 5.4 Personal Property. Except for Permitted
Exceptions, Seller has good and marketable title, free and clear
of all Encumbrances, to all personal property included in the
Auctioned Assets.
SECTION 5.5 Real Estate. Except for Permitted Exceptions,
Seller has good and marketable title, free and clear of all
Encumbrances, to all Buyer Real Estate. Schedule 5.5 contains
legal descriptions of the Buyer Real Estate.
SECTION 5.6 Certain Contracts and Arrangements. (a) Except
for (i) any contract or agreement listed on Schedule 2.2(a)(iv)
(the "Material Contracts") and (ii) Contracts which will expire
prior to the Closing Date or that are permitted to be entered
into under this Agreement, Seller is not a party to any contract
which is material to the business or operations of the Auctioned
Assets.
(b) Each Contract (i) constitutes a valid and binding
obligation of Seller, and of the other parties thereto, and (ii)
is in full force and effect.
(c) Except as set forth on Schedule 5.6 attached
hereto, there is not, under any of the Contracts, any default or
event which, with notice or lapse of time or both, would
constitute a material default by Seller, except for such events
of default and other events as to which requisite waivers or
consents have been obtained or which would not, individually or
in the aggregate, create a Material Adverse Effect.
SECTION 5.7 Legal Proceedings. Except as set forth on
Schedule 5.7 or in the Filed Seller SEC Documents, as of the date
of this Agreement, there are no claims, actions, proceedings or
investigations pending or threatened against or relating to
Seller with respect to the business or operations of the
Auctioned Assets, before any Governmental Authority which would,
individually or in the aggregate, be reasonably expected to
create a Material Adverse Effect. With respect to the business
or operations of the Auctioned Assets, Seller is not, as of the
date of this Agreement, subject to any outstanding judgment,
rule, order, writ, injunction or decree of any Governmental
Authority which could create a Material Adverse Effect. The
representations and warranties of Seller set forth in this
<PAGE>
Section 5.7 shall not apply to, and do not cover, any
environmental matters which, with respect to any representations
and warranties of Seller, are exclusively governed by
Section 5.9.
SECTION 5.8 Permits; Compliance with Law. Except as set forth
on Schedule 5.8 or in the Filed Seller SEC Documents, Seller is
in current compliance with all Permits necessary to conduct the
business and operations of the Auctioned Assets as currently
conducted, and Seller is otherwise in current compliance with all
laws, statutes, orders, rules, regulations, ordinances or
judgments of any Governmental Authority applicable to the
business and operations of the Auctioned Assets, except for such
failures to comply with such Permits, or such failures to be in
compliance with such laws, statutes, orders, rules, regulations,
ordinances or judgments, which would not, individually or in the
aggregate, create a Material Adverse Effect. The representations
and warranties of Seller set forth in this Section 5.8 shall not
apply to, and do not cover, any environmental matters which, with
respect to any representations and warranties of Seller, are
exclusively governed by Section 5.9.
SECTION 5.9 Environmental Matters.
(a) Except as set forth in Schedule 5.9(a) or disclosed in
the Filed Seller SEC Documents, Seller holds, and is in
compliance with all Environmental Permits required for Seller to
conduct the business and operations of the Auctioned Assets as
currently conducted under applicable Environmental Laws, and
Seller is otherwise in current compliance with all applicable
Environmental Laws on the date hereof with respect to the
business and operations of the Auctioned Assets, except for such
failures to hold or comply with such Environmental Permits, or
such failures to be in compliance with such applicable
Environmental Laws on the date hereof, which would not,
individually or in the aggregate, create a Material Adverse
Effect.
(b) Except as set forth in Schedule 5.9(b) or disclosed in
the Filed Seller SEC Documents, Seller has not received any
written notice of a violation of any Environmental Law, or been
notified that it is a potentially responsible party under the
Federal Comprehensive Environmental Response, Compensation, and
Liability Act or any similar state law with respect to any real
property included in the Buyer Real Estate or any Off-Site
location, except for such matters under such Environmental Laws
as would not, individually or in the aggregate, create a Material
Adverse Effect.
(c) No Release of Hazardous Substances has occurred at,
from, in, on, or under the real property included in the Buyer
Real Estate that has given, or could give rise to Environmental
Liabilities under Environmental Laws, except for such
Environmental Liabilities which (i) are disclosed in the
environmental reports set forth on Schedule 5.9(c) attached
hereto, or (ii) would not, individually or in the aggregate, have
a Material Adverse Effect.
<PAGE>
For purposes of the representations and warranties made in this
Article V, the Seller specifically disclaims any representations
and warranties with respect to standards of performance for new
stationary sources promulgated under Section 111 of the Federal
Clean Air Act, 42 U.S.C. 7411. The representations and
warranties made in this Section 5.9 are the exclusive
representations and warranties of the Seller relating to
environmental matters as of the date hereof.
SECTION 5.10 Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of
any action taken by Seller, except Navigant Consulting, Inc. and
Merrill Lynch & Co., which are acting for and at the expense of
Seller.
SECTION 5.11 Insurance. Except as set forth on Schedule 5.11
attached hereto, all material policies of fire, liability,
workers' compensation and other forms of insurance owned or held
by, or on behalf of, Seller and insuring any Auctioned Assets are
in full force and effect, all premiums with respect thereto
covering all periods up to and including the date hereof have
been paid (other than retroactive premiums which may be payable
with respect to comprehensive general liability and workers'
compensation insurance policies), and no written notice of
cancellation or termination has been received by Seller with
respect to any such policy which was not replaced on
substantially similar terms prior to the date of such
cancellation or termination.
SECTION 5.12 Disclaimers. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V, THE AUCTIONED
ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS, WHERE IS", AND
SELLER IS NOT MAKING ANY OTHER REPRESENTATIONS OR WARRANTIES
WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH
AUCTIONED ASSETS (INCLUDING ANY RELATING TO LIABILITIES,
OPERATIONS OF THE GENERATING FACILITY, CONDITION, VALUE OR
QUALITY OF THE AUCTIONED ASSETS OR THE PROSPECTS (FINANCIAL OR
OTHERWISE), RISKS OR OTHER INCIDENTS OF THE AUCTIONED ASSETS) OR
WITH RESPECT TO THIS AGREEMENT OR THE ANCILLARY AGREEMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SELLER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY,
USAGE, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO THE AUCTIONED ASSETS, OR ANY PART THEREOF, OR AS TO
THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN,
WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL
REQUIREMENTS, INCLUDING BUT NOT LIMITED TO ANY ENVIRONMENTAL
LAWS, OR WHETHER SELLER POSSESSES SUFFICIENT REAL PROPERTY OR
PERSONAL PROPERTY TO OPERATE THE AUCTIONED ASSETS. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN SECTION 5.9 HEREOF, SELLER
FURTHER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY
REGARDING THE ABSENCE OF HAZARDOUS SUBSTANCES OR LIABILITY OR
POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS WITH RESPECT
TO THE AUCTIONED ASSETS, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED
BY BUYERS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SELLER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE
<PAGE>
INFORMATION SET FORTH IN, OR CONTEMPLATED BY, THE INFORMATION
MEMORANDUM.
ARTICLE VI
Representations and Warranties of Buyers
Each Buyer represents and warrants to Seller (as to
itself only with respect to Sections 6.1, 6.2, 6.3, 6.5, 6.9 and
6.10, and jointly and severally otherwise) as follows:
SECTION 6.1 Organization. Allegheny 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 company
power and authority to own, lease and operate its properties and
to carry on its business as is now being conducted. PPL Global
is a corporation duly incorporated, 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.
SECTION 6.2 Authority Relative to This Agreement. Each Buyer
has all necessary corporate or company power and authority to
execute and deliver this Agreement and the Ancillary Agreements
to which it is party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by
each Buyer of this Agreement and such Ancillary Agreements and
the consummation by each Buyer of the transactions contemplated
hereby and thereby have been duly and validly authorized by its
Board of Directors or the Board of Directors of its Manager, as
applicable, of such Buyer and no other corporate or company
proceedings on the part of any Buyer are necessary to authorize
this Agreement or such Ancillary Agreements or the consummation
of the transactions contemplated hereby or thereby. This
Agreement and such Ancillary Agreements have been duly and
validly executed and delivered by each Buyer and, assuming that
this Agreement and the Ancillary Agreements constitute valid and
binding agreements of Seller and each other party thereto,
subject to the receipt of the Buyer Required Regulatory Approvals
and the Seller Required Regulatory Approvals, this Agreement and
the Ancillary Agreements constitute valid and binding agreements
of each Buyer, enforceable against such Buyer in accordance with
their respective terms.
SECTION 6.3 Consents and Approvals; No Violation.
(a) Subject to obtaining the Buyer Required Regulatory
Approvals and the Seller Required Regulatory Approvals, neither
the execution and delivery of this Agreement or the Ancillary
Agreements to which it is party by any Buyer nor the purchase by
<PAGE>
such Buyer of the Auctioned Assets pursuant to this Agreement
will (i) conflict with or result in any breach of any provision
of the Certificate of Incorporation, Certificate of Formation,
Bylaws or Operating Agreement of such Buyer, (ii) 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, lease
or other instrument or obligation to which such Buyer or any of
its subsidiaries is a party or by which any of their respective
assets may be bound or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to such Buyer, or
any of its assets, except, in the case of clause (ii) and (iii),
for such failures to obtain a necessary consent, defaults and
violations which would not, individually or in the aggregate,
have a Buyer Material Adverse Effect.
(b) Except for (i) the filings by any Buyer and Seller (or
Affiliates thereof) required by the HSR Act and the expiration or
earlier termination of all waiting periods under the HSR Act, and
(ii) the Required Regulatory Approvals set forth on Schedule 6.3
attached hereto (collectively, the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any
Governmental Authority is necessary for the consummation by any
Buyer of the transactions contemplated hereby or by the Ancillary
Agreements, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which relate to
the Transferable Permits.
SECTION 6.4 Availability of Funds. Each Buyer has sufficient
funds available to it or has received binding written commitments
(copies of which have heretofore been delivered to Seller) from
one or more nationally recognized financial institutions to
provide sufficient funds on the Closing Date to pay the Estimated
Purchase Price.
SECTION 6.5 Brokers. No broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of
any action taken by any Buyer.
SECTION 6.6 No Knowledge of Seller's Breach. No Buyer has
Knowledge of any breach by Seller of any representation or
warranty of Seller, or of any other condition or circumstance
that would excuse any Buyer from its timely performance of its
obligations hereunder. Each Buyer shall notify promptly Seller,
with respect to Seller's representations and warranties or such
other conditions or circumstances, if any such information comes
to such Buyer's attention prior to the Closing.
SECTION 6.7 Qualified Buyers. Each Buyer is qualified to
obtain any Permits and Environmental Permits necessary for such
Buyer to own and operate the Auctioned Assets as of the Closing
Date. Without limiting the foregoing, no Buyer is aware of any
reason or circumstance that would prevent such Buyer from
procuring the Buyer Required Regulatory Approvals.
<PAGE>
SECTION 6.8 Securities Laws. Each Buyer acknowledges that the
offer and sale of the Conemaugh Interest (or any portion thereof)
has not been registered under the Securities Act of 1933, as
amended, or any state securities laws, and affirms that it is not
acquiring such ownership interest (or any portion thereof) with a
view toward distribution in violation of such act or any state
securities law.
SECTION 6.9 Financial Representations. Each Buyer has
provided Seller with its most recent balance sheet, income
statement and statement of changes in cash flows and independent
auditors reports for each of the preceding three fiscal years and
most recent interim period. Such financial statements have been
prepared in accordance with GAAP and fairly reflect the financial
position and results of operations of such Buyer as at and for
the periods therein.
SECTION 6.10 Legal Proceedings. There are no claims, actions,
proceedings or investigations pending or, to the Knowledge of any
Buyer, threatened against or relating to any Buyer before any
Governmental Authority which would, individually or in the
aggregate, be reasonably expected to create a Buyer Material
Adverse Effect. No Buyer is subject to any outstanding judgment,
rule, order, writ, injunction or decree of any Governmental
Authority which could create a Buyer Material Adverse Effect.
ARTICLE VII
Covenants of the Parties
SECTION 7.1 Tax Exempt Financing.
(a) Each Buyer understands and agrees that:
(i) those facilities of the Seller included in the
Auctioned Assets listed on Schedule 7.1 attached hereto (the
"Exempt Facilities") have been financed, and refinanced, in
whole or in part, with the proceeds of
the issuance and sale by industrial development
revenue bonds or private activity bonds as set forth
on Schedule 7.1 attached hereto (collectively, the
"Revenue Bonds") the interest on which, with certain
exceptions, is excluded from gross income for
purposes of federal income taxation; and Seller is the
economic obligor in respect of such bonds;
(ii) The basis for such exclusion is the use of the Exempt
Facilities for the purpose of (A) the abatement or control of
atmospheric pollution or contamination and/or (B) the abatement
or control of water pollution or contamination, such qualifying
purposes being discussed in more detail in (b) below;
<PAGE>
(iii) The use of the Exempt Facilities for a purpose other
than a qualifying purpose indicated in subsection (ii) above
could impair (A) such exclusion from gross income of the interest
on such bonds, possibly with retroactive effect, unless
appropriate remedial action were taken (which could include
prompt defeasance or redemption of such bonds) and/or (B) the
deductibility of payment by Seller of interest based on the
restrictions in Section 150 (b) of the Code; and
(iv) A breach by any Buyer of its obligations under this Section
7.1 could result in the incurrence by Seller of additional costs
and expenses, including without limitation, increased interest
costs, loss of the interest deduction for tax purposes and
transaction costs relating to any refinancing, redemption and/or
defeasance of all or part of the Revenue Bonds, and Buyers will
be liable to Seller for such additional costs and expenses.
(b) (i) Each Buyer agrees that it shall not use, or permit
the use of, the Exempt Facilities for any purpose other than
(A) abating or controlling atmospheric or
water pollution or contamination by removing,
altering, disposing of or storing pollutants,
contaminants, waste or heat, all as
contemplated in U.S. Treasury Regulations
Section 1.103-8(g);
(B) the collection, storage, treatment,
utilization, processing or final disposal of
solid waste, all as contemplated in U.S.
Treasury Regulations Section 1.103-8(f); or
(C) the collection, storage, treatment,
utilization, processing or final disposal of
sewage, all as contemplated in U.S. Treasury
Regulations Section 1.103-8(f) unless such
Buyer has obtained at its own expense an
opinion addressed to Seller of nationally
recognized bond counsel reasonably acceptable
to Seller ("Bond Counsel") that such use will
not impair (x) the exclusion from gross income
of the interest on any issue of Revenue Bonds
for Federal income tax purposes or (y) the
deductibility of Seller's payments of interest
based on the restrictions in Section 150(b) of
the Code.
(ii) Each Buyer reasonably expects, as of the date
of this Agreement, that the Exempt Facilities will continue to be
used for the qualifying purposes set forth in subsection (i)
above, and for no other purpose, for the remainder of their
useful lives.
<PAGE>
(A) It is expressly understood and
agreed that the provisions of clause (b) above
shall not prohibit any Buyer from suspending
the operation of the Exempt Facilities on a
temporary basis, or from terminating the
operation of the Exempt Facilities on a
permanent basis and shutting down, retiring
and/or decommissioning the Exempt Facilities;
provided, however, that if the Exempt
Facilities, in whole or in part, are dismantled
and sold, including any sale for scrap, and if
the operation of the Generating Plant served by
such Exempt Facilities shall not theretofore
have been, and is not then being, terminated on
a permanent basis, then the proceeds of such
sale of the Exempt Facilities shall within six
months from the date of sale be expended to
acquire replacement property to be used for the
same qualifying purpose as the Exempt
Facilities so sold, unless such Buyer has
obtained at its own expense an opinion
addressed to Seller of Bond Counsel that the
failure to take this action will not impair (x)
the exclusion from gross income of the interest
on any issue of Revenue Bonds for Federal
income tax purposes or (y) the deductibility of
Seller's payments of interest based on the
restrictions in Section 150(b) of the Code.
(B) Each Buyer agrees that it shall not
issue, or have issued on its behalf, any
tax-exempt bonds to finance or refinance its
acquisition of the Exempt Facilities; provided
that it is expressly understood and agreed that
this clause (d) shall not prohibit the use of
tax-exempt bonds to finance or refinance any
improvement to the Exempt Facilities made after
the date of acquisition or to any assets other
than the Exempt Facilities.
(C) Each Buyer agrees that it shall give
Seller at least 180 days' prior written notice
of any suspension or termination of the
operation of the Exempt Facilities, or any part
thereof, and of any sale, exchange, transfer or
other disposition of the Exempt Facilities, or
any part thereof, including, but not limited
to, a sale for scrap.
(D) If Seller shall desire to refund any
Revenue Bonds, each Buyer shall cooperate with
Seller and with Bond Counsel with respect to
such refunding bonds and shall provide upon
request any representations, agreements or
covenants that are reasonably requested
concerning its compliance to such date and/or
in the future with the representations,
agreements and covenants made herein.
<PAGE>
(E) If any Buyer shall sell, exchange,
transfer or otherwise dispose of the Exempt
Facilities to a third party, such Buyer shall
cause to be included in the documentation
relating to such transaction covenants and
agreements on the part of such third party
substantially identical to those on the part of
such Buyer contained in this Section 7.1.
(F) The covenants and agreements on the
part of each Buyer contained in this Section
7.1 shall continue in effect so long as any of
the Revenue Bonds, including any refunding
bonds issued hereafter to refund any Revenue
Bonds, shall remain outstanding. Seller shall
notify Buyers promptly when there shall be no
Revenue Bonds outstanding.
SECTION 7.2 Access to Information.
(a) Between the date of this Agreement and the Closing
Date, Seller will, subject to the Confidentiality Agreements,
during ordinary business hours and upon reasonable notice (i) use
reasonable efforts to give Buyers and their representatives
reasonable access to all books, records, plants, offices and
other facilities and properties constituting the Auctioned
Assets, (ii) use reasonable efforts to permit Buyers to make such
reasonable inspections thereof as Buyers may reasonably request,
(iii) furnish Buyers with such financial and operating data and
other information with respect to the Auctioned Assets in the
possession of Seller, as Buyers may from time to time reasonably
request, (iv) furnish Buyers upon request a copy of each material
report, schedule or other document with respect to the Auctioned
Assets filed by Seller with, or received by Seller from, the PSC
or FERC; provided, however, that (A) any such activities shall be
conducted in such a manner as not to interfere unreasonably with
the operation of the Auctioned Assets, and without duplication by
Buyers (B) Seller shall not be required to take any action which
would constitute a waiver of the attorney-client privilege, and
(C) Seller need not supply Buyers with (1) any information or
access which Seller is under a legal obligation not to supply (2)
any information which Seller is not entitled pursuant to the
terms of the Conemaugh Operating Agreement, or (3) any
information which Seller has previously supplied to Buyers.
Notwithstanding anything in this Section 7.2 to the contrary,
(i) Buyers shall not have the right to perform or conduct any
environmental sampling or testing at, in, on, around or
underneath the Auctioned Assets and (ii) Seller shall not be
required to provide such access or information with respect to
any Retained Asset or Retained Liabilities.
(b) From and after the Closing Date, Buyers shall retain
all Operating Records (whether in electronic form or otherwise)
relating to the Auctioned Assets on or prior to the Closing Date.
Buyers also agree that, from and after the Closing Date, Seller
shall have the right, upon reasonable request to Buyers, to have
access to, or receive from Buyers copies of, any Operating
Records or other information in Buyers' possession relating to
the Auctioned Assets on or prior to the Closing Date and required
by Seller in order to comply with applicable law. Seller shall
<PAGE>
reimburse Buyers for their reasonable costs and expenses
incurred in connection with the foregoing sentence. If Buyers
shall desire to dispose of any Operating Records or other
information contemplated above, Buyers shall, prior to such
disposition, give Seller a reasonable opportunity to segregate
and remove such records and information as it may select.
SECTION 7.3 Consents and Approvals; Transferable Permits.
(a) The Parties shall cooperate with each other and (i)
prepare and file (or otherwise effect) as soon as practicable all
applications, notices, petitions and filings with respect to and
(ii) use their reasonable best efforts to obtain (A) the Seller
Required Regulatory Approvals and the Buyer Required Regulatory
Approvals and (B) any other consents, approvals or authorizations
of any other Governmental Authorities or third parties that are
necessary to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements other than such consents,
approvals, or authorizations which, if not obtained or made,
would not individually or in the aggregate, create a Material
Adverse Effect. Without limiting the generality of the
foregoing, (1) each Party agrees to, upon the other party's
request, support such other Party's applications for regulatory
approvals of the purchase and sale of the Auctioned Assets
contemplated by this Agreement, and (2) the Parties agree to
defend any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the Ancillary
Agreements, or the consummation of the transactions contemplated
hereby or thereby, including seeking to have any stay or
temporary restraining order entered by any Governmental Authority
vacated or reversed.
(b) Upon execution of this Agreement, Seller shall commence
the process of transferring to Buyers the Transferable Permits,
including completing and filing applications and related
documents with the appropriate Governmental Authorities. Seller
hereby reserves the right to modify, alter or amend any
Transferable Permit or to refuse to correct violations or
deficiencies in respect of any Transferable Permit as long as
such modification, alteration, amendment or refusal would not,
individually or in the aggregate, create a Material Adverse
Effect.
(c) Seller shall use its reasonable best efforts to
cooperate with Buyers in the transfer of Transferable Permits to
Buyers by Closing. If in the sole discretion of Seller, the
transfer of any Transferable Permit cannot be completed by
Closing, each Buyer is hereby authorized, but not required, to
act as Seller's representative and agent in respect of such
Transferable Permit and to do all things necessary for effecting
transfer of such Transferable Permit to Buyers as soon after the
Closing as is practicable, with Seller remaining the Transferable
Permit "holder of record" in such case until such transfer is
completed. In the case of each such Transferable Permit, Seller
shall, to the maximum extent permitted by law and such
Transferable Permit, enter into such reasonable arrangements with
Buyers as are necessary to provide Buyers with the benefits and
obligations of such Transferable Permit. If in the sole
discretion of Seller, Buyers are not able to complete the
transfer of any Transferable Permit after Closing without the
<PAGE>
occurrence of any event that, if such event had occurred between
the execution of this Agreement and the Closing, would have
created, individually or in the aggregate, a Material Adverse
Effect, Seller may substitute Buyers in its place and stead as
the Party responsible for completing the transfer of such
Transferable Permit.
SECTION 7.4 Further Assurances. Subject to the terms and
conditions of this Agreement, each of the Parties will use its
reasonable best efforts to take, or cause to be taken, as soon as
possible, all action, and to do, or cause to be done, as soon as
possible, all things necessary, proper or advisable under
applicable laws and regulations to consummate the sale of the
Auctioned Assets pursuant to this Agreement as soon as possible,
including using its reasonable best efforts to ensure
satisfaction of the conditions precedent to each Party's
obligations hereunder. Prior to any Buyer's submission of an
application with a Governmental Authority for a regulatory
approval, such Buyer shall submit such application to Seller for
review and comment and such Buyer shall incorporate into such
application any revisions reasonably requested by Seller.
Neither of the Parties will, without prior written consent of the
other Party, take or fail to take, or permit their respective
Affiliates to take or fail to take, any action, which would
reasonably be expected to prevent or materially impede, interfere
with or delay the consummation, as soon as possible, of the
transactions contemplated by this Agreement or the Ancillary
Agreements.
SECTION 7.5 Public Statements. The Parties shall consult with
each other prior to issuing any public announcement, statement or
other disclosure with respect to this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby,
and shall not issue any such public announcement, statement or
other disclosure prior to such consultation, except as may be
required by law.
SECTION 7.6 Tax Matters. (a) All transfer and sales taxes
(including (i) sales tax on the sale or purchase of the Auctioned
Assets imposed by Governmental Authorities, (ii) transfer tax on
the conveyance of interest in real property imposed by
Governmental Authorities, and (iii) any petroleum business taxes
and similar excise taxes on sales of petroleum based products
imposed by Governmental Authorities) incurred in connection with
this Agreement and the transactions contemplated hereby shall be
borne by Buyers. Buyers shall prepare and file in a timely
manner any and all Tax Returns or other documentation relating to
such taxes; provided, however, that, to the extent required by
applicable law, Seller will join in the execution of any such Tax
Returns or other documentation relating to any such taxes.
Buyers shall provide to Seller copies of each Tax Return
described in the proviso in the preceding sentence at least
30 days prior to the date such Tax Return is required to be
filed.
(b) At Seller's election, but on no less than 10
Business Days' notice to Buyers, the transfer of some or all of
the Auctioned Assets and the receipt of the amount payable to
Seller pursuant to Section 3.1 hereof shall be made through a
qualified intermediary in a manner satisfying the requirements of
Treasury Regulation Section 1.1031(k)-1(g).
<PAGE>
SECTION 7.7 Control of Litigation. The Parties agree and
acknowledge that Seller shall be entitled exclusively to control,
defend and settle any litigation, administrative or regulatory
proceeding, and any investigation or remediation activity arising
out of or related to any Retained Liabilities, and each Buyer
agrees to cooperate fully in connection therewith.
SECTION 7.8 Confidentiality. Each Buyer hereby agrees to
comply with its obligations to keep confidential certain
information in accordance with the terms set forth in the
Confidentiality Agreements.
SECTION 7.9 Risk of Loss.
(a) Except as otherwise provided for in this Section 7.9,
from the date hereof through the Closing Date, all risk of loss
or damage to the assets and properties included in the Auctioned
Assets shall be borne by Seller (other than loss or damage caused
by the acts or negligence of any Buyer or any of its employees,
officers, agents or representatives, which loss or damage shall
be the responsibility of Buyers).
(b) If, before the Closing Date, all or any portion of the
Auctioned Assets are (1) taken by eminent domain or are the
subject of a pending or (to the Knowledge of the Seller)
contemplated taking which has not been consummated, or (2)
damaged or destroyed by fire or other casualty, Seller shall
notify Buyers promptly in writing of such fact. If the fair
market value of the Auctioned Assets that are the subject of, or
are adversely affected by, such taking or loss is $5,000,000 or
less, (as estimated in good faith by Seller), the Parties agree
that such taking or loss shall not have any effect on (or
otherwise impede in any manner) the transactions contemplated
hereby, and Buyers shall be entitled to an assignment of all of
Seller's right, title and interest in and to any related award or
insurance proceeds. If (1) the fair market value of the
Auctioned Assets that are the subject of, are adversely affected
by such taking or loss is in excess of $5,000,000 (as estimated
in good faith by Seller in accordance with the preceding
sentence) and (2) Seller has not notified Buyers of its intention
to cure such taking or loss within 30 days after its occurrence,
the Parties shall negotiate in good faith 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 60 days after Seller has notified Buyers of
such taking or casualty, the Parties may terminate this Agreement
pursuant to Section 10.1.
ARTICLE VIII
Conditions
SECTION 8.1 Conditions Precedent to Each Party's Obligation To
Effect the Purchase and Sale. The respective obligations of
Buyers, on the one hand, and Seller, on the other hand, to effect
the purchase and sale of the Auctioned Assets shall be subject to
<PAGE>
the satisfaction or waiver by such Party or Parties, as the case
may be, on or prior to the Closing Date of the following
conditions:
(a) all Seller Required Regulatory Approvals and Buyer
Required Regulatory Approvals shall have been obtained by Seller
and Buyers, as the case may be, and all conditions to
effectiveness prescribed therein or otherwise by law, regulation
or order shall have been satisfied by such Parties; provided,
that Seller will not be required to close if any Seller Required
Regulatory Approval contains terms and conditions that create a
Regulatory Material Adverse Effect;
(b) no preliminary or permanent injunction or other order
or decree by any Federal or state court of competent jurisdiction
and no statute or regulation enacted by any Governmental
Authority prohibiting the consummation of the purchase and sale
of the Auctioned Assets (collectively, "Restraints") shall be in
effect; and
(c) the execution and delivery of each Ancillary Agreement,
by each Party thereto.
SECTION 8.2 Conditions Precedent to Obligation of Buyers To
Effect the Purchase and Sale. The obligation of Buyers to effect
the purchase and sale of the Auctioned Assets contemplated by
this Agreement shall be subject to the satisfaction or waiver by
Buyers on or prior to the Closing Date of the following
additional conditions:
(a) Seller shall have performed its covenants and
agreements contained in this Agreement which are required to be
performed on or prior to the Closing Date, except where the
failure to perform such covenants and agreements would not,
individually or in the aggregate, create a Material Adverse
Effect;
(b) the representations and warranties of Seller which are
set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date, as if made at
and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein)
would not, individually or in the aggregate, create a Material
Adverse Effect;
(c) Buyers shall have received a certificate from an
authorized officer of Seller, dated the Closing Date, to the
effect that, to the best of such officer's Knowledge, the
conditions set forth in Section 8.2(a) and (b) have been
satisfied;
(d) Buyers shall have received (i) the limited warranty
deed of conveyance substantially in the form of Exhibit C, and
(ii) an opinion from Dickstein Shapiro Morin & Oshinsky LLP or
other counsel reasonably acceptable to Buyers, dated the Closing
<PAGE>
Date, and reasonably satisfactory in form and substance to Buyers
covering the matters set forth in Exhibit D; and
(e) Buyers shall have received a Foreign Investment in Real
Property Tax Act Certification and Affidavit, executed by Seller.
SECTION 8.3 Conditions Precedent to Obligation of Seller To
Effect the Purchase and Sale. The obligation of Seller to effect
the purchase and the sale of the Auctioned Assets contemplated by
this Agreement shall be subject to the satisfaction or waiver by
Seller on or prior to the Closing Date of the following
additional conditions:
(a) Each Buyer shall have performed its covenants and
agreements contained in this Agreement which are required to be
performed on or prior to the Closing Date, except where the
failure to perform such covenants and agreements would not,
individually or in the aggregate, create a Buyer Material Adverse
Effect;
(b) the representations and warranties of each Buyer which
are set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing Date, as if made
at and as of such time (except to the extent expressly made as of
an earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to
"materiality" or "Buyer Material Adverse Effect" set forth
therein) would not, individually or in the aggregate, create a
Buyer Material Adverse Effect;
(c) Seller shall have received a certificate from an
authorized officer of each Buyer, dated the Closing Date, to the
effect that, to the best of such officer's Knowledge, the
conditions set forth in Section 8.3(a) and (b) have been
satisfied;
(d) Seller shall have received an opinion from Jones, Day,
Reavis and Pogue or other counsel reasonably acceptable to
Seller, dated the Closing Date, and reasonably satisfactory in
form and substance to Seller covering the matters set forth in
Exhibit E; and
(e) Buyers shall have been joined as parties to the
Conemaugh Operating Agreement (and PPL Global hereby agrees to
enter into, and support Seller in obtaining from the remaining
parties to the Conemaugh Operating Agreement, an irrevocable
release of Seller from any and all liabilities and obligations
under the Conemaugh Operating Agreement effective from and after
the Closing Date in respect of the Auctioned Assets).
<PAGE>
ARTICLE IX
Indemnification and Dispute Resolution
SECTION 9.1 Indemnification.
(a) Seller will indemnify and hold harmless each Buyer and
its Affiliates and their respective directors, officers,
employees and agents (collectively with each Buyer and its
Affiliates, the "Buyer Indemnitees") from and against any and all
claims, demands or suits by any person, and all losses,
liabilities, damages, obligations, payments, costs and expenses
(including reasonable legal fees and expenses and including costs
and expenses incurred in connection with investigations and
settlement proceedings) (each, an "Indemnifiable Loss"), as
incurred, asserted against or suffered by any Buyer Indemnitee
relating to, resulting from or arising out of:
(i) any breach by Seller of any covenant or agreement of Seller
contained in this Agreement or, prior to their expiration in
accordance with Section 11.3, the representations and warranties
contained in Sections 5.1, 5.2, 5.3 and 5.10 hereof;
(ii) the Retained Liabilities; or
(iii)any breach by Seller of any Ancillary Agreement.
(b) Buyers will jointly and severally (except as
contemplated by Section 11.14 hereof) indemnify and hold harmless
Seller and its Affiliates and their respective directors,
officers, trustees, employees and agents (collectively with
Seller and its Affiliates, the "Seller Indemnitees") from and
against any and all Indemnifiable Losses, as incurred, asserted
against or suffered by any Seller Indemnitee relating to,
resulting from or arising out of:
(i) any breach by any Buyer of any covenant or agreement of such
Buyer contained in this Agreement or, prior to their
expiration in accordance with Section 11.3, the representations and
warranties contained in Sections 6.1, 6.2, 6.3 and 6.5
hereof;
(ii) the Assumed Obligations;
(iii)any obligation resulting from an action or inaction
of any Buyer (A) under any Contract or warranty pursuant to
Section 2.4(b) (whether acting as principal or representative and
agent for Seller pursuant to Section 2.4(b) or otherwise) or
(B) pursuant to any Transferable Permit in respect of which
Seller remains the holder of record after the Closing Date
<PAGE>
pursuant to Section 7.3(c);
(iv) any transfer, sales or excise tax obligations imposed on the
Seller; or
(v) any breach by a Buyer of any Ancillary Agreement.
(c) The amount of any Indemnifiable Loss shall be reduced
to the extent that the relevant Buyer Indemnitee or Seller
Indemnitee (each, an "Indemnitee") receives any insurance
proceeds with respect to an Indemnifiable Loss and shall be
(i) increased to take account of any Tax Cost incurred by the
Indemnitee arising from the receipt of indemnity payments
hereunder and (ii) reduced to take account of any Tax Benefit
realized by the Indemnitee arising from the incurrence or payment
of any such Indemnifiable Loss. If the amount of any
Indemnifiable Loss, at any time subsequent to the making of an
indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other person, the amount of such
reduction, less any costs, expenses or premiums incurred in
connection therewith, will promptly be repaid by the Indemnitee
to the Party required to provide indemnification hereunder (the
"Indemnifying Party") with respect to such Indemnifiable Loss.
(d) To the fullest extent permitted by law, neither Party
nor any Buyer Indemnitee or any Seller Indemnitee shall be liable
to the other Party or any other Buyer Indemnitee or Seller
Indemnitee for any claims, demands or suits for consequential,
incidental, special, exemplary, punitive, indirect or multiple
damages connected with or resulting from any breach after the
Closing Date of this Agreement or the Ancillary Agreements (other
than breach of this Article IX), or any actions undertaken in
connection with or related hereto or thereto, including any such
damages which are based upon breach of contract, tort (including
negligence and misrepresentation), breach of warranty, strict
liability, statute, operation of law or any other theory of
recovery.
(e) The rights and remedies of the Parties under this
Article IX are, solely as between Seller, on the one hand, and
Buyers, on the other hand, exclusive and in lieu of any and all
other rights and remedies which such Parties may have under this
Agreement, the Ancillary Agreements or otherwise for monetary
relief with respect to (i) any breach of, or failure to perform,
any covenant or agreement set forth in this Agreement or the
Ancillary Agreements by a Party, (ii) any breach of any
representation or warranty by a Party, (iii) the Assumed
Obligations or the Retained Liabilities, and (iv) any obligation
in respect of Section 2.4 or Section 7.3. Each Party agrees that
the previous sentence shall not limit or otherwise affect any
non-monetary right or remedy which Party may have under this
Agreement or the Ancillary Agreements or otherwise limit or
affect any Party's right to seek equitable relief, including the
remedy of specific performance.
<PAGE>
(f) The Parties agree that, notwithstanding Section 9.1(e),
each Party shall retain, subject to the other provisions of this
Agreement, including Sections 9.1(d) and 11.3, all remedies at
law or in equity with respect to (i) fraud or willful or
intentional breaches of this Agreement or the Ancillary
Agreements and (ii) gross negligence or willful or wanton acts or
omissions to act of any Indemnitee (or any contractor or
subcontractor thereof) on or after the Closing Date.
(g) The Parties agree that Seller, on the one hand, and
Buyers, on the other hand, shall not be responsible to the other
for any Indemnifiable Loss (relating to the breach of
representations and warranties made by such Party hereunder)
pursuant to Section 9.1(a)(i) or Section 9.1(b)(i), as the case
may be, unless and until the aggregate amount of Seller's or
Buyers' (as applicable) Indemnifiable Losses exceeds $5,000,000.
Notwithstanding the foregoing, the aggregate maximum liability of
the Seller to indemnify the Buyers for Indemnifiable Losses
(relating to the breach of representations and warranties made by
Seller hereunder) pursuant to Section 9.1(a)(i) shall not exceed
an amount in excess of twenty percent (20%) of the Purchase Price
paid by the Buyers to the Seller. In addition, Seller shall not
be liable for any costs and expenses constituting Indemnifiable
Losses (e.g., fees and expenses of counsel, accountants, experts
and other similar costs) in excess of such costs that would have
been reasonably incurred if there was a single Buyer hereunder.
SECTION 9.2 Third Party Claims Procedures.
(a) If any Indemnitee receives notice of the assertion of
any claim or of the commencement of any claim, action, or
proceeding made or brought by any person who is not a Party or an
Affiliate of a Party (a "Third Party Claim") with respect to
which indemnification is to be sought from an Indemnifying Party,
the Indemnitee will give such Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 20
Business Days after the Indemnitee's receipt of notice of such
Third Party Claim; provided, however, that a failure to give
timely notice will not affect the rights or obligations of any
Indemnitee except if, and only to the extent that, as a result of
such failure, the Indemnifying Party was actually prejudiced.
Such notice shall describe the nature of the Third Party Claim in
reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee.
(b) If a Third Party Claim is made against an Indemnitee,
the Indemnifying Party will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party;
provided, however, that such counsel is not reasonably objected
to by the Indemnitee; and provided further that the Indemnifying
Party first admits in writing its liability to the Indemnitee
with respect to all material elements of such claim. Should the
Indemnifying Party so elect to assume the defense of a Third
Party Claim, the Indemnifying Party will not be liable to the
Indemnitee for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the
Indemnifying Party elects to assume the defense of a Third Party
<PAGE>
Claim, the Indemnitee will (i) cooperate in all reasonable
respects with the Indemnifying Party in connection with such
defense, (ii) not admit any liability with respect to, or settle,
compromise or discharge, any Third Party Claim without the
Indemnifying Party's prior written consent and (iii) agree to any
settlement, compromise or discharge of a Third Party Claim which
the Indemnifying Party may recommend and which by its terms
obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases
the Indemnitee completely in connection with such Third Party
Claim. In the event the Indemnifying Party shall assume the
defense of any Third Party Claim, the Indemnitee shall be
entitled to participate in (but not control) such defense with
its own counsel at its own expense. If the Indemnifying Party
does not assume the defense of any such Third Party Claim, the
Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after
giving notice to the Indemnifying Party of the terms of the
proposed settlement and the Indemnifying Party will promptly
reimburse the Indemnitee upon written request. Anything
contained in this Agreement to the contrary notwithstanding, no
Indemnifying Party shall be entitled to assume the defense of any
Third Party Claim if such Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than
monetary damages against the Indemnitee which, if successful,
would materially adversely affect the business of the Indemnitee.
<PAGE>
ARTICLE X
Termination
SECTION 10.1 Termination.
(a) This Agreement may be terminated at any time prior to
the Closing by an instrument in writing signed on behalf of each
of the Parties.
(b) This Agreement may be terminated by Seller, on the one
hand, or Buyers, on the other hand, if the Closing shall not have
occurred on or before the date that is 12 months from the date of
this Agreement (the "Termination Date"); provided, however, that
the right to terminate this Agreement pursuant to this Section
10.1(b) shall not be available (1) 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, or (2) to Buyers if the Seller has provided
Buyers with written notice of its election to postpone the
Closing for up to an additional 12-month period in the event that
all conditions precedent to Closing set forth in Article VIII
have been satisfied except with respect to those conditions set
forth in Section 8.1(a).
(c) This Agreement may be terminated by Seller, on the one
hand, or Buyers, on the other hand, if a Restraint having any of
the effects set forth in Section 8.1(b) shall be in effect and
shall have become final and nonappealable; provided, however,
that the Party seeking to terminate this Agreement pursuant to
this Section 10.1(c) shall have used its reasonable best efforts
to prevent the entry of and to remove such Restraint.
(d) This Agreement may be terminated by the Party entitled
to do so under the provisions of Section 7.9(b).
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1 Expenses. Except to the extent specifically
provided herein, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
shall be borne by the Party incurring such costs and expenses,
whether or not the transactions contemplated hereby are
consummated.
SECTION 11.2 Amendment and Modification; Extension; Waiver.
This Agreement may be amended, modified or supplemented only by
an instrument in writing signed on behalf of each of the Parties.
Seller, on the one hand, and Buyers, on the other hand, may
(i) extend the time for the performance of any of the obligations
or other acts of any other Party, (ii) waive any inaccuracies in
the representations and warranties of any other Party contained
in this Agreement or (iii) waive compliance by any other Party
with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such
<PAGE>
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such Party. The
failure of a Party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver
of such rights.
SECTION 11.3 No Survival of Representations or Warranties.
Each and every representation and warranty contained in this
Agreement, other than the representations and warranties
contained in Sections 5.1, 5.2, 5.3 and 5.10 and 6.1, 6.2, 6.3
and 6.5 (which representations and warranties shall survive for
12 months from the Closing Date), shall expire with, and be
terminated and extinguished by the Closing and no such
representation or warranty shall survive the Closing Date. From
and after the Closing Date, none of the Parties or any officer,
director, trustee or Affiliate of any of them shall have any
liability whatsoever with respect to any such representation or
warranty. The expiration of the representations and warranties
contained in Sections 5.1, 5.2, 5.3 and 5.10 and 6.1, 6.2, 6.3
and 6.5 shall not affect the Parties' obligations under
Article IX if the Indemnitee provided the Indemnifying Party with
proper notice of the claim or event for which indemnification is
sought prior to such expiration.
SECTION 11.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (as of
the time of delivery or, in the case of a telecopied
communication, of confirmation) if delivered personally,
telecopied (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the Parties at the following
addresses (or at such other address for a Party as shall be
specified by like notice):
if to Seller, to:
Potomac Electric Power Company
1900 Pennsylvania Avenue, N.W.
Washington, D.C. 20068
Telecopier: (202) 261-7889
Attention: William T. Torgerson, General Counsel
with a copy on or prior to the Closing Date to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Telecopier: (202) 887-0689
Attention: Kenneth M. Simon, Esq.
<PAGE>
if to Buyers, to:
Allegheny Energy Supply Company, LLC
800 Cabin Hill Drive
Greensburg, Pennsylvania 15601
Telecopier: (724) 830-5184
Attention: Patricia J. Clark
and:
Allegheny Energy Supply Company, LLC
Box 1000, RR12
Roseytown Road
Greensburg, Pennsylvania 15601
Telecopier: (724) 853-3788
Attention: David C. Benson
PPL Global, Inc.
11350 Random Hills Road, Suite 400
Fairfax, Virginia 22030
Telecopier: (730) 293-2659
Attention: Robert W. Burke
with a copy on or prior to the Closing Date to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
32nd Floor
New York, NY 10022
Telecopier: (212) 755-7306
Attention: William J. Henze, Jr., Esq.
SECTION 11.5 Assignment; No Third Party Beneficiaries.
(a) This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any Party, including by operation
of law, without the prior written consent of the other Party,
except (i) in the case of Seller (A) to an Affiliate of Seller or
a third party in connection with the transfer of the Transmission
System to such Affiliate or third party or (B) to a lending
institution or trustee in connection with a pledge or granting of
a security interest in all or any part of the Transmission System
and this Agreement and (ii) in the case of either Buyer (A) to an
Affiliate of such Buyer in connection with the transfer of the
<PAGE>
Auctioned Assets to such Affiliate, (B) to a lending institution
or trustee in connection with a pledge or granting of a security
interest in the Auctioned Assets and this Agreement and (C) to a
special purpose entity, grantor trust, business trust, limited
liability company, corporation or partnership (the beneficial
owners of which need not be affiliated with such Buyer) in
connection with the acquisition of the Auctioned Assets by such
entity for purposes of facilitating a financing through a secured
or unsecured loan, lease financing or synthetic lease financing
(provided that the representations and warranties of Buyers
pursuant to Article VI hereof shall continue to be true and
correct, without modification, as if made by such entity as of
the time of assignment, and such assignment and any transactions
in connection therewith shall not limit the rights, expand the
obligations or otherwise adversely affect the rights and
obligations of Seller hereunder); provided, however, that no
assignment or transfer of rights or obligations by either Party
shall relieve it from the full liabilities and the full financial
responsibility, as provided for under this Agreement, unless and
until the transferee or assignee shall agree in writing to assume
such obligations and duties and Seller or Buyers, as applicable,
has consented in writing to such assumption.
(b) Nothing in this Agreement is intended to confer upon
any other person except the Parties any rights or remedies
hereunder or shall create any third party beneficiary rights in
any person.
SECTION 11.6 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
District of Columbia (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).
SECTION 11.7 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.
SECTION 11.8 Interpretation. When a reference is made in this
Agreement to an Article, Section, Schedule or Exhibit, such
reference shall be to an Article or Section of, or Schedule or
Exhibit to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without
limitation" or equivalent words. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in
this Agreement shall have the defined meanings when used in the
Ancillary Agreements and any certificate or other document made
or delivered pursuant hereto or thereto unless otherwise defined
therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument, statute,
regulation, rule or order defined or referred to herein or in any
agreement or instrument that is referred to herein means such
<PAGE>
agreement, instrument, statute, regulation, rule or order as from
time to time amended, modified or supplemented, including (in the
case of agreements or instruments) by waiver or consent and (in
the case of statutes, regulations, rules or orders) by succession
of comparable successor statutes, regulations, rules or orders
and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its
permitted successors and assigns. Each Party acknowledges that
it has been represented by counsel in connection with the review
and execution of this Agreement and, accordingly, there shall be
no presumption that this Agreement or any provision hereof be
construed against the Party that drafted this Agreement.
<PAGE>
SECTION 11.9 Jurisdiction and Enforcement.
(a) Each of the Parties irrevocably submits to the
exclusive jurisdiction of (i) the Superior Court of the District
of Columbia and (ii) the United States District Court for the
District of Columbia, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction
contemplated hereby. Each of the Parties agrees to commence any
action, suit or proceeding relating hereto either in the United
States District Court for the District of Columbia or, if such
suit, action or proceeding may not be brought in such court for
jurisdictional reasons, in the Superior Court of the District of
Columbia. Each of the Parties further agrees that service of
process, summons, notice or document by hand delivery or U.S.
registered mail at the address specified for such Party in
Section 11.4 (or such other address specified by such Party from
time to time pursuant to Section 11.4) shall be effective service
of process for any action, suit or proceeding brought against
such Party in any such court. Each of the Parties irrevocably
and unconditionally waives any objection to the laying of venue
of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Superior Court
of the District of Columbia and (ii) the United States District
Court for the District of Columbia, and hereby further
irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum.
(b) The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement or any
Ancillary Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or any
Ancillary Agreement and to enforce specifically the terms and
provision of this Agreement or any Ancillary Agreement, this
being in addition to any other remedy to which they are entitled
at law or in equity.
SECTION 11.10 Entire Agreement. This Agreement, the
Confidentiality Agreements and the Ancillary Agreements including
the Exhibits, Schedules, documents, certificates and instruments
referred to herein or therein and other contracts, agreements and
instruments contemplated hereby or thereby, embody the entire
agreement and understanding of the Parties in respect of the
transactions contemplated by this Agreement. There are no
restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to
herein or therein. This Agreement and the Ancillary Agreements
supersede all prior agreements and understandings between the
Parties with respect to the transactions contemplated by this
Agreement other than the Confidentiality Agreement.
SECTION 11.11 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of
<PAGE>
being enforced, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
Parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 11.12 Conflicts. Except as expressly otherwise
provided herein or therein, in the event of any conflict or
inconsistency between the terms of this Agreement and the terms
of any Ancillary Agreement, the terms of this Agreement shall
prevail.
SECTION 11.13 Seller's Interest in Conemaugh Station. The
Parties acknowledge and agree that Seller owns and holds an
undivided nine and seventy-two hundredths percent (9.72%)
interest as tenant in common of the Conemaugh Station ("Seller's
Interest"), and Buyers are each acquiring a fifty percent (50%)
tenant-in-common interest in Seller's Interest. All references
in this Agreement to Seller's right, title and interest in, to
and under the Auctioned Assets, and the rights, liabilities and
obligations, in connection therewith, shall be construed in this
context.
SECTION 11.14 Joint and Several Liability. Notwithstanding
any provision in this Agreement to the contrary, all liabilities
and obligations of the Buyers under this Agreement shall be joint
and several except with respect to each Buyer's indemnification
obligation to Seller for breaches of representations and
warranties made by such Buyer pursuant to Sections 6.1, 6.2, 6.3,
6.5, 6.9 and 6.10 hereof.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be signed by their respective duly authorized
officers as of the date first above written.
POTOMAC ELECTRIC POWER COMPANY
By:____________________________
Name:
Title:
ALLEGHENY ENERGY SUPPLY COMPANY,
LLC
By:____________________________
Name:
Title:
PPL GLOBAL, INC.
By:____________________________
Name:
Title:
<PAGE>
)
DISTRICT OF COLUMBIA ) SS:
)
The undersigned, a Notary Public in and for the jurisdiction
aforesaid, does hereby certify that ______________, personally
known to me (or satisfactorily proven) to be the person who
signed as an authorized officer of Seller named in the foregoing
Instrument, personally appeared before me in said jurisdiction,
and as such authorized officer and by virtue of the authority
vested in him by said Instrument, acknowledged the same to be the
act and deed of said corporation, and that he executed and
delivered the same as such.
WITNESS my hand and official seal this ___ day of
___________, 2000.
______________________________
My Commission Expires: Notary Public in and for
the District of Columbia
<PAGE>
)
DISTRICT OF COLUMBIA ) SS:
)
The undersigned, a Notary Public in and for the jurisdiction
aforesaid, does hereby certify that ______________, personally
known to me (or satisfactorily proven) to be the person who
signed as an authorized officer of Allegheny Energy Supply
Company, LLC named in the foregoing Instrument, personally
appeared before me in said jurisdiction, and as such authorized
officer and by virtue of the authority vested in him by said
Instrument, acknowledged the same to be the act and deed of said
corporation, and that he executed and delivered the same as such.
WITNESS my hand and official seal this ___ day of
___________, 2000.
______________________________
My Commission Expires: Notary Public in and for
the District of Columbia
<PAGE>
)
DISTRICT OF COLUMBIA ) SS:
)
The undersigned, a Notary Public in and for the jurisdiction
aforesaid, does hereby certify that ______________, personally
known to me (or satisfactorily proven) to be the person who
signed as an authorized officer of PPL Global, Inc. named in the
foregoing Instrument, personally appeared before me in said
jurisdiction, and as such authorized officer and by virtue of the
authority vested in him by said Instrument, acknowledged the same
to be the act and deed of said corporation, and that he executed
and delivered the same as such.
WITNESS my hand and official seal this ___ day of
___________, 2000.
______________________________
My Commission Expires: Notary Public in and for
the District of Columbia
<PAGE>
Schedule 1.1
Definitions
"Accountants" shall have the meaning set forth in Section
3.2(b).
"Adjustment Date" shall have the meaning set forth in
Section 3.2(c).
"Adjustment Statement" shall have the meaning set forth in
Section 3.2(a).
"Affiliate" shall have the meaning set forth in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
"Agreement" shall have the meaning set forth in the
Preamble.
"Allocation" shall have the meaning set forth in Section
3.3.
"Ancillary Agreements" means the Assignment and
Assumption Agreement, Bill of Sale, the deeds contemplated by
Section 8.2(d)(i) and any other agreement to which Buyers and
Seller are party and which is expressly identified by its terms
as an Ancillary Agreement hereunder.
"Applicable Law" shall have the meaning set forth in
Section 3.3.
"Assignment and Assumption Agreement" means that
Assignment and Assumption Agreement, to be entered into at the
Closing by Buyers and Seller, in substantially the form as
Exhibit A attached to the Agreement.
"Assumed Consent Order Obligations" shall have the
meaning set forth in Section 2.3(a)(iv).
"Assumed Obligations" shall have the meaning set forth in
Section 2.3(a).
"Auctioned Assets" shall have the meaning set forth in
Section 2.2(a).
"Bill of Sale" means that certain Bill of Sale, to be
entered into at the Closing by Buyers and Seller, in
substantially the form as Exhibit B attached to the Agreement.
"Business Day" means any day other than Saturday, Sunday
and any day which is a legal holiday or a day on which banking
institutions in Washington, DC are authorized or required by law
or other action of a Governmental Authority to close.
"Buyers" shall have the meaning set forth in the Preamble
to the Agreement.
"Buyer Indemnitees" shall have the meaning set forth in
Section 9.1(a).
<PAGE>
"Buyer Material Adverse Effect" means any change or event
which would have a material adverse effect on the ability of the
applicable Buyer to consummate the transactions contemplated by,
and discharge its obligations under, the Agreement and the
Ancillary Agreements.
"Buyer Real Estate" shall have the meaning set forth in
Section 2.2(a)(i).
"Buyer Required Regulatory Approvals" shall have the
meaning set forth in Section 6.3(b).
"Buyer's Facilities" means those facilities of Buyers
situated on the Conemaugh Switchyard and the Conemaugh
Transmission Line.
"Closing" shall have the meaning set forth in
Section 4.1.
"Closing Adjustment Amount" shall have the meaning set
forth in Section 3.2(c).
"Closing Date" shall have the meaning set forth in
Section 4.1.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Conemaugh Operating Agreement" means that certain
Operating Agreement, dated December 1, 1967, originally entered
into among Pennsylvania Electric Company, Atlantic City Electric
Company, Baltimore Gas and Electric Company, Delmarva Power &
Light Company, Metropolitan Edison Company, Pennsylvania Power &
Light Company, Philadelphia Electric Company, Potomac Electric
Power Company, Public Service Electric and Gas Company and UGI
Corporation, with respect to the ownership and operation of
Conemaugh Station, as amended from time to time.
"Conemaugh Station" means that approximately 1,711 MW
coal-fired generating facility known as the Conemaugh Station,
located on the Conemaugh River in Indiana County, Pennsylvania,
and related properties and assets (excluding Seller's Interest in
the Conemaugh Switchyard and Conemaugh Transmission Line).
"Conemaugh Switchyard" means that certain 500kV
switchyard, as more fully described on Schedule 2.2(b)(i)
attached hereto.
"Conemaugh Transmission Line" means that certain 500kV
transmission line, as more fully described on Schedule 2.2(b)(i)
attached hereto.
"Confidentiality Agreements" means, collectively, the
Confidentiality Agreements dated January 25, 2000 and February 4,
2000 between Seller and Allegheny and Seller and PPL Global,
respectively.
<PAGE>
"Contracts" shall have the meaning set forth in
Section 2.2(a)(iv).
"DCPSC" means the Public Service Commission of the
District of Columbia.
"Disposed Items" shall have the meaning set forth in
Section 2.3(a)(iii).
"Easement and License Agreement" means that (i) certain
Conemaugh Switching Station Easement and License Agreement being
negotiated by and among (i) Atlantic City Electric Company,
Baltimore Gas & Electric Company, Delmarva Power & Light Company,
Sithe Pennsylvania Holdings, LLC, PP&L, Inc., PECO Energy
Company, UGI Development Company, the Seller and Public Service
Electric & Gas Company, in their capacity as generating station
owners, and (ii) Atlantic City Electric Company, Baltimore Gas &
Electric Company, Delmarva Power & Light Company, Metropolitan
Edison Company, PP&L, Inc., PECO Energy Company, UGI Utilities,
Inc., the Seller and Public Service Electric & Gas Company, in
their capacity as switching station owners, or (ii) in lieu of
such an agreement, any agreement or arrangement entered into by
such parties in accordance with the terms of that certain
Interconnection Agreement, dated November 19, 1999, by and among
the aforementioned parties, as the exclusive statement between
and among each and all of such generating station owners and each
and all of such switching station owners as to the easements,
access and other similar real property rights between and among
themselves with respect to the Conemaugh Station.
"Emission Reduction Credits" means credits, in units that
are established by the environmental regulatory agency with
jurisdiction over the Conemaugh Station that has obtained the
credits, resulting from a reduction in the emissions of air
pollutants from an emitting source or facility (including, and to
the extent allowable under applicable law, reductions from
retirements, control of emissions beyond that required by
applicable law and fuel switching), that: (i) have been
certified by the Pennsylvania Department of Environmental
Protection as complying with the law and regulations of the
Commonwealth of Pennsylvania governing the establishment of such
credits; or (ii) have been certified by any other applicable
regulatory authority as complying with the law and regulations
governing the establishment of such credits. Emission Reduction
Credits include certified air emissions reductions, as described
above, regardless of whether the regulatory agency certifying
such reductions designates such certified air emissions
reductions by a name other than "emissions reduction credits".
"Encumbrances" means any mortgages, pledges, liens,
security interests, conditional and installment sale agreements,
activity and use limitations, exceptions, conservation easements,
rights-of-way, deed restrictions, encumbrances and charges of any
kind.
"Environmental Laws" means all former, current and future
Federal, state, local and foreign laws (including common law),
treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives or orders (including consent orders) and
Environmental Permits, in each case, relating to pollution or
protection of the environment or natural resources, including
laws relating to Releases or threatened Releases, or otherwise
relating to the generation, manufacture, processing,
<PAGE>
distribution, use, treatment, storage, arrangement for disposal,
transport, recycling or handling, of Hazardous Substances.
"Environmental Liability" means all liabilities,
obligations, damages, losses, claims, actions, suits, judgments,
orders, fines, penalties, fees, expenses and costs, including:
(i) remediation costs, engineering costs, environmental
consultant fees, laboratory fees, permitting fees, investigation
costs and defense costs and attorneys' fees and expenses; (ii)
any claims, demands and causes of action relating to or resulting
from any personal injury (including wrongful death, pain,
suffering and loss of consortium), property damage (real or
personal) (including nuisance, trespass and diminution of value)
or natural resource damage; and (iii) any penalties, fines or
costs associated with the failure to comply with any
Environmental Law.
"Environmental Permits" means the permits, licenses,
consents, approvals and other governmental authorizations with
respect to Environmental Laws relating primarily to the power
generation operations of the Generating Facility.
"Estimated Non-Fuel Related Adjustment Amount" shall have
the meaning set forth in Section 4.2(b).
"Estimated Purchase Price" shall have the meaning set
forth in Section 4.2(a).
"Exempt Facilities" means those certain facilities
included in the Auctioned Assets which are listed on Schedule 7.1
attached to the Agreement.
"FERC" means the Federal Energy Regulatory Commission.
"Filed Seller SEC Documents" means the reports,
schedules, forms, statements and other documents filed by Seller
with the Securities and Exchange Commission, and publicly
available prior to the date of the Agreement.
"Final Allocation" shall have the meaning set forth in
Section 3.3.
"Final Fuel Related Adjustment Amount" shall have the
meaning set forth in Section 3.2(a).
"Final Non-Fuel Related Adjustment Amount" shall have the
meaning set forth in Section 3.2(a).
"GAAP" shall have the meaning set forth in Section 1.2.
"Generating Facility" means the Conemaugh Station and
related facilities, as more fully described on
Schedule 2.2(a)(iii) attached to the Agreement.
<PAGE>
"Governmental Authority" means any court, administrative
or regulatory agency or commission or other governmental entity
or instrumentality, domestic, foreign or supranational or any
department thereof.
"Greenhouse Gas Emission Reduction Credits" mean with
respect to a Federal or state law or regulation that imposes, or
may at any time after the Closing Date impose, a quantitative
limitation on greenhouse gas emissions, or taxes such emissions,
an authorization to emit a unit of greenhouse gases or a credit
against such quantitative limit or taxes with respect to
recognized reductions in greenhouse gases, where greenhouse gases
include carbon dioxide, methane, nitrous oxide,
hydrofluorcarbons, perfluorocarbons, and/or sulfur hexafluoride.
"Hazardous Substances" means (i) any petrochemical or
petroleum products, crude oil or any fraction thereof, ash,
radioactive materials, radon gas, asbestos in any form, urea
formaldehyde foam insulation or polychlorinated biphenyls, (ii)
any chemicals, materials, substances or wastes defined as,
included in, or that are alleged or determined by any Person or
Governmental Authority to be included in the definition of
"hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely
hazardous substances," "toxic substances," "PCBs,"
"contaminants," "asbestos" or "pollutants" or similar term in any
Environmental Law, (iii) any other chemical, material, substance
or waste which is prohibited, limited or regulated by any
Environmental Law, or (iv) any noise, electromagnetic radiation,
and any other substance or energy which causes or is alleged to
cause personal injury (including wrongful death, pain, suffering
and loss of consortium) or property damage (including nuisance,
trespass and diminution of value).
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any Federal, state, local or foreign
Tax or surtax (i) based upon, measured by or calculated with
respect to income, profits or receipts or (ii) based upon,
measured by or calculated with respect to multiple bases
(including corporate franchise taxes) if one or more of the bases
on which such Tax may be based, measured by or calculated with
respect to, is described in clause (i), in each case, together
with any interest, penalties, or additions to such Tax.
"Indemnifiable Loss" shall have the meaning set forth in
Section 9.1(a).
"Indemnifying Party" shall have the meaning set forth in
Section 9.1(c).
"Indemnitee" shall have the meaning set forth in
Section 9.1(c).
"Information Memorandum" means the Information
Memorandum, prepared on behalf of the Seller, describing the
Generating Facility, and the materials delivered with such
Information Memorandum, as such Information Memorandum and such
materials may have been amended or supplemented.
<PAGE>
"Knowledge" means the actual knowledge of the directors
and executive officers of the specified Person, which directors
and executive officers are charged with the responsibility for
the particular function as of the date of the Agreement, or with
respect to any certificate delivered pursuant to the Agreement,
the date of delivery of such certificate.
"MAAC" means the Mid-Atlantic Area Council.
"Material Adverse Effect" means any change, or effect on
the Auctioned Assets, that, individually or in the aggregate,
causes the value of the Auctioned Assets to decrease by more than
ten percent (10%) as compared to the value of the Auctioned
Assets immediately prior to the occurrence of such change or
effect, other than (i) any change or effect resulting from
changes in the international, national, regional or local
wholesale or retail energy, capacity or ancillary services
electric power markets, (ii) any change or effect resulting from
changes in the international, national, regional or local markets
for fuel, (iii) any change or effect resulting from changes in
the national, regional or local electric transmission systems,
(iv) any change or effect resulting from any bid cap, price
limitation, market power mitigation measure, or other regulatory
or legislative measure in respect of transmission services or the
wholesale or retail energy, capacity or ancillary services
markets adopted or approved by FERC, PSC or any other
Governmental Authority or proposed by any person, (v) any change
or effect resulting from any regulation, rule, procedure or order
adopted or proposed by or with respect to, or related to, the
PJM, (vi) any change or effect resulting from any action or
measure taken or adopted, or proposed to be taken or adopted, by
any local, state, regional, national or international reliability
organization, (vii) any changes in law, or any judgments, orders
or decrees that apply generally to similarly situated Persons,
and (viii) any materially adverse change in or effect on the
Auctioned Assets which is cured by Seller before the Closing
Date. For purposes of determining the occurrence of a Material
Adverse Effect, the initial value of the Auctioned Assets shall
be the amount set forth in clause (a) of Section 3.1.
"Material Contracts" shall have the meaning set forth in
Section 5.6(a).
"MDPSC" means the Public Service Commission of the State
of Maryland.
"NERC" means North American Electric Reliability Council
or any successor thereto.
"NOx Allowances" means nitrogen oxide allowances that
have been allocated to the Conemaugh Station by the Pennsylvania
Department of the Environment Protection under its NOx Budget
Program authorizing the emission of one ton of nitrogen oxide
during the specified control period.
"Off-Site" means any location except (i) the Auctioned
Assets and any adjoining properties and (ii) any location to or
under which Hazardous Substances present or disposed on the
Auctioned Assets or any adjoining properties, waterways or
airspaces have migrated or may migrate in the future.
<PAGE>
"Operating Records" shall have the meaning set forth in
Section 2.2(a)(viii).
"Party" shall have the meaning set forth in the Preamble.
"Permits" means the permits, licenses, consents,
approvals and other governmental authorizations (other than with
respect to Environmental Laws) relating primarily to the power
generation operations of the Generating Facility.
"Permitted Capital Expenditures" shall have the meaning
set forth in Section 4.2(c).
"Permitted Exceptions" means (i) all exceptions,
restrictions, easements, charges, rights-of-way and monetary and
nonmonetary encumbrances which are set forth in any Permits or
Environmental Permits, (ii) statutory liens for current taxes or
assessments not yet due or delinquent or the validity of which is
being contested in good faith by appropriate proceedings,
(iii) mechanics', carriers', workers', repairers' and other
similar liens arising or incurred in the ordinary course of
business relating to obligations as to which there is no default
on the part of Seller or the validity of which are being
contested in good faith by appropriate proceedings, (iv) purchase
money security interests in respect of personal property arising
or incurred in the ordinary course of business, (v) zoning,
entitlement, conservation restriction and other land use and
environmental regulations by Governmental Authorities, (v) all
facts that would be disclosed by an accurate survey and physical
inspection of the Buyer Real Estate, (vi) Encumbrances, easements
or other restrictions created pursuant to or contemplated by any
Contracts listed on Schedule 2.2(a)(iv) attached hereto; (vii)
Encumbrances, easements or other restrictions created pursuant to
or contemplated by any Ancillary Agreement, (viii) Encumbrances
of record (other than Encumbrances securing indebtedness for
money borrowed of Seller which are not covered by any other
clause of this definition) or Encumbrances otherwise disclosed to
Buyers in the Agreement or the Ancillary Agreements with respect
thereto, (ix) restrictions and regulations imposed by the PJM,
any Governmental Authority or any local, state, regional,
national or international reliability council and (x) such other
Encumbrances or imperfections in or failure of title which would
not, individually or in the aggregate, create a Material Adverse
Effect.
"Person" means any individual, partnership, limited
liability company, joint venture, corporation, trust,
unincorporated organization or Governmental Authority.
"PJM" means the Pennsylvania-New Jersey-Maryland
interconnected power pool operated under the PJM Agreement and
any successor thereto including any regional transmission
operator, independent system operator, transco, or any other
independent system administrator that possesses operational or
planning control over the Transmission System.
"PJM Agreement" means the Amended and Restated Operating
Agreement of the PJM Interconnection LLC dated as of June 2,
1997.
<PAGE>
"PJM Control Area" shall mean the control area recognized
by NERC as the PJM Control Area.
"PJM Interconnection LLC" means the independent system
operator of the PJM Control Area pursuant to the PJM Agreement
and the PJM Tariff.
"PJM Tariff" means the PJM Open Access Transmission
Tariff providing transmission service within the PJM Control
Area, including schedules, appendices, or exhibits attached
thereto, as in effect from time to time and as amended or
modified.
"Prorated Items" shall have the meaning set forth in
Section 2.3(a)(vii).
"PSC" means, either individually or collectively, the
MDPSC, VSC, DCPSC and PUC.
"PUC" means the Pennsylvania Utility Commission.
"Purchase Price" shall have the meaning set forth in
Section 3.1.
"Regulatory Material Adverse Effect" shall occur where
the Required Regulatory Approvals contains terms and conditions
that are materially adverse to the Seller taken as a whole.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration into the environment (including
ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or
fixture.
"Required Regulatory Approvals" means with respect to a
Party, any consent or approval of, filing with, or notice to, any
Governmental Authority that is necessary for the execution and
delivery of the Agreement and the Ancillary Agreements by such
Party or the consummation thereby of the transactions
contemplated hereby.
"Restraints" shall have the meaning set forth in
Section 8.1(b).
"Retained Assets" shall have the meaning set forth in
Section 2.2(b).
"Retained Liabilities" shall have the meaning set forth
in Section 2.3(b).
"Revenue Bonds" shall have the meaning set forth in
Section 7.1 of the Agreement.
"Seller" shall have the meaning set forth in the Preamble
to the Agreement.
<PAGE>
"Seller Facilities" means those facilities of the Seller
which are described on Schedule 2.2(b)(i) attached hereto
(excluding the Ash Haul Contractor's Building and Equipment).
"Seller Indemnitees" shall have the meaning set forth in
Section 9.1(b).
"Seller Required Regulatory Approvals" shall have the
meaning set forth in Section 5.3(b).
"Seller's Interest" shall have the meaning set forth in
Section 11.13.
"SO2 Allowances" mean sulfur dioxide allowances that have
been allocated to the Conemaugh Station by the Administrator of
the United States Environmental Protection Agency under Title IV
of the Clean Air Act authorizing the emission of one ton of
sulfur dioxide per allowance during or after a specified calendar
year.
"Tax Benefit" means, with respect to any Indemnifiable
Loss for any person, the positive excess, if any, of the Tax
liability of such person without regard to such Indemnifiable
Loss over the Tax liability of such person taking into account
such Indemnifiable Loss, with all other circumstances remaining
unchanged.
"Tax Cost" means, with respect to any indemnity payment
for any person, the positive excess, if any, of the Tax liability
of such person taking such indemnity payment into account over
the Tax liability of such person without regard to such payment,
with all other circumstances remaining unchanged.
"Tax Return" means any return, report, information return
or other document (including any related or supporting
information) required to be supplied to any authority with
respect to Taxes.
"Taxes" means all taxes, surtaxes, charges, fees, levies,
penalties or other assessments imposed by any United States
Federal, state or local or foreign taxing authority, including
Income Taxes, excise, property, sales, transfer, franchise,
special franchise, payroll, recording, withholding, social
security or other taxes, or any liability for taxes incurred by
reason of joining in the filing of any consolidated, combined or
unitary Tax Returns, in each case including any interest,
penalties or additions attributable thereto; provided, however,
that "Taxes" shall not include sewer rents or charges for water.
"Termination Date" shall have the meaning set forth in
Section 10.1(b).
"Third Party Claim" shall have the meaning set forth in
Section 9.2(a).
"Transferable Permits" shall have the meaning set forth
in Section 2.2(a)(v).
<PAGE>
"Transferred NOx Allowances" shall have the meaning set
forth in Section 2.2(a)(vii).
"Transferred SO2 Allowances" shall have the meaning set
forth in Section 2.2(a)(vi).
"Transmission Line Easement Agreement" means that (i)
certain Conemaugh-Conastone Transmission Line Easement Agreement
being negotiated by and among (i) Atlantic City Electric Company,
Baltimore Gas & Electric Company, Delmarva Power & Light Company,
Sithe Pennsylvania Holdings, LLC, PPL Electric Utilities
Corporation, PECO Energy Company, UGI Development Company, the
Seller and Public Service Electric & Gas Company, in their
capacity as generating station owners, and (ii) Atlantic City
Electric Company, Baltimore Gas & Electric Company, Delmarva
Power & Light Company, Metropolitan Edison Company, PPL Electric
Utilities Corporation, PECO Energy Company, UGI Utilities, Inc.,
the Seller and Public Service Electric & Gas Company, in their
capacity as switching station owners, or (ii) in lieu of such an
agreement, any agreement or arrangement entered into by such
parties, as the exclusive statement between and among each and
all of such generating station owners and each and all of such
switching station owners as to the easements granted over certain
real property owned by such generating station owners and other
ancillary rights relating thereto.
"Transmission System" shall have the meaning set forth in
Section 2.2(b)(i).
"VCC" means the Virginia State Corporate Commission.
