Exhibit 2.1
NINE XXXX XXXXX XXXX 0 NUCLEAR GENERATING FACILITY
ASSET PURCHASE AGREEMENT
BY AND AMONG
NIAGARA MOHAWK POWER CORPORATION,
NEW YORK STATE ELECTRIC & GAS CORPORATION,
ROCHESTER GAS AND ELECTRIC CORPORATION,
AND
CENTRAL XXXXXX GAS & ELECTRIC CORPORATION, as SELLERS,
CONSTELLATION ENERGY GROUP, INC.
AND
CONSTELLATION NUCLEAR, LLC, as BUYER
Dated as of December 11, 0000
XXXX XXXX XXXXX XXXX 0 NUCLEAR GENERATING FACILITY
ASSET PURCHASE AGREEMENT
INDEX OF DOCUMENTS FOR SIGNING
DATED AS OF DECEMBER 11, 2000
Document Tab
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Asset Purchase Agreement 1
Schedules to Asset Purchase Agreement 2
Exhibits to Asset Purchase Agreement 3
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Easement Agreement
Exhibit D Form of Interconnection Agreement
Exhibit E Forms of Revenue Sharing Agreement for each Seller
Exhibit F Forms of Bargain and Sale Deed for each Seller
Exhibit G Forms of Power Purchase Agreement for each Seller
Exhibit H [Intentionally left blank]
Exhibit I Form of Note
Exhibit J Form of Opinion from Counsel for each Seller
Exhibit K Form of Opinion from Counsel for Buyer and Parent
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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1.1. Definitions............................................................1
1.2. Certain Interpretive Matters..........................................17
ARTICLE II PURCHASE AND SALE
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2.1. Transfer of Assets....................................................18
2.2. Excluded Assets.......................................................20
2.3. Assumed Liabilities and Obligations...................................21
2.4. Excluded Liabilities..................................................22
2.5. Control of Litigation.................................................25
ARTICLE III THE CLOSING
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3.1. Closing...............................................................25
3.2. Payment of Purchase Price.............................................25
3.3. Adjustment to Purchase Price..........................................26
3.4. Allocation of Purchase Price..........................................28
3.5. Prorations............................................................28
3.6. Deliveries by Sellers.................................................29
3.7. Deliveries by Buyer...................................................31
3.8. Pre-Closing Breaches of Sellers'
Representations and Warranties........................................31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS
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4.1. Organization..........................................................33
4.2. Authority Relative to this Agreement..................................33
4.3. Consents and Approvals; No Violation..................................33
4.4. Reports...............................................................34
4.5. Undisclosed Liabilities...............................................34
4.6. Absence of Certain Changes or Events..................................34
4.7. Title and Related Matters.............................................35
4.8. Real Property Agreements..............................................35
4.9. Insurance.............................................................35
4.10. Environmental Matters.................................................36
4.11. Labor Matters.........................................................37
4.12. ERISA; Benefit Plans..................................................37
4.13. Real Property; Plant and Equipment....................................38
4.14. Condemnation..........................................................38
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4.15. Certain Contracts and Arrangements................................. 38
4.16. Legal Proceedings, etc............................................. 39
4.17. Permits............................................................ 39
4.18. NRC Licenses....................................................... 40
4.19. Regulation as a Utility............................................ 40
4.20. Taxes.............................................................. 40
4.21. Qualified Decommissioning Funds.................................... 41
4.22. Nonqualified Decommissioning Fund.................................. 42
4.23. Zoning Classification.............................................. 43
4.24. Operating Agreements............................................... 43
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
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5.1. Organization; Qualification........................................ 43
5.2. Authority Relative to this Agreement............................... 44
5.3. Consents and Approvals; No Violation............................... 44
5.4. Availability of Funds.............................................. 45
5.5. Legal Proceeding................................................... 45
5.6. WARN Act........................................................... 45
5.7. Transfer of Qualified Decommissioning Funds........................ 45
5.8. Foreign Ownership or Control....................................... 45
5.9. Sellers Representations and Warranties............................. 46
5.10. Financial Statements............................................... 46
ARTICLE VI COVENANTS OF THE PARTIES
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6.1. Conduct of Business Relating to the NMP-2 Assets................... 46
6.2. Access to Information.............................................. 48
6.3. Expenses........................................................... 50
6.4. Further Assurances; Cooperation.................................... 51
6.5. Public Statements.................................................. 52
6.6. Consents and Approvals............................................. 52
6.7. Brokerage Fees and Commissions..................................... 55
6.8. Tax Matters........................................................ 55
6.9. Advice of Changes.................................................. 58
6.10. Employees.......................................................... 58
6.11. Risk of Loss....................................................... 64
6.12. Decommissioning Funds.............................................. 64
6.13. Spent Nuclear Fuel Fees............................................ 66
6.14. Department of Energy Decontamination and Decommissioning Fees...... 66
6.15. Cooperation Relating to Insurance and Xxxxx-Xxxxxxxx Act........... 66
6.16. Tax Clearance Certificates......................................... 66
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6.17. Release of Sellers................................................. 67
6.18. Operating Agreements; Co-Tenants Agreement; Selling Co-Tenants
Agreement.......................................................... 67
6.19. Private Letter Ruling.............................................. 67
6.20. Decommissioning.................................................... 67
6.21. Obligation of Parent to Fund Buyer under Note...................... 67
ARTICLE VII CONDITIONS
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7.1. Conditions to Obligations of Buyer................................. 68
7.2. Conditions to Obligations of Sellers............................... 70
ARTICLE VIII INDEMNIFICATION
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8.1. Indemnification.................................................... 72
8.2. Defense of Claims.................................................. 74
ARTICLE IX TERMINATION
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9.1. Termination........................................................ 76
9.2. Procedure and Effect of No-Default Termination..................... 77
ARTICLE X MISCELLANEOUS PROVISIONS
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10.1. Amendment and Modification......................................... 78
10.2. Waiver of Compliance; Consents..................................... 78
10.3. Survival of Representations, Warranties, Covenants and
Obligations........................................................ 78
10.4. Notices............................................................ 78
10.5. Assignment......................................................... 80
10.6. Governing Law...................................................... 81
10.7. Counterparts....................................................... 82
10.8. Interpretation..................................................... 82
10.9. Schedules and Exhibits............................................. 82
10.10. Entire Agreement................................................... 82
10.11. Bulk Sales Laws.................................................... 82
10.12. Partial Closing.................................................... 83
10.13. Parental Support................................................... 83
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LIST OF EXHIBITS AND SCHEDULES
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EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Easement Agreement
Exhibit D Form of Interconnection Agreement
Exhibit E Forms of Revenue Sharing Agreement for each Seller
Exhibit F Forms of Bargain and Sale Deed for each Seller
Exhibit G Forms of Power Purchase Agreement for each Seller
Exhibit H [Intentionally left blank]
Exhibit I Form of Note
Exhibit J Form of Opinion from Counsel for Seller
Exhibit K Form of Opinion from Counsel for Buyer and Parent
SCHEDULES
1 Proportionate Ownership of Sellers
1.1(29) Common Facilities
1.1(84) Nuclear Employees
1.1(173) Transferable Permits
2.1(j) Intellectual Property
2.2(a) Excluded Assets
2.4(m) Pollution Control Bonds
3.2 Purchase Price
3.3(a)(vii) Low Level Waste
4.3(a) Sellers' Third Party Consents
4.3(b) Sellers' Required Regulatory Approvals
4.5 Liabilities
4.6 Absence of Certain Changes or Events
4.7(a) Exceptions to Title to Real Property
4.7(b) Tenant-In-Common Interests
4.8 Real Property Agreements
4.9 Insurance Exceptions
4.10 Environmental Matters
4.11 Noncompliance with Employment Laws
4.12(a) Benefit Plans
4.12(b) Benefit Plan Exceptions
4.13(a) Description of Real Property
4.13(b) Description of Major Equipment Components and Personal Property
4.13(c) FSAR Exceptions
4.14 Notices of Condemnation
4.15(a)(i) List of Sellers' Agreements (other than Fuel Contracts)
4.15(a)(ii) List of Fuel Contracts
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4.15(b) Agreement Exceptions
4.15(c) Agreement Defaults
4.16 List of Litigation
4.17(a) List of Permit Violations
4.17(b) List of Material Permits (other than Transferable Permits)
4.18(a) List of License Violations
4.18(b) List of Material NRC Licenses
4.20 Tax Matters
4.21 Tax and Financial Matters Relating to Qualified Decommissioning Funds
5.3(a) Buyer's Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Permitted Activities Prior to Closing
6.6 Consents and Approvals
6.8(e) Pollution Control Facilities
6.10(h) Actuarial Assumptions
6.10(o) Agreements
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of December 11, 2000, by and among
Niagara Mohawk Power Corporation, a New York corporation ("NMPC"), New York
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State Electric & Gas Corporation, a New York corporation ("NYSEG"), Rochester
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Gas and Electric Corporation, a New York corporation ("RG&E"), and Central
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Xxxxxx Gas & Electric Corporation, a New York corporation ("CHGEC"); (NMPC,
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NYSEG, RG&E and CHGEC are each individually referred to herein as a "Seller" and
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collectively as "Sellers") and Constellation Energy Group, Inc., a Maryland
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corporation ("Parent") and Constellation Nuclear, LLC, a Maryland limited
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liability company and a wholly-owned subsidiary of Parent ("Buyer"). Sellers,
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Parent and Buyer are referred to individually as a "Party," and collectively as
the "Parties."
W I T N E S S E T H
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WHEREAS, except as set forth on Schedule 4.7 hereto, each Seller owns, as a
tenant-in-common in the percentage set forth opposite such Seller's name on
Schedule 1 hereto ("Proportionate Ownership"), an undivided interest in Nine
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Mile Point Unit 2 Nuclear Generating Facility ("NMP-2"), NRC Operating License
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No. NPF-69, located near Oswego, New York, and certain facilities and other
assets associated therewith and ancillary thereto;
WHEREAS, NMPC is responsible for the daily operations of NMP-2 pursuant to
the terms of the Nine Mile Point Nuclear Station Unit 2 Operating Agreement,
effective as of January 1, 1993, as amended, among the Co-Tenants (as defined
below);
WHEREAS, Buyer desires to purchase and assume, and Sellers desire to sell
and assign the Purchased Interests (as defined in Section 2.1 below) and certain
associated liabilities, upon the terms and conditions hereinafter set forth in
this Agreement;
WHEREAS, the Parties desire that Parent support the obligations of Buyer
hereunder through the Closing; and
WHEREAS, simultaneously with the execution hereof, Buyer and NMPC are
entering into an Asset Purchase Agreement whereby Buyer will purchase the
interests of NMPC in the Nine Mile Point Unit 1 Nuclear Generating Facility, NRC
Operating License No. DPR-63 (collectively the "NMP-1 Interests").
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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
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1.1. Definitions. As used in this Agreement, the following terms have the
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meanings specified in this Section 1.1.
(1) "ABO" has the meaning set forth in Section 6.10(h)(A)(I).
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(2) "Additional Co-Tenant Interest Acquisition" has the meaning set forth
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in Section 6.4.
(3) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
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Rules and Regulations under the Securities Exchange Act of 1934.
(4) "Agreement" means this Asset Purchase Agreement together with the
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Schedules and Exhibits hereto, as the same may be from time to time amended.
(5) "Amount Realized" has the meaning set forth in Section 6.12.
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(6) "Ancillary Agreements" means the Assignment and Assumption Agreement,
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the Revenue Sharing Agreements, the Easement Agreement, the Interconnection
Agreement and the Power Purchase Agreements, as the same may be amended from
time to time.
(7) "ANI" means American Nuclear Insurers.
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(8) "Assignment and Assumption Agreement" means the Assignment and
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Assumption Agreement between Sellers and Buyer substantially in the form of
Exhibit A hereto, by which Sellers, subject to the terms and conditions hereof,
shall assign Sellers' interest in and rights under the Operating Agreements, the
Sellers' Agreements, the Non-material Contracts, the Real Property Agreements,
the Transferable Permits, certain intangible assets and other NMP-2 Assets to
Buyer and whereby Buyer shall assume the Assumed Liabilities and Obligations.
(9) "Assumed Liabilities and Obligations" has the meaning set forth in
-----------------------------------
Section 2.3.
(10) "Assumptions" has the meaning set forth in Section 6.10(h)(A).
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(11) "Atomic Energy Act" means the Atomic Energy Act of 1954, as amended.
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(12) [Intentionally left blank]
(13) "Benefit Plans" has the meaning set forth in Section 4.12(a).
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(14) "Xxxx of Sale" means the Xxxx of Sale, substantially in the form of
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Exhibit B hereto, to be delivered at the Closing, with respect to each Seller's
interests in the Tangible Personal Property included in the NMP-2 Assets to be
transferred to Buyer at the Closing.
(15) "Bond Counsel" has the meaning set forth in Section 6.8(e)(ii).
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(16) "Business Day" shall mean any day other than Saturday, Sunday and any
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day on which banking institutions in the State of New York are authorized by law
or other governmental action to close.
(17) "Buyer" has the meaning set forth in the preamble.
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(18) "Buyer Indemnity" has the meaning set forth in Section 8.1(b).
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(19) "Buyer Material Adverse Effect" has the meaning set forth in Section
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5.3(a).
(20) "Buyer's Required Regulatory Approvals" has the meaning set forth in
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Section 5.3(b).
(21) "Byproduct Material" means any radioactive material (except Special
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Nuclear Material) yielded in, or made radioactive by, exposure to the radiation
incident to the process of producing or utilizing Special Nuclear Material.
(22) "Capital Expenditures" has the meaning set forth in Section
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3.3(a)(iii).
(23) "Closing" has the meaning set forth in Section 3.1.
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(24) "Closing Adjustment" has the meaning set forth in Section 3.3(b).
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(25) "Closing Date" has the meaning set forth in Section 3.1.
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(26) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
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1985, as amended.
(27) "Code" means the Internal Revenue Code of 1986, as amended.
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(28) "Commercially Reasonable Efforts" means efforts which are designed to
-------------------------------
enable a Party, directly or indirectly, to satisfy expeditiously a condition to,
or otherwise assist in the consummation of, the transactions contemplated by
this Agreement and which do not require the performing Party to expend any funds
or assume liabilities other than expenditures and liabilities which are
customary and reasonable in nature and amount in the context of the transactions
contemplated by this Agreement.
(29) "Common Facilities" means collectively the meteorological towers, the
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emergency sirens, the emergency off-Site facility, the news center and other
facilities used jointly with the New York Power Authority and necessary to the
operation of the NMP-2 Assets, a partial listing of which is set forth on
Schedule 1.1(29).
(30) "Confidentiality Agreement" means the letter agreement dated May 31,
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2000, among Sellers and Buyer.
(31) "Co-Tenants" means NMPC, NYSEG, Long Island Lighting Company d/b/a
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LIPA ("LIPA"), RG&E and CHGEC.
(32) "Decommission" means to completely retire and remove the Facilities
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from service and to restore the Site, as well as any planning and administrative
activities incidental thereto, including but not limited to (a) the
dismantlement, decontamination and storage of the Facilities, in whole or in
part, and any reduction or removal, whether before or after termination of the
NRC license for the Facilities, of radioactivity at the Site, (b) all activities
necessary for the retirement, dismantlement and decontamination of the
Facilities to comply with all applicable
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Nuclear Laws and Environmental Laws, including the applicable requirements of
the Atomic Energy Act and the NRC's rules, regulations, orders and
pronouncements thereunder, the NRC Operating License for the Facilities and any
related decommissioning plan and (c) restoration of the Site to a condition
similar to the original land contouring at the Site, including, but not limited
to, the replacement of locally-indigenous trees, plants, shrubs, and grasses to
conform substantially with the surrounding environs, as appropriate for the
intended use of the Site and the property located thereon, as determined by the
Co-Tenants. Site restoration shall include, as appropriate, removal and disposal
of components and materials meeting NRC release criteria, demolition and removal
of decontaminated structures to an approximate depth of three feet below grade,
and backfilling of the Site with clean material, grading and landscaping. The
parties understand and agree that any form of entombment is not contemplated or
permitted under this definition.
(33) "Decommissioning Funds" means the Qualified Decommissioning Funds and
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the Nonqualified Decommissioning Funds.
(34) "Department of Energy" means the United States Department of Energy
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and any successor agency thereto.
(35) "Department of Energy Decommissioning and Decontamination Fees" means
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all fees related to the Department of Energy's Special Assessment of utilities
for the Uranium Enrichment Decontamination and Decommissioning Funds pursuant to
Sections 1801, 1802 and 1803 of the Atomic Energy Act and the Department of
Energy's implementing regulations at 10 C.F.R. Part 766, or any similar fees
assessed under amended or superseding statutes or regulations applicable to
separative work units purchased from the Department of Energy in order to
decontaminate and decommission the Department of Energy's gaseous diffusion
enrichment facilities.
(36) "Department of Justice" means the United States Department of Justice
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and any successor agency thereto.
(37) "Direct Claim" has the meaning set forth in Section 8.2(c).
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(38) "Easement Agreement" means the Reciprocal Easement Agreement in the
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form of Exhibit C.
(39) "Easements" means, with respect to the NMP-2 Assets, the easements,
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licenses and access rights to be granted by the appropriate party by or pursuant
to the Interconnection Agreement, the deeds conveying the Real Property to Buyer
or the Easement Agreement, including, without limitation, easements authorizing
access, use, maintenance, construction, repair, replacement and other activities
by the parties thereto.
(40) "Encumbrances" means any mortgages, pledges, liens, security
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interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, easements, encumbrances
and charges of any kind.
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(41) "Energy Reorganization Act" means the Energy Reorganization Act of
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1974, as amended.
(42) "Environment" means all air, surface water, groundwater, or land,
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including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
(43) "Environmental Claim" means any and all written claims alleging
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potential liability, administrative or judicial actions, suits, orders, liens,
notices alleging potential liability, notices of violation, investigations which
have been disclosed in writing to any Seller, complaints, requests for
information relating to the Release or threatened Release of Hazardous
Substances, proceedings, or other written communication, whether criminal or
civil, pursuant to or relating to any applicable Environmental Law by any person
(including, but not limited to, any Governmental Authority, private person and
citizens' group) based upon, alleging, asserting, or claiming any actual or
potential (a) violation of, or liability under any Environmental Law, (b)
violation of any Environmental Permit, or (c) liability for investigatory costs,
cleanup costs, removal costs, remedial costs, response costs, natural resource
damages, property damage, personal injury, fines, or penalties arising out of,
based on, resulting from, or related to the presence, Release, or threatened
Release into the environment of any Hazardous Substances at any location related
to the NMP-2 Assets, including, but not limited to, any off-Site location to
which Hazardous Substances, or materials containing Hazardous Substances, were
sent for handling, storage, treatment, or disposal.
(44) "Environmental Clean-up Site" means any location which is listed or
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formally proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on any
similar state list of sites requiring investigation or cleanup, or which is the
subject of any action, suit, proceeding, or investigation which has been
disclosed in writing to any Seller for any alleged violation of any
Environmental Law.
(45) "Environmental Condition" means the presence or Release to the
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environment, whether at the Site or at an off-Site location, of Hazardous
Substances, including any migration of those Hazardous Substances through air,
soil or groundwater to or from the Site or any off-Site location regardless of
when such presence or Release occurred or is discovered.
(46) "Environmental Laws" means all federal, state and local, civil and
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criminal laws, regulations, rules, ordinances, codes, decrees, judgments,
directives, or judicial or administrative orders regarding pollution or
protection of the Environment, natural resources or human health or the
Occupational Safety and Health Act (as it relates to Hazardous Substances),
including, without limitation, laws regarding Releases or threatened Releases of
Hazardous Substances (including, without limitation, Releases to ambient air,
surface water, groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
Release, transport, disposal or handling of Hazardous Substances. "Environmental
Laws" include, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. (S)(S) 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. (S)(S) 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. (S)(S) 1251 et seq.), the Clean Air Act (42
U.S.C. (S)(S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
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(S)(S) 2601 et seq.), the Oil Pollution Act (33 U.S.C. (S)(S) 2701 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. (S)(S) 11001 et
seq.), the Occupational Safety and Health Act (29 U.S.C. (S)(S) 651 et seq.) as
it relates to Hazardous Substances, Articles 17, 19, 24, 27 (Titles 9, 11 and
13), 29, 37 and 40 of the New York Environmental Conservation Law and all other
state laws analogous to any of the above. Notwithstanding the foregoing,
Environmental Laws do not include Nuclear Laws.
(47) "Environmental Permit" means any federal, state or local permits,
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licenses, approvals, consents or authorizations required by any Governmental
Authority under or in connection with any Environmental Law.
(48) "ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
(49) "ERISA Affiliate" has the meaning set forth in Section 2.4(k).
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(50) "ERISA Affiliate Plans" has the meaning set forth in Section 2.4(k).
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(51) "Estimated Adjustment" has the meaning set forth in Section 3.3(b).
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(52) "Estimated Closing Statement" has the meaning set forth in Section
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3.3(b).
(53) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(54) "Excluded Assets" has the meaning set forth in Section 2.2.
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(55) "Excluded Liabilities" has the meaning set forth in Section 2.4.
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(56) "Exempt Wholesale Generator" means an exempt wholesale generator as
--------------------------
defined in Section 32 of the Holding Company Act and the regulations issued
thereunder.
(57) "Facilities" means the plant, facilities, equipment, supplies and
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improvements in which Sellers have undivided ownership interests and are
included in the NMP-2 Assets.
(58) "Federal Power Act" means the Federal Power Act, as amended.
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(59) "Federal Trade Commission" means the United States Federal Trade
------------------------
Commission or any successor agency thereto.
(60) "FERC" means the United States Federal Energy Regulatory Commission or
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any successor agency thereto.
(61) "Final Safety Analysis Report" or "FSAR" means the report, as updated,
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that is required to be maintained for NMP-2 in accordance with the requirements
of 10 C.F.R. (S) 50.71(e).
(62) "Fuel Contracts" has the meaning set forth in Section 4.15(a).
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(63) "Fuel Market Value" for any date, and on a per KgU basis, means an
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amount, equal to (i) (a) the current restricted spot market prices for natural
UF6 and enrichment services (SWU) (determined as an average of the most recently
published Trade Tech and Ux prices), plus (b) $260 (which represents the
fabrication component), plus (c) a design and analysis cost factor ($500,000 per
reload divided by the number of KgUs in the reload), plus (d) the sum of items
(a), (b), and (c) multiplied by 0.02 (the advanced funds for construction rate),
multiplied by (ii) a fraction, the numerator of which is the energy produced to
date by the reload of which such KgU was a part and the denominator of which is
the total estimated energy capability of such reload.
(64) "Good Utility Practices" means any of the practices, methods and
----------------------
activities approved by a significant portion of the electric utility industry as
good practices applicable to nuclear generating facilities of similar design,
size and capacity or any of the practices, methods or activities which, in the
exercise of reasonable judgment by a prudent nuclear operator in light of the
facts known at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety, expedition and applicable law. Good Utility
Practices are not intended to be limited to the optimal practices, methods or
acts to the exclusion of all others, but rather to be practices, methods or acts
generally accepted in the electric utility industry.
(65) "Governmental Authority" means any federal, state, local or other
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governmental, regulatory or administrative agency, taxing authority, commission,
department, board, or other governmental subdivision, court, tribunal,
arbitrating body or other governmental authority.
(66) "Hazardous Substances" means (a) any chemicals, materials or
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substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "hazardous constituents," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (b) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law; excluding, however, any Nuclear
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Material to the extent regulated under any Nuclear Laws.
(67) "High Level Waste" means (1) irradiated nuclear reactor fuel, (2)
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liquid wastes resulting from the operation of the first cycle solvent extraction
system, or its equivalent, and the concentrated wastes from subsequent
extraction cycles, or their equivalent, in a facility for reprocessing
irradiated reactor fuel, (3) solids into which such liquid wastes have been
converted and (4) such other waste material containing radioactive nuclides in
concentrations or quantities that exceed Nuclear Regulatory Commission
requirements for classification as Low Level Waste (as defined herein).
(68) "High Level Waste Repository" means a facility which is designed,
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constructed and operated by or on behalf of the Department of Energy for the
storage and disposal of Spent Nuclear Fuel and other High Level Waste in
accordance with the requirements set forth in the Nuclear Waste Policy Act.
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(69) "Holding Company Act" means the Public Utility Holding Company Act of
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1935, as amended.
(70) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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1976, as amended.
(71) "IBEW" means Local 97 of the International Brotherhood of Electrical
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Workers.
(72) "IBEW Collective Bargaining Agreement" means the Collective Bargaining
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Agreement between NMPC and the IBEW, which is described in Schedule 4.11, as
well as the other memoranda of understanding and other documents which are
incorporated into, and made part of, the IBEW Collective Bargaining Agreement by
reference.
(73) "Income Tax" means any federal, state, local or foreign Tax (a) based
----------
upon, measured by or calculated with respect to net income, profits or receipts
(including, without limitation, capital gains Taxes and minimum Taxes) or (b)
based upon, measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the bases on
which such Tax may be based, measured by or calculated with respect to, is
described in clause (a), in each case together with any interest, penalties, or
additions to such Tax.
(74) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
------------------
(75) "Indemnifying Party" has the meaning set forth in Section 8.1(c).
------------------
(76) "Indemnity" means either a Sellers Indemnity or a Buyer Indemnity.
---------
(77) "Independent Accounting Firm" means such independent accounting firm
---------------------------
of national reputation as is mutually appointed by Sellers and Buyer.
(78) "Inspection" means all tests, reviews, examinations, inspections,
----------
investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the NMP-2 Assets prior to
the Closing.
(79) "Intellectual Property" means all patents and patent rights,
---------------------
trademarks and trademark rights, inventions, copyrights and copyright rights
owned or licensed by Sellers and necessary for the operation and maintenance of
the NMP-2 Assets, and all pending applications for registrations of patents,
trademarks, and copyrights, as set forth in Schedule 2.1(j).
(80) "Interconnection Agreement" means the Interconnection Agreement in the
-------------------------
form of Exhibit E hereto, under which NMP-2 will be provided after the Closing
Date with interconnection services consistent with NRC requirements relating to
offsite power availability and grid reliability and access to NMPC's
transmission facilities for the transmission of power from NMP-2.
(81) "Interconnection Facilities" has the meaning set forth in the
--------------------------
Interconnection Agreement.
-8-
(82) "Inventories" means nuclear fuel or alternative fuel inventories,
-----------
materials, spare parts, consumable supplies and chemical and gas inventories
relating to the operation of the Facilities located at, or in transit to, the
Facilities.
(83) "IRS" means the United States Internal Revenue Service or any
---
successor agency thereto.
(84) "Knowledge" means the actual knowledge of the corporate officers of
---------
the specified Person charged with responsibility for the particular function of
the specified Person after reasonable inquiry by such officers of the persons
whose titles are listed on Schedule 1.1(84) hereto.
(85) "Loss" means any and all damages, fines, fees, penalties,
----
deficiencies, losses and expenses (including without limitation all Remediation
costs, fees of attorneys, accountants and other experts, or other expenses of
litigation or proceedings or of any claim, default or assessment).
(86) "Low Level Waste" means radioactive material that: (1) is neither
---------------
High Level Waste (as defined herein), nor byproduct material (as defined in
Section 11e.(2) of the Atomic Energy Act of 1954 (42 U.S.C. 2014(e)(2)); and (2)
the Nuclear Regulatory Commission, consistent with existing law and in
accordance with paragraph (1), classifies as low-level radioactive waste.
(87) "Material Adverse Effect" means any change (or changes taken together)
-----------------------
in, or effect on, the NMP-2 Assets (including the operations or condition
(financial or otherwise) thereof) that is materially adverse to the value of the
Purchased Interests and the value of the NMP-1 Interests, taken as a whole,
other than any change (or changes taken together) generally affecting the
international, national, regional or local electric industry as a whole, or the
nuclear power industry as a whole, including changes in local wholesale or
retail markets for electric power or nuclear fuel, national, regional or local
electric transmission systems or operations thereof, and any change or effect
resulting from action or inaction by a Governmental Authority with respect to an
independent system operator or retail access in New York, but in any such case
not affecting the Purchased Interests, the Parties or the NMP-1 Interests in any
manner or degree significantly different than the industry as a whole.
(88) "Mortgage Indentures" means collectively the mortgage trust indenture
-------------------
originally granted by Central New York Power Corporation to The Marine Midland
Trust Company of New York, as trustee, dated as of October 1, 1937, as
supplemented and amended, with respect to NMPC, the Indenture of Mortgage dated
as of July 1, 1921 executed by NYSEG under the name of "New York State Gas and
Electric Corporation" to The Equitable Trust Company of New York, as trustee
(The Chase Manhattan Bank is successor trustee), as amended and supplemented,
with respect to NYSEG, the Indenture of Mortgage originally granted by Rochester
Railway and Light Company to Bankers Trust Company, as Trustee, dated as of
September 1, 1918, as supplemented and amended, and the Mortgage between RG&E
and The Chase Manhattan Bank (National Association), dated as of December 1,
1988, as supplemented and amended, and the Mortgage, between RG&E and General
Electric Capital Corporation, dated as of December 1, 1998, as supplemented and
amended, with respect to RG&E, and the
-9-
Indenture of Mortgage between CHGEC and American Exchange Irving Trust Company
(now The Bank of New York), as Trustee, dated as of January 1, 1927, as
supplemented and amended, with respect to CHGEC.
(89) "National Labor Relations Board" means the United States National
------------------------------
Labor Relations Board or any successor agency thereto.
(90) "XXXX" means Nuclear Electric Insurance Limited.
----
(91) "Net Cash Value" means the fair market value of the assets of each
--------------
Seller's Qualified Decommissioning Fund reduced by twenty percent (20%) of the
excess of the fair market value of such assets over their Tax Basis.
(92) "NMP-1" means Nine Xxxx Xxxxx Xxxx 0 Nuclear Generating Facility
-----
located near Oswego, New York and identified in NRC Operating License No. DPR-
63.
(93) "NMP-1 Asset Purchase Agreement" means the Asset Purchase Agreement,
------------------------------
dated as of the date hereof between Buyer and NMPC, relating to the sale of
certain interests in NMP-1.
(94) "NMP-1 Interests" has the meaning set forth in the recitals.
---------------
(95) "NMP-2" has the meaning set forth in the recitals.
-----
(96) "NMP-2 Assets" has the meaning set forth in Section 2.1.
------------
(97) "NMPC" has the meaning set forth in the preamble.
----
(98) "NMPC Retiree Coverages" has the meaning set forth in Section
----------------------
6.10(m).
(99) "NMPC's Defined Benefit Plan" has the meaning set forth in Section
---------------------------
6.10(h).
(100) "NMPC Savings Plan" has the meaning set forth in Section 6.10(g).
-----------------
(101) [Intentionally left blank]
(102) [Intentionally left blank]
(103) "Non-material Contracts" means those contracts, agreements, personal
----------------------
property leases or other commitments incidental to the operation or maintenance
of the NMP-2 Assets that have been entered into by NMPC in the ordinary course
of business prior to the Closing which either (i) are terminable, without
penalty or any other termination related liability, upon notice of 90 days or
less by NMPC or (ii) require the payment or delivery of goods or services with a
value of less than $50,000 per annum in the case of any individual contract or
commitment.
(104) "Nonqualified Decommissioning Funds" means the external trust fund
----------------------------------
that does not meet the requirements of Code Section 468A and Treas. Reg. (S)
1.468A-5, maintained by NMPC with respect to the Facilities prior to the Closing
pursuant to the NMPC
-10-
Decommissioning Trust Agreement, and in the case of NYSEG, RG&E and CHGEC, the
assets to be transferred to the Trustee under the Post-Closing Decommissioning
Trust Agreement pursuant to Section 6.12 even though such assets may not be held
in trust prior to Closing, and maintained by the Trustee after the Closing
pursuant to the Post-Closing Decommissioning Trust Agreement to the extent
assets are transferred to such trust pursuant to Section 6.12.
(105) "Nonqualified Target" means (a) if the Closing Date occurs on or
-------------------
before July 1, 2001, $3.9 million, and (b) if the Closing Date occurs after July
1, 2001, an amount in dollars equal to (x) $3.9 million plus (y) $3.9 million
times 0.000175 times the actual number of days that have elapsed since July 1,
----- -----
2001.
(106) "Non-selling Co-Tenant" means LIPA.
---------------------
(107) "Non-Union Employee" means any employee of NMPC employed as of the
------------------
Closing Date who is employed at, or whose work responsibilities involve
principally the operation of, the NMP-2 Assets and is not covered by the IBEW
Collective Bargaining Agreement. For purposes of Sections 2.4 and 6.10(k), the
term Non-Union Employee also includes any independent contractor who is self-
employed, who provides direct services to NMPC as of the Closing Date and who
provides services at, or whose work responsibilities involve principally the
operation of, the NMP-2 Assets.
(108) "NRC" means the United States Nuclear Regulatory Commission and any
---
successor agency thereto.
(109) "Nuclear Insurance Policies" means all insurance policies carried by
--------------------------
or for the benefit of Sellers with respect to the ownership, operation or
maintenance of the Facilities, including all liability, property damage and
business interruption policies in respect thereof. Without limiting the
generality of the foregoing, the term "Nuclear Insurance Policies" includes all
policies issued or administered by ANI or XXXX.
(110) "Nuclear Laws" means all Federal, state, local, provincial, foreign
------------
and international civil and criminal laws, regulations, rules, ordinances,
codes, decrees, judgments, directives, or judicial or administrative orders
relating to the regulation of nuclear power plants, Source Material, Byproduct
Material and Special Nuclear Materials; the regulation of Low Level Waste and
High Level Waste; the transportation and storage of Nuclear Materials; the
regulation of Safeguards Information; the regulation of nuclear fuel; the
enrichment of uranium; the disposal and storage of High Level Waste and Spent
Nuclear Fuel; contracts for and payments into the Nuclear Waste Fund; and as
applicable, the antitrust laws and the Federal Trade Commission Act to specified
activities or proposed activities of certain licensees of commercial nuclear
reactors, but shall not include Environmental Laws. "Nuclear Laws" include the
Atomic Energy Act of 1954, as amended (42 U.S.C. (S) 2011 et seq.), the Xxxxx-
Xxxxxxxx Act ((S) 170 of the Atomic Energy Act of 1954, as amended); the Energy
Reorganization Act of 1974 (42 U.S.C. (S) 5801 et seq.); Convention on the
Physical Protection of Nuclear Material Implementation Act of 1982 (Public Law
97 - 351; 96 Stat. 1663); the Foreign Assistance Act of 1961 (22 U.S.C. (S) 2429
et seq.); the Nuclear Non-Proliferation Act of 1978 (22 U.S.C. (S) 3201); the
Low-Level Radioactive Waste Policy Act (42 U.S.C. (S) 2021b et seq.); the
Nuclear Waste Policy Act (42 U.S.C. (S) 10101 et seq. as amended); the Low-Level
Radioactive Waste Policy Amendments Act
-11-
of 1985 (42 U.S.C. (S) 2021d, 471); and the Energy Policy Act of 1992 (4 U.S.C.
(S) 13201 et seq.); and any state or local laws analogous to the foregoing.
(111) "Nuclear Material" means Source Material, Special Nuclear Material,
----------------
Low Level Waste, High Level Waste, Byproduct Material and Spent Nuclear Fuel.
(112) "Nuclear Waste Fund" means the fund established by the Department of
------------------
Energy under the Nuclear Waste Policy Act in which the Spent Nuclear Fuel Fees
to be used for the design, construction and operation of a High Level Waste
Repository and other activities related to the storage and disposal of Spent
Nuclear Fuel and/or High Level Waste are deposited.
(113) "Nuclear Waste Policy Act" means the Nuclear Waste Policy Act of
------------------------
1982, as amended.
(114) "NYDEC" means the New York State Department of Environmental
-----
Conservation and any successor agency thereto.
(115) "NYPSC" means the Public Service Commission of the State of New York
-----
and any successor agency thereto.
(116) [Intentionally left blank]
(117) "Observers" has the meaning set forth in Section 6.1(c).
---------
(118) "Operating Agreements" means, collectively, the Nine Mile Point
--------------------
Nuclear Station Unit 2 Operating Agreement, effective January 1, 1993, as
amended by Amendment No. 1, effective January 1, 1995, among the Co-Tenants, and
the Basic Agreement, dated as of September 22, 1975, among the Co-Tenants.
(119) "Party" (and the corresponding term "Parties") has the meaning set
-----
forth in the preamble.
(120) "PBGC" means the Pension Benefit Guaranty Corporation established by
----
ERISA.
(121) "PBO" has the meaning set forth in Section 6.10(h)(A).
---
(122) "PC Bondholders" has the meaning set forth in Section 6.8(e)(i)(B).
--------------
(123) "Permits" has the meaning set forth in Section 4.17(a).
-------
(124) "Permitted Encumbrances" means: (i) the Easements; (ii) those
----------------------
exceptions to title to the NMP-2 Assets listed in Schedule 4.7(a) with respect
to Real Property; (iii) with respect to any date before the Closing Date,
Encumbrances created by the Mortgage Indentures; (iv) statutory liens for Taxes
or other governmental charges or assessments not yet due or delinquent or the
validity of which are being contested in good faith by appropriate proceedings
provided that the aggregate amount being so contested does not exceed $100,000;
(v) mechanics', materialmen's, 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
-12-
on the part of Sellers or the validity of which are being contested in good
faith, and which do not, individually or in the aggregate, exceed $100,000; (vi)
zoning, entitlement, conservation restriction and other land use and
environmental regulations imposed by Governmental Authorities which do not
materially, individually or in the aggregate, detract from the value of the
Purchased Interests in the NMP-2 Assets as such assets are currently used or
interfere with the present use or operation of the NMP-2 Assets and neither
secure indebtedness, nor, individually or in the aggregate, result in a Material
Adverse Effect; (vii) the covenants and restrictions set forth in Section
6.8(e); and (viii) such other liens, imperfections in or failures of title,
easements, leases, licenses, restrictions, activity and use limitations,
conservation easements, encumbrances and encroachments, as do not, individually
or in the aggregate, materially detract from the value of the Purchased
Interests in the NMP-2 Assets as such assets are currently used or materially
interfere with the present use or operation of the NMP-2 Assets and neither
secure indebtedness, nor, individually or in the aggregate, result in a Material
Adverse Effect.
(125) "Person" means any individual, partnership, limited liability
------
company, joint venture, corporation, trust, unincorporated organization,
association, or governmental entity or any department or agency thereof.
(126) "Pollution Control Bonds" has the meaning set forth in Section
-----------------------
2.4(m).
(127) "Pollution Control Facilities" has the meaning set forth in Section
----------------------------
6.8(e)(i)(A).
(128) "Post-Closing Adjustment" has the meaning set forth in Section
-----------------------
3.3(c).
(129) "Post-Closing Decommissioning Trust Agreement" means the
--------------------------------------------
decommissioning trust agreement between Buyer and the Trustee pursuant to which
any assets of any of the Decommissioning Funds to be transferred by any Seller
at Closing pursuant to Section 6.12 hereof will be held in trust.
(130) "Post-Closing Statement" has the meaning set forth in Section 3.3(c).
----------------------
(131) "Power Purchase Agreements" means collectively the four separate
-------------------------
Power Purchase Agreements between NMPC, NYSEG, RG&E and CHGEC, on the one hand,
and Buyer, on the other hand, in the respective forms of Exhibits H-1 through H-
4 hereto.
(132) "Xxxxx-Xxxxxxxx Act" means Section 170 of the Atomic Energy Act and
------------------
related provisions of Section 11 of the Atomic Energy Act.
(133) "Proportionate Ownership" has the meaning set forth in the recitals.
-----------------------
(134) "Proposed Post-Closing Adjustment" has the meaning set forth in
--------------------------------
Section 3.3(c).
(135) "Proprietary Information" has the meaning as set forth in the
-----------------------
Confidentiality Agreement.
(136) "Purchased Interests" has the meaning set forth in Section 2.1.
-------------------
-13-
(137) "Purchase Price" means, on any date, the amount set forth opposite
--------------
such date on Schedule 3.2.
(138) "Qualified Decommissioning Funds" means the external trust funds that
-------------------------------
meet the requirements of Code Section 468A and Treas. Reg. (S) 1.468A-5,
maintained by each Seller with respect to the Facilities prior to Closing
pursuant to Sellers' Decommissioning Trust Agreements and maintained by Buyer
after the Closing pursuant to the Post-Closing Decommissioning Trust Agreements
to the extent assets are transferred to such fund by Sellers pursuant to Section
6.12.
(139) "Qualified Target" means (a) if the Closing Date occurs on or before
----------------
July 1, 2001, $172.8 million, and (b) if the Closing Date occurs after July 1,
2001, an amount in dollars equal to (x) $172.8 million plus (y) $172.8 million
times 0.000140 times the actual number of days that have elapsed since July 1,
2001.
(140) "Real Property" has the meaning set forth in Section 2.1(a).
-------------
(141) "Real Property Agreements" has the meaning set forth in Section 4.8.
------------------------
(142) "Release" means any spilling, leaking, pumping, pouring, emitting,
-------
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Substance into the Environment.
(143) "Remediation" means action of any kind required by Environmental Law
-----------
to address a Release, the threat of a Release or the presence of Hazardous
Substances at the Site or an off-Site location including, without limitation,
any or all of the following activities to the extent they relate to or arise
from the presence of a Hazardous Substance at the Site or an off-Site location:
(a) monitoring, investigation, assessment, treatment, cleanup, containment,
removal, mitigation, response or restoration work, (b) obtaining any permits,
consents, approvals or authorizations of any Governmental Authority necessary to
conduct any such activity; (c) preparing and implementing any plans or studies
for any such activity; (d) obtaining a written notice from a Governmental
Authority with jurisdiction over the Site or an off-Site location under
Environmental Laws that no material additional work is required by such
Governmental Authority; (e) the implementation, application, installation,
operation or maintenance of remedial action on the Site or an off-Site location,
remedial technologies applied to the surface or subsurface soils, excavation and
off-Site treatment or disposal of soils, systems for long term treatment of
surface water or ground water, engineering controls or institutional controls;
and (f) any other activities required under Environmental Laws to address the
presence or Release of Hazardous Substances at the Site or an off-Site location.
(144) "Replacement Defined Benefit Plan" has the meaning set forth in
--------------------------------
Section 6.10(h).
(145) "Replacement Retiree Coverages" has the meaning set forth in Section
-----------------------------
6.10(m).
(146) "Replacement Welfare Plans" has the meaning set forth in Section
-------------------------
6.10(e).
(147) "Representatives" of a Party means the Party and its Affiliates and
---------------
their directors, officers, employees, agents, partners, advisors (including,
without limitation, accountants,
-14-
counsel, environmental consultants, financial advisors and other authorized
representatives) and parents and other controlling persons.
(148) "Revenue Sharing Adjustment" means the adjustment to the Purchase
--------------------------
Price calculated and paid in accordance with the Revenue Sharing Agreements.
(149) "Revenue Sharing Agreements" means collectively the four separate
--------------------------
agreements between NMPC, NYSEG, RG&E and CHGEC, on the one hand, and Buyer, on
the other hand, in the respective forms of Exhibits E-1 through E-4 hereto.
(150) "Safeguards Information" means information not otherwise classified
----------------------
as national security information or restricted data under NRC's regulations
which specifically identifies an NRC licensee's detailed (1) security measures
for the physical protection of Special Nuclear Material, or (2) security
measures for the physical protection and location of certain plant equipment
vital to the safety of production or utilization facilities.
(151) "SEC" means the United States Securities and Exchange Commission and
---
any successor agency thereto.
(152) [Intentionally left blank]
(153) "Securities Act" means the Securities Act of 1933, as amended.
--------------
(154) "Seller" and the corresponding term "Sellers" have the meanings set
------
forth in the preamble.
(155) "Sellers' Agreements" means those contracts, agreements, licenses and
-------------------
leases relating to the ownership, operation and maintenance of the NMP-2 Assets
that are being assigned to Buyer, as more particularly described on Schedule
4.15(a)(i), and the Fuel Contracts.
(156) "Sellers' Decommissioning Trust Agreements" means collectively the
-----------------------------------------
decommissioning trust agreement dated March 13, 1990, between Mellon Bank N.A.
and NMPC regarding the Qualified Decommissioning Funds and the Nonqualified
Decommissioning Funds of NMPC, the decommissioning trust agreement, dated March
12, 1990, between Bankers Trust Company and NYSEG, as amended, regarding the
Qualified Decommissioning Funds of NYSEG, the Master Decommissioning Trust
Agreement, made March 9, 1990, as amended, between RG&E and Mellon Bank N.A.,
regarding the Qualified Decommissioning Funds of RG&E and the Master
Decommissioning Trust Agreement, made as of March 1, 1990, between Central
Xxxxxx Gas & Electric Corporation and The Bank of New York, as Trustee,
regarding the Qualified Fund of CHGEC.
(157) "Sellers Indemnity" has the meaning set forth in Section 8.l(a).
-----------------
(158) "Sellers' Required Regulatory Approvals" has the meaning set forth in
--------------------------------------
Section 4.3(b).
(159) "Site" means the parcels of land included in the Real Property. Any
----
reference to the Site shall include, by definition, the surface and subsurface
elements, including the soils and
-15-
groundwater present at the Site, and any reference to items "at the Site" shall
include all items "at, on, in, upon, over, across, under and within" the Site.
(160) "Source Material" means: (1) uranium or thorium; or any combination
---------------
thereof, in any physical or chemical form, or (2) ores which contain by weight
one-twentieth of one percent (0.05%) or more of (i) uranium, (ii) thorium, or
(iii) any combination thereof. Source Material does not include Special Nuclear
Material.
(161) "Special Nuclear Material" means plutonium, uranium-233, uranium
------------------------
enriched in the isotope-233 or in the isotope-235, and any other material that
the NRC determines to be "Special Nuclear Material." Special Nuclear Material
also refers to any material artificially enriched by any of the above-listed
materials or isotopes.
(162) "Spent Nuclear Fuel" means fuel that has been withdrawn from a
------------------
nuclear reactor following irradiation, and has not been chemically separated
into its constituent elements by reprocessing. Spent Nuclear Fuel includes the
Special Nuclear Material, Byproduct Material, Source Material, and other
radioactive materials associated with nuclear fuel assemblies.
(163) "Spent Nuclear Fuel Fees" means those fees assessed on electricity
-----------------------
generated at NMP-2 and sold pursuant to the Standard Contract for Disposal of
Spent Nuclear Fuel and/or High Level Waste, as provided in Section 302 of the
Nuclear Waste Policy Act and 10 C.F.R. Part 961, as the same may be amended from
time to time.
(164) "Subsidiary" when used in reference to any Person means any entity of
----------
which outstanding securities having ordinary voting power to elect a majority of
the Board of Directors or other Persons performing similar functions of such
entity, are owned directly or indirectly, by such Person.
(165) "Tangible Personal Property" has the meaning set forth in Section
--------------------------
2.1(c).
(166) "Tax Basis" means the adjusted tax basis determined for federal
---------
income tax purposes under Code Section 1011(a).
(167) "Tax" or "Taxes" means, all taxes, charges, fees, levies, penalties
--------------
or other assessments imposed by any federal, state or local or foreign taxing
authority, including, but not limited to, income, excise, real or personal
property, sales, transfer, franchise, payroll, withholding, social security,
gross receipts, license, stamp, occupation, employment or other taxes, including
any interest, penalties or additions attributable thereto.
(168) "Tax Return" means any return, report, information return,
----------
declaration, claim for refund or other document (including any schedule or
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
(169) [Intentionally left blank]
(170) "Termination Date" has the meaning set forth in Section 9.1(b).
----------------
(171) "Third Party Claim" has the meaning set forth in Section 8.2(a).
-----------------
-16-
(172) "Total Compensation" has the meaning set forth in Section 6.10(d).
------------------
(173) "Transferable Permits" means those Permits and Environmental Permits
--------------------
identified in Schedule 1.1(173), which may be transferred to Buyer without a
filing with, notice to, consent or approval of any Governmental Authority.
(174) "Transferred Employee Records" means all records related to
----------------------------
Transferred Employees, including but not limited to the following information:
(i) skill and development training, (ii) seniority histories, (iii) salary and
benefit information, (iv) Occupational, Safety and Health Administration
reports, (v) active medical restriction forms, (vi) fitness for duty, and (vii)
disciplinary actions.
(175) "Transferred Employees" has the meaning set forth in Section 6.10(c).
---------------------
(176) "Transferred Non-Union Employees" has the meaning set forth in
-------------------------------
Section 6.10(c).
(177) "Transferred Union Employees" has the meaning set forth in Section
---------------------------
6.10(c).
(178) "Transition Committee" has the meaning set forth in Section 6.1(b).
--------------------
(179) "Transmission Assets" has the meaning set forth in Section 2.2(a).
-------------------
(180) "Trustee" means with respect to each Seller prior to the Closing the
-------
trustee of the Decommissioning Funds appointed by such Seller pursuant to
Sellers' Decommissioning Trust Agreement relating to such Seller and after the
Closing to the extent any assets of the Decommissioning Funds are transferred by
Sellers pursuant to Section 6.12 the trustees appointed pursuant to the Post-
Closing Decommissioning Trust Agreement.
(181) "Union Employees" means any employee of NMPC employed as of the
---------------
Closing Date who is employed at, or whose work responsibilities involve
principally the operation of NMP-2 Assets and is covered by the IBEW Collective
Bargaining Agreement.
(182) "USEPA" means the United States Environmental Protection Agency and
-----
any successor agency thereto.
(183) "WARN Act" means the Federal Worker Adjustment Retaining and
--------
Notification Act of 1988, as amended.
1.2. Certain Interpretive Matters. In this Agreement, unless the context
----------------------------
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa. The term "includes" or
"including" shall mean "including without limitation." References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.
-17-
ARTICLE II
PURCHASE AND SALE
-----------------
2.1. Transfer of Assets. Upon the terms and subject to the satisfaction of
------------------
the conditions contained in this Agreement, at the Closing, each Seller will
sell, assign, convey, transfer and deliver to Buyer, and Buyer will purchase,
assume and acquire from such Seller, free and clear of all Encumbrances (except
for Permitted Encumbrances), all of such Seller's right, title and interest
(collectively, the "Purchased Interests") as a co-owner of NMP-2 but, in the
-------------------
case of NMPC, not as the owner of NMP-1 or the owner of NMPC's other operations,
and, in the case of the other Sellers, not as the owners of the other Sellers'
other operations, in and to the following assets wherever located (the "NMP-2
-----
Assets"): (i) all of the assets constituting, or necessary in the ordinary
------
course of business to operate NMP-2 (but excluding such assets not essential to
the operation of NMP-2 that are used predominantly elsewhere in the operation of
any Seller's business), including, without limitation, those assets identified
in Schedule 2.1(j) and Schedule 4.13(b), (ii) those assets used jointly in the
operation of the Facilities and NMP-1 and (iii) those assets described below
(but excluding the Excluded Assets):
(a) Except as otherwise constituting part of the Excluded Assets, the
land described on Schedule 4.13(a) (which land comprises the Site) together with
all buildings, facilities and other improvements thereon including the
Facilities (but excluding any personal property thereon) and all appurtenances
thereto, including, without limitation, all related rights of ingress and egress
(collectively, the "Real Property");
-------------
(b) All Nuclear Materials at the Site and the Inventories;
(c) All machinery, mobile or otherwise, equipment (including computer
hardware and software and communications equipment), vehicles, tools, spare
parts, fixtures, furniture and furnishings and other personal property relating
to or used in the ordinary course of business to operate the Facilities,
including, without limitation, the items of personal property included in
Schedule 4.13(b), other than property used primarily as part of the Transmission
Assets or otherwise constituting part of the Excluded Assets (collectively,
"Tangible Personal Property"),
--------------------------
(d) Subject to the provisions of Section 6.4(d), all Sellers'
Agreements and the Non-material Contracts;
(e) All Real Property Agreements;
(f) All Transferable Permits;
(g) All books, operating records, operating, safety and maintenance
manuals, inspection reports, engineering design plans, documents, blueprints and
as built plans, specifications, procedures and similar items of Sellers,
wherever located, relating to the Facilities and the other NMP-2 Assets (subject
to the right of each Seller to retain copies of same for its use) other than
general ledger accounting records;
-18-
(h) All unexpired, transferable warranties and guarantees from third
parties with respect to any item of Real Property or personal property
constituting part of the NMP-2 Assets;
(i) The name "Nine Mile Point Unit 2";
(j) A non-assignable (except to Affiliates), royalty-free, non-
exclusive license to the Intellectual Property described on Schedule 2.1(j);
(k) The substation equipment, if any, designated in the
Interconnection Agreement as being transferred to Buyer;
(l) The assets comprising the Decommissioning Funds together with all
related tax accounting and other records, including all records necessary to
determine the Tax Basis of each asset in the Decommissioning Funds;
(m) All Nuclear Insurance Policies, including all rights to collect
premium refunds made after the Closing Date pursuant to the ANI nuclear industry
credit rating plan (other than refunds that relate to premiums paid prior to the
Closing Date);
(n) Subject to the receipt of approval from the Wireless Bureau of
the Federal Communications Commission, certain radio licenses;
(o) Subject to satisfaction of Buyer's indemnification obligations
under Section 8.1(a), the right to proceeds from insurance policies for coverage
of Assumed Liabilities and Obligations;
(p) Subject to satisfaction of Buyer's indemnification obligations
under Section 8.1(a), the rights of Sellers in and to any causes of action,
claims and defenses against third parties (including indemnification and
contribution) relating to any Assumed Liabilities and Obligations (including,
but not limited to, any cause of action or claim against DOE relating to DOE's
failure to accept or any delay in acceptance of Spent Nuclear Fuel pursuant to
the Standard Contract for Disposal of Spent Nuclear Fuel and/or High Level
Waste);
(q) The Common Facilities;
(r) Any rights of Sellers with respect to prior assessments of
licensees of operating nuclear power plants to support disposal facility
development activities by the New York State Department of Environmental
Conservation and Health, and the former Commission for Siting Low-Level
Radioactive Waste Disposal Facilities, which ceased operation in August 1995;
and
(s) Subject to the provisions of Section 6.18, all rights of Sellers
under the Operating Agreements.
2.2. Excluded Assets. Notwithstanding anything to the contrary in this
---------------
Agreement, nothing in this Agreement shall be construed as conferring on Buyer,
and Buyer is not acquiring, any right, title or interest in or to the following
specific assets which are associated with the
-19-
NMP-2 Assets, but which are hereby specifically excluded from the sale and the
definition of NMP-2 Assets herein (the "Excluded Assets"):
---------------
(a) Except as expressly identified in Schedule 4.13(b) or the
Interconnection Agreement, the electrical transmission or distribution
facilities (as opposed to generation facilities) of Sellers or any of their
Affiliates located at the Site or forming part of the Facilities (whether or not
regarded as a "transmission" or "generation" asset for regulatory or accounting
purposes), including all switchyard facilities, substation facilities and
support equipment, as well as all permits, contracts and warranties, to the
extent they relate to such transmission and distribution assets (collectively,
the "Transmission Assets"), and those assets, facilities and agreements
-------------------
identified on Schedule 2.2(a);
(b) Certificates of deposit, shares of stock, securities, bonds,
debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities (including, without
limitation, Sellers' member account balances with XXXX), except the assets
comprising the Decommissioning Funds;
(c) All rights to collect premium refunds made after the Closing Date
under Nuclear Insurance Policies to the extent that such refunds relate to
premiums paid prior to the Closing Date;
(d) All cash, cash equivalents, bank deposits, accounts and notes
receivable (trade or otherwise), and any income, sales, payroll or other tax
receivables, except the assets comprising the Decommissioning Funds;
(e) Subject to a license to be hereafter granted by NMPC as
contemplated by the NMP-1 Asset Purchase Agreement, the rights of Sellers and
their Affiliates to the names "Niagara Mohawk Power Corporation", "New York
State Electric & Gas Corporation", "NYSEG", "Rochester Gas and Electric
Corporation", "RG&E", "Central Xxxxxx Gas & Electric Corporation", "Central
Xxxxxx" or any related or similar trade names, trademarks, service marks,
corporate names or logos, or any part, derivative or combination thereof;
(f) All tariffs, agreements and arrangements to which any Seller is a
party for the purchase or sale of electric capacity and/or energy or for the
purchase or sale of transmission or ancillary services;
(g) Other than those contemplated by Section 2.1(p), the rights of
Sellers in and to any causes of action, claims and defenses against third
parties (including indemnification and contribution) relating to any Real
Property or personal property, Permits, Taxes, Real Property Agreements,
Sellers' Agreements or the Non-material Contracts, if any, including any claims
for refunds (including refunds of previously paid Department of Energy
Decommissioning and Decontamination Fees), prepayments, offsets, recoupment,
insurance proceeds, condemnation awards, judgments and the like, whether
received as payment or credit against future liabilities, relating specifically
to the Facilities or the Site and relating to any period prior to the Closing
Date; and
-20-
(h) Any and all of Sellers' rights in any contract representing an
intercompany transaction between a Seller and an Affiliate of such Seller,
whether or not such transaction relates to the provision of goods and services,
payment arrangements, intercompany charges or balances, or the like.
2.3. Assumed Liabilities and Obligations. On the Closing Date, Buyer shall
-----------------------------------
deliver to Sellers the Assignment and Assumption Agreement pursuant to which
Buyer shall assume and agree to discharge when due, all of the following
liabilities and obligations of Sellers (collectively, "Assumed Liabilities and
-----------------------
Obligations"):
-----------
(a) All liabilities and obligations of Sellers arising on or after
the Closing Date with respect to the ownership or operation of the NMP-2 Assets
and all liabilities and obligations of Sellers arising on or after the Closing
Date under Sellers' Agreements, the Real Property Agreements, the Non-material
Contracts and the Transferable Permits in accordance with the terms thereof,
including, without limitation, (i) the contracts, licenses, agreements and
personal property leases entered into by Sellers with respect to the NMP-2
Assets or under Sellers' Agreements or the Non-material Contracts and disclosed
on the relevant schedule and (ii) the contracts, licenses, agreements and
personal property leases entered into by Sellers with respect to the NMP-2
Assets after the date hereof consistent with the terms of this Agreement, except
in each case to the extent such liabilities and obligations, but for a breach or
default by Sellers or a related waiver or extension would have been paid,
performed or otherwise discharged on or prior to the Closing Date or to the
extent the same arise out of any such breach or default or out of any event
which after the giving of notice would constitute a default by Sellers; provided
that other than with respect to the Non-Union Employees and Union Employees (as
provided for in Section 2.3(d)), Buyer does not assume any liabilities or
obligations relating to personal injury, discrimination, wrongful discharge,
unfair labor practice, or constructive termination of any individual, or similar
claim or cause of action attributable to any actions or inactions by Seller
prior to the Closing Date;
(b) All liabilities (except for Excluded Liabilities) and obligations
of Sellers under or related to Environmental Laws or the common law with respect
to the Site; provided however, that Buyer does not assume any liability or
-------- -------
obligation for the off-Site disposal or release of Hazardous Substances or the
arrangement for such activities prior to the Closing Date, as provided in
Section 2.4(g) hereof, except that for the purposes of Section 2.3 and 2.4 "off-
Site" does not include any location adjoining the Site to which Hazardous
Substances Released at the Site have migrated;
(c) All liabilities and obligations of Sellers associated with the
NMP-2 Assets in respect of Taxes for which Buyer is liable pursuant to Sections
3.5 or 6.8(a) hereof,
(d) All liabilities and obligations with respect to Transferred
Employees (a) for which Buyer is responsible pursuant to Section 6.10 or the
terms of the IBEW Collective Bargaining Agreement, or (b) relating to the
employment of the Transferred Employees or termination of employment of the
Transferred Employees including liabilities for personal injury, discrimination,
harassment, retaliation, constructive termination, wrongful discharge, unfair
labor practices, or any similar claim or cause of action attributable to any
actions or inactions by NMPC prior to the Closing as to which no claim or cause
of action has been filed
-21-
with or is pending before any court, administrative agency or arbitrator prior
to the Closing, it being understood, however, that, to the extent required by a
court of competent jurisdiction, administrative agency or arbitrator, Buyer
shall implement any prospective changes (as opposed to compensatory costs,
damages or other liabilities relating to any periods prior to Closing) in the
terms of employment of any Non-Union or Union Employees who become Transferred
Employees as of the Closing Date or who are subsequently ordered to be
reinstated at NMP-1 or NMP-2 following the resolutions of the claims or causes
of action described above, irrespective of when such claim or cause of action is
filed or threatened;
(e) With respect to the NMP-2 Assets, any Tax that may be imposed by
any federal, state or local government on the ownership, sale, operation or use
of the NMP-2 Assets by Sellers on or after the Closing Date, except for any
Income Taxes attributable to income received by Sellers;
(f) All liabilities and obligations of Sellers to Decommission the
Facilities;
(g) All liabilities and obligations of Sellers associated with (i)
the nuclear fuel consumed at NMP-2 from and after the Closing Date and (ii) the
storage and disposal of the Nuclear Material of NMP-2 as of the Closing Date;
(h) All liabilities and obligations of Sellers under the Operating
Agreements arising on or after the Closing Date and all liabilities and
obligations of Sellers under the Operating Agreements as of the Closing Date
other than (i) Excluded Liabilities, (ii) amounts in dispute between Sellers and
(iii) any costs and expenses arising out of the operation and maintenance of
NMP-2 in the normal course of business prior to the Closing Date; and
(i) All obligations of Sellers arising on or after the Closing Date
to pay to ANI any additional premiums due to audit assessments.
2.4. Excluded Liabilities. Notwithstanding anything to the contrary in this
--------------------
Agreement, nothing in this Agreement shall be construed to impose on Buyer, and
Buyer shall not assume or be obligated to pay, perform or otherwise discharge,
the following liabilities or obligations (the "Excluded Liabilities"):
--------------------
(a) Any liabilities or obligations of Sellers in respect of any
Excluded Assets or other assets of Sellers which are not Purchased Interests or
related to the NMP-2 Assets;
(b) Any liabilities or obligations in respect of Taxes attributable
to the ownership, operation or use of NMP-2 Assets for taxable periods, or
portions thereof, ending before the Closing Date, except for Taxes for which
Buyer is liable pursuant to Sections 3.5 or 6.8(a) hereof;
(c) Any liabilities or obligations of Sellers accruing under any of
Sellers' Agreements or any Non-material Contract prior to the Closing Date;
(d) All liabilities and obligations arising under or relating to
Nuclear Laws or relating to any claim in respect of Nuclear Material arising out
of the ownership or operation of the NMP-2 Assets prior to the Closing Date,
including any and all asserted or unasserted
-22-
liabilities or obligations to third parties (including employees) for personal
injury, property damage or tort, or similar causes of action arising out of the
ownership or operation of the NMP-2 Assets prior to the Closing Date, including
liabilities or obligations arising out of or resulting from a "nuclear incident"
or "precautionary evacuation" (as such terms are defined in the Atomic Energy
Act) at the Site, or any other licensed nuclear reactor site in the United
States, or in the course of the transportation of radioactive materials to or
from the Site or any other site prior to the Closing Date, including, without
limitation, liability for any deferred premiums assessed in connection with such
a nuclear incident or precautionary evacuation under any applicable NRC or
industry retrospective rating plan or insurance policy, including any mutual
insurance pools established in compliance with the requirements imposed under
Section 170 of the Atomic Energy Act and 10 C.F.R. Part 140, 10 C.F.R. (S)
50.54(w), and liabilities and obligations arising out of or resulting from the
transportation, treatment, storage or disposal of Low Level Waste or other
Nuclear Materials, other than any liabilities or obligations which have been
expressly assumed by Buyer under Sections 2.3 or 6.13, provided Sellers will not
have any liability for similar matters arising on or after the Closing Date;
(e) Any fines or penalties (including investigatory or similar costs)
imposed by a Governmental Authority with respect to the NMP-2 Assets resulting
from (i) an investigation, proceeding, request for information or inspection
before or by a Governmental Authority prior to the Closing Date, or (ii)
criminal acts, willful misconduct or gross negligence of Sellers;
(f) Subject to Section 3.5, any payment obligations of Sellers for
goods delivered or services rendered prior to the Closing Date, including, but
not limited to, rental or lease payments due and owing prior to the Closing Date
pursuant to the Real Property Agreements and any leases relating to Tangible
Personal Property;
(g) Any liability or obligation under or related to Environmental
Laws or the common law, whether such liability or obligation is known or
unknown, contingent or accrued (whether or not arising or made manifest before
the Closing Date or on or after the Closing Date), arising as a result of, in
connection with or allegedly caused by the disposal, storage, transportation,
discharge, Release, or recycling of Hazardous Substances off-Site, or the
arrangement for such activities, in connection with the ownership or operation
of the NMP-2 Assets prior to the Closing Date, except that for the purpose of
Sections 2.3 and 2.4, "off-Site" does not include any location adjoining the
Site to which Hazardous Substances disposed of or Released at the Site have
migrated;
(h) Third party liability for toxic torts arising as a result of or
in connection with loss of life or injury to persons prior to the Closing Date
(whether or not such loss or injury was made manifest on or after the Closing
Date) caused (or allegedly caused) by the presence or Release of Hazardous
Substances at, on, in, under, adjacent to or migrating from the NMP-2 Assets
prior to the Closing Date, provided Sellers will not have any liability for
similar actions by Buyer on or after the Closing Date;
(i) Any liabilities or obligations relating to Sellers' operations
on, or usage of, the Easements or Sellers' equipment within the Easements,
including, without limitation, liabilities or obligations arising as a result of
or in connection with (1) any violation or alleged
-23-
violation of Environmental Law and (2) loss of life, injury to persons or
property or damage to natural resources, but only to the extent caused by any
Seller;
(j) Other than as provided for in Sections 2.3(a) and (d), any
liabilities or obligations relating to the employment or termination of
employment, including personal injury, discrimination, harassment, retaliation,
wrongful discharge, unfair labor practices, or constructive termination of any
individual, or any similar claim or cause of action attributable to any actions
or inactions by NMPC prior to the Closing Date, provided Sellers will not have
any liability for similar actions or inactions by Buyer on or after the Closing
Date;
(k) Subject to Section 6.10, any liabilities or obligations relating
to any Benefit Plan maintained by NMPC or any other benefit described in Section
4.12(a), or any employee benefit plan as defined in Section 3(3) of ERISA and
maintained by any trade or business (whether or not incorporated) which is or
ever has been under common control, or which is or ever has been treated as a
single employer, with NMPC under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which NMPC or any ERISA Affiliate contributed (the
---------------
"ERISA Affiliate Plans"), including any multi-employer plan contributed to at
---------------------
any time by NMPC or any ERISA Affiliate, or any multi-employer plan to which
NMPC or ERISA Affiliate is or was obligated at any time to contribute, including
but not limited to, any such liability (i) relating to the PBGC under Title IV
of ERISA; (ii) relating to a multi-employer plan; (iii) with respect to non-
compliance with the notice and benefit continuation requirements of COBRA; (iv)
with respect to any noncompliance with ERISA or any other applicable laws; or
(v) with respect to any suit, proceeding or claim which is brought against
Buyer, any Benefit Plan, ERISA Affiliate Plan, or any fiduciary or former
fiduciary of any such Benefit Plan or ERISA Affiliate Plan;
(l) With respect to the Union and Non-Union Employees and subject to
Sections 2.3(a), 2.3(d) and 6.10, any liabilities or obligations relating to
the employment or services or termination of employment or services, including
personal injury, discrimination, harassment, retaliation, constructive
termination, wrongful discharge, unfair labor practices, or any similar claim or
cause of action attributable to any actions or inactions by NMPC that are filed
with or pending before any court, administrative agency or arbitrator prior to
the Closing Date, provided Seller will not have any liability for similar
actions by Buyer on or after the Closing Date;
(m) Any liabilities relating to the New York State Energy Research
and Development Authority Pollution Control Bonds (collectively, as listed on
Schedule 2.4(m), the "Pollution Control Bonds") and any agreements relating
-----------------------
thereto, other than those arising out of the breach by Buyer of the covenants
contained in Section 6.8(e) hereof; and
(n) Subject to Section 6.18, any liabilities or obligations of
Sellers relating to or arising from the Operating Agreements prior to the
Closing Date.
2.5. Control of Litigation. The Parties agree and acknowledge that Sellers
---------------------
shall be entitled exclusively to control, defend and settle any litigation,
administrative or regulatory proceeding, and any investigation or other
activities arising out of or related to any Excluded Liabilities and Buyer
agrees to cooperate with Sellers in connection therewith.
-24-
ARTICLE III
THE CLOSING
-----------
3.1. Closing. Upon the terms and subject to the satisfaction of the
-------
conditions contained in Article VII of this Agreement and subject to Section
10.12, the sale, assignment, conveyance, transfer and delivery of the Purchased
Interests to Buyer, the payment of the Purchase Price to Sellers, and the
consummation of the other respective obligations of the Parties contemplated by
this Agreement shall take place at a closing (the "Closing"), to be held,
-------
simultaneously with the closing of the transactions contemplated by the NMP-1
Asset Purchase Agreement at the offices of Xxxxxxxx & Xxxxxxxx in New York City,
at 10:00 am. local time, or another mutually acceptable time and location, on
the date that is twenty (20) Business Days following the date on which the last
of the conditions precedent to Closing set forth in Article VII of this
Agreement have been either satisfied or waived by the Party for whose benefit
such conditions precedent exist, but in any event not after the Termination
Date, unless the Parties mutually agree on another date. For the sole purpose of
planning the Closing Date, the matters contemplated by Section 7.1(g), (h), (i),
(j), (l), (m), (n), (o) and (p), and Section 7.2(h), (i), (j), (k), (l), (m) and
(n) shall be assumed to have been satisfied; provided, however, that the actual
satisfaction of such provisions shall in all cases be considered to be a
condition to Closing. The date of Closing is hereinafter called the "Closing
-------
Date." The Closing shall be effective for all purposes as of 12:01 a.m. on the
----
Closing Date.
3.2. Payment of Purchase Price. Upon the terms and subject to the
-------------------------
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Interests, Buyer will pay or cause to be paid to Sellers at the
Closing in consideration of the Purchased Interests the Purchase Price plus or
minus any adjustments to such Purchase Price pursuant to the provisions of this
Agreement, one-half of which shall be paid by wire transfer of immediately
available funds denominated in U.S. dollars or by such other means as are agreed
upon by Sellers and Buyer and one-half of which shall be paid by a Note, in
substantially the form of Exhibit I. The Purchase Price shall be payable to
each Seller as determined by Sellers.
3.3. Adjustment to Purchase Price. (a) Subject to Section 3.3(b), at the
----------------------------
Closing, the Purchase Price shall be adjusted, without duplication, to account
for the items set forth in this Section 3.3(a):
(i) The Purchase Price shall be adjusted to account for the items
prorated as of the Closing Date pursuant to Section 3.5.
(ii) Each full-time regular Transferred Employee, up to 1,337 in
number, will be allocated to NMP-1 and NMP-2. As part of this allocation,
employees will be allocated 45% to NMP-1 and 55% to NMP-2. For each full-
time Transferred Employee allocated to NMP-2 below 675 and above 600, the
Purchase Price will be increased by $25,000.
(iii) The Purchase Price shall be increased by 82% of the amount
expended by Sellers between the date hereof and the Closing Date for
capital additions to or
-25-
replacements of property, plant and equipment included in the NMP-2 Assets
and other expenditures or repairs on property, plant and equipment included
in the NMP-2 Assets that are capitalized by Sellers in accordance with
their normal accounting policies, provided, that (A) such expenditures are
not required (1) for the customary operation and maintenance of NMP-2, (2)
to replace equipment which has failed for any other reason, or (3) to
comply with applicable laws, rules and regulations and (B) Buyer has
specifically requested or approved such expenditures in writing ("Capital
-------
Expenditures"). Nothing in this paragraph should be construed to limit
------------
Sellers' rights and obligations to make all capital expenditures necessary
to comply with NRC licenses and other Permits.
(iv) The Purchase Price shall be decreased or increased, as the case
may be, by 15.49 cents for every dollar that Sellers' Nonqualified
Decommissioning Fund assets transferred to Buyer exceed, or are less than,
the Nonqualified Target. In addition, if the Closing Date occurs after July
1, 2001, the Purchase Price shall be increased by one dollar for every
dollar that the Sellers' Nonqualified Decommissioning Fund exceeds the
Nonqualified Target, but only to the extent such excess result from a
contribution required by federal Income Tax law or the terms of the trust
agreement applicable to such fund to be made to the Sellers' Nonqualified
Decommissioning Fund by any Seller after the date hereof.
(v) Each Seller's share of the Purchase Price shall be adjusted
from time to time following the Closing Date by the payment under the
Revenue Sharing Agreement, if any, to each Seller as required under the
Revenue Sharing Agreement.
(vi) The Purchase Price shall be adjusted, if applicable, as
provided in Section 7.1(q).
(vii) If the cost to dispose of the Low Level Waste at the Facilities
as of the Closing Date is greater than $250,000, based on the disposal
criteria set forth in Schedule 3.3(a)(vii), the Purchase Price shall be
adjusted downward by $0.82 for every dollar that such Low Level Waste
disposal is greater than $250,000. Conversely, if the cost to dispose of
the Low Level Waste at the Facilities as of the Closing Date is less than
$250,000, the Purchase Price shall be adjusted upward by $0.82 for every
dollar that such Low Level Waste disposal is less than $250,000.
(viii) The Purchase Price shall be increased by the amount of eight
million two hundred thousand dollars ($8,200,000) per year for each year
(the "Contingent Payment") after 2034 (which amount shall increase by 3.5%
for each year following the first year) that Buyer has failed to receive
terminations of all Part 50 licenses from the NRC with respect to NMP-2.
Payment of the additional Purchase Price, if any, shall be made by Buyer to
Sellers within thirty (30) days following the close of each calendar year
in which a Contingent Payment under this Section 3.3(a)(viii) is required.
This Section 3.3(a)(viii) will be operative only upon the receipt of a
private letter ruling issued by the Internal Revenue Service (the "IRS") to
each Seller, which provides, in a form acceptable to each Seller, that the
amounts payable, if any, under this Section 3.3(a)(viii) will both: (I) not
be included in determining the taxable income for the taxable year of any
Seller until the Contingent Payment is fixed by the failure of Buyer to
Decommission
-26-
NMP-2 after 2034; and (II) not adversely affect Sellers' Federal income tax
consequences as contemplated in Section 6.12(b)(i) and Section 6.12(b)(ii).
Notwithstanding the preceding sentence, if the IRS refuses, or otherwise
fails, to issue the ruling contemplated under Section 3.3(a)(viii)(I)
above, this Section 3.3(a)(viii) nevertheless will be operative provided
that Sellers receive an opinion (or opinions as determined by each Seller)
of counsel, acceptable to each Seller, with respect to Section
3.3(a)(viii)(I), and the IRS issues the rulings that Sellers are entitled
to the Federal income tax consequences as contemplated in Section
6.12(b)(i) and Section 6.12(b)(ii). Neither the receipt of the rulings nor
any opinion of counsel contemplated by this Section 3.3(a)(viii) is
required as a condition to be fulfilled under this Agreement at or prior to
the Closing Date.
(ix) The Purchase Price shall be decreased by one dollar for every
dollar that Sellers' Qualified Decommissioning Fund assets transferred to
Buyer are less than the Qualified Target. In addition, if the Closing Date
occurs after July 1, 2001, the Purchase Price shall be increased by one
dollar for every dollar that the Sellers' Qualified Decommissioning Fund
exceeds the Qualified Target, but only to the extent such excess results
from a contribution required by federal Income Tax law or the terms of the
trust agreement applicable to such fund to be made to the Sellers'
Qualified Decommissioning Fund by any Seller after the date hereof.
(x) The Purchase Price shall be increased by $0.82 for every dollar
spent by any Seller for uranium, enrichment or fabrication after July 1,
2001 in connection with NMP-2 Reload No. 8.
(b) No less than ten (10) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth Sellers' best estimate of
---------------------------
all estimated adjustments to the Purchase Price required by Section 3.3(a)
(other than subsections 3.3(a)(v) and 3.3(a)(viii)) (the "Estimated
---------
Adjustment"). Within ten(10) calendar days after the delivery of the Estimated
----------
Closing Statement by Sellers to Buyer, Buyer may object in good faith to the
Estimated Adjustment in writing. If Buyer objects to the Estimated Adjustment,
the Parties shall attempt to resolve their differences by negotiation. If the
Parties are unable to do so prior to the Closing Date (or if Buyer does not
object to the Estimated Adjustment), the Purchase Price shall be adjusted (the
"Closing Adjustment") for the Closing by the amount of the Estimated Adjustment
------------------
not in dispute. The disputed portion shall be resolved in accordance with the
provisions of Section 3.3(c) and paid as part of any Post-Closing Adjustment to
the extent required by Section 3.3(c).
(c) Within sixty (60) days after the Closing Date, Sellers shall
prepare and deliver to Buyer a final closing statement (the "Post-Closing
------------
Statement") that shall set forth all adjustments to the Purchase Price required
---------
by Section 3.3(a) (other than subsections 3.3(a)(v) and 3.3(a)(viii)) (the
"Proposed Post-Closing Adjustment") and all work papers detailing such
--------------------------------
adjustments. The Post-Closing Statement shall be prepared using the same
accounting principles, policies and methods as Sellers have historically used in
connection with the calculation of the items reflected on such Post-Closing
Statement. Within thirty (30) days after the delivery of the Post-Closing
Statement by Sellers to Buyer, Buyer may object to the Proposed Post-Closing
Adjustment in writing. Sellers agree to cooperate with Buyer to provide Buyer
-27-
with the information used to prepare the Post-Closing Statement and information
relating thereto. If Buyer objects to the Proposed Post-Closing Adjustment, the
Parties shall attempt to resolve such dispute by negotiation. If the Parties are
unable to resolve such dispute within thirty (30) days after any objection by
Buyer, the Parties shall appoint the Independent Accounting Firm, which shall,
at Sellers' and Buyer's joint expense, review the Proposed Post-Closing
Adjustment and determine the appropriate adjustment to the Purchase Price, if
any, within thirty (30) days after such appointment. The Parties agree to
cooperate with the Independent Accounting Firm and provide it with such
information as it reasonably requests to enable it to make such determination.
The finding of such Independent Accounting Firm shall be binding on the Parties
hereto. Upon determination of the appropriate adjustment (the "Post-Closing
------------
Adjustment") by agreement of the Parties or by binding determination of the
----------
Independent Accounting Firm, the Party owing the difference shall deliver such
amount to the other Party no later than two (2) Business Days after such
determination, in immediately available funds or in any other manner as
reasonably requested by the payee.
3.4. Allocation of Purchase Price. At least ten (10) Business Days prior
----------------------------
to the Closing Date, Buyer and Sellers shall agree upon an allocation among the
NMP-2 Assets of the sum of the Purchase Price and the Assumed Liabilities and
Obligations, which will be memorialized on Schedule 3.4; provided, however, the
-------- -------
parties shall allocate a portion of the Purchase Price equal to the Fuel Market
Value to the purchase of each KgU of fuel held in inventory or loaded into the
Unit. The agreed allocation shall be used by the parties for all purposes except
as otherwise required by Section 1060 of the Code.
3.5. Prorations. (a) Buyer and Sellers agree that all of the items
----------
normally prorated, including those listed below (but not including Income
Taxes), relating to the business and operation of the NMP-2 Assets shall be
prorated as of the Closing Date, with Sellers liable to the extent of their
respective Proportionate Ownership and to the extent such items relate to any
time period prior to the Closing Date, and Buyer liable to the extent of the
aggregate of Sellers' Proportionate Ownership and to the extent such items
relate to periods commencing with the Closing Date (measured in the same units
used to compute the item in question, otherwise measured by calendar days):
(i) Personal property, real estate and occupancy Taxes, assessments
and other charges, if any, on or with respect to the business and operation
of the NMP-2 Assets;
(ii) Rent, Taxes and all other items (including prepaid services or
goods not included in Inventory) payable by or to Sellers under any of
Sellers' Agreements or the Non-material Contracts;
(iii) Any permit, license, registration, compliance assurance fees or
other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone, electricity and
other utilities; and
(v) Rent and Taxes and other items payable by Sellers under the
Real Property Agreements assigned to Buyer.
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(b) In connection with the prorations referred to in (a) above, in
the event that actual figures are not available at the Closing Date, the
proration shall be based upon the actual Taxes or other amounts accrued through
the Closing Date or paid for the most recent year (or other appropriate period)
for which actual Taxes or other amounts paid are available. Such prorated Taxes
or other amounts shall be re-prorated and paid to the appropriate Party within
sixty (60) days of the date that the previously unavailable actual figures
become available. The prorations shall be based on the number of days in a year
or other appropriate period (i) before the Closing Date and (ii) including and
after the Closing Date. Sellers and Buyer agree to furnish each other with such
documents and other records as may be reasonably requested in order to confirm
all adjustment and proration calculations made pursuant to this Section 3.5.
3.6. Deliveries by Sellers. At the Closing (or, in the case of those items
---------------------
contemplated by paragraph (j) below, at the Facilities on or before the Closing
Date), each Seller will deliver, or cause to be delivered, the following to
Buyer:
(a) The Xxxx of Sale, duly executed by such Seller;
(b) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Sellers with respect to the transfer
of the Purchased Interests, or the consummation of the transactions contemplated
by this Agreement;
(c) The opinions of counsel and officer's certificates of such
Seller contemplated by Section 7.1;
(d) Bargain and sale deeds with covenant provided for by Section 13
of the Lien Law of the State of New York, conveying the Real Property to Buyer,
in substantially the forms of Exhibit F hereto, duly executed and acknowledged
by such Seller in recordable form, and any owner's affidavits or similar
documents reasonably required by the title company;
(e) All Ancillary Agreements, duly executed by any or all Sellers,
as appropriate;
(f) Copies, certified by the Secretary or Assistant Secretary of
such Seller, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by such Seller in connection herewith, and the consummation of the
transactions contemplated hereby;
(g) A certificate of the Secretary or Assistant Secretary of such
Seller identifying the name and title and bearing the signatures of the officers
of such Seller authorized to execute and deliver this Agreement and the other
agreements and instruments contemplated hereby;
(h) Certificates of good standing with respect to such Seller,
issued by the Secretary of the State of such Seller's state of incorporation;
(i) To the extent available, tax clearance certificates or Tax
status certificates dated no more than thirty (30) days prior to the Closing for
each jurisdiction identified on Schedule 4.20;
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(j) To the extent available, originals of the Operating Agreements,
Sellers' Agreements, Non-material Contracts, Real Property Agreements and
Transferable Permits and, if not available, true and correct copies thereof, in
all cases together with notices to and, if required by the terms thereof,
consents by other Persons which are parties to the Operating Agreements, the
Sellers' Agreements, Non-material Contracts, Real Property Agreements and
Transferable Permits;
(k) The assets of the Decommissioning Funds to be transferred
pursuant to Section 6.12 shall be delivered to the Trustee of the Post-Closing
Decommissioning Trust Agreement;
(l) All such other instruments of assignment, transfer or conveyance
as shall, in the reasonable opinion of Buyer and its counsel, be necessary or
desirable to transfer to Buyer the Purchased Interests, in accordance with this
Agreement and where necessary or desirable in recordable form; and
(m) Such other agreements, consents, documents, instruments and
writings as are required to be delivered by Sellers at or prior to the Closing
Date pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.7. Deliveries by Buyer. At the Closing, Buyer will deliver, or cause to
-------------------
be delivered, the following to Sellers:
(a) The Purchase Price, payable pursuant to Section 3.2, as adjusted
pursuant to Section 3.3(a)(other than pursuant to subsections 3.3(a)(v) and
3.3(a)(viii));
(b) The opinions of counsel and certificates contemplated by Section
7.2;
(c) All Ancillary Agreements, duly executed by Buyer;
(d) Copies, certified by the Secretary or Assistant Secretary of
Buyer, of resolutions authorizing the execution and delivery of this Agreement,
and all of the agreements and instruments to be executed and delivered by Buyer
in connection herewith, and the consummation of the transactions contemplated
hereby;
(e) A certificate of the Secretary or Assistant Secretary of Buyer
identifying the name and title and bearing the signatures of the officers of
Buyer authorized to execute and deliver this Agreement, and the other agreements
contemplated hereby;
(f) A certificate of good standing with respect to Buyer, issued by
the Secretary of the State of Maryland;
(g) A certificate of authority of Buyer to do business in New York,
issued by the Secretary of State of New York;
(h) All such other instruments of assumption as shall, in the
reasonable opinion of Sellers and their counsel, be necessary for Buyer to
assume the Assumed Liabilities and Obligations in accordance with this
Agreement;
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(i) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the transfer of
the Purchased Interests, or the consummation of the transactions contemplated by
this Agreement; and
(j) Such other agreements, documents, instruments and writings as
are required to be delivered by Buyer at or prior to the Closing Date pursuant
to this Agreement or otherwise reasonably required in connection herewith.
3.8. Pre-Closing Breaches of Sellers' Representations and Warranties.
---------------------------------------------------------------
(a) To the extent that, prior to Closing, it is determined that, if
the qualification of materiality or Material Adverse Effect were deleted from
the Sellers' representations and warranties which do not survive the Closing
under Section 10.3(a), there would be any individual breach of any of the
Sellers' representations or warranties which do not survive the Closing under
Section 10.3(a) which would be reasonably likely to result in any claims,
demands, suits, losses, liabilities, damages, obligations, payments, costs and
expenses (including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, assessments, judgments, settlements and compromises
relating thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the Buyer (after taking into account the percentage
interest the Buyer is acquiring in the Facilities) ("Damages") of $3,000,000 or
more (a "Pre-Closing Breach"), then, to the extent that the aggregate amount of
the Damages of all Pre-Closing Breaches exceeds $10,000,000, the Sellers shall
hold the Buyer harmless from such Damages in excess of $10,000,000 by taking, at
their option, either or both of the following actions: (i) cure the breach
before the Closing, provided that the Closing shall not be delayed to effect any
cure; or (ii) adjust the Purchase Price prior to the Closing by an amount agreed
to by the Parties.
(b) To the extent the exact amount of the Damages of the Pre-Closing
Breach cannot reasonably be agreed upon by the Parties prior to the Closing, and
neither option (i) nor (ii) above is implemented, within 10 days after such Pre-
Closing Breach is brought by another Party to the attention of the other
Parties, such dispute (the "Dispute") may be submitted by any Party to, and if
so submitted shall be finally settled by, arbitration ("Arbitration") in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "Rules"), but any such Arbitration would have the following
characteristics: (i) there would be one arbitrator (the "Arbitrator"), selected
by the Parties acting in good faith, which Arbitrator must be a person with
substantial experience and knowledge relating to nuclear power plants; (ii) if
the Parties cannot agree on the identity of the Arbitrator by the end of the
above-described 10 day period, such person shall be appointed in accordance with
the Rules; (iii) the Arbitrator must enter a decision that the amount of Damages
is either the amount proposed by the Buyer or the amount proposed by the
Sellers, and no other amount, and, if such decision is entered prior to the
Closing, the Purchase Price otherwise payable at the Closing under this
Agreement shall be reduced by the amount of Damages (the "Damage Amount") so
decided; (iv) the Arbitrator must make his decision no earlier than 15 and no
later than 30 days after the date on which he is appointed as Arbitrator; (v) if
the Parties can agree amongst themselves on the amount of the Damages which are
the subject of the Dispute before the 15/th/ day after which the Arbitrator is
appointed, such agreement shall control and the Arbitration shall be terminated
without result; (vi) all costs of such Arbitration, including the compensation
of the Arbitrator (but not including
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the Parties' attorneys', accountants' and other professionals' fees, as to which
each Party shall pay its own), shall be split evenly between the Buyer, on the
one hand, and the Sellers, on the other hand; (vii) the Arbitration would take
place in Onondaga County, New York; and (viii) the decision of the Arbitrator
shall be final and binding upon the Parties. In no event shall any actions taken
pursuant to this subsection (b) delay the Closing.
(c) No Dispute or Arbitration shall delay the Closing, and if any
Dispute or Arbitration is ongoing at the time the Closing is otherwise able to
occur under this Agreement, the Closing shall proceed and the process described
in Section 3.8(b) shall continue past the Closing Date. In such case, the
Damage Amount as determined by the Arbitrator after the Closing shall be
recoverable by the Buyer against the Sellers; and the Sellers shall pay the
Damage Amount to the Buyer within seven days after the date of the Arbitrator's
decision. If the Sellers do not fully make such payment by the end of such seven
day period, the Buyer may proceed in one of the following ways, or a combination
thereof, at the Buyer's sole election: (i) setting off the Damage Amount against
any amount(s) otherwise owing from the Buyer to the Sellers under this
Agreement, and (ii) causing the entering of a judgment against the Sellers
severally in a court of competent jurisdiction consistent with Section 10.6
hereof with respect to, and to enforce the decision of, the Arbitrator
hereunder.
(d) The Parties specifically agree that the threshold of $3,000,000
does not constitute materiality or a Material Adverse Effect under this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Each Seller, severally as to matters involving such Seller only, and in
accordance with its Proportionate Ownership as to all other representations and
warranties, hereby represents and warrants to Buyer as follows (all such
representations and warranties other than those in Sections 4.1, 4.2, 4.3, 4.12,
4.19, 4.20, 4.21 and 4.22, being made to the Knowledge of each Seller):
4.1. Organization. Each Seller is a corporation duly organized, validly
------------
existing and in good standing under the laws of its jurisdiction of
incorporation 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.
4.2. Authority Relative to this Agreement. Each Seller has full corporate
------------------------------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action required on the part of
each Seller and no other corporate proceedings on the part of such Seller are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each Seller, and assuming that this Agreement constitutes a valid
and binding agreement of Buyer and subject to the receipt of Sellers' Required
Regulatory Approvals, constitutes the legal, valid and
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binding agreement of such Seller, enforceable against such Seller in accordance
with its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting or relating to the enforcement of creditors rights
generally or general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
4.3. Consents and Approvals; No Violation. (a) Except as set forth in
------------------------------------
Schedule 4.3(a), and subject to the receipt of Sellers' Required Regulatory
Approvals, neither the execution and delivery of this Agreement by each Seller
nor the consummation of the transactions contemplated hereby will (i) conflict
with or result in the breach or violation of any provision of the Certificate or
Articles of Incorporation or Bylaws of such Seller; (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 or other instrument or obligation to which such Seller is a
party or by which such Seller, or any of the NMP-2 Assets, may be bound, except
for such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which would not,
individually or in the aggregate, create a Material Adverse Effect; or (iii)
constitute violations of any order, writ, injunction, decree, statute, rule or
regulation applicable to such Seller, or any of its assets, which violation,
individually or in the aggregate, would create a Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b) (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Sellers' Required Regulatory Approvals"), no declaration, filing or
--------------------------------------
registration with, or notice to, or authorization, consent or approval of any
Governmental Authority is necessary for the execution and delivery of this
Agreement or the consummation by each Seller of the transactions contemplated
hereby, other than (i) such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not obtained or made, will not,
individually or in the aggregate, create a Material Adverse Effect or (ii) such
declarations, filings, registrations, notices, authorizations, consents or
approvals which become applicable to such Seller as a result of the specific
regulatory status of Buyer (or any of its Affiliates) or the result of any other
facts that specifically relate to the business or activities in which Buyer (or
any of its Affiliates) is or proposes to be engaged.
4.4. Reports. Since January 1, 1997, each Seller has filed or caused to be
-------
filed with the SEC, the applicable state or local utility commissions or
regulatory bodies, the NRC and the FERC, as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the NMP-2
Assets or the operation thereof under each of the Securities Act, the Exchange
Act, the applicable state public utility laws, the Federal Power Act, the
Holding Company Act, the Atomic Energy Act, the Energy Reorganization Act, and
the Xxxxx-Xxxxxxxx Act and the respective rules and regulations thereunder, all
of which complied in all material respects with all applicable requirements of
the appropriate act and the rules and regulations thereunder in effect on the
date each such report was filed, and there are no material misstatements or
omissions relating to the NMP-2 Assets in any such report; provided, however,
-------- -------
that no Seller shall be deemed to be making any representation or warranty to
Buyer hereunder concerning the financial statements of such Seller or any
Affiliate of such Seller contained in any such reports.
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4.5. Undisclosed Liabilities. Except as set forth in Schedule 4.5, the
-----------------------
NMP-2 Assets are not subject to any material liability or obligation (whether
absolute, accrued, contingent or otherwise) that has not been accrued or
reserved against in each Seller's financial statements as of the end of the most
recent fiscal quarter for which such statements are available or disclosed in
the notes thereto in accordance with generally accepted accounting principles
consistently applied.
4.6. Absence of Certain Changes or Events. Since January 1, 2000, except
------------------------------------
as set forth in Schedule 4.6 or Schedule 4.15(a)(i), there has not been: (a) any
Material Adverse Effect; (b) any damage, destruction or casualty loss, whether
or not covered by insurance, which, individually or in the aggregate, created a
Material Adverse Effect or (c) any agreement, commitment or transaction entered
into by any Seller that is material to the ownership or operation of the NMP-2
Assets and NMP-1, taken as a whole, and remains in full force and effect on the
date hereof.
4.7. Title and Related Matters. Each Seller holds title, insurable at
-------------------------
regular rates by a nationally recognized title insurance company, to its tenant-
in-common interest (as set forth on Schedule 4.7(b) hereto) in the Real Property
to be conveyed by it hereunder free and clear of all Encumbrances, other than
the Permitted Encumbrances; provided, however, that Sellers make no
-------- -------
representation or warranty with respect to title to groundwater. The Real
Property constitutes all of the real property necessary to operate the
Facilities as currently operated. Except for Permitted Encumbrances, each
Seller has good and valid title to its tenant-in-common interest (in the
percentages set forth on Schedule 4.7(b) hereto) in the NMP-2 Assets not
constituting Real Property free and clear of all Encumbrances. Except as set
forth on Schedule 4.7(b), each Seller owns a tenant-in-common interest in the
NMP-2 Assets in a percentage equal to its Proportionate Ownership.
4.8. Real Property Agreements. Schedule 4.8 lists, as of the date of this
------------------------
Agreement, all real property leases, easements, licenses and other rights in
real property (collectively, the "Real Property Agreements") to which any Seller
------------------------
is a party (directly or as a successor or assignee) and which (i) are to be
transferred and assigned to Buyer on the Closing Date, (ii) affect all or any
part of any Real Property and (iii) provide for annual payments of more than
$100,000. Except as set forth in Schedule 4.8, all such Real Property
Agreements are valid, binding and enforceable in accordance with their terms,
and are in full force and effect, and may be transferred or assigned to Buyer at
the Closing without the consent or approval of the other parties thereto; there
are no existing material defaults by Sellers or any other party thereunder; and
no event has occurred which (whether with or without notice, lapse of time or
both) would constitute a material default by Sellers or any other party
thereunder.
4.9. Insurance. Except as set forth in Schedule 4.9, all material policies
---------
of fire, liability, worker's compensation and other forms of insurance owned or
held by Sellers and insuring the NMP-2 Assets are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
as of which this representation is being made have been paid (other than
retroactive premiums which may be payable with respect to comprehensive general
liability and worker's compensation insurance policies), and no notice of
cancellation or termination has been received with respect to any such policy
which was not replaced on substantially similar terms prior to the date of such
cancellation. Except as described
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in Schedule 4.9, as of the date of this Agreement, Sellers have not been refused
any insurance with respect to the NMP-2 Assets nor has their coverage been
limited by any insurance carrier to which they have applied for any such
insurance or with which they have carried insurance during the last twelve
months.
4.10. Environmental Matters. With respect to the NMP-2 Assets and the
---------------------
ownership or operation thereof by Sellers, except as disclosed in Schedule 4.10:
(a) Sellers have obtained and hold all material Environmental
Permits necessary to the operation of the NMP-2 Assets as presently conducted;
(b) Sellers are in compliance in all material respects with all
terms, conditions and provisions of (i) all applicable Environmental Laws and
(ii) all material Environmental Permits;
(c) there are no Environmental Claims against Sellers with respect
to the NMP-2 Assets, and Sellers are not aware of any facts or circumstances
which are reasonably likely to form the basis for any material Environmental
Claim against Sellers with respect to the NMP-2 Assets;
(d) no Releases of Hazardous Substances have occurred at, from, on,
or under the Site and no Hazardous Substances are present on or migrating from
the Site that are reasonably likely to give rise to a material Environmental
Claim against Sellers;
(e) Sellers have not transported or arranged for the treatment,
storage, handling, disposal, or transportation of any Hazardous Substance from
the Site to any off-Site location which is an Environmental Clean-up Site;
(f) the Site is not an Environmental Clean-up Site;
(g) there are no Liens arising under or pursuant to any
Environmental Law with respect to the NMP-2 Assets and there are no facts,
circumstances, or conditions that are reasonably likely to be expected to
restrict, encumber, or result in the imposition of special conditions under any
Environmental Law with respect to the ownership, occupancy, development, use, or
transferability of the NMP-2 Assets, except those facts, circumstances or
conditions relating to the status of the NMP-2 Assets as a nuclear facility;
(h) there are no (i) underground storage tanks, active or abandoned
or (ii) polychlorinated-biphenyl-containing equipment;
(i) there have been no environmental audits or assessments conducted
since January 1997 by, on behalf of, or which are in the possession of Sellers
which have not been made available to Buyer prior to execution of this
Agreement; and
(j) there have been no claims by Sellers against comprehensive
general liability and excess insurance carriers for any Loss resulting from,
relating to or arising from Environmental Claims with respect to the NMP-2
Assets.
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The representations and warranties made by Sellers in this Section 4.10 are the
exclusive representations and warranties made to Buyer relating to environmental
matters.
4.11. Labor Matters. NMPC will make available to Buyer true, correct and
-------------
complete copies of the IBEW Collective Bargaining Agreement, which, except as
set forth in Schedule 4.11, is the only agreement with unionized workers to
which Sellers are a party or are subject and which relate to the NMP-2 Assets.
No Seller other than NMPC is a party to a collective bargaining agreement which
relates to the NMP-2 Assets. With respect to the ownership or operation of the
NMP-2 Assets, except to the extent set forth in Schedule 4.11 and except for
such matters as will not, individually or in the aggregate, create a Material
Adverse Effect: (a) NMPC is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (b) NMPC has not received notice
of any unfair labor practice complaint pending before the National Labor
Relations Board, (c) there is no labor strike, slowdown or stoppage actually
pending or threatened by any authorized representative of any union or other
representative of employees against or affecting NMPC; (d) NMPC has not received
notice that any representation petition respecting the employees of NMPC has
been filed with the National Labor Relations Board; (e) no arbitration
proceeding arising out of or under the IBEW Collective Bargaining Agreement is
pending against NMPC; and (f) NMPC has not experienced any primary work stoppage
in the past five years at the Purchased Interests.
4.12. ERISA; Benefit Plans.
--------------------
(a) Schedule 4.12(a) lists all deferred compensation, profit-
sharing, retirement and pension plans, including multi-employer plans (of which
none exist), and all material bonus and other employee benefit or fringe benefit
plans, including multi-employer plans (of which none exist), maintained or with
respect to which contributions are made by NMPC in respect to current non-
officer employees employed at the NMP-2 Assets ("Benefit Plans"). True, correct,
-------------
and complete copies of all such Benefit Plans have been made available to Buyer.
Information about benefits provided to officers of NMPC employed at the NMP-2
Assets, and to such other key NMPC employees employed at the NMP-2 Assets as are
agreed to by NMPC and Buyer, shall be disclosed in such manner as NMPC and Buyer
mutually agree.
(b) Except as set forth in Schedule 4.12(b), NMPC and the ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
requirements of Section 302 of ERISA and Section 412 of the Code with respect to
each Benefit Plan which is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA and to which Section 302 of ERISA applies. To NMPC's
Knowledge, except as set forth in Schedule 4.12(b), neither NMPC nor any ERISA
Affiliate has incurred any liability under Sections 4062(b), 4063 or 4064 of
ERISA to the PBGC in connection with any Benefit Plan which is subject to Title
IV of ERISA, nor any withdrawal liability to any multi-employer pension plan
under Section 4201 et. seq. of ERISA or to any multi-employer welfare benefit
plan. There is no reportable event (as defined in Section 4043 of ERISA) with
respect to any Benefit Plan that is required to be reported to the PBGC except
as set forth in Schedule 4.12(b). Except as set forth in Schedule 4.12(b), the
IRS has issued a letter for each Benefit Plan which is intended to be qualified
determining that such plan is exempt from United States Federal Income Tax under
Section 401(a) of the Code, and there has been no material occurrence since the
date of any such
-36-
determination letter (including but not limited to statutory or regulatory
changes to the requirements of Section 401(a) of the Code for which the remedial
amendment period has expired) which has adversely affected such qualification.
(c) Neither NMPC nor any ERISA Affiliate or parent or successor
corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction which may be disregarded under Section 4069 or Section 4212(c) of
ERISA. No Benefit Plan or ERISA Affiliate Plan is a multi-employer plan.
4.13. Real Property; Plant and Equipment.
----------------------------------
(a) Schedule 4.13(a) contains a legal description of, and exhibits
indicating the location of, the Real Property included in the NMP-2 Assets in
which Sellers have tenant-in-common interests. All Encumbrances on the Real
Property (other than Permitted Encumbrances) shall be released on or before the
Closing Date. Complete and correct copies of any current surveys in Sellers'
possession and any policies of title insurance currently in force and in the
possession of Sellers with respect to the Real Property have heretofore been
delivered by Sellers to Buyer.
(b) Schedule 4.13(b) contains a description of the major equipment
components and personal property comprising the NMP-2 Assets and all such
equipment and property has been maintained in accordance with Good Utility
Practices.
(c) Except for the exceptions listed in Schedule 4.13(c), the NMP-2
Assets conform in all material respects to the NRC license and the Final Safety
Analysis Report (FSAR) and are being operated in all material respects in
conformance with all material applicable requirements under the Atomic Energy
Act, the Energy Reorganization Act, and the rules, regulations, orders, and
licenses issued thereunder. The NMP-2 Assets constitute all of the real property
and tangible assets necessary to operate the Facilities in substantially the
same manner as they have been operated to date.
4.14. Condemnation. Except as set forth in Schedule 4.14, neither the
------------
whole nor any part of the Real Property or any other real property or rights
leased, used or occupied by Sellers in connection with the ownership or
operation of the NMP-2 Assets is subject to any pending suit for condemnation or
other taking by any Governmental Authority, and no such condemnation or other
taking has been threatened.
4.15. Certain Contracts and Arrangements.
----------------------------------
(a) Except for Sellers' interests in and rights under (i) those
contracts, agreements, licenses and leases relating to the ownership, operation
and maintenance of the NMP-2 Assets that are being assigned to Buyer as part of
the Purchased Interests, which are listed in Schedule 4.15(a)(i) or the other
schedules to this Agreement or are referenced in Section 4.12(a), (ii) those
contracts, agreements, commitments and understandings of Sellers relating to the
procurement or fabrication of nuclear fuel, a complete list of which is included
on Schedule 4.15(a)(ii) ("Fuel Contracts"), (iii) contracts, agreements,
--------------
personal property leases, commitments, understandings or instruments in which
all obligations of Sellers will expire prior
-37-
to the Closing Date, (iv) Non-Material Contracts and (v) the Ancillary
Agreements, no Seller is a party to any written contract, agreement, personal
property lease, commitment, understanding or instrument which is material to the
ownership or operation of the NMP-2 Assets or provides for the sale of any
amount of ancillary services, capacity or energy from any of the NMP-2 Assets
(whether or not entered into in the ordinary course of business).
(b) Except as disclosed in Schedule 4.15(b), each Sellers' Agreement
listed on Schedule 4.15(a)(i) and each Fuel Contract (i) constitutes the legal,
valid and binding obligation of each Seller that is a party thereto, (ii) is in
full force and effect, and (iii) may be transferred or assigned to Buyer at the
Closing without consent or approval of the other parties thereto, and will
continue in full force and effect thereafter in accordance with its terms, in
each case without breaching the terms thereof or resulting in the forfeiture or
impairment of any material rights thereunder.
(c) Except as set forth in Schedule 4.15(c), there is not, under any
Sellers' Agreement listed on Schedule 4.15(a)(i) or any Fuel Contract, any
default or event which, with notice or lapse of time or both, would constitute a
default on the part of any of the parties thereto, except such events of default
and other events as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, create a Material Adverse
Effect.
4.16. Legal Proceedings, etc. Except as set forth in Schedule 4.16 or in
----------------------
any filing made by each Seller or any of its Affiliates prior to the date hereof
pursuant to the Securities Act, the Exchange Act or the Atomic Energy Act, there
are no claims, actions, proceedings or investigations pending or threatened
against or relating to such Seller before any court, Governmental Authority
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 4.16 or in any filing
made by each Seller or any of its Affiliates prior to the date hereof pursuant
to the Securities Act, the Exchange Act or the Atomic Energy Act, such Seller is
not subject to any outstanding judgment, rule, order, writ, injunction or decree
of any court or Governmental Authority which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
4.17. Permits. (a) Each Seller has all permits, licenses, franchises and
-------
other governmental authorizations, consents and approvals, other than with
respect to permits under Environmental Laws referred to in Section 4.10 hereof
or licenses issued by the NRC referred to in Section 4.18 hereof (collectively,
"Permits"), used in, or necessary for the ownership and operation of, the NMP-2
Assets as presently conducted. Except as set forth in Schedule 4.17(a), no
Seller has received any written notification that it is in violation of any of
such Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any Governmental Authority applicable to it, except for
notifications of violations which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each Seller is in
compliance with all Permits, laws, statutes, orders, rules, regulations,
ordinances, and judgments of any Governmental Authority applicable to the NMP-2
Assets, except for violations which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
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(b) Schedule 4.17(b) sets forth all material Permits and
Environmental Permits other than Transferable Permits (which are set forth on
Schedule 1.1(173)) applicable to the NMP-2 Assets.
4.18. NRC Licenses.
------------
(a) Each Seller has all licenses, permits, and other consents and
approvals applicable to such Seller that are issued by the NRC and are necessary
to the ownership and operation of the NMP-2 Assets as presently operated,
pursuant to the requirements of all Nuclear Laws. Except as set forth in
Schedule 4.18(a), no Seller has received any written notification that it is in
violation of any of such license, or any order, rule, regulation, or decision of
the NRC with respect to the NMP-2 Assets, except for notifications of violations
which could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each Seller is in compliance with all Nuclear
Laws and all orders, rules, regulations, or decisions of NRC applicable to it
with respect to the NMP-2 Assets, except for violations which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Schedule 4.18(b) sets forth all material permits, licenses, and
other consents and approvals issued by the NRC applicable to the NMP-2 Assets.
4.19. Regulation as a Utility. Each Seller is an electric utility company
-----------------------
within the meaning of the Holding Company Act, a public utility within the
meaning of the Federal Power Act and an electric utility within the meaning of
the NRC regulations implementing the Atomic Energy Act. Except with respect to
local tax and zoning laws, no Seller is, as a result of its ownership or
operation of the NMP-2 Assets, subject to regulation as a public utility or
public service company (or similar designation) by any state of the United
States other than New York, any foreign country or any municipality or any
political subdivision of the foregoing.
4.20. Taxes. With respect to the NMP-2 Assets (i) all material Tax Returns
-----
required to be filed have been filed, and (ii) all material Taxes shown to be
due on such Tax Returns have been paid in full. Except as set forth in Schedule
4.20, to each Seller's Knowledge, no notice of deficiency or assessment has been
received from any taxing authority with respect to liabilities for Taxes of each
Seller in respect of the NMP-2 Assets, which have not been fully paid or finally
settled, and any such deficiency shown in such Schedule 4.20 to each Seller's
Knowledge is being contested in good faith through appropriate proceedings.
Except as set forth in Schedule 4.20, there are no outstanding agreements or
waivers extending the applicable statutory periods of limitation for Taxes
associated with the NMP-2 Assets for any period. Schedule 4.20 sets forth the
taxing jurisdictions in which each Seller owns assets or conducts business that
require a notification to a taxing authority of the transactions contemplated by
this Agreement, if the failure to make such notification, or obtain Tax
clearances in connection therewith, would either require Buyer to withhold any
portion of the Purchase Price or would subject Buyer to any liability for any
Taxes of any Seller.
4.21. Qualified Decommissioning Funds.
-------------------------------
(a) With respect to all periods prior to the Closing Date: (i) each
Seller's Qualified Decommissioning Fund is a trust, validly existing under the
laws of the State of New
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York with all requisite authority to conduct its affairs as it now does; (ii)
each Seller's Qualified Decommissioning Fund satisfies the requirements
necessary for such Fund to be treated as a "Nuclear Decommissioning Reserve
Fund" within the meaning of Code Section 468A(a) and as a "nuclear
Decommissioning Fund" and a "qualified nuclear Decommissioning Fund" within the
meaning of Treas. Reg. (S) 1.468A-1(b)(3); (iii) such Fund is in compliance in
all material respects with all applicable rules and regulations of the NRC, the
NYPSC and the IRS, and each Seller's Qualified Decommissioning Fund has not
engaged in any acts of "self-dealing" as defined in Treas. Reg. (S) 1.468A-
5(b)(2); (iv) no "excess contribution," as defined in Treas. Reg. (S) 1.468A-
5(c)(2)(ii), has been made to each Seller's Qualified Decommissioning Fund which
has not been withdrawn within the period provided under Treas. Reg. (S) 1.468A-
5(c)(2)(i); and (v) each Seller has made timely and valid elections to make
annual contributions to the Qualified Decommissioning Fund since 1984 and each
Seller has heretofore delivered copies of such elections to Buyer. Each Seller
has heretofore delivered to Buyer a copy of each Seller's Decommissioning Trust
Agreement as in effect on the date of this Agreement. Each Seller agrees not to
amend Seller's Decommissioning Trust Agreement between the date of this
Agreement and the Closing Date without Buyer's prior written consent, which
shall not be unreasonably withheld, except to permit the transfer referred to in
Section 6.12(a).
(b) Subject only to each Seller's Required Regulatory Approvals,
each Seller and the Trustee have, or as of Closing will have, all requisite
authority to cause the assets of the Qualified Decommissioning Fund to be
transferred to the Trustee of the Post-Closing Decommissioning Trust Agreement.
(c) With respect to all periods prior to the Closing Date, (i) each
Seller and/or the Trustee of the Qualified Decommissioning Fund has/have filed
or caused to be filed with the NRC, the IRS and any state or local authority all
material forms, statements, reports, documents (including all exhibits,
amendments and supplements thereto) required to be filed by such entities; and
(ii) there are no interim rate orders that may be retroactively adjusted or
retroactive adjustments to interim rate orders that may affect amounts that
Buyer may contribute to the Qualified Decommissioning Fund or may require
distributions to be made from the Qualified Decommissioning Fund. Each Seller
has delivered to Buyer a copy of the schedule of ruling amounts most recently
issued by the IRS for the Qualified Decommissioning Fund, a copy of the request
that was filed to obtain such schedule of ruling amounts and a copy of any
pending request for revised ruling amounts, in each case together with all
exhibits, amendments and supplements thereto. Any amounts contributed to the
Qualified Decommissioning Fund while such request is pending before the IRS and
which turn out to exceed the applicable amounts provided in the schedule of
ruling amounts issued by the IRS will be withdrawn from the Qualified
Decommissioning Fund within the period provided under Treas. Reg. (S) 1.468A-
5(c)(2)(i).
(d) Each Seller has made available to Buyer a statement of assets
and liabilities verified by the Trustee for the respective Qualified
Decommissioning Funds as of December 31, 1999 and as of the second Business Day
before Closing and they present fairly as of December 31, 1999 and as of the
second Business Day before Closing, the financial position of each respective
Qualified Decommissioning Fund. Each Seller has made available to Buyer
information from which Buyer can determine the Tax Basis of all assets in the
Qualified Decommissioning Fund as of the second Business Day before Closing.
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(e) Each Seller has made available to Buyer all contracts and
agreements to which the Trustee of the Qualified Decommissioning Fund, in its
capacity as such, is a party.
(f) With respect to all periods prior to the Closing Date, each
Seller's Qualified Decommissioning Fund has filed all Tax Returns required to be
filed, such Tax Returns are true, correct and complete in all material respects,
and all material Taxes shown to be due on such Tax Returns have been paid in
full. Except as shown in Schedule 4.21, no notice of deficiency or assessment
has been received from any taxing authority with respect to liability for Taxes
of each Seller's Qualified Decommissioning Fund which have not been fully paid
or finally settled, and any such deficiency shown in such Schedule 4.21 is being
contested in good faith through appropriate proceedings. Except as set forth in
Schedule 4.21, there are no outstanding agreements or waivers extending the
applicable statutory periods of limitations for Taxes associated with the
Qualified Decommissioning Funds for any period.
4.22. Nonqualified Decommissioning Fund.
---------------------------------
(a) With respect to all periods prior to the Closing Date, the
Nonqualified Decommissioning Fund of NMPC is a trust validly existing under the
laws of the State of New York with all requisite authority to conduct its
affairs as it now does. NMPC's Nonqualified Decommissioning Fund is in full
compliance with all applicable rules and regulations of the NRC and the NYPSC.
(b) Subject only to the Sellers' Required Regulatory Approvals, NMPC
has all requisite authority to cause the assets of the Nonqualified
Decommissioning Fund to be transferred to the Trustee of the Post-Closing
Decommissioning Trust Agreement.
(c) With respect to all periods prior to the Closing Date, NMPC and
the Trustee of the Nonqualified Decommissioning Fund have filed or caused to be
filed with the NRC and any state or local authority all material forms,
statements, reports, documents (including all exhibits, amendments and
supplements thereto) required to be filed by either of them.
(d) NMPC has made available to Buyer a statement of assets and
liabilities verified by the Trustee of its Nonqualified Decommissioning Fund as
of December 31, 1999 and as of the second Business Day before Closing, and they
present fairly as of December 31, 1999 and as of the second Business Day before
Closing, the financial position of such Nonqualified Decommissioning Fund. NMPC
has made available to Buyer information from which Buyer can determine the Tax
Basis as of the second Business Day before Closing of all assets (other than
cash) of the Nonqualified Decommissioning Fund transferred to the Trustee of the
Post-Closing Decommissioning Agreement pursuant to Section 6.12.
(e) NMPC has made available to Buyer all contracts and agreements to
which the Trustee of the Nonqualified Decommissioning Fund, in its capacity as
such, is a party.
4.23. Zoning Classification. The Real Property is not zoned.
---------------------
4.24. Operating Agreements.
--------------------
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(a) The Operating Agreements each (i) constitute the legal, valid
and binding obligation of each Seller, and constitute the legal, valid and
binding obligation of the other parties thereto, and (ii) are in full force and
effect. Other than the NRC license with respect to NMP-2, there are no
agreements or other legally binding arrangements that materially expand or
otherwise modify the rights and obligations of the Co-Tenants in respect of NMP-
2 as set out in the Operating Agreements.
(b) (i) Each Seller is in compliance in all material respects with
the terms of the Operating Agreements, (ii) no Seller is aware of any material
default or pending, threatened or actual claim under any of the Operating
Agreements, against any other Seller or any other party, and (iii) no Seller has
any claim against the other under the Operating Agreements.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
ARTICLE IV, THE NMP-2 ASSETS, WITH RESPECT TO WHICH THE PURCHASED INTERESTS ARE
BEING SOLD AND TRANSFERRED, ARE "AS IS, WHERE IS," AND SELLERS ARE NOT MAKING
ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR
IMPLIED, CONCERNING SUCH NMP-2 ASSETS (OR, AS APPLICABLE, THE PURCHASED
INTERESTS), INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
--------------------------------------------------
Each of Buyer and Parent represents and warrants with respect to itself to
Sellers as follows:
5.1. Organization; Qualification. Buyer is a limited liability company
---------------------------
duly formed, validly existing and in good standing under the laws of the State
of Maryland. Parent is a corporation duly formed, validly existing and in good
standing under the laws of the State of Maryland. Each of Buyer and Parent has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted. Buyer has
heretofore delivered to Sellers complete and correct copies of its Certificate
of Formation and operating agreement (or other similar governing documents), as
currently in effect. Buyer is, or on the Closing Date will be, qualified to
conduct business in the State of New York.
5.2. Authority Relative to this Agreement. Each of Parent and Buyer has
------------------------------------
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby or, with respect to Parent, its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby or, with respect to Parent,
its obligations hereunder have been duly and validly authorized by all necessary
corporate action required on the part of each of Parent and
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Buyer and no other corporate proceedings on the part of Parent or Buyer are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby or, with respect to Parent, its obligations hereunder. This
Agreement has been duly and validly executed and delivered by each of Parent and
Buyer, and assuming that this Agreement constitutes a valid and binding
agreement of Sellers and subject to the receipt of Buyer's Required Regulatory
Approvals, constitutes a valid and binding agreement of each of Parent and
Buyer, enforceable against each of Parent and Buyer in accordance with its
terms, except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
5.3. Consents and Approvals; No Violation.
------------------------------------
(a) Except as set forth in Schedule 5.3(a), and other than obtaining
Buyer's Required Regulatory Approvals, neither the execution and delivery of
this Agreement by Buyer or Parent nor the purchase by Buyer of the Purchased
Interests pursuant to this Agreement will (i) conflict with or result in any
breach of any provision of the Certificate of Formation or operating agreement
(or other similar governing documents) of Buyer and Parent, (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, (iii) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, agreement,
lease or other instrument or obligation to which Buyer or Parent is a party or
by which any of its assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, have a material adverse effect on the ability of Buyer or Parent to
perform its obligations hereunder ("Buyer Material Adverse Effect") or (iv)
-----------------------------
violate any law, regulation, order, judgment or decree applicable to Buyer,
which violations, individually or in the aggregate, would create a Buyer
Material Adverse Effect. Buyer has no Knowledge of any facts or circumstances
that make it reasonably likely that Buyer's Required Regulatory Approvals will
not be obtained.
(b) Except as set forth in Schedule 5.3(b) (the filings and approvals
referred to in such Schedule are collectively referred to as the "Buyer's
-------
Required Regulatory Approvals"), no declaration, filing or registration with, or
-----------------------------
notice to, or authorization, consent or approval of any Governmental Authority
is necessary for the consummation by Buyer of the transactions contemplated
hereby.
5.4. Availability of Funds. Buyer has sufficient funds available to it or
---------------------
has received binding written commitments from third parties, true and complete
copies of which it has provided to Sellers, to provide sufficient funds to pay
the Purchase Price on the Closing Date and to enable Buyer timely to perform all
of its obligations under this Agreement and Ancillary Agreements, and Buyer has
delivered to Sellers evidence of the availability of such sufficient funds.
5.5. Legal Proceeding. To the Knowledge of Buyer and Parent, there are no
----------------
actions, suits or proceedings pending against Buyer or Parent before any court,
arbitrator or Governmental Authority which, individually or in the aggregate,
could reasonably be expected to
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have a Buyer Material Adverse Effect. Neither Parent nor Buyer is subject to any
outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or Governmental Authority which, individually or in the
aggregate, could reasonably be expected to have a Buyer Material Adverse Effect.
5.6. WARN Act. Buyer does not intend with respect to the NMP-2 Assets to
--------
engage in a "plant closing" or "mass layoff', as such terms are defined in the
WARN Act within 60 days after the Closing Date.
5.7. Transfer of Qualified Decommissioning Funds. Except for the fact that
-------------------------------------------
NMP-2 in the hands of Buyer may not be treated as a "nuclear power plant" within
the meaning of Treasury Regulations Section 1.468A-1(b)(4), Buyer will otherwise
acquire and own a "qualifying interest" in NMP-2 within the meaning of Treasury
Regulations section 1.468A-1 and will, as the transferee, satisfy each of the
requirements set forth in Treasury Regulations Section 1.468A-6(b)(2) with
respect to the Qualified Decommissioning Funds.
5.8. Foreign Ownership or Control. Buyer or, if applicable Parent, will
----------------------------
conform to the restrictions on foreign ownership, control or domination
contained in Sections 103d and 104d of the Atomic Energy Act of 1954, as
amended, 42 U.S.C. (S)(S) 2133(d) and 2134(d), as applicable, and the NRC's
regulations in 10 C.F.R. (S) 50.38. Neither Parent nor Buyer is currently owned,
controlled, or dominated by a foreign entity and neither will become owned,
controlled, or dominated by a foreign entity before the Closing Date of this
transaction. Each of Parent and Buyer agrees to abstain from filing any
applications with any federal or state agency in connection with any proposed
merger, acquisition or disposition of assets or similar business combination
that could result in foreign ownership, control, or domination of Buyer, Buyer's
holding company or affiliates that own or control it before the Closing Date of
this transaction. If regulatory approval from the NRC for the transfer of
licenses from Sellers to Buyer has not been received prior to twenty days before
the Termination Date and any issues in the application to transfer related to
NRC approval of Buyer's foreign ownership, control or domination status have not
been resolved by that time, Sellers may at their option terminate this Agreement
and Buyer will be liable to Sellers for: (i) all of the costs that were incurred
in the sale of NMP-2 and (ii) any reduction in value received by Sellers. The
reduction in value will be defined as the greater of the difference between the
sale price to be received by Sellers in this Agreement and (a) the sale price to
have been received by Sellers in the terminated transaction between AmerGen as
buyer and Niagara Mohawk and NYSEG as sellers (the AmerGen Transaction), or (b)
the sale price actually received by Sellers in a subsequent sale completed
within two (2) years of the date of termination of this Agreement. In
calculating the value of the AmerGen Transaction, the sale price for each
transaction will be calculated as if 100% of both NMP-1 and NMP-2 were to be
sold. The reduction in value, with regard to comparison with the AmerGen
Transaction, will be the difference between the two sale prices. For the
purposes of this section the sale price for each sale includes, without
limitation, cash, power purchase agreements, revenue sharing, and
decommissioning.
5.9. Sellers' Representations and Warranties. As of the date hereof,
---------------------------------------
neither Buyer nor Parent has any knowledge of any breaches of any of Sellers'
representations or warranties or of any Pre-Closing Breaches.
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5.10. Financial Statements.
--------------------
Prior to the execution of this Agreement, Buyer has delivered to Sellers
true and complete copies of the unaudited balance sheet of Buyer as of the
quarter ended September 30, 2000, and the related unaudited statement of income
and cash flows for such period. Prior to the Closing, Buyer will deliver to
Sellers true and complete copies of the unaudited balance sheet of Buyer and the
related unaudited statement of income and cash flows, each as of the most recent
quarter end available at the time of Closing. Except as set forth in the notes
thereto, all such financial statements (i) were and will be prepared from the
books and records of Buyer in accordance with generally accepted accounting
principles consistently applied, and (ii) fairly present or will fairly present
the financial condition and results of operations of Buyer as of the respective
dates thereof and for the respective periods covered thereby.
ARTICLE VI
COVENANTS OF THE PARTIES
------------------------
6.1. Conduct of Business Relating to the NMP-2 Assets.
------------------------------------------------
(a) Except as described in Schedule 6.1 or to the extent Buyer
otherwise consents in writing, during the period from the date hereof to the
Closing Date, Sellers (i) shall operate the NMP-2 Assets in the ordinary course
consistent with Good Utility Practices and in accordance with all commitments
made by NMPC to the NRC as such commitments may be modified consistent with
current industry practices; it being understood that (A) any actions deemed
reasonably necessary in the operation of the NMP-2 Assets in accordance with
Good Utility Practices shall be deemed to be in the ordinary course unless such
actions materially impair the value, rated capacity or operation of the NMP-2
Assets or the liabilities and obligations of Buyer after the Closing Date and
(B) the capital budget provided to Buyer, dated November 1, 2000, is not
inconsistent with such standard; (ii) shall use Commercially Reasonable Efforts
to preserve intact the NMP-2 Assets and preserve the goodwill and relationships
with customers, suppliers and others having business dealings with them with
respect thereto; (iii) shall maintain the insurance coverage described in
Section 4.9; and (iv) shall comply in all material respects with all applicable
laws, rules and regulations relating to the NMP-2 Assets, including without
limitation, all Nuclear Laws and Environmental Laws. Notwithstanding the
foregoing, except as contemplated in this Agreement or as described in Schedule
6.1, or as required under applicable law or by any Governmental Authority, prior
to the Closing Date, without the written consent of Buyer, which consent shall
not be unreasonably withheld, Sellers will not with respect to the NMP-2 Assets:
(i) make any material change in the levels of Inventories
customarily maintained by Sellers with respect to the NMP-2 Assets;
(ii) except for Permitted Encumbrances, sell, lease (as lessor),
pledge, encumber, restrict, transfer or otherwise dispose of, or grant any
right with respect to, any of the NMP-2 Assets, other than assets used,
consumed or replaced in the ordinary course of business consistent with
Good Utility Practices;
-45-
(iii) modify, amend or voluntarily terminate prior to the expiration
date thereof any of Sellers' Agreements and agreements listed in Schedule
4.8 (or any other agreement to the extent any such extension or amendment
thereof would require the agreement to be disclosed on Schedule 4.8) or any
material Permit or Environmental Permits or waive any default by, or
release, settle or compromise any claim against, any other Party thereto,
other than (a) in the ordinary course of business, to the extent consistent
with Good Utility Practices, (b) with cause, to the extent consistent with
Good Utility Practices or (c) as may be required in connection with
Sellers' obligations to Buyer under this Agreement;
(iv) vary in any material respect from past practice in the timing
and extent of commitments to purchase nuclear fuel; provided, however, that
-------- -------
Sellers shall not extend or amend Fuel Contracts;
(v) enter into any power sales agreement having a term that extends
beyond June 30, 2001 or such other date that the Parties mutually agree to
be the date on which the Closing is expected to occur;
(vi) amend in any material respect or cancel any property, liability
or casualty insurance policies related thereto, or fail to maintain by self
insurance or with financially responsible insurance companies insurance in
such amounts and against such risks and losses as are customary for such
assets and businesses;
(vii) enter into any requirements contract for goods or any
commitment or contract for non-employment related services, in either case
not addressed in clauses (i) through (vi) above, that will be delivered or
provided after June 30, 2001 or such other date that the Parties mutually
agree to be the date on which the Closing is expected to occur that exceeds
$100,000 per annum in the aggregate, unless such commitment or contract is
terminable by NMPC (or after the Closing Date by Buyer) without further
liability, upon not more than 60 days notice; and
(viii) agree to enter into any of the transactions set forth in the
foregoing paragraphs (i) through (vii).
(b) A committee comprised of one or more senior representatives
designated by Sellers and one or more senior representatives designated by Buyer
(the "Transition Committee") will be established as soon as practicable after
--------------------
the execution of this Agreement to permit Buyer to observe the operation of the
NMP-2 Assets and to facilitate the transfer of the NMP-2 Assets to Buyer at the
Closing. The Transition Committee will be kept fully apprised by NMPC of all
NMP-2 management and operating developments. The Transition Committee shall have
reasonable access to the management and Nuclear Oversight Committee of the Board
of Directors of NMPC. The Transition Committee shall be accountable directly to
the respective chief executive officers of Buyer and Sellers and shall from time
to time report its findings to the senior management of Sellers and Buyer.
(c) Between the date of this Agreement and the Closing Date, in the
interest of cooperation between Sellers and Buyer and to permit informed action
by Buyer regarding its
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rights pursuant to Section 6.1(a), the Parties agree that at the sole
responsibility and expense of Buyer, and subject to compliance with all
applicable NRC rules and regulations, each Seller will permit designated Buyer
Representatives ("Observers") of Buyer to observe all operations of such Seller
---------
that relate to the NMP-2 Assets, and such observation will be permitted on a
cooperative basis in the presence of personnel of Sellers but not restricted to
the normal business hours of such Seller; provided, however, that such Observers
-------- -------
and their actions shall not interfere with the operation of NMP-2. Buyer's
Observers may recommend or suggest to management that actions be taken or not be
taken by Sellers; provided, however, that no Seller will be under any obligation
-------- -------
to follow any such recommendations or suggestions and each Seller shall be
entitled, subject to this Agreement, to conduct its business in accordance with
its own judgment and discretion. Buyer's Observers shall have no authority to
bind or make agreements on behalf of any Seller; to conduct discussions with or
make representations to third parties on behalf of any Seller; or to issue
instructions to or direct or exercise authority over any Seller or any of such
Seller's officers, employees, advisors or agents.
6.2. Access to Information.
---------------------
(a) In addition to the rights granted by Sections 6.1(b) and (c),
between the date of this Agreement and the Closing Date, each Seller will,
during ordinary business hours and upon reasonable notice and subject to
compliance with all applicable NRC rules and regulations (i) give Buyer and
Buyer Representatives reasonable access to all books, records, plants, offices
and other facilities and properties constituting the NMP-2 Assets; (ii) permit
Buyer to make such reasonable inspections thereof as Buyer may reasonably
request, other than Phase II environmental site assessments (which have been
conducted prior to the date hereof); (iii) furnish Buyer with such financial and
operating data and other information with respect to the NMP-2 Assets as Buyer
may from time to time reasonably request; (iv) furnish Buyer a copy of each
material report, schedule or other document filed or received by it since the
date hereof with respect to the NMP-2 Assets with the SEC, NRC, FERC, NYPSC or
any other Governmental Authority having jurisdiction over the NMP-2 Assets;
provided, however, that (A) any such investigation shall be conducted in such a
-------- -------
manner as not to interfere unreasonably with the operation of the NMP-2 Assets,
(B) no Seller shall be required to take any action which would constitute a
waiver of the attorney-client privilege and (C) no Seller need supply Buyer with
any information that such Seller is legally prohibited to supply. NMPC will
provide Buyer or Buyer's Representatives with access to the Transferred Employee
Records that it has, but NMPC shall not be required to provide access to other
employee records or medical information unless required by law or specifically
authorized by the affected employee. Notwithstanding anything in this Section
6.2 to the contrary, NMPC will only furnish or provide such access to
Transferred Employee Records and personnel and medical records as is required by
law, legal process or subpoena (other than data concerning salaries and
benefits, dates of birth, dates of hire and other information used to calculate
pension benefits which shall be provided). NMPC shall keep Buyer generally
informed as to the status of all material negotiations with collective
bargaining representatives concerning provisions of a successor collective
bargaining agreement that would affect Transferred Employees.
(b) Buyer and Sellers acknowledge that all information furnished to
or obtained by Buyer or Buyer Representatives pursuant to this Section 6.2 shall
be subject to the
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provisions of the Confidentiality Agreement and shall be treated as "Proprietary
Information" (as defined in Section 1.1).
(c) Following the Closing Date and subject to all applicable NRC
rules and regulations, each Party and its respective Representatives shall have
reasonable access to all of the books and records relating to the NMP-2 Assets,
including all Transferred Employee Records or other personnel and medical
records required by law, legal process or subpoena, in the possession of the
other Party or Parties to the extent that such access may reasonably be required
by such Party in connection with the Assumed Liabilities and Obligations or the
Excluded Liabilities, or other matters relating to or affected by the operation
of the NMP-2 Assets. Such access shall be afforded by the Party or Parties in
possession of such books and records upon receipt of reasonable advance notice
and during normal business hours. The Party or Parties exercising this right of
access shall be solely responsible for any costs or expenses incurred by it or
them pursuant to this Section 6.2(c). If the Party or Parties in possession of
such books and records shall desire to dispose of any such books and records,
such Party or Parties shall, prior to such disposition, give the other Party or
Parties a reasonable opportunity at such other Party's or Parties' expense, to
segregate and remove such books and records as such other Party or Parties may
select. Notwithstanding the foregoing, the right of access to medical records
and other confidential employee records shall be subject to all applicable legal
requirements.
(d) Sellers agree (i) not to release any Person (other than Buyer)
from any confidentiality agreement now existing with respect to the NMP-2
Assets, or waive or amend any provision thereof, and (ii) to assign any rights
arising under any such confidentiality agreement (to the extent assignable) to
Buyer.
(e) Notwithstanding the terms of the Confidentiality Agreements and
Section 6.2(b) above, the Parties agree that prior to the Closing Buyer may
reveal or disclose Proprietary Information to any other Persons in connection
with Buyer's financing and risk management of the NMP-2 Assets, and, to the
extent that Sellers consent, which consent shall not be unreasonably withheld,
to existing and potential customers and suppliers, and to such Persons with whom
Buyer expects it may have business dealings regarding the NMP-2 Assets from and
after the Closing Date; provided, however, that all such Persons agree in
-------- -------
writing to maintain the confidentiality of the Proprietary Information on
substantially the same terms and conditions of their respective Confidentiality
Agreements.
(f) Except as may be permitted in the Confidentiality Agreements or
during the course of Buyer's due diligence investigation of the NMP-2 Assets
prior to the date hereof, Buyer agrees that, prior to the Closing Date, it will
not contact any vendors, suppliers, employees, or other contracting parties of
Sellers or Sellers' Affiliates with respect to any aspect of the NMP-2 Assets or
the transactions contemplated hereby, without the prior written consent of
Sellers, which consent shall not be unreasonably withheld.
(g) Upon Buyer's or Sellers' (as the case may be) prior written
approval (which approval shall not be unreasonably withheld or delayed) Sellers
or Buyer (as the case may be) may provide Proprietary Information of the other
Party to the SEC, NRC, FERC, NYPSC or any other Governmental Authority having
jurisdiction over the NMP-2 Assets or any stock exchange, as may be necessary to
obtain Sellers' Required Regulatory Approvals or
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Buyer's Required Regulatory Approvals, respectively, or to comply generally with
any relevant law, rule or regulation. The disclosing Party shall seek
confidential treatment for the Proprietary Information provided to any such
Governmental Authority and the disclosing Party shall notify the other Party as
far in advance as practical of its intention to release to any Governmental
Authority any such Proprietary Information.
(h) The Parties agree that the Confidentiality Agreements shall
remain in place until the Closing Date. Thereafter, the Parties agree that any
restrictions contained in the Confidentiality Agreements with respect to Buyer's
disclosure of Proprietary Information shall terminate, other than with respect
to the Proprietary Information of Sellers that does not relate to the NMP-2
Assets. The Parties further agree that after the Closing Date, each Seller shall
keep confidential all Proprietary Information provided by Buyer or which such
Seller possesses with respect to the NMP-2 Assets, to the extent permitted by
law and to the same extent as provided in the Confidentiality Agreement
applicable to it, but without limitation as to duration.
6.3. Expenses. Except to the extent specifically provided herein, whether
--------
or not the transactions contemplated hereby are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including the cost of legal, technical and financial
consultants and the cost of filing for and prosecuting applications for Required
Regulatory Approvals, shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will pay the
cost of all filing fees under the HSR Act.
6.4. Further Assurances; Cooperation.
-------------------------------
(a) Subject to the terms and conditions of this Agreement, each of
the Parties hereto will use Commercially Reasonable Efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the sale of the Purchased Interests pursuant to this Agreement,
including without limitation using Commercially Reasonable Efforts to ensure
satisfaction of the conditions precedent to each Party's obligations hereunder,
including, without limitation, all regulatory approvals. Notwithstanding
anything in the previous sentence to the contrary, Sellers and Buyer shall use
Commercially Reasonable Efforts to obtain all Permits and Environmental Permits
necessary for Buyer to acquire and operate the NMP-2 Assets. Neither Buyer, on
the one hand, nor Sellers, on the other hand, will without the prior written
consent of the other, advocate, take or fail to take any action which would
reasonably be expected to prevent or materially impede, interfere with or delay
the transactions contemplated by this Agreement or which could reasonably be
expected to cause, or to contribute to causing, the other to receive less
favorable regulatory treatment than that sought by the other. Buyer further
agrees that prior to the Closing Date, neither it nor its Affiliates will enter
into any other contract to acquire, nor acquire, electric generation facilities
or uncommitted generation capacity if the proposed acquisition of such
additional electric generation facilities or uncommitted generation capacity are
reasonably likely to prevent or materially interfere with the transactions
contemplated by this Agreement; provided, however, that nothing herein shall
-------- -------
prohibit Buyer or its Affiliates from entering into any contract to acquire from
any Co-Tenant that is not a Party to this Agreement the undivided interest of
such Co-Tenant in NMP-2 pursuant to an option which is hereby granted by Buyer
to such Co-Tenant for a period of 30 days after the date hereof for
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such Co-Tenant to sell its interest on substantially the same terms and
conditions as set forth in this Agreement, including, without limitation, the
adjustments to the Purchase Price set forth in Section 3.3 thereof (such
acquisition being referred to herein as an "Additional Co-Tenant Interest
-----------------------------
Acquisition"); provided, further, that all regulatory filings with respect to
----------- -------- -------
such Additional Co-Tenant Interest Acquisition shall only be made following the
Closing unless Sellers mutually determine that such Additional Co-Tenant
Interest Acquisition is not reasonably likely to materially delay the
consummation of the transactions contemplated by this Agreement.
(b) From time to time after the Closing Date, without further
consideration, Sellers will execute and deliver such documents to Buyer as Buyer
may reasonably request, at Buyer's expense, in order to more effectively
consummate the sale and purchase of the Purchased Interests or to more
effectively vest in Buyer such title to the NMP-2 Assets as is provided for in
Section 4.7 subject to the Permitted Encumbrances. Sellers shall cooperate with
Buyer, at Buyer's expense, in Buyer's efforts to cure or remove any Permitted
Encumbrances that Buyer reasonably deems objectionable. From time to time after
the Closing Date, without further consideration, Buyer will, at its own expense,
execute and deliver such documents to Sellers as Sellers may reasonably request
in order to evidence Buyer's assumption of the Assumed Liabilities and
Obligations.
(c) The Parties shall cooperate with each other to facilitate the
transition of the information systems, computer applications and processing of
data at the Facilities.
(d) To the extent that Sellers' rights under any Sellers' Agreement
may not be assigned without the consent of another Person which consent has not
been obtained, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and Sellers, at their expense, shall use Commercially Reasonable
Efforts to obtain any such required consent(s) as promptly as possible. Sellers
and Buyer agree that if any consent to an assignment of any Sellers' Agreement
shall not be obtained or if any attempted assignment would be ineffective or
would impair Buyer's rights and obligations under the applicable Sellers'
Agreement so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Sellers, to the maximum extent permitted by law and such
Sellers' Agreement, shall after the Closing appoint Buyer to be Sellers'
representative and agent with respect to such Sellers' Agreement, and Sellers
shall, to the maximum extent permitted by law and such Sellers' Agreement, enter
into such reasonable arrangements with Buyer as are necessary to provide Buyer
with the benefits and obligations of such Sellers' Agreement. Sellers and Buyer
shall cooperate and shall each use Commercially Reasonable Efforts after the
Closing to obtain an assignment of such Sellers' Agreement to Buyer.
(e) NMPC agrees to provide such services to Buyer for up to two years
following the Closing as are reasonably required to the extent necessary to
ensure the continuity of support for NMP-2 and the orderly completion of
projects or other work in progress that would be adversely affected if those
services were interrupted. Buyer and NMPC will agree, as promptly as
practicable, following the date hereof, on the nature of such services, which
shall be agreed upon in a service agreement. NMPC will be reimbursed for all
its costs, including development costs, in accordance with procedures to be
mutually agreed upon by NMPC and Buyer or on an alternative cost reimbursement
basis as mutually agreed by NMPC and Buyer.
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(f) Buyer acknowledges that, notwithstanding anything to the contrary
contained in this Agreement, (i) by executing and delivering this Agreement none
of Sellers is, directly or indirectly, waiving its right of first refusal under
the Operating Agreements and (ii) that any Seller may, within 180 days after the
date hereof, exercise such right of first refusal following termination of this
Agreement with respect to such Seller.
(g) For a period of two years following the Closing, Buyer and its
Affiliates shall not acquire any interest in NMP-2 from any Co-Tenant that is
not a Party to this Agreement on terms superior to those provided for hereby and
by the Ancillary Agreements without providing additional compensation to each
Seller in an amount equal to (i) the aggregate amount of the excess value
received by such Co-Tenant over the value such Co-Tenant would have received if
it were a Party to this Agreement divided by (ii) such Co-Tenant's Proportionate
Ownership, multiplied by (iii) such Seller's Proportionate Ownership.
6.5. Public Statements. Until thirty (30) days following the Closing Date,
-----------------
the Parties shall not issue any press release or file any public disclosure with
the SEC with respect to this Agreement or the transactions contemplated hereby
without first affording the non-disclosing Party the opportunity to review and
comment on such disclosure.
6.6. Consents and Approvals.
----------------------
(a) Sellers and Buyer shall each file or cause to be filed with the
Federal Trade Commission and the Department of Justice any notifications
required to be filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The Parties
shall consult with each other as to the appropriate time of filing such
notifications and shall agree upon the timing of such filings, to respond
promptly to any requests for additional information made by either of such
agencies. The Parties shall use their Commercially Reasonable Efforts to cause
the waiting periods under the HSR Act to terminate or expire at the earliest
possible date after the date of filing. Buyer will pay all filing fees under the
HSR Act but each Party will bear its own costs for the preparation of any such
filing.
(b) As promptly as practicable after the date of this Agreement and
after the receipt of any findings required to be made by any other Governmental
Authority as a condition to Buyer and Sellers making the filings contemplated by
this paragraph, (i) Buyer shall file with FERC an application requesting Exempt
Wholesale Generator status for Buyer, which filing may be made individually by
Buyer or jointly with Sellers, as reasonably determined by the Parties, (ii)
Buyer and Sellers shall file with FERC an application requesting approval of the
Interconnection Agreement, and (iii) Buyer shall file with FERC applications
requesting approval of the Power Purchase Agreements and may file a FERC
application requesting approval of any power purchase agreement between Buyer
and its Affiliates. In fulfilling their respective obligations set forth in the
immediately preceding sentence, each of Buyer and Sellers shall use Commercially
Reasonable Efforts to effect the referenced filings with FERC by the relevant
dates set forth on Schedule 6.6. Prior to submitting such applications with
FERC, the Party preparing the filing shall submit such application to the other
Party for review and comment, and the filing Party shall incorporate into the
application any revisions reasonably requested by the other Party. Each Party
shall be solely responsible for the cost of preparing,
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reviewing and filing its respective application, any petition(s) for rehearing,
or any reapplication(s).
(c) As promptly as practicable after the date of this Agreement,
Sellers and Buyer shall, as applicable, file with NYPSC or any other
Governmental Authority having jurisdiction over Buyer or the Purchased
Interests, an application requesting a determination that the Purchased
Interests (i) will be an eligible facility under Section 32 of the Holding
Company Act, (ii) will benefit consumers, (iii) is in the public interest, and
(iv) does not violate state law. In fulfilling their respective obligations set
forth in the immediately preceding sentence, each of Buyer and Sellers shall use
its Commercially Reasonable Efforts to effect or cause to be effected any such
filings by the relevant dates set forth on Schedule 6.6. Prior to any Party's
submission of the applications contemplated by this Section 6.6(c), the
submitting Party shall give such application to the other Parties for review and
comment and the submitting Party shall incorporate into the application any
revisions reasonably requested by the reviewing Parties. Each Party will bear
its own costs of the preparation and review of any such filings.
(d) As promptly as practicable after the date of this Agreement,
Buyer shall file with FERC an application requesting authorization under Section
205 of the Federal Power Act to sell electric generating capacity and energy
(and, at Buyer's discretion, other services, including, without limitation,
ancillary services) at wholesale at market-based rates. In fulfilling its
obligations set forth in the immediately preceding sentence, Buyer shall use its
Commercially Reasonable Efforts to effect the referenced application with FERC
by the relevant date set forth on Schedule 6.6. Prior to Buyer's submission of
such application with FERC, Buyer shall submit such application to Sellers for
review and comment and Buyer shall consider any revisions reasonably requested
by Sellers. Buyer shall be solely responsible for the cost of preparing and
filing this application, any petition(s) for rehearing, or any reapplication(s).
Each Party will bear its own costs of the preparation and review of any such
filings.
(e) As promptly as practicable after the date of this Agreement,
Buyer and Sellers shall file with NRC an application requesting consent under
Section 184 of the Atomic Energy Act and 10 C.F.R. (S) 50.80 for the transfer of
the NMP-2 license from Sellers to Buyer, and approval of any conforming license
amendments or other related approvals. In fulfilling their respective
obligations set forth in the immediately preceding sentence, each of Buyer and
Sellers shall use its Commercially Reasonable Efforts to effect any such filing
by the relevant date set forth on Schedule 6.6. Each Party will bear its own
costs of the preparation of any such filing and NRC fees shall be borne 50% by
Buyer and 50% by Sellers.
(f) Sellers and Buyer shall cooperate with each other and promptly
prepare and file notifications with, and request Tax clearances from, state and
local taxing authorities in jurisdictions in which a portion of the Purchase
Price may be required to be withheld or in which Buyer would otherwise be liable
for any Tax liabilities of Sellers pursuant to such state and local Tax law.
(g) Sellers and Buyer shall cooperate with each other and, as
promptly as practicable after the date of this Agreement, (i) prepare and make
with FERC, NYPSC or any other Governmental Authority having jurisdiction over
any Seller, Buyer or the NMP-2 Assets, all necessary filings required to be made
with respect to the transactions contemplated hereby
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(including those specified above), (ii) effect all necessary applications,
notices, petitions and filings and execute all agreements and documents, (iii)
use Commercially Reasonable Efforts to obtain the transfer or reissuance to
Buyer of all necessary Transferable Permits, consents, approvals and
authorizations of all Governmental Authorities and (iv) use Commercially
Reasonable Efforts to obtain all necessary consents, approvals and
authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii) and (iii), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without limitation,
Sellers' Required Regulatory Approvals and Buyer's Required Regulatory
Approvals) or required by the terms of any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or other
instrument to which any Seller or Buyer is a party or by which any of them is
bound. The Parties shall respond promptly to any requests for additional
information made by such agencies, and use their respective Commercially
Reasonable Efforts to cause regulatory approval to be obtained at the earliest
possible date after the date of filing. Each Party will bear its own costs of
the preparation and review of any such filing. Sellers and Buyer shall have the
right to review in advance all characterizations of the information relating to
the transactions contemplated by this Agreement which appear in any filing made
in connection with the transactions contemplated hereby and the filing Party
shall incorporate into any filing any revisions reasonably requested by the non-
filing Party.
(h) Buyer shall have the primary responsibility for securing the
transfer, reissuance or procurement of the Permits and Environmental Permits
(other than Transferable Permits) effective as of the Closing Date. Sellers
shall cooperate with Buyer's efforts in this regard and assist in any transfer
or reissuance of a Permit or Environmental Permit held by Sellers or the
procurement of any other Permit or Environmental Permit when so requested by
Buyer. In the event that Buyer is unable, despite its Commercially Reasonable
Efforts, to obtain a transfer or reissuance of one or more Transferable Permits
as of the Closing Date, Buyer may use the Permits issued to Sellers, provided
(i) such use is not unlawful, (ii) Buyer notifies Sellers prior to the Closing
Date, (iii) Buyer continues to make Commercially Reasonable Efforts to obtain a
transfer or reissuance of such Permits after the Closing Date, and (iv) Buyer
indemnifies Sellers for any losses, claims or penalties suffered by Sellers in
connection with the Transferable Permit that is not transferred or reissued as
of the Closing Date resulting from Buyer's ownership of the NMP-2 Assets
following the Closing Date. In no event shall Buyer use or otherwise rely on a
Transferable Permit issued to Sellers beyond one year after the Closing Date.
6.7. Brokerage Fees and Commissions. Sellers and Buyer each represent and
------------------------------
warrant to the other that, other than with respect to fees and commissions of
X.X. Xxxxxx & Co., Inc., which shall be the sole responsibility of NMPC and
NYSEG, of Navigant Consulting Inc., which shall be the sole responsibility of
RG&E and CHGEC, and of Barrington Energy Partners, LLC, which shall be the sole
responsibility of Parent and Buyer, no broker, finder or other Person is
entitled to any brokerage fees, commissions or finder's fees in connection with
the transaction contemplated hereby by reason of any action taken by the Party
making such representation. Sellers and Buyer will pay to the other or otherwise
discharge, and will indemnify and hold the other harmless from and against, any
and all claims or liabilities for all brokerage fees, commissions and finder's
fees incurred by reason of any action taken by the indemnifying party.
6.8. Tax Matters.
-----------
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(a) All transfer taxes, New York State and local sales and use taxes
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by Buyer. Buyer will file, to the extent required by
applicable law, all necessary Tax Returns and other documentation with respect
to all such transfer or sales taxes, and Sellers will be entitled to review such
returns in advance and, if required by applicable law, will join in the
execution of any such Tax Returns or other documentation. Prior to the Closing
Date, Buyer will provide to Sellers, to the extent possible, an appropriate
exemption certificate in connection with this Agreement and the transactions
contemplated hereby, due from each applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with Section
3.5 of this Agreement, Buyer shall prepare and timely file all Tax Returns
required to be filed after the Closing with respect to the NMP-2 Assets, if any,
and shall duly and timely pay all such Taxes shown to be due on such Tax
Returns. Buyer's preparation of any such Tax Returns shall be subject to
Sellers' approval, which approval shall not be unreasonably withheld. Buyer
shall make such Tax Returns available for Sellers' review and approval no later
than fifteen (15) Business Days prior to the due date for filing such Tax
Return. Not less than five (5) Business Days prior to the due date of any such
Tax Return, each Seller shall pay to Buyer a portion of the amount shown as due
on such Tax Return as determined in accordance with Section 3.5 of this
Agreement in proportion to such Seller's Proportionate Ownership.
(c) Buyer and Sellers shall provide the other Parties with such
assistance as may reasonably be requested by the other Party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each will retain and provide the requesting Party with any
records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section 6.8(c) or pursuant to any other Section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the Parties hereto.
(d) In the event that a dispute arises between a Seller and Buyer as
to the amount of Taxes, the Parties shall attempt in good faith to resolve such
dispute, and any so agreed amount shall be paid to the appropriate party. If
such dispute is not resolved within 30 days thereafter, the Parties shall submit
the dispute to the Independent Accounting Firm for resolution, which resolution
shall be final, conclusive and binding on the Parties. Notwithstanding anything
in this Agreement to the contrary, the fees and expenses of the Independent
Accounting Firm in resolving the dispute shall be borne fifty percent (50%) by
such Seller and fifty percent (50%) by Buyer. Any payment required to be made
as a result of the resolution of the dispute by the Independent Accounting Firm
shall be made within ten days after such resolution, together with any interest
determined by the Independent Accounting Firm to be appropriate.
(e) (i) Buyer understands that:
(A) The facilities listed in Schedule 6.8(e) hereto (the
"Pollution Control Facilities") have been financed, and refinanced, in whole or
----------------------------
in part, with the proceeds of the issuance and sale of the Pollution Control
Bonds the interest on which, with certain exceptions, is excludable from gross
income for purposes of federal income taxation; and
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Sellers are the economic obligors and conduit borrowers in respect of the
Pollution Control Bonds;
(B) The basis for the federal income tax exclusion for
interest paid to bondholders of the Pollution Control Bonds ("PC Bondholders")
----------------
is the use of the Pollution Control Facilities for the purpose of (I) the
abatement or control of atmospheric pollution or contamination, (II) the
abatement or control of water pollution or contamination, (III) sewage disposal
and/or (IV) the disposal of solid waste, as provided in the Internal Revenue
Code of 1954, as amended, and the Code, such qualifying purposes being discussed
in more detail in paragraph (ii) below;
(C) The use of the Pollution Control Facilities for a
purpose other than the qualifying purposes indicated in subclause (B) above and
Section 6.8(e)(ii) hereunder may cause (I) the interest paid on the Pollution
Control Bonds to be includable in the federal gross income of the PC
Bondholders, possibly with retroactive effect, unless remedial action is taken
to promptly redeem or defease the Pollution Control Bonds or any portion
thereof, and/or (II) the deductibility of Sellers' payment of interest on the
Pollution Control Bonds to be disallowed pursuant to Section 150(b) of the Code;
and
(D) Any breach by Buyer of its obligations under this
subsection could result in the incurrence by Sellers of additional costs and
expenses, including by way of example, but not by limitation, an increase in the
rate of interest paid to the PC Bondholders, liability to the PC Bondholders for
their failure to include interest paid on the Pollution Control Bonds in each
one's respective federal gross income in the event of a final determination of
taxability by the IRS, loss of the interest deduction to Sellers under Code
section 150(b) and transaction costs relating by way of example but not by way
of limitation to any refinancing, redemption, defeasance of or tender for all or
part of the Pollution Control Bonds, and Buyer shall indemnify Sellers for such
additional costs and expenses incurred by Sellers solely as a result of any
breach by Buyer of its covenants in Sections 6.8(e)(ii) or (iii).
(ii) Except as provided in this paragraph, Buyer shall not
use, or permit the use of, the Pollution Control Facilities for any purpose
other than their current use and in accordance with the respective tax
compliance documents or non-arbitrage certificates for each of the Pollution
Control Bonds, or for (x) 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) or its successor Income Tax Regulations; (y) 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 its
successor Income Tax Regulations; or (z) the collection, storage, treatment,
utilization, processing or final disposal of sewage, all as contemplated in U.S.
Treasury Regulations Section 1.103-8(f) or its successor Income Tax Regulations;
unless Buyer has obtained at its own expense an opinion addressed to Sellers of
nationally recognized bond counsel reasonably acceptable to Sellers ("Bond
----
Counsel") that such change in use to a nonqualifying one will not impair (A) the
-------
exclusion from gross income of the interest on any issue of Pollution Control
Bonds for Federal income tax purposes or (B) the deductibility of Sellers'
payments of interest based on the restrictions in Section 150(b) of the Code.
For purposes of this subsection, an abandonment of the Pollution Control
Facilities shall be
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considered a "change in use"; provided, however, suspending the operation of the
-------- -------
Pollution Control Facilities or any part thereof on a temporary basis so that
the components thereof can be reactivated and used for the qualifying purposes
for which the Pollution Control Bonds were issued, shall not be considered a
"change in use."
(iii) Buyer shall not sell or transfer any portion of the
Pollution Control Facilities unless Buyer's transferee covenants in writing for
the benefit of Sellers to comply with and to satisfy the conditions of the
subsection (e) with respect to transferee's ownership and use of the Pollution
Control Facilities. Buyer's obligation on the covenants contained in this
subsection (e) shall survive any such sale or transfer of the Pollution Control
Facilities, and in the event of a violation of such covenants, Buyer and Buyer's
transferee (and all such subsequent transferees) shall be jointly and severally
liable to Sellers on Buyer's obligations hereunder. Any contract implementing
transfer of the Pollution Control Facilities shall contain the covenants of this
subsection (e).
(f) [Intentionally left blank]
(g) The Parties agree that, for U.S. tax purposes (and not for other
purposes, which are governed by Section 3.4), the Purchase Price shall be
allocated on a basis consistent with Section 1060 of the Code and the Treasury
Regulations thereunder. Each of Buyer and Sellers agree to file Internal
Revenue Service Form 8594 (Asset Acquisition Statement Under Section 1060), and
all federal, state, local and foreign Tax Returns, in accordance with such
allocations. Each of Buyer and Sellers agree to provide the other promptly with
any information required to complete Form 8594. Buyer and Sellers shall notify
and provide the other with reasonable assistance in the event of an examination,
audit or other proceeding regarding the allocation of the Purchase Price
pursuant to this section. Buyer and Sellers shall not take any position in any
tax return, tax proceeding or audit that is inconsistent with such allocation
without the consent of the other Party.
6.9. Advice of Changes. Prior to the Closing Date, each Party will
-----------------
promptly advise the other in writing of any change or discovery occurring after
the date hereof that would constitute a material breach of any representation,
warranty or covenant or a Pre-Closing Breach of the advising or other Party
under this Agreement. If a Party advises the other Party of any such matter
with respect to a breach of the advising Party (other than a Pre-Closing
Breach), the other Party shall have the right to terminate this Agreement in
accordance with Sections 9.1(e) or (f) as the case may be. If a Party advises
the other Party of any such matter with respect to a breach by the other Party
(other than a Pre-Closing Breach), the advising Party shall have the right to
terminate this Agreement in accordance with Sections 9.1(e) or (f) as the case
may be. If a Party fails to exercise its termination right, the written notice
under this Section 6.9 will be deemed to have amended this Agreement, including
the appropriate schedule, or to have qualified the representations and
warranties contained in Articles IV and X. Xxxxxxx shall be entitled to amend,
substitute or otherwise modify any Sellers' Agreement to the extent that such
Sellers' Agreement expires by its terms prior to the Closing Date or is
terminable without liability to Buyer on or after the Closing Date, or if the
terms and conditions of such modified Sellers' Agreement constituting the
Assumed Liabilities and Obligations are on terms and conditions not less
favorable to Buyer than the original Sellers' Agreement.
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6.10. Employees.
---------
(a) Buyer agrees to offer employment to the employees of NMPC's work
force employed at, or whose work responsibilities involve principally the
operation of, the Purchased Interests (in combination with the acquisition of
NMP-1 this work force currently consists of approximately 619 management and 718
represented employees). Buyer and NMPC agree that Buyer shall be a successor
within the meaning of the IBEW Collective Bargaining Agreement. The employment
of employees who are represented by the IBEW shall continue in accordance with
the IBEW Collective Bargaining Agreement.
(b) NMPC will make available to Buyer the IBEW Collective Bargaining
Agreement. With respect to Union Employees on the Closing Date, Buyer will
assume the IBEW Collective Bargaining Agreement as it relates to such Union
Employees employed at, or whose work responsibilities involve principally the
operation of, the Purchased Interests and shall agree and become party to and
bound by the terms and conditions of the IBEW Collective Bargaining Agreement
including, but not limited to, the obligation of Buyer to recognize the IBEW as
the collective bargaining agent of such employees. A Union Employee shall be
entitled to retain his or her seniority or receive credit for service with NMPC
in connection with entitlement to wages, vacation, benefits, and rights under
the IBEW Collective Bargaining Agreement, provided that the Union Employee signs
an employee declaration that is acceptable to NMPC, or otherwise indicates in a
manner that is acceptable to NMPC, that the Union Employee is voluntarily
resigning his or her employment with NMPC to pursue employment with Buyer
without asserting a claim for a separation benefit from NMPC ("Employee
Transition Agreement"). If a Union Employee fails to provide an Employee
Transition Agreement acceptable to NMPC, the Union Employee shall only be
accorded such wages, vacation, seniority, benefits, and rights as are available
to new employees under the IBEW Collective Bargaining Agreement.
(c) Each Non-Union Employee who is offered and accepts continued
employment with Buyer will be referred to herein as a "Transferred Non-Union
---------------------
Employee." Each Union Employee who is offered and accepts employment with Buyer
--------
will be referred to herein as a "Transferred Union Employee." Collectively,
--------------------------
Transferred Non-Union Employees and Transferred Union Employees shall be
referred to herein as "Transferred Employees."
---------------------
(d) For the period commencing on the Closing Date and ending 12
months thereafter, and except as Buyer and any Transferred Non-Union Employee
may otherwise mutually agree, Buyer shall provide each Transferred Non-Union
Employee with total compensation including without limitation base pay,
authorized overtime, bonuses, and benefits provided under all applicable
employee benefits plans and programs, and fringe benefit arrangements
(specifically excluding NMPC's education reimbursement program) (collectively,
"Total Compensation") which in the aggregate is substantially equivalent in
------------------
value to the Transferred Non-Union Employee's annualized Total Compensation
received from NMPC prior to Closing. Buyer shall also: (i) pay the reasonable
relocation costs of any Transferred Non-Union Employee who shall relocate at
Buyer's request and, (ii) maintain the defined benefit plan described in Section
6.10(h) for the period specified in that Section.
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(e) As of the Closing Date all Transferred Non-Union Employees shall
cease to participate in the employee welfare plans (as such term is defined in
ERISA) maintained or sponsored by NMPC or its Affiliates and shall, if
applicable, commence participation in the welfare benefit plans of Buyer or its
Affiliates (the "Replacement Welfare Plans") that will provide benefits or
-------------------------
coverage substantially similar to the benefits or coverage provided to the
Transferred Non-Union Employees under NMPC's plans and programs in effect for
the Transferred Non-Union Employees immediately prior to the Closing Date. Buyer
shall (i) waive all limitations as to pre-existing condition exclusions and
waiting periods with respect to the Transferred Non-Union Employees under the
Replacement Welfare Plans, other than, but only to the extent of, limitations or
waiting periods that were in effect with respect to such employees under the
welfare plans maintained by NMPC and that have not been satisfied as of the
Closing Date, and (ii) provide each Transferred Non-Union Employee with credit
for any co-payments and deductibles paid prior to the Closing Date during a plan
year under NMPC's plan that has not ended as of the Closing Date, in satisfying
any deductible or out-of-pocket requirements under the Replacement Welfare Plans
(on a pro-rata basis in the event of a difference in plan years).
(f) Buyer shall give all Transferred Non-Union Employees credit for
all service with NMPC and its Affiliates under all employee benefit plans,
programs and arrangements and all fringe benefit plans, programs, and
arrangements of Buyer ("Replacement Benefit Plans") in which they become
-------------------------
participants. The service credit given is for purposes of eligibility, vesting
and service related level of benefits, but not benefit accrual (except as
provided in the following sentence). For purposes of benefit accrual, Buyer
shall give Transferred Non-Union Employees credit for all service with NMPC and
its Affiliates under all Replacement Benefit Plans, but the ultimate benefits
provided under Replacement Benefit Plans may be offset by the corresponding
benefits previously provided by NMPC or benefit plans of NMPC, or by the
corresponding benefits accrued under the benefit plans of NMPC or otherwise
committed to be provided by NMPC in the future; provided, however, that such an
-------- -------
offset shall not be permitted with respect to the Replacement Defined Benefit
Plan described in Section 6.10(h).
(g) Buyer agrees to allow the Transferred Non-Union Employees, as of
the Closing Date, to be eligible to commence participation in a Buyer tax-
qualified 401(k) plan that will provide benefits substantially similar to the
benefits provided to the Transferred Non-Union Employees under the NMPC tax-
qualified 401(k) plan in effect for Non-Union Employees immediately prior to the
Closing Date ("NMPC Savings Plan").
-----------------
To the extent allowable by law and by the applicable NMPC plan, Buyer shall
take any and all necessary action to cause the trustee of any tax-qualified
401(k) plan of Buyer or its Affiliates in which any Transferred Non-Union
Employee becomes a participant to accept a direct "rollover" in cash of all or a
portion of said employee's "eligible rollover distribution" within the meaning
of Section 402 of the Code from the NMPC Savings Plan if requested to do so by
the Transferred Non-Union Employee. However, any tax-qualified 401(k) plan of
Buyer or its Affiliates accepting such a rollover shall not be required to
permit any investment to be made in Niagara Mohawk Holdings, Inc. common stock
on behalf of any Transferred Non-Union Employee after the Closing Date.
Notwithstanding anything in this paragraph to the contrary, if Transferred Non-
Union Employees are not entitled to distributions from the NMPC Savings Plan as
a result of being employed by Buyer, then either (i) the parties may negotiate a
direct transfer
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from the NMPC Savings Plan trust to Buyer's tax-qualified plan trust under such
terms and conditions as are agreeable to both parties or (ii) if the parties are
unable to negotiate such an agreement, then Buyer agrees to provide NMPC, in a
timely manner, with such information as NMPC reasonably needs about the
Transferred Non-Union Employees in order for NMPC to administer the Transferred
Non-Union Employees' benefits under the NMPC Savings Plan (e.g., information
about when the Transferred Non-Union Employees retire, die, terminate
employment).
(h) Effective as of the Closing Date, Buyer shall cause to be
established a defined benefit pension plan for the benefit of the Transferred
Non-Union Employees (the "Replacement Defined Benefit Plan"). The Replacement
--------------------------------
Defined Benefit Plan shall have the same terms as apply to the Transferred
NonUnion Employees under NMPC's qualified defined benefit plan ("NMPC's Defined
--------------
Benefit Plan") as of the Closing Date; provided that, except as required by law,
------------
no improvements for Transferred Non-Union Employees are made after the date
hereof and prior to the Closing Date without the written consent of Buyer, which
consent shall not be unreasonably withheld. Buyer agrees to maintain such terms
for Transferred Non-Union Employees for a period of at least seven (7) years
after the Closing Date (provided, however, that if changes in the law require
any such terms to be modified, Buyer may change such terms to the extent
necessary to comply with such laws as reasonably determined by the Buyer).
The Transferred Non-Union Employees shall be given credit in the
Replacement Defined Benefit Plan for all service with and compensation from NMPC
and its Affiliates as if it were service with and compensation from Buyer for
purposes of determining eligibility for benefits, the amount of any benefits or
benefit accruals, vesting, and service related levels of benefits under the
Replacement Defined Benefit Plan.
In connection with the foregoing, the following actions shall be taken as
of the Closing Date:
(A) At the time specified in subparagraph (C) below, NMPC shall cause
to be transferred from NMPC's Defined Benefit Plan to the
corresponding Replacement Defined Benefit Plan assets equal to
(i) the Projected Benefit Obligation ("PBO"), as determined in
---
accordance with the actuarial assumptions set forth in Schedule
6.10(h) (the "Assumptions"), attributable to the Transferred Non-
-----------
Union Employees as of the Closing Date, plus (ii) interest at an
annual rate that is equivalent to the discount rate set forth in
the Assumptions for the period from the Closing Date to the date
of the actual transfer of assets and adjusted for benefit
payments under the NMPC's Defined Benefit Plan made pursuant to
subparagraph (D) below; provided, however, that if NMPC is unable
-------- -------
to transfer the amount required by this paragraph h(A)(i) and
(ii), then:
(I) NMPC shall transfer an amount equal to the sum of the
accumulated benefit obligation ("ABO"), whether or not
vested, as determined in accordance with the
Assumptions, and which is attributable to the
Transferred Non-Union
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Employees as of the Closing Date and the amount
described in paragraph h(A)(ii); and
(II) NMPC shall pay to Buyer in cash the amount of the
difference between the amount described in paragraph
h(A)(i) and (ii) and the amount described in clause (I)
above.
The transfer of either of the amounts described in this
subparagraph (A) shall be made in accordance with Section 414(l)
of the Code and Treasury Regulation Section 1.414(l)-l, using the
actuarial assumptions specified in Schedule 6.10(h). The PBO and
ABO shall be calculated in accordance with the Assumptions and
using an annual interest rate credit equal to the "Interest Rate"
(as that term is defined in the NMPC Defined Benefit Plan) at the
Closing Date.
(B) All assets transferred under subparagraph (A) shall be
transferred in cash, or in marketable securities that are
reasonably acceptable to Buyer.
(C) Within 45 days after the Closing Date, NMPC and Buyer shall file
or cause to be filed any Forms 5310-A that may be required to be
submitted to the IRS in connection with the transfer described in
subparagraph (A).
The transfer described in subparagraph (A) shall be made as soon
as practicable following the determination of the amount
described in subparagraph (A), but in no event prior to the
thirtieth (30th) day following the filing of such Forms 5310-A
with the IRS or, in the event that the IRS, the PBGC or any other
governmental entity raises any objections to the transfer, the
date as of which the IRS, the PBGC or other governmental entity
withdraws such objections or is satisfied that the terms of the
transfer have been modified to the extent necessary to meet such
objections.
(D) Upon completion of the transfer under subparagraph (A), all
benefit payments from the Replacement Defined Benefit Plan shall
be the responsibility of Buyer. Pending completion of the
transfer under subparagraph (A), any benefits that would
otherwise be payable to the Transferred Non-Union Employees under
the Replacement Defined Benefit Plan shall be paid or continue to
be paid out of the NMPC's Defined Benefit Plan, and the amount to
be transferred under subparagraph (A) shall be reduced by the
amount of such payments.
Pending the completion of such transfer, NMPC will cooperate with
Buyer with respect to plan administration, including the
disbursement of benefits.
(E) Buyer agrees that it shall submit the Replacement Defined Benefit
Plan to the IRS for a determination letter on its tax-qualified
status under Section 401(a) of the Code as soon as practicable
after the Closing.
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NMPC agrees that it shall use Commercially Reasonable Efforts to accomplish
the transfer of assets described in subparagraph (A) of this Section 6.10;
provided, however, that if NMPC determines in good faith that it is unable to
-------- -------
make such a transfer, then, notwithstanding the language in this Section 6.10,
NMPC and Buyer agree to negotiate a mutually agreeable resolution of the defined
benefit plan issues in this Section.
(i) Buyer and NMPC do not anticipate the issuance of any notices
pursuant to the WARN Act. Notwithstanding the foregoing, NMPC agrees to timely
perform and discharge all requirements under the WARN Act and under applicable
state and local laws and regulations for the notification of employees arising
from the sale of the Purchased Interests to Buyer up to the Closing Date for
those employees who will not become Transferred Employees effective as of the
Closing Date. On or after the Closing Date, Buyer shall be responsible for
performing and discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the notification of
employees with respect to the Purchased Interests. At Closing, NMPC shall
provide a certificate setting forth the number of employees who suffered an
"employment loss" at NMP-1 or NMP-2 as defined under the WARN Act in the ninety
(90) days immediately preceding the Closing Date.
(j) NMPC is responsible for extending COBRA continuation coverage to
all employees and former employees, and qualified beneficiaries of such
employees and former employees, who become or became entitled to such COBRA
continuation coverage on or before the Closing Date by reason of the occurrence
of a qualifying event on or before the Closing Date, including those for whom
the Closing Date occurs during their COBRA election period. Buyer shall be
responsible for providing COBRA continuation coverage only to Transferred
Employees and qualified beneficiaries of such employees who become entitled to
such COBRA continuation coverage on or after the Closing Date by reason of the
occurrence of a qualifying event after the Closing Date.
(k) NMPC shall remain responsible for paying Transferred Non-Union
Employees for: (a) all salary, wages, and a pro rata portion of any bonuses or
incentive compensation that were earned for time worked for NMPC or NMPC's
Affiliates prior to the Closing Date; and (b) all workers' compensation,
disability benefits, or other insurance benefits for which entitlement to
payment is based upon events occurring prior to the Closing Date including any
incurred but unreported claims under employee benefit plans maintained by NMPC.
NMPC shall pay to Buyer as promptly as practicable following the Closing Date,
but no later than the 45th day, the cash equivalent for all vacation time for
Transferred Non-Union Employees which has accrued as of the Closing Date
(holiday time shall not be included in such payment). NMPC shall remain
responsible for all vacation time for Transferred Union Employees which has
accrued as of the Closing Date.
(l) Individuals who are otherwise "Union Employees" or "Non-Union
--------------- ---------
Employees" but who on any date are not actively at work due to a leave of
---------
absence covered by the Family and Medical Leave Act, or due to any other
authorized leave of absence, shall nevertheless be treated as "Union Employees"
---------------
or as "Non-Union Employees," as the case may be, on such date if they are able
-------------------
to (i) return to work within the protected period under the Family and Medical
Leave Act or such other leave whichever is applicable, and (ii) perform the
essential functions of their job, with or without a reasonable accommodation.
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(m) For at least two years following the Closing Date, Buyer shall
provide all Transferred Non-Union Employees with retiree medical, mental health,
prescription drug, and life insurance coverages (the "Replacement Retiree
-------------------
Coverages") that are substantially similar to the NMPC retiree medical, mental
---------
health, prescription drug, and life insurance coverages available to eligible
Non-Union Employees who retire from NMPC immediately prior to the Closing Date
(the "NMPC Retiree Coverages"). Buyer shall (i) waive all limitations as to pre-
----------------------
existing condition exclusions and waiting periods with respect to the
Transferred Non-Union Employees under the Replacement Retiree Coverages, other
than, but only to the extent of limitations or waiting periods that were in
effect with respect to such employees under the NMPC Retiree Coverages and that
have not been satisfied as of the Closing Date, and (ii) provide each
Transferred Non-Union Employee with credit for any co-payments and deductibles
paid prior to the Closing Date during a plan year under each applicable NMPC's
plan that has not ended as of the Closing Date, in satisfying any deductible or
out-of-pocket requirements under the Replacement Retiree Coverages (on a pro-
rata basis in the event of a difference in plan years). Effective as of the
Closing Date, NMPC shall have no responsibility to provide retiree medical,
mental health, prescription drug, or life insurance coverages for any
Transferred Employee.
(n) Buyer shall pay to each Transferred Non-Union Employee who is
hired by Buyer and whose employment is terminated by Buyer or one of its
Affiliates within eighteen months of the Closing Date a severance benefit
package equivalent to that which would have been provided to such individual
upon such termination by NMPC under the Niagara Mohawk Involuntary Severance
Plan as in effect on the Closing Date had such individual remained continuously
employed by NMPC or its Affiliates and had been eligible for, and entitled to
benefits under, such plan on the date of such termination.
(o) Buyer shall assume the obligations of NMPC under the agreements
listed on Schedule 6.10(o) hereto.
6.11. Risk of Loss.
------------
(a) Prior to the Closing, Buyer shall not bear any risk of loss or
damage to the property included in the NMP-2 Assets. Sellers shall replace or
repair any damage to the NMP-2 Assets in accordance with Good Utility Practices,
except as otherwise provided in paragraphs (b) or (c) below.
(b) If, before the Closing, all or any portion of the NMP-2 Assets
is taken by eminent domain or is the subject of a pending or (to the Knowledge
of Sellers) contemplated taking which has not been consummated, Sellers shall
notify Buyer promptly in writing of such fact. If such taking would create a
Material Adverse Effect, Buyer and Sellers shall negotiate in good faith to
settle the loss resulting from such taking (including, without limitation, by
making a fair and equitable adjustment to the Purchase Price) and, upon such
settlement, consummate the transactions contemplated by this Agreement pursuant
to the terms of this Agreement. If no such settlement is reached within sixty
(60) days after Sellers have notified Buyer of such taking, then Buyer or
Sellers may terminate this Agreement pursuant to Section 9.1(f).
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(c) If, before the Closing, all or any portion of the NMP-2 Assets
is damaged or destroyed by fire or other casualty, Sellers shall notify Buyer
promptly in writing of such fact. If such damage or destruction would create a
Material Adverse Effect and Sellers have not notified Buyer of their intention
to cure such damage or destruction within fifteen (15) days after its
occurrence, Buyer and Sellers shall negotiate in good faith to settle the loss
resulting from such casualty (including, without limitation, by making a fair
and equitable adjustment to the Purchase Price) and, upon such settlement,
consummate the transactions contemplated by this Agreement pursuant to the terms
of this Agreement. If no such settlement is reached within sixty (60) days after
Sellers have notified Buyer of such casualty, then Buyer may terminate this
Agreement pursuant to Section 9.1(f).
(d) The provisions of Section 5-1311 of the New York General
Obligations Law shall not apply to this Agreement.
6.12. Decommissioning Funds.
---------------------
(a) (i) Between the date hereof and the Closing Date, each Seller
will make additional cash deposits from time to time to its Qualified
Decommissioning Fund and its Nonqualified Decommissioning Fund such that, on the
Closing Date Sellers shall have accumulated assets in the Decommissioning Funds
equal to the Qualified Target, calculated on a Net Cash Value basis, in the
Qualified Decommissioning Funds and the Nonqualified Target in the Nonqualified
Decommissioning Fund.
(ii) At the Closing, Sellers shall cause all of the assets of
the Decommissioning Funds to be transferred to the Trustee under the Post-
Closing Decommissioning Trust Agreement.
(b) The Parties shall not take any actions that would be
inconsistent with the desired Tax consequences of the transactions contemplated
by this Agreement as set forth below:
(i) None of the Sellers, its Qualified Decommissioning Fund or
Buyer shall recognize any gain or otherwise take into account any income for
federal income tax purposes by reason of the transfer of the assets of such
Qualified Decommissioning Fund to the trustee under the Post-Closing
Decommissioning Trust Agreement.
(ii) Each Seller will (I) determine its gain or loss by taking
the difference between its Tax Basis in the Purchased Interests (excluding the
assets comprising its Qualified Decommissioning Fund) and its Purchase Price as
determined under Section 3.2 and Buyer's assumption of its percentage interest
of Assumed Liabilities and Obligations to the extent such Assumed Liabilities
and Obligations are taken into account as liabilities for federal income tax
purposes (together "Amount Realized") (excluding for purposes of this paragraph
6.12(b)(i), the decommissioning liability to the extent of the fair market value
of the assets of the Qualified Decommissioning Fund); and (II) take a current
deduction in determining its taxable income for its taxable year which includes
the Closing Date in an amount equal to the total of any amounts treated as
realized by Seller, or otherwise recognized as income to Seller, as a result of
Buyer's assumption of the Decommissioning obligations with respect to the
Purchased Interests.
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(iii) No Seller will be liable for any Tax on account of any
built in-gain in any such Seller's Qualified Decommissioning Fund.
(iv) Buyer will not realize income as a result of its
acquisition of the Purchased Interests except to the extent that the fair market
value of the Class I Assets (as defined in Temporary Treasury Regulations
Section (S) 1.338-6T(b)(1) and other than the assets comprising each Seller's
Qualified Decommissioning Fund) included as part of the Purchased Interests
exceeds the Purchase Price.
(c) In the event that, during the period beginning on the date of
this Agreement and ending on the Closing Date, legislation or Treasury
Regulations are enacted or promulgated or the IRS issues a private letter ruling
which is available to the Parties, revenue ruling, revenue procedure,
announcement or notice, or there has been a decision of a court of competent
jurisdiction, that produces a benefit for the Buyer not otherwise contemplated
in Section 6.12(b)(i) and 6.12(b)(iv) and is related to the transactions
contemplated in this Agreement, then, the Parties agree to negotiate in good
faith an equitable sharing of any such benefit.
6.13. Spent Nuclear Fuel Fees. Except as provided in the third sentence of
-----------------------
this paragraph and Sections 2.1(b) and 2.3(g), between the date hereof and the
Closing Date, and at all times thereafter, each Seller will remain liable for an
amount equal to such Seller's Proportionate Ownership of all Spent Nuclear Fuel
Fees and any other fees associated with electricity generated at NMP-2 and sold
prior to the Closing Date, and Buyer shall have no liability or responsibility
therefor. Buyer shall pay and discharge an amount equal to the sum of all
Sellers' Proportionate Ownership of all fees and expenses associated with the
nuclear fuel consumed in NMP-2 and sold from and after the Closing Date, and
Sellers shall have no liability or responsibility therefor. Buyer shall assume
title to, and responsibility for the sum of all Sellers' Proportionate Ownership
of the storage and disposal of the Spent Nuclear Fuel of NMP-2 as of the Closing
Date. Each Seller shall assign to Buyer its undivided right, title and interest
in and to the DOE Standard Spent Fuel Disposal Contract and shall provide the
required notice to DOE within 90 days of transfer of title to spent fuel.
6.14. Department of Energy Decontamination and Decommissioning Fees. Each
-------------------------------------------------------------
Seller will continue to pay in respect of its Proportionate Ownership all
Department of Energy Decontamination and Decommissioning Fees relating to
nuclear fuel purchased and consumed at NMP-2 prior to the Closing Date,
including but not limited to all annual Special Assessment invoices to be issued
after the Closing Date by the Department of Energy, as contemplated by its
regulations at 10 C.F.R. Part 766 implementing Sections 1801, 1802, and 1803 of
the Atomic Energy Act.
6.15. Cooperation Relating to Insurance and Xxxxx-Xxxxxxxx Act. Until the
--------------------------------------------------------
Closing, NMPC will maintain in effect the same level of property damage and
liability insurance for the Facilities as in effect on the date hereof. NMPC
shall cooperate with Buyer's efforts to obtain insurance, including insurance
required under the Xxxxx-Xxxxxxxx Act or other Nuclear Laws with respect to the
NMP-2 Assets. In addition, subject to the satisfaction of Buyer's
indemnification obligations under Section 8.1(a), NMPC agrees to use reasonable
efforts to assist Buyer in making any claims against pre-Closing insurance
policies of NMPC that may provide
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coverage related to Assumed Liabilities and Obligations. Buyer agrees to
indemnify NMPC for its reasonable out of pocket expenses incurred in providing
such assistance and cooperation and not to take any action which shall adversely
affect any residual rights of NMPC in such insurance policies.
6.16. Tax Clearance Certificates. Sellers and Buyer shall cooperate and
--------------------------
use their Commercially Reasonable Efforts to cause the tax clearance
certificates described in Schedule 4.20 of this Agreement to be issued by the
appropriate taxing authorities prior to the Closing Date or as soon as
practicable thereafter. Buyer shall, at least ten (10) days prior to the Closing
Date, file Form AU-196.10, Notification of Sale, Transfer or Assignment in Bulk,
with the New York State Department of Taxation and Finance.
6.17. Release of Sellers. Buyer shall use Commercially Reasonable Efforts
------------------
to obtain a written release of Sellers effective as of the Closing with respect
to obligations arising on or after the Closing Date under any of the Sellers'
Agreements or Non-material Contracts assigned to Buyer hereunder.
6.18. Operating Agreements; Co-Tenants Agreement; Selling Co-Tenants
--------------------------------------------------------------
Agreement. (a) During the period from the date of this Agreement to the Closing
Date, NMPC shall operate the NMP-2 Assets in compliance in all material respects
with the terms of the Operating Agreements and, without the written consent of
Buyer, which consent shall not be unreasonably withheld, Sellers shall not enter
into any amendment or modification of the Operating Agreements. NMPC shall keep
Buyer advised through the Transition Committee (as provided in Section 6.1(b))
of all significant operating issues applicable to NMP-2. NMPC shall keep
adequate books and records of all transactions and other matters relating to the
performance by NMPC of its duties and obligations under the Operating
Agreements. All such books and records shall be delivered or otherwise made
available to Buyer on the Closing Date.
(b) The Co-Tenants have entered into a co-tenant agreement which
governs, among other things, the treatment of NMP-2 operating costs prior to the
Closing. Buyer agrees to cooperate with the Co-Tenants in order to effect such
provisions of such co-tenant agreement.
(c) Sellers have entered into a selling co-tenants agreement which
requires, among other things, the sharing by Sellers of certain transaction
costs and adjustments to the sharing of the purchase price among Sellers. Buyer
agrees to cooperate with Sellers in order to effect such provisions of such
selling co-tenants agreement.
6.19. Private Letter Ruling
---------------------
The Parties agree to cooperate in good faith in the preparation and filing
of a private letter ruling request to be made jointly by Buyer and Sellers in
order to confirm the federal income tax treatment desired by the Parties as set
forth in Section 6.12(b)(i), (ii) and (iv). All rulings requested shall be
consistent with private letter rulings issued as of the date of this Agreement
by the IRS with respect to the transfer of a Qualified Decommissioning Fund to a
non-regulated buyer. Neither Buyer nor Sellers will take any actions to cause
the IRS to fail to issue such private letter ruling. The filing fees payable in
connection with such request shall be borne 50% by the Buyer and 50% by the
Sellers.
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6.20. Decommissioning
---------------
Buyer hereby agrees to commit to the NYPSC as a part of receiving Buyer's
Required Regulatory Approvals to Decommission NMP-2 once the Site is no longer
utilized for power generation, it being understood for purposes of this Section
6.20 that the term Decommission shall include, but not be limited to, all
requirements of Nuclear Laws and Environmental Laws, including the applicable
requirements of the Atomic Energy Act and the NRC's rules, regulations, orders
and pronouncements thereunder in effect on the date hereof.
6.21. Obligation of Parent to Fund Buyer under Note.
---------------------------------------------
In the event of the failure of Buyer to meet the Net Worth Requirement or
the Coverage Requirement (as defined in the Note referred to in Section 3.2
hereof ) prior to the date on which such Note is satisfied in full, the Parent
shall be obligated (the "Capital Obligation") no later than 5 days after receipt
of notice from Sellers to make an equity contribution or otherwise adjust the
capital structure of Buyer in order to cause Buyer to comply with such
requirements in order to avoid the occurrence of an Event of Default (as defined
in such Note), which 5 days shall run concurrently with the 5 day notice period
set forth in Section 5(g) or 5(h) of such Note, as applicable. In the event of
the failure by Parent to comply with its Capital Obligation, the Sellers shall
be entitled to the remedy of specific performance against Parent, compelling
Parent to comply with its Capital Obligation, and Parent shall reimburse Sellers
for any expenses in connection with enforcing their rights under this Section
6.21.
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of Buyer. The obligations of Buyer to
----------------------------------
purchase the Purchased Interests and to consummate the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Interests contemplated hereby shall
have expired or been terminated.
(b) No preliminary or permanent injunction or other order or decree
by any federal or state court or Governmental Authority which prevents the
consummation of the sale of the Purchased Interests contemplated herein shall
have been issued and remain in effect (each Party agreeing to cooperate in all
efforts to have any such injunction, order or decree lifted) and no statute,
rule or regulation shall have been enacted by any state or federal government or
Governmental Authority which prohibits the consummation of the sale of the
Purchased Interests;
(c) Buyer shall have received all of Buyer's Required Regulatory
Approvals, in form and substance reasonably satisfactory (including no
materially adverse conditions as described in Section 9.1(b)) to Buyer and such
approvals shall be in full force and effect and
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either (i) shall be final and non-appealable or (ii) if not final and non-
appealable, shall not be subject to the possibility of appeal, review or
reconsideration which, in the reasonable opinion of Buyer is likely to be
successful and, if successful, would have a Material Adverse Effect, or a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Buyer;
(d) Sellers holding Proportionate Interests equal to at least 50.1%
shall have received all of Sellers' Required Regulatory Approvals (other than
those the failure of which to obtain could not reasonably be expected to result
in a Material Adverse Effect or a material adverse effect on the business,
assets, operations or condition (financial or otherwise) of Buyer), none of such
approvals shall contain any conditions that could reasonably be expected to
result in a material adverse effect on the operations or condition (financial or
otherwise) of the NMP-2 Assets and the NMP-1 Interests, taken as a whole, or a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Buyer, and such approvals shall be in full force and
effect and either (i) shall be final and non-appealable or (ii) if not final and
non-appealable, shall not be subject to the possibility of appeal, review or
reconsideration which, in the reasonable opinion of Buyer is likely to be
successful and, if successful, would have a Material Adverse Effect, or a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Buyer;
(e) Sellers shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Sellers on or prior to the Closing
Date;
(f) Except to the extent the Purchase Price shall have been adjusted
pursuant to Section 3.8 with respect to any representation and warranty, the
representations and warranties of Sellers set forth in this Agreement that are
qualified by materiality shall be true and correct as of the Closing Date and
all other representations and warranties shall be true and correct in all
material respects as of the Closing Date, in each case as though made at and as
of the Closing Date;
(g) Buyer shall have received certificates from an authorized officer
of each Seller, dated the Closing Date, to the effect that, to such officer's
knowledge, the conditions set forth in Section 7.1(e), (f), (k), (n) and (o)
have been satisfied by such Seller, including a statement that such officer has
received written confirmation as to Section 7.1(f) from the persons listed on
Schedule 1.1(84);
(h) Buyer shall have received an opinion from each Seller's counsel
reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially in
the form of Exhibit J hereto;
(i) Sellers shall have delivered, or caused to be delivered, to Buyer
at the Closing, Sellers' closing deliveries described in Section 3.6;
(j) Buyer shall have received from a title insurance company
reasonably acceptable to Buyer an ALTA owner's title insurance policy on the
Real Property, in form and substance reasonably satisfactory to Buyer, insuring
title as described in Section 4.7, subject only
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to the Permitted Encumbrances. Buyer shall provide Sellers with a copy of a
preliminary title report and an updated survey for the Real Property to the
extent obtained by Buyer;
(k) Since the date hereof, no Material Adverse Effect shall have
occurred and be continuing;
(l) The liens of the Mortgage Indentures on the NMP-2 Assets shall
have been released and any documents necessary to evidence such release shall
have been delivered to the title company;
(m) The simultaneous sale to Buyer of NMP-1 pursuant to the NMP-1
Asset Purchase Agreement shall have been completed;
(n) The value of the Decommissioning Funds shall be as set forth in
Section 6.12;
(o) Each of the Co-Tenants shall have waived, or provided written
irrevocable notice that they will not exercise, any rights of first refusal
available to the Co-Tenants under the Operating Agreements to acquire the
interests of Sellers in the NMP-2 Assets, or such rights shall have otherwise
expired;
(p) For a period of seven consecutive days in the two week period
prior to the Closing Date, and as of the Closing, each of NMP-1 and NMP-2 shall
have been continuously operated at 97% of full licensed thermal power, other
than a temporary reduction in power output of not more than five percent of full
licensed thermal power that continues for less than 48 hours and planned
reductions in power to swap feed pumps, rod sequence exchanges and scram time
testing after which 97% of full licensed thermal power shall have again been
reached; and
(q) The taxes payable with respect to NMP-1 and NMP-2 to Oswego
County, Town of Scriba and Oswego City School District shall not be materially
higher than those contemplated by the Memorandum of Understanding, dated
November 13, 2000, among such entities and the Sellers, provided that Sellers
shall have the right to satisfy this condition with an adjustment to the
Purchase Price agreed to by the Parties reflecting the effect of 82% of such
higher taxes; provided, however, that if the taxes subsequently paid after the
Closing are decreased below the levels used in determining such adjustment,
Sellers shall be refunded such overpayment; and
(r) Legislation or Treasury Regulations shall have not been enacted
or promulgated, the IRS shall not have issued a private letter ruling which is
available to the Parties, revenue ruling, revenue procedure, announcement or
notice, and there shall not have been a decision of a court of competent
jurisdiction, that is reasonably likely to cause for federal income tax purposes
a result different for Buyer than the tax results contemplated in Section
6.12(b)(i) and 6.12(b)(iv) which is materially adverse to Buyer.
7.2. Conditions to Obligations of Sellers. The obligation of each Seller
------------------------------------
to sell the Purchased Interests and to consummate the other transactions
contemplated by this Agreement
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shall be subject to the fulfillment at or prior to the Closing Date (or the
waiver by such Seller) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Interests contemplated hereby shall
have expired or been terminated;
(b) No preliminary or permanent injunction or other order or decree
by any federal or state court or Governmental Authority which prevents the
consummation of the sale of the Purchased Interests contemplated herein shall
have been issued and remain in effect (each Party agreeing to use its
Commercially Reasonable Efforts to have any such injunction, order or decree
lifted) and no statute, rule or regulation shall have been enacted by any state
or federal government or Governmental Authority in the United States which
prohibits the consummation of the sale of the Purchased Interests;
(c) Each Seller shall have received all of such Seller's Sellers'
Required Regulatory Approvals, in form and substance reasonably satisfactory
(including no materially adverse conditions as described in Section 9.1 (d)) to
such Seller and such approvals shall be in full force and effect and either (i)
shall be final and non-appealable or (ii) if not final and non-appealable, shall
not be subject to the possibility of appeal, review or reconsideration which, in
the reasonable opinion of such Seller (A) is likely to be successful and (B), if
successful, would have a material adverse effect on the operations or conditions
(financial or otherwise) of such Seller;
(d) Buyer shall have received all Buyer's Required Regulatory
Approvals (other than those the failure of which to obtain could not reasonably
be expected to result in a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of such Seller), none of such
approvals shall contain any conditions that could reasonably be expected to
result in a material adverse effect on the business, assets, operations or
condition (financial or otherwise) of such Seller, and such approvals shall be
in full force and effect and either (i) shall be final and non-appealable or
(ii) if not final and non-appealable, shall not be subject to the possibility of
appeal, review or reconsideration which, in the reasonable opinion of such
Seller (A) is likely to be successful and (B) if successful, would have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of such Seller;
(e) All consents and approvals for the consummation of the sale of
the Purchased Interests contemplated hereby required under the terms of any
note, bond, mortgage, indenture, material agreement or other instrument or
obligation to which such Seller is party or by which such Seller, or any of the
NMP-2 Assets, may be bound, shall have been obtained, other than those which if
not obtained, would not, individually and in the aggregate, create a material
adverse effect on the operations or conditions (financial or otherwise) of such
Seller;
(f) Buyer shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Buyer on or prior to the Closing
Date;
(g) The representations and warranties of Buyer and Parent set forth
in this Agreement that are qualified by materiality shall be true and correct as
of the Closing Date and
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all other representations and warranties shall be true and correct in all
material respects as of the Closing Date, in each case as though made at and as
of the Closing Date;
(h) Each Seller shall have received certificates from an authorized
officer of Buyer and Parent, dated the Closing Date, to the effect that, to the
knowledge of such officer(s) the conditions set forth in Sections 7.2(f) and (g)
have been satisfied by Buyer and Parent;
(i) Effective upon Closing, Buyer shall have assumed, as set forth in
Section 6.10, all of the applicable obligations under the IBEW Collective
Bargaining Agreement;
(j) Sellers shall have received opinions from Buyer's and Parent's
counsel reasonably acceptable to Sellers, dated the Closing Date and
satisfactory in form and substance to Sellers and their counsel, substantially
in the form of Exhibit K hereto;
(k) Buyer shall have delivered, or caused to be delivered, to Sellers
at the Closing, Buyer's closing deliveries described in Section 3.7;
(l) The liens of the Mortgage Indentures on the NMP-2 Assets shall
have been released and any documents necessary to evidence such release shall
have been delivered to the title company;
(m) The simultaneous sale to Buyer of NMP-l pursuant to the NMP-1
Asset Purchase Agreement shall have been completed;
(n) Each of the Co-Tenants shall have waived, or provided written
irrevocable notice that they will not exercise, any right of first refusal under
the Operating Agreements to acquire the interests of Sellers in the NMP-2
Assets, or such rights shall have otherwise expired; and
(o) Legislation or Treasury Regulations shall have not been enacted
or promulgated, the IRS shall not have issued a private letter ruling which is
available to the Parties, revenue ruling, revenue procedure, announcement or
notice, and there shall not have been a decision of a court of competent
jurisdiction, that is reasonably likely to cause for Federal income tax purposes
a result different for a Seller than the tax results contemplated in Section
6.12(b)(i) and 6.12(b)(ii) which is materially adverse to such Seller.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1. Indemnification.
---------------
(a) Following the Closing, Buyer shall indemnify, defend and hold
harmless Sellers, their officers, directors, employees, shareholders, Affiliates
and agents (each, a "Sellers Indemnity") from and against any and all claims,
-----------------
demands, suits, losses, liabilities, damages, obligations, payments, costs and
expenses (including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, assessments, judgments, settlements and compromises
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relating thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) (each, an "Indemnifiable Loss"), asserted against or
------------------
suffered by any Sellers Indemnity relating to, resulting from or arising out of
(i) any breach by Buyer of the representations and warranties which survive the
Closing or any covenants contained in this Agreement, (ii) the Assumed
Liabilities and Obligations, (iii) any Third Party Claims against a Sellers
Indemnity arising out of or in connection with Buyer's ownership of undivided
interests in or operation of NMP-2 and other NMP-2 Assets on or after the
Closing Date, (iv) any actions taken by Buyer (including, without limitation,
the structure of the transfer of the Decommissioning Funds contemplated by this
Agreement), which shall result in tax consequences to Sellers which are
different for Sellers from those contemplated in Section 6.12(b)(i) and
6.12(b)(ii), or (v) any tax consequences to any Seller which results in a Tax
liability to any such Seller on account of any built-in gain in any such
Seller's Qualified Decommissioning Fund.
(b) Following the Closing, Sellers shall indemnify, defend and hold
harmless Buyer, its officers, directors, members, employees, shareholders,
Affiliates and agents (each, a "Buyer Indemnity") from and against any and all
---------------
Indemnifiable Losses asserted against or suffered by any Buyer Indemnity
relating to, resulting from or arising out of (i) any breach by a Seller of the
representations and warranties which survive the Closing or any covenants
contained in this Agreement, (ii) the Excluded Liabilities, (iii) noncompliance
by Sellers with any bulk sales or transfer laws as provided in Section 10.11,
(iv) any Third Party Claims against a Buyer Indemnity arising out of or in
connection with Sellers' ownership or operation of the NMP-2 Assets on or prior
to the Closing Date (other than any Third Party Claims that are Assumed
Liabilities), (v) any Third Party Claims against a Buyer Indemnity arising out
of or in connection with Sellers' ownership or operation of the Excluded Assets,
(vi) all Taxes incurred by reason of any act of Sellers that either constitutes
an act of "self-dealing" as defined in Treas. Reg. (S) 1.468A-5(b)(2) or results
in the disqualification of the Qualified Decommissioning Funds under Treas. Reg.
(S) 1.468A-5 other than as a result of the transfer contemplated by Section 5.7
hereof, or (vii) any claims or attachments of any Seller or any Seller creditor
against the Decommissioning Funds after the Closing Date. The indemnification
obligations of Sellers arising under this Section 8.1(b) shall be on a several
basis in accordance with their respective Proportionate Interests; provided,
--------
however, that NMPC shall be liable for the full amount of the Indemnifiable Loss
-------
if it shall be determined pursuant to a nonappealable final judgment of a court
of competent jurisdiction that Co-Tenants other than NMPC have no obligation
with respect to such losses under the Operating Agreements; provided, further,
-------- -------
however, that each Seller shall be liable for the full amount of the
-------
Indemnifiable Loss of any Buyer Indemnity relating to, arising from or arising
out of (A) breaches by such Seller of representations, warranties and covenants
relating specifically to such Seller and not the NMP-2 Assets, (B) Excluded
Assets or Liabilities that are the sole asset, obligation or liability, as the
case may be, of such Seller, (C) the matters set forth in clauses (iii) (in the
case of noncompliance by such Seller) and (vi) (in the case of any act by such
Seller) above, and (D) any claims or attachments of such Seller (or any creditor
of such Seller) against such Seller's Decommissioning Funds after Closing.
(c) The expiration or termination of any representation or warranty
shall not affect the Parties' obligations under this Section 8.1 if the
Indemnity provided the Person required to provide indemnification under this
Agreement (the "Indemnifying Party") with
------------------
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proper notice of the claim or event for which indemnification is sought prior to
such expiration, termination or extinguishment.
(d) Except to the extent otherwise provided in Article IX, the rights
and remedies of Sellers and Buyer under this Article VIII are exclusive and in
lieu of any and all other rights and remedies which Sellers and Buyer may have
under this Agreement or otherwise for monetary relief, with respect to (i) any
breach of or failure to perform any covenant, agreement, or representation or
warranty set forth in this Agreement, after the occurrence of the Closing, or
(ii) the Assumed Liabilities and Obligations or the Excluded Liabilities, as the
case may be. The indemnification obligations of the Parties set forth in this
Article VIII apply only to matters arising out of this Agreement, excluding the
Ancillary Agreements. Any Indemnifiable Loss arising under or pursuant to an
Ancillary Agreement shall be governed by the indemnification obligations, if
any, contained in the Ancillary Agreement under which the Indemnifiable Loss
arises.
(e) Notwithstanding anything to the contrary herein, no Party
(including an Indemnity) shall be entitled to recover from any other Party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments, losses, costs, or expenses under this Agreement any amount in excess
of the actual compensatory damages, court costs and reasonable attorney's and
other advisor fees suffered by such Party. Buyer and Sellers waive any right to
recover punitive, incidental, special, exemplary and consequential damages
arising in connection with or with respect to this Agreement including, but not
limited to, losses or damages caused by reason of unavailability of NMP-2, plant
shutdowns or service interruptions, loss of use, profits or revenue, inventory
or use charges, cost of purchased or replacement power, interest charges or cost
of capital. The provisions of this Section 8.1(e) shall not apply to
indemnification for a Third Party Claim.
8.2. Defense of Claims.
-----------------
(a) If any Indemnity receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought by any
Person who is not a Party to this Agreement or any Affiliate of a Party to this
Agreement (a "Third Party Claim"), including but not limited to an information
-----------------
document request or a notice of proposed disallowance issued by the Internal
Revenue Service relating to a matter covered by Section 5.7, with respect to
which indemnification is to be sought from an Indemnifying Party, the Indemnity
shall give such Indemnifying Party reasonably prompt written notice thereof, but
in any event such notice shall not be given later than twenty (20) calendar days
after the Indemnitee's receipt of notice of such Third Party Claim. Such notice
shall describe the nature of the Third Party Claim in reasonable detail and
shall indicate the estimated amount, if practicable, of the Indemnifiable Loss
that has been or may be sustained by the Indemnity. The Indemnifying Party will
have the right to participate in or, by giving written notice to the Indemnity,
to elect to assume the defense of any Third Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel, provided that the
counsel for the Indemnifying Party who shall conduct the defense of such Third
Party Claim shall be reasonably satisfactory to the Indemnity. The Indemnity
shall cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnity may compromise or settle such Third Party Claim over the
objection of the
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Indemnifying Party, which settlement or compromise shall conclusively establish
the Indemnifying Party's liability pursuant to this Agreement.
(b) (i) If, within twenty (20) calendar days after an Indemnity
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnity receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2 (a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnity in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
-------- -------
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnity that
the Indemnity believes the Indemnifying Party has failed to take such steps, the
Indemnity may assume its own defense and the Indemnifying Party shall be liable
for all reasonable expenses thereof.
(ii) Without the prior written consent of the Indemnity, the
Indemnifying Party shall not enter into any settlement of any Third Party Claim
which would lead to liability or create any financial or other obligation on the
part of the Indemnity for which the Indemnity is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without
leading to liability or the creation of a financial or other obligation on the
part of the Indemnity for which the Indemnity is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer,
the Indemnifying Party shall give written notice to the Indemnity to that
effect. If the Indemnity fails to consent to such firm offer within twenty (20)
calendar days after its receipt of such notice, the Indemnifying Party shall be
relieved of its obligations to defend such Third Party Claim and the Indemnity
may contest or defend such Third Party Claim. In such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be the
amount of such settlement offer plus reasonable costs and expenses paid or
incurred by Indemnity up to the date of said notice.
(c) Any claim by an Indemnity on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") shall be
------------
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not be
given later than twenty (20) calendar days after the Indemnity becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of twenty (20)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such twenty (20) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such claim, the Indemnity will be free to seek
enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time subsequent
to the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by, from or against
any other entity, the amount of such reduction, less any costs, expenses or
premiums incurred in connection therewith (together with interest thereon from
the date of payment thereof to the date or repayment at the "prime rate" as
published in The Wall Street Journal) shall promptly be repaid by the Indemnity
-----------------------
to the Indemnifying Party.
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(e) A failure to give timely notice as provided in this Section 8.2
shall not affect the rights or obligations of any Party hereunder except if, and
only to the extent that, as a result of such failure, the Party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
ARTICLE IX
TERMINATION
-----------
9.1. Termination. (a) This Agreement may be terminated at any time prior
-----------
to the Closing Date by mutual written consent of Sellers and Buyer.
(b) This Agreement may be terminated by Sellers or Buyer, if (i) any
Federal or state court of competent jurisdiction shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise prohibiting
the Closing, and such order, judgment or decree shall have become final and
nonappealable or (ii) any statute, rule, order or regulation shall have been
enacted or issued by any Governmental Authority which, directly or indirectly,
prohibits the consummation of the Closing; or (iii) the Closing contemplated
hereby shall have not occurred on or before December 31, 2001 (the "Termination
Date"); provided that the right to terminate this Agreement under this Section
9.1(b)(iii) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date and provided, further,
that if on the Termination Date the conditions to the Closing set forth in
Section 7.2(c) or 7.2(d) shall not have been fulfilled but all other conditions
to the Closing shall be fulfilled or shall have been capable of being fulfilled,
then the Termination Date shall be the day which is twenty-four months from the
date of this Agreement.
(c) This Agreement may be terminated by Buyer if any of Sellers'
Required Regulatory Approvals or Buyer's Required Regulatory Approvals, the
receipt of which is a condition to the obligation of Buyer to consummate the
Closing as set forth in Sections 7.1(c) and 7.1(d), shall have been denied or
shall have been granted but are not in form and substance reasonably
satisfactory to Buyer because one of such approvals contains a condition that
would have a material adverse effect on the operations or condition (financial
or otherwise) of the NMP-2 Assets and the NMP-1 Interests, taken as a whole, or
a material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Buyer.
(d) This Agreement may be terminated by any Seller with respect to
itself if any of its Sellers' Required Regulatory Approvals or Buyer's
Regulatory Approvals, the receipt of which are a condition to the obligation of
such Seller to consummate the Closing as set forth in Section 7.2(c) and Section
7.2(d), shall have been denied or shall have been granted but are not in form
and substance reasonably satisfactory to such Seller, because one of such
approvals contains a condition that would have a material adverse effect on the
business, assets, operations or condition (financial or otherwise) of such
Seller.
(e) This Agreement may be terminated by Buyer if there has been a
material violation or breach by Sellers of any applicable covenant,
representation or warranty contained in
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this Agreement and such violation or breach (i) is not adjusted under Section
3.8, (ii) is not cured by the earlier of the Closing Date or the date thirty
(30) days after receipt by Sellers (or by Buyer in the case of notice by Sellers
pursuant to Section 6.9) of written notice specifying particularly such
violation or breach, and (iii) such violation or breach has not been waived by
Buyer. With respect to any material violation or breach solely as to an
individual Seller, Buyer may terminate this Agreement solely as to such Seller,
unless the resulting Proportionate Ownership of the remaining Sellers is less
than 50.1%, in which event Buyer may terminate this Agreement.
(f) This Agreement may be terminated by Sellers if there has been a
material violation or breach by Buyer or Parent of any covenant, representation
or warranty contained in this Agreement and such violation or breach is not
cured by the earlier of the Closing Date or the date thirty (30) days after
receipt by Buyer or Parent (or by Sellers in the case of notice by Buyer or
Parent pursuant to Section 6.9) of written notice specifying particularly such
violation or breach, and such violation or breach has not been waived by
Sellers.
(g) This Agreement may be terminated by Buyer or Sellers in
accordance with the provisions of Sections 6.11(b) or (c).
(h) This Agreement may be terminated by a Seller, with respect to
itself, if one of the events the non-occurrence of which is a condition to
closing in Section 7.2(o) occurs, which is reasonably likely to have a material
adverse effect on the business, assets, operations or condition (financial or
otherwise) of such Seller.
(i) This Agreement may be terminated by RG&E or NYSEG with respect to
itself if any of its Sellers' Required Regulatory Approvals, the receipt of
which are a condition to its obligation to consummate the Closing as set forth
in Section 7.2(c), shall not have been granted within 170 days after the date
hereof.
(j) Buyer recognizes that NMPC shall retain its right prior to
Closing to negotiate any successor or amendment to the IBEW Collective
Bargaining Agreement and to make changes in wages and benefits payable to Non-
Union Employees which NMPC deems appropriate to its operations, including the
operations of NMP-2. Buyer agrees that any such successor or amendment to the
IBEW Collective Bargaining Agreement shall be treated as part of the IBEW
Collective Bargaining Agreement in accordance with Sections 1.1 (72) and 6.10.
This Agreement may be terminated by Buyer (i) within 10 Business Days following
NMPC providing to Buyer a copy of any tentative successor or amendment to the
IBEW Collective Bargaining Agreement if the terms thereof are inconsistent with
past practice and would increase materially the aggregate wages, compensation
and benefits payable to Transferred Employees, except as required by law, or
otherwise effect a material adverse change from the terms of the IBEW Collective
Bargaining Agreement as it relates to the Transferred Employees or the
operations of the NMP-2 Assets after the Closing or (ii) if NMPC shall increase
the cost of the aggregate wages, compensation, and benefits payable to the
Transferred Non-Union Employees in a manner that would be inconsistent with past
practice and would increase materially such cost. NMPC shall no later than one
day following the execution of any tentative successor or amendment to the IBEW
Collective Bargaining Agreement provide such agreement to Buyer.
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9.2. Procedure and Effect of No-Default Termination. In the event of
----------------------------------------------
termination of this Agreement by any Party pursuant to this Section 9, written
notice thereof shall forthwith be given by the terminating Party to the other
Parties, whereupon, if this Agreement is terminated pursuant to Section 9.1 (but
only in the case of termination pursuant to Subsections (e) or (f) where a
breach of a representation or warranty by the non-terminating Party is not
willful), the liabilities of the Parties hereunder will terminate, except as
otherwise expressly provided in this Agreement, and thereafter no Party shall
have any recourse against any of the other Parties by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1. Amendment and Modification. Subject to applicable law, this Agreement
--------------------------
may be amended, modified or supplemented only by written agreement of Sellers
and Buyer.
10.2. Waiver of Compliance; Consents. Except as otherwise provided in this
------------------------------
Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith.
10.3. Survival of Representations, Warranties, Covenants and Obligations.
------------------------------------------------------------------
(a) The representations and warranties given or made by any Party to
this Agreement or in the certificates required by Section 7.1(g) or 7.2(h) shall
not survive the Closing and shall be of no further force or effect, except that
(i) all representations and warranties relating to Taxes and Tax Returns shall
survive the Closing for the period of the applicable statutes of limitation plus
any extensions or waivers thereof and (ii) all representations and warranties
set forth in Sections 4.21, 4.22 and 5.7 hereof shall survive the Closing
indefinitely. Each Party shall be entitled to rely upon the representations and
warranties of the other Party or Parties set forth herein, notwithstanding any
investigation or audit conducted before or after the Closing Date or the
decision of any Party to complete the Closing.
(b) The covenants and obligations of the Parties set forth in this
Agreement, including without limitation the indemnification obligations of the
Parties under Article VIII hereof, shall survive the Closing indefinitely, and
the Parties shall be entitled to the full performance thereof by the other
Parties hereto without limitation as to time or amount (except as otherwise
specifically set forth herein).
10.4. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
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specified by like notice; provided, however, that notices of a change of address
-------- -------
shall be effective only upon receipt thereof):
(a) If to NMPC, to:
Niagara Mohawk Power Corporation
000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Chief Financial Officer
with a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx Xxxxxx Xxxxxxxxxx, Esq.
(b) if to NYSEG, to:
New York State Electric & Gas Corporation
Corporate Drive
Kirkwood Industrial Park
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Senior Vice President
with a copy to:
Xxxxx Xxxxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
(c) if to RG&E, to:
Rochester Gas and Electric Corporation
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Senior Vice President
with a copy to:
Xxxxx Peabody LLP
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
(d) if to CHGEC, to:
-00-
Xxxxxxx Xxxxxx Gas & Electric Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Upright, Senior Vice President
with a copy to:
Xxxxx & Xxxxxx LLP
One Chase Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(e) if to Buyer, to:
Constellation Nuclear, LLC
00 Xxxx Xxxxxxxxx Xxxxxx
00/xx/ Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
with a copy to:
Constellation Nuclear, LLC
00 Xxxx Xxxxxxxxx Xxxxxx
00/xx/ Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
(f) if to Parent, to:
Constellation Energy Group, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Chief Financial Officer
with a copy to:
Constellation Energy Group, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, General Counsel
10.5. Assignment. This Agreement and all of the provisions hereof shall be
----------
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any Party
hereto, including by operation of law, without the prior written consent of each
other Party, such consent not to be unreasonably withheld, nor is this Agreement
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intended to confer upon any other Person except the Parties hereto any rights,
interests, obligations or remedies hereunder. Any assignment in contravention of
the foregoing sentence shall be null and void and without legal effect on the
rights and obligations of the Parties hereunder. No provision of this Agreement
shall create any third party beneficiary rights in any employee or former
employee of Sellers (including any beneficiary or dependent thereof) in respect
of continued employment or resumed employment, and no provision of this
Agreement shall create any rights in any such Persons in respect of any benefits
that may be provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder. Notwithstanding the
foregoing, but subject to all applicable legal requirements, (i) Buyer or its
permitted assignee may grant a security interest in the rights and interests
hereunder to a trustee, lending institution or other party for the purposes of
leasing, financing or refinancing the Purchased Interests, (ii) Buyer or its
permitted assignee may assign, transfer, pledge or otherwise dispose of
(absolutely or as security) its rights and interests hereunder to an Affiliate
(an "Assignee Entity") of Buyer at least 68% of the equity securities of which
are owned by Buyer; provided, however, (1) any minority owner of the Assignee
-------- -------
Entity shall be that entity contemplated to become an equity owner of
Constellation Energy Group's merchant energy group as set forth in that certain
press release issued by Constellation Energy Group on October 23, 2000, (2) no
minority owner of the Assignee Entity may have any control or management or
operational rights or role with respect to the Assignee Entity , and (3) no such
assignment shall relieve or discharge Buyer from any of its obligations
hereunder or shall be made if it would reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by this
Agreement or materially increase the costs of the transactions contemplated by
this Agreement and (iii) Parent may assign its obligations hereunder to the
resulting parent entity of its unregulated businesses if such businesses are
spun-off after the date hereof provided that (A)(x) such parent entity's long-
term unsecured debt credit rating issue by Xxxxx'x Investors Service, Standard &
Poor's Corporation or another nationally recognized rating agency is investment
grade and (y) for so long as such parent entity does not have an investment
grade rating, then Buyer shall deliver an irrevocable, standby letter of credit
issued by a banking or other financial institution, the long-term unsecured debt
obligations of which is rated investment grade, with a drawing amount equal to
the Purchase Price, in the event such letter of credit is delivered prior to the
Closing, or the then outstanding principal amount, together with any then
accrued and unpaid interest on the Note, in the event such letter of credit is
delivered after the Closing, as the case may be, which shall remain in full
force and effect until the entire Purchase Price, and all amounts owed under the
Note, are satisfied and paid in full (or such parent entity reestablishes its
investment grade rating); provided, however, after payment in full of the cash
-------- -------
portion of the Purchase Price at Closing by Buyer, Buyer may reduce the drawing
amount under such letter of credit from time to time provided such drawing
amount is not less than the then outstanding principal amount, together with any
then accrued and unpaid interest on the Note; and (B) at the time of such
assignment such parent entity makes the same representations and warranties to
Sellers as those of Parent contained herein. Sellers agree, at Buyer's expense,
to execute and deliver such documents as may be reasonably necessary to
accomplish any such assignment, transfer, pledge or other disposition of rights
and interests hereunder so long as Sellers' rights under this Agreement are not
thereby altered, amended, diminished or otherwise impaired.
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10.6. Governing Law. Except as provided in Section 3.8, this Agreement
-------------
shall be governed by and construed in accordance with the law of the State of
New York (without giving effect to conflict of law principles) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies. THE PARTIES HERETO AGREE THAT VENUE IN ANY AND ALL
ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE
IN THE STATE AND FEDERAL COURTS FOR ONONDAGA COUNTY, NEW YORK, WHICH COURTS
SHALL HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSE (EXCEPT WHERE SUCH ACTION OR
PROCEEDING IS REQUIRED BY LAW TO BE IN OSWEGO COUNTY), AND THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION
OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH
COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8. Interpretation. The articles, section and schedule headings
--------------
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the meaning
or interpretation of this Agreement.
10.9. Schedules and Exhibits. Except as otherwise provided in this
----------------------
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.10. Entire Agreement. This Agreement, the Confidentiality Agreement and
----------------
the Ancillary Agreements, including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, and any other
documents executed on the date hereof that specifically reference this Section
10.10, embody the entire agreement and understanding of the Parties hereto in
respect of the transactions contemplated by this Agreement and supersedes all
prior agreements and understandings between the Parties other than the
Confidentiality Agreement with respect to such transactions. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein or therein. It is
expressly acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any material
made available to Buyer pursuant to the terms of the Confidentiality Agreement.
10.11. Bulk Sales Laws. Buyer acknowledges that, notwithstanding anything
---------------
in this Agreement to the contrary, Sellers will not comply with the provision of
the bulk sales laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. Buyer hereby waives compliance by Sellers with
the provisions of the bulk sales laws of all applicable jurisdictions.
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10.12. Partial Closing. In the event that the conditions set forth in
---------------
Section 7.1 shall be satisfied with respect to fewer than all Sellers, Buyer
shall, subject to the other terms and conditions of this Agreement, close the
transactions contemplated hereby with those Sellers who have satisfied the
conditions set forth in Section 7.1 and this Agreement shall remain in effect
with respect to any Seller with respect to whom the conditions set forth in
Section 7.1 have not been satisfied.
10.13. Parental Support. From the date hereof until the effectiveness of
----------------
the Closing, Parent agrees to provide to Buyer any and all financial support
necessary to permit Buyer to perform its obligations hereunder.
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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.
NIAGARA MOHAWK POWER CORPORATION
By:______________________________________
Name:
Title:
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By:______________________________________
Name:
Title:
ROCHESTER GAS AND ELECTRIC
CORPORATION
By:______________________________________
Name:
Title:
CENTRAL XXXXXX GAS & ELECTRIC
CORPORATION
By:______________________________________
Name:
Title:
CONSTELLATION NUCLEAR, LLC
By:______________________________________
Name:
Title:
CONSTELLATION ENERGY GROUP, INC.
By:______________________________________
Name:
Title:
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