\n
\n Section 6.5 Brokers 24
\n Section 6.6 No Knowledge of Seller’s Breach 24
\n Section 6.7 Qualified Buyer 25
\n Section 6.8 WARN Act 25
\n Section 6.9 Financial Representations 25
\n Section 6.10 Legal Proceedings 25
\nARTICLE VII – Covenants of the Parties 25
\n Section 7.1 Conduct of Business Relating to
\n the Auctioned Assets 25
\n Section 7.2 Access to Information 28
\n Section 7.3 Consents and Approvals; Transferable
\n Permits 29
\n Section 7.4 Further Assurances 30
\n Section 7.5 Public Statements 31
\n Section 7.6 Tax Matters 31
\n Section 7.7 Bulk Sales or Transfer Laws 31
\n Section 7.8 Witness Services 31
\n Section 7.9 Control of Litigation 32
\n Section 7.10 Confidentiality 32
\n Section 7.11 Risk of Loss 32
\n Section 7.12 Tax Exempt Financing 33
\n Section 7.13 Compliance with Governmental Agreements 36
\n Section 7.14 PJM; MAAC 36
\n Section 7.15 Trade Names 36
\n Section 7.16 Enforcement of Retained Rights 37
\n Section 7.17 Conduct of Business Relating to PPAs 37
\nARTICLE VIII – Conditions 37
\n Section 8.1 Conditions Precedent to Each Party’s
\n Obligation To Effect the Purchase
\n and Sale 37
\n Section 8.2 Conditions Precedent to Obligation
\n of Buyer To Effect the Purchase and Sale 38
\n Section 8.3 Conditions Precedent to Obligation
\n of Seller To Effect the Purchase and Sale 39
\nARTICLE IX – Employee Matters 41
\n Section 9.1 Employee Matters 41
\n Section 9.2 Pension Plans 43
\n Section 9.3 Buyer’s Savings Plan 43
\n Section 9.4 Severance Liabilities 45
\n Section 9.5 COBRA 45
\n Section 9.6 WARN Act 45
\nARTICLE X – Indemnification and Dispute Resolution 46
\n Section 10.1 Indemnification 46
\n Section 10.2 Third Party Claims Procedures 48
\nARTICLE XI – Termination 50
\n Section 11.1 Termination 50
\nARTICLE XII – Miscellaneous Provisions 50
\n Section 12.1 Expenses 50
\n<\/c><\/s><\/table>\n 4<\/p>\n
\n
\n Section 12.2 Amendment and Modification; Extension;
\n Waiver 51
\n Section 12.3 No Survival of Representations or
\n Warranties 51
\n Section 12.4 Notices 51
\n Section 12.5 Assignment; No Third Party Beneficiaries 52
\n Section 12.6 Governing Law 53
\n Section 12.7 Counterparts 53
\n Section 12.8 Interpretation 53
\n Section 12.9 Jurisdiction and Enforcement 54
\n Section 12.10 Entire Agreement 55
\n Section 12.11 Severability 55
\n Section 12.12 Conflicts 55
\n<\/c><\/s><\/table>\n 5<\/p>\n
SCHEDULES AND EXHIBITS<\/p>\n
\n\nSchedules Title
\n========= ======
\n
\nSchedule 1.1(a) Definitions
\nSchedule 1.1(c) Seller’s Severance Plans
\nSchedule 2.2(a)(ii) Spare Parts
\nSchedule 2.2(a)(iii) Personal Property
\nSchedule 2.2(a)(iv) Assigned Contracts
\nSchedule 2.2(a)(v) Transferable Permits
\nSchedule 2.2(a)(vi) Transferred SO2 Allowances
\nSchedule 2.2(a)(vii) Transferred NOx Allowances
\nSchedule 2.2(b)(i) Retained Transmission and
\n Distribution Facilities
\nSchedule 2.2(b)(ii)(B) Communications Equipment\/Related
\n Support Equipment
\nSchedule 2.3(a)(iv) Assumed Consent Order Obligations
\nSchedule 2.4 Retained Rights\/Unassigned PPAs
\nSchedule 5.3(a) Contracts Approvals; No Violation
\nSchedule 5.3(b) Seller Required Regulatory Approvals
\nSchedule 5.5(a) Real Estate Legal Description
\nSchedule 5.5(b) Title Surveys
\nSchedule 5.7 Material Contract Defaults
\nSchedule 5.8 Legal Proceedings
\nSchedule 5.9 Permits
\nSchedule 5.10(a) Environmental Matters
\nSchedule 5.10(b) Environmental Notification
\nSchedule 5.10(c) Environmental Reports
\nSchedule 5.12 Benefit Plans
\nSchedule 6.3(b) Buyer Required Regulatory Approvals
\nSchedule 7.1(b)(viii) Capital Expenditures
\nSchedule 7.12 Exempt Facilities\/Revenue Bonds
\n<\/c><\/s><\/caption>\n<\/table>\n\n\nExhibits Title
\n======== =====
\n
\nExhibit A Assignment and Assumption Agreement
\nExhibit B Bill of Sale<\/p>\nExhibit C-1, C-2, C-3 and C-4 Easements Agreements
\nExhibit D Guarantee Agreement
\nExhibit E-1, E-2, E-3 and E-4 Interconnection Agreements
\nExhibit F Local Area Support Agreement
\nExhibit G Operating Agreement
\nExhibit H Potomac River Lease
\nExhibit I-1 and I-2 Transition Power Agreements
\nExhibit J Deeds of Conveyance
\nExhibit K Opinion of Seller’s Counsel
\nExhibit L Opinion of Buyer’s Counsel
\nExhibit M Opinion of Guarantor’s Counsel
\n<\/c><\/s><\/caption>\n<\/table>\n
6<\/p>\n
ASSET PURCHASE AND SALE AGREEMENT (including the Schedules hereto, this
\n“Agreement”), dated as of June 7, 2000, by and between POTOMAC ELECTRIC POWER
\nCOMPANY, a District of Columbia and Virginia corporation (“Seller”), and
\nSOUTHERN ENERGY, INC., a Delaware corporation (“Buyer,” collectively with
\nSeller, the “Parties”).<\/p>\n
WHEREAS, Seller owns certain power generating facilities (described
\nherein as the “Generating Facilities”) and other assets associated therewith;
\nand<\/p>\n
WHEREAS, Buyer desires to purchase and assume, and Seller desires to
\nsell and assign, the Auctioned Assets (as defined in Section 2.2 below) and
\ncertain associated liabilities, upon the terms and conditions hereinafter set
\nforth.<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants,
\nrepresentations, warranties and agreements hereinafter set forth, and intending
\nto be legally bound hereby, the Parties agree as follows:<\/p>\n
ARTICLE I<\/p>\n
Definitions<\/p>\n
SECTION 1.1 Definitions. Any capitalized terms which are used but
\nnot defined in this Agreement shall have the meaning given to such terms in the
\nattached Schedule 1.1.<\/p>\n
SECTION 1.2 Accounting Terms. Any accounting terms used in this
\nAgreement or the Ancillary Agreements shall, unless otherwise specifically
\nprovided, have the meanings customarily given them in accordance with United
\nStates generally accepted accounting principles (“GAAP”) and all financial
\ncomputations hereunder or thereunder shall, unless otherwise specifically
\nprovided, be computed in accordance with GAAP consistently applied.<\/p>\n
ARTICLE II<\/p>\n
Purchase and Sale; Assumption of Certain Liabilities<\/p>\n
SECTION 2.1 Purchase and Sale. Upon the terms and subject to the
\nsatisfaction of the conditions contained in this Agreement, at the Closing,
\nSeller agrees to sell, assign, convey, transfer and deliver to Buyer (or Buyer’s
\npermitted assignees pursuant to Section 12.5(a)), and Buyer agrees to purchase
\nand acquire from Seller (or shall cause Buyer’s permitted assignees pursuant to
\nSection 12.5(a) to purchase and acquire from Seller) all of the Auctioned
\nAssets. In the case of any Auctioned Assets<\/p>\n
7<\/p>\n
not located at the Generating Facilities (including supplies, materials and
\nspare parts inventory), Buyer agrees that from and after the Closing, Buyer will
\nbear all risk of casualty or loss with regard to such Auctioned Assets
\n(regardless of whether they remain on Seller’s Real Estate or otherwise in
\nSeller’s possession).<\/p>\n
SECTION 2.2 Auctioned Assets and Retained Assets.<\/p>\n
(a) Auctioned Assets. The term “Auctioned Assets” means all of the
\nassets, real and personal property, goodwill and rights of Seller of whatever
\nkind and nature, whether tangible or intangible, in each case, primarily
\nrelating to the power generation operations of the Generating Facilities and the
\nSupport Operations, other than the Retained Assets, including the following:<\/p>\n
(i) except with respect to the Potomac River Real
\nProperty, all real property and leaseholds and other interests in real property
\nof Seller, together with all buildings, improvements, structures and fixtures
\nthereon, including the Chalk Point\/Morgantown Fuel Pipeline, the Ryceville
\nPumping Station, the Production Service Center, and the Ash Storage Sites,
\nsubject to any Permitted Exceptions (the “Buyer Real Estate”);<\/p>\n
(ii) all inventories of fuels, supplies, materials and
\nspare parts, together with and subject to (A) all Permitted Exceptions, and (B)
\nall warranties against manufacturers and vendors relating thereto, including the
\nspare parts listed on Schedule 2.2(a)(ii), in each case, other than assets that
\nbecome obsolete or that are used, consumed, replaced or disposed of in the
\nordinary course of business consistent with past practice or as permitted by
\nthis Agreement;<\/p>\n
(iii) the machinery, equipment (including any Revenue
\nMeters), facilities, furniture and other tangible personal property on the Buyer
\nReal Estate or the Potomac River Station Site, including any items of personal
\nproperty located on the Buyer Real Estate, the Potomac River Station Site or
\ntemporarily removed from the Buyer Real Estate or the Potomac River Station Site
\nfor repairs, servicing or maintenance and listed on Schedule 2.2(a)(iii),
\ntogether with and subject to (A) any Permitted Exceptions, and (B) all
\nwarranties against manufacturers or vendors relating thereto, in each case,<\/p>\n
8<\/p>\n
other than assets that become obsolete or that are used, consumed, replaced or
\ndisposed of in the ordinary course of business consistent with past practice or
\nas permitted by this Agreement;<\/p>\n
(iv) subject to Sections 2.2(b)(xi) and 2.4, all right,
\ntitle and interest of Seller in, to and under all contracts, agreements,
\npersonal property leases (whether Seller is lessor or lessee thereunder),
\ncommitments and all other legally binding arrangements (including any rights of
\nSeller under any PPA to sell energy to any third party power supplier) whether
\noral or written, which are (A) set forth on Schedule 2.2(a)(iv), (B) not
\nmaterial to the ownership and operation of the Generating Facilities, or (C)
\notherwise entered into by Seller in accordance with Section 7.1 (collectively,
\nthe “Contracts”), in each case, to the extent in full force and effect on the
\nClosing Date;<\/p>\n
(v) the Permits and Environmental Permits that are
\ntransferred or transferable by Seller to Buyer (collectively, the “Transferable
\nPermits”), including the Transferable Permits set forth on Schedule 2.2(a)(v),
\nin each case, to the extent in full force and effect on the Closing Date;<\/p>\n
(vi) the amount of SO2 Allowances listed on Schedule
\n2.2(a)(vi) attached hereto (“Transferred SO2 Allowances”);<\/p>\n
(vii) the amount of NOx Allowances listed on Schedule
\n2.2(a)(vii) attached hereto (“Transferred NOx Allowances”);<\/p>\n
(viii) (A) all data, information, books, operating records,
\noperating, safety and maintenance manuals, engineering design plans, blueprints
\nand as-built plans, specifications, procedures, facility compliance plans,
\nenvironmental procedures and similar records, to the extent in Seller’s
\npossession or readily available (collectively, the “Operating Records”), and (B)
\nto the extent permitted by law, all personnel files relating to the Transferred
\nEmployees, to the extent in Seller’s possession and readily available and to the
\nextent such files pertain to (1) skill and development training and resumes, (2)
\nseniority histories, (3) salary and benefit information, (4) Occupational Safety
\nand Health Act medical reports, (5) active medical restriction forms and (6) any
\nother matters, disclosure<\/p>\n
9<\/p>\n
of which by Seller to Buyer is permitted under applicable law without the
\nconsent of the Transferred Employee, but not including any performance
\nevaluations or disciplinary records (collectively, the “Transferred Employee
\nRecords”); provided, however, that Seller shall be permitted to retain copies,
\nor originals to the extent it provides Buyer with copies of same, of all
\nOperating Records and Transferred Employee Records;<\/p>\n
(ix) (A) except as provided in Section 2.2(b)(iv), the
\nsoftware (provided, however, that Buyer acknowledges that it will require
\nlicenses from third parties in order to be legally entitled to use such
\nsoftware), and (B) a non-exclusive, royalty-free license to use solely in
\nconnection with the Auctioned Assets the software or other copyrighted material
\nowned by Seller located at Buyer Real Estate; and<\/p>\n
(x) all claims, causes of action, choses in action,
\nrights of recovery and rights of set-off of any kind in favor of the Seller
\narising prior to the Closing Date relating to the Auctioned Assets other than
\nthose pertaining to the Retained Assets.<\/p>\n
(b) Retained Assets. The term “Retained Assets” means:<\/p>\n
(i) the electric transmission and distribution facilities
\nowned, controlled or operated by Seller for purposes of providing point-to-point
\ntransmission service, network integration service and distribution service and
\nother related purposes, used in controlling continuity between the Generating
\nFacilities and the transmission and distribution facilities and for other
\npurposes (including the Seller’s undivided ownership interest in the Conemaugh
\nSwitchyard and the Conemaugh Transmission Line), including those described on
\nSchedule 2.2(b)(i) attached hereto (the “Transmission System”);<\/p>\n
(ii) (A) except as set forth in Section 2.2(a)(iii), all
\nInterconnection Facilities and other transmission, distribution and substation
\nmachinery, equipment and facilities and related support equipment located on
\nBuyer Real Estate or Seller Real Estate or temporarily removed from Buyer Real
\nEstate<\/p>\n
10<\/p>\n
or Seller Real Estate for repairs, servicing or maintenance; (B) Communications
\nEquipment and related support equipment (1) located on Buyer Real Estate or
\ntemporarily removed from Buyer Real Estate for repairs, servicing or maintenance
\nand listed on Schedule 2.2(b)(ii)(B) or acquired by Seller after the date of
\nthis Agreement and designated by Seller as a Retained Asset or (2) located on
\nSeller Real Estate or temporarily removed from Seller Real Estate for repairs,
\nservicing or maintenance; and (C) all Protective Relaying Systems not located on
\nBuyer Real Estate;<\/p>\n
(iii) all cash, cash equivalents, bank deposits and
\naccounts receivable;<\/p>\n
(iv) (A) all mainframe computer systems of Seller and (B)
\nall software, copyrights, know-how or other proprietary information not
\nprimarily relating to the power generation operations of the Generating
\nFacilities, including software, copyrights, know-how or other proprietary
\ninformation licensed to Buyer pursuant to Section 2.2(a)(ix)(B);<\/p>\n
(v) the names “Pepco,” “Potomac Electric Power Company,”
\nand any related or similar trade names, trademarks, service marks or logos (and
\nany rights to and in the same, including any right to use the same);<\/p>\n
(vi) any refunds or credits related to Taxes attributable
\nto taxable periods (or portions thereof) prior to the Closing Date, and any
\nother rents, charges, liabilities or obligations paid prior to the Closing Date
\nin respect of the Auctioned Assets;<\/p>\n
(vii) personnel records (other than Transferred Employee
\nRecords) and all other records (other than Operating Records);<\/p>\n
(viii) (A) all Emission Reduction Credits or Greenhouse Gas
\nEmission Reduction Credits that are attributable to any emission reduction
\nactivities of the Seller which occur following the Closing Date at any
\nlocations, (B) any SO2 Allowances that are not Transferred SO2 Allowances, and<\/p>\n
11<\/p>\n
(C) any NOx Allowances that are not Transferred NOx Allowances;<\/p>\n
(ix) the Seller Real Estate (including a fee interest in
\nthe Potomac River Real Property);<\/p>\n
(x) all master station voltage control equipment within
\nand including the master station voltage control cabinets located at the
\nGenerating Facilities;<\/p>\n
(xi) the Retained Rights;<\/p>\n
(xii) the Conemaugh Interest;<\/p>\n
(xiii) all claims, causes of action, choses in action,
\nrights of recovery and rights of set-off of any kind in favor of the Seller
\narising prior to the Closing Date other than those pertaining to the Assumed
\nObligations; and<\/p>\n
(xiv) any other asset that is not described with
\nparticularity in this Agreement as an Auctioned Asset.<\/p>\n
SECTION 2.3 Assumed Obligations and Retained Liabilities.<\/p>\n
(a) Assumed Obligations. At the Closing, Buyer shall assume, and
\nfrom and after the Closing, shall discharge, all of the liabilities and
\nobligations, direct or indirect, known or unknown, absolute or contingent, which
\nrelate to the Auctioned Assets, the Potomac River Station Site or are otherwise
\nspecified below, other than the Retained Liabilities (collectively, the “Assumed
\nObligations”), including the following:<\/p>\n
(i) except as set forth in Section 2.3(b)(ii), any
\nliabilities and obligations under the Contracts (including any obligations of
\nSeller under any PPA to sell energy to any third party power supplier);<\/p>\n
(ii) any liabilities and obligations for goods delivered or services
\nrendered on or after the Closing Date relating to the Auctioned Assets;<\/p>\n
12<\/p>\n
(iii) except as set forth in Section 2.3(b)(iii), (iv) or
\n(v), any Environmental Liability including any Environmental Liability (A)
\narising out of or in connection with any violation or alleged violation of, or
\nnoncompliance or alleged noncompliance with, any Environmental Laws, prior to,
\non or after the Closing Date, relating to or arising in connection with the
\nAuctioned Assets and the Potomac River Station Site, (B) arising out of or in
\nconnection with the condition of any Auctioned Assets and the Potomac River
\nStation Site prior to, on or after the Closing Date, including any actual or
\nalleged presence, Release or threatened Release of any Hazardous Substances at,
\non, in, under or migrating onto or from, the Auctioned Assets and the Potomac
\nRiver Station Site, prior to, on or after the Closing Date, (C) arising out of
\nor in connection with any Release or threatened Release of any Hazardous
\nSubstance prior to, on or after the Closing Date relating to any equipment,
\nHazardous Substance, product or recyclable or recycled material (collectively,
\nthe “Disposed Items”) which remains on or has been removed from the Auctioned
\nAssets and the Potomac River Station Site, (D) in respect of any personal injury
\nor property damage relating to or arising from the presence, exposure to, or
\nproximity to any Hazardous Substance, prior to, on or after the Closing Date,
\nand (E) of any sort whatsoever arising or occurring on or after the Closing
\nDate;<\/p>\n
(iv) any liabilities and obligations under all consent
\norders including those listed on Schedule 2.3(a)(iv) (the “Assumed Consent Order
\nObligations”);<\/p>\n
(v) except as set forth in Section 2.3(b)(iv), any
\nliabilities and obligations with respect to the Permits to the extent arising or
\naccruing on or after the Closing Date;<\/p>\n
(vi) (A) all wages, overtime, employment taxes, workers
\ncompensation benefits, occupational safety and health liabilities or other
\nsimilar liabilities and obligations in respect of Transferred Employees arising
\nor accruing on or after the Closing Date, and (B) all other liabilities and
\nobligations with respect to the Transferred Employees for which Buyer is
\nresponsible pursuant to Article IX;<\/p>\n
(vii) (A) any liabilities and obligations in respect of any
\npersonal injury or property (real or personal) damage claim (including any claim
\nbased on wrongful death) relating to, resulting from, or arising out of the
\nAuctioned Assets and the Potomac River Station Site, arising or occurring on or
\nafter the Closing Date, or (B) any liabilities and obligations in respect of any
\ndiscrimination, wrongful discharge or unfair labor practice claim by any
\nTransferred Employee arising out of or relating to acts or omissions occurring
\non or after the Closing Date;<\/p>\n
(viii) any liabilities and obligations, with respect to the
\nperiods that include the Closing Date, with respect to real or personal property
\nrent, Taxes based on the ownership or use of property, utilities charges and
\nsimilar charges that primarily relate to the Generating Facilities
\n(collectively, the “Prorated Items”), including (A) personal property taxes,
\nreal estate and occupancy taxes, assessments and other charges, (B) rent and all
\nother items payable by Seller under any Contract, (C) any fees with respect to
\nany Transferable Permit and (D) sewer rents and charges for water, telephone,
\nelectricity and other utilities, in each case calculated by multiplying the
\namount of any such Prorated Item by a fraction the numerator of which is the
\nnumber of days in such period beginning on and after the Closing Date and the
\ndenominator of which is the number of days in such period;<\/p>\n
(ix) any liabilities and obligations in respect of Taxes
\n(other than as provided for by Section 2.3 (a)(viii)) attributable to the
\nAuctioned Assets arising or accruing during taxable periods (or portions
\nthereof) beginning on or after the Closing Date;<\/p>\n
(x) any severance costs payable under Seller’s Severance
\nPlans with respect to those Non-Union Employees who do not receive a Qualified
\nOffer by the Buyer pursuant to Section 9.1 (such liabilities are the “Closing
\nSeverance Expenses”);<\/p>\n
(xi) any liabilities and obligations of the Buyer relating
\nto the Potomac River Station Site as contemplated by the Potomac River Lease;<\/p>\n
13<\/p>\n
(xii) all liabilities and obligations of Seller under the
\nloan agreements set forth on Schedule 7.12 attached hereto (the “Loan
\nAgreements”) with respect to the Revenue Bonds; and<\/p>\n
(xiii) any liabilities and obligations under the Ancillary
\nAgreements in respect of the Auctioned Assets arising on or after the Closing
\nDate.<\/p>\n
(b) Retained Liabilities. Buyer shall not assume or be obligated
\nto pay, perform or otherwise discharge the following liabilities or obligations
\n(the “Retained Liabilities”):<\/p>\n
(i) any liabilities and obligations of Seller exclusively
\nrelating to any Retained Assets (other than as set forth in Section 2.3(a)(xi));<\/p>\n
(ii) any liabilities and obligations under the Contracts
\nwhich relate to (A) goods delivered or services rendered prior to the Closing
\nDate, and (B) breaches by the Seller of its obligations thereunder occurring
\nprior to the Closing Date;<\/p>\n
(iii) (A) any Environmental Liability of Seller arising out
\nof or in connection with the disposal by, or on behalf of, Seller and Release or
\nthreatened Release, prior to the Closing Date of Hazardous Substances at any
\nOff-Site location, (B) any Environmental Liability of Seller arising out of or
\nin connection with any Release or threatened Release of any Hazardous Substance
\non or after the Closing Date from the Seller Facilities or otherwise originating
\nfrom, or relating to, any equipment owned or used by Seller that is located on
\nBuyer Real Estate, and (C) any liability in respect of any personal injury
\nclaims relating to the exposure of a third party to asbestos at the Auctioned
\nAssets or the Potomac River Station Site which have been filed with any state or
\nfederal court having jurisdiction prior to the Closing Date;<\/p>\n
(iv) notwithstanding the Assumed Obligations set forth in
\nSection 2.3(a)(iii)(A), any monetary fines or penalties (including fines or
\npenalties from violations of any Environmental Law) imposed by a Governmental
\nAuthority to the extent arising out of or relating to acts or omissions of
\nSeller<\/p>\n
14<\/p>\n
in respect of the Auctioned Assets prior to the Closing Date;<\/p>\n
(v) any Environmental Liability whatsoever arising out
\nof, related to, or otherwise associated with the Release of fuel oil from the
\nRyceville-Piney Point Pipeline described in Schedule 5.10(a);<\/p>\n
(vi) (A) all wages, overtime, employment taxes, workers
\ncompensation benefits, occupational safety and health liabilities or other
\nsimilar liabilities and obligations in respect of Transferred Employees to the
\nextent arising or accruing prior to the Closing Date and (B) all other
\nliabilities and obligations with respect to the Transferred Employees for which
\nSeller is responsible pursuant to Article IX;<\/p>\n
(vii) any liabilities and obligations (A) in respect of any
\npersonal injury or property damage claim (other than any Environmental
\nLiabilities which are Assumed Obligations pursuant to Section 2.2(a)(iii) above)
\nrelating to the Auctioned Assets arising or occurring prior to the Closing Date,
\nor (B) in respect of any discrimination, wrongful discharge or unfair labor
\npractice claim by any Transferred Employee arising out of or relating to acts or
\nomissions of Seller prior to the Closing Date;<\/p>\n
(viii) any liabilities and obligations, with respect to
\nperiods prior to the Closing Date, for the Prorated Items, calculated as set
\nforth in Section 2.3(a)(viii);<\/p>\n
(ix) any liabilities and obligations in respect of Taxes
\n(other than as provided for by Section 2.3(b)(viii)) attributable to the
\nAuctioned Assets or trades or businesses associated with the Auctioned Assets
\narising or accruing during taxable periods (or portions thereof) ending before
\nthe Closing Date; and<\/p>\n
(x) any liabilities and obligations of Seller under the
\nAncillary Agreements in respect of the Retained Assets.<\/p>\n
15<\/p>\n
SECTION 2.4 Third Party Consents.<\/p>\n
(a) Notwithstanding Section 2.2(a)(ii), (iii) or (iv), to the
\nextent that Seller’s rights under any Contract or warranty may not be assigned
\nwithout the consent of another person which consent has not been obtained, this
\nAgreement shall not constitute an agreement to assign the same if an attempted
\nassignment would constitute a breach thereof or be unlawful, and Seller, at its
\nexpense, shall use its reasonable best efforts to obtain prior to the Closing
\nany such required consents with respect to any Material Contracts or material
\nwarranties.<\/p>\n
(b) Seller and Buyer agree that if any consent to an assignment of
\nany such Material Contract or material warranty shall not be obtained or if any
\nattempted assignment would in Seller’s reasonable opinion be ineffective or
\nwould impair any material rights and obligations of Buyer under such Material
\nContract or material warranty, as applicable, so that Buyer would not in effect
\nacquire the benefit of all such rights and obligations, Seller, to the maximum
\nextent permitted by law and such Material Contract or material warranty, as
\napplicable, shall after the Closing appoint Buyer to be Seller’s representative
\nand agent with respect to such Material Contract or material warranty, as
\napplicable, and Seller shall, to the maximum extent permitted by law and such
\nMaterial Contract or material warranty, as applicable, enter into such
\nreasonable arrangements with Buyer as are necessary to provide Buyer with the
\nbenefits and obligations of such Material Contract or material warranty, as
\napplicable. Notwithstanding any of the foregoing, in the event that Seller is
\nunable to obtain a consent from a Power Seller to an assignment of a PPA, such
\nPPA shall be governed by Section II of Schedule 2.4 attached hereto. Seller and
\nBuyer shall cooperate and shall each use their reasonable best efforts after the
\nClosing to obtain an assignment of each such Material Contract or material
\nwarranty, as applicable, to Buyer.<\/p>\n
ARTICLE III<\/p>\n
Purchase Price<\/p>\n
SECTION 3.1 Purchase Price. Subject to adjustment pursuant to
\nSections 3.2 and 3.4, the amount payable by Buyer to Seller for the Auctioned
\nAssets shall be the sum of (a) Two Billion Six Hundred Fifty Million Dollars
\n($2,650,000,000.00) (the “Purchase Price”), (b) an amount equal to the Final
\nFuel Related Adjustment Amount, (c) an amount equal to the Final Non-Fuel
\nRelated Adjustment Amount, and (d) an amount expended by Seller between the date
\nhereof and the Closing Date for Permitted Capital Expenditures pursuant to
\nSection 7.1(b)(viii).<\/p>\n
16<\/p>\n
SECTION 3.2 Certain Post-Closing Adjustments.<\/p>\n
(a) Within 60 Business Days after the last day of the month in
\nwhich Closing occurs, Seller shall prepare and deliver to Buyer a statement (an
\n“Adjustment Statement”) which reflects (i) the book cost, as reflected on the
\nbooks of Seller as of the Closing Date, of all inventories, materials, spare
\nparts and supplies (excluding any fuel supplies) included in the Auctioned
\nAssets (the “Final Non-Fuel Related Adjustment Amount”) and (ii) the book value,
\nas determined using Seller’s historical weighted average method, of all fuel
\nsupplies included in the Auctioned Assets (the “Final Fuel Related Adjustment
\nAmount”). The Final Fuel Related Adjustment Amount will be based on the actual
\nfuel inventory on the Closing Date, and the Final Non-Fuel Related Adjustment
\nAmount will be based on an inventory survey conducted within 30 Business Days
\nprior to the Closing Date, in each case, consistent with the inventory
\nprocedures of Seller in effect as of the date of this Agreement (the “Inventory
\nSurvey”). Seller will permit an employee, or representative, of Buyer to observe
\nthe Inventory Survey. The Adjustment Statement shall be prepared using (i) GAAP
\nand (ii) with respect to the Final Non-Fuel Related Adjustment Amount the same
\nsystem average price that Seller has historically used to calculate the book
\ncost of its supplies, materials and spare parts inventory. Buyer agrees to
\ncooperate with Seller in connection with the preparation of the Adjustment
\nStatement and related information, and shall provide to Seller such access,
\nbooks, records and information as may be reasonably requested from time to time.<\/p>\n
(b) Buyer may dispute the quantity delivered or quality of any
\ninventory item shown on the Adjustment Statement, or the mathematical
\ncalculations reflected therein, by notifying Seller in writing of the disputed
\namount, and the basis of such dispute, within 20 Business Days of Buyer’s
\nreceipt of the Adjustment Statement; provided, however, that in respect of the
\nquality of any inventory item, Buyer may not dispute Seller’s normal and
\ncustomary methods for accounting for excess inventory. Buyer shall have no right
\nto dispute any other matter in respect of the Adjustment Statement, including
\nhistorical system average price used to calculate the book cost of the inventory
\nand the Final Non-Fuel Related Adjustment Amount or the appropriateness, under
\nGAAP or otherwise, of using such historical system average price to determine
\nthe book cost of any particular item of inventory. In the event of a dispute
\nwith respect to the quantity or quality of any inventory item shown on the
\nAdjustment Statement, or the mathematical calculations reflected therein, Buyer
\nand Seller shall attempt to reconcile their differences and any resolution by
\nthem as to any disputed amounts shall be final, binding and conclusive on the
\nParties. If Buyer and Seller are unable to reach a resolution of such
\ndifferences within 20 Business Days of receipt of Buyer’s written notice of
\ndispute to Seller, Buyer and Seller shall submit the amounts remaining in
\ndispute for determination and resolution to KPMG Peat Marwick or any other
\naccounting firm of recognized national standing<\/p>\n
17<\/p>\n
reasonably acceptable to Seller and Buyer (the “Accountants”), which shall be
\ninstructed to determine and report to the Parties, within 20 Business Days after
\nsuch submission, upon such remaining disputed amounts, and such report shall be
\nfinal, binding and conclusive on the Parties with respect to the amounts
\ndisputed. Buyer and Seller shall each pay an amount, if any, equal to that
\npercentage of the fees and disbursements of the Accountants incurred in
\nconnection with the resolution of such disputed amounts that corresponds to the
\npercentage of disputed amounts awarded to the other Party by the Accountants
\nhereunder.<\/p>\n
(c) For purposes of this Agreement, the “Closing Adjustment
\nAmount” shall be the sum of (A) the amount of the Final Non-Fuel Related
\nAdjustment Amount, and (B) the amount of the Final Fuel Related Adjustment
\nAmount minus (ii) the amount of the Estimated Non-Fuel Related Adjustment
\nAmount. If the Closing Adjustment Amount is a positive number, then on the
\nAdjustment Date (as defined below), Buyer shall pay to Seller the amount of such
\npositive number. If the Closing Adjustment Amount is a negative number, then on
\nthe Adjustment Date, Seller shall pay to Buyer the amount of such negative
\nnumber. For purposes of this Agreement, the “Adjustment Date” means (1) if Buyer
\ndoes not disagree in any respect with the Adjustment Statement, the 23rd
\nBusiness Day following Buyer’s receipt of the Adjustment Statement or (2) if
\nBuyer shall disagree in any respect with the Adjustment Statement, the third
\nBusiness Day following either the resolution of such disagreement by the Parties
\nor a final determination by the Accountants in accordance with Section 3.2(b).
\nAny amount paid under this Section 3.2(c) shall be paid with interest for the
\nperiod commencing on the Closing Date up to but not including the date of
\npayment, calculated at the prime rate of The Chase Manhattan Bank in effect on
\nthe Closing Date, and in cash by wire transfer of immediately available funds.<\/p>\n
SECTION 3.3 Allocation of Purchase Price. Buyer shall deliver to
\nSeller at Closing a preliminary allocation among the Auctioned Assets of the
\namount payable by Buyer to Seller pursuant to Section 3.1 hereof, and, as soon
\nas practicable following the Closing (but in any event within 30 days following
\nthe final determination of the Closing Adjustment Amount), Buyer shall prepare
\nand deliver to Seller a final allocation of the amount payable by Buyer to
\nSeller pursuant to Section 3.1 hereof, and the post-closing adjustment pursuant
\nto Section 3.2, among the Auctioned Assets (the “Allocation”). The Allocation
\nshall be consistent with Section 1060 of the Code and the Treasury Regulations
\nthereunder. Seller hereby agrees to accept Buyer’s Allocation unless Seller
\ndetermines that such Allocation was not prepared in accordance with Section 1060
\nof the Code and the regulations thereunder (“Applicable Law”). If Seller so
\ndetermines, Seller shall within 20 Business Days thereafter propose any changes
\nnecessary to cause the Allocation to be prepared in accordance with Applicable
\nLaw. Within 10<\/p>\n
18<\/p>\n
Business Days following delivery of such proposed changes, Buyer shall provide
\nSeller with a statement of any objections to such proposed changes, together
\nwith a reasonably detailed explanation of the reasons therefor. If Buyer and
\nSeller are unable to resolve any disputed objections within 10 Business Days
\nthereafter, such objections shall be referred to the Accountants, whose review
\nwill be limited to whether Buyer’s Allocation of such disputed items regarding
\nthe Allocation was prepared in accordance with Applicable Law. The Accountants
\nshall be instructed to deliver to Seller and Buyer a written determination of
\nthe proper allocation of such disputed items within 20 Business Days. Such
\ndetermination shall be conclusive and binding upon the parties hereto for all
\npurposes, and the Allocation shall be so adjusted (the Allocation, including the
\nadjustment, if any, to be referred to as the “Final Allocation”). Fees and
\ndisbursements of the Accountants attributable to the Allocation shall be shared
\nby Buyer and Seller on the basis of their respective percentages of the disputed
\nitems which were allocated by the Accountants to the other Party hereunder. Each
\nof Buyer and Seller agrees to timely file Internal Revenue Service Form 8594,
\nand all Federal, state, local and foreign Tax Returns, in accordance with such
\nFinal Allocation and to report the transactions contemplated by this Agreement
\nfor Federal Income Tax and all other tax purposes in a manner consistent with
\nthe Final Allocation. Each of Buyer and Seller agrees to promptly provide the
\nother party with any additional information and reasonable assistance required
\nto complete Form 8594, or compute Taxes arising in connection with (or otherwise
\naffected by) the transactions contemplated hereunder. Each of Buyer and Seller
\nshall timely notify the other Party and each shall timely provide the other
\nParty with reasonable assistance in the event of an examination, audit or other
\nproceeding regarding the Final Allocation.<\/p>\n
SECTION 3.4 PPA-Related Purchase Price Adjustments.<\/p>\n
(a) In the event Closing occurs hereunder with respect to the
\nAuctioned Assets other than the Panda PPA as contemplated by Section 4.1,<\/p>\n
(i) at the Closing, Buyer shall deposit Two Hundred
\nFifty-Nine Million Eight Hundred Twenty-Seven Thousand Dollars ($259,827,000.00)
\nin immediately available funds in an interest-bearing escrow account pursuant to
\nan escrow agreement mutually satisfactory to the Parties, providing for the
\nrelease to Seller of the remaining balance of such escrow account after the
\nrelease, if any, to Buyer pursuant to Section 3.4(a)(ii) (together with all
\nearnings on such remaining balance) upon the earlier to occur of completion of
\nthe post-Closing consummation of this Agreement with respect to the Panda PPA
\n(the “Panda Release”) or the twelve (12) month period following the Closing<\/p>\n
19<\/p>\n
(after which the Panda PPA shall no longer be an “Assigned Contract” under
\nSchedule 2.2(a)(iv)) ; and<\/p>\n
(ii) at the time of the Panda Release, subject to Section
\n3.4(b), the escrow agent shall release to Buyer the funds deposited in the
\nescrow account described in Section 3.4(a)(i) (together with all earnings on the
\nprincipal released).<\/p>\n
(b) In the event the Closing or the Panda Release occurs after
\nOctober 31, 2000, Buyer shall pay Seller at Closing or at the time of the Panda
\nRelease, as applicable, by wire transfer of immediately available funds (or in
\nthe case of the Panda Release, the escrow agent shall reduce the amount released
\nto Buyer pursuant to Section 3.4(a)(ii) above by) an amount in United States
\nDollars equal to One Million Two Hundred Thousand Dollars ($1,200,000.00) per
\nmonth with respect to the Panda PPA, and Two Million Seven Hundred Thousand
\nDollars ($2,700,000.00) per month with respect to the OE PPA, as applicable,
\n(the “Adjustment Amounts”) for each calendar month (prorated for any portion of
\na calendar month) occurring between October 31, 2000 and the Closing Date or the
\ntime of the Panda Release, as applicable. In the event that the Panda Release
\ndoes not occur within the twelve (12) month period described in Section
\n3.4(a)(i), the escrow agent shall release to Seller the entire amount in such
\nescrow account (together with all earnings thereon). The foregoing amounts shall
\nbe adjustments to the Purchase Price.<\/p>\n
ARTICLE IV<\/p>\n
The Closing<\/p>\n
SECTION 4.1 Time and Place of Closing.<\/p>\n
(a) Upon the terms and subject to the satisfaction of the
\nconditions contained in Article VIII, the closing of the sale of the Auctioned
\nAssets contemplated by this Agreement (the “Closing”) will take place on such
\ndate as the Parties may agree, which date shall be as soon as practicable, but
\nno later than ten Business Days, following the date on which all of the
\nconditions set forth in Article VIII have been satisfied or waived, at the
\nWashington, D.C. offices of Dickstein Shapiro Morin & Oshinsky LLP, or at such
\nother place or time as the Parties may agree. Notwithstanding the foregoing, in
\nthe event all conditions set forth in Article VIII are satisfied other than the
\ncondition set forth in Section 8.3(h), Closing will take place with respect to
\nall of the Auctioned Assets as set forth above, provided, however, the Panda
\nRelease shall occur only upon satisfaction or waiver of the condition set forth
\nin Section 8.3(h)(which condition may only be waived by Seller if the MDPSC has
\neither issued an order determining that the Panda<\/p>\n
20<\/p>\n
Release does not violate the Panda PPA or dismissed the proceeding listed at
\nItem 1 of Schedule 5.8). The date and time at which the Closing actually occurs
\nis hereinafter referred to as the “Closing Date”.<\/p>\n
(b) The Parties agree that in the event there is a post-Closing
\nPanda Release, the effect hereunder shall be limited to (i) the Purchase Price
\nadjustments and other payments contemplated by Section 3.4; (ii) delivery by the
\nParties at the time of the Panda Release of a Novation or other instruments of
\nassignment and assumption in respect of the Panda PPA, or an acknowledgement of
\nthe applicability as of the time of the Panda Release of the provisions of
\nSection II of Schedule 2.4 hereto to the Panda PPA; (iii) exclusion of the Panda
\nPPA from the scope of all representations, warranties and opinions delivered at
\nClosing (which representations, warranties and opinions as to the Panda PPA will
\nbe required to be delivered at the time of the Panda Release); and (iv)
\nreferences in this Agreement and the Ancillary Agreements to the Closing Date
\nrelating to the Panda PPA shall be deemed references to the date of the Panda
\nRelease.<\/p>\n
SECTION 4.2 Payment of Estimated Purchase Price. (a) At the
\nClosing, Buyer will pay or cause to be paid to Seller by wire transfer of
\nimmediately available funds to an account previously designated in writing by
\nSeller an amount in United States dollars equal to the sum of (a) Two Billion
\nSix Hundred Fifty Million Dollars ($2,650,000,000.00), (b) an amount equal to
\nthe Estimated Non-Fuel Related Adjustment Amount, (c) an amount expended by
\nSeller between the date hereof and the Closing Date for Permitted Capital
\nExpenditures pursuant to Section 7.1(b)(viii) (the “Estimated Purchase Price”).
\nIn addition, at the Closing, Buyer will promptly pay Seller an amount equal to
\nthe Closing Severance Expenses, as contemplated by Section 2.3(a)(x) hereof.<\/p>\n
(b) At least 5 Business Days prior to the Closing Date, Seller
\nshall provide to Buyer its good faith estimate of the Final Non-Fuel Related
\nAdjustment Amount as of the last day of the month preceding the Closing Date,
\nwhich estimate shall be certified in writing by an appropriate officer of Seller
\n(the “Estimated Non-Fuel Related Adjustment Amount”). On or before the Closing
\nDate, Seller shall provide to Buyer a report which details the amounts expended
\nby Seller between the date hereof and the Closing Date for Permitted Capital
\nExpenditures pursuant to Section 7.1(b)(viii) (the “Permitted Capital
\nExpenditure Report”).<\/p>\n
ARTICLE V<\/p>\n
Representations and Warranties of Seller<\/p>\n
Seller represents and warrants to Buyer as follows:<\/p>\n
21<\/p>\n
SECTION 5.1 Organization; Qualification. Seller is a corporation
\nduly incorporated, validly existing and in good standing under the laws of the
\nCommonwealth of Virginia and the District of Columbia and has all requisite
\ncorporate power and authority to own, lease and operate the Auctioned Assets and
\nto carry on the business of the Auctioned Assets as currently conducted.<\/p>\n
SECTION 5.2 Authority Relative to This Agreement. Seller has all
\nnecessary corporate power and authority to execute and deliver this Agreement
\nand the Ancillary Agreements and to consummate the transactions contemplated
\nhereby and thereby. The execution and delivery by Seller of this Agreement and
\nthe Ancillary Agreements and the consummation by Seller of the transactions
\ncontemplated hereby and thereby have been duly and validly authorized by the
\nBoard of Directors of Seller or by a committee thereof to whom such authority
\nhas been delegated and no other corporate proceedings on the part of Seller are
\nnecessary to authorize this Agreement or the Ancillary Agreements or the
\nconsummation of the transactions contemplated hereby or thereby. This Agreement
\nand the Ancillary Agreements have been duly and validly executed and delivered
\nby Seller and, assuming that this Agreement and the Ancillary Agreements
\nconstitute valid and binding agreements of Buyer and each other party thereto,
\nsubject to the receipt of the Seller Required Regulatory Approvals and the Buyer
\nRequired Regulatory Approvals, constitute valid and binding agreements of
\nSeller, enforceable against Seller in accordance with their respective terms.<\/p>\n
SECTION 5.3 Consents and Approvals; No Violation.<\/p>\n
(a) Subject to obtaining the Seller Required Regulatory Approvals
\nand the Buyer Required Regulatory Approvals, neither the execution and delivery
\nof this Agreement or the Ancillary Agreements by Seller nor the consummation of
\nthe transactions contemplated hereby or thereby or the sale by Seller of the
\nAuctioned Assets pursuant to this Agreement will (i) conflict with or result in
\nany breach of any provision of the Certificate of Incorporation or By-laws of
\nSeller, (ii) except as set forth on Schedule 5.3(a), result in a default (or
\ngive rise to any right of termination, cancellation or acceleration) under any
\nof the terms, conditions or provisions of any note, bond, mortgage, indenture,
\nlicense, agreement, lease or other instrument or obligation to which Seller is a
\nparty or by which Seller, or any of the Auctioned Assets, may be bound, except
\nfor such defaults (or rights of termination, cancellation or acceleration) as to
\nwhich requisite waivers or consents have been obtained or which would not,
\nindividually or in the aggregate, create a Material Adverse Effect, or (iii)
\nviolate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to Seller, or the Auctioned Assets, except for such violations which
\nwould not, individually or in the aggregate, create a Material Adverse Effect.<\/p>\n
22<\/p>\n
(b) Except for (i) the filings by Seller and Buyer required by the
\nHSR Act and the expiration or earlier termination of all waiting periods under
\nthe HSR Act, and (ii) the Required Regulatory Approvals set forth on Schedule
\n5.3(b) attached hereto (collectively, the “Seller Required Regulatory
\nApprovals”), no declaration, filing or registration with, or notice to, or
\nauthorization, consent or approval of any Governmental Authority is necessary
\nfor the consummation by Seller of the transactions contemplated hereby or by the
\nAncillary Agreements, other than such declarations, filings, registrations,
\nnotices, authorizations, consents or approvals (A) which, if not obtained or
\nmade, would not individually or in the aggregate, create a Material Adverse
\nEffect or (B) which relate to the Transferable Permits.<\/p>\n
SECTION 5.4 Personal Property. Except for Permitted Exceptions,
\nSeller has good and marketable title, free and clear of all Encumbrances, to all
\npersonal property included in the Auctioned Assets.<\/p>\n
SECTION 5.5 Real Estate. Except for Permitted Exceptions, Seller
\nhas good and marketable title, free and clear of all Encumbrances, to all Buyer
\nReal Estate. Schedule 5.5(a) contains legal descriptions of the Buyer Real
\nEstate. The most recent real property surveys in the possession of Seller with
\nrespect to the Buyer Real Estate or any portion thereof are listed on Schedule
\n5.5(b).<\/p>\n
SECTION 5.6 Leases. As of the date of this Agreement, Seller is
\nnot a tenant under any real property leases which are material to the Auctioned
\nAssets.<\/p>\n
SECTION 5.7 Certain Contracts and Arrangements. (a) Except for
\n(i) any contract or agreement listed on Schedule 2.2(a)(iv) (the “Material
\nContracts”) and (ii) Contracts which will expire prior to the Closing Date or
\nthat are permitted to be entered into under this Agreement, Seller is not a
\nparty to any contract which is material to the business or operations of the
\nAuctioned Assets.<\/p>\n
(b) Each Contract (i) constitutes a valid and binding obligation
\nof Seller, and, to the Knowledge of Seller, of the other parties thereto, and
\n(ii) to the Knowledge of Seller, is in full force and effect.<\/p>\n
(c) Except as set forth on Schedule 5.7 attached hereto, to the
\nKnowledge of the Seller, there is not, under any of the Contracts, any default
\nor event which, with notice or lapse of time or both, would constitute a
\nmaterial default by Seller, except for such events of default and other events
\nas to which requisite waivers or consents have been obtained or which would not,
\nindividually or in the aggregate, create a Material Adverse Effect.<\/p>\n
SECTION 5.8 Legal Proceedings. Except as set forth on Schedule
\n5.8 or in the Filed Seller SEC Documents, as of the date of this Agreement,
\nthere are no claims, actions, proceedings or investigations pending or, to the<\/p>\n
23<\/p>\n
Knowledge of Seller, threatened against or relating to Seller with respect to
\nthe business or operations of the Auctioned Assets, before any Governmental
\nAuthority which would, individually or in the aggregate, be reasonably expected
\nto create a Material Adverse Effect. With respect to the business or operations
\nof the Auctioned Assets, Seller is not, as of the date of this Agreement,
\nsubject to any outstanding judgment, rule, order, writ, injunction or decree of
\nany Governmental Authority which could create a Material Adverse Effect. The
\nrepresentations and warranties of Seller set forth in this Section 5.8 shall not
\napply to, and do not cover, any environmental matters which, with respect to any
\nrepresentations and warranties of Seller, are exclusively governed by Section
\n5.10.<\/p>\n
SECTION 5.9 Permits; Compliance with Law. Except as set forth on
\nSchedule 5.9 or in the Filed Seller SEC Documents, Seller is in current
\ncompliance with all Permits necessary to conduct the business and operations of
\nthe Auctioned Assets as currently conducted, and, to the Knowledge of Seller,
\nSeller is otherwise in current compliance with all laws, statutes, orders,
\nrules, regulations, ordinances or judgments of any Governmental Authority
\napplicable to the business and operations of the Auctioned Assets, except for
\nsuch failures to comply with such Permits, or such failures to be in compliance
\nwith such laws, statutes, orders, rules, regulations, ordinances or judgments,
\nwhich would not, individually or in the aggregate, create a Material Adverse
\nEffect. The representations and warranties of Seller set forth in this Section
\n5.9 shall not apply to, and do not cover, any environmental matters which, with
\nrespect to any representations and warranties of Seller, are exclusively
\ngoverned by Section 5.10.<\/p>\n
SECTION 5.10 Environmental Matters.<\/p>\n
(a) Except as set forth in Schedule 5.10(a) or disclosed in the
\nFiled Seller SEC Documents, Seller holds, and is in compliance with all
\nEnvironmental Permits required for Seller to conduct the business and operations
\nof the Auctioned Assets as currently conducted under applicable Environmental
\nLaws, and, to the Knowledge of Seller, Seller is otherwise in current compliance
\nwith all applicable Environmental Laws on the date hereof with respect to the
\nbusiness and operations of the Auctioned Assets, except for such failures to
\nhold or comply with such Environmental Permits, or such failures to be in
\ncompliance with such applicable Environmental Laws on the date hereof, which
\nwould not, individually or in the aggregate, create a Material Adverse Effect.<\/p>\n
(b) Except as set forth in Schedule 5.10(b) or disclosed in the
\nFiled Seller SEC Documents, Seller has not received any written notice of a
\nviolation of any Environmental Law, or been notified that it is a potentially
\nresponsible party under the Federal Comprehensive Environmental Response,
\nCompensation, and Liability Act or any similar state law with respect to any
\nreal property included in the<\/p>\n
24<\/p>\n
Buyer Real Estate or any Off-Site location, except for such matters under such
\nEnvironmental Laws as would not, individually or in the aggregate, create a
\nMaterial Adverse Effect.<\/p>\n
(c) To the Knowledge of Seller, no Release of Hazardous Substances
\nhas occurred at, from, in, on, or under the real property included in the Buyer
\nReal Estate that has given, or could give rise to Environmental Liabilities
\nunder Environmental Laws, except for such Environmental Liabilities which (i)
\nare disclosed in the environmental reports set forth on Schedule 5.10(c)
\nattached hereto, or (ii) would not, individually or in the aggregate, have a
\nMaterial Adverse Effect.<\/p>\n
For purposes of the representations and warranties made in this Article V, the
\nSeller specifically disclaims any representations and warranties with respect to
\nstandards of performance for new stationary sources promulgated under Section
\n111 of the Federal Clean Air Act, 42 U.S.C. Section 7411. The representations
\nand warranties made in this Section 5.10 are the exclusive representations and
\nwarranties of the Seller relating to environmental matters as of the date
\nhereof.<\/p>\n
SECTION 5.11 Labor Matters. Seller has previously made available
\nto Buyer copies of all collective bargaining agreements to which Seller is a
\nparty or is subject and which relate to the business or operations of the
\nAuctioned Assets. With respect to the business and operations of the Auctioned
\nAssets, as of the date of this Agreement, (a) Seller is in compliance with all
\napplicable laws regarding employment and employment practices, terms and
\nconditions of employment and wages and hours, (b) Seller has not received
\nwritten notice of any unfair labor practice complaint against Seller pending
\nbefore the National Labor Relations Board, (c) there is no labor strike,
\nslowdown or stoppage actually pending or, to the Knowledge of Seller, threatened
\nagainst or affecting Seller, (d) Seller has not received notice that any
\nrepresentation petition respecting the employees of Seller has been filed with
\nthe National Labor Relations Board, (e) no arbitration proceeding arising out of
\nor under collective bargaining agreements is pending against Seller and (f)
\nSeller has not experienced any primary work stoppage since December 31, 1998,
\nexcept, in the case of each of the foregoing clauses, for such matters as would
\nnot, individually or in the aggregate, create a Material Adverse Effect.<\/p>\n
SECTION 5.12 ERISA; Benefit Plans. Schedule 5.12 sets forth a list of
\nall material deferred compensation, profit-sharing, retirement and pension plans
\nand all material bonus and other material employee benefit or fringe benefit
\nplans maintained, or with respect to which contributions have been made, by
\nSeller with respect to current or former employees employed in connection with
\nthe power generation operations of the Generating Facilities (collectively,
\n“Benefit Plans”).<\/p>\n
25<\/p>\n
Seller and each trade or business (whether or not incorporated) which are or
\nhave ever been under common control, or which are or have ever been treated as a
\nsingle employer, with Seller under Section 414(b), (c), (m) or (o) of the Code
\n(an “ERISA Affiliate”) have fulfilled their respective obligations under the
\nminimum funding requirements of Section 302 of ERISA, and Section 412 of the
\nCode, with respect to each Benefit Plan which is an “employee pension benefit
\nplan” as defined in Section 3(2) of ERISA and each such plan is in compliance in
\nall respects with the presently applicable provisions of ERISA and the Code,
\nexcept for such failures to fulfill such obligations or comply with such
\nprovisions which would not, individually or in the aggregate, create a Material
\nAdverse Effect. Neither Seller nor any ERISA Affiliate has incurred any
\nliability under Section 4062(b) of ERISA, or any withdrawal liability under
\nSection 4201 of ERISA, to the Pension Benefit Guaranty Corporation in connection
\nwith any Benefit Plan which is subject to Title IV of ERISA which liability
\nremains outstanding, and there has not been any reportable event (as defined in
\nSection 4043 of ERISA) with respect to any such Benefit Plan (other than a
\nreportable event with respect to which the 30-day notice requirement has been
\nwaived by the PBGC). Neither Seller nor any ERISA Affiliate or parent
\ncorporation, within the meaning of Section 4069(b) or Section 4212(c) of ERISA,
\nhas engaged in any transaction, within the meaning of Section 4069(b) or Section
\n4212(c) of ERISA. No Benefit Plan and no “employee pension benefit plan” (as
\ndefined in Section 3(2) of ERISA) maintained by Seller or any ERISA Affiliate or
\nto which Seller or any ERISA Affiliate has contributed is a multiemployer plan.<\/p>\n
SECTION 5.13 Taxes. With respect to the Auctioned Assets and trades
\nor businesses associated with the Auctioned Assets, (a) all Tax Returns required
\nto be filed have been filed and (b) all Taxes shown to be due on such Tax
\nReturns, and all Taxes otherwise owed, have been paid in full, except to the
\nextent that any failure to file or any failure to pay any Taxes would not,
\nindividually or in the aggregate, create a Material Adverse Effect. No written
\nnotice of deficiency or assessment has been received from any taxing authority
\nwith respect to liabilities for Taxes of Seller in respect of the Auctioned
\nAssets which has not been fully paid or finally settled or which is not being
\ncontested in good faith through appropriate proceedings, except for any such
\nnotices regarding Taxes which would not, individually or in the aggregate,
\ncreate a Material Adverse Effect. There are no outstanding agreements or waivers
\nextending the applicable statutory periods of limitation for Taxes associated
\nwith the Auctioned Assets for any period, except for any such agreements or
\nwaivers which would not, individually or in the aggregate, create a Material
\nAdverse Effect.<\/p>\n
SECTION 5.14 Undisclosed Liabilities. With respect to the Auctioned
\nAssets, there are no liabilities or obligations of any nature or kind (absolute,
\naccrued, contingent or otherwise) that would have been required to be set forth
\non a balance sheet in respect of the Auctioned Assets or in the notes thereto
\nprepared in<\/p>\n
26<\/p>\n
accordance with GAAP, as applied by Seller in connection with its December 31,
\n1999 balance sheet, except for any such liabilities or obligations which (a) are
\ndisclosed in or contemplated or permitted by this Agreement or the Ancillary
\nAgreements (including the Assumed Obligations), (b) are disclosed in the
\nInformation Memorandum, (c) are disclosed in the Filed Seller SEC Documents, (d)
\nhave been incurred in the ordinary course of business, or (e) which would not,
\nindividually or in the aggregate, create a Material Adverse Effect.<\/p>\n
SECTION 5.15 Brokers. No broker, finder or other person is entitled
\nto any brokerage fees, commissions or finder’s fees in connection with the
\ntransaction contemplated hereby by reason of any action taken by Seller, except
\nNavigant Consulting, Inc. and Merrill Lynch & Co., which are acting for and at
\nthe expense of Seller.<\/p>\n
SECTION 5.16 Insurance. Seller carries policies of insurance covering
\nfire, workers’ compensation, property all-risk, comprehensive bodily injury,
\nproperty damage liability, automobile liability, product liability, completed
\noperations, explosion, collapse, contractual liability, personal injury
\nliability and other forms of insurance relating to the Auctioned Assets, or
\notherwise self-insures in accordance with all statutory and regulatory criteria
\nagainst any such liabilities, which insurance is in such amounts, has such
\ndeductibles and retentions and is underwritten by such companies as would be
\nobtained by a reasonably prudent electric power business.<\/p>\n
SECTION 5.17 Disclaimers. EXCEPT FOR THE REPRESENTATIONS AND
\nWARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING
\nSOLD AND TRANSFERRED “AS IS, WHERE IS”, AND SELLER IS NOT MAKING ANY OTHER
\nREPRESENTATIONS OR WARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
\nCONCERNING SUCH AUCTIONED ASSETS (INCLUDING ANY RELATING TO LIABILITIES,
\nOPERATIONS OF THE GENERATING FACILITIES, CONDITION, VALUE OR QUALITY OF THE
\nAUCTIONED ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS OR OTHER
\nINCIDENTS OF THE AUCTIONED ASSETS) OR WITH RESPECT TO THIS AGREEMENT OR THE
\nANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SELLER
\nSPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE,
\nSUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE AUCTIONED
\nASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF
\nANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
\nREQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING
\nBUT NOT LIMITED<\/p>\n
27<\/p>\n
TO ANY ENVIRONMENTAL LAWS, OR WHETHER SELLER POSSESSES SUFFICIENT REAL PROPERTY
\nOR PERSONAL PROPERTY TO OPERATE THE AUCTIONED ASSETS. EXCEPT AS OTHERWISE
\nEXPRESSLY PROVIDED IN SECTION 5.10 HEREOF, SELLER FURTHER SPECIFICALLY DISCLAIMS
\nANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS SUBSTANCES OR
\nLIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS WITH RESPECT
\nTO THE AUCTIONED ASSETS, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY BUYER.
\nWITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER MAKES NO REPRESENTATION
\nOR WARRANTY WITH RESPECT TO THE INFORMATION SET FORTH IN, OR CONTEMPLATED BY,
\nTHE INFORMATION MEMORANDUM.<\/p>\n
ARTICLE VI<\/p>\n
Representations and Warranties of Buyer<\/p>\n
Buyer represents and warrants to Seller as follows:<\/p>\n
SECTION 6.1 Organization. Buyer is a corporation duly incorporated,
\nvalidly existing and in good standing under the laws of the State of Delaware
\nand has all requisite corporate power and authority to own, lease and operate
\nits properties and to carry on its business as is now being conducted.<\/p>\n
SECTION 6.2 Authority Relative to This Agreement. Buyer has all
\nnecessary corporate power and authority to execute and deliver this Agreement
\nand the Ancillary Agreements to which it is party and to consummate the
\ntransactions contemplated hereby and thereby. The execution and delivery by
\nBuyer of this Agreement and such Ancillary Agreements and the consummation by
\nBuyer of the transactions contemplated hereby and thereby have been duly and
\nvalidly authorized by the Board of Directors of Buyer and no other corporate
\nproceedings on the part of Buyer are necessary to authorize this Agreement or
\nsuch Ancillary Agreements or the consummation of the transactions contemplated
\nhereby or thereby. This Agreement and such Ancillary Agreements have been duly
\nand validly executed and delivered by Buyer and, assuming that this Agreement
\nand the Ancillary Agreements constitute valid and binding agreements of Seller
\nand each other party thereto, subject to the receipt of the Buyer Required
\nRegulatory Approvals and the Seller Required Regulatory Approvals, this
\nAgreement and the Ancillary Agreements constitute valid and binding agreements
\nof Buyer, enforceable against Buyer in accordance with their respective terms.<\/p>\n
SECTION 6.3 Consents and Approvals; No Violation.<\/p>\n
28<\/p>\n
(a) Subject to obtaining the Buyer Required Regulatory Approvals
\nand the Seller Required Regulatory Approvals, neither the execution and delivery
\nof this Agreement or the Ancillary Agreements to which it is party by Buyer nor
\nthe consummation of the transactions contemplated hereby or thereby or the
\npurchase by Buyer of the Auctioned Assets pursuant to this Agreement will (i)
\nconflict with or result in any breach of any provision of the [Organizational
\nDocuments] of Buyer, (ii) result in a default (or give rise to any right of
\ntermination, cancellation or acceleration) under any of the terms, conditions or
\nprovisions of any note, bond, mortgage, indenture, license, agreement, lease or
\nother instrument or obligation to which Buyer or any of its subsidiaries is a
\nparty or by which any of their respective assets may be bound or (iii) violate
\nany order, writ, injunction, decree, statute, rule or regulation applicable to
\nBuyer, or any of its assets, except, in the case of clause (ii) and (iii), for
\nsuch failures to obtain a necessary consent, defaults and violations which would
\nnot, individually or in the aggregate, have a Buyer Material Adverse Effect.<\/p>\n
(b) Except for (i) the filings by Buyer and Seller required by the
\nHSR Act and the expiration or earlier termination of all waiting periods under
\nthe HSR Act, and (ii) the Required Regulatory Approvals set forth on Schedule
\n6.3(b) attached hereto (collectively, the “Buyer Required Regulatory
\nApprovals”), no declaration, filing or registration with, or notice to, or
\nauthorization, consent or approval of any Governmental Authority is necessary
\nfor the consummation by Buyer of the transactions contemplated hereby or by the
\nAncillary Agreements, other than such declarations, filings, registrations,
\nnotices, authorizations, consents or approvals which relate to the Transferable
\nPermits.<\/p>\n
SECTION 6.4 Availability of Funds. Buyer has sufficient funds
\navailable to it or has received binding written commitments (copies of which
\nhave heretofore been delivered to Seller) from one or more nationally recognized
\nfinancial institutions to provide sufficient funds on the Closing Date to pay
\nthe Estimated Purchase Price.<\/p>\n
SECTION 6.5 Brokers. No broker, finder or other person is entitled
\nto any brokerage fees, commissions or finder’s fees in connection with the
\ntransaction contemplated hereby by reason of any action taken by Buyer, except
\nCredit Suisse First Boston Corporation, which is acting for and at the expense
\nof Buyer.<\/p>\n
SECTION 6.6 No Knowledge of Seller’s Breach. Buyer has no Knowledge
\nof any breach by Seller of any representation or warranty of Seller, or of any
\nother condition or circumstance that would excuse Buyer from its timely
\nperformance of its obligations hereunder. Buyer shall notify promptly Seller,
\nwith respect to Seller’s representations and warranties or such other conditions
\nor<\/p>\n
29<\/p>\n
circumstances, if any such information comes to Buyer’s attention prior to the
\nClosing.<\/p>\n
SECTION 6.7 Qualified Buyer. Buyer is qualified to obtain any
\nPermits and Environmental Permits necessary for Buyer to own and operate the
\nAuctioned Assets as of the Closing Date. Without limiting the foregoing, Buyer
\nis not aware of any reason or circumstance that would prevent Buyer from
\nprocuring the Buyer Required Regulatory Approvals.<\/p>\n
SECTION 6.8 WARN Act. Buyer does not intend to engage in a “Plant
\nClosing” or “Mass Lay-off” as such terms are defined in the WARN Act within
\nsixty days of the Closing Date.<\/p>\n
SECTION 6.9 Financial Representations. Buyer has provided Seller
\nwith the most recent balance sheet, income statement and statement of changes in
\ncash flows and independent auditors reports for each of the preceding three
\nfiscal years and most recent interim period. Such financial statements have been
\nprepared in accordance with GAAP and fairly reflect the financial position and
\nresults of operations of Buyer as at and for the periods therein.<\/p>\n
SECTION 6.10 Legal Proceedings. There are no claims, actions,
\nproceedings or investigations pending or, to the Knowledge of Buyer threatened
\nagainst or relating to Buyer before any Governmental Authority which would,
\nindividually or in the aggregate, be reasonably expected to create a Buyer
\nMaterial Adverse Effect. Buyer is not subject to any outstanding judgment, rule,
\norder, writ, injunction or decree of any Governmental Authority which could
\ncreate a Buyer Material Adverse Effect.<\/p>\n
ARTICLE VII<\/p>\n
Covenants of the Parties<\/p>\n
SECTION 7.1 Conduct of Business Relating to the Auctioned Assets.<\/p>\n
(a) Except with the prior written consent of Buyer (such consent
\nnot to be unreasonably withheld) or as required to effect the purchase and sale
\nof the Auctioned Assets and related transactions contemplated by this Agreement,
\nduring the period from the date of this Agreement to the Closing Date, Seller
\nwill operate the Auctioned Assets in the usual, regular and ordinary course and
\nin accordance with Good Utility Practices, and continue to pay accounts payable
\nwhich relate to the Auctioned Assets in a timely manner, consistent with past
\npractice.<\/p>\n
30<\/p>\n
(b) Notwithstanding the foregoing, except as contemplated in this
\nAgreement or the Ancillary Agreements, prior to the Closing Date, without the
\nprior written consent of Buyer (such consent not to be unreasonably withheld),
\nSeller will not:<\/p>\n
(i) except for Permitted Exceptions, grant any
\nEncumbrance on the Auctioned Assets securing any indebtedness for borrowed money
\nor guarantee or other liability for the obligations of any Person;<\/p>\n
(ii) make any material change in the levels of fuel
\ninventory and supplies, materials and spare parts inventory customarily
\nmaintained by Seller with respect to the Auctioned Assets, other than consistent
\nwith past practice;<\/p>\n
(iii) sell, lease (as lessor), transfer or otherwise
\ndispose of, any of the Auctioned Assets, other than assets that become obsolete
\nor assets used, consumed or replaced in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(iv) except as contemplated by Sections 7.9 and 7.17 with
\nrespect to the Unassigned PPAs, terminate, materially extend or otherwise
\nmaterially amend any of the Material Contracts (other than in accordance with
\ntheir respective terms) or waive any default by, or release, settle or
\ncompromise any material claim against, any other party thereto;<\/p>\n
(v) amend any of the Transferable Permits, other than (A)
\nTransferable Permits not material to the operations of the Auctioned Assets as
\ncurrently conducted, (B) as reasonably necessary to complete the transfer of
\nTransferable Permits as contemplated hereby, and (C) routine renewals or
\nnon-material modifications or amendments;<\/p>\n
(vi) enter into any Contract for the purchase, sale or
\nstorage of fuel (other than in the ordinary course of business) with respect to
\nthe Auctioned Assets (whether commodity or transportation) with a term in excess
\nof 12 months and not terminable on or before the Closing Date either (A)
\nautomatically, or (B) by option of Seller (or, after the<\/p>\n
31<\/p>\n
Closing, by Buyer) in its sole discretion, if the aggregate payments under such
\ncommitment for fuel and all other outstanding commitments for fuel (not
\npreviously approved by Buyer) would exceed $5,000,000;<\/p>\n
(vii) except in the case of capital expenditures covered by
\nclause (viii) below, enter into any Contract with respect to the Auctioned
\nAssets for goods or services not addressed in clauses (i) through (vi) with a
\nterm in excess of 12 months, if the aggregate future liability or receivable
\noutstanding on the date for measurement for the purpose of this covenant for all
\nsuch Contracts would be in excess of $1,000,000, not including any such Contract
\nterminable by notice of not more than 30 days without penalty or cost (other
\nthan de minimis administrative costs); provided, however, that notwithstanding
\nany other provision of this Agreement to the contrary, Seller may enter into any
\nContract reasonably necessary to effect the physical, legal or operational
\nseparation of the sites on which the Auctioned Assets are located or to
\notherwise implement the change of ownership contemplated hereby, or subdivision,
\nof such sites or implement the provisions of the Ancillary Agreements;<\/p>\n
(viii) make, or commit to make, any capital expenditures
\nexcept (A) those capital expenditures described on Schedule 7.1(b)(viii), (B)
\nthose capital expenditures which do not exceed in the aggregate $2,000,000 (in
\naddition to those other capital expenditures permitted under this subsection
\n(viii)), (C) those capital expenditures which are approved by Buyer, or (D)
\nthose capital expenditures which are mandated by a law or regulation of a
\nGovernmental Authority; provided, however, that, in the case of clause (D),
\nSeller will not make any such mandated capital expenditures (unless the failure
\nby Seller to make such capital expenditures would have an adverse impact upon
\nthe Auctioned Assets) if (y) such mandated capital expenditures are not required
\nto be made by Seller prior to the Closing Date, and (z) the Buyer assumes
\nresponsibility, at its sole cost, to make such mandated capital expenditures
\nafter the Closing (any capital expenditures described above are the “Permitted
\nCapital Expenditures”);<\/p>\n
32<\/p>\n
(ix) enter into any Contract with Affiliates of Seller the
\nterm of which are not indicative of arms-length negotiations;<\/p>\n
(x) (A) amend any Benefit Plans, or (B) grant any
\nEmployee an increase in compensation, except in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(xi) make any tax election with respect to the Auctioned
\nAssets; or<\/p>\n
(xii) enter into any Contract with respect to the Auctioned
\nAssets relating to any of the transactions set forth in the foregoing clauses
\n(i) through (xi).<\/p>\n
(c) Without limiting the generality of Sections 7.1(a) and (b), to
\nthe extent Section 7.1(a) or (b) prohibits Seller from entering into any
\nContract for goods and services in connection with maintenance or capital
\nexpenditures, Buyer agrees that Seller may request Buyer’s consent to enter into
\nsuch Contract, such consent not to be unreasonably withheld, and to the extent
\nBuyer so consents, all liabilities and obligations under such Contract shall
\nconstitute Assumed Obligations and Buyer shall otherwise reimburse Seller for
\nall its expenditures thereunder.<\/p>\n
(d) Notwithstanding anything in this Section 7.1 to the contrary,
\nSeller may take any action, incur any expense or enter into any obligation with
\nrespect to the Auctioned Assets to the extent that (i) all obligations and
\nliabilities arising with respect thereto do not constitute Assumed Obligations,
\n(ii) such actions are at Seller’s expense and are deemed by Seller to be
\nnecessary, or (iii) Seller otherwise provides that such obligations and
\nliabilities shall not be assumed or retained by Buyer.<\/p>\n
SECTION 7.2 Access to Information.<\/p>\n
(a) Between the date of this Agreement and the Closing Date,
\nSeller will, subject to the Confidentiality Agreement, during ordinary business
\nhours and upon reasonable notice (i) give Buyer and its representatives
\nreasonable access to all books, records, personnel, plants, offices and other
\nfacilities and properties constituting the Auctioned Assets, including for the
\npurpose of observing the operation by Seller of the Auctioned Assets, (ii)
\npermit Buyer to make such reasonable inspections thereof as Buyer may reasonably
\nrequest, (iii) furnish Buyer with such financial and operating data and other
\ninformation with respect to the Auctioned Assets as Buyer may from time to time
\nreasonably request, (iv) furnish<\/p>\n
33
\nBuyer upon request a copy of each material report, schedule or other document
\nwith respect to the Auctioned Assets filed by Seller with, or received by Seller
\nfrom, any PSC or FERC; provided, however, that (A) any such activities shall be
\nconducted in such a manner as not to interfere unreasonably with the operation
\nof the Auctioned Assets, (B) Seller shall not be required to take any action
\nwhich would constitute a waiver of the attorney-client privilege and (C) Seller
\nneed not supply Buyer with (1) any information or access which Seller is under a
\nlegal obligation not to supply or (2) any information which Seller has
\npreviously supplied to Buyer. Notwithstanding anything in this Section 7.2 to
\nthe contrary, (i) Seller will not be required to provide such information or
\naccess to any employee records other than Transferred Employee Records, (ii)
\nBuyer shall not have the right to perform or conduct any environmental sampling
\nor testing at, in, on, around or underneath the Auctioned Assets and (iii)
\nSeller shall not be required to provide such access or information with respect
\nto any Retained Asset or Retained Liabilities.<\/p>\n
(b) From and after the Closing Date, for a period of no
\nless than 7 years, Buyer shall retain all Operating Records (whether in
\nelectronic form or otherwise) relating to the Auctioned Assets on or prior to
\nthe Closing Date. Buyer also agrees that, from and after the Closing Date,
\nSeller shall have the right, upon reasonable request to Buyer, to have access
\nto, or receive from Buyer copies of, any Operating Records or other information
\nin Buyer’s possession relating to the Auctioned Assets on or prior to the
\nClosing Date and required by Seller in order to comply with applicable law.
\nSeller shall reimburse Buyer for its reasonable costs and expenses incurred in
\nconnection with the foregoing sentence. If the Buyer shall desire to dispose of
\nany Operating Records or other information contemplated above, Buyer shall,
\nprior to such disposition, give Seller a reasonable opportunity to segregate and
\nremove such records and information as it may select.<\/p>\n
SECTION 7.3 Consents and Approvals; Transferable Permits.<\/p>\n
(a) Seller and Buyer shall cooperate with each other and
\n(i) prepare and file (or otherwise effect) as soon as practicable all
\napplications, notices, petitions and filings with respect to and (ii) use their
\nreasonable best efforts to obtain (A) the Seller Required Regulatory Approvals
\nand the Buyer Required Regulatory Approvals and (B) any other consents,
\napprovals or authorizations of any other Governmental Authorities or third
\nparties that are necessary to consummate the transactions contemplated by this
\nAgreement or the Ancillary Agreements other than such consents, individually or
\nin the aggregate, create a Material Adverse Effect. Without limiting the
\ngenerality of the foregoing, (1) each Party agrees to, upon the other party’s
\nrequest, support such other Party’s applications for regulatory approvals of the
\npurchase and sale of the Auctioned Assets contemplated by this Agreement, and
\n(2) Buyer and Seller agree to defend any lawsuits or other legal proceedings,
\n 34<\/p>\n
whether judicial or administrative, challenging this Agreement or the Ancillary
\nAgreements, or the consummation of the transactions contemplated hereby or
\nthereby, including seeking to have any stay or temporary restraining order
\nentered by any Governmental Authority vacated or reversed.<\/p>\n
(b) Upon execution of this Agreement, Seller shall
\ncommence the process of transferring to Buyer the Transferable Permits,
\nincluding completing and filing applications and related documents with the
\nappropriate Governmental Authorities. Seller hereby reserves the right to
\nmodify, alter or amend any Transferable Permit or to refuse to correct
\nviolations or deficiencies in respect of any Transferable Permit as long as such
\nmodification, alteration, amendment or refusal would not, individually or in the
\naggregate, create a Material Adverse Effect.<\/p>\n
(c) Seller shall use its reasonable best efforts to
\ncooperate with Buyer in the transfer of Transferable Permits to Buyer by
\nClosing. If in the sole discretion of Seller, the transfer of any Transferable
\nPermit cannot be completed by Closing, Buyer is hereby authorized, but not
\nrequired, to act as Seller’s representative and agent in respect of such
\nTransferable Permit and to do all things necessary for effecting transfer of
\nsuch Transferable Permit as soon after the Closing as is practicable, with
\nSeller remaining the Transferable Permit “holder of record” in such case until
\nsuch transfer is completed. In the case of each such Transferable Permit, Seller
\nshall, to the maximum extent permitted by law and such Transferable Permit,
\nenter into such reasonable arrangements with Buyer as are necessary to provide
\nBuyer with the benefits and obligations of such Transferable Permit. If in the
\nsole discretion of Seller, Buyer is able to complete the transfer of any
\nTransferable Permit after Closing without the occurrence of any event that, if
\nsuch event had occurred between the execution of this Agreement and the Closing,
\nwould have created, individually or in the aggregate, a Material Adverse Effect,
\nSeller may substitute Buyer in its place and stead as the Party responsible for
\ncompleting the transfer of such Transferable Permit.<\/p>\n
SECTION 7.4 Further Assurances. Subject to the terms and conditions
\nof this Agreement, each of the Parties will use its reasonable best efforts to
\ntake, or cause to be taken, as soon as possible, all action, and to do, or cause
\nto be done, as soon as possible, all things necessary, proper or advisable under
\napplicable laws and regulations to consummate the sale of the Auctioned Assets
\npursuant to this Agreement as soon as possible, including using its reasonable
\nbest efforts to ensure satisfaction of the conditions precedent to each Party’s
\nobligations hereunder. Prior to Buyer’s submission of any application with a
\nGovernmental Authority for a regulatory approval, Buyer shall submit such
\napplication to Seller for review and comment and Buyer shall incorporate into
\nsuch application any revisions reasonably requested by Seller. Neither of the
\nParties will, without prior written consent of the other Party, take or fail to
\ntake, or permit their respective Affiliates to take or fail to
\n 35<\/p>\n
take, any action, which would reasonably be expected to prevent or materially
\nimpede, interfere with or delay the consummation, as soon as possible, of the
\ntransactions contemplated by this Agreement or the Ancillary Agreements.<\/p>\n
SECTION 7.5 Public Statements. The Parties shall consult with each
\nother prior to issuing any public announcement, statement or other disclosure
\nwith respect to this Agreement, the Ancillary Agreements or the transactions
\ncontemplated hereby or thereby, and shall not issue any such public
\nannouncement, statement or other disclosure prior to such consultation, except
\nas may be required by law.<\/p>\n
SECTION 7.6 Tax Matters.<\/p>\n
(a) All transfer and sales taxes (including (i) sales tax
\non the sale or purchase of the Auctioned Assets imposed by Governmental
\nAuthorities, (ii) transfer tax on the conveyance of interest in real property
\nimposed by Governmental Authorities, and (iii) any petroleum business taxes and
\nsimilar excise taxes on sales of petroleum based products imposed by
\nGovernmental Authorities) incurred in connection with this Agreement and the
\ntransactions contemplated hereby shall be borne by Buyer. Buyer shall prepare
\nand file in a timely manner any and all Tax Returns or other documentation
\nrelating to such taxes; provided, however, that, to the extent required by
\napplicable law, Seller will join in the execution of any such Tax Returns or
\nother documentation relating to any such taxes. Buyer shall provide to Seller
\ncopies of each Tax Return described in the proviso in the preceding sentence at
\nleast 30 days prior to the date such Tax Return is required to be filed.<\/p>\n
(b) At Seller’s election, but on no less than 10 Business
\nDays’ notice to Buyer, the transfer of some or all of the Auctioned Assets and
\nthe receipt of the amount payable by Buyer to Seller pursuant to Section 3.1
\nhereof shall be made through a qualified intermediary in a manner satisfying the
\nrequirements of Treasury Regulation Section 1.1031(k)-1(g); provided, however,
\nthat Seller shall pay and be responsible for any incremental costs associated
\nwith such use of a qualified intermediary.<\/p>\n
SECTION 7.7 Bulk Sales or Transfer Laws. Buyer acknowledges that
\nSeller will not comply with the provisions of any bulk sales or transfer laws of
\nany jurisdiction in connection with the transactions contemplated by this
\nAgreement. Buyer hereby waives compliance by Seller with the provisions of the
\nbulk sales or transfer laws of all applicable jurisdictions.<\/p>\n
SECTION 7.8 Witness Services. At all times from and after the
\nClosing Date, each Party shall use reasonable best efforts to make available to
\nthe other
\n 36<\/p>\n
Party, upon reasonable written request, its and its subsidiaries’ then current
\nor former officers, directors, employees (including former employees of Seller)
\nand agents as witnesses to the extent that (i) such persons may reasonably be
\nrequired by such requesting Party in connection with any claim, action,
\nproceeding or investigation in which such requesting Party may be involved and
\n(ii) there is no conflict between Buyer and Seller in such claim, action,
\nproceeding or investigation. Such other Party shall be entitled to receive from
\nsuch requesting Party, upon the presentation of invoices for such witness
\nservices, payments for such amounts, relating to supplies, disbursements and
\nother out-of-pocket expenses and direct and indirect costs of employees who are
\nwitnesses, as may be reasonably incurred in providing such witness services.<\/p>\n
SECTION 7.9 Control of Litigation. The Buyer and Seller agree and
\nacknowledge that Seller shall be entitled exclusively to control, defend and
\nsettle any litigation, administrative or regulatory proceeding, and any
\ninvestigation or remediation activity arising out of or related to any
\nUnassigned PPAs, Retained Assets or Retained Liabilities, and Buyer agrees to
\ncooperate fully in connection therewith. Without Buyer’s prior written consent,
\nSeller shall not settle any litigation, administrative or regulatory proceeding
\nrelating to an Unassigned PPA that would result in a material adverse effect on
\nthe rights of Buyer hereunder. Buyer and Seller agree and acknowledge that Buyer
\nshall be entitled to participate at its expense and assume control of any
\nlitigation, administrative or regulatory proceeding, exclusively arising out of
\nor related to any Assumed Obligations, and Seller agrees to cooperate fully in
\nconnection therewith. Anything contained in this Agreement to the contrary
\nnotwithstanding, no Party shall be entitled to assume the defense of any
\nlitigation, administrative or regulatory proceeding or investigation if such
\nlitigation, administrative or regulatory proceeding or investigation seeks an
\norder, injunction or other equitable relief for other than monetary damages
\nagainst the other Party which, if successful, would materially adversely affect
\nthe business of such other Party.<\/p>\n
SECTION 7.10 Confidentiality. Buyer hereby agrees to comply with its
\nobligations to keep confidential certain information in accordance with the
\nterms set forth in the Confidentiality Agreement.<\/p>\n
SECTION 7.11 Risk of Loss.<\/p>\n
(a) Except as otherwise provided for in this Section
\n7.11, from the date hereof through the Closing Date, all risk of loss or damage
\nto the assets and properties included in the Auctioned Assets shall be borne by
\nSeller (other than loss or damage caused by the acts or negligence of Buyer or
\nany of its employees, officers, agents or representatives, which loss or damage
\nshall be the responsibility of Buyer).
\n 37<\/p>\n
(b) If, before the Closing Date, all or any portion of
\nthe Auctioned Assets are (1) taken by eminent domain or are the subject of a
\npending or (to the Knowledge of the Seller) contemplated taking which has not
\nbeen consummated, or (2) damaged or destroyed by fire or other casualty, Seller
\nshall notify Buyer promptly in writing of such fact. If the fair market value of
\nthe Auctioned Assets that are the subject of, or are adversely affected by, such
\ntaking or loss is one percent (1%) or less of the fair market value of the
\nAuctioned Assets (as estimated in good faith by Seller), Buyer and Seller agree
\nthat such taking or loss shall not have any effect on (or otherwise impede in
\nany manner) the transactions contemplated hereby, and Buyer shall be entitled to
\nan assignment of all of Seller’s right, title and interest in and to any related
\naward or insurance proceeds. If (1) the fair market value of the Auctioned
\nAssets that are the subject of, are adversely affected by such taking or loss is
\nin excess of one percent (1%) of the fair market value of the Auctioned Assets
\n(as estimated in good faith by Seller in accordance with the preceding sentence)
\nand (2) Seller has not notified Buyer of its intention to cure such taking or
\nloss within 30 days after its occurrence, Buyer and Seller shall negotiate in
\ngood faith a fair and equitable adjustment to the Purchase Price and, upon such
\nsettlement, consummate the transactions contemplated by this Agreement pursuant
\nto the terms of this Agreement. If no such settlement is reached within 60 days
\nafter Seller has notified Buyer of such taking or casualty, Buyer or Seller may
\nterminate this Agreement pursuant to Section 11.1.<\/p>\n
SECTION 7.12 Tax Exempt Financing.<\/p>\n
(a) Buyer understands and agrees that:<\/p>\n
(i) those certain facilities of the Seller
\nlisted on Schedule 7.12 attached hereto (the “Exempt Facilities”) have been
\nfinanced, and refinanced, in whole or in part, with the proceeds of the issuance
\nand sale by various Governmental Authorities of industrial development revenue
\nbonds or private activity bonds as set forth on Schedule 7.12 attached hereto
\n(collectively, the “Revenue Bonds”) the interest on which, with certain
\nexceptions, is excluded from gross income for purposes of federal income
\ntaxation; and Seller is the economic obligor in respect of such bonds;<\/p>\n
(ii) The basis for such exclusion is the use of
\nthe Exempt Facilities for the purpose of (A) the abatement or control of
\natmospheric or water pollution or contamination and\/or (B) the collection,
\nstorage, treatment, utilization, processing or final disposal of solid waste
\nand\/or (C) the collection, storage, treatment, utilization, processing or
\n 38<\/p>\n
final disposal of sewage, such qualifying purposes being discussed in more
\ndetail in (b) below;<\/p>\n
(iii) The use of the Exempt Facilities for a
\npurpose other than a qualifying purpose indicated in subsection (ii) above could
\nimpair (A) such exclusion from gross income of the interest on such bonds,
\npossibly with retroactive effect, unless appropriate remedial action were taken
\n(which could include prompt defeasance or redemption of such bonds) and\/or (B)
\nthe deductibility of payment by Seller of interest based on the restrictions in
\nSection 150 (b) of the Code; and<\/p>\n
(iv) Any breach by Buyer of its obligations
\nunder this Section 7.12 could result in the incurrence by Seller of additional
\ncosts and expenses, including without limitation, increased interest costs, loss
\nof the interest deduction for tax purposes and transaction costs relating to any
\nrefinancing, redemption and\/or defeasance of all or part of the Revenue Bonds,
\nand Buyer will be liable to Seller for such additional costs and expenses.<\/p>\n
(b) i) Buyer agrees that it shall not use,
\nor permit the use of, the Exempt Facilities for any purpose other than the
\ncontinuing use of such Exempt Facilities for<\/p>\n
(A) abating or controlling atmospheric
\nor water pollution or contamination by removing, altering, disposing of or
\nstoring pollutants, contaminants, waste or heat, all as contemplated in U.S.
\nTreasury Regulations Section 1.103-8(g);<\/p>\n
(B) the collection, storage, treatment,
\nutilization, processing or final disposal of solid waste, all as contemplated in
\nU.S. Treasury Regulations Section 1.103-8(f); or<\/p>\n
(C) the collection, storage, treatment,
\nutilization, processing or final disposal of sewage, all as contemplated in U.S.
\nTreasury Regulations Section 1.103-8(f)
\n 39<\/p>\n
unless Buyer has obtained at its own expense an opinion addressed to Seller of
\nnationally recognized bond counsel reasonably acceptable to Seller (“Bond
\nCounsel”) that such use will not impair (x) the exclusion from gross income of
\nthe interest on any issue of Revenue Bonds for Federal income tax purposes or
\n(y) the deductibility of Seller’s payments of interest based on the restrictions
\nin Section 150(b) of the Code.<\/p>\n
(ii) Buyer reasonably expects, as of the date of
\nthis Agreement, that the Exempt Facilities will continue to be used for the
\nqualifying purposes set forth in subsection (i) above, and for no other purpose,
\nfor the remainder of their useful lives.<\/p>\n
(c) It is expressly understood and agreed that the
\nprovisions of clause (b) above shall not prohibit Buyer from (i) suspending the
\noperation of the Exempt Facilities on a temporary basis, and\/or (ii) selling
\nexclusively for cash Exempt Facilities consisting of personal property, in whole
\nor in part, including any sale for scrap, provided that the operation of the
\nGenerating Plant served by such Exempt Facilities shall not theretofore have
\nbeen, and is not then being, terminated on a permanent basis, and provided
\nfurther that the proceeds of such sale of the Exempt Facilities shall within six
\nmonths from the date of sale be expended to acquire replacement property to be
\nused for the same qualifying purpose as the Exempt Facilities so sold, and\/or
\n(iii) any other suspension or termination of operation or sale, exchange,
\ntransfer or other disposition of Exempt Facilities, provided that Buyer has
\nobtained at its own expense an opinion addressed to Seller of Bond Counsel that
\nthe failure to take this action will not impair (x) the exclusion from gross
\nincome of the interest on any issue of Revenue Bonds for Federal income tax
\npurposes or (y) the deductibility of Seller’s payments of interest based on the
\nrestrictions in Section 150(b) of the Code.<\/p>\n
(d) Buyer agrees that it shall not issue, or have issued
\non its behalf, any tax-exempt bonds to finance or refinance its acquisition of
\nthe Exempt Facilities; provided that it is expressly understood and agreed that
\nthis clause (d) shall not prohibit the use of tax-exempt bonds to finance or
\nrefinance any improvement to the Exempt Facilities made after the date of
\nacquisition or to any assets other than the Exempt Facilities.<\/p>\n
(e) Buyer agrees that it shall give Seller at least 180
\ndays’ prior written notice of any suspension or termination of the operation of
\nthe Exempt Facilities, or any part thereof, and of any sale, exchange, transfer
\nor other disposition of the Exempt Facilities, or any part thereof, including,
\nbut not limited to, a sale for scrap, such written notice to be provided whether
\nor not an opinion of Bond Counsel is required to be obtained in accordance with
\nclause (c).
\n 40<\/p>\n
(f) If Seller shall desire to refund any Revenue Bonds,
\nBuyer shall cooperate with Seller and with Bond Counsel with respect to such
\nrefunding bonds and shall provide upon request any representations, agreements
\nor covenants that are reasonably requested concerning its compliance to such
\ndate and\/or in the future with the representations, agreements and covenants
\nmade herein.<\/p>\n
(g) If Buyer shall sell, exchange, transfer or otherwise
\ndispose of the Exempt Facilities to a third party, Buyer shall cause to be
\nincluded in the documentation relating to such transaction covenants and
\nagreements on the part of such third party for the benefit of the Seller, and as
\nrequested by the Seller, the trustee for the holders of any Revenue Bonds
\nsubstantially identical to those on the part of Buyer contained in this Section
\n7.12.<\/p>\n
(h) The covenants and agreements on the part of Buyer
\ncontained in this Section 7.12 shall continue in effect so long as any of the
\nRevenue Bonds, including any refunding bonds issued hereafter to refund any
\nRevenue Bonds, shall remain outstanding. Seller shall notify Buyer promptly when
\nthere shall be no Revenue Bonds outstanding and, at the request of the Seller,
\nthe Buyer shall execute further documentation to provide that such covenants and
\nagreements are also for the benefit of the trustee for the holders of any
\nRevenue Bonds.<\/p>\n
(i) Notwithstanding any provision in this Agreement to
\nthe contrary, from and after the Closing Date, Seller agrees that it will remain
\nprimarily liable for, and promptly pay when due, all obligations to pay
\nprincipal and interest under the Loan Agreements.<\/p>\n
SECTION 7.13 Compliance with Governmental Agreements. From and after
\nthe Closing Date, Buyer agrees that it will abide by, and comply with, all
\nexisting permit conditions, provisions in the Certificates of Public Convenience
\nand Necessity issued to the Seller by any PSC, and any other agreements or
\narrangements between the Seller and the District of Columbia or the State of
\nMaryland (or any political subdivision thereof), including provisions or
\nagreements relating to environmental compliance and mitigation.<\/p>\n
SECTION 7.14 PJM; MAAC. From and after the Closing Date, Buyer shall
\nmaintain membership in good standing in PJM and MAAC, and shall submit to the
\ngovernance of the independent system operator established and administered under
\nthe PJM Agreement.<\/p>\n
SECTION 7.15 Trade Names. Seller shall not object to the use by Buyer
\nof any trade names, trademarks, service marks or logos (and any rights to and in
\nthe same, including any right to use the same) which are not Retained Assets in
\n 41<\/p>\n
connection with its ownership and operation of the Generating Facilities. In
\naddition, Buyer hereby acknowledges the right of Seller to use such trade names,
\ntrademarks, service marks or logos in connection with Seller’s ownership and
\noperation of the Retained Assets.<\/p>\n
SECTION 7.16 Enforcement of Retained Rights. Notwithstanding any
\nprovision of the Agreement to the contrary, Seller shall be entitled to enforce
\nall rights and remedies in respect of the Retained Rights in accordance with the
\nterms and conditions of each PPA, including termination of interconnection and
\nrelated services to the applicable Power Seller.<\/p>\n
SECTION 7.17 Conduct of Business Relating to PPAs. Prior to Closing,
\nexcept as expressly contemplated by this Agreement, required by the terms of any
\nPPA or consented to by Buyer (which shall not be unreasonably withheld), Seller
\nshall not amend, modify or extend any PPA, or waive performance of the
\nobligations of any party thereunder, which, would have a material adverse effect
\non the rights of Buyer hereunder.<\/p>\n
ARTICLE VIII<\/p>\n
Conditions<\/p>\n
SECTION 8.1 Conditions Precedent to Each Party’s Obligation To
\nEffect the Purchase and Sale. The respective obligations of each Party to effect
\nthe purchase and sale of the Auctioned Assets shall be subject to the
\nsatisfaction or waiver by such Party on or prior to the Closing Date of the
\nfollowing conditions:<\/p>\n
(a) all Seller Required Regulatory Approvals and Buyer
\nRequired Regulatory Approvals shall have been obtained by Seller and Buyer, as
\nthe case may be, and all conditions to effectiveness prescribed therein or
\notherwise by law, regulation or order shall have been satisfied by such Parties;
\nprovided, that the Seller will not be required to close if any Seller Required
\nRegulatory Approval contains terms and conditions that create a Regulatory
\nMaterial Adverse Effect;<\/p>\n
(b) no preliminary or permanent injunction or other order
\nor decree by any Federal or state court of competent jurisdiction and no statute
\nor regulation enacted by any Governmental Authority prohibiting the consummation
\nof the purchase and sale of the Auctioned Assets (collectively, “Restraints”)
\nshall be in effect; and<\/p>\n
(c) the execution and delivery of each Ancillary
\nAgreement, by each Party thereto.
\n 42<\/p>\n
SECTION 8.2 Conditions Precedent to Obligation of Buyer To Effect
\nthe Purchase and Sale. The obligation of Buyer to effect the purchase and sale
\nof the Auctioned Assets contemplated by this Agreement shall be subject to the
\nsatisfaction or waiver by Buyer on or prior to the Closing Date of the following
\nadditional conditions:<\/p>\n
(a) Seller shall have performed its covenants and
\nagreements contained in this Agreement which are required to be performed on or
\nprior to the Closing Date, except where the failure to perform such covenants
\nand agreements would not, individually or in the aggregate, create a Material
\nAdverse Effect;<\/p>\n
(b) the representations and warranties of Seller which
\nare set forth in this Agreement shall be true and correct as of the date of this
\nAgreement and as of the Closing Date, as if made at and as of such time (except
\nto the extent expressly made as of an earlier date, in which case as of such
\ndate), except where the failure of such representations and warranties to be so
\ntrue and correct (without giving effect to any limitation as to “materiality” or
\n“Material Adverse Effect” set forth therein) would not, individually or in the
\naggregate, create a Material Adverse Effect;<\/p>\n
(c) Buyer shall have received a certificate from an
\nauthorized officer of Seller, dated the Closing Date, to the effect that, to the
\nbest of such officer’s Knowledge, the conditions set forth in Section 8.2(a) and
\n(b) have been satisfied;<\/p>\n
(d) all material Permits and Environmental Permits
\nrequired for Buyer to conduct the business and operations of the Auctioned
\nAssets as currently conducted shall have been transferred or will be
\ntransferable to Buyer, or shall have been obtained or will be obtained by Buyer,
\nexcept where the failure to obtain such material Permits or Environmental
\nPermits will not have, individually or in the aggregate, a Material Adverse
\nEffect;<\/p>\n
(e) Buyer shall have received (i) the deeds of conveyance
\nsubstantially in the form of Exhibit J, and (ii) an opinion from Dickstein
\nShapiro Morin & Oshinsky LLP or other counsel reasonably acceptable to Buyer,
\ndated the Closing Date, and reasonably satisfactory in form and substance to
\nBuyer covering the matters set forth in Exhibit K;<\/p>\n
(f) Buyer shall have received a Foreign Investment in
\nReal Property Tax Act Certification and Affidavit, executed by Seller; and<\/p>\n
(g) Seller shall have delivered to Buyer all such other
\ninstruments as shall, in the reasonable opinion of the Buyer and its counsel, be
\n(i) necessary to transfer to
\n 43<\/p>\n
Buyer the Auctioned Assets in accordance with this Agreement or (ii) required to
\nconsummate the transactions contemplated by this Agreement.<\/p>\n
SECTION 8.3 Conditions Precedent to Obligation of Seller To Effect
\nthe Purchase and Sale. The obligation of Seller to effect the purchase and the
\nsale of the Auctioned Assets contemplated by this Agreement shall be subject to
\nthe satisfaction or waiver by Seller on or prior to the Closing Date of the
\nfollowing additional conditions:<\/p>\n
(a) Buyer shall have performed its covenants and
\nagreements contained in this Agreement which are required to be performed on or
\nprior to the Closing Date, except where the failure to perform such covenants
\nand agreements would not, individually or in the aggregate, create a Buyer
\nMaterial Adverse Effect;<\/p>\n
(b) the representations and warranties of Buyer which are
\nset forth in this Agreement shall be true and correct as of the date of this
\nAgreement and as of the Closing Date, as if made at and as of such time (except
\nto the extent expressly made as of an earlier date, in which case as of such
\ndate), except where the failure of such representations and warranties to be so
\ntrue and correct (without giving effect to any limitation as to “materiality” or
\n“Buyer Material Adverse Effect” set forth therein) would not, individually or in
\nthe aggregate, create a Buyer Material Adverse Effect;<\/p>\n
(c) Seller shall have received a certificate from an
\nauthorized officer of Buyer, dated the Closing Date, to the effect that, to the
\nbest of such officer’s Knowledge, the conditions set forth in Section 8.3(a) and
\n(b) have been satisfied;<\/p>\n
(d) Seller shall have received an opinion from Troutman
\nSanders LLP or other counsel reasonably acceptable to Seller, dated the Closing
\nDate, and reasonably satisfactory in form and substance to Seller covering the
\nmatters set forth in Exhibit L;<\/p>\n
(e) Buyer shall have provided evidence in form and
\nsubstance reasonably satisfactory to Seller of compliance by Buyer with its
\nobligations under Article IX (including, without limitation, a certificate from
\nan authorized officer of Buyer, dated the Closing Date, which identifies the
\nNon-Union Employees who did not receive from the Buyer a Qualified Offer
\npursuant to Section 9.1(d));<\/p>\n
(f) If a Guarantee Agreement has been entered into:<\/p>\n
(i) the Guarantee Agreement shall be in full
\nforce and effect;
\n 44<\/p>\n
(ii) the Guarantor shall have performed in all
\nmaterial respects its covenants and agreements contained in the Guarantee
\nAgreement which are required to be performed on or prior to the Closing Date;<\/p>\n
(iii) the representations and warranties of the
\nGuarantor which are set forth in the Guarantee Agreement shall be true and
\ncorrect as of the date of the Guarantee Agreement and as of the Closing Date, as
\nif made at and as of such time (except to the extent expressly made as of an
\nearlier date, in which case as of such date), except where the failure of such
\nrepresentations and warranties to be so true and correct (without giving effect
\nto any limitation as to “materiality” or “Guarantor Material Adverse Effect” set
\nforth therein) would not, individually or in the aggregate, create a Guarantor
\nMaterial Adverse Effect (as defined therein);<\/p>\n
(iv) Seller shall have received a certificate
\nfrom an authorized officer of the Guarantor, dated the Closing Date, to the
\neffect that, to the best of such officer’s Knowledge, the conditions set forth
\nin Sections 8.3(f)(ii) and (iii) have been satisfied;<\/p>\n
(v) Seller shall have received an opinion from
\nTroutman Sanders LLP or other counsel reasonably acceptable to Seller, dated the
\nClosing Date, and reasonably satisfactory in form and substance to Seller
\ncovering the matters set forth in Exhibit M.<\/p>\n
(g) Buyer shall have delivered to Seller all such other
\ninstruments as shall, in the reasonable opinion of the Seller and its counsel,
\nbe (i) necessary for the Buyer to assume the Assumed Obligations in accordance
\nwith this Agreement or (ii) required to consummate the transactions contemplated
\nby the Agreement.<\/p>\n
(h) Panda shall have consented to a Novation of the Panda
\nPPA satisfactory in form and substance to Seller, or Seller shall have received
\nan order from the MDPSC determining that the transactions contemplated by
\nSection II of Schedule 2.4 hereto with respect to the Panda PPA do not violate
\nthe Panda PPA, which order shall have become final and non-appealable, and which
\nis satisfactory in form and substance to Seller.
\n 45<\/p>\n
ARTICLE IX<\/p>\n
Employee Matters<\/p>\n
SECTION 9.1 Employee Matters.<\/p>\n
(a) Buyer shall offer employment, effective as of the
\nClosing Date, to all employees of Seller employed at the Generating Facilities
\nand the Support Operations as of the Closing Date who are covered by the IBEW
\nCollective Bargaining Agreement, including those employees absent from active
\nservice due to illness or leave of absence, whether paid or unpaid, other than
\nthose employees on long term disability as of the Closing Date who have received
\nwritten notice from Seller approving requests for long term disability as of the
\nClosing Date (the “Union Employees”), pursuant to and in accordance with the
\nIBEW Collective Bargaining Agreement and applicable law. Each Union Employee who
\nbecomes employed by Buyer pursuant to this Section 9.1(a) is referred to herein
\nas a “Transferred Union Employee”.<\/p>\n
(b) Any Union Employee who refuses an offer of employment
\nfrom Buyer made in accordance with the terms of this Section 9.1 shall be
\ntreated by Seller as a terminated employee and shall not be entitled to any
\nseverance or other benefits from Buyer in connection therewith.<\/p>\n
(c) Buyer shall provide benefits to Transferred Union
\nEmployees substantially equivalent to those provided under the IBEW Collective
\nBargaining Agreement. In doing so, Buyer may use different providers, establish
\nits own benefit plans or use its existing plans. There shall be no duplication
\nof benefits. Buyer shall recognize service with Seller for purposes of
\neligibility and vesting and benefit calculations in any benefit plan, program,
\nor fringe benefit arrangement. For purposes of health care coverage, Buyer shall
\nwaive all limitations regarding pre-existing condition exclusions, actively at
\nwork exclusions and waiting periods for Transferred Union Employees. During the
\ncalendar year in which Closing occurs, all health care expenses incurred by
\nTransferred Union Employees that were qualified to be taken into account for
\npurposes of satisfying any deductible or out-of-pocket limit under Seller’s
\nhealth care plans shall be taken into account for purposes of satisfying any
\ndeductible or out-of-pocket limit under Buyer’s health care plans for such
\ncalendar year. Buyer shall give all Transferred Union Employees full credit for
\nall vacation, sick leave or comp time benefits accrued and not used as of the
\nClosing. The Buyer shall provide substantially equivalent retiree medical
\nbenefits to the Transferred Union Employees only with no duplication of benefits
\nand such benefits shall be subject to any limitations in existing plan documents
\nand the IBEW Collective Bargaining Agreement and related documents.
\n 46<\/p>\n
(d) Buyer may, but shall not be required to, offer
\nemployment, effective as of the Closing Date, to employees of Seller (other than
\nUnion Employees) who are (i) employed at the Generating Facilities or (ii)
\ncorporate support personnel engaged in the Support Operations (collectively, the
\n“Non-Union Employees” and, together with Union Employees, “Employees”). Within
\nsixty (60) days after the date hereof, Buyer shall notify Seller as to the
\nidentity of those Non-Union Employees to whom it intends to offer employment,
\nprovided that, during such period, Seller shall, upon reasonable notice and to
\nthe extent not disruptive to the operation of the Auctioned Assets, provide
\nBuyer with reasonable access to Non-Union Employees and, to the extent permitted
\nby applicable law, their respective Transferred Employee Records. In the event
\nthat Buyer does not make a Qualified Offer to any Non-Union Employees, the Buyer
\nshall be solely responsible for the payment to such Non-Union Employees of all
\nseverance costs payable under the Seller’s 1998 Reorganization Severance Plan
\n(treating the consummation of the sale of the Auctioned Assets hereunder as an
\nevent entitling such Non-Union Employee to severance benefits thereunder). The
\nBuyer shall have no other obligations with respect to any Non-Union Employees to
\nwhich it does not make a Qualified Offer. Each Non-Union Employee who becomes
\nemployed by Buyer pursuant to this Section 9.1(d) shall be referred to herein as
\na “Transferred Non-Union Employee” and, together with Transferred Union
\nEmployees, the “Transferred Employees.” Any offer of employment to a Non-Union
\nEmployee that satisfies all of the following requirements is referred to herein
\nas a “Qualified Offer”:<\/p>\n
(1) Buyer shall pay and provide such Transferred
\nNon-Union Employee annual compensation, bonus and other incentive opportunities
\n(the “Total Cash Compensation”) at a rate substantially equivalent to such
\nTransferred Non-Union Employee’s Total Cash Compensation in the most recent
\ncalendar year ending prior to the Closing (which shall include cash compensation
\nin respect of such calendar year paid or payable after such calendar year).<\/p>\n
(2) The location of such Transferred Non-Union
\nEmployee’s workplace must be within a fifty (50) mile radius of the District of
\nColumbia metropolitan area; provided, however, that if any Non-Union Employee’s
\ncommute to the Buyer’s workplace following the Closing will be increased by more
\nthan fifty (50) miles (as compared to the number of miles traveled by such
\nNon-Union Employee to the Seller’s work place immediately prior to the Closing),
\nthe Buyer shall be required to pay such Non-Union Employee a $3,500 relocation
\nallowance.<\/p>\n
(e) Buyer shall provide benefits to Transferred Non-Union
\nEmployees substantially equivalent to those provided by Seller as of the Closing
\nDate. In doing so, Buyer may use different providers, establish its own benefit
\nplans or use its existing plans. There shall be no duplication of benefits.
\nBuyer shall recognize service with Seller for purposes of eligibility and
\nvesting and benefit calculations in
\n 47<\/p>\n
any benefit plan, program, or fringe benefit arrangement. For purposes of health
\ncare coverage, Buyer shall waive all limitations regarding pre-existing
\ncondition exclusions, actively at work exclusions and waiting periods for
\nTransferred Non-Union Employees. During the calendar year in which Closing
\noccurs, all health care expenses incurred by Transferred Non-Union Employees
\nthat were qualified to be taken into account for purposes of satisfying any
\ndeductible or out-of-pocket limit under Seller’s health care plans shall be
\ntaken into account for purposes of satisfying any deductible or out-of-pocket
\nlimit under Buyer’s health care plans for such calendar year. Buyer shall give
\nall Transferred Non-Union Employees full credit for all vacation, sick leave or
\ncomp time benefits accrued and not used as of the Closing. The Buyer shall
\nprovide substantially equivalent retiree medical benefits to the Transferred
\nNon-Union Employees only with no duplication of benefits and such benefits shall
\nbe subject to any limitations in existing plan documents.<\/p>\n
SECTION 9.2 Pension Plans. With respect to each Transferred
\nEmployee’s accrued benefit (based on service and compensation as of the Closing
\nDate) (the “Closing Date Benefits”), Seller shall, effective as of the Closing
\nDate, amend the General Retirement Plan (“Seller’s Pension Plan”) to (i)
\nrecognize service with Buyer for purposes of vesting the Closing Date Benefits
\nin such Seller’s Pension Plan; (ii) recognize service with Buyer toward
\neligibility for receipt of subsidized early retirement and optional benefit
\nforms with respect to the Closing Date Benefits under Seller’s Pension Plan;
\n(iii) provide that retirement from Buyer’s service shall be deemed retirement
\nfrom active employment with Seller for purposes of eligibility for receipt of
\nsubsidized early retirement and optional benefit forms with respect to the
\nClosing Date Benefits under Seller’s Pension Plan; and (iv) provide that Closing
\nDate Benefits cannot commence until the earlier of such Transferred Employee’s
\nactual retirement from Buyer’s employment or attainment of age 65. The pension
\nplan of Buyer (“Buyer’s Pension Plan”) shall recognize all prior service with
\nSeller for purposes of eligibility for participation, vesting, early retirement
\nsubsidies and benefit accrual for Transferred Employees, and may offset the
\nClosing Date Benefits from benefit accruals thereunder. Buyer and Seller shall
\nprovide each other with such records and information as may be necessary or
\nappropriate to carry out their respective obligations under this Section 9.2 for
\nthe purposes of administration of Buyer’s Pension Plan and Seller’s Pension
\nPlan.<\/p>\n
SECTION 9.3 Buyer’s Savings Plan. As soon as practicable, and in any
\nevent within 90 days after the Closing Date, Buyer shall establish a defined
\ncontribution pension plan (or plans) and trust (or trusts) intended to qualify
\nunder Sections 401(a) and 501(a) of the Code or amend an existing plan or plans
\nsatisfying such requirements (such plan or plans referred to as “Buyer’s Savings
\nPlan”) in which all Transferred Employees shall be eligible to participate as of
\nthe later of the Closing Date or the Buyer’s Savings Plan’s effective date.
\nBuyer’s Savings Plan shall provide for deferral options and employer matching
\ncontributions
\n 48<\/p>\n
with respect to the Transferred Employees who are participants (or eligible to
\nbe participants) in the Potomac Electric Power Company Savings Plan (“Seller’s
\nSavings Plan”) as of the Closing Date (such employees, the “Transferred Savings
\nEmployees”) that are no less favorable than those provided immediately prior to
\nthe Closing Date to the Transferred Savings Employees under Seller’s Savings
\nPlans (including an opportunity to make up for any lost deferrals and\/or
\nemployer matching contributions that were unavailable because of a delay between
\nthe Closing Date and the effective date of Buyer’s Savings Plan). Contributions
\nto the Seller’s Savings Plans with respect to the Transferred Savings Employees
\nshall cease effective as of the Closing Date. Each Transferred Savings Employee
\nshall be afforded the option of transferring his or her account balance into the
\nBuyer’s Savings Plan, including any outstanding loan balances attributable to
\nsuch accounts; provided, however, that if Seller is able to obtain a favorable
\nruling from the Internal Revenue Service to the effect that the consummation of
\nthe transactions contemplated hereby shall constitute a sale of substantially
\nall of the assets used in a trade or business within the meaning of Section
\n401(k)(10) of the Code, or that there has been a separation from service as a
\nnon-continuation of the same trade or business within the meaning of Section
\n401(k)(2)(B)(i)(I) of the Code, each Transferred Savings Employee shall be
\nafforded the option of maintaining his or her account balance under Seller’s
\nSavings Plan, rolling over his or her account balance, including any outstanding
\nloan balances attributable to such accounts into the Buyer’s Savings Plan,
\nrolling over his or her account balance into an individual retirement account or
\ncashing in his or her account balance (subject to applicable withholding taxes
\nand penalties). Any such transfers or rollovers shall satisfy the requirements
\nof Section 414(l) of the Code and Section 208 of ERISA and shall be in the form
\nof cash or other property, as Seller and Buyer shall mutually agree prior to
\nsuch transfer or rollover (which Buyer agrees shall include promissory notes
\nevidencing loans from Seller’s Savings Plan to Transferred Savings Employees
\nthat are outstanding on the Closing Date). Prior to such transfer or rollover,
\nBuyer will provide Seller with such documents and other information as Seller
\nshall reasonably request to assure itself that Buyer’s Savings Plan and the
\ntrust or trusts established pursuant thereto (i) provide for voluntary
\nparticipant after-tax contributions and (ii) contain participant loan provisions
\nand procedures necessary to effect the orderly transfer of participant loan
\nbalances associated with the transfer or rollover. In the event that a
\nTransferred Savings Employee shall elect to leave his or her account balance in
\nSeller’s Savings Plans, Buyer shall cooperate with Seller in providing that any
\noutstanding loan attributable to such account balance shall be repaid through
\npayroll deductions from Buyer’s payroll. Upon such transfer, Buyer’s Savings
\nPlan shall assume all liabilities and obligations whatsoever with respect to all
\namounts transferred from Seller’s Savings Plan to Buyer’s Savings Plan in
\nrespect of the Transferred Savings Employees and Seller and its Affiliates and
\nSeller’s Savings Plan shall be relieved of all such liabilities and obligations.
\nNotwithstanding anything in this Article IX to the contrary, no such transfer or
\nrollover shall take place unless and until Seller has received written evidence
\nof the adoption of Buyer’s Savings Plan
\n 49<\/p>\n
and the trust (or trusts) thereunder by Buyer and either (A) a copy of a
\nfavorable determination letter issued by the Internal Revenue Service and
\nsatisfactory to Seller’s counsel with respect to Buyer’s Savings Plan or (B) an
\nopinion, satisfactory to Seller’s counsel, of Buyer’s counsel to the effect that
\nthe terms of Buyer’s Savings Plan and its related trust or trusts qualify under
\nSections 401(a) and 501(a) of the Code. Buyer and Seller shall provide each
\nother with such records and information as may be necessary or appropriate to
\ncarry out their obligations under this Section 9.3 for the purposes of
\nadministration of Buyer’s Savings Plan, and they shall cooperate in the filing
\nof documents required by the transactions described herein.<\/p>\n
SECTION 9.4 Severance Liabilities. Buyer shall provide severance
\nbenefits (i) as contemplated by Schedule 1.1(c) attached hereto, and (ii) as set
\nforth in Seller’s 1998 Reorganization Severance Plan (treating the consummation
\nof the sale of the Auctioned Assets hereunder and the events specified in this
\nSection as events entitling such Non-Union Employee to severance benefits
\nthereunder) to any Transferred Non-Union Employee (i) who, within the 12-month
\nperiod immediately following the Closing Date, is terminated by Buyer or any of
\nits Affiliates other than for cause (as defined on Schedule 1.1(c)) or (ii) with
\nrespect to such Persons who have received and accepted Qualifying Offers, whose
\nterms and conditions of employment with Buyer or any of its Affiliates are
\nchanged during the 12-month period immediately following the Closing Date, such
\nthat such terms and conditions fail to satisfy all of the requirements set forth
\nin Section 9.1(d) above.<\/p>\n
SECTION 9.5 COBRA. Buyer shall provide notice of and the opportunity
\nto purchase continuation coverage as required by COBRA to any dependent or
\nformer dependent of a Transferred Union Employee or Transferred Non-Union
\nEmployee who incurs a “qualifying event” (as such term is defined in COBRA) on
\nor after the Closing Date, or who incurs a “qualifying event” prior to the
\nClosing Date (other than a termination of employment or death of the employee)
\nas to which notice is not provided to Seller or Buyer until the Closing Date or
\nthereafter.<\/p>\n
SECTION 9.6 WARN Act. Buyer shall be responsible, with respect to
\nthe Auctioned Assets, for performing and disclosing all requirements under the
\nWARN Act and applicable state and local laws and regulations for the
\nnotification of its employees of any “employment loss” within the meaning of the
\nWARN Act which occurs following the Closing Date.
\n 50<\/p>\n
ARTICLE X<\/p>\n
Indemnification and Dispute Resolution<\/p>\n
SECTION 10.1 Indemnification.<\/p>\n
(a) Seller will indemnify and hold harmless Buyer and its
\nAffiliates and their respective directors, officers, employees and agents
\n(collectively with Buyer and its Affiliates, the “Buyer Indemnitees”) from and
\nagainst any and all claims, demands or suits by any person, and all losses,
\nliabilities, damages, obligations, payments, costs and expenses (including
\nreasonable legal fees and expenses and including costs and expenses incurred in
\nconnection with investigations and settlement proceedings) (each, an
\n“Indemnifiable Loss”), as incurred, asserted against or suffered by any Buyer
\nIndemnitee relating to, resulting from or arising out of:<\/p>\n
(i) any breach by Seller of any covenant or
\nagreement of Seller contained in this Agreement or, prior to their expiration in
\naccordance with Section 12.3, the representations and warranties contained in
\nSections 5.1, 5.2, 5.3 and 5.15 hereof;<\/p>\n
(ii) any breach by Seller of its obligations
\nunder Section 7.12(i) hereof;<\/p>\n
(iii) the Retained Liabilities;<\/p>\n
(iv) the Panda Litigation; or<\/p>\n
(v) any breach by Seller of any Ancillary
\nAgreement.<\/p>\n
(b) Buyer will indemnify and hold harmless Seller and
\nits Affiliates and their respective directors, officers, trustees, employees and
\nagents (collectively with Seller and its Affiliates, the “Seller Indemnitees”)
\nfrom and against any and all Indemnifiable Losses, as incurred, asserted against
\nor suffered by any Seller Indemnitee relating to, resulting from or arising out
\nof:<\/p>\n
(i) any breach by Buyer of any covenant or
\nagreement of Buyer contained in this Agreement or, prior to their expiration in
\naccordance with Section 12.3, the representations and warranties contained in
\nSections 6.1, 6.2, 6.3 and 6.5 hereof;
\n 51<\/p>\n
(ii) the Assumed Obligations (other than any
\nIndemnifiable Losses resulting from any breach by Seller of its obligations
\nunder Section 7.12(i) hereof);<\/p>\n
(iii) any obligation resulting from any action or
\ninaction of Buyer (A) under any Contract or warranty pursuant to Section 2.4(b)
\nor Schedule 2.4 attached hereto (whether acting as principal or representative
\nand agent for Seller or otherwise) or (B) pursuant to any Transferable Permit in
\nrespect of which Seller remains the holder of record after the Closing Date
\npursuant to Section 7.3(c);<\/p>\n
(iv) any transfer, sales or excise tax
\nobligations imposed on the Seller arising from the sale or transfer of the
\nAuctioned Assets; or<\/p>\n
(v) any breach by Buyer of any Ancillary
\nAgreement.<\/p>\n
(c) The amount of any Indemnifiable Loss shall be reduced
\nto the extent that the relevant Buyer Indemnitee or Seller Indemnitee (each, an
\n“Indemnitee”) receives any insurance proceeds with respect to an Indemnifiable
\nLoss and shall be (i) increased to take account of any Tax Cost incurred by the
\nIndemnitee arising from the receipt of indemnity payments hereunder and (ii)
\nreduced to take account of any Tax Benefit realized by the Indemnitee arising
\nfrom the incurrence or payment of any such Indemnifiable Loss. If the amount of
\nany Indemnifiable Loss, at any time subsequent to the making of an indemnity
\npayment in respect thereof, is reduced by recovery, settlement or otherwise
\nunder or pursuant to any insurance coverage, or pursuant to any claim, recovery,
\nsettlement or payment by or against any other person, the amount of such
\nreduction, less any costs, expenses or premiums incurred in connection
\ntherewith, will promptly be repaid by the Indemnitee to the Party required to
\nprovide indemnification hereunder (the “Indemnifying Party”) with respect to
\nsuch Indemnifiable Loss.<\/p>\n
(d) To the fullest extent permitted by law, neither Party
\nnor any Buyer Indemnitee or any Seller Indemnitee shall be liable to the other
\nParty or any other Buyer Indemnitee or Seller Indemnitee for any claims, demands
\nor suits for consequential, incidental, special, exemplary, punitive, indirect
\nor multiple damages connected with or resulting from any breach after the
\nClosing Date of this Agreement or the Ancillary Agreements (other than breach of
\nthis Article X or as otherwise expressly set forth in any Ancillary Agreement),
\nor any actions undertaken in connection with or related hereto or thereto,
\nincluding any such damages which are based upon breach of contract, tort
\n(including negligence and
\n 52<\/p>\n
misrepresentation), breach of warranty, strict liability, statute, operation of
\nlaw or any other theory of recovery.<\/p>\n
(e) The rights and remedies of Seller and Buyer under
\nthis Article X are, solely as between Seller and Buyer, exclusive and in lieu of
\nany and all other rights and remedies which Seller and Buyer may have under this
\nAgreement, the Ancillary Agreements (except as otherwise expressly set forth in
\nany Ancillary Agreement) or otherwise for monetary relief with respect to (i)
\nany breach of, or failure to perform, any covenant or agreement set forth in
\nthis Agreement or the Ancillary Agreements by Seller or Buyer, (ii) any breach
\nof any representation or warranty by Seller or Buyer, (iii) the Assumed
\nObligations or the Retained Liabilities, and (iv) any obligation in respect of
\nSection 2.4 or Section 7.3. Each Party agrees that the previous sentence shall
\nnot limit or otherwise affect any non-monetary right or remedy which Party may
\nhave under this Agreement or the Ancillary Agreements or otherwise limit or
\naffect either Party’s right to seek equitable relief, including the remedy of
\nspecific performance.<\/p>\n
(f) Buyer and Seller agree that, notwithstanding
\nSection 10.1(e), each Party shall retain, subject to the other provisions of
\nthis Agreement, including Sections 10.1(d) and 12.3, all remedies at law or in
\nequity with respect to (i) fraud or willful or intentional breaches of this
\nAgreement or the Ancillary Agreements and (ii) gross negligence or willful or
\nwanton acts or omissions to act of any Indemnitee (or any contractor or
\nsubcontractor thereof) on or after the Closing Date.<\/p>\n
(g) Seller and Buyer agree that neither Party shall be
\nresponsible to the other Party for any Indemnifiable Loss (relating to the
\nbreach of representations and warranties made by such Party hereunder) pursuant
\nto Section 10.1(a)(i) or Section 10.1(b)(i), as the case may be, unless and
\nuntil the aggregate amount of such Party’s Indemnifiable Losses exceeds
\n$5,000,000. Notwithstanding the foregoing, the aggregate maximum liability of
\nthe Seller to indemnify the Buyer for Indemnifiable Losses (relating to the
\nbreach of representations and warranties made by the Seller hereunder) pursuant
\nto Section 10(a)(i) shall not exceed an amount in excess of the Purchase Price
\npaid by the Buyer to the Seller.<\/p>\n
SECTION 10.2 Third Party Claims Procedures.<\/p>\n
(a) If any Indemnitee receives notice of the assertion of
\nany claim or of the commencement of any claim, action, or proceeding made or
\nbrought by any person who is not a Party or an Affiliate of a Party (a “Third
\nParty Claim”) with respect to which indemnification is to be sought from an
\nIndemnifying Party, the Indemnitee will give such Indemnifying Party reasonably
\nprompt written notice thereof, but in any event not later than 20 Business Days
\nafter the Indemnitee’s receipt of notice of such Third Party Claim; provided,
\nhowever, that a failure to give
\n 53<\/p>\n
timely notice will not affect the rights or obligations of any Indemnitee except
\nif, and only to the extent that, as a result of such failure, the Indemnifying
\nParty was actually prejudiced. Such notice shall describe the nature of the
\nThird Party Claim in reasonable detail and will indicate the estimated amount,
\nif practicable, of the Indemnifiable Loss that has been or may be sustained by
\nthe Indemnitee.<\/p>\n
(b) If a Third Party Claim is made against an Indemnitee,
\nthe Indemnifying Party will be entitled to participate in the defense thereof
\nand, if it so chooses, to assume the defense thereof with counsel selected by
\nthe Indemnifying Party; provided, however, that such counsel is not reasonably
\nobjected to by the Indemnitee; and provided further that the Indemnifying Party
\nfirst admits in writing its liability to the Indemnitee with respect to all
\nmaterial elements of such claim. Should the Indemnifying Party so elect to
\nassume the defense of a Third Party Claim, the Indemnifying Party will not be
\nliable to the Indemnitee for any legal expenses subsequently incurred by the
\nIndemnitee in connection with the defense thereof. If the Indemnifying Party
\nelects to assume the defense of a Third Party Claim, the Indemnitee will (i)
\ncooperate in all reasonable respects with the Indemnifying Party in connection
\nwith such defense, (ii) not admit any liability with respect to, or settle,
\ncompromise or discharge, any Third Party Claim without the Indemnifying Party’s
\nprior written consent and (iii) agree to any settlement, compromise or discharge
\nof a Third Party Claim which the Indemnifying Party may recommend and which by
\nits terms obligates the Indemnifying Party to pay the full amount of the
\nliability in connection with such Third Party Claim and releases the Indemnitee
\ncompletely in connection with such Third Party Claim. In the event the
\nIndemnifying Party shall assume the defense of any Third Party Claim, the
\nIndemnitee shall be entitled to participate in (but not control) such defense
\nwith its own counsel at its own expense. If the Indemnifying Party does not
\nassume the defense of any such Third Party Claim, the Indemnitee may defend the
\nsame in such manner as it may deem appropriate, including settling such claim or
\nlitigation after giving notice to the Indemnifying Party of the terms of the
\nproposed settlement and the Indemnifying Party will promptly reimburse the
\nIndemnitee upon written request. Anything contained in this Agreement to the
\ncontrary notwithstanding, no Indemnifying Party shall be entitled to assume the
\ndefense of any Third Party Claim if such Third Party Claim seeks an order,
\ninjunction or other equitable relief or relief for other than monetary damages
\nagainst the Indemnitee which, if successful, would materially adversely affect
\nthe business of the Indemnitee.
\n 54<\/p>\n
ARTICLE XI<\/p>\n
Termination<\/p>\n
SECTION 11.1 Termination.<\/p>\n
(a) This Agreement may be terminated at any time prior to
\nthe Closing by an instrument in writing signed on behalf of each of the Parties.<\/p>\n
(b) This Agreement may be terminated by Seller or Buyer
\nif the Closing shall not have occurred on or before the date that is 12 months
\nfrom the date of this Agreement (the “Termination Date”); provided, however,
\nthat the right to terminate this Agreement pursuant to this Section 11.1(b)
\nshall not be available (1) to any Party whose failure to fulfill any obligation
\nunder this Agreement has been the cause of, or resulted in, the failure of the
\nClosing to occur on or before such date, or (2) to Buyer if the Seller has
\nprovided the Buyer with written notice of its election to postpone the Closing
\nfor up to an eighteen month period from the execution date of this Agreement in
\nthe event that all conditions precedent to Closing set forth in Article VIII
\nhave been satisfied except with respect to those conditions set forth in Section
\n8.1(a).<\/p>\n
(c) This Agreement may be terminated by either Seller or
\nBuyer if any Restraint having any of the effects set forth in Section 8.1(b)
\nshall be in effect and shall have become final and nonappealable; provided,
\nhowever, that the Party seeking to terminate this Agreement pursuant to this
\nSection 11.1(c) shall have used its reasonable best efforts to prevent the entry
\nof and to remove such Restraint.<\/p>\n
(d) This Agreement may be terminated by the Party
\nentitled to do so under the provisions of Section 7.11(b).<\/p>\n
ARTICLE XII<\/p>\n
Miscellaneous Provisions<\/p>\n
SECTION 12.1 Expenses. Except to the extent specifically provided
\nherein, all costs and expenses incurred in connection with this Agreement and
\nthe transactions contemplated hereby shall be borne by the Party incurring such
\ncosts and expenses, whether or not the transactions contemplated hereby are
\nconsummated.
\n 55<\/p>\n
SECTION 12.2 Amendment and Modification; Extension; Waiver. This
\nAgreement may be amended, modified or supplemented only by an instrument in
\nwriting signed on behalf of each of the Parties. Either Party may (i) extend the
\ntime for the performance of any of the obligations or other acts of the other
\nParty, (ii) waive any inaccuracies in the representations and warranties of the
\nother Party contained in this Agreement or (iii) waive compliance by the other
\nParty with any of the agreements or conditions contained in this Agreement. Any
\nagreement on the part of a Party to any such extension or waiver shall be valid
\nonly if set forth in an instrument in writing signed on behalf of such Party.
\nThe failure of a Party to this Agreement to assert any of its rights under this
\nAgreement or otherwise shall not constitute a waiver of such rights.<\/p>\n
SECTION 12.3 No Survival of Representations or Warranties. Each and
\nevery representation and warranty contained in this Agreement, other than the
\nrepresentations and warranties contained in Sections 5.1, 5.2, 5.3 and 5.15 and
\n6.1, 6.2, 6.3 and 6.5 (which representations and warranties shall survive for 12
\nmonths from the Closing Date), shall expire with, and be terminated and
\nextinguished by the Closing and no such representation or warranty shall survive
\nthe Closing Date. From and after the Closing Date, none of Seller, Buyer or any
\nofficer, director, trustee or Affiliate of any of them shall have any liability
\nwhatsoever with respect to any such representation or warranty. The expiration
\nof the representations and warranties contained in Sections 5.1, 5.2, 5.3 and
\n5.15 and 6.1, 6.2, 6.3 and 6.5 shall not affect the Parties’ obligations under
\nArticle X if the Indemnitee provided the Indemnifying Party with proper notice
\nof the claim or event for which indemnification is sought prior to such
\nexpiration.<\/p>\n
SECTION 12.4 Notices. All notices and other communications hereunder
\nshall be in writing and shall be deemed given (as of the time of delivery or, in
\nthe case of a telecopied communication, of confirmation) if delivered
\npersonally, telecopied (which is confirmed) or sent by overnight courier
\n(providing proof of delivery) to the Parties at the following addresses (or at
\nsuch other address for a Party as shall be specified by like notice):<\/p>\n
if to Seller, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel
\n 56<\/p>\n
with a copy on or prior to the Closing Date to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopier: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Buyer, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention: Anne Cleary<\/p>\n
with a copy on or prior to the Closing Date to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, NW
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
SECTION 12.5 Assignment; No Third Party Beneficiaries.<\/p>\n
(a) This Agreement and all of the provisions hereof shall
\nbe binding upon and inure to the benefit of the Parties and their respective
\nsuccessors and permitted assigns, but neither this Agreement nor any of the
\nrights, interests or obligations hereunder shall be assigned by any Party,
\nincluding by operation of law, without the prior written consent of the other
\nParty, except (i) in the case of Seller (A) to an Affiliate of Seller or a third
\nparty in connection with the transfer of the Transmission System to such
\nAffiliate or third party or (B) to a lending institution or trustee in
\nconnection with a pledge or granting of a security interest in all or any part
\nof the Transmission System and this Agreement and (ii) in the case of Buyer (A)
\nprior to the Closing, to one or more wholly-owned subsidiaries of Buyer or
\nlending institutions or other institutional investors acting as lessor to Buyer
\nor one or more wholly-owned subsidiaries of Buyer, so long as Buyer shall have
\nduly executed and delivered the Guarantee Agreement and such assignment is for
\nall of Buyer’s rights, interests and obligations hereunder associated with the
\nasset(s) subject to any such assignment, (B) to an Affiliate of Buyer in
\nconnection with the
\n 57<\/p>\n
transfer of all or part of the Auctioned Assets to such Affiliate and (C) to a
\nlending institution or trustee in connection with a pledge or granting of a
\nsecurity interest in the Auctioned Assets and this Agreement; provided, however,
\nthat no assignment or transfer of rights or obligations by either Party shall
\nrelieve it from the full liabilities and the full financial responsibility, as
\nprovided for under this Agreement, unless and until the transferee or assignee
\nshall agree in writing to assume such obligations and duties and the other Party
\nhas consented in writing to such assumption.<\/p>\n
(b) Nothing in this Agreement is intended to confer upon
\nany other person except the Parties any rights or remedies hereunder or shall
\ncreate any third party beneficiary rights in any person, including, with respect
\nto continued or resumed employment, any employee or former employee of Seller
\n(including any beneficiary or dependent thereof). No provision of this Agreement
\nshall create any rights in any such persons in respect of any benefits that may
\nbe provided, directly or indirectly, under any employee benefit plan or
\narrangement except as expressly provided for thereunder.<\/p>\n
SECTION 12.6 Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the District of Columbia (regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaw).<\/p>\n
SECTION 12.7 Counterparts. This Agreement may be executed in two or
\nmore counterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
SECTION 12.8 Interpretation. When a reference is made in this
\nAgreement to an Article, Section, Schedule or Exhibit, such reference shall be
\nto an Article or Section of, or Schedule or Exhibit to, this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in this
\nAgreement shall refer to this Agreement as a whole and not to any particular
\nprovision of this Agreement. All terms defined in this Agreement shall have the
\ndefined meanings when used in the Ancillary Agreements and any certificate or
\nother document made or delivered pursuant hereto or thereto unless otherwise
\ndefined therein. The definitions contained in this Agreement are applicable to
\nthe singular as well as the plural forms of such terms and to the masculine as
\nwell as to the feminine and neuter genders of such term. Any agreement,
\ninstrument, statute, regulation, rule or order defined or referred to herein or
\nin any agreement or instrument that is referred to herein means such agreement,
\ninstrument, statute, regulation, rule or order as from time to time
\n 58<\/p>\n
amended, modified or supplemented, including (in the case of agreements or
\ninstruments) by waiver or consent and (in the case of statutes, regulations,
\nrules or orders) by succession of comparable successor statutes, regulations,
\nrules or orders and references to all attachments thereto and instruments
\nincorporated therein. References to a person are also to its permitted
\nsuccessors and assigns. Each Party acknowledges that it has been represented by
\ncounsel in connection with the review and execution of this Agreement and,
\naccordingly, there shall be no presumption that this Agreement or any provision
\nhereof be construed against the Party that drafted this Agreement.<\/p>\n
SECTION 12.9 Jurisdiction and Enforcement.<\/p>\n
(a) Each of the Parties irrevocably submits to the
\nexclusive jurisdiction of (i) the Superior Court of the District of Columbia and
\n(ii) the United States District Court for the District of Columbia, for the
\npurposes of any suit, action or other proceeding arising out of this Agreement
\nor any transaction contemplated hereby. Each of the Parties agrees to commence
\nany action, suit or proceeding relating hereto either in the United States
\nDistrict Court for the District of Columbia or, if such suit, action or
\nproceeding may not be brought in such court for jurisdictional reasons, in the
\nSuperior Court of the District of Columbia. Each of the Parties further agrees
\nthat service of process, summons, notice or document by hand delivery or U.S.
\nregistered mail at the address specified for such Party in Section 12.4 (or such
\nother address specified by such Party from time to time pursuant to Section
\n12.4) shall be effective service of process for any action, suit or proceeding
\nbrought against such Party in any such court. Each of the Parties irrevocably
\nand unconditionally waives any objection to the laying of venue of any action,
\nsuit or proceeding arising out of this Agreement or the transactions
\ncontemplated hereby in (i) the Superior Court of the District of Columbia and
\n(ii) the United States District Court for the District of Columbia, and hereby
\nfurther irrevocably and unconditionally waives and agrees not to plead or claim
\nin any such court that any such action, suit or proceeding brought in any such
\ncourt has been brought in an inconvenient forum.<\/p>\n
(b) The Parties agree that irreparable damage would occur
\nin the event that any of the provisions of this Agreement or any Ancillary
\nAgreement were not performed in accordance with their specific terms or were
\notherwise breached. It is accordingly agreed that the Parties shall be entitled
\nto an injunction or injunctions to prevent breaches of this Agreement or any
\nAncillary Agreement and to enforce specifically the terms and provision of this
\nAgreement or any Ancillary Agreement, this being in addition to any other remedy
\nto which they are entitled at law or in equity.
\n 59<\/p>\n
SECTION 12.10 Entire Agreement. This Agreement, the Confidentiality
\nAgreement and the Ancillary Agreements including the Exhibits, Schedules,
\ndocuments, certificates and instruments referred to herein or therein and other
\ncontracts, agreements and instruments contemplated hereby or thereby, embody the
\nentire agreement and understanding of the Parties in respect of the transactions
\ncontemplated by this Agreement. There are no restrictions, promises,
\nrepresentations, warranties, covenants or undertakings other than those
\nexpressly set forth or referred to herein or therein. This Agreement and the
\nAncillary Agreements supersede all prior agreements and understandings between
\nthe Parties with respect to the transactions contemplated by this Agreement
\nother than the Confidentiality Agreement.<\/p>\n
SECTION 12.11 Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nParties shall negotiate in good faith to modify this Agreement so as to effect
\nthe original intent of the Parties as closely as possible to the fullest extent
\npermitted by applicable law in an acceptable manner to the end that the
\ntransactions contemplated hereby are fulfilled to the extent possible.<\/p>\n
SECTION 12.12 Conflicts. Except as expressly otherwise provided herein
\nor therein, in the event of any conflict or inconsistency between the terms of
\nthis Agreement and the terms of any Ancillary Agreement, the terms of this
\nAgreement shall prevail.
\n 60<\/p>\n
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to
\nbe signed by their respective duly authorized officers as of the date first
\nabove written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By: \/s\/ MARY SHARPE-HAYES
\n —————————————-
\n Name: Mary Sharpe-Hayes
\n Title: Vice President<\/p>\n
SOUTHERN ENERGY, INC.<\/p>\n
By: \/s\/ ANNE CLEARY
\n —————————————-
\n Name: Anne Cleary
\n Title: Vice President, Southern
\n Energy North America,
\n Inc., as authorized agent
\n 61<\/p>\n
Schedule 1.1<\/p>\n
Definitions<\/p>\n
“Accountants” shall have the meaning set forth in Section 3.2(b).<\/p>\n
“Adjustment Amount” shall have the meaning set forth in Section 3.4.<\/p>\n
“Adjustment Date” shall have the meaning set forth in Section 3.2(c).<\/p>\n
“Adjustment Statement” shall have the meaning set forth in Section
\n3.2(a).<\/p>\n
“Affiliate” shall have the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934, as
\namended.<\/p>\n
“Agreement” shall have the meaning set forth in the Preamble.<\/p>\n
“Allocation” shall have the meaning set forth in Section 3.3.<\/p>\n
“Ancillary Agreements” means the Potomac River Lease, the Local Area
\nSupport Agreement, the Transition Power Agreements, the Interconnection
\nAgreements, the Assignment and Assumption Agreement, Bill of Sale, Guarantee
\nAgreement, Operating Agreement, the deeds contemplated by Section 8.2(e)(i) and
\nany other agreement to which Buyer and Seller are party and which is expressly
\nidentified by its terms as an Ancillary Agreement hereunder.<\/p>\n
“Applicable Law” shall have the meaning set forth in Section 3.3.<\/p>\n
“Ash Storage Sites” mean those certain ash storage sites of the Seller
\nlocated in Charles County, Maryland, Prince George’s County, Maryland, and
\nMontgomery County, Maryland, as more fully described on Schedule 2.2(a)(iii) and
\nSchedule 5.5(a) attached to the Agreement.<\/p>\n
“Assignment and Assumption Agreement” means that Assignment and
\nAssumption Agreement, to be entered into at the Closing by Buyer and Seller, in
\nsubstantially the form as Exhibit A attached to the Agreement.<\/p>\n
“Assumed Consent Order Obligations” shall have the meaning set forth
\nin Section 2.3(a)(iv).
\n 62<\/p>\n
“Assumed Obligations” shall have the meaning set forth in Section
\n2.3(a).<\/p>\n
“Auctioned Assets” shall have the meaning set forth in Section
\n2.2(a).<\/p>\n
“Benefit Plans” shall have the meaning set forth in Section 5.12.<\/p>\n
“Bill of Sale” means that certain Bill of Sale, to be entered into at
\nthe Closing by Buyer (or Buyer’s permitted assignees pursuant to Section
\n12.5(a)) and Seller, in substantially the form as Exhibit B attached to the
\nAgreement.<\/p>\n
“Business Day” means any day other than Saturday, Sunday and any day
\nwhich is a legal holiday or a day on which banking institutions in Washington,
\nDC are authorized or required by law or other action of a Governmental Authority
\nto close.<\/p>\n
“Buyer” shall have the meaning set forth in the Preamble to the
\nAgreement.<\/p>\n
“Buyer Facilities” shall have the meaning given to such term in the
\nEasements Agreement.<\/p>\n
“Buyer Indemnitees” shall have the meaning set forth in Section
\n10.1(a).<\/p>\n
“Buyer Material Adverse Effect” means any change or event which would
\nhave a material adverse effect on the ability of the Buyer to consummate the
\ntransactions contemplated by, and discharge its obligations under, the Agreement
\nand the Ancillary Agreements.<\/p>\n
“Buyer Real Estate” shall have the meaning set forth in Section
\n2.2(a)(i).<\/p>\n
“Buyer Required Regulatory Approvals” shall have the meaning set forth
\nin Section 6.3(b).<\/p>\n
“Buyer’s Pension Plans” shall have the meaning set forth in Section
\n9.2.<\/p>\n
“Buyer’s Savings Plan” shall have the meaning set forth in Section
\n9.3.<\/p>\n
“Chalk Point\/Morgantown Fuel Pipeline” means the (i) 16″ pipeline,
\nincluding all components, between the Piney Point petroleum terminal and the
\nRyceville Pumping Station and (ii) the 12″ pipelines, including all components,
\nbetween the Ryceville Pumping Station and the Chalk Point Station
\n 63
\nand Morgantown Station, as more fully described on Schedule 5.5(a) attached to
\nthe Agreement.<\/p>\n
“Chalk Point Station” means that certain coal, oil and gas-fueled
\ngenerating facility of the Seller located on the Patuxent River in Aquasco,
\nMaryland (excluding that certain combustion turbine and related assets owned by
\nSouthern Maryland Electric Cooperative, Inc.), as more fully described on
\nSchedule 2.2(a)(iii) and Schedule 5.5(a) attached to the Agreement.<\/p>\n
“Closing” shall have the meaning set forth in Section 4.1.<\/p>\n
“Closing Adjustment Amount” shall have the meaning set forth in
\nSection 3.2(c).<\/p>\n
“Closing Date” shall have the meaning set forth in Section 4.1.<\/p>\n
“Closing Date Benefits” shall have the meaning set forth in Section
\n9.2.<\/p>\n
“Closing Severance Expenses” shall have the meaning set forth in
\nSection 2.3(a)(x).<\/p>\n
“Code” means the Internal Revenue Code of 1986, as amended.<\/p>\n
“Communications Equipment” means the equipment, systems, switches and
\nlines used in connection with voice, data and other communications activities.<\/p>\n
“Conemaugh Interest” means the 9.72% undivided ownership interest
\nheld by Seller, as a tenant-in-common, in the Conemaugh Station, together with
\nthe Seller’s undivided ownership interest in any related assets held in
\nundivided ownership with the other Persons having an undivided ownership
\ninterest in the Conemaugh Station (except in the case of Seller’s undivided
\nownership interest in the Conemaugh Switchyard and the Conemaugh Transmission
\nLine).<\/p>\n
“Conemaugh Station” means that certain coal-fired generating facility
\nlocated on the Conemaugh River in Indiana County, Pennsylvania.<\/p>\n
“Conemaugh Switchyard” means that certain 500kV switchyard, as
\ndescribed on Schedule 2.2(b)(i) attached to the Agreement.<\/p>\n
“Conemaugh Transmission Line” means that certain 500kV transmission
\nline, as described on Schedule 2.2(b)(i) attached to the Agreement.<\/p>\n
64
\n “Confidentiality Agreement” means the Confidentiality Agreement dated
\nFebruary 10, 2000 between Seller and Buyer.<\/p>\n
“Contracts” shall have the meaning set forth in Section 2.2(a)(iv).<\/p>\n
“DCPSC” means the Public Service Commission of the District of
\nColumbia.<\/p>\n
“Dickerson Station” means that certain coal, oil and gas-fuel fired
\ngenerating facility of the Seller located on the Potomac River near Dickerson,
\nMaryland, as more fully described on Schedule 2.2(a)(iii) and Schedule 5.5(a)
\nattached to the Agreement.<\/p>\n
“Disposed Items” shall have the meaning set forth in Section
\n2.3(a)(iii).<\/p>\n
“Easements Agreements” mean those certain Easements Agreements, to be
\nentered into at the Closing by Buyer and Seller, in substantially the form as
\nExhibits C-1, C-2, C-3 and C-4 attached to the Agreement.<\/p>\n
“Emission Reduction Credits” means credits, in units that are
\nestablished by the environmental regulatory agency with jurisdiction over the
\nsource or facility that has obtained the credits, resulting from a reduction
\nin the emissions of air pollutants from an emitting source or facility
\n(including, and to the extent allowable under applicable law, reductions from
\nretirements, control of emissions beyond that required by applicable law and
\nfuel switching), that: (i) have been certified by the Maryland Department of
\nthe Environment or the Virginia Department of Environmental Quality, as the
\ncase may be, as complying with the law and regulations of the State of
\nMaryland or the Commonwealth of Virginia, as the case may be, governing the
\nestablishment of such credits; or (ii) have been certified by any other
\napplicable regulatory authority as complying with the law and regulations
\ngoverning the establishment of such credits. Emission Reduction Credits
\ninclude certified air emissions reductions, as described above, regardless of
\nwhether the regulatory agency certifying such reductions designates such
\ncertified air emissions reductions by a name other than “emissions reduction
\ncredits”, but do not include SO2 Allowances or Nox Allowances.<\/p>\n
“Employees” shall have the meaning set forth in Section 9.1(d).<\/p>\n
“Encumbrances” means any mortgages, pledges, liens, security
\ninterests, conditional and installment sale agreements, activity and use
\nlimitations, exceptions, conservation easements, rights-of-way, deed
\nrestrictions, encumbrances and charges of any kind.<\/p>\n
“Entitlements” means all rights of Seller to receive any capacity,
\nenergy, ancillary services and other benefits under any PPA.<\/p>\n
65<\/p>\n
“Environmental Laws” means all former, current and future Federal,
\nstate, local and foreign laws (including common law), treaties, regulations,
\nrules, ordinances, codes, decrees, judgments, directives or orders (including
\nconsent orders) and Environmental Permits, in each case, relating to pollution
\nor protection of the environment or natural resources, including laws relating
\nto Releases or threatened Releases, or otherwise relating to the generation,
\nmanufacture, processing, distribution, use, treatment, storage, arrangement
\nfor disposal, transport, recycling or handling, of Hazardous Substances.<\/p>\n
“Environmental Liability” means all liabilities, obligations,
\ndamages, losses, claims, actions, suits, judgments, orders, fines, penalties,
\nfees, expenses and costs, including: (i) remediation costs, engineering costs,
\nenvironmental consultant fees, laboratory fees, permitting fees, investigation
\ncosts and defense costs and attorneys’ fees and expenses; (ii) any claims,
\ndemands and causes of action relating to or resulting from any personal injury
\n(including wrongful death, pain, suffering and loss of consortium), property
\ndamage (real or personal) (including nuisance, trespass and diminution of
\nvalue) or natural resource damage; and (iii) any penalties, fines or costs
\nassociated with the failure to comply with any Environmental Law.<\/p>\n
“Environmental Permits” means the permits, licenses, consents,
\napprovals and other governmental authorizations with respect to Environmental
\nLaws relating primarily to the power generation operations of the Generating
\nFacilities.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of 1974, as
\namended.<\/p>\n
“ERISA Affiliate” shall have the meaning set forth in Section 5.12.<\/p>\n
“Estimated Non-Fuel Related Adjustment Amount” shall have the meaning
\nset forth in Section 4.2(b).<\/p>\n
“Estimated Purchase Price” shall have the meaning set forth in
\nSection 4.2.<\/p>\n
“Exempt Facilities” means those certain facilities included in the
\nAuctioned Assets which are listed on Schedule 7.12 attached to the Agreement.<\/p>\n
“FERC” means the Federal Energy Regulatory Commission.<\/p>\n
“Filed Seller SEC Documents” means the reports, schedules, forms,
\nstatements and other documents filed by Seller with the Securities and
\nExchange Commission, and publicly available prior to the date of the
\nAgreement.<\/p>\n
“Final Allocation” shall have the meaning set forth in Section 3.3.<\/p>\n
66<\/p>\n
“Final Fuel Related Adjustment Amount” shall have the meaning set
\nforth in Section 3.2(a).<\/p>\n
“Final Non-Fuel Related Adjustment Amount” shall have the meaning set
\nforth in Section 3.2(a).<\/p>\n
“GAAP” shall have the meaning set forth in Section 1.2.<\/p>\n
“Generating Facilities” means the Generating Plants and related
\nfacilities (including the Chalk Point\/Morgantown Fuel Pipeline, the Ryceville
\nPumping Station, the Production Service Center, and the Ash Storage Sites), as
\nmore fully described on Schedule 2.2(a)(iii) and Schedule 5.5(a) attached to
\nthe Agreement.<\/p>\n
“Generating Plants” means the following power generating plants of
\nthe Seller: the Potomac River Station; the Dickerson Station; the Chalk Point
\nStation; and the Morgantown Station.<\/p>\n
“Good Utility Practice” means any of the applicable practices,
\nmethods and acts:<\/p>\n
(i) required by FERC, NERC, MAAC, PJM Interconnection LLC,
\n the PJM System Operator, or the successor of any of
\n them, whether or not the Party whose conduct is at
\n issue is a member thereof;<\/p>\n
(ii) required by applicable law or regulations;<\/p>\n
(iii) required by the Pepco Interconnection Standards or
\n the policies and standards of the Seller relating
\n to emergency operations;<\/p>\n
(iv) otherwise engaged in or approved by a significant
\n portion of the electric utility industry during
\n the relevant time period;<\/p>\n
which, in the exercise of reasonable judgment in light of the facts known at
\nthe time the decision was made, could have been expected to accomplish the
\ndesired result at a reasonable cost consistent with law, regulation, good
\nbusiness practices, reliability, safety, and expedition. Good Utility
\nPractice is not intended to be limited to the optimum practice, method, or act
\nto the exclusion of all others, but rather to be acceptable practices,
\nmethods, or acts generally accepted in the region.<\/p>\n
67
\n “Governmental Authority” means any court, administrative or
\nregulatory agency or commission or other governmental entity or
\ninstrumentality, domestic, foreign or supranational or any department thereof.<\/p>\n
“Greenhouse Gas Emission Reduction Credits” mean with respect to a
\nFederal or state law or regulation that imposes, or may at any time after the
\nClosing Date impose, a quantitative limitation on greenhouse gas emissions, or
\ntaxes such emissions, an authorization to emit a unit of greenhouse gases or a
\ncredit against such quantitative limit or taxes with respect to recognized
\nreductions in greenhouse gases, where greenhouse gases include carbon dioxide,
\nmethane, nitrous oxide, hydrofluorcarbons, perfluorocarbons, and\/or sulfur
\nhexafluoride.<\/p>\n
“Guarantee Agreement” means the Guarantee Agreement to be entered
\ninto at Closing by Guarantor and Seller, substantially in the form of Exhibit
\nD attached to the Agreement.<\/p>\n
“Guarantor” means any credit-worthy entity, acceptable to Seller,
\nwhich agrees to provide an unconditional guarantee to Seller of the full and
\npunctual payment of Buyer’s obligations hereunder and under the Ancillary
\nAgreements.<\/p>\n
“Hazardous Substances” means (i) any petrochemical or petroleum
\nproducts, crude oil or any fraction thereof, ash, radioactive materials, radon
\ngas, asbestos in any form, urea formaldehyde foam insulation or
\npolychlorinated biphenyls, (ii) any chemicals, materials, substances or wastes
\ndefined as, included in, or that are alleged or determined by any Person or
\nGovernmental Authority to be included in the definition of “hazardous
\nsubstances,” “hazardous wastes,” “hazardous materials,” “restricted hazardous
\nmaterials,” “extremely hazardous substances,” “toxic substances,” “PCBs,”
\n“contaminants,” “asbestos” or “pollutants” or similar term in any
\nEnvironmental Law, (iii) any other chemical, material, substance or waste
\nwhich is prohibited, limited or regulated by any Environmental Law, or (iv)
\nany noise, electromagnetic radiation, and any other substance or energy which
\ncauses or is alleged to cause personal injury (including wrongful death, pain,
\nsuffering and loss of consortium) or property damage (including nuisance,
\ntrespass and diminution of value).<\/p>\n
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
\n1976, as amended.<\/p>\n
“IBEW” means Local Union #1900 of the International Brotherhood of
\nElectrical Workers.<\/p>\n
“IBEW Collective Bargaining Agreement” means that certain Collective
\nBargaining Agreement, between the Seller and the IBEW, effective December 8,
\n1998, as amended from time to time.<\/p>\n
68
\n “Income Tax” means any Federal, state, local or foreign Tax or surtax
\n(i) based upon, measured by or calculated with respect to income, profits or
\nreceipts or (ii) based upon, measured by or calculated with respect to
\nmultiple bases (including corporate franchise taxes) if one or more of the
\nbases on which such Tax may be based, measured by or calculated with respect
\nto, is described in clause (i), in each case, together with any interest,
\npenalties, or additions to such Tax.<\/p>\n
“Indemnifiable Loss” shall have the meaning set forth in Section
\n10.1(a).<\/p>\n
“Indemnifying Party” shall have the meaning set forth in Section
\n10.1(c).<\/p>\n
“Indemnitee” shall have the meaning set forth in Section 10.01(c).<\/p>\n
“Information Memorandum” means the Information Memoranda, prepared on
\nbehalf of the Seller, describing the Generating Facilities and the PPAs, and
\nthe materials delivered with such Information Memoranda, as such Information
\nMemoranda and such materials may have been amended or supplemented.<\/p>\n
“Interconnection Agreements” means those certain Interconnection
\nAgreements, to be entered into at the Closing by Seller and Buyer,
\nsubstantially in the form of Exhibits E-1, E-2, E-3 and E-4 attached to the
\nAgreement.<\/p>\n
“Interconnection Facilities” shall have the meaning given to such
\nterm in the Interconnection Agreements.<\/p>\n
“Interconnection Services” shall have the meaning set forth in the
\nInterconnection Agreements.<\/p>\n
“Inventory Survey” shall have the meaning set forth in Section
\n3.2(a).<\/p>\n
“Knowledge” means the actual knowledge of the directors and executive
\nofficers of the specified Person, which directors and executive officers are
\ncharged with the responsibility for the particular function as of the date of
\nthe Agreement, or with respect to any certificate delivered pursuant to the
\nAgreement, the date of delivery of such certificate.<\/p>\n
“Loan Agreements” shall have the meaning set forth in Section
\n2.3(a)(xii).<\/p>\n
“Local Area Support Agreement” means that Local Area Support
\nAgreement, to be entered into at Closing by Seller and Buyer, substantially in
\nthe form of Exhibit F attached to the Agreement.<\/p>\n
69
\n “MAAC” means the Mid-Atlantic Area Council.<\/p>\n
“Material Adverse Effect” means any change, or effect on the
\nAuctioned Assets, that, individually or in the aggregate, causes the value of
\nthe Auctioned Assets to decrease by more than ten percent (10%) as compared to
\nthe value of the Auctioned Assets immediately prior to the occurrence of such
\nchange or effect, other than (i) any change or effect resulting from changes
\nin the international, national, regional or local wholesale or retail energy,
\ncapacity or ancillary services electric power markets, (ii) any change or
\neffect resulting from changes in the international, national, regional or
\nlocal markets for fuel, (iii) any change or effect resulting from changes in
\nthe national, regional or local electric transmission systems, (iv) any change
\nor effect resulting from any bid cap, price limitation, market power
\nmitigation measure, or other regulatory or legislative measure in respect of
\ntransmission services or the wholesale or retail energy, capacity or ancillary
\nservices markets adopted or approved by FERC, any PSC or any other
\nGovernmental Authority or proposed by any person, (v) any change or effect
\nresulting from any regulation, rule, procedure or order adopted or proposed by
\nor with respect to, or related to, the PJM, (vi) any change or effect
\nresulting from any action or measure taken or adopted, or proposed to be taken
\nor adopted, by any local, state, regional, national or international
\nreliability organization, (vii) any change resulting from the failure of any
\nEmployees not to be employed by the Buyer following the Closing, (viii) any
\nchanges in law, or any judgments, orders or decrees that apply generally to
\nsimilarly situated Persons, and (ix) any materially adverse change in or
\neffect on the Auctioned Assets which is cured by Seller before the Closing
\nDate. For purposes of determining the occurrence of a Material Adverse
\nEffect, the initial value of the Auctioned Assets shall be the amount set
\nforth in clause (a) of Section 3.1.<\/p>\n
“Material Contracts” shall have the meaning set forth in Section
\n5.7(a).<\/p>\n
“MDPSC” means the Public Service Commission of the State of Maryland.<\/p>\n
“Morgantown Station” means that certain coal\/oil-fueled generating
\nfacility of the Seller located on the Potomac River near Newburg, Maryland, as
\nmore fully described on Schedule 2.2(a)(iii) and Schedule 5.5(a) attached to
\nthe Agreement.<\/p>\n
“NERC” means North American Electric Reliability Council or any
\nsuccessor thereto.<\/p>\n
“Non-Union Employees” shall have the meaning set forth in Section
\n9.1(d).<\/p>\n
“Novation” shall have the meaning set forth in Schedule 2.4 attached
\nhereto.<\/p>\n
70<\/p>\n
“NOx Allowances” means nitrogen oxide allowances that have been
\nallocated to the Seller for the Generating Plants by (i) the Maryland
\nDepartment of the Environment under the State of Maryland’s NOx Budget Program
\nauthorizing the emission of one ton of nitrogen oxide during the specified
\ncontrol period, or (ii) the Virginia Department of Environmental Quality under
\nany budget program which may be established for the Commonwealth of Virginia.<\/p>\n
“OE PPA” collectively means those agreements identified in Item 4 of
\nSection I of Schedule 2.2(a)(iv) attached hereto.<\/p>\n
“Off-Site” means any location except (i) the Auctioned Assets, the
\nPotomac River Station Site, and (ii) any location to or under which Hazardous
\nSubstances present or disposed on the Auctioned Assets or the Potomac River
\nStation Site have migrated or may migrate in the future.<\/p>\n
“Operating Agreement” means that certain Operating Agreement, to be
\nentered into at the Closing by Buyer and Seller, in substantially the form as
\nExhibit G to the Agreement.<\/p>\n
“Operating Records” shall have the meaning set forth in Section
\n2.2(a)(viii).<\/p>\n
“Panda Litigation” means (i) the litigation captioned Potomac
\nElectric Power Company v. Panda-Brandywine, L.P., No. S00-CV-1103, filed in
\nthe United States District Court for the District of Maryland, and (ii) the
\nlegal proceedings referenced in Schedule 5.8 hereto.<\/p>\n
“Panda PPA” means that certain PPA identified in Item 5 of Section I
\nof Schedule 2.2(a)(vi) attached hereto.<\/p>\n
“Panda Release” shall have the meaning set forth in Section
\n3.4(a)(i).<\/p>\n
“Party” shall have the meaning set forth in the Preamble.<\/p>\n
“Pepco Interconnection Standards” means Pepco’s Interconnection and
\nParallel Operating Guideline as amended from time to time.<\/p>\n
“Permits” means the permits, licenses, consents, approvals and other
\ngovernmental authorizations (other than with respect to Environmental Laws)
\nrelating primarily to the power generation operations of the Generating
\nFacilities.<\/p>\n
“Permitted Capital Expenditures” shall have the meaning set forth in
\nSection 7.1(b)(viii).
\n 71<\/p>\n
“Permitted Exceptions” means (i) all exceptions, restrictions,
\neasements, charges, rights-of-way and monetary and nonmonetary encumbrances
\nwhich are set forth in any Permits or Environmental Permits, (ii) statutory
\nliens for current taxes or assessments not yet due or delinquent or the
\nvalidity of which is being contested in good faith by appropriate proceedings,
\n(iii) mechanics’, carriers’, workers’, repairers’ and other similar liens
\narising or incurred in the ordinary course of business relating to obligations
\nas to which there is no default on the part of Seller or the validity of which
\nare being contested in good faith by appropriate proceedings, (iv) purchase
\nmoney security interests in respect of personal property arising or incurred
\nin the ordinary course of business, (v) zoning, entitlement, conservation
\nrestriction and other land use and environmental regulations by Governmental
\nAuthorities, (v) all matters disclosed on those surveys listed on Schedule
\n5.5(b) to the Agreement and any other facts that would be disclosed by an
\naccurate survey and physical inspection of the Buyer Real Estate, (vi)
\nEncumbrances, easements or other restrictions created pursuant to or
\ncontemplated by any Ancillary Agreement, (vii) Encumbrances of record or
\nEncumbrances otherwise disclosed to Buyer in the Agreement or the Ancillary
\nAgreements with respect thereto, (viii) restrictions and regulations imposed
\nby the PJM, any Governmental Authority or any local, state, regional, national
\nor international reliability council and (ix) such other Encumbrances or
\nimperfections in or failure of title which would not, individually or in the
\naggregate, create a Material Adverse Effect.<\/p>\n
“Person” means any individual, partnership, limited liability
\ncompany, joint venture, corporation, trust, unincorporated organization or
\nGovernmental Authority.<\/p>\n
“PJM” means the Pennsylvania-New Jersey-Maryland interconnected power
\npool operated under the PJM Agreement and any successor thereto including any
\nregional transmission operator, independent system operator, transco, or any
\nother independent system administrator that possesses operational or planning
\ncontrol over the Transmission System.<\/p>\n
“PJM Agreement” means the Amended and Restated Operating Agreement of
\nthe PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
“PJM Control Area” shall mean the control area recognized by NERC as
\nthe PJM Control Area.<\/p>\n
“PJM Interconnection LLC” means the independent system operator of
\nthe PJM Control Area pursuant to the PJM Agreement and the PJM Tariff.<\/p>\n
“PJM System Operator” means the PJM energy control center staff
\nresponsible for central dispatch as provided in the PJM Agreement.<\/p>\n
72<\/p>\n
“PJM Tariff” means the PJM Open Access Transmission Tariff providing
\ntransmission service within the PJM Control Area, including schedules,
\nappendices, or exhibits attached thereto, as in effect from time to time and
\nas amended or modified.<\/p>\n
“Potomac River Lease” means that Generating Station Lease Agreement,
\nto be entered into at the Closing by Seller and Buyer, substantially in the
\nform of Exhibit H attached to the Agreement.<\/p>\n
“Potomac River Real Property” means that certain real property of the
\nSeller (which includes the Potomac River Station Site) described on Schedule
\n5.5(a) attached to the Agreement.<\/p>\n
“Potomac River Station” means that certain coal-fueled generating
\nfacility of the Seller located on the Potomac River in Alexandria, Virginia,
\nas more fully described on Schedule 2.2(a)(iii) and Schedule 5.5(a) attached
\nto the Agreement.<\/p>\n
“Potomac River Station Site” means that portion of the Potomac River
\nReal Property to be leased by the Seller to the Buyer pursuant to the terms of
\nthe Potomac River Lease.<\/p>\n
“PPAs” collectively means those power purchase agreements of the
\nSeller listed in Section I of Schedule 2.2(a)(iv) attached to the Agreement.<\/p>\n
“Production Service Center” means that primary support facility of
\nthe Seller located near Washington, D.C., as more fully described on Schedule
\n2.2(a)(iii) and Schedule 5.5(a) attached to the Agreement.<\/p>\n
“Prorated Items” shall have the meaning set forth in Section
\n2.3(a)(viii).<\/p>\n
“Protective Relaying System” means the system relating to the
\nGenerating Facilities comprised of components collectively used to detect
\ndefective power system elements or other conditions of an abnormal nature,
\ninitiate appropriate control circuit action in response thereto and isolate
\nthe appropriate system elements in order to minimize damage to equipment and
\ninterruption to service.<\/p>\n
“PSC” means, either individually or collectively, the MDPSC, VCC, PUC
\nand DCPSC.<\/p>\n
“Purchase Price” shall have the meaning set forth in Section 3.1.<\/p>\n
“PUC” means the Pennsylvania Utility Commission.
\n 73
\n “Qualified Offer” shall have the meaning set forth in Section 9.1(d).<\/p>\n
“Regulatory Material Adverse Effect” shall occur where the Required
\nRegulatory Approval contains terms and conditions that are materially adverse
\nto the Seller taken as a whole.<\/p>\n
“Release” means any release, spill, emission, leaking, dumping,
\ninjection, pouring, deposit, disposal, discharge, dispersal, leaching or
\nmigration into the environment (including ambient air, surface water,
\ngroundwater, land surface or subsurface strata) or within any building,
\nstructure, facility or fixture.<\/p>\n
“Required Regulatory Approvals” means with respect to a Party, any
\nconsent or approval of, filing with, or notice to, any Governmental Authority
\nthat is necessary for the execution and delivery of the Agreement and the
\nAncillary Agreements by such Party or the consummation thereby of the
\ntransactions contemplated hereby.<\/p>\n
“Restraints” shall have the meaning set forth in Section 8.1(b).<\/p>\n
“Retained Assets” shall have the meaning set forth in Section 2.2(b).<\/p>\n
“Retained Liabilities” shall have the meaning set forth in Section
\n2.3(b).<\/p>\n
“Retained Rights” shall have the meaning given to such term in Schedule
\n2.4 attached hereto.<\/p>\n
“Revenue Bonds” shall have the meaning set forth in Section 7.12(a)(i).<\/p>\n
“Revenue Meters” means all meters measuring demand, energy and
\nreactive components, and all pulse isolation relays, pulse conversion relays
\nand associated totalizing and remote access pulse recorder equipment, in each
\ncase, required to measure the transfer of energy between the Parties.<\/p>\n
“Ryceville Pumping Station” means that certain pumping station and
\nall components located in Ryceville, Maryland, as more fully described on
\nSchedule 2.2(a)(iii) and Schedule 5.5(a) attached to the Agreement.<\/p>\n
“Seller” shall have the meaning set forth in the Preamble to the
\nAgreement.<\/p>\n
“Seller Facilities” means those facilities of the Seller which are
\ndescribed in the Easements Agreement.<\/p>\n
74
\n “Seller Indemnitees” shall have the meaning set forth in Section
\n10.1(b).<\/p>\n
“Seller Real Estate” means all real property and leaseholds or other
\ninterests in real property of Seller (including the Potomac River Real
\nProperty), and other than Buyer Real Estate.<\/p>\n
“Seller Required Regulatory Approvals” shall have the meaning set
\nforth in Section 5.3(b).<\/p>\n
“Seller’s Pension Plans” shall have the meaning set forth in Section
\n9.2.<\/p>\n
“Seller’s Savings Plan” shall have the meaning set forth in Section
\n9.3.<\/p>\n
“Seller’s Severance Plans” mean those certain plans or policies of the
\nSeller, in effect on the date of Closing, which offer severance benefits to the
\nNon-Union Employees, as described on Schedule 1.1(c) attached to the Agreement.<\/p>\n
“SO2 Allowances” mean sulfur dioxide allowances that have been
\nallocated to Seller for the Generating Facilities by the Administrator of the
\nUnited States Environmental Protection Agency under Title IV of the Clean Air
\nAct authorizing the emission of one ton of sulfur dioxide per allowance during
\nor after a specified calendar year.<\/p>\n
“Support Operations” mean the business operations of the Seller which
\nare primarily engaged in the provision of support services to the ongoing
\noperation of the Generating Facilities (including business planning and strategy
\nservices, fuel supply services, bulk power management services, generation
\nengineering and maintenance services, and environmental services).<\/p>\n
“Tax Benefit” means, with respect to any Indemnifiable Loss for any
\nperson, the positive excess, if any, of the Tax liability of such person without
\nregard to such Indemnifiable Loss over the Tax liability of such person taking
\ninto account such Indemnifiable Loss, with all other circumstances remaining
\nunchanged.<\/p>\n
“Tax Cost” means, with respect to any indemnity payment for any
\nperson, the positive excess, if any, of the Tax liability of such person taking
\nsuch indemnity payment into account over the Tax liability of such person
\nwithout regard to such payment, with all other circumstances remaining
\nunchanged.<\/p>\n
“Tax Return” means any return, report, information return or other
\ndocument (including any related or supporting information) required to be
\nsupplied to any authority with respect to Taxes.<\/p>\n
75<\/p>\n
“Taxes” means all taxes, surtaxes, charges, fees, levies, penalties
\nor other assessments imposed by any United States Federal, state or local or
\nforeign taxing authority, including Income Taxes, excise, property, sales,
\ntransfer, franchise, special franchise, payroll, recording, withholding,
\nsocial security or other taxes, or any liability for taxes incurred by reason
\nof joining in the filing of any consolidated, combined or unitary Tax Returns,
\nin each case including any interest, penalties or additions attributable
\nthereto; provided, however, that “Taxes” shall not include sewer rents or
\ncharges for water.<\/p>\n
“Termination Date” shall have the meaning set forth in Section
\n11.1(b).<\/p>\n
“Third Party Claim” shall have the meaning set forth in Section
\n10.2(a).<\/p>\n
“Total Cash Compensation” shall have the meaning set forth in Section
\n9.1(d).<\/p>\n
“Transferable Permits” shall have the meaning set forth in Section
\n2.2(a)(v).<\/p>\n
“Transferred NOx Allowances” shall have the meaning set forth in
\nSection 2.2(a)(vii).<\/p>\n
“Transferred SO2 Allowances” shall have the meaning set forth in
\nSection 2.2(a)(vi).<\/p>\n
“Transferred Employee Records” shall have the meaning set forth in
\nSection 2.2(a)(viii).<\/p>\n
“Transferred Employees” shall have the meaning set forth in Section
\n9.1(d).<\/p>\n
“Transferred Non-Union Employees” shall have the meaning set forth in
\nSection 9.1(d).<\/p>\n
“Transferred Savings Employees” shall have the meaning set forth in
\nSection 9.3.<\/p>\n
“Transferred Union Employees” shall have the meaning set forth in
\nSection 9.1(a).<\/p>\n
“Transition Power Agreements” means that Transition Power Agreement
\n(District of Columbia) and Transition Power Agreement (Maryland), to be
\nentered into at Closing by Seller and Buyer, substantially in the form of
\nExhibits J-1 and J-2, respectively, attached to the Agreement.<\/p>\n
76<\/p>\n
“Transmission System” shall have the meaning set forth in Section
\n2.2(b)(i).<\/p>\n
“Unassigned PPA” shall have the meaning set forth in Schedule 2.4
\nattached hereto.<\/p>\n
“Union Employees” shall have the meaning set forth in Section 9.1(a).<\/p>\n
“VCC” means the Virginia State Corporation Commission.<\/p>\n
“WARN Act” means the Federal Worker Adjustment Retraining and
\nNotification Act of 1988, as amended.<\/p>\n
77
\n EXHIBIT A<\/p>\n
ASSIGNMENT AND ASSUMPTION AGREEMENT<\/p>\n
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment Agreement”)
\ndated as of _________, 2000 by and between Potomac Electric Power Company, a
\nDistrict of Columbia and Virginia corporation (“Seller”), and ____________, a
\n____________ corporation (“Buyer”). Seller and Buyer are referred to
\nindividually as a “Party,” and collectively as the “Parties.”<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, Seller and Buyer are parties to that certain Asset Purchase
\nand Sale Agreement, dated as of June 7, 2000 (as amended, supplemented or
\notherwise modified from time to time, the “Asset Sale Agreement”);<\/p>\n
WHEREAS, pursuant to the Asset Sale Agreement, Buyer has agreed to
\nassume from Seller the Assumed Obligations (as defined in the Asset Sale
\nAgreement) and Seller has agreed to retain the Retained Liabilities
\n(as defined in the Asset Sale Agreement); and<\/p>\n
WHEREAS, it is the intention of the Parties that by the execution and
\ndelivery of this Assignment Agreement, Seller will assign to Buyer and Buyer
\nwill assume and agree to discharge when due, without recourse to Seller, all
\nAssumed Obligations, as more particularly described and set forth in Section
\n2.3 of the Asset Sale Agreement.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing premises and for
\nother good and valuable consideration, the receipt and sufficiency of which
\nare hereby acknowledged, Seller and Buyer hereby agree as follows:<\/p>\n
1. Capitalized terms which are used but not defined in this
\nAssignment Agreement shall have the meaning ascribed to such terms in the
\nAsset Sale Agreement.<\/p>\n
2. Seller hereby sells, assigns, conveys, transfers and delivers to
\nBuyer all of the right, title and interest that Seller possesses and has the
\nright to transfer in, to, and under the Transferable Permits, the Transferred
\nSO2 Allowances, the Transferred NOX Allowances, the Contracts, the third-party
\nwarranties and guarantees, and all other intangible personal property included
\nin the Auctioned Assets.<\/p>\n
3. Buyer hereby assumes and agrees to discharge when due, without
\nrecourse to Seller, all liabilities and obligations of Seller constituting the
\nAssumed Obligations. Notwithstanding anything to the contrary herein, Buyer
\nshall not assume or perform any of the Retained Liabilities.
\n 78<\/p>\n
4. Neither the making nor the acceptance of this Assignment
\nAgreement shall enlarge, restrict or otherwise modify the terms of the Asset
\nSale Agreement or constitute a waiver or release by Seller or Buyer of any
\nliabilities, duties or obligations imposed upon either of them by the terms of
\nthe Asset Sale Agreement, including, without limitation, the representations and
\nwarranties and other provisions which the Asset Sale Agreement provides shall
\nsurvive the date hereof.<\/p>\n
5. In the event that any provision of this Assignment Agreement be
\nconstrued to conflict with a provision of the Asset Sale Agreement, the
\nprovision in the Asset Sale Agreement shall be deemed controlling.<\/p>\n
6. This Assignment Agreement shall bind and shall inure to the
\nbenefit of the respective Parties and their respective successors and
\npermitted assigns.<\/p>\n
7. No Third Party Beneficiary. Nothing in this Assignment Agreement
\nis intended to confer upon any other person except Buyer and Seller any rights
\nor remedies hereunder or shall create any third party beneficiary rights in any
\nperson.<\/p>\n
8. This Assignment Agreement shall be governed and construed in
\naccordance with the laws of the District of Columbia (regardless of the laws
\nthat might otherwise govern under applicable principles of conflicts of law).<\/p>\n
9. This Assignment Agreement may be executed in two counterparts,
\neach of which shall be deemed an original, but both of which together will
\nconstitute one and the same instrument.<\/p>\n
10. Seller hereby appoints _______________, a _______________ of
\nSeller, to be its duly authorized Attorney-in-Fact and in Seller’s name to
\nexecute, acknowledge and deliver this Assignment Agreement as its act and
\ndeed.
\nBuyer hereby appoints _____________, its ______________, to be its duly
\nauthorized Attorney-in-Fact and in Buyer’s name to execute, acknowledge and
\ndeliver this Assignment Agreement as its act and deed.<\/p>\n
IN WITNESS WHEREOF, this Assignment Agreement has been duly executed
\nand delivered by the Parties as of the date first above written.<\/p>\n
Attest: POTOMAC ELECTRIC POWER
\n COMPANY<\/p>\n
By By
\n ————————– —————————-
\n Secretary Name:
\n Title:<\/p>\n
Attest: [BUYER]<\/p>\n
By By
\n ————————– —————————-
\n Secretary Name:
\n Title:<\/p>\n
79<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for
\nSeller named in the foregoing Instrument, personally appeared before me in said
\njurisdiction, and as such attorney-in-fact and by virtue of the authority vested
\nin him by said Instrument, acknowledged the same to be the act and deed of said
\ncorporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
————————————-
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for Buyer
\nnamed in the foregoing Instrument, personally appeared before me in said
\njurisdiction, and as such attorney-in-fact and by virtue of the authority vested
\nin him by said Instrument, acknowledged the same to be the act and deed of said
\ncorporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
————————————-
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
80
\n EXHIBIT B<\/p>\n
BILL OF SALE<\/p>\n
THIS BILL OF SALE is made as of the ___ day of ____________, 2000 by
\nPotomac Electric Power Company, a District of Columbia and Virginia
\ncorporation (“Seller”), for the benefit of ________________, a
\n___________________ (“Buyer”).<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, pursuant to that certain Asset Purchase and Sale Agreement,
\ndated as of June 7, 2000 (as amended, supplemented or otherwise modified from
\ntime to time, the “Asset Sale Agreement”), by and between Seller and Buyer,
\nSeller has agreed to sell, assign, convey, transfer and deliver all of its
\nright, title and interest in and to the Auctioned Assets (as defined in the
\nAsset Sale Agreement) to Buyer, and Buyer has agreed to purchase, assume and
\nacquire such Auctioned Assets from Seller; and<\/p>\n
WHEREAS, pursuant to the Asset Sale Agreement, Seller has entered
\ninto this Bill of Sale as evidence of such conveyance to Buyer.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing premises and for
\nother good and valuable consideration, the receipt and adequacy of which is
\nhereby acknowledged, Seller hereby agrees as follows:<\/p>\n
1. Defined Terms. Capitalized terms which are used but not defined
\nin this Bill of Sale shall have the meaning ascribed to such terms in the
\nAsset Sale Agreement.<\/p>\n
2. Assignment. Seller does hereby sell, assign, convey, transfer
\nand deliver to Buyer all of Seller’s right, title and interest in and to all
\nof the Auctioned Assets.<\/p>\n
3. Retained Assets Not Assigned. Notwithstanding anything expressed
\nherein to the contrary, the Retained Assets are specifically excluded from the
\nAuctioned Assets and shall be retained by Seller following the Closing Date.<\/p>\n
4. Disclaimers. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
\nEXPRESSLY SET FORTH IN ARTICLE V OF THE ASSET SALE AGREEMENT, THE AUCTIONED
\nASSETS ARE BEING SOLD AND TRANSFERRED “AS IS, WHERE IS”, AND SELLER IS NOT
\nMAKING ANY OTHER REPRESENTATIONS OR WARRANTIES WRITTEN OR ORAL, STATUTORY,
\nEXPRESS OR IMPLIED, CONCERNING SUCH AUCTIONED ASSETS (INCLUDING ANY RELATING
\nTO LIABILITIES, OPERATIONS OF THE GENERATING FACILITIES, CONDITION, VALUE OR
\nQUALITY OF THE AUCTIONED ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE),
\nRISKS OR OTHER INCIDENTS OF THE AUCTIONED ASSETS) OR WITH RESPECT TO THE ASSET
\nSALE AGREEMENT OR THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED<\/p>\n
81
\nTHEREBY. SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
\nMERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH
\nRESPECT TO THE AUCTIONED ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP
\nTHEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR
\nCOMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS, OR THE APPLICABILITY OF ANY
\nGOVERNMENTAL REQUIREMENTS, INCLUDING BUT NOT LIMITED TO ANY ENVIRONMENTAL
\nLAWS, OR WHETHER SELLER POSSESSES SUFFICIENT REAL PROPERTY OR PERSONAL
\nPROPERTY TO OPERATE THE AUCTIONED ASSETS. EXCEPT AS OTHERWISE EXPRESSLY
\nPROVIDED IN SECTION 5.10 OF THE ASSET SALE AGREEMENT, SELLER FURTHER
\nSPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF
\nHAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER
\nENVIRONMENTAL LAWS WITH RESPECT TO THE AUCTIONED ASSETS, ALL OF WHICH ARE
\nHEREBY EXPRESSLY WAIVED BY BUYER. WITHOUT LIMITING THE GENERALITY OF THE
\nFOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE
\nINFORMATION SET FORTH IN, OR CONTEMPLATED BY, THE INFORMATION MEMORANDUM.<\/p>\n
5. Binding Effect; Assignment. This Bill of Sale and all of the
\nprovisions hereof shall be binding upon Seller and its successors and
\npermitted assigns and shall inure to the benefit of Buyer and its successors
\nand permitted assigns.<\/p>\n
6. No Third Party Beneficiary. Nothing in this Bill of Sale is
\nintended to confer upon any other person except Buyer and Seller any rights or
\nremedies hereunder or shall create any third party beneficiary rights in any
\nperson.<\/p>\n
7. Governing Law. This Bill of Sale shall be governed by and
\nconstrued in accordance with the laws of the District of Columbia (regardless
\nof the laws that might otherwise govern under applicable principles of
\nconflicts of law).<\/p>\n
8. Construction. This Bill of Sale is delivered pursuant to and is
\nsubject to the terms of the Asset Sale Agreement. In the event of any
\nconflict or ambiguity between the terms of the Asset Sale Agreement and the
\nterms of this Bill of Sale, the terms of the Asset Sale Agreement shall
\ncontrol.<\/p>\n
9. Counterparts. This Bill of Sale may be executed in two
\ncounterparts, each of which shall be deemed an original, but both of which
\ntogether shall constitute one and the same instrument.<\/p>\n
10. Power-of-Attorney. Seller hereby appoints _______________, a
\n_______________ of Seller, to be its duly authorized Attorney-in-Fact and in
\nSeller’s name to execute, acknowledge and deliver this Agreement as its act
\nand deed. Buyer hereby appoints _____________, its ______________, to be its
\nduly authorized Attorney-in-Fact and in Buyer’s name to execute, acknowledge
\nand deliver this Agreement as its act and deed.<\/p>\n
82<\/p>\n
IN WITNESS WHEREOF, this Bill of Sale has been duly executed and
\ndelivered by Seller as of the date first above written.<\/p>\n
Attest: POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By By
\n ——————— —————————–
\n Secretary Name:
\n Title:<\/p>\n
ACCEPTED AND AGREED TO
\nTHIS ____ DAY OF __________, 2000:<\/p>\n
Attest: [BUYER]<\/p>\n
By By
\n ——————— —————————–
\n Secretary Name:
\n Title:<\/p>\n
83<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for
\nSeller named in the foregoing Instrument, personally appeared before me in
\nsaid jurisdiction, and as such attorney-in-fact and by virtue of the authority
\nvested in him by said Instrument, acknowledged the same to be the act and deed
\nof said corporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
————————————
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
84
\n )
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for
\nBuyer named in the foregoing Instrument, personally appeared before me in said
\njurisdiction, and as such attorney-in-fact and by virtue of the authority
\nvested in him by said Instrument, acknowledged the same to be the act and deed
\nof said corporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
______________________________
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
85<\/p>\n
EXHIBIT C-1<\/p>\n
AFTER RECORDING PARCEL ID#
\nPLEASE RETURN TO: STREET ADDRESS:
\n_________________ _______________
\n_________________ _______________
\n_________________ _______________<\/p>\n
EASEMENT, LICENSE AND ATTACHMENT AGREEMENT
\n (Potomac River)<\/p>\n
THIS EASEMENT, LICENSE AND ATTACHMENT AGREEMENT (the “Agreement”), is
\ndated as of ______________, 2000, and is entered into by and between
\n________________________________________, a corporation organized and existing
\nunder the laws of the State of __________ and having an office at
\n____________________________ (“Generator”) and POTOMAC ELECTRIC POWER COMPANY, a
\nDistrict of Columbia and Virginia corporation and having an office at 1900
\nPennsylvania Avenue, N.W., Washington, DC 20068 (“Pepco”). Generator and Pepco
\nmay hereinafter be referred to individually as a “Party” and collectively as the
\n“Parties.”<\/p>\n
RECITALS<\/p>\n
A. Generator and Pepco have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (the “Asset Sale Agreement”),
\ndated June 7, 2000, for the sale of Pepco’s generating station known as the
\nPotomac River Station (as defined in the Asset Sale Agreement), which is located
\non that certain parcel of real property which has been leased by Pepco to
\nGenerator pursuant to that certain Site Lease Agreement between Pepco and
\nGenerator of even date herewith (the “Site Lease Agreement”) and is more
\nparticularly described in Exhibit “A” attached hereto (the “Generator’s
\nLeasehold Property”). The Generator’s Leasehold Property constitutes a portion
\nof the overall land comprising the Potomac River Station, which overall land is
\nmore particularly described in Exhibit “B” attached hereto (the “Pepco Real
\nProperty”). In connection with Pepco’s sale of Potomac River Station pursuant to
\nthe Asset Purchase Agreement, Pepco has sold to the Generator certain
\nimprovement located upon the Generator’s Leasehold Property (excluding the
\nBuilding Addition, as described in, and leased to Generator pursuant to, the
\nSite Lease Agreement) (such improvements sold to Generator being referred to
\nherein as the “Generator’s Improvements”).<\/p>\n
B. Pepco intends to continue to operate its transmission and
\ndistribution business on and from that portion of the Pepco Real Property which
\nis not leased to Generator pursuant to the Site Lease, which portion is more
\nparticularly described in Exhibit “C” attached hereto (the “Non-Leased Pepco
\nReal Property”).<\/p>\n
C. Pepco will continue to own and operate certain assets used in the
\nconduct of its transmission and distribution business which are located upon the
\nGenerator’s Leasehold Property, and Pepco requires Access (as defined below) to,
\nand certain other rights with respect to, the Generator’s Leasehold Property in
\nconnection therewith.
\n 86<\/p>\n
Generator, in the operation and conduct of its generation business, will require
\nAccess to, and certain other rights with respect to, the Non-Leased Pepco Real
\nProperty. Furthermore, Pepco and Generator have entered into an Interconnection
\nAgreement (the “Connection Agreement”), dated as of __________, 2000, pursuant
\nto which Pepco has agreed to provide certain Interconnection Service to
\nGenerator required for Generator’s conduct of its generation business at Potomac
\nRiver Station.<\/p>\n
D. In order for the Parties each to (i) enjoy the full benefit of
\ntheir respective property rights, real or personal, and conduct their respective
\nbusinesses thereat (ii) fulfill legal requirements, and (iii) comply with their
\nrespective agreements under the Connection Agreement, each Party requires
\ncertain easements, licenses, rights-of-way and\/or attachment rights in, on, over
\nand above, or with respect to, real and or personal property of the other Party.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, the Parties, in consideration of the mutual covenants
\nand agreements contained herein and in the Asset Sale Agreement and the
\nConnection Agreement, and for One Dollar ($1.00) and other good and valuable
\nconsideration, the receipt whereof and sufficiency of which are hereby
\nacknowledged, each intending to be legally bound and to bind their respective
\nsuccessors and assigns, hereby mutually agree as follows:<\/p>\n
1. DEFINITIONS<\/p>\n
1.1 Definitions. Any capitalized terms which are used but not
\ndefined in the body of this Agreement shall have the meanings given to such
\nterms in the attached Schedule 1.1.<\/p>\n
2. EASEMENTS<\/p>\n
2.1 Grant of Easements to Pepco. Generator does hereby give,
\ngrant, bargain, sell, assign and convey unto Pepco, the following easements on
\nthe Generator’s Leasehold Property, the Generator’s Improvements and the
\nBuilding Addition for the following purposes: (a) An easement for the Use,
\noperation and maintenance of the Retained Assets (as described in the Asset Sale
\nAgreement) located upon the Generator’s Leasehold Property and any other
\nequipment of any nature or kind retained by Pepco and located upon the
\nGenerator’s Leasehold Property, together with any other equipment used in
\nconnection with the foregoing (together with replacements thereof and
\nsubstitutions therefor).<\/p>\n
(b) An easement which enables Pepco to keep and maintain
\nin their present locations, and operate, any Transmission Facilities,
\nDistribution Facilities and<\/p>\n
87<\/p>\n
other assets owned by Pepco and located upon the Generator’s Leasehold Property,
\ntogether with an easement for all purposes reasonably deemed necessary or
\nconvenient by Pepco to exercise any right or fulfill any obligation under the
\nConnection Agreement, including the right to Use any improvements constructed,
\nmaintained or installed in connection therewith.<\/p>\n
(c) An easement and other Generator’s Improvements and the
\nBuilding Addition of Access to those certain generating buildings (and any
\nreplacements thereof) located upon the Generator’s Leasehold Property in and
\nupon which certain of Pepco’s Distribution Facilities and Transmission
\nFacilities are located. Such easement shall include, without limitation, the
\nright to have keys, access codes or other access methods necessary to enter any
\nof such generating buildings. Furthermore, the exercise of the easement right
\nset forth in this subparagraph shall be subject to the provisions of the
\nConnection Agreement including, without limitation, Section 3.3 thereof.<\/p>\n
(d) An easement of Access to the Generator’s Leasehold
\nProperty for the purposes of exercising any of the rights granted in this
\nSection 2.l, in the Connection Agreement or the Asset Sale Agreement.<\/p>\n
(e) An easement of Access to, and the right to use, the
\nparking lots, access roads, driveways and other such facilities located upon the
\nGenerator’s Leasehold Property.<\/p>\n
(f) Pepco’s exercise of the rights, easements, privileges
\nand licenses granted to it pursuant to this Section 2.1 shall be limited to
\nQualified Personnel or employees of contractors employed by Pepco who, in either
\nevent, are under Pepco’s and\/or its contractors’ direct supervision and whose
\nduties include, or who are engaged for the purpose of, Use of the rights granted
\npursuant to this Section 2.1.<\/p>\n
(g) The easements granted pursuant to this Section 2.1
\nshall expressly include Pepco’s right to lease, license or otherwise permit
\nAffiliates or third parties to use Pepco’s facilities upon such terms and for
\nsuch purposes as Pepco may determine from time to time, subject to the terms and
\nconditions of this Agreement.<\/p>\n
2.2 Reservation by Generator of Certain Rights. Generator
\nreserves to itself, from the easements granted pursuant to Section 2.1 hereof,
\nthe following rights, subject, however, to the provisions of the final paragraph
\nof this Section 2.2:<\/p>\n
(a) the right to (i) keep and maintain Generator’s
\nLeasehold Property and all improvements and facilities owned by Generator and
\nlocated upon the Generator’s Leasehold Property in their present locations, and
\n(ii) operate and maintain all improvements and facilities owned by Generator and
\nlocated upon the Generator’s Leasehold Property in a manner consistent with past
\npractice; and<\/p>\n
88
\n (b) the right to have Access to all portions of the
\nGenerator’s Leasehold Property for all purposes deemed reasonably necessary or
\nconvenient by Generator in the operation and conduct of its generation business
\nor in order to perform any act permitted, or fulfill any obligation of
\nGenerator, under the Connection Agreement, including maintenance of the
\nGenerator’s Leasehold Property in the manner described in the Connection
\nAgreement.<\/p>\n
(c) Generator’s exercise of the rights reserved to
\nGenerator in this Section 2.2, and the rights, privileges and licenses granted
\nto Generator in Section 2.3 shall be exclusively limited to Qualified Personnel
\nor employees of contractors employed by Generator who, in either event, are
\nunder Generator’s and\/or its contractors’ direct supervision and whose duties
\ninclude, or who are engaged for the purpose of, Use of the property described in
\nclause (a) of this Section.<\/p>\n
2.3 Grant of Easements, Right, Privilege and
\nLicense from Pepco to Generator.<\/p>\n
(a) Pepco does hereby grant to Generator the following
\neasements, rights, privileges and licenses on and with respect to the Non-Leased
\nPepco Real Property:<\/p>\n
(i) An easement which enables Generator to keep and
\nmaintain in their present locations, and operate, any Generating Facilities and
\nother assets owned by Generator and located upon the Non-Leased Pepco Real
\nProperty.<\/p>\n
(ii) An easement of Access to and upon the Non-Leased
\nPepco Real Property for the purposes of exercising any of the rights granted in
\nthe Connection Agreement or the Asset Sale Agreement.<\/p>\n
(b) In addition, but without limitation of Generator’s
\nrights pursuant to the Connection Agreement, Pepco agrees to make available to
\nGenerator (at no cost to Generator, except as provided below) Pepco’s master
\nstation voltage control equipment (the “Equipment”) located at Potomac River
\nStation upon the Generator’s Leasehold Property during the term of this
\nAgreement, subject to the following terms and conditions, and Generator agrees
\nto comply with such terms and conditions:<\/p>\n
(i) Generator’s operation of the Equipment shall
\nat all times be subject to that certain Agreement of Sale and Lease dated as of
\nNovember 30, 1994 between NationsBank Trust Company, National Association and
\nPepco (the “Control Center Lease”), and Generator shall comply with the terms
\nand conditions thereof with respect to the use of the Equipment (including
\nkeeping the Equipment free and clear of any liens, claims or encumbrances of
\nwhatever nature, and identifying the Equipment as being owned by Pepco, and
\nshall not modify, alter, remove or add to the Equipment);<\/p>\n
89<\/p>\n
(ii) Generator shall operate and maintain the
\nEquipment in accordance with Good Utility Practice;<\/p>\n
(iii) Generator shall be responsible for all
\noperating, repair and maintenance costs, taxes and the like with respect to the
\nEquipment, and shall reimburse Pepco promptly upon invoicing for any such costs
\npaid by Pepco;<\/p>\n
(iv) Generator’s Access to the Equipment shall be
\nin accordance with this Agreement;<\/p>\n
(v) Generator’s right to operate the Equipment
\nshall terminate in the event of actual or constructive loss of the Equipment,
\ndamage rendering the Equipment beyond repair or unfit for normal use, the
\ncondemnation or seizure of the Equipment, the obsolescence of the Equipment or
\nthe material breach by Generator of any of its covenants in this Section 2.3(b);<\/p>\n
(vi) Pepco shall have no obligation to Generator
\nwith respect to the Equipment other than to permit Access to and operation of
\nthe Equipment in accordance with this Section 2.3(b);<\/p>\n
(vii) The obligations of Generator under Section
\n7.4 (maintenance of liability insurance coverage) and Section 7.1
\n(indemnification) shall be applicable to the Equipment; and<\/p>\n
(viii) Pepco shall have Access to the Equipment for
\npurposes of complying with the terms and conditions of the Control Center Lease
\nand as necessary to perform any of the obligations of Generator pursuant to this
\nsubparagraph (b) above to the extent the same are not timely performed by
\nGenerator.<\/p>\n
2.4 General Scope of Easements.<\/p>\n
(a) Except as otherwise provided in Sections 2.2 and 2.3
\nabove and Section 2.4(b) below, each easement and each right, privilege and
\nlicense granted hereby is and shall be a perpetual grant, transfer, conveyance
\nand right of Access to and Use (subject to the terms of this Agreement) to the
\nGrantee thereof and to any future owner of the real property, improvements and
\nfacilities benefited thereby. Notwithstanding the foregoing, all easements,
\nrights, privileges and licenses granted by this Agreement are and shall be
\nsubject to the terms and conditions of the Connection Agreement, and in the
\nevent
\n 90
\nof any inconsistency between the terms and conditions of the Connection
\nAgreement and the terms of this Agreement, the terms of the Connection Agreement
\nshall control.<\/p>\n
(b) Any easement or right, privilege and license granted
\nhereunder for purposes of enabling a Party to exercise any right or fulfill any
\nobligation set forth in the Connection Agreement will continue for the term of
\nthe Connection Agreement, and thereafter if and to the extent that the right or
\nobligation (i) shall by its express terms survive the termination or expiration
\nof the Connection Agreement or (ii) is necessary for the conduct of business by
\nGrantee. In the event of the termination or expiration of an easement or right,
\nprivilege and license granted hereunder for purposes of enabling a Grantee to
\nexercise any right or fulfill any obligation set forth in the Connection
\nAgreement, all equipment and facilities installed or maintained by such Grantee
\non the real property of the other Party pursuant to said terminated or expired
\neasement or right, privilege and license shall, at the request of the other
\nParty, be removed at the sole cost and expense of such Grantee, and such Grantee
\nshall, at its sole cost and expense repair any damage to the real property
\nand\/or equipment and facilities of the other Party damaged as a result of such
\nremoval.<\/p>\n
(c) All equipment and facilities installed or maintained
\nby Grantee pursuant to an easement or right, privilege and license granted
\nhereunder shall be maintained by Grantee in accordance with Good Utility
\nPractice and the Connection Agreement, and Grantee shall make all repairs and
\nreplacements necessary to keep such equipment and facilities in such condition.<\/p>\n
(d) Generator may not Use any portion of Generator’s
\nLeasehold Property burdened by any easement, right or privilege granted to Pepco
\nhereunder if such Use would materially adversely affect the Use and enjoyment by
\nPepco of the rights granted to it hereunder, or materially increase the costs or
\nrisks associated with such Use.<\/p>\n
(e) All easements granted herein shall be deemed easements
\nappurtenant to the parcel of real property benefited thereby and shall run with
\nsuch real property and shall be deemed covenants running with the real property
\nburdened thereby.<\/p>\n
2.5 Interpretation. The following shall apply in interpreting
\nany easement and any right, privilege and license granted pursuant to this
\nAgreement:<\/p>\n
(a) Each easement and each right, privilege and license
\ngranted herein is irrevocable except by written agreement of the parties.<\/p>\n
(b) With respect to any easement created by this Agreement,
\nthe words “in,” “upon,” “to,” “on,” “over,” “above,” “through” and\/or “under”
\nshall be interpreted to include all of such terms.<\/p>\n
91<\/p>\n
(c) Each easement and each right, privilege and license
\ngranted herein may be enjoyed without charge or fee to Grantee of the easement.<\/p>\n
(d) Each easement and each right, privilege and license
\ngranted herein is also a grant of the additional right of Access over Grantor’s
\nproperty to accomplish the purpose of such easement or right, privilege and
\nlicense, to perform any obligations hereunder or in the Connection Agreement,
\nand to comply with any legal requirements affecting Grantee or its property
\nand\/or improvements.<\/p>\n
(e) Exercise of any easement or any right, privilege and
\nlicense granted hereunder permitting or requiring maintenance, repairs,
\nalteration, restoration, rebuilding, construction, upgrading, cleaning,
\ninstallation, removal, modification, replacement, expansion, or other work by
\nGrantee upon the property or improvements of Grantor shall be subject to the
\nfollowing conditions:<\/p>\n
(i) Work upon the facilities and properties of
\n either Party subject to this Agreement shall be
\n permitted only to each Party’s Qualified Personnel,
\n and Access to such facilities and properties shall be
\n permitted only to a Party’s Qualified Personnel and
\n such consultants, agents, contractors, subcontractors
\n and invitees as any Party may select or permit;
\n provided that any consultant, agent, contractor,
\n subcontractor or invitee shall comply with all
\n applicable provisions of this Agreement and the
\n Connection Agreement.<\/p>\n
(ii) Work shall be performed using reasonable
\n precautions to avoid unreasonable interference with
\n the Use and enjoyment of Grantor’s property and
\n improvements.<\/p>\n
(iii) Except only as may be specifically provided
\n to the contrary herein, Grantee shall not be liable
\n for damage, if any, which may be caused by Grantee’s
\n normal and reasonable Use of any easement, or right,
\n privilege or license granted hereunder.<\/p>\n
(iv) Following completion of the work, Grantee
\n shall restore Grantor’s property and improvements to
\n the same or as good a condition as existed before the
\n commencement of the work.<\/p>\n
(v) Any easement and any right, privilege and
\n license granted herein which permits a Grantee to
\n maintain its property, equipment, facilities and
\n appurtenances on the property and improvements owned
\n by Grantor also includes the right to maintain in
\n place on Grantor’s property and improvements any and
\n all wires and cables, connecting such property,
\n equipment,
\n 92<\/p>\n
facilities, and appurtenances to (i) the
\n devices, machinery and equipment which they
\n measure, regulate and\/or control, and (ii)
\n power sources.<\/p>\n
(vi) Generator shall be solely
\n responsible for the maintenance of any
\n roads, paths and other means of entry or
\n exit located upon either the Generator’s
\n Real Generator’s Real Property or the Pepco
\n Real Property that are commonly utilized by
\n Generator and Pepco, and their respective
\n employees, agents and contractors pursuant
\n to this Agreement or the Connection
\n Agreement.<\/p>\n
(f) Any easement granted pursuant to
\nSection 2.1(a), (b) or (c) includes the right to (i) trim, cut, treat and\/or
\nremove, by manual, mechanical, and chemical means, any and all trees, brush,
\nstructures and other obstructions within the easement area, as well as such
\ntrees, brush, structures and vegetation outside of the easement area deemed
\nreasonably necessary or desirable by Pepco for the safe and secure operation of
\nits facilities; and (ii) obtain Access to Generator’s Leasehold Property for the
\npurpose of performing the aforementioned acts.<\/p>\n
2.6 Rules and Regulations.<\/p>\n
Each Party may promulgate rules regulating the conduct of the other
\nParty in the exercise of rights under this Agreement provided such rules and
\nregulations do not unreasonably interfere with or impede the affected Party’s
\nrights and easements as set forth herein or in the Connection Agreement.<\/p>\n
2.7 No Obstruction.<\/p>\n
(a) No Party hereto shall obstruct the
\neasements or the rights, privileges and licenses granted or created pursuant to
\nthis Agreement or render them impassable or unusable in any way or otherwise in
\nany way interfere with the right to the Use and enjoyment of the easements or
\nrights, privileges and licenses granted or created pursuant to this Agreement.<\/p>\n
(b) No Party hereto shall make any
\nchanges to the topography or accesses on or to its respective property,
\nincluding grading or drainage that could reasonably be expected to adversely
\naffect another Party’s facilities, common use drainage systems, or pollution
\ncontrol systems, or the exercise of any right or fulfillment of any obligation
\nin this Agreement or in the Connection Agreement, without the prior written
\nconsent of the other Party which consent shall not unreasonably be withheld,
\ndelayed or conditioned.<\/p>\n
93<\/p>\n
3. TAXES, ASSESSMENTS AND OTHER CHARGES<\/p>\n
3.1 Real Estate Taxes. All matters concerning
\nthe payment of taxes, assessments and other such charges shall be governed by
\nthe provisions of Article 6 of Site Lease, which are incorporated herein by
\nreference.<\/p>\n
4. MECHANICS’ LIENS<\/p>\n
4.1 Notice Regarding Labor and Material. Notice
\nis hereby given that no Party hereto shall be liable for any labor or materials
\nfurnished or to be furnished to or for another Party hereto or to any other
\npersons or entities claiming under such other Party on credit, and that no
\nmechanics’ or other lien for any such labor or material furnished to a Party or
\nsuch other persons or entities shall attach to or affect any property interest
\nof any other Party.<\/p>\n
4.2 Disposition of Liens.<\/p>\n
(a) Pepco shall forthwith take such
\naction necessary to discharge, remove or satisfy any lien filed against the
\nGenerator’s Leasehold Property or any portion thereof for any labor or materials
\nfurnished or to be furnished for or on behalf of Pepco, or any person or entity
\nholding any portion thereof through or under Pepco.<\/p>\n
(b) Generator shall forthwith take such
\naction necessary to discharge, remove or satisfy any lien filed against the
\nNon-Leased Pepco Real Property or any portion thereof for any labor or materials
\nfurnished or to be furnished for or on behalf of Generator, or any person or
\nentity holding any portion thereof through or under Generator.<\/p>\n
(c) If either Pepco or Generator, as
\nthe case may be, shall fail to discharge, remove or satisfy any such lien which
\nit is obligated to discharge, remove or satisfy hereunder within ten (10) days
\nafter notice of the existence of the lien has been given to such defaulting
\nParty, the non-defaulting Party or parties may pay the amount of such lien or
\ndischarge the same by deposit or bonding, and the amount so paid or deposited,
\nor the premium paid for such bond, with interest at the rate provided for
\ndefaults in Section 6.3 hereof, shall be paid by the defaulting Party upon
\ndemand to the non-defaulting Party who effected such cure.<\/p>\n
(d) The defaulting Party shall defend,
\nindemnify and save harmless the non-defaulting Party from and against all
\nliability, loss, cost or expense (including reasonable attorneys’ fees) arising
\nout of any liens which the defaulting Party is obligated to discharge, remove or
\nsatisfy.<\/p>\n
94<\/p>\n
5. CONDEMNATION<\/p>\n
5.1 Condemnation. All matters concerning
\ncondemnation shall be governed by the provisions of Article 17 of the Site
\nLease, which are incorporated herein by reference.<\/p>\n
6. DEFAULTS<\/p>\n
6.1 Events of Default. Each and every one of the
\nfollowing events shall constitute an Event of Default (“Event of Default”) under
\nthis Agreement:<\/p>\n
(a) If a Party fails to make any
\npayment due to the other Party hereto within twenty (20) days of written demand
\nfor such payment;<\/p>\n
(b) If a Party fails, within twenty
\n(20) days of written notice from a Party, to make any payment due from such
\nParty to any third party and such failure could result in the imposition of a
\nlien or other encumbrance on the property or improvements of a Party, unless the
\npayment of such amount is contested in accordance with Section 3.5 hereof, in
\nwhich case, the provisions of Section 3.5 shall control; and<\/p>\n
(c) If a Party fails to perform any
\nmaterial non-monetary obligations hereunder, and said Party fails to cure such
\ndefault within thirty (30) days of receipt of written notice stating with
\nparticularity the nature of the default; provided, however, if such default is
\nof such a nature that it cannot be cured within thirty (30) days following
\nreceipt of such notice, an Event of Default shall not have occurred if the
\ndefaulting Party shall within such thirty (30) days commence the necessary cure
\nand shall at all times thereafter diligently and continuously prosecute such
\ncure to completion.<\/p>\n
6.2 Right of Self Help. A non-defaulting Party
\nmay at its election following the occurrence of a non-monetary Event of Default
\nand the thirtieth (30th) day after the receipt of the written notice specified
\nin paragraph 6.1(c) hereof, undertake the cure of such default on behalf of the
\ndefaulting Party. A non-defaulting Party is granted an easement to enter upon,
\nthrough or under the property or improvements of the defaulting Party to effect
\nsuch cure. Following the occurrence of an Event of Default involving the payment
\nof money to a person or entity not Party to this Agreement, a non-defaulting
\nParty may make such payment on behalf of the defaulting Party. All monies paid
\nby the non-defaulting Party and all reasonable costs and expenses (including,
\nreasonable attorneys’ fees) incurred by it, as the case may be, in effecting
\nsuch cure or payment, shall be paid by the defaulting Party upon written demand,
\ntogether with interest from the date of such demand at the rate set forth in
\nSection 6.3. This Section 6.2 shall not limit Pepco’s self-help rights pursuant
\nto Section 2.3(b).<\/p>\n
6.3 Interest. Following the occurrence of an
\nEvent of Default involving the nonpayment of money by the defaulting Party to
\nthe non-defaulting Party, all<\/p>\n
95<\/p>\n
monies owed to the non-defaulting party shall bear interest at the rate equal to
\none and one-half percent (1.5%) per month accruing on the due date, provided,
\nhowever, that such late payment charge shall not exceed the maximum charge which
\nmay be collected under State law.<\/p>\n
6.4 Enforcement Rights. In addition to any other
\nrights expressly set forth in this Agreement, but without limitation,
\nenforcement of this Agreement may be had by legal or equitable proceedings
\nagainst any defaulting Party either to specifically enforce, restrain or enjoin
\nthe violation of any restriction, covenant, agreement, term, representation or
\nwarranty herein contained or to recover damages. The above notwithstanding,
\ntermination of this Agreement shall not be available as a remedy in any
\nproceedings against any defaulting Party.<\/p>\n
6.5 No Forfeiture. Except by enforcement of a
\njudgment lien against such property, nothing contained in this Agreement shall
\ncreate any reversion, condition or right of re-entry or other provisions for
\nforfeiture under which any Party can be cut off, subordinated or otherwise
\ndisturbed in the possession of its property.<\/p>\n
6.6 Independent Covenants. None of the rights
\nand easement granted by this Agreement and none of the performances required by
\nthis Agreement shall be dependent, upon the performance of any other term,
\npromise, or condition of this Agreement or any documents executed concurrently
\nor in connection with this Agreement, and such rights, easement and requirements
\nor performance shall continue in effect irrespective of whether anything else in
\nthis Agreement or such other documents has been breached or has been terminated.
\nThe separateness and independent survival of the right, easements and
\nrequirements of performance under this Agreement are essential terms hereof
\nwithout which this Agreement would not have been made.<\/p>\n
7. INDEMNIFICATION AND INSURANCE<\/p>\n
7.1 Generator’s Indemnification. Generator shall
\nindemnify, hold harmless, and defend Pepco and its Affiliates, as the case may
\nbe, and their respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between Pepco and a third party or
\nGenerator) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Pepco’s employees or any third parties, to the
\nextent caused, by the breach of this Agreement by Generator or the negligence or
\nwillful misconduct of Generator and\/or its officers, directors, employees,
\nagents, contractors, subcontractors or invitees arising out of or connected with
\nGenerator’s performance of this Agreement, or the exercise by Generator of its
\nrights hereunder.<\/p>\n
96<\/p>\n
7.2 Pepco’s Indemnification. Pepco shall
\nindemnify, hold harmless, and defend Generator and its Affiliates, as the case
\nmay be, and their respective officers, directors, employees, agents,
\ncontractors, subcontractors, invitees, successors and permitted assigns from and
\nagainst any and all claims, liabilities, costs, damages, and expenses
\n(including, without limitation, reasonable attorney and expert fees, and
\ndisbursements incurred by any of them in any action or proceeding between
\nGenerator and a third party or Pepco) for damage to property of unaffiliated
\nthird parties, injury to or death of any person, including Generator’s employees
\nor any third parties, to the extent caused by the breach of this Agreement by
\nPepco or the negligence or willful misconduct of Pepco and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Pepco’s performance of this Agreement, or the exercise
\nby Pepco of its rights hereunder.<\/p>\n
7.3 Survival. The provisions of Sections 7.1 and
\n7.2 shall survive termination, cancellation, suspension, completion or
\nexpiration of this Agreement.<\/p>\n
7.4 Insurance Coverage. The Parties shall
\nmaintain at their own cost the following insurance: (a) standard Commercial
\nGeneral Liability insurance with limitations not less than One Hundred Million
\nDollars ($100,000,000.00)in the aggregate; (b) All-Risk Property insurance in
\namounts not less than one hundred percent (100%) of the full replacement cost of
\nthe improvements located upon each Party’s real property; (c) Worker’s
\ncompensation insurance as required by prevailing law and Employer’s liability
\ninsurance with limits of not less than Twenty-five Million Dollars
\n($25,000,000.00); and (d) such other insurance as is customary in the electric
\nutility industry.<\/p>\n
7.5 Certificate of Insurance. The Parties agree
\nto furnish each other with certificates of insurance evidencing the insurance
\ncoverage obtained in accordance with this Article 7, and the Parties agree to
\nnotify and send copies to the other of any policies maintained hereunder upon
\nwritten request by a Party. Each Party must notify the other Party within five
\n(5) business days of receiving notice of cancellation, change, amendment or
\nrenewal of any insurance policy required pursuant to Section 7.4 above.<\/p>\n
7.6 Additional Insureds and Waiver. Each Party
\nand its affiliates shall be named as additional insureds on the general
\nliability insurance policies obtained in accordance with Section 7.4, above, as
\nregards liability under this Agreement; and each general liability insurance
\npolicy shall contain a waiver of subrogation and each Party shall waive its
\nrights of recovery against the other for any loss or damage covered by such
\npolicy.<\/p>\n
8. MISCELLANEOUS<\/p>\n
8.1 Effective Date. This Agreement will be
\neffective on the Closing Date pursuant to the Asset Sale Agreement (the
\n“Effective Date”).<\/p>\n
97<\/p>\n
8.2 Exhibits. All exhibits attached to this
\nAgreement are part of this Agreement and the material contained in such exhibits
\nshall be construed and interpreted as if contained within the text of the
\nAgreement.<\/p>\n
8.3 Headings. The Article and Section headings
\nof this Agreement are for convenience and reference only and in no way define,
\nlimit or describe the scope and intent of this Agreement, nor in any way affect
\nthis Agreement.<\/p>\n
8.4 Interpretation. When a reference is made in
\nthis Agreement to an Article, Section, Schedule or Exhibit, such reference shall
\nbe to an Article or Section of, or Schedule or Exhibit to, this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in this
\nAgreement shall refer to this Agreement as a whole and not to any particular
\nprovision of this Agreement. The definitions contained in this Agreement are
\napplicable to the singular as well as the plural forms of such terms and to the
\nmasculine as well as to the feminine and neuter genders of such term. Any
\nagreement, instrument, statute, regulation, rule or order defined or referred to
\nherein or in any agreement or instrument that is referred to herein means such
\nagreement, instrument, statute, regulation, rule or order as from time to time
\namended, modified or supplemented, including (in the case of agreements or
\ninstruments) by waiver or consent and (in the case of statutes, regulations,
\nrules or orders) by succession of comparable successor statutes, regulations,
\nrules or orders and references to all attachments thereto and instruments
\nincorporated therein. References to a person are also to its permitted
\nsuccessors and assigns. Each Party acknowledges that it has been represented by
\ncounsel in connection with the review and execution of this Agreement and,
\naccordingly, there shall be no presumption that this Agreement or any provision
\nhereof be construed against the Party that drafted this Agreement.<\/p>\n
8.5 GOVERNING LAW. EXCEPT WITH RESPECT TO THE
\nCREATION, PERFECTION AND ENFORCEMENT OF THE REAL PROPERTY INTERESTS CREATED
\nHEREUNDER, WHICH SHALL BE GOVERNED AND CONSTRUED BY THE LAWS OF THE STATE, THIS
\nAGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
\nDISTRICT OF COLUMBIA EXCLUSIVE OF ITS CHOICE OF LAW RULES.<\/p>\n
8.6 Entire Agreement. This Agreement, the Asset
\nSale Agreement, the Site Lease, the Confidentiality Agreement (as defined in the
\nAsset Sale Agreement) and the Ancillary Agreements (as defined in the Asset Sale
\nAgreement) including the Exhibits, Schedules, documents, certificates and
\ninstruments referred to herein or therein and other contracts, agreements and
\ninstruments contemplated hereby or thereby, embody the entire agreement<\/p>\n
98<\/p>\n
and understanding of the Parties in respect of the transactions contemplated by
\nthis Agreement. There are no restrictions, promises, representations,
\nwarranties, covenants or undertakings other than those expressly set forth or
\nreferred to herein or therein.<\/p>\n
8.7 Amendment and Modification, Extension,
\nWaiver. This Agreement may be amended, modified or supplemented only by an
\ninstrument in writing signed on behalf of each of the Parties. Either Party may
\n(i) extend the time for the performance of any of the obligations or other acts
\nof the other Party, (ii) waive any inaccuracies in the representations and
\nwarranties of the other Party contained in this Agreement or (iii) waive
\ncompliance by the other Party with any of the agreements or conditions contained
\nin this Agreement. Any agreement on the part of a Party to any such extension or
\nwaiver shall be valid only if set forth in an instrument in writing signed on
\nbehalf of such Party. The failure of a Party to this Agreement to assert any of
\nits rights under this Agreement or otherwise shall not constitute a waiver of
\nsuch rights.<\/p>\n
8.8 Binding Effect. The covenants, conditions,
\nrestrictions, encumbrances, easements, license and agreements set forth in this
\nAgreement shall attach to, burden, and run with the land and the Generator’s
\nReal Property and the Pepco Real Property or the applicable portion or portions
\nthereof, and shall be appurtenant to the Generator’s Property or the Pepco Real
\nProperty, as appropriate and, together with the remainder of this Agreement,
\nshall be binding upon the Parties hereto and their respective successors,
\nassigns, grantees, transferees and tenants and, together with the remainder of
\nthis Agreement, shall inure to the benefit and Use of the Parties hereto and
\ntheir respective heirs, successors, assigns, grantees, transferees and tenants.
\nEach Grantee of any portion of or interest in the property and each mortgagee
\nwhich succeeds to the fee simple ownership of any portion of the property shall
\nbe deemed, by the acceptance of the deed conveying fee simple title to such
\nperson, to have agreed to perform each and every undertaking created hereunder
\nattributable to the portion of the property in which such Grantee or mortgagee
\nhas acquired an interest.<\/p>\n
8.9 Counterparts. This Agreement may be executed
\nin two or more counterparts, each of which shall be deemed an original, but all
\nof which together shall constitute one and the same instrument.<\/p>\n
8.10 Severability. If any term or other provision
\nof this Agreement is invalid, illegal or incapable of being enforced by any rule
\nof law or public policy, all other conditions and provisions of this Agreement
\nshall nevertheless remain in full force and effect. Upon such determination that
\nany term or other provision is invalid, illegal or incapable of being enforced,
\nthe Parties shall negotiate in good faith to modify this Agreement so as to
\neffect the original intent of the Parties as closely as possible to the fullest
\nextent permitted by applicable law in an acceptable manner to the end that the
\ntransactions contemplated hereby are fulfilled to the extent possible.<\/p>\n
99<\/p>\n
8.11 Notices. All notices and other
\ncommunications hereunder shall be in writing and shall be deemed given (as of
\nthe time of delivery or, in the case of a telecopied communication, of
\nconfirmation) if delivered personally, telecopied (which is confirmed) or sent
\nby overnight courier (providing proof of delivery) to the Parties at the
\nfollowing addresses (or at such other address for a Party as shall be specified
\nby like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopy No.: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Generator, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, N.W.
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
The names, titles and addresses of either Party in this section may be changed
\nby written notification to the other Party.<\/p>\n
100<\/p>\n
8.12 Independent Contractor Status. Nothing in
\nthis Agreement shall be construed as creating any relationship between Pepco and
\nGenerator other than that of independent contractors.<\/p>\n
8.13 Conflicts. Except with respect to the
\namendments, indemnification, liability, default and remedies provisions
\ncontained herein or as otherwise expressly provided herein, in the event of any
\nconflict or inconsistency between the terms of this Agreement and the terms of
\nthe Asset Sale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this Agreement to
\nbe signed by their respective duly authorized officers as of the date first
\nabove written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ————————————–
\n Name:
\n ————————————-
\n Title:
\n ————————————<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ————————————–
\n Name:
\n ————————————-
\n Title:
\n ————————————<\/p>\n
101<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State, personally
\nappeared ____________________________, an ______________________, by
\n_____________________, its ________ who _________ is personally known to
\nme\/________ and who acknowledged before me that he did sign the foregoing
\ninstrument and that the same is the free act and deed of said _______________,
\nand his free act and deed personally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
——————————————-
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State, personally
\nappeared _______________________, an ___________________, by ________________
\nits _____________________ who _______ is personally known to me\/________ and who
\nacknowledged before me that he did sign the foregoing instrument and that the
\nsame is the free act and deed of said corporation, and his free act and deed
\npersonally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
——————————————-
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
102<\/p>\n
Schedule 1.1<\/p>\n
Definitions<\/p>\n
“Access” means, subject to the conditions set forth in this Agreement
\nand a Party’s right to impose reasonable security and safety restrictions
\nprotecting its officers, employees, agents, consultants, contractors,
\nsubcontractors, invitees, property and confidential information, full and
\nunimpeded access, in common with Grantor over and through existing roads, paths,
\nwalkways, corridors, hallways, doorways, and other means of entry or exit, as
\nexist now and from time to time on Grantor’s property or, where no means of
\naccess exists, over and through those areas of Grantor’s property or
\nimprovements which are (i) reasonably necessary or convenient for achieving
\nGrantee’s underlying purposes, and (ii) least likely, out of the alternatives
\nreasonably available, to impede or damage the property or operation of any Party
\nhereto. Access shall also include access and right-of-way for Grantee’s
\nemployees, agents, consultants, contractors, subcontractors, vehicles, trucks,
\ntrailers, heavy machinery, equipment, materials, and all other items reasonably
\nnecessary or convenient for achieving Grantee’s underlying purposes.<\/p>\n
“Affiliate” has the meaning set forth in Rule 12b-2 of the General
\nRules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
“Agreement” means this Easement, License and Attachment Agreement.<\/p>\n
“Asset Sale Agreement” has the meaning set forth in the first recital
\nof this Agreement, as such Asset Sale Agreement may be amended or modified.<\/p>\n
“Connection Agreement” means the Interconnection Agreement (Potomac
\nRiver), dated as of __________, 2000, between Pepco and Generator.<\/p>\n
“Distribution of Electric Current” means local transmission and
\ndistribution of electricity to Pepco’s end users.<\/p>\n
“Distribution Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto, now
\nor hereafter installed or located on the Generator’s Real Property for
\nDistribution of Electric Current. Distribution Facilities do not include
\nTransmission Facilities.<\/p>\n
“Effective Date” has the meaning set forth in Section 8.l.<\/p>\n
“FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
103<\/p>\n
“Generating Facilities” means the Station and any additional generating
\nplants, turbines or other generating facilities constructed by Generator after
\nthe Effective Date at the site of the Station.<\/p>\n
“Generator’s Improvements” shall have the meaning given it by the first
\nrecital of the Agreement.<\/p>\n
“Generator” shall have the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
“Generator’s Leasehold Property” means the real property described in
\nExhibit A.<\/p>\n
“Good Utility Practice” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Grantee” means the Party or Parties who enjoy the principal benefit of
\nthe referenced easement, license, right (including attachment rights) privilege
\nor right-of-way.<\/p>\n
“Grantor” means the owner or owners of the property and\/or improvement
\ngranting the referenced easement, license, right (including attachment rights),
\nprivilege or right-of-way.<\/p>\n
“Interconnection Service” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Non-Leased Pepco Real Property” means the real property described in
\nExhibit C, and any improvements thereto now or hereafter situated thereon.<\/p>\n
“Party” or “Parties” shall have the meaning set forth in the
\nintroductory paragraph of this Agreement.<\/p>\n
“Pepco” shall have the meaning set forth in the introductory paragraph
\nof this Agreement and shall include its permitted successors and assigns.<\/p>\n
“Pepco Real Property” means the real property described in Exhibit B,
\nand any improvements or betterments thereto now or hereinafter situated thereon.<\/p>\n
“Qualified Personnel” means individuals who possess any required
\nlicenses and trained for their positions and duties by Generator and\/or Pepco
\npursuant to Good Utility Practice.<\/p>\n
“State” means the Commonwealth of Virginia.<\/p>\n
“Station” means the Potomac River Station as defined in the Asset Sale
\nAgreement.<\/p>\n
104<\/p>\n
“Transmission of Electric Current” means the transmission of such
\ncurrent typically over long distances and at voltages not commonly used for
\nservice to end use customers.<\/p>\n
“Transmission Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto, now
\nor hereafter installed or located on the Generator’s Real Property and\/or which
\nPepco may reasonably require now and from time to time on the Generator’s Real
\nProperty for the Transmission of Electric Current. Transmission Facilities do
\nnot include Distribution Facilities.<\/p>\n
“Transmission System” shall have the meaning set forth in the
\nConnection Agreement.<\/p>\n
“Use” means to operate, maintain, repair, upgrade, clean, install, add
\nto, alter, remove, inspect, construct, modify, restore, rebuild, replace,
\nrelocate and expand (but if any such addition, relocation or expansion would
\nunreasonably or materially burden Grantor’s Property, in each case, the express,
\nprior written consent of Grantor shall be required, which consent shall not
\nunreasonably be withheld, delayed or conditioned) (all of the foregoing to be in
\naccordance with Good Utility Practice).<\/p>\n
105<\/p>\n
LIST OF EXHIBITS<\/p>\n
Exhibit A Generator’s Leasehold Property
\nExhibit B Pepco Real Property
\nExhibit C Non-Leased Pepco Real Property<\/p>\n
106<\/p>\n
EXHIBIT C-2<\/p>\n
AFTER RECORDING PARCEL ID#
\nPLEASE RETURN TO: STREET ADDRESS:
\n_________________ ________________
\n_________________ _________________
\n_________________ _________________<\/p>\n
EASEMENT, LICENSE AND ATTACHMENT AGREEMENT
\n (Dickerson Station)<\/p>\n
THIS EASEMENT, LICENSE AND ATTACHMENT AGREEMENT (the “Agreement”), is
\ndated as of ______________, 2000, and is entered into by and between
\n_______________________________________, a corporation organized and existing
\nunder the laws of the State of __________ and having an office at
\n____________________________ (“Generator”) and POTOMAC ELECTRIC POWER COMPANY, a
\nDistrict of Columbia and Virginia corporation and having an office at 1900
\nPennsylvania Avenue, N.W., Washington, DC 20068 (“Pepco”). Generator and Pepco
\nmay hereinafter be referred to individually as a “Party” and collectively as the
\n“Parties.”<\/p>\n
RECITALS<\/p>\n
A. Generator and Pepco have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (the “Asset Sale Agreement”),
\ndated June 7, 2000, for the sale of Pepco’s generating station known as the
\nDickerson Station (as defined in the Asset Sale Agreement), which is located on
\nthat certain parcel of real property which has been conveyed by Pepco to
\nGenerator pursuant to the Asset Sale Agreement by virtue of a deed recorded
\nimmediately prior hereto and is more particularly described in Exhibit “A”
\nattached hereto (the “Generator’s Real Property”).<\/p>\n
B. Pepco intends to continue to operate its transmission and
\ndistribution business on and from that certain parcel of real property adjoining
\nthe Generator’s Real Property, which parcel has been retained by Pepco following
\nthe conveyances contemplated by the Asset Sale Agreement, and is more
\nparticularly described in Exhibit “B” attached hereto (the “Pepco Real
\nProperty”).<\/p>\n
C. Pepco will continue to own and operate certain assets used in
\nthe conduct of its transmission and distribution business which are located upon
\nthe Generator’s Real Property, and Pepco requires Access (as defined below) to,
\nand certain other rights with respect to, the Generator’s Real Property in
\nconnection therewith. Generator, in the operation and conduct of its generation
\nbusiness, will require Access to, and certain other rights with respect to, the
\nPepco Real Property. Furthermore, Pepco and Generator have entered into an
\nInterconnection Agreement (the “Connection Agreement”), dated as of __________,
\n2000, pursuant to which Pepco has agreed to provide certain Interconnection
\nService to Generator required for Generator’s conduct of its generation business
\nat Dickerson Station.<\/p>\n
107<\/p>\n
D. In order for the Parties each to (i) enjoy the full benefit of
\ntheir respective property rights, real or personal, and conduct their respective
\nbusinesses thereat (ii) fulfill legal requirements, and (iii) comply with their
\nrespective agreements under the Connection Agreement, each Party requires
\ncertain easements, licenses, rights-of-way and\/or attachment rights in, on, over
\nand above, or with respect to, real and or personal property of the other Party.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, the Parties, in consideration of the mutual covenants
\nand agreements contained herein and in the Asset Sale Agreement and the
\nConnection Agreement, and for One Dollar ($1.00) and other good and valuable
\nconsideration, the receipt whereof and sufficiency of which are hereby
\nacknowledged, each intending to be legally bound and to bind their respective
\nsuccessors and assigns, hereby mutually agree as follows:<\/p>\n
1. DEFINITIONS<\/p>\n
1.1 Definitions. Any capitalized terms which are used but
\nnot defined in the body of this Agreement shall have the meanings given to such
\nterms in the attached Schedule 1.1.<\/p>\n
2. EASEMENTS<\/p>\n
2.1 Grant of Easements to Pepco. Generator does hereby
\ngive, grant, bargain, sell, assign and convey unto Pepco, the following
\neasements on the Generator’s Real Property for the following purposes:<\/p>\n
(a) A one hundred twenty-five (125) foot wide
\nutility easement, as more particularly described in Exhibit “C” attached hereto,
\nfor the installation, operation, repair and maintenance of above and\/or below
\nground power and other utility lines utilized in connection with the
\ntransmission and distribution business of Pepco (as now or hereafter conducted)
\nand other functions as Pepco may determine from time to time.<\/p>\n
(b) An above ground easement as more
\nparticularly described in Exhibit “D” attached hereto, for connection of a 230kV
\ncircuit to Generator’s start-up transformer and the operation, repair and
\nmaintenance of said connection.<\/p>\n
(c) An easement for the Use, operation and
\nmaintenance of the Retained Assets (as described in the Asset Sale Agreement)
\nlocated upon the Generator’s Real Property and any other equipment of any nature
\nor kind retained by Pepco and located upon the Generator’s Real Property,
\ntogether with any other equipment used in connection with the foregoing
\n(together with replacements thereof and substitutions therefor).<\/p>\n
108<\/p>\n
(d) An easement which enables Pepco to keep and
\nmaintain in their present locations, and operate, any Transmission Facilities,
\nDistribution Facilities and other assets owned by Pepco and located upon the
\nGenerator’s Real Property, together with an easement for all purposes reasonably
\ndeemed necessary or convenient by Pepco to exercise any right or fulfill any
\nobligation under the Connection Agreement, including the right to Use any
\nimprovements constructed, maintained or installed in connection therewith.<\/p>\n
(e) An easement of Access to those certain
\ngenerating buildings (and any replacements thereof) located upon the Generator’s
\nReal Property in and upon which certain of Pepco’s Distribution Facilities and
\nTransmission Facilities are located. Such easement shall include, without
\nlimitation, the right to have keys, access codes or other access methods
\nnecessary to enter any of such generating buildings. Furthermore, the exercise
\nof the easement right set forth in this subparagraph shall be subject to the
\nprovisions of the Connection Agreement including, without limitation, Section
\n3.3 thereof.<\/p>\n
(f) An easement of Access to the Generator’s
\nReal Property for the purposes of exercising any of the rights granted in this
\nSection 2.l, in Section 2.3(b)(viii) hereof, in the Connection Agreement or the
\nAsset Sale Agreement.<\/p>\n
(g) An easement of Access to, and the right to
\nuse, the parking lots, access roads, driveways and other such facilities located
\nupon the Generator’s Real Property.<\/p>\n
(h) Pepco’s exercise of the rights, easements,
\nprivileges and licenses granted to it pursuant to this Section 2.1 shall be
\nlimited to Qualified Personnel or employees of contractors employed by Pepco
\nwho, in either event, are under Pepco’s and\/or its contractors’ direct
\nsupervision and whose duties include, or who are engaged for the purpose of, Use
\nof the rights granted pursuant to this Section 2.1.<\/p>\n
(i) The easements granted pursuant to this
\nSection 2.1 shall expressly include Pepco’s right to lease, license or otherwise
\npermit Affiliates or third parties to use Pepco’s facilities upon such terms and
\nfor such purposes as Pepco may determine from time to time, subject to the terms
\nand conditions of this Agreement.<\/p>\n
2.2 Reservation by Generator of Certain Rights. Generator
\nreserves to itself, from the easements granted pursuant to Section 2.1 hereof,
\nthe following rights, subject, however, to the provisions of the final paragraph
\nof this Section 2.2:<\/p>\n
(a) the right to (i) keep and maintain
\nGenerator’s Real Property and all improvements and facilities owned by Generator
\nand located upon the Generator’s Real Property in their present locations, and
\n(ii) operate and maintain all improvements and facilities owned by Generator and
\nlocated upon the Generator’s Real Property in a manner consistent with past
\npractice; and<\/p>\n
109<\/p>\n
(b) the right to have Access to all portions of
\nthe Generator’s Real Property for all purposes deemed reasonably necessary or
\nconvenient by Generator in the operation and conduct of its generation business
\nor in order to perform any act permitted, or fulfill any obligation of
\nGenerator, under the Connection Agreement, including maintenance of the
\nGenerator’s Real Property in the manner described in the Connection Agreement.<\/p>\n
(c) Generator’s exercise of the rights reserved
\nto Generator in this Section 2.2, and the rights, privileges and licenses
\ngranted to Generator in Section 2.3 shall be exclusively limited to Qualified
\nPersonnel or employees of contractors employed by Generator who, in either
\nevent, are under Generator’s and\/or its contractors’ direct supervision and
\nwhose duties include, or who are engaged for the purpose of, Use of the property
\ndescribed in clause (a) of this Section.<\/p>\n
2.3 Grant of Easements, Right, Privilege and License from
\nPepco to Generator.<\/p>\n
(a) Pepco does hereby grant to Generator the
\nfollowing easements, rights, privileges and licenses on and with respect to the
\nPepco Real Property:<\/p>\n
(i) An easement of Access to and upon
\nthe Pepco Real Property from Martinsburg Road (or other public right of way) for
\ningress and egress to Dickerson Station and the other Generating Facilities.
\n(ii) An easement which enables Generator to keep and maintain in their present
\nlocations, and operate, any Generating Facilities and other assets owned by
\nGenerator and located upon the Pepco Real Property.<\/p>\n
(ii) An easement which enables Generator
\nto keep and maintain in their present locations, and operate, any Generating
\nFacilities and other assets owned by Generator and located upon the Pepco Real
\nProperty.<\/p>\n
(iii) An easement of Access to and upon
\nthe Pepco Real Property for the purposes of exercising any of the rights granted
\nin the Connection Agreement or the Asset Sale Agreement.<\/p>\n
(b) In addition, but without limitation of
\nGenerator’s rights pursuant to the Connection Agreement, Pepco agrees to make
\navailable to Generator (at no cost to Generator, except as provided below)
\nPepco’s master station voltage control equipment (the “Equipment”) located at
\nDickerson Station upon the Generator’s Real Property during the term of this
\nAgreement, subject to the following terms and conditions, and Generator agrees
\nto comply with such terms and conditions:<\/p>\n
(i) Generator’s operation of the
\nEquipment shall at all times be subject to that certain Agreement of Sale and
\nLease dated as of November 30, 1994 between NationsBank Trust Company, National
\nAssociation and Pepco (the “Control Center Lease”), and Generator shall comply
\nwith the terms and conditions thereof with respect to the use of the Equipment
\n(including keeping the Equipment free<\/p>\n
110<\/p>\n
and clear of any liens, claims or encumbrances of whatever nature, and
\nidentifying the Equipment as being owned by Pepco, and shall not modify, alter,
\nremove or add to the Equipment);<\/p>\n
(ii) Generator shall operate and
\nmaintain the Equipment in accordance with Good Utility Practice;<\/p>\n
(iii) Generator shall be responsible for
\nall operating, repair and maintenance costs, taxes and the like with respect to
\nthe Equipment, and shall reimburse Pepco promptly upon invoicing for any such
\ncosts paid by Pepco;<\/p>\n
(iv) Generator’s Access to the Equipment
\nshall be in accordance with this Agreement;<\/p>\n
(v) Generator’s right to operate the
\nEquipment shall terminate in the event of actual or constructive loss of the
\nEquipment, damage rendering the Equipment beyond repair or unfit for normal use,
\nthe condemnation or seizure of the Equipment, the obsolescence of the Equipment
\nor the material breach by Generator of any of its covenants in this Section
\n2.3(b);<\/p>\n
(vi) Pepco shall have no obligation to
\nGenerator with respect to the Equipment other than to permit Access to and
\noperation of the Equipment in accordance with this Section 2.3(b); and<\/p>\n
(vii) The obligations of Generator under
\nSection 7.4 (maintenance of liability insurance coverage) and Section 7.1
\n(indemnification) shall be applicable to the Equipment.<\/p>\n
(viii) Pepco shall have Access to the
\nEquipment for purposes of complying with the terms and conditions of the Control
\nCenter Lease and as necessary to perform any of the obligations of Generator
\npursuant to this subparagraph (b) above to the extent the same are not timely
\nperformed by Generator.<\/p>\n
2.4 General Scope of Easements.<\/p>\n
(a) Except as otherwise provided in Sections 2.2
\nand 2.3 above and Section 2.4(b) below, each easement and each right, privilege
\nand license granted hereby is and shall be a perpetual grant, transfer,
\nconveyance and right of Access to and Use (subject to the terms of this
\nAgreement) to the Grantee thereof and to any future owner of<\/p>\n
111<\/p>\n
the real property, improvements and facilities benefited thereby.
\nNotwithstanding the foregoing, all easements, rights, privileges and licenses
\ngranted by this Agreement are and shall be subject to the terms and conditions
\nof the Connection Agreement, and in the event of any inconsistency between the
\nterms and conditions of the Connection Agreement and the terms of this
\nAgreement, the terms of the Connection Agreement shall control.<\/p>\n
(b) Any easement or right, privilege and license
\ngranted hereunder for purposes of enabling a Party to exercise any right or
\nfulfill any obligation set forth in the Connection Agreement will continue for
\nthe term of the Connection Agreement, and thereafter if and to the extent that
\nthe right or obligation (i) shall by its express terms survive the termination
\nor expiration of the Connection Agreement or (ii) is necessary for the conduct
\nof business by Grantee. In the event of the termination or expiration of an
\neasement or right, privilege and license granted hereunder for purposes of
\nenabling a Grantee to exercise any right or fulfill any obligation set forth in
\nthe Connection Agreement, all equipment and facilities installed or maintained
\nby such Grantee on the real property of the other Party pursuant to said
\nterminated or expired easement or right, privilege and license shall, at the
\nrequest of the other Party, be removed at the sole cost and expense of such
\nGrantee, and such Grantee shall, at its sole cost and expense repair any damage
\nto the real property and\/or equipment and facilities of the other Party damaged
\nas a result of such removal.<\/p>\n
(c) All equipment and facilities installed or
\nmaintained by Grantee pursuant to an easement or right, privilege and license
\ngranted hereunder shall be maintained by Grantee in accordance with Good Utility
\nPractice and the Connection Agreement, and Grantee shall make all repairs and
\nreplacements necessary to keep such equipment and facilities in such condition.<\/p>\n
(d) Generator may not Use any portion of
\nGenerator’s Real Property burdened by any easement, right or privilege granted
\nto Pepco hereunder if such Use would materially adversely affect the Use and
\nenjoyment by Pepco of the rights granted to it hereunder, or materially increase
\nthe costs or risks associated with such Use.<\/p>\n
(e) All easements granted herein shall be deemed
\neasements appurtenant to the parcel of real property benefited thereby and shall
\nrun with such real property and shall be deemed covenants running with the real
\nproperty burdened thereby.<\/p>\n
2.5 Interpretation. The following shall apply in
\ninterpreting any easement and any right, privilege and license granted pursuant
\nto this Agreement:<\/p>\n
(a) Each easement and each right, privilege and
\nlicense granted herein is irrevocable except by written agreement of the
\nparties.<\/p>\n
112<\/p>\n
(b) With respect to any easement created by this
\nAgreement, the words “in,” “upon,” “to,” “on,” “over,” “above,” “through” and\/or
\n“under” shall be interpreted to include all of such terms.<\/p>\n
(c) Each easement and each right, privilege and
\nlicense granted herein may be enjoyed without charge or fee to Grantee of the
\neasement.<\/p>\n
(d) Each easement and each right, privilege and
\nlicense granted herein is also a grant of the additional right of Access over
\nGrantor’s property to accomplish the purpose of such easement or right,
\nprivilege and license, to perform any obligations hereunder or in the Connection
\nAgreement, and to comply with any legal requirements affecting Grantee or its
\nproperty and\/or improvements.<\/p>\n
(e) Exercise of any easement or any right,
\nprivilege and license granted hereunder permitting or requiring maintenance,
\nrepairs, alteration, restoration, rebuilding, construction, upgrading, cleaning,
\ninstallation, removal, modification, replacement, expansion, or other work by
\nGrantee upon the property or improvements of Grantor shall be subject to the
\nfollowing conditions:<\/p>\n
(i) Work upon the facilities and
\nproperties of either Party subject to this Agreement shall be permitted only to
\neach Party’s Qualified Personnel, and Access to such facilities and properties
\nshall be permitted only to a Party’s Qualified Personnel and such consultants,
\nagents, contractors, subcontractors and invitees as any Party may select or
\npermit; provided that any consultant, agent, contractor, subcontractor or
\ninvitee shall comply with all applicable provisions of this Agreement and the
\nConnection Agreement.<\/p>\n
(ii) Work shall be performed using
\nreasonable precautions to avoid unreasonable interference with the Use and
\nenjoyment of Grantor’s property and improvements.<\/p>\n
(iii) Except only as may be specifically
\nprovided to the contrary herein, Grantee shall not be liable for damage, if any,
\nwhich may be caused by Grantee’s normal and reasonable Use of any easement, or
\nright, privilege or license granted hereunder.<\/p>\n
(iv) Following completion of the work,
\nGrantee shall restore Grantor’s property and improvements to the same or as good
\na condition as existed before the commencement of the work.<\/p>\n
(v) Any easement and any right,
\nprivilege and license granted herein which permits a Grantee to maintain its
\nproperty,<\/p>\n
113<\/p>\n
equipment, facilities and appurtenance on the property and improvements owned by
\nGrantor also includes the right to maintain in place on Grantor’s property and
\nimprovements any and all wires and cables connecting such property, equipment,
\nfacilities, and appurtenances to (i) the devices, machinery and equipment which
\nthey measure, regulate and\/or control, and (ii) power sources.<\/p>\n
(vi) Generator shall be solely
\nresponsible for the maintenance of any roads, paths and other means of entry or
\nexit located upon either the Generator’s Real Property or the Pepco Real
\nProperty that are commonly utilized by Generator and Pepco, and their respective
\nemployees, agents and contractors pursuant to this Agreement or the Connection
\nAgreement.<\/p>\n
(f) Any easement granted pursuant to Section
\n2.1(a), (b), (c) or (d) includes the right to (i) trim, cut, treat and\/or
\nremove, by manual, mechanical, and chemical means, any and all trees, brush,
\nstructures and other obstructions within the easement area, as well as such
\ntrees, brush, structures and vegetation outside of the easement area deemed
\nreasonably necessary or desirable by Pepco for the safe and secure operation of
\nits facilities; and (ii) obtain Access to Generator’s Real Property for the
\npurpose of performing the aforementioned acts.<\/p>\n
2.6 Rules and Regulations.<\/p>\n
Each Party may promulgate rules regulating the conduct of the other
\nParty in the exercise of rights under this Agreement provided such rules and
\nregulations do not unreasonably interfere with or impede the affected Party’s
\nrights and easements as set forth herein or in the Connection Agreement.<\/p>\n
2.7 No Obstruction.<\/p>\n
(a) No Party hereto shall obstruct the easements
\nor the rights, privileges and licenses granted or created pursuant to this
\nAgreement or render them impassable or unusable in any way or otherwise in any
\nway interfere with the right to the Use and enjoyment of the easements or
\nrights, privileges and licenses granted or created pursuant to this Agreement.<\/p>\n
(b) No Party hereto shall make any changes to
\nthe topography or accesses on or to its respective property, including grading
\nor drainage that could reasonably be expected to adversely affect another
\nParty’s facilities, common use drainage systems, or pollution control systems,
\nor the exercise of any right or fulfillment of any obligation in this Agreement
\nor in the Connection Agreement, without the prior written consent of the other
\nParty which consent shall not unreasonably be withheld, delayed or conditioned.<\/p>\n
114<\/p>\n
3. TAXES, ASSESSMENTS AND OTHER CHARGES<\/p>\n
3.1 Real Estate Taxes. Generator, with respect to the
\nGenerator’s Real Property and Pepco, with respect to the Pepco Real Property,
\nshall pay and discharge all of the following (“Real Estate Taxes”) whether or
\nnot now within the contemplation of the Parties hereto: (i) all real estate
\ntaxes, assessments (both general and special), other governmental impositions
\nand charges, taxes, rents, levies and sums of every kind or nature whatsoever,
\nextraordinary as well as ordinary, as shall at any time be imposed by any
\ngovernmental or public authority on, or become a lien in respect of, the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be, or any
\npart thereof, or which may become due and payable with respect thereto, and any
\nand all taxes assessments and charges levied, assessed or imposed upon the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be, in
\nlieu of or in addition to, the foregoing, under or by virtue of any present or
\nfuture laws, rules, requirements, orders, directives, ordinances or regulations
\nof the United States of America or of the State or of any subdivision thereof,
\nor of any lawful governmental authority whatsoever, and any interest or
\npenalties thereon, and (ii) all other taxes (excluding gains, sales and income
\ntaxes but including occupancy taxes which are measured by income) measured by
\nownership of the Generator’s Real Property or the Pepco Real Property, as the
\ncase may be. Generator shall pay and discharge all levies and assessments for
\nwater, water meter (including any expenses incident to the installation, repair
\nor replacement of any water meter) and sewer and all rents with respect to water
\nand sewer which provide service to the Generator’s Real Property.<\/p>\n
3.2 Personal Property Taxes. Generator and Pepco shall,
\nrespectively, pay and discharge all of the following (“Personal Property Taxes”)
\nwhether or not now within the contemplation of the Parties hereto: all taxes and
\nassessments which shall or may be charged, levied, assessed or imposed upon, or
\nbecome a lien upon, the personal property of Generator or Pepco, as the case may
\nbe, Used in the operation or in connection with the business conducted at the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be.<\/p>\n
3.3 Timing of Payment. Subject to the provisions of
\nSection 3.5, Generator and Pepco shall each comply with its covenant to pay and
\ndischarge all Real Estate Taxes and Personal Property Taxes by paying all such
\ntaxes directly to the appropriate taxing authorities prior to the expiration of
\nthe period within which payment is permitted without penalty or interest.
\nGenerator and Pepco shall within twenty (20) days of written request of the
\nother Party, produce the most recent official receipts from the appropriate
\ntaxing authorities evidencing such payment certified by Generator or Pepco, as
\nthe case may be, to the other Party hereto.<\/p>\n
3.4 Cooperation with respect to Tax Statements. Generator
\nand Pepco will cooperate with each other in obtaining and\/or retaining any tax
\nabatement for which the Generator’s Real Property or Pepco Real Property may be
\neligible. Upon written request of the Party seeking an abatement, the other
\nParty or Parties hereto will<\/p>\n
115<\/p>\n
execute and file any and all documents and instruments reasonably necessary to
\nobtain and retain such abatement, without the assumption of any liabilities or
\nobligations, provided that the Party seeking such abatement shall reimburse the
\ncooperating Party or Parties for any reasonable expenses that such cooperating
\nParty or Parties may incur in connection therewith.<\/p>\n
3.5 Tax Contests. Generator, with respect to the
\nGenerator’s Real Property, and Pepco, with respect to the Pepco Real Property:<\/p>\n
(a) May contest in good faith by appropriate
\nproceedings diligently and continuously conducted, at its or their sole cost and
\nexpense, any Real Estate Tax or charge or Personal Property Tax or charge, or
\nsimilar tax or charge and, where permitted by law, pay the same under protest.<\/p>\n
(b) Shall pay and discharge such contested items
\nas finally adjudicated or settled, with interest and penalties, and all other
\ncharges directed to be paid in or by any such adjudication or settlement.<\/p>\n
(c) May, in its or their sole discretion,
\nconsolidate any proceeding to obtain a reduction in the assessed valuation with
\nany similar proceeding or proceedings brought by it or them relating to any one
\nor more other tax years.<\/p>\n
(d) Shall indemnify and hold the non-contesting
\nParty harmless from and against all liability, loss, cost or expense arising out
\nof the contest.<\/p>\n
3.6 Refunds. Any refunds from any contest undertaken
\npursuant to Section 3.5 shall belong wholly to the Party or Parties that paid
\nthe tax.<\/p>\n
4. MECHANICS’ LIENS<\/p>\n
4.1 Notice Regarding Labor and Material. Notice is hereby
\ngiven that no Party hereto shall be liable for any labor or materials furnished
\nor to be furnished to or for another Party hereto or to any other persons or
\nentities claiming under such other Party on credit, and that no mechanics’ or
\nother lien for any such labor or material furnished to a Party or such other
\npersons or entities shall attach to or affect any property interest of any other
\nParty.<\/p>\n
4.2 Disposition of Liens.<\/p>\n
(a) Pepco shall forthwith take such action
\nnecessary to discharge, remove or satisfy any lien filed against the Generator’s
\nReal Property or any portion thereof for any labor or materials furnished or to
\nbe furnished for or on behalf of Pepco, or any person or entity holding any
\nportion thereof through or under Pepco.<\/p>\n
116<\/p>\n
(b) Generator shall forthwith take such action
\nnecessary to discharge, remove or satisfy any lien filed against the Pepco Real
\nProperty or any portion thereof for any labor or materials furnished or to be
\nfurnished for or on behalf of Generator, or any person or entity holding any
\nportion thereof through or under Generator.<\/p>\n
(c) If either Pepco or Generator, as the case
\nmay be, shall fail to discharge, remove or satisfy any such lien which it is
\nobligated to discharge, remove or satisfy hereunder within ten (10) days after
\nnotice of the existence of the lien has been given to such defaulting Party, the
\nnon-defaulting Party or parties may pay the amount of such lien or discharge the
\nsame by deposit or bonding, and the amount so paid or deposited, or the premium
\npaid for such bond, with interest at the rate provided for defaults in Section
\n6.3 hereof, shall be paid by the defaulting Party upon demand to the
\nnon-defaulting Party who effected such cure.<\/p>\n
(d) The defaulting Party shall defend, indemnify
\nand save harmless the non-defaulting Party from and against all liability, loss,
\ncost or expense (including reasonable attorneys’ fees) arising out of any liens
\nwhich the defaulting Party is obligated to discharge, remove or satisfy.<\/p>\n
5. CONDEMNATION<\/p>\n
5.1 Right to Participate. In the event the Generator’s
\nReal Property or the Pepco Real Property, or any part thereof, shall be taken in
\ncondemnation proceedings or by exercise of any right of eminent domain or any
\nagreement with those authorized to exercise such right (any such matter being
\nhereinafter referred to as a “Taking” or property “Taken”), whether such Taking
\nbe a permanent taking or a temporary Taking, any person or entity having an
\ninterest in the award or awards shall have the right to participate in any such
\ncondemnation proceedings or agreement for the purpose of protecting its interest
\nhereunder. Each Party so participating shall pay its own expenses.<\/p>\n
5.2 Total Taking. A “Total Taking” shall be deemed to
\nhave occurred as to the property of any Party (which means the Generator’s Real
\nProperty, as to Generator, and the Pepco Real Property, as to Pepco) when the
\nentire property of such Party shall be Taken or a substantial part of such
\nproperty shall be Taken and the untaken portion of the property would, following
\nthe completion of restoration, be unsuitable for the operation and the Use
\nthereof in the manner so operated and Used prior to the Taking. Upon a Total
\nTaking, this Agreement shall terminate with respect to the property Taken except
\nwith respect to the disposition of the award and this Agreement shall continue
\nwith respect to the property not Taken.<\/p>\n
5.3 Disposition of Award. In the event of a Taking, each
\nParty shall be entitled to share in the awards to the extent of its interest in
\nthe property subject to the<\/p>\n
117<\/p>\n
Taking, and for consequential damages to and dilution of value of the relevant
\nproperty not so Taken.<\/p>\n
5.4 Notice of Taking. In the event the Generator’s Real
\nProperty or the Pepco Real Property, or any part thereof, shall be the subject
\nof any condemnation proceedings or the subject of any eminent domain
\nproceedings, and if any Party shall receive actual notice of such proceedings,
\nthe Party receiving such notice shall notify the other Party of the existence of
\nsuch proceedings. Such notification shall occur within thirty (30) days of the
\nreceipt of such actual notice.<\/p>\n
6. DEFAULTS<\/p>\n
6.1 Events of Default. Each and every one of the
\nfollowing events shall constitute an Event of Default (“Event of Default’) under
\nthis Agreement:<\/p>\n
(a) If a Party fails to make any payment due
\nwithin twenty (20) days of written demand for such payment;<\/p>\n
(b) If a Party fails, within twenty (20) days of
\nwritten notice from a Party, to make any payment due from such Party to any
\nthird party and such failure could result in the imposition of a lien or other
\nencumbrance on the property or improvements of a Party, unless the payment of
\nsuch amount is contested in accordance with Section 3.5 hereof, in which case,
\nthe provisions of Section 3.5 shall control; and<\/p>\n
(c) If a Party fails to perform any material
\nnon-monetary obligations hereunder, and said Party fails to cure such default
\nwithin thirty (30) days of receipt of written notice stating with particularity
\nthe nature of the default; provided, however, if such default is of such a
\nnature that it cannot be cured within thirty (30) days following receipt of such
\nnotice, an Event of Default shall not have occurred if the defaulting Party
\nshall within such thirty (30) days commence the necessary cure and shall at all
\ntimes thereafter diligently and continuously prosecute such cure to completion.<\/p>\n
6.2 Right of Self Help. A non-defaulting Party may at its
\nelection following the occurrence of a non-monetary Event of Default and the
\nthirtieth (30th) day after the receipt of the written notice specified in
\nparagraph 6.1(c) hereof, undertake the cure of such default on behalf of the
\ndefaulting Party. A non-defaulting Party is granted an easement to enter upon,
\nthrough or under the property or improvements of the defaulting Party to effect
\nsuch cure. Following the occurrence of an Event of Default involving the payment
\nof money to a person or entity not Party to this Agreement, a non-defaulting
\nParty may make such payment on behalf of the defaulting Party. All monies paid
\nby the non-defaulting Party and all reasonable costs and expenses (including,
\nreasonable attorneys’ fees) incurred by it, as the case may be, in effecting
\nsuch cure or payment, shall be paid by the defaulting Party upon written demand,
\ntogether with interest from the date of such<\/p>\n
118<\/p>\n
demand at the rate set forth in Section 6.3. This Section 6.2 shall not limit
\nPepco’s self-help rights pursuant to Section 2.3(b).<\/p>\n
6.3 Interest. Following the occurrence of an Event of
\nDefault involving the nonpayment of money by the defaulting Party to the
\nnon-defaulting Party, all monies owed to the non-defaulting party shall bear
\ninterest at the rate equal to one and one-half percent (1.5%) per month accruing
\non the due date, provided, however, that such late payment charge shall not
\nexceed the maximum charge which may be collected under State law.<\/p>\n
6.4 Enforcement Rights. In addition to any other rights
\nexpressly set forth in this Agreement, but without limitation, enforcement of
\nthis Agreement may be had by legal or equitable proceedings against any
\ndefaulting Party either to specifically enforce, restrain or enjoin the
\nviolation of any restriction, covenant, agreement, term, representation or
\nwarranty herein contained or to recover damages. The above notwithstanding,
\ntermination of this Agreement shall not be available as a remedy in any
\nproceedings against any defaulting Party.<\/p>\n
6.5 No Forfeiture. Except by enforcement of a judgment
\nlien against such property, nothing contained in this Agreement shall create any
\nreversion, condition or right of re-entry or other provisions for forfeiture
\nunder which any Party can be cut off, subordinated or otherwise disturbed in the
\npossession of its property.<\/p>\n
6.6 Independent Covenants. None of the rights and
\neasement granted by this Agreement and none of the performances required by this
\nAgreement shall be dependent, upon the performance of any other term, promise,
\nor condition of this Agreement or any documents executed concurrently or in
\nconnection with this Agreement, and such rights, easement and requirements or
\nperformance shall continue in effect irrespective of whether anything else in
\nthis Agreement or such other documents has been breached or has been terminated.
\nThe separateness and independent survival of the right, easements and
\nrequirements of performance under this Agreement are essential terms hereof
\nwithout which this Agreement would not have been made.<\/p>\n
7. INDEMNIFICATION AND INSURANCE<\/p>\n
7.1 Generator’s Indemnification. Generator shall
\nindemnify, hold harmless, and defend Pepco and its Affiliates, as the case may
\nbe, and their respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between Pepco and a third party or
\nGenerator) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Pepco’s employees or any third parties, to the
\nextent caused, by the breach of this Agreement by Generator or the negligence or
\nwillful misconduct of<\/p>\n
119<\/p>\n
Generator’s and\/or its officers, directors, employees, agents, contractors,
\nsubcontractors or invitees arising out of or connected with Generator’s
\nperformance of this Agreement, or the exercise by Generator of its rights
\nhereunder.<\/p>\n
7.2 Pepco’s Indemnification. Pepco shall indemnify, hold
\nharmless, and defend Generator and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Generator and a third party or Pepco) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Generator’s employees or any third parties, to the extent
\ncaused by the breach of this Agreement by Pepco or the negligence or willful
\nmisconduct of Pepco and\/or its officers, directors, employees, agents,
\ncontractors, subcontractors or invitees arising out of or connected with Pepco’s
\nperformance of this Agreement, or the exercise by Pepco of its rights hereunder.<\/p>\n
7.3 Survival. The provisions of Sections 7.1 and 7.2
\nshall survive termination, cancellation, suspension, completion or expiration of
\nthis Agreement.<\/p>\n
7.4 Insurance Coverage. The Parties shall maintain at
\ntheir own cost the following insurance: (a) standard Commercial General
\nLiability insurance with limitations not less than One Hundred Million Dollars
\n($100,000,000.00)in the aggregate; (b) All-Risk Property insurance in amounts
\nnot less than one hundred percent (100%) of the full replacement cost of the
\nimprovements located upon each Party’s real property; (c) Worker’s compensation
\ninsurance as required by prevailing law and Employer’s liability insurance with
\nlimits of not less than Twenty-five Million Dollars ($25,000,000.00); and (d)
\nsuch other insurance as is customary in the electric utility industry.<\/p>\n
7.5 Certificate of Insurance. The Parties agree to
\nfurnish each other with certificates of insurance evidencing the insurance
\ncoverage obtained in accordance with this Article 7, and the Parties agree to
\nnotify and send copies to the other of any policies maintained hereunder upon
\nwritten request by a Party. Each Party must notify the other Party within five
\n(5) business days of receiving notice of cancellation, change, amendment or
\nrenewal of any insurance policy required pursuant to Section 7.4 above.<\/p>\n
7.6 Additional Insureds and Waiver. Each Party and its
\naffiliates shall be named as additional insureds on the general liability
\ninsurance policies obtained in accordance with Section 7.4, above, as regards
\nliability under this Agreement; and each general liability insurance policy
\nshall contain a waiver of subrogation and each Party shall waive its rights of
\nrecovery against the other for any loss or damage covered by such policy.<\/p>\n
8. MISCELLANEOUS<\/p>\n
120<\/p>\n
8.1 Effective Date. This Agreement will be effective on
\nthe Closing Date pursuant to the Asset Sale Agreement (the “Effective Date”).<\/p>\n
8.2 Exhibits. All exhibits attached to this Agreement are
\npart of this Agreement and the material contained in such exhibits shall be
\nconstrued and interpreted as if contained within the text of the Agreement.<\/p>\n
8.3 Headings. The Article and Section headings of this
\nAgreement are for convenience and reference only and in no way define, limit or
\ndescribe the scope and intent of this Agreement, nor in any way affect this
\nAgreement.<\/p>\n
8.4 Interpretation. When a reference is made in this
\nAgreement to an Article, Section, Schedule or Exhibit, such reference shall be
\nto an Article or Section of, or Schedule or Exhibit to, this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in this
\nAgreement shall refer to this Agreement as a whole and not to any particular
\nprovision of this Agreement. The definitions contained in this Agreement are
\napplicable to the singular as well as the plural forms of such terms and to the
\nmasculine as well as to the feminine and neuter genders of such term. Any
\nagreement, instrument, statute, regulation, rule or order defined or referred to
\nherein or in any agreement or instrument that is referred to herein means such
\nagreement, instrument, statute, regulation, rule or order as from time to time
\namended, modified or supplemented, including (in the case of agreements or
\ninstruments) by waiver or consent and (in the case of statutes, regulations,
\nrules or orders) by succession of comparable successor statutes, regulations,
\nrules or orders and references to all attachments thereto and instruments
\nincorporated therein. References to a person are also to its permitted
\nsuccessors and assigns. Each Party acknowledges that it has been represented by
\ncounsel in connection with the review and execution of this Agreement and,
\naccordingly, there shall be no presumption that this Agreement or any provision
\nhereof be construed against the Party that drafted this Agreement.<\/p>\n
8.5 GOVERNING LAW. EXCEPT WITH RESPECT TO THE CREATION,
\nPERFECTION AND ENFORCEMENT OF THE REAL PROPERTY INTERESTS CREATED HEREUNDER,
\nWHICH SHALL BE GOVERNED AND CONSTRUED BY THE LAWS OF THE STATE, THIS AGREEMENT
\nSHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE DISTRICT
\nOF COLUMBIA EXCLUSIVE OF ITS CHOICE OF LAW RULES.<\/p>\n
8.6 Entire Agreement. This Agreement, the Asset Sale
\nAgreement, the Confidentiality Agreement (as defined in the Asset Sale
\nAgreement) and the Ancillary<\/p>\n
121<\/p>\n
Agreements (as defined in the Asset Sale Agreement) including the Exhibits,
\nSchedules, documents, certificates and instruments referred to herein or therein
\nand other contracts, agreements and instruments contemplated hereby or thereby,
\nembody the entire agreement and understanding of the Parties in respect of the
\ntransactions contemplated by this Agreement. There are no restrictions,
\npromises, representations, warranties, covenants or undertakings other than
\nthose expressly set forth or referred to herein or therein..<\/p>\n
8.7 Amendment and Modification, Extension, Waiver. This
\nAgreement may be amended, modified or supplemented only by an instrument in
\nwriting signed on behalf of each of the Parties. Either Party may (i) extend the
\ntime for the performance of any of the obligations or other acts of the other
\nParty, (ii) waive any inaccuracies in the representations and warranties of the
\nother Party contained in this Agreement or (iii) waive compliance by the other
\nParty with any of the agreements or conditions contained in this Agreement. Any
\nagreement on the part of a Party to any such extension or waiver shall be valid
\nonly if set forth in an instrument in writing signed on behalf of such Party.
\nThe failure of a Party to this Agreement to assert any of its rights under this
\nAgreement or otherwise shall not constitute a waiver of such rights.<\/p>\n
8.8 Binding Effect. The covenants, conditions,
\nrestrictions, encumbrances, easements, license and agreements set forth in this
\nAgreement shall attach to, burden, and run with the land and the Generator’s
\nReal Property and the Pepco Real Property or the applicable portion or portions
\nthereof, and shall be appurtenant to the Generator’s Property or the Pepco Real
\nProperty, as appropriate and, together with the remainder of this Agreement,
\nshall be binding upon the Parties hereto and their respective successors,
\nassigns, grantees, transferees and tenants and, together with the remainder of
\nthis Agreement, shall inure to the benefit and Use of the Parties hereto and
\ntheir respective heirs, successors, assigns, grantees, transferees and tenants.
\nEach Grantee of any portion of or interest in the property and each mortgagee
\nwhich succeeds to the fee simple ownership of any portion of the property shall
\nbe deemed, by the acceptance of the deed conveying fee simple title to such
\nperson, to have agreed to perform each and every undertaking created hereunder
\nattributable to the portion of the property in which such Grantee or mortgagee
\nhas acquired an interest.<\/p>\n
8.9 Counterparts. This Agreement may be executed in two
\nor more counterparts, each of which shall be deemed an original, but all of
\nwhich together shall constitute one and the same instrument.<\/p>\n
8.10 Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nParties shall negotiate in good faith to modify this Agreement so as to effect
\nthe original intent of the Parties as closely as possible to the<\/p>\n
122<\/p>\n
fullest extent permitted by applicable law in an acceptable manner to the end
\nthat the transactions contemplated hereby are fulfilled to the extent possible.<\/p>\n
8.11 Notices. All notices and other communications
\nhereunder shall be in writing and shall be deemed given (as of the time of
\ndelivery or, in the case of a telecopied communication, of confirmation) if
\ndelivered personally, telecopied (which is confirmed) or sent by overnight
\ncourier (providing proof of delivery) to the Parties at the following addresses
\n(or at such other address for a Party as shall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopy No.: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Generator, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, N.W.
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
123<\/p>\n
The names, titles and addresses of either Party in this section may be changed
\nby written notification to the other Party.<\/p>\n
8.12 Independent Contractor Status. Nothing in this
\nAgreement shall be construed as creating any relationship between Pepco and
\nGenerator other than that of independent contractors.<\/p>\n
8.13 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this Agreement to
\nbe signed by their respective duly authorized officers as of the date first
\nabove written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ————————————–
\n Name:
\n ————————————-
\n Title:
\n ————————————<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ————————————–
\n Name:
\n ————————————-
\n Title:
\n ————————————<\/p>\n
124
\nSTATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State, personally
\nappeared _________________________, an ________________________, by
\n_____________________, its ________ who _________ is personally known to me\/
\n_______ and who acknowledged before me that he did sign the foregoing instrument
\nand that the same is the free act and deed of said ______________, and his free
\nact and deed personally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
—————————————-
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State, personally
\nappeared ________________________, an ___________________, by ________________
\nits _____________________ who _______ is personally known to me\/ ________ and
\nwho acknowledged before me that he did sign the foregoing instrument and that
\nthe same is the free act and deed of said corporation, and his free act and deed
\npersonally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
—————————————-
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
125<\/p>\n
Schedule 1.1<\/p>\n
Definitions<\/p>\n
“Access” means, subject to the conditions set forth in this Agreement
\nand a Party’s right to impose reasonable security and safety restrictions
\nprotecting its officers, employees, agents, consultants, contractors,
\nsubcontractors, invitees, property and confidential information, full and
\nunimpeded access, in common with Grantor over and through existing roads, paths,
\nwalkways, corridors, hallways, doorways, and other means of entry or exit, as
\nexist now and from time to time on Grantor’s property or, where no means of
\naccess exists, over and through those areas of Grantor’s property or
\nimprovements which are (i) reasonably necessary or convenient for achieving
\nGrantee’s underlying purposes, and (ii) least likely, out of the alternatives
\nreasonably available, to impede or damage the property or operation of any Party
\nhereto. Access shall also include access and right-of-way for Grantee’s
\nemployees, agents, consultants, contractors, subcontractors, vehicles, trucks,
\ntrailers, heavy machinery, equipment, materials, and all other items reasonably
\nnecessary or convenient for achieving Grantee’s underlying purposes.<\/p>\n
“Affiliate” has the meaning set forth in Rule 12b-2 of the General
\nRules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
“Agreement” means this Easement, License and Attachment Agreement.<\/p>\n
“Asset Sale Agreement” has the meaning set forth in the first recital
\nof this Agreement, as such Asset Sale Agreement may be amended or modified.<\/p>\n
“Connection Agreement” means the Interconnection Agreement (Dickerson),
\ndated as of __________, 2000, between Pepco and Generator.<\/p>\n
“Distribution of Electric Current” means local transmission and
\ndistribution of electricity to Pepco’s end users.<\/p>\n
“Distribution Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto, now
\nor hereafter installed or located on the Generator’s Real Property for
\nDistribution of Electric Current. Distribution Facilities do not include
\nTransmission Facilities.<\/p>\n
“Effective Date” has the meaning set forth in Section 8.l.<\/p>\n
“FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
126
\n “Generating Facilities” means the Station and any additional generating
\nplants, turbines or other generating facilities constructed by Generator after
\nthe Effective Date at the site of the Station.<\/p>\n
“Generator” shall have the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
“Generator’s Real Property” means the real property described in
\nExhibit A, and any improvements or betterments thereto now or hereinafter
\nsituated thereon<\/p>\n
“Good Utility Practice” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Grantee” means the Party or Parties who enjoy the principal benefit of
\nthe referenced easement, license, right (including attachment rights) privilege
\nor right-of-way.<\/p>\n
“Grantor” means the owner or owners of the property and\/or improvement
\ngranting the referenced easement, license, right (including attachment rights),
\nprivilege or right-of-way.<\/p>\n
“Interconnection Service” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Party” or “Parties” shall have the meaning set forth in the
\nintroductory paragraph of this Agreement.<\/p>\n
“Pepco” shall have the meaning set forth in the introductory paragraph
\nof this Agreement and shall include its permitted successors and assigns.<\/p>\n
“Pepco Real Property” means the real property described in Exhibit B,
\nand any improvements or betterments thereto nor or hereinafter situated thereon.<\/p>\n
“Qualified Personnel” means individuals who possess any required
\nlicenses and trained for their positions and duties by Generator and\/or Pepco
\npursuant to Good Utility Practice.<\/p>\n
“State” means the State of Maryland.<\/p>\n
“Station” means the Dickerson Station as defined in the Asset Sale
\nAgreement.<\/p>\n
“Transmission of Electric Current” means the transmission of such
\ncurrent typically over long distances and at voltages not commonly used for
\nservice to end use customers.<\/p>\n
“Transmission Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto, now
\nor hereafter installed or located on the Generator’s Real Property and\/or which
\nPepco may reasonably require now and from time to time on the<\/p>\n
127
\nGenerator’s Real Property for the Transmission of Electric Current. Transmission
\nFacilities do not include Distribution Facilities.<\/p>\n
“Transmission System” shall have the meaning set forth in the
\nConnection Agreement.<\/p>\n
“Use” means to operate, maintain, repair, upgrade, clean, install, add
\nto, alter, remove, inspect, construct, modify, restore, rebuild, replace,
\nrelocate and expand (but if any such addition, relocation or expansion would
\nunreasonably or materially burden Grantor’s Property, in each case, the express,
\nprior written consent of Grantor shall be required, which consent shall not
\nunreasonably be withheld, delayed or conditioned) (all of the foregoing to be in
\naccordance with Good Utility Practice).<\/p>\n
128<\/p>\n
LIST OF EXHIBITS<\/p>\n
Exhibit A Generator’s Real Property
\nExhibit B Pepco Real Property
\nExhibit C 125 Foot Utility Easement
\nExhibit D Easement for Connection of 230kV Circuit<\/p>\n
129<\/p>\n
EXHIBIT C-3<\/p>\n
AFTER RECORDING PARCEL ID#
\nPLEASE RETURN TO: STREET ADDRESS:
\n____________________ ____________________
\n____________________ ____________________
\n____________________ ____________________<\/p>\n
EASEMENT, LICENSE AND ATTACHMENT AGREEMENT
\n (Chalk Point Station)<\/p>\n
THIS EASEMENT, LICENSE AND ATTACHMENT AGREEMENT (the “Agreement”), is
\ndated as of ______________, 2000, and is entered into by and between
\n________________________________, a corporation organized and existing under the
\nlaws of the State of __________ and having an office at
\n__________________________________ (“Generator”) and POTOMAC ELECTRIC POWER
\nCOMPANY, a District of Columbia and Virginia corporation and having an office at
\n1900 Pennsylvania Avenue, N.W., Washington, DC 20068 (“Pepco”). Generator and
\nPepco may hereinafter be referred to individually as a “Party” and collectively
\nas the “Parties.”<\/p>\n
RECITALS<\/p>\n
A. Generator and Pepco have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (the “Asset Sale Agreement”),
\ndated June 7, 2000, for the sale of Pepco’s generating station known as the
\nChalk Point Station (as defined in the Asset Sale Agreement), which is located
\non that certain parcel of real property which has been conveyed by Pepco to
\nGenerator pursuant to the Asset Sale Agreement by virtue of a deed recorded
\nimmediately prior hereto and is more particularly described in Exhibit “A”
\nattached hereto (the “Generator’s Real Property”).<\/p>\n
B. Pepco intends to continue to operate its transmission and
\ndistribution business on and from that certain parcel of real property adjoining
\nthe Generator’s Real Property, which parcel has been retained by Pepco following
\nthe conveyances contemplated by the Asset Sale Agreement, and is more
\nparticularly described in Exhibit “B” attached hereto (the “Pepco Real
\nProperty”).<\/p>\n
C. Pepco will continue to own and operate certain assets used in
\nthe conduct of its transmission and distribution business which are located upon
\nthe Generator’s Real Property, and Pepco requires Access (as defined below) to,
\nand certain other rights with respect to, the Generator’s Real Property in
\nconnection therewith. Generator, in the operation and conduct of its generation
\nbusiness, will require Access to, and certain other rights with respect to, the
\nPepco Real Property. Furthermore, Pepco and Generator have entered into an
\nInterconnection Agreement (the “Connection Agreement”), dated as of __________,
\n2000, pursuant to which Pepco has agreed to provide certain Interconnection
\nService to Generator required for Generator’s conduct of its generation business
\nat Chalk Point Station.<\/p>\n
130
\n D. In order for the Parties each to (i) enjoy the full benefit of
\ntheir respective property rights, real or personal, and conduct their respective
\nbusinesses thereat (ii) fulfill legal requirements, and (iii) comply with their
\nrespective agreements under the Connection Agreement, each Party requires
\ncertain easements, licenses, rights-of-way and\/or attachment rights in, on, over
\nand above, or with respect to, real and or personal property of the other Party.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, the Parties, in consideration of the mutual covenants
\nand agreements contained herein and in the Asset Sale Agreement and the
\nConnection Agreement, and for One Dollar ($1.00) and other good and valuable
\nconsideration, the receipt whereof and sufficiency of which are hereby
\nacknowledged, each intending to be legally bound and to bind their respective
\nsuccessors and assigns, hereby mutually agree as follows:<\/p>\n
1. DEFINITIONS<\/p>\n
1.1 Definitions. Any capitalized terms which are used but
\nnot defined in the body of this Agreement shall have the meanings given to such
\nterms in the attached Schedule 1.1.<\/p>\n
2. EASEMENTS<\/p>\n
2.1 Grant of Easements to Pepco. Generator does hereby
\ngive, grant, bargain, sell, assign and convey unto Pepco, the following
\neasements on the Generator’s Real Property for the following purposes:<\/p>\n
(a) An above ground and underground easement, as
\nmore particularly described in Exhibit “C” attached hereto, for the
\ninstallation, operation, repair and maintenance of electrical connections and
\nother facilities between the existing switchyard on Pepco Real Property and the
\nexisting combustion turbine-generator area on Generator’s Real Property.<\/p>\n
(b) An easement as more particularly described
\nin Exhibit “D” attached hereto, for two (2) 69kV overhead transmission lines
\nfrom Pepco’s switchyard area on Pepco Real Property to an existing Southern
\nMaryland Electrical Cooperative switchyard on Generator’s Real Property and the
\noperation, repair and maintenance of said transmission lines.<\/p>\n
(c) An easement for the Use, operation and
\nmaintenance of the Retained Assets (as described in the Asset Sale Agreement)
\nlocated upon the Generator’s Real Property and any other equipment of any nature
\nor kind retained by Pepco and located upon the Generator’s Real Property,
\ntogether with any other equipment used in<\/p>\n
131<\/p>\n
connection with the foregoing (together with replacements thereof and
\nsubstitutions therefor).<\/p>\n
(d) An easement which enables Pepco to keep and
\nmaintain in their present locations, and operate, any Transmission Facilities,
\nDistribution Facilities and other assets owned by Pepco and located upon the
\nGenerator’s Real Property, together with an easement for all purposes reasonably
\ndeemed necessary or convenient by Pepco to exercise any right or fulfill any
\nobligation under the Connection Agreement, including the right to Use any
\nimprovements constructed, maintained or installed in connection therewith.<\/p>\n
(e) An easement of Access to those certain
\ngenerating buildings (and any replacements thereof) located upon the Generator’s
\nReal Property in and upon which certain of Pepco’s Distribution Facilities and
\nTransmission Facilities are located. Such easement shall include, without
\nlimitation, the right to have keys, access codes or other access methods
\nnecessary to enter any of such generating buildings. Furthermore, the exercise
\nof the easement right set forth in this subparagraph shall be subject to the
\nprovisions of the Connection Agreement including, without limitation, Section
\n3.3 thereof.<\/p>\n
(f) An easement of Access to the Generator’s
\nReal Property for the purposes of exercising any of the rights granted in this
\nSection 2.l, in Section 2.3(b)(viii) hereof, in the Connection Agreement or the
\nAsset Sale Agreement.<\/p>\n
(g) An easement of Access to, and the right to
\nuse, the parking lots, access roads, driveways and other such facilities located
\nupon the Generator’s Real Property.<\/p>\n
(h) Pepco’s exercise of the rights, easements,
\nprivileges and licenses granted to it pursuant to this Section 2.1 shall be
\nlimited to Qualified Personnel or employees of contractors employed by Pepco
\nwho, in either event, are under Pepco’s and\/or its contractors’ direct
\nsupervision and whose duties include, or who are engaged for the purpose of, Use
\nof the rights granted pursuant to this Section 2.1.<\/p>\n
(i) The easements granted pursuant to this
\nSection 2.1 shall expressly include Pepco’s right to lease, license or otherwise
\npermit Affiliates or third parties to use Pepco’s facilities upon such terms and
\nfor such purposes as Pepco may determine from time to time, subject to the terms
\nand conditions of this Agreement.<\/p>\n
2.2 Reservation by Generator of Certain Rights. Generator
\nreserves to itself, from the easements granted pursuant to Section 2.1 hereof,
\nthe following rights, subject, however, to the provisions of the final paragraph
\nof this Section 2.2:<\/p>\n
(a) the right to (i) keep and maintain
\nGenerator’s Real Property and all improvements and facilities owned by Generator
\nand located upon the Generator’s Real Property in their present locations, and
\n(ii) operate and maintain all <\/p>\n
132
\nimprovements and facilities owned by Generator and located upon the Generator’s
\nReal Property in a manner consistent with past practice; and<\/p>\n
(b) the right to have Access to all portions of
\nthe Generator’s Real Property for all purposes deemed reasonably necessary or
\nconvenient by Generator in the operation and conduct of its generation business
\nor in order to perform any act permitted, or fulfill any obligation of
\nGenerator, under the Connection Agreement, including maintenance of the
\nGenerator’s Real Property in the manner described in the Connection Agreement.<\/p>\n
(c) Generator’s exercise of the rights reserved
\nto Generator in this Section 2.2, and the rights, privileges and licenses
\ngranted to Generator in Section 2.3 shall be exclusively limited to Qualified
\nPersonnel or employees of contractors employed by Generator who, in either
\nevent, are under Generator’s and\/or its contractors’ direct supervision and
\nwhose duties include, or who are engaged for the purpose of, Use of the property
\ndescribed in clause (a) of this Section.<\/p>\n
2.3 Grant of Easements, Right, Privilege and License from
\nPepco to Generator.<\/p>\n
(a) Pepco does hereby grant to Generator the
\nfollowing easements, rights, privileges and licenses on and with respect to the
\nPepco Real Property:<\/p>\n
(i) An easement, as described on
\nExhibit “E” attached hereto, for the operation and maintenance of an existing
\noil pipeline (to be used solely for the transmission of oil) on, under and
\nacross Pepco Real Property at two (2) locations.<\/p>\n
(ii) An easement, as described on
\nExhibit “F” attached hereto, for the operation and maintenance of an existing
\noil pipeline (to be used solely for the transmission of oil) on, under and
\nacross the Retained Assets.<\/p>\n
(iii) An easement which enables Generator
\nto keep and maintain in their present locations, and operate, any Generating
\nFacilities and other assets owned by Generator and located upon the Pepco Real
\nProperty.<\/p>\n
(iv) An easement of Access to and upon
\nthe Pepco Real Property for the purposes of exercising any of the rights granted
\nin the Connection Agreement or the Asset Sale Agreement.<\/p>\n
(b) In addition, but without limitation of
\nGenerator’s rights pursuant to the Connection Agreement, Pepco agrees to make
\navailable to Generator (at no cost to Generator, except as provided below)
\nPepco’s master station voltage control equipment (the “Equipment”) located at
\nChalk Point Station upon the Generator’s Real Property during the term of this
\nAgreement, subject to the following terms and conditions, and Generator agrees
\nto comply with such terms and conditions:<\/p>\n
133<\/p>\n
(i) Generator’s operation of the
\nEquipment shall at all times be subject to that certain Agreement of Sale and
\nLease dated as of November 30, 1994 between NationsBank Trust Company, National
\nAssociation and Pepco (the “Control Center Lease”), and Generator shall comply
\nwith the terms and conditions thereof with respect to the use of the Equipment
\n(including keeping the Equipment free and clear of any liens, claims or
\nencumbrances of whatever nature, and identifying the Equipment as being owned by
\nPepco, and shall not modify, alter, remove or add to the Equipment);<\/p>\n
(ii) Generator shall operate and
\nmaintain the Equipment in accordance with Good Utility Practice;<\/p>\n
(iii) Generator shall be responsible for
\nall operating, repair and maintenance costs, taxes and the like with respect to
\nthe Equipment, and shall reimburse Pepco promptly upon invoicing for any such
\ncosts paid by Pepco;<\/p>\n
(iv) Generator’s Access to the Equipment
\nshall be in accordance with this Agreement;<\/p>\n
(v) Generator’s right to operate the
\nEquipment shall terminate in the event of actual or constructive loss of the
\nEquipment, damage rendering the Equipment beyond repair or unfit for normal use,
\nthe condemnation or seizure of the Equipment, the obsolescence of the Equipment
\nor the material breach by Generator of any of its covenants in this Section
\n2.3(b);<\/p>\n
(vi) Pepco shall have no obligation to
\nGenerator with respect to the Equipment other than to permit Access to and
\noperation of the Equipment in accordance with this Section 2.3(b);<\/p>\n
(vii) The obligations of Generator under
\nSection 7.4 (maintenance of liability insurance coverage) and Section 7.1
\n(indemnification) shall be applicable to the Equipment; and<\/p>\n
(viii) Pepco shall have Access to the
\nEquipment for purposes of complying with the terms and conditions of the Control
\nCenter Lease and as necessary to perform any of the obligations of Generator
\npursuant to this subparagraph (b) above to the extent the same are not timely
\nperformed by Generator.<\/p>\n
134<\/p>\n
2.4 General Scope of Easements.<\/p>\n
(a) Except as otherwise provided in Sections 2.2 and 2.3
\nabove and Section 2.4(b) below, each easement and each right, privilege and
\nlicense granted hereby is and shall be a perpetual grant, transfer, conveyance
\nand right of Access to and Use (subject to the terms of this Agreement) to the
\nGrantee thereof and to any future owner of the real property, improvements and
\nfacilities benefited thereby. Notwithstanding the foregoing, all easements,
\nrights, privileges and licenses granted by this Agreement are and shall be
\nsubject to the terms and conditions of the Connection Agreement, and in the
\nevent of any inconsistency between the terms and conditions of the Connection
\nAgreement and the terms of this Agreement, the terms of the Connection Agreement
\nshall control.<\/p>\n
(b) Any easement or right, privilege and license granted
\nhereunder for purposes of enabling a Party to exercise any right or fulfill any
\nobligation set forth in the Connection Agreement will continue for the term of
\nthe Connection Agreement, and thereafter if and to the extent that the right or
\nobligation (i) shall by its express terms survive the termination or expiration
\nof the Connection Agreement or (ii) is necessary for the conduct of business by
\nGrantee. In the event of the termination or expiration of an easement or right,
\nprivilege and license granted hereunder for purposes of enabling a Grantee to
\nexercise any right or fulfill any obligation set forth in the Connection
\nAgreement, all equipment and facilities installed or maintained by such Grantee
\non the real property of the other Party pursuant to said terminated or expired
\neasement or right, privilege and license shall, at the request of the other
\nParty, be removed at the sole cost and expense of such Grantee, and such Grantee
\nshall, at its sole cost and expense repair any damage to the real property
\nand\/or equipment and facilities of the other Party damaged as a result of such
\nremoval.<\/p>\n
(c) All equipment and facilities installed or maintained
\nby Grantee pursuant to an easement or right, privilege and license granted
\nhereunder shall be maintained by Grantee in accordance with Good Utility
\nPractice and the Connection Agreement, and Grantee shall make all repairs and
\nreplacements necessary to keep such equipment and facilities in such condition.<\/p>\n
(d) Generator may not Use any portion of Generator’s Real
\nProperty burdened by any easement, right or privilege granted to Pepco hereunder
\nif such Use would materially adversely affect the Use and enjoyment by Pepco of
\nthe rights granted to it hereunder, or materially increase the costs or risks
\nassociated with such Use.<\/p>\n
(e) All easements granted herein shall be deemed
\neasements appurtenant to the parcel of real property benefited thereby and shall
\nrun with such real property and shall be deemed covenants running with the real
\nproperty burdened thereby.<\/p>\n
2.5 Interpretation. The following shall apply in interpreting any
\neasement and any right, privilege and license granted pursuant to this
\nAgreement:<\/p>\n
135<\/p>\n
(a) Each easement and each right, privilege and license
\ngranted herein is irrevocable except by written agreement of the parties.<\/p>\n
(b) With respect to any easement created by this
\nAgreement, the words “in,” “upon,” “to,” “on,” “over,” “above,” “through” and\/or
\n“under” shall be interpreted to include all of such terms.<\/p>\n
(c) Each easement and each right, privilege
\nand license granted herein may be enjoyed without charge or fee to
\nGrantee of the easement.<\/p>\n
(d) Each easement and each right, privilege and license
\ngranted herein is also a grant of the additional right of Access over Grantor’s
\nproperty to accomplish the purpose of such easement or right, privilege and
\nlicense, to perform any obligations hereunder or in the Connection Agreement,
\nand to comply with any legal requirements affecting Grantee or its property
\nand\/or improvements.<\/p>\n
(e) Exercise of any easement or any right, privilege and
\nlicense granted hereunder permitting or requiring maintenance, repairs,
\nalteration, restoration, rebuilding, construction, upgrading, cleaning,
\ninstallation, removal, modification, replacement, expansion, or other work by
\nGrantee upon the property or improvements of Grantor shall be subject to the
\nfollowing conditions:<\/p>\n
(i) Work upon the facilities and properties of
\n either Party subject to this Agreement shall be
\n permitted only to each Party’s Qualified Personnel,
\n and Access to such facilities and properties shall be
\n permitted only to a Party’s Qualified Personnel and
\n such consultants, agents, contractors, subcontractors
\n and invitees as any Party may select or permit;
\n provided that any consultant, agent, contractor,
\n subcontractor or invitee shall comply with all
\n applicable provisions of this Agreement and the
\n Connection Agreement.<\/p>\n
(ii) Work shall be performed using reasonable
\n precautions to avoid unreasonable interference with
\n the Use and enjoyment of Grantor’s property and
\n improvements.<\/p>\n
(iii) Except only as may be specifically provided
\n to the contrary herein, Grantee shall not be liable
\n for damage, if any, which may be caused by Grantee’s
\n normal and reasonable Use of any easement, or right,
\n privilege or license granted hereunder.<\/p>\n
(iv) Following completion of the work, Grantee
\n shall restore Grantor’s property and improvements to
\n the same or as good a<\/p>\n
136<\/p>\n
condition as existed before the commencement of the
\n work.<\/p>\n
(v) Any easement and any right, privilege and
\n license granted herein which permits a Grantee to
\n maintain its property, equipment, facilities and
\n appurtenances on the property and improvements owned
\n by Grantor also includes the right to maintain in
\n place on Grantor’s property and improvements any and
\n all wires and cables connecting such property,
\n equipment, facilities, and appurtenances to (i) the
\n devices, machinery and equipment which they measure,
\n regulate and\/or control, and (ii) power sources.<\/p>\n
(vi) Generator shall be solely responsible for
\n the maintenance of any roads, paths and other means
\n of entry or exit located upon either the Gemerator’s
\n Real Property or the Pepco Real Property that are
\n commonly utilized by Generator and Pepco, and their
\n respective employees, agents and contractors pursuant
\n to this Agreement or the Connection Agreement.<\/p>\n
(f) Any easement granted pursuant to Section 2.1(a), (b),
\n(c) or (d) includes the right to (i) trim, cut, treat and\/or remove, by manual,
\nmechanical, and chemical means, any and all trees, brush, structures and other
\nobstructions within the easement area, as well as such trees, brush, structures
\nand vegetation outside of the easement area deemed reasonably necessary or
\ndesirable by Pepco for the safe and secure operation of its facilities; and (ii)
\nobtain Access to Generator’s Real Property for the purpose of performing the
\naforementioned acts.<\/p>\n
2.6 Rules and Regulations.<\/p>\n
Each Party may promulgate rules regulating the conduct of the other
\nParty in the exercise of rights under this Agreement provided such rules and
\nregulations do not unreasonably interfere with or impede the affected Party’s
\nrights and easements as set forth herein or in the Connection Agreement.<\/p>\n
2.7 No Obstruction.<\/p>\n
(a) No Party hereto shall obstruct the easements
\nor the rights, privileges and licenses granted or created pursuant to this
\nAgreement or render them impassable or unusable in any way or otherwise in any
\nway interfere with the right to the Use and enjoyment of the easements or
\nrights, privileges and licenses granted or created pursuant to this Agreement.<\/p>\n
(b) No Party hereto shall make any changes to
\nthe topography or accesses on or to its respective property, including grading
\nor drainage that could reasonably be expected to adversely affect another
\nParty’s facilities, common use drainage<\/p>\n
137<\/p>\n
systems, or pollution control systems, or the exercise of any right or
\nfulfillment of any obligation in this Agreement or in the Connection Agreement,
\nwithout the prior written consent of the other Party which consent shall not
\nunreasonably be withheld, delayed or conditioned.<\/p>\n
3. TAXES, ASSESSMENTS AND OTHER CHARGES<\/p>\n
3.1 Real Estate Taxes. Generator, with respect to the
\nGenerator’s Real Property and Pepco, with respect to the Pepco Real Property,
\nshall pay and discharge all of the following (“Real Estate Taxes”) whether or
\nnot now within the contemplation of the Parties hereto: (i) all real estate
\ntaxes, assessments (both general and special), other governmental impositions
\nand charges, taxes, rents, levies and sums of every kind or nature whatsoever,
\nextraordinary as well as ordinary, as shall at any time be imposed by any
\ngovernmental or public authority on, or become a lien in respect of, the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be, or any
\npart thereof, or which may become due and payable with respect thereto, and any
\nand all taxes assessments and charges levied, assessed or imposed upon the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be, in
\nlieu of or in addition to, the foregoing, under or by virtue of any present or
\nfuture laws, rules, requirements, orders, directives, ordinances or regulations
\nof the United States of America or of the State or of any subdivision thereof,
\nor of any lawful governmental authority whatsoever, and any interest or
\npenalties thereon, and (ii) all other taxes (excluding gains, sales and income
\ntaxes but including occupancy taxes which are measured by income) measured by
\nownership of the Generator’s Real Property or the Pepco Real Property, as the
\ncase may be. Generator shall pay and discharge all levies and assessments for
\nwater, water meter (including any expenses incident to the installation, repair
\nor replacement of any water meter) and sewer and all rents with respect to water
\nand sewer which provide service to the Generator’s Real Property.<\/p>\n
3.2 Personal Property Taxes. Generator and Pepco shall,
\nrespectively, pay and discharge all of the following (“Personal Property Taxes”)
\nwhether or not now within the contemplation of the Parties hereto: all taxes and
\nassessments which shall or may be charged, levied, assessed or imposed upon, or
\nbecome a lien upon, the personal property of Generator or Pepco, as the case may
\nbe, Used in the operation or in connection with the business conducted at the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be.<\/p>\n
3.3 Timing of Payment. Subject to the provisions of
\nSection 3.5, Generator and Pepco shall each comply with its covenant to pay and
\ndischarge all Real Estate Taxes and Personal Property Taxes by paying all such
\ntaxes directly to the appropriate taxing authorities prior to the expiration of
\nthe period within which payment is permitted without penalty or interest.
\nGenerator and Pepco shall within twenty (20) days of written request of the
\nother Party, produce the most recent official receipts from the appropriate
\ntaxing authorities evidencing such payment certified by Generator or Pepco, as
\nthe case may be, to the other Party hereto.<\/p>\n
138<\/p>\n
3.4 Cooperation with Respect to Tax Statements. Generator
\nand Pepco will cooperate with each other in obtaining and\/or retaining any tax
\nabatement for which the Generator’s Real Property or Pepco Real Property may be
\neligible. Upon written request of the Party seeking an abatement, the other
\nParty or Parties hereto will execute and file any and all documents and
\ninstruments reasonably necessary to obtain and retain such abatement, without
\nthe assumption of any liabilities or obligations, provided that the Party
\nseeking such abatement shall reimburse the cooperating Party or Parties for any
\nreasonable expenses that such cooperating Party or Parties may incur in
\nconnection therewith.<\/p>\n
3.5 Tax Contests. Generator, with respect to the
\nGenerator’s Real Property, and Pepco, with respect to the Pepco Real Property:<\/p>\n
(a) May contest in good faith by appropriate
\nproceedings diligently and continuously conducted, at its or their sole cost and
\nexpense, any Real Estate Tax or charge or Personal Property Tax or charge, or
\nsimilar tax or charge and, where permitted by law, pay the same under protest.<\/p>\n
(b) Shall pay and discharge such contested items
\nas finally adjudicated or settled, with interest and penalties, and all other
\ncharges directed to be paid in or by any such adjudication or settlement.<\/p>\n
(c) May, in its or their sole discretion,
\nconsolidate any proceeding to obtain a reduction in the assessed valuation with
\nany similar proceeding or proceedings brought by it or them relating to any one
\nor more other tax years.<\/p>\n
(d) Shall indemnify and hold the non-contesting
\nParty harmless from and against all liability, loss, cost or expense arising out
\nof the contest.<\/p>\n
3.6 Refunds. Any refunds from any contest undertaken
\npursuant to Section 3.5 shall belong wholly to the Party or Parties that paid
\nthe tax.<\/p>\n
4. MECHANICS’ LIENS<\/p>\n
4.1 Notice Regarding Labor and Material. Notice is hereby
\ngiven that no Party hereto shall be liable for any labor or materials furnished
\nor to be furnished to or for another Party hereto or to any other persons or
\nentities claiming under such other Party on credit, and that no mechanics’ or
\nother lien for any such labor or material furnished to a Party or such other
\npersons or entities shall attach to or affect any property interest of any other
\nParty.<\/p>\n
4.2 Disposition of Liens.<\/p>\n
(a) Pepco shall forthwith take such action
\nnecessary to discharge, remove or satisfy any lien filed against the Generator’s
\nReal Property or any<\/p>\n
139<\/p>\n
portion thereof for any labor or materials furnished or to be furnished for or
\non behalf of Pepco, or any person or entity holding any portion thereof through
\nor under Pepco.<\/p>\n
(b) Generator shall forthwith take such action
\nnecessary to discharge, remove or satisfy any lien filed against the Pepco Real
\nProperty or any portion thereof for any labor or materials furnished or to be
\nfurnished for or on behalf of Generator, or any person or entity holding any
\nportion thereof through or under Generator.<\/p>\n
(c) If either Pepco or Generator, as the case
\nmay be, shall fail to discharge, remove or satisfy any such lien which it is
\nobligated to discharge, remove or satisfy hereunder within ten (10) days after
\nnotice of the existence of the lien has been given to such defaulting Party, the
\nnon-defaulting Party or parties may pay the amount of such lien or discharge the
\nsame by deposit or bonding, and the amount so paid or deposited, or the premium
\npaid for such bond, with interest at the rate provided for defaults in Section
\n6.3 hereof, shall be paid by the defaulting Party upon demand to the
\nnon-defaulting Party who effected such cure.<\/p>\n
(d) The defaulting Party shall defend, indemnify
\nand save harmless the non-defaulting Party from and against all liability, loss,
\ncost or expense (including reasonable attorneys’ fees) arising out of any liens
\nwhich the defaulting Party is obligated to discharge, remove or satisfy.<\/p>\n
5. CONDEMNATION<\/p>\n
5.1 Right to Participate. In the event the Generator’s
\nReal Property or the Pepco Real Property, or any part thereof, shall be taken in
\ncondemnation proceedings or by exercise of any right of eminent domain or any
\nagreement with those authorized to exercise such right (any such matter being
\nhereinafter referred to as a “Taking” or property “Taken”), whether such Taking
\nbe a permanent taking or a temporary Taking, any person or entity having an
\ninterest in the award or awards shall have the right to participate in any such
\ncondemnation proceedings or agreement for the purpose of protecting its interest
\nhereunder. Each Party so participating shall pay its own expenses.<\/p>\n
5.2 Total Taking. A “Total Taking” shall be deemed to
\nhave occurred as to the property of any Party (which means the Generator’s Real
\nProperty, as to Generator, and the Pepco Real Property, as to Pepco) when the
\nentire property of such Party shall be Taken or a substantial part of such
\nproperty shall be Taken and the untaken portion of the property would, following
\nthe completion of restoration, be unsuitable for the operation and the Use
\nthereof in the manner so operated and Used prior to the Taking. Upon a Total
\nTaking, this Agreement shall terminate with respect to the property Taken except
\nwith respect to the disposition of the award and this Agreement shall continue
\nwith respect to the property not Taken.<\/p>\n
140<\/p>\n
5.3 Disposition of Award. In the event of a Taking, each
\nParty shall be entitled to share in the awards to the extent of its interest in
\nthe property subject to the Taking, and for consequential damages to and
\ndilution of value of the relevant property not so Taken.<\/p>\n
5.4 Notice of Taking. In the event the Generator’s Real
\nProperty or the Pepco Real Property, or any part thereof, shall be the subject
\nof any condemnation proceedings or the subject of any eminent domain
\nproceedings, and if any Party shall receive actual notice of such proceedings,
\nthe Party receiving such notice shall notify the other Party of the existence of
\nsuch proceedings. Such notification shall occur within thirty (30) days of the
\nreceipt of such actual notice.<\/p>\n
6. DEFAULTS<\/p>\n
6.1 Events of Default. Each and every one of the
\nfollowing events shall constitute an Event of Default (“Event of Default”) under
\nthis Agreement:<\/p>\n
(a) If a Party fails to make any payment due to
\na party hereto within twenty (20) days of written demand for such payment;<\/p>\n
(b) If a Party fails, within twenty (20) days of
\nwritten notice from a Party, to make any payment due from such Party to any
\nthird party and such failure could result in the imposition of a lien or other
\nencumbrance on the property or improvements of a Party, unless the payment of
\nsuch amount is contested in accordance with Section 3.5 hereof, in which case,
\nthe provisions of Section 3.5 shall control; and<\/p>\n
(c) If a Party fails to perform any material
\nnon-monetary obligations hereunder, and said Party fails to cure such default
\nwithin thirty (30) days of receipt of written notice stating with particularity
\nthe nature of the default; provided, however, if such default is of such a
\nnature that it cannot be cured within thirty (30) days following receipt of such
\nnotice, an Event of Default shall not have occurred if the defaulting Party
\nshall within such thirty (30) days commence the necessary cure and shall at all
\ntimes thereafter diligently and continuously prosecute such cure to completion.<\/p>\n
6.2 Right of Self Help. A non-defaulting Party may at its
\nelection following the occurrence of a non-monetary Event of Default and the
\nthirtieth (30th) day after the receipt of the written notice specified in
\nparagraph 6.1(c) hereof, undertake the cure of such default on behalf of the
\ndefaulting Party. A non-defaulting Party is granted an easement to enter upon,
\nthrough or under the property or improvements of the defaulting Party to effect
\nsuch cure. Following the occurrence of an Event of Default involving the payment
\nof money to a person or entity not Party to this Agreement, a non-defaulting
\nParty may make such payment on behalf of the defaulting Party. All monies paid
\nby the non-defaulting Party and all reasonable costs and expenses (including,
\nreasonable attorneys’ fees) incurred by it, as the case may be, in effecting
\nsuch cure or payment, shall be paid by<\/p>\n
141<\/p>\n
the defaulting Party upon written demand, together with interest from the date
\nof such demand at the rate set forth in Section 6.3. This Section 6.2 shall not
\nlimit Pepco’s self-help rights pursuant to Section 2.3(b).<\/p>\n
6.3 Interest. Following the occurrence of an Event of
\nDefault involving the nonpayment of money by the defaulting Party to the
\nnon-defaulting Party, all monies owed to the non-defaulting party shall bear
\ninterest at the rate equal to one and one-half percent (1.5%) per month accruing
\non the due date, provided, however, that such late payment charge shall not
\nexceed the maximum charge which may be collected under State law.<\/p>\n
6.4 Enforcement Rights. In addition to any other rights
\nexpressly set forth in this Agreement, but without limitation, enforcement of
\nthis Agreement may be had by legal or equitable proceedings against any
\ndefaulting Party either to specifically enforce, restrain or enjoin the
\nviolation of any restriction, covenant, agreement, term, representation or
\nwarranty herein contained or to recover damages. The above notwithstanding,
\ntermination of this Agreement shall not be available as a remedy in any
\nproceedings against any defaulting Party.<\/p>\n
6.5 No Forfeiture. Except by enforcement of a judgment
\nlien against such property, nothing contained in this Agreement shall create any
\nreversion, condition or right of re-entry or other provisions for forfeiture
\nunder which any Party can be cut off, subordinated or otherwise disturbed in the
\npossession of its property.<\/p>\n
6.6 Independent Covenants. None of the rights and
\neasement granted by this Agreement and none of the performances required by this
\nAgreement shall be dependent, upon the performance of any other term, promise,
\nor condition of this Agreement or any documents executed concurrently or in
\nconnection with this Agreement, and such rights, easement and requirements or
\nperformance shall continue in effect irrespective of whether anything else in
\nthis Agreement or such other documents has been breached or has been terminated.
\nThe separateness and independent survival of the right, easements and
\nrequirements of performance under this Agreement are essential terms hereof
\nwithout which this Agreement would not have been made.<\/p>\n
7. INDEMNIFICATION AND INSURANCE<\/p>\n
7.1 Generator’s Indemnification. Generator shall
\nindemnify, hold harmless, and defend Pepco and its Affiliates, as the case may
\nbe, and their respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between Pepco and a third party or
\nGenerator) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Pepco’s employees or any third parties, to the
\nextent caused,<\/p>\n
142<\/p>\n
by the breach of this Agreement by Generator or the negligence or willful
\nmisconduct of Generator and\/or its officers, directors, employees, agents,
\ncontractors, subcontractors or invitees arising out of or connected with
\nGenerator’s performance of this Agreement, or the exercise by Generator of its
\nrights hereunder.<\/p>\n
7.2 Pepco’s Indemnification. Pepco shall indemnify, hold
\nharmless, and defend Generator and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Generator and a third party or Pepco) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Generator’s employees or any third parties, to the extent
\ncaused by the breach of this Agreement by Pepco or the negligence or willful
\nmisconduct of Pepco and\/or its officers, directors, employees, agents,
\ncontractors, subcontractors or invitees arising out of or connected with Pepco’s
\nperformance of this Agreement, or the exercise by Pepco of its rights hereunder.<\/p>\n
7.3 Survival. The provisions of Sections 7.1 and 7.2
\nshall survive termination, cancellation, suspension, completion or expiration of
\nthis Agreement.<\/p>\n
7.4 Insurance Coverage. The Parties shall maintain at
\ntheir own cost the following insurance: (a) standard Commercial General
\nLiability insurance with limitations not less than One Hundred Million Dollars
\n($100,000,000.00)in the aggregate; (b) All-Risk Property insurance in amounts
\nnot less than one hundred percent (100%) of the full replacement cost of the
\nimprovements located upon each Party’s real property; (c) Worker’s compensation
\ninsurance as required by prevailing law and Employer’s liability insurance with
\nlimits of not less than Twenty-five Million Dollars ($25,000,000.00); and (d)
\nsuch other insurance as is customary in the electric utility industry.<\/p>\n
7.5 Certificate of Insurance. The Parties agree to
\nfurnish each other with certificates of insurance evidencing the insurance
\ncoverage obtained in accordance with this Article 7, and the Parties agree to
\nnotify and send copies to the other of any policies maintained hereunder upon
\nwritten request by a Party. Each Party must notify the other Party within five
\n(5) business days of receiving notice of cancellation, change, amendment or
\nrenewal of any insurance policy required pursuant to Section 7.4 above.<\/p>\n
7.6 Additional Insureds and Waiver. Each Party and its
\naffiliates shall be named as additional insureds on the general liability
\ninsurance policies obtained in accordance with Section 7.4, above, as regards
\nliability under this Agreement; and each general liability insurance policy
\nshall contain a waiver of subrogation and each Party shall waive its rights of
\nrecovery against the other for any loss or damage covered by such policy.<\/p>\n
143<\/p>\n
8. MISCELLANEOUS<\/p>\n
8.1 Effective Date. This Agreement will be effective on
\nthe Closing Date pursuant to the Asset Sale Agreement (the “Effective Date”).<\/p>\n
8.2 Exhibits. All exhibits attached to this Agreement are
\npart of this Agreement and the material contained in such exhibits shall be
\nconstrued and interpreted as if contained within the text of the Agreement.<\/p>\n
8.3 Headings. The Article and Section headings of this
\nAgreement are for convenience and reference only and in no way define, limit or
\ndescribe the scope and intent of this Agreement, nor in any way affect this
\nAgreement.<\/p>\n
8.4 Interpretation. When a reference is made in this
\nAgreement to an Article, Section, Schedule or Exhibit, such reference shall be
\nto an Article or Section of, or Schedule or Exhibit to, this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in this
\nAgreement shall refer to this Agreement as a whole and not to any particular
\nprovision of this Agreement. The definitions contained in this Agreement are
\napplicable to the singular as well as the plural forms of such terms and to the
\nmasculine as well as to the feminine and neuter genders of such term. Any
\nagreement, instrument, statute, regulation, rule or order defined or referred to
\nherein or in any agreement or instrument that is referred to herein means such
\nagreement, instrument, statute, regulation, rule or order as from time to time
\namended, modified or supplemented, including (in the case of agreements or
\ninstruments) by waiver or consent and (in the case of statutes, regulations,
\nrules or orders) by succession of comparable successor statutes, regulations,
\nrules or orders and references to all attachments thereto and instruments
\nincorporated therein. References to a person are also to its permitted
\nsuccessors and assigns. Each Party acknowledges that it has been represented by
\ncounsel in connection with the review and execution of this Agreement and,
\naccordingly, there shall be no presumption that this Agreement or any provision
\nhereof be construed against the Party that drafted this Agreement.<\/p>\n
8.5 GOVERNING LAW. EXCEPT WITH RESPECT TO THE CREATION,
\nPERFECTION AND ENFORCEMENT OF THE REAL PROPERTY INTERESTS CREATED HEREUNDER,
\nWHICH SHALL BE GOVERNED AND CONSTRUED BY THE LAWS OF THE STATE, THIS AGREEMENT
\nSHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE DISTRICT
\nOF COLUMBIA EXCLUSIVE OF ITS CHOICE OF LAW RULES.<\/p>\n
144<\/p>\n
8.6 Entire Agreement. This Agreement, the Asset Sale
\nAgreement, the Confidentiality Agreement (as defined in the Asset Sale
\nAgreement) and the Ancillary Agreements (as defined in the Asset Sale Agreement)
\nincluding the Exhibits, Schedules, documents, certificates and instruments
\nreferred to herein or therein and other contracts, agreements and instruments
\ncontemplated hereby or thereby, embody the entire agreement and understanding of
\nthe Parties in respect of the transactions contemplated by this Agreement. There
\nare no restrictions, promises, representations, warranties, covenants or
\nundertakings other than those expressly set forth or referred to herein or
\ntherein.<\/p>\n
8.7 Amendment and Modification, Extension, Waiver. This
\nAgreement may be amended, modified or supplemented only by an instrument in
\nwriting signed on behalf of each of the Parties. Either Party may (i) extend the
\ntime for the performance of any of the obligations or other acts of the other
\nParty, (ii) waive any inaccuracies in the representations and warranties of the
\nother Party contained in this Agreement or (iii) waive compliance by the other
\nParty with any of the agreements or conditions contained in this Agreement. Any
\nagreement on the part of a Party to any such extension or waiver shall be valid
\nonly if set forth in an instrument in writing signed on behalf of such Party.
\nThe failure of a Party to this Agreement to assert any of its rights under this
\nAgreement or otherwise shall not constitute a waiver of such rights.<\/p>\n
8.8 Binding Effect. The covenants, conditions,
\nrestrictions, encumbrances, easements, license and agreements set forth in this
\nAgreement shall attach to, burden, and run with the land and the Generator’s
\nReal Property and the Pepco Real Property or the applicable portion or portions
\nthereof, and shall be appurtenant to the Generator’s Property or the Pepco Real
\nProperty, as appropriate and, together with the remainder of this Agreement,
\nshall be binding upon the Parties hereto and their respective successors,
\nassigns, grantees, transferees and tenants and, together with the remainder of
\nthis Agreement, shall inure to the benefit and Use of the Parties hereto and
\ntheir respective heirs, successors, assigns, grantees, transferees and tenants.
\nEach Grantee of any portion of or interest in the property and each mortgagee
\nwhich succeeds to the fee simple ownership of any portion of the property shall
\nbe deemed, by the acceptance of the deed conveying fee simple title to such
\nperson, to have agreed to perform each and every undertaking created hereunder
\nattributable to the portion of the property in which such Grantee or mortgagee
\nhas acquired an interest.<\/p>\n
8.9 Counterparts. This Agreement may be executed in two
\nor more counterparts, each of which shall be deemed an original, but all of
\nwhich together shall constitute one and the same instrument.<\/p>\n
8.10 Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nParties shall negotiate in good faith to modify this<\/p>\n
145<\/p>\n
Agreement so as to effect the original intent of the Parties as closely as
\npossible to the fullest extent permitted by applicable law in an acceptable
\nmanner to the end that the transactions contemplated hereby are fulfilled to the
\nextent possible.<\/p>\n
8.11 Notices. All notices and other communications
\nhereunder shall be in writing and shall be deemed given (as of the time of
\ndelivery or, in the case of a telecopied communication, of confirmation) if
\ndelivered personally, telecopied (which is confirmed) or sent by overnight
\ncourier (providing proof of delivery) to the Parties at the following addresses
\n(or at such other address for a Party as shall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopy No.: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Generator, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, N.W.
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
146<\/p>\n
The names, titles and addresses of either Party in this section may be changed
\nby written notification to the other Party.<\/p>\n
8.12 Independent Contractor Status. Nothing in this
\nAgreement shall be construed as creating any relationship between Pepco and
\nGenerator other than that of independent contractors.<\/p>\n
8.13 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this
\nAgreement to be signed by their respective duly authorized officers
\nas of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ——————————————-
\n Name:
\n ——————————————-
\n Title:
\n ——————————————-<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ——————————————-
\n Name:
\n ——————————————-
\n Title:
\n ——————————————-<\/p>\n
147<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State, personally
\nappeared __________________________, an ________________________, by
\n_____________________, its ________ who _________ is personally known to
\nme\/________ and who acknowledged before me that he did sign the foregoing
\ninstrument and that the same is the free act and deed of said ______________,
\nand his free act and deed personally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
——————————————–
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State, personally
\nappeared ___________________________, an ___________________, by
\n________________ its _____________________ who _______ is personally known to
\nme\/________ and who acknowledged before me that he did sign the foregoing
\ninstrument and that the same is the free act and deed of said corporation, and
\nhis free act and deed personally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
——————————————–
\n Notary Public<\/p>\n
My Commission Expires:
\n 148<\/p>\n
Schedule 1.1<\/p>\n
Definitions<\/p>\n
“Access” means, subject to the conditions set forth in this Agreement
\nand a Party’s right to impose reasonable security and safety restrictions
\nprotecting its officers, employees, agents, consultants, contractors,
\nsubcontractors, invitees, property and confidential information, full and
\nunimpeded access, in common with Grantor over and through existing roads, paths,
\nwalkways, corridors, hallways, doorways, and other means of entry or exit, as
\nexist now and from time to time on Grantor’s property or, where no means of
\naccess exists, over and through those areas of Grantor’s property or
\nimprovements which are (i) reasonably necessary or convenient for achieving
\nGrantee’s underlying purposes, and (ii) least likely, out of the alternatives
\nreasonably available, to impede or damage the property or operation of any Party
\nhereto. Access shall also include access and right-of-way for Grantee’s
\nemployees, agents, consultants, contractors, subcontractors, vehicles, trucks,
\ntrailers, heavy machinery, equipment, materials, and all other items reasonably
\nnecessary or convenient for achieving Grantee’s underlying purposes.<\/p>\n
“Affiliate” has the meaning set forth in Rule 12b-2 of the General
\nRules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
“Agreement” means this Easement, License and Attachment Agreement.<\/p>\n
“Asset Sale Agreement” has the meaning set forth in the first recital
\nof this Agreement, as such Asset Sale Agreement may be amended or modified.<\/p>\n
“Connection Agreement” means the Interconnection Agreement (Chalk
\nPoint), dated as of __________, 2000, between Pepco and Generator.<\/p>\n
“Distribution of Electric Current” means local
\ntransmission and distribution of electricity to Pepco’s end users.<\/p>\n
“Distribution Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto, now
\nor hereafter installed or located on the Generator’s Real Property for
\nDistribution of Electric Current. Distribution Facilities do not include
\nTransmission Facilities.<\/p>\n
“Effective Date” has the meaning set forth in Section 8.l.<\/p>\n
“FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
149<\/p>\n
“Generating Facilities” means the Station and any additional generating
\nplants, turbines or other generating facilities constructed by Generator after
\nthe Effective Date at the site of the Station.<\/p>\n
“Generator” shall have the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
“Generator’s Real Property” means the real property described in
\nExhibit A, and any improvements or betterments thereto now or hereinafter
\nsituated thereon.<\/p>\n
“Good Utility Practice” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Grantee” means the Party or Parties who enjoy the principal benefit of
\nthe referenced easement, license, right (including attachment rights) privilege
\nor right-of-way.<\/p>\n
“Grantor” means the owner or owners of the property and\/or improvement
\ngranting the referenced easement, license, right (including attachment rights),
\nprivilege or right-of-way.<\/p>\n
“Interconnection Service” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Party” or “Parties” shall have the meaning set forth in the
\nintroductory paragraph of this Agreement.<\/p>\n
“Pepco” shall have the meaning set forth in the introductory paragraph
\nof this Agreement and shall include its permitted successors and assigns.<\/p>\n
“Pepco Real Property” means the real property described in Exhibit B,
\nand any improvements or betterments thereto now or hereinafter situated thereon.<\/p>\n
“Qualified Personnel” means individuals who possess any required
\nlicenses and trained for their positions and duties by Generator and\/or Pepco
\npursuant to Good Utility Practice.<\/p>\n
“State” means the State of Maryland.<\/p>\n
“Station” means the Chalk Point Station as defined in the Asset Sale
\nAgreement.<\/p>\n
“Transmission of Electric Current” means the transmission of such
\ncurrent typically over long distances and at voltages not commonly used for
\nservice to end use customers.<\/p>\n
“Transmission Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto, now
\nor hereafter installed or located on the<\/p>\n
150<\/p>\n
Generator’s Real Property and\/or which Pepco may reasonably require now and from
\ntime to time on the Generator’s Real Property for the Transmission of Electric
\nCurrent. Transmission Facilities do not include Distribution Facilities.<\/p>\n
“Transmission System” shall have the meaning set forth in the
\nConnection Agreement.<\/p>\n
“Use” means to operate, maintain, repair, upgrade, clean, install, add
\nto, alter, remove, inspect, construct, modify, restore, rebuild, replace,
\nrelocate and expand (but if any such addition, relocation or expansion would
\nunreasonably or materially burden Grantor’s Property, in each case, the express,
\nprior written consent of Grantor shall be required, which consent shall not
\nunreasonably be withheld, delayed or conditioned) (all of the foregoing to be in
\naccordance with Good Utility Practice).
\n 151<\/p>\n
LIST OF EXHIBITS<\/p>\n
Exhibit A Generator’s Real Property
\nExhibit B Pepco Real Property
\nExhibit C Easement for Electrical Connections between Switchyard
\nand Combustion Turbine-Generator
\nExhibit D Easement for Oil Pipeline on Pepco Real Property
\nExhibit E Easement for Oil Pipeline on Retained Assets<\/p>\n
152<\/p>\n
EXHIBIT C-4<\/p>\n
AFTER RECORDING PARCEL ID#
\nPLEASE RETURN TO: STREET ADDRESS:<\/p>\n
———————————- ———————————-<\/p>\n
———————————- ———————————-<\/p>\n
———————————- ———————————-<\/p>\n
EASEMENT, LICENSE AND ATTACHMENT AGREEMENT
\n (Morgantown Station)<\/p>\n
THIS EASEMENT, LICENSE AND ATTACHMENT AGREEMENT (the “Agreement”), is
\ndated as of ______________, 2000, and is entered into by and between
\n______________________________, a corporation organized and existing under the
\nlaws of the State of __________ and having an office at
\n_____________________________________ (“Generator”) and POTOMAC ELECTRIC POWER
\nCOMPANY, a District of Columbia and Virginia corporation and having an office
\nat 1900 Pennsylvania Avenue, N.W., Washington, DC 20068 (“Pepco”). Generator
\nand Pepco may hereinafter be referred to individually as a “Party” and
\ncollectively as the “Parties.”<\/p>\n
RECITALS<\/p>\n
A. Generator and Pepco have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (the “Asset Sale Agreement”),
\ndated June 7, 2000, for the sale of Pepco’s generating station known as the
\nMorgantown Station (as defined in the Asset Sale Agreement), which is located
\non that certain parcel of real property which has been conveyed by Pepco to
\nGenerator pursuant to the Asset Sale Agreement by virtue of a deed recorded
\nimmediately prior hereto and is more particularly described in Exhibit “A”
\nattached hereto (the “Generator’s Real Property”).<\/p>\n
B. Pepco intends to continue to operate its transmission and
\ndistribution business on and from that certain parcel of real property
\nadjoining the Generator’s Real Property, which parcel has been retained by
\nPepco following the conveyances contemplated by the Asset Sale Agreement, and
\nis more particularly described in Exhibit “B” attached hereto (the “Pepco Real
\nProperty”).<\/p>\n
C. Pepco will continue to own and operate certain assets used in
\nthe conduct of its transmission and distribution business which are located
\nupon the Generator’s Real Property, and Pepco requires Access (as defined
\nbelow) to, and certain other rights with respect to, the Generator’s Real
\nProperty in connection therewith. Generator, in the operation and conduct of
\nits generation business, will require Access to, and certain other rights with
\nrespect to, the Pepco Real Property. Furthermore, Pepco and Generator have
\nentered into an Interconnection Agreement (the “Connection Agreement”), dated
\nas of __________, 2000, pursuant to which Pepco has agreed to provide certain
\nInterconnection Service to Generator required for Generator’s conduct of its
\ngeneration business at Morgantown Station.<\/p>\n
153<\/p>\n
D. In order for the Parties each to (i) enjoy the full benefit
\nof their respective property rights, real or personal, and conduct their
\nrespective businesses thereat (ii) fulfill legal requirements, and (iii) comply
\nwith their respective agreements under the Connection Agreement, each Party
\nrequires certain easements, licenses, rights-of-way and\/or attachment rights
\nin, on, over and above, or with respect to, real and or personal property of
\nthe other Party.<\/p>\n
AGREEMENT<\/p>\n
NOW, THEREFORE, the Parties, in consideration of the mutual covenants
\nand agreements contained herein and in the Asset Sale Agreement and the
\nConnection Agreement, and for One Dollar ($1.00) and other good and valuable
\nconsideration, the receipt whereof and sufficiency of which are hereby
\nacknowledged, each intending to be legally bound and to bind their respective
\nsuccessors and assigns, hereby mutually agree as follows:<\/p>\n
1. DEFINITIONS<\/p>\n
1.1 Definitions. Any capitalized terms which are used
\nbut not defined in the body of this Agreement shall have the meanings given to
\nsuch terms in the attached Schedule 1.1.<\/p>\n
2. EASEMENTS<\/p>\n
2.1 Grant of Easements to Pepco. Generator does hereby
\ngive, grant, bargain, sell, assign and convey unto Pepco, the following
\neasements on the Generator’s Real Property for the following purposes:<\/p>\n
(a) A ten (10) foot wide easement, as more
\nparticularly described in Exhibit “C” attached hereto, for the connection and
\nextension of overhead and underground utility facilities and other equipment
\nand facilities utilized in connection with the transmission and distribution
\nbusiness of Pepco (as now or hereafter conducted) and other functions as Pepco
\nmay determine from time to time.<\/p>\n
(b) An easement for the Use, operation and
\nmaintenance of the Retained Assets (as described in the Asset Sale Agreement)
\nlocated upon the Generator’s Real Property and any other equipment of any
\nnature or kind retained by Pepco and located upon the Generator’s Real
\nProperty, together with any other equipment used in connection with the
\nforegoing (together with replacements thereof and substitutions therefor).<\/p>\n
(c) An easement which enables Pepco to keep and
\nmaintain in their present locations, and operate, any Transmission Facilities,
\nDistribution Facilities and other assets owned by Pepco and located upon the
\nGenerator’s Real Property, together with an easement for all purposes
\nreasonably deemed necessary or convenient by Pepco to<\/p>\n
154<\/p>\n
exercise any right or fulfill any obligation under the Connection Agreement,
\nincluding the right to Use any improvements constructed, maintained or
\ninstalled in connection therewith.<\/p>\n
(d) An easement of Access to those certain
\ngenerating buildings (and any replacements thereof) located upon the
\nGenerator’s Real Property in and upon which certain of Pepco’s Distribution
\nFacilities and Transmission Facilities are located. Such easement shall
\ninclude, without limitation, the right to have keys, access codes or other
\naccess methods necessary to enter any of such generating buildings.
\nFurthermore, the exercise of the easement right set forth in this subparagraph
\nshall be subject to the provisions of the Connection Agreement including,
\nwithout limitation, Section 3.3 thereof.<\/p>\n
(e) An easement of Access to the Generator’s
\nReal Property for the purposes of exercising any of the rights granted in this
\nSection 2.l, in Section 2.3(b)(viii) hereof, in the Connection Agreement or the
\nAsset Sale Agreement.<\/p>\n
(f) An easement of Access to, and the right to
\nuse, the parking lots, access roads, driveways and other such facilities
\nlocated upon the Generator’s Real Property.<\/p>\n
(g) Pepco’s exercise of the rights, easements,
\nprivileges and licenses granted to it pursuant to this Section 2.1 shall be
\nlimited to Qualified Personnel or employees of contractors employed by Pepco
\nwho, in either event, are under Pepco’s and\/or its contractors’ direct
\nsupervision and whose duties include, or who are engaged for the purpose of,
\nUse of the rights granted pursuant to this Section 2.1.<\/p>\n
(h) The easements granted pursuant to this
\nSection 2.1 shall expressly include Pepco’s right to lease, license or
\notherwise permit Affiliates or third parties to use Pepco’s facilities upon
\nsuch terms and for such purposes as Pepco may determine from time to time,
\nsubject to the terms and conditions of this Agreement.<\/p>\n
2.2 Reservation by Generator of Certain Rights.
\nGenerator reserves to itself, from the easements granted pursuant to Section
\n2.1 hereof, the following rights, subject, however, to the provisions of the
\nfinal paragraph of this Section 2.2:<\/p>\n
(a) the right to (i) keep and maintain
\nGenerator’s Real Property and all improvements and facilities owned by
\nGenerator and located upon the Generator’s Real Property in their present
\nlocations, and (ii) operate and maintain all improvements and facilities owned
\nby Generator and located upon the Generator’s Real Property in a manner
\nconsistent with past practice; and<\/p>\n
(b) the right to have Access to all portions of
\nthe Generator’s Real Property for all purposes deemed reasonably necessary or
\nconvenient by Generator in the operation and conduct of its generation business
\nor in order to perform any act permitted, or fulfill any obligation of
\nGenerator, under the Connection Agreement,<\/p>\n
155<\/p>\n
including maintenance of the Generator’s Real Property in the manner described
\nin the Connection Agreement.<\/p>\n
(c) Generator’s exercise of the rights reserved
\nto Generator in this Section 2.2, and the rights, privileges and licenses
\ngranted to Generator in Section 2.3 shall be exclusively limited to Qualified
\nPersonnel or employees of contractors employed by Generator who, in either
\nevent, are under Generator’s and\/or its contractors’ direct supervision and
\nwhose duties include, or who are engaged for the purpose of, Use of the
\nproperty described in clause (a) of this Section.<\/p>\n
2.3 Grant of Easements, Right, Privilege and License
\nfrom Pepco to Generator.<\/p>\n
(a) Pepco does hereby grant to Generator the
\nfollowing easements, rights, privileges and licenses on and with respect to the
\nPepco Real Property:<\/p>\n
(i) An easement, as described on
\nExhibit “D” attached hereto, for the operation and maintenance of an existing
\noil pipeline (to be used solely for the transmission of oil) on, under and
\nacross Pepco Real Property at two (2) locations.<\/p>\n
(ii) An easement, as described on
\nExhibit “E” attached hereto, for the operation and maintenance of an existing
\noil pipeline (to be used solely for the transmission of oil) on, under and
\nacross the Retained Assets.<\/p>\n
(iii) An easement which enables
\nGenerator to keep and maintain in their present locations, and operate, any
\nGenerating Facilities and other assets owned by Generator and located upon the
\nPepco Real Property.<\/p>\n
(iv) An easement of Access to and upon
\nthe Pepco Real Property for the purposes of exercising any of the rights
\ngranted in the Connection Agreement or the Asset Sale Agreement.<\/p>\n
(b) In addition, but without limitation of
\nGenerator’s rights pursuant to the Connection Agreement, Pepco agrees to make
\navailable to Generator (at no cost to Generator, except as provided below)
\nPepco’s master station voltage control equipment (the “Equipment”) located at
\nMorgantown Station upon the Generator’s Real Property during the term of this
\nAgreement, subject to the following terms and conditions, and Generator agrees
\nto comply with such terms and conditions:<\/p>\n
(i) Generator’s operation of the
\nEquipment shall at all times be subject to that certain Agreement of Sale and
\nLease dated as of November 30, 1994 between NationsBank Trust Company, National
\nAssociation and Pepco (the “Control Center Lease”), and Generator shall comply
\nwith the terms and conditions<\/p>\n
156<\/p>\n
thereof with respect to the use of the Equipment (including keeping the
\nEquipment free and clear of any liens, claims or encumbrances of whatever
\nnature, and identifying the Equipment as being owned by Pepco, and shall not
\nmodify, alter, remove or add to the Equipment);<\/p>\n
(ii) Generator shall operate and
\nmaintain the Equipment in accordance with Good Utility Practice;<\/p>\n
(iii) Generator shall be responsible for
\nall operating, repair and maintenance costs, taxes and the like with respect to
\nthe Equipment, and shall reimburse Pepco promptly upon invoicing for any such
\ncosts paid by Pepco;<\/p>\n
(iv) Generator’s Access to the
\nEquipment shall be in accordance with this Agreement;<\/p>\n
(v) Generator’s right to operate the
\nEquipment shall terminate in the event of actual or constructive loss of the
\nEquipment, damage rendering the Equipment beyond repair or unfit for normal
\nuse, the condemnation or seizure of the Equipment, the obsolescence of the
\nEquipment or the material breach by Generator of any of its covenants in this
\nSection 2.3(b);<\/p>\n
(vi) Pepco shall have no obligation to
\nGenerator with respect to the Equipment other than to permit Access to and
\noperation of the Equipment in accordance with this Section 2.3(b);<\/p>\n
(vii) The obligations of Generator under
\nSection 7.4 (maintenance of liability insurance coverage) and Section 7.1
\n(indemnification) shall be applicable to the Equipment; and<\/p>\n
(viii) Pepco shall have Access to the
\nEquipment for purposes of complying with the terms and conditions of the
\nControl Center Lease and as necessary to perform any of the obligations of
\nGenerator pursuant to this subparagraph (b) above to the extent the same are
\nnot timely performed by Generator.<\/p>\n
2.4 General Scope of Easements.<\/p>\n
(a) Except as otherwise provided in Sections
\n2.2 and 2.3 above and Section 2.4(b) below, each easement and each right,
\nprivilege and license granted hereby is and shall be a perpetual grant,
\ntransfer, conveyance and right of Access to and Use<\/p>\n
157<\/p>\n
(subject to the terms of this Agreement) to the Grantee thereof and to any
\nfuture owner of the real property, improvements and facilities benefited
\nthereby. Notwithstanding the foregoing, all easements, rights, privileges and
\nlicenses granted by this Agreement are and shall be subject to the terms and
\nconditions of the Connection Agreement, and in the event of any inconsistency
\nbetween the terms and conditions of the Connection Agreement and the terms of
\nthis Agreement, the terms of the Connection Agreement shall control.<\/p>\n
(b) Any easement or right, privilege and
\nlicense granted hereunder for purposes of enabling a Party to exercise any
\nright or fulfill any obligation set forth in the Connection Agreement will
\ncontinue for the term of the Connection Agreement, and thereafter if and to the
\nextent that the right or obligation (i) shall by its express terms survive the
\ntermination or expiration of the Connection Agreement or (ii) is necessary for
\nthe conduct of business by Grantee. In the event of the termination or
\nexpiration of an easement or right, privilege and license granted hereunder for
\npurposes of enabling a Grantee to exercise any right or fulfill any obligation
\nset forth in the Connection Agreement, all equipment and facilities installed
\nor maintained by such Grantee on the real property of the other Party pursuant
\nto said terminated or expired easement or right, privilege and license shall,
\nat the request of the other Party, be removed at the sole cost and expense of
\nsuch Grantee, and such Grantee shall, at its sole cost and expense repair any
\ndamage to the real property and\/or equipment and facilities of the other Party
\ndamaged as a result of such removal.<\/p>\n
(c) All equipment and facilities installed or
\nmaintained by Grantee pursuant to an easement or right, privilege and license
\ngranted hereunder shall be maintained by Grantee in accordance with Good
\nUtility Practice and the Connection Agreement, and Grantee shall make all
\nrepairs and replacements necessary to keep such equipment and facilities in
\nsuch condition.<\/p>\n
(d) Generator may not Use any portion of
\nGenerator’s Real Property burdened by any easement, right or privilege granted
\nto Pepco hereunder if such Use would materially adversely affect the Use and
\nenjoyment by Pepco of the rights granted to it hereunder, or materially
\nincrease the costs or risks associated with such Use.<\/p>\n
(e) All easements granted herein shall be
\ndeemed easements appurtenant to the parcel of real property benefited thereby
\nand shall run with such real property and shall be deemed covenants running
\nwith the real property burdened thereby.<\/p>\n
2.5 Interpretation. The following shall apply in
\ninterpreting any easement and any right, privilege and license granted pursuant
\nto this Agreement:<\/p>\n
(a) Each easement and each right, privilege and
\nlicense granted herein is irrevocable except by written agreement of the
\nparties.<\/p>\n
158<\/p>\n
(b) With respect to any easement created by
\nthis Agreement, the words “in,” “upon,” “to,” “on,” “over,” “above,” “through”
\nand\/or “under” shall be interpreted to include all of such terms.<\/p>\n
(c) Each easement and each right, privilege and
\nlicense granted herein may be enjoyed without charge or fee to Grantee of the
\neasement.<\/p>\n
(d) Each easement and each right, privilege and
\nlicense granted herein is also a grant of the additional right of Access over
\nGrantor’s property to accomplish the purpose of such easement or right,
\nprivilege and license, to perform any obligations hereunder or in the
\nConnection Agreement, and to comply with any legal requirements affecting
\nGrantee or its property and\/or improvements.<\/p>\n
(e) Exercise of any easement or any right,
\nprivilege and license granted hereunder permitting or requiring maintenance,
\nrepairs, alteration, restoration, rebuilding, construction, upgrading,
\ncleaning, installation, removal, modification, replacement, expansion, or other
\nwork by Grantee upon the property or improvements of Grantor shall be subject
\nto the following conditions:<\/p>\n
(i) Work upon the facilities and
\nproperties of either Party subject to this Agreement shall be permitted only to
\neach Party’s Qualified Personnel, and Access to such facilities and properties
\nshall be permitted only to a Party’s Qualified Personnel and such consultants,
\nagents, contractors, subcontractors and invitees as any Party may select or
\npermit; provided that any consultant, agent, contractor, subcontractor or
\ninvitee shall comply with all applicable provisions of this Agreement and the
\nConnection Agreement.<\/p>\n
(ii) Work shall be performed using
\nreasonable precautions to avoid unreasonable interference with the Use and
\nenjoyment of Grantor’s property and improvements.<\/p>\n
(iii) Except only as may be specifically
\nprovided to the contrary herein, Grantee shall not be liable for damage, if any,
\nwhich may be caused by Grantee’s normal and reasonable Use of any easement, or
\nright, privilege or license granted hereunder.<\/p>\n
(iv) Following completion of the work,
\nGrantee shall restore Grantor’s property and improvements to the same or as good
\na condition as existed before the commencement of the work.<\/p>\n
(v) Any easement and any right,
\nprivilege and license granted herein which permits a Gramtee to maintain its
\nproperty,<\/p>\n
159
\nequipment, facilities and appurtenances on the property and improvements owned
\nby Grantor also includes the right to maintain in place on Grantor’s property
\nand improvements any and all wires and cables connecting such property,
\nequipment, facilities, and appurtenances to (i) the devices, machinery and
\nequipment which they measure, regulate and\/or control, and (ii) power sources.<\/p>\n
(vi) Generator shall be solely
\nresponsible for the maintenance of any roads, paths and other means of entry or
\nexit exit located upon either the Generator’s Real Property or the Pepco Real
\nProperty that are commonly utilized by Generator and Pepco, and their respective
\nemployees, agents and contractors pursuant to this Agreement or the Connection
\nAgreement.<\/p>\n
(f) Any easement granted pursuant to Section
\n2.1(a), (b) or (c) includes the right to (i) trim, cut, treat and\/or remove, by
\nmanual, mechanical, and chemical means, any and all trees, brush, structures
\nand other obstructions within the easement area, as well as such trees, brush,
\nstructures and vegetation outside of the easement area deemed reasonably
\nnecessary or desirable by Pepco for the safe and secure operation of its
\nfacilities; and (ii) obtain Access to Generator’s Real Property for the purpose
\nof performing the aforementioned acts.<\/p>\n
2.6 Rules and Regulations.<\/p>\n
Each Party may promulgate rules regulating the conduct of the other
\nParty in the exercise of rights under this Agreement provided such rules and
\nregulations do not unreasonably interfere with or impede the affected Party’s
\nrights and easements as set forth herein or in the Connection Agreement.<\/p>\n
2.7 No Obstruction.<\/p>\n
(a) No Party hereto shall obstruct the
\neasements or the rights, privileges and licenses granted or created pursuant to
\nthis Agreement or render them impassable or unusable in any way or otherwise in
\nany way interfere with the right to the Use and enjoyment of the easements or
\nrights, privileges and licenses granted or created pursuant to this Agreement.<\/p>\n
(b) No Party hereto shall make any changes to
\nthe topography or accesses on or to its respective property, including grading
\nor drainage that could reasonably be expected to adversely affect another
\nParty’s facilities, common use drainage systems, or pollution control systems,
\nor the exercise of any right or fulfillment of any obligation in this Agreement
\nor in the Connection Agreement, without the prior written consent of the other
\nParty which consent shall not unreasonably be withheld, delayed or conditioned.<\/p>\n
160<\/p>\n
3. TAXES, ASSESSMENTS AND OTHER CHARGES<\/p>\n
3.1 Real Estate Taxes. Generator, with respect to the
\nGenerator’s Real Property and Pepco, with respect to the Pepco Real Property,
\nshall pay and discharge all of the following (“Real Estate Taxes”) whether or
\nnot now within the contemplation of the Parties hereto: (i) all real estate
\ntaxes, assessments (both general and special), other governmental impositions
\nand charges, taxes, rents, levies and sums of every kind or nature whatsoever,
\nextraordinary as well as ordinary, as shall at any time be imposed by any
\ngovernmental or public authority on, or become a lien in respect of, the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be, or
\nany part thereof, or which may become due and payable with respect thereto, and
\nany and all taxes assessments and charges levied, assessed or imposed upon the
\nGenerator’s Real Property or the Pepco Real Property, as the case may be, in
\nlieu of or in addition to, the foregoing, under or by virtue of any present or
\nfuture laws, rules, requirements, orders, directives, ordinances or regulations
\nof the United States of America or of the State or of any subdivision thereof,
\nor of any lawful governmental authority whatsoever, and any interest or
\npenalties thereon, and (ii) all other taxes (excluding gains, sales and income
\ntaxes but including occupancy taxes which are measured by income) measured by
\nownership of the Generator’s Real Property or the Pepco Real Property, as the
\ncase may be. Generator shall pay and discharge all levies and assessments for
\nwater, water meter (including any expenses incident to the installation, repair
\nor replacement of any water meter) and sewer and all rents with respect to
\nwater and sewer which provide service to the Generator’s Real Property.<\/p>\n
3.2 Personal Property Taxes. Generator and Pepco shall,
\nrespectively, pay and discharge all of the following (“Personal Property
\nTaxes”) whether or not now within the contemplation of the Parties hereto: all
\ntaxes and assessments which shall or may be charged, levied, assessed or
\nimposed upon, or become a lien upon, the personal property of Generator or
\nPepco, as the case may be, Used in the operation or in connection with the
\nbusiness conducted at the Generator’s Real Property or the Pepco Real Property,
\nas the case may be.<\/p>\n
3.3 Timing of Payment. Subject to the provisions of
\nSection 3.5, Generator and Pepco shall each comply with its covenant to pay and
\ndischarge all Real Estate Taxes and Personal Property Taxes by paying all such
\ntaxes directly to the appropriate taxing authorities prior to the expiration of
\nthe period within which payment is permitted without penalty or interest.
\nGenerator and Pepco shall within twenty (20) days of written request of the
\nother Party, produce the most recent official receipts from the appropriate
\ntaxing authorities evidencing such payment certified by Generator or Pepco, as
\nthe case may be, to the other Party hereto.<\/p>\n
3.4 Cooperation with Respect to Tax Statements.
\nGenerator and Pepco will cooperate with each other in obtaining and\/or
\nretaining any tax abatement for which the Generator’s Real Property or Pepco
\nReal Property may be eligible. Upon written request of the Party seeking an
\nabatement, the other Party or Parties hereto will<\/p>\n
161<\/p>\n
execute and file any and all documents and instruments reasonably necessary to
\nobtain and retain such abatement, without the assumption of any liabilities or
\nobligations, provided that the Party seeking such abatement shall reimburse the
\ncooperating Party or Parties for any reasonable expenses that such cooperating
\nParty or Parties may incur in connection therewith.<\/p>\n
3.5 Tax Contests. Generator, with respect to the
\nGenerator’s Real Property, and Pepco, with respect to the Pepco Real Property:<\/p>\n
(a) May contest in good faith by appropriate
\nproceedings diligently and continuously conducted, at its or their sole cost
\nand expense, any Real Estate Tax or charge or Personal Property Tax or charge,
\nor similar tax or charge and, where permitted by law, pay the same under
\nprotest.<\/p>\n
(b) Shall pay and discharge such contested
\nitems as finally adjudicated or settled, with interest and penalties, and all
\nother charges directed to be paid in or by any such adjudication or settlement.<\/p>\n
(c) May, in its or their sole discretion,
\nconsolidate any proceeding to obtain a reduction in the assessed valuation with
\nany similar proceeding or proceedings brought by it or them relating to any one
\nor more other tax years.<\/p>\n
(d) Shall indemnify and hold the non-contesting
\nParty harmless from and against all liability, loss, cost or expense arising
\nout of the contest.<\/p>\n
3.6 Refunds. Any refunds from any contest undertaken
\npursuant to Section 3.5 shall belong wholly to the Party or Parties that paid
\nthe tax.<\/p>\n
4. MECHANICS’ LIENS<\/p>\n
4.1 Notice Regarding Labor and Material. Notice is
\nhereby given that no Party hereto shall be liable for any labor or materials
\nfurnished or to be furnished to or for another Party hereto or to any other
\npersons or entities claiming under such other Party on credit, and that no
\nmechanics’ or other lien for any such labor or material furnished to a Party or
\nsuch other persons or entities shall attach to or affect any property interest
\nof any other Party.<\/p>\n
4.2 Disposition of Liens. (a) Pepco shall forthwith take
\nsuch action necessary to discharge, remove or satisfy any lien filed against
\nthe Generator’s Real Property or any portion thereof for any labor or materials
\nfurnished or to be furnished for or on behalf of Pepco, or any person or entity
\nholding any portion thereof through or under Pepco.<\/p>\n
162<\/p>\n
(b) Generator shall forthwith take such action
\nnecessary to discharge, remove or satisfy any lien filed against the Pepco Real
\nProperty or any portion thereof for any labor or materials furnished or to be
\nfurnished for or on behalf of Generator, or any person or entity holding any
\nportion thereof through or under Generator.<\/p>\n
(c) If either Pepco or Generator, as the case
\nmay be, shall fail to discharge, remove or satisfy any such lien which it is
\nobligated to discharge, remove or satisfy hereunder within ten (10) days after
\nnotice of the existence of the lien has been given to such defaulting Party,
\nthe non-defaulting Party or parties may pay the amount of such lien or
\ndischarge the same by deposit or bonding, and the amount so paid or deposited,
\nor the premium paid for such bond, with interest at the rate provided for
\ndefaults in Section 6.3 hereof, shall be paid by the defaulting Party upon
\ndemand to the non-defaulting Party who effected such cure.<\/p>\n
(d) The defaulting Party shall defend,
\nindemnify and save harmless the non-defaulting Party from and against all
\nliability, loss, cost or expense (including reasonable attorneys’ fees) arising
\nout of any liens which the defaulting Party is obligated to discharge, remove
\nor satisfy.<\/p>\n
5. CONDEMNATION<\/p>\n
5.1 Right to Participate. In the event the Generator’s
\nReal Property or the Pepco Real Property, or any part thereof, shall be taken
\nin condemnation proceedings or by exercise of any right of eminent domain or
\nany agreement with those authorized to exercise such right (any such matter
\nbeing hereinafter referred to as a “Taking” or property “Taken”), whether such
\nTaking be a permanent Taking or a temporary Taking, any person or entity having
\nan interest in the award or awards shall have the right to participate in any
\nsuch condemnation proceedings or agreement for the purpose of protecting its
\ninterest hereunder. Each Party so participating shall pay its own expenses.<\/p>\n
5.2 Total Taking. A “Total Taking” shall be deemed to
\nhave occurred as to the property of any Party (which means the Generator’s Real
\nProperty, as to Generator, and the Pepco Real Property, as to Pepco) when the
\nentire property of such Party shall be Taken or a substantial part of such
\nproperty shall be Taken and the untaken portion of the property would,
\nfollowing the completion of restoration, be unsuitable for the operation and
\nthe Use thereof in the manner so operated and Used prior to the Taking. Upon a
\nTotal Taking, this Agreement shall terminate with respect to the property Taken
\nexcept with respect to the disposition of the award and this Agreement shall
\ncontinue with respect to the property not Taken.<\/p>\n
5.3 Disposition of Award. In the event of a Taking, each
\nParty shall be entitled to share in the awards to the extent of its interest in
\nthe property subject to the<\/p>\n
163<\/p>\n
Taking, and for consequential damages to and dilution of value of the relevant
\nproperty not so Taken.<\/p>\n
5.4 Notice of Taking. In the event the Generator’s Real
\nProperty or the Pepco Real Property, or any part thereof, shall be the subject
\nof any condemnation proceedings or the subject of any eminent domain
\nproceedings, and if any Party shall receive actual notice of such proceedings,
\nthe Party receiving such notice shall notify the other Party of the existence
\nof such proceedings. Such notification shall occur within thirty (30) days of
\nthe receipt of such actual notice.<\/p>\n
6. DEFAULTS<\/p>\n
6.1 Events of Default. Each and every one of the
\nfollowing events shall constitute an Event of Default (“Event of Default”)
\nunder this Agreement:<\/p>\n
(a) If a Party fails to make any payment due to
\nthe other Party hereto within twenty (20) days of written demand for such
\npayment;<\/p>\n
(b) If a Party fails, within twenty (20) days
\nof written notice from a Party, to make any payment due from such Party to any
\nthird party and such failure could result in the imposition of a lien or other
\nencumbrance on the property or improvements of a Party, unless the payment of
\nsuch amount is contested in accordance with Section 3.5 hereof, in which case,
\nthe provisions of Section 3.5 shall control; and<\/p>\n
(c) If a Party fails to perform any material
\nnon-monetary obligations hereunder, and said Party fails to cure such default
\nwithin thirty (30) days of receipt of written notice stating with particularity
\nthe nature of the default; provided, however, if such default is of such a
\nnature that it cannot be cured within thirty (30) days following receipt of
\nsuch notice, an Event of Default shall not have occurred if the defaulting
\nParty shall within such thirty (30) days commence the necessary cure and shall
\nat all times thereafter diligently and continuously prosecute such cure to
\ncompletion.<\/p>\n
6.2 Right of Self Help. A non-defaulting Party may at
\nits election following the occurrence of a non-monetary Event of Default and
\nthe thirtieth (30th) day after the receipt of the written notice specified in
\nparagraph 6.1(c) hereof, undertake the cure of such default on behalf of the
\ndefaulting Party. A non-defaulting Party is granted an easement to enter upon,
\nthrough or under the property or improvements of the defaulting Party to effect
\nsuch cure. Following the occurrence of an Event of Default involving the
\npayment of money to a person or entity not Party to this Agreement, a
\nnon-defaulting Party may make such payment on behalf of the defaulting Party.
\nAll monies paid by the non-defaulting Party and all reasonable costs and
\nexpenses (including, reasonable attorneys’ fees) incurred by it, as the case
\nmay be, in effecting such cure or payment, shall be paid by the defaulting
\nParty upon written demand, together with interest from the date of such<\/p>\n
164<\/p>\n
demand at the rate set forth in Section 6.3. This Section 6.2 shall not limit
\nPepco’s self-help rights pursuant to Section 2.3(b).<\/p>\n
6.3 Interest. Following the occurrence of an Event of
\nDefault involving the nonpayment of money by the defaulting Party to the
\nnon-defaulting Party, all monies owed to the non-defaulting party shall bear
\ninterest at the rate equal to one and one-half percent (1.5%) per month
\naccruing on the due date, provided, however, that such late payment charge
\nshall not exceed the maximum charge which may be collected under State law.<\/p>\n
6.4 Enforcement Rights. In addition to any other rights
\nexpressly set forth in this Agreement, but without limitation, enforcement of
\nthis Agreement may be had by legal or equitable proceedings against any
\ndefaulting Party either to specifically enforce, restrain or enjoin the
\nviolation of any restriction, covenant, agreement, term, representation or
\nwarranty herein contained or to recover damages. The above notwithstanding,
\ntermination of this Agreement shall not be available as a remedy in any
\nproceedings against any defaulting Party.<\/p>\n
6.5 No Forfeiture. Except by enforcement of a judgment
\nlien against such property, nothing contained in this Agreement shall create
\nany reversion, condition or right of re-entry or other provisions for
\nforfeiture under which any Party can be cut off, subordinated or otherwise
\ndisturbed in the possession of its property.<\/p>\n
6.6 Independent Covenants. None of the rights and
\neasement granted by this Agreement and none of the performances required by
\nthis Agreement shall be dependent, upon the performance of any other term,
\npromise, or condition of this Agreement or any documents executed concurrently
\nor in connection with this Agreement, and such rights, easement and
\nrequirements or performance shall continue in effect irrespective of whether
\nanything else in this Agreement or such other documents has been breached or
\nhas been terminated. The separateness and independent survival of the right,
\neasements and requirements of performance under this Agreement are essential
\nterms hereof without which this Agreement would not have been made.<\/p>\n
7. INDEMNIFICATION AND INSURANCE<\/p>\n
7.1 Generator’s Indemnification. Generator shall
\nindemnify, hold harmless, and defend Pepco and its Affiliates, as the case may
\nbe, and their respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between Pepco and a third party or
\nGenerator) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Pepco’s employees or any third parties, to the
\nextent caused, by the breach of this Agreement by Generator or the negligence
\nor willful misconduct of<\/p>\n
165<\/p>\n
Generator and\/or its officers, directors, employees, agents, contractors,
\nsubcontractors or invitees arising out of or connected with Generator’s
\nperformance of this Agreement, or the exercise by Generator of its rights
\nhereunder.<\/p>\n
7.2 Pepco’s Indemnification. Pepco shall indemnify, hold
\nharmless, and defend Generator and its Affiliates, as the case may be, and
\ntheir respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between Generator and a third party or
\nPepco) for damage to property of unaffiliated third parties, injury to or death
\nof any person, including Generator’s employees or any third parties, to the
\nextent caused by the breach of this Agreement by Pepco or the negligence or
\nwillful misconduct of Pepco and\/or its officers, directors, employees, agents,
\ncontractors, subcontractors or invitees arising out of or connected with
\nPepco’s performance of this Agreement, or the exercise by Pepco of its rights
\nhereunder.<\/p>\n
7.3 Survival. The provisions of Sections 7.1 and 7.2
\nshall survive termination, cancellation, suspension, completion or expiration
\nof this Agreement.<\/p>\n
7.4 Insurance Coverage. The Parties shall maintain at
\ntheir own cost the following insurance: (a) standard Commercial General
\nLiability insurance with limitations not less than One Hundred Million Dollars
\n($100,000,000.00)in the aggregate; (b) All-Risk Property insurance in amounts
\nnot less than one hundred percent (100%) of the full replacement cost of the
\nimprovements located upon each Party’s real property; (c) Worker’s compensation
\ninsurance as required by prevailing law and Employer’s liability insurance with
\nlimits of not less than Twenty-five Million Dollars ($25,000,000.00); and (d)
\nsuch other insurance as is customary in the electric utility industry.<\/p>\n
7.5 Certificate of Insurance. The Parties agree to
\nfurnish each other with certificates of insurance evidencing the insurance
\ncoverage obtained in accordance with this Article 7, and the Parties agree to
\nnotify and send copies to the other of any policies maintained hereunder upon
\nwritten request by a Party. Each Party must notify the other Party within five
\n(5) business days of receiving notice of cancellation, change, amendment or
\nrenewal of any insurance policy required pursuant to Section 7.4 above.<\/p>\n
7.6 Additional Insureds and Waiver. Each Party and its
\naffiliates shall be named as additional insureds on the general liability
\ninsurance policies obtained in accordance with Section 7.4, above, as regards
\nliability under this Agreement; and each general liability insurance policy
\nshall contain a waiver of subrogation and each Party shall waive its rights of
\nrecovery against the other for any loss or damage covered by such policy.<\/p>\n
166<\/p>\n
8. MISCELLANEOUS<\/p>\n
8.1 Effective Date. This Agreement will be effective on
\nthe Closing Date pursuant to the Asset Sale Agreement (the “Effective Date”).<\/p>\n
8.2 Exhibits. All exhibits attached to this Agreement
\nare part of this Agreement and the material contained in such exhibits shall be
\nconstrued and interpreted as if contained within the text of the Agreement.<\/p>\n
8.3 Headings. The Article and Section headings of this
\nAgreement are for convenience and reference only and in no way define, limit or
\ndescribe the scope and intent of this Agreement, nor in any way affect this
\nAgreement.<\/p>\n
8.4 Interpretation. When a reference is made in this
\nAgreement to an Article, Section, Schedule or Exhibit, such reference shall be
\nto an Article or Section of, or Schedule or Exhibit to, this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to
\nbe followed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in
\nthis Agreement shall refer to this Agreement as a whole and not to any
\nparticular provision of this Agreement. The definitions contained in this
\nAgreement are applicable to the singular as well as the plural forms of such
\nterms and to the masculine as well as to the feminine and neuter genders of
\nsuch term. Any agreement, instrument, statute, regulation, rule or order
\ndefined or referred to herein or in any agreement or instrument that is
\nreferred to herein means such agreement, instrument, statute, regulation, rule
\nor order as from time to time amended, modified or supplemented, including (in
\nthe case of agreements or instruments) by waiver or consent and (in the case of
\nstatutes, regulations, rules or orders) by succession of comparable successor
\nstatutes, regulations, rules or orders and references to all attachments
\nthereto and instruments incorporated therein. References to a person are also
\nto its permitted successors and assigns. Each Party acknowledges that it has
\nbeen represented by counsel in connection with the review and execution of this
\nAgreement and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
8.5 GOVERNING LAW. EXCEPT WITH RESPECT TO THE CREATION,
\nPERFECTION AND ENFORCEMENT OF THE REAL PROPERTY INTERESTS CREATED HEREUNDER,
\nWHICH SHALL BE GOVERNED AND CONSTRUED BY THE LAWS OF THE STATE, THIS AGREEMENT
\nSHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE DISTRICT
\nOF COLUMBIA EXCLUSIVE OF ITS CHOICE OF LAW RULES.<\/p>\n
167<\/p>\n
8.6 Entire Agreement. This Agreement, the Asset Sale
\nAgreement, the Confidentiality Agreement (as defined in the Asset Sale
\nAgreement) and the Ancillary Agreements (as defined in the Asset Sale
\nAgreement) including the Exhibits, Schedules, documents, certificates and
\ninstruments referred to herein or therein and other contracts, agreements and
\ninstruments contemplated hereby or thereby, embody the entire agreement and
\nunderstanding of the Parties in respect of the transactions contemplated by
\nthis Agreement. There are no restrictions, promises, representations,
\nwarranties, covenants or undertakings other than those expressly set forth or
\nreferred to herein or therein.<\/p>\n
8.7 Amendment and Modification, Extension, Waiver. This
\nAgreement may be amended, modified or supplemented only by an instrument in
\nwriting signed on behalf of each of the Parties. Either Party may (i) extend
\nthe time for the performance of any of the obligations or other acts of the
\nother Party, (ii) waive any inaccuracies in the representations and warranties
\nof the other Party contained in this Agreement or (iii) waive compliance by the
\nother Party with any of the agreements or conditions contained in this
\nAgreement. Any agreement on the part of a Party to any such extension or waiver
\nshall be valid only if set forth in an instrument in writing signed on behalf
\nof such Party. The failure of a Party to this Agreement to assert any of its
\nrights under this Agreement or otherwise shall not constitute a waiver of such
\nrights.<\/p>\n
8.8 Binding Effect. The covenants, conditions,
\nrestrictions, encumbrances, easements, license and agreements set forth in this
\nAgreement shall attach to, burden, and run with the land and the Generator’s
\nReal Property and the Pepco Real Property or the applicable portion or portions
\nthereof, and shall be appurtenant to the Generator’s Property or the Pepco Real
\nProperty, as appropriate and, together with the remainder of this Agreement,
\nshall be binding upon the Parties hereto and their respective successors,
\nassigns, grantees, transferees and tenants and, together with the remainder of
\nthis Agreement, shall inure to the benefit and Use of the Parties hereto and
\ntheir respective heirs, successors, assigns, grantees, transferees and tenants.
\nEach Grantee of any portion of or interest in the property and each mortgagee
\nwhich succeeds to the fee simple ownership of any portion of the property shall
\nbe deemed, by the acceptance of the deed conveying fee simple title to such
\nperson, to have agreed to perform each and every undertaking created hereunder
\nattributable to the portion of the property in which such Grantee or mortgagee
\nhas acquired an interest.<\/p>\n
8.9 Counterparts. This Agreement may be executed in two
\nor more counterparts, each of which shall be deemed an original, but all of
\nwhich together shall constitute one and the same instrument.<\/p>\n
8.10 Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nParties shall negotiate in good faith to modify this<\/p>\n
168<\/p>\n
Agreement so as to effect the original intent of the Parties as closely as
\npossible to the fullest extent permitted by applicable law in an acceptable
\nmanner to the end that the transactions contemplated hereby are fulfilled to
\nthe extent possible.<\/p>\n
8.11 Notices. All notices and other communications
\nhereunder shall be in writing and shall be deemed given (as of the time of
\ndelivery or, in the case of a telecopied communication, of confirmation) if
\ndelivered personally, telecopied (which is confirmed) or sent by overnight
\ncourier (providing proof of delivery) to the Parties at the following addresses
\n(or at such other address for a Party as shall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopy No.: 202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Generator, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, N.W.
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
169<\/p>\n
The names, titles and addresses of either Party in this section may be changed
\nby written notification to the other Party.<\/p>\n
8.12 Independent Contractor Status. Nothing in this
\nAgreement shall be construed as creating any relationship between Pepco and
\nGenerator other than that of independent contractors.<\/p>\n
8.13 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this
\nAgreement to be signed by their respective duly authorized officers
\nas of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ——————————
\n Name:
\n ——————————
\n Title:
\n ——————————<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ——————————
\n Name:
\n ——————————
\n Title:
\n ——————————<\/p>\n
170<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State,
\npersonally appeared __________________________, an ________________________, by
\n_____________________, its ________ who _________ is personally known to me\/
\n________ and who acknowledged before me that he did sign the foregoing
\ninstrument and that the same is the free act and deed of said
\n_________________, and his free act and deed personally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
——————————-
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
STATE OF )
\n ) SS:
\nCOUNTY OF )<\/p>\n
BEFORE ME, a Notary Public in and for said County and State,
\npersonally appeared ________________________, an ___________________, by
\n________________ its _____________________ who _______ is personally known to
\nme\/ ________ and who acknowledged before me that he did sign the foregoing
\ninstrument and that the same is the free act and deed of said corporation, and
\nhis free act and deed personally and as such officer.<\/p>\n
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
\n__________, __________, this ____ day of _________, ____.<\/p>\n
———————————
\n Notary Public<\/p>\n
My Commission Expires:<\/p>\n
171<\/p>\n
Schedule 1.1<\/p>\n
Definitions<\/p>\n
“Access” means, subject to the conditions set forth in this Agreement
\nand a Party’s right to impose reasonable security and safety restrictions
\nprotecting its officers, employees, agents, consultants, contractors,
\nsubcontractors, invitees, property and confidential information, full and
\nunimpeded access, in common with Grantor over and through existing roads,
\npaths, walkways, corridors, hallways, doorways, and other means of entry or
\nexit, as exist now and from time to time on Grantor’s property or, where no
\nmeans of access exists, over and through those areas of Grantor’s property or
\nimprovements which are (i) reasonably necessary or convenient for achieving
\nGrantee’s underlying purposes, and (ii) least likely, out of the alternatives
\nreasonably available, to impede or damage the property or operation of any
\nParty hereto. Access shall also include access and right-of-way for Grantee’s
\nemployees, agents, consultants, contractors, subcontractors, vehicles, trucks,
\ntrailers, heavy machinery, equipment, materials, and all other items reasonably
\nnecessary or convenient for achieving Grantee’s underlying purposes.<\/p>\n
“Affiliate” has the meaning set forth in Rule 12b-2 of the General
\nRules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
“Agreement” means this Easement, License and Attachment Agreement.<\/p>\n
“Asset Sale Agreement” has the meaning set forth in the first recital
\nof this Agreement, as such Asset Sale Agreement may be amended or modified.<\/p>\n
“Connection Agreement” means the Interconnection Agreement
\n(Morgantown), dated as of __________, 2000, between Pepco and Generator.<\/p>\n
“Distribution of Electric Current” means local transmission and
\ndistribution of electricity to Pepco’s end users.<\/p>\n
“Distribution Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions, replacements and expansions thereto,
\nnow or hereafter installed or located on the Generator’s Real Property for
\nDistribution of Electric Current. Distribution Facilities do not include
\nTransmission Facilities.<\/p>\n
“Effective Date” has the meaning set forth in Section 8.l.<\/p>\n
“FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
172<\/p>\n
“Generating Facilities” means the Station and any additional
\ngenerating plants, turbines or other generating facilities constructed by
\nGenerator after the Effective Date at the site of the Station.<\/p>\n
“Generator” shall have the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
“Generator’s Real Property” means the real property described in
\nExhibit A, and any improvements or betterments thereto now or hereinafter
\nsituated thereon.<\/p>\n
“Good Utility Practice” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Grantee” means the Party or Parties who enjoy the principal benefit
\nof the referenced easement, license, right (including attachment rights)
\nprivilege or right-of-way.<\/p>\n
“Grantor” means the owner or owners of the property and\/or improvement
\ngranting the referenced easement, license, right (including attachment rights),
\nprivilege or right-of-way.<\/p>\n
“Interconnection Service” shall have the meaning given it by the
\nConnection Agreement.<\/p>\n
“Party” or “Parties” shall have the meaning set forth in the
\nintroductory paragraph of this Agreement.<\/p>\n
“Pepco” shall have the meaning set forth in the introductory paragraph
\nof this Agreement and shall include its permitted successors and assigns.<\/p>\n
“Pepco Real Property” means the real property described in Exhibit B,
\nand any improvements or betterments thereto now or hereinafter situated
\nthereon.<\/p>\n
“Qualified Personnel” means individuals who possess any required
\nlicenses and training for their positions and duties by Generator and\/or Pepco
\npursuant to Good Utility Practice.<\/p>\n
“State” means the State of Maryland.<\/p>\n
“Station” means the Morgantown Station as defined in the Asset Sale
\nAgreement.<\/p>\n
“Transmission of Electric Current” means the transmission of such
\ncurrent typically over long distances and at voltages not commonly used for
\nservice to end use customers.<\/p>\n
“Transmission Facilities” means towers, lines of towers, poles, lines
\nof poles, supporting structures, cables, crossarms, overhead and underground
\nwires, guys, braces, ducts, conduits, cables, anchors, lightning protective
\nwires, and all related above-ground and underground facilities, appurtenances
\nand equipment, including all additions,<\/p>\n
173
\nreplacements and expansions thereto, now or hereafter installed or located on
\nthe Generator’s Real Property and\/or which Pepco may reasonably require now and
\nfrom time to time on the Generator’s Real Property for the Transmission of
\nElectric Current. Transmission Facilities do not include Distribution
\nFacilities.<\/p>\n
“Transmission System” shall have the meaning set forth in the
\nConnection Agreement.<\/p>\n
“Use” means to operate, maintain, repair, upgrade, clean, install, add
\nto, alter, remove, inspect, construct, modify, restore, rebuild, replace,
\nrelocate and expand (but if any such addition, relocation or expansion would
\nunreasonably or materially burden Grantor’s Property, in each case, the express,
\nprior written consent of Grantor shall be required, which consent shall not
\nunreasonably be withheld, delayed or conditioned) (all of the foregoing to be in
\naccordance with Good Utility Practice).<\/p>\n
174<\/p>\n
LIST OF EXHIBITS<\/p>\n
Exhibit A Generator’s Real Property
\nExhibit B Pepco Real Property
\nExhibit C 10 Foot Electric Utility Easement
\nExhibit D Easement for Oil Pipeline on Pepco Real Property
\nExhibit E Easement for Oil Pipeline on Retained Assets<\/p>\n
175<\/p>\n
EXHIBIT D<\/p>\n
GUARANTEE AGREEMENT<\/p>\n
THIS GUARANTEE AGREEMENT (the “Agreement”), dated as of _____________,
\n2000, by and between Southern Energy, Inc., a Delaware (“Guarantor”), and
\nPotomac Electric Power Company, a District of Columbia and Virginia corporation
\n(“Seller”). Guarantor and Seller are referred to herein individually as a
\n“Party” and collectively as the “Parties.”<\/p>\n
WHEREAS, Seller and Guarantor have entered into an Asset Purchase and
\nSale Agreement dated the date hereof (as amended, supplemented or otherwise
\nmodified from time to time, the “Asset Sale Agreement”), pursuant to which
\nGuarantor has agreed to purchase and Seller has agreed to sell certain electric
\ngenerating assets, as more particularly set forth therein, and each of Guarantor
\nand Seller have undertaken certain duties, responsibilities and obligations as
\nset forth in the Asset Sale Agreement and the Ancillary Agreements (as defined
\nin the Asset Sale Agreement);<\/p>\n
WHEREAS, subsequent to the execution of the Asset Sale Agreement,
\nGuarantor has assigned to ________________, [its direct\/an indirect]
\nwholly-owned subsidiary (“Buyer”) [all\/certain] of its rights under the Asset
\nSale Agreement;<\/p>\n
WHEREAS, as a condition precedent to and in consideration of Seller’s
\nentering into the Asset Sale Agreement, Guarantor has agreed to guarantee
\npayment and performance of those covenants, agreements, obligations,
\nliabilities, representations and warranties made by Guarantor (and subsequently
\nassigned to Buyer) under the Asset Sale Agreement, any Ancillary Agreement or
\nany other agreement or instrument related thereto or entered into in connection
\ntherewith; and<\/p>\n
WHEREAS, Guarantor will benefit from the transactions contemplated by
\nthe Asset Sale Agreement.<\/p>\n
NOW, THEREFORE, the Parties agree as follows:<\/p>\n
SECTION 1. Definitions. Capitalized terms used herein shall have the
\nmeanings assigned to them herein or, if not defined herein, then such terms
\nshall have the meanings assigned to them in the Asset Sale Agreement.<\/p>\n
SECTION 2. Guarantee. Guarantor absolutely, irrevocably and
\nunconditionally guarantees, as a primary obligor and not merely as a surety, (a)
\nthe due and punctual payment of (i) each payment required to be made by Buyer
\nunder the Asset Sale Agreement or any Ancillary Agreement, when and as due,
\nincluding payments in respect of reimbursement of disbursements and interest
\nthereon and (ii) all other monetary<\/p>\n
176<\/p>\n
obligations, including indemnities, fees, costs and expenses, whether primary,
\nsecondary, direct, contingent, fixed or otherwise (including monetary
\nobligations incurred during the pendency of any bankruptcy, insolvency,
\nreceivership or other similar proceeding, regardless of whether allowed or
\nallowable in such proceeding), of Buyer under the Asset Sale Agreement, any
\nAncillary Agreement or any other agreement or instrument related thereto (all
\nsuch obligations referred to in this clause (a) being collectively referred to
\nas the “Monetary Obligations”) and (b) the due and punctual performance and
\nobservance of, and compliance with, all covenants, agreements, obligations,
\nliabilities, representations and warranties of Buyer under or pursuant to the
\nAsset Sale Agreement, any Ancillary Agreement or any other agreement or
\ninstrument related thereto (all such obligations referred to in the preceding
\nclauses (a) and (b) being collectively referred to as the “Obligations”).
\nGuarantor further agrees that the Obligations may be extended, amended, modified
\nor renewed, in whole or in part, without notice to or further assent from it,
\nand that it will remain bound upon its guarantee notwithstanding any extension,
\namendment, modification or renewal of any Obligation by Seller and Buyer.<\/p>\n
SECTION 3. Obligations Not Waived. To the fullest extent permitted by
\napplicable law, Guarantor waives all notices whatsoever with respect to this
\nAgreement or with respect to the Obligations, including presentment to, demand
\nof payment from and protest to Buyer of any of the Obligations, and notice of
\nacceptance of its guarantee and notice of protest for nonpayment. To the fullest
\nextent permitted by applicable law, the obligations of Guarantor hereunder shall
\nnot be affected by (a) the failure of Seller to assert any claim or demand or to
\nenforce or exercise any right or remedy against Buyer in respect of the
\nObligations or otherwise under the provisions of the Asset Sale Agreement, any
\nAncillary Agreement or otherwise or, in each case, any delay in connection
\ntherewith, or (b) any rescission, waiver, amendment or modification of, or any
\nrelease from any of the terms or provisions of, this Agreement, the Asset Sale
\nAgreement, any Ancillary Agreement or any other agreement.<\/p>\n
SECTION 4. Continuing Guarantee of Payment and Performance. Guarantor
\nfurther agrees that its guarantee constitutes a continuing guarantee of payment
\nand performance when due, and not of collection, and Guarantor further waives
\nany right to require that any resort be had by Seller to any security.<\/p>\n
SECTION 5. No Discharge or Diminishment of Guarantee.<\/p>\n
(a) The obligations of Guarantor hereunder shall not be subject to
\nany reduction, limitation, impairment or termination, or be subject to any
\ndefense or setoff, counterclaim, recoupment or termination whatsoever, or
\notherwise be affected, for any reason (other than the performance in full of all
\nObligations, including the indefeasible payment in full in cash of all Monetary
\nObligations, and the termination of all the Obligations), including:<\/p>\n
(i) any claim of waiver, release, surrender, alteration
\nor compromise of any of the Obligations;<\/p>\n
(ii) the invalidity, illegality or unenforceability of the
\nObligations;<\/p>\n
177<\/p>\n
(iii) the occurrence or continuance of any event of
\nbankruptcy, reorganization, insolvency, receivership or other similar proceeding
\nwith respect to Buyer or any other person (for purposes hereof, “person” means
\nany individual, partnership, limited liability company, joint venture,
\ncorporation, trust, unincorporated organization or Governmental Authority), or
\nthe dissolution, liquidation or winding up of Buyer or any other person;<\/p>\n
(iv) any permitted assignment or other transfer of this
\nAgreement by Seller or any permitted assignment or other transfer of the Asset
\nSale Agreement or any Ancillary Agreement in whole or in part;<\/p>\n
(v) any sale, transfer or other disposition by Guarantor
\nof any direct or indirect interest it may have in Buyer or any other change in
\nownership or control of Buyer; or<\/p>\n
(vi) the absence of any notice to, or knowledge on behalf
\nof, Guarantor of the existence or occurrence of any of the matters or events set
\nforth in the foregoing clauses.<\/p>\n
(b) Without limiting the generality of the foregoing, the
\nobligations of Guarantor hereunder shall not be discharged or impaired or
\notherwise affected by the failure of Seller to assert any claim or demand or to
\nenforce any remedy under the Asset Sale Agreement, any Ancillary Agreement or
\nany other agreement, by any waiver or modification of any provision thereof, by
\nany default, failure or delay, willful or otherwise, in the performance of the
\nObligations, or by any other act or omission that may or might in any manner or
\nto any extent vary the risk of Guarantor or that would otherwise operate as a
\ndischarge of Guarantor as a matter of law or equity (other than the performance
\nin full of all Obligations, including the indefeasible payment in full in cash
\nof all Monetary Obligations, and the termination of all the Obligations).<\/p>\n
SECTION 6. Defenses Waived. To the fullest extent permitted by
\napplicable law, Guarantor waives any defense based on or arising out of the
\nunenforceability of the Obligations or any part thereof from any cause. Seller
\nmay compromise or adjust any part of the Obligations, make any other
\naccommodation with Buyer or exercise any other right or remedy available to it
\nagainst Buyer, without affecting or impairing in any way the liability of
\nGuarantor hereunder except to the extent all the Obligations have been fully and
\nfinally performed, including the indefeasible payment in full of all Monetary
\nObligations, and terminated. To the fullest extent permitted by applicable law,
\nGuarantor waives any defense arising out of any such election even though such
\nelection operates, pursuant to applicable law, to impair or to extinguish any
\nright of reimbursement or subrogation or other right or remedy of Guarantor
\nagainst Buyer or any security. Guarantor waives each right and all defenses to
\nwhich it may be entitled under applicable law as in effect or construed from
\ntime to time.<\/p>\n
SECTION 7. Representations and Warranties of Guarantor. Guarantor
\nrepresents and warrants to Seller as follows:<\/p>\n
(a) Organization. Guarantor is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the State of Delaware
\nand has all requisite<\/p>\n
178<\/p>\n
corporate power and authority to own, lease and operate its properties and to
\ncarry on its business as is now being conducted.<\/p>\n
(b) Authority Relative to this Agreement. Guarantor has all
\nnecessary corporate power and authority to execute and deliver this Agreement
\nand to perform its obligations hereunder. The execution and delivery by
\nGuarantor of this Agreement and performance by Guarantor of its obligations
\nhereunder have been duly and validly authorized by the Board of Directors of
\nGuarantor and no other corporate proceedings on the part of Guarantor are
\nnecessary to authorize this Agreement or performance by Guarantor of its
\nobligations hereunder. This Agreement has been duly and validly executed and
\ndelivered by Guarantor and this Agreement constitutes a valid and binding
\nagreement of Guarantor, enforceable against Guarantor in accordance with its
\nterms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Subject to obtaining the Buyer Required Regulatory
\nApprovals, neither the execution and delivery of this Agreement by Guarantor nor
\nperformance by Guarantor of its obligations hereunder will (i) conflict with or
\nresult in any breach of any provision of the organizational or governing
\ndocuments or instruments of Guarantor, (ii) result in a default (or give rise to
\nany right of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Guarantor or any of
\nits subsidiaries is a party or by which any of their respective assets may be
\nbound or (iii) violate any order, writ, injunction, decree, statute, rule or
\nregulation applicable to Guarantor, or any of its assets, except in the case of
\nclauses (ii) and (iii) for such failures to obtain a necessary consent, defaults
\nand violations which would not, individually or in the aggregate, have a
\nmaterial adverse effect on the ability of Guarantor to discharge its obligations
\nunder this Agreement (a “Guarantor Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any Governmental Authority
\nis necessary for performance by Guarantor of its obligations hereunder, other
\nthan such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Guarantor Material Adverse Effect.<\/p>\n
SECTION 8. Agreement to Perform and Pay; Subordination. In furtherance
\nof the foregoing and not in limitation of any other right that Seller has at law
\nor in equity against Guarantor by virtue hereof, upon the failure of Buyer, to
\nperform or pay any Obligation when and as the same shall become due, Guarantor
\nhereby promises to and will forthwith, as the case may be, (a) perform, or cause
\nto be performed, such unperformed Obligations and (b) pay, or cause to be paid,
\nto Seller in cash the amount of such unpaid Monetary Obligations. Upon payment
\nby Guarantor of any sums to Seller as provided above, all rights of Guarantor
\nagainst Buyer, arising as a result thereof by way of right of subrogation,
\ncontribution, reimbursement, indemnity or otherwise shall in all respects be
\nsubordinate and junior in right of payment to the prior indefeasible payment in
\nfull in cash of all the Monetary Obligations. If any amount shall erroneously be
\npaid to Guarantor on account of (i) such subrogation, contribution,
\nreimbursement, indemnity or similar right or (ii) any such indebtedness of
\nBuyer, such amount shall be held in trust for the benefit of<\/p>\n
179<\/p>\n
Seller and shall forthwith be paid to Seller to be credited against the payment
\nof the Monetary Obligations or performance in accordance with the terms of the
\nAsset Sale Agreement or any Ancillary Agreement, as applicable.<\/p>\n
SECTION 9. Information. Guarantor assumes all responsibility for being
\nand keeping itself informed of Buyer’s financial condition and assets, and of
\nall other circumstances bearing upon the risk of nonperformance of the
\nObligations (including the nonpayment of Monetary Obligations) and the nature,
\nscope and extent of the risks that Guarantor assumes and incurs hereunder, and
\nagrees that Seller does not have any duty to advise Guarantor of information
\nknown to it regarding such circumstances or risks.<\/p>\n
SECTION 10. Termination and Reinstatement. The guarantee made hereunder
\n(a) shall terminate when all the Obligations have been (i) performed in full,
\nincluding the indefeasible payment in full in cash of the Monetary Obligations
\nand (ii) terminated and (b) shall continue to be effective or be reinstated, as
\nthe case may be, if at any time any payment, or any part thereof, of any
\nObligation is rescinded or must otherwise be restored by Seller upon the
\nbankruptcy or reorganization of Buyer or Guarantor or for any other reason.<\/p>\n
SECTION 11. Assignment; No Third Party Beneficiaries. This Agreement
\nand all of the provisions hereunder shall be binding upon and inure to the
\nbenefit of the Parties and their respective successors and permitted assigns,
\nand nothing herein express or implied will give or be construed to give any
\nperson any legal or equitable rights hereunder. Neither this Agreement nor any
\nof the rights, interests and obligations hereunder shall be assigned by
\nGuarantor, including by operation of law, without the prior written consent of
\nSeller; provided, however, that no assignment or transfer of rights or
\nobligations by Guarantor shall relieve it from the full liabilities and the full
\nfinancial responsibility, as provided for under this Agreement, unless and until
\nthe transferee or assignee shall agree in writing to assume such obligations and
\nduties and Seller has consented in writing to such assumption.<\/p>\n
SECTION 12. Amendment and Modification; Extension; Waiver. This
\nAgreement may be amended, modified or supplemented only by an instrument in
\nwriting signed on behalf of each of the Parties. Any agreement on the part of a
\nParty to any extension or waiver in respect of this Agreement shall be valid
\nonly if set forth in an instrument in writing signed on behalf of such Party.
\nThe failure of a Party to this Agreement to assert any of its rights under this
\nAgreement or otherwise shall not constitute a waiver of such rights.<\/p>\n
SECTION 13. Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the District of Columbia (regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaw).<\/p>\n
SECTION 14. Notices. All notices and other communications hereunder
\nshall be in writing and shall be deemed given (as of the time of delivery or, in
\nthe case of a telecopied communication, of the times of confirmation) if
\ndelivered personally, telecopied (which is confirmed) or sent by overnight
\ncourier (providing proof of delivery) to the Parties at the following addresses
\n(or at such other address for a Party as shall be specified by like notice):<\/p>\n
180<\/p>\n
if to Seller, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopy No.: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037-1526
\n Telecopy No.: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Buyer, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, N.W.
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
SECTION 15. Jurisdiction and Enforcement.<\/p>\n
(a) Each of the Parties irrevocably submits to the exclusive
\njurisdiction of (i) the Superior Court of the District of Columbia and (ii) the
\nUnited States District Court for the District of Columbia for the purposes of
\nany suit, action or other proceeding arising out of this Agreement or any
\ntransaction contemplated hereby. Each of the Parties agrees to commence any
\naction, suit or proceeding relating hereto either in the United States District
\nCourt for the District of Columbia or, if such suit, action or proceeding may
\nnot be brought in such court for jurisdictional reasons, in the Superior Court
\nof the District of Columbia. Each of the Parties further agrees that service of
\nprocess, summons, notice or<\/p>\n
181<\/p>\n
document by hand delivery or U.S. registered mail at the address specified for
\nsuch Party in Section 14 (or such other address specified by such Party from
\ntime to time pursuant to Section 14) shall be effective service of process for
\nany action, suit or proceeding brought against such Party in any such court.
\nEach of the Parties irrevocably and unconditionally waives any objection to the
\nlaying of venue of any action, suit or proceeding arising out of this Agreement
\nor the transactions contemplated hereby in (i) the Superior Court of the
\nDistrict of Columbia and (ii) the United States District Court for the District
\nof Columbia and hereby further irrevocably and unconditionally waives and agrees
\nnot to plead or claim in any such court that any such action, suit or proceeding
\nbrought in any such court has been brought in an inconvenient forum.<\/p>\n
(b) The Parties agree that irreparable damage would occur in the
\nevent that any of the provisions of this Agreement were not performed in
\naccordance with their specific terms or were otherwise breached. It is
\naccordingly agreed that the Parties shall be entitled equitable relief,
\nincluding without limitation, an injunction or injunctions to prevent breaches
\nof this Agreement and to specifically enforce the terms and provisions of this
\nAgreement, this being in addition to any other remedy to which they are justly
\nentitled to, whether at law or in equity.<\/p>\n
SECTION 16. Survival of Agreement. All covenants, agreements,
\nrepresentations and warranties made by Guarantor herein and in the certificates
\nor other instruments prepared or delivered in connection with or pursuant to
\nthis Agreement shall be considered to have been relied upon by Seller and shall
\nunconditionally survive the consummation of the transactions contemplated by the
\nAsset Sale Agreement, regardless of any investigation made by Seller or on its
\nbehalf, and shall continue in full force and effect as long as any Obligations
\nremain outstanding.<\/p>\n
SECTION 17. Effectiveness; Counterparts. This Agreement shall become
\neffective when executed by Guarantor and Seller. This Agreement may be executed
\nin two counterparts, each of which shall be deemed an original, but both of
\nwhich together shall constitute one and the same instrument.<\/p>\n
SECTION 18. Rules of Interpretation. The rules of interpretation
\nspecified in Section 12.8 of the Asset Sale Agreement shall be applicable to
\nthis Agreement.<\/p>\n
SECTION 19. Severability. <\/p>\n
(a) If any term or other provision of this Agreement is invalid,
\nillegal or incapable of being enforced by any rule of law or public policy, all
\nother conditions and provisions of this Agreement shall nevertheless remain in
\nfull force and effect. Upon such determination that any term or other provision
\nis invalid, illegal or incapable of being enforced, the Parties shall negotiate
\nin good faith to modify this Agreement so as to effect the original intent of
\nthe Parties as closely as possible to the fullest extent permitted by applicable
\nlaw, in an acceptable manner to the end that the transactions contemplated
\nhereby are fulfilled to the extent possible.<\/p>\n
(b) In the event that the provisions of this Agreement are claimed
\nor held to be inconsistent with any other agreement or instrument evidencing the
\nObligations, the terms of this Agreement shall remain fully valid and effective.<\/p>\n
182<\/p>\n
SECTION 20. Entire Agreement. This Agreement embodies the entire
\nagreement and understanding of the Parties in respect of the matters
\ncontemplated hereby. There are no restrictions, promises, representations,
\nwarranties, covenants or undertakings other than those expressly set forth or
\nreferred to herein. This Agreement supersedes all prior agreements and
\nunderstandings between the Parties with respect to the matters contemplated
\nhereby.<\/p>\n
SECTION 21. Seller hereby appoints _______________, a _______________
\nof Seller, to be its duly authorized Attorney-in-Fact and in Seller’s name to
\nexecute, acknowledge and deliver this Agreement as its act and deed. Guarantor
\nhereby appoints _____________, its ______________, to be its duly authorized
\nAttorney-in-Fact and in Buyer’s name to execute, acknowledge and deliver this
\nAgreement as its act and deed.<\/p>\n
IN WITNESS WHEREOF, this Guarantee Agreement has been duly executed and
\ndelivered by the Parties as of the date first above written.<\/p>\n
Attest: POTOMAC ELECTRIC POWER
\n COMPANY<\/p>\n
By By
\n ————————- ——————————-
\n Secretary Name:
\n Title:<\/p>\n
Attest: SOUTHERN ENERGY, INC.<\/p>\n
By By
\n ————————- ——————————-
\n Secretary Name:
\n Title:<\/p>\n
183<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for
\nGuarantor named in the foregoing Instrument, personally appeared before me in
\nsaid jurisdiction, and as such attorney-in-fact and by virtue of the authority
\nvested in him by said Instrument, acknowledged the same to be the act and deed
\nof said corporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
———————————-
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
184<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for
\nSeller named in the foregoing Instrument, personally appeared before me in said
\njurisdiction, and as such attorney-in-fact and by virtue of the authority vested
\nin him by said Instrument, acknowledged the same to be the act and deed of said
\ncorporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
————————————-
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
185<\/p>\n
EXHIBIT E-1<\/p>\n
INTERCONNECTION AGREEMENT
\n (Potomac River)<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
________________________________<\/p>\n
Dated ______, 2000<\/p>\n
186<\/p>\n
INTERCONNECTION AGREEMENT<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n
\nARTICLE 1 – DEFINITIONS 1
\nARTICLE 2 TERM AND TERMINATION 2
\n 2.1 Term 2
\n 2.2 Change in Law 2
\n 2.3 Effect after Termination 2
\nARTICLE 3 – CONTINUING OBLIGATIONS AND RESPONSIBILITIES 2
\n 3.1 Interconnection Service 2
\n 3.2 New Construction or Modifications 3
\n 3.2.1 Pepco Construction or Modifications 3
\n 3.2.2 Generator Construction or Modifications 4
\n 3.2.3 Modifications Affecting the Transmission System
\n or the Station 5
\n 3.3 Access, Easements, Conveyances, Licenses, and
\n Restrictions 6
\n 3.4 Facility and Equipment Maintenance 7
\n 3.5 Pepco Facilities and Generator Facilities 7
\n 3.6 Equipment Testing Obligations 7
\n 3.7 Inspections 8
\n 3.8 Information Reporting Obligations 9
\n 3.9 Local Services 10
\n 3.9.1 General 10
\n 3.9.2 Temporary Suspension of Local Services 10
\n 3.10 Pepco Provided Services 11
\n 3.11 Generator Provided Services 11
\n 3.12 Optional Services 12
\n 3.13 Metering and Telemetering 12
\n 3.14 Emergency Procedure 12
\n 3.15 Interconnection Service Interruptions 13
\n 3.16 Unit Status Notification 14
\n 3.17 Scheduled Maintenance Notification and Coordination 14
\n 3.17.1 Local Routine Inspection and Maintenance 14
\n 3.17.2 Transmission Sytem Maintenance 15
\n 3.18 Safety 15
\n 3.18.1 General 15
\n 3.18.2 Switching Tagging and Grounding 15
\n 3.19 Environmental Compliance and Procedures 15
\n 3.20 Operating Committee 16
\nARTICLE 4 – OPERATIONS 16
\n 4.1 General 16
\n 4.2 Generator’s Operating Obligations 17
\n 4.2.1 General 17
\n 4.2.2 Voltage or Reactive Control Requirements 18
\n<\/c><\/s><\/table>\n 187<\/p>\n
\n
\n 4.3 Auditing of Accounts and Records 19
\nARTICLE 5 — COST RESPONSIBILITIES AND BILLING PROCEDURES 19
\n 5.1 Cost Responsibilities for Interconnection Service 19
\n 5.2 Cost Responsibilities for Local Services 19
\n 5.3 Billing Procedures 20
\n 5.4 Billing Disputes 20
\nARTICLE 6 – CONFIDENTIALITY 21
\n 6.1 Confidentiality Obligations of Pepco 21
\n 6.2 Confidentiality Obligations of Generator 21
\n 6.3 Confidentiality of Audits 22
\n 6.4 Remedies 22
\nARTICLE 7 – EVENTS OF DEFAULT 22
\n 7.1 Events of Default 22
\n 7.2 Remedies 23
\nARTICLE 8 – LIMITATION OF LIABILITY 24
\n 8.1 Limitation of Pepco’s Liability 24
\n 8.2 Limitation on Generator’s Liability 24
\n 8.3 Consequential Damages 24
\nARTICLE 9 – INDEMNIFICATION FOR THIRD PARTY CLAIMS 25
\n 9.1 Generator’s Indemnification 25
\n 9.2 Pepco’s Indemnification 25
\n 9.3 Indemnification Procedures 26
\n 9.4 Survival 26
\nARTICLE 10 – INSURANCE 26
\n 10.1 Insurance Coverage 26
\n 10.2 Certificates of Insurance 26
\n 10.3 Additional Insureds and Waiver 26
\nARTICLE 11 – FORCE MAJEURE 27
\n 11.1 Effect of Force Majeure 27
\n 11.2 Force Majeure Defined 27
\n 11.3 Notification 27
\nARTICLE 12 – DISPUTES 28
\n 12.1 Disputes 28
\n 12.2 Arbitration 28
\n 12.3 FERC Dispute Resolution 29
\nARTICLE 13 – REPRESENTATIONS 29
\n 13.1 Representations of Pepco 29
\n 13.2 Representations of Generator 30
\nARTICLE 14 – ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY 32
\n 14.1 Assignment 32
\n 14.2 Release of Rights and Obligations 32
\n 14.3 Change in Corporate Identity 33
\n 14.4 Successors and Assigns 33
\n<\/c><\/s><\/table>\n 188<\/p>\n
\n
\nARTICLE 15 – SUBCONTRACTORS 33
\nARTICLE 16 – NOTICES 34
\n 16.1 Emergency Notices 34
\n 16.2 Notices 34
\nARTICLE 17 – AMENDMENTS 34
\n 17.1 Amendments 34
\n 17.2 FERC Proceedings 34
\nARTICLE 18 – MISCELLANEOUS PROVISIONS 35
\n 18.1 Waiver 35
\n 18.2 Labor Relations 35
\n 18.3 No Third Party Beneficiaries 35
\n 18.4 Governing Law 35
\n 18.5 Counterparts 36
\n 18.6 Interpretation 36
\n 18.7 Jurisdiction and Enforcement 36
\n 18.8 Entire Agreement 37
\n 18.9 Severability 37
\n 18.10 Independent Contractor Status 37
\n 18.11 Conflicts 37
\nSCHEDULE A DEFINITIONS 2
\nSCHEDULE B Pepco Facilities and Generator Facilities 7
\nSCHEDULE C – Points of Interconnection 9
\nSCHEDULE D – Switching, Tagging and Grounding Rules 11
\nSCHEDULE E – Pepco’s Interconnection Standards 14
\nSCHEDULE F – Local Services 15
\nSCHEDULE G – Pepco Current Projects 17
\nSCHEDULE H – Real Time Telemetry List 18
\n<\/c><\/s><\/table>\n 189<\/p>\n
INTERCONNECTION AGREEMENT (Potomac River)<\/p>\n
This Interconnection Agreement (“Agreement”) dated as of ____________,
\n2000 by and between Potomac Electric Power Company (“Pepco”) a District of
\nColumbia and Virginia corporation, and __________________ (“Generator”) a
\n___________ [corporation]. Pepco and Generator are each referred to herein as a
\n“Party,” and collectively referred to herein as the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco, and Generator have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (“Asset Sale Agreement”) dated
\nJune 7, 2000, for the sale by Pepco to Generator of certain assets comprising
\nthe Potomac River electric generation station;<\/p>\n
WHEREAS, Pepco intends to continue to operate its transmission and
\ndistribution businesses from their present locations;<\/p>\n
WHEREAS, Generator needs Interconnection Service from Pepco for the
\nPotomac River electric generating station;<\/p>\n
WHEREAS, Pepco needs access to parts of the Generator’s assets, and
\nGenerator needs access to parts of the Pepco’s assets; and<\/p>\n
WHEREAS, the Parties have agreed in the Asset Sale Agreement to execute
\nthis Agreement in order to provide Interconnection Service to Generator and to
\ndefine continuing responsibilities and obligations of the Parties with respect
\nto the use of the other Party’s property, assets and facilities as set forth
\nherein.<\/p>\n
NOW THEREFORE, in consideration of the mutual representations,
\ncovenants and agreements hereinafter set forth, and intending to be legally
\nbound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
Capitalized terms used in this Agreement shall have the meanings
\nspecified or referred to in Schedule A.<\/p>\n
190<\/p>\n
ARTICLE 2
\n TERM AND TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon consummation
\nof the Closing (“Effective Date”), and unless terminated sooner in accordance
\nwith the terms of this Agreement, shall continue in full force and effect until
\nthe earlier to occur of (i) the permanent cessation by the Generator of the
\npower generation functions of the Station or (ii) the permanent cessation of the
\ninterconnection functions of the Transmission System.<\/p>\n
2.2 Change in Law. If (a) the FERC, any state or state regulatory
\ncommission or the PJM Interconnection LLC implements a change in any law,
\nregulation, rule or practice, or (b) Pepco’s compliance with a change in any law
\nor regulation, which compliance, in either case, affects, or may reasonably be
\nexpected to affect, Pepco’s performance under this Agreement, the Parties shall
\nnegotiate in good faith any amendments to this Agreement that are necessary to
\nadapt the terms of this Agreement to such change, and Pepco shall file such
\namendments with the FERC.<\/p>\n
If the Parties are unable to reach agreement on such amendments, either Party
\nshall have the right to make a unilateral filing with the FERC to modify this
\nAgreement pursuant to Sections 205 or 206 or any other applicable provision of
\nthe Federal Power Act and the FERC rules and regulations thereunder; provided
\nthat the other Party shall have the right to oppose such filing and to
\nparticipate fully in any proceeding established by the FERC to address such
\namendments.<\/p>\n
2.3 Effect after Termination. The applicable provisions of this
\nAgreement shall continue in effect after cancellation or termination hereof to
\nthe extent necessary to provide for final billings, billing adjustments and
\npayments pertaining to liability and indemnification obligations arising from
\nacts or events that occurred while this Agreement was in effect.<\/p>\n
ARTICLE 3
\n CONTINUING OBLIGATIONS AND RESPONSIBILITIES<\/p>\n
3.1 Interconnection Service<\/p>\n
3.1.1 Subject to the terms and conditions of the Agreement,
\nPepco shall (a) permit the Station to continue to be interconnected to the
\nTransmission System at the Point of Interconnection, and (b) provide
\nInterconnection Service at the Point of Interconnection. Pepco agrees to permit
\nGenerator to interconnect<\/p>\n
191<\/p>\n
Station as long as Generator continues to operate such facilities pursuant to
\nPJM Requirements and Good Utility Practice.<\/p>\n
3.1.2 Interconnection Service shall not include, and Pepco
\nshall not be responsible under this Agreement for (a) transmission service,
\nlosses or ancillary services associated with the use of the Transmission System
\nfor the delivery of capacity, energy and\/or ancillary services produced by the
\nGenerating Facilities, or (b) providing or procuring capacity, energy and\/or
\nancillary services to the Generator or the Generating Facilities.<\/p>\n
3.1.3 The Generator’s interconnection to the Transmission
\nSystem of any new or expanded generating capacity of the Station shall (a) be
\nsubject to PJM Requirements and\/or FERC requirements governing interconnections
\nand (b) require a separate interconnection agreement mutually agreed to by the
\nParties in writing.<\/p>\n
3.1.4 Notwithstanding anything to the contrary in this
\nAgreement, Pepco’s performance of its obligations under this Agreement shall be
\nsubject to Generator entering into, and complying with, any PJM Generator
\nConnection Agreement which may be required pursuant to PJM Requirements with
\nrespect to Interconnection Service or the Station.<\/p>\n
3.2 New Construction or Modifications<\/p>\n
3.2.1 Pepco Construction or Modifications<\/p>\n
(a) Pepco shall make such additions,
\nmodifications, replacements and improvements to the Interconnection Facilities
\nas are required by PJM Requirements or Good Utility Practice to enable Pepco to
\nprovide Interconnection Service in compliance with this Agreement. Generator
\nshall pay all reasonable Costs incurred by Pepco for such additions,
\nmodifications, replacements or improvements.<\/p>\n
(b) Except with respect to operation and
\nmaintenance or ordinary maintenance done in the ordinary course of business or
\nto respond to abnormal or emergency conditions, if any additions, modifications,
\nreplacements or improvements to the Interconnection Facilities undertaken by
\nPepco might reasonably be expected to affect Generator’s operation of the
\nStation, Pepco shall provide one hundred twenty (120) days written notice to
\nGenerator prior to undertaking such additions, modifications, replacements or
\nimprovements. Any such additions, modifications, replacements or improvements
\nshall comply with PJM Requirements and Good Utility Practice. The Parties shall
\nmutually agree to the<\/p>\n
192<\/p>\n
scheduling of such addition, modification, replacement or improvement to
\nminimize any adverse impact on the Station. Generator shall be deemed to have
\naccepted Pepco’s proposed additions, modifications, replacements or improvements
\nunless Generator gives Pepco written notice of its objections within thirty (30)
\ndays after receipt of Pepco’s notice. Generator’s acceptance or deemed
\nacceptance of Pepco’s proposed additions, modifications, replacements or
\nimprovements shall not be construed, with respect thereto, as: (i) confirmation
\nor endorsement of the design; (ii) a warranty of safety, durability or
\nreliability; or (iii) responsibility for strength, details of design, adequacy
\nor capability.<\/p>\n
3.2.2 Generator Construction or Modifications<\/p>\n
(a) In the event Generator plans to increase the
\ncapacity of the Generating Facilities, Generator shall submit to Pepco any and
\nall plans and specifications that Pepco may reasonably request related to such
\nincrease. Such specifications and plans shall be submitted by Generator to Pepco
\nat the time that Generator submits its plans under the PJM Tariff related to
\nsuch expansion but no later than one hundred twenty (120) days prior to
\ncommencing such proposed increase. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice and
\nshall be subject to Section 3.1.3 of this Agreement.<\/p>\n
(b) If Generator plans any additions,
\nmodifications, or replacements to the Station that will not increase its
\ncapacity, but could reasonably be expected to affect the Transmission System or
\nthe Interconnection Facilities, Generator shall give Pepco reasonable notice,
\nbut not less than one hundred twenty (120) days prior written notice and
\nGenerator shall comply with all applicable PJM Requirements with respect to such
\nproposed additions, modifications, or replacements. All such additions,
\nmodifications, or replacements shall (i) comply with PJM Requirements and Good
\nUtility Practice, (ii) be accompanied by appropriate information and operating
\ninstructions, and (iii) be subject to the review and acceptance of Pepco, which
\nreview shall be based on PJM Requirements and Good Utility Practice and which
\nacceptance shall not unreasonably be withheld or delayed. Pepco shall be deemed
\nto have accepted Generator’s proposed additions, modifications or replacements
\nunless Pepco gives Generator written notice of its objections within thirty (30)
\ndays after receipt of the Generator’s notice.<\/p>\n
(c) Pepco’s acceptance of Generator’s plans and
\nspecifications for any proposed additions, modifications, or replacements to the
\nGenerating Facilities and Pepco’s participation in any interconnected operations
\nwith Generator are not and shall not be construed as: (i) confirmation or
\nendorsement of the design of the Generating Facilities; (ii) a warranty of
\nsafety, durability or reliability of the<\/p>\n
193<\/p>\n
Generating Facilities; or (iii) responsibility for strength, details of design,
\nadequacy, or capability of the Generating Facilities.<\/p>\n
(d) Pepco, pursuant to PJM Requirements, shall
\ninform Generator of any additions, modifications, or replacements to the
\nTransmission System or Interconnection Facilities, that will be necessary as a
\nresult of the addition, modification, or replacement to Station made pursuant to
\nSection 3.2.2. Generator shall compensate Pepco for all reasonable Costs it
\nincurs associated with any modifications, additions, or replacements made to the
\nInterconnection Facilities or Transmission System related to any additions,
\nmodifications, or replacements to the Generating Facilities. Pepco shall provide
\nan estimate as early as practicable, but in any event not less than sixty (60)
\ndays prior to the initiation of such addition, modification or replacement.<\/p>\n
(e) Generator shall modify, at its sole cost and
\nexpense, the Generating Facilities as may be reasonably required to conform with
\nPJM Requirements and Good Utility Practice or to conform with additions,
\nmodifications, or replacements of the Transmission System or the Interconnection
\nFacilities, required by PJM Requirements and Good Utility Practice or
\nimplemented in accordance with this Agreement, (including, without limitation,
\nchanges to the voltages at which the Transmission System is operated) provided,
\nhowever, that Generator shall not be obligated under this Agreement to
\nmodernize, expand or upgrade the Generating Facilities unless the failure to
\nmodernize, expand or upgrade is reasonably likely to have a material adverse
\neffect on the operation of Pepco’s Facilities.<\/p>\n
(f) Upon completion of any addition,
\nmodification, or replacement to the Generating Facilities that may reasonably be
\nexpected to affect the Transmission System or the Interconnection Facilities,
\nbut no later than ninety (90) days thereafter, Generator shall issue “as built”
\ndrawings to Pepco. Upon completion of any addition, modification, or replacement
\nto the Interconnection Facilities, that may reasonably be expected to affect the
\noperation of the Station, but no later than ninety (90) days thereafter, Pepco
\nshall issue “as built” drawings to the Generator.<\/p>\n
3.2.3 Modifications Affecting the Transmission System or
\n the Station<\/p>\n
(a) Notwithstanding anything herein to the
\ncontrary, except with respect to the projects or construction set forth in
\nSchedule G, no modifications to or new construction of facilities, or access
\nthereto, including but not limited to rights of way, fences, gates, shall be
\nmade by either Party which might reasonably be expected to adversely affect the
\nother Party with respect to such Party’s obligations<\/p>\n
194<\/p>\n
and responsibilities under this Agreement, without prior written notification as
\nset forth in Section 3.2.3(b) below, and without providing the other Party with
\nsufficient information regarding the work prior to commencement to enable such
\nParty to evaluate the impact of the proposed work on its operations. For all
\nmodifications reasonably expected to adversely affect the operations of the
\nother Party’s facilities, the Party shall provide at least one hundred twenty
\n(120) days written notice to the other Party prior to undertaking such
\nadditions, modifications or replacements. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice.<\/p>\n
(b) The Parties shall mutually agree to the
\nscheduling of such addition, modification, replacement or improvement proposed
\npursuant to Section 3.2.3(a) to minimize any adverse impact on the Station or
\nthe Transmission System. For all construction work, major modifications, or
\ncircuit changes involving new or existing facilities, equipment, systems or
\ncircuits that could reasonably be expected to affect the operation of either
\nParty, the Party desiring to perform said work shall provide the other Party
\nwith drawings, plans, specifications, and other necessary documentation for
\nreview at least sixty (60) days prior to the beginning of construction provided
\nthat for routine telecommunication work, the Party doing the work shall only be
\nrequired to provide 48 hours prior notice. The Party shall be deemed to have
\naccepted the proposed additions, modifications, replacements or improvements
\nunless the Party gives written notice of their objections within sixty (60) days
\nafter receipt of such notice. The Party’s acceptance or deemed acceptance of the
\nproposed additions, modifications, replacements or improvements shall not be
\nconstrued, with respect thereto, as: (i) confirmation or endorsement of the
\ndesign; (ii) a warranty of safety, durability or reliability; or (iii)
\nresponsibility for strength, details of design, adequacy or capability.<\/p>\n
3.3 Access, Easements, Conveyances, Licenses, and Restrictions<\/p>\n
3.3.1 The Parties hereby grant to each other such licenses,
\naccess and other rights to the Station and the Interconnection Facilities as may
\nbe necessary for either Party’s performance of their respective obligations
\nunder this Agreement. Such access shall be provided in a manner so as not to
\nunreasonably interfere with the ongoing business operations, rights, and
\nobligations of the other Party and shall be subject to the safety and security
\npractices of the Party granting such access. Access shall only be granted to
\nQualified Personnel.<\/p>\n
3.3.2 A Party shall not restrict a Party’s rights hereunder
\nto access the other Party’s property, facilities, or equipment without prior
\nwritten notification except in an Emergency, in which case the restricted access
\nshall last no longer than three (3) days, unless an alternate means of access is
\nprovided.<\/p>\n
195<\/p>\n
3.3.3 The Parties’ rights with respect to access to their
\nrespective facilities properties shall also be governed by the Easement.<\/p>\n
3.4 Facility and Equipment Maintenance<\/p>\n
3.4.1 Pepco shall provide Interconnection Service at the
\nPoint of Interconnection in a safe and efficient manner and pursuant to PJM
\nRequirements and Good Utility Practice. Generator shall be responsible for all
\nreasonable Costs incurred by Pepco to provide Interconnection Service and to
\nMaintain the Interconnection Facilities pursuant to the Agreement.<\/p>\n
3.4.2 Generator shall Maintain the Generating Facilities
\n(including coordination of its relay protection equipment) in a safe and
\nefficient manner and as required by and in accordance with PJM Requirements and
\nGood Utility Practice, provided, however, that Generator shall not be obligated
\nto modernize, expand or upgrade the Generating Facilities unless the failure to
\nmodernize, expand or upgrade is reasonably likely to have a material adverse
\naffect on the operation of the Interconnection Facilities or the Transmission
\nSystem.<\/p>\n
3.4.3 Unless otherwise specified herein, or unless the
\nParties mutually agree to a different arrangement, neither Party shall be
\nresponsible for the maintenance of the other Party’s equipment or property
\nregardless of its location.<\/p>\n
3.4.4 In addition to the requirements set forth elsewhere
\nin this Agreement, each Party shall Maintain its equipment and facilities and
\nperform its maintenance obligations that could reasonably be expected to affect
\nthe operations of the other Party in a safe and efficient manner and pursuant to
\nPJM Requirements and Good Utility Practice.<\/p>\n
3.5 Pepco Facilities and Generator Facilities. Unless otherwise
\nagreed to by the Parties, the Party owning Pepco Facilities or Generator
\nFacilities shall Maintain those facilities and shall do so pursuant to PJM
\nRequirements and Good Utility Practice and shall make such additions,
\nmodifications, replacements and improvements as are required by PJM requirements
\nand Good Utility Practice or which are necessary to maintain Interconnection
\nService, provided, however, that the Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generator Facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of the Transmission System or Interconnection
\nFacilities.<\/p>\n
3.6 Equipment Testing Obligations<\/p>\n
196
\n 3.6.1 For reliability purposes with respect to the
\nInterconnection Facilities and the Transmission System, Pepco may reasonably
\nrequest, pursuant to PJM Requirements, or Good Utility Practice, that Generator
\ntest, calibrate, verify, or validate the Generating Facilities or its equipment,
\nand Generator shall promptly comply with such a request. Generator shall be
\nresponsible for all costs of testing, calibrating, verifying or validating its
\nfacilities.<\/p>\n
3.6.2 At Pepco’s request, Generator shall supply to Pepco
\nat no cost, copies of inspection reports, installation and maintenance
\ndocuments, test and calibration records, verifications, and validations pursuant
\nto the foregoing Section 3.6.1. Pepco shall supply to Generator, at Generator’s
\nrequest and at no cost to Generator, copies of inspection reports, installation
\nand maintenance documents, test and calibration records, verifications, and
\nvalidations that Pepco has which are related to the Interconnection Facilities.<\/p>\n
3.7 Inspections<\/p>\n
3.7.1 Pepco shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work to the Generating Facilities.
\nSuch access by Pepco shall be exercised in a manner which does not unreasonably
\ninterfere with Generator’s ongoing business operations, rights and obligations
\nand shall be subject to Generator’s safety and security practices. If Pepco
\nobserves any deficiencies or defects with respect thereto that might reasonably
\nbe expected to adversely affect the Transmission System or the Interconnection
\nFacilities, Pepco shall notify the Generator, and Generator shall immediately
\nmake any corrections necessitated by PJM Requirements and Good Utility Practice.
\nNotwithstanding the foregoing in this Section 3.7.1, Pepco shall have no
\nliability whatsoever for any failure to fully or adequately observe any
\ndeficiency, it being agreed that Generator shall be fully responsible and liable
\nfor all such deficiencies, activities, equipment tests, installation,
\nconstruction or modification.<\/p>\n
3.7.2 Generator shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work conducted by Pepco to the
\nInterconnection Facilities. Such access by Generator shall be exercised in a
\nmanner which does not unreasonably interfere with Pepco’s ongoing business
\noperations, rights and obligations and shall be subject to Pepco’s safety and
\nsecurity practices. If Generator observes any deficiencies or defects with
\nrespect thereto that might reasonably be expected to adversely affect the
\nStation, Generator shall notify Pepco, and Pepco shall immediately make any
\ncorrections necessitated by applicable PJM Requirements and Good Utility
\nPractice. Notwithstanding the foregoing in this<\/p>\n
197<\/p>\n
Section 3.7.2, Generator shall have no liability whatsoever for any failure to
\nfully or adequately observe any deficiency, it being agreed that Pepco shall be
\nfully responsible and liable for all such deficiencies, activities, equipment
\ntests, installation, construction or modification.<\/p>\n
3.8 Information Reporting Obligations<\/p>\n
3.8.1 In order to provide Interconnection Service
\nhereunder, Pepco may request, and Generator shall promptly provide, all relevant
\ninformation, documents, or data regarding the Generating Facilities that would
\nbe expected to materially affect the Transmission System, and which is
\nreasonably requested by NERC, MAAC, the PJM Interconnection LLC, the MDPSC, the
\nDistrict of Columbia Public Service Commission and any other state or District
\nof Columbia agency having jurisdiction over Pepco or Generator, the PJM System
\nOperator, or the Transmission Operator, which disclosure shall be subject to
\nArticle 6 of this Agreement regarding the disclosure of commercially sensitive
\ninformation.<\/p>\n
3.8.2 Generator shall promptly supply accurate, complete,
\nand reliable information in response to reasonable information requests for real
\ntime data and other data from Pepco necessary for operations, maintenance,
\ncompliance with PJM Requirements or regulatory requirements, or analysis of the
\nInterconnection Facilities or the Transmission System. Such information may
\ninclude metered values for MW and MVAR, voltage, current, automatic voltage
\nregulator status, automatic frequency control, dispatch, frequency, breaker
\nstatus indication, or any other information reasonably required for reliable
\noperation of the Transmission System pursuant to PJM Requirements and Good
\nUtility Practice. At minimum, Generator shall satisfy the telemetry requirements
\nset forth in Schedule H.<\/p>\n
3.8.3 Information pertaining to generation operating
\nparameters shall be gathered and electronically transmitted directly to Pepco’s
\nenergy management system using a mutually acceptable communications protocol.<\/p>\n
3.8.4 Generator shall be responsible for the maintenance,
\nand any required replacements or upgrades of the field devices and equipment
\nused to gather information regarding generation operating parameters.<\/p>\n
3.8.5 Generator shall Maintain, at its expense, operating
\ntelephone links to the PJM Interconnection LLC, PJM System Operator, Pepco and
\nthe Transmission Operator, to provide information deemed necessary by them, or
\nas reasonably deemed necessary by Pepco in accordance with PJM Requirements or
\nGood Utility Practice to integrate operation of the Station with the
\nTransmission<\/p>\n
198<\/p>\n
System, provided, however, that Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generator’s facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of the Transmission System. Generator shall use
\ncommunication links at the Station consisting of the mobile radio low band C
\nfrequency and “all call” and “red phone” systems currently located at the
\nStation (or successor systems as may reasonably be required by Pepco) and shall
\nmaintain the availability of such systems to operate during abnormal conditions
\nincluding blackouts.<\/p>\n
3.9 Local Services<\/p>\n
3.9.1 General<\/p>\n
(a) The Parties agree that, due to the
\nintegration of certain control schemes of the Station and the Transmission
\nSystem, it is cost effective to provide each other with the services set forth
\nin Sections 3.10 and 3.11 in accordance with the terms and conditions set forth
\ntherein.<\/p>\n
(b) The Parties shall ensure, in accordance with
\nGood Utility Practice, that services provided by one Party to the other Party
\npursuant to Sections 3.10 and 3.11 shall be available at all times and in the
\nmanner and at the prices specified herein. Notwithstanding the foregoing, either
\nParty may change the services, provided that (1) there is no cost to the
\nreceiving Party as a result of such change, (2) the quality, reliability and
\nintegrity of the replacement services is equivalent to the existing service, and
\n(3) there is otherwise no materially adverse effect on the receiving Party.<\/p>\n
(c) Neither Party shall terminate any services
\nset forth in Sections 3.10 and 3.11 below that it agrees to provide to the other
\nParty, without the other Party’s prior written consent, which consent shall not
\nbe unreasonably withheld or delayed, provided, however, if a Party receiving a
\nservice under Sections 3.10 or 3.11 no longer needs or desires a particular
\nservice, said Party shall notify the other Party and the providing Party shall
\nterminate said services as soon thereafter as practicable.<\/p>\n
3.9.2 Temporary Suspension of Local Services<\/p>\n
(a) The Party providing a service set forth in
\nSections 3.10 or 3.11 below shall notify and obtain approval, which approval
\nshall not be unreasonably withheld or delayed, from the receiving Party of any
\nscheduled temporary<\/p>\n
199<\/p>\n
suspension of services at least five (5) business days in advance of such
\nsuspension. Such notification shall include an estimated time duration for a
\nreturn to normal conditions.<\/p>\n
(b) In the event of any unplanned or forced
\nsuspension of the services set forth in Sections 3.10 or 3.11, below, the
\nproviding Party shall immediately notify the other Party first verbally and then
\nin writing. The providing Party shall use all reasonable efforts to minimize the
\nduration of said suspension.<\/p>\n
(c) The Parties agree to complete any repairs,
\nmodifications or corrections, in accordance with Good Utility Practice, that are
\nnecessary to restore to the other Party as soon as reasonably practicable any
\nservices set forth in Sections 3.10 or 3.11 below that have been suspended.<\/p>\n
3.10 Pepco Provided Services: Schedule F sets forth the local
\nservices Pepco shall provide to the Generator pursuant to the terms of this
\nAgreement. Unless otherwise specified in Schedule F, for a period of three (3)
\nyears after the Effective Date (the “Initial Period”) and subject to Section 3.9
\nabove, Pepco shall provide Generator with the local services set forth in
\nSchedule F at no cost and in consideration of the local services Generator shall
\nprovide Pepco in accordance with Section 3.11 below. If Generator desires the
\ncontinuation of any of the services set forth in Schedule F which are subject to
\nthe Initial Period to continue after the Initial Period, upon Generator’s
\nwritten request to Pepco made at least 60 days prior to the expiration of the
\nInitial Period, the Parties shall engage in good faith negotiations to reach
\nmutually agreeable terms and conditions upon which such services will continue,
\nprovided, however, that if such agreement is not reached prior to the expiration
\nof the Initial Period, Pepco shall cease to provide services under Section 3.10
\nat the end of the Initial Period.<\/p>\n
3.11 Generator Provided Services. Schedule F sets forth the local
\nservices Generator shall provide to Pepco pursuant to the terms of this
\nAgreement. Unless otherwise specified in Schedule F, for the Initial Period and
\nsubject to Section 3.9 above, Generator shall provide Pepco with the local
\nservices set forth in Schedule F at no cost and in consideration of the local
\nservices Pepco shall provide Generator in accordance with Section 3.10 above. If
\nPepco desires the continuation of any of the services set forth in Schedule F
\nwhich are subject to the Initial Period to continue after the Initial Period,
\nupon Pepco’s written request to Generator made at least 60 days prior to the
\nexpiration of the Initial Period, the Parties shall engage in good faith
\nnegotiations to reach mutually agreeable terms and conditions upon which such
\nservices will continue, provided, however, that if such agreement is not reached
\nprior to the expiration of the Initial Period, Generator shall cease to provide
\nservices under Section 3.11 at the end of the Initial Period.<\/p>\n
200<\/p>\n
3.12 Optional Services: Generator may request that Pepco provide
\nthe following services to the Generator, provided, however, that Pepco shall not
\nhave any obligation to provide such services unless the Parties have mutually
\nagreed in writing to the price and other terms and conditions of such service:<\/p>\n
(a) PJM interface and dispatch services through the Pepco
\ncontrol center;<\/p>\n
(b) use of Pepco’s communication services;<\/p>\n
(c) maintenance of certain auxiliary and communications
\nequipment at the Station;<\/p>\n
(d) maintenance of high-voltage and medium-voltage
\nequipment such as power transformers and power circuit breakers;<\/p>\n
(e) maintenance of protective relaying, certain control
\nequipment, such as AGC and MSVC, plant batteries and revenue meters owned by
\nGenerator.<\/p>\n
3.13 Metering and Telemetering<\/p>\n
3.13.1 Generator shall, at Generator’s expense: (a) own,
\nMaintain, and repair, all Revenue Meters, instrument transformers and
\nappurtenances associated with Revenue Meters, and real time telemetry, (b)
\nconduct meter accuracy and tolerance tests, and (c) prepare all calibration
\nreports required for equipment that measures energy transfers at the Point of
\nInterconnection. All meter accuracy and tolerance testing hereunder shall be in
\naccordance with PJM Requirements and Good Utility Practice and shall be
\nconducted, at Pepco’s request, in the presence of Pepco’s representative.<\/p>\n
3.13.2 Generator shall own and Maintain, at the Generator’s
\nexpense, equipment for redundant real-time communications and transmission of
\ntelemetry, hourly MWh information, and such other information as required by the
\nPJM System Operator or Transmission Operator, or as reasonably required by Pepco
\nin accordance with PJM Requirements and Good Utility Practice.<\/p>\n
3.14 Emergency Procedure<\/p>\n
3.14.1 Pepco, through the Transmission Operator, shall
\nprovide Generator with prompt verbal notification of Emergencies with regard to
\nthe Transmission System which may reasonably be expected to affect Generator’s<\/p>\n
201<\/p>\n
immediate operation of the Station or Generator Facilities, and Generator shall
\nprovide Pepco with prompt verbal notification of Emergencies with regard to the
\nStation which may reasonably be expected to affect Interconnection Service or
\nthe Transmission System. Such notification shall describe the Emergency, the
\nextent of damage or deficiency, the anticipated length of an outage and the
\ncorrective action taken and\/or to be taken. Said verbal notification shall be
\nfollowed as soon as practicable (but no later than 24 hours after the verbal
\nnotification) with written notification.<\/p>\n
3.14.2 If an Emergency in the good faith judgment of a Party
\nendangers or could endanger life or property, the Party recognizing the problem
\nshall take such action as may be reasonable and necessary to prevent, avoid, or
\nmitigate injury, danger, or loss. If however the Emergency involves transmission
\nor electrical equipment, Generator shall notify the Transmission Operator, and
\nobtain the consent of such personnel, prior to performing any switching
\noperations.<\/p>\n
3.14.3 Pepco may, consistent with PJM Requirements and Good
\nUtility Practice, have the Transmission System Operator take whatever actions
\n(including tripping Generator’s synchronizing breakers) or inactions it deems
\nnecessary during an Emergency to: (a) preserve public safety; (b) preserve the
\nintegrity of the Transmission System, (c) limit or prevent damage; or (d)
\nexpedite restoration of service. If any action or inaction by Pepco or the
\nTransmission Operator under this Section 3.14 results in the discontinuation,
\ncurtailment, interruption or reduction of Interconnection Service, Pepco shall
\nuse reasonable efforts consistent with PJM Requirements and Good Utility
\nPractice to restore Interconnection Service as promptly as practicable and to
\nminimize the effect of such restoration of service on the Station.<\/p>\n
3.15 Interconnection Service Interruptions<\/p>\n
3.15.1 If at any time, in the reasonable exercise of the PJM
\nSystem Operator’s judgment, or the Transmission Operator’s judgment exercised in
\naccordance with PJM Requirements or Good Utility Practice and on a
\nnon-discriminatory basis, a condition exists, including the operation of
\nGenerator’s equipment, which might reasonably be expected to have a materially
\nadverse affect on the quality of service rendered by Pepco (including services
\nrendered to transmission or distribution customers) or interferes with the safe
\nand reliable operation of the Transmission System, Pepco may discontinue,
\ncurtail, reduce and\/or interrupt Interconnection Service until the condition has
\nbeen corrected.<\/p>\n
3.15.2 Unless the PJM System Operator, the Transmission
\nOperator or Pepco perceives that an Emergency exists or the risk of one is
\nimminent, Pepco<\/p>\n
202<\/p>\n
shall give Generator reasonable notice of its intention to discontinue, curtail,
\ninterrupt or reduce Interconnection Service in response to the interfering
\ncondition and, where practical, allow suitable time for Generator to remove the
\ninterfering condition if it is the result of Generator’s operations, before the
\ndiscontinuation, curtailment, interruption or reduction commences. Pepco’s
\njudgment with regard to the interruption of service under this paragraph shall
\nbe made pursuant to PJM Requirements and Good Utility Practice. In the case of
\nsuch interruption, Pepco shall immediately confer with Generator regarding the
\nconditions causing such interruption and its recommendation concerning timely
\ncorrection thereof. In the event Interconnection Service is interrupted under
\nthis section due to Generator’s failure to operate and Maintain the Generating
\nFacilities pursuant to PJM Requirements or Good Utility Practice, Generator
\nshall compensate Pepco for all costs reasonably incurred by Pepco attributable
\nto the interruption and restoration of Interconnection Service. Pepco shall use
\nreasonable efforts consistent with PJM Requirements and Good Utility Practice to
\nrestore Interconnection Service interrupted, curtailed or reduced pursuant to
\nthis Section 3.15 as promptly as practicable and to minimize the effect of such
\nrestoration of service on the Station.<\/p>\n
3.16 Unit Status Notification<\/p>\n
3.16.1 Generator acknowledges that Pepco requires
\ninformation regarding the status of the Station for Transmission System
\nreliability purposes. Accordingly, by 10:00 a.m. of each day, the Generator
\nshall provide Pepco the following information regarding the status of the
\nStation for the following day: Station availability to provide energy and
\ncapacity, the Station’s scheduled on and off times, Station synchronization,
\nplanned outages or deratings, and generation restrictions and limitations.
\nGenerator shall immediately notify Pepco of any changes to the information
\nprovided pursuant to the foregoing sentence.<\/p>\n
3.16.2 In circumstances, such as forced outages, Generator
\nshall notify Pepco of its generating unit’s temporary interruption of generation
\nas soon as practicable; and it shall provide Pepco, as soon as practicable, with
\na schedule of when generation will be resumed.<\/p>\n
3.17 Scheduled Maintenance Notification and Coordination<\/p>\n
3.17.1 Local Routine Inspection and Maintenance. The Parties
\nagree that, due to the integration of certain control and protective relaying
\nschemes between the Station and the Interconnection Facilities, it will be
\nnecessary for them to cooperate in the inspection, maintenance and testing of
\nthese areas of integration. Each Party will provide advance notice to the other
\nParty before undertaking any work in these areas, especially in electrical
\ncircuits involving circuit breaker trip and<\/p>\n
203<\/p>\n
close contacts, current transformers or potential transformers and such work
\nwill be performed in accordance with PJM Requirements and Good Utility Practice.<\/p>\n
3.17.2 Transmission System Maintenance. Pepco shall consult
\nwith Generator regarding timing of scheduled maintenance of the Interconnection
\nFacilities or the transmission facilities of the Transmission System which Pepco
\nor the Transmission Operator performs and which might reasonably be expected to
\naffect the Station. Pepco shall, to the extent practicable, schedule any
\ntesting, shutdown, or withdrawal of said facilities to coincide with Generator’s
\nscheduled outages for the Station. To facilitate such consultation and to the
\nextent the information is not available from the PJM System Operator in a timely
\nmanner, in June of each year, or on another date mutually acceptable to the
\nParties, Generator shall furnish Pepco with non-binding preliminary generator
\nmaintenance schedules covering the upcoming two years and any material changes
\nthereto. In the event Pepco is unable to schedule the outage of its facilities
\nto coincide with Generator’s schedule, Pepco shall notify Generator as soon as
\npracticable of the reasons for the facilities’ outage, of the time scheduled for
\nthe outage to take place, and of its expected duration.<\/p>\n
3.18 Safety<\/p>\n
3.18.1 General. Pepco agrees with respect to the
\nInterconnection Facilities and the Transmission System, and Generator agrees
\nwith respect to the Station, that all work performed by either Party on such
\nfacilities which could reasonably be expected to affect the operations of the
\nother Party shall be performed in accordance with all applicable PJM
\nRequirements and Good Utility Practice.<\/p>\n
3.18.2 Switching Tagging and Grounding . Each Party shall
\ncomply with the Switching, Tagging and Grounding Rules. Pepco will notify
\nGenerator of any changes in its Switching, Tagging and Grounding Rules.
\nGenerator shall be responsible for all switching, tagging and grounding on
\nGenerator’s side of the Point of Interconnection and, except for Generator
\nFacilities, Pepco shall be responsible for all switching, tagging and grounding
\non its side of the Point of Interconnection.<\/p>\n
3.19 Environmental Compliance and Procedures<\/p>\n
3.19.1 Each Party shall be responsible for complying with
\nall Environmental Laws applicable to it with respect to its facilities or
\nproperty.<\/p>\n
204<\/p>\n
3.19.2 A Party shall notify the other Party first verbally
\nand then in writing, of any Releases of a Hazardous Substance or any type of
\nremediation activities related thereto as soon as possible but no later than
\ntwenty-four (24) hours after the occurrence if within the reasonable judgment of
\nthe Party said activities could reasonably be expected to have a material
\nadverse effect upon the operations of the other Party and shall promptly furnish
\nto the other Party copies of any reports filed with any governmental agencies
\ncovering such events. This Section 3.19.2 does not effect any allocation of
\nliability with respect to the Station pursuant to the Asset Sale Agreement.<\/p>\n
3.19.3 Neither Party shall knowingly take any actions which
\nmight reasonably be expected to have a material adverse environmental impact
\nupon the operations of the other Party without prior written notification and
\nagreement between then Parties.<\/p>\n
3.20 Operating Committee. The Parties shall establish an operating
\ncommittee consisting of one representative for each Party (“Operating
\nCommittee”). The Operating Committee shall act only by unanimous agreement or
\nconsent. The Parties shall designate their respective representatives to the
\nOperating Committee, plus an alternate by written notice. Each Party’s
\nrepresentative on the Operating Committee is authorized to act on behalf of such
\nParty with respect to any matter arising under this Agreement which is to be
\ndecided by the Operating Committee, however, the Operating Committee shall not
\nhave any authority to modify or otherwise alter the rights and obligations of
\nthe Parties hereunder. The Operating Committee shall develop and implement
\nsuitable policies and procedures with which to coordinate the interaction of the
\nParties with respect to the performance of their duties and obligations under
\nthis Agreement.<\/p>\n
ARTICLE 4
\n OPERATIONS<\/p>\n
4.1 General<\/p>\n
4.1.1 The Parties agree to operate their respective
\nequipment that could reasonably be expected to have a material effect on the
\noperations of the other Party in a safe and efficient manner and in accordance
\nwith PJM Requirements and Good Utility Practice, and otherwise in accordance
\nwith the terms of this Agreement.<\/p>\n
4.1.2 Generator shall comply with the requests, orders, and
\ndirectives of Pepco with respect to Interconnection Service to the extent such
\nrequests, orders<\/p>\n
205<\/p>\n
or directives are (a) issued pursuant to PJM Requirements or Good Utility
\nPractice, (b) not discriminatory; and (c) otherwise in accordance with this
\nAgreement or applicable tariffs.<\/p>\n
4.1.3 In the event Generator believes that a request,
\norder, or directive of Pepco exceeds the limitations in this Section 4.1.2, it
\nshall nevertheless comply with the request, order, or directive pending
\nresolution of the dispute under Article 12. The Parties agree to cooperate in
\ngood faith to expedite the resolution of any disputes arising under this Section
\n4.1.<\/p>\n
4.2 Generator’s Operating Obligations<\/p>\n
4.2.1 General. Generator shall request permission from the
\nTransmission Operator, the PJM System Operator or the PJM Interconnection LLC,
\nas applicable, prior to opening and\/or closing circuit breakers in accordance
\nwith applicable switching and operations procedures and Good Utility Practice.<\/p>\n
(a) Generator shall carry out all switching
\norders from the Transmission Operator, the PJM System Operator, or the PJM
\nInterconnection LLC, in a timely manner and in accordance with PJM Requirements
\nand Good Utility Practice.<\/p>\n
(b) Generator shall (i) comply with Pepco’s
\nsystem restoration plan and black start criteria applicable to the Station as
\nconfigured as of the Effective Date or (ii) if the Station’s configuration is
\nmodified, provide alternative service restoration and black start capability in
\naccordance with PJM Requirements. Generator shall ensure that operating
\npersonnel at the Station are trained to implement such system restoration or
\nblack start plans. The Generator shall test the Station’s black-start
\ncombustion-turbines annually to confirm that the black-start combustion-turbines
\nwill start without an external power supply. The Generator shall test the
\nStation’s steam turbine-generators and those combustion-turbine generators that
\nwould be required to be black-started in accordance with Pepco’s Emergency
\nConditions and System Restoration Manual, as revised from time to time, and
\nplant restoration procedures, at least once every three years. Testing shall
\nconfirm the ability of a generating unit or Station to go from a shut down
\ncondition to an operating condition and start delivering power without
\nassistance from the Transmission System. These testing requirements shall remain
\nin place until PJM promulgates specific rules governing black-start testing.<\/p>\n
206<\/p>\n
(c) The electricity supplied by Generator to the
\nPoint of Interconnection shall be in the form of three-phase 60 Hertz
\nalternating current at the nominal system voltage.<\/p>\n
(d) Generator’s equipment shall conform with
\nGood Utility Practice for harmonic distortion and voltage fluctuation.<\/p>\n
(e) The Generator shall Maintain the equipment
\nto display and to follow the export\/import signal on the export\/import meters
\nwhen directed to do so by Pepco, the Transmission Operator or the PJM System
\nOperator for reliability purposes.<\/p>\n
4.2.2 Voltage or Reactive Control Requirements. Unless
\notherwise agreed to by the Parties or authorized or directed by the PJM
\nInterconnection LLC, Generator shall operate the Station with automatic voltage
\nregulators in service at all times. The voltage regulators will control voltage
\nat the Points of Interconnection consistent with the range of voltage prescribed
\nby Pepco or the Transmission System Operator in accordance with PJM Requirements
\nand Good Utility Practice.<\/p>\n
(a) Generator will operate the Station in
\naccordance with prescribed voltage schedules pursuant to Section 4.2.2 to the
\nextent the Station is operating within its reactive generating capability and
\nnot violating any electrical constraints.<\/p>\n
Should Generator fail to comply with such voltage schedules, Pepco or the
\nTransmission Operator, as applicable, shall provide written notice to the
\nGenerator of its intent to remedy that failure. If Generator does not promptly
\ncommence appropriate action after receiving such notice, Pepco or the
\nTransmission Operator may then take any necessary action at Generator’s expense
\nto remedy such failure, including the installation of capacitor banks or other
\nreactive compensation equipment necessary to ensure the proper voltage or
\nreactive supply at the Station including, at a minimum, by installing such
\nequipment outside any building housing the Generation Facilities. Pepco shall
\nmake, to the extent feasible, reasonable efforts to minimize the impact of such
\naction on the operation of the Station.<\/p>\n
(b) Generator shall notify the Transmission
\nOperator if (a) any or all generating units at the Station reaches a VAR limit,
\n(b) there is any deviation from the voltage schedules prescribed pursuant to
\nSection 4.2.2 which is outside the limits permitted by PJM Requirements or Good
\nUtility Practice, or (c) any automatic voltage regulator is removed from or
\nrestored to service.<\/p>\n
(c) The Transmission Operator may from time to
\ntime, pursuant to PJM Requirements or Good Utility Practice, request or direct
\nGenerator to<\/p>\n
207<\/p>\n
adjust generator controls that impact the Transmission System, such as
\nexcitation, droop, and automatic generation control settings and Generator shall
\ncomply with such request or directions.<\/p>\n
(d) Generator acknowledges that the Transmission
\nOperator may have the right, to the extent authorized or directed by the PJM
\nInterconnection LLC, to require reduced or increased generation of the Station
\nin accordance with PJM Requirements, or in accordance with applicable rules of
\nthe Transmission Operator.<\/p>\n
4.3 Auditing of Accounts and Records. The Parties shall have the
\nright, during normal business hours, to audit each other’s accounts and records
\npertaining to transactions under this Agreement, upon twenty (20) days prior
\nwritten notice, at the offices where such accounts and records are maintained,
\nprovided, however, that the audit shall be limited to those portions of the
\naccounts and records that are related to services provided to the other Party
\nunder this Agreement. Any such audit of a Party’s accounts and records will be
\nat the expense of the auditing Party, shall not be made more frequently than
\nonce in any twelve (12) month period, and no such audit may be made with respect
\nto accounts and records relating to periods more than twenty-four (24) months
\nprior to the date of the audit notice. The Party being audited will be entitled
\nto review the audit report and any supporting materials. The Party conducting
\nthe audit shall maintain the confidentiality of all information obtained during
\nthe audit in compliance with Article 6 of this Agreement. To the extent that
\naudited information includes confidential information, the auditing Party shall
\ndesignate an independent auditor at its expense to perform such audit.<\/p>\n
ARTICLE 5
\n COST RESPONSIBILITIES AND BILLING PROCEDURES<\/p>\n
5.1 Cost Responsibilities for Interconnection Service. Except as
\notherwise expressly stated herein, Generator shall not be responsible for any
\ncosts arising from Pepco’s provision of Interconnection Service or local
\nservices to Generator, except for those costs specified in Sections 3.2.1,
\n3.2.2, 3.4.1, and 3.15 or arising from the liability or indemnification
\nprovisions of this Agreement.<\/p>\n
5.2 Cost Responsibilities for Local Services. Except as otherwise
\nexpressly provided herein or agreed to by the Parties, each Party shall be
\nresponsible for the costs for local services provided to the other Party in
\nSections 3.10 and 3.11 as set forth in said sections.<\/p>\n
208<\/p>\n
5.3 Billing Procedures<\/p>\n
(a) Within ten (10) days after the first day of
\neach calendar month, each Party shall provide the other Party with a written
\ninvoice for any payments due from the other Party for services provided in the
\nprevious month.<\/p>\n
(b) Each invoice shall (i) delineate the month
\nin which the services were provided, (ii) fully describe the services rendered,
\n(iii) be itemized to reflect the services performed or provided, and (iv)
\nprovide reasonable detail as to the calculation of the amount involved.<\/p>\n
(c) All invoices shall be paid within fifteen
\n(15) days after receipt, but not earlier than the 25th day of the month in which
\nthe invoice is rendered. All payments shall be made in immediately available
\nfunds payable to the other Party, or by wire transfer to a bank designated in
\nwriting by such Party. Payment of invoices shall not relieve the paying Party
\nfrom any responsibilities or obligations it has under this Agreement, nor shall
\nsuch payment constitute a waiver of any claims arising hereunder.<\/p>\n
5.3.2 To the extent that, for any billing period, Generator
\nis obligated to pay to Pepco amounts due and calculated pursuant to Section 5.3,
\nPepco may use such amounts as a set-off against any amounts owed by Pepco to
\nGenerator under this Section 5.3.<\/p>\n
5.3.3 Interest on any unpaid amounts shall be calculated in
\naccordance with the methodology specified for interest on refunds in FERC
\nregulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on delinquent
\namounts shall be calculated from the due date of the bill to the date of
\npayment. When payments are made by mail, bills shall be considered as having
\nbeen paid on the date of receipt by the other Party.<\/p>\n
5.4 Billing Disputes. In the event of a billing dispute between
\nthe Parties, each Party shall continue to provide services as long as the other
\nParty continues to make all payments not in dispute. Payment of invoices by
\neither Party shall not relieve the paying Party from any responsibilities or
\nobligations it has under this Agreement; nor shall it constitute a waiver of any
\nclaims arising hereunder.<\/p>\n
209<\/p>\n
ARTICLE 6
\n CONFIDENTIALITY<\/p>\n
6.1 Confidentiality Obligations of Pepco. Pepco shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by Generator
\nin connection with this Agreement marked “Confidential” or “Proprietary.” Except
\nto the extent that such information or documents are (i) generally available to
\nthe public other than as a result of a disclosure by Pepco in breach of this
\nAgreement, (ii) available to Pepco on a non-confidential basis prior to
\ndisclosure to Pepco by Generator, or (iii) available to Pepco on a
\nnon-confidential basis from a source other than Generator, provided that such
\nsource is not known, and by reasonable effort could not be known, by Pepco to be
\nbound by a confidentiality agreement with Generator or otherwise prohibited from
\ntransmitting the information to Pepco by a contractual, legal or fiduciary
\nobligation, Pepco shall not release or disclose such information to any other
\nperson, except to its employees, representatives or agents on a need-to-know
\nbasis, in connection with this Agreement who has not first been advised of the
\nconfidentiality provisions of this Section 6.1 and has agreed in writing to
\ncomply with such provisions. In no event shall such information be disclosed in
\nviolation of the requirements of FERC Orders 889 and 889-A, and any successor
\nthereto. Pepco shall promptly notify Generator if it receives notice or
\notherwise concludes that the production of any information subject to this
\nSection 6.1 is being sought under any provision of law and Pepco shall use
\nreasonable efforts in cooperation with Generator to seek confidential treatment
\nfor such confidential information provided thereto.<\/p>\n
6.2 Confidentiality Obligations of Generator. Generator shall hold
\nin confidence, unless compelled to disclose by judicial or administrative
\nprocess or other provisions of law, all documents and information furnished by
\nPepco in connection with this Agreement marked “Confidential” or “Proprietary.”
\nExcept to the extent that such information or documents are (i) generally
\navailable to the public other than as a result of a disclosure by Generator in
\nbreach of this Agreement, (ii) available to Generator on a non-confidential
\nbasis prior to disclosure to Generator by Pepco, or (iii) available to Generator
\non a non-confidential basis from a source other than Pepco, provided that such
\nsource is not known, and by reasonable effort could not be known, by Generator
\nto be bound by a confidentiality agreement with Pepco or otherwise prohibited
\nfrom transmitting the information to Generator by a contractual, legal or
\nfiduciary obligation, Generator shall not release or disclose such information
\nto any other person, except to its employees, representatives or agents on a
\nneed-to-know basis, in connection with this Agreement who has not first been
\nadvised of the confidentiality provisions of this Section 6.2 and has agreed in
\nwriting to comply with such provisions. In no<\/p>\n
210<\/p>\n
event shall such information be disclosed in violation of the requirements of
\nFERC Orders 889 and 889-A, and any successor thereto. Generator shall promptly
\nnotify Pepco if it receives notice or otherwise concludes that the production of
\nany information subject to this Section 6.2 is being sought under any provision
\nof law and Generator shall use reasonable efforts in cooperation with Pepco to
\nseek confidential treatment for such confidential information provided thereto.<\/p>\n
6.3 Confidentiality of Audits. The independent auditor performing
\nany audit, as referred to in Section 4.3, shall be subject to a confidentiality
\nagreement between the auditor and the Party being audited. Such audit
\ninformation shall be treated as confidential except to the extent that its
\ndisclosure is required by regulatory or judicial order, for reliability purposes
\npursuant to PJM Requirements or Good Utility Practice, and pursuant to the
\nFERC’s rules and regulations. Except as provided herein, neither Party will
\ndisclose the audit information to any third party, without the other Party’s
\nprior written consent. Audit information in the hands of the Party not being
\naudited shall be subject to all provisions of Section 6.1 or 6.2, above, as
\napplicable.<\/p>\n
6.4 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its obligations
\nunder Section 6.1 or 6.2, above, as applicable. Each Party accordingly agrees,
\nsubject to Article 8, that the other Party shall be entitled to equitable
\nrelief, by way of injunction or otherwise, if the first Party breaches or
\nthreatens to breach its obligations under Section 6.1 or 6.2 of this Agreement,
\nas applicable, which equitable relief shall be granted without bond or proof of
\ndamages, and the receiving Party shall not plead in defense that there would be
\nan adequate remedy at law.<\/p>\n
ARTICLE 7
\n EVENTS OF DEFAULT<\/p>\n
7.1 Events of Default. Each of the following shall constitute an
\nEvent of Default by the a defaulting Party under this Agreement:<\/p>\n
(a) The failure by a Party to pay any amount due
\nwithin twenty (20) calendar days after receipt of written notice of nonpayment
\nby the other Party, unless the payment of such amount is disputed in good faith,
\nin which event Section 5.5 shall apply;<\/p>\n
(b) A Party’s breach of any material term or
\ncondition of this Agreement, including but not limited to any material breach of
\na representation,<\/p>\n
211<\/p>\n
warranty or covenant made in this Agreement which, after receiving written
\nnotice of the breach from the non-breaching Party (such notice to set forth in
\nreasonable detail the nature of the default and, where known and if applicable,
\nthe steps necessary to cure such default), (i)the breaching Party fails to cure,
\nif curable, within thirty (30) days following receipt of the notice or (ii) if
\nsuch default is of such a nature that it cannot be cured within thirty (30) days
\nfollowing receipt of such notice, the breaching Party fails within such thirty
\n(30) days to commence the necessary cure and fails at any time thereafter
\ndiligently and continuously to prosecute such cure to completion provided that
\nthe cure is completed no later than 180 days after the receipt of the default
\nnotice;<\/p>\n
(c) The appointment of a receiver, liquidator or
\ntrustee for either Party, and such receiver, liquidator or trustee is not
\ndischarged within sixty (60) days;<\/p>\n
(d) The entry of a decree or decrees
\nadjudicating a Party as bankrupt or insolvent, and such decree or decrees are
\nnot stayed or discharged within sixty (60) days; or<\/p>\n
(e) The filing of voluntary petitions for
\nbankruptcy under any federal or state bankruptcy law by a Party.<\/p>\n
7.2 Remedies<\/p>\n
7.2.1 If the breaching Party disputes that an Event of
\nDefault under Section 7.1.(b) has occurred, the breaching Party shall
\nnonetheless comply with this Section 7.2 pending the resolution of the dispute.
\nIf it is determined that no breach or Event of Default under Section 7.1(b)
\nexisted, the Party alleging the default shall pay and reimburse the other Party
\nfor all reasonable costs and expenses incurred by it to cure the alleged
\ndefault.<\/p>\n
7.2.2 Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (i) exercise all such rights and remedies as may be
\navailable to it at law or equity including seeking to recover damages caused by
\nsuch Event of Default, subject to Article 8 of this Agreement; and\/or (ii)
\nterminate this Agreement. The Parties shall not discontinue the performance of
\nany one or more of their obligations hereunder due to the occurrence of an Event
\nof Default during the pendency of any dispute regarding such Event of Default
\nand until such dispute is finally resolved except that Pepco may suspend or
\ninterrupt service if necessary for the safe and reliable operation of the
\nInterconnection Facilities or the Transmission System.<\/p>\n
212<\/p>\n
7.2.3 Notwithstanding the foregoing, upon the occurrence of
\nany Event of Default, the non-defaulting Party shall be entitled to commence an
\naction to require the defaulting Party to remedy such default by specifically
\nperformance of its duties and obligations hereunder in accordance with the terms
\nand conditions hereof.<\/p>\n
7.2.4 Notwithstanding anything in this Agreement to the
\ncontrary, in the event the Generator’s failure to comply with the provisions of
\nSections 4.1 and 4.2 of this Agreement is reasonably likely to have an immediate
\nand material adverse impact on Pepco or the Transmission System, Pepco shall
\nhave the right to take immediately reasonable steps and\/or to exercise
\nimmediately all remedies available under this Agreement, or at law or equity,
\nincluding the right, after providing as much notice as is practicable under the
\ncircumstances and complying with the applicable FERC notice requirements
\nregarding termination of service, to disconnect the Station from the
\nTransmission System.<\/p>\n
ARTICLE 8
\n LIMITATION OF LIABILITY<\/p>\n
8.1 Limitation of Pepco’s Liability. Pepco does not
\nguarantee the non-occurrence of, or warrant against, and will have no liability
\nhereunder for, and the Generator will release Pepco from all claims or damages
\nassociated with, any interruption in the availability of the Interconnection
\nFacilities, Interconnection Service or local services pursuant to Section 3.10
\nor damages to the Generator’s facilities, except to the extent such interruption
\nor damage is caused by Pepco’s gross negligence or willful misconduct in the
\nperformance of its obligations under this Agreement.<\/p>\n
8.2 Limitation on Generator’s Liability. Generator does
\nnot guarantee the non-occurrence of, or warrant against, and will have no
\nliability under this Agreement for, and Pepco will release Generator from all
\nclaims or damages arising under this Agreement which are associated with any
\ninterruption in the availability of the Station or local services pursuant to
\nSection 3.11, any reduction, curtailment, interruption or reduction of energy
\nfrom the Station, or damage to Pepco’s facilities, except to the extent such
\ninterruption or damage is caused by Generator’s gross negligence or willful
\nmisconduct in the performance of its obligations under the Agreement.<\/p>\n
8.3 Consequential Damages. Except for indemnity
\nobligations set forth in Article 9, neither Party, nor their respective
\nofficers, directors, agents, employees, Affiliates, or successors or assigns of
\nany of them, shall be liable to the other Party or its Affiliates, officers,
\ndirectors, agents, employees, successors or assigns for claims,<\/p>\n
213<\/p>\n
suits, actions or causes of action for incidental, punitive, special, indirect,
\nmultiple or consequential damages (including, without limitation, replacement
\npower costs, lost revenues, claims of customers, attorneys’ fees and litigation
\ncosts) connected with, or resulting from, performance or non-performance of this
\nAgreement, or any actions undertaken in connection with or related to this
\nAgreement, including, without limitation, any such damages which are based upon
\ncauses of action for breach of contract, tort (including negligence and
\nmisrepresentation), breach of warranty or strict liability. The provisions of
\nthis Section 8.3 shall apply regardless of fault and shall survive termination,
\ncancellation, suspension, completion, or expiration of this Agreement.<\/p>\n
ARTICLE 9
\n INDEMNIFICATION FOR THIRD PARTY CLAIMS<\/p>\n
9.1 Generator’s Indemnification. Generator shall
\nindemnify, hold harmless, and defend Pepco and its Affiliates, as the case may
\nbe, and their respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between Pepco and a third party or
\nGenerator) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Pepco’s employees or any third parties, to the
\nextent caused, by the negligence or willful misconduct of Generator’s and\/or its
\nofficers, directors, employees, agents, contractors, subcontractors or invitees
\narising out of or connected with Generator’s performance or breach of this
\nAgreement, or the exercise by Generator of its rights hereunder. In furtherance
\nof the foregoing indemnification and not by way of limitation thereof, Generator
\nhereby waives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
9.2 Pepco’s Indemnification. Pepco shall indemnify, hold
\nharmless, and defend Generator and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between the Generator and a third party or Pepco)
\nfor damage to property of unaffiliated third parties, injury to or death of any
\nperson, including Generator’s employees or any third parties, to the extent
\ncaused by the negligence or willful misconduct of Pepco and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Pepco’s performance or breach of this Agreement, or the
\nexercise by Pepco of its rights hereunder. In furtherance of the<\/p>\n
214<\/p>\n
foregoing indemnification and not by way of limitation thereof, Pepco hereby
\nwaives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
9.3 Indemnification Procedures. If either Party intends
\nto seek indemnification under this Article 9 from the other Party, the Party
\nseeking indemnification shall give the other Party notice of such claim within
\nninety (90) days of the later of the commencement of, or the Party’s actual
\nknowledge of, such claim or action. Such notice shall describe the claim in
\nreasonable detail, and shall indicate the amount (estimated if necessary) of the
\nclaim that has been, or may be sustained by, said Party. To the extent that the
\nother Party will have been actually and materially prejudiced as a result of the
\nfailure to provide such notice, such notice will be a condition precedent to any
\nliability of the other Party under the provisions for indemnification contained
\nin this Agreement. Neither Party may settle or compromise any claim without the
\nprior consent of the other Party; provided, however, said consent shall not be
\nunreasonably withheld or delayed.<\/p>\n
9.4 Survival. The indemnification obligations of each
\nParty under this Article 9 shall continue in full force and effect regardless of
\nwhether this Agreement has either expired or been terminated or canceled.<\/p>\n
ARTICLE 10
\n INSURANCE<\/p>\n
10.1 Insurance Coverage. The Parties shall maintain at
\ntheir own cost and expense, fire, liability, worker’s compensation, and other
\nforms of insurance relating to their respective property and facilities subject
\nto this Agreement in the manner, and amounts, and for the durations as is
\ncustomary in the electric utility industry.<\/p>\n
10.2 Certificates of Insurance. The Parties agree to
\nfurnish each other with certificates of insurance evidencing the insurance
\ncoverage obtained in accordance with this Article 10, and the Parties agree to
\nnotify and send copies to the other of any policies maintained hereunder upon
\nwritten request by a Party. Each Party must notify the other Party within ten
\n(10) business days of receiving notice of cancellation, change, amendment or
\nrenewal of any insurance policy required pursuant to Section 10.1 above.<\/p>\n
10.3 Additional Insureds and Waiver. Each Party and its
\naffiliates shall be named as additional insureds on the general liability
\ninsurance policies obtained in accordance with Section 10.1, above, as regards
\nliability under this Agreement; and<\/p>\n
215<\/p>\n
each Party shall waive its rights of recovery against the other for any loss or
\ndamage covered by such policy.<\/p>\n
ARTICLE 11
\n FORCE MAJEURE<\/p>\n
11.1 Effect of Force Majeure. Notwithstanding anything in
\nthis Agreement to the contrary, Generator and Pepco shall not be liable in
\ndamages or otherwise or responsible to the other for its failure to carry out
\nany of its obligations under this Agreement (except for the obligation to pay
\nsums of money due and owing hereunder) to the extent that they are unable to so
\nperform or are prevented from performing by an event of Force Majeure and has
\ncomplied with Section 11.3.<\/p>\n
11.2 Force Majeure Defined. Force Majeure means those
\ncauses beyond the reasonable control of the Party affected, which by the
\nexercise of reasonable diligence, including Good Utility Practice, that Party is
\nunable to prevent, avoid, mitigate, or overcome, including the following: any
\nact of God, labor disturbance (including a strike), act of the public enemy,
\nwar, insurrection, riot, fire, storm or flood, explosion, breakage or accident
\nto machinery or equipment, electric system disturbance), order, regulation or
\nrestriction imposed by governmental, military or lawfully established civilian
\nauthorities, or any other cause of a similar nature beyond a Party’s reasonable
\ncontrol.<\/p>\n
11.3 Notification. A Party shall not be entitled to rely
\non the occurrence of an event of Force Majeure as a basis for being excused from
\nperformance of its obligations under this Agreement, unless the Party relying on
\nthe event or condition shall: (a) provide prompt written notice of such Force
\nMajeure event to the other Party, including an estimation of its expected
\nduration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts in accordance with Good Utility
\nPractice to continue to perform its obligations under this Agreement; (c)
\nexpeditiously take action to correct or cure the event or condition excusing
\nperformance; (d) exercise all reasonable efforts to mitigate or limit damages to
\nthe other Party; and (e) provide prompt notice to the other Party of the
\ncessation of the event or condition giving rise to its excuse from performance.
\nSubject to this Section 11.3, any obligation under this Agreement shall be
\nsuspended only to the extent caused by such Force Majeure and only during the
\ncontinuance of any inability of performance caused by such Force Majeure but for
\nno longer period.<\/p>\n
216<\/p>\n
ARTICLE 12
\n DISPUTES<\/p>\n
12.1 Disputes<\/p>\n
12.1.1 A Party with a claim or dispute under this
\nAgreement shall submit to the Operating Committee a notification of such claim
\nor dispute within sixty (60) days after the circumstances that gave rise to the
\nclaim or the question or issue in dispute. The notification shall be in writing
\nand shall include a concise statement of the claim or the issue or question in
\ndispute, a statement of the relevant facts and documentation to support the
\nclaim. In the event the Operating Committee is unable, in good faith, to resolve
\ntheir disagreement in a manner satisfactory to both Parties within thirty (30)
\ndays after receipt by the Operating Committee of a notification specifying the
\nclaim, issue or question in dispute, the Parties shall refer the dispute to
\ntheir respective senior management. If, after using their good faith best
\nefforts to resolve the dispute, senior management cannot resolve the dispute
\nwithin thirty (30) days, the Parties shall utilize the arbitration procedures
\nset forth below in Section 12.2 to resolve a dispute, provided that nothing
\nherein or therein shall prohibit either Party from at any time requesting from a
\ncourt of competent jurisdiction a temporary restraining order, preliminary
\ninjunction, or other similar form of equitable relief to enforce performance of
\nthe provisions of this Agreement.<\/p>\n
12.2 Arbitration.<\/p>\n
(a) Unless the Parties other wise mutually agree
\nin writing to another form of dispute resolution such as dispute resolution
\nunder the PJM Agreement or the MAAC agreement, any arbitration initiated under
\nthis Agreement shall be conducted before a single neutral arbitrator appointed
\nby the Parties within thirty (30) days of receipt by respondent of the demand
\nfor arbitration. If the Parties are unable to agree on an arbitrator, such
\narbitration shall be appointed by the American Arbitration Association. Unless
\nthe Parties agree otherwise, the arbitrator shall be an attorney or retired
\njudge with at least fifteen (15) years of experience, and shall not have any
\ncurrent or past substantial business or financial relationships with any Party
\nto the arbitration. If possible, the arbitrator shall have experience in the
\nelectric utility industry. Unless otherwise agreed, the arbitration shall be
\nconducted in accordance with the American Arbitration Association’s Commercial
\nArbitration Rules, then in effect. Any arbitration proceedings, decision or
\naward rendered hereunder and the validity, effect and interpretation of this
\narbitration agreement shall be governed by the Federal Arbitration Act of the<\/p>\n
217<\/p>\n
United States, 9 U.S.C. Section 1 et seq. The location of any arbitration
\nhereunder shall be in the District of Columbia.<\/p>\n
(b) The arbitration shall, if possible, be
\nconcluded not later than six (6) months after the date that it is initiated. The
\narbitrator shall be authorized only to interpret and apply the provisions of
\nthis Agreement or any related agreements entered into under this Agreement and
\nshall have no power to modify or change any of the above in any manner. The
\narbitrator shall have no authority to award punitive or multiple damages or any
\ndamages inconsistent with this Agreement. The arbitrator shall, within thirty
\n(30) days of the conclusion of the hearing, unless such time is extended by
\nagreement of the Parties, notify the Parties in writing of his or her decision,
\nstating his or her reasons for such decision and separately listing his or her
\nfindings of fact and conclusions of law. The decision of the arbitrator rendered
\nin such a proceeding shall be final and binding on the Parties. Judgment on the
\naward may be entered upon it in any court having jurisdiction.<\/p>\n
12.3 FERC Dispute Resolution. Nothing in this Agreement
\nshall preclude, or be construed to preclude, any Party from filing a petition or
\ncomplaint with FERC with respect to any arbitrable claim over which FERC has
\njurisdiction. In such case, the other Party may request FERC to reject or to
\nwaive jurisdiction. If FERC rejects or waives jurisdiction with respect to all
\nor a portion of the claim, the portion of the claim not so accepted by FERC
\nshall be resolved through arbitration, as provided in this Agreement. To the
\nextent that FERC asserts or accepts jurisdiction over the claim, the decision,
\nfinding of fact or order of FERC shall be final and binding, subject to judicial
\nreview under the Federal Power Act, and any arbitration proceedings that may
\nhave commenced with respect to the claim prior to the assertion or acceptance of
\njurisdiction by FERC shall be terminated.<\/p>\n
ARTICLE 13
\n REPRESENTATIONS<\/p>\n
13.1 Representations of Pepco. Pepco hereby represents and
\nwarrants to Generator as follows:<\/p>\n
(a) Incorporation. Pepco is a corporation duly
\norganized, validly existing and in good standing under the laws of the District
\nof Columbia and the Commonwealth of Virginia, and has all requisite corporate
\npower and authority to own, lease and operate its material assets and properties
\nand to carry on its business as now being conducted.<\/p>\n
218<\/p>\n
(b) Authority. Pepco has all necessary corporate
\npower and authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Pepco of this
\nAgreement and the consummation by Pepco of the transactions contemplated
\nhereunder have been duly and validly authorized by the Board of Directors of
\nPepco or by a committee thereof to whom such authority has been delegated and no
\nother corporate proceedings on the part of Pepco are necessary to authorize this
\nAgreement or the transactions contemplated hereby. This Agreement has been duly
\nand validly executed and delivered by Pepco and, assuming that this Agreement
\nconstitutes a valid and binding agreement of Generator, constitutes a valid and
\nbinding agreement of Pepco, enforceable by Pepco in accordance with its terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery
\nof this Agreement by Pepco nor performance by Pepco of its obligations hereunder
\nwill (A) conflict with or result in any breach of any provision of the
\nCertificate of Incorporation or By-laws of Pepco, (B) result in a default (or
\ngive rise to any right of termination, cancellation or acceleration) under any
\nof the terms, conditions or provisions of any note, bond, mortgage, indenture,
\nlicense, agreement, lease or other instrument or obligation to which Pepco or
\nany of its subsidiaries is a party or by which any of their respective assets
\nmay be bound or (C) violate any order, writ, injunction, decree, statute, rule
\nor regulation applicable to Pepco, or any of its assets, except in the case of
\nclauses (B) and (C) for such failures to obtain a necessary consent, defaults
\nand violations which would not, individually or in the aggregate, have a
\nmaterial adverse effect on the ability of Pepco to discharge its obligations
\nunder this Agreement (a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or
\nregistration with, or notice to, or authorization, consent or approval of any
\ngovernmental authority is necessary for performance by Pepco of its obligations
\nhereunder, other than such declarations, filings, registrations, notices,
\nauthorizations, consents or approvals which, if not obtained or made would not,
\nindividually or in the aggregate, have a Pepco Material Adverse Effect.<\/p>\n
13.2 Representations of Generator. Generator hereby
\nrepresents and warrants to Pepco as follows:<\/p>\n
(a) Incorporation. Generator is a [corporation]
\nduly [incorporated], validly existing and in good standing under the laws of the
\nState of __________, and has all requisite [corporate] power and authority to
\nown, lease and<\/p>\n
219<\/p>\n
operate its material assets and properties and to carry on its business as now
\nbeing conducted.<\/p>\n
(b) Authority. Generator has all necessary
\n[corporate] power and authority to execute and deliver this Agreement and to
\nconsummate the transactions contemplated hereby. The execution and delivery by
\nthe Generator of this Agreement and the consummation by Generator of the
\ntransactions contemplated hereby have been duly and validly authorized the
\n[Board of Directors] of Generator or by a committee thereof to whom such
\nauthority has been delegated and no other [corporate] proceedings on the part of
\nGenerator are necessary to authorize this Agreement or the transactions
\ncontemplated hereby. This Agreement has been duly and validly executed and
\ndelivered by Generator and, assuming that this Agreement constitutes a valid and
\nbinding agreement of Pepco, constitutes a valid and binding agreement of
\nGenerator, enforceable against Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals.<\/p>\n
(i) Neither the execution and delivery
\nof this Agreement by Generator nor performance by Generator of its obligations
\nhereunder will (A) conflict with or result in any breach of any provision of the
\n[Certificate of Incorporation or By-laws] of Generator, (B) result in a default
\n(or give rise to any right of termination, cancellation or acceleration) under
\nany of the terms, conditions or provisions of any note, bond, mortgage,
\nindenture, license, agreement, lease or other instrument or obligation to which
\nGenerator or any of its subsidiaries is a party or by which any of their
\nrespective assets may be bound or (C) violate any order, writ, injunction,
\ndecree, statute, rule or regulation applicable to Generator, or any of its
\nassets, except in the case of clauses (B) and (C) for such failures to obtain a
\nnecessary consent, defaults and violations which would not, individually or in
\nthe aggregate, have a material adverse effect on the ability of Generator to
\ndischarge its obligations under this Agreement (a “Generator Material Adverse
\nEffect”).<\/p>\n
(ii) No declaration, filing or
\nregistration with, or notice to, or authorization, consent or approval of any
\nGovernmental Authority is necessary for performance by Generator of its
\nobligations hereunder, other than such declarations, filings, registrations,
\nnotices, authorizations, consents or approvals which, if not obtained or made
\nwould not, individually or in the aggregate, have a Generator Material Adverse
\nEffect.<\/p>\n
220<\/p>\n
ARTICLE 14
\n ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY<\/p>\n
14.1 Assignment.<\/p>\n
(a) Except as set forth in this Article 14, neither this
\nAgreement nor any of the rights, interests, or obligations hereunder shall be
\nassigned by either Party hereto, without the prior written consent of the other
\nParty, which consent shall not be unreasonably withheld or delayed.<\/p>\n
(b) Subject to Section 14.2, upon ten (10) days prior
\nwritten notice to Generator, Pepco may assign this Agreement, and Pepco’s
\nrights, interests and obligations hereunder, to (i) an Affiliate of Pepco that
\nowns all or part of Pepco’s Transmission System or (ii) an independent system
\noperator or independent transmission company whose control over all or part of
\nPepco’s Transmission System has been approved by the FERC.<\/p>\n
(c) Subject to Section 14.2, Generator may (a) assign any
\nof its rights and obligations hereunder to an Affiliate to the extent necessary
\nfor the Generator to qualify as an exempt wholesale generator under Section 32
\nof the Public Utility Holding Company Act of 1935, as amended, and (b) assign,
\ntransfer, pledge or otherwise dispose of its rights and interests hereunder to a
\ntrustee, lending institution, or other Person for the purposes of financing or
\nrefinancing the Station, including upon or pursuant to the exercise of remedies
\nunder such financing or refinancing, or by way of assignments, transfers,
\nconveyances of dispositions in lieu thereof; provided, however, that no such
\nassignment shall relieve or in any way discharge Generator from the performance
\nof its duties and obligations under this Agreement. Pepco agrees to execute and
\ndeliver, at Generator’s expense, such documents as may be reasonably necessary
\nto accomplish any such assignment, transfer, conveyance, pledge or disposition
\nof rights hereunder for purposes of the financing or refinancing of the
\nFacility, so long as Pepco’s rights under this Agreement are not thereby
\naltered, amended, diminished or otherwise impaired.<\/p>\n
(d) Subject to Section 14.2, either Party may assign this
\nAgreement to a successor to all or substantially all of the assets of such Party
\nby way of merger, consolidation, sale or otherwise, provided such successor
\nassumes in writing and becomes liable for all of such Party’s duties and
\nobligations hereunder.<\/p>\n
14.2 Release of Rights and Obligations. No assignment, transfer,
\nconveyance, pledge or disposition of rights, interests, duties or obligations
\nunder this Agreement by a Party shall relieve that Party from liability and
\nfinancial<\/p>\n
221<\/p>\n
responsibility for the performance thereof after any such transfer, assignment,
\nconveyance, pledge or disposition unless and until (i) the transferee or
\nassignee shall agree in writing to assume the obligations and duties of that
\nParty under this Agreement and to impose such obligations on subsequent
\npermitted transferees and assignees and (ii) the non-assigning Party has
\nconsented in writing to such assumption and to a release of the assigning Party
\nfrom such liability, such consent not to be unreasonably withheld or delayed.<\/p>\n
14.3 Change in Corporate Identity. If Generator terminates its
\nexistence as a [corporate] entity by merger, acquisition, sale, consolidation or
\notherwise, or if all or substantially all of Generator’s assets are transferred
\nto another person or business entity without complying with this Article 14,
\nPepco shall have the right, enforceable in a court of competent jurisdiction, to
\nenjoin Generator’s successor from using the Station in any manner that does not
\ncomply with the requirements of this Agreement or that impedes Pepco’s ability
\nto carry on its ongoing business operations.<\/p>\n
14.4 Successors and Assigns. This Agreement and all of the
\nprovisions hereof are binding upon, and inure to the benefit of, the Parties and
\ntheir respective successors and permitted assigns.<\/p>\n
ARTICLE 15
\n SUBCONTRACTORS<\/p>\n
Nothing in this Agreement shall prevent the Parties from utilizing the
\nservices of subcontractors as they deem appropriate, provided, however, the
\nParties agree that, where applicable, all said subcontractors shall comply with
\nthe terms and conditions of this Agreement. The creation of any subcontract
\nrelationship shall not relieve the hiring Party of any of its obligations under
\nthis Agreement. Each Party shall be fully responsible to the other Party for the
\nacts and\/or omission of any subcontractor it hires as if no subcontract had been
\nmade. Any obligation imposed by this Agreement upon the Parties, where
\napplicable, shall be equally binding upon and shall be construed as having
\napplication to any subcontractor. The Parties shall each be liable for,
\nindemnify, and hold harmless the other Party, their Affiliates and their
\nofficers, directors, employees, agents, servants, and assigns from and against
\nany and all claims, demands, or actions, from the other Party’s subcontractors;
\nand shall pay all costs, expenses and legal fees associated therewith and all
\njudgments, decrees and awards rendered therein. No subcontractor is intended to
\nbe or shall be deemed a third-party beneficiary of this Agreement.<\/p>\n
222<\/p>\n
ARTICLE 16
\n NOTICES<\/p>\n
16.1 Emergency Notices. At or prior to the Effective Date, each
\nParty shall indicate to the other Party, by notice, the appropriate person
\nduring each eight-hour work shift to contact in the event of an emergency, a
\nscheduled or forced interruption or reduction in services. The notice last
\nreceived by a Party shall be effective until modified in writing by the other
\nParty.<\/p>\n
16.2 Notices. All notices and other communications hereunder shall
\nbe in writing and shall be deemed given (as of the time of delivery or, in the
\ncase of a telecopied communication, of confirmation) if delivered personally,
\ntelecopied (which is confirmed) or sent by overnight courier (providing proof of
\ndelivery) to the Parties at the following addresses (or at such other address
\nfor a Party as shall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) ________________
\n Attention: ___________________<\/p>\n
if to Generator, to:<\/p>\n
c\/o Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
ARTICLE 17
\n AMENDMENTS<\/p>\n
17.1 Amendments. Except as set forth in Sections 2.2 and 17.2 of
\nthis Agreement, this Agreement may be amended, modified, or supplemented only by
\nwritten agreement of both Pepco and Generator.<\/p>\n
17.2 FERC Proceedings<\/p>\n
223<\/p>\n
(a) Pepco may unilaterally make application to FERC under
\nSection 205 of the Federal Power Act and pursuant to the FERC’s rules and
\nregulations promulgated thereunder for, or exercise any rights it may have under
\nSection 206 of the Federal Power Act and the regulations thereunder with respect
\nto, a change in any rates, terms and conditions, charges, classification of
\nservice, rule or regulation for any services Pepco provides under this Agreement
\nover which FERC has jurisdiction.<\/p>\n
(b) Generator may exercise its rights under Section 205
\nor 206 of the Federal Power Act and pursuant to FERC’s rules and regulations
\npromulgated thereunder with respect to any rate, term, condition, charge,
\nclassification of service, rule or regulation for any services provided under
\nthis Agreement over which FERC has jurisdiction.<\/p>\n
ARTICLE 18
\n MISCELLANEOUS PROVISIONS<\/p>\n
18.1 Waiver. Except as otherwise provided in this Agreement, any
\nfailure of a Party to comply with any obligation, covenant, agreement, or
\ncondition herein may be waived by the Party entitled to the benefits thereof
\nonly by a written instrument signed by the Party granting such waiver, but such
\nwaiver or failure to insist upon strict compliance with such obligation,
\ncovenant, agreement, or condition shall not operate as a waiver of, or estoppel
\nwith respect to, any subsequent or other failure.<\/p>\n
18.2 Labor Relations. The Parties agree to immediately notify the
\nother Party, verbally and then in writing, of any labor dispute or anticipated
\nlabor dispute which may reasonably be expected to affect the operations of the
\nother Party.<\/p>\n
18.3 No Third Party Beneficiaries. Nothing in this Agreement is
\nintended to confer upon any other person except the Parties any rights or
\nremedies hereunder or shall create any third party beneficiary rights in any
\nperson. No provision of this Agreement shall create any rights in any such
\npersons in respect of any benefits that may be provided, directly or indirectly,
\nunder any employee benefit plan or arrangement except as expressly provided for
\nthereunder.<\/p>\n
18.4 Governing Law<\/p>\n
This Agreement shall be governed by and construed in accordance with the laws of
\nthe District of Columbia (regardless of the laws that might otherwise govern
\nunder applicable principles of conflicts of law).<\/p>\n
224<\/p>\n
18.5 Counterparts. This Agreement may be executed in two or more
\ncounterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
18.6 Interpretation. When a reference is made in this Agreement to
\nan Article, Section, Schedule or exhibit, such reference shall be to an Article
\nor Section of, or Schedule or exhibit to, this Agreement unless otherwise
\nindicated. The table of contents and headings contained in this Agreement are
\nfor reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement. Whenever the words “include”, “includes” or
\n“including” are used in this Agreement, they shall be deemed to be followed by
\nthe words “without limitation” or equivalent words. The words “hereof”, “herein”
\nand “hereunder” and words of similar import when used in this Agreement shall
\nrefer to this Agreement as a whole and not to any particular provision of this
\nAgreement. The definitions contained in this Agreement are applicable to the
\nsingular as well as the plural forms of such terms and to the masculine as well
\nas to the feminine and neuter genders of such term. Unless otherwise expressly
\nstated otherwise herein, the word “day” shall mean any calendar day including
\nweekends and holidays. Any agreement, instrument, statute, regulation, rule or
\norder defined or referred to herein or in any agreement or instrument that is
\nreferred to herein means such agreement, instrument, statute, regulation, rule
\nor order as from time to time amended, modified or supplemented, including (in
\nthe case of agreements or instruments) by waiver or consent and (in the case of
\nstatutes, regulations, rules or orders) by succession of comparable successor
\nstatutes, regulations, rules or orders and references to all attachments thereto
\nand instruments incorporated therein. References to a person are also to its
\npermitted successors and assigns. Each Party acknowledges that it has been
\nrepresented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
18.7 Jurisdiction and Enforcement. Each of the Parties irrevocably
\nsubmits to the exclusive jurisdiction of (i) the Superior Court of the District
\nof Columbia and (ii) the United States District Court for the District of
\nColumbia, for the purposes of any suit, action or other proceeding arising out
\nof this Agreement or any transaction contemplated hereby. Each of the Parties
\nagrees to commence any action, suit or proceeding relating hereto either in the
\nUnited States District Court for the District of Columbia or, if such suit,
\naction or proceeding may not be brought in such court for jurisdictional
\nreasons, in the Superior Court of the District of Columbia. Each of the Parties
\nfurther agrees that service of process, summons, notice or document by hand
\ndelivery or U.S. registered mail at the address specified for such Party in
\nSection 16.2 (or such other address specified by such Party from<\/p>\n
225<\/p>\n
time to time pursuant to Section 16.2) shall be effective service of process for
\nany action, suit or proceeding brought against such Party in any such court.
\nEach of the Parties irrevocably and unconditionally waives any objection to the
\nlaying of venue of any action, suit or proceeding arising out of this Agreement
\nor the transactions contemplated hereby in (i) the Superior Court of the
\nDistrict of Columbia and (ii) the United States District Court for the District
\nof Columbia, and hereby further irrevocably and unconditionally waives and
\nagrees not to plead or claim in any such court that any such action, suit or
\nproceeding brought in any such court has been brought in an inconvenient forum.<\/p>\n
18.8 Entire Agreement. This Agreement, Asset Sale Agreement, the
\nConfidentiality Agreement and the Ancillary Agreements including the Exhibits,
\nSchedules, documents, certificates and instruments referred to herein or therein
\nand other contracts, agreements and instruments contemplated hereby or thereby,
\nembody the entire agreement and understanding of the Parties in respect of the
\ntransactions contemplated by this Agreement. There are no restrictions,
\npromises, representations, warranties, covenants or undertakings other than
\nthose expressly set forth or referred to herein or therein. This Agreement, the
\nAsset Sale Agreement and the Ancillary Agreements supersede all prior agreements
\nand understandings between the Parties with respect to the transactions
\ncontemplated by this Agreement other than the Confidentiality Agreement.<\/p>\n
18.9 Severability. If any term or other provision of this Agreement
\nis invalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the Parties shall
\nnegotiate in good faith to modify this Agreement so as to effect the original
\nintent of the Parties as closely as possible to the fullest extent permitted by
\napplicable law in an acceptable manner to the end that the transactions
\ncontemplated hereby are fulfilled to the extent possible.<\/p>\n
18.10 Independent Contractor Status. Nothing in this Agreement shall
\nbe construed as creating any relationship between Pepco and Generator other than
\nthat of independent contractors.<\/p>\n
18.11 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
226<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this
\nInterconnection Agreement (Potomac River) to be signed by their respective duly
\nauthorized officers as of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n —————————————-
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n —————————————-
\n Name:
\n Title:
\n 227<\/p>\n
SCHEDULE A
\n DEFINITIONS<\/p>\n
Part A. Capitalized terms not defined in the body of the Agreement shall have
\n the meaning set forth in Part A of this Schedule A. (Part B of this
\n Schedule A sets forth capitalized terms defined within the Agreement.)<\/p>\n
(1) “Affiliate” has the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
(2) “Ancillary Agreements” has the meaning set forth in the Asset
\nSale Agreement.<\/p>\n
(3) “Closing” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
(4) “Confidentiality Agreement” has the meaning set forth in the
\nAsset Sale Agreement.<\/p>\n
(5) “Costs” means all costs, including without limitation, any
\nTaxes, costs of acquiring real property, costs and fees for permits,
\nfranchises, licenses and regulatory approvals except to the extent that such
\ncosts are allocated to a party or parties other than the Generator by the PJM
\nInterconnection LLC or otherwise under the PJM Tariff or PJM Agreement.<\/p>\n
(6) “Easement” means the Easement Agreement dated __________,
\n2000, between the Parties with respect to the Station.<\/p>\n
(7) “Environmental Laws” means all former, current and future
\nfederal, state, local and foreign laws (including common law), treaties,
\nregulations, rules, ordinances, codes, decrees, judgments, directives or orders
\n(including consent orders) and environmental permits, in each case, relating to
\npollution or protection of the environment or natural resources, including laws
\nrelating to Releases or threatened Releases, or otherwise relating to the
\ngeneration, manufacture, processing, distribution, use, treatment, storage,
\narrangement for disposal, transport, recycling or handling, of Hazardous
\nSubstances.<\/p>\n
(8) “Emergency” means (a) with respect to Pepco, a condition or
\nsituation which Pepco, the PJM Interconnection LLC, the PJM System Operator or
\nthe Transmission Operator deem imminently likely to (i) endanger life or
\nproperty, or (ii) adversely affect or impair the Transmission System, Pepco’s
\nelectrical system or the electrical or transmission systems of others to which
\nthe Transmission System or Pepco’s electrical system are directly or indirectly
\nconnected and (b) with respect to the Generator, a condition or situation which
\nthe Generator deems imminently likely to (i) endanger life or property, or (ii)
\nadversely affect or impair the Station.<\/p>\n
(9) “FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
228<\/p>\n
(10) “Generating Facilities” means the Station and any additional
\ngenerating plants, turbines or other generating facilities constructed by
\nGenerator after the Effective Date at the site of the Station.<\/p>\n
(11) “Generator” has the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
(12) “Generator Facilities” mean the equipment and facilities
\nowned by the Generator but located on Pepco’s property which are identified in
\nSchedule B of this Agreement.<\/p>\n
(13) “Good Utility Practice” means any of the applicable
\npractices, methods and acts.<\/p>\n
(a) required by FERC, NERC, MAAC, the PJM
\nInterconnection LLC, the PJM System Operator, or the successor of any of them,
\nwhether or not the Party whose conduct is at issue is a member thereof,<\/p>\n
(b) required by applicable law or regulations,<\/p>\n
(c) required by the Pepco Interconnection Standards or
\nthe policies and standards of Pepco relating to emergency operations;<\/p>\n
(d) otherwise engaged in or approved by a significant
\nportion of the electric utility industry during the relevant time period;<\/p>\n
which, in the exercise of reasonable judgment in light of the facts known at
\nthe time the decision was made, could have been expected to accomplish the
\ndesired result at a reasonable cost consistent with law, regulation, good
\nbusiness practices, reliability, safety, and expedition. Good Utility Practice
\nis not intended to be limited to the optimum practice, method, or act to the
\nexclusion of all others, but rather to be acceptable practices, methods, or
\nacts generally accepted in the region.<\/p>\n
(14) “Hazardous Substances” means (i) any petrochemical or
\npetroleum products, crude oil or any fraction thereof, ash, radioactive
\nmaterials, radon gas, asbestos in any form, urea formaldehyde foam insulation
\nor polychlorinated biphenyls, (ii) any chemicals, materials, substances or
\nwastes defined as or included in the definition of “hazardous substances,”
\n“hazardous wastes,” “hazardous materials,” “restricted hazardous materials,”
\n“extremely hazardous substances,” “toxic substances,” “contaminants” or
\n“pollutants” or words of similar meaning and regulatory effect contained in any
\nEnvironmental Law or (iii) any other chemical, material, substance or waste
\nwhich is prohibited, limited or regulated by any Environmental Law.<\/p>\n
(15) “Interconnection Facilities” means those facilities or
\nportions of facilities owned or operated by Pepco to provide Interconnection
\nService which shall include, but not be limited to (1) facilities the cost of
\nwhich is reasonably allocated to the Interconnection Service provided to the
\nStation, or (2) Attachment Facilities or Local Upgrade Facilities, as defined
\nin the PJM Tariff, which are associated with the Interconnection Service and
\noperated and maintained by Pepco.<\/p>\n
229<\/p>\n
(16) “Interconnection Service” means the services provided by
\nPepco which are necessary to connect the Station to the Transmission System for
\nparallel operation of the Station and to enable Generator to transmit the
\nenergy and ancillary services produced by the Station to the Transmission
\nSystem and receive Station energy service and ancillary services, including
\nblackstart power, from the Generator’s supplier.<\/p>\n
(17) “MAAC” means the Mid-Atlantic Area Council, a reliability
\ncouncil under Section 202 of the Federal Power Act established pursuant to the
\nMAAC Agreement dated August 1, 1994, or any successor thereto.<\/p>\n
(18) “Maintain” means construct, reconstruct, install, inspect,
\nrepair, replace, operate, patrol, maintain, use, modernize, expand, upgrade, or
\nother similar activities.<\/p>\n
(19) “MDPSC” means the Maryland Public Service Commission or any
\nsuccessor agency thereto.<\/p>\n
(20) “NERC” means North American Electric Reliability Council or
\nany successor thereto.<\/p>\n
(21) “Pepco” has the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors or
\nassigns.<\/p>\n
(22) “Pepco Facilities” means the equipment and facilities owned
\nby Pepco but located on Generator’s property which are identified in Schedule B
\nof this Agreement.<\/p>\n
(23) “Pepco Interconnection Standards” means Pepco’s
\nInterconnection and Parallel Operating Guidelines as amended, modified or
\nreplaced from time to time. A copy of the existing Pepco Interconnection
\nStandards is attached hereto as Schedule E.<\/p>\n
(24) “Point of Interconnection” means each ownership point of
\ndemarcation set forth in Schedule C where capacity, energy and ancillary
\nservices are transferred between the Station and the Transmission System.<\/p>\n
(25) “Pepco Transmission Facilities” means those transmission,
\nsubstation, and communication facilities and related equipment, including the
\nInterconnection Facilities, and any additions, modifications or replacements
\nthereto, that are utilized to provide Interconnection Service to the Station.<\/p>\n
(26) “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Agreement and any successor
\nthereto including any regional transmission operator, independent system
\noperator, transco, or any other independent system administrator that possesses
\noperational or planning control over the T ransmission System.<\/p>\n
(27) “PJM Agreement” means the Amended and Restated Operating
\nAgreement of the PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
230<\/p>\n
(28) “PJM Control Area” shall mean the control area recognized by
\nNERC as the PJM Control Area.<\/p>\n
(29) “PJM Interconnection LLC” means the independent system
\noperator of the PJM Control Area pursuant to the PJM Operating Agreement and
\nthe PJM Tariff.<\/p>\n
(30) “PJM Generator Connection Agreement” means the
\ninterconnection agreement entered into between the Generator and the PJM
\nInterconnection LLC pursuant to the PJM Tariff with respect to the
\ninterconnection of the Station and the Transmission System.<\/p>\n
(31) “PJM Reliability Agreement” means the Reliability Assurance
\nAgreement dated June 2, 1997 among the load serving entities of PJM.<\/p>\n
(32) “PJM Requirements” means the rules, regulations or other
\nrequirements of PJM or MAAC contained in or adopted pursuant to the PJM
\nAgreement, the PJM Tariff or the PJM Reliability Agreement which are applicable
\nto Pepco, with respect to the Transmission System or the Interconnection
\nService, and the Generator with respect to the Generating Facilities.<\/p>\n
(33) “PJM System Operator” shall mean the PJM Interconnection LLC,
\nenergy control center staff responsible for central dispatch as provided in the
\nPJM Agreement.<\/p>\n
(34) “PJM Tariff” means the PJM Open Access Transmission Tariff
\nproviding transmission service within the PJM Control Area.<\/p>\n
(35) “Qualified Personnel” means individuals who possess any
\nrequired licenses and are trained for their positions and duties by Generator
\nand\/or Pepco pursuant to Good Utility Practice.<\/p>\n
(36) “Release” means any release, spill, emission, leaking,
\ndumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
\nor migration into the environment (including ambient air, surface water,
\ngroundwater, land surface or subsurface strata) or within any building,
\nstructure, facility or fixture.<\/p>\n
(37) “Revenue Meters” means all MWh and MVArh meters, pulse
\nisolation relays, pulse conversion relays, transducers required by Pepco or the
\nPJM Interconnection or PJM System Operator for billing or other purposes, and
\nassociated totalizing equipment, appurtenances and compensation required to
\nmeasure the transfer of energy across the Point of Interconnection.<\/p>\n
(38) “Station” means the Potomac River Station as defined in the
\nAsset Sale Agreement.<\/p>\n
(39) “Switching, Tagging, and Grounding Rules” means Pepco’s
\nswitching, tagging and grounding rules as amended, modified or replaced from
\ntime to time. A copy of the existing Switching, Tagging and Grounding Rules is
\nattached hereto as Schedule D.<\/p>\n
231<\/p>\n
(40) “Taxes” means all taxes, surtaxes, charges, fees, levies,
\npenalties or other assessments imposed by any United States federal, state,
\nlocal or foreign taxing authority, including income taxes, excise, property,
\nsales, transfer, franchise, special franchise, payroll, recording, withholding,
\nsocial security or other taxes, in each case including any interest, penalties
\nor additions attributable thereto.<\/p>\n
(41) “Transmission System” means the facilities owned, controlled,
\nor operated by Pepco, for purposes of providing transmission service, including
\nservices under the PJM Tariff, and Interconnection Service.<\/p>\n
(42) “Transmission Operator” means the person, or persons
\ndesignated by Pepco to coordinate the day to day interconnection of the Station
\nwith the Transmission System.<\/p>\n
Part B. The following terms have the meaning specified in the section of this
\n Agreement set forth opposite to such term:<\/p>\n
\n\n Term Agreement Reference<\/p>\n
\nAgreement Preamble
\nAsset Sale Agreement Preamble
\nEffective Date Section 2.1
\nEvent of Default Section 8.1
\nForce Majeure Section 11.1
\nInitial Period Section 3.10
\nOperating Committee Section 3.20
\nParty or Parties Preamble
\nTerm Article 2
\n<\/c><\/s><\/caption>\n<\/table>\n 232<\/p>\n
EXHIBIT E-2<\/p>\n
INTERCONNECTION AGREEMENT
\n (Morgantown)<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
—————————<\/p>\n
Dated , 2000
\n ————
\n 233<\/p>\n
INTERCONNECTION AGREEMENT<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n
\nARTICLE 1 – DEFINITIONS 1
\nARTICLE 2 TERM AND TERMINATION 2
\n 2.1 Term 2
\n 2.2 Change in Law 2
\n 2.3 Effect after Termination 2
\nARTICLE 3 – CONTINUING OBLIGATIONS AND RESPONSIBILITIES 2
\n 3.1 Interconnection Service 2
\n 3.2 New Construction or Modifications 3
\n 3.2.1 Pepco Construction or Modifications 3
\n 3.2.2 Generator Construction or Modifications 4
\n 3.2.3 Modifications Affecting the Transmission System
\n or the Station 5
\n 3.3 Access, Easements, Conveyances, Licenses,
\n and Restrictions 6
\n 3.4 Facility and Equipment Maintenance 7
\n 3.5 Pepco Facilities and Generator Facilities 7
\n 3.6 Equipment Testing Obligations 7
\n 3.7 Inspections 8
\n 3.8 Information Reporting Obligations 9
\n 3.9 Local Services 10
\n 3.9.1 General 10
\n 3.9.2 Temporary Suspension of Local Services 10
\n 3.10 Pepco Provided Services 11
\n 3.11 Generator Provided Services 11
\n 3.12 Optional Services 12
\n 3.13 Metering and Telemetering 12
\n 3.14 Emergency Procedure 12
\n 3.15 Interconnection Service Interruptions 13
\n 3.16 Unit Status Notification 14
\n 3.17 Scheduled Maintenance Notification and Coordination 14
\n 3.17.1 Local Routine Inspection and Maintenance 14
\n 3.17.2 Transmission Sytem Maintenance 15
\n 3.18 Safety 15
\n 3.18.1 General 15
\n 3.18.2 Switching Tagging and Grounding 15
\n 3.19 Environmental Compliance and Procedures 15
\n 3.20 Operating Committee 16
\nARTICLE 4 – OPERATIONS 16
\n 4.1 General 16
\n 4.2 Generator’s Operating Obligations 17
\n 4.2.1 General 17
\n 4.2.2 Voltage or Reactive Control Requirements 18
\n<\/c><\/c><\/s><\/table>\n 234<\/p>\n
\n
\n 4.3 Auditing of Accounts and Records 19
\nARTICLE 5 — COST RESPONSIBILITIES AND BILLING PROCEDURES 19
\n 5.1 Cost Responsibilities for Interconnection Service 19
\n 5.2 Cost Responsibilities for Local Services 19
\n 5.3 Billing Procedures 19
\n 5.4 Billing Disputes 20
\nARTICLE 6 – CONFIDENTIALITY 20
\n 6.1 Confidentiality Obligations of Pepco 20
\n 6.2 Confidentiality Obligations of Generator 21
\n 6.3 Confidentiality of Audits 22
\n 6.4 Remedies 22
\nARTICLE 7 – EVENTS OF DEFAULT 22
\n 7.1 Events of Default 22
\n 7.2 Remedies 23
\nARTICLE 8 – LIMITATION OF LIABILITY 24
\n 8.1 Limitation of Pepco’s Liability 24
\n 8.2 Limitation on Generator’s Liability 24
\n 8.3 Consequential Damages 24
\nARTICLE 9 – INDEMNIFICATION FOR THIRD PARTY CLAIMS 25
\n 9.1 Generator’s Indemnification 25
\n 9.2 Pepco’s Indemnification 25
\n 9.3 Indemnification Procedures 25
\n 9.4 Survival 26
\nARTICLE 10 – INSURANCE 26
\n 10.1 Insurance Coverage 26
\n 10.2 Certificates of Insurance 26
\n 10.3 Additional Insureds and Waiver 26
\nARTICLE 11 – FORCE MAJEURE 27
\n 11.1 Effect of Force Majeure 27
\n 11.2 Force Majeure Defined 27
\n 11.3 Notification 27
\nARTICLE 12 – DISPUTES 27
\n 12.1 Disputes 27
\n 12.2 Arbitration 28
\n 12.3 FERC Dispute Resolution 29
\nARTICLE 13 – REPRESENTATIONS 29
\n 13.1 Representations of Pepco 29
\n 13.2 Representations of Generator 30
\nARTICLE 14 – ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY 31
\n 14.1 Assignment 31
\n 14.2 Release of Rights and Obligations 32
\n 14.3 Change in Corporate Identity 32
\n 14.4 Successors and Assigns 33
\n<\/c><\/c><\/s><\/table>\n 235<\/p>\n
\n
\nARTICLE 15 – SUBCONTRACTORS 33
\nARTICLE 16 – NOTICES 33
\n 16.1 Emergency Notices 33
\n 16.2 Notices 33
\nARTICLE 17 – AMENDMENTS 34
\n 17.1 Amendments 34
\n 17.2 FERC Proceedings 34
\nARTICLE 18 – MISCELLANEOUS PROVISIONS 35
\n 18.1 Waiver 35
\n 18.2 Labor Relations 35
\n 18.3 No Third Party Beneficiaries 35
\n 18.4 Governing Law 35
\n 18.5 Counterparts 35
\n 18.6 Interpretation 35
\n 18.7 Jurisdiction and Enforcement 36
\n 18.8 Entire Agreement 36
\n 18.9 Severability 37
\n 18.10 Independent Contractor Status 37
\n 18.11 Conflicts 37
\nSCHEDULE A – DEFINITIONS 2
\nSCHEDULE B – Pepco Facilities and Generator Facilities 7
\nSCHEDULE C – Points of Interconnection 9
\nSCHEDULE D – Switching, Tagging and Grounding Rules 10
\nSCHEDULE E – Pepco’s Interconnection Standards 14
\nSCHEDULE F – Local Services 15
\nSCHEDULE G – Pepco Current Projects 17
\nSCHEDULE H – Real Time Telemetry List 18
\n<\/c><\/c><\/s><\/table>\n 236<\/p>\n
INTERCONNECTION AGREEMENT (Morgantown)<\/p>\n
This Interconnection Agreement (“Agreement”) dated as of _________,
\n2000 by and between Potomac Electric Power Company (“Pepco”) a District of
\nColumbia and Virginia corporation, and _____________ (“Generator”) a
\n___________ [corporation]. Pepco and Generator are each referred to herein as a
\n“Party,” and collectively referred to herein as the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco, and Generator have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (“Asset Sale Agreement”) dated
\nJune 7, 2000, for the sale by Pepco to Generator of certain assets comprising
\nthe Morgantown electric generation station;<\/p>\n
WHEREAS, Pepco intends to continue to operate its transmission and
\ndistribution businesses from their present locations;<\/p>\n
WHEREAS, Generator needs Interconnection Service from Pepco for the
\nMorgantown electric generating station;<\/p>\n
WHEREAS, Pepco needs access to parts of the Generator’s assets, and
\nGenerator needs access to parts of the Pepco’s assets; and<\/p>\n
WHEREAS, the Parties have agreed in the Asset Sale Agreement to
\nexecute this Agreement in order to provide Interconnection Service to Generator
\nand to define continuing responsibilities and obligations of the Parties with
\nrespect to the use of the other Party’s property, assets and facilities as set
\nforth herein.<\/p>\n
NOW THEREFORE, in consideration of the mutual representations,
\ncovenants and agreements hereinafter set forth, and intending to be legally
\nbound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
Capitalized terms used in this Agreement shall have the meanings
\nspecified or referred to in Schedule A.<\/p>\n
237<\/p>\n
ARTICLE 2
\n TERM AND TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon consummation
\nof the Closing (“Effective Date”), and unless terminated sooner in accordance
\nwith the terms of this Agreement, shall continue in full force and effect until
\nthe earlier to occur of (i) the permanent cessation by the Generator of the
\npower generation functions of the Station or (ii) the permanent cessation of
\nthe interconnection functions of the Transmission System.<\/p>\n
2.2 Change in Law. If (a) the FERC, any state or state regulatory
\ncommission or the PJM Interconnection LLC implements a change in any law,
\nregulation, rule or practice, or (b) Pepco’s compliance with a change in any
\nlaw or regulation, which compliance, in either case, affects, or may reasonably
\nbe expected to affect, Pepco’s performance under this Agreement, the Parties
\nshall negotiate in good faith any amendments to this Agreement that are
\nnecessary to adapt the terms of this Agreement to such change, and Pepco shall
\nfile such amendments with the FERC. If the Parties are unable to reach
\nagreement on such amendments, either Party shall have the right to make a
\nunilateral filing with the FERC to modify this Agreement pursuant to Sections
\n205 or 206 or any other applicable provision of the Federal Power Act and the
\nFERC rules and regulations thereunder; provided that the other Party shall have
\nthe right to oppose such filing and to participate fully in any proceeding
\nestablished by the FERC to address such amendments.<\/p>\n
2.3 Effect after Termination. The applicable provisions of this
\nAgreement shall continue in effect after cancellation or termination hereof to
\nthe extent necessary to provide for final billings, billing adjustments and
\npayments pertaining to liability and indemnification obligations arising from
\nacts or events that occurred while this Agreement was in effect.<\/p>\n
ARTICLE 3
\n CONTINUING OBLIGATIONS AND RESPONSIBILITIES<\/p>\n
3.1 Interconnection Service<\/p>\n
3.1.1 Subject to the terms and conditions of the
\nAgreement, Pepco shall (a) permit the Station to continue to be interconnected
\nto the Transmission System at the Point of Interconnection, and (b) provide
\nInterconnection Service at the Point of Interconnection. Pepco agrees to permit
\nGenerator to interconnect<\/p>\n
238<\/p>\n
Station as long as Generator continues to operate such facilities pursuant to
\nPJM Requirements and Good Utility Practice.<\/p>\n
3.1.2 Interconnection Service shall not include, and Pepco
\nshall not be responsible under this Agreement for (a) transmission service,
\nlosses or ancillary services associated with the use of the Transmission System
\nfor the delivery of capacity, energy and\/or ancillary services produced by the
\nGenerating Facilities, or (b) providing or procuring capacity, energy and\/or
\nancillary services to the Generator or the Generating Facilities.<\/p>\n
3.1.3 The Generator’s interconnection to the Transmission
\nSystem of any new or expanded generating capacity of the Station shall (a) be
\nsubject to PJM Requirements and\/or FERC requirements governing interconnections
\nand (b) require a separate interconnection agreement mutually agreed to by the
\nParties in writing.<\/p>\n
3.1.4 Notwithstanding anything to the contrary in this
\nAgreement, Pepco’s performance of its obligations under this Agreement shall be
\nsubject to Generator entering into, and complying with, any PJM Generator
\nConnection Agreement which may be required pursuant to PJM Requirements with
\nrespect to Interconnection Service or the Station.<\/p>\n
3.2 New Construction or Modifications<\/p>\n
3.2.1 Pepco Construction or Modifications<\/p>\n
(a) Pepco shall make such additions,
\nmodifications, replacements and improvements to the Interconnection Facilities
\nas are required by PJM Requirements or Good Utility Practice to enable Pepco to
\nprovide Interconnection Service in compliance with this Agreement. Generator
\nshall pay all reasonable Costs incurred by Pepco for such additions,
\nmodifications, replacements or improvements.<\/p>\n
(b) Except with respect to operation and
\nmaintenance or ordinary maintenance done in the ordinary course of business or
\nto respond to abnormal or emergency conditions, if any additions,
\nmodifications, replacements or improvements to the Interconnection Facilities
\nundertaken by Pepco might reasonably be expected to affect Generator’s
\noperation of the Station, Pepco shall provide one hundred twenty (120) days
\nwritten notice to Generator prior to undertaking such additions, modifications,
\nreplacements or improvements. Any such additions, modifications, replacements
\nor improvements shall comply with PJM Requirements and Good Utility Practice.
\nThe Parties shall mutually agree to the<\/p>\n
239<\/p>\n
scheduling of such addition, modification, replacement or improvement to
\nminimize any adverse impact on the Station. Generator shall be deemed to have
\naccepted Pepco’s proposed additions, modifications, replacements or
\nimprovements unless Generator gives Pepco written notice of its objections
\nwithin thirty (30) days after receipt of Pepco’s notice. Generator’s acceptance
\nor deemed acceptance of Pepco’s proposed additions, modifications, replacements
\nor improvements shall not be construed, with respect thereto, as: (i)
\nconfirmation or endorsement of the design; (ii) a warranty of safety,
\ndurability or reliability; or (iii) responsibility for strength, details of
\ndesign, adequacy or capability.<\/p>\n
3.2.2 Generator Construction or Modifications<\/p>\n
(a) In the event Generator plans to increase
\nthe capacity of the Generating Facilities, Generator shall submit to Pepco any
\nand all plans and specifications that Pepco may reasonably request related to
\nsuch increase. Such specifications and plans shall be submitted by Generator to
\nPepco at the time that Generator submits its plans under the PJM Tariff related
\nto such expansion but no later than one hundred twenty (120) days prior to
\ncommencing such proposed increase. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice and
\nshall be subject to Section 3.1.3 of this Agreement.<\/p>\n
(b) If Generator plans any additions,
\nmodifications, or replacements to the Station that will not increase its
\ncapacity, but could reasonably be expected to affect the Transmission System or
\nthe Interconnection Facilities, Generator shall give Pepco reasonable notice,
\nbut not less than one hundred twenty (120) days prior written notice and
\nGenerator shall comply with all applicable PJM Requirements with respect to
\nsuch proposed additions, modifications, or replacements. All such additions,
\nmodifications, or replacements shall (i) comply with PJM Requirements and Good
\nUtility Practice, (ii) be accompanied by appropriate information and operating
\ninstructions, and (iii) be subject to the review and acceptance of Pepco, which
\nreview shall be based on PJM Requirements and Good Utility Practice and which
\nacceptance shall not unreasonably be withheld or delayed. Pepco shall be deemed
\nto have accepted Generator’s proposed additions, modifications or replacements
\nunless Pepco gives Generator written notice of its objections within thirty
\n(30) days after receipt of the Generator’s notice.<\/p>\n
(c) Pepco’s acceptance of Generator’s plans and
\nspecifications for any proposed additions, modifications, or replacements to
\nthe Generating Facilities and Pepco’s participation in any interconnected
\noperations with Generator are not and shall not be construed as: (i)
\nconfirmation or endorsement of the design of the Generating Facilities; (ii) a
\nwarranty of safety, durability or reliability of the<\/p>\n
240<\/p>\n
Generating Facilities; or (iii) responsibility for strength, details of design,
\nadequacy, or capability of the Generating Facilities.<\/p>\n
(d) Pepco, pursuant to PJM Requirements, shall
\ninform Generator of any additions, modifications, or replacements to the
\nTransmission System or Interconnection Facilities, that will be necessary as a
\nresult of the addition, modification, or replacement to Station made pursuant
\nto Section 3.2.2. Generator shall compensate Pepco for all reasonable Costs it
\nincurs associated with any modifications, additions, or replacements made to
\nthe Interconnection Facilities or Transmission System related to any additions,
\nmodifications, or replacements to the Generating Facilities. Pepco shall
\nprovide an estimate as early as practicable, but in any event not less than
\nsixty (60) days prior to the initiation of such addition, modification or
\nreplacement.<\/p>\n
(e) Generator shall modify, at its sole cost
\nand expense, the Generating Facilities as may be reasonably required to conform
\nwith PJM Requirements and Good Utility Practice or to conform with additions,
\nmodifications, or replacements of the Transmission System or the
\nInterconnection Facilities, required by PJM Requirements and Good Utility
\nPractice or implemented in accordance with this Agreement, (including, without
\nlimitation, changes to the voltages at which the Transmission System is
\noperated) provided, however, that Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generating Facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of Pepco’s Facilities.<\/p>\n
(f) Upon completion of any addition,
\nmodification, or replacement to the Generating Facilities that may reasonably
\nbe expected to affect the Transmission System or the Interconnection
\nFacilities, but no later than ninety (90) days thereafter, Generator shall
\nissue “as built” drawings to Pepco. Upon completion of any addition,
\nmodification, or replacement to the Interconnection Facilities, that may
\nreasonably be expected to affect the operation of the Station, but no later
\nthan ninety (90) days thereafter, Pepco shall issue “as built” drawings to the
\nGenerator.<\/p>\n
3.2.3 Modifications Affecting the Transmission System or
\nthe Station<\/p>\n
(a) Notwithstanding anything herein to the
\ncontrary, except with respect to the projects or construction set forth in
\nSchedule G, no modifications to or new construction of facilities, or access
\nthereto, including but not limited to rights of way, fences, gates, shall be
\nmade by either Party which might reasonably be expected to adversely affect the
\nother Party with respect to such Party’s obligations<\/p>\n
241<\/p>\n
and responsibilities under this Agreement, without prior written notification
\nas set forth in Section 3.2.3(b) below, and without providing the other Party
\nwith sufficient information regarding the work prior to commencement to enable
\nsuch Party to evaluate the impact of the proposed work on its operations. For
\nall modifications reasonably expected to adversely affect the operations of the
\nother Party’s facilities, the Party shall provide at least one hundred twenty
\n(120) days written notice to the other Party prior to undertaking such
\nadditions, modifications or replacements. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice.<\/p>\n
(b) The Parties shall mutually agree to the
\nscheduling of such addition, modification, replacement or improvement proposed
\npursuant to Section 3.2.3(a) to minimize any adverse impact on the Station or
\nthe Transmission System. For all construction work, major modifications, or
\ncircuit changes involving new or existing facilities, equipment, systems or
\ncircuits that could reasonably be expected to affect the operation of either
\nParty, the Party desiring to perform said work shall provide the other Party
\nwith drawings, plans, specifications, and other necessary documentation for
\nreview at least sixty (60) days prior to the beginning of construction provided
\nthat for routine telecommunication work, the Party doing the work shall only be
\nrequired to provide 48 hours prior notice. The Party shall be deemed to have
\naccepted the proposed additions, modifications, replacements or improvements
\nunless the Party gives written notice of their objections within sixty (60)
\ndays after receipt of such notice. The Party’s acceptance or deemed acceptance
\nof the proposed additions, modifications, replacements or improvements shall
\nnot be construed, with respect thereto, as: (i) confirmation or endorsement of
\nthe design; (ii) a warranty of safety, durability or reliability; or (iii)
\nresponsibility for strength, details of design, adequacy or capability.<\/p>\n
3.3 Access, Easements, Conveyances, Licenses, and Restrictions<\/p>\n
3.3.1 The Parties hereby grant to each other such
\nlicenses, access and other rights to the Station and the Interconnection
\nFacilities as may be necessary for either Party’s performance of their
\nrespective obligations under this Agreement. Such access shall be provided in a
\nmanner so as not to unreasonably interfere with the ongoing business
\noperations, rights, and obligations of the other Party and shall be subject to
\nthe safety and security practices of the Party granting such access. Access
\nshall only be granted to Qualified Personnel.<\/p>\n
3.3.2 A Party shall not restrict a Party’s rights
\nhereunder to access the other Party’s property, facilities, or equipment
\nwithout prior written notification except in an Emergency, in which case the
\nrestricted access shall last no longer than three (3) days, unless an alternate
\nmeans of access is provided.<\/p>\n
242<\/p>\n
3.3.3 The Parties’ rights with respect to access to their
\nrespective facilities properties shall also be governed by the Easement.<\/p>\n
3.4 Facility and Equipment Maintenance<\/p>\n
3.4.1 Pepco shall provide Interconnection Service at the
\nPoint of Interconnection in a safe and efficient manner and pursuant to PJM
\nRequirements and Good Utility Practice. Generator shall be responsible for all
\nreasonable Costs incurred by Pepco to provide Interconnection Service and to
\nMaintain the Interconnection Facilities pursuant to the Agreement.<\/p>\n
3.4.2 Generator shall Maintain the Generating Facilities
\n(including coordination of its relay protection equipment) in a safe and
\nefficient manner and as required by and in accordance with PJM Requirements and
\nGood Utility Practice, provided, however, that Generator shall not be obligated
\nto modernize, expand or upgrade the Generating Facilities unless the failure to
\nmodernize, expand or upgrade is reasonably likely to have a material adverse
\naffect on the operation of the Interconnection Facilities or the Transmission
\nSystem.<\/p>\n
3.4.3 Unless otherwise specified herein, or unless the
\nParties mutually agree to a different arrangement, neither Party shall be
\nresponsible for the maintenance of the other Party’s equipment or property
\nregardless of its location.<\/p>\n
3.4.4 In addition to the requirements set forth elsewhere
\nin this Agreement, each Party shall Maintain its equipment and facilities and
\nperform its maintenance obligations that could reasonably be expected to affect
\nthe operations of the other Party in a safe and efficient manner and pursuant
\nto PJM Requirements and Good Utility Practice.<\/p>\n
3.5 Pepco Facilities and Generator Facilities Unless otherwise
\nagreed to by the Parties, the Party owning Pepco Facilities or Generator
\nFacilities shall Maintain those facilities and shall do so pursuant to PJM
\nRequirements and Good Utility Practice and shall make such additions,
\nmodifications, replacements and improvements as are required by PJM
\nrequirements and Good Utility Practice or which are necessary to maintain
\nInterconnection Service, provided, however, that the Generator shall not be
\nobligated under this Agreement to modernize, expand or upgrade the Generator
\nFacilities unless the failure to modernize, expand or upgrade is reasonably
\nlikely to have a material adverse effect on the operation of the Transmission
\nSystem or Interconnection Facilities.<\/p>\n
3.6 Equipment Testing Obligations<\/p>\n
243<\/p>\n
3.6.1 For reliability purposes with respect to the
\nInterconnection Facilities and the Transmission System, Pepco may reasonably
\nrequest, pursuant to PJM Requirements, or Good Utility Practice, that Generator
\ntest, calibrate, verify, or validate the Generating Facilities or its
\nequipment, and Generator shall promptly comply with such a request. Generator
\nshall be responsible for all costs of testing, calibrating, verifying or
\nvalidating its facilities.<\/p>\n
3.6.2 At Pepco’s request, Generator shall supply to Pepco
\nat no cost, copies of inspection reports, installation and maintenance
\ndocuments, test and calibration records, verifications, and validations
\npursuant to the foregoing Section 3.6.1. Pepco shall supply to Generator, at
\nGenerator’s request and at no cost to Generator, copies of inspection reports,
\ninstallation and maintenance documents, test and calibration records,
\nverifications, and validations that Pepco has which are related to the
\nInterconnection Facilities.<\/p>\n
3.7 Inspections<\/p>\n
3.7.1 Pepco shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work to the Generating Facilities.
\nSuch access by Pepco shall be exercised in a manner which does not unreasonably
\ninterfere with Generator’s ongoing business operations, rights and obligations
\nand shall be subject to Generator’s safety and security practices. If Pepco
\nobserves any deficiencies or defects with respect thereto that might reasonably
\nbe expected to adversely affect the Transmission System or the Interconnection
\nFacilities, Pepco shall notify the Generator, and Generator shall immediately
\nmake any corrections necessitated by PJM Requirements and Good Utility
\nPractice. Notwithstanding the foregoing in this Section 3.7.1, Pepco shall have
\nno liability whatsoever for any failure to fully or adequately observe any
\ndeficiency, it being agreed that Generator shall be fully responsible and
\nliable for all such deficiencies, activities, equipment tests, installation,
\nconstruction or modification.<\/p>\n
3.7.2 Generator shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work conducted by Pepco to the
\nInterconnection Facilities. Such access by Generator shall be exercised in a
\nmanner which does not unreasonably interfere with Pepco’s ongoing business
\noperations, rights and obligations and shall be subject to Pepco’s safety and
\nsecurity practices. If Generator observes any deficiencies or defects with
\nrespect thereto that might reasonably be expected to adversely affect the
\nStation, Generator shall notify Pepco, and Pepco shall immediately make any
\ncorrections necessitated by applicable PJM Requirements and Good Utility
\nPractice. Notwithstanding the foregoing in this<\/p>\n
244<\/p>\n
Section 3.7.2, Generator shall have no liability whatsoever for any failure to
\nfully or adequately observe any deficiency, it being agreed that Pepco shall be
\nfully responsible and liable for all such deficiencies, activities, equipment
\ntests, installation, construction or modification.<\/p>\n
3.8 Information Reporting Obligations<\/p>\n
3.8.1 In order to provide Interconnection Service
\nhereunder, Pepco may request, and Generator shall promptly provide, all
\nrelevant information, documents, or data regarding the Generating Facilities
\nthat would be expected to materially affect the Transmission System, and which
\nis reasonably requested by NERC, MAAC, the PJM Interconnection LLC, the MDPSC,
\nthe District of Columbia Public Service Commission and any other state or
\nDistrict of Columbia agency having jurisdiction over Pepco or Generator, the
\nPJM System Operator, or the Transmission Operator, which disclosure shall be
\nsubject to Article 6 of this Agreement regarding the disclosure of commercially
\nsensitive information.<\/p>\n
3.8.2 Generator shall promptly supply accurate, complete,
\nand reliable information in response to reasonable information requests for
\nreal time data and other data from Pepco necessary for operations, maintenance,
\ncompliance with PJM Requirements or regulatory requirements, or analysis of the
\nInterconnection Facilities or the Transmission System. Such information may
\ninclude metered values for MW and MVAR, voltage, current, automatic voltage
\nregulator status, automatic frequency control, dispatch, frequency, breaker
\nstatus indication, or any other information reasonably required for reliable
\noperation of the Transmission System pursuant to PJM Requirements and Good
\nUtility Practice. At minimum, Generator shall satisfy the telemetry
\nrequirements set forth in Schedule H.<\/p>\n
3.8.3 Information pertaining to generation operating
\nparameters shall be gathered and electronically transmitted directly to Pepco’s
\nenergy management system using a mutually acceptable communications protocol.<\/p>\n
3.8.4 Generator shall be responsible for the maintenance,
\nand any required replacements or upgrades of the field devices and equipment
\nused to gather information regarding generation operating parameters.<\/p>\n
3.8.5 Generator shall Maintain, at its expense, operating
\ntelephone links to the PJM Interconnection LLC, PJM System Operator, Pepco and
\nthe Transmission Operator, to provide information deemed necessary by them, or
\nas reasonably deemed necessary by Pepco in accordance with PJM Requirements or
\nGood Utility Practice to integrate operation of the Station with the
\nTransmission<\/p>\n
245<\/p>\n
System, provided, however, that Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generator’s facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of the Transmission System. Generator shall use
\ncommunication links at the Station consisting of the mobile radio low band C
\nfrequency and “all call” and “red phone” systems currently located at the
\nStation (or successor systems as may reasonably be required by Pepco) and shall
\nmaintain the availability of such systems to operate during abnormal conditions
\nincluding blackouts.<\/p>\n
3.9 Local Services<\/p>\n
3.9.1 General<\/p>\n
(a) The Parties agree that, due to the
\nintegration of certain control schemes of the Station and the Transmission
\nSystem, it is cost effective to provide each other with the services set forth
\nin Sections 3.10 and 3.11 in accordance with the terms and conditions set forth
\ntherein.<\/p>\n
(b) The Parties shall ensure, in accordance
\nwith Good Utility Practice, that services provided by one Party to the other
\nParty pursuant to Sections 3.10 and 3.11 shall be available at all times and in
\nthe manner and at the prices specified herein. Notwithstanding the foregoing,
\neither Party may change the services, provided that (1) there is no cost to the
\nreceiving Party as a result of such change, (2) the quality, reliability and
\nintegrity of the replacement services is equivalent to the existing service,
\nand (3) there is otherwise no materially adverse effect on the receiving Party.<\/p>\n
(c) Neither Party shall terminate any services
\nset forth in Sections 3.10 and 3.11 below that it agrees to provide to the
\nother Party, without the other Party’s prior written consent, which consent
\nshall not be unreasonably withheld or delayed, provided, however, if a Party
\nreceiving a service under Sections 3.10 or 3.11 no longer needs or desires a
\nparticular service, said Party shall notify the other Party and the providing
\nParty shall terminate said services as soon thereafter as practicable.<\/p>\n
3.9.2 Temporary Suspension of Local Services<\/p>\n
(a) The Party providing a service set forth in
\nSections 3.10 or 3.11 below shall notify and obtain approval, which approval
\nshall not be unreasonably withheld or delayed, from the receiving Party of any
\nscheduled temporary<\/p>\n
246<\/p>\n
suspension of services at least five (5) business days in advance of such
\nsuspension. Such notification shall include an estimated time duration for
\nreturn to normal conditions.<\/p>\n
(b) In the event of any unplanned or forced
\nsuspension of the services set forth in Sections 3.10 or 3.11, below, the
\nproviding Party shall immediately notify the other Party first verbally and
\nthen in writing. The providing Party shall use all reasonable efforts to
\nminimize the duration of said suspension.<\/p>\n
(c) The Parties agree to complete any repairs,
\nmodifications or corrections, in accordance with Good Utility Practice, that
\nare necessary to restore to the other Party as soon as reasonably practicable
\nany services set forth in Sections 3.10 or 3.11 below that have been suspended.<\/p>\n
3.10 Pepco Provided Services: Schedule F sets forth the
\nlocal services Pepco shall provide to the Generator pursuant to the terms of
\nthis Agreement. Unless otherwise specified in Schedule F, for a period of three
\n(3) years after the Effective Date (the “Initial Period”) and subject to
\nSection 3.9 above, Pepco shall provide Generator with the local services set
\nforth in Schedule F at no cost and in consideration of the local services
\nGenerator shall provide Pepco in accordance with Section 3.11 below. If
\nGenerator desires the continuation of any of the services set forth in Schedule
\nF which are subject to the Initial Period to continue after the Initial Period,
\nupon Generator’s written request to Pepco made at least 60 days prior to the
\nexpiration of the Initial Period, the Parties shall engage in good faith
\nnegotiations to reach mutually agreeable terms and conditions upon which such
\nservices will continue, provided, however, that if such agreement is not
\nreached prior to the expiration of the Initial Period, Pepco shall cease to
\nprovide services under Section 3.10 at the end of the Initial Period.<\/p>\n
3.11 Generator Provided Services. Schedule F sets forth
\nthe local services Generator shall provide to Pepco pursuant to the terms of
\nthis Agreement. Unless otherwise specified in Schedule F, for the Initial
\nPeriod and subject to Section 3.9 above, Generator shall provide Pepco with the
\nlocal services set forth in Schedule F at no cost and in consideration of the
\nlocal services Pepco shall provide Generator in accordance with Section 3.10
\nabove. If Pepco desires the continuation of any of the services set forth in
\nSchedule F which are subject to the Initial Period to continue after the
\nInitial Period, upon Pepco’s written request to Generator made at least 60 days
\nprior to the expiration of the Initial Period, the Parties shall engage in good
\nfaith negotiations to reach mutually agreeable terms and conditions upon which
\nsuch services will continue, provided, however, that if such agreement is not
\nreached prior to the expiration of the Initial Period, Generator shall cease to
\nprovide services under Section 3.11 at the end of the Initial Period.<\/p>\n
247<\/p>\n
3.12 Optional Services: Generator may request that Pepco
\nprovide the following services to the Generator, provided, however, that Pepco
\nshall not have any obligation to provide such services unless the Parties have
\nmutually agreed in writing to the price and other terms and conditions of such
\nservice:<\/p>\n
(a) PJM interface and dispatch services through
\nthe Pepco control center;<\/p>\n
(b) use of Pepco’s communication services;<\/p>\n
(c) maintenance of certain auxiliary and
\ncommunications equipment at the Station;<\/p>\n
(d) maintenance of high-voltage and
\nmedium-voltage equipment such as power transformers and power circuit breakers;<\/p>\n
(e) maintenance of protective relaying, certain
\ncontrol equipment, such as AGC and MSVC, plant batteries and revenue meters
\nowned by Generator.<\/p>\n
3.13 Metering and Telemetering<\/p>\n
3.13.1 Generator shall, at Generator’s expense: (a) own,
\nMaintain and repair, all Revenue Meters, instrument transformers and
\nappurtenances associated with Revenue Meters, and real time telemetry, (b)
\nconduct meter accuracy and tolerance tests, and (c) prepare all calibration
\nreports required for equipment that measures energy transfers at the Point of
\nInterconnection. All meter accuracy and tolerance testing hereunder shall be in
\naccordance with PJM Requirements and Good Utility Practice and shall be
\nconducted, at Pepco’s request, in the presence of Pepco’s representative.<\/p>\n
3.13.2 Generator shall own and Maintain, at the Generator’s
\nexpense, equipment for redundant real-time communications and transmission of
\ntelemetry, hourly MWh information, and such other information as required by
\nthe PJM System Operator or Transmission Operator, or as reasonably required by
\nPepco in accordance with PJM Requirements and Good Utility Practice.<\/p>\n
3.14 Emergency Procedure<\/p>\n
3.14.1 Pepco, through the Transmission Operator, shall
\nprovide Generator with prompt verbal notification of Emergencies with regard to
\nthe Transmission System which may reasonably be expected to affect Generator’s<\/p>\n
248<\/p>\n
immediate operation of the Station or Generator Facilities, and Generator shall
\nprovide Pepco with prompt verbal notification of Emergencies with regard to the
\nStation which may reasonably be expected to affect Interconnection Service or
\nthe Transmission System. Such notification shall describe the Emergency, the
\nextent of damage or deficiency, the anticipated length of an outage and the
\ncorrective action taken and\/or to be taken. Said verbal notification shall be
\nfollowed as soon as practicable (but no later than 24 hours after the verbal
\nnotification) with written notification.<\/p>\n
3.14.2 If an Emergency in the good faith judgment of a
\nParty endangers or could endanger life or property, the Party recognizing the
\nproblem shall take such action as may be reasonable and necessary to prevent,
\navoid, or mitigate injury, danger, or loss. If however the Emergency involves
\ntransmission or electrical equipment, Generator shall notify the Transmission
\nOperator, and obtain the consent of such personnel, prior to performing any
\nswitching operations.<\/p>\n
3.14.3 Pepco may, consistent with PJM Requirements and Good
\nUtility Practice, have the Transmission System Operator take whatever actions
\n(including tripping Generator’s synchronizing breakers) or inactions it deems
\nnecessary during an Emergency to: (a) preserve public safety; (b) preserve the
\nintegrity of the Transmission System, (c) limit or prevent damage; or (d)
\nexpedite restoration of service. If any action or inaction by Pepco or the
\nTransmission Operator under this Section 3.14 results in the discontinuation,
\ncurtailment, interruption or reduction of Interconnection Service, Pepco shall
\nuse reasonable efforts consistent with PJM Requirements and Good Utility
\nPractice to restore Interconnection Service as promptly as practicable and to
\nminimize the effect of such restoration of service on the Station.<\/p>\n
3.15 Interconnection Service Interruptions<\/p>\n
3.15.1 If at any time, in the reasonable exercise of the
\nPJM System Operator’s judgment, or the Transmission Operator’s judgment
\nexercised in accordance with PJM Requirements or Good Utility Practice and on a
\nnon-discriminatory basis, a condition exists, including the operation of
\nGenerator’s equipment, which might reasonably be expected to have a materially
\nadverse affect on the quality of service rendered by Pepco (including services
\nrendered to transmission or distribution customers) or interferes with the safe
\nand reliable operation of the Transmission System, Pepco may discontinue,
\ncurtail, reduce and\/or interrupt Interconnection Service until the condition
\nhas been corrected.<\/p>\n
3.15.2 Unless the PJM System Operator, the Transmission
\nOperator or Pepco perceives that an Emergency exists or the risk of one is
\nimminent, Pepco<\/p>\n
249<\/p>\n
shall give Generator reasonable notice of its intention to discontinue,
\ncurtail, interrupt or reduce Interconnection Service in response to the
\ninterfering condition and, where practical, allow suitable time for Generator
\nto remove the interfering condition if it is the result of Generator’s
\noperations, before the discontinuation, curtailment, interruption or reduction
\ncommences. Pepco’s judgment with regard to the interruption of service under
\nthis paragraph shall be made pursuant to PJM Requirements and Good Utility
\nPractice. In the case of such interruption, Pepco shall immediately confer with
\nGenerator regarding the conditions causing such interruption and its
\nrecommendation concerning timely correction thereof. In the event
\nInterconnection Service is interrupted under this section due to Generator’s
\nfailure to operate and Maintain the Generating Facilities pursuant to PJM
\nRequirements or Good Utility Practice, Generator shall compensate Pepco for all
\ncosts reasonably incurred by Pepco attributable to the interruption and
\nrestoration of Interconnection Service. Pepco shall use reasonable efforts
\nconsistent with PJM Requirements and Good Utility Practice to restore
\nInterconnection Service interrupted, curtailed or reduced pursuant to this
\nSection 3.15 as promptly as practicable and to minimize the effect of such
\nrestoration of service on the Station.<\/p>\n
3.16 Unit Status Notification<\/p>\n
3.16.1 Generator acknowledges that Pepco requires
\ninformation regarding the status of the Station for Transmission System
\nreliability purposes. Accordingly, by 10:00 a.m. of each day, the Generator
\nshall provide Pepco the following information regarding the status of the
\nStation for the following day: Station availability to provide energy and
\ncapacity, the Station’s scheduled on and off times, Station synchronization,
\nplanned outages or deratings, and generation restrictions and limitations.
\nGenerator shall immediately notify Pepco of any changes to the information
\nprovided pursuant to the foregoing sentence.<\/p>\n
3.16.2 In circumstances, such as forced outages, Generator
\nshall notify Pepco of its generating unit’s temporary interruption of
\ngeneration as soon as practicable; and it shall provide Pepco, as soon as
\npracticable, with a schedule of when generation will be resumed.<\/p>\n
3.17 Scheduled Maintenance Notification and Coordination<\/p>\n
3.17.1 Local Routine Inspection and Maintenance. The
\nParties agree that, due to the integration of certain control and protective
\nrelaying schemes between the Station and the Interconnection Facilities, it
\nwill be necessary for them to cooperate in the inspection, maintenance and
\ntesting of these areas of integration. Each Party will provide advance notice
\nto the other Party before undertaking any work in these areas, especially in
\nelectrical circuits involving circuit breaker trip and<\/p>\n
250<\/p>\n
close contacts, current transformers or potential transformers and such work
\nwill be performed in accordance with PJM Requirements and Good Utility
\nPractice.<\/p>\n
3.17.2 Transmission System Maintenance. Pepco shall consult
\nwith Generator regarding timing of scheduled maintenance of the Interconnection
\nFacilities or the transmission facilities of the Transmission System which
\nPepco or the Transmission Operator performs and which might reasonably be
\nexpected to affect the Station. Pepco shall, to the extent practicable,
\nschedule any testing, shutdown, or withdrawal of said facilities to coincide
\nwith Generator’s scheduled outages for the Station. To facilitate such
\nconsultation and to the extent the information is not available from the PJM
\nSystem Operator in a timely manner, in June of each year, or on another date
\nmutually acceptable to the Parties, Generator shall furnish Pepco with
\nnon-binding preliminary generator maintenance schedules covering the upcoming
\ntwo years and any material changes thereto. In the event Pepco is unable to
\nschedule the outage of its facilities to coincide with Generator’s schedule,
\nPepco shall notify Generator as soon as practicable of the reasons for the
\nfacilities’ outage, of the time scheduled for the outage to take place, and of
\nits expected duration.<\/p>\n
3.18 Safety<\/p>\n
3.18.1 General. Pepco agrees with respect to the
\nInterconnection Facilities and the Transmission System, and Generator agrees
\nwith respect to the Station, that all work performed by either Party on such
\nfacilities which could reasonably be expected to affect the operations of the
\nother Party shall be performed in accordance with all applicable PJM
\nRequirements and Good Utility Practice.<\/p>\n
3.18.2 Switching Tagging and Grounding . Each Party shall
\ncomply with the Switching, Tagging and Grounding Rules. Pepco will notify
\nGenerator of any changes in its Switching, Tagging and Grounding Rules.
\nGenerator shall be responsible for all switching, tagging and grounding on
\nGenerator’s side of the Point of Interconnection and, except for Generator
\nFacilities, Pepco shall be responsible for all switching, tagging and grounding
\non its side of the Point of Interconnection.<\/p>\n
3.19 Environmental Compliance and Procedures<\/p>\n
3.19.1 Each Party shall be responsible for complying with
\nall Environmental Laws applicable to it with respect to its facilities or
\nproperty.<\/p>\n
251<\/p>\n
3.19.2 A Party shall notify the other Party first verbally
\nand then in writing, of any Releases of a Hazardous Substance or any type of
\nremediation activities related thereto as soon as possible but no later than
\ntwenty-four (24) hours after the occurrence if within the reasonable judgment
\nof the Party said activities could reasonably be expected to have a material
\nadverse effect upon the operations of the other Party and shall promptly
\nfurnish to the other Party copies of any reports filed with any governmental
\nagencies covering such events. This Section 3.19.2 does not effect any
\nallocation of liability with respect to the Station pursuant to the Asset Sale
\nAgreement.<\/p>\n
3.19.3 Neither Party shall knowingly take any actions which
\nmight reasonably be expected to have a material adverse environmental impact
\nupon the operations of the other Party without prior written notification and
\nagreement between then Parties.<\/p>\n
3.20 Operating Committee. The Parties shall establish an operating
\ncommittee consisting of one representative for each Party (“Operating
\nCommittee”). The Operating Committee shall act only by unanimous agreement or
\nconsent. The Parties shall designate their respective representatives to the
\nOperating Committee, plus an alternate by written notice. Each Party’s
\nrepresentative on the Operating Committee is authorized to act on behalf of
\nsuch Party with respect to any matter arising under this Agreement which is to
\nbe decided by the Operating Committee, however, the Operating Committee shall
\nnot have any authority to modify or otherwise alter the rights and obligations
\nof the Parties hereunder. The Operating Committee shall develop and implement
\nsuitable policies and procedures with which to coordinate the interaction of
\nthe Parties with respect to the performance of their duties and obligations
\nunder this Agreement.<\/p>\n
ARTICLE 4
\n OPERATIONS<\/p>\n
4.1 General<\/p>\n
4.1.1 The Parties agree to operate their respective
\nequipment that could reasonably be expected to have a material effect on the
\noperations of the other Party in a safe and efficient manner and in accordance
\nwith PJM Requirements and Good Utility Practice, and otherwise in accordance
\nwith the terms of this Agreement.<\/p>\n
4.1.2 Generator shall comply with the requests, orders,
\nand directives of Pepco with respect to Interconnection Service to the extent
\nsuch requests, orders<\/p>\n
252<\/p>\n
or directives are (a) issued pursuant to PJM Requirements or Good Utility
\nPractice, (b) not discriminatory; and (c) otherwise in accordance with this
\nAgreement or applicable tariffs.<\/p>\n
4.1.3 In the event Generator believes that a request,
\norder, or directive of Pepco exceeds the limitations in this Section 4.1.2, it
\nshall nevertheless comply with the request, order, or directive pending
\nresolution of the dispute under Article 12. The Parties agree to cooperate in
\ngood faith to expedite the resolution of any disputes arising under this
\nSection 4.1.<\/p>\n
4.2 Generator’s Operating Obligations<\/p>\n
4.2.1 General. Generator shall request permission from the
\nTransmission Operator, the PJM System Operator or the PJM Interconnection LLC,
\nas applicable, prior to opening and\/or closing circuit breakers in accordance
\nwith applicable switching and operations procedures and Good Utility Practice.<\/p>\n
(a) Generator shall carry out all switching
\norders from the Transmission Operator, the PJM System Operator, or the PJM
\nInterconnection LLC, in a timely manner and in accordance with PJM Requirements
\nand Good Utility Practice.<\/p>\n
(b) Generator shall (i) comply with Pepco’s
\nsystem restoration plan and black start criteria applicable to the Station as
\nconfigured as of the Effective Date or (ii) if the Station’s configuration is
\nmodified, provide alternative service restoration and black start capability in
\naccordance with PJM Requirements. Generator shall ensure that operating
\npersonnel at the Station are trained to implement such system restoration or
\nblack start plans. The Generator shall test the Station’s black-start
\ncombustion-turbines annually to confirm that the black-start
\ncombustion-turbines will start without an external power supply. The Generator
\nshall test the Station’s steam turbine-generators and those combustion-turbine
\ngenerators that would be required to be black-started in accordance with
\nPepco’s Emergency Conditions and System Restoration Manual, as revised from
\ntime to time, and plant restoration procedures, at least once every three
\nyears. Testing shall confirm the ability of a generating unit or Station to go
\nfrom a shut down condition to an operating condition and start delivering power
\nwithout assistance from the Transmission System. These testing requirements
\nshall remain in place until PJM promulgates specific rules governing
\nblack-start testing.<\/p>\n
253<\/p>\n
(c) The electricity supplied by Generator to
\nthe Point of Interconnection shall be in the form of three-phase 60 Hertz
\nalternating current at the nominal system voltage.<\/p>\n
(d) Generator’s equipment shall conform with
\nGood Utility Practice for harmonic distortion and voltage fluctuation.<\/p>\n
4.2.2 Voltage or Reactive Control Requirements. Unless
\notherwise agreed to by the Parties or authorized or directed by the PJM
\nInterconnection LLC, Generator shall operate the Station with automatic voltage
\nregulators in service at all times. The voltage regulators will control voltage
\nat the Points of Interconnection consistent with the range of voltage
\nprescribed by Pepco or the Transmission System Operator in accordance with PJM
\nRequirements and Good Utility Practice.<\/p>\n
(a) Generator will operate the Station in
\naccordance with prescribed voltage schedules pursuant to Section 4.2.2 to the
\nextent the Station is operating within its reactive generating capability and
\nnot violating any electrical constraints. Should Generator fail to comply with
\nsuch voltage schedules, Pepco or the Transmission Operator, as applicable,
\nshall provide written notice to the Generator of its intent to remedy that
\nfailure. If Generator does not promptly commence appropriate action after
\nreceiving such notice, Pepco or the Transmission Operator may then take any
\nnecessary action at Generator’s expense to remedy such failure, including the
\ninstallation of capacitor banks or other reactive compensation equipment
\nnecessary to ensure the proper voltage or reactive supply at the Station
\nincluding, at a minimum, by installing such equipment outside any building
\nhousing the Generation Facilities. Pepco shall make, to the extent feasible,
\nreasonable efforts to minimize the impact of such action on the operation of
\nthe Station.<\/p>\n
(b) Generator shall notify the Transmission
\nOperator if (a) any or all generating units at the Station reaches a VAR limit,
\n(b) there is any deviation from the voltage schedules prescribed pursuant to
\nSection 4.2.2 which is outside the limits permitted by PJM Requirements or Good
\nUtility Practice, or (c) any automatic voltage regulator is removed from or
\nrestored to service.<\/p>\n
(c) The Transmission Operator may from time to
\ntime, pursuant to PJM Requirements or Good Utility Practice, request or direct
\nGenerator to adjust generator controls that impact the Transmission System,
\nsuch as excitation, droop, and automatic generation control settings and
\nGenerator shall comply with such request or directions.<\/p>\n
254<\/p>\n
(d) Generator acknowledges that the
\nTransmission Operator may have the right, to the extent authorized or directed
\nby the PJM Interconnection LLC, to require reduced or increased generation of
\nthe Station in accordance with PJM Requirements, or in accordance with
\napplicable rules of the Transmission Operator.<\/p>\n
4.3 Auditing of Accounts and Records. The Parties shall have the
\nright, during normal business hours, to audit each other’s accounts and records
\npertaining to transactions under this Agreement, upon twenty (20) days prior
\nwritten notice, at the offices where such accounts and records are maintained,
\nprovided, however, that the audit shall be limited to those portions of the
\naccounts and records that are related to services provided to the other Party
\nunder this Agreement. Any such audit of a Party’s accounts and records will be
\nat the expense of the auditing Party, shall not be made more frequently than
\nonce in any twelve (12) month period, and no such audit may be made with
\nrespect to accounts and records relating to periods more than twenty-four (24)
\nmonths prior to the date of the audit notice. The Party being audited will be
\nentitled to review the audit report and any supporting materials. The Party
\nconducting the audit shall maintain the confidentiality of all information
\nobtained during the audit in compliance with Article 6 of this Agreement. To
\nthe extent that audited information includes confidential information, the
\nauditing Party shall designate an independent auditor at its expense to perform
\nsuch audit.<\/p>\n
ARTICLE 5
\n COST RESPONSIBILITIES AND BILLING PROCEDURES<\/p>\n
5.1 Cost Responsibilities for Interconnection Service. Except as
\notherwise expressly stated herein, Generator shall not be responsible for any
\ncosts arising from Pepco’s provision of Interconnection Service or local
\nservices to Generator, except for those costs specified in Sections 3.2.1,
\n3.2.2, 3.4.1, and 3.15 or arising from the liability or indemnification
\nprovisions of this Agreement.<\/p>\n
5.2 Cost Responsibilities for Local Services. Except as otherwise
\nexpressly provided herein or agreed to by the Parties, each Party shall be
\nresponsible for the costs for local services provided to the other Party in
\nSections 3.10 and 3.11 as set forth in said sections.<\/p>\n
5.3 Billing Procedures<\/p>\n
255<\/p>\n
(a) Within ten (10) days after the first day of
\neach calendar month, each Party shall provide the other Party with a written
\ninvoice for any payments due from the other Party for services provided in the
\nprevious month.<\/p>\n
(b) Each invoice shall (i) delineate the month
\nin which the services were provided, (ii) fully describe the services rendered,
\n(iii) be itemized to reflect the services performed or provided, and (iv)
\nprovide reasonable detail as to the calculation of the amount involved.<\/p>\n
(c) All invoices shall be paid within fifteen
\n(15) days after receipt, but not earlier than the 25th day of the month in
\nwhich the invoice is rendered. All payments shall be made in immediately
\navailable funds payable to the other Party, or by wire transfer to a bank
\ndesignated in writing by such Party. Payment of invoices shall not relieve the
\npaying Party from any responsibilities or obligations it has under this
\nAgreement, nor shall such payment constitute a waiver of any claims arising
\nhereunder.<\/p>\n
5.3.2 To the extent that, for any billing period,
\nGenerator is obligated to pay to Pepco amounts due and calculated pursuant to
\nSection 5.3, Pepco may use such amounts as a set-off against any amounts owed
\nby Pepco to Generator under this Section 5.3.<\/p>\n
5.3.3 Interest on any unpaid amounts shall be calculated
\nin accordance with the methodology specified for interest on refunds in FERC
\nregulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on delinquent
\namounts shall be calculated from the due date of the bill to the date of
\npayment. When payments are made by mail, bills shall be considered as having
\nbeen paid on the date of receipt by the other Party.<\/p>\n
5.4 Billing Disputes. In the event of a billing dispute between
\nthe Parties, each Party shall continue to provide services as long as the other
\nParty continues to make all payments not in dispute. Payment of invoices by
\neither Party shall not relieve the paying Party from any responsibilities or
\nobligations it has under this Agreement; nor shall it constitute a waiver of
\nany claims arising hereunder.<\/p>\n
ARTICLE 6
\n CONFIDENTIALITY<\/p>\n
6.1 Confidentiality Obligations of Pepco. Pepco shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by
\nGenerator in<\/p>\n
256<\/p>\n
connection with this Agreement marked “Confidential” or “Proprietary.” Except
\nto the extent that such information or documents are (i) generally available to
\nthe public other than as a result of a disclosure by Pepco in breach of this
\nAgreement, (ii) available to Pepco on a non-confidential basis prior to
\ndisclosure to Pepco by Generator, or (iii) available to Pepco on a
\nnon-confidential basis from a source other than Generator, provided that such
\nsource is not known, and by reasonable effort could not be known, by Pepco to
\nbe bound by a confidentiality agreement with Generator or otherwise prohibited
\nfrom transmitting the information to Pepco by a contractual, legal or fiduciary
\nobligation, Pepco shall not release or disclose such information to any other
\nperson, except to its employees, representatives or agents on a need-to-know
\nbasis, in connection with this Agreement who has not first been advised of the
\nconfidentiality provisions of this Section 6.1 and has agreed in writing to
\ncomply with such provisions. In no event shall such information be disclosed in
\nviolation of the requirements of FERC Orders 889 and 889-A, and any successor
\nthereto. Pepco shall promptly notify Generator if it receives notice or
\notherwise concludes that the production of any information subject to this
\nSection 6.1 is being sought under any provision of law and Pepco shall use
\nreasonable efforts in cooperation with Generator to seek confidential treatment
\nfor such confidential information provided thereto.<\/p>\n
6.2 Confidentiality Obligations of Generator. Generator shall
\nhold in confidence, unless compelled to disclose by judicial or administrative
\nprocess or other provisions of law, all documents and information furnished by
\nPepco in connection with this Agreement marked “Confidential” or “Proprietary.”
\nExcept to the extent that such information or documents are (i) generally
\navailable to the public other than as a result of a disclosure by Generator in
\nbreach of this Agreement, (ii) available to Generator on a non-confidential
\nbasis prior to disclosure to Generator by Pepco, or (iii) available to
\nGenerator on a non-confidential basis from a source other than Pepco, provided
\nthat such source is not known, and by reasonable effort could not be known, by
\nGenerator to be bound by a confidentiality agreement with Pepco or otherwise
\nprohibited from transmitting the information to Generator by a contractual,
\nlegal or fiduciary obligation, Generator shall not release or disclose such
\ninformation to any other person, except to its employees, representatives or
\nagents on a need-to-know basis, in connection with this Agreement who has not
\nfirst been advised of the confidentiality provisions of this Section 6.2 and
\nhas agreed in writing to comply with such provisions. In no event shall such
\ninformation be disclosed in violation of the requirements of FERC Orders 889
\nand 889-A, and any successor thereto. Generator shall promptly notify Pepco if
\nit receives notice or otherwise concludes that the production of any
\ninformation subject to this Section 6.2 is being sought under any provision of
\nlaw and Generator shall use reasonable efforts in cooperation with Pepco to
\nseek confidential treatment for such confidential information provided thereto.<\/p>\n
257<\/p>\n
6.3 Confidentiality of Audits. The independent auditor performing
\nany audit, as referred to in Section 4.3, shall be subject to a confidentiality
\nagreement between the auditor and the Party being audited. Such audit
\ninformation shall be treated as confidential except to the extent that its
\ndisclosure is required by regulatory or judicial order, for reliability
\npurposes pursuant to PJM Requirements or Good Utility Practice, and pursuant to
\nthe FERC’s rules and regulations. Except as provided herein, neither Party will
\ndisclose the audit information to any third party, without the other Party’s
\nprior written consent. Audit information in the hands of the Party not being
\naudited shall be subject to all provisions of Section 6.1 or 6.2, above, as
\napplicable.<\/p>\n
6.4 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its
\nobligations under Section 6.1 or 6.2, above, as applicable. Each Party
\naccordingly agrees, subject to Article 8, that the other Party shall be
\nentitled to equitable relief, by way of injunction or otherwise, if the first
\nParty breaches or threatens to breach its obligations under Section 6.1 or 6.2
\nof this Agreement, as applicable, which equitable relief shall be granted
\nwithout bond or proof of damages, and the receiving Party shall not plead in
\ndefense that there would be an adequate remedy at law.<\/p>\n
ARTICLE 7
\n EVENTS OF DEFAULT<\/p>\n
7.1 Events of Default. Each of the following shall constitute an
\nEvent of Default by the a defaulting Party under this Agreement:<\/p>\n
(a) The failure by a Party to pay any amount
\ndue within twenty (20) calendar days after receipt of written notice of
\nnonpayment by the other Party, unless the payment of such amount is disputed in
\ngood faith, in which event Section 5.5 shall apply;<\/p>\n
(b) A Party’s breach of any material term or
\ncondition of this Agreement, including but not limited to any material breach
\nof a representation, warranty or covenant made in this Agreement which, after
\nreceiving written notice of the breach from the non-breaching Party (such
\nnotice to set forth in reasonable detail the nature of the default and, where
\nknown and if applicable, the steps necessary to cure such default), (i) the
\nbreaching Party fails to cure, if curable, within thirty (30) days following
\nreceipt of the notice or (ii) if such default is of such a nature that it
\ncannot be cured within thirty (30) days following receipt of such notice, the
\nbreaching Party fails within such thirty (30) days to commence the necessary
\ncure and fails at any time thereafter diligently and continuously to<\/p>\n
258<\/p>\n
prosecute such cure to completion provided that the cure is completed no later
\nthan 180 days after the receipt of the default notice;<\/p>\n
(c) The appointment of a receiver, liquidator
\nor trustee for either Party, and such receiver, liquidator or trustee is not
\ndischarged within sixty (60) days;<\/p>\n
(d) The entry of a decree or decrees
\nadjudicating a Party as bankrupt or insolvent, and such decree or decrees are
\nnot stayed or discharged within sixty (60) days; or<\/p>\n
(e) The filing of voluntary petitions for
\nbankruptcy under any federal or state bankruptcy law by a Party.<\/p>\n
7.2 Remedies<\/p>\n
7.2.1 If the breaching Party disputes that an Event of
\nDefault under Section 7.1.(b) has occurred, the breaching Party shall
\nnonetheless comply with this Section 7.2 pending the resolution of the dispute.
\nIf it is determined that no breach or Event of Default under Section 7.1(b)
\nexisted, the Party alleging the default shall pay and reimburse the other Party
\nfor all reasonable costs and expenses incurred by it to cure the alleged
\ndefault.<\/p>\n
7.2.2 Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (i) exercise all such rights and remedies as may be
\navailable to it at law or equity including seeking to recover damages caused by
\nsuch Event of Default, subject to Article 8 of this Agreement; and\/or (ii)
\nterminate this Agreement. The Parties shall not discontinue the performance of
\nany one or more of their obligations hereunder due to the occurrence of an
\nEvent of Default during the pendency of any dispute regarding such Event of
\nDefault and until such dispute is finally resolved except that Pepco may
\nsuspend or interrupt service if necessary for the safe and reliable operation
\nof the Interconnection Facilities or the Transmission System.<\/p>\n
7.2.3 Notwithstanding the foregoing, upon the occurrence
\nof any Event of Default, the non-defaulting Party shall be entitled to commence
\nan action to require the defaulting Party to remedy such default by
\nspecifically performance of its duties and obligations hereunder in accordance
\nwith the terms and conditions hereof.<\/p>\n
259<\/p>\n
7.2.4 Notwithstanding anything in this Agreement to the
\ncontrary, in the event the Generator’s failure to comply with the provisions of
\nSections 4.1 and 4.2 of this Agreement is reasonably likely to have an
\nimmediate and material adverse impact on Pepco or the Transmission System,
\nPepco shall have the right to take immediately reasonable steps and\/or to
\nexercise immediately all remedies available under this Agreement, or at law or
\nequity, including the right, after providing as much notice as is practicable
\nunder the circumstances and complying with the applicable FERC notice
\nrequirements regarding termination of service, to disconnect the Station from
\nthe Transmission System.<\/p>\n
ARTICLE 8
\n LIMITATION OF LIABILITY<\/p>\n
8.1 Limitation of Pepco’s Liability. Pepco does not guarantee the
\nnon-occurrence of, or warrant against, and will have no liability hereunder
\nfor, and the Generator will release Pepco from all claims or damages associated
\nwith, any interruption in the availability of the Interconnection Facilities,
\nInterconnection Service or local services pursuant to Section 3.10 or damages
\nto the Generator’s facilities, except to the extent such interruption or damage
\nis caused by Pepco’s gross negligence or willful misconduct in the performance
\nof its obligations under this Agreement.<\/p>\n
8.2 Limitation on Generator’s Liability. Generator does not
\nguarantee the non-occurrence of, or warrant against, and will have no liability
\nunder this Agreement for, and Pepco will release Generator from all claims or
\ndamages arising under this Agreement which are associated with any interruption
\nin the availability of the Station or local services pursuant to Section 3.11,
\nany reduction, curtailment, interruption or reduction of energy from the
\nStation, or damage to Pepco’s facilities, except to the extent such
\ninterruption or damage is caused by Generator’s gross negligence or willful
\nmisconduct in the performance of its obligations under the Agreement.<\/p>\n
8.3 Consequential Damages. Except for indemnity obligations set
\nforth in Article 9, neither Party, nor their respective officers, directors,
\nagents, employees, Affiliates, or successors or assigns of any of them, shall
\nbe liable to the other Party or its Affiliates, officers, directors, agents,
\nemployees, successors or assigns for claims, suits, actions or causes of action
\nfor incidental, punitive, special, indirect, multiple or consequential damages
\n(including, without limitation, replacement power costs, lost revenues, claims
\nof customers, attorneys’ fees and litigation costs) connected with, or
\nresulting from, performance or non-performance of this Agreement, or any
\nactions undertaken in connection with or related to this Agreement, including,
\nwithout limitation, any such damages which are based upon causes of action for<\/p>\n
260<\/p>\n
breach of contract, tort (including negligence and misrepresentation), breach
\nof warranty or strict liability. The provisions of this Section 8.3 shall apply
\nregardless of fault and shall survive termination, cancellation, suspension,
\ncompletion, or expiration of this Agreement.<\/p>\n
ARTICLE 9
\n INDEMNIFICATION FOR THIRD PARTY CLAIMS<\/p>\n
9.1 Generator’s Indemnification. Generator shall indemnify, hold
\nharmless, and defend Pepco and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Pepco and a third party or Generator) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Pepco’s employees or any third parties, to the extent caused,
\nby the negligence or willful misconduct of Generator’s and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Generator’s performance or breach of this Agreement,
\nor the exercise by Generator of its rights hereunder. In furtherance of the
\nforegoing indemnification and not by way of limitation thereof, Generator
\nhereby waives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
9.2 Pepco’s Indemnification. Pepco shall indemnify, hold
\nharmless, and defend Generator and its Affiliates, as the case may be, and
\ntheir respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between the Generator and a third party
\nor Pepco) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Generator’s employees or any third parties, to
\nthe extent caused by the negligence or willful misconduct of Pepco and\/or its
\nofficers, directors, employees, agents, contractors, subcontractors or invitees
\narising out of or connected with Pepco’s performance or breach of this
\nAgreement, or the exercise by Pepco of its rights hereunder. In furtherance of
\nthe foregoing indemnification and not by way of limitation thereof, Pepco
\nhereby waives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
9.3 Indemnification Procedures. If either Party intends to seek
\nindemnification under this Article 9 from the other Party, the Party seeking
\nindemnification shall give the other Party notice of such claim within ninety
\n(90)<\/p>\n
261<\/p>\n
days of the later of the commencement of, or the Party’s actual knowledge of,
\nsuch claim or action. Such notice shall describe the claim in reasonable
\ndetail, and shall indicate the amount (estimated if necessary) of the claim
\nthat has been, or may be sustained by, said Party. To the extent that the other
\nParty will have been actually and materially prejudiced as a result of the
\nfailure to provide such notice, such notice will be a condition precedent to
\nany liability of the other Party under the provisions for indemnification
\ncontained in this Agreement. Neither Party may settle or compromise any claim
\nwithout the prior consent of the other Party; provided, however, said consent
\nshall not be unreasonably withheld or delayed.<\/p>\n
9.4 Survival. The indemnification obligations of each Party under
\nthis Article 9 shall continue in full force and effect regardless of whether
\nthis Agreement has either expired or been terminated or canceled.<\/p>\n
ARTICLE 10
\n INSURANCE<\/p>\n
10.1 Insurance Coverage. The Parties shall maintain at their own
\ncost and expense, fire, liability, worker’s compensation, and other forms of
\ninsurance relating to their respective property and facilities subject to this
\nAgreement in the manner, and amounts, and for the durations as is customary in
\nthe electric utility industry.<\/p>\n
10.2 Certificates of Insurance. The Parties agree to furnish each
\nother with certificates of insurance evidencing the insurance Coverage obtained
\nin accordance with this Article 10, and the Parties agree to notify and send
\ncopies to the other of any policies maintained hereunder upon written request
\nby a Party. Each Party must notify the other Party within ten (10) business
\ndays of receiving notice of cancellation, change, amendment or renewal of any
\ninsurance policy required pursuant to Section 10.1 above.<\/p>\n
10.3 Additional Insureds and Waiver. Each Party and its affiliates
\nshall be named as additional insureds on the general liability insurance
\npolicies obtained in accordance with Section 10.1, above, as regards liability
\nunder this Agreement; and each Party shall waive its rights of recovery against
\nthe other for any loss or damage covered by such policy.<\/p>\n
262<\/p>\n
ARTICLE 11
\n FORCE MAJEURE<\/p>\n
11.1 Effect of Force Majeure. Notwithstanding anything in this
\nAgreement to the contrary, Generator and Pepco shall not be liable in damages
\nor otherwise or responsible to the other for its failure to carry out any of
\nits obligations under this Agreement (except for the obligation to pay sums of
\nmoney due and owing hereunder) to the extent that they are unable to so perform
\nor are prevented from performing by an event of Force Majeure and has complied
\nwith Section 11.3.<\/p>\n
11.2 Force Majeure Defined. Force Majeure means those causes
\nbeyond the reasonable control of the Party affected, which by the exercise of
\nreasonable diligence, including Good Utility Practice, that Party is unable to
\nprevent, avoid, mitigate, or overcome, including the following: any act of God,
\nlabor disturbance (including a strike), act of the public enemy, war,
\ninsurrection, riot, fire, storm or flood, explosion, breakage or accident to
\nmachinery or equipment, electric system disturbance), order, regulation or
\nrestriction imposed by governmental, military or lawfully established civilian
\nauthorities, or any other cause of a similar nature beyond a Party’s reasonable
\ncontrol.<\/p>\n
11.3 Notification. A Party shall not be entitled to rely on the
\noccurrence of an event of Force Majeure as a basis for being excused from
\nperformance of its obligations under this Agreement, unless the Party relying
\non the event or condition shall: (a) provide prompt written notice of such
\nForce Majeure event to the other Party, including an estimation of its expected
\nduration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts in accordance with Good Utility
\nPractice to continue to perform its obligations under this Agreement; (c)
\nexpeditiously take action to correct or cure the event or condition excusing
\nperformance; (d) exercise all reasonable efforts to mitigate or limit damages
\nto the other Party; and (e) provide prompt notice to the other Party of the
\ncessation of the event or condition giving rise to its excuse from performance.
\nSubject to this Section 11.3, any obligation under this Agreement shall be
\nsuspended only to the extent caused by such Force Majeure and only during the
\ncontinuance of any inability of performance caused by such Force Majeure but
\nfor no longer period.<\/p>\n
ARTICLE 12
\n DISPUTES<\/p>\n
12.1 Disputes<\/p>\n
263<\/p>\n
12.1.1 A Party with a claim or dispute under this Agreement
\nshall submit to the Operating Committee a notification of such claim or dispute
\nwithin sixty (60) days after the circumstances that gave rise to the claim or
\nthe question or issue in dispute. The notification shall be in writing and
\nshall include a concise statement of the claim or the issue or question in
\ndispute, a statement of the relevant facts and documentation to support the
\nclaim. In the event the Operating Committee is unable, in good faith, to
\nresolve their disagreement in a manner satisfactory to both Parties within
\nthirty (30) days after receipt by the Operating Committee of a notification
\nspecifying the claim, issue or question in dispute, the Parties shall refer the
\ndispute to their respective senior management. If, after using their good faith
\nbest efforts to resolve the dispute, senior management cannot resolve the
\ndispute within thirty (30) days, the Parties shall utilize the arbitration
\nprocedures set forth below in Section 12.2 to resolve a dispute, provided that
\nnothing herein or therein shall prohibit either Party from at any time
\nrequesting from a court of competent jurisdiction a temporary restraining
\norder, preliminary injunction, or other similar form of equitable relief to
\nenforce performance of the provisions of this Agreement.<\/p>\n
12.2 Arbitration.<\/p>\n
(a) Unless the Parties other wise mutually
\nagree in writing to another form of dispute resolution such as dispute
\nresolution under the PJM Agreement or the MAAC agreement, any arbitration
\ninitiated under this Agreement shall be conducted before a single neutral
\narbitrator appointed by the Parties within thirty (30) days of receipt by
\nrespondent of the demand for arbitration. If the Parties are unable to agree on
\nan arbitrator, such arbitration shall be appointed by the American Arbitration
\nAssociation. Unless the Parties agree otherwise, the arbitrator shall be an
\nattorney or retired judge with at least fifteen (15) years of experience, and
\nshall not have any current or past substantial business or financial
\nrelationships with any Party to the arbitration. If possible, the arbitrator
\nshall have experience in the electric utility industry. Unless otherwise
\nagreed, the arbitration shall be conducted in accordance with the American
\nArbitration Association’s Commercial Arbitration Rules, then in effect. Any
\narbitration proceedings, decision or award rendered hereunder and the validity,
\neffect and interpretation of this arbitration agreement shall be governed by
\nthe Federal Arbitration Act of the United States, 9 U.S.C. Section 1 et seq.
\nThe location of any arbitration hereunder shall be in the District of Columbia.<\/p>\n
(b) The arbitration shall, if possible, be
\nconcluded not later than six (6) months after the date that it is initiated.
\nThe arbitrator shall be authorized only to interpret and apply the provisions
\nof this Agreement or any related agreements entered into under this Agreement
\nand shall have no power to modify<\/p>\n
264<\/p>\n
or change any of the above in any manner. The arbitrator shall have no
\nauthority to award punitive or multiple damages or any damages inconsistent
\nwith this Agreement. The arbitrator shall, within thirty (30) days of the
\nconclusion of the hearing, unless such time is extended by agreement of the
\nParties, notify the Parties in writing of his or her decision, stating his or
\nher reasons for such decision and separately listing his or her findings of
\nfact and conclusions of law. The decision of the arbitrator rendered in such a
\nproceeding shall be final and binding on the Parties. Judgment on the award may
\nbe entered upon it in any court having jurisdiction.<\/p>\n
12.3 FERC Dispute Resolution. Nothing in this Agreement shall
\npreclude, or be construed to preclude, any Party from filing a petition or
\ncomplaint with FERC with respect to any arbitrable claim over which FERC has
\njurisdiction. In such case, the other Party may request FERC to reject or to
\nwaive jurisdiction. If FERC rejects or waives jurisdiction with respect to all
\nor a portion of the claim, the portion of the claim not so accepted by FERC
\nshall be resolved through arbitration, as provided in this Agreement. To the
\nextent that FERC asserts or accepts jurisdiction over the claim, the decision,
\nfinding of fact or order of FERC shall be final and binding, subject to
\njudicial review under the Federal Power Act, and any arbitration proceedings
\nthat may have commenced with respect to the claim prior to the assertion or
\nacceptance of jurisdiction by FERC shall be terminated.<\/p>\n
ARTICLE 13
\n REPRESENTATIONS<\/p>\n
13.1 Representations of Pepco. Pepco hereby represents and
\nwarrants to Generator as follows:<\/p>\n
(a) Incorporation. Pepco is a corporation duly
\norganized, validly existing and in good standing under the laws of the District
\nof Columbia and the Commonwealth of Virginia, and has all requisite corporate
\npower and authority to own, lease and operate its material assets and
\nproperties and to carry on its business as now being conducted.<\/p>\n
(b) Authority. Pepco has all necessary
\ncorporate power and authority to execute and deliver this Agreement and to
\nconsummate the transactions contemplated hereby. The execution and delivery by
\nPepco of this Agreement and the consummation by Pepco of the transactions
\ncontemplated hereunder have been duly and validly authorized by the Board of
\nDirectors of Pepco or by a committee thereof to whom such authority has been
\ndelegated and no other corporate proceedings on the part of Pepco are necessary
\nto authorize this Agreement or the transactions contemplated hereby. This
\nAgreement has been duly and validly<\/p>\n
265<\/p>\n
executed and delivered by Pepco and, assuming that this Agreement constitutes a
\nvalid and binding agreement of Generator, constitutes a valid and binding
\nagreement of Pepco, enforceable by Pepco in accordance with its terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this
\nAgreement by Pepco nor performance by Pepco of its obligations hereunder will
\n(A) conflict with or result in any breach of any provision of the Certificate
\nof Incorporation or By-laws of Pepco, (B) result in a default (or give rise to
\nany right of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Pepco or any of its
\nsubsidiaries is a party or by which any of their respective assets may be bound
\nor (C) violate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to Pepco, or any of its assets, except in the case of clauses (B)
\nand (C) for such failures to obtain a necessary consent, defaults and
\nviolations which would not, individually or in the aggregate, have a material
\nadverse effect on the ability of Pepco to discharge its obligations under this
\nAgreement (a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration
\nwith, or notice to, or authorization, consent or approval of any governmental
\nauthority is necessary for performance by Pepco of its obligations hereunder,
\nother than such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Pepco Material Adverse Effect.<\/p>\n
13.2 Representations of Generator. Generator hereby represents and
\nwarrants to Pepco as follows:<\/p>\n
(a) Incorporation. Generator is a [corporation]
\nduly [incorporated], validly existing and in good standing under the laws of
\nthe State of __________, and has all requisite [corporate] power and authority
\nto own, lease and operate its material assets and properties and to carry on
\nits business as now being conducted.<\/p>\n
(b) Authority. Generator has all necessary
\n[corporate] power and authority to execute and deliver this Agreement and to
\nconsummate the transactions contemplated hereby. The execution and delivery by
\nthe Generator of this Agreement and the consummation by Generator of the
\ntransactions contemplated hereby have been duly and validly authorized the
\n[Board of Directors] of Generator<\/p>\n
266<\/p>\n
or by a committee thereof to whom such authority has been delegated and no
\nother [corporate] proceedings on the part of Generator are necessary to
\nauthorize this Agreement or the transactions contemplated hereby. This
\nAgreement has been duly and validly executed and delivered by Generator and,
\nassuming that this Agreement constitutes a valid and binding agreement of
\nPepco, constitutes a valid and binding agreement of Generator, enforceable
\nagainst Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals.<\/p>\n
(i) Neither the execution and delivery of this
\nAgreement by Generator nor performance by Generator of its obligations
\nhereunder will (A) conflict with or result in any breach of any provision of
\nthe [Certificate of Incorporation or By-laws] of Generator, (B) result in a
\ndefault (or give rise to any right of termination, cancellation or
\nacceleration) under any of the terms, conditions or provisions of any note,
\nbond, mortgage, indenture, license, agreement, lease or other instrument or
\nobligation to which Generator or any of its subsidiaries is a party or by which
\nany of their respective assets may be bound or (C) violate any order, writ,
\ninjunction, decree, statute, rule or regulation applicable to Generator, or any
\nof its assets, except in the case of clauses (B) and (C) for such failures to
\nobtain a necessary consent, defaults and violations which would not,
\nindividually or in the aggregate, have a material adverse effect on the ability
\nof Generator to discharge its obligations under this Agreement (a “Generator
\nMaterial Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration
\nwith, or notice to, or authorization, consent or approval of any Governmental
\nAuthority is necessary for performance by Generator of its obligations
\nhereunder, other than such declarations, filings, registrations, notices,
\nauthorizations, consents or approvals which, if not obtained or made would not,
\nindividually or in the aggregate, have a Generator Material Adverse Effect.<\/p>\n
ARTICLE 14
\n ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY<\/p>\n
14.1 Assignment.<\/p>\n
(a) Except as set forth in this Article 14,
\nneither this Agreement nor any of the rights, interests, or obligations
\nhereunder shall be assigned by either Party hereto, without the prior written
\nconsent of the other Party, which consent shall not be unreasonably withheld or
\ndelayed.<\/p>\n
267<\/p>\n
(b) Subject to Section 14.2, upon ten (10) days
\nprior written notice to Generator, Pepco may assign this Agreement, and Pepco’s
\nrights, interests and obligations hereunder, to (i) an Affiliate of Pepco that
\nowns all or part of Pepco’s Transmission System or (ii) an independent system
\noperator or independent transmission company whose control over all or part of
\nPepco’s Transmission System has been approved by the FERC.<\/p>\n
(c) Subject to Section 14.2, Generator may (a)
\nassign any of its rights and obligations hereunder to an Affiliate to the
\nextent necessary for the Generator to qualify as an exempt wholesale generator
\nunder Section 32 of the Public Utility Holding Company Act of 1935, as amended,
\nand (b) assign, transfer, pledge or otherwise dispose of its rights and
\ninterests hereunder to a trustee, lending institution, or other Person for the
\npurposes of financing or refinancing the Station, including upon or pursuant to
\nthe exercise of remedies under such financing or refinancing, or by way of
\nassignments, transfers, conveyances of dispositions in lieu thereof; provided,
\nhowever, that no such assignment shall relieve or in any way discharge
\nGenerator from the performance of its duties and obligations under this
\nAgreement. Pepco agrees to execute and deliver, at Generator’s expense, such
\ndocuments as may be reasonably necessary to accomplish any such assignment,
\ntransfer, conveyance, pledge or disposition of rights hereunder for purposes of
\nthe financing or refinancing of the Facility, so long as Pepco’s rights under
\nthis Agreement are not thereby altered, amended, diminished or otherwise
\nimpaired.<\/p>\n
(d) Subject to Section 14.2, either Party may
\nassign this Agreement to a successor to all or substantially all of the assets
\nof such Party by way of merger, consolidation, sale or otherwise, provided such
\nsuccessor assumes in writing and becomes liable for all of such Party’s duties
\nand obligations hereunder.<\/p>\n
14.2 Release of Rights and Obligations. No assignment,
\ntransfer, conveyance, pledge or disposition of rights, interests, duties or
\nobligations under this Agreement by a Party shall relieve that Party from
\nliability and financial responsibility for the performance thereof after any
\nsuch transfer, assignment, conveyance, pledge or disposition unless and until
\n(i) the transferee or assignee shall agree in writing to assume the obligations
\nand duties of that Party under this Agreement and to impose such obligations on
\nsubsequent permitted transferees and assignees and (ii) the non-assigning Party
\nhas consented in writing to such assumption and to a release of the assigning
\nParty from such liability, such consent not to be unreasonably withheld or
\ndelayed.<\/p>\n
14.3 Change in Corporate Identity. If Generator
\nterminates its existence as a [corporate] entity by merger, acquisition, sale,
\nconsolidation or otherwise, or if all or substantially all of Generator’s
\nassets are transferred to another person or<\/p>\n
268<\/p>\n
business entity without complying with this Article 14, Pepco shall have the
\nright, enforceable in a court of competent jurisdiction, to enjoin Generator’s
\nsuccessor from using the Station in any manner that does not comply with the
\nrequirements of this Agreement or that impedes Pepco’s ability to carry on its
\nongoing business operations.<\/p>\n
14.4 Successors and Assigns. This Agreement and all of
\nthe provisions hereof are binding upon, and inure to the benefit of, the
\nParties and their respective successors and permitted assigns.<\/p>\n
ARTICLE 15
\n SUBCONTRACTORS<\/p>\n
Nothing in this Agreement shall prevent the Parties from
\nutilizing the services of subcontractors as they deem appropriate, provided,
\nhowever, the Parties agree that, where applicable, all said subcontractors
\nshall comply with the terms and conditions of this Agreement. The creation of
\nany subcontract relationship shall not relieve the hiring Party of any of its
\nobligations under this Agreement. Each Party shall be fully responsible to the
\nother Party for the acts and\/or omission of any subcontractor it hires as if no
\nsubcontract had been made. Any obligation imposed by this Agreement upon the
\nParties, where applicable, shall be equally binding upon and shall be construed
\nas having application to any subcontractor. The Parties shall each be liable
\nfor, indemnify, and hold harmless the other Party, their Affiliates and their
\nofficers, directors, employees, agents, servants, and assigns from and against
\nany and all claims, demands, or actions, from the other Party’s subcontractors;
\nand shall pay all costs, expenses and legal fees associated therewith and all
\njudgments, decrees and awards rendered therein. No subcontractor is intended to
\nbe or shall be deemed a third-party beneficiary of this Agreement.<\/p>\n
ARTICLE 16
\n NOTICES<\/p>\n
16.1 Emergency Notices. At or prior to the Effective
\nDate, each Party shall indicate to the other Party, by notice, the appropriate
\nperson during each eight-hour work shift to contact in the event of an
\nemergency, a scheduled or forced interruption or reduction in services. The
\nnotice last received by a Party shall be effective until modified in writing by
\nthe other Party.<\/p>\n
16.2 Notices. All notices and other communications
\nhereunder shall be in writing and shall be deemed given (as of the time of
\ndelivery or, in the case of a telecopied communication, of confirmation) if
\ndelivered personally, telecopied (which is confirmed) or sent by overnight
\ncourier (providing proof of delivery) to<\/p>\n
269<\/p>\n
the Parties at the following addresses (or at such other address for a Party as
\nshall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) ________________
\n Attention: ___________________<\/p>\n
if to Generator, to:<\/p>\n
c\/o Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
ARTICLE 17
\n AMENDMENTS<\/p>\n
17.1 Amendments. Except as set forth in Sections 2.2 and
\n17.2 of this Agreement, this Agreement may be amended, modified, or
\nsupplemented only by written agreement of both Pepco and Generator.<\/p>\n
17.2 FERC Proceedings<\/p>\n
(a) Pepco may unilaterally make application to
\nFERC under Section 205 of the Federal Power Act and pursuant to the FERC’s
\nrules and regulations promulgated thereunder for, or exercise any rights it may
\nhave under Section 206 of the Federal Power Act and the regulations thereunder
\nwith respect to, a change in any rates, terms and conditions, charges,
\nclassification of service, rule or regulation for any services Pepco provides
\nunder this Agreement over which FERC has jurisdiction.<\/p>\n
(b) Generator may exercise its rights under
\nSection 205 or 206 of the Federal Power Act and pursuant to FERC’s rules and
\nregulations promulgated thereunder with respect to any rate, term, condition,
\ncharge, classification of service, rule or regulation for any services provided
\nunder this Agreement over which FERC has jurisdiction.<\/p>\n
270<\/p>\n
ARTICLE 18
\n MISCELLANEOUS PROVISIONS<\/p>\n
18.1 Waiver. Except as otherwise provided in this
\nAgreement, any failure of a Party to comply with any obligation, covenant,
\nagreement, or condition herein may be waived by the Party entitled to the
\nbenefits thereof only by a written instrument signed by the Party granting such
\nwaiver, but such waiver or failure to insist upon strict compliance with such
\nobligation, covenant, agreement, or condition shall not operate as a waiver of,
\nor estoppel with respect to, any subsequent or other failure.<\/p>\n
18.2 Labor Relations. The Parties agree to immediately
\nnotify the other Party, verbally and then in writing, of any labor dispute or
\nanticipated labor dispute which may reasonably be expected to affect the
\noperations of the other Party.<\/p>\n
18.3 No Third Party Beneficiaries. Nothing in this
\nAgreement is intended to confer upon any other person except the Parties any
\nrights or remedies hereunder or shall create any third party beneficiary rights
\nin any person. No provision of this Agreement shall create any rights in any
\nsuch persons in respect of any benefits that may be provided, directly or
\nindirectly, under any employee benefit plan or arrangement except as expressly
\nprovided for thereunder.<\/p>\n
18.4 Governing Law<\/p>\n
This Agreement shall be governed by and construed in accordance with the laws
\nof the State of Maryland (regardless of the laws that might otherwise govern
\nunder applicable principles of conflicts of law).<\/p>\n
18.5 Counterparts. This Agreement may be executed in two
\nor more counterparts, each of which shall be deemed an original, but all of
\nwhich together shall constitute one and the same instrument.<\/p>\n
18.6 Interpretation. When a reference is made in this
\nAgreement to an Article, Section, Schedule or exhibit, such reference shall be
\nto an Article or Section of, or Schedule or exhibit to, this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to
\nbe followed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in
\nthis Agreement shall refer to this<\/p>\n
271<\/p>\n
Agreement as a whole and not to any particular provision of this Agreement. The
\ndefinitions contained in this Agreement are applicable to the singular as well
\nas the plural forms of such terms and to the masculine as well as to the
\nfeminine and neuter genders of such term. Unless otherwise expressly stated
\notherwise herein, the word “day” shall mean any calendar day including weekends
\nand holidays. Any agreement, instrument, statute, regulation, rule or order
\ndefined or referred to herein or in any agreement or instrument that is
\nreferred to herein means such agreement, instrument, statute, regulation, rule
\nor order as from time to time amended, modified or supplemented, including (in
\nthe case of agreements or instruments) by waiver or consent and (in the case of
\nstatutes, regulations, rules or orders) by succession of comparable successor
\nstatutes, regulations, rules or orders and references to all attachments
\nthereto and instruments incorporated therein. References to a person are also
\nto its permitted successors and assigns. Each Party acknowledges that it has
\nbeen represented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
18.7 Jurisdiction and Enforcement. Each of the Parties
\nirrevocably submits to the exclusive jurisdiction of the federal and state
\ncourts of the State of Maryland for the purposes of any suit, action or other
\nproceeding arising out of this Agreement or any transaction contemplated
\nhereby. Each of the Parties agrees to commence any action, suit or proceeding
\nrelating hereto either in the federal courts of the State of Maryland or, if
\nsuch suit, action or proceeding may not be brought in such court for
\njurisdictional reasons, in the state courts of the State of Maryland. Each of
\nthe Parties further agrees that service of process, summons, notice or document
\nby hand delivery or U.S. registered mail at the address specified for such
\nParty in Section 16.2 (or such other address specified by such Party from time
\nto time pursuant to Section 16.2) shall be effective service of process for any
\naction, suit or proceeding brought against such Party in any such court. Each
\nof the Parties irrevocably and unconditionally waives any objection to the
\nlaying of venue of any action, suit or proceeding arising out of this Agreement
\nor the transactions contemplated hereby in the federal and state courts of the
\nState of Maryland and hereby further irrevocably and unconditionally waives and
\nagrees not to plead or claim in any such court that any such action, suit or
\nproceeding brought in any such court has been brought in an inconvenient forum.<\/p>\n
18.8 Entire Agreement. This Agreement, Asset Sale
\nAgreement, the Confidentiality Agreement and the Ancillary Agreements including
\nthe Exhibits, Schedules, documents, certificates and instruments referred to
\nherein or therein and other contracts, agreements and instruments contemplated
\nhereby or thereby, embody the entire agreement and understanding of the Parties
\nin respect of the<\/p>\n
272<\/p>\n
transactions contemplated by this Agreement. There are no restrictions,
\npromises, representations, warranties, covenants or undertakings other than
\nthose expressly set forth or referred to herein or therein. This Agreement, the
\nAsset Sale Agreement and the Ancillary Agreements supersede all prior
\nagreements and understandings between the Parties with respect to the
\ntransactions contemplated by this Agreement other than the Confidentiality
\nAgreement.<\/p>\n
18.9 Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nParties shall negotiate in good faith to modify this Agreement so as to effect
\nthe original intent of the Parties as closely as possible to the fullest extent
\npermitted by applicable law in an acceptable manner to the end that the
\ntransactions contemplated hereby are fulfilled to the extent possible.<\/p>\n
18.10 Independent Contractor Status. Nothing in this
\nAgreement shall be construed as creating any relationship between Pepco and
\nGenerator other than that of independent contractors.<\/p>\n
18.11 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
273<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this
\nInterconnection Agreement (Morgantown) to be signed by their respective duly
\nauthorized officers as of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ——————————–
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ——————————–
\n Name:
\n Title:<\/p>\n
274<\/p>\n
SCHEDULE A
\n DEFINITIONS<\/p>\n
Part A. Capitalized terms not defined in the body of the Agreement shall have
\n the meaning set forth in Part A of this Schedule A. (Part B of this
\n Schedule A sets forth capitalized terms defined within the Agreement.)<\/p>\n
(1) “Affiliate” has the meaning set forth in Rule 12b-2
\nof the General Rules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
(2) “Ancillary Agreements” has the meaning set forth in
\nthe Asset Sale Agreement.<\/p>\n
(3) “Closing” has the meaning set forth in the Asset
\nSale Agreement.<\/p>\n
(4) “Confidentiality Agreement” has the meaning set
\nforth in the Asset Sale Agreement.<\/p>\n
(5) “Costs” means all costs, including without
\nlimitation, any Taxes, costs of acquiring real property, costs and fees for
\npermits, franchises, licenses and regulatory approvals except to the extent
\nthat such costs are allocated to a party or parties other than the Generator by
\nthe PJM Interconnection LLC or otherwise under the PJM Tariff or PJM Agreement.<\/p>\n
(6) “Easement” means the Easement Agreement dated
\n__________, 2000, between the Parties with respect to the Station.<\/p>\n
(7) “Environmental Laws” means all former, current and
\nfuture federal, state, local and foreign laws (including common law), treaties,
\nregulations, rules, ordinances, codes, decrees, judgments, directives or orders
\n(including consent orders) and environmental permits, in each case, relating to
\npollution or protection of the environment or natural resources, including laws
\nrelating to Releases or threatened Releases, or otherwise relating to the
\ngeneration, manufacture, processing, distribution, use, treatment, storage,
\narrangement for disposal, transport, recycling or handling, of Hazardous
\nSubstances.<\/p>\n
(8) “Emergency” means (a) with respect to Pepco, a
\ncondition or situation which Pepco, the PJM Interconnection LLC, the PJM System
\nOperator or the Transmission Operator deem imminently likely to (i) endanger
\nlife or property, or (ii) adversely affect or impair the Transmission System,
\nPepco’s electrical system or the electrical or transmission systems of others
\nto which the Transmission System or Pepco’s electrical system are directly or
\nindirectly connected and (b) with respect to the Generator, a condition or
\nsituation which the Generator deems imminently likely to (i) endanger life or
\nproperty, or (ii) adversely affect or impair the Station.<\/p>\n
(9) “FERC” means the Federal Energy Regulatory
\nCommission or its successors.<\/p>\n
275<\/p>\n
(10) “Generating Facilities” means the Station and any
\nadditional generating plants, turbines or other generating facilities
\nconstructed by Generator after the Effective Date at the site of the Station.<\/p>\n
(11) “Generator” has the meaning set forth in the
\nintroductory paragraph of this Agreement and shall include its permitted
\nsuccessors and assigns.<\/p>\n
(12) “Generator Facilities” mean the equipment and
\nfacilities owned by the Generator but located on Pepco’s property which are
\nidentified in Schedule B of this Agreement.<\/p>\n
(13) “Good Utility Practice” means any of the applicable
\npractices, methods and acts.<\/p>\n
(a) required by FERC, NERC, MAAC, the PJM
\nInterconnection LLC, the PJM System Operator, or the successor of any of them,
\nwhether or not the Party whose conduct is at issue is a member thereof,<\/p>\n
(b) required by applicable law or regulations,<\/p>\n
(c) required by the Pepco Interconnection
\nStandards or the policies and standards of Pepco relating to emergency
\noperations;<\/p>\n
(d) otherwise engaged in or approved by a
\nsignificant portion of the electric utility industry during the relevant time
\nperiod;<\/p>\n
which, in the exercise of reasonable judgment in light of the facts known at
\nthe time the decision was made, could have been expected to accomplish the
\ndesired result at a reasonable cost consistent with law, regulation, good
\nbusiness practices, reliability, safety, and expedition. Good Utility Practice
\nis not intended to be limited to the optimum practice, method, or act to the
\nexclusion of all others, but rather to be acceptable practices, methods, or
\nacts generally accepted in the region.<\/p>\n
(14) “Hazardous Substances” means (i) any petrochemical
\nor petroleum products, crude oil or any fraction thereof, ash, radioactive
\nmaterials, radon gas, asbestos in any form, urea formaldehyde foam insulation
\nor polychlorinated biphenyls, (ii) any chemicals, materials, substances or
\nwastes defined as or included in the definition of “hazardous substances,”
\n“hazardous wastes,” “hazardous materials,” “restricted hazardous materials,”
\n“extremely hazardous substances,” “toxic substances,” “contaminants” or
\n“pollutants” or words of similar meaning and regulatory effect contained in any
\nEnvironmental Law or (iii) any other chemical, material, substance or waste
\nwhich is prohibited, limited or regulated by any Environmental Law.<\/p>\n
(15) “Interconnection Facilities” means those facilities
\nor portions of facilities owned or operated by Pepco to provide Interconnection
\nService which shall include, but not be limited to (1) facilities the cost of
\nwhich is reasonably allocated to the Interconnection Service provided to the
\nStation, or (2) Attachment Facilities or Local Upgrade Facilities, as defined
\nin the PJM Tariff, which are associated with the Interconnection Service and
\noperated and maintained by Pepco.<\/p>\n
276<\/p>\n
(16) “Interconnection Service” means the services
\nprovided by Pepco which are necessary to connect the Station to the
\nTransmission System for parallel operation of the Station and to enable
\nGenerator to transmit the energy and ancillary services produced by the Station
\nto the Transmission System and receive Station energy service and ancillary
\nservices, including blackstart power, from the Generator’s supplier.<\/p>\n
(17) “MAAC” means the Mid-Atlantic Area Council, a
\nreliability council under Section 202 of the Federal Power Act established
\npursuant to the MAAC Agreement dated August 1, 1994, or any successor thereto.<\/p>\n
(18) “Maintain” means construct, reconstruct, install,
\ninspect, repair, replace, operate, patrol, maintain, use, modernize, expand,
\nupgrade, or other similar activities.<\/p>\n
(19) “MDPSC” means the Maryland Public Service Commission
\nor any successor agency thereto.<\/p>\n
(20) “NERC” means North American Electric Reliability
\nCouncil or any successor thereto.<\/p>\n
(21) “Pepco” has the meaning set forth in the
\nintroductory paragraph of this Agreement and shall include its permitted
\nsuccessors or assigns.<\/p>\n
(22) “Pepco Facilities” means the equipment and
\nfacilities owned by Pepco but located on Generator’s property which are
\nidentified in Schedule B of this Agreement.<\/p>\n
(23) “Pepco Interconnection Standards” means Pepco’s
\nInterconnection and Parallel Operating Guidelines as amended, modified or
\nreplaced from time to time. A copy of the existing Pepco Interconnection
\nStandards is attached hereto as Schedule E.<\/p>\n
(24) “Point of Interconnection” means each ownership
\npoint of demarcation set forth in Schedule C where capacity, energy and
\nancillary services are transferred between the Station and the Transmission
\nSystem.<\/p>\n
(25) “Pepco Transmission Facilities” means those
\ntransmission, substation, and communication facilities and related equipment,
\nincluding the Interconnection Facilities, and any additions, modifications or
\nreplacements thereto, that are utilized to provide Interconnection Service to
\nthe Station.<\/p>\n
(26) “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Agreement and any successor
\nthereto including any regional transmission operator, independent system
\noperator, transco, or any other independent system administrator that possesses
\noperational or planning control over the Transmission System.<\/p>\n
(27) “PJM Agreement” means the Amended and Restated
\nOperating Agreement of the PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
277<\/p>\n
(28) “PJM Control Area” shall mean the control area
\nrecognized by NERC as the PJM Control Area.<\/p>\n
(29) “PJM Interconnection LLC” means the independent
\nsystem operator of the PJM Control Area pursuant to the PJM Operating Agreement
\nand the PJM Tariff.<\/p>\n
(30) “PJM Generator Connection Agreement” means the
\ninterconnection agreement entered into between the Generator and the PJM
\nInterconnection LLC pursuant to the PJM Tariff with respect to the
\ninterconnection of the Station and the Transmission System.<\/p>\n
(31) “PJM Reliability Agreement” means the Reliability
\nAssurance Agreement dated June 2, 1997 among the load serving entities of PJM.<\/p>\n
(32) “PJM Requirements” means the rules, regulations or
\nother requirements of PJM or MAAC contained in or adopted pursuant to the PJM
\nAgreement, the PJM Tariff or the PJM Reliability Agreement which are applicable
\nto Pepco, with respect to the Transmission System or the Interconnection
\nService, and the Generator with respect to the Generating Facilities.<\/p>\n
(33) “PJM System Operator” shall mean the PJM
\nInterconnection LLC, energy control center staff responsible for central
\ndispatch as provided in the PJM Agreement.<\/p>\n
(34) “PJM Tariff” means the PJM Open Access Transmission
\nTariff providing transmission service within the PJM Control Area.<\/p>\n
(35) “Qualified Personnel” means individuals who possess
\nany required licenses and are trained for their positions and duties by
\nGenerator and\/or Pepco pursuant to Good Utility Practice.<\/p>\n
(36) “Release” means any release, spill, emission,
\nleaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal,
\nleaching or migration into the environment (including ambient air, surface
\nwater, groundwater, land surface or subsurface strata) or within any building,
\nstructure, facility or fixture.<\/p>\n
(37) “Revenue Meters” means all MWh and MVArh meters,
\npulse isolation relays, pulse conversion relays, transducers required by Pepco
\nor the PJM Interconnection or PJM System Operator for billing or other
\npurposes, and associated totalizing equipment and appurtenances and
\ncompensation required to measure the transfer of energy across the Point of
\nInterconnection.<\/p>\n
(38) “Station” means the Morgantown Station as defined in
\nthe Asset Sale Agreement.<\/p>\n
(39) “Switching, Tagging, and Grounding Rules” means
\nPepco’s switching, tagging and grounding rules as amended, modified or replace
\nfrom time to time. A copy of the existing Switching, Tagging and Grounding
\nRules is attached hereto as Schedule D.<\/p>\n
278<\/p>\n
(40) “Taxes” means all taxes, surtaxes, charges, fees,
\nlevies, penalties or other assessments imposed by any United States federal,
\nstate, local or foreign taxing authority, including income taxes, excise,
\nproperty, sales, transfer, franchise, special franchise, payroll, recording,
\nwithholding, social security or other taxes, in each case including any
\ninterest, penalties or additions attributable thereto.<\/p>\n
(41) “Transmission System” means the facilities owned,
\ncontrolled, or operated by Pepco, for purposes of providing transmission
\nservice, including services under the PJM Tariff, and Interconnection Service.<\/p>\n
(42) “Transmission Operator” means the person, or persons
\ndesignated by Pepco to coordinate the day to day interconnection of the Station
\nwith the Transmission System.<\/p>\n
Part B. The following terms have the meaning specified in the section of this
\n Agreement set forth opposite to such term:<\/p>\n
\n\nTerm Agreement Reference<\/p>\n
\nAgreement Preamble
\nAsset Sale Agreement Preamble
\nEffective Date Section 2.1
\nEvent of Default Section 8.1
\nForce Majeure Section 11.1
\nInitial Period Section 3.10
\nOperating Committee Section 3.20
\nParty or Parties Preamble
\nTerm Article 2
\n<\/c><\/s><\/caption>\n<\/table>\n 279
\n EXHIBIT E-3<\/p>\n
INTERCONNECTION AGREEMENT
\n (Dickerson)<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
———————————–<\/p>\n
Dated ____________, 2000<\/p>\n
280<\/p>\n
INTERCONNECTION AGREEMENT<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n
\nARTICLE 1 – DEFINITIONS 1
\nARTICLE 2 – TERM AND TERMINATION 2
\n 2.1 Term 2
\n 2.2 Change in Law 2
\n 2.3 Effect after Termination 2
\nARTICLE 3 – CONTINUING OBLIGATIONS AND RESPONSIBILITIES 2
\n 3.1 Interconnection Service 2
\n 3.2 New Construction or Modifications 3
\n 3.2.1 Pepco Construction or Modifications 3
\n 3.2.2 Generator Construction or Modifications 4
\n 3.2.3 Modifications Affecting the Transmission System
\n or the Station 6
\n 3.3 Access, Easements, Conveyances, Licenses,
\n and Restrictions 6
\n 3.4 Facility and Equipment Maintenance 7
\n 3.5 Pepco Facilities and Generator Facilities 8
\n 3.6 Equipment Testing Obligations 8
\n 3.7 Inspections 8
\n 3.8 Information Reporting Obligations 9
\n 3.9 Local Services 10
\n 3.9.1 General 10
\n 3.9.2 Temporary Suspension of Local Services 11
\n 3.10 Pepco Provided Services 11
\n 3.11 Generator Provided Services 12
\n 3.12 Optional Services 12
\n 3.13 Metering and Telemetering 13
\n 3.14 Emergency Procedure 13
\n 3.15 Interconnection Service Interruptions 14
\n 3.16 Unit Status Notification 15
\n 3.17 Scheduled Maintenance Notification and Coordination 15
\n 3.17.1 Local Routine Inspection and Maintenance 15
\n 3.17.2 Transmission Sytem Maintenance 15
\n 3.18 Safety 16
\n 3.18.1 General 16
\n 3.18.2 Switching Tagging and Grounding 16
\n 3.19 Environmental Compliance and Procedures 16
\n 3.20 Operating Committee 17
\nARTICLE 4 – OPERATIONS 17
\n 4.1 General 17
\n 4.2 Generator’s Operating Obligations 18
\n 4.2.1 General 18
\n 4.2.2 Voltage or Reactive Control Requirements 18
\n<\/c><\/s><\/table>\n 281<\/p>\n
\n
\n 4.3 Auditing of Accounts and Records 19
\nARTICLE 5 – COST RESPONSIBILITIES AND BILLING PROCEDURES 20
\n 5.1 Cost Responsibilities for Interconnection Service 20
\n 5.2 Cost Responsibilities for Local Services 20
\n 5.3 Billing Procedures 20
\n 5.4 Billing Disputes 21
\nARTICLE 6 – CONFIDENTIALITY 21
\n 6.1 Confidentiality Obligations of Pepco 21
\n 6.2 Confidentiality Obligations of Generator 22
\n 6.3 Confidentiality of Audits 22
\n 6.4 Remedies 23
\nARTICLE 7 – EVENTS OF DEFAULT 23
\n 7.1 Events of Default 23
\n 7.2 Remedies 24
\nARTICLE 8 – LIMITATION OF LIABILITY 25
\n 8.1 Limitation of Pepco’s Liability 25
\n 8.2 Limitation on Generator’s Liability 25
\n 8.3 Consequential Damages 25
\nARTICLE 9 – INDEMNIFICATION FOR THIRD PARTY CLAIMS 26
\n 9.1 Generator’s Indemnification 26
\n 9.2 Pepco’s Indemnification 26
\n 9.3 Indemnification Procedures 26
\n 9.4 Survival 27
\nARTICLE 10 – INSURANCE 27
\n 10.1 Insurance Coverage 27
\n 10.2 Certificates of Insurance 27
\n 10.3 Additional Insureds and Waiver 27
\nARTICLE 11 – FORCE MAJEURE 28
\n 11.1 Effect of Force Majeure 28
\n 11.2 Force Majeure Defined 28
\n 11.3 Notification 28
\nARTICLE 12 – DISPUTES 29
\n 12.1 Disputes 29
\n 12.2 Arbitration 29
\n 12.3 FERC Dispute Resolution 30
\nARTICLE 13 – REPRESENTATIONS 30
\n 13.1 Representations of Pepco 30
\n 13.2 Representations of Generator 31
\nARTICLE 14 – ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY 33
\n 14.1 Assignment 33
\n 14.2 Release of Rights and Obligations 33
\n 14.3 Change in Corporate Identity 34
\n 14.4 Successors and Assigns 34
\n<\/c><\/s><\/table>\n 282<\/p>\n
\n
\nARTICLE 15 – SUBCONTRACTORS 34
\nARTICLE 16 – NOTICES 35
\n 16.1 Emergency Notices 35
\n 16.2 Notices 35
\nARTICLE 17 – AMENDMENTS 35
\n 17.1 Amendments 35
\n 17.2 FERC Proceedings 36
\nARTICLE 18 – MISCELLANEOUS PROVISIONS 36
\n 18.1 Waiver 36
\n 18.2 Labor Relations 36
\n 18.3 No Third Party Beneficiaries 36
\n 18.4 Governing Law 37
\n 18.5 Counterparts 37
\n 18.6 Interpretation 37
\n 18.7 Jurisdiction and Enforcement 37
\n 18.8 Entire Agreement 38
\n 18.9 Severability 38
\n 18.10 Independent Contractor Status 38
\n 18.11 Conflicts 39
\nSCHEDULE A DEFINITIONS 2
\nSCHEDULE B Pepco Facilities and Generator Facilities 7
\nSCHEDULE C – Points of Interconnection 9
\nSCHEDULE D – Switching, Tagging and Grounding Rules 11
\nSCHEDULE E – Pepco’s Interconnection Standards 14
\nSCHEDULE F – Local Services 15
\nSCHEDULE G – Pepco Current Projects 17
\nSCHEDULE H – Real Time Telemetry List 18
\n<\/c><\/s><\/table>\n 283<\/p>\n
INTERCONNECTION AGREEMENT (Dickerson)<\/p>\n
This Interconnection Agreement (“Agreement”) dated as of _________,
\n2000 by and between Potomac Electric Power Company (“Pepco”) a District of
\nColumbia and Virginia corporation, and _____________ (“Generator”) a
\n___________ [corporation]. Pepco and Generator are each referred to herein as a
\n“Party,” and collectively referred to herein as the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco, and Generator have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (“Asset Sale Agreement”) dated
\nJune 7, 2000, for the sale by Pepco to Generator of certain assets comprising
\nthe Dickerson electric generation station;<\/p>\n
WHEREAS, Pepco intends to continue to operate its transmission and
\ndistribution businesses from their present locations;<\/p>\n
WHEREAS, Generator needs Interconnection Service from Pepco for the
\nDickerson electric generating station;<\/p>\n
WHEREAS, Pepco needs access to parts of the Generator’s assets, and
\nGenerator needs access to parts of the Pepco’s assets; and<\/p>\n
WHEREAS, the Parties have agreed in the Asset Sale Agreement to
\nexecute this Agreement in order to provide Interconnection Service to Generator
\nand to define continuing responsibilities and obligations of the Parties with
\nrespect to the use of the other Party’s property, assets and facilities as set
\nforth herein.<\/p>\n
NOW THEREFORE, in consideration of the mutual representations,
\ncovenants and agreements hereinafter set forth, and intending to be legally
\nbound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
Capitalized terms used in this Agreement shall have the meanings
\nspecified or referred to in Schedule A.<\/p>\n
284<\/p>\n
ARTICLE 2
\n TERM AND TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon consummation
\nof the Closing (“Effective Date”), and unless terminated sooner in accordance
\nwith the terms of this Agreement, shall continue in full force and effect until
\nthe earlier to occur of (i) the permanent cessation by the Generator of the
\npower generation functions of the Station or (ii) the permanent cessation of
\nthe interconnection functions of the Transmission System.<\/p>\n
2.2 Change in Law. If (a) the FERC, any state or state regulatory
\ncommission or the PJM Interconnection LLC implements a change in any law,
\nregulation, rule or practice, or (b) Pepco’s compliance with a change in any
\nlaw or regulation, which compliance, in either case, affects, or may reasonably
\nbe expected to affect, Pepco’s performance under this Agreement, the Parties
\nshall negotiate in good faith any amendments to this Agreement that are
\nnecessary to adapt the terms of this Agreement to such change, and Pepco shall
\nfile such amendments with the FERC. If the Parties are unable to reach
\nagreement on such amendments, either Party shall have the right to make a
\nunilateral filing with the FERC to modify this Agreement pursuant to Sections
\n205 or 206 or any other applicable provision of the Federal Power Act and the
\nFERC rules and regulations thereunder; provided that the other Party shall have
\nthe right to oppose such filing and to participate fully in any proceeding
\nestablished by the FERC to address such amendments.<\/p>\n
2.3 Effect after Termination. The applicable provisions of this
\nAgreement shall continue in effect after cancellation or termination hereof to
\nthe extent necessary to provide for final billings, billing adjustments and
\npayments pertaining to liability and indemnification obligations arising from
\nacts or events that occurred while this Agreement was in effect.<\/p>\n
ARTICLE 3
\n CONTINUING OBLIGATIONS AND RESPONSIBILITIES<\/p>\n
3.1 Interconnection Service<\/p>\n
3.1.1 Subject to the terms and conditions of the
\nAgreement, Pepco shall (a) permit the Station to continue to be interconnected
\nto the Transmission System at the Point of Interconnection, and (b) provide
\nInterconnection Service at the Point of Interconnection. Pepco agrees to permit
\nGenerator to interconnect<\/p>\n
285<\/p>\n
Station as long as Generator continues to operate such facilities pursuant to
\nPJM Requirements and Good Utility Practice.<\/p>\n
3.1.2 Interconnection Service shall not include, and Pepco
\nshall not be responsible under this Agreement for (a) transmission service,
\nlosses or ancillary services associated with the use of the Transmission System
\nfor the delivery of capacity, energy and\/or ancillary services produced by the
\nGenerating Facilities, or (b) providing or procuring capacity, energy and\/or
\nancillary services to the Generator or the Generating Facilities.<\/p>\n
3.1.3 The Generator’s interconnection to the Transmission
\nSystem of any new or expanded generating capacity of the Station shall (a) be
\nsubject to PJM Requirements and\/or FERC requirements governing interconnections
\nand (b) require a separate interconnection agreement mutually agreed to by the
\nParties in writing.<\/p>\n
3.1.4 Notwithstanding anything to the contrary in this
\nAgreement, Pepco’s performance of its obligations under this Agreement shall be
\nsubject to Generator entering into, and complying with, any PJM Generator
\nConnection Agreement which may be required pursuant to PJM Requirements with
\nrespect to Interconnection Service or the Station.<\/p>\n
3.2 New Construction or Modifications<\/p>\n
3.2.1 Pepco Construction or Modifications<\/p>\n
(a) Pepco shall make such additions,
\nmodifications, replacements and improvements to the Interconnection Facilities
\nas are required by PJM Requirements or Good Utility Practice to enable Pepco to
\nprovide Interconnection Service in compliance with this Agreement. Generator
\nshall pay all reasonable Costs incurred by Pepco for such additions,
\nmodifications, replacements or improvements.<\/p>\n
(b) Except with respect to operation and
\nmaintenance or ordinary maintenance done in the ordinary course of business or
\nto respond to abnormal or emergency conditions, if any additions,
\nmodifications, replacements or improvements to the Interconnection Facilities
\nundertaken by Pepco might reasonably be expected to affect Generator’s
\noperation of the Station, Pepco shall provide one hundred twenty (120) days
\nwritten notice to Generator prior to undertaking such additions, modifications,
\nreplacements or improvements. Any such additions, modifications, replacements
\nor improvements shall comply with PJM Requirements and Good Utility Practice.
\nThe Parties shall mutually agree to the<\/p>\n
286<\/p>\n
scheduling of such addition, modification, replacement or improvement to
\nminimize any adverse impact on the Station. Generator shall be deemed to have
\naccepted Pepco’s proposed additions, modifications, replacements or
\nimprovements unless Generator gives Pepco written notice of its objections
\nwithin thirty (30) days after receipt of Pepco’s notice. Generator’s acceptance
\nor deemed acceptance of Pepco’s proposed additions, modifications, replacements
\nor improvements shall not be construed, with respect thereto, as: (i)
\nconfirmation or endorsement of the design; (ii) a warranty of safety,
\ndurability or reliability; or (iii) responsibility for strength, details of
\ndesign, adequacy or capability.<\/p>\n
3.2.2 Generator Construction or Modifications<\/p>\n
(a) In the event Generator plans to increase
\nthe capacity of the Generating Facilities, Generator shall submit to Pepco any
\nand all plans and specifications that Pepco may reasonably request related to
\nsuch increase. Such specifications and plans shall be submitted by Generator to
\nPepco at the time that Generator submits its plans under the PJM Tariff related
\nto such expansion but no later than one hundred twenty (120) days prior to
\ncommencing such proposed increase. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice and
\nshall be subject to Section 3.1.3 of this Agreement.<\/p>\n
(b) If Generator plans any additions,
\nmodifications, or replacements to the Station that will not increase its
\ncapacity, but could reasonably be expected to affect the Transmission System or
\nthe Interconnection Facilities, Generator shall give Pepco reasonable notice,
\nbut not less than one hundred twenty (120) days prior written notice and
\nGenerator shall comply with all applicable PJM Requirements with respect to
\nsuch proposed additions, modifications, or replacements. All such additions,
\nmodifications, or replacements shall (i) comply with PJM Requirements and Good
\nUtility Practice, (ii) be accompanied by appropriate information and operating
\ninstructions, and (iii) be subject to the review and acceptance of Pepco, which
\nreview shall be based on PJM Requirements and Good Utility Practice and which
\nacceptance shall not unreasonably be withheld or delayed. Pepco shall be deemed
\nto have accepted Generator’s proposed additions, modifications or replacements
\nunless Pepco gives Generator written notice of its objections within thirty
\n(30) days after receipt of the Generator’s notice.<\/p>\n
(c) Pepco’s acceptance of Generator’s plans and
\nspecifications for any proposed additions, modifications, or replacements to
\nthe Generating Facilities and Pepco’s participation in any interconnected
\noperations with Generator are not and shall not be construed as: (i)
\nconfirmation or endorsement of the design of the Generating Facilities; (ii) a
\nwarranty of safety, durability or reliability of the<\/p>\n
287<\/p>\n
Generating Facilities; or (iii) responsibility for strength, details of design,
\nadequacy, or capability of the Generating Facilities.<\/p>\n
(d) Pepco, pursuant to PJM Requirements, shall
\ninform Generator of any additions, modifications, or replacements to the
\nTransmission System or Interconnection Facilities, that will be necessary as a
\nresult of the addition, modification, or replacement to Station made pursuant
\nto Section 3.2.2. Generator shall compensate Pepco for all reasonable Costs it
\nincurs associated with any modifications, additions, or replacements made to
\nthe Interconnection Facilities or Transmission System related to any additions,
\nmodifications, or replacements to the Generating Facilities. Pepco shall
\nprovide an estimate as early as practicable, but in any event not less than
\nsixty (60) days prior to the initiation of such addition, modification or
\nreplacement.<\/p>\n
(e) Generator shall modify, at its sole cost
\nand expense, the Generating Facilities as may be reasonably required to conform
\nwith PJM Requirements and Good Utility Practice or to conform with additions,
\nmodifications, or replacements of the Transmission System or the
\nInterconnection Facilities, required by PJM Requirements and Good Utility
\nPractice or implemented in accordance with this Agreement, (including, without
\nlimitation, changes to the voltages at which the Transmission System is
\noperated) provided, however, that Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generating Facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of Pepco’s Facilities.<\/p>\n
(f) Upon completion of any addition,
\nmodification, or replacement to the Generating Facilities that may reasonably
\nbe expected to affect the Transmission System or the Interconnection
\nFacilities, but no later than ninety (90) days thereafter, Generator shall
\nissue “as built” drawings to Pepco. Upon completion of any addition,
\nmodification, or replacement to the Interconnection Facilities, that may
\nreasonably be expected to affect the operation of the Station, but no later
\nthan ninety (90) days thereafter, Pepco shall issue “as built” drawings to the
\nGenerator.<\/p>\n
3.2.3 Modifications Affecting the Transmission System or
\n the Station<\/p>\n
(a) Notwithstanding anything herein to the
\ncontrary, except with respect to the projects or construction set forth in
\nSchedule G, no modifications to or new construction of facilities, or access
\nthereto, including but not limited to rights of way, fences, gates, shall be
\nmade by either Party which might reasonably be expected to adversely affect the
\nother Party with respect to such Party’s obligations<\/p>\n
288<\/p>\n
and responsibilities under this Agreement, without prior written notification
\nas set forth in Section 3.2.3(b) below, and without providing the other Party
\nwith sufficient information regarding the work prior to commencement to enable
\nsuch Party to evaluate the impact of the proposed work on its operations. For
\nall modifications reasonably expected to adversely affect the operations of the
\nother Party’s facilities, the Party shall provide at least one hundred twenty
\n(120) days written notice to the other Party prior to undertaking such
\nadditions, modifications or replacements. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice.<\/p>\n
(b) The Parties shall mutually agree to the
\nscheduling of such addition, modification, replacement or improvement proposed
\npursuant to Section 3.2.3(a) to minimize any adverse impact on the Station or
\nthe Transmission System. For all construction work, major modifications, or
\ncircuit changes involving new or existing facilities, equipment, systems or
\ncircuits that could reasonably be expected to affect the operation of either
\nParty, the Party desiring to perform said work shall provide the other Party
\nwith drawings, plans, specifications, and other necessary documentation for
\nreview at least sixty (60) days prior to the beginning of construction provided
\nthat for routine telecommunication work, the Party doing the work shall only be
\nrequired to provide 48 hours prior notice. The Party shall be deemed to have
\naccepted the proposed additions, modifications, replacements or improvements
\nunless the Party gives written notice of their objections within sixty (60)
\ndays after receipt of such notice. The Party’s acceptance or deemed acceptance
\nof the proposed additions, modifications, replacements or improvements shall
\nnot be construed, with respect thereto, as: (i) confirmation or endorsement of
\nthe design; (ii) a warranty of safety, durability or reliability; or (iii)
\nresponsibility for strength, details of design, adequacy or capability.<\/p>\n
3.3 Access, Easements, Conveyances, Licenses, and Restrictions<\/p>\n
3.3.1 The Parties hereby grant to each other such
\nlicenses, access and other rights to the Station and the Interconnection
\nFacilities as may be necessary for either Party’s performance of their
\nrespective obligations under this Agreement. Such access shall be provided in a
\nmanner so as not to unreasonably interfere with the ongoing business
\noperations, rights, and obligations of the other Party and shall be subject to
\nthe safety and security practices of the Party granting such access. Access
\nshall only be granted to Qualified Personnel.<\/p>\n
3.3.2 A Party shall not restrict a Party’s rights
\nhereunder to access the other Party’s property, facilities, or equipment
\nwithout prior written notification except in an Emergency, in which case the
\nrestricted access shall last no longer than three (3) days, unless an alternate
\nmeans of access is provided.<\/p>\n
289<\/p>\n
3.3.3 The Parties’ rights with respect to access to their
\nrespective facilities properties shall also be governed by the Easement.<\/p>\n
3.4 Facility and Equipment Maintenance<\/p>\n
3.4.1 Pepco shall provide Interconnection Service at the
\nPoint of Interconnection in a safe and efficient manner and pursuant to PJM
\nRequirements and Good Utility Practice. Generator shall be responsible for all
\nreasonable Costs incurred by Pepco to provide Interconnection Service and to
\nMaintain the Interconnection Facilities pursuant to the Agreement.<\/p>\n
3.4.2 Generator shall Maintain the Generating Facilities
\n(including coordination of its relay protection equipment) in a safe and
\nefficient manner and as required by and in accordance with PJM Requirements and
\nGood Utility Practice, provided, however, that Generator shall not be obligated
\nto modernize, expand or upgrade the Generating Facilities unless the failure to
\nmodernize, expand or upgrade is reasonably likely to have a material adverse
\naffect on the operation of the Interconnection Facilities or the Transmission
\nSystem.<\/p>\n
3.4.3 Unless otherwise specified herein, or unless the
\nParties mutually agree to a different arrangement, neither Party shall be
\nresponsible for the maintenance of the other Party’s equipment or property
\nregardless of its location.<\/p>\n
3.4.4 In addition to the requirements set forth elsewhere
\nin this Agreement, each Party shall Maintain its equipment and facilities and
\nperform its maintenance obligations that could reasonably be expected to affect
\nthe operations of the other Party in a safe and efficient manner and pursuant
\nto PJM Requirements and Good Utility Practice.<\/p>\n
3.5 Pepco Facilities and Generator Facilities Unless otherwise
\nagreed to by the Parties, the Party owning Pepco Facilities or Generator
\nFacilities shall Maintain those facilities and shall do so pursuant to PJM
\nRequirements and Good Utility Practice and shall make such additions,
\nmodifications, replacements and improvements as are required by PJM
\nrequirements and Good Utility Practice or which are necessary to maintain
\nInterconnection Service, provided, however, that the Generator shall not be
\nobligated under this Agreement to modernize, expand or upgrade the Generator
\nFacilities unless the failure to modernize, expand or upgrade is reasonably
\nlikely to have a material adverse effect on the operation of the Transmission
\nSystem or Interconnection Facilities.<\/p>\n
3.6 Equipment Testing Obligations<\/p>\n
290<\/p>\n
3.6.1 For reliability purposes with respect to the
\nInterconnection Facilities and the Transmission System, Pepco may reasonably
\nrequest, pursuant to PJM Requirements, or Good Utility Practice, that Generator
\ntest, calibrate, verify, or validate the Generating Facilities or its
\nequipment, and Generator shall promptly comply with such a request. Generator
\nshall be responsible for all costs of testing, calibrating, verifying or
\nvalidating its facilities.<\/p>\n
3.6.2 At Pepco’s request, Generator shall supply to Pepco
\nat no cost, copies of inspection reports, installation and maintenance
\ndocuments, test and calibration records, verifications, and validations
\npursuant to the foregoing Section 3.6.1. Pepco shall supply to Generator, at
\nGenerator’s request and at no cost to Generator, copies of inspection reports,
\ninstallation and maintenance documents, test and calibration records,
\nverifications, and validations that Pepco has which are related to the
\nInterconnection Facilities.<\/p>\n
3.7 Inspections<\/p>\n
3.7.1 Pepco shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work to the Generating Facilities.
\nSuch access by Pepco shall be exercised in a manner which does not unreasonably
\ninterfere with Generator’s ongoing business operations, rights and obligations
\nand shall be subject to Generator’s safety and security practices. If Pepco
\nobserves any deficiencies or defects with respect thereto that might reasonably
\nbe expected to adversely affect the Transmission System or the Interconnection
\nFacilities, Pepco shall notify the Generator, and Generator shall immediately
\nmake any corrections necessitated by PJM Requirements and Good Utility
\nPractice. Notwithstanding the foregoing in this Section 3.7.1, Pepco shall have
\nno liability whatsoever for any failure to fully or adequately observe any
\ndeficiency, it being agreed that Generator shall be fully responsible and
\nliable for all such deficiencies, activities, equipment tests, installation,
\nconstruction or modification.<\/p>\n
3.7.2 Generator shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work conducted by Pepco to the
\nInterconnection Facilities. Such access by Generator shall be exercised in a
\nmanner which does not unreasonably interfere with Pepco’s ongoing business
\noperations, rights and obligations and shall be subject to Pepco’s safety and
\nsecurity practices. If Generator observes any deficiencies or defects with
\nrespect thereto that might reasonably be expected to adversely affect the
\nStation, Generator shall notify Pepco, and Pepco shall immediately make any
\ncorrections necessitated by applicable PJM Requirements and Good Utility
\nPractice. Notwithstanding the foregoing in this<\/p>\n
291<\/p>\n
Section 3.7.2, Generator shall have no liability whatsoever for any failure to
\nfully or adequately observe any deficiency, it being agreed that Pepco shall be
\nfully responsible and liable for all such deficiencies, activities, equipment
\ntests, installation, construction or modification.<\/p>\n
3.8 Information Reporting Obligations<\/p>\n
3.8.1 In order to provide Interconnection Service
\nhereunder, Pepco may request, and Generator shall promptly provide, all
\nrelevant information, documents, or data regarding the Generating Facilities
\nthat would be expected to materially affect the Transmission System, and which
\nis reasonably requested by NERC, MAAC, the PJM Interconnection LLC, the MDPSC,
\nthe District of Columbia Public Service Commission and any other state or
\nDistrict of Columbia agency having jurisdiction over Pepco or Generator, the
\nPJM System Operator, or the Transmission Operator, which disclosure shall be
\nsubject to Article 6 of this Agreement regarding the disclosure of commercially
\nsensitive information.<\/p>\n
3.8.2 Generator shall promptly supply accurate, complete,
\nand reliable information in response to reasonable information requests for
\nreal time data and other data from Pepco necessary for operations, maintenance,
\ncompliance with PJM Requirements or regulatory requirements, or analysis of the
\nInterconnection Facilities or the Transmission System. Such information may
\ninclude metered values for MW and MVAR, voltage, current, automatic voltage
\nregulator status, automatic frequency control, dispatch, frequency, breaker
\nstatus indication, or any other information reasonably required for reliable
\noperation of the Transmission System pursuant to PJM Requirements and Good
\nUtility Practice. At minimum, Generator shall satisfy the telemetry
\nrequirements set forth in Schedule H.<\/p>\n
3.8.3 Information pertaining to generation operating
\nparameters shall be gathered and electronically transmitted directly to Pepco’s
\nenergy management system using a mutually acceptable communications protocol.<\/p>\n
3.8.4 Generator shall be responsible for the maintenance,
\nand any required replacements or upgrades of the field devices and equipment
\nused to gather information regarding generation operating parameters.<\/p>\n
3.8.5 Generator shall Maintain, at its expense, operating
\ntelephone links to the PJM Interconnection LLC, PJM System Operator, Pepco and
\nthe Transmission Operator, to provide information deemed necessary by them, or
\nas reasonably deemed necessary by Pepco in accordance with PJM Requirements or
\nGood Utility Practice to integrate operation of the Station with the
\nTransmission<\/p>\n
292<\/p>\n
System, provided, however, that Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generator’s facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of the Transmission System. Generator shall use
\ncommunication links at the Station consisting of the mobile radio low band C
\nfrequency and “all call” and “red phone” systems currently located at the
\nStation (or successor systems as may reasonably be required by Pepco) and shall
\nmaintain the availability of such systems to operate during abnormal conditions
\nincluding blackouts.<\/p>\n
3.9 Local Services<\/p>\n
3.9.1 General<\/p>\n
(a) The Parties agree that, due to the
\nintegration of certain control schemes of the Station and the Transmission
\nSystem, it is cost effective to provide each other with the services set forth
\nin Sections 3.10 and 3.11 in accordance with the terms and conditions set forth
\ntherein.<\/p>\n
(b) The Parties shall ensure, in accordance
\nwith Good Utility Practice, that services provided by one Party to the other
\nParty pursuant to Sections 3.10 and 3.11 shall be available at all times and in
\nthe manner and at the prices specified herein. Notwithstanding the foregoing,
\neither Party may change the services, provided that (1) there is no cost to the
\nreceiving Party as a result of such change, (2) the quality, reliability and
\nintegrity of the replacement services is equivalent to the existing service,
\nand (3) there is otherwise no materially adverse effect on the receiving Party.<\/p>\n
(c) Neither Party shall terminate any services
\nset forth in Sections 3.10 and 3.11 below that it agrees to provide to the
\nother Party, without the other Party’s prior written consent, which consent
\nshall not be unreasonably withheld or delayed, provided, however, if a Party
\nreceiving a service under Sections 3.10 or 3.11 no longer needs or desires a
\nparticular service, said Party shall notify the other Party and the providing
\nParty shall terminate said services as soon thereafter as practicable.<\/p>\n
3.9.2 Temporary Suspension of Local Services<\/p>\n
(a) The Party providing a service set forth in
\nSections 3.10 or 3.11 below shall notify and obtain approval, which approval
\nshall not be unreasonably withheld or delayed, from the receiving Party of any
\nscheduled temporary<\/p>\n
293<\/p>\n
suspension of services at least five (5) business days in advance of such
\nsuspension. Such notification shall include an estimated time duration for a
\nreturn to normal conditions.<\/p>\n
(b) In the event of any unplanned or forced
\nsuspension of the services set forth in Sections 3.10 or 3.11, below, the
\nproviding Party shall immediately notify the other Party first verbally and
\nthen in writing. The providing Party shall use all reasonable efforts to
\nminimize the duration of said suspension.<\/p>\n
(c) The Parties agree to complete any repairs,
\nmodifications or corrections, in accordance with Good Utility Practice, that
\nare necessary to restore to the other Party as soon as reasonably practicable
\nany services set forth in Sections 3.10 or 3.11 below that have been suspended.<\/p>\n
3.10 Pepco Provided Services: Schedule F sets forth the local
\nservices Pepco shall provide to the Generator pursuant to the terms of this
\nAgreement. Unless otherwise specified in Schedule F, for a period of three (3)
\nyears after the Effective Date (the “Initial Period”) and subject to Section
\n3.9 above, Pepco shall provide Generator with the local services set forth in
\nSchedule F at no cost and in consideration of the local services Generator
\nshall provide Pepco in accordance with Section 3.11 below. If Generator desires
\nthe continuation of any of the services set forth in Schedule F which are
\nsubject to the Initial Period to continue after the Initial Period, upon
\nGenerator’s written request to Pepco made at least 60 days prior to the
\nexpiration of the Initial Period, the Parties shall engage in good faith
\nnegotiations to reach mutually agreeable terms and conditions upon which such
\nservices will continue, provided, however, that if such agreement is not
\nreached prior to the expiration of the Initial Period, Pepco shall cease to
\nprovide services under Section 3.10 at the end of the Initial Period.<\/p>\n
3.11 Generator Provided Services. Schedule F sets forth the local
\nservices Generator shall provide to Pepco pursuant to the terms of this
\nAgreement. Unless otherwise specified in Schedule F, for the Initial Period and
\nsubject to Section 3.9 above, Generator shall provide Pepco with the local
\nservices set forth in Schedule F at no cost and in consideration of the local
\nservices Pepco shall provide Generator in accordance with Section 3.10 above.
\nIf Pepco desires the continuation of any of the services set forth in Schedule
\nF which are subject to the Initial Period to continue after the Initial Period,
\nupon Pepco’s written request to Generator made at least 60 days prior to the
\nexpiration of the Initial Period, the Parties shall engage in good faith
\nnegotiations to reach mutually agreeable terms and conditions upon which such
\nservices will continue, provided, however, that if such agreement is not
\nreached prior to the expiration of the Initial Period, Generator shall cease to
\nprovide services under Section 3.11 at the end of the Initial Period.<\/p>\n
294<\/p>\n
3.12 Optional Services: Generator may request that Pepco provide
\nthe following services to the Generator, provided, however, that Pepco shall
\nnot have any obligation to provide such services unless the Parties have
\nmutually agreed in writing to the price and other terms and conditions of such
\nservice:<\/p>\n
(a) PJM interface and dispatch services through the
\nPepco control center;<\/p>\n
(b) use of Pepco’s communication services;<\/p>\n
(c) maintenance of certain auxiliary and communications
\nequipment at the Station;<\/p>\n
(d) maintenance of high-voltage and medium-voltage
\nequipment such as power transformers and power circuit breakers;<\/p>\n
(e) maintenance of protective relaying, certain control
\nequipment, such as AGC and MSVC, plant batteries and revenue meters owned by
\nGenerator.<\/p>\n
3.13 Metering and Telemetering<\/p>\n
3.13.1 Generator shall, at Generator’s expense: (a) own,
\nMaintain and repair, all Revenue Meters, instrument transformers and
\nappurtenances associated with Revenue Meters, and real time telemetry, (b)
\nconduct meter accuracy and tolerance tests, and (c) prepare all calibration
\nreports required for equipment that measures energy transfers at the Point of
\nInterconnection. All meter accuracy and tolerance testing hereunder shall be in
\naccordance with PJM Requirements and Good Utility Practice and shall be
\nconducted, at Pepco’s request, in the presence of Pepco’s representative.<\/p>\n
3.13.2 Generator shall own and Maintain, at the Generator’s
\nexpense, equipment for redundant real-time communications and transmission of
\ntelemetry, hourly MWh information, and such other information as required by
\nthe PJM System Operator or Transmission Operator, or as reasonably required by
\nPepco in accordance with PJM Requirements and Good Utility Practice.<\/p>\n
3.14 Emergency Procedure<\/p>\n
3.14.1 Pepco, through the Transmission Operator, shall
\nprovide Generator with prompt verbal notification of Emergencies with regard to
\nthe Transmission System which may reasonably be expected to affect Generator’s<\/p>\n
295<\/p>\n
immediate operation of the Station or Generator Facilities, and Generator shall
\nprovide Pepco with prompt verbal notification of Emergencies with regard to the
\nStation which may reasonably be expected to affect Interconnection Service or
\nthe Transmission System. Such notification shall describe the Emergency, the
\nextent of damage or deficiency, the anticipated length of an outage and the
\ncorrective action taken and\/or to be taken. Said verbal notification shall be
\nfollowed as soon as practicable (but no later than 24 hours after the verbal
\nnotification) with written notification.<\/p>\n
3.14.2 If an Emergency in the good faith judgment of a
\nParty endangers or could endanger life or property, the Party recognizing the
\nproblem shall take such action as may be reasonable and necessary to prevent,
\navoid, or mitigate injury, danger, or loss. If however the Emergency involves
\ntransmission or electrical equipment, Generator shall notify the Transmission
\nOperator, and obtain the consent of such personnel, prior to performing any
\nswitching operations.<\/p>\n
3.14.3 Pepco may, consistent with PJM Requirements and Good
\nUtility Practice, have the Transmission System Operator take whatever actions
\n(including tripping Generator’s synchronizing breakers) or inactions it deems
\nnecessary during an Emergency to: (a) preserve public safety; (b) preserve the
\nintegrity of the Transmission System, (c) limit or prevent damage; or (d)
\nexpedite restoration of service. If any action or inaction by Pepco or the
\nTransmission Operator under this Section 3.14 results in the discontinuation,
\ncurtailment, interruption or reduction of Interconnection Service, Pepco shall
\nuse reasonable efforts consistent with PJM Requirements and Good Utility
\nPractice to restore Interconnection Service as promptly as practicable and to
\nminimize the effect of such restoration of service on the Station.<\/p>\n
3.15 Interconnection Service Interruptions<\/p>\n
3.15.1 If at any time, in the reasonable exercise of the
\nPJM System Operator’s judgment, or the Transmission Operator’s judgment
\nexercised in accordance with PJM Requirements or Good Utility Practice and on a
\nnon-discriminatory basis, a condition exists, including the operation of
\nGenerator’s equipment, which might reasonably be expected to have a materially
\nadverse affect on the quality of service rendered by Pepco (including services
\nrendered to transmission or distribution customers) or interferes with the safe
\nand reliable operation of the Transmission System, Pepco may discontinue,
\ncurtail, reduce and\/or interrupt Interconnection Service until the condition
\nhas been corrected.<\/p>\n
3.15.2 Unless the PJM System Operator, the Transmission
\nOperator or Pepco perceives that an Emergency exists or the risk of one is
\nimminent, Pepco<\/p>\n
296<\/p>\n
shall give Generator reasonable notice of its intention to discontinue,
\ncurtail, interrupt or reduce Interconnection Service in response to the
\ninterfering condition and, where practical, allow suitable time for Generator
\nto remove the interfering condition if it is the result of Generator’s
\noperations, before the discontinuation, curtailment, interruption or reduction
\ncommences. Pepco’s judgment with regard to the interruption of service under
\nthis paragraph shall be made pursuant to PJM Requirements and Good Utility
\nPractice. In the case of such interruption, Pepco shall immediately confer with
\nGenerator regarding the conditions causing such interruption and its
\nrecommendation concerning timely correction thereof. In the event
\nInterconnection Service is interrupted under this section due to Generator’s
\nfailure to operate and Maintain the Generating Facilities pursuant to PJM
\nRequirements or Good Utility Practice, Generator shall compensate Pepco for all
\ncosts reasonably incurred by Pepco attributable to the interruption and
\nrestoration of Interconnection Service. Pepco shall use reasonable efforts
\nconsistent with PJM Requirements and Good Utility Practice to restore
\nInterconnection Service interrupted, curtailed or reduced pursuant to this
\nSection 3.15 as promptly as practicable and to minimize the effect of such
\nrestoration of service on the Station.<\/p>\n
3.16 Unit Status Notification<\/p>\n
3.16.1 Generator acknowledges that Pepco requires
\ninformation regarding the status of the Station for Transmission System
\nreliability purposes. Accordingly, by 10:00 a.m. of each day, the Generator
\nshall provide Pepco the following information regarding the status of the
\nStation for the following day: Station availability to provide energy and
\ncapacity, the Station’s scheduled on and off times, Station synchronization,
\nplanned outages or deratings, and generation restrictions and limitations.
\nGenerator shall immediately notify Pepco of any changes to the information
\nprovided pursuant to the foregoing sentence.<\/p>\n
3.16.2 In circumstances, such as forced outages, Generator
\nshall notify Pepco of its generating unit’s temporary interruption of
\ngeneration as soon as practicable; and it shall provide Pepco, as soon as
\npracticable, with a schedule of when generation will be resumed.<\/p>\n
3.17 Scheduled Maintenance Notification and Coordination<\/p>\n
3.17.1 Local Routine Inspection and Maintenance. The
\nParties agree that, due to the integration of certain control and protective
\nrelaying schemes between the Station and the Interconnection Facilities, it
\nwill be necessary for them to cooperate in the inspection, maintenance and
\ntesting of these areas of integration. Each Party will provide advance notice
\nto the other Party before undertaking any work in these areas, especially in
\nelectrical circuits involving circuit breaker trip and<\/p>\n
297<\/p>\n
close contacts, current transformers or potential transformers and such work
\nwill be performed in accordance with PJM Requirements and Good Utility
\nPractice.<\/p>\n
3.17.2 Transmission System Maintenance. Pepco shall consult
\nwith Generator regarding timing of scheduled maintenance of the Interconnection
\nFacilities or the transmission facilities of the Transmission System which
\nPepco or the Transmission Operator performs and which might reasonably be
\nexpected to affect the Station. Pepco shall, to the extent practicable,
\nschedule any testing, shutdown, or withdrawal of said facilities to coincide
\nwith Generator’s scheduled outages for the Station. To facilitate such
\nconsultation and to the extent the information is not available from the PJM
\nSystem Operator in a timely manner, in June of each year, or on another date
\nmutually acceptable to the Parties, Generator shall furnish Pepco with
\nnon-binding preliminary generator maintenance schedules covering the upcoming
\ntwo years and any material changes thereto. In the event Pepco is unable to
\nschedule the outage of its facilities to coincide with Generator’s schedule,
\nPepco shall notify Generator as soon as practicable of the reasons for the
\nfacilities’ outage, of the time scheduled for the outage to take place, and of
\nits expected duration.<\/p>\n
3.18 Safety<\/p>\n
3.18.1 General. Pepco agrees with respect to the
\nInterconnection Facilities and the Transmission System, and Generator agrees
\nwith respect to the Station, that all work performed by either Party on such
\nfacilities which could reasonably be expected to affect the operations of the
\nother Party shall be performed in accordance with all applicable PJM
\nRequirements and Good Utility Practice.<\/p>\n
3.18.2 Switching Tagging and Grounding . Each Party shall
\ncomply with the Switching, Tagging and Grounding Rules. Pepco will notify
\nGenerator of any changes in its Switching, Tagging and Grounding Rules.
\nGenerator shall be responsible for all switching, tagging and grounding on
\nGenerator’s side of the Point of Interconnection and, except for Generator
\nFacilities, Pepco shall be responsible for all switching, tagging and grounding
\non its side of the Point of Interconnection.<\/p>\n
3.19 Environmental Compliance and Procedures<\/p>\n
3.19.1 Each Party shall be responsible for complying with
\nall Environmental Laws applicable to it with respect to its facilities or
\nproperty.<\/p>\n
298<\/p>\n
3.19.2 A Party shall notify the other Party first verbally
\nand then in writing, of any Releases of a Hazardous Substance or any type of
\nremediation activities related thereto as soon as possible but no later than
\ntwenty-four (24) hours after the occurrence if within the reasonable judgment
\nof the Party said activities could reasonably be expected to have a material
\nadverse effect upon the operations of the other Party and shall promptly
\nfurnish to the other Party copies of any reports filed with any governmental
\nagencies covering such events. This Section 3.19.2 does not effect any
\nallocation of liability with respect to the Station pursuant to the Asset Sale
\nAgreement.<\/p>\n
3.19.3 Neither Party shall knowingly take any actions which
\nmight reasonably be expected to have a material adverse environmental impact
\nupon the operations of the other Party without prior written notification and
\nagreement between then Parties.<\/p>\n
3.20 Operating Committee. The Parties shall establish an operating
\ncommittee consisting of one representative for each Party (“Operating
\nCommittee”). The Operating Committee shall act only by unanimous agreement or
\nconsent. The Parties shall designate their respective representatives to the
\nOperating Committee, plus an alternate by written notice. Each Party’s
\nrepresentative on the Operating Committee is authorized to act on behalf of
\nsuch Party with respect to any matter arising under this Agreement which is to
\nbe decided by the Operating Committee, however, the Operating Committee shall
\nnot have any authority to modify or otherwise alter the rights and obligations
\nof the Parties hereunder. The Operating Committee shall develop and implement
\nsuitable policies and procedures with which to coordinate the interaction of
\nthe Parties with respect to the performance of their duties and obligations
\nunder this Agreement.<\/p>\n
ARTICLE 4
\n OPERATIONS<\/p>\n
4.1 General<\/p>\n
4.1.1 The Parties agree to operate their respective
\nequipment that could reasonably be expected to have a material effect on the
\noperations of the other Party in a safe and efficient manner and in accordance
\nwith PJM Requirements and Good Utility Practice, and otherwise in accordance
\nwith the terms of this Agreement.<\/p>\n
4.1.2 Generator shall comply with the requests, orders,
\nand directives of Pepco with respect to Interconnection Service to the extent
\nsuch requests, orders<\/p>\n
299<\/p>\n
or directives are (a) issued pursuant to PJM Requirements or Good Utility
\nPractice, (b) not discriminatory; and (c) otherwise in accordance with this
\nAgreement or applicable tariffs.<\/p>\n
4.1.3 In the event Generator believes that a request,
\norder, or directive of Pepco exceeds the limitations in this Section 4.1.2, it
\nshall nevertheless comply with the request, order, or directive pending
\nresolution of the dispute under Article 12. The Parties agree to cooperate in
\ngood faith to expedite the resolution of any disputes arising under this
\nSection 4.1.<\/p>\n
4.2 Generator’s Operating Obligations<\/p>\n
4.2.1 General. Generator shall request permission from the
\nTransmission Operator, the PJM System Operator or the PJM Interconnection LLC,
\nas applicable, prior to opening and\/or closing circuit breakers in accordance
\nwith applicable switching and operations procedures and Good Utility Practice.<\/p>\n
(a) Generator shall carry out all switching
\norders from the Transmission Operator, the PJM System Operator, or the PJM
\nInterconnection LLC, in a timely manner and in accordance with PJM Requirements
\nand Good Utility Practice.<\/p>\n
(b) Generator shall (i) comply with Pepco’s
\nsystem restoration plan and black start criteria applicable to the Station as
\nconfigured as of the Effective Date or (ii) if the Station’s configuration is
\nmodified, provide alternative service restoration and black start capability in
\naccordance with PJM Requirements. Generator shall ensure that operating
\npersonnel at the Station are trained to implement such system restoration or
\nblack start plans. The Generator shall test the Station’s black-start
\ncombustion-turbines annually to confirm that the black-start
\ncombustion-turbines will start without an external power supply. The Generator
\nshall test the Station’s steam turbine-generators and those combustion-turbine
\ngenerators that would be required to be black-started in accordance with
\nPepco’s Emergency Conditions and System Restoration Manual, as revised from
\ntime to time, and plant restoration procedures, at least once every three
\nyears. Testing shall confirm the ability of a generating unit or Station to go
\nfrom a shut down condition to an operating condition and start delivering power
\nwithout assistance from the Transmission System. These testing requirements
\nshall remain in place until PJM promulgates specific rules governing
\nblack-start testing.<\/p>\n
300<\/p>\n
(c) The electricity supplied by Generator to
\nthe Point of Interconnection shall be in the form of three-phase 60 Hertz
\nalternating current at the nominal system voltage.<\/p>\n
(d) Generator’s equipment shall conform with
\nGood Utility Practice for harmonic distortion and voltage fluctuation.<\/p>\n
4.2.2 Voltage or Reactive Control Requirements. Unless
\notherwise agreed to by the Parties or authorized or directed by the PJM
\nInterconnection LLC, Generator shall operate the Station with automatic voltage
\nregulators in service at all times. The voltage regulators will control voltage
\nat the Points of Interconnection consistent with the range of voltage
\nprescribed by Pepco or the Transmission System Operator in accordance with PJM
\nRequirements and Good Utility Practice.<\/p>\n
(a) Generator will operate the Station in
\naccordance with prescribed voltage schedules pursuant to Section 4.2.2 to the
\nextent the Station is operating within its reactive generating capability and
\nnot violating any electrical constraints. Should Generator fail to comply with
\nsuch voltage schedules, Pepco or the Transmission Operator, as applicable,
\nshall provide written notice to the Generator of its intent to remedy that
\nfailure. If Generator does not promptly commence appropriate action after
\nreceiving such notice, Pepco or the Transmission Operator may then take any
\nnecessary action at Generator’s expense to remedy such failure, including the
\ninstallation of capacitor banks or other reactive compensation equipment
\nnecessary to ensure the proper voltage or reactive supply at the Station
\nincluding, at a minimum, by installing such equipment outside any building
\nhousing the Generation Facilities. Pepco shall make, to the extent feasible,
\nreasonable efforts to minimize the impact of such action on the operation of
\nthe Station.<\/p>\n
(b) Generator shall notify the Transmission
\nOperator if (a) any or all generating units at the Station reaches a VAR limit,
\n(b) there is any deviation from the voltage schedules prescribed pursuant to
\nSection 4.2.2 which is outside the limits permitted by PJM Requirements or Good
\nUtility Practice, or (c) any automatic voltage regulator is removed from or
\nrestored to service.<\/p>\n
(c) The Transmission Operator may from time to
\ntime, pursuant to PJM Requirements or Good Utility Practice, request or direct
\nGenerator to adjust generator controls that impact the Transmission System,
\nsuch as excitation, droop, and automatic generation control settings and
\nGenerator shall comply with such request or directions.<\/p>\n
301<\/p>\n
(d) Generator acknowledges that the
\nTransmission Operator may have the right, to the extent authorized or directed
\nby the PJM Interconnection LLC, to require reduced or increased generation of
\nthe Station in accordance with PJM Requirements, or in accordance with
\napplicable rules of the Transmission Operator.<\/p>\n
4.3 Auditing of Accounts and Records. The Parties shall have the
\nright, during normal business hours, to audit each other’s accounts and records
\npertaining to transactions under this Agreement, upon twenty (20) days prior
\nwritten notice, at the offices where such accounts and records are maintained,
\nprovided, however, that the audit shall be limited to those portions of the
\naccounts and records that are related to services provided to the other Party
\nunder this Agreement. Any such audit of a Party’s accounts and records will be
\nat the expense of the auditing Party, shall not be made more frequently than
\nonce in any twelve (12) month period, and no such audit may be made with
\nrespect to accounts and records relating to periods more than twenty-four (24)
\nmonths prior to the date of the audit notice. The Party being audited will be
\nentitled to review the audit report and any supporting materials. The Party
\nconducting the audit shall maintain the confidentiality of all information
\nobtained during the audit in compliance with Article 6 of this Agreement. To
\nthe extent that audited information includes confidential information, the
\nauditing Party shall designate an independent auditor at its expense to perform
\nsuch audit.<\/p>\n
ARTICLE 5
\n COST RESPONSIBILITIES AND BILLING PROCEDURES<\/p>\n
5.1 Cost Responsibilities for Interconnection Service. Except as
\notherwise expressly stated herein, Generator shall not be responsible for any
\ncosts arising from Pepco’s provision of Interconnection Service or local
\nservices to Generator, except for those costs specified in Sections 3.2.1,
\n3.2.2, 3.4.1, and 3.15 or arising from the liability or indemnification
\nprovisions of this Agreement.<\/p>\n
5.2 Cost Responsibilities for Local Services. Except as otherwise
\nexpressly provided herein or agreed to by the Parties, each Party shall be
\nresponsible for the costs for local services provided to the other Party in
\nSections 3.10 and 3.11 as set forth in said sections.<\/p>\n
5.3 Billing Procedures<\/p>\n
302<\/p>\n
(a) Within ten (10) days after the first day of each
\ncalendar month, each Party shall provide the other Party with a written invoice
\nfor any payments due from the other Party for services provided in the previous
\nmonth.<\/p>\n
(b) Each invoice shall (i) delineate the month in which
\nthe services were provided, (ii) fully describe the services rendered, (iii) be
\nitemized to reflect the services performed or provided, and (iv) provide
\nreasonable detail as to the calculation of the amount involved.<\/p>\n
(c) All invoices shall be paid within fifteen (15) days
\nafter receipt, but not earlier than the 25th day of the month in which the
\ninvoice is rendered. All payments shall be made in immediately available funds
\npayable to the other Party, or by wire transfer to a bank designated in writing
\nby such Party. Payment of invoices shall not relieve the paying Party from any
\nresponsibilities or obligations it has under this Agreement, nor shall such
\npayment constitute a waiver of any claims arising hereunder.<\/p>\n
5.3.2 To the extent that, for any billing period,
\nGenerator is obligated to pay to Pepco amounts due and calculated pursuant to
\nSection 5.3, Pepco may use such amounts as a set-off against any amounts owed
\nby Pepco to Generator under this Section 5.3.<\/p>\n
5.3.3 Interest on any unpaid amounts shall be calculated
\nin accordance with the methodology specified for interest on refunds in FERC
\nregulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on delinquent
\namounts shall be calculated from the due date of the bill to the date of
\npayment. When payments are made by mail, bills shall be considered as having
\nbeen paid on the date of receipt by the other Party.<\/p>\n
5.4 Billing Disputes. In the event of a billing dispute between
\nthe Parties, each Party shall continue to provide services as long as the other
\nParty continues to make all payments not in dispute. Payment of invoices by
\neither Party shall not relieve the paying Party from any responsibilities or
\nobligations it has under this Agreement; nor shall it constitute a waiver of
\nany claims arising hereunder.<\/p>\n
ARTICLE 6
\n CONFIDENTIALITY<\/p>\n
6.1 Confidentiality Obligations of Pepco. Pepco shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by
\nGenerator in<\/p>\n
303<\/p>\n
connection with this Agreement marked “Confidential” or “Proprietary.” Except
\nto the extent that such information or documents are (i) generally available to
\nthe public other than as a result of a disclosure by Pepco in breach of this
\nAgreement, (ii) available to Pepco on a non-confidential basis prior to
\ndisclosure to Pepco by Generator, or (iii) available to Pepco on a
\nnon-confidential basis from a source other than Generator, provided that such
\nsource is not known, and by reasonable effort could not be known, by Pepco to
\nbe bound by a confidentiality agreement with Generator or otherwise prohibited
\nfrom transmitting the information to Pepco by a contractual, legal or fiduciary
\nobligation, Pepco shall not release or disclose such information to any other
\nperson, except to its employees, representatives or agents on a need-to-know
\nbasis, in connection with this Agreement who has not first been advised of the
\nconfidentiality provisions of this Section 6.1 and has agreed in writing to
\ncomply with such provisions. In no event shall such information be disclosed in
\nviolation of the requirements of FERC Orders 889 and 889-A, and any successor
\nthereto. Pepco shall promptly notify Generator if it receives notice or
\notherwise concludes that the production of any information subject to this
\nSection 6.1 is being sought under any provision of law and Pepco shall use
\nreasonable efforts in cooperation with Generator to seek confidential treatment
\nfor such confidential information provided thereto.<\/p>\n
6.2 Confidentiality Obligations of Generator. Generator shall
\nhold in confidence, unless compelled to disclose by judicial or administrative
\nprocess or other provisions of law, all documents and information furnished by
\nPepco in connection with this Agreement marked “Confidential” or “Proprietary.”
\nExcept to the extent that such information or documents are (i) generally
\navailable to the public other than as a result of a disclosure by Generator in
\nbreach of this Agreement, (ii) available to Generator on a non-confidential
\nbasis prior to disclosure to Generator by Pepco, or (iii) available to
\nGenerator on a non-confidential basis from a source other than Pepco, provided
\nthat such source is not known, and by reasonable effort could not be known, by
\nGenerator to be bound by a confidentiality agreement with Pepco or otherwise
\nprohibited from transmitting the information to Generator by a contractual,
\nlegal or fiduciary obligation, Generator shall not release or disclose such
\ninformation to any other person, except to its employees, representatives or
\nagents on a need-to-know basis, in connection with this Agreement who has not
\nfirst been advised of the confidentiality provisions of this Section 6.2 and
\nhas agreed in writing to comply with such provisions. In no event shall such
\ninformation be disclosed in violation of the requirements of FERC Orders 889
\nand 889-A, and any successor thereto. Generator shall promptly notify Pepco if
\nit receives notice or otherwise concludes that the production of any
\ninformation subject to this Section 6.2 is being sought under any provision of
\nlaw and Generator shall use reasonable efforts in cooperation with Pepco to
\nseek confidential treatment for such confidential information provided thereto.<\/p>\n
304<\/p>\n
6.3 Confidentiality of Audits. The independent auditor performing
\nany audit, as referred to in Section 4.3, shall be subject to a confidentiality
\nagreement between the auditor and the Party being audited. Such audit
\ninformation shall be treated as confidential except to the extent that its
\ndisclosure is required by regulatory or judicial order, for reliability
\npurposes pursuant to PJM Requirements or Good Utility Practice, and pursuant to
\nthe FERC’s rules and regulations. Except as provided herein, neither Party will
\ndisclose the audit information to any third party, without the other Party’s
\nprior written consent. Audit information in the hands of the Party not being
\naudited shall be subject to all provisions of Section 6.1 or 6.2, above, as
\napplicable.<\/p>\n
6.4 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its
\nobligations under Section 6.1 or 6.2, above, as applicable. Each Party
\naccordingly agrees, subject to Article 8, that the other Party shall be
\nentitled to equitable relief, by way of injunction or otherwise, if the first
\nParty breaches or threatens to breach its obligations under Section 6.1 or 6.2
\nof this Agreement, as applicable, which equitable relief shall be granted
\nwithout bond or proof of damages, and the receiving Party shall not plead in
\ndefense that there would be an adequate remedy at law.<\/p>\n
ARTICLE 7
\n EVENTS OF DEFAULT<\/p>\n
7.1 Events of Default. Each of the following shall constitute an
\nEvent of Default by the a defaulting Party under this Agreement:<\/p>\n
(a) The failure by a Party to pay any amount due within
\ntwenty (20) calendar days after receipt of written notice of nonpayment by the
\nother Party, unless the payment of such amount is disputed in good faith, in
\nwhich event Section 5.5 shall apply;<\/p>\n
(b) A Party’s breach of any material term or condition
\nof this Agreement, including but not limited to any material breach of a
\nrepresentation, warranty or covenant made in this Agreement which, after
\nreceiving written notice of the breach from the non-breaching Party (such
\nnotice to set forth in reasonable detail the nature of the default and, where
\nknown and if applicable, the steps necessary to cure such default), (i) the
\nbreaching Party fails to cure, if curable, within thirty (30) days following
\nreceipt of the notice or (ii) if such default is of such a nature that it
\ncannot be cured within thirty (30) days following receipt of such notice, the
\nbreaching Party fails within such thirty (30) days to commence the necessary
\ncure and fails at any time thereafter diligently and continuously to<\/p>\n
305<\/p>\n
prosecute such cure to completion provided that the cure is completed no later
\nthan 180 days after the receipt of the default notice;<\/p>\n
(c) The appointment of a receiver, liquidator or trustee
\nfor either Party, and such receiver, liquidator or trustee is not discharged
\nwithin sixty (60) days;<\/p>\n
(d) The entry of a decree or decrees adjudicating a
\nParty as bankrupt or insolvent, and such decree or decrees are not stayed or
\ndischarged within sixty (60) days; or<\/p>\n
(e) The filing of voluntary petitions for bankruptcy
\nunder any federal or state bankruptcy law by a Party.<\/p>\n
7.2 Remedies<\/p>\n
7.2.1 If the breaching Party disputes that an Event of
\nDefault under Section 7.1.(b) has occurred, the breaching Party shall
\nnonetheless comply with this Section 7.2 pending the resolution of the dispute.
\nIf it is determined that no breach or Event of Default under Section 7.1(b)
\nexisted, the Party alleging the default shall pay and reimburse the other Party
\nfor all reasonable costs and expenses incurred by it to cure the alleged
\ndefault.<\/p>\n
7.2.2 Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (i) exercise all such rights and remedies as may be
\navailable to it at law or equity including seeking to recover damages caused by
\nsuch Event of Default, subject to Article 8 of this Agreement; and\/or (ii)
\nterminate this Agreement. The Parties shall not discontinue the performance of
\nany one or more of their obligations hereunder due to the occurrence of an
\nEvent of Default during the pendency of any dispute regarding such Event of
\nDefault and until such dispute is finally resolved except that Pepco may
\nsuspend or interrupt service if necessary for the safe and reliable operation
\nof the Interconnection Facilities or the Transmission System.<\/p>\n
7.2.3 Notwithstanding the foregoing, upon the occurrence
\nof any Event of Default, the non-defaulting Party shall be entitled to commence
\nan action to require the defaulting Party to remedy such default by
\nspecifically performance of its duties and obligations hereunder in accordance
\nwith the terms and conditions hereof.<\/p>\n
306<\/p>\n
7.2.4 Notwithstanding anything in this Agreement to the
\ncontrary, in the event the Generator’s failure to comply with the provisions of
\nSections 4.1 and 4.2 of this Agreement is reasonably likely to have an
\nimmediate and material adverse impact on Pepco or the Transmission System,
\nPepco shall have the right to take immediately reasonable steps and\/or to
\nexercise immediately all remedies available under this Agreement, or at law or
\nequity, including the right, after providing as much notice as is practicable
\nunder the circumstances and complying with the applicable FERC notice
\nrequirements regarding termination of service, to disconnect the Station from
\nthe Transmission System.<\/p>\n
ARTICLE 8
\n LIMITATION OF LIABILITY<\/p>\n
8.1 Limitation of Pepco’s Liability. Pepco does not guarantee the
\nnon-occurrence of, or warrant against, and will have no liability hereunder
\nfor, and the Generator will release Pepco from all claims or damages associated
\nwith, any interruption in the availability of the Interconnection Facilities,
\nInterconnection Service or local services pursuant to Section 3.10 or damages
\nto the Generator’s facilities, except to the extent such interruption or damage
\nis caused by Pepco’s gross negligence or willful misconduct in the performance
\nof its obligations under this Agreement.<\/p>\n
8.2 Limitation on Generator’s Liability. Generator does not
\nguarantee the non-occurrence of, or warrant against, and will have no liability
\nunder this Agreement for, and Pepco will release Generator from all claims or
\ndamages arising under this Agreement which are associated with any interruption
\nin the availability of the Station or local services pursuant to Section 3.11,
\nany reduction, curtailment, interruption or reduction of energy from the
\nStation, or damage to Pepco’s facilities, except to the extent such
\ninterruption or damage is caused by Generator’s gross negligence or willful
\nmisconduct in the performance of its obligations under the Agreement.<\/p>\n
8.3 Consequential Damages. Except for indemnity obligations set
\nforth in Article 9, neither Party, nor their respective officers, directors,
\nagents, employees, Affiliates, or successors or assigns of any of them, shall
\nbe liable to the other Party or its Affiliates, officers, directors, agents,
\nemployees, successors or assigns for claims, suits, actions or causes of action
\nfor incidental, punitive, special, indirect, multiple or consequential damages
\n(including, without limitation, replacement power costs, lost revenues, claims
\nof customers, attorneys’ fees and litigation costs) connected with, or
\nresulting from, performance or non-performance of this Agreement, or any
\nactions undertaken in connection with or related to this Agreement, including,
\nwithout limitation, any such damages which are based upon causes of action for<\/p>\n
307<\/p>\n
breach of contract, tort (including negligence and misrepresentation), breach
\nof warranty or strict liability. The provisions of this Section 8.3 shall apply
\nregardless of fault and shall survive termination, cancellation, suspension,
\ncompletion, or expiration of this Agreement.<\/p>\n
ARTICLE 9
\n INDEMNIFICATION FOR THIRD PARTY CLAIMS<\/p>\n
9.1 Generator’s Indemnification. Generator shall indemnify, hold
\nharmless, and defend Pepco and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Pepco and a third party or Generator) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Pepco’s employees or any third parties, to the extent caused,
\nby the negligence or willful misconduct of Generator’s and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Generator’s performance or breach of this Agreement,
\nor the exercise by Generator of its rights hereunder. In furtherance of the
\nforegoing indemnification and not by way of limitation thereof, Generator
\nhereby waives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
9.2 Pepco’s Indemnification. Pepco shall indemnify, hold
\nharmless, and defend Generator and its Affiliates, as the case may be, and
\ntheir respective officers, directors, employees, agents, contractors,
\nsubcontractors, invitees, successors and permitted assigns from and against any
\nand all claims, liabilities, costs, damages, and expenses (including, without
\nlimitation, reasonable attorney and expert fees, and disbursements incurred by
\nany of them in any action or proceeding between the Generator and a third party
\nor Pepco) for damage to property of unaffiliated third parties, injury to or
\ndeath of any person, including Generator’s employees or any third parties, to
\nthe extent caused by the negligence or willful misconduct of Pepco and\/or its
\nofficers, directors, employees, agents, contractors, subcontractors or invitees
\narising out of or connected with Pepco’s performance or breach of this
\nAgreement, or the exercise by Pepco of its rights hereunder. In furtherance of
\nthe foregoing indemnification and not by way of limitation thereof, Pepco
\nhereby waives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
9.3 Indemnification Procedures. If either Party intends to seek
\nindemnification under this Article 9 from the other Party, the Party seeking
\nindemnification shall give the other Party notice of such claim within ninety
\n(90)<\/p>\n
308<\/p>\n
days of the later of the commencement of, or the Party’s actual knowledge of,
\nsuch claim or action. Such notice shall describe the claim in reasonable
\ndetail, and shall indicate the amount (estimated if necessary) of the claim
\nthat has been, or may be sustained by, said Party. To the extent that the other
\nParty will have been actually and materially prejudiced as a result of the
\nfailure to provide such notice, such notice will be a condition precedent to
\nany liability of the other Party under the provisions for indemnification
\ncontained in this Agreement. Neither Party may settle or compromise any claim
\nwithout the prior consent of the other Party; provided, however, said consent
\nshall not be unreasonably withheld or delayed.<\/p>\n
9.4 Survival. The indemnification obligations of each Party under
\nthis Article 9 shall continue in full force and effect regardless of whether
\nthis Agreement has either expired or been terminated or canceled.<\/p>\n
ARTICLE 10
\n INSURANCE<\/p>\n
10.1 Insurance Coverage. The Parties shall maintain at their own
\ncost and expense, fire, liability, worker’s compensation, and other forms of
\ninsurance relating to their respective property and facilities subject to this
\nAgreement in the manner, and amounts, and for the durations as is customary in
\nthe electric utility industry.<\/p>\n
10.2 Certificates of Insurance. The Parties agree to furnish each
\nother with certificates of insurance evidencing the insurance coverage obtained
\nin accordance with this Article 10, and the Parties agree to notify and send
\ncopies to the other of any policies maintained hereunder upon written request
\nby a Party. Each Party must notify the other Party within ten (10) business
\ndays of receiving notice of cancellation, change, amendment or renewal of any
\ninsurance policy required pursuant to Section 10.1 above.<\/p>\n
10.3 Additional Insureds and Waiver. Each Party and its affiliates
\nshall be named as additional insureds on the general liability insurance
\npolicies obtained in accordance with Section 10.1, above, as regards liability
\nunder this Agreement; and each Party shall waive its rights of recovery against
\nthe other for any loss or damage covered by such policy.<\/p>\n
309
\n ARTICLE 11
\n FORCE MAJEURE<\/p>\n
11.1 Effect of Force Majeure. Notwithstanding anything in this
\nAgreement to the contrary, Generator and Pepco shall not be liable in damages
\nor otherwise or responsible to the other for its failure to carry out any of
\nits obligations under this Agreement (except for the obligation to pay sums of
\nmoney due and owing hereunder) to the extent that they are unable to so perform
\nor are prevented from performing by an event of Force Majeure and has complied
\nwith Section 11.3.<\/p>\n
11.2 Force Majeure Defined. Force Majeure means those causes
\nbeyond the reasonable control of the Party affected, which by the exercise of
\nreasonable diligence, including Good Utility Practice, that Party is unable to
\nprevent, avoid, mitigate, or overcome, including the following: any act of God,
\nlabor disturbance (including a strike), act of the public enemy, war,
\ninsurrection, riot, fire, storm or flood, explosion, breakage or accident to
\nmachinery or equipment, electric system disturbance), order, regulation or
\nrestriction imposed by governmental, military or lawfully established civilian
\nauthorities, or any other cause of a similar nature beyond a Party’s reasonable
\ncontrol.<\/p>\n
11.3 Notification. A Party shall not be entitled to rely on the
\noccurrence of an event of Force Majeure as a basis for being excused from
\nperformance of its obligations under this Agreement, unless the Party relying
\non the event or condition shall: (a) provide prompt written notice of such
\nForce Majeure event to the other Party, including an estimation of its expected
\nduration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts in accordance with Good Utility
\nPractice to continue to perform its obligations under this Agreement; (c)
\nexpeditiously take action to correct or cure the event or condition excusing
\nperformance; (d) exercise all reasonable efforts to mitigate or limit damages
\nto the other Party; and (e) provide prompt notice to the other Party of the
\ncessation of the event or condition giving rise to its excuse from performance.
\nSubject to this Section 11.3, any obligation under this Agreement shall be
\nsuspended only to the extent caused by such Force Majeure and only during the
\ncontinuance of any inability of performance caused by such Force Majeure but
\nfor no longer period.<\/p>\n
ARTICLE 12
\n DISPUTES<\/p>\n
12.1 Disputes<\/p>\n
310<\/p>\n
12.1.1 A Party with a claim or dispute under this Agreement
\nshall submit to the Operating Committee a notification of such claim or dispute
\nwithin sixty (60) days after the circumstances that gave rise to the claim or
\nthe question or issue in dispute. The notification shall be in writing and
\nshall include a concise statement of the claim or the issue or question in
\ndispute, a statement of the relevant facts and documentation to support the
\nclaim. In the event the Operating Committee is unable, in good faith, to
\nresolve their disagreement in a manner satisfactory to both Parties within
\nthirty (30) days after receipt by the Operating Committee of a notification
\nspecifying the claim, issue or question in dispute, the Parties shall refer the
\ndispute to their respective senior management. If, after using their good faith
\nbest efforts to resolve the dispute, senior management cannot resolve the
\ndispute within thirty (30) days, the Parties shall utilize the arbitration
\nprocedures set forth below in Section 12.2 to resolve a dispute, provided that
\nnothing herein or therein shall prohibit either Party from at any time
\nrequesting from a court of competent jurisdiction a temporary restraining
\norder, preliminary injunction, or other similar form of equitable relief to
\nenforce performance of the provisions of this Agreement.<\/p>\n
12.2 Arbitration.<\/p>\n
(a) Unless the Parties other wise mutually agree in
\nwriting to another form of dispute resolution such as dispute resolution under
\nthe PJM Agreement or the MAAC agreement, any arbitration initiated under this
\nAgreement shall be conducted before a single neutral arbitrator appointed by
\nthe Parties within thirty (30) days of receipt by respondent of the demand for
\narbitration. If the Parties are unable to agree on an arbitrator, such
\narbitration shall be appointed by the American Arbitration Association. Unless
\nthe Parties agree otherwise, the arbitrator shall be an attorney or retired
\njudge with at least fifteen (15) years of experience, and shall not have any
\ncurrent or past substantial business or financial relationships with any Party
\nto the arbitration. If possible, the arbitrator shall have experience in the
\nelectric utility industry. Unless otherwise agreed, the arbitration shall be
\nconducted in accordance with the American Arbitration Association’s Commercial
\nArbitration Rules, then in effect. Any arbitration proceedings, decision or
\naward rendered hereunder and the validity, effect and interpretation of this
\narbitration agreement shall be governed by the Federal Arbitration Act of the
\nUnited States, 9 U.S.C. Section 1 et seq. The location of any arbitration
\nhereunder shall be in the District of Columbia.<\/p>\n
(b) The arbitration shall, if possible, be concluded not
\nlater than six (6) months after the date that it is initiated. The arbitrator
\nshall be authorized only to interpret and apply the provisions of this
\nAgreement or any related agreements entered into under this Agreement and shall
\nhave no power to modify<\/p>\n
311<\/p>\n
or change any of the above in any manner. The arbitrator shall have no
\nauthority to award punitive or multiple damages or any damages inconsistent
\nwith this Agreement. The arbitrator shall, within thirty (30) days of the
\nconclusion of the hearing, unless such time is extended by agreement of the
\nParties, notify the Parties in writing of his or her decision, stating his or
\nher reasons for such decision and separately listing his or her findings of
\nfact and conclusions of law. The decision of the arbitrator rendered in such a
\nproceeding shall be final and binding on the Parties. Judgment on the award may
\nbe entered upon it in any court having jurisdiction.<\/p>\n
12.3 FERC Dispute Resolution. Nothing in this Agreement shall
\npreclude, or be construed to preclude, any Party from filing a petition or
\ncomplaint with FERC with respect to any arbitrable claim over which FERC has
\njurisdiction. In such case, the other Party may request FERC to reject or to
\nwaive jurisdiction. If FERC rejects or waives jurisdiction with respect to all
\nor a portion of the claim, the portion of the claim not so accepted by FERC
\nshall be resolved through arbitration, as provided in this Agreement. To the
\nextent that FERC asserts or accepts jurisdiction over the claim, the decision,
\nfinding of fact or order of FERC shall be final and binding, subject to
\njudicial review under the Federal Power Act, and any arbitration proceedings
\nthat may have commenced with respect to the claim prior to the assertion or
\nacceptance of jurisdiction by FERC shall be terminated.<\/p>\n
ARTICLE 13
\n REPRESENTATIONS<\/p>\n
13.1 Representations of Pepco. Pepco hereby represents and
\nwarrants to Generator as follows:<\/p>\n
(a) Incorporation. Pepco is a corporation duly
\norganized, validly existing and in good standing under the laws of the District
\nof Columbia and the Commonwealth of Virginia, and has all requisite corporate
\npower and authority to own, lease and operate its material assets and
\nproperties and to carry on its business as now being conducted.<\/p>\n
(b) Authority. Pepco has all necessary corporate power
\nand authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Pepco of this
\nAgreement and the consummation by Pepco of the transactions contemplated
\nhereunder have been duly and validly authorized by the Board of Directors of
\nPepco or by a committee thereof to whom such authority has been delegated and
\nno other corporate proceedings on the part of Pepco are necessary to authorize
\nthis Agreement or the transactions contemplated hereby. This Agreement has been
\nduly and validly<\/p>\n
312<\/p>\n
executed and delivered by Pepco and, assuming that this Agreement constitutes a
\nvalid and binding agreement of Generator, constitutes a valid and binding
\nagreement of Pepco, enforceable by Pepco in accordance with its terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this
\nAgreement by Pepco nor performance by Pepco of its obligations hereunder will
\n(A) conflict with or result in any breach of any provision of the Certificate
\nof Incorporation or By-laws of Pepco, (B) result in a default (or give rise to
\nany right of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Pepco or any of its
\nsubsidiaries is a party or by which any of their respective assets may be bound
\nor (C) violate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to Pepco, or any of its assets, except in the case of clauses (B)
\nand (C) for such failures to obtain a necessary consent, defaults and
\nviolations which would not, individually or in the aggregate, have a material
\nadverse effect on the ability of Pepco to discharge its obligations under this
\nAgreement (a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration
\nwith, or notice to, or authorization, consent or approval of any governmental
\nauthority is necessary for performance by Pepco of its obligations hereunder,
\nother than such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Pepco Material Adverse Effect.<\/p>\n
13.2 Representations of Generator. Generator hereby represents and
\nwarrants to Pepco as follows:<\/p>\n
(a) Incorporation. Generator is a [corporation] duly
\n[incorporated], validly existing and in good standing under the laws of the
\nState of __________, and has all requisite [corporate] power and authority to
\nown, lease and operate its material assets and properties and to carry on its
\nbusiness as now being conducted.<\/p>\n
(b) Authority. Generator has all necessary [corporate]
\npower and authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by the Generator
\nof this Agreement and the consummation by Generator of the transactions
\ncontemplated hereby have been duly and validly authorized the [Board of
\nDirectors] of Generator<\/p>\n
313<\/p>\n
or by a committee thereof to whom such authority has been delegated and no
\nother [corporate] proceedings on the part of Generator are necessary to
\nauthorize this Agreement or the transactions contemplated hereby. This
\nAgreement has been duly and validly executed and delivered by Generator and,
\nassuming that this Agreement constitutes a valid and binding agreement of
\nPepco, constitutes a valid and binding agreement of Generator, enforceable
\nagainst Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals.<\/p>\n
(i) Neither the execution and delivery of this
\nAgreement by Generator nor performance by Generator of its obligations
\nhereunder will (A) conflict with or result in any breach of any provision of
\nthe [Certificate of Incorporation or By-laws] of Generator, (B) result in a
\ndefault (or give rise to any right of termination, cancellation or
\nacceleration) under any of the terms, conditions or provisions of any note,
\nbond, mortgage, indenture, license, agreement, lease or other instrument or
\nobligation to which Generator or any of its subsidiaries is a party or by which
\nany of their respective assets may be bound or (C) violate any order, writ,
\ninjunction, decree, statute, rule or regulation applicable to Generator, or any
\nof its assets, except in the case of clauses (B) and (C) for such failures to
\nobtain a necessary consent, defaults and violations which would not,
\nindividually or in the aggregate, have a material adverse effect on the ability
\nof Generator to discharge its obligations under this Agreement (a “Generator
\nMaterial Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration
\nwith, or notice to, or authorization, consent or approval of any Governmental
\nAuthority is necessary for performance by Generator of its obligations
\nhereunder, other than such declarations, filings, registrations, notices,
\nauthorizations, consents or approvals which, if not obtained or made would not,
\nindividually or in the aggregate, have a Generator Material Adverse Effect.<\/p>\n
ARTICLE 14
\n ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY<\/p>\n
14.1 Assignment.<\/p>\n
(a) Except as set forth in this Article 14, neither this
\nAgreement nor any of the rights, interests, or obligations hereunder shall be
\nassigned by either Party hereto, without the prior written consent of the other
\nParty, which consent shall not be unreasonably withheld or delayed.<\/p>\n
314<\/p>\n
(b) Subject to Section 14.2, upon ten (10) days prior
\nwritten notice to Generator, Pepco may assign this Agreement, and Pepco’s
\nrights, interests and obligations hereunder, to (i) an Affiliate of Pepco that
\nowns all or part of Pepco’s Transmission System or (ii) an independent system
\noperator or independent transmission company whose control over all or part of
\nPepco’s Transmission System has been approved by the FERC.<\/p>\n
(c) Subject to Section 14.2, Generator may (a) assign
\nany of its rights and obligations hereunder to an Affiliate to the extent
\nnecessary for the Generator to qualify as an exempt wholesale generator under
\nSection 32 of the Public Utility Holding Company Act of 1935, as amended, and
\n(b) assign, transfer, pledge or otherwise dispose of its rights and interests
\nhereunder to a trustee, lending institution, or other Person for the purposes
\nof financing or refinancing the Station, including upon or pursuant to the
\nexercise of remedies under such financing or refinancing, or by way of
\nassignments, transfers, conveyances of dispositions in lieu thereof; provided,
\nhowever, that no such assignment shall relieve or in any way discharge
\nGenerator from the performance of its duties and obligations under this
\nAgreement. Pepco agrees to execute and deliver, at Generator’s expense, such
\ndocuments as may be reasonably necessary to accomplish any such assignment,
\ntransfer, conveyance, pledge or disposition of rights hereunder for purposes of
\nthe financing or refinancing of the Facility, so long as Pepco’s rights under
\nthis Agreement are not thereby altered, amended, diminished or otherwise
\nimpaired.<\/p>\n
(d) Subject to Section 14.2, either Party may assign
\nthis Agreement to a successor to all or substantially all of the assets of such
\nParty by way of merger, consolidation, sale or otherwise, provided such
\nsuccessor assumes in writing and becomes liable for all of such Party’s duties
\nand obligations hereunder.<\/p>\n
14.2 Release of Rights and Obligations. No assignment, transfer,
\nconveyance, pledge or disposition of rights, interests, duties or obligations
\nunder this Agreement by a Party shall relieve that Party from liability and
\nfinancial responsibility for the performance thereof after any such transfer,
\nassignment, conveyance, pledge or disposition unless and until (i) the
\ntransferee or assignee shall agree in writing to assume the obligations and
\nduties of that Party under this Agreement and to impose such obligations on
\nsubsequent permitted transferees and assignees and (ii) the non-assigning Party
\nhas consented in writing to such assumption and to a release of the assigning
\nParty from such liability, such consent not to be unreasonably withheld or
\ndelayed.<\/p>\n
14.3 Change in Corporate Identity. If Generator terminates its
\nexistence as a [corporate] entity by merger, acquisition, sale, consolidation
\nor otherwise, or if all or substantially all of Generator’s assets are
\ntransferred to another person or<\/p>\n
315<\/p>\n
business entity without complying with this Article 14, Pepco shall have the
\nright, enforceable in a court of competent jurisdiction, to enjoin Generator’s
\nsuccessor from using the Station in any manner that does not comply with the
\nrequirements of this Agreement or that impedes Pepco’s ability to carry on its
\nongoing business operations.<\/p>\n
14.4 Successors and Assigns. This Agreement and all of the
\nprovisions hereof are binding upon, and inure to the benefit of, the Parties
\nand their respective successors and permitted assigns.<\/p>\n
ARTICLE 15
\n SUBCONTRACTORS<\/p>\n
Nothing in this Agreement shall prevent the Parties from utilizing the
\nservices of subcontractors as they deem appropriate, provided, however, the
\nParties agree that, where applicable, all said subcontractors shall comply with
\nthe terms and conditions of this Agreement. The creation of any subcontract
\nrelationship shall not relieve the hiring Party of any of its obligations under
\nthis Agreement. Each Party shall be fully responsible to the other Party for
\nthe acts and\/or omission of any subcontractor it hires as if no subcontract had
\nbeen made. Any obligation imposed by this Agreement upon the Parties, where
\napplicable, shall be equally binding upon and shall be construed as having
\napplication to any subcontractor. The Parties shall each be liable for,
\nindemnify, and hold harmless the other Party, their Affiliates and their
\nofficers, directors, employees, agents, servants, and assigns from and against
\nany and all claims, demands, or actions, from the other Party’s subcontractors;
\nand shall pay all costs, expenses and legal fees associated therewith and all
\njudgments, decrees and awards rendered therein. No subcontractor is intended to
\nbe or shall be deemed a third-party beneficiary of this Agreement.<\/p>\n
ARTICLE 16
\n NOTICES<\/p>\n
16.1 Emergency Notices. At or prior to the Effective Date, each
\nParty shall indicate to the other Party, by notice, the appropriate person
\nduring each eight-hour work shift to contact in the event of an emergency, a
\nscheduled or forced interruption or reduction in services. The notice last
\nreceived by a Party shall be effective until modified in writing by the other
\nParty.<\/p>\n
16.2 Notices. All notices and other communications hereunder shall
\nbe in writing and shall be deemed given (as of the time of delivery or, in the
\ncase of a telecopied communication, of confirmation) if delivered personally,
\ntelecopied (which is confirmed) or sent by overnight courier (providing proof
\nof delivery) to<\/p>\n
316<\/p>\n
the Parties at the following addresses (or at such other address for a Party as
\nshall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) ________________
\n Attention: ________________________<\/p>\n
if to Generator, to:<\/p>\n
c\/o Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
ARTICLE 17
\n AMENDMENTS<\/p>\n
17.1 Amendments. Except as set forth in Sections 2.2 and 17.2 of
\nthis Agreement, this Agreement may be amended, modified, or supplemented only
\nby written agreement of both Pepco and Generator.<\/p>\n
17.2 FERC Proceedings<\/p>\n
(a) Pepco may unilaterally make application to FERC
\nunder Section 205 of the Federal Power Act and pursuant to the FERC’s rules and
\nregulations promulgated thereunder for, or exercise any rights it may have
\nunder Section 206 of the Federal Power Act and the regulations thereunder with
\nrespect to, a change in any rates, terms and conditions, charges,
\nclassification of service, rule or regulation for any services Pepco provides
\nunder this Agreement over which FERC has jurisdiction.<\/p>\n
(b) Generator may exercise its rights under Section 205
\nor 206 of the Federal Power Act and pursuant to FERC’s rules and regulations
\npromulgated thereunder with respect to any rate, term, condition, charge,
\nclassification of service, rule or regulation for any services provided under
\nthis Agreement over which FERC has jurisdiction.<\/p>\n
317<\/p>\n
ARTICLE 18
\n MISCELLANEOUS PROVISIONS<\/p>\n
18.1 Waiver. Except as otherwise provided in this Agreement, any
\nfailure of a Party to comply with any obligation, covenant, agreement, or
\ncondition herein may be waived by the Party entitled to the benefits thereof
\nonly by a written instrument signed by the Party granting such waiver, but such
\nwaiver or failure to insist upon strict compliance with such obligation,
\ncovenant, agreement, or condition shall not operate as a waiver of, or estoppel
\nwith respect to, any subsequent or other failure.<\/p>\n
18.2 Labor Relations. The Parties agree to immediately notify the
\nother Party, verbally and then in writing, of any labor dispute or anticipated
\nlabor dispute which may reasonably be expected to affect the operations of the
\nother Party.<\/p>\n
18.3 No Third Party Beneficiaries. Nothing in this Agreement is
\nintended to confer upon any other person except the Parties any rights or
\nremedies hereunder or shall create any third party beneficiary rights in any
\nperson. No provision of this Agreement shall create any rights in any such
\npersons in respect of any benefits that may be provided, directly or
\nindirectly, under any employee benefit plan or arrangement except as expressly
\nprovided for thereunder.<\/p>\n
18.4 Governing Law<\/p>\n
This Agreement shall be governed by and construed in accordance with the laws
\nof the State of Maryland (regardless of the laws that might otherwise govern
\nunder applicable principles of conflicts of law).<\/p>\n
18.5 Counterparts. This Agreement may be executed in two or more
\ncounterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
18.6 Interpretation. When a reference is made in this Agreement to
\nan Article, Section, Schedule or exhibit, such reference shall be to an Article
\nor Section of, or Schedule or exhibit to, this Agreement unless otherwise
\nindicated. The table of contents and headings contained in this Agreement are
\nfor reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement. Whenever the words “include”, “includes” or
\n“including” are used in this Agreement, they shall be deemed to be followed by
\nthe words “without limitation” or equivalent words. The words “hereof”,
\n“herein” and “hereunder” and words of similar import when used in this
\nAgreement shall refer to this<\/p>\n
318<\/p>\n
Agreement as a whole and not to any particular provision of this Agreement. The
\ndefinitions contained in this Agreement are applicable to the singular as well
\nas the plural forms of such terms and to the masculine as well as to the
\nfeminine and neuter genders of such term. Unless otherwise expressly stated
\notherwise herein, the word “day” shall mean any calendar day including weekends
\nand holidays. Any agreement, instrument, statute, regulation, rule or order
\ndefined or referred to herein or in any agreement or instrument that is
\nreferred to herein means such agreement, instrument, statute, regulation, rule
\nor order as from time to time amended, modified or supplemented, including (in
\nthe case of agreements or instruments) by waiver or consent and (in the case of
\nstatutes, regulations, rules or orders) by succession of comparable successor
\nstatutes, regulations, rules or orders and references to all attachments
\nthereto and instruments incorporated therein. References to a person are also
\nto its permitted successors and assigns. Each Party acknowledges that it has
\nbeen represented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
18.7 Jurisdiction and Enforcement. Each of the Parties irrevocably
\nsubmits to the exclusive jurisdiction of the federal and state courts of the
\nState of Maryland for the purposes of any suit, action or other proceeding
\narising out of this Agreement or any transaction contemplated hereby. Each of
\nthe Parties agrees to commence any action, suit or proceeding relating hereto
\neither in the federal courts of the State of Maryland or, if such suit, action
\nor proceeding may not be brought in such court for jurisdictional reasons, in
\nthe state courts of the State of Maryland. Each of the Parties further agrees
\nthat service of process, summons, notice or document by hand delivery or U.S.
\nregistered mail at the address specified for such Party in Section 16.2 (or
\nsuch other address specified by such Party from time to time pursuant to
\nSection 16.2) shall be effective service of process for any action, suit or
\nproceeding brought against such Party in any such court. Each of the Parties
\nirrevocably and unconditionally waives any objection to the laying of venue of
\nany action, suit or proceeding arising out of this Agreement or the
\ntransactions contemplated hereby in the federal and state courts of the State
\nof Maryland and hereby further irrevocably and unconditionally waives and
\nagrees not to plead or claim in any such court that any such action, suit or
\nproceeding brought in any such court has been brought in an inconvenient forum.<\/p>\n
18.8 Entire Agreement. This Agreement, Asset Sale Agreement, the
\nConfidentiality Agreement and the Ancillary Agreements including the Exhibits,
\nSchedules, documents, certificates and instruments referred to herein or
\ntherein and other contracts, agreements and instruments contemplated hereby or
\nthereby, embody the entire agreement and understanding of the Parties in
\nrespect of the<\/p>\n
319<\/p>\n
transactions contemplated by this Agreement. There are no restrictions,
\npromises, representations, warranties, covenants or undertakings other than
\nthose expressly set forth or referred to herein or therein. This Agreement, the
\nAsset Sale Agreement and the Ancillary Agreements supersede all prior
\nagreements and understandings between the Parties with respect to the
\ntransactions contemplated by this Agreement other than the Confidentiality
\nAgreement.<\/p>\n
18.9 Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nParties shall negotiate in good faith to modify this Agreement so as to effect
\nthe original intent of the Parties as closely as possible to the fullest extent
\npermitted by applicable law in an acceptable manner to the end that the
\ntransactions contemplated hereby are fulfilled to the extent possible.<\/p>\n
18.10 Independent Contractor Status. Nothing in this Agreement
\nshall be construed as creating any relationship between Pepco and Generator
\nother than that of independent contractors.<\/p>\n
18.11 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
320<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this
\nInterconnection Agreement (Dickerson) to be signed by their respective duly
\nauthorized officers as of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ————————————————-
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ————————————————-
\n Name:
\n Title:<\/p>\n
321<\/p>\n
SCHEDULE A
\n DEFINITIONS<\/p>\n
Part A. Capitalized terms not defined in the body of the Agreement shall
\n have the meaning set forth in Part A of this Schedule A. (Part B of
\n this Schedule A sets forth capitalized terms defined within the
\n Agreement.)<\/p>\n
(1) “Affiliate” has the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
(2) “Ancillary Agreements” has the meaning set forth in the Asset
\nSale Agreement.<\/p>\n
(3) “Closing” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
(4) “Confidentiality Agreement” has the meaning set forth in the
\nAsset Sale Agreement.<\/p>\n
(5) “Costs” means all costs, including without limitation, any
\nTaxes, costs of acquiring real property, costs and fees for permits,
\nfranchises, licenses and regulatory approvals except to the extent that such
\ncosts are allocated to a party or parties other than the Generator by the PJM
\nInterconnection LLC or otherwise under the PJM Tariff or PJM Agreement.<\/p>\n
(6) “Easement” means the Easement Agreement dated __________,
\n2000, between the Parties with respect to the Station.<\/p>\n
(7) “Environmental Laws” means all former, current and future
\nfederal, state, local and foreign laws (including common law), treaties,
\nregulations, rules, ordinances, codes, decrees, judgments, directives or orders
\n(including consent orders) and environmental permits, in each case, relating to
\npollution or protection of the environment or natural resources, including laws
\nrelating to Releases or threatened Releases, or otherwise relating to the
\ngeneration, manufacture, processing, distribution, use, treatment, storage,
\narrangement for disposal, transport, recycling or handling, of Hazardous
\nSubstances.<\/p>\n
(8) “Emergency” means (a) with respect to Pepco, a condition or
\nsituation which Pepco, the PJM Interconnection LLC, the PJM System Operator or
\nthe Transmission Operator deem imminently likely to (i) endanger life or
\nproperty, or (ii) adversely affect or impair the Transmission System, Pepco’s
\nelectrical system or the electrical or transmission systems of others to which
\nthe Transmission System or Pepco’s electrical system are directly or indirectly
\nconnected and (b) with respect to the Generator, a condition or situation which
\nthe Generator deems imminently likely to (i) endanger life or property, or (ii)
\nadversely affect or impair the Station.<\/p>\n
(9) “FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
322<\/p>\n
(10) “Generating Facilities” means the Station and any additional
\ngenerating plants, turbines or other generating facilities constructed by
\nGenerator after the Effective Date at the site of the Station.<\/p>\n
(11) “Generator” has the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
(12) “Generator Facilities” mean the equipment and facilities
\nowned by the Generator but located on Pepco’s property which are identified in
\nSchedule B of this Agreement.<\/p>\n
(13) “Good Utility Practice” means any of the applicable
\npractices, methods and acts<\/p>\n
(a) required by FERC, NERC, MAAC, the PJM
\nInterconnection LLC, the PJM System Operator, or the successor of any of them,
\nwhether or not the Party whose conduct is at issue is a member thereof,<\/p>\n
(b) required by applicable law or regulations,<\/p>\n
(c) required by the Pepco Interconnection Standards or
\nthe policies and standards of Pepco relating to emergency operations;<\/p>\n
(d) otherwise engaged in or approved by a significant
\nportion of the electric utility industry during the relevant time period;
\nwhich, in the exercise of reasonable judgment in light of the facts known at
\nthe time the decision was made, could have been expected to accomplish the
\ndesired result at a reasonable cost consistent with law, regulation, good
\nbusiness practices, reliability, safety, and expedition. Good Utility Practice
\nis not intended to be limited to the optimum practice, method, or act to the
\nexclusion of all others, but rather to be acceptable practices, methods, or
\nacts generally accepted in the region.<\/p>\n
(14) “Hazardous Substances” means (i) any petrochemical or
\npetroleum products, crude oil or any fraction thereof, ash, radioactive
\nmaterials, radon gas, asbestos in any form, urea formaldehyde foam insulation
\nor polychlorinated biphenyls, (ii) any chemicals, materials, substances or
\nwastes defined as or included in the definition of “hazardous substances,”
\n“hazardous wastes,” “hazardous materials,” “restricted hazardous materials,”
\n“extremely hazardous substances,” “toxic substances,” “contaminants” or
\n“pollutants” or words of similar meaning and regulatory effect contained in any
\nEnvironmental Law or (iii) any other chemical, material, substance or waste
\nwhich is prohibited, limited or regulated by any Environmental Law.<\/p>\n
(15) “Interconnection Facilities” means those facilities or
\nportions of facilities owned or operated by Pepco to provide Interconnection
\nService which shall include, but not be limited to (1) facilities the cost of
\nwhich is reasonably allocated to the Interconnection Service provided to the
\nStation, or (2) Attachment Facilities or Local Upgrade Facilities, as defined
\nin the PJM Tariff, which are associated with the Interconnection Service and
\noperated and maintained by Pepco.<\/p>\n
323<\/p>\n
(16) “Interconnection Service” means the services provided by
\nPepco which are necessary to connect the Station to the Transmission System for
\nparallel operation of the Station and to enable Generator to transmit the
\nenergy and ancillary services produced by the Station to the Transmission
\nSystem and receive Station energy service and ancillary services, including
\nblackstart power, from the Generator’s supplier.<\/p>\n
(17) “MAAC” means the Mid-Atlantic Area Council, a reliability
\ncouncil under Section 202 of the Federal Power Act established pursuant to the
\nMAAC Agreement dated August 1, 1994, or any successor thereto.<\/p>\n
(18) “Maintain” means construct, reconstruct, install, inspect,
\nrepair, replace, operate, patrol, maintain, use, modernize, expand, upgrade, or
\nother similar activities.<\/p>\n
(19) “MDPSC” means the Maryland Public Service Commission or any
\nsuccessor agency thereto.<\/p>\n
(20) “NERC” means North American Electric Reliability Council or
\nany successor thereto.<\/p>\n
(21) “Pepco” has the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors or
\nassigns.<\/p>\n
(22) “Pepco Facilities” means the equipment and facilities owned
\nby Pepco but located on Generator’s property which are identified in Schedule B
\nof this Agreement.<\/p>\n
(23) “Pepco Interconnection Standards” means Pepco’s
\nInterconnection and Parallel Operating Guidelines as amended, modified or
\nreplaced from time to time. A copy of the existing Pepco Interconnection
\nStandards is attached hereto as Schedule E.<\/p>\n
(24) “Point of Interconnection” means each ownership point of
\ndemarcation set forth in Schedule C where capacity, energy and ancillary
\nservices are transferred between the Station and the Transmission System.<\/p>\n
(25) “Pepco Transmission Facilities” means those transmission,
\nsubstation, and communication facilities and related equipment, including the
\nInterconnection Facilities, and any additions, modifications or replacements
\nthereto, that are utilized to provide Interconnection Service to the Station.<\/p>\n
(26) “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Agreement and any successor
\nthereto including any regional transmission operator, independent system
\noperator, transco, or any other independent system administrator that possesses
\noperational or planning control over the Transmission System.<\/p>\n
(27) “PJM Agreement” means the Amended and Restated Operating
\nAgreement of the PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
324<\/p>\n
(28) “PJM Control Area” shall mean the control area recognized by
\nNERC as the PJM Control Area.<\/p>\n
(29) “PJM Interconnection LLC” means the independent system
\noperator of the PJM Control Area pursuant to the PJM Operating Agreement and
\nthe PJM Tariff.<\/p>\n
(30) “PJM Generator Connection Agreement” means the
\ninterconnection agreement entered into between the Generator and the PJM
\nInterconnection LLC pursuant to the PJM Tariff with respect to the
\ninterconnection of the Station and the Transmission System.<\/p>\n
(31) “PJM Reliability Agreement” means the Reliability Assurance
\nAgreement dated June 2, 1997 among the load serving entities of PJM.<\/p>\n
(32) “PJM Requirements” means the rules, regulations or other
\nrequirements of PJM or MAAC contained in or adopted pursuant to the PJM
\nAgreement, the PJM Tariff or the PJM Reliability Agreement which are applicable
\nto Pepco, with respect to the Transmission System or the Interconnection
\nService, and the Generator with respect to the Generating Facilities.<\/p>\n
(33) “PJM System Operator” shall mean the PJM Interconnection LLC,
\nenergy control center staff responsible for central dispatch as provided in the
\nPJM Agreement.<\/p>\n
(34) “PJM Tariff” means the PJM Open Access Transmission Tariff
\nproviding transmission service within the PJM Control Area.<\/p>\n
(35) “Qualified Personnel” means individuals who possess any
\nrequired licenses and are trained for their positions and duties by Generator
\nand\/or Pepco pursuant to Good Utility Practice.<\/p>\n
(36) “Release” means any release, spill, emission, leaking,
\ndumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
\nor migration into the environment (including ambient air, surface water,
\ngroundwater, land surface or subsurface strata) or within any building,
\nstructure, facility or fixture.<\/p>\n
(37) “Revenue Meters” means all MWh and MVArh meters, pulse
\nisolation relays, pulse conversion relays, transducers required by Pepco or the
\nPJM Interconnection or PJM System Operator for billing or other purposes, and
\nassociated totalizing equipment and appurtenances and compensation required to
\nmeasure the transfer of energy across the Point of Interconnection.<\/p>\n
(38) “Station” means the Dickerson Station as defined in the Asset
\nSale Agreement.<\/p>\n
(39) “Switching, Tagging, and Grounding Rules” means Pepco’s
\nswitching, tagging and grounding rules as amended, modified or replaced from
\ntime to time. A copy of the existing Switching, Tagging and Grounding Rules is
\nattached hereto as Schedule D.<\/p>\n
325<\/p>\n
(40) “Taxes” means all taxes, surtaxes, charges, fees, levies,
\npenalties or other assessments imposed by any United States federal, state,
\nlocal or foreign taxing authority, including income taxes, excise, property,
\nsales, transfer, franchise, special franchise, payroll, recording, withholding,
\nsocial security or other taxes, in each case including any interest, penalties
\nor additions attributable thereto.<\/p>\n
(41) “Transmission System” means the facilities owned, controlled,
\nor operated by Pepco, for purposes of providing transmission service, including
\nservices under the PJM Tariff, and Interconnection Service.<\/p>\n
(42) “Transmission Operator” means the person, or persons
\ndesignated by Pepco to coordinate the day to day interconnection of the Station
\nwith the Transmission System.<\/p>\n
Part B. The following terms have the meaning specified in the section of
\n this Agreement set forth opposite to such term:<\/p>\n
\n\n Term Agreement Reference<\/p>\n
\nAgreement Preamble
\nAsset Sale Agreement Preamble
\nEffective Date Section 2.1
\nEvent of Default Section 8.1
\nForce Majeure Section 11.1
\nInitial Period Section 3.10
\nOperating Committee Section 3.20
\nParty or Parties Preamble
\nTerm Article 2
\n<\/c><\/s><\/caption>\n<\/table>\n 326<\/p>\n
EXHIBIT E-4<\/p>\n
INTERCONNECTION AGREEMENT
\n (Chalk Point)<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
___________________________________<\/p>\n
Dated ____________, 2000<\/p>\n
327<\/p>\n
INTERCONNECTION AGREEMENT<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n\n
\nARTICLE 1 – DEFINITIONS 1
\nARTICLE 2 TERM AND TERMINATION 2
\n 2.1 Term 2
\n 2.2 Change in Law 2
\n 2.3 Effect after Termination 2
\nARTICLE 3 – CONTINUING OBLIGATIONS AND RESPONSIBILITIES 2
\n 3.1 Interconnection Service 2
\n 3.2 New Construction or Modifications 3
\n 3.2.1 Pepco Construction or Modifications 3
\n 3.2.2 Generator Construction or Modifications 4
\n 3.2.3 Modifications Affecting the Transmission System
\n or the Station 5
\n 3.3 Access, Easements, Conveyances, Licenses,
\n and Restrictions 6
\n 3.4 Facility and Equipment Maintenance 7
\n 3.5 Pepco Facilities and Generator Facilities 7
\n 3.6 Equipment Testing Obligations 8
\n 3.7 Inspections 8
\n 3.8 Information Reporting Obligations 9
\n 3.9 Local Services 10
\n 3.9.1 General 10
\n 3.9.2 Temporary Suspension of Local Services 11
\n 3.10 Pepco Provided Services 11
\n 3.11 Generator Provided Services 11
\n 3.12 Optional Services 12
\n 3.13 Metering and Telemetering 12
\n 3.14 Emergency Procedure 13
\n 3.15 Interconnection Service Interruptions 14
\n 3.21.2 SMECO CT Metering and Telemetering 14
\n 3.16 Unit Status Notification 14
\n 3.17 Scheduled Maintenance Notification and Coordination 15
\n 3.17.1 Local Routine Inspection and Maintenance 15
\n 3.17.2 Transmission Sytem Maintenance 15
\n 3.18 Safety 15
\n 3.18.1 General 15
\n 3.18.2 Switching Tagging and Grounding 16
\n 3.19 Environmental Compliance and Procedures 16
\n 3.20 Operating Committee 16
\n 3.21 SMECO CT 17
\n 3.21.1 Information Reporting Obligations 17
\n 3.21.2 SMECO CT Metering and Telemetering 17
\n 3.21.2 SMECO CT Unit Status Notification 18
\n<\/c><\/s><\/caption>\n<\/table>\n 328<\/p>\n
\n
\n 3.21.4 SMECO CT Operations 18
\nARTICLE 4 – OPERATIONS 20
\n 4.1 General 20
\n 4.2 Generator’s Operating Obligations 20
\n 4.2.1 General 20
\n 4.2.2 Voltage or Reactive Control Requirements 21
\n 4.3 Auditing of Accounts and Records 22
\nARTICLE 5 – COST RESPONSIBILITIES AND BILLING PROCEDURES 23
\n 5.1 Cost Responsibilities for Interconnection Service 23
\n 5.2 Cost Responsibilities for Local Services 23
\n 5.3 Billing Procedures 23
\n 5.4 Billing Disputes 24
\nARTICLE 6 – CONFIDENTIALITY 24
\n 6.1 Confidentiality Obligations of Pepco 24
\n 6.2 Confidentiality Obligations of Generator 24
\n 6.3 Confidentiality of Audits 25
\n 6.4 Remedies 25
\nARTICLE 7 – EVENTS OF DEFAULT 26
\n 7.1 Events of Default 26
\n 7.2 Remedies 26
\nARTICLE 8 – LIMITATION OF LIABILITY 27
\n 8.1 Limitation of Pepco’s Liability 27
\n 8.2 Limitation on Generator’s Liability 28
\n 8.3 Consequential Damages 28
\nARTICLE 9 – INDEMNIFICATION FOR THIRD PARTY CLAIMS 28
\n 9.1 Generator’s Indemnification 28
\n 9.2 Pepco’s Indemnification 29
\n 9.3 Indemnification Procedures 29
\n 9.4 Survival 29
\nARTICLE 10 – INSURANCE 30
\n 10.1 Insurance Coverage 30
\n 10.2 Certificates of Insurance 30
\n 10.3 Additional Insureds and Waiver 30
\nARTICLE 11 – FORCE MAJEURE 30
\n 11.1 Effect of Force Majeure 30
\n 11.2 Force Majeure Defined 30
\n 11.3 Notification 31
\nARTICLE 12 – DISPUTES 31
\n 12.1 Disputes 31
\n 12.2 Arbitration 32
\n 12.3 FERC Dispute Resolution 32
\nARTICLE 13 – REPRESENTATIONS 33
\n 13.1 Representations of Pepco 33
\n 13.2 Representations of Generator 34
\n<\/c><\/s><\/table>\n 329<\/p>\n
\n
\nARTICLE 14 – ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY 35
\n 14.1 Assignment 35
\n 14.2 Release of Rights and Obligations 36
\n 14.3 Change in Corporate Identity 36
\n 14.4 Successors and Assigns 36
\nARTICLE 15 – SUBCONTRACTORS 36
\nARTICLE 16 – NOTICES 37
\n 16.1 Emergency Notices 37
\n 16.2 Notices 37
\nARTICLE 17 – AMENDMENTS 38
\n 17.1 Amendments 38
\n 17.2 FERC Proceedings 38
\nARTICLE 18 – MISCELLANEOUS PROVISIONS 38
\n 18.1 Waiver 38
\n 18.2 Labor Relations 39
\n 18.3 No Third Party Beneficiaries 39
\n 18.4 Governing Law 39
\n 18.5 Counterparts 39
\n 18.6 Interpretation 39
\n 18.7 Jurisdiction and Enforcement 40
\n 18.8 Entire Agreement 40
\n 18.9 Severability 41
\n 18.10 Independent Contractor Status 41
\n 18.11 Conflicts 41
\nSCHEDULE A DEFINITIONS 2
\nSCHEDULE B Pepco Facilities and Generator Facilities 7
\nSCHEDULE C Points of Interconnection 9
\nSCHEDULE D Switching, Tagging and Grounding Rules 11
\nSCHEDULE E Pepco’s Interconnection Standards 14
\nSCHEDULE F Local Services 15
\nSCHEDULE G Pepco Current Projects 17
\nSCHEDULE H Real Time Telemetry List for the Station 18
\nSCHEDULE I Real Time Telemetry List for the SMECO CT 20
\n<\/c><\/s><\/table>\n 330<\/p>\n
INTERCONNECTION AGREEMENT (Chalk Point)<\/p>\n
This Interconnection Agreement (“Agreement”) dated as of _________,
\n2000 by and between Potomac Electric Power Company (“Pepco”) a District of
\nColumbia and Virginia corporation, and _____________ (“Generator”) a ___________
\n[corporation]. Pepco and Generator are each referred to herein as a “Party,” and
\ncollectively referred to herein as the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco, and Generator have entered into an Asset Purchase and
\nSale Agreement for Generating and Related Assets (“Asset Sale Agreement”) dated
\nJune 7, 2000, for the sale by Pepco to Generator of certain assets comprising
\nthe Chalk Point electric generation station;<\/p>\n
WHEREAS, Pepco intends to continue to operate its transmission and
\ndistribution businesses from their present locations;<\/p>\n
WHEREAS, Generator needs Interconnection Service from Pepco for the
\nChalk Point electric generating station;<\/p>\n
WHEREAS, Pepco needs access to parts of the Generator’s assets, and
\nGenerator needs access to parts of the Pepco’s assets; and<\/p>\n
WHEREAS, the Parties have agreed in the Asset Sale Agreement to execute
\nthis Agreement in order to provide Interconnection Service to Generator and to
\ndefine continuing responsibilities and obligations of the Parties with respect
\nto the use of the other Party’s property, assets and facilities as set forth
\nherein.<\/p>\n
NOW THEREFORE, in consideration of the mutual representations,
\ncovenants and agreements hereinafter set forth, and intending to be legally
\nbound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
Capitalized terms used in this Agreement shall have the meanings
\nspecified or referred to in Schedule A.<\/p>\n
331<\/p>\n
ARTICLE 2
\n TERM AND TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon consummation
\nof the Closing (“Effective Date”), and unless terminated sooner in accordance
\nwith the terms of this Agreement, shall continue in full force and effect until
\nthe earlier to occur of (i) the permanent cessation by the Generator of the
\npower generation functions of the Station or (ii) the permanent cessation of the
\ninterconnection functions of the Transmission System.<\/p>\n
2.2 Change in Law. If (a) the FERC, any state or state regulatory
\ncommission or the PJM Interconnection LLC implements a change in any law,
\nregulation, rule or practice, or (b) Pepco’s compliance with a change in any law
\nor regulation, which compliance, in either case, affects, or may reasonably be
\nexpected to affect, Pepco’s performance under this Agreement, the Parties shall
\nnegotiate in good faith any amendments to this Agreement that are necessary to
\nadapt the terms of this Agreement to such change, and Pepco shall file such
\namendments with the FERC. If the Parties are unable to reach agreement on such
\namendments, either Party shall have the right to make a unilateral filing with
\nthe FERC to modify this Agreement pursuant to Sections 205 or 206 or any other
\napplicable provision of the Federal Power Act and the FERC rules and regulations
\nthereunder; provided that the other Party shall have the right to oppose such
\nfiling and to participate fully in any proceeding established by the FERC to
\naddress such amendments.<\/p>\n
2.3 Effect after Termination. The applicable provisions of this
\nAgreement shall continue in effect after cancellation or termination hereof to
\nthe extent necessary to provide for final billings, billing adjustments and
\npayments pertaining to liability and indemnification obligations arising from
\nacts or events that occurred while this Agreement was in effect.<\/p>\n
ARTICLE 3
\n CONTINUING OBLIGATIONS AND RESPONSIBILITIES<\/p>\n
3.1 Interconnection Service<\/p>\n
3.1.1 Subject to the terms and conditions of the Agreement,
\nPepco shall (a) permit the Station to continue to be interconnected to the
\nTransmission System at the Point of Interconnection, and (b) provide
\nInterconnection Service at the Point of Interconnection. Pepco agrees to permit
\nGenerator to interconnect Station as long as Generator continues to operate such
\nfacilities pursuant to PJM Requirements and Good Utility Practice.<\/p>\n
332<\/p>\n
3.1.2 Interconnection Service shall not include, and Pepco
\nshall not be responsible under this Agreement for (a) transmission service,
\nlosses or ancillary services associated with the use of the Transmission System
\nfor the delivery of capacity, energy and\/or ancillary services produced by the
\nGenerating Facilities, or (b) providing or procuring capacity, energy and\/or
\nancillary services to the Generator or the Generating Facilities.<\/p>\n
3.1.3 The Generator’s interconnection to the
\nTransmission System of any new or expanded generating capacity of
\nthe Station shall (a) be subject to PJM Requirements and\/or FERC
\nrequirements governing interconnections and (b) require a separate
\ninterconnection agreement mutually agreed to by the Parties in
\nwriting.<\/p>\n
3.1.4 Notwithstanding anything to the contrary in this
\nAgreement, Pepco’s performance of its obligations under this Agreement shall be
\nsubject to Generator entering into, and complying with, any PJM Generator
\nConnection Agreement which may be required pursuant to PJM Requirements with
\nrespect to Interconnection Service or the Station.<\/p>\n
3.2 New Construction or Modifications<\/p>\n
3.2.1 Pepco Construction or Modifications<\/p>\n
(a) Pepco shall make such additions, modifications,
\nreplacements and improvements to the Interconnection Facilities
\nas are required by PJM Requirements or Good Utility Practice to enable Pepco to
\nprovide Interconnection Service in compliance with this Agreement. Generator
\nshall pay all reasonable Costs incurred by Pepco for such additions,
\nmodifications, replacements or improvements.<\/p>\n
(b) Except with respect to operation and maintenance
\nor ordinary maintenance done in the ordinary course of business or to respond to
\nabnormal or emergency conditions, if any additions, modifications, replacements
\nor improvements to the Interconnection Facilities undertaken by Pepco might
\nreasonably be expected to affect Generator’s operation of the Station, Pepco
\nshall provide one hundred twenty (120) days written notice to Generator prior to
\nundertaking such additions, modifications, replacements or improvements. Any
\nsuch additions, modifications, replacements or improvements shall comply with
\nPJM Requirements and Good Utility Practice. The Parties shall mutually agree to
\nthe scheduling of such addition, modification, replacement or improvement to
\nminimize any adverse impact on the Station. Generator shall be deemed to have
\naccepted Pepco’s proposed additions, modifications, replacements or improvements
\nunless Generator gives Pepco written notice of its objections within thirty (30)
\ndays after<\/p>\n
333<\/p>\n
receipt of Pepco’s notice. Generator’s acceptance or deemed acceptance of
\nPepco’s proposed additions, modifications, replacements or improvements shall
\nnot be construed, with respect thereto, as: (i) confirmation or endorsement of
\nthe design; (ii) a warranty of safety, durability or reliability; or (iii)
\nresponsibility for strength, details of design, adequacy or capability.<\/p>\n
3.2.2 Generator Construction or Modifications<\/p>\n
(a) In the event Generator plans to increase the
\ncapacity of the Generating Facilities, Generator shall submit to Pepco any and
\nall plans and specifications that Pepco may reasonably request related to such
\nincrease. Such specifications and plans shall be submitted by Generator to Pepco
\nat the time that Generator submits its plans under the PJM Tariff related to
\nsuch expansion but no later than one hundred twenty (120) days prior to
\ncommencing such proposed increase. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice and
\nshall be subject to Section 3.1.3 of this Agreement.<\/p>\n
(b) If Generator plans any additions,
\nmodifications, or replacements to the Station that will not increase its
\ncapacity, but could reasonably be expected to affect the Transmission System or
\nthe Interconnection Facilities, Generator shall give Pepco reasonable notice,
\nbut not less than one hundred twenty (120) days prior written notice and
\nGenerator shall comply with all applicable PJM Requirements with respect to such
\nproposed additions, modifications, or replacements. All such additions,
\nmodifications, or replacements shall (i) comply with PJM Requirements and Good
\nUtility Practice, (ii) be accompanied by appropriate information and operating
\ninstructions, and (iii) be subject to the review and acceptance of Pepco, which
\nreview shall be based on PJM Requirements and Good Utility Practice and which
\nacceptance shall not unreasonably be withheld or delayed. Pepco shall be deemed
\nto have accepted Generator’s proposed additions, modifications or replacements
\nunless Pepco gives Generator written notice of its objections within thirty (30)
\ndays after receipt of the Generator’s notice.<\/p>\n
(c) Pepco’s acceptance of Generator’s plans and
\nspecifications for any proposed additions, modifications, or replacements to the
\nGenerating Facilities and Pepco’s participation in any interconnected operations
\nwith Generator are not and shall not be construed as: (i) confirmation or
\nendorsement of the design of the Generating Facilities; (ii) a warranty of
\nsafety, durability or reliability of the Generating Facilities; or (iii)
\nresponsibility for strength, details of design, adequacy, or capability of the
\nGenerating Facilities.<\/p>\n
(d) Pepco, pursuant to PJM Requirements, shall
\ninform Generator of any additions, modifications, or replacements to the
\nTransmission System or<\/p>\n
334<\/p>\n
Interconnection Facilities, that will be necessary as a result of the addition,
\nmodification, or replacement to Station made pursuant to Section 3.2.2.
\nGenerator shall compensate Pepco for all reasonable Costs it incurs associated
\nwith any modifications, additions, or replacements made to the Interconnection
\nFacilities or Transmission System related to any additions, modifications, or
\nreplacements to the Generating Facilities. Pepco shall provide an estimate as
\nearly as practicable, but in any event not less than sixty (60) days prior to
\nthe initiation of such addition, modification or replacement.<\/p>\n
(e) Generator shall modify, at its sole cost and
\nexpense, the Generating Facilities as may be reasonably required to conform with
\nPJM Requirements and Good Utility Practice or to conform with additions,
\nmodifications, or replacements of the Transmission System or the Interconnection
\nFacilities, required by PJM Requirements and Good Utility Practice or
\nimplemented in accordance with this Agreement, (including, without limitation,
\nchanges to the voltages at which the Transmission System is operated) provided,
\nhowever, that Generator shall not be obligated under this Agreement to
\nmodernize, expand or upgrade the Generating Facilities unless the failure to
\nmodernize, expand or upgrade is reasonably likely to have a material adverse
\neffect on the operation of Pepco’s Facilities.<\/p>\n
(f) Upon completion of any addition,
\nmodification, or replacement to the Generating Facilities that may reasonably be
\nexpected to affect the Transmission System or the Interconnection Facilities,
\nbut no later than ninety (90) days thereafter, Generator shall issue “as built”
\ndrawings to Pepco. Upon completion of any addition, modification, or replacement
\nto the Interconnection Facilities, that may reasonably be expected to affect the
\noperation of the Station, but no later than ninety (90) days thereafter, Pepco
\nshall issue “as built” drawings to the Generator.<\/p>\n
3.2.3 Modifications Affecting the Transmission System or
\n the Station<\/p>\n
(a) Notwithstanding anything herein to the
\ncontrary, except with respect to the projects or construction set forth in
\nSchedule G, no modifications to or new construction of facilities, or access
\nthereto, including but not limited to rights of way, fences, gates, shall be
\nmade by either Party which might reasonably be expected to adversely affect the
\nother Party with respect to such Party’s obligations and responsibilities under
\nthis Agreement, without prior written notification as set forth in Section
\n3.2.3(b) below, and without providing the other Party with sufficient
\ninformation regarding the work prior to commencement to enable such Party to
\nevaluate the impact of the proposed work on its operations. For all
\nmodifications reasonably expected to adversely affect the operations of the
\nother Party’s facilities, the Party shall provide at least one hundred twenty
\n(120) days<\/p>\n
335<\/p>\n
written notice to the other Party prior to undertaking such additions,
\nmodifications or replacements. Any such additions, modifications, or
\nreplacements shall comply with PJM Requirements and Good Utility Practice.<\/p>\n
(b) The Parties shall mutually agree to the
\nscheduling of such addition, modification, replacement or improvement proposed
\npursuant to Section 3.2.3(a) to minimize any adverse impact on the Station or
\nthe Transmission System. For all construction work, major modifications, or
\ncircuit changes involving new or existing facilities, equipment, systems or
\ncircuits that could reasonably be expected to affect the operation of either
\nParty, the Party desiring to perform said work shall provide the other Party
\nwith drawings, plans, specifications, and other necessary documentation for
\nreview at least sixty (60) days prior to the beginning of construction provided
\nthat for routine telecommunications work, the Party doing the work shall only be
\nrequired to provide 48 hours prior notice. The Party shall be deemed to have
\naccepted the proposed additions, modifications, replacements or improvements
\nunless the Party gives written notice of their objections within sixty (60) days
\nafter receipt of such notice. The Party’s acceptance or deemed acceptance of the
\nproposed additions, modifications, replacements or improvements shall not be
\nconstrued, with respect thereto, as: (i) confirmation or endorsement of the
\ndesign; (ii) a warranty of safety, durability or reliability; or (iii)
\nresponsibility for strength, details of design, adequacy or capability.<\/p>\n
3.3 Access, Easements, Conveyances, Licenses, and Restrictions<\/p>\n
3.3.1 The Parties hereby grant to each other such licenses,
\naccess and other rights to the Station and the Interconnection Facilities as may
\nbe necessary for either Party’s performance of their respective obligations
\nunder this Agreement. Such access shall be provided in a manner so as not to
\nunreasonably interfere with the ongoing business operations, rights, and
\nobligations of the other Party and shall be subject to the safety and security
\npractices of the Party granting such access. Access shall only be granted to
\nQualified Personnel.<\/p>\n
3.3.2 A Party shall not restrict a Party’s rights hereunder
\nto access the other Party’s property, facilities, or equipment without prior
\nwritten notification except in an Emergency, in which case the restricted access
\nshall last no longer than three (3) days, unless an alternate means of access is
\nprovided.<\/p>\n
3.3.3 The Parties’ rights with respect to access to their
\nrespective facilities properties shall also be governed by the Easement.<\/p>\n
3.4 Facility and Equipment Maintenance<\/p>\n
336<\/p>\n
3.4.1 Pepco shall provide Interconnection Service at the
\nPoint of Interconnection in a safe and efficient manner and pursuant to PJM
\nRequirements and Good Utility Practice. Generator shall be responsible for all
\nreasonable Costs incurred by Pepco to provide Interconnection Service and to
\nMaintain the Interconnection Facilities pursuant to the Agreement.<\/p>\n
3.4.2 Generator shall Maintain the Generating Facilities
\n(including coordination of its relay protection equipment) in a safe and
\nefficient manner and as required by and in accordance with PJM Requirements and
\nGood Utility Practice, provided, however, that Generator shall not be obligated
\nto modernize, expand or upgrade the Generating Facilities unless the failure to
\nmodernize, expand or upgrade is reasonably likely to have a material adverse
\naffect on the operation of the Interconnection Facilities or the Transmission
\nSystem.<\/p>\n
3.4.3 Unless otherwise specified herein, or unless the
\nParties mutually agree to a different arrangement, neither Party shall be
\nresponsible for the maintenance of the other Party’s equipment or property
\nregardless of its location.<\/p>\n
3.4.4 In addition to the requirements set forth elsewhere
\nin this Agreement, each Party shall Maintain its equipment and facilities and
\nperform its maintenance obligations that could reasonably be expected to affect
\nthe operations of the other Party in a safe and efficient manner and pursuant to
\nPJM Requirements and Good Utility Practice.<\/p>\n
3.5 Pepco Facilities and Generator Facilities Unless
\notherwise agreed to by the Parties, the Party owning Pepco Facilities or
\nGenerator Facilities shall Maintain those facilities and shall do so pursuant to
\nPJM Requirements and Good Utility Practice and shall make such additions,
\nmodifications, replacements and improvements as are required by PJM requirements
\nand Good Utility Practice or which are necessary to maintain Interconnection
\nService, provided, however, that the Generator shall not be obligated under this
\nAgreement to modernize, expand or upgrade the Generator Facilities unless the
\nfailure to modernize, expand or upgrade is reasonably likely to have a material
\nadverse effect on the operation of the Transmission System or Interconnection
\nFacilities.<\/p>\n
3.6 Equipment Testing Obligations<\/p>\n
3.6.1 For reliability purposes with respect to the
\nInterconnection Facilities and the Transmission System, Pepco may reasonably
\nrequest, pursuant to PJM Requirements, or Good Utility Practice, that Generator
\ntest, calibrate, verify, or validate the Generating Facilities or its equipment,
\nand Generator shall promptly<\/p>\n
337<\/p>\n
comply with such a request. Generator shall be responsible for all costs of
\ntesting, calibrating, verifying or validating its facilities.<\/p>\n
3.6.2 At Pepco’s request, Generator shall supply to Pepco
\nat no cost, copies of inspection reports, installation and maintenance
\ndocuments, test and calibration records, verifications, and validations pursuant
\nto the foregoing Section 3.6.1. Pepco shall supply to Generator, at Generator’s
\nrequest and at no cost to Generator, copies of inspection reports, installation
\nand maintenance documents, test and calibration records, verifications, and
\nvalidations that Pepco has which are related to the Interconnection Facilities.<\/p>\n
3.7 Inspections<\/p>\n
3.7.1 Pepco shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work to the Generating Facilities.
\nSuch access by Pepco shall be exercised in a manner which does not unreasonably
\ninterfere with Generator’s ongoing business operations, rights and obligations
\nand shall be subject to Generator’s safety and security practices. If Pepco
\nobserves any deficiencies or defects with respect thereto that might reasonably
\nbe expected to adversely affect the Transmission System or the Interconnection
\nFacilities, Pepco shall notify the Generator, and Generator shall immediately
\nmake any corrections necessitated by PJM Requirements and Good Utility Practice.
\nNotwithstanding the foregoing in this Section 3.7.1, Pepco shall have no
\nliability whatsoever for any failure to fully or adequately observe any
\ndeficiency, it being agreed that Generator shall be fully responsible and liable
\nfor all such deficiencies, activities, equipment tests, installation,
\nconstruction or modification.<\/p>\n
3.7.2 Generator shall, at its expense, have the right to
\ninspect or observe all maintenance activities, equipment tests, installation
\nwork, construction work, and modification work conducted by Pepco to the
\nInterconnection Facilities. Such access by Generator shall be exercised in a
\nmanner which does not unreasonably interfere with Pepco’s ongoing business
\noperations, rights and obligations and shall be subject to Pepco’s safety and
\nsecurity practices. If Generator observes any deficiencies or defects with
\nrespect thereto that might reasonably be expected to adversely affect the
\nStation, Generator shall notify Pepco, and Pepco shall immediately make any
\ncorrections necessitated by applicable PJM Requirements and Good Utility
\nPractice. Notwithstanding the foregoing in this Section 3.7.2, Generator shall
\nhave no liability whatsoever for any failure to fully or adequately observe any
\ndeficiency, it being agreed that Pepco shall be fully responsible and liable for
\nall such deficiencies, activities, equipment tests, installation, construction
\nor modification.<\/p>\n
338<\/p>\n
3.8 Information Reporting Obligations<\/p>\n
3.8.1 In order to provide Interconnection Service
\nhereunder, Pepco may request, and Generator shall promptly provide, all relevant
\ninformation, documents, or data regarding the Generating Facilities that would
\nbe expected to materially affect the Transmission System, and which is
\nreasonably requested by NERC, MAAC, the PJM Interconnection LLC, the MDPSC, the
\nDistrict of Columbia Public Service Commission and any other state or District
\nof Columbia agency having jurisdiction over Pepco or Generator, the PJM System
\nOperator, or the Transmission Operator, which disclosure shall be subject to
\nArticle 6 of this Agreement regarding the disclosure of commercially sensitive
\ninformation.<\/p>\n
3.8.2 Generator shall promptly supply accurate, complete,
\nand reliable information in response to reasonable information requests for real
\ntime data and other data from Pepco necessary for operations, maintenance,
\ncompliance with PJM Requirements or regulatory requirements, or analysis of the
\nInterconnection Facilities or the Transmission System. Such information may
\ninclude metered values for MW and MVAR, voltage, current, automatic voltage
\nregulator status, automatic frequency control, dispatch, frequency, breaker
\nstatus indication, or any other information reasonably required for reliable
\noperation of the Transmission System pursuant to PJM Requirements and Good
\nUtility Practice. At minimum, Generator shall satisfy the telemetry requirements
\nset forth in Schedule H.<\/p>\n
3.8.3 Information pertaining to generation operating
\nparameters shall be gathered and electronically transmitted directly to Pepco’s
\nenergy management system using a mutually acceptable communications protocol.<\/p>\n
3.8.4 Generator shall be responsible for the maintenance,
\nand any required replacements or upgrades of the field devices and equipment
\nused to gather information regarding generation operating parameters.<\/p>\n
3.8.5 Generator shall Maintain, at its expense, operating
\ntelephone links to the PJM Interconnection LLC, PJM System Operator, Pepco and
\nthe Transmission Operator, to provide information deemed necessary by them, or
\nas reasonably deemed necessary by Pepco in accordance with PJM Requirements or
\nGood Utility Practice to integrate operation of the Station with the
\nTransmission System, provided, however, that Generator shall not be obligated
\nunder this Agreement to modernize, expand or upgrade the Generator’s facilities
\nunless the failure to modernize, expand or upgrade is reasonably likely to have
\na material adverse effect on the operation of the Transmission System. Generator
\nshall use communication links at the Station consisting of the mobile radio low
\nband C frequency and “all call” and “red phone” systems currently located at the
\nStation (or successor systems as may reasonably be required by Pepco) and shall
\nmaintain the<\/p>\n
339<\/p>\n
availability of such systems to operate during abnormal conditions including
\nblackouts.<\/p>\n
3.9 Local Services<\/p>\n
3.9.1 General<\/p>\n
(a) The Parties agree that, due to the
\nintegration of certain control schemes of the Station and the Transmission
\nSystem, it is cost effective to provide each other with the services set forth
\nin Sections 3.10 and 3.11 in accordance with the terms and conditions set forth
\ntherein.<\/p>\n
(b) The Parties shall ensure, in accordance with
\nGood Utility Practice, that services provided by one Party to the other Party
\npursuant to Sections 3.10 and 3.11 shall be available at all times and in the
\nmanner and at the prices specified herein. Notwithstanding the foregoing, either
\nParty may change the services, provided that (1) there is no cost to the
\nreceiving Party as a result of such change, (2) the quality, reliability and
\nintegrity of the replacement services is equivalent to the existing service, and
\n(3) there is otherwise no materially adverse effect on the receiving Party.<\/p>\n
(c) Neither Party shall terminate any services
\nset forth in Sections 3.10 and 3.11 below that it agrees to provide to the other
\nParty, without the other Party’s prior written consent, which consent shall not
\nbe unreasonably withheld or delayed, provided, however, if a Party receiving a
\nservice under Sections 3.10 or 3.11 no longer needs or desires a particular
\nservice, said Party shall notify the other Party and the providing Party shall
\nterminate said services as soon thereafter as practicable.<\/p>\n
3.9.2 Temporary Suspension of Local Services<\/p>\n
(a) The Party providing a service set forth in
\nSections 3.10 or 3.11 below shall notify and obtain approval, which approval
\nshall not be unreasonably withheld or delayed, from the receiving Party of any
\nscheduled temporary suspension of services at least five (5) business days in
\nadvance of such suspension. Such notification shall include an estimated time
\nduration for a return to normal conditions.<\/p>\n
(b) In the event of any unplanned or forced
\nsuspension of the services set forth in Sections 3.10 or 3.11, below, the
\nproviding Party shall immediately notify the other Party first verbally and then
\nin writing. The providing Party shall use all reasonable efforts to minimize the
\nduration of said suspension.<\/p>\n
340<\/p>\n
(c) The Parties agree to complete any repairs,
\nmodifications or corrections, in accordance with Good Utility Practice, that are
\nnecessary to restore to the other Party as soon as reasonably practicable any
\nservices set forth in Sections 3.10 or 3.11 below that have been suspended.<\/p>\n
3.10 Pepco Provided Services: Schedule F sets forth the local
\nservices Pepco shall provide to the Generator pursuant to the terms of this
\nAgreement. Unless otherwise specified in Schedule F, for a period of three (3)
\nyears after the Effective Date (the “Initial Period”) and subject to Section 3.9
\nabove, Pepco shall provide Generator with the local services set forth in
\nSchedule F at no cost and in consideration of the local services Generator shall
\nprovide Pepco in accordance with Section 3.11 below. If Generator desires the
\ncontinuation of any of the services set forth in Schedule F which are subject to
\nthe Initial Period to continue after the Initial Period, upon Generator’s
\nwritten request to Pepco made at least 60 days prior to the expiration of the
\nInitial Period, the Parties shall engage in good faith negotiations to reach
\nmutually agreeable terms and conditions upon which such services will continue,
\nprovided, however, that if such agreement is not reached prior to the expiration
\nof the Initial Period, Pepco shall cease to provide services under Section 3.10
\nat the end of the Initial Period.<\/p>\n
3.11 Generator Provided Services. Schedule F sets forth the local
\nservices Generator shall provide to Pepco pursuant to the terms of this
\nAgreement. Unless otherwise specified in Schedule F, for the Initial Period and
\nsubject to Section 3.9 above, Generator shall provide Pepco with the local
\nservices set forth in Schedule F at no cost and in consideration of the local
\nservices Pepco shall provide Generator in accordance with Section 3.10 above. If
\nPepco desires the continuation of any of the services set forth in Schedule F
\nwhich are subject to the Initial Period to continue after the Initial Period,
\nupon Pepco’s written request to Generator made at least 60 days prior to the
\nexpiration of the Initial Period, the Parties shall engage in good faith
\nnegotiations to reach mutually agreeable terms and conditions upon which such
\nservices will continue, provided, however, that if such agreement is not reached
\nprior to the expiration of the Initial Period, Generator shall cease to provide
\nservices under Section 3.11 at the end of the Initial Period.<\/p>\n
3.12 Optional Services: Generator may request that Pepco provide
\nthe following services to the Generator, provided, however, that Pepco shall not
\nhave any obligation to provide such services unless the Parties have mutually
\nagreed in writing to the price and other terms and conditions of such service:<\/p>\n
(a) PJM interface and dispatch services through
\nthe Pepco control center;<\/p>\n
(b) use of Pepco’s communication services;<\/p>\n
341<\/p>\n
(c) maintenance of certain auxiliary and
\ncommunications equipment at the Station;<\/p>\n
(d) maintenance of high-voltage and
\nmedium-voltage equipment such as power transformers and power circuit breakers;<\/p>\n
(e) maintenance of protective relaying, certain
\ncontrol equipment, such as AGC and MSVC, plant batteries and revenue meters
\nowned by Generator.<\/p>\n
3.13 Metering and Telemetering<\/p>\n
3.13.1 Generator shall, at Generator’s expense: (a) own,
\nMaintain and repair, all Revenue Meters, instrument transformers and
\nappurtenances associated with Revenue Meters, and real time telemetry, (b)
\nconduct meter accuracy and tolerance tests, and (c) prepare all calibration
\nreports required for equipment that measures energy transfers at the Point of
\nInterconnection. All meter accuracy and tolerance testing hereunder shall be in
\naccordance with PJM Requirements and Good Utility Practice and shall be
\nconducted, at Pepco’s request, in the presence of Pepco’s representative.<\/p>\n
3.13.2 Generator shall own and Maintain, at the Generator’s
\nexpense, equipment for redundant real-time communications and transmission of
\ntelemetry, hourly MWh information, and such other information as required by the
\nPJM System Operator or Transmission Operator, or as reasonably required by Pepco
\nin accordance with PJM Requirements and Good Utility Practice.<\/p>\n
3.14 Emergency Procedure<\/p>\n
3.14.1 Pepco, through the Transmission Operator,
\nshall provide Generator with prompt verbal notification of Emergencies with
\nregard to the Transmission System which may reasonably be expected to affect
\nGenerator’s immediate operation of the Station or Generator Facilities, and
\nGenerator shall provide Pepco with prompt verbal notification of Emergencies
\nwith regard to the Station which may reasonably be expected to affect
\nInterconnection Service or the Transmission System. Such notification shall
\ndescribe the Emergency, the extent of damage or deficiency, the anticipated
\nlength of an outage and the corrective action taken and\/or to be taken. Said
\nverbal notification shall be followed as soon as practicable (but no later than
\n24 hours after the verbal notification) with written notification.<\/p>\n
3.14.2 If an Emergency in the good faith judgment
\nof a Party endangers or could endanger life or property, the Party recognizing
\nthe problem<\/p>\n
342<\/p>\n
shall take such action as may be reasonable and necessary to prevent, avoid, or
\nmitigate injury, danger, or loss. If however the Emergency involves transmission
\nor electrical equipment, Generator shall notify the Transmission Operator, and
\nobtain the consent of such personnel, prior to performing any switching
\noperations.<\/p>\n
3.14.3 Pepco may, consistent with PJM Requirements and Good
\nUtility Practice, have the Transmission System Operator take whatever actions
\n(including tripping Generator’s synchronizing breakers) or inactions it deems
\nnecessary during an Emergency to: (a) preserve public safety; (b) preserve the
\nintegrity of the Transmission System, (c) limit or prevent damage; or (d)
\nexpedite restoration of service. If any action or inaction by Pepco or the
\nTransmission Operator under this Section 3.14 results in the discontinuation,
\ncurtailment, interruption or reduction of Interconnection Service, Pepco shall
\nuse reasonable efforts consistent with PJM Requirements and Good Utility
\nPractice to restore Interconnection Service as promptly as practicable and to
\nminimize the effect of such restoration of service on the Station.<\/p>\n
3.15 Interconnection Service Interruptions<\/p>\n
3.15.1 If at any time, in the reasonable exercise of the PJM
\nSystem Operator’s judgment, or the Transmission Operator’s judgment exercised in
\naccordance with PJM Requirements or Good Utility Practice and on a
\nnon-discriminatory basis, a condition exists, including the operation of
\nGenerator’s equipment, which might reasonably be expected to have a materially
\nadverse affect on the quality of service rendered by Pepco (including services
\nrendered to transmission or distribution customers) or interferes with the safe
\nand reliable operation of the Transmission System, Pepco may discontinue,
\ncurtail, reduce and\/or interrupt Interconnection Service until the condition has
\nbeen corrected.<\/p>\n
3.15.2 Unless the PJM System Operator, the Transmission
\nOperator or Pepco perceives that an Emergency exists or the risk of one is
\nimminent, Pepco shall give Generator reasonable notice of its intention to
\ndiscontinue, curtail, interrupt or reduce Interconnection Service in response to
\nthe interfering condition and, where practical, allow suitable time for
\nGenerator to remove the interfering condition if it is the result of Generator’s
\noperations, before the discontinuation, curtailment, interruption or reduction
\ncommences. Pepco’s judgment with regard to the interruption of service under
\nthis paragraph shall be made pursuant to PJM Requirements and Good Utility
\nPractice. In the case of such interruption, Pepco shall immediately confer with
\nGenerator regarding the conditions causing such interruption and its
\nrecommendation concerning timely correction thereof. In the event
\nInterconnection Service is interrupted under this section due to Generator’s
\nfailure to operate and Maintain the Generating Facilities pursuant to PJM
\nRequirements or Good Utility Practice, Generator shall compensate Pepco for all<\/p>\n
343<\/p>\n
costs reasonably incurred by Pepco attributable to the interruption and
\nrestoration of Interconnection Service. Pepco shall use reasonable efforts
\nconsistent with PJM Requirements and Good Utility Practice to restore
\nInterconnection Service interrupted, curtailed or reduced pursuant to this
\nSection 3.15 as promptly as practicable and to minimize the effect of such
\nrestoration of service on the Station.<\/p>\n
3.16 SMECO CT Metering and Telemetering<\/p>\n
3.16.1 Generator acknowledges that Pepco requires
\ninformation regarding the status of the Station for Transmission System
\nreliability purposes. Accordingly, by 10:00 a.m. of each day, the Generator
\nshall provide Pepco the following information regarding the status of the
\nStation for the following day: Station availability to provide energy and
\ncapacity, the Station’s scheduled on and off times, Station synchronization,
\nplanned outages or deratings, and generation restrictions and limitations.
\nGenerator shall immediately notify Pepco of any changes to the information
\nprovided pursuant to the foregoing sentence.<\/p>\n
3.16.2 In circumstances, such as forced outages, Generator
\nshall notify Pepco of its generating unit’s temporary interruption of generation
\nas soon as practicable; and it shall provide Pepco, as soon as practicable, with
\na schedule of when generation will be resumed.<\/p>\n
3.17 Scheduled Maintenance Notification and Coordination<\/p>\n
3.17.1 Local Routine Inspection and Maintenance. The Parties
\nagree that, due to the integration of certain control and protective relaying
\nschemes between the Station and the Interconnection Facilities, it will be
\nnecessary for them to cooperate in the inspection, maintenance and testing of
\nthese areas of integration. Each Party will provide advance notice to the other
\nParty before undertaking any work in these areas, especially in electrical
\ncircuits involving circuit breaker trip and close contacts, current transformers
\nor potential transformers and such work will be performed in accordance with PJM
\nRequirements and Good Utility Practice.<\/p>\n
3.17.2 Transmission System Maintenance. Pepco shall consult
\nwith Generator regarding timing of scheduled maintenance of the Interconnection
\nFacilities or the transmission facilities of the Transmission System which Pepco
\nor the Transmission Operator performs and which might reasonably be expected to
\naffect the Station. Pepco shall, to the extent practicable, schedule any
\ntesting, shutdown, or withdrawal of said facilities to coincide with Generator’s
\nscheduled outages for the Station. To facilitate such consultation and to the
\nextent the information is not available from the PJM System Operator in a timely
\nmanner, in June of each year, or on another date mutually acceptable to the
\nParties, Generator<\/p>\n
344<\/p>\n
shall furnish Pepco with non-binding preliminary generator maintenance schedules
\ncovering the upcoming two years and any material changes thereto. In the event
\nPepco is unable to schedule the outage of its facilities to coincide with
\nGenerator’s schedule, Pepco shall notify Generator as soon as practicable of the
\nreasons for the facilities’ outage, of the time scheduled for the outage to take
\nplace, and of its expected duration.<\/p>\n
3.18 Safety<\/p>\n
3.18.1 General. Pepco agrees with respect to the
\nInterconnection Facilities and the Transmission System, and Generator agrees
\nwith respect to the Station, that all work performed by either Party on such
\nfacilities which could reasonably be expected to affect the operations of the
\nother Party shall be performed in accordance with all applicable PJM
\nRequirements and Good Utility Practice.<\/p>\n
3.18.2 Switching Tagging and Grounding . Each Party shall
\ncomply with the Switching, Tagging and Grounding Rules. Pepco will notify
\nGenerator of any changes in its Switching, Tagging and Grounding Rules.
\nGenerator shall be responsible for all switching, tagging and grounding on
\nGenerator’s side of the Point of Interconnection and, except for Generator
\nFacilities, Pepco shall be responsible for all switching, tagging and grounding
\non its side of the Point of Interconnection.<\/p>\n
3.19 Environmental Compliance and Procedures<\/p>\n
3.19.1 Each Party shall be responsible for complying with
\nall Environmental Laws applicable to it with respect to its facilities or
\nproperty.<\/p>\n
3.19.2 A Party shall notify the other Party first verbally
\nand then in writing, of any Releases of a Hazardous Substance or any type of
\nremediation activities related thereto as soon as possible but no later than
\ntwenty-four (24) hours after the occurrence if within the reasonable judgment of
\nthe Party said activities could reasonably be expected to have a material
\nadverse effect upon the operations of the other Party and shall promptly furnish
\nto the other Party copies of any reports filed with any governmental agencies
\ncovering such events. This Section 3.19.2 does not effect any allocation of
\nliability with respect to the Station pursuant to the Asset Sale Agreement.<\/p>\n
3.19.3 Neither Party shall knowingly take any actions which
\nmight reasonably be expected to have a material adverse environmental impact
\nupon the operations of the other Party without prior written notification and
\nagreement between then Parties.<\/p>\n
345<\/p>\n
3.20 Operating Committee. The Parties shall establish an operating
\ncommittee consisting of one representative for each Party (“Operating
\nCommittee”). The Operating Committee shall act only by unanimous agreement or
\nconsent. The Parties shall designate their respective representatives to the
\nOperating Committee, plus an alternate by written notice. Each Party’s
\nrepresentative on the Operating Committee is authorized to act on behalf of such
\nParty with respect to any matter arising under this Agreement which is to be
\ndecided by the Operating Committee, however, the Operating Committee shall not
\nhave any authority to modify or otherwise alter the rights and obligations of
\nthe Parties hereunder. The Operating Committee shall develop and implement
\nsuitable policies and procedures with which to coordinate the interaction of the
\nParties with respect to the performance of their duties and obligations under
\nthis Agreement.<\/p>\n
3.21 SMECO CT To the extent that Generator owns, operates and\/or
\ncontrols the SMECO CT, Generator shall be subject to the provisions set forth in
\nthis Section 3.21.<\/p>\n
3.21.1 Information Reporting Obligations<\/p>\n
(a) For Transmission System reliability
\npurposes, Pepco may request, and Generator shall promptly provide, all relevant
\ninformation, documents, or data regarding the SMECO CT that would be expected to
\nmaterially affect the Transmission System, and which is reasonably requested by
\nNERC, MAAC, the PJM Interconnection LLC, the MDPSC, any other state or District
\nof Columbia agency having jurisdiction over Pepco or Generator, the PJM System
\nOperator, or the Transmission Operator, which disclosure shall be subject to
\nArticle 6 of this Agreement regarding the disclosure of commercially sensitive
\ninformation.<\/p>\n
(b) Generator shall promptly supply accurate,
\ncomplete, and reliable information in response to reasonable information
\nrequests for real time data and other data from Pepco necessary for operations,
\nmaintenance, compliance with PJM Requirements or regulatory requirements, or
\nanalysis of the Transmission System. Such information may include metered values
\nfor MW and MVAR, voltage, current, automatic voltage regulator status, automatic
\nfrequency control, dispatch, frequency, breaker status indication, or any other
\ninformation reasonably required for reliable operation of the Transmission
\nSystem pursuant to PJM Requirements and Good Utility Practice. At minimum,
\nGenerator shall satisfy the telemetry requirements set forth in Schedule I for
\nthe SMECO CT.<\/p>\n
(c) Generator shall comply with Sections 3.8.3,
\n3.8.4 and 3.8.5 with respect to the SMECO CT.<\/p>\n
346<\/p>\n
3.21.2 SMECO CT Metering and Telemetering<\/p>\n
(a) With respect to the SMECO CT, Generator
\nshall, at Generator’s expense: (a) own, Maintain and repair, all meters,
\ninstrument transformers and appurtenances associated with meters, and real time
\ntelemetry, (b) conduct meter accuracy and tolerance tests, and (c) prepare all
\ncalibration reports required for equipment that measures energy transfers at the
\ninterconnection points with Pepco’s or any other parties’ facilities. All meter
\naccuracy and tolerance testing hereunder shall be in accordance with PJM
\nRequirements and Good Utility Practice and shall be conducted, at Pepco’s
\nrequest, in the presence of Pepco’s representative.<\/p>\n
(b) With respect to the SMECO CT, Generator
\nshall own and Maintain, at the Generator’s expense, equipment for redundant
\nreal-time communications and transmission of telemetry, hourly MWh information,
\nand such other information as required by the PJM System Operator or
\nTransmission Operator, or as reasonably required by Pepco in accordance with PJM
\nRequirements and Good Utility Practice.<\/p>\n
3.21.3 SMECO CT Unit Status Notification Generator shall
\nprovide the information described in Article 16 with respect to the status of
\nthe SMECO CT at the times set forth in Article 16.<\/p>\n
3.21.4 SMECO Operations<\/p>\n
(a) Generator agrees that to the extent the
\nSMECO CT could reasonably be expected to have a material effect on the
\noperations of Pepco, it shall operate the SMECO CT in a safe and efficient
\nmanner and in accordance with PJM Requirements and Good Utility Practice, and
\notherwise in accordance with the terms of this Agreement.<\/p>\n
(b) Generator shall comply with the requests,
\norders, and directives of Pepco with respect to the SMECO CT to the extent such
\nrequests, orders or directives are (a) issued pursuant to PJM Requirements or
\nGood Utility Practice, (b) not discriminatory; and (c) otherwise in accordance
\nwith this Agreement or applicable tariffs. In the event Generator believes that
\na request, order, or directive of Pepco exceeds the limitations in this Section
\n3.21.4(b), it shall nevertheless comply with the request, order, or directive
\npending resolution of the dispute under Article 12. The Parties agree to
\ncooperate in good faith to expedite the resolution of any disputes arising under
\nthis Section 3.21.4(b).<\/p>\n
347<\/p>\n
(c) Generator shall (i) comply with Pepco’s
\nsystem restoration plan and black start criteria applicable to the SMECO CT as
\nconfigured as of the Effective Date or (ii) if the SMECO CT’s configuration is
\nmodified, provide alternative service restoration and black start capability in
\naccordance with PJM Requirements. Generator shall ensure that operating
\npersonnel at the SMECO CT are trained to implement such system restoration or
\nblack start plans. The Generator shall test the SMECO CT’s black-start
\ncombustion-turbines annually to confirm that the black-start combustion-turbines
\nwill start without an external power supply. To the extent that the SMECO CT
\nwould be required to be black-started in accordance with Pepco’s Emergency
\nConditions and System Restoration Manual, as revised from time to time, and
\nplant restoration procedures, Generator shall test the SMECO CT at least once
\nevery three years. Testing shall confirm the ability of the SMECO CT to go from
\na shut down condition to an operating condition and start delivering power
\nwithout assistance from the Transmission System or SMECO’s system. These testing
\nrequirements shall remain in place until PJM promulgates specific rules
\ngoverning black-start testing.<\/p>\n
(d) Unless otherwise agreed to by the Parties or
\nauthorized or directed by the PJM Interconnection LLC, Generator shall operate
\nthe SMECO CT with automatic voltage regulators in service at all times. The
\nvoltage regulators will control voltage consistent with the range of voltage
\nprescribed by Pepco or the Transmission System Operator in accordance with PJM
\nRequirements and Good Utility Practice.<\/p>\n
(i) Generator will operate the SMECO CT
\nin accordance with prescribed voltage schedules pursuant to Section 3.21.4(d) to
\nthe extent the SMECO CT is operating within its reactive generating capability
\nand not violating any electrical constraints. Should Generator fail to comply
\nwith such voltage schedules, Pepco or the Transmission Operator, as applicable,
\nshall provide written notice to the Generator of its intent to remedy that
\nfailure. If Generator does not promptly commence appropriate action after
\nreceiving such notice, Pepco or the Transmission Operator may then take any
\nnecessary action at Generator’s expense to remedy such failure, including the
\ninstallation of capacitor banks or other reactive compensation equipment
\nnecessary to ensure the proper voltage or reactive supply at the Station
\nincluding, at a minimum, by installing such equipment outside any building
\nhousing the SMECO CT. Pepco shall make, to the extent feasible, reasonable
\nefforts to minimize the impact of such action on the operation of the SMECO CT.<\/p>\n
(ii) Generator shall notify the
\nTransmission Operator if (a) any or all generating units at the SMECO CT reaches
\na VAR limit, (b) there is any deviation from the voltage schedules prescribed
\npursuant to Section 3.21.4(d) which is outside the limits permitted by PJM
\nRequirements or Good Utility<\/p>\n
348<\/p>\n
Practice, or (c) any automatic voltage regulator is removed from or restored to
\nservice.<\/p>\n
(iii) The Transmission Operator may from
\ntime to time, pursuant to PJM Requirements or Good Utility Practice, request or
\ndirect Generator to adjust generator controls that impact the Transmission
\nSystem, such as excitation, droop, and automatic generation control settings and
\nGenerator shall comply with such request or directions.<\/p>\n
(iv) Generator acknowledges that the
\nTransmission Operator may have the right, to the extent authorized or directed
\nby the PJM Interconnection LLC, to require reduced or increased generation of
\nthe SMECO CT in accordance with PJM Requirements, or in accordance with
\napplicable rules of the Transmission Operator.<\/p>\n
ARTICLE 4
\n OPERATIONS<\/p>\n
4.1 General<\/p>\n
4.1.1 The Parties agree to operate their respective
\nequipment that could reasonably be expected to have a material effect on the
\noperations of the other Party in a safe and efficient manner and in accordance
\nwith PJM Requirements and Good Utility Practice, and otherwise in accordance
\nwith the terms of this Agreement.<\/p>\n
4.1.2 Generator shall comply with the requests, orders, and
\ndirectives of Pepco with respect to Interconnection Service to the extent such
\nrequests, orders or directives are (a) issued pursuant to PJM Requirements or
\nGood Utility Practice, (b) not discriminatory; and (c) otherwise in accordance
\nwith this Agreement or applicable tariffs.<\/p>\n
4.1.3 In the event Generator believes that a request,
\norder, or directive of Pepco exceeds the limitations in this Section 4.1.2, it
\nshall nevertheless comply with the request, order, or directive pending
\nresolution of the dispute under Article 12. The Parties agree to cooperate in
\ngood faith to expedite the resolution of any disputes arising under this Section
\n4.1.<\/p>\n
4.2 Generator’s Operating Obligations<\/p>\n
4.2.1 General. Generator shall request permission from the
\nTransmission Operator, the PJM System Operator or the PJM Interconnection<\/p>\n
349<\/p>\n
LLC, as applicable, prior to opening and\/or closing circuit breakers in
\naccordance with applicable switching and operations procedures and Good Utility
\nPractice.<\/p>\n
(a) Generator shall carry out all switching
\norders from the Transmission Operator, the PJM System Operator, or the PJM
\nInterconnection LLC, in a timely manner and in accordance with PJM Requirements
\nand Good Utility Practice.<\/p>\n
(b) Generator shall (i) comply with Pepco’s
\nsystem restoration plan and black start criteria applicable to the Station as
\nconfigured as of the Effective Date or (ii) if the Station’s configuration is
\nmodified, provide alternative service restoration and black start capability in
\naccordance with PJM Requirements. Generator shall ensure that operating
\npersonnel at the Station are trained to implement such system restoration or
\nblack start plans. The Generator shall test the Station’s black-start
\ncombustion-turbines annually to confirm that the black-start combustion-turbines
\nwill start without an external power supply. The Generator shall test the
\nStation’s steam turbine-generators and those combustion-turbine generators that
\nwould be required to be black-started in accordance with Pepco’s Emergency
\nConditions and System Restoration Manual, as revised from time to time, and
\nplant restoration procedures, at least once every three years. Testing shall
\nconfirm the ability of a generating unit or Station to go from a shut down
\ncondition to an operating condition and start delivering power without
\nassistance from the Transmission System. These testing requirements shall remain
\nin place until PJM promulgates specific rules governing black-start testing.<\/p>\n
(c) The electricity supplied by Generator to the
\nPoint of Interconnection shall be in the form of three-phase 60 Hertz
\nalternating current at the nominal system voltage.<\/p>\n
(d) Generator’s equipment shall conform with
\nGood Utility Practice for harmonic distortion and voltage
\nfluctuation.<\/p>\n
4.2.2 Voltage or Reactive Control Requirements. Unless
\notherwise agreed to by the Parties or authorized or directed by the PJM
\nInterconnection LLC, Generator shall operate the Station with automatic voltage
\nregulators in service at all times. The voltage regulators will control voltage
\nat the Points of Interconnection consistent with the range of voltage prescribed
\nby Pepco or the Transmission System Operator in accordance with PJM Requirements
\nand Good Utility Practice.<\/p>\n
(a) Generator will operate the Station in
\naccordance with prescribed voltage schedules pursuant to Section 4.2.2 to the
\nextent the Station is operating within its reactive generating capability and
\nnot violating any electrical<\/p>\n
350<\/p>\n
constraints. Should Generator fail to comply with such voltage schedules, Pepco
\nor the Transmission Operator, as applicable, shall provide written notice to the
\nGenerator of its intent to remedy that failure. If Generator does not promptly
\ncommence appropriate action after receiving such notice, Pepco or the
\nTransmission Operator may then take any necessary action at Generator’s expense
\nto remedy such failure, including the installation of capacitor banks or other
\nreactive compensation equipment necessary to ensure the proper voltage or
\nreactive supply at the Station including, at a minimum, by installing such
\nequipment outside any building housing the Generation Facilities. Pepco shall
\nmake, to the extent feasible, reasonable efforts to minimize the impact of such
\naction on the operation of the Station.<\/p>\n
(b) Generator shall notify the Transmission
\nOperator if (a) any or all generating units at the Station reaches a VAR limit,
\n(b) there is any deviation from the voltage schedules prescribed pursuant to
\nSection 4.2.2 which is outside the limits permitted by PJM Requirements or Good
\nUtility Practice, or (c) any automatic voltage regulator is removed from or
\nrestored to service.<\/p>\n
(c) The Transmission Operator may from time to
\ntime, pursuant to PJM Requirements or Good Utility Practice, request or direct
\nGenerator to adjust generator controls that impact the Transmission System, such
\nas excitation, droop, and automatic generation control settings and Generator
\nshall comply with such request or directions.<\/p>\n
(d) Generator acknowledges that the Transmission
\nOperator may have the right, to the extent authorized or directed by the PJM
\nInterconnection LLC, to require reduced or increased generation of the Station
\nin accordance with PJM Requirements, or in accordance with applicable rules of
\nthe Transmission Operator.<\/p>\n
4.3 Auditing of Accounts and Records. The Parties shall have the
\nright, during normal business hours, to audit each other’s accounts and records
\npertaining to transactions under this Agreement, upon twenty (20) days prior
\nwritten notice, at the offices where such accounts and records are maintained,
\nprovided, however, that the audit shall be limited to those portions of the
\naccounts and records that are related to services provided to the other Party
\nunder this Agreement. Any such audit of a Party’s accounts and records will be
\nat the expense of the auditing Party, shall not be made more frequently than
\nonce in any twelve (12) month period, and no such audit may be made with respect
\nto accounts and records relating to periods more than twenty-four (24) months
\nprior to the date of the audit notice. The Party being audited will be entitled
\nto review the audit report and any supporting materials. The Party conducting
\nthe audit shall maintain the confidentiality of all information obtained during
\nthe audit in compliance with Article 6 of this Agreement. To the extent that
\naudited information includes confidential<\/p>\n
351<\/p>\n
information, the auditing Party shall designate an independent auditor at its
\nexpense to perform such audit.<\/p>\n
ARTICLE 5
\n COST RESPONSIBILITIES AND BILLING PROCEDURES<\/p>\n
5.1 Cost Responsibilities for Interconnection Service. Except as
\notherwise expressly stated herein, Generator shall not be responsible for any
\ncosts arising from Pepco’s provision of Interconnection Service or local
\nservices to Generator, except for those costs specified in Sections 3.2.1,
\n3.2.2, 3.4.1, and 3.15 or arising from the liability or indemnification
\nprovisions of this Agreement.<\/p>\n
5.2 Cost Responsibilities for Local Services. Except as otherwise
\nexpressly provided herein or agreed to by the Parties, each Party shall be
\nresponsible for the costs for local services provided to the other Party in
\nSections 3.10 and 3.11 as set forth in said sections.<\/p>\n
5.3 Billing Procedures<\/p>\n
(a) Within ten (10) days after the first day of each
\ncalendar month, each Party shall provide the other Party with a written invoice
\nfor any payments due from the other Party for services provided in the previous
\nmonth.<\/p>\n
(b) Each invoice shall (i) delineate the month in which
\nthe services were provided, (ii) fully describe the services rendered, (iii) be
\nitemized to reflect the services performed or provided, and (iv) provide
\nreasonable detail as to the calculation of the amount involved.<\/p>\n
(c) All invoices shall be paid within fifteen (15) days
\nafter receipt, but not earlier than the 25th day of the month in which the
\ninvoice is rendered. All payments shall be made in immediately available funds
\npayable to the other Party, or by wire transfer to a bank designated in writing
\nby such Party. Payment of invoices shall not relieve the paying Party from any
\nresponsibilities or obligations it has under this Agreement, nor shall such
\npayment constitute a waiver of any claims arising hereunder.<\/p>\n
5.3.2 To the extent that, for any billing period, Generator
\nis obligated to pay to Pepco amounts due and calculated pursuant to Section 5.3,
\nPepco may use such amounts as a set-off against any amounts owed by Pepco to
\nGenerator under this Section 5.3.<\/p>\n
352<\/p>\n
5.3.3 Interest on any unpaid amounts shall be calculated in
\naccordance with the methodology specified for interest on refunds in FERC
\nregulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on delinquent
\namounts shall be calculated from the due date of the bill to the date of
\npayment. When payments are made by mail, bills shall be considered as having
\nbeen paid on the date of receipt by the other Party.<\/p>\n
5.4 Billing Disputes. In the event of a billing dispute between
\nthe Parties, each Party shall continue to provide services as long as the other
\nParty continues to make all payments not in dispute. Payment of invoices by
\neither Party shall not relieve the paying Party from any responsibilities or
\nobligations it has under this Agreement; nor shall it constitute a waiver of any
\nclaims arising hereunder.<\/p>\n
ARTICLE 6
\n CONFIDENTIALITY<\/p>\n
6.1 Confidentiality Obligations of Pepco. Pepco shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by Generator
\nin connection with this Agreement marked “Confidential” or “Proprietary.” Except
\nto the extent that such information or documents are (i) generally available to
\nthe public other than as a result of a disclosure by Pepco in breach of this
\nAgreement, (ii) available to Pepco on a non-confidential basis prior to
\ndisclosure to Pepco by Generator, or (iii) available to Pepco on a
\nnon-confidential basis from a source other than Generator, provided that such
\nsource is not known, and by reasonable effort could not be known, by Pepco to be
\nbound by a confidentiality agreement with Generator or otherwise prohibited from
\ntransmitting the information to Pepco by a contractual, legal or fiduciary
\nobligation, Pepco shall not release or disclose such information to any other
\nperson, except to its employees, representatives or agents on a need-to-know
\nbasis, in connection with this Agreement who has not first been advised of the
\nconfidentiality provisions of this Section 6.1 and has agreed in writing to
\ncomply with such provisions. In no event shall such information be disclosed in
\nviolation of the requirements of FERC Orders 889 and 889-A, and any successor
\nthereto. Pepco shall promptly notify Generator if it receives notice or
\notherwise concludes that the production of any information subject to this
\nSection 6.1 is being sought under any provision of law and Pepco shall use
\nreasonable efforts in cooperation with Generator to seek confidential treatment
\nfor such confidential information provided thereto.<\/p>\n
6.2 Confidentiality Obligations of Generator. Generator shall hold
\nin confidence, unless compelled to disclose by judicial or administrative
\nprocess or other provisions of law, all documents and information furnished by
\nPepco in connection with this Agreement marked “Confidential” or “Proprietary.”
\nExcept to<\/p>\n
353<\/p>\n
the extent that such information or documents are (i) generally available to the
\npublic other than as a result of a disclosure by Generator in breach of this
\nAgreement, (ii) available to Generator on a non-confidential basis prior to
\ndisclosure to Generator by Pepco, or (iii) available to Generator on a
\nnon-confidential basis from a source other than Pepco, provided that such source
\nis not known, and by reasonable effort could not be known, by Generator to be
\nbound by a confidentiality agreement with Pepco or otherwise prohibited from
\ntransmitting the information to Generator by a contractual, legal or fiduciary
\nobligation, Generator shall not release or disclose such information to any
\nother person, except to its employees, representatives or agents on a
\nneed-to-know basis, in connection with this Agreement who has not first been
\nadvised of the confidentiality provisions of this Section 6.2 and has agreed in
\nwriting to comply with such provisions. In no event shall such information be
\ndisclosed in violation of the requirements of FERC Orders 889 and 889-A, and any
\nsuccessor thereto. Generator shall promptly notify Pepco if it receives notice
\nor otherwise concludes that the production of any information subject to this
\nSection 6.2 is being sought under any provision of law and Generator shall use
\nreasonable efforts in cooperation with Pepco to seek confidential treatment for
\nsuch confidential information provided thereto.<\/p>\n
6.3 Confidentiality of Audits. The independent auditor performing
\nany audit, as referred to in Section 4.3, shall be subject to a confidentiality
\nagreement between the auditor and the Party being audited. Such audit
\ninformation shall be treated as confidential except to the extent that its
\ndisclosure is required by regulatory or judicial order, for reliability purposes
\npursuant to PJM Requirements or Good Utility Practice, and pursuant to the
\nFERC’s rules and regulations. Except as provided herein, neither Party will
\ndisclose the audit information to any third party, without the other Party’s
\nprior written consent. Audit information in the hands of the Party not being
\naudited shall be subject to all provisions of Section 6.1 or 6.2, above, as
\napplicable.<\/p>\n
6.4 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its obligations
\nunder Section 6.1 or 6.2, above, as applicable. Each Party accordingly agrees,
\nsubject to Article 8, that the other Party shall be entitled to equitable
\nrelief, by way of injunction or otherwise, if the first Party breaches or
\nthreatens to breach its obligations under Section 6.1 or 6.2 of this Agreement,
\nas applicable, which equitable relief shall be granted without bond or proof of
\ndamages, and the receiving Party shall not plead in defense that there would be
\nan adequate remedy at law.<\/p>\n
354<\/p>\n
ARTICLE 7
\n EVENTS OF DEFAULT<\/p>\n
7.1 Events of Default. Each of the following shall constitute an
\nEvent of Default by the a defaulting Party under this Agreement:<\/p>\n
(a) The failure by a Party to pay any amount due within
\ntwenty (20) calendar days after receipt of written notice of nonpayment by the
\nother Party, unless the payment of such amount is disputed in good faith, in
\nwhich event Section 5.5 shall apply;<\/p>\n
(b) A Party’s breach of any material term or condition of
\nthis Agreement, including but not limited to any material breach of a
\nrepresentation, warranty or covenant made in this Agreement which, after
\nreceiving written notice of the breach from the non-breaching Party (such notice
\nto set forth in reasonable detail the nature of the default and, where known and
\nif applicable, the steps necessary to cure such default), (i) the breaching
\nParty fails to cure, if curable, within thirty (30) days following receipt of
\nthe notice or (ii) if such default is of such a nature that it cannot be cured
\nwithin thirty (30) days following receipt of such notice, the breaching Party
\nfails within such thirty (30) days to commence the necessary cure and fails at
\nany time thereafter diligently and continuously to prosecute such cure to
\ncompletion provided that the cure is completed no later than 180 days after the
\nreceipt of the default notice;<\/p>\n
(c) The appointment of a receiver, liquidator or trustee
\nfor either Party, and such receiver, liquidator or trustee is not discharged
\nwithin sixty (60) days;<\/p>\n
(d) The entry of a decree or decrees adjudicating a Party
\nas bankrupt or insolvent, and such decree or decrees are not stayed or
\ndischarged within sixty (60) days; or<\/p>\n
(e) The filing of voluntary petitions for bankruptcy
\nunder any federal or state bankruptcy law by a Party.<\/p>\n
7.2 Remedies<\/p>\n
7.2.1 If the breaching Party disputes that an Event of
\nDefault under Section 7.1.(b) has occurred, the breaching Party shall
\nnonetheless comply with this Section 7.2 pending the resolution of the dispute.
\nIf it is determined that no breach or Event of Default under Section 7.1(b)
\nexisted, the Party alleging the default shall<\/p>\n
355<\/p>\n
pay and reimburse the other Party for all reasonable costs and expenses incurred
\nby it to cure the alleged default.<\/p>\n
7.2.2 Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (i) exercise all such rights and remedies as may be
\navailable to it at law or equity including seeking to recover damages caused by
\nsuch Event of Default, subject to Article 8 of this Agreement; and\/or (ii)
\nterminate this Agreement. The Parties shall not discontinue the performance of
\nany one or more of their obligations hereunder due to the occurrence of an Event
\nof Default during the pendency of any dispute regarding such Event of Default
\nand until such dispute is finally resolved except that Pepco may suspend or
\ninterrupt service if necessary for the safe and reliable operation of the
\nInterconnection Facilities or the Transmission System.<\/p>\n
7.2.3 Notwithstanding the foregoing, upon the occurrence of
\nany Event of Default, the non-defaulting Party shall be entitled to commence an
\naction to require the defaulting Party to remedy such default by specifically
\nperformance of its duties and obligations hereunder in accordance with the terms
\nand conditions hereof.<\/p>\n
7.2.4 Notwithstanding anything in this Agreement to the
\ncontrary, in the event the Generator’s failure to comply with the provisions of
\nSections 4.1 and 4.2 of this Agreement is reasonably likely to have an immediate
\nand material adverse impact on Pepco or the Transmission System, Pepco shall
\nhave the right to take immediately reasonable steps and\/or to exercise
\nimmediately all remedies available under this Agreement, or at law or equity,
\nincluding the right, after providing as much notice as is practicable under the
\ncircumstances and complying with the applicable FERC notice requirements
\nregarding termination of service, to disconnect the Station from the
\nTransmission System.<\/p>\n
ARTICLE 8
\n LIMITATION OF LIABILITY<\/p>\n
8.1 Limitation of Pepco’s Liability. Pepco does not guarantee the
\nnon-occurrence of, or warrant against, and will have no liability hereunder for,
\nand the Generator will release Pepco from all claims or damages associated with,
\nany interruption in the availability of the Interconnection Facilities,
\nInterconnection Service or local services pursuant to Section 3.10 or damages to
\nthe Generator’s facilities, except to the extent such interruption or damage is
\ncaused by Pepco’s gross negligence or willful misconduct in the performance of
\nits obligations under this Agreement.<\/p>\n
356<\/p>\n
8.2 Limitation on Generator’s Liability. Generator does not
\nguarantee the non-occurrence of, or warrant against, and will have no liability
\nunder this Agreement for, and Pepco will release Generator from all claims or
\ndamages arising under this Agreement which are associated with any interruption
\nin the availability of the Station or local services pursuant to Section 3.11,
\nany reduction, curtailment, interruption or reduction of energy from the
\nStation, or damage to Pepco’s facilities, except to the extent such interruption
\nor damage is caused by Generator’s gross negligence or willful misconduct in the
\nperformance of its obligations under the Agreement.<\/p>\n
8.3 Consequential Damages. Except for indemnity obligations set
\nforth in Article 9, neither Party, nor their respective officers, directors,
\nagents, employees, Affiliates, or successors or assigns of any of them, shall be
\nliable to the other Party or its Affiliates, officers, directors, agents,
\nemployees, successors or assigns for claims, suits, actions or causes of action
\nfor incidental, punitive, special, indirect, multiple or consequential damages
\n(including, without limitation, replacement power costs, lost revenues, claims
\nof customers, attorneys’ fees and litigation costs) connected with, or resulting
\nfrom, performance or non-performance of this Agreement, or any actions
\nundertaken in connection with or related to this Agreement, including, without
\nlimitation, any such damages which are based upon causes of action for breach of
\ncontract, tort (including negligence and misrepresentation), breach of warranty
\nor strict liability. The provisions of this Section 8.3 shall apply regardless
\nof fault and shall survive termination, cancellation, suspension, completion, or
\nexpiration of this Agreement.<\/p>\n
ARTICLE 9
\n INDEMNIFICATION FOR THIRD PARTY CLAIMS<\/p>\n
9.1 Generator’s Indemnification. Generator shall indemnify, hold
\nharmless, and defend Pepco and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Pepco and a third party or Generator) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Pepco’s employees or any third parties, to the extent caused,
\nby the negligence or willful misconduct of Generator’s and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Generator’s performance or breach of this Agreement, or
\nthe exercise by Generator of its rights hereunder. In furtherance of the
\nforegoing indemnification and not by way of limitation thereof, Generator hereby
\nwaives any defense it might otherwise have under applicable workers’
\ncompensation laws.<\/p>\n
357<\/p>\n
9.2 Pepco’s Indemnification. Pepco shall indemnify, hold harmless,
\nand defend Generator and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between the Generator and a third party or Pepco)
\nfor damage to property of unaffiliated third parties, injury to or death of any
\nperson, including Generator’s employees or any third parties, to the extent
\ncaused by the negligence or willful misconduct of Pepco and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Pepco’s performance or breach of this Agreement, or the
\nexercise by Pepco of its rights hereunder. In furtherance of the foregoing
\nindemnification and not by way of limitation thereof, Pepco hereby waives any
\ndefense it might otherwise have under applicable workers’ compensation laws.<\/p>\n
9.3 Indemnification Procedures. If either Party intends to seek
\nindemnification under this Article 9 from the other Party, the Party seeking
\nindemnification shall give the other Party notice of such claim within ninety
\n(90) days of the later of the commencement of, or the Party’s actual knowledge
\nof, such claim or action. Such notice shall describe the claim in reasonable
\ndetail, and shall indicate the amount (estimated if necessary) of the claim that
\nhas been, or may be sustained by, said Party. To the extent that the other Party
\nwill have been actually and materially prejudiced as a result of the failure to
\nprovide such notice, such notice will be a condition precedent to any liability
\nof the other Party under the provisions for indemnification contained in this
\nAgreement. Neither Party may settle or compromise any claim without the prior
\nconsent of the other Party; provided, however, said consent shall not be
\nunreasonably withheld or delayed.<\/p>\n
9.4 Survival. The indemnification obligations of each Party under
\nthis Article 9 shall continue in full force and effect regardless of whether
\nthis Agreement has either expired or been terminated or canceled.<\/p>\n
ARTICLE 10
\n INSURANCE<\/p>\n
10.1 Insurance Coverage. The Parties shall maintain at their own
\ncost and expense, fire, liability, worker’s compensation, and other forms of
\ninsurance relating to their respective property and facilities subject to this
\nAgreement in the manner, and amounts, and for the durations as is customary in
\nthe electric utility industry.<\/p>\n
358<\/p>\n
10.2 Certificates of Insurance. The Parties agree to furnish each
\nother with certificates of insurance evidencing the insurance coverage obtained
\nin accordance with this Article 10, and the Parties agree to notify and send
\ncopies to the other of any policies maintained hereunder upon written request by
\na Party. Each Party must notify the other Party within ten (10) business days of
\nreceiving notice of cancellation, change, amendment or renewal of any insurance
\npolicy required pursuant to Section 10.1 above.<\/p>\n
10.3 Additional Insureds and Waiver. Each Party and its affiliates
\nshall be named as additional insureds on the general liability insurance
\npolicies obtained in accordance with Section 10.1, above, as regards liability
\nunder this Agreement; and each Party shall waive its rights of recovery against
\nthe other for any loss or damage covered by such policy.<\/p>\n
ARTICLE 11
\n FORCE MAJEURE<\/p>\n
11.1 Effect of Force Majeure. Notwithstanding anything in this
\nAgreement to the contrary, Generator and Pepco shall not be liable in damages or
\notherwise or responsible to the other for its failure to carry out any of its
\nobligations under this Agreement (except for the obligation to pay sums of money
\ndue and owing hereunder) to the extent that they are unable to so perform or are
\nprevented from performing by an event of Force Majeure and has complied with
\nSection 11.3.<\/p>\n
11.2 Force Majeure Defined. Force Majeure means those causes beyond
\nthe reasonable control of the Party affected, which by the exercise of
\nreasonable diligence, including Good Utility Practice, that Party is unable to
\nprevent, avoid, mitigate, or overcome, including the following: any act of God,
\nlabor disturbance (including a strike), act of the public enemy, war,
\ninsurrection, riot, fire, storm or flood, explosion, breakage or accident to
\nmachinery or equipment, electric system disturbance), order, regulation or
\nrestriction imposed by governmental, military or lawfully established civilian
\nauthorities, or any other cause of a similar nature beyond a Party’s reasonable
\ncontrol.<\/p>\n
11.3 Notification. A Party shall not be entitled to rely on the
\noccurrence of an event of Force Majeure as a basis for being excused from
\nperformance of its obligations under this Agreement, unless the Party relying on
\nthe event or condition shall: (a) provide prompt written notice of such Force
\nMajeure event to the other Party, including an estimation of its expected
\nduration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts in accordance with Good Utility
\nPractice to continue to perform its obligations under this Agreement; (c)
\nexpeditiously take action to correct or cure the event or condition excusing
\nperformance; (d) exercise all reasonable efforts to mitigate or<\/p>\n
359<\/p>\n
limit damages to the other Party; and (e) provide prompt notice to the other
\nParty of the cessation of the event or condition giving rise to its excuse from
\nperformance. Subject to this Section 11.3, any obligation under this Agreement
\nshall be suspended only to the extent caused by such Force Majeure and only
\nduring the continuance of any inability of performance caused by such Force
\nMajeure but for no longer period.<\/p>\n
ARTICLE 12
\n DISPUTES<\/p>\n
12.1 Disputes<\/p>\n
12.1.1 A Party with a claim or dispute under this Agreement
\nshall submit to the Operating Committee a notification of such claim or dispute
\nwithin sixty (60) days after the circumstances that gave rise to the claim or
\nthe question or issue in dispute. The notification shall be in writing and shall
\ninclude a concise statement of the claim or the issue or question in dispute, a
\nstatement of the relevant facts and documentation to support the claim. In the
\nevent the Operating Committee is unable, in good faith, to resolve their
\ndisagreement in a manner satisfactory to both Parties within thirty (30) days
\nafter receipt by the Operating Committee of a notification specifying the claim,
\nissue or question in dispute, the Parties shall refer the dispute to their
\nrespective senior management. If, after using their good faith best efforts to
\nresolve the dispute, senior management cannot resolve the dispute within thirty
\n(30) days, the Parties shall utilize the arbitration procedures set forth below
\nin Section 12.2 to resolve a dispute, provided that nothing herein or therein
\nshall prohibit either Party from at any time requesting from a court of
\ncompetent jurisdiction a temporary restraining order, preliminary injunction, or
\nother similar form of equitable relief to enforce performance of the provisions
\nof this Agreement.<\/p>\n
12.2 Arbitration.<\/p>\n
(a) Unless the Parties other wise mutually agree in
\nwriting to another form of dispute resolution such as dispute resolution under
\nthe PJM Agreement or the MAAC agreement, any arbitration initiated under this
\nAgreement shall be conducted before a single neutral arbitrator appointed by the
\nParties within thirty (30) days of receipt by respondent of the demand for
\narbitration. If the Parties are unable to agree on an arbitrator, such
\narbitration shall be appointed by the American Arbitration Association. Unless
\nthe Parties agree otherwise, the arbitrator shall be an attorney or retired
\njudge with at least fifteen (15) years of experience, and shall not have any
\ncurrent or past substantial business or financial relationships with any Party
\nto the arbitration. If possible, the arbitrator shall<\/p>\n
360<\/p>\n
have experience in the electric utility industry. Unless otherwise agreed, the
\narbitration shall be conducted in accordance with the American Arbitration
\nAssociation’s Commercial Arbitration Rules, then in effect. Any arbitration
\nproceedings, decision or award rendered hereunder and the validity, effect and
\ninterpretation of this arbitration agreement shall be governed by the Federal
\nArbitration Act of the United States, 9 U.S.C. Section 1 et seq. The location of
\nany arbitration hereunder shall be in the District of Columbia.<\/p>\n
(b) The arbitration shall, if possible, be concluded not
\nlater than six (6) months after the date that it is initiated. The arbitrator
\nshall be authorized only to interpret and apply the provisions of this Agreement
\nor any related agreements entered into under this Agreement and shall have no
\npower to modify or change any of the above in any manner. The arbitrator shall
\nhave no authority to award punitive or multiple damages or any damages
\ninconsistent with this Agreement. The arbitrator shall, within thirty (30) days
\nof the conclusion of the hearing, unless such time is extended by agreement of
\nthe Parties, notify the Parties in writing of his or her decision, stating his
\nor her reasons for such decision and separately listing his or her findings of
\nfact and conclusions of law. The decision of the arbitrator rendered in such a
\nproceeding shall be final and binding on the Parties. Judgment on the award may
\nbe entered upon it in any court having jurisdiction.<\/p>\n
12.3 FERC Dispute Resolution. Nothing in this Agreement shall
\npreclude, or be construed to preclude, any Party from filing a petition or
\ncomplaint with FERC with respect to any arbitrable claim over which FERC has
\njurisdiction. In such case, the other Party may request FERC to reject or to
\nwaive jurisdiction. If FERC rejects or waives jurisdiction with respect to all
\nor a portion of the claim, the portion of the claim not so accepted by FERC
\nshall be resolved through arbitration, as provided in this Agreement. To the
\nextent that FERC asserts or accepts jurisdiction over the claim, the decision,
\nfinding of fact or order of FERC shall be final and binding, subject to judicial
\nreview under the Federal Power Act, and any arbitration proceedings that may
\nhave commenced with respect to the claim prior to the assertion or acceptance of
\njurisdiction by FERC shall be terminated.<\/p>\n
ARTICLE 13
\n REPRESENTATIONS<\/p>\n
13.1 Representations of Pepco. Pepco hereby represents and warrants
\nto Generator as follows:<\/p>\n
(a) Incorporation. Pepco is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the District of Columbia
\nand the Commonwealth of Virginia, and has all requisite corporate power and
\nauthority to<\/p>\n
361<\/p>\n
own, lease and operate its material assets and properties and to carry on its
\nbusiness as now being conducted.<\/p>\n
(b) Authority. Pepco has all necessary corporate power
\nand authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Pepco of this
\nAgreement and the consummation by Pepco of the transactions contemplated
\nhereunder have been duly and validly authorized by the Board of Directors of
\nPepco or by a committee thereof to whom such authority has been delegated and no
\nother corporate proceedings on the part of Pepco are necessary to authorize this
\nAgreement or the transactions contemplated hereby. This Agreement has been duly
\nand validly executed and delivered by Pepco and, assuming that this Agreement
\nconstitutes a valid and binding agreement of Generator, constitutes a valid and
\nbinding agreement of Pepco, enforceable by Pepco in accordance with its terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this Agreement
\nby Pepco nor performance by Pepco of its obligations hereunder will (A) conflict
\nwith or result in any breach of any provision of the Certificate of
\nIncorporation or By-laws of Pepco, (B) result in a default (or give rise to any
\nright of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Pepco or any of its
\nsubsidiaries is a party or by which any of their respective assets may be bound
\nor (C) violate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to Pepco, or any of its assets, except in the case of clauses (B) and
\n(C) for such failures to obtain a necessary consent, defaults and violations
\nwhich would not, individually or in the aggregate, have a material adverse
\neffect on the ability of Pepco to discharge its obligations under this Agreement
\n(a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any governmental authority
\nis necessary for performance by Pepco of its obligations hereunder, other than
\nsuch declarations, filings, registrations, notices, authorizations, consents or
\napprovals which, if not obtained or made would not, individually or in the
\naggregate, have a Pepco Material Adverse Effect.<\/p>\n
13.2 Representations of Generator. Generator hereby represents and
\nwarrants to Pepco as follows:<\/p>\n
362<\/p>\n
(a) Incorporation. Generator is a [corporation] duly
\n[incorporated], validly existing and in good standing under the laws of the
\nState of __________, and has all requisite [corporate] power and authority to
\nown, lease and operate its material assets and properties and to carry on its
\nbusiness as now being conducted.<\/p>\n
(b) Authority. Generator has all necessary [corporate]
\npower and authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by the Generator of
\nthis Agreement and the consummation by Generator of the transactions
\ncontemplated hereby have been duly and validly authorized the [Board of
\nDirectors] of Generator or by a committee thereof to whom such authority has
\nbeen delegated and no other [corporate] proceedings on the part of Generator are
\nnecessary to authorize this Agreement or the transactions contemplated hereby.
\nThis Agreement has been duly and validly executed and delivered by Generator
\nand, assuming that this Agreement constitutes a valid and binding agreement of
\nPepco, constitutes a valid and binding agreement of Generator, enforceable
\nagainst Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals.<\/p>\n
(i) Neither the execution and delivery of this Agreement
\nby Generator nor performance by Generator of its obligations hereunder will (A)
\nconflict with or result in any breach of any provision of the [Certificate of
\nIncorporation or By-laws] of Generator, (B) result in a default (or give rise to
\nany right of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Generator or any of
\nits subsidiaries is a party or by which any of their respective assets may be
\nbound or (C) violate any order, writ, injunction, decree, statute, rule or
\nregulation applicable to Generator, or any of its assets, except in the case of
\nclauses (B) and (C) for such failures to obtain a necessary consent, defaults
\nand violations which would not, individually or in the aggregate, have a
\nmaterial adverse effect on the ability of Generator to discharge its obligations
\nunder this Agreement (a “Generator Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any Governmental Authority
\nis necessary for performance by Generator of its obligations hereunder, other
\nthan such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Generator Material Adverse Effect.<\/p>\n
ARTICLE 14
\n ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY<\/p>\n
14.1 Assignment.<\/p>\n
(a) Except as set forth in this Article 14, neither this
\nAgreement nor any of the rights, interests, or obligations hereunder shall be
\nassigned by either Party hereto, without the prior written consent of the other
\nParty, which consent shall not be unreasonably withheld or delayed.<\/p>\n
(b) Subject to Section 14.2, upon ten (10) days prior
\nwritten notice to Generator, Pepco may assign this Agreement, and Pepco’s
\nrights, interests and obligations hereunder, to (i) an Affiliate of Pepco that
\nowns all or part of Pepco’s Transmission System or (ii) an independent system
\noperator or independent transmission company whose control over all or part of
\nPepco’s Transmission System has been approved by the FERC.<\/p>\n
(c) Subject to Section 14.2, Generator may (a) assign any
\nof its rights and obligations hereunder to an Affiliate to the extent necessary
\nfor the Generator to qualify as an exempt wholesale generator under Section 32
\nof the Public Utility Holding Company Act of 1935, as amended, and (b) assign,
\ntransfer, pledge or otherwise dispose of its rights and interests hereunder to a
\ntrustee, lending institution, or other Person for the purposes of financing or
\nrefinancing the Station, including upon or pursuant to the exercise of remedies
\nunder such financing or refinancing, or by way of assignments, transfers,
\nconveyances of dispositions in lieu thereof; provided, however, that no such
\nassignment shall relieve or in any way discharge Generator from the performance
\nof its duties and obligations under this Agreement. Pepco agrees to execute and
\ndeliver, at Generator’s expense, such documents as may be reasonably necessary
\nto accomplish any such assignment, transfer, conveyance, pledge or disposition
\nof rights hereunder for purposes of the financing or refinancing of the
\nFacility, so long as Pepco’s rights under this Agreement are not thereby
\naltered, amended, diminished or otherwise impaired.<\/p>\n
(d) Subject to Section 14.2, either Party may assign this
\nAgreement to a successor to all or substantially all of the assets of such Party
\nby way of merger, consolidation, sale or otherwise, provided such successor
\nassumes in writing and becomes liable for all of such Party’s duties and
\nobligations hereunder.<\/p>\n
14.2 Release of Rights and Obligations. No assignment, transfer,
\nconveyance, pledge or disposition of rights, interests, duties or obligations
\nunder this Agreement by a Party shall relieve that Party from liability and
\nfinancial responsibility for the performance thereof after any such transfer,
\nassignment,<\/p>\n
363<\/p>\n
conveyance, pledge or disposition unless and until (i) the transferee or
\nassignee shall agree in writing to assume the obligations and duties of that
\nParty under this Agreement and to impose such obligations on subsequent
\npermitted transferees and assignees and (ii) the non-assigning Party has
\nconsented in writing to such assumption and to a release of the assigning Party
\nfrom such liability, such consent not to be unreasonably withheld or delayed.<\/p>\n
14.3 Change in Corporate Identity. If Generator terminates its
\nexistence as a [corporate] entity by merger, acquisition, sale, consolidation or
\notherwise, or if all or substantially all of Generator’s assets are transferred
\nto another person or business entity without complying with this Article 14,
\nPepco shall have the right, enforceable in a court of competent jurisdiction, to
\nenjoin Generator’s successor from using the Station in any manner that does not
\ncomply with the requirements of this Agreement or that impedes Pepco’s ability
\nto carry on its ongoing business operations.<\/p>\n
14.4 Successors and Assigns. This Agreement and all of the
\nprovisions hereof are binding upon, and inure to the benefit of, the Parties
\nand their respective successors and permitted assigns.<\/p>\n
ARTICLE 15
\n SUBCONTRACTORS<\/p>\n
Nothing in this Agreement shall prevent the Parties from utilizing the
\nservices of subcontractors as they deem appropriate, provided, however, the
\nParties agree that, where applicable, all said subcontractors shall comply with
\nthe terms and conditions of this Agreement. The creation of any subcontract
\nrelationship shall not relieve the hiring Party of any of its obligations under
\nthis Agreement. Each Party shall be fully responsible to the other Party for the
\nacts and\/or omission of any subcontractor it hires as if no subcontract had been
\nmade. Any obligation imposed by this Agreement upon the Parties, where
\napplicable, shall be equally binding upon and shall be construed as having
\napplication to any subcontractor. The Parties shall each be liable for,
\nindemnify, and hold harmless the other Party, their Affiliates and their
\nofficers, directors, employees, agents, servants, and assigns from and against
\nany and all claims, demands, or actions, from the other Party’s subcontractors;
\nand shall pay all costs, expenses and legal fees associated therewith and all
\njudgments, decrees and awards rendered therein. No subcontractor is intended to
\nbe or shall be deemed a third-party beneficiary of this Agreement.<\/p>\n
ARTICLE 16
\n NOTICES<\/p>\n
16.1 Emergency Notices. At or prior to the Effective Date, each
\nParty shall indicate to the other Party, by notice, the appropriate person
\nduring each<\/p>\n
364<\/p>\n
eight-hour work shift to contact in the event of an emergency, a scheduled or
\nforced interruption or reduction in services. The notice last received by a
\nParty shall be effective until modified in writing by the other Party.<\/p>\n
16.2 Notices. All notices and other communications hereunder shall
\nbe in writing and shall be deemed given (as of the time of delivery or, in the
\ncase of a telecopied communication, of confirmation) if delivered personally,
\ntelecopied (which is confirmed) or sent by overnight courier (providing proof of
\ndelivery) to the Parties at the following addresses (or at such other address
\nfor a Party as shall be specified by like notice):<\/p>\n
if to Pepco , to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) ________________
\n Attention: ___________________<\/p>\n
if to Generator, to:<\/p>\n
c\/o Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
ARTICLE 17
\n AMENDMENTS<\/p>\n
17.1 Amendments. Except as set forth in Sections 2.2 and 17.2 of
\nthis Agreement, this Agreement may be amended, modified, or supplemented only by
\nwritten agreement of both Pepco and Generator.<\/p>\n
17.2 FERC Proceedings<\/p>\n
(a) Pepco may unilaterally make application to FERC under
\nSection 205 of the Federal Power Act and pursuant to the FERC’s rules and
\nregulations promulgated thereunder for, or exercise any rights it may have under
\nSection 206 of the Federal Power Act and the regulations thereunder with respect
\nto, a change in any rates, terms and conditions, charges, classification of
\nservice, rule or regulation for any services Pepco provides under this Agreement
\nover which FERC has jurisdiction.<\/p>\n
365<\/p>\n
(b) Generator may exercise its rights under Section 205
\nor 206 of the Federal Power Act and pursuant to FERC’s rules and regulations
\npromulgated thereunder with respect to any rate, term, condition, charge,
\nclassification of service, rule or regulation for any services provided under
\nthis Agreement over which FERC has jurisdiction.<\/p>\n
ARTICLE 18
\n MISCELLANEOUS PROVISIONS<\/p>\n
18.1 Waiver. Except as otherwise provided in this Agreement, any
\nfailure of a Party to comply with any obligation, covenant, agreement, or
\ncondition herein may be waived by the Party entitled to the benefits thereof
\nonly by a written instrument signed by the Party granting such waiver, but such
\nwaiver or failure to insist upon strict compliance with such obligation,
\ncovenant, agreement, or condition shall not operate as a waiver of, or estoppel
\nwith respect to, any subsequent or other failure.<\/p>\n
18.2 Labor Relations. The Parties agree to immediately notify the
\nother Party, verbally and then in writing, of any labor dispute or anticipated
\nlabor dispute which may reasonably be expected to affect the operations of the
\nother Party.<\/p>\n
18.3 No Third Party Beneficiaries. Nothing in this Agreement is
\nintended to confer upon any other person except the Parties any rights or
\nremedies hereunder or shall create any third party beneficiary rights in any
\nperson. No provision of this Agreement shall create any rights in any such
\npersons in respect of any benefits that may be provided, directly or indirectly,
\nunder any employee benefit plan or arrangement except as expressly provided for
\nthereunder.<\/p>\n
18.4 Governing Law<\/p>\n
This Agreement shall be governed by and construed in accordance with the laws of
\nthe State of Maryland (regardless of the laws that might otherwise govern under
\napplicable principles of conflicts of law).<\/p>\n
18.5 Counterparts. This Agreement may be executed in two or more
\ncounterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
18.6 Interpretation. When a reference is made in this Agreement to
\nan Article, Section, Schedule or exhibit, such reference shall be to an Article
\nor Section of, or Schedule or exhibit to, this Agreement unless otherwise
\nindicated. The table of contents and headings contained in this Agreement are
\nfor reference<\/p>\n
366<\/p>\n
purposes only and shall not affect in any way the meaning or interpretation of
\nthis Agreement. Whenever the words “include”, “includes” or “including” are used
\nin this Agreement, they shall be deemed to be followed by the words “without
\nlimitation” or equivalent words. The words “hereof”, “herein” and “hereunder”
\nand words of similar import when used in this Agreement shall refer to this
\nAgreement as a whole and not to any particular provision of this Agreement. The
\ndefinitions contained in this Agreement are applicable to the singular as well
\nas the plural forms of such terms and to the masculine as well as to the
\nfeminine and neuter genders of such term. Unless otherwise expressly stated
\notherwise herein, the word “day” shall mean any calendar day including weekends
\nand holidays. Any agreement, instrument, statute, regulation, rule or order
\ndefined or referred to herein or in any agreement or instrument that is referred
\nto herein means such agreement, instrument, statute, regulation, rule or order
\nas from time to time amended, modified or supplemented, including (in the case
\nof agreements or instruments) by waiver or consent and (in the case of statutes,
\nregulations, rules or orders) by succession of comparable successor statutes,
\nregulations, rules or orders and references to all attachments thereto and
\ninstruments incorporated therein. References to a person are also to its
\npermitted successors and assigns. Each Party acknowledges that it has been
\nrepresented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
18.7 Jurisdiction and Enforcement. Each of the Parties irrevocably
\nsubmits to the exclusive jurisdiction of the federal and state courts of the
\nState of Maryland for the purposes of any suit, action or other proceeding
\narising out of this Agreement or any transaction contemplated hereby. Each of
\nthe Parties agrees to commence any action, suit or proceeding relating hereto
\neither in the federal courts of the State of Maryland or, if such suit, action
\nor proceeding may not be brought in such court for jurisdictional reasons, in
\nthe state courts of the State of Maryland. Each of the Parties further agrees
\nthat service of process, summons, notice or document by hand delivery or U.S.
\nregistered mail at the address specified for such Party in Section 16.2 (or such
\nother address specified by such Party from time to time pursuant to Section
\n16.2) shall be effective service of process for any action, suit or proceeding
\nbrought against such Party in any such court. Each of the Parties irrevocably
\nand unconditionally waives any objection to the laying of venue of any action,
\nsuit or proceeding arising out of this Agreement or the transactions
\ncontemplated hereby in the federal and state courts of the State of Maryland and
\nhereby further irrevocably and unconditionally waives and agrees not to plead or
\nclaim in any such court that any such action, suit or proceeding brought in any
\nsuch court has been brought in an inconvenient forum.<\/p>\n
367<\/p>\n
18.8 Entire Agreement. This Agreement, Asset Sale Agreement, the
\nConfidentiality Agreement and the Ancillary Agreements including the Exhibits,
\nSchedules, documents, certificates and instruments referred to herein or therein
\nand other contracts, agreements and instruments contemplated hereby or thereby,
\nembody the entire agreement and understanding of the Parties in respect of the
\ntransactions contemplated by this Agreement. There are no restrictions,
\npromises, representations, warranties, covenants or undertakings other than
\nthose expressly set forth or referred to herein or therein. This Agreement, the
\nAsset Sale Agreement and the Ancillary Agreements supersede all prior agreements
\nand understandings between the Parties with respect to the transactions
\ncontemplated by this Agreement other than the Confidentiality Agreement.<\/p>\n
18.9 Severability. If any term or other provision of this Agreement
\nis invalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the Parties shall
\nnegotiate in good faith to modify this Agreement so as to effect the original
\nintent of the Parties as closely as possible to the fullest extent permitted by
\napplicable law in an acceptable manner to the end that the transactions
\ncontemplated hereby are fulfilled to the extent possible.<\/p>\n
18.10 Independent Contractor Status. Nothing in this Agreement shall
\nbe construed as creating any relationship between Pepco and Generator other than
\nthat of independent contractors.<\/p>\n
18.11 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
368<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this
\nInterconnection Agreement (Chalk Point) to be signed by their respective duly
\nauthorized officers as of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n —————————-
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n —————————-
\n Name:
\n Title:<\/p>\n
369<\/p>\n
SCHEDULE A
\n DEFINITIONS<\/p>\n
Part A. Capitalized terms not defined in the body of the Agreement shall
\n have the meaning set forth in Part A of this Schedule A. (Part B of
\n this Schedule A sets forth capitalized terms defined within the
\n Agreement.)<\/p>\n
(1) “Affiliate” has the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
(2) “Ancillary Agreements” has the meaning set forth in the Asset
\nSale Agreement.<\/p>\n
(3) “Closing” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
(4) “Confidentiality Agreement” has the meaning set forth in the
\nAsset Sale Agreement.<\/p>\n
(5) “Costs” means all costs, including without limitation, any
\nTaxes, costs of acquiring real property, costs and fees for permits, franchises,
\nlicenses and regulatory approvals except to the extent that such costs are
\nallocated to a party or parties other than the Generator by the PJM
\nInterconnection LLC or otherwise under the PJM Tariff or PJM Agreement.<\/p>\n
(6) “Easement” means the Easement Agreement dated __________,
\n2000, between the Parties with respect to the Station.<\/p>\n
(7) “Environmental Laws” means all former, current and future
\nfederal, state, local and foreign laws (including common law), treaties,
\nregulations, rules, ordinances, codes, decrees, judgments, directives or orders
\n(including consent orders) and environmental permits, in each case, relating to
\npollution or protection of the environment or natural resources, including laws
\nrelating to Releases or threatened Releases, or otherwise relating to the
\ngeneration, manufacture, processing, distribution, use, treatment, storage,
\narrangement for disposal, transport, recycling or handling, of Hazardous
\nSubstances.<\/p>\n
(8) “Emergency” means (a) with respect to Pepco, a condition or
\nsituation which Pepco, the PJM Interconnection LLC, the PJM System Operator or
\nthe Transmission Operator deem imminently likely to (i) endanger life or
\nproperty, or (ii) adversely affect or impair the Transmission System, Pepco’s
\nelectrical system or the electrical or transmission systems of others to which
\nthe Transmission System or Pepco’s electrical system are directly or indirectly
\nconnected and (b) with respect to the Generator, a condition or situation which
\nthe Generator deems imminently likely to (i) endanger life or property, or (ii)
\nadversely affect or impair the Station.<\/p>\n
(9) “FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
370<\/p>\n
(10) “Generating Facilities” means the Station and any additional
\ngenerating plants, turbines or other generating facilities constructed by
\nGenerator after the Effective Date at the site of the Station.<\/p>\n
(11) “Generator” has the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors and
\nassigns.<\/p>\n
(12) “Generator Facilities” mean the equipment and facilities owned
\nby the Generator but located on Pepco’s property which are identified in
\nSchedule B of this Agreement.<\/p>\n
(13) “Good Utility Practice” means any of the applicable practices,
\nmethods and acts.<\/p>\n
(a) required by FERC, NERC, MAAC, the PJM Interconnection
\nLLC, the PJM System Operator, or the successor of any of them, whether or not
\nthe Party whose conduct is at issue is a member thereof,<\/p>\n
(b) required by applicable law or regulations,<\/p>\n
(c) required by the Pepco Interconnection Standards or
\nthe policies and standards of Pepco relating to emergency operations;<\/p>\n
(d) otherwise engaged in or approved by a significant
\nportion of the electric utility industry during the relevant time period;<\/p>\n
which, in the exercise of reasonable judgment in light of the facts known at the
\ntime the decision was made, could have been expected to accomplish the desired
\nresult at a reasonable cost consistent with law, regulation, good business
\npractices, reliability, safety, and expedition. Good Utility Practice is not
\nintended to be limited to the optimum practice, method, or act to the exclusion
\nof all others, but rather to be acceptable practices, methods, or acts generally
\naccepted in the region.<\/p>\n
(14) “Hazardous Substances” means (i) any petrochemical or
\npetroleum products, crude oil or any fraction thereof, ash, radioactive
\nmaterials, radon gas, asbestos in any form, urea formaldehyde foam insulation or
\npolychlorinated biphenyls, (ii) any chemicals, materials, substances or wastes
\ndefined as or included in the definition of “hazardous substances,” “hazardous
\nwastes,” “hazardous materials,” “restricted hazardous materials,” “extremely
\nhazardous substances,” “toxic substances,” “contaminants” or “pollutants” or
\nwords of similar meaning and regulatory effect contained in any Environmental
\nLaw or (iii) any other chemical, material, substance or waste which is
\nprohibited, limited or regulated by any Environmental Law.<\/p>\n
(15) “Interconnection Facilities” means those facilities or
\nportions of facilities owned or operated by Pepco to provide Interconnection
\nService which shall include, but not be limited to (1) facilities the cost of
\nwhich is reasonably allocated to the Interconnection Service provided to the
\nStation, or (2) Attachment Facilities or Local Upgrade Facilities, as defined in
\nthe PJM Tariff, which are associated with the Interconnection Service and
\noperated and maintained by Pepco.<\/p>\n
371<\/p>\n
(16) “Interconnection Service” means the services provided by Pepco
\nwhich are necessary to connect the Station to the Transmission System for
\nparallel operation of the Station and to enable Generator to transmit the energy
\nand ancillary services produced by the Station to the Transmission System and
\nreceive Station energy service and ancillary services, including blackstart
\npower, from the Generator’s supplier.<\/p>\n
(17) “MAAC” means the Mid-Atlantic Area Council, a reliability
\ncouncil under Section 202 of the Federal Power Act established pursuant to the
\nMAAC Agreement dated August 1, 1994, or any successor thereto.<\/p>\n
(18) “Maintain” means construct, reconstruct, install, inspect,
\nrepair, replace, operate, patrol, maintain, use, modernize, expand, upgrade, or
\nother similar activities.<\/p>\n
(19) “MDPSC” means the Maryland Public Service Commission or any
\nsuccessor agency thereto.<\/p>\n
(20) “NERC” means North American Electric Reliability Council or
\nany successor thereto.<\/p>\n
(21) “Pepco” has the meaning set forth in the introductory
\nparagraph of this Agreement and shall include its permitted successors or
\nassigns.<\/p>\n
(22) “Pepco Facilities” means the equipment and facilities owned by
\nPepco but located on Generator’s property which are identified in Schedule B of
\nthis Agreement.<\/p>\n
(23) “Pepco Interconnection Standards” means Pepco’s
\nInterconnection and Parallel Operating Guidelines as amended, modified or
\nreplaced from time to time. A copy of the existing Pepco Interconnection
\nStandards is attached hereto as Schedule E.<\/p>\n
(24) “Point of Interconnection” means each ownership point of
\ndemarcation set forth in Schedule C where capacity, energy and ancillary
\nservices are transferred between the Station and the Transmission System.<\/p>\n
(25) “Pepco Transmission Facilities” means those transmission,
\nsubstation, and communication facilities and related equipment, including the
\nInterconnection Facilities, and any additions, modifications or replacements
\nthereto, that are utilized to provide Interconnection Service to the Station.<\/p>\n
(26) “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Agreement and any successor
\nthereto including any regional transmission operator, independent system
\noperator, transco, or any other independent system administrator that possesses
\noperational or planning control over the Transmission System.<\/p>\n
(27) “PJM Agreement” means the Amended and Restated Operating
\nAgreement of the PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
372<\/p>\n
(28) “PJM Control Area” shall mean the control area recognized by
\nNERC as the PJM Control Area.<\/p>\n
(29) “PJM Interconnection LLC” means the independent system
\noperator of the PJM Control Area pursuant to the PJM Operating Agreement and the
\nPJM Tariff.<\/p>\n
(30) “PJM Generator Connection Agreement” means the interconnection
\nagreement entered into between the Generator and the PJM Interconnection LLC
\npursuant to the PJM Tariff with respect to the interconnection of the Station
\nand the Transmission System.<\/p>\n
(31) “PJM Reliability Agreement” means the Reliability Assurance
\nAgreement dated June 2, 1997 among the load serving entities of PJM.<\/p>\n
(32) “PJM Requirements” means the rules, regulations or other
\nrequirements of PJM or MAAC contained in or adopted pursuant to the PJM
\nAgreement, the PJM Tariff or the PJM Reliability Agreement which are applicable
\nto Pepco, with respect to the Transmission System or the Interconnection
\nService, and the Generator with respect to the Generating Facilities.<\/p>\n
(33) “PJM System Operator” shall mean the PJM Interconnection LLC,
\nenergy control center staff responsible for central dispatch as provided in the
\nPJM Agreement.<\/p>\n
(34) “PJM Tariff” means the PJM Open Access Transmission Tariff
\nproviding transmission service within the PJM Control Area.<\/p>\n
(35) “Qualified Personnel” means individuals who possess any
\nrequired licenses and are trained for their positions and duties by Generator
\nand\/or Pepco pursuant to Good Utility Practice.<\/p>\n
(36) “Release” means any release, spill, emission, leaking,
\ndumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
\nor migration into the environment (including ambient air, surface water,
\ngroundwater, land surface or subsurface strata) or within any building,
\nstructure, facility or fixture.<\/p>\n
(37) “Revenue Meters” means all MWh and MVArh meters, pulse
\nisolation relays, pulse conversion relays, transducers required by Pepco or the
\nPJM Interconnection or PJM System Operator for billing or other purposes, and
\nassociated totalizing equipment and appurtenances and compensation required to
\nmeasure the transfer of energy across the Point of Interconnection.<\/p>\n
(38) “SMECO CT” means the approximately 84 MW generating facility
\nand related assets owned by the Southern Maryland Electric Cooperative, or its
\nsuccessors or assigns, which is located at or near the site of the Station.<\/p>\n
(39) “Station” means the Chalk Point Station as defined in the
\nAsset Sale Agreement (excluding the SMECO CT).<\/p>\n
373<\/p>\n
(40) “Switching, Tagging, and Grounding Rules” means Pepco’s
\nswitching, tagging and grounding rules as amended, modified or replace from time
\nto time. A copy of the existing Switching Tagging and Grounding Rules is
\nattached hereto as Schedule D.<\/p>\n
(41) “Taxes” means all taxes, surtaxes, charges, fees, levies,
\npenalties or other assessments imposed by any United States federal, state,
\nlocal or foreign taxing authority, including income taxes, excise, property,
\nsales, transfer, franchise, special franchise, payroll, recording, withholding,
\nsocial security or other taxes, in each case including any interest, penalties
\nor additions attributable thereto.<\/p>\n
(42) “Transmission System” means the facilities owned, controlled,
\nor operated by Pepco, for purposes of providing transmission service, including
\nservices under the PJM Tariff, and Interconnection Service.<\/p>\n
(43) “Transmission Operator” means the person, or persons
\ndesignated by Pepco to coordinate the day to day interconnection of the Station
\nwith the Transmission System.<\/p>\n
Part B. The following terms have the meaning specified in the section of this
\n Agreement set forth opposite to such term:<\/p>\n
\n\n Term Agreement Reference<\/p>\n
\nAgreement Preamble
\nAsset Sale Agreement Preamble
\nEffective Date Section 2.1
\nEvent of Default Section 8.1
\nForce Majeure Section 11.1
\nInitial Period Section 3.10
\nOperating Committee Section 3.20
\nParty or Parties Preamble
\nTerm Article 2
\n<\/c><\/s><\/caption>\n<\/table>\n 374
\n EXHIBIT F<\/p>\n
LOCAL AREA SUPPORT AGREEMENT<\/p>\n
BY AND BETWEEN<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
————————————<\/p>\n
Dated , 2000
\n ————–<\/p>\n
375<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n\n Page<\/p>\n
\nARTICLE I – DEFINITIONS 1
\nARTICLE II – TERM; TERMINATION 1
\n 2.1 – Term 1
\n 2.2 – Termination 1
\n 2.3 – Continuation 2
\nARTICLE III – OPERATING REQUIREMENTS 2
\n 3.1 – PJM; MAAC 2
\n 3.2 – Obligations of Generator 2
\n 3.3 – Violations 4
\n 3.4 – Billing Procedures 4
\nARTICLE IV – RETIREMENT OR REMOVAL FROM SERVICE OF
\n THE FACILITY 5
\n 4.1 – Conditions Precedent to Retirement or Removal 5
\n 4.2 – Notice Requirement 5
\n 4.3 – PJM Studies 6
\n 4.4 – Termination Fee 6
\nARTICLE V – REPRESENTATIONS OF THE PARTIES 7
\n 5.1 – Representations of Pepco 7
\n 5.2 – Representations of Generator 8
\nARTICLE VI – DEFAULT 9
\n 6.1 – Event of Default 9
\n 6.2 – Remedies 9
\n 6.3 – Additional Remedies 10
\n 6.4 – Reimbursement for Replacement Costs 10
\n 6.5 – Limitation of Liability 10
\nARTICLE VII – ASSIGNMENT 11
\n 7.1 – Assignment 11
\n 7.2 – Release of Rights and Obligations 11
\n 7.3 – Transfer of Facility 11
\n 7.4 – Change in Corporate Identity 12
\n 7.5 – Successors and Assigns 12
\nARTICLE VIII – FORCE MAJEURE 12
\n 8.1 – Force Majeure 12
\n 8.2 – Definition of Force Majeure 12
\n 8.3 – Force Majeure Procedures 12
\nARTICLE IX – INDEMNIFICATION 13
\n 9.1 – Generator’s Indemnification 13
\n 9.2 – Pepco’s Indemnification 13
\n 9.3 – Indemnification Procedures 13
\n 9.4 – Survival 13
\nARTICLE X – CONFIDENTIALITY 14
\n 10.1 – Confidentiality Obligations of Pepco 14
\n<\/c><\/s><\/caption>\n<\/table>\n 376<\/p>\n
\n
\n 10.2 – Confidentiality Obligations of Generator 14
\n 10.3 – Remedies 15
\nARTICLE XI – DISPUTE RESOLUTION 15
\n 11.1 – Disputes 15
\n 11.2 – Arbitration 15
\n 11.3 – FERC Jurisdiction 16
\nARTICLE XII – MISCELLANEOUS 16
\n 12.1 – Amendment and Modification; Extension; Waiver 16
\n 12.2 – Notices 16
\n 12.3 – No Third Party Beneficiaries 17
\n 12.4 – Independent Contractors 17
\n 12.5 – Governing Law 18
\n 12.6 – Jurisdiction and Enforcement 18
\n 12.7 – Counterparts 18
\n 12.8 – Interpretation 18
\n 12.9 – Entire Agreement 19
\n 12.10 – Severability 19
\n 12.11 – Conflicts 19
\n 12.12 – Further Assurances 19
\n<\/c><\/s><\/table>\n 377<\/p>\n
LOCAL AREA SUPPORT AGREEMENT<\/p>\n
THIS LOCAL AREA SUPPORT AGREEMENT (as amended from time to time, this
\n“Agreement”) is made and entered into as of ___________, 2000 by and between
\nPotomac Electric Power Company, a District of Columbia and Virginia corporation
\n(“Pepco”), and ______________________ (“Generator”), a __________ [corporation].
\nPepco and Generator are referred to individually as a “Party” and collectively
\nas the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco and Generator have entered into an Asset Purchase and
\nSale Agreement, dated June 7, 2000 (as amended from time to time, the “Asset
\nSale Agreement”), for the sale by Pepco to Generator of the Facility (as defined
\nherein);<\/p>\n
WHEREAS, Pepco requires local generation support from the Facility in
\norder to maintain reliability of electric service in the local area of the
\nFacility, including the reliable transmission and delivery of Energy (as defined
\nherein) to loads connected radially to the Facility switchyard; and<\/p>\n
WHEREAS, the provisions of this Agreement are essential to maintaining
\nthe reliability of electric service in the local area of the Facility.<\/p>\n
NOW THEREFORE, in consideration of the mutual covenants,
\nrepresentations, warranties, and agreements contained herein, and intending to
\nbe legally bound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
DEFINITIONS<\/p>\n
Capitalized terms used in this Agreement shall have the respective
\nmeanings set forth in Appendix A hereto.<\/p>\n
ARTICLE II<\/p>\n
TERM; TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon consummation
\nof the Closing (the “Effective Date”). The Agreement shall continue in full
\nforce and effect for a term of twenty (20) years (the “Term”) unless terminated
\nearlier in accordance with Section 2.2.<\/p>\n
2.2 Termination. Subject to any required regulatory approval, this
\nAgreement may be terminated prior to the end of the Term: (a) by either Party
\npursuant to Section 6.2; or<\/p>\n
378<\/p>\n
(b) upon written notice by Pepco that Substitute Resources satisfactory to PJM
\nand Pepco have become operational.<\/p>\n
2.3 Continuation. The applicable provisions of this Agreement
\nshall continue in effect after cancellation, termination or expiration hereof to
\nthe extent necessary to provide for final billings, billing adjustments and
\npayments pertaining to liability and indemnification obligations arising from
\nacts or events that occurred while this Agreement was in effect.<\/p>\n
ARTICLE III<\/p>\n
OPERATING REQUIREMENTS<\/p>\n
3.1 PJM; MAAC.<\/p>\n
(a) From and after the Effective Date and for so long as
\nPJM Interconnection LLC is the control area operator for the System, Generator
\nshall maintain membership in good standing in PJM and MAAC and shall execute,
\ndeliver and perform all agreements required by PJM and MAAC, including the PJM
\nAgreement and the MAAC Agreement.<\/p>\n
(b) If PJM Interconnection LLC ceases to be the control
\narea operator for the System, then Generator shall be obligated to enter into
\ncomparable operating arrangements with any succeeding control area operator for
\nthe System, or with Pepco, to achieve the same local area reliability goals,
\nsubject to equivalent terms, set forth in this Agreement.<\/p>\n
3.2 Obligations of Generator. Provided the Facility’s switchyard
\nremains in the PJM Control Area, Generator shall operate and maintain the
\nFacility in the following manner:<\/p>\n
(a) Operation and Compensation.<\/p>\n
(i) Generator shall make the Facility Available
\nand shall follow the generation unit commitment procedures and dispatch orders
\n(including requests for Ancillary Services) of PJM Interconnection LLC and, in
\norder to maintain local area reliability as provided in Section 3.2(a)(iii)
\nbelow, of Pepco. Generator shall make the Facility Available and shall follow
\nsuch generation unit commitments and dispatch orders (including requests for
\nAncillary Services) even if operation of the Facility is not required for energy
\nsales scheduled by Generator.<\/p>\n
(ii) When PJM Interconnection LLC orders a change
\nin operation of the Facility for any reason, including local area reliability,
\nPJM compensation rules will apply. Pepco will have no obligation under this
\nAgreement to compensate Generator for such operation.<\/p>\n
(iii) Pepco may order operation and dispatch level
\nof the Facility for local area reliability in accordance with Pepco Transmission
\nProcedures No. 28 and No. 29 at any time when PJM Interconnection LLC has not
\nordered such operation. When Pepco<\/p>\n
379<\/p>\n
orders operation of the Facility for local area reliability in accordance with
\nPepco Transmission Procedures No. 28 and No. 29 at a time when PJM
\nInterconnection LLC has not ordered such operation, Generator shall schedule the
\nappropriate operation of the Facility in accordance with PJM procedures. Pepco
\nshall pay Generator the excess, if any, of (A) the compensation Generator would
\nhave received if PJM Interconnection LLC had ordered such operation for local
\narea reliability minus (B) the compensation actually received by Generator from
\nPJM Interconnection LLC for such operation.<\/p>\n
(iv) Generator shall not retire or indefinitely
\nremove from service the Facility or any of its Units except as permitted
\npursuant to Article IV. Until the retirement or indefinite removal from service
\nof the Facility or any of its Units in accordance with Article IV, Generator
\nshall (A) maintain the capacity of each Unit in accordance with Good Utility
\nPractice and (B) shall otherwise operate and maintain the Facility, or cause the
\nFacility to be operated and maintained, in accordance with Good Utility
\nPractice.<\/p>\n
(v) Notwithstanding any provision of this
\nSection 3.2(a) to the contrary, in the event Abnormal Conditions exist for any
\nperiod of twenty-one (21) consecutive days, then during the period commencing on
\nthe twenty-first (21st) day of such Abnormal Conditions and ending with the
\ntermination of such Abnormal Conditions, Generator must use best efforts to
\ncomply with Pepco Transmission Procedure No. 28 pursuant to Sections 3.2(a)(i)
\nand 3.2(a)(iii).<\/p>\n
(b) Maintenance. Generator shall abide by PJM rules and
\ncooperate with PJM Interconnection LLC and Pepco in scheduling maintenance of
\nthe Facility and each Unit and any other equipment outages affecting the
\noperation of the Facility or any Unit.<\/p>\n
(c) Notification of Pepco.<\/p>\n
(i) Generator shall promptly notify Pepco of any
\ncondition, incident or occurrence that will, or is reasonably likely to, cause
\nGenerator to fail to provide Energy or Ancillary Services during such periods
\nand in such amounts as required by Section 3.2(a), along with the anticipated
\nduration of the condition, incident or occurrence. Such notice shall not excuse
\nperformance by Generator of any of its obligation hereunder nor shall it deprive
\nPepco of any of its remedies under this Agreement.<\/p>\n
(ii) Generator shall, unless specifically waived
\nby Pepco in writing, (A) promptly provide Pepco copies of any written
\ncorrespondence, notices and agreements and arrangements between Generator and
\nPJM Interconnection LLC and\/or MAAC and (B) permit Pepco to attend any meetings
\nor discussions between Generator and PJM Interconnection LLC and\/or MAAC, in
\neach case to the extent any such correspondence, notices, agreements,
\narrangements, meetings or discussions concern any operation, outage or shutdown
\nof the Facility or any Unit that has or is reasonably expected to have an impact
\non Pepco’s local area reliability.<\/p>\n
380<\/p>\n
3.3 Violations.<\/p>\n
(a) Normal Condition Violation. If Pepco Sheds Load as a
\nresult of a Normal Condition Violation, Generator shall pay to Pepco an amount
\nequal to one million dollars ($1,000,000) for each such violation.<\/p>\n
(b) Abnormal Condition Violation.<\/p>\n
(i) If Generator commits an Abnormal Condition
\nViolation, Generator shall pay to Pepco an amount equal to one thousand dollars
\nper megawatt hour ($1,000\/MWh) for the difference (whether positive or negative)
\nin any hour during such Abnormal Condition Violation between the Target Output
\nand the Actual Output.<\/p>\n
(ii) In addition to any amount payable by
\nGenerator pursuant to Section 3.3(b)(i), if Generator has supplied Excess Output
\nduring an Abnormal Condition Violation, then Generator shall pay to Pepco an
\namount equal to all revenues derived by Generator from supplying such Excess
\nOutput.<\/p>\n
(iii) Notwithstanding any provision of this
\nSection 3.3(b) to the contrary, in the event Abnormal Conditions exist for any
\nperiod of twenty-one (21) consecutive days, then Generator shall not be required
\nto pay Pepco the amounts otherwise due under Section 3.3(b)(i) or 3.3(b)(ii) for
\nthe period commencing on the twenty-first (21st) day of such Abnormal Conditions
\nand ending with the termination of such Abnormal Conditions.<\/p>\n
(c) All amounts payable under this Section 3.3 shall be
\npaid in accordance with the billing procedures set forth in Section 3.4.<\/p>\n
(d) The Parties agree that the foregoing payment
\nprovisions are an integral part of this Agreement and forms a portion of the
\nconsideration for executing the Asset Sale Agreement; that the amounts set forth
\nin this Section 3.3 represent a reasonable estimate of the damages incurred by
\nPepco for a Normal Condition Violation and an Abnormal Condition Violation; that
\nthe payment by Generator of such amounts is an appropriate remedy; and that such
\npayments constitute liquidated damages and not a forfeiture or penalty.
\nGenerator irrevocably and unconditionally waives any claim that these payments
\nare or may be unenforceable as to Generator.<\/p>\n
3.4 Billing Procedures.<\/p>\n
(a) Within ten (10) calendar days after the first day of
\neach month immediately following the month in which one or more Transaction Days
\nhave occurred, Generator shall provide to Pepco a written invoice for any
\npayments due to Generator from Pepco pursuant to Section 3.2(a)(iii). Pepco
\nshall submit invoices to Generator whenever necessary under this Agreement.<\/p>\n
(b) Each invoice shall (i) delineate the month in which
\nthe Services were provided, (ii) fully describe the Services rendered, (iii) be
\nitemized to reflect the Services<\/p>\n
381<\/p>\n
performed or provided, and (iv) provide reasonable detail as to the calculation
\nof the amount involved.<\/p>\n
(c) All invoices shall be paid within fifteen (15)
\ncalendar days of receipt, but not earlier than the 25th day of the month in
\nwhich the invoice is rendered. All payments shall be made in immediately
\navailable funds payable to the other Party, by wire transfer to a bank account
\ndesignated in writing by such Party. Payment of invoices shall not relieve the
\npaying Party from any responsibilities or obligations it has under this
\nAgreement, nor shall such payment constitute a waiver of any claims arising
\nhereunder.<\/p>\n
(d) To the extent that, for any billing period, Generator
\nis obligated to pay to Pepco amounts due and calculated pursuant to Section 3.3,
\nPepco may use such amounts as a set-off against any amounts owed by Pepco to
\nGenerator under Section 3.2(a)(iii). If such amounts due and calculated pursuant
\nto Section 3.3 exceed the amounts due to Generator under Section 3.2(a)(iii) for
\nany billing period, Pepco shall submit an invoice to Generator and Generator
\nshall pay such invoice within fifteen (15) calendar days of receipt.<\/p>\n
(e) In the event of a billing dispute hereunder, (i)
\nGenerator shall continue to provide Services in accordance with the terms of
\nthis Agreement and (ii) the Party required to make payments hereunder shall pay
\nto the other Party all invoiced amounts, net of any set-offs permitted under
\nSection 3.4(d), that are not in dispute.<\/p>\n
ARTICLE IV<\/p>\n
RETIREMENT OR REMOVAL FROM SERVICE OF THE FACILITY<\/p>\n
4.1 Conditions Precedent to Retirement or Removal. Prior to the
\nretirement or indefinite removal from service of the Facility or any of its
\nUnits, Generator shall: (i) comply with all applicable MAAC requirements in
\nconnection with such retirement or indefinite removal from service; (ii) if
\napplicable, enter into an agreement with PJM Interconnection LLC providing for
\nstudies relating to the impact of the retirement or indefinite removal from
\nservice on the Facility, as more particularly described in Section 4.3 below;
\nand (iii) either (A) pay any applicable termination fee, as more particularly
\ndescribed in Section 4.4 below, or (B) provide (at Generator’s expense)
\nsubstitute resources satisfactory to PJM and Pepco for the remaining term of the
\nAgreement to maintain the reliability of the Facility (the “Substitute
\nResources”).<\/p>\n
4.2 Notice Requirement. Generator shall not be permitted to shut
\ndown the Facility or applicable Unit until the later of (x) the date specified
\nby Generator in a written notice to PJM Interconnection LLC and Pepco indicating
\nGenerator’s intent to shut down the Facility or Unit, such notice to be provided
\nat least five (5) years prior to the date of shutdown (the “Termination Notice”)
\nand (y) the date on which PJM notifies Generator in writing that transmission
\nreinforcements or other appropriate measures necessitated by the shutdown are in
\ncommercial operation. PJM Interconnection LLC may reduce or eliminate the five
\n(5) year notice requirement if PJM Interconnection LLC determines, following
\nconsideration of Generator’s commitment to provide Substitute Resources and
\nother applicable factors, that the reliability of the PJM Control Area no longer
\nrequires<\/p>\n
382<\/p>\n
such advance notice. In addition to PJM’s determination, Generator must obtain
\nPepco’s consent to reduce or eliminate the advance notice requirement, such
\nconsent not to be unreasonably withheld.<\/p>\n
4.3 PJM Studies. In the event Generator does not intend to provide
\nSubstitute Resources, Generator shall enter into an agreement with PJM
\nInterconnection LLC to perform a system impact study and, if indicated by the
\nsystem impact study, a facilities study, of the proposed retirement or
\nindefinite removal from service of the Facility or applicable Unit in order to
\ndetermine the PJM transmission additions or upgrades required, if any, to
\naccommodate such retirement or indefinite removal from service. Alternatively,
\nif Generator does intend to provide Substitute Resources, Generator shall (i)
\ncommission a study to evaluate the feasibility of the proposed Substitute
\nResources and (ii) at the request of PJM Interconnection LLC, enter into an
\nagreement with PJM Interconnection LLC to perform any system impact and
\nfacilities studies required by PJM Interconnection LLC. Generator shall pay all
\ncosts and deposits required in connection with the performance of any such
\nstudies consistent with Part IV of the PJM Tariff.<\/p>\n
4.4 Termination Fee. Based on the results of the studies required
\nby PJM Interconnection LLC, PJM Interconnection LLC may determine that certain
\ntransmission system additions or upgrades are necessary to accommodate the
\nretirement or indefinite removal from service of the Facility or applicable
\nUnit. As a termination fee (the “Termination Fee”), Generator shall contribute
\nto the transmission owner(s) constructing the additions or upgrades (through PJM
\nor directly), an amount equal to that portion of the installed cost of such
\nadditions or upgrades calculated as follows:<\/p>\n
(i) if the Termination Notice specifies a retirement or
\nindefinite removal from service date which is prior to the sixth anniversary of
\nthe Closing Date, the portion shall be 100%;<\/p>\n
(ii) if the specified retirement or indefinite removal
\nfrom service date is on or after the sixth anniversary but prior to the seventh
\nanniversary of the Closing Date, the portion shall be 80%;<\/p>\n
(iii) if the specified retirement or indefinite removal
\nfrom service date is on or after the seventh anniversary but prior to the eighth
\nanniversary of the Closing Date, the portion shall be 60%;<\/p>\n
(iv) if the specified retirement or indefinite removal
\nfrom service date is on or after the eighth anniversary but prior to the ninth
\nanniversary of the Closing Date, the portion shall be 40%;<\/p>\n
(v) if the specified retirement or indefinite removal
\nfrom service date is on or after the ninth anniversary but prior to the tenth
\nanniversary of the Closing Date, the portion shall be 20%; and<\/p>\n
(vi) if the specified retirement or indefinite removal
\nfrom service date is on or after the tenth anniversary of the Closing Date,
\nGenerator shall have no obligation under<\/p>\n
383<\/p>\n
this Agreement to reimburse PJM Interconnection LLC for the cost of the
\nadditions and upgrades found necessary by PJM Interconnection LLC.<\/p>\n
ARTICLE V<\/p>\n
REPRESENTATIONS OF THE PARTIES<\/p>\n
5.1 Representations of Pepco. Pepco hereby represents and warrants
\nto Generator as follows:<\/p>\n
(a) Incorporation. Pepco is a corporation duly
\nincorporated, validly existing and in good standing under the laws of the
\nDistrict of Columbia and Commonwealth of Virginia, and has all requisite
\ncorporate power and authority to own, lease and operate its material assets and
\nproperties and to carry on its business as now being conducted.<\/p>\n
(b) Authority. Pepco has all necessary corporate power
\nand authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Pepco of this
\nAgreement and the consummation by Pepco of the transactions contemplated hereby
\nhave been duly and validly authorized by the Board of Directors of Pepco or by a
\ncommittee thereof to whom such authority has been delegated and no other
\ncorporate proceedings on the part of Pepco are necessary to authorize this
\nAgreement or the transactions contemplated hereby. The Agreement has been duly
\nand validly executed and delivered by Pepco and, assuming that this Agreement
\nconstitutes a valid and binding agreement of Generator, constitutes a valid and
\nbinding agreement of Pepco, enforceable against Pepco in accordance with its
\nterms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this
\nAgreement by Pepco nor performance by Pepco of its obligations hereunder will
\n(i) conflict with or result in any breach of any provision of the Certificate of
\nIncorporation or By-laws of Pepco, (ii) result in a default (or give rise to any
\nright of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Pepco or any of its
\nsubsidiaries is a party or by which any of their respective assets may be bound
\nor (iii) violate any order, writ, injunction, decree, statute, rule or
\nregulation applicable to Pepco, or any of its assets, except in the case of
\nclauses (ii) and (iii) for such failures to obtain a necessary consent, defaults
\nand violations which would not, individually or in the aggregate, have a
\nmaterial adverse effect on the ability of Pepco to discharge its obligations
\nunder this Agreement (a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with,
\nor notice to, or authorization, consent or approval of any Governmental
\nAuthority is necessary for performance by Pepco of its obligations hereunder,
\nother than such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Pepco Material Adverse Effect.<\/p>\n
384<\/p>\n
5.2 Representations of Generator. Generator represents and
\nwarrants to Pepco as follows:<\/p>\n
(a) Incorporation. Generator is a [corporation] duly
\n[incorporated], validly existing and in good standing under the laws of the
\nState of ______________ and has all requisite [corporate] power and authority to
\nown, lease and operate its material assets and properties, including the
\nFacility, and to carry on its business as now being conducted.<\/p>\n
(b) Authority. Generator has all necessary [corporate]
\npower and authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Generator of
\nthis Agreement and the consummation by Generator of the transactions
\ncontemplated hereby have been duly and validly authorized by the [Board of
\nDirectors] of Generator or by a committee thereof to whom such authority has
\nbeen delegated and no other [corporate] proceedings on the part of Generator are
\nnecessary to authorize this Agreement or the transactions contemplated hereby.
\nThis Agreement has been duly and validly executed and delivered by Generator
\nand, assuming that this Agreement constitutes a valid and binding agreement of
\nPepco, constitutes a valid and binding agreement of Generator, enforceable
\nagainst Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this
\nAgreement by Generator nor performance by Generator of its obligations hereunder
\nwill (i) conflict with or result in any breach of any provision of the
\n[Certificate of Incorporation or By-laws] of Generator, (ii) result in a default
\n(or give rise to any right of termination, cancellation or acceleration) under
\nany of the terms, conditions or provisions of any note, bond, mortgage,
\nindenture, license, agreement, lease or other instrument or obligation to which
\nGenerator or any of its subsidiaries is a party or by which any of their
\nrespective assets may be bound or (iii) violate any order, writ, injunction,
\ndecree, statute, rule or regulation applicable to Generator, or any of its
\nassets, except in the case of clauses (ii) and (iii) for such failures to obtain
\na necessary consent, defaults and violations which would not, individually or in
\nthe aggregate, have a material adverse effect on the ability of Generator to
\ndischarge its obligations under this Agreement (a “Generator Material Adverse
\nEffect”).<\/p>\n
(ii) No declaration, filing or registration with,
\nor notice to, or authorization, consent or approval of any Governmental
\nAuthority is necessary for performance by Generator of its obligations
\nhereunder, other than such declarations, filings, registrations, notices,
\nauthorizations, consents or approvals which, if not obtained or made would not,
\nindividually or in the aggregate, have a Generator Material Adverse Effect.<\/p>\n
385<\/p>\n
ARTICLE VI<\/p>\n
DEFAULT<\/p>\n
6.1 Event of Default. Unless excused by Force Majeure, each of the
\nfollowing events shall constitute an event of default (an “Event of Default”)
\nunder this Agreement:<\/p>\n
(a) The failure by a Party to pay any amount due
\nhereunder within thirty (30) days after receipt of written notice of nonpayment
\nby the other Party, unless the payment of such amount is disputed in good faith,
\nin which event Section 3.4(e) and Article XI shall apply;<\/p>\n
(b) A Party’s breach of any material term or condition of
\nthis Agreement, including but not limited to any material breach of a
\nrepresentation, warranty or covenant made in this Agreement which, after
\nreceiving written notice of the breach from the non-breaching Party (such notice
\nto set forth in reasonable detail the nature of the default and, where known and
\nif applicable, the steps necessary to cure such default), (i) the breaching
\nParty fails to cure the default, if curable, within thirty (30) days following
\nreceipt of the notice or (ii) if such default is of such a nature that it cannot
\nbe cured within thirty (30) days following receipt of such notice, the breaching
\nParty fails within such thirty (30) days to commence the necessary cure and
\nfails at any time thereafter diligently and continuously to prosecute such cure
\nto completion, provided that the cure is completed no later than one hundred
\neighty (180) days after receipt of the default notice; provided, that no notice
\nor cure period shall be applicable with respect to any breach by Generator of
\nSection 3.2(a)(v);<\/p>\n
(c) The appointment of a receiver or liquidator or
\ntrustee for either Party, and such receiver, liquidator or trustee is not
\ndischarged within sixty (60) days;<\/p>\n
(d) The entry of a decree adjudicating a Party as
\nbankrupt or insolvent, and such decree is continued undischarged and unstayed
\nfor a period of sixty (60) days; or<\/p>\n
(e) The filing of a voluntary or involuntary petition in
\nbankruptcy under any provision of any federal or state bankruptcy law by a Party
\nor against it, and, with respect to an involuntary petition in bankruptcy, such
\npetition continues undischarged and unstayed for a period of sixty (60) days.<\/p>\n
6.2 Remedies. Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (i) exercise all such rights and remedies as may be
\navailable to it at law or equity including seeking to recover damages caused by
\nsuch Event of Default, subject to Section 6.5 of this Agreement, and\/or (ii)
\nterminate this Agreement. The Parties shall not discontinue the performance of
\nany one or more of their obligations hereunder due to the occurrence of an Event
\nof Default during the pendency of any dispute regarding such Event of Default
\nand until such dispute is finally resolved.<\/p>\n
386<\/p>\n
6.3 Additional Remedies. Generator acknowledges and specifically
\nagrees that its obligations under this Agreement are essential to ensure the
\nreliability of the System; that breach of Generator’s obligations may result in
\nirreparable harm and damage to Pepco which cannot adequately be compensated by a
\nmonetary award; and that, as a consequence thereof, Pepco shall, in addition to
\nany other remedy to which Pepco may be entitled by reason of Generator’s breach
\nof this Agreement, be entitled to seek and obtain temporary, preliminary and
\npermanent injunctive relief from any court or Governmental Authority of
\ncompetent jurisdiction restraining Generator from committing or continuing any
\nbreach of this Agreement.<\/p>\n
6.4 Reimbursement for Replacement Costs. Upon an Event of Default,
\nGenerator shall be liable to Pepco for all costs reasonably incurred by Pepco as
\na direct result of Generator’s failure to deliver Energy or Ancillary Services
\npursuant to the terms of this Agreement. Such costs shall include all reasonable
\ncosts associated with the procurement of replacement Energy, including Energy,
\nAncillary Services, demand, capacity, or reservation charges, any transmission
\ncosts associated with procuring such replacement Energy and any costs of
\nconstructing the additions or upgrades necessary to provide the Energy to be
\nsupplied by Generator hereunder. In addition to the amounts associated with the
\npurchase of replacement Energy, Generator shall be liable for reasonable
\nadministrative and legal expenses incurred as a result of Generator’s failure to
\nperform. The Parties expressly agree that such amounts do not constitute
\nliquidated damages and that the obligations of Generator under this Section 6.4
\nshall survive and continue in full force and effect regardless of whether this
\nAgreement expires or terminates or is canceled, surrendered or completed.<\/p>\n
6.5 Limitation of Liability. Except as provided in Sections 3.3,
\n4.4 and 6.4, neither Party nor their respective officers, directors, agents,
\nemployees, parents, Affiliates, successors, assign, contractors or
\nsubcontractors shall be liable to the other Party or its shareholders,
\nsubsidiaries, Affiliates, officers, directors, agents, employees, successors,
\nassigns, contractors or subcontractors for any claims, demands or suits for
\nconsequential, incidental, special, exemplary, punitive, indirect or multiple
\ndamages connected with or resulting from any breach of this Agreement (other
\nthan breach of Article IX), or any actions undertaken in connection with or
\nrelated hereto or thereto, including any such damages which are based upon
\nbreach of contract, tort (including negligence and misrepresentation), breach of
\nwarranty, strict liability, statute, operation of law or any other theory of
\nrecovery. The foregoing shall not prevent any Party from recovering damages of
\nthe foregoing nature in a claim for indemnification hereunder for such damages
\nasserted by a third party.<\/p>\n
387<\/p>\n
ARTICLE VII<\/p>\n
ASSIGNMENT<\/p>\n
7.1 Assignment.<\/p>\n
(a) Except as set forth in Sections 7.1(b), 7.1(c) and
\n7.1(d), neither this Agreement nor any of the rights, interests, or obligations
\nhereunder shall be assigned by either Party hereto, without the prior written
\nconsent of the other Party, which consent shall not be unreasonably withheld or
\ndelayed.<\/p>\n
(b) Upon ten (10) days prior written notice to Generator,
\nPepco may assign this Agreement, and Pepco’s rights, interests and obligations
\nhereunder, to (i) an Affiliate of Pepco that owns all or part of Pepco’s
\ntransmission system or (ii) an Independent System Operator or independent
\ntransmission company whose control over all or part of Pepco’s transmission
\nsystem has been approved by the FERC.<\/p>\n
(c) Generator may assign, transfer, pledge or otherwise
\ndispose of its rights and interests hereunder to a trustee, lending institution,
\nor other Person for the purposes of financing or refinancing the Facility,
\nincluding upon or pursuant to the exercise of remedies under such financing or
\nrefinancing, or by way of assignments, transfers, conveyances of dispositions in
\nlieu thereof; provided, however, that no such assignment or disposition shall
\nrelieve or in any way discharge Generator from the performance of its duties and
\nobligations under this Agreement.<\/p>\n
Pepco agrees to execute and deliver, at Generator’s expense, such documents as
\nmay be reasonably necessary to accomplish any such assignment, transfer,
\nconveyance, pledge or disposition of rights hereunder for purposes of the
\nfinancing or refinancing of the Facility, so long as Pepco’s rights under this
\nAgreement are not thereby altered, amended, diminished or otherwise impaired.<\/p>\n
(d) Either Party may assign this Agreement to a successor
\nto all or substantially all of the assets of such Party by way of merger,
\nconsolidation, sale or otherwise, provided such successor assumes in writing and
\nbecomes liable for all of such Party’s duties and obligations hereunder.<\/p>\n
7.2 Release of Rights and Obligations. No assignment, transfer,
\nconveyance, pledge or disposition of rights, interests, duties or obligations
\nunder this Agreement by a Party shall relieve that Party from liability and
\nfinancial responsibility for the performance thereof after any such transfer,
\nassignment, conveyance, pledge or disposition unless and until (i) the
\ntransferee or assignee shall agree in writing to assume the obligations and
\nduties of that Party under this Agreement and to impose such obligations on
\nsubsequent permitted transferees and assignees and (ii) the non-assigning Party
\nhas consented in writing to such assumption and to a release of the assigning
\nParty from such liability, such consent not to be unreasonably withheld or
\ndelayed.<\/p>\n
7.3 Transfer of Facility. Any direct or indirect assignment, sale,
\nconveyance, lease, or other transfer by Generator of the Facility, any Unit or
\nGenerator’s direct or indirect<\/p>\n
388<\/p>\n
owner thereof, whether by operation of law or otherwise, shall be null and void
\nunless, with Pepco’s prior written consent, which shall not be unreasonably
\nwithheld or delayed, the transferee of the Facility or such Unit assumes in
\nwriting all of Generator’s right, title and interest in and to this Agreement,
\nand all of Generator’s rights, interests, duties and obligations hereunder.<\/p>\n
7.4 Change in Corporate Identity. If Generator terminates its
\nexistence as a corporate entity by merger, acquisition, sale, consolidation or
\notherwise, or if all or substantially all of Generator’s assets are transferred
\nto another person or business entity without complying with this Article VII,
\nPepco shall have the right, enforceable in a court of competent jurisdiction, to
\nenjoin Generator’s successor from using the Facility in any manner that does not
\ncomply with the requirements of this Agreement or that impedes Pepco’s ability
\nto carry on its ongoing business operations.<\/p>\n
7.5 Successors and Assigns. This Agreement and all of the
\nprovisions hereof are binding upon, and inure to the benefit of, the Parties and
\ntheir respective successors and permitted assigns.<\/p>\n
ARTICLE VIII<\/p>\n
FORCE MAJEURE<\/p>\n
8.1 Force Majeure. Notwithstanding anything in this Agreement to
\nthe contrary, the Parties shall be excused from performing their respective
\nobligations hereunder and shall not be liable in damages or otherwise to the
\nextent that a Party is unable to perform or is prevented from performing by an
\nevent of Force Majeure and has complied with Section 8.3. The Parties recognize
\nand agree that an event of Force Majeure will not relieve any Party of its
\nobligation to make payments when due hereunder.<\/p>\n
8.2 Definition of Force Majeure. The term “Force Majeure” as used
\nherein means those causes beyond the reasonable control of the Party affected,
\nthat, by the exercise of reasonable diligence, including Good Utility Practice,
\nsuch Party is unable to prevent, avoid, mitigate, or overcome, including the
\nfollowing: any act of God, act of the public enemy, war, civil disturbance,
\ninsurrection, riot, fire (unless resulting from the fault or negligence of the
\nParty asserting Force Majeure), storm or flood, lightning or explosion (unless
\nresulting from the fault or negligence of the Party asserting Force Majeure) or
\nany other cause of a similar nature beyond such Party’s reasonable control.
\nNeither the cost to operate and maintain the Facility nor any mechanical or
\nelectrical breakdown or failure of machinery or plant owned or operated by
\nGenerator due to any reason other than an event which itself constitutes an
\nevent of Force Majeure shall be deemed an event of Force Majeure.<\/p>\n
8.3 Force Majeure Procedures. A Party shall not be entitled to
\nrely on the occurrence of an event of Force Majeure as a basis for being excused
\nfrom performance of its obligations under this Agreement unless the Party
\nrelying on the event or condition shall: (a) provide prompt written notice of
\nsuch Force Majeure event to the other Party, including an estimation of its
\nexpected duration and the probable impact on the<\/p>\n
389<\/p>\n
performance of its obligations hereunder; (b) exercise all reasonable efforts in
\naccordance with Good Utility Practice to continue to perform its obligations
\nunder this Agreement; (c) expeditiously take action to correct or cure the event
\nor condition excusing performance; (d) exercise all reasonable efforts to
\nmitigate or limit damages to the other Party; and (e) provide prompt notice to
\nthe other Party of the cessation of the event or condition giving rise to its
\nexcuse from performance. Subject to this Section 8.3, any obligation under this
\nAgreement shall be suspended only to the extent caused by such Force Majeure and
\nonly during the continuance of any inability of performance caused by such Force
\nMajeure but for no longer period.<\/p>\n
ARTICLE IX<\/p>\n
INDEMNIFICATION<\/p>\n
9.1 Generator’s Indemnification. Generator shall indemnify, hold
\nharmless and defend Pepco, its Affiliates, and their respective officers,
\ndirectors, employees, agents, contractors, subcontractors, invitees and
\nsuccessors, from and against any and all claims, demands, suits, obligations,
\npayments, liabilities, costs, losses, judgments, damages and expenses (including
\nthe costs and expenses of any and all actions, suits, proceedings, assessments,
\njudgments, settlements, and compromises relating thereto, reasonable attorneys’
\nand expert fees and reasonable disbursements in connection therewith) for any
\nloss or liability arising out of or relating to Generator’s breach of any
\ncovenant, representation or warranty of Generator in this Agreement.<\/p>\n
9.2 Pepco’s Indemnification. Pepco shall indemnify, hold harmless
\nand defend Generator, its Affiliates, and their respective officers, directors,
\nemployees, agents, contractors, subcontractors, invitees and successors, from
\nand against any and all claims, demands, suits, obligations, payments,
\nliabilities, costs, losses, judgments, damages and expenses (including the costs
\nand expenses of any and all actions, suits, proceedings, assessments, judgments,
\nsettlements, and compromises relating thereto reasonable attorneys’ and expert
\nfees and reasonable disbursements in connection therewith) for any loss or
\nliability arising out of or relating to Pepco’s breach of any covenant,
\nrepresentation or warranty of Pepco in this Agreement.<\/p>\n
9.3 Indemnification Procedures. Any Party seeking indemnification
\nunder this Agreement shall give the other Party notice of such claim within
\nninety (90) days of the later of the commencement of, or the Party’s actual
\nknowledge of, such claim or action. Such notice shall describe the claim in
\nreasonable detail, and shall indicate the amount (estimated if necessary) of the
\nclaim that has been, or may be sustained by, said Party. The failure to provide
\nsuch notice shall not excuse any Party from its continuing obligations
\nhereunder; however, any claim shall be reduced by the damages resulting from
\nsuch Party’s delay or failure to provide such notice. Neither Party may settle
\nor compromise any claim for which indemnification is sought under this Agreement
\nwithout the prior consent of the other Party; provided, however, said consent
\nshall not be unreasonably withheld or delayed.<\/p>\n
9.4 Survival. The indemnification obligations of each Party under
\nthis Article IX for acts or occurrences that occur prior to expiration,
\ntermination, or cancellation of this<\/p>\n
390<\/p>\n
Agreement shall survive the Effective Date and continue in full force and effect
\nregardless of whether this Agreement expires or terminates, or is canceled,
\nsurrendered or completed.<\/p>\n
ARTICLE X<\/p>\n
CONFIDENTIALITY<\/p>\n
10.1 Confidentiality Obligations of Pepco. Pepco shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by Generator
\nin connection with this Agreement marked “Confidential” or “Proprietary.” Except
\nto the extent that such information or documents are (i) generally available to
\nthe public other than as a result of a disclosure by Pepco in breach of this
\nAgreement, (ii) available to Pepco on a non-confidential basis prior to
\ndisclosure to Pepco by Generator, or (iii) available to Pepco on a
\nnon-confidential basis from a source other than Generator, provided that such
\nsource is not known, and by reasonable effort could not be known, by Pepco to be
\nbound by a confidentiality agreement with Generator or otherwise prohibited from
\ntransmitting the information to Pepco by a contractual, legal or fiduciary
\nobligation, Pepco shall not release or disclose such information to any other
\nperson, except to its employees, representatives or agents on a need-to-know
\nbasis, in connection with this Agreement who has not first been advised of the
\nconfidentiality provisions of this Section 10.1 and has agreed in writing to
\ncomply with such provisions. In no event shall such information be disclosed in
\nviolation of the requirements of FERC Orders 889 and 889-A, and any successor
\nthereto. Pepco shall promptly notify Generator if it receives notice or
\notherwise concludes that the production of any information subject to this
\nSection 10.1 is being sought under any provision of law and Pepco shall use
\nreasonable efforts in cooperation with Generator to seek confidential treatment
\nfor such confidential information provided thereto.<\/p>\n
10.2 Confidentiality Obligations of Generator. Generator shall hold
\nin confidence, unless compelled to disclose by judicial or administrative
\nprocess or other provisions of law, all documents and information furnished by
\nPepco in connection with this Agreement marked “Confidential” or “Proprietary.”
\nExcept to the extent that such information or documents are (i) generally
\navailable to the public other than as a result of a disclosure by Generator in
\nbreach of this Agreement, (ii) available to Generator on a non-confidential
\nbasis prior to disclosure to Generator by Pepco, or (iii) available to Generator
\non a non-confidential basis from a source other than Pepco, provided that such
\nsource is not known, and by reasonable effort could not be known, by Generator
\nto be bound by a confidentiality agreement with Pepco or otherwise prohibited
\nfrom transmitting the information to Generator by a contractual, legal or
\nfiduciary obligation, Generator shall not release or disclose such information
\nto any other person, except to its employees, representatives or agents on a
\nneed-to-know basis, in connection with this Agreement who has not first been
\nadvised of the confidentiality provisions of this Section 10.2 and has agreed in
\nwriting to comply with such provisions. In no event shall such information be
\ndisclosed in violation of the requirements of FERC Orders 889 and 889-A, and any
\nsuccessor thereto. Generator shall promptly notify Pepco if it receives notice
\nor otherwise concludes that the production of any information subject to this
\nSection 10.2 is being sought under any provision of law and Generator shall use
\nreasonable efforts in cooperation<\/p>\n
391<\/p>\n
with Pepco to seek confidential treatment for such confidential information
\nprovided thereto.<\/p>\n
10.3 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its obligations
\nunder Section 10.1 or 10.2, above, as applicable. Each Party accordingly agrees,
\nthat the other Party shall be entitled to equitable relief, by way of injunction
\nor otherwise, if a Party breaches or threatens to breach its obligations under
\nSection 10.1 or 10.2 of this Agreement, as applicable, which equitable relief
\nshall be granted without bond or proof of damages, and the receiving Party shall
\nnot plead in defense that there would be an adequate remedy at law.<\/p>\n
ARTICLE XI<\/p>\n
DISPUTE RESOLUTION<\/p>\n
11.1 Disputes. A Party with a claim or dispute under this Agreement
\nshall submit to the other Party a notification of such claim or dispute within
\nsixty (60) days after the circumstances that gave rise to the claim or the
\nquestion or issue in dispute. The notification shall be in writing and shall
\ninclude a concise statement of the claim or the issue or question in dispute, a
\nstatement of the relevant facts and documentation to support the claim. In the
\nevent the Parties are unable, in good faith, to resolve their disagreement in a
\nmanner satisfactory to both Parties within thirty (30) days after receipt by a
\nParty of a notification specifying the claim, issue or question in dispute, the
\nParties shall refer the dispute to their respective senior management. If, after
\nusing their good faith best efforts to resolve the dispute, senior management
\ncannot resolve the dispute within thirty (30) days, the Parties shall utilize
\nthe arbitration procedures set forth below in Section 11.2 to resolve a dispute,
\nprovided that nothing herein or therein shall prohibit Pepco or Generator from
\nat any time requesting from a court of competent jurisdiction a temporary
\nrestraining order, preliminary injunction, or other similar form of equitable
\nrelief to enforce performance of the provisions of this Agreement.<\/p>\n
11.2 Arbitration.<\/p>\n
(a) Unless the Parties otherwise mutually agree in
\nwriting to another form of dispute resolution, such as dispute resolution under
\nthe PJM Agreement or the MAAC Agreement, any arbitration initiated under this
\nAgreement shall be conducted before a single neutral arbitrator appointed by the
\nParties within thirty (30) days of receipt by respondent of the demand for
\narbitration. If the Parties are unable to agree on an arbitrator, such
\narbitration shall be appointed by the American Arbitration Association. Unless
\nthe Parties agree otherwise, the arbitrator shall be an attorney or retired
\njudge with at least fifteen (15) years of experience, and shall not have any
\ncurrent or past substantial business or financial relationships with any Party
\nto the arbitration. If possible, the arbitrator shall have experience in the
\nelectric utility industry. Unless otherwise agreed, the arbitration shall be
\nconducted in accordance with the American Arbitration Association’s Commercial
\nArbitration Rules, then in effect, in the District of Columbia. Any arbitration
\nproceedings, decision or award rendered hereunder and the validity, effect and<\/p>\n
392<\/p>\n
interpretation of this arbitration agreement shall be governed by the Federal
\nArbitration Act of the United States, 9 U.S.C. Section 1 et seq.<\/p>\n
(b) The arbitration shall, if possible, be concluded not
\nlater than six (6) months after the date that it is initiated. The arbitrator
\nshall be authorized only to interpret and apply the provisions of this Agreement
\nor any related agreements entered into under this Agreement and shall have no
\npower to modify or change any of the above in any manner. The arbitrator shall
\nhave no authority to award punitive or multiple damages or any damages
\ninconsistent with this Agreement. The arbitrator shall, within thirty (30) days
\nof the conclusion of the hearing, unless such time is extended by agreement of
\nthe Parties, notify the Parties in writing of his or her decision, stating his
\nor her reasons for such decision and separately listing his or her findings of
\nfact and conclusions of law. The decision of the arbitrator rendered in such a
\nproceeding shall be final and binding on the Parties. Judgment on the award may
\nbe entered upon it in any court having jurisdiction.<\/p>\n
11.3 FERC Jurisdiction. Nothing in this Agreement shall preclude,
\nor be construed to preclude, any Party from filing a petition or complaint with
\nFERC with respect to any arbitrable claim over which FERC has jurisdiction. In
\nsuch case, the other Party may request FERC to reject or to waive jurisdiction.
\nIf FERC rejects or waives jurisdiction with respect to all or a portion of the
\nclaim, the portion of the claim not so accepted by FERC shall be resolved
\nthrough arbitration, as provided in this Agreement. To the extent that FERC
\nasserts or accepts jurisdiction over the claim, the decision, finding of fact or
\norder of FERC shall be final and binding, subject to judicial review under the
\nFederal Power Act, and any arbitration proceedings that may have commenced with
\nrespect to the claim prior to the assertion or acceptance of jurisdiction by
\nFERC shall be terminated.<\/p>\n
ARTICLE XII<\/p>\n
MISCELLANEOUS<\/p>\n
12.1 Amendment and Modification; Extension; Waiver. This Agreement
\nmay be amended, modified or supplemented only by an instrument in writing signed
\non behalf of each of the Parties. Either Party may (i) extend the time for the
\nperformance of any of the obligations or other acts of the other Party, (ii)
\nwaive any inaccuracies in the representations and warranties of the other Party
\ncontained in this Agreement or (iii) waive compliance by the other Party with
\nany of the agreements or conditions contained in this Agreement. Any agreement
\non the part of a Party to any such extension or waiver shall be valid only if
\nset forth in an instrument in writing signed on behalf of such Party. The
\nfailure of a Party to this Agreement to assert any of its rights under this
\nAgreement or otherwise shall not constitute a waiver of such rights.<\/p>\n
12.2 Notices. All notices and other communications hereunder shall
\nbe in writing and shall be deemed given (as of the time of delivery or, in the
\ncase of a telecopied communication, of confirmation) if delivered personally,
\ntelecopied (which is confirmed) or sent by overnight courier (providing proof of
\ndelivery) to the Parties at the following addresses (or at such other address
\nfor a Party as shall be specified by like notice):<\/p>\n
393<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, NW
\n Washington, DC 20037
\n Telecopier: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Generator, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, NW
\n Suite 300 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin Israel, Esq.<\/p>\n
12.3 No Third Party Beneficiaries. Nothing in this Agreement,
\nexpress or implied, is intended to confer on any other person except the Parties
\nhereto any rights, interests, obligations or remedies hereunder.<\/p>\n
12.4 Independent Contractors. The Parties acknowledge and agree
\nthat: (i) they are independent contractors, (ii) neither Party shall have any
\nright, power or authority to enter into any agreement or commitment, act on
\nbehalf of, or otherwise bind the other<\/p>\n
394<\/p>\n
Party in any way, and (iii) nothing contained in this Agreement shall create any
\nrelationship between Pepco and Generator other than that of independent
\ncontractors.<\/p>\n
12.5 Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the District of Columbia (regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaw).<\/p>\n
12.6 Jurisdiction and Enforcement. Except as provided in Article
\nXI, each of the Parties irrevocably submits to the exclusive jurisdiction of (i)
\nthe Superior Court of the District of Columbia and (ii) the United States
\nDistrict Court for the District of Columbia, for the purposes of any suit,
\naction or other proceeding arising out of this Agreement or any transaction
\ncontemplated hereby. Except as provided in Article XI, each of the Parties
\nagrees to commence any action, suit or proceeding relating hereto either in the
\nUnited States District Court for the District of Columbia or, if such suit,
\naction or proceeding may not be brought in such court for jurisdictional
\nreasons, in the Superior Court for the District of Columbia. Except as provided
\nin Article XI, each of the Parties further agrees that service of process,
\nsummons, notice or document by hand delivery or U.S. registered mail at the
\naddress specified for such Party in Section 12.2 (or such other address
\nspecified by such Party from time to time pursuant to Section 12.2) shall be
\neffective service of process for any action, suit or proceeding brought against
\nsuch Party in any such court. Except as provided in Article XI, each of the
\nParties irrevocably and unconditionally waives any objection to the laying of
\nvenue of any action, suit or proceeding arising out of this Agreement or the
\ntransactions contemplated hereby in (i) the Superior Court of the District of
\nColumbia and (ii) the United States District Court for the District of Columbia,
\nand hereby further irrevocably and unconditionally waives and agrees not to
\nplead or claim in any such court that any such action, suit or proceeding
\nbrought in any such court has been brought in an inconvenient forum.<\/p>\n
12.7 Counterparts. This Agreement may be executed in two
\ncounterparts, each of which shall be deemed an original, but both of which
\ntogether shall constitute one and the same instrument.<\/p>\n
12.8 Interpretation. When a reference is made in this Agreement to
\nan Article or Section, such reference shall be to an Article or Section of this
\nAgreement unless otherwise indicated. The table of contents and headings
\ncontained in this Agreement are for reference purposes only and shall not affect
\nin any way the meaning or interpretation of this Agreement. Whenever the words
\n“include”, “includes” or “including” are used in this Agreement, they shall be
\ndeemed to be followed by the words “without limitation” or equivalent words. The
\nwords “hereof”, “herein” and “hereunder” and words of similar import when used
\nin this Agreement shall refer to this Agreement as a whole and not to any
\nparticular provision of this Agreement. The definitions contained in this
\nAgreement are applicable to the singular as well as the plural forms of such
\nterms and to the masculine as well as to the feminine and neuter genders of such
\nterm. Any agreement, instrument, statute, regulation, rule or order defined or
\nreferred to herein or in any agreement or instrument that is referred to herein
\nmeans such agreement, instrument, statute, regulation, rule or order as from
\ntime to time amended, modified or supplemented, including (in the case of
\nagreements or instruments) by waiver or consent and (in the case of statutes,<\/p>\n
395<\/p>\n
regulations, rules or orders) by succession of comparable successor statutes,
\nregulations, rules or orders and references to all attachments thereto and
\ninstruments incorporated therein. References to a person are also to its
\npermitted successors and assigns. Each Party acknowledges that it has been
\nrepresented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
12.9 Entire Agreement. This Agreement, including the documents,
\ncertificates and instruments referred to herein and other contracts, agreements
\nand instruments contemplated hereby, embody the entire agreement and
\nunderstanding of the Parties in respect of the transactions contemplated by this
\nAgreement. There are no restrictions, promises, representations, warranties,
\ncovenants or undertakings other than those expressly set forth or referred to
\nherein or therein. This Agreement supersedes all prior agreements and
\nunderstandings between the Parties with respect to the transactions contemplated
\nby this Agreement.<\/p>\n
12.10 Severability. If any term or other provision of this Agreement
\nis invalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the Parties shall
\nnegotiate in good faith to modify this Agreement so as to effect the original
\nintent of the Parties as closely as possible to the fullest extent permitted by
\napplicable law in an acceptable manner to the end that the transactions
\ncontemplated hereby are fulfilled to the extent possible.<\/p>\n
12.11 Conflicts. Except with respect to the indemnification,
\nliability, default and remedies provisions contained herein or as otherwise
\nexpressly provided herein, in the event of any conflict or inconsistency between
\nthe terms of this Agreement and the terms of the Asset Sale Agreement, the terms
\nof the Asset Sale Agreement shall prevail.<\/p>\n
12.12 Further Assurances. The Parties hereto agree to execute and
\ndeliver promptly, at the expense of the Party requesting such action, any and
\nall other and further instruments, documents and information which may be
\nreasonably requested in order to effectuate the transactions contemplated
\nhereby. Each Party agrees to cooperate with, assist and accommodate all
\nreasonable requests made by the other Party in respect of any regulatory
\napproval necessary for, or any regulatory proceeding relating to, the execution,
\ndelivery or performance of this Agreement. Each Party further agrees to comply
\nin all material respects with all Laws of Governmental Authorities relating to
\nthis Agreement and the consummation of the transactions contemplated hereby.<\/p>\n
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]<\/p>\n
396<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this Local Area
\nSupport Agreement to be signed by their respective duly authorized
\nrepresentatives on the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER
\n COMPANY<\/p>\n
By:
\n ——————————–
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ——————————–
\n Name:
\n Title:<\/p>\n
397<\/p>\n
APPENDIX A<\/p>\n
As used in this Agreement, the following terms have the meanings set
\nforth below:<\/p>\n
(a) “Abnormal Conditions” means Abnormal Conditions as described
\nin Pepco Transmission Procedure No. 28.<\/p>\n
(b) “Abnormal Condition Violation” means any failure by Generator
\nduring Abnormal Conditions to comply during any hour with the operation and
\ndispatch orders specified by PJM Interconnection LLC or Pepco for that hour
\npursuant to Section 3.2(a); provided, however, Generator shall not have
\ncommitted an Abnormal Condition Violation if the Actual Output is no more than
\nfive megawatts (5 MW) greater than or five megawatts (5 MW) less than the Target
\nOutput based on instantaneous meter readings.<\/p>\n
(c) “Actual Output” means the actual output supplied in any hour
\nduring Abnormal Conditions by Generator from the Facility pursuant to the
\noperation and dispatch orders of PJM Interconnection LLC or Pepco in accordance
\nwith Section 3.2(a).<\/p>\n
(d) “Affiliate” shall have the meaning set forth in Rule 12b-2 of
\nthe General Rules and Regulations under the Securities Exchange Act of 1934, as
\namended.<\/p>\n
(e) “Ancillary Services” means all services or requirements
\nnecessary to support the transmission of capacity and Energy from resources to
\nloads while maintaining reliable operation of the System in accordance with Good
\nUtility Practice. Ancillary Services includes, but is not limited to,
\nscheduling, system control and dispatch, reactive supply and voltage control
\nfrom generation sources, regulation and frequency response, energy imbalance,
\noperating reserve, emergency energy, spinning reserve and supplemental reserve.<\/p>\n
(f) “Available” means, in relation to the Facility, that the
\nFacility or any Unit thereof is capable, in real time, of producing Energy and
\nAncillary Services which will be delivered into the System.<\/p>\n
(g) “Closing” shall have the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
(h) “Closing Date” means the date on which the Closing with
\nrespect to the Facility actually occurs.<\/p>\n
(i) “Effective Date” means the date upon which this Agreement
\nbecomes effective as determined pursuant to Section 2.1.<\/p>\n
(j) “Energy” means electrical energy.<\/p>\n
(k) “Event of Default” has the meaning set forth in Section 6.1.<\/p>\n
398<\/p>\n
(l) “Excess Output” means the amount, if any, by which the Actual
\nOutput exceeds the Target Output based on instantaneous meter readings.<\/p>\n
(m) “Facility” means the Potomac River Station electric generating
\nfacility, which consists of Units 1, 2, 3, 4 and 5 and associated generating
\nfacilities, located in Alexandria, Virginia.<\/p>\n
(n) “FERC” means the Federal Energy Regulatory Commission or its
\nsuccessor.<\/p>\n
(o) “Force Majeure” has the meaning set forth in Section 8.2.<\/p>\n
(p) “Generator Material Adverse Effect” has the meaning set forth
\nin Section 5.2.<\/p>\n
(q) “Good Utility Practice” means any of the applicable practices,
\nmethods and acts:<\/p>\n
(i) required by FERC, NERC, MAAC, PJM Interconnection
\nLLC, the PJM System Operator, or the successor of any of them, whether or not
\nthe Party whose conduct is at issue is a member thereof;<\/p>\n
(ii) required by applicable Law;<\/p>\n
(iii) required by the Pepco Interconnection Standards or
\nthe policies and standards of Pepco relating to emergency operations;<\/p>\n
(iv) otherwise engaged in or approved by a significant
\nportion of the electric utility industry during the relevant time period;<\/p>\n
which, in the exercise of reasonable judgment in light of the facts known at the
\ntime the decision was made, could have been expected to accomplish the desired
\nresult at a reasonable cost consistent with applicable Law, good business
\npractices, reliability, safety, and expedition. Good Utility Practice is not
\nintended to be limited to the optimum practice, method, or act to the exclusion
\nof all others, but rather to be acceptable practices, methods, or acts generally
\naccepted in the region.<\/p>\n
(r) “Governmental Authority” means any court, administrative or
\nregulatory agency or commission or other governmental entity or instrumentality,
\ndomestic, foreign or supranational or any department thereof.<\/p>\n
(s) “Independent System Operator” means an entity, other than
\nPepco or any affiliate or associate company, including any regional transmission
\noperator, independent system operator, transco, or any other independent system
\nadministrator, that possess operational or planning control over the System.<\/p>\n
399<\/p>\n
(t) “Law” means any law, statute, treaty, code, rule, regulation,<\/p>\n
or order judgement or determination of an arbitrator, court or other
\nGovernmental Authority, or any franchise, license, lease, permit, certificate,
\nauthorization, qualification, easement, right of way, right or approval binding
\non a Party or any of its property.<\/p>\n
(u) “MAAC” means the Mid-Atlantic Area Council, a reliability
\ncouncil under Section 202 of the Federal Power Act established pursuant to the
\nMAAC Agreement, dated August 1, 1994 (the “MAAC Agreement”), and any successor
\nthereto.<\/p>\n
(v) “NERC” means the North American Electric Reliability Council
\nand any successor entity thereto.<\/p>\n
(w) “Normal Conditions” means Normal Conditions as described in
\nPepco Transmission Procedure No. 28.<\/p>\n
(x) “Normal Condition Violation” means any failure by Generator to
\ncomply with Pepco Transmission Procedure No. 28 during Normal Conditions, any
\nfailure to have at least one (1) Unit at full rated capacity during Normal
\nConditions or both.<\/p>\n
(y) “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Agreement and any successor
\nthereto including any regional transmission operator, independent system
\noperator, transco, or any other independent system administrator that possesses
\noperational or planning control over the System.<\/p>\n
(z) “PJM Agreement” means the Amended and Restated Operating
\nAgreement of the PJM Interconnection LLC, dated as of June 2, 1997.<\/p>\n
(aa) “PJM Control Area” means the control area recognized by NERC
\nas the PJM Control Area.<\/p>\n
(bb) “PJM Interconnection LLC” means the independent system
\noperator of the PJM Control Area pursuant to the PJM Agreement and the PJM
\nTariff.<\/p>\n
(cc) “PJM System Operator” means the PJM Interconnection LLC energy
\ncontrol center staff responsible for central dispatch as provided in the PJM
\nAgreement.<\/p>\n
(dd) “PJM Tariff” means the PJM Open Access Transmission Tariff
\nproviding transmission service within the PJM Control Area.<\/p>\n
(ee) “Pepco Interconnection Standards” means Pepco’s
\nInterconnection and Parallel Operating Guidelines as amended from time to time.
\nA copy of the existing Pepco Interconnection Standards is attached hereto as
\nExhibit A.<\/p>\n
(ff) “Pepco Interconnection Procedure No. 28” means Pepco’s
\nTransmission System Operations Procedure No. 28, and any modification or
\nsuccessor procedure accepted by PJM. A copy of existing Pepco Transmission
\nProcedure No. 28 is attached.<\/p>\n
400<\/p>\n
hereto as Exhibit B. The Parties shall revise Exhibit B from time
\nto time to conform to any changes made to Pepco Transmission
\nProcedure No. 28.<\/p>\n
(gg) “Pepco Transmission Procedure No. 29” means Pepco’s
\nTransmission System Operations Procedure No. 29, and any modification or
\nsuccessor procedure accepted by PJM. A copy of the existing Pepco Transmission
\nProcedure No. 29 is attached hereto as Exhibit C. The Parties shall revise
\nExhibit C from time to time to conform to any changes made to Pepco Transmission
\nProcedure No. 29.<\/p>\n
(hh) “Pepco Material Adverse Effect” has the meaning set forth in
\nSection 5.1.<\/p>\n
(ii) “Person” means any individual, partnership, limited liability
\ncompany, joint venture, corporation, trust, unincorporated organization, or
\ngovernmental entity or any department or agency thereof.<\/p>\n
(jj) “Services” means Generator’s operation of the Facility or any
\nUnit thereof in accordance with Section 3.2(a).<\/p>\n
(kk) “Shed Load” means the process of deliberately removing firm
\nload from the System, whether manually, automatically or through requiring
\nlocation-specific load reductions, in accordance with Good Utility Practice to
\nmaintain the integrity of the System.<\/p>\n
(ll) “Substitute Resources” has the meaning set forth in Section
\n4.1
\n (mm) “System” means Pepco’s electric system in the electrical
\nvicinity of the Facility.<\/p>\n
(nn) “Target Output” means the output required to be supplied in
\nany hour during Abnormal Conditions by Generator from the Facility pursuant to
\n the operation and dispatch orders of PJM Interconnection LLC or Pepco in
\naccordance with Sections 3.2(a).<\/p>\n
(oo) “Term” has the meaning set forth in Section 2.1.<\/p>\n
(pp) “Termination Fee” has the meaning set forth in Sections 4.4.<\/p>\n
(qq) “Termination Notice” has the meaning set forth in Section 4.2.<\/p>\n
(rr) “Transaction Day” means any day during which the Facility is
\nrequired to, and in fact does, provide Services.<\/p>\n
(ss) “Unit” or “Units” means one or more individual electricity
\ngenerating unit or units constituting a part of the Facility.<\/p>\n
401<\/p>\n
EXHIBIT G<\/p>\n
OPERATION AND MAINTENANCE AGREEMENT<\/p>\n
FOR<\/p>\n
BUZZARD POINT AND BENNING FACILITIES
\n LOCATED IN WASHINGTON, D.C.<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY, As Owner<\/p>\n
And<\/p>\n
________________________________, As Operator<\/p>\n
Dated as of _________, 2000<\/p>\n
402<\/p>\n
EXHIBIT G<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n
\nARTICLE 1 DEFINITIONS 1
\nARTICLE 2 SCOPE OF SERVICES 1
\nARTICLE 3 PEPCO RESPONSIBILITIES 8
\nARTICLE 4 BUDGET 9
\nARTICLE 5 OPERATOR’S FEE, INVOICING AND PAYMENTS 11
\nARTICLE 6 FACILITIES CUSTODY 12
\nARTICLE 7 TERM AND TERMINATION 14
\nARTICLE 8 REPRESENTATIONS AND WARRANTIES OF PEPCO 16
\nARTICLE 9 REPRESENTATIONS AND WARRANTIES OF OPERATOR 18
\nARTICLE 10 COVENANTS OF THE PARTIES 20
\nARTICLE 11 EMPLOYEE MATTERS 21
\nARTICLE 12 INDEMNIFICATION 21
\nARTICLE 13 FORCE MAJEURE 23
\nARTICLE 14 CONFIDENTIALITY 24
\nARTICLE 15 DISPUTE RESOLUTION 25
\nARTICLE 16 MISCELLANEOUS PROVISIONS 26
\n<\/c><\/c><\/s><\/table>\n APPENDICES AND EXHIBITS<\/p>\n
\n
\nAppendix A Definitions
\nExhibit I Facility Sites
\nExhibit II Budget for First Contract Year
\nExhibit III Employee Matters
\nExhibit IV Pepco Interconnection Standards
\n<\/c><\/s><\/table>\n 403<\/p>\n
EXHIBIT G<\/p>\n
OPERATION AND MAINTENANCE AGREEMENT<\/p>\n
THIS OPERATION AND MAINTENANCE AGREEMENT (including the Appendices,
\nExhibits and Schedules hereto, this “Agreement”), dated as of ____________, 2000
\n(the “Effective Date”), by and between Potomac Electric Power Company, a
\nDistrict of Columbia and Virginia corporation (“Pepco”), and ________________, a
\n_____________ (“Operator”) (individually, a “Party”; collectively, the
\n“Parties”).<\/p>\n
WHEREAS, Pepco is the owner of two electric generation facilities
\nlocated in Washington, DC, namely the Buzzard Point Generating Station and the
\nBenning Generation Station (collectively, the “Facilities”);<\/p>\n
WHEREAS, Pepco is desirous of having Operator operate and maintain the
\nFacilities, and Operator is willing to operate and maintain the Facilities, upon
\nthe terms and conditions hereinafter set forth.<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants,
\nrepresentations, warranties and agreements hereinafter set forth, and intending
\nto be legally bound hereby, the Parties agree as follows:<\/p>\n
ARTICLE 1<\/p>\n
DEFINITIONS<\/p>\n
Capitalized terms used in this Agreement shall have the respective
\nmeanings set forth in Appendix A hereto.<\/p>\n
ARTICLE 2<\/p>\n
SCOPE OF SERVICES<\/p>\n
2.1 Applicable Principles.<\/p>\n
2.1.1 Operator shall operate and maintain the Facilities for the
\nTerm of this Agreement. Operator shall perform all Services specified herein,
\nand all other Services that are reasonably necessary to support operation of the
\nFacilities, it being understood that a principal purpose of this Agreement is to
\nrelieve Pepco of the necessity of engaging or supplying any labor, service or
\nmaterial to support operation of the Facilities unless the labor, service or
\nmaterial is specifically itemized in this Agreement as being furnished by Pepco
\nto Operator. Pepco shall retain responsibility for the disposition and sale of
\nthe entire capacity and energy output of the Facilities.<\/p>\n
404<\/p>\n
EXHIBIT G<\/p>\n
2.1.2 Operator shall perform the Services in accordance with Good
\nUtility Practices and pursuant to all applicable PJM Requirements and dispatch
\norders.<\/p>\n
2.2 Operator’s Performance. Operator’s responsibilities and
\nobligations to Pepco shall include the following, from and after the Turnover
\nDate until the Termination Date:<\/p>\n
2.2.1 Operate and maintain the Facilities.<\/p>\n
2.2.2 Respond to and operate the Facilities as directed by Pepco and
\nin a manner consistent with this Agreement.<\/p>\n
2.2.3 Be responsible for all costs and Taxes associated with
\noperating and maintaining the Facilities; with the exception of capital
\nexpenditures to be funded by Pepco pursuant to Section 4.2 below and Income
\nTaxes and property taxes imposed on Pepco.<\/p>\n
2.2.4 Arrange for the procurement, delivery, storage and redelivery
\nof all material, equipment, chemicals and other consumables and supplies
\nassociated with operating and maintaining the Facilities, including fuel, water,
\nsewer, electricity (except to the extent provided by Pepco pursuant to Section
\n3.1) and telecommunications service.<\/p>\n
2.2.5 Retain all operating and maintenance records (whether in
\nelectronic form or otherwise) relating to the Facilities. Operator shall provide
\nto Pepco, upon reasonable request, copies of any records or other information in
\nOperator’s possession relating to the Facilities and required by Pepco in order
\nto comply with Applicable Law.<\/p>\n
2.2.6 Implement and maintain a program of planned maintenance for
\nthe Facilities.<\/p>\n
2.2.7 Develop, implement and enforce a preventative maintenance
\nprogram that will ensure that the Facilities (a) experience no more than a 20%
\nderating of either Facility (except for maintenance) so as to support
\nrequirements for local area reliability by demonstration of generation during
\nthe semi-annual PJM Net Capability Test, and (b) can meet the performance
\nrequirements on the Termination Date (as provided in Section 6.2 below).<\/p>\n
2.2.8 Perform all routine maintenance.<\/p>\n
2.2.9 Coordinate arrangements with Pepco for maintenance outages,
\nplanned and unplanned outages including outages requiring major capital expenses
\nby Pepco.<\/p>\n
EXHIBIT G<\/p>\n
405<\/p>\n
2.2.10 Maintain an effective work force at the Facilities, assuming
\nand discharging as appropriate any outstanding responsibilities of Pepco under
\nany collective bargaining agreements as set forth in Exhibit III.<\/p>\n
2.2.11 Conduct appropriate inspections and make the Facilities
\navailable at reasonable times for inspections by Pepco and others designated by
\nPepco.<\/p>\n
2.2.12 Develop, implement and enforce programs for safety, quality
\nassurance and quality control.<\/p>\n
2.2.13 Dispose of all discharge water and other waste, including
\nwastewater, spent chemicals, and Hazardous Substances, in compliance with all
\napplicable Environmental Laws. Costs incurred by Operator associated with such
\nsubstances existing at the Facility Sites prior to the Turnover Date shall be
\nreimbursed to Operator by Pepco.<\/p>\n
2.2.14 Immediately notify the Pepco representative of any
\nenvironmental violation, serious personal injury, equipment damage that would
\nnot be encompassed within the scope of routine operations and maintenance,
\ncitizen complaint, Governmental Authority complaint or inspection.<\/p>\n
2.2.15 Comply with reporting requirements of all applicable
\nEnvironmental Laws.<\/p>\n
2.2.16 Obtain, comply with and maintain in force all necessary
\nOperator Required Regulatory Approvals and any Permits and Environmental Permits
\nrequired for the performance of its duties hereunder other than Permits and
\nEnvironmental Permits to be procured by Pepco pursuant to Section 3.1.6.<\/p>\n
2.2.17 Maintain comprehensive records relating to Facilities performance
\nand submit reports (monthly during Peak Season, quarterly otherwise, and
\nadditional reports as may be appropriate) to Pepco regarding performance (which
\nrecords shall be the property of Pepco and shall be delivered to Pepco on the
\nTermination Date).<\/p>\n
2.2.18 Pay (i) all fines, penalties or other levies imposed by any
\nGovernmental Authority relating to the operation of the Facilities after the
\nTurnover Date, and (ii) all costs incurred in remedying the consequences of any
\nsuch failure to comply with Applicable Law after the Turnover Date, unless the
\nimposition related solely to the gross negligence or willful misconduct of
\nPepco.<\/p>\n
406<\/p>\n
EXHIBIT G<\/p>\n
2.2.19 Cooperate with Pepco for purposes of maintaining good
\nrelationships with Governmental Authorities and the general public (including
\ntours, community relations programs, etc.).<\/p>\n
2.2.20 Comply with requirements and cooperate in processes relating
\nto Budgeting (Article 4), Facilities Custody (Article 6), and other matters as
\nprovided in this Agreement.<\/p>\n
2.2.21 Conduct training for and follow applicable system restoration
\nprocedures in system emergencies and in all system restoration drills as
\nimplemented by PJM and local Pepco control centers.<\/p>\n
2.2.22 Designate a duly authorized representative as a point of
\ncontact for Pepco.<\/p>\n
2.2.23 Cooperate with Pepco to ensure the smooth transitions of
\noperational responsibility for the Facilities (i) from Pepco to Operator
\neffective the Turnover Date and (ii) from Operator to Pepco effective the
\nTermination Date.<\/p>\n
2.2.24 Cooperate generally with Pepco. Operator may, without the
\nconsent of Pepco, enter into subcontracts for the performance of the obligations
\nset forth in this Section 2.2, provided however any subcontract or series of
\nsubcontracts with any subcontractor of a value greater than five hundred
\nthousand dollars ($500,000) shall be subject to the prior written approval of
\nPepco, not to be unreasonably withheld or delayed.<\/p>\n
2.3 Operator’s Commitments Related to Facility Performance
\nGenerally. Operator shall comply with the following performance commitments,
\nexcept with respect to, and while, a Facility is on an approved maintenance
\noutage or during, and to the extent of interference by, an event of Force
\nMajeure declared in accordance with Article 13:<\/p>\n
2.3.1 Maintain black start capability.<\/p>\n
2.3.2 Maintain response capability in accordance with the following
\nrequirements:<\/p>\n
During a system emergency, Buzzard Point Station must be online within
\ntwo (2) hours notice, thirty (30) minutes during Peak Season.<\/p>\n
407<\/p>\n
EXHIBIT G<\/p>\n
For a local area emergency, Benning Station must be online within
\ntwenty-four (24) hours notice, eighteen (18) hours during Peak Season.<\/p>\n
On a prescheduled basis, as determined by Pepco, the Facilities must be
\nonline within seventy-two (72) hours notice, twenty-four (24) hours during Peak
\nSeason.<\/p>\n
2.3.3 Follow the generation unit commitment procedures and dispatch
\norders of PJM as remitted through Pepco or, to maintain local area reliability.<\/p>\n
2.3.4 Respond when PJM orders a change in operation of a Facility
\nfor any reason, including local area reliability.<\/p>\n
2.3.5 Conduct training for and follow applicable system restoration
\nprocedures in system emergencies and in all system restoration drills as
\nimplemented by PJM and local Pepco control centers.<\/p>\n
2.3.6 Respond when Pepco orders operation of the Facility for local
\narea reliability at a time when PJM has not ordered such operation.<\/p>\n
2.3.7 Assure that the Units experience no more than a twenty percent
\n(20%) derating at either Facility (except for maintenance).<\/p>\n
2.4 Operator’s Commitments Related to Facility Performance Damages
\nand Bonuses.<\/p>\n
2.4.1 EFORD. Operator shall satisfy the EFORD Standard during each
\nContract Year. In the event of a failure to satisfy the EFORD Standard during
\nany Contract Year, Operator shall pay to Pepco as liquidated damages and not as
\na penalty an amount determined pursuant to the following formula:<\/p>\n
(a) EFORD Liquidated Damages = [EFORD for the Contract
\nYear] minus [EFORD Standard] multiplied by [$200,000 per point at Benning,
\n$80,000 per point at Buzzard].<\/p>\n
(b) In the event Facilities performance exceeds the EFORD
\nStandard during any Contract Year, Pepco shall pay to Operator as a performance
\nbonus an amount determined pursuant to the following formula (provided such
\namount is greater than zero):<\/p>\n
EFORD Performance Bonus = [EFORD Standard] minus [EFORD for the
\nContract Year] multiplied by [$100,000 per point at Benning, $40,000 per point
\nat Buzzard].<\/p>\n
408
\n EXHIBIT G<\/p>\n
2.4.2 Net Revenues Bonus. Operator shall exercise reasonable
\ncommercial efforts to support maximization of net revenues earned from
\nFacilities operations. Operator shall be eligible for a Net Revenues Bonus
\ndetermined as follows:<\/p>\n
Net Revenues Bonus= (.05) x [(M1xLMP1) + (M2-M1)xLMP2) (M2xQe)]<\/p>\n
Where<\/p>\n
M1 = quantity of energy scheduled by PJM for each hour for the Unit for
\nthe first settlement for that day during the 16-hour peak period.<\/p>\n
M2 = quantity of energy delivered real time for each hour during the
\n16-hour peak period.<\/p>\n
LMP1 = the first settlement hourly integrated Pepco zone LMP for each
\nhour.<\/p>\n
LMP2 = the real time hourly integrated Pepco zone LMP for each hour.<\/p>\n
Qe = the fuel cost of the Unit as specified in Section 4.1.2 hereof.<\/p>\n
2.4.3 Limitation. Operator’s obligation for Liquidated Damages
\nhereunder shall not exceed one million dollars ($1,000,000) per Contract Year.
\nIn the event the calculation of Operator’s Net Revenues Bonus pursuant to
\nsection 2.4.2 is negative, Operator shall not be obligated to make payment
\nthereof to Pepco provided, however, the amount of any EFORD Performance Bonus
\nmay be offset to the extent of any negative Net Revenue balance as determined
\nabove.<\/p>\n
2.5 Insurance.<\/p>\n
2.5.1 Operator shall procure and maintain in force from the Turnover
\nDate through the Termination Date the following insurance coverages.<\/p>\n
(a) Workers Compensation with statutory limits and in
\ncompliance with District of Columbia law.<\/p>\n
(b) Employer’s Liability with minimum limits of one
\nmillion dollars ($1,000,000).<\/p>\n
(c) General Liability with minimum limits of one million
\ndollars ($1,000,000) per occurrence, including broad form endorsement,
\nproducts\/completed operations, contractual liability and personal injury
\ncoverage. Pepco shall be named an additional insured on Operator’s policy.
\nFellow employee and explosion, collapse and underground exclusions shall be
\ndeleted, if they exist.<\/p>\n
409<\/p>\n
EXHIBIT G<\/p>\n
(d) Automobile Liability with minimum limits of one
\nmillion dollars ($1,000,000) combined single limit, including coverage for
\nowned, non-owned and hired vehicles. All coverages required by the District of
\nColumbia shall be provided.<\/p>\n
(e) Umbrella Coverage with respect to the coverages in
\nsubparts (b), (c) and (d) above, in the amount of five million dollars
\n($5,000,000).<\/p>\n
All coverages provided shall be primary without right of contribution
\nfrom any insurance that Pepco may have in force from time to time. Any insurance
\nmaintained by Pepco shall be in excess of Operator’s insurance and will not pay
\non any claim until Operator’s insurance is exhausted. If Operator chooses to
\nmaintain any deductibles or retention with respect to any required coverages,
\nOperator shall pay all costs that would have been paid by insurance until the
\ndeductible or retention is satisfied. Any deductibles or retentions shall be
\ndisclosed to Pepco, which will retain the right to disapprove such deductibles
\nor retentions. All insurers proposed to be used by Operator shall be either
\nrated [A] or better or first approved by Pepco.<\/p>\n
(f) Environmental Coverages Contractors\/Operators
\nPollution Legal Liability with at least minimum limits as follows:<\/p>\n
fifty million dollars ($50,000,000) per occurrence\/ one
\n hundred million dollars $100,000,000) in the annual aggregate<\/p>\n
and will cover pollution losses arising out of Operator’s operations and
\ncompleted operations, associated with work performed under this Agreement.<\/p>\n
Minimum Scope of Coverage for Pollution Legal Liability: For losses
\ncovered by pollution conditions that arise from Operator activities during the
\nTerm, the policy shall include the following coverage arising from pollution
\nfrom covered operations:<\/p>\n
bodily injury, sickness, disease, mental anguish or shock
\nsustained by any person, including death;<\/p>\n
property damage including physical injury to or destruction of
\ntangible property including the resulting loss of use thereof, the loss of use
\nof tangible property and natural resource damage liability that has not been
\nphysically injured or destroyed;<\/p>\n
410<\/p>\n
EXHIBIT G<\/p>\n
clean-up costs including investigation, testing,
\ndetoxification, neutralization, for release on and off the insured property; and<\/p>\n
defense including costs, charges and expenses incurred in the
\ninvestigation, adjustment or defense of claims for such compensation damages.<\/p>\n
If the above insurance policy is on a “claims made” basis, it shall be
\nmaintained for a period of not less than two (2) years with the retroactive date
\nto be held constant with the Turnover Date.<\/p>\n
2.5.2 Prior to the Turnover Date, Operator shall provide a
\ncertificate and a broker’s opinion letter indicating compliance with the above
\nrequirements to:<\/p>\n
Manager, Corporate Insurance & Risk Management Department
\n Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, NW
\n Washington, DC 20068<\/p>\n
ARTICLE 3<\/p>\n
PEPCO RESPONSIBILITIES<\/p>\n
3.1 Pepco’s Duties Generally. Pepco shall be responsible, at its
\nown expense, for providing information, materials and other items described in
\nthis Article 3. All such items shall be made available at such times and in such
\nmanner as may be reasonably required for the orderly performance of those
\nServices provided hereunder by Operator. Pepco’s responsibilities and
\nobligations to Operator shall include the following:<\/p>\n
3.1.1 Market and arrange for the sale or other disposition of, and
\nany necessary transmission service for, the entire capacity and energy output of
\nthe Facilities as Pepco may determine from time to time in its discretion.<\/p>\n
3.1.2 Provide access to the Facilities and the Facility Sites.<\/p>\n
3.1.3 Provide access to property adjacent to the Facilities under
\nthe control of Pepco, as necessary for the performance of the Services.<\/p>\n
3.1.4 Allow Operator to operate and maintain the Facilities.<\/p>\n
3.1.5 Schedule the operation of the Units in accordance with Good
\nUtility Practices, equipment warranties, the operating procedures for the
\nFacilities, and otherwise as necessary to provide reasonable advance notice to<\/p>\n
411<\/p>\n
EXHIBIT G<\/p>\n
allow for the staffing and start-up of the Units.<\/p>\n
3.1.6 Obtain and maintain in force all necessary Pepco Required
\nRegulatory Approvals and Permits required for the Facilities that are usually
\nand customarily maintained in force by owners of power generation facilities.<\/p>\n
3.1.7 Provide all relevant equipment warranties or support
\nagreements to Operator for administration.<\/p>\n
3.1.8 Provide existing operations and maintenance manuals and
\nrecords to Operator for use in operating and maintaining the Facilities.<\/p>\n
3.1.9 Make available to Operator an allocated share of fuel storage
\ncapacity at the M Street Terminal under such agreements as shall be executed for
\nextension of Pepco’s rights pursuant to a Throughput and Storage Agreement
\npresently under negotiation.<\/p>\n
3.1.10 Provide station electrical service as reasonably necessary to
\nsupport operation of the Facilities in standby condition during non-dispatch
\nperiods.<\/p>\n
3.1.11 Make available emissions allowances or credits required for
\nthe operation of the Facilities.<\/p>\n
3.1.12 Designate a duly authorized representative as a point of
\ncontact for Operator.<\/p>\n
3.1.13 Cooperate in accomplishing smooth operating transitions of
\nresponsibility for the Facilities (i) from Pepco to Operator effective the
\nTurnover Date and (ii) from Operator to Pepco effective the Termination Date.<\/p>\n
3.1.14 Cooperate generally with Operator.<\/p>\n
ARTICLE 4<\/p>\n
BUDGET<\/p>\n
4.1 Establishment of Operating Budget.<\/p>\n
4.1.1 The Operating Budget for the First Contract Year is attached
\nhereto as Exhibit IIA.<\/p>\n
412<\/p>\n
EXHIBIT G<\/p>\n
4.1.2 For years subsequent to the First Contract Year, Operator
\nshall submit a proposed operating budget to Pepco by August 31. Pepco shall
\nprovide a written response thereto within forty-five (45) days of receipt of
\nOperator’s proposed operating budget. The parties shall establish the Operating
\nBudget through good faith negotiations thereafter. If the Parties are unable to
\nagree upon an operating budget, the Operating Budget shall be established at an
\namount equal to the Operating Budget for the prior Contract Year, escalated
\npursuant to the Escalation Index; and either Party may seek modification of the
\nOperating Budget pursuant to mediation procedures of the American Arbitration
\nAssociation. Mediation shall be the exclusive dispute resolution mechanism with
\nrespect to the matters addressed in this Article 4.<\/p>\n
For purposes of the Operating Budget, the cost of fuel shall be
\ndetermined as follows:<\/p>\n
Pepco will compensate Operator each month for fuel use on the following
\nbasis:<\/p>\n
FP = ((Qe x E) + (Qs x S)) x Fi<\/p>\n
Where<\/p>\n
FP = Fuel Payment
\n Qe = Specified amount of fuel per MWh
\n E = MWh produced in the month
\n Qs = Specified amount of fuel used per start
\n S = Number of starts initiated per month
\n Fi = Fuel index price (Platts’ is suggested; for Benning, Fi will
\n be a composite representative of No. 4 Fuel Oil.)<\/p>\n
Qe, Qs and Fi will be established for each Facility.<\/p>\n
4.1.3 Budget Adjustments.<\/p>\n
(a) In the event of an Emergency situation requiring the
\nincurrence of costs not provided for by the Operating Budget, Operator shall
\nnotify Pepco of (i) the costs incurred or to be incurred and (ii) the reasons
\nfor those costs. The Parties shall negotiate in good faith the requirement for,
\nand the terms of, any amendment to the Operating Budget required by the
\nEmergency situation.<\/p>\n
(b) In the event Pepco directs a material modification in
\nplans for Facilities operations for an Operation Year from the plans existing at
\nthe time of establishment of the Operating Budget for that Contract Year,<\/p>\n
413<\/p>\n
EXHIBIT G<\/p>\n
(e.g., postponing a planned maintenance event or scheduling an unanticipated
\nmaintenance event), the Operating Budget shall be appropriately modified.<\/p>\n
4.2 Capital Budget<\/p>\n
4.2.1 The Capital Budget for the First Contract Year is attached
\nhereto as Exhibit IIB.<\/p>\n
4.2.2 Regular Capital Budget. In conjunction with the Operating
\nBudget process set forth in Section 4.1.2 above, Operator may submit a proposal
\nfor a Capital Budget for the ensuing Contract Year. Such request shall describe,
\nwith reasonable particularity (i) the capital expenditures requested, (ii) the
\nanticipated cost thereof, supported by the basis for the cost determination,
\n(iii) the benefit to be achieved by such expenditures and, (iv) a discussion as
\nto whether the result could be achieved through alternative means. The Capital
\nBudget shall be established in conjunction and in accordance with the procedures
\nfor the Operating Budget set forth in Section 4.1.2 above.<\/p>\n
4.2.3 Exceptional Capital Expenditures. In the event of an emergency
\nsituation requiring a capital expenditure not provided for by the Capital
\nBudget, Operator shall provide a description of the proposed capital expenditure
\nin accordance with the provisions of Section 4.2.1 above. The Capital Budget
\nshall be amended as appropriate in accordance with the procedures for
\nestablishing the original Capital Budget for the Contract Year.<\/p>\n
ARTICLE 5<\/p>\n
OPERATOR’S FEE, INVOICING AND PAYMENTS<\/p>\n
Operator shall be entitled to payment of the Operator’s Fee and to
\nreimbursement of costs incurred consistent with the approved Operating Budget
\nand, to the extent funded by Operator, of costs incurred consistent with the
\napproved Capital Budget.<\/p>\n
5.1 Operator’s Fee.<\/p>\n
Operator shall be entitled to a base Operator’s Fee in each Contract
\nYear for the performance of the Services hereunder. Such Operator’s Fee may be
\nsupplemented in each Contract Year by bonuses paid to Operator pursuant to
\nSection 2.4 hereof. The Operator’s Fee is intended to compensate Operator for
\n(i) performance of all of its obligations under the Agreement other than costs
\nitems to be reimbursed to Operator, and (ii) its profit.<\/p>\n
414<\/p>\n
EXHIBIT G<\/p>\n
For each Contract Year of the Initial Term, Pepco shall pay to Operator
\nan Operator’s Fee of five hundred thousand dollars ($500,000). The Operator’s
\nFee for Contract Years in periods subsequent to the Initial Term shall be
\ndetermined by mutual agreement.<\/p>\n
5.2 Invoicing and Payments.<\/p>\n
Operator shall deliver to Pepco an invoice and performance report by
\nthe tenth day of each calendar month, covering the preceding calendar month
\n(“Period”). The invoice shall describe in reasonable detail the costs incurred
\nconsistent with the Operating Budget during the Period. The invoice shall
\nidentify one-twelfth of the Operating Fee for the Contract Year.<\/p>\n
Pepco shall make payments to Operator within forty-five (45) days of
\nreceipt of Operator’s invoice and performance report.<\/p>\n
5.2.1 Year End Adjustments.<\/p>\n
Subject to Section 4.1.3, Operator shall not be entitled to
\nreimbursement of costs incurred by Operator in excess of costs approved in the
\nOperating Budget or Capital Budget for the Contract Year, except to the extent
\nsuch costs were reasonably incurred due to an event of Force Majeure. In the
\nevent Operator incurs costs in any Contract Year less than the costs approved in
\nthe Operating Budget, Pepco shall pay to Operator one-half of the cost savings,
\nsuch amount to be paid in conjunction with the payment for the December invoice.<\/p>\n
Any liquidated damages or performance bonus due pursuant to Section 2.3
\nshall be paid or adjusted, as appropriate, in conjunction with the payment for
\nthe December invoice.<\/p>\n
ARTICLE 6<\/p>\n
FACILITIES CUSTODY<\/p>\n
6.1 Transfer from Pepco to Operator at Term Commencement.<\/p>\n
6.1.1 Pepco shall transfer custody of the Facilities to Operator
\neffective the Turnover Date. Pepco shall provide to Operator notice of its good
\nfaith estimate of the Turnover Date on or about thirty (30) days prior to<\/p>\n
415<\/p>\n
EXHIBIT G<\/p>\n
the estimated Turnover Date. Pepco shall provide to Operator notice of the
\nactual Turnover Date at least ten (10) days prior to the actual Turnover Date.
\nPepco and Operator shall work cooperatively to establish a smooth transition of
\nresponsibilities for the Facilities.<\/p>\n
6.1.2 The baseline for assessment of Unit’s performance subsequent
\nto the Turnover Date shall be the final Capability Demonstration Test conducted
\nduring the 2000 Peak Season. Pepco shall give Operator reasonable advance notice
\nof the timing of such Capability Demonstration Test. On or about the Turnover
\nDate, in the event Operator has reasonable cause to believe that circumstances
\nmay have caused the Facilities performance to have diminished subsequent to the
\nperformance of that Capability Demonstration Test, the Parties shall mutually
\nagree upon procedures to determine the existence of such circumstances and to
\nestablish a revised baseline for assessment of a Unit’s performance. Operator
\nand Pepco shall conduct a joint inspection of the Units to determine whether any
\nother circumstances exist that might adversely affect a Unit’s performance.<\/p>\n
6.1.3 On or about the Turnover Date, Pepco and Operator shall
\nconduct an inventory survey of fuel materials, parts, consumables and supplies
\nat the Facilities. The results of the inventory survey shall be mutually agreed
\nby the Parties.<\/p>\n
6.1.4 Pepco and Operator shall undertake an inventory of contracts
\nprimarily relating to the operations and maintenance of the Facilities, and
\nPepco shall, to the extent assignable, assign to Operator such contracts as are
\nselected by Operator for assignment and the costs to be incurred thereunder
\nshall be included in the Operating Budget. To the extent contracts selected by
\nOperator are unassignable, Pepco shall designate Operator as its agent for
\nperformance thereunder.<\/p>\n
6.2 Return from Operator to Pepco at Term Conclusion.<\/p>\n
6.2.1 Effective the Termination Date, Operator shall return custody
\nof the Facilities to Pepco in the same condition as received from Pepco, normal
\nwear and tear from operation in accordance with Good Utility Practices excepted.
\nOperator and Pepco shall work cooperatively to establish a smooth return of
\nresponsibility for the Facilities.<\/p>\n
6.2.2 Except as provided in this Section 6.2.2, the performance of
\nthe Units effective the Termination Date shall be the final Capability
\nDemonstration Test conducted during the most recent Peak Season. Operator shall
\ngive Pepco reasonable advance notice of the timing of such Capability
\nDemonstration Test. On or about the Termination Date, in the event Pepco has<\/p>\n
—————–<\/p>\n
(1) Pepco currently anticipates that the Turnover Date shall be on or about
\n the date of the closing of the transactions contemplated by the Asset
\n Purchase and Sale Agreement to be entered into by Pepco and the
\n purchaser of certain of Pepco’s other generating facilities.<\/p>\n
416<\/p>\n
EXHIBIT G<\/p>\n
reasonable cause to believe that circumstances may have caused a Unit’s
\nperformance to have diminished subsequent to the performance of that Capability
\nDemonstration Test, the Parties shall mutually agree upon procedures to
\ndetermine the existence of such circumstances and to establish a revised
\nassessment of the Unit’s performance. Pepco and Operator shall conduct a joint
\ninspection of the Unit to determine whether any other circumstances exist that
\nmight adversely affect a Unit’s performance.<\/p>\n
ARTICLE 7<\/p>\n
TERM AND TERMINATION<\/p>\n
7.1 Term. This Agreement shall be effective for a period running
\nfrom the Effective Date until December 31, 2003 (“Initial Term”). It shall renew
\nautomatically thereafter for three (3) year terms, (the Initial Term and any
\nrenewals, collectively the “Term”) unless terminated by either party by written
\nnotice delivered at least one (1) year prior to the expiration of the then
\ncurrent Term or as otherwise provided in this Article. In the event Pepco
\nterminates this Agreement upon the conclusion of the Initial Term, Pepco shall
\npay to Operator a termination fee of two hundred fifty thousand dollars
\n($250,000).<\/p>\n
7.2 Termination for Default.<\/p>\n
7.2.1 Termination by Pepco for Operator Default.<\/p>\n
The occurrence of any of the events set forth below shall constitute an
\nOperator Event of Default under this Agreement:<\/p>\n
(a) Operator materially fails to satisfy the performance
\ncommitments set forth in Section 2.3;<\/p>\n
(b) Operator voluntarily commences bankruptcy,
\ninsolvency, reorganization, stay, moratorium or similar debtor-relief
\nproceedings, or shall have become insolvent or generally does not pay its debts
\nas they become due, or admits in writing its inability to pay its debts, or
\nmakes an assignment for the benefit of creditors;<\/p>\n
(c) Insolvency, receivership, reorganization, bankruptcy,
\nor similar proceedings shall have been commenced against Operator and such
\nproceedings remain undismissed or unstayed for a period of sixty (60) days;<\/p>\n
(d) Operator fails to maintain the insurance coverages
\nrequired under Section 2.4; or<\/p>\n
417<\/p>\n
EXHIBIT G<\/p>\n
(e) Operator breaches any other material term or
\ncondition of this Agreement, including but not limited to any material breach of
\na representation, warranty or covenant made in this Agreement which, after
\nreceiving written notice of the breach from Pepco (such notice to set forth in
\nreasonable detail the nature of the default and, where known and if applicable,
\nthe steps necessary to cure such default), (i) Operator fails to cure the
\ndefault, if curable, within thirty (30) days following receipt of the notice or
\n(ii) if such default is of such a nature that it cannot be cured within thirty
\n(30) days following receipt of such notice, Operator fails within such thirty
\n(30) days to commence the necessary cure and fails at any time thereafter
\ndiligently and continuously to prosecute such cure to completion.<\/p>\n
7.2.2 Pepco’s Default Remedies Against Operator. If an Operator
\nEvent of Default shall have occurred and be continuing, Pepco shall have the
\nright to terminate this Agreement by Notice to Operator. In the event of such
\ntermination:<\/p>\n
(a) If requested by Pepco, Operator shall withdraw from
\nthe Facility Site, shall assign to Pepco (without future recourse to Operator)
\nsuch of Operator’s subcontracts as Pepco may request, and shall remove such
\nmaterials, equipment, tools and instruments used and any debris or waste
\nmaterials generated by Operator in the performance of the Services as Pepco may
\ndirect, and Pepco may take possession of any and all facilities, materials and
\nequipment at the Facility Site or in transit thereto.<\/p>\n
(b) Operator’s liability hereunder is in addition to any
\nother liabilities of Operator provided for or relating to this Agreement.<\/p>\n
7.2.3 Termination by Operator for Pepco Default.<\/p>\n
The occurrence of any of the events set forth below shall constitute a
\nPepco Event of Default under this Agreement:<\/p>\n
(a) Pepco shall have failed to make any payment to
\nOperator when due hereunder within thirty (30) days after receipt of written
\nnotice of nonpayment by Operator, unless the payment of such amount is disputed
\nin good faith;<\/p>\n
(b) Pepco voluntarily commences bankruptcy, insolvency,
\nreorganization, stay, moratorium or similar debtor-relief proceedings, or shall
\nhave become insolvent, or generally does not pay its debts as they become due,
\nor admits in writing its inability to pay its debts, or makes a deed of trust or
\nassignment for the benefit of creditors;<\/p>\n
418<\/p>\n
EXHIBIT G<\/p>\n
(c) Insolvency, receivership, reorganization, bankruptcy,
\nor similar proceedings shall have been commenced against Pepco and such
\nproceedings remain undismissed or unstayed for a period of sixty (60) days; or<\/p>\n
(d) Pepco breaches any other material term or condition
\nof this Agreement, including but not limited to any material breach of a
\nrepresentation, warranty or covenant made in this Agreement which, after
\nreceiving written notice of the breach from Operator (such notice to set forth
\nin reasonable detail the nature of the default and, where known and if
\napplicable, the steps necessary to cure such default), (i) Pepco fails to cure
\nthe default, if curable, within thirty (30) days following receipt of the notice
\nor (ii) if such default is of such a nature that it cannot be cured within
\nthirty (30) days following receipt of such notice, Pepco fails within such
\nthirty (30) days to commence the necessary cure and fails at any time thereafter
\ndiligently and continuously to prosecute such cure to completion.<\/p>\n
7.2.4 Operator’s Rights Against Pepco. If a Pepco Event of Default
\nshall have occurred and be continuing, Operator shall have the right to
\nterminate this Agreement by Notice to Pepco. In such event, Operator shall
\npromptly submit to Pepco an accounting of Operator’s costs and Pepco shall pay
\nOperator amounts due and owing, including associated fee, not later than thirty
\n(30) days after receipt of Operator’s accounting. The foregoing remedies shall
\nconstitute Operator’s sole and exclusive remedies against Pepco with respect to
\na Pepco Event of Default.<\/p>\n
7.3 Termination for Abandonment. In the event Pepco determines to
\nretire any of the Facilities from service, which Pepco shall have the right to
\ndo in its sole discretion, Pepco shall provide Notice to Operator. In such
\nevent, Operator shall promptly submit to Pepco an accounting of Operator’s costs
\nand Pepco shall pay Operator amounts due and owing, including associated fee,
\nnot later than thirty (30) days after receipt of Operator’s accounting. The
\nforegoing remedies shall constitute Operator’s sole and exclusive remedies
\nagainst Pepco for termination pursuant to this Section 7.3.<\/p>\n
ARTICLE 8<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PEPCO<\/p>\n
Pepco represents and warrants to Operator as follows:<\/p>\n
8.1 Incorporation. Pepco is a corporation duly incorporated,
\nvalidly existing and in good standing under the laws of the Commonwealth of
\nVirginia and the District of Columbia and has all requisite corporate power and
\nauthority to own, operate and contract for Services for the Facilities and to<\/p>\n
419<\/p>\n
EXHIBIT G<\/p>\n
carry on the business of the Facilities as now being conducted.<\/p>\n
8.2 Authority Relative to This Agreement. Pepco has all necessary
\ncorporate power and authority to execute and deliver this Agreement and to
\nconsummate the transactions contemplated hereby. The execution and delivery by
\nPepco of this Agreement and the consummation by Pepco of the transactions
\ncontemplated hereby have been duly and validly authorized by the Board of
\nDirectors of Pepco or by a committee thereof to whom such authority has been
\ndelegated and no other corporate proceedings on the part of Pepco are necessary
\nto authorize this Agreement or the consummation of the transactions contemplated
\nhereby. This Agreement has been duly and validly executed and delivered by Pepco
\nand, assuming that this Agreement constitutes a valid and binding agreement of
\nOperator, subject to the receipt of the Pepco Required Regulatory Approvals and
\nthe Operator Required Regulatory Approvals, constitutes a valid and binding
\nagreement of Pepco, enforceable against Pepco in accordance with its terms.<\/p>\n
8.3 Consents and Approvals; No Violation.<\/p>\n
(a) Subject to obtaining the Pepco Required Regulatory
\nApprovals and the Operator Required Regulatory Approvals, neither the execution
\nand delivery of this Agreement by Pepco nor the performance by Pepco of its
\nobligations hereunder will (i) conflict with or result in any breach of any
\nprovision of the Certificate of Incorporation or By-laws of Pepco, (ii) result
\nin a default (or give rise to any right of termination, cancellation or
\nacceleration) under any of the terms, conditions or provisions of any note,
\nbond, mortgage, indenture, license, agreement, lease or other instrument or
\nobligation to which Pepco or any of its subsidiaries is a party or by which any
\nof the Facilities may be bound, or (iii) violate any order, writ, injunction,
\ndecree, statute, rule or regulation applicable to Pepco or the Facilities,
\nexcept in the case of clauses (ii) and (iii) for such failures to obtain a
\nnecessary consent, defaults and violations which would not, individually or in
\nthe aggregate, have a material adverse effect on the ability of Pepco to
\ndischarge its obligations under this Agreement (a “Pepco Material Adverse
\nEffect”).<\/p>\n
(b) Except for the Required Regulatory Approvals set
\nforth on Schedule 8.3(b) attached hereto (collectively, the “Pepco Required
\nRegulatory Approvals”), no declaration, filing or registration with, or notice
\nto, or authorization, consent or approval of any Governmental Authority is
\nnecessary for the performance by Pepco of its obligations hereunder, other than
\nsuch declarations, filings, registrations, notices, authorizations, consents or
\napprovals which, if not obtained or made, would not individually or in the
\naggregate, create a Pepco Material Adverse Effect.<\/p>\n
420<\/p>\n
EXHIBIT G<\/p>\n
8.4 Labor Matters. Pepco has previously made available to Operator
\ncopies of all collective bargaining agreements to which Pepco is a party or is
\nsubject and which relate to the business or operations of the Facilities. With
\nrespect to the business and operations of the Facilities, as of the date of this
\nAgreement, Pepco is in compliance with all Applicable Laws regarding employment
\nand employment practices, terms and conditions of employment and wages and
\nhours, except, for such matters as would not, individually or in the aggregate,
\ncreate a Pepco Material Adverse Effect or an Operator Material Adverse Effect.<\/p>\n
8.5 Survival. The representations and warranties in this Article 8
\nshall continue in full force and effect for the Term of this Agreement.<\/p>\n
8.6 THE FACILITIES ARE BEING MADE AVAILABLE AND CUSTODY THEREOF IS
\nTRANSFERRED “AS IS, WHERE IS”, AND PEPCO IS NOT MAKING ANY REPRESENTATIONS OR
\nWARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH
\nFACILITIES (INCLUDING ANY RELATING TO LIABILITIES, OPERATION, CONDITION, VALUE
\nOR QUALITY OF THE FACILITIES OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS OR
\nOTHER INCIDENTS OF THE FACILITIES) OR WITH RESPECT TO THIS AGREEMENT OR THE
\nTRANSACTIONS CONTEMPLATED HEREBY. PEPCO SPECIFICALLY DISCLAIMS ANY
\nREPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR
\nA PARTICULAR PURPOSE, WITH RESPECT TO THE FACILITIES, OR ANY PART THEREOF, OR AS
\nTO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER
\nLATENT OR PATENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PEPCO MAKES
\nNO REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION SET FORTH IN, OR
\nCONTEMPLATED BY, THE INFORMATION MEMORANDUM.<\/p>\n
ARTICLE 9
\n REPRESENTATIONS AND WARRANTIES OF OPERATOR<\/p>\n
Operator represents and warrants to Pepco as follows:<\/p>\n
9.1 Organization. Operator is a corporation duly incorporated,
\nvalidly existing and in good standing under the laws of the State of
\n______________ and has all requisite corporate power and authority to own, lease
\nand operate its properties and to carry on its business as is now being
\nconducted.<\/p>\n
421<\/p>\n
9.2 Authority Relative to This Agreement. Operator has all
\nnecessary corporate power and authority to execute and deliver this Agreement
\nand to consummate the transactions contemplated hereby. The execution and
\ndelivery by Operator of this Agreement and the consummation by Operator of the
\ntransactions contemplated hereby have been duly and validly authorized by the
\nBoard of Directors of Operator and no other corporate proceedings on the part of
\nOperator are necessary to authorize this Agreement or the consummation of the
\ntransactions contemplated hereby. This Agreement has been duly and validly
\nexecuted and delivered by Operator and, assuming that this Agreement constitutes
\na valid and binding agreement of Pepco, subject to the receipt of the Operator
\nRequired Regulatory Approvals and the Pepco Required Regulatory Approvals, this
\nAgreement constitutes a valid and binding agreement of Operator, enforceable
\nagainst Operator in accordance with its terms.<\/p>\n
9.3 Consents and Approvals; No Violation.<\/p>\n
(a) Subject to obtaining the Operator Required Regulatory
\nApprovals and the Pepco Required Regulatory Approvals, neither the execution and
\ndelivery of this Agreement by Operator nor the performance by Operator of its
\nobligations hereunder will (i) conflict with or result in any breach of any
\nprovision of the [Certificate of Incorporation or By-laws] of Operator, (ii)
\nresult in a default (or give rise to any right of termination, cancellation or
\nacceleration) under any of the terms, conditions or provisions of any note,
\nbond, mortgage, indenture, license, agreement, lease or other instrument or
\nobligation to which Operator or any of its subsidiaries is a party or by which
\nany of their respective assets may be bound or (iii) violate any order, writ,
\ninjunction, decree, statute, rule or regulation applicable to Operator, or any
\nof its assets, except, in the case of clauses (ii) and (iii), for such failures
\nto obtain a necessary consent, defaults and violations which would not,
\nindividually or in the aggregate, have a material adverse effect on the ability
\nof Operator to discharge its obligations under this Agreement (an “Operator
\nMaterial Adverse Effect”).<\/p>\n
(b) Except for the Required Regulatory Approvals set
\nforth on Schedule 9.3(b) attached hereto (collectively, the “Operator Required
\nRegulatory Approvals”), no declaration, filing or registration with, or notice
\nto, or authorization, consent or approval of any Governmental Authority is
\nnecessary for the performance by Operator of its obligations hereunder, other
\nthan such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made, would not individually or
\nin the aggregate, create an Operator Material Adverse Effect.<\/p>\n
9.4 Facility Sites Inspection. Operator has had a full and
\neffective opportunity to inspect the Facilities and the Facility Sites, to
\ndetermine to the extent pertinent to operate all pertinent surface and
\nsubsurface conditions of Hazardous Substances at the Facility Sites. Operator
\naccepts<\/p>\n
422<\/p>\n
EXHIBIT G<\/p>\n
the existing conditions and shall not be entitled to any relief hereunder based
\nupon such conditions, including the existence of conditions contrary to
\nOperator’s expectations based upon inspections prior to execution of this
\nAgreement or subsequent thereto.(2)<\/p>\n
9.5 Qualified Operator. Operator is qualified to obtain any
\nPermits and Environmental Permits necessary for Operator to operate the
\nFacilities as of the Turnover Date. Without limiting the foregoing, Operator is
\nnot aware of any reason or circumstance that would prevent Operator from
\nprocuring the Operator Required Regulatory Approvals.<\/p>\n
ARTICLE 10<\/p>\n
COVENANTS OF THE PARTIES<\/p>\n
10.1 Conduct of Business Relating to the Facilities. Except with
\nthe prior written consent of Operator (such consent not to be unreasonably
\nwithheld) or as required to effect the transactions contemplated by this
\nAgreement, during the period from the Effective Date to the Turnover Date, Pepco
\nwill operate the Facilities in the usual, regular and ordinary course in
\ncompliance with Applicable Law and in accordance with Good Utility Practices,
\nand pursuant to all applicable PJM Requirements, and continue to pay accounts
\npayable which relate to the Facilities in a timely manner, consistent with past
\npractice.<\/p>\n
10.2 Consents and Approvals. Pepco and Operator shall cooperate
\nwith each other and (i) prepare and file (or otherwise effect) as soon as
\npracticable all applications, notices, petitions and filings with respect to and
\n(ii) use their reasonable best efforts to obtain (A) the Pepco Required
\nRegulatory Approvals and the Operator Required Regulatory Approvals and (B) any
\nother consents, approvals or authorizations of any other Governmental
\nAuthorities or third parties that are necessary to consummate the transactions
\ncontemplated by this Agreement, other than such consents, approvals or
\nauthorizations which, if not obtained or made, would not, individually or in the
\naggregate, create a Pepco Material Adverse Effect or an Operator Material
\nAdverse Effect. Without limiting the generality of the foregoing, (1) each Party
\nagrees to, upon the other Party’s request, support such other Party’s
\napplications for regulatory approvals of the transactions contemplated by this
\nAgreement, and (2) Pepco and Operator agree to defend any lawsuits or other
\nlegal proceedings, whether judicial or administrative, challenging this
\nAgreement, or the consummation of the transactions contemplated hereby,
\nincluding seeking to have any stay or temporary restraining order entered by<\/p>\n
———————<\/p>\n
(2) Additional inspections may be undertaken by Operator prior to Agreement
\n execution whether before or after bid award.<\/p>\n
423<\/p>\n
EXHIBIT G<\/p>\n
any Governmental Authority vacated or reversed.<\/p>\n
ARTICLE 11<\/p>\n
EMPLOYEE MATTERS<\/p>\n
The Parties shall provide for the employment and pay and benefits of the
\nemployees at the Facilities in accordance with the provisions set forth in
\nExhibit III hereto. On the Turnover Date, Pepco shall provide Operator all
\npersonnel files relating to the Transferred Employees, to the extent in Pepco’s
\npossession and readily available and to the extent such files pertain to (1)
\nskill and development training and resumes, (2) seniority histories, (3) salary
\nand benefit information, (4) Occupational Safety and Health Act medical reports,
\n(5) active medical restriction forms and (6) any other matters, disclosure of
\nwhich by Pepco to Operator is permitted under Applicable Law without the consent
\nof the Transferred Employee, but not including any performance evaluations or
\ndisciplinary records (collectively, the “Transferred Employee Records”);
\nprovided, however, that Pepco shall be permitted to retain copies, or originals
\nto the extent it provides Operator with copies of same, of all Transferred
\nEmployee Records.<\/p>\n
ARTICLE 12<\/p>\n
INDEMNIFICATION<\/p>\n
12.1 Operator’s Indemnification. Operator shall indemnify, hold
\nharmless and defend Pepco, its Affiliates, and their respective officers,
\ndirectors, employees, agents, contractors, subcontractors, invitees and
\nsuccessors, from and against any and all claims, demands, suits, obligations,
\npayments, liabilities, costs, losses, judgments, damages and expenses (including
\nthe costs and expenses of any and all actions, suits, proceedings, assessments,
\njudgments, settlements, and compromises relating thereto, reasonable attorneys’
\nand expert fees and reasonable disbursements in connection therewith) for any
\nloss or liability, damage to property, injury to or death of any person,
\nincluding Pepco’s employees, Operator’s employees and their Affiliates’
\nemployees, or any third parties, to the extent caused wholly or in part by any
\nact or omission, negligent or otherwise, by Operator or its officers, directors,
\nemployees, agents, contractors, subcontractors and invitees arising out of or
\nconnected with Operator’s performance or breach of this Agreement, or the
\nexercise by Operator of its rights hereunder.<\/p>\n
12.2 Pepco’s Indemnification. Pepco shall indemnify, hold harmless
\nand defend Operator, its Affiliates, and their respective officers, directors,
\nemployees, agents, contractors, subcontractors, invitees and successors, from
\nand against any and all claims, demands, suits, obligations, payments,
\nliabilities, costs, losses, judgments, damages and expenses<\/p>\n
424<\/p>\n
EXHIBIT G<\/p>\n
(including the costs and expenses of any and all actions, suits, proceedings,
\nassessments, judgments, settlements, and compromises relating thereto reasonable
\nattorneys’ and expert fees and reasonable disbursements in connection therewith)
\nfor any loss or liability damage to property, injury to or death of any person,
\nincluding Operator’s employees, Pepco’s employees and their Affiliates’
\nemployees, or any third parties, to the extent caused wholly or in part by (i)
\nany negligent act or omission by Pepco or its officers, directors, employees,
\nagents, contractors, subcontractors and invitees arising out of or connected
\nwith Pepco’s performance of this Agreement, or (ii) the presence of Hazardous
\nSubstances on the Facility Sites prior to the Turnover Date.<\/p>\n
12.3 Indemnification Procedures. Any Party seeking indemnification
\nunder this Agreement shall give the other Party notice of such claim promptly
\nbut in no event later than ninety (90) days from the later of the commencement
\nof, or the Party’s actual knowledge of, such claim or action. Such notice shall
\ndescribe the claim in reasonable detail, and shall indicate the amount
\n(estimated if necessary) of the claim that has been, or may be sustained by,
\nsaid Party. The failure to provide such notice shall not excuse any Party from
\nits continuing obligations hereunder; however, any claim shall be reduced by the
\ndamages resulting from such Party’s delay or failure to provide such notice.
\nNeither Party may settle or compromise any claim for which indemnification is
\nsought under this Agreement without the prior consent of the other Party;
\nprovided, however, said consent shall not be unreasonably withheld or delayed.<\/p>\n
12.4 Survival. The indemnification obligations of each Party under
\nthis Article 12 for acts or occurrences that occur prior to expiration,
\ntermination, or cancellation of this Agreement shall survive the Effective Date
\nand continue in full force and effect regardless of whether this Agreement
\nexpires or terminates, or is canceled, surrendered or completed.<\/p>\n
12.5 Limitation of Liability. Except as provided in Section 2.3,
\nneither Party nor their respective officers, directors, agents, employees,
\nparents, Affiliates, successors, assigns, contractors or subcontractors shall be
\nliable to the other Party or its shareholders, subsidiaries, Affiliates,
\nofficers, directors, agents, employees, successors, assigns, contractors or
\nsubcontractors for any claims, demands or suits for consequential, incidental,
\nspecial, exemplary, punitive, indirect or multiple damages connected with or
\nresulting from any breach after the Effective Date of this Agreement (other than
\nbreach of this Article 12), or any actions undertaken in connection with or
\nrelated hereto or thereto, including any such damages which are based upon
\nbreach of contract, tort (including negligence and misrepresentation), breach of
\nwarranty, strict liability, statute, operation of law or any other theory of
\nrecovery. In any Contract Year, the aggregate liability of Operator for claims
\nof Pepco arising out of or relating to the performance or non-performance of
\nthis Agreement shall be limited to one million dollars ($1,000,000) per Contract
\nYear.<\/p>\n
425<\/p>\n
EXHIBIT G<\/p>\n
The foregoing limitations shall not prevent any Party from recovering
\ndamages of the foregoing nature in a claim for indemnification hereunder for
\nsuch damages asserted by a third party.<\/p>\n
ARTICLE 13<\/p>\n
FORCE MAJEURE<\/p>\n
13.1 Force Majeure. Notwithstanding anything in this Agreement to
\nthe contrary, the Parties shall be excused from performing their respective
\nobligations hereunder and shall not be liable in damages or otherwise to the
\nextent that a Party is unable to perform or is prevented from performing by an
\nevent of Force Majeure and has complied with Section 13.3. The Parties recognize
\nand agree that an event of Force Majeure will not relieve any Party of its
\nobligation to make payments when due hereunder.<\/p>\n
13.2 Definition of Force Majeure. The term “Force Majeure” as used
\nherein means those causes beyond the reasonable control of the Party affected,
\nthat, by the exercise of reasonable diligence, including Good Utility Practices,
\nsuch Party is unable to prevent, avoid, mitigate, or overcome, including the
\nfollowing: any act of God, changes in Applicable Law, act of the public enemy,
\nwar, civil disturbance, insurrection, riot, fire (unless resulting from the
\nfault or negligence of the Party asserting Force Majeure), storm or flood,
\nlightning or explosion (unless resulting from the fault or negligence of the
\nParty asserting Force Majeure) or any other cause of a similar nature beyond
\nsuch Party’s reasonable control. Neither the cost to operate and maintain the
\nFacilities, lack of economic feasibility, adverse general economic conditions
\nnor economic hardship affecting a Party’s performance hereunder due to any
\nreason other than an event which itself constitutes an event of Force Majeure
\nshall be deemed an event of Force Majeure.<\/p>\n
13.3 Force Majeure Procedures. A Party shall not be entitled to
\nrely on the occurrence of an event of Force Majeure as a basis for being excused
\nfrom performance of its obligations under this Agreement unless the Party
\nrelying on the event or condition shall: (a) provide prompt written notice of
\nsuch Force Majeure event to the other Party, including an estimation of its
\nexpected duration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts in accordance with Good Utility
\nPractice to continue to perform its obligations under this Agreement; (c)
\nexpeditiously take action to correct or cure the event or condition excusing
\nperformance; (d) exercise all reasonable efforts to mitigate or limit damages to
\nthe other Party; and (e) provide prompt notice to the other Party of the
\ncessation of the event or condition giving rise to its excuse from performance.
\nSubject to this Section 13.3, any obligation under this Agreement shall be
\nsuspended only to the extent caused by such Force Majeure and only during the
\ncontinuance of any inability of performance caused by such Force Majeure but for
\nno longer period.<\/p>\n
426<\/p>\n
ARTICLE 14<\/p>\n
CONFIDENTIALITY<\/p>\n
14.1 Confidentiality Obligations of Pepco. Pepco shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by Operator
\nin connection with this Agreement. Except to the extent that such information or
\ndocuments are (i) generally available to the public other than as a result of a
\ndisclosure by Pepco in breach of this Agreement, (ii) available to Pepco on a
\nnon-confidential basis prior to disclosure to Pepco by Operator, or (iii)
\navailable to Pepco on a non-confidential basis from a source other than
\nOperator, provided that such source is not known, and by reasonable effort could
\nnot be known, by Pepco to be bound by a confidentiality agreement with Operator
\nor otherwise prohibited from transmitting the information to Pepco by a
\ncontractual, legal or fiduciary obligation, Pepco shall not release or disclose
\nsuch information to any other person, except to its employees, representatives
\nor agents on a need-to-know basis, in connection with this Agreement who has not
\nfirst been advised of the confidentiality provisions of this Section 14.1 and
\nhas agreed in writing to comply with such provisions. Pepco shall promptly
\nnotify Operator if it receives notice or otherwise concludes that the production
\nof any information subject to this Section 14.1 is being sought under any
\nprovision of law and Pepco shall use reasonable efforts in cooperation with
\nOperator to seek confidential treatment for such confidential information
\nprovided thereto.<\/p>\n
14.2 Confidentiality Obligations of Operator. Operator shall hold
\nin confidence, unless compelled to disclose by judicial or administrative
\nprocess or other provisions of law, all documents and information furnished by
\nPepco in connection with this Agreement. Except to the extent that such
\ninformation or documents are (i) generally available to the public other than as
\na result of a disclosure by Operator in breach of this Agreement, (ii) available
\nto Operator on a non-confidential basis prior to disclosure to Operator by
\nPepco, or (iii) available to Operator on a non-confidential basis from a source
\nother than Pepco, provided that such source is not known, and by reasonable
\neffort could not be known, by Operator to be bound by a confidentiality
\nagreement with Pepco or otherwise prohibited from transmitting the information
\nto Operator by a contractual, legal or fiduciary obligation, Operator shall not
\nrelease or disclose such information to any other person, except to its
\nemployees, representatives or agents on a need-to-know basis, in connection with
\nthis Agreement who has not first been advised of the confidentiality provisions
\nof this Section 14.2 and has agreed in writing to comply with such provisions.
\nOperator shall promptly notify Pepco if it receives notice or otherwise
\nconcludes that the production of any information subject to this Section 14.2 is
\nbeing sought under any provision of law and Operator shall use reasonable
\nefforts in cooperation with Pepco to seek confidential treatment for such
\nconfidential information provided thereto.<\/p>\n
427<\/p>\n
EXHIBIT G<\/p>\n
14.3 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its obligations
\nunder Section 14.1 or 14.2, above, as applicable. Each Party accordingly agrees,
\nthat the other Party shall be entitled to equitable relief, by way of injunction
\nor otherwise, if a Party breaches or threatens to breach its obligations under
\nSection 14.1 or 14.2 of this Agreement, as applicable, which equitable relief
\nshall be granted without bond or proof of damages, and the receiving Party shall
\nnot plead in defense that there would be an adequate remedy at law.<\/p>\n
ARTICLE 15<\/p>\n
DISPUTE RESOLUTION<\/p>\n
15.1 Disputes. Except as provided in Article 4, a Party with a
\nclaim or dispute under this Agreement shall submit to the other Party a
\nnotification of such claim or dispute within sixty (60) days after the
\ncircumstances that gave rise to the claim or the question or issue in dispute.
\nThe notification shall be in writing and shall include a concise statement of
\nthe claim or the issue or question in dispute, a statement of the relevant facts
\nand documentation to support the claim. In the event the Parties are unable, in
\ngood faith, to resolve their disagreement in a manner satisfactory to both
\nParties within thirty (30) days after receipt by a Party of a notification
\nspecifying the claim, issue or question in dispute, the Parties shall refer the
\ndispute to their respective senior management. If, after using their good faith
\nbest efforts to resolve the dispute, senior management cannot resolve the
\ndispute within thirty (30) days, the Parties shall, except as provide in Article
\n4, utilize the arbitration procedures set forth below in Section 15.2 to resolve
\na dispute, provided that nothing herein or therein shall prohibit Pepco or
\nOperator from at any time requesting from a court of competent jurisdiction a
\ntemporary restraining order, preliminary injunction, or other similar form of
\nequitable relief to enforce performance of the provisions of this Agreement.<\/p>\n
15.2 Arbitration.<\/p>\n
(a) Any arbitration initiated under this Agreement shall
\nbe conducted before a single neutral arbitrator appointed by the Parties within
\nthirty (30) days of receipt by respondent of the demand for arbitration. If the
\nParties are unable to agree on an arbitrator, such arbitration shall be
\nappointed by the American Arbitration Association. Unless the Parties agree
\notherwise, the arbitrator shall be an attorney or retired judge with at least
\nfifteen (15) years of experience, and shall not have any current or past
\nsubstantial business or financial relationships with any Party to the
\narbitration. If possible, the arbitrator shall have experience in the electric
\nutility industry. Unless otherwise agreed, the arbitration shall be conducted in
\naccordance with the American Arbitration<\/p>\n
428<\/p>\n
EXHIBIT G<\/p>\n
Association’s Commercial Arbitration Rules, then in effect, in the District of
\nColumbia. Any arbitration proceedings, decision or award rendered hereunder and
\nthe validity, effect and interpretation of this arbitration agreement shall be
\ngoverned by the Federal Arbitration Act of the United States, 9 U.S.C. Sections
\n1 et seq.<\/p>\n
(b) The arbitration shall, if possible, be concluded not
\nlater than six (6) months after the date that it is initiated. The arbitrator
\nshall be authorized only to interpret and apply the provisions of this Agreement
\nor any related agreements entered into under this Agreement and shall have no
\npower to modify or change any of the above in any manner. The arbitrator shall
\nhave no authority to award punitive or multiple damages or any damages
\ninconsistent with this Agreement. The arbitrator shall, within thirty (30) days
\nof the conclusion of the hearing, unless such time is extended by agreement of
\nthe Parties, notify the Parties in writing of his or her decision, stating his
\nor her reasons for such decision and separately listing his or her findings of
\nfact and conclusions of law. The decision of the arbitrator rendered in such a
\nproceeding shall be final and binding on the Parties. Judgment on the award may
\nbe entered upon it in any court having jurisdiction.<\/p>\n
ARTICLE 16<\/p>\n
MISCELLANEOUS PROVISIONS<\/p>\n
16.1 Expenses. Except to the extent specifically provided herein,
\nall costs and expenses incurred in connection with this Agreement and the
\ntransactions contemplated hereby shall be borne by the Party incurring such
\ncosts and expenses, whether or not the transactions contemplated hereby are
\nconsummated.<\/p>\n
16.2 Amendment and Modification; Extension; Waiver. This Agreement
\nmay be amended, modified or supplemented only by an instrument in writing signed
\non behalf of each of the Parties. Either Party may (i) extend the time for the
\nperformance of any of the obligations or other acts of the other Party, (ii)
\nwaive any inaccuracies in the representations and warranties of the other Party
\ncontained in this Agreement or (iii) waive compliance by the other Party with
\nany of the agreements or conditions contained in this Agreement. Any agreement
\non the part of a Party to any such extension or waiver shall be valid only if
\nset forth in an instrument in writing signed on behalf of such Party. The
\nfailure of a Party to assert any of its rights under this Agreement or otherwise
\nshall not constitute a waiver of such rights.<\/p>\n
16.3 Notices. All notices and other communications hereunder shall
\nbe in writing and shall be deemed given (as of the time of delivery or, in the
\ncase of a telecopied communication, of confirmation) if delivered personally,
\ntelecopied (which is confirmed) or sent by overnight courier<\/p>\n
429<\/p>\n
EXHIBIT G<\/p>\n
(providing proof of delivery) to the Parties at the following addresses (or at
\nsuch other address for a Party as shall be specified by like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopier: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
if to Operator, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, NW
\n Suite 300 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
16.4 Assignment; No Third Party Beneficiaries.<\/p>\n
(a) This Agreement and all of the provisions hereof shall
\nbe binding upon and inure to the benefit of the Parties and their respective
\nsuccessors and permitted assigns, but neither this Agreement nor any of the
\nrights, interests or obligations hereunder shall be assigned by any Party,<\/p>\n
430<\/p>\n
EXHIBIT G<\/p>\n
including by operation of law, without the prior written consent of the other
\nParty, except (i) in the case of Pepco, (A) to an Affiliate of Pepco, (B) to a
\nthird party in connection with the transfer of Pepco’s transmission system to
\nsuch third party or (C) to a lending institution or trustee in connection with a
\npledge or granting of a security interest in all or any part of the this
\nAgreement, and (ii) in the case of Operator, to a lending institution or trustee
\nin connection with a pledge or granting of a security interest in this
\nAgreement; provided, however, that no assignment or transfer of rights or
\nobligations by either Party shall relieve it from the full liabilities and the
\nfull financial responsibility, as provided for under this Agreement, unless and
\nuntil the transferee or assignee shall agree in writing to assume such
\nobligations and duties and the other Party has consented in writing to such
\nassumption.<\/p>\n
(b) Nothing in this Agreement is intended to confer upon
\nany other person except the Parties any rights or remedies hereunder or shall
\ncreate any third party beneficiary rights in any person, including, with respect
\nto continued or resumed employment, any employee or former employee of Pepco
\n(including any beneficiary or dependent thereof). No provision of this Agreement
\nshall create any rights in any such persons in respect of any benefits that may
\nbe provided, directly or indirectly, under any employee benefit plan or
\narrangement except as expressly provided for thereunder.<\/p>\n
16.5 Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the District of Columbia (regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaw).<\/p>\n
16.6 Counterparts. This Agreement may be executed in two
\ncounterparts, each of which shall be deemed an original, but both of which
\ntogether shall constitute one and the same instrument.<\/p>\n
16.7 Interpretation. When a reference is made in this Agreement to
\nan Article, Section, Appendix, Exhibit or Schedule, such reference shall be to
\nan Article or Section of, or Appendix, Exhibit or Schedule to, this Agreement
\nunless otherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation” or equivalent words. The words
\n“hereof”, “herein” and “hereunder” and words of similar import when used in this
\nAgreement shall refer to this Agreement as a whole and not to any particular
\nprovision of this Agreement. The definitions contained in this Agreement are
\napplicable to the singular as well as the plural forms of such terms and to the
\nmasculine as well as to the feminine and neuter genders of such term. Any
\nagreement, instrument, statute, regulation, rule or order defined or referred to
\nherein or in any agreement or instrument<\/p>\n
431<\/p>\n
EXHIBIT G<\/p>\n
that is referred to herein means such agreement, instrument, statute,
\nregulation, rule or order as from time to time amended, modified or
\nsupplemented, including (in the case of agreements or instruments) by waiver or
\nconsent and (in the case of statutes, regulations, rules or orders) by
\nsuccession of comparable successor statutes, regulations, rules or orders and
\nreferences to all attachments thereto and instruments incorporated therein.
\nReferences to a person are also to its permitted successors and assigns. Each
\nParty acknowledges that it has been represented by counsel in connection with
\nthe review and execution of this Agreement, and, accordingly, there shall be no
\npresumption that this Agreement or any provision hereof be construed against the
\nParty that drafted this Agreement.<\/p>\n
16.8 Jurisdiction and Enforcement. Except as provided in Articles 4
\nand 15, each of the Parties irrevocably submits to the exclusive jurisdiction of
\n(i) the Superior Court of the District of Columbia, and (ii) the United States
\nDistrict Court for the District of Columbia, for the purposes of any suit,
\naction or other proceeding arising out of this Agreement or any transaction
\ncontemplated hereby. Except as provided in Articles 4 and 15, each of the
\nParties agrees to commence any action, suit or proceeding relating hereto either
\nin the United States District Court for the District of Columbia or, if such
\nsuit, action or proceeding may not be brought in such court for jurisdictional
\nreasons, in the Superior Court for the District of Columbia. Except as provided
\nin Articles 4 and 15, each of the Parties further agrees that service of
\nprocess, summons, notice or document by hand delivery or U.S. registered mail at
\nthe address specified for such Party in Section 16.3 (or such other address
\nspecified by such Party from time to time pursuant to Section 16.3) shall be
\neffective service of process for any action, suit or proceeding brought against
\nsuch Party in any such court. Except as provided in Articles 4 and 15, each of
\nthe Parties irrevocably and unconditionally waives any objection to the laying
\nof venue of any action, suit or proceeding arising out of this Agreement or the
\ntransactions contemplated hereby in (i) the Superior Court for the District of
\nColumbia, or (ii) the United States District Court for the District of Columbia,
\nand hereby further irrevocably and unconditionally waives and agrees not to
\nplead or claim in any such court that any such action, suit or proceeding
\nbrought in any such court has been brought in an inconvenient forum.<\/p>\n
16.9 Entire Agreement. This Agreement and the Asset Sale Agreement,
\nincluding the Appendices, Exhibits, Schedules, documents, certificates and
\ninstruments referred to herein or therein and other contracts, agreements and
\ninstruments contemplated hereby or thereby, embodies the entire agreement and
\nunderstanding of the Parties in respect of the transactions contemplated by this
\nAgreement. There are no restrictions, promises, representations, warranties,
\ncovenants or undertakings other than those expressly set forth or referred to
\nherein or therein. This Agreement and the Asset Sale Agreement supersede all
\nprior agreements and understandings between the Parties with respect to the
\ntransactions contemplated by this Agreement.<\/p>\n
432<\/p>\n
EXHIBIT G<\/p>\n
16.10 Severability. If any term or other provision of this Agreement
\nis invalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the Parties shall
\nnegotiate in good faith to modify this Agreement so as to effect the original
\nintent of the Parties as closely as possible to the fullest extent permitted by
\nApplicable Law in an acceptable manner to the end that the transactions
\ncontemplated hereby are fulfilled to the extent possible.<\/p>\n
16.11 Conflicts. Except with respect to the indemnification,
\nliability, default and remedies provisions contained herein or as otherwise
\nexpressly provided herein, in the event of any conflict or inconsistency between
\nthe terms of this Agreement and the terms of the Asset Sale Agreement, the terms
\nof the Asset Sale Agreement shall prevail.<\/p>\n
16.12 Attorney-in-Fact. Pepco hereby appoints _______________, a
\n_______________ of Pepco, to be its duly authorized Attorney-in-Fact and in
\nPepco’s name to execute, acknowledge and deliver this Agreement as its act and
\ndeed. Operator hereby appoints _____________, its ______________, to be its duly
\nauthorized Attorney-in-Fact and in Operator’s name to execute, acknowledge and
\ndeliver this Agreement as its act and deed.<\/p>\n
433<\/p>\n
EXHIBIT G<\/p>\n
IN WITNESS WHEREOF, Pepco and Operator have caused this Operation and
\nMaintenance Agreement to be signed by their respective duly authorized officers
\nas of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n —————————————
\n Name:
\n Title:<\/p>\n
[OPERATOR]<\/p>\n
By:
\n —————————————
\n Name:
\n Title:<\/p>\n
434<\/p>\n
EXHIBIT G<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for Pepco
\nas named in the foregoing Instrument, personally appeared before me in said
\njurisdiction, and as such attorney-in-fact and by virtue of the authority vested
\nin him by said Instrument, acknowledged the same to be the act and deed of said
\ncorporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
——————————
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
435<\/p>\n
EXHIBIT G<\/p>\n
)
\nDISTRICT OF COLUMBIA ) SS:
\n )<\/p>\n
The undersigned, a Notary Public in and for the jurisdiction aforesaid,
\ndoes hereby certify that ______________, personally known to me (or
\nsatisfactorily proven) to be the person who signed as attorney-in-fact for
\nOperator named in the foregoing Instrument, personally appeared before me in
\nsaid jurisdiction, and as such attorney-in-fact and by virtue of the authority
\nvested in him by said Instrument, acknowledged the same to be the act and deed
\nof said corporation, and that he executed and delivered the same as such.<\/p>\n
WITNESS my hand and official seal this ___ day of ___________, 2000.<\/p>\n
——————————
\nMy Commission Expires: Notary Public in and for
\n the District of Columbia<\/p>\n
436<\/p>\n
APPENDIX A<\/p>\n
DEFINITIONS<\/p>\n
As used in this Agreement, the following terms have the following
\nmeanings:<\/p>\n
“Affiliate” shall have the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934, as
\namended.<\/p>\n
“Agreement” means this Operation and Maintenance Agreement dated _____,
\n2000 and any schedules, appendices or exhibits attached thereto.<\/p>\n
“Applicable Law” means all current and future Federal, state and local
\nlaws (including common law and Environmental Laws), treaties, regulations,
\nrules, ordinances, codes, decrees, judgments, directives or orders (including
\nconsent orders) and Permits, in each case, relating to the Services or the
\nFacilities or otherwise related to the transactions contemplated by this
\nAgreement.<\/p>\n
“Business Day” means any day other than Saturday, Sunday and any day
\nwhich is a legal holiday or a day on which banking institutions in Washington,
\nD.C. are authorized or required by law or other action of a Governmental
\nAuthority to close.<\/p>\n
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of
\n1984.<\/p>\n
“Capability Demonstration Test” means the PJM Summer Capability
\nDemonstration Test.<\/p>\n
“Capital Budget” shall have the meaning set forth in Section 4.2.
\nImprovement projects with a cost of greater than $500,000 shall be included in
\nthe Capital Budget, as such amount may be revised by Pepco in consideration of
\naccounting or tax regulations.<\/p>\n
“Cause” means (a) the commission of any act by an employee constituting
\nfinancial dishonesty against Operator (or any of its affiliates), or (b)
\nsubstantial violations of directions from a supervising executive, repeated poor
\nperformance or nonperformance of such employee’s duties, responsibilities or
\nactivities; provided that, in the case of clause (b) only, Operator (or any of
\nits affiliates) has given the employee written notice of such violations, poor
\nperformance or nonperformance and the employee has failed to cure.<\/p>\n
“Code” means the United States Internal Revenue Code of 1986, as
\namended.<\/p>\n
“Contract Year” means a calendar year, provided however that the first
\nContract Year shall commence on the Turnover Date and end on December 31, 2001
\n(“First Contract Year”) and any financial obligations stated on the<\/p>\n
437<\/p>\n
EXHIBIT G<\/p>\n
basis of a Contract Year shall be adjusted by multiplying those obligations by a
\nfraction of which the numerator shall be number of days in that Contract Year
\nand the denominator shall be 365.<\/p>\n
“Effective Date” means the date set forth in the preamble hereto.<\/p>\n
“EFORD” means the “Equivalent Forced Outage Rate Demand” as determined
\nin accordance with PJM procedures.<\/p>\n
“EFORD Standard” means an average EFORD rating, calculated as the
\naverage of the EFORDS of all Units of a Facility in a Contract Year: for
\npurposes of determining liquidated damages pursuant to Section 2.4.1(a) for
\nBenning, eighteen percent (18%), and for Buzzard, twelve percent (12%); and for
\npurposes of determining Performance Bonus pursuant to Sections 2.4.1(b) ten
\npercent (10%).<\/p>\n
“Emergency” means any event or circumstance arising in the course of
\nthe operations and maintenance of the Facilities which: (i) requires prompt
\nactions; and (ii) in the reasonable opinion of Operator in accordance with Good
\nUtility Practices, could be expected to: (A) endanger the health or safety of
\nany employee or any person at or in the vicinity of the Facilities or the
\nFacility Sites, (B) have a material adverse effect on the transmission system,
\nor (C) have a material adverse effect on the Facilities or the Facility Sites.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of 1974, as
\namended.<\/p>\n
“Employees” shall have the meaning set forth in Exhibit III.<\/p>\n
“Environmental Laws” means all current and future Federal, state, local
\nand foreign laws (including common law), treaties, regulations, rules,
\nordinances, codes, decrees, judgments, directives or orders (including consent
\norders) and Environmental Permits, in each case, relating to pollution or
\nprotection of the environment or natural resources, including laws relating to
\nReleases or threatened Releases, or otherwise relating to the generation,
\nmanufacture, processing, distribution, use, treatment, storage, arrangement for
\ndisposal, transport, recycling or handling, of Hazardous Substances.<\/p>\n
“Environmental Permits” means the permits, licenses, consents,
\napprovals and other governmental authorizations with respect to Environmental
\nLaws relating primarily to the power generation operations of the Facilities.<\/p>\n
“Escalation Index” means three percent (3%) per Contract Year.<\/p>\n
“FERC” means the Federal Energy Regulatory Commission or its successor.<\/p>\n
438
\n EXHIBIT G<\/p>\n
“Facilities” means the Buzzard Point Generating Station and the Benning
\nGenerating Station.<\/p>\n
“Facility Sites” means the real property on which the Facilities are
\nlocated as set forth in Exhibit I.<\/p>\n
“Force Majeure” shall have the meaning set forth in Section 13.2.<\/p>\n
“Good Utility Practices” means any of the applicable practices, methods
\nand acts:<\/p>\n
(i) required by FERC, NERC, MAAC, PJM, the PJM System
\nOperator, or the successor of any of them, whether or not the Party whose
\nconduct is at issue is a member thereof;<\/p>\n
(ii) required by Applicable Law;<\/p>\n
(iii) required by the Pepco Interconnection Standards or
\nthe policies and standards of Pepco relating to emergency operations;<\/p>\n
(iv) otherwise engaged in or approved by a significant
\nportion of the electric utility industry during the relevant time period; which,
\nin the exercise of reasonable judgment in light of the facts known at the time
\nthe decision was made, could have been expected to accomplish the desired result
\nat a reasonable cost consistent with law, regulation, good business practices,
\nreliability, safety, and expedition. Good Utility Practices are not intended to
\nbe limited to the optimum practice, method, or act to the exclusion of all
\nothers, but rather to be acceptable practices, methods, or acts generally
\naccepted in the region.<\/p>\n
“Governmental Authority” means any court, administrative or regulatory
\nagency or commission or other governmental entity or instrumentality or any
\ndepartment thereof.<\/p>\n
“Hazardous Substances” means (i) any petrochemical or petroleum
\nproducts, crude oil or any fraction thereof, ash, radioactive materials, radon
\ngas, asbestos in any form, urea formaldehyde foam insulation or polychlorinated
\nbiphenyls, (ii) any chemicals, materials, substances or wastes defined as,
\nincluded in, or that are alleged or determined by any Person or Governmental
\nAuthority to be included in the definition of “hazardous substances,” “hazardous
\nwastes,” “hazardous materials,” “restricted hazardous materials,” “extremely
\nhazardous substances,” “toxic substances,” “PCBs,” “contaminants,” “asbestos” or
\n“pollutants” or similar term in any Environmental Law, (iii) any other chemical,
\nmaterial, substance or waste which is prohibited, limited or regulated by any
\nEnvironmental Law or (iv) any noise, electromagnetic radiation, and any other
\nsubstance or energy which causes or is alleged to cause personal injury
\n(including wrongful death, pain,<\/p>\n
439<\/p>\n
EXHIBIT G<\/p>\n
suffering and loss of consortium) or property damage (including nuisance,
\ntrespass and diminution of value).<\/p>\n
“IBEW” means Local Union #1900 of the International Brotherhood of
\nElectrical Workers.<\/p>\n
“IBEW Collective Bargaining Agreement” means that certain Collective
\nBargaining Agreement, between Pepco and the IBEW, effective December 8, 1998, as
\namended from time to time.<\/p>\n
“Income Tax” means any Federal, state and local Tax or surtax (i) based
\nupon, measured by or calculated with respect to income, profits or receipts, or
\n(ii) based upon, measured by or calculated with respect to multiple bases
\n(including corporate franchise taxes) if one or more of the bases on which such
\nTax may be based, measured by or calculated with respect to, is described in
\nclause (i), in each case, together with any interest, penalties, or additions to
\nsuch Tax.<\/p>\n
“Information Memorandum” means the Information Memorandum, prepared on
\nbehalf of Pepco, describing the Facilities, and the materials delivered with
\nsuch Information Memorandum, as such Information Memorandum and such materials
\nmay have been amended or supplemented.<\/p>\n
“Initial Term” shall have the meaning set forth in Section 7.1.<\/p>\n
“MAAC” means the Mid-Atlantic Area Council, a reliability council under
\nSection 202 of the Federal Power Act established pursuant to the MAAC Agreement,
\ndated August 1, 1994, as amended from time to time, and any successor entity
\nthereto.<\/p>\n
“NERC” means the North American Electric Reliability Council and any
\nsuccessor entity thereto.<\/p>\n
“Non-Union Employees” shall have the meaning set forth in Exhibit III.<\/p>\n
“Notice” shall mean a written notice satisfying the requirements of
\nSection 16.3.<\/p>\n
“Operating Budget” shall have the meaning set forth in Section 4.1.<\/p>\n
“Operator Event of Default” shall have the meaning set forth in Section
\n7.2.1.<\/p>\n
“Operator Material Adverse Effect” shall have the meaning set forth in
\nSection 9.3(a).<\/p>\n
440<\/p>\n
EXHIBIT G<\/p>\n
“Operator Required Regulatory Approvals” shall have the meaning set
\nforth in Section 9.3(b).<\/p>\n
“Operator’s Fee” shall have the meaning set forth in Section 5.1.<\/p>\n
“Operator’s Pension Plan” shall have the meanings set forth in Exhibit
\nIII.<\/p>\n
“Operator’s Savings Plan” shall have the meaning set forth in Exhibit
\nIII.<\/p>\n
“Party or Parties” shall have the meaning set forth in the Preamble.<\/p>\n
“Peak Season” shall mean the months of May, June, July, August and
\nSeptember of any Contract Year.<\/p>\n
“Pepco Event of Default” shall have the meaning set forth in Section
\n7.2.3.<\/p>\n
“Pepco Interconnection Standards” means Pepco’s Interconnection and
\nParallel Operating Guidelines as amended from time to time. A copy of the
\nexisting Pepco Interconnection Standards is attached hereto as Exhibit IV.<\/p>\n
“Pepco Material Adverse Effect” shall have the meaning set forth in
\nSection 8.3(a).<\/p>\n
“Pepco Required Regulatory Approvals” shall have the meaning set forth
\nin Section 8.3(b).<\/p>\n
“Pepco’s Pension Plan” shall have the meaning set forth in Exhibit III.<\/p>\n
“Pepco’s Savings Plan” shall have the meaning set forth in Exhibit III.<\/p>\n
“Period” shall have the meaning set forth in Section 5.2.<\/p>\n
“Permits” means the permits, licenses, consents, approvals and other
\ngovernmental authorizations (other than with respect to Environmental Laws)
\nprimarily relating to the power generation operations of the Facilities.<\/p>\n
“Person” means any individual, partnership, limited liability company,
\njoint venture, corporation, trust, unincorporated organization or Governmental
\nAuthority.<\/p>\n
“PJM” means the Pennsylvania-New Jersey-Maryland interconnected power
\npool operated under the PJM Agreement and any successor thereto, including any
\nregional transmission operator\/independent system operator, transco or any other
\nindependent system administrator that possesses operational or planning<\/p>\n
441<\/p>\n
EXHIBIT G<\/p>\n
control over Pepco’s transmission system.<\/p>\n
“PJM Agreement” means the Amended and Restated Operating Agreement of
\nthe PJM Interconnection LLC, dated as of June 2, 1997.<\/p>\n
“PJM Control Area” shall mean the control area recognized by NERC as
\nthe PJM Control Area.<\/p>\n
“PJM Interconnection LLC” means the independent system operator of the
\nPJM Control Area pursuant to the PJM Agreement and the PJM Tariff.<\/p>\n
“PJM Reliability Agreement” means the Reliability Assurance Agreement
\ndated June 2, 1997 among the load serving entities of PJM.<\/p>\n
“PJM Requirements” means the rules, regulations or other requirements
\nof PJM or MAAC contained or adopted pursuant to the PJM Agreement, the PJM
\nReliability Agreement or the PJM Tariff which are applicable to Pepco and
\nOperator, with respect to the Facilities.<\/p>\n
“PJM System Operator” shall mean the PJM Interconnection energy control
\ncenter staff responsible for central dispatch as provided in the PJM Agreement.<\/p>\n
“PJM Tariff” means the PJM Open Access Transmission Tariff providing
\ntransmission service within the PJM Control Area.<\/p>\n
“Qualified Offer” shall have the meaning set forth in Exhibit III.<\/p>\n
“Regulatory Approval” means with respect to a Party, any consent or
\napproval of, filing with, or notice to, any Governmental Authority that is
\nnecessary for the execution and delivery of the Agreement by such Party or the
\nconsummation thereby of the transactions contemplated hereby.<\/p>\n
“Release” means any release, spill, emission, leaking, dumping,
\ninjection, pouring, deposit, disposal, discharge, dispersal, leaching or
\nmigration into the environment (including ambient air, surface water,
\ngroundwater, land surface or subsurface strata) or within any building,
\nstructure, facility or fixture.<\/p>\n
“Services” means all activities to be performed by Operator hereunder.<\/p>\n
“Taxes” means all taxes, surtaxes, charges, fees, levies, penalties or
\nother assessments imposed by any United States Federal, state or local or
\nforeign taxing authority, including Income Taxes, excise, property, sales,
\ntransfer, franchise, special franchise, payroll, recording, withholding,<\/p>\n
442<\/p>\n
EXHIBIT G<\/p>\n
social security or other taxes, including any interest, penalties or additions
\nattributable thereto.<\/p>\n
“Term” shall have the meaning set forth in Section 7.1.<\/p>\n
“Termination Date” means the last day of the Term.<\/p>\n
“Total Cash Compensation” shall have the meaning set forth in Exhibit
\nIII.<\/p>\n
“Transferred Employee Records” shall have the meaning set forth in
\nArticle 11.<\/p>\n
“Transferred Employees” shall have the meaning set forth in Exhibit
\nIII.<\/p>\n
“Transferred Non-Union Employees” shall have the meaning set forth in
\nExhibit III.<\/p>\n
“Transferred Savings Employees” shall have the meaning set forth in
\nExhibit III.<\/p>\n
“Transferred Union Employees” shall have the meaning set forth in
\nExhibit III.<\/p>\n
“Turnover Date” shall mean the date established pursuant to Section
\n6.1.<\/p>\n
“Turnover Date Benefits” shall have the meaning set forth in Exhibit
\nIII.<\/p>\n
“Union Employees” shall have the meaning set forth in Exhibit III.<\/p>\n
“Units” shall mean each of (i) the two (2) steam turbines at Benning
\nand (ii) the sixteen (16) combustion turbines at Buzzard Point.<\/p>\n
“WARN Act” means the Federal Worker Adjustment Retraining and
\nNotification Act of 1988, as amended.<\/p>\n
443<\/p>\n
EXHIBIT H<\/p>\n
SITE LEASE AGREEMENT<\/p>\n
by and between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
——————————–<\/p>\n
444<\/p>\n
EXHIBIT H<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n\n Page<\/p>\n
\nARTICLE 1 PREMISES 1
\nARTICLE 2 TERM 2
\nARTICLE 3 DELIVERY OF THE PREMISES TO TENANT 2
\nARTICLE 4 ACCEPTANCE OF THE PREMISES BY TENANT 2
\nARTICLE 5 RENTAL 3
\nARTICLE 6 PAYMENT OF REAL ESTATE TAXES 4
\nARTICLE 7 OPERATION, MANAGEMENT AND MAINTENANCE 6
\nARTICLE 8 UTILITIES 6
\nARTICLE 9 USE 6
\nARTICLE 10 LAWS, ORDINANCES AND REQUIREMENTS OF PUBLIC
\n AUTHORITIES 7
\nARTICLE 11 QUIET ENJOYMENT 7
\nARTICLE 12 ALTERATIONS 8
\nARTICLE 13 LIENS 8
\nARTICLE 14 REPAIRS 9
\nARTICLE 15 INSURANCE 9
\nARTICLE 16 DAMAGE BY FIRE OR OTHER CASUALTY 10
\nARTICLE 17 CONDEMNATION 10
\nARTICLE 18 ASSIGNMENT AND SUBLETTING 11
\nARTICLE 19 INDEMNIFICATION 11
\nARTICLE 20 SURRENDER OF THE PREMISES 11
\nARTICLE 21 LEASEHOLD MORTGAGES 12
\nARTICLE 22 PRIORITY 14
\nARTICLE 23 DEFAULT AND REMEDIES 15
\nARTICLE 24 ESTOPPEL CERTIFICATES 15
\nARTICLE 25 SECURITY DEPOSIT 16
\nARTICLE 26 FORCE MAJEURE 16
\nARTICLE 27 NOTICES 17
\nARTICLE 28 MISCELLANEOUS 18
\n<\/c><\/c><\/s><\/caption>\n<\/table>\nAppendix and Exhibits:<\/p>\n
\n
\n Appendix A Definitions
\n Exhibit A Legal Description of the Premises
\n Exhibit A-1 Description of the Building Addition
\n Exhibit B Legal Description of the Landlord’s Land
\n Exhibit C Form of Easement Agreement
\n<\/c><\/s><\/table>\n 445<\/p>\n
EXHIBIT H<\/p>\n
SITE LEASE AGREEMENT<\/p>\n
THIS SITE LEASE AGREEMENT (as amended from time to time and with all
\nAppendices and Exhibits attached hereto, this “Lease”) is made as of the ___ day
\nof ______________, 2000 by and between Potomac Electric Power Company, a
\nDistrict of Columbia and Virginia corporation (“Landlord”), and
\n_______________________________ (“Tenant”). Landlord and Tenant are sometimes
\nhereafter collectively referred to herein as the “Parties.”<\/p>\n
W I T N E S S E T H<\/p>\n
WHEREAS, Landlord and Tenant have entered into an Asset Purchase and
\nSale Agreement for Generating Plants and Related Assets, dated June 7, 2000 (as
\namended from time to time, the “Asset Sale Agreement”), for the sale by Landlord
\nto Tenant of, among other things, the Potomac River Station generating facility
\nand associated generating assets (the “Generating Station”); and<\/p>\n
WHEREAS, Tenant desires to lease from Landlord the land upon which the
\nGenerating Station is located, consisting of approximately ___ acres and as more
\nparticularly described in Exhibit A hereto, together with all appurtenances
\nthereto including, without limitation, that certain Building Addition more
\nparticularly described in Exhibit A-1 attached hereto (the “Building Addition”),
\nbut excluding the Generating Station and all other improvements besides the
\nBuilding Addition located upon such land (collectively, the “Premises”).<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants,
\nrepresentations, warranties and agreements contained herein, and intending to be
\nlegally bound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1<\/p>\n
PREMISES<\/p>\n
Section 1.01 Lease of Premises. Landlord leases to Tenant, and Tenant
\nleases from Landlord, for the Term (as defined below) and subject to the
\nprovisions hereof, to each of which Landlord and Tenant mutually agree, the
\nPremises. The Premises adjoins a parcel of land owned by Landlord upon which is
\nlocated a transmission and distribution substation and certain other
\ntransmission and distribution facilities owned by Landlord (collectively, the
\n“Transmission and Distribution Facilities”). The overall parcel owned by
\nLandlord that includes the Premises and the adjoining land upon which the
\nTransmission and Distribution Facilities are located is more particularly
\ndescribed in Exhibit B (the “Landlord’s Land”). Tenant shall grant to Landlord
\ncertain access and other rights to the Premises, and Landlord shall<\/p>\n
446<\/p>\n
EXHIBIT H<\/p>\n
grant to Tenant certain access and other rights to the Landlord’s Land, pursuant
\nto an Easement Agreement substantially in the form attached hereto as Exhibit C.<\/p>\n
ARTICLE 2<\/p>\n
TERM<\/p>\n
Section 2.01 Term. The term of this Lease (the “Term”) shall commence
\nupon consummation of the Closing (as defined in the Asset Sale Agreement) (the
\n“Commencement Date”) and shall continue for a term of ninety-nine (99) years
\nunless sooner terminated as provided herein.<\/p>\n
The first “Lease Year” shall be twelve (12) months, commencing on the
\nCommencement Date, except if the Commencement Date is not the first day of a
\nmonth, the first “Lease Year” shall include the partial month in which the
\nCommencement Date occurs plus the ensuing twelve (12) month period. Each
\nsubsequent “Lease Year” shall mean each subsequent twelve (12) month period
\ncommencing immediately upon the expiration of the prior Lease Year.<\/p>\n
Section 2.02 Quiet Enjoyment. Provided Tenant performs all of Tenant’s
\nobligations under this Lease, including the payment of Rental (as defined
\nbelow), Tenant shall, during the Term, enjoy the Premises without disturbance
\nfrom Landlord or any other persons claiming or acting by, through, or under
\nLandlord; subject, however, to the terms of this Lease. This covenant and all
\nother covenants of Landlord now or hereafter in this Lease shall be binding upon
\nLandlord and its successors.<\/p>\n
ARTICLE 3<\/p>\n
DELIVERY OF THE PREMISES TO TENANT<\/p>\n
Tenant hereby acknowledges Landlord’s delivery of possession of the
\nPremises to Tenant in the condition required pursuant to this Lease.<\/p>\n
ARTICLE 4<\/p>\n
ACCEPTANCE OF THE PREMISES BY TENANT<\/p>\n
Tenant hereby acknowledges and agrees that the Premises are in good and
\ntenantable condition, and accepts same in “as is” condition, and agrees that
\nLandlord has no obligation to perform any work in connection with the Premises
\nto make same fit for Tenant’s use and occupancy pursuant to this Lease.<\/p>\n
447<\/p>\n
EXHIBIT H<\/p>\n
ARTICLE 5<\/p>\n
RENTAL<\/p>\n
Section 5.01 Payment of Annual Base Rental. Commencing on the
\nCommencement Date, Tenant shall pay to Landlord for each Lease Year, an annual
\nrental (“Annual Base Rental”) in the amount set forth in Section 5.02 hereof.<\/p>\n
Section 5.02 Annual Base Rental. Tenant hereby covenants and
\nagrees to pay Landlord, as Annual Base Rental for the Premises on the first day
\nof each Lease Year and in the manner provided herein, an amount equal to $1.00.
\nTenant may prepay the Annual Base Rental for the Term (or portions thereof) at
\nany time.<\/p>\n
Section 5.03 Payment of Rental. All Rental shall be paid to
\nLandlord by Tenant when due, without deduction, offset or counterclaims unless
\notherwise permitted herein, or by applicable state law, in lawful money of the
\nUnited States, at Landlord’s address for notices as specified in Article 27
\nhereof, or such other place as Landlord may from time to time designate. The
\nterm “Rental” as used herein means the then applicable Annual Base Rental and
\nReal Estate Taxes (as hereinafter described) to the extent such Real Estate
\nTaxes are required to be paid by Tenant to Landlord pursuant to Section 6.01(c).
\nAll past due amounts of Rental shall bear interest, which interest shall be
\ndeemed to be Rental, from the date due until paid at a rate per annum equal to
\ntwo (2) percentage points above the prime rate of interest (the “Prime Rate”)
\ncharged by U.S. money center commercial banks as published in The Wall Street
\nJournal, such prime rate to change from time to time as and when the change is
\nreported; provided, however, that any interest payable pursuant to this Section
\n5.03 shall never exceed the maximum rate of interest from time to time permitted
\nto be charged under applicable law to Tenant with respect to the indebtedness
\nfor which such interest is charged under this Lease (the “The Highest Lawful
\nRate”). If The Wall Street Journal ceases to publish the prime rate of interest
\ncharged by U.S. money center commercial banks, Landlord shall have the right to
\nreasonably substitute the prime rate of interest published by another reasonably
\ncomparable financial newspaper. In addition, if any amount of Rental is not paid
\nwithin ten (10) days after written notice that the same is due and payable,
\nTenant shall pay to Landlord a late charge, which late charge shall be deemed to
\nbe Rental, in the amount of four percent (4%) of the amount in default.<\/p>\n
Section 5.04 Rental Not Based on Income. It is agreed by Landlord
\nand Tenant that no Rental for the use, occupancy or utilization of the Premises
\nshall be, or is, based in whole or in part on the net income or profits derived
\nby any person from the Generating Station or the Premises.<\/p>\n
Section 5.05 Application of Rental. Payment by Tenant or receipt
\nby Landlord of lesser amounts of Rental than that stipulated in this Lease shall
\nbe applied to amounts owing by Tenant to Landlord in any order<\/p>\n
448<\/p>\n
EXHIBIT H<\/p>\n
determined by Landlord. No endorsement or statement on any check or any letter
\naccompanying any check or payment as Rental shall be deemed an accord and
\nsatisfaction, and Landlord may accept such check or payment without prejudice to
\nLandlord’s right to recover the balance of such Rental or pursue any other
\nremedy provided in this Lease. Any credit due to Tenant hereunder by reason of
\noverpayment of Rental shall first be applied to any Rental owed to Landlord by
\nTenant if Tenant shall be in default when said credit shall be owed.<\/p>\n
ARTICLE 6<\/p>\n
PAYMENT OF REAL ESTATE TAXES<\/p>\n
Section 6.01 Real Estate Taxes.<\/p>\n
(a) The term “Real Estate Taxes” means the total of all
\ntaxes and assessments, general and special, ordinary and extraordinary, foreseen
\nand unforeseen, including assessments for public improvements and betterments
\nassessed, levied or imposed, directly or indirectly, with respect to the
\nPremises. Real Estate Taxes shall not include any income taxes, inheritance
\ntaxes or gift taxes.<\/p>\n
(b) To the extent that the Premises and the Generating
\nStation constitute a separate tax lot or parcel (or separate tax lots or
\nparcels): (i) Tenant shall pay directly to the pertinent taxing authority all
\nReal Estate Taxes due with respect to the Premises and the Generating Station
\nduring the Term, such payment obligations to commence upon the Commencement Date
\n(subject to adjustment between Landlord and Tenant during the first and last
\nyears of the Term if such Lease years do not coincide with the pertinent fiscal
\nyear for Real Estate Taxes); (ii) Tenant shall timely provide evidence to
\nLandlord of the timely payment of said Real Estate Taxes; and (iii) Tenant shall
\nhave the right to contest any Real Estate Taxes (in Landlord’s name, provided
\nTenant indemnifies Landlord on account thereof), provided it does so at its own
\ncost and expense by appropriate proceedings conducted in good faith. In the
\nevent Tenant contests any such Real Estate Taxes, it shall furnish Landlord with
\na detailed description of the contested matter and all actions taken by it in
\nconnection therewith. To the extent that the Premises constitutes a separate tax
\nlot, but the Real Estate Taxes attributable thereto (including the Generating
\nStation) are not billed separately to Tenant, Landlord shall promptly, upon its
\nreceipt of the same, submit to Tenant copies of all bills for such Real Estate
\nTaxes for direct payment by Tenant to the pertinent taxing authority. Landlord
\nshall be solely responsible for any penalties which may be assessed as a result
\nof its failure to promptly submit to Tenant the bills required pursuant to this
\nSection 6.01(b).<\/p>\n
(c) To the extent that the Premises and the Generating
\nStation do not constitute a separate tax lot or parcel (or separate tax lots or
\nparcels), and are taxed as part of a larger tax lot or parcel which consists of
\nor includes Landlord’s Land: (i) the Real Estate Taxes attributable to the
\nPremises and the Generating Station shall be that portion of the overall Real<\/p>\n
449<\/p>\n
EXHIBIT H<\/p>\n
Estate Taxes payable with respect to such larger tax lot that the aggregate
\nassessed tax value of the Generating Station and the Premises bears to the
\naggregate assessed tax value of the larger tax lot and all improvements located
\nwithin said larger tax lot, provided that if such assessed tax values are not
\nseparately stated, such Real Estate Taxes shall be based upon relative fair
\nmarket values as reasonably determined by Landlord in good faith; (ii) Landlord
\nshall periodically provide to Tenant a written statement showing the amount of
\nReal Estate Taxes attributable to the Premises and the Generating Station
\n(determined as aforesaid) then due and payable, which statement shall attach a
\ncopy of the tax bill due and payable, and shall show in reasonable detail the
\namount thereof attributable to the Premises (determined as aforesaid); and (iii)
\nTenant shall pay to Landlord the amount of Real Estate Taxes attributable to the
\nPremises and the Generating Station within thirty (30) days of receipt of
\nLandlord’s statement. Landlord shall provide Tenant with reasonable proof of
\npayment of Real Estate Taxes attributable to the larger tax lot reasonably
\npromptly after Tenant’s request therefor. Landlord shall have the right to
\ncontest the amount of Real Estate Taxes attributable to the larger tax lot or
\nparcel by appropriate proceedings diligently conducted in good faith and
\nprovided Landlord shall have satisfactorily bonded the amount of contested Real
\nEstate Taxes or set up reserves therefor adequate under generally accepted
\naccounting principles, and Tenant shall continue to pay to Landlord, as and when
\nrequired hereunder, Tenant’s proportionate share (determined as aforesaid) of
\nthe Real Estate Taxes attributable to the Premises and the Generating Station,
\nand shall also pay to Landlord Tenant’s proportionate share (determined as
\naforesaid) of the reasonable costs of any such contest. The benefit of any
\nrefund of Real Estate Taxes obtained as a result of any such contest shall be
\nshared by Landlord and Tenant in the proportion that such refunded Real Estate
\nTaxes were paid (or payable) by Landlord and Tenant. In the event Landlord
\ncontests any such Real Estates Taxes, it shall furnish Tenant with a description
\nof the contested matter and all actions to be taken by it in connection
\ntherewith. In the event Tenant desires to contest the amount of Real Estate
\nTaxes attributable to the larger tax lot or parcel, Tenant shall furnish to
\nLandlord a detailed description of the contested matter and all actions to be
\ntaken by it in connection with such contest, and Tenant shall continue to pay to
\nLandlord, as and when required hereunder, Tenant’s proportionate share
\n(determined as aforesaid) of the Real Estate Taxes attributable to the Premises
\nand the Generating Station. Any such contest by Tenant shall be conducted
\npursuant to appropriate proceedings diligently conducted by Tenant in good faith
\nand at Tenant’s own cost and expense. Any refund of Real Estate Taxes obtained
\nas a result of any such contest by Tenant (after reimbursement to Tenant of the
\nreasonable costs of any such contest) shall be shared by Landlord and Tenant in
\nthe proportion that such refunded Real Estate Taxes were paid (or payable) by
\nLandlord and Tenant.<\/p>\n
(d) Tenant may, at its sole cost and expense, seek to
\nhave the Premises treated as a separate tax lot or parcel provided such new tax
\nlot or parcel does not have an adverse effect on the remainder of the Landlord’s
\nLand or the Transmission and Distribution Facilities. Landlord shall reasonably
\ncooperate with Tenant, at Tenant’s sole cost and expense, in obtaining the
\nseparate tax lot or parcel for the Premises.<\/p>\n
450<\/p>\n
EXHIBIT H<\/p>\n
ARTICLE 7<\/p>\n
OPERATION, MANAGEMENT AND MAINTENANCE<\/p>\n
Section 7.01 Operation and Maintenance.<\/p>\n
(a) Tenant shall operate and maintain the entirety of the
\nPremises, including landscaping, during the Term of this Lease at its sole cost
\nand expense, and shall be responsible for payment for all utilities and other
\ncosts associated with its occupancy and use of the Premises.<\/p>\n
(b) Without limitation of the foregoing, Tenant shall at
\nall times use, operate and maintain the Premises in compliance with all Legal
\nRequirements now or hereinafter in effect and any recorded covenants, conditions
\nand restrictions affecting the Premises.<\/p>\n
ARTICLE 8<\/p>\n
UTILITIES<\/p>\n
Section 8.01 Utility Capacity. Tenant acknowledges that all
\nnecessary mains, conduits and other facilities necessary to supply water,
\nelectricity, gas, telecommunication service, sewer service and other utilities
\nnecessary for the operation of the Generating Station are available to the
\nPremises and in place, and are of sufficient quantity and quality, as of the
\nCommencement Date. Tenant shall pay directly all costs associated with its
\nconsumption of such service at the Premises. Tenant shall immediately cause all
\nsuch utility service to be billed directly to Tenant.<\/p>\n
Section 8.02 No Landlord Liability. No cessation or interruption
\nof any services to the Premises will make Landlord liable in any respect for
\ndamages to either person, property or business, nor be construed as an eviction
\nof Tenant, nor relieve Tenant from any of its obligations under this Lease,
\nexcept to the extent caused by the negligence of Landlord, its agents, employees
\nor contractors.<\/p>\n
ARTICLE 9<\/p>\n
USE<\/p>\n
Tenant agrees to use and maintain the Premises in a lawful and proper
\nmanner, and in a manner which does not interfere with Landlord’s operation of
\nits Transmission and Distribution Facilities or that portion of the Landlord’s
\nLand that is not the subject of this Lease. Landlord agrees to use and maintain
\nits Transmission and Distribution Facilities and that portion of the Landlord’s
\nLand that is not the subject of this Lease in a manner which does not materially
\ninterfere with Tenant’s operation of the Generating Station or the Premises.<\/p>\n
451<\/p>\n
EXHIBIT H<\/p>\n
ARTICLE 10<\/p>\n
LAWS, ORDINANCES AND REQUIREMENTS OF PUBLIC AUTHORITIES<\/p>\n
Except as otherwise provided in this Lease and subject to Tenant’s
\nobligations in respect of the Assumed Obligations in accordance with the terms
\nof the Asset Sale Agreement, Tenant shall, at its sole expense, in its use of
\nthe Premises and in its operation and maintenance of the Premises during the
\nTerm: (i) comply with, and be responsible under, all laws (including the
\nAmericans with Disabilities Act, 42 U.S.C. Sections 12101 et seq., as amended),
\nall Environmental Laws (as defined in the Asset Sale Agreement) and other laws,
\nregulations, ordinances and orders of Federal, state, county, municipal and
\nother authorities having jurisdiction over the Premises (collectively, the
\n“Legal Requirements”) as such Legal Requirements relate to the Premises, and
\n(ii) comply with any direction, order or request (subject to Tenant’s right to
\nreasonably protest such direction, order or request) made pursuant to law by any
\ncourt or public officers requiring abatement of any nuisance or responses to any
\npresence or release of materials, or which imposes upon Landlord or Tenant any
\nduty or obligation arising from conditions which have been created by Tenant or
\nwhich otherwise exist with respect to the Premises (except for any such
\nobligations expressly retained by Landlord as Retained Obligations pursuant to
\nthe Asset Sale Agreement or any such condition directly caused by Landlord, its
\nagents, employees or invitees after the Commencement Date). If Tenant receives
\nnotice of any such direction or of violation of any such law, order, ordinance,
\nor regulation, it shall promptly notify Landlord thereof. Tenant agrees that all
\nalterations developed by it in the Premises pursuant to Article 12 hereof shall
\nbe developed in compliance with all such Legal Requirements. Without limitation
\nof the foregoing, the Tenant will, at its sole cost and expense, keep the
\nPremises and every part thereof free from contamination from any Hazardous
\nSubstances (as defined in the Asset Sale Agreement).<\/p>\n
ARTICLE 11<\/p>\n
QUIET ENJOYMENT<\/p>\n
Landlord covenants and agrees that Tenant, upon paying the Annual Base
\nRental and all other charges herein provided for and performing and observing
\nthe covenants, conditions and agreements on the part of the Tenant hereunder to
\nbe performed and observed, shall and may peaceably hold and enjoy the Premises
\nduring the Term hereof for all purposes set forth herein, subject to such
\nlimitations as are set forth herein.<\/p>\n
452<\/p>\n
EXHIBIT H<\/p>\n
ARTICLE 12<\/p>\n
ALTERATIONS<\/p>\n
Section 12.01 Alterations. Tenant may, at all times during the
\nTerm, make alterations to the Premises. The above notwithstanding, Tenant may
\nnot, without Landlord’s prior written consent, make any alterations which in any
\nway interfere with the Landlord’s operation of its Transmission and Distribution
\nFacilities or that portion of the Landlord’s Land that is not subject to this
\nLease.<\/p>\n
All alterations shall be made at Tenant’s sole cost and expense. All
\nsuch construction, alterations, and maintenance work done by, or for, Tenant
\nshall (a) not adversely affect the structure or the safety of the Transmission
\nand Distribution Facilities, (b) comply with all building, safety, fire,
\nplumbing, electrical, and other codes and governmental and insurance
\nrequirements, (c) be completed in a good and workmanlike manner, and (d) be
\nperformed by reputable contractors. Landlord agrees hereby to reasonably
\ncooperate, at no cost or liability to Landlord, in Tenant’s efforts to obtain
\nsuch governmental consents, approvals and land permits as may be required for
\nany alterations to the Premises made by Tenant pursuant to this Article 12.<\/p>\n
All alterations constructed by Tenant hereunder shall be constructed
\nand maintained in accordance with all Legal Requirements.<\/p>\n
ARTICLE 13<\/p>\n
LIENS<\/p>\n
Tenant shall keep the Premises free from any liens arising from any
\nwork performed, materials furnished, or obligations incurred by or at the
\nrequest of Tenant. All persons either contracting with Tenant or furnishing or
\nrendering labor and materials to Tenant shall be notified in writing by Tenant
\nthat they must look only to Tenant for payment. If any lien is filed against the
\nPremises or Tenant’s leasehold interest therein, Tenant shall discharge the same
\nby payment or bonding within sixty (60) days after receipt of notice of its
\nfiling. To the extent Tenant desires to contest the application or validity of
\nany lien filed against the Premises or Tenant’s leasehold interest therein, it
\nmay do so by appropriate proceedings diligently conducted by Tenant in good
\nfaith provided it adequately bonds off, or sets aside sufficient reserves for
\npayment of, any such contested lien.<\/p>\n
453<\/p>\n
EXHIBIT H<\/p>\n
ARTICLE 14<\/p>\n
REPAIRS<\/p>\n
Subject to Tenant’s obligations to satisfy the Assumed Obligations
\npursuant to the Asset Sale Agreement and to maintain the Premises in compliance
\nwith said Assumed Obligations, and except as may be otherwise expressly set
\nforth herein, Tenant shall keep the Premises and every part thereof in such
\ncondition and repair as Tenant deems appropriate during the Term, at Tenant’s
\nsole cost and expense. Landlord has no obligation, and has made no promise, to
\nalter, remodel, improve, repair, redecorate, or paint the Premises or any part
\nthereof. No representations respecting the condition of the Premises have been
\nmade by Landlord to Tenant (other than those, if any, which may be set forth in
\nthe Asset Sale Agreement).<\/p>\n
ARTICLE 15<\/p>\n
INSURANCE<\/p>\n
Section 15.01 Tenant’s Insurance. During the Term, Tenant, at its
\nsole expense, shall obtain and keep in force such insurance as is customarily
\ncarried by owners of comparable facilities in the geographic area which the
\nPremises are located.<\/p>\n
All policies under this Section 15.01 shall be issued by insurers that
\nare authorized to do business in the Commonwealth of Virginia and shall name the
\nLandlord as an additional insured and shall contain an undertaking by the
\ninsurers to notify the parties in writing, by certified or registered United
\nStates mail, return receipt requested, not less than thirty (30) days before any
\nmaterial adverse change, reduction in coverage, cancellation, or other
\ntermination thereof.<\/p>\n
Section 15.02 Waiver of Subrogation. All policies covering real or
\npersonal property which Tenant obtains affecting the Premises or the Generating
\nStation shall include a clause or endorsement denying the insurer any rights of
\nsubrogation against the Landlord. Landlord shall not be liable or responsible
\nfor, and Tenant hereby releases the Landlord, the partners, employees, officers,
\ndirectors and agents of the other from any and all liability and responsibility
\nto the Tenant, or any person claiming by, through or under the Tenant, by way of
\nsubrogation or otherwise for any damage or loss to property due to hazards
\ncovered or which should be covered by policies of insurance obtained or which
\nshould be or have been obtained pursuant to this Lease, to the extent of the
\ninjury or loss covered or which should have been covered thereby, assuming that
\nany deductible shall be deemed to be insurance coverage. All policies of
\ninsurance covering the Transmission and Distribution Facilities and that portion
\nof Landlord’s Land not subject to<\/p>\n
454<\/p>\n
EXHIBIT H<\/p>\n
this Lease shall include a clause or endorsement denying any insurer any rights
\nof subrogation against Tenant.<\/p>\n
ARTICLE 16<\/p>\n
DAMAGE BY FIRE OR OTHER CASUALTY<\/p>\n
Tenant shall promptly notify Landlord of any material damage to the
\nPremises by fire or other casualty. If the Premises is damaged by fire or other
\ncasualty, Tenant may, at its option, repair the damage to the Premises at its
\nown expense. There shall be no abatement of Rental after the occurrence of any
\ncasualty and\/or during the period of any repairs.<\/p>\n
ARTICLE 17<\/p>\n
CONDEMNATION<\/p>\n
Section 17.01 Condemnation of All or Materially All of the
\nPremises. In the event that all or materially all of the Premises are taken or
\ncondemned for any public purpose, this Lease shall terminate as of the date of
\nsuch taking; provided, however, that those provisions of this Lease which are
\ndesignated to cover matters of termination and the period thereafter shall
\nsurvive the termination hereof.<\/p>\n
Section 17.02 Condemnation of Part of Premises. In the event that
\na portion, but less than all or materially all, of the Premises should be taken
\nor condemned for any public purpose, then this Lease shall terminate as of the
\ndate of such taking as to the portion of the Premises so taken but this Lease
\nshall remain in full force and effect as to the remainder of the Premises. In
\nthe event of a taking of a portion of the Premises which does not result in a
\ntermination of the Lease, the Rental shall not be adjusted to take into account
\nthe portion of the Premises so taken.<\/p>\n
Section 17.03 Condemnation Award. Tenant shall be entitled to
\nreceive the entire award in any condemnation proceeding or action for the value
\nof its leasehold interest in the Premises, and any other losses suffered by
\nTenant that are attributable to such taking.<\/p>\n
Section 17.04 Temporary Condemnation. If the temporary use or
\noccupancy of all or any part of the Premises shall be condemned or taken for any
\npublic or quasi-public use during the Term, this Lease shall be and remain
\nunaffected by such condemnation or taking and Tenant shall continue to pay in
\nfull the Rental payable hereunder for any period during such temporary use or
\noccupancy during the Term. In the event of any such condemnation or taking,
\nTenant shall be entitled to appear, claim, prove and receive the portion of the
\naward for such taking that represents compensation for use or occupancy of the
\nPremises during the Term.<\/p>\n
455<\/p>\n
EXHIBIT H<\/p>\n
ARTICLE 18<\/p>\n
ASSIGNMENT AND SUBLETTING<\/p>\n
This Lease and all of the provisions hereof shall be binding upon and
\ninure to the benefit of the Parties and their respective successors and
\npermitted assigns, but neither this Lease nor any of the rights, interests or
\nobligations hereunder shall be assigned by Tenant, including by operation of
\nlaw, nor shall the Premises or any portion thereof be sublet by Tenant, in each
\ncase, without the prior written consent of Landlord, except (i) prior to the
\nClosing, to a wholly-owned subsidiary so long as Tenant shall have duly executed
\nand delivered the Guarantee Agreement and such assignment is for all of Tenant’s
\nrights, interests and obligations hereunder, (ii) to an Affiliate (as defined in
\nthe Asset Sale Agreement) of Tenant in connection with the transfer of the
\nGenerating Station to such Affiliate and (iii) to the extent permitted under
\nArticle 21 hereto; provided, however, that no assignment, transfer or sublet of
\nrights or obligations by Tenant shall relieve it from the full liabilities and
\nthe full financial responsibility, as provided for under this Lease, unless and
\nuntil the transferee or assignee shall agree in writing to assume such
\nobligations and duties and Landlord has consented in writing to such assumption.
\nTo the extent Landlord’s consent is required pursuant to the provisions of this
\nArticle 18, such consent shall not be unreasonably withheld, delayed or
\nconditioned.<\/p>\n
Nothing in this Lease is intended to confer upon any other person
\nexcept the Parties any rights or remedies hereunder or shall create any third
\nparty beneficiary rights in any person.<\/p>\n
ARTICLE 19<\/p>\n
INDEMNIFICATION<\/p>\n
This Lease is an Ancillary Agreement (as defined in the Asset Sale
\nAgreement) and the provisions of Article X of the Asset Sale Agreement shall
\napply ceteris paribus to this Agreement.<\/p>\n
ARTICLE 20<\/p>\n
SURRENDER OF THE PREMISES<\/p>\n
Section 20.01 Surrender. Upon the expiration of the Term or other
\ntermination of this Lease for any cause whatsoever, except as otherwise provided
\nin Article 16 hereof, Tenant shall peacefully vacate the Premises in the same
\ncondition as they were at the beginning of the Term (as same may thereafter have
\nbeen improved by Tenant and subject to Tenant’s obligations pursuant to the
\nAsset Sale Agreement), condemnation, reasonable use and wear and tear thereof
\nexcepted. Should Tenant continue to hold the Premises after the termination of
\nthis Lease, whether the termination occurs by lapse of time or otherwise, such
\nholding over shall constitute and be construed as a tenancy<\/p>\n
456<\/p>\n
EXHIBIT H<\/p>\n
from month-to-month at a rental equal to the fair market value of such
\nmonth-to-month tenancy, as determined by an independent appraiser chosen by
\nLandlord in good faith, and subject to all of the other terms set forth herein
\nexcept any right to renew this Lease, but the foregoing shall not constitute a
\nconsent by Landlord to such holding over and shall not prevent Landlord from
\nexercising any of its remedies under this Lease or applicable law by reason of
\nsuch holding over. Tenant shall be liable to Landlord for all direct damage,
\nwhich Landlord suffers because of any holding over by Tenant.<\/p>\n
Section 20.02 Removal of Personal Property and Alterations. Prior
\nto the expiration of the Term, or promptly upon the earlier termination of this
\nLease, Tenant shall remove, at Tenant’s expense, all of its furniture,
\nfurnishings, personal property, trade fixtures and shall promptly repair all
\ndamage done to the Premises by such removal. Any items not so removed shall be
\ndeemed abandoned and shall thereupon become the property of Landlord.<\/p>\n
ARTICLE 21<\/p>\n
LEASEHOLD MORTGAGES<\/p>\n
Section 21.01 Leasehold Mortgages. Tenant is hereby given the
\nright by Landlord, in addition to any other rights herein granted, with or
\nwithout Landlord’s prior written consent, to mortgage its interests in this
\nLease, including, without limitation, any easements granted by Landlord for the
\nbenefit of the Premises, under one or more leasehold deed(s) of trust or
\nmortgage(s) (individually, a “Mortgage” and collectively, the “Mortgages”), and
\nto give to the holder of any such Mortgage (a “Mortgagee”) a lien, assignment
\nand\/or security interest in (i) any personal property included within this
\nLease, (ii) the rents, income, receipts, revenues and profits of the Premises,
\n(iii) any assignment, subleases or other transfer of all or any part of Tenant’s
\nrights under this Lease (iv) any rights of extension, renewal or expansion
\ncontained in this Lease, as collateral security for such Mortgage(s), upon the
\ncondition that all rights acquired under such Mortgage(s) shall be subject to
\neach and all of the covenants, conditions and restrictions set forth in this
\nLease and to all rights and interests of Landlord herein, none of which
\ncovenants, conditions, restrictions, rights and interests is or shall be waived
\nby Landlord by reason of the right so given to Tenant to mortgage such interest
\nin this Lease, except as expressly provided herein. If Tenant shall mortgage
\nthis Lease and if the Mortgagee under such Mortgage shall send to Landlord a
\ntrue copy of any such Mortgage, together with a written notice specifying the
\nname and addresses of the Mortgagee and the pertinent recording date with
\nrespect to such Mortgage(s), Landlord agrees that so long as any obligations
\nsecured by such leasehold Mortgage(s) shall remain unsatisfied, the following
\nprovisions shall apply:<\/p>\n
(a) If at any time there shall be more than one Mortgage, the
\nholder of the Mortgage prior in lien, shall be vested with the rights of the<\/p>\n
457<\/p>\n
EXHIBIT H<\/p>\n
Mortgagee under this Article 21 (including, without limitation, the right to
\ngive consents or approval or any other right vested in any Mortgagee by this
\nLease) to the exclusion of the holder of any junior Mortgage.<\/p>\n
(b) Landlord shall, upon sending Tenant any notice of default,
\nsimultaneously send a copy of such notice to the Mortgagee, using such
\nreasonable method and to such address as may be designated in a written notice
\nfrom such Mortgagee to Landlord. No notice given by Landlord to Tenant shall be
\nbinding upon or affect a Mortgagee or Tenant unless a copy of such notice shall
\nbe given to the Mortgagee pursuant to this subsection (b) of this Section 21.01
\nand Article 27 hereof. In addition to the other rights of the Mortgagee set
\nforth in this Article 21, the Mortgagee shall, after service of any such notice
\nupon it, have the right to cure or cause the cure of any default by Tenant
\nhereunder, and Landlord shall accept such performance by or at the instigation
\nof such Mortgagee as if the same had been done by Tenant. All notices to the
\nMortgagee shall be sent return receipt requested and shall not be effective
\nuntil received by such Mortgagee.<\/p>\n
(c) Landlord shall allow the Mortgagee concurrently the same cure
\nperiod given to Tenant hereunder to cure such default, plus an additional thirty
\n(30) days within which to cure the default, or, in the case of non-monetary
\ndefault or other condition which cannot in the exercise of due diligence be
\ncured by Mortgagee prior to the expiration of such additional thirty (30) day
\nperiod, shall allow the Mortgagee such additional days as is reasonably
\nnecessary for the curing of the default, in which event Landlord may not
\nexercise any remedies on account of such default so long as the Mortgagee is
\ndiligently and with continuity engaged in curing the default. The rights of the
\nMortgagee under this subsection (c) are in addition to the rights provided to
\nthe Mortgagee under subsection (d) of this Section 21.01.<\/p>\n
(d) If the Mortgagee, its nominee, or a purchaser at a foreclosure
\nor other sale shall acquire title to Tenant’s interest in this Lease and shall
\ncure all of Tenant’s defaults under this Lease which are susceptible of being
\ncured by such Mortgagee or by such nominee or purchaser, as the case may be,
\nwithin the time reasonably required therefor, then the defaults of any prior
\nholder of Tenant’s interest in this Lease which are not susceptible of being
\ncured by such Mortgagee (or by such nominee or purchaser) shall not be deemed to
\nbe defaults under this Lease as between Landlord and the Mortgagee, its nominee
\nor such purchaser. If Mortgagee does obtain possession of the Premises, Landlord
\nagrees to acknowledge Mortgagee, or its nominee as a successor to Tenant under
\nthis Lease, provided Mortgagee agrees to be bound by the terms and provisions of
\nall other agreements between Landlord and Tenant relating to the Premises
\nexisting both as of the Commencement Date and the date of succession.<\/p>\n
(e) To the extent permitted by law, Landlord acknowledges that as
\nbetween Landlord and the Mortgagee, its nominee or a purchaser at a foreclosure
\nor other sale, this Lease shall not be deemed to be terminated<\/p>\n
458<\/p>\n
EXHIBIT H<\/p>\n
notwithstanding the rejection of this Lease by operation of law, by Tenant or by
\nits representative, or by any trustee appointed in Tenant’s bankruptcy case,
\npursuant to the U.S. Bankruptcy Code (Title 11 of the United States Code) or any
\nother insolvency law. The Mortgagee shall be deemed to have satisfied its
\nobligation to commence foreclosure proceedings or cause Tenant’s interest in
\nthis Lease to be sold under a power of sale by asserting a claim in Tenant’s
\ncase under the U.S. Bankruptcy Code or other insolvency proceeding, and the
\nMortgagee shall not be deemed to have failed to satisfy such obligation if the
\nMortgagee is unable to do so as a result of the provisions of Section 362 of the
\nU.S. Bankruptcy Code or similar provisions of any other insolvency law.<\/p>\n
(f) No Mortgagee or its nominee shall become liable under the
\nprovisions of this Lease unless and until such time as it becomes, and then only
\nfor as long as it remains, the owner of Tenant’s interest in this Lease, and
\nsuch liability shall be limited to such Mortgagee’s or nominee’s interest in the
\nPremises.<\/p>\n
(g) Landlord shall, upon request, execute, acknowledge and deliver
\nto each leasehold Mortgagee(s) an agreement (prepared at the sole cost and
\nexpense of Tenant and in form reasonably satisfactory to Landlord and such
\nleasehold Mortgagee(s)) among Landlord, Tenant and the leasehold Mortgagee(s),
\nagreeing to all of the provisions of this Article 21.<\/p>\n
ARTICLE 22<\/p>\n
PRIORITY<\/p>\n
Section 22.01 Priority of Lease. This Lease and all Mortgages shall
\nbe superior in all respects to the lien of any deeds of trust, mortgages or
\nother security instruments securing indebtedness of Landlord (collectively,
\n“Subordinate Instruments”) which may hereafter from time to time during the Term
\ncover the Premises, or any interest of Landlord therein, and to any advances
\nmade on the security thereof, and to any refinancings, increases, renewals,
\nmodifications, consolidations, replacements and extensions thereof. As of the
\ndate hereof, the Premises shall not be subject to the lien, operation and effect
\nof any deeds of trust, mortgages or other security instruments securing
\nindebtedness of Landlord.<\/p>\n
Section 22.02 Attornment. At any time that any mortgagee (which,
\nfor these purposes, shall include the beneficiary under a deed of trust or any
\nSubordinate Instruments), foreclosure purchaser or other party acquires the
\ninterest of Landlord in the Premises, Tenant shall attorn to such mortgagee or
\npurchaser upon any such sale or the grantee under any deed in lieu of such
\nforeclosure and shall recognize such mortgagee, purchaser or grantee as the case
\nmay be, as Landlord under this Lease. The foregoing agreement of Tenant to
\nattorn shall survive any such foreclosure sale, trustee’s sale, or conveyance in
\nlieu thereof. Tenant shall, upon demand at any time, before or after any such
\nforeclosure sale, trustee’s sale, or conveyance in lieu thereof, execute,
\nacknowledge, and deliver to Landlord’s mortgagee or any<\/p>\n
459<\/p>\n
EXHIBIT H<\/p>\n
successor thereof or any then owner of the Premises, any written instruments and
\ncertificates evidencing such attornment as such mortgagee, successor or owner
\nmay reasonably require.<\/p>\n
ARTICLE 23<\/p>\n
DEFAULT AND REMEDIES<\/p>\n
Section 23.01 Tenant Default and Landlord Remedies. In the event:
\n(a) Tenant shall fail to pay any Rental or other sums payable by Tenant
\nhereunder as and when such Rental or other sums become due and payable and such
\nfailure shall continue for more than sixty (60) days after written notice from
\nLandlord; or (b) Tenant shall fail to perform or observe any other material
\ncovenant or obligation hereunder and such failure shall continue for more than
\nsixty (60) days after written notice from Landlord, provided, however, that if
\nTenant has commenced curative action prior to the expiration of the sixty (60)
\nday period and diligently pursues same to completion thereafter, Tenant shall
\nhave such longer period of time as is reasonably necessary to cure such default,
\nthen Landlord may do whatever Tenant is obligated to do under this Lease and
\nenter the Premises (in accordance with applicable judicial procedures) without
\nbeing liable to prosecution or any claim for damages therefor to accomplish this
\npurpose. Tenant shall reimburse Landlord immediately upon demand for any
\nreasonable expenses which Landlord incurs in thus effecting compliance with this
\nLease on Tenant’s behalf, and Landlord shall not be liable for any damages
\nsuffered by Tenant from such action, unless caused by the gross negligence or
\nwillful conduct of Landlord, its agents, employees or contractors.<\/p>\n
Section 23.02 No Acceptance of Surrender. No act or thing done by
\nLandlord or its agents during the Term shall constitute an acceptance of an
\nattempted surrender of the Premises, and no agreement to accept a surrender of
\nthe Premises shall be valid unless made in writing and signed by Landlord.. No
\nwaiver by either Party of any breach of this Lease shall constitute a waiver of
\nany other violation or breach of any of the terms hereof. Forbearance by either
\nParty to enforce one or more of the remedies herein provided upon a breach
\nhereof shall not constitute a waiver of any other breach of this Lease. <\/p>\n
Section 23.03 Rights Cumulative. The rights granted to either
\nParty in this Lease shall be cumulative of every other right or remedy which
\neither Party may otherwise have at law or in equity or by statute, and the
\nexercise of one or more rights or remedies shall not prejudice or impair the
\nconcurrent or subsequent exercise of other rights or remedies.<\/p>\n
ARTICLE 24<\/p>\n
ESTOPPEL CERTIFICATES<\/p>\n
Upon the request of Landlord, Tenant or a Mortgagee, Landlord and\/or
\nTenant will execute and deliver to the requesting party an instrument stating,<\/p>\n
460<\/p>\n
EXHIBIT H<\/p>\n
if the same be true, that this Lease has not been modified or amended (or
\nstating what modifications or amendments may be in effect), that the Lease is
\nthen in full force and effect and that, to the best of such Party’s knowledge,
\nthere are then no offsets, defenses or counterclaims with respect to the payment
\nof rent reserved hereunder or in the performance of any of the other terms,
\ncovenants and conditions hereof on the part of such Party to be performed, and
\nthat as of such date no default has been declared hereunder by either Party
\nhereto and that such Party at the time has no knowledge of any fact or
\ncircumstance which might reasonably give rise to a default by either Party.<\/p>\n
ARTICLE 25<\/p>\n
SECURITY DEPOSIT<\/p>\n
No security deposit shall be required in connection with this Lease.<\/p>\n
ARTICLE 26<\/p>\n
FORCE MAJEURE<\/p>\n
Section 26.01 Force Majeure. Notwithstanding anything in this
\nLease to the contrary, the Parties shall be excused from performing their
\nrespective obligations hereunder, and shall not be liable in damages or
\notherwise, to the extent that a Party is unable to perform or is prevented from
\nperforming by an event of Force Majeure and has complied with Section 26.03. The
\nParties recognize and agree that an event of Force Majeure will not relieve any
\nParty of its obligation to make payments when due hereunder.<\/p>\n
Section 26.02 Definition of Force Majeure. The term “Force Majeure”
\nas used herein means those causes beyond the reasonable control of the Party
\naffected, that, by the exercise of reasonable diligence, such Party is unable to
\nprevent, avoid, mitigate, or overcome, including the following: any act of God,
\nact of the public enemy, war, civil disturbance, insurrection, riot, fire
\n(unless resulting from the fault or negligence of the Party asserting Force
\nMajeure), storm or flood, lightning or explosion (unless resulting from the
\nfault or negligence of the Party asserting Force Majeure) or any other cause of
\na similar nature beyond such Party’s reasonable control.<\/p>\n
Section 26.3 Force Majeure Procedures. A Party shall not be
\nentitled to rely on the occurrence of an event of Force Majeure as a basis for
\nbeing excused from performance of its obligations under this Lease unless the
\nParty relying on the event or condition shall: (a) provide prompt written notice
\nof such Force Majeure event to the other Party, including an estimation of its
\nexpected duration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts to continue to perform its
\nobligations under this Lease; (c) expeditiously take action to correct or cure
\nthe event or condition excusing performance; (d) exercise all reasonable efforts
\nto mitigate or limit damages to the other Party; and (e) provide prompt notice
\nto the other Party of the cessation of the event or<\/p>\n
461<\/p>\n
EXHIBIT H<\/p>\n
condition giving rise to its excuse from performance. Subject to this Section
\n26.03, any obligation under this Lease shall be suspended only to the extent
\ncaused by such Force Majeure and only during the continuance of any inability of
\nperformance caused by such Force Majeure but for no longer period.<\/p>\n
ARTICLE 27<\/p>\n
NOTICES<\/p>\n
All notices and other communications hereunder shall be in writing and
\nshall be deemed given (as of the time of delivery or, in the case of a
\ntelecopied communication, of confirmation) if delivered personally, telecopied
\n(which is confirmed) or sent by overnight courier (providing proof of delivery)
\nto the Parties at the following addresses (or at such other address for a Party
\nas shall be specified by like notice):<\/p>\n
if to Landlord, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson, General Counsel<\/p>\n
with a copy to:<\/p>\n
Dickstein Shapiro Morin & Oshinsky LLP
\n 2101 L Street, N.W.
\n Washington, D.C. 20037
\n Telecopy No.: (202) 887-0689
\n Attention: Kenneth M. Simon, Esq.<\/p>\n
462<\/p>\n
EXHIBIT H<\/p>\n
if to Tenant, to:<\/p>\n
Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention: <\/p>\n
with a copy to:<\/p>\n
Troutman Sanders LLP
\n 1300 I Street, N.W.
\n Suite 500 East
\n Washington, DC 20005
\n Telecopier: (202) 274-2994
\n Attention: Benjamin L. Israel, Esq.<\/p>\n
ARTICLE 28<\/p>\n
MISCELLANEOUS<\/p>\n
Section 28.01 Payments and Reimbursements. Where this Lease
\nrequires either Party to pay or to reimburse directly to other Party for any
\nitem, such payment or reimbursement will be the actual costs (unless
\n“reasonable” costs are otherwise specified) incurred therefor by the Party
\nentitled to reimbursement. The party requesting reimbursement shall provide
\nreasonable back-up for the reimbursement amount requested. Failure by Tenant to
\npay any such amounts shall be considered as a failure to pay Rental, and, as a
\nresult, Landlord shall be entitled to all applicable rights and remedies.<\/p>\n
Section 28.02 No Merger. There shall be no merger of this Lease or
\nof the leasehold estate hereby created with the fee estate in the Premises or
\nany part thereof by reason of the fact that the same person may acquire or hold,
\ndirectly or indirectly, this Lease or the leasehold estate hereby created or any
\ninterest in this Lease or in such leasehold estate as well as the fee estate in
\nthe Premises or any interest in such fee estate. In the event of a voluntary or
\nother surrender of this Lease, or a mutual cancellation hereof, Landlord may, at
\nits option, terminate all subleases.<\/p>\n
463<\/p>\n
EXHIBIT H<\/p>\n
Section 28.03 No Representations. Neither Landlord nor Landlord’s
\nagents or brokers, nor Tenant nor Tenant’s agents or brokers, have made any
\nrepresentations or promises with respect to the Premises or this Lease except as
\nherein expressly set forth or as set forth in the Asset Sale Agreement and all
\nreliance with respect to any representations or promises is based solely on
\nthose contained herein or therein. No rights, easements, or licenses are
\nacquired by Tenant under this Lease by implication or otherwise except as
\nexpressly set forth in this Lease.<\/p>\n
Section 28.04 No Offer. The submission of this Lease to Tenant
\nshall not be construed as an option, reservation or offer, nor shall Tenant have
\nany rights with respect thereto unless both Landlord and Tenant execute and
\nreceive a copy of this Lease.<\/p>\n
Section 28.0 Light, Air and View Obstruction. Any elimination or
\nshutting off of light, air, or view by any structure which may be erected on
\nlands (other than the Premises) adjacent to the Premises shall in no way affect
\nthis Lease or impose any liability on Landlord.<\/p>\n
Section 28.06 Time of the Essence. Time is of the essence with
\nrespect to Tenant’s and Landlord’s obligations under this Lease.<\/p>\n
Section 28.07 Recordation. At the request of either Party, this
\nLease, or a memorandum thereof, may be recorded among the pertinent land records
\nby either party. All costs associated with such recordation shall be borne by
\nthe party desiring recordation.<\/p>\n
Section 28.08 Expenses. Except to the extent specifically provided
\nherein, all costs and expenses incurred in connection with this Lease and the
\ntransactions contemplated hereby shall be borne by the Party incurring such
\ncosts and expenses, whether or not the transactions contemplated hereby are
\nconsummated.<\/p>\n
Section 28.09 Amendment and Modification; Extension; Wavier. This
\nLease may be amended, modified or supplemented only by an instrument in writing
\nsigned on behalf of each of the Parties. Either Party may (i) extend the time
\nfor the performance of any of the obligations or other acts of the other Party,
\nor (ii) waive compliance by the other Party with any of the agreements or
\nconditions contained in this Lease. Any agreement on the part of a Party to any
\nsuch extension or waiver shall be valid only if set forth in an instrument in
\nwriting signed on behalf of such Party. The failure of a Party to this Lease to
\nassert any of its rights under this Lease or otherwise shall not constitute a
\nwaiver of such rights.<\/p>\n
Section 28.10 Governing Law. This Lease shall be governed by and
\nconstrued in accordance with the laws of the Commonwealth of Virginia
\n(regardless of the laws that might otherwise govern under applicable principles
\nof conflicts of law).<\/p>\n
Section 28.11 Jurisdiction and Enforcement.<\/p>\n
464<\/p>\n
EXHIBIT H<\/p>\n
(a) Each of the parties irrevocably submits to the exclusive
\njurisdiction of (i) the Superior Court of the District of Columbia and (ii) the
\nUnited States District Court for the District of Columbia, for the purposes of
\nany suit, action or other proceeding arising out of this Lease or any
\ntransaction contemplated hereby. Each of the parties agrees to commence any
\naction, suit or proceeding relating hereto either in the United States District
\nCourt for the District of Columbia or, if such suit, action or proceeding may
\nnot be brought in such court for jurisdictional reasons, in the Superior Court
\nof the District of Columbia. Each of the parties further agrees that service of
\nprocess, summons, notice or document by hand delivery or U.S. registered mail at
\nthe address specified for such Party in Article 27 (or such other address
\nspecified by such Party from time to time pursuant to Article 27) shall be
\neffective service of process for any action, suit or proceeding brought against
\nsuch Party in any such court. Each of the parties irrevocably and
\nunconditionally waives any objection to the laying of venue of any action, suit
\nor proceeding arising out of this Lease or the transactions contemplated hereby
\nin (i) the Superior Court of the District of Columbia and (ii) the United States
\nDistrict Court for the District of Columbia, and hereby further irrevocably and
\nunconditionally waives and agrees not to plead or claim in any such court that
\nany such action, suit or proceeding brought in any such court has been brought
\nin an inconvenient forum.<\/p>\n
(b) The Parties agree that irreparable damage would occur in the
\nevent that any of the provisions of this Lease were not performed in accordance
\nwith their specific terms or were otherwise breached. It is accordingly agreed
\nthat the Parties shall be entitled to an injunction or injunctions to prevent
\nbreaches of this Lease and to enforce specifically the terms and provisions of
\nthis Lease, this being in addition to any other remedy to which they are
\nentitled at law or in equity.<\/p>\n
Section 28.12 Counterparts. This Lease may be executed in two
\ncounterparts, each of which shall be deemed an original, but both of which
\ntogether shall constitute one and the same instrument.<\/p>\n
Section 28.13 Interpretation. When a reference is made in this
\nLease to an Article or Section, such reference shall be to an Article or Section
\nof this Lease unless otherwise indicated. The table of contents and headings
\ncontained in this Lease are for reference purposes only and shall not affect in
\nany way the meaning or interpretation of this Lease. Whenever the words
\n“include”, “includes” or “including” are used in this Lease, they shall be
\ndeemed to be followed by the words “without limitation” or equivalent words. The
\nwords “hereof”, “herein” and “hereunder” and words of similar import when used
\nin this Lease shall refer to this Lease as a whole and not to any particular
\nprovision of this Lease. The definitions contained in this Lease are applicable
\nto the singular as well as the plural forms of such terms and to the masculine
\nas well as to the feminine and neuter genders of such term. Any agreement,
\ninstrument, statute, regulation, rule or order defined or referred to herein or
\nin any agreement or instrument that is referred to herein means such agreement,
\ninstrument, statute, regulation, rule or order as from time to time amended,
\nmodified or supplemented, including (in the case of agreements or instruments)
\nby waiver or consent and (in the case of statutes,<\/p>\n
465<\/p>\n
EXHIBIT H<\/p>\n
regulations, rules or orders) by succession of comparable successor statutes,
\nregulations, rules or orders and references to all attachments thereto and
\ninstruments incorporated therein. References to a person are also to its
\npermitted successors and assigns. Each Party acknowledges that it has been
\nrepresented by counsel in connection with the review and execution of this
\nLease, and, accordingly, there shall be no presumption that this Lease or any
\nprovision hereof be construed against the Party that drafted this Lease.<\/p>\n
Section 28.14 Entire Agreement. This Lease, including the
\ndocuments, certificates and instruments referred to herein and other contracts,
\nagreements and instruments contemplated hereby, embody the entire agreement and
\nunderstanding of the parties in respect of the transactions contemplated by this
\nLease. There are no restrictions, promises, representations, warranties,
\ncovenants or undertakings other than those expressly set forth or referred to
\nherein or therein. This Lease supersedes all prior agreements and understandings
\nbetween the parties with respect to the transactions contemplated by this Lease.<\/p>\n
Section 28.15 Severability. If any term or other provision of this
\nLease is invalid, illegal or incapable of being enforced by any rule of law or
\npublic policy, all other conditions and provisions of this Lease shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nparties shall negotiate in good faith to modify this Lease so as to effect the
\noriginal intent of the parties as closely as possible to the fullest extent
\npermitted by applicable law in an acceptable manner to the end that the
\ntransactions contemplated hereby are fulfilled to the extent possible.<\/p>\n
Section 28.16 Conflicts. Except as expressly provided otherwise
\nherein or therein, in the event of any conflict or inconsistency between the
\nterms of this Lease and the terms of the Asset Sale Agreement, the terms of the
\nAsset Sale Agreement shall prevail.<\/p>\n
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
\nsigned by their respective duly authorized officers as of the date first above
\nwritten.<\/p>\n
ATTEST: LANDLORD
\n POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By: By: (SEAL)
\n ————————— ——————————-<\/p>\n
Name: Name:
\n ————————- —————————–
\nTitle: Title:
\n ———————– —————————–<\/p>\n
ATTEST: TENANT<\/p>\n
466<\/p>\n
EXHIBIT H<\/p>\n
———————————–<\/p>\n
By: By: (SEAL)
\n ————————— ——————————-
\nName: Name:
\n ————————- —————————–
\nTitle: Title:
\n ———————– —————————–<\/p>\n
467<\/p>\n
EXHIBIT H<\/p>\n
APPENDIX A<\/p>\n
DEFINITIONS<\/p>\n
The following terms have the meanings specified in the references set
\nforth opposite each such term:<\/p>\n
Term Reference<\/p>\n
“Annual Base Rental” Section 5.01<\/p>\n
“Asset Sale Agreement” Recitals<\/p>\n
“Building Addition” Recitals<\/p>\n
“Closing” Asset Sale Agreement<\/p>\n
“Commencement Date” Section 2.01<\/p>\n
“Environmental Laws” Asset Sale Agreement<\/p>\n
“Force Majeure” Section 26.02<\/p>\n
“Generating Station” Recitals<\/p>\n
“Hazardous Substances” Asset Sale Agreement<\/p>\n
“Highest Lawful Rate” Section 5.3<\/p>\n
“Landlord” Preamble<\/p>\n
“Landlord’s Land” Section 1.01<\/p>\n
“Lease” Preamble<\/p>\n
“Lease Year” Section 2.01<\/p>\n
“Legal Requirements” Article 10<\/p>\n
“Mortgagee” Section 21.01<\/p>\n
“Mortgages” Section 21.01<\/p>\n
“New Lease” Section 21.01<\/p>\n
“Premises” Recitals<\/p>\n
“Prime Rate” Section 5.03<\/p>\n
468<\/p>\n
EXHIBIT H<\/p>\n
“Real Estate Taxes” Section 6.01<\/p>\n
“Rental” Section 5.03<\/p>\n
“Subordinate Instruments” Section 22.01<\/p>\n
“Tenant” Preamble<\/p>\n
“Term” Section 2.01<\/p>\n
“Transmission and Distribution Facilities” Section 1.01<\/p>\n
469<\/p>\n
EXHIBIT – I-1<\/p>\n
TRANSITION POWER AGREEMENT
\n (District of Columbia)<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
—————————————–<\/p>\n
Dated ____________, 2000<\/p>\n
470<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n
\nARTICLE 1 – DEFINITIONS 1
\nARTICLE 2 – TERM AND TERMINATION 2
\n 2.1 – Term 2
\n 2.2 – Termination 2
\nARTICLE 3 – CAPACITY RESOURCES 2
\n 3.1 – Capacity Resources Obligations 2
\n 3.2 – Capacity Resources Information Requirements 3
\nARTICLE 4 – ANCILLARY SERVICES 4
\nARTICLE 5 – ENERGY 4
\n 5.1 – Required Energy 4
\n 5.2 – Optional Energy 4
\n 5.3 – Determination of Energy Requirements; Losses 5
\nARTICLE 6 – PRICING 5
\n 6.1 – Compensation for Services 5
\n 6.2 – Taxes 6
\nARTICLE 7 – SERVICES OBTAINED BY GENERATOR FROM PJM 7
\nARTICLE 8 – ALTERNATIVE SERVICES AND LIMITED LIABILITY 7
\n 8.1 – Alternative Services 7
\n 8.2 – Limitation on Liability 7
\nARTICLE 9 – FORCE MAJEURE 8
\n 9.1 – Effect of Force Majeure 8
\n 9.2 – Force Majeure Defined 8
\n 9.3 – Notification 8
\nARTICLE 10 – INDEMNIFICATION FOR THIRD PARTY CLAIMS 9
\n 10.1 – Generator’s Indemnification 9
\n 10.2 – Pepco’s Indemnification 9
\n 10.3 – Indemnification Procedures 10
\n 10.4 – Survival 10
\nARTICLE 11 – DEFAULT 10
\n 11.1 – Event of Default 10
\n 11.2 – Remedies 11
\nARTICLE 12 – PROJECTIONS AND OPERATING COMMITTEE 11
\n 12.1 – Projections 11
\n 12.2 – Operating Committee 11
\nARTICLE 13 – COST RESPONSIBILITIES AND BILLING PROCEDURES 12
\n 13.1 – Billing Procedures 12
\n 13.2 – Billing Disputes 13
\n 13.3 – Interest on Unpaid Balances 13
\n<\/c><\/s><\/table>\n 471<\/p>\n
\n
\nARTICLE 14 – CONFIDENTIALITY 13
\n 14.1 – Confidentiality Obligations of Pepco 13
\n 14.2 – Confidentiality of Audits 14
\n 14.3 – Remedies 14
\nARTICLE 15 – DISPUTE RESOLUTION 14
\n 15.1 – Disputes 14
\n 15.2 – Arbitration 15
\nARTICLE 16 – REPRESENTATIONS 16
\n 16.1 – Representations of Pepco 16
\n 16.2 – Representations of Generator 17
\nARTICLE 17 – ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY 19
\n 17.1 – Generally 19
\n 17.2 – Pepco’s Assignment Rights 19
\n 17.3 – Generator’s Assignment Rights 19
\n 17.4 – Mergers or Consolidations 19
\n 17.5 – Limitations 19
\n 17.6 – Successors 20
\nARTICLE 18 – NOTICES 20
\nARTICLE 19 – AMENDMENTS 21
\n 19.1 – Amendments 21
\n 19.2 – PJM Agreement Modifications 21
\nARTICLE 20 – AUDITS 22
\nARTICLE 21 – MISCELLANEOUS PROVISIONS 22
\n 21.1 – Waiver 22
\n 21.2 – No Third Party Beneficiaries 22
\n 21.3 – Governing Law 23
\n 21.4 – Counterparts 23
\n 21.5 – Interpretation 23
\n 21.6 – Jurisdiction and Enforcement 23
\n 21.7 – Entire Agreement 24
\n 21.8 – Severability 24
\n 21.9 – Further Assurances 25
\n 21.10-Independent Contractor Status 25
\n 21.11-Conflicts 25
\n<\/c><\/s><\/table>\nSCHEDULE 1 – DEFINITIONS 27<\/p>\n
EXHIBIT A – Pepco’s Non-Binding Estimate for Calendar Year 2001
\n of Capacity Resources for the Service Load 31 <\/p>\n
EXHIBIT B – Capacity Resources Plan for Contract Year 1 32<\/p>\n
472<\/p>\n
EXHIBIT I-1<\/p>\n
TRANSITION POWER AGREEMENT (District of Columbia)<\/p>\n
This Transition Power Agreement (“Agreement”) dated as of _________,
\n2000 by and between Potomac Electric Power Company (“Pepco”) a District of
\nColumbia and Virginia corporation, and _____________ (“Generator”) a ___________
\n[corporation]. Pepco and Generator are each referred to herein as a “Party,” and
\ncollectively referred to herein as the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco and Generator have entered into an Asset Sale and
\nPurchase Agreement (“Asset Sale Agreement”) dated June 7, 2000 for (i) the sale
\nand purchase of certain of Pepco’s generating resources and (ii) the assignment
\nof rights and obligations under five power purchase agreements (“PPAs”) or for
\nalternative arrangements relating to such PPAs;<\/p>\n
WHEREAS, certain of the PPAs provide for the purchase and sale of
\nrenewable energy resources;<\/p>\n
WHEREAS, Pepco will continue to operate its transmission and
\ndistribution businesses which includes obligations to sell power to its retail
\ncustomers; and<\/p>\n
WHEREAS, the Parties have agreed in the Asset Sale Agreement to execute
\nthis Agreement in order to provide for the sale by Generator, and purchase by
\nPepco, of capacity, electric energy and certain ancillary services in accordance
\nwith the terms and conditions of this Agreement.<\/p>\n
NOW THEREFORE, in consideration of the mutual representations,
\ncovenants and agreements hereinafter set forth, and intending to be legally
\nbound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
Unless otherwise defined herein, capitalized terms used in this
\nAgreement shall have the meanings specified or referred to in Schedule 1 of this
\nAgreement.<\/p>\n
ARTICLE 2
\n TERM AND TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon consummation
\nof the Closing (“Effective Date”). Unless terminated sooner in accordance with
\nthe<\/p>\n
473<\/p>\n
terms of this Agreement, this Agreement shall continue in full force and effect
\nfrom the Effective Date until the end of Contract Year 4.<\/p>\n
2.2 Termination. The applicable provisions of this Agreement shall
\ncontinue in effect after cancellation or termination hereof to the extent
\nnecessary to provide for final billings, billing adjustments and payments
\npertaining to liability and indemnification obligations arising from acts or
\nevents that occurred while this Agreement was in effect.<\/p>\n
ARTICLE 3
\n CAPACITY RESOURCES<\/p>\n
3.1 Capacity Resources Obligations<\/p>\n
(a) During the term of this Agreement, Generator shall
\nsupply to Pepco and make available within PJM on Pepco’s behalf, and Pepco shall
\npurchase from Generator, Pepco’s full requirements for Capacity Resources to
\nserve the Service Load (“Capacity Resource Requirements”) at the prices set
\nforth in Article 6 of this Agreement. Capacity Resources shall be determined,
\nand provided by the Generator, in accordance with the PJM Reliability Agreement
\nand other applicable PJM requirements. Capacity Resource Requirements shall mean
\nthe portion of Pepco’s Accounted-For Obligation, as that term is defined and
\ndetermined in accordance with the PJM Reliability Agreement and applicable PJM
\nrequirements, that is located in the District of Columbia.<\/p>\n
(b) To the extent that PJM assigns to Pepco Fixed
\nTransmission Rights for Capacity Resources contained in a Capacity Resource Plan
\nand designated for Fixed Transmission Rights, Pepco shall transfer such Fixed
\nTransmission Rights to Generator pursuant to PJM’s procedures for assigning
\nFixed Transmission Rights.<\/p>\n
(c) Generator shall provide to the PJM System Operator or
\nPJM Interconnection LLC, as applicable, all information and data required with
\nrespect to the Capacity Resources Requirements, with copies to Pepco, and
\nGenerator shall be responsible for any charges levied by the PJM System Operator
\nor the PJM Interconnection LLC on Pepco or Generator due to the delayed receipt
\nof such information and data in accordance with the PJM Reliability Agreement
\nunless the delay is due to Pepco’s delay in providing Generator with information
\nthat Pepco is required to provide.<\/p>\n
474<\/p>\n
3.2 Capacity Resources Information Requirements<\/p>\n
(a) Generator shall provide in accordance with this
\nSection 3.2 its proposed plan to satisfy its obligations hereunder to provide
\nthe Capacity Resources Requirements under this Agreement (“Capacity Resources
\nPlan”).<\/p>\n
(b) Exhibit A hereto sets forth Pepco’s non-binding
\nestimate of the Capacity Resources required to supply the Service Load for each
\nmonth during the 2001 calendar year. On or before April 1 preceding each
\nPlanning Period thereafter, Pepco shall provide Generator with a non-binding
\nestimate of the Capacity Resources required to supply the Service Load for each
\nmonth in the following Planning Period.<\/p>\n
(c) Exhibit B hereto sets forth the Generator’s Capacity
\nResources Plan for Contract Year 1.<\/p>\n
(d) On or before May 1 preceding each Planning Period
\nthereafter during the term of this Agreement, the Generator shall provide to the
\nOperating Committee, for review and approval (such approval not to be
\nunreasonably withheld or delayed), its proposed Capacity Resources Plan
\n(including Generator’s proposed designation of Capacity Resources for associated
\nFixed Transmission Rights) to be submitted to the PJM Interconnection LLC in
\naccordance with Schedule 6 of the PJM Reliability Agreement for the upcoming
\nPlanning Period.<\/p>\n
(e) If the Generator intends to propose any material
\nchange to a Capacity Resources Plan (including any change in a designation of
\nCapacity Resources eligible for Fixed Transmission Rights) which has previously
\nbeen approved by the Operating Committee, the Generator shall provide such
\nproposed changes to the Operating Committee before it is submitted for approval
\npursuant to the PJM Reliability Agreement and such change shall be subject to
\nthe Operating Committee for review and approval (such approval not to be
\nunreasonably withheld or delayed) if the change (1) adds a resource other than
\n(x) capacity already certified by the PJM Interconnection LLC or PJM System
\nOperator, as applicable, as a Capacity Resource or (y) Capacity Credits, or (2)
\nproposes to change a designation of Capacity Resources eligible for Fixed
\nTransmission Rights.<\/p>\n
475<\/p>\n
ARTICLE 4
\n ANCILLARY SERVICES<\/p>\n
During the term of this Agreement, Generator shall supply to Pepco and
\ndeliver within PJM on Pepco’s behalf, and Pepco shall purchase, Pepco’s full
\nrequirements for Ancillary Services for the Service Load (“Ancillary Services
\nRequirements”) at the prices set forth in Article 6 of this Agreement. Ancillary
\nServices mean Regulation and Frequency Response Service (as defined in Schedule
\n3 of the PJM Tariff) and Operating Reserves (as defined in Schedules 5 and 6 of
\nthe PJM Tariff).<\/p>\n
ARTICLE 5
\n ENERGY<\/p>\n
5.1 Required Energy. During the term of this Agreement, Generator
\nshall supply to Pepco at the Delivery Points, and Pepco shall purchase, the
\nfollowing percentages of Pepco’s Full Energy Requirements in the year indicated
\nbelow (the “Required Energy Percent”) at the prices set forth in Article 6 of
\nthis Agreement:<\/p>\n
\n\n Year Required Energy Percent<\/p>\n
\n Contract Year 1 100%<\/p>\n Contract Year 2 75%
\n<\/c><\/s><\/caption>\n<\/table>\n
5.2 Optional Energy<\/p>\n
(a) For the duration of each of Contract Year 2, Contract
\nYear 3 and Contract Year 4, Pepco shall have the right to purchase from
\nGenerator (the “Call Options”) the percentages of the Full Energy Requirements
\nindicated below (the “Optional Energy Percent”). To the extent Pepco exercises a
\nCall Option for a given year, Generator shall supply to Pepco at the Delivery
\nPoints the Optional Energy Percent at the price set forth in Article 6 of this
\nAgreement.<\/p>\n
\n\n Year Optional Energy Percent<\/p>\n
\n Contract Year 2 25%
\n<\/c><\/s><\/caption>\n<\/table>\n 476<\/p>\n
\n
\n Contract Year 3 100% (in 25% increments)<\/p>\n Contract Year 4 100% (in 25% increments)
\n<\/c><\/s><\/table>\n
Notwithstanding the foregoing, the total of Pepco’s Call Options
\nexercised with respect to the Optional Energy Percent for Contract Year 3 and
\nContract Year 4, respectively, shall not exceed the percentage of the Full
\nEnergy Requirements that Pepco elected to purchase in the immediately preceding
\ncontract year.<\/p>\n
(b) By each October 1 prior to the contract year in which
\nthe applicable Optional Energy Percent is deliverable (“Strike Date”), Pepco
\nshall notify Generator in writing whether it is exercising any of its Call
\nOptions for the upcoming contract year, and if so, the percentage of its Full
\nEnergy Requirements it elects to purchase.<\/p>\n
5.3 Determination of Energy Requirements. The amount of Full
\nEnergy Requirements shall be as determined by PJM in accordance with Schedule 1,
\nSection 3.2 of the PJM Operating Agreement at the respective PJM load buses
\nmeasured by PJM for the Service Load served by Pepco (the “Delivery Points”).
\nGenerator shall be responsible for all energy losses (including allocated PJM
\nlosses, unaccounted-for energy and distribution losses) associated with delivery
\nof Required Energy Percent and Optional Energy Percent to the Service Load.<\/p>\n
ARTICLE 6
\n PRICING<\/p>\n
6.1 Compensation for Services Subject to the terms of this
\nAgreement, Pepco shall be obligated to make a monthly payment to Generator for
\nthe Services it provides which shall be comprised of the following components:<\/p>\n
(a) For each Month during the term of the Agreement, a
\nCapacity Payment for the Capacity Resources Requirements and Ancillary Services
\nRequirements that Generator provides to Pepco in such Month calculated as
\nfollows:<\/p>\n
Capacity Payment = (Capacity Price + Ancillary Services Price) x
\nMetered Energy Requirements<\/p>\n
Where:<\/p>\n
477<\/p>\n
Capacity Price = $3.50\/MWh<\/p>\n
Ancillary Services Price = $0.50\/MWh<\/p>\n
(b) For each Month during the term of the Agreement, an
\nEnergy Payment for the Required Energy Percent and Optional Energy Percent, if
\nany, that Generator delivers to Pepco at the Delivery Points in each Month
\ncalculated as follows:<\/p>\n
Energy Payment = [Metered Energy Requirements x (Required
\n Energy Percent + Optional Energy Percent)] x Energy Price<\/p>\n
Where:<\/p>\n
Energy Price = $35.50\/MWh during a Summer Month
\n and $25.30\/MWh during a Winter Month.<\/p>\n
(c) Pepco’s monthly payment to Generator will be
\ndecreased by (i) any PJM charges for transmission congestion, allocated losses
\nand unaccounted-for energy that Pepco incurs in connection with the Services
\nGenerator delivers to Pepco pursuant to Articles 4, 5 and 6 of this Agreement,
\nand (ii) the amounts of any payments Generator owes to Pepco pursuant to Article
\n8 of this Agreement.<\/p>\n
6.2 Taxes. Generator shall be responsible for taxes related to the
\nsale or provision of Services hereunder.<\/p>\n
ARTICLE 7
\n SERVICES OBTAINED BY GENERATOR FROM PJM<\/p>\n
Pepco shall, upon Generator’s request, reasonably cooperate with
\nGenerator to facilitate its acquisition in the PJM marketplace and resale to
\nPepco of the Services Generator is obligated to provide to Pepco under this
\nAgreement. Pepco shall follow Generator’s instructions with respect to
\nscheduling load in the day ahead PJM market.<\/p>\n
478<\/p>\n
ARTICLE 8
\n ALTERNATIVE SERVICES AND LIMITATION OF LIABILITY<\/p>\n
8.1 Alternative Services. To the extent that Generator does not
\nprovide Capacity Resources Requirements, Ancillary Services Requirements, the
\nRequired Energy and\/or Optional Energy (“Services”) to Pepco as required under
\nthis Agreement, Generator, as an alternative method of performing such
\nobligations, shall pay Pepco the positive difference between the price Pepco
\npays for such Services in the appropriate PJM marketplace, or if not available
\nin the PJM market, any other market (“Alternative Services”) and the price Pepco
\nwould have paid to Generator for such Services under this Agreement, plus
\npenalties and nonperformance charges, if any, assessed on Pepco by the PJM
\nInterconnection LLC or PJM System Operator as a result of the Generator not
\nproviding the Services. Calculation of the cost of Alternative Services
\nhereunder shall include all reasonable direct costs associated with the
\nprocurement and delivery of Alternative Services, including legal or
\ntransactional costs and expenses; taxes, energy, demand, capacity, or
\nreservation charges; energy losses; emergency energy; and any transmission or
\ncongestion costs but does not include the cost of PJM network service. For
\npurposes of determining the amount of Alternative Services Pepco purchases to
\nsatisfy its energy requirements, energy requirements for any day shall be the
\nnet amount of energy Pepco purchases for the Service Load in the PJM day-ahead
\nand second settlement markets.<\/p>\n
8.2 Limitation of Liability. Except for indemnity obligations set
\nforth in Article 10 and the damages, charges or penalties set forth in Sections
\n3.1(c), 5.3, 8.1 and 13.3 of this Agreement, neither Party, nor their respective
\nofficers, directors, agents, employees, Affiliates, or successors or assigns of
\nany of them, shall be liable to the other Party or its Affiliates, officers,
\ndirectors, agents, employees, successors or assigns for claims, suits, actions
\nor causes of action for incidental, punitive, special, indirect, multiple or
\nconsequential damages (including, without limitation, lost revenues, claims of
\ncustomers, attorneys’ fees and litigation costs) connected with, or resulting
\nfrom, performance or non-performance of this Agreement, or any actions
\nundertaken in connection with or related to this Agreement, including, without
\nlimitation, any such damages which are based upon causes of action for breach of
\ncontract, tort (including negligence and misrepresentation), breach of warranty
\nor strict liability. The provisions of this Section 8.2 shall apply regardless
\nof fault and shall survive termination, cancellation, suspension, completion, or
\nexpiration of this Agreement.<\/p>\n
479<\/p>\n
ARTICLE 9
\n FORCE MAJEURE<\/p>\n
9.1 Effect of Force Majeure. Notwithstanding anything in this
\nAgreement to the contrary, the Parties shall be excused from performing their
\nrespective obligations hereunder (except for the obligation to pay sums of money
\ndue and owing hereunder) and shall not be liable in damages or otherwise, to the
\nextent that a Party is unable to perform or is prevented from performing by an
\nevent of Force Majeure and has complied with Section 9.3.<\/p>\n
9.2 Force Majeure Defined. Force Majeure includes, without
\nlimitation, storm, flood, lightning, drought, earthquake, fire, explosion, civil
\ndisturbance, acts of God or the public enemy, civil disturbance, or any other
\ncause beyond a Party’s reasonable control but only if and to the extent that the
\nevent directly affects the availability of the transmission or distribution
\nfacilities of PJM or Pepco which are necessary to deliver capacity or energy to
\nthe Service Load. Force Majeure shall not include events affecting the
\navailability or cost of operating any generating facility or resource.<\/p>\n
9.3 Notification. A Party shall not be entitled to rely on the
\noccurrence of an event of Force Majeure as a basis for being excused from
\nperformance of its obligations under this Agreement unless the Party relying on
\nthe event or condition shall: (a) provide prompt written notice of such Force
\nMajeure event to the other Party, including an estimation of its expected
\nduration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts to continue to perform its
\nobligations under this Agreement; (c) expeditiously take action to correct or
\ncure the event or condition excusing performance; (d) exercise all reasonable
\nefforts to mitigate or limit damages to the other Party; and (e) provide prompt
\nnotice to the other Party of the cessation of the event or condition giving rise
\nto its excuse from performance. Subject to this Section 9.3, any obligation
\nunder this Agreement shall be suspended only to the extent caused by such Force
\nMajeure and only during the continuance of any inability of performance caused
\nby such Force Majeure but for no longer period.<\/p>\n
ARTICLE 10
\n INDEMNIFICATION FOR THIRD PARTY CLAIMS<\/p>\n
10.1 Generator’s Indemnification. Generator shall indemnify, hold
\nharmless, and defend Pepco and its Affiliates, as the case may be, and their
\nrespective<\/p>\n
480<\/p>\n
officers, directors, employees, agents, contractors, subcontractors, invitees,
\nsuccessors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Pepco and a third party or Generator) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Pepco’s employees or any third parties, to the extent caused,
\nby the negligence or willful misconduct of Generator’s and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Generator’s performance or breach of this Agreement, or
\nthe exercise by Generator of its rights hereunder.<\/p>\n
10.2 Pepco’s Indemnification. Pepco shall indemnify, hold harmless,
\nand defend Generator and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between the Generator and a third party or Pepco)
\nfor damage to property of unaffiliated third parties, injury to or death of any
\nperson, including Generator’s employees or any third parties, to the extent
\ncaused by the negligence or willful misconduct of Pepco and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Pepco’s performance or breach of this Agreement, or the
\nexercise by Pepco of its rights hereunder.<\/p>\n
10.3 Indemnification Procedures. If either Party intends to seek
\nindemnification under this Article 10 from the other Party, the Party seeking
\nindemnification shall give the other Party notice of such claim within ninety
\n(90) days of the later of the commencement of, or the Party’s actual knowledge
\nof, such claim or action. Such notice shall describe the claim in reasonable
\ndetail, and shall indicate the amount (estimated if necessary) of the claim that
\nhas been, or may be sustained by, said Party. To the extent that the other Party
\nwill have been actually and materially prejudiced as a result of the failure to
\nprovide such notice, such notice will be a condition precedent to any liability
\nof the other Party under the provisions for indemnification contained in this
\nAgreement. Neither Party may settle or compromise any claim without the prior
\nconsent of the other Party; provided, however, said consent shall not be
\nunreasonably withheld or delayed.<\/p>\n
481<\/p>\n
10.4 Survival. The indemnification obligations of each Party under
\nthis Article 10 shall continue in full force and effect regardless of whether
\nthis Agreement has either expired or been terminated or canceled.<\/p>\n
ARTICLE 11
\n DEFAULT<\/p>\n
11.1 Event of Default. Unless excused by Force Majeure, each of the
\nfollowing events shall constitute an event of default (an “Event of Default”)
\nunder this Agreement:<\/p>\n
(a) the failure by a Party to pay any amount due within
\nthirty (30) days after receipt of written notice of nonpayment by the other
\nParty, unless the payment of such amount is disputed in good faith;<\/p>\n
(b) a Party’s breach of any material term or condition of
\nthis Agreement including any material breach of a representation, warranty or
\ncovenant made in this Agreement which, after receiving written notice of the
\nbreach from the non-breaching Party (such notice to set forth in reasonable
\ndetail the nature of the default and, where known and if applicable, the steps
\nnecessary to cure such default), (i) the breaching Party fails to cure within
\nthirty (30) days following receipt of the notice or (ii) if such default is of
\nsuch a nature that it cannot be cured within thirty (30) days following receipt
\nof such notice, the breaching Party fails within such thirty (30) days to
\ncommence the necessary cure and fails at any time thereafter diligently and
\ncontinuously to prosecute such cure to completion provided that the cure is
\ncompleted no later than 180 days after the receipt of the default notice;<\/p>\n
(c) the appointment of a receiver or liquidator or
\ntrustee for either Party and such receiver, liquidator or trustee is not
\ndischarged within sixty (60) days;<\/p>\n
(d) the entry of a decree adjudicating a Party as
\nbankrupt or insolvent, and such decree is continued undischarged and unstayed
\nfor a period of sixty (60) days; or<\/p>\n
(e) the filing of a voluntary or involuntary petition in
\nbankruptcy under any provision of any federal or state bankruptcy law by a Party
\nor against it, and, with respect to an involuntary petition in bankruptcy, such
\npetition continues undischarged and unstayed for a period of sixty (60) days.<\/p>\n
482<\/p>\n
11.2 Remedies. Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (a) terminate this Agreement by providing sixty (60)
\ndays’ prior written notice to the defaulting Party and this Agreement shall
\nthereupon terminate upon receipt of regulatory approval for such termination,
\nbut not before the date specified in the notice, and\/or (b) subject to Section
\n8.2 of this Agreement, exercise all such rights and remedies as may be available
\nto it under this Agreement or at law or equity with respect to such Event of
\nDefault.<\/p>\n
ARTICLE 12
\n PROJECTIONS AND OPERATING COMMITTEE<\/p>\n
12.1 Projections. No later than three (3) business days prior to
\neach Monday during the term of this Agreement, Pepco shall provide Generator
\nwith non-binding projections of the Services to be provided by Generator to
\nPepco under this Agreement for the week beginning that Monday.<\/p>\n
12.2 Operating Committee. The Parties shall establish an operating
\ncommittee consisting of one representative for each Party (“Operating
\nCommittee”). The Operating Committee shall act only by unanimous agreement or
\nconsent. The Parties shall designate their respective representatives to the
\nOperating Committee, plus an alternate by written notice. Each Party’s
\nrepresentative on the Operating Committee is authorized to act on behalf of such
\nParty with respect to any matter arising under this Agreement which is to be
\ndecided by the Operating Committee, however, the Operating Committee shall not
\nhave any authority to modify or otherwise alter the rights and obligations of
\nthe Parties hereunder. The Operating Committee shall develop and implement
\nsuitable policies and procedures with to coordinate the interaction of the
\nParties with respect to the performance of their duties and obligations under
\nthis Agreement.<\/p>\n
ARTICLE 13
\n COST RESPONSIBILITIES AND BILLING PROCEDURES<\/p>\n
13.1 Billing Procedures.<\/p>\n
(a) Within ten (10) days after the first day of each
\nMonth Pepco shall provide to Generator a written invoice setting forth (a) the
\namount Pepco owes to Generator pursuant to Article 6 of this Agreement for
\nServices and any other payments which may be due hereunder, and (b) the amounts,
\nif any, that Generator owes to Pepco pursuant to this Agreement. Each invoice
\nshall (i) delineate<\/p>\n
483<\/p>\n
the Month in which the Services or Alternative Services were provided or
\nreimbursable charges were incurred, (ii) fully describe the Services or
\nAlternative Services rendered or reimbursable charges incurred, (iii) be
\nitemized to reflect the Services or Alternative Services performed or provided
\nor reimbursable charges incurred, and (iv) provide reasonable detail as to the
\ncalculation of the amounts involved.<\/p>\n
(b) All invoices shall be paid within fifteen (15) days
\nafter the date of issuance, but not earlier than the 25th day of the month in
\nwhich the invoice is rendered. All payments shall be made by wire transfer to a
\nbank designated in writing by such Party. Payment of invoices shall not relieve
\nthe paying Party from any responsibilities or obligations it has under this
\nAgreement, nor shall such payment constitute a waiver of any claims arising
\nhereunder.<\/p>\n
(c) To the extent that, for any billing period, Generator
\nis obligated to pay to Pepco amounts due and calculated pursuant to this Section
\n13.1, Pepco may use such amounts as a set-off against any amounts owed by Pepco
\nto Generator.<\/p>\n
13.2 Billing Disputes. In the event of a billing dispute between
\nthe Parties, (i) each Party shall continue to perform its obligations in
\naccordance with the terms of this Agreement subject to the other Party’s rights
\nhereunder, and (ii) the Party required to make payments hereunder shall pay to
\nthe other Party all invoiced amounts when due, net of any set-offs permitted
\nunder Section 13.1(d), that are not in dispute. Payment of invoices by either
\nParty shall not relieve the paying Party from any responsibilities or
\nobligations it has under this Agreement; nor shall it constitute a waiver of any
\nclaims arising hereunder.<\/p>\n
13.3 Interest on Unpaid Balances. Interest on any unpaid amounts
\nshall be calculated in accordance with the methodology specified for interest on
\nrefunds in FERC regulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on
\ndelinquent amounts shall be calculated from the due date of the bill to the date
\nof payment. When payments are made by mail, bills shall be considered as having
\nbeen paid on the date of receipt by the other Party.<\/p>\n
ARTICLE 14
\n CONFIDENTIALITY<\/p>\n
14.1 Confidentiality Obligations of Pepco. Each Party shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor<\/p>\n
484<\/p>\n
other provisions of law, all documents and information furnished by one Party to
\nthe other Party in connection with this Agreement marked “Confidential” or
\n“Proprietary.” Except to the extent that such information or documents are (i)
\ngenerally available to the public other than as a result of a disclosure by a
\nreceiving Party in breach of this Agreement, (ii) available to the receiving
\nParty on a non-confidential basis prior to disclosure by the other Party , or
\n(iii) available to the receiving Party on a non-confidential basis from a source
\nother than the other Party, provided that such source is not known, and by
\nreasonable effort could not be known, by the receiving Party to be bound by a
\nconfidentiality agreement with the other Party or otherwise prohibited from
\ntransmitting the information to the receiving Party by a contractual, legal or
\nfiduciary obligation, the receiving Party shall not release or disclose such
\ninformation to any other person, except to its employees, representatives or
\nagents on a need-to-know basis, in connection with this Agreement who has not
\nfirst been advised of the confidentiality provisions of this Section 14.1 and
\nhas agreed in writing to comply with such provisions. In no event shall such
\ninformation be disclosed in violation of the requirements of FERC Orders 889 and
\n889-A, and any successor thereto. The Party receiving confidential information
\nfrom the other Party shall promptly notify the other Party if it receives notice
\nor otherwise concludes that the production of any information subject to this
\nSection 14.1 is being sought under any provision of law and the receiving Party
\nshall use reasonable efforts in cooperation with the other Party to seek
\nconfidential treatment for such confidential information provided thereto.<\/p>\n
14.2 Confidentiality of Audits. The independent auditor performing
\nany audit, as referred to in Article 20, shall be subject to a confidentiality
\nagreement between the auditor and the Party being audited. Such audit
\ninformation shall be treated as confidential except to the extent that its
\ndisclosure is required by regulatory or judicial order, for reliability purposes
\npursuant to PJM requirements and pursuant to the FERC’s rules and regulations.
\nExcept as provided herein, neither Party will disclose the audit information to
\nany third party, without the other Party’s prior written consent. Audit
\ninformation in the hands of the Party not being audited shall be subject to all
\nprovisions of Article 20.<\/p>\n
14.3 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its obligations
\nunder Sections 14.1 and 14.2. Each Party accordingly agrees, subject to Section
\n8.2, that the other Party shall be entitled to equitable relief, by way of
\ninjunction or otherwise, if the first Party breaches or threatens to breach its
\nobligations under Sections 14.1 or 14.2 of this Agreement, as applicable, which
\nequitable relief<\/p>\n
485<\/p>\n
shall be granted without bond or proof of damages, and the receiving Party shall
\nnot plead in defense that there would be an adequate remedy at law.<\/p>\n
ARTICLE 15
\n DISPUTE RESOLUTION<\/p>\n
15.1 Disputes. A Party with a claim or dispute under this Agreement
\nshall submit to the Operating Committee a notification of such claim or dispute
\nwithin sixty (60) days after the circumstances that gave rise to the claim or
\nthe question or issue in dispute. The notification shall be in writing and shall
\ninclude a concise statement of the claim or the issue or question in dispute, a
\nstatement of the relevant facts and documentation to support the claim. In the
\nevent the Operating Committee is unable, in good faith, to resolve their
\ndisagreement in a manner satisfactory to both Parties within thirty (30) days
\nafter receipt by the Operating Committee of a notification specifying the claim,
\nissue or question in dispute, the Parties shall refer the dispute to their
\nrespective senior management. If, after using their good faith best efforts to
\nresolve the dispute, senior management cannot resolve the dispute within thirty
\n(30) days, the Parties shall utilize the arbitration procedures set forth below
\nin Section 15.2 to resolve a dispute, provided that nothing herein or therein
\nshall prohibit a Party from at any time requesting from a court of competent
\njurisdiction a temporary restraining order, preliminary injunction, or other
\nsimilar form of equitable relief to enforce performance of the provisions of
\nthis Agreement.<\/p>\n
15.2 Arbitration.<\/p>\n
(a) Unless the Parties otherwise mutually agree in
\nwriting to another form of dispute resolution such as dispute resolution under
\nthe PJM Agreement or the MAAC agreement, any arbitration initiated under this
\nAgreement shall be conducted before a single neutral arbitrator appointed by the
\nParties within thirty (30) days of receipt by respondent of the demand for
\narbitration. If the Parties are unable to agree on an arbitrator, such
\narbitrator shall be appointed by the American Arbitration Association. Unless
\nthe Parties agree otherwise, the arbitrator shall be an attorney or retired
\njudge with at least fifteen (15) years of experience, and shall not have any
\ncurrent or past substantial business or financial relationships with any Party
\nto the arbitration. If possible, the arbitrator shall have experience in the
\nelectric utility industry. Unless otherwise agreed, the arbitration shall be
\nconducted in accordance with the American Arbitration Association’s Commercial<\/p>\n
486<\/p>\n
Arbitration Rules, then in effect. Any arbitration proceedings, decision or
\naward rendered hereunder and the validity, effect and interpretation of this
\narbitration agreement shall be governed by the Federal Arbitration Act of the
\nUnited States, 9 U.S.C. Sections 1 et seq. The location of any arbitration
\nhereunder shall be in the District of Columbia.<\/p>\n
(b) The arbitration shall, if possible, be concluded not
\nlater than six (6) months after the date that it is initiated. The arbitrator
\nshall be authorized only to interpret and apply the provisions of this Agreement
\nor any related agreements entered into under this Agreement and shall have no
\npower to modify or change any of the above in any manner. The arbitrator shall
\nhave no authority to award punitive or multiple damages or any damages
\ninconsistent with this Agreement. The arbitrator shall, within thirty (30) days
\nof the conclusion of the hearing, unless such time is extended by agreement of
\nthe Parties, notify the Parties in writing of his or her decision, stating his
\nor her reasons for such decision and separately listing his or her findings of
\nfact and conclusions of law. The decision of the arbitrator rendered in such a
\nproceeding shall be final and binding on the Parties. Judgment on the award may
\nbe entered upon it in any court having jurisdiction.<\/p>\n
(c) Nothing in this Agreement shall preclude, or be
\nconstrued to preclude, any Party from filing a petition or complaint with FERC
\nwith respect to any arbitrable claim over which FERC has jurisdiction. In such
\ncase, the other Party may request FERC to reject or to waive jurisdiction. If
\nFERC rejects or waives jurisdiction with respect to all or a portion of the
\nclaim, the portion of the claim not so accepted by FERC shall be resolved
\nthrough arbitration, as provided in this Agreement. To the extent that FERC
\nasserts or accepts jurisdiction over the claim, the decision, finding of fact or
\norder of FERC shall be final and binding, subject to judicial review under the
\nFederal Power Act, and any arbitration proceedings that may have commenced with
\nrespect to the claim prior to the assertion or acceptance of jurisdiction by
\nFERC shall be terminated.<\/p>\n
ARTICLE 16
\n REPRESENTATIONS<\/p>\n
16.1 Representations of Pepco. Pepco hereby represents and warrants
\nto Generator as follows:<\/p>\n
487<\/p>\n
(a) Incorporation. Pepco is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the District of Columbia
\nand the Commonwealth of Virginia, and has all requisite corporate power and
\nauthority to own, lease and operate its material assets and properties and to
\ncarry on its business as now being conducted.<\/p>\n
(b) Authority. Pepco has all necessary corporate power
\nand authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Pepco of this
\nAgreement and the consummation by Pepco of the transactions contemplated
\nhereunder have been duly and validly authorized by the Board of Directors of
\nPepco or by a committee thereof to whom such authority has been delegated and no
\nother corporate proceedings on the part of Pepco are necessary to authorize this
\nAgreement or the transactions contemplated hereby. This Agreement has been duly
\nand validly executed and delivered by Pepco and, assuming that this Agreement
\nconstitutes a valid and binding agreement of Generator, constitutes a valid and
\nbinding agreement of Pepco, enforceable by Pepco in accordance with its terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this Agreement
\nby Pepco nor performance by Pepco of its obligations hereunder will (A) conflict
\nwith or result in any breach of any provision of the Certificate of
\nIncorporation or By-laws of Pepco, (B) result in a default (or give rise to any
\nright of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Pepco or any of its
\nsubsidiaries is a party or by which any of their respective assets may be bound
\nor (C) violate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to Pepco, or any of its assets, except in the case of clauses (B) and
\n(C) for such failures to obtain a necessary consent, defaults and violations
\nwhich would not, individually or in the aggregate, have a material adverse
\neffect on the ability of Pepco to discharge its obligations under this Agreement
\n(a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any governmental authority
\nis necessary for performance by Pepco of its obligations hereunder, other than
\nsuch declarations, filings, registrations, notices, authorizations, consents or
\napprovals which, if not<\/p>\n
488<\/p>\n
obtained or made would not, individually or in the aggregate, have a Pepco
\nMaterial Adverse Effect.<\/p>\n
16.2 Representations of Generator. Generator hereby represents and
\nwarrants to Pepco as follows:<\/p>\n
(a) Incorporation. Generator is a [corporation] duly
\n[incorporated], validly existing and in good standing under the laws of the
\nState of __________, and has all requisite [corporate] power and authority to
\nown, lease and operate its material assets and properties and to carry on its
\nbusiness as now being conducted.<\/p>\n
(b) Authority. Generator has all necessary [corporate]
\npower and authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by the Generator of
\nthis Agreement and the consummation by Generator of the transactions
\ncontemplated hereby have been duly and validly authorized the [Board of
\nDirectors] of Generator or by a committee thereof to whom such authority has
\nbeen delegated and no other [corporate] proceedings on the part of Generator are
\nnecessary to authorize this Agreement or the transactions contemplated hereby.
\nThis Agreement has been duly and validly executed and delivered by Generator
\nand, assuming that this Agreement constitutes a valid and binding agreement of
\nPepco, constitutes a valid and binding agreement of Generator, enforceable
\nagainst Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals.<\/p>\n
(i) Neither the execution and delivery of this Agreement
\nby Generator nor performance by Generator of its obligations hereunder will (A)
\nconflict with or result in any breach of any provision of the [Certificate of
\nIncorporation or By-laws] of Generator, (B) result in a default (or give rise to
\nany right of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Generator or any of
\nits subsidiaries is a party or by which any of their respective assets may be
\nbound or (C) violate any order, writ, injunction, decree, statute, rule or
\nregulation applicable to Generator, or any of its assets, except in the case of
\nclauses (B) and (C) for such failures to obtain a necessary consent, defaults
\nand violations which would not, individually or in the aggregate, have a
\nmaterial adverse effect on the ability of Generator to discharge its obligations
\nunder this Agreement (a “Generator Material Adverse Effect”).<\/p>\n
489<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any Governmental Authority
\nis necessary for performance by Generator of its obligations hereunder, other
\nthan such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Generator Material Adverse Effect.<\/p>\n
ARTICLE 17
\n ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY<\/p>\n
17.1 Generally. Except as otherwise set forth in this Article 17,
\nneither this Agreement nor any of the rights, interests, or obligations
\nhereunder shall be assigned by either Party hereto, without the prior written
\nconsent of the other Party, which consent shall not be unreasonably withheld or
\ndelayed.<\/p>\n
17.2 Pepco’s Assignment Rights. Subject to Section 17.5 below, upon
\nten (10) days prior written notice to Generator, Pepco may assign this
\nAgreement, and Pepco’s rights, interests and obligations hereunder, to an
\nAffiliate of Pepco that assumes Pepco’s obligations to provide Services to the
\nService Load.<\/p>\n
17.3 Generator’s Assignment Rights. Subject to Section 17.5 below,
\nGenerator may assign, transfer, pledge or otherwise dispose of its rights and
\ninterests hereunder to a trustee, lending institution, or other Person for the
\npurposes of financing or refinancing the Auctioned Assets, including upon or
\npursuant to the exercise of remedies under such financing or refinancing, or by
\nway of assignments, transfers, conveyances of dispositions in lieu thereof;
\nprovided, however, that no such assignment in accordance with this Section 17.3
\nshall relieve or in any way discharge Generator from the performance of its
\nduties and obligations under this Agreement. Pepco agrees to execute and
\ndeliver, at Generator’s expense, such documents as may be reasonably necessary
\nto accomplish any such assignment, transfer, conveyance, pledge or disposition
\nof rights hereunder for purposes of the financing or refinancing of the
\nFacility, so long as Pepco’s rights under this Agreement are not thereby
\naltered, amended, diminished or otherwise impaired.<\/p>\n
17.4 Mergers or Consolidations. Subject to Section 17.5 below,
\neither Party may assign this Agreement to a successor to all or substantially
\nall of the assets of such Party by way of merger, consolidation, sale or
\notherwise, provided such successor assumes in writing and becomes liable for all
\nof such Party’s duties and obligations hereunder.<\/p>\n
490<\/p>\n
17.5 Limitations<\/p>\n
(a) No assignment, transfer, conveyance, pledge or
\ndisposition of rights, interests, duties or obligations under this Agreement by
\na Party shall relieve that Party from liability and financial responsibility for
\nthe performance thereof after any such transfer, assignment, conveyance, pledge
\nor disposition unless and until (i) the transferee or assignee shall agree in
\nwriting to assume the obligations and duties of that Party under this Agreement
\nand to impose such obligations on subsequent permitted transferees and assignees
\nand (ii) the non-assigning Party has consented in writing to such assumption and
\nto a release of the assigning Party from such liability, such consent not to be
\nunreasonably withheld or delayed.<\/p>\n
(b) If Generator terminates its existence as a
\n[corporate] entity by merger, acquisition, sale, consolidation or otherwise, or
\nif all or substantially all of Generator’s assets are transferred to another
\nperson or business entity without complying with this Article 17, Pepco shall
\nhave the right, enforceable in a court of competent jurisdiction, to enjoin
\nGenerator’s successor from using its assets in any manner that does not comply
\nwith the requirements of this Agreement or that impedes Pepco’s ability to carry
\non its ongoing business operations.<\/p>\n
17.6 Successors. This Agreement and all of the provisions hereof
\nare binding upon, and inure to the benefit of, the Parties and their respective
\nsuccessors and permitted assigns.<\/p>\n
ARTICLE 18
\n NOTICES<\/p>\n
Except as otherwise expressly set forth in this Agreement, all notices
\nand other communications hereunder shall be in writing and shall be deemed given
\n(as of the time of delivery or, in the case of a telecopied communication, of
\nconfirmation) if delivered personally, telecopied (which is confirmed) or sent
\nby overnight courier (providing proof of delivery) to the Parties at the
\nfollowing addresses (or at such other address for a Party as shall be specified
\nby like notice):<\/p>\n
491<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) ________________
\n Attention: ___________________<\/p>\n
if to Generator, to:<\/p>\n
c\/o Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
ARTICLE 19
\n AMENDMENTS<\/p>\n
19.1 Amendments. Except as provided in Section 19.2, this Agreement
\nshall not be amended, modified, or supplemented unless mutually agreed to by the
\nParties in writing. Except as provided in Section 19.2(b) below, the rates,
\nterms and conditions contained in this Agreement are not subject to change under
\nSections 205 or 206 of the Federal Power Act absent the mutual written agreement
\nof the Parties. It is the intent of this Section 19.1 that, except as provided
\nin Section 19.2(b) below, the rates, terms and conditions of this Agreement
\nshall not be subject to change except by mutual written agreement by the
\nParties.<\/p>\n
19.2 PJM Agreement Modifications<\/p>\n
(a) If the PJM Agreements are amended or modified so that
\nany schedule or section references herein to such agreements is changed, such
\nschedule or section references herein shall be deemed to automatically (and
\nwithout any further action by the Parties) refer to the new or successor
\nschedule or section in the PJM Agreements which replaces that originally
\nreferred to in this Agreement.<\/p>\n
(b) If the applicable provisions of the PJM Agreements
\nreferenced herein, or any other PJM rules relating to the implementation of this
\nAgreement, are changed materially from those in effect on May 31, 2000, the
\nOperating<\/p>\n
492<\/p>\n
Committee shall cooperate to make conforming changes to this Agreement to
\nfulfill the purposes of this Agreement; provided that no such changes shall
\nalter the economic benefits of this Agreement between the Parties. If the
\nOperating Committee fails to agree on such changes within 15 days, Pepco may
\nunilaterally make conforming changes to this Agreement to fulfill the purposes
\nof this Agreement, and shall file such changes with the FERC on behalf of both
\nParties; provided that nothing herein shall prejudice the Generator’s rights to
\nprotest such change.<\/p>\n
ARTICLE 20
\n AUDITS<\/p>\n
The Parties shall have the right, during normal business hours, to
\naudit each other’s accounts and records pertaining to transactions under this
\nAgreement, upon twenty (20) days prior written notice, at the offices where such
\naccounts and records are maintained. Any such audit of a Party’s accounts and
\nrecords will be at the expense of the auditing Party, shall not be made more
\nfrequently than once in any twelve (12) month period, and no such audit may be
\nmade with respect to accounts and records relating to periods more than
\ntwenty-four (24) months prior to the date of the audit notice. The Party being
\naudited will be entitled to review the audit report and any supporting
\nmaterials. The Party conducting the audit shall maintain the confidentiality of
\nall information obtained during the audit in compliance with Section 14.2 of
\nthis Agreement. To the extent that audited information includes confidential
\ninformation, the auditing Party shall designate an independent auditor at its
\nexpense to perform such audit.<\/p>\n
ARTICLE 21
\n MISCELLANEOUS PROVISIONS<\/p>\n
21.1 Waiver. Except as otherwise provided in this Agreement, any
\nfailure of a Party to comply with any obligation, covenant, agreement, or
\ncondition herein may be waived by the Party entitled to the benefits thereof
\nonly by a written instrument signed by the Party granting such waiver, but such
\nwaiver or failure to insist upon strict compliance with such obligation,
\ncovenant, agreement, or condition shall not operate as a waiver of, or estoppel
\nwith respect to, any subsequent or other failure.<\/p>\n
21.2 No Third Party Beneficiaries. Nothing in this Agreement is
\nintended to confer upon any other person except the Parties any rights or
\nremedies hereunder or shall create any third party beneficiary rights in any
\nperson. No<\/p>\n
493<\/p>\n
provision of this Agreement shall create any rights in any such persons in
\nrespect of any benefits that may be provided, directly or indirectly, under any
\nemployee benefit plan or arrangement except as expressly provided for
\nthereunder.<\/p>\n
21.3 Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the District of Columbia (regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaw).<\/p>\n
21.4 Counterparts. This Agreement may be executed in two or more
\ncounterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
21.5 Interpretation. When a reference is made in this Agreement to
\nan article, section, schedule or exhibit, such reference shall be to an article
\nor section of, or schedule or exhibit to, this Agreement unless otherwise
\nindicated. The table of contents and headings contained in this Agreement are
\nfor reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement. Whenever the words “include”, “includes” or
\n“including” are used in this Agreement, they shall be deemed to be followed by
\nthe words “without limitation” or equivalent words. The words “hereof”, “herein”
\nand “hereunder” and words of similar import when used in this Agreement shall
\nrefer to this Agreement as a whole and not to any particular provision of this
\nAgreement. The definitions contained in this Agreement are applicable to the
\nsingular as well as the plural forms of such terms and to the masculine as well
\nas to the feminine and neuter genders of such term. Unless otherwise expressly
\nstated otherwise herein, the word “day” shall mean any calendar day including
\nweekends and holidays. Any agreement, instrument, statute, regulation, rule or
\norder defined or referred to herein or in any agreement or instrument that is
\nreferred to herein means such agreement, instrument, statute, regulation, rule
\nor order as from time to time amended, modified or supplemented, including (in
\nthe case of agreements or instruments) by waiver or consent and (in the case of
\nstatutes, regulations, rules or orders) by succession of comparable successor
\nstatutes, regulations, rules or orders and references to all attachments thereto
\nand instruments incorporated therein. References to a person are also to its
\npermitted successors and assigns. Each Party acknowledges that it has been
\nrepresented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
494<\/p>\n
21.6 Jurisdiction and Enforcement. Each of the Parties irrevocably
\nsubmits to the exclusive jurisdiction of (i) the Superior Court of the District
\nof Columbia and (ii) the United States District Court for the District of
\nColumbia, for the purposes of any suit, action or other proceeding arising out
\nof this Agreement or any transaction contemplated hereby. Each of the Parties
\nagrees to commence any action, suit or proceeding relating hereto either in the
\nUnited States District Court for the District of Columbia or, if such suit,
\naction or proceeding may not be brought in such court for jurisdictional
\nreasons, in the Superior Court of the District of Columbia. Each of the Parties
\nfurther agrees that service of process, summons, notice or document by hand
\ndelivery or U.S. registered mail at the address specified for such Party in
\nArticle 18 (or such other address specified by such Party from time to time
\npursuant to Article 18) shall be effective service of process for any action,
\nsuit or proceeding brought against such Party in any such court. Each of the
\nParties irrevocably and unconditionally waives any objection to the laying of
\nvenue of any action, suit or proceeding arising out of this Agreement or the
\ntransactions contemplated hereby in (i) the Superior Court of the District of
\nColumbia and (ii) the United States District Court for the District of Columbia,
\nand hereby further irrevocably and unconditionally waives and agrees not to
\nplead or claim in any such court that any such action, suit or proceeding
\nbrought in any such court has been brought in an inconvenient forum.<\/p>\n
21.7 Entire Agreement. This Agreement, the Asset Sale Agreement,
\nthe Confidentiality Agreement and the Ancillary Agreements including the
\nexhibits, schedules, documents, certificates and instruments referred to herein
\nor therein and other contracts, agreements and instruments contemplated hereby
\nor thereby, embody the entire agreement and understanding of the Parties in
\nrespect of the transactions contemplated by this Agreement. There are no
\nrestrictions, promises, representations, warranties, covenants or undertakings
\nother than those expressly set forth or referred to herein or therein. This
\nAgreement, the Asset Sale Agreement and the Ancillary Agreements supersede all
\nprior agreements and understandings between the Parties with respect to the
\ntransactions contemplated by this Agreement other than the Confidentiality
\nAgreement.<\/p>\n
21.8 Severability. If any term or other provision of this Agreement
\nis invalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the Parties shall
\nnegotiate in good faith to modify this Agreement so as to effect the original
\nintent of the Parties as closely as possible to the fullest extent permitted by
\napplicable law in an acceptable<\/p>\n
495<\/p>\n
manner to the end that the transactions contemplated hereby are fulfilled to
\nthe extent possible.<\/p>\n
21.9 Further Assurances. The Parties hereto agree to execute and
\ndeliver promptly, at the expense of the Party requesting such action, any and
\nall other and further instruments, documents and information which may be
\nreasonably requested in order to effectuate the transactions contemplated
\nhereby. Each Party agrees to cooperate with, assist and accommodate all
\nreasonable requests made by the other Party in respect of any regulatory
\napproval necessary for, or any regulatory proceeding relating to, the execution,
\ndelivery or performance of this Agreement. Each Party further agrees to comply
\nin all material respects with all laws of governmental authorities relating to
\nthis Agreement and the consummation of the transactions contemplated hereby.<\/p>\n
21.10 Independent Contractor Status. Nothing in this Agreement shall
\nbe construed as creating any relationship between Pepco and Generator other than
\nthat of independent contractors.<\/p>\n
21.11 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
496<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this Transition
\nPower Agreement (District of Columbia) to be signed by their respective duly
\nauthorized officers as of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n ———————————
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n ———————————
\n Name:
\n Title:<\/p>\n
497<\/p>\n
SCHEDULE 1
\n DEFINITIONS<\/p>\n
Part A. Capitalized terms not defined in the body of the Agreement shall have
\n the meaning set forth in Part A of this Schedule 1. (Part B of this
\n Schedule 1 sets forth capitalized terms defined within the Agreement.)<\/p>\n
1. ” Affiliate” has the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
2. “Auctioned Assets” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
3. “Capacity Credits” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
4. “Capacity Resources” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
5. “Contract Year 1” means the period beginning on the Effective
\nDate and ending thirteen calendar months thereafter.<\/p>\n
6. “Contract Year 2” means the period beginning immediately after
\nthe end of Contract Year 1 and ending twelve calendar months thereafter.<\/p>\n
7. “Contract Year 3” means the period beginning immediately after
\nthe end of Contract Year 2 and ending twelve calendar months thereafter.<\/p>\n
8. “Contract Year 4” means the period beginning immediately after
\nthe end of Contract Year 3 and ending twelve calendar months thereafter.<\/p>\n
9. “Closing” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
10. “Confidentiality Agreement” has the meaning set forth in the
\nAsset Sale Agreement.<\/p>\n
11. “FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
12. “Fixed Transmission Rights” has the meaning set forth in the
\nPJM Operating Agreement.<\/p>\n
498<\/p>\n
13. “Full Energy Requirements” means the full electric energy
\nrequirements of the Service Load in any hour, measured in megawatt hours at the
\nDelivery Points.<\/p>\n
14. “Generator” has the meaning set forth in the preamble of this
\nAgreement and shall include its permitted successors and assigns.<\/p>\n
15. “Metered Energy Requirements” means the full electric energy
\nrequirements of the Service Load in any hour, measured in megawatt hours at the
\nretail (customer revenue meter) level. For customers without, interval metering,
\nPepco will use customer or retail class profiles in accordance with the District
\nof Columbia Public Service Commission regulations to distribute periodic metered
\nenergy usage to obtain hourly customer energy usage. When Pepco curtailable load
\nprograms are operated, customer loads which are curtailed will be increased by
\nPepco to reflect the hourly energy usage which would have occurred if
\ncurtailments had not taken place.<\/p>\n
16. “Month” means a calendar month.<\/p>\n
17. “Network Customer” has the meaning set forth in the PJM
\nTariff.<\/p>\n
18. “Network Load” has the meaning set forth in the PJM Tariff.<\/p>\n
19. “Optional Energy” means the Optional Energy Percent, as
\nelected by Pepco through the exercise of its Call Options, of Pepco’s Full
\nEnergy Requirements.<\/p>\n
20. “Pepco” has the meaning set forth in the preamble of this
\nAgreement and shall include its permitted successors or assigns.<\/p>\n
21. “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Operating Agreement and any
\nsuccessor thereto including any regional transmission organization, independent
\nsystem operator, transco, or any other independent system administrator that
\npossesses operational control or planning control over Pepco’s transmission
\nsystem.<\/p>\n
22. “PJM Agreements” means the PJM Operating Agreement, PJM
\nReliability Agreement, and PJM Tariff.<\/p>\n
23. “PJM Control Area” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
24. “PJM Operating Agreement” means the Amended and Restated
\nOperating Agreement of the PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
499<\/p>\n
25. “PJM Interconnection LLC” means the independent system
\noperator of the PJM Control Area pursuant to the PJM Operating Agreement and the
\nPJM Tariff.<\/p>\n
26. “PJM Reliability Agreement” means the PJM Reliability
\nAssurance Agreement dated June 2, 1997, establishing obligations, standards and
\nprocedures for maintaining the reliable operation of the PJM Control Area.<\/p>\n
27. “PJM System Operator” means the PJM Interconnection LLC energy
\ncontrol center staff responsible for central dispatch as provided in the PJM
\nAgreement.<\/p>\n
28. “PJM Tariff” means the PJM Open Access Transmission Tariff
\nproviding transmission service within the PJM Control Area.<\/p>\n
29. “Planning Period” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
30. “Required Energy” means the Required Energy Percent of Pepco’s
\nFull Energy Requirements.<\/p>\n
31. “Service Load” means (i) all of Pepco’s default service retail
\nelectric energy customers located in Pepco’s service territory, as such
\nterritory exists on the Effective Date, in the District of Columbia, and (ii)
\nthe energy requirements of the Washington Metropolitan Area Transit Authority in
\nthe Commonwealth of Virginia which Pepco is required to provide.<\/p>\n
32. “Summer Month” means each Month during the period of May 1
\nthrough September 30.<\/p>\n
33. “Winter Month” means each Month during the period of October 1
\nthrough April 30.<\/p>\n
Part B. The following terms have the meaning specified in the section
\nof this Agreement set forth opposite to such term:<\/p>\n
\n
\nTerm Agreement Reference
\nAgreement Preamble
\nAlternative Services Section 8.1
\nAncillary Services Article 4
\nAncillary Services Requirements Article 4
\nAsset Sale Agreement First Recital
\nCall Options Section 5.2(a)
\n<\/c><\/s><\/table>\n 500<\/p>\n
\n
\nCapacity Resources Plan Section 3.2(a)
\nCapacity Resources Requirements Section 3.1(a)
\nDelivery Points Section 5.3
\nEffective Date Section 2.1
\nEvent of Default Section 11.1
\nForce Majeure Section 9.2
\nGenerator Material Adverse Effect Section 16.2(c)(i)
\nOperating Committee Article 12
\nOptional Energy Percent Section 5.2(a)
\nPepco Material Adverse Effect Section 16.1(c)(i)
\nParty or Parties Preamble
\nPPAs First Recital<\/p>\nRequired Energy Percent Section 5.1
\nServices Section 8.1
\n<\/c><\/s><\/table>\n
501<\/p>\n
EXHIBIT I-2<\/p>\n
TRANSITION POWER AGREEMENT
\n (Maryland)<\/p>\n
By and Between<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
and<\/p>\n
—————————————–<\/p>\n
Dated ____________, 2000<\/p>\n
502<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n
\nARTICLE 1 – DEFINITIONS 1
\nARTICLE 2 – TERM AND TERMINATION 2
\n 2.1 – Term 2
\n 2.2 – Termination 2
\nARTICLE 3 – CAPACITY RESOURCES 2
\n 3.1 – Capacity Resources Obligations 2
\n 3.2 – Capacity Resources Information Requirements 3
\nARTICLE 4 – ANCILLARY SERVICES 4
\nARTICLE 5 – ENERGY 4
\n 5.1 – Required Energy 4
\n 5.2 – Optional Energy 5
\n 5.3 – Determination of Energy Requirements; Losses 5
\nARTICLE 6 – PRICING 6
\n 6.1 – Compensation for Services 6
\n 6.2 – Taxes 7
\nARTICLE 7 – SERVICES OBTAINED BY GENERATOR FROM PJM 7
\nARTICLE 8 – ALTERNATIVE SERVICES AND LIMITED LIABILITY 7
\n 8.1 – Alternative Services 7
\n 8.2 – Limitation on Liability 8
\nARTICLE 9 – FORCE MAJEURE 9
\n 9.1 – Effect of Force Majeure 9
\n 9.2 – Force Majeure Defined 9
\n 9.3 – Notification 9
\nARTICLE 10 – INDEMNIFICATION FOR THIRD PARTY CLAIMS 10
\n 10.1 – Generator’s Indemnification 10
\n 10.2 – Pepco’s Indemnification 10
\n 10.3 – Indemnification Procedures 10
\n 10.4 – Survival 11
\nARTICLE 11 – DEFAULT 11
\n 11.1 – Event of Default 11
\n 11.2 – Remedies 12
\nARTICLE 12 – PROJECTIONS AND OPERATING COMMITTEE 12
\n 12.1 – Projections 12
\n 12.2 – Operating Committee 12
\nARTICLE 13 – COST RESPONSIBILITIES AND BILLING PROCEDURES 13
\n 13.1 – Billing Procedures 13
\n 13.2 – Billing Disputes 14
\n<\/c><\/s><\/table>\n 503<\/p>\n
\n
\n 13.3 – Interest on Unpaid Balances 14
\nARTICLE 14 – CONFIDENTIALITY 14
\n 14.1 – Confidentiality Obligations of Pepco 14
\n 14.2 – Confidentiality of Audits 15
\n 14.3 – Remedies 15
\nARTICLE 15 – DISPUTE RESOLUTION 15
\n 15.1 – Disputes 15
\n 15.2 – Arbitration 16
\nARTICLE 16 – REPRESENTATIONS 17
\n 16.1 – Representations of Pepco 17
\n 16.2 – Representations of Generator 18
\nARTICLE 17 – ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY 20
\n 17.1 – Generally 20
\n 17.2 – Pepco’s Assignment Rights 20
\n 17.3 – Generator’s Assignment Rights 20
\n 17.4 – Mergers or Consolidations 20
\n 17.5 – Limitations 20
\n 17.6 – Successors 21
\nARTICLE 18 – NOTICES 21
\nARTICLE 19 – AMENDMENTS 22
\n 19.1 – Amendments 22
\n 19.2 – PJM Agreement Modifications 22
\nARTICLE 20 – AUDITS 23
\nARTICLE 21 – MISCELLANEOUS PROVISIONS 23
\n 21.1 – Waiver 23
\n 21.2 – No Third Party Beneficiaries 23
\n 21.3 – Governing Law 24
\n 21.4 – Counterparts 24
\n 21.5 – Interpretation 24
\n 21.6 – Jurisdiction and Enforcement 25
\n 21.7 – Entire Agreement 25
\n 21.8 – Severability 26
\n 21.9 – Further Assurances 26
\n 21.10-Independent Contractor Status 26
\n 21.11-Conflicts 26
\nSCHEDULE 1 – DEFINITIONS 28
\nEXHIBIT A – Pepco’s Non-Binding Estimate for Calendar Year 2001 of
\nCapacity Resources for the Service Load 32
\nEXHIBIT B – Capacity Resources Plan for Contract Year 1 33
\n<\/c><\/s><\/table>\n 504<\/p>\n
EXHIBIT I-2<\/p>\n
TRANSITION POWER AGREEMENT (Maryland)<\/p>\n
This Transition Power Agreement (“Agreement”) dated as of _________,
\n2000 by and between Potomac Electric Power Company (“Pepco”) a District of
\nColumbia and Virginia corporation, and _____________ (“Generator”) a ___________
\n[corporation]. Pepco and Generator are each referred to herein as a “Party,” and
\ncollectively referred to herein as the “Parties.”<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Pepco and Generator have entered into an Asset Sale and
\nPurchase Agreement (“Asset Sale Agreement”) dated June 7, 2000 for (i) the sale
\nand purchase of certain of Pepco’s generating resources and (ii) the assignment
\nof rights and obligations under five power purchase agreements (“PPAs”) or for
\nalternative arrangements relating to such PPAs;<\/p>\n
WHEREAS, certain of the PPAs provide for the purchases and sale of
\nRenewable Energy Resources;<\/p>\n
WHEREAS, Pepco will continue to operate its transmission and
\ndistribution businesses which includes obligations to sell power to its retail
\ncustomers; and<\/p>\n
WHEREAS, the Parties have agreed in the Asset Sale Agreement to execute
\nthis Agreement in order to provide for the sale by Generator, and purchase by
\nPepco, of capacity, electric energy and certain ancillary services in accordance
\nwith the terms and conditions of this Agreement.<\/p>\n
NOW THEREFORE, in consideration of the mutual representations,
\ncovenants and agreements hereinafter set forth, and intending to be legally
\nbound hereby, the Parties hereto agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
Unless otherwise defined herein, capitalized terms used in this
\nAgreement shall have the meanings specified or referred to in Schedule 1 of this
\nAgreement.<\/p>\n
ARTICLE 2
\n TERM AND TERMINATION<\/p>\n
2.1 Term. This Agreement shall become effective upon the
\nconsummation of the Closing (“Effective Date”). Unless terminated sooner in<\/p>\n
505<\/p>\n
accordance with the terms of this Agreement, this Agreement shall continue in
\nfull force and effect from the Effective Date through and including June 30,
\n2004.<\/p>\n
2.2 Termination. The applicable provisions of this Agreement shall
\ncontinue in effect after cancellation or termination hereof to the extent
\nnecessary to provide for final billings, billing adjustments and payments
\npertaining to liability and indemnification obligations arising from acts or
\nevents that occurred while this Agreement was in effect.<\/p>\n
ARTICLE 3
\n CAPACITY RESOURCES<\/p>\n
3.1 Capacity Resources Obligations<\/p>\n
(a) During the term of this Agreement, Generator shall
\nsupply to Pepco and make available within PJM on Pepco’s behalf, and Pepco shall
\npurchase from Generator, Pepco’s full requirements for Capacity Resources to
\nserve the Service Load (“Capacity Resource Requirements”) at the prices set
\nforth in Article 6 of this Agreement. Capacity Resources shall be determined,
\nand provided by the Generator, in accordance with the PJM Reliability Agreement
\nand other applicable PJM requirements. Capacity Resource Requirements shall mean
\nthe portion of Pepco’s Accounted-For Obligation, as that term is defined and
\ndetermined in accordance with the PJM Reliability Agreement and applicable PJM
\nrequirements, that is located in the State of Maryland.<\/p>\n
(b) To the extent that PJM assigns to Pepco Fixed
\nTransmission Rights for Capacity Resources contained in a Capacity Resource Plan
\nand designated for Fixed Transmission Rights, Pepco shall transfer such Fixed
\nTransmission Rights to Generator pursuant to PJM’s procedures for assigning
\nFixed Transmission Rights<\/p>\n
(c) Generator shall provide to the PJM System Operator or
\nPJM Interconnection LLC, as applicable, all information and data required with
\nrespect to the Capacity Resources Requirements, with copies to Pepco, and
\nGenerator shall be responsible for any charges levied by the PJM System Operator
\nor the PJM Interconnection LLC on Pepco or Generator due to the delayed receipt
\nof such information and data in accordance with the PJM Reliability Agreement
\nunless the delay is due to Pepco’s delay in providing Generator with information
\nthat Pepco is required to provide.<\/p>\n
506<\/p>\n
3.2 Capacity Resources Information Requirements<\/p>\n
(a) Generator shall provide in accordance with this
\nSection 3.2 its proposed plan to satisfy its obligations hereunder to provide
\nthe Capacity Resources Requirements under this Agreement (“Capacity Resources
\nPlan”).<\/p>\n
(b) Exhibit A hereto sets forth Pepco’s non-binding
\nestimate of the Capacity Resources required to supply the Service Load for each
\nmonth during the 2001 calendar year. On or before April 1 preceding each
\nPlanning Period thereafter, Pepco shall provide Generator with a non-binding
\nestimate of the Capacity Resources required to supply the Service Load for each
\nmonth in the following Planning Period.<\/p>\n
(c) Exhibit B hereto sets forth the Generator’s Capacity
\nResources Plan for Contract Year 1.<\/p>\n
(d) On or before May 1 preceding each Planning Period
\nthereafter during the term of this Agreement, the Generator shall provide to the
\nOperating Committee, for review and approval (such approval not to be
\nunreasonably withheld or delayed), its proposed Capacity Resources Plan
\n(including Generator’s proposed designation of Capacity Resources for associated
\nFixed Transmission Rights) to be submitted to the PJM Interconnection LLC in
\naccordance with Schedule 6 of the PJM Reliability Agreement for the upcoming
\nPlanning Period.<\/p>\n
(e) If the Generator intends to propose any material
\nchange to a Capacity Resources Plan (including any change in a designation of
\nCapacity Resources eligible for Fixed Transmission Rights) which has previously
\nbeen approved by the Operating Committee, the Generator shall provide such
\nproposed changes to the Operating Committee before it is submitted for approval
\npursuant to the PJM Reliability Agreement and such change shall be subject to
\nthe Operating Committee for review and approval (such approval not to be
\nunreasonably withheld or delayed) if the change (1) adds a resource other than
\n(x) capacity already certified by the PJM Interconnection LLC or PJM System
\nOperator, as applicable, as a Capacity Resource or (y) Capacity Credits, or (2)
\nproposes to change a designation of Capacity Resources eligible for Fixed
\nTransmission Rights.<\/p>\n
507<\/p>\n
ARTICLE 4
\n ANCILLARY SERVICES<\/p>\n
During the term of this Agreement, Generator shall supply to Pepco and
\ndeliver within PJM on Pepco’s behalf, and Pepco shall purchase, Pepco’s full
\nrequirements for Ancillary Services for the Service Load (“Ancillary Services
\nRequirements”) at the prices set forth in Article 6 of this Agreement. Ancillary
\nServices mean Regulation and Frequency Response Service (as defined in Schedule
\n3 of the PJM Tariff) and Operating Reserves (as defined in Schedules 5 and 6 of
\nthe PJM Tariff).<\/p>\n
ARTICLE 5
\n ENERGY<\/p>\n
5.1 Required Energy.<\/p>\n
(a) During the term of this Agreement, Generator shall
\nsupply to Pepco at the Delivery Points, and Pepco shall purchase, the following
\npercentages of Pepco’s Full Energy Requirements in the year indicated below (the
\n“Required Energy Percent”), including the applicable Renewable Energy Percent,
\nat the prices set forth in Article 6 of this Agreement:<\/p>\n
\n\n Year Required Energy Percent<\/p>\n
\n Contract Year 1 100%
\n Contract Year 2 75%
\n<\/c><\/s><\/caption>\n<\/table>\n 5.2 Optional Energy<\/p>\n
(a) For the duration of each of Contract Year 2, Contract
\nYear 3 and Contract Year 4, Pepco shall have the right to purchase from
\nGenerator (the “Call Options”) the percentages of the Full Energy Requirements
\nindicated below (the “Optional Energy Percent”), including the applicable
\nRenewable Energy Percent. To the extent Pepco exercises a Call Option for a
\ngiven year, Generator shall supply to Pepco at the Delivery Points the Optional
\nEnergy Percent at the price set forth in Article 6 of this Agreement.<\/p>\n
508<\/p>\n
\n\n Year Optional Energy Percent<\/p>\n
\n Contract Year 2 25%<\/p>\n Contract Year 3 100% (in 25% increments)<\/p>\n
Contract Year 4 100% (in 25% increments)
\n<\/c><\/s><\/caption>\n<\/table>\n
Notwithstanding the foregoing, the total of Pepco’s Call Options
\nexercised with respect to the Optional Energy Percent for Contract Year 3 and
\nContract Year 4, respectively, shall not exceed the percentage of the Full
\nEnergy Requirements that Pepco elected to purchase in the immediately preceding
\ncontract year.<\/p>\n
(b) By each October 1 prior to the contract year in which
\nthe applicable Optional Energy Percent is deliverable (“Strike Date”), Pepco
\nshall notify Generator in writing whether it is exercising any of its Call
\nOptions for the upcoming contract year, and if so, the percentage of its Full
\nEnergy Requirements it elects to purchase.<\/p>\n
5.3 Determination of Energy Requirements. The amount of Full
\nEnergy Requirements shall be as determined by PJM in accordance with Schedule 1,
\nSection 3.2 of the PJM Operating Agreement at the respective PJM load buses
\nmeasured by PJM for the Service Load served by Pepco (the “Delivery Points”).
\nGenerator shall be responsible for all energy losses (including allocated PJM
\nlosses, unaccounted-for energy and distribution losses) associated with delivery
\nof Required Energy Percent and Optional Energy Percent to the Service Load.<\/p>\n
5.4 Renewable Energy Resources Reporting Requirements. Generator
\nacknowledges that under Maryland law and MDPSC requirements, Pepco is required
\nto provide the Renewable Energy Percentage to its Service Load and to satisfy
\nMDPSC reporting requirement with respect thereto. Upon Pepco’s written request,
\nGenerator shall provide to Pepco in writing no later than thirty (30) days after
\nsuch request, the information and data requested by Pepco to demonstrate that
\nGenerator has provided the Renewable Energy Percent required under this
\nAgreement and if Generator has failed to provide all of such Renewable Energy
\nPercent, the reasons for such failure.<\/p>\n
509<\/p>\n
ARTICLE 6
\n PRICING<\/p>\n
6.1 Compensation for Services Subject to the terms of this
\nAgreement, Pepco shall be obligated to make a monthly payment to Generator for
\nthe Services it provides which shall be comprised of the following components:<\/p>\n
(a) For each Month during the term of the Agreement, a
\nCapacity Payment for the Capacity Resources Requirements and Ancillary Services
\nRequirements that Generator provides to Pepco in such Month calculated as
\nfollows:<\/p>\n
Capacity Payment = (Capacity Price + Ancillary Services Price) x Metered
\n Energy Requirements<\/p>\n
Where:<\/p>\n
Capacity Price = $3.50\/MWh<\/p>\n
Ancillary Services Price = $0.50\/MWh<\/p>\n
(b) For each Month during the term of the Agreement, an
\nEnergy Payment for the Required Energy Percent and Optional Energy Percent, if
\nany, that Generator delivers to Pepco at the Delivery Points in each Month
\ncalculated as follows:<\/p>\n
Energy Payment = [Metered Energy Requirements x (Required Energy Percent
\n + Optional Energy Percent)] x Energy Price<\/p>\n
Where:<\/p>\n
Energy Price = $40.00\/MWh during a Summer Month and $22.20\/MWh
\nduring a Winter Month.<\/p>\n
(c) Pepco’s monthly payment to Generator will be
\ndecreased by (i) any PJM charges for transmission congestion, allocated losses
\nand unaccounted-for energy that Pepco incurs in connection with the Services
\nGenerator delivers to Pepco pursuant to Articles 4, 5 and 6 of this Agreement,
\nand (ii) the amounts of any payments Generator owes to Pepco pursuant to Article
\n8 of this Agreement.<\/p>\n
510<\/p>\n
6.2 Taxes. Generator shall be responsible for taxes related to the
\nsale or provision of Services hereunder.<\/p>\n
ARTICLE 7
\n SERVICES OBTAINED BY GENERATOR FROM PJM<\/p>\n
Pepco shall, upon Generator’s request, reasonably cooperate with
\nGenerator to facilitate its acquisition in the PJM marketplace and resale to
\nPepco of the Services Generator is obligated to provide to Pepco under this
\nAgreement. Pepco shall follow Generator’s instructions with respect to
\nscheduling load in the day ahead PJM market.<\/p>\n
ARTICLE 8
\n ALTERNATIVE SERVICES AND LIMITATION OF LIABILITY<\/p>\n
8.1 Alternative Services. To the extent that Generator does not
\nprovide Capacity Resources Requirements, Ancillary Services Requirements, the
\nRequired Energy and\/or the Optional Energy (“Services”) to Pepco as required
\nunder this Agreement, Generator, as an alternative method of performing such
\nobligations, shall pay Pepco the positive difference between the price Pepco
\npays for such Services in the appropriate PJM marketplace, or if not available
\nin the PJM market, any other market (“Alternative Services”) and the price Pepco
\nwould have paid to Generator for such Services under this Agreement, plus
\npenalties and nonperformance charges, if any, assessed on Pepco by the PJM
\nInterconnection LLC or PJM System Operator as a result of the Generator not
\nproviding the Services. Calculation of the cost of Alternative Services
\nhereunder shall include all reasonable direct costs associated with the
\nprocurement and delivery of Alternative Services, including legal or
\ntransactional costs and expenses; taxes, energy, demand, capacity, or
\nreservation charges; energy losses; emergency energy; and any transmission or
\ncongestion costs but does not include the cost of PJM network service. For
\npurposes of determining the amount of Alternative Services Pepco purchases to
\nsatisfy its energy requirements, energy requirements for any day shall be the
\nnet amount of energy Pepco purchases for the Service Load in the PJM day-ahead
\nand second settlement markets. Notwithstanding the foregoing, Generator shall
\nnot have satisfied its obligations to provide electricity from Renewable Energy
\nResources under the provisions of this Section 8.1 unless Pepco acquires such
\nelectricity in the PJM market or such other market in which Pepco acquires
\nServices.<\/p>\n
511<\/p>\n
8.2 Limitation of Liability. Except for indemnity obligations set
\nforth in Article 10 and the damages, charges or penalties set forth in Sections
\n3.1(c), 5.3, 8.1 and 13.3 of this Agreement, neither Party, nor their respective
\nofficers, directors, agents, employees, Affiliates, or successors or assigns of
\nany of them, shall be liable to the other Party or its Affiliates, officers,
\ndirectors, agents, employees, successors or assigns for claims, suits, actions
\nor causes of action for incidental, punitive, special, indirect, multiple or
\nconsequential damages (including, without limitation, lost revenues, claims of
\ncustomers, attorneys’ fees and litigation costs) connected with, or resulting
\nfrom, performance or non-performance of this Agreement, or any actions
\nundertaken in connection with or related to this Agreement, including, without
\nlimitation, any such damages which are based upon causes of action for breach of
\ncontract, tort (including negligence and misrepresentation), breach of warranty
\nor strict liability. The provisions of this Section 8.2 shall apply regardless
\nof fault and shall survive termination, cancellation, suspension, completion, or
\nexpiration of this Agreement.<\/p>\n
ARTICLE 9
\n FORCE MAJEURE<\/p>\n
9.1 Effect of Force Majeure. Notwithstanding anything in this
\nAgreement to the contrary, the Parties shall be excused from performing their
\nrespective obligations hereunder (except for the obligation to pay sums of money
\ndue and owing hereunder) and shall not be liable in damages or otherwise, to the
\nextent that a Party is unable to perform or is prevented from performing by an
\nevent of Force Majeure and has complied with Section 9.3.<\/p>\n
9.2 Force Majeure Defined. Force Majeure includes, without
\nlimitation, storm, flood, lightning, drought, earthquake, fire, explosion, civil
\ndisturbance, acts of God or the public enemy, civil disturbance, or any other
\ncause beyond a Party’s reasonable control but only if and to the extent that the
\nevent directly affects the availability of the transmission or distribution
\nfacilities of PJM or Pepco which are necessary to deliver capacity or energy to
\nthe Service Load. Force Majeure shall not include events affecting the
\navailability or cost of operating any generating facility or resource.<\/p>\n
9.3 Notification. A Party shall not be entitled to rely on the
\noccurrence of an event of Force Majeure as a basis for being excused from
\nperformance of its obligations under this Agreement unless the Party relying on
\nthe event or condition shall: (a) provide prompt written notice of such<\/p>\n
512<\/p>\n
Force Majeure event to the other Party, including an estimation of its expected
\nduration and the probable impact on the performance of its obligations
\nhereunder; (b) exercise all reasonable efforts to continue to perform its
\nobligations under this Agreement; (c) expeditiously take action to correct or
\ncure the event or condition excusing performance; (d) exercise all reasonable
\nefforts to mitigate or limit damages to the other Party; and (e) provide prompt
\nnotice to the other Party of the cessation of the event or condition giving rise
\nto its excuse from performance. Subject to this Section 9.3, any obligation
\nunder this Agreement shall be suspended only to the extent caused by such Force
\nMajeure and only during the continuance of any inability of performance caused
\nby such Force Majeure but for no longer period.<\/p>\n
ARTICLE 10
\n INDEMNIFICATION FOR THIRD PARTY CLAIMS<\/p>\n
10.1 Generator’s Indemnification. Generator shall indemnify, hold
\nharmless, and defend Pepco and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between Pepco and a third party or Generator) for
\ndamage to property of unaffiliated third parties, injury to or death of any
\nperson, including Pepco’s employees or any third parties, to the extent caused,
\nby the negligence or willful misconduct of Generator’s and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors or invitees arising
\nout of or connected with Generator’s performance or breach of this Agreement, or
\nthe exercise by Generator of its rights hereunder.<\/p>\n
10.2 Pepco’s Indemnification. Pepco shall indemnify, hold harmless,
\nand defend Generator and its Affiliates, as the case may be, and their
\nrespective officers, directors, employees, agents, contractors, subcontractors,
\ninvitees, successors and permitted assigns from and against any and all claims,
\nliabilities, costs, damages, and expenses (including, without limitation,
\nreasonable attorney and expert fees, and disbursements incurred by any of them
\nin any action or proceeding between the Generator and a third party or Pepco)
\nfor damage to property of unaffiliated third parties, injury to or death of any
\nperson, including Generator’s employees or any third parties, to the extent
\ncaused by the negligence or willful misconduct of Pepco and\/or its officers,
\ndirectors, employees, agents, contractors, subcontractors<\/p>\n
513<\/p>\n
or invitees arising out of or connected with Pepco’s performance or breach of
\nthis Agreement, or the exercise by Pepco of its rights hereunder.<\/p>\n
10.3 Indemnification Procedures. If either Party intends to seek
\nindemnification under this Article 10 from the other Party, the Party seeking
\nindemnification shall give the other Party notice of such claim within ninety
\n(90) days of the later of the commencement of, or the Party’s actual knowledge
\nof, such claim or action. Such notice shall describe the claim in reasonable
\ndetail, and shall indicate the amount (estimated if necessary) of the claim that
\nhas been, or may be sustained by, said Party. To the extent that the other Party
\nwill have been actually and materially prejudiced as a result of the failure to
\nprovide such notice, such notice will be a condition precedent to any liability
\nof the other Party under the provisions for indemnification contained in this
\nAgreement. Neither Party may settle or compromise any claim without the prior
\nconsent of the other Party; provided, however, said consent shall not be
\nunreasonably withheld or delayed.<\/p>\n
10.4 Survival. The indemnification obligations of each Party under
\nthis Article 10 shall continue in full force and effect regardless of whether
\nthis Agreement has either expired or been terminated or canceled.<\/p>\n
ARTICLE 11
\n DEFAULT<\/p>\n
11.1 Event of Default. Unless excused by Force Majeure, each of the
\nfollowing events shall constitute an event of default (an “Event of Default”)
\nunder this Agreement:<\/p>\n
(a) the failure by a Party to pay any amount due within
\nthirty (30) days after receipt of written notice of nonpayment by the other
\nParty, unless the payment of such amount is disputed in good faith;<\/p>\n
(b) a Party’s breach of any material term or condition of
\nthis Agreement including any material breach of a representation, warranty or
\ncovenant made in this Agreement which, after receiving written notice of the
\nbreach from the non-breaching Party (such notice to set forth in reasonable
\ndetail the nature of the default and, where known and if applicable, the steps
\nnecessary to cure such default), (i) the breaching Party fails to cure within
\nthirty (30) days following receipt of the notice or (ii) if such default is of<\/p>\n
514<\/p>\n
such a nature that it cannot be cured within thirty (30) days following receipt
\nof such notice, the breaching Party fails within such thirty (30) days to
\ncommence the necessary cure and fails at any time thereafter diligently and
\ncontinuously to prosecute such cure to completion provided that the cure is
\ncompleted no later than 180 days after the receipt of the default notice ;<\/p>\n
(c) the appointment of a receiver or liquidator or
\ntrustee for either Party and such receiver, liquidator or trustee is not
\ndischarged within sixty (60) days;<\/p>\n
(d) the entry of a decree adjudicating a Party as
\nbankrupt or insolvent, and such decree is continued undischarged and unstayed
\nfor a period of sixty (60) days; or<\/p>\n
(e) the filing of a voluntary or involuntary petition in
\nbankruptcy under any provision of any federal or state bankruptcy law by a Party
\nor against it, and, with respect to an involuntary petition in bankruptcy, such
\npetition continues undischarged and unstayed for a period of sixty (60) days.<\/p>\n
11.2 Remedies. Upon the occurrence of an Event of Default, the
\nnon-defaulting Party may (a) terminate this Agreement by providing sixty (60)
\ndays’ prior written notice to the defaulting Party and this Agreement shall
\nthereupon terminate upon receipt of regulatory approval for such termination,
\nbut not before the date specified in the notice, and\/or (b) subject to Section
\n8.2 of this Agreement, exercise all such rights and remedies as may be available
\nto it under this Agreement or at law or equity with respect to such Event of
\nDefault.<\/p>\n
ARTICLE 12
\n PROJECTIONS AND OPERATING COMMITTEE<\/p>\n
12.1 Projections. No later than three (3) business days prior to
\neach Monday during the term of this Agreement, Pepco shall provide Generator
\nwith non-binding projections of the Services to be provided by Generator to
\nPepco under this Agreement for the week beginning that Monday.<\/p>\n
12.2 Operating Committee. The Parties shall establish an operating
\ncommittee consisting of one representative for each Party<\/p>\n
515<\/p>\n
(“Operating Committee”). The Operating Committee shall act only by unanimous
\nagreement or consent. The Parties shall designate their respective
\nrepresentatives to the Operating Committee, plus an alternate by written notice.
\nEach Party’s representative on the Operating Committee is authorized to act on
\nbehalf of such Party with respect to any matter arising under this Agreement
\nwhich is to be decided by the Operating Committee, however, the Operating
\nCommittee shall not have any authority to modify or otherwise alter the rights
\nand obligations of the Parties hereunder. The Operating Committee shall develop
\nand implement suitable policies and procedures with to coordinate the
\ninteraction of the Parties with respect to the performance of their duties and
\nobligations under this Agreement.<\/p>\n
ARTICLE 13
\n COST RESPONSIBILITIES AND BILLING PROCEDURES<\/p>\n
13.1 Billing Procedures.<\/p>\n
(a) Within ten (10) days after the first day of each
\nMonth Pepco shall provide to Generator a written invoice setting forth (a) the
\namount Pepco owes to Generator pursuant to Article 6 of this Agreement for
\nServices and any other payments which may be due hereunder, and (b) the amounts,
\nif any, that Generator owes to Pepco pursuant to this Agreement. Each invoice
\nshall (i) delineate the Month in which the Services or Alternative Services were
\nprovided or reimbursable charges were incurred, (ii) fully describe the Services
\nor Alternative Services rendered or reimbursable charges incurred, (iii) be
\nitemized to reflect the Services or Alternative Services performed or provided
\nor reimbursable charges incurred, and (iv) provide reasonable detail as to the
\ncalculation of the amounts involved.<\/p>\n
(b) All invoices shall be paid within fifteen (15) days
\nafter the date of issuance, but not earlier than the 25th day of the month in
\nwhich the invoice is rendered. All payments shall be made by wire transfer to a
\nbank designated in writing by such Party. Payment of invoices shall not relieve
\nthe paying Party from any responsibilities or obligations it has under this
\nAgreement, nor shall such payment constitute a waiver of any claims arising
\nhereunder.<\/p>\n
(c) To the extent that, for any billing period, Generator
\nis obligated to pay to Pepco amounts due and calculated pursuant to this Section
\n13.1, Pepco may use such amounts as a set-off against any amounts owed by Pepco
\nto Generator.<\/p>\n
516<\/p>\n
13.2 Billing Disputes. In the event of a billing dispute between
\nthe Parties, (i) each Party shall continue to perform its obligations in
\naccordance with the terms of this Agreement subject to the other Party’s rights
\nhereunder, and (ii) the Party required to make payments hereunder shall pay to
\nthe other Party all invoiced amounts when due, net of any set-offs permitted
\nunder Section 13.1(d), that are not in dispute. Payment of invoices by either
\nParty shall not relieve the paying Party from any responsibilities or
\nobligations it has under this Agreement; nor shall it constitute a waiver of any
\nclaims arising hereunder.<\/p>\n
13.3 Interest on Unpaid Balances. Interest on any unpaid amounts
\nshall be calculated in accordance with the methodology specified for interest on
\nrefunds in FERC regulations at 18 C.F.R. Section 35.19a(a)(2)(iii). Interest on
\ndelinquent amounts shall be calculated from the due date of the bill to the date
\nof payment. When payments are made by mail, bills shall be considered as having
\nbeen paid on the date of receipt by the other Party.<\/p>\n
ARTICLE 14
\n CONFIDENTIALITY<\/p>\n
14.1 Confidentiality Obligations of Pepco. Each Party shall hold in
\nconfidence, unless compelled to disclose by judicial or administrative process
\nor other provisions of law, all documents and information furnished by one Party
\nto the other Party in connection with this Agreement marked “Confidential” or
\n“Proprietary.” Except to the extent that such information or documents are (i)
\ngenerally available to the public other than as a result of a disclosure by a
\nreceiving Party in breach of this Agreement, (ii) available to the receiving
\nParty on a non-confidential basis prior to disclosure by the other Party , or
\n(iii) available to the receiving Party on a non-confidential basis from a source
\nother than the other Party, provided that such source is not known, and by
\nreasonable effort could not be known, by the receiving Party to be bound by a
\nconfidentiality agreement with the other Party or otherwise prohibited from
\ntransmitting the information to the receiving Party by a contractual, legal or
\nfiduciary obligation, the receiving Party shall not release or disclose such
\ninformation to any other person, except to its employees, representatives or
\nagents on a need-to-know basis, in connection with this Agreement who has not
\nfirst been advised of the confidentiality provisions of this Section 14.1 and
\nhas agreed in writing to comply with such provisions. In no event shall such
\ninformation be disclosed in violation of the requirements of FERC Orders 889 and
\n889-A, and any successor thereto. The Party receiving confidential information
\nfrom the<\/p>\n
517<\/p>\n
other Party shall promptly notify the other Party if it receives notice or
\notherwise concludes that the production of any information subject to this
\nSection 14.1 is being sought under any provision of law and the receiving Party
\nshall use reasonable efforts in cooperation with the other Party to seek
\nconfidential treatment for such confidential information provided thereto.<\/p>\n
14.2 Confidentiality of Audits. The independent auditor performing
\nany audit, as referred to in Article 20, shall be subject to a confidentiality
\nagreement between the auditor and the Party being audited. Such audit
\ninformation shall be treated as confidential except to the extent that its
\ndisclosure is required by regulatory or judicial order, for reliability purposes
\npursuant to PJM requirements and pursuant to the FERC’s rules and regulations.
\nExcept as provided herein, neither Party will disclose the audit information to
\nany third party, without the other Party’s prior written consent. Audit
\ninformation in the hands of the Party not being audited shall be subject to all
\nprovisions of Article 20.<\/p>\n
14.3 Remedies. The Parties agree that monetary damages would be
\ninadequate to compensate a Party for the other Party’s breach of its obligations
\nunder Sections 14.1 and 14.2. Each Party accordingly agrees, subject to Section
\n8.2, that the other Party shall be entitled to equitable relief, by way of
\ninjunction or otherwise, if the first Party breaches or threatens to breach its
\nobligations under Sections 14.1 or 14.2 of this Agreement, as applicable, which
\nequitable relief shall be granted without bond or proof of damages, and the
\nreceiving Party shall not plead in defense that there would be an adequate
\nremedy at law.<\/p>\n
ARTICLE 15
\n DISPUTE RESOLUTION<\/p>\n
15.1 Disputes. A Party with a claim or dispute under this Agreement
\nshall submit to the Operating Committee a notification of such claim or dispute
\nwithin sixty (60) days after the circumstances that gave rise to the claim or
\nthe question or issue in dispute. The notification shall be in writing and shall
\ninclude a concise statement of the claim or the issue or question in dispute, a
\nstatement of the relevant facts and documentation to support the claim. In the
\nevent the Operating Committee is unable, in good faith, to resolve their
\ndisagreement in a manner satisfactory to both Parties within thirty (30) days
\nafter receipt by the Operating Committee of a notification specifying the claim,
\nissue or question in dispute, the Parties<\/p>\n
518<\/p>\n
shall refer the dispute to their respective senior management. If, after using
\ntheir good faith best efforts to resolve the dispute, senior management cannot
\nresolve the dispute within thirty (30) days, the Parties shall utilize the
\narbitration procedures set forth below in Section 15.2 to resolve a dispute,
\nprovided that nothing herein or therein shall prohibit a Party from at any time
\nrequesting from a court of competent jurisdiction a temporary restraining order,
\npreliminary injunction, or other similar form of equitable relief to enforce
\nperformance of the provisions of this Agreement.<\/p>\n
15.2 Arbitration.<\/p>\n
(a) Unless the Parties otherwise mutually agree in
\nwriting to another form of dispute resolution such as dispute resolution under
\nthe PJM Agreement or the MAAC agreement, any arbitration initiated under this
\nAgreement shall be conducted before a single neutral arbitrator appointed by the
\nParties within thirty (30) days of receipt by respondent of the demand for
\narbitration. If the Parties are unable to agree on an arbitrator, such
\narbitrator shall be appointed by the American Arbitration Association. Unless
\nthe Parties agree otherwise, the arbitrator shall be an attorney or retired
\njudge with at least fifteen (15) years of experience, and shall not have any
\ncurrent or past substantial business or financial relationships with any Party
\nto the arbitration. If possible, the arbitrator shall have experience in the
\nelectric utility industry. Unless otherwise agreed, the arbitration shall be
\nconducted in accordance with the American Arbitration Association’s Commercial
\nArbitration Rules, then in effect. Any arbitration proceedings, decision or
\naward rendered hereunder and the validity, effect and interpretation of this
\narbitration agreement shall be governed by the Federal Arbitration Act of the
\nUnited States, 9 U.S.C. Sections 1 et seq. The location of any arbitration
\nhereunder shall be in the District of Columbia.<\/p>\n
(b) The arbitration shall, if possible, be concluded not
\nlater than six (6) months after the date that it is initiated. The arbitrator
\nshall be authorized only to interpret and apply the provisions of this Agreement
\nor any related agreements entered into under this Agreement and shall have no
\npower to modify or change any of the above in any manner. The arbitrator shall
\nhave no authority to award punitive or multiple damages or any damages
\ninconsistent with this Agreement. The arbitrator shall, within thirty (30) days
\nof the conclusion of the hearing, unless such time is extended by agreement of
\nthe Parties, notify the Parties in writing of his or her decision, stating his
\nor her reasons for such decision and separately<\/p>\n
519<\/p>\n
listing his or her findings of fact and conclusions of law. The decision of the
\narbitrator rendered in such a proceeding shall be final and binding on the
\nParties. Judgment on the award may be entered upon it in any court having
\njurisdiction.<\/p>\n
(c) Nothing in this Agreement shall preclude, or be
\nconstrued to preclude, any Party from filing a petition or complaint with FERC
\nwith respect to any arbitrable claim over which FERC has jurisdiction. In such
\ncase, the other Party may request FERC to reject or to waive jurisdiction. If
\nFERC rejects or waives jurisdiction with respect to all or a portion of the
\nclaim, the portion of the claim not so accepted by FERC shall be resolved
\nthrough arbitration, as provided in this Agreement. To the extent that FERC
\nasserts or accepts jurisdiction over the claim, the decision, finding of fact or
\norder of FERC shall be final and binding, subject to judicial review under the
\nFederal Power Act, and any arbitration proceedings that may have commenced with
\nrespect to the claim prior to the assertion or acceptance of jurisdiction by
\nFERC shall be terminated.<\/p>\n
ARTICLE 16
\n REPRESENTATIONS<\/p>\n
16.1 Representations of Pepco. Pepco hereby represents and warrants
\nto Generator as follows:<\/p>\n
(a) Incorporation. Pepco is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the District of Columbia
\nand the Commonwealth of Virginia, and has all requisite corporate power and
\nauthority to own, lease and operate its material assets and properties and to
\ncarry on its business as now being conducted.<\/p>\n
(b) Authority. Pepco has all necessary corporate power
\nand authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by Pepco of this
\nAgreement and the consummation by Pepco of the transactions contemplated
\nhereunder have been duly and validly authorized by the Board of Directors of
\nPepco or by a committee thereof to whom such authority has been delegated and no
\nother corporate proceedings on the part of Pepco are necessary to authorize this
\nAgreement or the transactions contemplated hereby. This Agreement has been duly
\nand validly executed and delivered by Pepco and, assuming that this Agreement
\nconstitutes a valid and binding agreement of Generator, constitutes<\/p>\n
520<\/p>\n
a valid and binding agreement of Pepco, enforceable by Pepco in accordance with
\nits terms.<\/p>\n
(c) Consents and Approvals; No Violation.<\/p>\n
(i) Neither the execution and delivery of this Agreement
\nby Pepco nor performance by Pepco of its obligations hereunder will (A) conflict
\nwith or result in any breach of any provision of the Certificate of
\nIncorporation or By-laws of Pepco, (B) result in a default (or give rise to any
\nright of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Pepco or any of its
\nsubsidiaries is a party or by which any of their respective assets may be bound
\nor (C) violate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to Pepco, or any of its assets, except in the case of clauses (B) and
\n(C) for such failures to obtain a necessary consent, defaults and violations
\nwhich would not, individually or in the aggregate, have a material adverse
\neffect on the ability of Pepco to discharge its obligations under this Agreement
\n(a “Pepco Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any governmental authority
\nis necessary for performance by Pepco of its obligations hereunder, other than
\nsuch declarations, filings, registrations, notices, authorizations, consents or
\napprovals which, if not obtained or made would not, individually or in the
\naggregate, have a Pepco Material Adverse Effect.<\/p>\n
16.2 Representations of Generator. Generator hereby represents and
\nwarrants to Pepco as follows:<\/p>\n
(a) Incorporation. Generator is a [corporation] duly
\n[incorporated], validly existing and in good standing under the laws of the
\nState of __________, and has all requisite [corporate] power and authority to
\nown, lease and operate its material assets and properties and to carry on its
\nbusiness as now being conducted.<\/p>\n
(b) Authority. Generator has all necessary [corporate]
\npower and authority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery by the Generator of
\nthis Agreement and the consummation by Generator of the<\/p>\n
521<\/p>\n
transactions contemplated hereby have been duly and validly authorized the
\n[Board of Directors] of Generator or by a committee thereof to whom such
\nauthority has been delegated and no other [corporate] proceedings on the part of
\nGenerator are necessary to authorize this Agreement or the transactions
\ncontemplated hereby. This Agreement has been duly and validly executed and
\ndelivered by Generator and, assuming that this Agreement constitutes a valid and
\nbinding agreement of Pepco, constitutes a valid and binding agreement of
\nGenerator, enforceable against Generator in accordance with its terms.<\/p>\n
(c) Consents and Approvals.<\/p>\n
(i) Neither the execution and delivery of this Agreement
\nby Generator nor performance by Generator of its obligations hereunder will (A)
\nconflict with or result in any breach of any provision of the [Certificate of
\nIncorporation or By-laws] of Generator, (B) result in a default (or give rise to
\nany right of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of any note, bond, mortgage, indenture, license,
\nagreement, lease or other instrument or obligation to which Generator or any of
\nits subsidiaries is a party or by which any of their respective assets may be
\nbound or (C) violate any order, writ, injunction, decree, statute, rule or
\nregulation applicable to Generator, or any of its assets, except in the case of
\nclauses (B) and (C) for such failures to obtain a necessary consent, defaults
\nand violations which would not, individually or in the aggregate, have a
\nmaterial adverse effect on the ability of Generator to discharge its obligations
\nunder this Agreement (a “Generator Material Adverse Effect”).<\/p>\n
(ii) No declaration, filing or registration with, or
\nnotice to, or authorization, consent or approval of any Governmental Authority
\nis necessary for performance by Generator of its obligations hereunder, other
\nthan such declarations, filings, registrations, notices, authorizations,
\nconsents or approvals which, if not obtained or made would not, individually or
\nin the aggregate, have a Generator Material Adverse Effect.<\/p>\n
ARTICLE 17
\n ASSIGNMENT\/CHANGE IN CORPORATE IDENTITY<\/p>\n
17.1 Generally. Except as otherwise set forth in this Article 17,
\nneither this Agreement nor any of the rights, interests, or obligations<\/p>\n
522<\/p>\n
hereunder shall be assigned by either Party hereto, without the prior written
\nconsent of the other Party, which consent shall not be unreasonably withheld or
\ndelayed.<\/p>\n
17.2 Pepco’s Assignment Rights. Subject to Section 17.5 below, upon
\nten (10) days prior written notice to Generator, Pepco may assign this
\nAgreement, and Pepco’s rights, interests and obligations hereunder, to an
\nAffiliate of Pepco that assumes Pepco’s obligations to provide Services to the
\nService Load.<\/p>\n
17.3 Generator’s Assignment Rights. Subject to Section 17.5 below,
\nGenerator may assign, transfer, pledge or otherwise dispose of its rights and
\ninterests hereunder to a trustee, lending institution, or other Person for the
\npurposes of financing or refinancing the Auctioned Assets, including upon or
\npursuant to the exercise of remedies under such financing or refinancing, or by
\nway of assignments, transfers, conveyances of dispositions in lieu thereof;
\nprovided, however, that no such assignment in accordance with this Section 17.3
\nshall relieve or in any way discharge Generator from the performance of its
\nduties and obligations under this Agreement. Pepco agrees to execute and
\ndeliver, at Generator’s expense, such documents as may be reasonably necessary
\nto accomplish any such assignment, transfer, conveyance, pledge or disposition
\nof rights hereunder for purposes of the financing or refinancing of the
\nFacility, so long as Pepco’s rights under this Agreement are not thereby
\naltered, amended, diminished or otherwise impaired.<\/p>\n
17.4 Mergers or Consolidations. Subject to Section 17.5 below,
\neither Party may assign this Agreement to a successor to all or substantially
\nall of the assets of such Party by way of merger, consolidation, sale or
\notherwise, provided such successor assumes in writing and becomes liable for all
\nof such Party’s duties and obligations hereunder.<\/p>\n
17.5 Limitations<\/p>\n
(a) No assignment, transfer, conveyance, pledge or
\ndisposition of rights, interests, duties or obligations under this Agreement by
\na Party shall relieve that Party from liability and financial responsibility for
\nthe performance thereof after any such transfer, assignment, conveyance, pledge
\nor disposition unless and until (i) the transferee or assignee shall agree in
\nwriting to assume the obligations and duties of that Party under this Agreement
\nand to impose such obligations on subsequent permitted transferees and assignees
\nand (ii) the non-assigning<\/p>\n
523<\/p>\n
Party has consented in writing to such assumption and to a release of the
\nassigning Party from such liability, such consent not to be unreasonably
\nwithheld or delayed.<\/p>\n
(b) If Generator terminates its existence as a
\n[corporate] entity by merger, acquisition, sale, consolidation or otherwise, or
\nif all or substantially all of Generator’s assets are transferred to another
\nperson or business entity without complying with this Article 17, Pepco shall
\nhave the right, enforceable in a court of competent jurisdiction, to enjoin
\nGenerator’s successor from using its assets in any manner that does not comply
\nwith the requirements of this Agreement or that impedes Pepco’s ability to carry
\non its ongoing business operations.<\/p>\n
17.6 Successors. This Agreement and all of the provisions hereof
\nare binding upon, and inure to the benefit of, the Parties and their respective
\nsuccessors and permitted assigns.<\/p>\n
ARTICLE 18
\n NOTICES<\/p>\n
Except as otherwise expressly set forth in this Agreement, all notices
\nand other communications hereunder shall be in writing and shall be deemed given
\n(as of the time of delivery or, in the case of a telecopied communication, of
\nconfirmation) if delivered personally, telecopied (which is confirmed) or sent
\nby overnight courier (providing proof of delivery) to the Parties at the
\nfollowing addresses (or at such other address for a Party as shall be specified
\nby like notice):<\/p>\n
if to Pepco, to:<\/p>\n
Potomac Electric Power Company
\n 1900 Pennsylvania Avenue, N.W.
\n Washington, D.C. 20068
\n Telecopier: (202) 261-7889
\n Attention: William T. Torgerson
\n General Counsel<\/p>\n
524<\/p>\n
if to Generator, to:<\/p>\n
c\/o Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338-4780
\n Telecopier: (770) 821-6575
\n Attention:<\/p>\n
ARTICLE 19
\n AMENDMENTS<\/p>\n
19.1 Amendments. Except as provided in Section 19.2, this Agreement
\nshall not be amended, modified, or supplemented unless mutually agreed to by the
\nParties in writing. Except as provided in Section 19.2(b) below, the rates,
\nterms and conditions contained in this Agreement are not subject to change under
\nSections 205 or 206 of the Federal Power Act absent the mutual written agreement
\nof the Parties. It is the intent of this Section 19.1 that, except as provided
\nin Section 19.2(b) below, the rates, terms and conditions of this Agreement
\nshall not be subject to change except by mutual written agreement by the
\nParties.<\/p>\n
19.2 PJM Agreement Modifications<\/p>\n
(a) If the PJM Agreements are amended or modified so that
\nany schedule or section references herein to such agreements is changed, such
\nschedule or section references herein shall be deemed to automatically (and
\nwithout any further action by the Parties) refer to the new or successor
\nschedule or section in the PJM Agreements which replaces that originally
\nreferred to in this Agreement.<\/p>\n
(b) If the applicable provisions of the PJM Agreements
\nreferenced herein, or any other PJM rules relating to the implementation of this
\nAgreement, are changed materially from those in effect on May 31, 2000, the
\nOperating Committee shall cooperate to make conforming changes to this Agreement
\nto fulfill the purposes of this Agreement; provided that no such changes shall
\nalter the economic benefits of this Agreement between the Parties. If the
\nOperating Committee fails to agree on such changes within 15 days, Pepco may
\nunilaterally make conforming changes to this Agreement to fulfill the purposes
\nof this Agreement, and shall file such changes with the<\/p>\n
525<\/p>\n
FERC on behalf of both Parties; provided that nothing herein shall prejudice the
\nGenerator’s rights to protest such change.<\/p>\n
ARTICLE 20
\n AUDITS<\/p>\n
The Parties shall have the right, during normal business hours, to
\naudit each other’s accounts and records pertaining to transactions under this
\nAgreement, upon twenty (20) days prior written notice, at the offices where such
\naccounts and records are maintained. Any such audit of a Party’s accounts and
\nrecords will be at the expense of the auditing Party, shall not be made more
\nfrequently than once in any twelve (12) month period, and no such audit may be
\nmade with respect to accounts and records relating to periods more than
\ntwenty-four (24) months prior to the date of the audit notice. The Party being
\naudited will be entitled to review the audit report and any supporting
\nmaterials. The Party conducting the audit shall maintain the confidentiality of
\nall information obtained during the audit in compliance with Section 14.2 of
\nthis Agreement. To the extent that audited information includes confidential
\ninformation, the auditing Party shall designate an independent auditor at its
\nexpense to perform such audit.<\/p>\n
ARTICLE 21
\n MISCELLANEOUS PROVISIONS<\/p>\n
21.1 Waiver. Except as otherwise provided in this Agreement, any
\nfailure of a Party to comply with any obligation, covenant, agreement, or
\ncondition herein may be waived by the Party entitled to the benefits thereof
\nonly by a written instrument signed by the Party granting such waiver, but such
\nwaiver or failure to insist upon strict compliance with such obligation,
\ncovenant, agreement, or condition shall not operate as a waiver of, or estoppel
\nwith respect to, any subsequent or other failure.<\/p>\n
21.2 No Third Party Beneficiaries. Nothing in this Agreement is
\nintended to confer upon any other person except the Parties any rights or
\nremedies hereunder or shall create any third party beneficiary rights in any
\nperson. No provision of this Agreement shall create any rights in any such
\npersons in respect of any benefits that may be provided, directly or indirectly,
\nunder any employee benefit plan or arrangement except as expressly provided for
\nthereunder.<\/p>\n
526<\/p>\n
21.3 Governing Law This Agreement shall be governed by and
\nconstrued in accordance with the laws of the State of Maryland (regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaw).<\/p>\n
21.4 Counterparts. This Agreement may be executed in two or more
\ncounterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
21.5 Interpretation. When a reference is made in this Agreement to
\nan article, section, schedule or exhibit, such reference shall be to an article
\nor section of, or schedule or exhibit to, this Agreement unless otherwise
\nindicated. The table of contents and headings contained in this Agreement are
\nfor reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement. Whenever the words “include”, “includes” or
\n“including” are used in this Agreement, they shall be deemed to be followed by
\nthe words “without limitation” or equivalent words. The words “hereof”, “herein”
\nand “hereunder” and words of similar import when used in this Agreement shall
\nrefer to this Agreement as a whole and not to any particular provision of this
\nAgreement. The definitions contained in this Agreement are applicable to the
\nsingular as well as the plural forms of such terms and to the masculine as well
\nas to the feminine and neuter genders of such term. Unless otherwise expressly
\nstated otherwise herein, the word “day” shall mean any calendar day including
\nweekends and holidays. Any agreement, instrument, statute, regulation, rule or
\norder defined or referred to herein or in any agreement or instrument that is
\nreferred to herein means such agreement, instrument, statute, regulation, rule
\nor order as from time to time amended, modified or supplemented, including (in
\nthe case of agreements or instruments) by waiver or consent and (in the case of
\nstatutes, regulations, rules or orders) by succession of comparable successor
\nstatutes, regulations, rules or orders and references to all attachments thereto
\nand instruments incorporated therein. References to a person are also to its
\npermitted successors and assigns. Each Party acknowledges that it has been
\nrepresented by counsel in connection with the review and execution of this
\nAgreement, and, accordingly, there shall be no presumption that this Agreement
\nor any provision hereof be construed against the Party that drafted this
\nAgreement.<\/p>\n
21.6 Jurisdiction and Enforcement. Each of the Parties irrevocably
\nsubmits to the exclusive jurisdiction of the federal and state courts of the
\nState of Maryland for the purposes of any suit, action or other proceeding
\narising out of this Agreement or any transaction contemplated<\/p>\n
527<\/p>\n
hereby. Each of the Parties agrees to commence any action, suit or proceeding
\nrelating hereto either in the federal courts of the State of Maryland or, if
\nsuch suit, action or proceeding may not be brought in such court for
\njurisdictional reasons, in the state courts of the State of Maryland. Each of
\nthe Parties further agrees that service of process, summons, notice or document
\nby hand delivery or U.S. registered mail at the address specified for such Party
\nin Article 18 (or such other address specified by such Party from time to time
\npursuant to Article 18) shall be effective service of process for any action,
\nsuit or proceeding brought against such Party in any such court. Each of the
\nParties irrevocably and unconditionally waives any objection to the laying of
\nvenue of any action, suit or proceeding arising out of this Agreement or the
\ntransactions contemplated hereby in the federal and state courts of the State of
\nMaryland and hereby further irrevocably and unconditionally waives and agrees
\nnot to plead or claim in any such court that any such action, suit or proceeding
\nbrought in any such court has been brought in an inconvenient forum.<\/p>\n
21.7 Entire Agreement. This Agreement, the Asset Sale Agreement,
\nthe Confidentiality Agreement and the Ancillary Agreements including the
\nexhibits, schedules, documents, certificates and instruments referred to herein
\nor therein and other contracts, agreements and instruments contemplated hereby
\nor thereby, embody the entire agreement and understanding of the Parties in
\nrespect of the transactions contemplated by this Agreement. There are no
\nrestrictions, promises, representations, warranties, covenants or undertakings
\nother than those expressly set forth or referred to herein or therein. This
\nAgreement, the Asset Sale Agreement and the Ancillary Agreements supersede all
\nprior agreements and understandings between the Parties with respect to the
\ntransactions contemplated by this Agreement other than the Confidentiality
\nAgreement.<\/p>\n
21.8 Severability. If any term or other provision of this Agreement
\nis invalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the Parties shall
\nnegotiate in good faith to modify this Agreement so as to effect the original
\nintent of the Parties as closely as possible to the fullest extent permitted by
\napplicable law in an acceptable manner to the end that the transactions
\ncontemplated hereby are fulfilled to the extent possible.<\/p>\n
528<\/p>\n
21.9 Further Assurances. The Parties hereto agree to execute and
\ndeliver promptly, at the expense of the Party requesting such action, any and
\nall other and further instruments, documents and information which may be
\nreasonably requested in order to effectuate the transactions contemplated
\nhereby. Each Party agrees to cooperate with, assist and accommodate all
\nreasonable requests made by the other Party in respect of any regulatory
\napproval necessary for, or any regulatory proceeding relating to, the execution,
\ndelivery or performance of this Agreement. Each Party further agrees to comply
\nin all material respects with all laws of governmental authorities relating to
\nthis Agreement and the consummation of the transactions contemplated hereby.<\/p>\n
21.10 Independent Contractor Status. Nothing in this Agreement shall
\nbe construed as creating any relationship between Pepco and Generator other than
\nthat of independent contractors.<\/p>\n
21.11 Conflicts. Except with respect to the amendments,
\nindemnification, liability, default and remedies provisions contained herein or
\nas otherwise expressly provided herein, in the event of any conflict or
\ninconsistency between the terms of this Agreement and the terms of the Asset
\nSale Agreement, the terms of the Asset Sale Agreement shall prevail.<\/p>\n
529<\/p>\n
IN WITNESS WHEREOF, Pepco and Generator have caused this Transition
\nPower Agreement (Maryland) to be signed by their respective duly authorized
\nofficers as of the date first above written.<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n —————————–
\n Name:
\n Title:<\/p>\n
[GENERATOR]<\/p>\n
By:
\n —————————–
\n Name:
\n Title:<\/p>\n
530<\/p>\n
SCHEDULE 1
\n DEFINITIONS<\/p>\n
Part A. Capitalized terms not defined in the body of the Agreement
\nshall have the meaning set forth in Part A of this Schedule 1. (Part B of this
\nSchedule 1 sets forth capitalized terms defined within the Agreement.)<\/p>\n
1. ” Affiliate” has the meaning set forth in Rule 12b-2 of the
\nGeneral Rules and Regulations under the Securities Exchange Act of 1934.<\/p>\n
2. “Auctioned Assets” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
3. “Capacity Credits” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
4. “Capacity Resources” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
5. “Contract Year 1” means the period between the Effective Date
\nthrough and including December 31, 2001.<\/p>\n
6. “Contract Year 2” means the period between January 1, 2002
\nthrough and including December 31, 2002.<\/p>\n
7. “Contract Year 3” means the period between January 1, 2003
\nthrough and including December 31, 2003.<\/p>\n
8. “Contract Year 4” means the period between January 1, 2004
\nthrough and including June 30, 2004.<\/p>\n
9. “Closing” has the meaning set forth in the Asset Sale
\nAgreement.<\/p>\n
10. “Confidentiality Agreement” has the meaning set forth in the
\nAsset Sale Agreement.<\/p>\n
11. “FERC” means the Federal Energy Regulatory Commission or its
\nsuccessors.<\/p>\n
12. “Fixed Transmission Rights” has the meaning set forth in the
\nPJM Operating Agreement.<\/p>\n
531<\/p>\n
13. “Full Energy Requirements” means the full electric energy
\nrequirements of the Service Load in any hour, measured in megawatt hours at the
\nDelivery Points.<\/p>\n
14. “Generator” has the meaning set forth in the preamble of this
\nAgreement and shall include its permitted successors and assigns.<\/p>\n
15. “MDPSC” means the Maryland Public Services Commission or its
\nsuccessor.<\/p>\n
16. “Metered Energy Requirements” means the full electric energy
\nrequirements of the Service Load in any hour, measured in megawatt hours at the
\nretail (customer revenue meter) level. For customers without, interval metering,
\nPepco will use customer or retail class profiles in accordance with the MDPSC
\nregulations to distribute periodic metered energy usage to obtain hourly
\ncustomer energy usage. When Pepco curtailable load programs are operated,
\ncustomer loads which are curtailed will be increased by Pepco to reflect the
\nhourly energy usage which would have occurred if curtailments had not taken
\nplace.<\/p>\n
17. “Month” means a calendar month.<\/p>\n
18. “Network Customer” has the meaning set forth in the PJM
\nTariff.<\/p>\n
19. “Network Load” has the meaning set forth in the PJM Tariff.<\/p>\n
20. “Optional Energy” means the Optional Energy Percent, as
\nelected by Pepco through the exercise of its Call Options, of Pepco’s Full
\nEnergy Requirements, including the Renewable Energy Percent.<\/p>\n
21. “Pepco” has the meaning set forth in the preamble of this
\nAgreement and shall include its permitted successors or assigns.<\/p>\n
22. “PJM” means the Pennsylvania New Jersey-Maryland
\ninterconnected power pool operated under the PJM Operating Agreement and any
\nsuccessor thereto including any regional transmission organization, independent
\nsystem operator, transco, or any other independent system administrator that
\npossesses operational control or planning control over Pepco’s transmission
\nsystem.<\/p>\n
23. “PJM Agreements” means the PJM Operating Agreement, PJM
\nReliability Agreement, and PJM Tariff.<\/p>\n
24. “PJM Control Area” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
532<\/p>\n
25. “PJM Operating Agreement” means the Amended and Restated
\nOperating Agreement of the PJM Interconnection LLC dated as of June 2, 1997.<\/p>\n
26. “PJM Interconnection LLC” means the independent system
\noperator of the PJM Control Area pursuant to the PJM Operating Agreement and the
\nPJM Tariff.<\/p>\n
27. “PJM Reliability Agreement” means the PJM Reliability
\nAssurance Agreement dated June 2, 1997, establishing obligations, standards and
\nprocedures for maintaining the reliable operation of the PJM Control Area.<\/p>\n
28. “PJM System Operator” means the PJM Interconnection LLC energy
\ncontrol center staff responsible for central dispatch as provided in the PJM
\nAgreement.<\/p>\n
29. “PJM Tariff” means the PJM Open Access Transmission Tariff
\nproviding transmission service within the PJM Control Area.<\/p>\n
30. “Planning Period” has the meaning set forth in the PJM
\nReliability Agreement.<\/p>\n
31. “Renewable Energy Resources” means renewable energy resource
\nas defined in MD CODE, PUBLIC UTILITY COMPANIES Section 1.01(z).<\/p>\n
32. “Renewable Energy Percent” means electricity from Renewable
\nEnergy Resources which is equal to 0.997 percent of the Required Energy or
\nOptional Energy, as applicable.<\/p>\n
33. “Required Energy” means the Required Energy Percent of Pepco’s
\nFull Energy Requirements, including the Renewable Energy Percent.<\/p>\n
34. “Service Load” means (i) all of Pepco’s default service retail
\nelectric energy customers located in Pepco’s service territory, as such
\nterritory exists on the Effective Date, in the State of Maryland and (ii)
\nqualifying facilities to which Pepco is obligated to sell energy pursuant to the
\nrates and terms set forth in Pepco’s qualifying facilities tariff on file with
\nthe Maryland Public Service Commission which is currently designated as
\nMD-CG-SPP.<\/p>\n
35. “Summer Month” means each Month during the period of May 1
\nthrough September 30.<\/p>\n
533<\/p>\n
36. “Winter Month” means each Month during the period of October 1
\nthrough April 30.<\/p>\n
Part B. The following terms have the meaning specified in the section
\nof this Agreement set forth opposite to such term:<\/p>\n
\n\nTerm Agreement Reference<\/p>\n
\nAgreement Preamble
\nAlternative Services Section 8.1
\nAncillary Services Article 4<\/p>\nAncillary Services Requirements Article 4
\nAsset Sale Agreement First Recital
\nCall Options Section 5.2(a)
\nCapacity Resources Plan Section 3.2(a)
\nCapacity Resources Requirements Section 3.1(a)
\nDelivery Points Section 5.3
\nEffective Date Section 2.1
\nEvent of Default Section 11.1
\nForce Majeure Section 9.2
\nGenerator Material Adverse Effect Section 16.2(c)(i)
\nOperating Committee Article 12
\nOptional Energy Percent Section 5.2(a)
\nPepco Material Adverse Effect Section 16.1(c)(i)
\nParty or Parties Preamble
\nPPAs First Recital<\/p>\n
Required Energy Percent Section 5.1
\nServices Section 8.1
\n<\/c><\/s><\/caption>\n<\/table>\n
534<\/p>\n
EXHIBIT J<\/p>\n
AFTER RECORDING, RETURN TO: PARCEL ID
\n——————————— ——————–
\n——————————— ——————–
\n———————————
\n STREET ADDRESS:<\/p>\n
——————–
\n ——————–<\/p>\n
SPECIAL WARRANTY DEED<\/p>\n
THIS SPECIAL WARRANTY DEED, is made as of ______________, 2000 and is
\nby and between POTOMAC ELECTRIC POWER COMPANY, a District of Columbia and
\nVirginia corporation (the “Grantor”) and __________________________________ (the
\n“Grantee”).<\/p>\n
WITNESSETH:<\/p>\n
THAT, for and in consideration of the sum of Ten Dollars ($10.00), cash
\nin hand paid, and other good and valuable consideration, the receipt and
\nsufficiency of which is hereby acknowledged, the Grantor does hereby grant,
\nbargain, sell and convey, with Special Warranty of Title, unto the Grantee,
\nthose certain parcels of land situate in the County of ______________, State of
\nMaryland (the “Real Estate”), and being more particularly described in Exhibit A
\nattached hereto and incorporated herein by reference (the “Property”), together
\nwith all improvements located thereon and all appurtenances thereunto belonging.<\/p>\n
This conveyance is made subject to all recorded covenants,
\nrestrictions, easements, reservations, agreements and rights-of-way applicable
\nto the Real Estate or any part thereof.<\/p>\n
TO HAVE AND TO HOLD the Real Estate, together with all rights,
\nprivileges, and advantages thereunto belonging or appertaining to the Grantee,
\nits successors and assigns, forever.<\/p>\n
535<\/p>\n
IN WITNESS WHEREOF, the Grantor has caused this Special Warranty Deed
\nto be executed as of the date first above written.<\/p>\n
WITNESS: GRANTOR:<\/p>\n
POTOMAC ELECTRIC POWER COMPANY<\/p>\n
By:
\n———————— ————————
\n Name:
\n ————————
\n Title:
\n ————————<\/p>\n
State of )
\n ———————
\n )
\nCounty of )
\n —————-<\/p>\n
On this ___ day of ______________, 2000, before me, the undersigned
\nNotary Public, personally appeared ___________________ who acknowledged
\nhimself\/herself to be the _____________ of Potomac Electric Power Company, and
\nthat he\/she, as ____________ of such corporation, being authorized so to do,
\nexecuted the foregoing Instrument for the purposes therein contained, by signing
\nhis\/her name, as _____________ of Potomac Electric Power Company.<\/p>\n
IN WITNESS WHEREOF, I hereunto set my hand and official seal.<\/p>\n
——————————
\n Notary Public<\/p>\n
My commission expires:
\n ——————<\/p>\n
536<\/p>\n
MARYLAND CERTIFICATION<\/p>\n
This is to certify that the foregoing instrument was prepared by or
\nunder the supervision of the undersigned, an attorney duly admitted to practice
\nbefore the Court of Appeals of the State of Maryland.<\/p>\n
_________________________________<\/p>\n
_______________, Attorney at Law<\/p>\n
537<\/p>\n
EXHIBIT A<\/p>\n
All that certain land situate in ____________ County, Maryland, and more
\nparticularly described as follows:<\/p>\n
538<\/p>\n
EXHIBIT K<\/p>\n
OPINION OF COUNSEL TO SELLER<\/p>\n
1. Seller is a corporation validly existing and in good standing
\n under the laws of the District of Columbia and the
\n Commonwealth of Virginia. Seller has all necessary corporate
\n power and authority to execute and deliver the Agreement and
\n each of the Ancillary Agreements to which Seller is a party
\n and to consummate the transactions contemplated thereby; and
\n the execution and delivery of the Agreement and each of the
\n Ancillary Agreements to which Seller is a party and the
\n consummation by Seller of the transactions contemplated
\n thereby have been duly and validly authorized by all necessary
\n corporate action required on the part of Seller.<\/p>\n
2. The Agreement and each of the Ancillary Agreements to which
\n Seller is a party have been duly and validly executed and
\n delivered by Seller, and assuming that the Agreement and each
\n such Ancillary Agreement constitutes a valid and binding
\n obligation of each other party thereto, subject to receipt of
\n all Required Regulatory Approvals, constitute valid and
\n binding obligations of Seller, enforceable against Seller in
\n accordance with their respective terms, except as may be
\n limited by applicable bankruptcy, insolvency, fraudulent
\n conveyance, reorganization, moratorium or other similar laws
\n affecting or relating to enforcement of creditor’s rights
\n generally and general principles of equity, including without
\n limitation, concepts of materiality, reasonableness, good
\n faith and fair dealing (regardless of whether enforcement is
\n considered in a proceeding at law or in equity). With respect
\n to the foregoing opinion, (i) insofar as provisions contained
\n in the Agreement and the Ancillary Agreements provide for
\n indemnification, exoneration or limitations of liability, the
\n enforceability thereof may be limited by public policy
\n considerations and (ii) the availability of a decree for
\n specific performance or an injunction is subject to the
\n discretion of the court requested to issue any such decree or
\n injunction.<\/p>\n
3. The execution, delivery and performance of the Agreement and
\n each Ancillary Agreement to which Seller is a party does not
\n (a) conflict with the Articles of Incorporation or Bylaws of
\n Seller, (b) to the knowledge of Seller’s counsel, constitute a
\n violation of or default under those agreements or instruments
\n set forth on a Schedule attached to the opinion and which have
\n been identified to such counsel by Seller as all the
\n agreements and instruments which are material to the business
\n or financial condition of Seller, or (c) violate any order,
\n writ, injunction, decree, statute, rule or regulation, of
\n which Seller’s counsel has knowledge, applicable to Seller or
\n the Auctioned Assets, except for such violations which<\/p>\n
539<\/p>\n
would not, individually or in the aggregate, create a Material
\n Adverse Effect.<\/p>\n
4. Except for the Seller Required Regulatory Approvals, no
\n declaration, filing or registration with, or notice to, or
\n authorization, consent or approval of any Governmental
\n Authority is necessary for the consummation by Seller of the
\n transactions contemplated by the Agreement and each of the
\n Ancillary Agreements to which Seller is a party, other than
\n such declarations, filings, registrations, notices,
\n authorizations, consents or approvals (i) which, if not
\n obtained or made, would not, individually or in the aggregate,
\n create a Material Adverse Effect or (ii) which relate to the
\n Transferable Permits.<\/p>\n
In rendering such opinion, such counsel may (A) rely in respect of
\nmatters of fact upon certificates of officers and employees of Seller and upon
\ninformation obtained from public officials, (B) assume that all documents
\nsubmitted to counsel as originals are authentic, that all copies submitted to
\ncounsel conform to the originals thereof, and that the signatures on all
\ndocuments examined by counsel are genuine, (C) state that the opinion is limited
\nto federal laws, the Virginia Stock Corporation Act and the laws of the District
\nof Columbia, (D) state that counsel expresses no opinion with respect to the
\ntitle of Seller to any of the Auctioned Assets, (E) state that counsel expresses
\nno opinion with respect to state or local taxes or tax statutes to which Seller
\nor the Auctioned Assets may be subject, (F) state that counsel expresses no
\nopinion with respect to any bulk sales, bulk transfer or similar laws to which
\nSeller or the Auctioned Assets may be subject, (G) state that counsel expresses
\nno opinion with respect to provisions of the Agreement and the Ancillary
\nAgreements relating to subject matter jurisdiction of the United States District
\nCourt for the District of Columbia or relating to the waiver of an inconvenient
\nforum, and (H) with respect to the opinions expressed in paragraphs 3 and 4
\nabove, state that counsel is relying as to such matters on the opinions of
\nin-house, local and other special counsel to Seller to the extent of the matters
\nset forth in such opinions. Certificates and opinions relied upon by Seller’s
\ncounsel shall be delivered to Buyer together with the opinion of Seller’s
\ncounsel.<\/p>\n
540<\/p>\n
EXHIBIT L<\/p>\n
OPINION OF COUNSEL TO BUYER<\/p>\n
1. Buyer is a corporation validly existing and in good standing
\n under the laws of its jurisdiction of incorporation. Buyer has
\n all necessary corporate power and authority to execute and
\n deliver the Agreement and each of the Ancillary Agreements to
\n which Buyer is a party and to consummate the transactions
\n contemplated thereby; and the execution and delivery of the
\n Agreement and each of the Ancillary Agreements to which Buyer
\n is a party and the consummation by Buyer of the transactions
\n contemplated thereby have been duly and validly authorized by
\n all necessary corporate action required on the part of Buyer.<\/p>\n
2. The Agreement and each of the Ancillary Agreements to which
\n Buyer is a party have been duly and validly executed and
\n delivered by Buyer, and assuming that the Agreement and each
\n such Ancillary Agreement constitutes a valid and binding
\n obligation of the other parties thereto, subject to receipt of
\n all Required Regulatory Approvals, constitute valid and
\n binding obligations of Buyer, enforceable against Buyer in
\n accordance with their respective terms, except as may be
\n limited by applicable bankruptcy, insolvency, fraudulent
\n conveyance, reorganization, moratorium or other similar laws
\n affecting or relating to enforcement of creditors’ rights
\n generally and general principles of equity, including without
\n limitation, concepts of materiality, reasonableness, good
\n faith and fair dealing (regardless of whether enforcement is
\n considered in a proceeding at law or in equity). With respect
\n to the foregoing opinion, (i) insofar as provisions contained
\n in the Agreement and the Ancillary Agreements provide for
\n indemnification, exoneration or limitations of liability, the
\n enforceability thereof may be limited by public policy
\n considerations and (ii) the availability of a decree for
\n specific performance or an injunction is subject to the
\n discretion of the court requested to issue any such decree or
\n injunction.<\/p>\n
3. The execution, delivery and performance of the Agreement and
\n each Ancillary Agreement to which Buyer is a party does not
\n (a) conflict with the Articles of Incorporation or Bylaws of
\n Buyer, (b) to the knowledge of Buyer’s counsel, constitute a
\n violation of or default under those agreements or instruments
\n set forth on a Schedule attached to the opinion and which have
\n been identified to such counsel by Buyer as all the agreements
\n and instruments which are material to the business or
\n financial condition of Buyer, or (c) violate any order, writ
\n injunction, decree, statute, rule or regulation, of which
\n Buyer’s counsel has knowledge, applicable to Buyer or any of
\n its assets, except for such violations which would<\/p>\n
541<\/p>\n
not, individually or in the aggregate, create a Buyer Material
\n Adverse Effect.<\/p>\n
4. Except for the Buyer Required Regulatory Approvals, no
\n declaration, filing or registration with, or notice to, or
\n authorization, consent or approval of any Governmental
\n Authority is necessary for the consummation by Buyer of the
\n transactions contemplated by the Agreement and each of the
\n Ancillary Agreements to which Buyer is a party, other than
\n such declarations, filings, registrations, notices,
\n authorizations, consents or approvals which relate to the
\n Transferable Permits.<\/p>\n
In rendering such opinion, such counsel may (A) rely in respect of
\nmatters of fact upon certificates of officers and employees of Buyer and upon
\ninformation obtained from public officials, (B) assume that all documents
\nsubmitted to counsel as originals are authentic, that all copies submitted to
\ncounsel conform to the originals thereof, and that the signatures on all
\ndocuments examined by counsel are genuine, (C) state that the opinion is limited
\nto federal laws, the [corporate statute of Buyer’s jurisdiction of
\nincorporation] and the laws of the District of Columbia, (D) state that counsel
\nexpresses no opinion with respect to provisions of the Agreement and the
\nAncillary Agreements relating to the subject matter jurisdiction of the United
\nStates District Court for the District of Columbia and relating to the waiver of
\nan inconvenient forum, and (E) with respect to the opinions expressed in
\nparagraphs 3 and 4 above, state that counsel is relying as to such matters on
\nthe opinions of in-house, local and other special counsel to Buyer to the extent
\nof the matters set forth in such opinions. Certificates and opinions relied upon
\nby Buyer’s counsel shall be delivered to Seller together with the opinion of
\nBuyer’s counsel.<\/p>\n
542<\/p>\n
EXHIBIT M<\/p>\n
OPINION OF COUNSEL TO GUARANTOR<\/p>\n
1. Guarantor is a corporation validly existing and in good
\n standing under the laws of its jurisdiction of incorporation.
\n Guarantor has all necessary corporate power and authority to
\n execute and deliver the Guarantee Agreement and to consummate
\n the transactions contemplated thereby; and the execution and
\n delivery of the Guarantee Agreement and the consummation by by
\n Guarantor of the transactions contemplated thereby have been
\n duly and validly authorized by all necessary corporate action
\n required on the part of Guarantor.<\/p>\n
2. The Guarantee Agreement has been duly and validly executed and
\n delivered by Guarantor and, assuming that the Guarantee
\n Agreement constitutes a valid and binding obligation of
\n Seller, constitutes a valid and binding obligation of
\n Guarantor, enforceable against Guarantor in accordance with
\n its terms, except as may be limited by applicable bankruptcy,
\n insolvency, fraudulent conveyance, reorganization, moratorium
\n or other similar laws affecting or relating to enforcement of
\n creditors’ rights generally and general principles of equity,
\n including without limitation, concepts of materiality,
\n reasonableness, good faith and fair dealing (regardless of
\n whether enforcement is considered in a proceeding at law or in
\n equity). With respect to the foregoing opinion, the
\n availability of a decree for specific performance or an
\n injunction is subject to the discretion of the court requested
\n to issue any such decree or injunction.<\/p>\n
3. The execution, delivery and performance of the Guarantee
\n Agreement does not (a) conflict with the Articles of
\n Incorporation or Bylaws of Guarantor, (b) to the knowledge of
\n Guarantor’s counsel, constitute a violation of or default
\n under those agreements or instruments set forth on a Schedule
\n attached to the opinion and which have been identified to such
\n counsel by Guarantor as all the agreements and instruments
\n which are material to the business or financial condition of
\n Guarantor, or (c) violate any order, writ, injunction, decree,
\n statute, rule or regulation, of which Guarantor’s counsel has
\n knowledge, applicable to Guarantor or the Auctioned Assets,
\n except for such violations which would not, individually or in
\n the aggregate, have a material adverse effect on the ability
\n of Guarantor to consummate the transactions by, and discharge
\n its obligations under, the Guarantee Agreement.<\/p>\n
4. No declaration, filing or registration with, or notice to, or
\n authorization, consent or approval of any Governmental
\n Authority<\/p>\n
543<\/p>\n
is necessary for the consummation by Guarantor of the
\n transactions contemplated by the Guarantee Agreement.<\/p>\n
In rendering such opinion, such counsel may (A) rely in respect of
\nmatters of fact upon certificates of officers and employees of Guarantor and
\nupon information obtained from public officials, (B) assume that all documents
\nsubmitted to counsel as originals are authentic, that all copies submitted to
\ncounsel conform to the originals thereof, and that the signatures on all
\ndocuments examined by counsel are genuine, (C) state that the opinion is limited
\nto federal laws, the [corporate statute of the Guarantor’s jurisdiction of
\nincorporation] and the laws of the District of Columbia, (D) state that counsel
\nexpresses no opinion with respect to provisions of the Guarantee Agreement
\nrelating to the subject matter jurisdiction of the United States District Court
\nfor the District of Columbia and relating to the waiver of an inconvenient
\nforum, and (E) with respect to the opinions expressed in paragraphs 3 and 4
\nabove, state that counsel is relying as to such matters on the opinions of
\nin-house, local and other special counsel to Guarantor to the extent of the
\nmatters set forth in such opinions. Certificates and opinions relied upon by
\nGuarantor’s counsel shall be delivered to Seller together with the opinion of
\nGuarantor’s counsel.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8237,8556],"corporate_contracts_industries":[9534],"corporate_contracts_types":[9623,9622],"class_list":["post-43320","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-mirant-corp","corporate_contracts_companies-potomac-electric-power-co","corporate_contracts_industries-utilities__electric","corporate_contracts_types-planning__asset","corporate_contracts_types-planning"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43320","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43320"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43320"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43320"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}