Exhibit 10.1

 

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

by and among

Old Dominion ELECTRIC Cooperative

as Seller

and

ESSENTIAL POWER ROCK SPRINGS, LLC

as Buyer

–––––––––––––––––––––––––––––––––––

Dated as of June 14, 2018

 

 

 

4133-4922-8561.17

 

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TABLE OF CONTENTS

Page

ARTICLE 1 Definitions and Rules of Construction

1

SECTION 1.01

Definitions

1

SECTION 1.02

Rules of Construction

1

ARTICLE 2 Purchase and Sale

2

SECTION 2.01

Purchase and Sale of Acquired Assets

2

SECTION 2.02

Purchase Price and Closing

7

SECTION 2.03

Closing Deliveries

8

SECTION 2.04

Withholding

9

ARTICLE 3 Representations and Warranties of Seller

10

SECTION 3.01

Organization and Existence

10

SECTION 3.02

Authorization

10

SECTION 3.03

Consents of Seller

10

SECTION 3.04

Noncontravention

11

SECTION 3.05

Financial Statements; Absence of Changes; No Undisclosed Liabilities

11

SECTION 3.06

Litigation

12

SECTION 3.07

Compliance with Laws and Permits

12

SECTION 3.08

Contracts

13

SECTION 3.09

Ownership of Assets

15

SECTION 3.10

Employee Matters

15

SECTION 3.11

Taxes

15

SECTION 3.12

Emission Allowances

15

SECTION 3.13

Intercompany Obligations

16

SECTION 3.14

Indebtedness of Seller

16

SECTION 3.15

Real Property

16

SECTION 3.16

Brokers

17

ARTICLE 4 Representations and Warranties of Buyer

17

SECTION 4.01

Organization and Existence

17

SECTION 4.02

Authorization

17

SECTION 4.03

Consents of Buyer

17

SECTION 4.04

Noncontravention

18

SECTION 4.05

Litigation

18

SECTION 4.06

Compliance with Laws

18

SECTION 4.07

Available Funds

18

SECTION 4.08

Due Diligence Investigation

18

SECTION 4.09

Brokers

19

ARTICLE 5 Covenants

19

SECTION 5.01

Information Pending Closing

19

SECTION 5.02

Conduct of Business Pending the Closing

19

SECTION 5.03

Tax Matters

22

 

 

 

 

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SECTION 5.04

Confidentiality; Publicity

24

SECTION 5.05

Post-Closing Books and Records

25

SECTION 5.06

Expenses

25

SECTION 5.07

Financing Cooperation

25

SECTION 5.08

Further Actions

26

SECTION 5.09

Amended and Restated Shared Facilities Agreement

29

SECTION 5.10

Post-Closing Cooperation

29

SECTION 5.11

Proration of Charges

30

SECTION 5.12

Risk of Loss

30

SECTION 5.13

Exclusivity

31

SECTION 5.14

Update of Disclosure Schedules; Election Not to Close

31

ARTICLE 6 Conditions to Closing

32

SECTION 6.01

Conditions to Each Party’s Obligations

32

SECTION 6.02

Conditions to Obligation of Buyer

32

SECTION 6.03

Conditions to Obligation of Seller

33

ARTICLE 7 Survival and Release

34

SECTION 7.01

Survival of Certain Representations and Warranties

34

SECTION 7.02

“As Is” Sale; Release

34

SECTION 7.03

Consequential Damages

35

ARTICLE 8 Indemnification, Termination, Amendment and Waiver

35

SECTION 8.01

Indemnification by Seller

35

SECTION 8.02

Indemnification by Buyer

36

SECTION 8.03

Indemnification Procedures

37

SECTION 8.04

Indemnification Generally and Limitations

39

SECTION 8.05

Termination

41

SECTION 8.06

Effect of Termination

42

ARTICLE 9 Miscellaneous

43

SECTION 9.01

Notices

43

SECTION 9.02

Severability

44

SECTION 9.03

Counterparts

44

SECTION 9.04

Amendments and Waivers

44

SECTION 9.05

Entire Agreement; No Third Party Beneficiaries

44

SECTION 9.06

Governing Law

45

SECTION 9.07

Specific Performance

45

SECTION 9.08

Consent to Jurisdiction; Waiver of Jury Trial

45

SECTION 9.09

Assignment

46

SECTION 9.10

Headings

46

SECTION 9.11

Schedules and Exhibits

46

 

2

 

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Exhibits

Exhibit A

Defined Terms

Exhibit B

Form of FIRPTA Certificate

Exhibit C

Form of Assignment of Transferred Intellectual Property Agreement

Exhibit D

Form of Bill of Sale, Assignment and Assumption Agreement

Exhibit E

Form of Deed

Exhibit F

Form of Lease Termination Agreement

Exhibit G

Terms and Conditions of the Amended and Restated Shared Facilities Agreement

Exhibit H

Form of Post-Closing Access Agreement

 

 

Schedules

 

Schedule A

Buyer Disclosure Schedule

Schedule B

Seller Disclosure Schedule

 

 

 

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of June 14, 2018
and is by and among Old Dominion Electric Cooperative, a Virginia utility
aggregation cooperative (“Seller”), and Essential Power Rock Springs, LLC, a
Delaware limited liability company (“Buyer”, and together with Seller, the
“Parties” and each, a “Party”).

RECITALS

WHEREAS, immediately prior to the execution of this Agreement, (a) Seller is the
owner of, among other facilities, Units 1 and 2 of a natural gas-fired peaking
facility known as the Rock Springs Generation Facility located in Cecil County,
Maryland, a 50% interest in the common facilities primarily related to the Rock
Springs Generation Facility, a 50% interest in the Rock Springs Switchyard, and
certain interests in the related real property and all Improvements located
thereon (the “Facility”), and (b) Buyer is the owner of, among other facilities,
Units 3 and 4 of the Rock Springs Generation Facility and corresponding 50%
interests in the common facilities and Rock Springs Switchyard; and

WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, certain assets located at or in connection with the Facility and Seller
desires to assign to Buyer, and Buyer desires to assume, certain liabilities
located at or in connection with the Facility.

NOW THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

ARTICLE 1

Definitions and Rules of Construction

SECTION 1.01Definitions.  Capitalized terms used in this Agreement shall have
the meanings ascribed to them in this Agreement or in Exhibit A hereto.

SECTION 1.02Rules of Construction.

(a)Unless the context otherwise requires, references in this Agreement to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.

(b)If a term is defined as one part of speech (such as a noun), it shall have a
corresponding meaning when used as another part of speech (such as a
verb).  Terms defined in the singular have the corresponding meanings in the
plural, and vice versa.  Unless the context of this Agreement clearly requires
otherwise, words importing the masculine gender shall include the feminine and
neutral genders and vice versa.  The term “include,” “includes” or “including”
shall be deemed to be followed by the words “without limitation.”  The words
“hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import,
when used in

 

 

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this Agreement, shall refer to this Agreement as a whole and not to any
particular section or article in which such words appear.  The word “or” shall
not be exclusive.  The words “ordinary course of business” will be deemed to be
followed by “consistent with past practice.”

(c)Whenever this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified.  Whenever any action must
be taken hereunder on or by a day that is not a Business Day, then such action
may be validly taken on or by the next day that is a Business Day.

(d)The Parties acknowledge that each Party and its attorney has reviewed this
Agreement and that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting Party, or any similar rule operating
against the drafter of an agreement, shall not be applicable to the construction
or interpretation of this Agreement.

(e)The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.

(f)A reference to any agreement, document or instrument shall be construed to
refer to such agreement, document or instrument as the same may be amended,
modified, supplemented or replaced.

(g)A reference to a Law shall be construed to refer to such Law as the same may
be amended, modified, supplemented or restated and be in effect from time to
time; a reference to any tariff, rate or order of any Governmental Authority
shall be construed to refer to such tariff, rate or order, as the same may be
amended, modified, supplemented or restated and be in effect from time to time.

(h)All accounting terms used herein and not expressly defined herein shall have
the meanings given to them under GAAP.

ARTICLE 2

Purchase and Sale

SECTION 2.01Purchase and Sale of Acquired Assets.

(a)At the Closing, upon the terms and subject to the conditions set forth in
this Agreement, Buyer agrees to purchase, acquire and accept from Seller, and
Seller agrees to sell, assign, transfer, convey and deliver to Buyer, free and
clear of all Liens (other than Permitted Liens) all of Seller’s right, title and
interest in, to and under the assets owned, used or held for use primarily in
the operation of the Facility (collectively, the “Acquired Assets”), including
the following:

(i)all deposits and expenses that have been prepaid by Seller, including
security deposits with third-party suppliers or vendors, prepaid lease and
rental payments, prepaid Property Taxes, postage, utility deposits, and expenses
attributable to the ownership or operation of the Facility, including as set
forth or described in Section

 

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2.01(a)(i) of the Seller Disclosure Schedule, but excluding any such prepaid
deposits and expenses attributable to Excluded Assets or that constitute
Excluded Assets;

(ii)all Inventories located in or on the Owned Real Property or the Transferred
Easements or otherwise used or held for use primarily in the operation of the
Facility (including any Inventory stored at the common facilities of the Rock
Springs Generation Facility) and as set forth or disclosed in Section
2.01(a)(ii) of the Seller Disclosure Schedule;

(iii)the Owned Real Property and all Improvements located therein or thereon
(including any partial interest therein);

(iv)the Leases and all Improvements located in or on the Leased Real Property;

(v)the Transferred Easements and all Improvements located in or on the Easement
Real Property (including any partial interest therein);

(vi)Except as set forth in Section 2.01(b)(x), all items of Tangible Personal
Property (including equipment and capital spare parts) located in or on the
Owned Real Property, the Leased Real Property or the Transferred Easements or
otherwise used or held for use primarily in the operation of the Facility,
including any partial interests therein, and including (A) as set forth or
disclosed in Section 2.01(a)(vi) of the Seller Disclosure Schedule and (B) any
Option Capital Spares identified in an Option Capital Spares Notice delivered by
Buyer in accordance with Section 2.02(c), if any;

(vii)all rights of Seller under the Contracts primarily relating to the Acquired
Assets, Assumed Liabilities or the Facility, including those set forth in
Section 2.01(a)(vii) of the Seller Disclosure Schedule (collectively, the
“Assumed Contracts”);

(viii)to the extent transferable pursuant to applicable Law (including upon
request or application to a Governmental Entity or which will pass to Buyer as
successor in title to any other Acquired Assets by operation of Law), all
Permits (including Environmental Permits) related to the ownership or operation
of the Facility, including as set forth or described in Section 2.01(a)(viii) of
the Seller Disclosure Schedule (the “Transferred Permits”);

(ix)all documents, books, records and files, including all documents,
instruments, papers, electronic correspondence, records and files stored on
computer disks or tapes or any other storage medium, studies, reports, drawings,
microfilms, photographs, letters, journals, title policies, regulatory filings,
purchase orders, invoices, shipping records, operating records, operating,
safety and maintenance manuals, engineering design plans relating to the current
operation of the Facility, blueprints and as-built plans, user documentation
(including installation guides, user manuals, training materials, release notes,
working papers, etc.), equipment repair, safety, maintenance or service records,
technical data, financial and operating data, environmental records, final
versions of plans and studies, accounting and Tax records (including Tax
Returns),

 

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ledgers, filings or other documentation relating to any litigation or other
Liability, external correspondence arising in the last three years and other
books and records, whether in paper, e-mail, digital or other tangible form, in
each case, to the extent material to and used in or associated with the
ownership or operation of the Facility, including as set forth or described in
Section 2.01(a)(ix) of the Seller Disclosure Schedule (collectively, the
“Records”);

(x)all right, title and interest of Seller in and to the Intellectual Property
set forth or described in Section 2.01(a)(x) of the Seller Disclosure Schedule,
and all other Intellectual Property owned or licensed by Seller that is
primarily used by Seller in connection with or in support of the ownership or
operation of the Facility, and the rights of Seller to the use of the name of
the Facility;

(xi)the Transferred Allowances, which Seller shall deliver to and Buyer shall
accept in the Emission Allowance Accounts designated by Buyer within five (5)
Business Days after Closing, and which shall be subject to gross up in
accordance with Section 5.08(g);

(xii)all causes of action (including counterclaims), defenses, claims, credits,
demands, remedies or rights of set-off of any kind against Third Parties to the
extent relating to or arising from any Assumed Liability or the ownership or
operation of the Facility, including all such rights under or pursuant to
warranties, representations, covenants, agreements, indemnities or guarantees
made or provided in any Assumed Contracts or otherwise;

(xiii)all applicable warranties from manufacturers or vendors, to the extent
that such warranties are transferable, and all rights, including the right to
make a claim, under applicable warranties, in each case, as in existence on the
date hereof, and including such additional claims as may be initiated by Seller
or its Affiliates in connection with the ownership or operation of the Facility
in the ordinary course of business prior to the Closing in accordance with this
Agreement;

(xiv) all goodwill relating to the ownership or operation of the Facility;

(xv)all PJM capacity supply obligations, rights and revenues associated with the
Facility for any period of time subsequent to the Closing; and

(xvi)the assets listed on Section 2.01(a)(xvi) of the Seller Disclosure
Schedule.

(b)Notwithstanding any other provision of this Agreement, Seller shall not sell,
assign, transfer, convey or deliver to Buyer, and Buyer shall not purchase,
acquire or accept, any right, title and interest in or to any of the following
(collectively, the “Excluded Assets”):

(i)any assets, properties, goodwill or rights, including rights under Contract,
of Seller or any of its Affiliates not primarily related to the Facility;

 

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(ii)Seller’s rights under this Agreement (including the right to receive the
Purchase Price) and under any of the ancillary agreements to be entered into in
connection with the transactions contemplated hereby;

(iii)except as set forth in Section 2.01(a), all Current Assets;

(iv)all documents, books, records and files of Seller other than the Records
(copies of which may be retained by Seller);

(v)the organizational documents, qualifications to do business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
blank stock certificates, and other documents relating to the organization,
maintenance and existence of Seller or any of its Affiliates, whether before, on
or after the Closing Date;

(vi)Contracts that are not Assumed Contracts, Permits that are not Transferred
Permits and Intellectual Property or Intellectual Property licenses not included
among the Acquired Assets;

(vii)all shares of capital stock or other equity interests of Seller or any of
its Affiliates or securities convertible into or exchangeable or exercisable for
shares of capital stock or other equity interests of Seller or any of its
Affiliates;

(viii)all claims that Seller may have against any Third Party primarily with
respect to any Excluded Assets or Excluded Liabilities;

(ix)Tax refunds, credits, abatements or similar offsets against Taxes of
Seller  (other than pre-paid Property Taxes as provided in Section 2.01(a)(i)
and any refunds or credits of Property Taxes allocated to the Post-Closing Tax
Period that are borne by Buyer) including, for the avoidance of doubt, any
refunds or credits of Taxes relating to the Acquired Assets or the Facility that
are allocable to the Pre-Closing Tax Period that are borne by Seller;

(x)any Option Capital Spares not identified in an Option Capital Spares Notice
delivered by Buyer in accordance with Section 2.02(c), if any;

(xi)insurance proceeds;

(xii)condemnation awards with respect to acts of condemnation occurring prior to
the Closing Date;

(xiii)Claims of Seller in Old Dominion Elec. Coop., 151 FERC ¶ 61,207 (2015),
reh’g denied, 154 FERC ¶ 61,155 (2016), appeal docketed, No. 16-111 (D.C. Cir.
2016), and any recovery thereon or proceeds thereof;

(xiv)all revenues relating to Seller’s Reactive Service Tariff;

 

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(xv)all PJM rights and revenues associated with the Facility for any period on
or prior to the Closing, including transactions under the PJM Tariff for the
sale of ancillary services (as defined in the PJM Tariff) or day-ahead or
intra-day sales of electrical energy;

(xvi)with respect to the Existing O&M Agreement, all deposits, expenditures and
expenses that have been prepaid by Seller, including security deposits, less all
accrued liabilities or other amounts payable by Seller thereunder, in each case,
with respect to the period prior to the Closing Date; and

(xvii)all cash and cash equivalents of Seller as of the Closing Date, and any
revenues, proceeds, accounts and notes receivable relating to the period prior
to the Closing Date.

(c)Effective at the Closing, upon the terms and subject to the conditions set
forth in this Agreement, Buyer agrees to assume and become responsible for the
following  Liabilities to the extent relating to the Acquired Assets (and solely
to the extent they do not constitute Excluded Liabilities) (the “Assumed
Liabilities”):

(i)all Liabilities of Seller under the Assumed Contracts other than relating to
breaches by Seller prior to the Closing;

(ii)all Liabilities with respect to the Transferred Permits other than relating
to breaches by Seller prior to the Closing;

(iii)the portion of any Transfer Taxes allocated to Buyer pursuant to Section
5.03(c) and the portion of Property Taxes allocable to the Post-Closing Tax
Period;

(iv)all other Liabilities to be expressly assumed by Buyer pursuant to this
Agreement;

(v)Permitted Liens and Claims under Environmental Law, whether arising before,
on or after the Closing;

(vi)all post-Closing Liabilities and obligations to surrender and retire
Emission Allowances to cover or account for the emissions of sulfur dioxide,
annual nitrogen oxide, seasonal nitrogen oxide or carbon dioxide by the Facility
pursuant to Environmental Laws, including CSAPR, RGGI and Title IV of the Clean
Air Act, and associated state programs (the “Transferred Emission Liabilities”);

(vii)without limiting the representations and warranties of the Seller set forth
in Article ARTICLE 3 and Buyer’s rights under Article 8, all post-Closing
Liabilities of any nature whatsoever arising from the ownership or operation of
the Acquired Assets and the Facility subsequent to the Closing;

(viii)all Liabilities, including fines or penalties, imposed by any Governmental
Entity relating to or otherwise arising out of Laws associated with the

 

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reliability of the bulk electric system, including NERC Reliability Standards,
whether arising before, on or after the Closing, except to the extent resulting
from the actions or express directions of Seller; and

(ix)all Liabilities set forth or described in Section 2.01(c)(vii) of the Seller
Disclosure Schedule.

(d)Notwithstanding any other provision of this Agreement, Seller shall retain,
and shall be responsible for paying, performing and discharging when due, and
Buyer shall not assume or have any responsibility for, any of the following
Liabilities, whether arising prior to, on or after the Closing Date (the
“Excluded Liabilities”):

(i)all Current Liabilities (other than the Transferred Emission Liabilities);

(ii)all Liabilities of Seller with respect to the ordering or purchasing of
capital spare parts;

(iii)all (A) Transaction Expenses and (B) Indebtedness of Seller and its
Affiliates or that is otherwise secured, directly or indirectly, in whole or in
part, by any of the Acquired Assets or to which any of the Acquired Assets are
otherwise subject;

(iv)all Liabilities (A) relating to or arising, whether before, on or after the
Closing, out of, or in connection with, any of the Excluded Assets or any other
assets of Seller or its Affiliates that are not Acquired Assets, or (B) of any
nature whatsoever to the extent arising from the ownership or operation of the
Acquired Assets and the Facility prior to the Closing, except to the extent
expressly set forth in Sections 2.01(c)(i), (ii), (iv), (v),  (viii) and (ix);
and

(v)all Taxes of Seller and any Affiliate of Seller (other than the portion of
Property Taxes allocable to the Post-Closing Tax Period and all Transfer Taxes
allocated to Buyer pursuant to Section 5.03(c)), including any such Taxes
imposed on Buyer as a withholding agent or as a transferee.

SECTION 2.02Purchase Price and Closing.

(a)In consideration of the sale, assignment, conveyance, transfer and delivery
to Buyer of the right, title and interest as of the Closing of Seller in the
Acquired Assets, at the Closing Buyer shall pay to Seller an amount equal to the
Purchase Price.

(b)The aggregate amount to be paid by Buyer for the Acquired Assets (and
assumption of Assumed Liabilities) shall be an amount equal to the sum of (i)
One Hundred Fifteen Million Dollars ($115,000,000.00) (the “Base Purchase
Price”), plus (ii) the aggregate price of the Option Capital Spares identified
in the Option Capital Spares Notice delivered by Buyer in accordance with
Section 2.02(c), if any (collectively, the “Purchase Price”).

(c)Buyer shall have the option to acquire any or all of the capital spare parts
set forth on Section 2.02(c) of the Seller Disclosure Schedule (the “Option
Capital Spares”), in

 

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each case for the price set forth therein.  Buyer may exercise its option to
acquire any or all of the Option Capital Spares by delivering notice of its
election to do so (the “Option Capital Spares Notice”) to Seller not less than
thirty (30) days following the date of this Agreement, which Option Capital
Spares Notice shall specify (i) the Option Capital Spares that Buyer is electing
to purchase and (ii) the aggregate price therefore.  At the Closing, Buyer shall
pay the Purchase Price to Seller by wire transfer of immediately available funds
to the account or accounts specified by Seller, which account or accounts shall
be specified in writing to Buyer not less than five (5) Business Days prior to
the Closing.

(d)The closing of the purchase and sale of the Acquired Assets and the
assumption of the Assumed Liabilities (the “Closing”) shall take place at the
offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 at 10:00
a.m., Eastern Prevailing Time, on (i) the later of (x) the second Business Day
following the satisfaction or (to the extent permitted by applicable Law) waiver
of the conditions set forth in Article 6 (other than those conditions that by
their nature are to be satisfied at the Closing but subject to the satisfaction
or (to the extent permitted by applicable Law) waiver of such conditions at the
Closing), and (y) if Buyer has received Updating Information and has elected not
to terminate this Agreement pursuant to Section 5.14, on the fifth Business Day
following the receipt of such Updating Information, or (ii) at such other time,
date and place as may be mutually agreed upon in writing by the Parties (the
date on which the Closing actually occurs pursuant to this clause (d) being
referred to as the “Closing Date”).  The Closing shall be effective for all
purposes at 00:00:01 (Eastern Prevailing Time) on the Closing Date (the
“Effective Time”).

SECTION 2.03Closing Deliveries. At the Closing:

(a)Seller will deliver the following to Buyer or its designees:

(i)All of the Seller’s Required Consents;

(ii)Counterparts of the Deeds, duly executed by Seller (or its relevant
Affiliate);

(iii)A counterpart duly executed by Seller to the Bill of Sale;

(iv)A duly executed certification of non-foreign status under Section 1445(b)(2)
of the Code, substantially in the form of Exhibit B hereto;

(v)A counterpart duly executed by Seller to the Assignment of Transferred
Intellectual Property Agreement;

(vi)Counterparts duly executed by Seller to one or more Lease Termination
Agreements;

(vii)A counterpart duly executed by Seller to the Amended and Restated Shared
Facilities Agreement;

(viii)A counterpart duly executed by Seller to the Post-Closing Access
Agreement, substantially in the form of Exhibit H hereto;

 

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(ix)A duly executed release of the lien with respect to the Acquired Assets
under the Seller Indenture, in a form reasonably acceptable to Buyer and Seller;
and

(x)Such other deeds, bills of sale, assignments, agreements, documents,
instruments and writings as are required to be delivered by Seller at or prior
to the Closing pursuant to the terms of this Agreement, including the
certificate contemplated by Section ‎6.02(c), or as are otherwise reasonably
required to comply with the provisions of this Agreement.

(b)Buyer will deliver the following to Seller or its designees:

(i)The Purchase Price by wire transfer of immediately available funds to the
account or accounts specified by Seller;

(ii)Counterparts of the Deeds, duly executed by Buyer (if required);

(iii)A counterpart duly executed by Buyer to the Bill of Sale;

(iv)A counterpart duly executed by Buyer to the Assignment of Transferred
Intellectual Property Agreement;

(v)A counterpart duly executed by Buyer to the Amended and Restated Shared
Facilities Agreement;

(vi)A counterpart duly executed by Buyer to the Post-Closing Access Agreement,
substantially in the form of Exhibit H hereto; and

(vii)Such other deeds, bills of sale, assignments, agreements, documents,
instruments and writings as are required to be delivered by Buyer at or prior to
the Closing Date pursuant to the terms of this Agreement, including the
certificate contemplated by Section ‎6.03(c), or as are otherwise reasonably
required to comply with the provisions of this Agreement.

SECTION 2.04Withholding

.  Buyer, and any Persons acting on its behalf, shall be entitled to deduct and
withhold any amounts in connection with the transactions contemplated by this
Agreement that are required to be deducted and withheld under applicable
Law.  Buyer shall advise Seller of any such withholding Buyer expects to make
and reasonably cooperate with Seller to reduce or eliminate any such withholding
to the extent permissible under applicable Law.  To the extent any such amounts
are deducted or withheld and promptly remitted to the relevant Governmental
Entity, such amounts shall be treated as having been paid to the Person in
respect of which the deduction or withholding was made.

 

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ARTICLE 3

Representations and Warranties of Seller

Except as disclosed in the applicable sections of the Seller Disclosure
Schedule, Seller hereby represents and warrants to Buyer as of the date hereof
and as of the Closing Date as follows:

SECTION 3.01Organization and Existence.  Seller is a utility aggregation
cooperative duly formed, validly existing and in good standing under the Law of
the Commonwealth of Virginia.  Seller has full power and authority to execute
and deliver this Agreement and the other agreements and instruments to be
delivered hereunder by Seller and to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and
thereunder.  Seller is duly qualified or licensed to do business in each other
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it, and in which the actions required to be
performed by it hereunder makes such qualification or licensing necessary,
except in those jurisdictions where the failure to be so qualified or licensed
would not, individually or in the aggregate, reasonably be expected to result in
a Seller Material Adverse Effect.

SECTION 3.02Authorization.  The execution, delivery and performance by Seller of
this Agreement and the other agreements and instruments to be delivered
hereunder by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby, including the sale, assignment, transfer,
conveyance and delivery of the Acquired Assets, are within Seller’s powers and
have been duly authorized by all necessary action on the part of Seller, and no
other action on the part of Seller or its members is necessary to authorize the
execution, delivery and performance of this Agreement and the other agreements
and instruments to be delivered hereunder by Seller or the consummation by
Seller of the transactions contemplated hereby and thereby.  This Agreement has
been, and each other agreement and instrument to be delivered hereunder by
Seller shall be, when executed and delivered, duly executed and delivered by
Seller.  This Agreement constitutes, and each other agreement and instrument to
be delivered hereunder by Seller will, when executed and delivered at or prior
to the Closing, constitute (assuming the due execution and delivery by each
other Party hereto and thereto) a valid and legally binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject in all
respects to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting creditors’
rights generally and general equitable principles (whether considered in a
proceeding in equity or at law).  The Acquired Assets do not (and will not)
include any Equity Securities.

SECTION 3.03Consents of Seller.  No consent, waiver, approval, license, permit,
order or authorization (each, a “Consent”) of, or registration, notice,
declaration or filing (each, a “Filing”) with, any Governmental Entity or any
other Person which has not been obtained or made by Seller or any of its
Affiliates is required to be obtained or made by such Person in connection with
the execution, delivery and performance of this Agreement and the other
agreements and instruments to be delivered hereunder by Seller and the
consummation by Seller of the transactions contemplated hereby and thereby,
other than (a) the Seller’s Required Consents and (b) the Consents and Filings
the failure of which to obtain or make would not,

 

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individually or in the aggregate, reasonably be expected to materially impair
the ownership or operation of the Acquired Assets or the Facility as currently
owned and operated by Seller and its Affiliates, or otherwise prevent,
materially impair or delay the ability of Seller and its Affiliates to
consummate the transactions contemplated by, or perform their respective
obligations under, this Agreement or the other agreements and instruments to be
delivered hereunder by Seller or its Affiliates.  

SECTION 3.04Noncontravention.  Subject to Seller obtaining the Seller’s Required
Consents, the execution, delivery and performance of this Agreement and the
other agreements and instruments to be delivered hereunder by Seller and the
consummation by Seller of the transactions contemplated hereby and thereby do
not and will not, directly or indirectly, (a) conflict with, contravene or
violate any provision of the Organizational Documents of Seller or any of its
Affiliates, (b) conflict with, contravene or violate any Law in any material
respect by which Seller or any of its Affiliates or its or their respective
assets or properties (including the Acquired Assets and the Facility) is subject
or bound or (c) violate or result in a breach, default (with or without notice
or lapse of time or both) or acceleration under, or give rise to any penalty or
any right of termination, cancellation or modification under, or require any
Consent or waiver under, or result in the creation of any Lien upon any of the
Acquired Assets or the Facility or any of the properties or assets of Seller or
any of its Affiliates under, or any other remedy under, any Contract to which
Seller or any of its Affiliates is a party or by which Seller or any of its
assets or properties (including the Acquired Assets and the Facility) is subject
or bound, except, in the case of clause (c), as would not, individually or in
the aggregate materially impair the ownership or operation of the Acquired
Assets or the Facility as currently owned or operated by Seller or its
Affiliates, or otherwise prevent, materially impair or delay the ability of
Seller and its Affiliates to consummate the transactions contemplated by, or
perform their respective obligations under, this Agreement or the other
agreements and instruments to be delivered hereunder by Seller or its
Affiliates.

SECTION 3.05Financial Statements; Absence of Changes; No Undisclosed
Liabilities.

(a)Section 3.05(a) of the Seller Disclosure Schedule sets forth true, correct
and complete copies of the unaudited balance sheets and statements of income as
of and for the calendar years ended December 31, 2016, and December 31, 2017,
regarding the Facility and the Acquired Assets (collectively, the “Financial
Statements”).  The Financial Statements have been prepared in good faith from
the books and records of Seller in accordance with GAAP applied on a consistent
basis, accurately reflect the books and records of Seller and fairly present in
all material respects the expenses of Seller with respect to the Acquired
Assets, the Assumed Liabilities and the Facility as of the date thereof or for
the period set forth therein.

(b)Except (i) as set forth in Section 3.05(b) of the Seller Disclosure Schedule
or (ii) as arising from the actions or omissions of the Operator, since December
31, 2017, (A) the business of the Facility has been conducted in accordance with
the ordinary course of business in all material respects, (B) there has not been
any change, event, effect, circumstance, occurrence, state of facts, condition,
development or other matter relating to the Facility, the Acquired Assets or the
Assumed Liabilities that, individually or in the aggregate, resulted in, or
would reasonably be expected to result in, a Seller Material Adverse Effect or a
Company

 

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Material Adverse Effect and (C) no action has been taken with respect to the
Facility, Acquired Assets or Assumed Liabilities that would have been prohibited
by Section 5.02 if taken after the date hereof.

(c)Except as disclosed in Section 3.05(c) of the Seller Disclosure Schedule or
as otherwise applicable to both Parties as owners of units and the common
facilities at the site, there are no Assumed Liabilities other than (i)
Liabilities reflected or reserved against on the Financial Statements or
incurred after such date in the ordinary course of business, (ii) Liabilities
under any Assumed Contract (but excluding any Liabilities in connection with or
relating to any breach thereof or default thereunder) or (iii) Liabilities that,
individually or in the aggregate, would not reasonably be expected to be
material to the Acquired Assets or the Facility, taken as a whole.

SECTION 3.06Litigation.  Except as disclosed in Section 3.06 of the Seller
Disclosure Schedule, there are no (and, during the past three (3) years, there
have not been any) Claims or Orders pending, in effect or, to the Knowledge of
Seller, threatened in writing, by or against or otherwise affecting Seller or
any of its Affiliates that would reasonably be expected to, individually or in
the aggregate, result in material Indemnifiable Losses to Buyer or otherwise
materially impair the ownership or operation of the Acquired Assets as currently
owned or operated by Seller or its Affiliates, or otherwise prevent, materially
impair or delay the ability of Seller and its Affiliates to consummate the
transactions contemplated by, or perform their respective obligations under,
this Agreement or the other agreements and instruments to be delivered hereunder
by Seller or its Affiliates.  There are no suits, claims or proceedings pending
or, to the Knowledge of Seller, threatened in writing against Seller, or
otherwise primarily relating to the Facility or the Acquired Assets, alleging
any violation of, or liability under, Environmental Law.

SECTION 3.07Compliance with Laws and Permits.  

(a)Except as disclosed in Section 3.07 of the Seller Disclosure Schedules,
Seller and each of its Affiliates (in respect of the Acquired Assets and Assumed
Liabilities) (i) is, and, during the past three (3) years, has been, in
compliance in all material respects with all Laws applicable to the Acquired
Assets and to Seller’s activities as Owner under Article 3 of the Existing O&M
Agreement and (ii) to Seller’s Knowledge, has not, during the past three (3)
years, received any written or oral notice, charge, claim or assertion to the
effect that it is or was not in compliance in any material respect with any
applicable Law.

(b)For the past six (6) years, Seller and its Affiliates have not, directly or
indirectly, through its Representatives or any Person authorized to act on their
behalf (including any distributor, agent, sales intermediary or other third
party) offered, promised, paid, authorized or given any money or anything of
value to any Government Official for the purpose of (i) influencing any act or
decision of any Government Official; (ii) inducing any Government Official to do
or omit to do an act in violation of a lawful duty; (iii) securing an improper
advantage; or (iv) inducing any Government Official to influence the act or
decision of a Governmental Entity in order to obtain or retain business, or
direct business to any Person.

 

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SECTION 3.08Contracts.

(a)Section 3.08 of the Seller Disclosure Schedule sets forth a true, correct and
complete list of all of the following Contracts primarily related to or
primarily affecting the Facility or the Acquired Assets or the Assumed
Liabilities in effect on the date of this Agreement to which Seller or an
Affiliate thereof is a party (provided that in no event shall Seller be required
to include on Section 3.08 of the Seller Disclosure Schedule any transactions
under the PJM Tariff for the sale of ancillary services (as defined in the PJM
Tariff) or day-ahead or intra-day sales of electrical energy):

(i)Contracts, including any service agreement or parts supply agreement, which
would reasonably be expected to involve payments in excess of $100,000 in any
12-month period or $1,000,000 in the aggregate;

(ii)Contracts for the transmission, purchase, exchange, sale or delivery of
electric power in any form, including energy, capacity or any ancillary
services;

(iii)Contracts with a Governmental Entity;

(iv)Contracts which contain any covenant which materially restricts Seller or
any of its Affiliates from competing or engaging in any activity or business, or
the geographic area in which Seller or any of its Affiliates may so engage, or
that grant exclusivity rights, rights of first refusal, rights of first offer or
similar rights to the counterparty thereto;

(v)Contracts for the transportation, purchase, exchange, sale or delivery of
natural gas or other fuels, water or commodities used for the generation of
electric power, or for the conversion of natural gas into electricity;

(vi)Contracts for the sale or lease of any material Acquired Assets (other than
relating to the operation or maintenance of Acquired Assets with a value less
than $100,000 individually or $1,000,000 in the aggregate (in each case,
including any potential payment to exercise any right or option related to any
of the Acquired Assets);

(vii)Contracts for the storage, parking, loaning or balancing of natural gas;

(viii)Any outstanding futures, forward, swap, collar, put, call, floor, cap,
option or other similar Contracts, including with respect to electric power (in
any form, including energy, capacity or ancillary services), natural gas,
emission allowances and offsets, and other commodities, currencies, interest
rates, indices and securities;

(ix)Any operations agreement, maintenance agreement or management agreement
(including administration, energy management, dispatch, scheduling or market
participant services);

 

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(x)Any management, consulting and employment Contracts providing for (A)
payments by Seller (or, with respect to any Assumed Contracts, Buyer after the
Closing) in excess of $100,000 in any year, (B) severance, (C) any change in
control or sale payment or bonus, (D) retention payment or bonus, (E)
acceleration of vesting of any payment or equity security, (F) any covenant not
to compete or (G) any similar obligation;

(xi)Joint venture, partnership, limited liability company agreements or other
Contracts involving the sharing of profits or losses;

(xii)Contracts that involve, as parties thereto, one or more of Seller or its
Affiliates, on the one hand, and any of the directors, officers or other
Affiliates of Seller, its Affiliates or any of their respective Related Persons,
on the other hand;

(xiii)Contracts (i) pursuant to which Seller or any of its Affiliates licenses
in material Intellectual Property, other than click-wrap, shrink-wrap and
off-the-shelf software licenses for unmodified software in object code form that
are commercially available on reasonable terms to the public generally with
license, maintenance, support and other fees less than $25,000 per year, (ii)
pursuant to which Seller or any of its Affiliates licenses out Intellectual
Property to any other Affiliate or other Third Party or (iii) pertaining to the
development, maintenance or support of any material Intellectual Property;

(xiv)Contracts requiring Seller or any of its Affiliates to make any capital
expenditures in excess of $500,000 in the aggregate; and

(xv)Contracts providing for indemnification by Seller or any of its Affiliates,
except for any such Contract that is not material to the Acquired Assets,
Assumed Liabilities or the Facility and is entered into in the ordinary course
of business.

The foregoing listed or required to be listed Contracts are collectively
referred to as the “Material Contracts”.

(b)True, correct and complete copies of all Material Contracts, including all
amendments thereto, have been delivered or made available to Buyer not later
than the third Business Day preceding the date of this Agreement.  

(c)(i) Each Material Contract constitutes the legal, valid and binding
obligation of, and is enforceable in accordance with its terms against, Seller
and, to the Knowledge of Seller, the other parties thereto (other than Buyer or
any of its Affiliates) and is in full force and effect, subject in all respects
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws relating to or affecting creditors’ rights generally
and general equitable principles; (ii) neither Seller nor, to the Knowledge of
Seller, any other party (other than Buyer or any of its Affiliates) to any
Material Contract, is in material breach, violation or default (and no event,
condition or omission exists or has occurred that after notice or the lapse of
time or both) thereof in any material respect; (iii) Seller has not received any
written claim or notice of any material breach of or material default of Seller
under any Material Contract that is unresolved; and (iv) no event, condition or

 

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omission exists or has occurred which, individually or in the aggregate, with or
without the giving of notice or the lapse of time or both, would constitute, or
would reasonably be expected to result in, a material breach of or a material
default under any Material Contract by Seller or, to the Knowledge of Seller,
any other party thereto (other than Buyer and its Affiliates).  

SECTION 3.09Ownership of Assets.  Except as set forth in Section 3.09 of the
Seller Disclosure Schedule, Seller has good and valid title to, or, in the case
of any leased, subleased or licensed real or personal property, valid and
subsisting leasehold interests in or a legal, valid and enforceable license to
use, all of the Acquired Assets, free and clear of all Liens other than
Permitted Liens.  No Affiliate of Seller has held, or immediately prior to the
Closing will be holding, the Acquired Assets or the Facility.

SECTION 3.10Employee Matters. Seller and its Affiliates do not employ or engage,
and in the past five years have not employed or engaged, any employees to
provide services primarily related to the Facility, other than employees
primarily engaged in monitoring and reporting to Seller regarding the operation
or maintenance of the Facility.  

SECTION 3.11Taxes.  Except as set forth in Section 3.11 of the Seller Disclosure
Schedule, with respect to the Acquired Assets and the Facility, (i) all material
Tax Returns of Seller required to be filed have been or will be filed when due
in accordance with all applicable Laws; (ii)  all material Taxes of Seller that
are due and payable have been paid in full within the time required by Law;
(iii) there is no action, suit, proceeding, investigation, audit or claim now
pending with respect to any material Tax of Seller; (iv) there are no
outstanding agreements extending the statutory period of limitation applicable
to any claim for, or the period for the collection or assessment of, material
Taxes of Seller; (v) there are no Liens on any of the Acquired Assets for Taxes
(other than for current Taxes not yet due and payable); (vi) no claim with
respect to ownership of the Acquired Assets or the Facility has ever been made
by an authority in a jurisdiction in which Seller does not file a Tax Return
that Seller is or may be subject to taxation by that jurisdiction in respect of
Taxes with respect to ownership of the Acquired Assets or the Facility that
would be covered by or the subject of such Tax Return; (vii) none of the
Acquired Assets are treated as equity interests in any Person for Tax purposes;
(viii) except as a result of a change in assessment or change in Law after the
Closing Date, no Property Tax will be due with respect to the Acquired Assets
that is not reflected in the Financial Statements; and (ix) no Acquired Asset
(a) is property required to be treated as owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986, (b) is “public utility property” within the meaning of Section
168(f)(2) of the Code, (c) constitutes “tax-exempt use property” within the
meaning of Section 168(h) of the Code, (d) is “tax-exempt bond financed
property” within the meaning of Section 168(g) of the Code, (e) secures any debt
the interest of which is tax-exempt under Section 103(a) of the Code or (f) is
subject to a 467 rental agreement as defined in Section 467 of the Code.

 

SECTION 3.12Emission Allowances.  Section 3.12 of the Seller Disclosure Schedule
contains a list of Emission Allowances which are reasonably expected to be
sufficient to cover the Seller Allowance Obligation (the “Transferred
Allowances”).  Seller holds, or reasonably expects to hold before Closing, such
Transferred Allowances in its Emission

 

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Allowance Accounts and such Transferred Allowances are (or will be) fully
transferrable to Buyer.

SECTION 3.13Intercompany Obligations.  Except as set forth in Section 3.13 of
the Seller Disclosure Schedule, (a) no obligations, Contracts or other
Liabilities exist between Seller or one or more of its Affiliates or its or
their Related Persons, on the one hand, and one or more of Seller’s other
Affiliates or its or their other Related Persons, on the other hand, that is
related to any of the Acquired Assets or Assumed Liabilities and will continue
in effect subsequent to the Closing, and (b) other than Seller, no Related
Person of Seller or any of its Affiliates owns or has any interest in any
property (whether real, personal or mixed and whether tangible or intangible)
which is used or held for use in the operation of the Facility.

SECTION 3.14Indebtedness of Seller.  The Assumed Liabilities do not include any
Indebtedness, and no outstanding Indebtedness will be secured by the Facility or
Acquired Assets following the Closing.

SECTION 3.15Real Property.

(a)Section 3.15(a)(i) of the Seller Disclosure Schedule sets forth a complete
and accurate list of the Owned Real Property.  Except as set forth on Section
3.15(a)(ii) of the Seller Disclosure Schedule, Seller owns and possesses good
and indefeasible title in fee simple to the Owned Real Property and all
Improvements constituting real property located therein or thereon, free and
clear of all Liens other than Permitted Liens.

(b)Section 3.15(b)(i) of the Seller Disclosure Schedule sets forth a complete
and accurate list of the easements, rights-of-way, real property permits and
licenses and documents evidencing other real estate rights regarding real
property, pursuant to which Seller occupies or uses real property primarily
relating to the Facility (each, a “Transferred Easement”; such real property
being referred to as the “Easement Real Property”), and Seller has provided
copies to Buyer of each Transferred Easement.  Except as set forth in
Section 3.15(b)(ii) of the Seller Disclosure Schedule, Seller owns and possesses
good and valid easement, right-of-way, permit and license and other real estate
interests in the Easement Real Property and owns good and indefeasible title in
fee simple to all Improvements constituting real property located therein or
thereon, as applicable, free and clear of all Liens other than Permitted Liens.

(c)Section 3.15(c)(i) of the Seller Disclosure Schedule sets forth a complete
and accurate description of leases, licenses and occupancy agreements regarding
real property pursuant to which Seller leases, subleases, occupies or otherwise
uses real property in respect of the Facility (each, a “Lease”; such real
property being referred to as the “Leased Real Property”), and the Seller has
provided copies to Buyer of each Lease.  Except as set forth on Section
3.15(c)(ii) of the Seller Disclosure Schedule, Seller owns and possesses good
and valid leasehold interests or licenses in the Leased Real Property and all
Improvements located therein or thereon, as applicable, free and clear of all
Liens other than Permitted Liens.

(d)Seller does not lease, sublease, occupy or otherwise use any real property
primarily relating to the Facility, other than the Owned Real Property, the
Leased Real

 

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Property and the Easement Real Property and Improvements constituting real
property located therein or thereon.

SECTION 3.16Brokers.  Except as set forth in Section 3.16 of the Seller
Disclosure Schedule, neither Seller nor any of its Affiliates has any Liability
to pay any brokers’ or finders’ fees or similar fees or commissions to any
broker, finder, agent or other Person with respect to the transactions
contemplated by this Agreement.

ARTICLE 4

Representations and Warranties of Buyer

Except as disclosed in the applicable sections of the Buyer Disclosure Schedule,
Buyer hereby represents and warrants to Seller as of the date hereof and as of
the Closing Date as follows:

SECTION 4.01Organization and Existence.  Buyer is a limited liability company
duly organized, validly existing and in good standing under the Laws of the
State of Delaware with all requisite power and authority required to enter into
this Agreement and consummate the transactions contemplated hereby.  Buyer is
duly qualified or licensed to do business in each other jurisdiction where the
actions required to be performed by it hereunder makes such qualification or
licensing necessary, except in those jurisdictions where the failure to be so
qualified or licensed would not reasonably be expected to result in a material
adverse effect on Buyer’s ability to perform its obligations hereunder or to
consummate the transactions contemplated hereby.

SECTION 4.02Authorization.  The execution, delivery and performance by Buyer of
this Agreement and the other agreements and instruments to be delivered
hereunder by Buyer and the consummation by Buyer of the transactions
contemplated hereby and thereby are within Buyer’s powers and have been duly
authorized by all necessary action on the part of Buyer.  This Agreement has
been, and each other agreement and instrument to be delivered hereunder by Buyer
shall be, when executed and delivered, duly executed and delivered by
Buyer.  This Agreement constitutes, and each other agreement and instrument to
be delivered hereunder by Buyer will, when executed and delivered at or prior to
the Closing, constitute (assuming the due execution and delivery by each of the
other Parties hereto and thereto) a valid and legally binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, subject in all
respects to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting creditors’
rights generally and general equitable principles (whether considered in a
proceeding in equity or at law).

SECTION 4.03Consents of Buyer.  No Consent of, or Filing with, any Governmental
Entity which has not been obtained or made by Buyer is required to be obtained
or made by Buyer in connection with the execution and delivery of this Agreement
and the other agreements and instruments to be delivered hereunder by Buyer and
the consummation by Buyer of the transactions contemplated hereby and thereby in
order to effect the sale of the Acquired Assets or the assumption of the Assumed
Liabilities, other than (a) the Buyer’s Required Consents, (b) the Consents and
Filings the failure of which to obtain or make would not

 

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reasonably be expected to result in a material adverse effect on Buyer’s ability
to perform its obligations hereunder or to consummate the transactions
contemplated hereby and (c) Consents of, or Filings with, FERC that may be made
or obtained by Buyer after the Closing Date.

SECTION 4.04Noncontravention.  Subject to Buyer obtaining the Buyer’s Required
Consents, the execution, delivery and performance of this Agreement and the
other agreements and instruments to be delivered hereunder by Buyer does not,
and the consummation by Buyer of the transactions contemplated hereby and
thereby will not (a) contravene or violate any provision of the Organizational
Documents of Buyer, (b)  conflict with, contravene or violate any Law in any
material respect by which Buyer or its assets or properties is subject or bound
or (c) violate or result in a breach, default (with or without notice or lapse
of time or both) or acceleration under, or give rise to any penalty or any right
of termination, cancellation or modification under, or require any Consent or
waiver under, or result in the creation of any Lien upon any of the properties
or assets of Buyer under, or any other remedy under, any Contract to which Buyer
is a party or by which Buyer or any of its assets or properties is bound,
except, in the case of clause (c), as would not, individually or in the
aggregate materially impair or delay the ability of Buyer to consummate the
transactions contemplated by, or perform its obligations under, this Agreement
or the other agreements and instruments to be delivered hereunder by Buyer.

SECTION 4.05Litigation.  There are no Claims or Orders pending, in effect or, to
Buyer’s Knowledge, threatened in writing, against or otherwise relating to Buyer
or any of its Affiliates that would, individually or in the aggregate,
reasonably be expected to result in a material adverse effect on Buyer’s ability
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.  Buyer is not subject to any Order that prohibits the
consummation of the transactions contemplated by this Agreement or would
reasonably be expected to result in a material adverse effect on Buyer’s ability
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.

SECTION 4.06Compliance with Laws.  Buyer is not in violation of any Law, except
for violations that would not reasonably be expected to result in a material
adverse effect on Buyer’s ability to perform its obligations hereunder or to
consummate the transactions contemplated hereby.

SECTION 4.07Available Funds.  At the Closing, Buyer shall have sufficient cash
on hand or other sources of immediately available funds to enable it to pay the
Purchase Price and any other amounts to be paid by it hereunder.

SECTION 4.08Due Diligence Investigation.  Without affecting the representations
and warranties of Seller herein: (a) Buyer or its Representatives have had the
opportunity to conduct their own independent investigation, review and analysis
of the business, operations, assets and properties, Liabilities, results of
operations, financial condition and prospects of the Seller, Acquired Assets and
Facility as they have deemed necessary or advisable in connection with entering
into this Agreement and the related documents and the transactions contemplated
hereby and thereby; (b) Buyer and its Representatives have been provided
adequate access to the personnel, assets, properties, premises and records of
Seller, the Acquired Assets and the Facility for such purpose; and (c) Buyer has
relied solely upon the representations and warranties made

 

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by Seller in Article 3 in making its decision to acquire the Acquired Assets and
assume the Assumed Liabilities, and has not relied on any other statements or
advice from Seller, its Affiliates, or Representatives.

SECTION 4.09Brokers.  Except as set forth in Section 4.09 of the Buyer
Disclosure Schedule, neither Buyer nor any of its Affiliates have any Liability
to pay any brokers’ or finders’ fees or similar fees or commissions to any
broker, finder or agent or other Person with respect to the transactions
contemplated by this Agreement for which Seller or its Affiliates could become
liable or obliged.

ARTICLE 5

Covenants

SECTION 5.01Information Pending Closing.  From the date of this Agreement
through the Closing, Seller shall provide Buyer and its Representatives with
access to the personnel, properties, books, records, contracts, documents and
information of or with respect to the Facility and its material operations, upon
reasonable notice and at reasonable times and as otherwise reasonably requested
by Buyer.  Notwithstanding the foregoing, Seller shall not be required to
provide any information or access that Seller reasonably believes it is
prohibited from providing to Buyer by reason of applicable Law, Contract or
which constitutes or allows access to information protected by attorney/client
privilege; provided that in the event any information or other such access is
withheld, Seller shall provide Buyer with a reasonable summary or redacted
version of any such information or access that is so withheld from
Buyer.  Following the Closing, Seller shall be entitled to retain copies (at
Seller’s sole cost and expense) of all Records relating to its ownership and/or
operation of the Acquired Assets and Facility prior to Closing.

SECTION 5.02Conduct of Business Pending the Closing.

(a)From the date of this Agreement through the Closing, Seller, to the extent it
exercises decision making power through the Existing Shared Facilities
Agreement, the Existing O&M Agreement or otherwise, shall cause the Facility to
be operated in the ordinary course of business, in compliance in all material
respects with applicable Laws and material Contracts, and use commercially
reasonable efforts to preserve, maintain and protect the Acquired Assets and the
Facility in the present condition, ordinary wear and tear excepted, maintain
available supplies and inventories in quantities consistent with past practice,
maintain the Permits, maintain all relationships with PJM, suppliers,
Governmental Entities and others having business relationships with Seller and
its Affiliates related to the Facility and maintain in full force and effect all
insurance policies primarily relating to the Facility or the Acquired Assets in
effect on the date hereof.  Without limiting the foregoing, except as expressly
required by this Agreement, as set forth in Section 5.02 of the Seller
Disclosure Schedule or as consented to in writing by Buyer, which consent shall
not be unreasonably withheld, conditioned or delayed, from the date of this
Agreement through the Closing, Seller shall not (to the extent primarily
relating to the Facility, the Acquired Assets or the Assumed Liabilities) do the
following:

 

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(i)sell, transfer, convey or otherwise dispose of any Acquired Assets other than
dispositions of obsolete tangible personal property or in the ordinary course of
business;

(ii)acquire material assets of any other Person or merge or consolidate with any
Person or business division, in each case that would result in the acquisition
of Acquired Assets or give rise to an Assumed Liability outside the ordinary
course of business;

(iii)fully or partially liquidate, dissolve or otherwise wind up its business or
operations;

(iv)make a voluntary assignment for the benefit of its creditors or file a
voluntary petition of bankruptcy or insolvency or otherwise institute insolvency
proceedings of any type;

(v)amend or modify its Organizational Documents in any manner that would have a
material adverse effect on Seller’s ability to consummate the transactions
contemplated hereby;

(vi)allow the Facility to engage in any material new line of business, or make
any material change in the conduct of the business of the Facility;

(vii)pay or make any non-cash dividend or other non-cash distribution of
property comprising all or any portion of the Acquired Assets, the Facility or
the Assumed Liabilities;

(viii)(A) create, incur or assume any Indebtedness, except where such
Indebtedness is incurred under existing credit facilities, (B) guarantee any
Indebtedness of another Person or (C) incur, create or assume, or permit the
incurrence, creation or assumption of, any Lien on the Acquired Assets, except
for Permitted Liens, except, in each case, in the ordinary course of business or
as would not constitute an Assumed Liability;

(ix)waive, release, compromise, settle or consent to any litigation or claim
where such settlement or consent would result in any liability (other than as
would not constitute an Assumed Liability) to Buyer or the Facility or would
have a material adverse effect on Seller’s ability to perform its obligations
hereunder;

(x)enter into, terminate, cancel, materially amend, grant any waiver of any
material term under, or grant any material consent with respect to any Material
Contract (or any Contract that would be a Material Contract if in existence on
the date hereof), provided that Seller may take any such action with respect to
(A) any Contracts that do not currently exist, but would (if in existence on the
date hereof) be a Material Contract solely due to one or more of clauses (i),
(v), (vii), (vii) or (ix) of Section 3.08(a) in the ordinary course of business
or if such action would not result in a Post-Closing Liability to Buyer, and
(B) transactions under the PJM Tariff for the sale of ancillary services (as
defined in the PJM Tariff) or day-ahead or intra-day sales of electrical

 

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energy; provided further that regardless of anything to the contrary in this
Agreement, Seller shall not terminate, cancel, materially amend, grant any
waiver of any material term under, or grant any material consent with respect to
the Columbia Gas Contract;

(xi)terminate or replace Essential Power Operating Company, LLC as Operator
under and as defined in the Existing O&M Agreement or as CT Plant Operator under
and as defined in the Existing Shared Facilities Agreement;

(xii)modify the Annual Operating Budget or Annual Operating Plan for the current
Operating Year under and as defined in the Existing O&M Agreement;

(xiii)make or agree to make any capital expenditures (other than in accordance
with the Annual Operating Budget (as defined in the Existing O&M Agreement)) or
fail to make any capital expenditures in accordance with the Annual Operating
Budget (as defined in the Existing O&M Agreement);

(xiv)absent a change in circumstances, and, in any event, consistent with
prudent industry practices and the Existing O&M Agreement, defer any scheduled
material maintenance on any Acquired Assets;

(xv)fail to renew or grant any material right or license in any Intellectual
Property required for the ownership, operation or maintenance of the Acquired
Assets;

(xvi)make or change any material Tax election, settle or compromise any material
claim, notice, audit or assessment, adopt or change any method of Tax accounting
relating to any material amount of Tax, file any amended Tax Return, enter into
any Tax allocation, indemnity, sharing, closing or similar Contract, surrender,
settle or compromise any right to claim a Tax refund, consent to any extension
or waiver of the statute of limitations period applicable to any material Tax
claim or assessment, fail to pay any material amount of Taxes as such Taxes
become due and payable or make any voluntary Tax disclosure or Tax amnesty
filing, in each case, to the extent such action could result in Liabilities for
Buyer or its Affiliates or otherwise adversely affect the Acquired Assets;

(xvii)fail to maintain or renew all necessary Permits required in relation to
the Acquired Assets or the operation of the Facility;

(xviii)make any material change in the levels of fuel inventory customarily
maintained by Seller or its Affiliates with respect to the Acquired Assets and
the Facility, except for in the ordinary course of business, or purchase any
fuel inventory which is not of a similar grade or type as purchased in the
ordinary course of business;

(xix)use the Inventory, the capital spare parts located in or on the Owned Real
Property or the Transferred Easements or otherwise used or held for use in the
operation of the Facility, or any other property that would constitute Acquired
Assets if the Closing occurred at such time, other than for the operation of the
Facilities in the

 

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ordinary course of business or in accordance with the Existing Shared Facilities
Agreement;

(xx)(A) hire or engage any employee or independent contractor (except to the
extent such independent contractor does not result in any post-Closing Liability
or obligation on the part of the Buyer) to provide services in connection with
or otherwise in relation to the Facility; or (B) negotiate, adopt, amend or
terminate any collective bargaining Contract, agreement, understanding or
arrangement with any labor union or similar employee organizing body;

(xxi)participate in or fail to participate in any capacity auction except in the
ordinary course of business; provided that such participation by Seller shall
involve bidding capacity from the Facility into any such auction consistent with
PJM market rules and in a manner reasonably expected to result in all eligible
capacity from the Facility clearing the auction; or

(xxii)agree or commit to do any of the foregoing;

provided that Seller shall not be deemed in breach of any obligation pursuant to
this Section 5.02(a) as a result of the actions or omissions of the Operator or
CT Plant Operator under the Existing Shared Facilities Agreement or Existing O&M
Agreement, respectively, unless Seller shall explicitly direct, vote for or
consent to and cause any such action or omission.

(b)Buyer and Seller acknowledge that the Parties have engaged in discussions
with PECO Energy Company concerning the potential sale to PECO Energy Company of
the Rock Springs Switchyard, which sale would occur following the Closing.  From
the date of this Agreement through the Closing, Seller shall reasonably
cooperate with Buyer with respect to such potential sale (including providing
such information as is reasonably necessary to facilitate discussions with PECO
Energy Company to the extent within the possession or control of Seller and not
otherwise available to Buyer or any of its Affiliates), and Seller hereby
consents to Buyer’s direct engagement with PECO Energy Company with respect to
such potential sale. Notwithstanding the provisions of this Section 5.03(b), (i)
Seller shall not be required to (A) incur any unreimbursed out-of-pocket cost or
expense or undertake any liability in connection with such engagement or (B)
enter into any agreement with PECO Energy Company that would be binding on
Seller or its interest in the Rock Springs Switchyard, and (ii) Buyer shall not
have any authority or right to bind Seller or Seller’s interest in the Rock
Springs Switchyard with respect to any such sale or other matters.

SECTION 5.03Tax Matters.  

(a)Straddle Period.  When it is necessary under this Agreement to allocate
Taxes, other than Transfer Taxes, for a Straddle Period between the Pre-Closing
Tax Period and the Post-Closing Tax Period, Property Taxes shall be allocated
based on a prorated daily basis and all other Taxes shall be allocated based on
an interim closing of the books as of the end of the Closing Date.

(b)Cooperation.  Buyer and Seller shall cooperate fully, and shall cause their
respective Affiliates to cooperate fully, as and to the extent reasonably
requested by any Party,

 

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in connection with the filing of Tax Returns with respect to taxable periods
beginning on or prior to the Closing Date (including Straddle Periods) and any
audit or other proceeding in respect of Taxes relating the ownership or
operation of the Acquired Assets (each a “Tax Proceeding”) with respect to such
Tax Returns.  Such cooperation shall include the retention and (upon a Party’s
request) the provision of records and information which are reasonably relevant
to any such Tax Proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.  The requesting Party shall reimburse the
cooperating Parties for all reasonable costs and expenses incurred by such
cooperating Parties.  Notwithstanding any provision in this Agreement to the
contrary, Buyer (or any Affiliate thereof) shall not take any action or position
that is reasonably likely to adversely affect Seller (or any of its
Affiliates).  For the avoidance of doubt, nothing in this Section 5.03(b) shall
require Buyer, Seller or their respective Affiliates to make available Tax
Returns (or supporting documentation) relating to income or similar Taxes.

(c)Transfer Taxes.  All Transfer Taxes incurred in connection with the
transactions contemplated by this Agreement shall be borne one-half by Seller
and one-half by Buyer.  The Party responsible under applicable law for filing
any Tax Return with respect to an applicable Transfer Tax shall prepare such Tax
Return and provide a copy to the other Party for its review and approval within
a reasonable period of time prior to filing such Tax Return.  Buyer and Seller
further agree, upon request, to use commercially reasonable efforts to obtain
any certificate or other document from any Governmental Entity or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed in connection with the transactions contemplated hereby.

(d)Purchase Price Allocation.  The Parties agree that the aggregate
consideration (including any Assumed Liabilities and any other items treated as
consideration for U.S. federal income tax purposes and all other tax purposes)
paid in exchange for the Acquired Assets will be allocated among the Acquired
Assets in a manner consistent with applicable tax law (an “Allocation”).  Within
90 days of Closing, Buyer shall deliver to Seller an initial Allocation.  Seller
shall be deemed to agree with the initial Allocation unless Seller delivers a
written dispute notice to Buyer within thirty (30) days from the receipt thereof
setting forth in reasonable detail the reason for any objections and any
proposed adjustments to the initial Allocation.  Buyer and Seller shall
negotiate in good faith to resolve any disputed items.  If the Parties fail to
resolve any disputed items within ten (10) Business Days of the delivery of
Buyer’s dispute notice, Buyer and Seller may each make separate Allocations to
the extent of such disputed items that are not resolved. Seller and Buyer shall
use reasonable efforts to update and adjust any Allocation, in a manner
consistent with applicable tax law, following any adjustment to the aggregate
consideration paid in exchange for the Acquired Assets pursuant to this
Agreement.  Except to the extent otherwise required by any applicable tax Law,
if Buyer and Seller agree to a consistent Allocation then they shall each
prepare all Tax Returns, including IRS Form 8594, in a manner consistent with
such Allocation as it may be adjusted pursuant to this Agreement) and shall not
take any inconsistent position on any Tax Returns provided, however, that
nothing contained herein shall prevent Buyer or Seller from settling any
proposed deficiency or adjustment by any Taxing Authority based upon or arising
out of such Allocation, and neither Buyer nor Seller shall be required to
litigate before any court any proposed deficiency or adjustment by any Taxing
Authority challenging such

 

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Allocation. Each of Buyer and Seller shall promptly notify the other in writing
upon receipt of notice of any pending or threatened Tax audit or assessment
challenging any Allocation.

(e)Property Taxes.  Seller shall promptly pay when due all Property Taxes levied
with respect to the Acquired Assets attributable to the Pre-Closing Tax Period,
except any Property Taxes related to the Pre-Closing Tax Period payable as a
result of any default by Buyer under the PILOT Agreement, the Existing Shared
Facilities Agreement or the Amended and Restated Shared Facilities Agreement;
provided, that, for the avoidance of doubt, the foregoing shall not be deemed to
alter any of the obligations of Buyer with respect to the allocation of
liability for Property Taxes related to the Pre-Closing Tax Period under the
PILOT Agreement, the Existing Shared Facilities Agreement or the Amended and
Restated Shared Facilities Agreement.  Seller shall be liable for all such
Property Taxes, reduced (but not below zero) by any Property Taxes with respect
to the Acquired Assets prepaid by Seller that are allocable to a Post-Closing
Tax Period.  Buyer shall be liable for the proportionate amount of such Property
Taxes that is attributable to the Post-Closing Tax Period and any Property Taxes
related to the Pre-Closing Tax Period payable as a result of any default by
Buyer under the PILOT Agreement, the Existing Shared Facilities Agreement or the
Amended and Restated Shared Facilities Agreement.  Upon receipt of any bill for
such Property Taxes, Buyer or Seller, as applicable, shall present a statement
to the other setting forth the amount of reimbursement to which each is entitled
under this Section 5.03(e) together with such supporting evidence as is
reasonably necessary to calculate the proration amount.  The proration amount
shall be paid by the party owing it to the other within ten (10) days after
delivery of such statement absent manifest error.  In the event that Buyer or
Seller makes any payment for which it is entitled to reimbursement under this
Section 5.03(e), the applicable Party shall make such reimbursement promptly but
in no event later than ten (10) days after the presentation of a statement
setting forth the amount of reimbursement to which the presenting Party is
entitled along with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement.

SECTION 5.04Confidentiality; Publicity.

(a)Except as otherwise provided in Section 5.04(b) and except as required by
applicable Law, including securities Law, each Party will keep confidential the
terms of this Agreement and any of the ancillary agreements to be entered into
in connection with the transactions contemplated hereby; provided that (i) each
Party shall have the right to communicate and discuss with, and provide to, its
Affiliates (and any investment funds advised or managed by such Affiliates) and
its and their legal and financial advisors, potential and committed financing
sources, accountants, representatives, officers or employees, directors,
consultants and agents, any information regarding the terms and status of this
Agreement and any of the ancillary agreements to be entered into in connection
with the transactions contemplated hereby who are under professional duty or
contractual obligation to maintain the confidentiality of such information and
(ii) each Party may disclose this Agreement and any of the ancillary agreements
to be entered into in connection with the transactions contemplated hereby to
FERC or other applicable Governmental Authorities in connection with this
Agreement and any communications or filings related thereto.

 

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(b)Except as required by applicable Law, including securities Law, without prior
written approval of the other Party, neither Party nor its respective Affiliates
shall issue any press release or make any public statement regarding this
Agreement and the transactions contemplated hereby.  Notwithstanding anything to
the contrary herein, each Party and its respective Affiliates shall be permitted
to disclose information concerning this Agreement and the transactions
contemplated hereby after the Closing in connection with its customary
fundraising, marketing, informational or reporting activities, and financing
sources and other professional advisors thereof may publish “tombstones” or
other customary announcements which do not contain pricing details that are not
otherwise publicly available, in each case, without the other Party’s consent.

SECTION 5.05Post-Closing Books and Records.  As of the Closing, Seller and its
Affiliates shall be entitled to retain copies (at Seller’s sole cost and
expense) of all books, records and other documents (including back-up tapes)
pertaining to the ownership or operation of the Facility shall be available in
tangible form at the Facility as of immediately following the Closing.  Buyer
shall retain, for at least seven (7) years after the Closing Date, all books,
records and other documents pertaining to the Facility’s businesses that relate
to the period prior to the Closing Date, and, solely to the extent necessary for
Seller and its Affiliates to prepare Tax returns, respond to Tax audits or other
pending or threatened Claims, to make the same available after the Closing Date
for inspection and copying by Seller, at Seller’s sole cost and expense, during
regular business hours without significant disruption to the Facility’s
businesses and upon reasonable request and upon reasonable advance notice;
provided that such books, records and other documents shall not be available
with respect to any information (a) that is related to any pending Claim between
Seller and its Affiliates, on the one hand, and Buyer and its Affiliates, on the
other hand, (b) that is not permitted to be disclosed to Seller and its
Affiliates under any Contract or applicable Law or (c) the disclosure of which
would jeopardize any protection under attorney-client privilege or work product
doctrine.  At and after the expiration of such period, if Seller or any of its
Affiliates have previously requested in writing that such books and records be
preserved, Buyer shall, and to the extent within its powers as an equity holder,
shall cause the Facility to, either preserve such books and records for such
reasonable period as may be requested by Seller or transfer such books and
records to Seller or its designated Affiliates at Seller’s expense.

SECTION 5.06Expenses.  Except as otherwise provided in this Agreement (including
Section 5.08(b)), whether or not the Closing takes place, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such costs and expenses, including
any fees, expenses or other payments incurred or owed by a Party to any brokers,
financial or legal advisors or comparable other persons retained or employed by
such Party in connection with the transactions contemplated by this Agreement.  

SECTION 5.07Financing Cooperation. Buyer may explore certain debt financing
arrangements in connection with the Closing contemporaneously with or following
the Closing (a “Debt Financing”).  Seller agrees to provide such information
(and to cause its Affiliates and its and their respective personnel and advisors
to provide such information), including unaudited pro forma balance sheets and
statements of income as of and for the calendar years ended December 31, 2016,
and December 31, 2017, in connection with the Debt Financing as is

 

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reasonably requested by Buyer.  Notwithstanding any other provision set forth
herein or in any other agreement between Seller and Buyer (or their respective
Affiliates), Seller agrees that Buyer and its Affiliates may share non-public or
confidential information regarding the Acquired Assets and the Facility with the
financing sources and that Buyer, its Affiliates and such financing sources may
share such information with potential financing sources in connection with any
marketing efforts (including any syndication) in connection with the Debt
Financing, provided that the recipients of such information agree to customary
confidentiality arrangements.

SECTION 5.08Further Actions.

(a)Subject to the terms and conditions of this Agreement, Buyer and Seller each
agrees to use commercially reasonable efforts (except where a different efforts
standard is specifically contemplated by this Agreement, in which case such
different standard shall apply) to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement.  In furtherance of the foregoing, prior to the Closing, Seller shall
provide Buyer with reasonable assistance that Buyer may reasonably request in
order to effect an orderly transition of the Acquired Assets, Assumed
Liabilities and Facility to Buyer, including cooperating in transition planning
discussions.  Seller shall reasonably cooperate with Buyer’s efforts to obtain,
at Buyer’s sole cost and expense, any title insurance and ALTA surveys that
Buyer may desire with respect to the Owned Real Property and Easement Real
Property (including providing a customary owner’s affidavit to Buyer’s title
insurance company in form and substance acceptable to Seller).

(b)The Parties will each use commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to obtain the Required Consents, including any Consents
required in connection with any approvals of parties to Contracts that are
included in the Acquired Assets and any Filings or Consents with or from any
Governmental Entity, including by (i) preparing and filing as soon as
practicable all such Filings or Consents with or from any Governmental Entity or
other Person that are required to be filed or obtained in order to consummate
the transactions contemplated hereby, (ii) taking all actions necessary to cause
all conditions set forth in Article 6 to be satisfied as soon as practicable and
(iii) executing and delivering any additional instruments necessary to fully
carry out the purposes of this Agreement; provided, however, that neither Party
shall be required to expend any funds or assume any Liabilities other than
expenditures and Liability assumptions that are customary and reasonable in
nature and amount in the context of the transactions contemplated by this
Agreement.  Notwithstanding the foregoing Section 5.08(a) or this Section
‎5.08(b), none of Buyer or any of its Affiliates shall have any obligation to
(i) hold separate or divest any property or assets of Buyer or any of its
Affiliates or (ii) defend against any Claim challenging this Agreement or the
transactions contemplated hereby. Seller shall not make any payments or
otherwise pay any consideration to any Third Party or agree to modify the terms
of any Contract, waive any right or grant any concession (including providing
any Third Party credit support or any corporate guaranty), in each case, to
obtain any Consent or release, except for the payment of cash amounts by Seller
and its Affiliates that will be paid in full prior to the Closing. The Parties
agree that (A) Buyer shall draft and file, and bear any filing fees associated
with, the application for FERC Approval, a joint petition for the FERC Waiver
and in connection with filings under the HSR

 

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Act and (B)  Seller shall draft and file, and bear the filing fees associated
with any Filings or Consents with or from any other Governmental Entity,
including the filing pursuant to Schedule 2 to the PJM Tariff for the
termination of Seller’s Reactive Service Tariff; provided, however, that (1)
each Party shall have a reasonable opportunity to first review and comment on
any Filings or Consents and the Party responsible for such Filing or Consent
shall consider such comments in good faith and (2) notwithstanding anything to
the foregoing, each Party will bear its own internal costs and pay all fees and
expenses including expenses of its counsel in connection with such Filings or
Consents regardless of the Party responsible for drafting and
filing.  Notwithstanding anything in this Agreement to the contrary, in no event
shall Buyer or any of its Affiliates be required, and in no event shall Seller
or any of its Affiliates be permitted, to offer or agree to sell or otherwise
dispose of, or hold separate, agree to conduct, license or otherwise limit the
use of any of the assets, categories of asset or businesses or other segments of
the Facility or its business, or Buyer or any of its Affiliates, or to agree to
any change in its business or any other restriction or condition with respect
thereto required or requested by a Governmental Entity.

(c)Seller and Buyer shall (i) each, to the extent practicable and permitted by
applicable Law, promptly inform the other Party of any material communication
made to, or received by such Party from, any Governmental Entity regarding any
of the transactions contemplated hereby, (ii) respond as promptly as reasonably
practicable to any inquiries or requests for additional information and
documentary material received from any Governmental Entity and (iii) except as
required by Law, not enter into any agreement with any Governmental Entity
agreeing not to consummate the transactions contemplated by this
Agreement.  Notwithstanding anything in this Agreement to the contrary, in no
event will either Party or its Affiliates be required to share with the other
Party any information that (A) does not relate to the Acquired Assets, the
Facility and the Assumed Liabilities, (B) reveals such Party’s (or its
Affiliates’) valuation or negotiating strategy with respect to the transactions
contemplated hereby, or (C) is otherwise confidential or proprietary information
of such Party or any of its Affiliates.

(d)Notwithstanding any other provision in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign or transfer any interest
in any asset (including any preliminary fuel oil conversion studies), claim,
right or benefit if such assignment or transfer (or attempt to make such an
assignment or transfer) (i) is prohibited by Law or (ii) without the Consent of
a Third Party (including any Governmental Entity), would (A) constitute a breach
or other contravention of the rights of such Third Party, (B) be reasonably
likely to subject Buyer, Seller or any of their respective Representatives to
civil or criminal liability, (C) be reasonably likely to make such assignment or
transfer void or voidable or (D) in any way materially and adversely affect the
rights thereunder of Buyer, Seller or their respective Representatives, and such
Consent is not obtained at or before the Closing (such assets, claims, rights or
benefits being collectively referred to herein as the “Restricted Assets”). Any
assignment or transfer of a Restricted Asset shall be made subject to applicable
Law or such Consent being obtained. If the assignment or transfer of any
Restricted Asset is prohibited by Law or is not obtained prior to the Closing,
(1) each Party shall continue to use commercially reasonable efforts to obtain
such Consents or implement any actions required to complete the assignment or
transfer of such Restricted Assets (including cooperating with each other in
attempting to obtain any required Consent with respect thereto)

 

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as soon as reasonably applicable to the extent and for so long as the applicable
Restricted Asset shall not have been assigned to Buyer, (2) Seller shall,
without further consideration, use commercially reasonable efforts to cooperate
with Buyer in good faith to enter into any alternative arrangements (such as a
license, sublease or operating agreement) reasonably acceptable to Buyer and
Seller intended to provide Buyer with the benefit of any such Restricted Asset
until such time as such Consent has been obtained which results in Buyer or its
Affiliates receiving all the benefits and bearing all the costs, liabilities and
burdens with respect to any such Restricted Asset and (3) upon the obtaining of
any required Consents, such Restricted Asset shall promptly be transferred and
assigned to Buyer hereunder at no additional cost to Buyer and effective as if
transferred as of the Closing; provided, that, except as provided under Section
5.08(b), no Party or its Affiliates shall have any obligation to pay money to or
make any concessions to obtain any such Consent, except for bearing its own
costs (including expenses of counsel).

(e)Following the Closing, (i) if Buyer or any of its Affiliates receive any
asset or payment from a Third Party that constitutes an Excluded Asset, Buyer
shall promptly after receipt thereof, but in no event later than five (5)
Business Days after such receipt, notify Seller of such receipt and transfer to
Seller such Excluded Asset to an account designated by Seller and (ii) if Seller
receives any Inventories or any payment that otherwise constitutes an Acquired
Asset, Seller shall promptly after receipt thereof, but in no event later than
five (5) Business Days after such receipt, notify Buyer of such receipt and send
to Buyer such Inventories to an address designated in writing by Buyer or such
payment to an account designated by Buyer, as applicable.

(f)The Parties will take all such actions as are necessary to transfer the
Facility from Seller’s PJM eRPM account to Buyer’s (or its designee’s) PJM eRPM
account, and to transfer any and all PJM capacity supply obligations and rights
as may be associated with the Facility from Seller to Buyer as of the Closing,
including the capacity supply obligations and rights set forth on Section
5.08(f) of the Seller Disclosure Schedule and any such capacity supply that the
Facility has cleared in any of the PJM capacity auctions occurring before the
Closing for periods of time that are subsequent to the Closing.

(g)If the Transferred Allowances delivered to Buyer’s Emission Allowance
Accounts pursuant to Section 2.01(a)(x) are insufficient to cover the Seller
Allowance Obligation, then Buyer shall promptly notify and provide Seller
reasonable detail of the basis of such determination, and Seller shall, within
five (5) Business Days of receipt of such notification, deliver to Buyer any
additional Emission Allowances as are necessary to cover the Seller Allowance
Obligations.

(h)Seller shall use commercially reasonable efforts to provide assistance to
Buyer in connection with Buyer’s preparation and filing with FERC of a rate
schedule for the provision of Reactive Service from the Facility.  To the extent
available, Seller shall provide Buyer and its Representatives with the
information and documentation listed on Section 5.08(h) of the Buyer Disclosure
Schedule as soon as practicable (and in any event no later than thirty (30)
days) following the date of this Agreement.

 

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SECTION 5.09Amended and Restated Shared Facilities Agreement.  At the Closing,
Buyer and Seller shall enter into an Amended and Restated Shared Facilities
Agreement reflecting the terms and conditions set forth in Exhibit G hereto and
otherwise reasonably acceptable to Buyer and Seller (the “Amended and Restated
Shared Facilities Agreement”), in order to effect the sharing of services and
facilities and allocation of certain tax obligations under the PILOT Agreement
between the Facility and Seller’s “Wildcat Point” facility following the
Closing.  Buyer and Seller shall work in good faith to finalize the Amended and
Restated Shared Facilities Agreement prior to Closing.

SECTION 5.10Post-Closing Cooperation.

(a)After Closing, upon prior reasonable written request, each Party shall use
commercially reasonable efforts to cooperate with each other in furnishing
records, information, oral or written testimony, oral or written attestations
and certifications, and other assistance (including making available to each
other officers, directors, employees and agents for fact finding, consultation
and interviews as witnesses to the extent any such Person may reasonably be
required) in connection with transition matters and any inquiries or proceedings
involving the Facility, but excluding any proceedings arising from disputes
among the Parties. Each such requesting Party shall reimburse such cooperating
Party for any reasonable out-of-pocket expenses paid or incurred by such
cooperating Party as a result of any such requested cooperation.

(b)After the Closing Date, if a Party or its Affiliates receive mail, packages,
and other communications (including electronic communications) properly
belonging to the other (or the other’s Affiliates), the receiving Party shall
promptly after becoming aware thereof refer, forward or otherwise deliver such
mail, packages, or other communications (or, in case the same relate to both the
ownership or operation of the Acquired Assets or the Facility or the Assumed
Liabilities and Seller’s other businesses, copies thereof) to the other
Party.  The provisions of this Section 5.10(b) are not intended to, and shall
not be deemed to, constitute an authorization by either Seller, on one hand, or
Buyer, on the other hand, to permit the other to accept service of process on
its behalf and no Party is or shall be deemed to be the agent of the other for
service of process purposes.  In the event that, on or after the Closing Date, a
Party or any of its Affiliates receives any payments or other funds belonging to
the other Party, then such Party shall, or shall cause its Affiliates receiving
such funds to, receive such funds in trust for such other Party and promptly
forward such funds to such other Party, without offset for any liability.

(c)Following the Closing, the Parties shall, and shall cause their respective
Affiliates to, use commercially reasonable efforts to take, or cause to be
taken, all appropriate action, to do or cause to be done all things necessary,
proper or advisable under applicable Law, and to execute and deliver such
documents, certificates, instruments, agreements and other papers, as may be
reasonably required to carry out the provisions of this Agreement and consummate
and make effective the transactions contemplated by this Agreement, or confirm,
record or evidence the authorization, execution, delivery or performance of this
Agreement or consummation of the transactions contemplated by this Agreement.
Without limiting the foregoing, to the extent that, from time to time after the
Closing, (a) Seller or its Affiliates and/or Buyer or its Affiliates identify
assets that constitute Acquired Assets or otherwise are

 

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owned by Buyer but that are in the possession of Seller or its Affiliates
(including any payments from customers of Buyer that are improperly sent to
Seller or its Affiliates after the Closing), Seller will use commercially
reasonable efforts to locate such items and take such action as is necessary to
put Buyer or one of its Affiliates in actual possession thereof and (b) Seller
or its Affiliates and/or Buyer or its Affiliates identify assets that constitute
Excluded Assets or otherwise are owned by Seller but that are in the possession
of Buyer or its Affiliates (including any payments from customers of Seller that
are improperly sent to Buyer or its Affiliates after the Closing), Buyer will
use commercially reasonable efforts to locate such items and take such action as
is necessary to put Seller or one of its Affiliates in actual possession
thereof.

SECTION 5.11 Proration of Charges.

(a)Except as otherwise provided in this Agreement, all installments of special
assessments or other charges on or with respect to the Acquired Assets payable
by Seller for any period in which the Closing Date shall occur, including base
rent, common area maintenance, royalties, all municipal, utility or authority
charges for water, sewer, electric or gas charges, garbage or waste removal,
cost of fuel and amounts secured by any materialmen’s, mechanics’, carriers’,
workmen’s, warehousemen’s, repairmen’s and other like Liens, shall be
apportioned as of the Closing, and each party shall pay its proportionate share
promptly upon the receipt of any bill, statement or other charge with respect
thereto. If such charge or rates are assessed either based upon time or for a
specified period, such charges or rates shall be prorated as of 00:00:01
(Eastern Prevailing Time) on the Closing Date. If such charges or rates are
assessed based upon usage of utility or similar services, such charges shall be
prorated based upon meter readings taken on the Closing Date.

(b)All refunds, reimbursements, installments of base rent, additional rent,
license fees or other use related revenue receivable by any party to the extent
attributable to the operation of the Facility for any period in which the
Closing shall occur shall be prorated so that Seller shall be entitled to that
portion of any such installment applicable to the period up to but not including
the Closing Date and Buyer shall be entitled to that portion of any such
installment applicable to any period including and from and after the Closing
Date, and if Buyer or Seller, as the case may be, shall receive any such
payments after the Closing Date, they shall promptly remit to such other parties
their share of the payments.

(c)The prorations pursuant to this Section 5.11 may be calculated after the
Closing Date, as each item to be prorated (including any such obligation,
assessment, charge, refund, reimbursement, rent installment, fee or revenue)
accrues or comes due, provided that, in any event, any such proration shall be
calculated not later than thirty (30) days after the party requesting proration
of any item obtains the information required to calculate such proration of such
item.

SECTION 5.12Risk of Loss

. Except as otherwise provided in this Section 5.12, prior to the Closing, all
risk of loss or damage to the Acquired Assets or the Facility shall, as between
Buyer and Seller, be borne by Seller until the Closing; provided, that Seller
shall have no obligation to restore, repair or replace the Acquired Assets or
the Facility in connection with a fire or other casualty (each such event, an
“Event of Loss”), or a taking by a Governmental

 

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Entity by exercise of the power of eminent domain (each, a “Taking”).  If prior
to the Closing the Acquired Assets or the Facility are subject to an Event of
Loss or a Taking, then the following provisions of this Section 5.12 shall
apply:

(a)There shall be no effect on the transactions contemplated hereby following
the occurrence of (i) any one or more Events of Loss, if the aggregate costs,
net of and after giving effect to any insurance proceeds committed by Seller to
remedy any such Event of Loss to the extent transferred to Buyer free and clear
of any Liens in immediately available funds, to restore, repair or replace the
Acquired Assets or Facility subject to such Event of Loss to a condition
reasonably comparable to their prior condition, plus the amount of any lost
profits reasonably expected to accrue after Closing as a result of such Event of
Loss, such amount pursuant to this clause (i) to be determined by an independent
Third Party appraiser mutually selected by the Parties (collectively,
“Restoration Costs”) and/or (ii) any one or more Takings, if the value, net of
and after giving effect to any available condemnation award and any tax benefits
related thereto to the extent transferred to Buyer free and clear of any Liens
in immediately available funds, of the property subject to such Taking plus the
amount of any lost profits reasonably expected to accrue after Closing as a
result of such Taking, such amount pursuant to this clause (ii) to be determined
by an independent Third Party appraiser mutually selected by the Parties
(collectively, the “Condemnation Value”), is, in the aggregate, less than or
equal to one percent (1%) of the Base Purchase Price.

(b)In the event that the aggregate Restoration Costs and Condemnation Value with
respect to one or more Events of Loss and/or Takings equals an amount in excess
of one percent (1%) of the Base Purchase Price, then Buyer shall have the right
to terminate this Agreement.

SECTION 5.13Exclusivity

.  From the date hereof until the earlier of the Closing or the termination of
this Agreement, Seller shall not, and shall cause each of its Affiliates not to,
and shall use reasonable best efforts to cause its and its Affiliates’
respective Representatives not to, directly or indirectly, encourage, solicit,
initiate or engage in discussions or negotiations with, or provide any
information to, any Person (other than Buyer and its Affiliates and
Representatives), concerning any sale of the Acquired Assets or the Facility or
similar transactions involving any Acquired Assets or the Facility, or enter
into any agreement with respect thereto.

SECTION 5.14Update of Disclosure Schedules; Election Not to Close.

(a)Seller has the continuing right (i) to supplement, modify or amend, from the
date of this Agreement through the date that is no more than the later of five
(5) Business Days prior to Closing or the Business Day following such event, the
information required to be set forth on the Seller Disclosure Schedules as to
representations made by Seller with respect to any matter hereafter arising
which, if existing upon execution of the Agreement, would have been required to
have been set forth on the Seller Disclosure Schedules, and (ii) if necessary or
appropriate to correct any inaccuracy in a representation made by Seller, to add
a schedule to the Seller Disclosure Schedules with a corresponding reference in
this Agreement (such information and additional schedules collectively, the
“Updating Information”).

 

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(b)Upon receipt of Updating Information from Seller, Buyer may terminate this
Agreement within fifteen (15) days thereof in accordance with Section
8.05(e).  Seller acknowledges and agrees that Buyer may terminate this Agreement
within such 15-day period in its sole discretion pursuant to Section
8.05(e).  If Buyer does not terminate this Agreement within such 15-day period,
(i) any incorrectness or breach caused by the Updating Information shall be
deemed cured and Buyer shall not be entitled to any claim for indemnification
for such incorrectness or breach, (ii) the relevant Seller Disclosure Schedules
shall be deemed to be supplemented, modified or amended by such Updating
Information as of the execution of this Agreement for all purposes of this
Agreement, and (iii) any applicable representations and warranties to which such
Updating Information refers shall be deemed qualified as of the execution of
this Agreement by such Updating Information.

ARTICLE 6

Conditions to Closing

SECTION 6.01Conditions to Each Party’s Obligations.  The obligation of Buyer and
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by Buyer and Seller) as of the Closing of each of
the following conditions:

(a)All of the Required Consents shall have been made, given or obtained, as
applicable, and shall be in full force and effect (other than as described in
Section 6.01(b) and (d).

(b)Early termination shall have been granted or the applicable waiting period
shall have expired under the HSR Act with respect to the transactions
contemplated by this Agreement.

(c)FERC Approval shall have been granted.

(d)No Order or Law preventing, prohibiting or making illegal the Closing shall
be in effect.

(e)Seller and Buyer each shall have agreed on the form and substance of the
Amended and Restated Shared Facilities Agreement pursuant to Section 5.09.  

SECTION 6.02Conditions to Obligation of Buyer.  The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by Buyer) as of the Closing of each of the following
additional conditions:

(a)Seller shall have duly performed, satisfied and complied with, in all
material respects, each of the covenants, agreements and obligations set forth
in this Agreement required to be performed, satisfied or complied with by it at
or prior to the Closing.

(b)(i) The representations and warranties of Seller (other than the
representations and warranties set forth in the Specified Representations made
by Seller), as such representations or warranties are modified by any Updating
Information, shall be true and

 

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correct as of the date hereof and as of the Closing Date as though made on the
Closing Date (without regard to any qualifier therein as to materiality, Seller
Material Adverse Effect or Company Material Adverse Effect), except to the
extent such representations and warranties expressly relate to an earlier date
(in which case they shall be true and correct as of such earlier date) and
except where the failure of such representations and warranties to be so true
and correct, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Seller Material Adverse Effect or a Company
Material Adverse Effect; and (ii) the Specified Representations made by Seller,
as such representations or warranties are modified by any Updating
Information,  shall be true and correct as of the date hereof and as of the
Closing Date as though made on the Closing Date in all respects (without regard
to any qualifier therein as to materiality, Seller Material Adverse Effect or
Company Material Adverse Effect), except to the extent such representations and
warranties expressly relate to an earlier date (in which case they shall be so
true and correct as of such earlier date) and except for such breaches that are
de minimis.

(c)Seller shall have delivered to Buyer a certificate, dated as of the Closing
Date, duly executed on behalf of Seller by an authorized executive officer
thereof, certifying that the conditions specified in Sections 6.02(a), Section
6.02(b) and Section 6.02(d) have been fulfilled.

(d)Since the date of this Agreement, there has not occurred a Seller Material
Adverse Effect or Company Material Adverse Effect.

(e)Buyer shall have obtained such amount of additional debt financing as it
reasonably deems necessary to consummate the transactions contemplated hereby,
on terms and conditions reasonably satisfactory to Buyer.

(f)FERC Waiver shall have been issued.

SECTION 6.03Conditions to Obligation of Seller.  The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by Seller) as of the Closing of each of the following
additional conditions:

(a)Buyer shall have duly performed and satisfied or complied with, in all
material respects, each of the covenants, agreements and obligations set forth
in this Agreement required to be performed, satisfied or complied with by it at
or prior to the Closing.

(b)(i) The representations and warranties of Buyer, (other than the
representations and warranties set forth in the Specified Representations made
by Buyer) shall be true and correct as of the date hereof and as of the Closing
Date as though made on the Closing Date (without regard to any qualifier therein
as to materiality), except to the extent such representations and warranties
expressly relate to an earlier date (in which case they shall be true and
correct as of such earlier date) and except where the failure of such
representations and warranties to be so true and correct, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a material
adverse effect on Buyer’s ability to consummate the transactions contemplated by
this Agreement; and (ii) the Specified Representations made by Buyer shall be
true and correct as of the date hereof and as of the

 

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Closing Date as though made on the Closing Date in all respects (without regard
to any qualifier therein as to materiality), except to the extent such
representations and warranties expressly relate to an earlier date (in which
case they shall be so true and correct as of such earlier date) and except for
such breaches that are de minimis.

(c)Buyer shall have delivered to Seller a certificate, dated as of the Closing
Date, duly executed on behalf of Buyer by an authorized individual thereof,
certifying that the conditions specified in Sections 6.03(a) and 6.03(b) hereto
have been fulfilled.

ARTICLE 7

Survival and Release

SECTION 7.01Survival of Certain Representations and Warranties.  Other than (a)
Sections 3.01 (Organization and Existence), 3.02 (Authorization), 3.09
(Ownership of Assets), 3.14 (Indebtedness of Seller), 3.16 (Brokers), 4.01
(Organization and Existence), 4.02 (Authorization) and 4.09 (Brokers)
(collectively, the “Specified Representations”) which shall survive for a period
of five (5) years after the Closing Date, (b) Section SECTION 3.11 (Taxes),
which shall survive the Closing until the date that is ninety (90) days after
the expiration of the applicable statute of limitations and (c) Sections
8.01(a)(iii), 8.01(a)(iv), 8.02(a)(iii) and 8.02(a)(iv), which shall survive the
Closing indefinitely, all other representations, warranties, covenants and
agreements of the Parties contained in this Agreement (other than covenants and
agreements which by their terms are to be performed after Closing, which shall
survive until the date that is ninety (90) days after the last date that a Party
is required to take any action or refrain from taking any action in accordance
therewith) shall survive for a period of twelve (12) months after the Closing
Date and there shall be no liabilities or obligations with respect thereto from
and after such date; provided, that any claim made or asserted by a Person
within the applicable survival period shall continue to survive with respect to
such claim until such claim is finally resolved and all obligations with respect
thereto are fully satisfied.  

SECTION 7.02“As Is” Sale; Release.  

(a)EXCEPT FOR THOSE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE
3 OF THIS AGREEMENT or the Seller Disclosure Schedule (as modified by the
Updating Information), EXCEPT IN THE CASE OF FRAUD, (i) THE ACQUIRED ASSETS AND
THE ASSUMED LIABILITIES ARE BEING TRANSFERRED “AS IS, WHERE IS, WITH ALL
FAULTS,” AND (ii) BUYER ACKNOWLEDGES THAT IT HAS NOT RELIED ON, AND SELLER
EXPRESSLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE,
EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE ACQUIRED ASSETS
OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS AND OTHER INCIDENTS OF THE
ACQUIRED ASSETS AND THE ASSUMED LIABILITIES.  Buyer further acknowledges and
agrees that any fuel oil conversion studies included in the Acquired Assets are
incomplete and may not be relied upon.

 

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(b)Except for the rights of each Party arising under this Agreement and the
other agreements and instruments to be delivered in connection herewith,
effective as of the Closing and without limiting the other Party’s
responsibility and obligation arising under this Agreement, each Party hereby
absolutely and unconditionally releases, and shall cause its Affiliates and its
and their Related Persons to absolutely and unconditionally release, acquit and
forever discharge the other Party, its Affiliates and its and their respective
Related Persons from any and all costs, expenses, damages, debts, or any other
obligations, Liabilities and claims whatsoever, whether known or unknown, both
in law and in equity, in each case to the extent arising out of or resulting
from the ownership and/or operation of the Acquired Assets or the Facility or
the Assumed Liabilities, or the assets, business, operations, conduct, services,
products and/or employees (including former employees) of any of the Facility
(and any predecessors), whether related to any period of time before or after
the Closing Date (all of the foregoing, collectively, the “Released
Liabilities”); provided, that if Buyer makes a Claim against Seller involving
actions or omissions of the Operator, then Seller shall retain all rights it has
against such Operator.  Each Party shall not and shall cause its Affiliates and
its and their Related Persons not to, make any claim against any of the other
Party, its Affiliates or its and their respective Related Persons for any
Released Liabilities.

SECTION 7.03Consequential Damages (a).  No Party shall be liable for punitive or
exemplary damages, whether based on contract, tort, strict liability, other Law
or otherwise and whether or not arising from the other Party’s sole, joint or
concurrent negligence, strict liability or other fault for any matter relating
to this Agreement and the transactions contemplated hereby; provided, however,
that the foregoing shall not apply to Claims brought by any Third Party for
which any Indemnifying Entity is obligated to indemnify an Indemnified Entity
hereunder.

ARTICLE 8

Indemnification, Termination, Amendment and Waiver

SECTION 8.01Indemnification by Seller.

(a)From and after the Closing, subject to the other provisions of this Article
8, Seller shall indemnify Buyer, its Affiliates and its and their respective
Related Persons (collectively, the “Indemnified Buyer Entities”) and defend and
hold each of them harmless from and against, any and all Indemnifiable Losses
suffered, paid or incurred by such Indemnified Buyer Entity to the extent
arising out of or as a result of: (i)  any breach or inaccuracy of any of the
representations and warranties made by Seller to Buyer in Article 3 or in any
certificate delivered in connection with this Agreement, (ii) any breach or
default of, or failure to comply with or perform, by Seller of any of the
covenants or agreements of Seller contained in this Agreement, (iii) any
Excluded Assets, and (iv) any Excluded Liabilities.

(b)Notwithstanding anything to the contrary contained in this Agreement, the
Indemnified Buyer Entities shall be entitled to indemnification:

(i)only if the aggregate Indemnifiable Losses to all Indemnified Buyer Entities
with respect to all such claims exceed one percent (1%) of the Base Purchase
Price (the “Deductible”), whereupon (subject to the provisions of clauses (ii)
and (iii) below) Seller shall be obligated to pay only such amounts that exceed
the

 

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Deductible; provided, that the Deductible shall not apply to Indemnifiable
Losses suffered, paid or incurred by an Indemnified Buyer Entity arising out of
or as a result of a breach or inaccuracy in or otherwise related to any of the
Specified Representations made by Seller, the representations and warranties
contained in Section 3.11 or claims pursuant to Section 8.01(a)(ii), Section
8.01(a)(iii) or Section 8.01(a)(iv);

(ii)only with respect to individual items (or series of related items) where the
Indemnifiable Losses relating thereto are in excess of $50,000 (any items less
than such threshold shall not be aggregated for the purposes of the immediately
preceding clause (i)); provided that this Section 8.01(b)(ii) shall not apply to
Indemnifiable Losses suffered, paid or incurred by an Indemnified Buyer Entity
arising out of or as a result of any breach of or inaccuracy in any of the
Specified Representations made by Seller, the representations and warranties
contained in Section 3.11 or claims pursuant to Section 8.01(a)(ii), Section
8.01(a)(iii) or Section 8.01(a)(iv); and

(iii)only with respect to such claims made on or before the expiration, if any,
of the survival period pursuant to Section 7.01 for the applicable
representation, warranty, covenant or agreement.

(c)Notwithstanding anything to the contrary contained in this Agreement, in no
event shall the Indemnified Buyer Entities be entitled to aggregate
indemnification in excess of ten percent (10%) of the Base Purchase Price (the
“Cap”); provided, that the Cap shall not apply to Indemnifiable Losses suffered,
paid or incurred by an Indemnified Buyer Entity arising out of or as a result of
any breach of or inaccuracy in any of the Specified Representations made by
Seller, the representations and warranties contained in Section 3.11 or claims
pursuant to Sections 8.01(a)(ii), (iii) or (iv).

(d)This Section is subject to the limitations set forth in Section 7.03.

(e)Notwithstanding anything to the contrary in this Agreement, for purposes of
this Section 8.01 or Section 8.02, the determination of any breach or inaccuracy
or the amount of any Indemnifiable Losses arising therefrom shall be made
without regard to any qualification or exception contained in any of the
representations, warranties, covenants or agreements relating to materiality,
Seller Material Adverse Effect, Company Material Adverse Effect or any similar
qualification or standard applicable thereto.

SECTION 8.02Indemnification by Buyer.

(a)From and after the Closing Date, subject to the other provisions of this
Article 8, Buyer agrees to indemnify Seller and its officers, directors,
employees and Affiliates (collectively, the “Indemnified Seller Entities”) and
to defend and hold each of them harmless from and against, any and all
Indemnifiable Losses suffered, paid or incurred by any such Indemnified Seller
Entity to the extent arising out of or resulting from (i) any breach or
inaccuracy of any of the representations and warranties made by Buyer in Article
4 or in any certificate delivered in connection with this Agreement, (ii) any
breach by Buyer of any of its covenants or agreements of Buyer contained in this
Agreement, (iii) the Acquired Assets or (iv) the Assumed Liabilities, other than
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which an Indemnified Buyer Entity is entitled to indemnification under Section
8.01 (without giving effect to Section 7.01) or (v) the Acquired Assets, other
than any Indemnifiable Loss relating to any matter for which an Indemnified
Buyer Entity is entitled to indemnification under Section 8.01 (without giving
effect to Section 7.01).

(b)Notwithstanding anything to the contrary contained in this Agreement, the
Indemnified Seller Entities shall be entitled to:

(i)only if the aggregate Indemnifiable Losses to all Indemnified Seller Entities
with respect to all such claims exceed the Deductible, whereupon (subject to the
provisions of clauses (ii) and (iii) below) Buyer shall be obligated to pay only
such amounts that exceed the Deductible; provided, that the Deductible shall not
apply to Indemnifiable Losses suffered, paid or incurred by an Indemnified
Seller Entity arising out of or as a result of a breach or inaccuracy in or
otherwise related to any of the Specified Representations made by Buyer or
claims pursuant to Sections 8.02(a)(ii), (iii) or (iv);

(ii)only with respect to individual items (or series of related items) where the
Indemnifiable Losses relating thereto are in excess of $50,000 (any items less
than such threshold shall not be aggregated for the purposes of the immediately
preceding clause (i)); provided that this Section 8.02(b)(ii) shall not apply to
Indemnifiable Losses suffered, paid or incurred by an Indemnified Seller Entity
arising out of or as a result of any breach of or inaccuracy in any of the
Specified Representations made by Buyer or any claims pursuant to Sections
8.02(a)(ii), (iii) or (iv); and

(iii)only with respect to such claims made on or before the expiration, if any,
of the survival period pursuant to Section 7.01 for the applicable
representation, warranty, covenant or agreement.

(c)Notwithstanding anything to the contrary contained in this Agreement, in no
event shall the Indemnified Seller Entities be entitled to aggregate
indemnification in excess of the Cap; provided, that the Cap shall not apply to
Indemnifiable Losses suffered, paid or incurred by an Indemnified Seller Entity
arising out of or as a result of any breach of or inaccuracy in any of the
Specified Representations made by Buyer or claims pursuant to Sections
8.02(a)(ii), (iii) or (iv).

(d)This Section is subject to the limitations set forth in Section 7.03.

SECTION 8.03Indemnification Procedures.

(a)If an Indemnified Buyer Entity or an Indemnified Seller Entity (each, an
“Indemnified Entity”) reasonably believes that a Claim or other circumstance
exists that has given or may reasonably be expected to give rise to a right of
indemnification under this Article 8 (whether or not the amount of Indemnifiable
Losses relating thereto is then quantifiable), such Indemnified Entity shall
assert its claim for indemnification by giving written notice thereof (a “Claim
Notice”) to the party from which indemnification is sought (the “Indemnifying
Entity”) reasonably promptly after the discovery by the Indemnified Entity of
the circumstances giving rise to such claim for indemnity.  Each Claim Notice
shall, to the

 

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extent then known, describe the claim in reasonable detail. The failure of the
Indemnified Entity to so notify the Indemnifying Entity shall not relieve the
Indemnifying Entity of liability hereunder except (and then only) to the extent
that the defense of such Claim is materially prejudiced by the failure to give
such notice.

(b)Except as otherwise set forth herein, upon receipt by an Indemnifying Entity
of a Claim Notice in respect of a Claim by a Person not a Party or affiliated
with any Party (a “Third Party”), the Indemnifying Entity shall be entitled to:
(i) assume and have sole control over the defense of such Claim at its sole cost
and expense and with its own counsel (subject to the proviso to the last
sentence of this Section 8.03(b)) if it gives written notice of its intention to
do so to the Indemnified Entity within thirty (30) days of the receipt of such
Claim Notice from the Indemnified Entity; provided, that in order for the
Indemnifying Entity to assume the defense of such Claim brought by a Third
Party, (A) the Indemnifying Entity must, in its notice assuming such defense,
acknowledge that the Indemnifying Entity is obligated to indemnify the
Indemnified Entity for any and all Indemnifiable Losses arising from or in
connection with such Claim (subject to the limitations in clause (b) or (c) of
Section 8.01 or Section 8.02, as applicable), and (B) the amount of
indemnification available to the Indemnified Entity under this Article 8 (after
taking into account such limitations) with respect to such Claim (net of the
amount of any other pending claims against the Indemnifying Entity) must exceed
50% of the Indemnifiable Losses reasonably likely to arise from such Claim; and
(ii) negotiate a settlement or compromise of such Claim; provided, that (I) (a)
such settlement or compromise shall include a full, complete, irrevocable and
unconditional waiver and release by the Third Party and its applicable
Affiliates and their Related Persons of all Indemnified Entities for all
Indemnifiable Losses with respect to such Claim (without any cost or liability
of any nature whatsoever to such Indemnified Entities), (b) there shall be no
finding or admission of any violation of Law or any violation of the rights of
any Party, or (c) such settlement or compromise contemplates relief other than
monetary damages that are paid in full by the Indemnifying Entity concurrently
with the settlement or compromise, and (II) any such settlement or compromise
shall be permitted hereunder only with the prior written consent of the
Indemnified Entity, which shall not be unreasonably withheld, conditioned or
delayed.  

(c)If, within thirty (30) days of receipt from an Indemnified Entity of any
Claim Notice with respect to a Claim brought by a Third Party (or as provided in
clause (II) of the proviso to the last sentence of Section 8.03(b)), the
Indemnifying Entity (i) advises such Indemnified Entity in writing that the
Indemnifying Entity shall not elect to defend, settle or compromise such Claim
or (ii) fails to make such an election in writing, such Indemnified Entity may,
at its option, defend, settle or otherwise compromise or pay such Claim;
provided, that any such settlement or compromise shall be permitted hereunder
only with the prior written consent of the Indemnifying Entity, which consent
shall not be unreasonably withheld, conditioned or delayed.  For the avoidance
of doubt, unless and until the Indemnifying Entity makes an election in
accordance with Section 8.03(b) to defend, settle or compromise such Claim, all
of the Indemnified Entity’s reasonable costs and expenses arising out of the
defense, settlement or compromise of any such Claim shall be Indemnifiable
Losses subject to indemnification hereunder to the extent provided herein and
shall be borne by the Indemnifying Entity upon determination that the
Indemnifying Party is liable with respect to such Claim.  

 

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(d)Each Party shall, upon reasonable advance notice and during normal business
hours, make available to the defending Party without expense (other than
reimbursement of reasonable out of pocket expenses) all information reasonably
available to such Party to the extent relating to such Claim and reasonably
required for the defense of such Claim, except as may be prohibited by
applicable Law, and subject to applicable privilege.  In addition, the Parties
shall render to each other such assistance as may reasonably be requested in
order to ensure the proper and adequate defense of any such Claim.  The Party in
charge of the defense shall keep the other Party fully apprised at all times as
to the status of the defense or any settlement negotiations with respect
thereto.  If the Indemnifying Entity elects to defend any such Claim, then the
Indemnified Entity shall be entitled to participate in such defense with counsel
reasonably acceptable to the Indemnifying Entity, at such Indemnified Entity’s
sole cost and expense.  In the event the Indemnifying Entity assumes the defense
of (or otherwise elects to negotiate or settle or compromise) any Claim as
described above, then the Indemnified Entity shall be entitled to participate in
(but not control) such defense and investigation with counsel reasonably
acceptable to the Indemnifying Entity at such Indemnified Entity’s sole cost and
expense; provided that, notwithstanding anything herein to the contrary, the
Indemnifying Entity shall bear the reasonable fees, costs and expenses of
separate counsel of the Indemnified Entity (and shall pay such fees, costs and
expenses at least monthly) if (x) the Indemnified Entity shall have reasonably
concluded that (I) there may be a conflict of interest (including one or more
legal defenses or counterclaims available to it which are different from or in
addition to those available to the Indemnifying Entity) that would make it
inappropriate, in the reasonable judgment of the Indemnified Entity, for the
same counsel to represent both the Indemnified Entity and the Indemnifying
Entity, or (II) such Claim seeks nonmonetary relief which, if granted, could
materially and adversely affect the Indemnified Entity or its Affiliates (and in
such case of this clause (II) the Indemnified Entity may elect to assume such
defense), (y) the Indemnifying Entity shall not have (I) employed counsel
reasonably satisfactory to such Indemnified Entity within a reasonable time
after such Claim Notice is received by the Indemnifying Entity and (II)
continued to diligently conduct the defense of such Claim (and in such case of
clauses (y)(I) and (y)(II), the Indemnified Entity may, at its option, defend,
settle or otherwise compromise or pay such Claim) or (z) the Indemnifying Entity
did not, in its notice assuming such defense, acknowledge its responsibility to
the Indemnified Entity for any and all Indemnifiable Losses arising out of,
resulting from or based upon such Claim.

SECTION 8.04Indemnification Generally and Limitations.

(a)Each Indemnified Entity shall use commercially reasonable efforts (which
shall not include the initiation of any litigation proceedings) at the
Indemnifying Entity’s sole expenses in connection with any Claim for
indemnification under this Article 8 to obtain any insurance proceeds available
to such Indemnified Entity with regard to the applicable Claims and to recover
any amounts to which it may be entitled in respect of the applicable Claims
pursuant to contractual or other indemnification rights that it may have against
Third Parties; provided that no Indemnified Entity shall be required to maintain
any insurance.  The amount which the Indemnifying Entity is or may be required
to pay to any Indemnified Entity pursuant to this Article 8 shall be reduced by
any insurance proceeds or other amounts actually received by or on behalf of
such Indemnified Entity related to the related Indemnifiable Losses (net of
deductibles, coinsurance, costs or recovery or other expenses incurred in
obtaining such

 

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proceeds, payments or reimbursements, and reasonably expected increases in
premiums as a result of such recovery, and net of any prior reimbursements to
the Indemnifying Entity pursuant to this Section 8.04).  If an Indemnified
Entity shall have received the payment required by this Agreement from the
Indemnifying Entity in respect of Indemnifiable Losses and shall subsequently
actually received insurance proceeds or other amounts described by this
paragraph in respect of such Indemnifiable Losses, then such Indemnified Entity
shall promptly repay to the Indemnifying Entity a sum equal to the amount of
such insurance proceeds or other such amounts actually received, not to exceed
the amount of Indemnifiable Losses actually paid by the Indemnifying Entity, but
only to the extent that after taking into account such amounts (net of
deductibles, coinsurance, costs of recovery or other expenses incurred in
obtaining such proceeds, payments or reimbursements, and net of any prior
reimbursements to the Indemnifying Entity pursuant to this Section 8.04);
provided, however, that any indemnity payment under this Agreement shall be
treated as an adjustment to the Purchase Price for Tax purposes to the maximum
extent permitted by law.

(b)In addition to the requirements of Section 8.04(a), each Indemnified Entity
shall be obligated in connection with any claim for indemnification under this
Article ‎8 to use commercially reasonable efforts to mitigate Indemnifiable
Losses upon and after becoming aware of any event which could reasonably be
expected to give rise to such Indemnifiable Losses.

(c)The indemnification provided in this Article 8 shall be the exclusive
post-Closing remedy available to any Party hereto with respect to any breach of
any representation, warranty, covenant or agreement in this Agreement, or
otherwise in respect of the transactions contemplated by this Agreement, other
than (i) claims by a Party under Section 9.07 for specific performance and (ii)
with respect to fraud by any Person.  

(d)Except in the case of fraud, (i) no Representative or Affiliate of Seller (or
any of their respective Related Persons) shall have any Liability to Buyer or
any other Person as a result of the breach of any representation, warranty,
covenant, agreement or obligation of Seller in this Agreement, and (ii) no
Representative or Affiliate of Buyer (or any of their respective Related
Persons) shall have any Liability to Seller or any other Person (whether in
contract or in tort, in law or equity, or based upon any theory that seeks to
impose liability of an entity against its owners or Affiliates) as a result of
the breach of any representation, warranty, covenant, agreement or obligation of
Buyer in this Agreement or any other obligations or liabilities arising under or
in connection with this Agreement.

(e)This Article 8 is subject to the limitations set forth in Section 7.03.

(f)Notwithstanding the foregoing, no Indemnified Entity shall be entitled to any
indemnification hereunder in respect of any Indemnifiable Loss to the extent
caused by the gross negligence, willful misconduct or failure to perform
obligations under this Agreement of such Indemnified Entity or any Related
Person.

(g)No Party shall be liable for any Indemnifiable Losses resulting from or
relating to any inaccuracy in or breach of any representation or warranty in
this Agreement if the Party seeking indemnification for such Indemnifiable
Losses had Knowledge (or, with

 

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respect to Buyer, the general manager or the operations and maintenance manager
of the Facility had actual knowledge) of such inaccuracy or breach as of the
date hereof.

(h)To the extent that a Tax Benefit actually is realized by an Indemnified
Entity due to Indemnifiable Losses for which such Indemnified Entity has
received a payment pursuant to Section 8.01 or Section 8.02, as applicable, the
Indemnified Entity shall reimburse the Indemnifying Entity the amount of such
Tax Benefit within a reasonable time after the Tax Return reflecting such Tax
Benefit is filed with the applicable Taxing Authority.  For purposes of this
Section 8.04(h), a “Tax Benefit” means the net amount by which the Tax liability
of the Indemnified Entity actually is reduced by a deduction, reduction of
income or entitlement to a refund or credit, in each case taking into account
any Tax effect (including any reduction in tax basis) resulting from the receipt
of such indemnity payment hereunder.

SECTION 8.05Termination.   This Agreement may be terminated at any time prior to
the Closing:

(a)by mutual written agreement of Buyer and Seller;  

(b)by either Buyer, on the one hand, or Seller, on the other hand, if the
Closing shall not have occurred on or prior to the six (6) month anniversary of
the date of this Agreement (the “Outside Date”); provided, that in the event
that any of the Required Consents set forth on Section 8.05(b) of the Buyer
Disclosure Schedule or the Seller Disclosure Schedule, respectively, shall not
have been made, given or obtained, as applicable, or the conditions set forth in
Sections 6.01(b) or (c) shall not have been satisfied, in each case as of or
prior to such six (6) month anniversary, then the “Outside Date” shall be the
earlier of (i) the third (3rd) Business Day following the receipt of such
Required Consent or the satisfaction of such condition and (ii) the nine (9)
month anniversary of the date of this Agreement; and provided further, that the
right to terminate this Agreement under this Section 8.05(b) shall not be
available to any Party if the failure of any such Party’s representation or
warranty to be true and correct or failure to perform or comply with any such
Party’s covenant, agreement or obligation under this Agreement has been the
primary cause of the failure of the Closing to occur on or before the Outside
Date;

(c)by either Buyer, on the one hand, or Seller, on the other hand, by giving
written notice to the other Party if any Governmental Entity shall have issued
an Order or taken any other action, or any Law shall be in effect, permanently
restraining, enjoining or otherwise prohibiting the consummation of any of the
transactions contemplated by this Agreement, and such Order or other action or
Law shall have become final and unappealable;

(d)by either Buyer, on the one hand, or Seller, on the other hand, by giving
written notice to the other Party if there has been a breach (which term shall,
with respect to any representation or warranty, include any inaccuracy) by such
other Party of any representation, warranty or covenant contained in this
Agreement and, assuming Closing were to occur on the day on which such written
notice is provided pursuant to this Section 8.05(d), such breach, individually
or in the aggregate, would result in the failure to satisfy one or more of the
conditions to Closing of the Party sending such notice (set forth in Section
6.01, Section 6.02 or Section 6.03, as applicable) and such breach, if of a
character that is capable of being

 

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cured, is not cured by the breaching Party within thirty (30) days of its
receipt of such written notice from the other Party, or any condition that would
not be satisfied as a result of such breach is incapable of being satisfied by
the Outside Date; provided, that (i) Buyer shall not be permitted to terminate
this Agreement if Buyer is then in breach (which term shall, with respect to any
representation or warranty, include any inaccuracy) of any of its
representations, warranties, covenants or other agreements contained herein and
such breach would result in the failure to satisfy one or more of the conditions
to the Closing set forth in Section 6.01 or Section 6.02 and (ii) Seller shall
not be permitted to terminate this Agreement if Seller is then in breach (which
term shall, with respect to any representation or warranty, include any
inaccuracy) of any of their representations, warranties, covenants or other
agreements contained herein and such breach would result in the failure to
satisfy one or more of the conditions to the Closing set forth in Section 6.01
or Section 6.03; or

(e)by Buyer pursuant to Section 5.12(d) or 5.14(b).

SECTION 8.06Effect of Termination.  

(a)If this Agreement is terminated as permitted by Section 8.05, such
termination shall be without liability of any Party to the other Party;
provided, this Section 8.06(a) shall not relieve any Party of any liability for
damages actually incurred or suffered by the other Party as a result of the
willful breach of any provision of this Agreement or fraud by such Party arising
prior to such termination.  Nothing in this Article 8 shall prohibit Seller from
seeking specific performance pursuant to, and on the terms and conditions set
forth in, Section 9.07.

(b)If this Agreement is terminated by either Party pursuant to Section 8.05,
written notice thereof shall forthwith be given to the other Party in accordance
with Section 9.01 and this Agreement and the transactions contemplated by this
Agreement shall be terminated and become null and void (except as provided by
this Section 8.06), without further action by any Party; provided, that the
following provisions which shall survive such termination: Section 5.04
(Confidentiality; Publicity); Section 5.06 (Expenses); this Section 8.06 (Effect
of Termination) and Article 9 (other than Section 9.07 (Specific Performance)).

ARTICLE 9

Miscellaneous

SECTION 9.01Notices.  All notices, requests and other communications hereunder
shall be in writing (including e-mail) and shall be sent, delivered or mailed,
addressed or e-mailed:

(a)if to Buyer, to:

 

Essential Power Rock Springs, LLC

9405 Arrowpoint Boulevard

Charlotte, NC 28273

Attention: John Ragan

Email: johnragan@cogentrix.com

 

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and

with copies (which shall not constitute notice) to:

Cogentrix Energy Power Management, LLC

9405 Arrowpoint Boulevard

Charlotte, NC 28273

Attention: Jacob Pollack

Email: JacobPollack@Cogentrix.com

 

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attention:  David Allinson

Email: David.Allinson@lw.com

(b)if to Seller, to:

 

Old Dominion Electric Cooperative

4201 Dominion Boulevard

Glen Allen, VA  23060

Attention: D. Richard Beam

Facsimile: (804) 747-3742

Email: rbeam@odec.com

 

with a copy to:

 

Orrick, Herrington & Sutcliffe LLP

1152 15th Street, NW

Washington, DC 20005

Attention: Kyle W. Drefke

Facsimile: (202) 339-8500

Email: kdrefke@orrick.com

Each such notice, request or other communication shall be given (i) by mail
(postage prepaid, registered or certified mail, return receipt requested),
(ii) by hand delivery, (iii) by nationally recognized courier service or (iv) by
e-mail.  Each such notice, request or communication shall be effective (i) if
mailed, three calendar days after mailing at the address specified in this
section (or in accordance with the latest unrevoked written direction from such
Party), (ii) if delivered by hand or by nationally recognized courier service,
when delivered at the address specified in this section (or in accordance with
the latest unrevoked written direction from the receiving Party) and (iii)  if
by e-mail, upon delivery; provided, that notices received on a day that is not a
Business Day or after the close of business on a Business Day will be deemed to
be effective on the next Business Day.

SECTION 9.02Severability.  The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.  If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is found to be invalid or unenforceable in

 

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any jurisdiction, (a) a suitable and equitable provision agreed by the Parties
shall be substituted therefor in order to carry out, so far as may be valid or
enforceable, such provision and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.  Notwithstanding anything to the
contrary in this Agreement, the Parties hereto agree that that the remedies
hereunder and limitations thereon (including under Article 8) shall be
considered integral provisions of this Agreement and that such remedies and
limitations shall not be severable in any manner that increases a Party’s
liabilities or obligations, or (in the case of Sections 8.01 to 8.04 reduces a
Party’s rights, under this Agreement.

SECTION 9.03Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall,
taken together, be considered one and the same agreement.  Delivery of an
executed signature page of this Agreement by facsimile or other electronic image
scan transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.  

SECTION 9.04Amendments and Waivers.  This Agreement may not be amended except by
an instrument in writing signed on behalf of Buyer and Seller.  Each Party may,
by an instrument in writing signed on behalf of such Party, waive compliance by
any other Party with any term or provision of this Agreement that such other
Party was or is obligated to comply with or perform.  No failure or delay by any
Party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  Except as otherwise provided herein, the rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law or in equity.

SECTION 9.05Entire Agreement; No Third Party Beneficiaries.  This Agreement
(together with the written agreements, Schedules and certificates referred to
herein or delivered pursuant hereto) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the Parties with respect to the subject matter hereof.  Except for (a)
Representatives or Affiliates of Buyer and Seller, as applicable, who are
intended third party beneficiaries of and entitled to enforce Section 7.02(b)
and (b) Indemnified Buyer Entities and Indemnified Seller Entities, who are
intended third party beneficiaries of and shall be entitled to enforce (through
Buyer, in the case of Indemnified Buyer Entities, and Seller, in the case of
Indemnified Seller Entities) Sections 8.01 to 8.04, this Agreement is for the
sole benefit of the Parties and their permitted assigns and is not intended to
confer upon any other Person any rights or remedies hereunder.

SECTION 9.06Governing Law.  This Agreement shall be governed by and construed
and enforced in accordance with, and this Agreement and all matters arising out
of or relating in any way whatsoever (whether in contract, tort or otherwise) to
this Agreement shall be governed by, the laws of the State of Delaware,
exclusive of real property matters, which shall be governed by the laws of the
jurisdiction where the real property is located.

 

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SECTION 9.07Specific Performance.  The Parties agree that irreparable damage for
which monetary damages, even if available, would not be an adequate remedy,
would occur in the event that the provisions of this Agreement were not
performed in accordance with its specific terms and that any remedy at law for
any breach of the provisions of this Agreement would be
inadequate.  Accordingly, the Parties acknowledge and agree that, subject to the
last sentence of this Section 9.07, each Party hereto shall be entitled to an
injunction, specific performance or other equitable relief to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof
pursuant to Section 9.08, this being in addition to any other remedy to which
they are entitled at law or in equity.  Notwithstanding anything to the contrary
in this Agreement (including Section 8.06), it is explicitly agreed that Seller
shall not be entitled to specific performance of Buyer’s obligations to
consummate the transactions as contemplated herein unless (i) all of the
conditions set forth in Section 6.01 and Section 6.02 have been satisfied in
full (other than those conditions which by their nature are to be satisfied by
deliveries made at the Closing, but which conditions, at the time that Seller
seeks specific performance pursuant to this sentence, would be satisfied if the
Closing were to occur at such time), (ii) Buyer fails to complete the Closing on
the date the Closing should have occurred pursuant to Section 2.02(d) and (iii)
Seller has, in writing, (A) irrevocably waived any unsatisfied conditions in
Section 6.03 and (B) confirmed that the Closing will occur if specific
performance is granted.

SECTION 9.08Consent to Jurisdiction; Waiver of Jury Trial.  Each of the Parties
hereto irrevocably submits to the exclusive jurisdiction of the Chancery Court
of the State of Delaware and any state appellate court therefrom within the
State of Delaware (or, if the Chancery Court of the State of Delaware declines
to accept jurisdiction over a particular matter, any state or federal court
within the State of Delaware), for the purposes of any Claim arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the Chancery Court of the State of Delaware or any state
appellate court therefrom, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (including any Claim, cross-claim or claim by a
third party of any kind or description, whether in law or in equity, whether in
contract or in tort or otherwise, against the Debt Financing Source Parties in
any WAY relating to this Agreement or any of the transactions contemplated
hereby or thereby.

SECTION 9.09Assignment.  Neither this Agreement nor any of the rights or
obligations hereunder shall be assigned by either Party without the prior
written consent of each of Buyer and Seller; provided, that Buyer may, without
consent: (a) transfer its rights and obligations under this Agreement to an
Affiliate or to any future purchaser of Buyer or the Acquired Assets, so long as
any such transferor and transferee execute and deliver to Seller an assumption
agreement for the benefit of Seller pursuant to which (i) the transferor
continues to be bound by obligations of a nature that otherwise survive
termination of this Agreement, such as

 

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Sections 5.03, 5.05, 5.08 and 5.10, and (ii) the transferee acknowledges and
agrees that it is bound by the terms and conditions of this Agreement; or (b)
collaterally assign any or all of its rights and interests hereunder or under
any instrument executed or delivered in connection herewith to one or more
financing sources of Buyer, so long as Buyer remains jointly and severally
obligated to satisfy all of Buyer’s obligations under the terms of this
Agreement.  Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and permitted assigns.  Any attempted assignment in
violation of the terms of this Section shall be null and void, ab initio.

SECTION 9.10Headings.  The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

SECTION 9.11Schedules and Exhibits.  Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are made a part of this Agreement. Any disclosure in the Seller
Disclosure Schedule or Buyer Disclosure Schedule corresponding to and qualifying
a specific numbered paragraph or section hereof shall be deemed to correspond to
and qualify any other numbered paragraph or section relating to such Party only
to the extent a cross-reference is expressly made to such other section or
subsection or to the extent the relevance of such disclosure to such section or
subsection is reasonably apparent from the face of such disclosure.  Certain
information set forth in the Schedules is included solely for informational
purposes, is not an admission of liability with respect to the matters covered
by the information, and may not be required to be disclosed pursuant to this
Agreement.  The specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific item in
the Schedules is not intended to imply that such amounts (or higher or lower
amounts) are or are not material, and no Party shall use the fact of the setting
of such amounts or the fact of the inclusion of any such item in the Schedules
in any dispute or controversy between the Parties as to whether any obligation,
item, or matter not described herein or included in a Schedule is or is not
material for purposes of this Agreement.

[SIGNATURE PAGE FOLLOWS]

 

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the day and year first above written.

OLD DOMINION ELECTRIC COOPERATIVE,

as Seller

 

By:

/s/ D. Richard Beam

Name:

D. Richard Beam

Title:

SVP of Power Supply

 

 

 

 

ESSENTIAL POWER ROCK SPRINGS, LLC,

as Buyer

 

 

By:

/s/ Jason Solimini

Name:

Jason Solimini

Title:

Vice President, Finance, Controller and Treasurer

 

 

 

[Signature Page to Asset Purchase Agreement]

 

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Exhibit A

Defined Terms

As used in the Agreement, the following terms have the following meanings:

“Acquired Assets” has the meaning set forth in Section 2.01(a).

“Affiliate” of any Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first Person.

“Agreement” has the meaning set forth in the Preamble.

“Allocation” has the meaning set forth in Section 5.03(d).

“Amended and Restated Shared Facilities Agreement” has the meaning set forth in
Section 5.09.

“Assignment of Transferred Intellectual Property Agreement” means the Assignment
of Transferred Intellectual Property Agreement to be executed by Buyer and
Seller at the Closing substantially in the form attached hereto as Exhibit C.

“Assumed Contracts” has the meaning set forth in Section 2.01(a)(vii).

“Assumed Liabilities” has the meaning set forth in Section 2.01(c).

“Base Purchase Price” has the meaning set forth in Section 2.02(b).

“Bill of Sale” means the Bill of Sale and Assignment and Assumption Agreement,
substantially in the form attached hereto as Exhibit D, containing the
assignment and assumption of the Acquired Assets  and Assumed Liabilities, other
than the assignment of the Intellectual Property (which shall be assigned
pursuant to the Assignment of Transferred Intellectual Property Agreement),
Owned Real Property (which shall be transferred pursuant to the Deed) and Leases
(which shall be terminated pursuant to one or more Lease Termination
Agreements).

“Business Day” means any day other than a Saturday or Sunday or any day banks in
the State of Delaware are authorized or required to be closed.

“Buyer” has the meaning set forth in the Preamble.

“Buyer Disclosure Schedule” means the schedule attached hereto as Schedule A.

“Buyer’s Required Consents” means the consents specified in Section 4.03 of the
Buyer Disclosure Schedule.

“Cap” has the meaning set forth in Section 8.01(c).

A-1

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“Claim” means any written demand or claim, action, suit, litigation, mediation,
Facility-specific inquiry by a Government Official, prosecution, charge, legal
proceeding (whether at law or in equity), Facility-specific investigation, or
arbitration, whether judicial, administrative or otherwise.

“Claim Notice” has the meaning set forth in Section 8.03(a).

“Closing” has the meaning set forth in Section 2.02(d).

“Closing Date” has the meaning set forth in Section 2.02(d).

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Columbia Gas Contract” means the (a) Firm Transmission Service Agreement by and
between Rock Springs Generation, LLC, predecessor-in-interest to Seller, and
Columbia Gas Transmission Corporation, dated March 12, 2003, as amended by:
Revision No. 1, dated March 12, 2003, Revision No. 2 dated April 28, 2011,
Revision No. 3 dated February 13, 2013, Revision No. 4 dated September 12, 2014,
and Revision No. 5 dated October 31, 2014; (b) No Notice Transmission Service
Agreement by and between Columbia Gas Transmission, LLC and Seller dated April
25, 2011, as amended by: Revision No. 1 dated February 13, 2013, Revision No. 2
dated March 27, 2015, Revision No. 3 dated March 31, 2016, Revision No. 4, dated
March 31, 2017, Revision No. 5, dated August 31, 2017; and (c) SIT Service
Agreement by and between Columbia Gas Transmission, LLC and Seller, dated May 9,
2008.

“Company Material Adverse Effect” means any change, event, effect, circumstance,
occurrence, state of facts, condition, development or other matter that,
individually or in the aggregate, has had, or would reasonably be expected to
have, a material adverse effect on the business, assets, properties, condition
(financial or otherwise) or results of operations of the Acquired Assets,
Assumed Liabilities and the Facility, taken as a whole, except for any such
change, event, effect, circumstance, occurrence, state of facts, condition,
development or other matter to the extent resulting from or arising out of
(a) any changes generally affecting the industries in which the Facility
operates (including the electric and natural gas generating, transmission or
distribution industries), whether international, national, regional, state,
provincial or local, (b)  changes in international, national, regional, state,
provincial or local wholesale or retail markets for electric power, natural gas
or fuel supply or transportation or related products and operations, (c) changes
in general regulatory or political conditions, including any acts of war or
terrorist activities, (d) changes in international, national, regional, state,
provincial or local electric transmission or distribution systems generally,
(e) changes in the markets for or costs of commodities or supplies, including
fuel, generally, (f) effects of weather, meteorological events or other natural
disasters or natural occurrences beyond the control of Seller, (g) any change of
Law or regulatory policy after the date hereof, including any rate or tariff,
and any application thereof, (h) changes or adverse conditions in the financial,
banking or securities markets, including those relating to debt financing and,
in each case, including any disruption thereof and any decline in the price of
any security or any market index, (i) the announcement, execution or delivery of
this Agreement, (j) any change in GAAP after the date hereof, or (k) strikes,
work stoppages or other labor disputes; provided, that (i) the exceptions
described in clauses (a), (b), (c), (d), (e) and (j) shall apply only if the
changes described therein do not have a

 

A-2

 

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disproportionate effect on any Acquired Asset, Assumed Liability or the Facility
relative to other assets, liabilities or Persons operating in the industries in
which Seller operates the Facility, and (ii) the exception described in clause
(i) shall not apply in connection with any provision of this Agreement
addressing the execution, delivery, announcement or performance of this
Agreement or the consummation of the transactions contemplated hereby, or any
condition with respect thereto.

“Condemnation Value” has the meaning set forth in Section 5.12(a).

“Consent” has the meaning set forth in Section 3.03.

“Contract” means any written or oral contract, subcontract, lease, sublease,
license, arrangement, commitment, franchise, warranty, guaranty, letter of
intent, letter of understanding, promise, evidence of indebtedness, mortgage,
indenture, purchase order, bid, letter of credit, security agreement,
undertaking or other similar instrument or agreement.

“Control” (including lower case uses, and correlative meanings including
“controlled by” and “under common control with”) means possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a Person (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).  

“CSAPR” means the United States Environmental Protection Agency’s Cross-State
Air Pollution Rule, 40 C.F.R. §§ 51, 52, 72, and 97, as such rule is updated
from time to time pursuant to subsequent rules, adjustments, opinions and
guidance by Governmental Entities of competent jurisdiction.

“Current Assets” means, as of the Effective Time, the current assets related to
the ownership or operation of the Facility, determined in accordance with GAAP,
as of 11:59 P.M. (Eastern Prevailing Time) on the Closing Date.  For the
avoidance of doubt, Current Assets shall not include any Acquired Assets.

“Current Liabilities” means, as of the Effective Time the current liabilities
arising out of or incurred as a result of the ownership or operation of the
Facility, determined in accordance with GAAP.  For the avoidance of doubt,
Current Liabilities shall not include any Assumed Liabilities.

“Debt Financing” has the meaning set forth in Section 5.07.

“Deductible” has the meaning set forth in Section 8.01(b)(i).

“Deed” means, with respect to each parcel of Owned Real Property, the instrument
of conveyance customary to the applicable jurisdiction to be executed by Seller
at the Closing in order to convey to Buyer Seller’s interest in such parcel of
Owned Real Property, free and clear of all Liens, other than Permitted Real
Property Liens, substantially in the form attached hereto as Exhibit E.

“Dollars” or “$” means the lawful currency of the United States of America.

 

A-3

 

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“Easement Real Property” has the meaning set forth in Section 3.15(b).

“Easements” means all easements, rights-of-way and rights of ingress or egress
appurtenant to real property.

“Effective Time” has the meaning set forth in Section 2.02(d).

“Emission Allowance” means a limited authorization, right, instrument or permit
to emit one (metric or short, as applicable) ton of sulfur dioxide, annual
nitrogen oxide, seasonal nitrogen oxide or carbon dioxide emissions pursuant to
Environmental Laws, including CSAPR, RGGI and Title IV of the Clean Air Act, and
the associated state programs.

“Emission Allowance Account” means an account on the RGGI Allowance Tracking
System, a General Account for compliance with United States Environmental
Protection Agency emission programs including CSAPR or any other account in
which Emission Allowances are held.

“Environmental Law” means any and all applicable Law relating to (a) the
protection, preservation or restoration of the environment (including air,
surface water, groundwater, surface land, subsurface land, plant and animal life
or any natural resource), (b) the protection of human health or the health and
the public, (c) human or ecological exposure to Hazardous Materials, or (d) the
Release of Hazardous Materials.

“Environmental Permit” means any Permit required under or issued, granted,
given, authorized by or made pursuant to Environmental Law.

“Equity Securities” shall mean any and all shares, interests, participations,
other equity interests of any kind or other equivalents (however designated) of
capital stock of a corporation and any and all ownership or equity interests of
any kind in a Person (other than a corporation), including membership interests,
partnership interests, joint venture interests, phantom stock, stock
appreciation rights and beneficial interests, and any and all warrants, options,
rights to vote or purchase or any other rights or securities convertible into,
exercisable for or related to any of the foregoing.

“Event of Loss” has the meaning set forth in Section 5.12.

“Excluded Assets” has the meaning set forth in Section 2.01(b).

“Excluded Liabilities” has the meaning set forth in Section 2.01(d).

“Existing O&M Agreement” means that certain Amended and Restated Scheduling,
Dispatch, Operating Practices, and Operation and Maintenance Agreement, dated as
of March 31, 2009, by and between Essential Power Operating Company, LLC (f/k/a
NAEA Operating Company, LLC), Seller and Buyer.

“Existing Shared Facilities Agreement” means that certain Third Amended,
Restated and Renamed Rock Springs Ownership Agreement, dated as of April 19,
2013, by and between Seller and Buyer.

 

A-4

 

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“Facility” has the meaning set forth in the Recitals.

“FERC” means the Federal Energy Regulatory Commission or any successor agency
thereto.

“FERC Approval” means the issuance of a final order by FERC, not subject to
rehearing or appeal, granting without material modification or condition all
authorizations requested by Seller and Buyer under a joint application for
authorization of the proposed transaction under Section 203 of the FPA.

“FERC Waiver” means a temporary waiver by FERC of (i) the capacity release rules
set forth in 18 C.F.R. § 284.8 and related policies and requirements, and (ii)
the applicable pipeline tariff requirements, to allow the assignment and release
to Buyer of the applicable natural gas transportation agreements with Columbia
Gas Transmission, LLC.

“Filing” has the meaning set forth in Section 3.03.

“Financial Statements” has the meaning set forth in Section 3.05(a).

“Financing Information” means all information with respect to business,
operations, financial condition, projections and prospects of the Acquired
Assets as may be reasonably requested by Buyer or its financing sources,
including the Financial Statements; and such other information relating to the
Acquired Assets as is reasonably requested in connection with Debt Financing.

“FPA” means the Federal Power Act, as amended, and the implementing regulations
of FERC thereunder.

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means any U.S. or foreign, federal, national,
supernational, state, provincial, local, municipal, county or other governmental
authority, court, government or self regulatory organization, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch or other
instrumentality of any of the foregoing, in each case, with jurisdiction over
the matter in question, including any department, branch, council, officer,
official, unit, securities exchange and any other governmental,
quasi-governmental or nongovernmental body, including FERC, NERC and PJM.

“Government Official” means any official, officer, employee, representative or
any Person acting in an official capacity for or on behalf of any Governmental
Entity.

“Hazardous Materials” means (i) any petroleum or petroleum products or
by-products, radioactive materials or wastes, asbestos in any form,
asbestos-containing materials, urea formaldehyde foam insulation and
polychlorinated biphenyls, radon gas or silica or (ii) any other pollutant,
chemical, material, substance, contaminant or waste to the extent prohibited,
limited or regulated by or pursuant to any Environmental Law.

 

A-5

 

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“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976

“Improvements” means all buildings, structures, improvements, facilities,
fixtures, furnishings, furniture, offices, building systems and equipment, and
all components thereof, in each case, to which Seller has any right, title or
interest.

“Indebtedness” means, with respect to any Person, the aggregate amount
(including the current portions thereof) of all (a) liabilities (i) for money
borrowed from others, (ii) evidenced by bonds, notes debentures or other similar
instruments, (iii) purchase money obligations, other than to the extent arising
in the ordinary course of business and not secured by a Lien on the Acquired
Assets, (iv) for capitalized lease obligations required to be recorded as such
under GAAP or historically recorded as indebtedness, (v) for obligations to pay
deferred purchase price of assets, services or securities, except trade accounts
payable and other current liabilities arising in the ordinary course of business
and not secured by a Lien on the Acquired Assets, (vi) for reimbursement
obligations for letters of credit or similar instruments that have been drawn,
or arising out of banker’s acceptances, surety bonds, performance bonds or
similar credit transactions, (vii) for obligations under any swap, derivative,
currency, rate cap, collar or interest rate Contract, and (viii) for obligations
arising under any conditional sale, consignment, title retention or similar
arrangements or agreements (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of the subject property), in each case of such Person, (b) indebtedness
of the type described in subsection (a) above guaranteed, directly or indirectly
(including through the incurrence of a Lien), in any manner by such Person or
for which such Person may be liable, but excluding endorsements of checks and
other instruments in the ordinary course of business (in respect of the Excluded
Liabilities, solely to the extent such checks or instruments are not reflected
as Current Assets), (c) interest expense accrued but unpaid on or relating to
any of such indebtedness, and (d) prepayment and redemption penalties and
premiums, breakage costs, late charges, penalties, collection fees and other
monetary obligations relating to any of such indebtedness.

“Indemnifiable Losses” means any and all claims, injuries, lawsuits,
Liabilities, losses, damages, Taxes, Orders, Liens, fines, penalties, costs and
expenses, including the reasonable fees and disbursements of counsel (including
fees of attorneys and paralegals, whether at the pre-trial, trial, or appellate
level, or in arbitration) and all amounts reasonably paid in investigation,
defense, or settlement of any of the foregoing, whether or not involving a Claim
by a Third Party and whether incurred before, at or after the Closing.

“Indemnified Buyer Entities” has the meaning set forth in Section 8.01(a).

“Indemnified Entity” has the meaning set forth in Section 8.03(a).

“Indemnified Seller Entities” has the meaning set forth in Section 8.02(a).

“Indemnifying Entity” has the meaning set forth in Section 8.03(a).

“Intellectual Property” means all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, service marks, service mark
rights, trade secrets,

 

A-6

 

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applications to register, and registrations for, the foregoing trademarks,
service marks, know- how and other proprietary rights and information.

“Inventories” means (a) any fuel inventories, materials, consumable supplies,
chemical and gas inventories or similar raw materials located at the Facility,
in transit to the Facility or stored offsite for use at the Facility, and (b)
all inventories, parts, materials and supplies, including spare parts, that are
for use at or in connection with the Facility, in each case, in which Seller has
any right, title or interest.

“Knowledge” means, (a) in the case of Seller, the actual knowledge, after
reasonable inquiry, of the individuals listed in Section 1.01-2 of the Seller
Disclosure Schedule, and (b) in the case of Buyer, the actual knowledge, after
reasonable inquiry, of the individuals listed in Section 1.01-2 of the Buyer
Disclosure Schedule.

“Law” means, with respect to any Person, any domestic or foreign, federal,
state, provincial or local statute, law (including common law), ordinance, rule,
administrative interpretation, regulation, Permit, Order, writ, injunction,
directive, judgment, decree or other requirement of any Governmental Entity
directly applicable to such Person or any of its respective properties or
assets, as amended from time to time.

“Lease” has the meaning set forth in Section 3.15(c).

“Lease Termination Agreement” means the Lease Termination Agreements to be
executed by Seller at the Closing substantially in the form attached hereto as
Exhibit F.

“Leased Real Property” has the meaning set forth in Section 3.15(c).

“Liability” means any debt (including any Indebtedness), liability or
obligation, whether known or unknown, direct or indirect, matured or unmatured,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due
or to become due.

“Lien” means any mortgage, pledge, assessment, security interest, lien, adverse
claim, levy, encroachment, right of first option, title defect, tenancy (and
other possessory interest), easement, right of way, covenant, conditional sale
or other title retention agreement, or other similar encumbrance or restriction.

“Marketing Material” means each of the following: (a) customary bank books,
information memoranda and other information packages regarding the business,
operations, financial condition, projections and prospects of Acquired Assets
and the Facility, including all information relating to the transactions
contemplated hereunder, and (b) all other marketing material reasonably
requested by Buyer or its financing sources in connection with the syndication
or other marketing of the Debt Financing.

“Material Contracts” has the meaning set forth in Section 3.08(a).

“NERC” means the North American Electric Reliability Corporation or any
successor thereto, and any regional entity thereof, including ReliabilityFirst
Corporation.

 

A-7

 

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“NERC Reliability Standards” means those reliability standards developed and
enforced by NERC, subject to FERC approval.

“Operator” means the “Operator” as defined in the Existing O&M Agreement, or the
“CT Plant Operator” as defined in the Existing Shared Facilities Agreement.  

“Option Capital Spares” has the meaning set forth in Section 2.02(c).

“Option Capital Spares Notice” has the meaning set forth in Section 2.02(c).

“Order” shall mean any settlement, stipulation, order, writ, judgment,
injunction, decree, ruling, determination or award of any Governmental Entity or
arbitrator.

“Organizational Documents” means, with respect to any Person, the articles or
certificate of incorporation or organization and by-laws, the limited
partnership agreement, the partnership agreement or the limited liability
company agreement, operating agreement or such other organizational documents of
such Person.

“Outside Date” has the meaning set forth in Section 8.05(b).

“Owned Real Property” means the real property relating to the Acquired Assets or
the Facility in which Seller has fee title interest listed on Section 3.15(a)(i)
of the Seller Disclosure Schedule.

“Parties or Party” has the meaning set forth in the Preamble.

“Permits” means any permit, subdivision approval, variance, license, franchise,
certificate, writ, exemption, order or other authorization by a Governmental
Entity, or approval necessary to own, operate or use any of the Acquired Assets
or the Facility as presently used and operated.

“Permitted Liens”  means

(a) with respect to any Real Property, (i) matters of record in the official
public records of real property of the jurisdiction where the Real Property is
located to the extent affecting the Real Property, (ii) the terms and conditions
of the instruments by which the estate or interest of Seller was conveyed to
Seller, including the rights of cotenants with respect to any undivided interest
owned in the real property of which the Real Property is a part, (iii) the terms
and conditions of the Assumed Contracts, the Existing Shared Facilities
Agreement (prior to Closing), the Amended and Restated Shared Facilities
Agreement (as of Closing), the Existing O&M Agreement, the PILOT Agreement and
the Transferred Permits, (iv) matters that would be disclosed by true, correct
and current surveys of each parcel of Real Property, or (v) such other
imperfections of title, Easements, encumbrances, and restrictions, in each case,
only to the extent either (A) with respect to clauses (i) through (v) above, the
same do not individually or in the aggregate materially impair the value or
transferability of, or materially interfere with the ability of Seller to
conduct its businesses as currently conducted on, the Real Property or to
utilize such properties for their intended purposes, or (B) with respect to
clauses (ii), (iii) (other than with

 

A-8

 

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respect to Assumed Contracts), (iv) or (v) above, Buyer had Knowledge or
Operator’s plant manager had knowledge of the existence of such matters;

(b) materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s
and other like Liens arising in the ordinary course of business to the extent
(i) relating to amounts not yet due and payable, or (ii) with respect to any
Real Property, securing Assumed Liabilities;

(c) Liens for Taxes not yet due and payable;

(d) prior to the Closing, any Liens permitted under the Seller Indenture; and

(e) with respect to Real Property, zoning, entitlement and other land use and
environmental regulations promulgated by any Governmental Entity, in each case,
to the extent such zoning, entitlement and other regulations are not violated by
the current use and occupancy of such Real Property.  

For the avoidance of doubt, “Permitted Liens” shall not include any Liens
securing Indebtedness of Seller.

“Permitted Real Property Liens” means the Liens described in clauses (a), (b),
(c), (d) and (e) of the definition of “Permitted Liens”.

“Person” means any individual, corporation, partnership, joint venture, trust,
association, organization, Governmental Entity or other entity.

“PILOT Agreement” means that certain Agreement for Payment in Lieu of Taxes,
dated as of April 2, 2002, by and among Seller (as successor by merger to Rock
Springs Generation, LLC), Buyer (as successor in interest to Outwater Funding,
Limited Partnership) and Cecil County, Maryland (formerly the Board of County
Commissioners of Cecil County), as amended by that certain First Amendment,
dated as of May 22, 2013.

“PJM” means PJM Interconnection, L.L.C., or any successor thereto.

“PJM Tariff” means PJM’s Open Access Transmission Tariff as accepted for filing
by FERC.

“Post-Closing Access Agreement” means the Post-Closing Access Agreement to be
executed by Buyer and Seller at the Closing substantially in the form attached
hereto as Exhibit H.

“Post-Closing Tax Period” means any Tax period beginning after the Closing Date
and that portion of a Straddle Period beginning after the Closing Date.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing
Date and that portion of any Straddle Period ending on the Closing Date.

“Property Taxes” means all real property Taxes, personal property Taxes and
similar ad valorem Taxes and includes any amounts payable under the PILOT
Agreement.

 

A-9

 

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“Purchase Price” has the meaning set forth in Section 2.02(b).

“Reactive Service” means the provision of reactive supply and voltage control
from generation or other sources of service pursuant to the currently effective
terms of Schedule 2 to the PJM Tariff.

“Reactive Service Tariff” means Seller’s tariff for the provision of Reactive
Service accepted for filing by FERC in Docket No. ER05-682.

“Real Property” means the Owned Real Property, the Leased Real Property, the
Easement Real Property and, with respect to each, all Improvements constituting
real property located thereon or therein.

“Records” has the meaning set forth in Section 2.01(a)(ix).

“Related Person” means, with respect to a particular Person, such Person and any
of its former, current and future Affiliates and beneficiaries, each of their
respective former, current and future direct or indirect directors, officers,
“principals,” general or limited partners, financing sources, employees,
stockholders, other equityholders, members, managers, agents, successors,
assignees, Affiliates, controlling Persons or agents.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposing, emanating or
migrating of Hazardous Materials into or through the environment (including
ambient air (indoor or outdoor), surface water, groundwater, land surface or
subsurface strata or within any building, structure, facility or fixture).

“Released Liabilities” has the meaning set forth in Section 7.02(b).

“Representatives” means, as to any Person, such Person’s Affiliates and the
officers, directors, managers, employees, counsel, accountants, financial
advisers and consultants of such Person or its Affiliates.

“Required Consents” means, collectively, the Buyer’s Required Consents and the
Seller’s Required Consents.

“Restoration Costs” has the meaning set forth in Section 5.12(a).

“Restricted Assets” has the meaning set forth in Section 5.08(d).

“RGGI” means the Regional Greenhouse Gas Initiative and all Environmental Laws
implementing such initiative in the participating RGGI states.

“Rock Springs Switchyard” means the switchyard and related facilities and
equipment interconnecting the Rock Springs Generation Facility to the PJM
transmission grid.

“Schedules” means, collectively, the Buyer Disclosure Schedule and the Seller
Disclosure Schedule, and each is referred to as a “Schedule.”

 

A-10

 

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“Seller” has the meaning set forth in the Preamble.

“Seller Allowance Obligation” shall mean the quantity of Emission Allowances
that Buyer will be required to surrender in connection with the Acquired Assets
under CSAPR, RGGI and Title IV of the Clean Air Act to cover or account for the
emissions of carbon dioxide, sulfur dioxide, nitrogen oxide and other air
pollutant that took place at any point prior to the Closing Date but assuming
such surrender would occur on the Closing Date.

“Seller Disclosure Schedule” means the schedule attached hereto as Schedule B.

“Seller Indenture” means that certain Second Amended and Restated Indenture of
Mortgage and Deed of Trust, dated as of January 1, 2011, by and between Seller
and Branch Banking and Trust Company, as trustee.

“Seller Material Adverse Effect” means any change, event, effect, circumstance,
occurrence, state of facts, condition, development or other matter that,
individually or in the aggregate, has had, or would reasonably be expected to
have a material adverse effect on the ability of Seller to timely perform its
obligations hereunder or consummate the transactions contemplated by this
Agreement, except for any such change, event, effect, circumstance, occurrence,
state of facts, condition, development or other matter arising from (a) a
change, financial or otherwise, to the business, affairs or operation of the
Buyer or any of its Affiliates or (b) any event or condition attributable to the
execution or delivery of this Agreement or the announcement or pendency of the
transactions contemplated hereby, or resulting from or relating to compliance
with the terms hereof.

“Seller’s Required Consents” means the consents specified in Section 3.03 of the
Seller Disclosure Schedule.

“Specified Representations” has the meaning set forth in Section 7.01.

“Straddle Period” means a taxable period that begins on or before and ends after
the Closing Date.

“Taking” has the meaning set forth in Section 5.12.

“Tangible Personal Property” means all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, leased or owned
vehicles and other items or tangible personal property (other than Inventories)
of every kind to which Seller has any right, title or interest (wherever located
and whether or not carried on Seller’s books) to the extent related to any
Acquired Asset or the Facility, together with all auxiliary equipment, ancillary
and associated facilities and equipment, electrical transformers, pipeline and
electrical interconnection and metering facilities used for the receipt of fuel
and water and the delivery of the electrical output of the Facility, and all
other Improvements relating to the ownership, operation and maintenance of any
Acquired Asset or the Facility.

“Tax” or “Taxes” means all net or gross income, gross receipts, net proceeds,
sales, use, ad valorem, value added, goods and services, consumption, harmonized
sales, franchise, margin, levies, imposts, capital, capital gains, bank shares,
withholding, payroll, employer health, real

 

A-11

 

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property, personal property, customs duties, employment, excise, property, deed,
stamp, alternative, net worth or add-on minimum, environmental or other taxes,
assessments, duties, levies or similar governmental charges in the nature of a
tax imposed by any Governmental Entity, whether disputed or not, together with
any interest, penalties, fines, additions to tax or additional amounts with
respect thereto.

“Tax Proceeding” has the meaning set forth in Section 5.03(b).

“Tax Returns” means any return, report or similar statement required to be filed
with a Taxing Authority with respect to any Taxes (including any attached
schedules), including any information return, claim for refund, amended return
and declaration of estimated Tax.

“Taxing Authority” means, with respect to any Tax, the Governmental Entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.

“Third Party” has the meaning set forth in Section 8.03(a).

“Transaction Expenses” shall mean (a) all fees, costs and expenses (including
fees, costs and expenses of legal counsel, investment bankers, brokers or other
representatives and consultants and appraisal fees, costs and expenses) incurred
by Seller or its Affiliates in connection with the negotiation and execution of
this Agreement and all other agreements and documents entered into in connection
with the transactions contemplated by this Agreement, the performance of their
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby (and any such amounts required to be paid to any
Third Party, and any other Indemnifiable Losses incurred by Seller, in
connection with obtaining or failing to obtain any Consent required to be
obtained in connection with the consummation of the transactions contemplated
hereby or thereby); and (b) all costs, fees and expenses associated with the
Filings or Consents contemplated by Section 5.08(b) to be drafted and filed by
Seller.

“Transfer Taxes” means all transfer, real property transfer or recordation,
sales, use, goods and services, value added, documentary, stamp duty, gross
receipts, excise, and conveyance Taxes and other similar Taxes, duties, fees or
charges but for the avoidance of doubt shall exclude any Taxes of Seller that
are imposed on income or gain, and any Taxes of Seller that are imposed on Buyer
as a withholding agent or as a transferee (which Taxes are Excluded
Liabilities).

“Transferred Allowances” has the meaning set forth in Section SECTION 3.12.

“Transferred Easements” has the meaning set forth in Section SECTION 3.15(b).

“Transferred Emission Liabilities” has the meaning set forth in Section
2.01(c)(vi).

“Transferred Permits” has the meaning set forth in Section 2.01(a)(viii).

“Updating Information” has the meaning set forth in Section 5.14(a).

 

 

A-12

 

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Exhibit B

 

Foreign Investment in Real Property Tax Act (FIRPTA)

Non-Foreign Certification

Pursuant to Section 1445 of the Internal Revenue Code

 

Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”)
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person.  For U.S. federal income tax purposes
(including Section 1445 of the Code), the owner of a disregarded entity (which
has legal title to a U.S. real property interest under local law) will be the
transferor of the property and not the disregarded entity.  To inform the
transferee that withholding of tax is not required in connection with the
transfer of certain assets by Old Dominion Electric Cooperative, a Virginia
utility aggregation cooperative (“Transferor”), as contemplated by that certain
Asset Purchase Agreement, dated as of [____], 2018, by and among Transferor and
Essential Power Rock Springs, LLC, a Delaware limited liability company
(“Purchaser”), the undersigned hereby certifies the following on behalf of
Transferor:

 

 

1.

Transferor is not a foreign corporation, foreign limited liability company,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Code and U.S. Treasury Regulations);

 

 

2.

Transferor is not a disregarded entity as defined in Treasury Regulations
Section 1.1445-2(b)(2)(iii);

 

 

3.

Transferor’s U.S. employer identification number is [];

 

 

4.

The address of Transferor is:

 

Old Dominion Electric Cooperative

4201 Dominion Boulevard

Glen Allen, VA  23060; and

 

5.

Transferor understands that this certification may be disclosed to the Internal
Revenue Service by Purchaser and that any false statements made herein could be
punished by fine, imprisonment, or both.

 

[signature page follows]

 

 

B-1

 

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Under penalties of perjury I declare that I have examined this certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of
Transferor.

 

OLD DOMINION ELECTRIC COOPERATIVE

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to FIRPTA Certificate]

 

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Exhibit C

 

ASSIGNMENT OF INTELLECTUAL PROPERTY AGREEMENT

 

This ASSIGNMENT OF INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is made
and delivered as of [●], 2018 (the “Effective Date”), by and between Old
Dominion Electric Cooperative, a Virginia utility aggregation cooperative
(“Seller”), and Essential Power Rock Springs, LLC, a Delaware limited liability
company (“Buyer”).  Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement (as hereinafter
defined).  Buyer and Seller are collectively referred to herein as the
“Parties”.

 

WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement,
dated as of [●], 2018 (the “Purchase Agreement”), whereby Seller has agreed to,
among other things, sell, transfer, assign, and convey to Buyer and Buyer has
agreed to purchase and accept from Seller the Acquired Assets, other than the
Excluded Assets, in accordance with the terms and conditions set forth in such
Purchase Agreement; and

WHEREAS, pursuant to the terms of the Purchase Agreement, Seller desires to
sell, assign, convey, transfer and deliver to Buyer, and Buyer desires to
purchase and accept from Seller, as of the Effective Date, all right, title and
interest of Seller in and to the Intellectual Property set forth or described in
Section 2.01(a)(x) of the Seller Disclosure Schedule, and all other Intellectual
Property owned or licensed by Seller that is primarily used by Seller in
connection with or in support of the ownership or operation of the Facility, and
the rights of Seller to the use of the name of the Facility, subject to the
terms of the Purchase Agreement (collectively the “Seller Intellectual
Property”).

NOW, THEREFORE, pursuant to the Purchase Agreement, and for and in consideration
of the premises and the mutual covenants contained herein, and for other good
and valuable consideration, the receipt, adequacy, and legal sufficiency of
which are hereby acknowledged, the Parties do hereby agree as follows:

1.

Assignment.  For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, as of the Effective Date and subject to and upon
the terms and conditions contained in the Purchase Agreement, Seller hereby
unconditionally grants, conveys, and assigns to Buyer, its successors and
assigns, free and clear of any and all Liens (except Permitted Liens), all of
Seller’s right, title and interest throughout the world to and under the Seller
Intellectual Property, including all goodwill pertaining thereto.

2.

Assumption.  Buyer hereby accepts the Seller Intellectual Property, from and
after the Effective Date.  Seller shall have no further rights in and to the
Seller Intellectual Property from and after the Effective Date.

3.

Further Instruments. The Seller hereby covenants and agrees to cooperate with
Buyer on or after the date hereof, upon request of Buyer, to take all
commercially reasonable actions and to execute and deliver, or cause to be
executed and delivered, all other documents and instruments reasonably necessary
or appropriate to fully evidence, vest, perfect and confirm,

 

C-1

 

--------------------------------------------------------------------------------

 

document, record and carry out the contribution, sale, assignment, transfer and
delivery of the Seller Intellectual Property, as contemplated by the Purchase
Agreement and this Agreement and Buyer’s ownership of all rights, title and
interests therein.

4.

No Third Party Beneficiaries.  This Agreement is for the sole benefit of the
Parties  and their permitted assigns and nothing herein expressed or implied
shall give or be construed to give to any other Person, other than the Parties
and such permitted assigns, any legal or equitable rights hereunder.

5.

Amendment. This Agreement may not be amended or modified except by an instrument
in writing signed by or on behalf of each of the Parties hereto.

6.

Notices.  All notices or other communications or deliveries provided for under
this Agreement shall be given as provided in the Purchase Agreement.

7.

Binding Effect; Assignment.  This Agreement and all of the provisions hereof
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and assigns.

8.

Governing Law/Jurisdiction.  This Agreement shall be interpreted, construed and
governed in accordance with, and subject to the jurisdiction provided in, the
Purchase Agreement.

9.

Counterparts.  This Agreement may be executed in two or more counterparts
(including exchange of signature pages by telecopy, e-mail or other means of
electronic transmission) each of which shall be deemed to be an original, but
all of which together shall constitute one and the same agreement.

10.

Incorporation.  All recitals and all exhibits are incorporated by reference as
if fully set forth herein.

11.

No Conflict.  Nothing contained in this Agreement shall be deemed to modify,
amend, or supersede any of the obligations or agreements of Seller, Buyer, or
any other party contained in the Purchase Agreement.  The Purchase Agreement is
the exclusive source of the agreement and understanding between Seller and Buyer
respecting the sale of the Seller Intellectual Property.  In the event of a
conflict or inconsistency between the terms and conditions of this Agreement and
the terms and conditions of the Purchase Agreement, the terms and conditions of
the Purchase Agreement shall prevail.

[Signature Page Follows]

 

 

C-2

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have executed this Assignment as of the date
first written above.

 

SELLER:

 

OLD DOMINION ELECTRIC COOPERATIVE,

a Virginia utility aggregation cooperative

 

By:

 

Name:

 

Title:

 

 

 

 

 

BUYER:

 

ESSENTIAL POWER ROCK SPRINGS, LLC,

a Delaware limited liability company

 

 

By:

 

Name:

 

Title:

 

 

 

 

C-1

 

--------------------------------------------------------------------------------

 

Exhibit D

 

BILL OF SALE

 

 

This BILL OF SALE (this “Agreement”) is made and delivered as of [●], 2018 (the
“Effective Date”), by and between Old Dominion Electric Cooperative, a Virginia
utility aggregation cooperative (“Seller”), and Essential Power Rock Springs,
LLC, a Delaware limited liability company (“Buyer”).  Capitalized terms used but
not defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement (as hereinafter defined).  Buyer and Seller are collectively
referred to herein as the “Parties”.

 

WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement,
dated as of [●], 2018 (the “Purchase Agreement”), whereby Seller has agreed to,
among other things, sell, transfer, assign, and convey to Buyer, and Buyer has
agreed to purchase and accept, from Seller the Acquired Assets, other than the
Excluded Assets, in accordance with the terms and conditions set forth in such
Purchase Agreement.

NOW, THEREFORE, pursuant to the Purchase Agreement, and for and in consideration
of the premises and the mutual covenants contained herein, and for other good
and valuable consideration, the receipt, adequacy, and legal sufficiency of
which are hereby acknowledged, the Parties do hereby agree as follows:

1.

Assignment.  For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, as of the Effective Date and subject to and upon
the terms and conditions contained in the Purchase Agreement, Seller hereby
unconditionally grants, conveys, and assigns to Buyer, its successors and
assigns, free and clear of any and all Liens (except Permitted Liens), all of
Seller’s right, title and interest to the Acquired Assets and Assumed
Liabilities (other than Intellectual Property, Owned Real Property, Leases and
Transferred Easements) (the “Purchased Assets”).

2.

Assumption.  Buyer hereby accepts all right, title and interest to the Purchased
Assets, and all risk of loss with respect thereto, from and after the Effective
Date.  Seller shall have no further rights in and to the Purchase Assets from
and after the Effective Date.

3.

Further Instruments. The Seller hereby covenants and agrees to cooperate with
Buyer on or after the date hereof, upon request of Buyer, to take all
commercially reasonable actions and to execute and deliver, or cause to be
executed and delivered, all other documents and instruments reasonably necessary
or appropriate to fully evidence, vest, perfect and confirm, document, record
and carry out the contribution, sale, assignment, transfer and delivery of the
Purchased Assets, as contemplated by the Purchase Agreement and this Agreement
and Buyer’s ownership of all rights, title and interests therein.

4.

No Third Party Beneficiaries.  This Agreement is for the sole benefit of the
Parties and their permitted assigns and nothing herein expressed or implied
shall give or be construed to give to any other Person, other than the Parties
and such permitted assigns, any legal or equitable rights hereunder.

 

D-1

 

--------------------------------------------------------------------------------

 

5.

Amendment. This Agreement may not be amended or modified except by an instrument
in writing signed by or on behalf of each of the Parties hereto.

6.

Notices.  All notices or other communications or deliveries provided for under
this Agreement shall be given as provided in the Purchase Agreement.

7.

Binding Effect; Assignment.  This Agreement and all of the provisions hereof
shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective successors and assigns.

8.

Governing Law/Jurisdiction.  This Agreement shall be interpreted, construed and
governed in accordance with, and subject to the jurisdiction provided in, the
Purchase Agreement.

9.

Counterparts.  This Agreement may be executed in two or more counterparts
(including exchange of signature pages by telecopy, e-mail or other means of
electronic transmission) each of which shall be deemed to be an original, but
all of which together shall constitute one and the same agreement.

10.

Incorporation.  All recitals and all exhibits are incorporated by reference as
if fully set forth herein.

11.

No Conflict.  Nothing contained in this Agreement shall be deemed to modify,
amend, or supersede any of the obligations or agreements of Seller, Buyer, or
any other party contained in the Purchase Agreement.  The Purchase Agreement is
the exclusive source of the agreement and understanding between Seller and Buyer
respecting the sale of the Purchased Assets.  In the event of a conflict or
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of the Purchase Agreement, the terms and conditions of the
Purchase Agreement shall prevail.

[Signature Page Follows]

 

 

 

 

 

D-2

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the
date first written above.

 

SELLER:

 

OLD DOMINION ELECTRIC COOPERATIVE,

a Virginia utility aggregation cooperative

 

By:

 

Name:

 

Title:

 

 

 

 

 

BUYER:

 

ESSENTIAL POWER ROCK SPRINGS, LLC,

a Delaware limited liability corporation

 

 

By:

 

Name:

 

Title:

 

 

 

 

D-1

 

--------------------------------------------------------------------------------

 

Exhibit E

Form of Deed

 

 

E-1

 

--------------------------------------------------------------------------------

 

THIS INSTRUMENT PREPARED BY,
AND AFTER RECORDING RETURN TO:

 

LeClairRyan PLLC

919 East Main Street

Twenty-Fourth Floor

Richmond, Virginia 23219

 

TAX MAP / PARCEL ID #08-019320

SPECIAL WARRANTY DEED

THIS SPECIAL WARRANTY DEED is made as of __________, 2018 by and between OLD
DOMINION ELECTRIC COOPERATIVE, a Virginia utility aggregation cooperative (the
“Grantor”), and ESSENTIAL POWER ROCK SPRINGS, LLC, a Delaware limited liability
company (the “Grantee”), and provides as follows:

W I T N E S S E T H:

FOR AND IN CONSIDERATION OF THE SUM OF [●] DOLLARS ($[●]) cash in hand paid, and
other good and valuable consideration paid by Grantee to Grantor, the receipt of
which is hereby acknowledged, Grantor does hereby grant, bargain, sell and
convey, Grantor’s one half (1/2) undivided co-tenancy interest, with Special
Warranty of Title, to Grantee forever in fee simple the lands and property,
together with all improvements located on the property, situate and lying in
Cecil County, Maryland, and more particularly described in Exhibit A hereto (the
“Property”); and

TOGETHER with any and all and rights, privileges, appurtenances and advantages
to the same belonging or anywise appertaining.

TO HAVE AND TO HOLD the Property, together with all rights, privileges,
appurtenances and advantages thereunto belonging or appertaining to the Grantee,
its successors and assigns, forever.

This conveyance is made subject to all covenants, restrictions, easements,
reservations, agreements, rights-of-way, conditions of record and all matters
discoverable by a current survey of the Property insofar as they affect the
Property or any part thereof.  Grantor will only warrant and forever defend the
right and title to the Property unto the said Grantee against the claims of
those persons claiming by, through or under Grantor, but not otherwise.

[Remainder of page intentionally left blank; signature appears on following
page.]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Grantor has caused its name to be executed on its behalf by
its duly authorized officer.

 

OLD DOMINION ELECTRIC COOPERATIVE,

a Virginia utility aggregation cooperative

 

By:

 

Name:

 

Title:

 

 

 

 

 

 

ATTEST:

 

 

By:

 

Name:

 

 

 

--------------------------------------------------------------------------------

 

NOTARY ACKNOWLEDGMENT

 

COMMONWEALTH OF VIRGINIA
SS:
COUNTY OF _______________

 

I CERTIFY that on  ______________, 2018, ___________________ personally came
before me and acknowledged under oath, to my satisfaction that:

(a)  this person signed and delivered the attached as _________________ of OLD
DOMINION ELECTRIC COOPERATIVE, a Virginia utility aggregation cooperative, the
utility aggregation cooperative named in this instrument;

(b)  this person is authorized by the utility aggregation cooperative to sign
and deliver this instrument on behalf of the utility aggregation cooperative;

(c)  this instrument was signed and made by the utility aggregation cooperative
as its voluntary act and deed.

 

Signed and sworn to before me

 

on

 

, 2018

 

 

 

 

 

 

 

Notary Public of the Commonwealth of Virginia

 

This is to certify that this instrument was prepared by or under the supervision
of the undersigned, who is an attorney duly admitted to practice law before the
Court of Appeals of the State of Maryland.

 

 

 

, Esquire

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

PROPERTY

 

 

Lot 1, containing 51.102 acres, more or less, as shown on plat entitled “Minor
Subdivision Plan for Lands of Old Dominion Electric Cooperative & Essential
Power Rock Springs, LLC” recorded September 24, 2015 in Liber 1118 at folio 2,
among the land records of Cecil County, Maryland.

Such property, comprised of two parcels, is also described as follows:

Description of lands situate in the Eighth Election District of Cecil County,
Maryland. Said lands being shown as Lot 1, lying west of and immediately
adjacent to U.S. Route 222, as shown on a minor subdivision plan entitled Minor
Subdivision for Lands of Old Dominion Electric Cooperative & Essential Power
Rock Springs, LLC as prepared by Northern Bay Land Planning Engineering and
Surveying Corporation, dated August 26, 2015 as recorded in the Office of the
Recorder of Deeds in and for Cecil County, Maryland in Plat Cabinet PC No. 1118,
at folio 2 and being further indexed as Minor Subdivision No. 4017, with said
lands being more particularly described as follows to wit:

 

Beginning for the same at a point located at the northeast corner of the herein
described parcel, with said point of beginning being located on the westerly
right-of-way line of U.S. Route 222, as shown on State Roads Commission of
Maryland Plat Nos. 9228, 9229, and 9230. Said point of beginning is further
described as being located South 28°40'33" West a distance of 807.46 feet as
measured along said right-of-way line from a capped pin located at the
southernmost corner of lands now or formerly of Atlantic Seaboard Corporation as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber W.A.S. No. 134, at folio 338 (Parcel No. 1); Said point of beginning being
further situated at positional coordinates N 748,487.7630 E 1,549,701.3725 as
referenced to the Maryland State Plane Coordinate System; thence leaving said
point of beginning and in accordance with a survey by Northern Bay Land
Planning, Engineering and Surveying Corporation, with the courses herein based
upon the Maryland State Plane Coordinate System (NAD 83/1991), the following
courses and distances: binding along the aforesaid westerly right-of-way line of
said U.S. Route 222, South 28°40'33" West a distance of 1,219.59 feet to a
capped pin set; thence leaving said westerly right-of-way line and running by
and with lands now or formerly of William E. Riddle, Jr. as described in a deed
found among the Land Records of Cecil County, Maryland in Liber N. D. S. No.
179, at folio 146, North 61°19'27" West a distance of 142.55 feet to a capped
pin set; thence running by and with the same, South 28°40'33" West a distance of
190.54 feet to a capped pin set on the northeasterly right-of-way line of Old
Mill Road as conveyed in fee simple to the Board of County Commissioners of
Cecil County and described in a deed found among the Land Records of Cecil
County, Maryland in Liber W.L.B. No. 1735 at folio 234; thence running by and
with the same the following six (6) courses and distances:

 

 

1.

North 61°42'14" West a distance of 151.52 feet to a point; thence,

 

 

2.

North 61°15'05" West a distance of 268.85 feet to a point; thence,

 

--------------------------------------------------------------------------------

 

 

3.

North 62°01'20" West a distance of 263.95 feet to a point; thence,

 

4.

North 61°42'26" West a distance of 260.44 feet to a point; thence,

 

5.

North 60°54'48" West a distance of 285.33 feet to a point; thence,

 

6.

North 60°39'25" West a distance of 53.94 feet to a point; thence, leaving the
said northeasterly right-of-way line of Old Mill Road and running by and with
the line of lands for Lot 2 as shown on the aforementioned Minor Subdivision
Plan for lands of Old Dominion Electric Cooperative & Essential Power Rock
Springs, LLC, the following fifteen (15) courses and distances:

 

1.

North 45°00'00" East a distance of 241.41 feet to a point; thence,

 

2.

South 45°00'00" East a distance of 23.83 feet to a point; thence,

 

3.

North 45°00'00" East a distance of 271.50 feet to a point; thence,

 

4.

North 39°28'02" East a distance of 142.20 feet to a point; thence,

 

5.

North 89°34'51" East a distance of 221.38 feet to a point; thence,

 

6.

North 00°04'01" East a distance of 470.25 feet to a point; thence,

 

7.

North 24°06'00" East a distance of 30.88 feet to a point; thence,

 

8.

North 00°01'07" East a distance of 185.05 feet to a point; thence,

 

9.

North 38°40'37" East a distance of 52.33 feet to a point; thence,

 

10.

North 78°38'32" East a distance of 227.89 feet to a point; thence,

 

11.

South 86°54'43" East a distance of 504.56 feet to a point; thence,

 

12.

South 45°34'39" East a distance of 180.31 feet to a point; thence,

 

13.

South 33°00'06" East a distance of 101.81 feet to a point; thence,

 

14.

South 41°18'29" East a distance of 70.17 feet to a point; thence,

 

15.

South 31°42'32" East a distance of 446.37 feet to the place of beginning.

Containing 45.917 acres of land, more or less

 

Description of lands situate in the Eighth Election District of Cecil County,
Maryland. Said lands being shown as Lot No. 1, lying south of and immediately
adjacent to Old Mill Road as shown on a minor subdivision plan entitled Minor
Subdivision for Lands of Old Dominion Electric Cooperative & Essential Power
Rock Springs, LLC as prepared by Northern Bay Land Planning Engineering and
Surveying Corporation, dated August 26, 2015 as recorded in the Office of the
Recorder of Deeds in and for Cecil County, Maryland in Plat Cabinet PC No. 1118,
at folio 2 and being further indexed as Minor Subdivision No. 4017, with said
lands being more particularly described as follows to wit:

 

--------------------------------------------------------------------------------

 

 

Beginning for the same at the northeasterly corner of the herein described
parcel with said point of beginning being located in or near the physical
centerline of Old Mill Road and being further located at positional coordinates
N 747,734.120 E 1,548,066.601 as referenced to the Maryland State Plane
Coordinate System; thence leaving said point of beginning and in accordance with
a survey by Northern Bay Land Planning, Engineering and Surveying Corporation,
with the courses herein based upon the Maryland State Plane Coordinate System
(NAD 83/1991) the following courses and distances: running by and with lands now
or formerly of Emory Francis Holbrook, Jr. and Donald Francis Holbrook as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber No. W.L.B. 1207 at folio 123, South 26°38’15” West a distance of 668.12
feet, passing over a capped pin set at 30.00 feet from the beginning of said
line, to a point in the line of lands now or formerly of PECO Energy Company as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber No. W.L.B. 545 at folio 1; thence, running by and with the same, North
66°09’00” West a distance of 357.08 feet to an iron pipe found; thence, running
by and with lands now or formerly of James S. Jeter as described in a deed found
among the Land Records of Cecil County, Maryland in Liber W.L.B. 2732 at folio
50, North 11°42’53” East a distance of 234.95 feet to point, said point further
described as being located  South 11°42’53” West – 0.33 feet from an iron pipe
found; thence, running by and with lands now or formerly of Charles C. Gunther,
Jr. and Laura L Rittershofer as described in a deed found in the Land Records of
Cecil County, Maryland in Liber W.L.B. 1184 at folio 234, South 77°29’15” East a
distance of 120.81 feet to a capped pin set; thence, continuing by and with
lands now or formerly of Charles C. Gunther, Jr. and Laura L Rittershofer as
described in a deed found in the Land Records of Cecil County, Maryland in Liber
W.L.B. 1184 at folio 234, North 26°38’15” East a distance of 441.60 feet,
passing over a capped pin set 411.60 feet from the beginning of said line, to a
point in or near to the centerline of the aforementioned Old Mill Road; thence,
running in or near the centerline of Old Mill Road, South 60°54’48” East a
distance of 285.61 feet to a point; thence, continuing in or near the centerline
of Old Mill Road, South 61°42’26” East a distance of 14.65 feet to the place of
beginning.  

 

Containing 5.185 acres of land, more or less

 

BEING a portion of the same property of which Rock Springs Generation, LLC, a
Virginia limited liability company, by Deed dated December 31, 2003 and recorded
on and among the Land Records of Cecil, Maryland on March 15, 2004, in Liber
1608 at folio 682, granted and conveyed a 1/2 undivided interest to Old Dominion
Electric Cooperative, a Virginia utility aggregation cooperative.

 

 

 

--------------------------------------------------------------------------------

 

Exhibit F

Lease Termination Agreements

 

 

 

THIS INSTRUMENT PREPARED BY,
AND AFTER RECORDING RETURN TO:

 

LeClairRyan PLLC

919 East Main Street

Twenty-Fourth Floor

Richmond, Virginia 23219

 

TAX MAP / PARCEL ID #08-019320

DEED OF GROUND LEASE TERMINATION AGREEMENT

 

THIS DEED OF GROUND LEASE TERMINATION AGREEMENT (this “Agreement”), is dated
this ___ day of ___________, 2018, is made by and between ESSENTIAL POWER ROCK
SPRINGS, LLC, a Delaware limited liability company (“EP Rock Springs”), and OLD
DOMINION ELECTRIC COOPERATIVE, a Virginia utility aggregation cooperative
(“ODEC”), with respect to the lease of certain parcels of real property.

 

RECITALS

 

A.EP Rock Springs is the successor in interest to CED Rock Springs, Inc., a
Delaware corporation and a Ground Lessor (“CED Rock Springs”), under that
certain Deed of Ground Lease (the “Lease”), dated December 18, 2002, by and
between CED Rock Springs and Rock Springs Generation, LLC, a Virginia limited
liability company (“RSG”).

 

B.ODEC is the successor in interest to RSG as a Ground Lessor and the Ground
Lessee under the Lease.

 

C.The Lease is evidenced of record by that certain Memorandum of Ground Lease
Agreement (the “Memorandum”), dated December 18, 2002, by and between CED Rock
Springs and RSG, which Memorandum was recorded on January 9, 2003 in Book 1239,
Page 34 of the public records of the Clerk of Court of Cecil County, Maryland
with respect to the property described in Exhibit A attached hereto (the
“Property”).

 

D.EP Rock Springs and ODEC wish to provide for the termination of the Lease and
the Memorandum.

 

 

F-1

 

--------------------------------------------------------------------------------

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, EP Rock Springs and ODEC hereby
agree as follows:

 

1.TERMINATION DATE.  The Lease and the Memorandum shall terminate as of the date
hereof, in the same manner and with the same effect as if that date had been
originally fixed in the Lease for the expiration of the term.  

 

2.OPTIONS.  Any options to renew the Lease, whether or not exercised prior to
the date hereof, are null and void and of no further effect.

 

3.REPRESENTATION OF PARTIES.  Each party represents that it has not made any
assignment, sublease, transfer, conveyance, or other disposition of the Lease,
or interest in the Lease, or any claim, demand, obligation, liability, action,
or cause of action arising from the Lease, and, to its knowledge, it has full
right, power and authority to enter into this Agreement.

 

4.FURTHER ASSURANCES.  Each party agrees to cooperate with the other and to
execute and deliver all such further instruments and documents and do all such
further acts and things as such party may be reasonably requested to do from
time to time by the other party in order to carry out the provisions and
objectives of this Agreement.

 

5.SUCCESSORS.  This Agreement shall be binding on and inure to the benefit of
the parties and their successors.

 

6.RELEASE.  Each party hereby releases and forever discharges the other party
from any and all claims, demands, debts, accounts, contracts, obligations,
liabilities, actions and causes of action, whether in law or in equity, which
the party ever had, now has, or may have, directly or indirectly, known or
unknown, arising out of or in any way related the Lease.

 

 

 

 

[Signatures appear on following page.]

 

 

 

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO

DEED OF GROUND LEASE TERMINATION AGREEMENT

 

IN WITNESS WHEREOF, EP Rock Springs and ODEC have executed this Lease
Termination Agreement as of the day and year first written above.

 

EP ROCK SPRINGS:

Essential Power Rock Springs, LLC, a Delaware limited liability company

 

ODEC:

Old Dominion Electric Cooperative, a Virginia utility aggregation cooperative

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

 

 

 

Date:

 

 

Date:

 

 

 

 

 

[Signature Page to Deed of Ground Lease Termination Agreement]

 

--------------------------------------------------------------------------------

 

[NTD: TO INSERT APPROPRIATE EPRS NOTARY BLOCK]

 

 

[Signature Page to Deed of Ground Lease Termination Agreement]

 

--------------------------------------------------------------------------------

 

NOTARY ACKNOWLEDGMENT

 

COMMONWEALTH OF VIRGINIA
SS:
COUNTY OF _______________

 

I CERTIFY that on  ______________, 2018, ___________________ personally came
before me and acknowledged under oath, to my satisfaction that:

(a)  this person signed and delivered the attached as _________________ of OLD
DOMINION ELECTRIC COOPERATIVE, a Virginia utility aggregation cooperative, the
utility aggregation cooperative named in this instrument;

(b)  this person is authorized by the utility aggregation cooperative to sign
and deliver this instrument on behalf of the utility aggregation cooperative;

(c)  this instrument was signed and made by the utility aggregation cooperative
as its voluntary act and deed.

 

Signed and sworn to before me

 

on

 

, 2018

 

 

 

 

 

 

 

Notary Public of the Commonwealth of Virginia

 

This is to certify that this instrument was prepared by or under the supervision
of the undersigned, who is an attorney duly admitted to practice law before the
Court of Appeals of the State of Maryland.

 

 

 

, Esquire

 

 

 

 

 

[Signature Page to Deed of Ground Lease Termination Agreement]

 

--------------------------------------------------------------------------------

 

Exhibit A

Property

Description of a Lease Area, to be granted by Rock Springs Generation, LLC,
situate in the Eighth Election District of Cecil County, MD. Said lands being
shown as "Unit 2 Lease Area" on a plan entitled "Plan of Unit 2 Lease Area
within lands of Rock Springs, LLC", dated 03/05/02, as prepared by Northern Bay
Land Planning, Engineering and Surveying Corporation. Said lands being more
particularly described as follows to wit:

Beginning for the same at a point located at the Northeasterlymost corner of the
herein described parcel of land, having a coordinate value of 748,882.977 North,
1,548,820.797 East, as based upon Maryland State Plane Coordinate System NAO
1983, adjusted  1991; thence leaving said  point of beginning and   running Due
South -

276.00 feet to a point  (748,606.977  N, 1,548,820.797  E); thence running  Due
West - 107.59 feet; thence running  Due North - 276.00 feet to a point; thence
running Due East - 107.59 feet to the place of beginning.

Containing  29,696 Square Feet of land, more or   less.

 

 

 

--------------------------------------------------------------------------------

 

Exhibit G

Term and Conditions for the Amended and Restated Shared Facilities Agreement

 

 

 

Service Water Storage Tank and Supply Piping:

The 8 million gallon water storage tank, owned by Rock Springs (RS), has service
connections to both RS and ODEC’s Wildcat Point (WCP).  Each owner shall be
solely responsible for the operation and maintenance (O&M) expenses and required
capital expenditures associated with their supply piping from their respective
flanged piping connection at the tank.  All other tank O&M expenses and capital
expenditures, including, but not limited to, painting, internal/external
inspections, instrumentation upgrades, permit renewals, emergency
replenishments, and upgrades and repairs of any kind, shall be split equally
between RS and WCP.  

 

RS and WCP shall mutually agree on an annual budget for the tank.  RS shall
provide to WCP for its approval, by October 1st of each year, an O&M and capital
expenditure budget, including schedules for payment thereof for inclusion in the
annual WCP budget.  WCP will not unreasonably, withhold, delay or condition its
consent to such budget.  Any unscheduled maintenance or capital expenditures
otherwise requested by RS but not included in such annual plan shall be subject
to WCP's approval, (other than as set forth below in respect of casualty or an
emergency (for which costs shall be split equally)).  All maintenance and repair
work in respect of the tank shall be conducted in a reasonable manner,
incorporating all operational considerations of both RS and WCP, and otherwise
so to avoid material adverse interference with the operations of RS and WCP. RS
shall timely communicate with WCP regarding the status and progress of all
maintenance and capital work.  WCP will have the opportunity to observe any
scheduled or unscheduled O&M or installation or incorporation of capital
expenditures.

 

RS shall provide WCP with reasonable access to any service water piping that is
located on RS property in order for WCP to perform piping maintenance and
repairs as required.

 

Casualty/Purchase Option

Any repair or refurbishment arising as a result of any casualty or other event
of loss affecting the tank shall be mutually agreed between RS and WCP.  Any
costs or expenditures relating thereto, net of any available insurance proceeds,
shall be borne equally by WCP and RS.

 

In the event RS intends to abandon operation of the tank, WCP shall, for a
period of 90 days’ following notice from RS of such intent, have the right, but
not the obligation, to purchase the tank (and related property rights relating
thereto) at RS’s net book value.

 

Tank Water Supply:

Raw water, for tank replenishment, will be supplied by WCP as required.  Each of
RP and WCP shall appoint a designated representative to represent the parties in
respect of matters concerning the tank, related water treatment and supply and
other shared facilities issues.  The designated representatives shall reasonably
coordinate regarding all operational matters in respect of the shared services,
including scheduling the replenishment of the tank to ensure sufficient water
remains available for the operation of RS and WCP.  The designated
representatives and other operations staff will develop and maintain operational
procedures for operation of the tank. An Operating Committee shall be
established (substantially as described in the Existing Shared Facilities
Agreement) to provide oversight of the designated representatives' activities
and resolve any disputes between the designated representatives.

 

Water Usage:

RS shall have the right to withdraw a volume of service water from the tank up
to its permitted daily peak limit of 0.262 mgd.  WCP shall have the right to
withdraw water down to the tank level of the WCP connection to the tank.  This
level will ensure approximately 475,000 gallons remains in the tank for
continued use by RS and will ensure sufficient suction head remains for both the
RS and WCP emergency fire pumps.  

 

G-1

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Water Usage Fee:

In the event RS’s net water usage exceeds in any contract year (with a contract
year equal to a 12 month period, initially commencing on the effective date of
the shared services agreement and subsequently commencing on the anniversary
thereof) 1,500,000 gallons, RS shall pay WCP for net water usage in excess of
such amount at a rate equal to $2.50 per-thousand gallons.  Ten years following
the effective date of the shared services agreement, WCP and RS shall undertake
in good faith an analysis to evaluate the cost to provide the water and any
necessary adjustment to the rate to accurately reflect the cost of the
service.  Net water usage is defined as the volume of water removed by RS from
the water storage tank during a given period. RS net water usage shall be
reported to WCP by RS on a monthly basis or otherwise as reasonably requested by
WCP from time to time.

 

Easements:

Rock Springs Fire Water Loop Easement:

Portions of the RS fire water loop extend onto ODEC’s WCP property.  WCP shall
provide RS with access to the sections of the fire piping loop that reside on
WCP’s property in order to perform piping maintenance and repairs as required
(subject to customary notice requirements).  In exchange, RS shall ensure that
all landscaping and roadways that are disturbed during the process of gaining
access to any underground piping shall be repaired and returned to their
as-found state, including the repair or replacement of any fencing that RS
disturbs in the easement area.  RS shall provide a survey of the easement area,
a metes and bounds description thereof, and such other information in respect of
the easement and RS’s intended uses thereof as WCP may reasonably request.  Such
easement shall reserve to WCP rights to conduct any and all activities within
the easement area, including granting of easements and occupancy rights (but
excluding the installation of structures or other improvements); provided such
activities and easement grants do not materially adversely affect the operation
of RS’s equipment located therein.  RS shall execute such documentation in
respect of this easement as WCP and/or WCP’s lenders may reasonably request.  RS
shall indemnify WCP, and defend and hold harmless WCP from, any and all claims,
losses, liabilities, damages, costs and expenses resulting from the presence
and/or operation of RS’s equipment or conduct of RS’s activities within the
easement area (except to the extent any of the foregoing arise as a result of
WCP’s negligent or willful acts or omissions).

 

Delmarva-WCP Backup Power Easement:

RS shall provide WCP a non-exclusive easement with respect to the back-up power
arrangements supplied by Delmarva Power & Light to WCP solely for the purpose of
maintaining and operating WCPs’ existing transmission poles and associated power
lines thereon (and subsequent replacements thereof which are similar in size and
scale), subject to RS’ confirmation that such an easement will not materially
adversely affect RS’ operations. Voltages on the power lines maintained in the
easement by WCP shall not exceed [34.5 kV].  WCP shall provide a survey of the
easement area, a metes and bounds description thereof, and such other
information in respect of the easement and WCP’s intended uses thereof as RS may
reasonably request.  Such easement shall reserve to RS rights to conduct any and
all activities within the easement area, including installation of improvements
and granting of easements and occupancy rights provided such activities,
improvements and easement grants do not materially adversely affect the
operation of WCP’s equipment located therein.  WCP shall execute such
documentation in respect of this easement as RS and/or RS’ lenders may
reasonably request.  WCP shall indemnify RS, and defend and hold harmless RS
from, any and all claims, losses, liabilities, damages, costs and expenses
resulting from the presence and/or operation of WCP’s or Delmarva’s equipment or
conduct of WCP’s or Delmarva’s activities within the easement area (except to
the extent any of the foregoing arise as a result of RS’s negligent or willful
acts or omissions).

 

 

G-2

 

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Emergency Diesel Generator:

During the installation of the backup Emergency Diesel Generator (EDG) at WCP,
an electrical connection from the EDG to RS was provided in order to supply
emergency backup power to RS in addition to WCP.  Due to differences in
auxiliary power voltages between the two facilities, a transformer was installed
at RS to accommodate the electrical connection to RS.  Each owner will be solely
responsible for their respective electrical feeds, including any transformers,
from the first electrical termination to the EDG.  As such, WCP shall provide RS
with access to any portion of electrical feed which resides on WCP’s property in
order to perform maintenance and repairs as required.   EDG specific maintenance
and testing will be performed by and at the discretion of WCP personnel except
where testing will impact the RS facility in which case testing shall be
coordinated between the two facilities.  Documented EDG variable maintenance and
testing costs will be equally split between the two facilities.  Air permit
compliance of the EDG shall be the sole responsibility of WCP.  Any significant
planned maintenance to the EDG will be communicated by WCP to RS to ensure RS
has the opportunity to capture these expenses in their annual budget.  The EDG
shall be successfully tested to ensure emergency loads at both WCP and RS can be
accommodated prior to RS reimbursement of any EDG maintenance and testing costs,
which testing shall include confirmation that the RS bus which is supplied power
by the EDG is energized and functional.  The test will consist of energizing the
emergency feed from the WCP emergency generator through the new RS circuit
(i.e., energization of the new ABB transformer up to the new manual 480 V feeder
breaker), a check of the sequencing of the phases and such other steps as the
parties may mutually agree. In addition, RS shall have the right to disconnect
from the EDG at any point in the future upon 90 days prior written notice.    If
RS choses to disconnect from the EDG, WCP shall be solely responsible for all
costs associated with the on-going testing, maintenance, and repairs of the EDG
after the disconnection date.

 

Emergency Phone Line:

A dedicated phone line has been installed between WCP and RS to ensure any site
emergencies are promptly communicated.  Both parties agree to maintain equipment
associated with this dedicated line on their respective properties.  Costs
associated with any future upgrades or repairs of this system shall be split
equally by RS and WCP if the repair/upgrade is deemed necessary by both parties
and otherwise borne by the party incurring the cost.

 

General Access and Cooperation:

Access gates in the fences lining the property borders of the two facilities
shall remain closed under normal operations.  RS and WCP shall cooperate to
provide reasonable visitor access to the other party on an as-needed basis,
excluding the RS Switchyard, access rights to the extent governed by the WCP
interconnection agreement. When possible, each operator shall provide advanced
notice of the request for access and shall follow the applicable protocol for
plant visitors. Under abnormal operating conditions, plant access may be
required by either party without advance notice including access through the
bordering fence gates.

 

WCP and RS shall mutually agree on an annual basis (and in any event prior to
any applicable deadlines for finalization of the annual budget of each) a plan
and budget for maintenance and upkeep of the joint fence line.  Costs therefor
shall be borne equally by the parties.

 

Appropriate documentation evidencing property and access rights described
herein, including easements, shall be entered into between RS and WCP.

 

 

G-3

 

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RS Oily Water Separator Connection to WCP

WCP and RS will be responsible for the cost of maintenance and repair for that
portion of the RS Oily Water Separator system that is located on their
respective property. WCP will notify RS if a condition exists which would
prevent transfer of RS oily water to WCP and will work to expedite repair to
resume normal operations.

 

Evaporative Cooling Discharge from RS to WCP

WCP and RS will be responsible for the cost of maintenance and repair for that
portion of the RS Evaporative Cooling Discharge system that is located on their
respective property. WCP will notify RS if a condition exists which would
prevent transfer of RS evaporative cooling discharge to WCP and will work to
expedite repair to resume normal operations.

 

Jointly Connected WCP and RS Ground Grid:

WCP and RS will be responsible for maintenance on the portion of the ground grid
that is located on their property and will notify the other facility if
scheduled maintenance has the potential to impact the ground grid such that the
impacted facility has sufficient time to evaluate the potential impact. In the
event of an unplanned impact to the ground grid, the facility with the impact
will work expeditiously to perform repairs and will keep the other facility
notified of status. For ground grid connections at joint fencing, the facility
causing the impact on the jointly owned fencing will be responsible for all cost
associated with repair.

 

RS Fire Loop:

RS shall be responsible for the proper maintenance and repair, including
associated cost, of that portion of the RS Fire Loop that enters WCP property.

 

WP and RS NPDES Wastewater Discharge Permit:

WCP will obtain and maintain a NPDES Industrial Wastewater Permit supporting
process wastewater discharge between WCP and RS. WCP will provide to RS copies
of any contemplated modifications to such permit that could reasonably be
expected to affect RS’s operations at least 15 days prior to submission thereof,
and shall reasonably consider and incorporate any comments provided by RS in
respect thereof.  WCP shall not request any modifications to such permit that
would materially adversely affect RS’ operations, except as required by law and
where any adverse impact is proportionately shared by WCP and RS.

 

SRBC Surface Water Withdrawal Permit:

WCP and RS shall maintain its respective SRBC Surface Withdrawal Permit.  RS
shall provide such information reasonably requested by WCP relating to the
consumptive water used from the Service Water Storage Tank for purposes of
compliance with the joint metering plan submitted on October 25, 2016 pursuant
to the SRBC Surface Withdrawal Permits.

 

Stormwater Pollution Prevention  Plan (SWPPP):

As RS is listed as a source of stormwater in the WCP SWPPP, RS shall comply with
the general best practices required by the SWPPP (provided RS has been provided
a copy thereof) and provide such information as may be requested by WCP in
connection with same. Further, WCP will provide such information as requested by
RS regarding the stormwater conveyance system.  WCP will provide to RS copies of
any contemplated modifications to the SCP SWPPP that could reasonably be
expected to affect RS’s operations at least 15 days prior to submission thereof,
and shall reasonably consider and incorporate any comments provided by RS in
respect thereof.  WCP shall not make or request any modifications to such SWPPP
that would materially adversely affect RS’ operations, except as required by law
and where any adverse impact is proportionately shared by WCP and RS.

 

 

G-4

 

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Property Tax Allocations

With respect to tax payments pursuant to the PILOT Agreement, tax obligations
shall be allocated as follows:

•     As of Closing and through 6/30/2035, RS shall be responsible for
$1,760,000 of each annual tax period payment and WCP shall be responsible for
the remainder; provided, that the tax payment in respect of the annual tax
period in which Closing occurs shall be adjusted pro rata to account for the
pre-Closing period portion thereof, during which time tax obligations shall be
deemed allocated as set forth in the Existing Shared Facilities Agreement.

•     For the annual tax periods commencing on 7/1/2035, Section 2(d) of
Schedule 5.05(b) of the Existing Shared Facilities Agreement shall be conformed
and included in the shared facilities agreement.

 

CPCN Noise Monitoring and Measuring

WCP and RS will be responsible under their respective Certificates of Public
Convenience and Necessity (CPCN) or under applicable law for noise levels
arising out of the ownership or operation of WCP and RS, respectively.  Without
limiting the foregoing, WCP will be responsible for any costs to verify results
of the pre-construction predictive analysis and remediation of compliance
obligations under WCP’s CPCN.  RS shall reasonably cooperate with WCP to the
extent required to permit WCP to implement any such remediation.  If, and to the
extent, noise levels arising out of the ownership or operation of WCP or RS, as
applicable, should increase as a result of events or circumstances arising after
the date hereof and such increase would cause the other party to violate its
CPCN requirements or applicable law relating to noise levels, then such party
shall be responsible for the costs of mitigating and remedying any such increase
in noise levels causing such violations consistent with provisions generally
applicable to obligations of the parties under the agreement. Each party shall
reasonably cooperate with the other to the extent required to permit the other
to implement any such mitigation or remedy described in the immediately
preceding sentence.

 

Disputes:

The dispute resolution procedures provided in Article 4 of the Existing Shared
Facilities Agreement shall be conformed for inclusion in the shared services
agreement.

 

Good Faith Efforts:

The parties agree that each will in good faith take all reasonable actions
within their reasonable control as are necessary to permit the other party to
fulfill its obligations under the shared services agreement; provided, that no
party will be obligated to expend money or incur material economic loss in order
to facilitate performance by the other party. Where the consent, agreement or
approval of either party must be obtained hereunder, such consent, agreement or
approval shall not be unreasonably withheld, conditioned or delayed, unless
otherwise provided herein. Where either party is required or permitted to act or
fail to act based upon its opinion or judgment, such opinion or judgment shall
not be unreasonably exercised. Where notice to the other party is required to be
given herein, and no period is specified, reasonable notice shall be
given.  Where a party is required to provide access to its property to the other
party, reasonable access (customary in scope) shall be given, unless otherwise
provided herein.

 

Liability:

Neither party shall be liable to the other under the shared facilities agreement
for any consequential, indirect, special, exemplary or punitive damages,
including any damages for lost profits or revenues, except where such damages
result from gross negligence or willful misconduct.

 

 

 

 

1.

Based on SRBC Docket No. 20001203-3, Essential Power Rock Springs, LLC – Rock
Springs Generation Facility, Consumptive Water Use (Peak Day) of up to 0.262
million gallons per day from the Wildcat Point Generation Facility – Conowingo
Reservoir of the Susquehanna River, modification date 1/10/2017.

 

 

G-5

 

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Exhibit H

Form of Post-Closing Access Agreement

 

 

 

H-1

 

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POST-CLOSING ACCESS AGREEMENT

 

This POST-CLOSING ACCESS AGREEMENT (this “Agreement”) is dated as of this ____
day of ___________, 2018, by and between ESSENTIAL POWER ROCK SPRINGS, LLC, a
Delaware limited liability company (“EP Rock Springs”), and OLD DOMINION
ELECTRIC COOPERATIVE, a Virginia utility aggregation cooperative (“ODEC”), and
provides as follows:

 

RECITALS

 

A.EP Rock Springs owns certain real property, together with all improvements
located thereon, situate, lying and being in Cecil County, Maryland, and more
particularly described in Exhibit A hereto (the “Property”). ODEC previously
owned a one half (1/2) undivided co-tenancy interest in the Property and
conveyed such interest to EP Rock Springs by Special Warranty Deed on the date
hereof (the “Sale”).

 

B.Prior to the Sale, ODEC utilized a portion of the Property as a temporary
construction staging area in connection with its development of a power
generation facility on property owned by ODEC adjacent to the Property.  ODEC
has completed its construction on its adjacent property and now desires to
remove its construction trailers, materials and debris from the Property, and to
restore the portion of the Property impacted by its construction work to its
prior condition (the “Restoration Work”).

 

C.ODEC desires to complete the Restoration Work and EP Rock Springs is willing
to permit ODEC to enter the Restoration Area (as defined below) and complete the
Restoration Work, on the terms and conditions as set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, EP Rock Springs and ODEC hereby
agree as follows:

 

1.ACCESS TO RESTORATION AREA.  

 

1.1. EP Rock Springs hereby permits ODEC and ODEC’s agents to enter upon that
portion of the Property outlined on Exhibit B attached hereto and by this
reference made hereof (the “Restoration Area”) to conduct and complete the
Restoration Work; provided, however, that (i) ODEC shall provide EP Rock Springs
with at least twenty-four (24) hours advance notice prior to accessing the
Restoration Area; and (ii) ODEC shall perform the Restoration Work during normal
business hours.  ODEC shall not use the Restoration Area for any purpose other
than performance of the Restoration Work.

 

1.2. All Restoration Work performed by ODEC shall be done (i) at the sole cost
and expense of ODEC, (ii) in a commercially reasonable manner, (iii) in
compliance with all applicable laws and all safety and security rules of EP Rock
Springs and (iv) at EP Rock Springs’ election, with a representative of EP Rock
Springs present.  

 

 

--------------------------------------------------------------------------------

 

1.3. After completing the Restoration Work, ODEC shall promptly repair any
damage caused to the Restoration Area or the Property by ODEC’s Restoration
Work, and return the Restoration Area to substantially the same condition as
existed immediately prior the use of the Restoration Area for construction
staging.  

 

1.4. ODEC shall not permit any mechanics’ or materialmens’ liens or other liens
to attach to the Property by reason of performance of the Restoration Work, and
ODEC shall indemnify EP Rock Springs from and against all loss, claims, actions,
liens, proceedings, liability, damage, cost or expense (including reasonable
attorneys’ fees) (collectively, “Claims”) arising out of same or in connection
therewith.  Such indemnity shall survive the termination of this
Agreement.  ODEC shall be solely responsible, at its cost and expense, for
satisfying or removing any lien, including mechanic’s or materialmens’ liens,
against the Property (including, without limitation the Restoration Area) which
arises from or is caused by or related to any work performed, materials
furnished or obligations incurred by or on behalf of ODEC or any of its
employees, agents, invitees, licensees, contractors, subcontractors or other
users of the Restoration Area (collectively, “Permittees”) with respect to the
Restoration Area within ten (10) days following the recording or filing
thereof.   

 

1.5. ODEC shall not, and shall not permit any of its Permittees to, unreasonably
interfere with EP Rock Springs’ use of the Property.  EP Rock Springs reserves
and retains the right to use the Restoration Area for any purpose whatsoever, so
long as the access to, and use of, the Restoration Area for the Restoration Work
is not materially impaired.

 

2.INDEMNITY.  Except to the extent caused by the negligent or willful acts or
omissions of EP Rock Springs, ODEC shall indemnify, defend and hold EP Rock
Springs harmless for, from, and against all Claims in connection with any entry
on the Restoration Area by ODEC, any claim of lien or damage, or any activities
on the Restoration Area (including, without limitation, the Restoration Work) by
ODEC or its Permittees, or any exercise by ODEC of its rights under this
Agreement. This indemnity shall survive any termination of this Agreement.  

 

3.ACCESS PERIOD. ODEC and EP Rock Springs agree that, pursuant to the terms and
conditions of this Agreement, ODEC and its agents shall have the right of access
granted by this Agreement until December 31, 2018 (the “Expiration Date”),
unless such period is extended by the written consent of the parties prior to
such date.   This Agreement shall automatically terminate on the Expiration
Date, except for those provisions which expressly survive such termination.  

 

4.LIABILITY.  Except to the extent caused by the gross negligence or willful
misconduct of EP Rock Springs, EP Rock Springs shall not be liable for any
damage or injury to persons or property arising out of use of the Restoration
Area by ODEC or its Permittees.  

 

5.INSURANCE.  ODEC at its sole expense will procure and maintain, in full force
and effect during the term of this Agreement, the insurance policies customary
for similar enterprises in the State of Maryland, including, without limitation,
(i) general liability insurance with limits of liability not less than
$5,000,000 for each occurrence and $5,000,000 in the

 

2

 

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aggregate, (ii) business automobile liability insurance with limits of liability
not less than $1,000,000 for each occurrence and $1,000,000 in the aggregate,
and (iii) workers’ compensation and/or employers’ liability insurance in a form
and amount covering ODEC’s full liability as required under applicable
law.  ODEC may satisfy its insurance obligations under this Agreement by follow
form umbrella and/or excess liability coverage.  All such insurance shall name
EP Rock Springs and any other person specified by EP Rock Springs as an
additional insured.  ODEC hereby waives all rights and claims against EP Rock
Springs for such losses, and waives all rights of subrogation of its insurers,
provided such waiver of subrogation shall not affect the right of the insured to
recover thereunder.  

 

6.NOTICES.  All notices, demands, statements, designations, approvals or other
communications given or required to be given by either party to the other
hereunder or by law shall be either (i) sent by overnight delivery using a
nationally recognized overnight courier, in which case notice shall be deemed
delivered one business day after deposit with such courier, or (ii) sent by
personal delivery, in which case notice shall be deemed delivered upon receipt
or refusal of delivery, and addressed as follows, or to such other address as
may be designated by written notice from one party to the other:

 

EP Rock Springs:

 

 

 

Essential Power Rock Springs, LLC

 

9405 Arrowpoint Boulevard

 

Charlotte, NC 28273

 

Attention: John Ragan

 

Email: johnragan@cogentrix.com

 

 

 

and

 

 

 

with copies (which shall not constitute notice) to:

 

 

 

Cogentrix Energy Power Management, LLC

 

9405 Arrowpoint Boulevard

 

Charlotte, NC 28273

 

Attention: Jacob Pollack

 

Email: JacobPollack@Cogentrix.com

 

 

ODEC:

Old Dominion Electric Cooperative

 

4201 Dominion Boulevard

 

Glen Allen, VA  23060

 

Attention: D. Richard Beam

 

Facsimile: (804) 747-3742

 

Email: rbeam@odec.com

 

7.ASSIGNMENT.  ODEC shall not voluntarily or by operation of law assign or
transfer all or any part of ODEC’s interest in this Agreement without EP Rock
Springs’ prior written consent.  Any attempt to transfer this Agreement in
violation of this Section shall be null and void and of no further force and
effect.

 

 

3

 

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8.PROHIBITION AGAINST RECORDING.  Neither this Agreement, nor any memorandum,
affidavit or other writing with respect thereto, shall be recorded by ODEC or by
anyone acting through, under or on behalf of ODEC.

 

9.MISCELLANEOUS.  If any provision of this Agreement or the application thereof
to any person or circumstance shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.  Any and all Exhibits referred to in this
Agreement are incorporated in this Agreement by this reference.  This Agreement
may be executed in any number of counterparts, each of which when executed and
delivered shall be deemed an original, and all such counterparts shall
constitute one and the same instrument.  This Agreement shall be governed by,
interpreted under, and construed in accordance with the laws of the State of
Maryland.

 

 

[Signatures appear on following page.]

 

4

 

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SIGNATURE PAGE TO POST-CLOSING ACCESS AGREEMENT

 

IN WITNESS WHEREOF, EP Rock Springs and the ODEC have caused this Agreement to
be executed on their behalf by their duly authorized representatives as of the
dates indicated below.

 

EP ROCK SPRINGS:

Essential Power Rock Springs, LLC, a Delaware limited liability company

 

ODEC:

Old Dominion Electric Cooperative, a Virginia utility aggregation cooperative

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

 

 

 

Date:

 

 

Date:

 

 

 

 

5

 

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Exhibit A

 

The Property

 

Lot 1, containing 51.102 acres, more or less, as shown on plat entitled “Minor
Subdivision Plan for Lands of Old Dominion Electric Cooperative & Essential
Power Rock Springs, LLC” recorded September 24, 2015 in Liber 1118 at folio 2,
among the land records of Cecil County, Maryland.

Such property, comprised of two parcels, is also described as follows:

Description of lands situate in the Eighth Election District of Cecil County,
Maryland. Said lands being shown as Lot 1, lying west of and immediately
adjacent to U.S. Route 222, as shown on a minor subdivision plan entitled Minor
Subdivision for Lands of Old Dominion Electric Cooperative & Essential Power
Rock Springs, LLC as prepared by Northern Bay Land Planning Engineering and
Surveying Corporation, dated August 26, 2015 as recorded in the Office of the
Recorder of Deeds in and for Cecil County, Maryland in Plat Cabinet PC No. 1118,
at folio 2 and being further indexed as Minor Subdivision No. 4017, with said
lands being more particularly described as follows to wit:

 

Beginning for the same at a point located at the northeast corner of the herein
described parcel, with said point of beginning being located on the westerly
right-of-way line of U.S. Route 222, as shown on State Roads Commission of
Maryland Plat Nos. 9228, 9229, and 9230. Said point of beginning is further
described as being located South 28°40'33" West a distance of 807.46 feet as
measured along said right-of-way line from a capped pin located at the
southernmost corner of lands now or formerly of Atlantic Seaboard Corporation as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber W.A.S. No. 134, at folio 338 (Parcel No. 1); Said point of beginning being
further situated at positional coordinates N 748,487.7630 E 1,549,701.3725 as
referenced to the Maryland State Plane Coordinate System; thence leaving said
point of beginning and in accordance with a survey by Northern Bay Land
Planning, Engineering and Surveying Corporation, with the courses herein based
upon the Maryland State Plane Coordinate System (NAD 83/1991), the following
courses and distances: binding along the aforesaid westerly right-of-way line of
said U.S. Route 222, South 28°40'33" West a distance of 1,219.59 feet to a
capped pin set; thence leaving said westerly right-of-way line and running by
and with lands now or formerly of William E. Riddle, Jr. as described in a deed
found among the Land Records of Cecil County, Maryland in Liber N. D. S. No.
179, at folio 146, North 61°19'27" West a distance of 142.55 feet to a capped
pin set; thence running by and with the same, South 28°40'33" West a distance of
190.54 feet to a capped pin set on the northeasterly right-of-way line of Old
Mill Road as conveyed in fee simple to the Board of County Commissioners of
Cecil County and described in a deed found among the Land Records of Cecil
County, Maryland in Liber W.L.B. No. 1735 at folio 234; thence running by and
with the same the following six (6) courses and distances:

 

1.North 61°42'14" West a distance of 151.52 feet to a point; thence,

 

2.North 61°15'05" West a distance of 268.85 feet to a point; thence,

 

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3.North 62°01'20" West a distance of 263.95 feet to a point; thence,

4.North 61°42'26" West a distance of 260.44 feet to a point; thence,

5.North 60°54'48" West a distance of 285.33 feet to a point; thence,

6.

North 60°39'25" West a distance of 53.94 feet to a point; thence, leaving the
said northeasterly right-of-way line of Old Mill Road and running by and with
the line of lands for Lot 2 as shown on the aforementioned Minor Subdivision
Plan for lands of Old Dominion Electric Cooperative & Essential Power Rock
Springs, LLC, the following fifteen (15) courses and distances:

1.North 45°00'00" East a distance of 241.41 feet to a point; thence,

2.South 45°00'00" East a distance of 23.83 feet to a point; thence,

3.North 45°00'00" East a distance of 271.50 feet to a point; thence,

4.North 39°28'02" East a distance of 142.20 feet to a point; thence,

5.North 89°34'51" East a distance of 221.38 feet to a point; thence,

6.North 00°04'01" East a distance of 470.25 feet to a point; thence,

7.North 24°06'00" East a distance of 30.88 feet to a point; thence,

8.North 00°01'07" East a distance of 185.05 feet to a point; thence,

9.North 38°40'37" East a distance of 52.33 feet to a point; thence,

10.North 78°38'32" East a distance of 227.89 feet to a point; thence,

11.South 86°54'43" East a distance of 504.56 feet to a point; thence,

12.South 45°34'39" East a distance of 180.31 feet to a point; thence,

13.South 33°00'06" East a distance of 101.81 feet to a point; thence,

14.South 41°18'29" East a distance of 70.17 feet to a point; thence,

15.South 31°42'32" East a distance of 446.37 feet to the place of beginning.

Containing 45.917 acres of land, more or less

 

Description of lands situate in the Eighth Election District of Cecil County,
Maryland. Said lands being shown as Lot No. 1, lying south of and immediately
adjacent to Old Mill Road as shown on a minor subdivision plan entitled Minor
Subdivision for Lands of Old Dominion Electric Cooperative & Essential Power
Rock Springs, LLC as prepared by Northern Bay Land Planning Engineering and
Surveying Corporation, dated August 26, 2015 as recorded in the Office of the
Recorder of Deeds in and for Cecil County, Maryland in Plat Cabinet PC No. 1118,
at folio 2 and being further indexed as Minor Subdivision No. 4017, with said
lands being more particularly described as follows to wit:

 

 

 

 

--------------------------------------------------------------------------------

 

 

Beginning for the same at the northeasterly corner of the herein described
parcel with said point of beginning being located in or near the physical
centerline of Old Mill Road and being further located at positional coordinates
N 747,734.120 E 1,548,066.601 as referenced to the Maryland State Plane
Coordinate System; thence leaving said point of beginning and in accordance with
a survey by Northern Bay Land Planning, Engineering and Surveying Corporation,
with the courses herein based upon the Maryland State Plane Coordinate System
(NAD 83/1991) the following courses and distances: running by and with lands now
or formerly of Emory Francis Holbrook, Jr. and Donald Francis Holbrook as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber No. W.L.B. 1207 at folio 123, South 26°38’15” West a distance of 668.12
feet, passing over a capped pin set at 30.00 feet from the beginning of said
line, to a point in the line of lands now or formerly of PECO Energy Company as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber No. W.L.B. 545 at folio 1; thence, running by and with the same, North
66°09’00” West a distance of 357.08 feet to an iron pipe found; thence, running
by and with lands now or formerly of James S. Jeter as described in a deed found
among the Land Records of Cecil County, Maryland in Liber W.L.B. 2732 at folio
50, North 11°42’53” East a distance of 234.95 feet to point, said point further
described as being located  South 11°42’53” West – 0.33 feet from an iron pipe
found; thence, running by and with lands now or formerly of Charles C. Gunther,
Jr. and Laura L Rittershofer as described in a deed found in the Land Records of
Cecil County, Maryland in Liber W.L.B. 1184 at folio 234, South 77°29’15” East a
distance of 120.81 feet to a capped pin set; thence, continuing by and with
lands now or formerly of Charles C. Gunther, Jr. and Laura L Rittershofer as
described in a deed found in the Land Records of Cecil County, Maryland in Liber
W.L.B. 1184 at folio 234, North 26°38’15” East a distance of 441.60 feet,
passing over a capped pin set 411.60 feet from the beginning of said line, to a
point in or near to the centerline of the aforementioned Old Mill Road; thence,
running in or near the centerline of Old Mill Road, South 60°54’48” East a
distance of 285.61 feet to a point; thence, continuing in or near the centerline
of Old Mill Road, South 61°42’26” East a distance of 14.65 feet to the place of
beginning.  

 

Containing 5.185 acres of land, more or less

 

BEING a portion of the same property of which Rock Springs Generation, LLC, a
Virginia limited liability company, by Deed dated December 31, 2003 and recorded
on and among the Land Records of Cecil, Maryland on March 15, 2004, in Liber
1608 at folio 682, granted and conveyed a 1/2 undivided interest to Old Dominion
Electric Cooperative, a Virginia utility aggregation cooperative.

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit B

 

Restoration Area

 

[gntgew0l5flw000001.jpg]

 

 

 

7

--------------------------------------------------------------------------------

 

 

 

SCHEDULE A

BUYER DISCLOSURE SCHEDULES

TO

ASSET PURCHASE AGREEMENT

by and among

OLD DOMINION ELECTRIC COOPERATIVE

as Seller

and

ESSENTIAL POWER ROCK SPRINGS, LLC

as Buyer

Dated as of June 14, 2018

 

 

--------------------------------------------------------------------------------

 

Section 1.01-2

Buyer’s Knowledge Individuals

John Gasbarro

James Larocque

 

 

--------------------------------------------------------------------------------

 

Section 4.03

Required Consents

1.

FPA Section 203 authorization from FERC to consummate the transactions
contemplated by the Agreement.

2.

Early termination or expiration of the waiting period under the HSR Act
applicable to the transactions contemplated by the Agreement.

3.

Notices and deliverables to PJM in accordance with PJM’s generation transfer
rules (PJM Manual 14D).

 

--------------------------------------------------------------------------------

 

Section 4.09

Brokers

None.

 

--------------------------------------------------------------------------------

 

Section 5.08(h)

Facility Information and Documentation for Buyer’s Reactive Service Filing:

1.

Reactive power test reports or, if tests are not required for the facility,
alternative reports to verify D curve, e.g., in PJM: eGADs and eDART systems

2.

Total capital investment costs and supporting invoices

3.

Turbogenerator installed cost and supporting invoices

4.

Generator and exciter installed costs and supporting invoices

 

a.

If generator/exciter costs are not segregated, provide breakout of costs from
original equipment manufacturer

5.

Generator step-up transformer equipment installed costs and supporting invoices

6.

Total accessory electric equipment installed costs and supporting invoices

7.

Depreciation, operations and maintenance, administrative and general, income
tax, taxes other than income, and accumulated deferred income taxes for prior
three calendar years

8.

Documentation from company’s books and records to support identified costs,
including plant construction records and accounting data

9.

Actual fuel cost data for prior three calendar years

 

--------------------------------------------------------------------------------

 

Section 8.05(b)

None.

 

 

--------------------------------------------------------------------------------

 

 

 

SCHEDULE B

 

SELLER DISCLOSURE SCHEDULE

 

to

 

ASSET PURCHASE AGREEMENT

by and among

Old Dominion ELECTRIC Cooperative

as Seller

and

ESSENTIAL POWER ROCK SPRINGS, LLC

as Buyer

–––––––––––––––––––––––––––––––––––

Dated as of June 14, 2018

 

--------------------------------------------------------------------------------

 

This document includes the Seller Disclosure Schedule referred to in the ASSET
PURCHASE AGREEMENT (the “Agreement”), dated as of June 14, 2018 by and between
Old Dominion Electric Cooperative, a Virginia utility aggregation cooperative
(the “Seller”), and Essential Power Rock Springs, LLC a Delaware limited
liability company (the “Buyer”).  Capitalized terms used, but not otherwise
defined herein, shall have the meanings ascribed to them in the Agreement.

This Seller Disclosure Schedule sets forth exceptions and qualifications to the
representations and warranties, and certain covenants, contained in the
Agreement and certain information called for by the Agreement.  Nothing in this
Seller Disclosure Schedule is intended to broaden the scope of any
representation, warranty, covenant or agreement contained in the Agreement or to
create any representation, warranty, covenant or agreement on the part of the
Seller, except as and to the extent expressly provided in the Agreement.  The
information contained in this Seller Disclosure Schedule is disclosed solely for
the purposes of the Agreement, and no information contained herein shall be
deemed to be an admission of any matter whatsoever by the Seller to any third
party.  No disclosure in this Seller Disclosure Schedule relating to any
possible breach or violation of any agreement or Law shall be construed as an
admission or indication that any such breach or violation exists or has actually
occurred.  The Seller may, at its option, include in this Seller Disclosure
Schedule items that are not material or required by the Agreement in order to
avoid any misunderstanding, and such inclusion, or any reference to dollar
amounts, shall not be deemed to be an acknowledgement, admission or
representation that such items are material or are required by the Agreement, to
establish any standard of materiality, or to define further the meaning of such
terms for purposes of the Agreement.

This Seller Disclosure Schedule is arranged in sections corresponding to those
contained in the Agreement merely for convenience, and the disclosure of an item
in one section of this Seller Disclosure Schedule as an exception to a
particular representation or warranty shall be deemed adequately disclosed as an
exception with respect to each other representation or warranty made in the
Agreement to the extent that the applicability of such disclosure to such other
representation or warranty is reasonably apparent on the face of such
disclosure.  This Seller Disclosure Schedule is hereby incorporated into the
Agreement and are hereby made a part thereof as if set out in full in the
Agreement.  The section headings contained in this Seller Disclosure Schedule
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Seller Disclosure Schedule or of the Agreement.

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 1.01-2

Seller’s Knowledge Individuals

1.

Robert L. Kees, Senior Vice President & Chief Financial Officer

2.

D. Richard Beam, Senior Vice President of Power Supply

3.

Michael Wise, Director of Operations

4.

Bryan Rogers, Vice President and Controller

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(i)

Deposits and Expenses

1.

Prepaid property taxes with respect to the Acquired Assets pursuant to that
certain Agreement For Payment in Lieu of Taxes by and between Seller, Buyer, and
Cecil County, Maryland dated April 2, 2002, as amended by the First Amendment to
Agreement For Payment in Lieu of Taxes, dated May 22, 2013.

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(ii)

Inventories

1.

Inventories shall include:

 

a.

All non-capital spares for the Rock Springs Generation Facility;

 

b.

All non-capital spares for the Rock Springs Switchyard;

 

c.

All Inventory associated with the Rock Springs Generation Facility;

 

d.

All Inventory associated with the Rock Springs Switchyard; and

 

e.

All Inventory associated with the spare generator step-up transformer.

For the avoidance of doubt, Inventories transferred to Buyer pursuant to Section
2.01(a)(ii) of the Agreement and this Section 2.01(a)(ii) of this Seller
Disclosure Schedule shall exclude  Option Capital Spares, which are addressed in
Section 2.02(c) of this Seller Disclosure Schedule.

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(vi)

Tangible Personal Property

1.

Unit Specific Property:

 

a.

Two GE 7FA natural gas fired, simple cycle, combustion turbines (Unit 1 and Unit
2), including the equipment for each turbine, the lube oil/gas valve module, the
packaged electronic and electrical control compartments, burners, the gas
turbine, fuel gas piping, the air process skid, the generator, the compressor
wash skid, the inlet air filter house, the generation excitation/LCI
compartment, the fire protection skid, the isolation transformer and the
excitation transformer; and

 

b.

Accessory equipment, including the inlet air conditioning system and associated
underground raw water piping, hydrogen storage tanks, fin fan coolers, inlet air
filters, gas turbine drain tanks, the continuous emissions monitors and their
enclosures, Mark V computer control equipment, ductwork, diffusers, stacks and
injectors and any equipment directly attached to each unit, such as foundations,
grounding, the generator circuit breaker, isolated phase bus duct for electrical
connection to the step-up transformer low side bushing, step-up transformer and
any control and instrumentation cables and instruments that connect internally
within a turbine, generator or skid enclosure.

2.

Common Facilities:

 

a.

Administrative building, demineralized water treatment building, fire pump
building, plant electrical building, waste oil storage building, eight million
gallon service water tank (with interface ownership points as set forth in
Exhibit G (Terms and Conditions of the Amended and Restated Shared Facilities
Agreement)) and services connected directly to and housed within these
identified facilities, including foundations, grounding, electrical cable,
electrical cabinets and switchgear, piping, pumps, valves, control equipment,
air compressors, and support equipment; and

 

b.

CLC system including fans, motors, pumps, pulleys and above, and below, ground
piping. Gas infrastructure included both in the Rock Springs gas yard as well as
the Columbia gas yard.

3.

Transmission Facilities: Equipment and material that comprise the Rock Springs
Switchyard, including control enclosure including all internal equipment,
circuit breakers, disconnect switches (including disconnect switch 89-T5
connecting RS Switchyard to WP Collector Bus), CCVT’s, PT’s, conductor, steel
backbone structures, metering, SCADA system, associated foundations for
equipment, cable and raceways.

4.

Miscellaneous Property: Plant truck, mule, golf carts, man lift, fork lifts,
plant roadways, electrical ground grid, plant fencing (with interface ownership
points as set forth in Exhibit G (Terms and Conditions of the Amended and
Restated Shared Facilities Agreement)), plant sanitary system, including pumps
and drains, and warehouse inventory as identified in Section 2.01(a)(ii) of this
Seller Disclosure Schedule.

 

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(vii)

Assumed Contracts

 

1.

Existing O&M Agreement.

 

2.

Columbia Gas Contract.

 

3.

Letter regarding Settlement and Release of Claims against Columbia Pipeline
Company Related to the Pipeline Liquids Contamination at Rock Springs Generation
Facility, dated as of November 15, 2017, from Nautilus Power LLC, Operator and
Buyer, as acknowledged and agreed by Seller.

 

4.

Fourth Revised Agreement on Coordination and Delegation of Responsibility for
Compliance with Electric Reliability Standards, dated as of May 1, 2017, by and
between Seller, Buyer and Operator.

 

5.

Interconnection Service Agreement by and between PJM Interconnection, L.L.C.,
Seller, and Buyer, dated August 21, 2002.

 

6.

Interconnection Service Agreement by and between PJM Interconnection, L.L.C.,
Seller and Buyer, dated June 13, 2014.

 

7.

Interconnection Agreement, by and between PECO Energy Company, Seller and Buyer,
dated as of May 10, 2002.

 

8.

Upgrade Construction Service Agreement, by and between PJM Interconnection,
L.L.C, H-P Energy Resources LLC, Seller, and Buyer, dated as of February 22,
2017.

 

9.

The following capacity awards obtained through the PJM Reliability Pricing Model
auctions for the following PJM Delivery Years (“DY”):

 

•

301.3 MW of base capacity from the Facility for $210.63/MW-day and 7.6 MW of CP
capacity from the Facility for $225.42/MW-day for DY 2018/2019

 

•

315.4 MW of base capacity from the Facility for $99.77/MW-day for DY 2019/2020

 

•

316.2 MW of CP capacity from the Facility for $187.87/MW-day for DY 2020/2021

 

•

317.2 MW of CP capacity from the Facility for $165.73/MW-day for DY 2021/2022

 

10.

Sections 3.15(b)(i) and 3.15(c)(i) of this Seller Disclosure Schedule are hereby
incorporated by reference into this Section 2.01(a)(vii).

 

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(viii)

Transferred Permits

1.

Air:

 

a.

Title V Operating Permit:  #24-015-00202

 

b.

Air Quality General Permit for Aether Aqua-Gas Heater ID# 015-0202-5-0148

2.

Water:

 

a.

Susquehanna River Basin Commission:   Docket No. 20001203 and Modification No.
20001203-3

 

 

b.

Maryland General Permit 11-HT:   (NPDES Permit No. MDG679431)- Registration
Number 11HT9431

 

•

3.

Waste: EPA ID Number for shipping Haz. Waste:  MDD 149 980 989

4.

Oil: Oil Operations Permit 2018-OPT-11150

5.

Stormwater: “No Exposure” Certification exemption in the General Discharge
Permit for Storm Water Associated with Industrial Activities Permit No. 12-SW.

6.

CPCN: Rock Springs Generation Facility Certificate of Public Convenience and
Necessity (CPCN) PSC Case No. 8821.

 

1.

 

 

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(ix)

Records

None.

 

 

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(x)

Intellectual Property

None.

 

 

 

--------------------------------------------------------------------------------

 

Section 2.01(a)(xvi)

Additional Acquired Assets

Fifty percent (50%) interest in the spare transformer located on-site with the
following specifications:

Manufacturer: ASEA

Serial Number: 12057-03

Nameplate Rating: 525-18KV, 470 MVA

Location: Adjacent to Rock Springs Administration Building

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 2.01(c)(ix)

Additional Assumed Liabilities

None.

 

--------------------------------------------------------------------------------

 

Section 2.02(c)

Option Capital Spares*

 

 

Parts In

ODEC Inventory

Part

Condition

ODEC

Price

Major Combustion Inspection Parts:

 

 

 

Combustions Liners

Partial set**

Refurbished

$30,000

Combustions Caps

One Full Set

Refurbished

$225,000

Combustion Transition Pieces

One Full Set

Refurbished

$600,000

Fuel Nozzles

One Full Set

Refurbished

$650,000

 

 

 

 

Major Hot Gas Path Inspection Parts:***

 

 

$500,000

Row 1 Nozzles

One Full Set

Used

 

Row 2  Nozzles

One Full Set

Used

 

Row 1  Buckets

One Full Set

Used

 

Row 2  Buckets

One Full Set

Used

 

Row 1  Shrouds

One Full Set

Used

 

Row 2  Shrouds

None

 

 

 

 

 

 

Total

 

 

$2,005,000

Percent

 

 

 

 

 

 

 

Notes:

 

 

 

Unless otherwise noted, listed parts are complete sets

 

 

 

* In accordance with Section 7.02 of the Agreement, Seller provides no warranty
to Buyer regarding the condition or quality of any Option Capital Spares, and
Buyer accepts such Option Capital Spare on an “as is” basis as provided in such
section.

**There are 2 refurbished combustion liners (a set of 14 is required)

*** Row 3 parts omitted as replacement may not be required until the first major
inspection

 

 

 

--------------------------------------------------------------------------------

 

Section 3.03

Seller’s Required Consents

1.

FERC Approval.

2.

FERC Waiver.

3.

Early termination or expiration of the waiting period under the HSR Act
applicable to the transactions contemplated by the Agreement.

4.

The filing pursuant to Schedule 2 to the PJM Tariff for the termination of
Seller’s Reactive Service Tariff consistent with applicable FERC regulations and
Schedule 2 of the PJM Open Access Transmission Tariff.

5.

Notice to PJM pursuant to PJM Manual 14D Generation Transfer Process and PJM
consent to assign the PJM Interconnection Service Agreement for the Facility.

6.

Consent of Branch Banking and Trust Company, as trustee under the Seller
Indenture, to the release of the Acquired Assets.

7.

Consent to Assignment from Operator and Buyer under the O&M Agreement.

 

 

 

--------------------------------------------------------------------------------

 

Section 3.05(a)

Financial Statements

 

 

--------------------------------------------------------------------------------

 

Old Dominion Electric Cooperative

Rock Springs Balance Sheet (Unaudited)

For the 12 Months ended December 31, 2017

 

ASSETS

 

 

 

Plant in Service-Rock Springs

 

$

150,045,823

ARC-RS Oil/H2O

 

 

1,009

ARC-RS Well Abandonment

 

 

4,539

ARC-RS HAZMAT Removal

 

 

75,654

CWIP-RS

 

 

71,528

Accum Depr - RS

 

 

(72,569,258)

AD-ARO-RS Oil/H20 Sep.

 

 

(498)

AD-ARO-RS Well Aband.

 

 

(2,205)

AD-ARO-RS HAZMAT Rem.

 

 

(36,777)

Spares Inventory-RS-Unit Speci

 

 

839,989

Prepayments-ConEd Operating

 

 

25,000

Prepaid Insur & Prop Taxes-RS

 

 

1,489,064

TOTAL ASSETS

 

$

79,943,868

 

 

 

 

CAPITALIZATION AND LIABILITIES

 

 

 

Owner's Equity

 

 

79,607,188

A/P-RS-ConEd/NAEA

 

 

154,935

ARO-RS - Oil/H20 Separator

 

 

2,261

ARO-RS - Well Aband.

 

 

10,157

ARO-RS - HAZMAT Rem.

 

 

169,327

TOTAL CAPITALIZATION AND LIABILITIES

 

$    

79,943,868

 

 

 

--------------------------------------------------------------------------------

 

Old Dominion Electric Cooperative

Rock Springs Income Statement (Unaudited)

For the 12 Months ended December 31, 2017

 

Operating Revenues

 

$

21,113,094

 

 

 

 

Operating Expenses

 

 

 

Rock Springs-Fuel-Gas

 

 

6,523,118

NOx Allowances-Rock Springs

 

 

6,673

CO2 Allowances-Rock Springs

 

 

236,763

O&M Support-ODEC

 

 

147,380

RS-Shared Services Fee

 

 

159,077

RS - Chemicals

 

 

5,195

RS - Labor Ops

 

 

398,625

RS - Utilities

 

 

8,692

RS - Water Treatment

 

 

13,487

RS - Environ. Compliance

 

 

30,376

RS - Office Admin

 

 

50,761

RS - Safety

 

 

4,282

RS - Site Miscellaneous

 

 

20,097

RS - Station Service

 

 

136,767

Engineering-O-RS

 

 

579,186

Transmission-Rock Springs

 

 

287,884

Rock Springs A&G

 

 

218,618

RS Legal Expense

 

 

1,647

RS Consulting-Accounting

 

 

3,911

Rock Springs-O&M Insurance

 

 

246,440

RS Benefits-EP

 

 

133,124

RS Payroll Taxes-EP

 

 

48,680

RS Employee Expenses-EP

 

 

10,141

RS Travel & Entertainment-EP

 

 

17,994

Insur-Capacity Perform-RS ODEC

 

 

210,832

RS-Fuel Handling Sys-Dem

 

 

11,318

RS-Labor Maint-Dem

 

 

132,875

RS-Misc Equip-Dem

 

 

11,332

RS-Unit 1 Maint-Dem

 

 

504,290

RS-Unit 2 Maint-Dem

 

 

96,930

RS-Controls & Instrumentation

 

 

2,500

RS-CEMS

 

 

12,901

RS-Motor Control Center

 

 

13,276

RS-Tools

 

 

2,095

RS-Air Compressor

 

 

7,048

RS-Cooling Water System

 

 

6,502

RS-Hydrogen Systems

 

 

8,457

RS - Bldg & Grounds Maint

 

 

42,881

RS-Mobil Equip Maint

 

 

193

Depr Exp-Rock Springs CT

 

 

4,605,474

Depr Exp-ARO Rock Spr

 

 

2,707

Taxes-Property (Rock Springs)

 

 

880,306

Accretion Exp-Rock Springs

 

 

9,768

TOTAL OPERATING EXPENSES.

 

$

15,850,603

OPERATING MARGINS

 

$

5,262,491

 

 

 

 

NON-OPERATING EXPENSES/INCOME

 

 

 

Int Exp Allocation-Rock Spring

 

 

2,380,556

Donations-RS-ODEC

 

 

7,000

Donations-RS-EP

 

 

1,623

TOTAL NON-OPERATING EXPENSES/INCOME

 

$

2,389,179

 

 

 

 

NET MARGINS

 

$  

2,873,312

 

 

 

--------------------------------------------------------------------------------

 

Old Dominion Electric Cooperative

Rock Springs Balance Sheet (Unaudited)

For the 12 Months ended December 31, 2016

 

ASSETS

 

 

 

Plant in Service-Rock Springs

 

$

149,476,409

ARC-RS Oil/H2O

 

 

1,009

ARC-RS Well Abandonment

 

 

4,539

ARC-RS HAZMAT Removal

 

 

75,654

CWIP-RS

 

 

61,941

Accum Depr - RS

 

 

(67,994,761)

AD-ARO-RS Oil/H20 Sep.

 

 

(464)

AD-ARO-RS Well Aband.

 

 

(2,054)

AD-ARO-RS HAZMAT Rem.

 

 

(34,255)

Spares Inventory-RS-Unit Speci

 

 

826,623

Prepayments-ConEd Operating

 

 

25,000

Prepaid Insur & Prop Taxes-RS

 

 

1,485,819

TOTAL ASSETS

 

$

83,925,460

 

 

 

 

CAPITALIZATION AND LIABILITIES

 

 

 

Owner's Equity

 

 

83,473,329

A/P-RS-ConEd/NAEA

 

 

280,153

ARO-RS - Oil/H20 Separator

 

 

2,140

ARO-RS - Well Aband.

 

 

9,611

ARO-RS - HAZMAT Rem.

 

 

160,227

TOTAL CAPITALIZATION AND LIABILITIES

 

$

83,925,460

 

 

 

 

--------------------------------------------------------------------------------

 

Old Dominion Electric Cooperative

Rock Springs Income Statement (Unaudited)

For the 12 Months ended December 31, 2016

 

Operating Revenues

 

$

30,128,342

Operating Expenses

 

 

 

Rock Springs-Fuel-Gas

 

 

8,862,522

NOx Allowances-Rock Springs

 

 

11,667

CO2 Allowances-Rock Springs

 

 

974,945

O&M Support-ODEC

 

 

157,074

RS-Shared Services Fee

 

 

155,952

RS - Chemicals

 

 

8,570

RS - Labor Ops

 

 

364,337

RS - Utilities

 

 

2,992

RS - Water Treatment

 

 

21,038

RS - Environ. Compliance

 

 

18,499

RS - Office Admin

 

 

66,379

RS - Safety

 

 

5,729

RS - Site Miscellaneous

 

 

12,425

RS - Station Service

 

 

94,764

Engineering-O-RS

 

 

290,228

Transmission-Rock Springs

 

 

214,504

Rock Springs A&G

 

 

250,463

RS Legal Expense

 

 

31

Rock Springs-O&M Insurance

 

 

301,299

RS Benefits-EP

 

 

111,959

RS Payroll Taxes-EP

 

 

42,766

RS Employee Expenses-EP

 

 

20,165

RS Travel & Entertainment-EP

 

 

5,074

RS-R&S Prepayment Amort.

 

 

8,431

RS-Fuel Handling Sys-Dem

 

 

25,669

RS-Labor Maint-Dem

 

 

118,370

RS-Misc Equip-Dem

 

 

21,534

RS-Unit 1 Maint-Dem

 

 

188,994

RS-Unit 2 Maint-Dem

 

 

1,287,114

RS-Controls & Instrumentation

 

 

3,278

RS-CEMS

 

 

47,780

RS-Breakers/Transformers

 

 

-8,265

RS-Motor Control Center

 

 

11,095

RS-Electrical & Elect Contro

 

 

-28,564

RS-Tools

 

 

4,792

RS-Air Compressor

 

 

24,520

RS-Eq Repairs & Calibration

 

 

8,280

RS-Hydrogen Systems

 

 

14,174

RS - Bldg & Grounds Maint

 

 

41,711

RS-Mobil Equip Maint

 

 

2,424

Depr Exp-Rock Springs CT

 

 

4,910,640

Depr Exp-ARO Rock Spr

 

 

2,707

Taxes-Property (Rock Springs)

 

 

826,223

Accretion Exp-Rock Springs

 

 

9,243

TOTAL OPERATING EXPENSES.

 

$

19,513,532

OPERATING MARGINS

 

$

10,614,810

 

 

 

 

NON-OPERATING EXPENSES/INCOME

 

 

 

Int Exp Allocation-Rock Spring

 

 

2,652,841

Donations-RS-ODEC

 

 

5,600

Donations-RS-EP

 

 

2,701

TOTAL NON-OPERATING EXPENSES/INCOME

 

$

2,661,142

 

 

 

 

NET MARGINS

 

$

7,953,668

 

 

 

--------------------------------------------------------------------------------

 

Section 3.05(b)

Absence of Changes

None.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.05(c)

Undisclosed Liabilities

None.

 

 

 

--------------------------------------------------------------------------------

 

Section 3.06

Litigation

1.

Old Dominion Elec. Coop., 151 FERC ¶ 61,207 (2015), reh’g denied, 154 FERC ¶
61,155 (2016), appeal docketed, No. 16-111 (D.C. Cir. 2016)

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.07

Compliance with Laws and Permits

Critical Infrastructure Protection NERC Compliance Audit of eleven NERC
Reliability Standards conducted by Reliability First with document reviews
conducted prior to site visit and onsite audit dates at the Rock Springs
Generation Facility of 5/14/18-5/16/18. Preliminary results of audit, as
communicated during an onsite exit brief, indicate approximately twelve
requirements with Potential Non-Compliances, six requirements identified as
Areas for Concern and twenty-nine additional Recommendations. The draft report
from the audit is outstanding.

 

 

--------------------------------------------------------------------------------

 

Section 3.08

Material Contracts

Section 2.01(a)(vii) of this Seller Disclosure Schedule is hereby incorporated
by reference into this Section 3.08 of the Seller Disclosure Schedule.

 

 

--------------------------------------------------------------------------------

 

Section 3.09

Ownership of Assets

None.

 

 

 

 

--------------------------------------------------------------------------------

 

Section 3.11

Taxes

None.

 

 

 

--------------------------------------------------------------------------------

 

Section 3.12

Emission Allowances

For the period January 1 through August 31st 2018, the anticipated emissions for
the Facility (Units 1 and 2) are:

 

 

•    RGGI (CO2):

 

116,736 tons

 

•    SO2 (CSSO2G1):

 

0.2 tons

 

•    Annual NOX (CSNOX):

 

33 tons

 

•    Seasonal NOX (CSOSG2):

 

25.7 tons

 

These are estimates only and the actual values will vary depending on actual
dispatch and the final Closing Date.

 

 

 

--------------------------------------------------------------------------------

 

Section 3.13

Intercompany Obligations

None.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.15(a)(i)

Owned Real Property

Lot 1, containing 51.102 acres, more or less, as shown on plat entitled “Minor
Subdivision Plan for Lands of Old Dominion Electric Cooperative & Essential
Power Rock Springs, LLC” recorded September 24, 2015 in Liber 1118 at folio 2,
among the land records of Cecil County, Maryland.

Such property is also described as follows:

Description of lands situate in the Eighth Election District of Cecil County,
Maryland. Said lands being shown as Lot 1, lying west of and immediately
adjacent to U.S. Route 222, as shown on a minor subdivision plan entitled Minor
Subdivision for Lands of Old Dominion Electric Cooperative & Essential Power
Rock Springs, LLC as prepared by Northern Bay Land Planning Engineering and
Surveying Corporation, dated August 26, 2015 as recorded in the Office of the
Recorder of Deeds in and for Cecil County, Maryland in Plat Cabinet PC No. 1118,
at folio 2 and being further indexed as Minor Subdivision No. 4017, with said
lands being more particularly described as follows to wit:

Beginning for the same at a point located at the northeast corner of the herein
described parcel, with said point of beginning being located on the westerly
right-of-way line of U.S. Route 222, as shown on State Roads Commission of
Maryland Plat Nos. 9228, 9229, and 9230. Said point of beginning is further
described as being located South 28°40'33" West a distance of 807.46 feet as
measured along said right-of-way line from a capped pin located at the
southernmost corner of lands now or formerly of Atlantic Seaboard Corporation as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber W.A.S. No. 134, at folio 338 (Parcel No. 1); Said point of beginning being
further situated at positional coordinates N 748,487.7630 E 1,549,701.3725 as
referenced to the Maryland State Plane Coordinate System; thence leaving said
point of beginning and in accordance with a survey by Northern Bay Land
Planning, Engineering and Surveying Corporation, with the courses herein based
upon the Maryland State Plane Coordinate System (NAD 83/1991), the following
courses and distances: binding along the aforesaid westerly right-of-way line of
said U.S. Route 222, South 28°40'33" West a distance of 1,219.59 feet to a
capped pin set; thence leaving said westerly right-of-way line and running by
and with lands now or formerly of William E. Riddle, Jr. as described in a deed
found among the Land Records of Cecil County, Maryland in Liber N. D. S. No.
179, at folio 146, North 61°19'27" West a distance of 142.55 feet to a capped
pin set; thence running by and with the same, South 28°40'33" West a distance of
190.54 feet to a capped pin set on the northeasterly right-of-way line of Old
Mill Road as conveyed in fee simple to the Board of County Commissioners of
Cecil County and described in a deed found among the Land Records of Cecil
County, Maryland in Liber W.L.B. No. 1735 at folio 234; thence running by and
with the same the following six (6) courses and distances:

1.North 61°42'14" West a distance of 151.52 feet to a point; thence,

2.North 61°15'05" West a distance of 268.85 feet to a point; thence,

3.North 62°01'20" West a distance of 263.95 feet to a point; thence,

4.North 61°42'26" West a distance of 260.44 feet to a point; thence,

 

--------------------------------------------------------------------------------

 

5.North 60°54'48" West a distance of 285.33 feet to a point; thence,

6.North 60°39'25" West a distance of 53.94 feet to a point; thence, leaving the
said northeasterly right-of-way line of Old Mill Road and running by and with
the line of lands for Lot 2 as shown on the aforementioned Minor Subdivision
Plan for lands of Old Dominion Electric Cooperative & Essential Power Rock
Springs, LLC, the following fifteen (15) courses and distances:

1.North 45°00'00" East a distance of 241.41 feet to a point; thence,

2.South 45°00'00" East a distance of 23.83 feet to a point; thence,

3.North 45°00'00" East a distance of 271.50 feet to a point; thence,

4.North 39°28'02" East a distance of 142.20 feet to a point; thence,

5.North 89°34'51" East a distance of 221.38 feet to a point; thence,

6.North 00°04'01" East a distance of 470.25 feet to a point; thence,

7.North 24°06'00" East a distance of 30.88 feet to a point; thence,

8.North 00°01'07" East a distance of 185.05 feet to a point; thence,

9.North 38°40'37" East a distance of 52.33 feet to a point; thence,

10.North 78°38'32" East a distance of 227.89 feet to a point; thence,

11.South 86°54'43" East a distance of 504.56 feet to a point; thence,

12.South 45°34'39" East a distance of 180.31 feet to a point; thence,

13.South 33°00'06" East a distance of 101.81 feet to a point; thence,

14.South 41°18'29" East a distance of 70.17 feet to a point; thence,

15.South 31°42'32" East a distance of 446.37 feet to the place of beginning.

 

Containing 45.917 acres of land, more or less

 

Description of lands situate in the Eighth Election District of Cecil County,
Maryland. Said lands being shown as Lot No. 1, lying south of and immediately
adjacent to Old Mill Road as shown on a minor subdivision plan entitled Minor
Subdivision for Lands of Old Dominion Electric Cooperative & Essential Power
Rock Springs, LLC as prepared by Northern Bay Land Planning Engineering and
Surveying Corporation, dated August 26, 2015 as recorded in the Office of the
Recorder of Deeds in and for Cecil County, Maryland in Plat Cabinet PC No. 1118,
at folio 2 and being further indexed as Minor Subdivision No. 4017, with said
lands being more particularly described as follows to wit:

Beginning for the same at the northeasterly corner of the herein described
parcel with said point of beginning being located in or near the physical
centerline of Old Mill Road and being further located at positional coordinates
N 747,734.120 E 1,548,066.601 as referenced to the Maryland State Plane
Coordinate System; thence leaving said point of beginning and in accordance with
a survey by Northern Bay Land Planning, Engineering and Surveying Corporation,
with the courses herein based upon the Maryland State Plane Coordinate System

 

 

--------------------------------------------------------------------------------

 

(NAD 83/1991) the following courses and distances: running by and with lands now
or formerly of Emory Francis Holbrook, Jr. and Donald Francis Holbrook as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber No. W.L.B. 1207 at folio 123, South 26°38’15” West a distance of 668.12
feet, passing over a capped pin set at 30.00 feet from the beginning of said
line, to a point in the line of lands now or formerly of PECO Energy Company as
described in a deed found among the Land Records of Cecil County, Maryland in
Liber No. W.L.B. 545 at folio 1; thence, running by and with the same, North
66°09’00” West a distance of 357.08 feet to an iron pipe found; thence, running
by and with lands now or formerly of James S. Jeter as described in a deed found
among the Land Records of Cecil County, Maryland in Liber W.L.B. 2732 at folio
50, North 11°42’53” East a distance of 234.95 feet to point, said point further
described as being located  South 11°42’53” West – 0.33 feet from an iron pipe
found; thence, running by and with lands now or formerly of Charles C. Gunther,
Jr. and Laura L Rittershofer as described in a deed found in the Land Records of
Cecil County, Maryland in Liber W.L.B. 1184 at folio 234, South 77°29’15” East a
distance of 120.81 feet to a capped pin set; thence, continuing by and with
lands now or formerly of Charles C. Gunther, Jr. and Laura L Rittershofer as
described in a deed found in the Land Records of Cecil County, Maryland in Liber
W.L.B. 1184 at folio 234, North 26°38’15” East a distance of 441.60 feet,
passing over a capped pin set 411.60 feet from the beginning of said line, to a
point in or near to the centerline of the aforementioned Old Mill Road; thence,
running in or near the centerline of Old Mill Road, South 60°54’48” East a
distance of 285.61 feet to a point; thence, continuing in or near the centerline
of Old Mill Road, South 61°42’26” East a distance of 14.65 feet to the place of
beginning.  

 

Containing 5.185 acres of land, more or less

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.15(a)(ii)

Owned Real Property Title Exceptions

None.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.15(b)(i)

Easement Real Property

1.

Third Amended, Restated and Renamed Rock Springs Ownership Agreement, dated
April 19, 2013, by and between Essential Rock Springs, LLC, a Delaware limited
liability company, and Seller.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.15(b)(ii)

Easement Real Property Title Exceptions

None.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.15(c)(i)

Leased Real Property

1.

Deed of Ground Lease, dated December 18, 2002, by and between Rock Springs
Generation, LLC (as Ground Lessor and Ground Lessee) and CED Rock Springs, Inc.
(as Ground Lessor) (Units 1 and 2).

2.

Deed of Ground Lease, dated December 18, 2002, by and between CED Rock Springs,
Inc. (as Ground Lessor and Ground Lessee) and Rock Springs Generation, LLC (as
Ground Lessor) (Units 3 and 4).

3.

Third Amended, Restated and Renamed Rock Springs Ownership Agreement, dated
April 19, 2013, by and between Essential Rock Springs, LLC, a Delaware limited
liability company, and Seller.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.15(c)(ii)

Leased Real Property Title Exceptions

None.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 3.16

Brokers

None.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 5.02

Conduct of Business Pending Closing

None.

 

 

 

--------------------------------------------------------------------------------

 

Section 5.08(f)

Capacity Supply Rights and Obligations

Section 2.01(a)(vii) of this Seller Disclosure Schedule is hereby incorporated
by reference into this Section 5.08(f) of this Seller Disclosure Schedule.

 

 

 

ARTICLE I

 

--------------------------------------------------------------------------------

 

Section 8.05(b)

Specified Consents

Section 3.03 of this Seller Disclosure Schedule is hereby incorporated into this
Section 8.05(b) of this Seller Disclosure Schedule.