ML20206F755
| ML20206F755 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley |
| Issue date: | 05/05/1999 |
| From: | Cross J, Stetz J CENTERIOR ENERGY, DUQUESNE LIGHT CO. |
| To: | |
| Shared Package | |
| ML20206F745 | List: |
| References | |
| NUDOCS 9905060233 | |
| Download: ML20206F755 (150) | |
Text
I 10 CFR f 50.80 UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION In the Matter of
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i FirstEnergy Nuclear Operating Company,
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Pennsylvania Power Company,
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And
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Docket Nos. 50-334 & 50-412 Duquesne Light Company
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(Beaver Valley Power Station, Units 1 & 2)
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APPLICATION FOR ORDER AND CONFORMING ADMINISTRATIVE LICENSE AMENDMENTS FOR LICENSE TRANSFER (NRC FACILITY OPERATING LICENSE NOS. DPR-66 & NPF-73) 9905060233 990505 ~~
PDR ADOCK 05000334 P
j APPLICATION FOR ORDER AND CONFORMING ADMINISTRATIVE LICENSE AMENDMENTS FOR LICENSE TRANSFER I
(NRC FACILITY OPERATING LICENSE NOS. DPR-66 & NPF-73) l TABIS OF CONTENTS I.
INTRO D U CTI ON................................................. I i
II.
STATEMENT OF PURPOSE OF THE TRANSFER AND NATURE OF THE TRANSACTION MAKING THE TRANSFER NECESSARY OR DESIRABLE..................... 2 III.
GENERAL CORPORATE INFORMATION REGARDING FENOC AND PENN POWER.......................... 4 A.
NAME OF NEW LICENSEES................................ 4 B.
AD D RES S ES............................................. 5 C.
DESCRIPTION OF BUSINESS............................... 5 i
D.
ORGANIZATION AND MANAGEMENT...................... 5 1.
State of Establishment and Place of Business............... 5 2.
Boards of Directors.................................. 6 3.
Principal Executives and Officers........................ 8 IV.
TECHNICAL QUALIFICATIONS OF FENOC....................... 10 V.
FINANCIAL QUALIFICATIONS OF PENN POWER.................. 13 VI.
ANTITRUST CONSIDERATIONS................................. 14 VII.
RESTRICTED DATA AND CLASSIFIED NATIONAL SECURITY INFORM ATION...................................... 17 VIII. ENVIRONMENTAL CONSIDERATIONS........................... 17 IX.
ADDITIONAL INFORMATION REGARDING SPECIFIC REGULATORY REQUIREMENTS, PLANS, PROGRAMS & PROCEDURES............ 18 A.
GENERAL DESIGN CRITERION 17........................ 18 L
B.
EMERGENCY PLANNING................................. 18 l
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C.
EXC LUSION ARE A....................................... 20 l
D.
S E C URITY.............................................. 22 E.
QUALITY ASSURANCE PROGRAM........................ 23 F.
FINAL SAFETY ANALYSIS REPORT........................ 24 G.
TRAINING.............................................. 24 H.
PRICE-ANDERSON INDEMNITY AND NUCLEAR INSURANCE...................
.............. 25 I.
STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL............................... 25 X.
OTHER REQUIRED REGULATORY APPROVALS................... 25 XI.
EFFECTIVE D ATE............................................. 26 XII CONC LUS I ON................................................. 2 6 i
I IST OF ATTACHMENTS Attachment A-1 Beaver Valley Power Station, Unit No.1, License Amendment Request No. 269 Attachment A-2 Beaver Valley Power Station, Unit No. 2, License Amendment Request No.144 Attachment B Beaver Valley Power Station, Unit Nos. I and 2, License Amendment Request Nos. 269 and 144, REVISION OF FACILITY OPERATING LICENSE Attachment C Nuclear Generation Conveyance Agreement by and between Duquesne Light Company, on the one hand, and Pennsylvania Power Company and The Cleveland Electric Illuminating Company, on the other, dated as of March 25,1999.
REFERENCE Reference 1 FirstEnergy Corp.'s 1998 Annual Report was submitted by letter from J.P. Stetz to the NRC dated April 21,1999.
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IE l-L INTRODUCTION l
L Duquesne Light Company (DLC) and FirstEnergy Nuclear Operating Company
- (FENOC), acting for itself and on behalf of Pennsylvania Power Company (Penn Power),
submit the following additional information in support c f their request for Nuclear Regulatory Commission (NRC) consent to the transfer of DLC's ownership interests in Beaver Valley Power Station, Units 1 & 2 (BVPSl&2) to Penn Power and DLC's operating authority under Facility Operating License Nos. DPR-66 & NPF-73 to FENOC. FENOC and DLC request that the NRC consent to this transfer to: (1) authorize Penn Power to possess DLC's 47.5%
undivided ownership interest in BVPSI and 13.74% undivided ownership interest in BVPS2; and (2) authorize FENOC to operate BVPSl&2 under essentially the same conditions and authorizations included in the existing licenses. No physical changes will be made to BVPSl&2 as a result of this transfer, and there will be no significant change in the day-to-day j
operations of BVPSl&2.
BVPSl&2 are two nuclear power generating plants" consisting of Pressurized Water Reactors (PWR), Westinghouse steam turbines, and other associated equipment located in Shippingport, Pennsylvania. Stone & Webster was the Architect & Engineer for the project.
NRC Facility Operating License No. DPR-66 for BVPSI was issued on July 2,1976, and will expire on January 29,2016. NRC Facility Operating License No. NPF-73 for BVPS2 was issued on August 14,1987, and will expire on June 27,2027.
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BVPSl&2 are each licensed to a maximum power level of 2,652 megawatts thermal I
( M W t).
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DLC will continue to operate BVPSl&2 until its ownership interests are transferred to Penn Power. Following the proposed transfer, subsidiaries of FirstEnergy Corp. (FE) will own 100% of both units, and FENOC will have sole responsibility to the NRC for the operation and maintenance of BVPSl&2. The FE subsidiaries holding ownership interests in BVPSl&2 will be responsible for all operating and maintenance expenses and any other financial obligations arising under the BVPSl&2 licenses.
II.
STATEMENT OF PURPOSE OF THE TRANSFER AND NATURE OF THE TRANSACTION MAKING THE TRANSFER NECESSARY OR DESIRABLE Penn Power, a Pennsylvania Corporation, is a wholly owned subsidiary of the Ohio Edison Company (OE), an Ohio Corporation, which in turn is a wholly owned subsidiary of FE, another Ohio Corporation. Penn Power is an electric utility that provides retail electric service to residential, industrial, and commercial consumers in Pennsylvania, and Penn Power already holds a 17.5% undivided ownership interest in BVPSI. During the construction of BVPS2, Penn Power originally had a 6.28% interest BVPS2, which with NRC's approval it transferred to OE prior to issuance of the BVPS2 operating license. See Letter from J.F. Stolz to E.J. Woolever dated April 19,1977.
FENOC is an Ohio Corporation and a wholly owned subsidiary of FE. FENOC was organized solely for the purposes of operating nuclear power plants owned by the electric utility subsidiaries of FE. FE is an electric utility holding company registered under the Public Utility Holding Company Act of 1935. In addition to Ohio Edison, which owns an undivided 35% interest in BVI. and a 41.88% interest in BVPS2, other subsidiaries of FE include Cleveland Electric Illuminating Company (CC). which owns an undivided 24.47% interest in BVPS2, and The Toledo Edison Company (TE), which owns an undivided 19.91% interest in 2
' BVPS2. Following the proposed transfer, FE subsidiaries will own 100% of BVPSl&2 and will operate BVPSl&2. The proposed transfer of DLC's ownership interest in the Perry Nuclear Power Plant (PNPP) is the subject of a separate NRC license transfer application being filed in Docket No 50-440.
This transfer is being undertaken pursuant to a DLC restructuring plan approved by the Pennsylvania Public Utility Commission (Pa PUC) on May 29,1998,2' and an agreement in principle dated October 14,1998, in which DLC and FE agreed to the transfer of 1,436 megawatts (MW) owned by DLC at eight generating units in exchange for 1,328 MW at three power plants owned by Penn Power and CEI. On March 25,1999, the parties implemented this agreement, by simultaneously executing definitive agreements, including the Nuclear Generation Conveyance Agreement (Conveyance Agreement) and the Generation Exchange Agreement (Exchange Agreement) pursuant to which, DLC has agreed to transfer to Penn Power and CEI, and they have agreed to assume, all of DLC's ownership and interests in BVPSl&2 (to Penn Power) and PNPP (to CEI), subject to the requisite regulatory approvals.
DLC has also agreed to transfer its rights and obligations as the NRC-licensed operator of BVPSl&2 (to FENOC), thus making both units wholly-owned and operated by FE subsidiaries.
4 In the simultaneous exchange, FE subsidiaries CEI and Penn Power will transfer ownership of three coal-fired plants and one combustion turbine to DLC, which will then be included in DLC's planned auction ofits generating assets pursuant to its restructuring plan.
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Order issued May 29,1998 at Docket No. R-00974104.
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e Under this plan, DLC will exit the generation business by divesting its entire ownership interests in nuclear and fossil power plants.
The transaction, which is the subject of this application, is wholly between and among previously associated " electric utilities," as defined in 10 CFR 50.2, which were members of the Central Area Power Coordination Group (CAPCO). CAPCO was formed in 1967 to jointly develop power generation and transmission facilities including BVPS.# When the transaction is closed, all of DLC's 47.5% interest in BVPSI and its 13.74% interest in BVPS2 will be transferred to Penn Power, and FENOC will become the licensed operator of BVPSl&2. The other ownership interests in BVPSl&2 will be unaffected.
Both DLC's Qualified Decommissioning Funds and Non-qualified Decommissioning Funds for Beaver Valley Units 1 and 2 will be transferred to Penn Power and will be augmented by certain additional contributions to be made by DLC, ensuring that the NRC's decommissioning requirements for the units will continue to be met.
III.
GENERAL CORPORATE INFORMATION REGARDING FENOC AND PENN POWER A.
NAME OF NEW LICENSEE The new licensed operator will be FENOC, and the name of the new licensed owner of DLC's existing 47.5% undivided ownership interest in BVPS1 and 13.74% undivided ownership interest in BVPS2 will be Pennsylvania Power Company.
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After the Nuclear closing date, FE will have exclusive ownership d operating control of all the generating assets that now arejointly owned and operateu ander CAPCO.
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ADDRESSES FENOC's headquarters is located at:
Perry Nuclear Power Plant Post Office Box 97 10 Center Road Perry, OH 44081 Penn Power's headquarters is located at:
1 East Washington Street P.O. Box 891 New Castle, PA 16103 C.
DESCRIPTION OF BUSINESS Penn Power is an electric utility that provides retail electric service to residential, industrial, and commercial consumers in Pennsylvania.
FENOC is an Ohio Corporation and a wholly owned subsidiary of FE. FENOC was organized solely for the purposes of operating nuclear power plants owned by the electric utility subsidiaries of FE. FENOC is essentially the successor to the operating organizations that operated Davis-Besse and PNPP since their inception. On December 1,1998, and December 2,1998, NRC authorized FENOC to operate Davis-Besse and PNPP, respectively #
D.
ORGANIZATION AND MANAGEMENT 1.
State of Establishment and Place of Business FENOC is a corporation eganized and existing under the laws of the State of Ohio.
FENOC's headquarters are located in Ohio, and its principal place of business has heretofore i
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See Davis-Besse " Order Approving Application Regarding the Transfer of Operating Authority, December 1,1998 63 FR 67715 (Dec. 8,1998); and PNPP " Order Approving Application Regarding the Transfer of Operating Authority," December 2, 1998,63 FR 67939 (Dec. 9,1998).
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1 been in Ohio. Upon the transfer of BVPSl&2, FENOC will also conduct business in
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Pennsylvania.. Penn Power is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania. Penn Power's headquarters are located in Pennsylvania, and its principal place ofbusiness has heretofore been in Pennsylvania. Neither FENOC nor Penn 1
Power are owned, controlled or dominated by an alien, a foreign corporation or a foreign government.
2.
Boards of Directors FENOC Board of Directors Name Address Citizenship Willard R. Holland FirstEnergy Corp.
U.S.
Chairman of the Board 76 South Main Street Akron, OH 44308-1890 H. Peter Burg.
FirstEnergy Corp.
U.S, President and Chief 76 South Main Street Executive Officer of First Akron, OH 44308-1890 Energy Corp. and President of The Cleveland Electric Illuminating Company, Toledo Edison Company and Ohio Edison Company William F. Conway William F. Conway & Associates, Inc.
U.S.
President of William F.
Scottsdale, Arizona 85262 Conway & Associates,Inc.
AnthonyJ. Alexander FirstEnergy Corp.
U.S.
Executive Vice-President 76 South Main Street and General Counsel of Akron, OH 44308-1890 FirstEnergy Corp., The Cleveland Electric Illuminating Company, Toledo Edison Company, and Ohio Edison Company 6
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l John P. Stetz FirstEnergy Nuclear Operating U.S.
j President and Chief Company Nuclear Officer of 76 South Main Street FirstEnergy Nuclear Akron, OH 44308-1890 Operating Company Penn Power Board of Directors Name Address Citizenship H. Peter Burg FirstEnergy Corp.
U.S.
President and Chief 76 South Main Street Executive Officer of First Akron, OH 44308-1890 Energy Corp. and President of The Cleveland Electric Illuminating Company, Toledo Edison Company and Ohio Edison Company Willard R. Holland FirstEnergy Corp.
U.S.
Chairman of the Board 76 South Main Street Akron, OH 44308-1890 Anthony J. Alexander FirstEnergy Corp.
U.S.
Executive Vice-President 76 South Main Street and General Counsel of Akron, OH 44308-1890 FirstEnergy Corp., The Cleveland Electric Illuminating Company, Toledo Edison Company, and Ohio Edison Company 7
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Principal Executives and Omcers FENOC Principal Executives and Omcers Name Address Citizenship John P. Stetz FirstEnergy Nuclear Operating U.S.
President and Chief Company i
Nuclear Officer 76 South Main Street Akron, OH 44308-1890 Guy G. Campbell Davis-Besse Nuclear Power Station U.S.
Vice President, 5501 North State Route 2 Davis-Besse Nuclear Oak Harbor, OH 43449 '
j Power Station.
1 Lew W. Myers Perry Nuclear Power Plant U.S.
Vice President, Perry P.O. Box 97 Nuclear Power Plant 10 Center Road Perry,OH 44081 John K. Wood Perry Nuclear Power Plant U.S.
Vice President, FENOC P.O. Box 97 10 Center Road Perry,OH 44081 Nnn Power Principal Executives and Omcers Name Address Citizensalp Willard R. Holland FirstEnergy Corp.
U.S.
Chairman of the Board 76 South Main Street Akron, OH 44308-1890 R. Joseph Hrach Pennsylvania Power Company U.S.
President 1 East Washington Street P.O. Box 891 New Castle, PA 16103 Anthony J. Alexander FirstEnergy Corp.
U.S.
Vice President and 76 South Main Street General Counsel Akron, OH 44308-1890 8
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F.t John A. Gill FirstEnergy Corp.
U.S.
.Vice President 76 South Main Street
' Akron, OH 44308-1890 Earl T. Carey FirstEnergy Corp.
U.S.
Vice President 76 South Main Street Akron, OH 44308-1890 Arthur R. Garfield FirstEnergy Corp.
U.S.
Vice President-76 South Main Street Akron, OH 44308-1890 Richard H. Marsh FestEnergy Corp.
U.S.
Vice President-76 South Main Street Akron, OH 44308-1890 Guy L. Pipitone FirstEnergy Corp.
U.S.
Vice President 76 South Main Street Akron, OH 44308-1890 Stanley F. Szwed -
FirstEnergy Corp.
U.S.
Vice President 76 South Main Street Akron, OH 44308-1890 Nancy C. Ashcom FirstEnergy Corp.
U.S.
Corporate Secretary 76 South Main Street Akron, OH 44308-1890 Edward,T. Udovich FirstEnergy Corp.
U.S.
Assistant Corporate 76 South Main Street Secretary Akron, OH 44308-1890 Harvey L. Wagner FirstEnergy Corp.
U.S.
Comptroller 76 South Main Street Akron, OH 44308-1890 Thomas C. Navin FirstEnergy Corp.
U.S.
Treasurer 76 South Main Street Akron, OH 44308-1890 Randy Scilla FirstEnergy Corp.
U.S.
Assistant Treasurer 76 South Main Street Akron, OH 44308-1890 9
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IV.
TECHNICAL QUALIFICATIONS OF FENOC The technical qualifications of FENOC to carry out its responsibilities under Facility Operating License Nos. DPR-66 & NPF-73, as transferred and amended, will meet or exceed the existing technical qualifications of the current licensees. FENOC is already licensed to operate Davis-Besse and PNPP, and its personnel have a long history of experience operating those units. When the license transfer and amendments become effective, FENOC will assume responsibility for, and control over, the operation and maintenance of BVPSl&2.
1 Substantially all of DLC's existing nuclear organization at the BVPSl&2 site will be transferred to FENOC, and substantially all of DLC's nuclear employees at the site will become FENOC employees as soon as administratively feasible. Thus, the plant staff will be essentially unchanged. Further, the overriding philosophy that will govern FENOC management will be to assure that FENOC will continue to manage, operate, and maintain BVPSl&2 in accordance with the conditions and requirements established by the NRC and with the same high regard for public and personnel safety demonstrated by DLC.
The existing DLC technical support organizations for BVPSl&2, as described in Chapter 13.0 & 17.0 of the Unit 2 Updated Final Safety Analysis Report (UFSAR), which are not currently assigned to the site, will either become part of FENOC, continue to perform these functions on behalf of FENOC, or transfer their functions to FENOC employees or contractors who will mr et the existing UFSAR technical support requirements for these functions. This will ensure that the functions, responsibilities and reporting relationslips of these organizations, especially as they relate to activities important to the safe operation of BVPSl&2, will continue to be clear and unambiguous and that the performance of these l
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u organizations will be essentially unaffected by the transfer. Engineering support for BVPSl&2 is currently provided by a dedicated engineering organization that is an integral part of the site.
organization that will be transferred to FENOC.
i-When the transfer becomes effective, the present plant organization, including the quality assurance, engineering, and technical support functions will be transferred essentially
. intact from DLC to FENOC. The technical qualifications will be, therefore, at least equivalent l
to those of the existing organization. A central objective in planning the transfer of employees and operating responsibilities from DLC to FENOC has been to ensure that there is no disruption of the operation of the plant and to respect the integrity of the existing organization.
When the transfer becomes effective,1 ENOC will operate, manage, and maintain BVPSl&2 in accordance with the conditions and requirements established by the NRC and with the same regard for public and personal safety heretofore exemplified by DLC.
Therefore, in the proposed FENOC organization, the nuclear organization of DLC will be p
substantially preserved with the only immediate change being that the position of senior
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l nuclear executive at the BVPSl&2 site (FENOC Vice President - BVPS) will be held by a current FENOC executive, who will report to the FENOC President and Chief Nuclear Officer.
Subsequent organizational changes may occur to align the DLC existing organizational l'
structure to conform to the FENOC model. However, the senior site nuclear executive will-continue to be the officer at the site responsible for overall safe operation and maintenance of BVPSl&2. This individual will report to the President of FENOC, who in tum reports to the Board of Directors of FENOC. The Quality Assurance organization of the plant will also have direct access to the site Vice President of FENOC on matters related to quality; therefore, the l'
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effectiveness of this organization will not be reduced by the proposed change. This organizational approach allows transfer of DLC personnel to FENOC with minimal organizational changes and no anticipated ' disruption to the existing, dedicated site
- organization.
As detailed in Section 2.1 of the Conveyance Agreement, DLC will transfer its interest in the BVPSl&2 assets to Penn Power. FENOC will possess the assets it needs to maintain and operate the unit consistent with NRC requirements. Section~ 2.1 provides an extensive I
listing of assets in addition to plant and equipment that will be transferred, such as books, 4
. operating records, operating, safety and maintenance manuals, engineering design plans,
. documents, blueprints and as-built plans, specifications, procedures and similar items. (Certain assets related to BVPSl&2, such as specified transmission and switchyard facilities, inter alia, are specifically excluded from being transferred pursuant to Section 2.2 of the Conveyance
~ Agreement.)
As a practical matter, the official copies of records, which the NRC requires a licensee to maintain, are already located and maintained at the BVPSl&2 site. Nevertheless, FENOC will also ensure that it acquires custody or control of any important documents that may currently be located at DLC's corporate offices or other off-site locations. Further, any necessary contracts with the Architect Engineer, Nuclear Steam Supply System (NSSS) supplier, and other major vendors, will be assigned, as allowed by the contracts, or appropriate other contracts will be obtained by FENOC on a timely basis. Other contracts and contractor l
relationships relating to BVPSl&2 will also be assigned or transferred.
See Sections 2.3 of the Conveyance Agreement.
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Additional information concerning the impact of the proposed license transfer and conforming changes to specific DLC plans and programs supporting BVPSl&2 is contained in Sectibn IX, below.
V.
FINANCIAL QUALIFICATIONS OF PENN POWER Penn Power is an " electric utility" as that term is defined in 10 CFR 50.2, and it is therefore exempt from demonstrating financial qualifications pursuant to 10 CFR Q 50.33(f).
Penn Power's rates are established through traditional cost of service regulation.
Approximately eighty-seven percent (87%).of Penn Power's revenues from its electric utility operations are currently derived from rates established by the Pa PUC, with the remainder coming from rates regulated or set by the FERC. During the last three calendar years, Penn Power's revenues averaged approximately $323 million per year. Penn Power's entitlement to electricity from BVPSl&2 will be dispatched pursuant to a Joint Dispatch Agreement among the FE companies which is on file with FERC, and pursuant to inter-company billing arrangements among the FE companies, Penn Power will receive revenues to cover its share of the operations & maintenance and capital expenses associated with BVPSl&2. A copy of FE's 1998 Annual Report was submitted by letter from J.P. Stetz to the NRC dated April 21, 1999.
CEI, OE, TE, Penn Power and DLC 'recently filed decommissioning reports with the NRC under 10 CFR 50.75(f)(1), and are providing financial assurance for decommissioning in accordance with their respective interests in BVPSl&2 through external sinking trust funds in which deposits are made annually. Following the transfer of the DLC ownership interests in BVPSl&2, the FE companies plan to continue to use the external sinking fund method and 13
either have funds available or make additional annual contributions sufficient to meet the NRC minimum funding requirements in 10 CFR 50.75(c), consistent with the financial assurance requirements of 10 CFR 50.75(e). In connection with the transfer of DLC's interests in
- BVPSl&2, DLC will transfer its existing decommissioning funds of approximately
$42.5 million for BVPSI and $8.8 million for BVPS2, as of December 31,1998, plus earnings on these funds through the Closing Date, to Penn Power. DLC also will provide certain additional decommissioning funding pursuant to the terms of the Conveyance Agreement.
Subject to certain adjustments, DLC will provide an additional $25.5 million for BVPS1 and
$10.3.million for BVPS2. Both parties have agreed to use their best efforts to secure a tax-advantaged transfer of all of DLC's decommissioning funds to Penn Power. If such IRS rulings are not obtained, the decommissioning funds will still be transferred to Penn Power and DLC will be responsible to ensure that Penn Power receives an equivalent amounNf additional funding on an after-tax basis.
VI.
ANTITRUST CONSIDERATIONS There are no antitrust conditions attached to the BVPSl&2 licenses held, either by a
DLC or any of the FE Companies. BVPSI was licensed pursuant to Section 104b of the Act.
Accordingly, BVPSI is exempt from further NRC antitrust review pursuant to the Act, and subsequent NRC issuances and precedent. See NUREG-1574, NRC Standard Review Plan On Antitrust Reviews, Sections 1.1,1.3, & l.5 (Dec.1997); cf NRC Final Policy Statement on the Restructuring and Economic Deregulation of the Electric Utility Industry,62 Fed. Reg. 44071, 44074 (Aug.19,1997). See also NRC Safety Evaluation of the Transfer of TMI-l from GPU to AmerGen (April 12,1999); NRC Safety Evaluation Related to Proposed Merger of 14
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- CalEnergy Company, Inc. and MidAmerican Energy Holdings Company (Quad Cities) l
- (Dec. 22,1998).
As noted above, there are also no antitrust license conditions attached to BVPS2. As l
required by Section 103 of the Act, an antitrust review was conducted prior to issuing the
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- BVPS2 construction permit on May 4 of 1974. However, no antitrust conditions were imposed on the.BVPS2 license as a result of that review. See Duquesne Light Company (Beaver Valley Power Station, Unit 2), CLI-74-24,7 AEC 953 (1974).. Significantly, at that time Penn Power
. had a 6.28% undivided ownership interest in BVPS2 and underwent antitrust review. The
- letter of advice from the U.S. Attorney General concluded that NRC should proceed in considering the application without any antitrust hearing. 38 FR 10659,1%60 (April 30, 1973). In 1987, in connection with the issuance of the operating license for BVPS2, the NRC
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also concluded that as a " result of the implementation of all Davis-Besse/ Perry license l
l conditions and the procompetitive effect they have had on the planning and day-to-day operations of all CAPCO systems" further antitrust review of BVPS2 was not warranted.
52 FR 15402,15403 (1987). More recently, in connection with the proposed merger of CEI l
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and TE and the proposed transfer of control of the Davis-Besse and PNPP licenses, NRC concluded that "[t]he license conditions [on those plants] that evolved from the Commission's antitrust review process are extensive and procompetitive." 59 FR 40928,40929 (Aug.10, l
l 1994). These conditions continue, and the swap of roughly equivalent amounts of nuclear and i
fossil generation between DLC and the FE companies does not implicate any significant
. change in the competitive market.
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Prior to issuance of the BVPS2 operating license, with NRC's approval Penn Power transferred its interests in' BVPS2 to its parent, OE. OE and other FE subsidiaries currently own and are licensed to possess 86.26% of BVPS2. Pursuant to this license transfer, ownership of the remaining 13.74%, approximately 113 MWe, will be transfened to Penn
' Power. This transfer does not involve any significant change in licensed activities, and no antitrust review is required in connection with the transfer of this de minimis interest to another FE subsidiary.' See, e.g., NUREG-1574, NRC Standard Review Plan On Antitrust Reviews, l
Sections 3.3 & 3.3.1 (Dec.1997); cf NRC Safety Evaluation of Proposed Transfer of License (River Bend Station, Unit 1) (Nov. 28,1997).
Further antitrust review is unwarranted here, inasmuch as: (1) BVPSI is exempt from antitrust review; (2) BVPS2 has already been subject to antitrust reviews in connection with NRC's issuance of both the construction permit and initial operating license, with no antitrust license conditions found necessary, and the transfer of approxima+ely 113 MWe to Penn Power, under circumstances where affiliates currently own the remainder of BVPS2, is de i
minimis; and (3) " extensive and procompetitive" antitrust license conditions already are in place at both the PNPP and Davis-Besse plants for the FE licensees, as well as for FENOC, the operator of those units. 59 FR at 40929. 3' It should be noted that competitive issues in connection with this transaction are subject to review by the Antitrust Division of the U.S.
Department of Justice, the Federal Trade Commission and the FERC.
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See PNPP " Order Approving Application Regarding the Transfer of Operating Authority," December 2,1998, 63 FR 67939 (Dec. 9,1998); and Davis-Besse " Order
' Approving Application Regarding the Transfer of Operating Authority," December 1, 1998 63 FR 67715 (Dec. 8,1998).
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r VII.
RESTRICTED DATA AND CLASSIFIED NATIONAL SECURITY INFORMATION This application does not contain any Restricted Data or classified National Security Information, and it is not expected that any such information will become involved in the licensed activities. However, in the event that such information does become involved, FENOC agrees that it will appropriately safeguard such information and will not permit any individual to have access to such information until the Office of Personnel Management shall have made an investigation and reponed to the NRC on the character, associations and loyalty of such individual, and the NRC shall have determined that permitting such person to have access to such information will not endanger the common defense and security of the United States.
VIII. ENVIRONMENTAL CONSIDERATIONS The requested approval for transfer of the BVPSl&2 licenses and accompanying administrative amendments are exempt from environmental review, because they fall within the categorical exclusion appearing at 10 CFR 51.22(c)(21) for which neither an Environmental Assessment nor an Environmental Impact Statement is required. Moreover, the proposed license transfer does not involve any amendment to the licenses or other change that j
would directly affect the actual operation of BVPSl&2 in any substantive way. The proposed transfer and changes to the licenses do not involve an increase in the amounts, or a change in the types, of any radiological effluents that may be allowed to be released off-site, and involve no increase in the amounts or change in the types of any non-radiological effluents that may be released off-site. Further, there is no increase in the individual or cumulative occupational 17 f
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r radiation exposure. Therefore, the proposed transfer and license changes have no environmental impact.
IX.
ADDITIONAL INFORMATION REGARDING SPECIFIC REGULATORY REQUIREMENTS, PLANS, PROGRAMS & PROCEDURES A.
GENERAL DESIGN CRITERION 17 In compliance with General Design Criterion (GDC) 17, DLC currently provides off-site power to BVPSl&2 over transmission facilities owned and operated by DLC.
Functionally, DLC's interconnection with BVPSl&2 will not change as a result of the proposed license transfer.
GDC 17 specifically requires that there be an assured source of off-site power to the plant. Pursuant to this requirement, thejoint ownership of the Beaver Valley Switchyard by DLC and FE companies and interconnection with both DLC and FE companies will provide adequate assurance that: (1) the BVPSl&2 site will be provided with a continued source of i
off-site power from the DLC and/or FE transmission systems; and (2) the arrangements for controlling operation, maintenance, repair, and other activities with respect to the Beaver Valley switching station, the transmission lines and the switchyard will continue to provide a reliable source of off-site power.
B.
EMERGENCY PLANNING Upon consummation of the transfer, FENOC will assume authority and responsibility for functions necessary to fulfill the emergency planning requirements specified in 10 CFR
{ 50.47(b) and Part 50, Appendix E. Any changes made to the existing BVPSl&2 emergency plan developed and implemented by the cunent licensees will be made in accordance with 10 CFR { 50.54(q). FENOC and DLC anticipate that no changes will be made that will result 18 l
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in a decrease in the effectiveness of the pf ans, and that the plans will continut to meet the standards of10 CFR 50.47(b) and the requirements of Appendix E of Part 50. Any specific emergency plan changes will be submitted to the NRC within 30 days after the changes are made, pursuant to 10 CFR 50.54(q) and Appendix E,Section V. If FENOC or DLC identifies any proposed changes that would decrease the effectiveness of the approved emergency plans, application to the Commission will be made and such propesed changes will i
not be implemented until approved by the Commission. Determinations as to whether any i
proposed change (s) would result in a decrease in effectiveness will be made in accordance with DLC's approved plans, programs and procedures.
FENOC anticipates that no substantive changes will be made to the existing on-site emergency organization, but that certain corporate support and/or corporate oversight functions may be changed, transferred on-site, or transferred to a FENOC corporate support organization.
This organization will provide support functions to BVPSl&2, which may be provided
- through contractual anangements with DLC or third parties. Persons assigned to perform these
- functions will meet the same qualification requirements as the existing responsible DLC corporate support personnel. Transition plans will be established to ensure that the support described in the existing emergency plan will be maintained throughout any transition period associated with the transfer.
All onsite equipment and facilities dedicated to the BVPSl&2 Onsite Radiological Emergency Response Plan will be transferred to FENOC. The current off-site emergency facilities and equipment, including telecommunications systems, the Joint Public Information l
Center, and the Siren Notification System, will be leased by DLC to FENOC. Pursuant to an l
l-L 19
Assignment and Assumption Agreement appended to the Conveyance Agreement, DLC will
{
assign to FENOC and FENOC will assume all offsite real property leases for all facilities and property associated with emergency planning, including siren locations and radiological monitoring stations.
In addition, the existing agreements for support from state and local organizations and public agencies, will be assumed by FENOC. All such state and local participants in the BVPSl&2 Radiological Emergency Response Plans will be advised in advance of the transfers of BVPS emergency planning obligations from DLC to FENOC to ensure the fhil support and cooperation of state and local participants for FENOC as the successor to DLC as operator of BVPSl&2. In sum, the proposed license transfer will not impact compliance with the emergency planning requirements.
C.
EXCLUSION AREA Upon the transfer of operating authority under the licenses to FENOC, FENOC will have authority to determine and control all activities within the Exclusion Area for BVPSl&2, as defined in Section 5.1, " Technical Specifications" to the BVPSl&2 Licenses, to the extent required by 10 CFR Part 100. This authority is described in the Unit 2 UFSAR Section 2.1.2
" Exclusion Area Authority and Control," and the Unit 1 UFSAR Section 2.1.1, " Location and Description." The current operating licensee has the authority to determine and control all activities in the Exclusion Area, including exclusion ofpersonnel and property from the area, and such authority will be transferred to FENOC.
Under the Conveyance Agreement, DLC will transfer ownership of all property within the Exclusion Area Boundary (EAB), except certain switchyard and transmission facilities and i
20
l
, Assignment and Assumption Agreement appended to the Conveyance Agreement, DLC will assign to FENOC and FENOC will assume all offsite real property leases for all facilities and property associated with emergency planning, including siren locations and radiological monitoring stations.
In addition, the existing agreements for support from state and local organizations and public agencies, will be assumed by FENOC. All such state and local participants in the BVPSl&2 Radiological Emergency Response Plans will be advised in advance of the transfers of BVPS emergency planning obligations from DLC to FENOC to ensure the full support and cooperation of state and local participants for FENOC as the successor to DLC as operator of BVPSl&2. In sum, the proposed license transfer will not impact compliance with the emergency planning requirements.
C.
EXCLUSION AREA Upon the transfer of operating authority under the licenses to FENOC, FENOC will have authority to determine and control all activities within the Exclusion Area for BVPSl&2, as defined in Section 5.1, " Technical Specifications" to the BVPSl&2 Licenses, to the extent required by 10 CFR Part 100. This authority is described in the Unit 2 UFSAR Section 2.1.2
" Exclusion Area Authority and Control," and the Unit 1 UFSAR Section 2.1.1," Location and Description." The current operating licensee has the authority to determine and control all activities in the E::clusion Area, including exclusion of personnel and property from the area, and such authority will be transferred to FENOC.
Under the Conveyance Agreement, DLC will transfer ownership of all property within the Exclusion Area Boundary (EAB), except certain switchyard and transmission facilities and 20
two parcels within the EAB owned by Dravo Corporation and Freeport Levelopment. FENOC will assume existing ngreements with Dravo Corporation and Freeport Development granting BVPS full authority to evacuate Phillis Island, owned by Dravo, and property owned by Freeport located within the EAB.
DLC and Penn Power have entered into an Easement, License and Attachment 1
Agreement (Easement Agreement) in conjunction with the Exchange Agreement, wherein FENOC, through Penn Power, has the authority necessary pursuant to NRC requirements to
)
i i
control activities within the exclusion area, including the ability to exclude personnel and equipment from tS : area. Such authority includes the ability, to the extent necessary, to control DLC activities related to its retained ownership interests in the BVPSl&2 Switchyard and Transmission Facilities, and to exclude DLC personnel and equipment from the exclusion area. The Easement Agreement provides that Penn Power and FENOC retain the authority, within those portions of the EAB for BVPS 1&2 owned or controlled by DLC, to determine and control all activities in the EAB, including exclusion of personnel and property from the area, to the extent necessary to comply with applicable NRC requirements. To the extent permitted by NRC requirements, FENOC will exercise this control in such a fashion whereby DLC's access to the switchyard and transmission facilities will not be unduly restricted.
With respect to the activities unrelated to plant operation that occur in the Exclusion Area identified in Section 5.1 of the Technical Specifications, there will be no change.
FENOC will assume responsibility for the Emergency Plan as discussed above.
21 l
D.
SECURITY Upon consummation of the transfer, FENOC will assume authority and responsibility for the functions necessary to fulfill the security planning requirements specified in 10 CFR Part 73. Any changes made to the existing NRC-approved physical security, guard training and qualification, and safeguards contingency plans developed and implemented by the current licensees will be made in accordance with 10 CFR Q 50.54(p). FENOC and DLC anticipate that no changes will be made that will result in a decrease in the effectiveness of the plans, and that the plans will continue to meet the standards of 10 CFR Part 73, Appendix C. Any specific security plan changes will be submitted to the NRC within two months after the changes are made, pursuant to 10 CFR 50.54(p)(2). If FENOC or DLC identifies any proposed changes that would decrease the effectiveness of the approved security plans, application to the Commission will be made, and such proposed changes will not be implemented until approved by the Commission. Determinations as to whether any proposed change (s) would result in a decrease in effectiveness will be made in accordance with DLC's approved plans, programs and procedures.
FENOC anticipates that no substantive changes will be made to the existing on-site security organization, but that certain corporate support and/or corporate oversight functions may be changed, transferred on-site, or transferred to a FENOC corporate support organization.
Support functions may be provided to BVPSl&2 through contractual arrangements with DLC and/or third parties. Persons assigned to perform these functions will meet the same qualification requirements as the existing responsible support personnel. Transition plans will 22 i
be established to ensure that the support described in the existing security plans will be maintained throughout any transition period associated with the transfer.
Existing agreements for support from organizations and agencies not affiliated with the current licensees will be assigned to FENOC. FENOC and DLC plan to notify the parties to such agreements in advance of the transfer of the BVPSl&2 licenses to FENOC, and advise those parties of FENOC's responsibility for management and operation of BVPSl&2. In sum, the proposed license transfer will not impact compliance with physical security requirements.
E.
QUALITY ASSURANCE PROGRAM Upon consummation of the transfer, FENOC will assume authority and responsibility for the functions necessary to fulfill the quality assurance (QA) requirements of 10 CFR Part 50, Appendix B. Any changes made to the existing BVPSl&2 Quality Assurance Plan developed and implemented by the current licensees will be made in accordance with 10 CFR
@ 50.54(a). FENOC and DLC anticipate that no changes will be made that will result in a reduction in the commitments in the Quality Assurance Plan description previously accepted by the NRC. If FENOC or DLC identifies any changes to the Quality Assurance Plan that would result in a reduction in commitments, application to the Commission will be made, and such proposed changes will not be implemented until approved by the Commission.
Determinations as to whether any proposed change (s) would result in a reduction in commitment will be made in accordance with DLC's approved plans, programs and procedures.
FENOC anticipates that it will be able to assume all of the current functions of the existing QA organization by assigning qualified FENOC personnel or contractor personnel, 23
r.
1 1
i.e., DLC personnel (under contract) or other qualified contractors, to each of the positions named in the current Quality Assurance Plan (or equivalent positions). Persons assigned to perform these functions will meet the same qualification requirements as the existing responsible DLC personnel. Transition plans will be established to ensure that the support described in the existing Quality Assurance Plan will be maintained throughout any transition j
period associated with the transfer.
F.
FINAL SAFETY ANALYSIS REPORT With the exception of areas discussed in this application, the proposed license transfer and conforming administrative amendments ivill not change or invalidate infonnation presently appearing in the UFSAR for BVPSl&2, and any licensing basis commitments will remain in effect. Changes necessary to accommodate the proposed transfer and conforming administrative license amendments will be incorporated into the UFSARs, in accordance with
)
10 CFR Q 50.71(e), following implementation of the license transfer.
G.
TRAINING As already noted, the off-site Training Center and Simulator Buildings, including any off-site staff currently working at these facilities, will be transferred to FENOC. The proposed license amendment will not impact compliance with the operator re-qualification program requirements of 10 CFR @ 50.54 and related sections, nor maintenance of the Institute of Nuclear Power Operations accreditation for licensed and non-licensed training. Upon transfer i
of the license, FENOC will assume ultimate responsibility for implementation of present training programs. Changes to the programs to reflect the transfer will not decrease the scope 24 i
n of the approved operator re-qualification program without the specific authorization of the NRC in accordance with 10 CFR Q 50.54(i).
H.
PRICE-ANDERSON INDEMNITY AND NUCLEAR INSURANCE FENOC requests that N'RC amend the existing Price Anderson indemnity agreement to add FENOC and Penn Power, effective as of the date of the license transfer. Prior to the license transfer, FENOC will obtain all required nuclear property insurance pursuant to 10 CFR @ 50.54(w) and nuclear liability coverage pursuant to Section 170 of the Act and 10 CFR Part 140. Penn Power's annual certified financial statements show that a cash flow can be generated and would be available for payment of a retrospective premium of $10 million within three months of a submission of a statement pursuant to 10 CFR 140.21(e).
I.
STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL On and aller the DLC Nuclear Closing, the FE subsidiaries owning BVPSl&2 will assume title to and responsibility for storage and disposal of the spent nuclear fuel at BVPSl&2. DLC will assign and the applicable lill subsidiary will assume DLC's rights and obligations under the Standard Contract with the Department of Energy.
X.
OTHER REQUIRED REGULATORY APPROVALS The proposed transfer of DLC's interest in BVPSl&2 to Penn Power is subject to approvals of the Pa PUC. In addition, the transfer of transmission assets between the FE companies and DLC will require the approval of the FERC under Section 203 of the Federal Power Act. FE and DLC arejointly filing with the FERC for such approval. FERC action is expected in the third or founh quader of 1999.
25
1
. FENOC and DLC will also file any notifications with the Federal Trade Commission and the Department of Justice that are required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), and the applicab! ' rules and regulations.
Any additional information required will be supplied with a goal towards the termination or expiration of the HSR Act waiting perid 9t the earliest possible date after the date of filing.
FENOC and DLC believe that certain rulings by the IRS and/or certain legislative changes to the Internal Revenue Code or changes in IRS regulations may be necessary and/or desirable with respect to the transfer of decommissioning funds. These matters are discussed
)
in greater detail in Section 6.19 of the Conveyance Agreement.
XI.
EFFECTIVE DATE The proposed asset exchange transaction between FE and DLC requires the approval of other regulatory agencies in addition to the NRC's consent to the transfer of DLC's in Facility Operating License Nos. DPR-66 & NPF-73 to Penn Power and DLC's operating authority to
)
FENOC. Until all necessary approvals have been obtained, the closing of the transaction can not occur. Therefore, the NRC is requested to review this Application on a schedule that will permit it to act on and approve the prol osed transfer that would be effectuated by the closing as promptly as possible and in any event before September 30,1999.
XII.
CONCLUSION Based upon the forgoing information, FENOC, Penn Power and DLC respectfully
. request that NRC issue an Order approving the transfer of DLC's ownership interests in Facility Operating License Nos. DPR-66 & NPF-73 to Penn Power, authorizing FENOC to operate BVPSl&2, and approving the Conforming Administrative License Amendments.
26 i
I, John P. Stetz, being duly sworn, state that I am President of FirstEnergy Nuclear Operating Company (FENOC) and Senior Vice President - Nuclear of FirstEnergy Corp. (FE),
L that I am authorized to sign and file this Application with the Nuclear Regulatory Commission i
on behalf of FENOC and Pennsylvania Power Company (Penn Power), and that the statements l
made and the matters set forth herein pertaining to FENOC, Penn Power and the other FE l
compames are true and correct to the best of my knowledge and belief.
FirstEnergy Nuclear Operating Company j
j i
kW Johd.'Stetz' " ' /
President -- FENOC
)
FE Sr. Vice President - Nuclear STATE OF o
COUNTY OF buwY Subscribed and sworn to me, a Notary Public, in and for the County and State above named, this 6
th day of Nu/
.,1999.
rM Com
- sion Expirel
U f"
ARY E. O'REILLY "' *'.1'i
/
Attorney of Law 3;-
Notory Public - State of Ohio
[ My Commission has no Expiration Dofe
{
Soction O,R.C.147.03 i
28 l
f l
(-
l I, James E. Cross, being duly swom, state that I am President -- Generation-Group and Chief Nuclear Officer of Duquesne Light Company (DLC), that I am authorized to sign and l
file this Application with the Nuclear Regulatory Commission on behalf of DLC, and that the statements made and the matters set forth herein pertaining to DLC are true and correct to the best ofmy knowledge and belief.
I Duquesne Light Company
[L Jags E. Cross President -- Generation-Group Chief Nuclear Officer STATE OF O
COUNTY OF (L hw.ib I
Subscribed and sworn to Notary blic, in and for the County and State above named, this 6
th day of
,1999.
1
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p, ion Expires: /
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29
ATTACHMENT A-1 Beaver Valley Power Station, Unit No. 1 License Amendment Request No. 269 The following is a list of the affected pages:
Affected Pages:
Operating License page 1 Operating License page 2 Operating License page 3 operating License page 4 operating License page 6 Operating License page 6a Appendix B of Operating License Appendix C of Operating License i
I
)
4
+*/ *%k NUCLEAR REGULATORY COMMISSION UNITED STATES y
7, wAsmNGToN, D. C. 20666
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/ {M Fms7ENWI NUEEAR OPEARTING CcWMY)
TOU^UCC": L 0':T 00""f =
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OHIO E01 SON COMPANY l TE PENNSYLVANIA POWER COMPANY DOCKET NO. 50-334 COPR-66 BEAVER VALLEY POWER STATION UNIT NO. l FACILITY OPERATING LICENSE (AmendmentNo.-4 License No. DPR-66 wg on tk3 cAam behM M m3 kr 1.
The Nuclear Reaulatory Commission (the Conmission) having found that:
(The, Ers4 EnerM Nudaar Ceh " -
LFEN0GRg ;:n w+0hlo A.
The applicatio'n for license filed by Nber : LT+ r 1
Og Edison Company, and Pennsylvania Power Company (the licensees) compiles
)
6 with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations set forth in 10 CFR Chapter I and all required notifications to other agencies or bodies have been duly made; B.
Construction of the Beaver Valley Power Station, Unit No. 1 (f acility), has been substantially completed in conformity with Construction Permit No. CPPR-75 and the application, as amended, tha provisions of the Act and the rules and regulations of the Commission; C.
The facility will operate in conformity with the application, i
as amended, the provisions of the Act, and the rules and regulations of the Commission; D.
There is reasonable assurance: (l) that the activities authorized by this amended operating license can be conducted without endangering the health and safety of the public, and (ii) that such activities will be conducted in compilance with the rules and regulations of the Commission; M0]
E.
L ;; ::: L'p^C:g:27 Is technically qualifled and the 1icensees are financially quellfled to engage in the activities authorized by this amended operating license in accordance with the rules and j
regulations of the Commission; J
F.
The licensees have satisfied the applicable provisions of 10 CFR I
Part 140, " Financial Protection Requirements and indemnity Agree-ments," of the Commission's regulations; N
veNot. is omwaea w os e.g i., w owo ea,. son
+
(aym. d % Agh. 6:ue 6,oeyk (ks e.*we.
W I
N y n3sh \\g
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sgc.) c.,g 7%
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os w
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cfropeona 3
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1 i
fA-L hW.
G.
The issuance of this amended operating license will net be inimical to the common defense and security or to the health and safety of the public; H.
After weighing the environmental, economic, technical, and other benefits of the facility against environmental and o+her costs and considering available alternatives, the issuance of Amendment No. 4 to Facility Operating License No. DPR-66 is in accordance with 10 CFR l
Part 51 (formerly Appendix D of 10 CFR Part 50) of the Commission's i
regulations and all applicable requirements have been satisfied; and 1.
The receipt, possession, and use of source, byproduct, and special nuclear material as authorized by this amended license will be in accordance with the Commission's regulations in 10 CFR Parts 30, 40, and 70, including 10 CFR Sections 30.33, 40.32, 70.23, and 70.31.
QENo 2.
Facility Operating License No. OPR46 issued to 5;;:=; L.g3 L.4=-y, lo Edison Company, and ennsylvania Power Company is hereby amended in its entirety to read as f s:
pgo c].
A.
This amended license applies to the Beaver Valley Power Station, Unit No. I, a pressurized water nuclear reactor and associated equipment h
(the facility), owned by r er r- ! and operated by 5:==: Lip
~
. T;2y.
The f acility is located in Beaver County, Pennsylvania, on the southern shore of the Ohio River, and is described in the " Final Safety Analysis Report" as supplemented and amended (Amendments I through 21) and the Environmental Report as amended (Supplements I throuch 6).
h CAmo Edsson Come*w a4 we
\\u m 4werChe g B.
Subject to the conditions anB requirements incorporated herein, the Conynission hereby licenses:
m (i) 3 ; : =: Lip' C=;;y, pursuant to Section 104b of the Act and 10 CFR Part 50, " Licensing of Production and Utilization Facilities," to possess, use, and operate the f acility and g g d "se..e gem 't :- 9, D hio Edison Company, and+ Pennsylvania Power Company to possess the f acility at the designated location in Beaver County, Pennsylvania in accordance with the procedures and limitations set forth in this amended license; FEHoM(2) T::::r e u::",c=: y, pursuant to the Act and 10 CFR ea 70, to receive possess, and use at any time special nuclear material as reactor fuel, in accordance -ith the limitations for storage and amount s required for reactor operation, as described in the Final Safety Analysis Report, as supplemented and amended; (ft I
=
hA-hAN pgpot (3) De;eetne Li;ht Cc-any, pursuant to tha Act and 10 CFR Parts 30, 40 and 70, to receive, possess and use i any time any byproduct, source and special nuclear material as sealed neutron sources for reactor startup, sealed sources for reactor instrumentation and radiation monitoring equipment calibration, and as fission detectors in amounts as required; FE g (4) 0:::::r: Li;5t CeTeay, pursuant to the Act and 10 CFR Parts 30, 40 and 70, to receive, possess and use in amounts as required any byproduct, source, or special nuclear material without restriction to chemical or physical form, for sample analysis or instrument calibration or associated with radioactive apparatus or components; FENoc.
(5) 0:;n :: Li-St C: :ny, pursuant to the Act and 10 CFR Parts 30 and 70, to possess, but not separate, such byproduct and special nuclear materials as may be produced by the operation of the facility.
C.
This amended license shall be deemed to contain and is subject to the conditions specified in the following Commission regulations in 10 CFR Chapter 1: Part 20, Section 30.34 of Part 30, Section 40.41 of Part 40 Sections 50.54 and 50.59 of Part 50, and Section 70.32 of Part 70; and is subject to all applicable provisions of the Act and to the rules, regulations, and orders of the Commission now or hereafter in effect; and is subject to the additional conditions specified or incorporated below:
i (1) Maximum Power Level
( g g t, D ;::::: Light Cr.;;;y is authorized to operate the facility at a
(
steady state reactor core power level of 2652 megawatts thermal.
ho be. ugd h Ndth (2) Technical Specifications i
The Technical Specifications contained in Appendix A, as revised g
through Amendment No.140, are hereby incorporated in the license.
The licensee shall operate the facility in accordance with the Technical Specifications.
[(3) Au;'H&j 5:r 9:ter Sy:t:
4- - DELETE (0:?:t:d by annen:t ":. g l
y gg Amendment No. % '9(, 449-
f:.
1 DPR-66 i
i Q t ;::: i:9,+--- DELETG
.(3)
Less Than Three Loon Operation
{pplopC,0;:=: 'i;ht Cr;=3 shall not operate the reactor at power levels above P-7 (as defined in Table 3.3-1 of Specification 3.3.1.1 of the Technical Specifications, Appendix A) with less than-three (3) reactor l
coolant loops in operation until safety analyses for less than three loop operation have been submitted by the. licensees and approval for less than three loop operation at power levels above P-7 has been granted by the Commission by amendment of this license.
(4)
Steam Generator Water Rise Rate Deleted per License Amendment No. 24.
(5)
Fire Protection Proaram gTh: li:=:: shall implement and maintain in effect all-provisions of the approved fire protection program as described in the Updated Final (Mg Safety Analysis Report (UFSAR) for the facility, subject to the l
(
followina orovision yth: 11:=::: may make changes to the approved fire protection program without prior approval of the Commission only if those changes would not adversely affect the ability to achieve and maintain safe shutdown in the event of a fire.
I Amendment No. 8, M, M, 48, M, 33, 39, 4M, C:rr::ted by lett:r d:t:d 4:11 '"
'007 I
V
,,., a a p
[
-}-
(6)
Syntaan_Tntenrity i
}qgot M;2:== Light Ox;=y shall implement a program to reduce leakage from systems outside containment that would or could contain highly radioactive fluids during a serious transient or accident to as low as practical Javels.
This program shall include the following:
1.
Provisions establishing preventive maintenance and periodic visual inspection requirements, and 2.
Integrated leak test requirements for each system at a frequency not to exceed refueling cycle intervals.
(7)
Iodine Monitorina (FENo)L eMice== Lisht c:=;=7 = hall i=Plement a program which will ensure the capability to accurately determine the airborne iodine concentration in vital areas under accident conditions.
This program shall include the following:
1.
Training of personnai, 2.
Procedures for monitoring, and 3.
Provisions for maintenance of sampling and analysis'equipmant.
(8)
Backun Method for Determinina Subcoolina Marsin j
b 7 % 7; ::: Light t: ; =y shall'laplement a program which hENo#
vill ensure the capability to accurately monitor the Reactor Coolant System subcooling margin.
This program ahall include the following:
1.
Trainirig of personnel, and 2.
Procedures for monitoring.
(9)
Staan annarator Surveillaue Yn meval Ex+mnaian e
The performance interval for the steam generator surveillance requirement identified in the licensee's request' for surveillance interval extension dated November 11, 1998, shall be extended to coincide with the cycle 13 refueling outage or the end of 500 effective full power days, whichever is sooner.
This surveillance will not extend beyond June 15, 2000.
(htspo1N Y Amendment No. &
htA-Gh ADO c
-u.
.(10)
Additional Conditions
[McMk N The Additional Condition contained in Appendix C, as revised
'through Amendment No. M E, are hereby incorporated into.this f6 M license. t gn= Lip.t Cs,.=; shall operate the facility in accordance with the Additional Conditions.
2.D.
Physical Protection Mh: 'E:- ee shall fully implement and maintain in effect all provisions QENOjC. of the following Commission approved documents, including amendments and changes made pursuant to the authority of 10 CFR 50.54(p). These approved documents consist of information withheld from public disclosure pursuant to 10 CFR 2.790(d):
(1) " Beaver Valley Power Station, Unit No.1, Physical Security Plan",
Revision 1, dated October 31, 1977, as supplemented by Revision 2 dated May 15, 1978, Revision 3 dated February 21, 1979.
(2) The NRC approved Safeguards Contingency Plan as transmitted by letter of March 22, 1980.
(3) " Beaver Valley Power Station Guard Training and Qualification Plan",
submitted by letter, dated August 16, 1979, as revised by letter 1
dated September 26,-1980. This Plan shall be fully implemented in accordance with 10 CFR 73.55(b)(4), within 60 days of this approval by the Commission. All security personnel shall be qualified within two years of this approval.
E.
All work and activities in connection with this project shall be performed pursuant to the provisions of the Comonwealth of Pennsylvania Clean Streams Acts of June 24, 1913, as amended,'and of June 22, 1937, as amended, and.in accordance with all permits issued by the Department of Environmental Resources of the Commonwealth of Pennsylvania.
2.F.
This amended license is effective as of the date of issuance and shall expire at midnight on January ?9, 2016.
FOR THE NUCLEAR REGULATORY COMMISSION ORIGINAL SIGNED bY R. 5. BOYD Roger S. Boyd, Director Division of Project Management Office of Nuclear Reac:or Regulation Date of Issuance: July 2, 1976 Amendment No. M, 48, M6,402-
- l. % p N
'y
OfR-G6
%CC i
t Docket No. 50-334 ENVIRONMENTAL TF.CifilCAL SPECIFICATION 5 l
i Appendix B to Operatina License DPR-66 has been eliminated in its entirety by thi; :::ni nt. Cet 7.---;;;nt N;;. 3, 5^. " ead 77 9 Losere gaa no.93) e OELETE -
9 OCAVEE VALLEV L7;I' Amendment No. 43-u,.a ~.ap e
l
..w (OfW W
APPENDIX C ADDITIONAL CONDITIONS OPERATING LICENSE NO. DPR-66
,,,,ap n.. _... -
'4-"
C-my,+0hio Edison Company, andePennsylvania Power Company shall comply with the followine-conditions on the schedules noted below:
-Crha, bestEvacgy Nuc.lavoged,) Cm Amendment-Additional Condition Implementation Number Date 202 The~ licensee is authorized to relocate certain The amendment Technical Specification requirements to shall be l
licensee-controlled documents.
Implementation implemented 4
of this amendment shall include the relocation within 60 days of these technical specification requirements from April 14, i
to the appropriate documents, as described in 1997 the licensee's application dated September 9, 1996, and evaluated in the staff's safety i
evaluation attached to this amendment.
208 The licensee commits to perform the post weld The amendment heat treatment of sleeve welds and the shall be NRC-recommended inspections for repaired tubes implemented as described in the licensee's application within 60 days dated March 10, 1997, as supplemented July 28 from and September 17, 1997, and evaluated in the November 25, staff's safety evaluation attached to this 1997 amendment.
209 The licensee is authorized to relocate certain The amendment Technical Specification requirements to shall be licensee-controlled documents.
Implementation implemented 1
of this amendment shall include the relocation within 60 days of these technical specification requirements from to the appropriate documents, as described in December 10, the licensee's application dated March 14, 1997 1997, as supplemented July 29 and August 13, 1997, and evaluated in the staff's safety evaluation attached to this amendment.
210 The licensee is authorized to relocate certain The amendment Technical Specification requirements to shall be licensee-controlled documents.
Implementation implemented of this amendment shall include the relocation within 30 days of these technical specification requirements from to the appropriate documents, as described in January 20, 1998 the licensee's application dated September 11, 1997, _ and evaluated in the staff's safety evaluation attached to this amendment.
1 Amendment No. 203, 808, 309,3M
@ tope 6ed M C
m
ATTACHMENT A-2 Beaver Valley Power Station, Unit No. 2 License Amendment Request No. 144 The following is a list of the affected pages:
Affected Pages:
Operating License page 1 Operating License page 2 Operating License page 3 operating License page 3a Operating License page 4 Operating License page 5 Operating License page 6 Operating License page 7 Cover page for Appendix B to the Operating License Table of Contents for Appendix B to the Operating License 1
Appendix B of Operating License Page 1 Appendix B of Operating License Page 2 Appendix B of Operating License page 4 Appendix B of Operating License page 5 Appendix D of Operating License
1 h e F- ~1 3 ) Ao D
/ p nem[0, UNITED STATES
[ ),.,
i NUCLEAR REGULATORY COMMISSION r-ADO
[
-l WA$mNG TON. O. C. 20555
% d,(. #
E F'IASTENEA6Y NutLGAR 09EIMTIM6 foWMJ
~ ~ T COMPANY TA E PE9dsYL\\lAN iki potuEh
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i OHIO EDISON COMPANY 3
THE CLEVELAND ELECTRIC TLLilMINATING COMPANY THE TOLEDO EDISON COMPANY i
DOCKET NO. 50-412 BEAVER VALLEY POWER STATION, UNIT 2 FACILITY OPERATING LICENSE (Jhe w s e e eom %, m a License No. NPF-73 1.
The Nuclear Regulatory Comission (the Comission or the NRC) has found that:
E NMw @% W9 MN SCk A.
The application for license filed _ sy the 02 ::::: 'i@t Cz;: p acung4r unM and as agent forr0hio Edison Company, The Cleveland hon,ik5 Electric Illuminating Company, and The Toledo Edison Company (the own Osd.
licensees), complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Comission's regula-tions set forth in 10 CFR Chapter I, and all required notifications to other agencies or bodies have been duly made; B.
Construction of the Beaver Valley Power Station Unit 2 (the facility) has been substantially completed in conformity with Construction Permit No. CPPR-105 and the application, as amended, the provisions of the Act, and the regulations of the Comission; C.
The facility will operate in confonnity with the application, as amended, the provisions of the Act, and the regulations of the Cossiission (except as exempted from compliance in Section 2.0.
below);
D.
There is reasonable assurance:
(1) that the activities authorized by this operating license can be conducted without endangering the health and safety of the public and (ii) that such activities will be conducted in compliance with the Conesission's regulations set forth in 10 CFR Chapter I (except as exempted from compliance in Section 2.0. below);
@iNo9
%c. 6.nr@aw Powe.r Compaq j~The.
k
'";;enr.; u@+, C
- y f 0LCet is authorized to act as agent for Ohio Edison Company, The ClevelandE1Tuminatin&ElectriaCompany, and The Toledo Edison Company and has exclusive responsibility and control over the physical
. construction, operation, and maintenance of the facility.
(ProposO W65
(79 F-73bA2 FE blos E.
Samne Light C;;; n:/ is technically cualified to engage in the activities authorized by this license in accordance with the Comission's regulations set forth in 10 CFR Chapter !;
.F.
The licensees have satisfied the applicable orovisions of 10 CFR part 140, " Financial Protection Requirements and Indemnity Agreements," of the Commission's regulations; G.
The issuance of this license will not be inimical to the common defense and security or to the health and safety of the public; 4
After weighing the environmental, economic, technical, and other benefits of the facility against environmental and other costs and considering available alternatives, the issuance of this Facility Operating License No. NPF-73 is subject to the conditions for protection of the environment set forth in the Environmental Protection Plan attached as Appendix B, is in accordance with 10 CFR Part 51 of the Comission's regulations, and all applicable requirements have been satisfied; I.
The receipt, possession and use of source, byproduct and special nuclear material as authorized by this license will be in accordance with the Commission's regulations in 10 CFR, Parts 30, 40, and 70.
2.
Based on the foregoing findings, review by the Nuclear Regulatory Comission at a meeting on July 8,1987, and approval by the Commission on August 13, 1987, the License for Fuel loading and Low Power Testing, License No. NPF-64, issued on May 28, 1987, is superseded by Facility FEHoC.
Operating License NPF-73, hereby issued to the %q.e;ne Light Company, Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company (the licensees) to read as follows:
-The. masWoois V.we coe 3 TMr )
A.
This license applies to the Beaver Valley Power Station, Unit 2, a press _urized water reactor and associated equipment (the facility) owned byKhfo Edison Company, The Cleveland Eleevic Illuminating 4ETE Com FEMOC T:pany, and The Toledo Edison Company ^-' :r-Tand operated by a ;;; = Light c
- y. The facility is located on the licensees' site on the southern shore of the Ohio River in Beaver County, Pennsylvania, approximately 22 miles northwest of Pittsburgh and 5 miles east of East Liverpool, Ohio, and is described in
" G;;oe Li ht 0-1 i;;y': Final Safety Analysis Report, as supplemented NO i
and amended, and in its Environmental Report, as supplemented and amended; 9.
Subject to the conditions and requirements incorporated herein, the Comission hereby licenses:
g (1) Pursuant to Section 103 of the Act and 10 CFR Part 50. N; m:
'.ight C1-g=y to possess, use, and operate the facility at the designated location in Beaver County, Pennsylvania, in accordance with the procedures and limitations set forth in this license; (froposd We
(SfF- @ A00
-3 4 % sw.em A-cy. g 7
(2) Pursuant to the Act and 10 CFR Part 50," Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company to possess the facility at the designated location in Beaver County, Pennsylvania, in accordance with the procedures and limitatiors set forth in the license; I
(PENch (3) Pursuant to the Act and 10 CFR Part 70, ";;;:::: U;5t C^ n y to receive, possess, and use at any time special ruclear material as reactor fuel, in accordance with the limitations for storage and amounts required for reactor operation, as describ9d in the Final Safety Analysis Report, as supplemented and ame.id E N OC-l (4) Pursuant to the Act and 10 CFR Parts 30, 40, and 70, 0;.;;nn; b4gh-4empany to receive, possess, and use at any time any byproduct, source, and special nuclear m Kerial such as sealed neutron sources for reector startup, sealed sources for reactor instmmentation and radiation monitoring equipment calibration, and as fission detectors in amounts as required; (5) Pursuant to the Act and 10 CFR Parts 30, 40, and 70, Duquesne U;b C ; ry to receive, possess, and use in amounts as required any byproduct, source, or special nuclear material without restriction to chemical or physical fom, for sample analysis or instrument calibration or other activity associated with radioactive apparatus or components; (6) Pursuant to the Act and 10 CFR Parts 30, 40, and 70, *:;;;:n:
s U;ht C ;: ; to possess, but not separate, such byproduct and special nuclear materials as may be produced by the operation i
of,the facility authorized herein. M Uhe Pennsuvama Pa w c.o m pow (7)
(a) 9txt '.Mt C_,: ; Ohio Edison Company, The Cleveland Electric Iliuminating Company and The Toledo Edison Company are authorized to transfer any portion of their respective 13.745, 41.881, 74.471 and 19.911 ownership interests in BVPS Unit 2 and 4 proportionate share of their ownership interests in the BYPS common facilities to certain potential investors identified in their submittals of July 14, 16, 22 and 31 and September 14, 17 and 18, 1987, and at the same time to lease back from such purchasers such interest transferred in the 8VPS Unit 2 facility. The term of the lease is for approximately 29-1/2 years subject to a right of renewal. Such sale and leaseback transactions are subject to the representations and conditions set forth in the aforementioned submittals. Specifically, a lessor and anyone else who may acquire an interest under these transactions are prohibited from exercising directly or indirectly any control over the license of BVPS Unit 2.
For purposes of this condition the Ifmitations in 10 CFR 50,81, as now in effect and as may be subsequently amended, are fully applicable to the lessor and any successor in interest to that lessor as long as the license for BVPS Unit 2 remains in effect; these financial u),.y wy
(NPF-W)W transactions shall have no effect on the license for the BVPs Unit 2 facility throughout the term of the license.
(b)
Further, the licensees are also required to notify the NRC in writing prior to any change in:
(1) the term or conditions of any lease agreements executed as part of these transactions; (iit the BVPS Operating Agreement, (iii) the existing property insurance coverage for BVPS Unit 2, and (iv) any action by a lessor or others that may have an adverse effect on the safe operation of the facility.
C.
This license shall be deemed to contain and is subject to the conditions specified in the Conrnission's regulations set forth in 10 CFp Chapter I and is subject to all applicable provisicos of the Act and to the rules, regulations, and orders of the Comission now or hereafter in effect; and is subject. to the additional conditions specified or incorporated below:
(1) Maximum Power Level 4Efe is authorized to operate the facility at reactor core power levels not in excess of 2652 megawatts thennal (100 percent power) in accordance with the conditions specified herein.
(2) _ Technical Soecif' ations
[M* Mb y
The Technical Specification contained in Appendix A, as revised through Amendment No.
, and the Environmental Protection Plan contained in Appendix B, both of which are attached hereto are hereby incorporated in the license.
shall operate the facility in accordance with the Technical pecifications and the Environmental Protection Plan.
FENO3 (A.f.JWah
n e
(Nf F-13} A0D (3)
Initial Startun Test Proaram (Section 14 of the SER, and Supplements 3 and 5)
Deleted (4)
Fresh Fuel Storace The following criteria apply to the storage and handling of new fuel assemblies in the fuel handling building:
(a) No more than two fuel assemblies shall be out of approved shipping containers or fuel assembly r.torage racks at any one time.
(b) The minimum edge-to-edge distance between the above two new assemblies, the shipping container array, and the storage rack arrays shall be at least 12 inches.
(c) New fuel assemblies shall be stored in such a manner that water would drain freely from the assemblies in the event l
of flooding and subsequent draining of the fuel storage.
area.
(5)
Inservice Insoection (Section 6.6 of SER Sunnlement 5)
Deleted l
(6)
Fomal Federal Emeraency Manaaement Acency Findina In the event that the NRC finds that the lack of progress in completion of the procedures in the Federal Emergency Management Agency's final rule, 44 CFR Part 350, is an indication that a major substantive problem exists in achieving or maintaining an adequate state of emergency preparedness, the provisions of 10 CFR Section 50.54(s)(2) will apply.
(7) Plant Safety Monitofina System (PSMS)
Deleted i
l ht=^=LL:Y =:@ DELETE Amendment No. g,
- U%po30 %A
)y i
@@-13)W 1
(8) Detailed Control Room Desion Review (DCRDR)
Deleted (9)
Safety Parameter Disolav System (SPDS)
Deleted (10)
Fire Protection Modifications (Section 9.5.1 of SER Supolement 6) foicedM h (11) Additional Conditions t
C The Additional Conditions contained in Appendix
, as revised through Amendment No.40, are hereby incorporated into this licensee..pr; :=: Light O s m ; shall operate the facility in accordance with the Additional Conditions.
D.
Exemotions The following exemptions are authorized by law and will not endanger life or property or the common defense and security, and certain special circumstances are present. With the granting of these exemptions, the facility will operate, to the extent authorized herein, in conformity with the application,.as amended, the provisions of the Act, and the rules and regulations of the Commission.
(1) The facility requires an exemption from the requirements of General Design Criterion (GDC) 4, Appendix A to 10 CFR 50. The staff has described in detail in Supplement 4 and Supplement 5 to the Safety Evaluation Report the technical basis and "special circumstances" associated with this exemption. The staff's environmental assessment was published on March 27, 1987 (52 FR 9979). Therefore, pursuant to 10 CFR 50.12(a)(1), 10 CFR 50.12(a)(2)(ii) and (iv), Beaver Valley Power Station, Unit 2 is exempt from the requirements of GDC 4, Appendix A to 10 CFR 50 with respect to the dynamic loading effects associated with the postulated pipe breaks described in detail in Section 3.6.3 of Supplement 4 to the Safety Evaluation Report. These dynamic loading effects include pipe whip, jet impingement, and break-associated dynamic transients. Specifically, this eliminates the need to install jet impingement barriers and pipe whip restraints associated with postulated pipe breaks in the pressurizer surge line, reactor coolant bypass system, SE? YEP'!klEY
'y DEETE Amendment No.114,fa
(
MM
h PF-1 p 2 g
-F-safety injection system, and residual heat removal system. This exemption will expire when the current GDC 4 rulemaking changes have been completed.
(2) The facility requires an exemption from the requirements of 10 CFR 50, Appendix J, Section III.D.2(b)(ii). The justification of this exemption is contained in Section 6.2.6 of Supplement 5 to the Safety Evaluation Report. and modified by a letter dated July 26, 1995.
The staff's environmental assessment was published on May 12, 1987 (52 FR 17651) and on June 9, 1995 (60 FR 30611). Therefore, j
pursuant to 10 CFR 50.12(a)(1) and 10 CFR 50.12(a)(2)(ii) and (iii), Beaver Valley Power Station, Unit 2 is exempt from the i
quoted requirement and instead, is required to perform the overall air lock leak test at pressure P, before establishing containment integrity if air lock maintenance has been performed that could affect the air lock sealing capability.
Local leak rate testing at a pressure of not less than P may be substituted for an overall air lock test where the desig,n permits.
i (3) The facility was previously granted an exemption from the criticality alarm requirements of 10 CFR 70.24 (see License No.
SNM-1954) dated April 9, 1986, which granted this exemption).
Beaver Valley Power Station, Unit 2 is hereby exempted from the l
criticality alam system provisions of 10 CFR 70.24 so far as this l
section applies to the storage of fuel assemblies held under this license.
E.
Physical Security iH-Etr shall fully implement and maintain in effect all provisions of the FENoc physical security, guard training and' qualification, and safeguards contingency plans previously approved by the Commission and all amendments and revisions to such plans made pursuant to the authority of 10 CFR 50.90 and 10 CFR 50 54(p). The plans, which contain safeguards information protected under 10 CFR 73.21, are entitled:
" Beaver Valley Power Station Security Plan," with revisions submitted through April 15,1987; " Beaver Valley Power Station Security Training and Qualification Plan," with revisions submitted through April 15, 1987; and Beaver Valley Power Station Security Contingency Plan," with revisions submitted through February 19, 1987.
F.
Fire Protection Procram (Section 9.5.1 of SER Supplement 3)
Enoc)
M'.e shall implement and maintain in effect all provisions of the approved fire protection program as described in the Final Safety Analysis Report through Amendment No. 17, and submittals dated May 18, May 20, May 21, June 24 and July 6, 1987, and as described in the Safety Evaluation Report dated October 1985, and Supplements 1 through 6, subject to the following provision:
(p j WoM Amendment No. 44-
-X-l 9 %ee may make changes to the approved fire protection program without prior approval of the Commission only if i
those changes would not adversely affect the ability to achieve and maintain safe shutdown in the event of a fire.
G.
ReDortina to the Commission DELETED l
H.
Financial Protection The licensees shall have and maintain financial protection of such type and in such amounts as the Commission shall require in accordance with Section 170 of the Atomic ~ Energy l
Act of 1954, as amended, to cover public liability claims.
I.
Exciration This license is effective on the date of issuance and shall expire at midnight on May 27, 2027.
FOR THE NUCLEAR REGULATORY COMMISSION ORIGINAL SIGNED BY:
Thomas E. Murley, Director Office of Nuclear Reactor Regulation
Enclosures:
1.
Appendix A - Technical Specifications (NUREG-1279) 2.
Appendix B - Environmental Protection Plan r 'P Date of Issuance:
August 14, 1987 f3 nJgauc-mA,o~.\\coaaims lJ w
4,g u.4 )
Amendmene No. +r-3
(TPF *13]4-ADD APPENDIX B TO FACILITY OPERATING LICENSE NO. NPF-73 BEAVER VALLEY POWER STATION UNIT 2
>0"^"EC"E LIC"T CO.""."."Y, ET AL r-DOCKET NO.'50-412 ENVIRONMENTAL PROTECTION PLAN (NONRADIOLOGICAL)
AUGUST 1987 FmsTENERG'T NutLEAS OPEANTING CoMPANT
(
l o%fedwehigl E
1 Gir-isy-Am 8EAVER VALLFY POWER STATION UNIT 2 ENVIRONFENTAL PROTECT'ON DLAN INNTADIOLOGICAli TABLE OF CONTENTS Section Page 1.0 Objectives of the Environmental Protection Plan..................
I 2.0 E nvi ronmen ta l P ro tec t i on I s s ues..................................
1 3.0 Consistene.v Requirements.........................................
1 3.1 Pl a n t Des ign an c O pe ra tion.......................................
1 3.2 Reporting Pelated to t% NPDES Pemit and State Certifications... ?
3.3 Changes Recuired for Compliance with Other Environmental Regulations....................................................
2 4.0 E nv i ronmen ta l C o ndi ti on s......................................... 2 4.1 Unu sua l or Impo rtant Envi ronmenta l Events........................ ?
4.2 Environmental Fonitoring......................................... 3 t
5.0 Admi ni s trati ve Procedu re s........................................ 3 E.1 Review and Audit................................................. 3 F.2 Records Retention................................................
3 5.3 Chances in Ervironmental Protection Plan......................... 4 5.4 Plant Reporting Requirements..................................... 4
(,ftego3d N
(t d F ~1 M W 1.0 Otjectives of the Environmental Protection Plan The Environmental Protection Plan ~(EPP) is.to provide for protection of renradiolcgical environmental values during operation cf the Beaver Valley Power Station, Unit E (facility). The principal objectives of the EPF are as follows:
(1) Verify that the facility is operated in an environmentally acceptable manner, as established by the Final Environmental Statement - Operating License Stage (FES-OL) and other NRC environmental impact assessments.
(2) Coordinate NRC requirements and maintain consistency with other Federal, State, and local requirements for environmental protection.
(3) Keep NRC infomed of the environmental effects of facility construction ano operation and of actions taken to control those effects.
Environmcntal concerns identified in the FES-OL (September 1985, NUREG-1094) which relate to water quality matters are regulateo by way of the licensee's*
NPDES pemit.
2.0 Environmental Protecticn issues In the FES-OL (NUREG-1094, September 1985), the staff considered the environmental impacts associated with the operation of the Beaver Valley Fower Station Unit 2.
No aouatic/ water quality, terrestrial, or rioise issues were identified.
3.0 Consistency Recuirements 3.1 Plant Desian and Operation The licensee may make changes in station design or operation or perform tests or experiments affecting the environment provided such activities do not involve an unreviewed environmental question and do not involve a change in h
the EPP*f Changes in station design or operation or perfomance of tests or experiments which do not affect the environment are no't subject to the requirements of this EPP. Activities governed by Section 3.3 are not subject i
to the reouirements of this Section.
Before engaging in additional construction or operational activities which may significantly affect the environment, the licensee shall prepare and record an environmental evaluation of such activity. Activities are excluded from this requirement if all measurable nonradiological environmental effects are confined to the on-site areas previously disturbed during site preparation and plant construction. When the evaluation indicates that such activity involves an unreviewed environmental question, the licensee shall provide a written evalu-ation of such activity and obtain prior NRC approval. Such activity and change to the EPP may be implemented only in accordance with an appropriate license amendment as set forth in Section 5.3 of this EPP.
(Tha Viestbu;fy Nwde.< Ope /ap C
p Q
" Licensee" refers to d_.-.....,... y om.ay
.-d operator of the facility,.and acting as agent for Ohio Edison. Company, The Cl nd Electric Illuminating Company, and The Toledo Edison Company, owners DEiLETE of the facility. The. Mg lvom. Awse Cg.y yTh c
1
@opex1 M
h PF--M AS A proposed chanQe, test, or experitt.ent shall be deemed to irvolve an unreviewed environmental questior if it concerns:
(1) a matter which may result in e significert increase in any adverse environmer.tal impact previously evaluater' ir, the FES-pt, environrrental impact appraisals, or in any decisions of the Atoniit Safety and licensing Board; or (2) e significant change ir ef'luents or power level; or (3) a matter, not previously reviewed and evaluated in thc doeurents specified in (li ef this Subsection, which ray have a significant adverse envirorcertal impact.
The licensee shall maintain records of changes in facility design or operation and of tests and experiements carried out pursuant to this Subsection. These records shall include written evaluations which provide bases for the deter-mination that the change, test, or experiement does not involve an unreviewed
)
environmental cuestion or constitute a decrease in the effectiveness of this EPP to meet the objectives specified in Section 1.0.
The licensee shall include as part of the Annual Environmental Operating Report (per Subsection 5.4.1) brief descriptions, analyses, interpretations, and evaluations of such charges, tests, and experitnents.
)
l 3.?
Peporting Pelated to the NFDES Pemit erd State Certificatice j
Chances to, or renewals of, the NPDES Permit or the State certification shall be reported to the NRC within 30 days followino the date the chance or renewal is approved.
If a pemit or certification, in part or in its entirety, is appealed ard stayed, the NRC shall be notified within 30 days followirs the date the stay is cranted.
The licensee shall notify the FPC of changes to the effective NPCES Pemit proposed by the licensee by providing NDC with a copy of the proposed cherge at the same time it is submitted to the permittinc acency. The licensee shall provide the NRC a copy of the application for renewal c' the NPDES Pertrit at the same time the application is submitted to the permitting agency.
3.3 Changes Reevired for Concliance with Other Environmental Peculators Changes in plant design or operation and performance of tests or experiments which are required to achieve compliance with other Federal, State, and loct' environmentel reculations are,not sub.iect to the reouirements of Section 3.1.
4.0 Environmental Conditions 4.1 Unusual or Important Environmental Events Any occurrence of an unusual or important event that indicates or could result in significart environmental impact causally related to plant operation shall be recorded and reported to the NRC within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> followed by a written report per Subsection 5.4.2 of the EPP.
F This provision dces not relieve the litersee of the requirements of 10 CFP 50.59.
J 2
s.m.ow (Ag wh
N 9F-17 A00 5.3 Changes in Envircrrental Protection Plan Recuests for changes in the EPP shall include an assessment of the environmental impact c' the proposed change and a supporting justification.
Irplementetton of such changes in the EPP shall r.ct commence prior to W approval of the preposed changes in the forn cf a license amendment incerporating the-appropriate revision to the EPP.
5.4 Plant Reportino Pecuirements 5.4.1 Routine Reports An Annual Environmental Operating Report describing irrlementation of this Err
- or the previous year shall be submitted to the NPC prior to Fay 1. of each year. The period of the first report shall begin with the date of issuarce of the operating license, and the initial report shall be submitted prior to May 1 of the year following issuance of the crerating license.
The report shall include surcaries ano analyses of the results o# the envircn-mental protection activities required by Subsection 4.2 (if any) cf this EPP for the report period, including a comparison with related preoperational studies, operational controls (as appropriate), and previous nonradiological environmental monitoring repcrts, and an assessment o# the observed impacts of the plant operation on the environmcrt.
If harmful effects or evidence of trends toward irreversible damage to the environment are observed, the licensee shall provide a detailed aralysis of the data and a proposed course of miticating action.
The Annual Environmental Operating Peport shall aise include:
j (1) A list of EPP noncompliances and the corrective actions taken to remedy them.
(21 A list of all changes in station design or operation, tests, and experi-ments made in accordance with Subsection 3.1 which involved a potentially I
significant unreviewed environmental question.
i (3) A list of nonrcutine reports submitted in accordarce with Schsection 5.4.2.
In the event that some results are not available by the report due date, the report shall be submitted, noting and explaining the missing results. The j
missing results shall be submitted as soon as possible in a supplementary report.
j i
5.4.2 A written report shall be submitted to the NRC within 30 days of occurrence of a nonroutine event. The report shall:
(a) describe, analyze, and evaluate the event, including extent and magnitude of DELETE
+4-the impact, and plant operating characteristics; (b) describe t e probable cause of the event: fc) indicate the actior taken to ccrrect the reported event; (d) indicate the corrective action taken to preclude repetition of the event and to prevent similar occurrences involving similar components or systems; and (e) indicate the agencies notified and their preliminary responses.
4
(.frego
v NPF-73)e AoD Events reportable under this subsecticn which also require rercrts DaETE-rto othe@ Federal, State, or local agencies stall be reported in accordance with those rererting reouirements ir. \\teu of the recnirenwnts of this subsection. The 600 shall be previded with a copy of such reportt at the same time it is subritted te the other acerCy.
l 1
l l
l l
1 l
l i
l f
5 N.,a w ora. g f
p
%3)A00 l
APPENDIX O e ADDITIONAL CONDITIONS OPERATING LICENSE NO. NPF-73 i
---y Ogarre L!;ht 007sg Ohio Edison Company, The Cleveland Electric illuminating Company, and The Toledo Edison Company shall comply with the following conditions on the I
schedules noted below-Amendment Additional Condition implementation Number Date 83 The licensee is authorized to relocate certain This amendment Technical Specification requirements to shall be licensee-controlled documents, implementation implemented i
of this amendment shallinclude the relocation within 60 days of these technical specification requirements from April 14, to the appropriate documents, as described in 1997 the licensee's application dated September 9, 1996, and evaluated in the staff's safety evaluation attached to this amendment.
87 The licensee is authorized to relocate certain The amendment Technical specification requirements to shall be licensee-controlled documents. Implementation implemented within of this amendment shallinclude the relocation 60 days from of these technical specification requirements December 10, to the appropriate documents, as described in 1997 the licensee's application dated March 14, 1997, as supplemented July 29 and August 13, 1997, and evaluated in the staff's safety evaluation attached to this amendment.
l 88 The licensee is authorized to relocate certain The amendment Techni:al Specification requirements to shall be i
licensee-controlled documents. Implementation implemented of this amendment shallinclude the relocation within 30 days of these technical specification requirements to from the appropriate documents, as described in the January 20,1998 licensee's application dated September 11, 1997, and evaluated in the staff's safety evaluation attached to this amendment.
98 The licensee commits to perform visual The amendment acceptance examinations of sleeve welds, post shall be weld heat treatment of sleeve welds, and the implemented within NRC-recommended inspections of repaired 60 days from tubes as described in the licensee's application fbrch 26,1999 dated March 10,1997, as supplemented July l
28,1997, September 17,1997, April 30,1998, I
and January 29,1999, and evaluated in the staff's safety evaluation attached to this c-N amendment.
bGt Erdg N uc.ieor ope dg 3 % 9e q h o fo m (e g
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ATTACHMENT B i
Beaver Valley Power Station, Unit Nos. 1 and 2 License Amendment Request Nos. 269 and 144 REVISION OF FACILITY OPERATING LICENSE A.
DESCRIPTION OF AMENDMENT REQUEST The proposed changes to the Beaver Valley Power Station (BVPS)
Unit No. 1 and BVPS Unit No. 2 licenses involve (1) the deletion of references to Duquesne Light Company (DLC), as owner of 47.5%
of BVPS Unit No.
1 and 13.7% of BVPS Unit No.
2, and as the licensed operator of BVPS Unit No. 1 and BVPS Unit No. 2; (2) the authorization of FENOC to operate BVPS Unit No. 1 and Unit No. 2 under essentially the same conditions and authorization included in the existing license; and (3) authorization of Pennsylvania Power Company (Penn Power) to own 47.5% of BVPS Unit No. 1 and 13.7%
of BVPS Unit No.
2.
The proposed wording changes associated with the amendments to the BVPS Unit No. 1 and Unit No.
2 licenses are shown in Attachments A-1 and A-2, respectively, and are listed below.
The proposed amendment would make the following changes to the operating Licenses and associated Appendices:
For BVPS Unit No. 1 Facility Operatina License Revise the heading to add "THE FIRSTENERGY NUCLEAR OPERATING COMPANY" and remove "Duquesne Light Company"; add the word "THE" preceding the words " OHIO" and " PENNSYLVANIA".
- Revise paragraph 1.A to remove the words "Duquesne Light company" and add "The FirstEnergy Nuclear Operating Company
( FENOC) * " ; add the words " acting on its own behalf and as agent for The";
add the word "The" preceding the word
" Pennsylvania"; add a footnote designated by a single asterisk which reads as follows:
- FENOC is authorized to act as agent for The Ohio Edison Company and The Pennsylvania Power Company, and has exclusive responsibility and control over the physical construction, operation, and maintenance of the facility.
Revise paragraph 1.E to replace the reference to "Duquesne Light Company" with "FENOC".
- Move the words " Amendment No."
on page number one of the Operating License to the bottom right corner of the page.
Revise paragraph 2 to replace the reference to "Duquesne Light Company" with "FENOC"; add the word "The" preceding the words
" Ohio" and " Pennsylvania".
ATTACHMENT B, continusd License Amendment Request Nos. 269 and 144 Page 2-Revise paragraph'2.A to replace the words "the licensees" with "The Ohio Edison Company and The Pennsylvania Power Company,";
replace the reference to "Duquesne Light Company" with "FENOC".-
- Revise paragraph 2.B.(1) to replace the first reference to "Duquesne Light Company" with "FENOC"; revise the fourth line by deleting the reference to "Duquesne Light Company"; add the word "The" preceding the words " Ohio" and " Pennsylvania".
Revise paragraphs 2.B.(2), 2.B.(3), 2.B.(4),
2.B. (5),
- 2. C. (1),
-e 2.C.(3),
2.C.(6),
2.C.(7),
2.C.(8) and 2.C.(10) to replace references to "Duquesne Light Company" with "FENOC".
...as revised through
- Revise paragraph 2.C.(2) to read Amendment No. (to be added by NRC)....".
Delete the first paragraph 2.C.(3) pertaining to the Auxiliary River Water System.
- Revise paragraph 2.C.(5) to replace the words "The license" and "the licensee" with "FENOC".
1
- Revise paragraph 2.C.(10) to read
"...as revised through Amendment No. (to be added by NRC]....".
Revise paragraph 2.D to replace the words "The licensee" with "FENOC".
Add "DPR-66" to the upper left corner of the Operating License e
pages that currently do not contain this designation.
- Renumber the Operating License pages following the current page 4 so that the numbering is sequential; delete the words 4
"(next page is 6)".
Page format revisions and page repagination will be performed as necessary to permit incorporation of additional text and to make the page format consistent in the document.
Additional pages may be added as necessary as a result of these changes.
1 For BVPS Unit No. 1 Anoendix B
- Revise the page containing information on the deletion of Appendix B
by replacing the words "this amendment" with
" Amendment No. 93"; delete the words "See Amendments Nos. 25, 64, 66 and 77."; delete the words " Beaver Valley Unit 1" from the bottom left corner of the page.
B-2
ATTACHMENT B, continu1d License Amendment Request Nos. 269 and 144 Page 3
- Add."DPR-66" to-the upper left corner of the page specifying that Appendix B was deleted.
For BVPS Unit No. 1 Accendix C e Revise the first paragraph of Appendix C to replace the reference to "Duquesne Light Company" with "The FirstEnergy Nuclear Operating Company"; add the word "The" preceding the words " Ohio" and " Pennsylvania".
Add "DPR-66" to the upper left corner.C the Appendix C page.
e f
For BVPS Unit No. 2 Facility Operatina License e Revise the heading to add "THE FIRSTENERGY NUCLEAR OPERATING COMPANY"; replace the reference to "Duquesne Light" with "The Pennsylvania Power"; add the word "The" preceding the " Ohio Edison Company".
- Revise paragraph 1.A to remove - the words "Duquesne Light Company". and add "The FirstEnergy Nuclear Operating Company (FENOC)"; replace the words "for itself" with the words "on its own behalf";. add the words "The Pennsylvania Power Company, The" preceding the words " Ohio Edison Company".
Modify the footnote designated by a
single asterisk by replacing the reference to the "Duquesne Light Company (DLCo)"
with "FENOC"; add the words "The Pennsylvania Power Company, The" preceding the words " Ohio Edison Company"; move the word
" Illuminating" to follow the word " Electric".
- Revise paragraph 1.E to replace the reference to "Duquesne Light Company" with "FENOC".
- Revise paragraph 2 to replace the reference to "the Duquesne Light Company" with "FENOC"; add the wordn "The Pennsylvania Power. Company, The" preceding the words " Ohio Edison Company".
- Revise paragraph 2.A by adding the words "The Pennsylvania l
Power Company, The" preceding the words " Ohio Edison Company";
delete the words "and owned" preceding the words "and operated by"; replace the reference to "the Duquesne Light Company" with "FENOC" following the words " operated by"; replace the reference to "Duquesne Light Company's" with "FENOC's" preceding the words " Final Safety Analysis Report".
Revise paragraph 2.B.(1) to replace the reference to "Duquesne Light Company" with "FENOC".
B-3
c.
ATTACHMENT B, continuzd License. Amendment Request Nos. 269 and 144
]
l
.Page 4 I
i i
[
Revise paragraph 2.B.(2) ~by adding the words "The Pennsylvania Power Company, The" preceding the words " Ohio Edison Company".
l
- Revise' paragraphs 2.B.(3),
2.B.(4),
2.B. (5) and 2.B.(6) to L
replace references to "Duquesne Light Company" with "FENOC".
l l
- Revise paragraph 2.B.(7)(a) to replace the reference to I
"Duquesne Light company,"
with "The Pennsylvania Power Company, The".
- Revise paragraph 2.C.(1) to replace the reference to "DLCo" with "FENOC".
Revise paragraph 2.C.(2) to read "as revised through Amendment j
No. (to be added by NRC)....";
replace the reference to "DLCO" with "FENOC".
- Revise paragraph 2.C.(11) to read "as revised through Amendment No. (to be added by NRC)..."; replace the letter "D" with the letter "C"
following the word " Appendix"; replace the j
l reference to "Duquesne Light Company" with "FENOC".
j l
Revise paragraphs 2.E and 2.F to replace references to "DLCo" with "FENOC".
i
- Delete the words " Beaver Valley Unit 2"
from the bottom left corner of the current Operating License page numbers 4 and 5.
Add the following to the list of
Enclosures:
"3. Appendix C Additional Conditions".
- Add "NPF-73" to the upper left corner of pages that currently do not contain this designation.
- Renumber the pages following the current page 3 so that the numbering is sequential.
Page format revisions and page repagination will be performed as necessary to permit incorporation of additional text and to make the page format consistent in the document.
Additional l
l pages may be added as necessary as a result of these changes.
For BVPS Unit No. 2 Anoendix B Revise the cover page by replacing the reference to "Duquesne Light Company" with "FIRSTENERGY NUCLEAR OPERATING COMPANY".
B-4
ATTACHMENT B, continuad License Amendment Request Nos. 269 and 144 Page 5 On page number one of Appendix B, add a second asterisk to the words "EPP*"
following the words "do not involve a change in the".
- Revise the footnote on the bottom of page number one by replacing the words "Duquesne Light Company, owner and" with "The FirstEnergy Nuclear Operating Company,"; add the words "The Pennsylvania Power Company, The" precedi.1g the words
" Ohio Edison Company"; delete the word "also" preceding the word " owners of the facility".
- Add a second asterisk to the footnote pertaining to the requirements of 50.59; move this footnote to the previous page.
Delete the word "of" following the word " magnitude" in Section 5.4.2; delete the letter "s" from the word "others" preceding the word " Federal" also contained in Section 5.4.2.
- Add "NPF-73" to the upper left corner of pages that currently do not contain this designation.
Page format revisions and page repagination will be performed as necessary to permit incorporation of additional text and to make the page format "onsistent in the document.
Additional pages may be added as :. cessary as a result of these changes.
For BVPS Unit No. 2 ADoendix D Revise the title of " Appendix D" to " Appendix C".
- Revise the first paragraph of proposed Appendix C to replace the reference to "Duquesne Light Company" with "The FirstEnergy Nuclear Operating Company, The Pennsylvania Power Company, The".
Add "NPF-73" to the upper left corner of the page.
B.
DESIGN BASES This amendment request revises the Facility Operating License and Appendices excluding Appendix A (Technical Specifications).
This amendment request does not involve a
change to a
- system, l
structure or component at BVPS Unit Nos. 1 and 2.
Therefore, wording pertaining to " Design Bases" is not applicable to this amendment request.
l B-5
p ATTACHMENT B,Lcontinu1d I
License Amendment Request Nos. 269 and 144
.Page 6
(
C.
JUSTIFICATION The following are paragraphs. containing justifications for administrative changes:
The' proposed amendment will transfer.
and authorize The Pennsylvania Power-Company (Penn Power) to possess The Duquesne Light company's (DLC's) 47.5% interest ~ in BVPS Unit No. 1 snd 13.7% interest in BVPS Unit No.
2.
In. addition the proposed amendment will transfer and authorize FENOC to operate BVPS Unit l
Nos..
1 and 2
under. essentially the same conditions and authorization included in the existing licenses.
The proposed changes to. the Facility Operating License and Appendices. (as applicable) are necessary to reflect that FENOC will replace DLC as the operator of BVPS Unit Nos. 1 and 2.
The addition of Penn Power'to the BVPS Unit No. 2 Facility Operating License including Appendices B and D (current designation) is necessary to reflect
-transfer of DLC's ownership of BVPS Unit No. 2 to Penn. Power.
For BVPS Unit No. 1 only, the proposed change to paragraph 1.A of l
the Operating License to add the words " acting on its own behalf l
and as agent f or The" is necessary to reflect that FENOC will only operate the facility.
FENOC will not be an owner of the facility.
The current wording reflects that DLC is the operator and is one of the owners of the facility.
For BVPS Unit No. 1 only, the proposed change to paragraph 2.A of the Operating License to replace the words "the licensees" with "The Ohio Edison Company and The Pennsylvania Power Company," is necessary since all the licensees will not be owners of BVPS Unit No.
1.
FENOC will be a licensee but not an owner of BVPS Unit No.
1.
For BVPS Unit No. 2 only, the proposed change to paragraph 2.A of the Operating License to delete the words "and owned" is necessary to reflect that FENOC will only operate the facility.
FENOC will not own any portion of the facility.
The current wording reflects that DLC is the operator and is one of the owners of the facility.
The addition of the single asterisk footnote specified in the BVPS Unit No. 1 Facility Operating License is necessary to delineate that-FENOC is authorized to operate BVPS Unit No. 1 on behalf of the Owners.
This proposed footnote wording is consistent with the footnote currently contained in the BVPS Unit No. 2 Facility Operating License.
For BVPS Unit No. 1 only, the deletion of reference to DLC as an owner in paragraph 2.B. (1) is necessary to reflect that transfer I
of ownership to Penn. Power.
DLC will no longer be an owner of i
either facility.
l B-6 i
)
ATTACHMENT B, continutd License Amendment Request Nos. 269 and 144 Page 7 For BVPS Unit No. 2 only, the proposed change to the footnote on page number one of Appendix B pertaining to the deletion of the words " owner and" and "also" is necessary to reflect that FENOC will only operate the facility.
FENOC will not own any portion of the facility.
The following are paragraphs containing justifications for changes that are editorial in nature and do not affect plant safety:
The addition of the word "The" preceding each reference to the
" Ohio Edison Company" and the " Pennsylvania Power Company" is being proposed tc make the references to the various companies consistent in 1
- q Facility Operating Licenses.
For BVPS Unit No. 1 only, the moving of the words " Amendment No."
from the current location on page number one of the operating License to the bottom right corner of the page is necessary to make the amendment number location consistent throughout the document.
For BVPS Unit No. 2 only, the proposed change to paragraph 1.A of the operating License to revise the words "for itself" with the words "on its own behalf" is an editorial change.
This proposed wording is another method of conveying the same meaning.
The moving of the word
" Illuminating" to follow the word
" Electric" in the BVPS Unit No.
2 footnote on page 1 of the Facility Operating License, is necessary to reflect the correct title of The Cleveland Electric Illuminating Company.
The proposed revision to paragraph 2.C.(2), to reflect the latest amendment number for Appendix A,
is editorial change.
Each amendment to Appendix A
contains wording in the amendment issuance document that specifically states that paragraph 2.C. (2) of the Facility Operating License is revised to reflect the applicable amendment.
The issuance documentation for Amendment Number 221 (BVPS Unit No. 1) and Amendment Number 98 (BVPS Unit No. 2) contains wording that reflects that paragraph 2.C.(2) has been revised to state these amendment numbers.
It should be noted that the Amendment Numbers 221 (BVPS Unit No. 1) and 98 (BVPS Unit No.
2) may be superseded by future amendments to Appendix A.
Therefore, the proposed wording indicates that the number will be added by the NRC to permit the latest amendment number to be incorporated in this paragraph upon issuance of this amendment.
For BVPS Unit No.
1 only, the proposed deletion of the first paragraph designated as 2.C.(3),
pertaining to the Auxiliary River Water, is necessary to eliminate two license conditions with the same designation.
The first paragraph 2.C.(3) was deleted by Amendment No.
S.
Therefore, this information is no longer relevant to the operating License.
B-7
ATTACHMENT B, continusd License Amendment Request Nos. 269 and 144 Page 8 For BVPS Unit No.. 1 only, the proposed change to paragraph 2.C.(5) of the Operating License to replace the words "The license" and "the licensee" with "FENOC" makes this license condition more specific and adds consistency to the license conditions.
FENOC is the licensee that has exclusive responsibility and control over the physical construction, operation and maintenance of the facility.
Therefore, it is appropriate to specify FENOC in place of the term " licensee".
The proposed revision to paragraph 2.C.(10)
(BVPS Unit No. 1)/
2.C.(11) (BVPS' Unit No. 2) to reflect the latest amendment number for Appendix C (note BVPS Unit No. 2 currently specifies this appendix by the letter "D")
is editorial in nature.
Each amendment which adds a condition to Appendix C contains_ wording in the amendment issuance document that specifically states-that paragraph 2.C. (10) /2.C. (11) of the Facility Operating License is revised to reflect the applicable amendment.
The issuance documentation for Amendment Number 210 (BVPS Unit No. 1) and 98 (BVPS Unit No. 2) contains wording that reflects these amendment numbers.
It should be noted that the Amendment Numbers 210 (BVPS Unit No. 1) and 98 (BVPS Unit No. 2) may be superseded by future amendments to Appendix C.
Therefore, the proposed. wording indicates that the number will be added by the NRC to permit the latest amendment number to be incorporated in this paragraph upon issuance of this amendment.
For BVPS Unit No. 1 only, the proposed change to paragraph 2.D of the Operating License to replace the words "The licensee" with "FENOC" makes this license requirement more specific.
FENOC is the licensee that has exclusive responsibility and control over the physical construction, operation and maintenance of the facility.
Therefore, it is appropriate to specify FENOC in the
}
place of the term " licensee".
l For BVPS Unit No. 2 only, the addition of Appendix C to the list of Enclosures to the Operating License is necessary to make the list complete.
Appendix C was added by Amendment No. 83 and, therefore, became an Enclosure to the Operating License.
The proposed revision to the BVPS Unit No.
1 page containing information about the deletion of Appendix B, will state the specific Amendment Number which eliminated Appendix B in its entirety.
The proposed revision will remove the vague wording currently stated on this page.
The removal of reference to Amendment Nos.
25, 64, 66 and 77 will delete unnecessary information concerning the various revisions to Appendix B.
The NRC's Safety Evaluation for Amendment No.
93 contains the references to these four Amendments.
Therefore, this historical information does not need to be stated on this page.
i For BVPS Unit No. 2 only, the proposed change to designate the l
Appendix D as Appendix C is being made to ensure the Appendices B-8 l
ATTACHMENT B, continund License Amendment Request Nos. 269 and 144 Page 9 to the Operating License are lettered sequentially.
Currently, Appendix C is not contained in the Operating License.
only, the proposed addition of a second l
For BVPS _ Unit No.
2 asterisk to the footnote in Appendix B
pertaining to the requirements of 50.59
_is necessary because there are two footnotes in Appendix B designated by a single asterisk.
This footnote is currently contained on page number two of Appendix B but applies. to wording on page number one concerning " Plant Design and Operation".
When this footnote is moved to the correct page, there would be two footnotes designated by the same symbol.
Therefore, to provide clarification on the application of the footnotes in Appendix B, this footnote would be designated by double asterisks.
Paragraph 5.4.2 of Appendix B would be revised by deleting the word "of" following the word " magnitude" and deleting -the "s" from the word "others" preceding the word
" Federal".
These changes are necessary to correct errors in grammar.
The proposed deletion of the words " Beaver Valley Unit 1"
from the page containing information on the deletion of Appendix B and the proposed deletion of the words " Beaver Valley Unit 2"
from the current Operating License pages 4 and 5, is necessary to make these pages consistent with the other Operating License pages.
These pages will' contain the license number which can be referenced back to the facility's name by utilizing the first page of the Operating License.
The addition of the license number (as applicable) to the top left corner of each operating license page including Appendices is editorial.
The operating license number is used for the purpose of document identification.
This proposed change does not affect the requirements specified in the Facility Operating License and associated Appendices.
The renumbering of the pages in the Facility Operating License is necessary in order to have the page numbers in sequential order.
The note on page number 4 of the BVPS Unit No.
1 Operating License stating that the "next page is 6"
is no longer required j
with the renumbering of the pages, i
The revision to page format, page repagination and the addition of new pages, as necessary, will permit the addition of new text j
and make the appearance of the document consistent.
These type of changes are editorial in nature.
D.
SAFETY ANALYSIS The proposed license changes involving the deletion of references to DLC as an owner and operator of BVPS Unit Nos. 1 and 2, the addition of FENOC as the operator of BVPS Unit Nos. 1 and 2, and the addition of Penn Power to the BVPS Unit No.
2 Operating License as an owner are administrative in nature.
These changes B-9
i l
ATTACHMENT B, continusd License Amendment Request Nos. 269 and 144 j
Page 10 i
i are considered administrative since the proposed changes ensure an. equivalent level of authority and independence where appropriate.
These proposed license changes do no more than l
reflect the license transfer and do not directly affect actual i
operating methods and actual operation of the facility.
Therefore, these license changes fall under the guidance of the NRC's generic
- finding, stated in the Federal Register (63
)
FR 66728), that for the purposes of 10 CFR 50.58 (b) (5), 50.91 and 50.92, and 72.46 and 72.50, administrative amendments pertaining to license transfer do not involve a
"significant hazards consideration" or a " generic issue consideration".
1 The remaining changes to the Operating License and associated Appendices, that do not directly pertain to the transfer of operating authority or transfer of plant ownership, are editorial in nature and do not affect plant safety.
Therefore, this proposed amendment does not adversely affect nuclear safety or safe plant operations.
E.
NO SIGNIFICANT HAZARDS EVALUATION The no significant hazard considerations involved with the proposed amendment have been evaluated.
The evaluation focusing on the three standards set forth in 10 CFR 50.92(c) are as quoted below:
The Commission may make a final determination, pursuant to the procedures in paragraph 50.91, that a proposed amendment to an operating license for a
facility licensed under paragraph 50.21(b) or paragraph 50.22 or for a
testing facility involves no significant hazards consideration, if I
operation of the facility in accordance with the proposed amendment would not:
(1)
Involve a significant increase in the probability or consequences of an accident previously evaluated; or (2)
Create the possibility of a new or different kind of accident from any accident previously evaluated; or (3)
Involve a significant reduction in a margin of safety.
l The following evaluation is provided for the no significant l
hazards consideration standards.
1.
Does the change involve a
significant increase in the probability or consequences of an accident previously evaluated?
The proposed amendment does not involve a
significant increase in the probability of an accident previously evaluated because no accident initiators or assumptions are B-10 l
l
ATTACHMENT B, continusd
. License Amendment Request Nos. 269 and 144 Page 11 affected.
The proposed changes, which are administrative, nave no direct effect on any plant systems.
All Limiting Conditions for Operation, Limiting Safety System Settings, and Safety Limits specified in the Technical Specifications will remain unchanged.
The remaining changes are editorial 1
in nature and do not affect plant safety.
The -proposed amendment does not involve a
significant increase in the consequences of an accident previously evaluated because no accident conditions or assumptions are affected.
The proposed changes do not alter the source term, containment isolation, or allowable radiological consequences.
The proposed changes are administrative or editorial in nature and have no adverse effect on any plant system.
Therefore, operation of the facility in accordance with the proposed amendment does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2.
Does the change create the possibility of a new or different kind of accident from any accident previously evaluated?
The proposed amendment does not create the possibility of a new or different kind of accident from any accident previously evaluated because no new accident initiators or assumptions are introduced by the proposed changes.
The proposed changes, which are administrative or editorial in nature, have no direct effect on any plant systems.
The changes do not affect the reactor coolant pressure boundary and do not affect any system functional requirements, plant maintenance, or operability requirements.
Therefore, operation of the facility in accordance with the proposed amendment will not create the possibility of a new or different kind of accident from any accident previously evaluated.
3.
Does the change involve a significant reduction in a margin of safety?
The proposed amendment does not involve a
significant reduction in the margin of safety because the proposed changes do not involve new or significant changes to the initial conditions contributing to accident severity or consequences.
The proposed
- changes, which are administrative, have no direct effect on any plant systems.
The remaining changes are editorial in nature and do not affect plant safety.
Therefore, the proposed amendment does not involve a
significant reduction in a margin of safety.
B-11
E l
ATTACHMENT B, centinusd License Amendment Request Nos. 269 and 144 l-Page 12 l
F.
NO SIGNIFICANT HAZARDS CONSIDERATION DETERMINATION Based on the considerations expressed above, it is concluded that
- the activities associated with this license amendment request satisfy the requirements of 10 CFR 50.92(c) and, accordingly, a no significant hazards consideration finding is justified.
G.
ENVIRONMENTAL CONSIDERATION The proposed administrative amendment pertaining to transfer of the BVPS Unit Nos. 1 and 2 licenses is exempt from environmental
- review, because it falls within the categorical exclusion appearing at 10 CFR
- 51. 22 (c) (21) for which neither an.
Environmental Assessment nor an Environmental Impact Statement is required.
Moreover, the proposed amendment does not involve a change that would directly affect the actual operation of BVPS
-1
' Unit Nos. 1 and 2 in any substantive way.
The proposed amendment does.not involve an increase in the amounts, or a change in the
. types, of any radiological effluents that may be allowed to be released offsite, and involves no increase in the amounts or change in the types of non-radiological effluents that may be released offsite.
- Further, there' is no increase in the individual or cumulative occupational radiation exposure, and the proposed amendment has no environmental impact.
H.
UFSAR' CHANGES Changes necessary to accommodate this proposed amendment will be incorporated into the UFSARs, in accordance with 10 CFR 50.71(e) following NRC approval and transfer of the Operating License to FENOC.
i B-12
i l
=
2 1
ATTACHMENT C 1
I J
l l
l
f[,..
1
)
l CONFORhED COPY j
l 1
)
I 1
l NUCLEAR GENERATION CONVEYANCE AGREEMENT by and between DUQUESNE LIGHT COMPANY, on the one hand, and
~
PENNSYLVANIA POWER COMPANY and THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, on the other Dated as of March 25,1999
n TABLE OF CONTENTS East ARTICLE I DEFINITIONS...
...2 1.1 Definitions
.2 1.2 Certain Interoretive Matters 24 1.3 CAPCO Anreements to Govern 24 1.4 DLCs Interest in Assets.,
, 24 ARTICLE II CONVEYANCE OF DLC NUCLEAR ASSETS 25 2.1 Transfer of DLC Nuclear Assets..
. 25 2.2 Ex. cluded Assets..
. 26 2.3 Aemmed Liabilities 28 2.4 Excluded I inhilitiaa.
..............30 2.5 fontrol of f itiaatinn.
. 31 2.6 Fuel Supokes 32 2,7 Inventories 32 2.8
[ Intentionally Omitted.)....
.32 2.9 Spent Nudaar Fuel Fees and Ownershio
.. 32 2.10 Deoartment of Enerav Decontammation and Decommissioning Fees.. 33 2.11 Prooerty Tax Litination...
33 ARTICLE III THE DLC NUCLEAR CLOSING..
. 33 3.1 DLC Nuclear Closina 33 3.2 Cale>1ation of DLC Nuclear Closina Payments 34 i
3.3 Payment of DLC Nuclear Closina Payment 35 35 3.4 Prorations..
3.5 Audit Cooocration...
36 3.6 Deliveries by Soecified FE Subsidiaries
. 36 37 3.7 Deliveries by DLC...
39 3.8 Work in Proaress 39 3.9 And11 mrv Anreements.
i
ARTICLE IV REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF DLC 39
4.1 Incomoration
Ouahfication
... 39 4.2 Authority 39 4.3 Consents and Anorovals: No Violation 40 4.4 Insurance 40 4.5 DLC Real Prooenv Leases 40 4.6 Environmental Matters.
40 4.7 Real Proceny 42 4.8 Condemnation.
42 4.9 Contracts and Leases
. 42 4.10 Lenal ProWinan
. 43 4.11 Pernuts...
. 43 4.12 IREE.....
44 4.13 Intellectual Proceny
. 44 4.14 Comoliance With Laws
. 44 4.15 DISCLAIMERS REGARDING DLC NUCLEAR ASSETS
. 44 4.16 Year 2000 Comoliance
... 45 4.17
[ Intentionally Omitted.]
45 4-18 Caoital Exoenditures 45 4.19 Labor Matters..
45 4.20 Benefit Plans: ERISA 46 4.21 DLC Oualified Decommissioninn Funds 46 4.22 DLC Nonenalified Decommissioning Funds
. 48 4.23 DLC Nuclear Law Matters
. 49 ARTICLE V REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SPECIFIED FE SUBSIDIARIES,....
50 l
5.1 Incorooration
Oualification 50 l
50 5.2 Authority 5.3 Consents and Acorovals: No Violation 50 5.4 Lenal Proceedinas.
51 I
5.5
[ Intentionally Omitted).
51 5.6 WARN Act.
51 5.7 R=datory Status of Soecified FE Subsidiaries 51 5.8 SoMfied FE Subsidiaries' Nuclear Law Matters.
51 l
l ii I
i
e ARTICLE VI-COVENANTS OF THE PARTIES..
52 p
6.1.1 Interim Ooeration of Beaver Vallev 52 6.1.2 Interim Operation of Perry Unit 1
. 54 6.2 Access to Information.
. 54 6.3' Confidentia'ity.
. 54 -
6.4 Pubhc Statements 55 55 6.5 Expenses.....
6.6 Further Assurances.
55 1
. 56 6.7 Cnnannte and Anorovals 6.8 Fees and Comnussions......
58 6.9 Tax Matters...
58 6.10 Advice ofChanges 59 59 6.11 DLC Employees........
6.12 Risk ofLoss
. 64 64 6.13 CAPCO Agreements...........
6.14 PaAmd of Accrued Interest in Inmrance Premiums
........ 64 6.15 Oneratino Cantrol...............
..... 64
.6.16 Beaver Vallev Unit 2 Facility Leases.
.- 64 65 6-17 Tax Exempt Financmg 6.18 Famaval at SlJee:rmert Site Buddmas..
67 67 6.19 Decommissionmg Funds.....,......
6.19.1 Beaver Vallev Unit 1 Dm-i:==iona Funds..
67 l
6.19.2 - Beaver Vallev Unit 2 D-x- -i ::daria Fundt
. 70 1
6.19.3 Peny Unit 1 Doccu Adonino Funds.
73 6.20 Fmnlovee Morale.
75 6.21 Beaver Vallev Omnibus Services Aurement and Related Easements 75 ARTICLE VII
. 76 CONDITIONS.........
7.1 Canditions to Obliantions of the Parties 76 i
7.2 Conditions to Oblications of DLC
. 76 l-7.3 Conditians to Oblications of Seacinad FE Subsidiaries..
78 ARTICLE VIII
. 80 INDEMNIFICATION..
80 8.1 GeneralIndamnine= tion Obhgations.
- 8.2 Indamnincatian and Pala==* of DLC by Snacinad FE Subsidiaries 80
. 8.3 Ir hirT = tion of SnacinM FE Sub=idiaries by DLC.
81 iii e;
v-s.'
't -
l l
8.4 Certam Limitations on Indemnification 81 8.5
' Defense of Claims..
82 ARTICLE IX TERMINATION.
84 9.1 Termination.
. 84 9.2 Procadure and Effect of No-Daf= nit Termination.
85 ARTICLE X MISCELLANEOUS PROVISIONS 86 10.1 Ammiment and Modification 86 l
10.2 Waiver of Comoliance: Consents..
86 10.3 No Survival 86-10.4 Notices........
86 87 10.5 Assignment....
10.6 Govemmn Law.
. 87 88 10.7 Counterparts..
88 10.8 Interpretation..
88 10.9 ScMlae and Exhibits 88 10.10 Entire Agreement..
10.11 U S. Dollars..
88 10.12 Sewane Facilities.
88 10.13 Bulk Sales Laws.
89 iv
NUCLEAR GENERATION CONVEYANCE AGREEMENT NUCLEAR GENERATION CONVEYANCE AGREEMENT, dated as of March 25,1999
(" Aareement"), by and between Duquesne Light Company ("DLC"), a Pennsylvania corporation, on the one hand, and Pennsylvania Power Company ("Penn Power"), a Pennsylvania corporation and The Cleveland Electric Illumir:aing Company ("ClLC"), an Ohio corporation, on the other. DLC, on the one hand, and Penn Power and CEIC, on the other, are referred to individually as a ".Pyty,"
and collectively as the " Parties "
W IIN E S S EIll WHEREAS, DLC and FE (as hereinaRer defined), acting on behalfof the FE Subsidiaries (as hereinafter defined) have entered into an agreement in principle dated October 14,1998 (the
" Agreement in Princiole"), regarding the exchange ofinterests in certain electric generation facilities; and WHEREAS, in order to implement the Agreement in Principle with respect to DLC's nuclear generating assets which are subject to thejurisdiction of the NRC (as hereinafter defined), the Parties desire to set forth in this Agreement the definitive terms and conditions pursuant to which DLC agrees to transfer to and convey, and Penn Power and CEIC agree to assume, all of DLC's right, title and interest in and to certain plants (Beaver Valley Unit 1, Beaver Valley Unit 2, SAPS and Perry Unit 1, as each is hereinafter defined), as well as DLC's rights and obligations as operator of Beaver Yalley Unit 1 and Beaver Valley Unit 2; and WHEREAS, in order to implement the Agreement in Principle with respect to certain fossil fueled power plants, simultaneously with the execution of this Agreement, DLC and the FE Subsidiaries will enter into the Generation Exchange Agreement (the "Exchanne Agreement") dated as of the date hereof, in the form of Exhibit A, pursuant to which DLC will exchange its undivided interests in certain electric generation plants operated by the FE Subsidiaries (W.H. Sammis Unit No.
7, Bruce Mansfield Units Nos.1,2 & 3, and Eastlake Unit No. 5) for the interests of certain of the FE Subsidiaries in electric generation plants in Avon Lake, Ohio, New Castle, Pennsylvania and Niles, Ohio; and WHEREAS, simultaneously with the execut on ofthis Agreement, DLC and FE will enter into i
the FE Support Agreement, and DLC, FE and the FE Subsidiaries will enter into the CAPCO Settlement Agreement and the Electric Facilities Agreement (as each is hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:
7
~.
L ARTICLE I DEFINITIONS l
1.1 Definitions. As used in this Agreement, the following terms hgve the meanings specified in this Section 1.1.
.(1)
" Affiliate" has the meaning set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.
(2)
" Agreement" means this Nuclear Generation Conveyance Agreement, together with the Schedules and Exhibits hereto, as the same may be from time to time amended.
(3)
" Anreement in Princiole" has the meaning set forth in the preamble to this Agreement.
l (3A) " Amendment 2 to the C APCO Perry Uni' 1 Ooeratina Anreement" means the Amendment 2 to the CAPCO Perry Unit 1 Operating Agreement, substantially in the form of Exhibit J hereto, to be entered into between DLC and CEIC at the time this Agreement is l
executed.'
(4)
" Ancillarv Anreements" means the CAPCO Settlement Agreement and the Electric Facilities Agreement and, in respect of each Plant, the Assignment and Assumption Agreement, the Bill of Sale, the FIRPTA Affidavit, the Warranty Deed (s) with respect to such Plant and, in the case of Beaver Valley, the Beaver Valley Omnibus Services Agreement, in each case as the same may be from time to time amended.'
l (5)
"ANI" means American Nuclear Insurance, or any successor entity.
(6)
"Assianment and Assumotion Anreement" means an Assignment and Assumption Agreement in respect of each Plant between DLC and the applicable Specified FE Subsidiary, substantially in the form of Exhibit B hereto, by which DLC shall, subject to the terms and conditions hereof, assign the DLC Nuclear Agreements, certain intangible assets and other DLC Nuclear Assets in respect ofeach Plant to the applicable Specified FE Subsidiary, and whereby such Specified FE Subsidiary shall assume the Assumed Liabilities in respect of each Plant.
(7)
" A=enmed Decommissioninn Liabilities" has the meaning set forth in Section 2.3(f).
(8)
"A==umed Environmental Liabilities" has the meaning set forth in Section 2.3(c).
2
r.
1
.=
l l
l
.(9)
" Assumed Liabilities" has the meaning set forth in Section 2.3.
L l
(10)
" Assumed Nuclear Liabilities" has the meaning set forth in Section 2.3(g).
(11). " Assumt ' Soent Fuel Liabilities" has the meaning set fonh in Section 2.3(h).
(12)
" Atomic Enerav Act" means the Atomic Energy Act of 1954, as amended.
(13)
" Beaver Valley" means, collectively, Beaver Valley Unit 1, Beaver Valley Unit 2 and SAPS.
(14)
[ Intentionally Omitted.]
(15)
" Beaver Vallev CAPCO Aareements" means all the contractual arrangements associated with CAPCO relating to Beaver Valley, including those contracts listed on Schedule 1.1 (15).
(16)
" Beaver Vallev Switchvard Assets" means the real and personal assets described.in Schedule 2.2(a).
(17)
[ Intentionally Omitted.]
(18)
" Beaver Vallev Omnibus Services Aareement" means the Beaver Valley Omnibus Services Agreement substantially in the form of Exhibit F hereto, to be entered into between Penn Power and DLC as of the DLC Nuclear Closing Date.
L (19)
" Beaver Vallev Unit 1" means the nuclear generating plant known as Beaver Valley Power Station Unit No.1, including such plant's fifty percent (50%)
l l
undivided interest in the Common Facility Assets.
(20)
" Beaver Vallev Unit 1 Decommissionina Amount" has the meaning set i
forth in Section 6.19.1 (a) (i).
(21)
" Beaver Vallev Unit 1 Decommissionina Shortfall" has the meaning set forth in Section 6.19.1 (a)(i).
(22)
" Beaver Vallev Unit 1 Nonanalified Decommissionina Funds" means one or more external trust funds that do not meet the requirements of Code section 468A and Treasury Regulations section 1.468A-5, maintained by DLC with respect to Beaver Valley Unit I prior to the DLC Nuclear Closing.
(23)
" Beaver Vallev Unit i Oualified Decommissioninn Fund" means the external trust fund that meets the requirements of Code section 468A and Treasury I
3 L
g 3
Regulations section 1.468 A-5, maintained by DLC with respect to Beaver Valley Unit 1 prior to the DLC Nuclear Closing.
(24)
" Beaver Vallev Unit 2" means the nuclear generating plant known as Beaver Valley Power Station Unit No. 2, including such plant's fifty percent (50%)
undivided interest in the Common Facility Assets.
(25)
" Beaver Vallev Unit 2 Decommissioninn Amount" has the meaning set forth in Section 6.19.2 (a)(i).
(26)
" Beaver Vallev Unit 2 Decommissioning Shonfall" has the meaning i
1 set forth in Section 6.19.2 (a)(i).
(27)
" Beaver Vallev Unit 2 Facility Leases" means, collectively, the seven i
(7) facility leases with respect to Beaver Valley Unit 2, dated as of September 15, 1987, each by and between the Beaver Valley Unit 2 Owner Trustee and DLC, as amended.
(28)
" Beaver Vallev Unit 2 Foreclosure" means any foreclosure, forfeiture or similar proceeding the occurrence of which is pursuant to the Beaver Valley Unit 2 Lease Indentures.
(29)
" Deaver Vallev Unit 2 Indentures Notes" has the meaning set forth in Section 6.16(a).
(30)
" Beaver Vallev Unit 2 Indentures Suonort Agreement" means the Beaver Valley Unit 2 Indentures Suppon Agreement substantially in the form of Exhibit I.
(31)
" Beaver Vallev Unit 2 Indentures Trustee" means Irving Trust Company, as indenture trustee, under each of the Beaver Valley Unit 2 Lease Indentures, and any successor indenture trustee appointed in accordance with the terms of the Beaver Valley Unit 2 Lease Indentures.
(32)
" Beaver Vallev Unit 2 Lease Indentures" means, collectively, the seven (7) trust indenture, mortgage, security agreements and assignments of facility lease, l
dated as of September 15,1987, between State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), a national banking association, not in its individual capacity, but solely as trustee under those cenain trust agreements dated as of September 15,1987 with the owner participants thereto as set forth therein, and The Bank of New York (successor in interest to Irving Trust Company), a New York banking corporation, as the indenture trustee, as such may be amended, modified, supplemented or restated from time to time.
l 4
.(33)
" Beaver Vallev Unit 2 Lease Indentures Documents" means all contractual arrangements implementing the sale-leaseback in respect ofBeaver Valley Unit 2, including those documents described in Schedule 1. l(33).
(34)
" Heaver Vallev Unit 2 Nonaualified Decommissioninn Funds" means the external trust funds that do not meet the requirements of Code section 468 A and Treasury Regulations section 1.468A-5, maintained by DLC with respect to Beaver Valley Unit 2.
(35)
Beaver Vallev Unit 2 Ooeratina Anreement" means the Operating Agreement - Beaver Valley Unit I and Beaver Valley Unit 2, as amended and restated as of September 15, 1987, by and between CEIC, DLC, Ohio Edison Company, an Ohio corporation, Penn Power, and The Toledo Edimn Company, an Ohio corporation, as such may be amended, modified, supplemented or restated from time to time.
(36)
" Beaver Vallev Unit 2 Owner Trustee" means First National Bank of Boston, as owner trustee under each of the Beaver Valley Unit 2 Facility Leases.
(37)
" Beaver Vallev Unit 2 Onalified Decommissioninn Funds" means the external trust funds that meet the requirements of Code section 468A and Treasury j
Regulations section 1.468 A-5, maintained by DLC with respect to Beaver Valley Unit 2.
(38)
" Benefit Plans" means with respect to each Party, each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each severance or termination pay, medical, surgical, hospitalization, life insurance and other " welfare" plan, fund or program (within the meaning of Section 3(1) ofERIS A) each profit-sharing, stock bonus or other " pension" plan, fund or program (within the meaning of Section 3(2) of ERISA), each employment, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or ar-rangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by such Party or by any ERISA Affiliate.
(39)
"Billgf.Sals" mear s a Bill of Sale, substantially in the form of Exhibit C hereto, to be delivered by DLC to each of Penn Power and CEIC at the DLC Nuclear Closing, with respect to Tangible Personal Property included in the DLC Nuclear Asuts transferred to such Specified FE Subsidiary at the DLC Nuclear Closing.
(40)
" Bond Counsel" has the meaning assigned thereto in Section 6.17(b)(i).
(41)
" Business Day" means any day other than Saturday, Sunday and any day which is a day on which banking institutions in the Commonwealth of 5
~.c i
L l
Pennsylvania or the State ofOhio are authorized by law or other governmental action l
to close.
l (42)
"Bvoroduct Material" means any radioactive material (except Special l
Nuclear Material) yielded in, or made radioactive by, exposure to radiation in the process of producing or utilizing Special Nuclear Material.
(43)
"C APCO" means the Central Area Power Coordination Group.
(44)
"C APCO Anreements" means, coll :vely, the Beaver Valley C APCO l
Agreements and the Perry CAPCO Agreements.
l (45)
"CAPCO Settlement Anreement" means that certain CAPCO l
Settlement Agreement executed by DLC and each applicable FE Subsidiary, l
substantially in the form of Exhibit H hereto.
(46)
"Caoital Excenditures" means capital additions to or replacements of property, plant and equipment included in the DLC Nuclear Assets and other l
expenditures or Wairs on property, plant and equipment included in the DLC Nuclear i
Assets that would be capitalized by a party in accordance with its normal accounting policies.
"CEIC" means The Cleveland Electric Illuminating Company, an Ohio j
(47) corporation.
l (48)- "CEIC NonanMed Decommissioninn Funds" means the external trust funds that do not meet the requirements of Code section 468A and Treasury Regulations section 1.468A-5, maintained by CEIC.
(49)
"CEIC Oualified Decommissioninn Funds" means the external trust funds that meet the requirements of Code section 468A and Treasury Regulations section 1.468A-5, maintained by CEIC with respect to Perry Unit 1.
(50)
" CERCLA" means the Federal Comprehensive Environmental Response, Compensation, and Liability Act,42 U.S.C. Section 9601 et seq., as l
amended.
(51)
" COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1984.
l (52)
" COBRA Continuous Coverane" means the requirements of Section 4980B(f) of the Code.
(53)
" fads" means the Internal Revenue Code of 1986, as amended.
6
(54)
" Collective Barnaining Agreement" has the meaning set fonh in Section 6.11(d).
(55)
" Commercially Reasonable Effonli" means efforts which are reasonably within the contemplation of the Parties at the time of executing this Agreement and which do not require the performing Party to expend any funds other than expenditures which are customary and reasonable under the circumstances in transactions of the kind and nature contemplated by this Agreement in order for the performing Pany to satisfy its obligations hereunder.
(56)
" Common CAPCO Anreements" means those CAfic Agreements relating to both any ponion of the Exchange Assets and any ponion of the DLC Nuclear Assets, including those listed in Schedule 1.l(56).
(57)
" Common Facility Assets" means those assetslocated at Beaver Valley and used in common by Beaver Valley Unit I and Beaver Valley Unit 2 and listed in Schedule 1.l(57).
(58)
" Computer Systems" means hardware, sof1 ware, and firmware product (including embedd,d microcontrollers in non-computer equipment).
(59.)
" Continuation Period" has the meaning set forth in Section 6. I 1(c)(ii).
(60)
"Decommissioninn" means the complete retirement and removal of a Plant from service and the restoration of the Real Property relating to such Plant, as well as any planning and administrative activities incidental thereto, including but not limited to (a) the dismantlement, decontamination, storage, and/or entombment of the Plant, in whole or in pan, and any reduction or removal, whether before or after termination of the NRC license for the Plant, of radioactivity at the Real Property relating to such Plant, and (b) all activities necessary for the retirement, dismantlement and decontamination of the Plant to comply with all applicable laws, including applicable Nuclear Laws and Environmental Laws,. including the applicable requirements of the Atomic Energy Act and the NRC's rules, regulations, orders and pronouncements thereunder, the NRC operating license for the Plant and any related decommissioning plan.
(61)
"Decommissioninn Costs" means the costs of Decommissioning the DLC Nuclear Assets in accordance with all applicable laws, including the applicable Nuclear Laws and Environmental Laws.
(62)
"Decommissioninn Funds" means collectively, the Qualified Decommissioning Funds and the Nonqualified Decommissioning Funds.
(63)
"Deoartment of Energy" means the United States Depanment of Energy and any successor agency thereto.
7
(64)
"Decartment ofEnerav Decommissioning and Decontamination Fees" means all fees related to the Department of Energy's Special Assessment of utilities for the Uranium Enrichment Decontamination and Decommissioning Fund pursuant I
to Sections 1801,1802 and 1803 ofthe Atomic Energy Act,42 U.S.C. 2297(g)-(g-2),
and the Department of Energy's implementing regulations at 10 CFR Part 766, or any similar fees assessed under amended or superseding statutes or regulations applicable to separative work units purchased from the Department of Energy in order to decontaminate and decommission the Department of Energy's gaseous diffusion enrichment facilities.
(65)
"Deoartment of Enerav Standard Contract" means the Contracts for Disposal ofS pent Nuclear Fuel and/or High-Level Radioactive Waste, No. DE-CR01 -
83NE44380, dated as of June 13, 1983 between the United States of America, represented by the United States Department of Energy, and DLC; and No. DE-CR01-84RW00004, dated as ofJune 26,1984, between the Unites States of America, represented by the United States Department of Energy, and DLC and OEC.
(66)
" Direct Claim" means any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim.
(67)
"QL.C" means Duquesne Light Company, a Pennsylvania corporation.
(68)
"DLC Beaver Vallev Emernency Preoaredness Anreements" means those agreements listed in Schedule 1.l(68).
(69)
"DLC Indemnifiable Loss" means an Indemnifiable Loss asserted against or suffered by any DLC Indemnitee.
(70)
"DLC Indemnitee" means DLC, its officers, directors, employees, shareholders, Affiliates and agents.
(70A) "DLC Interim Fuel Reauirements" has the meaning set forth in Section 2.6(b)(i).
1 (71)
"DLC Nonanalified Decommissioninn Funds" means, collectively, the Beaver Valley Unit 1 Nonqualified Decommissioning Fund, the Beaver Valley Unit 2 Nonqualified Decommissioning Fund and the Perry Unit 1 Nonqualified l
Decommissioning Fund.
(72)
"DLC Non-Union Emolovees" has the meaning set forth in Section 6.I1(c).
(73)
"DLC Nuclear Anreements" means any contracts, agreements, licenses and personal property leases entered into by DLC with respect to the ownership, operation or maintenance of the DLC Nuclear Assets, whether or not disclosed on Schedule 4.9(a)(i) and (ii) or Schedule 4.9(b)(i) and (ii), including the DLC Beaver 8
^
1 l
Valley Emergency Preparedness Agreements, but shall not include the Beaver Valley Unit 2 Lease Indentures Documents.
(74)
"DLC Nuclear Assets" has the meaning set forth in Section 2.1, to the extent of DLC's undivided percentage interest in such assets.
(75)
"DLC Nuclear Closinn" means the closing at which the assignment, conveyance, transfer and delivery of some or all of the DLC Nuclear Assets to Penn Power and CEIC, as contemplated by this Agreement, shall take place.
(76)
"DLC Nuclear Closina Date" has the meaning set fonh in Section 3.1.
(77)
"DLC Nuclear Closina Payment" has the meaning set forth in Section.
3.2(a).
(78)
"DLC Nuclear Insurance Policies" means any insurance policies carried by or for the benefit of DLC with respect to the ownership, operation or maintenance of the DLC Nuclear Assets, including all ANI and NEIL nuclear liability, property
)
damage or business interruption policies in respect thereof.
(79)
"DLC On=lified Decommissioninn Funds" means, collectively, the Beaver Valley Unit 1 Qualified Decommissioning Fund, the Beaver Valley Unit 2 Qualified Decommissioning Fund and the Perry Unit 1 Qualified Decommissioning Fund.
(80)
"DLC Reoresentatives" means DLC's authorized representatives, including its professional and financial advisors.
l J
(81)
"DLC Reauired Regulatory Acorovals" means the Required Regulatory Approvals referred to in Schedule 4.3(b).
(82)
"DLC Savinns Plans" has the meaning set forth in Section 6.1I(e)(ii)(E).
(83)
"DLC Transferred Non-Union Emolovees" has the meaning set forth in Section 6.11(c).
(84)
"DLC Transferred Union Emolovee" has the meaning set forth in Section 6.11(b).
(85)
"DLC Transmission Assets" means DLC's seventy-six and one-tenth percent (76.1%) undivided interest in the Beaver Valley Switchyard Assets.
(86)
"DLC Union Emolovees" has the meaning set forth in Section 6. I 1(b).
9 t
k
(87)
"EC AR" means the East Central Area Reliability Council, a regional reliability counsel established pursuant to the East Central Area Reliability Coordination Agreement, and any successor entity thereto.
(88)
" Electric Facilities Agreement" has the meaning assigned thereto in the Exchange Agreement.
(89)
" Encumbrances" means any mortgages, pledges, tiens, security interests, conditional and installment sale agreements, activity and use limitations, conservation casements, deed restrictions, encumbrances and charges of any kind.
(90)
" Environmental Claim" means any and all pending and/or threatened administrative or judicial actions, suits, orders, claims, tiens, notices, notices of violations, investigations, complaints, requests for information, proceedings, or other I
written communications, whether criminal or civil (each, a " Claim"), pursuant to or relating to any applicable Environmental Law or pursuant to a common law theory, by any Person (including any Governmental Authority, private person and citizens' group) based upon, alleging, asserting, or claiming any actual or potential (a) violation 3
of, or liability under any Environmental Law, (b) violation of any Environmental Permit, or (c) liability for investigatory costs, cleanup costs, removal costs, remedial costs, response costs, natural resource damages, property damage, personal injury, fines, or penalties arising out of, based on, resulting from, or related to any Environmental Condition or any Release or threatened Release into the environment I
of any Regulated Substances at any lo;stion related to the DLC Nuclear Assets, including, but not limited to, any Off-Site Location to which Regulated Substances, or materials (other than Nuclear Materials) containing Regulated Substances, were sent for handling, storage, treatment, or disposal.
(91)
" Environmental Condition" means the presence or Release of a Regulated Substance (other than a naturally-occurring substance) on or in environmental media, or structures on Real Property, at an Off Site Locatioh or other property (including the presence in surface water, groundwater, soils or subsurface strata, or air), including the subsequent migration of any such Regulated Substance, j
i regardless of when such presence or Release occurred or is discovered.
l (92)
" Environmental Laws" means all Federal, state, local, provincial, foreign and international civil and criminallaws, regulations, rules, ordinances, codes, decrees, judgments, directives, orjudicial or administrative orders relating to pollution or protection of the environment, natural resources or human health and safety, including laws relating to Releases or threatened Releases of Regulated Substances (including Releases to ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport, disposal or handling of Regulated j
Substances, but shall not include Nuclear Laws. " Environmental Laws" include: (a) with respect to Federallaw, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. { % 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
10
((.6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. QQ 1251 et seq.), the Clean Air Act (42 U.S.C. sQ 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. {l 2601 et seq.), Atomic Energy Act,42 U.S.C. Q 2011 et seq.; the
- Oil Pollution Act (33 U.S.C.
2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
I1001 et seq.), the Occupational Safety and Health Act (29 U.S.C. Q} 651 et seq.),the Safe Drinking Water Act (42 U.S.C. Q300f et seq.), the Surface Mine Conservation and Reclamation Act (30 U.S.C. QQ1251-1279), and regulations adopted pursuant thereto; and counterpart state and local laws, and regulations adopted.thereto; (b) with respect to Pennsylvania law, the Pennsylvania Clean Streams Law (35 P.S. {691.1 et seq.) the Pennsylvania Air Pollution Control Act (35 P.S. %4001 et seq.), the Pennsylvania Solid Waste Management Act (35 P.S. {6018.101 et seq.), the Pennsylvania Storage Tank and Spill Prevention Act (35 P.S. {6021.101 et seq.), the Pennsylvania Safe Drinking Water Act (35 P.S. 721.1 et seq.), the Pennsylvania Sewage Facilities Act (35 P.S.
{750.1 et seq.), the Pennsylvania Hazardous Sites Cleanup Act (35 P.S. l6020.101 et seq.), the Pennsylvania Land Recycling and Environmental Remediation Standards Act (35 P.S. {6026.101 et seq.), the Pennsylvania Surface Mining Conservation and Reclamation Act (52 P.S. {l 396.1 et seq.), the Coal Refuse Disposal Control Act (52 P.S. 30.51 et seq.), the Non-Coal Surface Mining and Reclamation Act (52 P.S.
l3301 et seq.), the Pennsylvania Worker and Community Right-to-Know Act (35 P.S.
l7301 et seq.), the Pennsylvania Hazardous Material Emergency Planning and Response Act (35 P.S. Q6022.101 et seq.), and regulations adopted pursuant thereto; and (c) with respect to Ohio law, Ohio Rev. Code Ann. Q l501.30 et seg. (Diversion of Waters), Ohio Rev. Code Ann. i 1506.01 et seg. (Coastal Management), Ohio Rev. Code Ann. { 1509.01 et seg. (Oil and Gas), Ohio Rev. Code Ann. Q 1513.01 et seq. (Coal Surface Mining), Ohio Rev. Code Ann. Q 1520.01 et seg. (Canal Lands),
)
Ohio Rev. Code Ann. { 3704.01 et seg. (Air Pollution Control), Ohio Rev. Code Ann.
3710.01 et seg. (Asbestos Abatement), Ohio Rev. Code Ann.
3714.01 et seg.
(Construction and Demolition Debris), Ohio Rev. Code Ann. Q 3734.01 et seq. (Solid and Hazardous Wastes), Ohio Rev. Code Ann. Q 3737.87 et seg. (Petroleum Underground Storage Tanks), Ohio Rev.' Code Ann. Q 3742.01 et seg. (Lead Abatement and Testing), Ohio Rev. Code Ann. Q 3750.01 et seg. (Emergency Planning), Ohio Rev. Code Ann. Q 3751.01 et seg. (Hazardous Substances), Ohio Rev. Code Ann. f 3752.01 etseg. (Cessation ofChemical Handling Operations), Ohio Rev. Code Ann. l 3767.01 et seg. (Nuisancef.), Ohio Rev. Code Ann. l 4913.01 et i
seg. (Public Utilities Commission - Acid Rain Control), Ohio Rev. Code Ann. Q l
6109.01 et seg. (Safe Drinking Water), Ohio Rev. Code Ann. Q 6111.01 et seq.
(Water Pollution Control), and regulations adopted pursuant thereto.
(93)
" Environmental Permits" means any permits, registrations, certificates, certifications, licenses and authorizations, consents and approvals of Governmental Authorities required under Environmental Laws with respect to the DLC Nuclear Assets.
(94)
"ERIS A" means the Employee Retirement Income Security Act of 1974, as amended.
I1
(95)
"ERISA Affiliate" means a trade or business, whether or not incorporated, that together with a Party would be deemed a " single employer" within the meaning of Section 4001(b) of ERISA.
(96)
" Estimated DLC Nuclear Closing Payment" has the meaning set forth in Section 3.2(b).
(97)
" Estimated DLC Nuclear Closina Statement" has the meaning set forth in Section 3.2(b).
(98)
"Exchanne Agreement" has the meaning set forth in the preamble to this Agreement.
(99)
"Exchanne Assets" has the meaning assigned thereto in the Exchange l
Agreement.
(100) "Exchanne Closina" has the meaning assigned thereto in the Exchange Agreetnent.
(101) "Exchanne Date" has the meaning assigned thereto in the Exchange Agreement.
(102) " Excluded Assets" has the meaning set fonh in Section 2.2.
(103) " Excluded Liabilities" has the meaning set forth in Section 2.4.
(104) "Exemot Facilities" means those DLC facilities listed in Schedule 1.l(104).
(105) " Facilities Act" has the meaning set forth in Section 10.12.
(106) "Eg" means FirstEnergy Corp., an Ohio corporation and parent company of the FE Subsidiaries.
(107) "FE Subsidiaries" means, collectively, Ohio Edison Company, Penn Power, CEIC and The Toledo Edison Company.
(108) "FE Suooon Aareement" means the FE Support Agreement substantially in the form of Exhibit D hereto, to be entered into between FE and DLC on the date hereof.
(109) "FENOC" means FirstEnergy Nuclear Operating Company, an Ohio corporation.
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(110) "FERC" means the Federal Energy Regulatory Commission or any successor agency thereto.
(111) " Final Adiustment" has the meaning set forth in Section 3.2(d).
(112) " Final DLC Nuclear Closing Statement" has the meaning set forth in Section 3.2(c).
(113) " Final Order" means an action by the relevant Governmental Authority that has not been ieversed, stayed, enjoined, set aside, annulled or suspended or with respect to which any waiting period prescribed by law before the transactions contemplated hereby may be consummated has expired.
(114) "FIRPTA Affidavit" means the Foreign Investment in Real Property Tax Act Certification and Affidavit in respect of each Plant, substantially in the form of Exhibit E hereto.
(115) " Fuel Suonties" means the supplies of nuclear fuel in reactor core, natural uranium, converted uranium, enriched uranium and/or any other form of nuclear fuel, under contract, or in inventory, related to the operation of either Plant.
(116) "GE Settlement Anreement"meanstheSettlement Agreementbetween Plaintiffs FE Subsidiaries and DLC and Defendant General Electric Company, executed on January 20,1994 in settlement oflitigation concerning Perry Unit 1.
(117) " Good Utility Practices" mean any of the applicable practices, methods, standards, guides or acts:
(a) required by any Governmental Authority, regional or national reliability council, or national trade organization, including NERC, EC AR, Edison Electric Institute, or American Society of Mechanical Engineers, or the successor of any of them, whether or not the Party whose conduct is at issue is a member thereof; (b) otherwise engaged in or approved by a significant portion of the electric utility industry during the relevant time period which in the exercise of reasonable judgment in light of the facts known or that should have been known at the time a decision was made, could have been expected to accomplish the desired result in a manner consistent with law, regulation, good business practices, generation, transmission, and distribution reliability, safety, environmental protection, economy, and expediency. Good Utility Practices is intended to be acceptable practices, methods, or acts generally accepted in the region, and is not intended to be limited to the optimum practices, methods, or acts to the exclusion of all others; and (c) such other acts or practices as are reasonably necessary to maintain tne reliability of the Plants.
13
(118) " Governmental Authority" means any foreign, Federal, state, local or other governmental, regulatory or administrative agency, coun, commission, depanment, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority.
(119) "HSR Act"meanstheHart-Scott-Rodino AntitrustImprovements Act of 1976, as amended.
l 1
(120) "Hinh Level Waste" means (1) irradiated nuclear reactor fuel, (2)
]
liquid wastes resulting from the operation of the first cycle solvent extraction system, or its equivalent, and the concentrated wastes from subsequent extraction cycles, or their equivalent, in a facility for reprocessing irradiated reactor fuel, and (3) solids into which such liquid wastes have been converted.
(121) "Hiah Level Waste Recository" means a facility which is designed, constructed and operated by or on behalfofthe Depanment ofEnergy for the storage and disposal of Spent Nuclear Fuel and other High Level Waste in accordance with the requirements set fonh in the Nuclear Waste Policy Act.
(122) "IBEW" has the meaning set fonh in Section 6.11(b).
(123) "IBEW CBA" has the meaning set fonh in Section 6.11(b).
(124) " Income Tax" means any Federal, state, local or foreign Tax (a) based upon, measured by or calculated with respect to net income, profits or receipts (including capital gains Taxes and minimum Taxes) or (b) based upon, measured by or calculated with respect to multiple bases (including corporate franchise taxes) if one or more of the bases on which such Tax may be based, measured by or calculated with respect to, is described in clause (a), in each case together with any interest, penalties, or additions to such Tax.
(125) "Indemnifiable Loss" means any claim, demand, suit, loss, liability, damage, obligation, payment, cost or expense (including the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys' fees and reasonable disbursements in connection therewith).
(126) "I.ndsmnifying Party" means a Pany obligated to provide indemnification under this Agreement.
(127) " Indemnitee" means a Person entitled to receive indemnification under this Agreement.
(128) "Indeoendent Accountina Firm" means such independent accounting firm of national reputation as is mutually appointed by DLC and Specified FE Subsidiaries.
14
rL.
p l
-(128A)" Interim Period" has the meaning set forth in Section 6.1.l(a).
1 (129) " Inspection" means all tests, reviews, examinations, inspections, investigations, verifications, samplings and similar activities conducted by Specified FE Subsidiaries (or either one ofthem) or their agents or Representatives with respect to the DLC Nuclear Assets prior to the DLC Nuclear Closing.
(l30) "IntellectualPropertv"meanspatentsandpatentrights,trademarksand trademark rights, inventions, copyrights and copyright rights and all pending applications for registrations of patents, trademarks, and copyrights.
(131) " Inventories" means materials, spare pans, capital spare parts, consumable supplies and chemical inventories relating to the operation of any Plant, orovided. that " Inventories" shall not include Fuel Supplies, and orovided funher. that reference to " Inventories" shall be limited to the extent of DLC's proportionate interest therein.
(132) "ES" means the Internal Revenue Service and any successor agency thereto.
(133) "J&L So-M v Steel Transformer" means the 345/138 Kv auto t
transformer located at the site on which the Beaver Valley Switchyard Assets are located and owned by J&L Specialty Steel Company.
(134) "Knowledne" means the actual knowledge of the corporate officers and/or Plant managers of the specified Person charged with responsibility for the particular function as of the date of this Agreement, or, with respect to any certificate delivered pursuant to this Agreement, the date of delivery of the cenificate.
(135) " Low Level Waste" means waste material which contains radioactive nuclides emitting primarily beta or gamma radiation, or both, in concentrations or quantities which exceed applicable Federal or state standards for unrestricted release.
Low Level Waste does not include waste containing more than ten (10) nanocuries of transuranic contaminants per gram of material, nor Spent Nuclear Fuel, nor material classified as either high-level waste or waste which is unsuited for disposal by near-surface burial under any applicable Federal regulations.
(136) " Material Adverse Effect" means any change in, or effect on DLC's proportionate interest in any Plant, from or after the date hereof that is materially adverse to the operations or condition (financial or otherwise) ofDLC's proportionate interest in such Plant, other than: (a) any change affecting the international, national, regional or local electric or nuclear industry as a whole and not specific and exclusive to DLC's proportionate interest in such Plant; (b) any change or effect resulting from I
changes in the international, national, regional or local wholesale or retail markets for I
electric or nuclear power; (c) any change or effect resulting from changes in the l
15
~
1 international, national, regional or local markets for any fuel used in connection with DLC's proportionate interest in such Plant; (d) any change or effect resulting from changes in the North American, national, regional or local electric transmission systems or operations thereof;(e) any materially adverse change in or effect on DLC's proportionate interest in such Plant which is cured (including by the payment of money) before the Termination Date; and (f) any order of any court or Governmental j
4 Authority applicable to the providers of generation, transmission or distribution of electricity generally that imposes restrictions, regulations or other requirements thereon, including any order with respect to an independent system operator or retail I
access in Pennsylvania or Ohio.
(137) "MicrowaveTower"shallmeanthemicrowavetoweratBeaverValley reserved by DLC pursuant to the Electric Facilities Agreement.
(138) "NEIL" means Nuclear Electric Insurance Limited, or any successor entity.
(139) "NERC" means North American Electric Reliability Council, and any succestor entity thereto.
(140) "Nonaualified Funds" mean any funds not eligible for contribution to an external trust meeting the requirements of Code section 468A and Treasury Regulations section 1.468A-5.
(141) "Non-Oualifyinn Offer" means an offer to a DLC Transferred Non-Union Employee that is either less than 100% of such employee's current total annual cash compensation at the time the offer was made (consisting ofbase salary and target incentive bonus) or requires, as a condition of acceptance, a relocation of residence as described in Section 6.11(g).
(142) "NEC" means the United States Nuclear Regulatory Commission and any successor agency thereto.
(143) "NRC Anorovals" means the consent ofthe NRC pursuant to Section 184 of the Atomic Energy Act and 10 C.F.R. Q 50.80 to the transfer of DLC's l
undivided ownership interests in Beaver Valley Unit I and Beaver Valley Unit 2 to Penn Power, DLC's undivided ownership interest in Perry to CEIC, and DLC's operating responsibility for Beaver Valley to FENOC, NRC approval of all conforming administrative license amendments associated with such transfers, NRC consent to the transfer of, and approval of any related amendments to, any nuclear materials licenses associated with such transfers and any other NRC reviews or approvals required in connection with the consummation of the transactions contemplated by this Agreement.
(144) " Nuclear Laws" means all Federal, state, local, provincial, foreign and international civil and criminal laws, regulations, rules, ordinances, codes, decrees, 16
1 judgements, directives, orjudicial or administrative orders relating to the regulation ofnuclear power plants, nuclear source, byproduct and Special Nuclear Materials; the regulation ofLow Level Waste and High Level Wastes; the transportation and storage of nuclear materials; the regulation of Safeguards Information; the regulation of '
nuclear fuel; the enrichment of uranium; the disposal and storage of high-level radioactive waste, and spent nuclear fuel; contracts for and payments into the Nuclear l
Waste Fund; and as applicable, the Antitrust Laws and Section 5 ofthe Federal Trade Commission Act to specified activities or proposed activities of certain licensees of commercial nuclear reactors, but shall not include Environmental Laws. " Nuclear Laws" include the Atomic Energy Act of 1954, as amended (42 U.S.C. Q 2011 et seq.), the Price-Anderson Act ({ 170 of the Atomic Energy Act of 1954, as amended); the Energy Reorganization Act of 1974 (42 U.S.C. { 5801 et seq.);
Convention on the Physical Protection of Nuclear Material Implementation Act of 1982 (Public Law 97 - 351; % STAT.1663); the Foreign Assistance Act of 1961 (22 U.S.C. { 2429 et seq.); the Nuclear Non-Proliferation Act of 1978 (22 U.S.C.
3201); the Low-Level Radioactive Waste Policy Act (42 U.S.C. { 2021b et seq.);
the Nuclear Waste Policy Act, (42 U.S.C. Q 10101 et seq.); the Low-Level Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. { 2021d,471); the Energy Policy Act of 1992 (4 U.S.C. Q 13201 et seq.); the Pennsylvania Radiation Protection Act, 35 P.S. 7110.101 et seq.; the Appalachian States Low-Level Radioactive Waste Compact, 35 P.S. j 7125.1 et seq.; the Pennsylvania Low-Level Radioactive Waste Disposal Act., 35 P.S. { 7130.101 et seq.; the Pennsylvania Radiation Protection Act,35 P.S.7110.101 et seq.; the Pennsylvania Low-Level Radioactive Waste Disposal Act,35 P.S. Q 7130.101 et seq.; the Ohio Low-Level Radioactive Waste Act, ORC Chapter 3747; Ohio Radiation Control Law, ORC Chapter 3748.
(145) " Nuclear Material" means Source Material, Special Nuclear Material, Low Level Waste, Byproduct Material and Spent Nuclear Fuel.
(146) " Nuclear Waste Fund" means the fund established by the Department of Energy under the Nuclear Waste Policy Act in which the Spent Nuclear Fuel Fees to be used for the design, construction and operation of a High Level Waste Repository and other activities related to the storage and disposal of Spent Nuclear Fuel and/or High Level Waste are deposited.
(147) " Nuclear Waste Policy Act" means the Nuclear Waste Policy Act of 1982, as amended.
(148) "Off-Site Location" means any real property other than the Real Property.
(149) "PaDEP" means the Pennsylvania Department of Environmental Protection and any successor agency thereto.
17
(150) "PaPUC" means the Pennsylvania Public Utility Commission and any successor agency thereto.
(151) "Eany" !s '. the meaning set forth in the preamble to this Agreement.
(151 A) "Penn Fuel Lease Arrannements" means the Second Amended and Restated Fuel Lease, dated December 1,1981, with Amendment No. I dated January 22,1992 between Penn Fuel Corporation, as lessor, and DLC, as lessee, and certain financing arrangements ir connection with such Second Amended and Restated Fuel Lease.
(152) "Penn Power" means Pennsylvania Power Company, a Pennsylvania corporation.
(153) "Penn Power NonanaliGed Decommissioninn Funds" means the external trust funds that do not meet the requirements of Code section 468A and Treasury Regulations section 1.468-5 maintained by Penn Power.
(154) "Penn Power Oualified Decommissioninn Funds" means the external trust funds that meet the requirements of Code section 468A and Treasury Regulations section 1.468-5, maintained by Penn Power with respect to Beaver Valley.
(155) " Permits" mean, with respect to the DLC Nuclear Assets, any permits, licenses (including the NRC 10 C.F.R. Part 50 Nuclear Licenses), registrations, franchises and other authorizations, consents and approvals of Governmental Authorities (but in each case excluding Environmental Permits).
(156) " Permitted Encumbrances" means the permitted tiens and encumbrances as set forth in Schedule 1.1 (156).
(157) " Perry C APCO Anreements" means all the contractual arrangements associated with CAPCO relating to Perry Unit 1, including those contracts listed in Schedule 1.l(157).
(158) " Perry Unit 1" means the nuclear generation plant known as Peny Unit No.1.
(159) " Perry Unit 1 Decommissioninn Amount" has the meaning set forthin Section 6.19.3 (a)(i).
(160) " Perry Unit 1 Decommissioninn Shortfall" has the meaning set forth in Section 6.19.3 (a)(i).
(161) " Perry Unit 1 Nonaualified Decommissioninn Funja" means the external trust funds that do not meet the requirements of Code section 468A and 18
Treasury Regulations section 1.468A-5, maintained by DLC with respect to Perry j
Unit 1.
(162) " Perry Unit i Oualified Decommissioninn Funds" means the external 1
tmst funds that meet the requirements of Code section 468A and Treasury Regulations section 1.468A-5, maintained by DLC with respect to Perry Unit 1.
(163) " Person" means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or Governmental Authority.
(164) "Pjant" means Beaver Valley or Perry Unit 1.
(165) "Pjants" mean, collectively, Beaver Valley and Perry Unit 1.
(166) "Pronosed Final Adiustment" has the meaning set forth in Section 3.2(c).
(167) " Proprietary Information" of a Pa-ty means all information about the Party or its Affiliates, including their respective propenies or operations, furnished to the other Party or its Representatives by the Party or its Representatives, in connection with this Agreement, whether before or after the date hereof, regardless of the manner or medium in which it is furnished and all analyses, reports, tests or a
other information created or prepared by, or on behalf of, a Party during the performance of" Phase 1" or " Phase II" environmental site assessments. Proprietary Information does not include information that: (a) is or becomes generally available to the public, other than as a result of a disclosure by the other Party or its Representatives; (b) was available to the other Party on a nonconfidential basis prior to its disclosure by the Party or its Representatives; (c) becomes available to the other Party on a nonconfidential basis from a Person, other than the Party or its Representatives, who is not otherwise bound by a confidentiality agreement with the Party or its Representatives, or is not otherwise under any obligation to the Party or any ofits Representatives not to transmit the information to the other Party or its Representatives; or (d) is independently developed by the other Party.
(168) "PUC0" means the Public Utilities Commission of the State of Ohio and any successor agency thereto.
(169) " Qualified Funds" mean any funds eligible for contribution to an external trust meeting the requirements of Code section 468A and Treasury Regulations section 1.468 A-5.
1 (170) "Oualifyinn Offer" means an offer to e DLC Transferred Non-Union Employee of the same or similarjob that is at least 100% of such employee's current total annual cash compensation at the time the offer was made (consisting of base salary and target incentive bonus).
i 19
I[4 (171) "Real Property" has the meaning set forth in Section 2.l(a). Any reference to the Real Property includes, by definition, the surface and subsurface elements, including the soils and groundwater present at the Real Property, and any reference to items "at the Real Property" shall include all items "at, on, in, upon, over, across, under and within" the Real Property.
(172) "Real Property Leases" means all real property leases ;isted in Schedule 4.5 under which DLC is a lessee or lessor and which relate to the DLC l
- Nuclear Assets.
(173) "Renulated Substances" means (a) any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and dielectric fluid l
containing polychlorinated biphenyls; (b) any chemicals, materials or substances defined as or included in the definition of " hazardous substances," " hazardous wastes," " hazardous materials," " hazardous constituents," " restricted hazardous materials," " extremely hazardous substances," " toxic substances," " contaminants,"
" pollutants," " toxic pollutants" or words of similar meaning and regulatory effect under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which or whose discharge, emission, disposal or Release is prohibitedJimited or regulated by any applicable Environmental Law, but in all events shall exclude any Nuclear Material.
(174) "Renulatory Anorovals" means any consent or approval of, filing with, or notice to, any Governmental Authority that is necessary for the execution and delivery of this Agreement by the referenced Pvty or the consummation thereby of the transactions contemplated hereby, other than such consents, approvals, filings or notices which, if not obtained or made, will not prevent such Party from performing its material obligations hereunder.
i (175) "Reoulatory Material Adverse Effect" shall occur where a Final Order with respect to Required Regulatory Approvals contains terms and conditions that are i
materially adverse to the financial condition, prospects, properties, operations or results of operations of the affected Party, taken as a whole including all Subsidiaries and Affiliates, to which the terms and conditions of such Final Order apply, provided that, in addition to the foregoing, a Final Order with respect to Required Regulatory Approvals shall be deemed to constitute a Regulatory Material Adverse Effect (i) as to FE Subsidiaries or their Affiliates, ifit prohibits such FE Subsidiaries or Affiliates from transferring their transmission assets to American Transmission Systems, Inc.
(or its successor and assigns), is inconsistent with the FERC's determination in Ohio Edison Co. et al., 81 FERC 161,110 (1997) that "we expect FirstEnergy to participate in the Midwest ISO or another appropriate ISO," or requires the FE Subsidiaries or their Affiliates to divest generating plants other than Avon Lake, Newcastle or Niles, and (ii) as to DLC, ifit disallows from recoven in rates a material i
20
portion of the expenses related to the Generation Exchange (as such term is defined in the Exchange Agreement).
(176) " Release" means release, spill, leak, discharge, dispose of, pump, pour, emit, empty, inject, leach, dump or allow to escape into or through the environment.
(177) "Remediation" means any action taken in the investigation, removal, co'nfinement, cleanup, treatment, or monitoring of an Environmental Condition on Real Property or Off-Site Location, including, (i) obtaining any Permits or Environmental Permits required for such remedial activities, and (ii) implementation of any engineering controls and institutional controls. The term "remediation" includes (1) any action which constitutes " removal" action or " remedial action" as defined by Section 101 of CERCLA,42 U.S.C. Q6901(23) and (24); (2) any action which constitutes a " response" as defined by Section 102 of the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. Q6020.103 or (3) any action which constitutes a " remedy" or " remedial activities" as defined by Ohio Rev. Code Ann. Q 3746.01(N).
l (178) "Recresentatives" means the DLC Representatives and the Specified FE Subsidiaries' Representatives, as applicable.
(179) "Reauired Reaulatory Anorovals" means with respect to a Party, any consent or_ approval of, filing with, or notice to, any Governmental Authority that is necessary for the execution and delivery of this Agreement by such Party or the consummation by such Party of the transactions contemplated hereby and thereby, other than such consents, approvals, filings or notices which are not required in the ordinary course to be obtained prior to the DLC Nuclear Closing and transfer of the DLC Nuclear Assets or which, if not obtained or made, will not prevent such Party from performing its material obligations hereunder.
4 (180) " Revenue Bonds" has the meaning assigned thereto in Section 6.17(a)(i).
(181) "Safeauards Information" means information not otherwise classified as National Security Information or Restricted Data under NRC's regulations which specifically identifies an NRC licensee's detailed (1) security measures for the physical protection of Special Nuclear Material, or (2) security measures for the physical protection and location of cenain plant equipment vital to the safety ofproduction or utilization facilities (182) "SMji" means the real and personal property comprising the decommissioned Shippingport Atomic Power Station described in Schedule 1. l(182).
(183) " SEQ" means the Securities and Exchange Commission and any successor agency thereto.
21
3 (184) "Shinoinnoort Contract" means Contract DE-ACIl-76PN00292, as redesignated (36-1)-292, or No. 76-C-11-0292 between DLC and the United States Energy Research and Development Administration, and its successor the Department ofEnergy.
. (185) "Shiocinnoort Site Buildinas" means those buildings described in Schedule 1.1(185).
(186) " Source Material" means: (1) uranium or thorium; or any combination thereof, in any physical or chemical form, or (2) ores which contain by weight one-twentieth of one percera (0.05%) or more of: (i) uranium, (ii) thorium, or (iii) any combination thereof. Source Material does not include Special Nuclean Material.
(187) "Soccial Nuclear Material" means plutonium, uranium-233, uranium enriched in the isotope-233 or in the isotope-235, and any other material that the NRC determines to be "Specia! Nuclear Material." Special Nuclear Material also refers to any material artificially enriched by any of the above-listed materials or isotopes.
(188) "Soecified FE Subsidiaries" means, collectively, Penn Power and CEIC, and "Soecified FE Subsidiary" means either one of them.
(l89) "Specified FE Subsidiaries'Indemnifiable Losses" has the meaning set forth in Section 8.3.
(190) "Soecified FE Subsidiaries' Indemnitee" means each Specified FE Subsidiary, its officers, directors, employees, shareholders, Affiliates and agents.
(191) [ Intentionally omitted.]
(192) "Soecified FE Subsidiaries' Reoresentatives" means the authorized representatives of each Specified FE Subsidiary, including its professional and finan-cial advisors.
(193) "Soecified FE Subsidiaries' Reauired Reaulatory Acorovals" means, the Required Regulatory Approvals referred to in Schedule 5.3(b).
(194) "Soent Nuclear Fuel" means fuel that has been withdrawn from a nuclear reactor following irradiation and has not been chemically separated into its constituent elements by reprocessing. Spent Nuclear Fuel includes the Special Nuclear Material, Byproduct Material, source material, and other radioactive materials associated with nuclear fuel assemblies.
(195) "Soent Nuclear Fuel Fees" means these fees assessed on electricity l
generated at the Plants and sold pursuant to the Department of Energy Standard Contract for Disposal of Spent Nuclear Fuel and/or High Lewi Waste, as provided 22
/
y L
l l
in Section 302 of the Nuclear Waste Policy Act and 10 C.F.R. Part 961, as the same may be amended from time to time.
(196) "Subridigy" when used in reference to any Person means any entity of which outstanding securities, having ordinary voting power to elect a majority of the Board of Directors or other Persons performing similar functions of such entity are owned directly or indirectly by such Person.
l l
(197) "Tannible Personal Property" has the meaning set forth in Section 1
2.l(c).
(198) "Igns" means all taxes, charges, fees, levies, penalties or other assessment s imposed by any Federal, state, local or foreign taxing authority, including, but not limited to, income, excise, propeny, sales, transfer, franchise, payroll, withholding, social security, gross receipts, license, stamp, occupation, employment or other taxes, including any interest, penalties or additions attributable thereto.
(199) "TaxReturn"meansanyretum, report,informationreturn, declaration, claim for refund or other document (including any schedule or related or supporting information) required to be supplied to any taxing authority with respect to Taxes including amendments thereto.
(27)0) " Termination Date" has the meaning set forth in section 9.l(b).
(201) " Third Party Claim" means any claim, action, or proceeding made or brought by any Person who is not (i) a Party to this Agreement, or (ii) an Affiliate of a Pany to this Agreement.
l (202) " Transferable Permits" means those Permits and Environmental Permits which may be transferred by DLC to Specified FE Subsidiaries without a filing with, notice to, consent of or approval of any Governmental Authority, as set fonh in Schedule 1.l(202).
(203) " Transfer Taxes" means any real property transfer or gains tax, sales tax, conveyance fee, use tax, stamp tax, stock transfer tax or other similar tax, including any related penalties, interest and additions to tax.
(203 A)" Transition Committee" has the meaning set forth in Section 6.1.l(b)(i).
(203B)" Transition Plan" has the meaning set forth in Section 6.1.l(b)(i).
l (203C)" Transition Team" has the meaning set fonh in Section 6.1.l(b)(i).
(204) "USEPA" means the United States Environmental Protection Agency and any successor agency thereto.
l 23 1
1
p (205) " WARN Act" means the Federal Worker Adjustment Retraining and Notification Act of 1958, as amended.
(206) " Warranty Deed" means a special warranty deed, in the Form of Exhibit G hereto.
(207) " Year 2000 Comoliant" means, with respect to any Party, that the Computer Systems ofsuch Party will correctly differentiate between years, in different centuries, that end in the same two digits, and will accurately process date/ time data (including, but not limited to, calculating, comparing, and sequencing) from, into, and between the twentieth and twenty-first centuries, including leap year calculations.
" Year 2000 Comoliance" has a meaning correlative to the foregoing.
1.2 Certain Internretive Matters. In this Agreement, unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa.' The term " includes" or " including" shall mean " including without limitation." In addition, (i) references to a Section, Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule of this Agreement; (ii) reference to a given agreement or instrument shall be a reference to that agreement or instrument as modified, amended, supplemented or restated through the date as of which such reference is made;(iii) references to any Person shall include its permitted successors and assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities; and (iv) references to laws, rules and regulations shall include such laws, rules and regulations as they may from time to time be amended, modified or supplemented.
1.3 CAPCO Anreements to Govem. The Parties agree that, unless this Agreement expressly provides otherwise, the Parties' ownership, operation and maintenance of each Plant shall be governed by the CAPCO Agreements up to the DLC Nuclear Closing Date in respect of such Plant. Unless otherwise restricted under this Agreement, the CAPCO Agreements will govern and control the Parties' c.wnership, operation and maintenance of each Plant prior to the DLC Nuclear 1
Closing Date in respect of such Plant.
1.4 DLC's Interest in Assets. The Parties acknowledge that DLC has a forty-seven and one-half percent (47.5%) undivided interest in Beaver Valley Unit I and the DLC Nuclear Assets relating thereto, a thirteen and seventy-four hundredths percent (13.74%) undivided interest in Beaver Valley Unit 2 and the DLC Nuclear Assets relating thereto and a thirteen and seventy-four hundredths percent (13.74%) undivided interest in Perry Unit I and the DLC Nuclear Assets relating thereto.
All references in this Agreement to DLC's right, title and interest in such Plants and assets, and rights,
~ liabilities and obligations in connection therewith, shall be constmed in this context.
ARTICLE II CONVEYANCE OF DLC NUCLEAR ASSETS 2.1 Transfer of DLC Nuclear Assets. Upon the terms and subject to the satisfaction of the conditions contained in this Agreement, at the DLC Nuclear Closing DLC will assign, convey, 24
1 transfer and deliver to Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1, and Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1, will assume and acquire from DLC, free and clear of all Encumbrances (except for Permitted Encumbrances), all right, title and interest of DLC in and to all of the assets (except for Excluded Assets) constituting the Plants, or used in and necessary to generate electricity from the Plants and DLC's undivided percentage ownership interest in those assets described below, each as in existence on the DLC Nuclear Closing Date (collectively, "DLC Nuclear Assets"):
(a)
Those certain parcels of real property owned by DLC relating to the Plants, together with all building, facilities and other improvements thereon and all appurtenances thereto, as described in Schedule 2.l(a) (the "Real Prooerty");
(b)
All Inventories related exclusively to the Plants; (c)
All machinery ( mobile or othenvise), equipment (including communications equipment), vehicles, tools, furniture and furnishings and other personal property included in the DLC Nuclear Assets that are owned by DLC and located on the Real Property on the DLC Nuclear Closing Date, including the items of personal property jointly owned by DLC and FE Subsidiaries and used principally in the operation of the Plants that are in the possession of DLC and listed in Schedule 2. l(c), other than property used or primarily usable as part of the DLC Transmission Assets or otherwise constituting part of the Excluded Assets (collectively, "Tannible Personal Pronerty");
(d)
Subject to the provisions of Section 6.6(c), all DLC Nuclear Agreements, orovided. however. in the event the Exchange Closing and the DLC Nuclear Closing do not occur on the same day, for the Common CAPCO Agreements which shall not be assigned and assumed as otherwise contemplated hereunder but shall be so assigned and assumed at the later of such Exchange Closing or DLC Nuclear Closing and then pursuant to a separate Assignment and Assumption Agreement, and, orovided further, however. that DLC shall not assign its interest as operator under j
the Beaver Valley Unit 2 Operating Agreement to Penn Power on the DLC Nuclear Closing Date but DLC shall make arrangements to provide that Penn Power (or its designee) will be responsible for operation and maintenance of Beaver Valley after the DLC Nuclear Closing, and DLC shall tern 3v te all involvement under the Beaver Valley Unit 2 Operating Agreement on the date on which the Beaver Valley Unit 2 Lease Indentures are terminated; (e) -
Subject to the provisions of Section 6.6(c), all Real Property Leases; (f)
All Transferable Permits; (g)
All books, operating records, operating, safety and maintenance manuals, engineering design plans, documents, blueprints and as-built plans, specifications, procedures and similar items of DLC relating specifically to the design, construction, licensing, regulation, operation or Decommissioning of the DLC Nuclear Assets and necessary for the licensing, operation and Decommissioning of the Plants in the possession ofDLC other than such items which are proprietary to third parties and accounting records; (h)
Fuel Supplies and Spent Nuclear Fuel; 25
(i)
All unexpired, transferable warranties and guarantees from third parties with respect to any DLC Nuclear Asset and listed in Schedule 2.l(i);
(j)
The names of the Plants. It is expressly understood that DLC is not assigning or transferring to Specified FE Subsidiaries any right to use the name "Duquesne," "Duquesne Light l
Company," "DQE", "DQE, Inc.", or other trade names, trademarks, service marks, corporate names and logos or any part, derivative or combination thereof; (k)
All drafts, memoranda, reports, information, technology, and specifications relating to DLC's plans for Year 2000 Compliance with respect to the Plants; (1)
The Intellectual Property described on Schedule 2.l(1);
(m)
The DLC Qualified Decommissioning Funds and the DLC Nonqualified Decommissioning Funds; (n)
The GE Settlement Agreement; (o)
The DLC Nuclear Insurance Policies and DLC's member account balance in respect of all ANI and NEIL nuclear liabilities, property damage or business interruption policies; and (p)
All right, title and interest of DLC in and to the 10 C.F.R. Part 50 Nuclear
' Licenses.
2.2 Excluded Assets. Notwithstanding anything to the contraryin this Agreement, nothing in this Agreement will constitute a transfer to Penn Power, in respect of Beaver Valley, and CEIC,
- in respect of Perry Unit 1 of, or be construed as conferring on Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1, and Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1 is not acquiring, any right, title or inte,est in or to the following specific assets which are associated with the DLC Nuclear Assets, but which are hereby specifically excluded from the transfer to Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit I and the definition of DLC Nuclear Assets herein (the " Excluded Assets"):
(a)
The DLC Transmission Assets and the assets being transferred by DLC pursuant to the Electric Facilities Agreement (including those certain assets, facilities, agreements, and other property used or primarily usable as part of the DLC Transmission Assets);
i (b)
Certain switches and meters in the Plants, gas facilities, revenue meters and remote testing units, drainage pipes and systems and certain transmission towers and poles, as identified as being retained by DLC in the Electric Facilities Agreement; (c)
Certificates ofdeposit, shares ofstock, securities, bonds, debentures, evidences ofindebtedness, and interests in joint ventures, partnerships, limited liability companies and other entities; 26
(d)
All cash, cash equivalents, bank deposits, accounts and notes receivable (trade or othenvise), and any income, sales, payroll or other tax receivables; (e)
The rights of DLC and its Affiliates to the names "Duquesne," "Duquesne Light Company," "DQE", "DQE, Inc.", or other trade names, trademarks, service marks, corporate names or logos, or any part, derivative or combination thereof; (f)
All tariffs 'greements and arrangements to which DLC is a party for the i
purchase or sale of electric capac., and/or energy or for the purchase of transmission or ancillary services; (g)
Except as provided in Section 2.11, or in the case of causes of action against third parties (including indemnification and contribution) relating ts an Environmental Condition or Regulated Substance or arising under Environmental Laws, the rights of DLC in and to any causes of action against third parties (including indemnification and contribution) relating to any Real i
Property or Tangible Personal Property, Pennits, Environmental Permits, Taxes, Real Property Leases or DLC Nuclear Agreements, if any, and not relating to the Assumed Liabilities including any claims for refunds, prepayments, offsets, recoupment, insurance proceeds, condemnation awards, judgments and the like, whether received as payment or credit against future liabilities, relating specifically to the Plants or the Real Property and relating to any period prior to the applicable DLC Nuclear Closing Date; (h)
Any and all of DLC's rights and interests in any contract that is not a DLC Nuclear Agrr ement or that is an intercompany transaction between DLC and an Affiliate of DLC, whether or rat such intercompany transaction relates to the provision ofgoods and services, payment arrangemer. ts, intercompany charges or balances, or the like; (i)
DLC's accrued interest in refunds ofreserve premiums and/or dividends and/or distributions ofearnings based on membership account balance (s) and insurance premiums in respect of all ANI and NEIL nuclear liabilities, property damage or business interruption policies in respect of the Plants up to and including the DLC Nuclear Closing Date, irrespective of when such refunds and/or dividends are actually paid; (j)
The J&L Specialty Steel Transformer; (k)
The Beaver Valley Unit 2 Lease Indentures Documents; (1)
The telecommunication equipment listed in Schedule 2.2(1); and (m)
The Microwave Tower.
2.3 Assumed Liabilities. On the DLC Nuclear Closing Date with respect to the Plants, each Specified FE Subsidiary shall deliver to DLC an Assignment and Assumption Agreement pursuant to which each Specified FE Subsidiary (Penn Power,in respect ofBeaver Valley, and CEIC, in respect of Perry Unit 1) shall assume and agree to discharge when due, without recourse to DLC, ar.d shall release DLC from all of the following liabilities and obligations of DLC, direct or indirect, 27
F known or unknown, absolute or contingent, which relate to, or arise by virtue of DLC's ownership of the DLC Nuclear Assets (other than Excluded Liabilities) with respect to the Plants (Penn Power, l
in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1), in accordance with the respective terms and subject to the respective conditions thereof(collectively, " Assumed Liabilities"):
l (a)
All liabilities and obligations of DLC arising on or aRer the DLC Nuclear l
Closing Date under the DLC Nuclear Agreements (except, in the event the Exchange Closing and the DLC Nuclear Closing do not occur on the same day, for the Common CAPCO Agreements which shall not be assigned and assumed as otherwise contemplated hereunder but shall be so assigned and assumed at the later of such Exchange Closing or such DLC Nuclear Closing and then pursuant to I
a separate Assignment and Assumption Agreement), the Real Property Leases and the Transferable Permits in accordance with the terms thereof, including the DLC Nuclear Agreements entered into by DLC (i) prior to the date hereof and (ii) aRer the date hereof consistent with the terms of this Agreement, except in each case to the extent such liabilities and obligations, but for a breach or default by DLC, would have been paid, performed or otherwise discharged on or prior to such DLC Nuclear Closing Date or to the extent the same arise out of any such breach or default or out of any event which after the giving of notice or passage of time would constitute a default by DLC; (b)
All liabilities and obligations associated with the DLC Nuclear Assets in respect of Taxes for which Specified FE Subsidiaries are liable pursuant to Sections 3.4 or 6.9(a)
- hereof, (c)
Allliabilities, responsibilities and obligations arising under Environmental Laws or relating to Environmental Conditions or Regulated Substances (including common law liabilities relating to Environmental Conditions and Regulated Substances), whether suchliability, responsibility or obligation is known or unknown, contingent or accrued, as ofthe applicable DLC Nuclear Closing Date, including: (i) costs of compliance (including capital, operating and other costs) relating to any violation or alleged violation of Environmental Laws occurring prior to, on or after such DLC
- Nuclear Closing Date, with respect to the ownership or operation of the applicable DLC Nuclear Assets; (ii) property damage or natural resource damage (whether such damages wcre manifested before or after the applicable DLC Nuclear Closing Date) arising from Environmental Conditions or Releases of Regulated Substances at, on, in, under, adjacent to, or migrating from any DLC Nuclear Assets prior to, on, or after the applicable DLC Nuclear Closing Date, (iii) any Remediation (whether or not such Remediation commenced before the applicable DLC Nuclear Closing Date or commences after the applicable DLC Nuclear Closing Date) of Environmental Conditions or Regulated Substances that are present or have been Released prior to, on or after such DLC Nuclear Closing Date, at, on, in, adjacent to or migrating from the DLC Nuclear Assets; (iv) any violations or alleged violations of Environmental Laws occurring on or after the applicable DLC Nuclear Closing Date with respect to the ownership or operation of any DLC Nuclear Assets; (v) any bodily injury or loss oflife arising from Environmental Conditions or Releases of Regulated Substances at, on, in, under, adjacent to or migrating from any DLC Nuclear Assets on or after the applicable DLC Nuclear I
Closing Date; (vi) any bodily injury, loss oflife, property damage, or natural resource damage arising from the storage, transportation, treatment, disposal, discharge, recycling or Release, at any Off-Site Location, or arising from the arrangement for such activities, on or after the applicable DLC Nuclear Closing Date, of Regulated Substances generated in connection with the ownership or operation of the DLC Nuclear Assets; and (vii) any Remediation of any Environmental Condition or Release of 28
L-Regulated Substances arising from the storage, transportation, treatment, disposal, discharge, recycling or Release, at any Off-Site Location, or arising from the arrangement for such activities, on or aRer the applicable DLC Nuclear Closing Date, of Regulated Substances generated in connection with the ownership or operation of the DLC Nuclear Assets (collectively, " Assumed Environmental Liabilities");
(d)
Allliabilities and obligations of DLC with respect to the DLC Nuclear Assets under the agreements or consent orders with Governmental Authorities set forth on Schedule 2.3(d) aRer the applicable DLC Nuclear Closing; l
(e)
Any Tax that may be imposed by any Federal, state or local government on the ownership, sale (except with respect to Transfer Taxes as provided in Section 6.9(a)), operation or use of the applicable DLC Nuclear Assets on or aRer the DLC Nuclear Closing Date, except for any Income Taxes attributable to income received by DLC; l
I (f)
All liabilities and obligation: ofDLC in respect ofDecommissioning the DLC Nuclear Assets, and the Decommissioning Costs relating thereto whether arising prior to, on or aAer the applicable DLC Nuclear Closing Date (collectively, " A==nmed Decommissioninn Liabilities");
(g)
All liabilities, responsibilities and obligations arising under or relating to Nuclear Laws or relating to any claim in respect of Nuclear Materials based on common law or Environmental Laws, whether such liability, responsibility or obligation is known or unknown, l
contingent or accmed and whether arising or occurring prior to, on or aRer the DLC Nuclear Closing i
Date, including any and all asserted or unasserted liabilities or obligations to third parties (including employees) for personal injury or tort, or similar causes of action arising out of the o'vnership or operation of the DLC Nuclear Assets prior to, on or aRer the DLC Nuclear Closing Date, including liabilities, responsibilities and obligations arising out ofor resulting from the transportation, treatment, storage or disposal of Low Level Waste or other Nuclear Materials, includiag liabilities, responsibilities and obligations arising out ofor resulting from a " nuclear incli:nt" or " precautionary l
evacuation" (as such terms are defined in the Atomic Energy Act) at the Plants, or any other licensed l
nuclear reactor site in the United States, or in the course of the transportation of Nuclear Materials I
to or from the Plants or any other site prior to, on or aRer the DLC Nuclear Closing Date, including l
liability for any deferred premiums assessed in connection with such a nuclear incident or precautionary evacuation under any applicable NRC or industry retrospective rating plan or insurance I
policy, including any mutualinsurance pools established in compliance with the requirements imposed under Section 170 of the Atomic Energy Act and 10 C.F.R. Part 140 or 10 C.F.R. Q 50.54(w),
I orovided. howsyst, that in respect ofliabilities, responsibilities and obligations under Section 211 of L
the Energy Reorganization Act and 10 C.F.R. 50.7 in respect of Beaver Valley, Penn Power as transferee hereunder shall only be responsible for liabilities, responsibilities or obligations arising or l
occurring on or aAer the DLC Nuclear Closing (collectively, " A=sumed Nuclear Liabilities");
l (h)
All liabilities, responsibilities and obligations in respect of Spent Nuclear Fuel, whether such liability, responsibility or obligation is known or unknown, contingent or accrued and whether arising or occurring prior to, on or aAer the DLC Nuclear Closing Date except as specified l
in the first sentence of Section 2.9 (collectively, "Accumed Soent Fuel Liabilities"); and 29
n l
(i)
All of DLC's rights (except as provided under the CAPCO Settlement Agreement) and obligations under all C APCO Agreements, except to the extent otherwise specifically provided in the applicable DLC Assignment and Assumption Agreement and except,in the event the Exchange Closing and the DLC Nuclear Closing do not occur on the same day, for the Common CAPCO Agreements which shall not be assigned and assumed as otherwise contemplated hereunder but shall be so assigned and assumed at the later of such Exchange Closing or such DLC Nuclear Closing and then pursuant to a separate Assignment and Assumption Agreement.
2.4 Excluded Liabilities. Not withstanding anything to the contrary in this Agreement, no Specified FE Subsidiary shall assume or be obligated to pay, perform or otherwise discharge the following specified liabilities or obligations of DLC, (orovided. however, that DLC retains such liabilities and obligations only to the extent these liabilities and obligations currently are imposed on DLC under the CAPCO Agreements and orovided. further. that nothing in this Section 2.4 shall be construed to impose any continuing liability or obligation on DLC in respect of Assumed Decommissioning Liabilities, Assumed Environmental Liabilities (except as expressly provided in Sections 2.4(e), (g) and (h)), Assumed Nuclear Liabilities and Assumed Spent Fuel Liabilities)(the
" Excluded Liabilities"):
(a)
Any liabilities or obligations ofDLC in respect ofany Excluded Assets or other assets of DLC that are not DLC Nuclear Assets; (b).
Any liabilities or obligations of DLC with respect to Taxes attributable to BLC's ownership, operation or use of DLC Nuclear Assets for taxable periods, or portions thereof, ending before the DLC Nuclear Closing Date, except for Taxes for which Specified FE SubsMiaries are liable pursuant to Section 3.4 hereof and except for liabilities described in Section 2.3 that may be characterized as " Taxes";
(c)
Any liabilities or obligations of DLC accruing under any of the DLC Nuclear Agreements prior to the DLC Nuclear Closing Date; (d)
Any and all asserted or unasserted liabilities or obligations to third parties (including employees) for personal injury or tort, or similar causes of action arising during or attributable to the period prior to the DLC Nuclear Closing Date, to the extent these liabilities or obligations are not assumed by Specified FE Subsidiaries by operation oflaw; (e)
Any fines, penalties and associated costs for defending related enforcement actions, resulting from any violation or alleged violation of Environmental Laws or Nuclear Laws with respect to the ownership or operation of the DLC Nuclear Assets occurring prior to the DLC Nuclear Closing Date; l
(f)
Any payment obligations of DLC pursuant to DLC Nuclear Agreements for goods delivered or services rendered prior to the DLC Nuclear Closing Date, including, but not limited to, rental payments pursuant to the Real Property Leases; (g)
Any liabilities, responsibilities and obligations of DLC arising under Environmental Laws or relating to Environmental Conditions or Regulated Substances (including common law liabilities relating to Environmental Conditions and Regulated Substances), whether 30
4 such liability, responsibility or obligation was known or unknown, contingent or accrued, which relates to (i) any bodily injury, loss oflife, property damage or natural resource damage arising from the storage, transportation, treatment, disposal, discharge, recycling or Release, at any Off-Site Location, or arising from the arrangement for such activities, prior to the DLC Nuclear Closing Date, of Regulated Substances generated in connection with the ownership or operation of the DLC Nuclear Assets; or (ii) any Remediation of any Environmental Condition or Regulated Substance at any Off-Site Location, arising from the storage, transportation, treatment, disposal, discharge, recyclir.g or Release, at such Off-Site Location, or arising from the arrangement for such activities, prior to the DLC Nuclear Closing Date, of Regulated Substances generated in connection with, in each case, the ownership or operation of the DLC Nuclear Assets; orovided. that for purposes of this paragraph, " oft Site Location" does not include anylocation to which Regulated Substances disposed of or Released at the DLC Nuclear Assets have migrated; (h)
Any liability to third parties (including employees) for bodily injury or loss of life (whether or not such injury or loss arose or was made manifest on or after the DLC Nuclear Closing Date), to the extent caused (or allegedly caused) by Environmental Conditions or the Release of Regulated Substances at, on, in, under, or adjacent to, or migrating from, the DLC Nuclear Assets prior to the DLC Nuclear Closing Date; (i)
Any liability of DLC arising out of a breach by DLC or any Affiliates of DLC of any of their respective obligations under this Agreement or the Ancillary Agreements; (j)
Any liability ofDLC in respect ofDepartment ofEnergy Decontamination and Decommissioning fees due up to the time of the DLC Nuclear Closing as described in (and limited by) Section 2.10; (k)
Any liability in respect of Spent Nuclear Fuel specified as belonging to DLC in the first sentence of Section 2.9; and (1)
Any liability specified as belonging to DLC pursuant to Section 6.11(o).
2.5 Control of Litination. The Parties agree and acknowledge that DLC shall be entitled exclusively to control, defend and settle any litigation, administrative or regulatory proceeding, and any investigation or Remediation activity (including without limitation any environmental mitigation or Remediation activities), (i) arising out of or related to any Excluded Liabilities or (ii) in respect of Beaver Valley, where DLC, as operator of the Plant, would have been entitled to control such litigation under the CAPCO Agreements as in effect as of the DLC Nuclear Closing Date in respect of Beaver Valley, and in each case Specified FE Subsidiaries shall agree to cooperate fully in l
1 connection therewith, provided. however. that, in respect ofany such activity described in clause (ii),
DLC shall give the applicable Specified FE Subsidiary reasonable advance notice and opportunity to comment upon any settlement, wh ch comments shall be fully considered.
2.6 Fuel Sunolies. (a) At the DLC Nuclear Closing, DLC will sell, assign, convey, transfer and deliver to each SpeciSed FE Subsidiary its rights, title and interest in and to the Fuel Supplies related to the operation of the applicable DLC Nuclear Assets (Beaver Valley in respect of Penn Power, and Perry Unit 1, in respect of CEIC) and the applicable Specified FE Subsidiary shall pay 31
)
L
l I
l DLC an amount equal to the actual cost of such Fuel Supplies on DLC's books and records, as established by invoices (and reasonable supporting materials establishing the actual cost of such Fuel Supplies) with such invoices and supporting materials to be delivered to the Specified FE Subsidiaries not later than three (3) Business Days prior to the scheduled date of the DLC Nuclear Closing.
(b)(i) The Parties acknowledge that, absent exercise by the Specified FE Subsidiaries i
of the option provided in clause (ii) below, DLC shall not be obligated to renew the Penn Fuel Lease Arrangements which are due to expire on September 29,1999, but DLC may, at its option, elect to renew such arrangements to provide for DLC's requirements for Fuel Supplies from such expiration date through the DLC Nuclear Closing Date (the "DLC Interim Fuel Reauirements").
(ii) DLC agrees that if the Specified FE Subsidiaries request, in writing, prior to July 10,1999 that DLC renew the Penn Fuel Lease Arrangements for a period after the DLC Nuclear Closing Date, and agree in writing to pay any incremental costs associated with the renewal by DLC and obtaining all consents in respect of such arrangements, DLC will use Commercially Reasonable Efforts to effect such renewal and to obtain any consents required in connection therewith.
(iii) In connection with the DLC Interim Fuel Requirements, the Panies agree to discuss whether it would be mutually economically advantageous for DLC to obtain such requirements from Specified FE Subsidiaries (or an Affiliate of either of them), provided. however.
that this clause shall neither require DLC to obtain such requirements from Specified FE Subsidiaries l
(or an Affiliate of.either of them) nor obligate Specified FE Subsidiaries (or an Affiliate of either of them) to supply such requirements to DLC.
l 2.7 Inventories. Schedule 2.7 lists the Inventories that exist as of the date of this Agreement, together with the net book values of such Inventories. At the DLC Nuclear Closing, as part of the DLC Nuclear Assets in respect of the applicable Plant, DLC will transfer to each Specified l
FE Subsidiary (Penn Power in respect of Beaver Valley and CEIC in respect of Perry Unit 1) DLC's interest in Inventories at such Plant.
2.8 (Intentionally Omitted.)
2.9 Soent Nuclear Fuel Fees and Ownershio Between the date hereof and the DLC Nuclear Closing Date for the Plants, DLC will pay all Spent Nuclear Fuel Fees and any other fees associated with its share ofelectricity generated at such Plant and sold prior to such closing date, and Specified FE Subsidiaries shall have no liability or responsibility in respect thereof Specified FE Subsidiaries shall pay and discharge all fees and expenses associated with their share of the nuclear fuel consumed in the Plants and sold from and after such closing date, and DLC shall have no liability l
or responsibility in respect thereof. Specified FE Subsidiaries shall assume title to, and responsibility for the storage and disposal of Spent Nuclear Fuel presently stored at each Plant (including any such l
fuel which may have been used in connection with generating DLC's share of electricity at such Plant) l as of the DLC Nuclear Closing Date for such Plant. DLC shall assign to each Specified FE Subsidiary the applicable Department of Energy's Standard Spent Fuel Disposal Contract for each Plant and shall provide the required notice to the Department of Energy within 90 days of transfer of title to Spent Nuclear Fuel.
32 iE
2.10 Deoartment of Enerav Decontamination and Decommissioninn Fees. DLC will cc::%ue to pay all Department of Energy Decontamination and Decommissioning Fees relating to
'tr sl~are of the nuclear fuel purchased and consumed at each Plant prior to the DLC Nuclear Closing Date for such Plant, including all annual Special Assessment invoices to be issued aRer such closing date by the Department of Energy, as contemplated by its regulations at 10 C.F.R. Part 766 implementing Sections 1801,1802, and 1803 of the Atomic Energy Act, but DLC shall have no liability in respect of any such fees thereaRer, whether such fees are assessed with respect to the period prior to, on or aAer the DLC Nuclear Closing Date.
2.11 Pronerty Tax Litination. Notwithstanding the provisions of the Perry CAPCO Agreements, CEIC will receive the full benefits, including any refunds, and shall bear the full costs incurred aAer October 14,1998, related to pending litigation and appeals regarding the real and personal property taxes for Perry Unit I as identified on Schedule 2.11. DLC will continue to take all actions necessary in such proceedings, in cooperation with CEIC until the DLC Nuclear Closing, subject to reimbursement at the DLC Nuclear Closing by CEIC of all expenses incurred by DLC for such proceedings aAer October 14,1998. DLC will promptly pay to CEIC all amounts received by DLC as a result of such pending litigation and appeals. If the conveyance as to Peny Unit 1 is not consummated for any reason, the Parties shall negotiate arrangements that place them in the same position as to such Plant, with respect to any such costs or bene 6ts, as if neither the Agreement in Principle nor this Agreement had been executed.
~
ARTICLE III THE DLC NUCLEAR CLOSING 3.I DLC Nuclear Closina. Upon the terms and subject to the satisfaction ofthe conditions in Article VII of this Agreement, the conveyance, assignment, transfer and delivery of the DLC Nuclear Assets to Penn Power, in respect ofBeaver Valley, and CEIC, in respect ofPerry Unit 1, and the assumption of the Assumed Liabilities by Penn Power, in respect of Beaver Valley, and CEIC, in respect ofPerry Unit 1,in respect ofsuch DLC Nuclear Assets, as contemplated by this Agreement shall take placc at a closing (the "DLC Nuclear Closine"), to be held at' the offices of Skadden, Arps, State, Meagher & Flom LLP,1440 inw York Avenue, NW, Washington, D.C. at 10:00 a.m. local time, on the day following the date nie conditions precedent to the DLC Nuclear Closing set forth in ArticleVII of this Agreement in respect of the Plants have been either satisfied or waived by the Party for whose bene 6t such conditions precedent exist, or at such other time and date as the Parties may mutually agree. The date of the DLC Nuclear Closing in respect of the Plants is hereinaAer called the "DLC Nuclear Closinn Date" 3.2 Calculation of DLC Nuelear Closina Payments.
(a)
The "DLC Nuclear Closinn Payment" means the total ofpayments due under the Beaver Valley CAPCO Agreements and the Perry CAPCO Agreements, the amounts due to DLC from the Specified FE Subsidiaries in respect of Fuel Supplies pursuant to Section 2.6 and the amounts due pursuant to Section 3.4.
33
p l
l.
i i
(b)
At least ten (10) Business Days prior to the DLC Nuclear Closing Date, DLC shall prepare and deliver to Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1, an estimated closing statement (each, an " Estimated DLC Nuclear Closina Statement") that shall set forth DLC's best estimate of all estimated DLC Nuclear Closing Payments due from Penn l
Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1, to DLC (the " Estimated DLC Nuclear Closina Payment") in respect of the DLC Nuclear Closing. Within five (5) Business Days following the delivery of the Estimated DLC Nuclear Closing Statement to Specified FE Subsidiaries, either Specified FE Subsidiary may object in good faith to the Estimated DLC Nuclear Closing Payment in writing. Ifeither Specified FE Subsidiar objects to the Estimated DLC Nuclear i
Closing Payment, the Parties shall attempt to resolve their differences by negotiation. If the Parties are unable to do so before three (3) Business Days prior to the DLC Nuclear Closing Date, the amounts of the Estimated DLC Nuclear Closing Payment not in dispute shall be paid at the DLC Nuclear Closing. The disputed portion shall be paid as a Final Adjustment to the extent required by Section 3.2(c).
(c)
Within sixty (60) days following the DLC Nuclear Closing Date, DLC shall prepare and deliver to Penn Power, in respect of Beaver Valley, and CEIC, in respect of Perry Unit 1, a final closing statement including adjustments to the proration amounts specified by Section 3.4 '
l and any disputed portion of the DLC Nuclear Closing Payment described in clause (a) above (the j
" Final DLC Nuc! car Clonino Statement") setting forth the final DLC Nuclear Closing Payment in respect of the DLC Nuclear Closing and identifying the amount of any adjustment necessary to conform such FinalDLC Nuclear Closing Statement with payments made at the DLC Nuclear Closing (d' Proposed Final Adiustment"). All calculations of any DLC Nuclear Closing Payments shall be prepared using the same accounting principles, policies and methods as DLC has historically used in connection with the calculation of the items reflected on such Final DLC Nuclear Closing Statement.
(d)
Within thirty (30) days following the delivery of a Final DLC Nuclear Closing State. ment, Penn Power, in respect ofBeaver Valley, and CEIC, in respect ofPerry Unit 1, may object to such Proposed Final Adjustment in writing. DLC agrees to cooperate to provide the applicable Specified FE Subsidiary and its Representatives information used to prepare any Final DLC Nuclear Closing Statement and information relating thereto. If either Specified FE Subsidiary objects to the Proposed Final Adjustment in respect ofits Plant, the Parties shall attempt to resolve such dispute by negotiation. If the Parties are unable to resolve such dispute within thirty (30) days of any objection by the applicable Specified FE Subsidiary, such Specified FE Subsidiary and DLC shall appoint the Independent Accounting Firm, which shall, at their joint expense, review the Proposed Final Adjustment and determme the appropriate adjustment to the applicable DLC Nuclear Closing Payment, if any, within thirty (30 days) of such appointment. The Parties agree to cooperate with the Independent Accounting Firm and provide it with such information as it reasonably requests to enable it to make such determination. The finding of such Independent Accounting Firm shall be l-binding on the applicable Specified FE Subsidiary and DLC. Upon determination of the appropriate l
adjustment (the " Final Adiustment") by agreement of the Parties or by binding determination of the Independent Accounting Firm, if the Final Adjustment results in a change to any DLC Nuclear Closing Payment, the Party owing the difference shall deliver such difference to the other Party no later than two (2) Business Days after such determination, in immediately available funds or in any other manner as reasonably requested by the payee.
34
3.3 Payment of DLC Nuclear Closina Payment. If any DLC Nuclear Closing Payment is a positive amount, such amount shall be payable by the applicable Specified FE Subsidiary to DLC.
If any DLC Nuclear Closing Payment is a negative amount, such amount shall be payable by DLC to the applicable Specified FE Subsidiary. In connection with the DLC Nuclear Closing, subject to Section 3.2(b), the Party owing the DLC Nuclear Closing Payment shall pay such amount to the other Party by wire transfer ofimmediately available funds denominated in U.S. dollars or by such other means as are agreed upon by the Parties. In addition to DLC Nuclear Closing Payments, the Parties recognize that monies will be owed under the terms of the CAPCO Agreements related to the DLC Nuclear Assets for obligations through the DLC Nuclear Closing Date. Notwithstanding any contrary provisions herein, the Parties will follow existing CAPCO billing procedures and the applicable Party will take all actions necessary to cause final bills to be rendered within ninety (90) days after the DLC Nuclear Closing Date.
3.4 Prorations Notwithstanding anything to the contrary in any CAPCO Agreement:
(a)
The Parties agree that all of the items normally prorated, including those listed below (but not including Income Taxes), relating to the business and operation of the DLC Nuclear Assets shall be prorated as of the DLC Nuclear Closing Date, with DLC liable to the extent such items relate to any time period prior to the DLC Nuclear Closing Date, and the applicable Specified FE Subsidiary liable to the extent such items relate to periods commencing with the DLC Nuclear Closing Date (measured in the same units used to compute the item in question, otherwise measured by calendar days):
(i)
Personal property, real estate and occupancy Taxes, assessments and other charges, if any, on or with respect to the business and operation of the DLC Nuclear Assets; (ii)
Rent, Taxes and all other items (including prepaid services or goods not included in Inventory) payable by or to a DLC under any of the DLC Nuclear Agreements; (iii)
Any permit, license, registration, compliance assurance fees or other fees with respect to any Transferable Permit; (iv)
Sewer rents and charges for water, telephone, electricity and other utilities with respect to the DLC Nuclear Assets; (v)
Rent and Taxes payable by DLC under the Real Property Leases assigned to the applicable Specified FE Subsidiary; and (vi)
ANI and NEIL insurance premiums for the current year or other applicable policy period; (vii)
Impositions and fees payable to the Department of Energy and the NRC; and 35
B.
I (viii) Membership fees in respect of the Institute for Nuclear Power Operator, the Nuclear Energy Institute and similar organizations involved solely in nuclear matters.
(b)
In connection with the prorations referred to in Section 3.4. (a) above, in the event that actual figures are not available at the DLC Nuclear Closing Date, the proration shall be based upon the actual Taxes or other amounts accrued through the DLC Nuclear Closing Date or paid for the most recent year (or other appropriate period) for which actual Taxes or other amounts paid are available. Such prorated Taxes or other amounts shall be re-prorated and paid to the appropriate Party within sixty (60) days of the date that the previously unavailable actual figures become available. The prorations shall be based on the number ofdays in a year or other appropriate period (i) before the DLC Nuclear Closing Date and (ii) including and after the DLC Nuclear Closing Date. The Parties agree to furnish each other with such documents and other records as may be l
reasonably requested in order to confirm all adjustment and proration calculations made pursuant to this Section 3.4.
3.5 Audit Cooperation. Each of Specified FE Subsidiaries and DLC shall notify and provide the other with reasonable assistance in the event of an examination, audit or other proceeding regarding any fair market value of the DLC Nuclear Assets and the Assumed Liabihties.
3.6
- Deliveries by Soecified FE Subsidiaries. At the DLC Nuclear Closing, each Specified FE Subsidiary will deliver, or cause to be delivered, the following to DLC:
~
(a)
With respect to the transfer of the applicable DLC Nuclear Assets:
(i)
The Assignment and Assumption Agreementin respect ofsuch assets, duly executed by each Specified FE Subsidiary (Penn Power in respect of Beaver Valley and CEIC in respect of Perry Unit 1);
(ii)
All such other instruments of assumption as shall, in the reasonable opinion of DLC and its counsel, be necessary for Penn Power to assume the Assumed Liabilities in respect of Beaver Valley and CEIC to assume the Assumed Liabilities in respect of Perry Unit 1, in each case in accordance with this Agreement; and (iii)
Certificates ofinsurance relating to the insurance policies required pursuant to Section 6.16 of this Agreement and pursuant to 10 C F.R. Parts 50 and 140.-
(b)
With respect to this Agreement:
(i)
The documents to be delivered by Specified FE Subsidiaries under Section 7.2; (ii)
Copies, certified by the Secretary or Assistant Secretary of each Specified FE Subsidiary, of corporate resolutions authorizing the execution and delivery of this Agreement and all of the agreements and instruments to be executed and delivered by such Specified FE Subsidiary in connection herewith, and the consummation of the transactions contemplated hereby; 36
1 (iii)
Certificates of the Secretary or Assistant Secretary of each Specified FE Subsidiary identifying the name and title and bearing the signatures of the officers of such Specified FE Subsidiary authorized to execute and deliver this Agreement and the other agreements and instruments contemplated hereby; (iv)
Certificates of good standing with respect to each Specified FE Subsidiary, issued by the jurisdiction ofincorporation of such Specified FE Subsidiary; and (v)
Such other agreements, documents, instruments and writings as are required to be delivered by such Specified FE Subsidiary at or prior to the applicable DLC Nuclear Closing Date pursuant to this Agreement or otherwise reasonably required in connection herewith.
(vi)
Certificates dated the DLC Nuclear Closing Date executed by the duly authorized officers of each Specified FE Subsidiary to the effect that, to such officers' Knowledge, the conditions set forth in Section 7.3 have been satisfied by each Specified FE Subsidiary and that each of the representations and warranties of each Specified FE Subsidiary made in this Agreement are true and correct in all material respects as though made at and as of the DLC Nuclear Closing Date.
3.7 Deliveries by DLC. At the DLC Nuclear Closing, DLC will deliver, or cause to be delivered, the folletwing to the applicable Specified FE Subsidiary (Penn Power in respect of Beaver Valley and CEIC in respect of Perry Unit 1):
(a)
With respect to the transfer of the applicable DLC Nuclear Assets :
(i)
The Assignment and Assumption Agreement in respect ofsuch assets, duly executed by DLC; (ii)
The duly executed Bill of Sale with respect to the applicable DLC Nuclear Assets; (iii)
Copies of any and all governmental and other third party consents, waivers or approvals obtained or required to be obtained by DLC with respect to the transfer of the applicable DLC Nuclear Assets or the consummation of the transactions contemplated by this Agreement; (iv)
One or more Warranty Deeds conveying the Real Property, duly executed and acknowledged by DLC and in recordable form; (v)
FIRPTA Affidavits, duly executed by DLC; (vi)
To the extent available, originals ofall DLC Nuclear Agreements, Real Property Leases and Transferable Permits and,ifnot available, tme and correct copies thereof which agreements, leases and permits shall be located at the applicable Plant, with a list thereof being provided at the applicable DLC Nuclear Closing; 37
4 (vii)
All such other instruments of assignment, transfer or conveyance as shall, in the reasonable opinion ofthe applicable Specified FE Subsidiary and its counsel, be necessary or desirable to transfer the applicable DLC Nuclear Assets to the applicable Specified FE Subsidiary, in accordance with this Agreement and where necessary or desirable in recordable form; and (viii) The DLC Nuclear Insurance Policies.
(b)
With respect to this Agreement:
(i)
The documents to be delivered by DLC under Section 7.3, (ii)
Copies, certified by the Secretary or Assistant Secretary of DLC, of j
. corporate resolutions authorizing the execution and delivery of tais Agreement and all of the agreements and instruments to be executed and delivered by DLC in connection herewith, and the consummation of the transactions contemplated hereby; (iii)
A certificate ofthe Secretary or Assistant Secretary ofDLC identifying the name and title and beanng the signatures of the ofEcers ofDLC authorized to execute and deliver i
this Agreement and the other agreements and instruments contemplated hereby; (iv)
A certificate of good standing with respect to DLC, issued by the i
I Secretary of State of the Commonwealth of Pennsylvania and the State of Ohio; and (v)
Such other agreements, documents, instruments and writings as are required to be delivered by DLC at or prior to the applicable DLC Nuclear Closing Date pursuant to this Agreement or otherwise reasonably required in connection herewith.
(vi)
Certificate dated the DLC Nuclear Closing Date executed by the duly authorized officers of DLC to the effect that, to such officers' Knowledge, the conditions set forth in Section 7.2 have been satisfied by DLC and that each of the representations and warranties ofDLC made in this Agreement are true and correct in all material respects as'though made at and as of the DLC Nuclear Closing Date.
i 3.8 Work in Pronress. The Parties agree to work together before and after the DLC Nuclear Closing Date to effect an orderly transition with respect to work in progress.
3.9 Ancillary Anreements. The Parties acknowledge that the Ancillary Agreements (except for the Electric Facilities Agreement and the CAPCO Settlement Agreement) shall be executed on the DLC Nuclear Closing Date and each Party agrees to execute, in connection with the DLC Nuclear Closing, each such Ancillary Agreement to which it is to be a party, substantially in the form of such Ancillary Agreements attached hereto. Each Party further (i) acknowledges that it has executed the CAPCO Settlement Agreement and the Electric Facilities Agreement on the date hereof l
and (ii) agrees that the Parties hereto shall make, pursuant to Section 6.7 hereof, all filings necessary or advisable to obtain any Required Regulatory approvals in respect of the CAPCO Settlement Agreement and the Electric Facilities Agreement and the transactions contemplated thereby.
38
ARTICLE IV j
l i
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF DLC DLC represents and wan ants to Penn Power, in respect of Beaver Valley, and to CEIC, in respect of Perry Unit I as follows:
4.1 Incorooration
Oualification. DLC is a corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has all requisite corporate power and authority to own, lease and operate its material assets and properties and to cany on its business as is now being conducted. DLC is duly qualified to do business as a foreign corporation and a in good standing under the laws of each jurisdiction in which its business, as now being conducted, shall require it to be so qualified, except where the failure to be so quali6ed would not have a Material Adverse Effect. DLC has heretofore delivered to Specified FE Subsidiaries true, complete and correct copies ofits Articles ofIncorporation and Bylaws as currently in effect.
4.2 Authority. DLC has full corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which DLC is a signatory and to consummate the transactions contemplated hereby or thereby. The execution and delivery of this Agreement and each of the Ancillary Agreements to which DLC is a signatory by DLC and the consummation ofthe transactions contemplated hereby and thereby by DLC have been duly and validly authorized by all necessary corporate action required on the part ofDLC and this Agreement and each of the Ancillary Agreements to which it is a signatory have been duly and validly executed and delivered by DLC.
Subject to the receipt of the DLC Required Regulatory Approvals, each of this Agreement and each of,the Ancillary Agreements to which DLC is a signatory constitutes the legal, valid and binding agreement of DLC, enforceable against DLC in accordance with its terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity).
4.3 Conwnts and Anorovals: No Violation. (a) Except as set forthin Schedule 4.3(a), and subject to obtaining any DLC Required Regulatory Approvals, neither the execution, delivery and performance of this Agreement by DLC nor the execution, delivery and performance by DLC of the Ancillary Agreements will(i) conflict with or result in any breach of any provision of the Articles of Incorporation or Bylaws of DLC, (ii) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, material agreement or other instrument or obligation to which DLC is a party or by which it, or any of the DLC Nuclear Assets may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained or that would not, individually or in the aggregate, create a Material Adverse Effect; or (iii) constitute violations of any law, regulation, order, judgment or decree applicable to DLC, which violations, individually or in the aggregate, would create a Material Adverse Effect.
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(b)
Other than the Required Regulatory Approvals set forth in Schedule 4.3(b)
(the "DLC Reauired Reaulatory Acorovals"), no consent or approval of, filing with, or notice to, any Governmental Authority is necessary for the execution and delivery of this Agreement, or the consummation by DLC of the transactions contemplated thereby, other than (i) such consents, approvals, filings or notices which, if not obtained or made, will not prevent DLC from performing its material obligations hereunder and (ii) such consents, approvals, filings or notices which become applicable to DLC or the DLC Nuclear Assets as a result of the specific regulatory status of Specified FE Subsidiaries (or any of their Affiliates) or as a result of any other facts that specifically relate to the business or activities in which Specified FE Subsidiaries (or any of their Affiliates) is or proposes to be engaged.
4.4 Insurance (a) DLC has obtained and is maintaining policies ofliability and other forms ofinsurance as required by the applicable CAPCO Agreements.
(b)
DLC has obtained and is maintaining the policies ofliability and other forms ofinsurance in respect of SAPS as described in Schedule 4.4(b).
4.5 DLC Real Pronerty Leases. Schedule 4.5 lists, as of the date of the Agreement, all Real Property Leases. Except as set forth in Schedule 4.5, the Real Property Leases are valid, binding and enforceable against DLC in accordance with their terms; there are no existing material defaults by DLC or, to DLC's Knowledge, any other party thereunder; and no event has occurred which (whether with or without notice, lapse of time or both) would constitute a material default by BLC or, to DLC's Knowledge, any other party thereunder. DLC has delivered to each Specified FE Subsidiary true, correct and complete copies of each of the Real Property Leases applicable to the Plant it is to acquire.
4.6 Environmental Matters. (a) DLC is an owner but not an operator of Perry Unit I which is operated by an FE Subsidiary. For this reason, both DLC's environmental responsibilities and its Knowledge ofenvironmentalissues and concerns at Perry Unit I and the related DLC Nuclear Assets are limited and its representations are accordingly limited or excluded as set forth in this Section 4.6(a). Subject to this fact and except as disclosed in Schedule 4.6(a):
(i)
DLC holds, and is in substantial compliance with, all Environmental Permits that are required for DLC to own its undivided interest in Perry Unit 1, and DLC is otherwise in compliance with applicable Environmental Laws with respect to its ownership of Perry Unit i except for such failures to hold or comply with required Environmental Permits, or such failures to be in compliance with applicable Environmental Laws, as would not, individually or in the aggregate, create a Material Adverse Effect; (ii)
DLC has not received any written request for information, or been notified that it is a potentially responsible party, under CERCLA or any similar state law with respect to Perry Unit 1; and (iii)
DLC has not entered into or agreed to any consent decree or order relating to Perry Unit 1, and is not subject to any outstanding judgment, decree, or judicial order r
40 i
o relating to compliance with any Environmental Law or to Remediation ofRegulated Substances under any Environmental Law relating to Perry Unit 1.
(b)
Except as disclosed in Schedule 4.6(b):
(i)
DLC holds, and is in substantial compliance with, all Environmental Permits that are required for DLC to own its undivided interest in Beaver Valley and to conduct the business and operations of the DLC Nuclear Assets in respect of Beaver Valley, and is otherwise in compliance with applicable Environmental Laws with respect to the business and operations of the DLC Nuclear' Assets in respect of Beaver Valley, except for such failures to hold or comply with required Environmental Permits, or such failures to be in compliance with applicable Environmental Laws, as would not, individually or in aggregate, create a Material Adverse Effect; (ii)
DLC has not received any written request for information, or been notified that it is a potentially responsible party, under CERCLA or any similar state law with respect to the Real Property in respect of Beaver Valley; (iii)
DLC has not entered into or agreed to any consent decree or order relating to the Real Property in respect of Beaver Valley, nor is it subject to any outstanding judgment, decree, or judicial order relating to compliance with any Environmental Law or to Remediation of Regulated Substances under any Environmental Law relating to Beaver Valley.
~
To DLC's Knowledge, no Release of Regulated Substances has (iv) occurred at the Real Property in respect of Beaver Valley and no Regulated Substances are present in, on, about or migrating from the Real Property in respect of Beaver Valley that could (absent a Release of such substances) give rise to an Environmental Claim related to the DLC Nuclear Assets in respect of Beaver Valley for which Remediation reasonably could be required, except in any such case to the extent that any such Release or Environmental Claim would not, individually or in aggregate, create a Material Adverse Effect.
(c)
The representations and warranties made in this Section 4.6 are DLC's exclusive representations and warranties relating to environmental matters.
4.7 Real Procerty. Schedule 4.7 contains a description of the Real Property included in the DLC Nuclear Assets. True and correct copies of any current surveys, abstracts, title commitments or title opinions in DLC's possession and all policies of title insurance currently in force and in the possession of DLC with respect to the Real Property have heretofore been made available to Specified FE Subsidiaries.
4.8 Condemnation. Except as set forth in Schedule 4.8, DLC has not received any written notices of and otherwise has no Knowledge of any pending or threatened proceedings or actions by any Governmental Authority to condemn or take by power of eminent domain all or any part of the DLC Nuclear Assets.
4.9 Contracts and Leases. (a) With respect to Perry Unit 1:
41
a (i)
Schedule 4.9(a)(i) lists each written contract, license, agreement, or personal property lease which is material to DLC's ownership interest in the DLC Nuclear Assets relating to Perry Unit 1, other than (A) those listed or described on another Schedule, (B) that are expected to expire or terminate prior to the DLC Nuclear Closing Date, (C) that provide for annual payments by DLC after the date hereof ofless than $500,000, or (iv) to which FE or a FE Subsidiary is a signatory, (ii)
Except as disclosed in Schedule 4.9(a)(ii), each DLC Nuclear Agreement listed in Sd-dule 4.9(a)(i) (A) constitutes a legal, valid and binding obligation of DLC and, to DLC s Knewb!c,e, constitutes a valid and binding obligation ofthe other parties thereto, and (B) may be ti insfen ed to CEIC pursuant to this Agreement without the consent of the other parties thereto and wn1 continue in full force and effect themafter, unless in any such case the impact of such lack oflegality, validity or binding nature, or inability to transfer, would not, individually or in the aggregate, create a Material Adverse Effect.
(iii)
Except as set forth in Schedule 4.9(a)(iii), there is not, under any of the DLC Nuclear Agreements listed in Schedule 4.9(a)(i), any default or event which, with notice or lapse of time or both, would constitute a default on the part of DLC or, to DLC's Knowledge, any of the other parties thereto, except such events of default and other events which would not, individually or in the aggregate, create a Material Adverse Effect.
(b)
With respect to Beaver Valley:
(i)
Schedule 4.9(b)(i) lists each DLC Nuclear Agreement in respect of Beaver Valley which is material to the business or operations of the DLC Nuclear Assets in respect of Beaver Valley, other than those (A) that are listed or described on another Schedule, (B) that are ewted to expire or terminate prior to the DLC Nuclear Closing Date, or (C) that provide for anc.aal payments by DLC after the date hereof ofless than $500,000.
(ii)
Except as disclosed in Schedule 4.9(b)(ii), each DLC Nuclear Agreement in respect of Beaver Valley (A) constitutes a legal, valid and kinding obligation of DLC and, to DLC's Knowledge, constitutes a valid and binding obligation of the other parties thereto, and (B) may be transferred to Penn Power pursuant to this Agreement without the consent of the other panies thereto and will continue in full force and effect thereafter, unless in any such case the impact of such lack oflegality, validity or binding nature, or inability to transfer, would not, individually or i
in the aggregate, create a Material Adverse Effect, with the understanding that the DLC Nuclear Assets associated with Beaver Valley Unit 2 will be subject to the Encumbrances associated with the Beaver Valley Unit 2 Lease Indentures.
f (iii)
Except as set forth in Schedule 4.9(b)(iii), there is not, under the DLC Nuclear Agreements in respect of Beaver Valley, any default or event which, with notice or lapse of L
I time or both, would constitute a default on the part ofDLC or to DLC's Knowledge, any ofthe other l
panies thereto, except such events ofdefault and other events which would not, individually or in the aggregate, create a Material Adverse Effect.
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4.10 Lenal Proceedinas. Except as set forth in Schedule 4.10, there is no action or proceeding pending or, to DLC's Knowledge, threatened against DLC before any court, arbitrator or Governmental Authority, which could, individually or in the aggregate, reasonably be expected to create a Material Adverse Effect. Except as set forth in Schedule 4.10, DLC is not subject to any outstanding judgments, rules, orders, writs, injunctions or decrees of any court, arbitrator or Governmental Authority that would, individually or in the aggregate, create a Material Adverse Effect.
4.11 Pernuts (a) With respect to Perry Unit 1:
(i)
DLC has all Permits necessary to own the DLC Nuclear Assets relating to Perry Unit i except where the failure to have such Permits would not, individually or in the aggregate, create a Material Adverse Effect. Except as disclosed on Schedule 4.11(a)(i), DLC has not received any notification that DLC is in violation of any such Permits, except notifications of violations which would not, individually or in the aggregate, create a Material Adverse Effect. DLC is in compliance with all such Permits except where non-compliance would not, individually or in the aggregate, create a Material Adverse Effect.
(ii)
Schedule 4.11(a)(ii) sets forth all material Permits, other than Transferable Permits related to the DLC Nuclear Assets relating to Perry Unit I held by DLC.
(b).
With respect to Beaver Valley:
(i)
DLC has all Permits (other than Environmental Permits, which are addressed in Section 4.6 hereof) necessary to own and operate the DLC Nuclear Assets relating to Beaver Valley except where the failure to have such Permits would not, individually or in the aggregate, create a Material Adverse Effect. Except as disclosed on Schedule 4.11(b)(i), DLC has not received any notification that DLC is in violation of any such Permits, except notifications of violations which would not, individually or in the aggregate, creete a Material Adverse Effect. DLC is in compliance with all such Permits except where non-compliance would not, individually or in the aggregate, create a Material Adverse Effect.
(ii)
Schedule 4.11(b)(ii) sets forth all material Permits, other than Transferable Permits related to the DLC Nuclear Assets relating to Beaver Valley.
4.12 Taxes DLC has filed or caused to be filed all Tax Retums that are required to be filed by it with respect to any Tax relating to the DLC Nuclear Assets, and paid or caused to be paid all Taxes that have become due as indicated thereon, except where such Tax is being contested in good faith by appropriate proceedings, or where the failure to so file or pay would not create a Material Adverse Effect. All Tax Returns relating to the DLC Nuclear Assets are true, correct and complete in all material respects. There are no tiens for Taxes upon the DLC Nuclear Assets except for liens for Taxes not yet due and Permitted Encumbrances. Except as set forth in Schedule 4.12, no notice of deficiency or assessment has been received from any taxing authority with respect to liabilities for Taxes ofDLC in respect of the DLC Nuclear Assets, which have not been fully paid or finally settled, and any such deficiency shown in Schedule 4.12 is being contested in good faith through appropriate proceedings. Except as set forth in Schedule 4.12, there are no outstanding agreements or waivers i
43
extending the applicable statutory periods oflimitation for Taxes associated with the DLC Nuclear Assets that w2 be binding upon the applicable Specified FE Subsidiary after the DLC Nuclear Closing. Except as set forth in Schedule 4.12, none of the DLC Nuclear Assets is property that is required to be treated as being owned by any other person pursur.nt to the so-called safe harbor lease provisions offormer Section 168(f) ofthe Code, and none of the DLC Nuclear Assets is " tax-exempt use" property within the meaning of Section 168(h) of the Code. Schedule 4.12 sets forth the taxing jurisdictions in which DLC owns assets or conducts business that require a notification to a taxing authority of the transactions contemplated by this Agreement, if the failure to make such notification, j
or obtain Tax clearance certificates in connection therewith, would either require either Specified FE Subsidiary to withhold any portion of the consideration or subject either Specified FE Subsidiary to any liability for any Taxes of DLC.
4.13 Intellectual Prossny Schedule 4.13 sets forth allIntellectual Property used in and, individually or in the aggregate with other Intellectual Property, material to the operation or business of the DLC Nuclear Assets, each of which DLC either has all right, title and interest in or valid and binding rights under contract to use. Except as disclosed in Schedule 4.13, (i) DLC is not, nor has it received any notice that it is, in default (or with the giving of notice or lapse of time or both, would be in default), under any contract to use such Intellectual Property, and (ii) to DLC's Knowledge, such Intellectual Property is not being infringed by any other Person. DLC has not received notice that it is infringing any Intellectual Property of any other Person in connection with the operation or business of DLC Nuclear Assets, and DLC, to its Knowledge, is not infringing any Intellectual Property of any other Person which, individually or in the aggregate, would have a Material Adverse Effect.
4.14 Comoliance With Laws. DLC is in compliance with all applicable laws, rules and regulations with respect to its ownership or, in the case ofBeaver Valley, operation of DLC Nuclear Assets except where the failure to be in compliance would not, individually or in the aggregate, create a Material Adverse Effect.
4.15 DISCLAIMERS REGARDING DLC NUCLEAR ASSETS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTES SET FORTH IN THIS ARTICLE IV, THE DLC NUCLEAR ASSETS ARE TRANSFERRED "AS IS, WHERE IS", AND DLC EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTES OF ANY KIND OR NATURE, EXPRESS OR IMPLED, AS TO LIABILITE3, OPERATIONS OF THE PLANTS, THE TITLE, CONDITION, VALUE OR QU ALITY OF THE DLC NUCLE AR ASSETS ORTHE PRO SPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE DLC NUCLEAR ASSETS AND DLC SPECIFICALLY DISCLAIMS ANY REPRESENTATION ORWARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE DLC NUCLEAR ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER L ATENT OR P ATENT, OR COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS, ORTHE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENYS, INCLUDING BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER DLC POSSESSES SUFFICENT REAL PROPERTY ORPERSONAL PROPERTY TO OPERATE THE DLC NUCLEAR ASSETS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, DLC FURTHER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY 44
1 I
I REGARDING THE ABSENCE OF REGULATED SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS WITH RESPECT TO THE DLC NUCLEAR ASSETS. WITHOUT LIMITING THE GENERALITY OF THE l
FOREGOING, EXCEPT ' AS OTHERWISE EXPRESSLY PROVIDED HEREIN, DLC EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF THE DLC NUCLEAR ASSETS OR THE SUITABILITY OF THE DLC NUCLEAR ASSETS FOR OPERATION AS A POWER PLANT AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY DLC OR DLC REPRESENTATIVES, OR BY ANY BROKER ORINVESTMENT B ANKER, WILL C AUSE OR CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR QUALITY OF THE DLC NUCLEAR ASSETS.
4.16 Year 2000 Comoliance. DLC, with respect to the Computer Systems at Beaver Valley that may be included in the DLC Nuclear Assets, has plans to achieve Year 2000 Compliance, and is using Commercially Reasonable Efforts to execute and carry out such plans.
4.17 (Intentionally Omitted.]
4.I8 Capital Expenditures. The only capital expenditures associated with the DLC Nuclear Assets relating to Beaver Valley that are planned by DLC are those capital expenditures approved in accordance with the Beaver Valley CAPCO Agreements.
4.19 Labor Matters. DLC has previously delivered to Penn Power or its Representatives true and correct copies of all collective bargaining agreements to which DLC is a party or is subject and which relate to the business and operations of the DLC Nuclear Assets relating to Beaver Valley, With respect to the business or operations ofthe DLC Assets relating to Beaver Valley, except to the extent set forth in Schedule 4.19 and except for such matters as will not, individually or in aggregate, create a Material Adverse Effect, (a) DLC is in compliance with all applicable laws respecting employment and employment practices, occupational safety and health, plant closing, mass layoffs, terms and conditions of employment and wages and hours; (b) DLC has not received any written notice of any unfair labor practice complaint against DLC pending before the National Labor Relations Board; (c) no arbitration proceeding arising out of or under any collective bargaining agreement is pending against DLC; and (d) DLC has not experienced any work stoppage within the three-year period prior to the date hereof and to DLC's Knowledge none is currently threatened.
4.20 Benefit Plans: ERISA. (a) Schedule 4.20 lists all DLC Benefit Plans maintained for, or in which the employees of DLC connected with the DLC Nuclear Assets relating to Beaver Valley participate. True and complete copies of all such DLC Benefit Plans have been made available to Penn Power or its Representatives.
(b)
No liability under Title IV or Section 302 ofERIS A has been incurred by DLC or any ERIS A Affiliate ofDLC that has not been satisfied in full, and no condition exists that presents a material risk to DLC or any ERISA Affiliate of DLC ofincurring any such liability, other than liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due). Insofar as the representation made in this Section 4.20(b) applies to Sections 4064,4069 45
or 4204 of Title IV of ERISA, it is made with respect to any employee benefit plan, program, agreement or arrangement subject to Title IV of ERISA to which DLC or any ERISA Affiliate of DLC made, or was required to make, contributions during the five (5)-year period ending on the last day of the most recent plan year ended prior to the DLC Nuclear Closing Date.
(c)
The consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event through the DLC Nuclear Closing Date, (i) entitle any current or former employee or officer ofDLC or any ERIS A Affiliate ofDLC to severance pay, unemployment compensation or any other payment that is not tite responsibility ofDLC pursuant to Section 6.11(o), or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer that is not the responsibility of DLC pursuant to Section 6.11(o).
(d)
There has been no material failure of a DLC Benefit Plan that is a group health plan (as defined in Section 5000(b)(1) of the Code) to meet the requirements of Section 4980B(f) of the Code with respect to a qualified beneficiary (as defined in Section 4980B(g) of the Code).
'Neither DLC nor any ERIS A Affiliate of DLC has contributed to a nonconforming group health plan (as defined in Section 5000(c) of the Code) and no ERISA Affiliate of DLC has incurred a tax Section 5000(e) of the Code that is or could become a liability of Specified FE Subsidiaries.
(e)
There are no pending, or to DLC's Knowledge, threatened or anticipated claims by or on b@alf of any DLC Benefit Plans, by any employee or beneficiary covered under any such DLC Benefit Plans, or otherwise involving any such DLC Benefit Plans (other than routine claims for benefits).
4.21 DLC Oualified Decommissioninn Funds.
(a)
Each DLC Qualified Decommissioning Fund is a trust, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania with all requisite authority to conduct its affairs as it now does. Each DLC Qualified Decommissioning Fund satisfies the requirements necessary for such fund to be treated as a " Nuclear Decommissioning Reserve Fund" within the meaning of Code section 468A(a) and as a " nuclear decommissioning fund" and a
" qualified nuclear decommissioning fund" within the meaning ofTreas. Reg. 1.468A-1(b)(3). Each such fund is in compliance in all material respects with all applicable rules and regulations ofthe NRC, the PaPUC, and the IRS. No DLC Qualified Decommissioning Fund has engaged in any acts of"self-dealing" as defined in Treas. Reg. Q l.468A-5(b)(2). No " excess contribution," as defined in Treas.
l Reg. { l.468A-5(c)(2)(ii), has been made to any DLC Qualified Decommissioning Fund which has not been withdrawn within the period provided under Treas. Reg. 1.468A-5(c)(1). DLC has made i
timely and valid elections to make annual contributions to the DLC Qualified Decommissioning Funds l
for each year in which such Funds have been in existence. DLC has heretofore delivered copies of such elections to Specified FE Subsidiaries.
(b)
Subject only to DLC's Required Regulatory Approvals, DLC has all requisite authority to cause the assets of the DLC Qualified Decommissioning Funds to be transferred to the applicable Specified FE Subsidiaries in accordance with the provisions of this Agreement.
46 L.
(c)
DLC and/or the trustee ofeach of the DLC Qualified Decommissioning Funds have filed or caused to be filed with the NRC, the IRS and any state or local authority all material forms, statements, reports, documents (including all exhibits, amendments and supplements thereto) required to be filed by either of them. DLC has delivered to Specified FE Subsidiaries a copy of the schedule of ruling amounts most recently issued by the IRS for each of the DLC Qualified Decommissioning Funds, a copy of the request that was filed to obtain such schedule of ruling amounts and a copy of any pending requests for revised ruling amounts, in each case together with all exhibits, amendments and supplements thereto. As of the DLC Nuclear Closing, DLC will have i
i timely filed all requests for revised schedules of mling amounts for the DLC Qualified Decommissioning Funds in accordance with Treas. Reg. Q l.468 A-3(i). DLC shall furnish Specified FE Subsidiaries with copies of such requests for revised schedules of ruling amounts, together with all exhibits, amendments and supplementals thereto, promptly after they have been filed with the IRS.
Any amounts contributed to the DLC Qualified Decommissioning Funds while such requests are pending before the IRS and which turn out to be in excess of the applicable amounts provided in the schedule of ruling amounts issued by the IRS will be withdrawn from the DLC Qualified Decommissioning Funds within the period provided under Treas. Reg. { l.468A-5(c)(2) for withdrawals of excess contributions to be made without resulting in a disqualification of the Funds under Treas. Reg. Q l.468A-5(c)(1). Except as provided in Section 6.19 of this Agreement, there are no interim rate orders that may be i etroactively adjusted or retroactive adjustments to interim rate orders that may affect amounts that Specified FE Subsidiaries may contiibute to the DLC Qualified Decommissioning Funds or may require distributions to be made from the D'.C Qualified Decommissioningfunds.
(d)
DLC has made available to Specified FE Subsidiaries the balance sheets for each of the DLC Qualified Decommissioning Funds as of December 31,1998 and as of the last Business Day before the DLC Nuclear Closing Date, and they present fairly as ofDecember 31,1998 and as of the last Business Day before closing, the financial position of each of the DLC Qualified Decommissioning Funds in conformity with generally accepted accounting principles applied on a consistent basis, except as otherwise noted there. DLC has made available to Specified FE Subsidiaries information from which Specified FE Subsidiaries can determine the Tax Basis of all assets in the DLC Qualified Decommissioning Funds as of the last Business Day before the DLC Nuclear Closing Date. There are no liabilities (whether absolute, accrued, contingent or othenvise and whether due or to become due), including, but not limited to, any acts of"self-dealing" as defined in Treas. Reg. 1.468A-5(b)(2) or agency or other legal proceedings that may materially affect the financial position of each of the DLC Qualified Decommissioning Funds other than those, if any, that are disclosed on Schedule 4.21.-
(e)
DLC has made available to Specified FE Subsidiaries all contracts and agreements to which the Trustee of each of the DLC Qualified Decommissioning Funds, in its capacity as such, is a party.
-(f)
Each of the DLC Qualified Decommissioning Funds has filed all Tax Returns required to be filed and all material Taxes shown to be due on such Tax Returns have been paid in full except where such Tax is being contested in good faith by appropriate proceedings or where the failure to so file or pay would not create a Material Adverse Effect. Except as shown in Schedule 4.21, no notice of deficiency or assessment has been received from any taxing authority with respect 47
to liability for Taxes ofeach of the DLC Qualified Decommissioning Funds which have not been fully paid or finally settled, and any such deficiency shown in such Schedule 4.21 is being contested in good faith through appropriate proceedings. Except as set forth in Schedule 4.21, there are no outstanding agreements or waivers extending the applicable statutory periods oflimitations for Taxes associated with each of the DLC Qualified Decommissioning Funds that will be binding on Specified FE Subsidiaries after the DLC Nuclear Closing Date.
(g)
To the extent DLC have pooled the assets of the DLC Qualified Decommissioning Funds for investment purposes in periods prior to the DLC Nuclear Closing, such pooling arrangement is a partnership for federal income tax purposes and DLC has filed all Tax Returns required to be filed with respect to such pooling arrangement for such periods.
4.22 DLC NonanMed Decommissioninn Funds.
(a)
Each DLC Nonqualified Decommissioning Fund is a tmst validly existing and in good standing under the laws of the Commonwealth of Pennsylvania with all requisite authority to conduct its affairs as it now does. Each'of DLC Nonqualified Decommissioning Fund is in full compliance with all applicable rules and regulations of the NRC, and the PaPUC.
(b)
Subject only to DLC's Required Regulatory Approvals, DLC has all requisite -
authority to cause the assets of the DLC Nonqualified Decommissioning Funds to be transferred to the applicable Spqcified FE Subsidiaries in accordance with the provisions of this Agreement.
(c)
DLC and/or the Trustee of the DLC Nonqualified Decommissioning Funds have filed or caused to be filed with the NRC and any state or local authority a:1 material forms, statements, reports, documents (including all exhibits, amendments and supplements thereto) required to be filed by either of them.
(d)
DLC has made available to Specified FE Subsidiaries the balance sheets for the DLC Nonqualified Decommissioning Funds as of December 31,1998 and as of the last Business Day before the DLC Nuclear Closing Date, and they present fairly as of December 31,1998 and as of the last Business Day before closing, the financial position' of the DLC Nonqualified Decommissioning Funds in conformity with generally accepted accounting principles applied on a consistent basis, except as otherwise noted therein. DLC has made available to Specified FE Subsidiaries information from which Specified FE Subsidiaries can determine the Tax Basis as of the last Business Day before closing of all assets (other than cash) of the DLC Nonqualified Decommissioning Funds transferred to Specified FE Subsidiaries pursuant to Section 6.19. There are no liabilities (whether absolute, accrued, contingent or otherwise and whether due or to become due) including, but not limited, agency or other legal proceedings, that may materially affect the financial position of the DLC Nonqualified Decommissioning Funds other than those, if any, that are disclosed on Schedule 4.22.
(e)
DLC has made available to Specified FE Subsidiaries all contracts and agreements to which the trustee of the Nonqualified Decommissioning Funds, in its capacity as such, is a party.
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p 1
I 4.23 DLC Nuclear Law Matters.
}
(a)
DLC is a licensed co-owner, but not an operator of Perry Unit 1, which is operated by an Affiliate of Specified FE Subsidiaries. Subject to this fact, and except as disclosed in Schedule 4.23(a):
(i)
DLC holds, and is in substantial compliance with all Permits in respect f'
I of Nuclear Laws that are required for DLC to own Perry Unit I and DLC is otherwise in compliance with all Nuclear Laws with respect to its own:rship of Perry Unit I except for such failures to hold or comply with regard to Permits in respect orNuclear Laws, or such failures to be in compliance J
with applicable Nuclear Laws, as would not, individually or in the aggregate, create a Material Adverse Effect; and (ii)
DLC has not entered into or agreed to any consent decree or order relating to Perry Unit 1, and is not subject to any outstanding judgment, decree or judicial order relating to any Nuclear Law relating to Perry Unit 1.
(b)
Except as disclosed in Schedule 4.23(b):
(i)
DLC holds, and is in substantial compliance with, all Permits in respect ofNuclear Laws that are required for DLC to conduct the business of and operate the DLC Nuclear Assets in respect of Beaver Valley, and is otherwise in substantial compliance with applicable Nuclear Laws with respect _to the business and operations of the DLC Nuclear Assets in respect of Beaver Valley except for such failures to hold or comply with required Permits in respect of Nuclear Laws, or such failures to be in compliance with applicable Nuclear Laws, as would not, individually or in aggregate, create a Material Adverse Effect; and (ii)
DLC is not subject to any outstanding judgment, decree, or judicial order relating to compliance with any Nuclear Law relating to Beaver Valley.
ARTICLE V REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SPECIFIED FE SUBSIDIARIES i
Each Specified FE Subsidiary hereby, for itself, represents and warrants to DLC as follows:
5.1 Incornoration
Oualification. Such Specified FE Subsidiary is a corporation duly i
mcorporated, validly existing and in good standing u'nder the laws ofits jurisdiction ofincorporation i
and has all requisite corporate power and authority to own, lease and operate its material assets and i
l propenies and to carry on its business as is now being conducted. Such Specified FE Subsidiary is duly qualified to do business as a foreign corporation and is in good standing under the laws of each j
i jurisdiction in which its business as now being conducted shall require it to be so qualified, except where the failure to be so qualified would not have an Material Adverse Effect. Such Specified FE Subsidiary has heretofore delivered to DLC true, complete and correct copies ofits Articles of Incorporation and Bylaws as currently in effect.
49
I 5.2 Authority. Such Specified FE Subsidiary has full corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is a signatory and to consummate the transactions contemplated hereby or thereby. The execution and delivery of this Agreement and each of the Ancillary Agreements to which it is a signatory by such Specified FE Subsidiary and the consummation of the transactions contemplated hereby and thereby by such Specified FE Subsidiary have been duly and validly authorized by all necessary corporate action required on the part of such Specified FE Subsidiary and this Agreement and each of the Ancillary 1
Agreements to which it is a signatory has been duly and validly executed and delivered by such Specified FE Subsidie.ry. Subject to the receipt of the applicable Specified FE Subsidiaries' Required Regulatory Approvals, each of this Agreement and each of the Ancillary Agreements to which it is a signatory constitutes the legal, valid and binding agreement of such Specified FE Subsidiary, enforceable against such Specified FE Subsidiary in accordance with its terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity).
5.3 Consents and Anorovals: No Violation.
(a)
Except as set forth in Schedule 5.3(a), and subject to obtaining any applicable Specified FE Subsidiaries' Required Regulatory Approvals, neither the execution and delivery of this Agreement nor theexecution and delivery of the Ancillary Agreements to which it is a signatory will (i) conflict with or result in any breach of any provision of the Articles ofIncorporation or Bylaws of such Specified FE Subsidiary, (ii) result in a default (or give rise to any r ght of termination, i
cancellation or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, material agreement or other instrument or obligation to which such Specified FE Subsidiary is a party or by which it, or any of the DLC Nuclear Assets may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained or that would not, individually or in the aggregate, create a Material Adverse Effect; or (iii) constitute violations of any law, regulation, order, judgment or decree applicable to such Specified FE Subsidiary, which violations, individually or in the aggregate, would create a Material Adverse Effect.
(b)
Other than the Required Regulatory Approvals set forth in Schedule 5.3(b)in respect of such Specified FE Subsidiary (collectively, the "Soecified FE Subsidiaries' Reauired Regulatory Anorovals"), no consent or approval of, filing with, or notice to, any Governmental Authority is necessary for the execution and delivery of this Agreement by such Specified FE Subsidiary, or the consummation by such Specified FE Subsidiary of the transactions contemplated hereby, other than (i) such consents, approvals, filings or notices which, if not obtained or made, will not prevent such Specified FE Subsidiary from performing its material obligations hereunder and (ii) such consents, approvals, filings or notices which become applicable to such Specified FE Subsidiary or the DLC Nuclear Assets as a result of the specific regulatory status of DLC (or any ofits Affiliates) or as a result of any other facts that specifically relate to the business or activities in which DLC (or any ofits Affiliates)is or proposes to be engaged.
50
1 i
l
)
i 5.4 Legal Proceedinus. Except as set forth in Schedule 5.4, there is no action'or proceeding pending or, to the knowledge of such Specified FE Subsidiary, threatened, against such Specified FE Subsidiary before any court, arbitrator or Governmental Authority, which could, individually orin the aggregate, reasonably be expected to create an Material Adverse Effect. Except as set forth in Schedule 5.4, such Specified FE Subsidiaryis not subject to any outstandingjudgments, rules, orders, writs, injunctions or decrees of any court, arbitrator or Governmental Authority that would, individually or in the aggregate, create an Material Adverse Effect.
5.5
[ Intentionally Omitted).
5.6 WARN Act. Specified FE Subsidiaries do not intend to engage in a " Plant Closing" I
or " Mass Layoff" as such terms are defined in the WARN Act with respect to any Plant within sixty l
days of the DLC Nuclear Closing Date in respect of the Plants.
5.7 Remdatory Status of Soecified FE Subsidiaries. Each Specified FE Subsidiary is an
" electric utility" within the meaning of 10 C.F.R.
50.2 and an " eligible taxpayer" under Code Section 468 A).
5.8 '
Soecified FE Subsidiaries' Nuclear Law Matters.
(a)
Penn Power is a licensed co-owner, but not an operator, of Beaver Valley, l
which is operated.by DLC. Subject to this fact, and except as disclosed in Schedule 5.8(a):
(i)
Penn Power holds, and is in substantial compliance with all Permits in respect of Nuclear Laws that are required for Penn Power to own Beaver Valley and Penn Power is otherwise in compliance with all Nuclear Laws with respect to its ownership ofBeaver Valley except for such failures to hold or comply with regard to Permits in respect ofNuclear Laws, or such failures to be in compliance with applicable Nuclear Laws, as would not, individually or in the aggregate, create a Material Adverse Effect; and i
(ii)
Penn Power has not entered into or agreed to any consent decree or order relating to Beaver Valley, and is not subject to any outstanding judgment, decree or judicial order relating to any Nuclear Law relating to Beaver Valley.
(b)
Except as disclosed in Schedule 5.8(b):
(i)
CEIC holds, and is in substantial compliance with, all Permits in respect ofNuclear Laws that are required for CEIC to conduct the business of and operate the CEIC Nuclear Assets in respect of Perry Unit 1, and is otherwise in substantial compliance with applicable Nuclear Laws with respect 'to the business and operations of the CEIC Nuclear Assets in respect ofPerry Unit i except for such failures to hold or comply with required Permits in respect of Nuclear Laws, or such failures to be in compliance with applicable Nuclear Laws, as would not, individually or in aggregate, create a Material Adverse Effect; and I
l (ii)
CEIC is not subject to any outstanding judgment, decree, or judicial order relating to compliance with any Nuclear Law relating to Perry Unit 1.
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n.-
.l 1
ARTICLE VI COVENANTS OF THE PARTIES 6.1.1 Interim Ooeration of Beaver Vallev. (a) The Parties understand and agree that the CAPCO Agreements remain in full force and effect from the date ofthis Agreement through the DLC Nuclear. Closing Date (the " Interim Period"), and, except as modified by this Section 6.1, the ownership and operating responsibility for Beaver Valley shall be as provided in the CAPCO Agreements.
(b)
During the Interim Period, in the interest of facilitating an orderly transition 1
and permitting informed action by FENOC in fhrtherance of the action contemplated by Section 6.15 hereof, the Parties agree as follows:
(i)
A transition team led by one individual designated by DLC and one individual designated by FENOC (the "Tranmition Tam") will be established as soon after execution of this Agreement as practicable to examine all aspects of the operation of Beaver Valley, including but not limited to operations and maintenance, l
engineering, regulatory, procedural, staffing, support services, fuel purchasing and business issues affecting Beaver Valley. The Transition Team shall appoint individuals from each Party's organization representing the key nuclear functional areas as such areas are mutually defined by the Transition Team. The appointed individuals and the Transition Team shall comprise the Beaver Valley Transition Committee (the " Transition Committee") which shall meet, during the Interim Period, on a regular basis to create a definitive transition plan which will enable the Parties to effect an orderly transition in furtherance of the action contemplated by Section 6.15 hereof (the " Transition Pig").
(ii)
From time to time, but at least once every two weeks, the Transition Committee shall report its progress on the Transition Plan to the senior management ofboth DLC and FENOC. The Transition Committee shall be provided access to such information und site facilities as may be necessary to enable it to perform its responsibilities hereunder. The Transition Committee shall have no authority to bind or make agreements on behalf of any of DLC, FENOC or Penn Power, or to issue instructions to or direct or exercise authority over their respective officers, employees, advisors or agents.
(iii)
Nothing in this Section 6.1.l(b)is intended to modify DLC's ownership or operating responsibility or authority with respect to Beaver Valley as provided for in the CAPCO Agreements or in any way affect DLC's authority to conduct its business at Beaver Valley in accordance with its own judgement and 6scretion in accordance with the CAPCO Agreements.
52
2 (c)
' Notwithstanding Section 6. l(a) above, unless Penn Power otherwise consents in writing, during the period from the date of this Agreement to the DLC Nuclear Closing Date, DLC
.shall not:
(i) except as othenvise provided herein (including as provided in Section
- 6. l(d) below), enter into any commitment for the purchase, sale, or transportation offuel for Beaver Valley having a term greater than six months and not terminable on or before the DLC Nuclear Closing Date either (i) automatically, or (ii) by option of Penn Power in its sole discretion, if the aggregate payment under such commitment for fuel and all other outstanding commitments for fuel
- for Beaver Valley not previously approved by Penn Power would exceed $3,000,000; (ii) except as otherwise provided herein, enter into any contract, agreement, commitment or arrangement relating to Beaver Valley that individually exceeds
$1,000,000 unless it is terminable by DLC without penalty or premium upon no more than sixty (60) days notice; (iii) except as otherwise required by the terms of any collective bargaining agreement or as otherwise provided in Section 6.11 hereofor as currently contemplated by the plans and budgets in place under the CAPCO Agreements, (i) hire at, or transfer to Beaver Valley, any new.
employees prior to the DLC Nuclear Closing, other than to fill vacancies in existing positions in the reasonable discretion of DLC, (ii) materially increase salaries or wages of employees employed in connection with Beaver Valley prior to the DLC Nuclear Closing, (iii) take any action prior to the DLC Nuclear Closing to affect a material change in any collective bargaining agreement, or (iv) take any action prior to the DLC Nuclear Closing to materially increase the aggregate benefits payable to the employees employed in connection with Beaver Valley; or ll (iv) except as otherwise provided herein, enter into any written or oral contract, agreement, commitment or arrangement with respect to any of the proscribed transactions set forth in the foregoing paragraphs (i) - (iii).
(d)
Notwithstanding Section 6.l(c) above, DLC is permitted to enter into commitments with respect to uranium enrichment services in respect to the Plants satisfactory to it in its sole discretion from the date of this Agreement through the DLC Nuclear Closing Date in
- respect of each Plant; orovided. however, that if DLC expects to include such commitments in the DLC Nuclear Agreements, it shall obtain the written consent of Specified FE Subsidiaries prior to entering into such commitments.
6.1.2 Interim Ooeration of Peny Unit 1. The Parties understand and agree that the Amendment 2 to the C APCO Perry Unit 1 Operating Agreement executed in accordance with Section 6.15(b) hereof shall remain in full force and effect during the Interim Period, and, except as modified by this Agreement, the ownership, operation and maintenance of Perry shall be as provided in the amended CAPCO Perry Unit 1 Operating Agreement.
6.2 Access to Information.
53
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l f
(a)
For a period of seven (7) years after the DLC Nuclear Closing Date (or such longer period as may be required by applicable law), each Party and their Representatives shall have reasonable access to all of the books and records of the DLC Nuclear Assets, including all Transferred Employee Records in the possession of any Party to the extent that such access may reasonably be required in connection with the Assumed Liabilities or the Excluded Liabilities, or other matters relating to or affected by the operation of the DLC Nuclear Assets. Such access shall be afforded by the Party in possession of any such books and records upon receipt of reasonable advance notice and during normal business hours. The Pany exercising this right of access shall be solely responsible for any costs or expenses incurred by it or the holder of the information with respect to such access pursuant to this Section 6.2(a). If the Pany in possession of such books and records shall desire to dispose of any books and records upon or prior to the expiration ofsuch seven-l
. year period (or any such longer period), such Party shall, prior to such disposition, give the other Party a reasonable opportunity at the latter's expense, to segregate and remove such books and records as it may select.
[
(b)
Penn Power agrees that, prior to the DLC Nuclear Closing Date, it will not '
contact any vendors, suppliers, employees, or other contracting panies of DLC or its Affiliates with respect to any aspect of the DLC Nuclear Assets relating to Beaver Valley or the transactions contemplated hereby, without the prior written consent of DLC, which consent shall not be.
unreasonably withheld.
6.3 Can6dentiality. (a) Each Party shall, and shall use its best efforts to cause its Representatives to, (i) keep all Proprietary Information of the other Party confidential and not to L
disclose or reveal any such Proprietary Information to any Person other than such Party's Representatives and (ii) not use such Proprietary Information other than in connection with the consummation of the transactions contemplated hereby. After the DLC Nuclear Closing Date, any Proprietary Information to the extent related to the DLC Nuclear Assets acquired by Specified FE Subsidiaries shall no longer be subject to the restrictions set forth herein. The obligations of the Parties under this Section 6.3(a) shall be in full force and effect for three (3) years from the date hereof and will survive the termination ofthis Agreement, the discharge of all other obligations owed by the Parties to each other and the DLC Nuclear Closing Date.
l (b)
Upon the other Pany's prior written approval (which shall not be unreasonably withheld), either Pany may provide Proprietary Information of the other Pany to the PUCO, the l
PaPUC, the SEC, the FERC, the NRC or any other Governmental Authority withjurisdiction or any stock exchange, as may be necessary to obtain Regulatory Approvals required by a Party, or to comply generally with any relevant law or regulation. The disclosing Party will seek confidential j
treatment for the Proprietary Information provided to any Governmental Authority and the disclosing Party will notify the other Pany as far in advance as is practicable ofits intention to release to any Governmental Authority any Proprietary Information.
6.4 Public Statements. Subject to the requirements imposed by law, any Governmental Authority or stock exchange, prior to the DLC Nuclear Closing Date, no press release or other public announcement or public statement or comment in response to any inquiry relating to the transactions contemplated by this Agreement shall be issued or made by any Pany without the prior approval of 54 L.
e, s
the other Party (which approval shall not be unreasonably withheld). The Parties agree to cooperate in preparing such announcements.
6.5 Expenses Except to the extent specifically provided herein, whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the Party incurring such costs and expenses, including the costs of any state or local Transfer Taxes associated with its transfer of the Real Propeny, Notwithstanding anything to the contrary herein, Specified FE Subsidiaries will be responsible for (a) all costs and expenses associated with the obtaining ofany title insurance policy and all endorsements thereto that such Party elects to obtain and (b) all filing fees under the HSR Act relating to the DLC Nuclear Assets it would acquire hereunder.
6.6 Funher Assurances.
(a)
Subject to the terms and conditions of this Agreement, each Party hereto shall use its best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and achieve the DLC Nuclear Closing in respect of all the Plants pursuant to this Agreement and the assumption of the Assumed Liabilities, including using its best efforts to ensure satisfaction of the conditions.
precedent to each Party's obligations hereunder, including obtaining all necessary consents, approvals,
. and authorizations of third parties and Governmental Authorities required to be obtained in order to consummate the transactions hereunder, and to effectuate a transfer of the Transferable Permits to Specified FE Subsidiaries. Specified FE Subsidiaries agree to perform promptly all conditions required of Specified FE Subsidiaries in connection with DLC's Required Regulatory Approvals.
None of the Panies hereto shall, without prior written consent of the other Parties, take or fail to take any action, which might reasonably be expected to prevent or materially impede, interfere with or delay the transactions contemplated by this Agreement.
(b)
In the event that any DLC Nuclear Asset shall not have been conveyed to the applicable Specified FE Subsidiary at the DLC Nuclear Closing, DLC shall, subject to Section 6.6(c),
use Commercially Reasonable Efforts to convey such asset to the applicable Specified FE Subsidiary as promptly as is practicable after the DLC Nuclear Closing.
(c)
(i) To the extent that DLC's rights under any material DLC Nuclear Agreement or Real Property Lease may not be assigned without the consent of another Person which consent has not been obtained by the DLC Nuclear Closing Date, this Agreement shall not constitute an agreement to assign the same, if an attempted assignment would constitute a breach thereof or be unlawful.
(ii) If any consent to an assignment of any material DLC Nuclear Agreement or Real Property Lease shall not be obtained or if any attempted assignment would be ineffective or would impair either Specified FE Subsidiaries' rights and obligations under the material DLC Nuclear Agreement or Real Property Lease in question, so that such Specified FE Subsidiary would not in effect acquire the benefit of all such rights and oNigations, DLC, at the option ofsuch Specified FE Subsidiary and to the maximum extent permitted by law and such material DLC Nuclear Agreement or Real Property Lease shall, after the DLC Nuclear Closing Date, appoint such Specified FE Subsidiary to be DLC's agent with respect to such material DLC Nuclear Agreement or Real Property 55
I c:
Lease, or, to the maximum extent permitted by law and such material DLC Nuclear Agreement or Real Property Lease, enter into such reasonable arrangements with such Specified FE Subsidiary or l
take such other actions as are necessary to provide such Specified FE Subsidiary with the same or substantially similar rights and obligations of such material DLC Nuclear Agreement or Real Property Lease as such Specified FE Subsidiary may reasonably request. The Parties shall cooperate and shall I
each use Commercially Reasonable Efforts prior to and'after the DLC Nuclear Closing Date to obtain an assignment of such material DLC Nuclear Agreement or Real Property Lease to such Specified FE Subsidiary. For purposes of this Section 6.6(c), without limitation, all DLC Nuclear Agreements listed on Schedules 4.5 and 4.9(a)(i) and 4.9(b)(i) are deemed to be " material."
(d)
To the extent that DLC's rights under any warranty or guaranty described in Section 2. l(i) may not be assigned without the consent of another Person, which consent has not been obtained by the DLC Nuclear Closing Date, this Agreement shall not constitute an agreement to assign the same, if an attempted assignment would constitute a breach thereof, or be unlawful. If any consent to an assignment of any such warranty or guaranty shall not be obtained, or if any attempted assignment would be ineffective or would impair the rights and obligations of the applicable Specified FE Subsidiary under the warranty or guaranty in question, so that such Specified FE Subsidiary would not in effect acquire the benefit of all such rights and obligations, DLC, at the expense of such Specified FE Subsidiary, shall use Commercially Reasonable Efforts, to the extent permitted by law _
and such warranty or guaranty, to enforce such warranty or guaranty for the benefit ofsuch Specified FE Subsidiary so as to provide such Specified FE Subsidiary to the maximum extent possible with the benefits and obligations of such warranty or guaranty.
l 6.7 Consents and Anorovals.
(a)
As promptly as advisable after the date of this Agreement, DLC and Specified FE Subsidiaries shall each file or cause to be filed with the Federal Trade Commission and the U States Department of Justice any notifications required to be filed under the HSR Act and the rules and regulations promulgated thereunder with respect to the transactions contemplated hereby. The Parties shall use their respective best efforts to respond promptly to any requests for additional information made by either of such agencies, and to cause the waiting periods under the HSR Act to terminate or expire at the earliest possible date after the date of filing. Specified FE Subsidiaries will pay all filing fees under the HSR Act relating to the DLC Nuclear Assets to be acquired thereby, but l
each Party will bear its own costs of the preparation of any filing.
(b)
As promptly as advisable after the date hereof, Specified FE Subsidiaries shall make any filings required by the Federal Power Act. Prior filings with the FERC, Specified FE l
Subsidiaries shall submit such application to DLC for review and comment and shallincorporate into l
the application any revisions reasonably requested. Specified FE Subsidiaries shall be solely responsible for the cost of preparing and filing the application, any petition (s) for rehearing, or any reapplication. If the filing is rejected by the FERC, Specified FE Subsidiaries agrees to petition the FERC for rehearing and/or to re-submit an application with the FERC, provided that in either case this action does not create a Material Adverse Effect on Specified FE Subsidiaries and that it has been approved by DLC.
56
V.
(c)
As promptly as advisable, and in any case within sixty (60) days after the date of this Agreement, DLC and Specified FE Subsidiaries, as applicable, shall make any filings required l
by the PUCO, the PaPUC and any other Governmental Authority, and make or cause to be made any l
other filings required to be made with respect to the transactions contemplated hereby. The Panies shall respond promptly to any requests for additional information made by such agencies, and use their respective Commercially Reasonable Efforts to cause regulatory approval to be obtained at the earliest possible date after the date of filing. Each Party will bear its own costs of the preparation of l
any such filing.
(d)
The Parties shall cooperate with each other and promptly prepare and file notifications with, and request Tax clearances from, state and local taxing authorities in jurisdictions in which a portion of the consideration may be required to be withheld or in which Specified FE Subsidiaries would otherwise be liable for any Tax liabilities of DLC pursuant to such state and local
. Tax law.
(e)
Specified FE Subsidiaries shall have the primary responsibility for securing the transfer, reissuance or procurement of the Permits and Environmental Permits (other than Transferable Permits) effective as of the DLC Nuclear Closing Date. DLC shall cooperate with Specified FE Subsidiaries' efforts in this regard and assist in any transfer or reissuance of a Permit or l
Environmental Permit held by DLC or the procurement of any other Permit or Environmental Permit when so requested by Specified FE Subsidiaries, to the extent such cooperation does not entail payment of money by DLC.
(f)
As promptly as possible after the date hereof, DLC and Specified FE Subsidiaries shall file with the NRC joint applications requesting the NRC Approvals. The Parties shall respond promptly to any requests for additional information made by the NRC, cooperate in connection with any presentation or proceeding associated with the NRC application and use their respective best effons to cause such NRC Approvals to be obtained at the earliest possible date after the date of filing. Each Party will bear its own costs of the preparation of any such filing and the NRC filing and processing fees in respect of such filing shall be paid fifty percent (50%) by DLC and l.
fifty percent (50%) by the Specified FE Subsidiaries.
6.8 Fees and Commissions. Each Party represents and warrants to the other Party that, no broker, finder or other Person is entitled to any brokerage fees, commissions or finder's fees in connection with the transaction contemplated hereby by reason of any action taken by the Party making such representation. DLC and Specified FE Subsidiara will pay to the other or otherwise discharge, and will indemnify and hold the other harmless from and agust, any and all claims or liabilities for all brokerage fees, commissions and finder's fees (other than the fees, commissions and I
finder's fees payable to the parties listed above) incurred by reason of any action taken by the indemnifying pany.
I 6.9 Tax Matters'.
\\
(a)
All Transfer Taxes incurred in connection with this Agreement and the transactions contemplated hereby, including, (i) Pennsylvania or Ohio sales tax; (ii) the Pennsylvania or Ohio transfer tax, conveyance fees or conveyances ofinterests in real and/or personal property; 57 i
=
l
k*
I and (iii) Pennsylvania or Ohio sales tax and transfer tax on deeds shall be borne by DLC. DLC shall file, to the extent required by, or permissible under, applicable law, all necessary Tax Retums and other documentation with respect to all such Transfer Taxes, and, if required by applicable law, Specified FE Subsidiaries shall join in the execution of any such Tax Returns and other documentation. Prior to the applicable DLC Nuclear Closing Date, to the extent applicable, Specified FE Subsidiaries shall provide to DLC appropriate certificates ofTax exemption from each applicable taxing authority.
l I
l (b)
With respect to Taxes to be prorated in accordance with Section 3.4 of this Agreement, Specified FE Subsidiaries shall prepare and timely file all Tax Returns required to be filed l
after the DLC Nuclear Closing Date with respect to the DLC Nuclear Assets, if any, and shall duly and timely pay all such Taxes shown to be due on such Tax Returns. Specified FE Subsidiaries agrees that preparation of any such Tax Returns shall be subject to DLC's approval, which approval shall not be unreasonably withheld. Specified FE Subsidiaries shall make such Tax Returns available for DLC's review and approval no later than fifteen (15) Business Days prior to the due date for filing each such Tax Return.
(c)
Specified FE Subsidiaries and DLC shall provide each other with such assistance as may reasonably be requested by the other Party in connection with the preparation of-any Tax Return, any audit or other examination by any taxing authority, or any judicial or l
administrative proceedmgs relating to liability for Taxes, and each shall retain and provide the
_ requesting party.with any records or information which may be relevant to such return, audit, examination or proceedings. Any information obtained pursuant to this Section 6.9(c) or pursuant to any other Section hereof providing for the sharing ofinformation or review of any Tax Return or other instrument relating to Taxes shall be kept confidential by the Panies.
l (d)
In the event that a dispute arises between DLC and either Specified FE Subsidiary regarding Taxes, or any amount due under this Section 6.9, the Parties shall attempt in good faith to resolve such dispute and any agreed upon amount shall be paid to the appropriate Party.
If such dispute is not resolved within 30 days, the Parties shall submit the dispute to the Independent l'
Accounting Firm for resolution, which resolution shall be final, conclusive and binding on the Parties.
Notwithstanding anything in this Agreement to the contrary, the fees and expenses ofthe Independent
~
I
' Accounting Firm in resolving the dispute shall be borne 50% by DLC and 50% by the applicable Specified FE Subsidiary. Any payment required to be made as a result ofthe resolution ofthe dispute by the Independent Accounting Firm shall be made within ten days after such resolution, together with any interest determined by the Independent Accounting Firm to be appropriate.
6.10 Advice of Channes. Prior to the DLC Nuclear Closing, each Pany will advise the other in writing with respect to any matter arising after execution of this Agreement of which that l
l Party obtains Knowledge and which, if existing or occurring at the date of this Agreement, would have been required to be set forth in this Agreement, including any of the Schedules hereto. DLC l
may at any time notify Specified FE Subsidiaries of any development causing a breach of any ofits representations and warranties in Article IV, and Specified FE Subsidiaries may at any time notify DLC of any development causing a breach of any ofits representations and warranties in Anicle V.
Unless DLC or the Specified FE Subsidiaries have the right to terminate this Agreement pursuant to Section 9,1(f) or (g) below (after the expiration of the applicable cure period provided therein) by 58
m i
i reason of the developments and exercises that right within the period of fifteen (15) days after such right accrues, the written notice pursuant to this Section 6,10 will be deemed to have amended this Agreement, including the appropriate Schedule, to have qualified the representations and warranties j
contained in Articles IV and V above, as applicable and to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of the development.
6.11 DLC Emolovees.
(a)
DLC shall identify the employees at the Plants on Schedule 6.ll(a), which schedule shall also set forth such employees level of seniority, classification and Plant location. DLC may submit an offer of continuing employment with DLC or a DLC Subsidiary or an Affiliate thereof to those employees identified on Schedule 6.11(a), provided that such offer shall not be contingent on any such employee waiving his or her rights to consider a competing offer of employment from either Specified FE Subsidiary. Upon the acceptance by any such employee of DLC's offer of continuing employment, DLC shall provide written notice thereof to Specified FE Subsidiaries and shall modify Schedule 6.11(a) to reflect the same.
(b)
At least 120 days prior to the DLC Nuclear Closing Date, each Specified FE Subsidiary shall provide DLC with notice ofits respective staffing level requirements, listed by.
classification and operation, and shall be required to offer employment only to that number of employees of DLC who are covered by the International Brotherhood of Electrical Workers
("IBEW"), Local. Unions 140,142,144,147,148,149 collective bargaining agreement with DLC J
fIBEW CB A") and are either (i) employed in positions relating to the Plants or (ii) if employed at another location, perform substantially all their work in support of the Plants, and in each case, who are necessary to satisfy such Specified FE Subsidiary's staffing level requirements (collectively, "DLC l
Union Emolovees"). In each classification, DLC Union Employees shall be so offered employment in order of their seniority as provided for in the IBEW CBA. Each person who becomes employed by such Specified FE Subsidiary pursuant to this section shall be referred herein as a "D1_C Transferred Union Emolovee."
(c)
At least 120 days prior to the DLC Nuclear Closing Date, each Specified FE Subsidiary shall provide DLC with notice ofits respective staffing level requirements, listed by classification and operation, and shall be required to make either a Non-Qualifying or a Qualifying
. Offer of employment only to that number of salaried employees of DLC who are employed in connection with the DLC Nuclear Assets and who are listed in, or are in a function or whose employment responsibilities are listed in, Schedule 6.ll(c) (collectively, "DLC Non-Union j
l Emolovees"), which schedule shall also set forth such employees' salary and responsibilities and who I
l are necessary to satisfy the staffing level requirements of a Specified FE Subsidiary or Affiliate. Each l
l employee employed by a Specified FE Subsidiary or Affiliate pursuant to this section shall be referr l
herein as a "DLC Transferred Non-Union Emolovee " To the extent that a Specified FE Subsidiary takes an employee from Beaver Valley and relocates the employee to another plant owned by any Specified FE Subsidiary or any Affiliate of any of them, such employee shall receive the same relocation allowance as if b or she had been an FE employee.
(d)
All offers of employment made by a Specified FE Subsidiary pursuant to Sections 6.11 (b) and (c) shall be made in accordance with all applicable laws and regulations 59 o
(including thejoint application to be made by DLC and Penn Power to the NRC in respect of Beaver Valley), and for DLC Union Employees, in accordance with the BEW CBA and shall remain open for a period of ten (10) working days. Any such offer which is accepted within such ten (10) working day period shall thereafter be irrevocable until the earlier of the DLC Nuclear Closing Date or the termination of this Agreement pursuant to its terms. Following acceptance of such offers, such Specified FE Subsidiary shall provide written notice thereof to DLC, and DLC shall provide such Specified FE Subsidiary with access to the files and records of employees accepting such offers, to the extent permitted by contract, the IBEW CB A and/or applicable law. Schedule 6.11(d) sets forth the collective bargaining agreemems, and amendments thereto, to which DLC is a party in connection with the DLC Nuclear Assets.
(e)
With respect to DLC Transferred Union Employees and DLC Transferred Non-Union Employees, the following shall be npplicable:
(i)
For such DLC Transferred Union Employees, a Specified FE Subsidiary shall recognize BEW Local Unions 140,142,144,147,148,149 as the exclusive collective bargaining representative and shall assume the terms and conditions ofthe IBEW CB A until the expiration of said agreement, and will funher comply with all applicable legal obligations with respect to collective bargaining under federal labor law thereafter.
(ii)
A Specified FE Subsidiary or Affiliate will establish and maintain benefit plans (including a severance plan) for Transferred DLC Non-Union Employees and DLC Transferred Union Employees under either the BEW CB A or any similar DLC document which are comparable to the DLC Plant Benefit Plans in effect for such employees immediately prior to the DLC Nuclear Closing Date and provide at least the same level of benefits or coverage as the DLC Plant Benefit Plans in accordance with and for the duration of the BEW CBA, in the case of DLC Transferred Union Employees, or until December 31,2001, in the case of DLC Transferred Non-Union Employees (such period being hereinafter referred to as the " Continuation Period"). Subject to applicable law and the BEW CBA, nothing in the foregoing shall prevent a Specified FE Subsidiary or FE Affiliate from using different benefit providers or from establishing new benefit plans or using its existing benefit plans as the means ofmeeting its obligation hereunder. The commitments under this paragraph shall, however, require the following during the Continuation Period:
(A) With respect to health care plans, any Specified FE Subsidiary agrees to waive or to cause the waiver of all limitations as to pre-existing conditions and actively-at-work exclusions and waiting periods for such employees, except that a Specified FE Subsidiary may require the employee or his/her dependents who, on the DLC Nuclear Closing Date, is then in the process of satisfying any similar exclusion or waiting period under the DLC health care plans to satisfy fully the balance of the applicable time period for such exclusion or waiting period under the applicable FE plan. With respect to the calendar year in which the DLC Nuclear Closing Date occurs, all health care expenses incurred by any such employees and/or any eligible dependent thereofin the portion of the calendar year preceding the DLC Nuclear Closing Date that were qualified to be taken into account for purposes of satisfying any deductible or out-of-pocket limit under any DLC health care plans shall be taken into account for purposes of satisfying any deductible or out-of-pocket limit under the health care pbn of a Specified FE Subsidiary or Affiliate of FE for such calendar year.
60
(B) With respect to service and seniority, a Specified FE Subsidiary shall recognize each such employee's service and seniority with 1;LC for all non-pension purposes, including the determination ofeligibility and extent of service or seniority-related welfare benefits such as vacation and sick pay benefits and to agree to E ve each such employee full credit for a!!
i vacation benefits banked, accrued, and unused, as of the DLC Nuclear Closing Date.
l (C) With respect to pension benefits, a Specified FE Subsidiary or Affiliate of FE
{
shall provide each employee with a pension benefit that, when combined with the benefit accrued by such employee under the DLC pension plan as it exists on the DLC Nuclear 3
Closing Date, is at least equal in value to the pension benefit such employee would have accrued if such employee had remained employed with DLC and continued to be covered by such DLC pension plan (as it exists on the DLC Nuclear Closing Date) during the Continuation Period. In providing such benefits, a Specified FE Subsidiary or Affiliate ofFE shall recognize each such employee's combined service and earnings with DLC and a Specified FE Subsidiary or Affiliate of FE. The determination of the benefit required by this Section 6.11(c)(ii)(C) shall be made in good faith by the accounting firm then acting as the independent auditor of the Specified FE Subsidiary or Affiliate of FE, which determination shall be final and binding on the panies hereto and each affected employee.
(D) With respect to post-retirement medical and life insurance programs, a Specified FE Subsidiary shall provide to any such employee who retires from a Specified FE Subsidiary's employment prior to the expiration of the IBEW CBA with respect to DLC Transferred Union Employee.s, and December 31, 2001 with respect to DLC Transferred Non-Union Employees, and is at least age 55 and has ten or more years ofcombined service with DLC and a Specified FE Subsidiary or Affiliate of FE, benefits, to the extent possible, that.are substantially equivalent to the DLC post-retirement medical and life insurance programs that such employee would have received, if such employee had continued to be covered by the DLC programs as they existed on the DLC Nuclear Closing Date.
(E) With respect to the DLC 401(k) Retirement Savings Plan for Management or the DLC 401(k) Retirement Savings Plan for the IBEW (collectively, the "DLC Savinas Plag"),
a Specified FE Subsidiary shall take any and all necessary action to cause the trustee of any defined contribution plan of a Specified FE Subsidiary in which any such employee becomes a participant by virtue of this section, to accept a direct " rollover" of all or a portion of said employee's " eligible rollover distribution" within the meaning of Section 402 of the Code from the DLC Savings Plan, if requested to do so by such employee, or to accept a direct plan-to-plan transfer from the DLC Savings Plan of the account balances of any such employee and the assets of such plans related thereto, if requested to do so by DLC or by any such employee. Each Specified FE Subsidiary agrees that the property so rolled over and the assets so transferred may include (i) promissory notes evidencing loans from the DLC Savings Plan to such emplo ces that are outstanding as of the DLC Nuclear Closing Date, and (ii) shares of DLC common stock in which the account balances of such employees are invested as of the DLC Nuear Closing Date. However, any defined contribution plan of FE or its Subsidiaries or Anmates accepting such a rollover or transfer shall not be required to (i) make any furt er loans to any such employee after the DLC Nuclear Closing Date or (ii) permit any h
61
4 e
additionalinvestment to be made in DLC common stock on behalf of any such employee after the DLC Nuclear Closing Date. DLC hereby represents to each FE Subsidiary that the DLC Savings Plan is intended to be qualified within the meaning of Section 402 of the Code.
(f)
With respect to severance benefits, each Specified FE Subsidiary, as applicable, is required to provide for any DLC Transferred Non-Union Employee who is terminated as a result of an overall reduction in. work force due to decreased employment need of such Specified FE Subsidiary prior to the date which is one year following the DLC Nuclear Closing Date severance benefits at the level for such employees in effect as of the date hereof. DLC Transferred Non-Union Employees shall also be entitled to severance benefits if, prior to the date which is one year following the DLC Nuclear Closing Date, the applicable Specified FE Subsidiary reduces the pay rate for such employee and such employee within seven days thereafter terminates employment. Any employee provided severance bene 6ts under this section may be required to execute a release of claims against DLC and such Specified FE Subsidiary, in such form as each Specified FE Subsidiary shall prescribe, as a condition for the receipt of such benefits.
(g)
Each DLC Transferred Non-Union Employee who is initially assigned, or assigned within 12 months of the DLC Nuclear Closing Date, by each Specified FE Subsidiary, to a principal place of work that requires such employee to relocate his residence will be reimbursed by.
the applicable Specified FE Subsidiary for all relocation expenses in accordance with the DLC relocation plans in effect as of the date hereof. For purposes of the foregoing a required relocation of residence shall. include a change in the principal place of work that is more than 30 miles farther from such employee's principal place of work immediately pria to the DLC Nuclear Closing Date and requires a commute from his current residence of at least one hour in each direction.
(h)
DLC shall be responsible, with respect to the DLC Nuclear Assets, for performing and discharging all requirements under the WARN Act and under applicable state and local laws and regulations for the notification ofits employees of any " employment loss" within the meaning of the WARN Act which occurs prior to the DLC Nuclear Closing Date.
(i)
Neither Specified FE Subsidiary shall be responsible for extending COBRA Continuous Coverage to any employees and former employees of DLC, or to any qualified beneficiaries of such employees and former employees, who become or became entitled to COBRA Continuous Coverage on or before the DLC Nuclear Closing Date, including those for whom the DLC Nuclear Closing Date occurs during their COBRA election period.
(j)
DLC or its Af51iates shall pay to all DLC Transferred Union and DLC Transferred Non-Union Employees, all compensation, bonus, vacation and holiday compensation, workers' compensation or other employment benefits to which they are entitled under the terms of the applicable compensation or DLC benefit plans or programs. The Specified FE Subsidiaries shall pay to each employee offered employment pursuant to this Section 6,11, all unpaid salary, bonus, vacation and holiday compensation, workers' compensation or other compensation or employment benefits that are payable in cash which have accrued to such employees following the DLC Nuclear Closing Date, at such times as provided under the terms of the applicable compensation or benefit programs.
62
E, l
l l
(k)
Individuals who are otherwise DLC Union Employees or DLC Non-Union Employees, but who on any date are not actively at work due to a leave of absence covered by the Family and Medical Leave Act (FMLA), or due to any other authorized leave of absence, shall l
l nevertheless be treated as " Union Employees" or as "Non-Union Employees", as the case may be, on such date if they are able (i) to return to work within the protected period under the FMLA or such other leave (which in any event shall not extend more than twelve (12) weeks after the DLC l
Nuclear Closing Date), whichever is applicable, and (ii) to perform the essential functions oftheirjob, with or without a reasonable accommodation.
(1)
The Specified FE Subsidiaries shall be responsible, with respect to the Exchange Assets, for performing and discharging all requirements under the WARN Act and under applicable state and local laws and regulations for the notification of its employees of any
" employment loss" within the meaning of the WARN Act which occurs following the DLC Nuclear Closing Date.
(m)
The Specified FE Subsidiaries are responsible for extending and continuing to extend COBRA Continuation Coverage to all DLC Transferred Union and DLC Trauferred Non-Union Employees, and qualified beneficiaries of such employees who become entitled to such COBRA Continuation Coverage following the DLC Nuclear Closing Date.
(n)
The provisions of this Section 6.11 shall not be construed as being for the benefit for any person other than the Parties hereto, and shall not be enforceable by persons other than such Parties (including, without limitations, the DLC Transferred Union Employees and DLC Transferred Non-Union Employees.)
(o)
NotwithManding any provision ofthe Beaver Valley C APCO Agreements, with respect to any DLC Union Employees who do not receive an offer of employment from a Specified FE Subsidiary pursuant to subsection (b) hereof and with respect to any DLC Non-Union Employees who decline a Non-Qualifying Offer pursuant to subsection (c) hereof, and are thereafter terminated, DLC will be responsible for paying for the aggregate cost incurred in providing the severance, pension and banked, accrued and unused vacation benefits due to such employees.
6.12 Risk of Loss.
From the date hereof through the DLC Nuclear Closing Date, all risk ofloss or damage to the property included in the DLC Nuclear Assets shall be governed by the Perry CAPCO Agreements or Beaver Valley CAPCO Agreements, as applicable.
6.13 CAPCO Aareements. AdministrationoftheCAPCO Agreementsshallbeconducted l-in accordance with the terms of such CAPCO Agreements and the CAPCO Settlement Agreement.
(
6.14 Refund of Accrued Interest in Insurance Premiums. At the request of DLC, each l
Specified FE Subsidiary shall enter into and/or cause other appropriate FE Subsidiaries to enter into any agreement with ANI and/or NEIL and DLC reasonably requested by DLC to assure that the refunds in respect of ANI and NEIL reserve premiums and/or dividends and/or distributions of 63 4
fi i
earnings based on membership account balance (s) and insurance premiums described in Section 2.2(i) are paid directly by ANI and/or NEIL to DLC.
{
6.15 Ooeratinn Control. (a) Subject to the terms and conditions hereof and receipt of the applicable DLC Required Regulatory Approvals, at the DLC Nuclear Closing DLC shall transfer to
. FENOC, and FENOC shall assume from DLC, responsibility for the operation and maintenance of l
Beaver Valley and FENOC shall become the operator, all as described in Section 2.l(d).
(b)
As ofthe date of this Agreement, DLC has provided written notification to FE that it supports the pending NRC application by FENOC to assume responsibility for the operation and maintenance of Perry Unit 1. Promptly upon the execution of this Agreement, DLC shall(i) provide its consent, pursuant to the operating agreement in respect ofPerry Unit 1, to the assignment ofoperating responsibility to FENOC and (ii) the parties to Amendment 2 to the CAPCO Perry Unit i Operating Agreement shall execute and deliver that amendment.
6.16 Beaver Vallev Unit 2 Facility Leases.
(a)
Prior to the DLC Nuclear Closing Date, DLC will terminate the Beaver Valley Unit 2 Facility Leases and will be responsible for all payments and expenses associated with such termination. In addition, pursuant to Section 3.9(b) of the Beaver Valley Unit 2 Lease Indentures, DLC will assume all of the obligations of the Beaver Valley Unit 2 Owner Trustees under those indenture and the_ notes issued and outstanding thereunder (the " Beaver Vallev Unit 2 indentures Notes") and shall make all payments required thereby. DLC further agrees that it will redeem the Beaver Valley Unit 2 Indentures Notes in full no later than December 1,2002. In connection with such termination and assumption, Penn Power agrees to cooperate and/or to cause other appropriate FE Subsidiaries to cooperate to the extent reasonably necessary or appropriate to effect such termination and assumption by DLC, including taking those actions described in Schedule 6.16(a) and taking actions reasonably acceptable to it that may be required by third par ues in connection with such termination and assumption.
(b)'
Until the Beaver Valley Unit 2 Indentures Notes have been paid in full, Penn Power agrees that it:
(i) will not terminate the Beaver Valley Unit 2 Operating Agreement, and will not sell, transfer, assign or dispose of(collectively, " transfer") all or any material portion ofits rights or interest in and to Beaver Valley Unit 2 and the Beaver Valley Unit 2 Operating Agreement, unless such transfer is made subject to the Encumbrance of the Beaver Valley Unit 2 Lease Indentures, as provided in this Agreement, and the transferee assumes all obligations in connection with accepting the transfer subject to such Encumbrance as provided in this Agreement; (ii) will keep Beaver Valley Unit 2 and the Beaver Valley Unit 2 Operating Agreement free and clear of any Encumbrances that would be superior to the Encumbrance of the Beaver Valley Unit 2 Lease Indentures; (iii) cause Beaver Valley Unit 2 to be used and operated under and in compliance with all applicable laws, rules regulations and orders of any applicable Governmental 64
Authority, Good Utility Practices and the Beaver Valley Unit 2 Operating Agreement, except where failure to do so would not result in a Material Adverse Effect; and (iv) maintain insurance policies in respect of Beaver Valley Unit 2 comparable to those maintained in respect thereof by DLC as of the DLC Nuclear Closing Date in respect of Beaver Valley, cause DLC to be a named insured in respect of such liability insurance policies maintained in respect of Beaver Valley, cause the Beaver Valley Unit 2 Lease Indentures Trustee to be a named insured on such insurance policies and the loss payee in respect ofthirteen and seventy-four one hundredths percent (13.74%) of the "all risk" property insurance portion of such insurance policies, and provide a copy of a certificate evidencing such insurance coverage to DLC on or before September 1 of each year.
6.17 Tax Exemot Financina.
(a)
Specified FE Subsidiaries understand and agree that:
(i) the Exempt Facilities have been financed, and refinanced, in whole or in part, with the proceeds of the issuance and sale by various governmental authorities ofindustrial development revenue bonds or private activity bonds (collectively, the " Revenue Bonds") the interest.
on which, with certain exceptions, is excluded from gross income for purposes of federal income taxation; and DLC is the economic obligor in respect of such bonds; the basis for such exclusion is the use of the Exempt Facilities for the (ii) purpose of( A) the abatement or control of atmospheric pollution or contamination (B) the abatement or control of water pollution or contamination, (C) sewage disposal and/or (D) the disposal of solid waste, such qualifying purposes being discussed in more detail in (b) below; (iii) the use of the Exempt Facilities for a purpose other than the qualifying purpose indicated in subsection (ii) above could impair (a) such exclusion from gross income of the interest on such bonds, possibly with retroactive affect, unless appropriate remedial action were taken (which could include prompt defeasance and /or redemption of such bonds) and/or (b) the deductibility of DLC's payment ofinterest based on the restrictions in Section 150(b) of the Code; and (iv) any breach by Specified FE Subsidiaries of their obligations under this Anicle could result in the incurrence by DLC of additional costs and expenses, including without limitation, increased interest costs, loss of the interest deduction for tax purposes and transaction costs relating to any refinancing redemption and/or defeasance of all or part of the Revenue Bonds, and Specified FE Subsidiaries will be liable to DLC for such additional costs and expenses.
(b)
(i) Specified FE Subsidiaries shall not use, or permit the use of, the Exempt Facilities for any purpose other than:(A) abating or controlling atmospheric or water pollution or contamination by removing, altering, disposing ofor storing pollutants, contaminants, waste or heat, all as contemplated in U.S. Treasury Regulations Section 1.103-8(g); (B) the collection, storage, treatment, utilization, processing or final disposal of solid waste, all as contemplated in U.S. Treasury Regulations Section 1.103-8(f); or (C) the collection, storage, treatment, utilization, processing or 65 u
1
- final disposal of sewage, all as contemplated in U.S. Treasury Regulations Section 1.103-8(f); unless Specified FE Subsidiaries have obtained at their own expense an opinion addressed to DLC of nationally recognized bond counsel reasonably acceptable to DLC (" Bond Counsel") that such use
- will not impair (x) the exclusion from gross income of the interest on any issue of Revenue Bonds for Federal income tax purposes or (y) the deductibility of DLC's payments ofinterest based on the restrictions in Section 150(b) of the Code.
(ii)
Specified FE Subsidiaries reasonably expect, as of the date of this Agreement, that the Exempt Facilities will continue to be used for the qualifying purposes set forth in subsection (i) above, and for no other purpose, for the remainder of their useful lives.
(c)
It is expressly understood and agreed the provisions of clause (b) above shall not prohibit Specified FE Subsidiaries from suspending the operation of the Exempt Facilities on a tempv.ary basis, or from terminating the operation ofthe Exempt Facilities on a permanent basis and shutting down, retiring, abandoning and/or decommissioning the Exempt Facilities; orovided.
however. that if the Exempt Facilities, in whole or in part, are dismantled and sold, including any sale for scrap, and if the operation of the Plant served by such Exempt Facilities shall not theretofore have been, and is not then being, terminated on a permanent basis, then the proceeds of such sale of the Exempt Facilities shall within six months from the date of sale be expended to acquire replacement -
property to be used for the same qualifying purpose as the Exempt Facilities so sold, unless Specified FE Subsidiaries have obtained at their own expense an opinion addressed to DLC Bond Counsel that no taking this action will not impair (x) the exclusion from gross income of the interest on any issue of Revenue Bonds for Federal income tax purposes or (y) the deductibility of DLC's payments of interest based on the restrictions in Section 150(b) of the Code.
(d)
Specified FE Subsidiaries shall not issue, or have issued on their behalf, any tax-exempt bonds to finance or refinance its acquisition of the Exempt Facilities; provided that it is expressly understood and agreed that this clause (d) shall not prohibit the use of tax-exempt bonds to finance or refinance any improvement to the Exempt Facilities made after the date of acquisition or any assets other than the Exempt Facilities.
(e)
Specified FE Subsidiaries shall give DLC at least 180 days' prior written notice of any suspension or termination of the operation of the Exempt Facilities, or any part thereof, and of any sale, exchange, transfer or other disposition of the Exempt Facilities, or any part thereof, including, but not limited to, a sale for scrap.
(f)
If DLC shall desire to refund any Revenue Bonds, Specified FE Subsidiaries shall cooperate with DLC and with Bond Counsel with respect to the refunding bonds and shall provide upon request any representations, agreements or covenants that are reasonably requested concerning its compliance to such date and/or in the future with the representations, agreements and covenants made herein.
(g)
If Specified FE Subsidiaries shall sell, exchange, transfer or otherwise dispose of the Exempt Facilities to a third party, Specified FE Subsidiaries shall cause to be included in the documentation relating to such transaction covenants and agreements on the part of such third party substantially identical to those on the part of Specified FE Subsidiaries contained in this Section 6.17.
66
i (h)
The covenants and agreements on the part of Specified FE Subsidiaries contained in this Section 6.17 shall continue in erTect so long as any Revenue Bonds, including any refunding bonds issued hereafter to refund any Revenue Bonds, shall remain outstanding. DLC shall notify Specified FE Subsidiaries promptly when there shall be no Revenue bonds outstanding.
6.18 Removal at Shiocinaoort Site Buildings. Prior to the DLC Nuclear Closing in respect of Beaver Valley, DLC will remove all Regulated Substances and Nuclear Material from the Shippingport Site Buildings to the reasonable satisfaction of Penn Power. In addition, DLC agrees to use Commercially Reasonable Efforts to assign its rights under the Shippingport Contract to Penn Power and take appropriate steps to delete the S APS site from the definition of the Beaver Valley site boundaries set forth in the Updated Safety Analysis Reports for Beaver Valley Unit I and Beaver Valley Unit 2 and other related licensing documentation on or prior to the DLC Nuclear Closing.
6.19 Decommissionina Funds.
6.19.1 Beaver Vallev Unit 1 Decommissioning Funds (a)
Beaver Vallev Unit i Oualified Funds.
(i)
As soon as practicable after execution of this Agreement, DLC shall use Commercially Reasonable Efforts to obtain a privateletter ruling from the IRS substantially to the effect that DLC be permitted to make an additional single contribution in the same calendar year as the DLC Nuclear Closing Date to the Beaver Valley Unit 1 Qualified Decommissioning Fund in an amount equal to the Beaver Valley Unit 1 Decommissioning Shortfall. As used herein, the
" Beaver Vallev Unit 1 Decommissioning Shortfall" shall mean $25.5 million (the " Beaver Vallev Unit 1 Decommissionina Amount")less the amount of any additional qualifying fund deposits made by DLC to the Beaver Valley Unit 1 Qualified Decommissioning Fund between January 1,1999 and the DLC Nuclear Closing Date. If necessary to obtain such IRS ruling, DLC will request from the PaPUC an appropriate order with respect to the rate treatment of such contribution.
(ii)
If DLC is informed by the IRS that the IRS will not issue a favorable ruling or DLC determines that it is otherwise unable to obtain the private letter ruling described in paragraph (i) above prior to the DLC Nuclear Closing Date, DLC may notify Penn Power, in writing, that DLC is unable to obtain the IRS ruling. Upon receiving such notification, Penn Power shall use Commercially Reasonable Efforts to obtain a private letter ruling from the IRS prior to the DLC Nuclear Closing Date substantially to the effect that Penn Power be permitted to make an additional single contribution to the Penn Power Qualified Decommissioning Funds for Beaver Valley Unit 1 in the same calendar year as the DLC Nuclear Closing Date in an amount equal to the Beaver Valley Unit 1 Decommissioning Shortfall and, if necessary to obtain such ruling, Penn Power shall also request from the PaPUC. an 67
appropriate order with respect to the rate treatment of such contribution To the extent that Penn Power obtains the private letter ruling referenced in this paragraph (ii), DLC shall agree to pay in cash to Penn Power an amount equal to the Beaver Valley Unit 1 Decommissioning Shortfall.
(iii)
If DLC determines that the private letter rulings described in paragraphs (i)-
(ii) will not be obtained, Penn Power shall, at the request of DLC, cooperate with-DLC in requesting such private letter mlings from the IRS.or authorizations from any other Governmental Authority prior to the DLC Nuclear Closing Date that would permit DLC to transfer to Penn Power or permit DLC or Penn Power, as applicable, to make one or more contributions, as soon as possible after January 1,1999, to the Beaver Valley Unit I
_ Qualified Decommissioning Funds or the Penn Power Qualified Decommissioning Funds, as applicable, in such amounts that would provide to Penn Power in Qualified Funds, the equivalent, on an after-tax present value basis, of the Beaver Valley Unit 1 Decommissioning Amount as determined in paragraphs (i) and (ii) above. In the event that the rulings or authorizations in this paragraph (iii) are not able to be obtained or DLC otherwise determines not to pursue the provisions of this paragraph (iii), DLC shall transfer to Penn Power such amounts as provided pursuant to the provisions of paragraphs (v)(A) and (B) below.
(iv)
At the DLC Nuclear Closing, DLC shall cause all of the assets of the Beaver Valley Unit 1 Qualified Decommissioning Funds to be transferred to Penn Power (or, ifdirected in writing to do so by Penn Power, to the tmstee of any tmst specified in such written direction), provided that (A) Penn Power shall j
contribute all amounts received from the Beaver Valley Unit 1 Qualified Decommissioning Funds into the Penn Power Qualified Decommissioning Funds, and (B) each of DLC and Penn Power shall have received private letter rulings from the IRS, or opinions of counsel satisfactory to each of DLC and Penn Power, substantially to the effect that, pursuant to Treas. Reg. Q l.468A-6, neither DLC nor Penn Power nor any of the applicable DLC Qualified Decommissioning Funds or Penn Power Qualified Decommissioning Funds shall recognize any gain or otherwise take into account any income for federal income tax purposes by reason of the transfer of the assets of the Beaver Valley Unit 1 Qualified Decommissioning Funds.
(v)
At the DLC Nuclear Closing Date, DLC shall, in respect of any amounts for which an IRS pris ate letter ruling pursuant to paragraphs (i), (ii) or (iii) has not been received, transfer an additional decommissioning payment to Penn Power as follows:
(A)
If receipt of the additional decommissioning payment by Penn Power from DLC is not included in income for federal income tax purposes or Penn Power receives a deduction for federal income tax purposes for the same year in which it has such income, the additional decommissioning 68
payment ("ADPu") shall be ($25.5 million - AQF)(1.436). As used in this paragraph (A) and paragraph (B) below, AQF shall mean the additional qualifying fund deposits authorized by any IRS ruling, including any qualified fund deposits made between January 1,1999 and the DLC Nuclear Closing Date; provided, however, that ADPu shall not be less than zero.
(B)
If receipt of the additional decommissioning payment by Penn Power is included in income for federal income tax purposes and Penn Power does not receive a deduction for federal income tax purposes for the same year in which it has such income, the additional decommissioning payment
("ADP% ) shall be ($25.5 million - AQF) (1.436) divided by 0.65; provided, however, that ADP% shall not be less than zero.
Any additional decommissioning payment shall be payable in cash or in additional Nonqualified Funds, and at the request of DLC, Penn Power shall contribute all payments received from DLC into the Penn Power Nonqualified Decommissioning Funds or the Penn Power Qualified Decommissioning Funds.
(b)
Beaver Vallev Unit i NonansMed Funds.
~
(i)
DLC and Penn Power shall use Commercially Reasonable Efforts to obtain a private letter ruling from the IRS prior to the DLC Nuclear Closing Date substantially to the effect that Penn Power shall not recognize any gain or otherwise take into account any income for federal income tax purposes by reason of the transfer of the assets of the Beaver Valley Unit 1 Nonqualified Decommissioning Funds.
(ii)
At the DLC Nuclear Closing, DLC shall cause all of the assets of the Beaver Valley Unit 1 Nonqualified Decommissioning Funds to be transferred to Penn Power (or, if directed in writing to do so by Penn Power, to the trustee of any trust specified in such written direction), provided that, to the extent required 1
by any IRS private letter ruling received pursuant to paragraph (i), Penn Power shall contribute all amounts received from the Beaver Valley Unit 1 Nonqualified Decommissioning Funds into the Penn Power Nonqualified or Qualified Decommissioning Funds, as applicable.
(iii)
If the receipt by Penn Power of the Beaver Valley Unit i Nonqualified Decommissioning Fundsis included in income for federalincome tax purposes and Penn Power does not receive a deduction for federal income tax purposes for the same year in which it has such income, DLC shall transfer to Penn Power an amount equal to the assets ofthe Beaver Valley Unit i Nonqualified Decommissioning Funds as of the DLC Nuclear Closing Date divided by 0.65.
(c)
Reportina 69
Commencing on the date of this Agreement until the DLC Nuclear Closing Date, DLC shall provide (or cause the investment manager to provide) to 4
Penn Power quarterly unaudited statements ofeamings, contributions, market values, investment allocations and performance reports and such other information for the Beaver Valley Unit 1 Qualified and Nonqualified Decommissioning Funds as reasonably requested by Penn Power.
6.19.2 Beaver Vallev Unit 2 Decommissioninn Funds (a)
Beaver Vallev Unit 2 Oualified Funds.
j l
(i)
As soon as practicable after execution of this Agreement, DLC shall use
(
Commercially Reasonable Efforts to obtain a private letter ruling from the IRS i
substantially to the effect that DLC be permitted to make en additional single contribution in the same calendar year as the DLC Nuclear Closing Date to the Beaver Valley Unit 2 Qualified Decommissioning Fund in an amount equal to the Beaver Valley Unit 2 Decommissioning Shortfall. As used herein, the
" Beaver Vallev Unit 2 Decommimmioninn Shortfall" shall mean $10.3 million (the " Beaver Vallev Unit 2 Decommissionina Amount") less the amount of any additional qualifying fund deposits made by DLC to the Beaver Valley Unit 2 Quahfied Decommissioning Fund between January 1,1999 and the DLC Nuclear Closing Date. Ifnecessary to obtain such IRS ruling, DLC will request from the PaPUC an appropriate order with respect to the rate
)
treatment of such contribution.
(ii)
If DLC is informed by the IRS that the IRS will not issue a favorable ruling or DLC determines that it is otherwise unable to obtain the private letter ruling described in paragraph (i) above prior to the DLC Nuclear Closing Date, DLC may notify Penn Power, in writing, that DLC is unable to obtain the IRS ruling. Upon receiving such notification, Penn Power shall use Commercially Reasonable Efforts to obtain a private letter mling from the IRS prior to the DLC Nuclear Closing Date substantially to the effect that Penn Power be permitted to make an additional single contribution to the Penn Power Qualified Decommissioning Funds for Beaver Valley Unit 2 in the same calendar year as the DLC Nuclear Closing Date in an amount equal to the Beaver Valley Unit 2 Decommissioning Shortfall and, if necessary to obtain such ruling, Penn Power shall also request from the PaPUC an appropriate order with respect to the rate treatment ofsuch contribution. To the extent that Penn Power obtains the private letter ruling referenced in this paragraph (ii), DLC shall agree to pay in cash to Penn Power an amount equal to the Beaver Valley Unit 2 Decommissioning Shortfall.
(iii)
If DLC determines that the private letter rulings described in paragraphs (i)-
(ii) will not be obtained, Penn Power shall, at the request of DLC, cooperate with DLC in requesting such private letter rulings from the IRS or 70
c i
authotizations from any other Governmental Authority prior to the DLC Nuclear Closing Date that would permit DLC to transfer to Penn Power or permit DLC or Penn Power, as applicable, to make one or more contributions, as soon as possible after January 1,1999, te the Beaver Valley Unit 2 Qualified. Decommissioning Funds or the Penn Power Qualified j
Decommissioning Funds, as applicable, in such amounts that would provide to Penn Power in Qualified Funds, the equivalent, on an after-tax present i
value basis, of the Beaver Valley Unit 2 Decommissioning Amount as determined in paragraphs (i) and (ii) above. In the event that the rulings or authorizations in this paragraph (iii) are not able to be obtained or DLC
-)
otherwise determines not to pursue the provisions of this paragraph (iii), DLC shall transfer to Penn Power such amounts as provided pursuant to the provisions of paragraphs (v)(A) and (B) below.
(iv)
At the DLC Nuclear Closing, DLC shall cause all of the assets of the Beaver Valley Unit 2 Qualified Decommissioning Funds to be transferred to Penn Power (or, if directed in writing to do so by Penn Power, to the trustee of any trust speci6ed in such written direction), provided that (A) Penn Power shall contribute all amounts received from the Beaver Valley Unit 2 Qualified Decommissioning Funds into the Penn Power Qualified Decommissioning Funds, and (B) each ofDLC and Penn Power shall have received private letter rulings from the IRS, or opinions of counsel satisfactory to each of DLC and Penn Power, substantially to the effect that, pursuant to Treas. Reg. Q l.468A-6, neither DLC nor Penn Power nor any of the applicable DLC Qualified Decommissioning Funds or Penn Power Qualified Decommissioning Funds shall recognize any gain or otherwise take into account any income for federal income tax purposes by reason of the transfer of the assets of the Beaver Valley Unit 2 Qualified Decommissioning Funds.
(v)
At the DLC Nuclear Closing Date, DLC shall, in respect of any amounts for which an IRS private letter mling pursuant to paragraphs (i), (ii) or (iii) has not been received, transfer an additional decommissioning payment to Penn Power as follows:
(A)
If receipt of the additional decommissioning payment by Penn Power from DLC is not included in income for federal income tax purposes or Penn Power receives a deduction for federal income tax purposes for the same year in which it has such income, the additional decommissioning payment ("ADPs,") shall be ($10.3 million - AQF) (1.436). As used in this paragraph (A) and paragraph (B) below, AQF shall mean the additional qualifying fund deposits authorized by any IRS ruling, including any qualified fund deposits made between January 1,1999 and the DLC Nuclear Closing Date, provided, however, that ADPg, shall not be less than zero.
(B)
If receipt of the additional decommissioning payment by Penn Power is included in income for federal income tax purposes and Penn Power 71
does not receive a deduction for federalincome tax purposes for the same year in which it has such income, the additional decommissioning payment
("ADP% ) shall be ($10.3 million - AQF) (1.436) divided by 0.65; provided, however, that ADP% shall not be less than zero.
Any additional decommissioning payment shall be payable in cash, or in additional Nonqualified Funds, and at the request of DLC, Penn Power shall contribute all payments received from DLC into the Penn Power Nonqualified Decommissioning Funds or the Penn Power Qualified Decommissioning Funds.
(b)
Beaver Vallev Unit 2 Nononali6ed Funds.
(i)
DLC and Penn Power shall use Commercially Reasonable Efforts to obtain a private letter ruling from the IRS prior to the DLC Nuclear Closing Date substantially to the effect that Penn Power shall not recognize any gain or otherwise take into account any income for federal income tax purposes by reason of the transfer of the assets of the Beaver Valley Unit 2 Nonqualified Decommissioning Funds.
(ii)
At the DLC Nuclear Closing, DLC shall cause all of the assets of the Beaver Valley Unit 2 Nonqualified Decommissioning Funds to be transferred to Penn j
Power (or, if directed in writing to do so by Penn Power, to the trustee of any f
trust specified in such written direction), provided that, to the extent required by any IRS private letter ruling received pursuant to paragraph (i), Penn Power shall contribute all amounts received from the Beaver Valley Unit 2 Nonquali6ed Decommissioning Funds into the Penn Power Nonqualified or Qualified Decommissioning Funds, as applicable.
(iii)
If the receipt by Penn Power of the Beaver Valley Unit 2 Nonqualified Decommissioning Funds is included in income for federalincome tax purposes and Penn Power does not receive a deduction f3 federal income tax purposes for the same year in which it has such income, DLC shall transfer to Penn Power an amount equal to the assets of the Beaver Valley Unit 2 Nonqualified Decommissioning Funds as of the DLC Nuclear Closing Date divided by 0.65.
(c)
Reportina Commencing on the date of this Agreement until the DLC Nuclear Closing 1
Date, DLC shall provide (or cause the investment manager to provide) to Penn Power quarterly unaudited statements ofearnings, contributions, market values, investment allocations and performance reports and such other
]
information for the Beaver Valley Unit 2 Qualified and Nonqualified i
~
Decommissioning Funcs as reasonably requested by Penn Power.
6.19.3 Perry Unit 1 Decommissioninn Fund _s l
72
(a)
Perry Unit 1 Oualified Funds.
(i)
As soon as practicable after execution of this Agreement, DLC shall use Commercially Reasonable Efforts to obtain a private letter ruling from the IRS substantially to the effect that DLC be permitted to make an additional single contribution in the same calendar year as the DLC Nuclear Closing Date to the Perry Unit 1 Qualified Decommissioning Fund in an amount equal to the Perry Unit 1 Decommissioning Shortfall. As used herein, the " Perry Unit I Decommiazioninn Shortfall" shall mean $21.6 million (the " Perry Unit 1 Decommi==ionino Amount")less the amount of any additional qualifying fund deposits made by DLC to the Perry Unit 1 Quali6ed Decommissioning Fund between January 1,1999 and the DLC Nuclear Closing Date. If necessary to obtain such IRS ruling, DLC will request from the PaPUC an appropriate order with respect to the rate treatment of such contribution.
(ii)
If DLC is informed by the IRS that the IRS will not issue a favorable ruling i
or DLC determines that it is otherwise unable to obtain the private letter i
ruling described in paragraph (i) above prior to the DLC Nuclear Closing Date, DLC may notify CEIC, in writing, that DLC is unable to obtain the IRS.
n21ing. Upon receiving such noti 6 cation, CEIC shall use Commercially Reasonable Efforts to obtain a private letter ruling from the IRS prior to the DLC Nuclear Closing Date substantially to the effect that CEIC be permitted to make an additional single contribution to the CEIC Qualified Decommissioning Funds for Perry Unit 1 in the same calendar year as the DLC Nuclear Closing Date in an amount equal to the Perry Unit 1 Decommissioning Shortfall and, ifnecessary to obtsn such ruling, CEIC shall also request from the PUCO an appropriate order with respect to the rate treatment of such contribution. To the extent that CEIC obtains the private letter ruling referenced in this paragraph (ii), DLC shall agree to pay in cash to CEIC an amount equal to the Perry Unit 1 Decommissioning Shortfall.
(iii)
If DLC determines that the private letter rulings described in paragraphs (i)-
(ii) will not be obtained, CEIC shall, at the request of DLC, cooperate with DLC in requesting such private letter rulings from the IRS or authorizations from any other Governmental Authority prior to the DLC Nuclear Closing Date that would permit DLC to transfer to CEIC or permit DLC or CEIC, as applicable, to make one or more contributions, as soon as possible after January 1,1999, to the Perry Unit 1 Qualified Decommissioning Funds or the CEIC Qualified Decommissioning Funds, as applicable, in such amounts that would provide to CEIC in Quali6ed Funds, the equivalent, on an after-tax present value. basis, of the Perry Unit 1 Decommissioning Amount as determined in paragraphs (i) and (ii) above. In the event that the rulings or l-authorizations in this paragraph (iii) are not able to be obtained or DLC otherwise determines not to pursue the provisions of this paragraph (iii), DLC shall transfer to CEIC such amounts as provided pursuant to the provisions of paragraphs (v)(A) and (B) below.
73 l
l (iv)
At the DLC Nuclear Closing, DLC shall cause all of the assets of the Perry Unit 1 Qualified Decommissioning Funds to be transferred to CEIC (or, if directed in writing to do so by CEIC, to the trustee of any trust specified in such written direction), provided that (A) CEIC shall contribute all amounts received from the Perry Unit 1 Qualified Decommissioning Funds into the CEIC Qualified Decommissioning Funds, and (B) each of DLC and CEIC shall have received private letter rulings from the IRS, or opinions of counsel satisfactory to each of DLC and CEIC, substantially to the effect that, pursuant to Treas. Reg. { l.468A-6, neither DLC nor CEIC nor any of the applicable DLC Qualified Decommissioning Funds or CEIC Qualified Decommissioning Funds shall recognize any gain or otherwise take into j
account any income for federal income tax purposes by reason of the transfer of the assets of the Perry Unit 1 Qualified Decommissioning Funds.
(v)
At the DLC Nuclear Closing Date, DLC shall, in respect of any amounts for which an IRS private letter ruling pursuant to paragraphs (i), (ii) or (iii) has not been received, transfer an additional decommissioning payment to CEIC as follows:
(A) If receipt of the additional decommissioning payment by CEIC from DLC is not included in income for federal income tax purposes or CEIC receives a deduction for federal income tax purposes for the same year in which it has such income, the additional decommissioning payment (" ADPs,,")
shall be ($21.6 million - AQF) (1.436). As used in this paragraph (A) and paragraph (B)below, AQF shall mean the additional qualifying fund deposits authorized by any IRS ruling, including any qualified fund deposits made between January 1,1999 and the DLC Nuclear Closing Date; provided, however, that ADPu hall not be less than zero.
s (B)
If receipt of the additional decommissioning payment by CEIC is included in income for federal income tax purposes and CEIC does not receive a deduction for federal income tax purposes for the same year in which it has such income, the additional decommissioning payment
("ADP% ) shall be ($21.6 million - AQF) (1.436) divided by 0.65; provided, however, that ADP% shall not be less than zero.
Any additional decommissioning payment shall be payable in cash or in additional Nonqualified Funds, and at the request of DLC, CEIC shall contribute all payments received from DLC into the CEIC Nonqualified Decommissioning Funds or the CEIC Qualified Decommissioning Funds.
(b)
Reoorting Commencing on the date of this Agreement until the DLC Nuclear Closing Date, DLC shall provide (or cause the investment manager to provide) to CEIC quarterly unaudited statements of earnings, contributions, market 74
values, investment allocations and performance reports and such other information for the Perry Unit 1 Qualified Decommissioning Funds as reasonably requested by CEIC.
6.20 Emolovee Morale. The Parties agree to work together in good faith to preserve the morale of the employees at Beaver Valley prior to the DLC Nuclear Closing Date in respect of Beaver Valley.
6.21 Beaver Vallev Omnibus Services Anreement and Related Easements. The Parties agree that they'will work together in good faith during the Interim Period to finalize the Beaver Valley Omnibus Services Agreement (including Exhibit A thereto), and that the form thereofattached hereto may need to be modified in order to take into account the reasonable operating needs of Beaver Valley following the DLC Nuclear Closing Date. The Parties further agree that they will work together to agree on an casement and access agreement, substantially in the form of Exhibit K, to be executed at the time the Beaver Valley Omnibus Services Agreement is executed, to provide DLC with the access rights reasonably necessary to enable it to perform its obligations under the i
Beaver Valley Omnibus Services Agreement.
l ARTICLE VII i
CONDITIONS 7.1 Conditions to Obliantions of the Parties. The obligation of the Parties to effect the transfer of the DLC Nuclear Assets in respect ofeach Plant and the other transactions contemplated by this Agreement shall be subject to the fulfillment or waiver by each of Specified FE Subsidiaries and DLC at or prior to the DLC Nuclear Closing Date, of the following conditions in respect ofeach Plant:
(a)
The waiting period under the HSR Act applicable to the consummation of the transfer of the DLC Nuclear Assets contemplated hereby shall have expired or been terminated; (b)
No preliminary or permanent injunction or other order or decree by any
~ Governmental Authority which prevents the consummation of the transfer of the applicable DLC Nuclear Assets contemplated herein shall have been issued and remain in effect (each Party agreeing
)
to use its reasonable best efforts to have any such injunction, order or decree lifted) and no statute, rule or regulation shall have been enacted by any state or federal government or Governmental Authority prohibiting the consummation of the transfer of the DLC Nuclear Assets; (c)
In respect of the DLC Nuclear Closing in respect of Beaver Valley, DLC shall have terminated the Beaver Valley Facilities Leases and assumed the Beaver Valley Unit 2 Indentures i
Notes issued pursuant to the Beaver Valley Unit 2 Lease Indentures;
- 1 (d)
The Applicable NRC Approval (s) shall have been obtained in tespect of the transfer of such Plant; 75
1 (e)
The C APCO Settlement Agreement shall have been executed by DLC, the FE Subsidiaries and TEC; (f)
The Support Agreement shall have been executed by FE and DLC; (g)
All consents or approvals, filings with, or notices to any Governmental Authority that are necessary for the consummation of the transactions contemplated by each of the CAPCO Settlement Agreement and the Electric Facilities Agreement shall have been obtained or made, other than such consents, approvals, filings or notices which are not required in the ordinary course to be obtained or made prior to the consummation of the transactions thereunder or which, ifnot obtained or made, will not prevent the parties thereto from performing their material obligations thereunder; and (h)
There shall be no court order requiring DQE to consummate the transactions j
contemplated under the Agreement and Plan of Merger between DQE and Allegheny Energy, Inc.
7.2 Conditions to Oblinations of DLC. The obligation of DLC to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment of the following conditions or the waiver thereof by DLC at or prior to the DLC Nuclear Closing Date of the following conditions:
(a).
DLC shall have received all Required Regulatory Approvals applicable to BLC, in form and substance reasonably satisfactory to it and on terms and conditions that do not create a Regulatory Material Adverse Effect for DLC; (b)
All consents and approvals for the consummation of the execution, delivery and performance of this Agreement and the Ancillary Agreements and the transfer of the applicable DLC Nuclear Assets contemplated hereby required under the terms of any note, bond, mortgage, indenture, material agreement or other instrument or obligation to which Specified FE Subsidiaries is a party or by which Specified FE Subsidiaries,'or any of the applicable DLC Nuclear Assets, may be bound, shall have been obtained, other than those which if not obtained, would not, individually or in the aggregate, create a Material Adverse Effect; (c)
Specified FE Subsidiaries shall have in all material respects performed and complied with the covenants and agreements contained in this Agreement which are required to performed and complied with by Specified FE Subsidiaries on or prior to the DLC Nuclear Clos Date; (d)
The representations and warranties of Specified FE Subsidiaries set forth in this Agreement shall be true and correct in all material respects as of the DLC Nuclear Closing D as though made at and as of the DLC Nuclear Closing Date; (e)
DLC shall have received a certificate from authorized officers of Specified FE Subsidiaries, dated the DLC Nuclear Closing Date, to the effect that, to such officers' Knowledge, the conditions set forth in Sections 7.2(c) and (d) have been satisfied by Specified FE Subsidiaries; 76
(f)
DLC shall have received an opinion from counsel to each Specified FE Subsidiary, dated the DLC Nuclear Closing Date and reasonably satisfactory in form and substance to DLC and its counsel, substantially to the effect that:
(i)
Such Specified FE Subsidiary is a corporation duly organized, validly existing and in good standing under the laws ofits state oforganization and is qualified to do business in the Commonwealth of Pennsylvania or State ofOhio, as the case may be, and has the full corporate power and authority to own, lease and operate its material assets and properties and to cany on its business as is now conducted, and to execute and deliver the Agreement and each of the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby; and the execution and delivery of the Agreement and the Ancillary Agreements to which it is a party by such Specified FE Subsidiary, and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action required on the part of such Specified FE Subsidiary; (ii)
The Agreement and each of the Ancillary Agreements to which it is a party have been duly and validly executed and delivered by such Specified FE Subsidiary and constitute legal, valid and binding agreements of such Specified FE Subsidiary, enforceable against such Specified FE Subsidiary in accordance with their terms, except that such enforceability may be -
limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity);
(iii)
The execution, delivery and performance of the Agreement and each of the Ancillary Agreements to which it is a pany by the applicable Specified FE Subsidiary does not (A) conflict with the Anicles ofIncorporation or Bylaws, as currently in effect, of such Specified FE Subsidiary or (B) to the knowledge of such counsel, constitute a violation of or default under those agreements or instruments set fonh on a Schedule attached to the opinion and which have been identified to such counsel as all the agreements and instruments which are material to the business or financial condition of such Specified FE Subsidiary; (iv)
The Assignment and Assumption Agreement and other transfer documents described in Section 3.6 are in proper form for each Specified FE Subsidiary to assume its respective Assumed Liabilities; and (v)
No consent or approval of, filing with, or notice to, any Governmental Authority is necessary for the execution and delivery of this Agreement and each of the Ancillary Agreements by Specified FE Subsidiaries or the consummation by Specified FE Subsidiaries of the transactions contemplated hereby and thereby, other than (i) such consents, approvals, filings or notices set forth in Schedules 4.3(a) or 4.3(b) or which, if not obtained or made, will not prevent Specified FE Subsidiaries from performing their material obligations under this Agreement and each
. of the Ancillary Agreements to which it is a party and (ii) such consents, approvals, filings or notices which become applicable to each Specified FE Subsidiary or the applicable DLC Nuclear Assets as a result of the specific regulatory status of DLC (or any ofits Affiliates) or as a result of any other 77
F u.
~
l i-facts that specifically relate to the business or act v t es n w chi h DLC (or any ofits Affiliates)is or iii i proposes to be engaged.
In rendering the foregoing opinion, counsel to each Specified FE Subsidiary may rely on l
opinions oflocal law reasonably acceptable to DLC.
-(g)
Specified FE Subsidiaries shall have delivered, or caused to be delivered, to DLC at the DLC Nuclear Closing, Specified FE Subsidiaries closing deliveries described in Section 3.6.
7,3 Conditions to Obliantions of Soecified FE Subsidiaries. The obligation of Specified FE Subsidiaries to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver by Specified FE Subsidiaries at or prior to the DLC Nuclear Closing Date of the following conditions:
(a)
Specified FE Subsidiaries shall have received all Required Regulatory Approvals applicable to Specified FE Subsidiaries on terms and conditions that do not create a Regulatory Material Adveru Effect for Specified FE Subsidiaries; (b)
All consents and approvals for the execution, delivery, and performance ofthis.
Agreement and the Ancillary Agreements, and for the consummation of the transfer of the applicable DLC Nuclear Assets contemplated hereby required under the terms of any note, bond, mortgage, indenture, materialagreement or other instrument or obligation to which DLC is a party or by which BLC, or any of the DLC Nuclear Assets, may be bound, shall have been obtained, other than those which if not obtained, would not, individually or in the aggregate, create a Material Adverse Effect; (c)
DLC shall have in all material respects performed and complied with the covenants and agreements contained in this Agreement which are required to be performed and complied with by DLC on or prior to the DLC Nuclear Closing Date (including its covenant under Section 6.16(a) to terminate the Beaver Valley Unit 2 Facility Leases and assume the ob!!gations in respect of the Beaver Valley Unit 2 Indentures Notes);
(d)
The representations and warranties of DLC set forth in this Agreement shall be true and correct in all material respects as of the DLC Nuclear Closing Date as though made at and as of the DLC Nuclear Closing Date; i
(e)
Specified FE Subsidiaries shall have received a certificate from an authorized officer of DLC, dated the DLC Nuclear Closing Date, to the effect that, to such officer's Knowledge, l
the conditions set forth in Sections 7.3(c) and (d) have been satisfied by DLC; (f)
Specified FE Subsidiaries shall have received an opinion from DLC's counsel, dated the DLC Nuclear Closing Date and reasonably satisfactory in form and substance to Specified FE Subsidiaries and its counsel, substantially to the effect that:
(i)
DLC is a corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has the full corporate power and authority to own, lease and operate its material assets ar.d properties and to carry on its business as 78 m
is now conducted, and to execute and deliver the Agreement and each of the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby; and the execution and delivery of the Agreement and the Ancillary Agreements by DLC, and the consummation of the transactions l
contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action required on the part of DLC; (ii)
The Agreement and each ofthe Ancillary Agreements have been duly i
and validly executed and delivered by DLC and constitute legal, valid and binding agreements of DLC, enforceable against DLC in accordance with their terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity);
(iii)
The execution, delivery and performance of the Agreement and each of the Ancillary Agreements by DLC does not conflict with the Articles ofIncorporation or Bylaws, as currently in effect, of DLC; (iv)
The Assignment and Assumption Agreement, the Bill of Sale, the Warranty Deeds, and other transfer documents described in Section 3.7 are in proper form to transfer to Specified FE Subsidiaries such title as was held by DLC to the applicable DLC Nuclear Assets; and (v)
No consent or approval of, filing with, or notice to, any Governmental
^
Authority is necessary for the execution and delivery of this Agreement and each of the Ancillary Agreements by DLC, or the consummation by DLC of the transactions contemplated hereby and thereby, other than (i) such consents, approvals, filings or notices set forth in Schedules 4.3(a) or 4.3(b) or which, if not obtained or made, will not prevent DLC from performing its material obligations under this Agreement and each of the Ancillary Agreements and (ii) such consents, approvals, filings or notices which become applicable to DLC or the DLC Nuclear Assets as a result of the specific regulatory status of Specified FE Subsidiaries (or any of their Affiliates) or as a result of any other facts that specifically relate to the business or activities in which Specified FE Subsidiaries (or any of their Affiliates) is or proposes to be engaged.
In rendering the foregoing opinion, DLC's counsel may rely on opinions of local law reasonably acceptable to Specified FE Subsidiaries.
(g)
DLC shall have delivered, or caused to be delivered, to Specified FE Subsidiaries at the applicable DLC Nuclear Closing, DLC's closing deliveries described in Section 3.7.
(h)
With respect to Beaver Valley only, Penn Power shall have received from a title insurance company ALTA title owner's insurance policies on the Real Property, subject only to Permitted Encumbrances, standard printed exceptions and such other Encumbrances as are reasonably acceptable to Penn Power. Any Permitted Encumbrance not removed prior to the DLC Nuclear Closing shall be deemed reasonably acceptable to Specified FE Subsidiaries as aforesaid unless such Permitted Encumbrance would have a Material Adverse Effect. DLC shall provide Specified FE 79
(.
Subsidiaries with a copy of a preliminary title report and survey for the Real Property as soon as they are available.
ARTICLE VIII INDEMNIFICATION 8.1 General Indemnification Oblinations. Up to the DLC Nuclear Closing Date, the indemnification provisions of the CAPCO Agreements shall be applicable.
1 1
8.2 Indemnification and Relew of DLC by Specified FE Subsidiaries.
(a)
Each Specified FE Subsidiary severally with respect to itself under this Agreement shall indemnify, defend and hold harmless DLC, its officers, directors, employees, shareholders, Affiliates and agents (each, a "DLC Indemnitee") from and against any and all Indemnifiable Losses assened against or suffered by any DLC Indemnitee (each, a "12LC Indemnifiable Loss") in any way relating to, resulting from or arising out of(i) any breach by such Specified FE Subsidiary of any covenant or agreement of such Specified FE Subsidiary contained in this Agreement or the representations and warranties contained in Sections 5.1, 5.2 and 5.3, (ii) the Assumed Liabilities, or (iii) any Third Party Claims against a DLC Indemnitee arising out of or in connection with such Specified FE Subsidiary's ownership or operation of the Plants and other DLC Nuclear Assets on or after the DLC Nuclear Closing Date.
(b)
Each Specified FE Subsidiary severally with respect to itself under this Agreement, on behalf ofits Representatives and Affiliates, does hereby release, hold harmless and forever discharge DLC, DLC Representatives and Affiliates of DLC, from any and all Specified FE Subsidiaries Indemnifiable Losses resulting from, arising out of or relating to Assumed Liabilities.
Each Specified FE Subsidiary hereby waives for itself any and all rights and benefits with respect to such Specified FE Subsidiaries' Indemnifiable Losses that it now has, or in the future may have conferred upon it by virtue of any statute or common law principle which provides that a general release does not extend to claims which a Party does not know or suspect to exist in its favor at the time ofexecuting the release,ifKnowledge ofsuch claims would have materially affected such Party's settlement with the obligor. in this connection, each Specified FE Subsidiary hereby acknowledges that it is aware that factual matters now unknown to it may have given or may hereafter give rise to Specified FE Subsidiaries' Indemnifiable Losses that are presently unknown, unanticipated and unsuspected, and it further agrees that this release has been negotiated and agreed upon in light of that awareness and nevertheless hereby intends to release DLC, DLC Representatives and DLC Affiliates from the Specified FE Subsidiaries' Indemnifiable Losses described in the first sentence of this paragraph.
j 8.3 Indemnification of Soecified FE Subsidiaries by DLC.
DLC shall indemnify, defend and hold harmless Specified FE Subsidiaries, their officers, directors, employees, shareholders, Affiliates and agents (each, a "Soecified FE Subsidiaries' indemnitee") from and against any and allIndemnifiable Losses asserted against or suffered by any 80
Specified FE Subsidiaries' Indemnitee (each, a "Soecified FE Subsidiaries' Indemnifiable Loss")in any way relating to, resulting from or arising out of(i) any breach by DLC of any covenant or agreement of DLC contained in this Agreement or the representations and warranties contained in Sections 4.1, 4.2 and 4.3, (ii) the Excluded Liabilities, (iii) noncompliance by DLC with any bulk sales or transfer laws as provided in Section 10.13, and (iv) claims and liabilities associated with the termination of the Beaver Valley Unit 2 Facility Leases as contemplated by Section 6.16.
8.4 Certain Limitations on indemnification.
(a)
Notwithstanding anything to the contrary contained herein:
(i)
Any Indemnitee shall use Commercially Reasonable Efforts to mitigate all losses, damages and the like relating to a claim under these indemnification provisions, including availing itself of any defenses, limitations, rights of contribution, claims against third Persons and other rights at law or equity. The Indemnitee's Commercially Reasonable Efforts shall include the reasonable expenditure of money to mitigate or otherwise reduce or eliminate any loss or expenses for which indemnification would otherwise be due, and the Indemnifying Party shall reimburse the Indemnitee for the Indemnitee's reasonable expenditures in undertaking the mitigation.
(ii)
Any Indemnifiable Loss shall be net of(i) the dollar amount of any insurance or other proceeds actually receivable by the Indemnitee or any ofits Affiliates with respect to the Indemnifiable Loss, and (ii) income tax benefits to the Indemnitee, to the extent realized by the indemnitee. Any Party seeking indemnity hereunder shall use Commercially Reasonable Efforts to seek coverage (including both costs of defense and indemnity) under applicable insurance policies with respect to any such Indemnifiable Loss.
(b)
The expiration, termination or extinguishment of any covenant or agreement shall not affect the Parties' obligations under Sections 8.2 and 8.3 hereofif the Indemnitee provided the Indemnifying Party with proper notice of the claim or event for which indemnification is sought prior to such expiration, termination or extinguishment.
(c)
Except to the extent otherwise provided in Article VII, the rights and remedies of DLC and each DLC Indemnitee and each of the Specified FE Subsidiaries and each Specified FE Subsidiaries' Indemnitee under this Article VIII are exclusive and in lieu of any and all other rights and remedies which DLC and Specified FE Subsidiaries may have under this Agreement or otherwise for monetary relief, with respect to (i) any breach of or failure to perform any covenant, agreement, or representation or warranty set forth in this Agreement, after the occurrence of the DLC Nuclear Closing, or (ii) the Assumed Liabilities or the Excluded Liabilities, as the case may be. The indemnification obligations of the Parties set forth in this Article VIII apply only to matters arising out of this Agreement, but do not extend to matters arising out of the Ancillary Agreements. Any Indemnifiable Loss arising under or pursuant to an Ancillary Agreement shall be governed by the indemnification obligations, if any, contained in the Ancillary Agreement under which the Indemnifiable Loss arises.
(d)
Notwithstanding anything to the contrary contained herein, no Party (including
)
an Indemnitee) shall be entitled to recover from any other Party (including an Indemnifying Party) for 81
i I
any liabilities, damages, obligations, payments, losses, costs, or expenses under this Agreement any I
amount in excess of the actual compensatory damages, court costs and reasonable attorney's and other advisor fees suffered by such Party. DLC and Specified FE Subsidiaries waive any right to recover punitive, incidental, special, exemplary and consequential damages arising in connection with I
or with respect to this Agreement. The provisions of this Section 8.4(d) shall not apply to l
indemnification for a Third Party Claim.
8.5 Defense of Claims.
(a)
If any Indemnitee receives notice of the assertion or commencement of any l
Third Party Claim made or brought by any Person who is not a Party to this Agreement or any Affiliate of a Pany to this Agreement with respect to which indemnification is to be sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying Pany reasonably prompt written notice thereof, but in any event such notice shall not be given later than ten (10) calendar days after the Indemnitee's receipt of notice of such Third Party Claim. Such notice shall describe the nature of the Third Party Claim in reasonable detail and shall indicate the estimated amount, if practicable, of the Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party will have the right to participate in or, by giving written notice to the Indemnitee, to elect to assume the defense of any Third Party Claim at such Indemnifying Party's expense and by such Indemnifying Party's own counsel, provided that the counsel for the Indemmfying Party who shall' conduct the defense of such Third Party Claim shall be reasonably satisfactory to the Indemnitee. The Indemnitee shall cooperate in good faith in such defense at such Indemnitee's own expense. If an Indemnifying Party elects not to assume the defense of any Third Party Claim, the Indemnitee may compromise or settle such Third Party Claim over the objection of the Indemnifying Party, which settlement or compromise shall conclusively establish the Indemnifying Party's liability pursuant to this Agreement.
(b)
(i) If, within ten (10) calendar days after an Indemnitee provides written notice to the Indemnifying Party of any Third Party Claims, the Indemnitee receives written notice from the Indemnifying Party that such Indemnifying Party.has elected to assume the defense of such Third Party Claim as provided in Section 8.5(a), the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided however, that if the Indemnifying Party shall fail to take reasonable steps necessary to defend -
diligently such Third Pany Claim within twenty (20) calendar days after receiving notice from the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to take such steps, the Indemnitee may assume its own defense and the Indemnifying Party shall be liable for all reasonable expenses thereof.
(ii) Without the prior written consent of the Indemnitee, the Indemnifying Party shall not enter into any settlement of any Third Party Claim which would lead to liability or create any financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification hereunder. If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnitee for-which the Indemnitee is not entitled to indemnification hereunder and the bdemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnitee to that effect. If the Indemnitee fails to consent to such firm offer within ten (10) calendar days after 82
its receipt of such notice, the Indemnifying Party shall be relieved ofits obligations to defend such
- Third Party Claim and the Indemnitee may contest or defend such Third Party Claim. In such event, the maximum liability of the Indemnifying Party as to such Third Party Claim will be the amount of such settlement offer plus reasonable costs and expenses paid or incurred by Indemnitee up to the date of said notice.
(c)
Any claim by an Indemnitee on account of an Indemnifiable Loss which does not result from a Third Party Claim (a " Direct Claim") shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, stating the nature of such claim in reasonable detail and indicating the estimated amount, if practicable, but in any event such notice shall not be given later than ten (10) calendar days after the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party shall have a period of thirty (30) calendar days within which to respond to such Direct Claim. Ifthe Indemnifying Party does not respond within such thirty (30) calendu day period, the Indemnifying Party shall be deemed to have accepted such claim. Ifthe Indemnifying Party rejects such claim, the Indemnitee will be free to seek enforcement ofits right to indemnification under this Agreement.
(d)
Ifthe amount of any Indemnifiable Loss, at any time subsequent to the making of an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under or.
pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by, from or against any other entity, the amount of such reduction, less any costs, expenses or premiums incurred in connection therewith (together with interest thereon from the date of payment thereof at se publicly announced prime rate then in effect of The Chase Manhattan Bank) shall promptly be repaid by the Indemnitee to the Indemnifying Party.
(e)
A failure to give timely notice as provided in this Section 8.5 shall not affect the rights or obligations of any Party hereunder except if, and only to the extent that, as a result of such failure, the Party which was entitled to receive such notice was actually prejudiced as a result of such failure.
ARTICLE IX TERMINATION 9.1 Termination. (a) This Agreement may be terminated at any time prior to the DLC Nuclear Closing Date by mutual written consent of DLC and the Specified FE Subsidiaries.
(b)
This Agreement may be terminated by either Party if(i) any Federal or state court of competent jurisdiction shall have issued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the DLC Nuclear Closing, and such order, judgment or decree sha'l have become final and nonappeallable; (ii) any statute, rule, order or regulation shall have been enacted or issued by any Govemmental Authority which prohibits the consummation of the DLC Nuclear Closing; or (iii) the DLC Nuclear Closing contemplated hereby shall have not occurred on or before the day which is 12 months from the date of this Agreement (the " Termination Qals"); provided that the right to terminate this Agreement under this Section 9.l(b) (iii) shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the 83
cause of, or resulted in, the failure of the DLC Nuclear Closing to occur on or before such date; and provided, further, that ifon the Termination Date the conditions to the DLC Nuclear Closing set forth in Section 7.l(b) or 7.2(a) or 7.3(a), shall not have been fulfilled but all other conditions to the DLC Nuclear Closing shall be fulfilled or shall be capable ofbeing fulfilled, then the Termination Date shall be the day which is 18 months from the date of this Agreement.
(c)
This Agreement may be terminated by DLC ifit shall have received a Final Order that has caused the conditions set forth in Section 7.2(a) not to be satisfied.
(d). This Agreement may be terminated by Specified FE Subsidiaries if they (or either one of them) shall have received a Final Order that has caused the conditions set forth in Section 7.3(a) not to be satisfied.
(e)
This Agreement may be terminated by either Party if, before the DLC Nuclear Closing Date, all or any portion of the DLC Nuclear Assets are (i) taken by eminent domain or are the subject of a pending or (to the Knowledge of DLC with respect such DLC Nuclear Assets) contemplated taking which has not been consummated or (ii) damaged or destroyed by fire or other casualty, DLC shall(x) notify the applicable Specified FE Subsidiary promptly in writing ofsuch fact, (y) assign or pay, as the case may be, any proceeds thereof to the applicable Specified FE Subsidiary at the DLC Nuclear Closing, and (z) either restore the damage or assign the insurance proceeds therefor (and pay the amount of any deductible and/or self-insured amount in respect of such casualty) to the applicable Specified FE Subsidiary at the DLC Nuclear Closing. Notwithstanding the above, if such casualty or loss results in a Material Adverse Effect to DLC with respect to the DLC Nuclear Assets being conveyed by DLC, the Parties shall negotiate to settle the loss resulting
)
from such taking (and such negotiation shall include, without limitation, the negotiation of a fair and equitable payment to the applicable Specified FE Subsidiary to offset such casualty or loss). If no such settlement is reached within sixty (60) days after DLC has notified the applicable Specified FE Subsidiary of such casualty or loss, then DLC may terminate this Agreement. In the event ofdamage or destruction which DLC elects to restore, DLC will have the right (with respect to the DLC Nuclear Assets being conveyed by DLC) to postpone the DLC Nuclear Closing for up to six (6) months, and the applicable Specified FE Subsidiary will have the right to inspect and observe, or have its Representatives inspect or observe, all repairs necessitated by any such damage or destruction.
(f)
This Agreement may be terminated by DLC if there has been a violation or breach by a Specified FE Subsidiary of any covenant, representation or warranty contained in this Agreement which has resulted in a Material Adverse Effect and such violation or breach is not cu (and the applicable Material Adverse Effect remedied) by the earlier of the DLC Nuclear Closing Dat or the date which is thirty (30) days after receipt by Specified FE Subsidiaries of notice specifying particularly such violation or breach, and such violation or breach has not been waived by DLC.
(g)
This Agreement may be terminated by Specified FE Subsidiaries if there has been a violation or breach by DLC of any covenant, representation or warranty contained in this Agreement which has resulted in a Material Adverse Effect and such violation or breach is not c (and the applicable Material Adverse Effect remedied) by the earlier ofthe DLC Nuclear Closing Dat or the date which is thirty (30) days after receipt by DLC of notice specifying particularly such violation or breach, and such violation or breach has not been waived by Specified FE Subsidiaries 84
o orovided. however, that in no event shall DLC's entry into a commitment described in Section 6.1(d)
I constitute a basis for tennination under this clause (g).
l l
9.2 '
Prominre and Effect of No-Default Termination. In the event of termination of this Agreement by either or both of the Parties pursuant to any of Section 9.l(a) through (e), written notice thereof shall forthwith be given by the terminating party to the other party, whereupon the liabilities of the Parties hereunder will temunate, except as otherwise expressly provided in this Agreement, and thereafter neither Party shall have any recourse agamst the other by reason of this Agreement l
ARTICLE X MISCELLANEOUS PROVISIONS 10.1 Amendment and Modification. This Agreement may be amended, modified or supplemented only by written agreement of DLC and Specified FE Subsidiaries.
10.2 Waiver of Comoliance: Consents. Except as otherwise provided in this Agreement, any failure of any of the Parties to comply with any obligation, covenant, agreement or condition herein may be waived by the Party entitled to the benefits thereof only by a written instrument signed by the Party' grantmg such waiver, but such waiver of such obligation, covenant, agreement or condition shall not operate as a waiver _of, or estoppel with respect to, any subsequent failure to comply therewith.
10.3 No Survival. (a) Except as provided in Section 10.3(b) and 10.3(c), each and every representation, warranty and covenant contained in this Agreement shall expire with, and be termmated and extinguished by the consummation of the sale of the DLC Nuclear Assets and shall merge into the deed (s) pursuant hereto and the transfer of the Assumed Liabilities pursuant to this Agreement and such representations, warranties and covenants shall not survive the DLC Nuclear Closing Date; and none of DLC, either Specified FE Subsidiary or any officer, director, trustee or Affiliate of any of them shall be under any liability whatsoever with respect to any such representation, warranty or covenant.
(b)
The covenares contained in Sections 3.2(c), 3.2(d), 3.4, 3.5, 6.2(a), 6.3(a), 6.5, 6.6, 6.7(e), 6.7(f), 6,8, 6.9, 6.11, 6.14, 6.16, 6.17, 9.2, and in Articles VIII and IX shall survive the delivery of the deed (s) and the DLC Nuclear Closing in accordance with their terms.
.(c)
The representations, warrannes and disclaimers contained in Sections 4.1,4.2,4.3, 5.1, 5.2, 5 3, and claims arising under 6.7(e) shall survive the DLC Nuclear Closing for eighteen (18) months from the DLC Nuclear Closing Date.
10.4 Notices All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile transmission, or mailed by ovemight courier or registered or certified mail (retum receipt requested), postage prepaid, to the recipient Party at its address (or at such other address or facsimile number for a Party as shall be specified by like notice; orovided '
however. that notices of a change of address shall be effective only upon receipt thereof):
85
(a)
If to DLC, to:
Duquesne Light Company 411 Seventh Avenue Pittsburgh,PA 15219 Telephone: (412) 393-6000 Fax: (412) 393-6760 Attention: Morgan O'Brien with a copy to:
Skadden, Arps, State, Meagher & Flom LLP 1440 New York Avenue, N.W.
Washington,DC 20005 Telephone: (202) 371-7000 Fax: (202) 393-5760 Attention: Erica A. Ward (b) if to either Specified FE Subsidiary, to:
FirstEnergy Corp.
76 South Main Street Akron,OH 44308 Telephone:
Fax:
Attention: Anthony J. Alexander with a copy to:
Winthrop, Stimpson, Putnam & Roberts One Battery Park Plaza New York, NY 10004 Telephone: (212) 858-1000 Fax: (212) 858-15C0 Attention: MichaelP. Cusick 10.5 Assianment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and pennitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party hereto, including by operation oflaw, without the prior written consent of each other Party, nor is this Agreement intended to confer upon any other Person except the Parties hereto any rights, interests, obligations or remedies hereunder. Except as expressly provided herein, no provision of this Agreement shall create any third party beneficiary rights in any employee or former employee of DLC (including any beneSciary or dependent thereof)in respect of continued employment or resumed employment, and no provision of this Agreement shall create any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any employee benefit plan or arrangement except as expressly 86
i provided for thereunder. DLC agrees, at the expense of Speci6ed FE Subsidiaries, to execute and deliver such documents as may be reasonably necessary to accomplish any such assignment, transfer, pledge or other disposition of rights and interests hereunder so long as the DLC's rights under this Agreement are not thereby altered, amended, duninished or othenvise impaired.
10.6 Governinn Law. This Agreement shall be governed by and construed in accordance with the law of the Commonwealth of Pennsylvania (without giving effect to conflict oflaw principles) as to all matters, including but not limited to matters ofvalidity, construction, effect, performance and remedies
- (except to such matters of real estate law that must be govemed by the laws of the State of Ohio). THE i
PARTIES HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL COURTS IN AND FOR PITTSBURGH,. PENNSYLVANIA, WHICH COURTS SHALL HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES t
HERETO IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY I
- ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS -
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
L 10.7 Counterparts This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all ofwhich together shall constitute one and the same instmment.
10.8 Interoretation. The articles, section and schedule ha*A contained in this Agreement S
are solely for the purpose ofreference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
1 10.9 Schedules and Exhibits. Except as otherwise provided in this Agreement, all Exhibits and Schedules referred to herein are intended to be and hereby are specifically made a part of this Agreement.
J 10.10 Entire Agreement. This Agreement and the Anculary Agreements, including the Exhibits, l
Schedules, documents, certificates and instmments referred to herein or therein, embody the entire l
agreement and understanding of the Parties hereto in respect of the transactions contemplated by this Agreement There are no restrictions, promises, representations, warranties, covenants or undertakings,
'I other than those expressly set forth or referred to herein or therein. This Agreement and the Ancillary Agreements supersede all prior agreements and understandmgs between the Parties with respect to such transactions (including the Agreement in Principle).
l 10.11 U.S Dollars. Unless otherwise stated, all dollar amounts set forth herein are United States
- (U.S.) dollars.
10.12 Sewane Facilities. Pursuant to the provisions of the Pennsylvania Sewage Facilities Act, 35 P.S. {750.7a, Penn Power is notified that a " community sewage system" (as defined in Section 2 of the L
Sewage Facilities Act,35 P.S. Q750.2) is not available on one or more lots comprising part of the Real Property at the facilities list in Schedule 10.12. Prior to construction of any buildings on such lots, a permit 87
F I
to connect to a community sewage system or a permit for installation of an individual sewage system must be obtained pursuant to Section 7 of the Sewage Facilities Act,35 P.S. Q750.7. Before signing this Agreement, Penn Power should contact the local agency charged with admmistering the Sewage Facilities Act in the area of each such facility and lot (s) to determme the procedure and requirements for obtaining l
a permit for an individual or community sewage system to service such lot (s), if required for the intended l
uses and purposes of such lot (s).
10.13 Bulk Sales Laws. Each Specified FE Subsidiary acknowledges that, notwithstanding l
l anything in this Agreement to the contrary, DLC will not comply with the provision of the bulk sales laws of any jurisdiction in connection with the transactions contemplated by this Agreement. Each Specified FE Subsidiary hereby waives compliance by DLC with the provisions ofthe bulk saleslaws ofall applicable jurisdictions.
IN WITNESS WHEREOF, DLC and Specified FE Subsidiaries have caused this Agreement to be signed by their respective duly authorized officers as of the date first above written.
DUQUESNE LIGHT COMPANY By:
/s/ Moraan K. O'Brien Name: Morgan K. O'Brien
Title:
Vice President, Finance PENNSYLVANIA POWER COMPANY By:
/s/ Anthony J. Alexander Name: Anthony J. Alexander
Title:
Vice President and General Counsel THE CLEVELAND ELECTRIC ILLUMINATING COMPANY By:
/s/ Anthony J. Alexander Name: Anthony J. Alexander
Title:
Executive Vice President and l
General Counsel 88
1 LIST OF EXHIBITS AND SCHEDULES EXHIBITS
- Exhibit A Form of Exchange Agreement Exhibit B Form of Assignment and Assumption Agreement i
Exhibit C Form of Bill of Sale Exhibit D Form of FE Suppon Agreement Exhibit E -
Form of FIRPTA Affidavit Exhibit F Form of Beaver Valley Omnibus Services Agreement Exhibit G Form of Special Warranty Deed Exhibit H Form of CAPCO Settlement Agreement Exhibit I Form of Beaver Valley Unit 2 Indentures Suppon Agreement Exhibit J Fonn of Amendment 2 to the CAPCO Peny Unit 1 Operating Agreement Exhibit K Form of Easement Agreement l
SCHEDULES i
1.l(15)
Beaver Valley CAPCO Agreements 1.l(33)
Beaver Valley Unit 2 Lease Indentures Documents 1.l(56)
Common CAPCO Agreements 1,.l(57)
Colnmon Facility Assets 1.l(68)
DLC Beaver Valley Emergency Preparedness Agreements L1(104)
Exempt Facilities 1.l(156)
Permitted Encumbrance 1.l(157).
Perry CAPCO Agreements 1.l(182)-
Real and Personal Propeny Comprising the Decommissioned Shippingport Atomic Power Station 1.l(185)
Shippingpon Site Buildings 1.l(202)
Transferable Permits (both environmental and non-environmental) 2.l(a)
DLC Real Property 2.l(c)
Tangible Personal Pmpeny 2.l(i).
Unexpired, Transferrable Warranties and Guarantees fmm Third Parties 2.l(1)
Intellectual Property 2.2(a)
Beaver Valley Switchyard Assets 2.2(1).
Excepted Beaver Valley Telecommunications Equipment 2.3(d) -
Agreements or Consent Orders 2.7 inventories to be Transferred and Total Net Book Value 2.11 Peny Unit 1 Propeny Tax Litigation 4.3(a)
DLC Conflicts / Defaults / Violations
..4.3(b)
DLC Required Regulatory Approvals 4.4(b)
Shippingport Atomic Power Station Insurance Coverage i
[
i 4.5 Real Property Leases 4.6(a)
Perry Unit 1 Environmental Matters 4.6(b)
Beaver Valley Environmental Matters 4.7 Description of Real Property 4.8 Notices of Condemnation 4.9(aXi)
Perry Unit 1 List of Contracts 4.9(aXii)
Material Exceptions and Required Consents to Peny Unit 1 Contracts 4.9(aXiii)
Material Defaults under Perry Unit 1 Contracts 4.9(bXi)
Beaver Valley L.ist of Contracts 4.9(bXii)
Material Exceptions and Required Consents to Beaver Valley Contracts 4.9(bXiii)
Material Defaults under Beaver Valley Contracts 4.10 Legal Proceedings 4.11(aXi)
Peny Unit 1 Permit Violations 4.11(aXii)
Peny Unit 1 Material Permits 4.11(bXi)
Beaver Valley Permit Violations 4.11(bXii)
Beaver Valley Material Permits 4.12 Tax Matters 4.13 Intellectual Property 4.19 Beaver Valley Labor Matters 4.20 Beaver Valley Benefit Plans 4.21 Matters Relating to Quahfied Decommissioning Funds 4.22 Matters Relating to Nonqualified Decommissioning Funds 4.23(a)
DI;C Nuclear Law Matters Relating to Perry Unit 1 4.23(b)
DLC Nuclear Law Matters Relating to Beaver Valley
]l 5.3(a)
Specified FE Subsidiaries' Conflicts / Defaults / Violations 5.3(b)
Specified FE Subsidiaries' Required Regulatory Approvals 5.4 List of Specified FE Subsidiaries' Litigation 5.8(a)
Specified FE Subsidiaries' Nuclear Law Matters Relating to Beaver Valley 5.8(b)
Specified FE Subsidiaries' Nuclear Law Matters Relating to Peny Unit 1 l
6.11(a)
Specified Individual Employees j
)
6.11(c)
DLC Non-Union Employees 6.11(d)
DLC Collective Bargaining Agreements for DLC Nuclear Assets 6.16(a)
Penn Power Actions in Respect of Beaver Valley Unit 2 Lease Indentures 10.12 Sewage Facilities j
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Schedule 5.3(b) i Nuclear Generation Conveyance Agreement FE S=h Warina Beamired Bae=latarv A=aravais CEIC NRC Approval for Joint License Application to Transfer DLC Owncrship Interest in Peny to CEIC pursuant to 10 CFR Parts 2 and 50.
Ohio Public Utilities Commission (PUCO) - An order or series of orders of the PUCO approving the transactions contemplated by the Conveyance Agreement.
Penn Power NRC Appmval for Joint License Application to Transfer DLC Ownership Interest in Beaver Valley Unit I to Penn Power pursuant to 10 CFR 50.80 Parts 2 and 50.
NRC Approval for Joint U^=aaa Application to Transfer DLC Ownership Interest in Beaver Vaucy Unit 2 to Penn Power pursuant to 10 CPR 50.80 Parts 2 and 50.
Pennsylvania Public Utility Commission (PaPUC) consent pursuant to 66 Pa. C.S.
52101 conceming relations with affiliated interest. (FENOC as BVPS opemtor)
PaPUC - An order or series of orders of the PaPUC approving the transactions contemplated by the Conveyance Agreement.
Pennsylvania Department of Environmental Protection ("PADEP") Air Quality Operating Permits and Application. Pursuant to 25 Pa. Code (( 127.32 &
127.462, DLC and Penn Power must jointly submit an application for minor permit modifications to all air quality %46g permits, including Penn Power's compliance history form, as soon as practicable following execution of agreement, i
but not later than 60 days before closing, to obtain approval from PADEP to transfer air quality Waing pennits and/or plan approvals issued by PADEP to DLC. PADEP must also be noti 5ed of the ownership change for purposes of the pending application, and Penn Power will need to submit a compliance history form for that purpose as well.
U.S. EPA /PADEP Hazardous Waste Generator Identification Number. Pursuant
- to 25 Pa. Code i 262.12 and 40 C.F.R. l 262.12, Penn Power must obtain appmval firom the United States Environmental Protection Ascocy ("U.S. EPA")
and PADEI' in order to transfer or issue a new hazardous waste generator identification number.
e
o o
Schedule 5.3(b)
Nuclear Generation Conveyance Agreement (Continued)
R Subsidiaries Raqujred benlatory Annrovals FENOC NRC Approval for Joint License Application to Transfer DLC Operatmg Authority in the Beaver Valley Power Station (Unit I and Unit 2) to FENOC pursuant to 10 CFR Parts 2 and 50.
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l l
i l
e L
f.+ 4 Je Schedule 4 3rbi
\\uclear Generanen Com eunce Agreement DLC REOl'lRED REGl'LATORY APPROVALS I
Beaver Vallev 1.
Nuclear Regulatory Commission FN'RC") Nuclear Licenses Alust obtain NRC Approvals related to transfer (10 C F.R. Pans 2 and 50) 2 Pennsvivania Public Utilitv Commission Pennsylvania Public Utility Commission approval is required to transfer the DLC Nuclear Assets to Penn Power 3
Pennsvivania Department of Environmental Protection ("P \\DEP"i Air Ouality Operatinu Permits and Annlicanon Pursuant to 25 Pa. Code 44127 32 & 127 462. DLC and Penn Power must.iointly submit an application for minor permit modifications to all air quality operating permits.
including Penn Power's compliance history form, a> soon as practicable following execution of agreement, but no later than 60 days before closing. to obtain approval from PADEP to transfer air quality operating pemiits and or plan approvals issued by PADEP to DLC PADEP must also be notitled of the onnership change for purposes of the pending application, and Penn Power will need to submit a compliance history form for that purpose as welt 4
U S EPA P ADEP Hazardous Waste Generator identification Number Pursuant to 25 Pa Code t 20212 and 10 C F R 4 26212. Per.n Power must obtain approval from the United States Environmental Protection Agency FC i EPA") and PADEP in order to transfer or issue a new hazardous uaste generator :dentiti; mon number e
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O 1
t Il Pern L' nit I i
Nuclear Reculatorv Comnnuion Nlust obtain NRC Approvals related to transfer t 10 C F R Parts : and 50) 2.
Pennsvivania Public Utility Commission Pennsylvania Public Utility Commission approval is required to transfer the DLC Nuclear Assets to Penn Power-1 i
O