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Exhibit 10.6

EXECUTION COPY

MASTER ASSET SWAP AGREEMENT

by and between

ALLEGHENY ENERGY SUPPLY COMPANY, LLC

and

MONONGAHELA POWER COMPANY

Dated as of December 31, 2006

 

TABLE OF CONTENTS

 

 

             

 

  

Page

  • ARTICLE I DEFINITIONS

  

5

 

 

1.1    

 

Definitions

  

5

 

 

1.2    

 

Certain Interpretive Matters

  

23

 

 

1.3    

 

Simultaneous Closings; Timing of Phase Two Closing

  

23

 

 

1.4    

 

Determination of Percentage Interests

  

23

 

 

1.5    

 

Certain Matters Relating to AGC and OVEC

  

24

 

 

1.6    

 

Certain Contractual Matters

  

24

 

 

1.7    

 

Certain Matters Relating to Joint Ownership

  

25

  • ARTICLE II TRANSFER OF AE SUPPLY PHASE ONE ASSETS

  

26

 

 

2.1    

 

Transfer of AE Supply Phase One Assets

  

26

 

 

2.2    

 

Excluded AE Supply Phase One Assets

  

27

 

 

2.3    

 

Assumed AE Supply Phase One Liabilities

  

28

 

 

2.4    

 

Excluded AE Supply Phase One Liabilities

  

30

 

 

2.5    

 

Fuel Supplies

  

31

  • ARTICLE III TRANSFER OF MON POWER PHASE ONE ASSETS

  

31

 

 

3.1    

 

Transfer of Mon Power Phase One Assets

  

31

 

 

3.2    

 

Excluded Mon Power Phase One Assets

  

33

 

 

3.3    

 

Assumed Mon Power Phase One Liabilities

  

34

 

 

3.4    

 

Excluded Mon Power Phase One Liabilities

  

35

 

 

3.5    

 

Fuel Supplies

  

37

  • ARTICLE IV TRANSFER OF AE SUPPLY PHASE TWO ASSETS

  

37

 

 

4.1    

 

Transfer of AE Supply Phase Two Assets

  

37

 

 

4.2    

 

Excluded AE Supply Phase Two Assets

  

39

 

 

4.3    

 

Assumed AE Supply Phase Two Liabilities

  

39

 

 

4.4    

 

Excluded AE Supply Phase Two Liabilities

  

41

 

 

4.5    

 

Fuel Supplies

  

42

  • ARTICLE V THE PHASE ONE CLOSING

  

43

 

 

5.1    

 

Phase One Closing

  

43

 

 

5.2    

 

Calculation of Closing Payments

  

43

 

 

5.3    

 

Payment of Closing Payments

  

45

 

 

5.4    

 

Prorations

  

46

 

 

5.5    

 

Audit Cooperation

  

46

 

 

5.6    

 

Deliveries by AE Supply

  

47

 

 

5.7    

 

Deliveries by Mon Power

  

49

 

 

5.8    

 

Phase One Revenue Bond Matters

  

51

  • ARTICLE VI THE PHASE TWO CLOSING

  

51

 

 

6.1    

 

Phase Two Closing

  

51

 

 

6.2    

 

Calculation of Closing Payments

  

52

 

 

6.3    

 

Payment of Closing Payments

  

53

 

 

6.4    

 

Prorations

  

53

 

 

6.5    

 

Audit Cooperation

  

54

 

 

6.6    

 

Deliveries by AE Supply

  

54



 

 

         

6.7    

  

Deliveries by Mon Power

  

56

6.8    

  

Phase Two Revenue Bond Matters

  

57

  • ARTICLE VII REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF AE SUPPLY

  

57

7.1    

  

Organization; Qualification

  

57

7.2    

  

Authority

  

57

7.3    

  

Consents and Approvals; No Violation

  

58

7.4    

  

Insurance

  

58

7.5    

  

Real Property Leases

  

59

7.6    

  

Environmental Matters

  

59

7.7    

  

Real Property

  

60

7.8    

  

Condemnation

  

60

7.9    

  

Contracts

  

60

7.10  

  

Legal Proceedings

  

61

7.11  

  

Permits

  

61

7.12  

  

Taxes

  

61

7.13  

  

Compliance With Laws

  

62

7.14  

  

DISCLAIMERS REGARDING ASSETS

  

62

  • ARTICLE VIII REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF MON POWER

  

63

8.1    

  

Incorporation; Qualification

  

63

8.2    

  

Authority

  

63

8.3    

  

Consents and Approvals; No Violation

  

64

8.4    

  

Insurance

  

64

8.5    

  

Real Property Leases

  

65

8.6    

  

Environmental Matters

  

65

8.7    

  

Real Property

  

66

8.8    

  

Condemnation

  

66

8.9    

  

Contracts

  

66

8.10  

  

Legal Proceedings

  

66

8.11  

  

Permits

  

67

8.12  

  

Taxes

  

67

8.13  

  

Compliance With Laws

  

68

8.14  

  

DISCLAIMERS REGARDING ASSETS

  

68

  • ARTICLE IX COVENANTS OF THE PARTIES

  

69

9.1    

  

Conduct of Business Relating to the Exchange Assets

  

69

9.2    

  

Access to Information

  

70

9.3    

  

Confidentiality

  

72

9.4    

  

Expenses

  

72

9.5    

  

Further Assurances

  

72

9.6    

  

Consents and Approvals

  

74

9.7    

  

Tax Matters

  

75

9.8    

  

Advice of Changes

  

75

9.9    

  

Risk of Loss

  

76

9.10  

  

Amended and Restated Facilities Lease Agreement

  

77



 

         
  • ARTICLE X CONDITIONS

  

77

10.1  

  

Conditions to Obligations of the Parties to Close Phase One

  

77

10.2  

  

Conditions to Obligations of AE Supply to Close Phase One

  

77

10.3  

  

Conditions to Obligations of Mon Power to Close Phase One

  

78

10.4  

  

Conditions to Obligations of the Parties to Close Phase Two

  

80

10.5  

  

Conditions to Obligations of AE Supply to Close Phase Two

  

80

10.6  

  

Conditions to Obligations of Mon Power to Close Phase Two

  

80

  • ARTICLE XI TERMINATION; CERTAIN REMEDIES

  

81

11.1  

  

Termination

  

81

11.2  

  

Procedure and Effect of No-Default Termination

  

82

11.3  

  

Specific Performance

  

82

11.4  

  

Other Remedies

  

83

  • ARTICLE XII MISCELLANEOUS PROVISIONS

  

83

12.1  

  

Amendment and Modification

  

83

12.2  

  

Waiver of Compliance; Consents

  

83

12.3  

  

No Survival

  

83

12.4  

  

Notices

  

84

12.5  

  

Assignment

  

84

12.6  

  

Governing Law

  

85

12.7  

  

Counterparts

  

85

12.8  

  

Interpretation

  

85

12.9  

  

Schedules and Exhibits

  

85

12.10

  

Entire Agreement

  

85

12.11

  

U.S. Dollars

  

85

12.12

  

Bulk Sales Laws

  

85

12.13

  

Tax Matters

  

85



MASTER ASSET SWAP AGREEMENT

MASTER ASSET SWAP AGREEMENT, dated as of December 31, 2006 (this " Agreement "), by and between Allegheny Energy Supply Company, LLC, a Delaware limited liability company (" AE Supply ") and Monongahela Power Company, an Ohio corporation (" Mon Power "). AE Supply, on the one hand, and Mon Power, on the other, are referred to individually as a " Party ," and collectively, as the " Parties ."

W I T N E S S E T H

WHEREAS, on July 13, 2005, the Parties, together with certain of their Affiliates (as defined herein), filed a Section 203 and Section 205 application (the " Application ") with the FERC (as defined herein), seeking, among other things, approval of a transaction between the Parties involving the exchange of interests in certain electric generation facilities as described in the Application (the " Transaction "); and

WHEREAS, the intent of the Transaction is to realign generation ownership and contractual arrangements within Allegheny Energy, Inc., including the anticipated transfer (i) by AE Supply to Mon Power of an interest in Fort Martin Station representing approximately 895 MWs, (ii) by Mon Power to AE Supply of an equity interest in AGC (as defined herein) representing approximately 127 MWs, an interest in Harrison Station representing approximately 13 MWs, an interest in Hatfield Station representing approximately 400 MWs, an interest in Pleasants Station representing approximately 276 MWs, an interest in Willow Island Station representing approximately 12 MWs, and a contractual interest in OVEC (as defined herein) representing approximately 67 MWs, and (iii) by AE Supply to Mon Power of an interest in Albright Station representing approximately 108 MWs, an equity interest in AGC representing approximately 316 MWs, an interest in Pleasants Station representing approximately 100 MWs, an interest in Rivesville Station representing approximately 21 MWs, and an interest in Willow Island Station representing approximately 48 MWs, in each case subject to certain potential adjustments and including the assumption of certain related liabilities; and

WHEREAS, in order to implement the Transaction, the Parties desire to set forth in this Agreement the definitive terms and conditions pursuant to which (i) AE Supply will transfer to Mon Power its Fort Martin Percentage Interest (as defined herein) and certain related liabilities and Mon Power will transfer to AE Supply its Phase One Asset Percentage Interests (as defined herein) and certain related liabilities (such transactions, " Phase One "), and (ii) AE Supply will transfer to Mon Power its Phase Two Asset Percentage Interests (as defined herein) and certain related liabilities (such transactions, " Phase Two "); and

WHEREAS, the Parties expect to consummate (i) Phase One as soon as practicable following the date hereof, subject to the terms and conditions of this Agreement, and (ii) Phase Two contemporaneous with, or as soon as practicable following, the consummation of Phase One, subject to the terms of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . As used in this Agreement, the following terms have the meanings specified in this Section 1.1.

  • (1) " Acquiring Party " means, with respect to the AE Supply Phase One Assets and the AE Supply Phase Two Assets, Mon Power (or, if applicable, a Subsidiary of Mon Power), and with respect to the Mon Power Phase One Assets, AE Supply (or, if applicable, a Subsidiary of AE Supply).

    (2) " AGC " means Allegheny Generating Company, a Virginia corporation.

    (3) " AGC Interest " means any equity interest in AGC comprising a portion of the Phase One Assets or the Phase Two Assets.

    (4) " AE Supply " has the meaning set forth in the preamble to this Agreement.

    (5) " AE Supply Phase One Assets " has the meaning set forth in Section 2.1.

    (6) " AE Supply Phase One Assignment and Assumption Agreement " means the Assignment and Assumption Agreement between AE Supply and Mon Power, in a form reasonably acceptable to AE Supply and Mon Power.

    (7) " AE Supply Phase One Closing Payments " has the meaning set forth in Section 5.2(b).

    (8) " AE Supply Phase One Estimated Closing Payments " has the meaning set forth in Section 5.2(d).

    (9) " AE Supply Phase One Estimated Closing Statement " has the meaning set forth in Section 5.2(d).

    (10) " AE Supply Phase One Financing Instruments " has the meaning set forth in Section 10.3(b).

    (11) " AE Supply Phase Two Assets " has the meaning set forth in Section 4.1.

    (12) " AE Supply Phase Two Assignment and Assumption Agreement " means the Assignment and Assumption Agreement between AE Supply and Mon Power, in a form reasonably acceptable to AE Supply and Mon Power.

    (13) " AE Supply Phase Two Closing Payments " has the meaning set forth in Section 6.2(b).

    (14) " AE Supply Phase Two Estimated Closing Payments " has the meaning set forth in Section 6.2(c).

    (15) " AE Supply Phase Two Estimated Closing Statement " has the meaning set forth in Section 6.2(c).

    (16) " AE Supply Phase Two Financing Instruments " has the meaning set forth in Section 10.6(a).

    (17) " AE Supply Representatives " means AE Supply’s authorized representatives, including without limitation, its professional and financial advisors.

    (18) " AE Supply Required Regulatory Approvals " has the meaning set forth in Section 7.3(b).

    (19) " 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.

    (20) " Agreement " means this Master Asset Swap Agreement, together with the Exhibits and Schedules attached hereto, as the same may be from time to time amended.

    (21) " Amended and Restated Facilities Lease Agreement " means that certain Amended and Restated Facilities Lease and Assignment Agreement, by and between AE Supply and Mon Power, to be effective as of the Phase One Closing Date, in the form attached to the Application.

    (22) " Amended and Restated Service Agreement " means that certain Amended and Restated Full Requirements Service Agreement, by and between Mon Power and The Potomac Edison Company, dba Allegheny Power, to be effective as of the Phase One Closing Date, in the form attached to the Application.

    (23) " Ancillary Agreements " means each of those agreements and other instruments contemplated to be executed and delivered in connection with the Phase One Closing or the Phase Two Closing pursuant to the terms of this Agreement, in each case as the same may be from time to time amended.

    (24) " Application " has the meaning set forth in the recitals to this Agreement.

 

  • (25) " Assigned Agreements " means, with respect to AE Supply as the Conveying Party, the Fort Martin Agreements and the Phase Two Agreements, as applicable, and with respect to Mon Power as the Conveying Party, the Phase One Agreements.

    (26) " Assumed AE Supply Phase One Liabilities " has the meaning set forth in Section 2.3.

    (27) " Assumed AE Supply Phase Two Liabilities " has the meaning set forth in Section 4.3.

    (28) " Assumed Liabilities " means the Assumed AE Supply Phase One Liabilities, the Assumed AE Supply Phase Two Liabilities and the Assumed Mon Power Phase One Liabilities, as applicable.

    (29) " Assumed Mon Power Phase One Liabilities " has the meaning set forth in Section 3.3.

    (30) " Bills of Sale " means the Bills of Sale, each in a form reasonably acceptable to Mon Power and AE Supply, to be delivered by each Conveying Party at the Phase One Closing or the Phase Two Closing, as the case may be, with respect to the Fort Martin Tangible Personal Property, the Phase One Tangible Personal Property and the Phase Two Tangible Personal Property, as the case may be.

    (31) " Business Day " means any day other than Saturday, Sunday and any day which is a day on which banking institutions in the State of New York are authorized by law or other governmental action to close.

    (32) " Capital Expenditures " means Fort Martin Capital Expenditures, Phase One Capital Expenditures and Phase Two Capital Expenditures, as applicable.

    (33) " Capital Spare Parts " means any major equipment items of significant cost that are essential to the operation of the Exchange Assets of a Conveying Party. Such equipment is generally a long lead-time item and, consistent with past practice, has been assigned to the capital base of the respective Exchange Asset upon delivery and prior to its placement in service.

    (34) " CERCLA " means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq ., as amended.

    (35) " Closing Payments " means the AE Supply Phase One Closing Payments, the Mon Power Phase One Closing Payments and the AE Supply Phase Two Closing Payments, as applicable.

    (36) " Code " means the Internal Revenue Code of 1986, as amended.

 

  • (37) " Commercially Reasonable Efforts " means efforts by a Party that do not require the performing Party to expend any funds other than expenditures that are customary and reasonable in transactions of the kind and nature contemplated by this Agreement in order for the performing Party to satisfy its obligations hereunder.

    (38) " Conveying Party " means, with respect to the AE Supply Phase One Assets and the AE Supply Phase Two Assets, AE Supply (or, if applicable, a Subsidiary of AE Supply), and with respect to the Mon Power Phase One Assets, Mon Power (or, if applicable, a Subsidiary of Mon Power).

    (39) " Emission Reduction Credits " means any credit, certification or related intangible environmental benefit that is recognized by a Governmental Authority or non-governmental entity that results from the reduction in emissions of any pollutant (including without limitation, NOx, SO2, CO, VOCs and CO2) from an emitting source or facility. The term "Emission Reduction Credit" shall include so-called early compliance SO2 credits and so-called early compliance NOx credits, as well as any other credit, certification or related asset regardless of the name assigned to such asset by a Governmental Authority or non-governmental entity.

    (40) " Encumbrances " means any mortgages, pledges, liens, security interests, conditional and installment sale agreements, activity and use limitations, conservation easements, deed restrictions, encumbrances and charges of any kind.

    (41) " Environmental Claim " means any and all pending and/or threatened administrative or judicial actions, suits, orders, claims, liens, notices, notices of violations, investigations, complaints, requests for information, proceedings, or other written communication, whether criminal or civil, pursuant to or relating to any applicable Environmental Law or pursuant to a common law theory, by any Person (including, but not limited to, any Governmental Authority, private person and citizens’ group) based upon, alleging, asserting or claiming any actual or potential (a) violation of, or liability under, any Environmental Law, (b) violation of any Environmental Permit, or (c) liability for investigatory costs, cleanup costs, removal costs, remedial costs, response costs, natural resource damages, property damage, personal injury, fines, or penalties arising out of, based on, resulting from, or related to any Environmental Condition or any Release or threatened Release into the environment of any Regulated Substances at any location related to the Exchange Assets, including, but not limited to, any Off-Site Location to which Regulated Substances, or materials containing Regulated Substances, were sent for handling, storage, treatment, or disposal.

    (42) " 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 Location 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, regardless of when such presence or Release occurred or is discovered.

 

  • (43) " Environmental Laws " means all federal, state, local, provincial, foreign and international civil and criminal laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or administrative orders relating to pollution or protection of the environment, natural resources or human health and safety, including, without limitation, laws relating to Releases or threatened Releases of Regulated Substances (including, without limitation, Releases to ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport, disposal or handling of Regulated Substances. "Environmental Laws" include: CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq .), the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq .), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq .), the Clean Air Act (42 U.S.C. §§ 7401 et seq .), the Toxic Substances Control Act (15 U.S.C. §§ 2601 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. §§ 11001 et seq .), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq .), the Safe Drinking Water Act (42 U.S.C. §300f et seq .), the Surface Mining Control and Reclamation Act (30 U.S.C. §§1251-1279), and regulations adopted pursuant thereto, and counterpart state and local laws, and regulations adopted pursuant thereto.

    (44) " Environmental Permits " means the Fort Martin Environmental Permits, the Phase One Environmental Permits and the Phase Two Environmental Permits, as applicable.

    (45) " Estimated Closing Payment " means the AE Supply Phase One Estimated Closing Payment, the Mon Power Phase One Estimated Closing Payment or the AE Supply Phase Two Estimated Closing Payment, as applicable.

    (46) " Estimated Closing Statement " means the AE Supply Phase One Estimated Closing Statement, the Mon Power Phase One Estimated Closing Statement or the AE Supply Phase Two Estimated Closing Statement, as applicable.

    (47) " Exchange Assets " means the AE Supply Phase One Assets, the Mon Power Phase One Assets and the AE Supply Phase Two Assets, as applicable.

    (48) " Excluded AE Supply Phase One Assets " has the meaning set forth in Section 2.2.

    (49) " Excluded AE Supply Phase One Liabilities " has the meaning set forth in Section 2.4.

 

  • (50) " Excluded AE Supply Phase Two Assets " has the meaning set forth in Section 4.2.

    (51) " Excluded AE Supply Phase Two Liabilities " has the meaning set forth in Section 4.4.

    (52) " Excluded Mon Power Phase One Assets " has the meaning set forth in Section 3.2.

    (53) " Excluded Mon Power Phase One Liabilities " has the meaning set forth in Section 3.4.

    (54) " Excluded Liabilities " means the Excluded AE Supply Phase One Liabilities, the Excluded Mon Power Phase One Liabilities and the Excluded AE Supply Phase Two Liabilities, as applicable.

    (55) " Exempt Facilities " means those AE Supply Phase One Assets listed in Schedule 2.3(g), those AE Supply Phase Two Assets listed in Schedule 4.3(h), and those Mon Power Phase One Assets listed in Schedule 3.3(g), as the case may be.

    (56) " Facilities Lease Agreement " means that certain Facilities Lease Agreement, dated as of August 1, 2000, by and between AE Supply and The Potomac Edison Company, dba Allegheny Power.

    (57) " Facilities Lease Agreement Assignment and Assumption " means an assignment and assumption agreement pursuant to which The Potomac Edison Company assigns to Mon Power, and Mon Power assumes from The Potomac Edison Company, the Facilities Lease Agreement.

    (58) " FERC " means the Federal Energy Regulatory Commission or any successor agency thereto.

    (59) " Final Order " means an action by the relevant Governmental Authority that has not been reversed, stayed, enjoined, set aside, annulled or suspended and/or with respect to which any waiting period prescribed by law before the transactions contemplated hereby may be consummated has expired.

    (60) " FIRPTA Affidavit " means the Foreign Investment in Real Property Tax Act Certification and Affidavit to be executed by AE Supply and Mon Power, in a form reasonably acceptable to AE Supply and Mon Power.

    (61) " Fort Martin Agreements " means (i) any contracts, agreements, licenses and personal property leases entered into by AE Supply with respect to the ownership, operation or maintenance of the AE Supply Phase One Assets, whether or not disclosed on Schedule 7.9(a), but excluding the Fort Martin Real Property Leases and (ii) the Service Agreement.

 

  • (62) " Fort Martin Capital Expenditures " means capital additions to or replacements of property, plants and equipment included in the AE Supply Phase One Assets and other expenditures or repairs on property, plants and equipment included in the AE Supply Phase One Assets that would be capitalized by AE Supply in accordance with its normal accounting policies.

    (63) " Fort Martin Capital Spare Parts " means Capital Spare Parts related to the AE Supply Phase One Assets and set forth on Schedule 1.1(63).

    (64) " Fort Martin Emission Reduction Credits " means the Emission Reduction Credits allocated to AE Supply and related to the Fort Martin Percentage Interest.

    (65) " Fort Martin Environmental Permits " means the permits, registrations, certificates, certifications, licenses and authorizations, consents and approvals of Governmental Authorities required under Environmental Laws and held by AE Supply with respect to the AE Supply Phase One Assets.

    (66) " Fort Martin Inventories " means materials, spare parts, consumable supplies and chemical inventories relating to the operation of Fort Martin Station, provided that "Fort Martin Inventories" shall not include Capital Spare Parts, Fuel Supplies, Fort Martin SO2 Emission Allowances or Fort Martin NOx Emission Allowances.

    (67) " Fort Martin NOx Emission Allowances " means NOx Emission Allowances allocated to AE Supply and related to the Fort Martin Percentage Interest.

    (68) " Fort Martin Percentage Interest " means all of AE Supply’s ownership interest in Fort Martin Station, representing 895 megawatts with a market value of $738 million (as determined in accordance with the Market Expert’s Report), to be transferred to Mon Power in Phase One of the Transaction.

    (69) " Fort Martin Permits " means any permits, licenses, registrations, franchises and other authorizations, consents and approvals of Governmental Authorities (but in each case excluding Fort Martin Environmental Permits) held by AE Supply with respect to the AE Supply Phase One Assets.

    (70) " Fort Martin Real Property " has the meaning set forth in Section 2.1(a). Any reference to the Fort Martin Real Property includes, by definition, AE Supply’s right, title and interest in and to the surface and subsurface elements, including the soils and groundwater present at the Fort Martin Real Property, and any reference to items "at the Fort Martin Real Property" includes all items "at, on, in, upon, over, across, under and within" the Fort Martin Real Property.

    (71) " Fort Martin Real Property Leases " has the meaning set forth in Section 7.5.

 

  • (72) " Fort Martin SO2 Emission Allowances " means SO2 Emission Allowances allocated to AE Supply and related to the Fort Martin Percentage Interest.

    (73) " Fort Martin Tangible Personal Property " has the meaning set forth in Section 2.1(c).

    (74) " Fort Martin Transferable Permits " means those Fort Martin Permits and Fort Martin Environmental Permits that may be transferred at the Phase One Closing without a filing with, notice to, consent of or approval of any Governmental Authority, as set forth in Schedule 7.11(c).

    (75) " Fuel Supplies " means the supplies of coal, fuel oil, natural gas or alternative fuels related to the operation of any Plant that are either (i) located at such Plant or (ii) titled to the Conveying Party and allocated to, and in transit to, such Plant.

    (76) " GAAP " means U.S. generally accepted accounting principles.

    (77) " Good Utility Practices " mean any practices, methods, standards, guides or acts, as applicable, that are:

    (a) required by any Governmental Authority, regional or national reliability council, or national trade organization, including NERC, ECAR, 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 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 Practice 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) reasonably necessary to maintain the reliability of the Plants.

    (78) " Governmental Authority " means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority.

    (79) " Income Tax " means any federal, state, local or foreign Tax (a) based upon, measured by or calculated with respect to gross or net income, profits

    or receipts (including, without limitation, capital gains Taxes and minimum Taxes) or (b) based upon, measured by or calculated with respect to multiple bases (including, without limitation, corporate franchise taxes) if one or more of the bases on which such Tax may be based, measured by or calculated with respect to, is described in clause (a), in each case together with any interest, penalties, or additions to such Tax.

    (80) " Independent Accounting Firm " means such independent accounting firm of national reputation as is mutually appointed by AE Supply and Mon Power.

    (81) " Inspection " means all tests, reviews, examinations, inspections, investigations, verifications, samplings and similar activities conducted by an Acquiring Party or its authorized representatives, including without limitation, its professional and financial advisors, with respect to the Exchange Assets prior to the Phase One Closing or Phase Two Closing, as applicable.

    (82) " Interim Liabilities " has the meaning set forth in Section 4.3(f).

    (83) " Inventories " means the Fort Martin Inventories, Phase One Inventories and the Phase Two Inventories, as applicable.

    (84) " Knowledge " means the actual knowledge of the corporate officers 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 certificate.

    (85) " Market Expert’s Report " means the Independent Market Expert’s Report prepared by PA Consulting Group and attached to the Application.

    (86) " Material Adverse Effect " means any change in, or effect on, any Exchange Asset, from or after the date hereof that is materially adverse to the operations or condition (financial or otherwise) of such Exchange Asset, other than: (a) any change affecting the international, national, regional or local electric industry as a whole and not specific and exclusive to such Exchange Asset; (b) any change or effect resulting from changes in the international, national, regional or local wholesale or retail markets for electric power; (c) any change or effect resulting from changes in the international, national, regional or local markets for any fuel used in connection with such Exchange Asset; (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 such Exchange Asset which is cured (including by the payment of money) by the Conveying Party before the Termination Date; (f) any order of any court or Governmental Authority applicable to the providers of generation, transmission or distribution of electricity generally that imposes restrictions, regulations or other requirements thereon; and (g) the application of any of the prevention of significant deterioration provisions or the new source review provisions of the Clean Air Act, 42 U.S.C. Parts C and D.

 

  • (87) " Mon Power Phase One Assets " has the meaning set forth in Section 3.1

    (88) " Mon Power Phase One Assignment and Assumption Agreement " means the Assignment and Assumption Agreement between Mon Power and AE Supply, in a form reasonably acceptable to Mon Power and AE Supply.

    (89) " Mon Power Phase One Closing Payments " has the meaning set forth in Section 5.2(c).

    (90) " Mon Power Phase One Estimated Closing Payments " has the meaning set forth in Section 5.2(d).

    (91) " Mon Power Phase One Estimated Closing Statement " has the meaning set forth in Section 5.2(d).

    (92) " Mon Power Phase One Financing Instruments " has the meaning set forth in Section 10.2(b).

    (93) " Mon Power Representatives " means Mon Power’s authorized representatives, including without limitation, its professional and financial advisors.

    (94) " Mon Power Required Regulatory Approvals " has the meaning set forth in Section 8.3(b).

    (95) " New Facilities Lease Agreement " means that certain Facilities Lease and Assignment Agreement, by and between Mon Power and The Potomac Edison Company, dba Allegheny Power, to be effective as of the Phase One Closing Date, in the form attached to the Application.

    (96) " NOx Budget Program " means any state or federal regulatory program under which the United States or any state establishes a state, regional or national cap on emissions of nitrogen oxide or NOx and requires the surrender of allowances or other authorizations for the right to emit an amount of NOx as a means of ensuring compliance with such state, regional or national emissions cap. "NOx Budget Program(s)" shall include the Clean Air Interstate Rule, the Ozone and Nitrogen Oxide Transport rule and any other current or future program that is designed to control NOx emissions and applies to any of the Plants.

    (97) " NOx Emission Allowance " means an authorization by the applicable state or federal Governmental Authority under a NOx Budget Program authorizing the emission of a quantity of nitrogen oxides or NOx as defined by the applicable state or federal Governmental Authority.

 

  • (98) " Off-Site Location " means any real property other than the Real Property.

    (99) " OVEC Agreement " means the agreement dated the 10 th of July, 1953 and originally entered into by and among Ohio Valley Electric Corporation, Appalachian Electric Power Company, The Cincinnati Gas & Electric Company, Columbus and Southern Ohio Electric Company, The Dayton Power and Light Company, Indiana & Michigan Electric Company, Kentucky Utilities Company, Louisville Gas and Electric Company, Monongahela Power Company, Ohio Edison Company, The Ohio Power Company, Pennsylvania Power Company, The Potomac Edison Company, Southern Indiana Gas and Electric Company, The Toledo Edison Company, and West Penn Power Company (as may be amended, modified, or amended and restated from time to time) and the Amended and Restated Inter-Company Power Agreement, dated as of March 13, 2006, among the Allegheny Energy Supply Company, LLC, Ohio Valley Electric Corporation, Appalachian Power Company, the Cincinnati Gas & Electric Company, Columbus Southern Power Company, the Dayton Power and Light Company, FirstEnergy Generation Corporation, Indiana Michigan Power Company, Kentucky Utilities Company, Louisville Gas and Electric Company, Monongahela Power Company, Ohio Power Company, and Southern Indiana Gas and Electric Company (as may be amended, modified, or amended and restated from time to time).

    (100) " OVEC Interest " means any contractual interests in the OVEC Agreement comprising a portion of the Phase One Assets.

    (101) " Party " has the meaning set forth in the Recitals.

    (102) " Permits " means with respect to the Exchange Assets, any permits, licenses, registrations, franchises and other authorizations, consents and approvals of Governmental Authorities (but in each case excluding Environmental Permits) held by AE Supply or Mon Power, as applicable.

    (103) " Permitted Encumbrances " means: (a) those exceptions to title listed in Schedule 1.1(103); (b) statutory liens for Taxes or other governmental charges or assessments not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings; (c) mechanics’, carriers’, workers’, repairers’ and other similar liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Conveying Party or the validity of which are being contested in good faith; (d) zoning, entitlement, conservation restriction and other land use and environmental regulations by Governmental Authorities; (f) prior to the Phase One Closing or the Phase Two Closing, as applicable, liens relating to the Revenue Bonds, and following the Phase One Closing or the Phase Two Closing, as applicable, liens relating to those Revenue Bonds the debt obligations of which are assumed, in whole or in part, pursuant to the terms of this Agreement by the Acquiring Party at the Phase One Closing or the Phase Two Closing, as the case

    may be; and (g) other liens, imperfections in or failure of title, charges, easements, restrictions and Encumbrances that do not materially, individually or in the aggregate, detract from the value of the applicable Exchange Assets as currently used or materially interfere with the present use of such Exchange Assets and neither secure indebtedness, nor individually or in the aggregate create a Material Adverse Effect.

    (104) " Person " means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or governmental entity or any department or agency thereof.

    (105) " Phase One " has the meaning set forth in the recitals to this Agreement.

    (106) " Phase One Agreements " means any contracts, agreements, licenses and personal property leases entered into by Mon Power with respect to the ownership, operation or maintenance of the Mon Power Phase One Assets, whether or not disclosed on Schedule 8.9(a), but excluding the Phase One Real Property Leases.

    (107) " Phase One Assets " means Mon Power’s right, title and interest in and to the physical assets comprising Harrison Station, Hatfield Station, Pleasants Station, Willow Island Station, its equity interests in AGC and its contractual interests in the OVEC Agreement.

    (108) " Phase One Capital Expenditures " means capital additions to or replacements of property, plants and equipment included in the Mon Power Phase One Assets and other expenditures or repairs on property, plants and equipment included in the Mon Power Phase One Assets that would be capitalized by Mon Power in accordance with its normal accounting policies.

    (109) " Phase One Capital Spare Parts " means Capital Spare Parts related to the Mon Power Phase One Assets and set forth on Schedule 1.1(109).

    (110) " Phase One Closing " has the meaning set forth in Section 5.1.

    (111) " Phase One Closing Date " means the date on which the Phase One Closing occurs.

    (112) " Phase One Closing Payment Balance " has the meaning set forth in Section 5.3(c).

    (113) " Phase One Closing Payments " has the meaning set forth in Section 5.2(a).

    (114) " Phase One Emission Reduction Credits " means the Emission Reduction Credits allocated to Mon Power related to the Phase One Percentage Interests.

 

  • (115) " Phase One Environmental Permits " means the permits, registrations, certificates, certifications, licenses and authorizations, consents and approvals of Governmental Authorities required under Environmental Laws and held by Mon Power with respect to the Mon Power Phase One Assets.

    (116) " Phase One Final Adjustment " has the meaning set forth in Section 5.2(f).

    (117) " Phase One Inventories " means materials, spare parts, consumable supplies and chemical inventories relating to the operation of any of the Phase One Assets, provided that "Phase One Inventories" shall not include Capital Spare Parts, Fuel Supplies, Phase One SO2 Emission Allowances or Phase One NOx Emission Allowances.

    (118) " Phase One NOx Emission Allowances " means NOx Emission Allowances allocated to Mon Power and related to the Phase One Percentage Interests.

    (119) " Phase One Percentage Interests " means such percentage ownership interests of Mon Power in the Phase One Assets to be conveyed to AE Supply at the Phase One Closing as the parties may mutually agree, or as may be required, pursuant to Section 1.4 of this Agreement.

    (120) " Phase One Permits " means any permits, licenses, registrations, franchises and other authorizations, consents and approvals of Governmental Authorities (but in each case excluding Phase One Environmental Permits) held by Mon Power with respect to the Mon Power Phase One Assets.

    (121) " Phase One Real Property " has the meaning set forth in Section 3.1(a). Any reference to the Phase One Real Property includes, by definition, Mon Power’s right, title and interest in and to the surface and subsurface elements, including the soils and groundwater present at the Phase One Real Property, and any reference to items "at the Phase One Real Property" includes all items "at, on, in, upon, over, across, under and within" the Phase One Real Property.

    (122) " Phase One Real Property Leases " has the meaning set forth in Section 8.5.

    (123) " Phase One SO2 Emission Allowances " means SO2 Emission Allowances allocated to Mon Power and related to the Phase One Percentage Interests.

    (124) " Phase One Tangible Personal Property " has the meaning set forth in Section 3.1(c).

    (125) " Phase One Transferable Permits " means those Phase One Permits and Phase One Environmental Permits that may be transferred at the Phase One Closing without a filing with, notice to, consent of or approval of any Governmental Authority, as set forth in Schedule 8.11(c).

 

  • (126) " Phase Two " has the meaning set forth in the recitals to this Agreement.

    (127) " Phase Two Agreements " means any contracts, agreements, licenses and personal property leases entered into by AE Supply with respect to the ownership, operation or maintenance of the AE Supply Phase Two Assets, whether or not disclosed on Schedule 7.9(a), but excluding the Phase Two Real Property Leases.

    (128) " Phase Two Assets " means AE Supply’s right, title and interest in and to the physical assets comprising Albright Station, Pleasants Station, Rivesville Station and Willow Island Station and its equity interests in AGC.

    (129) " Phase Two Capital Expenditures " means capital additions to or replacements of property, plants and equipment included in the AE Supply Phase Two Assets and other expenditures or repairs on property, plants and equipment included in the AE Supply Phase Two Assets that would be capitalized by AE Supply in accordance with its normal accounting policies.

    (130) " Phase Two Capital Spare Parts " means Capital Spare Parts related to the AE Supply Phase Two Assets and set forth on Schedule 1.1(130).

    (131) " Phase Two Closing " has the meaning set forth in Section 6.1.

    (132) " Phase Two Closing Date " means the date on which the Phase Two Closing occurs.

    (133) " Phase Two Closing Payments " has the meaning set forth in Section 6.2(a).

    (134) " Phase Two Emission Reduction Credits " means the Emission Reduction Credits allocated to AE Supply and related to the Phase Two Percentage Interests.

    (135) " Phase Two Environmental Permits " means the permits, registrations, certificates, certifications, licenses and authorizations, consents and approvals of Governmental Authorities required under Environmental Laws and held by AE Supply with respect to the AE Supply Phase Two Assets.

    (136) " Phase Two Final Adjustment " has the meaning set forth in Section 6.2(e).

    (137) " Phase Two Inventories " means materials, spare parts, consumable supplies and chemical inventories relating to the operation of any of the Phase Two Assets, provided that "Phase Two Inventories" shall not include Capital Spare Parts, Fuel Supplies, Phase Two SO2 Emission Allowances, or Phase Two NOx Emission Allowances.

 

  • (138) " Phase Two NOx Emission Allowances " means NOx Emission Allowances allocated to AE Supply and related to the Phase Two Percentage Interests.

    (139) " Phase Two Percentage Interests " mean such percentage ownership interests of AE Supply in the Phase Two Assets to be conveyed to Mon Power at the Phase Two Closing as the Parties may mutually agree, or as may be required, pursuant to Section 1.4 of this Agreement.

    (140) " Phase Two Permits " means any permits, licenses, registrations, franchises and other authorizations, consents and approvals of Governmental Authorities (but in each case excluding Phase Two Environmental Permits) held by AE Supply with respect to the AE Supply Phase Two Assets.

    (141) " Phase Two SO2 Emission Allowances " means SO2 Emission Allowances allocated to AE Supply and related to the Phase Two Percentage Interests.

    (142) " Phase Two Real Property " has the meaning set forth in Section 4.1(a). Any reference to the Phase Two Real Property includes, by definition, AE Supply’s right, title and interest in and to the surface and subsurface elements, including the soils and groundwater present at the Phase Two Real Property, and any reference to items "at the Phase Two Real Property" includes all items "at, on, in, upon, over, across, under and within" the Phase Two Real Property.

    (143) " Phase Two Real Property Leases " has the meaning set forth in Section 7.5.

    (144) " Phase Two Tangible Personal Property " has the meaning set forth in Section 4.1(c).

    (145) " Phase Two Transferable Permits " means those Phase Two Permits and Phase Two Environmental Permits that may be transferred at the Phase Two Closing without a filing with, notice to, consent of or approval of any Governmental Authority, as set forth in Schedule 7.11(c).

    (146) " Plant " means, (i) with respect to the AE Supply Phase One Assets, the Fort Martin Station, (ii) with respect to the Mon Power Phase One Assets, Harrison Station, Hatfield Station, Pleasants Station, Willow Island Station, Bath County Station and the generating facilities operated pursuant to the OVEC Agreement, and (iii) with respect to the AE Supply Phase Two Assets, Albright Station, Pleasants Station, Rivesville Station, Willow Island Station and Bath County Station.

 

  • (147) " Proposed AE Supply Phase One Final Adjustments " has the meaning set forth in Section 5.2(e).

    (148) " Proposed Mon Power Phase One Final Adjustments " has the meaning set forth in Section 5.2(e).

    (149) " Proposed AE Supply Phase Two Final Adjustments " has the meaning set forth in Section 6.2(d).

    (150) " Proposed Final Adjustment " means the Proposed AE Supply Phase One Final Adjustment, Proposed Mon Power Phase One Final Adjustment or the Proposed AE Supply Phase Two Final Adjustment, as applicable.

    (151) " Proprietary Information " of a Party means all information about the Party or its Affiliates, including their respective properties or operations, furnished to the other Party or its Representatives by the Party or its Representatives, after the date hereof, regardless of the manner or medium in which it is furnished and all analyses, reports, tests or other information created or prepared by, or on behalf of, a Party in respect of the same. 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 of its Representatives not to transmit the information to the other Party or its Representatives; or (d) is independently developed by the other Party.

    (152) " Real Property " means the Fort Martin Real Property, the Phase One Real Property and the Phase Two Real Property, as applicable.

    (153) " Real Property Leases " means Fort Martin Real Property Leases, Phase One Real Property Leases and Phase Two Real Property Leases, as applicable.

    (154) " Regulated 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 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 prohibited, limited or regulated by any applicable Environmental Law.

 

  • (155) " Release " means release, spill, leak, discharge, dispose of, pump, pour, emit, empty, inject, leach, dump or allow to escape into or through the environment.

    (156) " Remediation " means any action taken in the investigation, removal, confinement, cleanup, treatment, or monitoring of an Environmental Condition on Real Property or Off-Site Location, including, without limitation, (a) obtaining any Permits or Environmental Permits required for such remedial activities, and (b) implementation of any engineering controls and institutional controls. The term "Remediation" includes, without limitation, any action which constitutes "removal action" or "remedial action" as defined by Section 101 of CERCLA, 42 U.S.C. §6901(23) and (24).

    (157) " Representatives " means the AE Supply Representatives and the Mon Power Representatives, as applicable.

    (158) " Required Regulatory Approvals " means the AE Supply Required Regulatory Approvals and the Mon Power Required Regulatory Approvals, as applicable.

    (159) " Revenue Bonds " means those industrial development revenue bonds or private activity bonds (including so-called pollution control bonds) that are issued by various governmental agencies and authorities and the proceeds of which were or are used to finance or refinance, in whole or in part, any of the Exchange Assets, including the Exempt Facilities.

    (160) " SEC " means the Securities and Exchange Commission and any successor agency thereto.

    (161) " Service Agreement " means that certain Service Agreement, dated as of August 1, 2000, by and between The Potomac Edison Company, dba Allegheny Power, and AE Supply.

    (162) " Service Agreement Assignment and Assumption " means an assignment and assumption agreement pursuant to which AE Supply assigns to Mon Power, and Mon Power assumes from AE Supply, the Service Agreement.

    (163) " SO2 Emission Allowance " means a limited authorization issued by the Administrator of the USEPA under the Clean Air Act, 42 U.S.C. § 7401, et seq ., to emit one ton of sulfur dioxide during or after a specified calendar year.

    (164) " Subsidiary " when used in reference to any Person means any entity of which outstanding securities, having ordinary voting power to elect a majority of the Board of Directors or other Persons performing similar functions of such entity are owned directly or indirectly by such Person.

 

  • (165) " Taxes " means all taxes, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, excise, property, sales, transfer, franchise, payroll, withholding, social security, gross receipts, license, stamp, occupation, employment or other taxes, including any interest, penalties or additions attributable thereto.

    (166) " Tax Return " means any return, report, information return, declaration, claim for refund or other document (including any schedule or related or supporting information) required to be supplied to any taxing authority with respect to Taxes including amendments thereto.

    (167) " Transaction " has the meaning set forth in the recitals to this Agreement.

    (168) " Transferable Permit " means a Fort Martin Transferable Permit, Phase One Transferable Permit or Phase Two Transferable Permit, as applicable.

    (169) " 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.

    (170) " Transmission Assets " means with respect to a Plant, the electrical transmission and distribution facilities (as opposed to generation facilities) located on Real Property or forming part of such Plant (whether or not regarded as a "transmission", "distribution" or "generation" asset for regulatory or accounting purposes), including all switchyard facilities, substation facilities and support equipment, as well as all permits, contracts and warranties, to the extent they relate to such transmission and distribution assets; provided, however, that for purposes of this Agreement, Transmission Assets shall not include, and specifically excludes, step-up transformers.

    (171) " Transmission Easements " means those easements or other rights to access held by a Conveying Party over, across, through or under any Real Property transferred by such Conveying Party hereunder for the purpose of accessing, maintaining and operating any of such Conveying Party’s Transmission Assets located on such Real Property.

    (172) " USEPA " means the United States Environmental Protection Agency and any successor agency thereto.

    (173) " Warranty Deed " means a special warranty deed or limited warranty deed, as applicable, in a form reasonably acceptable to Mon Power and AE Supply.

    (174) " WVPSC " means the West Virginia Public Service Commission, and any successor agency thereto.

1.2 Certain Interpretive Matters . In this Agreement, unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term "includes" or "including" shall mean "including without limitation." 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 Simultaneous Closings; Timing of Phase Two Closing . To the extent that the conditions precedent to the consummation of the Phase Two Closing, as set forth in Sections 10.4, 10.5 and 10.6 of this Agreement, are satisfied or waived on or before the date of the Phase One Closing, either Party may elect to consummate the Phase Two Closing simultaneously with the Phase One Closing. Upon any such election, the Parties shall cause the Phase One Closing and the Phase Two Closing to occur simultaneously and, in connection therewith, the Parties shall agree to such changes to this Agreement as shall be necessary or advisable to accomplish such simultaneous closings. Subject to the provisions of Article XI, in the event that the Phase One Closing and the Phase Two Closing do not occur simultaneously, it is the intention of the Parties to cause the Phase Two Closing to occur as soon as practicable following the Phase One Closing, but no later than May 1, 2012, unless one or more of the conditions precedent to the consummation of the Phase Two Closing, as set forth in sections 10.4, 10.5 and 10.6 of this Agreement, that are not within the reasonable control of either Party, shall not have been satisfied by such date, due to no fault of either Party, in which case the Parties shall cause the Phase Two Closing to occur as soon as practicable following the satisfaction of such condition(s) precedent.

1.4 Determination of Percentage Interests .

(a) All references in this Agreement to AE Supply’s right, title and interest in Fort Martin Station and the AE Supply Phase One Assets, and all rights, liabilities and obligations in connection therewith, shall refer only to, and shall be limited to the extent of, the Fort Martin Percentage Interest.

(b) The Parties shall, no later than ten (10) Business Days prior to the Phase One Closing, mutually agree in writing upon the Phase One Percentage Interests to be transferred at the Phase One Closing; provided, however, that the aggregate market value (as determined in accordance with the Market Expert Report) for the megawatts represented by such Phase One Percentage Interests, taken as a whole, shall equal no more than $738 million. If the Parties are unable to mutually agree upon such Phase One Percentage Interests as contemplated by the immediately preceding sentence, then the Phase One Percentage Interests shall be as set forth on Exhibit A attached to this Agreement. All references in this Agreement to Mon Power’s right, title

and interest in the Phase One Assets and the Mon Power Phase One Assets, and all rights, liability and obligations in connection therewith, shall refer only to, and shall be limited to the extent of, the Phase One Percentage Interests.

(c) The Parties shall, no later than ten (10) Business Days prior to the Phase Two Closing, mutually agree in writing upon the Phase Two Percentage Interests to be transferred at the Phase Two Closing; provided, however, that the aggregate market value (as determined in accordance with the Market Expert Report) for the megawatts represented by such Phase Two Percentage Interests, taken as a whole, shall equal at least $364 million. If the Parties are unable to mutually agree upon such Phase Two Percentage Interests as contemplated by the immediately preceding sentence, then the Phase Two Percentage Interests shall be as set forth on Exhibit A attached to this Agreement. All references in this Agreement to AE Supply’s right, title and interest in the Phase Two Assets and the AE Supply Phase Two Assets, and all rights, liability and obligations in connection therewith, shall refer only to, and shall be limited to the extent of, the Phase Two Percentage Interests.

1.5 Certain Matters Relating to AGC and OVEC . For the avoidance of doubt, it is the intention of the Parties that the transfers of the AGC Interest and the OVEC Interest contemplated by this Agreement shall be accomplished by each Conveying Party transferring any such AGC Interest or the OVEC Interest, directly or indirectly, through one or more of such Conveying Party’s Subsidiaries, to the Acquiring Party or, at the Acquiring Party’s direction, one or more of the Acquiring Party’s Subsidiaries. The Parties agree to reasonably cooperate with one another in effecting any such direct or indirect transfers of any such AGC Interest or OVEC Interest in connection with the Phase One Closing or the Phase Two Closing, as the case may be. The parties acknowledge and agree that in connection with the transfer of the OVEC Interest at the Phase One Closing, and in order to qualify AE Supply as a Permitted Assignee (as defined in the OVEC Agreement), (i) Mon Power shall, and hereby does, agree to remain obligated, following the Phase One Closing, to satisfy all of the obligations related to the OVEC Interest transferred to AE Supply (or any of its Subsidiaries) to the extent that such obligations are not satisfied by AE Supply (or any such Subsidiaries) and (ii) AE Supply shall, and hereby does, indemnify, defend and hold harmless Mon Power in connection with all Assumed Mon Power Phase One Liabilities related to the OVEC Interest transferred to AE Supply at the Phase One Closing.

1.6 Certain Contractual Matters . For the avoidance of doubt it is the Parties intention that, in connection with, and effective as of, the Phase One Closing, (i) AE Supply will assign the Service Agreement to Mon Power and contemporaneously therewith Mon Power and The Potomac Edison Company will enter into the Amended and Restated Service Agreement, (ii) The Potomac Edison Company will assign the Facilities Lease Agreement to Mon Power and contemporaneously therewith Mon Power and AE Supply will enter into the Amended and Restated Facilities Lease Agreement, and (iii) The Potomac Edison Company and Mon Power will enter into the New Facilities Lease Agreement.

1.7 Certain Matters Relating to Joint Ownership . For the avoidance of doubt, and in recognition of the fact that Fort Martin Station, certain of the Phase One Assets and certain of the Phase Two Assets are, as of the date hereof, and are expected to be, prior to the Phase One Closing or the Phase Two Closing, as the case may by, jointly owned by AE Supply and Mon Power, the Parties expressly agree as follows:

(a) to the extent that Mon Power owns any interest in Fort Martin Station prior to the Phase One Closing, it shall continue to be responsible, following the Phase One Closing, for any liabilities and obligations associated with any such interest to the same degree that it would be responsible for the same had the Phase One Closing not occurred (except to the extent that Mon Power expressly assumes in writing, pursuant to Section 2.3 hereof or otherwise, in connection with


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