-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OKzBL66K75LOxpdNjNeNx4lmpTW04tdCxyOHYhebEc7S681niVKKj0SYvNpGsPvD lZkvT3Y427I0C6343pRGGw== 0000950172-01-500446.txt : 20010702 0000950172-01-500446.hdr.sgml : 20010702 ACCESSION NUMBER: 0000950172-01-500446 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010622 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONECTIV CENTRAL INDEX KEY: 0001029590 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 510377417 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13895 FILM NUMBER: 1670746 BUSINESS ADDRESS: STREET 1: 800 KING ST STREET 2: P O BOX 231 CITY: WILMINGTON STATE: DE ZIP: 19899 BUSINESS PHONE: 3024293114 MAIL ADDRESS: STREET 1: 800 KING ST STREET 2: P O BOX 231 CITY: WILMINGTON STATE: DE ZIP: 19899 8-K 1 s252323.txt 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) June 22, 2001 --------------------------- Conectiv - ----------------------------------------------------------------------------- Exact Name of Registrant Specified in Charter Delaware 1-13895 51-0377417 - ------------------------------------------------------------------------------ (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 800 King Street, P.O. Box 231, Wilmington, Delaware 19899 - ----------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (302) 429-3018 --------------------------- - ------------------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. As previously reported in Note 14 to the Consolidated Financial Statements included in Item 8 of Part II of Conectiv's 2000 Annual Report on Form 10- K, Conectiv's subsidiaries Delmarva Power & Light Company ("DPL") and Atlantic City Electric Company ("ACE") entered into agreements with NRG Energy, Inc. ("NRG") for the sale of their respective interests in non-strategic baseload fossil fuel-fired electric generating plants in January 2000. Pursuant to these agreements, on June 22, 2001, DPL completed the sale of its interests in Indian River Station, a wholly owned 784 megawatt ("MW") coal- and oil- fired generating plant located in Sussex County, Delaware, and Vienna Station, a wholly owned 170 MW oil-fired generating plant located in Vienna, Maryland. Also pursuant to these agreements, on June 22, 2001, Conectiv's subsidiary, Conectiv Delmarva Generation, Inc. ("CDG") (successor by assignment to DPL's interests), completed the sale of its minority interest (3.72% ownership interest or 63.4 MW) in Conemaugh Station, a jointly owned coal-fired generating plant located in New Florence, Pennsylvania, and the sale of its minority interest (3.70% ownership interest or 63.4 MW) in Keystone Station, a jointly owned coal-fired generating plant located in Shelocta, Pennsylvania. As a result of these sales, Conectiv and its subsidiaries received approximately $630 million in cash consideration, subject to final adjustment based on the value of fuel and material inventories at the closing and certain capital expenditures. The amount of the consideration received was determined as the result of arm's-length negotiations between Conectiv's subsidiaries and NRG. The interests of Conectiv's subsidiaries in the generating plants sold on June 22, 2001 had a net book value of approximately $286 million as of March 31, 2001. Conectiv expects to recognize an after-tax gain of approximately $170 - $175 million in its earnings for the second quarter of 2001 as a result of these sales. Proceeds of these sales are expected to be used to repay debt, to repurchase preferred stock and other securities of Conectiv's subsidiaries and to fund projects associated with Conectiv's mid-merit generation business. To facilitate completion of these sales, DPL and ACE agreed to alter their respective agreements with NRG and NRG Power Marketing, Inc., an affiliate of NRG ("NRG Power"), effective June 22, 2001, as follows: o DPL and ACE entered into amendments to their respective sales agreements with NRG to provide for (i) the sale by DPL and CDG of their respective interests in Indian River Station, Vienna Station, Conemaugh Station and Keystone Station separate from the sale by ACE of its interests in certain electric generating assets, and (ii) the separate sale by ACE of its interests in each of (A) Deepwater Station, (B) B.L. England Station, and (C) Conemaugh and Keystone Stations, in each case, subject to the receipt of the required approvals from the New Jersey Board of Public Utilities and the satisfaction of other closing conditions; o ACE entered into amendments to its sales agreements with NRG to provide for the extension of the termination dates of the sale agreements between ACE and NRG relating to Deepwater Station, Conemaugh and Keystone Stations and B.L. England Station; o The agreement between DPL and NRG Power for DPL to purchase 500 megawatt-hours ("MWh") of firm electricity per hour from NRG, beginning on June 22, 2001 and ending December 31, 2005, was not changed; however, DPL entered into additional agreements, beginning on June 22, 2001, to purchase from NRG Power up to 350 MWh of firm electric energy per hour and up to 750 MW of capacity through August 31, 2001 and up to 300 MW of capacity through September 30, 2001; and o ACE terminated its existing power purchase agreement with NRG Power. Subject to the receipt of the required approvals from the New Jersey Board of Public Utilities and the satisfaction of other closing conditions, Conectiv expects the sale by ACE of certain electric generating assets to be completed during 2001. However, there can be no assurances that such approvals will be obtained, or that such sales will be completed. The description of the transactions set forth herein is qualified in its entirety by reference to the sales agreements between each of DPL and ACE, and NRG, including the respective amendments thereto, copies of which are filed as exhibits to this report and incorporated by reference herein. On June 25, 2001, Conectiv issued a press release relating to such transactions, a copy of which is filed as an exhibit to this report and is incorporated by reference herein. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Not applicable. (b) The pro forma financial information required pursuant to Article 11 of Regulation S-K is furnished and filed as Exhibit 99.2 to this report and is incorporated by reference herein. (c) Exhibits. 2.1 Purchase and Sale Agreement by and between Delmarva Power & Light Company and NRG Energy, Inc., dated as of January 18, 2000 (wholly owned electric generating plants) (Incorporated by reference to Exhibit 10-A to Delmarva Power & Light Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, Commission file no. 1-1405). 2.2 Purchase and Sale Agreement by and between Delmarva Power & Light Company and NRG Energy, Inc., dated as of January 18, 2000 (jointly owned electric generating plants) (Incorporated by reference to Exhibit 10-B to Delmarva Power & Light Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, Commission file no. 1-1405). 2.3 Purchase and Sale Agreement by and between Atlantic City Electric Company and NRG Energy, Inc., dated as of January 18, 2000 (wholly owned electric generating plants) (Incorporated by reference to Exhibit 10-B to Atlantic City Electric Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, Commission file no. 1-3559). 2.4 Purchase and Sale Agreement by and between Atlantic City Electric Company and NRG Energy, Inc., dated as of January 18, 2000 (jointly owned electric generating plants) (Incorporated by reference to Exhibit 10-C to Atlantic City Electric Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, Commission file no. 1-3559). 2.5 Amendment to the Purchase and Sale Agreement by and between Delmarva Power & Light Company and NRG Energy, Inc., dated as of June 22, 2001 (wholly owned electric generating plants) (Filed herewith). 2.6 Amendment to the Purchase and Sale Agreement by and between Delmarva Power & Light Company and NRG Energy, Inc., dated as of June 22, 2001 (jointly owned electric generating plants) (Filed herewith). 2.7 Amendment to the Purchase and Sale Agreement by and between Atlantic City Electric Company and NRG Energy, Inc., dated as of June 22, 2001 (wholly owned electric generating plants) (Filed herewith). 2.8 Amendment to the Purchase and Sale Agreement by and between Atlantic City Electric Company and NRG Energy, Inc., dated as of June 22, 2001 (jointly owned electric generating plants) (Filed herewith). 99.1 Press release issued by Conectiv dated June 25, 2001 (Filed herewith). 99.2 Conectiv Unaudited Consolidated Pro Forma Financial Statements - Generation Asset Sale and Transfer (Filed herewith). SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONECTIV By: /s/ John C. Roden ------------------------------- John C. Van Roden Senior Vice President and Chief Financial Officer June 28, 2001 EXHIBIT 2.5 DP&L WHOLLY OWNED AGREEMENT AMENDMENT TO THE PURCHASE AND SALE AGREEMENT BY AND BETWEEN DELMARVA POWER & LIGHT COMPANY AND NRG ENERGY, INC. AMENDMENT TO THE PURCHASE AND SALE AGREEMENT (the "Amendment") by and between Delmarva Power & Light Company, a Delaware and Virginia corporation ("DP&L" or "Seller"), and NRG Energy, Inc., a Delaware corporation ("Buyer"), dated as of June 22, 2001. Seller and Buyer may each be referred to herein individually as a "Party" and collectively as the "Parties." Capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings assigned to them in the Agreement (as defined below). WHEREAS, Seller and Buyer are Parties to that certain Purchase and Sale Agreement, dated as of January 18, 2000 (the "Agreement"), providing for the sale and assignment by Seller of the Purchased Assets and the Assumed Liabilities and the purchase and assumption by Buyer of the Purchased Assets and the Assumed Liabilities, upon the terms and conditions set forth in the Agreement; and WHEREAS, the Closing of the transactions contemplated by the Agreement, the DP&L Related Purchase Agreement and the ACE Related Purchase Agreements has been unexpectedly delayed; and WHEREAS, as a result of the delay of the Closing, the Parties desire to amend the Agreement as set forth herein, and the DP&L Related Purchase Agreement and the ACE Related Purchase Agreements as set forth in the respective amendments to such agreements, which are being entered into simultaneously with this Amendment, to, among other things, extend the termination date of the Agreement, the DP&L Related Purchase Agreement and the ACE Related Purchase Agreements. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Seller and Buyer hereby agree as follows: ARTICLE I Amendment of Certain Provisions of the Agreement Section 1.1 Certain Definitions. (a) Section 1.1(4) of the Agreement is hereby amended and restated in its entirety to read as follows: "'Additional Agreements' means the Interconnection Agreement, the DP&L Master Power Purchase Agreement, the DP&L 500 MWh Power Purchase Confirmation, the DP&L Capacity Power Purchase Confirmation, the DP&L 350 MWh Power Purchase Confirmation, the Transition Services Agreement, the Access Agreement, the Indian River Station Access Agreement, the Limited Warranty Deeds, the Assignment and Assumption Agreement and the Bill of Sale." (b) Section 1.1 of the Agreement is hereby amended to include the following additional provisions: (153) "DP&L Master Power Purchase Agreement" means the Master Power Purchase Agreement between DP&L and NRG Power Marketing Inc., dated April 11, 2001, as amended and restated through the date hereof, and attached as Exhibit K to the Agreement. (154) "DP&L 500 MWh Power Purchase Confirmation" means the transaction confirmation letter, dated April 11, 2001, as amended and restated through the date hereof, issued by DP&L to NRG Power Marketing Inc. under the DP&L Master Power Purchase Agreement, relating to the purchase of 500MWh of firm electric energy, and attached as Exhibit L to the Agreement. (155) "DP&L Capacity Power Purchase Confirmation" means the transaction confirmation letter, dated June 22, 2001, issued by DP&L to NRG Power Marketing Inc. under the DP&L Master Power Purchase Agreement, relating to the purchase of 750MW of firm electric PJM capacity credits from the Closing Date through August 31, 2001 and the purchase of 300 MW of firm electric PJM capacity credits from September 1, 2001 through September 30, 2001, and attached as Exhibit M to the Agreement. (156) "DP&L 350 MWh Power Purchase Confirmation" means the transaction confirmation letter, dated June 22, 2001, issued by DP&L to NRG Power Marketing Inc. under the DP&L Master Power Purchase Agreement, relating to the purchase of 350MWh of firm electric energy, and attached as Exhibit N to the Agreement. (157) "Indian River Station Access Agreement" means the access agreement between Seller and Buyer relating to the Indian River Station to be entered into at the Closing, and attached as Exhibit O to the Agreement. Section 1.2 Deliveries by Seller. (a) Section 3.6(e) of the Agreement is hereby amended and restated in its entirety to read as follows: "The DP&L Master Power Purchase Agreement, the DP&L 500 MWh Power Purchase Confirmation, the DP&L Capacity Power Purchase Confirmation and the DP&L 350 MWh Power Purchase Confirmation, in each case, duly executed by Seller;" (b) Section 3.6(g) of the Agreement is hereby amended and restated in its entirety to read as follows: "The Access Agreement and the Indian River Access Agreement, in each case, duly executed by Seller;" Section 1.3 Deliveries by Buyer. (a) Section 3.7(d) of the Agreement is hereby amended and restated in its entirety to read as follows: "The DP&L Master Power Purchase Agreement, the DP&L 500 MWh Power Purchase Confirmation, the DP&L Capacity Power Purchase Confirmation and the DP&L 350 MWh Power Purchase Confirmation, in each case, duly executed by NRG Power Marketing Inc.;" (b) Section 3.7(f) of the Agreement is hereby amended and restated in its entirety to read as follows: "The Access Agreement and the Indian River Access Agreement, in each case, duly executed by Buyer;" Section 1.4 Relationship of the Agreement and the Related Purchase Agreements. Section 3.9 of the Agreement is hereby amended and restated in its entirety to read as follows: "The transactions contemplated by this Agreement, together with the transactions contemplated by the DP&L Related Purchase Agreement, are intended by the Parties to be consummated substantially simultaneously; and if any of the transactions contemplated hereby or by the DP&L Related Purchase Agreement are not consummated simultaneously on the Closing Date in accordance with the terms and subject to the conditions set forth herein and in the DP&L Related Purchase Agreement, as applicable, then each Party shall take, or cause to be taken, all actions, and do, or cause to be done, all things, in each case, that are necessary to dissolve and invalidate all transactions contemplated hereby and thereby; provided, however, that if the failure to consummate the transactions contemplated hereby or thereby results from a default or breach of a Party under this Agreement or under the DP&L Related Purchase Agreement, then nothing in the foregoing shall preclude or limit the rights or remedies of any Party in connection with such default or breach." Section 1.5 Employees. (a) Section 6.8(g) of the Agreement is hereby amended and restated in its entirety to read as follows: "(g) As soon as practicable, and in any event within ninety (90) days after the Closing Date, Buyer shall establish or make available to Transferred Union Employees a defined contribution pension plan (or plans) and trust (or trusts) intended to qualify under Sections 401(a) and 501(a) of the Code (such plan or plans referred to as "Buyer's Savings Plan") in which all Transferred Union Employees shall be eligible to participate as of the later of the Closing Date or the Buyer's Savings Plan's effective date. Buyer's Savings Plan shall provide for deferral options and employer matching contributions with respect to the Transferred Union Employees who are participants in the Conectiv Savings & Investment Plan and the Atlantic City Electric Co. Savings Plan B (collectively, "Seller's Savings Plans") as of the Closing Date (such employees, the "Transferred Savings Employees") that are no less favorable than those provided as of immediately prior to the Closing Date to the Transferred Savings Employees under the Seller's Savings Plans. Buyer shall provide a make-whole payment outside of Buyer's Savings Plan to reflect lost matching contributions on account of any delay in enrollment to any Transferred Employee who enrolls in Buyer's Savings Plan within the first thirty (30) days after the Closing. Contributions to the Seller's Savings Plans with respect to the Transferred Savings Employees shall cease effective as of the Closing Date, subject to Section 6.8(m). Each Transferred Savings Employee shall be afforded the option of transferring his or her account balance into the Buyer's Savings Plan; provided, however, that if Seller is able to obtain a favorable ruling from the Internal Revenue Service to the effect that the consummation of the transactions contemplated hereby shall constitute a sale of substantially all of the assets used in a trade or business within the meaning of Section 401(k)(10) of the Code, each Transferred Savings Employee shall be afforded the option of rolling over his or her account balance into the Buyer's Savings Plan. Such transfers or rollovers shall satisfy the requirements of Section 414(l) of the Code and Section 208 of ERISA and shall be in the form of cash or other property, as Seller and Buyer shall mutually agree prior to such transfer or rollover. Each Transferred Savings Employee shall be treated as a terminated employee, and shall be afforded the opportunity to receive a distribution from Seller's Savings Plans, to elect a direct rollover of such distribution into Buyer's Savings Plan, or to leave his or her account balance in Seller's Savings Plans (if such balance exceeds $5,000). Any such rollovers shall satisfy the requirements of Section 208 of ERISA and shall be in the form of cash or other property, as Seller and Buyer shall mutually agree prior to such rollover. Prior to such rollover, Buyer will provide Seller with such documents and other information as Seller shall reasonably request to assure itself that Buyer's Savings Plan and the trust or trusts established pursuant thereto contain participant loan provisions and procedures necessary to effect the orderly transfer of participant loan balances associated with the rollover. Notwithstanding anything in this Section 6.8(f) to the contrary, no such rollover shall take place unless and until Seller has received written evidence of the adoption of Buyer's Savings Plan and the trust (or trusts) thereunder by Buyer and either (A) a copy of a favorable determination letter issued by the Internal Revenue Service and satisfactory to Seller's counsel with respect to Buyer's Savings Plan or (B) an opinion, satisfactory to Seller's counsel, of Buyer's counsel to the effect that the terms of Buyer's Savings Plan and its related trust or trusts qualify under Sections 401(a) and 501(a) of the Code. Buyer and Seller shall provide each other with such records and information as may be necessary or appropriate to carry out their obligations under this Section 6.8(f) for the purposes of administration of Buyer's Savings Plan, and they shall cooperate in the filing of documents required by the transactions described herein." (b) Section 6.8 of the Agreement is hereby amended to include the following additional provisions: "(l) Within sixty (60) days after the Closing, Seller shall (a) provide Buyer with a written statement setting forth the number of unused hours of vacation, accrued vacation, carryover vacation, perfect attendance holidays and floating holidays accrued during the period commencing on January 1 of the year during which the Closing occurs and ending on the day immediately preceding the Closing Date ("Accrued and Unused Vacation") for Transferred Non-Union Employees and (b) transfer funds to Buyer in an amount sufficient to pay for Accrued and Unused Vacation, such amount to be based on the wages and salaries of Transferred Non-Union Employees in effect on the day immediately preceding the Closing Date; provided that, upon receipt of notice from Seller, Buyer shall promptly reimburse Seller for any and all payments in respect of Accrued and Unused Vacation made by Seller to Transferred Non-Union Employees after the Closing, whether as the result of any suit, action or proceeding, or otherwise. From and after the Closing, Buyer shall recognize the right of Transferred Employees to Accrued and Unused Vacation during the remainder of the year during which the Closing occurs and, with respect to Transferred Union Employees, in accordance with the applicable IBEW Collective Bargaining Agreement and applicable Law. (m) In the event that the Closing Date occurs on any day other than the day immediately following the day on which any regular pay period of Seller relating to any Transferred Employees ends, then, notwithstanding Buyer's obligations hereunder, in order to accommodate Buyer's request, Seller shall, in respect of such period, (i) pay to such Transferred Employees the salary or wages to which such Transferred Employees are entitled, (ii) pay to the applicable Governmental Authorities all required amounts in respect of payroll and similar withholding Taxes relating to such salaries and wages, and (iii) make any regular deposits or contributions, including deposits or contributions of matching funds to Seller's Benefit Plans on behalf of such Transferred Employees. Buyer shall, within 30 days after the Closing, reimburse Seller for all amounts in respect of such salaries, wages, Taxes, deposits and contributions to the extent relating to the period from and after the Closing Date." Section 1.6 Environmental Matters. The final sentence of Section 6.12(d) of the Agreement is hereby amended and restated in its entirety to read as follows: "Furthermore, notwithstanding anything to the contrary herein, Seller shall have no obligation to indemnify Buyer for any penalties or fines or other costs or expenses related to Buyer's failure to comply with the legal requirements of Title IV of the Clean Air Act or the NOx Budget Program of Delaware and Maryland." Section 1.7 Reimbursement of Certain Metering Expenses. Section 6.14 of the Agreement is hereby amended and restated in its entirety to read as follows: "From and after the Closing, Buyer shall (a) reimburse Seller for reasonable amounts expended by Seller on or prior to June 30, 2002 in connection with the installation, renovation or improvement of revenue quality meters and related equipment up to an aggregate amount of $1,500,000; and (b) cooperate with Seller as fully as reasonably possible in order to facilitate Seller's installation, renovation or improvement of revenue quality meters and related equipment to the extent that such installation, renovation or improvement requires that Seller gain access to the Real Property after the Closing Date. From the Closing Date through the date on which the installation, renovation or improvement of revenue quality meters is completed, the interim metering methodology set forth on Exhibit P to this Agreement shall be used to compensate DP&L for station loads and losses occurring from the Closing Date through such date." Section 1.8 Certain Closing Conditions. (a) Section 7.1(o) of the Agreement is hereby amended and restated in its entirety to read as follows: "The DP&L Related Purchase Agreement shall be in full force and effect and the valid and binding obligation of each Party thereto (other than Buyer); and all conditions to the obligations of all Parties to the DP&L Related Purchase Agreement to consummate the transactions contemplated thereby shall have been satisfied or, to the extent permitted by applicable Law, waived." (b) Section 7.2(h) of the Agreement is hereby amended and restated in its entirety to read as follows: "The DP&L Related Purchase Agreement shall be in full force and effect and the valid and binding obligation of each Party thereto (other than Seller); and all conditions to the obligations of all Parties to the DP&L Related Purchase Agreement to consummate the transactions contemplated thereby shall have been satisfied or, to the extent permitted by applicable Law, waived." Section 1.9 Certain Termination Provisions. Section 9.1(b) of the Agreement is hereby amended and restated in its entirety to read as follows: "This Agreement may be terminated by Seller, on the one hand, or Buyer, on the other hand, upon written notice to the other Party, (i) at any time prior to the Closing if any court of competent jurisdiction shall have issued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the Closing, and such order, judgment or decree shall have become final and nonappealable; (ii) at any time prior to the Closing if any Law shall have been enacted or issued by any Governmental Authority which, directly or indirectly, prohibits the consummation of the transactions contemplated by this Agreement, the DP&L Related Purchase Agreement or any Additional Agreement; or (iii) at any time after October 31, 2001, if the Closing shall not have occurred on or before such date; provided, however, that the right to terminate this Agreement under this Section 9.1(b)(iii) shall not be available to any Party whose breach of this Agreement has caused, or resulted in, the failure of the Closing to occur on or before such date." Section 1.10 Certain Exhibits. The Agreement is hereby amended to delete Exhibit G in its entirety and any and all references thereto in the Agreement. ARTICLE II Release, Waiver and Additional Provisions Section 2.1 Release and Waiver of Claims Against Seller Parties. (a) Buyer and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Seller and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Seller Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all claims, demands, debts, losses, costs, expenses, proceedings, judgments, damages, actions, causes of action, suits, contracts, agreements, obligations, accounts and liabilities of any kind or character whatsoever, known or unknown, suspected or unsuspected, in contract or in tort, at law or in equity ("Claims"), that the Buyer or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Seller Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.1 to this Amendment. (b) Buyer hereby represents and warrants to Seller that, as of the date of this Amendment, to Buyer's knowledge, Buyer does not have any Claims against any Seller Party, other than as set forth in Schedule 2.1 to this Amendment, which Claims have been released and waived pursuant to Section 2.1(a). Section 2.2 Release and Waiver of Claims Against Buyer Parties. (a) Seller and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Buyer and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Buyer Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all Claims, that the Seller or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Buyer Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.2 to this Amendment. (b) Seller hereby represents and warrants to Buyer that, as of the date of this Amendment, to Seller's knowledge, Seller does not have any Claims against any Buyer Party, other than as set forth in Schedule 2.2 to this Amendment, which Claims have been released and waived pursuant to Section 2.2(a). Section 2.3 Disclosed Matters. Pursuant to Section 6.7 of the Agreement, Buyer and Seller hereby acknowledge and agree that the supplemental or amended disclosure set forth in the Schedules to the Agreement being delivered by Seller to Buyer contemporaneously with this Amendment and dated as of the date hereof shall, for purposes of the Agreement, as amended hereby, including for purposes of determining whether the conditions to Closing set forth in Article VII of the Agreement are satisfied, be deemed to have been disclosed as of January 18, 2000. Section 2.4 Closing. Pursuant to Section 3.1 of the Agreement, the Parties hereby agree that, notwithstanding any provision of the Agreement to the contrary, the Parties intend that the Closing shall occur on June 22, 2001, subject to the satisfaction or waiver of the conditions precedent to the Closing set forth therein, as amended hereby. ARTICLE III Miscellaneous Provisions Section 3.1 Amendment and Modification. Subject to applicable Law, this Amendment may be amended, supplemented or otherwise modified only by written agreement entered into by all Parties. Section 3.2 Waiver of Compliance; Consents. To the extent permitted by applicable Law, any failure of any of the Parties to comply with any covenant, agreement or condition set forth herein may be waived by the Party entitled to the benefit thereof only by a written instrument signed by such Party, but any such waiver shall not operate as a waiver of, or estoppel with respect to, any prior or subsequent failure to comply therewith. Section 3.3 Notices. All notices and other communications hereunder shall be in writing and shall be given in accordance with Section 10.8 of the Agreement. Section 3.4 Assignment. This Amendment shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but neither this Amendment nor any of the rights, interests, obligations or remedies hereunder shall be assigned by any Party hereto, including by operation of law, without the prior written consent of the other Parties, nor is this Amendment intended to confer upon any other Person any rights, interests, obligations or remedies hereunder. Without limiting the generality of the foregoing, no provision of this Amendment shall create any third-party beneficiary rights in any Employee or former employee of Seller (including any beneficiary or dependent thereof) in respect of continued employment or resumed employment, and no provision of this Amendment shall create any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any employee benefit plan or arrangement except as expressly provided for thereunder. Notwithstanding the foregoing, (i) Seller may assign all or any portion of its rights, interests, obligations and remedies hereunder to Conectiv, a Delaware corporation, or any of Conectiv's wholly owned subsidiaries; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Seller from any of its obligations hereunder or under the Agreement; and (ii) Buyer may assign all or any portion of its rights, interests, obligations and remedies hereunder to (A) any of its wholly owned subsidiaries or (B) a trustee, lending institution or other Person solely for purposes of financing the transactions contemplated hereby; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Buyer from any of its obligations hereunder or under the Agreement. Section 3.5 Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware (without giving effect to conflicts of law principles) as to all matters, including validity, construction, effect, performance and remedies. Venue in any and all suits, actions and proceedings related to the subject matter of this Amendment shall be in the state and federal courts located in and for the State of Delaware (the "Courts"), which shall have exclusive jurisdiction for such purpose, and the Parties hereby irrevocably submit to the exclusive jurisdiction of such courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Each of the Parties hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Amendment or the transactions contemplated hereby. Section 3.6 Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 3.7 Interpretation. The article and section headings contained in this Amendment are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or construction of this Amendment. Ambiguities and uncertainties in the wording of this Amendment shall not be construed for or against any Party, but shall be construed in the manner that most accurately reflects the Parties' intent as of the date of this Amendment. Each Party acknowledges that it has been represented by counsel in connection with the review and execution of this Amendment, and, accordingly, there shall be no presumption that this Amendment or any provision hereof be construed against the Party that drafted this Amendment. Section 3.8 Effect; Entire Agreement. Except as amended, supplemented or otherwise modified by this Amendment, the Agreement shall remain in full force and effect, and the valid and binding obligation of each Party. The Agreement, as amended hereby, (including the Schedules and Exhibits thereto), together with the Confidentiality Agreement, the DP&L Related Purchase Agreement, as amended, and the ACE Related Purchase Agreements, as amended, embody the entire agreement and understanding of the Parties hereto and thereto in respect of the transactions contemplated by the Agreement, as amended hereby, the Additional Agreements, the DP&L Related Purchase Agreement, as amended, and the ACE Related Purchase Agreements, as amended, and supersedes all prior agreements and understandings between or among the Parties with respect to the transactions contemplated hereby or thereby. [Signature Page Follows] IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed and delivered as of the date and year first written above. DELMARVA POWER & LIGHT COMPANY By: /s/ Philip S. Reese -------------------------------------- Philip S. Reese Vice President and Treasurer NRG ENERGY, INC. By: /s/ David H. Peterson -------------------------------------- David H. Peterson Chairman, President and CEO (DP&L WHOLLY OWNED STATIONS) EXHIBIT 2.6 DP&L JOINTLY OWNED AGREEMENT AMENDMENT TO THE PURCHASE AND SALE AGREEMENT BY AND BETWEEN DELMARVA POWER & LIGHT COMPANY AND NRG ENERGY, INC. AMENDMENT TO THE PURCHASE AND SALE AGREEMENT (the "Amendment") by and between Delmarva Power & Light Company, a Delaware and Virginia corporation ("DP&L" or "Seller"), and NRG Energy, Inc., a Delaware corporation ("Buyer"), dated as of June 22, 2001. Seller and Buyer may each be referred to herein individually as a "Party" and collectively as the "Parties." Capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings assigned to them in the Agreement (as defined below). WHEREAS, Seller and Buyer are Parties to that certain Purchase and Sale Agreement, dated as of January 18, 2000 (the "Agreement"), providing for the sale and assignment by Seller of the Purchased Assets and the Assumed Liabilities and the purchase and assumption by Buyer of the Purchased Assets and the Assumed Liabilities, upon the terms and conditions set forth in the Agreement; and WHEREAS, the Closing of the transactions contemplated by the Agreement, the DP&L Related Purchase Agreement and the ACE Related Purchase Agreements has been unexpectedly delayed; and WHEREAS, as a result of the delay of the Closing, the Parties desire to amend the Agreement as set forth herein, and the DP&L Related Purchase Agreement and the ACE Related Purchase Agreements as set forth in the respective amendments to such agreements, which are being entered into simultaneously with this Amendment, to, among other things, extend the termination date of the Agreement, the DP&L Related Purchase Agreement and the ACE Related Purchase Agreements. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Seller and Buyer hereby agree as follows: ARTICLE I Amendment of Certain Provisions of the Agreement Section 1.1 Certain Definitions. (a) Section 1.1(3) of the Agreement is hereby amended and restated in its entirety to read as follows: "'Additional Agreements' means the Like-Kind Exchange Acknowledgment, the Limited Warranty Deeds, the Assignment and Assumption Agreement and the Bill of Sale." (b) Section 1.1 of the Agreement is hereby amended to include the following additional provision: (153) "Like-Kind Exchange Acknowledgment" means the like-kind exchange acknowledgment among Buyer, Conectiv Delmarva Generation, Inc. ("CDG") and 1031 Corp., Inc. ("1031 Corp") to be entered into at the Closing and attached as Exhibit G to the Agreement. Section 1.2 Deliveries by Seller. Section 3.6(c) of the Agreement is hereby amended and restated in its entirety to read as follows: "The Assignment and Assumption Agreements, duly executed by Seller; and the Like-Kind Exchange Acknowledgment, duly executed by CDG and 1031 Corp;" Section 1.3 Deliveries by Buyer. Section 3.7(b) of the Agreement is hereby amended and restated in its entirety to read as follows: "The Assignment and Assumption Agreements and the Like-Kind Exchange Acknowledgment, in each case, duly executed by Buyer;" Section 1.4 Relationship of the Agreement and the Related Purchase Agreements. Section 3.9 of the Agreement is hereby amended and restated in its entirety to read as follows: "The transactions contemplated by this Agreement, together with the transactions contemplated by the DP&L Related Purchase Agreement, are intended by the Parties to be consummated substantially simultaneously; and if any of the transactions contemplated hereby or by the DP&L Related Purchase Agreement are not consummated simultaneously on the Closing Date in accordance with the terms and subject to the conditions set forth herein and in the DP&L Related Purchase Agreement, as applicable, then each Party shall take, or cause to be taken, all actions, and do, or cause to be done, all things, in each case, that are necessary to dissolve and invalidate all transactions contemplated hereby and thereby; provided, however, that if the failure to consummate the transactions contemplated hereby or thereby results from a default or breach of a Party under this Agreement or under the DP&L Related Purchase Agreement, then nothing in the foregoing shall preclude or limit the rights or remedies of any Party in connection with such default or breach." Section 1.5 Certain Closing Conditions. (a) Section 7.1(j) of the Agreement is hereby amended and restated in its entirety to read as follows: "The DP&L Related Purchase Agreement shall be in full force and effect and the valid and binding obligation of each Party thereto (other than Buyer); and all conditions to the obligations of all Parties to the DP&L Related Purchase Agreement to consummate the transactions contemplated thereby shall have been satisfied or, to the extent permitted by applicable Law, waived." (b) Section 7.2(i) of the Agreement is hereby amended and restated in its entirety to read as follows: "The DP&L Related Purchase Agreement shall be in full force and effect and the valid and binding obligation of each Party thereto (other than Seller); and all conditions to the obligations of all Parties to the DP&L Related Purchase Agreement to consummate the transactions contemplated thereby shall have been satisfied or, to the extent permitted by applicable Law, waived." Section 1.6 Certain Termination Provisions. Section 9.1(b) of theAgreement is hereby amended and restated in its entirety to read as follows: "This Agreement may be terminated by Seller, on the one hand, or Buyer, on the other hand, upon written notice to the other Party, (i) at any time prior to the Closing if any court of competent jurisdiction shall have issued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the Closing, and such order, judgment or decree shall have become final and nonappealable; (ii) at any time prior to the Closing if any Law shall have been enacted or issued by any Governmental Authority which, directly or indirectly, prohibits the consummation of the transactions contemplated by this Agreement, the DP&L Related Purchase Agreement or any Additional Agreement; or (iii) at any time after October 31, 2001, if the Closing shall not have occurred on or before such date; provided, however, that the right to terminate this Agreement under this Section 9.1(b)(iii) shall not be available to any Party whose breach of this Agreement has caused, or resulted in, the failure of the Closing to occur on or before such date." ARTICLE II Release, Waiver and Additional Provisions Section 2.1 Release and Waiver of Claims Against Seller Parties. (a) Buyer and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Seller and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Seller Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all claims, demands, debts, losses, costs, expenses, proceedings, judgments, damages, actions, causes of action, suits, contracts, agreements, obligations, accounts and liabilities of any kind or character whatsoever, known or unknown, suspected or unsuspected, in contract or in tort, at law or in equity ("Claims"), that the Buyer or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Seller Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.1 to this Amendment. (b) Buyer hereby represents and warrants to Seller that, as of the date of this Amendment, to Buyer's knowledge, Buyer does not have any Claims against any Seller Party, other than as set forth in Schedule 2.1 to this Amendment, which Claims have been released and waived pursuant to Section 2.1(a). Section 2.2 Release and Waiver of Claims Against Buyer Parties. (a) Seller and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Buyer and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Buyer Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all Claims, that the Seller or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Buyer Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.2 to this Amendment. (b) Seller hereby represents and warrants to Buyer that, as of the date of this Amendment, to Seller's knowledge, Seller does not have any Claims against any Buyer Party, other than as set forth in Schedule 2.2 to this Amendment, which Claims have been released and waived pursuant to Section 2.2(a). Section 2.3 Disclosed Matters. Pursuant to Section 6.6 of the Agreement, Buyer and Seller hereby acknowledge and agree that the supplemental or amended disclosure set forth in the Schedules to the Agreement being delivered by Seller to Buyer contemporaneously with this Amendment and dated as of the date hereof shall, for purposes of the Agreement, as amended hereby, including for purposes of determining whether the conditions to Closing set forth in Article VII of the Agreement are satisfied, be deemed to have been disclosed as of January 18, 2000. Section 2.4 Closing. Pursuant to Section 3.1 of the Agreement, the Parties hereby agree that, notwithstanding any provision of the Agreement to the contrary, the Parties intend that the Closing shall occur on June 22, 2001, subject to the satisfaction or waiver of the conditions precedent to the Closing set forth therein, as amended hereby. ARTICLE III Miscellaneous Provisions Section 3.1 Amendment and Modification. Subject to applicable Law, this Amendment may be amended, supplemented or otherwise modified only by written agreement entered into by all Parties. Section 3.2 Waiver of Compliance; Consents. To the extent permitted by applicable Law, any failure of any of the Parties to comply with any covenant, agreement or condition set forth herein may be waived by the Party entitled to the benefit thereof only by a written instrument signed by such Party, but any such waiver shall not operate as a waiver of, or estoppel with respect to, any prior or subsequent failure to comply therewith. Section 3.3 Notices. All notices and other communications hereunder shall be in writing and shall be given in accordance with Section 10.8 of the Agreement. Section 3.4 Assignment. This Amendment shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but neither this Amendment nor any of the rights, interests, obligations or remedies hereunder shall be assigned by any Party hereto, including by operation of law, without the prior written consent of the other Parties, nor is this Amendment intended to confer upon any other Person any rights, interests, obligations or remedies hereunder. Without limiting the generality of the foregoing, no provision of this Amendment shall create any third-party beneficiary rights in any Employee or former employee of Seller (including any beneficiary or dependent thereof) in respect of continued employment or resumed employment, and no provision of this Amendment shall create any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any employee benefit plan or arrangement except as expressly provided for thereunder. Notwithstanding the foregoing, (i) Seller may assign all or any portion of its rights, interests, obligations and remedies hereunder to Conectiv, a Delaware corporation, or any of Conectiv's wholly owned subsidiaries; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Seller from any of its obligations hereunder or under the Agreement; and (ii) Buyer may assign all or any portion of its rights, interests, obligations and remedies hereunder to (A) any of its wholly owned subsidiaries or (B) a trustee, lending institution or other Person solely for purposes of financing the transactions contemplated hereby; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Buyer from any of its obligations hereunder or under the Agreement. Section 3.5 Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware (without giving effect to conflicts of law principles) as to all matters, including validity, construction, effect, performance and remedies. Venue in any and all suits, actions and proceedings related to the subject matter of this Amendment shall be in the state and federal courts located in and for the State of Delaware (the "Courts"), which shall have exclusive jurisdiction for such purpose, and the Parties hereby irrevocably submit to the exclusive jurisdiction of such courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Each of the Parties hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Amendment or the transactions contemplated hereby. Section 3.6 Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 3.7 Interpretation. The article and section headings contained in this Amendment are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or construction of this Amendment. Ambiguities and uncertainties in the wording of this Amendment shall not be construed for or against any Party, but shall be construed in the manner that most accurately reflects the Parties' intent as of the date of this Amendment. Each Party acknowledges that it has been represented by counsel in connection with the review and execution of this Amendment, and, accordingly, there shall be no presumption that this Amendment or any provision hereof be construed against the Party that drafted this Amendment. Section 3.8 Effect; Entire Agreement. Except as amended, supplemented or otherwise modified by this Amendment, the Agreement shall remain in full force and effect, and the valid and binding obligation of each Party. The Agreement, as amended hereby (including the Schedules and Exhibits thereto), together with the Confidentiality Agreement, the DP&L Related Purchase Agreement, as amended, and the ACE Related Purchase Agreements, as amended, embody the entire agreement and understanding of the Parties hereto and thereto in respect of the transactions contemplated by the Agreement, as amended hereby, the Additional Agreements, DP&L Related Purchase Agreement, as amended, and the ACE Related Purchase Agreements, as amended, and supersedes all prior agreements and understandings between or among the Parties with respect to the transactions contemplated hereby or thereby. [Signature Page Follows] IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed and delivered as of the date and year first written above. DELMARVA POWER & LIGHT COMPANY By: /s/ Philip S. Reese -------------------------------------- Philip S. Reese Vice President and Treasurer NRG ENERGY, INC. By: /s/ David H. Peterson -------------------------------------- David H. Peterson Chairman, President and CEO (DP&L JOINTLY OWNED STATIONS) EXHIBIT 2.7 ACE WHOLLY OWNED AGREEMENT AMENDMENT TO THE PURCHASE AND SALE AGREEMENT BY AND BETWEEN ATLANTIC CITY ELECTRIC COMPANY AND NRG ENERGY, INC. AMENDMENT TO THE PURCHASE AND SALE AGREEMENT (the "Amendment") by and between Atlantic City Electric Company, a New Jersey corporation ("ACE" or "Seller"), and NRG Energy, Inc., a Delaware corporation ("Buyer"), dated as of June 22, 2001. Seller and Buyer may each be referred to herein individually as a "Party" and collectively as the "Parties." Capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings assigned to them in the Agreement (as defined below). WHEREAS, Seller and Buyer are Parties to that certain Purchase and Sale Agreement, dated as of January 18, 2000 (the "Agreement"), providing for the sale and assignment by Seller of the Purchased Assets and the Assumed Liabilities and the purchase and assumption by Buyer of the Purchased Assets and the Assumed Liabilities, upon the terms and conditions set forth in the Agreement; and WHEREAS, the Closing of the transactions contemplated by the Agreement, the ACE Related Purchase Agreement and the DP&L Related Purchase Agreements has been unexpectedly delayed; and WHEREAS, as a result of the delay of the Closing, the Parties desire to amend the Agreement as set forth herein, the ACE Related Purchase Agreement and the DP&L Related Purchase Agreements as set forth in the respective amendments to such agreements, which are being entered into simultaneously with this Amendment, to, among other things, extend the termination date of the Agreement, the ACE Related Purchase Agreement and the DP&L Related Purchase Agreements. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Seller and Buyer hereby agree as follows: ARTICLE I Amendment of Certain Provisions of the Agreement Section 1.1 Certain Definitions. Section 1.1 of the Agreement is hereby amended to include the following additional provisions: (155) "ACE Master Power Purchase Agreement" means the Master Power Purchase Agreement between ACE and NRG Power Marketing Inc., dated April 11, 2001, as amended through the date hereof, and attached as Exhibit J to this Agreement. (156) "ACE 400 MWh Energy Purchase Confirmation" means the transaction confirmation letter, dated April 11, 2001, as amended, through the date hereof, issued by ACE to NRG Power Marketing Inc. under the ACE Master Power Purchase Agreement, relating to the purchase of 400 MWh of firm electric energy, and attached as Exhibit K to this Agreement. (157) "ACE 400 MW Capacity Purchase Confirmation" means the transaction confirmation letter, dated April 11, 2001, as amended through the date hereof, issued by ACE to NRG Power Marketing Inc. under the ACE Master Power Purchase Agreement, relating to the purchase of 400 MW of firm electric PJM capacity credits, and attached as Exhibit L to this Agreement. (158) "B.L. England Station Transactions" means the transactions contemplated by this Agreement to the extent relating to the B.L. England Station, it being understood that such transactions, together with the Deepwater Station Transactions, constitute and include all of the transactions contemplated by this Agreement. (159) "Deepwater Station Transactions" means the transactions contemplated by this Agreement to the extent relating to the Deepwater Station, it being understood that such transactions, together with the B.L. England Station Transactions, constitute and include all of the transactions contemplated by this Agreement. (160) "Deepwater Substation" means the name of the industrial establishment as to which ACE has filed a Remediation Agreement Application pursuant to ISRA. (161) "Distribution Substation Yard" means Distribution Substation Yard as such term is used in the Remediation Agreement Applications submitted by Deepwater Power LLC and ACE pursuant to ISRA for the Deepwater Station and Deepwater Substation, respectively. (162) "Initial Additional NOx Emission Allowances" means the amount of additional NOx Emission Allowances Seller will owe Buyer after Closing or Buyer will owe Seller after Closing as determined by Section 6.15(b)(ii). (163) "Main Substation Yard" means Main Substation Yard as such term is used in the Remediation Agreement Applications submitted by Deepwater Power LLC and ACE pursuant to ISRA for the Deepwater Station and Deepwater Substation, respectively. (164) "Supplemental Prorated NOx Emission Allowances" means the amount of NOx Emission Allowances calculated in accordance with Section 6.15(b)(iii). Section 1.2 Closing. (a) Section 3.1 of the Agreement is hereby amended by renumbering such section as Section 3.1(a). (b) Section 3.1 of the Agreement is hereby amended to include the following additional provisions: "(b) Notwithstanding any provision hereof to the contrary, the Parties acknowledge and agree that, in the event that the conditions precedent to the Closing set forth in Sections 7.1 (a) and (c), and Sections 7.2 (a), (c), and (g) of this Agreement, shall have been satisfied or, to the extent permitted by applicable Law, waived by the Party for whose benefit such conditions precedent exist, but only with respect to the B.L. England Station Transactions or the Deepwater Station Transactions, but not both, then the Parties shall proceed to consummate the transactions for which such conditions have been so satisfied or waived in accordance with this Section 3.1 with the following effect: (i) with respect to such of the B. L. England Station Transactions or the Deepwater Station Transactions as are first consummated by the Parties hereunder (such transactions referred to as the "First Transactions" and such Station referred to as the "First Station"), the terms "Closing" and "Closing Date", as used herein, shall mean, with respect to the representations, warranties, covenants and agreements set forth herein relating to such First Station, including the Purchased Assets, Excluded Assets, Assumed Liabilities and Excluded Liabilities relating thereto, the Closing of the First Transactions and the date on which such Closing actually occurs, respectively; (ii) with respect to such of the B. L. England Station Transactions or the Deepwater Station Transactions as are last consummated by the Parties hereunder (such transactions referred to as the "Last Transactions" and such Station referred to as the "Last Station"), the terms "Closing" and "Closing Date", as used herein, shall mean, with respect to the representations, warranties, covenants and agreements set forth herein relating to such Last Station, including the Purchased Assets, Excluded Assets, Assumed Liabilities and Excluded Liabilities relating thereto, the Closing of the Last Transactions and the date on which such Closing actually occurs, respectively; (iii) (A) no representation or warranty contained in this Agreement with respect to the First Transactions or the First Station shall survive the Closing of the First Transactions, and (B) no representation or warranty contained in this Agreement with respect to the Last Transactions or the Last Station shall terminate by reason of the Closing of the First Transactions or survive the Closing of the Last Transactions; (iv) all covenants and agreements of the Parties contained in the Agreement to the extent relating to the First Transactions which, in accordance with their respective terms, are to be performed and complied with (A) prior to or at the Closing shall be of no further force or effect after the Closing of the First Transactions or (B) on or prior to the Closing Date shall be of no further force or effect after the Closing Date of the First Transactions, in each case, solely to the extent relating to the First Transactions; provided that no Party hereto shall be relieved of any liability hereunder for any wilful breach of its obligations hereunder; (v) all covenants and agreements of the Parties contained in the Agreement to the extent relating to the First Transactions which, in accordance with their respective terms, are to be performed and complied with (A) after the Closing Date shall be performed or complied with after the Closing Date of the First Transactions or (B) after the Closing shall be performed or complied with after the Closing of the First Transactions, in each case, solely to the extent relating to the First Transactions; (vi) all covenants and agreements of the Parties contained in the Agreement to the extent relating to the Last Transactions which, in accordance with their respective terms, are to be performed and complied with (A) prior to or at the Closing shall be of no further force or effect after the Closing of the Last Transactions or (B) on or prior to the Closing Date shall be of no further force or effect after the Closing Date of the Last Transactions, in each case, solely to the extent relating to the Last Transactions; provided that no Party hereto shall be relieved of any liability hereunder for any wilful breach of its obligations hereunder; (vii) all covenants and agreements of the Parties contained in the Agreement to the extent relating to the Last Transactions which, in accordance with their respective terms, are to be performed and complied with (A) after the Closing Date shall be performed or complied with after the Closing Date of the Last Transactions or (B) after the Closing shall be performed or complied with after the Closing of the Last Transactions, in each case, solely to the extent relating to the Last Transactions, it being understood that no Party shall have any obligation to perform or comply with any such covenant or agreement after the Closing Date or the Closing of the First Transaction and prior to or at the Closing Date or the Closing of the Last Transaction; and (viii) all conditions to the respective obligations of the Parties to effect the transactions contemplated by this Agreement and set forth in Article VII shall, from and after the Closing of the First Transaction, be of no further force or effect with respect to the First Transaction." Section 1.3 Relationship of the Agreement and the Related Purchase Agreements. Section 3.9 of the Agreement is hereby amended by deleting such Section in its entirety. Section 1.4 Employees. (a) Section 6.8(g) of the Agreement is hereby amended and restated in its entirety to read as follows: "(g) As soon as practicable, and in any event within ninety (90) days after the Closing Date, Buyer shall establish or make available to Transferred Union Employees a defined contribution pension plan (or plans) and trust (or trusts) intended to qualify under Sections 401(a) and 501(a) of the Code (such plan or plans referred to as "Buyer's Savings Plan") in which all Transferred Union Employees shall be eligible to participate as of the later of the Closing Date or the Buyer's Savings Plan's effective date. Buyer's Savings Plan shall provide for deferral options and employer matching contributions with respect to the Transferred Union Employees who are participants in the Conectiv Savings & Investment Plan and the Atlantic City Electric Co. Savings Plan B (collectively, "Seller's Savings Plans") as of the Closing Date (such employees, the "Transferred Savings Employees") that are no less favorable than those provided as of immediately prior to the Closing Date to the Transferred Savings Employees under the Seller's Savings Plans. Buyer shall provide a make-whole payment outside of Buyer's Savings Plan to reflect lost matching contributions on account of any delay in enrollment to any Transferred Employee who enrolls in Buyer's Savings Plan within the first thirty (30) days after the Closing. Contributions to the Seller's Savings Plans with respect to the Transferred Savings Employees shall cease effective as of the Closing Date, subject to Section 6.8(l). Each Transferred Savings Employee shall be afforded the option of transferring his or her account balance into the Buyer's Savings Plan; provided, however, that if Seller is able to obtain a favorable ruling from the Internal Revenue Service to the effect that the consummation of the transactions contemplated hereby shall constitute a sale of substantially all of the assets used in a trade or business within the meaning of Section 401(k)(10) of the Code, each Transferred Savings Employee shall be afforded the option of rolling over his or her account balance into the Buyer's Savings Plan. Such transfers or rollovers shall satisfy the requirements of Section 414(l) of the Code and Section 208 of ERISA and shall be in the form of cash or other property, as Seller and Buyer shall mutually agree prior to such transfer or rollover. Each Transferred Savings Employee shall be treated as a terminated employee, and shall be afforded the opportunity to receive a distribution from Seller's Savings Plans, to elect a direct rollover of such distribution into Buyer's Savings Plan, or to leave his or her account balance in Seller's Savings Plans (if such balance exceeds $5,000). Any such rollovers shall satisfy the requirements of Section 208 of ERISA and shall be in the form of cash or other property, as Seller and Buyer shall mutually agree prior to such rollover. Prior to such rollover, Buyer will provide Seller with such documents and other information as Seller shall reasonably request to assure itself that Buyer's Savings Plan and the trust or trusts established pursuant thereto contain participant loan provisions and procedures necessary to effect the orderly transfer of participant loan balances associated with the rollover. Notwithstanding anything in this Section 6.8(f) to the contrary, no such rollover shall take place unless and until Seller has received written evidence of the adoption of Buyer's Savings Plan and the trust (or trusts) thereunder by Buyer and either (A) a copy of a favorable determination letter issued by the Internal Revenue Service and satisfactory to Seller's counsel with respect to Buyer's Savings Plan or (B) an opinion, satisfactory to Seller's counsel, of Buyer's counsel to the effect that the terms of Buyer's Savings Plan and its related trust or trusts qualify under Sections 401(a) and 501(a) of the Code. Buyer and Seller shall provide each other with such records and information as may be necessary or appropriate to carry out their obligations under this Section 6.8(f) for the purposes of administration of Buyer's Savings Plan, and they shall cooperate in the filing of documents required by the transactions described herein." (b) Section 6.8 of the Agreement is hereby amended to include the following additional provisions: "(k) Within sixty (60) days after the Closing, Seller shall (a) provide Buyer with a written statement setting forth the number of unused hours of vacation, accrued vacation, carryover vacation, perfect attendance holidays and floating holidays accrued during the period commencing on January 1 of the year during which the Closing occurs and ending on the day immediately preceding the Closing Date ("Accrued and Unused Vacation") for Transferred Non-Union Employees and (b) transfer funds to Buyer in an amount sufficient to pay for Accrued and Unused Vacation, such amount to be based on the wages and salaries of Transferred Non-Union Employees in effect on the day immediately preceding the Closing Date; provided that, upon receipt of notice from Seller, Buyer shall promptly reimburse Seller for any and all payments in respect of Accrued and Unused Vacation made by Seller to Transferred Non-Union Employees after the Closing, whether as the result of any suit, action or proceeding, or otherwise. From and after the Closing, Buyer shall recognize the right of Transferred Employees to Accrued and Unused Vacation during the remainder of the year during which the Closing occurs and, with respect to Transferred Union Employees, in accordance with the applicable IBEW Collective Bargaining Agreement and applicable Law. (l) In the event that the Closing Date occurs on any day other than the day immediately following the day on which any regular pay period of Seller relating to any Transferred Employees ends, then, notwithstanding Buyer's obligations hereunder, in order to accommodate Buyer's request, Seller shall, in respect of such period, (i) pay to such Transferred Employees the salary or wages to which such Transferred Employees are entitled, (ii) pay to the applicable Governmental Authorities all required amounts in respect of payroll and similar withholding Taxes relating to such salaries and wages, and (iii) make any regular deposits or contributions, including deposits or contributions of matching funds to Seller's Benefit Plans on behalf of such Transferred Employees. Buyer shall, within 30 days after the Closing, reimburse Seller for all amounts in respect of such salaries, wages, Taxes, deposits and contributions to the extent relating to the period from and after the Closing Date." Section 1.5 Environmental Matters. (a) Section 6.10(c)(i) is hereby amended as follows: (i) by adding, at the beginning of the first sentence, the phrase "Except as set forth in subsection (iii) below, "; and (ii) by deleting the phrase at the beginning of second sentence, "Notwithstanding anything to the contrary herein," and replacing it with the phrase "Notwithstanding anything to the contrary herein, and subject to Section 6.10(c)(iii),". (b) Section 6.10(c) is hereby amended to include the following additional provision: "(iii) Notwithstanding the above, Seller, to the extent authorized by the NJDEP, shall be responsible for compliance with ISRA after the Closing with respect to the Main Substation Yard and the Distribution Substation Yard for the Deepwater Station and shall be responsible for the costs incurred in connection with such compliance, provided, that Buyer shall reimburse Seller for all costs or Indemnifiable Losses incurred to the extent that such costs or Indemnifiable Losses arise in connection with the investigation or Remediation of contamination arising from or relating to assets (including the oil filter house and the subsurface vault located in the Main Substation Yard) other than the Transmission Assets." (c) Section 6.15(a) is hereby amended by renumbering such section as Section 6.15(a)(i). (d) Section 6.15(a) is hereby amended to include the following additional provision: "(ii) In furtherance, but not in limitation of Section 3.1(b), if the B.L. England Station and the Deepwater Station are not transferred to Buyer at the same time, the SO2 Allowances and NOx Emission Allowances that have been allocated to or are otherwise related to the Last Station, as set forth on Schedules 2.1(g) and 2.1(h), shall not be transferred to Buyer and shall remain the property of Seller until such time as the Last Station is transferred to Buyer. In addition, in calculating whether Seller owes Buyer additional Emission Allowances as a result of Seller's operation of the Stations prior to the Closing or whether Buyer owes Seller additional Emission Allowances, as set forth in Section 6.15(b), the Parties shall not make any such calculations with respect to the Last Station until such time as the Last Station is transferred to Buyer; provided that nothing herein is intended to relieve the Parties from their obligations to make such calculations with respect to the First Station." (e) Section 6.15(b)(ii) is hereby amended and restated in its entirety to read as follows: "(ii) Initial Additional NOx Emission Allowances. (A) Seller shall provide Initial Additional NOx Emission Allowances to Buyer based on the following formula: (1) Seller's emissions of NOx (in tons) from the units subject to the NOx Budget Program of New Jersey for the period of the year from and including May 1 of the year in which the transaction closes up to but not including the Closing Date, or September 30 of said year, whichever comes first; minus (2) Seller's Initial Prorated NOx Emission Allowances. Seller's Initial Prorated NOx Emission Allowances shall be determined by adding all of the NOx Emission Allowances set forth on Schedule 6.15(b)(ii) from and including May 1 of the year the transaction closes up to but not including the Closing Date, or September 30 of the year the transaction closes, whichever comes first. If the result of this calculation is less than zero, then Buyer shall transfer to Seller an amount of Initial Additional NOx Emission Allowances equal to the absolute value of the result of the calculation set forth in this subsection. (B) If Schedule 6.15(b)(ii) and Schedule 6.15(b)(iii) are not finalized as of the date of the execution of this Agreement, Seller hereby covenants to act in good faith to promptly prepare such schedules after the relevant Governmental Authority finalizes the initial allocation of NOx Emission Allowances for the year 2001. Schedule 6.15(b)(ii) shall be prepared as follows. First, Seller shall develop a projection of its NOx emissions for each of the Purchased Assets for each calendar day from May 1, 2001 to and including September 30, 2001. Second, Seller shall take the NOx Emission Allowances set forth on Schedule 2.1(g) for each Purchased Asset for the year 2001 and allocate the NOx Emission Allowances to each calendar day for the period May 1, 2001 to and including September 30, 2001, so that for each such calendar day, the ratio of said NOx Emission Allowances to the total number of NOx Emission Allowances for the Purchased Asset set forth on Schedule 2.1(g) for the year 2001 shall equal the ratio of the projected NOx emissions for each such calendar day to the total number of projected NOx emissions for the Purchased Asset for the period May 1, 2001 to and including September 30, 2001. When completed, Schedule 6.15(b)(ii) shall be a day-by-day schedule of NOx Emission Allowances for each of the Purchased Assets. The final form and substance of Schedule 6.15(b)(ii) shall be subject to the agreement of Seller and Buyer, acting in good faith, consistent with the terms of this subsection. Schedule 6.15(b)(iii) shall be based on the ratios calculated in connection with the development of Schedule 6.15(b)(ii)." (f) Section 6.15(b)(iii) is hereby amended by renumbering such section as Section 6.15(b)(iv) and is hereby amended and restated in its entirety to read as follows: "(iv) If it appears with respect to any Station that the Closing of the transactions contemplated by this Agreement will not occur until after December 31, 2001, Seller shall prepare with respect to such Station schedules that will accomplish the same purpose as Schedules 6.15(b)(i), 6.15(b)(ii) and 6.15(b)(iii) for calendar year 2002 (or such other calendar year(s) in which the transaction closes). Such schedules shall be prepared consistent with the terms of Section 6.15(b)." (g) Section 6.15(b) is hereby amended to include the following additional provision: "(iii) Supplemental Prorated NOx Emission Allowances The Supplemental Prorated NOx Emission Allowances shall be determined as follows: (A) if the Closing of the B.L. England Station Transactions occurs at a time other than at the time of the Closing of the Deepwater Station Transactions, the number of NOx Emission Allowances issued to Seller by the NJDEP after the Closing Date, during the year of the Closing, shall be multiplied by 18.5%; (B) the product calculated in (A) shall be multiplied by 86%.; (C) the percentages on Schedule 6.15(b)(iii) shall be added from and including May 1 of the year the transaction closes up to but not including the Closing Date, or September 30 of the year the transaction closes, whichever comes first; and (D) the number of NOx Emission Allowances calculated in (B) shall be multiplied by the percentage calculated in (C). Seller shall retain the Supplemental Prorated NOx Emission Allowances. If B.L. England Station is later transferred to Buyer, Supplemental Prorated NOx Emission Allowances with respect to B.L. England Station shall be determined using the same formula, with the exception that in (A), NOx Emission Allowances issued to Seller by the NJDEP after the Closing Date, during the year of the Closing, shall be multiplied by 81.5%." (h) Section 6.15(c) is hereby amended and restated in its entirety to read as follows: "Buyer shall deliver to Seller, within thirty (30) days after Closing, a statement indicating the amount of SO2 Allowances and Initial Additional NOx Emission Allowances it is owed, or that it owes Seller, in accordance with the formulas set forth in subsections (b)(i) and (ii), respectively (the "Statement"). The Statement shall be based on verified CEMs data for SO2 and NOx and shall include sufficient information to be evaluated by Seller. In the event that Seller is in disagreement with the Statement, Seller shall, within ten (10) calendar days after receipt of the Statement, notify Buyer of such disagreement setting forth with specificity the nature of such disagreement. If Seller fails to notify Buyer of all disagreements within the ten (10) calendar days provided for herein, then the Statement, as delivered by Buyer pursuant to Section 6.15(c), shall be final, binding and conclusive on the Parties hereto and the Party owing SO2 Allowances and/or Initial Additional NOx Emission Allowances to the other Party shall transfer such SO2 Allowances and/or Initial Additional NOx Emission Allowances (or make a payment in lieu of transferring such Emissions Allowances in accordance with Section 6.15(d)). If Seller is in disagreement with the Statement and notifies Buyer within such ten (10) calendar day period, then the Parties shall promptly attempt to resolve such disagreement by negotiation. If the Parties are unable to resolve such disagreements within fifteen (15) calendar days following such notice of disagreement, the Parties shall appoint an Independent Accounting Firm within thirty (30) calendar days following such notice, which shall review the Statement and any additional information related to the Statement submitted by either of the Parties and shall determine the amount of SO2 Allowances and/or Initial Additional NOx Emission Allowances owed by either of the Parties. Resolution of any such disagreements shall be made by the Independent Accounting Firm in a writing addressed to all Parties within thirty (30) calendar days following referral to it by the Parties of such disagreements in accordance with this Agreement. The findings of such Independent Accounting Firm shall be final, binding and conclusive on the Parties. All costs and fees of the Independent Accounting Firm shall be borne by Buyer and Seller equally." (i) Section 6.15(d) is hereby amended and restated in its entirety to read as follows: "The Party or Parties owing SO2 Allowances and/or Initial Additional NOx Emission Allowances calculated pursuant to this Section shall transfer the number of SO2 Allowances and/or Initial Additional NOx Emission Allowances owed to the other Party by no later than thirty (30) days prior to the dates by which Buyer must have sufficient SO2 Allowances and/or Initial Additional NOx Emission Allowances in its compliance accounts in order to comply with Title IV of the federal Clean Air Act or the NOx Budget Program of New Jersey. The NOx Emission Allowances and SO2 Allowances transferred hereunder shall have a vintage year that is the same as the year the transaction closes or, solely in the case of SO2 Allowances, a prior vintage year, unless the Party that is owed such Emission Allowances waives such requirement in writing. If the Party owing SO2 Allowances and/or Initial Additional NOx Emission Allowances does not or cannot meet this provision, the other Party shall be entitled to (i) acquire SO2 Allowances and/or NOx Emission Allowances equal to the number of additional SO2 Allowances and/or Initial Additional NOx Emission Allowances calculated pursuant to this Section and (ii) seek compensation from the owing Party for the cost of acquiring such additional SO2 Allowances and/or NOx Emission Allowances, respectively ("Allowance Cost"), which shall be calculated based on the market price for such allowances as of the date such allowances are purchased; provided, that a Party that is owed SO2 Allowances and/or Initial Additional NOx Emission Allowances and has the right to purchase such Emission Allowances pursuant to this Section must purchase such Emission Allowances no later than 180 days after the date(s) by which the owing Party was to provide such Emission Allowances to the owed Party, as set forth in the first sentence of this subsection, in order to be entitled to receive compensation under this subsection. The Party that has the right to purchase SO2 Allowances and/or NOx Emission Allowances pursuant to this Section shall also be entitled to receive simple interest at the Prime Rate on the Allowance Cost, which shall accrue from the date(s) payment is due as provided in the following sentence through and including the date of payment by the owing Party. Payment shall be made no later than thirty (30) days after the owing Party receives an invoice from the owed Party for compensation, which invoice shall specify the market price of the Emissions Allowances acquired by the owed Party; provided, that the owing Party shall not be obligated to make such payment if it disputes the amount of compensation claimed by the owed Party within fifteen (15) days after receipt of the invoice from the owed Party. Any disputes concerning the compensation owed to Buyer under Section 6.15(d) shall be resolved through good faith negotiations between the Parties. Buyer and Seller shall be obligated to act reasonably to mitigate the Allowance Cost as set forth herein. Furthermore, notwithstanding anything to the contrary herein, Seller shall have no obligation to indemnify Buyer for any penalties or fines or other costs or expenses related to Buyer's failure to comply with the legal requirements of Title IV of the Clean Air Act or the NOx Budget Program of New Jersey." Section 1.6 Reimbursement of Certain Metering Expenses. Section 6.17 of the Agreement is hereby amended and restated in its entirety to read as follows: "From and after the Closing, Buyer shall (a) reimburse Seller for reasonable amounts expended by Seller on or prior to June 30, 2002 in connection with the installation, renovation or improvement of revenue quality meters and related equipment up to an aggregate amount of $1,500,000; and (b) cooperate with Seller as fully as reasonably possible in order to facilitate Seller's installation, renovation or improvement of revenue quality meters and related equipment to the extent that such installation, renovation or improvement requires that Seller gain access to the Real Property after the Closing Date. From the Closing Date through the date on which the installation, renovation or improvement of revenue quality meters is completed, the interim metering methodology set forth on Exhibit M to this Agreement shall be used to compensate ACE for station loads and losses occurring from the Closing Date through such date." Section 1.7 Conditions to the Obligations of Buyer. Section 7.1(j) of the Agreement is hereby amended and restated in its entirety to read as follows: "The ACE 400 MWh Energy Purchase Confirmation and the ACE 400 MW Capacity Purchase Confirmation shall have been terminated in all respects with no further Liability on the part of Buyer or any Affiliate of Buyer, and Buyer shall have received evidence of such termination in form and substance reasonably satisfactory to Buyer." Section 1.8 Conditions to the Obligation of Seller. Section 7.2(i) of the Agreement is hereby amended and restated in its entirety to read as follows: "The ACE 400 MWh Energy Purchase Confirmation and the ACE 400 MW Capacity Purchase Confirmation shall have been terminated in all respects with no further Liability on the part of Seller or any Affiliate of Seller, and Seller shall have received evidence of such termination in form and substance reasonably satisfactory to Seller." Section 1.9 Certain Termination Provisions. Section 9.1(b) of the Agreement is hereby amended and restated in its entirety to read as follows: "This Agreement may be terminated by Seller, on the one hand, or Buyer, on the other hand, upon written notice to the other Party, (i) at any time prior to the Closing if any court of competent jurisdiction shall have issued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the Closing, and such order, judgment or decree shall have become final and nonappealable; (ii) at any time prior to the Closing if any Law shall have been enacted or issued by any Governmental Authority which, directly or indirectly, prohibits the consummation of the transactions contemplated by this Agreement or by any Additional Agreement; or (iii) solely with respect to the Deepwater Station Transactions, at any time after October 31, 2001, if the Closing of the Deepwater Station Transactions shall not have occurred on or before such date; and solely with respect to the B.L. England Station Transactions, at any time after December 31, 2001, if the Closing of the B.L. England Station Transactions shall not have occurred on or before such date; provided, however, that the right to terminate this Agreement under this Section 9.1(b)(iii) shall not be available to any Party whose breach of this Agreement has caused, or resulted in, the failure of the Closing to occur on or before such date." Section 1.10 Effect of Termination. Section 9.2 of the Agreement is hereby amended and restated in its entirety to read as follows: "Upon termination of this Agreement prior to the Closing pursuant to Section 9.1, this Agreement shall be null and void and of no further force or effect (except that the provisions set forth in Section 6.3, this Section 9.2 and Article X, and the Confidentiality Agreement, shall remain in full force and effect in accordance with their respective terms); and no Party shall have any further Liability under this Agreement (other than for any wilful breach of its obligations hereunder), provided however, that, in the event that this Agreement is terminated pursuant to Section 9.1(b)(iii) with respect to the B.L. England Station Transactions or the Deepwater Station Transactions, but not both, the preceding sentence shall apply to the First Transactions and the First Station for which this Agreement shall have been so terminated, but shall remain in full force and effect for the Last Transactions and Last Station." Section 1.11 No Survival. Section 10.6 of the Agreement is hereby amended and restated in its entirety to read as follows: "Subject to Section 3.1(b), no representation or warranty contained in this Agreement shall survive the delivery of the Limited Warranty Deeds and the Closing. Subject to Section 3.1(b), the covenants and agreements of the Parties contained in this Agreement shall survive the Closing in accordance with their respective terms." ARTICLE II Release, Waiver and Additional Provisions Section 2.1 Release and Waiver of Claims Against Seller Parties. (a) Buyer and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Seller and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Seller Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all claims, demands, debts, losses, costs, expenses, proceedings, judgments, damages, actions, causes of action, suits, contracts, agreements, obligations, accounts and liabilities of any kind or character whatsoever, known or unknown, suspected or unsuspected, in contract or in tort, at law or in equity ("Claims"), that the Buyer or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Seller Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.1 to this Amendment. (b) Buyer hereby represents and warrants to Seller that, as of the date of this Amendment, to Buyer's knowledge, Buyer does not have any Claims against any Seller Party, other than as set forth in Schedule 2.1 to this Amendment, which Claims have been released and waived pursuant to Section 2.1(a). Section 2.2 Release and Waiver of Claims Against Buyer Parties. (a) Seller and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Buyer and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Buyer Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all Claims, that the Seller or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Buyer Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.2 to this Amendment. (b) Seller hereby represents and warrants to Buyer that, as of the date of this Amendment, to Seller's knowledge, Seller does not have any Claims against any Buyer Party, other than as set forth in Schedule 2.2 to this Amendment, which Claims have been released and waived pursuant to Section 2.2(a). Section 2.3 Disclosed Matters. Pursuant to Section 6.7 of the Agreement, Buyer and Seller hereby acknowledge and agree that the supplemental or amended disclosure set forth in the Schedules to the Agreement being delivered by Seller to Buyer contemporaneously with this Amendment and dated as of the date hereof shall, for purposes of the Agreement, as amended hereby, including for purposes of determining whether the conditions to Closing set forth in Article VII of the Agreement are satisfied, be deemed to have been disclosed as of January 18, 2000. ARTICLE III Miscellaneous Provisions Section 3.1 Amendment and Modification. Subject to applicable Law, this Amendment may be amended, supplemented or otherwise modified only by written agreement entered into by all Parties. Section 3.2 Waiver of Compliance; Consents. To the extent permitted by applicable Law, any failure of any of the Parties to comply with any covenant, agreement or condition set forth herein may be waived by the Party entitled to the benefit thereof only by a written instrument signed by such Party, but any such waiver shall not operate as a waiver of, or estoppel with respect to, any prior or subsequent failure to comply therewith. Section 3.3 Notices. All notices and other communications hereunder shall be in writing and shall be given in accordance with Section 10.8 of the Agreement. Section 3.4 Assignment. This Amendment shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but neither this Amendment nor any of the rights, interests, obligations or remedies hereunder shall be assigned by any Party hereto, including by operation of law, without the prior written consent of the other Parties, nor is this Amendment intended to confer upon any other Person any rights, interests, obligations or remedies hereunder. Without limiting the generality of the foregoing, no provision of this Amendment shall create any third-party beneficiary rights in any Employee or former employee of Seller (including any beneficiary or dependent thereof) in respect of continued employment or resumed employment, and no provision of this Amendment shall create any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any employee benefit plan or arrangement except as expressly provided for thereunder. Notwithstanding the foregoing, (i) Seller may assign all or any portion of its rights, interests, obligations and remedies hereunder to Conectiv, a Delaware corporation, or any of Conectiv's wholly owned subsidiaries; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Seller from any of its obligations hereunder or under the Agreement; and (ii) Buyer may assign all or any portion of its rights, interests, obligations and remedies hereunder to (A) any of its wholly owned subsidiaries or (B) a trustee, lending institution or other Person solely for purposes of financing the transactions contemplated hereby; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Buyer from any of its obligations hereunder or under the Agreement. Section 3.5 Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware (without giving effect to conflicts of law principles) as to all matters, including validity, construction, effect, performance and remedies. Venue in any and all suits, actions and proceedings related to the subject matter of this Amendment shall be in the state and federal courts located in and for the State of Delaware (the "Courts"), which shall have exclusive jurisdiction for such purpose, and the Parties hereby irrevocably submit to the exclusive jurisdiction of such courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Each of the Parties hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Amendment or the transactions contemplated hereby. Section 3.6 Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 3.7 Interpretation. The article and section headings contained in this Amendment are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or construction of this Amendment. Ambiguities and uncertainties in the wording of this Amendment shall not be construed for or against any Party, but shall be construed in the manner that most accurately reflects the Parties' intent as of the date of this Amendment. Each Party acknowledges that it has been represented by counsel in connection with the review and execution of this Amendment, and, accordingly, there shall be no presumption that this Amendment or any provision hereof be construed against the Party that drafted this Amendment. Section 3.8 Effect; Entire Agreement. Except as amended, supplemented or otherwise modified by this Amendment, the Agreement shall remain in full force and effect, and the valid and binding obligation of each Party. The Agreement, as amended hereby (including the Schedules and Exhibits thereto), together with the Confidentiality Agreement, the ACE Related Purchase Agreement, as amended, and the DP&L Related Purchase Agreements, as amended, embody the entire agreement and understanding of the Parties hereto and thereto in respect of the transactions contemplated by the Agreement, as amended hereby, the Additional Agreements, the ACE Related Purchase Agreement, as amended, and the DP&L Related Purchase Agreements, as amended, and supersedes all prior agreements and understandings between or among the Parties with respect to the transactions contemplated hereby or thereby. [Signature Page Follows] IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed and delivered as of the date and year first written above. ATLANTIC CITY ELECTRIC COMPANY By: /s/ Philip S. Reese -------------------------------------- Philip S. Reese Vice President and Treasurer NRG ENERGY, INC. By: /s/ David H. Peterson -------------------------------------- David H. Peterson Chairman, President and CEO (ACE WHOLLY OWNED STATIONS) EXHIBIT 2.8 ACE JOINTLY OWNED AGREEMENT AMENDMENT TO THE PURCHASE AND SALE AGREEMENT BY AND BETWEEN ATLANTIC CITY ELECTRIC COMPANY AND NRG ENERGY, INC. AMENDMENT TO THE PURCHASE AND SALE AGREEMENT (the "Amendment") by and between Atlantic City Electric Company, a New Jersey corporation ("ACE" or "Seller"), and NRG Energy, Inc., a Delaware corporation ("Buyer"), dated as of June 22, 2001. Seller and Buyer may each be referred to herein individually as a "Party" and collectively as the "Parties." Capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings assigned to them in the Agreement (as defined below). WHEREAS, Seller and Buyer are Parties to that certain Purchase and Sale Agreement, dated as of January 18, 2000 (the "Agreement"), providing for the sale and assignment by Seller of the Purchased Assets and the Assumed Liabilities and the purchase and assumption by Buyer of the Purchased Assets and the Assumed Liabilities, upon the terms and conditions set forth in the Agreement; and WHEREAS, the Closing of the transactions contemplated by the Agreement, the ACE Related Purchase Agreement and the DP&L Related Purchase Agreements has been unexpectedly delayed; and WHEREAS, as a result of the delay of the Closing, the Parties desire to amend the Agreement as set forth herein, and the ACE Related Purchase Agreement and the DP&L Related Purchase Agreements as set forth in the respective amendments to such agreements, which are being entered into simultaneously with this Amendment, to, among other things, extend the termination date of the Agreement, the ACE Related Purchase Agreement and the DP&L Related Purchase Agreements. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Seller and Buyer hereby agree as follows: ARTICLE I Amendment of Certain Provisions of the Agreement Section 1.1 Relationship of the Agreement and the Related Purchase Agreements. Section 3.9 of the Agreement is hereby amended by deleting such Section in its entirety. Section 1.2 Certain Closing Conditions. (a) Section 7.1(j) of the Agreement is hereby amended by deleting such Section in its entirety. (b) Section 7.2(i) of the Agreement is hereby amended by deleting such Section in its entirety. Section 1.3 Certain Termination Provisions. Section 9.1(b) of the Agreement is hereby amended and restated in its entirety to read as follows: "This Agreement may be terminated by Seller, on the one hand, or Buyer, on the other hand, upon written notice to the other Party, (i) at any time prior to the Closing if any court of competent jurisdiction shall have issued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the Closing, and such order, judgment or decree shall have become final and nonappealable; (ii) at any time prior to the Closing if any Law shall have been enacted or issued by any Governmental Authority which, directly or indirectly, prohibits the consummation of the transactions contemplated by this Agreement or any Additional Agreement; or (iii) at any time after October 31, 2001, if the Closing shall not have occurred on or before such date; provided, however, that the right to terminate this Agreement under this Section 9.1(b)(iii) shall not be available to any Party whose breach of this Agreement has caused, or resulted in, the failure of the Closing to occur on or before such date." ARTICLE II Release, Waiver and Additional Provisions Section 2.1 Release and Waiver of Claims Against Seller Parties. (a) Buyer and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Seller and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Seller Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all claims, demands, debts, losses, costs, expenses, proceedings, judgments, damages, actions, causes of action, suits, contracts, agreements, obligations, accounts and liabilities of any kind or character whatsoever, known or unknown, suspected or unsuspected, in contract or in tort, at law or in equity ("Claims"), that the Buyer or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Seller Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.1 to this Amendment. (b) Buyer hereby represents and warrants to Seller that, as of the date of this Amendment, to Buyer's knowledge, Buyer does not have any Claims against any Seller Party, other than as set forth in Schedule 2.1 to this Amendment, which Claims have been released and waived pursuant to Section 2.1(a). Section 2.2 Release and Waiver of Claims Against Buyer Parties. (a) Seller and each of its Affiliates hereby unconditionally and irrevocably releases, acquits and forever discharges Buyer and its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and assigns (collectively, the "Buyer Parties"), effective as of the date hereof, of and from, and hereby unconditionally and irrevocably waives, any and all Claims, that the Seller or any of its Affiliates alone or with any other Person had, now has, or might hereafter have against the Buyer Parties or any of them jointly and/or severally, for or by reason of any matter, circumstance, event, action, omission, cause or thing whatsoever occurring or existing on or before the date of this Amendment, arising under, relating to or in connection with the Agreement (or any of the Exhibits or Schedules thereto) and which are set forth in Schedule 2.2 to this Amendment. (b) Seller hereby represents and warrants to Buyer that, as of the date of this Amendment, to Seller's knowledge, Seller does not have any Claims against any Buyer Party, other than as set forth in Schedule 2.2 to this Amendment, which Claims have been released and waived pursuant to Section 2.2(a). Section 2.3 Disclosed Matters. Pursuant to Section 6.6 of the Agreement, Buyer and Seller hereby acknowledge and agree that the supplemental or amended disclosure set forth in the Schedules to the Agreement being delivered by Seller to Buyer contemporaneously with this Amendment and dated as of the date hereof shall, for purposes of the Agreement, as amended hereby, including for purposes of determining whether the conditions to Closing set forth in Article VII of the Agreement are satisfied, be deemed to have been disclosed as of January 18, 2000. ARTICLE III Miscellaneous Provisions Section 3.1 Amendment and Modification. Subject to applicable Law, this Amendment may be amended, supplemented or otherwise modified only by written agreement entered into by all Parties. Section 3.2 Waiver of Compliance; Consents. To the extent permitted by applicable Law, any failure of any of the Parties to comply with any covenant, agreement or condition set forth herein may be waived by the Party entitled to the benefit thereof only by a written instrument signed by such Party, but any such waiver shall not operate as a waiver of, or estoppel with respect to, any prior or subsequent failure to comply therewith. Section 3.3 Notices. All notices and other communications hereunder shall be in writing and shall be given in accordance with Section 10.8 of the Agreement. Section 3.4 Assignment. This Amendment shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but neither this Amendment nor any of the rights, interests, obligations or remedies hereunder shall be assigned by any Party hereto, including by operation of law, without the prior written consent of the other Parties, nor is this Amendment intended to confer upon any other Person any rights, interests, obligations or remedies hereunder. Without limiting the generality of the foregoing, no provision of this Amendment shall create any third-party beneficiary rights in any Employee or former employee of Seller (including any beneficiary or dependent thereof) in respect of continued employment or resumed employment, and no provision of this Amendment shall create any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any employee benefit plan or arrangement except as expressly provided for thereunder. Notwithstanding the foregoing, (i) Seller may assign all or any portion of its rights, interests, obligations and remedies hereunder to Conectiv, a Delaware corporation, or any of Conectiv's wholly owned subsidiaries; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Seller from any of its obligations hereunder or under the Agreement; and (ii) Buyer may assign all or any portion of its rights, interests, obligations and remedies hereunder to (A) any of its wholly owned subsidiaries or (B) a trustee, lending institution or other Person solely for purposes of financing the transactions contemplated hereby; provided, however, that no such assignment shall (A) materially impair or delay the consummation of the transactions contemplated hereby or by the Agreement or (B) relieve or discharge Buyer from any of its obligations hereunder or under the Agreement. Section 3.5 Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware (without giving effect to conflicts of law principles) as to all matters, including validity, construction, effect, performance and remedies. Venue in any and all suits, actions and proceedings related to the subject matter of this Amendment shall be in the state and federal courts located in and for the State of Delaware (the "Courts"), which shall have exclusive jurisdiction for such purpose, and the Parties hereby irrevocably submit to the exclusive jurisdiction of such courts and irrevocably waive the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding. Service of process may be made in any manner recognized by such Courts. Each of the Parties hereby irrevocably waives its right to a jury trial arising out of any dispute in connection with this Amendment or the transactions contemplated hereby. Section 3.6 Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 3.7 Interpretation. The article and section headings contained in this Amendment are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or construction of this Amendment. Ambiguities and uncertainties in the wording of this Amendment shall not be construed for or against any Party, but shall be construed in the manner that most accurately reflects the Parties' intent as of the date of this Amendment. Each Party acknowledges that it has been represented by counsel in connection with the review and execution of this Amendment, and, accordingly, there shall be no presumption that this Amendment or any provision hereof be construed against the Party that drafted this Amendment. Section 3.8 Effect; Entire Agreement. Except as amended, supplemented or otherwise modified by this Amendment, the Agreement shall remain in full force and effect, and the valid and binding obligation of each Party. The Agreement, as amended hereby (including the Schedules and Exhibits thereto), together with the Confidentiality Agreement, the DP&L Related Purchase Agreement, as amended, and the ACE Related Purchase Agreements, as amended, embody the entire agreement and understanding of the Parties hereto and thereto in respect of the transactions contemplated by the Agreement, as amended hereby, the Additional Agreements, DP&L Related Purchase Agreement, as amended, and the ACE Related Purchase Agreements, as amended, and supersedes all prior agreements and understandings between or among the Parties with respect to the transactions contemplated hereby or thereby. [Signature Page Follows] IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed and delivered as of the date and year first written above. ATLANTIC CITY ELECTRIC COMPANY By: /s/ Philip S. Reese --------------------------------------- Philip S. Reese Vice President and Treasurer NRG ENERGY, INC. By: /s/ David H. Peterson --------------------------------------- David H. Peterson Chairman, President and CEO (ACE JOINTLY OWNED STATIONS) EXHBIT 99.1 [GRAPHIC OMITTED] June 25 2001 Contacts:Ted Caddell, Public Affairs; 302-283-5811 Bob Marshall, Investor Relations; 302-429-3164 CONECTIV ANNOUNCES SALE OF BASE-LOAD PLANTS TO NRG New Mid-Merit Generation and Power Purchase Agreements Ensure Reliability WILMINGTON, Del. - Conectiv (NYSE:CIV) today announced its Delmarva Power & Light Company subsidiary has completed the sale of approximately 1,081 megawatts of baseload coal-fired generation to subsidiaries of NRG Energy. As part of its strategic focus on the 'mid-merit' generation market in the mid-Atlantic region, Conectiv will retain approximately 2,000 megawatts of mid-merit and peaking generation in the PJM power pool. The company is driving forward to establish a market leading position in the mid-merit segment, with the goal of adding a total of 4,000 megawatts of mid-merit generation by 2004. Conectiv's mid-merit power plants come on line quickly and produce electricity when demand is high, and can be stopped quickly when demand drops. Delmarva Power entered into both short- and long-term purchase power contracts with NRG to provide energy and capacity for the Delmarva Peninsula. In addition to the retention of 2,000 megawatts of mid-merit generation, the company is currently well into a $300 million, 550 megawatt expansion of the Hay Road plant. The first combustion turbine at that plant, which will produce 116 megawatts, began commercial operation in early June. "Our decision to concentrate on mid-merit plants, such as the Hay Road expansion project, coupled with the power purchase arrangements we have put in place all mean one thing for Conectiv customers - a steady and reliable supply of electricity into the future," according to Conectiv President Tom Shaw. The sales announced today cover the Indian River Power Plant near Millsboro, Del.; the Vienna Power Plant near Vienna, Md., and minority interests in the Keystone and Conemaugh coal-fired plants in Pennsylvania. Excluding inventory adjustments and other items, Conectiv received approximately $630 million in cash for the plants. An after-tax gain of approximately $170 million to $175 million is expected to be recognized in Conectiv's second quarter 2001 earnings as a result of the sales. Proceeds are expected to be used to repay debt and to fund Conectiv's mid-merit construction program. (more) As previously announced, Delmarva Power and Atlantic City Electric, also a Conectiv subsidiary, entered into purchase and sale agreements with NRG in January 2000 for the sale of approximately 1,900 megawatts of generation assets, including the 1,081 sold to NRG. Consummation of the sales is conditioned upon, among other things, receipt of required regulatory approvals. Because the parties have not yet received the required approval of the New Jersey Board of Public Utilities for Atlantic City Electric's generation assets, those sales were not consummated simultaneously with the Delmarva Power assets, as originally contemplated by Conectiv and NRG. Subject to receipt of the New Jersey Board of Public Utilities approval, Conectiv expects the sale of certain Atlantic City Electric assets to take place during 2001. In connection with the sale of the Delmarva Power assets, Conectiv and NRG amended the purchase and agreements, among other reasons, to permit separate closings of the sales of the Delmarva Power and Atlantic City Electric assets. ##### Conectiv, a Fortune 500 company headquartered in Wilmington, DE, is focused on two core energy businesses. Conectiv Power Delivery provides safe, reliable, and affordable energy service to more than one million customers in New Jersey, Delaware, Maryland, and Virginia. Conectiv Energy uses a sophisticated power-trading unit to optimize the value of a growing portfolio of mid-merit power plants that can start and stop quickly in response to changes in the demand for power within the PJM [Pennsylvania-New Jersey-Maryland] power pool. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act") provides a "safe harbor" for forward-looking statements to encourage such disclosures without the threat of litigation, provided those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement. Forward-looking statements have been made in this Press Release. Such statements are based on beliefs of Conectiv's (the "Company's") management ("Management") as well as assumptions made by and information currently available to Management. When used herein, the words "will," "anticipate," "estimate," "expect," "objective," and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following: deregulation of energy supply and telecommunications; the unbundling of delivery services; an increasingly competitive energy and telecommunications marketplace; results of any asset dispositions; sales retention and growth; federal and state regulatory actions; future litigation results; cost of construction; operating restrictions; increased costs and construction delays attributable to environmental regulations; nuclear decommissioning and the availability of reprocessing and storage facilities for spent nuclear fuel; and credit market concerns. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing list of factors pursuant to the Litigation Reform Act should not be construed as exhaustive or as an admission regarding the adequacy of disclosures made prior to the effective date of the Litigation Reform Act. ###www.conectiv.com## EXHIBIT 99.2 CONECTIV PRO FORMA FINANCIAL STATEMENTS - GENERATION ASSET SALE AND TRANSFER BACKGROUND In 1999, the electric utility businesses of Delmarva Power & Light Company (DPL)and Atlantic City Electric Company (ACE) were restructured pursuant to legislation enacted in Delaware, Maryland and New Jersey and orders issued by the Delaware Public Service Commission (DPSC), Maryland Public Service Commission (MPSC), and New Jersey Board of Public Utilities (NJBPU). The restructurings of DPL's and ACE's electric utility businesses are discussed in Conectiv's 2000 Annual Report on Form 10-K in Notes 1, 7, 10, 11 and 17 to the Consolidated Financial Statements, included in Item 8 of Part II, and under "Electric Utility Industry Restructuring," within Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), included in Item 7 of Part II. In connection with electric utility industry restructuring and Conectiv's "mid-merit" strategy, as discussed under "Mid-Merit Electric Generation" in the MD&A of Conectiv's 2000 Annual Report on Form 10-K, Conectiv is realigning the mix of electric generating plants owned by its subsidiaries. Effective July 1, 2000, DPL and ACE contributed to Conectiv electric generating plants with 1,501 and 502, respectively, megawatts of capacity. Then, Conectiv transferred the electric generating plants to subsidiaries of Conectiv Energy Holding Company (CEH). CEH and its subsidiaries are engaged in non-regulated electricity production and sales, energy trading, and marketing. As discussed in Note 14 to the Consolidated Financial Statements included in Item 8 of Part II of Conectiv's 2000 Annual Report on Form 10-K, DPL and ACE entered into agreements to sell their nuclear and non-strategic baseload fossil electric generating plants. On December 29, 2000, DPL sold its ownership interests in nuclear electric generating plants. As of March 31, 2001, the electric generating plants which were subject to agreements for sale had 2,203.5 megawatts of capacity and a net book value of $416 million, excluding the nuclear decommissioning liability included in accumulated depreciation. On June 22, 2001, pursuant to the agreements for sale, the ownership interests of DPL and another Conectiv subsidiary in plants that had a net book value of approximately $286 million (as of March 31, 2001) and electric generating capacity of 1,080.8 megawatts were sold for approximately $631 million, subject to final adjustments for inventory and other items. ACE has ownership interests in plants with a net book value of approximately $131 million (as of March 31, 2001) and electric generating capacity of 1,122.7 megawatts which remain subject to agreements for sale. The sales of ACE's plants are expected to result in proceeds of approximately $189 million subject to adjustment for inventory levels and certain other items. However, there can be no assurances that the sales will be completed. Upon the sale of the ownership interests of ACE in nuclear electric generating units, ACE will transfer its nuclear decommissioning funds to the purchasers who will assume full responsibility for decommissioning such units. DESCRIPTION OF PRO FORMA FINANCIAL INFORMATION The following consolidated financial statements for Conectiv are filed with this Exhibit: o Unaudited Pro Forma Consolidated Balance Sheet at March 31, 2001, and o Unaudited Pro Forma Consolidated Statements of Income for the Three Months Ended March 31, 2001 and for the Year Ended December 31, 2000. The following major assumptions were made in preparing these pro forma financial statements: o For purposes of the Pro Forma Consolidated Balance Sheet, all electric generating plants subject to the agreements for sale, as discussed in Note 14 to the Consolidated Financial Statements included in Item 8 of Part II of Conectiv's Annual Report on Form 10-K, were all assumed to be sold as of March 31, 2001. o For purposes of the Pro Forma Consolidated Statements of Income, the sales and transfers described above were assumed have occurred as of the beginning of the period. As a result, expenses related to generation assets assumed to be sold were eliminated. o Replacement energy and capacity were assumed to be purchased from the PJM Interconnection, L.L.C. (PJM). The energy costs were based on an hourly PJM Locational Marginal Price (LMP) and the capacity costs were based on average PJM capacity rates. o Under its rates for electricity supplied to utility customers, ACE was assumed to be permitted to earn a return on the stranded costs resulting from the power plant sales and to no longer earn a return on the power plants sold. o Revenues which resulted from the Wholesale Transaction Confirmation Letter Agreements during 2000, as discussed in Note 15 to the Consolidated Financial Statements included in Item 8 of Part II of Conectiv's 2000 Annual Report on Form 10-K, were assumed not to have been earned due to the assumed sale of the nuclear power plants. o For the portion of 2000 that the electricity supply operations of DPL in Maryland were still subject to regulation (January 1 through June 30, 2000) customer rates were assumed to be adjusted to remove amounts for a return on generation rate base and to add amounts for recovery of replacement power costs. o The proceeds from the sale of nuclear and non-strategic baseload fossil electric generating plants by Conectiv's subsidiaries were assumed to be used to repay short-term and long-term debt, after considering expected debt retirement costs and tax payments on the gain on the sale of the electric generation assets. o The transfer of the decommissioning trusts as a result of the sale of the ownership interests of ACE in nuclear generation units was assumed to occur on a non-taxable basis. o The net pro forma gain from the sale of ACE's generation units, except for the Deepwater generation unit, was recorded as a reduction to recoverable stranded costs. The net loss of approximately $38 million which is expected to result from the sale of the Deepwater generation unit was recorded as an extraordinary charge in the 4th quarter of 1999. A pro forma adjustment resulting from the recognition of unamortized investment tax credits which are recognized upon completion of the sale was credited to retained earnings. The net pro forma gain from the sale of DPL's generation units was credited to retained earnings. For the Pro Forma Consolidated Statement of Income for 2000, the transfer of strategic generating assets from Conectiv's utility subsidiaries to subsidiaries of CEH was assumed to occur on January 1, 2000, at book value, on a non-taxable basis. An effective tax rate of 40% was utilized to calculate the income tax effects of adjustments to the Pro Forma Consolidated Income Statements. These Pro Forma Consolidated Financial Statements have been prepared for comparative purposes only and do not purport to be indicative of operations or financial condition which would have actually resulted if the sale and transfer of generation assets or other related transactions occurred on the dates of the periods presented, or which may result in the future. Further, these Pro Forma Consolidated Financial Statements have been prepared using information available at the date of this filing. As a result, certain amounts indicated herein are preliminary in nature and, therefore, will be subject to adjustment in the future. DESCRIPTION OF PRO FORMA ADJUSTMENTS The Unaudited Pro Forma Consolidated Statements of Income and Balance Sheet filed with this Exhibit reflect the following adjustments: Adjustments to the Consolidated Statements of Income: 1. A net decrease in "Electric revenues" due to (i) no revenues from the operations of the deregulated Deepwater generation unit and the nuclear plants under the "Wholesale Transaction Confirmation Letter Agreements," and (ii) no return earned on generation rate base of divested plants, partly offset by a return earned on the stranded costs of ACE and recovery of replacement power costs, for part of 2000, in DPL's Maryland jurisdiction. 2. Increases in "Electric fuel and purchased energy and capacity" primarily because the cost increase from Conectiv's subsidiaries purchasing all energy and capacity requirements to meet their retail load exceed the cost decrease from no longer purchasing fuel for the electric generating units. 3. Decreases in other operating expenses as a result of the sale of certain generation assets by Conectiv's subsidiaries. 4. A decrease in "Interest charges" as a result of retirement of debt after the sale of certain generation assets. Adjustments to the Consolidated Balance Sheet: 1. A net increase to "Cash and cash equivalents" primarily as a result of net proceeds received from the sale of certain generation units, less cash used for the retirement of certain debt issues. 2. Net decreases in "Fuel" and "Materials and supplies" inventories as a result of the sale of certain generation assets. 3. A decrease to "Funds held by trustee" as a result of the transfer of nuclear decommissioning trust funds to the buyers of ACE's ownership interests in nuclear electric generating plants. 4. A decrease to "Property, plant and equipment" and "Construction work-in-progress" as a result of the sale of certain generation assets. 5. A decrease to "Accumulated Depreciation" as a result of the sale of certain generation assets and the assumption of the nuclear decommissioning obligations of ACE by the purchasers of ACE's ownership interests in nuclear electric generating plants. 6. Decreases to "Leased nuclear fuel, at amortized cost", "Current capital lease obligation", and "Long-term capital lease obligation" as a result of the sale of the nuclear fuel to the buyers of ACE's ownership interests in nuclear electric generating plants and the corresponding liquidation of the capital lease obligation. 7. Decrease to "Recoverable stranded costs" and an increase to "Regulatory Liability for New Jersey income tax benefit" due to the sale of certain electric generation assets of ACE, which are subject to stranded cost recovery. An expected net gain from the sale of such assets, results in a decrease in recoverable stranded costs. 8. Decreases to "Other deferred charges" and "Other deferred credits and Other Liabilities" as a result of the sale of certain generation assets. 9. Decreases to "Short-term debt" and "Long-term debt" due to assumed repayment of debt with the net sales proceeds expected to be available after debt retirement costs and tax payments on the gain on the sale of the electric generation assets. 10. Changes to "Taxes Accrued", "Deferred income taxes, net" and "Deferred investment tax credits" as a result of the sale of certain generation assets. 11. Net increase to "Retained Earnings" as a result of an expected net gain from the sale of certain generation assets. 11. Net increase to "Retained Earnings" as a result of an expected net gain from the sale of certain generation assets.
CONECTIV UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2001 --------------------------------------------------------------- Reported Adjustments Pro Forma --------------------------------------------------------------- (Dollars in Thousands) OPERATING REVENUES Electric $ 766,879 $ (31,192) (1) $ 735,687 Gas 638,085 638,085 Other services 149,685 149,685 ----------------- ------------------- ----------------- 1,554,649 (31,192) 1,523,457 ----------------- ------------------- ----------------- OPERATING EXPENSES Electric fuel and purchased energy and capacity 485,726 37,064 (2) 522,790 Gas purchased 629,390 629,390 Other services' cost of sales 120,144 - 120,144 Operation and maintenance 112,700 (26,453) (3) 86,247 Depreciation and amortization 62,400 (15,116) (3) 47,284 Taxes other than income taxes 20,190 (511) (3) 19,679 ----------------- ------------------- ----------------- 1,430,550 (5,016) 1,425,534 ----------------- ------------------- ----------------- OPERATING INCOME 124,099 (26,176) 97,923 ----------------- ------------------- ----------------- OTHER INCOME 2,752 2,752 ----------------- ------------------- ----------------- INTEREST EXPENSE Interest charges 53,032 (12,159) (4) 40,873 Capitalized interest and allowance for borrowed funds during construction (4,931) (4,931) ----------------- ------------------- ----------------- 48,101 (12,159) 35,942 ----------------- ------------------- ----------------- PREFERRED STOCK DIVIDEND REQUIREMENTS OF SUBSIDIARIES 5,159 5,159 ----------------- ------------------- ----------------- INCOME BEFORE INCOME TAXES AND 73,591 (14,017) 59,574 INCOME TAXES 32,787 (5,607) 27,180 ----------------- ------------------- ----------------- NET INCOME $ 40,804 $ (8,410) $ 32,394 ================= =================== ================= INCOME (LOSS) APPLICABLE TO: Common Stock $ 39,912 $ (7,929) $ 31,983 Class A common stock 892 (481) 411 ----------------- ------------------- ----------------- Total $ 40,804 $ (8,410) $ 32,394 ================= =================== ================= AVERAGE SHARES OUTSTANDING (000): Common Stock 82,704 82,704 Class A common stock 5,742 5,742 INCOME (LOSS) PER AVERAGE SHARE, BASIC AND DILUTED Common Stock $ 0.48 $ (0.09) $ 0.39 Class A common stock $ 0.16 $ (0.09) $ 0.07
CONECTIV UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME YEAR ENDED DECEMBER 31, 2000 Reported Adjustments Pro Forma ------------------------------------------------------------ (Dollars in Thousands) OPERATING REVENUES Electric $ 2,906,342 $ (77,353) (1) $ 2,828,989 Gas 1,529,785 1,529,785 Other services 592,997 592,997 ----------------- ------------------ ---------------- 5,029,124 (77,353) 4,951,771 ----------------- ------------------ ---------------- OPERATING EXPENSES Electric fuel and purchased energy and capacity 1,613,579 220,515 (2) 1,834,094 Gas purchased 1,445,911 1,445,911 Other services' cost of sales 504,615 504,615 Special charges 25,162 25,162 Gain on sale of interest in nuclear plants (16,612) (16,612) Operation and maintenance 627,667 (146,601) (3) 481,066 Depreciation and amortization 260,082 (62,542) (3) 197,540 Taxes other than income taxes 80,886 (2,077) (3) 78,809 ----------------- ------------------ ---------------- 4,541,290 9,295 4,550,585 ----------------- ------------------ ---------------- OPERATING INCOME 487,834 (86,648) 401,186 ----------------- ------------------ ---------------- OTHER INCOME 49,495 49,495 ----------------- ------------------ ---------------- INTEREST EXPENSE Interest charges 223,445 (50,574) (4) 172,871 Capitalized interest and allowance for borrowed funds during construction (10,843) (10,843) ----------------- ------------------ ---------------- 212,602 (50,574) 162,028 ----------------- ------------------ ---------------- PREFERRED STOCK DIVIDEND REQUIREMENTS OF SUBSIDIARIES 20,383 20,383 ----------------- ------------------ ---------------- INCOME BEFORE INCOME TAXES AND 304,344 (36,074) 268,270 INCOME TAXES 133,514 (14,430) 119,084 ----------------- ------------------ ---------------- NET INCOME $ 170,830 $ (21,644) $ 149,186 ================= ================== ================ INCOME (LOSS) APPLICABLE TO: Common Stock $ 164,719 $ (21,057) $ 143,662 Class A common stock 6,111 (587) 5,524 ----------------- ------------------ ---------------- Total $ 170,830 $ (21,644) $ 149,186 ================= ================== ================ AVERAGE SHARES OUTSTANDING (000): Common Stock 83,686 83,686 Class A common stock 5,742 5,742 INCOME (LOSS) PER AVERAGE SHARE, BASIC AND DILUTED Common Stock $ 1.97 $ (0.25) $ 1.72 Class A common stock $ 1.06 $ (0.10) $ 0.96
CONECTIV UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS March 31, 2001 -------------------------------------------------- Reported Adjustments Pro Forma -------------------------------------------------- (Dollars in Thousands) ASSETS Current Assets Cash and cash equivalents $ 44,268 $ 96,795 (1) $ 141,063 Accounts receivable, net of allowance of $31,697 982,974 982,974 Inventories, at average cost Fuel (coal, oil and gas) 64,653 (11,429) (2) 53,224 Materials and supplies 53,572 (3,982) (2) 49,590 Deferred energy supply costs 21,198 21,198 Prepayments 25,575 25,575 Deferred income taxes, net 11,369 11,369 -------------- ------------- ------------- 1,203,609 81,384 1,284,993 -------------- ------------- ------------- Investments Investment in leveraged leases 53,999 53,999 Funds held by trustee 125,387 (115,569) (3) 9,818 Other investments 73,643 73,643 -------------- ------------- ------------- 253,029 (115,569) 137,460 -------------- ------------- ------------- Property, Plant and Equipment Electric generation 1,581,768 (827,425) (4) 754,343 Electric transmission and distribution 2,746,397 2,746,397 Gas transmission and distribution 281,241 281,241 Other electric and gas facilities 390,702 390,702 Telecommunications, thermal systems, and other property, plant, and equipment 263,140 263,140 -------------- ------------- ------------- 5,263,248 (827,425) 4,435,823 Less: Accumulated depreciation 2,222,856 (528,404) (5) 1,694,452 -------------- ------------- ------------- Net plant in service 3,040,392 (299,021) 2,741,371 Construction work-in-progress 465,905 (2,853) (4) 463,052 Leased nuclear fuel, at amortized cost 25,129 (25,129) (6) - Goodwill, net of accumulated amortization of $33,437 341,918 341,918 -------------- ------------- ------------- 3,873,344 (327,003) 3,546,341 -------------- ------------- ------------- Deferred Charges and Other Assets Recoverable stranded costs 981,494 (47,049) (7) 934,445 Deferred recoverable income taxes 82,450 82,450 Unrecovered purchased power costs 13,988 13,988 Unrecovered New Jersey state excise tax 7,163 7,163 Deferred debt refinancing costs 20,031 20,031 Deferred other postretirement benefit costs 29,356 29,356 Prepaid pension costs 76,377 76,377 Unamortized debt expense 25,105 25,105 License fees 21,612 21,612 Other 68,198 (13,819) (8) 54,379 -------------- ------------- ------------- 1,325,774 (60,868) 1,264,906 -------------- ------------- ------------- Total Assets $ 6,655,756 $ (422,056) $ 6,233,700 ============== ============= =============
CONECTIV UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS March 31, 2001 ------------------------------------------------- Reported Adjustments Pro Forma ------------------------------------------------- (Dollars in Thousands) CAPITALIZATION AND LIABILITIES Current Liabilities Short-term debt $ 738,522 $ (161,521) (9) $ 577,001 Long-term debt due within one year 100,751 100,751 Variable rate demand bonds 158,430 158,430 Accounts payable 631,232 631,232 Taxes accrued 68,871 81,795 (10) 150,666 Interest accrued 46,699 46,699 Dividends payable 27,161 27,161 Deferred energy supply costs 30,479 30,479 Current capital lease obligation 15,596 (15,480) (6) 116 Above-market purchased energy contracts and other electric restructuring liabilities 23,719 23,719 Other 88,217 (1,170) 87,047 ------------- ------------- ------------- 1,929,677 (96,376) 1,833,301 ------------- ------------- ------------- Deferred Credits and Other Liabilities Other postretirement benefits obligation 90,747 90,747 Deferred income taxes, net 807,120 65,414 (10) 872,534 Deferred investment tax credits 63,044 (18,458) (10) 44,586 Regulatory liability for New Jersey income tax benefit 49,262 5,174 (7) 54,436 Above-market purchased energy contracts and other electric restructuring liabilities 95,783 (6,813) (8) 88,970 Deferred gain on termination of purchased energy contract 74,968 74,968 Long-term capital lease obligation 10,491 (9,649) (6) 842 Other 61,770 (12,309) (8) 49,461 ------------- ------------- ------------- 1,253,185 23,359 1,276,544 ------------- ------------- ------------- Capitalization Common stock: $0.01 per share par value 150,000,000 shares authorized; 82,967,179 shares outstanding 831 831 Class A common stock, $0.01 per share par value; 10,000,000 shares authorized; 5,742,315 share outstanding 57 57 Additional paid-in capital - - common stock 1,030,941 1,030,941 Additional paid-in capital - - Class A common stock 93,738 93,738 Retained earnings 60,784 189,383 (11) 250,167 Treasury shares, at cost, 135,604 shares (2,786) (2,786) Unearned compensation (2,896) (2,896) Accumulated other comprehensive income (14,183) (14,183) ------------- ------------- ------------- Total common stockholders' equity 1,166,486 189,383 1,355,869 Preferred stock and securities of subsidiaries: Not subject to mandatory redemption 95,933 95,933 Subject to mandatory redemption 188,950 188,950 Long-term debt 2,021,525 (538,422) (9) 1,483,103 ------------- ------------- ------------- 3,472,894 (349,039) 3,123,855 ------------- ------------- ------------- Total Capitalization and Liabilities $ 6,655,756 $ (422,056) $ 6,233,700 ============= ============= =============
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