Asset Purchase Agreement
Execution Copy
ASSET PURCHASE AGREEMENT
By and Among
BANGOR HYDRO-ELECTRIC COMPANY,
a Maine corporation,
PENOBSCOT HYDRO CO., INC.,
a Maine corporation
and
PP&L GLOBAL, INC.,
a Pennsylvania corporation
Dated as of September 25, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE
2.1 The Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Excluded Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Assumed Liabilities.. . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Purchase Price Adjustment.. . . . . . . . . . . . . . . . . . . . . 19
3.3 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . 20
3.4 Proration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.5 Exclusion of Purchased Assets from Closing. . . . . . . . . . . . . 21
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing.. . . . . . . . . . . . . . . . . . . . . 22
4.2 Payment of Purchase Price.. . . . . . . . . . . . . . . . . . . . . 22
4.3 Deliveries By Sellers.. . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Deliveries by the Buyer.. . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
5.1 Organization; Authority.. . . . . . . . . . . . . . . . . . . . . . 24
5.2 Authority Relative to This Agreement. . . . . . . . . . . . . . . . 24
5.3 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . 24
5.4 Title and Related Matters.. . . . . . . . . . . . . . . . . . . . . 25
5.5 Environmental Matters.. . . . . . . . . . . . . . . . . . . . . . . 26
5.6 Labor Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 ERISA; Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . 27
5.8 Real Estate.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.9 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10 Certain Contracts and Arrangements.. . . . . . . . . . . . . . . . 28
5.11 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 29
5.12 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.13 Taxes. . 29
5.14 Representations Regarding Bangor-Pacific.. . . . . . . . . . . . . 31
5.15 Representations Regarding ▇▇▇▇▇ Unit No. 4.. . . . . . . . . . . . 33
5.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.17 Personal Property Included in Purchased Assets.. . . . . . . . . . 34
5.18 Intellectual Property Rights.. . . . . . . . . . . . . . . . . . . 34
5.19 Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
6.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Authority Relative to This Agreement. . . . . . . . . . . . . . . . 35
6.3 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . 35
6.4 Regulation as a Utility.. . . . . . . . . . . . . . . . . . . . . . 36
6.5 Availability of Funds.. . . . . . . . . . . . . . . . . . . . . . . 36
6.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.7 Qualified Buyer.. . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.8 Title Policy Commitment.. . . . . . . . . . . . . . . . . . . . . . 37
6.9 "AS IS" Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.10 Buyer s Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business of the Sellers. . . . . . . . . . . . . . . . . 37
7.2 Access to Information.. . . . . . . . . . . . . . . . . . . . . . . 39
7.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.4 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 41
7.5 Public Statements.. . . . . . . . . . . . . . . . . . . . . . . . . 42
7.6 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . 42
7.7 Tax Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.8 Supplements to Schedules. . . . . . . . . . . . . . . . . . . . . . 45
7.9 Employees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.10 Risk of Loss.. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.11 Confidential Information.. . . . . . . . . . . . . . . . . . . . . 49
7.12 Observation, Inspection and Participation. . . . . . . . . . . . . 50
7.13 Delivery of Books and Records, etc.; Removal of Property.. . . . . 51
7.14 Millenium Compliance.. . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the Transactions.. 52
8.2 Conditions to Obligations of the Buyer. . . . . . . . . . . . . . . 53
8.3 Conditions to Obligations of the Sellers. . . . . . . . . . . . . . 56
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification.. . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2 Defense of Claims.. . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE X
TERMINATION
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.2 Procedure and Effect of Termination. . . . . . . . . . . . . . . . 64
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification.. . . . . . . . . . . . . . . . . . . . 64
11.2 Waiver of Compliance; Consents.. . . . . . . . . . . . . . . . . . 64
11.3 No Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.5 Assignment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.7 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.8 Interpretation.. . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.9 Schedules and Exhibits.. . . . . . . . . . . . . . . . . . . . . . 67
11.10 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 67
11.11 No Punitive or Consequential Damages. . . . . . . . . . . . . . . 67
11.12 Parties' Knowledge of Others' Breach. . . . . . . . . . . . . . . 67
SCHEDULES
1.1(a)(31) HQ Transfer Agreement Principles
1.1(a)(33) Hydroelectric Assets
1.1(a)(49) Project Maps
1.1(a)(53) Seller Required Consents
1.1(a)(60) Transitional Power Sales Agreement
1.1(a)(61) Transmission Assets
1.1(a)(64) West Enfield Project Finance Documents
2.2(d) Excluded Assets
3.3 Purchase Price Allocation
5.4 Title Matters
5.5 Environmental Matters
5.6 Labor Matters
5.7 Summary of Benefit Plans
5.8 Real Estate, Easements and Encumbrances
5.9 Condemnation
5.10 Sellers' Agreements
5.11 Legal Proceedings
5.12 Permits and Permit Matters
5.13 Tax Matters
5.14 Bangor-Pacific
5.16 Insurance
5.18 Intellectual Property Rights
6.3 Buyer's Consents and Approvals
7.1 Conduct of Business; Capital Expenditures and Maintenance
Expenditures
EXHIBITS
A Form of ▇▇▇▇ of Sale
B Form of Assignment and Assumption Agreement
C Form of FIRPTA Affidavit
D Form of Interconnection Agreement
E Form of Transitional Power Sales Agreement
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 25, 1998, by and among
BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation ("BHE"), PENOBSCOT HYDRO
CO., INC., a Maine corporation ("PHC," and together with BHE, the
"Sellers"), and PP&L GLOBAL, INC., a Pennsylvania corporation (the
"Buyer").
WHEREAS, the Sellers own certain assets hereinafter defined as the
Purchased Assets;
WHEREAS, the Sellers conducted an auction of the Purchased Assets, and
the Buyer was selected as the winning bidder therefor;
WHEREAS, the Buyer and the Sellers desire to provide herein for the
purchase and sale of the Purchased Assets;
WHEREAS, a material inducement for the Buyer and the Sellers of the
purchase and sale provided for herein is the execution on the Closing Date
of the Ancillary Agreements as defined herein;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) As used in this Agreement, the
following terms have the meanings specified in this Section 1.1(a):
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(2) "Ancillary Agreements" means the Assignment and Assumption
Agreement, the Interconnection Agreement (including the Separation
Document), the HQ Transfer Agreement, the Transitional Power Sales
Agreement and the MEPCO Confirmation Agreement.
(3) "Assignment and Assumption Agreement" means the Assignment
and Assumption Agreement substantially in the form of Exhibit B hereto to
be dated as of the Closing Date pursuant to which Sellers shall assign
certain intangible Purchased Assets to Buyer and Buyer shall assume the
Assumed Liabilities.
(4) "Bid Date" means September 2, 1998.
(5) "▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale substantially in the
form of Exhibit A hereto to be delivered by a Seller at the Closing,
relating to the Purchased Assets of such Seller which constitute personal
property and which are to be transferred to the Buyer at the Closing (other
than those certain intangible Purchased Assets covered by the Assignment
and Assumption Agreement).
(6) "Business" means the business of ownership, operation and
maintenance of the Purchased Assets substantially in the manner such assets
were owned, operated and maintained on the Bid Date.
(7) "Business Day" shall mean any day other than Saturday,
Sunday and any day which is a legal holiday or a day on which banking
institutions in Maine or New York are authorized by law or other
governmental action to close.
(8) "Buyer Representatives" means the Buyer's accountants,
employees, counsel, environmental consultants, financial advisors and other
authorized representatives.
(9) "Capital Expenditures" means those capital expenditures
which are identified as capital expenditures on Schedule 7.1.
(10) "CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act, as amended.
(11) "Closing" means the closing of the sale of the Purchased
Assets.
(12) "Closing Date" means the date and time at which the Closing
actually occurs.
(13) "Code" means the Internal Revenue Code of 1986, as amended.
All citations to the Code or to the Treasury Regulations promulgated
thereunder ("Treasury Regulations") shall include any amendments thereto
and any substitute or successor provisions thereto.
(14) "Collective Bargaining Agreement" means the Union Agreement
between BHE and Local Union No. 1837 of the International Brotherhood of
Electrical Workers ("Local 1837"), effective January 1, 1996, as the same
may be amended from time to time.
(15) "Confidentiality Agreement" means the Confidentiality
Agreement dated May 19, 1998 between BHE and Buyer.
(16) "DOE" means the United States Department of Energy.
(17) "Easements" means the reservations of easements in favor of
BHE to be included in the deeds of conveyance with respect to the Purchased
Assets constituting Real Estate as set forth in the Interconnection
Agreement and the Separation Document.
(18 )"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, options, claims,
possessory interests, title retention agreements, devices or arrangements
(including any lease and the nature thereof), ▇▇▇▇▇▇ or inchoate tax liens,
charges, assessments, covenants, reservations, rights of first refusal,
rights to acquire, rights of use, restrictions (whether on use, operation,
sale, transfer or otherwise), whether imposed by deed, agreement, law or
otherwise, activity and use limitations, and conservation and other
easements.
(19) "Environmental Laws" means all Federal, state, municipal and
local laws (including common laws), regulations, rules, ordinances, codes,
licenses, decrees, judgments, directives, or judicial or administrative
orders relating to pollution, protection, preservation or restoration of
human health, the environment or natural resources, including, without
limitation, laws relating to Releases or threatened Releases of Hazardous
Substances (including, without limitation, into or through ambient air,
surface water, groundwater, land, wetlands, surface and subsurface strata)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Substances, including without limitation the Clean Water Act, the Clean Air
Act, the Resource Conservation and Recovery Act, the Toxic Substances
Control Act, and CERCLA, in each case as amended, and their local
counterparts.
(20) "Environmental Matters" means any notice of violation or any
claim, demand, liability, obligation, penalty, sanction, abatement or order
or direction by any governmental authority or any person for personal
injury (including death), tangible or intangible property damage, damage to
the environment or natural resources, pollution or contamination arising
under Environmental Laws.
(21) "Environmental Reports" means, collectively, the Phase 1
Environmental Assessments relating to the Hydroelectric Facilities prepared
by Dames & ▇▇▇▇▇ as provided to the Buyer in the Supplement dated May 4,
1998 to the Offering Memorandum dated April 1998, and as such reports may
be amended from time to time prior to the Closing Date solely for purposes
of including additional items therein.
(21A) "Equity Contribution Agreement" means the Equity
Contribution Agreement dated September 25, 1998 among Buyer, Sellers and
PP&L Resources, Inc.
(22) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(23) "Estimated Adjustment Amount" means the Sellers' good faith
reasonable estimate of the Adjustment Amount for the Closing, calculated in
accordance with Section 3.2(b) hereof.
(24) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(25) "Federal Power Act" means the Federal Power Act of 1935, as
amended.
(26) "FERC" means the Federal Energy Regulatory Commission.
(27) "FIRPTA Affidavit" means a Foreign Investment in Real
Property Tax Act Certification and Affidavit substantially in the form of
Exhibit C hereto.
(28) "Good Utility Practice" means any of the applicable
practices, methods and acts:
(i) required of the party to whom Good Utility
Practice is being applied under regulations of the National
Electric Safety Code, New England Power Pool ("NEPOOL"),
Northeast Power Coordinating Council, a regional reliability
governing body, North American Electric Reliability Council,
or the successor of any of them, whether or not the party
whose conduct is at issue is a member thereof; or
(ii) otherwise engaged in or approved by a
significant portion of the electric utility industry during
the relevant time period; which, in the exercise of
reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to
accomplish the desired result at a reasonable cost to the
party being expected to apply Good Utility Practice,
consistent with law, regulation, good business practices,
generation, transmission, and distribution reliability,
safety, and expedition. Good Utility Practice is intended
to include practices, methods, or acts generally accepted in
the region, and is not intended to be limited to optimum
practices, methods, or acts to the exclusion of all others.
Good Utility Practice does not include intentional disregard
of contractual commitments, even if those commitments are
uneconomic under current market conditions.
(29) "Hazardous Substances" means (a) any petrochemical or
petroleum products, oil or coal ash, radioactive materials, radon gas,
asbestos in any form that is or could become friable, urea formaldehyde
foam insulation and transformers or other equipment that contain dielectric
fluid which may contain levels of polychlorinated biphenyls; (b) any
chemicals, materials or substances defined in any applicable Environmental
Law as or included in the definition of "hazardous substances," "hazardous
chemicals," "hazardous wastes," "hazardous materials," "hazardous matter,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning or
regulatory effect; or (c) any other chemical, material or substance, the
discharge, emission or Release of which is prohibited, limited or regulated
by any applicable Environmental Law.
(30) "Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended.
(31) "HQ Transfer Agreement" means an agreement to be mutually
agreed by BHE and Buyer prior to the Closing Date in accordance with the
principles set forth in Schedule 1.1(a)(31) pursuant to which the rights
and obligations described in clause (ii) of the definition of "Transmission
Assets" are to be conveyed by BHE to Buyer, and the Additional Payments are
to be made by Buyer to BHE.
(32) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
(33) "Hydroelectric Assets" means, subject to the Easements and
Section 2.2, all of the Sellers' right, title and interest in, to and
under: (a) the real property described in clause (i) below and the personal
property, tangible or intangible, constituting or used or held for use
principally for the Business in connection with, or, as determined pursuant
to the Separation Document, necessary for the Business in connection with,
the hydroelectric facilities listed on Schedule 1.1(a)(33) (the
"Hydroelectric Facilities"), and (b) PHC's interest in Bangor-Pacific,
including, but not limited to, the following assets owned by the Sellers:
(i) with respect to each of the Hydroelectric
Facilities and excluding any Excluded Assets, the real
property (including all buildings, structures, fixtures and
other improvements thereon) described in the deeds
referenced in Schedule 5.8 (subject to the Separation
Document) and contained within the boundary description set
forth or referred to in the applicable FERC license,
easements and rights of way of record relating to the
Hydroelectric Facilities in favor of Sellers, as well as the
real property described in the applicable Project Map as
being included in the Hydroelectric Assets (other than any
property identified therein as property being retained by
Sellers) (the "Hydroelectric Facilities Real Property");
(ii) all inventories of supplies, materials and
spares (a listing of which, as of the Bid Date, is included
in Schedule 1.1(a)(33)) located at, held for use principally
in connection with or in transit to any of the Hydroelectric
Facilities on the Closing Date;
(iii) the machinery, equipment, furniture and other
personal property (but excluding any Excluded Assets)
located at or held for use principally in connection with
any of the Hydroelectric Facilities on the Closing Date,
including, without limitation, the items of personal
property identified in Schedule 1.1(a)(33) as being
associated with any of the Hydroelectric Facilities as of
the Bid Date and all warranties against manufacturers or
vendors relating thereto to the extent such warranties are
freely transferable by the Sellers;
(iv) the vehicles, boats, trailers and other
rolling stock utilized or held for use as of the Closing
Date by any of the Sellers principally in connection with
any of the Hydroelectric Facilities including, without
limitation, the items included in Schedule 1.1(a)(33) as of
the Bid Date, and all warranties against manufacturers or
vendors relating thereto to the extent such warranties are
freely transferable by the Sellers;
(v) the contracts, agreements and personal
property leases listed on Schedule 5.10 that are described
therein as being associated with any of the Hydroelectric
Facilities or the related Business and are assignable;
(vi) except for prepaid expenses and deposits of
any of the Sellers attributable to contracts constituting
Excluded Assets, all prepaid expenses, progress payments and
deposits of or by any of the Sellers, rights to receive a
prepaid expense, deposit or progress payment, and cash in
transit that constitutes a prepaid expense, progress payment
or deposit, if any, relating to the conduct of the Business
in connection with any of the Hydroelectric Facilities,
including without limitation the items listed on Schedule
1.1(a)(33);
(vii) all books, operating and maintenance records,
operating, safety and maintenance manuals, engineering or
design plans, drawings, blueprints and as-built plans,
specifications, procedures and similar items of Sellers
relating specifically to any of the Hydroelectric
Facilities, other than books of account;
(viii) all trade secrets, patents and patentable
inventions owned by any of the Sellers, to the extent
necessary for the ownership, operation and maintenance of
the assets described in clauses (i)-(vii) of this Section
1.1(a)(33), and any rights of Sellers in and to the names of
the Hydroelectric Facilities;
(ix) all rights, privileges, claims, causes of
action and options relating to the Business in connection
with any of the Hydroelectric Facilities (including any of
the Sellers' goodwill therein);
(x) any other warranties and indemnities given by
third parties with respect to any of the assets described
above or in connection with the Business conducted in
connection with any of the Hydroelectric Facilities;
(xi) BHE's "Request for Rehearing and
Clarification" filed at the FERC on May 20, 1998 in respect
of Projects Nos. 10981, 2712, 2534, 2403 and 2710 and Docket
No. DI97-10, and all causes of action and rights thereunder,
and all causes of action and rights arising in any of those
proceedings, together with their supporting documents,
including, but not limited to, applications, exhibits and
drawings; and
(xii) All of the rights and other assets of BHE
described on Schedule 1.1(a)(33) relating to the license
applications and water quality permits associated with the
Basin ▇▇▇▇▇ Project No. 10981, the Medway Project No. 2666
and the ▇▇▇▇▇▇▇ Project No. 2721 (in each case as defined in
such schedule), together with their supporting documents,
including, but not limited to, applications, exhibits and
drawings.
(34) "Hydro Quebec Agreements" means those agreements listed
under the heading "Hydro Quebec Agreements" in Schedule 5.10.
(35) "Indentures" means, collectively, (i) the Mortgage and Deed
of Trust, dated as of July 1, 1936, from BHE to Citibank, N.A., successor
by merger to City Bank Farmers Trust Company, as trustee, as from time to
time amended and supplemented, and (ii) the General and Refunding Mortgage
Indenture and Deed of Trust, dated as of June 1, 1995, from BHE to Chase
Manhattan Bank, N.A., successor by merger to Chemical Bank, as trustee, as
from time to time amended and supplemented.
(36) "Independent Accounting Firm" means an independent
accounting firm of national reputation mutually appointed by the Sellers
and the Buyer.
(37) "Interconnection Agreement" means the Interconnection
Agreement substantially in the form of Exhibit D hereto to be dated as of
the Closing Date, between BHE and the Buyer.
(38) "Knowledge" means the actual and conscious knowledge of the
members of management of Sellers or Buyer, as the case may be, after
reasonable inquiry by them of selected employees of the Sellers or Buyer,
as the case may be, whom they believe, in good faith, to be the persons
generally responsible for the subject matters to which the knowledge is
pertinent.
(39) "Maintenance and Capital Expenditures Amount" means the
aggregate amount of all funds actually expended on, or for which
liabilities were accrued with respect to, Maintenance Expenditures and
Capital Expenditures by BHE, if any, during the period beginning on the
date hereof and ending on the Closing Date, but not to exceed $500,000 in
the aggregate except as agreed in writing by Buyer.
(40) "Maintenance Expenditures" means those maintenance
expenditures which are identified as maintenance expenditures on Schedule
7.1.
(41) "Material Adverse Effect" means any change in or effect on
the Purchased Assets or the Business after the Bid Date that is,
individually or in the aggregate, materially adverse to the physical
condition, ownership or operation of the Purchased Assets (including
without limitation any change or effect resulting from governmental action)
and which change or effect causes the value of the Purchased Assets, taken
as a whole, to decrease by more than ten percent (10%), other than any such
materially adverse change in or effect on the Purchased Assets which is
cured (including by the payment of money) by the Sellers before the Closing
Date.
(42) "MEPCO Confirmation Agreement" means the agreement of even
date herewith between BHE and Buyer providing for the terms of the
reassignment by BHE of the MEPCO Reservation to Buyer effective as provided
therein.
(43) "MEPCO Reservation" means BHE's transmission service
reservation with Maine Electric Power Company ("MEPCO"), pursuant to (i) 45
▇▇ ▇▇▇▇ Term Firm Transmission Service Agreement dated July 9, 1996 between
MEPCO and BHE, as extended by the Letter Agreement dated September 12, 1997
(the "Letter Agreement") between MEPCO and BHE and (ii) 55 ▇▇ ▇▇▇▇ Term
Firm Transmission Service Agreement dated July 24, 1996 between MEPCO and
BHE, as extended by the Letter Agreement. This reservation is for firm
point-to-point transmission service from the Maine/New Brunswick border to
the MEPCO 345/115 kV substation in Orrington, Maine, in the amount of 100
megawatts pursuant to the MEPCO transmission tariff filed at and approved
by FERC.
(44) "Milford Project" means, subject to Section 2.2, the
hydroelectric generating plant and associated equipment and property
described in its FERC license, located in Milford, Maine as described in
Schedule 1.1(a)(33).
(45) "MPUC" means the Maine Public Utilities Commission.
(46) "Permitted Encumbrances" means: (i) those Encumbrances and
exceptions to the title to the Purchased Assets set forth in Schedule 5.8
in the form delivered on the date hereof and the Easements, provided that
such Encumbrances, exceptions and Easements do not render title to the
Purchased Assets unmarketable or prevent adequate access to the Purchased
Assets to which they relate, or materially interfere with the continuing
ownership, use, operation or maintenance of such assets consistent with
historical practice or materially detract from the Business; (ii) all
exceptions, restrictions, easements, charges, licenses, leases, rights-of-
way and encumbrances which, as of the Bid Date, are matters of record or
are set forth in an applicable FERC project license, except for such
encumbrances which secure indebtedness, provided that, to the Knowledge of
Sellers, no such items render title to the Purchased Assets unmarketable or
prevent adequate access to the Purchased Assets to which they relate, or
materially interfere with the continuing ownership, use, operation or
maintenance of such assets consistent with historical practice or
materially detract from the Business; (iii) when such term is used with
respect to any date before the Closing Date, Encumbrances created by the
Indentures or, to the extent of Encumbrances specifically described in such
Schedule, the agreements listed in Schedule 5.10 in the form delivered on
the date hereof; (iv) Encumbrances incurred in connection with the Sellers'
purchase of properties or assets constituting Purchased Assets in the
ordinary course of business securing all or a portion of the purchase price
therefor; (v) when such term is used with respect to any date prior to the
Closing Date, Encumbrances permitted by the Indentures; (vi) statutory
liens for current taxes or assessments not yet delinquent or the validity
of which is being contested in good faith by appropriate proceedings;
(vii) when such term is used with respect to any date prior to the Closing
Date, mechanics', carriers', workers', repairers' and other similar liens
arising or incurred in the ordinary course of business; (viii) zoning,
entitlement, conservation restriction and other land or water use or
Environmental Laws or regulations administered by governmental authorities;
(ix) such other minor liens, imperfections in or failures of title,
charges, easements, restrictions and encumbrances, whether or not of
record, which, individually or in the aggregate, do not materially detract
from the value of the Purchased Assets as currently used or materially
interfere with the ownership, use, operation or maintenance of the
Purchased Assets; and (x) with respect to the ▇▇▇▇▇ Assets, the terms and
provisions of the ▇▇▇▇▇ Agreements.
(47) "Person" means any individual, partnership, limited
liability company, limited liability partnership, joint venture,
corporation, trust, unincorporated organization and any governmental entity
or any department or agency thereof.
(48) "Pre-Closing Periods" means all Tax periods ending on or
before the Closing Date and, with respect to any Tax period that includes
but does not end on the Closing Date, the portion of such period that
includes and ends on the Closing Date.
(49) "Project Maps" means the maps contained in Schedule
1.1(a)(49) provided by the Sellers depicting certain portions of the
Hydroelectric Facilities Real Property and the Excluded Assets.
(50) "Purchased Assets" means collectively the Hydroelectric
Assets, the ▇▇▇▇▇ Assets and the Transmission Assets, provided, that the
term "Purchased Assets" does not include any fuel, supplies, materials,
spares or other inventory listed as such on the schedules to this agreement
to the extent such fuel, supplies, materials, spares or inventory are used
at or incorporated into the Purchased Assets prior to the Closing Date and,
for the avoidance of doubt, Buyer acknowledges that for purposes of
Sellers' representations and warranties contained in this Agreement,
"Purchased Assets" does not refer in any way to ▇▇▇▇▇ Station, but only to
Sellers' right, title and interest in the ▇▇▇▇▇ Assets.
(51) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to escape into or
through the environment.
(52) "SEC" means the Securities and Exchange Commission.
(53) "Seller Required Consents" means those consents and waivers
listed or referenced on Schedule 1.1(a)(53) attached hereto.
(54) "Sellers' Agreements" means those agreements listed or
referenced on Schedule 5.10.
(55) "Separation Document" means the Separation Document to be
prepared under the terms of the Interconnection Agreement.
(56) [Intentionally omitted.]
(57) "Tax Return" means any return, report, information return or
other document (including any related or supporting information) required
to be supplied to any authority with respect to Taxes.
(58) "Tax" or "Taxes" means any or all taxes, charges, fees,
levies, penalties or other assessments imposed by any United States
Federal, state or local or foreign taxing authority, including, but not
limited to, income, excise, property, sales, use, transfer, franchise,
payroll, withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto.
(59) "Title Insurance Company" means Lawyers' Title Insurance
Corporation or First American Title Insurance Company or another reputable
title insurance company selected by Buyer and reasonably acceptable to
Sellers.
(60) "Transitional Power Sales Agreement" means a Transitional
Power Sales Agreement to be mutually agreed by BHE and Buyer prior to the
Closing Date providing for the sale by Buyer to BHE of installed capacity
and energy from the Hydroelectric Facilities, which agreement shall be
based on the form thereof attached as Exhibit E which shall be modified by
BHE and Buyer in accordance with the principles set forth in Schedule
1.1(a)(60).
(61) "Transmission Assets" means (i) BHE's rights to develop and
utilize a second 345kV tie-line with New Brunswick Power Corporation as
described in Schedule 1.1(a)(61) (the "345 Line") and (ii) BHE's rights and
obligations under the Hydro Quebec Agreements, but does not include
ownership or operational control of any of such transmission facilities nor
any obligations to make support payments pursuant to the Hydro Quebec
Agreements.
(62) "WARN Act" means the Federal Worker Adjustment Retraining
and Notification Act of 1988.
(63) "West Enfield Hydro Project" means the 13 MW hydroelectric
power station and associated dam and reservoir located on the Penobscot
River just upstream of its confluence with the Piscataquis River in the
towns of Enfield and Howland, Maine.
(64) "West Enfield Project Finance Documents" means the
agreements and documents listed in Schedule 1.1(a)(64).
(65) "Window Expiration Date" means the later of (i) the date six
months from the date of this Agreement and (ii) the date three months prior
to the Closing Date.
(66) "▇▇▇▇▇ Agreements" means (i) the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Unit No. 4
Agreement for Joint Ownership, Construction and Operation, dated as of
November 1, 1974, by and among BHE, Central Maine Power Company, Maine
Public Service Company, Boston Edison Company, Fitchburg Gas and Electric
Light Company, Montaup Electric Company, New England Power Company, New
Bedford Gas and Edison Light Company, Newport Electric Corporation, Public
Service Company of New Hampshire, Central Vermont Public Service
Corporation, Green Mountain Power Corporation, City of Burlington Electric
Department, Village of Lyndonville Electric Department, and Massachusetts
Municipal Wholesale Electric Company, as amended by Amendments Nos. 1, 2
and 3 dated, respectively, June 30, 1975, August 16, 1976 and December 31,
1978, as amended (the "▇▇▇▇▇ Joint Ownership Agreement"), (ii) The
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Unit No. 4 Transmission Agreement, dated as of November 1,
1974, as amended, by and among BHE and the other parties to the agreement
described in clause (i) above, and (iii) the deed to BHE of its joint
ownership interest in common in ▇▇▇▇▇ Unit No. 4, by deed of Central Maine
Power Company to BHE et. al., dated December 22, 1976, and recorded in the
Cumberland County Registry of Deeds in Book 3955, Page 140.
(67) "▇▇▇▇▇ Assets" means, subject to Section 2.2, BHE's entire
joint ownership interest in Unit 4 of ▇▇▇▇▇ Station as set forth in the
▇▇▇▇▇ Agreements, including, but not limited to, the following assets to
the extent of BHE's interest therein under the ▇▇▇▇▇ Agreements:
(i) the real property associated with Unit 4 of
▇▇▇▇▇ Station or the related Business;
(ii) all inventories of fuels, supplies, materials
and spares located at, held for use principally in
connection with, or in transit to Unit 4 of ▇▇▇▇▇ Station on
the Closing Date;
(iii) the machinery, equipment, furniture and other
personal property (but excluding any Excluded Assets)
located at or held for use principally in connection with
Unit 4 of ▇▇▇▇▇ Station on the Closing Date; and
(iv) the vehicles, trailers and other rolling
stock utilized or held for use as of the Closing Date in
connection with Unit 4 of ▇▇▇▇▇ Station.
(68) "▇▇▇▇▇ Station" means the electric generating facilities
known as the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Station (sometimes referred to as Yarmouth
Station) located in Yarmouth, Maine.
(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:
Term Section
Additional Payments 3.1
Adjustment Amount 3.2(b)
Adjustment Statement 3.2(b)
Ancillary Agreements Recitals
Assumed Liabilities 2.3(b)
Audited Balance Sheet 5.19
Bangor-Pacific 5.14(b)
Bangor-Pacific Interest 5.14(b)
Bangor-Pacific Operating Co. 5.14(b)
Basin ▇▇▇▇▇ Hydro Project Schedule 1.1(a)(33)
BHE Recitals
BP Permits 5.14(i)
Buyer Recitals
Buyer Group 9.1(a)
Buyer Required Regulatory Approvals 6.3(b)
Buyer's Window 7.9(a)
Century Date Compliant 7.14
Certain Indemnifiable Loss 9.1(a)
Closing Conditions 4.1
COBRA 7.9(h)
Direct Claim 9.2(c)
Employee Transition Plan 7.9(f)
Employees 7.9(a)
Environmental Condition 9.2(f)
Environmental Permits 5.5(a)
EPA 5.3(b)
ERISA Affiliate Plan 2.4(vii)
Excluded Assets 2.2
Excluded Liabilities 2.4
Final 8.1(c)
HIPAA 7.9(h)
HQ Transmission Support Agreements Schedule 5.10
Hydroelectric Facilities 1.1(a)(33)(a)
Hydroelectric Facilities Real Property 1.1(a)(33)(i)
Indemnifiable Loss 9.1(a)
Indemnifying Party 9.1(d)
Indemnitee 9.1(c)
Information 7.2(b)
Initial Payment 3.1
Intellectual Property 5.18
Inventory Adjustment Amount 3.2(b)
Letter Agreement 1.1(a)(43)
Local 1837 1.1(a)(14)
Maine Restructuring Law 7.9(a)
MDEP 5.3(b)
MEPCO 1.1(a)(43)
NEPOOL 1.1(a)(28)(i)
Other Intellectual Property 5.18
Permits 5.12
PHC Recitals
Preliminary Purchase Price 4.2
Prior Welfare Plans 7.9(d)
Process 7.14(a)
Purchase Price 3.1
Purchased Assets Employee 2.4(iv)
Remediation 9.2(f)
Replacement Welfare Plans 7.9(d)
Representative 7.11(a)
Real Estate 5.8
Site Representatives 7.12
Seller Indemnified Environmental Losses 9.1(a)
Seller Required Regulatory Approvals 5.3(b)
Sellers Recitals
Sellers Group 9.1(b)
Technology 7.14
Termination Date 10.1(b)
Third Party Claim 9.2(a)
345 Line 1.1(a)(61)
345 Line ROWs Schedule 1.1(a)(61)
Title Commitment 6.8
Transferred Employee 7.9(a)
Treasury Regulations 1.1(a)(13)
Unaudited Balance Sheet 5.19
Veazie Hydro Project Schedule 1.1(a)(33)
VRAP 9.2(f)
West Enfield Loan Agreement Schedule 1.1(a)(64)
West Enfield Joint Venture Agreement Schedule 5.10
▇▇▇▇▇ 4 Interest 5.15
▇▇▇▇▇ Joint Ownership Agreement 1.1(a)(66)
ARTICLE II
PURCHASE AND SALE
2.1 The Sale. Upon the terms and subject to the satisfaction of
the conditions contained in this Agreement (or waiver of such conditions as
permitted by this Agreement), at the Closing the Sellers will sell, assign,
convey, transfer and deliver to the Buyer, and the Buyer will purchase and
acquire from Sellers, free and clear of all Encumbrances (except for those
Permitted Encumbrances which are permitted by definition to survive after
the Closing Date), all of the Sellers' right, title and interest in, to and
under the Purchased Assets.
2.2 Excluded Assets. Notwithstanding any provisions herein to the
contrary, the Purchased Assets shall not include the following assets of
Sellers (herein referred to as the "Excluded Assets"):
(a) all cash, cash equivalents, bank deposits, accounts
receivable, notes receivable, checkbooks and canceled checks, regulatory
assets and any income, sales, payroll or other tax receivables;
(b) certificates of deposit, shares of stock, securities, bonds,
debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities (other than
those described in Sections 1.1(a)(67) and 1.1(a)(33)(b) hereof);
(c) any trade names, trademarks, service marks or logos
incorporating or associated with any names of the Sellers, provided that
Buyer shall be authorized to continue to use for internal purposes only and
not for public use, materials bearing such names, trademarks or logos (such
as employee manuals) used by Sellers prior to the Closing Date until such
materials are reprinted or otherwise replaced;
(d) all transmission, distribution, and substation facilities,
including, but not limited to, those described or referred to in Schedule
2.2(d), the precise delineation and composition of which shall be subject
to the Separation Document;
(e) all contracts between BHE and customers purchasing electric
capacity and energy from BHE under wholesale rates or otherwise subject to
regulation by the FERC and all contracts of any nature of Sellers which do
not expressly constitute Purchased Assets;
(f) any refund or credit (i) related to real or personal
property, excise, sales or use Taxes paid by the Sellers prior to the
Closing Date in respect of the Purchased Assets, or paid by the Sellers
after the Closing Date but relating to periods prior to the Closing Date,
whether such refund is received as a payment or as a credit against future
real or personal property, excise, sales or use Taxes payable, or (ii)
arising under any Sellers' Agreement and relating to a period before the
Closing Date;
(g) except to the extent required by law, all personnel records
relating to the Purchased Assets Employees who become employees of the
Buyer;
(h) any amounts payable or which become payable pursuant to
claims asserted by any of the Sellers with respect to periods prior to the
Closing Date relating to the Purchased Assets, including, without
limitation, all contractual and equitable rights of BHE to receive payments
from any other holder of a joint ownership interest in ▇▇▇▇▇ Unit No. 4
pursuant to Sections 5, 6, 7 or 7.1 of the ▇▇▇▇▇ Joint Ownership Agreement
as a result of the sale by such holder of real or personal property
constituting a portion of ▇▇▇▇▇ Station regardless of when such sale is
consummated (but excluding any rights relating to the development,
construction or operation of a future generating unit at the ▇▇▇▇▇ Station
site arising under the second paragraph of Section 5 of the ▇▇▇▇▇ Joint
Ownership Agreement); and
(i) all real property of Sellers described in the Project Maps
or in Schedule 5.8 or any other part of this Agreement as real property to
be retained by Sellers.
2.3 Assumed Liabilities.
(a) On the Closing Date, the Buyer and the Sellers shall enter
into the Assignment and Assumption Agreement, pursuant to which, among
other things, the Buyer shall assume and agree to discharge, when due, all
of the liabilities and obligations of the Sellers, direct or indirect,
known or unknown, absolute or contingent, which arise and are attributable
to the period after the Closing Date and relate solely to the Purchased
Assets or which arose or relate to the period on or prior to the Closing
Date and are specifically referred to in this Section 2.3(a), other than
Excluded Liabilities, in accordance with the respective terms and subject
to the respective conditions thereof. Without limitation of the foregoing,
the following liabilities and obligations shall be included in the Assumed
Liabilities:
(i) all liabilities and obligations of the Sellers, to the
extent and only to the extent arising and attributable to the period
after the Closing Date, under (a) the Sellers' Agreements and the real
property leases comprising a part of the Purchased Assets in
accordance with the terms thereof, (b) the Permits and Environmental
Permits that are transferred to Buyer and (c) the contracts, leases
and other agreements entered into by the Sellers with respect to the
Purchased Assets after the date hereof in the ordinary course of
business and consistent with the terms of this Agreement (including,
without limitation, agreements with respect to liabilities for real or
personal property Taxes on any of the Purchased Assets entered into by
any Seller and any local government and in all cases involving
agreements requiring Buyer's consent under Section 7.1, solely such
agreements entered into with the prior written consent of Buyer);
provided that Assumed Liabilities shall not include liabilities and
obligations to the extent such liabilities and obligations, but for a
breach or default by either of the Sellers, would have been paid,
performed or otherwise discharged specifically by their terms or the
terms hereof on or prior to the Closing Date or to the extent the same
arise out of any such breach or default;
(ii) all liabilities and obligations in respect of Taxes for
which the Buyer is liable pursuant to Section 7.7;
(iii) any liabilities and obligations associated with the
Purchased Assets for which the Buyer has indemnified the Sellers
pursuant to Section 9.1;
(iv) all liabilities and obligations with respect to the
Transferred Employees for which the Buyer is responsible pursuant to
Section 7.9;
(v) any liability, obligation or responsibilities under or
related to former, current or future Environmental Laws, Environmental
Matters or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as
a result of or in connection with (a) any violation or alleged
violation of Environmental Laws with respect to the ownership or
operation of the Purchased Assets after the Closing Date; (b)
compliance with applicable Environmental Laws with respect to the
ownership or operation of the Purchased Assets after the Closing Date;
(c) loss of life, injury to persons or property or damage to natural
resources caused (or allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to, or migrating from
the Purchased Assets after the Closing Date, including, but not
limited to, Hazardous Substances contained in building materials at
the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; (d) loss of life, injury to persons
or property or damage to natural resources caused (or allegedly
caused) by the offsite disposal, storage, transportation, discharge,
Release or recycling of Hazardous Substances in connection with the
ownership or operation of the Purchased Assets after the Closing Date;
(e) the investigation and/or remediation of Hazardous Substances that
have been Released at, on, in, under, adjacent to, or migrating from
the Purchased Assets after the Closing Date, including, but not
limited to, Hazardous Substances contained in building materials at
the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at the
Purchased Assets; (f) the investigation and/or remediation of
Hazardous Substances that are disposed, stored, transported,
discharged, Released or recycled at any off-site location after the
Closing Date in connection with the ownership or operation of the
Purchased Assets; and (g) any violation or alleged violation of
Environmental Law, and any loss of life, injury to persons or property
or damage to natural resources caused (or allegedly caused) by (i)
negligent acts or omissions by the Buyer at any of the Purchased
Assets; (ii) acts or omissions by the Buyer at any of the Purchased
Assets which cause a condition not in violation of Environmental Law
or not in need of remediation under Environmental Law on or prior to
the Closing Date to be in violation of Environmental Law or in need of
remediation under Environmental Law (including, without limitation,
the Release or destabilization of Hazardous Substances which are in a
stable or contained state and are in compliance with all applicable
Environmental Laws); or (iii) negligent acts or omissions by the Buyer
at any of the Purchased Assets after the Closing Date that exacerbate
or aggravate any condition in violation of Environmental Law or in
need of remediation under Environmental Law on the Closing Date, to
the extent of any such negligent exacerbation or aggravation;
provided, that the mere discovery or failure to discover by the Buyer
of a violation of Environmental Law or a condition in need of
remediation under Environmental Law which violation or condition
existed on the Closing Date, in and of itself shall not be included in
this clause (g); provided, that nothing set forth in this Section
2.3(a)(v) shall require the Buyer to assume any liabilities that are
described in Section 2.4(v) or 2.4(vi);
(vi) all liabilities incurred by any of the Sellers for
payment of Maintenance Expenditures and Capital Expenditures directly
related to the Purchased Assets to the extent not included in the
Maintenance and Capital Expenditures Amount and agreed to be
reimbursed in writing by Buyer; and
(vii) with respect to the Purchased Assets, (a) any Tax that
may be imposed by any state or local government on the ownership,
sale, operation, or use of the Purchased Assets with respect to the
periods after the Closing Date, including real or personal property
Taxes except as otherwise provided in Section 7.7, (b) any software
license transfer, reissuance or similar costs relating to any of the
Purchased Assets and (c) Permitted Encumbrances which are permitted by
definition to survive the Closing Date.
(b) All of the foregoing liabilities and obligations to be
assumed by the Buyer under Section 2.3(a) (excluding any Excluded
Liabilities) are referred to herein as the "Assumed Liabilities." None of
the liabilities and obligations of the Sellers assumed by Buyer are
intended to be expanded, increased, broadened or enlarged as to rights or
remedies of third parties against the Buyer as compared to such rights or
remedies which such parties would have had against the Sellers had the
transactions contemplated by this Agreement not taken place.
(c) Subject to Section 9.2(f), the parties agree and acknowledge
that after the Closing Date the Buyer shall be entitled exclusively to
control any litigation, administrative or regulatory proceeding or
investigation arising out of or related to any Assumed Liabilities and the
Sellers agree to promptly notify the Buyer of the institution or
commencement of any of the foregoing and to cooperate fully with the Buyer
in connection therewith (provided that Sellers' cooperation need not
include the payment of money or any other financial accommodation).
2.4 Excluded Liabilities. Except as expressly stated in this
Agreement to the contrary, Buyer shall not assume and shall not be
responsible for, and Sellers shall be and remain liable for, the payment,
performance or discharge of any liability or obligation of Sellers
whatsoever other than the Assumed Liabilities. Sellers covenant and agree
that they will fully discharge (or mutually settle, compromise or, as
provided in Section 9.1, indemnify the Buyer against) all their respective
liabilities and obligations as to which Sellers' failure to so discharge or
settle could result in an Encumbrance against any of the Purchased Assets
or a claim against Buyer, except the Assumed Liabilities. All such
liabilities and obligations not being assumed by Buyer pursuant to
Section 2.3 are herein called the "Excluded Liabilities." Without
limitation of the foregoing, the Excluded Liabilities shall include without
limitation, the following liabilities or obligations:
(i) any liabilities or obligations of any of the Sellers in
respect of any Excluded Assets or other assets of the Sellers which
are not Purchased Assets;
(ii) any liabilities or obligations in respect of Taxes for
which any of the Sellers are liable pursuant to Section 7.7;
(iii) any liabilities or obligations of the Sellers with
respect to commitments for the purchase or sale of power or fuel,
other than under any Sellers' Agreement;
(iv) Except for obligations assumed by Buyer under Section
7.9, any liabilities or obligations relating to the Sellers'
employment of, termination of employment of, provision of benefits to,
and compensation of employees employed at the Purchased Assets,
including but not limited to an employee whose employment principally
relates to any of the Purchased Assets (a "Purchased Assets
Employee"), and any personal injury, discrimination, harassment,
wrongful discharge or other wrongful employment practice, unfair labor
practice, claims for benefits (including claims arising under ERISA or
workers' compensation laws), or similar claims or causes of action,
known or unknown, absolute or contingent, asserted or unasserted, of
any such person arising out of acts or omissions occurring or
otherwise attributable to the period on or before the Closing Date;
(v) any liabilities, obligations, or responsibilities under
or related to former, current or future Environmental Laws,
Environmental Matters or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (a) any
violation or alleged violation of Environmental Laws with respect to
the offsite disposal, storage, transportation, discharge, Release or
recycling of Hazardous Substances on or prior to the Closing Date in
connection with the ownership, operation or maintenance of the
Purchased Assets; (b) compliance with applicable Environmental Laws
with respect to the offsite disposal, storage, transportation,
discharge, Release or recycling of Hazardous Substances on or prior to
the Closing Date in connection with the ownership, operation or
maintenance of the Purchased Assets; (c) loss of life, injury to
persons or property or damage to natural resources (whether or not
such loss, injury or damage was made manifest before or after the
Closing Date) caused (or allegedly caused) by the offsite disposal,
storage, transportation, discharge, Release or recycling of Hazardous
Substances on or prior to the Closing Date in connection with the
Purchased Assets, or the ownership, operation or maintenance of the
Purchased Assets; and (d) the investigation and/or remediation
(whether or not such investigation or remediation commenced on or
before the Closing Date) of Hazardous Substances that are disposed,
stored, transported, discharged, Released or recycled, or the
arrangement for such activities at any off-site location, on or prior
to the Closing Date, in connection with the Purchased Assets or the
ownership, operation or maintenance of the Purchased Assets;
(vi) any liabilities, obligations or responsibilities under
or related to former, current or future Environmental Laws,
Environmental Matters or the common law, whether such liability,
obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (a) any
violation or alleged violation of Environmental Laws with respect to
the ownership or operation of the Purchased Assets on or prior to the
Closing Date; (b) compliance with applicable Environmental Laws with
respect to the ownership or operation of the Purchased Assets on or
prior to the Closing Date; (c) loss of life, injury to persons or
property or damage to natural resources (whether or not such loss,
injury or damage was made manifest before or after the Closing Date)
caused (or allegedly caused) by the presence or Release of Hazardous
Substances at, on, in, under, adjacent to or migrating from the
Purchased Assets on or prior to the Closing Date, including, but not
limited to, Hazardous Substances contained in building materials at
the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets on or prior to the Closing Date and
(d) the investigation and/or remediation (whether or not such
investigation or remediation commenced on or before the Closing Date)
of Hazardous Substances that are present or have been Released at, on,
in, under, adjacent to or migrating from the Purchased Assets on or
prior to the Closing Date, including, but not limited to, Hazardous
Substances contained in building materials at the Purchased Assets or
in the soil, surface water, sediments, groundwater, landfill cells, or
in other environmental media at or adjacent to the Purchased Assets on
or prior to the Closing Date;
(vii) any liabilities or obligations of Sellers relating to
any benefit plan, or to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) of Sellers, whether or not
terminated, established, maintained or contributed to by any of the
Sellers or any of their ERISA Affiliates at any time, or to which any
of the Sellers or any of their ERISA Affiliates are or have been
obligated to contribute to at any time ("ERISA Affiliate Plan");
including any liability (A) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (B) relating to a multiemployer
plan; (C) with respect to non-compliance with COBRA or HIPAA; (D) with
respect to noncompliance with any other applicable provision of the
Code, ERISA or any other applicable laws; or (E) with respect to any
suit, proceeding or claim which is brought against the Buyer with
respect to any such benefit plan or ERISA Affiliate Plan, against any
such benefit plan or ERISA Affiliate Plan, or against any fiduciary or
former fiduciary of any such benefit plan or ERISA Affiliate Plan; and
(viii) BHE's obligations under the HQ Transmission Support
Agreements (subject to the terms and conditions of the HQ Transfer
Agreement).
All such liabilities and obligations not being assumed pursuant to
this Section 2.4 are herein called the "Excluded Liabilities."
Subject to Section 9.2(f), the parties agree and acknowledge that the
Sellers shall be entitled exclusively to control any litigation,
administrative or regulatory proceeding, investigation or inquiry of any
kind or nature arising out of or related to any Excluded Liabilities, and
the Buyer agrees to promptly notify the Sellers of the actual or threatened
commencement or occurrence of any of the foregoing and to cooperate fully
with the Sellers in connection therewith (provided that Buyer's cooperation
need not include the payment of money or any other financial
accommodation).
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. Subject to the express provisions of this
Agreement, the purchase price for the Purchased Assets shall consist of the
Initial Payment and the Additional Payments (collectively, the "Purchase
Price"). The "Initial Payment" shall be an amount equal to the sum of (i)
$89,000,000 and (ii) the Adjustment Amount. The "Additional Payments"
shall consist of the payment by Buyer to BHE of $400,000 per year (or pro
rata portion thereof) for the term of the HQ Transmission Support
Agreements, to be payable as provided in the HQ Transfer Agreement.
3.2 Purchase Price Adjustment.
(a) No later than five (5) Business Days before the Closing
Date, BHE shall notify the Buyer in writing of the Estimated Adjustment
Amount, which shall be payable by the Buyer to BHE as provided in Section
4.2.
(b) Within thirty (30) days after the Closing, BHE shall prepare
and deliver to the Buyer a statement (the "Adjustment Statement") which
reflects (i) the net book value, as reflected on the books of the Sellers
as of the Closing Date, of BHE's interest under the ▇▇▇▇▇ Agreements in the
fuel inventory at ▇▇▇▇▇ Station (the "Inventory Adjustment Amount") and
(ii) the Maintenance and Capital Expenditures Amount applicable to the
Purchased Assets. The Inventory Adjustment Amount and the Maintenance and
Capital Expenditures Amount are referred to collectively as the "Adjustment
Amount." The Inventory Adjustment Amount will be based on an inventory
survey conducted within five (5) Business Days prior to the Closing Date
consistent with Sellers' current inventory procedures, and Buyer will be
entitled to have a Buyer Representative observe such inventory survey. The
Adjustment Statement shall be prepared using the same generally accepted
accounting principles, policies and methods as the Sellers have
historically used in connection with the calculation of the items reflected
on the Adjustment Statement. The Buyer agrees to cooperate with BHE in
connection with the preparation of the Adjustment Statement and related
information and shall provide to BHE such books, records and information as
may be reasonably requested from time to time.
(c) The Buyer may dispute the Inventory Adjustment Amount or the
Maintenance and Capital Expenditures Amount; provided, however, that the
Buyer shall notify BHE in writing of the disputed amount, and the basis of
such dispute, within ten (10) Business Days of the Buyer's receipt of the
Adjustment Statement. In the event of a dispute with respect to any part
of an Adjustment Amount, the Buyer and BHE shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the parties. If the Buyer and BHE are
unable to reach a resolution of such differences within thirty (30) days of
receipt by BHE of the Buyer's written notice of dispute, the Buyer and BHE
shall submit the amounts remaining in dispute for determination and
resolution to the Independent Accounting Firm, which shall be instructed to
determine and report to the parties, within thirty (30) days after such
submission, upon such remaining disputed amounts, and such report shall be
final, binding and conclusive on the parties hereto with respect to the
amounts disputed. The fees and disbursements of the Independent Accounting
Firm shall be shared equally.
(d) Within ten (10) Business Days after the Buyer's receipt of
the Adjustment Statement, if the Adjustment Amount is less than the
Estimated Adjustment Amount, the Sellers shall refund the difference to the
Buyer, and if the Adjustment Amount is greater than the Estimated
Adjustment Amount, the Buyer shall pay the difference to BHE on behalf of
the Sellers; provided, that if there is a dispute with respect to any
amount on the Adjustment Statement, the Buyer shall immediately pay to BHE
on behalf of the Sellers any undisputed amounts (to the extent not
previously paid). Within five (5) Business Days after the final
determination of any amounts on the Adjustment Statement, the Buyer shall
pay to BHE on behalf of the Sellers an amount equal to (x) the Adjustment
Amount as finally determined to be payable with respect to the Adjustment
Statement less (y) the sum of the Estimated Adjustment Amount and any
additional undisputed amount theretofore paid by the Buyer to the Sellers;
provided, however, that if such amount shall be less than zero, then the
Sellers will pay to the Buyer the amount by which such amount is less than
zero. Any amount paid or refunded under this Section 3.2(d) shall be paid
or refunded with interest for the period commencing on the Closing Date
through the date of payment, calculated at the "prime rate" for domestic
banks as published in The Wall Street Journal (Northeast Edition) in the
"Money Rates" section on the Closing Date, in cash by Federal or other wire
transfer of immediately available funds.
3.3 Allocation of Purchase Price. Each of the Buyer and the
Sellers agree to allocate the Purchase Price among the Purchased Assets in
accordance with Schedule 3.3. Each of the Buyer and the Sellers agree to
file Internal Revenue Service Form 8594 with their Federal Income Tax
Returns for the taxable year that includes the Closing Date, and to file
all Federal, state, local and foreign Tax Returns, each in accordance with
the allocation of the Purchase Price among the tax categories of the
Purchased Assets set forth above. Each of the Buyer and the Sellers shall
report the transactions contemplated by this Agreement for Federal Income
Tax and all other Tax purposes in a manner consistent with such allocation.
Each of the Buyer and the Sellers agree to provide the others promptly with
any other information and cooperation required to complete Form 8594. Each
of the Buyer and the Sellers shall notify and provide the others with
reasonable assistance in the event of an examination, audit or other
proceeding regarding the agreed-upon allocation of the Purchase Price.
3.4 Proration.
(a) The Buyer and the Sellers agree that all of the items
normally prorated, including those listed below, relating to the business
and operation of the Purchased Assets will be prorated as of the Closing
Date, with the Sellers liable with respect to Purchased Assets being sold
by them to the extent such items relate to any time period through the
Closing Date, and the Buyer liable to the extent such items relate to
periods subsequent to the Closing Date with, to the extent practicable, a
cash settlement on the Closing Date:
(i) personal property and real estate taxes, assessments
and other charges, if any, by the municipality, on the basis of the
municipality's fiscal year, on or with respect to the business and
operation of the Purchased Assets;
(ii) rent, Taxes and other items payable by or to a Seller
under any of the Sellers' Agreements assigned to and assumed by the
Buyer hereunder which are associated with the Purchased Assets;
(iii) any permit, license, registration, compliance assurance
fees or other fees with respect to any Permit and Environmental Permit
associated with the Purchased Assets;
(iv) sewer rents and charges for water, telephone,
electricity and other utilities; and
(v) fixed monthly charges to the NEPOOL.
(b) In connection with the prorations referred to in (a) above,
in the event that actual figures are not available at the Closing Date, the
proration shall be based upon the actual Taxes or fees for the preceding
year (or appropriate period) for which actual Taxes or fees are available
and such Taxes or fees shall be reprorated upon request of the affected
Sellers, on the one hand, or the Buyer, on the other hand, made within
sixty (60) days after the date that the actual amounts become available.
The Sellers and the Buyer agree to furnish each other with such documents
and other records as may be reasonably requested in order to confirm all
adjustment and proration calculations made pursuant to this Section 3.4.
(c) To the extent required by any approval of the transfer of
the FERC project licenses related to the Hydroelectric Assets, Sellers
agree to pay all annual charges accrued under such licenses as of the
Closing Date.
3.5 Exclusion of Purchased Assets from Closing.
(a) In the event (i) any Purchased Asset cannot be conveyed on
the Closing Date due to the failure on the part of Sellers to satisfy any
condition in Article VIII (other than Section 8.1(c)) required on their
part to be satisfied or (ii) the condition set forth in Section 8.1(c) is
not satisfied (without regard to any qualifications with respect to
Material Adverse Effect contained therein), then:
(1) if the aggregate value of the Purchased Asset or
group of Purchased Assets that are so affected equals 10% or more of the
Purchase Price or if the exclusion of such asset(s) materially impairs the
use of another Purchased Asset or a group of Purchased Assets as
historically used the aggregate value of which equals 10% or more of the
Purchase Price, then at Buyer's option, Buyer may (i) terminate this
Agreement pursuant to Section 10.1(d) (provided that Buyer shall not be
entitled to terminate this Agreement if the sole affected Purchased Asset
is the Veazie Hydro Project), or (ii) proceed with the Closing and the
Purchase Price shall be decreased by an amount equal to the aggregate value
of such Purchased Asset or group of Purchased Assets so affected; or
(2) if the aggregate value of the Purchased Asset or
group of Purchased Assets that are so affected equals less than 10% of the
Purchase Price or if the exclusion of such asset(s) materially impairs the
use of another Purchased Asset or a group of Purchased Assets as
historically used the aggregate value of which equals 10% or less of the
Purchase Price, the Closing shall proceed and the Purchase Price shall be
decreased by an amount equal to the aggregate value of the Purchased Asset
or group of Purchased Assets so affected.
(b) For purposes of this Section 3.5, the "value" of any asset
shall be determined in accordance with the allocation of the Purchase Price
as set forth on Schedule 3.3. In the case of such an adjustment to the
Purchase Price, the Maintenance and Capital Expenditure Amount shall be
reduced by the amounts thereof attributable to such assets.
(c) Notwithstanding Section 3.5(a)(1) above, Buyer agrees that
in the event BHE is unable to convey its interest in Bangor-Pacific to
Buyer at Closing for any reason, Buyer shall nevertheless proceed with the
Closing and the Purchase Price shall be reduced by the amount allocated to
BHE's interest in Bangor-Pacific as set forth on Schedule 3.3.
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing. Upon the terms and subject to the
satisfaction of the conditions contained in Article VIII of this Agreement
(the "Closing Conditions"), the Closing will take place at the offices of
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, New York, New York on such date as the
parties may agree, which date shall be as soon as practicable, but, subject
to Section 7.4 hereof, no later than five (5) Business Days following the
date on which all of the Closing Conditions have been satisfied or waived;
or at such other place or time as the parties may agree.
4.2 Payment of Purchase Price. Upon the terms and subject to the
satisfaction (or waiver) of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, the Buyer will pay or cause to be paid to
BHE on behalf of the Sellers at the Closing an amount in United States
dollars equal to the sum of (i) $89,000,000 (as adjusted, if so required,
pursuant to the express provisions of this Agreement including without
limitation Sections 3.5 and 7.10 hereof) and (ii) the Estimated Adjustment
Amount (the "Preliminary Purchase Price"), by wire transfer of immediately
available funds or by such other means as are agreed upon by BHE and the
Buyer. The balance of the Initial Payment (or, alternatively, any amounts
owing by the Sellers to Buyer), in each case determined in accordance with
Section 3.2 hereof, shall be paid as provided in said Section 3.2.
4.3 Deliveries By Sellers. At the Closing, subject to the express
provisions of this Agreement including, without limitation, Sections 3.5
and 7.10 hereof, the appropriate Sellers will deliver the following to the
Buyer:
(a) ▇▇▇▇ of Sale, duly executed by the Sellers, for the personal
property included in the Purchased Assets;
(b) All consents, waivers or approvals obtained by any of the
Sellers with respect to the sale and purchase of the Purchased Assets
or the consummation of the transactions related to the sale of the
Purchased Assets, contemplated by this Agreement, to the extent
specifically required hereunder;
(c) Opinions of counsel and certificates (as contemplated by
Section 8.2) with respect to the Purchased Assets;
(d) One or more deeds of conveyance of the Real Estate included
in the Purchased Assets to the Buyer, reserving the applicable
Easements, without covenants or warranty of title, duly executed and
acknowledged by the appropriate Sellers and in recordable form,
together with transfer tax declarations with respect to such
conveyances;
(e) FIRPTA Affidavits executed by the appropriate Sellers;
(f) The Assignment and Assumption Agreement, duly executed by the
appropriate Sellers, together with the attachment thereto relating to
the ▇▇▇▇▇ Assets;
(g) All such other instruments of assignment or conveyance as
shall, in the reasonable opinion of the Buyer and its counsel, be
necessary or desirable to transfer to the Buyer the Purchased Assets
in accordance with this Agreement and, where necessary or desirable,
in recordable form;
(h) Each of the other Ancillary Agreements, duly executed by the
appropriate Sellers and, in the case of the Separation Document, the
HQ Transfer Agreement and the Transitional Power Sales Agreement, in a
form mutually satisfactory to BHE and Buyer;
(i) A copy of the resolutions of the Board of Directors of each
of the Sellers authorizing and approving this Agreement and each of
the Ancillary Agreements to which such Seller is a party and the
consummation of the transactions contemplated hereby and thereby, in
each case certified by the secretary of the respective Seller;
(j) Certificates by the secretary of each Seller as to the
incumbency of each person executing this Agreement or any Ancillary
Agreement on behalf of such Seller; and
(k) Such other agreements, documents, instruments and writings as
are required to be delivered by any of the Sellers at or prior to the
Closing Date pursuant to this Agreement or otherwise required in
connection herewith.
4.4 Deliveries by the Buyer. At the Closing, subject to the
express provisions of this Agreement including, without limitation,
Sections 3.5 and 7.10, the Buyer will deliver the following to the
appropriate Sellers:
(a) The Preliminary Purchase Price, by wire transfer of
immediately available funds or such other means as are agreed upon by
BHE and the Buyer;
(b) An opinion of counsel and certificate (as contemplated by
Section 8.3) with respect to the Purchased Assets;
(c) The Assignment and Assumption Agreement, duly executed by the
Buyer, together with the attachment thereto relating to the ▇▇▇▇▇
Assets;
(d) All such other instruments of assumption as shall, in the
reasonable opinion of any Seller and its counsel, be necessary or
desirable for the Buyer to assume the Assumed Liabilities related to
the Purchased Assets being sold by such Seller in accordance with this
Agreement;
(e) Each of the Ancillary Agreements, duly executed by the Buyer
and, in the case of the Separation Document, the HQ Transfer Agreement
and the Transitional Power Sales Agreement, in a form mutually
satisfactory to BHE and Buyer; and
(f)Such other agreements, documents, instruments and writings as
are required to be delivered by the Buyer at or prior to the Closing
Date pursuant to this Agreement or otherwise required in connection
herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer as follows as of the
date hereof and as of the Closing Date:
5.1 Organization; Authority. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maine and has all requisite corporate power and authority to own,
lease, and operate its properties and to carry on its business as is now
being conducted.
5.2 Authority Relative to This Agreement. Each Seller has full
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the Ancillary Agreements to which it is a party and
the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action required on the part
of each Seller. This Agreement has been duly and validly executed and
delivered by each Seller, and, assuming the accuracy of the Buyer's
representations and warranties contained in Section 6.2, and subject to the
receipt of the Seller Required Regulatory Approvals, the Seller Required
Consents and the Buyer Required Regulatory Approvals, constitutes a valid
and binding agreement of each Seller, enforceable against the Sellers in
accordance with their terms, except that such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity. The Ancillary Agreements, when executed,
will, assuming the accuracy of the Buyer's representations and warranties
contained in Section 6.2, and subject to the receipt of the Seller Required
Regulatory Approvals, the Seller Required Consents and the Buyer Required
Regulatory Approvals, constitute valid and binding obligations of each
Seller party thereto, enforceable against such Seller in accordance with
their terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity.
5.3 Consents and Approvals; No Violation.
(a) Except for obtaining the Seller Required Consents and as
otherwise set forth in Schedule 1.1(a)(53), and other than obtaining the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, neither the execution and delivery of this Agreement or the
Ancillary Agreements by the Sellers nor the sale by the Sellers of the
Purchased Assets pursuant to this Agreement or the performance by each
Seller of its respective other obligations under this Agreement and the
Ancillary Agreements to which such Seller is a party will (i) conflict with
or result in any breach of any provision of the Articles of Incorporation
or Bylaws of any Seller, each as amended or restated; (ii) result in a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which any Seller is a party or by which any Seller or any of
the Purchased Assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been or by the Closing Date will be obtained or which, in the
aggregate, would not have a Material Adverse Effect; or (iii) require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority or other Person,
except where the failure to fulfill such requirement would not result in a
Material Adverse Effect; or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to any Seller, or any of its
assets, which violation would have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.12 and except for (i) any
approvals under the Federal Power Act [required to convey the Purchased
Assets to Buyer and to reassign the MEPCO Reservation to Buyer in
accordance with the MEPCO Confirmation Agreement], (ii) any approvals
required under Title 35-A of the Maine Revised Statutes or otherwise from
the MPUC, (iii) the approval, if required, of the SEC pursuant to the
Holding Company Act, (iv) the filings by the Sellers and the Buyer required
by the HSR Act and the expiration or earlier termination of all waiting
periods under the HSR Act, and (v) any approval required of the Maine
Department of Environmental Protection ("MDEP") , the United States
Environmental Protection Agency ("EPA"), or other governmental agency
pursuant to any Environmental Law (the filings and approvals referred to in
Schedule 5.12 and clauses (i) through (v) are collectively referred to as
the "Seller Required Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of
any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by the Sellers or the consummation
by the Sellers of the transactions contemplated hereby or by the Ancillary
Agreements, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals (x) which become applicable to the
Sellers or the Purchased Assets as a result of the specific regulatory
status of the Buyer (or any of its Affiliates) or as a result of any other
facts that specifically relate to the business or activities in which the
Buyer (or any of its Affiliates) is or proposes to be engaged or which are
identified herein as Buyer Required Regulatory Approvals or (y) which, if
not obtained or made, will not, individually or in the aggregate, have a
Material Adverse Effect.
5.4 Title and Related Matters. Except as set forth in Schedule 5.4
and except for those Permitted Encumbrances which are permitted by
definition to survive the Closing Date, (i) BHE shall have, and shall
convey to Buyer, good, valid and marketable record title, insurable as such
by the Title Insurance Company at Buyer's sole cost and expense, to each of
the Purchased Assets constituting Real Estate as specified in the Title
Commitments, and (ii) each Seller shall have, and shall convey to Buyer,
good, valid and marketable title to the other Purchased Assets which it
purports to own (other than those which have been disposed of since the
date hereof in the ordinary course of business), free and clear of all
Encumbrances. Except as set forth in Schedule 5.4, BHE is in possession of
each of the Purchased Assets constituting Real Estate and there are no
third party licensees or tenants at the sites of the Real Estate. Sellers
have valid and subsisting leasehold estates and the right to quiet
enjoyment of the Real Estate subject to real property leases for the full
term thereof and each such lease is a legal, valid and binding agreement,
enforceable against the respective Seller in accordance with its terms and
there is no default of Sellers (or any condition or event which, after
notice or lapse of time or both, would constitute a default of Sellers)
thereunder.
5.5 Environmental Matters. Except as disclosed in Schedule 5.5:
(a) The Sellers hold, and are in compliance with, all permits,
licenses and governmental authorizations ("Environmental Permits")
required for Sellers to conduct, as now conducted, the Business with
respect to the Purchased Assets under applicable Environmental Laws,
and the Sellers have not received any written notice (or otherwise
have Knowledge) of any violation of any Environmental Law that is
presently applicable to the Purchased Assets or the related Business.
(b) The Sellers have not received any written request for
information, or been notified (or otherwise have Knowledge) that any
Seller is a potentially responsible party, under CERCLA or any similar
state law with respect to any on-site location included within the
Purchased Assets or in connection with any off-site location used by
Sellers in connection with any Purchased Asset.
(c) The Sellers have not entered into or agreed to any consent
decree or order, and are not subject to any judgment, decree, or
judicial order, with respect to any of the Purchased Assets or the
related Business relating to compliance with any Environmental Law or
to investigation or cleanup of Hazardous Substances under any
Environmental Law.
(d) To their Knowledge, Sellers have provided Buyer with (i) a
list of all facilities that have been used during the course of the
operations of any of the Purchased Assets for the treatment, storage,
recycling or disposal of any Hazardous Substances; (ii) a list of all
material environmental reports and/or audits which discuss the
environmental conditions of the Purchased Assets; and (iii) a list of
all underground storage tanks and/or surface impoundments located on
the Purchased Assets which contain or have contained Hazardous
Substances.
5.6 Labor Matters. The Collective Bargaining Agreement is
the only collective bargaining agreement to which any Seller is a party or
is subject and which relates to the ownership, operation or maintenance of
the Purchased Assets. Solely (in each of the following clauses (a) through
(f)) with respect to the business or operations of the Purchased Assets or
the Purchased Assets Employees, except to the extent set forth in Schedule
5.6 (except for such matters as will not have a Material Adverse Effect or
are not included in the Assumed Liabilities), (a) the Sellers are in
compliance with the Collective Bargaining Agreement and all applicable laws
respecting employment and employment practices, terms and conditions of
employment, collective bargaining and wages and hours; (b) the Sellers have
not received written notice (or otherwise have Knowledge) of any unfair
labor practice complaint against any Seller pending before the National
Labor Relations Board; (c) there is no labor strike, slowdown or stoppage
actually pending or, to Sellers' Knowledge, threatened against or affecting
any Seller or the Purchased Assets; (d) the Sellers have not received
notice (or otherwise have Knowledge) that a representation petition
respecting the employees of any Seller has been filed with the National
Labor Relations Board; (e) no arbitration proceeding arising out of or
under the Collective Bargaining Agreement is pending against any Seller;
and (f) there are no administrative charges or court complaints against the
Sellers concerning alleged employment discrimination or other employment
related matters pending or, to Sellers' Knowledge, threatened before the
U.S. Equal Employment Opportunity Commission or any other governmental or
regulatory body or authority. The Sellers are not in violation of the WARN
Act.
5.7 ERISA; Benefit Plans. Schedule 5.7 provides summary
descriptions of all deferred compensation, pension, profit-sharing,
incentive and retirement plans, and all material bonus and other employee
benefit or fringe benefit plans, maintained or with respect to which the
Sellers have provided compensation and/or benefits to the Purchased Assets
Employees. As to all qualified plans which Sellers maintain:
(a) they are qualified under Code Sections 401(a) and 501(a) and
have current Internal Revenue Service determination letters;
(b) they are currently in compliance in form and operation with
Code and Treasury Regulation requirements;
(c) all required contributions have been made in a timely manner
and funding is adequate for terminations resulting from the sale of
the Purchased Assets;
(d) there are no pending or, to Sellers' Knowledge, threatened
claims against any such plans or Sellers or otherwise, which allege
violations of law which could result in liability on the part of the
Buyer; and as to all terminated qualified retirement plans which a
Seller has maintained, participants' rights have been fully satisfied;
and
(e) neither of the Sellers nor any entity required to be
aggregated therewith pursuant to Section 414(b) or (c) of the Code
and/or Section 4001(b) of ERISA has incurred or could reasonably be
expected to incur any material liability under Title IV of ERISA
and/or Section 412 of the Code (other than for the payment of benefits
or Pension Benefit Guaranty Corporation insurance premiums, in each
case payable in the ordinary course).
5.8 Real Estate. Schedule 5.8 identifies the deeds or other
instruments evidencing BHE's title to the real property rights owned or
leased by BHE as lessor or as lessee (or as to which BHE holds easements or
other rights) and included in the Purchased Assets (other than the 345 Line
ROWs, as to which Annex I to Schedule 5.8 references the relevant tax
parcels), as well as certain real property owned by BHE which on the date
hereof is associated with certain of the Hydroelectric Facilities but is
not included within the Purchased Assets. The portions of the real
property rights, including rights to flood and flow, described in such
deeds and other instruments that constitute Purchased Assets and the 345
Line ROWs are collectively referred to herein as the "Real Estate."
Schedule 5.8 also describes certain Encumbrances on the Real Estate of
which Sellers have Knowledge. Subject to change in applicable law or
regulation, or interpretation thereof, and events beyond the control of
Sellers, no fee ownership, lease, right of way, easement, license or other
right in real property, other than the Real Estate, is necessary for the
Buyer to own, operate or maintain the Purchased Assets substantially as
historically owned, operated and maintained by the Sellers. To Sellers'
Knowledge, none of the improvements on any of the Real Estate, including,
without limitation the Easements, nor any appurtenances thereto or
equipment therein nor the operation or maintenance thereof, violate any
restrictive covenant or the terms, conditions or restrictions of any
easement. All Real Estate (other than the ▇▇▇ ▇▇▇▇ ▇▇▇▇) will have access,
directly or indirectly through an easement under which Buyer shall have
adequate rights, to a public road. To the extent that zoning laws apply,
each parcel of Real Estate (other than the ▇▇▇ ▇▇▇▇ ▇▇▇▇) is zoned for its
current use. Copies of all surveys, title insurance policies or real
estate leases in the possession of the Sellers related to the Real Estate
have been delivered or made available to the Buyer.
5.9 Condemnation. Except as set forth in Schedule 5.9, BHE has
received no written notice or otherwise has Knowledge that any part of the
Real Estate or any other real property or rights leased, used or occupied
by BHE in connection with the ownership, operation or maintenance of the
Purchased Assets is subject to any pending or threatened suit for
condemnation or other taking by any public authority.
5.10 Certain Contracts and Arrangements.
(a) Except (i) as listed in Schedule 5.10 and (ii) for
agreements entered into with Buyer's consent under Section 7.1, the Sellers
are not a party to any contract, agreement, personal property lease,
commitment, understanding or instrument which relates to the Purchased
Assets or the ownership, operation or maintenance of the Purchased Assets
and which is included in the Assumed Liabilities. Complete and accurate
copies of all Sellers' Agreements, together with all amendments and
supplements, have been delivered or made available to the Buyer prior to
the execution of this Agreement.
(b) Except in set forth in Schedule 5.10, each Sellers'
Agreement (i) constitutes a valid and binding obligation of each Seller
which is a party thereto enforceable against such Seller in accordance with
its terms, (ii) is in full force and effect, and (iii) except as disclosed
in Schedule 5.10 may be transferred to the Buyer pursuant to this Agreement
without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder.
(c) Except as set forth in Schedule 5.10, there is not, under
any of the Sellers' Agreements, any default or event which, with notice or
lapse of time or both, would constitute a default on the part of a Seller
or, to Sellers' Knowledge, any other party thereto, except such events of
default and other events as to which requisite waivers or consents have
been obtained, or which would not, in the aggregate, have a Material
Adverse Effect.
(d) The Purchased Assets are, and as of the Closing Date will
be, inclusive of all facilities and equipment in such condition as will be
sufficient for Buyer to comply with its obligations under the
Interconnection Agreement after giving effect to the Separation Document.
5.11 Legal Proceedings. Except as set forth in Schedule 5.11 and
except for matters which are Excluded Liabilities, there are no claims,
actions, proceedings or investigations pending or, to Sellers' Knowledge,
threatened against or relating to the Sellers and pertaining to the
Purchased Assets before any court, governmental or regulatory authority or
body acting in an adjudicative capacity. Except as set forth in Schedule
5.11 and except for matters which are Excluded Liabilities, no Seller is
subject to any outstanding judgment, rule, order, writ, injunction or
decree of any court, governmental or regulatory authority pertaining to the
Purchased Assets or the related Business.
5.12 Permits.
(a) "Permits" means all material permits, licenses, franchises
and other governmental authorizations, consents and approvals relating to
the Purchased Assets or the ownership, operation or maintenance of the
Purchased Assets, other than those permits required pursuant to
Environmental Laws. Except as set forth in Schedule 5.12, the Sellers have
all Permits necessary to own, operate and maintain the Purchased Assets as
presently owned, and operated, except where the failure to have any such
permit would not have a Material Adverse Effect. Except as set forth in
Schedule 5.12, the Sellers have not received any written notification that
any Seller is in violation of any of such Permit, or any law, statute,
order, rule, regulation, ordinance or judgment of any governmental or
regulatory body or authority applicable to it and pertaining to the
Purchased Assets or the related Business. Except as set forth in Schedule
5.12, to their Knowledge, the Sellers are in compliance with all Permits,
laws, statutes, orders, rules, regulations, ordinances, or judgments of any
governmental or regulatory body or authority applicable to them or the
Purchased Assets or the related Business except for violations which,
individually or in the aggregate, do not have a Material Adverse Effect.
(b) Schedule 5.12 sets forth all Permits and Environmental
Permits including Permits and Environmental Permits which, if not held or
maintained (individually or in the aggregate) could reasonably be expected
to impair the Buyer's conduct of the Business with respect to the Purchased
Assets. Copies of all such permits listed on Schedule 5.12 have been
provided or made available to the Buyer prior to the execution of this
Agreement.
5.13 Taxes.
(a) With respect to the Purchased Assets and the business of the
Sellers associated therewith, (i) all Tax Returns of Sellers required to be
filed have been timely filed and are true, correct and complete, and (ii)
all Taxes, including those shown to be due on such Tax Returns, have been
timely paid. Except as set forth in Schedule 5.13, (i) no notice of
deficiency or assessment has been received from any taxing authority with
respect to liabilities for Taxes of the Sellers in respect of the Purchased
Assets and the business of the Sellers associated therewith (nor has any
such taxing authority threatened to issue such notice or assessment), that
have not been fully paid or finally settled, and any such deficiency shown
in such Schedule 5.13 is being contested in good faith through appropriate
proceedings, (ii) there are no outstanding agreements or waivers extending
the applicable statutory periods of limitation for Taxes of the Sellers
associated with the Purchased Assets for any period, (iii) none of the
Purchased Assets is "tax-exempt use property" within the meaning of Section
168(h) of the Code or tax-exempt bond financed property within the meaning
of Section 168(g)(5) of the Code and none of the Purchased Assets is
subject to any lease made pursuant to Section 168(f)(8) of the Code and
(iv) there are no Encumbrances for Taxes on the Purchased Assets that are
not Permitted Encumbrances. There are no proceedings pending for the
reduction of, and Sellers have no Knowledge of any contemplated increase
in, the assessed valuation of the Real Estate or the other Purchased
Assets.
(b) With respect to Bangor-Pacific:
(i) all Tax Returns have been timely filed, and are true,
correct and complete in all material respects;
(ii) all Taxes, including those shown to be due on such Tax
Returns have been paid;
(iii) all Taxes that Bangor-Pacific is required by law to
withhold and collect have been withheld and collected and timely paid
over to the appropriate governmental authorities;
(iv) except to the extent set forth in Schedule 5.13, no Tax
audits or other administrative proceedings are presently pending or
proposed or to Sellers' Knowledge threatened (in each case in writing)
with regard to any Taxes or Tax Returns of Bangor-Pacific;
(v) except to the extent set forth in Schedule 5.13, there
are no Encumbrances for Taxes on any property or assets of Bangor-
Pacific other than Permitted Encumbrances;
(vi) all deficiencies of Taxes asserted in writing or
otherwise asserted with respect to Bangor-Pacific as a result of an
audit, examination, investigation or similar proceeding have been paid
or are being contested in good faith through appropriate proceedings,
with adequate reserves booked for any adverse determination;
(vii) there are no powers of attorney in effect relating to
Taxes of Bangor-Pacific that relate to Taxes for any post-Closing
period;
(viii) except as set forth in Schedule 5.13, there are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any items of Tax of Bangor-Pacific, and
Bangor-Pacific has not requested any extension of time within which to
file any Tax Return that has not yet been filed;
(ix) Bangor-Pacific is and has been since its date of
inception properly treated as a partnership, and not as an association
taxable as a corporation, for United States federal income and
applicable state and local tax purposes; and
(x) there are no agreements now, and there have been no
agreements in the past, providing for allocations of income or losses,
distributions of cash, of Bangor-Pacific other than as set forth in
the West Enfield Joint Venture Agreement.
(xi) there are no proceedings pending for the reduction of,
and Sellers have no Knowledge of any contemplated increase in, the
assessed valuation of the real property or the other assets of Bangor-
Pacific.
5.14 Representations Regarding Bangor-Pacific.
(a) PHC is a wholly-owned subsidiary of BHE.
(b) PHC owns a 50% partnership interest (the "Bangor-Pacific
Interest") in Bangor-Pacific Hydro Associates ("Bangor-Pacific," which
term, for purposes of Sections 5.13 and 5.14 and as the context
contemplates, shall include Bangor Pacific Operating Co.). Bangor-Pacific
is the owner of (i) the West Enfield Hydro Project and the Power Purchase
Agreement dated June 9, 1986 between BHE and Bangor-Pacific (as successor
to West Enfield Associates) and (ii) 100% of the issued and outstanding
stock of Bangor-Pacific Operating Co., Inc., a Maine corporation and the
operator of the West Enfield Hydro Project ("Bangor-Pacific Operating
Co."). The Bangor-Pacific Interest and the 50% partnership interest held
by ▇▇▇▇▇ Power Corporation represent all of the outstanding partnership
interests in Bangor-Pacific. Except as set forth in Schedule 5.14, there
are no outstanding options, rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) (i) pursuant to
which Bangor-Pacific, PHC or BHE is or may become obligated to issue, sell,
purchase, return or redeem any partnership interests in Bangor-Pacific or
(ii) that give any person the right to receive any benefits or rights
similar to holders of partnership interests in Bangor-Pacific.
Sellers have made available to the Buyer, with respect to Bangor-
Pacific, an audited balance sheet for the period ending December 31, 1997
and an unaudited balance sheet for the period ended June 30, 1998; such
balance sheets present fairly in all material respects the financial
position of Bangor-Pacific as at such dates in accordance with generally
accepted accounting principles.
Except to the extent disclosed in the balance sheet described
above, Bangor-Pacific has no liability, debt, commitment or obligation of
any kind which, in accordance with generally accepted accounting
principles, should be provided for or disclosed in a footnote to such
balance sheet.
Except (i) as set forth in Schedule 5.14 and (ii) as otherwise
contemplated by this Agreement, since the date of the June 30, 1998 balance
sheet for Bangor-Pacific, there has not been (a) any material adverse
change in or effect on the business or operations of Bangor-Pacific; (b)
any damage, destruction or casualty loss which is material to the business
or operations of Bangor-Pacific; or (c) any entry into any agreement,
commitment or transaction (including, without limitation, any borrowing,
capital expenditure or capital financing) which relates to the business or
operations of Bangor-Pacific or its assets, except agreements, commitments
or transactions in the ordinary course of business and cancellable upon 30
days' notice without premium or penalty or as contemplated herein.
(c) Except as set forth in Schedule 5.14 (which items disclosed
therein, to the Knowledge of Sellers, do not render title to the Purchased
Assets unmarketable or prevent adequate access to the Purchased Assets to
which they relate, or materially interfere with the continuing ownership,
use, operation or maintenance of such assets consistent with historical
practice or materially detract from the Business) and except for Permitted
Encumbrances, (i) Bangor-Pacific has good and marketable record title to
the real estate purported to be owned by it, and to the other assets which
it purports to own (other than those which have been disposed of since the
date hereof in the ordinary course of business), free and clear of all
Encumbrances, and (ii) neither the whole nor any part of the real estate
owned, leased, used or occupied by Bangor-Pacific is subject to any pending
suit for condemnation or other taking by any public authority and, to
Sellers' Knowledge, no such condemnation or other taking has been
threatened.
(d) Schedule 5.14 lists all real property leases to which
Bangor-Pacific is a lessee or lessor and which provide for annual payments
of more than $100,000 or are otherwise material to the business or
operations of Bangor-Pacific. Except as set forth in Schedule 5.14, all
such leases are valid, binding and enforceable in accordance with their
terms, are in full force and effect and there are no existing defaults by
Bangor-Pacific or any other party thereto thereunder.
(e) Except as set forth in Schedule 5.14, (i) Bangor-Pacific
holds all Environmental Permits required for Bangor-Pacific to conduct, as
now conducted, the business and operations of Bangor-Pacific under
applicable Environmental Laws, and, to the Knowledge of Sellers, Bangor-
Pacific has not received any written notice (nor do Sellers otherwise have
Knowledge) of any violation by Bangor-Pacific of any Environmental Law,
(ii) Bangor-Pacific has not received any written request for information,
or been notified (nor do Sellers otherwise have Knowledge) that Bangor-
Pacific is a potentially responsible party, under CERCLA or any similar
state law with respect to any on-site location of Bangor-Pacific included
within the Purchased Assets, and (iii) Bangor-Pacific has not entered into
or agreed to any consent decree or order, nor is Bangor-Pacific subject to
any judgment, decree, or judicial order with respect to any of its assets
or relating to compliance with any Environmental Law or to investigation or
cleanup of Hazardous Substances under any Environmental Law.
(f) Except as set forth in Schedule 5.14, Bangor-Pacific has no
employees and Bangor-Pacific has no or has had no "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) or "employee welfare benefit
plans" (as defined in Section 3(l) of ERISA) or any post-retirement benefit
plans.
(g) Except (i) as listed in Schedule 5.14, (ii) for contracts,
agreements, personal property leases, commitments, understandings or
instruments which will expire prior to the Closing Date or (iii) for
agreements with suppliers entered into in the ordinary course of business,
Bangor-Pacific is not a party to any written contract, agreement, personal
property lease, commitment, understanding or instrument which relates to
the ownership or operation of Bangor-Pacific or its assets. Each agreement
referenced in this Section 5.14(g) to which Bangor-Pacific is a party and
which is material to the Purchased Assets (i) constitutes a valid and
binding obligation of Bangor-Pacific and (ii) is, or at the Closing will
be, in full force and effect. Except as set forth in Schedule 5.14, there
is not, under any of the agreements listed in such Schedule, any default or
event which, with notice or lapse of time or both, would constitute a
default on the part of Bangor-Pacific or, to Sellers' Knowledge, any other
party thereto except such events of default and other events as to which
requisite waivers or consent have been obtained, or which would not, in the
aggregate, have a Material Adverse Effect.
(h) Except as set forth in Schedule 5.14 and except for matters
which are Excluded Liabilities, there are no claims, actions, proceedings
or investigations pending or, to Sellers' Knowledge, threatened against or
relating to the business or operations of Bangor-Pacific or its assets
before any court, governmental or regulatory authority or body acting in an
adjudicative capacity. Except as set forth in Schedule 5.14 and except for
matters which are Excluded Liabilities, neither Bangor-Pacific nor its
assets is subject to any outstanding judgment, rule, order, writ,
injunction or decree of any court, governmental or regulatory authority.
(i) Bangor-Pacific has all permits, licenses, franchises and
other governmental authorizations, consents and approvals (other than those
permits required pursuant to Environmental Laws) (collectively "BP
Permits") necessary to own and operate its business as presently owned and
operated, except where the failure to have any such permit would not have a
Material Adverse Effect. Except as set forth in Schedule 5.14, (i) Bangor-
Pacific has not received any written notification that it is in violation
of any of such BP Permit, or any law, statute, order, rule, regulation,
ordinance or judgment of any governmental or regulatory body or authority
applicable to it, (ii) to Sellers' Knowledge, Bangor-Pacific is in
compliance with all BP Permits, laws, statutes, orders, rules, regulations,
ordinances, or judgment of any governmental or regulatory body or authority
applicable to it and (iii) the validity of the BP Permits will not be
affected by the execution of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby.
Schedule 5.12 sets forth all Permits and Environmental Permits held by
Bangor-Pacific, which, if not held or maintained (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect,
copies of all of which have been provided or made available to the Buyer
prior to the execution of this Agreement.
5.15 Representations Regarding ▇▇▇▇▇ Unit No. 4. BHE is the record
and beneficial owner of an 8.33% joint ownership interest in common (the
"▇▇▇▇▇ 4 Interest") in ▇▇▇▇▇ Unit No. 4, free and clear of all Encumbrances
except Permitted Encumbrances. BHE has provided to the Buyer a copy of the
governing documents related to the ▇▇▇▇▇ 4 Interest, each of which is
listed on Schedule 5.10. There are no outstanding options, rights,
agreements, convertible or exchangeable securities or other commitments
(other than this Agreement) (i) pursuant to which BHE is or may become
obligated to sell or purchase any joint ownership interests in ▇▇▇▇▇ Unit
No. 4 or (ii) that give any person other than BHE the right to receive any
of the benefits or rights of the ▇▇▇▇▇ 4 Interest.
5.16 Insurance. Except as set forth in Schedule 5.16, all policies
of fire, liability, worker's compensation and other forms of insurance
owned or held by Sellers and insuring the Purchased Assets or the Business
are in full force and effect, all premiums with respect thereto covering
all periods up to and including the date as of which this representation is
being made have been paid (other than retroactive premiums which may be
payable with respect to comprehensive general liability and worker's
compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which was not
replaced on substantially similar terms prior to the date of such
cancellation. Except as set forth in Schedule 5.16, Sellers have not been
refused any insurance with respect to the Purchased Assets or the Business
nor has their coverage been limited by any insurance carrier to which they
have applied for any such insurance or with which they have carried
insurance during the last twelve months.
5.17 Personal Property Included in Purchased Assets. No personal
property of Sellers used or held for use in connection with any Purchased
Asset as of the Bid Date but not included in the Purchased Assets or
transferred to Buyer at Closing is necessary for Buyer to own, operate or
maintain the Purchased Assets substantially as historically owned, operated
and maintained by the Sellers.
5.18 Intellectual Property Rights. Schedule 5.18 discloses all
trade secrets, patents and patentable rights used or held for use or
necessary in connection with the Purchased Assets and the related Business
("Intellectual Property"), all of which Sellers either have all right,
title and interest in or a valid and binding irrevocable, non-royalty
bearing, right under contract to use without limitation. There are no
trademarks, tradenames, service marks, service names, inventions,
copyrights, or rights related to any of the foregoing, know-how or
applications for and registrations of patents, trademarks, service marks
and copyrights ("Other Intellectual Property") used, held for use or
necessary in connection with the Purchased Assets and the related Business.
Sellers have not received notice (or otherwise have Knowledge) that Sellers
are infringing upon any Intellectual Property or Other Intellectual
Property of any other Person in connection with the Purchased Assets or the
related Business.
5.19 Financial Statements. BHE has made available to the Buyer its
audited consolidated balance sheet as of December 31, 1997 (the "Audited
Balance Sheet"), and its unaudited consolidated balance sheet as of June
30, 1998 (the "Unaudited Balance Sheet"). The Audited Balance Sheet
(including the related notes thereto) presents fairly, in all material
respects, the consolidated financial position of the Sellers as of its date
in conformity with generally accepted accounting principles applied on a
consistent basis, except as otherwise noted therein. The Unaudited Balance
Sheet (including the notes thereto) presents fairly, in all material
respects, the consolidated financial position of the Sellers as of its date
in conformity with generally accepted accounting principles applied on a
consistent basis except as otherwise noted therein.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS ARTICLE V, THE PURCHASED ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS,
WHERE IS", AND THE SELLERS ARE NOT MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH
PURCHASED ASSETS, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY
EXCLUDED AND DISCLAIMED.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers, as of the date
hereof and as of the Closing Date, as follows:
6.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to own,
lease, and operate its properties and to carry on its business as is now
being conducted. The Buyer has heretofore delivered to BHE complete and
correct copies of its Certificate of Incorporation and Bylaws (or other
similar governing documents), and any amendments thereto, as currently in
effect.
6.2 Authority Relative to This Agreement. The Buyer has full
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Buyer, and no other corporate
proceedings on the part of the Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Buyer,
and assuming the accuracy of Sellers' representations and warranties
contained in Section 5.2, and subject to the receipt of the Buyer Required
Regulatory Approvals, the Seller Required Consents and the Seller Required
Regulatory Approvals, this Agreement constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general
principles of equity. The Ancillary Agreements, when executed, will,
assuming the accuracy of Sellers' representations and warranties contained
in Section 5.2, and subject to the receipt of the Buyer Required Regulatory
Approvals, the Seller Required Consents and the Seller Required Regulatory
Approvals, constitute valid and binding agreements of Buyer, enforceable
against the Buyer in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity.
6.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 6.3, and other than
obtaining the Buyer Required Regulatory Approvals, the Seller Required
Consents and the Seller Required Regulatory Approvals, neither the
execution and delivery of this Agreement or the Ancillary Agreements by the
Buyer nor the purchase by the Buyer of the Purchased Assets pursuant to
this Agreement and the Ancillary Agreements will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation
or Bylaws (or other similar governing documents) of the Buyer, (ii) require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, or (iii) result
in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement, lease or other instrument or
obligation to which the Buyer or any of its subsidiaries is a party or by
which any of its assets may be bound, except for such defaults (or rights
of termination, cancellation or acceleration) as to which requisite waivers
or consents have been obtained, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer, and
any assets of Buyer.
(b) Except for (i) authorizations under Part II of the Federal
Power Act required (A) to implement sales under any wholesale sales
agreements to be assigned to the Buyer, (B) to acquire, own and operate the
jurisdictional Purchased Assets and (C) to sell electricity from the
Purchased Assets at wholesale market-based rates, (ii) approval by the
FERC, under Part I of the Federal Power Act, of the transfer of the FERC
project licenses related to, and necessary to operate, the Hydroelectric
Assets, (iii) any MPUC approval necessary for the Sellers to transfer the
Purchased Assets in Maine and/or for the Buyer to purchase the Purchased
Assets in Maine, and to obtain exempt wholesale generator certification
with respect to the Purchased Assets, (iv) the filing by the Buyer and the
Sellers required by the HSR Act and the expiration or earlier termination
of all waiting periods under the HSR Act, (v) any approval required of the
MDEP, the EPA, or other governmental agency pursuant to any Environmental
Law, (vi) the acceptance/approval by FERC of the Interconnection Agreement
and the Transitional Power Sales Agreement, (vii) certification of Buyer as
an exempt wholesale generator pursuant to Section 32 of the Holding Company
Act with respect to the Purchased Assets (excluding approvals for sales to
Affiliates), (viii) any authorizations or approvals of FERC required to be
obtained by Buyer in connection with the HQ Agreements, and (ix) any
authorizations or approvals of the SEC or FERC required for Buyer to
acquire, own and operate the Purchased Assets without causing Buyer's
parent, PP&L Resources, Inc., to become subject to registration under the
Holding Company Act (the filings and approvals referred to in clauses (i)
through (ix) are collectively referred to as the "Buyer Required Regulatory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby or by the Ancillary Agreements.
6.4 Regulation as a Utility. The Buyer is not and, except as a
consequence of the transactions and regulatory approvals contemplated by
this Agreement, at the Closing Date will not be, subject to regulation as a
public utility or public service company (or similar designation) by the
United States, any state of the United States, any foreign country or any
municipality or any political subdivision of the foregoing. The Buyer is
an Affiliate of a public utility holding company exempt from registration
under the Holding Company Act.
6.5 Availability of Funds. The Buyer has sufficient funds available
to it to pay the Purchase Price on the Closing Date in accordance with
Section 4.2.
6.6 Litigation. There is no pending or, to Buyer's Knowledge,
threatened action, by any governmental authority, arbitration panel or
third Person which is likely to result, or has resulted, in (a) the
institution of legal proceedings to prohibit or restrain the performance of
this Agreement, the Equity Contribution Agreement, or any of the Ancillary
Agreements, or the consummation of the transactions contemplated thereby in
any material respect, or (b) a claim for damages as a result of this
Agreement, the Equity Contribution Agreement, or any of the Ancillary
Agreements, or the consummation of the transactions contemplated thereby.
There is no pending or, to Buyer's Knowledge, threatened litigation or
proceeding, private or governmental, against Buyer which is likely to have
a material adverse effect on Buyer.
6.7 Qualified Buyer. To Buyer's Knowledge, Buyer is not ineligible
under applicable law or regulation from obtaining any Permits necessary for
the Buyer to own and operate the Purchased Assets as of the Closing to the
extent such operation is either required by any Ancillary Agreement or is
contemplated by the Buyer.
6.8 Title Policy Commitment. Within one hundred and twenty (120) days
after the date of this Agreement, the Buyer shall, at its own cost and
expense, obtain and provide the Sellers with copies of, title policy
commitments (the "Title Commitments") issued by the Title Insurance Company
with respect to the Real Estate.
6.9 "AS IS" Sale. Buyer acknowledges that the representations and
warranties set forth in this Agreement, the Ancillary Agreements and any
certificates delivered by Sellers in connection herewith or therewith
constitute the sole and exclusive representations and warranties of the
Seller in connection with the transactions contemplated hereby. There are
no representations, warranties, covenants, understandings or agreements
among the parties regarding the Purchased Assets or their transfer other
than those incorporated or referred to in this Agreement or the Ancillary
Agreements. Except for the representations and warranties set forth in
this Agreement, the Ancillary Agreements and any certificates delivered by
Sellers in connection herewith or therewith, Buyer disclaims reliance on
any representations, warranties or guarantees, either express or implied,
by Sellers.
6.10 Buyer's Affiliate. If Buyer elects to use one or more Affiliates
to hold title to any or all of the Purchased Assets, Buyer shall be deemed
to have made the representations and warranties in this Article VI on
behalf of itself and any such Affiliates as if the Affiliates were a
signatory to this Agreement.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business of the Sellers.
(a) Except as described in Schedule 7.1, from the date hereof to
the Closing Date, the Sellers will conduct the Business related to the
Purchased Assets (to the extent the Sellers have the legal right and
authority to do so) according to their ordinary and usual course of
business consistent with Good Utility Practice. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement
or as described in Schedule 7.1, prior to the Closing Date, without the
prior written consent of the Buyer (which consent shall not be unreasonably
withheld), the Sellers will not with respect to the Purchased Assets or the
related Business:
(i) create any Encumbrance (except Permitted Encumbrances)
on the Purchased Assets, except in the ordinary course of Sellers'
business or as required under Sellers' debt instruments and as will be
removed on or prior to the Closing Date;
(ii) make any material change in the levels of fuel
inventory and stores inventory customarily maintained by the Sellers
with respect to the Purchased Assets, except for such changes which
are consistent with Good Utility Practice;
(iii) enter into any commitment for the purchase or sale of
fuel having a term greater than six months and not terminable on or
before the Closing Date either (i) automatically, or (ii) by option of
BHE (or, after the Closing, by Buyer) in its sole discretion, if the
aggregate payment under such commitment and all other outstanding
commitments not previously approved by the Buyer would be expected to
exceed $1 million;
(iv) sell, lease (as lessor), transfer or otherwise dispose
of any of the Purchased Assets, other than assets used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practice;
(v) amend, terminate or grant any waiver or consent with
respect to any of the Sellers' Agreements other than in the ordinary
and usual course of business, or take any action, or permit PHC to
take any action, to dissolve Bangor-Pacific;
(vi) enter into or amend any material real or personal
property Tax agreement, treaty or settlement;
(vii) make or approve any increase in the compensation
payable by Sellers to any of the Employees (including, without
limitation, salary, bonuses and benefits) except for increases
consistent with past practices as heretofore disclosed to the Buyer;
provided, however, that the foregoing shall not restrict the granting
by the Sellers of voluntary early retirement and severance packages in
accordance with the Employee Transition Plan solely at the Sellers'
expense;
(viii) enter into any oral or written contracts, agreements,
commitments or arrangements (A) to do any of the foregoing matters, or
(B) with respect to the Purchased Assets, in excess of $500,000 which
have a term in excess of six (6) months, unless it is terminable by
the Sellers and their assignee without penalty or premium upon not
more than 30 days' notice, or (C) outside the ordinary course of
business.
(b) Without limiting the generality of the first sentence of
Section 7.1, prior to the Closing Date, except with the prior written
consent of the Buyer, the Sellers will, with respect to the Purchased
Assets:
(i) consult with the Buyer as to the making of any material
decisions or the taking of any material actions in matters other than
in the ordinary course of business;
(ii) consult with the Buyer as to the making of any material
decisions or the taking of any material actions involving
environmental decisions;
(iii) maintain the Purchased Assets in customary repair,
working order and condition (reasonable wear and tear excepted) and,
except as contemplated by Section 7.10, repair or replace any
Purchased Assets damaged or destroyed by fire or other casualty;
(iv) keep in force at not less than their present limits all
policies of insurance to the extent reasonably practicable in light of
the prevailing market conditions in the insurance industry and
promptly notify Buyer of the cancellation of any such policy or any
material modification thereto; and
(v) maintain their customary business relationships with
any lessor, licensor, customer or supplier of any Seller, and maintain
their relationship with Purchased Assets Employees consistent with
historical practice (subject to renegotiation of the Collective
Bargaining Agreement).
(c) Notwithstanding anything in Section 7.1(a) or (b) to the
contrary, the Sellers may, in their sole discretion (i) make Maintenance
Expenditures and Capital Expenditures up to but not to exceed the
Maintenance and Capital Expenditures Amount, (ii) make, at the Sellers'
expense, such other maintenance and capital expenditures as the Sellers
deem necessary, and (iii) take any action in respect of the Purchased
Assets (not otherwise described in (a) or (b)) that does not adversely
affect the Purchased Assets or the Assumed Liabilities.
7.2 Access to Information.
(a) Between the date of this Agreement and the Closing Date, the
Sellers will, during ordinary business hours and upon reasonable notice (i)
give the Buyer and the Buyer Representatives reasonable access to all
books, records, plants, offices and other facilities and properties
constituting the Purchased Assets or related to the Business or the Assumed
Liabilities unless such access would violate applicable law; (ii) permit
the Buyer and its representatives to make such reasonable inspections
thereof as the Buyer may reasonably request; (iii) furnish the Buyer with
such financial and operating data and other information with respect to the
Purchased Assets, the related Business and the Assumed Liabilities as the
Buyer may from time to time reasonably request; and (iv) furnish the Buyer
a copy of each report, Schedule or other document filed or received by them
with respect to the Purchased Assets or the related Business with the SEC,
MPUC, MDEP, FERC, DOE, EPA or other relevant regulatory agency; provided,
however, that (A) any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operation of the Purchased
Assets, (B) the Sellers shall not be required to take any action which
would constitute a waiver of the attorney-client privilege and (C) the
Sellers need not supply the Buyer with any information which the Sellers,
in their reasonable judgment, are under a legal obligation not to supply,
provided that Sellers describe, to the extent permissible, the nature of
the information withheld. Notwithstanding anything in this Section 7.2 to
the contrary, (i) the Sellers will only furnish or provide such access to
personnel and medical records as is required by law, and (ii) the Buyer
shall not have the right to perform or conduct any environmental sampling
or testing at, in, on, or underneath or adjacent to the Purchased Assets.
(b) All information furnished to or obtained by the Buyer and
the Buyer Representatives pursuant to this Section 7.2 shall be
"Information" for purposes of Section 7.11 hereof.
(c) Subject to the last two sentences of this paragraph (c), for
a period of ten years after the Closing Date, the Sellers and their
representatives shall have reasonable access to all of the books and
records of the Purchased Assets transferred to the Buyer hereunder to the
extent that such access may reasonably be required by the Sellers in
connection with matters relating to or affected by the operation of the
Purchased Assets prior to the Closing Date. Such access shall be afforded
by the Buyer upon receipt of reasonable advance notice and during normal
business hours. The Sellers shall be solely responsible for any costs or
expenses incurred by them pursuant to this Section 7.2(c). If the Buyer
shall desire to dispose of any such books and records prior to the
expiration of such ten-year period, the Buyer shall, prior to such
disposition, give the Sellers a reasonable opportunity, at the Sellers'
expense, to segregate and remove such books and records as the Sellers may
select.
(d) Subject to the last two sentences of this paragraph (d), for
a period of ten years after the Closing Date, the Buyer and Buyer
Representatives shall have reasonable access to all of the books and
records of the Purchased Assets retained by the Sellers to the extent that
such access may reasonably be required by the Buyer in connection with
matters relating to or affected by the operation of the Purchased Assets
subsequent to the Closing Date; provided, however, that Sellers shall not
be required to provide access to personnel or medical records except as
required by law. Such access shall be afforded by the Sellers upon receipt
of reasonable advance notice and during normal business hours. In
addition, the Sellers will cooperate in the defense of any action brought
against the Buyer by a former employee of the Sellers. The Buyer shall be
solely responsible for any costs or expenses incurred by it pursuant to
this Section 7.2(d). If any Seller shall desire to dispose of any such
books and records prior to the expiration of such ten-year period, such
Seller shall, prior to such disposition, give the Buyer a reasonable
opportunity at the Buyer's expense, to segregate and remove such books and
records as the Buyer may select; provided, however, that the Sellers will
use best efforts to preserve all employment and medical records of those
employees who are hired by the Buyer as of the Closing Date, for a period
of not less than ten (10) years from the Closing Date.
(e) If within ten years after the Closing Date the MPUC shall
commence an investigation of the reasonableness of any term or condition of
this Agreement, Buyer shall fully cooperate with the Sellers in providing
any information or testimony which may be helpful to Sellers in
establishing the reasonableness of the terms and conditions of the
Agreement. Sellers shall be responsible for any costs or expenses incurred
by Buyer pursuant to this Section 7.2(e).
7.3 Expenses. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party incurring such
costs and expenses, including, without limitation, any expenses associated
with litigation arising out of this Agreement or any of the transactions
contemplated hereunder. Notwithstanding anything to the contrary herein,
the Buyer will be responsible for (a) all costs and expenses associated
with the obtaining of any title insurance policy and all endorsements
thereto that the Buyer elects to obtain, and (b) all filing fees of Buyer
as an acquiring person under the HSR Act. Sellers and Buyer each represent
and warrant to the other, respectively, that, except for ▇▇▇▇ Consulting
Group, Inc., which is acting for and at the expense of the Sellers, no
broker, finder or other person is entitled to any brokerage fees,
commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the party making such
representation. The Sellers and Buyer will pay to the other, or otherwise
discharge, and will indemnify and hold the other harmless from and against,
any and all claims or liabilities for all brokerage fees, commissions, and
finders' fees (other than as described above) incurred by reason of any
action taken by the indemnifying party.
7.4 Further Assurances.
(a) Each of the parties hereto will use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the sale of the Purchased
Assets pursuant to this Agreement. From time to time after the Closing
Date, without further consideration, the Sellers will reasonably cooperate
with the Buyer in its efforts to maximize any tax benefits associated with
the Purchased Assets with respect to periods following the Closing Date and
to minimize the tax costs associated with the transactions contemplated
hereby, and will, at their own expense, execute and deliver such documents
to the Buyer as the Buyer may reasonably request in order to more
effectively vest in the Buyer the Sellers' title to the Purchased Assets.
From time to time after the Closing Date, the Buyer will reasonably
cooperate with the Sellers in their efforts to maximize any tax benefits
associated with the Purchased Assets with respect to periods prior to the
Closing Date and to minimize the tax costs associated with the transactions
contemplated hereby, and will, at its own expense, execute and deliver such
documents to the Sellers as the Sellers may reasonably request in order to
more effectively consummate the sale of the Purchased Assets pursuant to
this Agreement.
(b) Subject to Section 3.5, in the event that any Purchased
Asset shall not have been conveyed to the Buyer at the Closing, the Sellers
shall, subject to Section 7.4(c), use their best efforts to convey such
asset to the Buyer as promptly as is practicable after the Closing. In the
event that any Easement shall not have been retained by a Seller after the
Closing, the Buyer shall use its best efforts to grant such Easement to
such Seller as promptly as is practicable after the Closing. Nothing
contained herein shall require the Sellers or the Buyer to institute any
litigation or to pay or agree to pay any sum of money to convey such asset
or grant such easement.
(c) To the extent that the Sellers' rights under any Sellers'
Agreement may not be assigned without the consent of another Person which
consent has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and the Sellers, at their expense, shall use
their best efforts to obtain any such required consent(s) as promptly as
possible. The Sellers and the Buyer agree that if any consent to an
assignment of any Sellers' Agreement shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights and obligations under the Sellers' Agreement in question so that the
Buyer would not in effect acquire the benefit of all such rights and
obligations, the Sellers, to the maximum extent permitted by law and such
Sellers' Agreement, shall with respect to any such Sellers' Agreement,
appoint the Buyer to be the Sellers' agent with respect to such Sellers'
Agreement, and enter into such reasonable arrangements with the Buyer as
are necessary to provide the Buyer with the benefits and obligations of
such Sellers' Agreement. Schedule 1.1(a)(53) identifies those agreements
that will be assigned to the Buyer and those agreements which will be
governed by the preceding sentence.
(d) Sellers and Buyer covenant and agree to negotiate and enter
into in good faith such further agreements as may be necessary for
operating the Purchased Assets after the Closing Date.
(e) The parties agree and acknowledge that certain of the
Permits issued by the FERC include assets included in the Purchased Assets
as well as other assets of the Sellers which are not to be conveyed to the
Buyer pursuant to this Agreement. In connection with the parties'
performance of their obligations under Section 7.4(a) hereof, the parties
agree to take all action necessary in order that any such Permit, when
transferred to the Buyer, will be modified appropriately to reflect the
retention by the Sellers of the assets to be retained by them and the
retention by the Sellers of any necessary Permit with respect to such
retained assets.
(f) BHE agrees to consult with Buyer in connection with any
matter on which the participants in NEPOOL are entitled to vote or give
consent or approve and which could affect the Purchased Assets in any
material respect.
7.5 Public Statements. Between the date of this Agreement and
the Closing Date, the Sellers and the Buyer agree that they will consult
with each other in advance of making any public announcement or press
release, or otherwise disclosing any information, relating to the execution
of this Agreement or any transactions contemplated hereby, or otherwise
relating to the Purchased Assets, and will negotiate in good faith with
respect to the form, content and timing thereof and shall not issue any
such release without the prior approval of the other party; provided,
however, that each party reserves the right to make such statements to
regulatory authorities in the ordinary course of business or as are
required, in the opinion of its counsel, by applicable law.
7.6 Consents and Approvals.
(a) The Sellers and the Buyer shall each file or cause to be
filed with the Federal Trade Commission and the United States Department of
Justice any notifications required to be filed under the HSR Act and the
rules and regulations promulgated thereunder with respect to the
transactions contemplated hereby. The parties shall consult with each
other as to the appropriate time of filing such notifications and shall use
their best efforts to make such filings at the agreed upon time, to respond
promptly to any requests for additional information made by either of such
agencies, and to cause the waiting periods under the HSR Act to terminate
or expire at the earliest possible date after the date of filing. Buyer
will pay all filing fees of Buyer as an acquiring person under the HSR Act
in accordance with Section 7.3, and each of the parties shall bear its own
costs of the preparation of any filing.
(b) The Sellers and the Buyer shall cooperate with each other
and (i) promptly prepare and file all necessary documents, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use their respective best efforts to obtain
the transfer or reissuance to the Buyer of all necessary Permits,
Environmental Permits, consents, approvals and authorizations of all
governmental bodies, including without limitation Permits related to the
345 Line, and (iv) use their respective best efforts to obtain all
necessary consents, approvals and authorizations of all other parties, in
the case of each of the foregoing clauses (i), (ii), (iii) and (iv),
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Seller Required Regulatory
Approvals, the Seller Required Consents and the Buyer Required Regulatory
Approvals) or for the Buyer to own, operate or maintain, on and after the
Closing Date, the Purchased Assets substantially as such assets have been
historically owned, operated and maintained by the Sellers prior to the
date of this Agreement, or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument to which any Seller or the Buyer is a
party or by which either of them is bound. Each of the Sellers and the
Buyer shall have the right to review in advance all characterizations of
the information relating to the transactions contemplated by this Agreement
which appear in any filing made in connection with the transactions
contemplated hereby.
(c) The Sellers shall use their best efforts prior to and, if
necessary, after the Closing Date to obtain the Seller Required Consents,
and the Buyer shall use its best efforts prior to and, if necessary, after
the Closing Date to obtain the Buyer Required Regulatory Approvals. If any
such consent or approval is not obtained, the Sellers and the Buyer agree
to cooperate in any reasonable arrangements (which may include, in the case
of leased property, a sublease thereof) designed to provide for the Buyer
all of the benefits (and to assure that the Sellers will be effectively
relieved from related liabilities) under such contract, agreement, lease,
commitment or right, including enforcement for the benefit of the Buyer, at
the Sellers' expense, of any and all rights of the Sellers against the
other party or parties thereto. Nothing in this Agreement shall be
construed as an attempt or agreement to assign (i) any contract which is
nonassignable without the consent of the other party or parties thereto
unless such consent shall have been given, or (ii) any contract or claim as
to which all the remedies for the enforcement thereof would not pass to the
Buyer as an incident of the assignments provided for by this Agreement.
(d) Each of Buyer and the Sellers mutually agree for the benefit
of the other that, between the date of this Agreement and the Closing Date,
neither Buyer, Sellers nor any of their respective controlled Affiliates
will enter into any agreement, commitment or undertaking which would
reasonably be expected to impair the ability of Buyer and Sellers to
complete the purchase and sale of the Purchased Assets at the earliest time
that the conditions set forth in Article VIII are satisfied.
7.7 Tax Matters.
(a) All transfer and sales or use taxes incurred in connection
with this Agreement and the transactions contemplated hereby shall be borne
by the Buyer, whether imposed on the Buyer or the Sellers, and the Buyer,
at its own expense, will file, to the extent required by applicable law,
all necessary Tax Returns and other documentation with respect to all such
transfer or sales taxes, and, if required by applicable law, the Sellers
will join in the execution of any such Tax Returns or other documentation
and will take such positions therein as are reasonably requested by the
Buyer. Sellers shall be responsible for the payment of all their
respective Taxes payable with respect to any period or portion thereof
prior to the Closing Date.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement only, the Buyer shall prepare and timely file
all Tax Returns required to be filed with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Taxes, whether imposed on
the Buyer or the Sellers, shown to be due on such Tax Returns. The Buyer's
preparation of any such Tax Returns shall be subject to the Sellers'
approval, which approval shall not be unreasonably withheld. The Buyer
shall make such Tax Returns available for the Sellers' review and approval
no later than fifteen (15) Business Days prior to the due date for filing
such Tax Return. Within ten (10) Business Days after receipt of such Tax
Return, the Sellers shall pay to the Buyer the Sellers' proportionate share
of the amount shown as due on such Tax Returns determined in accordance
with Section 3.4 of this Agreement to the extent Sellers are liable
therefor pursuant thereto and to the extent not already paid or accrued as
a liability on Sellers' balance sheets as of June 30, 1998.
(c) After the Closing Date, Buyer and Sellers shall provide each
other with such cooperation and information relating to each other as
either party reasonably may request in (A) filing any Tax Return, amended
Tax Return or claim for Tax refund, (B) determining any Tax liability or a
right to refund of Taxes, (C) conducting or defending any audit or other
proceeding in respect of Taxes or (D) effectuating the terms of this
Agreement. The parties shall retain all Tax Returns, schedules and work
papers, and all material records and other documents relating thereto,
until the expiration of the statute of limitation (and, to the extent
notified by any party, any extensions thereof) of the taxable years to
which such returns and other documents relate and, unless such Tax returns
and other documents are offered and delivered to Sellers or Buyer, as
applicable, until the final determination of any Tax in respect of such
years. Any information obtained under this Section 7.7(c) shall be kept
confidential, except as may be otherwise necessary in connection with
filing any Tax Return, amended Tax Return, or claim for Tax refund,
determining any Tax liability or right to refund of Taxes, or in conducting
or defending any audit or other proceeding in respect of Taxes.
Notwithstanding the foregoing, neither Seller nor Buyer, nor any of their
Affiliates, shall be required unreasonably to prepare any document, or
determine any information not then in its possession, in response to a
request under this Section 7.7(c).
(d) (i) Sellers shall use reasonable efforts to cause to be
prepared and filed all Tax Returns of Bangor-Pacific for all taxable
periods ending on or prior to the Closing Date and cause to be paid all
Taxes relating to such Tax Returns.
Upon request of Buyer, PHC shall cooperate with Buyer in making a
Code Section 754 election by Bangor-Pacific with respect to obtaining an
adjustment to the basis of Bangor-Pacific's assets under Code Section 743.
For purposes of the allocations pursuant to Code Sections 755 and 1060 with
respect to the Code Section 754 elections, Buyer and PHC mutually agree
that property, plant and equipment may be assigned a value equal to fair
market value and receivables may be assigned a value equal to the face
amount thereof net of any bad debts for purposes of any such election. If
a Code Section 754 election is to be made, Buyer shall prepare and submit
within one hundred eighty (180) days after the Closing Date an allocation
consistent with the allocation described above to Sellers for their review
and approval, which shall not be unreasonably withheld. Provided that the
other partners in Bangor-Pacific have agreed to cooperate with Buyer in
causing Bangor-Pacific to make a Code Section 754 election, at the election
of Buyer, Buyer and PHC shall timely complete and file the statement
required by Treasury Regulation 1.743-1 and IRS Form 8594 consistent with
such allocation, shall provide a copy of such form to the other party
hereto and shall file a copy of such form with its federal income tax
return for the period that includes the Closing Date. Sellers agree not to
take any action to rescind any such Code Section 754 election now or
hereafter in effect with respect to the assets of Bangor-Pacific.
(ii) Sellers shall have the right, at Sellers' sole expense,
to represent the interests of Bangor-Pacific in any Tax audit or
administrative or court proceeding relating to Tax Returns described
in Section 7.7(d)(i) with respect to which any Seller may be liable
for Taxes (including any such proceedings relating to Bangor-Pacific);
provided, however, that Buyer shall have the right to participate in
any such audit or proceeding to the extent that any such audit or
proceeding may affect the Tax liability of Buyer, any of its
Affiliates, or Bangor-Pacific for any period ending after the Closing
Date (with the right to consent to any settlement which may affect the
Tax liability of Buyer, which consent shall not be unreasonably
withheld) and to employ counsel of its choice at its own expense for
purposes of such participation.
(iii) Buyer shall notify Sellers in writing, as promptly as
practicable, upon receipt by Buyer, any Affiliate of Buyer, or Bangor-
Pacific of notice of any pending or threatened Tax audits or
assessments relating to the income, properties or operations of any
Seller or Bangor-Pacific, in each case for Pre-Closing Periods only,
so long as Pre-Closing Periods remain open; provided, however, that
failure by Buyer to comply with this Section 7.7(d)(iii) shall not
affect Buyer's right to indemnification relating to Taxes if such
failure does not prejudice the rights of Sellers. Sellers shall
notify Buyer in writing as promptly as practicable upon receipt by
Sellers or any Affiliate of Sellers of notice of any pending or
threatened Tax audits or assessments relating to the income,
properties or operations of Bangor-Pacific.
(e) The obligations of the Buyer and Sellers under this Section
7.7 shall survive the Closing and shall continue until the expiration of
the applicable statute of limitations.
7.8 Supplements to Schedules. Prior to the Closing Date, the
Sellers shall supplement or amend the Schedules required by this Agreement
with respect to any matter relating to the Purchased Assets hereafter
arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Schedules.
No supplement or amendment of any Schedule made pursuant to this Section
shall be deemed to cure any breach of any representation or warranty made
in this Agreement unless the parties agree thereto in writing.
7.9 Employees.
(a) During the period beginning on the date of this Agreement
and ending on the Window Expiration Date ("Buyer's Window"), the Buyer may
offer employment, effective as of the Closing Date, to employees of BHE who
are presently employed principally in connection with the ownership and
operation of the Purchased Assets and whose names and titles are listed
individually in a list previously provided by BHE to the Buyer (all such
employees hereinafter referred to as "Employees"). Notwithstanding the
foregoing, any such individual who, following the date hereof, changes job
position of his/her own volition pursuant to BHE's existing internal job
posting procedures and, as a result of such change, ceases to be employed
principally in connection with the ownership and operation of the Purchased
Assets shall not be considered an Employee for purposes of this Section
7.9, provided, that Buyer may offer employment during the Buyer's Window to
replacement individuals who in general perform the functions and duties of
such departed individual, in which case the Buyer's Window will extend for
an additional 30 days in respect of such replacement individual (and any
such replacement individual shall be considered an Employee for the
purposes of this Section 7.9). To the extent permitted by law, BHE will
provide reasonable access to information (excepting personnel and medical
records) and individuals reasonably necessary to the Buyer in connection
with Buyer's consideration of such offers.
All such offers of employment shall be made in accordance with
all applicable laws and regulations. Each person who becomes employed by
the Buyer pursuant to this Section 7.9 shall be referred to herein as a
"Transferred Employee." Any changes in the terms and conditions of
employment of any Transferred Employee shall be made in accordance with the
applicable provisions of Chapter 32 of Title 35-A ("An Act to Restructure
the State's Electric Industry") (the "Maine Restructuring Law") including
35-A M.R.S.A. Section3216 and any rules adopted by the MPUC implementing
those statutory requirements, including Chapter 303.
Subject to any and all applicable provisions of the Collective
Bargaining Agreement, during the Buyer's Window, Sellers will refrain from
offering post-Closing employment to any of the Employees without the prior
consent of the Buyer, other than those Employees whom the Buyer indicates
in writing it does not intend to hire. Without the prior written consent
of BHE, the Buyer shall not solicit, directly or indirectly, for employment
any employees of BHE or any of its Affiliates at any time beginning on the
date hereof and up to and including the second anniversary of the Closing
Date, other than offers to Employees made during the Buyer's Window.
Subject to any and all applicable provisions of the Collective
Bargaining Agreement, Sellers shall not, without the prior written consent
of the Buyer, solicit for employment any Employee to whom the Buyer makes
an offer within the Buyer's Window and who becomes a Transferred Employee,
at any time beginning at the end of the Buyer's Window and ending on the
second anniversary of the Closing Date.
With respect to any Employee who does not become a Transferred
Employee, Sellers shall be responsible for providing such Employee with any
benefits to which such Employee shall become entitled under the Sellers'
Employee Transition Plan, as well as any other termination or severance
benefits to which such Employee may be entitled.
(b) The Buyer acknowledges that the Collective Bargaining
Agreement expires on December 31, 1998, and that BHE is obligated to
bargain in good faith with Local 1837 with respect to a replacement or
extension of such Agreement, and Buyer hereby agrees to assume BHE's
obligations under the Collective Bargaining Agreement with respect to any
union Transferred Employees as now in effect and as it may be amended by
such replacement or extension. BHE agrees to keep the Buyer regularly
informed of the progress of negotiations with Local 1837 with respect to
the amendment or extension of the Collective Bargaining Agreement. To the
extent consistent with its obligation to bargain in good faith, BHE will
use its best efforts to limit the extension of the term of the Collective
Bargaining Agreement as it may apply to Employees in the bargaining unit to
a date not later than December 1, 1999, unless Buyer consents to a later
date, and to limit changes in the Collective Bargaining Agreement that are
applicable to Employees and are adverse to the employer.
(c) For the period commencing on the Closing Date and ending
December 31, 2001, the Buyer shall provide all Transferred Employees with
total compensation (including, without limitation, base salary and
overtime, bonuses, and benefits contained in the employee benefit plans,
programs and fringe benefit arrangements of Buyer) which the Buyer in good
faith believes is, in the aggregate, substantially equivalent in value to
the total compensation provided to such employees by BHE immediately prior
to the Closing Date (except that Buyer shall not be required to provide
compensation to such employees corresponding to any bonuses or other
incentive compensation paid by BHE). Nothing herein shall be deemed to
guarantee a Transferred Employee continued employment with the Buyer for
any definite period of time.
(d) As of the Closing Date, all Transferred Employees shall
cease to participate in the employee welfare benefit plans (as such term is
defined in ERISA) maintained or sponsored by BHE (the "Prior Welfare
Plans") and shall, if applicable, commence to participate in welfare
benefit plans of the Buyer or its Affiliates (the "Replacement Welfare
Plans"). The Buyer shall (i) waive all limitations as to pre-existing
condition exclusions and waiting periods with respect to Transferred
Employees under the Replacement Welfare Plans, other than, but only to the
extent of, limitations or waiting periods that were in effect with respect
to such employees under the Prior Welfare Plans and that have not been
satisfied as of the Closing Date, and (ii) provide each Transferred
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date in satisfying any deductible or out-of-pocket requirements
under the Replacement Welfare Plans (on a pro-rata basis in the event of a
difference in plan years).
(e) The Buyer shall take any and all necessary action to cause
the trustee of a tax-qualified defined contribution plan of the Buyer or
one of its Affiliates, if requested to do so by a Transferred Employee, to
accept a direct "rollover" of all or a portion of said employee's
distribution from any defined contribution retirement plan of BHE.
(f) Buyer shall pay to each Transferred Employee whose
employment is involuntarily terminated by the Buyer or any of its
Affiliates subsequent to the Closing Date and prior to December 31, 2001,
except where such employment is terminated for cause, unless such cause is
beyond the control of the Transferred Employee as in the case of a layoff
for lack of work, the "Benefits Required By Legislative Mandate" (as
defined in the Employee Transition Plan of BHE prepared pursuant to the
Maine Restructuring Law (the "Employee Transition Plan")) that would have
been provided to such individual upon such termination by BHE under the
Employee Transition Plan, had such employee remained continuously employed
by BHE and had such individual been eligible under, and covered by, such
plan on the date of such termination; provided however, that no such
benefit shall be required to be paid by the Buyer to any such employee who
either received the Benefits Required By Legislative Mandate or elected to
receive the "Enhanced & Unreduced Accrued Benefit Option" from BHE under
(and as defined in) the Employee Transition Plan.
(g) Sellers agree to timely perform and discharge all
requirements under the WARN Act, if any, and under applicable state and
local laws and regulations for the notification of their employees arising
from the sale of the Purchased Assets to the Buyer. After the Closing
Date, the Buyer shall be responsible for performing and discharging all
requirements under the WARN Act, if any, and under applicable state and
local laws and regulations for the notification of its employees with
respect to the Purchased Assets.
(h) Subject to the other provisions of this Section 7.9, and
except as specifically provided to the contrary in this Agreement:
(1) The Sellers, and not the Buyer, shall be responsible
and shall assume any and all liability for all compensation,
benefits, and perquisites of any kind due any Transferred
Employee on account of employment by the Sellers before the
Closing Date, or the termination of employment by the Sellers,
including, but not limited to, continuation of health care
coverage pursuant to the health continuation coverage provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1986, as
amended ("COBRA") and compliance with the Health Insurance
Portability and Accountability Act of 1996, as amended ("HIPAA");
and
(2) The Buyer, and not the Sellers, shall be responsible
and shall assume any and all liability for all compensation,
benefits, and perquisites of any kind due any Transferred
Employee on account of employment by the Buyer on and after the
Closing Date, or the termination of employment by the Buyer,
including, but not limited to, continuation of health care
coverage pursuant to COBRA and compliance with HIPAA.
7.10 Risk of Loss.
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the property included in the Purchased Assets shall be
borne by the Sellers.
(b) If, before the Closing Date, all or any portion of the
Purchased Assets is taken by eminent domain (or is the subject of a pending
or (to the Knowledge of the Sellers) contemplated taking which has not been
consummated), the Sellers shall notify the Buyer promptly in writing of
such fact, and Buyer shall have the option to elect (A) to eliminate the
affected Purchased Asset or group of Purchased Assets and proceed with the
Closing with the Purchase Price being decreased by an amount equal to the
aggregate value of the eliminated Purchased Asset or group of Purchased
Assets, (B) to retain the affected Purchased Asset or group of Purchased
Assets and negotiate an adjustment to the Purchase Price, in which event
the Buyer and the Sellers shall negotiate in good faith to settle the loss
resulting from such taking (including, without limitation, by making a fair
and equitable adjustment to the Purchase Price) and, upon such settlement,
proceed with the Closing pursuant to the terms of this Agreement, or (C) if
the aggregate value of the Purchased Asset or group of Purchased Assets
taken by eminent domain exceeds 10% or more of the Purchase Price, to
terminate this Agreement pursuant to Section 10.1(d); provided, however,
that, subject to Section 3.5, Buyer shall not be entitled to terminate this
Agreement if the affected Purchased Asset is solely (1) the Veazie Hydro
Project, or (2) the Bangor-Pacific Interest.
(c) If, before the Closing Date, all or any portion of the
Purchased Assets is damaged or destroyed by fire or other casualty, the
Sellers shall notify the Buyer promptly in writing of such fact and, if the
Sellers have not notified the Buyer within thirty (30) days after the
occurrence of such damage, destruction or loss of their intention to cure
such damage, destruction or loss prior to Closing Date (and unless such
cure is so effected prior to the Closing Date), Buyer shall have the option
to elect (A) to eliminate the affected Purchased Asset or group of
Purchased Assets and proceed with the Closing with the Purchase Price being
decreased by an amount equal to the aggregate value of the eliminated
Purchased Asset or group of Purchased Assets, (B) to retain the affected
Purchased Asset or group of Purchased Assets and negotiate an adjustment to
the Purchase Price, in which event the Buyer and the Sellers shall
negotiate in good faith to settle the loss resulting therefrom (including,
without limitation, by making a fair and equitable adjustment to the
Purchase Price), and, upon such settlement, proceed with the Closing
pursuant to the terms of this Agreement, or (C) if the aggregate value of
the Purchased Asset or group of Purchased Assets damaged or destroyed
exceeds 10% or more of the Purchase Price, to terminate this Agreement
pursuant to Section 10.1(d); provided, however, that, subject to Section
3.5, Buyer shall not be entitled to terminate this Agreement if the
affected Purchased Asset is solely (1) the Veazie Hydro Project, or (2) the
Bangor-Pacific Interest.
(d) In the case of an adjustment to the Purchase Price pursuant
to paragraph (b) or (c) hereof due to the taking of or damage to a
Purchased Asset, the Maintenance and Capital Expenditure Amount shall be
reduced by the amounts thereof attributable to such assets.
7.11 Confidential Information.
(a) All oral and written information (collectively
"Information") disclosed by any party or its representatives, whether
before or after the date hereof, in connection with the transactions
contemplated by or the discussions and negotiations preceding this
Agreement, to any other party or its directors, officers and employees and
representatives of its advisors (the persons to whom such disclosure is
permissible being collectively called "Representatives"), shall (i) be kept
confidential by other party and its Representatives, and shall not be
disclosed by such other party and its Representatives except as otherwise
provided in this Agreement, (ii) not be used by any such other persons
except as contemplated by this Agreement, and (iii) be treated with the
same degree of care used in protecting its own confidential and proprietary
information.
(b) Each party hereto will inform its Representatives of the
confidential nature of the other party's Information and will be
responsible for any breach of this Section 7.11 by its Representatives.
(c) If any party is requested or required (by the terms of a
subpoena, order, civil investigative demand or other similar process or
other written request issued by a court of competent jurisdiction or by a
Federal, state or local governmental body or agency) to disclose any
Information of the other party (or any of the terms, conditions or other
facts with respect to the transactions contemplated by this Agreement), the
obligated party shall (i) provide the other party with prompt notice of
such request(s) and the documents requested so that the other party may
seek an appropriate protective order and/or waive the obligated party's
compliance with the provisions of this Section 7.11, and (ii) take such
legally available steps as the other party may reasonably request, to
resist or narrow such request. If, in the absence of a protective order or
the receipt of a waiver hereunder the obligated party is nonetheless, in
the reasonable opinion of its legal counsel, compelled to disclose
Information of the other party pursuant to any regulatory or judicial
proceeding, the obligated party may disclose such Information to such
tribunal without liability hereunder; provided, however, that the obligated
party shall give the other party written notice of Information to be so
disclosed as far in advance of its disclosure as is practicable, shall
furnish only that portion of the Information which is legally required, and
shall request an order or other reliable assurance that confidential
treatment will be accorded to such portions of the Information required to
be disclosed as the affected party designates.
(d) The term "Information" does not include any information
which (i) becomes generally available to and known by the public (other
than as a result of a unilateral disclosure directly or indirectly made by
the recipient party or its Representatives), (ii) becomes available to the
recipient party on a non-confidential basis from a source other than the
disclosing party or its Representatives, provided that such source is not
and was not bound by a confidentiality agreement with or other obligation
of secrecy to the disclosing party, or (iii) which in the opinion of
counsel to the disclosing party is required to be disclosed by federal
securities laws, provided that the disclosing party shall consult with the
other parties hereto as to the content of any such disclosure prior to its
occurrence.
(e) From the date hereof through the Closing Date, Buyer shall
have the right to disclose Information of Sellers with respect to the
Purchased Assets to financing parties and their respective representatives
in connection with financing the transactions contemplated by this
Agreement and to third parties in connection with planning for operations
of the Purchased Assets following the Closing Date, provided that any such
disclosure is made pursuant to confidentiality obligations equivalent to
those provided in this Section 7.11. The Buyer shall be responsible for
any breach of this Section 7.11(e) by any such third party.
(f) If this Agreement is terminated in accordance with its
terms, the recipient party will return promptly to the disclosing party all
copies, extracts or other reproductions in whole or in part of the
disclosing party's Information in the recipient party's possession or in
the possession of its Representatives, and the recipient party will destroy
all copies of any memoranda, notes, analyses, compilations, studies or
other documents prepared by the recipient party or for the recipient
party's use based on, containing or reflecting any Information. Such
destruction shall, if requested, be certified in writing to the disclosing
party by an authorized officer of the recipient party supervising such
destruction.
(g) The parties agree that each shall be entitled to equitable
relief, including injunction and specific performance, in the event of any
breach of the provisions of this Section 7.11, in addition to all other
remedies available to such party at law or in equity.
(h) This Section 7.11 supersedes the correlative provisions of
the Confidentiality Agreement, which agreement is of no further force and
effect, provided that Information disclosed by one party to the other party
hereto prior to the date hereof shall be Information for all purposes of
this Section 7.11.
7.12 Observation, Inspection and Participation.
(a) Between the date of this Agreement and the Closing Date, the
Buyer shall be entitled to have a reasonable number of representatives, all
of whom shall be employees of the Buyer or its Affiliates unless otherwise
agreed by BHE in each instance ("Site Representatives") at any of the
Purchased Assets, on a full or part time basis (whether on site or off
site), as determined by the Buyer; provided, however, that (A) the presence
and activities of the Site Representatives shall be conducted in a manner
as not to interfere unreasonably with the operation of the Purchased
Assets, or with the activities of the Sellers not related to the Purchased
Assets and (B) the Site Representatives shall not have access to any
information that is unavailable pursuant to Section 7.2. Reasonable office
space and facilities shall be made available by the Sellers to such Site
Representatives. Each Site Representative shall have the right to review
budgets and expenditures, audit records (except for personnel and medical
records unless required by law), inspect equipment, advise on repairs
required for equipment, review permits, review the progress of outages,
review maintenance and operating practices and otherwise observe all
activities at the above mentioned facilities in each case to the extent
related to the Purchased Assets or the conduct of the Business and subject
to the limitations contained in Section 7.12(b).
(b) Between the date of this Agreement and the Closing Date, the
Sellers shall exercise their reasonable best efforts to invite Site
Representatives to attend meetings (whether internal or with third parties)
in which the Sellers participate and which relate specifically to the
physical operation or maintenance of the Purchased Assets or the conduct of
the Business; provided, however, that such obligation shall not extend to
(i) meetings of the boards of directors, or any committees thereof, of any
of the Sellers or their Affiliates, (ii) meetings with governmental or
regulatory authorities which are not open to the public, provided that
promptly following each such a meeting Sellers shall inform the Buyer of
the discussions at such meeting as they relate to the Purchased Assets,
(iii) meetings as to which any participant not affiliated with any of the
Sellers (or any of their Affiliates), at its own initiative, requests that
Site Representatives not attend, provided that promptly following each such
meeting Sellers shall inform the Buyer of the discussions at such meeting
as they relate to the Purchased Assets, (iv) meetings of employees of the
Sellers relating to the preparation of the Separation Document, (v)
meetings with counsel, or (vi) meetings the subject matter of which, in the
Sellers' reasonable judgment, if disclosed to the Buyer, would likely be
detrimental to the Sellers (including, without limitation, information
relating to the Sellers' proposed business activities following the Closing
Date or to contractual or other matters as to which the interests of the
Sellers and the Buyer may diverge). Site Representatives shall also be
entitled to consult with the Sellers and make recommendations as to all
activities relating to the management, operation, maintenance,
construction, renewal, addition, replacement, modification and disposal of
the Purchased Assets or the conduct of the Business, including, without
limitation, applications for authorizations, permits and licenses, and fuel
procurement and transportation.
(c) The Buyer shall exercise its reasonable best efforts to
invite designated representatives of the Sellers to attend all meetings
between the date of this Agreement and the Closing Date with third parties
in which the Buyer participates and which relate specifically to any
proceedings before the FERC with respect to this Agreement, the
Interconnection Agreement or the Transitional Power Sales Agreement or the
transactions contemplated hereby or thereby.
7.13 Delivery of Books and Records, etc.; Removal of Property.
On or prior to the Closing Date, Sellers will deliver or make
available to Buyer at the locations of the Purchased Assets all of the
books and records and other such assets constituting a part of the
Purchased Assets as are in Sellers' possession at other locations and, if
at any time after the Closing Date, Sellers discover in their possession or
under their control any other such books and records, Sellers will promptly
delivery such books and records to the Buyer. Within a reasonable time
after the Closing Date and subject to the Easements and except as
contemplated by the Separation Document, Sellers shall remove all assets
not being sold to the Buyer pursuant to this Agreement from the Real
Estate. Such removal shall be at the sole cost and risk of Sellers,
including risk of loss and damage to such assets and to the Purchased
Assets conveyed to the Buyer pursuant to this Agreement.
7.14 Millenium Compliance. Sellers shall use their best efforts to
assure that no later than October 1, 1999, all proprietary technology and
third party proprietary technology which comprise a part of the Purchased
Assets (technology so utilized is collectively referred to as "Technology")
is made "Century Date Compliant." Any such Technology is deemed to be
Century Date Compliant if:
(a) the functions, calculations, and other computing processes
of the Technology (collectively "Processes") perform in a consistent manner
and correctly track and account for dates and passage of time, regardless
of the date in time on which the Processes are actually performed and
regardless of the date on which data was input into the product, whether
before, on, or after January 1, 2000 and whether or not the dates are
affected by leap years;
(b) the Technology accepts, calculates, compares, sorts,
extracts, sequences, and otherwise processes date inputs and date values,
and returns and displays date values in a consistent manner and correctly
tracks and accounts for dates and the passage of time, regardless of the
dates used, whether before, on or after January 1, 2000;
(c) the Technology functions without interruptions caused by the
date in time on which the Processes are actually performed or by the date
input to the system, whether before, on or after January 1, 2000;
(d) the Technology accepts and responds to year input in a
manner that resolves any ambiguities as to century in a defined and
predetermined and appropriate manner; and
(e) the Technology stores and displays date information in ways
that are unambiguous as to the determination of the century.
If, after October 1, 1999, any such Technology is discovered not to be
Century Date Compliant, Sellers shall reimburse Buyer for all reasonable
costs associated with making the Technology Century Date Compliant and
shall indemnify Buyer for all reasonably demonstrable damages of Buyer
caused by the failure of such Technology to be Century Date Compliant.
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the
Transactions. The respective obligations of each party to effect the
purchase and sale of the Purchased Assets shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions
(any of which may be waived jointly by Buyer and Sellers):
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby
shall have expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any Federal or state court which prevents the consummation
of the sale of the Purchased Assets contemplated hereby shall have
been issued and remain in effect (each party agreeing to use its best
efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted by any state or
Federal government or governmental agency in the United States which
prohibits the consummation of the sale of the Purchased Assets;
(c) All Federal, state and local government consents and
approvals (including but not limited to legislative and administrative
consents and approvals and, in the case of clause (ii) below, any
approval required to transfer, or issue or reissue in the name of
Buyer, a Permit or Environmental Permit) required for (i) the
consummation of the sale of the Purchased Assets and the other
transactions contemplated hereby, (ii) the ownership, operation and
maintenance by the Buyer of the Purchased Assets in a manner
substantially consistent with the Sellers' historical ownership,
operation and maintenance thereof, and (iii) the execution, delivery
and performance by the parties thereto of the Ancillary Agreements,
including, without limitation, the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, shall have been
obtained, unless the failure to obtain such consent or approval would
not result in a Material Adverse Effect, and shall be Final ("Final"
means a final order that has not been stayed, enjoined, appealed, set
aside or suspended, with respect to which any required waiting or
appeal period has expired or has been waived, and as to which all
conditions to effectiveness prescribed therein or otherwise by law
have been satisfied); and
(d) The Seller Required Consents and all other consents and
approvals for the consummation of the sale of the Purchased Assets and
the other transactions contemplated hereby shall have been obtained,
other than those which if not obtained, would not, in the aggregate,
have a Material Adverse Effect.
8.2 Conditions to Obligations of the Buyer. The obligation
of the Buyer to effect the purchase of the Purchased Assets contemplated by
this Agreement shall be subject to the fulfillment at or prior to the
Closing Date of the following additional conditions (all or any of which
may be waived in whole or in part by the Buyer in its sole discretion):
(a) There shall not have occurred and be continuing a Material
Adverse Effect, provided, that, subject to Section 3.5, the absence of
a Material Adverse Effect which solely affects either the Veazie Hydro
Project or the Bangor-Pacific Interest shall not be a condition to the
obligation of the Buyer to effect the purchase of the remaining
Purchased Assets;
(b) (i) The representations and warranties of the Sellers set
forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date
as though repeated at and as of the Closing Date, and (ii) the Sellers
shall have performed and complied with in all material respects the
covenants and agreements contained in this Agreement that are required
to be performed and complied with by the Sellers on or prior to the
Closing Date;
(c) The Purchased Assets shall be free and clear of Encumbrances
except those Permitted Encumbrances which by definition are permitted
to survive the Closing Date;
(d) The Buyer shall have received certificates from authorized
officers of the Sellers, dated the Closing Date, to the effect that,
to the best of such officers' Knowledge, the conditions set forth in
Sections 8.2(a), (b) and (c) have been satisfied;
(e) The consents and approvals required to be obtained pursuant
to Section 8.1(c) or (d) hereof shall not contain or be granted
subject to terms or conditions which could reasonably be expected to
have a Material Adverse Effect when compared to the terms and
conditions presently applicable to the Purchased Assets;
(f) Within the earlier to occur of forty-five (45) days after
Buyer's receipt of the Title Commitments or one hundred and fifty
(150) days after the date of this Agreement, Buyer shall not have
notified the Seller in writing that such Title Commitments contain
non-customary exceptions or qualifications that could reasonably be
expected to have a Material Adverse Effect;
(g) BHE and Buyer shall have entered into a memorandum of
understanding with respect to the potential future development of the
345 Line and/or the Basin ▇▇▇▇▇ Hydroelectric Project pursuant to
which, upon the election of Buyer in its sole discretion to proceed
with either of such development projects, (i) BHE shall be afforded
the right to acquire for no additional consideration a 50% equity
interest in the project to be developed, and BHE and Buyer shall
negotiate in good faith a joint venture agreement with respect to such
project which shall obligate BHE to pay 50% of project development
costs, and (ii) if BHE declines to exercise such right, BHE shall,
upon request of Buyer, enter into a consulting agreement with Buyer to
assist Buyer in the development of such project, which agreement shall
provide for reimbursement on a current basis of BHE's costs incurred
under such agreement and, if the project proceeds to financial
closing, a success fee of not less than 5% of the total budgeted costs
for such project net of any consulting costs reimbursed to BHE by
Buyer as provided above.
(h) The Buyer shall have received an opinion from New York and
Maine counsel to Sellers, as applicable, reasonably satisfactory to
Buyer, dated the Closing Date, substantially to the effect that:
(1) each Seller is a corporation organized, existing and in good
standing under the laws of its state of incorporation and each state
or other jurisdiction in which it is qualified to do business as a
foreign corporation by virtue of owning the Purchased Assets or
conducting the related Business, and each Seller has the corporate
power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby; and the execution and delivery of this Agreement
and the Ancillary Agreements and the consummation of the sale of the
Purchased Assets contemplated hereby have been duly authorized by all
requisite corporate action taken on the part of the Sellers;
(2) this Agreement and the Ancillary Agreements have been duly
executed and delivered by the Sellers and (assuming that the Seller
Required Regulatory Approvals, the Seller Required Consents and the
Buyer Required Regulatory Approvals are obtained) are valid and
binding obligations of the Sellers, enforceable against the Sellers in
accordance with their terms, except (A) that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights,
and (B) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(3) the execution, delivery and performance of this Agreement and
the Ancillary Agreements by the Sellers will not constitute a
violation of the Articles of Incorporation or Bylaws, as currently in
effect, of any Seller;
(4) the ▇▇▇▇ of Sale and other documents described in Section 4.3
are in proper form to transfer to the Buyer title to the Purchased
Assets; and
(5) no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental authority is
necessary for the consummation by the Sellers of the Closing other
than (i) the Seller Required Regulatory Approvals, all of which have
been obtained and are Final, (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which if
not obtained or made, would not, in the aggregate, have a Material
Adverse Effect and (iii) the Seller Required Consents, all of which
have been obtained.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United
States or the laws of the State of Maine, such counsel may rely upon
opinions of counsel admitted in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall be delivered
together with the opinion of such counsel. Such opinion may expressly
rely as to matters of fact upon certificates furnished by the Sellers
and appropriate officers and directors of the Sellers and by public
officials;
(i) All corporate and other proceedings to be taken by the
Sellers in connection with the transactions contemplated hereby and
all documents incident thereto shall be reasonably satisfactory in
form and substance to the Buyer and its counsel, and the Buyer and its
counsel shall have received all such certified or other copies of such
documents as it or they may reasonably request; and
(j) Sellers shall have delivered to the Buyer duly executed
counterparts of each document or agreement contemplated to be
delivered by Sellers under Section 4.3 of this Agreement and the
conditions to effectiveness of each such agreement (the Effective
Date, if any, as defined therein) shall have been satisfied.
8.3 Conditions to Obligations of the Sellers. The obligation
of the Sellers to effect the sale of the Purchased Assets contemplated by
this Agreement shall be subject to the fulfillment (all or any of which may
be waived by Seller) at or prior to the Closing Date of the following
additional conditions:
(a) The Sellers shall have received the Preliminary Purchase
Price from Buyer;
(b) (i) The representations and warranties of the Buyer set forth
in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as though
repeated at and as of the Closing Date, and (ii) the Buyer shall have
performed and complied in all material respects with its covenants and
agreements contained in this Agreement which are required to be
performed on or prior to the Closing Date;
(c) The Sellers shall have received a certificate from an
authorized officer of the Buyer, dated the Closing Date, to the effect
that, to the best of such officer's Knowledge, the conditions set
forth in Sections 8.3(a) and (b) have been satisfied;
(d) The consents and approvals required to be obtained pursuant
to Section 8.1(c) hereof shall not contain, or be granted subject to,
terms or conditions which, from the Sellers' perspective, materially
and adversely affect the benefits to the Sellers under this Agreement
or the transactions contemplated hereby;
(e) All corporate and other proceedings to be taken by the Buyer
in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in form
and substance to the Sellers and their counsel, and the Sellers and
their counsel shall have received all such certified or other copies
of such documents as it or they may reasonably request; and
(f) The Sellers shall have received an opinion from counsel for
Buyer reasonably satisfactory to Sellers, dated the Closing Date, to
the effect that:
(1) Buyer is a corporation organized, existing and in good
standing under the laws of the Commonwealth of Pennsylvania, and has
the corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby; and the execution and
delivery of this Agreement and the Ancillary Agreements and the
consummation of the sale and purchase of the Purchased Assets
contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;
(2) this Agreement and the Ancillary Agreements have been duly
executed and delivered by the Buyer and (assuming that the Seller
Required Regulatory Approvals, the Seller Required Consents and the
Buyer Required Regulatory Approvals are obtained) are valid and
binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to the creditors' rights and (B) that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought;
(3) the execution, delivery and performance of this Agreement and
the Ancillary Agreements by the Buyer will not constitute a violation
of the Certificate of Incorporation or by-laws (or other similar
governing documents), as currently in effect, of the Buyer;
(4) the Assignment and Assumption Agreement and other instruments
described in Section 4.4 are in proper form and are effective for the
Buyer to assume the Assumed Liabilities; and
(5) no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental authority is
necessary for the consummation by the Buyer of the Closing other than
(i) the Buyer Required Regulatory Approvals, all of which have been
obtained and are Final, and (ii) any other declarations, filings,
registrations, notices, authorizations, comments or approvals which if
not obtained would not prevent the payment by Buyer of the Purchase
Price.
As to any matter contained in such opinion which involves the
laws of any jurisdiction other than the Federal laws of the United
States, the Commonwealth of Pennsylvania or the State of Maine, such
counsel may rely upon opinions of counsel admitted to practice in such
other jurisdictions. Any opinions relied upon by such counsel as
aforesaid shall be delivered together with the opinion of such
counsel. Such opinion may expressly rely as to matters of fact upon
certificates furnished by appropriate officers and directors of the
Buyer and its respective Affiliates and by public officials; and
(g) Buyer shall have delivered to Sellers the documents and
agreements contemplated to be delivered by the Buyer in Section 4.4 or
elsewhere in this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification.
(a) Sellers will indemnify, defend and hold harmless the Buyer
and its affiliates and their respective directors, officers, employees,
agents and representatives ("Buyer Group") from and against any and all
claims, demands or suits (by any Person), losses, liabilities, damages (but
excluding, except to the extent claimed by third parties, any
consequential, special, indirect, punitive or incidental damages, including
without limitation lost profits), obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, assessments, penalties, fines, judgments,
settlements and compromises relating thereto, reasonable disbursements in
connection therewith, reasonable attorneys' and consultants' fees,
investigation, removal or response cleanup and remedial costs) (each, an
"Indemnifiable Loss"), asserted against or suffered by the Buyer Group
relating to, resulting from or arising out of (i) any breach of any
representation or warranty (without regard to any qualifications with
respect to Material Adverse Effect contained therein) of the Sellers
contained in this Agreement or any schedule hereto, or any certificate
delivered by or on behalf of Sellers in connection herewith, (ii) any
covenant or agreement of Sellers set forth in Sections 7.1, 7.2(a), 7.5,
7.6(a), 7.6(d), 7.8, 7.10 or 7.12, (iii) any breach of any other covenant
or agreement of the Sellers contained in this Agreement, any schedule
hereto, or any certificate delivered by or on behalf of Sellers in
connection herewith, or (iv) the Excluded Liabilities, provided, however,
that, in the case of any Indemnifiable Loss arising under clause (i) or
(ii) of this Section 9.1(a) ("Certain Indemnifiable Losses"), (W) such
indemnification shall be effective only with respect to claims written
notice of which is received by Sellers no later than eighteen months after
the Closing Date, (X) no amounts shall be due and payable to the extent
that the sum of Certain Indemnifiable Losses plus all Seller Indemnified
Environmental Losses (as defined below) is equal to $500,000 or less, (Y)
in no event shall the aggregate amount of all payments made by the Sellers
with respect to Certain Indemnifiable Losses exceed ten percent (10%) of
the Purchase Price, and (Z) the foregoing limitations on Sellers' indemnity
shall not apply to the extent the Certain Indemnifiable Loss results from
any successor liability of Buyer arising out of a failure of Bangor-Pacific
to file any Tax Return required to be filed by it prior to the Closing, or
the failure of Sellers to file any Tax Return or pay any Tax required to be
filed or paid by them under this Agreement, and provided, further, that in
the case of any Indemnifiable Loss relating to the Excluded Liabilities of
Sellers described in Section 2.4(vi) (hereinafter, "Seller Indemnified
Environmental Losses"), (1) such indemnification shall be effective only
with respect to claims written notice of which is received by Sellers no
later than the third anniversary of the Closing Date, (2) no amounts shall
be due and payable to the extent that the sum of such Seller Indemnified
Environmental Losses plus the Certain Indemnifiable Losses is equal to
$500,000 or less and (3) in no event shall the aggregate amount of all
payments made by the Sellers with respect to such Seller Indemnified
Environmental Losses exceed $20 million.
(b) The Buyer will indemnify, defend and hold harmless the
Sellers and their affiliates and their respective directors, officers,
employees, agents and representatives ("Sellers Group") from and against
any and all Indemnifiable Losses asserted against or suffered by the
Sellers Group relating to, resulting from or arising out of (i) any breach
of any representation or warranty of the Buyer contained in this Agreement,
any schedule hereto, or any certificate delivered by or on behalf of Buyer
in connection herewith, (ii) any covenant or agreement of the Buyer set
forth in Sections 7.5, 7.6(a), 7.6(d), 7.10 or 7.12, (iii) any breach of
any other covenant or agreement of the Buyer contained in this Agreement,
any schedule hereto, or any certificate delivered by or on behalf of Buyer
in connection herewith, or (iv) the Assumed Liabilities, provided, however,
that in the case of any Indemnifiable Loss arising under clause (i) or (ii)
of this Section 9.1(b), (X) such indemnification shall remain in effect
only with respect to claims written notice of which is received by Buyer no
later than eighteen months after the Closing Date, (Y) no amounts shall be
due and payable to the extent that the aggregate amount of such
Indemnifiable Losses is equal to $500,000 or less and (Z) in no event shall
the aggregate amount of all payments made by the Buyer with respect to such
Indemnifiable Losses exceed ten percent (10%) of the Purchase Price.
(c) Any Person entitled to receive indemnification under this
Agreement (an "Indemnitee") having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages,
costs and expenses from insurers of such Indemnitee under applicable
insurance policies so as to reduce the amount of any Indemnifiable Loss
hereunder. The amount of any Indemnifiable Loss shall be reduced (i) to
the extent that the Indemnitee receives any insurance proceeds with respect
to an Indemnifiable Loss and (ii) to take into account any net Tax benefit
recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss and any payment actually received with respect to an
Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any
representation, warranty, covenant or agreement shall not affect the
parties' obligations under this Section 9.1 if the Indemnitee provided the
person required to provide indemnification under this Agreement (the
"Indemnifying Party") with proper notice of the claim or event for which
indemnification is sought prior to such expiration, termination or
extinguishment.
(e) Other than as provided in Section 10.2 hereof, the rights
and remedies of the Sellers and the Buyer under this Article IX are
exclusive and in lieu of any and all other rights and remedies which the
Sellers and the Buyer may have under this Agreement or otherwise for
monetary relief with respect to (i) any breach or failure to perform any
representation, warranty, covenant or agreement set forth in this
Agreement, any schedule hereto, or any certificate delivered by or on
behalf of Sellers or Buyer in connection herewith or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be.
The rights and obligations of indemnification under this Section
9.1 shall not be limited or subject to set-off based on any violation or
alleged violation of any obligation under this Agreement or otherwise,
including but not limited to breach or alleged breach by the Indemnitee of
any representation, warranty, covenant or agreement contained in this
Agreement.
9.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or
brought by any Person who is not a party to this Agreement or any Affiliate
of a party to this Agreement (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party, the Indemnitee
will give such Indemnifying Party prompt written notice thereof, but in any
event not later than twenty (20) days after the Indemnitee's receipt of
notice of such Third Party Claim. Such notice shall describe the nature of
the Third Party Claim in reasonable detail (including a copy of the Third
Party Claim if made in writing) and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee. The Indemnifying Party will have the right, by giving
written notice to the Indemnitee as provided below, to elect to assume the
defense of any Third Party Claim at such Indemnifying Party's own expense
and by such Indemnifying Party's own counsel, by all appropriate
proceedings, which proceedings will be diligently prosecuted, and the
Indemnitee will upon request of an Indemnifying Party cooperate in good
faith in such defense at the Indemnifying Party's expense. If the
Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party is hereby authorized (but not obligated), at the expense
of the Indemnified Party, to file any motion, answer or other pleading and
to take any other action which the Indemnified Party deems necessary or
appropriate to protect the Indemnified Party's interests, provided that
such action is not prejudicial to the Indemnifying Party's defense in any
material respect. Notwithstanding the assumption of defense by the
Indemnifying Party, the Indemnitee may take over the control of the defense
or settlement of a Third Party Claim at any time if it irrevocably waives
its right to indemnity with respect to such Third Party Claim.
(b) The Indemnifying Party will have a period of fifteen (15)
days after an Indemnitee provides written notice to the Indemnifying Party
of any Third Party Claim within which to notify the Indemnitee in writing
that (i) the Indemnifying Party disputes liability to the Indemnitee
hereunder with respect to the Third Party Claim and, if so, the basis for
the dispute, and (ii) if the Indemnifying Party does not dispute liability,
whether or not the Indemnifying Party has elected to assume the defense of
such Third Party Claim as provided in the last sentence of Section 9.2(a).
If the Indemnifying Party has assumed the defense, it will not be liable
for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. Without the prior written consent of
the Indemnitee in its sole discretion, the Indemnifying Party will not
enter into any settlement of any Third Party Claim which would lead to
liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee does not simultaneously receive full
indemnification or which would fail to result in the Indemnitee receiving a
release of the Indemnitee reasonably satisfactory to it. If the
Indemnifying Party fails to assume the defense, assumes the defense but
fails to diligently prosecute it, or fails to give any notice when required
hereunder, then the Indemnitee will have the right to defend against such
Third Party Claim, at the sole cost and expense of the Indemnifying Party,
and, if requested by the Indemnitee, the Indemnifying Party will at the
sole cost and expense of the Indemnifying Party, cooperate with the
Indemnitee and its counsel in such defense. If the Indemnifying Party
disputes its liability for any portion of such Third Party Claim, the
Indemnitee will be free to seek enforcement of its rights, if any, to
indemnification under this Agreement.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party written notice thereof prior
to the expiration of the indemnification notice period, stating the nature
of such claim in reasonable detail and indicating the estimated amount, if
practicable, but in any event not later than twenty (20) days after the
Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party
will have a period of thirty (30) days within which to respond to such
Direct Claim, specifying the portion of the Direct Claim that is disputed
and the basis for such position. If Indemnifying Party does not respond
within such thirty (30) day period the Indemnifying Party will be deemed to
have accepted such claim. If the Indemnifying Party responds within such
thirty (30) day period, the Indemnifying Party will be deemed to have
accepted and be liable for payment of the undisputed portion of such claim,
if any, on demand. If the Indemnifying Party rejects any portion of such
claim, the Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such reduction, less
any costs, expenses or premiums incurred in connection therewith, will
promptly be repaid by the Indemnitee to the Indemnifying Party. Upon
making any indemnity payment, the Indemnifying Party will, to the extent of
such indemnity payment, be subrogated to all rights of the Indemnitee
against any third party in respect of the Indemnifiable Loss to which the
indemnity payment relates; provided, however, that (i) the Indemnifying
Party will then be in compliance with its obligations under this Agreement
in respect of such Indemnifiable Loss and (ii) until the Indemnitee
recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third party on account of said
indemnity payment is hereby made expressly subordinated and subjected in
right of payment to the Indemnitee's rights against such third party.
Without limiting the generality or effect of any other provision hereof,
each such Indemnitee and Indemnifying Party will duly execute upon request
all instruments reasonably necessary to evidence and perfect the above-
described subrogation and subordination rights. Nothing in this Section
9.2(d) shall be construed to require any party hereto to obtain or maintain
any insurance coverage. The rights contained herein shall not be
duplicative of any reductions effected pursuant to Section 9.1(c) hereof.
(e) Subject to clauses (X) and (1) of the provisos to Section
9.1(a) and clause (X) of the proviso to Section 9.1(b) hereof, a failure to
give timely notice as provided in this Section 9.2 will not affect the
rights or obligations of any party hereunder except if, and only to the
extent that, as a result of such failure, the party which was entitled to
receive such notice was actually prejudiced as a result of such failure.
(f) During the three-year period following the Closing Date, if
the Buyer acquires Knowledge of an event, condition or circumstance
described in Sections 2.3(a)(v), 2.4(v) or 2.4(vi) of this Agreement,
including, without limitation, any event, act, omission, loss,
circumstance, injury, damage, Release or occurrence (an "Environmental
Condition"), the Buyer shall give prompt written notice to BHE of such
Environmental Condition regardless of whether it is a matter for which
Buyer is indemnified by Sellers under this Agreement (provided that
subsection (e) of this Section shall apply to such notice). Excluded from
this notice requirement are Environmental Conditions existing as of the
date of this Agreement that have been disclosed to the Buyer by the
Sellers. Such notice shall describe the Environmental Condition in
reasonable detail and include a copy of any written documentation in
Buyer's (or its agents') possession regarding the Environmental Condition.
Until Sellers shall no longer have any indemnification obligations with
respect to Seller Indemnified Environmental Losses under Section 9.1(a)
hereof, if either (i) the notice states that such Environmental Condition
is a matter with respect to which Buyer or any member of the Buyer Group is
seeking or may seek indemnification from Sellers hereunder, or (ii) BHE
otherwise reasonably concludes that the existence of or the potential
remediation of such Environmental Condition could result in a Seller
Indemnified Environmental Loss, then, in addition to the rights set forth
elsewhere in this Section 9.2, BHE shall have the right, at its sole cost
and expense, to conduct and control any investigation and/or remediation
("Remediation") relating to or arising out of the Environmental Condition.
If Sellers conduct the Remediation,
(1) Buyer shall have the right to participate in the planning
and design of any such Remediation and the right to participate in any
meetings with, hearings before or other sessions with any governmental
body regarding the Remediation;
(2) Sellers will coordinate the schedule of the Remediation with
Buyer so that disruptions of operation of the affected facilities will
be minimized;
(3) Buyer will cooperate with Sellers to enable them to conduct
the Remediation in a reasonably timely manner, including without
limitation affording Sellers and their agents reasonable access to the
property to be remediated, provided that such cooperation need not
include the payment of money or any other financial accommodation;
(4) in case clause (ii) of this subsection (f) is applicable,
Sellers will obtain the prior written approval of the Buyer, which
consent will not be withheld unreasonably, for any consultant or
contract or retained by Sellers to design or implement the
Remediation;
(5) Sellers will conduct the Remediation in compliance with all
applicable Environmental Laws;
(6) Sellers will use their reasonable efforts to complete such
Remediation in a timely and professional manner;
(7) in case clause (ii) of this subsection (f) is applicable,
Sellers will not agree to or select any Remediation plan without the
consent of Buyer to such plan, which shall not be withheld
unreasonably or delayed;
(8) Sellers will not agree to or select any Remediation plan
that imposes any additional obligations on Buyer, including the
obligation to sign manifests or obtain permits, without the prior
written consent of the Buyer. If Buyer agrees in writing to a
Remediation that imposes additional obligations on Buyer, and Sellers
then fail, in the reasonable opinion of Buyer after notice from Buyer,
to implement the Remediation in a manner which will complete the
Remediation in a reasonably timely manner and in accordance with
Environmental Laws, the Buyer may give written notice of such failure
to the Sellers and, if after giving such notice, Sellers shall not
have addressed Buyer's concerns in a satisfactory manner within thirty
(30) days, Buyer may assume control of the Remediation and implement
and complete such Remediation at the expense of the Sellers (subject
to the ultimate determination under this Article IX of responsibility
for such expenses). Sellers shall provide the Buyer copies of any
study, plan or report associated with the Remediation at least thirty
(30) days before it is submitted to any governmental body and shall
provide Buyer copies of all reports, plans and correspondence
submitted to a governmental body. In addition, Sellers shall provide
Buyer seven days' notice (or shall provide Buyer notice as soon as
practical if seven days' notice is not practical) of any meetings
with, hearings before or other sessions with any governmental body
with respect to the Remediation; and
(9) Sellers shall be responsible for any violation or alleged
violation of Environmental Law, and any loss of life, injury to
persons or property or damage to natural resources caused (or
allegedly caused), by (i) negligent acts or omissions by the Sellers
in connection with Remediation conducted by Sellers at any of the
Purchased Assets; (ii) acts or omissions by the Sellers at any of the
Purchased Assets in connection with Remediation conducted by Sellers
which cause a condition not in violation of Environmental Law or not
in need of remediation under Environmental Law to be in violation of
Environmental Law or in need of remediation under Environmental Law
(including, without limitation, the Release or destabilization of
Hazardous Substances which are in a stable or contained state and are
in compliance with all applicable Environmental Laws) in connection
with Remediation conducted by Sellers; or (iii) negligent acts or
omissions by the Sellers in connection with Remediation conducted by
Sellers at any of the Purchased Assets that exacerbate or aggravate
any condition in violation of Environmental Law or in need of
remediation under Environmental Law, to the extent of any such
negligent exacerbation or aggravation; provided, that the mere
discovery or failure to discover in connection with Remediation
conducted by Sellers by the Sellers of a violation of Environmental
Law or a condition in need of remediation under Environmental Law
shall not in and of itself subject Sellers to liability under this
subsection (9).
Buyer acknowledges that BHE has requested that the MDEP review
the Milford Project pursuant to the Voluntary Response Action Program
("VRAP"), 38 M.R.S.A. Section 343-E and agrees that BHE shall have the
right to continue to prosecute such VRAP application after the Closing.
BHE agrees to indemnify and hold harmless Buyer from any costs, expenses or
liabilities which may arise from the completion of the VRAP process.
ARTICLE X
TERMINATION
10.1 Termination. (a) This Agreement may be terminated at any
time prior to the Closing Date by mutual written consent of the Sellers and
the Buyer.
(b) This Agreement may be terminated by the Sellers or the Buyer
if the Closing contemplated hereby shall not have occurred on or before the
date twelve months after the date of this Agreement (the date the Sellers
or the Buyer becomes entitled to terminate this Agreement pursuant to this
Section 10.1(b) is referred to as the "Termination Date"); provided that
the right to terminate this Agreement under this Section 10.1(b) shall not
be available to any party whose failure to fulfill any obligations under
this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date; and provided, further, that if on
the date twelve months after this Agreement the conditions to the Closing
set forth in Section 8.1(c) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the date referred to above shall be the date which is
eighteen months from the date of this Agreement.
(c) This Agreement may be terminated by either the Sellers or
the Buyer if (i) any governmental or regulatory body, the consent of which
is a condition to the obligations of the Sellers and the Buyer to
consummate the Closing shall have determined not to grant its or their
consent and all appeals of such determination shall have been taken and
have been unsuccessful, (ii) one or more courts of competent jurisdiction
in the United States or any state 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 or (iii) any statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the
United States which prohibits the consummation of the Closing.
(d) This Agreement may be terminated by the Buyer in accordance
with Section 3.5 or Section 7.10.
10.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions
contemplated hereby by either or both of the parties pursuant to Section
10.1, written notice thereof shall forthwith be given by the terminating
party to the other party and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action
by any of the parties hereto. If this Agreement is terminated as provided
herein:
(a) none of the parties hereto nor any of their respective
trustees, directors, officers or Affiliates, as the case may be, shall have
any liability or further obligation to the other party or any of their
respective trustees, directors, officers or Affiliates, as the case may be,
pursuant to this Agreement, except in each case as stated in this Section
10.2 and in Sections 7.2(b), 7.3 and 7.11; and
(b) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn
from the agency or other person to which they were made.
Notwithstanding any other term or provision of this Agreement or the
other documents delivered pursuant to this Agreement, each of the parties
hereby agrees that no officers, directors, employees, agents or attorneys
of such party shall be liable hereunder for any profit, loss of capital,
consequential, special, indirect, punitive or incidental damages that may
be incurred by any other party as a result of any action or inaction by any
other party hereunder or in connection with this Agreement or any agreement
contemplated to be executed in connection with this agreement, and hereby
knowingly, voluntarily and intentionally waives the right to seek any such
damages.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written
agreement of the Sellers and the Buyer.
11.2 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
11.3 No Survival. Subject to the provisions of Section 10.2, (i)
each and every representation and warranty contained in this Agreement
shall expire with, and be terminated and extinguished by, the consummation
of the sale of the Purchased Assets and the transfer of the Assumed
Liabilities pursuant to this Agreement and such representations and
warranties shall not survive the Closing Date, except to the extent
necessary to make effective a party's ability to make an indemnity claim
with respect to such representations and warranties during the notice
period and as otherwise provided in Section 9.1 and (ii) every covenant and
obligation contained in this Agreement shall survive the Closing and the
consummation of the sale of the Purchased Assets and the transfer of the
Assumed Liabilities, except to the extent a party's ability to make an
indemnity claim with respect to such covenants and obligations is expressly
limited under Section 9.1. None of the Sellers, the Buyer or any officer,
director, trustee or Affiliate of any of them shall be under any liability
whatsoever with respect to any such representation, warranty or covenant
upon and after the termination or expiration thereof.
11.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
facsimile transmission, telexed or mailed by overnight courier or
registered or certified mail (return receipt requested), postage prepaid,
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt thereof):
If to the Sellers, to:
Bangor Hydro-Electric Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Buyer, to:
PP&L Global, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Counsel
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
11.5 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law, without the
prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or
remedies hereunder; provided, however, that the Buyer may assign, with the
Sellers' consent, which shall not be unreasonably withheld, any or all of
its rights, interests and obligations hereunder to one or more of its
Affiliates or, without any consent by Sellers, to one or more of the direct
or indirect wholly-owned Subsidiaries of PP&L Global, Inc. (in either which
case the Buyer shall nonetheless remain jointly and severally responsible
for the performance of all such obligations) so long as any such assignment
does not adversely affect the availability or timing of any Federal, state
or local government consent or approval required for the consummation of
the sale of the Purchased Assets and so long as the Parent's obligations
under the Equity Contribution Agreement extend directly to such Affiliate
or wholly-owned subsidiary. Notwithstanding the foregoing, the rights and
obligations of the Sellers (or any of them) pursuant to this Agreement may,
with the Buyer's consent, which shall not be unreasonably withheld, delayed
or conditioned, be assigned to, and assumed by, such entity or entities to
which any or all of the Sellers or the Purchased Assets have been
transferred subsequent to the date of this Agreement pursuant to any
corporate reorganization, restructuring or similar transaction.
11.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maine (regardless of
the laws that might otherwise govern under applicable Maine principles of
conflicts of law) as to all matters, including but not limited to matters
of validity, construction, effect, performance and remedies. Any and all
disputes arising out of or in connection with this Agreement shall be
adjudicated in the Federal or state courts located in the State of Maine,
to whose jurisdiction the parties hereby irrevocably submit for such
purposes. The parties agree to perform their duties pursuant to this
Agreement and the Ancillary Agreements in good faith and in a commercially
reasonable manner.
11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Interpretation. The Article and Section headings contained in
this Agreement 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
interpretation of this Agreement. Neither party shall be deemed to have
been the drafter of this Agreement, which is the product of detailed, arm's
length negotiations between the parties and their respective counsel.
11.9 Schedules and Exhibits. All Exhibits and Schedules referred
to herein are intended to be and hereby are specifically made a part of
this Agreement. Any matters described or referred to in any Schedule shall
be deemed included in any other relevant Schedule, irrespective of whether
any express incorporation by reference is made therein to the extent it is
readily apparent that the matter to be disclosed should be included in the
other schedule.
11.10 Entire Agreement. This Agreement including the Exhibits,
Schedules, documents, certificates and instruments referred to herein,
embodies the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement and supersedes
any and all prior oral or written expressions, understandings or agreements
between or among the parties with respect thereto. There are no
restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein or
therein. It is expressly acknowledged and agreed that, other than as
expressly set forth in this Agreement, there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any
material made available to the Buyer pursuant to the terms of Section 7.11
(including without limitation the Offering Memorandum, dated April 1998,
the reference manuals relating to the Purchased Assets, any other
supplemental information or responses to data requests, or materials
received from or reviewed at the Sellers' document center, in each case
made available to the Buyer by the Sellers or ▇▇▇▇ Consulting Group, Inc.).
11.11 No Punitive or Consequential Damages. Notwithstanding anything
to the contrary contained in this Agreement in Article IX or otherwise,
except to the extent provided in Section 9.1(a) or (b) with respect to
Indemnifiable Losses consisting of claims of third parties, no party or its
Affiliates shall seek or be liable for any punitive or consequential
damages, including, but not limited to, loss of revenue or income, or loss
of business reputation or opportunity relating to any breach or alleged
breach of this Agreement.
11.12 Parties' Knowledge of Others' Breach. Buyer shall not be
entitled to assert that the condition to Buyer's obligation set forth in
Section 8.2(b)(i) of this Agreement is not satisfied due to a breach by
Sellers of any of their representation and warranties of which Buyer solely
has Knowledge. Sellers shall not be entitled to assert that the condition
to Sellers' obligations set forth in Section 8.3(b)(i) of this Agreement is
not satisfied due to a breach by Buyer of any of its representation and
warranties of which Sellers solely have Knowledge.
IN WITNESS WHEREOF, the Sellers and the Buyer have caused this
agreement to be signed by their respective duly authorized officers as of
the date first above written.
BANGOR HYDRO-ELECTRIC COMPANY
By: ______________________
Name:
Title:
PENOBSCOT HYDRO CO., INC.
By: ______________________
Name:
Title:
PP&L GLOBAL, INC.
By: ______________________
Name:
Title: