Exhibit 10(q)-1
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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
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TABLE OF CONTENTS
Page
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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
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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
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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
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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
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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 I
DEFINITIONS
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1.1 Definitions. (a) As used in this Agreement, the following terms have
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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
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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.
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(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)
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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);
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(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.
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(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
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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.
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(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.
9
(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.
10
(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)
11
Term Section
---- -------
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)
12
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;
13
(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;
14
(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
15
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;
16
(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
17
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
18
(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
19
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;
20
(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.
21
(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
22
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;
23
(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
24
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
25
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
26
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
27
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.
28
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
29
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.
30
(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
31
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.
32
(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.
33
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
34
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
35
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.
36
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
37
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
38
(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
39
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.
40
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.
41
(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
42
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
43
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.
44
(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
45
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. (S)3216 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.
46
(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.
47
(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
48
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
49
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
50
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,
51
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):
52
(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
53
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
54
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
55
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,
56
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,
57
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
58
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.
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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
60
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,
61
(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
62
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. (S)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
63
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
64
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
65
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.
66
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.
67
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:
68
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: /s/
---------------------------------
Name:
Title:
PENOBSCOT HYDRO CO., INC.
By: /s/
---------------------------------
Name:
Title:
PP&L GLOBAL, INC.
By: /s/
---------------------------------
Name:
Title: