PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 31st day of March, 1995 by and between BABCOCK-ULTRAPOWER
JONESBORO, a joint venture formed as a California general partnership
("Seller"), and BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation ("Buyer").
RECITALS
WHEREAS, Seller is the owner of a 24.5 MW wood-fired small power
production facility located in Jonesboro, Maine (the "Facility");
WHEREAS, pursuant to a Power Purchase Agreement dated as of August
13, 1984 (as amended to date, the "Power Purchase Agreement") between Buyer
and Seller, Buyer has committed to purchase the electric output of the
Facility for a term and under such conditions as are set forth therein;
WHEREAS, Buyer, based upon its examination and analysis, believes
that it is acquiring the ability to achieve substantial net present value
savings for its customers by reducing its overall cost of purchased power if
it acquires all right, title and interest of Seller in and to the Power
Purchase Agreement on the terms and conditions set forth herein, and that
consummation of the transactions described herein is in the best interests of
Buyer and its customers; and
WHEREAS, Seller is willing to sell to Buyer all of its right, title
and interest in and to the Power Purchase Agreement on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and covenants contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller, intending to be legally bound, hereby agree
as follows:
ARTICLE 1
PURCHASE AND SALE; CLOSING
1.1 PURCHASE AND SALE. Subject to the terms and conditions set
forth herein, Seller agrees to sell, assign, transfer, convey and deliver to
Buyer on the Closing Date (as hereinafter defined), and Buyer agrees to
purchase from Seller on the Closing Date, all right, title and interest of
Seller in and to the Power Purchase Agreement.
1.2 PURCHASE PRICE; PAYMENTS AT CLOSING. (a) In consideration
for the purchase referred to in Section 1.1 above, Buyer shall on the Closing
Date pay to Seller (i) the amount of $41,500,000 in cash in immediately
available funds and (ii) the principal amount of Loans to be outstanding as
of the Escrow Release Date (as hereinafter defined) (subject to the
adjustment described in Section 1.2(b) below) in immediately available funds,
as specified in the notice delivered pursuant to Section 1.2(c) below (such
amounts described in clauses (i) and (ii) of this Section 1.2(a) being
hereinafter referred to collectively as the "Purchase Price") and (iii) the
amounts described in Section 1.4(a) hereof.
(b) If the Escrow Release Date does not occur on an Installment
Payment Date (as hereinafter defined), the aggregate amount payable pursuant
to Section 1.2(a)(ii) above shall be reduced by (i) the principal amount of
the installment of Loans scheduled to be repaid on the following Installment
Payment Date pursuant to Section 2.4(a)(i) (regularly scheduled payments) and
Section 2.4(b) (accelerated prepayments) of the Loan Agreement (as
hereinafter defined), multiplied by (ii) a fraction equal to the number of
days from and including the previous Installment Payment Date to but not
including the Escrow Release Date divided by the number of days from and
including the previous Installment Payment Date to but not including the
following Installment Payment Date.
(c) The aggregate amount of any payment pursuant to Section
1.2(a)(ii) above shall be equal to the amount set forth in the certificate
delivered by Seller to Buyer pursuant to Section 1.6(x) below. Except as
expressly provided in Section 1.2 (a)(ii) and Section 6.1 of this Agreement,
Seller shall pay all other amounts due and payable under the Loan Agreement
and the Security Documents.
(d) The terms "Agent", "Banks", "Loans", and "Installment Payment
Date" shall have the meanings set forth in the Amended and Restated
Construction and Term Loan Agreement dated as of October 1, 1989 (as amended
to date, the "Loan Agreement") among Seller, the Banks party thereto and The
Bank of New York, as Agent.
1.3 CLOSING DATE. (a) The consummation of the purchase referred
to in Section 1.1 above and the payments set forth in Section 1.2(a) hereof
(the "Closing") shall occur on June 9, 1995 at 10:00 a.m. (New York time), at
the offices of White & Case, 1155 Avenue of the Americas, New York, New York
10036 or at such other time, not later than September 15, 1995, as Buyer may
determine in accordance with this Section 1.3 (the "Closing Date") or such
other place as Seller and Buyer may agree upon. Buyer may select such other
Closing Date, not later than September 15, 1995, as Buyer may determine
provided that such other Closing Date shall be a date not more than five nor
less than four Eurodollar Business Days (as defined in the Loan Agreement)
prior to the date on which the Loans may be prepaid in full pursuant to the
Loan Agreement (unless the Agent otherwise agrees in writing to the
prepayment of the Loans other than as set forth in the Loan Agreement).
Buyer shall provide Seller not less than thirty days prior written notice of
such other Closing Date. In the event Buyer is unable to consummate the
purchase referred to in Section 1.1 on such Closing Date, Buyer may select
another Closing Date (determined in accordance with this paragraph and which,
without the consent of Seller, shall be not less than thirty days following
the applicable Closing Date) by written notice to Seller given not less than
five Eurodollar Business Days prior to the then applicable Closing Date. In
the event that the Closing Date is extended beyond June 9, 1995, Seller
agrees to select only thirty-day Interest Periods (as defined in the Loan
Agreement) with respect to the Loans. Seller agrees not to amend the Loan
Agreement in any manner that would increase the costs payable by Buyer
hereunder or otherwise materially and adversely affect the obligations of
Buyer to Seller under this Agreement.
(b) Concurrently with the consummation of the Closing, Seller
shall provide notice to the Agent and the Banks in accordance with the Loan
Agreement of the prepayment of the Loans in full on the Escrow Release Date.
1.4 OTHER PAYMENTS AT CLOSING.
(a) In addition to the payments required pursuant to Section
1.2(a)(i) and (ii), Buyer shall pay to Seller (or at the direction of Seller
to the applicable third parties or counterparties) on the Closing Date in
cash in immediately available funds an amount equal in the aggregate to:
(i) (x) the book inventory value of, and (y) unless Buyer has
delivered its written undertaking pursuant to Section 1.8 below, all of
Seller's projected disposal costs associated with, the fuel located at
the Facility on the Closing Date (excluding any such fuel which Seller
intends to combust in order to satisfy a power sales commitment to a
third party commencing within thirty days of the Closing Date), as set
forth in the certificate delivered by Seller pursuant to Section
1.6(viii) below; provided that Buyer will not be responsible under this
Section 1.4(a)(i) for the inventory value of any fuel in excess of the
equivalent of 9,104 bone dry short tons or the disposal of any fuel in
excess of the equivalent of 10,014 bone dry short tons;
(ii) undisputed amounts payable by Buyer to Seller under and in
accordance with the Power Purchase Agreement which will have accrued as
of the Escrow Release Date less interest accrued from, and including,
the Closing Date to, but excluding, the Escrow Release Date (the "Escrow
Interest") on all indebtedness incurred by Buyer to fund the Purchase
Price and the amounts payable pursuant to Section 1.4(a)(iii) (the
"Escrow Debt"); provided that Buyer shall have notified Seller in
writing of any amounts disputed in good faith under the Power Purchase
Agreement and its reasons for such dispute at least one business day
(which, for the purposes of this Agreement, shall mean any day other
than a Saturday, Sunday or other day on which banks in New York City or
the State of Maine are authorized or required by law to close) prior to
the Closing Date;
(iii) amounts payable to Seller's counterparties as a result of the
termination as of the Escrow Release Date of the interest rate swap
agreements entered into by Seller in respect of the Loans, as set forth
in the certificate delivered by Seller pursuant to Section 1.6(ix)
below;
(iv) amounts reimbursable by Buyer pursuant to Section 6.1 hereof
with respect to which Seller has provided invoices, and such supporting
documentation as shall be reasonably available to Seller, to Buyer at
least two business days prior to the Closing Date; and
(v) Seller's aggregate projected costs in respect of employee
retraining and employee retention, as set forth in the certificate
delivered by Seller pursuant to Section 1.6(viii) below, which together
with the costs described in Section 1.4(a)(v) of the West Enfield
Purchase Agreement (as hereinafter defined) shall not exceed $265,000 in
the aggregate.
(b) The amounts payable on the Closing Date in respect of Sections
1.4(a)(i) and (v) above shall be as set forth in the certificate delivered by
Seller to Buyer pursuant to Section 1.6(viii) below, and, with respect to
amounts payable under Sections 1.4(a)(i)(y) and 1.4(a)(v), shall be subject
to adjustment as provided in Section 1.7 below. The amounts payable on the
Closing Date in respect of the Power Purchase Agreement under Section
1.4(a)(ii) above shall be determined in accordance with the provisions of the
Power Purchase Agreement, shall be based, as provided therein, upon a reading
of the Facility's meters on the Closing Date and shall be subject to
adjustment for the period between the Closing Date and the Escrow Release
Date as provided in Section 1.7 below based upon a reading of the Facility's
meters on the Escrow Release Date.
1.5 DELIVERIES BY BUYER ON THE CLOSING DATE. On the Closing Date,
Buyer shall deliver to Seller the following (provided that a completed draft
(which may include estimates, as appropriate) of the document described in
subsection (viii) shall be delivered to Seller at least four business days
prior to the Closing Date):
(i) an executed assignment, substantially in the form of Exhibit A
hereto (the "Assignment");
(ii) a copy, certified as of the Closing Date by the Secretary of
Buyer, of the resolutions of its Board of Directors, authorizing the
execution, delivery and performance by it of this Agreement and the
transactions contemplated hereby;
(iii) a certificate, dated as of the Closing Date and signed by the
Secretary of Buyer, as to the incumbency of the officers of Buyer
signing this Agreement and any document or agreement which is to be
signed by Buyer in connection with the Closing;
(iv) a certificate, dated as of the Closing Date and signed by an
officer of Buyer, on behalf of Buyer, to the effect that each of the
representations and warranties of Buyer made in this Agreement are true
and correct in all material respects on the Closing Date;
(v) a Certificate of Good Standing of recent date for Buyer,
issued by the appropriate authority in the State of Maine;
(vi) an opinion of counsel to Buyer in substantially the form of
Exhibit B hereto;
(vii) all other documents, instruments and certificates reasonably
required by Seller or its counsel to consummate the transactions
contemplated hereby; and
(viii) a certificate, dated the Closing Date, setting forth the
amount of the Escrow Debt to be incurred by Buyer and the rate and
amount of the Escrow Interest.
1.6 DELIVERIES BY SELLER ON THE CLOSING DATE . At the Closing,
Seller shall deliver to Buyer the following (provided that completed drafts
(which may include estimates, as appropriate) of the documents described in
subsections (viii), (ix) and (x) shall be delivered to Buyer at least three
business days prior to the Closing Date):
(i) an executed Assignment;
(ii) a copy, certified as of the Closing Date by the Secretary or
an Assistant Secretary of each partner of Seller, of the resolutions of
the Board of Directors of such partner, authorizing the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby;
(iii) a certificate, dated as of the Closing Date and signed by the
Secretary or an Assistant Secretary of each partner of Seller, as to the
incumbency of the officers of such partner signing this Agreement and
any document or agreement which is to be signed by such partner in
connection with the Closing;
(iv) a certificate, dated as of the Closing Date and signed by an
officer of each partner of Seller, on behalf of such partner, to the
effect that each of the representations and warranties of Seller made in
this Agreement, insofar as concerns such partner, and, to the best of
such partner's knowledge, insofar as concerns Seller, are true and
correct in all material respects on the Closing Date;
(v) a Certificate of Good Standing of recent date for each partner
of Seller, issued by the appropriate authority in its jurisdiction of
incorporation;
(vi) opinions of counsel to the Seller and of counsel to each
partner of Seller substantially to the effect set forth in Exhibit C
hereto;
(vii) all other documents, instruments and certificates reasonably
required by Buyer or its counsel to consummate the transactions
contemplated hereby;
(viii) a certificate, which shall set forth (A) the amounts payable
under Section 1.4(a)(i)(x), (B) a good faith estimate by Seller as of
the Closing Date of the amounts to be paid to Seller by Buyer pursuant
to Sections 1.4(a)(i)(y) and 1.4(a)(v) above and (C) the amounts to be
paid to Seller by Buyer pursuant to Section 1.4(a)(ii) above, in each
case together with supporting data in reasonable detail and such
supporting documentation as may be reasonably available to Seller;
(ix) a certificate showing the amounts to be paid to Seller by
Buyer on the Closing Date pursuant to Section 1.4(a)(iii) above,
together with supporting data in reasonable detail and such supporting
documentation as may be reasonably available to Seller; and
(x) a certificate, dated as of the Closing Date, setting forth the
aggregate amount of any payment to be made by Buyer as required pursuant
to Section 1.2(a)(ii).
1.7 POST-CLOSING ADJUSTMENTS. (a) On or prior to the fifth
business day after the Escrow Release Date, Seller shall make a final
determination of the amounts payable by Buyer under the Power Purchase
Agreement in accordance with the second sentence of Section 1.4(b) for the
period between the Closing Date and the Escrow Release Date and shall deliver
to Buyer a certificate setting forth such amounts and all calculations in
reasonable detail necessary to support such amounts. Within two business
days following delivery of such certificate, Buyer shall pay Seller in cash
in immediately available funds the amount set forth in such certificate.
(b) If Buyer has not delivered its written undertaking pursuant to
Section 1.8 below, then on the forty-fifth day following the Escrow Release
Date (or the first business day thereafter if such forty-fifth day is not a
business day) or such later date as Seller shall determine if the effect of
such delay is to reduce the amounts which may be payable by Buyer as
hereinafter determined, Seller shall make a final determination of the
amounts payable by Buyer pursuant to Section 1.4(a)(i)(y) above and shall
deliver to Buyer a certificate setting forth such amounts and all
calculations and documentation in reasonable detail necessary to support such
amounts. Within two business days following delivery of such certificate,
Seller shall pay Buyer in cash in immediately available funds (or Buyer shall
pay Seller, as applicable) the difference between the aggregate amount set
forth in such certificate and the aggregate amount paid by Buyer to Seller on
the Closing Date pursuant to Section 1.4(a)(i)(y).
(c) If Buyer has delivered its written undertaking pursuant to
Section 1.8 below, during the period for disposal to be specified in the
undertaking referred to in Section 1.8 below, Seller shall cooperate with
Buyer to permit Buyer reasonable access to the Facility, and, to the extent
available as reasonably determined by Seller, the assistance of Facility
personnel in order for Buyer to conduct the disposal of the fuel in
accordance with such undertaking.
(d) On the six-month anniversary of the Escrow Release Date (or
the first business day thereafter if such six-month anniversary is not a
business day), Seller shall make a final determination of the amount payable
by Buyer pursuant to Section 1.4(a)(v) above and shall deliver to Buyer a
certificate setting forth such amount and all calculations and documentation
in reasonable detail necessary to support them. Within two business days
following delivery of such certificate, Seller shall pay Buyer in cash in
immediately available funds (or Buyer shall pay Seller, as applicable) the
difference between the amount set forth in such certificate and the amount
paid by Buyer to Seller on the Closing Date pursuant to Section 1.4(a)(v),
provided that the payments by Buyer pursuant to such Section 1.4(a)(v) and
this Section 1.7(d), together with the payments by Buyer pursuant to Section
1.4(a)(v) and Section 1.7(d) of the West Enfield Purchase Agreement, shall in
no event exceed $265,000 in the aggregate.
1.8 FUEL DISPOSAL ELECTION. Not later than May 15, 1995, Seller
shall provide Buyer a summary of the terms and conditions to be applicable to
any undertaking by Buyer to dispose of the fuel described in Section
1.4(a)(i). If Buyer wishes to undertake such disposal, Buyer shall negotiate
with and deliver to Seller no later than May 23, 1995 a written undertaking
to such effect substantially on the terms and conditions provided by and
otherwise in form and substance reasonably acceptable to Seller.
1.9 DELIVERIES BY SELLER ON THE UNDERWRITING DATE. In the event
Buyer shall finance all or a portion of the Purchase Price with an offering
of debt securities, Seller shall deliver to Buyer the following not later
than 12:01 p.m., prevailing New York time, on the date Buyer proposes to
execute and deliver a purchase contract with respect to such securities (the
"Underwriting Date"); provided that Buyer shall have given Seller five
business days prior written notice of such Underwriting Date:
(i) a certificate, dated as of the Underwriting Date and signed by
an officer of each partner of Seller, on behalf of such partner, to the
effect that each of the representations and warranties of Seller made in
this Agreement, insofar as concerns such partner, and, to the best of
such partner's knowledge, insofar as concerns Seller, are true and
correct in all material respects on the Underwriting Date;
(ii) an amendment to Schedule 6.3(b), if required, setting forth
any additional claims of Seller under the Power Purchase Agreement
arising from the Effective Date (as hereinafter defined) of this
Agreement to the Underwriting Date which shall survive the consummation
of the sale described in Section 1.1 hereof in accordance with Section
6.3(b) of this Agreement; and
(iii) evidence satisfactory to Buyer that the releases and
discharges described in Section 3.3 hereof shall have been delivered to
the Escrow Agent under the Escrow Agreement hereinafter described.
1.10 ESCROW AGREEMENT. Seller and Buyer agree to execute and
deliver, on or prior to the Underwriting Date, the Escrow Agreement
hereinafter referred to in form and substance reasonably satisfactory to both
Seller and Buyer with an escrow agent reasonably satisfactory to both Seller
and Buyer.
ARTICLE 2
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate the Closing on the Closing
Date is subject to the satisfaction (or waiver by Buyer), on or before the
Closing Date, of each of the conditions set forth below. Each document
required to be delivered on the Closing Date pursuant to this Article 2 shall
be delivered in escrow pursuant to an escrow agreement (the "Escrow
Agreement") which shall provide for the release of all such documents on the
first date after the Closing Date on which the Loans may be prepaid in full
pursuant to the Loan Agreement (the "Escrow Release Date").
2.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller contained herein and in all certificates and other
documents and agreements delivered by Seller to Buyer pursuant hereto or in
connection with the transactions contemplated hereby shall be true and
accurate in all material respects as of the date hereof and as of the Closing
Date.
2.2 PERFORMANCE. Seller shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by it and shall have
delivered all items required to be delivered pursuant to Section 1.6 by it on
or prior to the Closing Date.
2.3 FINANCING. Buyer shall have obtained the financing, on terms
reasonably satisfactory to Buyer, necessary to pay the Purchase Price and the
payments set forth in Section 1.4(a) above (other than Section 1.4(a)(ii)) on
the Closing Date, which financing shall have been approved by the Maine
Public Utilities Commission ("MPUC") on terms and conditions reasonably
satisfactory to Buyer.
2.4 CONSENTS. Buyer shall have obtained, on terms reasonably
satisfactory to Buyer, any required consents of its lenders under its
revolving credit borrowing arrangements.
2.5 OTHER MPUC APPROVALS. (a) Buyer shall have obtained such
orders or decrees of the MPUC as may be necessary in order to establish the
costs of its performance under this Agreement as assets under generally
accepted accounting principles and to recover such costs and amortize such
assets through rates to customers over such period or periods as may be
reasonably acceptable to Buyer and (b) Buyer shall, at its option, have
secured a certificate of approval for an electric rate stabilization
agreement pursuant to 35-A Me. Rev. Stat. Ann. Secion 3156.
2.6 UNITIL AGREEMENT. The agreement between Buyer and UNITIL
Power Corp. ("UNITIL") amending that portion of the Power Sales Agreement
(the "UNITIL Agreement") between Buyer and UNITIL dated as of March 26, 1986
relating to the resale of energy and capacity from the Facility shall have
been approved by the Federal Energy Regulatory Commission.
2.7 NO LITIGATION. No litigation whose subject matter relates to
any of the transactions contemplated by this Agreement shall be pending or
threatened before any court or regulatory agency the outcome of which, in the
reasonable opinion of Buyer, could materially adversely affect the ability of
Buyer to consummate such transactions or to recover the payments made to
Seller in its rates.
2.8 WEST ENFIELD. On the Closing Date, there shall have been
consummated in accordance with the agreement of even date herewith (the "West
Enfield Purchase Agreement") between Buyer and Babcock-Ultrapower West
Enfield, a joint venture organized under the laws of California, the sale to
the Buyer of all right, title and interest of Babcock-Ultrapower West Enfield
in and to the Power Purchase Agreement, dated as of August 13, 1984, as
amended to date, regarding the wood-fired small power production facility
located in West Enfield, Maine.
2.9 SCHEDULE 6.3(B). Any claims under the Power Purchase Agreement
which Seller shall have proposed to add to Schedule 6.3(b) after the
Underwriting Date shall be reasonably satisfactory to Buyer.
ARTICLE 3
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the Closing on the Closing
Date is subject to the satisfaction (or waiver by Seller), on or before the
Closing Date, of each of the conditions set forth below. Each document
required to be delivered on the Closing Date pursuant to this Article 3 and
each payment to be made on the Closing Date pursuant to Article 1.2(a) shall
be delivered or made, as the case may be, in escrow pursuant to the Escrow
Agreement which shall provide for the release of all such documents and such
payments on the Escrow Release Date and which shall also provide that any
interest earned on amounts held pursuant to the Escrow Agreement shall be
paid to Seller on the Escrow Release Date.
3.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained herein and in all certificates, agreements and
other documents delivered by Buyer to Seller pursuant hereto or in connection
with the transactions contemplated herein shall be true and accurate in all
material respects as of the date hereof and as of the Closing Date.
3.2 PERFORMANCE. Buyer shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by it including, without
limitation, payment of the Purchase Price and the payments set forth in
Section 1.4(a) above and shall have delivered all items required to be
delivered pursuant to Section 1.5 by it on or prior to the Closing Date.
3.3 TERMINATION AND RELEASE. (a) Seller shall have received a
release and discharge executed by the Agent and (if necessary) the Banks,
reasonably satisfactory in form and substance to Seller, whereby Seller is
released from and discharged of its obligations under the Loan Agreement, the
Security Documents and the Notes (each as defined in the Loan Agreement), and
such release and discharge shall provide that the Agent and the Banks shall
have released to Seller and otherwise discharged all mortgages, liens,
security interests and encumbrances on any property of the Seller whatsoever
(including without limitation, permits, goods, equipment, intangibles and
deposit accounts) entered into or obtained by the Agent and the Banks in
connection with Seller's obligations under the Loan Agreement, the Security
Documents and the Notes.
(b) On the Closing Date, Seller shall have received satisfactory
assurances of payment in cash in immediately available funds on the Escrow
Release Date of an amount equal to the balance to be on deposit on the Escrow
Release Date, and all accrued interest thereon, in accounts held as cash
collateral and/or reserve accounts in connection with the Loan Agreement
and/or the Security Documents.
3.4 TRANSMISSION AGREEMENT. Seller and Buyer shall have entered
into an agreement on terms and conditions reasonably satisfactory to Seller
for the transmission of power generated at the Facility from the Facility to
points at which Buyer's transmission system interconnects with the
transmission system of other electric utilities for the purpose of enabling
Seller (or any successor owner or user of the Facility) to compete for the
sale of capacity and energy to other utilities in the bulk power supply
market, or (except to the extent such restriction is prohibited by law) to
entities that are not retail customers of Buyer. Such agreement shall
provide for such transmission services at non-discriminatory rates
customarily available among electric utilities. To the extent that the
approval of the Federal Energy Regulatory Commission or other governmental
agency is required as a condition to the effectiveness of such agreement, at
Seller's request and upon payment by Seller to Buyer of any required filing
fee, Buyer will use its best efforts to obtain the requisite approval; such
approval, however, is not a condition to Seller's obligations to consummate
the Closing on the Closing Date.
3.5 SPECIAL FACILITIES. Seller and Buyer shall have entered into
an agreement, on terms and conditions reasonably satisfactory to Seller and
no less favorable to Seller than under the Agreement for Installation of
Special Facilities for Parallel Operation Between Bangor Hydro-Electric
Company and Babcock-Ultrapower Jonesboro (the "Special Facilities Agreement")
in effect as of the date of this Agreement, providing for the continued use
of the Special Facilities (as defined in the Special Facilities Agreement) by
Seller (or any successor owner or user of the Facility). To the extent that
the approval of the MPUC or other governmental agency is required as a
condition to the effectiveness of such agreement, at Seller's request, Buyer
will use its best efforts to obtain the requisite approval; such approval,
however is not a condition to Seller's obligation to consummate the Closing
on the Closing Date. In the absence of such approved agreement, Buyer will
make the Special Facilities available to Seller (and any such successor)
pursuant to the applicable industrial tariff in effect from time to time.
3.6 DISPATCH SERVICES AGREEMENT. Seller and Buyer shall have
entered into an agreement, on terms and conditions reasonably satisfactory to
Seller, requiring Buyer to provide dispatch services to Seller (or any
successor owner or user of the Facility) to allow Seller or such successor to
sell energy and capacity into northeastern power markets. To the extent that
the approval of the Federal Energy Regulatory Commission or other
governmental agency is required as a condition to the effectiveness of such
agreement, at Seller's request and upon payment by Seller to Buyer of any
required filing fee, Buyer will use its best efforts to obtain the requisite
approval; such approval, however, is not a condition to Seller's obligation
to consummate the Closing on the Closing Date.
3.7 STATION SERVICE RATE AGREEMENT. Seller and Buyer shall have
entered into an agreement, on terms and conditions and at a rate reasonably
satisfactory to Seller, providing for the supply of electric power by Buyer
to the Facility (notwithstanding any subsequent change in ownership of the
Facility). To the extent that the approval of the MPUC or other governmental
agency is required as a condition to the effectiveness of such agreement, at
Seller's request, Buyer will use its best efforts to obtain the requisite
approval; such approval, however, is not a condition to Seller's obligation
to consummate the Closing on the Closing Date. In the absence of such
approved agreement, Buyer will make electric power available to the Facility
at rates and pursuant to terms and conditions on file with the MPUC.
3.8 WEST ENFIELD. On the Closing Date, there shall have been
consummated in accordance with the West Enfield Purchase Agreement, the sale
to the Buyer of all right, title and interest of Babcock-Ultrapower West
Enfield in and to the Power Purchase Agreement, dated as of August 13, 1984,
as amended to date, regarding the wood-fired small power production facility
located in West Enfield, Maine.
3.9 NO LITIGATION. No litigation whose subject matter relates to
any of the transactions contemplated by this Agreement shall be pending or
threatened before any court or regulatory agency the outcome of which, in the
reasonable opinion of Seller, could materially adversely affect the ability
of Seller to consummate such transactions.
3.10 SCHEDULE 6.3(B). Any claims under the Power Purchase
Agreement which Buyer shall have proposed to add to Schedule 6.3(b) after the
Underwriting Date shall be reasonably satisfactory to Seller.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller on the date hereof
and as of the Closing Date as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maine and has
the full corporate power and authority to carry on its business as it is now
being conducted.
4.2 AUTHORIZATION. Buyer has the full corporate power and
authority to enter into this Agreement, the Assignment and the agreements
referred to in Sections 3.4 through 3.7 hereof (such agreements referred to
in Sections 3.4. through 3.7 hereof collectively, the "Post-PPA Agreements")
and to perform its obligations hereunder and thereunder. Buyer's execution,
delivery and performance of this Agreement have been, and Buyer's execution,
delivery and performance of the Assignment, the Post-PPA Agreements and all
other documents or instruments incidental thereto will have been, prior to
the execution thereof, approved by all necessary corporate action on the part
of Buyer. Except where governmental approvals for Post-PPA Agreements may be
required as noted in Sections 3.4 through 3.7, this Agreement is, and the
Assignment and the Post-PPA Agreements, when executed and delivered, will be,
the valid and binding obligations of Buyer enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general principles of equity, regardless of whether such
equitable principles are considered in a proceeding at law or in equity.
4.3 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES AND THIRD
PARTIES. Except for the approval of the MPUC referred to in Section 2.3
above and approvals described in Sections 3.4 to 3.7 with respect to the
Post-PPA Agreements, no consent, approval or authorization of, or
declaration, filing or registration with, any court or governmental or
regulatory authority or any other third party is required to be made or
obtained by Buyer in connection with the execution, delivery and performance
of this Agreement, the Assignment or the Post-PPA Agreements. As of the
Closing Date, the MPUC approval referred to in the preceding sentence has
been obtained. Any stocks, bonds, notes or other evidence of indebtedness
issued or sold or to be issued or sold pursuant to or in reliance on and in
accordance with such MPUC approval are and shall be valid, binding and
enforceable in accordance with their terms, including the terms of any
agreement, instrument or document under or pursuant to which the stocks,
bonds, notes or other evidences of indebtedness are issued.
4.4 LITIGATION. No actions, claims, proceedings, suits,
investigations, orders to show cause, notices of violation or notices of
apparent liability or forfeiture are pending, or to the best knowledge of
Buyer threatened, against Buyer questioning or challenging the validity of
this Agreement, the Assignment or the Post-PPA Agreements or any action taken
or proposed to be taken by Buyer pursuant hereto or in connection with the
transactions contemplated hereby or thereby.
4.5 NO VIOLATION. Subject to any necessary consents of Buyer's
lenders referred to in Section 2.4 above, Buyer's execution, delivery and
performance of this Agreement, the Assignment or the Post-PPA Agreements will
not violate or conflict with, or require a consent or result in a default or
event of default under, any material contract, agreement, note, mortgage or
indenture, or any judgment, order or decree, to which Buyer is a party or by
which it or its assets are bound. As of the Closing Date, the lenders'
approval referred to in the preceding sentence has been obtained.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer on the date hereof
and as of the Closing Date as follows:
5.1 ORGANIZATION. Seller is a joint venture formed as a general
partnership duly organized, validly existing and in good standing under the
laws of the State of California and has the full partnership power and
authority to carry on its business as it is now being conducted.
5.2 AUTHORIZATION. Seller has the full power and authority to
enter into this Agreement, the Assignment and the Post-PPA Agreements and to
perform its obligations hereunder and thereunder. Seller's execution,
delivery and performance of this Agreement have been, and Seller's execution,
delivery and performance of the Assignment and the Post-PPA Agreements will
have been, prior to the execution thereof, approved by all necessary
partnership action on the part of Seller and by all corporate and partnership
action on the part of its partners. This Agreement is, and the Assignment
and the Post-PPA Agreements, when executed and delivered, will be, the valid
and binding obligations of Seller enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency and other similar laws affecting creditors' rights generally and
by general principles of equity, regardless of whether such equitable
principles are considered in a proceeding at law or in equity.
5.3 CONSENTS AND APPROVALS OF
GOVERNMENTAL AUTHORITIES. Except for any approvals described in Sections
3.4 to 3.7 with respect to the Post-PPA Agreements, no consent, approval or
authorization of, or declaration, filing or registration with, any court or
governmental or regulatory authority is required to be made or obtained by
Seller in connection with its execution, delivery and performance of this
Agreement, the Assignment or the Post-PPA Agreements.
5.4 LITIGATION. No actions, claims, proceedings, suits,
investigations, orders to show cause, notices of violation or notices of
apparent liability or forfeiture are pending, or to the best knowledge of
Seller threatened, against Seller questioning or challenging the validity of
this Agreement, the Assignment or the Post-PPA Agreements or any action taken
or proposed to be taken by Seller pursuant hereto or in connection with the
transactions contemplated hereby or thereby.
5.5 NO VIOLATION. Subject to consent of the Agent and the Banks
under the Loan Agreement, Seller's execution, delivery and performance of
this Agreement, the Assignment or the Post-PPA Agreements will not violate or
conflict with, or require the consent or result in a default or event of
default under, any material contract, agreement, note, mortgage or indenture,
or any judgment, order or decree to which Seller is a party or by which it or
its assets are bound.
ARTICLE 6
MISCELLANEOUS PROVISIONS
6.1 TRANSACTION COSTS. (a) Buyer shall be responsible for all
out-of-pocket costs and expenses incurred by or on behalf of Buyer in
connection with this Agreement, including the fees and costs of its counsel,
and shall also be responsible for fees and costs of counsel to Seller
reasonably incurred in connection with this Agreement and the transactions
contemplated hereby and of counsel to the Agent and the Banks (to the extent
that Seller determines it is responsible for such fees and costs under the
Loan Agreement and the Security Documents) incurred in connection with this
Agreement and the transactions contemplated hereby, in each case whether or
not the Closing occurs. In addition, Buyer shall be responsible for the
travel expenses and out-of-pocket costs of Seller and each partner of Seller
incurred in connection with this Agreement and the transactions contemplated
hereby to the extent such costs exceed $15,000, whether or not the Closing
occurs. Buyer shall also be responsible for all amendment, prepayment,
breakage, termination, up-front, commitment or other Bank fees or costs or
expenses payable in connection with the payment of the obligations of the
Seller under the Loan Agreement as of the Escrow Release Date and the
incurrence by Buyer of new debt in connection with the transactions
contemplated hereby.
(b) This obligation shall survive the Closing or any termination
of this Agreement, and Buyer shall pay such fees, costs and expenses (i)
within 15 days after receipt of invoices submitted to Buyer by Seller
(together with such supporting data in reasonable detail and such supporting
documentation as may be reasonably available to Seller) as such fees, costs
and expenses are incurred, and (ii) at the Closing to the extent they are
known and are the subject of invoices provided to Buyer pursuant to Section
1.4(a)(iv) hereof.
6.2 TERMINATION. This Agreement may be terminated at any time by
the mutual agreement of Seller and Buyer, and will terminate at 12:01 A.M.
(New York time) on September 16, 1995 unless extended by mutual agreement of
Seller and Buyer.
6.3 SURVIVAL. (a) All covenants, agreements, representations,
and warranties made by the parties to this Agreement or in any agreement,
document, or instrument executed and delivered pursuant hereto or in
connection with the transactions contemplated hereby shall survive the
Closing, to the extent of and in accordance with their terms.
(b) From and after the Closing Date and notwithstanding the
consummation of the sale described in Section 1.1 hereof, all rights of Buyer
and Seller against each other under the Power Purchase Agreement in respect
of any claim of either Buyer or Seller which is described in Schedule 6.3(b)
hereof, or any claim arising during the period from the date hereof until the
Closing Date and which shall be described in Schedule 6.3(b) hereof as
amended as of the Closing Date, shall survive and be preserved for further
action by Buyer or Seller in accordance with the terms of the Power Purchase
Agreement as in effect on the date hereof and applicable law.
6.4 TAX INDEMNIFICATION. (a) Buyer hereby agrees to indemnify and
hold Seller and each partner of Seller (each, a "Tax-Indemnified Party")
harmless on an After-Tax Basis from and against any and all taxes, fees,
duties, impost, levies or charges of whatsoever nature (other than taxes of
general applicability based on income) imposed by the State of Maine or any
political subdivision thereof or any taxing authority of such State or
political subdivision and all interest, penalties or similar liabilities with
respect thereto (any such amounts, "Taxes") solely as a result of any payment
made or to be made by Buyer to Seller pursuant to this Agreement or as a
result of the purchase and sale of Seller's right, title and interest in and
to the Power Purchase Agreement as contemplated by this Agreement but only to
the extent such Taxes are imposed as a result of a Change in Law after the
date of this Agreement. Buyer agrees to pay (or reimburse such Tax-
Indemnified Party for payment of) any and all Taxes within 45 days of the
date on which such Tax-Indemnified Party delivers to Buyer the documentation
required by the immediately succeeding paragraph.
Each Tax-Indemnified Party will (i) notify Buyer in writing within
five business days of such Tax-Indemnified Party's receipt of an assessment,
notice or request for payment of any such Tax from a taxing authority, and
(ii) supply to Buyer not less than twenty business days in advance of the due
date therefor calculations, documentation and forms of returns (or, at the
option of such Indemnified Party, pertinent portions of or excerpts from such
returns) demonstrating the nature, amount and calculation of any Tax which
such Tax-Indemnified Party believes Buyer is obligated to pay pursuant to
this Section. In no event will Buyer be obligated to pay interest, penalties
or late charges due as a result of a Tax-Indemnified Party's failure to file
returns or make Tax payments within the time periods required by law unless
such failure is the result of the action or inaction of Buyer. Failure of a
Tax-Indemnified Party to provide any notice or other item to Buyer as
described in this paragraph by the time specified in this or the immediately
succeeding paragraph shall not, however, affect such Tax-Indemnified Party's
right to indemnification as provided in the first paragraph of this Section
6.4(a).
Each Tax-Indemnified Party will promptly notify Buyer of any event
which such Tax-Indemnified Party believes constitutes or may constitute a
Change of Law promptly after becoming aware thereof. Buyer may, at its
option, require such Tax-Indemnified Party, with funds provided by Buyer, to
make any payment of Tax pursuant to this Section under protest and may at
Buyer's sole expense contest the assessment or calculation of such Tax before
the relevant taxing authority. Each Tax-Indemnified Party agrees to Buyer
exercising direction and control of any such protest and any related
proceeding, and will provide reasonable cooperation at Buyer's request and
sole expense in the conduct thereof.
(b) For purposes of Section 6.4(a) above, (i) "Change in Law"
shall mean any finally adopted change in law, rule or regulation, or official
published interpretation thereof in each instance, and (ii) "After-Tax Basis"
shall mean on a basis such that any payment required to be paid on such basis
shall, if necessary, be supplemented by a further payment so that the sum of
the two payments, after deduction of all taxes, penalties, fines, interest
and other charges resulting from the receipt (actual or constructive) of such
payments imposed by or under any Federal, state or local governmental
authority in the United States or subdivision or any taxing authority of any
thereof (assuming for this purpose that each Tax-Indemnified Party is a tax-
paying entity in the State of Maine subject to the maximum applicable
corporate income tax rates then in effect), and after taking into account all
related tax savings (whether by deduction, credit or otherwise) actually
realized as a result of such payments or the event or circumstance giving
rise thereto, shall be equal to the payment so required.
(c) Each Tax-Indemnified Party agrees not to actively support the
adoption of any Change in Law to which the indemnification contained in this
Section 6.4 would apply and further agrees that none of its affiliates shall
do so. In addition, each partner of Seller agrees that at the request and at
the expense of Buyer it will use reasonable efforts to assist in any
challenge to any such Change in Law.
6.5 GENERAL INDEMNIFICATION BY BUYER. Buyer shall defend,
indemnify and hold Seller, each partner thereof, and each partner's
directors, officers, employees, agents, attorneys, and affiliates (each, a
"Seller Indemnified Party") harmless at all times against and in respect of
any claim, action, loss, cost, expense, liability, penalty or interest, or
damage (collectively, "Damages") suffered or incurred by such Seller
Indemnified Party, and all other costs and expenses incurred by such Seller
Indemnified Party in necessary investigation or, after notice to Buyer of its
intent to do so, in attempting to avoid or oppose the imposition thereof,
arising out of, relating to, or resulting from, (i) any breach of any
representation, warranty, covenant, or agreement made by Buyer in this
Agreement, or in any agreement, document, or instrument executed and
delivered pursuant to or in connection with the transactions contemplated
hereby or thereby; or (ii) the non-performance or malperformance of any
obligation to be performed on the part of Buyer under this Agreement or in
any agreement (including, without limitation, any agreement entered into
pursuant to Section 1.8 hereof), document or instrument executed and
delivered pursuant hereto or in connection with the transactions contemplated
hereby or thereby; PROVIDED that Buyer shall not be obligated to indemnify
any Seller Indemnified Party for any Damages suffered or incurred by such
Seller Indemnified Party as a result of such Seller Indemnified Party's gross
negligence or willful misconduct.
6.6 GENERAL INDEMNIFICATION BY SELLER. Seller shall defend,
indemnify and hold Buyer, and each of Buyer's directors, officers, employees,
agents, attorneys, and affiliates (each, a "Buyer Indemnified Party")
harmless at all times against and in respect of any Damages suffered or
incurred by such Buyer Indemnified Party, and all other costs and expenses
incurred by such Buyer Indemnified Party in necessary investigation or, after
notice to Seller of its intent to do so, in attempting to avoid or oppose the
imposition thereof, arising out of, relating to, or resulting from, (i) any
breach of any representation, warranty, covenant, or agreement made by Seller
in this Agreement, or in any agreement, document, or instrument executed and
delivered pursuant to or in connection with the transactions contemplated
hereby or thereby; or (ii) the non-performance or malperformance of any
obligation to be performed on the part of Seller under this Agreement or in
any agreement, document or instrument executed and delivered pursuant hereto
or in connection with the transactions contemplated hereby or thereby;
PROVIDED that Seller shall not be required to indemnify any Buyer Indemnified
Party for any Damages suffered or incurred by such Buyer Indemnified Party as
a result of such Buyer Indemnified Party's gross negligence or willful
misconduct.
6.7 DEFENSE AGAINST ASSERTED CLAIMS; LIMITATIONS. (a) If any
claim or assertion for Damages is made or asserted against any Seller
Indemnified Party or Buyer Indemnified Party, as applicable, as provided in
Section 6.5 or 6.6, such Seller Indemnified Party or Buyer Indemnified Party
(each hereinafter referred to as an "Indemnified Party") shall with
reasonable promptness give to the other party (the "Indemnifying Party")
written notice of the claim or assertion for Damages and request the
Indemnifying Party to defend the same. The Indemnifying Party shall, at its
expense, assume the defense of such claim or assertion with counsel
reasonably satisfactory to the Indemnified Party. The Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
separate counsel shall be at the expense of the Indemnified Party unless (i)
the engagement of such counsel has been specifically authorized by the
Indemnifying Party in writing, (ii) the Indemnifying Party has failed to
assume the defense of such claim or assertion within ten (10) days after
being notified of such claim, (iii) the named parties to such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party shall have reasonably concluded
that there may be one or more legal defenses available to the Indemnified
Party which are different from or in addition to those available to the
Indemnifying Party, or (iv) such action involves a criminal claim against
such Indemnified Party. In the event the conditions set forth in clause
(iii) of the preceding sentence are met, the Indemnifying Party shall not
have the right to assume the defense of such action on behalf of the
Indemnified Party as to such legal defenses available to the Indemnified
Party which are different from or in addition to those available to the
Indemnifying Party, but shall indemnify the Indemnified Party against all
litigation expenses (including reasonable fees of counsel) in connection with
such defenses. The indemnification to which this Section 6.7 relates shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received (together with such
supporting data in reasonable detail and such supporting documentation as may
be reasonably available to the Indemnified Party) or loss, damage, liability,
cost, or expense is incurred; PROVIDED, that no settlement or compromise of
any claim asserted or action commenced in respect of which the Indemnifying
Party will be liable in accordance with its indemnity under this Agreement
shall give rise to liability of such Indemnifying Party unless such
Indemnifying Party shall have been notified in writing of the proposed
settlement or compromise and shall have consented in writing thereto, which
consent shall not be unreasonably withheld so long as any claims which have
been or may be asserted against the Indemnifying Party in such action or any
related or future action are to be released with prejudice in connection with
such settlement or compromise, it being understood, however, that in the
event the Indemnifying Party unreasonably withholds its consent to a
settlement or compromise as to which it has agreed above that such consent
shall not be unreasonably withheld, the Indemnified Party may proceed to
consummate such settlement or compromise without the consent of the
Indemnifying Party and may pursue its indemnification claims hereunder
against the Indemnifying Party as provided herein in respect of the cost of
such settlement or compromise. Buyer and Seller will cooperate with each
other and shall take reasonable measures to obtain the cooperation of
Seller's Indemnified Parties and Buyer's Indemnified Parties, as applicable,
in the defense of any action and the relevant records of each shall be
available to the other with respect to such defense.
(b) In no event shall either party be liable to any Indemnified
Party (as defined in Section 6.7) for any consequential, special, indirect or
incidental damages, or loss of profits, cost of money, claims of customers or
claims of financiers, or any amounts in settlement thereof, howsoever the
same may be caused, in connection with any claim arising under this Agreement
except to the extent any of the foregoing are included in a third party claim
against a Seller Indemnified Party or Buyer Indemnified Party, as the case
may be, to which the provisions of Section 6.5 or 6.6 apply. In addition,
each Seller Indemnified Party and each Buyer Indemnified Party shall use
reasonable efforts to mitigate any Damages which may be the subject of an
indemnification claim by it pursuant to Section 6.5 or 6.6 hereof, as
applicable.
6.8 CONDUCT PRIOR TO CLOSING. During the period from the date of
this Agreement to the Closing Date, (i) Buyer shall confer on a regular and
frequent basis with one or more representatives of Seller to report on the
status of the various conditions set forth in Article 2 hereof, (ii) Seller
agrees to provide reasonable cooperation to Buyer in connection with the
possible minimization of the amounts payable pursuant to Section 1.4(a)(iii)
hereof, and (iii) promptly upon learning thereof, each of Buyer and Seller
shall notify the other of any breach of any representation or warranty set
forth in Section 4 or Section 5 hereof.
6.9 NOTICES. All notices, requests or other communications
required or permitted hereunder shall be given in writing and shall be deemed
to have been duly given, if delivered in hand, on the date of receipt (or
refusal), or if given by Federal Express or similar nationally recognized
expedited overnight commercial courier, when delivered to Federal Express or
similar nationally recognized expedited overnight commercial courier,
addressed to the recipient of the notice, with all freight charges paid, or
if given by facsimile transmission, when sent, to the following addresses and
facsimile numbers:
If to Seller, to:
Babcock & Wilcox Jonesboro Power, Inc.
20 South Van Buren Avenue
Barberton, Ohio 44203
Facsimile: 216-860-1868
Attention: Vice President, Operations
and
ESI Jonesboro Limited Partnership
c/o ESI Energy, Inc.
1400 Centrepark Boulevard, Suite 600
West Palm Beach, Florida 33401
Facsimile: (407) 687-4932
Attention: Vice-President, Business Management
and
L.G.& E. Power 6 Incorporated
2030 Main Street, 12th Floor
Irvine, California 92714
Facsimile: (714) 955-4333
Attention: President
If to Buyer, to:
Bangor Hydro-Electric Company
P.O. Box 932
33 State Street
Bangor, ME 04402-0932
Facsimile: 207-990-6963
Attention: Robert S. Briggs, President
or to such other address or number as any party may have designated for
itself by written notice to the other in the manner herein prescribed, except
that notices of change of address shall be effective only upon receipt.
6.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other party and any
assignment made absent such consent shall be void AB INITIO.
6.11 GOVERNING LAW. This agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance
with the laws of the State of Maine.
6.12 COUNTERPARTS. This Agreement may be executed simultaneously
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.
6.13 HEADINGS. The headings contained in this Agreement are
inserted for convenience only and are not intended to be determinative or
interpretive of the substance of this Agreement.
6.14 ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties,
covenants or undertakings other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the subject matter hereof.
6.15 EFFECTIVENESS. This Agreement shall become effective on the
date (the "Effective Date") on which (i) Seller and Buyer shall have signed a
copy hereof (whether the same or different copies), (ii) Buyer shall have
delivered to Seller instruments with the same substantive effect as those
required by Sections 1.5(ii) and (iii) to be delivered by Buyer on the
Closing Date, (iii) Seller shall have delivered to Buyer instruments with the
same substantive effect as those required by Sections 1.6(ii) and (iii) to be
delivered by Seller on the Closing Date, and (iv) Seller shall have received
any necessary consent of the Agent and the Banks under the Loan Agreement to
its execution and delivery of this Agreement.
6.1 CONDITIONS PRECEDENT. Seller and Buyer agree to use
reasonable efforts to satisfy, on or prior to the Closing Date, the
conditions precedent to their respective obligations to consummate the
Closing set forth in Article 2 and Article 3 hereof.
6.17 FUEL PURCHASE. Except as provided herein, Seller shall not
purchase any fuel for use at the Facility unless Buyer shall have consented
to such purchase. Seller may purchase fuel without Buyer's consent provided
that Buyer shall not be obligated pursuant to Section 1.4(a)(i) and Section
1.7(b) to pay the book inventory value or disposal cost of any such fuel
purchased without its consent. Any impairment of Seller's ability to comply
with the Power Purchase Agreement as a result of the operation of this
Section 6.17 shall not be the basis for any claim of a default on the part of
the Seller under the Power Purchase Agreement.
6.18 DISCLOSURE. Each of Seller and Buyer agrees that the terms of
this Agreement may be disclosed to any regulatory agency which has
jurisdiction over Seller, Buyer, or any of their respective affiliates, to
any of their respective lenders, in any filings under the securities laws, in
any disclosure document delivered to its shareholders or in connection with
any offering of its securities.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
BANGOR HYDRO-ELECTRIC COMPANY,
By: /s/ Robert S. Briggs
---------------------
Name:
Title:
BABCOCK ULTRAPOWER JONESBORO,
a California general partnership
By: L.G.& E. POWER 6
INCORPORATED,
its general partner
By: /s/ Scott Noll
-----------------
Name:
Title:
By: ESI JONESBORO LIMITED
PARTNERSHIP,
a Delaware Limited
Partnership
By: ESI JONESBORO, INC.,
its general partner
By: /s/ Lori Bonilla
------------------
Name:
Title:
By: BABCOCK & WILCOX JONESBORO
POWER, INC.,
its general partner
By: /s/ Jack M. Arnold
----------------------
Name:
Title:
EXHIBIT A
to Purchase Agreement
ASSIGNMENT OF POWER PURCHASE AGREEMENT
THIS ASSIGNMENT OF POWER PURCHASE AGREEMENT (this "Assignment") is
made and entered into as of [closing date] by and between BABCOCK-ULTRAPOWER
JONESBORO, a joint venture formed as a California general partnership (the
"Assignor"), and BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation (the
"Assignee").
W I T N E S E T H :
WHEREAS, the Assignor and the Assignee are parties to the Power
Purchase Agreement dated as of August 13, 1984 (as amended to date, the
"Power Purchase Agreement");
WHEREAS, the Assignor has agreed to sell to the Assignee and the
Assignee has agreed to purchase all of Assignor's right, title and interest
in and to the Power Purchase Agreement on the terms and conditions set forth
in the Purchase Agreement dated as of March 31, 1995 (the "Purchase
Agreement") by and between the Assignor and the Assignee; and
WHEREAS, it is a condition to the obligations of the parties under
the Purchase Agreement that this Assignment be executed and delivered;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. ASSIGNMENT. The Assignor hereby sells, assigns, transfers,
conveys and delivers to the Assignee, without recourse (except for any
misrepresentation regarding the subject matter stated in the immediately
succeeding sentence) to the Assignor and without any warranty to the
Assignee, either express or implied, as to any matter whatsoever and without
representation except as herein expressly made, and the Assignee hereby
purchases from the Assignor, all of the Assignor's right, title and interest
in and to the Power Purchase Agreement (the "Interest"). The Assignor and
each partner of the Assignor represent to the Assignee that the Assignor is
the sole owner of the Interest herein conveyed and that such Interest of the
Assignor is free and clear of all liens, security interests, claims or
encumbrances whatsoever.
2. RELEASE OF CLAIMS. Except with respect to any claims which
are to survive the execution and delivery of this Assignment and the
consummation of the transactions contemplated by the Purchase Agreement
pursuant to the terms of Section 6.3(b) of the Purchase Agreement, the
Assignor and each partner of the Assignor hereby release the Assignee, its
officers, directors, employees, agents and affiliates, and the Assignee
hereby releases the Assignor, each partner of the Assignor and each partner's
officers, directors, employees, agents and affiliates, fully, finally, and
forever from all claims (known or unknown) which have been or could be
asserted by the parties hereto arising out of, under or in connection with
the Power Purchase Agreement under the statutory or common law of any
jurisdiction, including, without limitation, any and all manner of actions,
causes of action, suits, damages, sums of money, controversies, agreements,
promises, court costs, judgments, attorneys' fees, claims for exemplary or
punitive damages, claims for consequential damages, and all claims and
demands of whatever type in law or in equity, which any party to this
Assignment ever had, now has or which any party to this Assignment hereafter
can, shall or may have for, upon, or by reason of the Power Purchase
Agreement.
3. CAPITALIZED TERMS. All capitalized terms not otherwise
defined in this Assignment shall have the meanings ascribed to such terms in
the Purchase Agreement.
4. COUNTERPARTS. This Assignment may be executed in several
counterparts each of which shall constitute but one and the same instrument.
5. GOVERNING LAW. This Assignment shall be governed by and
construed in accordance with the laws of the State of Maine.
6. AMENDMENTS. This Assignment shall not be amended except by an
instrument in writing executed by the parties through their duly authorized
representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed as of the day and year first written above.
BABCOCK-ULTRAPOWER JONESBORO,
a general partnership, as Assignor
By: L.G.& E. POWER 6 INCORPORATED,
its general partner
By:_______________________
Name:
Title:
By: ESI JONESBORO LIMITED
PARTNERSHIP,
a Delaware Limited
Partnership
By: ESI JONESBORO, INC.,
its general partner
By:_______________________
Name:
Title:
By: BABCOCK & WILCOX JONESBORO
POWER, INC., its general
partner
By:_______________________
Name:
Title:
BANGOR HYDRO-ELECTRIC COMPANY,
a corporation, as Assignee
By________________________
Name:
Title:
EXHIBIT B
[Opinion of Buyer's Counsel]
[Closing date]
re 24.5 MW Production Facility
in Jonesboro, Maine
Babcock & Wilcox Jonesboro Power, Inc.
20 South Van Buren Avenue
Barberton, Ohio 44203
ESI Jonesboro Limited Partnership
c/o ESI Energy, Inc.
1400 Centrepark Boulevard, Suite 600
West Palm Beach, Florida 33401
L.G.& E. Power 6 Incorporated
2030 Main Street, 12th Floor
Irvine, California 92714
Ladies and Gentlemen:
I am General Counsel and Corporate Clerk of Bangor Hydro-Electric
Company ("Buyer"), a Maine corporation, and have acted as its counsel in
connection with the execution and delivery of the Purchase Agreement dated as
of March 31, 1995 (the "Agreement") by and between Babcock-Ultrapower
Jonesboro ("Seller"), a joint venture formed as a California general
partnership, and Buyer relating to the Power Purchase Agreement, dated as of
August 13, 1984, as amended, by and between Seller and Buyer. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to such terms in the Agreement.
In rendering this opinion, I have assumed the genuineness of all
signatures, the authenticity of all documents submitted to me as originals
and the conformity to authentic original documents of all documents submitted
to me as certified, conformed or photostatic copies.
I have examined and relied upon such documents, corporate records,
certificates of corporate officers and representatives and other instruments
and legal matters as I have deemed necessary for the purposes of the opinions
expressed herein.
Based upon the foregoing, it is my opinion that:
1. Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maine. Buyer has full corporate
authority and power to enter into the Agreement, the Post-PPA Agreements and
the Assignment and to perform its obligations thereunder.
2. Except for such approvals with respect to the Post-PPA
Agreements as are set forth in the Agreement, no consent, order,
authorization, waiver, approval or any other action by, or registration,
declaration or filing with, any person, board or body, public or private, is
required for Buyer to enter into the Agreement, the Post-PPA Agreements or
the Assignment or for Buyer to perform, and to be legally bound to perform,
its obligations thereunder.
3. The Agreement, the Post-PPA Agreements and the Assignment have
been duly and validly authorized by all requisite action on the part of
Buyer, have been duly and validly executed and delivered by Buyer and,
assuming due authorization, execution and delivery by Seller, constitute the
legal, valid and binding obligations of Buyer, enforceable against it in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or other similar laws applicable to
creditors' rights generally and except as the availability of any particular
remedy may be limited by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law, and
subject in the case of the Post-PPA Agreements to the receipt of such
approvals as are described in Sections 3.4 through 3.7 of the Agreement.
4. The execution, delivery and performance of the Agreement, the
Post-PPA Agreements and the Assignment will not result in any violation of
the articles of incorporation or by-laws of Buyer or (subject in the case of
the Post-PPA Agreements to the receipt of such approvals as are described in
Sections 3.4 through 3.7 of the Agreement) any existing statute, law,
governmental rule, regulation, decree or order applicable to Buyer or its
properties, or contravene the provisions of or constitute a default under any
material agreement, indenture, mortgage, lease or other instrument to which
it or its property is or may be bound.
5. There is no action, suit, proceeding or investigation at law or
in equity or by or before any court or administrative agency pending or, to
the best of my knowledge threatened against or affecting Buyer which
questions the validity of the Agreement, the Post-PPA Agreements or the
Assignment which, individually or in the aggregate, would have a material
adverse effect upon the ability of Buyer to enter into and carry out its
obligations under the Agreement, the Post-PPA Agreements or the Assignment.
I am a member of the Bar of the State of Maine and express no
opinion as to any laws other than the laws of the State of Maine and the
federal laws of the United States.
I am furnishing this opinion to you solely for your benefit in
connection with the transactions contemplated by the Agreement and this
opinion is not to be used, circulated, quoted or otherwise referred to for
any other purpose without my prior written approval in each instance.
Very truly yours,
EXHIBIT C
Counsel to Seller and counsel to each partner of Seller shall
deliver opinions, dated the Closing Date, to the effect that:
1. Seller is a general partnership duly organized, validly
existing and in good standing under the laws of the State of California.
Seller is fully authorized and empowered to enter into the Agreement, the
Post-PPA Agreements and the Assignment and to perform its obligations
thereunder.
2. No consent, order, authorization, waiver, approval or any other
action by, or registration, declaration or filing with, any person, board or
body, public or private, is required for Seller to enter into the Agreement,
the Post-PPA Agreements or the Assignment for Seller to perform, and to be
legally bound to perform, its obligations thereunder.
3. The Agreement, the Post-PPA Agreements and the Assignment have
been duly and validly authorized by all requisite action on the part of
Seller, have been duly and validly executed and delivered by Seller and
constitute the legal, valid and binding obligation of Seller, enforceable
against it in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
applicable to creditors' rights generally and except as the availability of
any particular remedy may be limited by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
4. The execution, delivery and performance of the Agreement, the
Post-PPA Agreements and the Assignment will not result in any violation of
the partnership agreement of Seller or any existing statute, law,
governmental rule, regulation, decree or order applicable to Seller or its
properties, or contravene the provisions of or constitute a default under any
material agreement, indenture, mortgage, lease or other instrument to which
it or its property is or may be bound.
5. There is no action, suit, proceeding or investigation at law or
in equity or by or before any court or administrative agency pending or, to
the best of our knowledge threatened against or affecting Seller which
questions the validity of the Agreement, the Post-PPA Agreements or the
Assignment which, individually or in the aggregate, would have a material
adverse effect upon the ability of Seller to enter into and carry out its
obligations under the Agreement, the Post-PPA Agreements or the Assignment.
6. Seller is the sole owner of the Interest (as defined in the
Assignment) conveyed under the Assignment and such Interest of the Seller is
free and clear of all liens, security interests, claims or encumbrances
whatsoever.
PURCHASE AGREEMENT
Schedule 6.3(b)
DISPUTED ISSUES
Jonesboro Facility
METERING ISSUE
Babcock-Ultrapower Jonesboro contends that the facility has experienced high
purchased electricity charges based on inaccurate usage readings from a
Bangor Hydro meter located at the Jonesboro substation. Extensive system
checking and technical analysis, conducted by Bangor Hydro, Babcock-
Ultrapower Jonesboro, and independent consultants, has demonstrated that the
plant metering has been affected by harmonics in the Bangor Hydro system.
These harmonics have caused imbalances in the system distribution lines that
are improperly registered by Bangor Hydro's meter as electric usage at the
facility. In January 1994 Babcock-Ultrapower Jonesboro, as a customer,
notified Bangor Hydro of the alleged problem and the Partnership's concern
about excessive past billings for electric usage and the potential for
ongoing excessive electric charges if the situation was not corrected.
Despite several follow up requests and the acknowledgement by Bangor Hydro
technicians that a problem exists, a solution has not been implemented to
date, nor have prior overbillings been corrected.
OCTOBER 1994 CAPACITY AND
ENERGY BILLINGS AND 1994 BONUS BILLINGS
The facility completed its scheduled 1994 two-week maintenance outage a day
and a half early and, as was the practice in the past, called Bangor Hydro
for a dispatch order to either begin firm generation or curtail generation.
The facility was instructed to curtail generation and received
acknowledgments from the Bangor Dispatch Operators that the units were
accepted back as available for service.
The facility responded to these dispatch orders and Babcock-Ultrapower
expected to receive decremental energy payments for the period commencing
with Bangor's dispatch order; however, Bangor Hydro refused to pay the total
invoiced amounts, claiming that a mandatory full two-week outage was required
and that no decremental payments were due until this period was completed.
Babcock-Ultrapower contends that the maintenance periods were terminated by
Bangor Hydro's dispatch orders, and that these orders were to be relied upon
based on past practices and actions of Bangor Hydro.
The availability of decremental energy during this period also affects
Babcock-Ultrapower's performance payment under the 1994 Bonus Billing.