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PURCHASE AND OPTION AGREEMENT
by and between
PERC Management Company Limited Partnership
and
The Prudential Insurance Company of America
September 1997
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PURCHASE AND OPTION AGREEMENT
This PURCHASE AND OPTION AGREEMENT (the "Agreement"), dated as of September __,
1997, is made and entered into by and between PERC Management Company Limited
Partnership, a Maine limited partnership ("Buyer"), and The Prudential Insurance
Company of America, a New Jersey mutual insurance company ("Seller").
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, on the terms and subject to the conditions set forth in this Agreement,
77% of Seller's right, title and interest as a limited partner in and to
Penobscot Energy Recovery Company, Limited Partnership, a Maine limited
partnership (the "PERC Partnership") and of its right, title and interest in, to
and under the Second Amended and Restated Agreement and Certificate of Limited
Partnership, dated as of May 15, 1986, among Buyer, Energy National, Inc., a
Utah corporation ("ENI"), and Seller, as amended by the First Amendment, dated
as of June 14, 1991 (as so amended, the "PERC Partnership Agreement"), which 77%
interest in the PERC Partnership and PERC Partnership Agreement is hereinafter
referred to as the "PERC Assigned Interest."
WHEREAS, Seller desires to grant to Buyer, and Buyer desires to purchase from
Seller, on the terms set forth in this Agreement, an option to purchase the
remaining 23% of the Seller's right, title and interest as a limited partner in
and to the PERC Partnership and the PERC Partnership Agreement (including any
distributions of, or resulting from, warrants currently held or that may be
acquired by the PERC Partnership that entitle the holder to acquire securities
of Bangor Hydro-electric Company, a Maine corporation, but excluding the next
annual distribution of "Net Cash Flow" (as defined in the PERC Partnership
Agreement) to be made in respect of such 23% limited partnership interest
pursuant to Section 5 of the PERC Partnership Agreement (expected to be made in
or about April 1998), any other distributions of Net Cash Flow made in respect
of such 23% limited partnership interest for the period commencing on the
Closing Date (as hereinafter defined) and ending on the Exercise Date (as
hereinafter defined) and any distributions made as a result of a Refunding
(defined below) (provided such Refunding occurs during the Option Term (defined
below)), which 23% interest (after giving effect to the foregoing adjustments)
in the PERC Partnership is hereafter referred to as the "Option Interest."
WHEREAS, Seller desires to sell, and Buyer desires to purchase from Seller, on
the terms and subject to the conditions set forth in this Agreement, all of
Seller's right, title and interest as a limited partner (comprising an 83.333%
limited partnership interest) in and to Orrington Waste, Ltd. Limited
Partnership, an Oregon limited partnership (the "OWL Partnership"), and all of
Seller's right, title and interest in, to and under the Agreement of Limited
Partnership, dated January 8, 1993, between Pacific Orrington Energy, Inc., an
Oregon corporation ("OEI"), and Seller (the "OWL Partnership Agreement"), which
interest in and to the OWL Partnership and in, to and under the OWL Partnership
Agreement is hereinafter referred to as the "OWL Assigned Interest."
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NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements and the conditions set forth in this
Agreement, Buyer and Seller hereby agree as follows:
ARTICLE I - TRANSFER OF INTERESTS AND PURCHASE PLAN
1.01 Transfer of PERC Assigned Interest and OWL Assigned Interest.
On the terms and subject to all of the conditions set forth in this Agreement,
at the Closing (as hereinafter defined), Seller shall sell, transfer and assign
to Buyer, and Buyer shall purchase and acquire from Seller, all of Seller's
right, title and interest, as of the date hereof, in and to the PERC Assigned
Interest and all of Seller's right, title and interest in and to the OWL
Assigned Interest.
1.02 Amount. The purchase price for the PERC Assigned Interest shall
be Eleven Million Seven Hundred Thirty-Six Thousand Nine Hundred and Five
Dollars ($11,736,905) (the "PERC Purchase Price") and the purchase price for the
OWL Assigned Interest shall be Two Hundred Thousand Dollars ($200,000) (the "OWL
Purchase Price").
1.03 Manner of Payment. On the terms and subject to all of the
conditions set forth in this Agreement, Buyer shall pay to Seller the PERC
Purchase Price and the OWL Purchase Price by wire transfer of such amounts (in
immediately available funds) on the Closing Date to Bank of New York, New York,
New York, ABA No.021u000u018, Account No.89003-05290, PIC Misc. Pooled Asset
Account, Penobscot LP, or to such other account as Seller may notify Buyer of in
writing.
ARTICLE II - OPTION AND OPTION PRICE
2.01 Grant of Option. On the terms and subject to all of the
conditions set forth in this Agreement, Seller hereby grants to Buyer, effective
as of the Closing Date, the option to purchase the Option Interest (the
"Option").
2.02 Option and Exercise Price. The purchase price of the Option
shall be Three Hundred Thousand Dollars ($300,000) (the "Option Price"). The
exercise price of the Option shall be Two Million One Hundred Thousand Dollars
($2,100,000) (the "Exercise Price"). If the Option is exercised, the Option
Price shall not be applied to the Exercise Price.
2.03 Option Term. Buyer may exercise the Option at any time from the
Closing Date until the later of (i) the thirteenth (13th) month following the
Closing Date, and (ii) seven months following the closing date of the refunding
of the Floating Rate Demand Resource Recovery Revenue Bonds (Penobscot Energy
Recovery Company Project -- Series 1986 A and B (the "Refunding")), issued by
the Town of Orrington, Maine, pursuant to that certain Trust Indenture, dated
April 1, 1986 between the Town of Orrington and Mellon Bank, N.A., as trustee,
as supplemented, but in no event shall the Option expire later than December 31,
1998 (the "Option Term").
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2.04 Manner of Payment of Option Price. On the terms and subject to
all of the conditions set forth in this Agreement, Buyer shall pay to Seller the
Option Price by wire transfer of such amount (in immediately available funds) on
the Closing Date to the account named in Section 1.03 or to such other account
as Seller may notify Buyer of in writing.
2.05 Method of Exercise and Payment of Exercise Price. The Option
may be exercised by delivery, within the Option Term, of written notice to the
Seller at least 30 days prior to the intended date of exercise (the "Exercise
Date") of the Option. On the Exercise Date, Buyer and Seller shall follow the
same closing and payment procedures as are described in Articles III and VI of
this Agreement.
ARTICLE III - CLOSING
3.01 Closing. The closing of the transactions contemplated by
Article I (the "Closing") and Article II of this Agreement shall take place at
the offices of Buyer. The Closing shall take place on the date hereof or at such
other location, time or date as may be agreed to in writing between Seller and
Buyer (such date of the Closing being herein called the "Closing Date").
3.02 General Procedure. At the Closing, each party shall deliver to
the party entitled to receipt thereof the documents required to be delivered
pursuant to Articles VI and VII hereof and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may be
reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be reasonably
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the PERC Assigned Interest, the
OWL Assigned Interest, or the Option Interest, as the case may be, shall be
effected by Seller's execution and delivery to Buyer of an assignment
substantially in the form attached hereto as Exhibit A (the "PERC Assignment"),
Exhibit B hereto (the "OWL Assignment") or Exhibit C hereto (the "PERC Option
Assignment"), respectively, and such other instruments of conveyance, transfer,
assignment and delivery as Buyer shall reasonably request to cause Seller to
transfer, convey, assign and deliver the PERC Assigned Interest, the OWL
Assigned Interest or the Option Interest, as the case may be, to Buyer.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
4.01 Execution, Delivery; Valid and Binding Agreement. The
execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by Seller and no other proceedings on its part are necessary to
authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly executed and delivered by Seller and, assuming that this
Agreement is the valid and binding agreement of Buyer, constitutes the valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable
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bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights or by general principles
of equity.
4.02 No Breach. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated hereby
do not conflict with or result in any breach of any of the provisions of, or
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any lien, security interest, charge or
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of any indenture,
mortgage, lease, loan agreement or other agreement or instrument by which
Seller, the PERC Assigned Interest, the OWL Assigned Interest or the Option
Interest are bound or affected or any law, statute, rule or regulation or order,
judgment or decree to which Seller, the PERC Assigned Interest or the Option
Interest are subject.
4.03 Good Title; No Liens. Seller owns good title to the PERC
Assigned Interest, the Option Interest and the OWL Assigned Interest, free and
clear of all liens and encumbrances. Seller has not previously sold, transferred
or assigned any of its interest in the PERC Partnership (other than previous
partial sales of such interest to Buyer, if any) or the OWL Partnership, nor has
it acquired any of its interest in the PERC Partnership during the past twelve
months. Seller agrees not to sell, assign, transfer or in any way encumber the
Option Interest during the Option Term.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 Execution, Delivery; Valid and Binding Agreement. The
execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by Buyer, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement has been duly executed and delivered by Buyer and, assuming that
this Agreement is the valid and binding agreement of Seller, constitutes the
valid and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
5.02 No Breach. The execution, delivery and performance of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Buyer, or require any
authorization, consent, approval, exemption or other action by or notice to any
bank, trustee or other person (however constituted) or any court or other
governmental body, under the provisions of any indenture, mortgage, lease, loan
agreement or other agreement or instrument by which Buyer is bound or affected
(other than those obtained and in full force and effect as of the Closing Date
or closing
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date for the exercise of the Option, as applicable), or any law, statute, rule
or regulation or order, judgment or decree to which Buyer is subject. The
execution of the Agreement and the Assignment Agreement is authorized by the
PERC Partnership Agreement and no further consent or approval of the partners of
the PERC Partnership, other than those expressly contemplated in Section VII
hereof, is required.
5.03 Accredited Investor; Investment Purposes. Buyer is an
"accredited investor" as defined under Regulation D promulgated under the
Securities Act of 1933, as amended. Buyer is acquiring the PERC Assigned
Interest, the OWL Assigned Interest, and the Option, and, upon exercise of the
Option will acquire the Option Interest, for its own account for investment and
not with a view to, or for sale or resale in connection with, any public
distribution thereof or with any present intention of selling, distributing or
otherwise disposing of the PERC Assigned Interest, the OWL Assigned Interest,
the Option or the Option Interest, except such sales thereof as are made not in
violation of the Securities Act of 1933, as amended, the applicable securities
or "blue sky" laws of any State and any other applicable law. Buyer possesses
sufficient knowledge and experience in financial and business matters so that it
is capable of evaluating the merits and risks of purchasing the PERC Assigned
Interest, the OWL Assigned Interest, the Option and the Option Interest, as the
case may be.
5.04 Investigation. Buyer has performed such investigations and
undertaken such due diligence in respect of the PERC Partnership, the OWL
Partnership, the assets of each such partnership, the PERC Partnership
Agreement, the OWL Partnership Agreement and the documents and agreements
related thereto as it in the exercise of its independent judgment deemed
necessary under the circumstances. Buyer is entering into this Agreement and the
transactions contemplated hereby without reliance upon any representation or
warranty from Seller other than such representations and warranties as are
expressly set forth in this Agreement and the agreements, certificates and other
documents executed and delivered by Seller as of the Closing Date.
5.05 Access to Information. Buyer has provided to Seller full access
to all of the books and records of the PERC Partnership and has caused OEI to
provide to Seller full access to all of the books and records of the OWL
Partnership and has provided to Seller all agreements (including the most recent
drafts of documents proposed to be entered into in connection with the
Refunding) material to an appraisal by Seller of the value of the PERC Assigned
Interest, the OWL Assigned Interest, the Option and the Option Interest. Buyer
hereby represents that, other than the Refunding, the restructuring of the power
purchase agreement with Bangor Hydro-electric Company and the related waste
disposal agreements, there are no pending or proposed transactions, and neither
the Buyer nor PERC Partnership are currently involved in any negotiations, that
are or could be material to an appraisal by Seller of the value of the PERC
Assigned Interest, the OWL Assigned Interest, the Option and the Option
Interest.
ARTICLE VI - THE CLOSING
6.01 Seller's Closing Obligations. On the Closing Date (or the closing date of
the Option Interest, if the Option is exercised), Seller shall have (a)delivered
to Buyer the PERC Assignment
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and the OWL Assignment (on the Closing Date) or the PERC Option Assignment (on
the Exercise Date) and such other instruments of conveyance, transfer,
assignment and delivery as Buyer shall have reasonably requested pursuant to
Section 3.02 hereof; and (b)satisfied (or Buyer has waived in writing) each of
the conditions to Buyer's obligations as set forth in Article VI.
6.02 Buyer's Closing Obligations. On the Closing Date (or the closing date of
the Option Interest, if the Option is exercised), Buyer shall have (a)delivered
to Seller a wire transfer in immediately available funds in the amount of
$12,236,905 (or $2,100,000, upon exercise of the Option) and a duly executed
counterpart of each of the PERC Assignment and the OWL Assignment; and
(b)satisfied (or Seller has waived in writing) each of the conditions to
Seller's obligations set forth in Article VII.
ARTICLE VII - CONDITIONS TO CLOSING
7.01 Conditions to Seller's Obligations. The obligations of Seller hereunder are
subject to the satisfaction, or waiver in writing by Buyer, as of the Closing
Date, of the following conditions:
(a) Amendment of PERC Partnership Agreement. The PERC Partnership
Agreement shall have been amended as of the Closing Date, (i) to adjust the
percentage interests of partners to reflect the sale of the PERC Assigned
Interest, (ii) to relieve Seller of all obligations under the PERC Partnership
Agreement to make capital contributions or other payments to the PERC
Partnership, (iii) to provide for the transfer of the Option Interest upon
exercise of the Option without further amendment of the PERC Partnership
Agreement or consent of the other partners, (iv) to provide that the indemnity
contained in Section 8.1(b) shall survive the transfer of the PERC Partnership
Agreement and the Option Interest with respect to any claims Seller may have
arising out of actions or events occurring prior to the transfer of the Option
Interest, and (v) to make such other amendments thereof as are necessary to
reflect the transactions contemplated hereby, all by a Second Amendment in
substantially the form attached hereto as Exhibit D.
(b) PERC Capital Contribution Agreement. Buyer shall have caused
Seller to be released from all of its remaining obligations under that certain
Capital Contribution Agreement, dated May 15, 1986, as amended, between Seller
and the PERC Partnership, and shall have obtained the consent of Morgan Guaranty
Trust Company ("Morgan") to such release, and shall have obtained the consents
of the Required Banks (as defined in the Credit Agreement) to such release and
the transfers which are the subject matter of this Agreement, such release and
consents each to be in form and substance satisfactory to Seller.
(c) OEI Consent. Buyer shall have obtained for the benefit of Seller
the consent of OEI to the transfer of the OWL Partnership Interest.
(d) OWL Capital Contribution Agreement. Buyer shall have caused
Seller to be released from all of its remaining obligations under that certain
Capital Contribution Agreement, dated January 15, 1993, between Seller and the
OWL Partnership, and shall have
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obtained for the benefit of Seller the consent of Morgan to such release, such
release and consent each to be in form and substance satisfactory to Seller.
(e) Opinions; Certificates. Buyer shall have delivered to Seller an
opinion of counsel in form and substance satisfactory to Seller.
ARTICLE VIII - MISCELLANEOUS
8.01 Expenses. Except as otherwise expressly provided for herein,
Seller and Buyer will pay all of their own expenses in connection with the
negotiation of this Agreement, the performance of their respective obligations
hereunder and the consummation of the transactions contemplated by this
Agreement (whether consummated or not); provided that Buyer shall pay, when
invoiced, Seller's attorney's fees incurred in connection with the transactions
contemplated by the Agreement.
8.02 Amendment and Waiver. This Agreement may not be amended or
waived except in a writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between any persons having
any interest in this Agreement will be deemed effective to modify or amend any
part of this Agreement or any rights or obligations of any person under or by
reason of this Agreement.
8.03 Complete Agreement. This Agreement contains the complete
agreement between the parties and supersedes any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the transfer of the PERC Assigned Interest, the Option , the
Option Interest or the OWL Assigned Interest.
8.04 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
8.05 Governing Law. The internal law, without regard to conflicts of
laws principles, of the State of New York will govern all questions concerning
the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement.
8.06 Survival. The covenants, representations and warranties
contained in this Agreement shall survive the Closing.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
PERC MANAGEMENT COMPANY LIMITED
PARTNERSHIP
BY: PERC, INC., General Partner
By /s/ Martin J. Sergi
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Its: President
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ John Wand
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Its: Vice President
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EXHIBIT A - ASSIGNMENT OF PERC PARTNERSHIP INTEREST
THIS AGREEMENT, made and entered into as of the ____ day of ________, 199__, by
and between PERC Management Company Limited Partnership ("Buyer") and The
Prudential Insurance Company of America (the "Seller").
WITNESSETH:
WHEREAS, Seller owns a limited partnership interest in Penobscot Energy Recovery
Company, Limited Partnership (the "Partnership"); and
WHEREAS, Seller desires to sell to Buyer 77% of Seller's right, title and
interest in and to such partnership interest (the "PERC Assigned Interest"); and
WHEREAS, the Buyer desires to purchase the PERC Assigned Interest in
consideration of the cash payment to Seller of Eleven Million Seven Hundred
Thirty-Six Thousand Nine Hundred Five Dollars ($11,736,905).
NOW THEREFORE, Seller hereby transfers to Buyer all of Seller's right, title and
interest in and to the PERC Assigned Interest from and after the date hereof.
1. Buyer hereby, and by these presents, accepts the Sellers tender of the PERC
Assigned Interest and assumes Seller's obligations in respect thereof.
2. Seller and Buyer each warrants and represents that it is not in default
under any provision of the PERC Partnership Agreement.
3. This Agreement shall bind the parties hereto, their heirs, successors,
legal representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
BUYER: SELLER:
PERC MANAGEMENT COMPANY THE PRUDENTIAL INSURANCE
LIMITED PARTNERSHIP COMPANY OF AMERICA
BY: PERC, INC., General Partner
By___________________________ By_______________________________
Its__________________________ Its______________________________
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EXHIBIT B - ASSIGNMENT OF OWL PARTNERSHIP INTEREST
THIS AGREEMENT, made and entered into as of the ____ day of ___________, 199__,
by and between PERC Management Company Limited Partnership ("Buyer") and The
Prudential Insurance Company of America (the "Seller").
WITNESSETH:
WHEREAS, Seller owns a limited partnership interest in Orrington Waste, Ltd.
Limited Partnership, an Oregon limited partnership (the "Partnership"); and
WHEREAS, Seller desires to sell to Buyer all of Seller's right, title and
interest in and to such partnership interest (the "Assigned Interest"); and
WHEREAS, the Buyer desires to purchase the Assigned Interest in
consideration of the cash payment to Seller of Two Hundred Thousand Dollars
($200,000).
NOW THEREFORE, Seller hereby transfers to Buyer all of Seller's right, title and
interest in and to the Assigned Interest from and after the date hereof.
1. Buyer hereby, and by these presents, accepts the Seller's tender of the
Assigned Interest and assumes Seller's obligations in respect thereof.
2. Seller and Buyer each warrants and represents that it is not in default
under any provision of the Agreement of Limited Partnership, dated January 8,
1993, as amended.
3. This Agreement shall bind the parties hereto, their heirs, successors,
legal representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
BUYER: SELLER:
PERC MANAGEMENT COMPANY THE PRUDENTIAL INSURANCE
LIMITED PARTNERSHIP COMPANY OF AMERICA
By: PERC, INC., General Partner
By___________________________ By_______________________________
Its__________________________ Its______________________________
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EXHIBIT C - ASSIGNMENT OF REMAINING PERC PARTNERSHIP INTEREST
THIS AGREEMENT, made and entered into as of the ____ day of ___________, 199__,
by and between PERC Management Company Limited Partnership ("Buyer") and The
Prudential Insurance Company of America (the "Seller").
WITNESSETH:
WHEREAS, Seller originally owned a limited partnership interest in Penobscot
Energy Recovery Company, Limited Partnership (the "Partnership"); and
WHEREAS, on _________, 1997, Buyer purchased from Seller 77% of Seller's right,
title and interest in and to such partnership interest (the "Initial
Assignment"); and
WHEREAS, in conjunction with the Initial Assignment, Seller granted to Buyer an
option (the "Option") to purchase all of Seller's remaining right, title and
interest in and to the Partnership that was not transferred at the time of the
Initial Assignment (the "Option Interest"); and
WHEREAS, the Buyer desires to exercise the Option in consideration of the
cash payment to Seller of Two Million One Hundred Thousand Dollars ($2,100,000).
NOW THEREFORE, Seller hereby transfers to Buyer all of Seller's right, title and
interest in and to the Option Interest from and after the date hereof.
1. Buyer hereby, and by these presents, accepts the Seller's tender of the
Option Interest and assumes Seller's obligations in respect thereof.
2. Seller and Buyer each warrants and represents that it is not in default
under any provision of the PERC Partnership Agreement.
3. This Agreement shall bind the parties hereto, their heirs, successors,
legal representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
BUYER: SELLER:
PERC MANAGEMENT COMPANY THE PRUDENTIAL INSURANCE
LIMITED PARTNERSHIP COMPANY OF AMERICA
BY: PERC, INC., General Partner
By___________________________ By_______________________________
Its__________________________ Its______________________________
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