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Exhibit 4.1
AMENDMENT NO. 2
TO POWER PURCHASE AGREEMENT
This Amendment No. 2 to Power Purchase Agreement ("Second Amendment") is
entered into as of the 26th day of June , 1998 by and between PENOBSCOT ENERGY
RECOVERY COMPANY, LIMITED PARTNERSHIP, a Maine limited partnership ("Seller"),
and BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Buyer are parties to a Power Purchase Agreement dated
June 21, 1984 and amended by Amendment No. 1 dated March 24, 1986 (as amended,
the "Agreement") for the sale by Seller and the purchase by Buyer of energy and
capacity from Seller's Orrington, Maine waste-to-energy facility (the
"Facility"); and
WHEREAS, Seller has entered into certain long-term waste disposal
agreements with numerous Maine municipalities, pursuant to a standard form First
Amended and Restated Waste Disposal Agreement dated as of April 1, 1991 or
shortly thereafter (the "First Waste Disposal Agreement") and intends to enter
into a standard form Second Amended, Restated and Extended Waste Disposal
Agreement (the "Second Waste Disposal Agreement") with many of the same
municipalities as of the Closing (as hereinafter defined); and
WHEREAS, those municipalities which are parties to the First Waste
Disposal Agreement are known as the "Charter Municipalities"; and
WHEREAS, those municipalities which become parties to the Second Waste
Disposal Agreement are known as "Amending Charter Municipalities;" and
WHEREAS, the Amending Charter Municipalities will be directly benefitted
by this Agreement, because it is expected that the continuing sale of energy by
Seller to Buyer will enable Seller to economically receive and process municipal
solid waste under the Second Waste Disposal Agreement, which is expected to
substantially assist the Amending Charter Municipalities in the discharge of
their obligation to provide for the disposition of municipal solid waste
discarded by their residents and businesses; and
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WHEREAS, in accordance with 35-A M.R.S.A. ss.3156, Buyer has conclusively
determined that (i) this Second Amendment provides near-term benefits to its
rate payers that will be reflected in rates paid by the Buyer's customers; and
(ii) as a result of this Second Amendment, potential future adverse rate impacts
are not likely to be disproportionate to near-term gains; and (iii) this Second
Amendment is consistent with 35-A M.R.S.A. ss.3191; and (iv) this Second
Amendment will not adversely impact the availability of a diverse and reliable
mix of electric energy resources and will not significantly reduce the long-term
electric energy or capacity resources available to Buyer and needed to meet
future electric demand; and
WHEREAS, consistent with 35-A M.R.S.A. ss.3208(4), Buyer has conclusively
determined that this Second Amendment will reduce the Buyer's potential stranded
costs; and
WHEREAS, at the request of Buyer, Seller is entering into a loan agreement
(the "Bond Financing Agreement") with the Finance Authority of Maine ("FAME") to
provide a loan to Seller pursuant to FAME's electric rate stabilization loan
program, as defined in 10 M.R.S.A. ss.963-A (7-A), by issuing bonds (the "New
Bonds") to refinance and replace the existing loan provided to Seller from
certain bonds issued by the Town of Orrington, Maine (the "Old Bonds"), which
Old Bonds financed a portion of the construction of the Facility; and
WHEREAS, this Amendment is being executed and delivered contingent upon
the closing of the refinancing referred to in the preceding paragraph (the
"Closing"); and
WHEREAS, delivery of the New Bonds shall be conclusive evidence that the
Closing has occurred; and
WHEREAS, Seller, Municipal Review Committee, Inc. (the "MRC") and Buyer
have approved the Bond Financing Agreement and the Trust Indenture (the "Trust
Indenture") to be entered into as of the Closing between FAME and The Chase
Manhattan Bank, as the trustee for the New Bonds (the "Bond Trustee"), pursuant
to which the Bond Trustee will receive specified payments from Seller and Buyer
at Closing to fund certain reserves held in trust by the Bond Trustee under the
Trust Indenture; and
WHEREAS, all Charter Municipalities are members of the MRC which is the
designated agent for the Charter Municipalities and the Amending Charter
Municipalities; and
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WHEREAS, Seller and Buyer understand that the Amending Charter
Municipalities will receive certain benefits as a result of this Second
Amendment and related transactions, and intend that the MRC shall be an express
third party beneficiary hereunder for the benefit of the Amending Charter
Municipalities to the extent provided herein; and
WHEREAS, Buyer intends to issue warrants to the MRC or its designees for
the benefit of Amending Charter Municipalities at the Closing; and
WHEREAS, the MRC and Buyer are separately entering into an agreement as of
the Closing regarding certain operating reports about the Facility to be
prepared periodically by the MRC for which Buyer shall pay Forty Thousand
Dollars ($40,000.00) annually (subject to annual adjustment in accordance with
changes in the "CPI-U," so-called, published by the United States Bureau of
Labor Statistics), payable Ten Thousand Dollars ($10,000.00) quarterly in
advance;
NOW THEREFORE, in consideration of the mutual covenants and promises set
forth herein, and the consent of the MRC and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller and Buyer agree as follows:
1. It is the express intent of Seller and Buyer that the MRC possess an
enforceable benefit for the Amending Charter Municipalities as a
third party beneficiary of the Agreement. As a third party
beneficiary, it is intended that the MRC shall have standing in any
suit, bankruptcy, reorganization, arbitration, mediation or dispute
resolution proceeding arising out of the Agreement to enforce any
rights granted to the Amending Charter Municipalities or the MRC
hereunder, or to seek damages from the breach of any obligations
owed to the Amending Charter Municipalities and the MRC hereunder.
2. The following provisions of the Agreement shall not be materially
amended, supplemented or modified without the express written
consent of the MRC, which consent shall not be unreasonably withheld
or delayed:
Article II: Term
Article III: Sale of Power
Article IV: Billing and Payment
Article IX: Deliveries
Article XI: Continuity of Service
Article XIII: Breach
Article XIV: Assignment
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Article XV: Indemnity
Article XVI: Liability, Dedication
Article XVII: Force Majeure
Article XIX: Representations and Warranties of the Parties
Article XXI: Waiver
Article XXIII: Choice of Law
The First and Second Amendments to the Agreement
3. At the Closing Buyer will (a) deposit with the Bond Trustee for the
benefit of Seller Six Million Dollars ($6,000,000.00) for credit to
the Capital Reserve Fund established under the Trust Indenture and
(b) a one-time payment of $151,393, which is an amount equal to
interest at the rate of eight percent (8%) per annum on One Million
Dollars ($1,000,000.00) over sixteen quarter-year periods,
discounted at the same interest rate (together, the "Closing
Payment"), for deposit under the terms of the Trust Indenture. Buyer
will pay to the Bond Trustee for the benefit of Seller and the MRC,
as agent for the Amending Charter Municipalities additional cash
payments in the aggregate amount of Four Million Dollars
($4,000,000), for deposit under the terms of the Trust Indenture, in
quarterly payments of Two Hundred Fifty Thousand Dollars
($250,000.00) due on the first day of each quarter for each quarter
or part thereof (January, April, July, October) which occurs after
the Closing, commencing October 1, 1998, until sixteen such
quarterly payments have been made (the "Installment Payments," and
together with the Closing Payment, the "Bangor Hydro Payments," and
each date of such payment, the "Payment Date"). All Bangor Hydro
Payments shall be made to the Bond Trustee but if a Bond Trustee is
not serving in such capacity on a particular Payment Date then the
Bangor Hydro Payment shall be made as Seller shall direct Buyer in
writing. The obligation of Buyer to make each of the Bangor Hydro
Payments shall be absolute and unconditional, and Buyer shall not be
entitled to any abatement, diminution, set off, abrogation, waiver
or modification thereof nor to any termination of the Agreement by
any reason whatsoever except as expressly provided herein,
regardless of any rights of set-off, recoupment or counterclaim that
Buyer might otherwise have against Seller or any other party or
parties and regardless of any contingency, act of God, event or
cause whatsoever.
4. Buyer and Seller each agree to pay by wire transfer of same day
funds on the Closing Date or as soon thereafter as practicable,
one-half (1/2) of the third party costs of restructuring the
financing described above including but not limited to costs related
to: (a) extension and termination of the letter of credit securing
the Old Bonds, (b) retirement of the Old Bonds, (c)
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issuance of the New Bonds and loans related thereto, (d) obtaining
FAME approval; and all of certain costs of other entities including,
but not limited to, reasonable expenses incurred by the MRC, the
Town of Orrington, bond counsel, FAME, the existing letter of credit
banks, and the Bond Trustee, and their respective counsel, with
credit for such portion thereof that may have been advanced by Buyer
or Seller, respectively, prior to the Closing.
5. Subject to the satisfaction of the requirements contained in
Paragraph 6 below, Seller shall pay to Buyer one-third (1/3) of any
Distributable Cash (as such term is defined in the Second Waste
Disposal Agreement), which is available for distribution in
accordance with the Trust Agreement, but only to the extent
permitted under the Bond Financing Agreement (each such payment a
"Bangor Hydro Distribution"), as more particularly described in the
Surplus Cash Agreement of even date herewith among Buyer, Seller,
and the MRC.
6. Seller's obligation to make a Bangor Hydro Distribution to Buyer is
contingent on Buyer making each Installment Payment as and when due
and performing each of its other obligations set forth in the
Agreement, as amended hereby. In the event of a payment default
hereunder by Buyer, Buyer shall immediately rebate to the Bond
Trustee (or if none, to Seller) all Bangor Hydro Distributions
previously received by Buyer in an amount equal to the sum of the
Bangor Hydro Payments (together with any other payments due
hereunder) which have not been paid when due, which rebate amount
(net of costs of collection) shall be distributed as directed in
writing by Seller.
7. In the event that Buyer's obligation to make payments under the
Agreement is avoided, or otherwise reduced in amount, or delayed, or
impaired in a bankruptcy, reorganization, or similar proceeding,
Seller's obligation to make any further Bangor Hydro Distributions
shall cease, and Seller and the MRC shall have valid and enforceable
claims against Buyer in the aggregate amount of all Bangor Hydro
Distributions previously paid to Buyer, net of any reserves funded
by Bangor Hydro Payments and held by the Bond Trustee under the
Trust Indenture, in addition to any other claims for damages or
other claims Seller and the MRC may possess.
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8. Article V of the Agreement is amended as follows:
To Seller: Penobscot Energy Recovery Company, Limited Partnership
P.O. Box 96
Industrial Way
Orrington, ME 04475
Attention: Plant Manager
With a copy (which shall not constitute notice) to:
Gordon F. Grimes, Esq.
Bernstein, Shur, Sawyer & Nelson
100 Middle Street
P.O. Box 9729
Portland, ME 04104-5029
To Buyer: President
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932
Bangor, ME 04402-0932
To Municipal Review Committee, Inc.:
Municipal Review Committee, Inc.
Eastern Maine Development Corporation
One Cumberland Place
Bangor, ME 04401
With a copy (which shall not constitute notice) to:
Thomas M. Brown, Esq.
Eaton, Peabody, Bradford & Veague, P.A.
Fleet Center - Exchange Street
P.O. Box 1210
Bangor, ME 04402-1210
Monthly billing statements to Buyer shall be sent to:
Assistant Treasurer
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932
Bangor, ME 04402-0932
9. Article IX of the Agreement is amended by adding the following at the end
of the last sentence of the first paragraph:
"...until such time as retail access is permitted pursuant to 35-A
M.R.S.A. ss.3202 or any successor statute. Thereafter Seller may
(without waiving any right to continue buying from Buyer from time
to time thereafter) purchase such power as permitted by statute,
which shall be delivered by Buyer if requested by Seller."
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10. Article XIII(A) of the Agreement is amended by adding the following at
the end of the first sentence:
"...and in addition Buyer shall pay all Bangor Hydro Payments set
forth in paragraphs 6 and 7 of the Second Amendment hereof."
11. Article XIV of the Agreement is amended by adding the following words
after the words "that the Trustee to which this Agreement is assigned" in the
second sentence thereof:
"..., upon taking possession of the Facility after foreclosure of
its liens on and security interests therein,...
12. Article XV of the Agreement is amended by inserting the following
immediately after the first sentence thereof:
"Notwithstanding the above, no limitation appearing in the preceding
sentence will be construed to limit payment of the amounts described
in paragraphs 6 and 7 of the Second Amendment hereof."
13. Article XVI is amended by adding the following to Section A:
"...except obligations to the MRC as provided for herein."
14. Article XXIV of the Agreement is amended by adding the following:
"...other than such terms and conditions referred to in documents
referred to in the Second Amendment."
Buyer acknowledges that any default under the Agreement referenced in the 15th
WHEREAS clause hereof shall not be a default under this Agreement or in any way
excuse performance by Buyer hereunder or give rise to any rights of offset with
respect thereto. In all other respects, the Agreement shall remain in full force
and effect in accordance with the terms thereof, and Seller and Buyer each
hereby reaffirms its respective obligations thereunder.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Amendment No. 2 to be
executed as of the date first written above.
WITNESS: Penobscot Energy Recovery Company, Limited
Partnership
By: PERC Management Company Limited
Partnership, its General Partner
By: PERC, Inc. its General Partner
/s/ Robert E. Wetzel By: /s/ Martin J. Sergi
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Name: Robert E. Wetzel Martin J. Sergi
Its President
By: Energy National, Inc., its General
Partner
/s/ David Lloyd By: /s/ Michael J. Young
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Name: David Lloyd Michael J. Young
Its Secretary
Bangor Hydro-Electric Company
/s/ Andrew Landry By: /s/ Carroll R. Lee
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Name: Andrew Landry Carroll R. Lee
Its Senior Vice President and Chief
Operating Officer
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