Agreement of Merger
by and among
Consolidated Hydro Maine, Inc.,
CHI Universal, Inc.,
Consolidated Hydro, Inc.,
Ridgewood Maine Hydro Corporation
and
Ridgewood Maine Hydro Partners, L.P.
Dated as of
July 1, 1996
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered into
as of July 1, 1996 between and among Consolidated Hydro Maine, Inc., a Delaware
Corporation ("CHI Maine"), CHI Universal, Inc., a Delaware Corporation
("Universal"), Consolidated Hydro, Inc., a Delaware Corporation ("Parent"),
Ridgewood Maine Hydro Corporation, a Delaware corporation (the "General
Partner") and Ridgewood Maine Hydro Partners, L.P., a Delaware limited
partnership (the "Partnership").
RECITALS
A. CHI Maine owns and operates all the assets of 14 separate
hydroelectric generating facilities located in the State of Maine which
collectively have a nameplate generating capacity of 11.32 megawatts and which
sell electricity pursuant to Power Purchase Agreements (as defined below)
(individually, a "Project" and collectively the "Projects").
B. CHI Maine is a wholly owned subsidiary of Universal, and Universal
is a wholly owned subsidiary of the Parent.
C. Subject to the terms and conditions of this Agreement, and in
accordance with the General Corporation Law and Limited Partnership Act (as each
is defined below), the parties hereto desire that CHI Maine be merged with and
into the Partnership (the "Merger").
D. The Merger has been approved by the Board of Directors of CHI
Maine, by Universal, as sole shareholder of CHI Maine, by Parent, as sole
shareholder of Universal, and by each of the general and limited partners of
Partnership.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties intending to be legally bound,
hereby agree as follows:
ARTICLE 1
Definitions and Interpretations
1.1 Defined Terms. Capitalized terms used in this Agreement without
other definition shall have the meanings specified in this Section 1.1, unless
the context requires otherwise.
"Additional Consents and Notices" has the meaning set forth in Section
4.6.
"Adjusted Cash Consideration Statement" has the meaning set forth in
Section 3.3.1.
"Affiliate" of a specified Person means any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified. For purposes
of the foregoing, "control," "controlled by" and "under common control with,"
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agreement" means this Agreement of Merger, including all Exhibits and
Schedules.
"Amended Partnership Agreement" means the amended and restated
Agreement of Limited Partnership of the Partnership in the form of Exhibit A.
"Balance Sheet" means the balance sheet of CHI Maine prepared in
accordance with GAAP as of the Effective Date, but excluding as assets of CHI
Maine any accounts receivable or other assets receivable from Affiliates of
Parent or Universal.
"Bangor Hydro" means Bangor Hydro-Electric Company, a Maine
Corporation.
"Cash Consideration" has the meaning set forth in Section 3.2.4, as
the same may be adjusted pursuant to Section 3.3.
"Certificate of Merger" means a Certificate of Merger between CHI
Maine and the Partnership in the form of Exhibit B.
"CHI Maine" has the meaning set forth in the Recitals.
"CHI Maine Assets" means all the assets and rights of any kind or
character owned or leased or otherwise benefiting CHI Maine, including (i) the
Sites, and all easements, rights of way and other similar rights in which CHI
Maine has any interest, (ii) the approximately 11.32 megawatt nameplate capacity
hydroelectric generating facilities and related fixtures, improvements,
equipment and other assets located on the Sites, (iii) the Power Purchase
Agreements and all of the other Project Documents, (iv) all of the other
tangible and intangible, personal, real, mixed and other property and assets of
any kind owned or leased by CHI Maine or in which CHI Maine has any rights or
interests.
"CHI Maine Shares" has the meaning set forth in Section 5.1.
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"Closing" has the meaning given in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Documents" means, collectively, this Agreement, the
Certificate of Merger, the Amended Partnership Agreement, the Option Agreement
and the O&M Agreement.
"CMP" means Central Maine Power Company, a Maine Corporation.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted thereunder.
"Current Assets" means, collectively, the CHI Maine Assets shown or
required to be shown as current assets on the Balance Sheet.
"Current Liabilities" means, collectively, all liabilities of CHI
Maine shown or required to be shown as current liabilities on the Balance Sheet.
"Default" means, when used with reference to any agreement without
other reference, any event or circumstance that, with the giving of notice or
lapse of time, or both, would, unless cured or waived, become an Event of
Default under such agreement.
"Delaware Laws" means, collectively, the General Corporation Law and
the Limited Partnership Act.
"Effective Date" means 12:01 a.m. July 1, 1996.
"Environmental Laws" means, collectively, all federal, state, local
and other laws, statutes and regulations, and any other rule, guidance,
guideline or common law, which in any way relates to health, safety or the
environment, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. ss. 9601 et seq.; the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976,
as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. ss.
6901 et seq.; the Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act
of 1976, 15 U.S.C. ss. 2601 et seq.; the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 et seq.; the Clean Air Act of
1966, as amended, 42 U.S.C. ss. 7401 et seq.; the National Environmental Policy
Act of 1975, 42 U.S.C. ss. 4231; the Rivers and Harbours Act of 1899, 33 U.S.C.
ss. 401 et seq.; the Endangered Species Act of 1973, as amended, 16 U.S.C. ss.
1531 et seq.; the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. ss. 651 et seq.; the Safe Drinking Water Act of 1974, as amended, 42
U.S.C. ss. 300(f) et seq.; the
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Hazardous Materials Transportation Act, 42 U.S.C. ss.ss. 1471, 1472, 1655, 1801
et seq.; the Federal Insecticide, Fungicide & Rodenticide Act, 7 U.S.C. ss. 136
et seq.; and the Atomic Energy Act, 42 U.S.C. ss. 3011 et seq.
"Event of Default" means, when used with reference to any agreement
without other reference, an event of default or other similar event as defined
in, or pursuant to, the terms of such agreement.
"FERC" means the Federal Energy Regulatory Commission and its
successors.
"Financial Statements" has the meaning set forth in Section 5.4.
"FPA" means the Federal Power Act, as amended, and all rules and
regulations adopted thereunder.
"GAAP" means generally accepted accounting principles in effect in the
United States from time to time, applied on a consistent basis by the accounting
entity to which they refer.
"General Corporation Law" means the General Corporation Law of the
State of Delaware (as amended).
"General Partner" has the meaning set forth in the Preamble of this
Agreement.
"Governmental Approval" means any applicable authorization, approval,
consent, license, lease, ruling, permit, tariff, certification, exemption,
filing or registration by or with any Governmental Person.
"Governmental Consents and Notices" has the meaning set forth in
Section 4.5.
"Governmental Filing" shall mean any filings, reports, registrations,
notices or other submissions made to any federal, state or local Governmental
Person.
"Governmental Person" means any federal, state, local or other
government, any political subdivision or any governmental, judicial, public or
statutory instrumentality, tribunal, agency (including those pertaining to
health, safety or the environment), authority, body or entity, or other
regulatory bureau, authority, body or entity having legal jurisdiction over the
matter or Person in question.
"Governmental Rule" means any applicable federal, state, local or other
law, statute, treaty, rule, regulation, ordinance, order, code, judgment,
decree, directive, injunction, writ or similar action or decision duly
implementing any of the foregoing by any Governmental Person, but does not
include Governmental Approvals.
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"Hazardous Substance" shall mean any "hazardous substance" as defined
under Section 101(14) of CERCLA or the regulations adopted pursuant thereto, or
any "hazardous substance" as defined under any similar statute, rule or
regulation of Maine.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all of the rules and regulations thereunder.
"Knowledge", "known" and "knows", whether or not capitalized herein
and when used with respect to matters covered by a representation, warranty,
covenant or other provision of this Agreement applicable to the Projects, CHI
Maine, Universal or the Parent, means the knowledge and beliefs of each of
Edward M. Stern, Daniel S. Pease and John Bogert.
"Lien" means any lien, mortgage, encumbrance, charge, pledge, lease,
security interest, claim, option or right of any kind (including any conditional
sale or other title retention agreement) which constitutes an interest in or
claim against property.
"Limited Partnership Act" means the Limited Partnership Act as adopted
by the State of Delaware (as amended).
"Merger" has the meaning set forth in the Recitals.
"Merger Effective Time" has the meaning set forth in Section 2.2.
"Merger Securities" has the meaning set forth in Section 3.2.5.
"Net Working Capital Amount" means the amount by which Current Assets
exceed (or are less than) the Current Liabilities.
"O&M Agreement" means the Operations, Maintenance and Administration
Agreement in the form of Exhibit C.
"Option Agreement" shall mean the Option and Escrow Agreement in the
form of Exhibit D attached hereto.
"Parent" has the meaning set forth in the Recitals.
"Partnership" has the meaning set forth in the preamble of this
Agreement.
"Permitted Liens" means (i) any Lien for real estate or similar taxes
which are not yet due and payable, (ii) the Liens created under the Power
Purchase Agreements and (iii) Liens on record at the land records office in
local jurisdiction in which any Project is located.
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"Person" means any individual, corporation, partnership, trust, joint
venture, unincorporated association, limited liability company, Governmental
Person or other entity.
"Power Purchase Agreements" means the Power Purchase Agreements
between CHI Maine and Bangor Hydro CMP, as the case may be, with respect to each
Project as more fully described on Schedule 1.1 attached hereto.
"Project" has the meaning set forth in the Recitals.
"Project Documents" has the meaning set forth in Section 5.8.
"Projections" means the financial projections for the Projects
attached hereto as Exhibit E.
"PUC" means the Public Utilities Commission of the State of Maine.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended, and all rules and regulations adopted thereunder as in effect from time
to time.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended, and all rules and regulations adopted thereunder as in effect from time
to time.
"Qualifying Facility" means a "qualifying facility" within the meaning
of PURPA.
"Regulated Substance" means (a) asbestos, PCBs, petroleum or petroleum
products, and (b) any "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous substances", "regulated substances",
"industrial waste", "residual waste", "solid waste", "toxic substances", "toxic
pollutants", "contaminants" or "pollutants" as any of those terms is currently
defined in or for the purpose of any applicable Environmental Law.
"Release or Discharge" shall mean, whether or not capitalized, any
spill, leak, emission, dumping, discharge, injection, escape, or disposal of any
substance into the environment, including any surface water, groundwater, land
surface, subsurface strata or air.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted thereunder.
"Site" means with respect to each Project, the land upon which such
project is located, as more fully described on Schedule 5.7.1 attached hereto.
"Trust" means Ridgewood Electric Power Trust IV, a Delaware business
Trust.
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1.2 Interpretations. For purposes of this Agreement, except where
otherwise expressly provided or unless the context otherwise necessarily
requires:
1.2.1 the terms "herein," "herewith" and "hereof" are references
to this Agreement, taken as a whole;
1.2.2 the terms "include," "includes" and "including" shall mean
"including, without limitation";
1.2.3 references to a "Section," "Article," "Exhibit" or
"Schedule" shall mean a Section, Article, Exhibit or Schedule of this Agreement,
as the case may be;
1.2.4 references to a given agreement, instrument or other
document shall be a reference to that agreement, instrument or other document as
modified, amended, supplemented and restated through the date as of which such
reference is made;
1.2.5 references to a Person include its permitted successors and
permitted assigns;
1.2.6 the singular shall include the plural and the masculine
shall include the feminine and neuter, and vice versa;
1.2.7 reference to a given Governmental Rule is a reference to
that Governmental Rule as amended, modified, supplemented or restated as of the
date on which the reference is made; and
1.2.8 accounting terms have the meanings given to them by GAAP.
ARTICLE 2
The Merger and Merger Consideration
2.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Merger Effective Time, CHI Maine shall be merged with and into the
Partnership, in accordance with the Delaware Laws and the Certificate of Merger.
At the Merger Effective Time, the separate corporate existence of CHI Maine
shall cease, the rights of Universal, as sole holder of the CHI Maine Shares,
shall be converted into the right to receive the Cash Consideration and the
Merger Securities, and the Partnership, as the
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surviving entity, shall continue its limited partnership existence, all in
accordance with the provisions of the Delaware Laws and the Certificate of
Merger.
2.2 Merger Effective Time. As soon as practicable after the
satisfaction or waiver of all of the conditions to the Closing of the
transaction contemplated by this Agreement, the parties shall cause the Merger
to be consummated by causing the Certificate of Merger to be executed and filed
with the Secretary of State of the State of Delaware in accordance with the
applicable provisions of the Delaware Laws. The Merger shall become effective
(the "Merger Effective Time") at the time of such filing with the Secretary of
State of Delaware of the Certificate of Merger is completed, or at such later
time, if any, as is specified in the Certificate of Merger.
2.3 General Effect of Merger. The Merger shall have the effects set
forth in the Delaware Laws. Without limiting the generality of the foregoing,
and subject thereto, at the Merger Effective Time, the CHI Maine Assets, shall
vest in the Partnership, and all debts, liabilities and duties of CHI Maine
shall become the debts, liabilities and duties of the Partnership in the same
manner as if the Partnership had itself incurred them. All rights of creditors
and all liens upon the property of CHI Maine shall thereafter be preserved
unimpaired.
2.4 Effect of Merger on Partners, Partnership Agreement and Universal.
The General Partner, the sole general partner of the Partnership immediately
prior to the Merger Effective Time, shall remain the sole general partner of the
Partnership after the Merger Effective Time, the Trust, the sole limited partner
of the Partnership immediately prior to the Merger Effective Time, shall remain
as a limited partner of the Partnership after the Merger Effective Time and at
the Merger Effective Time, Universal shall be admitted as an additional limited
partner of the Partnership and each of the General Partner, the Trust and
Universal shall thereafter continue as partners of the Partnership in accordance
with the Amended Partnership Agreement, until such time thereafter as one or
more of such partners ceases to be a partner in the Partnership or a new partner
is admitted to the Partnership in accordance with the provisions of the Amended
Partnership Agreement and applicable law. At the Merger Effective Time, the
limited partnership agreement of the Partnership as in effect immediately prior
to the Merger Effective Time shall be amended and restated in its entirety in
the form of the Amended Partnership Agreement and shall thereafter remain in
full force and effect until thereafter amended in accordance with the provisions
thereof and applicable law.
2.5 Merger Consideration, Manner of Payment. The Partnership shall pay
to Universal the Cash Consideration and deliver to Universal the Merger
Securities in the manner specified in Article 3.
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ARTICLE 3
Closing Date and Actions at Closing
3.1 Closing Date. Subject to the other provisions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall be held at the offices of Curtis Thaxter Stevens Broder & Micoleau Limited
Liability Company, P.A., One Canal Plaza, Portland, Maine 04112-7320, at 10
a.m., local time, on October 3, 1996, or if later, on a date which is three
business days after the closing conditions set forth in Articles 7 and 8 below
have been satisfied or waived. The date of the Closing is sometimes referred to
herein as the "Closing Date." The parties hereto contemplate that the Closing
will occur contemporaneously with the Merger Effective Time.
3.2 Actions at Closing. Subject to the satisfaction of the Closing
conditions set forth in Articles 7 and 8 hereof, in addition to and without
limiting any other provision of this Agreement, each of CHI Maine, Universal and
Parent, on the one hand, and the Partnership, on the other hand, agrees to take
the following actions or to cause the following actions to be taken at the
Closing on the Closing Date:
3.2.1 Certificate of Merger. CHI Maine shall execute and deliver
to the Partnership the Certificate of Merger. The Partnership shall execute the
Certificate of Merger and cause it to be delivered to the Secretary of State of
the State of Delaware and shall thereafter take such further actions as may be
required under this Agreement to cause the Certificate of Merger to become
effective as quickly as possible.
3.2.2 CHI Maine Shares. Universal shall deliver to the
Partnership for cancellation certificates representing all of the CHI Maine
Shares, together with a stock powers endorsed in blank with signatures
guaranteed.
3.2.3 Amended Partnership Agreement. Universal shall execute and
deliver to the Partnership the Amended Partnership Agreement, and the
Partnership shall cause the General Partner and the Trust to execute the Amended
Partnership Agreement.
3.2.4 Cash Consideration. As the cash portion of the
consideration for the Merger, the Partnership shall pay or cause to be paid to
Universal, by wire transfer or other credit of immediately available funds to an
account designated by Universal, an amount, determined as follows (the "Cash
Consideration"):
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(a) Five Million Six Hundred Twenty-Five Thousand Dollars
($5,625,000); plus (or minus)
(b) Fifty percent (50%) of the Net Working Capital Amount; minus
(c) Fifty percent (50%) of the amount of any liabilities of CHI
Maine (other than Current Liabilities and other than the
non- Current Liabilities for long-term lease obligations in
an amount not to exceed $1,102,000) shown on the Balance
Sheet; plus
(d) An amount in lieu of interest computed on the sum of the
amounts described in Section 3.2.4 (a), (b) and (c) above at
the rate of 6% per annum from and after the Effective Date
through and including July 31, 1996, and at the rate of 8.5%
per annum for the period from and after August 1, 1996
through the Closing Date;
provided,however, that the aggregate amount of the Cash Consideration shall not
exceed Six Million Five Hundred Thousand Dollars ($6,500,000).
In order to expedite the Closing, the parties agree that at the
Closing, the Partnership shall pay to Universal the sum of Six Million One
Hundred Fifty Five Thousand Ninety Four Dollars ($6,155,094), which amount
represents the parties' current estimate of the Cash Consideration. After the
Closing, the amount of such estimated Cash Consideration shall be adjusted as
provided in Section 3.3 below.
3.2.5 Merger Securities. At the Merger Effective Time, the
Partnership shall deliver to Universal (i) a fully executed original of the
Amended Partnership Agreement and (ii) stock certificates for 500 shares of the
common stock of the General Partner (collectively, the "Merger Securities").
3.2.6 O&M Agreement. Parent shall cause CHI Operations, Inc., a
Delaware corporation and Affiliate of Universal, to execute and deliver to the
Partnership, and the Partnership shall execute and deliver to Parent, the O&M
Agreement.
3.3 Post Closing Adjustment of Cash Consideration .
3.3.1 Procedure. On or before the later of October 31, 1996 or 90
days after the Closing Date, Parent shall cause to be prepared and delivered to
the Partnership a written statement setting forth the proposed increase or
decrease of the Cash Consideration (the "Adjusted Cash Consideration Statement")
which statement shall be accompanied by a Balance Sheet and computations of the
Net Working Capital
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Amount. For a period of 30 days after the delivery of such Adjusted Cash
Consideration Statement and accompanying documents, Parent shall give, and shall
cause its Affiliates to give, reasonable access to the books and records of
Parent and its Affiliates, and CHI Maine (to the extent retained after the
Closing), to representatives of the Partnership for the purpose of determining
the accuracy of the Adjusted Cash Consideration Statement. Unless within such 30
day period the Partnership shall provide to Parent written notice that the
Partnership disputes the Adjusted Cash Consideration Statement (in which case
Section 3.3.2 below shall apply), the Adjusted Cash Consideration Statement
shall become final and the Parent shall immediately pay, or cause its Affiliates
to pay, to the Partnership, or the Partnership shall immediately pay to
Universal, as the case may be, any amounts due in accordance with such Adjusted
Cash Consideration Statement.
3.3.2 Disputes. In the event that the Partnership disputes the
Adjusted Cash Consideration Statement, the Partnership shall notify Parent of
such dispute within the 30 day period described in Section 3.3.1 above by
sending to Parent written notice specifying in reasonable detail the nature of
the dispute. If the Partnership and Parent cannot resolve such dispute with 10
days after receipt by Parent of such notice, then the Partnership and Parent
shall submit the dispute to any one of the "Big Six" nationally recognized
accounting firms selected by the Partnership which has an office in Portland,
Maine and which does not represent any of the parties. Parent shall deliver to
such firm the Adjusted Cash Consideration Statement and all work papers and
other supporting documentation, books and records, used in the preparation
thereof. Such accounting firm shall, within 30 days of the date of its
retention, consider only the disputed matter and promptly resolve the disputed
matter and render its decision in writing, which decision shall be final and
binding on the parties. Universal and the Partnership shall provide to the such
accounting firm such additional information as the such accounting firm may
reasonably request within five days of receipt of such request. The costs and
expenses of the such accounting firm shall be borne equally by Universal and the
Partnership. The parties agree that any determination of such accounting firm
may be enforced in any court located in the State of Maine and that the parties
hereby consent to the jurisdiction and venue in any such court for the purpose
of any enforcement proceeding.
3.4 Parties' Intent. The parties intend that the economic effects of
the closing of the transactions contemplated by this Merger Agreement, the
Option Agreement and the O&M Agreement relate back to the Effective Date
(notwithstanding the actual Closing Date), and the parties are adopting the
approach set forth herein so that upon the Closing, the economic burdens and
benefits of ownership of the Projects under each of such agreements shall be for
the account of the Partnership from and after the Effective Date.
3.5 Possession and Control of Projects. Notwithstanding any subsequent
Merger Effective Time, upon the Closing, the Partnership shall assume management
and control of all aspects of all of the Projects, to the same extent as if the
Merger
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Effective Time has occurred simultaneously with the Closing, in each case,
subject to the terms and conditions contained in the O&M Agreement.
3.6 Additional Actions. Universal and the Partnership shall, on
request, on and after the Closing Date, take such further actions as may be
requested pursuant to Section 10.4.
ARTICLE 4
Certain Representations and Warranties
Relating to Parent, Universal and CHI
Maine
Parent and Universal hereby jointly and severally represent and
warrant to the Partnership (regardless of any examinations, inspections, audits
or other investigations Partnership has heretofore made or may hereafter make
with respect to such representations and warranties) as of the Closing Date as
follows:
4.1 Due Organization. Each of Parent, Universal and CHI Maine are
corporations duly organized, validly existing and in good standing under the
laws of Delaware, and each is qualified to transact business in all
jurisdictions where the ownership of its properties or its operations require
such qualification.
4.2 Power and Authority. Each of Parent, Universal and CHI Maine has
full corporate power and authority to enter into and perform its obligations
hereunder and under the Closing Documents to which it is or will be a party and
to consummate the transactions herein and therein contemplated in accordance
with the terms, provisions and conditions hereof and thereof. All corporate
proceedings required to be taken by each of Parent, Universal and CHI Maine to
authorize it to execute, deliver and perform this Agreement and the other
Closing Documents to which it is or will be a party have been duly and validly
taken.
4.3 Valid, Binding and Enforceable Obligations. Each of this Agreement
and the other Closing Documents to which any of Parent, Universal or CHI Maine
is or willbe a party has been, or will be on the Closing Date, as the case may
be, duly and validly executed by Parent, Universal and/or CHI Maine and
constitutes, or will constitute when executed, a valid, binding and enforceable
obligation, enforceable against such Person in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and the
enforcement of debtors' obligations generally and by
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general principles of equity, regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
4.4 No Violations. Assuming the consents and notices described in
Section 4.5 and 4.6 have been obtained or made, the execution and delivery by
Parent, Universal or CHI Maine, as the case may be, of this Agreement and the
other Closing Documents to which it is or will be a party, and the consummation
by Parent, Universal or CHI Maine, as the case may be, of the transactions
contemplated hereby and thereby will not (a) violate or be in conflict with the
charter documents of Parent, Universal or CHI Maine, (b) violate, be in conflict
with, or constitute a Default or Event of Default under, or cause or permit the
acceleration of the maturity of, or give rise to any rightof termination,
cancellation, imposition of fees or penalties under, any Project Document or any
other debt, obligation, contract, commitment of fees or other agreement to which
Parent, Universal or CHI Maine is a party or by which any of their respective
properties or assets is or may be bound, (c) result in the creation or
imposition of any Lien upon any of the property or assets of Parent, Universal
or CHI Maine under any Project Document or any other debt, obligation, contract,
commitment or other agreement to which Parent, Universal or CHI Maine is a party
or by which any of their respective properties or assets is or may be bound or
(d) violate any Governmental Rule.
4.5 Governmental Consents and Notices. Except for the Governmental
Approvals set forth on Schedule 4.5 (collectively, the "Governmental Consents
and Notices"), no Governmental Approval is necessary in connection with the
execution and delivery by Parent, Universal or CHI Maine of this Agreement and
the other Closing Documents to which either of them is or will be a party, or
the consummation of the transactions contemplated hereby and thereby, including
the full, valid and effective consummation of the Merger. Except as expressly
described on Schedule 4.5, all of Governmental Consents and Notices have been
duly obtained or made and none has been revoked or rescinded or has expired.
4.6 Additional Consents and Notices. Except for the consents, notices
and other items set forth on Schedule 4.6 (collectively, the "Additional
Consents and Notices"), no filing, registration, qualification, notice, consent,
approval or authorization to, with or from any Person (excluding Governmental
Persons) is necessary in connection with the execution and delivery by Parent,
Universal or CHI Maine of this Agreement and the other Closing Documents to
which any of them is or will be a party, or the consummation of the transactions
contemplated hereby and thereby, including the full, valid and effective
consummation of the Merger. Except as expressly described on Schedule 4.6, all
of the Additional Consents and Notices have been duly obtained or made and none
has been revoked or rescinded or has expired.
4.7 No Litigation. Except as set forth on Schedule 4.7, there are no
actions, suits or proceedings of any type pending or, to the knowledge of Parent
or Universal threatened, against Parent (with respect to any Project), Universal
or CHI Maine or any
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of their respective properties or business, whether at law or in equity, before
or by any Governmental Person. Neither Parent nor Universal has any knowledge
of any state of facts or contemplated event which may reasonably be expected
to give rise to any such action, suit or proceeding. Neither Parent (with
respect to any Project), Universal nor CHI Maine is operating under, or subject
to, or in default with respect to, any order, writ, injunction or decree of any
Governmental Person.
4.8 Bankruptcy. Neither Parent, Universal nor CHI Maine has filed any
voluntary petition in bankruptcy or been adjudicated a bankrupt or insolvent,
filed any petition or answer seeking any reorganization, liquidation,
dissolution or similar relief under any bankruptcy, insolvency, or other debtor
relief law, or sought or consented to or acquiesced in the appointment of any
trustee, receiver, conservator or liquidator of all or any substantial part of
its properties. No court of competent jurisdiction has entered an order,
judgment or decree approving a petition filed against Parent, Universal or CHI
Maine seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any federal bankruptcy act, or
other debtor relief law, and no other liquidator has been appointed of Parent,
Universal or CHI Maine or of all or any substantial part of their respective
properties. Each of Parent, Universal and CHI Maine are solvent and are able to
meet their respective obligations as they become due. Parent has delivered to
the General Partner a copy of the Parent's latest audited financial statements.
4.9 PUHCA, FPA, Etc. Neither Parent, Universal nor CHI Maine is a
"public utility company," an "electric utility company," a "holding company," a
"subsidiary company," an "associate company" or an "affiliate" within the
meaning of PUHCA, the FPA, PURPA or under any applicable state laws relating to
the regulation of electric utilities.
4.10 Ownership. Parent owns all of the issued and outstanding stock of
Universal, free and clear of all claims, liabilities, pledges, liens, charges
and encumbrances of any kind.
ARTICLE 5
Certain Representations and Warranties
Relating to CHI Maine and the Projects
Parent and Universal hereby jointly and severally represent and
warrant to the Partnership, each for itself and on behalf of CHI Maine and the
Projects (regardless of any examinations, inspections, audits or other
investigations the Partnership has
15
heretofore made or may hereafter make with respect to such representations and
warranties) as follows:
5.1 Capitalization of CHI Maine. The total authorized stock of CHI
Maine consists of 1,000 shares of common stock, $1 par value per share, of which
100 shares are validly issued and outstanding, fully paid and non-assessable
(the "CHI Maine Shares"). The CHI Maine Shares are all held by Universal without
violation of any preemptive rights. There are no outstanding options, warrants,
calls, commitments, arrangements, rights or agreements of any character to
purchase or otherwise acquire from CHI Maine, at any time or upon the happening
of any stated event, any shares of the capital stock of CHI Maine. None of the
CHI Maine Shares are held by CHI Maine as treasury shares. Universal has the
right to sell and transfer to the Partnership valid title to all the CHI Maine
Shares, free and clear of all claims, liabilities, pledges, liens, charges and
encumbrances of any kind.
5.2 Business of CHI Maine. CHI Maine is not engaged in any business or
activities other than the development, ownership, operation and maintenance of
the Projects and matters incidental thereto. Without limiting the generality of
the foregoing, CHI Maine does not (a) own any capital stock, partnership
interest or other interest of any type, directly or indirectly, in any other
corporation, partnership or other Person, (b) has not conducted any business
other than the business contemplated by the Project Documents to which it is a
party, (c) is not a party to or bound by any contract, agreement, instrument or
other document other than the Project Documents to which it is a party and (d)
has no outstanding debt or other liability of any type other than pursuant to
the Project Documents to which it is a party or as otherwise disclosed on the
Financial Statements.
5.3 Qualifying Facility Matters. Except as set forth on Schedule 5.3,
each of the Projects is a hydro-electric generating facility licensed by FERC to
operate through the date sets forth with respect to such Project on such
Schedule 5.3. Each Project is, and during all applicable period has been, a
Qualifying Facility in compliance in all respects with all technical and
ownership requirements contained in all applicable FERC rules and regulations.
CHI Maine has provided to the appropriate utility under each of the Power
Purchase Agreements, all documents, information and other data requested or
required by such utility in accordance with policies and procedures for
monitoring the compliance of Qualifying Facilities with applicable FERC rules
and regulations. Except as disclosed on Schedule 5.3, no Project has ever been
placed on "probation" pursuant to such policies and procedures and has ever had
any payment from such utility reduced, delayed or withheld in connection with
such policies and procedures, and no Person (including such utility, the PUC,
and the FERC, or any agent or representative of any of such Persons) has ever
provided notice to the effect, or otherwise asserted or alleged, that any
Project has failed or may fail to comply in any respect with any applicable FERC
rule or regulation relating to maintaining their status as Qualifying Facilities
or any procedures or policies of such utility relating thereto.
16
5.4 Financial Statements; Books of Account. Attached as Schedule 5.4
are (i) true and complete copies of the unaudited financial statements of each
Project and the unaudited financial statements of CHI Maine, for the periods
ending as of June 30, 1993, 1994 and 1995, (ii) the unaudited financial
statements for each of the Projects and CHI Maine for the nine month period
ended March 31, 1996 and (iii) the Summary and Financial Analysis dated March
18, 1996 and the kilowatt hour production by Project for the past five fiscal
years ending June 30, 1995 and for the nine month period ending March 31, 1996
(collectively, the "Financial Statements"). The items described in (i) and (ii)
above have been prepared in accordance with GAAP and present fairly the
financial position and results of operations of each of the Projects and CHI
Maine at the dates and for the period indicated therein, subject, with respect
to interim periods, to normal year end adjustments. The items described in (iii)
above are accurate summaries of the operations of the Projects as recorded on
the books and records of CHI Maine with respect to the items described therein.
Neither CHI Maine nor any Project has engaged in any transaction, maintained any
bank accounts or obtained or used any funds which have not been reflected in the
Financial Statements.
5.5 Absence of Certain Changes. Since March 31, 1996:
5.5.1 Neither CHI Maine nor any Project has entered into any
transaction which was not in the ordinary course of its business (other than
execution of this Agreement);
5.5.2 There has been no materially adverse change in the
business, operations, finances, assets or liabilities of CHI Maine or any
Project;
5.5.3 There has been no material damage to, or destruction or
loss of, any of the CHI Maine assets;
5.5.4 Neither CHI Maine nor any Project has declared, paid or set
aside for payment any amounts for distribution to Universal or its Affiliates
(other than CHI Maine) or any other Person, and
5.5.5 Neither CHI Maine nor any Project has made any change in
any method of accounting or accounting practice or any change in depreciation or
amortization policies or rates theretofore adopted.
5.6 No Undisclosed Liabilities. As of the date of the this Agreement,
neither CHI Maine nor any Project has any material liabilities or obligations of
any nature (whether accrued, absolute, fixed or unfixed, known or unknown,
asserted or unasserted, contingent, by guaranty, surety or assumption or
otherwise), except for the liabilities disclosed on the most recent balance
sheet of CHI Maine included in the Financial Statements, and except for Current
Liabilities to unaffiliated third parties which are normal and usual in amount
and which have been incurred since the date of
17
the most recent balance sheet of CHI Maine included in the Financial Statements
in the ordinary course of business.
5.7 CHI Maine Assets.
5.7.1 Real Property Rights; Title Insurance. Schedule 5.7.1 is a
complete and accurate list, broken down by Project, of (i) all real property
owned or leased by CHI Maine, and of all easements, rights of way, rights of
interconnection and other similar agreements in which CHI Maine has any rights
and (ii) all title insurance policies and similar insurance policies issued to
CHI Maine or any of its Affiliates relating to any of the property described in
preceding clause (i) or relating to the fixtures and improvements listed on
Schedule 5.7.2.
5.7.2 Fixtures and Improvements. Schedule 5.7.2 is a compete and
accurate list, broken down by Project, of all buildings, fixtures and other
improvements having a value in excess of $10,000 which are owned by CHI Maine
and located on a Site or elsewhere.
5.7.3 Equipment and Other Personal Property. To the extent not
included on Schedule 5.7.2, Schedule 5.7.3 is a complete and accurate list,
broken down by Project, of all equipment, plant, machinery, installations,
tools, spare parts, furniture, supplies, vehicles and other personal property
which are owned by CHI Maine and which have a value in excess of $10,000 and
Schedule 5.7.3 specifically indicates any such item of property which is not
located on or at a Site and identifies the location thereof.
5.7.4 Title to CHI Maine Assets. Except at disclosed on Schedule
5.7.4, CHI Maine has good, indefeasible and insurable ownership or leasehold
title to each of the Sites, free and clear of all Liens, and CHI Maine has good
and indefeasible title to the remainder of the other CHI Maine Assets, free and
clear of all Liens, in each case subject to customary and routine exceptions
normally found in title insurance policies. Subject to requirements of proper
operation and maintenance, the CHI Maine Assets constitute all of the assets
necessary for the lawful operation and use of each of the Projects in the
ordinary course (including all easements, rights of way, rights of
interconnection and other similar rights and agreements required for the
operation of such Project) and such assets include all assets required by the
Project Documents.
5.8 Project Documents.
5.8.1 Set forth on Schedule 5.8 is a true, correct and compete
list and brief description, broken down by Project, of all material agreements,
contracts, instruments and franchises, including all amendments thereto relating
to such Project, or to which any of the Projects is subject (collectively the
"Project Documents"). A true, correct and complete copy of each of the Project
Documents, including all
18
amendments, supplements, exhibits and schedules, if any, thereto, has been made
available to the Partnership.
5.8.2 None of the Power Purchase Agreements has been modified,
supplemented, amended, waived or terminated in any way whatsoever, and none of
the other Project Documents has been modified, supplemented amended, waived or
terminated in any material respect, in any such case whether orally or in
writing, except by means of another Project Document. 5.8.3 Each of the Project
Documents constituting an agreement, contract, instrument or other similar
document (including each Power Purchase Agreement) has been duly authorized,
executed and delivered by CHI Maine and to the knowledge of Parent and
Universal, by each of the other parties thereto, and is in full force and effect
and is valid and enforceable in accordance with its terms.
5.8.4 There are no uncured Defaults or Events of Default on the
part of Parent, Universal or CHI Maine under any Project Document (including any
Power Purchase Agreement) and neither Parent, Universal nor CHI Maine has
received notice, oral or written, that a Default or Event of Default on the part
of any other Person has occurred thereunder or that any Person has alleged or
asserted any such Default or Event of Default by any Person.
5.9 No Employees, Etc. During the preceding five years, CHI Maine has
had no employees and has no existing or contingent liabilities or obligations
for any compensation, bonus, health, sick pay, disability, vacation pay,
group-term life insurance, severance, employee welfare, pension, profit sharing,
retirement or other employee benefit plans, funds, programs or arrangements.
5.10 Governmental Approvals. The Governmental Approvals listed on
Schedule 5.10 constitute all of the Governmental Approvals which are necessary
in connection with the ownership, use, operation and maintenance of the
Projects, and the conduct of CHI Maine's business and activities. Each
Governmental Approval has been duly and validly issued, or transferred, to CHI
Maine, and is in full force and effect, and all rights and entitlements
thereunder are vested exclusively in CHI Maine. CHI Maine has not committed any
act or failed to act in any manner or under any circumstances which could result
in the revocation or suspension of any Governmental Approval or in any other
disciplinary action relating thereto. No Person has claimed, and neither Parent,
Universal nor CHI Maine has received any notice, that CHI Maine has committed
any such act or failed to so act. The consummation of the Merger and the other
transactions provided for in this Agreement and the other Closing Documents will
not impair or adversely affect any of the rights, powers, or privileges granted
pursuant to any Governmental Approval, and upon such consummation, all the
rights and privileges of CHI Maine under each Governmental Approval will be
fully, validly and effectively vested in the Partnership by operation of law.
Neither Parent nor Universal has any reason to believe that any Governmental
Approval will not be renewed upon its
19
naturalexpiration in the ordinary course of business upon compliance with normal
and customary renewal procedures applicable to such Governmental Approval.
5.11 General Legal Compliance. Except as disclosed on Schedule 5.11,
or 5.12, to the knowledge of Parent and Universal, (a) CHI Maine and each of the
Projects haveat all times fully complied in all material respects with all
Governmental Rules applicable to CHI Maine and such Project and with all
Governmental Approvals, including all Governmental Rules applicable to the
conduct of CHI Maine's business and activities and to the construction,
ownership, operation, maintenance and use of the Projects.
5.12 Environmental Legal Compliance. Without limiting the generality
of Section 5.11, except for prior violations which have been properly reported
to the appropriate authority and fully resolved without any potential future
liability of any Project or CHI Maine, and except as disclosed on Schedule 5.12:
(a) To the knowledge of Parent and Universal, CHI Maine and each
of the Projects and the Sites have each complied with, and are in compliance
with: (x) the terms and conditions of all Governmental Approvals, Governmental
Filings and Governmental Rules issued or required pursuant to any Environmental
Law, and (y) all other limitations, restrictions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any
Environmental Law, or in any notice, order or demand letter issued, entered,
promulgated or approved pursuant to any Environmental Law:
(b) To the knowledge of Parent and Universal, neither CHI Maine
nor any Project or Site (i) has been or is alleged to have been in violation of
any Environmental Law,(ii) has received any notice of violation or other
notification from any Governmental Person or any third party alleging that CHI
Maine, such Project or such Site are in violation of any Environmental Law or
(iii) are subject to, or have been subject to, any administrative or judicial
proceedings or investigations pursuant to any Environmental Law;
(c) To the knowledge of Parent and Universal, neither CHI Maine
nor any Project has caused or permitted the Release of any polychlorinated
biphenyls, asbestos containing material or urea formaldehyde insulation at any
Site;
(d) To the knowledge of Parent and Universal, there are not now,
and there have not been previously, any underground storage tanks owned or
installed by CHI Maine or any Project on any Site;
(e) To the knowledge of Parent and Universal, no Site or other
real property now or previously owned or leased by CHI Maine or any Project
contains any Regulated Substance that, under any Environmental Law currently in
effect, (i) impose or could reasonably be expected to impose on Parent,
Universal, CHI Maine or any
20
Project a liability for removal, remediation, or other cleanup, or damage to
natural resources; (ii) could have a material adverse affect on the value of any
Project or the CHI Maine Assets; or (iii) could reasonably be expected to result
in the imposition of a Lien on the Project or any of the other CHI Maine Assets;
(f) None of CHI Maine, Parent or Universal or their respective
Affiliates has received any request for information from any Governmental Person
or any other Personwhich request is related to any location (including any Site)
which is, or may be, subject to actions for removal, response, remediation or
cleanup of Regulated Substances, including but not limited to any information
request pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA") or any similar State statute, rule or
regulation and which may subject CHI Maine or any Project to any obligation for
removal, response, remediation or cleanup of Regulated Substances at such
location;
(g) None of the CHI Maine, Parent or Universal or their
respective Affiliates has received any notice of violation or order, demand, or
other claim (i) for removal, response, remediation or cleanup of any Regulated
Substances at any location (including any Site); (ii) for damage to natural
resources; or (iii) for personal injury or property damage related to the
release or discharge of Regulated Substances;
(h) To the knowledge of Parent and Universal, neither CHI Maine
nor any Project has, except in compliance with all applicable rules, regulations
and permits:
(i) disposed, discharged or released any Hazardous Substance or
Regulated Substance at;
(ii) arranged for the disposal of any Hazardous Substance or
Regulated Substance at;
(iii) transported any Hazardous Substance or Regulated Substance
to; or
(iv) owned or operated,
any location or facility (including any Site) that is listed or proposed for
listing on the National Priority List under CERCLA or any similar State remedial
action priority list, or which has been proposed for removal or remedial action
under any Environmental Law;
(i) To the knowledge of Parent and Universal, CHI Maine has
obtained and complied with all required Governmental Approvals for the disposal
or beneficial use of all wastes generated by any Project. Schedule 5.12 sets
forth a full and complete list of all sites and facilities where wastes
generated by CHI Maine or any Project have been stored, treated, processed or
disposed;
21
(j) To the knowledge of Parent and Universal, all facilities and
sites to which waste materials generated by CHI Maine or any Project have been
sent for storage, treatment, processing, or disposal are in compliance with all
applicable Environmental Laws;
(k) None of the Parent, Universal or CHI Maine has made or is
currently obligated to make, any report or notification to any Governmental
Person regarding the release or discharge of any Regulated Substance, and
(l) To the knowledge of Parent and Universal, there has not been,
whether prior to or in connection with the construction and operation of any
Project (including any activities or processes relating to such Project) any
release or discharge by CHI Maine or any Project of any Regulated Substance at
or to any Site (whether onto or into the ground, soil, subsurface, surface
water, ground water, air or otherwise), and other than those which (i) are
permitted under all applicable Environmental Laws and Governmental Approvals and
(ii) occur only in the ordinary course of the operation of such Project.
5.13 Insurance. Schedule 5.13 contains a list and description of all
insurance policies of any type which are held by CHI Maine or its Affiliates
with respect to the Projects, specifying the insurer, amount of coverage, type
of insurance, policy number and any pending claims thereunder. Except as
disclosed on Schedule 4.7, no claim of any type has been made under any of such
policies with respect to the Projects within the preceding five years.
5.14 Utilities. All utility services necessary for the operation of
each Project are available at the boundaries of the Site.
5.15 Project Construction and Condition. To the knowledge of Parent
and Universal, each Project is operating substantially as designed, all of the
CHI Maine Assets are in good operating condition, maintenance and repair
considering their age, and there are no material design or other material
defects in any Project or any CHI Maine Asset. Schedule 5.15 lists all
engineering reports and surveys prepared by or on behalf of Parent, Universal or
their Affiliates with respect to the Projects, and true, correct and complete
copies of the same have been made available to the Partnership.
5.16 Securities Laws. Based upon and provided that the representations
of the Partnership in Sections 6.7 and 6.8 are true and correct, the acquisition
of CHI Maine contemplated by this Agreement is not required to be registered
pursuant to the Securities Act, or applicable state securities laws or
regulations.
5.17 Brokers' Fees, Prospective Purchaser, Etc. Neither this Agreement
nor the consummation of the transactions contemplated hereby was induced by or
procured through any Person acting on behalf of, or representing, Parent,
Universal, CHI Maine, or any of their respective Affiliates as a broker, finder,
investment banker, financial advisor or in any similar capacity, and no Person
(other than the Purchaser
22
and its Affiliates) currently has any right or option of any type to acquire,
directly or indirectly, any interest in any Project or CHI Maine.
5.18 Tax Matters.
5.18.1 Elections. Neither Parent, Universal nor their Affiliates
have made any elections which would cause CHI Maine to be subject to Section
341(f) (relating to collapsible corporations) or Section 338 (relating to
stepped-up basis) of the code.
5.18.2 Property Taxes. Schedule 5.18.2 sets forth the current
assessment and annual property taxes payable with respect to each Project.
5.19 Bank Accounts. All financial transactions on behalf of CHI Maine
and all the Projects are handled directly by Parent and/or Universal, and
neither CHI Maine nor any Project maintains accounts of any nature or safe
deposit boxes at any bank, trust company, savings and loan or other financial
institution. No Person holds any general or specific powers of attorney from CHI
Maine or any Project.
5.20 Projections. The Projections were prepared in good faith by
Parent and Universal and are consistent with the terms of the Project Documents
and the prior operating history of the Projects.
5.21 Condition of Dams. Except as set forth in Schedule 5.21, to the
knowledge of Parent and Universal and taking into consideration the age of the
Projects and the dams, the dams (a) which impound water for the Projects, (b)
any other dam for which the responsibility of maintenance is conveyed as part of
the CHI Maine Assets and (c) any other dam included as part of the Projects
under applicable FERC licenses or exemptions, are all in good and safe
condition. Except as set forth in Schedule 5.21(a), neither CHI Maine, Parent
nor Universal has received any notice or otherwise obtained any information,
formal or informal, that would indicate the likelihood of any future
requirements pertaining to the condition of such dams other than routine
maintenance and repairs.
5.22 Full Disclosure of Material Facts. This Agreement and the
Exhibits and Schedules hereto disclose all facts which are material to CHI
Maine's business and the transactions contemplated hereunder.
5.23 Accredited Investor. Each of Parent and Universal is an
"accredited investor" as defined in Section 501 of the Securities Act and is a
sophisticated investor with the capability of evaluating the merits and risks of
entering into this Agreement and the Option Agreement.
23
ARTICLE 6
Representations and Warranties
of the General Partner and the
Partnership
The General Partner and the Partnership hereby jointly and severally
represent and warrant to Parent and Universal (regardless of any examinations,
inspections, audits or other investigations Parent and Universal has heretofore
made or may hereafter make with respect to such representations and warranties)
as follows:
6.1 Due Organization. The General Partner is a corporation and the
Partnership is a limited partnership, and each is duly organized and validly
existing under the laws of the State of Delaware and is qualified to transact
business in all jurisdictions where the ownership of its respective properties
or operations require such qualification (except where the failure to so qualify
would not have a material adverse effect on its financial conditions, its
ability to own its properties or transact its business, or to carry out the
transactions contemplated hereby). Prior to the Effective Time, the General
Partner is the sole general partner of the Partnership holding a 1% partner
interest in the Partnership, and the sole limited partner of the Partnership is
the Trust, holding a 99% partner interest in the Partnership. The total
authorized stock of the General Partner consists of 1,000 shares of common
stock, $0.01 par value per share, of which 1,000 shares are validly issued and
outstanding, fully paid and non-assessable, with 500 of such shares being held
by the Trust without violation of pre-emptive rights, and with the remaining 500
shares having been contributed by the Trust to the Partnership so that such
shares may be issued to Universal upon the closing of the transactions
contemplated by this Agreement. There are no outstanding options, warrants,
calls, commitments, arrangements, rights or agreements of any character to
purchase or otherwise acquire from the General Partner, the Partnership or the
Trust, at any time or upon the happening of any stated event, any shares of the
capital stock of the General Partner or any interest in the Partnership (other
than as set forth in this Agreement and the Option Agreement). At the Merger
Effective Time, the Merger Securities delivered to Universal shall be free and
clear of all claims, liabilities, pledges, liens and encumbrances of any kind
(other than under this Agreement and the Option Agreement).
6.2 Business of the General Partner and the Partnership. Each of the
General Partner and the Partnership are entities newly organized for the purpose
of consummating the transactions contemplated by this Agreement and the Option
Agreement and have not engaged in any business or activities other than their
organization and capitalization and the other activities in connection with this
Agreement and the Option Agreement and other matters related thereto. Without
limiting the generality of the foregoing, except as described in this Agreement,
neither the General Partner nor the Partnership (a) owns any capital stock,
partnership interest
24
or other interest of any type, directly or indirectly, in any other corporation,
partnership or any other person and (b) is not or has no outstanding debt or
liability of any type other than pursuant to this Agreement and the transactions
contemplated hereby. The Partnership has been capitalized by cash equity
contributions from the General Partner and the Trust in an amount in excess of
the parties' estimate of the Cash Consideration described in Section 3.2.4
above.
6.3 Power and Authority. The General Partner and Partnership each have
full power and authority to enter into and perform its obligations hereunder and
under the other Closing Documents to which it is or will be a party and to
consummate the transactions herein and therein contemplated in accordance with
the terms, provisions and conditions hereof and thereof. All proceedings
required to be taken by the Partnership and its partners to authorize the
Partnership to execute, deliver and perform the terms of this Agreement and the
other Closing Documents to which it is or will be a party have been duly and
validly taken.
6.4 Valid, Binding and Enforceable Obligations. Each of this Agreement
and the other Closing Documents to which the General Partner or the Partnership
is or will be a party has been, or will be on the Closing Date, duly and validly
executed by the General Partner or the Partnership, as the case may be, and
constitutes, or will when executed constitute, a valid and binding obligation,
enforceable against such Person in accordance with its terms, excepts as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and the
enforcement of debtors' obligations generally and by general principles of
equity, regardless of whether enforcement is pursuant to a proceeding in equity
or at law.
6.5 No Violations. The execution and delivery by the Partnership of
this Agreement and the other Closing Documents to which either of them is or
will be a party, and the consummation of the transactions contemplated hereby
and thereby will not (a) violate or be in conflict with the organizational
documents of the General Partner or the Partnership, (b) violate, be in conflict
with, or constitute a Default or Event of Default under, or cause or permit the
acceleration of the maturity of, or give rise to any right of termination,
cancellation, imposition of fees or penalties under, any debt, obligation,
contract, commitment of fees or other agreement to which the General Partner or
the Partnership is a party or by which any of its properties or assets is or may
be bound, (c) result in the creation or imposition of any Lien upon any of the
property or assets of the General Partner or the Partnership under any debt,
obligation, contract, commitment or other agreement to which the General Partner
or the Partnership is a party or by which any of their respective properties or
assets is or may be bound or (d) violate any Governmental Rule.
6.6 Bankruptcy. Neither the Partnership nor its partners has filed any
voluntary petition in bankruptcy or been adjudicated a bankrupt or insolvent,
filed any petition or answer seeking any reorganization, liquidation,
dissolution or similar relief
25
under any bankruptcy, insolvency, or other debtor relief law, or sought or
consented to or acquiesced in the appointment of any trustee, receiver,
conservator or liquidator of all or any substantial part of their respective
properties. No court of competent jurisdiction has entered an order, judgment or
decree approving a petition filed against either the Partnership or its partners
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any federal bankruptcy act or other debtor
relief law, and no other liquidator has been appointed of the Partnership or its
partners or of all or any substantial part of their respective properties. Each
of the General Partner and the Partnership are solvent and are able to meet
their respective obligations as they become due.
6.7 No Litigation. There are no actions, suits or proceedings of any
type pending or, to the knowledge of the General Partner or the Partnership,
threatened against either the General Partner or the Partnership or any of their
respective properties or business, whether at law or in equity, before or by any
Governmental Person. Neither the General Partner nor the Partnership has any
knowledge of any state of facts or contemplated event which may reasonably be
expected to give rise to any such actions, suit or proceeding. Neither the
General Partner nor the Partnership is operating under, or subject to, or in
default with respect to, any order, writ, injunction, or decree of any
Governmental Person.
6.8 Investment Intent. The Partnership is acquiring interests in CHI
Maine as contemplated by this Agreement solely for the purpose of investment and
not with a view to, or for sale in connection with, any distribution thereof.
The Partnership acknowledges that the interests in CHI Maine are not registered
under the Securities Act and that such interests may not be transferred or sold
except in compliance with the registration provisions of the Securities Act or
pursuant to an applicable exemption therefrom and in compliance with applicable
state securities laws and regulations.
6.9 Accredited Investor. The Partnership and each of its partners is
an "accredited investor" as defined in rule 501 of the Securities Act and is a
sophisticated investor with the capability of evaluating the merits and risks of
entering into this Agreement.
6.10 Brokers' Fees. Neither this Agreement nor the consummation of the
transactions contemplated hereby was induced by or procured through any Person
acting on behalf of, or representing the Partnership or any of its partners or
Affiliates as a broker, finder, investment banker, financial advisor or in any
similar capacity.
6.11 Governmental Consents and Notices. Except for approvals required
under the HSR Act, no Governmental Approval is necessary or appropriate in
connection with the execution and delivery by the Partnership of this Agreement
and the other Closing Documents to which either of them is or will be a party,
or the consummation of the transactions contemplated hereby and thereby,
including the full, valid and effective consummation of the Merger.
26
6.12 Accuracy of Representations and Warranties of Parent and
Universal. Neither the General Partner nor the Partnership is currently aware of
any facts or circumstances which has led either of them to conclude that any of
the representations or warranties contained in Articles 4 and 5 hereof are
untrue in any material respect.
ARTICLE 7
Conditions Precedent to the Obligations
of the General Partner and the
Partnership
The obligation of the General Partner and the Partnership to
consummate the transactions contemplated hereby shall be subject to the
fulfillment to the satisfaction of, or waiver by, the General Partner and
Partnership in their sole discretion, of each of the following conditions on or
prior to the Closing:
7.1 No Termination. This Agreement shall not have been terminated
pursuant to Section 10.5 hereof.
7.2 Representations True and Correct; Certificate. The representations
and warranties of Parent and Universal contained in this Agreement shall be true
and correct in all material respect on and as of the Closing Date with the same
force and effect as if made on and as of the Closing Date, and Parent and
Universal shall have executed and delivered to the Partnership an officer's
certificate confirming the same.
7.3 Compliance and Covenants; Certificate. Parent, Universal and CHI
Maine shall have performed and complied with all covenants, agreement and
conditions required by this Agreement to be performed or complied with by any of
them prior to or on the Closing Date, and Parent and Universal shall have
executed and delivered to the Partnership an officer's certificate confirming
the same.
7.4 No Adverse Proceedings. On the Closing Date, no action or
proceeding shall be pending by any public authority or private individual or
entity before any court or administrative body to restrain, enjoin or otherwise
prevent the consummation of this Agreement or the transactions contemplated
hereby or to recover any damages or obtain other relief as a result of the
transactions proposed hereby.
7.5 Proceedings Satisfactory. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement and all
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documents incident thereto shall be reasonably satisfactory in form and
substance to the General Partner and the Partnership and their counsel, and, the
General Partner and the Partnership and their counsel shall have received copies
of such documents as the General Partner and the Partnership and their counsel
may reasonably request in connection therewith. The Closing of this Agreement is
conditioned upon the delivery of a fully executed copy of each of the Option
Agreement, the Amended Partnership Agreement and the O&M Agreement to each party
which is a signatory to such agreements and the performance by the respective
parties thereto of all their respective obligations under such agreements which
are required to be performed on or before the Closing Date.
7.6 No Adverse Changes. Between the Date of this Agreement and the
Closing Date, there shall have been no materially adverse changes in the
position, financial or otherwise, or the assets, liabilities or results of
operations of CHI Maine or any Project other than as permitted or contemplated
by this Agreement, nor shall the business, assets and properties of CHI Maine
have been materially and adversely affected in any way as a result of fire,
explosion, earthquake, disaster, accident, flood, riot, civil disturbance,
uprising, activity of armed forces, or act of God or public enemy, whether or
not covered by applicable insurance.
7.7 Consents and Notices. All Governmental Consents and Notices,
Additional Consents and Notices and other consents or notices required to be
obtained from or made to any Person shall have been duly obtained, made or
provided, as the case may be, and shall be in full force and effect.
7.8 Legal Opinion. The General Partner and the Partnership shall have
received from counsel to CHI Maine, Universal and Parent a legal opinion
substantially in the form of Exhibit F attached hereto.
7.9 Execution and Delivery of Closing Documents. This Agreement and
each of the other Closing Documents shall have been duly authorized, executed
and delivered by the parties thereto and shall be in full force and effect on
the Closing Date without any material Default or Event of Default having
occurred and be continuing thereunder or material breach thereof or
circumstances which would give any party thereto the right to terminate any such
Closing Document.
7.10 No Violations. The consummation of the transactions contemplated
hereby and by the other Closing Documents shall not violate any Governmental
Rule.
7.11 Closing Actions. Each of the actions required to be taken by
Universal, Parent and CHI Maine pursuant to Section 3.2 or otherwise to effect
the transactions contemplated hereby shall have been duly performed and complied
with, and the General Partner and the Partnership shall have received
satisfactory evidence of any and all such actions.
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7.12 CHI Maine Documents. The Partnership shall have received (i) the
originals of the certificate of incorporation, by-laws, minute books, stock
books, and otherorganizational records of CHI Maine, (ii) certificates
representing all the CHI Maine Shares, together with stock powers endorsed in
blank with signatures guaranteed and (iii) evidence as to the good standing of
CHI Maine in the State of Maine.
7.13 Due Diligence. Subject to the provisions of Section 10.5.4, the
General Partner and the Partnership shall have completed its due diligence
investigation of the assets and the financial, operating and business affairs
and prospects of CHI Maine and the Projects, and shall be satisfied, in their
absolute and sole discretion, with all of their findings, including any and all
such findings relating to the compliance by the Projects and the Sites with all
Environmental Laws.
7.14 Utility Confirmation. The General Partner and the Partnership
shall have received written confirmation from CMP or Bangor Hydro, as the case
may be, in form and substance satisfactory to the General Partner and the
Partnership, that no consent or approval of either of such utilities is required
under any of the Power Purchase Agreements with respect to the consummation of
the transaction contemplated by this Agreement.
ARTICLE 8
Conditions Precedent to the
Obligations of Parent, Universal and CHI
Maine
The obligations of Parent, Universal and CHI Maine to consummate the
transactions contemplated hereby shall be subject to the fulfillment to the
satisfaction of, or waiver by, Parent, Universal and CHI Maine, in their sole
discretion, of each of the following conditions on or prior to the Closing:
8.1 No Termination. This Agreement shall not have been terminated
pursuant to Section 10.5 hereof.
8.2 Representations True and Correct; Certificate. The representations
and warranties of the General Partner and the Partnership contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with, the same force and effect as if made on and as of the Closing
Date, and the General Partner and the Partnership shall have executed and
delivered to Parent, Universal and CHI Maine an officer's certificate confirming
the same.
29
8.3 Compliance with Covenants; Certificates. The General Partner and
the Partnership shall have performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed or complied with by
them prior to or on the Closing Date, and the General Partner and the
Partnership shall have executed and delivered to Parent, Universal and CHI Maine
an officer's certificate confirming the same.
8.4 No Adverse Proceedings. On the Closing Date, no action or
proceeding shall be pending by any public authority or private individual or
entity before any court or administrative body to restrain, enjoin or otherwise
prevent the consummation of this Agreement or the transactions contemplated
hereby or to recover any damages or obtain other relief as a result of the
transactions proposed hereby.
8.5 Proceedings Satisfactory. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement and all documents incident thereto, shall be reasonably satisfactory
in form and substance to Parent, Universal and CHI Maine and their counsel, and
Universal and CHI Maine and their counsel shall have received copies of such
documents as Parent, Universal and CHI Maine and their counsel may reasonably
request in connection therewith. The Closing of this Agreement is conditioned
upon the delivery of a fully executed copy of each of the Option Agreement, the
Amended Partnership Agreement and the O&M Agreement to each party which is a
signatory to such agreements and the performance bythe respective parties
thereto of all their respective obligations under such agreements which are
required to be performed on or before the Closing Date.
8.6 Consents and Notices. All Governmental Consents and Notices,
Additional Consents and Notices and other consents or notices required to be
obtained from or made to any Person shall have been duly obtained, made or
provided, as the case may be, and shall be in full force and effect.
8.7 Legal Opinion. Universal shall have received from the
Partnership's counsel a legal opinion in the form of Exhibit G.
8.8 Execution and Delivery of Closing Documents. This Agreement and
each of the other Closing Documents shall have been duly authorized, executed
and delivered by the parties thereto and shall be in full force and effect on
the Closing Date without any material Default or Event of Default having
occurred or existing thereunder or material breach thereof or circumstance which
would give any party thereto the right to terminate any such Closing Document.
8.9 No Violations. The consummation of the transactions contemplated
hereby and by the other Closing Documents shall not violate any Governmental
Rule.
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8.10 Closing Actions. Each of the actions required to be taken by the
General Partner and the Partnership pursuant to Section 3.2 or otherwise to
effect the transaction contemplated hereby, including the payment of the Cash
Consideration, shall have been duly performed and complied with, and Parent and
Universal shall have received satisfactory evidence of any and all such actions.
8.11 Insurance. The Partnership shall have delivered to Parent and
Universal an insurance certificate confirming that the Partnership had secured
insurance for the Partnership which is substantially similar to the insurance
described in Section 5.13. 8.12 Letters of Credit. The Partnership shall have
assumed all of the obligations of Parent and Universal with respect to the
letters of credit described on Schedule 8.12 and shall have provided cash
collateral or other credit support reasonably satisfactory to Parent and
Universal to assure the subsequent replacement of such letters of credit and the
termination of any ongoing liability of Parent or Universal with respect
thereto.
8.13 Utility Confirmation. Parent and Universal shall have received
written confirmation from CMP or Bangor Hydro, as the case may be, in form and
substance satisfactory to Parent and Universal, that no consent or approval of
either of such utilities is required under a Power Purchase Agreement with
respect to the consummation of the transaction contemplated by this Agreement.
ARTICLE 9
Indemnification
9.1 Indemnification By Parent and Universal. Subject to the
limitations of Section 9.3 below, and as the sole monetary remedy of the General
Partner and the Partnership for any breach of this Agreement by Parent,
Universal or CHI Maine, (other than the specific obligations of Article 11
hereof), Parent and Universal shall jointly and severally to the maximum extent
not prohibited by law, indemnify, defend and hold harmless the General Partner,
the Partnership and all of their respective Affiliates, shareholders, partners,
members, investors, directors, officers, employees, agents and assignees, from
and against any and all losses, liabilities, damages, claims or expenses
(including reasonable attorneys' fees and expenses) suffered or incurred by any
such party by reason of or resulting from the inaccuracy of any representation
or warranty or the breach, nonfulfillments or nonperformance of any covenant or
agreement of either Parent, Universal or CHI Maine under this Agreement or any
other Closing Document. Notwithstanding the foregoing, the obligation of Parent
and Universal to indemnify pursuant to this Section 9.1 with respect to the
incorrectness or breach of any of its representations, warranties or covenants
set forth herein (other than in Article 11) shall
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be limited to an aggregate amount equal to the Cash Consideration, and shall not
be asserted unless the applicable indemnified party has notified Parent and
Universal in writing of such claim no later than 15 calendar months after the
Closing Date. The General Partner and the Partnership agree that they will
assert no claims for indemnification under this Section 9.1 unless and until the
total amount of indemnification sought under this Agreement exceeds a threshold
amount of One Hundred Twelve Thousand Five Hundred Dollars ($112,500) (net of
any insurance proceeds received); provided, however, if such threshold amount is
exceeded, then the General Partner and the Partnership may seek to recover the
entire amount of any such indemnification claims. 9.2 Indemnification by the
General Partner and the Partnership. As the sole monetary remedy by Parent and
Universal for any breach of this Agreement by the General Partner or
Partnership, the General Partner and the Partnership shall jointly and severally
to the maximum extent not prohibited by law, indemnify, defend and hold harmless
Parent, Universal and all of its Affiliates, shareholders, partners, members,
investors, directors, officers, employees, agents and assignees, from and
against any andall losses, liabilities, damages, claims or expenses (including
reasonable attorneys' fees and expenses) suffered or incurred by any such party
by reason of or resulting from the inaccuracy of any representation or warranty
or the breach, nonfulfillment or nonperformance of any covenant or agreement of
the General Partner and the Partnership under this Agreement or any other
Closing Document or resulting from the use, ownership, or operations of CHI
Maine or the Projects after the Closing Date.
9.3 Procedure for Claims. Any Person entitled to indemnification
hereunder shall give prompt, written notice to the indemnifying party setting
forth the circumstances giving rise to such claim as well as the amount sought.
The indemnifying party shall have the right, but not the obligation, to defend
against, negotiate, settle or otherwise deal with such claim, at its own expense
and represented by counsel of its choice, which right shall be exercised within
15 days after receipt of notice of the claim; provided, however, that if the
indemnifying party exercises such right, the Person seeking indemnification
nevertheless may participate in any proceeding at its expense with counsel of
its choice, and provided, further, that the indemnifying party may not enter
into a settlement with respect to such claim without the consent of the Person
seeking indemnification unless such settlement is limited to a payment of money
for which the Person seeking indemnification is fully indemnified by the
indemnifying party. If the indemnifying party does not elect to deal with any
claim, the such indemnifying party shall have no liability with respect to any
compromise or settlement thereof undertaken without its consent. The parties
will cooperate fully with one another in connection with the defense,
negotiation or settlement of any claim.
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ARTICLE 10
Covenants
10.1 Pre-Closing Covenants of Parent and Universal. Until the Closing
Date, Parent shall, and shall cause Universal and CHI Maine to, unless the
Partnership shall otherwise agree in writing, do the following:
10.1.1 Full Access. Permit the Partnership and its representatives,
agents, counsel and accountants to have full access to all properties, books,
accounts, records, contracts, files, correspondence, tax records and documents
of or relating to the Projects, CHI Maine and the CHI Maine Assets, and permit
the Partnership to cause its agents to conduct such reviews, inspections,
surveys, tests and investigations of the Projects, CHI Maine and CHI Maine
Assets as the Partnership deems necessary or advisable.
10.1.2 Furnishing Information. Promptly furnish or cause to be
furnished, at its sole cost and expense, to the Partnership and its
representatives originals or copies of all Project Documents and other
documents, records, data and information concerning such businesses, assets,
finances and properties of or relating to the Projects, CHI Maine, and CHI Maine
Assets that may be requested, including copies of all environmental reports, and
plans and specifications pertaining to all or any portion of any Project or any
Site.
10.1.3 Consultation with Accountants. Permit the Partnership to
consult with the accountants for CHI Maine and said accountants are hereby
authorized to disclose all information in its possession to the Partnership with
respect to CHI Maine.
10.1.4 Discussions with Project Participants. Upon reasonable
prior notice from the Partnership to Parent and Universal, permit the
Partnership and its representatives and agents to discuss the acquisition of CHI
Maine as contemplated by this Agreement with any of the parties to the Project
Documents or any other Person who has any relationship to any Project.
10.1.5 Representations and Warranties. Refrain from doing, or
causing to be done, anything which would cause the representations and
warranties set forth in Articles 4 or 5 hereof from being true, complete and
accurate on the Closing Date as if made on such date.
10.1.6 Conduct of Business. Except as expressly contemplated
hereby, carry on the Projects and the business of CHI Maine in the ordinary
course, and not sell, transfer or otherwise dispose of any CHI Maine Asset, and
continue to use, operate, maintain and repair the Projects and all CHI Maine
Assets in accordance with all Governmental Approvals, all Project Documents and
all applicable
33
Governmental Rules and otherwise in accordance with CHI Maine's prior practices;
provided, however, that CHI Maine may dispose of surplus or non-operating assets
which are not material to the ongoing operations of the Projects. Pending the
Closing, the Partnership agrees and consents that CHI Maine may proceed with the
implementation of the capital expenditure projects described in Schedule 10.1.6
hereof.
10.1.7 Preservation of Assets, Relationships, Etc. Preserve CHI
Maine's business organization and the Projects and CHI Maine Assets intact, and
preserve CHI Maine's present relationships with all other parties to the Project
Documents and others involved with or having any relationship to any Project.
10.1.8 New Obligations. Not enter into any material contract,
agreement or instrument of any type, whether written or oral, or otherwise incur
any new liabilities, whether contingent or otherwise, except in the ordinary
course of business.
10.1.9 No Defaults or Events of Default. Refrain from doing any
act or omitting to do any act, or permitting any act or omission to act, which
will cause a Default of Event of Default under any Project Document.
10.1.10 No Solicitations, Etc. Refrain from soliciting or
encouraging (by way of furnishing information, or otherwise) any inquiries or
proposals for the acquisition of Universal or CHI Maine or any Project or any
CHI Maine Assets.
10.1.11 Notification. Promptly notify the Partnership in writing
of any event, circumstance or condition that results or, with the passage of
time or notice, or both, would reasonably be likely to result, in (a) any
representation or warranty of Parent or Universal under this Agreement being
false in any material respect at any time, or (b) any condition to Closing for
the benefit of the Partnership being unable to be satisfied or (c) the inability
of Parent or Universal to perform any of their respective obligations hereunder.
10.1.12 Spare Parts. Contribute or cause to be contributed to CHI
Maine free and clear of any Liens and at no obligation to CHI Maine, any and all
spare parts or other assets solely relating to the Projects (if any) which are
held or owned by Affiliates of CHI Maine.
10.2 Filings and Consents. Each of the parties, as promptly as
practicable, shall use its reasonable, good faith and diligent efforts to make,
or cause to be made, all such filings and submissions and obtain or cause to be
obtained all such consents and approvals applicable to it, in order to
consummate the transactions contemplated by this Agreement in accordance with
the terms hereof. Each party will supply the other parties with copies of all
correspondence, filings and communications with any Governmental Person with
respect to the transactions contemplated by this Agreement.
34
10.3 Provision of Information. The originals of all books and records,
accounts, contracts and other documents held by Parent, Universal or its
Affiliates and relating to CHI Maine or the Projects (other than documents
wholly internal to Parent, Universal or their Affiliates and not reasonably
necessary to the proper operation and management of any Project) shall be
delivered by such parties to the Partnership at the Closing or promptly after
the Closing Date, but in no event later than 15 days after the Closing Date.
10.4 Further Assurances. Parent, Universal, the General Partner and
the Partnership shall, on request, cooperate with each other by furnishing any
additional information, executing and delivering any additional documents and/or
instruments and doing any and all such other things as may be reasonably
requested by any of the parties or its counsel to consummate or otherwise
further implement or effectuate the transactions contemplated by this Agreement
and the other Closing Documents, including, without limitation, such affidavits
or other documents which may be necessary to permit the Partnership to obtain a
"non-imputation" clause in the title insurance covering the Sites.
10.5 Termination. This Agreement may be terminated at any time prior
to the Closing as follows, and in no other manner.
10.5.1 By Mutual Agreement. By the mutual agreement of all of the
parties in writing.
10.5.2 By the General Partner and the Partnership. By written
notice from the General Partner and the Partnership to Parent and Universal if
(a) any condition set forth herein for the benefit of the General Partner and
the Partnership shall not have been timely satisfied, (b) Parent, Universal or
CHI Maine fails to perform any obligation hereunder in a timely manner and fails
to cure the same promptly after written notice thereof from the General Partner
and the Partnership to Parent and Universal or (c) any representation or
warranty of Parent or Universal hereunder proves to be false in any material
respect and is not promptly cured after written notice thereof from the General
Partner and the Partnership to Parent and Universal.
10.5.3 By Parent, Universal and CHI Maine. By written notice from
Parent, Universal and CHI Maine to the General Partner and the Partnership if
(a) any condition set forth herein for the benefit of Parent or Universal shall
not have been timely satisfied, (b) the General Partner and the Partnership
fails to perform any obligation hereunder in a timely manner and fails to sure
the same promptly after written notice thereof from Parent and Universal to the
Partnership or (c) any representation or warranty of the General Partner and the
Partnership hereunder proves to be false in any material respect and is not
promptly cured after written notice thereof from Parent and Universal to the
General Partners and the Partnership.
35
10.5.4 By Any Party. By written notice from any party to the
other parties if the Closing contemplated hereunder has not taken place on or
before October 15, 1996 (other than as a result of the failure of any party to
cause the satisfaction of a closing condition which is under such party's
control); provided, however, that the General Partner and the Partnership may
extend such date to a date not later than October 31, 1996 by delivery of
written notice to Parent and Universal which (i) sets forth the extended date,
(ii) expressly waives the closing condition set forth in Section 7.13 above. and
(iii) confirms that the General Partner and the Partnership are currently in
compliance with all of its obligations under this Agreement.
ARTICLE 11
Tax Matters
11.1 Sales and Transfer Taxes. All transfer, sales, use, documentary
transfer, stamp or excise taxes, or other similar taxes of any type payable in
connection with the Merger or otherwise in connection with the consummation of
the transaction contemplated by this Agreement and the other Closing Documents
(including filing fees, if any, under the HSR Act), shall be borne 50% by the
Trust and 50% by Parent pursuant to a separate agreement executed
contemporaneously herewith.
11.2 Other Taxes and Tax Returns.
11.2.1 Parent and Universal's Responsibility. Parent, Universal
and their Affiliates shall cause to be prepared and filed, and shall pay any and
all taxes, interest or penalties associated therewith, any and all tax returns,
reports and forms relating to taxes which are required to be filed for, by, on
behalf of, or with respect to CHI Maine, the CHI Maine Assets, the Projects or
the Sites on or before the Merger Effective Time, or after the Merger Effective
Time and relating to any taxable period or portion thereof ending on or before
the Merger Effective Time, except to the extent that such taxes were included in
the determination of Current Liabilities. Parent and Universal shall indemnify
the Partnership and its Affiliates and hold the Partnership and its Affiliates
harmless from any an all liabilities associated with the failure by Parent,
Universal or any of their Affiliates to comply with the obligations set forth in
the preceding sentence.
11.2.2 Partnership's Responsibility. The Partnership and its
Affiliates shall cause to be prepared and filed, and shall pay any and all
taxes, interest or penalties associated therewith, each tax return, report, or
form (other than any tax return, report or form described in Section 11.2.1)
which is required to be filed for, by,
36
on behalf of or with respect to CHI Maine, the CHI Maine Assets, the Projects or
the Sites for all periods commencing after the Merger Effective Time. The
Partnership shall indemnify Parent, Universal and their Affiliates and hold
Parent, Universal and their Affiliates harmless from any and all liabilities
associated with the failure by the Partnership or any Affiliates thereof to
comply with the obligations set forth in the preceding sentence.
11.3. Cooperation and Exchange of Information. The Partnership, Parent
and Universal shall furnish or cause to be furnished to each other (at
reasonable times) upon request and as promptly as practicable, such information
(including, without limitation, access to personnel and books and records)
pertinent to tax matters to which this Agreement relates and assistance relating
to such tax matters as is reasonably necessary for the preparation, review,
audit and filing of any tax return, the preparation for any tax audit, or the
defense or prosecution of any assessment or other similar claim or any
administrative or court proceeding. The party requesting information shall
reimburse the other for the third party costs of providing such information. Any
information obtained by a party hereto or its Affiliates from another party
hereto or its Affiliates in connection with any tax matters to which this
Agreement relates shall be kept confidential, except as may be otherwise
necessary in connection with the filing of tax returns or claims or refund or in
conducting an audit or other proceeding.
11.4 Tax Proceedings. The Partnership shall give reasonably prompt
written notice to Parent and Universal upon receipt by either the Partnership or
any of its Affiliates of written notice of any audit of, assessment against, or
administrative, court or other proceeding relating to CHI Maine, the CHI Maine
Assets, any Project or any Site with respect to which Parent and Universal is
required to indemnify, defend, and hold the Partnership harmless under Section
11.2.1 or which may otherwise affect the determination of taxes for which Parent
and Universal is obligated to indemnify, defend and hold harmless under this
Agreement. Parent and Universal shall give reasonably prompt written notice to
the Partnership upon receipt by Parent or Universal or any of their Affiliates
of written notice of any audit of, assessment against, or, administrative, court
or other proceeding relating to CHI Maine, the CHI Maine Assets, any Project or
any Site with respect to which Parent and Universal or the Partnership is
required to indemnify, defend and hold harmless the other under Section 11.2.1
or Section 11.2.2, respectively, or which may affect the determination of taxes
for which Parent, Universal or the Partnership is obligated to indemnify, defend
and hold harmless under this Agreement.
11.5 Treatment of Merger. The parties agree that for federal and state
income tax purposes the parties shall treat the Merger as a cash merger in which
the Partnership is acquiring the CHI Maine Assets from CHI Maine to the extent
of the Cash Consideration, as the same may be adjusted pursuant to the terms
hereof.
11.6 Survival. Notwithstanding anything contained in this Agreement to
the contrary, each of the parties' representations, warranties, covenants,
agreements,
37
rights, and obligations with respect to any tax covered by this Agreement shall
survive the Merger Effective Time and shall not terminate until 45 calendar days
after the expiration of all statutes of limitation (including any and all
extensions thereof) applicable to such tax or the assessment thereof.
ARTICLE 12
Miscellaneous
12.1 Transaction Costs. Except as otherwise expressly provided herein,
the General Partner and the Partnership, on the one hand, and Parent and
Universal, for themselves and on behalf of CHI Maine, on the other hand, shall
pay all of their own costs and expenses (including attorneys' fees and other
legal costs and expenses and accountants' fees and other accounting costs and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
12.2 Entire Agreement. This Agreement represents the entire
understanding and agreement among the parties with respect to the subject matter
hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and among such parties.
12.3 Amendments. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by each of
the parties hereto.
12.4 Assignments. No party shall assign its rights and/or obligations
hereunder without the prior written consent of each other party to this
Agreement.
12.5 Binding Effect. All of the terms and provisions of this
Agreement, whether so expressed or not, shall be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective
administrators, executors, legal representatives, heirs, successors and
permitted assigns. Notwithstanding the preceding sentence or any other provision
of this Agreement, all of the representations and warranties made by or on
behalf of CHI Maine herein, and all of the covenants and obligations herein of
CHI Maine, which in any such case are for the benefit of the
38
General Partner and the Partnership, shall, on and after the Merger Effective
Time, and without further action of the parties, automatically be deemed to be
assumed by Parent and Universal for the benefit of the General Partner and the
Partnership as if made by Parent and Universal in the first instance.
12.6 Headings. This headings contained in this Agreement are for
convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect in any way the meaning or interpretation of this
Agreement.
12.7 Notices. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing and shall be (as
elected by the person giving such notice) hand delivered by messenger or courier
service, telefaxed, or mailed by registered or certified mail (postage prepaid),
return receipt requested, addressed to:
To the General Partner and the Partnership and to CHI Maine
(Post-Closing)
With a copy to:
c/o Ridgewood Power Corporation De Forest & Duer
947 Linwood Avenue 90 Broad Street
Ridgewood, NJ 07450 New York, NY 10004
Attn: President Attn: Lee Black
To Parent, Universal and to CHI Maine
(Pre-Closing)
With a copy to:
Consolidated Hydro, Inc. Consolidated Hydro, Inc.
Stamford Towers Andover Business Park
680 Washington Boulevard 200 Bulfinch Drive
5th Floor Andover, MA 01810
Stamford, CT 06901 Attn: Daniel S. Pease
Attn: Edward M. Stern
Curtis Thaxter Stevens Broder &
Micoleau Limited Liability
Company, P.A.
One Canal Plaza
P.O. Box 7320
Portland, ME 04112
Attn: Stephen E. Champagne
or to such other address as any party may designate by notice complying with the
terms of this Section 12.7. Each such notice shall be deemed delivered (a) on
the date
39
actually delivered if by messenger or courier service; (b) on the date of
confirmed answer-back if by telefax and (c) on the date upon which the return
receipt is signed or delivery is refused or the notice is designated by the
postal authorities as not deliverable, as the case may be, if mailed.
12.8 Severability. If any provision of this Agreement or any other
Agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
12.9 Waivers. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder. Any waiver by any
party of any breach of any provision of this Agreement should not be construed
as a waiver of any continuing or succeeding breach of such provision, a waiver
of the provision itself, or a waiver of any right, power or remedy under this
Agreement. No notice to or demand on any party in any case shall, of itself,
entitle such party to any other or further notice or demand in similar or other
circumstances.
12.10 Enforcement Costs. If any legal action or other proceeding is
brought for the enforcement of this Agreement or any other Closing Document, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, sales and use taxes, court costs and all expenses
even if not taxable as court costs (including, without limitation, all such
fees, taxes, costs and expenses incident to arbitration, appellate, bankruptcy
and post-judgment proceedings), incurred in that action or proceeding, in
addition to any other relief to which such party or parties may be entitled.
Attorney's fees shall include, without limitation, paralegal fees, investigative
fees, administrative costs, sales and use taxes and all other charges billed by
the attorney to the prevailing party.
12.11 Remedies Cumulative. Except as otherwise expressly provided
herein, no remedy herein conferred upon any party is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or inequity or by statute or otherwise. No single or partial
exercise by any party of any right, power or remedy hereunder shall preclude any
other or further exercise thereof.
12.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall
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constitute one and the same instrument. Confirmation of execution by telefax of
a signature page shall be binding upon any party so confirming.
12.13 Governing Law. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed and enforced in accordance
with, the internal laws of the State of Delaware without regard to principles of
conflicts of laws.
12.14 Preparation of Agreement. This Agreement shall not be construed
more strongly against any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and is equally responsible
for its preparation.
12.15 Survival. All representations, warranties, covenants and
agreements made herein or otherwise referenced herein shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for the time periods herein provided.
12.16 Materiality. As used in this Agreement the word "material" shall
refer to materiality with respect to the subject matter of the particular
representation, warranty or covenant in questions, and not materiality in
relation to the purchase price or transactions contemplated hereby as taken as a
whole.
12.17 Inducement to Transaction. All representations and warranties
made by any party in this Agreement shall be deemed made for the purpose of
inducing the other party of enter into this Agreement.
12.18 Receipt of Monies, Etc. Any monies, checks, drafts, money
orders, postal notes and other instruments received after the Closing Date by
Parent or Universal or their Affiliates in payment of any amounts due to CHI
Maine or the Partnership after the Closing Date shall be promptly delivered to
the Partnership.
12.19 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with the
Commercial Rules of the American Arbitration Association then pertaining, and
judgement on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. Arbitration hearings shall be held in the City of
Portland, Maine.
12.20 Confidentiality and Communications. Because of the highly
sensitive nature of this transaction and Parent and Universal's concerns with
the impact that the transaction may have on their employees, the General Partner
and the Partnership agree that they shall initiate all transaction related due
diligence and shall arrange all site visits and communications with employees of
CHI Maine through Edward M. Stern or Daniel S. Pease. The General Partner and
the Partnership agree to keep confidential, and to cause their Affiliates,
employees, counsel, accountants,
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consultants, advisors, lenders, and representatives (collectively their
"Agents") to keep confidential any information provided by Parent, Universal or
CHI Maine to the General Partner and the Partnership to be used by the General
Partner and the Partnership or their Agents in connection with their
investigation of CHI Maine, the Projects or the Sites, and to return to Parent
and Universal, on their written request, any and all documents or other written
information so obtained, together with all copies thereof; provided, that
nothing herein shall limit the disclosure of such information to the extent
required by applicable law or judicial process or to the extent determined by
Affiliates of the General Partner and the Partnership as being necessary or
appropriate for disclosure to direct or indirect investors in the General
Partner and the Partnership. The confidentiality requirement of this paragraph
shall not apply to any information that is or becomes generally available to the
public, is or becomes available to the General Partner and the Partnership and
their Agents from a non-confidential source, or that is required to be disclosed
by law. The General Partner and the Partnership agree to advise their Agents of
the confidential nature of the information and of the obligation of such Agents
to comply with the provisions of this Agreement with respect thereto. The
General Partner and the Partnership shall use and cause their Agents to use
information supplied or obtained hereunder in good faith and only for purposes
of evaluating and proceeding with the transaction anticipated by this Agreement.
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ARTICLE 13
Execution Clause
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of July 1, 1996.
The Partnership:
CHI Maine: Ridgewood Maine Hydro Partners, L.P.
Consolidated Hydro Maine, Inc. By: Ridgewood
Maine Hydro Corporation,
general partner
By: _________________________ By: ________________________
Name: _________________________ Name: ________________________
Title: _________________________ Title: ________________________
Universal: The General Partner:
CHI Universal, Inc. Ridgewood Maine
Hydro Corporation
By: _________________________ By: ________________________
Name: _________________________ Name: ________________________
Title: _________________________ Title: ________________________
Parent:
Consolidated Hydro, Inc.
By: _________________________
Name: _________________________
Title: _________________________
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Table of Contents
Article # Description Page #
Article I Definitions and Interpretations 1
Article II The Merger and Merger Consideration 7
Article III Closing Date and Actions at Closing 9
Article IV Certain Representations and Warranties
Relating to Parent, Universal and CHI
Maine 12
Article V Certain Representations and Warranties
Relating to CHI Maine and the Projects 14
Article VI Representations and Warranties of the
General Partner and the Partnership 22
Article VII Conditions Precedent to the Obligations of
the General Partner and the Partnership 26
Article VIII Conditions Precedent to the Obligations of
Parent, Universal and CHI Maine 28
Article IX Indemnification 30
Article X Covenants 31
Article XI Tax Matters 35
Article XII Miscellaneous 37
Article XIII Execution Clause 42