**Exhibit 10.23**

 

EXECUTION VERSION

 

 

 

 

 

ASSET PURCHASE AGREEMENT

 

between

 

BRASCAN POWER INC.,

 

as Buyer,

 

RUMFORD FALLS POWER COMPANY,

 

as Seller,

 

and

 

RUMFORD PAPER COMPANY,

 

as

 

Mill Owner

 

 

 

 

 

January 6, 2006

 

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ASSET PURCHASE AGREEMENT

 

THIS AGREEMENT is made this 6th day of January, 2006 betweenBRASCAN POWER INC., an Ontario corporation (“Buyer”), RUMFORD FALLSPOWER COMPANY, a Maine corporation (“Seller”) and, solely for purposesof Section 5.06, Section 7.05 and Section 9.05 of thisAgreement, RUMFORD PAPER COMPANY, a Delaware Corporation (“Mill Owner”),under the following circumstances:

 

A. Seller owns and operates a project consisting of two hydroelectricgenerating plants and related facilities located on the Androscoggin River inRumford, Oxford County, Maine comprised of approximately 40 megawatts in total(Federal Energy Regulatory Commission Project No. 2333) (collectively, the“Project”).

 

B. Seller desires to sell to Buyer, and Buyer desires to purchase fromSeller, the Purchased Assets (as defined below) on the terms and conditions setforth herein.

 

NOW, THEREFORE, in consideration of the foregoing, the representations,warranties and covenants contained in this Agreement and for other good andvaluable consideration, the receipt and sufficiency of which hereby isacknowledged, and intending to be legally bound, the parties hereby agree asfollows:

 

ARTICLE 1

 

DEFINITIONS

 

1.01  Definitions.  For purposes of this Agreement, the terms setforth below shall be defined as follows:

 

“Affiliate” with respect to any party, means a party, person orentity that, directly, or indirectly through one or more intermediaries,controls, is controlled by, or is under common control with, such party.  For purposes of this definition, “control”means, when used with respect to any Person, the possession, directly orindirectly, of the power to direct or cause the direction of the management andpolicies of such Person, whether through the ownership of voting securities, bycontract or otherwise, and the terms “controlling” and “controlled” havecorrelative meanings.

 

“Agreement” means this Asset Purchase Agreement.

 

“Ancillary Agreements” has the meaning set forth in Section 7.05hereof.

 

“Assumed Agreements” has the meaning given that term in Section 2.01(d).

 

“Assumed Obligations” has the meaning given that term in Section 2.03(c).

 

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“Attachments” has the meaning given that term in Section 5.01(a)(ix).

 

“Bank” has the meaning given that term in Section 10.08.

 

“Basket Amount” has the meaning given that term in Section 10.07(a).

 

“Business Day” means a day other than a Saturday, Sunday orother day on which commercial banks in New York City, New York, Dayton, Ohio,or Portland, Maine, are authorized or required by Law to be closed.

 

“Buyer” has the meaning given that term in the preamble to thisAgreement.

 

“Buyer Group” has the meaning given that term in Section 10.02.

 

“Cash Purchase Price” has the meaning given that term in Section 2.04(a)(i).

 

“Change” means a material change inthe use of the Project after the Closing Date, provided that a material changein use does not include a cessation in operations other than a voluntarydecommissioning or demolition (or involuntary decommissioning or demolition thatis not required by Environmental Law) of all or substantially all of theProject or the operations conducted thereon.

 

“Claim” has the meaning given that term in Section 10.04.

 

“Closing” has the meaning given that term in Section 7.01.

 

“Closing Date” has the meaning given that term in Section 7.01.

 

“CMP” means Central Maine Power Company.

 

“Code” means the Internal Revenue Code of 1986, as amended, andthe regulations adopted thereunder.

 

“Corrected Schedule” has the meaning given that term in Section 8.02(a).

 

“Damages” means all claims, liabilities, losses, damages,expenses, costs of settlement and demands of any character whatsoever(including, without limitation, the reasonable fees and expenses of counsel).

 

“Effective Time” has the meaning given that term in Section 7.02.

 

“Employee Agreements” has the meaning given that term in Section 3.10.

 

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“Encumbrance” means any lien, mortgage, pledge, securityinterest, license, easement, quasi-easement, covenant, condition, declaration,imperfection of title, or other encumbrance or restriction.

 

“Environment” means any surfacewater, groundwater, drinking water supply, land surface, subsurface strata,river sediment, plant or animal life, natural resources, air, water vapor,surface soil, subsurface soil and any other natural resource.

 

*“*EnvironmentalClaims” refers to any complaint, summons, citation, notice, directive,order, claim, litigation, investigation, notice of violation, judicial oradministrative proceeding, judgment, letter or other communication from anyGovernmental Entity, department, bureau, office or other authority, or anythird party involving violations of Environmental Laws, Handling of HazardousMaterials or Releases of Hazardous Materials from, on or under (i) anyassets or properties used by the Project; (ii) from any adjoiningproperties or businesses; or (iii) from or onto any facilities whichreceived Hazardous Materials generated by the Purchased Assets.

 

“EnvironmentalConditions”******means anycondition, known or unknown, foreseen or unforeseen, arising out of:  (1) the Release, threat of Release, orexposure of Persons to Hazardous Materials; (2) any violation of anyEnvironmental Law; (3) the Handling of Hazardous Materials or (4) anyEnvironmental Claim.

 

“Environmental Damages” means all claims, judgments, causes ofaction, liabilities, obligations, damages, losses, deficiencies, costs,penalties, interest and expenses (including, without limitation, the reasonablefees and expenses of counsel).

 

“Environmental Laws” means any Law related to:  (i) the protection of the Environmentand/or (ii) the Handling of Hazardous Materials.  “Environmental Laws” include, withoutlimitation: the Comprehensive Environmental Response, Compensation, andLiability Act, as amended, 42 U.S.C. §9601 et seq.; the Resource Conservationand Recovery Act, as amended, 42 U.S.C. §6901 et seq.; the Clean Air Act, asamended, 42 U.S.C. §7401 et seq.; the Federal Water Pollution Control Act, asamended, 33 U.S.C. §1251 et seq.; the Toxic Substances Control Act, as amended,15 U.S.C. §2601 et seq.; the Emergency Planning and Community Right to KnowAct, as amended, 42 U.S.C. §11001 et seq.; the Safe Drinking Water Act, asamended, 42 U.S.C. §300f et seq.; the Occupational Health and Safety Act, asamended, 29 U.S.C. §655 et seq.; the Federal Insecticide, Fungicide andRodenticide Act, 7 U.S.C. §136 et seq.; the Hazardous Materials TransportationAct, as amended, 49 U.S.C. §5101 et seq.; Oil Discharge Prevention and PollutionControl Law, 38 M.R.S.A. §541; Underground Oil Storage Facilities andGroundwater Protection Law, 38 M.R.S.A. § 561 et seq., and any othercomparable foreign, federal, state, municipal or local Laws.

 

“Environmental Liabilities”****meansany Environmental Damages, including without limitation, costs ofinvestigation, Remedial Action or other response actions, known or unknown,foreseen or unforeseen, with regard to the Purchased Assets arising outof:  (i) Environmental Conditions, (ii) HistoricalEnvironmental Liabilities, or (iii) any violation of any Environmental

 

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Permit.  For the avoidance of doubt, EnvironmentalLiabilities shall not include Environmental Damages after the Closing Dateresulting from increases in operating expenses of the Purchased Assets,including but not limited to, depreciation, wages, administration ofenvironmental programs, chemicals, materials, sewer fees and permit fees.

 

“Environmental Permits”****meansany approvals, authorizations, certificates, consents, licenses, or permitsrequired under any Environmental Law for operation of the Purchased Assets.

 

“Equipment” has the meaning given that term in Section 2.01(b).

 

“Exceptions” has the meaning given that term in Section 5.06(a).

 

“Excluded Assets” has the meaning given that term in Section 2.01.

 

“Excluded Obligations” has the meaning given that term in Section 2.03.

 

“Expiration Date” has the meaning given that term in Section 8.01(b).

 

“Federal Power Act” means the Federal Power Act, as amended,codified at 16 U.S.C. §§ 791 *et seq.*andthe regulations adopted thereunder as of the effective date of this Agreement.

 

“FERC” means the Federal Energy Regulatory Commission.

 

“FERC Boundary” means the real property located within theProject boundary as depicted in the FERC License.

 

“FERC License” means the hydropowerlicense issued pursuant to Part I of the Federal Power Act for FERCProject No. 2333, as amended from time to time, together with allregulations, orders, issuances, filings and correspondence applicable to theProject and arising under the Federal Power Act or regulations promulgatedthereunder.

 

“Governmental Entity” means any nation, state, city, locality,municipality, or other political subdivision and any body or authorityexercising judicial, legislative, regulatory or administrative functions forany of the foregoing (including, without limitation, any agency, department,board or commission), or any court or arbiter.

 

“Handling”means any manner of manufacturing, using, generating, accumulating, storing,treating, disposing of, recycling, processing, distributing, handling,labeling, producing, releasing, or transporting, as any such terms may bedefined in any Environmental Law, of Hazardous Materials.

 

“HazardousMaterials” means any substance or material that has been defined orotherwise listed as a “hazardous material,” “hazardous waste” or “hazardoussubstance” or words of similar import under any Environmental Law or any otherwaste substance or material that is regulated under any

 

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EnvironmentalLaw, including, without limitation, petroleum and petroleum products,polychlorinated biphenyls, and asbestos-containing materials.

 

“Historical Environmental Liabilities”means any Historical On-Site Environmental Liabilities or Historical Off-SiteEnvironmental Liabilities.

 

“HistoricalOff-Site Environmental Liabilities” means any Environmental Liabilities(other than Historical On-Site Environmental Liabilities) that arise fromoperations, practices, Handling of Hazardous Materials, transfers, disposals orother activities (or omissions) of or on behalf of Seller prior to the ClosingDate, including but not limited to Environmental Liabilities related to dioxinand furans, polychlorinated biphenyls and chlorinated solvents andcontamination related to the pre-Closing removal of underground storage tanks.

 

“Historical On-Site Environmental Liabilities” means anyEnvironmental Liabilities (other than Historical Off-Site EnvironmentalLiabilities) arising from Environmental Conditions at, on, under or migratingfrom the Purchased Assets existing prior to the Closing Date, or that arisefrom operations, practices, Handling of Hazardous Materials, transfers, disposalsor other activities (or omissions) of or on behalf of Seller at or on thePurchased Assets prior to the Closing Date, including but not limited toEnvironmental Liabilities related to dioxin and furans, polychlorinatedbiphenyls and chlorinated solvents, and contamination related to thepre-Closing removal of underground storage tanks; provided, however, that anyEnvironmental Liabilities associated with subsurface groundwater contaminatedwith Hazardous Materials that flows beneath a Purchased Asset, where suchHazardous Materials were not Released, or alleged to be Released, from aPurchased Asset or the Mill, is not considered a Historical On-SiteEnvironmental Liability; provided, further, notwithstanding anything to thecontrary in this Agreement, Seller shall have no liability for historicalon-site asbestos-containing materials (other than waste asbestos-containingmaterial that is not in compliance with the Environmental Laws as of theClosing Date).

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Actof 1976, as amended.

 

“Indemnified Party” has the meaning given that term in Section 10.04.

 

“Indemnifying Party” has the meaning given that term in Section 10.04.

 

“Independent Consultant Award” has the meaning given that termin Section 10.08(iv).

 

“Knowledge of Seller” or “Seller’s Knowledge” means, andis limited to, the actual knowledge of John Fuller, General Manager (Pulp andUtilities); Larry Souther, former Operating Superintendent; Rick Delaney,Operating Superintendent; Scott Reed, Environmental Manager; Matt Jesch, ChiefFinancial Officer of New Page Corporation; and Ron Guay, Associate GeneralCounsel of New Page Corporation, and each of their respective immediatesubordinates.

 

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“Laws” means applicable laws, statutes, charters, ordinances,decisional law, common law, rules and regulations.

 

“Legal Proceeding”means any judicial, administrative or arbitral action, suit, proceeding (publicor private) or governmental proceeding or investigation with regard toEnvironmental Law or Environmental Liabilities.

 

“Letter of Credit” has the meaning given that term in Section 10.08.

 

“Lowest-Cost Commercially ReasonableManner” has the meaning given that term in Section 10A.04(e).

 

“Material Contract” has the meaning given that term in Section 3.08.

 

“MeadWestvaco” means MeadWestvaco Corporation, a Delawarecorporation that is the seller in that certain Equity and Asset PurchaseAgreement by and between Maple Acquisition LLC and MeadWestvaco Corporationdated January 14, 2005.

 

“Mill” means Rumford Paper Company’s pulp and paper milloperated on and about the Mill Real Property.

 

“Mill Owner” has the meaning given that term in the preamble tothis Agreement.

 

“Mill Real Property” means the real property owned by Mill Owneras of the Closing Date.

 

“Order” means any order, injunction, judgment, decree, ruling,writ, assessment or arbitration award of a Governmental Entity.

 

“Permit” means any license, permit, approval or authorization ofa Governmental Entity which relates to, or is necessary for, the ownership orthe operation of the Project in substantially the same manner as it currentlyis being operated by Seller, but shall exclude any and all EnvironmentalPermits.

 

“Permitted Encumbrances” means: (i) liens for Taxes not yet delinquent or for Taxes that Seller iscontesting in good faith through appropriate proceedings, provided in each casethat adequate reserves have been established therefor, (ii) purchase moneyliens and liens securing rental payments under capital lease arrangements, (iii) liensof mechanics, materialmen, carriers, workers, repairers and other similar liensarising in the ordinary course of the operation of the Project, provided suchliens can be and are insured against or bonded over, and (iv) otherEncumbrances arising in the ordinary course of the operation of the Projectwhich, in the aggregate, do not have a material adverse effect on the PurchasedAssets (including, without limitation, the Real Property), taken as a whole.

 

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“Person” means an individual, partnership, corporation, limitedliability company, association, joint stock company, joint venture, trust,estate, unincorporated organization, labor union, Governmental Entity or anyother entity.

 

“Project” has the meaning given that term in the recitals.

 

“Project Employees” has the meaning given that term in Section 3.10.

 

“Property Tax Year” has the meaning given that term in Section 2.05(b).

 

“Protocol Agreement” has the meaning set forth in Section 9.05hereof.

 

“Purchase Price” has the meaning given that term in Section 2.04(a).

 

“Purchased Assets” has the meaning given that term in Section 2.01.

 

“Real Estate Documents” has the meaning given that term in Section 5.01(a)(ix).

 

“Real Estate Title Documents” has the meaning given that term inSection 5.06(a).

 

“Real Property Permitted Encumbrances” means: (a) thePermitted Encumbrances and (b) the following:

 

(i)  zoning, entitlement and other landuse and building and fire Laws;

 

(ii)  Exceptions in the Title InsuranceCommitment that are not Title Defects or Title Objections;

 

(iii)  the Encumbrances created by theRetained Real Property Instruments (to the extent agreed to pursuant to theprovisions of Section 5.01(a)(ix) and 5.06);

 

(iv)  the cohabitation protocol andrelocation rights, as set forth in Exhibit I to this Agreement, and theprovisions of Section 9.04; and

 

(v)  those Title Defects and TitleObjections accepted by Buyer in accordance with Section 5.06.

 

“Real Property to be Conveyed” has the meaning given that termin Section 2.01(a).

 

“Recipient” has the meaning given that term in Section 9.01.

 

“Records” has the meaning given that term in Section 2.01(f).

 

“Reduction Agreement” has the meaning given that term in Section 10.08(iii).

 

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“Reduction Amount” has the meaning given that term in Section 10.08.

 

“Reduction Date” has the meaning given that term in Section 10.08.

 

“Reduction Dispute Notice” has the meaning given that term in Section 10.08(iii).

 

“Release” means any release, spill, emission, leaking, pumping, injection,deposit, disposal, discharge, dispersal, leaching, or migration at, into oronto the Environment, including movement or migration through or in theair, soil, surface water or groundwater, whether sudden or non-sudden andwhether accidental or non-accidental, or any release, emission or discharge asthose terms are defined in any applicable Environmental Law.

 

“Remedial Action” means any response action, removal action,remedial action, corrective action, monitoring program, sampling program,investigation or other actions taken to (i) clean up, remove, remediate,treat, monitor, assess or evaluate Hazardous Materials in the environment; (ii) preventor minimize a Release or threatened Release of Hazardous Materials so that theydo not migrate or endanger or threaten to endanger, public health or welfare orthe environment; or (iii) perform pre-remedial studies and investigationsand post-remedial operation and maintenance activities, or any other actionsauthorized by 42 U.S.C. § 9601 et seq. or 38 M.R.S.A. § 1361 et seq.

 

“Retained Real Property Instruments” means the instrumentscreating or otherwise evidencing the Real Property Rights to be Retained.

 

“Retained Real Property Rights” has the meaning given that termin Section 2.01(a).

 

“Schedule” means any of the disclosure schedules delivered bySeller to Buyer concurrently with the execution of this Agreement by theparties, subject to the provisions of Section 8.02 hereof.

 

“Seller” has the meaning given that term in the preamble to thisAgreement.

 

“Seller Group” has the meaning given that term in Section 10.03.

 

“Seller Reduction Notice” has the meaning given that term in Section 10.08(i).

 

“Seller Title Notice” has the meaninggiven that term in Section 5.06(c).

 

“Services Agreement” has the meaning given that term in Section 5.01(a)(ix).

 

“Specified Consents” has the meaning given that term in Section 6.01(d).

 

“Survey” has the meaning given that term in Section 5.06(a).

 

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“Tax” or “Taxes” means any foreign, federal, state orlocal income, gross receipts, occupation, environmental (including taxes under Section 59Aof the Code), customs, duties, registration, alternative or add-on minimum,estimated, withholding, payroll, employment, unemployment insurance, socialsecurity (or similar), excise, sales, use, value-added, franchise, realproperty, personal property, business and occupation, capital stock,  stamp or documentary, transfer, workman’scompensation or other tax, governmental fee or imposition of any kindwhatsoever, including any interest, penalties, additions, assessments ordeferred liability with respect thereto, whether disputed or not.

 

“Tax Return” means any return, report, declaration, true andperfect list under 36 M.R.S.A. § 706, claim for refund or reimbursement,estimate, election, or information statement or bill relating to any Tax,including any schedule or attachment thereto and any amendment thereto.

 

“Third Party Claim” has the meaning given that term in Section 10.04.

 

“Title Defects” has the meaning giventhat term in Section 5.06(b).

 

“Title Insurance Commitment” has the meaning given that term in Section 5.06(a).

 

“Title Notice” has the meaning giventhat term in Section 5.06(b).

 

“Title Objections” has the meaninggiven that term in Section 5.06(b).

 

“Transfer Taxes” has the meaning given that term in Section 2.05(d).

 

“Undivided Interest Agreement” has the meaning given that termin Section 7.05.

 

“Water Rights Agreement” has the meaning given that term in Section 7.05.

 

1.02  United States Dollars.All references to money and dollar amounts in this Agreement shall mean dollarsand currency of the United States of America.

 

ARTICLE 2

 

PURCHASE AND SALE OF ASSETS

 

2.01  Purchase and Sale ofAssets.  Subject to the terms andconditions of this Agreement, at the Closing, Seller shall sell to Buyer, andBuyer shall purchase from Seller, the following assets (collectively, the “PurchasedAssets”), as the same shall exist on the Closing Date free and clear of allEncumbrances other than Permitted Encumbrances (and, in the case of RealProperty, the Real Property Permitted Encumbrances):

 

(a)  without limitation, Seller’s realproperty located within the FERC Boundary, the other real property described inSchedule 2.01(a)(A), and, as and to the extent agreed by Buyer, Seller and

 

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Mill Owner in accordance with Section 5.06hereof, (i) sufficient real property easement rights in Mill Owner’s realproperty located within the FERC Boundary that are necessary to operate theProject, (ii) such other real estate rights necessary for Buyer toconstruct the third penstock in the vicinity of the two existing penstocks nearthe Lower Station (as depicted in the FERC License), and (iii) sucheasements or other rights necessary for the delivery by Buyer of electricalenergy and ancillary products from the Project to the ISO-NE for sale intoNEPOOL in accordance with good operating practices, in compliance with Laws andSeller’s Permits (except as otherwise contemplated by this Agreement) andEnvironmental Permits, as more particularly described in Schedule 2.01(a) (collectively,the “Real Property to be Conveyed”), but excluding therefrom, without limitation, the real property andrelated rights set forth under the heading of “Retained Real Property Rights”on Schedule 2.01(a)(B) and other real property and related rightsagreed to by the parties in accordance with Section 5.06 or not expresslyagreed to be sold or conveyed to Buyer (collectively, the “Retained RealProperty Rights”);

 

(b)  the machinery, equipment, tools, furniture, furnishings andother fixed assets listed on Schedule 2.01(b) (collectively,the “Equipment”);

 

(c)  the inventory of supplies, stores, parts and materials usedin the operation of the Project and located on the Real Property on the ClosingDate;

 

(d)  all of Seller’s rights under the contracts, agreements,purchase orders, understandings, and arrangements set forth on Schedule 2.01(d) (collectively,the “Assumed Agreements”);

 

(e)  all of Seller’s rights in, to and under the Permits andEnvironmental Permits that are listed on Schedule 2.01(e), in each case tothe extent assignable; and

 

(f)  all of Seller’s documents and records with respect to theownership and operation of the Project (including, without limitation, (i) withrespect to the Real Property, the Equipment, the Assumed Agreements, the Permitsand the Environmental Permits; (ii) as required by and pertaining to theFERC License; and (iii) cost reports including property tax assessmentsfor the last three years) (collectively, the “Records”), subject toSeller’s right to retain copies of any such Records;

 

provided, however, that notwithstanding anything to the contrarycontained in this Agreement, the term “Purchased Assets” shall notinclude any of the following assets of Seller or any assets not described above(which shall be retained by Seller and hereinafter are referred to as the “ExcludedAssets”):

 

(i)  cash and cash equivalents and bankaccounts;

 

(ii)  any real property of Seller notdescribed on Schedule 2.01(a) as “Real Property to be Conveyed”,the Retained Real Property Rights and any personal property of Seller notlisted on Schedule 2.01(b);

 

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(iii)  subject to Section 2.01(d) andSection 2.05,****any receivablesor other rights to receive payments (with the exception of insurance proceedsresulting from the destruction of any Purchased Asset required to be conveyedunder Section 2.01 which Purchased Asset is not replaced prior to theClosing, which proceeds shall be paid to Buyer at or after the Closing, as thecase may be);

 

(iv)  all financial statements, taxreturns and official corporate records, including the corporate minute booksand stock ledgers;

 

(v)  all (A) “employee benefitplans” (as defined in Section 3(3) of the Employee Retirement IncomeSecurity Act of 1974, as amended), (B) employment, consulting,non-competition, non-solicitation or other compensation agreements, and allcollective bargaining agreements, and (C) bonus or other incentivecompensation, equity or equity based compensation, stock purchase, deferredcompensation, change in control, severance, leave of absence, vacation, salarycontinuation, medical, life insurance, section 125 cafeteria, dependantcare, pension or welfare benefit plans, policies, agreements or arrangements,in each case as to which the Seller has any liability, contingent or otherwise,thereunder for current or former employees, directors or individual consultantsof Seller;

 

(vi)  Seller’s shares in AndroscogginReservoir Company, a Maine corporation; and

 

(vii)  the other assets, if any, listedon Schedule 2.01(vii).

 

2.02  Conditional Assignmentof Assumed Agreements, Permits and Environmental Permits.  To the extent that the assignment of any ofthe Assumed Agreements, the Permits, or the Environmental Permits by Seller toBuyer is not permitted without the consent or approval of any other party orparties thereto, this Agreement shall not be deemed to constitute anundertaking to assign the same if such consent or approval is not given;provided, however, that Buyer and Seller each shall use commercially reasonableefforts to secure any such consent or approval. If a consent or approval to the assignment of an Assumed Agreement isrequired and is not obtained prior to Closing, Seller shall cooperate withBuyer following the Closing in any commercially reasonable arrangement designedto provide Buyer with the benefits under the Assumed Agreements to the extentnot assigned.

 

2.03.  Assumption ofObligations.  At the Closing, Buyershall assume and agree to perform and pay on a timely basis, in accordance withthe applicable terms and conditions,  thefollowing liabilities and obligations of Seller relating to the Project and thePurchased Assets:

 

(a)  all liabilities or obligations of Seller that (i) accrue,are assessed or are required to be performed under the terms of the AssumedAgreements after the Closing, or (ii) are assessed prior to the Closingbut are due and payable after the Closing, or (iii) are assessed after theClosing but relate to a period prior to the Closing, and in the cases ofclauses (ii) and (iii), only to the extent disclosed to Buyer on Schedule 2.03(a);

 

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(b)  all liabilities or obligations of Seller that accrue and arerequired to be performed under the terms of the Permits and EnvironmentalPermits, to the extent assigned to Buyer, excluding, however, any fines,penalties or administrative charges imposed by a Governmental Entity relatingto the period prior to the Closing; and

 

(c)  all liabilities or obligations of Seller that accrue and arerequired to be performed by Seller under the terms of the Real PropertyPermitted Encumbrances ((a) through (c), collectively, the “AssumedObligations”);

 

provided, however, that notwithstanding anything to the contrarycontained in this Agreement, the term “Assumed Obligations” shall not includeany other liabilities or obligations of Seller including, without limitation,the following liabilities and obligations of Seller (all of which otherliabilities and obligations shall be retained by Seller and hereinafter arereferred to as the “Excluded Obligations”):

 

(i)  all liabilities and obligations notrelating to the Project;

 

(ii)  all liabilities and obligations(including, without limitation, Historical Environmental Liabilities andobligations unless and only to the extent Buyer breaches any covenants underSections 5.02(d) or 9.04) relating to or arising out of the operation ofthe Project prior to the Closing Date;

 

(iii)  all liabilities and obligationsfor Taxes (x) of Seller or (y) subject to the provisions of Section 2.05(b) or(d) hereof, relating to or arising out of the Purchased Assets or theoperation of the Project prior to the Closing Date; and

 

(iv)  all liabilities and obligationsrelating to or arising out of (A) the employment by Seller, or (B) thetermination of employment by Seller, of any employees of Seller or Mill Ownerat the Project arising at any time.

 

2.04  Purchase Price.  (a) The consideration to be given byBuyer to Seller for the purchase and sale of the Purchased Assets (the “PurchasePrice”) shall consist of:

 

(i)  One Hundred Forty-Four MillionDollars ($144,000,000) (the “Cash Purchase Price”), and

 

(ii)  the assumption by Buyer of theAssumed Obligations as provided in Section 2.03.

 

(b)  The Cash Purchase Price shall be paid by Buyer at the Closingby wire transfer of immediately available funds to the account or accountsspecified by Seller in writing to Buyer.

 

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2.05  Prorations and Expenses;Certain Tax Matters.

 

(a)  Except as otherwise specifically provided in this Agreement,all income, expenses and costs pertaining to the conduct and operation of theProject and the ownership of the Purchased Assets, other than real and personalproperty taxes, which are addressed in Sections 2.05(b) and (c) hereof,and obligations under Assumed Agreements, which are addressed in Section 2.03(a) hereof,shall be prorated as of the Closing Date, so that as between Seller and Buyer,Seller shall receive all revenues and shall be responsible for all expenses,costs and liabilities allocable to the period prior to the Closing Date, andBuyer shall receive all revenues and shall be responsible for all expenses,costs and liabilities allocable to the Closing Date and the period thereafter.

 

(b)  Real and personal property Taxes with respect to the PropertyTax Year in which the Closing occurs that are attributable to the PurchasedAssets shall be apportioned between Seller and Buyer in the following mannerand shall be an adjustment to the Purchase Price.  Seller’s proportionate share of such Taxesshall be based on the number of days in the Property Tax Year that Seller ownedthe real and personal property at issue up through and including the day beforethe date of the Closing.  Buyer’sproportionate share of such Taxes with respect to such property shall be basedon the proportionate number of days in the Property Tax Year on and after thedate of the Closing.  For purposes ofthis Section 2.05, the term “Property Tax Year” means the fiscalyear of the taxing jurisdiction imposing the real or personal property tax. Ifthe Closing occurs before the Tax rates or values for the real or personalproperty Taxes are fixed for the Property Tax Year, the apportionment of suchTaxes shall be based upon the Tax rates for the immediately preceding PropertyTax Year applied to the most recent assessed valuation of the Purchased Assets.Seller’s proportionate share of such Taxes shall be reduced by the amount ofany real and personal property Taxes paid prior to the Closing in respect ofthe current Property Tax Year.

 

(c)  Any refunds or credits of real property Taxes or personalproperty Taxes relating to the Purchased Assets with respect to: (i) anyProperty Tax Years occurring prior to the Property Tax Year in which theClosing occurs shall be for the account of Seller, and if received or utilizedby the Buyer, shall be paid to Seller within five Business Days after Buyerreceives such refund or utilizes such credit, and Buyer shall notify Seller ofsuch receipt or utilization within such time period, and (ii) the PropertyTax Year that includes the Closing Date shall be apportioned between Seller andBuyer, pro rata in the same manner as such Taxes originally were allocatedpursuant to Section 2.05(b), based on the portion of the Property Tax Yearin which such Purchased Assets were owned by Seller and Buyer, respectively.

 

(d)  Notwithstanding any other provision of this Agreement to thecontrary, any and all sales, use, transfer, stamp, duties, recording andsimilar Taxes (“Transfer Taxes”) incurred in connection with thetransactions contemplated by this Agreement shall be borne by Buyer.  The party charged by Law with the duty ofmaking the necessary filing and Tax Returns with respect to such Transfer Taxesshall do so in accordance with applicable Law and make the required TransferTax payment.  If Seller has such duty tofile and pay any Transfer Tax, Buyer shall reimburse Seller within fiveBusiness Days following receipt of notice of the amount thereof.

 

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2.06  Purchase PriceAllocation.  For purposes of Section 1060of the Code, the Purchase Price shall be allocated among the Purchased Assetsin the manner set forth on Schedule 2.06.  Buyer and Seller shall: (i) be bound bysuch allocation for purposes of determining any Taxes, (ii) prepare andfile their Tax Returns on a basis consistent with such allocation, and (iii) takeno position inconsistent with such allocation on any Tax Return or in anyproceeding before any taxing authority. The obligations of Buyer and Seller under this Section 2.06 shallsurvive the Closing.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as expressly set forth in Section 3.05, Seller representsand warrants to Buyer as of the date hereof as follows:

 

3.01  Corporate Organizationand Authority of Seller.  Seller is acorporation duly organized, validly existing and in good standing under theLaws of the State of Maine with full power and authority to own and operate theProject and the Purchased Assets and carry on its business as now beingconducted.  Seller has all requisitecorporate power and authority to execute, deliver and perform thisAgreement.  Seller is duly qualified orauthorized to do business as a foreign corporation and is in good standingunder the Laws of each jurisdiction in which the conduct of its business or theownership of its properties requires such qualification or authorization,except where the failure to be so qualified, authorized or in good standingwould not reasonably be expected to have a material adverse effect on thePurchased Assets or Seller’s ability to consummate the transactionscontemplated hereby.  Seller’s executionand delivery of this Agreement and any other agreements to be executed anddelivered by Seller at the Closing and the performance by Seller of thetransactions contemplated by this Agreement and any such other agreements hasbeen duly authorized by all necessary corporate action on the part of Seller.

 

3.02  Enforceability.  This Agreement is, and each other AncillaryAgreement to be executed and delivered by Seller at the Closing will be, dulyand validly executed and delivered by Seller, and this Agreement is, and eachother Ancillary Agreement to be executed and delivered by Seller will be, avalid and legally binding obligation of Seller, enforceable against Seller inaccordance with their respective terms. Neither the execution and delivery of this Agreement or any such otheragreement nor the performance by Seller of the terms and provisions hereof orthereof will:  (i) violate theArticles of Incorporation or Bylaws of Seller, (ii) violate any Law orOrder by which Seller, the Project or any of the Purchased Assets are bound, or(iii) except as set forth on Schedule 3.02, result in abreach or violation of any term or provision of, constitute a default under, orgive rise to any right of termination or cancellation under, or result in orpermit an acceleration of, any indenture, mortgage, lease or other agreement orinstrument to which Seller is a party or by which Seller or any of thePurchased Assets is bound, other than as would not reasonably be expected tohave a material adverse effect on Seller’s ability to perform its obligationshereunder, or the Project or the Purchased Assets.

 

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3.03  Subsidiaries; Mill Owner.  Except as otherwise set forth on Schedule 3.03,Seller does not own, directly or indirectly, any capital stock, membershipinterest or other equity interest in any Person.  All of the outstanding capital stock ofSeller is owned by Mill Owner.

 

3.04  Third Party Consents.  Except as otherwise set forth on Schedule 3.04,no material authorization, consent, waiver or approval of, or filing with, ornotification to, any third party (including, without limitation, anyGovernmental Entity) is required to be obtained by Seller in connection withits sale and transfer of the Purchased Assets to Buyer on the terms andconditions set forth in this Agreement, and to permit Seller to perform itsother obligations hereunder.

 

3.05  Title to PurchasedAssets; Sufficiency.  Except asotherwise set forth on Schedule 3.05, Seller has:  (i) good and defensible title to all ofthe tangible and intangible personal property constituting part of thePurchased Assets, free and clear of all Encumbrances other than the PermittedEncumbrances, and (ii) good and marketable fee simple title to the RealProperty to be Conveyed, free and clear of all Encumbrances, other than theReal Property Permitted Encumbrances. Except for the Excluded Assets and except as set forth in Schedule 3.05hereof, the Purchased Assets constitute all of the properties and assets usedin or held for use in the operation of the Project as currently operated bySeller, and are sufficient for Buyer to operate the Project as the Project iscurrently operated by Seller. Notwithstanding anything to the contrary in this Section 3.05,Seller makes no representation and warranty whatsoever with respect to the RealProperty to be Conveyed as of the date of this Agreement, which representationand warranty in this Section 3.05 as it relates to the Real Property to beConveyed shall be made only as of the Closing Date.

 

3.06  Environmental.  Except as described on Schedule 3.06:  (i) to the Knowledge of Seller, the RealProperty is in compliance with all applicable Environmental Laws, except wherethe failure to be in compliance would not have a material adverse effect on thePurchased Assets, taken as a whole; (ii) Seller has not received writtennotification within the three-year period preceding the date of this Agreementfrom any Governmental Entity with respect to any current material violations ofor liability under any Environmental Laws concerning the Purchased Assets; (iii) tothe Knowledge of Seller, there are no claims, actions, suits or LegalProceedings pending or threatened, at law or equity, relating to violation ofor liability under any Environmental Law concerning the Purchased Assets; (iv) tothe Knowledge of Seller, there has been no Release or threatened Release at,on, under or from the Purchased Assets of any Hazardous Materials except suchmatters as would not reasonably be expected to have a material adverse effecton the Purchased Assets, taken as a whole; (v) to the Knowledge of Seller,there are no facts or circumstances that could reasonably be expected to resultin the imposition of liability pursuant to Environmental Law upon Buyer with respectto the Purchased Assets, except such matters as would not reasonably beexpected to have a material adverse effect on the Purchased Assets, taken as awhole;  (vi) Seller has provided toBuyer copies of the reports and investigations within its possession or controlregarding the environmental condition of the Purchased Assets that are listedon Schedule 3.06(vi); (vii) Schedule 3.06(vii) containsa true, correct and complete list of all material Environmental Permitspertaining to the Project; (viii) Seller currently has all materialEnvironmental Permits that are required for the operation of the

 

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Project as presently operated, all of which are in full force andeffect; and (ix) to the Knowledge of Seller (a) Seller is not inviolation of any terms or conditions of any such Environmental Permit, otherthan any such violation, breach or default that would not reasonably beexpected to have a material adverse effect on Seller, the Project or the PurchasedAssets, (b) no written notice of a pending violation of any materialEnvironmental Permit has been received by Seller, and (c) no proceeding ispending or threatened to revoke, prevent the renewal of, or limit any suchmaterial Environmental Permit.  Therepresentations and warranties contained in this Section 3.06 are theexclusive representation and warranties by Seller related to EnvironmentalLaws, Environmental Conditions and Environmental Permits.

 

3.07  Equipment.  Except as otherwise described on Schedule 3.07,the Equipment constitutes all material machinery, equipment, tools, furnitureand furnishings required for the operation of the Project in substantially thesame manner as it was being operated by Seller immediately prior to the date ofthis Agreement.  Except as otherwisedescribed on Schedule 3.07, all of the Equipment is located on theReal Property.

 

3.08  Contracts.  Schedule 3.08 contains a list ofall contracts, leases, commitments and agreements to which Seller is a party asof the date of this Agreement which relate to the Project and either:  (i) require the payment or receipt bySeller of more than Fifty Thousand Dollars ($50,000) during the term of such contract or agreement and whichare not terminable by Seller on ninety (90) or fewer days notice withoutpenalty, or (ii) which are described in Subsections 3.08(i) through (vii) below(collectively, the “Material Contracts”).  Except as set forth on Schedule 3.08,Seller has made true and complete copies of the Material Contracts available toBuyer.  To the Knowledge of Seller, eachof the Material Contracts is in full force and effect and is the legal, valid,binding and enforceable obligation of Seller; no material default existsthereunder.   Material Contracts shallinclude:

 

(i)  contracts and agreements for thefuture purchase, exchange or sale of electric power or ancillary services thatextend beyond the Closing Date;

 

(ii)  contracts and agreements for thefuture transmission of electric power;

 

(iii) interconnection contracts andagreements;

 

(iv) contracts and agreements related toreservoir, water management and river operations;

 

(v)  contracts and agreements for thesale of any Purchased Asset or that grant a right or option to purchase anyPurchased Asset;

 

(vi)  contracts and agreements underwhich Seller has imposed a security interest on any of the Purchased Assets;and

 

(vii)  contracts and agreements thatpurport to limit the Project’s freedom to compete in any line of business or inany geographic area.

 

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3.09  Permits.  Schedule 3.09 contains a true,correct and complete list of all material Permits pertaining to theProject.  Except as set forth on Schedule 3.09,Seller currently has all material Permits that are required for the operationof the Project as presently operated, all of which are in full force andeffect.  Except as set forth on Schedule 3.09,to Seller’s Knowledge (a) Seller is not in violation of any terms orconditions of any such Permit, other than any such violation, breach or defaultthat would not reasonably be expected to have a material adverse effect onSeller, the Project or the Purchased Assets, (b) no written notice of apending violation of any material Permit has been received by Seller, and (c) noproceeding is pending or threatened to revoke, prevent the renewal of, or limitany such material Permit.

 

3.10  Employees.  Schedule 3.10 contains a list ofthe names of each employee of Mill Owner who, as of the date of this Agreement,directly and primarily performs services for the Project (the “ProjectEmployees”) and a list of any collective bargaining agreement or employmentagreement currently in effect covering any such Project Employee (collectively,the “Employee Agreements”).  Copiesof the Employee Agreements have been made available to Buyer.  Except as otherwise set forth on Schedule 3.10:(i) to the Knowledge of Seller, there is no labor strike, dispute or workstoppage or lockout involving any of the Project Employees actually pendingor threatened, and (ii) Mill Owner is in compliance in all materialrespects with all applicable Laws respecting employment and employmentpractices with respect to the Project Employees.

 

3.11  Compliance with Law.  Except as otherwise set forth on Schedule 3.11and excluding any representation or warranty regarding Environmental Laws,which is governed exclusively by Section 3.06, (i) to the Knowledgeof Seller, the Project is being operated in compliance with all applicable Lawsexcept for non-compliance which would not reasonably be expected to have amaterial adverse effect on Seller, the Project or the Purchased Assets; (ii) Sellerhas not been given written notice of any violation of any Law with respect tothe ownership or operation of the Purchased Assets; and (iii) to theKnowledge of Seller, no investigation or review relating to Seller with respectto the ownership or operation of the Purchased Assets by any GovernmentalEntity is pending or threatened.

 

3.12  Litigation.  Except as described on Schedule 3.12,to the Knowledge of Seller, there are no claims, actions, suits or proceedingspending or threatened against Seller or the Purchased Assets, at law or inequity, before or by any Governmental Entity nor is Seller subject to anyOrder: (i) relating to the ownership or operation of the Project or thePurchased Assets, (ii) which could materially impair the ability of Sellerto perform its obligations under this Agreement or any other agreement to beentered into by Seller at the Closing, or (iii) which questions thevalidity or propriety of this Agreement or any such other agreement or of anyaction to be taken hereunder or thereunder.

 

3.13  Changes in the Project.  Since December 31, 2004, except asotherwise set forth in Schedule 3.13:  (i) there has not occurred anydevelopment or event that has caused or would reasonably be expected to cause amaterial adverse change in the physical condition or operating capability ofthe Purchased Assets, taken as a whole; (ii) there has been no sale,lease, transfer,

 

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Encumbrance or disposition of assets used in the operation of theProject with an aggregate book value of more than $50,000, other than the useof supplies in the ordinary course of business and other than the distributionof cash to Mill Owner; (iii) there has been no capital expenditures orcommitments in respect thereto in excess of $50,000; and (iv) Seller hasnot entered into any agreement with respect to any of the foregoing.

 

3.14  Taxes.  Seller has filed in a timely manner allrequisite Tax Returns required to be filed by it, all such Tax Returns aretrue, correct and complete in all material respects, and all material amountsof Taxes required to be paid by Seller have been paid in a timely manner forall periods ending prior to the Closing Date. There is no material dispute orpending or threatened claim, or any audit, investigation, protest or similarproceeding concerning any Tax with respect to the Purchased Assets.  None of the Purchased Assets is (i) propertyrequired to be treated as being owned by another Person pursuant to theprovisions of Section 168(f)(8) of the Internal Revenue Code of 1954,as amended and in effect immediately prior to the enactment of the Tax ReformAct of 1986, (ii) “tax-exempt use property” within the meaning of Section 168(h)(1) ofthe Code, (iii) “tax-exempt bond financed property” within the meaning of Section 168(g) ofthe Code, (iv) “limited use property” within the meaning of Rev. Proc. 2001-28,(v) subject to Section 168(g)(1)(A) of the Code, or (vi) subjectto any provision of state, local or foreign Law comparable to any of theprovisions listed above.  None of thePurchased Assets are subject to any Encumbrances for unpaid Taxes.  Seller is not a foreign person within themeaning of Section 1445 of the Code.

 

3.15  No Commissions.  Except for a fee payable by Seller toCompetitive Energy Services, LLC, no commissions or brokers’ or finders’ feesare payable by, through or on account of any acts of Seller or Mill Owner inconnection with this Agreement or the transactions contemplated hereby.

 

3.16.  Insurance.  Seller or one or more of its Affiliates havethe insurance policies listed at Schedule 3.16, all of which are infull force and effect.

 

EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 3, BUYER ISACQUIRING THE PURCHASED ASSETS “AS IS, WHERE IS” AND SELLER HAS NOT MADE ANDDOES NOT MAKE ANY REPRESENTATION OR WARRANTY OF ANY NATURE AS TO THE PURCHASEDASSETS OR THE PROJECT (INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), AND BUYER HEREBYEXPRESSLY ACKNOWLEDGES THAT NO SUCH OTHER REPRESENTATIONS OR WARRANTIES HAVEBEEN MADE BY SELLER OR RELIED UPON BY BUYER. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY EXPRESSED OR IMPLIEDWARRANTIES, GUARANTIES, PROMISES, STATEMENTS, REPRESENTATIONS OR INFORMATIONPERTAINING TO THE PROJECT OR THE PURCHASED ASSETS MADE OR FURNISHED BY ANYAGENT, EMPLOYEE, SERVANT OR OTHER PERSON REPRESENTING OR PURPORTING TOREPRESENT SELLER, UNLESS SUCH WARRANTIES, GUARANTIES, PROMISES, STATEMENTS,REPRESENTATIONS OR INFORMATION ARE EXPRESSLY AND SPECIFICALLY SET FORTH IN THISARTICLE 3.

 

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ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as of the date hereof asfollows:

 

4.01  Corporate Organizationand Authority.  Buyer is a corporation duly organized, validlyexisting and in good standing under the Laws of the Province of Ontario and hasfull power and authority to execute, deliver and perform this Agreement.  Buyer is duly qualified or authorized to dobusiness as a foreign corporation and is in good standing under the Laws of eachjurisdiction in which the conduct of its business or the ownership of itsproperties requires such qualification or authorization, except where thefailure to be so qualified, authorized or in good standing would not reasonablybe expected to have a material adverse effect on Buyer’s assets or Buyer’sability to consummate the transactions contemplated hereby.  Buyer’s execution and delivery of thisAgreement and any other agreements to be executed and delivered by Buyer at theClosing and the performance by Buyer of the transactions contemplated by thisAgreement and any such other agreements have been duly authorized by allnecessary corporate or other actions and proceedings on the part of Buyer.

 

4.02  Enforceability.  This Agreement is, and each AncillaryAgreement to be executed and delivered by Buyer at the Closing will be, dulyand validly executed and delivered by Buyer, and this Agreement is, and eachother Ancillary Agreement to be executed and delivered by Buyer will be, avalid and legally binding obligation of Buyer, enforceable against Buyer inaccordance with their respective terms. Neither the execution of this Agreement or any such other agreement byBuyer nor the performance by Buyer of the various terms and provisions hereofor thereof will:  (i) violate thearticles or certificate of incorporation or bylaws of Buyer, (ii) violateany Law or Order by which Buyer or any of its property is bound, or (iii) resultin a breach or violation of any term or provision of, constitute a defaultunder, or give rise to any right of termination or cancellation under, orresult in or permit an acceleration of, any indenture, mortgage, lease or otheragreement or instrument to which Buyer is a party or by which it or any of itsproperty is bound, except in the case of the foregoing clauses (ii) and(iii), as would not reasonably be expected to result in a material adverseeffect on Buyer’s ability to perform its obligations hereunder.

 

4.03  Litigation.  To the knowledge of Buyer, there are noclaims, actions, suits or proceedings now pending or threatened against oraffecting Buyer, at law or in equity, or before or by any Governmental Entitywhich may impair the ability of Buyer to perform this Agreement or any otheragreement to be entered into at the Closing or which questions the validity orpropriety of this Agreement or any such other agreement or of any action takenhereunder or thereunder in connection with this Agreement.

 

4.04  Third Party Consents.  Except as otherwise set forth on Schedule 4.04,no authorization, consent, waiver or approval of or filing with, ornotification to, any third party (including, without limitation, anyGovernmental Entity) is required to be obtained by Buyer in

 

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connection with its purchase of the Purchased Assets on the terms andconditions set forth in this Agreement, and to permit Buyer to perform itsother obligations hereunder.

 

4.05  Buyer’s Investigation.  Buyer is an informed and sophisticatedpurchaser of assets similar to the Project and, in connection with thetransactions contemplated hereby, has sought the advice of experts who areexperienced in the evaluation and purchase of assets similar to theProject.  Subject to the provisions ofSections 2.01(a), 5.06 and 6.01(g), Buyer has undertaken such investigation ofthe Project and the Purchased Assets as it has deemed necessary to enable it tomake an informed decision with respect to this Agreement and the transactionscontemplated hereby.  Buyer acknowledgesthat Seller has provided Buyer with such access to the personnel, properties,premises and Records of Seller and Mill Owner as Buyer has requested, subjectto the limitations on certain activities set forth in Section 5.02(d).  In entering into this Agreement, inpurchasing the Purchased Assets and in consummating the other transactionscontemplated herein, Buyer has relied solely upon its own investigation and theexpress representations and warranties of Seller set forth in Article 3 ofthis Agreement, and neither Seller nor Mill Owner nor any of their respectiveofficers, directors, shareholders, employees, affiliates, agents orrepresentatives has made any representation or warranty as to Seller, thePurchased Assets, this Agreement or the Project, except as expressly set forthin this Agreement.  To the fullest extentpermitted by Law, neither Seller nor Mill Owner nor any of their respectiveofficers, directors, shareholders, employees, Affiliates, agents orrepresentatives shall have any liability to Buyer for any information madeavailable to, or statements made to, Buyer (or any of its agents, officers,directors, employees, Affiliates or representatives), other than (x) theexpress obligation of Seller to indemnify Buyer following the Closing to theextent set forth in Article 10 and Article 10A; (y) pursuant to theGuaranty of New Page Corporation in the form attached hereto and only tothe extent executed and delivered to Buyer; and (z) as provided in Section 8.03.  Nothing contained in this Section 4.05shall limit or restrict any of the representations and warranties of Sellercontained in this Agreement or any other Ancillary Agreement to be executed anddelivered by Seller at the Closing.

 

4.06  Ability to Perform.  Buyer currently has available to itsufficient funding to enable Buyer to consummate the purchase of the PurchasedAssets on the terms set forth in this Agreement, to pay all expenses to beincurred by Buyer in connection therewith and to perform all of its otherobligations under this Agreement and any other agreement to be entered into byBuyer pursuant to this Agreement.

 

4.07  No Commissions.  No commissions or brokers’ or finders’ feesare payable by, through or on account of any acts of Buyer or itsrepresentatives in connection with this Agreement or the transactionscontemplated hereby.

 

4.08  Buyer’sKnowledge.  Buyer hereby representsand warrants that it has informed Seller of any material mistakes or omissionson the Schedules of which Buyer is aware, including, without limitation,anything that Buyer is aware of that might give rise to a claim by Buyeragainst Seller under the terms of this Agreement or any Ancillary Agreements.

 

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ARTICLE 5

 

PRE-CLOSING COVENANTS

 

5.01  Covenants of Seller.

 

(a)  Except as otherwise contemplated by this Agreement, asrequired by applicable Law or as may be approved by Buyer, during the periodfrom the date of this Agreement to the earlier of the Closing Date or thetermination of this Agreement in accordance with Article 8, Seller shall:

 

(i)  operate the Project in the ordinarycourse, consistent with Seller’s past practices, in accordance with goodoperating practices and in compliance with Laws and Seller’s Permits andEnvironmental Permits;

 

(ii)  continue to maintain the PurchasedAssets consistent with Seller’s past practices, in accordance with goodoperating practices and in compliance with Laws and Seller’s Permits andEnvironmental Permits;

 

(iii) use reasonable efforts to preserveintact the present business organization and operations of the Project, to keepavailable the services of its contractors and to preserve its relationshipswith licensors, suppliers, dealers, customers and others having businessrelationships with the Project;

 

(iv)  promptly commence and diligentlypursue with commercially reasonable efforts, in consultation with Buyer, atSeller’s expense, a ring bus interconnection or a dedicated interconnectionbetween the Project and pool transmission facilities currently operated by ISONew England via an interconnection agreement with ISO New England or, in thediscretion of CMP, with the transmission facilities grid of CMP via aninterconnection arrangement with CMP, all as further described on Exhibit Bhereto;

 

(v)  promptly disclose to Buyer anyevent occurring after the date of this Agreement which, to the Knowledge ofSeller, results in any of the representations and warranties of Seller setforth in Article 3 becoming inaccurate or untrue in any material respect;

 

(vi)  use commercially reasonable effortsto obtain, prior to the Closing, all of the Specified Consents required to beobtained by Seller;

 

(vii)  provide Buyer’s officers,employees, counsel, accountants and other representatives with reasonableaccess, during normal business hours, to the Project, the books and Records ofSeller with respect to the Project and personnel of Seller and Mill Owner whoare reasonably familiar with the Project;

 

(viii)  subject to the provisions of Section 5.02(d) hereof,provide reasonable access to Buyer and Buyer’s representatives for the purposeof investigating and

 

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designing its remote control systems and communication equipment,provided that Buyer shall conduct such activities so as to avoid interference withSeller’s operations; and

 

(ix)  use diligent efforts and negotiatein good faith with Buyer in accordance with Section 5.06 (1) thedeeds and easements necessary to transfer the Real Property to be Conveyed, theRetained Real Property Instruments and real property attachment to theUndivided Interest Agreement, and all other real estate documents reasonablyrequired to effect the transactions contemplated by this Agreement at theClosing (collectively, the “Real Estate Documents”); (2) a servicesagreement for the provision of certain maintenance and operation services toBuyer after the Closing (the “Services Agreement”); and (3) theother attachments to the Undivided Interest Agreement (the “Attachments”).

 

(b)  Except as specifically contemplated by this Agreement, Sellershall not, from the date hereof until the Closing, without the written consentof Buyer, which consent shall not be unreasonably withheld, delayed orconditioned:

 

(i)  sell or transfer any of thePurchased Assets having a value more than Twenty Five Thousand Dollars($25,000) in the aggregate, provided, however, Seller shall havethe right to transfer the Retained Real Property Rights without limitation;

 

(ii)  sell or transfer any spare partsor inventory comprising a portion of the Purchased Assets;

 

(iii)  make any capital expenditures,series of capital expenditures or commitments for capital expenditures relatedto the Project to the extent the capital improvements related to such capitalexpenditure will not be completed and fully paid for prior to the Closing;

 

(iv)  amend, modify, cancel, or waive anyrights under or grant any consent (1) relating to, any Permits orEnvironmental Permits, or, (2) in any material manner with respect to theAssumed Agreements or Material Contracts, except in each case as specificallyprovided herein, or enter into any material contract that extends beyond theClosing Date relating to the Purchased Assets or the Project;

 

(v)  incur any obligations orliabilities not in existence on the date hereof that will become an AssumedLiability or otherwise become the obligation of Buyer in connection with theacquisition of the Purchased Assets;

 

(vi) permit, allow, or suffer any Purchased Asset to be subjected to anyEncumbrances other than Permitted Encumbrances, the Real Property PermittedEncumbrances or Encumbrances that will otherwise be discharged prior to or atthe time of the Closing;

 

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(vii) make any Tax election or settle or compromise any Tax liability that couldreasonably be expected to create or otherwise cause any liability to Buyer, orwith respect to which the Project or the Purchased Assets may be subject,levied or assessed;

 

(viii) grant, issue or give any Person any rights or options with respect to theProject or the Purchased Assets; or

 

(ix)  agree or commit to do any of theforegoing.

 

(c)  Except as specifically contemplated by this Agreement, Sellershall not, from the date hereof until the Closing, without the written consentof Buyer:

 

(i)  liquidate, dissolve, recapitalize,reorganize or otherwise wind up its business or operations, or enter into anymerger or consolidation with any corporation or other entity; or

 

(ii)  enter into any contract thatrestrains, restricts, limits or impedes the ability of the Project to competewith or conduct any business or any line of business in any geographic area.

 

5.02  Covenants of Buyer.  Except as otherwise contemplated by thisAgreement, as required by applicable Laws or as may be approved by Seller,during the period from the date of this Agreement to the earlier of the ClosingDate or the termination of this Agreement in accordance with Article 8:

 

(a)  Buyer shall have available, on the Closing Date, sufficientfunding to enable Buyer to consummate the purchase of the Purchased Assets fromSeller in accordance with this Agreement and otherwise to perform all of Buyer’sobligations under this Agreement and the other agreements to be entered into byBuyer pursuant to this Agreement;

 

(b)  Buyer shall use commercially reasonable efforts to obtain,prior to the Closing, all of the Specified Consents required to be obtained byBuyer;

 

(c)  Buyer shall promptly disclose to Seller any event occurringafter the date of this Agreement of which Buyer becomes aware which results inany of the representations and warranties of Buyer set forth in Article 4,or any of the representations or warranties of Seller set forth in Article 3,being inaccurate or untrue in any material respect;

 

(d)  Neither Buyer nor any of its Affiliates shall undertake orcause to be undertaken any non-subsurface sampling or analysis, subsurfaceinvestigation, or any communication with any Governmental Entity by or onbehalf of Buyer or its Affiliates with regard to any Environmental Liabilitiesor Environmental Conditions regarding the Purchased Assets.  In the event that any Governmental Entityinitiates any communication (written, electronic or verbal) with Buyer

 

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pre-closing, (1) in the case of written or electroniccommunication, Buyer shall not respond to such communication and shall refersuch communication to Seller for response, and (2) in the case of a verbalcommunication, shall immediately refer the representative of the GovernmentalEntity to Seller’s Representative; and

 

(e)  Buyer shall use diligent efforts and negotiate in good faithwith Seller the Real Estate Documents as contemplated by Section 5.06(e),the Services Agreement and the Attachments.

 

5.03  Filings.  Promptly after the execution of thisAgreement, Buyer and Seller each shall prepare and make or cause to be made anyrequired filings, submissions and notifications under applicable Law(including, without limitation, under the HSR Act and under the Federal PowerAct) to the extent that such filings are necessary to consummate thetransactions contemplated hereby and shall use all commercially reasonableefforts to take all other actions necessary to consummate the transactionscontemplated by this Agreement in a manner consistent with applicable Law.  Except with respect to the transfer and/oramendment of the FERC License, which is governed by this Section 5.03, andthe filings required under HSR Act, which the parties shall preparecollaboratively, Buyer shall be responsible for making all filings andobtaining each consent listed on Schedule 4.04 and Seller shall beresponsible for making all filings and obtaining subdivision approval, ifapplicable.  Each party shall furnish tothe other party such necessary information and reasonable assistance as suchother party may reasonably request in connection with their respectiveobligations under this Agreement and a copy of each filing and allcorrespondence related thereto.  All suchfilings shall be made as promptly as practicable.  Seller shall work with Buyer to draft andjointly file with FERC (i) an application for transfer and/or amendment oflicense pursuant to the Federal Power Act Sections 8 and/or 9, 16 U.S.C. §§ 801-02,and FERC’s regulations at 18 C.F.R. Part 9, which application shallrecognize, among other things, the Water Requirements (as they are defined inthe Water Rights Agreement) and related water easements to be granted to MillOwner; and (ii) an application for authorization of Seller’s dispositionand Buyer’s acquisition of the FERC-jurisdictional Purchased Assets pursuant tothe Federal Power Act Section 203, 16 U.S.C. § 824b, and FERC’sregulations at 18 C.F.R. Part 33. Buyer shall be responsible for filing its acknowledgement of acceptanceof license with FERC within sixty (60) days after the date of issuance by FERCof an order of transfer and/or amendment and shall concurrently submit acertified copy of documents evidencing the purchase of the Purchased Assets.  Buyer shall also be responsible for filing anotice of consummation of transaction with FERC in the Federal Power Act Section 203proceeding within ten (10) days after Closing.  The parties shall use all commerciallyreasonable efforts, diligently take all necessary and proper actions andprovide any additional information requested by the FERC and other regulatoryagencies in connection with any required approvals and shall jointly file suchadditional information that may be required by FERC in connection with the applicationfor transfer and/or amendment of the FERC License and the application forauthorization under the Federal Power Act Section 203.  Buyer and Seller will communicate with FERCon a cooperative basis, including joint communications on material matters inthe transfer and/or amendment of the FERC License.  Buyer’s obligations in this Section 5.03shall survive the Closing.

 

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5.04  Efforts to Complete theTransactions.  Subject to the termsand conditions set forth in this Agreement, Buyer and Seller each shall use allcommercially reasonable efforts to take, or cause to be taken, all action, andto do, or cause to be done, all things necessary or appropriate to consummatethe transactions contemplated by this Agreement.

 

5.05  Publicity.  Neither Buyer nor Seller shall, without theprior written consent of the other (which consent shall not unreasonably bewithheld or delayed), make any public disclosure (by means of publicannouncement, press release or otherwise) concerning the subject matter of thisAgreement or any of the transactions contemplated hereby, unless otherwiserequired by Law.

 

5.06 Real Estate Due Diligence, Real Estate Documents and theAttachments.

 

(a)  On or before the date that is thirty (30) Business Days fromthe date of this Agreement, Seller shall deliver to Buyer:  (i) a binding commitment for real estatetitle insurance (the “Title Insurance Commitment”), issued by TicorInsurance Company or another title insurance company authorized to do businessin Maine and reasonably acceptable to Buyer, insuring the Real Property to beConveyed, together with copies of all of the documents referred to therein asexceptions (the “Exceptions”), all source deeds, chains of title andplans referred to in such documents, (ii) a final****modified ALTA survey and Surveyor’s Report(collectively, the “Survey”) showing the boundary of the Real Propertyto be Conveyed , the Retained Real Property Rights located within the FERCBoundary, the real estate rights to be granted by Mill Owner to Buyer pursuantto this Agreement to the extent they can be generally depicted on a survey, theMill Owner’s real property within the FERC Boundary, and the location of eachException to the extent it can generally be located on a survey, excludingtherefrom Seller’s flowage rights upstream from the Upper Station (as depictedon Exhibit K to the FERC License), (iii) the Real Estate Documents(together with the Title Insurance Commitment, the Exceptions, and the Survey,collectively the “Real Estate Title Documents”), and (iv) theAttachments.

 

(b) Within thirty (30) Business Days of receipt of all of the RealEstate Title Documents, Buyer shall advise Seller in writing and withreasonable detail (the “Title Notice”) of (i) objections to theform or substance of the Real Estate Title Documents to the extent that they donot satisfy in Buyer’s reasonable judgment the requirements of Section 2.01(a),(ii) any defects in title (excluding those created by the Retained RealProperty Instruments) that would prevent Seller or Mill Owner, as applicable,from conveying title insurable to Buyer’s reasonable satisfaction to the RealProperty to be Conveyed (the “Title Defects”), (iii) any TitleObjections, and (iv) any objection to the form or substance of theAttachments.  For purposes of thisAgreement, “Title Objections” means only those real estate title and realestate permitting matters that would prevent, in Buyer’s reasonable judgment, (1) theownership and operation of the Project in accordance with Section 2.01(a),or (2) a transfer and/or amendment of the FERC License as contemplated bythis Agreement.

 

(c)  Seller shall provide written notice (the “Seller TitleNotice”) to Buyer within thirty (30) days of receipt of the Title Notice ifSeller determines that it will be unable or is unwilling to cure any TitleDefect or Title Objection prior to or at the Closing, in which case Buyer may

 

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elect either to (i) accept title to the Purchased Assets subjectto the uncured Title Defects or Title Objections and the Attachments; or (ii) negotiatewith Seller and Mill Owner for the period set forth in Section 5.06(e).  If Buyer fails to notify Seller in writing ofits option to elect one of the foregoing options within twenty (20) days ofSeller Title Notice, Buyer shall be deemed to have agreed to accept title tothe Purchased Assets subject to such uncured or uncurable Title Defects orTitle Objections described in Seller Title Notice and the form and substance ofthe Attachments.  In all events, Sellershall be required to remove as to any fee simple interests comprising the RealProperty to be Conveyed or, to the extent an easement or interest other thanfee simple is to be conveyed as part of the Real Property to be Conveyed,subordinate, any mortgage liens, tax liens, or mechanics’ lien encumbering thePurchased Assets.

 

(d)  The parties hereby agree that the Real Estate Documents shallinclude, but not be limited to, an easement and/or such other real estaterights conveying to Mill Owner the right to use water, including withoutlimitation, riparian rights to use such water, located in the AndroscogginRiver on or about the Real Property to be Conveyed below the Upper Station (asdepicted in the FERC License), which easement rights and/or such other realproperty rights shall be appurtenant to and benefit the Mill RealProperty.  Such easement rights and/orother real property rights shall be broader in ways that the parties willnegotiate in good faith than those water rights to be granted to Mill Ownerunder the Water Rights Agreement, with the scope, terms and conditions to bereasonably acceptable to Buyer, Seller and Mill Owner.  Buyer acknowledges that the granting of theseeasement rights and/or other real property rights are a material inducement toSeller entering into, and Mill Owner joining for limited purposes, thisAgreement.

 

(e)  In  the event the formand substance of the Real Estate Documents and Attachments are not agreed to bythe parties within thirty (30) days from the date of the Seller Title Notice ascontemplated in Section 5.06(c), after negotiating in good faith duringthis period, then either party shall have the right to terminate thisAgreement, and upon such termination all obligations of the parties hereundershall cease and neither party shall have any claim against the other by reasonof this Agreement, except as provided in Section 8.03.

 

(f)  The parties hereby agree that upon finalizing the RealProperty to be Conveyed and the Real Estate Permitted Encumbrances, Schedule 3.05shall be updated and modified in a manner reasonably acceptable to the partieswithout reference to, or any liability as contemplated by, Section 8.02.

 

ARTICLE 6

 

CONDITIONS TO THE CLOSING

 

6.01  Conditions to theObligations of Buyer.  Theobligations of Buyer to effect the transactions contemplated by this Agreementat the Closing shall be subject to the fulfillment (or waiver by Buyer) on orprior to the Closing Date of the following conditions:

 

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(a)  all agreements and covenants required by this Agreement to becomplied with or performed by Seller at or prior to the Closing shall have beencomplied with or performed in all material respects;

 

(b)  all of the representations and warranties of Seller containedin this Agreement (i) that are qualified as to material adverse effectshall be true and correct as of the Closing as if made at and as of such time(except to the extent a different time expressly is stated therein, in whichcase they shall be true and correct at such time) and (ii) that are not soqualified shall be true and correct in all material respects as of the Closingas if made at and as of such time (except to the extent a different timeexpressly is stated therein, in which case they shall be so true and correct atsuch time), in each case, except for matters that would not reasonably beexpected to have a negative financial impact on the Purchased Assets or theProject in excess of Two Million Dollars ($2,000,000) in the aggregate;

 

(c)  all filing and waiting period requirements under and theFederal Power Act and HSR Act, if any, shall have been satisfied;

 

(d)  all of the consents and approvals listed on Schedule 6.01(d) (the“Specified Consents”) shall have been obtained, including a final,non-appealable order from FERC transferring and/or amending the FERC License;

 

(e)  there shall not be any effective preliminary or permanentinjunction or other order issued by any Governmental Entity which enjoins theconsummation of any of the transactions contemplated by this Agreement;

 

(f)  Seller shall have delivered to Buyer a title insurancecommitment insuring the Real Property to be Conveyed and reflecting only thoseReal Property Permitted Encumbrances as determined in accordance with Section 5.06,for which the sole condition to the issuance of a title insurance policy is thepayment of the title insurance premium, to be paid by Buyer; and

 

(g)  an affidavit in form attached as Exhibit K executed onbehalf of Seller.

 

6.02  Conditions to theObligations of Seller.  Theobligation of Seller to effect the transactions contemplated by this Agreementshall be subject to the fulfillment (or waiver by Seller) on or prior to theClosing Date of the following conditions:

 

(a)  all agreements and covenants required by this Agreement to becomplied with or performed by Buyer at or prior to the Closing shall have beencomplied with and performed in all material respects;

 

(b)  all of the representations and warranties of Buyer containedin this Agreement (i) that are qualified as to material adverse effectshall be true and correct as of the Closing as if made at and as of such time(except to the extent a different time expressly is stated therein, in whichcase they shall be true and correct at such time) and (ii) that are not soqualified shall be true and correct in all material respects as of the Closingas if made at and as of such time (except to the

 

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extent a different time expressly is stated therein in which case theyshall be so true and correct at such time);

 

(c)  all filing and waiting period requirements under the Federal PowerAct and the HSR Act, if any, shall have been satisfied;

 

(d)  all of the Specified Consents shall have been obtained,including a final, non-appealable order from FERC transferring and/or amendingthe FERC License; and

 

(e)  there shall not be any effective preliminary or permanentinjunction or other order issued by any Governmental Entity which enjoins theconsummation of any of the transactions contemplated by this Agreement.

 

ARTICLE 7

 

THE CLOSING

 

7.01  Closing.  The closing of the transactions contemplatedby this Agreement (the “Closing”) shall take place at the Portland,Maine office of Preti, Flaherty, Beliveau, Pachios & Haley LLP (orsuch other place as the parties may agree), commencing at 10:00 a.m. onthe third Business Day following the first date on which all of the conditionsspecified in Article 6 have been satisfied or waived, or at such othertime as Buyer and Seller may agree (the “Closing Date”).

 

7.02  Timing and Effectivenessof Actions.  At the Closing, theparties shall take the actions described in this Article 7.  All actions shall be deemed to have occurredsimultaneously and as of 12:01 a.m. on the Closing Date (the “EffectiveTime”) and, unless Buyer and Seller otherwise agree, the effectiveness ofany action taken at the Closing shall be conditioned upon the taking of allother actions required by this article.

 

7.03  Seller’s Deliveries.  At the Closing, Seller shall deliver:

 

(a)  One or more QuitclaimDeeds with Covenant or such other appropriate documents or instruments of transfer, asthe case may require to transfer the Real Property to be Conveyed and theAttachments, in the form agreed pursuant to Section 5.06;

 

(b)  A Bill of Sale and Assignment and Assumption Agreement in theform of Exhibit D executed by Seller;

 

(c)  Assignment and Assumption Agreements in the forms attachedhereto of Exhibit E;

 

(d)  A certificate signed by the President or a Vice President ofSeller and dated the Closing Date as to the matters set forth in Section 6.01(a) andSection 6.01(b);

 

(e)  Evidence reasonably satisfactory to Buyer of the receipt ofthe Specified Consents for which Seller is responsible to obtain and theassignment to Buyer of the Assumed Agreements,

 

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the Permits and the Environmental Permits, to the extent Buyer hasobtained consent, as contemplated by this Agreement;

 

(f)  An affidavit of non-foreign status certifying that the saleof the Real Property by Seller is exempt from withholding under Section 1445of the Code, and, if applicable, a certificate in the form required by MaineRevenue Services certifying that the sale of the Real Property by Seller isexempt from Maine income tax withholding under 36 M.R.S.A. § 5250 A, and atax clearance certificate from Maine Revenue Services with respect to Sellerpursuant to 36 M.R.S.A. § 177(6);

 

(g) The Protocol Agreement in the form of Exhibit L,executed by Seller; and

 

(h)  Such other certificates, documents and instruments asreasonably may be requested by Buyer in connection with the transactionscontemplated by this Agreement, including without limitation the affidavits andindemnities reasonably required for the issuance of Buyer’s title insurancepolicy.

 

7.04  Buyer’s Deliveries.  At the Closing, Buyer shall deliver:

 

(a)  The Cash Purchase Price, paid in the manner provided in Section 2.04;

 

(b)  The Bill of Sale and Assignment and Assumption Agreement inthe Form of Exhibit D, executed by Buyer;

 

(c)  The Assignment and Assumption Agreements in the form of Exhibit Eexecuted by Buyer, and the assumption by Buyer of the Permits and EnvironmentalPermits in form and substance reasonably satisfactory to Seller and itscounsel, as contemplated by this Agreement;

 

(d)  A certificate signed by the President or a Vice President ofBuyer and dated the Closing Date as to the matters set forth in Section 6.02(a) andSection 6.02(b);

 

(e)  The Protocol Agreement in the form of Exhibit L,executed by Buyer; and

 

(f)  Such other certificates, documents and instruments asreasonably may be requested by Seller in connection with the transactionscontemplated by this Agreement.

 

7.05  Other Actions.  At the Closing, Seller, Buyer and Mill Owner,as applicable, shall execute and deliver the Water Rights Agreement among Mill Owner, Sellerand Buyer substantially in the form attached hereto as Exhibit F(the “Water Rights Agreement”); and an Undivided Ownership,Operation, and Maintenance Agreement between Mill Owner and Buyer substantiallyin the form attached hereto as Exhibit G (the “UndividedInterest Agreement”); the Protocol Agreement between Mill Owner and Buyersubstantially in the form attached hereto as Exhibit L; and aServices Agreement between Mill Owner and Buyer in form and substancereasonably acceptable to Buyer, Seller and Mill Owner (the agreements anddocuments

 

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referenced in this section and in Section 7.03 and 7.04 abovecollectively the “Ancillary Agreements”).

 

ARTICLE 8

 

TERMINATION

 

8.01  Termination.  Notwithstanding anything in this Agreement tothe contrary, this Agreement may be terminated at any time prior to theClosing:

 

(a)  By mutual written consent of Buyer and Seller.

 

(b)  By either Buyer or Seller if the transactions contemplated bythis Agreement have not been consummated on or before August 31, 2006 (orsuch later date as Buyer and Seller may agree to in writing) (the “ExpirationDate”), except that the right to terminate this Agreement under this Section 8.01(b) shallnot be available to a party if the failure of such party to perform anymaterial obligation under this Agreement or to fulfill any material conditionunder this Agreement within the control of such party has been the proximatecause of, or resulted in, the failure of the transactions contemplated by thisAgreement to be consummated on or before the Expiration Date.

 

(c)  By Buyer:

 

(i) if events occur that render one ormore of the conditions to the obligations of Buyer set forth in Section 6.01(other than Section 6.01(b) thereof) impossible of satisfaction andsuch condition or conditions are not waived by Buyer;

 

(ii) if a material breach by Seller ofany covenant or agreement is not cured as soon as reasonably practicable (and,in any event, within thirty (30) days, provided that if such breach is notcurable within thirty (30) days and Seller is diligently pursuing a cure, thethirty (30) day period shall be extended by an additional fifteen (15) days)after written notice thereof is given by Buyer to Seller;

 

(iii)  in the case of a breach by Sellerof a representation or warranty that would reasonably be expected to have anegative financial impact on the Purchased Assets or the Project in excess ofTwo Million Dollars ($2,000,000) that is not cured as soon as reasonablypracticable (and, in any event, within thirty (30) days, provided that if suchbreach is not curable within thirty (30) days and Seller is diligently pursuinga cure, the thirty (30) day period shall be extended by an additional fifteen(15) days) after written notice thereof is given by Buyer to Seller.

 

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(d)  By Seller, if:

 

(i)  events occur that render one ormore of the conditions to the obligations of Seller as set forth in Section 6.02impossible of satisfaction and such condition or conditions are not waived bySeller; or

 

(ii)  a material breach by Buyer of anyrepresentation, warranty, covenant or agreement in this Agreement occurs thatis not cured as soon as reasonably practicable (and, in any event, within thirty(30) days, provided that if such breach is not curable within thirty (30) daysand Buyer is diligently pursuing a cure, the thirty (30) day period shall beextended by an additional fifteen (15) days) after written notice thereof isgiven by Seller to Buyer; or

 

(e)  By Buyer pursuant to Section 8.02(a) hereof.

 

If this Agreement is terminated by either Buyer or Seller pursuant tothis Section 8.01, such termination shall become effective at such time asthe terminating party gives written notice of the termination to the otherparty.

 

8.02  Disclosure Supplements.

 

(a)  Prior to Closing, Seller shall have the right to modify orsupplement any of the Schedules to this Agreement to reflect facts orinformation coming to the attention of Seller following the execution of thisAgreement that cause any representation herein not to be correct as of the datehereof or to be true as of the Closing Date (any such modified or supplemented Schedule beingreferred to herein as a “Corrected Schedule”).  In the event that Seller provides a CorrectedSchedule, subject to subsection 8.02(b) below, such CorrectedSchedule, as so modified or supplemented, shall be deemed to be incorporated inthe Schedules attached to this Agreement;provided, however, that if, in the absence of such modification orsupplementation, the condition to the obligations of Buyer set forth in Section 6.01(b) wouldnot be satisfied, then Buyer shall have the option of not proceeding to theClosing and terminating this Agreement, and upon such termination allobligations of the parties hereunder shall cease and neither party shall haveany claim against the other by reason of this Agreement, except as provided in Section 8.03.

 

(b)  In the event that Buyer desires topreserve a claim for indemnification pursuant to Article 10 or Article 10A,as applicable, hereof with respect to any change made in a Corrected Schedule,Buyer shall notify Seller in writing within thirty (30) days of receipt of suchCorrected Schedule and Seller shall have a period of thirty (30) days (or,if less, to the Expiration Date), to fully cure such condition.   Unless Seller shall have fully cured suchcondition, Buyer shall have the right to proceed to Closing and reserve itsright to assert a claim after the Closing for indemnification pursuant to, andto the extent provided in, Article 10 or Article 10A, as applicable,hereof with respect to any modification or supplementation made in theCorrected Schedule.  Nothing contained inthis Section 8.02 is intended to, or shall, give Buyer an indemnificationright independent of, or in addition to, those rights set forth in Article 10and Article 10A, as applicable, hereof.

 

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8.03  Effect of Termination.  In the event this Agreement is terminatedpursuant to Section 8.01, the provisions of this Agreement immediatelyshall become void and of no further force and effect (except that theprovisions of the Confidentiality Agreement shall survive such termination), and there shall be no liability ofSeller, on the one hand, or of Buyer, on the other hand, other than withrespect to (i) any fraudulent or willful material breach by such party orparties of any representation, warranty or obligation on the part of such partywhich occurred and was not cured prior to such termination and (ii) anybreach by Buyer of its obligations under Section 5.02(d).

 

ARTICLE 9

 

CERTAIN POST-CLOSING OBLIGATIONS

 

9.01  Post-Closing Access.  After the Closing, Seller shall provide Buyerwith reasonable access during normal business hours to the books and Records ofSeller included in the Excluded Assets which relate to the Purchased Assetsprior to the Closing for the purpose of enabling Buyer to prepare its financialstatements and Tax Returns, or for the purpose of dealing with Tax audits,investigations, refund claims, appeals, protests and similar proceedings, andto perform any other acts reasonably related to the purchase of the PurchasedAssets by Buyer.  After the Closing,Buyer shall provide Seller with reasonable access during normal business hoursto any books and Records of Seller included in the Purchased Assets whichrelate to the Purchased Assets prior to the Closing for the purpose of enablingSeller to prepare its financial statements and Tax Returns, or for the purposeof dealing with Tax audits, investigations, refund claims, appeals, protestsand similar proceedings, and to perform any other acts reasonably related tothe sale of the Purchased Assets to Buyer or Seller’s ownership thereof priorto the Closing Date.  Nothing containedin this paragraph shall be construed as requiring Buyer or Seller to grant theother party access to any Tax Returns other than a Tax Return filed pursuant to35 M.R.S.A. § 706 or to any financial statements, unless access to suchTax Returns or financial statements is necessary for the preparation offinancial statements or Tax Returns or for the purpose of enabling either partyto deal with Tax audits, investigations, refund claims, appeals, protests andsimilar proceedings, or to perform any other acts reasonably related to thepurchase of the Purchased Assets or Seller’s ownership thereof prior to theClosing Date.  The parties agree toretain any documents or Records that may be relevant to Tax audits, investigations,refund claims, appeals, protests and similar proceedings for at least theperiod of the applicable statute of limitations plus six months. If eitherparty shall desire to dispose of any of such books and Records prior to theexpiration of such period, such party shall, prior to such disposition, givethe other party (the “Recipient”) a reasonable opportunity, at theRecipient’s expense, to segregate and remove such books and Records asRecipient may select. The parties further agree to cooperate and allowreasonable access to the appropriate personnel of the other party for thepurpose of dealing with any Tax audits, investigations, refund claims, appeals,protests and similar proceedings.

 

9.02  Further Assurances.  Each party shall execute and deliver, orcause to be executed and delivered, all such other assignments, deeds,easements, instruments and other documents

 

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and shall take all such other actions as the other party reasonably mayrequest from time to time in order to effectuate the provisions of thisAgreement.

 

9.03  InterconnectionAgreement.  After the Closing, Sellershall, at its expense and in consultation with Buyer, use all commerciallyreasonable actions necessary to (a) present to Buyer an interconnectionagreement with ISO-New England for approval by Buyer, which approval shall notbe unreasonably withheld, delayed or denied, and (b) cause to beconstructed to completion the improvements and interconnection infrastructurereferenced in such agreement necessary to connect the Project with the grid atthe point specified therein, all within twenty-four (24) months from the dateof Closing, which time period shall be extended as necessary so long as Selleris diligently pursuing such interconnection agreement and improvements, and allas further described in Exhibit B hereto and the Undivided InterestAgreement, provided, however, that if it should become impossibleto present such interconnection agreement with ISO-New England as described inthis Section 9.03, the parties shall continue to operate in accordancewith the terms and conditions of the Undivided Interest Agreement and theLetter of Credit shall be terminated; provided, that in no event shall theLetter of Credit be terminated prior to a date that is four hundred fifty-one(451) days after the Closing.

 

9.04  Limitationson Investigation, Testing and Communications.

 

(a)  With regard to Historical Environmental Liabilities Buyer agrees that neither Buyer nor any ofits Affiliates shall undertake or cause to be undertaken any non-subsurfacesampling or analysis, subsurface investigation, or any communication with anyGovernmental Entity by or on behalf of Buyer or its Affiliates after theClosing Date unless (and only to the extent) such sampling, analysis,investigation, or communication is (1) required by any Environmental Law; (2) inresponse to a request of a Governmental Entity; or (3) during the normalcourse of business arising out of repairs, modifications, maintenance orconstruction activities that are conducted consistent with normal businesspractices; provided, however, any such sampling or analysis, subsurfaceinvestigation, or communication with a Governmental Entity shall not beconsidered “required by Environmental Law” for purposes of this Section 9.04if such sampling, analysis, investigation or communication occurs as a resultof: (a) a Change; or (b) due diligence conducted by a future****prospective purchaser, investor orfinancing source.  For purposes of this Section 9.04(a),installation of a third wheel and penstock for hydroelectric power generating,and actions related thereto, shall not be considered a Change.  For avoidance of doubt, the phrase “non-subsurfacesampling or analysis” as used herein shall not encompass a Phase IEnvironmental Site Assessment performed in accordance with the U.S.Environmental Protection Agency’s Innocent Landowners, Standards for ConductingAll Appropriate Inquiries, 40 C.F.R. Part 312 and Standard E 1507-05 ofthe American Society for Testing and Materials (“Standard Practice forEnvironmental Site Assessments:  Phase IEnvironmental Site Assessment Process”); provided, however, that suchPhase I Environmental Site Assessment may not include communication with anyGovernmental Entity beyond that necessary to obtain access to review records inthe possession or control of a Governmental Entity.  With regard to Historical On-SiteEnvironmental Liabilities, Buyer’s obligations under this Section 9.04(a) shallsurvive until May 1, 2013.

 

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(b)  The covenants contained in this Section 9.04 shall beincluded in the Real Estate Documents, as applicable, in such a manner as toimpose the same restrictions on Buyer and any transferee of Buyer and (1) forHistorical Off-Site Environmental Liabilities shall run with the Real Propertyto be Conveyed in perpetuity for the benefit of all and any portion of the MillOwner’s property and (2) for Historical On-Site Environmental Liabilitiesshall run with the Real Property to be Conveyed until May 1, 2013 for thebenefit of all and any portion of the Mill Owner’s property.

 

(c)  Buyer agrees to make all commercially reasonable efforts toprovide Seller and the Mill Owner with advance notice of any repairs,modifications, maintenance or construction activities that might cause orresult in the creation or imposition of Environmental Liabilities for purposesof consultation with Seller.  Buyer andSeller hereby agree that any communications between the parties during suchconsultation are made without prejudice and shall be treated as confidentialsettlement discussions not to be used in evidence in any dispute.

 

9.05  Cohabitation Protocol;Dispute Resolution.  The parties agree that the cohabitationprotocol and relocation rights set forth in Exhibit I shall be included inthe Real Estate Documents as applicable. Buyer and Mill Owner shall execute and deliver at closing the agreementattached as Exhibit L (the “Protocol Agreement”).

 

ARTICLE 10

 

INDEMNIFICATION GENERALLY

 

10.01  Survival ofRepresentations and Warranties.  Therepresentations and warranties of the parties set forth in this Agreement shallsurvive the Closing but shall terminate and expire fifteen (15) months afterthe Closing Date.  With the exception ofBuyer’s pre-closing covenants set forth in Section 5.02(d) whichshall survive without limit as to time, the pre-closing covenants of theparties hereto shall terminate and expire upon Closing.

 

10.02  Indemnification bySeller.  From and after the ClosingDate, Seller shall indemnify and hold Buyer and each of its Affiliates,directors, shareholders, officers and employees (collectively, the “BuyerGroup”), harmless from and against Damages imposed upon or incurred by anyof them which arise out of:  (i) anymisrepresentation or inaccuracy of a representation or warranty made by Sellerin this Agreement (other than the representations and warranties made in Section 3.06hereof, which are addressed solely in Article 10A hereof), subject to theprovisions of Section 8.02 hereof (disregarding for this purpose anymateriality, material adverse effect or similar qualifiers contained in suchrepresentations); (ii) any breach or non-fulfillment of a post-closingcovenant or agreement on the part of Seller set forth in this Agreement; (iii) thefee payable to Competitive Energy Services, LLC referred to in Section 3.15;and (iv) all actions, suits, proceedings and judgments incident to any ofthe foregoing.

 

10.03  Indemnificationby Buyer.  From and after the ClosingDate, Buyer shall indemnify and hold Seller and each of its Affiliates,directors, shareholders, officers and employees (the

 

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“Seller Group”), harmless from and against all Damages imposedupon or incurred by any of them and which arise out of:  (i) the Assumed Obligations, (ii) anymisrepresentation or inaccuracy of a representation or warranty made by Buyerin this Agreement (disregarding for this purpose any materiality, materialadverse effect or similar qualifiers contained therein), (iii) any breachor non-fulfillment of any covenant or agreement on the part of Buyer set forthin this Agreement, other than breach or non-fulfillment of the Buyer’scovenants in Section 5.02(d) or 9.04 hereof, which are addressedsolely in Article 10A hereof; (iv) the ownership, use or operation ofthe Project or the Purchased Assets after the Closing, and (v) allactions, suits, proceedings and judgments incident to any of the foregoing.

 

10.04  IndemnificationProcedures.  Any claim forindemnification under Section 10.02 or Section 10.03 (a “Claim”)shall be valid only if the party seeking indemnification notifies the otherparty in writing of, and setting forth in such writing with particularity, thebasis for the Claim within the period provided in Section 10.10.  If a claim for indemnification is to be madeby a party (an “Indemnified Party”) against another party (the “IndemnifyingParty”), the Indemnified Party shall give written notice to theIndemnifying Party promptly after the Indemnified Party becomes aware of anyfact, condition, or event which gives rise to a Claim for which indemnificationmay be sought under this Article 10 (provided that failure to notify theIndemnifying Party shall not relieve the Indemnifying Party of any liability itmay have to the Indemnified Party, except to the extent that the IndemnifyingParty has been prejudiced by such failure and provided further that nothingcontained herein shall extend the time limits set forth in Section 10.10hereof).  Each Indemnified Party shalluse commercially reasonable efforts to mitigate Damages for which it seeksindemnification under this Article 10. If any lawsuit, enforcement action, demand or claim is brought or madeby any other Person (a “Third Party Claim”) against an Indemnified Partyinvolving a matter for which the Indemnified Party is entitled toindemnification pursuant to Section 10.02 or Section 10.03, writtennotice thereof shall be given promptly to the Indemnifying Party (provided thatfailure to notify the Indemnifying Party shall not relieve the IndemnifyingParty of any liability it may have to the Indemnified Party, except to theextent that the Indemnifying Party has been prejudiced by such failure and providedfurther that nothing contained herein shall extend the time limits set forth inSection 10.10 hereof).  After suchnotice is given, the Indemnifying Party shall be entitled, if it so elects, totake control of the defense and investigation of such Third Party Claim and toemploy and engage attorneys of its own choice reasonably acceptable to theIndemnified Party to handle and defend the same, at the Indemnifying Party’scost, risk and expense, provided that any such exercise of the Indemnifying Party’srights to take control of the defense and investigation of any Third PartyClaim shall not be deemed a waiver of the Indemnifying Party’s right todetermine at a later date that such Third Party Claim is not entitled toindemnification under this Agreement, in which case Indemnifying Party may, inthe exercise of its sole discretion, determine not to continue to defend anysuch Third Party Claim and any action taken by the Indemnifying Party inconnection with such determination shall be undertaken in a manner so as not tomaterially prejudice the defense or the rights of the Indemnified Party.  The Indemnified Party shall cooperate withthe Indemnifying Party so as to minimize the risk of any such prejudice.  The Indemnified Party shall cooperate in allreasonable respects with the Indemnifying Party and such attorneys in theinvestigation, trial and defense of such Third Party Claim and any appealarising therefrom, which shall include:  (i) furnishingsuch records,

 

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information and testimony, and attending such conferences, discoveryproceedings, hearings, trials and appeals, as reasonably may be requested inconnection therewith, (ii) affording access during normal business hoursto the Indemnifying Party to, and reasonable retention by the Indemnified Partyof, records and information which are reasonably relevant to such Third PartyClaim, and (iii) making its employees available on a mutually convenientbasis to provide additional information and explanation of any materialprovided to the Indemnifying Party hereunder. The Indemnified Party nevertheless may, at its own cost, participate inthe investigation, trial and defense of such Third Party Claim or any appealarising from any such Third Party Claim.

 

10.05  Settlement orCompromise of Third Party Action; Failure to Assume Defense.  If the Indemnifying Party has assumed controlof the defense of a Third Party Claim pursuant to Section 10.04, theIndemnifying Party may consent to a settlement or compromise of, or the entryof any monetary judgment arising from such Third Party Claim without the priorwritten consent of the Indemnified Party if, and only if, the proposedsettlement, compromise or entry: (A) does not contain an admission ofguilt or wrongdoing on the part of the Indemnified Party, and (B) does notprovide for any remedy or sanction against the Indemnified Party other than thepayment of money which the Indemnifying Party agrees to pay and does pay.  If the Indemnifying Party does not assume thedefense of the Third Party Claim in accordance with Section 10.04 within20 days after the receipt of notice thereof, the Indemnified Party may, at theIndemnifying Party’s expense, defend the Third Party Claim, but may settleand/or compromise the Third Party Claim only with the consent of theIndemnifying Party.

 

10.06  Adjustment to PurchasePrice.  Amounts paid with respect toindemnification pursuant to this Article 10 or Article 10A shall betreated as an adjustment to the Purchase Price paid by Buyer for the PurchasedAssets, and appropriate adjustments shall be made to the allocation of thePurchase Price among the Purchased Assets which was made pursuant to Section 2.06.

 

10.07  General Limitations.  (a)  Neither Seller nor Buyer shall beliable under this Article 10 or Article 10A for any Damages orEnvironmental Damages unless and until the aggregate cumulative amount ofDamages and Environmental Damages exceeds $2,000,000 (the “Basket Amount”)and then shall be liable only to the extent that the aggregate cumulativeamount of such damages exceeds the Basket Amount, *provided,**however,*that the Basket Amount shallnot apply to Seller’s obligations under Section 9.03.

 

(b)  In no event shall the aggregate cumulative amount of Seller’sor Buyer’s liabilities under this Article 10 and Article 10A exceedtwenty percent (20%) of the Cash Purchase Price.

 

(c)  Except as otherwise expressly provided in Section 10A.02(e),in no event shall either Buyer or Seller be liable for indemnification underthis Article 10 or Article 10A for indirect, incidental,consequential, special, liquidated, punitive or exemplary Damages or indirect,incidental, consequential, special, liquidated, punitive or exemplaryEnvironmental Damages.

 

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(d)  In calculating the amount of Damages and EnvironmentalDamages for which an Indemnified Party is entitled to indemnificationunder  Articles 10 and 10A, the amount ofDamages and Environmental Damages, as applicable, shall be reduced by:  (i) any insurance proceeds actuallyreceived by the Indemnified Party from an insurance carrier with respect tosuch Damages and Environmental Damages, as applicable, provided that if theIndemnified Party fails to either diligently pursue any such insurance proceedsreasonably available to it or assign a valid right to the Indemnifying Party topursue such insurance proceeds, the Indemnifying Party’s obligation shall bereduced by the amount of insurance proceeds reasonably available to theIndemnified Party, and (ii) any amounts actually received by theIndemnified Party from third parties with respect to Damages and EnvironmentalDamages, as applicable, pursuant to indemnification, warranty or other similarrights, provided that if the Indemnified Party fails to diligently pursue suchrights, the Indemnifying Party’s obligation shall be reduced by the amountsavailable to the Indemnified Party.  Ifany Damages or Environmental Damages, as applicable, for which indemnificationis provided under this Article 10 or 10A subsequently are reduced by anyinsurance payment or recovery from a third party, the Indemnified Partypromptly shall remit the amount of such reduction to the Indemnifying Party.

 

10.08  Letter of Credit.On the Closing Date, Seller shall cause to be issued to Buyer an irrevocablestandby letter of credit issued by JPMorgan Chase Bank N.A. (the “Bank”)in the amount of Seven Million Two Hundred Thousand Dollars ($7,200,000) in theform attached hereto as Exhibit J (as the same may be amended fromtime to time, the “Letter of Credit”), securing Seller’s obligationsunder Articles 10 and 10A hereto, provided that the face amount of the Letterof Credit shall be reduced to $3,000,000 on the four hundred fifty first (451st)day after the Closing, and further reduced thereafter in six (6) monthintervals (each six (6) month interval, a “Reduction Date”) toreflect only the amounts (if any) remaining to be paid by Seller in connectionwith the permanent interconnection arrangements contemplated by Section 9.03.  The amount of the reduction (the “ReductionAmount”) on each Reduction Date shall be determined as follows:

 

(i)  No later than sixty (60) days prior to each Reduction Date,Seller shall furnish to Buyer a dated and signed notice (the “SellerReduction Notice”), stating Seller’s good faith calculation of theReduction Amount for such Reduction Date.

 

(ii)  If, within thirty (30) days after the date of receipt of theSeller Reduction Notice, Buyer does not furnish Seller with a Reduction DisputeNotice (as defined below), Buyer and Seller shall provide the Bank with jointwritten instructions, executed by each of Buyer and Seller, that the Letter ofCredit shall be reduced by the Reduction Amount as set forth in the SellerReduction Notice.

 

(iii)  If Buyer in good faith disputes the Reduction Amount setforth in the Seller Reduction Notice, then Buyer shall, within thirty (30) daysafter the date of receipt of the Seller Reduction Notice, notify Seller inwriting of such dispute (a “Reduction Dispute Notice”) in reasonabledetail specifying the grounds of the dispute. If a Reduction Dispute Notice is delivered to Seller within such thirty(30) day period, then Seller and Buyer shall attempt to resolve the matter ormatters in dispute within thirty (30) days

 

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after the receipt by Seller of the Reduction Dispute Notice.  In the event Seller and Buyer are able toresolve the matter or matters in dispute within such thirty (30) day period,the Letter of Credit shall be reduced upon receipt by the Bank of a writtenagreement executed by each of Buyer and Seller directing the Bank to make areduction (a “Reduction Agreement”) and the Bank shall be authorized torely on any such Reduction Agreement and to make the reduction in accordancetherewith.

 

(iv)  If the disputed matter or matters cannot be resolved bySeller and Buyer within thirty (30) days after receipt by Seller of theReduction Dispute Notice, the matter or matters in dispute shall be promptlysubmitted to the EPRO engineering firm, located in Augusta, Maine, which firmshall not later than thirty (30) days after such submission, render its opiniondirecting the bank to make a reduction and specifying the Reduction Amount (the“Independent Consultant Award”). The Letter of Credit shall be reduced upon receipt by the Bank of a copyof the Independent Consultant Award directing the Bank to make a reduction, andthe Bank shall be authorized to rely on any such Independent Consultant Awardand to make the reduction in accordance therewith.

 

Notwithstanding anything in this Agreement to the contrary, the Letterof Credit shall be terminated (i) as contemplated in Section 9.03, or(ii) upon completion of the permanent interconnection arrangements,whichever occurs first, provided that in no event shall the Letter of Credit beterminated prior to a date that is four hundred fifty-one (451) days after theClosing.

 

10.09  Additional Limitations.

 

(a)    Notwithstandinganything to the contrary contained in this Agreement, Seller shall not beliable for any Damages imposed upon or incurred or accrued by Buyer Grouprelating to acts, omissions, or other events arising or occurring after theClosing.

 

(b)  Seller shall have no indemnification obligations under Article 10to the extent that, as a result of any negligence or willful misconduct ofBuyer or its Affiliates after the Closing Date, the amount of Damages subjectto indemnification by Seller is exacerbated.

 

10.10  Time Limits.  Notwithstanding any other provision of thisAgreement, no claim with respect to the misrepresentation or inaccuracy in anymaterial respect of a representation and warranty made by a party or partiesshall be valid unless notice of such claim is given to the Indemnifying Partywithin fifteen (15) months after the Closing Date.

 

10.11  Exclusive Remedies.  From and after the Closing Date, the rightsof indemnification provided for under Articles 10 and 10A hereto shall be thesole remedy which any party to this Agreement may have at law or in equity(including, without limitation, rescission) in the event of any breach of theprovisions of this Agreement.

 

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**ARTICLE 10A**

 

**ENVIRONMENTAL INDEMNITY**

 

10A.01 Survival.

 

(a)  The representations and warranties of Seller made in Section 3.06shall survive the Closing, but shall terminate and expire at the close ofbusiness on the date that is fifteen (15) months after the Closing Date, itbeing understood that any indemnity obligations of Seller with respect to suchrepresentations and warranties shall be governed exclusively in the mannerprovided for in the proviso to Section 10A.02(a).

 

(b)  Except as specifically set forth in this Agreement, effectiveas of the Closing Date, Buyer (on behalf of itself and its Affiliates) waivesany rights and claims it may have against either Seller or any of itsAffiliates and their respective directors, officers, employees, Affiliates,controlling persons or representatives, whether in law or in equity, relatingto Environmental Liabilities.  The rightsand claims waived pursuant to the immediately preceding sentence include,without limitation, any rights to rescission and any claims for contribution orother rights of recovery arising out of or relating to any Environmental Laws**.**

 

(c)  Notwithstanding any other provision of this Article 10Ato the contrary, with the exception of the indemnification obligations of Buyerunder Section 10A.02(e), no party shall be liable to any Indemnified Partyfor indirect, incidental, consequential, special, liquidated, punitive orexemplary Damages or for indirect, incidental, consequential, special,liquidated, punitive or exemplary Environmental Damages.

 

10A.02  EnvironmentalIndemnification.

 

(a)  Subject to Sections 10A.02(b), 10A.02(d), 10A.04(f) and10A.04(g), Seller hereby agrees to indemnify and hold the Buyer Group harmlessfrom and against any and all Environmental Damages arising out of or resultingfrom any inaccuracy of any representation or any breach of warranty on the partof Seller in Section 3.06, subject to the provisions of Section 8.02hereof (disregarding for this purpose any materiality, material adverse effector similar qualifiers contained in such representations); provided, however,that all indemnity obligations of Seller under that Section 3.06 will begoverned exclusively by Sections 10A.03 and 10A.04.  For the avoidance of doubt, the sole andexclusive obligations of Seller to indemnify the Buyer Group for EnvironmentalDamages for inaccuracy of any representation or any breach of warranty of Section 3.06are set forth in this Section 10A.02(a).

 

(b)  Notwithstanding anything in this Agreement to the contrary, (1) Sellershall not be liable for any Environmental Damages with respect to the mattersset forth in Section 10A.02(a) unless (x) a claim is timely assertedduring the applicable survival period specified in Section 10A.01(a) and(y) the aggregate of all indemnifiable Damages and Environmental Damages under Article 10and Section 10A.02(a) exceeds, on a cumulative basis, the BasketAmount, and (2) Seller shall not be required to pay an aggregate amount inexcess of 20% of the Cash Purchase Price in respect of all Damages andEnvironmental Damages for the matters set forth in Articles 10 and 10A.  For the avoidance of doubt, Seller shall notbe liable for any Damages or Environmental Damages arising out of any breach ofthe representations contained in Section 3.06

 

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(Environmental) other than exclusively in the manner provided for inthe proviso to Section 10A.02(a).

 

(c)  Notwithstanding the limitations contained in Section 10.07,and provided that Buyer has not breached its covenants under Sections 5.02(d) or9.04, Seller hereby agrees to indemnify and hold the Buyer Group harmless fromand against any and all Environmental Damages incurred by Buyer arising out ofor resulting from any Historical Environmental Liabilities that accrue and areasserted by Buyer before May 1, 2013; provided, however, thatSeller’s obligation under this Section 10A.02(c) shall be limited tothe amounts actually received by Seller, less any reasonable costs andexpenses, including legal fees, incurred by Seller in collecting such amounts,from MeadWestvaco with respect to such Environmental Damages any of whichamounts would be received pursuant to and in accordance with the terms andprocedures contained in the Equity and Asset Purchase Agreement by and BetweenMeadWestvaco Corporation and Maple Acquisition LLC, dated as of January 14,2005 (as amended from time to time)(hereinafter the “MeadWestvaco Indemnity”);provided further, that Seller shall use commercially reasonable effortsto obtain recovery pursuant to the MeadWestvaco Indemnity and, to the extentBuyer requests Seller to pursue a claim under the MeadWestvaco Indemnity, allcosts of prosecuting such claim shall be paid by Buyer.  Seller shall invoice Buyer for reasonablecosts of pursuing a claim on behalf of Buyer on a monthly basis and Buyer shallpromptly pay all reasonable expenses.

 

(d)  Notwithstanding anything in this Agreement to the contrary,Seller (1) shall have no indemnification obligations under this Article 10Afor any Environmental Damages resulting from changes in any Environmental Lawoccurring after the Closing Date, provided that any Remedial Action ofHistorical Environmental Liabilities may be governed by applicable post-Closingrequirements for conducting Remedial Actions, so long as any Remedial Action isconducted in a Lowest-Cost Commercially Reasonable Manner and (2) shallnot be liable for any Environmental Damages imposed upon or incurred or accruedby Buyer Group relating to acts or omissions of Buyer or its Affiliates, or theexistence of Environmental Conditions to the extent first arising or existingafter the Closing Date.

 

(e)  Buyer hereby agrees to indemnify and hold Seller Groupharmless from and against (1) any and all Environmental Damages imposedupon or incurred or accrued by Seller or its Affiliates relating to acts oromissions of Buyer or its Affiliates, or the existence of conditions to theextent first arising or existing after the Closing Date, and (2) withregard to Historical Environmental Liabilities, any and all Damages andEnvironmental Damages arising out of or resulting from violation or breach byBuyer or its Affiliates of****Buyer’sobligations under Section 5.02(d) or Section 9.04 hereof; provided,however, the obligations of Buyer to indemnify and hold harmless SellerGroup hereunder with regard to Historical Off-Site Environmental Liabilitiescaused by Buyer’s breach of Section 9.04 hereof shall be withoutlimitation as to duration; providedfurther, however, thatthe obligations of Buyer to indemnify and hold harmless Seller Group hereunderwith regard to Historical On-Site Environmental Liabilities caused by Buyer’sbreach of Sections 5.02(d) and/or 9.04 shall terminate on May 1,2013.  The provisions of Section 10.07shall apply to Buyer’s indemnification obligations under this Section 10A.02(e);provided, however, that the limitations in Sections 10.07(c) shallnot apply to Buyer’s

 

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indemnification obligations in the event of a violation or breach byBuyer or its Affiliates of Buyer’sobligations under Section 5.02(d) or Section 9.04, in which caseBuyer shall indemnify and hold Seller Group harmless from and against any andall Damages, Environmental Damages, and special, indirect and consequentialdamages, but in no event shall the aggregate cumulative amount of Buyer’sliabilities under Article 10 and Article 10A exceed the amount setforth in Section 10.07(b) and in no event shall Buyer be liable forpunitive or exemplary Damages.** **Buyer’s obligations under this Section 10A.02(e) shallbe come effective (i) with regard to breach of Section 5.02(d), uponthe effective date of this Agreement, and (ii) with regard to breach of Section 9.04,on the Closing Date.  For the avoidanceof doubt with respect to Section 10A.02(e)(1), Buyer shall not beobligated to indemnify Seller under Section 10A.02(e)(1) forHistorical Environmental Liabilities, except in the event of a breach by Buyerof its covenants or obligations under Section 5.02(d) or Section 9.04,in which case Buyer’s indemnification obligations under this Section 10A.02(e) shallapply.

 

10A.03 Procedures for Indemnification. Subject to the following sentence, whenever a claim shall arise forindemnification under this Article 10A, the Indemnified Party shallpromptly notify the  Indemnifying Partyof such claim within the period provided in Section 10.01 and, when known,the facts constituting the basis for such claim; provided, however, that in theevent of any claim for indemnification under this Article 10A resultingfrom or in connection with any claim or Legal Proceeding by a third party, theIndemnified Party shall give such notice thereof to the Indemnifying Party notlater than ten (10) Business Days prior to the time any response to theasserted claim is required, if possible, and in any event within five (5) BusinessDays following receipt of notice thereof. Notwithstanding the foregoing, in the case of claims for indemnificationhereunder not arising in connection with any claim or Legal Proceeding by athird party, the Indemnified Party shall not submit such claims to theIndemnifying Party in increments aggregating less than $50,000.  The Indemnified Party’s failure to givetimely notice or to furnish the Indemnifying Party with any relevant facts inconnection with any third party claim shall not constitute a defense (in partor in whole) to any claim for indemnification by such party, except and only tothe extent that such failure shall result in any prejudice to the IndemnifyingParty and provided further that nothing contained herein shall extend the timelimits set forth in Section 10.10 hereof. In the event of any such claim for indemnification resulting from or inconnection with a claim or Legal Proceeding by a third party, the IndemnifyingParty may, at its sole cost and expense, assume the defense thereof by writtennotice within ten (10) Business Days, using counsel that is reasonablysatisfactory to the Indemnified Party**,**provided that any such exercise of the Indemnifying Party’s rights to takecontrol of the defense and investigation of any third party claim shall not bedeemed a waiver of the Indemnifying Party’s right to determine at a later datethat such third party claim is not entitled to indemnification under thisAgreement, in which case the Indemnifying Party may, in the exercise of itssole discretion, determine not to continue to defend any such third party claimand any action taken by the Indemnifying Party in connection with suchdetermination shall be undertaken in a manner so as not to materially prejudicethe defense or the rights of the Indemnified Party.  The Indemnified Party shall cooperate withthe Indemnifying Party so as to minimize risk of any such prejudice.  Each Indemnified Party shall use commerciallyreasonable efforts to mitigate Environmental Damages for which it seeksindemnification under this Article 10A. If an Indemnifying Party assumes the defense of any such claim or LegalProceeding, the

 

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Indemnifying Party shall be entitledto take all steps necessary in the defense thereof including the settlement ofany case that involves solely monetary damages without the consent of theIndemnified Party; provided, however, that the Indemnified Party may, at itsown expense, participate in any such proceeding with the counsel of its choicewithout any right of control thereof. The Indemnifying Party, if it has assumed the defense of any claim orLegal Proceeding by a third party as provided herein, shall not consent to, orenter into, any compromise or settlement of (which settlement (i) commitsthe Indemnified Party to take, or to forbear to take, any action or (ii) doesnot provide for a full and complete written release by such third party of theIndemnified Party), or consent to the entry of any judgment that does notrelate solely to monetary damages arising from, any such claim or LegalProceeding by a third party without the Indemnified Party’s prior writtenconsent, which shall not be unreasonably withheld, conditioned or delayed.  The Indemnifying Party and the IndemnifiedParty shall cooperate fully in all aspects of any investigation, defense,pre-trial activities, trial, compromise, settlement or discharge of any claimin respect of which indemnity is sought pursuant to this Article 10A,including, but not limited to, by providing the other party with reasonableaccess to employees and officers (including as witnesses) and otherinformation, provided, that in each case, such access shall be given atreasonable times and upon reasonable notice and without undue interruption tosuch party’s business or personnel.  Solong as the Indemnifying Party is in good faith defending such claim orproceeding, the Indemnified Party shall not compromise or settle such claimwithout the prior written consent of the Indemnifying Party, which consentshall not be unreasonably withheld, conditioned or delayed.  If the Indemnifying Party does not assume thedefense of any such claim or litigation in accordance with the terms hereof,the Indemnified Party may defend against such claim or litigation in suchmanner as it may deem appropriate, including settling such claim or litigation(after giving prior written notice of the same to the Indemnifying Party andobtaining the prior written consent of the Indemnifying Party, which consentshall not be unreasonably withheld, conditioned or delayed) on such terms asthe Indemnified Party may reasonably deem appropriate, and the IndemnifyingParty will promptly indemnify the Indemnified Party in accordance with theprovisions of this Section 10A.03.

 

10A.04 Limitations and Procedures Applicable to Indemnification forEnvironmental Liabilities.

 

(a)  Subject to the terms of this Section 10A.04, whenever aclaim shall arise for indemnification under Section 10A.02(a), the claimshall be submitted by the Indemnified Party to the Indemnifying Party inaccordance with the timelines and procedures set out in Section 10A.03.

 

(b)  In the event that Buyer submits a claim for indemnificationunder Section 10A.02(a) relating to any Environmental Damages, exceptsuch Environmental Damages that are or relate to an Historical EnvironmentalLiability, the claims shall be submitted by the Indemnified Party to theIndemnifying Party in accordance with the timelines and procedures set out in Section 10A.03.  Following submission of such a claim, exceptas otherwise expressly provided in Section 10A.03 and 10A.04, theprocedures in Section 10.04 shall apply.

 

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(c)  In the event that an Indemnified Party submits a claim forindemnification under Section 10A.02(c) or (e) relating to anHistorical Environmental Liability, the Indemnifying Party or its designee(which may include, but shall not be limited to, Seller’s predecessor ininterest in the Purchased Assets) may assume the defense and/or resolution(including without limitation, undertaking Remedial Action) thereof.  The Indemnifying Party (or its designee)shall be entitled to take all steps necessary in the defense and/or resolutionthereof, including the settlement thereof (which settlement shall require theconsent of the Indemnified Party, such consent not to be unreasonably withheld,delayed or conditioned); provided, however, that the Indemnified Party may, atits expense, monitor any proceeding with counsel of its choice without anyright of control thereof.  Where aRemedial Action is required, the Indemnifying Party (or its designee) agrees touse commercially reasonable efforts to avoid (i) unreasonable interferencewith the operations of the Project or the Mill provided there is no Changeafter the Closing Date, or (ii) unreasonably restricting the ability touse the Project or the Mill for the use it was employed on the Closing Date orfor substantially similar uses, without the consent of the affected party,which consent shall not be unreasonably withheld, conditioned or delayed.

 

(d)  Seller (or its designee) and Buyer shall cooperate fully inall aspects of any investigation, defense, pre-trial activities, trial,compromise, settlement, discharge or Remedial Action arising in connection withany claim in respect of which indemnity is sought, including, but not limitedto, by providing the other party with reasonable access to: 1) employees andofficers (including as witnesses); 2) other relevant information; and 3)facilities, provided, that in each case, such access shall be given atreasonable times and upon reasonable notice and without undue interruption tosuch party’s business or personnel.  Solong as Seller (or its designee) is in good faith defending and/or resolving aHistorical Environmental Liability under this Section, Buyer shall notcompromise, settle or in any manner interfere with the defense or resolution ofsuch Historical Environmental Liability. If Seller (or its designee) does not assume the defense and/orresolution of any such Historical Environmental Liability claim or litigationin accordance with the terms hereof, Buyer may defend and/or resolve suchHistorical Environmental Liability in a commercially reasonable manner,including settling claims or litigation (after giving prior written notice ofthe same to the Seller and obtaining the prior written consent of Seller, whichconsent shall not be unreasonably withheld, conditioned or delayed).

 

(e)  In connection with any Remedial Action covered by theindemnity in Section 10A.02(a), (c) or (e), the Indemnifying Partyshall only be required to undertake or reimburse Environmental Damages incurredin the course of Remedial Action conducted in a “Lowest-Cost Commercially Reasonable Manner,”which shall mean, the lowest cost methods permitted by applicable EnvironmentalLaw determined from the perspective of a reasonable business person actingwithout regard to the availability of indemnification hereunder to achievecompliance with Environmental Law (taking all relevant circumstances intoconsideration, including, without limitation, the lowest-cost method that wouldminimize exposure to additional Environmental Damages that would be subject to indemnificationhereunder).  Such Lowest-CostCommercially Reasonable Manner shall include, where appropriate, the use ofrisk-based remedies, institutional or engineering controls, or deedrestrictions, provided such remedies, controls, or restrictions do not: (1) unreasonablyinterfere with the operations of the Project or the Mill provided there is noChange after the Closing Date, or (2) unreasonably restrict the ability touse the Project or the

 

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Mill for the use it was employed on the Closing Date or forsubstantially similar uses, without the consent of the affected party, whichconsent shall not be unreasonably withheld, conditioned or delayed.  Seller shall have no indemnificationobligations under Section 10A.02 to the extent Environmental Damages ariseor result from any Change after the Closing Date caused by Buyer or anysubsequent owner or operator of the Purchased Assets.

 

(f)  Notwithstanding anything in this Agreement to the contrary,Seller shall have no indemnification obligations for Historical EnvironmentalLiabilities arising or resulting from a breach by Buyer of Sections 5.02(d) or9.04.

 

(g)  Seller shall have no indemnification obligations under Article 10or Article 10A to the extent that, as a result of any negligence orwillful misconduct of Buyer or its Affiliates after the Closing Date, theamount of Damages or Environmental Damages subject to indemnification by Selleris exacerbated.

 

ARTICLE 11

 

MISCELLANEOUS

 

11.01  Expenses.  Whether or not the transactions contemplatedby this Agreement are consummated, Seller shall pay all costs and expensesattributable to the performance of, and compliance with, all agreements andconditions to be performed or complied with by Seller under this Agreement(including, without limitation, all fees and expenses of Seller’s counsel andaccountants), and Buyer shall pay all costs and expenses attributable to theperformance of and compliance with, all agreements and conditions to beperformed or complied with by Buyer under this Agreement (including, withoutlimitation, all fees and expenses of Buyer’s legal counsel and accountants).

 

11.02  Entire Agreement;Amendment.  This Agreement, includingthe exhibits and schedules attached hereto and the documents and agreementsreferred to herein (which exhibits, schedules and documents are incorporatedherein by this reference) shall constitute the complete and entire agreementbetween the parties hereto with respect to the subject matter hereof and shallsupersede all previous oral and written negotiations and commitments and anyother writings with respect to such subject matter, other than theConfidentiality Agreement.  ThisAgreement cannot be modified or amended except in writing duly executed by each  party hereto.

 

11.03  Notices.  All notices, requests, demands and othercommunications hereunder shall be in writing and shall be deemed to have beengiven: (i) when delivered personally, (ii) one Business Day afterbeing sent by nationally recognized overnight delivery service, (iii) whensent by facsimile transmission, if the sending facsimile machine receives andprints a confirmation of receipt by the receiving facsimile machine, or (iii) threeBusiness Days after being deposited in the United States mail, certified andwith proper postage prepaid, addressed as follows:

 

If to Seller:                             RumfordFalls Power Company

c/o New Page Corporation

 

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Courthouse Plaza Northeast

Dayton, Ohio  45403

Attention:  Vice President,General Counsel & Secretary

Facsimile No.:  (937) 242-9459

 

and

 

Preti Flaherty Beliveau Pachios & Haley LLP

45 Memorial Circle

Augusta, ME 04330

Attention: Anthony W. Buxton, Esq.

Facsimile: (207) 623-2914

 

and

 

Preti Flaherty Beliveau Pachios & Haley LLP

One City Center

P.O. Box 9546

Portland, Maine  04112-9546

Attention:  Bonnie L. Martinolich, Esq.

Facsimile No.:  (207) 791-3111

 

If to Buyer:

 

Brascan Power Inc.

Suite 300, BCE Place

181 Bay Street, P.O. Box 762

Toronto, Ontario, Canada M5J 2T3

Attention:  Harry A. Goldgut

Facsimile: (416) 363-2856

 

and to:

 

Brascan Power Corporation

480 de la Cite Blvd

Gatineau, Quebec, Canada J8T 8R3

Attention:  Louis-Philippe Denis

Facsimile: (819) 561-7188

 

With a copy to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

 

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Attention:  Simeon Gold, Esq.

Facsimile: (212) 310-8007

 

and to:

 

Pierce Atwood LLP

One Monument Square

Portland, Maine 04101-0111

Attention:  Matthew Manahan, Esq.

Facsimile: (207) 791-1350

 

Any party may change the address to which notices or othercommunications are to be directed to it by giving notice of such change to theother party in the manner provided in this section.

 

11.04  Counterparts.  This Agreement may be executed simultaneouslyin two or more counterparts (which may be by facsimile or electronictransmission), each of which shall be deemed to be original, but all of whichtogether shall constitute one and the same instrument.

 

11.05 Parties in Interest; Assignment.  This Agreement and all of the provisionshereof shall be binding upon, shall inure to the benefit of, and shall beenforceable by the parties hereto and their respective successors and permittedassigns, but neither this Agreement nor any of the rights, interests orobligations hereunder shall be assigned by either party hereto without theprior written consent of the other party, except that, with notice to Seller,Buyer may assign this Agreement in whole to an Affiliate pursuant to an instrumentreasonably satisfactory to Seller by which the Affiliate assumes all of Buyer’sobligations under this Agreement and, upon the Closing, including withoutlimitation, the payment of the Cash Purchase Price, Buyer shall be deemed fullyreleased from all of Buyer’s obligations hereunder.

 

11.06  No Waiver.  The failure of any party hereto to enforce atany time any of the provisions of this Agreement shall in no way be construedto be a waiver of any such provision, nor in any way to affect the validity ofthis Agreement or any part thereof or the right of such party thereafter toenforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiverof any other or subsequent breach.

 

11.07  Interpretation.  The headings contained in this Agreement arefor convenience of reference only and shall in no way affect the meaning orinterpretation of this Agreement.  Unlessthe context of this Agreement expressly otherwise indicates, any singular termin this Agreement includes the plural, and any plural term includes thesingular.  If any term or condition ofthis Agreement is found to be ambiguous, the ambiguity shall not be construedagainst any one particular party and/or in favor of any one particular party,and such ambiguous language shall be in all cases construed as a wholeaccording to its fair meaning.

 

11.08  No Third PartyBeneficiaries.  This Agreement is forthe sole benefit of the parties hereto and their permitted assigns, and nothingherein expressed or implied shall give or be

 

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construed to give to any Person, other than the parties hereto andtheir permitted assigns, any legal or equitable rights hereunder (except asotherwise expressly provided in  Articles10 and 10A hereof).

 

### 11.09  Arbitration.  Except as specifically provided in thisAgreement, any controversy, claim or dispute arising out of or relating to thisAgreement, or any alleged breach or non-performance of this Agreement, shall bereferred to the American Arbitration Association to be settled by arbitrationconducted ** **in accordance with the CommercialArbitration Rules of the American Arbitration Association before a singlearbitrator in Portland, Maine (or such other location as the parties mayagree), such arbitrator to be chosen by mutual agreement of the parties or,absent such agreement, by the American Arbitration Association. ** **Judgmentupon the award of the arbitrator may be entered in any court havingjurisdiction thereof.  The fees andexpenses of the arbitrator shall be apportioned between the parties by thearbitrator with the findings and results of the arbitration.  Any award shall be a conclusive determinationof the disputed matter; shall be final and binding upon the parties and shallnot be contested by the parties.  Anyaward of damages by an arbitrator will be determined, limited, and controlledby the limitation of damages provisions in this Agreement.  Nothingin this Section 11.09 will preclude, or be construed to preclude, theresort by either party to a court of competent jurisdiction solely for thepurposes of securing an injunction or for the specific performance of a party’sobligations hereunder.

###  

11.10  Governing Law.  This Agreement shall be construed in accordancewith, and the legal relations among the parties shall be governed by, the Lawsof the State of Maine as applicable to agreements executed and fully performedin the State of Maine.

 

11.11.      Non-Recourse.  No past, present or future director, officer,employee, incorporator, member, partner, stockholder, affiliate, agent,attorney or representative of Buyer or its Affiliates on the one hand, or(except as expressly provided in the guaranty of New Page Corporation),Seller or its Affiliates on the other hand, shall have any liability for anyobligations or liabilities of Buyer or Seller, as applicable, under thisAgreement or the other documents delivered by Buyer or Seller, as applicable,in connection herewith, of or for any claim based on, in respect of, or byreason of, the transactions contemplated hereby and thereby.

 

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IN WITNESS WHEREOF, this Agreement has been executed by the parties onthe date first above written.

 

 
|   | RUMFORD FALLS POWER COMPANY |
|--------|-----------------------------|
|   |                        |   |
|   |                        |   |
|   | By                          |   /s/Peter H. Vogel, Jr. |   |
|   |                        | Name: | Peter H. Vogel, Jr. |
|   |                        | Title: | President |
|   |                        |   |
|   |                        |   |
|   | BRASCAN POWER INC.          |
|   |                        |   |
|   |                        |   |
|   | By                          |   /s/ Richard Legault |   |
|   |                        | Name: | Richard Legault |
|   |                        | Title: | President and Chief Operating Officer |
|        |                             |  |  |  |

 

The Mill Owner hereby executes this Agreement for the limited purposesset forth in the preamble and hereby agrees to perform its obligations underSections 5.06, 7.05 and 9.05.

 
|   | RUMFORD PAPER COMPANY |
|--------|-----------------------|
|   |                  |   |
|   |                  |   |
|   | By                    |   /s/  Douglas K.  Cooper |   |
|   |                  | Name: | Douglas K. Cooper |
|   |                  | Title: | Vice President |
|        |                       |  |  |  |

 

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GUARANTY

 

Inconsideration for and as an inducement to Buyer entering into the foregoingAsset Purchase Agreement with Seller (the “Agreement”), New Page Corporation(“Guarantor”) does hereby unconditionally and irrevocably guaranty toBuyer, subject to the limitations on Seller’s indemnification obligations setforth in  the Agreement, the due andpunctual performance of Seller’s payment obligations pursuant to Article 10  and Article 10A of the Agreement.  Any and all defenses available to Seller withrespect to any demand for payment by any Buyer Indemnified Party under Article 10and Article 10A shall be available to Guarantor as a defense to any demandfor payment pursuant to this guaranty. Guarantor hereby unconditionally waives (i) any and all noticesthat may be required by statute, rule of law or otherwise, now orhereafter in effect, including promptness, diligence, demand, presentment,protest, notice of acceptance and any other notice with respect to thisGuaranty or any of Seller’s obligations pursuant to Article 10 or Article 10Aof the Agreement and (ii) any requirement that Buyer proceed or make ademand first against the Seller or otherwise exhaust any right, power or remedyunder the Agreement before requesting payment or performance by Guarantorhereunder or that Buyer protect, secure, perfect or insure any securityinterest or lien on any property subject thereto or exhaust any other right totake any action against the Seller or any collateral or any other guarantee orsource of payment.

 

 

INWITNESS WHEREOF, Guarantor has executed this Guaranty this                 day of January, 2006.

 

 
|   | NEW  PAGE CORPORATION |
|--------|-----------------------|
|   |                  |
|   |                  |
|   | By                    |   |   |
|   |                  | Its: |   |

 

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