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


 

















 


ASSET PURCHASE AGREEMENT


 


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


 


A. 
Seller owns and operates a project consisting of two hydroelectric
generating plants and related facilities located on the Androscoggin River in
Rumford, 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 from
Seller, the Purchased Assets (as defined below) on the terms and conditions set
forth herein.


 


NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties and covenants contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which hereby is
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:


 


ARTICLE 1


 


DEFINITIONS


 


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


 


“Affiliate” with respect to any party, means a party, person or
entity 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 or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled” have
correlative meanings.


 


“Agreement” means this Asset Purchase Agreement.


 


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


 


“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 or
other 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 this
Agreement.


 


“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 in
the use of the Project after the Closing Date, provided that a material change
in use does not include a cessation in operations other than a voluntary
decommissioning or demolition (or involuntary decommissioning or demolition that
is not required by Environmental Law) of all or substantially all of the
Project 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, and
the 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, security
interest, license, easement, quasi-easement, covenant, condition, declaration,
imperfection of title, or other encumbrance or restriction.


 


“Environment” means any surface
water, 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.


 


“Environmental
Claims” refers to any complaint, summons, citation, notice, directive,
order, claim, litigation, investigation, notice of violation, judicial or
administrative proceeding, judgment, letter or other communication from any
Governmental Entity, department, bureau, office or other authority, or any
third party involving violations of Environmental Laws, Handling of Hazardous
Materials or Releases of Hazardous Materials from, on or under (i) any
assets or properties used by the Project; (ii) from any adjoining
properties or businesses; or (iii) from or onto any facilities which
received Hazardous Materials generated by the Purchased Assets.


 


“Environmental
Conditions” means any
condition, known or unknown, foreseen or unforeseen, arising out of:  (1) the Release, threat of Release, or
exposure of Persons to Hazardous Materials; (2) any violation of any
Environmental Law; (3) the Handling of Hazardous Materials or (4) any
Environmental Claim.


 


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


 


“Environmental Laws” means any Law related to:  (i) the protection of the Environment
and/or (ii) the Handling of Hazardous Materials.  “Environmental Laws” include, without
limitation: the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, 42 U.S.C. §9601 et seq.; the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. §6901 et seq.; the Clean Air Act, as
amended, 42 U.S.C. §7401 et seq.; the Federal Water Pollution Control Act, as
amended, 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 Know
Act, as amended, 42 U.S.C. §11001 et seq.; the Safe Drinking Water Act, as
amended, 42 U.S.C. §300f et seq.; the Occupational Health and Safety Act, as
amended, 29 U.S.C. §655 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. §136 et seq.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. §5101 et seq.; Oil Discharge Prevention and Pollution
Control Law, 38 M.R.S.A. §541; Underground Oil Storage Facilities and
Groundwater Protection Law, 38 M.R.S.A. § 561 et seq., and any other
comparable foreign, federal, state, municipal or local Laws.


 


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


 


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


 


“Environmental Permits” means
any approvals, authorizations, certificates, consents, licenses, or permits
required 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. and
the 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 the
Project boundary as depicted in the FERC License.


 


“FERC License” means the hydropower
license issued pursuant to Part I of the Federal Power Act for FERC
Project No. 2333, as amended from time to time, together with all
regulations, orders, issuances, filings and correspondence applicable to the
Project and arising under the Federal Power Act or regulations promulgated
thereunder.


 


“Governmental Entity” means any nation, state, city, locality,
municipality, or other political subdivision and any body or authority
exercising judicial, legislative, regulatory or administrative functions for
any 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 be
defined in any Environmental Law, of Hazardous Materials.


 


“Hazardous
Materials” means any substance or material that has been defined or
otherwise listed as a “hazardous material,” “hazardous waste” or “hazardous
substance” or words of similar import under any Environmental Law or any other
waste substance or material that is regulated under any


 


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Environmental
Law, 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-Site
Environmental Liabilities.


 


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


 


“Historical On-Site Environmental Liabilities” means any
Environmental Liabilities (other than Historical Off-Site Environmental
Liabilities) arising from Environmental Conditions at, on, under or migrating
from the Purchased Assets existing prior to the Closing Date, or that arise
from operations, practices, Handling of Hazardous Materials, transfers, disposals
or other activities (or omissions) of or on behalf of Seller at or on the
Purchased Assets prior to the Closing Date, including but not limited to
Environmental Liabilities related to dioxin and furans, polychlorinated
biphenyls and chlorinated solvents, and contamination related to the
pre-Closing removal of underground storage tanks; provided, however, that any
Environmental Liabilities associated with subsurface groundwater contaminated
with Hazardous Materials that flows beneath a Purchased Asset, where such
Hazardous Materials were not Released, or alleged to be Released, from a
Purchased Asset or the Mill, is not considered a Historical On-Site
Environmental Liability; provided, further, notwithstanding anything to the
contrary in this Agreement, Seller shall have no liability for historical
on-site asbestos-containing materials (other than waste asbestos-containing
material that is not in compliance with the Environmental Laws as of the
Closing Date).


 


“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act
of 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 term
in Section 10.08(iv).


 


“Knowledge of Seller” or “Seller’s Knowledge” means, and
is limited to, the actual knowledge of John Fuller, General Manager (Pulp and
Utilities); Larry Souther, former Operating Superintendent; Rick Delaney,
Operating Superintendent; Scott Reed, Environmental Manager; Matt Jesch, Chief
Financial Officer of New Page Corporation; and Ron Guay, Associate General
Counsel of New Page Corporation, and each of their respective immediate
subordinates.


 


5

















 


“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 (public
or private) or governmental proceeding or investigation with regard to
Environmental Law or Environmental Liabilities.


 


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


 


“Lowest-Cost Commercially Reasonable
Manner” 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 Delaware
corporation that is the seller in that certain Equity and Asset Purchase
Agreement by and between Maple Acquisition LLC and MeadWestvaco Corporation
dated January 14, 2005.


 


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


 


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


 


“Mill Real Property” means the real property owned by Mill Owner
as 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 of
a Governmental Entity which relates to, or is necessary for, the ownership or
the operation of the Project in substantially the same manner as it currently
is being operated by Seller, but shall exclude any and all Environmental
Permits.


 


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


 


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“Person” means an individual, partnership, corporation, limited
liability company, association, joint stock company, joint venture, trust,
estate, unincorporated organization, labor union, Governmental Entity or any
other 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 9.05
hereof.


 


“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 in
Section 5.06(a).


 


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


 


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


 


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


 


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


 


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


 


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


 


“Real Property to be Conveyed” has the meaning given that term
in 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 or
onto the Environment, including movement or migration through or in the
air, soil, surface water or groundwater, whether sudden or non-sudden and
whether accidental or non-accidental, or any release, emission or discharge as
those 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) prevent
or minimize a Release or threatened Release of Hazardous Materials so that they
do not migrate or endanger or threaten to endanger, public health or welfare or
the environment; or (iii) perform pre-remedial studies and investigations
and post-remedial operation and maintenance activities, or any other actions
authorized by 42 U.S.C. § 9601 et seq. or 38 M.R.S.A. § 1361 et seq.


 


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


 


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


 


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


 


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


 


“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 meaning
given 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).


 


8

















 


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


 


“Tax Return” means any return, report, declaration, true and
perfect 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 given
that 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 given
that term in Section 5.06(b).


 


“Title Objections” has the meaning
given 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 term
in 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 dollars
and currency of the United States of America.


 


ARTICLE 2


 


PURCHASE AND SALE OF ASSETS


 


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


 


(a)  without limitation, Seller’s real
property located within the FERC Boundary, the other real property described in
Schedule 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 5.06
hereof, (i) sufficient real property easement rights in Mill Owner’s real
property located within the FERC Boundary that are necessary to operate the
Project, (ii) such other real estate rights necessary for Buyer to
construct the third penstock in the vicinity of the two existing penstocks near
the Lower Station (as depicted in the FERC License), and (iii) such
easements or other rights necessary for the delivery by Buyer of electrical
energy and ancillary products from the Project to the ISO-NE for sale into
NEPOOL in accordance with good operating practices, in compliance with Laws and
Seller’s Permits (except as otherwise contemplated by this Agreement) and
Environmental 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 and
related rights set forth under the heading of “Retained Real Property Rights”
on Schedule 2.01(a)(B) and other real property and related rights
agreed to by the parties in accordance with Section 5.06 or not expressly
agreed to be sold or conveyed to Buyer (collectively, the “Retained Real
Property Rights”);


 


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


 


(c)  the inventory of supplies, stores, parts and materials used
in the operation of the Project and located on the Real Property on the Closing
Date;


 


(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 and
Environmental Permits that are listed on Schedule 2.01(e), in each case to
the extent assignable; and


 


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


 


provided, however, that notwithstanding anything to the contrary
contained in this Agreement, the term “Purchased Assets” shall not
include 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 “Excluded
Assets”):


 


(i)  cash and cash equivalents and bank
accounts;


 


(ii)  any real property of Seller not
described on Schedule 2.01(a) as “Real Property to be Conveyed”,
the Retained Real Property Rights and any personal property of Seller not
listed on Schedule 2.01(b);


 


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(iii)  subject to Section 2.01(d) and
Section 2.05, any receivables
or other rights to receive payments (with the exception of insurance proceeds
resulting from the destruction of any Purchased Asset required to be conveyed
under Section 2.01 which Purchased Asset is not replaced prior to the
Closing, which proceeds shall be paid to Buyer at or after the Closing, as the
case may be);


 


(iv)  all financial statements, tax
returns and official corporate records, including the corporate minute books
and stock ledgers;


 


(v)  all (A) “employee benefit
plans” (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended), (B) employment, consulting,
non-competition, non-solicitation or other compensation agreements, and all
collective bargaining agreements, and (C) bonus or other incentive
compensation, equity or equity based compensation, stock purchase, deferred
compensation, change in control, severance, leave of absence, vacation, salary
continuation, medical, life insurance, section 125 cafeteria, dependant
care, 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 consultants
of Seller;


 


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


 


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


 


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


 


2.03.  Assumption of
Obligations.  At the Closing, Buyer
shall assume and agree to perform and pay on a timely basis, in accordance with
the applicable terms and conditions,  the
following liabilities and obligations of Seller relating to the Project and the
Purchased Assets:


 


(a)  all liabilities or obligations of Seller that (i) accrue,
are assessed or are required to be performed under the terms of the Assumed
Agreements after the Closing, or (ii) are assessed prior to the Closing
but are due and payable after the Closing, or (iii) are assessed after the
Closing but relate to a period prior to the Closing, and in the cases of
clauses (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 are
required to be performed under the terms of the Permits and Environmental
Permits, to the extent assigned to Buyer, excluding, however, any fines,
penalties or administrative charges imposed by a Governmental Entity relating
to the period prior to the Closing; and


 


(c)  all liabilities or obligations of Seller that accrue and are
required to be performed by Seller under the terms of the Real Property
Permitted Encumbrances ((a) through (c), collectively, the “Assumed
Obligations”);


 


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


 


(i)  all liabilities and obligations not
relating to the Project;


 


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


 


(iii)  all liabilities and obligations
for 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 the
operation of the Project prior to the Closing Date; and


 


(iv)  all liabilities and obligations
relating to or arising out of (A) the employment by Seller, or (B) the
termination of employment by Seller, of any employees of Seller or Mill Owner
at the Project arising at any time.


 


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


 


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


 


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


 


(b)  The Cash Purchase Price shall be paid by Buyer at the Closing
by wire transfer of immediately available funds to the account or accounts
specified 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 the
Project and the ownership of the Purchased Assets, other than real and personal
property 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, and
Buyer 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 Property
Tax Year in which the Closing occurs that are attributable to the Purchased
Assets shall be apportioned between Seller and Buyer in the following manner
and shall be an adjustment to the Purchase Price.  Seller’s proportionate share of such Taxes
shall be based on the number of days in the Property Tax Year that Seller owned
the real and personal property at issue up through and including the day before
the date of the Closing.  Buyer’s
proportionate share of such Taxes with respect to such property shall be based
on the proportionate number of days in the Property Tax Year on and after the
date of the Closing.  For purposes of
this Section 2.05, the term “Property Tax Year” means the fiscal
year of the taxing jurisdiction imposing the real or personal property tax. If
the Closing occurs before the Tax rates or values for the real or personal
property Taxes are fixed for the Property Tax Year, the apportionment of such
Taxes shall be based upon the Tax rates for the immediately preceding Property
Tax 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 of
any real and personal property Taxes paid prior to the Closing in respect of
the current Property Tax Year.


 


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


 


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


 


13

















 


2.06  Purchase Price
Allocation.  For purposes of Section 1060
of the Code, the Purchase Price shall be allocated among the Purchased Assets
in the manner set forth on Schedule 2.06.  Buyer and Seller shall: (i) be bound by
such allocation for purposes of determining any Taxes, (ii) prepare and
file their Tax Returns on a basis consistent with such allocation, and (iii) take
no position inconsistent with such allocation on any Tax Return or in any
proceeding before any taxing authority. 
The obligations of Buyer and Seller under this Section 2.06 shall
survive the Closing.


 


ARTICLE 3


 


REPRESENTATIONS AND WARRANTIES OF SELLER


 


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


 


3.01  Corporate Organization
and Authority of Seller.  Seller is a
corporation duly organized, validly existing and in good standing under the
Laws of the State of Maine with full power and authority to own and operate the
Project and the Purchased Assets and carry on its business as now being
conducted.  Seller has all requisite
corporate power and authority to execute, deliver and perform this
Agreement.  Seller is duly qualified or
authorized to do business as a foreign corporation and is in good standing
under the Laws of each jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing
would not reasonably be expected to have a material adverse effect on the
Purchased Assets or Seller’s ability to consummate the transactions
contemplated hereby.  Seller’s execution
and delivery of this Agreement and any other agreements to be executed and
delivered by Seller at the Closing and the performance by Seller of the
transactions contemplated by this Agreement and any such other agreements has
been duly authorized by all necessary corporate action on the part of Seller.


 


3.02  Enforceability.  This Agreement is, and each other Ancillary
Agreement to be executed and delivered by Seller at the Closing will be, duly
and validly executed and delivered by Seller, and this Agreement is, and each
other Ancillary Agreement to be executed and delivered by Seller will be, a
valid and legally binding obligation of Seller, enforceable against Seller in
accordance with their respective terms. 
Neither the execution and delivery of this Agreement or any such other
agreement nor the performance by Seller of the terms and provisions hereof or
thereof will:  (i) violate the
Articles of Incorporation or Bylaws of Seller, (ii) violate any Law or
Order 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 a
breach or violation of any term or provision of, constitute a default under, or
give rise to any right of termination or cancellation under, or result in or
permit an acceleration of, any indenture, mortgage, lease or other agreement or
instrument to which Seller is a party or by which Seller or any of the
Purchased Assets is bound, other than as would not reasonably be expected to
have a material adverse effect on Seller’s ability to perform its obligations
hereunder, or the Project or the Purchased Assets.


 


14

















 


3.03  Subsidiaries; Mill Owner.  Except as otherwise set forth on Schedule 3.03,
Seller does not own, directly or indirectly, any capital stock, membership
interest or other equity interest in any Person.  All of the outstanding capital stock of
Seller 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, or
notification to, any third party (including, without limitation, any
Governmental Entity) is required to be obtained by Seller in connection with
its sale and transfer of the Purchased Assets to Buyer on the terms and
conditions set forth in this Agreement, and to permit Seller to perform its
other obligations hereunder.


 


3.05  Title to Purchased
Assets; Sufficiency.  Except as
otherwise set forth on Schedule 3.05, Seller has:  (i) good and defensible title to all of
the tangible and intangible personal property constituting part of the
Purchased Assets, free and clear of all Encumbrances other than the Permitted
Encumbrances, and (ii) good and marketable fee simple title to the Real
Property to be Conveyed, free and clear of all Encumbrances, other than the
Real Property Permitted Encumbrances. 
Except for the Excluded Assets and except as set forth in Schedule 3.05
hereof, the Purchased Assets constitute all of the properties and assets used
in or held for use in the operation of the Project as currently operated by
Seller, and are sufficient for Buyer to operate the Project as the Project is
currently operated by Seller. 
Notwithstanding anything to the contrary in this Section 3.05,
Seller makes no representation and warranty whatsoever with respect to the Real
Property to be Conveyed as of the date of this Agreement, which representation
and warranty in this Section 3.05 as it relates to the Real Property to be
Conveyed 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 Real
Property is in compliance with all applicable Environmental Laws, except where
the failure to be in compliance would not have a material adverse effect on the
Purchased Assets, taken as a whole; (ii) Seller has not received written
notification within the three-year period preceding the date of this Agreement
from any Governmental Entity with respect to any current material violations of
or liability under any Environmental Laws concerning the Purchased Assets; (iii) to
the Knowledge of Seller, there are no claims, actions, suits or Legal
Proceedings pending or threatened, at law or equity, relating to violation of
or liability under any Environmental Law concerning the Purchased Assets; (iv) to
the Knowledge of Seller, there has been no Release or threatened Release at,
on, under or from the Purchased Assets of any Hazardous Materials except such
matters as would not reasonably be expected to have a material adverse effect
on 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 result
in the imposition of liability pursuant to Environmental Law upon Buyer with respect
to the Purchased Assets, except such matters as would not reasonably be
expected to have a material adverse effect on the Purchased Assets, taken as a
whole;  (vi) Seller has provided to
Buyer copies of the reports and investigations within its possession or control
regarding the environmental condition of the Purchased Assets that are listed
on Schedule 3.06(vi); (vii) Schedule 3.06(vii) contains
a true, correct and complete list of all material Environmental Permits
pertaining to the Project; (viii) Seller currently has all material
Environmental Permits that are required for the operation of the


 


15

















 


Project as presently operated, all of which are in full force and
effect; and (ix) to the Knowledge of Seller (a) Seller is not in
violation of any terms or conditions of any such Environmental Permit, other
than any such violation, breach or default that would not reasonably be
expected to have a material adverse effect on Seller, the Project or the Purchased
Assets, (b) no written notice of a pending violation of any material
Environmental Permit has been received by Seller, and (c) no proceeding is
pending or threatened to revoke, prevent the renewal of, or limit any such
material Environmental Permit.  The
representations and warranties contained in this Section 3.06 are the
exclusive representation and warranties by Seller related to Environmental
Laws, Environmental Conditions and Environmental Permits.


 


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


 


3.08  Contracts.  Schedule 3.08 contains a list of
all contracts, leases, commitments and agreements to which Seller is a party as
of the date of this Agreement which relate to the Project and either:  (i) require the payment or receipt by
Seller of more than Fifty Thousand Dollars ($50,000) during the term of such contract or agreement and which
are not terminable by Seller on ninety (90) or fewer days notice without
penalty, 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 to
Buyer.  To the Knowledge of Seller, each
of the Material Contracts is in full force and effect and is the legal, valid,
binding and enforceable obligation of Seller; no material default exists
thereunder.   Material Contracts shall
include:


 


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


 


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


 


(iii) interconnection contracts and
agreements;


 


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


 


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


 


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


 


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


 


16

















 


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


 


3.10  Employees.  Schedule 3.10 contains a list of
the names of each employee of Mill Owner who, as of the date of this Agreement,
directly and primarily performs services for the Project (the “Project
Employees”) and a list of any collective bargaining agreement or employment
agreement currently in effect covering any such Project Employee (collectively,
the “Employee Agreements”).  Copies
of 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 work
stoppage or lockout involving any of the Project Employees actually pending
or threatened, and (ii) Mill Owner is in compliance in all material
respects with all applicable Laws respecting employment and employment
practices with respect to the Project Employees.


 


3.11  Compliance with Law.  Except as otherwise set forth on Schedule 3.11
and excluding any representation or warranty regarding Environmental Laws,
which is governed exclusively by Section 3.06, (i) to the Knowledge
of Seller, the Project is being operated in compliance with all applicable Laws
except for non-compliance which would not reasonably be expected to have a
material adverse effect on Seller, the Project or the Purchased Assets; (ii) Seller
has not been given written notice of any violation of any Law with respect to
the ownership or operation of the Purchased Assets; and (iii) to the
Knowledge of Seller, no investigation or review relating to Seller with respect
to the ownership or operation of the Purchased Assets by any Governmental
Entity 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 proceedings
pending or threatened against Seller or the Purchased Assets, at law or in
equity, before or by any Governmental Entity nor is Seller subject to any
Order: (i) relating to the ownership or operation of the Project or the
Purchased Assets, (ii) which could materially impair the ability of Seller
to perform its obligations under this Agreement or any other agreement to be
entered into by Seller at the Closing, or (iii) which questions the
validity or propriety of this Agreement or any such other agreement or of any
action to be taken hereunder or thereunder.


 


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


 


17

















 


Encumbrance or disposition of assets used in the operation of the
Project with an aggregate book value of more than $50,000, other than the use
of supplies in the ordinary course of business and other than the distribution
of cash to Mill Owner; (iii) there has been no capital expenditures or
commitments in respect thereto in excess of $50,000; and (iv) Seller has
not entered into any agreement with respect to any of the foregoing.


 


3.14  Taxes.  Seller has filed in a timely manner all
requisite Tax Returns required to be filed by it, all such Tax Returns are
true, correct and complete in all material respects, and all material amounts
of Taxes required to be paid by Seller have been paid in a timely manner for
all periods ending prior to the Closing Date. There is no material dispute or
pending or threatened claim, or any audit, investigation, protest or similar
proceeding concerning any Tax with respect to the Purchased Assets.  None of the Purchased Assets is (i) property
required to be treated as being owned by another Person pursuant to the
provisions 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 Reform
Act of 1986, (ii) “tax-exempt use property” within the meaning of Section 168(h)(1) of
the Code, (iii) “tax-exempt bond financed property” within the meaning of Section 168(g) of
the 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) subject
to any provision of state, local or foreign Law comparable to any of the
provisions listed above.  None of the
Purchased Assets are subject to any Encumbrances for unpaid Taxes.  Seller is not a foreign person within the
meaning of Section 1445 of the Code.


 


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


 


3.16.  Insurance.  Seller or one or more of its Affiliates have
the insurance policies listed at Schedule 3.16, all of which are in
full force and effect.


 


EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 3, BUYER IS
ACQUIRING THE PURCHASED ASSETS “AS IS, WHERE IS” AND SELLER HAS NOT MADE AND
DOES NOT MAKE ANY REPRESENTATION OR WARRANTY OF ANY NATURE AS TO THE PURCHASED
ASSETS OR THE PROJECT (INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), AND BUYER HEREBY
EXPRESSLY ACKNOWLEDGES THAT NO SUCH OTHER REPRESENTATIONS OR WARRANTIES HAVE
BEEN MADE BY SELLER OR RELIED UPON BY BUYER. 
SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, PROMISES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROJECT OR THE PURCHASED ASSETS MADE OR FURNISHED BY ANY
AGENT, EMPLOYEE, SERVANT OR OTHER PERSON REPRESENTING OR PURPORTING TO
REPRESENT SELLER, UNLESS SUCH WARRANTIES, GUARANTIES, PROMISES, STATEMENTS,
REPRESENTATIONS OR INFORMATION ARE EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS
ARTICLE 3.


 


18

















 


ARTICLE 4


 


REPRESENTATIONS AND WARRANTIES OF BUYER


 


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


 


4.01  Corporate Organization
and Authority.  Buyer is a corporation duly organized, validly
existing and in good standing under the Laws of the Province of Ontario and has
full power and authority to execute, deliver and perform this Agreement.  Buyer is duly qualified or authorized to do
business as a foreign corporation and is in good standing under the Laws of each
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing would not reasonably
be expected to have a material adverse effect on Buyer’s assets or Buyer’s
ability to consummate the transactions contemplated hereby.  Buyer’s execution and delivery of this
Agreement and any other agreements to be executed and delivered by Buyer at the
Closing and the performance by Buyer of the transactions contemplated by this
Agreement and any such other agreements have been duly authorized by all
necessary corporate or other actions and proceedings on the part of Buyer.


 


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


 


4.03  Litigation.  To the knowledge of Buyer, there are no
claims, actions, suits or proceedings now pending or threatened against or
affecting Buyer, at law or in equity, or before or by any Governmental Entity
which may impair the ability of Buyer to perform this Agreement or any other
agreement to be entered into at the Closing or which questions the validity or
propriety of this Agreement or any such other agreement or of any action taken
hereunder 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, or
notification to, any third party (including, without limitation, any
Governmental Entity) is required to be obtained by Buyer in


 


19

















 


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


 


4.05  Buyer’s Investigation.  Buyer is an informed and sophisticated
purchaser of assets similar to the Project and, in connection with the
transactions contemplated hereby, has sought the advice of experts who are
experienced in the evaluation and purchase of assets similar to the
Project.  Subject to the provisions of
Sections 2.01(a), 5.06 and 6.01(g), Buyer has undertaken such investigation of
the Project and the Purchased Assets as it has deemed necessary to enable it to
make an informed decision with respect to this Agreement and the transactions
contemplated hereby.  Buyer acknowledges
that Seller has provided Buyer with such access to the personnel, properties,
premises and Records of Seller and Mill Owner as Buyer has requested, subject
to the limitations on certain activities set forth in Section 5.02(d).  In entering into this Agreement, in
purchasing the Purchased Assets and in consummating the other transactions
contemplated herein, Buyer has relied solely upon its own investigation and the
express representations and warranties of Seller set forth in Article 3 of
this Agreement, and neither Seller nor Mill Owner nor any of their respective
officers, directors, shareholders, employees, affiliates, agents or
representatives has made any representation or warranty as to Seller, the
Purchased Assets, this Agreement or the Project, except as expressly set forth
in this Agreement.  To the fullest extent
permitted by Law, neither Seller nor Mill Owner nor any of their respective
officers, directors, shareholders, employees, Affiliates, agents or
representatives shall have any liability to Buyer for any information made
available to, or statements made to, Buyer (or any of its agents, officers,
directors, employees, Affiliates or representatives), other than (x) the
express obligation of Seller to indemnify Buyer following the Closing to the
extent set forth in Article 10 and Article 10A; (y) pursuant to the
Guaranty of New Page Corporation in the form attached hereto and only to
the extent executed and delivered to Buyer; and (z) as provided in Section 8.03.  Nothing contained in this Section 4.05
shall limit or restrict any of the representations and warranties of Seller
contained in this Agreement or any other Ancillary Agreement to be executed and
delivered by Seller at the Closing.


 


4.06  Ability to Perform.  Buyer currently has available to it
sufficient funding to enable Buyer to consummate the purchase of the Purchased
Assets on the terms set forth in this Agreement, to pay all expenses to be
incurred by Buyer in connection therewith and to perform all of its other
obligations under this Agreement and any other agreement to be entered into by
Buyer pursuant to this Agreement.


 


4.07  No Commissions.  No commissions or brokers’ or finders’ fees
are payable by, through or on account of any acts of Buyer or its
representatives in connection with this Agreement or the transactions
contemplated hereby.


 


4.08  Buyer’s
Knowledge.  Buyer hereby represents
and warrants that it has informed Seller of any material mistakes or omissions
on the Schedules of which Buyer is aware, including, without limitation,
anything that Buyer is aware of that might give rise to a claim by Buyer
against Seller under the terms of this Agreement or any Ancillary Agreements.


 


20

















 


ARTICLE 5


 


PRE-CLOSING COVENANTS


 


5.01  Covenants of Seller.


 


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


 


(i)  operate the Project in the ordinary
course, consistent with Seller’s past practices, in accordance with good
operating practices and in compliance with Laws and Seller’s Permits and
Environmental Permits;


 


(ii)  continue to maintain the Purchased
Assets consistent with Seller’s past practices, in accordance with good
operating practices and in compliance with Laws and Seller’s Permits and
Environmental Permits;


 


(iii) use reasonable efforts to preserve
intact the present business organization and operations of the Project, to keep
available the services of its contractors and to preserve its relationships
with licensors, suppliers, dealers, customers and others having business
relationships with the Project;


 


(iv)  promptly commence and diligently
pursue with commercially reasonable efforts, in consultation with Buyer, at
Seller’s expense, a ring bus interconnection or a dedicated interconnection
between the Project and pool transmission facilities currently operated by ISO
New England via an interconnection agreement with ISO New England or, in the
discretion of CMP, with the transmission facilities grid of CMP via an
interconnection arrangement with CMP, all as further described on Exhibit B
hereto;


 


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


 


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


 


(vii)  provide Buyer’s officers,
employees, counsel, accountants and other representatives with reasonable
access, during normal business hours, to the Project, the books and Records of
Seller with respect to the Project and personnel of Seller and Mill Owner who
are 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 purpose
of investigating and


 


21

















 


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


 


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


 


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


 


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


 


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


 


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


 


(iv)  amend, modify, cancel, or waive any
rights under or grant any consent (1) relating to, any Permits or
Environmental Permits, or, (2) in any material manner with respect to the
Assumed Agreements or Material Contracts, except in each case as specifically
provided herein, or enter into any material contract that extends beyond the
Closing Date relating to the Purchased Assets or the Project;


 


(v)  incur any obligations or
liabilities not in existence on the date hereof that will become an Assumed
Liability or otherwise become the obligation of Buyer in connection with the
acquisition of the Purchased Assets;


 


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


 


22

















 


(vii) 
make any Tax election or settle or compromise any Tax liability that could
reasonably be expected to create or otherwise cause any liability to Buyer, or
with 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 the
Project or the Purchased Assets; or


 


(ix)  agree or commit to do any of the
foregoing.


 


(c)  Except as specifically contemplated by this Agreement, Seller
shall not, from the date hereof until the Closing, without the written consent
of Buyer:


 


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


 


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


 


5.02  Covenants of Buyer.  Except as otherwise contemplated by this
Agreement, 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 Closing
Date or the termination of this Agreement in accordance with Article 8:


 


(a)  Buyer shall have available, on the Closing Date, sufficient
funding to enable Buyer to consummate the purchase of the Purchased Assets from
Seller in accordance with this Agreement and otherwise to perform all of Buyer’s
obligations under this Agreement and the other agreements to be entered into by
Buyer 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 by
Buyer;


 


(c)  Buyer shall promptly disclose to Seller any event occurring
after the date of this Agreement of which Buyer becomes aware which results in
any 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 or
cause to be undertaken any non-subsurface sampling or analysis, subsurface
investigation, or any communication with any Governmental Entity by or on
behalf of Buyer or its Affiliates with regard to any Environmental Liabilities
or Environmental Conditions regarding the Purchased Assets.  In the event that any Governmental Entity
initiates any communication (written, electronic or verbal) with Buyer


 


23

















 


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


 


(e)  Buyer shall use diligent efforts and negotiate in good faith
with 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 this
Agreement, Buyer and Seller each shall prepare and make or cause to be made any
required filings, submissions and notifications under applicable Law
(including, without limitation, under the HSR Act and under the Federal Power
Act) to the extent that such filings are necessary to consummate the
transactions contemplated hereby and shall use all commercially reasonable
efforts to take all other actions necessary to consummate the transactions
contemplated by this Agreement in a manner consistent with applicable Law.  Except with respect to the transfer and/or
amendment of the FERC License, which is governed by this Section 5.03, and
the filings required under HSR Act, which the parties shall prepare
collaboratively, Buyer shall be responsible for making all filings and
obtaining each consent listed on Schedule 4.04 and Seller shall be
responsible for making all filings and obtaining subdivision approval, if
applicable.  Each party shall furnish to
the other party such necessary information and reasonable assistance as such
other party may reasonably request in connection with their respective
obligations under this Agreement and a copy of each filing and all
correspondence related thereto.  All such
filings shall be made as promptly as practicable.  Seller shall work with Buyer to draft and
jointly file with FERC (i) an application for transfer and/or amendment of
license 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 shall
recognize, among other things, the Water Requirements (as they are defined in
the Water Rights Agreement) and related water easements to be granted to Mill
Owner; and (ii) an application for authorization of Seller’s disposition
and Buyer’s acquisition of the FERC-jurisdictional Purchased Assets pursuant to
the Federal Power Act Section 203, 16 U.S.C. § 824b, and FERC’s
regulations at 18 C.F.R. Part 33. 
Buyer shall be responsible for filing its acknowledgement of acceptance
of license with FERC within sixty (60) days after the date of issuance by FERC
of an order of transfer and/or amendment and shall concurrently submit a
certified copy of documents evidencing the purchase of the Purchased Assets.  Buyer shall also be responsible for filing a
notice of consummation of transaction with FERC in the Federal Power Act Section 203
proceeding within ten (10) days after Closing.  The parties shall use all commercially
reasonable efforts, diligently take all necessary and proper actions and
provide any additional information requested by the FERC and other regulatory
agencies in connection with any required approvals and shall jointly file such
additional information that may be required by FERC in connection with the application
for transfer and/or amendment of the FERC License and the application for
authorization under the Federal Power Act Section 203.  Buyer and Seller will communicate with FERC
on a cooperative basis, including joint communications on material matters in
the transfer and/or amendment of the FERC License.  Buyer’s obligations in this Section 5.03
shall survive the Closing.


 


24

















 


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


 


5.05  Publicity.  Neither Buyer nor Seller shall, without the
prior written consent of the other (which consent shall not unreasonably be
withheld or delayed), make any public disclosure (by means of public
announcement, press release or otherwise) concerning the subject matter of this
Agreement or any of the transactions contemplated hereby, unless otherwise
required by Law.


 


5.06 
Real Estate Due Diligence, Real Estate Documents and the
Attachments.


 


(a)  On or before the date that is thirty (30) Business Days from
the date of this Agreement, Seller shall deliver to Buyer:  (i) a binding commitment for real estate
title insurance (the “Title Insurance Commitment”), issued by Ticor
Insurance Company or another title insurance company authorized to do business
in Maine and reasonably acceptable to Buyer, insuring the Real Property to be
Conveyed, together with copies of all of the documents referred to therein as
exceptions (the “Exceptions”), all source deeds, chains of title and
plans referred to in such documents, (ii) a final modified ALTA survey and Surveyor’s Report
(collectively, the “Survey”) showing the boundary of the Real Property
to be Conveyed , the Retained Real Property Rights located within the FERC
Boundary, the real estate rights to be granted by Mill Owner to Buyer pursuant
to this Agreement to the extent they can be generally depicted on a survey, the
Mill Owner’s real property within the FERC Boundary, and the location of each
Exception to the extent it can generally be located on a survey, excluding
therefrom Seller’s flowage rights upstream from the Upper Station (as depicted
on 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) the
Attachments.


 


(b) Within thirty (30) Business Days of receipt of all of the Real
Estate Title Documents, Buyer shall advise Seller in writing and with
reasonable detail (the “Title Notice”) of (i) objections to the
form or substance of the Real Estate Title Documents to the extent that they do
not satisfy in Buyer’s reasonable judgment the requirements of Section 2.01(a),
(ii) any defects in title (excluding those created by the Retained Real
Property Instruments) that would prevent Seller or Mill Owner, as applicable,
from conveying title insurable to Buyer’s reasonable satisfaction to the Real
Property to be Conveyed (the “Title Defects”), (iii) any Title
Objections, and (iv) any objection to the form or substance of the
Attachments.  For purposes of this
Agreement, “Title Objections” means only those real estate title and real
estate permitting matters that would prevent, in Buyer’s reasonable judgment, (1) the
ownership 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 by
this Agreement.


 


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


 


25

















 


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


 


(d)  The parties hereby agree that the Real Estate Documents shall
include, but not be limited to, an easement and/or such other real estate
rights conveying to Mill Owner the right to use water, including without
limitation, riparian rights to use such water, located in the Androscoggin
River on or about the Real Property to be Conveyed below the Upper Station (as
depicted in the FERC License), which easement rights and/or such other real
property rights shall be appurtenant to and benefit the Mill Real
Property.  Such easement rights and/or
other real property rights shall be broader in ways that the parties will
negotiate in good faith than those water rights to be granted to Mill Owner
under the Water Rights Agreement, with the scope, terms and conditions to be
reasonably acceptable to Buyer, Seller and Mill Owner.  Buyer acknowledges that the granting of these
easement rights and/or other real property rights are a material inducement to
Seller entering into, and Mill Owner joining for limited purposes, this
Agreement.


 


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


 


(f)  The parties hereby agree that upon finalizing the Real
Property to be Conveyed and the Real Estate Permitted Encumbrances, Schedule 3.05
shall be updated and modified in a manner reasonably acceptable to the parties
without reference to, or any liability as contemplated by, Section 8.02.


 


ARTICLE 6


 


CONDITIONS TO THE CLOSING


 


6.01  Conditions to the
Obligations of Buyer.  The
obligations of Buyer to effect the transactions contemplated by this Agreement
at the Closing shall be subject to the fulfillment (or waiver by Buyer) on or
prior to the Closing Date of the following conditions:


 


26

















 


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


 


(b)  all of the representations and warranties of Seller contained
in this Agreement (i) that are qualified as to material adverse effect
shall 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 which
case they shall be true and correct at such time) and (ii) that are not so
qualified shall be true and correct in all material respects 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 which case they shall be so true and correct at
such time), in each case, except for matters that would not reasonably be
expected to have a negative financial impact on the Purchased Assets or the
Project in excess of Two Million Dollars ($2,000,000) in the aggregate;


 


(c)  all filing and waiting period requirements under and the
Federal 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 permanent
injunction or other order issued by any Governmental Entity which enjoins the
consummation of any of the transactions contemplated by this Agreement;


 


(f)  Seller shall have delivered to Buyer a title insurance
commitment insuring the Real Property to be Conveyed and reflecting only those
Real 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 the
payment of the title insurance premium, to be paid by Buyer; and


 


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


 


6.02  Conditions to the
Obligations of Seller.  The
obligation of Seller to effect the transactions contemplated by this Agreement
shall be subject to the fulfillment (or waiver by Seller) on or prior to the
Closing Date of the following conditions:


 


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


 


(b)  all of the representations and warranties of Buyer contained
in this Agreement (i) that are qualified as to material adverse effect
shall 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 which
case they shall be true and correct at such time) and (ii) that are not so
qualified shall be true and correct in all material respects as of the Closing
as if made at and as of such time (except to the


 


27

















 


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


 


(c)  all filing and waiting period requirements under the Federal Power
Act 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 amending
the FERC License; and


 


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


 


ARTICLE 7


 


THE CLOSING


 


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


 


7.02  Timing and Effectiveness
of Actions.  At the Closing, the
parties shall take the actions described in this Article 7.  All actions shall be deemed to have occurred
simultaneously and as of 12:01 a.m. on the Closing Date (the “Effective
Time”) and, unless Buyer and Seller otherwise agree, the effectiveness of
any action taken at the Closing shall be conditioned upon the taking of all
other actions required by this article.


 


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


 


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


 


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


 


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


 


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


 


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


 


28

















 


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


 


(f)  An affidavit of non-foreign status certifying that the sale
of the Real Property by Seller is exempt from withholding under Section 1445
of the Code, and, if applicable, a certificate in the form required by Maine
Revenue Services certifying that the sale of the Real Property by Seller is
exempt from Maine income tax withholding under 36 M.R.S.A. § 5250 A, and a
tax clearance certificate from Maine Revenue Services with respect to Seller
pursuant 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 as
reasonably may be requested by Buyer in connection with the transactions
contemplated by this Agreement, including without limitation the affidavits and
indemnities reasonably required for the issuance of Buyer’s title insurance
policy.


 


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 in
the Form of Exhibit D, executed by Buyer;


 


(c)  The Assignment and Assumption Agreements in the form of Exhibit E
executed by Buyer, and the assumption by Buyer of the Permits and Environmental
Permits in form and substance reasonably satisfactory to Seller and its
counsel, as contemplated by this Agreement;


 


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


 


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


 


(f)  Such other certificates, documents and instruments as
reasonably may be requested by Seller in connection with the transactions
contemplated 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, Seller
and 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 substantially
in the form attached hereto as Exhibit G (the “Undivided
Interest Agreement”); the Protocol Agreement between Mill Owner and Buyer
substantially in the form attached hereto as Exhibit L; and a
Services Agreement between Mill Owner and Buyer in form and substance
reasonably acceptable to Buyer, Seller and Mill Owner (the agreements and
documents


 


29

















 


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


 


ARTICLE 8


 


TERMINATION


 


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


 


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


 


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


 


(c)  By Buyer:


 


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


 


(ii) if a material breach by Seller of
any 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 not
curable within thirty (30) days and Seller is diligently pursuing a 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;


 


(iii)  in the case of a breach by Seller
of a representation or warranty that would reasonably be expected to have a
negative financial impact on the Purchased Assets or the Project in excess of
Two Million Dollars ($2,000,000) that is 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) days and Seller is diligently pursuing
a 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.


 


30

















 


(d)  By Seller, if:


 


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


 


(ii)  a material breach by Buyer of any
representation, warranty, covenant or agreement in this Agreement occurs that
is 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) days
and Buyer is diligently pursuing a cure, the thirty (30) day period shall be
extended by an additional fifteen (15) days) after written notice thereof is
given 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 to
this Section 8.01, such termination shall become effective at such time as
the terminating party gives written notice of the termination to the other
party.


 


8.02  Disclosure Supplements.


 


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


 


(b)  In the event that Buyer desires to
preserve 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 such
Corrected 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 such
condition, Buyer shall have the right to proceed to Closing and reserve its
right to assert a claim after the Closing for indemnification pursuant to, and
to the extent provided in, Article 10 or Article 10A, as applicable,
hereof with respect to any modification or supplementation made in the
Corrected Schedule.  Nothing contained in
this Section 8.02 is intended to, or shall, give Buyer an indemnification
right independent of, or in addition to, those rights set forth in Article 10
and Article 10A, as applicable, hereof.


 


31

















 


8.03  Effect of Termination.  In the event this Agreement is terminated
pursuant to Section 8.01, the provisions of this Agreement immediately
shall become void and of no further force and effect (except that the
provisions of the Confidentiality Agreement 
shall survive such termination), and there shall be no liability of
Seller, on the one hand, or of Buyer, on the other hand, other than with
respect to (i) any fraudulent or willful material breach by such party or
parties of any representation, warranty or obligation on the part of such party
which occurred and was not cured prior to such termination and (ii) any
breach 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 Buyer
with reasonable access during normal business hours to the books and Records of
Seller included in the Excluded Assets which relate to the Purchased Assets
prior to the Closing for the purpose of enabling Buyer to prepare its financial
statements and Tax Returns, or for the purpose of dealing with Tax audits,
investigations, refund claims, appeals, protests and similar proceedings, and
to perform any other acts reasonably related to the purchase of the Purchased
Assets by Buyer.  After the Closing,
Buyer shall provide Seller with reasonable access during normal business hours
to any books and Records of Seller included in the Purchased Assets which
relate to the Purchased Assets prior to the Closing for the purpose of enabling
Seller to prepare its financial statements and Tax Returns, or for the purpose
of dealing with Tax audits, investigations, refund claims, appeals, protests
and similar proceedings, and to perform any other acts reasonably related to
the sale of the Purchased Assets to Buyer or Seller’s ownership thereof prior
to the Closing Date.  Nothing contained
in this paragraph shall be construed as requiring Buyer or Seller to grant the
other party access to any Tax Returns other than a Tax Return filed pursuant to
35 M.R.S.A. § 706 or to any financial statements, unless access to such
Tax Returns or financial statements is necessary for the preparation of
financial statements or Tax Returns or for the purpose of enabling either party
to deal with Tax audits, investigations, refund claims, appeals, protests and
similar proceedings, or to perform any other acts reasonably related to the
purchase of the Purchased Assets or Seller’s ownership thereof prior to the
Closing Date.  The parties agree to
retain any documents or Records that may be relevant to Tax audits, investigations,
refund claims, appeals, protests and similar proceedings for at least the
period of the applicable statute of limitations plus six months. If either
party shall desire to dispose of any of such books and Records prior to the
expiration of such period, such party shall, prior to such disposition, give
the other party (the “Recipient”) a reasonable opportunity, at the
Recipient’s expense, to segregate and remove such books and Records as
Recipient may select. The parties further agree to cooperate and allow
reasonable access to the appropriate personnel of the other party for the
purpose of dealing with any Tax audits, investigations, refund claims, appeals,
protests and similar proceedings.


 


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


 


32

















 


and shall take all such other actions as the other party reasonably may
request from time to time in order to effectuate the provisions of this
Agreement.


 


9.03  Interconnection
Agreement.  After the Closing, Seller
shall, at its expense and in consultation with Buyer, use all commercially
reasonable actions necessary to (a) present to Buyer an interconnection
agreement with ISO-New England for approval by Buyer, which approval shall not
be unreasonably withheld, delayed or denied, and (b) cause to be
constructed to completion the improvements and interconnection infrastructure
referenced in such agreement necessary to connect the Project with the grid at
the point specified therein, all within twenty-four (24) months from the date
of Closing, which time period shall be extended as necessary so long as Seller
is diligently pursuing such interconnection agreement and improvements, and all
as further described in Exhibit B hereto and the Undivided Interest
Agreement, provided, however, that if it should become impossible
to present such interconnection agreement with ISO-New England as described in
this Section 9.03, the parties shall continue to operate in accordance
with the terms and conditions of the Undivided Interest Agreement and the
Letter of Credit shall be terminated; provided, that in no event shall the
Letter of Credit be terminated prior to a date that is four hundred fifty-one
(451) days after the Closing.


 


9.04  Limitations
on Investigation, Testing and Communications.


 


(a)  With regard to Historical Environmental Liabilities Buyer agrees that neither Buyer nor any of
its Affiliates shall undertake or cause to be undertaken any non-subsurface
sampling or analysis, subsurface investigation, or any communication with any
Governmental Entity by or on behalf of Buyer or its Affiliates after the
Closing Date unless (and only to the extent) such sampling, analysis,
investigation, or communication is (1) required by any Environmental Law; (2) in
response to a request of a Governmental Entity; or (3) during the normal
course of business arising out of repairs, modifications, maintenance or
construction activities that are conducted consistent with normal business
practices; provided, however, any such sampling or analysis, subsurface
investigation, or communication with a Governmental Entity shall not be
considered “required by Environmental Law” for purposes of this Section 9.04
if such sampling, analysis, investigation or communication occurs as a result
of: (a) a Change; or (b) due diligence conducted by a future prospective purchaser, investor or
financing 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-subsurface
sampling or analysis” as used herein shall not encompass a Phase I
Environmental Site Assessment performed in accordance with the U.S.
Environmental Protection Agency’s Innocent Landowners, Standards for Conducting
All Appropriate Inquiries, 40 C.F.R. Part 312 and Standard E 1507-05 of
the American Society for Testing and Materials (“Standard Practice for
Environmental Site Assessments:  Phase I
Environmental Site Assessment Process”); provided, however, that such
Phase I Environmental Site Assessment may not include communication with any
Governmental Entity beyond that necessary to obtain access to review records in
the possession or control of a Governmental Entity.  With regard to Historical On-Site
Environmental Liabilities, Buyer’s obligations under this Section 9.04(a) shall
survive until May 1, 2013.


 


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


 


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


 


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


 


ARTICLE 10


 


INDEMNIFICATION GENERALLY


 


10.01  Survival of
Representations and Warranties.  The
representations and warranties of the parties set forth in this Agreement shall
survive the Closing but shall terminate and expire fifteen (15) months after
the Closing Date.  With the exception of
Buyer’s pre-closing covenants set forth in Section 5.02(d) which
shall survive without limit as to time, the pre-closing covenants of the
parties hereto shall terminate and expire upon Closing.


 


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


 


10.03  Indemnification
by Buyer.  From and after the Closing
Date, Buyer shall indemnify and hold Seller and each of its Affiliates,
directors, shareholders, officers and employees (the


 


34

















 


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


 


10.04  Indemnification
Procedures.  Any claim for
indemnification under Section 10.02 or Section 10.03 (a “Claim”)
shall be valid only if the party seeking indemnification notifies the other
party in writing of, and setting forth in such writing with particularity, the
basis for the Claim within the period provided in Section 10.10.  If a claim for indemnification is to be made
by a party (an “Indemnified Party”) against another party (the “Indemnifying
Party”), the Indemnified Party shall give written notice to the
Indemnifying Party promptly after the Indemnified Party becomes aware of any
fact, condition, or event which gives rise to a Claim for which indemnification
may be sought under this Article 10 (provided that failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability it
may have to the Indemnified Party, except to the extent that the Indemnifying
Party has been prejudiced by such failure and provided further that nothing
contained herein shall extend the time limits set forth in Section 10.10
hereof).  Each Indemnified Party shall
use commercially reasonable efforts to mitigate Damages for which it seeks
indemnification under this Article 10. 
If any lawsuit, enforcement action, demand or claim is brought or made
by any other Person (a “Third Party Claim”) against an Indemnified Party
involving a matter for which the Indemnified Party is entitled to
indemnification pursuant to Section 10.02 or Section 10.03, written
notice thereof shall be given promptly to the Indemnifying Party (provided that
failure to notify the Indemnifying Party shall not relieve the Indemnifying
Party of any liability it may have to the Indemnified Party, except to the
extent that the Indemnifying Party has been prejudiced by such failure and provided
further that nothing contained herein shall extend the time limits set forth in
Section 10.10 hereof).  After such
notice is given, the Indemnifying Party shall be entitled, if it so elects, to
take control of the defense and investigation of such Third Party Claim and to
employ and engage attorneys of its own choice reasonably acceptable to the
Indemnified Party to handle and defend the same, at the Indemnifying Party’s
cost, risk and expense, provided that any such exercise of the Indemnifying Party’s
rights to take control of the defense and investigation of any Third Party
Claim shall not be deemed a waiver of the Indemnifying Party’s right to
determine at a later date that such Third Party Claim is not entitled to
indemnification under this Agreement, in which case Indemnifying Party may, in
the exercise of its sole discretion, determine not to continue to defend any
such Third Party Claim and any action taken by the Indemnifying Party in
connection with such determination shall be undertaken in a manner so as not to
materially prejudice the defense or the rights of the Indemnified Party.  The Indemnified Party shall cooperate with
the Indemnifying Party so as to minimize the risk of any such prejudice.  The Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party and such attorneys in the
investigation, trial and defense of such Third Party Claim and any appeal
arising therefrom, which shall include:  (i) furnishing
such records,


 


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information and testimony, and attending such conferences, discovery
proceedings, hearings, trials and appeals, as reasonably may be requested in
connection therewith, (ii) affording access during normal business hours
to the Indemnifying Party to, and reasonable retention by the Indemnified Party
of, records and information which are reasonably relevant to such Third Party
Claim, and (iii) making its employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided to the Indemnifying Party hereunder. 
The Indemnified Party nevertheless may, at its own cost, participate in
the investigation, trial and defense of such Third Party Claim or any appeal
arising from any such Third Party Claim.


 


10.05  Settlement or
Compromise of Third Party Action; Failure to Assume Defense.  If the Indemnifying Party has assumed control
of the defense of a Third Party Claim pursuant to Section 10.04, the
Indemnifying Party may consent to a settlement or compromise of, or the entry
of any monetary judgment arising from such Third Party Claim without the prior
written consent of the Indemnified Party if, and only if, the proposed
settlement, compromise or entry: (A) does not contain an admission of
guilt or wrongdoing on the part of the Indemnified Party, and (B) does not
provide for any remedy or sanction against the Indemnified Party other than the
payment of money which the Indemnifying Party agrees to pay and does pay.  If the Indemnifying Party does not assume the
defense of the Third Party Claim in accordance with Section 10.04 within
20 days after the receipt of notice thereof, the Indemnified Party may, at the
Indemnifying Party’s expense, defend the Third Party Claim, but may settle
and/or compromise the Third Party Claim only with the consent of the
Indemnifying Party.


 


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


 


10.07  General Limitations.  (a)  Neither Seller nor Buyer shall be
liable under this Article 10 or Article 10A for any Damages or
Environmental Damages unless and until the aggregate cumulative amount of
Damages and Environmental Damages exceeds $2,000,000 (the “Basket Amount”)
and then shall be liable only to the extent that the aggregate cumulative
amount of such damages exceeds the Basket Amount, provided,
however, that the Basket Amount shall
not apply to Seller’s obligations under Section 9.03.


 


(b)  In no event shall the aggregate cumulative amount of Seller’s
or Buyer’s liabilities under this Article 10 and Article 10A exceed
twenty 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 under
this Article 10 or Article 10A for indirect, incidental,
consequential, special, liquidated, punitive or exemplary Damages or indirect,
incidental, consequential, special, liquidated, punitive or exemplary
Environmental Damages.


 


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(d)  In calculating the amount of Damages and Environmental
Damages for which an Indemnified Party is entitled to indemnification
under  Articles 10 and 10A, the amount of
Damages and Environmental Damages, as applicable, shall be reduced by:  (i) any insurance proceeds actually
received by the Indemnified Party from an insurance carrier with respect to
such Damages and Environmental Damages, as applicable, provided that if the
Indemnified Party fails to either diligently pursue any such insurance proceeds
reasonably available to it or assign a valid right to the Indemnifying Party to
pursue such insurance proceeds, the Indemnifying Party’s obligation shall be
reduced by the amount of insurance proceeds reasonably available to the
Indemnified Party, and (ii) any amounts actually received by the
Indemnified Party from third parties with respect to Damages and Environmental
Damages, as applicable, pursuant to indemnification, warranty or other similar
rights, provided that if the Indemnified Party fails to diligently pursue such
rights, the Indemnifying Party’s obligation shall be reduced by the amounts
available to the Indemnified Party.  If
any Damages or Environmental Damages, as applicable, for which indemnification
is provided under this Article 10 or 10A subsequently are reduced by any
insurance payment or recovery from a third party, the Indemnified Party
promptly 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 irrevocable
standby 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 the
form attached hereto as Exhibit J (as the same may be amended from
time to time, the “Letter of Credit”), securing Seller’s obligations
under Articles 10 and 10A hereto, provided that the face amount of the Letter
of 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) month
intervals (each six (6) month interval, a “Reduction Date”) to
reflect only the amounts (if any) remaining to be paid by Seller in connection
with the permanent interconnection arrangements contemplated by Section 9.03.  The amount of the reduction (the “Reduction
Amount”) 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 “Seller
Reduction Notice”), stating Seller’s good faith calculation of the
Reduction Amount for such Reduction Date.


 


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


 


(iii)  If Buyer in good faith disputes the Reduction Amount set
forth in the Seller Reduction Notice, then Buyer shall, within thirty (30) days
after the date of receipt of the Seller Reduction Notice, notify Seller in
writing of such dispute (a “Reduction Dispute Notice”) in reasonable
detail 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 or
matters in dispute within thirty (30) days


 


37

















 


after the receipt by Seller of the Reduction Dispute Notice.  In the event Seller and Buyer are able to
resolve 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 written
agreement executed by each of Buyer and Seller directing the Bank to make a
reduction (a “Reduction Agreement”) and the Bank shall be authorized to
rely on any such Reduction Agreement and to make the reduction in accordance
therewith.


 


(iv)  If the disputed matter or matters cannot be resolved by
Seller and Buyer within thirty (30) days after receipt by Seller of the
Reduction Dispute Notice, the matter or matters in dispute shall be promptly
submitted to the EPRO engineering firm, located in Augusta, Maine, which firm
shall not later than thirty (30) days after such submission, render its opinion
directing 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 copy
of the Independent Consultant Award directing the Bank to make a reduction, and
the Bank shall be authorized to rely on any such Independent Consultant Award
and to make the reduction in accordance therewith.


 


Notwithstanding anything in this Agreement to the contrary, the Letter
of 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 be
terminated prior to a date that is four hundred fifty-one (451) days after the
Closing.


 


10.09  Additional Limitations.


 


(a)    Notwithstanding
anything to the contrary contained in this Agreement, Seller shall not be
liable for any Damages imposed upon or incurred or accrued by Buyer Group
relating to acts, omissions, or other events arising or occurring after the
Closing.


 


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


 


10.10  Time Limits.  Notwithstanding any other provision of this
Agreement, no claim with respect to the misrepresentation or inaccuracy in any
material respect of a representation and warranty made by a party or parties
shall be valid unless notice of such claim is given to the Indemnifying Party
within fifteen (15) months after the Closing Date.


 


10.11  Exclusive Remedies.  From and after the Closing Date, the rights
of indemnification provided for under Articles 10 and 10A hereto shall be the
sole 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 the
provisions of this Agreement.


 


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ARTICLE 10A


 


ENVIRONMENTAL INDEMNITY


 


10A.01 
Survival.


 


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


 


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


 


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


 


10A.02  Environmental
Indemnification.


 


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


 


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


 


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(Environmental) other than exclusively in the manner provided for in
the 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) or
9.04, Seller hereby agrees to indemnify and hold the Buyer Group harmless from
and against any and all Environmental Damages incurred by Buyer arising out of
or resulting from any Historical Environmental Liabilities that accrue and are
asserted by Buyer before May 1, 2013; provided, however, that
Seller’s obligation under this Section 10A.02(c) shall be limited to
the amounts actually received by Seller, less any reasonable costs and
expenses, including legal fees, incurred by Seller in collecting such amounts,
from MeadWestvaco with respect to such Environmental Damages any of which
amounts would be received pursuant to and in accordance with the terms and
procedures contained in the Equity and Asset Purchase Agreement by and Between
MeadWestvaco 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 efforts
to obtain recovery pursuant to the MeadWestvaco Indemnity and, to the extent
Buyer requests Seller to pursue a claim under the MeadWestvaco Indemnity, all
costs of prosecuting such claim shall be paid by Buyer.  Seller shall invoice Buyer for reasonable
costs of pursuing a claim on behalf of Buyer on a monthly basis and Buyer shall
promptly pay all reasonable expenses.


 


(d)  Notwithstanding anything in this Agreement to the contrary,
Seller (1) shall have no indemnification obligations under this Article 10A
for any Environmental Damages resulting from changes in any Environmental Law
occurring after the Closing Date, provided that any Remedial Action of
Historical Environmental Liabilities may be governed by applicable post-Closing
requirements for conducting Remedial Actions, so long as any Remedial Action is
conducted in a Lowest-Cost Commercially Reasonable Manner and (2) shall
not be liable for any Environmental Damages imposed upon or incurred or accrued
by Buyer Group relating to acts or omissions of Buyer or its Affiliates, or the
existence of Environmental Conditions to the extent first arising or existing
after the Closing Date.


 


(e)  Buyer hereby agrees to indemnify and hold Seller Group
harmless from and against (1) any and all Environmental Damages imposed
upon or incurred or accrued by Seller or its Affiliates relating to acts or
omissions of Buyer or its Affiliates, or the existence of conditions to the
extent first arising or existing after the Closing Date, and (2) with
regard to Historical Environmental Liabilities, any and all Damages and
Environmental Damages arising out of or resulting from violation or breach by
Buyer or its Affiliates of Buyer’s
obligations under Section 5.02(d) or Section 9.04 hereof; provided,
however, the obligations of Buyer to indemnify and hold harmless Seller
Group hereunder with regard to Historical Off-Site Environmental Liabilities
caused by Buyer’s breach of Section 9.04 hereof shall be without
limitation as to duration; provided  further, however, that
the obligations of Buyer to indemnify and hold harmless Seller Group hereunder
with regard to Historical On-Site Environmental Liabilities caused by Buyer’s
breach of Sections 5.02(d) and/or 9.04 shall terminate on May 1,
2013.  The provisions of Section 10.07
shall apply to Buyer’s indemnification obligations under this Section 10A.02(e);
provided, however, that the limitations in Sections 10.07(c) shall
not apply to Buyer’s


 


40

















 


indemnification obligations in the event of a violation or breach by
Buyer or its Affiliates of Buyer’s
obligations under Section 5.02(d) or Section 9.04, in which case
Buyer shall indemnify and hold Seller Group harmless from and against any and
all Damages, Environmental Damages, and special, indirect and consequential
damages, but in no event shall the aggregate cumulative amount of Buyer’s
liabilities under Article 10 and Article 10A exceed the amount set
forth in Section 10.07(b) and in no event shall Buyer be liable for
punitive or exemplary Damages.  Buyer’s obligations under this Section 10A.02(e) shall
be come effective (i) with regard to breach of Section 5.02(d), upon
the effective date of this Agreement, and (ii) with regard to breach of Section 9.04,
on the Closing Date.  For the avoidance
of doubt with respect to Section 10A.02(e)(1), Buyer shall not be
obligated to indemnify Seller under Section 10A.02(e)(1) for
Historical Environmental Liabilities, except in the event of a breach by Buyer
of 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) shall
apply.


 


10A.03 
Procedures for Indemnification. 
Subject to the following sentence, whenever a claim shall arise for
indemnification under this Article 10A, the Indemnified Party shall
promptly notify the  Indemnifying Party
of 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 the
event of any claim for indemnification under this Article 10A resulting
from or in connection with any claim or Legal Proceeding by a third party, the
Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than ten (10) Business Days prior to the time any response to the
asserted claim is required, if possible, and in any event within five (5) Business
Days following receipt of notice thereof. 
Notwithstanding the foregoing, in the case of claims for indemnification
hereunder not arising in connection with any claim or Legal Proceeding by a
third party, the Indemnified Party shall not submit such claims to the
Indemnifying Party in increments aggregating less than $50,000.  The Indemnified Party’s failure to give
timely notice or to furnish the Indemnifying Party with any relevant facts in
connection with any third party claim shall not constitute a defense (in part
or in whole) to any claim for indemnification by such party, except and only to
the extent that such failure shall result in any prejudice to the Indemnifying
Party and provided further that nothing contained herein shall extend the time
limits set forth in Section 10.10 hereof. 
In the event of any such claim for indemnification resulting from or in
connection with a claim or Legal Proceeding by a third party, the Indemnifying
Party may, at its sole cost and expense, assume the defense thereof by written
notice within ten (10) Business Days, using counsel that is reasonably
satisfactory to the Indemnified Party,
provided that any such exercise of the Indemnifying Party’s rights to take
control of the defense and investigation of any third party claim shall not be
deemed a waiver of the Indemnifying Party’s right to determine at a later date
that such third party claim is not entitled to indemnification under this
Agreement, in which case the Indemnifying Party may, in the exercise of its
sole discretion, determine not to continue to defend any such third party claim
and any action taken by the Indemnifying Party in connection with such
determination shall be undertaken in a manner so as not to materially prejudice
the defense or the rights of the Indemnified Party.  The Indemnified Party shall cooperate with
the Indemnifying Party so as to minimize risk of any such prejudice.  Each Indemnified Party shall use commercially
reasonable efforts to mitigate Environmental Damages for which it seeks
indemnification under this Article 10A. 
If an Indemnifying Party assumes the defense of any such claim or Legal
Proceeding, the


 


41

















 


Indemnifying Party shall be entitled
to take all steps necessary in the defense thereof including the settlement of
any case that involves solely monetary damages without the consent of the
Indemnified Party; provided, however, that the Indemnified Party may, at its
own expense, participate in any such proceeding with the counsel of its choice
without any right of control thereof. 
The Indemnifying Party, if it has assumed the defense of any claim or
Legal Proceeding by a third party as provided herein, shall not consent to, or
enter into, any compromise or settlement of (which settlement (i) commits
the Indemnified Party to take, or to forbear to take, any action or (ii) does
not provide for a full and complete written release by such third party of the
Indemnified Party), or consent to the entry of any judgment that does not
relate solely to monetary damages arising from, any such claim or Legal
Proceeding by a third party without the Indemnified Party’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed.  The Indemnifying Party and the Indemnified
Party shall cooperate fully in all aspects of any investigation, defense,
pre-trial activities, trial, compromise, settlement or discharge of any claim
in respect of which indemnity is sought pursuant to this Article 10A,
including, but not limited to, by providing the other party with reasonable
access to employees and officers (including as witnesses) and other
information, provided, that in each case, such access shall be given at
reasonable times and upon reasonable notice and without undue interruption to
such party’s business or personnel.  So
long as the Indemnifying Party is in good faith defending such claim or
proceeding, the Indemnified Party shall not compromise or settle such claim
without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, conditioned or delayed.  If the Indemnifying Party does not assume the
defense of any such claim or litigation in accordance with the terms hereof,
the Indemnified Party may defend against such claim or litigation in such
manner as it may deem appropriate, including settling such claim or litigation
(after giving prior written notice of the same to the Indemnifying Party and
obtaining the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, conditioned or delayed) on such terms as
the Indemnified Party may reasonably deem appropriate, and the Indemnifying
Party will promptly indemnify the Indemnified Party in accordance with the
provisions of this Section 10A.03.


 


10A.04 
Limitations and Procedures Applicable to Indemnification for
Environmental Liabilities.


 


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


 


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


 


42

















 


(c)  In the event that an Indemnified Party submits a claim for
indemnification under Section 10A.02(c) or (e) relating to an
Historical Environmental Liability, the Indemnifying Party or its designee
(which may include, but shall not be limited to, Seller’s predecessor in
interest 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 resolution
thereof, including the settlement thereof (which settlement shall require the
consent of the Indemnified Party, such consent not to be unreasonably withheld,
delayed or conditioned); provided, however, that the Indemnified Party may, at
its expense, monitor any proceeding with counsel of its choice without any
right of control thereof.  Where a
Remedial Action is required, the Indemnifying Party (or its designee) agrees to
use commercially reasonable efforts to avoid (i) unreasonable interference
with the operations of the Project or the Mill provided there is no Change
after the Closing Date, or (ii) unreasonably restricting the ability to
use the Project or the Mill for the use it was employed on the Closing Date or
for 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 in
all aspects of any investigation, defense, pre-trial activities, trial,
compromise, settlement, discharge or Remedial Action arising in connection with
any claim in respect of which indemnity is sought, including, but not limited
to, by providing the other party with reasonable access to: 1) employees and
officers (including as witnesses); 2) other relevant information; and 3)
facilities, provided, that in each case, such access shall be given at
reasonable times and upon reasonable notice and without undue interruption to
such party’s business or personnel.  So
long as Seller (or its designee) is in good faith defending and/or resolving a
Historical Environmental Liability under this Section, Buyer shall not
compromise, settle or in any manner interfere with the defense or resolution of
such Historical Environmental Liability. 
If Seller (or its designee) does not assume the defense and/or
resolution of any such Historical Environmental Liability claim or litigation
in accordance with the terms hereof, Buyer may defend and/or resolve such
Historical Environmental Liability in a commercially reasonable manner,
including settling claims or litigation (after giving prior written notice of
the same to the Seller and obtaining the prior written consent of Seller, which
consent shall not be unreasonably withheld, conditioned or delayed).


 


(e)  In connection with any Remedial Action covered by the
indemnity in Section 10A.02(a), (c) or (e), the Indemnifying Party
shall only be required to undertake or reimburse Environmental Damages incurred
in the course of Remedial Action conducted in a “Lowest-Cost Commercially Reasonable Manner,”
which shall mean, the lowest cost methods permitted by applicable Environmental
Law determined from the perspective of a reasonable business person acting
without regard to the availability of indemnification hereunder to achieve
compliance with Environmental Law (taking all relevant circumstances into
consideration, including, without limitation, the lowest-cost method that would
minimize exposure to additional Environmental Damages that would be subject to indemnification
hereunder).  Such Lowest-Cost
Commercially Reasonable Manner shall include, where appropriate, the use of
risk-based remedies, institutional or engineering controls, or deed
restrictions, provided such remedies, controls, or restrictions do not: (1) unreasonably
interfere with the operations of the Project or the Mill provided there is no
Change after the Closing Date, or (2) unreasonably restrict the ability to
use the Project or the


 


43

















 


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


 


(f)  Notwithstanding anything in this Agreement to the contrary,
Seller shall have no indemnification obligations for Historical Environmental
Liabilities arising or resulting from a breach by Buyer of Sections 5.02(d) or
9.04.


 


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


 


ARTICLE 11


 


MISCELLANEOUS


 


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


 


11.02  Entire Agreement;
Amendment.  This Agreement, including
the exhibits and schedules attached hereto and the documents and agreements
referred to herein (which exhibits, schedules and documents are incorporated
herein by this reference) shall constitute the complete and entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede all previous oral and written negotiations and commitments and any
other writings with respect to such subject matter, other than the
Confidentiality Agreement.  This
Agreement cannot be modified or amended except in writing duly executed by each  party hereto.


 


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


 


If to Seller:                             Rumford
Falls Power Company


c/o New Page Corporation


 


44

















 


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


 


45

















 


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 other
communications are to be directed to it by giving notice of such change to the
other party in the manner provided in this section.


 


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


 


11.05 Parties in Interest; Assignment.  This Agreement and all of the provisions
hereof shall be binding upon, shall inure to the benefit of, and shall be
enforceable by the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party hereto without the
prior 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 instrument
reasonably satisfactory to Seller by which the Affiliate assumes all of Buyer’s
obligations under this Agreement and, upon the Closing, including without
limitation, the payment of the Cash Purchase Price, Buyer shall be deemed fully
released from all of Buyer’s obligations hereunder.


 


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


 


11.07  Interpretation.  The headings contained in this Agreement are
for convenience of reference only and shall in no way affect the meaning or
interpretation of this Agreement.  Unless
the context of this Agreement expressly otherwise indicates, any singular term
in this Agreement includes the plural, and any plural term includes the
singular.  If any term or condition of
this Agreement is found to be ambiguous, the ambiguity shall not be construed
against 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 whole
according to its fair meaning.


 


11.08  No Third Party
Beneficiaries.  This Agreement is for
the sole benefit of the parties hereto and their permitted assigns, and nothing
herein expressed or implied shall give or be


 


46

















 


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


 


11.09  Arbitration.  Except as specifically provided in this
Agreement, any controversy, claim or dispute arising out of or relating to this
Agreement, or any alleged breach or non-performance of this Agreement, shall be
referred to the American Arbitration Association to be settled by arbitration
conducted  in accordance with the Commercial
Arbitration Rules of the American Arbitration Association before a single
arbitrator in Portland, Maine (or such other location as the parties may
agree), such arbitrator to be chosen by mutual agreement of the parties or,
absent such agreement, by the American Arbitration Association.  Judgment
upon the award of the arbitrator may be entered in any court having
jurisdiction thereof.  The fees and
expenses of the arbitrator shall be apportioned between the parties by the
arbitrator with the findings and results of the arbitration.  Any award shall be a conclusive determination
of the disputed matter; shall be final and binding upon the parties and shall
not be contested by the parties.  Any
award of damages by an arbitrator will be determined, limited, and controlled
by the limitation of damages provisions in this Agreement.  Nothing
in this Section 11.09 will preclude, or be construed to preclude, the
resort by either party to a court of competent jurisdiction solely for the
purposes of securing an injunction or for the specific performance of a party’s
obligations hereunder.


 


11.10  Governing Law.  This Agreement shall be construed in accordance
with, and the legal relations among the parties shall be governed by, the Laws
of the State of Maine as applicable to agreements executed and fully performed
in 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 any
obligations or liabilities of Buyer or Seller, as applicable, under this
Agreement 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 by
reason of, the transactions contemplated hereby and thereby.


 


47

















 


IN WITNESS WHEREOF, this Agreement has been executed by the parties on
the 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 purposes
set forth in the preamble and hereby agrees to perform its obligations under
Sections 5.06, 7.05 and 9.05.


 


	
   

  	
  RUMFORD PAPER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
    /s/  Douglas K.
  Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Douglas K. Cooper

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
					



 

















 


GUARANTY


 


In
consideration for and as an inducement to Buyer entering into the foregoing
Asset Purchase Agreement with Seller (the “Agreement”), New Page Corporation
(“Guarantor”) does hereby unconditionally and irrevocably guaranty to
Buyer, subject to the limitations on Seller’s indemnification obligations set
forth in  the Agreement, the due and
punctual performance of Seller’s payment obligations pursuant to Article 10  and Article 10A of the Agreement.  Any and all defenses available to Seller with
respect to any demand for payment by any Buyer Indemnified Party under Article 10
and Article 10A shall be available to Guarantor as a defense to any demand
for payment pursuant to this guaranty. 
Guarantor hereby unconditionally waives (i) any and all notices
that may be required by statute, rule of law or otherwise, now or
hereafter in effect, including promptness, diligence, demand, presentment,
protest, notice of acceptance and any other notice with respect to this
Guaranty or any of Seller’s obligations pursuant to Article 10 or Article 10A
of the Agreement and (ii) any requirement that Buyer proceed or make a
demand first against the Seller or otherwise exhaust any right, power or remedy
under the Agreement before requesting payment or performance by Guarantor
hereunder or that Buyer protect, secure, perfect or insure any security
interest or lien on any property subject thereto or exhaust any other right to
take any action against the Seller or any collateral or any other guarantee or
source of payment.


 


 


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


 


 


	
   

  	
  NEW
  PAGE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Its: