EXHIBIT 10.12
PURCHASE AND SALE AGREEMENT
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TABLE OF CONTENTS
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Page
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SECTION 1: Definitions and Terms 1
SECTION 2: Purchase and Sale of the Shares and Closing 3
SECTION 3: Conditions to the Obligations of Purchaser 4
SECTION 4: Conditions 5
SECTION 5: Conditions to the Obligations of Seller 6
SECTION 6: Seller's Representations and Warranties 7
SECTION 7: Post-Closing Covenants 13
SECTION 8: Representations and Warranties of Purchaser 15
SECTION 9: Purchaser's Agreements; Events of Default; Remedies 16
SECTION 10: General Indemnity 19
SECTION 11: Notices 23
SECTION 12: Miscellaneous 23
LIST OF EXHIBITS
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EXHIBIT 2.1 PLEDGE
DISCLOSURE EXHIBIT
EXHIBIT 6.11 PROJECT AGREEMENTS
EXHIBIT 6.15 FINANCIALS
EXHIBIT 6.22 BANK ACCOUNTS
EXHIBIT 7.2 WASTE REMOVAL CONTRACT
PURCHASE AND SALE AGREEMENT
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This Purchase and Sale Agreement ("this Purchase Agreement") is made and entered
into this 30th day of April, 1987 between Xxxx X. Xxxxxxx, Xxxxxxx Xxxx and
Xxxxxx X. Xxxx (collectively, "Seller") and Environmental Power Corporation, a
Delaware corporation ("Purchaser").
RECITALS
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(1) Seller owns 20,000 shares of the issued and outstanding common stock,
par value $1.00, of Milesburg Energy, Inc., a Pennsylvania corporation ("MEI").
(2) MEI is in the process of developing a waste-coal fired electric plant
consisting of a circulating fluidized bed boiler and related facilities having a
maximum design capacity of 36.5 to 43 megawatts to be erected at a site known as
West Penn Power Company's Milesburg Power Station in Centre County, Pennsylvania
("Project").
(3) Purchaser is purchasing the Shares (defined below) on the terms and
conditions herein set forth.
NOW, THEREFORE, it is agreed:
SECTION 1
Definitions and Terms
Unless otherwise specified, capitalized terms shall have the meanings set
forth in this Section 1 as follows:
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1.1 Affiliate: Any person directly or indirectly controlling, controlled
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by or under common control with another person.
1.2 Closing: The closing of the purchase and sale of the Shares on the
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Closing Date.
1.3 Closing Date: The date and time: April 30, 1987 at 10 a.m.
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1.4 Electric Energy Purchase Agreement: Agreement between MEI and West
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Penn Power Company ("West Penn") relating to the purchase of energy from the
Project.
1.5 Exhibit Agreements: The agreements listed on Exhibit 6.11.
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1.6 Financials: As defined in Section 6.15.
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1.7 Governmental Authorization: Any consent, right, exemption,
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concession, permit, license, authorization, certificate, order, franchise,
determination, or approval from any governmental body, agency, public
corporation or authority.
1.8 Land Sale Agreement: Agreement between Antrim Mining, Inc. ("Antrim")
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and West Penn relating to land upon which the Project is to be constructed and
certain improvements and equipment thereon.
1.9 Lien: Any mortgage, pledge, lien, charge, security interest or lease
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in the nature thereof (including any conditional sale agreement, equipment trust
agreement or other title retention agreement) or other encumbrance of whatsoever
nature; but excluding taxes not yet due and payable.
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1.10 MEI: Milesburg Energy, Inc., a Pennsylvania corporation.
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1.11 Notes: As defined in Section 2.
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1.12 Pledge: As defined in Section 2.
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1.13 Purchase Price: $5,220,000.
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1.14 Purchaser: Environmental Power Corporation, a Delaware corporation.
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1.15 Seller: Xxxx X. Xxxxxxx, Xxxxxxx Xxxx and Xxxxxx X. Xxxx.
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1.16 Shares: 20,000 shares of the common stock, $1.00 par value, of MEI,
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constituting all of the issued and outstanding shares of the capital stock of
MEI.
SECTION 2
Purchase and Sale of the Shares and Closing
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2.1 Purchaser shall purchase from Seller, and Seller shall sell to
Purchaser, on the Closing Date, the Shares for the Purchase Price, payable
$100,000 by check or wire transfer ("Initial Payment") and the balance by
delivery of Purchaser's non-negotiable, non-interest bearing promissory notes,
one in the principal amount of $220,000 ("Note 1") and one in the principal
amount of $4,900,000 ("Note 2"), collectively, the "Notes".
Upon satisfaction of Condition I (defined below), Note 1 shall be due and
payable, and upon satisfaction of Condition II (defined below), Note 2 shall be
due and payable. The Notes shall be without recourse to the Purchaser and shall
be secured
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by a pledge of the Shares pursuant to a pledge agreement ('"Pledge") attached
and marked Exhibit 2.1.
2.2 The Closing shall take place at the offices of Rackemann, Xxxxxx &
Xxxxxxxx, One Financial Center, Boston, Massachusetts, on the Closing Date.
2.3 Notwithstanding anything herein to the contrary, unless prior to
December 31, 1987, Antrim shall have (a) entered into the Land Sale Agreement in
form and substance satisfactory to Purchaser and (b) obtained all governmental
approvals related to zoning, subdivision and other so-called land use control
laws necessary to (i) transfer to the purchaser under the Land Sales Agreement
title to the property covered by the Land Sale Agreement and (ii) permit the
construction of the Project (the "Recision Condition"), then the Initial Payment
shall be forthwith refunded to Purchaser, the Notes cancelled, if Seller shall
not have caused the Shares to be transferred to its name pursuant to the terms
of the Pledge, they shall be transferred to Seller and thereafter all
obligations of Purchaser and Seller to each other under this Purchase Agreement
shall terminate without recourse.
SECTION 3
Conditions to the Obligations of Purchaser
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The obligation of the Purchaser to close on the Closing Date shall be
subject to the satisfaction of the following conditions precedent, each of which
may be waived in writing at the discretion of the Purchaser. The Purchaser's
sole recourse.
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for non-fulfillment of any of the following conditions shall be to terminate
this Purchase Agreement.
3.1 This Purchase Agreement and all other agreements entered into or
undertaken in connection with the transactions contemplated hereby shall have
been duly authorized by all necessary corporate action of MEI.
3.2 At the Closing, Seller shall deliver, free and clear of all liens,
encumbrances, claims and other charges or every kind, certificates for the
Shares, in negotiable form, with stock powers attached.
3.3 At the Closing, Seller shall deliver resignations of all officers and
directors of MEI. Seller shall cause full possession and control of all the
assets and properties of MEI to be delivered to the successor officers and
directors.
3.4 Purchaser shall have received an opinion from counsel to Seller and
MEI as to certain corporate and other matters in form and substance acceptable
to Purchaser.
SECTION 4
Conditions
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Following are the conditions which must be satisfied prior to payment of
the Notes:
Condition 1: The Electric Energy Purchase Agreement shall be in full force
and effect, neither party thereto shall be in default under any material
provision thereunder and the conditions set forth in Section 5.3(f), (g), (h)
and (i)
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therein shall have been satisfied by MEI and the Recision Condition shall have
been satisfied.
Condition 2: The occurrence of the Financial Closing Date, as that term is
defined in the Electric Energy Purchase Agreement and the actual release of
funds for construction of the Project.
The Seller's sole recourse for non-fulfillment of Condition 1 or Condition
2 shall be to terminate this Purchase Agreement.
SECTION 5
Conditions to the Obligations of Seller
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The obligation of the Seller to close on the Closing Date shall be subject
to the satisfaction of the following conditions precedent, each of which may be
waived in writing at the discretion of the Seller. The Seller's sole recourse
for non-fulfillment of any of the following conditions shall be to terminate
this Purchase Agreement.
5.1 This Purchase Agreement and all other agreements entered into or
undertaken in connection with the transactions contemplated hereby shall have
been duly authorized by all necessary corporate action of Purchaser.
5.2 Purchaser shall pay the Purchase Price.
5.3 Seller shall have received an opinion, from counsel to Purchaser as to
certain corporate matters in form and substance acceptable to Seller.
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SECTION 6
Seller's Representations and Warranties
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Except as set forth in the Disclosure Exhibit, Seller hereby represents and
warrants to Purchaser as follows:
6.1 MEI is validly existing as a corporation and in good standing under
the laws of the Commonwealth of Pennsylvania.
6.2 MEI has full corporate power and authority to own and operate its
properties, to carry on its business as presently conducted, and to enter into
and perform its obligations under this Purchase Agreement, the Exhibit
Agreements and all other agreements entered into or undertaken in connection
with the transactions contemplated hereby.
6.3 No Governmental Authorization of or by, or the giving of notice to, or
the registration with or the taking of any other action in respect of, any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, and no filing, recording, publication or
registration in any public office or any other place, is now required or
necessary to authorize the execution and delivery of this Purchase Agreement or
any of the Exhibit Agreements.
6.4 Neither the execution and delivery of this Purchase Agreement or any
of the Exhibit Agreements to which Seller or MEI is a party, the performance of
their respective obligations thereunder, nor the consummation by either of the
transactions contemplated thereby will conflict with or result in any breach of,
or constitute a default under, or result in the creation or
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imposition of any Lien upon any property or assets of the Seller or MEI under
any applicable law, rule, regulation, judgment or order, the charter documents
of MEI or any indenture, mortgage, deed of trust, or other instrument or
agreement to which the Seller or MEI is a party or by which either of them may
be bound or to which any of their respective properties or assets may be
subject.
6.5 The execution, delivery and performance by Seller or MEI, as the case
may be, of this Purchase Agreement and any of the Exhibit Agreements have been
duly authorized by all necessary action. Assuming the due authorization,
execution and delivery thereof by each of the other parties thereto, each such
agreements constitute legal, valid and binding obligations of Seller or MEI, as
the case may be, enforceable in accordance with their terms subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally.
6.6 Neither Seller nor MEI is in default under any mortgage, deed of
trust, indenture or other material instrument or agreement to which either is a
party or by which either or any of their respective properties or assets may be
bound, which default might have a material adverse effect on Seller or MEI or on
any of the transactions contemplated hereby.
6.7 There are no pending or, to the best of Seller's knowledge, threatened
suits or proceedings against Seller or MEI, which, if determined adversely,
would adversely affect the business or financial condition of Seller or MEI or
the consummation of the transactions contemplated by this Purchase
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Agreement including, without limitation, the development of the Project.
6.8 Seller, at the Closing, will have good and marketable title to the
Shares and MEI will have good and marketable title to its assets, in each case,
free and clear of all Liens.
6.9 The conduct of MEI's business is in compliance with all laws,
ordinances, rules, regulations or orders applicable thereto, other than laws,
ordinances, rules, regulations or orders with which a failure to comply, in any
case or in the aggregate, would not have a material adverse effect on the
development and operation of the Project.
6.10 Neither Seller nor MEI is a holding company, or a subsidiary or
affiliate of a holding company, or a public utility, within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or a public utility
within the meaning of the Federal Power Act, as amended.
6.11 Seller has given Purchaser true, correct and complete copies of all
contracts to which either MEI or Seller is a party and which relate to the
development, management and operation of the Project. Except for the contracts
listed on Exhibit 6.11, there are no contracts, agreements or understandings
between MEI or Seller and any other person, whether or not reduced to writing
and related to the development, management or operation of the Project and in
the case of MEI alone, whether or not related to the development management or
operation of the project. All contracts which relate to the development,
operation or management of the
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Project entered into by Antrim have been duly and effectively assigned to MEI
and all consents of any third parties in connection therewith have been obtained
by MEI.
6.12 The minute book of MEI, as made available to Purchaser and its
representatives, contains accurate records of all meetings of and corporate
actions or written consents by the stockholders and the Board of Directors of
MEI.
6.13 The authorized capital stock of MEI consists of 100,000 shares of
$1.00 par value common stock of which 20,000 shares are issued and outstanding.
All of such shares have been validly issued and are fully paid and non-
assessable. MEI has no obligation to issue or deliver shares of its common
stock to any person whether upon exercise of subscription rights, options,
warrants, conversion rights, or otherwise.
6.14 MEI has no equity interest in any other corporation, firm or
partnership.
6.15 The un-audited balance sheet ("Financials") attached as Exhibit 6.15
is correct and presents fairly the financial position of MEI as of the date
thereof and is stated and has been prepared on a basis substantially consistent
with generally accepted accounting principles applied on a basis consistent with
that of preceding periods.
6.16 Since the date of the Financials, MEI has not declared or paid any
dividend on, or made any other distribution in respect of, any shares of its
outstanding capital stock and has not issued or sold any shares of its capital
stock.
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6.17 Except as and to the extent reflected or reserved against in the
Financials, MEI has no liabilities or obligations of any nature, whether
accrued, absolute or contingent or otherwise, including, without limitation, all
federal, state and local tax liabilities due or to become due with respect to
any period prior thereto.
6.18 Except as reflected in or adequately reserved against in the
Financials, since the date of the Financials, there has not been (i) any change
in the financial condition, assets, liabilities, results of operations, business
or prospects of MEI, (ii) any damage, destruction, or loss whether or not
covered by insurance affecting the property, business or prospects of MEI, (iii)
any labor dispute, (iv) any entry into any material commitment or transaction
(including, without limitation, any borrowing or capital expenditure) other than
the transactions contemplated by this Purchase Agreement, and those entered into
in the ordinary course of business, or (v) any other event or condition of any
character, which, in the case of all of the foregoing, individually or in the
aggregate, has been or may be materially adverse in relation to the financial
condition, business or prospects of MEI.
6.19 MEI has filed all Federal, State and local income, excise or
franchise tax returns, real estate and personal property tax returns, sales and
use tax returns and other tax returns required to be filed by it and have paid
all taxes owing by it except taxes which have accrued and for which adequate
provision had been made in the Financials. Neither
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the United States federal income tax liability nor any state tax liabilities of
MEI have ever been examined, audited or settled. Neither the Internal Revenue
Service nor any other tax authority is now asserting or, to the best of Seller's
knowledge, threatening to assert against MEI any deficiency or claim for
additional taxes or interest thereon or penalties in connection therewith.
6.20 MEI has no employees and no plan or contract providing for bonuses,
pensions, options, stock purchases, deferred compensation, retirement payments,
profit sharing or other similar employee benefit arrangements.
6.21 MEI has not, since its organization, engaged in an activity other
than the development of the Project.
6.22 There is set forth in Exhibit 6.22 a true and complete list of each
bank in which MEI has an account together with the account number and a list of
all persons authorized to draw thereon.
6.23 Neither Seller nor MEI has retained, employed or authorized any
broker or finder to act on their behalf in connection with the consummation of
the transactions contemplated hereby. Seller shall pay any fees due such broker
or finder and shall hold Purchaser and MEI harmless and indemnified from and
against any and all claims of such broker or finder.
6.24 No statement of fact made by or on behalf of Seller or MEI in this
Purchase Agreement or in any certificate or schedule furnished to Purchaser
pursuant thereto, or otherwise
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delivered by or in behalf of Seller to Purchaser contains any untrue statement
of a material fact or omits to state any material fact necessary to make
statements contained therein or herein not misleading.
SECTION 7
Post-Closing Covenants
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7.1 After the Closing Date, Xxxx X. Xxxxxxx shall, without compensation
other than the Purchase Price, continue his involvement in the development
process which shall include, without limitation, consultation with Purchaser,
attendance at meetings with Governmental Authorities and Project meetings, and
generally keeping abreast of Project development. Purchaser will reimburse Xxxx
X. Xxxxxxx only for his reasonable out-of-pocket expenses incurred in attending
meetings at Purchaser's request.
7.2 Promptly after the Closing Date, Purchaser shall cause MEI and Seller
shall cause R.N.S. Services, Inc. ("RNS"), to begin negotiation in good faith
and shall use their best efforts to promptly enter into agreements pursuant to
which RNS, or another entity controlled by Seller and affiliated with RNS, will
supply Purchaser with all waste-coal, limestone and ash removal required for
operation of the Project on substantially the same terms set forth on Exhibit
7.2 and on such other terms as the parties may agree, provided if the parties
conclude that the terms of such agreements, either individually or in the
aggregate, will jeopardize the status of
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the Project as a qualified small power production facility or, in any event, if
the parties fail to agree on the final terms of and execute such agreements
prior to November 1, 1987, then the obligations of Purchaser and Seller to each
other under this Section 7.2 shall terminate without recourse; provided,
however, such termination shall not terminate any rights either party may have
against the other for failing to negotiate toward such agreements in good faith
which rights may be exercised either before or after November 1, 1987.
7.3 Upon the satisfaction of the Recision Condition, Seller shall cause
Antrim to assign all of Antrim's interest in the Land Sales Agreement to MEI and
Purchaser shall cause MEI to reimburse Antrim for all fees paid to West Penn and
attorneys and other professionals by Antrim after the date of this Purchase
Agreement of Antrim's in connection with the Land Sales Agreement as of that
date. At such time as MEI acquires the real property described in the Land
Sales Agreement, MEI shall assume Antrim's indemnity obligations to West Penn
under Land Sales Agreement and shall hold Antrim harmless in connection
therewith. If such acquisition occurs prior to the Financial Closing Date,
Purchaser shall assume Antrim's indemnity obligations as a co-indemnitor,
provided Purchaser's obligations thereunder, whenever arising, shall terminate
on the Financial Closing Date
7.4 After the Closing, each of Purchaser and Seller will take such further
action and execute and deliver such further instruments and documents as either
shall reasonably request to carry out the purposes of the Purchase Agreement.
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SECTION 8
Representations and Warranties of Purchaser
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Purchaser hereby represents and warrants to Seller as follows:
8.1 Purchaser is validly existing as a corporation in good standing under
the laws of the State of Delaware.
8.2 Purchaser has full corporate power and authority to own and operate
its properties, to carry on its business as presently conducted, and to enter
into and perform its obligations under this Purchase Agreement, the Notes and
the Pledge.
8.3 Neither the execution and delivery of this Purchase Agreement, the
Notes or the Pledge, the performance of its obligations thereunder, nor the
consummation of the transactions contemplated thereby, will conflict with or
result in any breach of, or constitute a default under, or result in the
creation or imposition of any lien upon any of its property or assets under, any
applicable law, rule, regulation, judgment or order, its charter documents or
any indenture, mortgage, deed of trust, or other instrument or agreement to
which it is a party or by which it may be bound or to which any of its property
or assets may be subject.
8.4 The execution, delivery and performance by Purchaser of this Purchase
Agreement, the Notes and the Pledge have been duly authorized by all necessary
corporate action. Assuming the due authorization, execution and delivery
thereof by each of the other parties thereto, each such agreement constitutes a
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legal, valid and binding obligation of Purchaser, enforceable in accordance with
its terms subject to applicable bankruptcy, insolvency and similar laws
affecting creditor's rights generally.
8.5 Purchaser has not retained, employed or otherwise authorized any
broker or finder to act on its behalf in connection with the consummation of the
transactions contemplated hereby.
SECTION 9
Purchaser's Agreements
Events of Default; Remedies
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9.1 Purchaser agrees to perform, or cause MEI to perform, the following
after the Closing:
(a) Proceed with all due diligence to develop the Project after the
Closing and comply in all material respects with the Electric Energy Purchase
Agreement;
(b) Within 30 days after the Closing, appoint, and at all times thereafter
shall maintain, one person who will act as Project Manager. The initial Project
Manager will be Xxxxx Xxxxxx, and Seller shall be notified from time to time as
to any change of the Project Manager.
(c) By August 1, 1987, furnish to Sellers such evidence of the
qualifications and financial condition of the architect or engineer selected to
prepare (or supervise the preparation of) the Plans and Specifications as West
Penn may reasonably request, together with a description of the scope of the
work to be performed by such architect or engineer and a true and
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complete copy of the proposed contract with the architect or engineer who shall
prepare (or supervise the preparation of) the Plans and Specifications.
(d) By October 1, 1987, furnish to Sellers, the preliminary construction
Plans and Specifications for the Project as required by the Electric Energy
Purchase Agreement and copies of all licenses, permits, applications and
correspondence with regulatory agencies having jurisdiction over the design,
construction or operation of the Project.
(e) By November 1, 1987, furnish to Seller a copy of a proposed contract
with the general contractor for the construction of the Project, together with
evidence of the general contractor's qualifications and financial conditions.
(f) By March 1, 1988, furnish to Seller a recognized institutional
lender's commitment to provide initial construction financing for the Project
(which may include customary conditions to such institution's obligations to
lend) or such other evidence satisfactory to Seller concerning initial
construction financing for the Project.
9.2 If Purchaser or MEI shall fail to perform, when due, any of the
obligations in Section 9.1, Seller shall have the right to take any action,
incur any expense or pay any amount that Seller, in its sole discretion, deems
necessary or appropriate to perform those obligations prior to the time the
failure to perform would constitute a default under the Electric Energy Purchase
Agreement. In connection with the exercise of Seller's rights under this
Section 9.2, Purchaser
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shall give Seller access to all records of MEI and to the extent they relate
exclusively to the development of the Project, the records of Purchaser
9.3 Any of the following shall be an Event of Default:
(a) Purchaser shall fail to pay the Notes when due.
(b) Purchaser shall fail, prior to the Financial Closing Date, to
reimburse Seller for any and all expenses incurred or amounts paid by Seller in
exercising its rights under Section 9.2.
(c) (i) Purchaser becomes subject to a decree or order for relief in a
voluntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law; or (ii) Purchaser becomes
subject to a decree or other order adjudging Purchaser bankrupt or insolvent or
(iii) a court approves as properly filed a petition seeking, or Purchaser
commences a proceeding for, reorganization, arrangement, adjustment or
composition under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law, or (iv) a decree or order is entered
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Purchaser or of any substantial part of its property
or ordering the winding up or liquidation of Purchaser's affairs, and, in all
such cases, any such decree or order for relief or any other such decree or
order shall continue unstayed and in effect for a period of sixty (60)
consecutive days.
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(d) Except (i) as security for financing, (ii) in connection with a sale
and leaseback arrangement, or (iii) to an affiliate of Purchaser, without the
prior consent of Seller (which consent shall not be unreasonably withheld)
a. MEI conveys, or contracts to convey, the land upon which the Project
is to be constructed.
b. XXX xxxxx, assigns, or otherwise transfers the Electric Energy
Purchase Agreement or any part of the Project.
c. Purchaser sells, assigns, pledges, grants a security interest in, or
otherwise transfers the shares.
9.4 If an Event of Default occurs and is continuing prior to the payment
of the Notes, Seller, as its sole and exclusive remedy, may exercise the rights
provided in the Pledge Agreement.
SECTION 10
General Indemnity
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10.1 The Seller will indemnify and hold the Purchaser harmless against and
in respect of:
(a) any and all damage, loss, liability or deficiency resulting from any
misrepresentation, breach of representation or warranty under Section 6 or
nonfulfillment of any covenant or agreement on the part of the Seller to be
performed or observed (other than performance of any covenant or agreement
assigned to Purchaser pursuant to this Purchase Agreement); or from any
misrepresentation in or omission from any Exhibit or other written statement,
list, certificate or instrument
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furnished to Purchaser by the Seller pursuant to this Purchase Agreement; and
(b) any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and legal fees) incident to any
of the foregoing.
10.2 The Purchaser will indemnify and hold the Seller harmless against and
in respect of:
(a) any and all damage, loss, liability or deficiency resulting from any
misrepresentation, breach of representation or warranty under Section 8;
(b) any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and legal fees) incident to the
foregoing.
10.3 MEI will indemnify and hold Seller harmless against and in respect
of;
(a) any and all damages, loss, liability or deficiency resulting from
MEI's failure to satisfy any liability set forth in the Disclosure Exhibit or
reflected or reserved against in the Financials; and
(b) any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and legal fees) resulting
therefrom.
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10.4 The indemnifying party shall satisfy any and all claims for
indemnification properly asserted by the indemnified party pursuant to this
Section 10 within forty-five (45) days after receipt of written notice of such
claim for indemnification.
10.5 The indemnified party shall notify the indemnifying party of any
claim or demand by a third party which the indemnified party has determined has
given rise to or could reasonably give rise to a claim for indemnification and
the indemnifying party shall have a reasonable time (not to exceed ten days)
after receipt of such notice in which to retain counsel satisfactory to the
indemnified party to defend such third party claim or demand on behalf of the
indemnified party. If satisfactory counsel is so obtained, the indemnified party
shall make available to the indemnifying party and its agents and
representatives all records and other materials which are reasonably required in
the defense of such third party claim or demand and shall otherwise cooperate
with and assist the indemnifying party in the defense of such third party claim
or demand; and so long as the indemnifying party is defending such third party
claim or demand in good faith, the indemnified party shall not settle or
compromise such third party claim or demand. If the indemnifying party fails to
retain counsel to defend such third party claim or demand in good faith, the
indemnified party shall have the right, but not the obligation, to defend,
settle or compromise such third party claim or demand. If the indemnifying party
fails to
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defend in good faith any third party claim or demand for which the indemnified
party is entitled to indemnification hereunder, the indemnifying party shall pay
all legal fees and other costs and expenses incurred by the indemnifying party
as same become due and the indemnifying party shall pay on demand any judgment
or other resulting obligation of such third party claim or demand.
10.6 Any claim made pursuant to this Section 10 must be made in writing on
or before the third anniversary of the satisfaction of Condition 2. No
indemnifying party shall have any liability under this Section 10 until the
aggregate of all claims exceeds $10,000, and in no event shall Seller's
liability exceed the Purchase Price, Purchaser's liability exceed $50,000 or
MEI's liability exceed the amount of any liabilities reserved or reflected in
the Financials or disclosed in the Disclosure Exhibit.
10.7 Upon payment of any indemnity pursuant to this Section 10 the
indemnifying party shall be subrogated to any rights of the the indemnified
party in respect of the matter against which such indemnity was given. Nothing
contained in this Section 10 or elsewhere in this Purchase Agreement shall be
deemed to confer any right in favor of, or create any obligation of the
indemnifying party to anyone whomsoever except the indemnified party.
10.8 If there is more than one person comprehended by the term Seller, the
liability of the Seller shall be joint and several, but no individual Seller
shall be liable to Purchaser
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for an amount in excess of an amount which bears the same relationship to the
Purchase Price as the shares owned by such Seller bears to the Shares.
SECTION 11
Notices
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Except as otherwise provided herein, all notices and other communications
required under the terms and provisions hereof shall be in writing and shall be
come effective when delivered by hand, by courier, or received by telex,
telecopier, telegram or registered first class mail, postage prepaid, addressed
as follows:
If to Purchaser, at: Environmental Power Corporation
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, President
with a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Rackemann, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to Seller, at: c/o Antrim Mining, Inc.
P. O. Xxx 00
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Xxxxxxx Xxxx
and Xxxxxx X. Xxxx
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
Varnum, Riddering, Xxxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
SECTION 12
Miscellaneous
-------------
12.1 This Purchase Agreement shall in all respects be governed by, and
construed in accordance with, the laws of the
23
Commonwealth of Massachusetts including without limitation all matters of
construction, validity and performance.
12.2 The terms of this Purchase Agreement shall not be altered, modified,
amended, supplemented or terminated in any manner whatsoever except by written
instrument signed by the party against which such alteration, modification,
amendment, supplement or termination is sought.
12.3 This Purchase Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assigns.
12.4 Section headings and the table of contents are for convenience only
and shall not be construed as a part of this Purchase Agreement. All references
herein to numbered sections, unless otherwise indicated, are to sections of this
Purchase Agreement.
12.5 This Purchase Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original for all purposes, but all such counterparts shall together constitute
but one and the same instrument.
12.6 If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or such provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof or the application of such term or provision
24
to circumstances other than those as to which it is held invalid or
unenforceable. To the extent permitted by applicable law, the parties hereto
hereby waive any provision of law which renders any term or provision hereof
invalid or unenforceable in any respect.
Executed under seal as of the date first above written.
ENVIRONMENTAL POWER CORPORATION
/s/ Xxxx X. Xxxxxxx
----------------
Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------
Executive Vice President
/s/ Xxxxxxx Xxxx
-------------
Xxxxxxx Xxxx
/s/ Xxxxxx X. Xxxx
--------------
Xxxxxx X. Xxxx
25
EXHIBIT 2.1
PLEDGE AGREEMENT
AGREEMENT made April 30, 1987, between Environmental Power Corporation
("Pledgor") and Xxxx X. Xxxxxxx, Xxxxxxx Xxxx and Xxxxxx X. Xxxx (collectively,
"Pledgee").
RECITAL
For good and valuable consideration from Pledgee, the receipt and
sufficiency of which is acknowledged, Pledgor has agreed to pledge certain stock
with Pledgee as security for the payment and performance of his obligations to
Pledgee under a certain Non-Recourse Secured Note I dated April 30, 1987, in the
amount of $220,000 and a certain Non-Recourse Secured Note II dated April 30,
1987 in the amount of $4,900,000 (collectively the "Notes").
NOW, THEREFORE, it is agreed:
1. Pledge. As security for the payment by Pledgor of the Notes, Pledgor
------
hereby grants and transfers a security interest to Pledgee in instruments of the
following description:
20,000 shares of common stock, $1.00 par value per share, of Milesburg
Energy, Inc., a Pennsylvania corporation ("MEI"), represented by
certificate(s) number ____, ____ and ____
duly endorsed in blank, or accompanied by a stock power duly endorsed in blank,
and herewith delivered to Pledgee. Pledgor hereby appoints Pledgee his attorney
to arrange for the transfer of the pledged shares on the books of MEI to the
name of Pledgee. Pledgee shall hold the pledged shares as security for the
repayment of the Notes and shall not encumber or dispose of the pledged shares
except in accordance with the provisions of paragraph 9 of this Pledge.
2. Dividends. During the term of this Pledge, all dividends and other
---------
amounts paid in respect of the pledged shares, whether or not received by
Pledgee as a result of their record ownership of the pledged shares shall, so
long as Pledgor is not in default in the performance of any of the terms of this
Pledge, be paid to Pledgor.
3. Voting Rights. During the term of this Pledge, and so long as Pledgor
-------------
is not in default in the performance of any of the terms of this Pledge, Pledgor
shall have the right to vote the pledged shares on all corporate questions, and
Pledgee upon request shall execute proxies in favor of Pledgor to this end.
4. Adjustments. If, during the term of this Pledge, any share dividend,
-----------
reclassification, readjustment, or other change is declared or made in the
capital structure of MEI all new
substituted, and additional shares, or other securities, issued by reason of any
such change, shall be held by Pledgee under the terms of this Pledge in the same
manner as the shares originally pledged hereunder.
5. Warrants and Rights. If during the term of this Pledge, subscription
-------------------
warrants or any other rights or options shall be issued in connection with the
pledged shares, such warrants, rights, and options shall be immediately assigned
by Pledgor to Pledgee, provided, Pledgor shall have the right to exercise such
warrants, options or rights and if exercised by Pledgor, all new shares or other
securities so acquired by Pledgor shall be immediately assigned to Pledgee to be
held under the terms of this Pledge in the same manner as to the shares
originally pledged hereunder.
6. Payment of Loan. Upon payment of all sums owing to Pledgee under the
---------------
Notes, Pledgee shall transfer to Pledgor all the pledged shares and all rights
received by Pledgee as a result of its record ownership thereof if the pledged
shares are then registered in the name of Pledgee.
7. Default. It shall be a default under this Pledge if Pledgor shall
-------
fail to pay when due any amount owing under the Notes or shall fail to perform
any other covenant or condition of Pledgor under this Agreement or there is an
appointment of a custodian or receiver of any part of Pledgor's property, or the
making of an assignment or trust mortgage for the benefit of creditors by
Pledgor, or the commencement of any proceeding under any bankruptcy or
insolvency law by or against Pledgor which is not dissolved or discharged within
45 days. If there is a default under this Pledge, Pledgee shall have the rights
and remedies provided in the Uniform Commercial Code in force in the
Commonwealth of Massachusetts at the date of this Pledge and in this connection,
Pledgee may, upon twenty days' written notice to Pledgor and without liability
for any diminution in price which may have occurred, sell at a public or private
sale all or any part of the pledged shares in such manner and for such price as
Pledgee may determine. At any public sale, Pledgee shall be free to purchase all
or part of the pledged shares and pay for the same by cancellation of any amount
owing Pledgee by Pledgor pursuant to the Note and free of any right of
redemption on the part of the Pledgor. The proceeds of any sale shall be applied
by Pledgee first to the amount of the expenses of the sale and then to the
amount equal to the principal under the Notes. Any remaining balance of such
proceeds shall be paid to Pledgor.
8. Notices. Any notice required by Pledgee to Pledgor under this Pledge
-------
shall be deemed properly given if in writing and mailed postage prepaid,
certified or registered mail, return receipt requested to Pledgor at:
2
Xxxxxx X. Xxxxxx, President
Environmental Power Corporation
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Rackemann, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
EXECUTED under seal the day and year first above written.
Witness: PLEDGOR
ENVIRONMENTAL POWER
CORPORATION
___________________________ By: ________________________
3
EXHIBIT 6.11
1. Letter dated 1/12/87 from Baskin, Flaherty, Xxxxxxx & Xxxxxxx, P.C.
2. Agreements with Black & Xxxxxx indentified by letter dated 1/23/87, 12/8/86
and agreement dated 9/15/86.
3. Letter dated 2/26/87 to Xxxxx & XxXxxxxx, Inc. from MEI.
4. Letter dated 1/16/87 to Xxxx Xxxxx from XXX.
5. Letter dated 1/14/87 to Tracydale Development Co. from MEI.
6. Agreements with Chernie Contracting Corp. identified by letters dated
3/30/87, 12/8/86 from MEI.
7. Letters dated 1/19/87 and 1/20/87 between MEI and Gannett Xxxxxxx
Environmental Engineers, Inc.
8. Electric Energy Purchase Agreement.
9. Letter Agreement Allegheny Power System dated Oct. 17, 1986.
DISCLOSURE EXHIBIT
Section 6.4 The Electric Energy Purchase Agreement by its terms provided for
various security interests created by MEI and affecting the
Project.
Section 6.11 Antrim Mining, Inc. has been negotiating with West Penn to
purchase the land and improvements on which the Project will be
located. These negotiations may constitute an agreement or
understanding which relate to the Project.
Section 6.17 MEI has the following liabilities not reflected on the
Financials.
Section 6.17
Unbilled obligations for:
Electric Energy Xxxx Xxxxx
---------------
Legal Services 1) Varnum Ridderig Xxxxxxx & Xxxxxxx
--------------
2) Xxxxxx Xxxxxxxx Xxxxxx & Mannio, P.
C.
3) Xxxxxxx Xxxxxxxxx
4) Alleghany Power System
Engineers 1) Black & Xxxxxx
---------
2) Gannett Xxxxxxx Environmental
Engineers
Land Rental Tracydale Development Co.
-----------
6.22 Bank Account Numbers
---- ---------------
First Citizens 02-20307-3-02
National Bank
6.23 There is an agreement with Baskin, Flaherty, Xxxxxxx & Xxxxxxx
P.C. identified in Exhibit 6.11.
MILESBURG ENERGY, INC.
----------------------
(A Development Stage Company)
Financial Statements
April 21, 1987
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Accountants' Compilation Report
Exhibit I Balance Sheet
April 21, 1987
Exhibit II Statement of Loss and Accumulated Deficit
Four Month Period Ended April 21, 1987
Exhibit III Statement of Changes in Financial Position
Four Month Period Ended April 21, 1987
Notes to Financial Statements
[LETTERHEAD OF XXXXXX, XXXXX & ASSOCIATES APPEARS HERE]
Stockholders and Directors
MILESBURG ENERGY, INC.
Blossburg, Pennsylvania
The accompanying balance sheet of
MILESBURG ENERGY, INC.
----------------------
(A Development Stage Company)
as of April 21, 1987 and related statement of loss and accumulated deficit and
statement of changes in financial position for the four month period then ended
have been compiled by us in accordance with standards established by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements. information that is the representation of management. We have not
audited or reviewed the accompanying financial statements and, accordingly, we
do not express an opinion or any other form of assurances on them.
/s/ Xxxxxx, Xxxxx & Associates
April 23, 1987
Muncy, Pennsylvania
MILESBURG ENERGY, INC. EXHIBIT I
---------------------- ---------
(A Development Stage Company)
Balance Sheet
April 21, 1967
(See Accountants Compilation Report)
ASSETS
------
Current Assets:
Cash in bank 42,229.07
Fixed Assets:
Energy development costs 228,497.10
----------
Total Assets 270,726.17
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable 70,726.17
Notes payable - Antrim Mining, Inc., non-interest 41,000.60
Notes payable - stockholders, non-interest 139,000.00
----------
Total current liabilities 250,726.17
Stockholders' Equity:
Common stock, $1.00 par value, 100,000 shares
authorized; 20,000 shares issued and outstanding 20,000.00
----------
Total Liabilities and Stockholders' Equity 270,726.17
==========
The accompanying Notes to Financial Statements are an integral part of this
financial statement.
MILESBURG ENERGY, INC. EXHIBIT II
---------------------- ----------
(A Development Stage Company)
Statement of Loss and Accumulated Deficit
Four Month Period Ended April 21,1987
(See Accountants' Compilation Report)
NO ACTIVITY -0-
==========
The accompanying Notes to Financial Statements are an integral part of this
financial statement.
MILESBURG ENERGY, INC. EXHIBIT III
---------------------- -----------
(A Development Stage Company)
Statement of Changes in Financial Position
Four Month Period Ended April 21, 1987
(See Accountants' Compilation Report)
Sources of Working Capital -0-
Application of Working Capital --
Increase of development costs 93,540.93
---------
Net decrease in working capital 93,540.93
=========
-------------------------------------------------------------------------------
Changes in Components of Working Capital
Comprised Of --
Increase/(Decrease) in Current Assets:
Cash 41,910.89
Increase/(Decrease) in Current Liabilities:
Accounts payable (15,990.18)
Notes payable 151,442.00
----------
Increase in current liabilities 135,451.82
----------
Net decrease in working capital 93,540.93
==========
The accompanying Notes to Financial Statements are an integral part of this
financial statement.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 CORPORATE FORMATION
------ -------------------
MILESBURG ENERGY, INC. was incorporated on September 30, 1986,
under the laws of the Commonwealth of Pennsylvania. The corporation is
a closely-held corporation with 100% stock ownership owned by the Mase
and Xxxxxxx families. The stockholders invested $20,000.00 for stock
and $139,000.00 for loans to provide working capital to develope a
feasability study for generation of electricity from coal refuse. The
company has been in the development stage since its formation.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
------- -------------------------------
The more significant accounting policies of MILESBURG ENERGY,
INC. , a development company, all of which are in conformity with
generally accepted accounting principles, are summarized as follows --
Accounting Method
-----------------
MILESBURG ENERGY, INC. uses the accrual method of accounting for
both financial and tax purposes. Under the accrual method, the
corporation recognizes income when earned or services rendered and
expenses when incurred. All costs incurred during the development
stage have been capitalized.
Taxes
-----
The shareholders of the corporation have elected to have the
corporation treated as a small business corporation (Sub-chapter 'S')
for both federal and state income tax purposes; consequently, no
corporate net income taxes are recognized.
NOTE 3 ENERGY DEVELOPMENT COSTS
------ ------------------------
Development costs incurred to date in the study of producing
electricity from coal refuse are summarized as follows --
Name Description Amount
------------------------- ------------------------- --------------
Black & Xxxxxx Preliminary design plan 73858.61
Varuum, Xxxxxxxxx, Xxxxxxx
& Xxxxxxx Attorneys 99585.87
Gannett W Xxxxxxx Environ-
mental Engineers. Inc. Air quality studies 16690.37
NOTES TO FINANCIAL STATEMENTS
-----------------------------
PAGE 2
------
NOTE 3 ENERGY DEVELOPMENT COSTS (Continued)
Name Description Amount
------------------------- ------------------------- --------------
Xxxxxxxx X. Xxxxxxxxx, PC Conversion study 5,000.00
Utility Engineers, Inc. Preliminary study 7,000.00
Xxxxxx X. Xxxxxxxxx PURPA qualification 6,434.64
Xxxxxx X. Xxxxxxxx & Assoc. Engineers 3,889.77
X. X. Xxxxxxx Drilling Co. Testing 2,396.00
Miscellaneous items Travel costs 6,069.30
Schmidt, Chapman, Duff &
Xxxxxx Attorneys 1,760.00
Xxxxxx, Xxxxx & Associates Certified Public
Accountants 1,763.25
Xxxxxx Electric Supply Electrical 305.02
Tracydale Development Co. Rental lease 600.00
Xxxxxxx & Xxxxxxxx Attorney -
incorporation 210.36
Xxxxx Xxxxx Surveyor 150.00
Regulatory Policy Institute Subscription 145.00
Pennysaver Advertisement -
incorporation 64.66
First Citizens National Bank Checkbook 54.05
PA Department of Revenue Capital stock tax 19.00
Miscellaneous items Office overhead 166.82
Xxxxxxxx Xxxxx Electrical 170.58
Xxxxxx X. Xxxxx Consultant 1,600.00
Simon-Eastern Corporation Consultant 564.00
----------
Total development costs 228,497.10
==========
EXHIBIT 7.2
1. RNS will be the exclusive supplier for all necessary services to process and
transport waste coal; transport and dispose of flyash, bottom ash, dry
scrubber residue; and supply limestone for the Project for a term of 15
years beginning on the Commencement Date defined in the Electric Energy
Purchase Agreement.
2. The aggregate payments by MEI to RNS will be $4,787,000 per year in the base
year when the WPP Energy Credit is 1.28(cents)/kwh.
3. The payments will be escalated/de-escalated monthly in direct proportion to
the WPP Energy Credit Escalation De-escalation from the base of
1.28(cents)/kwhr.
4. Transportation will be by railroad or truck.
5. The only wastes to be disposed of under the ash disposal contract are
flyash, bottom ash, dry scrubber residue. The plant will be designed and
operated to segregate or blend the ash products at RNS discretion.
6. Waste fuel services will be for a minimum 7000 BTU/lb. maximum
4.3pounds/MBTU sulfur waste coal. RNS will supply all data necessary to
permit MEI to submit all necessary applications to FERC for certification of
fuel sources as qualified waste under FERC rules and regulations
7. The supply contracts will be structured to permit qualification of the
Project for tax-exempt financing under applicable provisions of the Internal
Revenue Code of 1986.
8. RNS will supply evidence of availability of sites and sources and character
of materials sufficient to fulfill its obligations under the supply
contracts.