UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 0-25748
GREAT BAY POWER CORPORATION
(Exact name of registrant as specified in its charter)
New Hampshire 02-0396811
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 Ladd Street, Portsmouth, New Hampshire 03801-408
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 433-8822
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant has filed all
documents required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution
of securities under a plan confirmed by a court.
Yes X No
Class Outstanding at November 1, 1995
Common Shares $0.01 Par Value 7,999,998
Page 1 of ____ pages.
Exhibit Index appears on page _____.
INDEX
Part I. Financial Information:
Item 1 - Financial Information:
Statements of Income and Loss - Three and Nine
Months Ended September 30, 1995 and 1994............................ 3
Balance Sheets at September 30, 1995
and December 31, 1994.............................................. 4-5
Statements of Cash Flow - Nine Months
Ended September 30, 1995 and 1994..................................... 6
Notes to Financial Statements........................................ 7-8
Item 2 - Financial Discussion:
Management's Discussion and Analysis of
Results of Operations.............................................. 9-13
Part II. Other Information:
Item 6 - Exhibits and Reports in Form 8-K:
Signature.............................................................. 15
Exhibit Index......................................................... 16
STATEMENTS OF INCOME AND LOSS STATEMENTS OF INCOME AND LOSS
(UNAUDITED)
(Dollars in Thousands, except shares and per share data)
SUCCESSOR COMPANY PREDECESSOR COMPANY
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1995 1995 1994 1994
Operating Revenues $6,350 $20,759 $4,586 $9,445
Operating Expenses:
Production 4,484 12,786 4,421 14,631
Transmission 231 705 149 702
Administrative & General
1,673 4,612 1,014 3,330
Depreciation and Amortization
784 2,304 2,276 6,827
Taxes Other than Income
1,005 3,027 1,145 3,584
Total Operating Expenses
8,177 23,434 9,005 29,074
Operating Income (Loss)
(1,827) (2,675) (4,419) (19,629)
Other (Income) Deductions:
Interest Expense 0 0 391 550
Other (401) (1,202) (55) (207)
Total Other (Income)
Deductions (401) (1,202) 336 343
Income Before Taxes (1,426) (1,473) (4,755) (19,972)
Income Taxes (94) (97) (1,518) (6,467)
Net Income (Loss) $(1,332) $(1,376) $(3,237) $(13,505)
Shares Outstanding
7,999,998 7,999,998
Earnings (Loss) Per Share
$(0.17) $(0.17)
(The accompanying notes are an integral part of these
statements.)
BALANCE SHEET
(UNAUDITED)
(Dollars in Thousands)
September 30, December 31,
1995 1994
ASSETS:
Net Utility Plant $100,356 $101,213
Nuclear Fuel 12,318 10,556
Less: Accumulated Depreciation
(5,659) (2,118)
Net Nuclear Fuel 6,659 8,438
Total Utility Plant and Nuclear Fuel
107,015 109,651
Other Property & Investments:
Decommissioning Trust Fund
4,478 3,290
Current Assets:
Cash & Cash Equivalents
12,876 18,533
Short-term Investments, at market
9,423 3,684
Accounts Receivable 2,089 2,598
Materials & Supplies 4,897 4,846
Prepayments & Other Assets
3,248 2,976
Total Current Assets
32,533 32,637
Deferred Debits & Other 96 88
TOTAL ASSETS $144,122 $145,666
(The accompanying notes are an integral part of these
statements.)
BALANCE SHEET
(UNAUDITED)
(Dollars in Thousands)
September 30, December 31,
1995 1994
LIABILITIES & STOCKHOLDERS' EQUITY:
Stockholders' Equity:
Common Stock Issued $80 $80
Paid in Capita 88,030 88,030
Retained Earnings (Deficit)
(1,194) 182
Total Capitalization
86,916 88,292
Operating Reserves:
Misc. Other Liability 719 719
Decommissioning Liability
49,622 48,530
Total Operating provisions
50,341 49,249
Current & Accrued Liabilities:
Accounts Payable & Accrued Expenses
113 303
Taxes Accrued 747 1,166
Reorganization Expenses 268 2,653
Misc. Current Liabilities
2,904 1,346
Total Current & Accrued Liabilities
4,032 5,468
Other Liabilities & Deferred Credits
Deferred Taxes -- 94
Other Liabilties & Deferred Credits
2,833 2,563
Total Other Liabilities & Deferred Credits
2,833 2,657
Total Liabilities & Capital
$144,122 $145,666
(The accompanying notes are an integral part of these
statements.)
CASH FLOW STATEMENT
(UNAUDITED)
(Dollars in Thousands, except shares and per share data)
Successor Company Predecessor Company
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
Cash Flows From Operating Activities:
Net Income (Loss) $(1,376) $(13,505)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
2,304 6,131
Nuclear Fuel Amortization
3,541 2,003
Investment Tax Credit - Net
-- (139)
Deferred Taxes (94) (6,329)
Change in assets and liabilities:
(Increase) Decrease in:
Accounts receivable 509 277
Materials and supplies (51) --
Prepayments (272) 2,365
Increase (Decrease) in:
Accounts payable (190) --
Taxes accrued (419) (135)
Other (566) 2,357
Net Cash Provided From (Used In)
Operating Activities
3,386 (6,975)
Cash Flows From Investment Activities:
Gross Additions to Utility Plant
(899) (1,859)
Gross Additions to Nuclear Fuel
(1,762) --
Decommissioning Fund Payments
(643) --
Decrease (Increase) in Short-term Investments
(5,739) --
Net Cash (Used In) Investment Activities
(9,043) (1,859)
Cash Flow From Financing Activities:
Debtor-in-Possession Financing
-- 8,922
Net Cash Provided From Financing Activities
-- 8,922
Net Increase (Decrease) in Cash and Equivalents
(5,657) 88
Cash and Equivalents at Beginning of Period
18,533 138
Cash and Equivalents at End of Period
$12,876 $226
Cash paid for:
Interest --- ---
Income Taxes --- ---
(The accompanying notes are an integral part of these
statements.)
NOTES TO FINANCIAL STATEMENTS
Note A - THE COMPANY
Great Bay Power Corporation (the "Company") is a New Hampshire
corporation which emerged from bankruptcy on November 23, 1994.
The predecessor company, EUA Power Corporation ( the
"Predecessor") was incorporated in 1986. The Company is
authorized by the New Hampshire Public Utilities Commission
(NHPUC) to engage in business as a public utility for the
purposes of acquiring its 12.1% interest in the Seabrook Nuclear
Power Project (the "Seabrook Project"), participating as a joint
owner in the Seabrook Project and selling its share of the
electricity produced by Seabrook Project for resale. The
Seabrook Project consists of the Seabrook Unit 1 reactor
("Seabrook Unit 1"), a nuclear-fueled, steam electricity
generating plant located in Seabrook, New Hampshire. The
Predecessor became a wholesale generating company when Seabrook
Unit 1 commenced commercial operation on August 19, 1990. In
1993, the Predecessor became an Exempt Wholesale Generator under
the Energy Policy Act of 1992.
The Company currently has two employees, and substantially all
the Company's power marketing and administrative functions are
performed on the Company's behalf by third parties pursuant to
contractual agreements.
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited financial statements included herein have been
prepared on behalf of the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission and include, in the opinion of management, all
adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of interim period results.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been omitted or condensed
pursuant to such rules and regulations. The Company believes,
however, its disclosures herein, when read in conjunction with
the Company's audited financial statements for the year ended
December 31, 1994, are adequate to make the information
presented not misleading. As further discussed in the
Management Discussion and Analysis, the results for the interim
periods are not necessarily indicative of the results to be
expected for the full fiscal year.
Note C - COMMITMENTS AND CONTINGENCIES
Nuclear Issues
Like other nuclear generating facilities, the Seabrook Project
is subject to extensive regulation by the Nuclear Regulatory
Commission ("NRC"). The NRC is empowered to authorize the
siting, construction and operation of nuclear reactors after
consideration of public health, safety, environmental and
anti-trust matters.
The NRC has promulgated numerous requirements affecting safety
systems, fire protection, emergency response planning and
notification systems, and other aspects of nuclear plant
construction, equipment and operation. The Company has been,
and may be, affected to the extent of its proportionate share by
the cost of any such requirements for Seabrook Unit 1. <PAGE>
Nuclear units in the United States have been subject to
widespread criticism and opposition. Some nuclear projects have
been canceled following substantial construction delays and cost
overruns as the result of licensing problems, unanticipated
construction defects and other difficulties. Various groups
have by litigation, legislation and participation in
administrative proceedings sought to prohibit the completion and
operation of nuclear units and the disposal of nuclear waste.
In the event of a shutdown of any unit, NRC regulations require
that it be completely decontaminated of any residual
radioactivity. The cost of such decommissioning, depending on
the circumstances, could substantially exceed the owners'
investment at the time of cancellation.
Public controversy concerning nuclear power could adversely
affect the operating license of Seabrook Unit 1. While the
Company cannot predict the ultimate effect of such controversy,
it is possible that it could result in a premature shutdown of
the unit.
Liquidity and Capital Expenditures
The Company anticipates that its share of the Seabrook
Project's capital expenditures for the 1995 fiscal year,
including reactor refueling scheduled for November 1995, will
total approximately $7.0 million. The majority of these capital
expenditures are for nuclear fuel. This scheduled outage is
expected to last approximately 45 days, during which time the
plant will not generate any electricity for its owners.
The Seabrook Project experienced an unscheduled outage from
June 18, 1995 to July 5, 1995. During this period the Seabrook
Project did not produce electricity and the Company did not earn
any revenue. During unscheduled outages, in addition to the
expenses of routine operation and maintenance, the Company is
responsible for its pro rata share of expenses related to the
outage. In addition, as a result of the June 18, 1995 to July
5, 1995 unscheduled outage, the operation of Seabrook Unit 1 has
been limited to approximately 96% of maximum capacity. This
reduction in capacity continued until the start of a scheduled
refueling outage, which began on November 4, 1995, resulting in
a reduction of approximately 4% in the energy Great Bay had
available for sale. Seabrook Unit 1 is expected to return to
full operating capacity following the completion of the
refueling outage which began on November 4, 1995.
Note D - COMMON STOCK
The Company's authorized capital stock consists of 8,000,000
shares of common stock, with a par value of $0.01 per share.
A total of 7,999,998 shares of common stock were outstanding on
November 1, 1995.
The Company has never paid cash dividends on the Common Stock.
The Company currently intends to retain all of its future
earnings and does not anticipate paying a dividend in the
foreseeable future.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Great Bay Power Corporation (formerly known as EUA Power
Corporation) is a New Hampshire public utility whose principal
asset is its 12.1% joint ownership interest in the Seabrook
Nuclear Power Project in Seabrook, New Hampshire . The
Company's share of the Seabrook Project capacity is
approximately 140 megawatts . The Company sells its share of
the electricity produced by the Seabrook Project in the
wholesale electricity market, primarily in the Northeast United
States. Great Bay does not have operational responsibility for
the Seabrook Project. Instead, the daily operational and
management responsibilities of the Seabrook Project are carried
out by a Managing Agent, which is currently North Atlantic
Energy Service Corporation ("NAESCO"), a wholly-owned subsidiary
of Northeast Utilities.
The Company's operating results and the comparability of these
results on an interim and annual basis are directly impacted by
the operations of the Seabrook Project, including the cyclical
refueling outages (generally scheduled 18-24 months apart) as
well as any unscheduled outages. During outage periods at the
Seabrook Project, the Company has no electricity available for
resale and consequently no revenues.
The Company accrues reserves for the incremental costs of the
scheduled outages over the periods between such scheduled
outages. However, during outages, the Company continues to
record the normal operating and maintenance expenses of the
Seabrook Project as incurred. Accordingly, the Company will
incur losses during scheduled outage periods as a result of the
combination of a lack of revenues and the recognition of normal
recurring operating and maintenance costs, as well as the
continuing depreciation of the utility plant.
A scheduled refueling outage for the Seabrook Project began
on November 4, 1995 and is expected to extend to December 18,
1995. Based on the Seabrook Project budget for this scheduled
outage, assuming that the duration of the outage is forty-five
days and assuming that only refueling and routine maintenance is
performed, the Company anticipates incurring a loss in the range
of $3,700,000 in the fourth quarter of 1995 resulting from
decreased revenues coupled with continuing operating and
maintenance expenses and depreciation, as discussed above.
The Company also incurs losses during unscheduled outage
periods due to decreased revenues and additional costs
associated with unscheduled outages as well as continuing
operating and maintenance expenses and depreciation. It is
not possible for the Company to predict the frequency or
duration of future unscheduled outages; however, such outages
will most likely occur.
THIRD QUARTER OF FISCAL 1995 COMPARED TO THE THIRD QUARTER OF
FISCAL 1994
Results of Operation
The third quarter of 1995 was the Company's third full quarter
of operations since it emerged from bankruptcy on November 23,
1994. During this period the Company recorded a net loss of
$1,332,000, as compared to a net loss of $3,237,000 recorded by
the Predecessor Company during the third quarter of 1994. The
net loss recorded for the quarter ended September 30, 1995 was
primarily due to reduced capacity at the Seabrook Project as a
result of the June 18, 1995 to July 5, 1995 unscheduled outage.
In contrast, the net loss for the quarter ended September 30,
1994 was primarily due to an outage from April 5, 1994 to July
31, 1994 which was the result of an unexpected extension of a
scheduled refueling outage. The decreased net loss in the 1995
quarter as compared with the 1994 quarter was the result of
increased sales and decreased operating expenses, primarily
lower depreciation due to the write-down of the Company's
Seabrook Project assets to fair value upon its emergence from
bankruptcy.
Operating Revenues
Operating revenues increased by approximately 38.5% to
$6,350,000 in the third quarter of 1995 as compared with
$4,586,000 in the third quarter of 1994 . The increase was due
to higher availability and production at the Seabrook Project,
resulting from a reduction in the amount of scheduled and
unscheduled outage time during the third quarter of 1995 as
compared with the same period during 1994. During the third
quarter of 1995, the average capacity factor at the Seabrook
Project was 90.44% of the rated capacity versus an average
capacity factor of 64.31% for the same period in 1994. Sales of
electricity increased by approximately 40.6% to 278,606,000
kilowatt hours in 1995 as compared with 198,121,000 kilowatt
hours in 1994. This increase in kWh sales during the third
quarter of 1995 was partially offset by a reduction in the sales
price per kWh received by the Company during the third quarter
of 1995, as compared to the same period of 1994. During the
third quarter of 1995 the sales price per kWh declined 4.6% to
2.27 cents per kWh as compared with 2.38 cents per kWh in the
1994 period.
Expenses
Administrative and General expenses increased by 65.0% to
$1,673,000 during the third quarter of 1995as compared with
$1,014,000 in the third quarter of 1994. This increase
primarily reflects the normal costs associated with the
ongoing management of the Company after its emergence from
bankruptcy.
Depreciation and amortization expenses decreased by 65.6% to
$784,000 in the third quarter of 1995 as compared with
$2,276,000 in the third quarter of 1994. This decrease was the
result of a reduction in the depreciable value of the Company's
investment in the Seabrook Project due to the write-down to fair
value of all the Company's assets following its emergence from
bankruptcy in November 1994.
Taxes Other Than Income decreased by approximately 12.2% to
$1,005,000 in the third quarter of 1995 as compared with
$1,145,000 in the 1994 period. This decrease was primarily due
to higher property tax accruals during the 1994 period.
Other
Other income increased by 629% to $401,000 during the third
quarter of 1995 as compared with $55,000 in the third quarter of
1994. This increase primarily reflects increased interest
income as a result of the Company's significantly higher cash
and investment balances in the current year.
FIRST NINE MONTHS OF FISCAL 1995 COMPARED TO THE FIRST NINE
MONTHS OF FISCAL 1994
Results of Operation
The Company recorded a net loss of $1,376,000 for the first
nine months of 1995, as compared to a net loss of $13,505,000
recorded by the Predecessor Company during the first nine months
of 1994. The net loss recorded for the period was due in part
to an unscheduled outage at the Seabrook Project, from June 18,
1995 to July 5, 1995, which resulted in an estimated decrease in
revenues for the period of approximately $1,537,000. In
contrast, the net loss for the nine months ended September 30,
1994 was primarily due to an outage from April 5, 1994 to July
31, 1994 which was the result of an unexpected extension of a
scheduled refueling outage. The decreased loss in the first
nine months of 1995 as compared with the same period of 1994 was
also the result of decreased operating expenses, primarily lower
depreciation due to the write-down of the Company's Seabrook
Project assets to fair value upon its emergence from bankruptcy.
Operating Revenues
Operating revenues increased by approximately 119.8% to
$20,759,000 in the first nine months of 1995 compared with
$9,445,000 in the first nine months of 1994. The increase was
primarily due to higher availability and production at the
Seabrook Project resulting from a reduction in the amount of
outage time during the first nine months of 1995 compared with
the same period during 1994. During the first nine months of
1995, the average capacity factor at the Seabrook Project was
92.8% of the rated capacity versus an average capacity factor of
48.6% for the same period in 1994. The increase in revenue for
the first nine months of 1995 was also due to a 1.7% increase in
sales price per kWh to 2.44 cents per kWh in 1995, compared with
2.40 cents per kWh in the 1994 period.
Expenses
Production expenses for the first nine months of 1995 decreased
by 12.6% to $12,786,000 as compared with $14,631,000 in the
1994 period, despite increased power production during the 1995
period. This decrease was primarily the result of reduced
maintenance expenses at the Seabrook Project during the1995
period compared with the 1994 period, during which an extended
outage increased maintenance costs. The reduction in production
expenses was also the result of reduced nuclear fuel costs
during the first nine months of 1995 due to a revision in the
fuel amortization rate adopted upon reorganization.
Administrative and General expenses increased by 38.5% to
$4,612,000 during the first nine months of 1995 as compared with
$3,330,000 in the 1994 period. This increase primarily
reflects the normal costs associated with the ongoing management
of the Company after its emergence from bankruptcy.
Depreciation and amortization expenses decreased by 66.3%to
$2,304,000 in the first nine months of 1995 as compared with
$6,827,000 in the 1994 period. This decrease was the result of
a reduction in the depreciable value of the Company's investment
in the Seabrook Project due to the write-down to fair value of
all the Company's assets following its emergence from bankruptcy
in November 1994.
Taxes Other Than Income decreased by approximately 15.5% to
$3,027,000 in the first nine months of 1995 as compared with
$3,584,000 in the 1994 period. This decrease was primarily due
to higher property tax accruals during the year earlier period.
Other
Other income increased by 480% to $1,202,000 during the first
nine months of 1995 as compared with $207,000 in the first nine
months of 1994. This increase primarily reflects increased
interest income as a result of the Company's significantly
higher cash and investment balances in the current year.
Net Operating Losses
For federal income tax purposes, as of December 31, 1994, the
Company had net operating loss carryforwards ("NOLs") of
approximately $139,400,000 which are scheduled to expire
between 2005 and 2009. Because the Company has experienced one
or more ownership changes within the meaning of Section 382 of
the Internal Revenue Code of 1986, as amended, an annual
limitation has been imposed on the ability of the Company to
deduct the NOLs it generated prior to any date on which it
experienced an ownership change. The Company believes that such
annual limitation is approximately $5,500,000 and, accordingly,
that the ability of the Company to utilize annually its NOLs and
depreciation deductions attributable to its property and/or
equipment will be substantially restricted.
Liquidity
The Company's cash and short-term investments decreased
approximately $82,000 during the first nine months of 1995. Principal factors
affecting liquidity during the nine months ended September 30,
1995 included the operating loss discussed above plus $2,661,000
of capital expenditures for plant and nuclear fuel, payments of
$643,000 to the decommissioning trust fund and payments of
$2,385,000 for bankruptcy-related reorganization expenses.
Partially offsetting the items listed above were non-cash
charges to income of $5,845,000 for depreciation and
amortization and $1,589,000 for accrued outage costs.
For the quarter ending December 31, 1995, the Company expects
to use a significant amount of its cash and equivalents to fund
its share of a planned refueling outage of approximately 45 days
(assuming that the duration of the outage is forty-five days and
assuming that only refueling and routine maintenance is
performed, the decrease in cash and equivalents during the
fourth quarter of 1995 is estimated to be in the range of
$8,300,000). This outage will reduce revenues for such quarter
and increase operating expenses and capital expenditures,
primarily for nuclear fuel.
The cash generated from electricity sales by the Company is and
has been less than the Company's ongoing cash requirements. The
Company expects that it will continue to incur cash deficits
until the prices at which it is able to sell its share of the
electricity generated by the Seabrook Project increase, which
may be a number of years, if ever. The Company intends to cover
such deficits with its cash reserves, which totalled
approximately $22,299,000 at September 30, 1995.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) There were no reports on Form 8-K submitted for the
three months ended September 30, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GREAT BAY POWER CORPORATION
/s/ John A. Tillinghast
John A. Tillinghast
President
(Principal Financial Officer)
Dated: November 14, 1995
EXHIBIT INDEX
Exhibit No. Description Page Number
10.1 Services Agreement, dated as of November 3, 1995,
by and between PECO Energy Company and the Company.
10.2 Warrant Purchase Agreement, dated as of
November 3, 1995, by and between PECO
Energy Company and the Company.
27 Financial Data Schedule.
99 Press Release of the Company, dated
November 6, 1995, with respect to the
Services Agreement by and between PECO
Energy Company and the Company.
_________________________
(1) Confidential treatment requested as to certain portions
which are indicated by an asterisk and filed separately with the Securities and
Exchange Commission with an Application for Confidential Treatment pursuant to
Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-31-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 107,014,898
<OTHER-PROPERTY-AND-INVEST> 4,478,145
<TOTAL-CURRENT-ASSETS> 32,533,259
<TOTAL-DEFERRED-CHARGES> 95,269
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 144,121,598
<CAPITAL-SURPLUS-PAID-IN> 88,030,276
<RETAINED-EARNINGS> (1,194,027)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 86,916,249
<COMMON> 80,000
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 57,205,349
<TOT-CAPITALIZATION-AND-LIAB> 144,121,598
<GROSS-OPERATING-REVENUE> 20,758,527
<INCOME-TAX-EXPENSE> (96,708)
<OTHER-OPERATING-EXPENSES> 23,433,584
<TOTAL-OPERATING-EXPENSES> 23,336,876
<OPERATING-INCOME-LOSS> (2,578,349)
<OTHER-INCOME-NET> 1,202,273
<INCOME-BEFORE-INTEREST-EXPEN> (1,376,076)
<TOTAL-INTEREST-EXPENSE> 6
<NET-INCOME> (1,376,083)
0
<EARNINGS-AVAILABLE-FOR-COMM> (1,376,083)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 3,386,000
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
Exhibit 10.1
SERVICES AGREEMENT
between
PECO ENERGY COMPANY
and
GREAT BAY POWER CORPORATION
This Services Agreement (the "Agreement") between PECO Energy
Company, a Pennsylvania corporation, ("PECO"), and Great Bay
Power Corporation, a New Hampshire corporation, ("Great Bay") is
made and dated this third day of November, 1995. PECO and Great
Bay may be referred to individually as a "Party" and
collectively as the "Parties."
WHEREAS, Great Bay has an approximately twelve percent (12%)
ownership interest in the Seabrook 1 Nuclear Power Plant
("Seabrook"), which generates approximately 140 MW of capacity
and energy;
WHEREAS, Great Bay desires that PECO serve as Great Bay's agent
in arranging for the sale to third parties of capacity and
energy owned by Great Bay which is not presently committed, as
provided herein;
WHEREAS, PECO desires to act as Great Bay's agent to arrange for
the sale of such capacity and energy subject to the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound hereby, do hereby
agree as follows:
SECTION 1: Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"Additional Power Amount" shall mean capacity and/or energy or
agreements to acquire capacity and/or energy that meet the
following criteria: (i) it originates from generating facilities within the
states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, or
Vermont; (ii) the cost to PECO to acquire such capacity and/or energy net
of all Transmission Costs and Ancillary Services Costs, determined in
accordance with the terms and conditions of the purchase agreement pursuant
to which
Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
such power was acquired, would be $*****/MWh or less; and (iii)
the term of the purchase of such capacity and/or energy would be
one year or longer.
"Additional Seabrook Capacity" shall mean (i) Seabrook capacity
purchased by Great Bay other than Great Bay's existing 12.1324%
ownership in Seabrook, and (ii) as mutually agreed to by the Parties in
writing, capacity purchased by Great Bay at nuclear facilities other than
Seabrook which have substantially the same pressurized water reactor design,
historical operating performance, and operating costs as Seabrook.
"Agreement" shall mean this Services Agreement, and all of the
attachments hereto, as the same may be amended in accordance
with the terms hereof.
"Ancillary Services" shall mean generation capacity and/or
energy, or control area services, which are purchased to
maintain reliable delivery of Transactions within or between control areas,
including but not limited to, reactive power support, spinning reserve, load
following, and transmission line losses (if not included with Transmission).
"Ancillary Services Costs" shall mean all costs incurred in
connection with the purchase of Ancillary Services.
"Annual Hours" shall mean 8760 for any full calendar year other
than 1996 in which the Agreement is in effect; and shall equal,
for any partial calendar year, other than 1996, in which the
Agreement is in effect, the product of (i) 8760 and (ii) a
fraction, the numerator of which is the number of days during
the applicable calendar year in which the Agreement is in effect
and the denominator of which is 365. During 1996, Annual Hours
shall equal the product of (i) 8784 and (ii) a fraction, the
numerator of which is the number of days from the Service
Commencement Date through December 31, 1996, and the denominator
of which is 366.
"Annual True-Up Amount" shall mean the amount to be paid by
PECO to Great Bay, subject to the terms of Section 9, for
underpayment to Great Bay of the share of Net Sales Revenue due
to Great Bay during the previous calendar year, as calculated
pursuant to Section 9(b) and Attachment l to the Agreement.
"Back-Up Power" shall mean capacity and/or energy delivered to
Customers during periods in which the Initial Power Amount is
partially or totally unavailable.
"Customer" shall mean any party that purchases or utilizes any
portion of the Initial Power Amount.
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Proprietary and Confidential
"Delinquent Amounts" shall mean, for any month, the amount of
Gross Receipts receivable from Customers which are not collected
by the fourteenth (14th) day of the immediately following month.
"Enabling Agreements" shall mean agreements between Great Bay
and third parties which, upon execution by Great Bay and such
parties, enable PECO to arrange for the direct sale of the
Initial Power Amount to such parties.
"Firm Energy Performance Payment" shall mean the amount payable
by PECO to Great Bay for PECO's failure to achieve the Winter
1996 Firm Sales Target, and shall be calculated according to the
terms of Section 8.
"Firm Energy Transaction" shall mean a Transaction (i) in which
energy is guaranteed to be available for a period of time or may
be called by the Customer during agreed-upon periods, and (ii)
requires that energy delivery not be interrupted for reasons of
economy or unit outage during periods in which delivery is guaranteed.
"Great Bay" shall mean Great Bay Power Corporation.
"Gross Receipts" shall mean all dollar amounts receivable from
all Transactions during a relevant period.
"Half-Year True-Up Amount" shall mean the amount to be paid by PECO to
Great Bay each July during the term of the Agreement, subject to the
terms of Section 9, for underpayment to Great Bay of the share of Net
Sales Revenues payable to Great Bay during January through June of each
applicable calendar year, as calculated pursuant to Section 9(a) and
Attachment l to the Agreement.
"Initial Power Amount" shall mean the approximately 140 MW of Seabrook
capacity and associated energy generated by Great Bay's 12.1324% ownership
of Seabrook, less capacity and associated energy committed under the
contractual agreements listed in Attachment 2 hereto.
"MW" shall mean megawatts of capacity.
"MWh" shall mean megawatthour(s) of energy.
"NEPEX" shall mean the Northeast Power Exchange, or its successor entity.
"NEPOOL" shall mean the New England Power Pool, or its successor entity.
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Proprietary and Confidential
"Net Power" shall mean the MWh produced by Seabrook, less station service
expressed in MWh, as reported by Seabrook's operators in the Seabrook
Station Status Report, or any successor report thereto.
"Net Sales Revenues" shall mean, for the relevant period, the
difference between (i) the sum of Gross Receipts and Reservation
Fees and (ii) the sum of Transmission Costs and Ancillary
Services Costs.
"Non-Seabrook Power" shall mean capacity and/or energy purchased by Great Bay
which is neither an Additional Power Amount nor Additional Seabrook Capacity.
"On-Peak Periods" shall mean Monday through Saturday from the hour ending
0700 through the hour ending 2200, unless otherwise mutually agreed between
PECO and Great Bay.
"Other NEPOOL Supply" shall mean capacity and/or energy purchased or
callable by PECO, other than an Additional Power Amount, which Great Bay
elects not to participate in with PECO, which originates from generating
facilities within Connecticut, Maine, Massachusetts, New Hampshire,
Rhode Island, or Vermont.
"Outage" shall mean a period in which Seabrook does not generate energy.
"PECO" shall mean PECO Energy Company.
"Real Time Information" shall mean information which is made
available on a periodic or real-time basis to Seabrook owners or
NEPOOL members relating to (i) Seabrook availability and
production level and (ii) NEPEX operating conditions; the
availability, production level, and cost of NEPEX-dispatched
generating units; and the availability, flows, and constraints
on transmission systems owned by NEPOOL members.
"Reservation Fee" shall mean the fee payable by PECO to Great Bay for the
right to arrange for the sale of the Initial Power Amount, as defined in
Section 6(a) herein.
"Reservation Fee Rebate" shall mean the amount, if any, PECO is owed for
overpayment of Reservation Fees, as determined under Section 9(c) herein.
"Seabrook" shall mean the Seabrook l Nuclear Power Project in
Seabrook, New Hampshire.
"Seabrook Capacity Factor" shall mean the actual operating performance
of Seabrook, as determined under Section 9(c).
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Proprietary and Confidential
"Seabrook Station Rated Capacity" shall mean the capability rating for
Seabrook as determined by the NEPOOL operations committee pursuant to
the NEPOOL Agreement at the beginning of each NEPOOL summer and winter
capability period.
"Seabrook Station Status Report" shall mean the daily report published by
Seabrook's operator reporting gross energy production, station load
consumption, and average net power produced by Seabrook, or any successor
report containing the same or substantially similar information.
"Service Commencement Date" shall mean the latest of (i) the return to
service of Seabrook from the refueling outage presently scheduled to
commence on or about November 5, l995, (ii) the date upon which the
termination of the Marketing Agent Agreement, dated April 26, 1993
between Great Bay and UNITIL, becomes effective, as determined by Great
Bay, and (iii) the completion of data links and receipt of authorizations
to enable PECO to receive Real Time Information on an ongoing basis.
"Service Fee" shall mean the portion of Net Sales Revenues payable to PECO
as compensation for services provided by PECO to Great Bay, as calculated
pursuant to Section 6(b) herein.
"Spot Market Performance Payment" means the amounts payable by PECO to
Great Bay as calculated pursuant to Section 8(c).
"Termination True-Up Amount" shall mean the amount to be paid by PECO to
Great Bay upon termination of the Agreement pursuant to Section 16 for
underpayment to Great Bay of the share of Net Sales Revenues payable
to Great Bay, as calculated pursuant to Section 16(c) and Attachment l
to the Agreement.
"Transaction" shall mean a sale or utilization of all or any portion of
the Initial Power Amount pursuant to the terms of the Agreement arranged
by PECO to a Customer.
"Transmission" shall mean the right to utilize, or the actual use of,
transmission and/or distribution systems, as defined by the Federal
Energy Regulatory Commission, to deliver the Initial Power Amount to
points of delivery agreed upon with Customers.
"Transmission Costs" shall mean the cost of Transmission, including
payments to reserve transmission capacity and adder payments to
transmission providers for actual transmission usage and/or
transmission line losses.
"UNITlL" shall mean the UNITIL Corporation and its affiliates
and subsidiaries.
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Proprietary and Confidential
"Warrant" shall mean the warrant purchased by PECO under the Warrant
Purchase Agreement, the execution of which shall occur at the same
time as execution of this Agreement.
"Warrant Expiration Date" shall mean the earliest of the following to
occur: (i) September 30, 1996, if Seabrook Capacity Factor for the
period from the Service Commencement Date through September 15, 1996 is
equal to or greater than 60%; (ii) December 3l, l996, if Seabrook Capacity
Factor for the period from the Service Commencement Date through December 15,
1996 is equal to or greater than 60%; (iii) two (2) business days following
the first date after December 31, 1996 upon which Seabrook Capacity Factor
for the immediately preceding twelve months is equal to or greater than
60%; or (4) December 3l, 1997.
"Warrant Purchase Agreement" shall mean the agreement which the Parties
enter into concurrently with this Agreement, pursuant to which PECO shall
purchase a Warrant which, upon exercise, shall enable PECO to purchase
a 4.99% ownership of Great Bay common stock.
"Warrant Shares" shall mean the shares of Great Bay common stock which
PECO shall have the right to purchase pursuant to the Warrant Purchase
Agreement.
"Winter 1995 Sales Price" shall mean the average price received by Great
Bay during the Winter 1995 period for the sales of capacity and/or energy
owned by Great Bay identified in Attachment 3, as calculated pursuant
to Section 8.
"Winter 1996 Firm Sales Target" shall mean the product of (i) twenty-five
percent (25%), (ii) the Initial Power Amount and (iii) the number of
hours in the Winter 1996 Period.
"Winter 1996 Sales Price" shall mean the average sales price received by
Great Bay for Transactions during the Winter 1996 Sales Period, as
calculated pursuant to Section 8.
"Winter 1996 Sales Period" shall mean the period commencing on the later of
(i) January 1, 1996 and (ii) the Service Commencement Date, and concluding
on March 31, 1996.
SECTION 2. Term of the Agreement.
a. Initial Term. The Agreement shall be effective upon execution, and
subject to subparagraph (b), shall terminate on December 31, 1997.
Services under the Agreement shall commence upon the Service
Commencement Date.
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Proprietary and Confidential
b. Extension or Early Termination of the Agreement. If PECO purchases
the Warrant Shares on or before the Warrant Expiration Date, the Agreement
shall terminate on December 31, 1998. If Seabrook Capacity Factor from
the Service Commencement Date through September 15, 1996 exceeds 60% and
PECO does not purchase the Warrant Shares on or before September 30, 1996
for reasons other than Great Bay's failure to satisfy Section 5 of the
Warrant Purchase Agreement, Great Bay shall have the right, but not the
obligation, to terminate the Agreement on December 31, 1996, and shall
notify PECO by October 20, 1996 whether Great Bay so elects to terminate
the Agreement. If the Warrant Expiration Date occurs after September 30,
1996, Great Bay shall inform PECO by the twentieth (20th) day following
the Warrant Expiration Date, if PECO does not purchase the Warrant Shares on
or before the Warrant Expiration Date, whether Great Bay elects to terminate
the Agreement. If Great Bay so elects to terminate, the Agreement shall
terminate on the ninetieth (90th) day following the Warrant Expiration Date.
SECTION 3. General Obligations of Great Bay.
a. Provision of Initial Power Amount. For the term of the Agreement,
Great Bay shall appoint PECO as Great Bay's exclusive agent to arrange for
the sale of the Initial Power Amount. Unless otherwise agreed between the
Parties, Great Bay shall make the Initial Power Amount available to PECO
at Seabrook.
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Proprietary and Confidential
b. PECO Exclusivity. During the term of the Agreement, Great Bay shall
not: (i) retain a party other than PECO to serve as Great Bay's agent to
sell, or arrange for Transactions utilizing, the Initial Power Amount,
(ii) enter into arrangements with a party other than PECO to provide, in
connection with offers for sale or the actual sale of the Initial Power
Amount, any of the services which PECO shall provide pursuant to Section 4
herein, (iii) enter into an agreement except with PECO for the purchase by
Great Bay, or for the delivery to a Customer, of Back-Up Power with respect
to a Firm Energy Transaction, (iv) engage in any negotiations with a
potential Customer nor make any offers with respect to the terms and
conditions for sale of the Initial Power Amount without PECO's prior written
consent, or (v) enter into an agreement that would cause the Initial Power
Amount to deviate from the amount set forth in Attachment 2 hereto, unless
otherwise agreed to in writing by PECO.
c. Transfer of Title to Initial Power Amount. Great Bay shall retain
title and ownership of the Initial Power Amount unless and until some or
all of such title and/or ownership is transferred to other parties pursuant
to the terms of a Transaction.
d. Provision of Transactional Capabilities. To the extent permissible,
Great Bay shall make available to PECO, for PECO's use in arranging
Transactions, all Real-Time Information; transactional capabilities; and
rights to purchase from, or sell to, NEPEX which are accorded to Great Bay as
a NEPOOL member. In addition, Great Bay shall provide PECO the necessary
authorizations to enable PECO to act as Great Bay's agent for Transactions
or interactions with NEPOOL members, including the right to broker and
schedule Transactions utilizing NX-7 Agreement(s) between Great Bay and
a NEPOOL member(s). Great Bay shall provide to PECO a copy of the Seabrook
Station Status Report, or any successor report thereto, immediately following
Great Bay's receipt thereof.
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Proprietary and Confidential
e. Notification of Plant Outages. Great Bay shall notify PECO promptly
of any planned Outages upon learning from Seabrook operators that such an
Outage is planned, including the expected nature and duration of such an
Outage. Great Bay shall notify PECO immediately upon learning that any
unplanned Outage or reduction in Seabrook output that has or will occur,
including the expected nature and duration of such an Outage or reduction.
With respect to the Outage presently scheduled to commence on or about
November 5, 1995, Great Bay shall provide PECO notice of Seabrook's
expected return to service not less than five (5) business days prior
to such scheduled in-service date.
SECTION 4. Services Provided by and General Obligations of PECO.
Upon execution of the Agreement, PECO shall provide the following services to
Great Bay:
a. Brokering Services. PECO shall use its reasonable best efforts to
arrange for the sale of the entire Initial Power Amount in one or more
Transactions, provided however, that PECO shall purchase any portion of
the Initial Power Amount not sold in Transactions. PECO shall use the
same care and diligence in arranging Transactions as it uses in the sale of
capacity and/or energy owned by PECO. PECO is authorized and required to
perform all services necessary to arrange Transactions including to exercise
reasonable judgment during the negotiation and scheduling of Transactions.
PECO shall arrange for Transmission and/or Ancillary Services as necessary
under the terms and conditions of each Transaction. At the request of Great
Bay, PECO shall offer for sale or use all or any portion of uncommitted
Initial Power Amount on such terms and conditions as Great Bay shall direct,
provided that the offer for sale is for a term of at least six (6) months
in duration and that Great Bay shall not compel PECO to offer a Firm Energy
Transaction, ("Great Bay Directed Offer"). If PECO, in its sole business
judgment, does not believe that the terms and conditions of a Great Bay
Directed Offer maximize the value of the Initial Power Amount, PECO shall
notify Great Bay in writing of such belief and shall have the right, but not
the obligation, at the time that such a Great Bay Directed Offer is
transmitted to the potential Customer, to exercise its right to terminate
the Agreement pursuant to Section 16(b). PECO shall not complete
arrangements for a Transaction with a duration of one year or more withouT
the prior written consent of Great Bay.
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Proprietary and Confidential
b. Provision of Firm Supply. In connection with offering any portion of
the Initial Power Amount, PECO shall offer to arrange Firm Energy
Transactions which in its sole business judgment will maximize the value of
the Initial Power Amount; provided, however, that in no event shall Great
Bay have the right to compel PECO to offer for sale a Firm Energy
Transaction. During periods in which the Initial Power Amount is partially
or totally unavailable, PECO shall arrange for the delivery of Back-Up
Power to Customers which have entered into a Firm Energy Transaction
arranged by PECO. Unless otherwise agreed to by the Parties, PECO shall
bear all costs associated with the purchase and transmission of Back-Up Power
and shall retain all revenue received from delivery of Back-Up Power.
Revenue received by PECO for Back-Up Power shall not be included in the
calculation of Gross Receipts under Section 7(a). Great Bay shall have no
obligation to purchase or arrange for Back-Up Power to replace portions of
the Initial Power Amount which cannot be supplied during periods in which
Initial Power Amount is partially or totally unavailable.
c. Bundling of Initial Power Amount. If at any time (i) a portion of the
Initial Power Amount is available but is not committed to a Transaction,
(ii) PECO has Other NEPOOL Supply available for use in a sale, and
(iii) PECO can arrange a sale which could be served with energy from the
Initial Power Amount or the Other NEPOOL Supply, then PECO shall be
obligated to serve each such sale with both the Initial Power Amount and the
Other NEPOOL Supply until the Initial Power Amount is fully utilized.
d. Economic Disincentive. If at any time (i) a portion of the Initial
Power Amount is not committed to a Transaction, (ii) PECO simultaneously
owns uncommitted Other NEPOOL Supply and (iii) PECO would retain more margin
from a pending sale by utilizing such Other NEPOOL Supply than it would
retain by utilizing the uncommitted portion of the Initial Power Amount,
then PECO shall notify Great Bay of such circumstances.
e. Billing. Except as otherwise provided in this Section 4, PECO shall
bill Customers for each Transaction and shall collect from them such billed
amounts. PECO shall be responsible for maintaining accurate records of each
Transaction. At either Party's written request, the Parties shall retain a
third party trustee agent to maintain an account into which Gross Receipts
shall be
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Proprietary and Confidential
paid, and out of which the monthly payment to Great Bay, pursuant to
Section 7(c), and the monthly payment to PECO, pursuant to Section 7(b),
shall be disbursed. The cost of trustee agent services shall be treated as
an Ancillary Service Cost for the purpose of calculating Net Sales Revenues,
up to an annual cost of $36,000. The Party which requests retention of a
trustee agent shall bear costs for trustee agent services in excess of
$36,000 during any calendar year, or portion thereof, in which the
Agreement is in effect.
f. Transaction Administration. PECO shall provide administration services
including scheduling of Transactions with relevant control area
administrators, and filing documentation enabling Transactions with control
areas or power pool administrators, as necessary. PECO shall have the right
to negotiate Enabling Agreements on Great Bay's behalf (such as NX-7
Agreements), which are required by control areas or power pools other than
NEPOOL, although any such agreements would only become effective upon Great
Bay's consent, which consent shall not be unreasonably or untimely withheld.
SECTION 5: Restrictions on Certain PECO Actions.
PECO acknowledges that it is acquiring the Warrant (and if it exercises the
Warrant, will acquire the Warrant Shares) for investment purposes and that
it is not acquiring the Warrant (and if it exercises the Warrant, the
Warrant Shares) with the intent or objective of affecting the management
or control of Great Bay. In furtherance of the foregoing, PECO covenants
that so long as the Agreement is effective, except for a change in control
of Great Bay, in connection with the Warrant Shares it shall not directly
or indirectly, and shall not permit any of its affiliates or associates
(as such terms are defined in Rule l2b-2 promulgated under the Exchange
Act), directly or indirectly, without the prior consent of the board of
directors of Great Bay, to:
a. purchase, acquire or own, or offer or agree to purchase, acquire or
own, any securities of Great Bay or any of its subsidiaries which are
entitled to, or may be entitled to, vote or by the terms thereof are
convertible into or exchangeable for securities which are entitled to vote
(collectively, "Voting Securities"), other than (i) the Warrant Shares;
(ii) securities which may be issued with respect to the Warrant Shares as
a result of any stock splits, dividends, distributions, recapitalizations or
similar events; and (iii) additional Voting Securities provided
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Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
that the aggregate of all Voting Securities owned by PECO and its
affiliates, after giving effect to any proposed purchase, does not and will
not exceed 9.9% of the total of all of Great Bay's issued and outstanding
Voting Securities at any time;
b. make, or in any way participate in, any "solicitation" of "proxies" or
be a "participant" in an "election contest" or "solicitation" (as such
terms are defined or used in Regulation 14A under the Securities Exchange
Act of 1934, as amended, the "Exchange Act") with respect to Great Bay, or
initiate, propose, communicate with or otherwise solicit stockholders of
Great Bay for the approval of one or more stockholder proposals or induce or
attempt to induce any other person to initiate any stockholder proposal; or
c. form, join, in any way participate in, or encourage the formation of,
a group (as such term is defined in Section 13(d)(3) of the Exchange Act)
with respect to any Voting Securities; or
d. deposit any Voting Securities into a voting trust, or subject any Voting
Securities to any agreement or arrangement with respect to the voting of
any Voting Securities or other agreement having similar effect, except as
provided herein; or
e. except for services to be provided hereunder, otherwise act, alone or in
concert with others, to affect or influence control of the management or the
Board of Directors of Great Bay or its subsidiaries.
SECTION 6. Definition of Fees.
a. Reservation Fee. In consideration for retaining PECO as its exclusive
agent to broker the Initial Power Amount, PECO shall pay to Great Bay a
Reservation Fee of $** per MWh, for each hour or portion thereof, during
which Seabrook generates energy from the Service Commencement Date to the
date of termination of the Agreement. PECO shall not pay a Reservation Fee
for energy associated with a Seabrook Capacity Factor equal to or greater
than 90.0%.
b. Service Fee. In consideration for providing the services specified
above, PECO shall be paid by Great Bay a Service Fee, which during each
calendar year, or portion thereof, in which the Agreement is in effect
equals the product of (i) **%, (ii) Net Sales Revenues,
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Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
and (iii) the lesser of Seabrook Capacity Factor and 85.0%; plus the
product of (i) **%, (ii) Net Sales Revenues, and (iii) the amount by which
Seabrook Capacity Factor is greater than 85.0% and less than 90%. PECO
shall not be paid a Service Fee for the portion of total Net Sales Revenues
associated with a Seabrook Capacity Factor equal to or greater than 90.0%.
SECTION 7. Monthly Payment to Great Bay and PECO.
a. Monthly Statement. Not later than fifteen (15) days following the end
of each calendar month, PECO shall render to Great Bay a monthly statement
detailing for the prior month: (i) Gross Receipts, (ii) Reservation Fee
payments due Great Bay, and (iii) the description and cost of Transmission
and/or Ancillary Services associated with that month's Transactions. PECO
shall provide with each monthly statement the terms and conditions of each
Transaction during the relevant month, unless the terms and conditions of
a Transaction have been provided to Great Bay in a previous Monthly
Statement, and if any Transaction is of the type described in Section 4(c),
PECO shall include in its description the amount and the terms and conditions
upon which PECO's Other NEPOOL Supply was sold as part of the Transaction.
b. Monthly Payment to Great Bay. At the time each monthly statement is
due to Great Bay, PECO shall pay to Great Bay an amount equal to the
product of (i) ********** percent (**%) and (ii) the difference between, for
the prior month, Net Sales Revenues and Delinquent Amounts; plus the product
of (i) ********** percent (**%) and (ii) any Delinquent Amounts collected
during the prior month.
c. Monthly Payment to PECO. At the time each monthly statement is due to
PECO, PECO shall retain from Gross Receipts an amount equal to the product
of (i) *********** percent (**%) and (ii) the difference between, for the
prior month, Net Sales Revenues and Delinquent Amounts; plus the product of
(i) *********** percent (**%) and (ii) any Delinquent Amounts collected
during the prior month.
SECTION 8. Performance Payment to Great Bay.
a. Statement of Winter 1996 Performance.
Coincident with the monthly statement which PECO renders to Great Bay for
Transactions during March 1996, PECO shall render a
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statement detailing (i) the amount of Initial Power Amount sold in Firm
Energy Transactions with durations of at least three months, and (ii) the
Winter 1996 Sales Price. The Winter 1996 Sales Price shall equal the
quotient of (i) Net Sales Revenues Due to Great Bay for the Winter 1996
Period divided by (ii) the amount of Initial Power Amount energy
(expressed in MWhs) delivered in Transactions.
b. Performance Standard. Except as provided in Section 8(d), if (i) PECO
has not arranged for the sale of a total of at least twenty-five percent
(25%) of the Initial Power Amount in Firm Energy Transactions of at least
three months in duration, or (ii) the Winter 1996 Sales Price is less than
the Winter 1995 Sales Price, then PECO shall pay to Great Bay the lesser of
(i) the Firm Energy Performance Payment and (ii) the Spot Market Performance
Payment. For purposes of determining the Winter 1996 Firm Sales Target,
any Firm Energy Transaction of at least three months in duration which
(i) PECO has completed contractual negotiations for but which Great Bay,
pursuant to Section 4(a) elects not to enter into, or (ii) has been
contracted for but which has not become effective due to any action or
inaction of the Federal Energy Regulatory Commission or any state or local
regulatory body with competent jurisdiction, shall be deemed to have been
arranged by PECO and shall be included in the calculation of the 1996 Firm
Sales Target. The Winter 1995 Sales Price shall equal, for the Winter
1995 Period, the quotient of (i) net sales revenues actually paid to Great
Bay for the Winter 1995 Period and (ii) the amount of MWh sold by Great Bay
to third parties during the Winter 1995 Period, other than the amount of
MWh purchased from Great Bay by UNITIL pursuant to the UNITIL Power Purchase
Agreement, dated April 16, 1993. If during the Winter 1996 Period there
are no Firm Energy Transactions, or PECO is excused from paying a Firm
Energy Performance Payment pursuant to Section 7(d), PECO shall pay to
Great Bay the Spot Market Payment, if any.
c. Calculation of Payments. The Firm Energy Performance Payment shall be
in an amount equal to the product of (i) the difference between the Winter
1996 Firm Sales Target and the amount of MWh proposed to be sold by PECO,
or actually sold, in Firm Energy Transactions of three months or longer
during the Winter 1996 Period, and (ii) the average sales price for Firm
Energy Transactions of three months or longer. The Spot Market Performance
Payment shall be an amount equal to the
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product of: (i) the difference between the Winter 1996 Sales Price and
the Winter 1995 Sales Price, and (ii) the amount of energy, expressed in
MWh sold in Transactions during the Winter 1996 Period.
d. Payments Excused. PECO's obligation to pay a Firm Energy Performance
Payment (but not the Spot Market Performance Payment) shall be excused in
the event that Great Bay, for any reason, does not enter into those Enabling
Agreements required by PECO to satisfy the Winter 1996 Firm Sales Target.
In addition, PECO's obligation to pay a Spot Market Performance Payment shall
be excused in the event that (i) Great Bay and PECO mutually agree in
writing that the value of the Initial Power Amount may be maximized through
on-peak spot market transactions and (ii) Seabrook Capacity Factor during
such On-Peak Periods is below 80%.
SECTION 9. Bi-Annual Revenue Sharing True Up.
a. Half Year True-Up. Not later than fifteen (15) business days following
June 30th of each calendar year during the Agreement term, PECO shall
determine the Half Year True-Up Amount based on actual Seabrook operating
performance during January through June of the applicable year, and shall
pay Great Bay, as provided in this Section 8 and Attachment l, the portion of
Net Sales Revenues received by PECO during the preceding six months equal
to the difference between (i) revenues owed Great Bay during January through
June, inclusive, of each calendar year (as calculated pursuant to Attachment
l hereto) and (ii) the total amount of Net Sales Revenues received by Great
Bay during the relevant January through June period. Great Bay shall be paid
the Great Bay Half-Year Delinquent Share determined in accordance with
Step 16 of the calculation of the Half-Year True-Up provided in Attachment l.
b. Annual True-Up. Not later than fifteen (l5) business days following
December 31st of each calendar year during the Agreement term, PECO shall
determine the Annual True-Up Amount based on actual Seabrook operating
performance during the preceding calendar year, and shall pay Great Bay,
as provided in this Section 9 and Attachment l, a portion of Net Sales
Revenues equal to (i) revenues owed Great Bay during each calendar year of
the Agreement term (as calculated pursuant to Attachment l) less (ii) the
total amount of Net Sales Revenues received by Great Bay during the relevant
calendar year, less (iii) the Half Year True-Up Amount, less (iv) the
-15-
result of the Half Year Delinquent Amount True-Up. Great Bay shall be paid
the Great Bay Delinquent Share determined in accordance with Step 17 of the
calculation of the Annual True-Up provided in Attachment 1.
c. Seabrook Capacity Factor. Seabrook Capacity Factor shall be expressed as
a percentage and shall equal total Net Power produced during the relevant
period divided by the product of (i) Seabrook Station Rated Capacity for
the relevant period and (ii) the number of hours in the relevant period.
d. Seabrook Capacity Factor Statement. Not later than the seventh (7th)
business day following June 30th and December 31st of each year of the
Agreement term, Great Bay shall render to PECO a statement of Seabrook
Capacity Factor during, respectively, the preceding six months, and the
preceding calendar year. This statement shall be utilized by PECO to
determine (i) the amount Great Bay is owed for under recovery of Net Sales
Revenues as a result of a Seabrook Capacity Factor equal to or greater than
85.0% during the relevant period, and (ii) the Reservation Fee Rebate owed
to PECO. PECO shall not compute the Half-Year True-Up Amount, the Annual
True-Up Amount, or the Reservation Fee Rebate if Seabrook Capacity Factor
is less than 85.0% during the relevant period.
e. Reservation Fee Rebate. The Reservation Fee Rebate shall equal the
difference between (i) total Reservation Fee Payments by PECO to Great Bay
and (ii) the amount of Reservation Fee payments owed by PECO to Great Bay
as a result of actual Seabrook Capacity Factor during each applicable
calendar year.
f. Calculations. The methodology for calculating the Half-Year True-Up
Amount, the Annual True-Up Amount, and the Reservation Fee Rebate is
provided in Attachment l hereto.
SECTION 10. Late Payments.
Interest on due and owing unpaid amounts shall accrue daily from the due
date of such unpaid amount until the date paid at a rate equal to 110% of
the then current prime interest rate per annum of The Chase Manhattan Bank
(National Association) or its successor.
-16-
SECTION 11. Continuing Obligations.
Notwithstanding termination or expiration of this Agreement, Great Bay and
PECO shall each be obligated to perform their respective obligations under
Transactions contractually agreed to in writing by PECO during the Agreement
term.
SECTION 12. PECO's Right to Renegotiate.
If at any time during each calendar year of the Agreement term, PECO has
arranged a Firm Energy Transaction utilizing the Initial Power Amount and
(i) PECO can demonstrate that Seabrook is not capable of achieving at
least a sixty percent (60%) Seabrook Capacity Factor during the applicable
calendar year or (b) Seabrook generates insufficient energy to meet firm
obligations arranged by PECO for sixty (60) consecutive days, PECO shall
have the right to negotiate an adjustment in the Service Fee to reflect
a more equitable payment for PECO's brokering services. During 1997, the
number of hours equal to the planned duration of the 1997 Seabrook refueling
Outage, as reported by Great Bay to PECO in writing fifteen (15) days prior
to commencement of such planned Outage, shall be exempted from calculation
of Seabrook Capacity Factor for the purposes of this Section 12.
SECTION 13. PECO and Great Bay Obligations for Future Joint Opportunities.
a. Joint Purchase of Additional Power. PECO shall be obligated to
provide Great Bay with the opportunity to participate in all purchases of
Additional Power Amounts. PECO and Great Bay shall enter into good faith
negotiations for a period of thirty (30) days following the execution of
a letter of intent between PECO and a third party for the purchase of an
Additional Power Amount, during which time PECO and Great Bay shall
negotiate terms and conditions for the ownership, sharing of costs, and
sharing of revenues associated with each Additional Power Amount; provided,
however, that if PECO and Great Bay cannot agree on such terms in a timely
manner, PECO shall not be prevented from (i) unilaterally entering into
such a purchase and executing all documents to implement such purchase and
(ii) allocating to Great Bay, as part of any cost and revenue sharing to
which PECO and Great Bay may mutually agree at a later date, costs and
revenues associated with the Additional Power Amount commencing on the date
which PECO entered into the purchase. PECO shall serve as the Parties'
exclusive agent in arranging for the
-17-
sale of capacity and/or energy associated with each Additional Power
Amount which the Parties participate in jointly.
b. Great Bay Purchase of Additional Seabrook Capacity. Additional
Seabrook capacity purchased by Great Bay shall be governed by the
Agreement, and shall be incorporated into the definition of Initial Power
Amount as set forth in Attachment 2.
c. Great Bay Purchase of Additional non-Seabrook power. Great Bay shall
provide PECO with the opportunity to serve as Great Bay's exclusive agent
in arranging for the sale of additional Non-Seabrook Power purchased by
Great Bay. PECO and Great Bay shall enter into good faith negotiations
for a period of thirty (30) days following the execution of a letter of
intent between Great Bay and a third party for the purchase of
Non-Seabrook Power, during which time PECO and Great Bay shall negotiate
the terms and conditions under which PECO would serve as Great Bay's
exclusive agent in arranging the sale of Non-Seabrook Power. If PECO and
Great Bay cannot agree to such terms at the end of thirty (30) days, Great
Bay shall be able to enter into negotiations with a third party to arrange
for the sale of such a Non-Seabrook Power purchase.
d. Joint Pursuit of Other Opportunities. PECO and Great Bay agree to use
good faith efforts to maximize the value of the Initial Power Amount
including joint acquisition of generating assets, or subject to Section 13(a)
and Section 13(c), joint participation in the purchase of additional
power. The Parties agree to meet each quarter during the term of the
Agreement to discuss portfolio expansion opportunities in the NEPOOL region.
SECTION 14. Transaction Costs and Expenses.
Each Party shall be liable for its own costs with respect to the execution
and performance of the Agreement unless specifically provided otherwise
herein.
SECTION l5. Liability and Indemnification.
Each Party shall be liable to the other Party for direct damages only, and
in no event shall either Party be liable to the other Party for any
indirect, consequential, punitive, or exemplary damages in tort, for
Initial Power Amount or otherwise. Great Bay shall indemnify, hold
harmless and defend PECO against all claims, liability, costs or expense
-18-
for loss, damage or injury to persons or property in any manner directly
or indirectly connected (a) with or growing out of, the generation or
distribution of the Initial Power Amount, except in the event that such
claim, liability, cost or expense was a result of PECO's gross negligence
and willful misconduct hereunder or for a breach hereunder, which breach
is the cause of such claim, liability, cost or expense, and (b) with the
termination of any existing brokering or marketing arrangements with third
parties relating to the Initial Power Amount. The limitations set forth
in the first sentence of this Section 14 shall not apply with respect to
subparagraph (b).
SECTION 16. Termination.
a. Termination for Failure to Meet Material Obligations. In addition
to any other remedy, if any Party fails to perform its material obligations
under the Agreement, then the non-defaulting Party may provide written
notice of an intent to terminate the Agreement within thirty (30) days
of the occurrence of a material default, and the defaulting party shall
have fifteen (l5) days to cure such default. If the default is not cured
within such fifteen (l5) days, the non-defaulting Party may terminate the
Agreement. Termination, or expiration of this Agreement in accordance
with its terms, will not excuse pre-existing liabilities of either Party,
provided that: (i) for capacity and/or energy associated with the Initial
Power Amount which is generated after the Agreement is terminated or expired
in accordance with its terms, PECO shall not pay a Reservation Fee, and
100% of Net Sales Revenues from the sale of such energy and/or capacity
shall be paid to Great Bay; (ii) 100% of revenues from delivery of Back-Up
Power shall be paid to PECO; (iii) if Great Bay materially breaches this
Agreement, and as a result thereof, PECO terminates this Agreement pursuant
to Section 16(a), PECO shall have the right not to exercise the Warrant and
Great Bay shall refund to PECO the Purchase Price of the Warrant, as
defined in the Warrant Purchase Agreement; and (iv) PECO's rights under
the Warrant Purchase Agreement shall not be adversely affected by such
termination. Any other bilateral agreements between PECO and Great Bay
shall not be adversely affected by termination of the Agreement.
b. Termination for Convenience. At any time prior to the Warrant
Expiration Date, Great Bay may terminate the Agreement upon thirty (30)
days' prior written notice to PECO. Upon such event, the provisions
set forth in
-19-
subparagraphs (a)(i), (ii), and (iii) of this Section 16 shall apply to
such termination. In addition, upon presentment of the notice of
termination to PECO, Great Bay shall refund to PECO the Warrant Purchase
Price plus interest accrued pursuant to Section 10 herein, and the
Warrant and the Warrant Purchase Agreement shall be of no further force
and effect. If at any time prior to September 30, 1996, Great Bay
requires PECO to make a Great Bay Directed Offer after PECO has provided
Great Bay with such notice under Section 4(a), PECO may terminate the
Agreement upon ninety (90) days' prior written notice to Great Bay. Upon
such event the provisions set forth in subparagraphs (a)(i), (ii) and
(iii) of this Section 16 shall apply to such termination. In addition,
upon presentment of the notice of termination to Great Bay, Great Bay shall
refund to PECO a pro rata portion of the Warrant Purchase Price and the
Warrant Purchase Agreement shall be of no further force and effect. The
pro rata portion of the Warrant Purchase Price to be paid to PECO shall
be an amount equal to the product of (i) the Warrant Purchase Price and
(ii) a fraction, the numerator of which is the number of days from the
date upon which notice of termination is presented to Great Bay through
September 30, 1996, and the denominator of which is the number of days
from the Service Commencement Date through September 30, 1996.
c. True-Up Upon Termination. Not later than fifteen (l5) days following
termination of the Agreement pursuant to subparagraphs (a) and (b) of
this Section l5, PECO and Great Bay shall conduct a Termination True-Up.
The Termination True-Up Amount shall be determined using the same
methodology as provided in Section 9 and Attachment l for an Annual True
Up, except that the relevant period for determining the Termination
True-Up Amount shall be (i) the period since the most recent prior Half
Year True-Up, if termination occurs in July through December, or (ii) the
period since the most recent prior Annual True-Up, if termination occurs
in January through July.
SECTION l7. Confidentiality.
The Parties agree to keep the terms and conditions of the Agreement
(the "Confidential Information") confidential, provided that either Party
may disclose any Confidential Information to its consultants and advisors
who agree to be bound by this provision. If either Party is required by
law or judicial or administrative proceeding to disclose Confidential
Information to a third party which may be
-20-
obligated to make such information public, the disclosing Party shall so
inform the other Party; shall use its reasonable best efforts to disclose
only that portion of the Confidential Information that is required to be
disclosed to such third party; and shall be relieved of its obligations
hereunder with respect to that Confidential Information that was required to
be disclosed.
SECTION 18. Representations Warranties and Covenants.
Each Party represents and warrants to the other as follows:
a. Due Organization. It is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or organization, is duly licensed and qualified to hold property and
transact business and is in good standing in each jurisdiction where the
failure so to qualify would (i) materially adversely affect its ability
to perform any of its obligations under the Agreement; (ii) materially
adversely affect the rights of either Party hereto, (iii) materially
adversely affect the transactions contemplated by the Agreement; or (iv)
materially adversely affects its financial condition; and it has full power
and authority to enter into, and perform its obligations under, the Agreement.
b. Due Authorization: Enforceability; No Violation. This Agreement is duly
authorized, executed and delivered by it and, assuming the due authorization,
execution and delivery thereof by the other Party hereto, is, or will
be, as the case may be, its legal, valid and binding obligation enforceable
against it in accordance with its terms, except to the extent that the
enforceability of such Agreement may be limited by (i) applicable bankruptcy,
insolvency, receivership, fraudulent conveyance or other similar laws relating
to or affecting the rights and remedies of creditors generally or (ii) general
principles of equity (regardless of whether considered in a proceeding in
equity or at law). The execution and delivery by it of the Agreement, and
the performance by it of its obligations under the Agreement will not
be, in violation of its charter or bylaws or other governing documents, do
not and will not contravene any applicable federal or state law, rule,
regulation or order of any jurisdictional regulatory authority and do not
and will not contravene or result in any breach of any provision of, or
constitute a default or result in the creation of any lien under, any
indenture, mortgage, material contract or other material
-21-
instrument to which it is a party or by which it or its property may be
bound, or require the consent or approval of any trustee or holders of its
indebtedness or obligations, except for such consents or approvals as have
been duly obtained, given or accomplished.
c. No Approvals, Notices and Filings. Except for termination of the
Marketing Agent Agreement, dated April 1, 1993, with UNITIL, no consent or
approval of, giving of notice to, registration with, or taking of any action
in respect to or by any federal, state or local governmental authority or
agency or any other person is, or will be, required with respect to the
execution, delivery or performance by it of the Agreement.
d. Litigation. There are no actions, suits, or proceedings pending or,
to its knowledge, threatened against, or affecting it in any court or
before any governmental commission, that if adversely determined would
materially adversely affect its ability to perform any of its obligations
under the Agreement.
e. Compliance. It is not in default under any indenture, mortgage or
loan agreement, nor is it in default under any other agreement or
instrument to which it is now a party or by which it is bound, nor is it
in violation of any law, order, injunction, decree, rule or regulation
applicable to it of any court or administrative body, which default or
violation would (i) materially adversely affect its ability to perform any of
its obligations under the Agreement; (ii) materially adversely affect the
rights of the other Party hereto, or (iii) materially adversely affect the
transactions contemplated under the Agreement, and no event has occurred
and is continuing which, under the provisions of any such indenture, mortgage
or loan agreement, or other agreement or instrument, with the lapse of time or
the giving of notice, or both, would constitute such a material default
thereunder and would have such a material adverse effect.
SECTION 19. Agreements of Each Party.
Each Party agrees as follows:
a. Further Assurances. Each Party shall execute, acknowledge, deliver,
file and record all such further acts, conveyances, documents, instruments,
or similar statements and assurances as the other Party hereto may from
time to time reasonably request in order to carry
-22-
out more effectively the intent and purpose of this Agreement. In
particular, Great Bay shall use its reasonable best efforts to cooperate
with PECO to obtain Enabling Agreements with Customers.
b. No Conflicting Agreements. It shall not enter into any agreement which
would be violated or breached by the performance of its obligations hereunder
or any instrument or document to be delivered by it hereunder.
c. Payment of Taxes and Claims. It shall prepare and timely file all
federal, state andlocal tax returns and/or information statements required
to be filed by it and pay and discharge all taxes, assessments and other
governmental charges or levies imposed upon it or in respect of any of its
assets, which the failure to discharge may have a material adverse effect on
its ability to perform its obligations hereunder.
d. Notification of Litigation and Adverse Business Development. It shall
give prompt written notice to the other Party of (i) any action, proceeding
or investigation pending or, to the best of its knowledge, threatened,
against it before any court or governmental instrumentality or other
administrative agency which would have a material adverse effect on its ability
to perform its obligations hereunder.
SECTION 20. Notices.
All notices and other communications required or permitted by this Agreement
or by law to be served upon or given to a Party hereunder shall be deemed
duly served, given and received (i) on the date of service, if served
personally or sent by telex or facsimile transmission (with appropriate
confirmation of receipt) by the Party hereto to whom notice is to be given,
or (ii) on the fourth (4th) day after mailing, if mailed by first class
registered or certified mail, postage prepaid or (iii) on the next day if
sent by a nationally recognized courier for next day service and so addressed
and if there is evidence of acceptance by receipt addressed as follow
if to PECO:
PECO Energy Company
2004 Renaissance Boulevard
King of Prussia, PA 19406
Attention: Marjorie R. Philips, Esquire
-23-
if to Great Bay:
Great Bay Power Corporation
20 Ladd Street
Portsmouth, NH 03801
Attention: John Tillinghast, President
or at such other address as any Party hereto may from time to time designate
by notice duly given in accordance with the provisions of this Section 20
to the other Party hereto.
SECTION 2l. Miscellaneous.
a. Headings. The headings used in this Agreement have been inserted for
convenience of reference only and in no way shall restrict or otherwise modify
any of the terms or provisions hereof.
b. Time of the Essence. All times and dates in this Agreement shall be of
the essence.
c. Entire Agreement. The Warrant Purchase Agreement and this Agreement
comprise the entire understanding and agreement among the Parties and
supersede all prior and contemporaneous discussions, negotiations, agreements
and communications among the Parties, whether oral or written, with respect
to the subject matter herein.
d. Amendment. This Agreement may be amended only upon the consent of each
Party hereto, expressed in writing.
e. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, as applied to
contracts among residents of Pennsylvania wholly to be performed within
that Commonwealth.
f. Severability. If any provision of this Agreement is determined to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the Parties. In any event, all of the
other provisions shall be deemed valid and enforceable to the greatest
possible extent.
g. Construction. All references herein to any agreement shall be to such
agreement as amended, supplemented or modified from time to time.
All references to a particular entity shall include a reference to such
entity's successors. The words "herein," "hereof" and"hereunder" shall refer
to the Agreement as a whole and
-24-
not to any particular section or subsection of this Agreement. The singular
shall include the plural and the masculine shall include the feminine and
neuter, and vice versa. "Includes" or "including" shall mean"including,
without limitation."
h. Cross-References. All cross-references in this Agreement, unless
specifically stated otherwise, refer to provisions of this Agreement.
i. Further Assurances. Each Party hereby represents and warrants that
the individual signing this Agreement on its behalf is duly authorized to
execute and deliver this Agreement on behalf of such Party.
j. Waiver. No waiver of any provision of this Agreement shall be deemed
effective unless contained in a writing signed by the Party against whom the
waiver is sought to be enforced. No failure or delay by any Party in
exercising any right, power or remedy, and no waiver of any breach or
failure to perform shall be deemed a waiver of any subsequent breach or
failure to perform or of any other right arising under this Agreement.
k. Not for Benefit of Third Parties. The provisions of this Agreement
are intended only for the regulation of relations among the Parties hereto.
This Agreement is not intended for the benefit of third parties and does not
grant any rights to third parties
l. Interpretation. Each Party and its counsel have reviewed this
Agreement and accordingly the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
m. Exhibits and Schedules. All of the exhibits and schedules attached hereto
are incorporated herein by this reference.
n. Except with respect to a Party's assignment of this Agreement to a
successor organization which includes substantially the same personnel and
assets as the assigning Party's existing organization, neither Party shall
assign this Agreement without the prior written consent of the non-assigning
Party.
-25-
IN WITNESS WHEREOF, the Parties hereto have each caused this Agreement to be
duly executed by their respective representatives thereunto duly authorized as
of the respective dates set forth below.
PECO ENERGY COMPANY GREAT BAY POWER CORPORATION
By:_/s/ Nancy J. Zausner By: /s/ John A.Tillinghast
Nancy J. Zausner John Tillinghast
Vice-President President
Date: 11/3/95 Date: 11/3/95
-26-
Attachment 1:
Methodology for Computation of True-Up Amounts.
Half-Year True-Up Amount
The following methodology will be utilized to determine the Half-Year True-Up
Amount. During 1996, the period over which the Half-Year True-Up Amount will be
determined will be adjusted to reflect the Service Commencement Date.
Step Calculation to be Made: Variable Name Formula
1. Determine the number of Half-Year Hours = E January - June
hours during the (Hours in each month)
half-year period.
2. Determine the amount of Half-Year GB = E January - June 30
MWhs of Seabrook energy Power (Initial Power Amount* number of
owned by Great Bay hours, or portions thereof,
during the half-year during each day in which
period Seabrook generated power)
3. Determine Seabrook Net Half-Year SB = E January - June 30
Power during the Power (Amount of Net Power generated
half-year period. by Seabrook each day)
4. Determine Half-Year Half-Year SCF = Half-Year SB Power
Seabrook Capacity (Seabrook Rated Capacity during
Factor period* Half-Year Hours)
If Half-Year SCF is less than 85.0%, the Half-Year True-Up Amount shall
equal $0.
Step Calculation to be Made: Variable Name Formula
5. Determine the amount of Step 5 Result If(Half-Year SCF-85%>5%),
Half-Year SCF which is then=5%
greater than 85% but less
than 90%.
6. Determine the amount of Step 6 Result If(Half-Year SCF-85%<5%),
Half-Year SCF which is then=Half-Year SCF-85%
greater than 90%.
-27-
Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
7. Determine Half-Year Great Bay =[(84.99%***%)=(Step 5 Result
Revenue Share for PECO Half-Year Revenue ***%)=(Step 6
and Great Bay Share Result****%)]/Half-Year SCF
(expressed as a %age)
PECO Half-Year =1-Great Bay Half-Year Revenue
Revenue Share Share
8. Determine Half-Year Net Half-Year NSR =E January-June (Net Sales
Sales Revenue Revenue for each month)
9. Determine Delinquent Half-Year DA =Delinquent Amounts as of June
Amounts outstanding as 30
of June 30 of relevant
calendar year
10. Determine Reservation Half-Year RFR If Half-Year SCF=or>90%,
Fee Rebate. No =(Half-Year SCF-90%)*Half-Year
Reservation Fee Rebate GB Power *$**
is owed if Half-Year
Seabrook Capacity
Factor is less than 90%
11. Determine Half-Year Half-Year =Half-Year NSR - Half-Year DA -
True-Up Basis Distribution Half-Year RFR
Basis
12. Determine Service Fee =Half-Year Distribution Basis*
Owed to PECO PECO Half-Year Revenue Share(%)
13. Determine Revenue Share Half-Year GB =Half-Year Distribution
Owed to Great Bay Revenue Owed Basis*Great Bay Half-Year
Revenue Share (%)
14. Determine revenue GB Revenue =E January - June (Monthly
received by GB during Received Payment to GB for each month)
the relevant calendar
year.
15. Determine True-Up Half-Year True-Up =Half-Year GB Revenue Owed - GB
Amount Amount Revenue Received
16. Determine Sharing of GB Half-Year =Half-Year DA*Great Bay Half-
unpaid Delinquent Delinquent Share Year Revenue Share (%)
Amounts
PECO Half-Year =Half-Year DA*PECO Half-Year
Delinquent Share Revenue Share (%)
Annual True-Up Amount
The following methodology will be utilized to determine the Annual True-Up
Amount. During 1996, the period over which the Annual True-Up Amount is
determined will be adjusted to reflect the actual Service Commencement Date.
-28-
Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
Step Calculation to be Made: Variable Name Formula
1. Determine the number of Annual Hours =8760, unless the year is a
hours during the year. leap year, in which case,=878
2. Determine the amount of Annual GB Power =E January 1 - Dec 31
MWhs of Seabrook energy (Initial Power Amount*number of
owned by Great Bay hours, or portions thereof,
during the year. during each day in which
Seabrook generated power)
3. Determine Seabrook Net Annual SB Power =E January 1 - Dec 31
Power during the year. (Amount of Net Power
generated by Seabrook each
day)
4. Determine Annual Annual SCF = Annual SB Power
Seabrook Capacity (Seabrook Rated Capacity
Factor during period*Annual Hours)
If Annual SCF is less than 85.0%, the Annual True-Up Amount shall equal $0.
Step Calculation to be Made: Variable Name Formula
5. Determine the amount of Step 5 Result If(Annual SCF-85%>5%),then = 5%
Annual SCF which is
greater than 85% but If(Annual SCF-85%<5%),then =
less than 90%. Annual SCF-85%
6. Determine the amount of Step 6 Result If(Annual SCF-85%<5%),then = 0%
Annual SCF which is
greater than 90%. If(Annual SCF-85%>5%),then =
Annual SCF-90%
7. Determine Annual Great Bay Annual =[(84.99%***%)(Step 5 Result***%)
Revenue Share for PECO Revenue Share + (Step 6 Result****%)]/Annual SC
and Great Bay
(expressed as a %age). PECO Annual =1-Great Bay Annual Revenue Share
Revenue Share
8. Determine Annual Net Annual NSR =E January - December
Sales Revenue (Net Sales Revenue for each month)
-29-
Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
9. Determine Delinquent Annual DA =Delinquent Amounts as of
Amounts outstanding as December 31
of December 31 of
relevant calendar year.
10. Determine Reservation Annual RFR If Annual SCF is=or>90%,Annual
Fee Rebate. N o RFR=(Annual SCF-90%)*Annual GB
Reservation Fee Rebate Power*$**
is owed if Annual
Seabrook Capacity
Factor is less than 90%.
11. Determine Annual Annual =Annual NSR-Annual DA-Annual RFR
True-Up Basis Distribution
Basis
12. Determine Service Fee =Annual Distribution Basis*PECO
Owed to PECO Annual Revenue Share (%)
13. Determine Revenue Share Annual GB Revenue =Annual Distribution Basis*Great
Owed to Great Bay Owed Bay Annual Revenue Share (%)
14. Determine what share of Half-Year DA =(Half-Year DA*Great Bay Annual
Half-Year Delinquent True-Up Revenue Share)-GB Half-Year
Amount GB should have Delinquent Share
been paid at the Annual
GB Revenue Share rate.
15. Determine revenue GB Revenue =E January - December (Monthly
received by GB during Received Payment to GB for each month)
the relevant calendar
year.
16. Determine Annual Annual True-Up =Annual GB Revenue Owed-GB Revenue
True-Up Amount Amount Received-Half-Year True-Up
Amount+Half-Year DA True-Up
17. Determine Sharing of GB Delinquent =Annual DA*Great Bay Annual
unpaid Delinquent Share Revenue Share
Amounts
PECO Delinquent =Annual DA*PECO Annual Revenue
Share Share
-30-
Termination True-Up Amount
The Termination True-Up Amount shall be calculated utilizing the same
methodology as the Half-Year True-Up Amount. The start date for the period
for which the Termination True-Up Amount is calculated shall be (i) January
1, if the most recent true-up performed before the date of termination was an
Annual True-Up, and (ii) July 1, if the most recent true-up performed before
the date of termination was a Half-Year True-Up. The end date for the period
for which the Termination True-Up Amount is calculated shall be the date of
termination.
-31-
Attachment 2
Schedule of Great Bay Agreements
Exempt from Inclusion in Initial Power Amount
1. Purchased Power Agreement between Great Bay Power Corporation and
UNITIL Power Corp. dated April 26, 1993 for purchase of 0.8696% of the
capacity and associated energy from Seabrook (representing approximately
10 MW).
2. Purchased Power Option Agreement between Great Bay Power Corporation
and UNITIL Power Corporation dated April 26, 1993 for option to purchase
1.3043% capacity and associated energy from Seabrook (representing
approximately 15 MW) during the period commencing November 1, 1998 through
and including October 31, 2018.
3. Purchased power agreement between Great Bay Power Corporation and
Bangor Hydro-Electric Company for 10 MW during the winter months
(November-March) commencing January 1, 1996 through March 1998 (with option
for two additional years) at variable energy rates pursuant to terms of
the Final Offer dated October 4, 1995 attached hereto.
-32-
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
CONFIDENTIAL 10/4/95
FINAL OFFER
ATTACHMENT 2
PRICING SCHEDULE 2: Variable Energy Rates
_____________________________________________________________________________
CONTRACT YEAR CAPACITY CAPACITY ENERGY TOTAL
PERIOD CHARGE CHARGE RATE
(MW) ($/kW-yr) ( /kW-yr) ( /kWh)
[1] [2] [3] [4] [5]
_____________________________________________________________________________
INITIAL 95/96 Jan-Mar 10 10 **** ****
CONTRACT 96/97 Nov-Mar 10 10 **** ****
TERM 97/98 Nov-Mar 10 10 **** ****
_____________________________________________________________________________
OPTION 98/99 Nov-Mar 10 45 **** ****
TERM 99/00 Nov-Mar 10 65 **** ****
_____________________________________________________________________________
NOTES:
[1] The Initial Contract Term is 2 yr & 10 mon beginning January 1, 1996 with
an option to extend for an additional one or two years. The exercise date of
the option is 10 days prior to the start of the Option Term. On or prior to
the exercise date BHE will notify GBPC of its intent to exercise and the term
for which BHE wishes to purchase the option.
15 Revision
BHE shall have the option to increase its Seabrook entitlement each winter
NEPOOL capacity period by 5 MW. BHE may exercise this option by providing
notice to GBPC 30 days prior to the start of each NEPOOL capability period.
[2] BHE's Seabrook entitlement will be a percentage of the Unit(i.e.
approximately 0.8696% for 10 MW). BHE will specify the annual capacity it
wishes to purchase during the Initial Contract Term and the Option Term at
the time of executing the agreement. BHE's annual entitlement may vary
between 10 MW and 25 MW in each year of the Initial Contract Term. (BHE has
selected 10 MW). The capacity reserved under the Option Term may not exceed
the maximum annual capacity purchased during the Initial Contract Term.
Upon the loss of certain customers specified in the agreement, BHE may
reduce its Seabrook entitlement on a pro-rata basis.
-33-
Delivery will be to the low voltage side of the Seabrook station transformer
in accordance with Joint Owner's Agreement. BHE arranges and pays for PTF
transmission service to the BHE service territory.
[3] The capacity price will be assessed on the kW entitlement reserved by
BHE in each year. Capacity payments will be monthly. BHE will receive a pro
rata capacity credit from unscheduled outages longer than 3 days.
[4] Energy Charge Rates are estimates based on a forecast for 1% sulfur No. 6
fuel oil. The accrual Energy Charge Rate for each month will be calculated
as follows:
Energy Rate ($/kWh) = Platt's Price ($/bbl) X 9,000 (Btu/kWh)
_____________________________________
6,400,000 (Btu/bbl
where Platt's Price is the monthly average of the daily mean prices of
1% sulfur No. 6 oil (cargo) in $/bbl from Platt's Oilgram Price Report for New
York/Boston district.
[5] Total rate assumes an 85% annual capacity factor and is shown for
comparison purposes only.
-34-
Proprietary and Confidential
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
Attachment 3
Great Bay Sales Revenue during the Winter 1995 Period
Energy Delivered Price Sales Average Price
MW sold (MWh) ($/MWh) Revenue ($/MWh)
January
NEPCO 75.00 55,919 ***** *********
Bangor Hydro 35.00 26,096 ***** *******
Northeast Utilities 19.52 14,556 ***** *******
96,571 ********* *****
February
NEPCO 75.00 50,763 ***** *********
Bangor Hydro 35.00 23,690 ***** *******
Northeast Utilities 19.52 13,214 ***** *******
87,667 ********* *****
March
NEPCO 75.00 56,284 ***** *********
Bangor Hydro 35.00 26,266 ***** *******
Northeast Utilities 19.52 14,651 ***** *******
97,201 ********* *****
Less: Marketing Fees 77,000
TOTAL/Avg. Price 281,439 ********* *****
-35-
WARRANT PURCHASE AGREEMENT
This Agreement dated as of November 3, 1995 is entered into
by and between Great Bay Power Corporation, a New Hampshire
corporation (the "Company"), and PECO Energy Company, a
Pennsylvania corporation (the "Purchaser").
In consideration of the mutual promises and covenants con-
tained in this Agreement, the parties hereto agree as follows:
1. Authorization and Sale of the Warrant.
1.1. Authorization. The Company has, or on or before
the Closing (as defined in Section 2.2) will have, duly authorized
the sale and issuance of a Warrant (the "Warrant") to purchase
four hundred twenty thousand (420,000) shares of the Company's
common stock, $.01 par value per share (the "Warrant Shares"), at
a price per share equal to the greater of (x) $9.75 per share and
(y) the highest price at which a share of the Company's common
stock, $.01 par value per share (the "Common Stock"), has traded
on the National Association of Securities Dealers National Market
(the "National Market") from the Approval Date, as defined in the
Warrant, to the date on which the Warrant is exercised (the
"Exercise Price"), and on such other terms and in the form
attached hereto as Exhibit A.
As of the date of this Agreement, the Company does not have
sufficient authorized shares of Common Stock for issuance upon
exercise of the Warrant. The Company's board of directors has
approved for submission to the Company's shareholders, at its next
shareholders meeting, an amendment to the Company's certificate of
incorporation to increase the number of authorized shares of the
Company's Common Stock by an amount sufficient to permit the
Company to reserve the Warrant Shares for issuance pursuant to the
Warrant in the event of exercise thereof (the "Charter
Amendment"). If the Charter Amendment is not approved on or
before May 31, 1996, as the Purchaser's sole and exclusive remedy,
the Company shall promptly repay to the Purchaser the Purchase
Price with interest thereon from the date hereof until paid in
full at a rate per annum equal to 110% of the prime rate announced
by The Chase Manhattan Bank (National Association) or its
successor, from time to time and this Agreement shall be of no
further force and effect.
1.2. Sale of Warrant. Subject to the terms and
conditions of this Agreement, at the Closing the Company will sell
and issue to the Purchaser, and the Purchaser will buy the Warrant
for a purchase price of one million dollars ($1,000,000) (the
"Purchase Price"). If the Warrant is exercised, the Purchase
Price shall be applied as a credit against the Exercise Price. If
the Warrant is not exercised, the Company shall retain the
Purchase Price; provided however, if (a) Purchaser properly
terminates the Services Agreement, as defined in Section 5.7
below, pursuant to Section 16(a)(iii) of the Services Agreement,
(b) the Company terminates the Services Agreement pursuant to
Section 16(b), or (c) the Approval Date, as defined in the Warrant
does not occur on or before May 31, 1996, the Company shall refund
to Purchaser the Purchase Price, together with interest accrued
thereon at the rate set forth in Section 1.1 above; and provided
further, if Purchaser terminates the Services Agreement because
the Company ordered the Purchaser to make a Great Bay Directed
Offer, as that term is defined in the Services Agreement, the
Company shall refund a portion of the Purchase Price to Purchaser
in an amount equal to the product of the Purchase Price and a
fraction, the numerator of which is the number of days from the
date upon which notice of termination is presented to the Company
by Purchaser in accordance with Section 16(b) of the Services
Agreement through September 30, 1996, and the denominator of which
is the number of days from the Service Commencement Date, as
defined in the Services Agreement, through September 30, 1996.
If the Company requires Purchaser to establish a
separate trust account to hold Gross Receipts pursuant to Section
4(e) of the Services Agreement and there still is present a
circumstance which could entitle Purchaser to a refund of all or a
portion of the Purchase Price pursuant to this Section 1.2, the
Company shall, at Purchaser's request, deposit the Purchase Price
into a separate trust account which will be payable to Purchaser
if Purchaser is so entitled under this Section 1.2. Such account
will be established on the same or similar terms on which the
trust account is established pursuant to the Services Agreement.
The cost of such account shall be paid by Purchaser.
The Warrant Expiration Date shall mean the earliest to
occur of the following: (1) September 30, 1996, if the Seabrook
Capacity Factor for the period from the Service Commencement Date
through September 15, 1995 is equal to or greater than 60%; (2)
December 31, 1996, if the Seabrook Capacity Factor for the period
from the Service Commencement Date through December 15, 1996 is
equal to or greater than 60%; (3) two (2) business days following
the first date after December 31, 1996 that the Seabrook Capacity
Factor for the immediately preceding twelve months is equal to or
greater than 60%; or (4) December 31, 1997. Service Commencement
Date and Seabrook Capacity Factor shall have the respective
meanings ascribed to such terms in the Services Agreement.
2. The Closing.
2.1. In General. The closing ("Closing") of the sale
and purchase of the Warrant under this Agreement shall take place
at the offices of Hale and Dorr, 60 State Street, Boston,
Massachusetts, at 10:00 a.m. on the second business day following
-2-<PAGE>
delivery by the Company to Purchaser of notice that the conditions
to closing specified in Section 5 have been satisfied, or at such
other time and place as is mutually agreeable to the Company and
the Purchaser. At the Closing, the Company will deliver to the
Purchaser the Warrant to be registered in the name of the
Purchaser, against payment to the Company of the Purchase Price
therefor, by wire transfer or other method acceptable to the
Company. The date of the Closing is hereinafter referred to as
the "Closing Date."
3. Representations of the Company. The Company hereby
represents and warrants to the Purchaser as of the date hereof as
follows:
3.1. Organization and Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New Hampshire and has full
corporate power and authority to conduct its business as presently
conducted and as proposed to be conducted by it and except as
otherwise disclosed in this Agreement, to enter into and perform
this Agreement and to carry out the transactions contemplated by
this Agreement.
3.2. Capitalization. The authorized capital stock of
the Company consists of 8,000,000 shares of Common Stock of which
7,999,998 shares are issued and outstanding. All of such issued
and outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable. Except
as provided in this Agreement, (i) no subscription, warrant,
option (other than the options to purchase 455,000 shares of
Common Stock which are currently outstanding and which were
granted pursuant to the Company's 1995 Stock Option Plan),
convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company is
authorized or outstanding, (ii) there is not any commitment of the
Company to issue any subscription, warrant, option, convertible
security or other such right or to issue or distribute to holders
of any shares of its capital stock any evidences of indebtedness
or assets of the Company, and (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay
any dividend or make any other distribution in respect thereof.
No person or entity is entitled to (i) any preemptive or similar
right with respect to the issuance of any capital stock of the
Company, or (ii) except as provided in this Agreement and for
rights granted to the parties listed on Schedule 3.2 to register
such persons' shares under the Securities Act, any rights with
respect to the registration of any capital stock of the Company
under the Securities Act.
-3-<PAGE>
3.3. Subsidiaries. The Company has no subsidiaries and
does not own or control, directly or indirectly, any other corpo-
ration, association or business entity. The Company is not a
participant in any joint venture or partnership.
3.4. Issuance of Warrant. The issuance, sale and
delivery of the Warrant in accordance with this Agreement has
been, or will be on or prior to the Closing, duly authorized by
all necessary corporate action on the part of the Company. Upon
approval of the Charter Amendment, the issuance of the Warrant
Shares pursuant to the terms of the Warrant will be duly
authorized by all necessary corporate action on the part of the
Company and when issued and paid for in accordance with the terms
of the Warrant will be duly and validly issued, fully paid and
nonassessable.
3.5. Authority for Agreement. Subject to shareholder
approval of the Charter Amendment, the execution, delivery and
performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action, and this
Agreement has been duly executed and delivered by the Company.
This Agreement constitutes the valid and binding obligation of the
Company enforceable in accordance with its terms. Subject to
shareholder approval of the Charter Amendment, the execution of
and performance of the transactions contemplated by this Agreement
and compliance with its provisions by the Company will not violate
any provision of law and will not, with or without the passage of
time, conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, its
Restated Certificate of Incorporation, as amended (the "Restated
Certificate"), or its Amended and Restated By-Laws or any
indenture, lease, agreement or other instrument to which the
Company is a party or by which it or any of its properties is
bound, or any decree, judgment, order, statute, rule or regulation
applicable to the Company.
3.6. Governmental Consents. Except for approval of the
New Hampshire Public Utility Commission with respect to the
issuance of the Warrant and Warrant Shares, no consent, approval,
order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental
authority is required on the part of the Company in connection
with the execution and delivery of this Agreement, or the offer,
issuance, sale and delivery of the Warrant. Based on the
representations made by the Purchaser in Section 4 of this
Agreement, the offer, sale and issuance of the Warrant to the
Purchaser will be in compliance with applicable federal and state
securities laws.
3.7. Commission Filings. Copies of all documents
(including exhibits, but excluding exhibits incorporated by
-4-<PAGE>
reference) filed by the Company with the Commission pursuant to
the Exchange Act since April 17, 1994 (the "Commission Filings"),
have been delivered to Purchaser. The Commission Filings, all of
which were filed on a timely basis, (i) were prepared, in all
material respects, in accordance with the requirements of the
Exchange Act and the rules and regulations thereunder, (ii) did
not at the time they were filed contain any untrue statement of
material fact, and (iii) did not at the time they were filed omit
to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not
misleading. Each of the audited financial statements and
unaudited interim financial statements (including any related
notes or schedules) included in the Commission Filings was
prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as may be
indicated therein or in the notes or schedules thereto (any such
schedules being prepared in accordance with Regulation S-X), and
fairly presented in all material respects the financial position
of the Company as at the dates thereof and the results of its
operations and cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to normal
year-end audit adjustments and the absence of complete notes.
3.8. Litigation. There are no action, suits, or
proceedings pending or, to its knowledge, threatened against, or
affecting the Company in any court or before any governmental
commission, which seeks to enjoin the Closing of this Agreement or
which challenges the validity of the Company's obligations
hereunder.
4. Representations of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
4.1. Investment. The Purchaser is acquiring the Warrant
and intends to acquire the Warrant Shares issuable upon exercise
of the Warrant for its own account for investment and not with a
view to, or for resale in connection with, any distribution or
public offering thereof (within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), nor with any present
intention of distributing or selling the same; and, the Purchaser
has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.
4.2. Authority. The Purchaser has full corporate power
and authority to enter into and to perform this Agreement in
accordance with its terms. The Purchaser has not been organized,
reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.3. Experience. The Purchaser has carefully reviewed
the Commission Filings and the Joint Ownership Agreement among the
-5-<PAGE>
owners of Seabrook, as amended, and the representations concerning
the Company contained in this Agreement and the Services Agreement
and has made detailed inquiry concerning the Company, its business
and its personnel; the officers of the Company have made available
to the Purchaser the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the
Warrant made hereby and to obtain any additional information that
the Company possesses or can acquire without unreasonable effort
or expense that is necessary to verify the accuracy of information
provided by the Company to Purchaser; in evaluating the
suitability of an investment in the Company, the Purchaser has not
relied upon any representations or other information (whether oral
or written) other than as set forth in the Commission Filings and
the Joint Ownership Agreement among the Joint Owners of Seabrook,
as amended, or in this Agreement and the Services Agreement.
4.4. Accredited Investor. The Purchaser is an
Accredited Investor within the definition set forth in Securities
Act Rule 501(a).
5. Conditions to the Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Warrant at the Closing
is subject to the fulfillment, or the waiver by the Purchaser, of
the following conditions on or before the Closing Date:
5.1. Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be true
on and as of such Closing Date with the same effect as though such
representation and warranty had been made on and as of that date.
5.2. Performance. The Company shall have performed and
complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to
or at the Closing.
5.3. Opinion of Counsel. The Purchaser shall have
received an opinion from Hale and Dorr, counsel for the Company,
dated the Closing Date, addressed to the Purchaser at the Closing
as to the corporate good standing of the Company and, subject to
shareholder approval of the Charter Amendment, the due
authorization of this Agreement and of the Warrant, the lack of
conflicts between this Agreement and other agreements to which the
Company is a party and applicable law, that New Hampshire Public
Utility Commission approval has been obtained for the issuance of
the Warrant and the Warrant Shares and the enforceability of this
Agreement and the Warrant.
5.4. Certificates and Documents. The Company shall have
delivered to the Purchaser:
(a) Certificates, as of the most recent
practicable dates, as to the corporate good standing of the
-6-<PAGE>
Company issued by the Secretary of State of the State of New
Hampshire, confirming such good standing within five business days
of the Closing Date;
(b) Amended and Restated By-laws of the Company,
certified by its Secretary or Assistant Secretary as of the
Closing Date; and
(c) Resolutions of the Board of Directors
authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by
the Secretary or Assistant Secretary of the Company as of such
Closing Date.
5.5. Stockholder Approval. Purchaser shall have
received from the persons listed on Schedule 3.2 their respective
undertaking to vote those shares of the Company's Common Stock
which each owns as of the record date for the shareholders meeting
at which the Charter Amendment is submitted for approval in favor
of the Charter Amendment.
5.6. Compliance Certificate. The Company shall have
delivered to the Purchaser a certificate, executed by the Chairman
or the President of the Company, dated the Closing Date,
certifying to the fulfillment of the conditions specified in
subsections 5.1 and 5.2 this Agreement.
5.7. Services Agreement. The Company and the Purchaser
shall have entered into a service agreement (the "Services
Agreement") providing for Purchaser to act as the Company's
marketing agent in the form attached hereto as Exhibit C.
5.8. Other Matters. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the
Purchaser and the Purchaser shall have received all such
counterpart originals or certified or other copies of such
documents as it may reasonably request.
5.9. Regulatory Approval. The Company shall have
received a final order of the New Hampshire Public Utilities
Commission approving and authorizing the sale of the Warrant and
issuance of the Warrant Shares and to the extent required,
approval of the Charter Amendment.
6. Conditions to the Obligations of the Company. The obli-
gations of the Company to sell the Warrant to Purchaser on the
Closing Date are subject to fulfillment, on or before the Closing
Date, of each of the following conditions:
-7-<PAGE>
6.1. Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in
Section 4 shall be true on and as of such Closing Date with the
same effect as though such representations and warranties had been
made on and as of that date.
6.2. Regulatory Approval. The Company shall have
received a final order of the New Hampshire Public Utilities
Commission approving and authorizing the sale of the Warrant,
issuance of the Warrant Shares and the Charter Amendment.
7. Covenants of Purchaser and the Company.
7.1. Restriction on Sale of Warrant Shares. If and for
so long as the Purchaser owns 5% or more of the Company's Voting
Securities and no person together with its Affiliates or
Associates owns 50% or more of the Voting Securities, the
Purchaser shall not sell (i) Voting Securities which represent 5%
or more of the total of the Voting Securities to any person or
group; and (ii) Voting Securities to any person or group which
holds or would hold after giving effect to the proposed sale 5% of
the Voting Securities.
7.2. Repurchase of Warrant Shares. If Purchaser
purchases the Warrant Shares and during the period following such
purchase and prior to Purchaser's right to demand registration of
the Warrant Shares pursuant to Section 8.3 below the Company
engages in a transaction that would result in the Purchaser owning
5% or more of the Company's issued and outstanding Common Stock
(and not as a result of Purchaser purchasing additional shares of
Common Stock) the Company agrees to purchase from Purchaser, at
Purchaser's request, sufficient shares (the "Repurchased Shares")
so that Purchaser will own no more than 4.99% of the Company's
issued and outstanding shares after giving effect to such
transaction. The Company will give Purchaser prior written notice
of a transaction that would result in Purchaser owning 5% or more
of the Company's issued and outstanding shares not less than 30
days prior to the closing date for such transaction. Purchaser
shall give the Company written notice within 10 days of receipt of
such notice whether it will require the Company to purchase the
Repurchased Shares. The Company shall purchase the Repurchased
Shares at the same time the transaction giving rise to the
Company's obligation hereunder is closed (the "Purchase Date").
If the transaction giving rise to the Company's obligation to
purchase the Repurchased Shares has a fixed price at which the
Company's Common Stock is valued, the purchase price for the
Repurchased Shares shall be such price. If no such price is
fixed, the purchase price for the Repurchased Shares shall equal
the average of the closing prices for the Company's Common Stock
on trades of such Common Stock on the National Market for 20
business days prior to the Purchase Date. Purchaser shall be
required to tender good title to the Repurchased Shares against
-8-<PAGE>
payment therefor. The Company's obligation hereunder shall cease
and be of no further force and effect if Purchaser purchases
additional shares of Common Stock which cause it to own 5% or more
of the Company's issued and outstanding shares of Common Stock.
8. Registration Rights.
8.1. Certain Definitions. As used in this Section 8 and
elsewhere in this Agreement, the following terms shall have the
following respective meanings:
"Commission" means the Securities and Exchange
Commission, or any other Federal agency at the time administering
the Securities Act.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar Federal statute, and the rules
and regulations of the Commission issued under such Act, as they
each may, from time to time, be in effect.
"Registration Statement" means a registration
statement filed by the Company with the Commission for a public
offering and sale of securities of the Company (other than a
registration statement on Form S-8 or Form S-4, or their succes-
sors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
"Registration Expenses" means the expenses
described in Section 8.6.
"Registrable Shares" means the Warrant Shares and
shares issued in respect thereof (because of stock splits, stock
dividends, reclassifications, recapitalizations or similar
events); provided, however, the Warrant Shares shall cease to be
Registrable Shares (i) upon any sale pursuant to a Registration
Statement, Section 4(1) of the Securities Act or Rule 144 under
the Securities Act, or any sale in any manner to a person or
entity which, by virtue of Section 9(b) of this Agreement, is not
entitled to the rights provided by this Section 8 and (ii) at such
time as they first become eligible for resale pursuant to Rule
144(k) under the Securities Act. Whenever reference is made in
this Agreement to a request or consent of holders of a certain
percentage of Registrable Shares, the determination of such
percentage shall include Warrant Shares issuable upon exercise of
the Warrant even if the Warrant has not yet been exercised.
"Securities Act" means the Securities Act of 1933,
as amended, or any similar Federal statute, and the rules and
regulations of the Commission issued under such Act, as they each
may, from time to time, be in effect.
-9-<PAGE>
8.2. Sale or Transfer of the Warrant and Registrable
Shares; Legend.
(a) The Warrant may only be transferred to the
extent permitted by Section 9(b) of the Warrant. The Registrable
Shares shall not be sold or transferred unless either (i) they
first shall have been registered under the Securities Act, or
(ii) the Company first shall have been furnished with an opinion,
in form and substance satisfactory to the Company, of legal
counsel satisfactory to the Company to the effect that such sale
or transfer is exempt from the registration requirements of the
Securities Act.
(b) Each certificate representing Registrable
Shares shall bear the following legend:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise
transferred, pledged or hypothecated unless
and until such securities are registered
under such Act or an opinion, in form and
substance satisfactory to the Company, of
counsel satisfactory to the Company is ob-
tained to the effect that such sale or
transfer is exempt from the registration
requirements of the Securities Act."
The foregoing legend shall be removed from the
certificates representing any of such securities, at the request
of the holder thereof, at such time as they become eligible for
resale pursuant to Rule 144(k) under the Securities Act or upon
registration.
8.3. Required Registrations.
(a) If at any time after the earlier of
termination in accordance with its terms of the Services Agreement
or September 30, 1998, the Registrable Shares are not eligible and
continue to be ineligible for resale pursuant to Rule 144(k) a
holder or holders of an aggregate of at least 51% of the
Registrable Shares may request, in writing, that the Company
effect the registration on Form S-3 (or any successor form) of
Registrable Shares owned by such holder or holders having an
aggregate offering price of at least $500,000 (based on the then
current market price). If the holders initiating the registration
intend to distribute the Registrable Shares by means of an
underwriting, they shall so advise the Company in their request.
In the event such registration is underwritten, the right of other
holders of Registrable Shares to participate shall be conditioned
on such holders' participation in such underwriting. Upon receipt
-10-<PAGE>
of any such request, the Company shall promptly give written
notice of such proposed registration to all holders of Registrable
Shares. Such holders of Registrable Shares shall have the right,
by giving written notice to the Company within 20 days after the
Company provides its notice, to elect to have included in such
registration such of their Registrable Shares as such holders may
request in such notice of election, subject to the approval of the
underwriter managing the offering as provided below. Thereupon,
the Company shall, as expeditiously as possible, use reasonable
commercial efforts to effect the registration, on Form S-3 (or any
successor form), of all Registrable Shares which the Company has
been requested to so register.
Notwithstanding any other provision of this
Section 8.3, if the distribution of Registrable Shares is to be
effected by means of an underwriting and the managing underwriter
advises the holders of Registrable Shares initiating the
registration in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the
holders of Registrable Shares initiating the registration shall so
advise all holders of Registrable Shares which would otherwise be
included in the underwriting and the number of Registrable Shares
that may be included in the underwriting shall be allocated among
all such holders of Registrable Shares, including the holders of
Registrable Shares initiating the registration, in proportion (as
nearly as practicable) to the amount of Registrable Shares owned
by each such holder. If the distribution of Registrable Shares is
to be effected by means of an underwriting and the managing
underwriter does not limit the number of Registrable Shares to be
underwritten, the Company or other holders of securities of the
Company who have registration rights similar to those set forth in
Section 8.4 hereof may include Common Stock for their respective
accounts in such registration if the managing underwriter states
that such inclusion would not adversely effect the offering of
Registrable Shares and if the number of Registrable Shares which
would otherwise have been included in such registration and
underwriting will not thereby be limited or reduced.
(b) The Company shall not be required to effect
more than one registration pursuant to paragraph (a) above. In
addition, the Company shall not be required to effect any
registration within six months after the effective date of any
other Registration Statement of the Company.
(c) If at the time of any request to register
Registrable Shares pursuant to this Section 8.3, the Company is
engaged or has fixed plans to engage within 30 days of the time of
the request in a registered public offering as to which the
holders of Registrable Shares may request to include Registrable
Shares pursuant to Section 8.4 or is engaged in any other activity
which, in the good faith determination of the Company's Board of
Directors, would be adversely effected by the requested
-11-<PAGE>
registration to the material detriment of the Company, then the
Company may at its option direct that such request be delayed for
a period not in excess of six months from the effective date of
such offering or the date of commencement of such other material
activity, as the case may be.
8.4. Incidental Registration.
(a) Until the tenth anniversary of the date of
this Agreement, if the Company proposes to file a Registration
Statement (other than pursuant to Section 8.3) covering the sale
of shares of Common Stock by the Company at any time or from time
to time, it will, prior to such filing, give written notice to all
holders of Registrable Shares of its intention to do so and, upon
the written request of a holder or holders of Registrable Shares
given within 20 days after the Company provides such notice (which
request shall state the intended method of disposition of such
Registrable Shares), the Company shall use reasonable commercial
efforts to cause all Registrable Shares which the Company has been
requested by such holder or holders to register to be registered
under the Securities Act to the extent necessary to permit their
sale or other disposition in accordance with the intended methods
of distribution specified in the request of such holder or
holders; provided that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this
Section 8.4 without obligation to any holder of Registrable
Shares. Notwithstanding anything in the foregoing to the
contrary, the Company shall not be required to provide such
advance notice in connection with, nor include any Registrable
Shares in, any offering under this Section 8.4 involving an
underwriting if the Company has been informed that in the opinion
of the managing underwriter, the registration of any Registrable
Shares would jeopardize the success of the offering by the
Company. In such event, the Company will provide written notice
to all holders of Registrable Shares of such managing
underwriter's opinion. Such notice need not be given prior to the
filing of the applicable Registration Statement.
(b) In connection with any offering under this
Section 8.4 involving an underwriting, the Company shall not be
required to register any Registrable Shares or include any
Registrable Shares in such underwriting unless the holders thereof
accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the managing underwriter,
adversely effect the offering of shares to be included in the
underwriting by the Company and by the holders of registration
rights pursuant to a Registration Rights Agreement between the
Company and certain shareholders of the Company (the "Senior
Shareholders") dated as of April 7, 1994, as amended on November
23, 1994. If in the opinion of the managing underwriter, after
giving effect to the priority rights of the Company and the Senior
-12-<PAGE>
Shareholders as provided in the previous sentence, the
registration of all of the Registrable Shares which the holders
have requested to be included would adversely effect the offering
by the Company and/or the Senior Shareholders, then the Company
shall be required to include in the underwriting only that number
of Registrable Shares, if any, which the managing underwriter
believes may be sold without causing such adverse effect. If the
number of Registrable Shares to be included in the underwriting in
accordance with the foregoing is less than the total number of
shares which the holders of Registrable Shares have requested to
be included, then the holders of Registrable Shares who have
requested registration and other holders of securities entitled to
be included in such registration (other than the Senior
Shareholders, who shall have the priority rights specified above)
shall participate in the underwriting: pro rata based upon their
total ownership of shares of Common Stock of the Company (giving
effect to the conversion into Common Stock of all securities
convertible thereinto and the exercise for Common Stock of all
shares exercisable therefor). If any holder of Registrable Shares
would thus be entitled to include more shares than such holder
requested to be registered, the excess shall be allocated among
other requesting holders of Registrable Shares pro rata in the
manner described in the preceding sentence.
8.5. Registration Procedures. If and whenever the
Company is required by the provisions of this Agreement to use
reasonable commercial efforts to effect the registration of any of
the Registrable Shares under the Securities Act, the Company
shall:
(a) use reasonable commercial efforts to file
with the Commission a Registration Statement with respect to such
Registrable Shares and to cause that Registration Statement to
become and remain effective for a period of not less than 90 days
or until all shares covered by the registration statement have
been sold;
(b) as expeditiously as possible prepare and file
with the Commission any amendments and supplements to the Regis-
tration Statement and the prospectus included in the Registration
Statement as may be necessary to keep the Registration Statement
effective for the period described in Section 8.5(a);
(c) as expeditiously as possible furnish to each
holder of Registrable Shares who is selling shares pursuant to
such registration (a "Selling Holder") such reasonable numbers of
copies of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as the Selling Holder may reasonably request in
order to facilitate the public sale or other disposition of the
Registrable Shares owned by the Selling Holder; and
-13-<PAGE>
(d) as expeditiously as possible use reasonable
commercial efforts to register or qualify the Registrable Shares
covered by the Registration Statement under the securities or Blue
Sky laws of such states as the Selling Holders shall reasonably
request, and do any and all other acts and things that may be
necessary or desirable to enable the Selling Holders to consummate
the public sale or other disposition in such states of the
Registrable Shares owned by the Selling Holders; provided,
however, that the Company shall not be required in connection with
this paragraph (d) to qualify as a foreign corporation or execute
a general consent to service of process in any jurisdiction.
If the Company has delivered preliminary or final
prospectuses to the Selling Holders and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Company shall promptly notify the Selling
Holders and, if requested, the Selling Holders shall immediately
cease making offers of Registrable Shares and return all
prospectuses to the Company. The Company shall promptly provide
the Selling Holders with revised prospectuses and, following
receipt of the revised prospectuses, the Selling Holders shall be
free to resume making offers of the Registrable Shares with such
revised prospectuses.
8.6. Allocation of Expenses. The Company will pay all
Registration Expenses of all registrations under this Agreement;
provided, however, that if a registration is withdrawn at the
request of the holders of Registrable Shares requesting such
registration, the requesting holders shall pay the Registration
Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration.
For purposes of this Section, the term "Registration Expenses"
shall mean all expenses incurred by the Company in complying with
a request to register Registrable Shares pursuant to Section 8 of
this Agreement including, without limitation, all registration and
filing fees, exchange listing fees, printing expenses, fees and
disbursements of counsel for the Company and the fees and expenses
of one counsel selected by the Selling Holders to represent the
Selling Holders, state Blue Sky fees and expenses, and the expense
of any special audits incident to or required by any such
registration, but excluding underwriting discounts, selling
commissions and the fees and expenses of the Selling Holders' own
counsel (other than the one counsel selected to represent all of
the Selling Holders).
8.7. Indemnification. In the event of any registration
of any of the Registrable Shares under the Securities Act pursuant
to Section 8 of this Agreement, the Company will indemnify and
hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if
any, who controls such seller or underwriter within the meaning of
the Securities Act or the Exchange Act against any losses, claims,
-14-<PAGE>
damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such
Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and the Company will reimburse such seller, under-
writer and each such controlling person for any legal or any other
expenses reasonably incurred by such seller, underwriter or
controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or omission made in
such Registration Statement, preliminary prospectus or prospectus,
or any such amendment or supplement, in reliance upon and in con-
formity with information furnished to the Company by or on behalf
of such seller, underwriter or controlling person specifically for
use in the preparation thereof.
In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to Section 8
of this Agreement, each seller of Registrable Shares, severally
and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such
underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to the
Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or
on behalf of such seller, specifically for use in connection with
the preparation of such Registration Statement, prospectus,
-15-<PAGE>
amendment or supplement; provided, however, that the obligations
of such seller of Registrable Shares hereunder shall be limited to
an amount equal to the proceeds to such seller of Registrable
Shares from the sale of Registrable Shares as contemplated herein.
Each party entitled to indemnification under this Sec-
tion 8.7 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose ap-
proval shall not be unreasonably withheld). The Indemnified Party
may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained
by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding.
No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settle-
ment which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect of such claim or litigation,
and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent
of the Indemnifying Party.
8.8. Indemnification with Respect to Underwritten Of-
fering. In the event that Registrable Shares are sold pursuant to
a Registration Statement in an underwritten offering pursuant to
Section 8.3(a), the Company agrees to enter into an underwriting
agreement containing customary representations and warranties with
respect to the business and operations of an issuer of the securi-
ties being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary
provisions with respect to indemnification by the Company of the
underwriters of such offering.
8.9. Information by Holder. Each holder of Registrable
Shares included in any registration shall furnish to the Company
such information regarding such holder and the distribution pro-
posed by such holder as the Company may request in writing and as
shall be required in connection with any registration, qualifica-
tion or compliance referred to in this Agreement.
-16-<PAGE>
9. Transfers of Certain Rights.
(a) The rights granted to the Purchaser pursuant to
Section 8 of this Agreement may be transferred by such holder to
another holder of Registrable Shares, to any Affiliate, as defined
in Section 7.1, of such holder or to any person or entity
acquiring at least one hundred thousand (100,000) Registrable
Shares (such number being subject to adjustment for any stock
dividend, stock split, subdivision, combination or other
recapitalization of the Common Stock of the Company); provided,
however, that the Company is given written notice by the
transferee at the time of such transfer stating the name and
address of the transferee and identifying the securities with
respect to which such rights are being assigned.
(b) Transferees. Any transferee (other than the
Purchaser) to whom rights hereunder are transferred shall, as a
condition to such transfer, deliver to the Company a written
instrument by which such transferee agrees to be bound by the
obligations imposed upon the Purchaser and/or holders of
Registrable Shares, as the case may be, under this Agreement to
the same extent as if such transferee were a party hereto.
(c) Subsequent Transferees. A transferee to whom
rights are transferred pursuant to this Section 9 may not again
transfer such rights to any other person or entity, other than as
provided in Sections 9(a) and (b).
10. Confidentiality. The Purchaser and each holder of
Registrable Shares agrees that he or it will keep confidential and
will not disclose or divulge any confidential, proprietary or
secret information which the Purchaser or such holder of
Registrable Shares, as the case may be, may obtain from the
Company pursuant to financial statements, reports and other
materials submitted by the Company to such Purchaser or holder of
Registrable Shares, as the case may be, pursuant to this
Agreement, unless such information is known, or until such
information becomes known, to the public or except as required by
law or judicial or administrative proceeding.
11. Survival of Representations and Warranties. All agree-
ments, representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the
closing of the transactions contemplated hereby.
12. Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall
be (i) delivered by hand, (ii) mailed by first-class United States
mail, certified or registered mail, return receipt requested,
postage prepaid, (iii) transmitted by telecopy with a hard copy
mailed by first class certified or registered mail as aforesaid;
or (iv) delivered by overnight courier service:
-17-<PAGE>
If to the Company, at 20 Ladd Street, Portsmouth, New
Hampshire 03801, telecopy number (603) 433-8645, Attention:
President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchaser, and/or
holders of Registrable Shares, as the case may be, with a copy to
Mark N. Polebaum, Esq., Hale and Dorr, 60 State Street, Boston,
Massachusetts 02109, telecopy number 617-526-5000; or
If to the Purchaser, at 2004 Renaissance Blvd., King of
Prussia, PA 19406, telecopy number (610) 292-6603, or at such
other address or addresses as may have been furnished to the
Company in writing by such Purchaser.
If to a holder of Registrable Shares other than a Purchaser,
at his or its address as it appears on the stock record books of
the Company, or at such other address or addresses as may have
been furnished to the Company in writing by such Stockholder or
holder of Registrable Shares.
Notices provided in accordance with this Section 12 shall be
deemed delivered upon personal delivery or (i) 72 hours after
deposit in the mail, (ii) noon on the second business day next
following deposit with an overnight express courier service and
(iii) in the case of notices provided by telecopy, upon completion
of transmission to the addressee's telecopier.
13. No Assignment. The Warrant may not be assigned except
to the extent permitted by Section 9(b) of the Warrant. The
rights under Section 8 hereof with respect to the Warrant Shares
may only be assigned to the extent permitted by Section 9 hereof.
Except to the extent permitted by the foregoing sentence, the
rights granted pursuant to this Agreement may not be transferred
or assigned by the Purchaser or any holder of Registrable Shares.
Subject to the foregoing, the provisions of this Agreement shall
be binding upon, and inure to the benefit of, the respective
successors, assigns, heirs, executors and administrators of the
parties hereto.
14. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
15. Amendments and Waivers. Except as otherwise expressly
set forth in this Agreement, any term of this Agreement may be
amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the
Company and Purchaser and after the Closing the holders of at
least a majority of the Registrable Shares. No waivers of or
exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed
-18-<PAGE>
as, a further or continuing waiver of any such term, condition or
provision.
16. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
17. Headings. The headings of the sections, subsections,
and paragraphs of this Agreement have been added for convenience
only and shall not be deemed to be a part of this Agreement.
18. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision.
19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
Hampshire, without giving effect to conflict of laws provisions.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of the day and year first above written.
GREAT BAY POWER CORPORATION
By: /s/ John A. Tillinghast
Title: President
PECO ENERGY COMPANY
By: /s/ Nancy J. Zausner
Title: Vice President
-19-<PAGE>
EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE RESTRICTIONS (INCLUDING
RESTRICTIONS IMPOSED UNDER APPLICABLE
SECURITIES LAWS) ON TRANSFER SET FORTH IN
SECTIONS 4 AND 11 OF THIS WARRANT. THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
APPLICABLE STATE SECURITIES STATUTES.
Warrant No. 1 Number of Shares: 420,000
(subject to adjustment)
Date of Issuance: November __, 1995
GREAT BAY POWER CORPORATION
Common Stock Purchase Warrant
(Void after September 30, 1996)
Great Bay Power Corporation, a New Hampshire corporation
(the "Company"), for value received, hereby certifies that PECO
Energy Company, a Pennsylania corporation (the "Registered
Holder"), is entitled, subject to the terms set forth below and
the terms of the Warrant Purchase Agreement, upon exercise of this
Warrant to purchase from the Company, at any time on or after the
Approval Date, as hereafter defined, and on or before the Warrant
Expiration Date, as hereafter defined, at not later than 5:00 p.m.
(Boston, Massachusetts time), 420,000 shares of the Company's
Common Stock .01 par value (the "Common Stock") at a purchase
price per share equal to the greater of (x) $9.75 (as adjusted
pursuant to Section 2, the "Fixed Component") and (y) the highest
price at which a share of the Company's Common Stock has traded on
the National Association of Securities Dealers National Market
from the Approval Date to the date on which the Warrant is
exercised (as adjusted pursuant to Section 2, the "Variable
Component").
The shares purchasable upon exercise of this Warrant, and the
purchase price per share, each as adjusted from time to time
pursuant to the provisions of this Warrant, are hereinafter
referred to as the "Warrant Shares" and the "Purchase Price,"
respectively. This Warrant shall be of no further force and
effect, unless the Approval Date occurs on or before May 31, 1996.<PAGE>
Approval Date shall mean the date when an amendment to the
Company's Certificate of Incorporation is filed with the New
Hampshire Secretary of State increasing the number of the
Company's authorized shares of Common Stock to a number sufficient
to permit the Company to reserve the Warrant Shares for issuance
pursuant to this Warrant in the event of exercise by the
Registered Holder.
For purposes of this Warrant, Warrant Expiration Date shall
mean the earliest to occur of the following: (1) September 30,
1996, if the Seabrook Capacity Factor for the period from the
Service Commencement Date through September 15, 1995 is equal to
or greater than 60%; (2) December 31, 1996, if the Seabrook
Capacity Factor for the period from the Service Commencement Date
through December 15, 1996 is equal to or greater than 60%; (3) two
(2) business days following the first date after December 31, 1996
that the Seabrook Capacity Factor for the immediately preceding
twelve months is equal to or greater than 60%; or (4) December 31,
1997. Service Commencement Date and Seabrook Capacity Factor
shall have the respective meanings ascribed to such terms in the
Services Agreement dated November __, 1995, between the Company
and the Registered Holder hereof.
1. Exercise.
(a) This Warrant may be exercised by the Registered
Holder, in whole but not in part, by surrendering this Warrant,
with the purchase form appended hereto as Exhibit I duly executed
by the Registered Holder or by the Registered Holder's duly
authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United
States, of the Purchase Price payable in respect of the Warrant
Shares, less $1,000,000.
(b) The exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on
the day on which this Warrant shall have been surrendered to the
Company as provided in Section 1(a) above. At such time, the
person or persons in whose name or names any certificates for
Warrant Shares shall be issuable upon such exercise as provided in
Section 1(c) below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such
certificates.
(c) As soon as practicable after the exercise of this
Warrant, the Company, at its expense, will cause to be issued in
the name of, and delivered to, the Registered Holder, or as the
-2-<PAGE>
Registered Holder (upon payment by the Registered Holder of any
applicable transfer taxes) may direct a certificate or
certificates for the number of full Warrant Shares to which the
Registered Holder shall be entitled upon such exercise plus, in
lieu of any fractional share to which the Registered Holder would
otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof.
2. Adjustments.
(a) If outstanding shares of the Company's Common Stock
shall be subdivided into a greater number of shares or a dividend
in Common Stock shall be paid in respect of Common Stock, the
Fixed Component of the Purchase Price in effect immediately prior
to such subdivision or at the record date of such dividend shall,
simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend, be
proportionately reduced. If outstanding shares of Common Stock
shall be combined into a smaller number of shares, the Fixed
Component of the Purchase Price in effect immediately prior to
such combination shall, simultaneously with the effectiveness of
such combination, be proportionately increased. When any
adjustment is required to be made in the Fixed Component of the
Purchase Price, the number of Warrant Shares purchasable upon the
exercise of this Warrant shall be changed to the number determined
by dividing (i) an amount equal to the number of shares issuable
upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Fixed Component of the Purchase
Price in effect immediately prior to such adjustment, by (ii) the
Fixed Component of the Purchase Price in effect immediately after
such adjustment. At the time of exercise of the Warrant, the
Variable Component of the Purchase Price shall equal the highest
of the Period High Prices, as adjusted pursuant to the last
sentence of this paragraph. Period High Prices means the highest
price at which a share of the Company's Common Stock has traded on
the National Association of Securities Dealers National Market for
each of the following periods: (A) from the Approval Date to the
first adjustment of the Fixed Component; (B) each period from an
adjustment to the Fixed Component to the next such adjustment
following the first adjustment of the Fixed Component; and (C) the
period from the last adjustment to the Fixed Component immediately
prior to the exercise of the Warrant. Each Period High Price
shall be adjusted in the same proportion as the adjustment to the
Fixed Component each time that the Fixed Component was adjusted
subsequent to the time that such Period High Price was in effect.
-3-<PAGE>
(b) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a
change in par value or a subdivision or combination as provided
for in Section 2(a) above), or any consolidation or merger of the
Company with or into another corporation, or a transfer of all or
substantially all of the assets of the Company, then, as part of
any such reorganization, reclassification, consolidation, merger
or sale, as the case may be, lawful provision shall be made so
that the Registered Holder of this Warrant shall have the right
thereafter to receive upon the exercise hereof the kind and amount
of shares of stock or other securities or property which the
Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, the Registered
Holder had held the number of shares of Common Stock which were
then purchasable upon the exercise of this Warrant. In any such
case, appropriate adjustment (as reasonably determined in good
faith by the Board of Directors of the Company) shall be made in
the application of the provisions set forth herein with respect to
the rights and interests thereafter of the Registered Holder of
this Warrant, such that the provisions set forth in this Section 2
(including provisions with respect to adjustment of the Purchase
Price) shall thereafter be applicable, as nearly as is reasonably
practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of
this Warrant.
(c) When any adjustment is required to be made in the
Purchase Price, the Company shall promptly mail to the Registered
Holder a certificate setting forth the Purchase Price after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment. Such certificate shall also set forth
the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable following the occurrence
of any of the events specified in Section 2(a) or (b) above.
3. Fractional Shares. The Company shall not be required
upon the exercise of this Warrant to issue any fractional shares,
but shall make an adjustment therefor in cash on the basis of the
mean between the low bid and high asked prices of the Warrant
Shares on the over-the-counter market as reported by the National
Association of Securities Dealers Automated Quotations System or
the closing market price of the Warrant Shares on a national
securities exchange or the last reported sales price on the NASDAQ
National Market on the trading day immediately prior to the date
of exercise, whichever is applicable, or if none is applicable,
then on the basis of the then market value of the Warrant Shares
-4-<PAGE>
as shall be reasonably determined in good faith by the Board of
Directors of the Company.
4. Requirements for Transfer.
(a) This Warrant may only be transferred to the extent
permitted by Section 9(b). The Warrant Shares shall not be sold
or transferred unless either (i) they first shall have been
registered under the Securities Act, or (ii) the Company first
shall have been furnished with an opinion, in form and substance
satisfactory to the Company, of legal counsel satisfactory to the
Company to the effect that such sale or transfer is exempt from
the registration requirements of the Securities Act.
(b) Each certificate representing Warrant Shares shall
bear a legend substantially in the following form:
"The securities represented by this
certificate have not been registered
under the Securities Act of 1933, as
amended, and may not be offered, sold or
otherwise transferred, pledged or
hypothecated unless and until such
securities are registered under such Act
or an opinion, in form and substance
satisfactory to the Company, of counsel
satisfactory to the Company is obtained
to the effect that such sale or transfer
is exempt from the registration
requirements of the Securities Act."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the Registered
Holder, at such time as they become eligible for resale pursuant
to Rule 144(k) under the Securities Act or upon registration.
5. No Impairment. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.
-5-<PAGE>
6. Notices of Record Date, etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or other stock or securities at the time
deliverable upon the exercise of this Warrant) for the purpose of
entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the
Company is the surviving entity), or any transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be
mailed to the Registered Holder of this Warrant a notice
specifying, as the case may be, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the
time, if any which is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other
stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up. Such notice
shall be mailed at least ten (10) days, or if such advance notice
is not practicable, then such shorter period as may be
practicable, prior to the record date or effective date for an
event specified in Section 6(a), (b) or (c).
7. Reservation of Stock. On and after the Approval Date
the Company will at all times reserve and keep available, solely
for issuance and delivery upon the exercise of this Warrant, such
number of Warrant Shares and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this
Warrant.
-6-<PAGE>
8. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount
reasonably satisfactory to the Company, or (in the case of
mutilation) upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.
9. Transfers, etc.
(a) The Company will maintain a register containing the
name and address of the Registered Holder of this Warrant. The
Registered Holder may change its address as shown on the Warrant
register by written notice to the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this
Warrant and all rights hereunder are transferable, in whole but
not in part, solely to an Affiliate, as such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
of the Registered Holder upon surrender of this Warrant with a
properly executed assignment (in the form of Exhibit II hereto) at
the principal office of the Company.
(c) Until any transfer of this Warrant is made in the
Warrant register, the Company may treat the Registered Holder of
this Warrant as the absolute owner hereof for all purposes;
provided, however, that if and when this Warrant is properly
assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
10. Giving of Notices, etc. All notices and other
communications from the Company to the Registered Holder of this
Warrant shall be in writing and shall be delivered and effective
in accordance with the terms of the Warrant Purchase Agreement
between the Company and Purchaser of even date.
11. No Rights as Stockholder. Until the exercise of this
Warrant, the Registered Holder of this Warrant shall not have or
exercise any rights by virtue hereof as a stockholder of the
Company.
12. Change or Waiver. Any term of this Warrant may be
changed or waived only by an instrument in writing signed by the
party against which enforcement of the change or waiver is sought.
-7-<PAGE>
13. Headings. The headings in this Warrant are for purposes
of reference only and shall not limit or otherwise affect the
meaning of any provision of this Warrant.
14. Governing Law. This Warrant will be governed by and
construed in accordance with the internal laws (and not the laws
of conflicts) of the State of New Hampshire.
15. No Third Party Beneficiaries. This Warrant shall not
confer any rights or remedies upon any person other than the
signatories hereto and their respective successors and permitted
assigns.
16. Entire Agreement. Except for the Warrant Purchase
Agreement, this Warrant constitutes the entire agreement among the
signatories hereto and supersedes any prior understandings,
agreements or representations by or among the signatories hereto,
written or oral, that may have related in any way to the subject
matter hereof.
17. Counterparts. This Warrant may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
18. Nouns and Pronouns. Whenever the context may require,
any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
names and pronouns shall include the plural and vice-versa.
19. Severability. Any provision of this Warrant that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
[Corporate Seal] GREAT BAY POWER CORPORATION
ATTEST: By:____________________________
Title: President
_______________________ Address: 20 Ladd Street
Portsmouth, NH
-8-<PAGE>
AGREED AND ACCEPTED:
PECO ENERGY COMPANY
By:________________________
Title:_____________________
Address:
-9-<PAGE>
EXHIBIT I
PURCHASE FORM
To:_________________ Dated:______________
The undersigned, pursuant to the provisions set forth in the
attached Warrant (No. 1), hereby irrevocably elects to purchase
______ shares of the Common Stock covered by such Warrant and
herewith makes payment of $____________, representing the full
purchase price for such shares at the price per share provided for
in such Warrant.
Signature:__________________________
Address:____________________________
____________________________<PAGE>
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________
hereby sells, assigns and transfers all of the rights of the
undersigned under the attached Warrant (No. 1) with respect to all
of the shares of Common Stock covered thereby to the following
person(s):
Name of Assignee Address No. of Shares
The undersigned represents and warrants to Great Bay Power
Company that this assignment of the Warrant is permitted by
Section 9(b) of the Warrant.
Dated:______________ Signature:_______________________________
Dated:______________ Witness:_________________________________<PAGE>
EXHIBIT A
SCHEDULE 3.2
OMEGA CAPITAL PARTNERS L.P.
OMEGA INSTITUTIONAL PARTNERS L.P.
OMEGA OVERSEAS PARTNERS L.P.
COMMON FUND
OMEGA OVERSEAS PARTNERS II LTD.
GOLDMAN SACHS & CO. PROFIT SHARING
MASTER TRUST
GOLDMAN SACHS & CO., POOLED IRA 2
88 PINE STREET
ELLIOTT ASSOCIATES, L.P.
GREAT BAY POWER CORPORATION
20 Ladd Street, Portsmouth, New Hampshire 03801
telephone 603/433/8822
facsimile 603/433-8645
FOR IMMEDIATE RELEASE
Contact: Great Bay Power Corporation
John A. Tillinghast
President
(603) 433-8822
GREAT BAY POWER ANNOUNCES
STRATEGIC MARKETING ARRANGEMENT WITH PECO ENERGY
PORTSMOUTH, NEW HAMPSHIRE, November 6, 1995 --- Great Bay Power
Corporation (NASDAQ: GBPW) announced today that it has entered
into a strategic marketing arrangement with PECO Energy Company.
PECO Energy is a major operating utility which provides electric
and gas service in southeastern Pennsylvania.
To establish the strategic marketing arrangement, Great Bay
and PECO signed a services agreement in which Great Bay appointed
PECO as its exclusive agent to market Great Bay's approximately
130 megawatts of uncommitted capacity generated by Great Bay's 12%
ownership interest in the Seabrook Nuclear Power Plant in
Seabrook, New Hampshire. Under the services agreement, PECO will
provide back-up power to customers during scheduled and
unscheduled outages at the Seabrook plant. This service from PECO
is expected to permit Great Bay to compete more effectively for
firm, all requirements power contracts. The arrangement also
provides for Great Bay and PECO to jointly pursue other
opportunities which are intended to maximize the value of Great
Bay's interest in Seabrook.
In addition, PECO agreed to purchase a warrant from the
Company for $1,000,000. The warrant grants to PECO the right to
purchase 420,000 shares of Great Bay's common stock (4.99% of the
total shares outstanding) at an exercise price of the higher of
(1) $9.75 per share, or (2) the stock's highest trading price
between the date that additional shares (to be reserved for
issuance upon exercise of the warrant) are authorized at the
Company's annual meeting of shareholders scheduled for the first
quarter of 1996 and the warrant expiration date. The purchase
price for the warrant will be credited toward the purchase price
for the shares upon exercise of the warrant. The warrant expires
on September 30, 1996 unless extended because the Seabrook
facility fails to maintain a 60% capacity factor for the first 9
months of 1996, in which case the expiration date is extended
until the earlier of such time as Seabrook's rolling 12-month
capacity factor equals or exceeds 60% or December 31, 1997.
Issuance of the warrant is subject to approval by the New
Hampshire Public Utilities Commission.
The marketing agreement has an initial term through
December 31, 1997, but may be terminated by Great Bay at the end
of 1996 if PECO fails to exercise the warrant. If PECO exercises
the warrant to acquire 4.99% of the Company, the marketing
agreement will be extended to December 31, 1998.
Commenting on the strategic marketing arrangement with PECO,
John A. Tillinghast, Great Bay's President and CEO, stated, "PECO
currently markets over 1100 megawatts of its own uncommitted
capacity in the Pennsylvania, New Jersey and Maryland region and
has proven itself to be a leader in the power marketing field.
PECO's commitment to provide firm, back-up power expands Great
Bay's product offerings and strengthens our ability to compete in
New England and beyond. Great Bay welcomes PECO's confidence in
Great Bay as evidenced by PECO's agreement to purchase a warrant
to acquire 4.99% of the Company. We look forward to working with
PECO to aggressively pursue new opportunities as the New England
power markets increasingly embrace competition."
The Company owns 12% of the Seabrook Nuclear Power Plant in
Seabrook, New Hampshire. This ownership entitles Great Bay to
sell approximately 140 MW of the plant's power output. Great Bay
currently has 10 MW committed on a long-term basis and sells the
other approximately 130 MW on short term markets. Marketing
services are currently provided to Great Bay by UNITIL Resources,
Inc.
Incorporated in 1986, Great Bay is a New Hampshire
corporation authorized by the New Hampshire Public Utilities
Commission to engage in business as a public utility.
