ML20128B642
| ML20128B642 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 11/25/1992 |
| From: | Ritsher J NORTH ATLANTIC ENERGY SERVICE CORP. (NAESCO), ROPES & GRAY |
| To: | Edison G Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 9212040036 | |
| Download: ML20128B642 (78) | |
Text
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OS A E ROPCS & GRAY ON E INTERN ATION AL PLACC BOSTON. M ASSAC H USETTS O2110-2G2 4
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' I ' 8 0 C '"4 " k M 0EG-3 W llovember 25, 1992 PEDERALlKEREER Gordon E.
Edison, Sr.
Project Manager office of Muclear Reactor Regulation U.
S.
Iluclear Regulatory Commission One White Flint - 11555 Rockville Pike Rocnville, Maryland 208b2 Referencest (a)
Letter, dated November 14, 1992, J. A.
Ritsher to T.
E.
Murley (b)
Telephone conversation on November 24, 1992, G.
E.
Edison, Sr. to T.
Harpster Re Docket No. 50-443, Seabrook Station Unit 1; EUA Pover Cornoration Bankrupigy Procee_ sling
Dear Mr. Edison:
This letter is filed on behalf of North Atlantic Energy Service Corporation and the committee in response to your telephone conversation with Mr. Harpster at Seibrook Station (Reference A).
In that conversation you raised a series of questions and requests for information prompted by my letter of November 19, 1992 (Reference B).
Some of the terms defined in Reference A are used again in this rerponse.
As a preliminary mattor, I would like to reiterate three l
important points from my prior letter.
First, EUA Power has l
existed as a debtor-in-possession under Chapter 11 of the Bankruptcy Code since February 28, 1991, a lengthy period in which little progress toward a resolution has been made until very recently.
The proposed redemption of EUA Power's stock (the
" Initial Step" referred to in the earlier letter) is a facilitating move conceived by the principal parties in that proceeding as a way to circumvent a procedural roadblock.
That roadblock is created by the statutory priority given to review by the Securities and Exchar.ge Commission whenever a plan of reorganization involves a company subject to the Public Utility Holding Company Act and the fact that the SEC Staff"s pending workload would prevent any prompt review by the SEC in this bhbOdo b,* f C )/ - ( L T 9-iamt flool n
9212040036 921125 PDR ADOCK 05000443 l
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j RoPts & G A Av a
i Gordon E.
Edison, Sr. November 25, 1992 l
instance, causing substantial additional deJay.
Further delay can only be counterproductive to any favorable resolution of EUA 1
Power's situation, j
second, the Interim Step accomplishes no substantive change
~
in the bankrupt's positien.
The redemption of stock merely eliminates EUA Power's status as a subsidiary owned by a 5
i registered holding company, an ownership devoid of real meaning so long as the bankrupt remains under the control of the Bankruptcy Court in the on-going proceeding.
In reality, after the Interim Step, EUA Power would remain under the full control i
of the Bankruptcy Court which oversees the conduct of its day-to-day operations as a debtor-in-possession.
The posture of the proceeding will still require the Plan to be formally reviewed by l
the Court and, if feasible, confirmed by the Court.
Thus, the i
position implicit in Reference a, namely that, since the i
technical transfer of control inherent in the Interim Stop j
effects no change in the status auo, it does not raally rise to i
the level of the kind of substantive " transfer of control" l
contemplated by 10 CFR $50.80.
Third, the Interim Step in no way affects the operatlun of i
Seabrook Station which remains the exclusive responribility of horth Atlantic.
With those points in mind, let me provide the responses to your questions on behalf of North Atlantic and the Committee.
Question 1 1.
Plear,e supply the Bondholders Committee's Plan of Reorganization, as amended, and the plan or other documentation of the " Interim Stop."
Rganonse_l:
Attached hereto is the Joint Motion of official Bondholders' Committee, the Debtor, and Eastern Utilities Associates to Enter Settlement Agreement to Compromise l
Controversies Pursuant to Fed. R. Bankr.
P. 9019 (a) and to Amend i
the Debtor's Schedule of Liabilities which was filed with the Bankruptcy Court seeking approval, inter alia of the " Interim 2
Step", together with Exhibit A thereto and the accompanying i
Memorandum of Law.
This Motion fully describes the purpose and mechanics of the redemption of stock.
The Plan of Reorganization itself does not directly rclate to the Interin Step, but rather describes the principles upon which EUA Power would be permitted to emerge from bankruptcy _as a recrganized entity.
Those concepts are properly the subject of formal proceedings before the Commission and the Bankruptcy Court once the procedural roadblock is removed.
Therefore, the Plan will be an exhibit to the Application for Consent to Indirect-e 4
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Transfer of Control and License Amendment which will be filed with the Commission promptly after the Interim Step clears the procedural way for the Banktuptcy Court to begin its considsration of the Plan.
)
~
ouestion 2 2
2.
Ate there any other proposed plans of reorganization of EUA Power now being considered?
4 l
1 Responso Rt No other plans have been proposed in the EUA Power bankruptcy proceeding.
l (Litestion 3 1
3.
Who are the holders of 10% or more of common stock in EUA Powar and what are their nationalities?
What are the classes i
of that common stock?
Are there other classes of stock?
If so, i
who owne that stock and what are the nationalities of those owners?
Response 3:
EUA Power's preferred and common stock is currently held 100% by Eastern Utilities Associates, a registered holding company.
See in the above Docket the Application for Amendment to the Construction Permits, dated March 26, 1986, and the related Amendments No. 9 issued by the Commission and the Staff's Safety Evaluation.
There is no other outstanding class l
of stock.
l Questions 4 throuch 8 4.
Who are the owners of EUA Power's secured notes?
What is their percentage of ownership and their nationality?
5 5.
Are thore any other bonds outstanding or secured debts of EUA Pcwor?
Describe that debt and its ownership.
6.
What are the other classes of creditors of EUA Power?
Will they have any interest in EUA Power after the reorganization?
If so, who are they?
What will be their interests after the reorganization and, if they are to be owners, what are their nationalities?
l 7.
Who would have the ownerchip interests in EUA Power after the reorganization?
What would be these interests?
Who would own these particular interests and what would be.the nationality of these owners?
8.
What is the plan for " syndication" of the secured Plan i
of Reorganization financing?
I i
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1 I
Ropts& GnAv 1
Gordon E.
Edison, Sr. November 25, 1992 Response 4 - 8:
These questions really inquire into aspects of the Plan of Reorganization sponsored by the Committee which, i
if the proceeding over achieves a posture where that Plan can be i
considered, will be the subject of a formal application to the Commission.
The specifics of the ownership of the existing EUA Power debt and the ultimate ownership of the now EUA Power equity l
securities have no relevance to the Interim Step because they will not be affected in any way by the stock redemption.
They only become relevant when the Commission ultimately considers the transfer of control inherent in the Plan.
The " Summary of Facts" in the Memorandum of Law referred to above provides a preview of what will be presented to the Commission at that time.
Similarly, the potential for syndicating a financing for a Reorganized EUA Power ic non-existent until the plan, which will produce a Reorganized EUA Power, itself becomes a reality.
i Therefore, conjectures as to its nature have no bearing on the Interim Step.
Until the SEC roadblock is eliminated by the 3
Interir. Step, the Plan and any related financing remain dormant.
i 2ngstion_2 l
9.
Has the SEC sought any further information in relation to the Plan of Reorganization?
Please supply these regreats and i
any replies to those requests, BesDonse 9:
As indicated by the discussion above, because a'
of other workload the SEC Staff review of the filing with respect to the Plan has not progressed.
The more recent filing with respect to the redemption of stock has elicited no inquiries from the SEC Staff so far.
ouestions 10 throuan 13 10.
In relation to the " Interim Step," who would redeem the common stock?
Who would own the common stock after its redemption, if anyone?
Would there be any remaining creditors of EUA Power after the redemption?
I 11.
After the contemplated redemption of all EUA Power Corporation's common stock in the "Incerim STop" - who would own the corporation?
What would be their nationalities?
What are their qualifications to possess a nuclear utilization facility?
12.
Under the law of the state in which EUA Power le incorporated, can a corporation own all its stock?
Please obtain appropriate' legal citations.
13.
Are the owners of EUA Power after the " Interim Step" and after the Plan of Reorganization is consummated, the same?
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i Ropts & Gnw a
Gordon E.
Edison, Sr. November 25, 1992 l
Reoponse 10 thrcuch 13:
J EUA Power Corporation filed a voluntary petition for rel, if under Chapter 11 of the Bankruptcy Code on February 28, 1991.
l Since that time it has operated as a " debtor in possession" (a
" DIP") under 551107 and 1108 of the United States Bankruptcy Code, 11 U.S.C.
5101 et sog.
The Bankruptcy Code permits a DIP to continue to operate the debtor corporation's business in the ordinary course during a Chapter 11 proceeding, but requires that 3
the DIP seek approval from the Bankruptcy Court, after notico and hearing to interested psrties, before it takes any significant or unusual actions.
The DIP is also charged with the special powers afforded to a Chapter 11 trustee under 591104 and 1106 of the Bankruptcy Code and has the commensurate responsibilities of a J
bankruptcy trustee.
These responsibilities include investigating i
the debtor's businenn, marshalling its annets and reorganizing i
the debtor and its estate on behalf of all parties in interest.
Because the DIP is created under the Bankruptcy Code, it has the benefit of the supremacy clause of the United States Constitution where the Bankruptcy Code and otherwise applicable state law conflict.
For example, it is not customary for a DIP to hold shareholder meetings or to have regular elections of officers and directors.
Shareholders are entitled to voice their views with reapect to the reorganization process as parties in interests in the same way that creditors are afforded that opportunity.
The Bankruptcy Court, the Official Creditors Committen d the Office of the United States Trustee, a division or Department of Justice, serve as a check on the actions taken by a DIP.
No abpect of the Interim Step will change in any way the i
rights or responsibilities of the DIP as trustee.
EUA Power will remain accountable to the Bankruptcy Court with respect to all matters other than ordinary course transactions, will be under the scrutiny of the Official Creditors Committee and the Office of the United States Trustee and will need to seek all appropriate approvals before it may cause any plan of reorganization-for EUA Power to become effective.
EUA Power will redeem all of_its common and preferred scock and that stock will become an asset of the EUA Power estate under the jurisdiction of the United States Bankruptcy Court and the-DIP as trustee.
Once the stock has been redeemed, it cannot be further transferred by the: DIP until the Plan has been confirmed.
The redemption will not have an impact on any existing creditors of EUA Power.
After the plan-of reorganization being proposed by the-Official Bondholders Committee of EUA Power becomes effective, the ownership of EUA Power will be changed.
A condition to the plan becoming effective and therefore a condition to'the change of ownership occurring is approval by the NRC of the change of ownership.
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Ropts & GHAY Gordon E.
Edison, Sr. llovember 25, 1992 Question 14 14.
Finally, you queutioned the absence of any anti-trust information in the original letter.
Responsg_14:
The Interim Step by itself does not effect any real transfer of control of EUA Power or any change in the marketing of the EUA Pcwer's electrical energy from Seabrcok Station, so Appendix L is not applicable.
Furthermore, EUA Power only owns the 140 megawatts of generating capacity represented by its interest in Seabrook Station, so it would be exempt from any requirement to file any Appendix L information under 10 CFR l
5 50. 33a (a) (3).
j We hope that the foregoing has clarified the distinction between the issucc before the Commission with respect to the Interim Step and those which will be presented when a formal Applic?. tion for Consent is filed.
We have tried to be fully responsive with respect to the former and will have your other questions in mind while preparing the Application.
If you have any further questions, please do not he;itate to call Mr. liarpster (603-474-9523) or the undersigned.
Very truly yours, ROPES & GRAY
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Jo i A. Ritsher _
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Enclosures
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UNITED STAT'S BANKRUPTCY COURT Z
t FOR THE DISTRICT OF NEW HAMPSHIRE l
'92 MW 18 P4 :l l
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In re
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Chapter 11 Cl
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Case No. 91-1d$20 EUA POWER CORPORATION
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0
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Hearing:
December 8, 1992 Debtor
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Hearing Time:
9:30 a.m.
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JOINT MOTION OF OFFICIAL BONDHOLDERS' COMMITTEE, THE DEBTOR, AND EASTERN UTILIT.tES ASSOCI ATES TO ENTER SETTLEMENT AGREEMENT TO COMPROMISE CONTROVERSIES PURSUANT TO FED.
R.
HANKR.
P. 9019 (a)
AND TO AMEND THE DEBTOR'S SCHEDULE OF LIABILITIES The Official Bondholders' Committee for EUA Power (the
" Committee"), EUA Power Corporacion (the " Debtor" or "EUA Power"),
and Eastern Utilities Associates ("EUA") hereby jointly move that this Court enter an Order pursuant to Fed.
R.
Bankr.
P.
9019(a),
authorizing the Committee and the Debtor to execute and deliver, and perform under, the Settlement Agreement attached hereto as Exhibit A (the " Settlement Agreement") which resolves all of the I
outstanding litigation and controversies among the parties pending before this Court, and permitting the Debtor to amend its schedule of liabilities as provided in the Settlement Agreement.
In i
support of this motion, the Committee, the Debtor, and EUA state as follows:
1.
On February 28, 1991 (the " Filing Date"), the Debtor filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. SS 101 et sec.
Pursuant to 11 U.S.C.
55 1107 and 1108, the Debtor is operating and managing its business as a debtor-in possession.
1
2.
The Debtor is a single-purpose New Hampshire e oration whien holds as its sole asset, other than certain causes oc action discussed more fully below, an undivided 12.13241 interest in the Seabrook Nuclear power plant (the "Seabrook Interest").
3.
E,'A nolds 100% of the issued and outstanding ccmmon and preferred stock of the Debtor.
4.
The Committee represents the holders of claims arising under the Debtor's 17)t Series B and Series C Secured Notes (the
" Bondholders").
As of the Filing Date, these claims totaled approximately $294,000,000 (the " Bondholder Claims").
The Bondholder Claims constitute 1001 of the secured claims against the Debtor and approximately 99% of all claims listed by the Debtor on its amended schedules, other than claims held directly or through subrogation by EUA and its affiliates.
Current Committee members hold in excess of 40% of all of the Bondholder Claims.
5.
The Committee has filad a plan of reorganization (the
" Plan") and disclosure statement (the " Disclosure Statement") and alleged various claims on behalf of the Debtor against EUA, including claims against EUA to avoid preferential transfers, which are the subject of Adv. Pro. No. 91-10791, and claims against EUA, EUA Service Corporation and certain directors of the Debtot for breach of their fiduciary duties to the Dcbtor's creditors.
In addition, the Committee believes that additional 1
Duplicate originals of this motion and the supporting memorandum of law have also been filed in Adv. Pro. No. 91-1G'9. i
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s a
i i
claims could be made on behalf of the Debtor-against EUA and other i
I EUA subsidiaries to recover payments under certain tax allocation l
egreements and against Connecticut National Bank and Citibank, i
N.A.
to recover preferential transfers.
6.
EUA and the Debtor have opposed the Committee's Plan and j
Disclosure Statement and disputed the claims raised by tne 1
Ccmmittee.
7.
The litigation and plan formulation discussions i n this
{
i case have been unusually complicated because of the regulatory framework in which they must occur.
ihe Committee is seeking, or will seek, approval for its Plan not only from the Bankruptcy Court but also from the Securities and Exchange Commission (the j
"SEC"), New Hampshire Public Utilities Commission ("NHPUC"), the Tederal Energy Regulatory Commission ("FERC") and the Nuclear 3
i Regulatory Commission ("NRC").
8.
EUA and the Debtor have intervened and filed an l
objection with the SEC to the Plan and Disclosure Statement.
l Although applications for approval by the NHPUC, FERC and the NRC 4
are not yet ripe for submission, it is likely that, absent an overall resolution among the parties, intervention and objections.
t i
by EUA and the Debtor before these regulatory bodies, and the litigation which would result, would substantially delay the 4
regulctory approval process.
9.
Having considered the law and the facts applicable to Plan and Disclosure Statement, the objections thereto, the claims l
of the Committeo, the merit of the affirmative defenses EUA and 3-4 g1,w ye3-,t-e-
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its subsidiaries have asserted and could assert, and the i
uncertainties, expense and delays inherent in litigation and the regulatory approval process, the Ccmmittee, the Debtor, and EUA submit that it is in the best interests of the Debtor's estate to enter into a settlement of all claims and disputes among them, in accordance with the terms of the Settlement Agreement.
i j
10.
After extensive efforts by all parties, the terms of a settlement have been reached and embodied in the Settlement Agreement.
The Settlem...t Agreement terminates all pending litigatio3, provides critically needed funds to the Debtor, in-the amount of $20 million, and will substantially shorten and simplify i
both plan confirmation and the regulatory approval process.
11.
The key points of the Settlement Agreement may be summari:ed gent. ally as follows:
(a)
The Debtor, the Connittee, to the extent it is l
acting on the Debtor's behalf, and the individual Committee members have agreed to release EUA, its officers and directors and its various subsidiaries and affiliates, from any and all claims, causes of action and liabilities.
The claims being released include all preference claims, breach of duty claims, claims under the tax allocation agreements i
and avoiding power claims against Connecticut National Bank and Citicorp N.A.
Claims of the l
Committee members and all other Bondholders against the Debtor or the Tebtor's estate for unpaid i
amounts due under the Series B and Series C Notes are of course being proberved.
(b)
EUA will cause to be paid S20,000,000 into the Debtor's estate and EUA and its subsidiaries will 4
withdraw the approximately $50,000,000 in proofs of claims tney have filed.
4
r (c)
EUA and the Debtor will withdraw all pending interventions and objections to the Plan and Disclosure Statement.
EUA and the Debtor have agreed to cooperate with the Committee in obtaining all regulatory and Bankruptcy Court approvals to implement the Plan, as presently filed and as hereafter amended, provided that such amendments are not inconsistent with the Settlement Agreemen:.
The Debtor will stipulate to the Committee's valuation of the Bondholder's collateral, as provided in the Plan, for the purposes of this Settlement Agreement and the Plan.
(d)
The Debtor will redeem all preferred and common shares held by EUA.
(e)
EUA and all of its subsidiaries and affiliates will waive and release any and all claims which any of them have against the Debtor and the Committee.
(f)
The parties will work cooperatively to maximize their respective tax benefits.
(g)
EUA Service Corp. ("EUA Service") will, at the Committae's discretion, continue to provide administrative services on a cost basis to the Debtor, other than marketing of electricity on a long-term basis.
(h)
The Debtor will indemnify its continuing officers and directors and EUA Service for actions taken after the Effective Date of and consistent with the terms of the Settlement Agreement.
(i)
EUA will reaffirm its existing guarantee of the Debtor's liability for future costs of decomtaissioning the Seabrook Nuclear Power Plant.
(j)
The Debtor will assign to EUA or its designee its right to receive discounted engineering services from United Engineers and Constructors under the Settlement Agreement dated November 1, 1991.
(k)
The Debtor will amend its schedule of liabilities to withdraw a'/ objer-: ion to the claims of the Bondholders and to delets the claims of Citibank N. A., Connecticut National Bank and the New Hampshire Industrial Development Authority. - _ _ - _ _ _ _
i (1)
The Committee will covenant not to sue Et1A and its subsidiaries with respect to certain mattera, 12.
The Settlement Agreement set forth herein satisfies the applicaole standards of Fed.
R.
Bankr.
P.
9019(a), as discussed more fully in the acccmpanying memorandum of law, is fair and 3
l equitable and is in the best interest of the Debtor's estate, for example, the $20 million cash payment enhances the feasibility of the Plan not only because it strengthens the Debtor's financial i
position while it seeks long term power contracts, but also i
because the additional cash resources allow the Debtor to extend the time by which such contracts must be obtained.
It is sufficient to repay the existing debtor-in-possession facility and I
to cover operating shortfalls approximately eight to ten additional months.
This will also reduce the Debtor's need for ahort term borrowings and thereby reduce the Debtor's interest i
costs.
Moreove i, the economic value of the settlement to the estate 15 significantly greater than S20.million due to the waiver by EUA and certain of its subsidiaries of approximately 2
$50,000,000 in unsecured claims asserted by EUA against the Debtor.
2 All recoveries in the preference litigation against EUA would result'in an increase of EUA's previously filed unsecured claim.
Given the estimated value of the Debtor's interest in Seabrook of
$120,000,000, and total outstanding claims against the estate of
$360,000,000, under the Plan, absent subordination,.EUA would likely be entitled to receive approximately a 33% dividend (interests in the reorganized debtor with a value of $20,000,000),
on account of such claims. i
n J
13.
In addition to the s'.g.ificant immediate financial l
advantages of the settlement, the non-monetary consideration resolves several critical issues and similarly improves Plan feasibility.
In particular, the Court will most likely not be
)
required to value the Bondholders' collateral in connection with 4
f Plan confirmation as the Debtor has now stipulated to such value.
l EUA's agreement to reaff!!m its $10,000,000 guarantee of the l
Debtor's liability for the costs of decommissioning the Seabrook j
Nuclear Power Plant resolves another critical disputa.
Perhaps most importantly, the settlement ensures the cooperatica of all i
l parties before regulatory authorities, a circumstance which renders it much more likely that the requisite approvals will be i
granted without undue delay.
14.
The parties to the settlement have been represented by experienced and knowledgeable counsel, all of whom have devoted many hours to this case and the Settlement Agreement.
The Settlement Agreement is the product of arms length bargaining among sophisticated parties.
Therefore, and for all of the other reasons set forth above, the Court should approve the Settlement f
Agreement.
l 15.
In further support of this Motion, the Committee, tne l
Debtor, and EUA incorporate by reference the Memorandum of Law in suppott of this Motion which is being filed contemporaneously herewith.
The Debtor has filed an affidavit of its President in support of the settlement.
l
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WHEREFORE, t h e Corr.mi t t e e, the Debtor, and EUA respectfully request that this Court enter an Order approving the settlement and compromise of controversies with EUA as set forth in the attached Settlement Agreement and in connection therewith A
permitting tne Debtor to amend its schedule of liabilities as set forth in paragraph 11(k) above, :nd granting such other and further relief as in just.
OFFICIAL BONDHOLDERS COMMITTEE, By its attorney <,
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afk N. Polebaum IBNH 01615)
-Albert A. Notini (BNH 03117)
Prank W. Getman Jr.
HALE AND DORR 1155 Elm Street Manchester, New Hampshire 03101 (603) 627-7600 EUA POWER CORPORATION, By its attorneys,
/7
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Alan L. LefkowitY (BHW1)3348)
John P. Dennis, Esquire Dechert Price & Rhoads Ten Post Office Square, South Boston, MA 02109 (617) 728-7100
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EASTERN UTILl!IES ASSOCIATES, By its attorneys, j
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I J.
Ronald Trost, Esquire Shalom L. Kohn, Esquire 1
Kelley A. Cornish (BNH 03534)
Sidlay & Austin 875 Third Avenue New York, NY 10022 3
(212) 906-2000
. ~ _ -
Arthur I. Andersen, Esquire Christopher W.
Parker, Esquire Mark L. Yeager, Esquire McDermott, Will & Emery 75 State Street Boston, MA 02109 (617) 345-5000 Dated:
November 18, 1992 1
e 9
Exn; 1g SETTLEMENT AGREEMENT inis Settlement Agreement is entered into this 18th day of NovenLar, 1992, among EUA Power Corpo: tion ("EUA Power"), a New Hanpsntre :orpcration and a debtor and a detter in possess; n in Chapter 11, Case No. 9K91-10525 presently pending in the United States Bankruptcy Court for the District of New Hanpshire (tne
" Bankruptcy Court"), Eastern Utilities Associates ("EUA"), a Massachusetts voluntary association, and the Official Bondholders' Committee (tPe " Committee") of EUA Power, the duly appointed tepresentative of the holders or ;UA Power's 17 1/2%
Series B and 17 1/2% Series C Secured Notes (together, the
" Secured Notes").
REC ITALS WHEREAS, EUA Power filed a v luntary petition under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C.
Section 101 gi Egg. (the " Bankruptcy Code") on Feuruary 28, 1991 in the Bankruptcy Court; and l
WHEREAS, EUA Power has continued to own and operate its i
business as a debtor in possession; and WHEREAS, the Committee was duly appointed by the United 1
(
States Trustee on March 14, 1991 pursuant to an order of the l
l Bankruotcy Court as the official representative of the holders of the Secured Notes issued by EUA Power pursuant to an Indenture of Mortgage dated November 15, 1986, as amended by three supplemental indentures dated February 24, 1987, May 1, 1988 and November 1, 1988; and
j i
WHEREAS, EUA is the owner et 100% of the issued and
)
outstanding shares of preferred and common stock of EUA Power; i
and WHEREAS, there have arisen during the pendency of EUA j
P0wer's Chapter il case a number of disputes among tne C:r,ittee, EUA Power and EUA which the parties wish to resolve on the terr-l and tenditions contained herein.
NOW, THEREFORE, in consideration of the foregoing and for other gcod and valuable consideration the receipt and sufficiency of which is hereby acknowledged, and with the specific intent to be bound by the terms hereof, the parties hereto hereby stipulate and agree as follows:
AGREEMENT 1.
Recitals j
All of the Recitals set forth above are an integral part Of r
this Settlement Agreement and are incorporated by reference herein.
2.
EeZtlement Payment on the Effective Date of this Settlement Agreement, as defined in paragraph 15 below (the " Effective Dtt;"), EUA shall cause to be-paid to EUA Power the sum of $20,000,000 in immediately available United States funds in consideration of the mutual ' covenants net forth herein.
EUA Power in turn agrees to use that portion of said $20,000,000 which is equal to the amount then outstanding under the existing debtor in possession financing facility provided by The Connecticut Light and Power 2
Company and The United Illuminating Company (the "D:P racility")
to pay in full the DIP Facility.
EUA Power shall hold the remainder of said $20,000,000 in an interest bearing or equivalent account at a bank or other financial institution which is accepta'le to the Cormittee, provided that the Committee nay c
not unreasonably withhold its consent or its acceptance of a bank, or other financial institution proposed by EUA Power, and provided, further that such funds are held in compliance with Section 345 of the Bankruptcy Code.
J.
Releases by EUA Power on the Effective Date, EUA Power, for itself and on behalf of all persons claiming by or through it, including without limitation, the Committee, will execute and deliver to EUA a Release, in the form annexed hereto as Exhibit A, releasing EUA, all subsidiaries of EUA (excluding Montaup Electric Company
("Montaup") in its capacity as a joint owner of the Seabrook Nuclear Project and excluding EUA Power) and all employees, officers, directors, tructees, representatives, agents and attorneys of EUA and all of its subsioiaries (including EUA Power) from any and all claims from the beginning of the world through the Effective Date (whether or not such claims have been asserted in the Bankruptcy Court proceedings or any adversary proceeding), including but not limited to, any and all claims which are alleged in (i) Adversary Proceeding No. 91-1079 (the
" Preference Action"), (ii) the draft complaint,- a copy of which is attached to the Motion of Official Bondholders' Committee for 3
.. ~ _ _ _ _ _ _ -. _., _ _ _, _
i I
Leave to File Adversary Complaint on behalf of EUA Power and EUA Power's creditors, dated August 27, 1992 (the " Fiduciary Duty Action") and (iii) any and all cl. aims against EUA and its subsidiaries for amounts allegedly owing under the tax allocatien agreements to wnich EUA T wer, EUA and EUA's subsidiaries are l
parties (the " Tax Claims").
On the Effective Date, EUA Power, for itself and en behalf ci all persons claiming by or througn it, shall execute and deliver to the Committee a Release, in the form annexed hereto as Exhibit B.
4.
Release by the Comnitteef Covenant of the Committee on the Effective Date, the Committee will execute and deliver to EUA a Release, in the form annexed hereto as E::hibit C,
releasing EUA, all subsidiories of EUA (excluding Montaup in its capacity as a joint owner of the seabrook Nuclear Project and excluding EUA Power) and all employees, officers, directors, trustees, Jepresentatives, agents-and attorneys of EUA and of all
'ncluding EUA Pover) of any and all claims of its subsidiaries of the Committee on behalf of EUA Power from the beginning of the world through the Effective Date (whether or not such claims have l
been asserted in the Bankruptcy _ Court proceedings or any l
adversary proceeding), including but not limited to, any and all I
l claims which are alleged in the Preference Action and the Fiduci~ary Duty Action and the Tax Claims.
The Committee, on l
behalf of itself, on behalf of EUA Power, and in any other l
capacity, covenants and agrees that at no time will it commence i
or continue any action or assert or continue to assert any-claim 4
1
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_. _ _ _ ~
l i
l whatsoever with respect to. matters arising before tne Effective Date against EUA or any of its subsidiaries (excluding Montaup in its capacity as a joint owner of the Seabrook Nuclear Project and I
excluding EUA Power) nor against any of the employees, officers, directors, trustees, representatives, agents or atterneys of IUA or of any of its subs) diaries (including EUA Power).
5.
P_grsenal Claims Aareenent bv the_CQCrittee Members Contemporaneous 1y with the execution and delivery of this Settlement Agreement, all of the current voting members of the nommittee (Leucadia, Inc., IDS Financial Corp., Kemper Financial Services, Inc. and Shehrson Lehman Brothers, Inc. (together, the
" Committee Members")) shall have executed and delivered an agreement with respect to the release of " personal" claims in the form annexed hereto as Exhibit D.
6.
Covenant of EUA Power EUA Power, for itself and on behalf of all persons claiming by or through it, including without limitation, the Committee, covenants and agrees that it will not commence any actions arising in connection with loans by Connecticut Netional Bank and/or Citibank, N.A. to EUA Power, including without limitation, any avoiding power actions under the Bankruptcy Code.
7.
Release by the EUA Group.
On the Effective Date, EUA, for itself and as the duly authorited agent of each of its subsidiaries (other than Montaup in its capacity as a joint owner of.the-Seabrook Nuclear Project and other than EUA Fower) and on behalf of all persons claiming 5
by or thr: ugh them, including without limitation, all of thetr employees, officers, directors, trusteos, representatives, agents and attorneys (the "EUA Group"), shall execute and deliver to EUA Power and the Committee Members Re.) eases, in the forms annaxed hereto as Exhibits E and F, in which the EUA Group will release EUA Power and the Committee Members from any and all claims relating to EUA Power from the beginning of the woric to :ne Effective Date, including withott limitation those claims set i
forth in Proofs of Claim Nos. 43 through 46 and 48 (but specifically excluding the claim of Dechert, Price & Rhoads in the amount of $36,383.22 set 'f orth in Proof of Claim No. 41),
Also on the Effective Date, the EUA Group will file with the Bankruptcy Court withdrawals of its proofs of claim filed in EUA Power's Chapter 11 case and any and all of such claims shall be deemed disallowed in EUA Power's Chapter 11 case and any successor or subsequent case for EUA Power under the Bankruptcy Code.
It is a condition precedent (which can be waived in the sole discretion of the Committee) to the obligations of the parties to this Settlement Agreement-that en the Effective-Date, the following directors and officers JA Power deliver a Release to ELa Power in the form annexed hereto as Exhibit G:
Donald G.
Pardus Arthur A.
Hatch f
Robert E. Maguire John R.
Stevens Clifford J.
Hebert, Jr.
Robert P. Tassinari William F.
O'Connor Richard M.
Burns Robert F. Wolff, Jr.
8 o
6
EUA and 1s subsidiaries will use reasonable efforts to secure such Release from the foregoing directors and officers.
S.
Arendrent of Schedules it is a condition precedent to the Effective Date that the r
Sankruptcy Court shall have authorized EUA Power to auend, on tne Effective Date, its schedule of liabilities to reflect that it no longer disputes or views as contingent or unliquidated claims arising under the Secured No*,es and to delete fro. such schedules any and all claims scheduled for Connecticut National Bank,
- Citibank, N.A.
and the New Hampshire Industrial Development Authority.
EUA Power agrees nc
- o make any further amendments e
to such schedule regarding a"/
aims without the written consent of the Committec unless ordered by the Bankruptcy Court.
Nothing herein shall constitute an allowance of any claims set forth on such schedule.
9.
Withdrawal of Occositions, Etc.
On the Effective Date, EUA and EUA Power shall (i) each request of the Securities and Exchange Commission (the "SEC")
leave to withdraw their respective motions to intervene as parties in File No. 70-8034 presently before the SEC, (ii) withdraw all objections to the Second Amended Disclosure Statemeno of the Committee as it may be amended.("the Committet Disclosure Statement"), provided that any such amendments to the Committee Disclosure Statement are not ir.
1sistent with the ternt or conditions of this Snttlement Agreement and (iii) withdraw their respective Motions to Stay the Bankruptcy Court's 7
i i
1 1
consideration of the Committee Disclosure Statement.
EUA and EUA i
Power hereby agree that neither of them will file any further objections to the Third Amended Plan of Reorganization filed by the Committee as such Plan may hereafter be amended (the
" Committee Plan") or the Committee Disclosure Statement, pr:vided i
9 that any such amendments to the Committee Plan and Cormittee Disclosure Statement are not inconsistent with the terms or conditions of tnis Settlement Agreement.
EUA and EUA Pcwer l
hereby covenant and agree not to oppose the Committae's valuation of the interest in EUA Power's property held by the holders of the Secured Notes as being equal to ninety-five percent (95%) of the value of EUA Power's interest in the Seabrook Nuclear l
Project, and for purposes of this Settlement Agreement and the i
Plan, EUA Power shall stipulate to such valuation.
10.
Tax Matters The Committee and EUA Power will cooperate with EUA in i
minimizing EUA's tax liabilities as a result of a deconsolidation of EUA Power from the EUA tax group (the "Deconsolidation"),
t provided that such cooperation does not require EUA Power to pay cash for any resulting tax liability and does not alter the l
t manner of filing consolidate tax returns called for under the t
I
(
existing tax allocation agreements prior to Deconsolidation.
The I
parties agree that to the extent permissible under the tax laws, the tax attributes of EUA Power (e.g.,
net operating loss carry I
forwards, investment tax credits and' alternative minimum tax l
l credits) shall first-be w*ilized by or allocated among the 3
l
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l
members of the EUA tax group in a manner consistent with the oest interests of EUA and the other members of the EUA tax grt.p (other than EUA Power) and thereafter, to the extent not inconsistent with such objective, EUA will cooperate with EUA
?:wer and the Committee to maximize to the extent pern>ssio;e under the tax laws the amount cf tax attributes that me y be available to EUA Power upon Deconsolidation, including without limitation tax attributes that are of no benefit (taking into account excess loss account recapture pursuant to Treas. Reg.
St.1502-19(a) with respect to EUA Power) to.the EUA tax group (other than EUA Power).
EUA agrees that if the Dsconsolidation occurs on or after January 1, 1993 an' before January 31, 1993, EUA Power may elect pursuant to Treas. Reg. 51.15 0 2 -7 6 ( b) ( 5 ) to not be considered a member of the EUA tax group for the taxable year beginning January 1, 1993.
EUA Power and the Ccmmittee hereby agree with EUA that, other than the amounts being paid to EUA Power as provided in this Settlement Agrcement, except to the extent provided in this paragraph 10, no further amounts will be paid to EUA Power under the tax allocation agreements or otherwise-for EUA Power's tax attributes regardless of the date upon which Deconsolidation occurs.
EUA Power and the Committee specxfically acknowledge that, under the current tax laws, until EUA Power redeems EUA's equity interest in EUA Power as contemplated by paragraph 11 of this Settlement Agreement or EUA owns less than 80% of the outstanding common stock of EUA Power, EUA and the other members of the EUA tax group will continue to I
9 i
I
. ~, _.. -.
l i
4 d
a utilize tne tax attributes of EUA Power in the consolidated tax 1
returns of the EUA tax group.
EUA shall characterize the i
payments made to EUA Power under this settlement Agreement as l
payments made for the allocation or utilizatian of EUA Power's J
tax attributes 3s provided in this paragraph 10 to the extent a
that EUA Power's tax attricutes are so allocated or utilized by EUA and the other members of the EUA tax group (other than EUA Power) and EUA Power has not previously been compensated for sucn tax attributes.
The parties will cooperate to cause the i
Deconsolidation to occur on the Effect.Je Date or as soon thereafter as possible.
The parties will cooperate in the filing of federal and state income tax returns.
EUA hereby releases, indemnifies and agrees to aold EUA Power harmless from and against any tax liability of the EUA tax group for any period c
during which EUA Power is a member of the EUA tax group.
If, at an't time, EUA liquidates or otherwise terminates its interest in EUA Power, and if EUA has not by reason of such transaction or by reason of any prior events recaptured its excess loss account 1
with respect to EUA Power pursuant to Treas. Reg. 1.1502-19, EUA-shall thereupon pay EUA Power 50% of the net tax benefits realized by the EUA tax group by reason of the EUA tax group's-use of EUA Power's tax attributes after December 31, 1993.
For the purpose of determining-the amount of EUA Power's tax attributes which resulted in a tax benefit realized by the EUA tax group, such tax attributes will be reduced by the amount, if any, of the positive taxable income of EUA Power (computed on a i
10
seps
- e return basis prior to application of such tax attributes) for the period after December 31, 1993, and will be increased by the amount, if any, of any such positive taxable income for the period after December 31, 1993 distributed by EUA power to FCA.
11.
Pederation of EUA Power Shares Because EUA Power is insolvent and is a debtor in a Chapter 11 case, the holders of the issued and outstanding shares of common and preferred stock of EUA Power are not entitled to any assets or value from EUA Power's estate and will receive no dividend under the Committee Plan.
Accordingly, EUA Power shall take all necessary action to effect the redemption of all of EUA Power's issued and outstanding shares of common and preferred stock without payment of anf consideration and EUA shall not object to such redemption.
EUA, EUA Power and the Committee shall cooperate with each other in obtaining those regulatory approvals which each party reasonably determines ate required in order to effect such redemption.
'.f the necessary regulatory approvals for the stock-redemption have not been obtained by the Effective Date all other provisions of this Settlement-Agreement shall become effective on the Effective Date.
In that event, at the committee's written election, nade from time to time in its sole discretion, the stock redemption shall either be abandoned or pursued thereafter.
If the stock redemption is abandoned, EUA shall support the Committee Plan in any manner not inconsistent with the terms or conditions of this Settlement Agreement and by 11
T l
1 4
voting the shares of EUA Power witn respect t-the Committee Plan 5
as directed by tne Conmittee.
The parties hereto hereby agree that within 13 days after the Effective Date the name of EUA Power snall 'ce changed to a name which does not include any reference to Eastern Utilities Associates, EUA, EUA Power Or an*,
i other variation which in any way includes "EUA" or " Eastern Utilities" in the new name.
12.
Administrative Succort Services As of the Effective Date, EUA Service Corporation ("EUA 6
Service") shall, at the written request of the Committee, on a cost basis consistent with the requirements of the SEC under the Public Utility Holding Company Act of 1935, provide to EUA Power the followinq administrative services: marketing electricity en a shcrt-term basis, keeping the financial books and records of EUA t
Power, managing EUA Power's cash resources and such other rout;ne 4
administrative services as the Committee may lawfully and specifi<clly request of EUA Service from time to time until EUA Power's Chapter 11 case is closed; provided that, in any event, i
EUA Service's obligation to provide such administrative services shall not extend for a period of more than two years from the i
Effective Date; and provided further that, in no event, shall EUA Service perform any services pertaining to the marketing of electricity on a long-term basis.
EUA Power hereby agrees to indemnify and hold EUA Service and all of its employees, officers, directors, agents and attorneys, or any of them, harmless from any and all claims and liabilitics of any kind L
l l
12 i
l
1 4
i i
whien may
'e brought against any of them arising out of the c
services EUA Service provides to EUA Power on or after the Effective Date except for claims arising as a result of willful misconduct by the indemnitoes.
The Committee may at any time, by giving five cusiness days written notice to EUA Power and tUA Service, terminate EUA Service's obligation to provide administrative services to EUA Power, whereupon, EUA Service d
shall thereafter provide no such services to EUA Power.
For so 1
~
long as EUA Service shall continue to provide services to EUA I
1 Power, EUA Service shall consult with the Committee about all matters affecting the administration of EUA Power's financial and other affairs and shall follow the lawful recommend &tions of the Committee with respect to all such matters, Prior to the 1
Effectiv-Date, tha following individuals shall be elected, appointed or continue to serve as officers and directors of EUA Power as set forth opposite their respective names in accordance with the by-laws of EUA Power:
John R.
Stevens:
Director, President and Treasurer Richard A.
Samuels:
Secretary on and after tha Effective Date, EUA Power hereby agrees to indemnify and hold harmless such officers and directors from any and all claims and liabilities of any kind, other than claims for willful misconduct, which may be brought against such officers or u
directors arising out of their conduct in such capacities.
The Committee hereby. covenants and agrees that at no time will it i
commence any action or assert any claim whatsoever with respect
)
to such claims and liabilities against such officers and 4
13
)
s i
direcrcrs for which sucn officers and directors would be entitled to indemnifi:ation by EUA Power.
As of the Effective Date, and j
i for so 1:ng thereafter as such officers and directors shall i
continue to provide services to EUA Power, they shall consult j
with the Corn;ttee about all catters affecting the administra ;;n J
of EUA Power's financial and other affairs and shall follow the lawful recommendations of the Committee with respect to all sucn matters.
Such officers and directors shall have the authority to 1
operate EUA Power in the ordinary course of business, unless the 3
f 3
Committee objects as to a particular matter, in which case, such officers and directors will fol'.aw the lawful recommendations of 3
the Committee with respect to all such matters.
Notwithstanding the foregoing, such officers and directors shall cause EUA Pcwer to take all actions necessary to implement this Settlement Agreement and not take any actions inconsistent with the terms of this Settlement Agreement.
13.
Acknowledament of Decommissionina Guarantv EUA hereby acknowledges and confirms its duties and obligations under its Limited Guaranty dated May 4, 1990 in favor of the Joint Owners of the Seabrook Nuclear Project, a copy of 1
~
which is attached hereto as Exnibit H.
14.
UE&C Settlement Services EUA Power hereby assigns to Montaup as of the Effective Date all of its right, title and interest to receive discounted engineering services under the Settlement Agreement dated November 1, 1991 among the joint owcers of the Seabrook Nuclear i
14 i
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m,
-,..gpm, y
t i
l Project and United Engineers and Constructors (the "UELC settlement"; as provided in paragraphs 3.2 and 3.5 thereunder.
All other rights of EUA Power under the UE&C Settlement Aareement are specifically reserved to EUA Power.
15.
Effectc/eness of Acreenent The Effective Date of this Settlement Agreement shall be the i
i latter of the date of entry of a Final Bankruptcy Court Order i
approving this Settlement Agreement or the date of entry of :
f Final SEC Order approving this Settlement Agreement (or so much i
of the' action contemplated by this Settlement Agreement as may require SEC approval), provided however, that if the Effective Date does not occur on or before.Tanuary 31, 1993 (unless the parties hereto by written agreement extend the date), then this Settlement Agreement shall be of no force or effect, provided further, that the Effective Date shall not occur until all of tne Releases contemplated hereunder and by the personal claims agreement provided for in paragraph 5 hereof have been executed and delivered.
A Final Bankruptcy Court order shall mean an i
order entered by the Bankruptcy Court which order shall not be subject to appeal or stay or as to which all periods for filing i
an appeal or stay shall have expired.
7 Final SEC Order shall mean an order entered by the SEC which order shall not be subiect to appeal or stay or as to which all periods for filing an appeal or stay shall have expired, provided, that if no objection to such order shall have been urged before the SEC prior to its J
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issuance, a Final SEC Order snall mean an order entered by the SEC which shall not have bern stayed or appealed.
16.
Miscellaneous a.
Mercer.
This Settlement Agreement (including the recitals hereto wnich are expressly incorporated herein) conta:ns 1,
tne entire agreement of the parties with respect to the subject mat.ers covered hereby and supersedes all prior oral and written discussions, negotiations and proposals.
b.
Governino Law.
This Settlement Agreement shall be governed and construed by the laws of The Commonwealth of Massachusetts, c.
Waiver of Jurv Trial.
Each of the parties hereto hereby j
waives its right to claim a trial by jury with respect to any cla.ims arising under this Settlement Agreement and each party consents to the jurisdiction of the Bankruptcy Court to hear and resolve as a core matter any and all claims arising under this Settlement Agreement.
d.
Further Assurances.
Each of the parties hereto chall execute and deliver such other or furtner documents and instruments as may be reasonably required in order to fully irplement the terms and provisions of this Settlement Agreement.
EUA and EUA Power shall make reasonable efforts to assist in obtaining approval of the Coe.mittee Plan, provided that the Committee Plan, as it may be amended, is not inconsistent with the terms or conditions of this Settlement Agreement.
16
e.
Due Authorization.
Each of the signatories to this Settlenent Agreement represents and aarrants to the other signatories tnat, subject to obtaining the approval of the Bankruptcy Court and all necessary regulatory approvals, it has all requisite authority to execute and deliver this Settlenent Agreement and the General Releases to be delivered by
- as contemplated hereby, f.
Notices.
All r.otices requests, consents and other communications under this Settlement Agreement shall be in
,w writing and shall be delivered by hand or given by electronic facsimile transmission or mailed by first class, certified or registered mail, return receipt raquested, postage prepaid:
if to the Committee, to State Street Bank and Trust Company, Corporate Trust Department, one Heritage Drive, No. Quincy, MA 02171-2128, attentio9 Decker Adams, with a copy to '4 ark N.
Polebaum, Hale & Dorr, 60 State Street, Boston, MA 02109:
if to EUA, at One Liberty Square, Boston, MA 02107, attention Donald G.
Pardus, with a copy to Arthur I.
Anderson, McDermott, Will & Emeri, 75 State Street, Boston, MA 02109; and if to EUA Power, at One Liberty Square, Boston, MA 02107, attention John R.
Stevens, with a copy to Alan L.
Lefkowitz, 4
Dechert Price & Rhoads, 10 Post Office Square South, Suit 1230, Boston, MA 02109.
g.
Document Under Seal.
This Settlement Agreement shall be deemed to be an instrument under seal under the laws of The Common'-ealth of Massachusetts, -pon and after the Effective Date, and rtall be enforceable and binding upon each of the parties and their respective successors and assigns, including, with respect to EUA Power, without limitation, any trustee appointed in EUA Power's Chaptar 11 case or any superseding Chapter 7 case.
17 I
ATTEST:
EUA PCWER CORPCRATION
,n tb ki By: _
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ATTEST:
THE OFFICIAL SC'!DHOLDERS' COMMITTEE OF EUA POWER CORPORATICN By:
Psccc m :reA m at l
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.a ATTEST:
F.Uh POWE.R CCRPCRATION
.e Dy IAST5.7.N 'JT!*.ITIES AS3CCI ATES ATTEST:
By:
THE OFFICIAL BONDEOLDERS' ATTIST:
COMMITTEE OF EUA PCWER CORPCRATION l$
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" EXHIBIT A" l
RELEASE For good and valuable consideration caused to be paid by 1
)
Eastern Utilities Associates ("EUA"), receipt of which is hereby 4
acknowledged, EUA Power Corporation, debtor and debtor in l
possessicn in Chapter 11, Case No. BK91-10525 in the United
)
States Bankruptcy Court for-the District of New Hampshire ("EUA Power"), for itself and on behalf of all persons claiming-by or i
through it, including without limitation, the Official Bondholders' Conmittee of EUA Power (the " Bondholders' Committee"), hereby releases, remises and forever discharges EUA and all subsidiaries of EUA (excluding Montaup Electric Company in its capacity as a joint owner of the Seabroo% Nuclear Project i
and EUA Power) and all of the employees, officers, directors, trustees, representatives, agents and attorneys of EUA and all f
its subsidie. ries (including EU A Power), of and from any and all debts, demands, actions, causes of action, suits, accounts, i
agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name j
and nature (" claims"), which they now have or ever had or could have asserted against any.of them from the beginning of the world t
.to this date, including but not' limited to any and all claims which (i) are alleged in Adversary. Proceeding No. 91-1^'9 (the
" Preference Action"), (.1) are alleged in the draft complaint attached to the Bondholders' Committee Motion for Leave to file Adversary Complaint on behalf of EUA Power and EUh Power's creditors dated August 27, 1992 filed in Chapter 11, Case No.
l t
4 4
1 4
Statec Sankruptcy Court for the District SK91-10525 in the United j
of New Hampshire (the " Fiduciary Duty Action"), (iii) may er
-could be asserted for amounts allegedly owing under the tax allocation agreenents to which EUA Power, EUA and EUA's substdiaries are parties (the " Tax Claims") or (iv) may arise tu I
of or relate to the various transactions and events giving rise to the Preference Action, the Fiduciary Duty Action or the Tax Claims, bu r. specifically excluding any and all claims arising i
under that certain Settlement Agreement by and among EUA, EUA 1
Power and the Bondholders' Committeo dated as of November 1992.
Executed as a document under seal.
I EUA POWER CORPORATIOt' N
By:
John R.
Stevens, Presloent Duly Authorizen DATED:
1992 1
COMMONWEALTH OF MASSACHUSETTS
)
COLNTY CF JUFFOLK
)
ss.:
i At Boston on this day of 1992 before me appeared John R.
Stevens, to me personally known, who, being by me duly sworn, did sa'l that he is the President of EUA Power Corporation, and that the foregoing Release was signed by him on behalf *of.said Corporation by authority of its Board of Directors, and said officer acknouledged said. instrument to be the free act and deed of said Corporation.
1 4
Notary Public HMy Commission Expires (Notarial Seal)
. s: : r:=um : s
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" EXHIBIT B" 9
RELEASE For good and valuable consideration, the receipt of which is hereby acknowledged, EUA Power Corporation ("EUA Power"), for itself end on behalf of all persons claiming by or tnr;ugn ::,
i.
hereby releases, remises and forever discharges the Official 2
Sondholders' Committee (th
'Sondholders' Committee") of EUA Power and its members, agents, advisors and attorneys (but not j
any of the other current or former holders of any of EUA Power's 17!% Series A, 17!% Series B and 17!% Series C Secured Notes) of l
and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants,. contracts, damages and any and all claims, counterclaims, demands and liabiJities I
whatsoever of every name and nature relating to EUA Power, hach it now has or ever had or could have assertt" against the 1
1 i
Sondholders' Committee.
.s 1
Executed as a document under seal.
I EUA POWER CORPORATION i
l BY:
John R.
,Stevens, President Duly Authorized 1992 DATED: _
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I J.
t COMMONWEALTH OF MASSACHUSETTS
)-
i COUNTY OF SUFFOLK
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ss.:
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At Boston on this day of 1992 before me i
appeared John R.
Stevens, to-me personally known, who, being by J
~
l me duly sworn, did say that he is the President of EUA Power Corporatien, and that the foregoing Release was signed by him on l
tehalf of said Corporatien by authority of its Board of l
Directors, and said officer acknowledged said instrument ::: ce
- he free act'and deed of said Ccrporation.
4 I
Notary Public i
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" EXHIBIT C" RELEASE For good and valuable consideration, receipt of which is hereby acknowledged, the Off ;1al Bondholders' Connittee of EUA Power Corporation ("EUA Power") in Chapter 11, Case Sc, BK91-10525 in the United States Sankruptcy Court for the District of New Hampshire (the " Bondholders' Committee") hereby releases, remises and forever discharges EUA and all subsidiaries af EUA (excluding Montaup Electric Company in its capacity as a joint owner of the Seabrook Nuclear Project and EUA Power) and all of the employees, officers, directors, trustees, representatives, agents and attorneys of EUA and of its subsidiaries (including
- j EUA Power), of and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name and nature ("clains"),
which the Bondholders' Committee on behalf of EUA Power now has or ever had or could have asserted against any of them from the beginning of the world to this date, including but not limited to any and all claims which (i) are alleged in Adversary Proceeding No. 91-1079 (the " Preference Action"), (ii) are alleged in the draft complaint attached to the Bondholders' Committee Motion for Leave to File Adversary. Complaint on behalf of EUA Power and EUA Power's creditors dated August 27, 1992 filed in Chapter 11, Case No. SK91-10525 in the United States Bankruptcy Court for the District of New Hampshire (the "ridaciary Duty Actica"), (iii) t-may or could be asserted for amounts owing under the tax
4 1
i allocation agreements to which EUA Power, EUA and EUA's subsidiaries are parties (the " Tax Claims") or (iv) may arise out of cr relate to the various transactions and events giving rise to the Preference Action, the Fiduciary Duty Action or the Tax claims, but specifically excluding any and all clai=s arising under that certain Settlement Agret aent by and among EUA, ICA Power and the Bondholders' Committee dated as of November i
i 1992.
Executed as a document under seal.
THE OFFICIAL BONDHOLDERS' COMMITTEE OF EUA POWER CORPORATION By:
Kennetn Urbaszewski, Chairman Duly Authorized DATED:
1992 4
l STATE OF
)
COUNTY OF
)
ss.:
1 At Boston on this day of 1992 before me appeared Kenneth Urbaszewski, to me personally known, who, being by re duly sworn, did say that he is the Chairman of The Official Bondholders' Committee of EUA Power Corporation, and that the foregoing Release was signed by him on behalf of said Committee by authority of its members, and said officer acknowledged said instrument to be the free act and deed of said Committee.
Notary Public My Commission Expires 1
(Notarial Seal) f
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i "EXH 3:7 2"
SETTLEMENT AGREEMENT REGARDING PERSONAL CLAIMS f
This Settlement Agreement is entered into this 13th day of November, 1992, between Eastern Utilities Associates ("EUA"), a 4
Massachusetts /Oluntary association, and those certain holders :f 17 1/2% Series B and 17 1/2% Series C Secured Notes (the " Secured j
Notes") of EUA Power Corporation, a New Hampshire corporation and a debtor and debtor in possession in Chapter 11, Case No. SK91-10525 ("EUA Power"), who are signatories to this Personal 4
Settlement Agreement (the " Bondholder Signatories").
WHEREAS, EUA Power filed a voluntary petition under Chapter 11 of the United Stated Bankruptcy Code, 11 U.S.C. Section 101 gi sag. (the " Bankruptcy Code") on February 23, 1991 with the United States Bankruptcy Court for the District of New Hampshire (the
" Bankruptcy Court") and j
WHEREAS, the Official Bondholders' Committee (the
" Committee") of EUA Power, the representative of the holders of the Secured Notes (the " Bondholders"), was duly appointed by an order of the United States Trustee on March 14, 1991, as thereafter amended and WHEREAS, EUA, EUA Power and the Committee have entered into a Settlement Agreement, a copy of which is attached hereto as Exhibit.A (the " Settlement Agreement"), and WHEREAS, EUA and its subsidiaries (excluding EUA Power) and the Bondholder Signatories, who are the-current voting members of l
the Committee, wish to compromise certain claims " personal" to the Bondholders.
l l
4 m
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, - -, _ ~
NCW THEREFORE, in consideration of the foregoing and for other goed and valuable consideration the receipt and sutiiciency of wnich is hereby acknowledged, and with the specific intent to be cound by the terms hereof, the parties nereto hereby st'.pulate and agree as f:llows:
1.
As of the Effective Date of the Settlement Agreement as defined in the Settlement Agreement, all of the Bandholder Signator. will execute and deliver to EUA Releases in the forms attached hereto as Exhibits I - IV.
2.
The +4.71tals to the Settlement Agreement are expressly incorporated herein.
3.
Each of the signatories to this Personal Settlement Agreement represents and warrants to the other signatories that it has all requisite authority to execute and deliver this Personal Settlement Agreement, and with respect to the signatories to this Personal Settlement Agreement other than EUA, the release which it is to deliver under the terms of this Personal Settlement Agreement.
4.
This Personal Settlement Agreement shall be deemed to be an instrument under seal under the laws of The Commonwealth of Massachusetts and shall be enforceable and binding upon each of the parties and their respective successors and assigns.
4 2
~.
I AITEST:
AIC LEASING l
l By:
David K.
Sherman duly authorized i
i ATTEST:
IDS FINANCIAL CORP., as investment advisor for i
IDS BOND FUND, INC.
IDS EXTRA INCOME FUND, INC.
i IDS LIFE SPECIAL INCOME FUND, INC.
By:
Bernhard M.
Fleming duly authorized ATTEST:
SHEARSON LEHMAN BROTHERS, INC.
By:
James Asselstine duly authorized ATTEST:
KEMPER FINANCIAL SERVICES, INC.
as investment advisor to various accounts By:
4 Kenneth Urbaszewski duly authorized 4
ATTEST:
EASTERN UTILITIES ASSOCIATES By:
1 Donald G.
Pardus duly authorized a
3
k 4
4 ATTEST:
IDS BOND FUND, INC.
By:
3 Leslie L. Ogg duly authorized ATTEST:
IDS EXTRA INCOME FUND, INC.
4 By:
Leslie L. Ogg duly authorized ATTEST:
IDS LIFE SPECIAL INCOME FUND, INC.
i By:
Leslie L.
Ogg duly authorized t
, how ed W 'Sk
}
l I
I' l
l l
l 4
l l
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" EXHIBIT !"
RELEASE For good and valuable consideration, the receipt of which is hereby acknowledged, Leucadia, Inc. in its capacity as a holder or former holder of EUA Power Corporation's ("EUA Power")
securities hereby releases, remises and forever discharges Eastern Utili*ios Associates ("EUA") and all subsidiaries of EUA (excluding EUA Power) and all of the employees, officers, directors, trustees, representatives, agents and attorneys of 1UA i
and of 15: :ubsidiaries (including EUA Power), of and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name and nature pertaining to EUA's or any of its subsidiaries' alleged management, operation or ownership of EUA Power or alleged other relationship or affiliation with EUA Power which Leucadia, Inc, now has or ever had or could have asserted against any of them from the beginning of the world to this date including, but not limited to, claims or matters which (i) are alleged in the adversary complaint attached to the official Bondholders' Committee Motion for Leave to File Adversary Complaint on behalf of EUA Power and EUA Power's creditors dated August-27, 1992 filed in Chapter 11, Case No. BK91-10525 in the United States Bankruptcy Court for the District of New Hampshire (the " Fiduciary Duty Action"), (ii) may arise out of or relate to the various transactions and events giving rise to the Fiduciary Duty Action or (iii) are related to the purchase, sale or
ownership of EUA Power's 17 1/21 Series A, 17 1/2% Series B or 17 1/2% 1eries.C Secured Notes.
Executed as a document under seal.
LEUCADIA, INC.
By:
Davic K.
Sherman Duly Authorized DATED:
1992 STATE OF
)
COUNTY OF
)
ss.:
At Boston on this day of 1992 before ne appeared David K. Sherman, to me personally known, who, being by me duly sworn, did say that he is the of Leucadia, Inc., and that the foregoing Release was signed by him on behalf of said Corporation by authority of its Board of Directorr, and said officer acknowledged said instrument to be the free act and deed of said Corporation.
Notary Public My Commission Expires (Notarial Seal).
I 3 ?$1013\\*08r.,AVW 038 I
" EXHIBIT I!"
RELEASE For good and valuable consideration, the receipt of which is hereby acknowledged, IDS Financial Corp., IDS Bond Fund, Inc.,
!DS Extra Incere Fund, Inc. and IDS Life Special Income Fund, Inc. (together, " IDS") in their capacities as holders or former holders of EUA Power Corporation's ("EUA Power") securities hereby release, remise and forever discharge Eastern Utilities Associates ("EUA") and all subsidiaries of EUA (excluding EUA Power) and all of the employees, officers, directors, trustees, representatives, agents and attorneys of EUA and of its subsidiaries (including EUA Power), of and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name and nature pertaining to EUA's or any of its subsidiaries' alleged management, operation or ownership of EUA 'ower or alleged other relationship oc affiliation with EUA Power which IDS now has or ever had or could have asserted against any of them from the beginnAag of the world to this date including, but not limited to, claims or matters which (i) are alleged in the adversary complaint attached to the Official Bondholders' Committee Motion for Leave to File Adversary Complaint on behalf of EUA Power and EUA Power's creditors dated August 27, 1992 filed in Chapter 11, Ise No. BK91-10525 in the United States Bankruptcy Court for the District of New Hampshire (the
" Fiduciary Duty Action"), (ii) may arise out of or relate to the
i
+
1 various transactions and events giving rise to the Fiduciary Duty Actir or (iii) are related to the purchase, sale or ownership of EUA Power's 17 1/2% Series A, 17 1/24 Series B ot 17 1/2% Se;ies C Secured Notes.
Executed as a docunent under seal.
l IDS FINA;4CIAL CORP.
i By:
Bernhard M.
Fleming ; TITLE' Duly Authorized DATED:
1992 d
STATE OF
)
4 COUNTY OF
)
ss.:
1 At Boscon on this day of 1992 before T.e appeared Bernhard M.
Fleming, to me personally known, who, being by me duly sworn, did say that he is the of IDS Financial Corp., and that the foregoing Release was signed oy his on behalf of said Corporation by authority of its Board of Directors, and said officer acknowledged said instrument to bel the free act and deed of said Corporation.
Notary Public My Commission Expires (Notarial Seal) e.
w
By:
Leslie L. Ogg, Vice President &
General Counsel I
Duly Authorized 1992 DATED:
v STATE OF
)
COUllTY OF
)
SS.:
At Boston on this day of-1992 before me appeared Leslie L. Ogg, to -a personally known, who, being by me 4
duly sworn, did say that he is the Vice President and General Counsel of IDS Bond Fund, Inc., and that the foregoing Releara was signed by him on behalf of said Corporation by authority of its Board of Directors, and said officer acknowledged said instrument *a be the free act and deed of said Corporation.
Uotary Public My Commission-Expires (flotarial Seal) i
1 i
IDS EXTRA INCCME TUND, INC.
I I
BY3 Leslie L. Ogg, j
Vice President &
General Counsel j
Duly Authori:ed DATED:
1992 l
l
{
STATE OF
)
i COUNTY OF
)
ss.:
l At Boston on this
_ day of 199. before me appeared Les1:,e L. Ogg, to me personally known, who., being by me
{
duly sworn, did say that he is the Vice President and General l
Counsel of IDS Extra Income Fund, Inc., and that the foregoing l
Release was signed by him on behalf of said Corporation by authority of its Board of Directorn, and said officer acknowledged said instrument to be the free act and deed of said j
}
Corporation, i
i i
Notary Public a
My Commission Expires l
1 (Notarial Seal) 1 4
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4
IDS LIFE SPECIAL INCOME FUND, INC.
By:
Leslie L. ogg, Vice President Duly Authori:ed DATED:
1992 STATE OF
)
COUNTY OF
)
ss.:
l At Boston on this day of 1992 before me appeared Leslie L. Ogg, to me personally known, who, being by me duly sworn, did say that he is the Vice Presid^r; of IDS Life Special Incomo Fund, Inc., and that the foregoing Release was signed by him on behalf of said Corporation by authority of its Board of Directors, and said officer acknowledged said instrument to be the free act and deed oi said Corporetion.
Notary Public My Commission Expires (Notarial Seal) n= r :=te,w a.
J
" EXHIBIT III" RELEASE 1
j Tcr geod and valuable consideratior, the receipt of which is hereby ac:nowledged. Shearson Lehman Brothers, Inc. in its
)
capacitj as a.:lder or former holder of EUA Power Corporat;rn's
("EUA Power") securities hereby releases, remises and forever discharges Eastern Utilities Associates ("EUA") and all j
subsidiar14sut! LUA (excluding EUA Power) and all of the employees, officers, directors, trustees, reprasentatives, agents t
)
and attorneys of EUA and of its subsidiaries (including EUA i
]
Power), of a si ftam any and all debts, demands, actions, causes uof action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name and nature pertaining to EUA's or any of its subsidiaries' alleged management, operat.cn or ownership of EUA Power or alleged other relationship or affiliation with EUA Power which Shearson Lehman Brothers, Inc.
l now has or ever had or could have asserted against any of thsm l
from the beginning of the world to this date including, but not limited to, claims or matters which (i) are alleged in the adversary complaint attached to the official Bondholders' Committee Motion for Leave to File Adversary Complaint on behalf of EUA, Power and EUA Power's creditors dated August 27, 1992 filed in Chapter 11, Case No. BK91-10525 in_the United States Bankruptcy Court for the District of tune Hampshire (the
" Fiduciary Duty Action"), (ii) may arise out of or relate to the
[
various transactions and events giving rise to the Fiduciary Duty I
l i
m
Action or (iii) are related to the purchase, sale ar ownership of EUA Power's 17h% Series A, 17!% Series B or 17\\% Series C 59:ured Notes.
Executed as a document under seal.
SHEARSON LEHMAN BROTHERS, INC.
By:
James Asselstine (TITLL)
Duly Authorized e
DATED:
1992 STATE OF
)
COUNTY OF
)
ss.:
At Boston on this day of 1992 before me appeared James Asselstine, to me personally known, who, being by me duly sworn, did say that he is the of Shearson Lehman Brothers, Inc.. and that the foregoing Release was signed by him en behalf of said corporation 1,y authority of its Board of Directors, and said officer acknowledged said instrument to be the free act and deed of said Corporation.
Notary Public My Commission Expires (Notarial Seal)'
1 1
I
. ~ -. - - - - -
i "EXHIBli IV" RELEASE For good and valuable consideration, the receipt of which is hereby acknowledged, Kemper Financial Services, Inc. in its capacity as a holder or f ormer holder of EUA Pcwer Corp 0:stion'a
("EUA Power") securities hereby releases, remises and forever disenarges Eastern Utilities Associates ("EUA") and all subsidiaries of EUA (excluding EUA Power) and all of the employees, officers, directors, trustees, representatives, agents and attorneys of EUA and of its subsidiaries (including EUA Power), of and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, countercirims, demands and liabilities whatsoever of every nama and nature pertain'.ng to EUA's or any of its subsidiaries' alleged management, operation or ownership of EUA Power or alleged other relationship or affiliation with EUA Power which Kemper Financial Services, Inc.
now has or ever had or could have asserted against any of then from the beginning of the world to this date including, but not limited to, claims or matters which (i) are alleged in the adversary complaint attached to the official Bondholders' Cotamittee Motion for Leave to Fil9 Adversary Complaint on behalf of EUA Power and EUA Power's creditors dated Auguat 27, 1992 filed 5n Chapter 11, Case tio. BK91-10525 in the United States Bankruptcy Court for the District of : 9w Hampshire (the
" Fiduciary Duty Action"), (ii) may arise out of or relate to the j
various transactions and events giving rise to the Fiduciary l
l
_y l
Duty Action or (iii) are related to the purchase, sale or ownership of EUA Dower's 17 1/2% Series A, 17 1/2% Series B or 17 1,/2% Series C Secured Notes.
Executed as a document under seal.
KEMPER FINANCIAL SERVICES, INC.
By:
Kenneth Urbas:ewskt ' TITLE]
Duly Authorized DATED:
1992 STATE OF
)
COUNTY OF
)
ss.:
At Boston on his day of 1992 before me appeared Kenneth Urcaczewski, to me personally known, who, being by me duly sworn, did say'that he is the
___ of Kemper Financial Services, Inc., and that the foregoing Release was signed.by him on behalf of said Corporation by authority of its Board of Directors, and said officer acknowledged said instrument to be the free act and deed of said Corporation.
i Notary Public My Commission Expires (Notarial Seal).
j mee.:ux esoon.
1.
Y l
i
" EXHIBIT E" nELEASE l
1 for good and valuable consideration, the receipt of which is hereby acknowledged, Eastern Utilities Associates ("EUA") for I
itself and as the duly authorized agent of each of its subsidiaries (excluding Montaup Electric Company in its capacity as a Joint owner of the Seabrook Nuclear Project and EUA Power C:rporation ("EUA Power")) and on benalf of all persons claiming 3
l by or through them, including, without limitation, all of their employees. officers, directors, trustees, representatives, agents and attorneys, hereby releases, remises and forever discharges EUA Power, debtor and debtor in possession in Chapter 11, Case No. BF.91-10 5 2 5 in the United States Bankruptcy Court for the t
District of 'tew Hampshire, of and from any and all debts, J
demands, actions, causes of action, suite, accounts, agreenents, covenants, contracts, damages and any and all claims, 4
counterclaims, demands and liabili*.ies whatsoever of every name and nature relating to EUA Poser-(" claims"), which any of them now has or ever had or could have assarted against EUA Power from the beginning of the world to this date, including, but not limited to any and all claims, which are alleged in Proof of i
Claims Nos. 43 through 46 and 48 or may arise out of or relate to the various transactions and events giving rise to Proofs of Claims Nos. 43 through 46 and 18 (but specifically excluding the claim of Dechert, Price & Rhoads ir. tL) amaunt of $36,383.22 set forth in Proof of Claim No. 41), but specifically excluding any and all claims arising under that certain Settlement Agreement by 4
and among EUA, EUA Power and the official Bondholders' Committee of EUA Power dated as of November 1]92.
Executed as a document under seal.
EASTERN UTILITIES ASSOCIATES By:
Donald G.
Pardus, Chairman Duly Authorized DATED:
1992 COMMONWEALTH OF HASSACHUSETTS
)
COUl'TY OF SUFFOLK
)
ss.:
At Boston on this day of 1992 before me appeared "7nald G. Pardus, to me personally known, who, being by me duly sworn, did say that he is the Chairman of Eastern Utilities Associates, had that the foregoing Release was signed by him on behalf of said Association by authority of its Board of Trustees, and said officer acknowledged said instrument to be the free act and deed of said Association.
Notary Public My Commission Expires (Notarial Seal) a
" EXHIBIT F" RELEASE For good and valuable consideration, the receipt of which is hereby acknowledged, Eastern Utilities Associates ("EUA") for itself and as the duly authori:ed agent of eacn of its subsidiaries (excluding Montaup Electric Conpany in its capacity as a joint owner of the Seabrook Nuclear Project and EUA Power Corporation) and on behalf of all persons claiming by or through them, including, without limitation, all of their employees, officers, directors, trustees, representatives, agents e.id attorneys, hereby releases, remises and forever discharges j
Leucadia, Inc., IDS Financial Corp., IDS Bond Fund, Inc., IDS Extra Income Fund, Inc., TDS Life Special income Fund, Inc.,
Shearson Lehman Brothers, Inc. and Kemper Financial Serv.ces, Inc., as investment adviser to various accounts, the official Bondholders' Committee (the ' Committee Members") of EUA Power Corporation ("EUA Power") in Chapter 11, Case No. BK91-10525 in the United States Bankruptcy Court for the District of New Hampshire, of and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name and nature relating to EUA Power
(" claims"), which any of them now has or ever had or could have asserted against the Committee Men.cers from the beginning of the world to this date, but specifically excluding any and all claims arising under that certain Settlement 6
4 5
)
Agreement by and among EUA, EUA Power and the Bondholders' Committee dated as of November 1992.
4 Executed as a document under seal.
EASTEP.N U1ILITIES ASSOCIATES By:
Donald G.
Pardus, Chairman Duly Authorized
}
DATED: November 1992 I
3 COMMONWEALTH OF MASSACHUSETTS
)
COUNTY OF SUFFOLK
)
ss.:
At Boston on this day of November, 1992 before me I
appeared Donald G.
Pardus, to me personally known, who, being by me duly sworn, did say that he is the Chairman of Eastern Utilities Associates, and that the foregoing Release was signed by him on behalf of said Association by authority of its-Board of Trustees, and said officer acknowledged said instrument to be the free act and deed of said Association.
Notary Public My Commission Expires (Notarial Seal) 4 1
31603 411CC8tELAWe C20
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. ~... -.. -,. -, -.
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" EXHIBIT C" f
g g
For good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned current or former officers and directors of EUA Power Corporation ("EUA Power"), a debtor and debtor in possession in Chapter 11, Case No. BK91-10525 in the United States Bankruptcy Court for the District of New Hampshire, hereby release, remise and forever discharge EUA Power of and from any and all debts, demands, actions, causes of action, suits, accounts, agreements, covenants, contracts, damages and any and all claims, counterclaims, demands and liabilities whatsoever of every name and nature (" claims") which the undersigned now have or ever had or could have asserted against EUA Power; provided, however, that this Release shall not affect EUA Power's obligations to indemnify its officers and directors purt.uant to paragraph 12 of that certain Settlement Agreement dated as of 11ovember __, 1992 among EUA Power, the Bondholders' Committee and Eastern Utilities Associates attacher 1 hereto as Annex I.
l
li Executed as a doeur.ent under seal.
Dated:
1992 Donald G.
Pardus D
1 Artnur A.
Hat:n Robert E.
Maguire 1
John R.
Stevens Clifford J.
Hebert, Jr.
Robert P.
Tassinari WillE$m F.
O'Connor Richard M.
Burns Robert F.
W o l f.', Jr.
ysocmatssw cro a
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UNITED STATES BANKRUPTCY COUR".
DISTRICT OF NEW HAMPSHIRE
- grg @ 18 P4 :11
)
CLERv-
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Dl$,hl~ v l
In re
)
Ch1pter 11
)
Case No. 91-10525 EUA POWER CORPORATION
)
)
Hearing:
December 8, 1992 Debtor
)
Hearing Time:
9:30 a.m.
)
MEMORANDUM OF TAW IN SUPPORT OF JOINT MOTION OF i
THE OFFIDIAL BONDHOLDERS' COMMITTEE, THE DEBTOR, AND EASTERN UTILITIES ASSOCIATES TO ENTER SETTLEMENT AGREEMENT TO COMPROMISE CONTROVERSIES PURSUANT TO FED.
R.
BANKR.
P. 9019(a) AND TO AMEND THE DEBTOR'S SCHEDULE 0F LIABILITIES Contemporaneously herewith the Official Dondho'.ders' Committee of EUA Power Corporation, the duly appointed t
representative of the holder of the Debtor's 17-1/2% series B and Serics C Secured Notes (the " Committee"), EUA Power Corporation
~
(the " Debtor"), and Eastern Utilities Associates ("EUA") filed their Joint Motion (the ".Toint Motion") to Enter Settlement Agreement to Compromise Controversies Fursuant to Fed. R.
Bankr.
P. 9019(a) And to Amend the Debcor's Schedule of Liabilities.
A copy of the Settleiaent Agreement which the parties have executed is attached to the Joint Motion (the "Setticment Agreement").
In support of the Joint Motion, the Committee, the Debtor, and EUA rely on and refer to the facts and arguments set forth in the 1
Joint Motion and the legal arguments set forth below.
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I
SUMMARY
OF PACTS 1
1 The Debtor, a wholly-owned subsidiary of EUA, is a public 3
l
.O lity organized undet the corporation laws of New Hampshire.
It filed its Chapter 11 petition'on February 28, 1991 (the " Filing 1
l Date") and continues to own and operate its business as a debtor-l in-possession under the Bankruptcy Code.
In addition to being subject to the operating requirements of the Bankruptcy Code, the Debtor's business and its 12.1324-percent ownership interest in the Seabrook Nuclear Power Plant (the "Seabrook Interest") are f
l regulated by state and numerous federal regulatory agencies and i
commissions, including the New Hampshire Public Utilities i
Commission ("NHPUC"), the Securities and Exchange Commission (the j
" ST.c - ) under the 1935 Public Ubility Holding Company Act, che i
Federal Energy Regulatory Commission ("FERC"), and the Nuclear l
Regulatory Commission ("NRC").
EUA is the parent company of the Debtor, owning 100% of the issued and outstanding preferred and common shares of the Debtor.
i It and other of its subsidiaries have filed proofs of claim in the Debtor's bankruptcy case in an approximate amount of $50,000,000.
l i
The Committee represents the holders of claims arising under the Debtor's 17-1/2% Series B and Series C Secured Notes (the
" Bondholders").
As of the Filing Date, these claims totalled approximately $294,000,000 (the " Bondholder Claims").
The Bondholder Claims constitute 100% of the secured claims against i
the Debtor and approximately 99% of all claims listed by the Debtcr on its amended schedules, other thaa claims held directly l :
l
,. ~
!*,4
';n or through subrogation by EUA and its affiliates.
Current Committee members hold in excess of 40% of all of the Bondholder Claims.
Several contected matters # are pending and unresolved in the Debtor's Chapter 11 case which the Committee, the Debtor, and EUA wish to resolve pursuant to the Settlement Agreement.
These include the following (1) a S38,452,000 preference action against EUA; (2) certain potential preference actions against the Connecticut Naticu'.cl Bank and Citibank, N. A. ; (3) several claims for alleged breaches of fiduciary duty, of unknown value, against the officers and directors of the Debtor and against EUA and EUA Service Corporation, an affiliate of the Debtor and another wholly-owned subsidiary of EUA ("EUA Service"); and (4) alleged claims arising under certain tax allocation agreements amonq the Debtorr EUA and EUA's other subsidiaries.
Because of the complexity of the factual allegations, the applicable law and the pending and contemplated litigation, as well as the vigorous defenses offered by the respective defendants, and the expense to the estate of pursuing the claims, it is not possible to provide a reasonable estimate of the present value to the estate of the unresolved disputes if litigated to judgment and through appeals.
In addition to being a party to the above-mentioned time-consuming and expensive contested matters, the Committee had filed its-Second Amended Disclosure Statement-for Bondholders' Committee (the " Disclosure Statement") and Third Amended Plan of Reorcanization Dated September 30, 1992 (the " Plan") with this.
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~
Court on October 1, 1992.
However, the Committee's Plan is subject to a lengthy and costly approval process.
In addition to approval from the Bankruptcy Court, the Committee has sought or intends to seek approval from the SEC, the NHPUC, FERC and the NRC.
Progress on obtaining approvals for the Plan and Disclosure Statement has been hampered by EUA's vigorous opposition at noth the SEC and the Bankruptcy Court.
Against this-acrimonious background, the Committee, the Debtor, and EUA have engaged in extensive negotiations in an effort to resol'.e all contested matters in the case and ease the path to a prompt _ confirmation and implemer.tation of the Committee's Plan.
With the aid of numerous attorneys expert in the fields of bankruptcy, tax, regulatory, and corporate law, along with the Committee's financial advisors, the Committee, the Debtor, and EUA have agreed to resolve their disputes on the ter.ms set forth in the Fettlement Agreement.
In summary, the Settlement Agreement provides for the following to take place on the Effective Date under the Settlement Agreements (i) the release of all claims held by the Debtor or asserted by the Committee, on behalf of the Debtor, against EUA and its subsidiaries, including all claims relating to the disputed matters described above; (ii) the cash payment by EUA to the Debtor of $20,000,000; (iii) the cooperation by EUA and the Debtor of the Committee's Plan and Disclosure Statement; (iv).the I
resolution of all tax matters currently in dis'c2te; (v) the redemption by the Debtor, of all of EUA's issued and outstanding
_4
(.;
3 l
shares of common and preferred stock; (vi) the provision, at cost, 1
l of administrative support services to the Debtor by CUA Service; j
(vil) the indemnification by the Debtor of its officers and directors and EUA Service for#any actions taken after the 4
Effective Date of the Settlement Agreement; (viii) the amendment by the Debtor of its schedules to delete any objection to the 2
claims of the Bondholders and to delete the claims of Citibank, a
N.A., Connecticut National Bank and the New Hampshire Industrial Development Authority; (1x) the reaffirmation by EUA of its Decommissioning Guarantee; (x) the Debtor's stipulation to a 4
percentage of the value of the Seabrook Interest to which the lien securing the Bondholders claims is attached; (xi) the release oy the individual Committee members of " personal" claims they may t
hold against EUA and its subsidiaries in their capacities as f
Bondholders, other than claims against the Debtor for unpaid amounts due under the Series B anc Ceries C Notes; and 'xii) the 1
l assignmert by the Debtor to EUA of its right to receive certain l
i discounted engineering services.
l ARGUMENT INTRCDUCTION AND LErAL STANDARD l
Bankruptcy Rule 9019(a) provides:
i (a)
On motion by the (DIP), and after a hearing and notice to creditors, (and] the United States trustee, the court may npprove a compromise or settlement. - -..
\\
l Ud Q:1 i
red.
R. Bankr.
P. 9019(a).
Under the case law, the legal standard j
for approval of a settlement or compromise is whether the settlement is " fair and equitable" and "in the best interests of j
the estate."
In re Apex Oil Co.,
92 B.R.
847, 867 (Bankr.
E.D.
i Mo. 1988) (citing and quoting Protective Committee for Independent i.
l Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S.
- 414, 424 (1968)); In re New Hampshire Elec. Co-op., Inc., 138 B.R.
- 668, 674 (Bankr. D.N.H. 1992) (using fair and equitable standard in
{
approving compromise embodied in plan of reorganization); In re j
Public Service Co. of N.H.,
114 B.R.
320, 825 - 826 (Bankr. D.N.H.
I 1990) (same).
Although the Court is expected to reach an informed i
and independent judgment regarding whether the settlement works in the best interest of the estate, the judgment of the i
debtor-in-possession, and in this case that of the Con.mittee, in proposing a compromise "should not be substituted as lone as the I
settlement is reasonable."
In re Apex Oil Co.,
92 B.R. at 867 I
(citing In re Grant Broadcasting, Inc., 71 B.R.
390, 3')9 ( Bank r.
j E.D. Pa. 1987); Texas Extrusion Corp. v.
Palmer, Palmer & Coffee (In re Texas Extrusion Corp.), 68 B.R.
712, 720 (N.D. Tex. 1986),
aff'd, 836 F.2d 217 (5th Cir. 1980)).
Courts also typically give i
j
"' proper deference to (the creditors') reasonable views'" when deciding whether to approve a settlement agreement.
Id. (quoting i
Drexel v..Loomis, 35 F.2d 800, 806 (8th Cir. 1929)).1 1
5
]
-The Court need not determine conclusively whether the settlement will create the best result obtainable, but instead need only " determine that the settlement does not fall 'below the i _.
FNo
(%
up A.
THE FROPOSED SETTLEMENT AGREEMENT SATISPIES THIS COURT'S ST[sNDARDS In two recent cases in which the respective debtors, like the Debtor here, were joint owners o; !3eabrook subject to the jurisdiction of multiple regulatory agencies, thic Court approved compromises of controversies.
In re New Hampshire tiec. Co-op.,
Inc., 138 B.R. at 676; PSNH, 114 B.R. at 843.
In the most recent case, New Hampshire Electric Co-op., Inc., this Court approved a compromise between the debtor and the Public Service Ccrpany of New Hampshire ("PSNH") concerning certalu disputes in connection with a sellback agreement and wholesale power supply agreen,ent.
138 B.R. at 674-676.
This Court stated that the " overriding" consideration bearing on its review of that compromise was whether the debtor's respective positions with regard to the two contracts in dispute would ultimately be the prevailing positions if litigated.
Id. at 674.
The Court took special notice of the complexity of the issues in tha New Hampshire Electric Co-op.,
Inc. disputes and the time delays inherent when a utility subject lowest point in the range of reasonableness.'"
In re Apex Oil Co.,
92 B.R. at 867 (quoting Cosoff v. Rodman (In re W.T. Grant
~
Co.), 699 F.2d 599, 608 (2d Cir.), ce-t. denied, 464 U.S. 822 (1983))*
There is no requirement tEEt~ the Court conduct a trial or a " mini-trial" on the merits of the underlying dispute.
In re Blair, 538 F.2d 849, 851 (9th Cir. 1976); Greenspun v. Bogan, 492 F.2d 375, 381 (1st Cir. 1974) (citations omitted).
Even if israes of fact are raised, a hearing regarding settlement should not become a trial on the merits of the dispute.
- See, e.g.,
In re Baldwin-United Corp., 607 F.
Supp. 1312, 1320 (S.D.N.Y. 1985). -_
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to regulatory monitoring is in Chapter 11.
Id. ("Anybody that has dealt with any of *hese utility reorganizations, or utility issues i
j gener. 'ly, would have to recognize that if (the 1
dispute in the case) has to be litigated, (it) will result for many reasons in quite acrimonious and long extended litigation.").
a This Court also looked to the " skills (,)
sophistication, j
[and) the energy... expended (by the parties) in reaching the
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com,romise, and whether the settlement ha(d) been negotiated j
l_
between e mpetent adversaries (bearing) the skills and energies 4
necessary to hammer out an appropriate compromise."
Id, Fi~nally, the Court emphasized that without the compromise, the debtor would not be able to survive and make progress in its reorganization process to the detriment of all of the creditors and interent l
t holders of the estate.
See id. at 676.
See also In re PSNH, 138 B.R.
at 826 - 827) (listing factors for court to examine when deciding whether to approve compromise embodied in plan of reorganization and inoicating that the same factors apply in a f
compromise.outside of a plan ),
2 l
l 2
These factors are as follows:
i
)
(1)
The-balance between the likelihood of success should the case go to trial vis a vis the concrete present and future l
benefits held forth by the settlement without the expense i
and delay of a trial and subsequent appellate procedures; l
(ii)- The prospect of complex and-protracted litigation if the settlement is not-approved; (iii) The' proportion of the class members who do not object or who
~
L affirmatively support the proposed settlement;
Ej ls,;,1 i
The present case bears striking similarity to the New
[
Hampshire Electric Co-op., Inc. and PSNH cases, particularly with t
respect to the complications of litigation before regulatory authorities.
Moreover, this case is already burdened with one multi-million dollar adversary proceeding, and another adversary proceeding is waiting to be commenced.
Approval of the Settlement Agreement is essential to the viability of the Debtor.
The outcome of the present and potential litigation in the Debtor's case is uncertain, involving a costly, complex, and time-consuming resolution process in several regulatory forums, as well as the Bankruptcy Court.
By contrast, the Settlement Agreement was negotiated in good faith by competent professionals, and provxdes for immediate enormous monetary and non-monetary benefits to the Debtor's estate, including the infusion of $20,000,000 in cash, the waiver of approximately 550,000,000 in claims filed against the Debtor's estate and the (iv)
The competency and experience of counsel who support the settlement; (v)
The relative benefits to be received by individuals or groups within the class; (vi)
The nature and breadth of releases to be obtained by the directors and officers as a-result of the settlement; and (vii) The extent.to which.the settlement is truly the product of
" arms-length" bargaining, and not of fraud or collusion.
Id. (citing In re Texaco, Inc., 84 B.R.
893, 902 (Bankr. S.D.N.Y.
i 1988)).
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reaffirnation of a $10,000,000 guarantee which directly benefits j
the Deotor.
It permits the Debtor to pay in full its current i
debtor-in-possession financing and provides for cooperation in the l
bankruptcy proceedings and regulatory forums, thereby reducing the L
delays certain to be present absent approval of the Settlement Agreement.
Therefore, the Settlement AgreemenP. is in the best interests of the estate, and satisfies the applicable standards of Fed. R. Bankr. P. 9019(a).
)
B.
THE PROPOSED SETTLEMENT AGREEMENT SATISFIES THE FAIR AND j
EQUITABLE STANDARD OF OTHER BANKRUPTCY COURTS Other courts have looked at factors similar to the ones discussed in New Hampshire Electric Co-op., Inc. and PSNH in reviewing proposed settlements and have specifically enumerated such factors as follows:
(i) the probability of success in any 4
outs anding litigation or dir.pute; (ii) the difficulties of collecting judgment; (iii) the complexity of the litigation if the court does not approve the compromise, and the expense, inconvenience and delay necessarily attending it; and (iv) the paramount interest of the creditors and interest holders of the estate.
In re Apex Oil Co. 92 B.R.
at 867 (citing Drexel v.
Loomis, 35 F.2d at 806); In the Matter of Energy Co-cp., Inc., 886 F.2d 921, 927 (7th Cir. 1989) (listing similar factors).3 3
Courts do not place much emphasis on the second factor, but place much more weight on the other Drexel v. Loomis factors when deciding whether to approve.a compromise.
- See, e.g.,
Iannacone v.
Foothill Capital Corp. (In re Hancock-Nelson Mercantile Co.,
Inc.,
95 B.R.
982, 995 (Bankr.
D. Minn. 1989).
Consequently, tnis factor will not be discussed outside of this footnote in this J.
t$ $,')
h 1.
The Settlement Agreement Provides More Benefits To The Estate Than Pursuing The outstanding Contested Matters The Committee and the Debtor believe that the Settlement Agreement will provide more benefits to the Debtor's estate than i
pursuing the hotly contested disputed claims.
Although both the Committee and EUA believe that they would likely prevail in the -
pending adversary proceedings and in their respective positions regarding the Plan, neither EUA nor the Committee is able to predict the outcome of these matters.
On October 7, 1992, this v7urt issued an order and Memorandum opinion denying cross motions J
for summary judgment filed by EUA and the Committee with regard to the preference action.
In the Memorandum opinion, the Court concluded that several legal and factual issucs remained unresolved and that therefore, all preference issues other than those applicable to the earmarking defense would have to be tried at a later date.
The preference is based on unsettled applications of preterence law which have not been routinely litigated.
The prospects of success with regard to the fiduciary duty claims and tax allocation claims are also practically impossible to predict.
They are vigorously disputed by EUA.
Indeed, even if the_ Committee were successfal in pursuing the F
memorandum.
Although EUA-is a public_ utility and appears to have l
significant assets, the Committee has no way of knowing the full extent of EUA's assets and: ability to satisfy any-judgment which might be entered against it in the future.
j...
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claims, the payment on any judgment would not occur until several years from now.
On the other hand, the Settlement Agreement provides tangible and immediate monetary benefits to the Debtor's estate.
First, it provides for the payment to the reorganized Debtor of $20 million in immediately available funds.
This is a sufficient amount both to repay the existing debtor-in-possession financing, thereby stopping the accrual of interest at the rate of prime plus 7, and to pay through approximately the Summer of'1993, Seabrook and Chapter 11-expenses arising while the Committee's Plan is being confirmed and approved by the appropriate regulatory authorities.
Second, the economic value of the settlement to the estate is significantly greater than S20 million due to the waiver by EUA and certain of its subsidiaries of approximately $50,000,000 in unsecured claims and EUA's reaffirmation of its existing
$10,000,000 guarantee of the Debtor's liability for the cost of decommissioning Seabrook.
The Committee and the Debtor are satisfied that the substantial economic value of the settlement to the Debtor's estate reasonably reflects the probability of success in any outstanding litigation.
In addition to examining the monetary cor. "..deration received j
from a settlement agreement, courts also consider the nonmonetary benefits..as well.
- See, e.g.,
In re New Hampshire Elec. Co-op.,
Inc., 138 3.R. at 674 (considering nonmonetary benefit of-avoiding expensive and time-consuming contested disputes in regulatory and b.nkruptcy court forums); Securities and Exchange Commission v. -
j 7.,
,m
,)
A i
I Drexel Burnham Lambert, Inc. (In re Drexel Burnham La= Sert Group, Inc.) 130 3.R.
910, 926 - 27 (S.D.N.Y. 1991) (emphasis 4 ig nonmonetary benefit of settlement in that it is a necessary first step toward confirmation of a plan): Apex 011 Co.,
Inc., 97 B.R.
I at 868 (listing benefits of nonmonetary factors such as avoiding a
delays and risks incumbent in pursuing novel and speculative legal theories).
l j
In this case approval of the Settlement Agreement will j
eliminate the most significant hurdles standing in the way of a f
resolution of this Chapter 11 case.
Without the settlement, there will be no consensual plan and perhaps no prompt resolution of the i
Chapter 11 case.
Pursuant to the Settlement Agreement, EUA and the Debtor have agreed to cooperate with the Committee in its
)
efforts to obtain approval of the Committee's Plan and Disclosure 4
Statement.
This support will allow the reorganization process to j
go forward with much less litigation in the Bankruptcy Court and l
the applicable regulatory forums.
2.
Resolving The Contested Matters Would Involve A Complex Process, Resulting In Costly And Time-Consuming Litigation As mentioned above, the litigavion and disputes which are the subject of the Settlement Agreement are complex and not routinely litigated.
The Court is well aware of the voluminous pleadings already'on the docket in connection with the preference suit alone, a1 well as the unsettled rules of law on which the suit is based.
Furthermore, attempting
- .o resolve the complex outstanding valuation issues concerning the bondholders' lien L also been
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time-consuming.
All three of the parties to the Settlement l
Agreement have already expended an enormous amount of funds litigating the outstanding disputes.
Considering the lengthy i
appeals process, even if the Committee ptevails, the Debtor's estate cannot reasonably be expected to receive any funds within the next several months if the Settlement Agreement is not J
approved.
l Even more important, in order for a successful reorganization of a regulated utility to occur, the parties must reach a consensus, if the unresolved issues are not settled, the parties will have to litigate in various federi!, and state regulatory forums, federal and state courts, as well as this Bankruptcy Court.
The delay would be tremendous and harmful to the creditors of the Debtor who would be unlikely to receive payment on their claims anytime in the near future.
Given the contentious nature of this case, the benefits that the Settlement Agreement will provide to the estate in the form of avoiding expensive and time-consuming litigation in several federal and state courts and regulatory forums is manifest.
See In re New Har..pshire Elec. Co-i op, Inc., 138 B.R. at 674.
3.
The Approval Of The Settlement Acreement Is In The Best Interests Of The Creditors And Interest Holders Of The j
Estate As-discussed above, the Debtor and the Committee believe that i
~,
i the creditors and interest holders of the Debtor will benefit significantly if the Settlement Agreement is approved.
This is so i
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with respect to both the immediate financial benefit and the benefits flowing from a consensual plan process.
f Significant1'j, the Committee,, EUA and the Debtor have been i
the major participants in the bankruptcy case.
Their collective 1
l view that the settlement is in the best interests of the estate weighs heavily in favor of approving the agreement.
See In re Grant Broadcasting, Inc., 71 B.h.
at 399.
)
j 4.
The Settlement Agreement Is The Product of Substantial Arms-Length Nego*.iations Made In Good Faith By Professionals Who Are Experts In Their Fields I
)
The Committee, the Debtor, and EUA negotiated vigorously to j
come up with this arms-length Settlement Agreement which they have entered into in good faith.
Professionals expert in the areas of bankruptcy, tax, regulatory, and corporate law tor all three parties were *.tvolved in the negotiation process.
This Court f
sr.ould grant credence to the Settlement Agreement because it was l
entered into by sophisticated adversaries represented by competent and skill.ful experts expending much energy in reaching the i
proposed fair and equitable consensus.
See New Hampshi:-a Elec.
Co-op.,
Inc., 138 B.R.
at 674.
CONCLUSION l
The Settlement Agreement was entered into in good faith and l
is fair,. equitable and in the best interests of the estate.
For all of the above-stated r2asons, this Court should grant the Joint Motion of the Committee, the Debtor, and EUA to Enter Settlement Agreement and to Compromise Controversies Pursuant to Fed.
R. r l
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Bankr.
P. 9019(a) and te Amend the Debtor's Schedule of Liabilities.
Respectfully submitted, i
OFFICI AL 30tDHOLDERS ' COMMITTEE By its attorneys,
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M$ ?7 N. 'Poj ebaum (BNH 01615 )
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,J' Aleert A. Notini (BNH 031.17)
, [.q Frank W. Getman Jr.
%g,* s HALE AND DORR
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1155 Elm Stret Manchester, Ne' ~!ampshire 03101 (603)627-760G EUA POWER CORPORATION By its attorneys,
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Alan L. Lefkowir.: (BNH.03s. 1)
DECH"RT, PRICE
&~ RHOADS 10 Acc Office Square 60stm, Massachusetts 02109 (611 ;
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EASTERN UTILITIES ASSOCIATES By its attorneys, ji (?
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Ronald Trost, Esquire '
Shalom L.
Kohn, Esquire 4
Kelley A. Cornish (BNH 03534)
SIDLEY & AUSTIN 875 Third Avenue New York, NY 10022 (212) 906-2000 t
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l A r t h~u r I. Anderson, Esquire Christopher W.
Parker, Esquire Mark L. Yeager, Esquire MCDERMOTT, WILL & EMERY 75 State Streat Boston, Mass. s 'tusetts 02109 (617) 345-500u Dated:
November 18, 1992 4
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