Exhibit 10.61
PURCHASE AGREEMENT
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This Purchase Agreement (this "Agreement"), dated as of January 16, 1999, is
entered into between Caithness Energy L.L.C., a Delaware limited liability
company, Caithness Acquisition Company, LLC, a Delaware limited liability
company ("CAC"), (collectively, "Buyer"), and CalEnergy Company, Inc., a
Delaware corporation ("Seller").
RECITALS
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A. Seller owns (a) the shares of common stock described in Exhibit A
attached hereto, constituting all of the outstanding capital stock or membership
interests, as applicable (the "Stock"), of Coso Operating Company LLC, a
Delaware limited liability company, Coso Hotsprings Intermountain Power, Inc.,
China Lake Operating Company, Coso Technology Corporation, China Lake Geothermal
Management Company, China Lake Plant Services, Inc., a California corporation,
Coso Hotsprings Overland Power, Inc., Rose Valley Properties, Inc., each a
Delaware corporation (except as indicated) (individually, a "Company" and
collectively, the "Companies") and (b) the following partnership or joint
venture interests: 50% of China Lake Joint Venture, 50% of Coso Land Company and
approximately 16% of Coso Geothermal Company (each a "Partnership Interest" and
collectively, the "Partnership Interests"). The Companies own the partnership
interests set forth in Exhibit B attached hereto, constituting an interest in,
each of the following partnerships (i) Coso Energy Developers, a California
general partnership, (ii) Coso Finance Partners, a California general
partnership, (iii) Coso Power Developers, a California general partnership, and
(iv) Coso Finance Partners II, a California general partnership (individually, a
"Partnership" and collectively, the "Partnerships"), which own the geothermal
power generation facilities commonly known as the Navy I, Navy II and BLM
projects located at China Lake, California (the "Projects") and collectively
100% of the stock of Coso Funding Corp., a Delaware corporation. In addition,
Coso Energy Developers and Coso Power Developers together own 100% of Coso
Transmission Line Partners, a California general partnership.
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the Stock and Partnership Interests subject to the terms and
conditions of this Agreement.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Defined Terms. As used herein, the terms below shall have the
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following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Action" shall mean any action, order, writ, injunction, judgment or
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decree of any court or governmental or regulatory entity or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental or
regulatory audit or investigation.
"Affiliate" shall have the meaning set forth in the Securities
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Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Books and Records" shall mean, with respect to a company, records of
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the company pertaining to the company's business, properties or assets and
books, ledgers, files, reports, documents and other customary corporate records
(including drilling records and computer records and other forms of electronic
data storage) relating thereto maintained by the company or by Representatives
on its behalf, and for the Partnerships shall include copies of audited
financial statements and any tax returns of the Partnerships in Seller's
possession.
"Budget" shall mean the 1999 operating and capital budgets for the
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Partnerships (other than Coso Finance Partners II) proposed by Seller and
approved by Sandwell Engineering, Inc.
"Closing" shall have the meaning set forth in Section 3.1 hereof.
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"Closing Date" shall mean February 25, 1999 or such other date as
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provided in Section 6.10
"Consents" shall mean all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or required for the present or anticipated conduct of, or relating to
the operation of, the Companies' or Partnerships' businesses or for the
consummation of the transactions contemplated hereby.
"Corporate Partners" shall mean China Lake Operating Company, Coso
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Hotsprings Intermountain Power, Inc. and Coso Technology Corporation.
"Encumbrance" shall mean any claim, lien, pledge, option, warrant,
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put, call, security interest, deed of trust, mortgage, right of way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Operation and Maintenance Agreement" shall mean the separate Plant,
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Field and Transmission Line operating agreements between the Seller, as the
operator on the one hand, and the Companies and Coso Transmission Line Partners,
on the other hand, with respect to the Projects.
"Projects" shall have the meaning as set forth in Recital A hereof.
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"Purchase Price" shall have the meaning set forth in Section 2.2
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hereof.
"Released Claims" shall have the meaning set forth in Section 6.4
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hereof.
"Representative" shall mean any officer, director, principal,
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attorney, accountant, agent, employee or other representative.
"SCE Litigation" shall mean the action in the Superior Court for Inyo
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County entitled Southern California Edison Company, Plaintiff, v. Coso Finance
Partners, Coso Power Developers, Coso Energy Developers, China Lake Operating
Company, Coso Technology Corporation, Coso Hotsprings Intermountain Power, Inc.,
CalEnergy Company, Inc. and Does 1 through 100, defendants (Master Case No.
22784), and the Related Cross Action in the Superior Court for Inyo County
entitled Coso Finance Partners, Coso Power Developers, Coso Energy Developers,
China Lake Operating Company, Coso Technology Corporation, Coso Hotsprings
Intermountain Power, Inc., CalEnergy Company, Inc. and Roes 1 through 100,
Cross-Complainants, v. Southern California Edison Company, Edison
International, The Mission Group, Mission Power Engineering Company, and Roes 1
through 100, Cross-Defendants (Case No. 22718), and including any litigation or
claims that may arise or be initiated subsequently as a result of the
allegations made or to be made in the foregoing proceedings or in any way
relating to any of the facts, transactions, events, occurrences or acts alleged
or underlying the foregoing proceedings.
"Tax" or "Taxes" shall mean any federal, state, local, foreign or
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other tax, levy, impost, fee, assessment or other government charge, including
without limitation income, estimated income, business, occupation, franchise,
property, payroll, personal property, sales, transfer, use, employment,
commercial rent, occupancy, license, gross receipts, ad valorem, excise or
withholding taxes, and any premium, including without limitation interest,
penalties, fines and additional sums to be paid in connection therewith.
"Tax Return" means any return, report, information return, audit,
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investigation or other proceeding response or other document (including any
related or supporting information and, where applicable, profit and loss
accounts and balance sheets) with respect to Taxes.
"Termination Rights" shall mean the rights granted for Seller's
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benefit to secure Buyer's performance obligations in the event Seller terminates
this Agreement pursuant to Section 11.1(a) (iii).
ARTICLE II
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PURCHASE AND SALE OF STOCK
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2.1 Transfer of Stock and Partnership Interests. Upon the terms and
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subject to the conditions contained herein, at the Closing, Seller will sell,
convey, transfer, assign and deliver to Buyer, and Buyer will acquire from
Seller, all shares of the Stock and all of the Partnership Interests.
2.2 Consideration for Stock. Upon the terms and subject to the conditions
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contained herein, as consideration for the purchase of all shares of the Stock
and Partnership Interests, Buyer shall pay to Seller as follows: Five Million
U.S. Dollars (US$5,000,000) shall be paid to Seller in immediately available
funds on or before January 22, 1999 as a deposit (the "Deposit"), Two Hundred
and Five Million U.S. Dollars ($205,000,000) (less the Deposit and any interest
accrued on the Deposit at the rate of 5% per annum) which shall be paid to
Seller at the Closing in immediately available funds, and the balance of which
shall be paid by delivery to Seller at Closing the Agreement concerning
Consideration executed by Buyer for the payment of additional Consideration of
up to US$5,000,000 as set forth in Exhibit D hereto (collectively the "Purchase
Price").
ARTICLE III
CLOSING
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3.1 Closing. The closing of the transactions contemplated herein (the
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"Closing") shall be held on the Closing Date at 9:00 a.m. local time at the
offices of Seller, unless the parties hereto otherwise agree in writing to an
extension of such date or location. In the event that the consents required in
Sections 7.2 and 8.2 hereunder have not been obtained by February 23, 1999 (and
Buyer is not in breach of any of its obligations under this Agreement including,
without limitation, its best efforts obligations under Section 6.10), the
Closing shall be extended until two (2) business days after such consents are
obtained, subject to Section 11.1(a)(ii).
3.2 Documents to be Delivered. To effect the transfer referred to in
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Section 2.1 hereof and the delivery of the consideration described in Section
2.2 hereof, Seller and Buyer shall, on the Closing Date, deliver the following:
(a) Seller shall deliver to CAC or its designee(s) (provided such
designee(s) first become parties to this Agreement and agree to be bound by the
terms of this Agreement to the same extent as the Buyer), certificates or stock
powers evidencing all shares of the Stock of the Companies, free and clear of
all Encumbrances (other than Encumbrances related to the Coso Funding Corp. and
Partnership financing arrangements, Project agreements and permits and the SCE
Litigation), duly endorsed in blank for transfer.
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(b) Seller shall convey to CAC the Partnership Interests, free and
clear of all Encumbrances (other than Encumbrances related to the Coso Funding
Corp. and Partnership financing arrangements, Project agreements and permits and
the SCE Litigation).
(c) Seller and Buyer each shall deliver all documents required to be
delivered pursuant to Articles VII and VIII hereof.
(d) Buyer shall deliver to Seller Two Hundred and Five Million U.S.
Dollars (US$205,000,000) (less the Deposit and any interest accrued on the
Deposit at the rate of 5% per annum) in immediately available funds .
(e) Seller shall deliver to CAC all Books and Records of the
Companies, the Seller's Books and Records solely in its capacity as operator of
the Project or solely as owner of the Companies and written resignations of the
Companies' nominees to the Partnerships' management committees and of all
directors and officers of the Companies, it being agreed that Seller may retain
copies of the Books and Records for bona fide business purposes, subject to the
confidentiality and use restrictions contained herein.
(f) Buyer shall deliver to Seller a fully executed Agreement
concerning Consideration and Future Revenue Agreement in the forms attached as
Exhibits D and F.
(g) Seller and Buyer shall deliver a certificate duly executed by an
authorized officer to the effect that each of the representations and warranties
made by it in this Agreement are accurate in all material respects as of the
Closing Date as if made on the Closing Date.
(h) Seller and Buyer shall deliver opinions of counsel in form and
substance customary for transactions of this type and reasonably satisfactory to
the Seller and Buyer, dated the Closing Date, as to the authorization, validity
and enforceability of this Agreement, the Acknowledgment and Agreement-Release,
Acknowledgment and Agreement-Indemnity, the Agreement concerning Consideration,
the Contingent Payment Agreement, Escrow Agreement and any release or indemnity
required by this Agreement, provided, that such counsel may reasonably rely on
local counsel as to matters of local law. Buyer shall be responsible for
obtaining opinions of counsel with respect to the Caithness Affiliates.
(i) Seller shall deliver a quitclaim, "as is" and without any
representation or warranty, for all of its interest in assets within the Coso
KGRA which are owned by the Partnerships or have been paid for by the
Partnerships or are primarily used at or in connection with the Projects subject
to Seller's retention of Retained Operations.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
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OF SELLER AND THE COMPANIES
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Seller hereby agrees with and represents and warrants to Buyer as follows,
which representations and warranties are, as of the date hereof true and
correct:
4.1 Organization. Each of Seller and the Companies is a corporation or
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limited liability company, as the case may be, duly organized, validly existing
and in good standing under the laws of the state of its incorporation.
4.2 Authorization. Seller has all requisite power and authority, and has
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taken all corporate action necessary, to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Seller and is
a legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.
4.3 Capitalization and Partnership Interests. Seller owns all the
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outstanding shares of Stock set forth in Exhibit A hereto and such shares
constitute the entire outstanding capital stock of the Companies as set forth in
Exhibit C attached hereto; and there are no other outstanding debt or equity
securities or similar instruments or interests in respect of the Companies
(except for each Company's proportionate share of the debt obligations of the
Partnerships, if any, set forth on the balance sheets referred to in Section
4.5). Upon transfer to Buyer of the shares of Stock and the Partnership
Interests, Seller shall have indirectly transferred to Buyer all of the
partnership interests set forth in Exhibit B, which include all of Seller's and
the Companies' right, title and interest in and to the Partnerships of any kind
whatsoever, including, without limitation, any interest in any proceeds in
respect of Partnership litigation or other Partnership claims against third
parties.
4.4 No Encumbrances. (a) Seller owns as of the date hereof, and will own
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as of the Closing Date, all of the outstanding and authorized capital stock of
the Companies free and clear of all Encumbrances except for those Encumbrances
related to the Coso Funding Corp. and Partnership financing arrangements,
Project agreements and permits and the SCE Litigation.
(b) Seller owns as of the date hereof, and will own as of the Closing
Date, the Partnership Interests, free and clear of all Encumbrances except for
those Encumbrances related to the Coso Funding Corp. and Partnership financing
arrangements, Project agreements and permits and the SCE Litigation.
4.5 December 31, 1998 Balance Sheets. Seller shall deliver to Buyer at or
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before Closing or such earlier time as they become available, balance sheets for
each of the Companies as of December 31, 1998 prepared by Seller in accordance
with generally accepted accounting principles ("GAAP") and financial statements
of the Partnerships as of December 31, 1998 audited by PriceWaterhouseCoopers
LLP; provided that it is understood that Seller makes no representation or
warranty in respect of the balance sheets of the Partnerships or other entities
in which it holds Partnership Interests
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4.6 No Brokers, Etc. Neither Seller nor the Companies nor any of their
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respective Representatives, shareholders or Affiliates has employed or made any
agreement with any Representative, broker, finder or similar agent or any other
person or firm which will result in the obligation of Buyer, any Company or any
of their respective Affiliates to pay any finder's fee, brokerage fee,
consulting fee, severance fee, services fee, commission or similar payment or
expense in connection with the transactions contemplated hereby. Seller will
pay all of its own expenses in connection with this Agreement, as provided in
Section 11.7 hereof.
4.7 Books and Records. Seller represents and warrants to Buyer that the
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Books and Records delivered to Buyer at the closing are originals or true copies
of the actual Books and Records of the Companies and the Seller's Books and
Records solely in its capacity as operator of the Projects or solely as owner of
the Stock.
4.8 Access to Information. Seller represents and warrants that it has and
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will provide Buyer with access to all reasonably requested information in
connection with Buyer's due diligence regarding the SCE Litigation and other
Partnership matters.
4.9 Litigation. To the best of Seller's knowledge, set forth on Schedule
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4.9 is a list of certain pending litigation matters involving the Companies and
the Partnerships and no other material Action is pending, or currently
threatened, at law or in equity, against or affecting, the Companies or
Partnerships or their material properties or rights before any state or federal
court, arbitrator, administrative agency, regulatory body, tribunal or
government instrumentality.
4.10 Material Contracts. Except as may be alleged in any matter
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referenced in Schedule 4.10, to the best of Seller's knowledge, the ISO4
contracts between Southern California Edison Company and the Partnerships, the
United States of America through Naval Facilities Engineering command and China
Lake Joint Venture (the "Navy Contract") and the BLM geothermal leases No. CA
11402 and 11384 are in full force and effect.
4.11 Activities. The Corporate Partners are special purpose entities
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formed for the purpose of managing or serving as the managing general partners
of Coso Finance Partners, Coso Energy Developers and Coso Power Developers, and
to Seller's knowledge, the Corporate Partners have undertaken no material
activities except in connection with such purpose.
4.12 Conflicts. This Agreement and Seller's performance hereunder shall
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not materially conflict with any applicable covenants, agreements or laws
applicable to Seller.
4.13 Assets. Upon consummation of this transaction at Closing, to
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Seller's knowledge, it shall have transferred all of its material rights
necessary for the operation of the Projects.
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ARTICLE V
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
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Buyer agrees with and hereby represents and warrants to Seller as follows,
which representations and warranties are, as of the date hereof, and will be, as
of the Closing Date, true and correct:
5.1 Organization. Buyer is a corporation or limited liability company, as
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applicable, duly organized, validly existing and in good standing under the laws
of Delaware except with respect to CAC which will be warranted as of January 22,
1999 and the Closing Date.
5.2 Authorization. Buyer has all requisite power and authority, and has
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taken all action necessary, to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to perform its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer and is a legal,
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms except with respect to CAC which will be warranted as of January
22, 1999 and the Closing Date.
5.3 No Brokers, Etc. Neither Buyer nor any of its Representatives,
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shareholders or affiliates has employed or made any agreement with any
Representative, broker, finder or similar agent or any other person or firm
which will result in the obligation of Seller, any Company, or any of Seller's
affiliates to pay any finder's fee, brokerage fee, consulting fee, severance
fee, services fee, or commission or similar payment or expense in connection
with the transactions contemplated hereby. Buyer will pay all of its own
expenses in connection with this Agreement, as provided in Section 11.7 hereof.
5.4 Financing. Buyer has and will at Closing have access to the
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immediately available funds required to pay the Purchase Price and expressly
agrees that obtaining financing is not a condition to performing its obligations
hereunder and acknowledges that Seller is expressly relying on such
representation.
5.5 Due Diligence. Buyer acknowledges and agrees that it has detailed
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knowledge regarding the Projects as a result of its many years of management
committee participation and that it further has been provided the full
opportunity to conduct due diligence regarding the SCE Litigation and other
Partnership matters and has requested and has been provided with full access to
all reasonably requested Partnership information necessary to make an informed
investment decision.
5.6 Conflicts. This Agreement and Buyer's performance hereunder shall not
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materially conflict with any applicable covenants, agreements or laws applicable
to Buyer except for third party consents (other than those consents specifically
referenced in 8.2) which will be obtained by Buyer prior to Closing and will not
be a condition to Buyer's
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obligation to close.
ARTICLE VI
COVENANTS OF BUYER, SELLER AND THE COMPANIES
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Buyer and Seller each covenant with the other as follows:
6.1 Actions to Consummate Closing; Further Assurances. Each of the
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parties hereto agrees, both before and after the Closing, (a) to use all efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to remove or satisfy Closing conditions
which are within such party's control and otherwise to consummate and make
effective the transactions contemplated by this Agreement, (b) to execute any
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the transactions contemplated
hereunder, and (c) to cooperate with each other in connection with the
foregoing; provided that Seller has sought and shall use commercially reasonable
efforts to obtain the consents required under the Coso Funding Corp. financing
arrangements and Buyer shall cooperate with such consent solicitation; provided,
further, that any payments required to be made and any costs or expenses
incurred in connection with reaffirming ratings or obtaining any consents,
agreements not to object or similar arrangements sought from the bondholders or
trustee or letter of credit bank group under the Coso Funding Corp. financing
arrangements in order to close as promptly as practical following the date
hereof shall be shared equally by Buyer (or the Partnerships) and Seller. In
addition, upon Closing, Buyer agrees to use its best efforts to cause the
Partnerships to execute and become a party to the Agreement concerning
Consideration and Future Revenue Agreement in the forms attached as Exhibits D
and E and cause the Partnerships to be bound by the terms thereof to the same
extent as Buyer.
6.2 Conduct of Business. From the date hereof through the Closing or
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earlier termination of this Agreement, the Companies shall, except as consented
to by Buyer in writing, continue to operate solely in the ordinary course of
business and substantially in accordance with past practice and will not take
any action inconsistent with this Agreement or with the consummation of the
Closing; provided, however, that, except in situations where action is required
promptly, and if within Seller's control, Seller shall not, without CAC's
written consent, intentionally cause the Partnerships to incur obligations not
provided in the Budget prior to Closing. In addition, from the date hereof
through the Closing or earlier termination of this Agreement, Buyer and Seller
shall agree to all major strategic or planning issues concerning drilling or
operations.
6.3 Tax Elections. Seller and Buyer each represent and warrant that they
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have all right and authority to and shall cause a Section 338(h)(10) election to
be made in connection with the Companies (and related Section 754 elections to
be made with respect to the Partnerships). Within 10 days prior to the Closing,
Buyer will deliver to Seller its proposed allocation of the purchase price under
Section 338(h)(10) and Buyer
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and Seller shall endeavor to agree to a reasonable allocation prior to Closing.
6.4 General Release. Each of the Buyers for themselves and on behalf of
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each of their respective Representatives, partners, members, Affiliates, heirs,
executors, successors and assigns including, without limitation, their
Affiliates which are executing the Acknowledgment and Agreement-Release set
forth below (the "Caithness Releasing Parties"), for good and sufficient
consideration, the receipt and adequacy of which is hereby acknowledged, hereby
releases, remises, forgives and forever discharges Seller and its partners,
affiliates, insurers, subsidiaries and each of their respective present and
former Representatives, servants, partners and shareholders (collectively the
"Releasees"), from any and all claims, demands, debts, losses, obligations,
liabilities, costs, expenses, sums of money, accounts, reckonings, suits, rights
of action and causes of action of any kind or character whatsoever, from the
beginning of time, whether known or unknown, suspected or unsuspected, which,
against Releasees, the Caithness Releasing Parties ever had, now have or
hereafter can, shall or may have, or, upon, for or with respect to any matter,
cause or anything whatsoever, from the beginning of time, including, without
limitation, those which are based upon the claims asserted in the SCE Litigation
or relate in any way thereto ("Released Claims"). Released Claims include,
without limitation, all losses, costs, claims, issues, obligations or
liabilities, arising out of or related to (i) any alleged breach of the
Partnerships' partnership agreements, (ii) any alleged breach of the Operation
and Maintenance Agreements, (iii) the direct or indirect ownership of the
Partnerships or Partnership Interests, (iv) fees or overhead charges to the
Partnerships or Partnership Interests or the partners thereof, (v) alleged
ownership or operation of the Projects (including operations after the Closing
Date pursuant to Section 6.6 hereof) or any activities or permits or consents or
regulatory matters related thereto, including the Transition Services (as
hereinafter defined) and (vi) any cooperation, advice, testimony or any other
services provided in the future in connection with the SCE Litigation including,
without limitation, cooperation provided by Seller or its Representatives
pursuant to the last sentence of Section 6.11; but shall not include liabilities
solely for an intentional and material breach of the express representations
made in Article IV. Buyer acknowledges and agrees that this is a general release
of all claims it has or may have against Seller, except with respect to an
intentional and material breach of the express representations made by Seller in
Article IV. The term of this release shall be unlimited; provided, however, that
this release will be ineffective only if and only to the extent that all of the
following have occurred and are continuing: (a) Buyer is not in breach of the
terms of this Agreement (b) Buyer has provided Seller notice of a material
breach of this Agreement and an opportunity to cure, (c) Buyer properly
terminated this Agreement pursuant to Section 11.1 (a) (iv), and (d) Buyer has
obtained a final nonappealable judgment that Seller is in material breach of
this Agreement.
As to all matters that are to become released pursuant to this Agreement,
the Caithness Releasing Parties hereby expressly waive any right or benefit
available to them in any capacity under the provisions of Section 1542 of the
Civil Code of California, which provides:
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"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
The Caithness Releasing Parties expressly waive any such right or benefit
available to it in any capacity under the comparable provisions of any other
state or federal law.
Buyer shall cause any transferee of Buyer's (or the Affiliates' who are
executing the Acknowledgment and Agreement-Release set forth below) direct or
indirect interests in the Partnerships or Projects to independently so release
Seller by delivering a written release in the form set forth above. Further
Buyer shall further use its best efforts to cause its other Affiliates and the
Partnerships to independently so release Seller by delivering a written release
in the form set forth above.
6.5 Indemnity. Buyer (and each of the Affiliates who are executing the
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Acknowledgment and Agreement-Indemnity set forth below) hereby agrees to
indemnify and defend, and shall use its best efforts to cause its other
Affiliates, the Companies and Partnerships to indemnify and defend, Seller for,
from and against all losses, costs (including attorneys' fees), claims, expenses
and liabilities incurred in connection with the SCE Litigation, or the Released
Claims or in connection with claims made by any Representative, partner,
subsidiary or affiliate of Buyer or any shareholder, member or Representative
thereof, as a result of Seller remaining a named party in the SCE Litigation or
otherwise. The term of this indemnity shall be unlimited; provided, however,
that this indemnity will be ineffective only if and only to the extent that all
of the following have occurred and are continuing: (a) Buyer is not in breach
of the terms of this Agreement (b) Buyer has provided Seller notice of a
material breach of this Agreement and an opportunity to cure, (c) Buyer properly
terminated this Agreement pursuant to Section 11.1 (a) (iv), and (d) Buyer has
obtained a final nonappealable judgment that Seller is in material breach of
this Agreement. Buyer shall cause any transferee of Buyer's (or the Affiliates'
who are executing the Acknowledgment and Agreement-Indemnity set forth below)
direct or indirect interests in the Partnerships or Projects) to independently
so indemnify Seller by delivering a written indemnity in the form and substance
set forth herein. Buyer agrees not to settle and to not permit the other
parties to the SCE Litigation to settle the SCE Litigation in whole or in part
without obtaining a dismissal with prejudice and a general release of Seller and
its Affiliates and Representatives, including a waiver of (S)1542 of the Civil
Code of California.
6.6 Operations. Seller is in the process of transferring all of its
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operating employees, agreements and permits related to the operation of the
Projects to Coso Operating Company, except for certain employees and resource
data and computer systems which it will, prior to Closing, determine to retain
for its other California geothermal facilities ("Retained Operations"). Seller
shall provide Buyer a schedule specifying employees, resource data or computer
systems which are to be deemed Retained Operations on or before the Closing
Date, which shall be reasonably acceptable to Buyer. Seller and Buyer agree to
cooperate fully with each other to
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ensure that all rights and obligations with respect to such operating employees,
agreements and permits are transferred or otherwise assumed by Coso Operating
Company prior to the Closing or as soon as possible thereafter. To the extent
any portion of such employees, agreements or permits are not transferred to or
otherwise assumed by Coso Operating Company prior to the Closing Date, Seller
shall, for a reasonable period thereafter, perform, at Buyer's expense, such
transition services as are required to permit the continued right of the
Projects to operate the Projects under the existing agreements and permits, and
if Coso Operating Company continues to be managed by Seller after Closing or
Seller is required to directly provide management or operations oversight for
the Projects after the Closing Date, Buyer shall cause the Partnerships to make
monthly payments to the Seller of the fee and overhead amount as set forth in
the Budget (or a subsequent budget if greater) until such management or
oversight is no longer provided ("Transition Services"). Seller and Buyer also
agree to cooperate with respect to the Retained Operations and any related
transition services to be provided by Buyer to Seller which related services
will be at Seller's cost.
6.7 Bonds and Other Security. Buyer shall use its best efforts to, on or
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before the Closing Date, assume or replace all bonds, letters of credit,
guarantees or other security, and provide the release of Seller and its
affiliates, with respect to all agreements, permits, licenses, and approvals
provided by Seller or its affiliates related to the Partnership, Partnership
Interests or Projects including, without limitation, the CIAC tax indemnity and
guarantee agreements with Southern California Edison Company and other
obligations listed on Schedule 6.7. To the extent Buyer has not provided such
replacements, assumptions and releases by the Closing Date, Buyer shall do so as
soon as possible following Closing and Buyer and the Affiliates executing the
Acknowledgment and Agreement-Indemnity set forth below shall fully indemnify
Seller and its Affiliates from all liabilities, costs and expenses in connection
therewith.
6.8 FERC Recertification. In connection with this Agreement, Buyer agree
--------------------
to recertify the facility utilizing the self-certification procedure at its own
cost and expense and agrees that such recertification shall not be a condition
to Closing.
6.9 Termination Rights. If Seller becomes entitled to the Termination
------------------
Rights pursuant to Section 11 (b) (ii), (w) Buyer shall forfeit all rights
hereunder including its rights to the Deposit, or if the Deposit has not been
delivered, forfeit its rights hereunder and pay over to Seller the sum of
$5,000,000 in immediately available funds, (x) Buyer shall immediately pay to
Seller Five Million U.S. Dollars (US$5,000,000) in immediately payable funds
into such account as directed by the Seller as liquidated damages and (y) Seller
or its designee shall be entitled to receive a monthly payment equal to the
monthly operator fees and overheads and all of its current management committee
fees as currently set forth in the Budget (including the Base Fee therein) and
such payment shall escalate from year to year on January 1 of each year (with
the first adjustment effective January 1, 2000) based on the change in the
Consumer Price Index, and (z) Seller shall cause its Affiliates to waive any
right of first refusal it may claim to have with respect to Seller's interests
in the Partnerships and shall provide any consent reasonably required to
facilitate the transfer of Seller's direct or indirect interests in the
Partnerships (which
12
waiver and agreement to consent shall not be assignable and shall expire one
year from the date of this Agreement). Buyer shall cause the respective
Partnership management committees to take such actions as are required to
approve the Budget; provided, however, that if the release provided in Section
6.4 and the indemnity provided in Section 6.5 are ineffective pursuant to the
express provisions thereof, such action shall be null and void.
6.10 Commitment to Close. Buyer shall close on the acquisition of the
-------------------
Stock and Partnership Interests on or before February 25, 1999, unless any
consents required under the Coso Funding Corp. financing arrangements have not
been received or any approval, notice or passage of time required by the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, has not been
received; provided, however, that in order for Seller to permit Buyer to obtain
any extension of the Closing Date, Buyer must use its best efforts to obtain all
consents required and close as promptly as possible (pursuant to a schedule
mutually agreed to by January 22, 1999 which has an end date of February 25,
1999), including retaining, or partnering with, an operator acceptable to any
rating agencies or Coso Funding Corp. note or bond holders or letter of credit
bank group, if required to obtain such consents in which case the Closing Date
may be extended by Seller day for day from February 25, 1999 until two business
days after such consents or approvals are received, but in no event shall the
Closing Date be extended beyond May 31, 1999.
6.11 Litigation Obligations. Buyer shall use its best efforts to obtain
----------------------
the exclusion or dismissal with prejudice of Seller or its Representatives from
any dispute, action or litigation, pending or threatened, related in any way to
the Companies, Partnerships or Projects, including obtaining the dismissal with
prejudice of Seller from the SCE Litigation and agree that it will not permit
the SCE Litigation to be settled in whole or in part without the full and
complete release of Seller and its Affiliates and Representatives. Further
Seller agrees that Buyer shall be consulted as to all significant decisions
regarding the SCE Litigation prior to Closing and such decisions shall be
mutual. Seller shall include Buyer's designated litigation counsel in an update
status discussion concerning the SCE litigation on a weekly or such other basis
as the parties hereto may agree. Seller shall provide reasonable cooperation to
Buyer in connection with the SCE Litigation and the defense thereof, including,
without limitation, if not otherwise prohibited or restricted by a protective
order or otherwise by law, the following: providing to Buyer or Buyer's
Representatives reasonable access to originals or copies of any and all
documents in Seller's possession relating to the SCE Litigation and Seller's
defense thereof which are non-privileged or if privileged, constitute documents
created by or for counsel as part of counsel's representation of the
Partnerships; providing Buyer or Buyer's Representatives reasonable access to
all witnesses or other persons under Seller's control that have knowledge of any
matter which is the subject of the SCE Litigation or the defense thereof;
providing to Buyer or Buyer's Representatives reasonable opportunity to discuss,
consult or otherwise communicate with such of Seller's Representatives under
Seller's control that have knowledge pertaining to the SCE Litigation and
Buyer's defense thereof, and otherwise reasonably consult, meet and provide
reasonable assistance in the defense of the SCE Litigation. Buyer agrees to pay
all of Seller's out of pocket and third party costs
13
in connection with Seller providing such cooperation. Buyer agrees to keep
Seller reasonably informed of significant issues in the litigation and any
decisions which could reasonably be expected to result in indemnity of Seller
hereunder.
6.12 Post 1998 Partnership Distributions; Pay Over Assurance. Seller and
-------------------------------------------------------
Buyer acknowledge and agree that all partnership distributions in respect of the
Stock and Partnership Interests and all Partnership assets and liabilities
(except any intercompany balances between Seller and its affiliates which shall
be extinguished) for the period commencing after December 31, 1998 are
transferred to Buyer according to the terms of this Agreement, and accordingly,
Seller and Buyer agree that if any monies, properties, securities, proceeds or
any other benefits in respect of the interests of the Partnerships or the
Partnership Interests (for the period commencing after December 31, 1998) are
received by Seller or its affiliates, that Seller will immediately notify and
pay over the same to Buyer or to Buyer's nominee, and that if Seller incurs or
pays any costs or liabilities in respect of the Stock, Partnerships, Partnership
Interests or Projects after December 31, 1998, on receipt of notice thereof
Buyer shall promptly pay or reimburse Seller in full. Notwithstanding the
foregoing, the parties expressly agree that all management fees, operating fees,
allocations of overhead and similar costs, expenses and reimbursements made in
accordance with the Budget and or, payable or accrued prior to Closing and not
otherwise paid or reimbursed in the ordinary course shall be paid to Seller by
the Companies and Partnerships at the Closing or within 30 days after Closing if
amounts are not determinable at Closing.
6.13 Taxes. All Taxes which are or may become due in respect of the
-----
Companies or their respective operations and assets, as reflected on Tax Returns
to be filed by the Seller for tax periods ending prior to January 1, 1999 will
be fully paid and discharged by Seller; provided, that it is understood that
Seller makes no representation or warranty in respect of Tax Returns or Taxes
due and payable by the Partnerships or entities in which it holds a partnership
interest and shall have no liability hereunder for any inaccuracy of such Tax
Returns or any failure of the Partnerships to pay such Taxes, and provided
further that, (i) Seller shall not be obligated to pay and discharge the
Companies' or Seller's allocable share of Taxes (including any adjustment to tax
credits or depletion allowance), arising in respect of the Partnerships or
Partnership Interests for tax periods ending prior to January 1, 1999, resulting
from any adjustments to Taxes arising from tax audits or similar proceedings and
the Companies' or Seller's allocable share of costs and expenses in connection
therewith, and (ii) Seller shall not be obligated to pay and discharge the
Companies' or Seller's allocable share of Taxes (including any adjustment to tax
credits or depletion allowance), arising in respect of the Partnerships or
Partnership Interests for any short period ending on or before the date of the
Closing and to the extent such Taxes under clause (i) or (ii) above are incurred
by Seller, Buyer shall immediately reimburse Seller for any costs for or related
to such Taxes which are in excess of the amount of Taxes which would have arisen
from the transactions contemplated herein that Seller would have paid if such
Taxes were not so incurred and (b) to the extent such Taxes under clause (i) and
(ii) result in a reduction in the amount of Taxes arising from the transactions
contemplated herein that Seller would have paid if such Taxes were not so
incurred, Seller shall immediately reimburse Buyer for any such Taxes. If Seller
14
receives a refund of any Taxes of the Companies for any tax period ending on or
prior to the Closing, then Seller shall immediately pay such refunded Taxes to
Buyer reduced by the amount of any increase in the amount of Taxes arising from
the transaction contemplated herein that Seller will have paid because of such
refunded Taxes. In no event shall Buyer amend any prior year tax return without
Seller's written consent. Upon Closing, Buyer shall be responsible to prepare
and file all Tax Returns and make tax elections with respect to the Companies,
Partnership Interests and Partnerships for tax periods commencing on or ending
after December 31, 1998 (except for any such return that must be filed as part
of Sellers consolidated return), but shall cooperate with and obtain Seller's
prior concurrence for any Tax Returns to be filed with respect to any period
commencing prior to Closing.
6.14 Exclusivity. Following execution hereof and prior to Closing or
-----------
notice of termination of this Agreement, Seller agrees not to negotiate with any
third parties regarding acquisition of an interest in the Projects.
6.15 Limited Release of Buyer. Seller for itself and on behalf of its
------------------------
Representatives, Affiliates, successors and assigns, for good and sufficient
consideration, the receipt and adequacy of which is hereby acknowledged, hereby
releases, remises, forgives and forever discharges Buyer and its Affiliates and
Representatives from any and all claims, demands, debts, losses, obligations,
liabilities, costs, expenses, sums of money, accounts, reckonings, suits, rights
of action and causes of action which Seller has against Buyer and its
Representatives and Affiliates with respect to Buyer and its Representatives and
Affiliates actions in their capacity as members of the respective management
committees of the Partnerships; provided, however, that notwithstanding the
foregoing, nothing in this Section 6.15 shall restrict, impair, diminish,
reduce, affect, or otherwise modify the general release of the Releasees set
forth in Section 6.4 of this Agreement or the indemnification provided Seller
pursuant to Sections 6.5, 6.7 or 9.3 and all provisions in this Agreement with
respect to such releases and indemnification shall be deemed to supersede and
modify this Section 6.15 to the extent of any conflict.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Seller to consummate the transactions provided for
hereby are subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, any of which may be waived by Buyer:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer contained in this Agreement shall be materially true and
correct at and as of the date of this Agreement and at and as of the Closing
Date as if made thereon, and Buyer shall have performed and satisfied all
agreements and covenants required hereby to be performed by it on or prior to
the Closing Date, including, without limitation, having delivered to Seller the
Deposit on or before January 22, 1999 and Buyer being prepared to close Closing
Date.
15
7.2 Consents. All Consents and waivers necessary to the consummation of
--------
the transactions contemplated hereby shall have been obtained, including without
limitation any notice and approval required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any other third party
consents (to the extent not waived), including, without limitation, all rating
agency reaffirmations and consents as may be required under the Coso Funding
Corp. and Partnership financing arrangements including the consent of the letter
of credit bank group, if applicable.
7.3 No Proceedings or Litigation. No Action by any governmental authority
----------------------------
or other person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to (a) materially affect the right or ability of Buyer to
own, possess or transfer the Stock after the Closing, or (b) materially damage
Seller if the transactions contemplated hereunder are consummated. There shall
not be any statute, rule or regulation that makes the purchase and sale of the
Stock contemplated hereby illegal or otherwise prohibited.
7.4 Documents. Buyer has delivered all documents required by Section 3.2
---------
of this Agreement.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for hereby
are subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by Buyer:
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Seller and the Companies contained in this Agreement shall be
materially true and correct at and as of the date of this Agreement and at and
as of the Closing Date, as if made thereon, and Seller and the Companies shall
have performed and satisfied all agreements and covenants required hereby to be
performed by them on or prior to the Closing Date.
8.2 Consents. Any notice and approval required pursuant to the
--------
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (provided
Buyer is not in breach of its obligation under Section 6.10 hereof) any rating
agency reaffirmations and any consent and waiver required under the Coso Funding
Corp. and Partnership financing arrangements, including the consent of the
letter of credit bank group, if applicable shall have been obtained. No other
third party consents shall be a condition to Buyer's performance hereunder.
8.3 Exhibits; Books and Records. Seller shall have delivered to Buyer the
---------------------------
Books and Records referenced in Section 3.2(e).
16
8.4 Documents. Seller shall have delivered all documents required by
---------
Section 3.2 of this Agreement.
ARTICLE IX
ACTIONS BY BUYER, SELLER AND THE COMPANIES AFTER THE CLOSING
------------------------------------------------------------
9.1 Books and Records; Tax Matters:
------------------------------
(a) Books and Records. Each party agrees that it will cooperate with
-----------------
and make available to the other party, during normal business hours, all Books
and Records and other information retained and remaining in existence after the
Closing which are necessary or useful in connection with any tax inquiry, audit,
investigation or dispute, any litigation or investigation or any other matter
requiring such Books and Records and information for any reasonable business
purpose. The party requesting any such Books and Records and information shall
bear all of the out-of-pocket costs and expenses reasonably incurred in
connection with providing such Books and Records and information. All
information received pursuant to this Section 9.1 shall be subject to the
confidentiality and general release provisions of this Agreement.
(b) Cooperation and Records Retention. Buyer, Seller and the
---------------------------------
Companies shall (i) each provide the others with such assistance as may
reasonably be requested by any of them in connection with the preparation of any
return, audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) each retain and
provide the others with any records or other information that may be reasonably
requested in connection with such return, audit or examination, proceeding or
determination, and (iii) each provide the others with any final determination of
any such audit or examination, proceeding, or determination that affects any
amount required to be shown on any tax return of the others for any period.
Without limiting the generality of the foregoing, Buyer and Seller shall each
retain, until the applicable statutes of limitations have expired, copies of all
Company tax returns, supporting work schedules, and other records or information
that may be relevant to such returns for all tax periods or portions thereof
ending on or before January 1, 1999 and shall not destroy or otherwise dispose
of any such records without first providing the others with a reasonable
opportunity to review and copy the same.
9.2 Survival of Representations, Etc. All statements contained in any
---------------------------------
certificate, document, exhibit or instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements (including the indemnity provisions set forth in Section 6.7 and
9.3 hereof) of Buyer and Seller contained herein shall survive the consummation
of the transactions contemplated hereby and the Closing Date for a period of
five years following the Closing Date unless otherwise specified herein.
17
9.3 Indemnification.
---------------
Each of Buyer and Seller hereby agree to fully indemnify, defend and
hold harmless the other against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees and
costs of investigation (as the same are incurred), that such other party shall
incur or suffer, which arise, result from, or relate to any inaccuracy in or
breach of, or failure by the indemnifying party to perform any of its
representations, warranties, covenants or promises in this Agreement; provided,
however such indemnity shall not apply to any sum so incurred or suffered to the
extent caused by the indemnified party's breach of such representations,
warranties, covenants or promises. The party to be indemnified shall promptly
notify the other party of the existence of any claim, demand or other matter to
which the other party's indemnification obligations would apply, and shall give
it a reasonable opportunity to defend and control the defense of the same at its
own expense and with counsel of its own selection; provided that the party to be
indemnified shall at all times also have the right to participate fully in the
defense at its own expense. Each party hereto agrees that, to the extent that it
is an indemnified party hereunder, it shall, at no cost to the indemnified party
other than out of pocket costs, provide prior reasonable cooperation to the
indemnifying party in connection with the indemnifying party's defense of any
indemnified matter, including, without limitation, providing such party with
access to any and all reasonably applicable non-privileged documents and
employee witnesses or other persons having knowledge of such indemnified matter
within the indemnified party's control, and providing to the indemnifying party
the reasonable opportunity to discuss, consult or otherwise communicate with any
of the indemnified party's Representatives under its control about the
indemnified matter, provided such communication is made in the presence of the
indemnified party. If a party shall, within a reasonable time after such notice,
fail to defend, the party to be indemnified shall have the right, but not the
obligation, to undertake the defense of, and to compromise or settle (exercising
reasonable business judgment), the claim or other matter on behalf, for the
account, and at the expense and risk of the other party. The indemnifying party
shall not settle any matter for which the indemnified party seeks indemnity
hereunder without the consent of the indemnified party unless such settlement
provides for a reasonably satisfactory release of the indemnified party. Buyer
shall cause any transferee of Buyer's (or the Affiliates' who are executing the
Acknowledgment and Agreement-Indemnity set forth below) direct or indirect
interests in the Partnerships or Projects to independently so release Seller by
delivering a written indemnity in the form set forth above. Further Buyer shall
further use its best efforts to cause its other Affiliates and the Partnerships
to independently so indemnify Seller by delivering a written indemnity in the
form set forth above.
ARTICLE X
SECURITIES LAW
--------------
10.1 Acquisition for Investment. Buyer hereby acknowledges that the
--------------------------
shares of
18
Stock to be purchased pursuant to the terms of this Agreement shall be acquired
in good faith for investment for its own account and not with a view to a
distribution or resale of any such Stock.
10.2 Legend. Each certificate representing shares of Stock sold pursuant
------
to the provisions hereof, if deemed advisable by the Companies, shall bear the
following legends:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF EXEMPTION THEREFROM UNDER SAID ACT OR THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
and
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Termination and Remedies.
------------------------
(a) Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(i) By mutual written consent of Buyer and Seller;
(ii) By Buyer or Seller if the Closing shall not have occurred
on or prior to May 31, 1999; provided, however, that this provision may be
-------- -------
extended by mutual agreement in writing by Buyer and Seller, and provided,
further, that this provision shall not be available to Buyer if Seller has the
right to terminate this Agreement under Subsection (iii) of this Section
11.1(a);
(iii) By Seller, at its option, if there is (x) a material
breach of any representation or warranty set forth herein (including the failure
to deliver the Deposit to Seller on or before January 22, 1999) or of any
covenant or agreement to be complied with or performed by Buyer pursuant to the
terms of this Agreement (including, without limitation, the failure to be ready
to close by the Closing Date) or (y) the failure of a condition set forth in
Article VII to be satisfied (and such condition is not waived in writing by
Seller) on or prior to the Closing Date, or (z) the occurrence of any event
which results
19
or would result in the failure of a condition set forth in Article VII to be
satisfied on or prior to the Closing Date;
(iv) By Buyer, if there is a material breach by Seller of
(S)3.2(a)(b)(c), 6.2 or 6.14 of this Agreement.
(b) In the Event of Termination. In the event of termination of this
---------------------------
Agreement as permitted by Subsection (a) of this Section 11.1:
(i) The confidentiality and release provisions of this Agreement
and the provisions of Sections 11 and 6.9 shall continue in full force and
effect;
(ii) In the event of a termination by Seller pursuant to Subsection
(iii) (x), (y) or (z) of Section 11.1(a), (and provided that in the case of a
termination pursuant to Subsection (iii)(y) or (z), such termination shall
result from events referenced in Section 7.1), Buyer shall immediately upon
written notice by Seller forfeit its Deposit and pay Seller $5 million as
liquidated damages and Seller shall be entitled to the Termination Rights set
forth in Section 6.9 and Buyer agrees not dispute such payment;
(iii) In, and only in, the event of a termination by Seller solely
for reasons other than a termination that results from a breach of this
Agreement by Buyer, Seller shall refund the Deposit with interest thereon at the
rate of 5 percent per annum to the Buyer; and
(iv) The parties expressly agree that specific performance or other
injunctive relief is not available hereunder and that damages will be the sole
remedy available to a party hereunder.
11.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; provided, however, that Buyer may, at its
election, direct Seller to transfer all or a portion of the Stock or Partnership
Interests to one or more designees who are affiliates of Buyer rather than to
Buyer in connection with the Closing (but no such transfer shall relieve Buyer
of any of its obligations hereunder). Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and no other person shall have any
right, benefit or obligation under this Agreement as a third party beneficiary
or otherwise. Buyer shall not transfer any of its interests in the Partnerships
or any interest in the Projects or the assets thereof without causing such
transferee to assume its obligations hereunder, provided, however, that Buyer
may assign its rights acquired pursuant hereto to a lender providing debt
financing necessary for the consummation of the transaction contemplated herein
without such lender assuming Buyer's obligations provided all Buyer's
obligations to Seller and the obligations to Seller of Buyer's Affiliates
executing the Acknowledgment and Release remain in effect.
11.3 Notices. All notices, requests, demands and other communications
-------
which
20
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by facsimile; the day after it is sent, if sent for
next day delivery to a domestic address by a recognized overnight delivery
service (e.g., Federal Express); and upon receipt, if sent by certified or
----
registered mail, return receipt requested. In each case notice shall be sent
to:
If to Seller addressed to:
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: General Counsel
Fax No.: (402) 231-1658
If to Buyer addressed to:
Caithness Energy LLC
41/st/ Floor
1114 Avenue of the Americas
New York, NY 10036-7790
Attention: President
Fax No.: 212-921-9239
with a copy to:
Thomas Harnsberger
Riordan & McKinzie
300 South Grand Ave., 29th Floor
Los Angeles, CA 90071
and to such other places and with such other copies as either party may
designate as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and
-------------
the rights of the parties determined in accordance with the laws of the State of
California, except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
11.5 Amendments and Waivers. This Agreement may not be amended except by
----------------------
an instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other
21
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Expenses. Each of Seller and Buyer shall pay their own legal,
--------
accounting, out-of-pocket and other expenses incident to this Agreement and to
any action taken by or on behalf of such party in preparation for carrying this
Agreement into effect unless expressly provided otherwise herein.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Captions. The titles, captions or headings of the Articles and
--------
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Public Statements and Press Releases. The parties hereto
------------------------------------
covenant and agree that, if either party plans to issue a press release or other
public announcement disclosing the execution of this agreement ("Initial
Release"), it shall provide a copy of such Initial Release to the other party
for review and comment in advance of issuance, provided, that neither party
hereto nor their respective Affiliates shall issue any Initial Release prior to
Buyer's deposit of $5,000,000 on or before January 22, 1999. Following such
Initial Release, Buyer agrees that any future public announcements by it with
respect to the Companies or the business of the Partnerships shall be consistent
with its Initial Release, except as otherwise required by law, and Seller agrees
that Seller's future public announcements will be consistent with its
obligations as a public company.
11.11 Confidential Information. The parties each acknowledge that
------------------------
the Representatives of the parties are aware of and the Books and Records of the
Companies and Partnerships contain confidential and proprietary information
regarding the Companies and Partnerships and the business of the parties and
accordingly, the parties agree that they shall not, on or after the date hereof,
directly or indirectly, make disclosure of such confidential and proprietary
information to any third party except if compelled to do so by subpoena, court
order or similar binding legal process (issued or initiated by an unaffiliated
third party) in which case each party agrees to give the other party adequate
notice in order for such party to seek a protective order or similar protection
and, in connection therewith, each party agrees to reasonably cooperate with the
other party. The parties each agree that, in the event of a breach or
threatened breach of this Section, the other party shall be entitled to
equitable relief, including injunction and specific performance, in addition to
all other remedies available at law or at
22
equity. For purposes of this Section, confidential and proprietary information
shall not include information which is or becomes generally available to the
public other than through a breach of this Agreement.
11.12 Cumulative Remedies. All rights and remedies of either party
-------------------
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
11.13 Entire Agreement. This Agreement and any other agreements or
----------------
minutes executed pursuant to the terms hereof including, without limitation,
agreements in the form attached as Exhibits hereto, constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof.
11.14 Survival. The covenants contained in Article VI of this Agreement
--------
shall survive Closing and the covenants contained in Sections 6.4, 6.9 and 11.1
shall survive termination of this Agreement and shall be enforceable by the
Buyer and Seller.
[Signatures appear on the following pages]
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
SELLER: BUYER:
CALENERGY COMPANY, INC., CAITHNESS ENERGY L.L.C.
a Delaware corporation a Delaware limited liability company
BY: /s/ Steven A. McArthur BY: /s/ James D. Bishop Jr.
---------------------------- --------------------------------
Title: Executive Vice President Title:
------------------------- -----------------------------
CAITHNESS ACQUISITION COMPANY,
LLC
a Delaware limited liability company
BY: /s/ James D. Bishop Jr.
--------------------------------
BY: ____________________________
Title: _________________________
24
Acknowledgment and Agreement - Release
--------------------------------------
The undersigned hereby acknowledge and agree to be bound by the terms of
Sections 6.4 and 11.13 of the foregoing Purchase Agreement to the same extent as
the Buyer including, without limitation, (i) the general release, (ii) the
waiver of Section 1542 of the Civil Code of California and hereby covenant to
take any and all actions and execute any further documents reasonably requested
by Seller to implement and enforce such Sections.
CAITHNESS RESOURCES, INC. CAITHNESS CORPORATION
a Delaware corporation a Delaware corporation
BY: /s/ James D Bishop Jr. BY: /s/ James D Bishop Jr.
------------------------------ ----------------------------
Title: Title:
--------------------------- -------------------------
CAITHNESS POWER L.L.C.
a Delaware limited liability company
BY: /s/ James D Bishop Jr.
------------------------------
Title: /s/ James D Bishop Sr.
--------------------------- -------------------------------
JAMES BISHOP, SR.,
25
/s/ James Bishop, Jr.
--------------------------
JAMES BISHOP, JR.
CAITHNESS CEA GEOTHERMAL. L.P.,
a Delaware limited partnership,
a general partner
By: CAITHNESS POWER, L.L.C.,
a Delaware limited liability company,
a general partner
By: CAITHNESS ENERGY, L.L.C.
a Delaware limited liability company,
its managing member
BY: /s/ James D. Bishop, Jr.
----------------------------------
Name: James D. Bishop, Jr.
Title:
26
Acknowledgment and Agreement - Indemnity
----------------------------------------
The undersigned hereby acknowledge and agree to be bound by the terms of
Sections 2.2, 6.4, 6.5, 6.9, 6.11 and 11.13 of the foregoing Purchase Agreement
to the same extent as the Buyer including, without limitation, (i) the general
release, (ii) the waiver of Section 1542 of the Civil Code of California and
(iii) indemnity obligations and hereby covenant to take any and all actions and
execute any further documents reasonably requested by Seller to implement and
enforce such Section.
BUYER:
CAITHNESS RESOURCES, INC. CAITHNESS CORPORATION
a Delaware corporation a Delaware corporation
BY: /s/James D. Bishop Jr. BY: /s/ James D. Bishop Jr.
---------------------------- ----------------------------
Title: _________________________ Title: _________________________
CAITHNESS POWER L.L.C.
a Delaware limited liability company
BY: /s/ James D. Bishop Jr.
----------------------------
Title: _________________________
CHINA LAKE OPERATING COMPANY COSO HOTSPRINGS INTERMOUNTAIN
a Delaware corporation POWER, INC.
a Delaware corporation
BY: /s/ Steven A. McArthur BY: Steven A. McArthur
---------------------------- ----------------------------
Title: Executive V.P. Title: Executive V.P.
------------------------- -------------------------
COSO TECHNOLOGY CORPORATION
a Delaware corporation
BY: /s/ Steven A. McArthur
----------------------------
Title: Executive V.P.
-------------------------
27
CAITHNESS CEA GEOTHERMAL. L.P.,
a Delaware limited partnership,
a general partner
By: CAITHNESS POWER, L.L.C.,
a Delaware limited liability company,
a general partner
By: CAITHNESS ENERGY, L.L.C.
a Delaware limited liability company,
its managing member
BY: /s/ James D. Bishop, Jr.
--------------------------------
Name: James D. Bishop Jr.
Title:
28