EXHIBIT 4.8
$135,000,000
SALTON SEA FUNDING CORPORATION
$70,000,000 7.02% Senior Secured Series D Notes Due May 30, 2000
$65,000,000 8.30% Senior Secured Series E Bonds Due May 30, 2011
PURCHASE AGREEMENT
June 17, 1996
CS First Boston Corporation
Park Avenue Plaza,
New York, N.Y. 10055
Dear Sirs:
1. Introductory. Salton Sea Funding Corporation, a Delaware
corporation (the "Funding Corporation"), proposes, subject to the terms and
conditions stated herein, to issue and sell to CS First Boston Corporation, as
initial purchaser ("CSFBC" or the "Purchaser"), U.S.$70,000,000 principal
amount of its 7.02% Series D Senior Secured Notes due May 30, 2000 (the
"Series D Securities") and U.S.$65,000,000 principal amount of its 8.30%
Series E Senior Secured Bonds Due May 30, 2011 (the "Series E Securities" and,
collectively with the Series D Securities, the "Securities"), to be issued
under a Trust Indenture dated as of July 21, 1995, as supplemented by the
First Supplemental Indenture dated as of October 18, 1995 and the Second
Supplemental Trust Indenture to be dated as of the Closing Date (as
hereinafter defined) (as so supplemented, the "Indenture"), each by and
between the Funding Corporation and Chemical Trust Company of California, as
trustee (the "Trustee") on a private placement basis pursuant to an exemption
under Section 4(2) of the United States Securities Act of 1933, as amended
(the "Securities Act"). Payments owed under the Securities will be guaranteed
by Salton Sea Brine Processing L.P., a California limited partnership
("SSBP"), Salton Sea Power Generation L.P., a California limited partnership
("SSPG"), Fish Lake Power Company, a Delaware corporation ("Fish Lake" and,
collectively with SSBP and SSPG, the "Salton Sea Guarantors"), Vulcan Power
Company, a Delaware corporation ("VPC"), CalEnergy Operating Company, a
Delaware corporation ("CEOC"), BN Geothermal, Inc., a Delaware corporation
("BN/Geothermal"), San Felipe Energy Company, a California corporation ("San
Felipe"), Conejo Energy Company, a California corporation ("Conejo"), Niguel
Energy Company, a California corporation ("Niguel"), Vulcan/BN Geothermal
Power Company, a Nevada general partnership ("Vulcan"), Leathers, L.P., a
California limited partnership ("Leathers"), Elmore, L.P., a California
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limited partnership ("Elmore"), Del Ranch, L.P., a California limited
partnership ("Del Ranch" and, collectively with VPC, CEOC, BN/Geothermal, San
Felipe, Conejo, Niguel, Vulcan, Leathers and Elmore, the "Partnership
Guarantors") and Salton Sea Royalty Company, a Delaware corporation ("SSRC" or
the "Royalty Guarantor" and, collectively with the Salton Sea Guarantors and
the Partnership Guarantors, the "Guarantors"). Capitalized terms used herein
without being defined herein shall have the meanings ascribed to such terms in
the Indenture (as modified by the form of Second Supplemental Trust Indenture
attached as Annex A hereto). Each of the Funding Corporation and the
Guarantors hereby agrees with the Purchaser as follows:
2. Representations and Warranties of the Funding Corporation
and the Guarantors.
Each of the Funding Corporation and the Guarantors jointly
and severally represents and warrants to, and agrees with, the Purchaser that:
(a) The Funding Corporation and the Guarantors have prepared
a preliminary offering circular dated June 11, 1996 (as it may be amended or
supplemented, the "Preliminary Offering Circular") and a final offering
circular dated June 17, 1996 (as it may be amended or supplemented, the
"Offering Circular") relating to the Securities. Copies of the Preliminary
Offering Circular and the Offering Circular have been delivered by the Funding
Corporation and the Guarantors to the Purchaser. The Preliminary Offering
Circular was on the date thereof accurate in all material respects and did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and the Offering Circular is as of its date (and any amendment or
supplement thereto will be as of its date) accurate in all material respects
and does not (and will not) contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that the Funding Corporation and the Guarantors make no
representation or warranty as to information contained in or omitted from the
Preliminary Offering Circular or the Offering Circular in reliance upon and in
conformity with written information furnished to the Funding Corporation
through the Purchaser specifically for inclusion therein, it being understood
and agreed that the only such information is that described as such in Section
7(b) hereof.
(b) The Funding Corporation has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of Delaware, is duly qualified to do business as a foreign corporation,
and is a corporation in good standing in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification (except where the failure to so
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qualify would not have a material adverse effect on the Funding Corporation
and the Guarantors, taken as a whole). Each of SSBP, SSPG, Leathers, Elmore
and Del Ranch is a limited partnership duly formed and validly existing in
good standing under the laws of the State of California, is duly qualified to
do business as a foreign limited partnership, and is a foreign limited
partnership in good standing in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification
(except where the failure to so qualify would not have a material adverse
effect on the Funding Corporation and the Guarantors, taken as a whole). Each
of CEOC, Fish Lake, SSRC and BN/Geothermal has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business as a foreign corporation, and is
a corporation in good standing in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification
(except where the failure to so qualify would not have a material adverse
effect on the Funding Corporation and the Guarantors, taken as a whole). VPC
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Nevada, is duly qualified to do
business as a foreign corporation, and is a corporation in good standing in
each jurisdiction in which its ownership or lease of property or the conduct
of its business requires such qualification (except where the failure to so
qualify would not have a material adverse effect on the Funding Corporation
and the Guarantors, taken as a whole). Each of San Felipe, Conejo and Niguel
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of California, is duly qualified to do
business as a foreign corporation and is a corporation in good standing in
each jurisdiction in which its ownership or lease of property or the conduct
of its business requires such qualification (except where the failure to so
qualify would not have a material adverse effect on the Funding Corporation
and the Guarantors, taken as a whole). Vulcan is a general partnership duly
formed and validly existing in good standing under the laws of the State of
Nevada, is duly qualified to do business as a foreign general partnership and
is a foreign general partnership in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its business
requires such qualification (except where the failure to so qualify would not
have a material adverse effect on the Funding Corporation and the Guarantors,
taken as a whole). The Funding Corporation and each Guarantor have all
necessary power and authority to own or lease their respective properties and
to conduct the respective businesses in which they are engaged as described in
the Offering Circular. All of the outstanding shares of capital stock of the
Funding Corporation have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by Magma Power Company ("Magma") free and
clear of any claim, lien, encumbrance or agreement, except as contemplated by
the Financing Documents; all of the partnership interests of each of SSBP and
SSPG represent valid partnership interests in such partnership; all of the
general partnership interests in SSBP and SSPG are owned by SSPC, free and
clear of any claim, lien, encumbrance or agreement except as contemplated by
the Financing Documents; all of the limited partnership interests in SSBP are
owned by Magma, free and clear of any claim, lien, encumbrance or agreement
except as contemplated by the Financing Documents; all of the limited
partnership interests in SSPG are owned by SSBP, free and clear of any claim,
lien, encumbrance or agreement except as contemplated by the Financing
Documents; 99% of the outstanding shares of capital stock of SSPC are owned by
Magma and 1% of such shares are owned by the Funding Corporation, in each case
free and clear of any claim, lien, encumbrance
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or agreement except as contemplated by the Financing Documents; all of the
outstanding shares of capital stock of each of VPC, CEOC, Fish Lake and SSRC
have been duly authorized and validly issued and are fully paid and
nonassessable; 99% of the outstanding shares of capital stock of each of VPC,
CEOC, Fish Lake and SSRC are owned by Magma and 1% of the outstanding shares
of capital stock of each of VPC, CEOC, Fish Lake and SSRC are owned by the
Funding Corporation, in each case, free and clear of any claim, lien,
encumbrance or agreement except as contemplated by the Financing Documents;
all of the outstanding shares of capital stock of BN/Geothermal, San Felipe,
Conejo and Niguel have been duly authorized and validly issued and are fully
paid and nonassessable; all of the outstanding shares of capital stock of
BN/Geothermal are owned by VPC, free and clear of any claim, lien, encumbrance
or agreement except as contemplated by the Financing Documents; all of the
outstanding shares of capital stock of San Felipe, Conejo and Niguel are owned
by CEOC, free and clear of any claim, lien, encumbrance or agreement except as
contemplated by the Financing Documents; all of the partnership interests in
Vulcan represent valid general partnership interests in Vulcan; 50% of such
partnership interests in Vulcan are owned by BN/Geothermal and 50% of such
partnership interests are owned by VPC, in each case, free and clear of any
claim, lien, encumbrance or agreement except as contemplated by the Financing
Documents; all of the partnership interests in each of Leathers, Del Ranch and
Elmore represent valid partnership interests in such partnership; a 40%
general partnership interest and a 10% limited partnership interest in
Leathers is owned by San Felipe, a 40% general partnership interest in
Leathers is owned by CEOC and a 10% limited partnership interest in Leathers
is owned by Magma, in each case, free and clear of any claim, lien,
encumbrance or agreement except as contemplated by the Financing Documents; a
40% general partnership interest and a 10% limited partnership interest in Del
Ranch is owned by Conejo, a 40% general partnership interest in Del Ranch is
owned by CEOC and a 10% limited partnership interest in Del Ranch is owned by
Magma, in each case, free and clear of any claim, lien, encumbrance or
agreement except as contemplated by the Financing Documents; a 40% general
partnership interest and a 10% general partnership interest in Elmore is owned
by Niguel, a 40% general partnership interest in Elmore is owned by CEOC and a
10% limited partnership interest in Elmore is owned by Magma, in each case,
free and clear of any claim, lien, encumbrance or agreement except as
contemplated by the Financing Documents.
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(c) Each of the Funding Corporation and the Guarantors has
all power and authority necessary to execute and deliver this Agreement, the
Stock Acquisition Agreement (the "Stock Acquisition Agreement") among
CalEnergy Imperial Valley Company, Inc., Magma, CEOC and VPC, the Agreement
Terminating Commitments (the "Agreement Terminating Commitments") among
Leathers, Elmore, Del Ranch, The Fuji Bank, Limited, Morgan Guaranty Trust
Company and the banks party thereto and each other Transaction Document to
which it is a party and perform its obligations hereunder and thereunder; each
of this Agreement, the Stock Acquisition Agreement, the Agreement Terminating
Commitments and the other Transaction Documents to which the Funding
Corporation or the Guarantors is a party has been or on the Closing Date (as
hereinafter defined) will have been duly authorized, executed and delivered by
such party or parties thereto and constitutes the legal, valid and binding
obligation of such party or parties, subject to the qualification that the
enforceability of such party's or parties' obligations hereunder or thereunder
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general
equitable principles and except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy; the execution, delivery and performance by each of the Funding
Corporation and the Guarantors of this Agreement, the Stock Acquisition
Agreement, the Agreement Terminating Commitments, the Second Supplemental
Trust Indenture dated as of the Closing Date (the "Supplemental Indenture") by
and between the Funding Corporation and the Trustee, the Securities and the
other Transaction Documents to which it is a party and its compliance with the
provisions hereof and thereof will not breach or (except as contemplated by
the Financing Documents) result in the creation or imposition of any lien,
charge or encumbrance upon any asset which is material to the Funding
Corporation and the Guarantors, taken as a whole (a "Material Asset") pursuant
to the terms of, or constitute a breach of, or default under, the partnership
agreement or certificate of limited or general partnership of SSBP, SSPG,
Vulcan, Leathers, Elmore or Del Ranch, the corporate charter or by-laws of the
Funding Corporation, Fish Lake, VPC, CEOC, BN/Geothermal, San Felipe, Conejo,
Niguel or SSRC or any agreement, indenture (including, without limitation, the
Indenture) or other instrument to which the Funding Corporation or the
Guarantors is a party or by which the Funding Corporation or the Guarantors is
bound (in each case which is material to the Funding Corporation and the
Guarantors taken as a whole) or to which any Material Asset is subject, or any
law, order, rule, regulation, judgment or decree of any court or governmental
agency having jurisdiction over the Funding Corporation or the Guarantors or
any Material Asset of the Funding Corporation or the Guarantors; and, except
as completed on or prior to the Closing Date or as required by applicable
state securities laws, no consent, authorization or order of, or filing or
registration by the Funding Corporation or any Guarantor with, any court,
governmental agency or third party is required in connection with the
execution, delivery and performance of each of this Agreement and the other
Transaction Documents to which the Funding Corporation or any Guarantor is a
party.
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(d) The execution, delivery and performance by each of the
Funding Corporation and the Guarantors of this Agreement, the Stock
Acquisition Agreement, the Agreement Terminating Commitments and the other
Transaction Documents to which it is a party and its compliance with the
provisions hereof and thereof will not conflict with, result in the creation
or imposition (except as contemplated by the Financing Documents) of any lien,
charge or encumbrance upon any asset which is material to the business or
financial condition of CalEnergy Company, Inc. ("CalEnergy") or Magma pursuant
to the terms of, or constitute a breach of, or default under, the corporate
charter or by-laws of CalEnergy or Magma or any agreement, indenture or other
instrument material to the business or financial condition of CalEnergy and to
which CalEnergy or Magma is a party or by which CalEnergy or Magma is bound or
to which any asset which is material to the business or financial condition of
CalEnergy or Magma is subject, or any law, order, rule, regulation, judgment
or decree of any court or governmental agency having jurisdiction over
CalEnergy or Magma.
(e) Neither the Funding Corporation, Fish Lake, VPC, CEOC,
BN/Geothermal, San Felipe, Conejo, Niguel or SSRC is in violation of its
corporate charter or by-laws. None of Leathers, Elmore, Del Ranch, SSBP or
SSPG is in violation of its respective certificate of limited partnership or
partnership agreement. Vulcan is not in violation of its certificate of
general partnership or partnership agreement. Neither the Funding Corporation
nor any Guarantor (i) is in default, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the due
performance and observance of any material term, representation, covenant or
condition contained in any lease, license, indenture, mortgage, deed of trust,
note, bank loan or other evidence of indebtedness or any other agreement,
understanding or instrument to which the Funding Corporation or any Guarantor
is a party or by which the Funding Corporation or any Guarantor or any
property of the Funding Corporation or any Guarantor may be bound or affected,
which default would have a material adverse effect on the financial condition,
business or results of operations of the Funding Corporation and the
Guarantors taken as a whole, or (ii) is in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject,
which violation would have a material adverse effect on the financial
condition, business or results of operations of any Guarantor, which would in
turn be reasonably likely to have a material adverse effect on the financial
condition, properties, business or results of operations of the Guarantors
taken as a whole.
(f) Except as described in or contemplated by the Offering
Circular, each Guarantor represents, after due inquiry, that it (i) has
properly obtained each license, permit, certificate, franchise or other
governmental authorization necessary to the ownership of its property or to
the conduct of its business as described in the Offering Circular, and (ii) is
in compliance with all terms and conditions of such license, permit,
certificate, franchise or other governmental authorization,
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except (x) in either case where the failure to do so would not have a material
adverse effect on the financial condition, business or results of operations
of the Funding Corporation and the Guarantors taken as a whole, (y) permits,
consents and approvals that may be required for future drilling or operating
activities which are ordinarily deemed to be ministerial in nature and which
are anticipated to be obtained in the ordinary course and (z) permits,
consents and approvals for developmental or construction activities which have
not yet been obtained but which have been or will be applied for in the course
of development or construction and which are anticipated to be obtained in the
ordinary course.
(g) Except as described in or contemplated by the Offering
Circular, each of the Funding Corporation and the Guarantors holds, as
applicable, good and valid title to, or valid and enforceable leasehold or
contractual interests in, all items of real and personal property which are
material to the business of the Funding Corporation and the Guarantors taken
as a whole, free and clear of all liens, encumbrances and claims which would
materially interfere with the conduct of the business of the Funding
Corporation and the Guarantors taken as a whole, as described in the Offering
Circular. Each of Vulcan, Leathers, Elmore, Del Ranch, SSBP and SSPG carries
insurance in such amounts and covering such risks as is adequate for the
conduct of its business and the value of its properties and which is
consistent with what is customarily carried by similar companies engaged in
similar businesses. Each of the foregoing insurance policies is valid and in
full force and effect. The Funding Corporation and the Guarantors are
presently conducting their respective businesses as described in the Offering
Circular and in substantial compliance with all applicable rules, regulations
and laws.
(h) Deloitte & Touche LLP and Coopers & Lybrand, L.L.P.,
whose respective reports appear in the Offering Circular, are and were, during
the period covered by their respective reports, independent with respect to
the Funding Corporation and the Guarantors within the meaning of the
Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder (the "Exchange Act").
(i) The Supplemental Indenture has been validly authorized
and, when executed by the proper officers of the Funding Corporation (assuming
the due authorization, execution and delivery thereof by the Trustee) and
delivered by the Funding Corporation, will constitute the legal, valid and
binding obligation of the Funding Corporation, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles; the
Securities have been validly authorized, and, upon payment therefor on the
Closing Date as provided herein, will be validly issued and outstanding, and
will constitute obligations of the Funding Corporation entitled to the
benefits of the Indenture, except as the enforceability thereof may be limited
by bankruptcy, insolvency,
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fraudulent transfer, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and by general equitable
principles; the summary descriptions contained in the Offering Circular of the
Securities, the Indenture and the other Financing Documents conform in all
material respect to these documents.
(j) This Agreement has been duly authorized, executed
and delivered by the Funding Corporation and the Guarantors.
(k) Each Financing Document to which the Funding Corporation
is a party (other than this Agreement, the Supplemental Indenture and the
Securities) has been duly authorized, executed and delivered by the Funding
Corporation and, assuming due authorization, execution and delivery by the
other Persons party thereto (other than such Persons which are Guarantors or
Affiliates thereof), constitutes the legal, valid and binding agreement of the
Funding Corporation, enforceable in accordance with its terms, except as
enforceability thereof may be subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, and by general principles of equity.
(l) The Agreement Terminating Commitments, the Stock
Acquisition Agreement and each Financing Document to which any of the
Guarantors is a party (other than this Agreement) has been duly authorized,
executed and delivered by the Guarantors party thereto and, assuming due
authorization, execution and delivery by the other Persons party thereto
(other than such Persons which are the Funding Corporation, other Guarantors
or Affiliates thereof), constitutes the legal, valid and binding agreement of
the Guarantors party thereto, enforceable in accordance with its terms, except
as enforceability thereof may be subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and general
principles of equity.
(m) Each Project Document to which any of the Guarantors is
a party has been duly authorized, executed and delivered by the Guarantors
party thereto and, assuming due authorization, execution and delivery by the
other parties thereto which are not Guarantors or Affiliates thereof,
constitutes a legal, valid and binding agreement of such Guarantor,
enforceable against such Guarantor in accordance with its respective terms,
except as enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
affecting creditors' rights generally and general principles of equity.
(n) The execution and delivery of each of the Security
Documents to which the Funding Corporation or any of the Guarantors is a party
or will be a party on the Closing Date is or will be effective to create in
favor of the Collateral Agent for the benefit of the Secured Parties and, in
certain circumstances, the Funding Corporation, as
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security for the payment and performance of the obligations secured thereby, a
valid and enforceable security interest in the Collateral covered or purported
to be covered thereby. Such security interests granted by the Salton Sea
Guarantors, CEOC, VPC and the Royalty Guarantor have the priority purported to
be created by such Security Documents. All filings and recordings necessary to
protect, preserve and perfect such security interests have been made and are
in full force and effect. Upon recordation of each Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing, dated as of the Closing Date
entered into by Vulcan, Elmore, Leathers and Del Ranch (collectively, the
"Partnership Deed of Trust") and filing of the UCC-1 financing statements
naming Vulcan, Elmore, Leathers and Del Ranch as debtors and the Collateral
Agent as secured party (the "Financing Statements"), such security interests
granted by such Guarantors will have the priority purported to be created by
such Security Documents. Each Partnership Deed of Trust is or, on the Closing
Date, will be in appropriate form for recording as a mortgage of real estate
and for filing as a fixture filing financing statement to protect, preserve
and perfect the liens and security interests created or to be created by the
Partnership Deed of Trust. The Financing Statements on the Closing Date will
be in appropriate form for filing (including the description of the Collateral
set forth therein) in each office and in each jurisdiction where required to
create and perfect the lien and security interest described above.
(o) Magma, the Funding Corporation, SSPC and the Guarantors
will own all of the Funding Corporation Collateral and the Collateral on the
Closing Date, free and clear of any Liens other than Permitted Liens.
(p) Except as described in the Offering Circular, there is
no litigation or proceeding pending before or by any court or governmental
agency, authority or body, or any arbitrator or, to the knowledge of the
Funding Corporation or any Guarantor, threatened, to which the Funding
Corporation or any Guarantor is a party or of which any Material Asset of the
Funding Corporation or any Guarantor is the subject, including, without
limitation, any audit by the Internal Revenue Service of the Federal income
tax returns of any Guarantor, which, if an adverse decision were reached,
would be likely to have a material adverse effect on (x) the financial
condition, business or results of operations of the Funding Corporation and
the Guarantors, taken as a whole, or (y) the ability of any of the Funding
Corporation or any Guarantor to perform in any material respect their
respective obligations under the Financing Documents and Project Documents to
which any of them is a party.
(q) The financial statements (including the related notes)
included on pages F-1 through F-55 in the Offering Circular present fairly the
financial condition, results of operations and changes in financial position
of the entities purported to be shown thereby, at the dates and for the
periods indicated, and, except as otherwise described
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in the Offering Circular, have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved, and the capitalization of the Funding Corporation and the
Guarantors, as set forth in the column labeled "Actual" under the caption
"Capitalization" in the Offering Circular, is accurately described as of the
date presented therein.
(r) Except as disclosed in the Offering Circular, since the
date of the latest audited financial statements included in the Offering
Circular there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the financial
condition, business or results of operations of the Funding Corporation and
the Guarantors taken as a whole.
(s) The factual information provided by the Funding
Corporation and the Guarantors to the Independent Engineer in the preparation
of its report set forth at Appendices B to the Offering Circular (which
factual information is referenced in such report) was provided in good faith;
provided that the foregoing does not imply or express any representation or
warranty by the Funding Corporation and the Guarantors as to the accuracy of
the projections or conclusions contained in such report and does not
constitute any obligation to update such report.
(t) No labor problem or disturbance with the persons
employed in connection with the Projects exists or, to the knowledge of the
Funding Corporation or any Guarantor, is threatened which might reasonably be
expected to have a material adverse effect on the business, financial
condition or results of operations of the Funding Corporation and the
Guarantors taken as a whole.
(u) Neither the Funding Corporation nor any Guarantor nor
any of their respective affiliates nor (assuming the accuracy of the
representations of the Purchasers set forth herein) any person acting on their
behalf has made offers or sales of securities under circumstances that would
require the registration of the Securities under the Securities Act of 1933,
as amended (the "Securities Act").
(v) The Securities meet the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(w) Neither the Funding Corporation nor any Guarantor is an
open-end investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the United
States Investment Company Act of 1940, as amended (the "Investment Company
Act"), nor is it a closed-end investment company required to be registered,
but not registered, thereunder; and neither the Funding Corporation nor any
Guarantor is and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Offering Circular, neither the Funding Corporation nor any Guarantor will be
an "investment company" as defined in the Investment Company Act.
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(x) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Securities are listed on any
national securities exchange registered under Section 6 of the United States
Securities exchange Act of 1934 ("Exchange Act") or quoted in a U.S. automated
inter-dealer quotation system.
(y) Assuming the accuracy of the representations of the
Purchaser herein, the offer and sale of the Securities in the manner
contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof,
Regulation D thereunder and Regulation S thereunder; and it is not necessary
to qualify an indenture in respect of the Securities under the United States
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(z) Assuming the accuracy of the representations of the
Purchaser herein, neither the Funding Corporation, any Guarantor, nor any of
their affiliates, nor any person acting on their behalf (i) has, within the
six-month period prior to the date hereof, offered or sold in the United
States or to any U.S. person (as such terms are defined in Regulation S under
the Securities Act) the Securities or any security of the same class or series
as the Securities (excluding the Exchange Securities) or (ii) has offered or
will offer or sell the Securities (A) in the United States by means of any
form of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act or (B) with respect to any such securities
sold in reliance on Rule 903 of Regulation S ("Regulation S") under the
Securities Act, by means of any directed selling efforts within the meaning of
Rule 902(b) of Regulation S. Assuming the accuracy of the representations of
the Purchaser herein, the Funding Corporation, the Guarantors and any person
acting on their behalf have complied and will comply with the offering
restrictions requirement of Regulation S.
(aa) The proceeds to the Funding Corporation from the
offering of the Securities will not be used to purchase or carry any security,
except as contemplated in the Offering Circular.
(bb) Each of the Salton Sea Projects and Partnership
Projects is a "Qualifying Small Power Production Facility," as such term is
defined pursuant to the Public Utility Regulatory Policies Act of 1978, as
amended. None of the Guarantors or the Funding Corporation, will, solely as a
result of the participation by the parties separately or as a group in the
transactions contemplated by the Financing Documents and the ownership, use or
operation of the Projects, be subject to regulation by any Governmental
Authority as a "public utility," an "electric utility," and "electric utility
holding company," a "public utility holding company," a "holding company," or
an "electrical corporation" or a subsidiary or affiliate of any of the
foregoing under any Law (including, without limitation, rules and regulations
of the California State Energy Resources Conservation and
11
Development Commission, the Public Utility Holding Company Act of 1935, the
Federal Power Act of 1920 and the Public Utility Regulatory Policies Act of
1978, each as amended).
(cc) None of the Funding Corporation or any of the
Guarantors is a "party in interest" or a "disqualified person" (within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended) with
respect to any "employee benefit plan" (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended).
(dd) The proceeds from the sale of Securities will be loaned
by the Funding Corporation to the Partnership Guarantors and utilized by the
Partnership Guarantors as described under the section of the Offering Circular
titled "Use of Proceeds."
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Funding Corporation agrees
to sell to the Purchaser, and the Purchaser agrees, to purchase from the
Funding Corporation, at a purchase price of 99.45% of the principal amount of
the Series D Securities and 99.25% of the principal amount of the Series E
Securities, plus accrued interest from June 20, 1996 to the Closing Date, the
entire principal amount of the Securities. The Funding Corporation will
deliver against payment of the purchase price the Securities to be offered and
sold by the Purchaser in reliance on Regulation S (the "Regulation S
Securities") in the form of one or more permanent global Securities for each
series in registered form without interest coupons (the "Regulation S Global
Securities") which will be deposited with the Trustee, as custodian for The
Depository Trust Company ("DTC") for the respective accounts of the DTC
participants for Morgan Guaranty Trust Company of New York, Brussels office,
as operator of the Euroclear System ("Euroclear"), and Cedel Societe Anonyme
("Cedel") and registered in the name of Cede & Co., as nominee for DTC. The
Funding Corporation will deliver against payment of the purchase price the
Securities to be purchased by the Purchaser hereunder and to be offered and
sold by the Purchaser in reliance on Rule 144A under the Securities Act (the
"144A Securities") in the form of one permanent global Security for each
series in definitive form without interest coupons (the "Restricted Global
Security") deposited with the Trustee as custodian for DTC and registered in
the name of Cede & Co., as nominee for DTC. The Regulation S Global Security
will have the following single ISIN number for each series: Series
D-USU79627AD47; and Series E-USU79627AE20. The Restricted Global Security will
have the following single CUSIP number for each series: Series D-US795770AG13;
and Series E-US795770AH95. Securities sold to institutional "accredited
investors" (within the meaning of Rule 501(a) (1), (2), (3) or (7) under the
Securities Act) will be issued in certificated form. The Restricted Global
Securities shall include the legend regarding restrictions on transfer set
forth under "Transfer Restrictions" in the Offering Circular. Interests in any
permanent
12
global Securities will be held only in book-entry form through Euroclear,
Cedel or DTC, as the case may be, except in the limited circumstances
described in the Offering Circular. Any resales, pledges or other transfers by
a holder who acquired such Securities in an offshore transaction pursuant to
Regulation S shall be made outside the United States only to a non-U.S. Person
in a transaction meeting the requirements of Regulation S under the Securities
Act or in the United States only to Qualified Institutional Buyers (as defined
in Rule 144A under the Securities Act). Any resales, pledges or other
transfers by an institutional "accredited investor" who acquired such
Securities shall be made, within the United States, only to Qualified
Institutional Buyers.
Payment for the Securities shall be made by the Purchaser in
Federal (same day) funds by official check or checks or wire transfer to an
account in New York previously designated to CSFBC by the Funding Corporation
drawn to the order of the Funding Corporation, at the office of Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York, 10022 at 10:00
A.M., (New York time), on June 20, 1996 or at such other date and time not
later than seven full business days thereafter as CSFBC and the Funding
Corporation determine, such time being herein referred to as the "Closing
Date", against delivery to the Trustee as custodian for DTC of (i) the
Regulation S Global Securities representing all of the Regulation S Securities
for the respective accounts of the DTC participants for Euroclear and Cedel,
(ii) the Restricted Global Securities representing all of the 144A Securities
and (iii) certificated securities representing all of the Securities sold to
institutional "accredited investors". The Regulation S Global Securities, the
Restricted Global Securities and such certificated securities will be made
available for checking at the above office of Skadden, Arps, Slate, Meagher &
Flom at least 24 hours prior to the Closing Date.
4. Representations by Purchaser; Resale by Purchaser.
(a) The Purchaser represents and warrants to the Company
that it is an "accredited investor" within the meaning of Regulation D under
the Securities Act.
(b) The Purchaser acknowledges that the Securities have not
been registered under the Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons except
in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. The Purchaser represents and
agrees that it has offered and sold the Securities, and will offer and sell
the Securities, only in accordance with Rule 903, Rule 144 under the
Securities Act ("Rule 144") or Rule 144A under the Securities Act ("Rule
144A"). Accordingly, neither the Purchaser nor its affiliates, nor any persons
acting on its or their behalf, have engaged or will engage in any directed
selling efforts with respect to the Securities, and the Purchaser, its
affiliates and all
13
persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. The Purchaser severally
agrees that, at or prior to confirmation of sale of the Securities, other than
a sale pursuant to Rule 144A or Rule 144, the Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Securities from it a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
reoffered, sold, pledged, transferred, assigned, encumbered or
otherwise disposed of in the absence of registration under the
Securities Act except in an offshore transaction pursuant to
Regulation S under the Securities Act or to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act)."
Terms used in this subsection (b) have the meanings given to them by
Regulation S.
(c) The Purchaser agrees that it and each of its affiliates
has not entered and will not enter into any contractual arrangement with
respect to the distribution of the Securities except for any such arrangements
with the prior written consent of the Funding Corporation.
(d) The Purchaser agrees that it and each of its affiliates
has not offered and sold the Securities and will not offer or sell the
Securities in the United States by means of any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Securities
Act, including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. The Purchaser agrees, with respect to resales made in reliance on
Rule 144A of any of the Securities, to deliver either with the confirmation of
such resale or otherwise prior to settlement of such resale a notice to the
effect that the resale of such Securities has been made in reliance upon the
exemption from the registration requirements of the Securities Act provided by
Rule 144A.
(e) The Purchaser agrees that it will offer to sell the
Securities only to, and will solicit offers to buy the Securities from,
persons who in purchasing the Securities will be deemed to have represented
and agreed that such person (i)(A) is a Qualified Institutional Buyer, (B) is
aware that the sale to it is being made in reliance on Rule 144A and (C) is
acquiring such Securities for its own account or for the account of a
Qualified Institutional Buyer, (ii) is (A) an institutional "accredited
investor" (as defined in Rule 501 (a)(1),(2),(3) or (7) under the Securities
Act) and (B) concurrently
14
with its purchase executing and delivering the purchaser's letter containing
certain representation and agreements in substantially the form attached as
Appendix D to the Offering Circular or (iii) is not a U.S. person and is
purchasing such Securities in an offshore transaction pursuant to Regulation S.
5. Certain Agreements of the Funding Corporation and
the Guarantors. The Funding Corporation and the Guarantors agree with the
Purchaser that:
(a) The Funding Corporation and the Guarantors will advise
CSFBC promptly of any proposal to amend or supplement the Offering Circular
and will not effect such amendment or supplementation without CSFBC's consent.
If, at any time prior to the completion of the resale of the Securities by the
Purchaser, any event occurs as a result of which the Offering Circular as then
amended or supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Funding Corporation and the Guarantors promptly will notify
CSFBC of such event and promptly will prepare, at their own expense, an
amendment or supplement which will correct such statement or omission. Neither
CSFBC's consent to, nor CSFBC's delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(b) The Funding Corporation and the Guarantors will furnish
to the Purchaser copies of the Preliminary Offering Circular, the Offering
Circular and all amendments and supplements to such documents, in each case as
soon as available and in such quantities as CSFBC requests, and the Funding
Corporation will furnish to CSFBC on the date hereof three copies of the
Offering Circular. At any time when the Funding Corporation is not subject to
Section 13 or 15(d) of the Exchange Act, the Funding Corporation will promptly
furnish or cause to be furnished to CSFBC and, upon request of holders and
prospective purchasers of the Securities, to such holders and purchasers,
copies of the information required to be delivered to holders and prospective
purchasers of the Securities pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto) in order to permit compliance with
Rule 144A in connection with resales by such holders of the Securities. The
Funding Corporation and the Guarantors will pay the expenses of printing and
distributing to the Purchaser and such holders and purchasers all such
documents.
15
(c) The Funding Corporation and the Guarantors will arrange
for the qualification of the Securities for sale and the determination of
their eligibility for investment under the laws of such jurisdictions in the
United States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the resale of the Securities
by the Purchaser, provided that the Funding Corporation and the Guarantors
will not be required to qualify as a foreign corporation or to file a general
consent to service of process in any such jurisdiction.
(d) During the period of five years hereafter, the Funding
Corporation will furnish to CSFBC, as soon as available after the end of each
fiscal year, a copy of its annual audited financial statements and the annual
audited financial statements of the Guarantors (on a combined basis).
(e) During the period of three years after the Closing Date,
the Funding Corporation will, upon request, furnish to CSFBC and any holder of
Securities a copy of the restrictions on transfer applicable to the
Securities.
(f) During the period of three years after the Closing Date,
the Funding Corporation and the Guarantors will not, and will not permit any
of their affiliates (as defined in Rule 144 under the Securities Act) to,
resell any of the Securities that have been reacquired by any of them.
(g) During the period of three years after the Closing Date,
the Funding Corporation and the Guarantors will not be or become, an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under Section 8 of the Investment
Company Act, and none of the Funding Corporation nor any of the Guarantors is
or will become, a closed-end investment company required to be registered, but
not registered, under the Investment Company Act.
(h) The Funding Corporation and the Guarantors will pay all
expenses incidental to the performance of their obligations under this
Agreement, the Indenture and the other Financing Documents, including (i) the
fees and expenses of the Trustee and its professional advisers; and (ii) all
expenses in connection with the execution, issue, authentication, packaging
and initial delivery of the Securities, the preparation and printing of this
Agreement, the Securities, the Indenture, the Preliminary Offering Circular,
the Offering Circular and amendments and supplements thereto, and any other
document relating to the issuance, offer, sale and delivery of the Securities.
The Funding Corporation and the Guarantors will also pay or reimburse the
Purchaser (to the extent incurred by it) for any expenses actually and
reasonably incurred by the Purchaser in connection with the purchase and sale
of the Securities, including, without limitation, all out-of-pocket
16
expenses incurred by the Purchaser (such as, but not limited to, travel,
hotel, telephone and telecopy charges) , all fees and disbursements of counsel
to the Purchaser, expenses related to qualification of the Securities for sale
under the laws of such jurisdictions in the United States and Canada as CSFBC
designates and the printing of memoranda relating thereto, up to $1,000 ("blue
sky fees"), fees charged by investment rating agencies for the rating of the
Securities("rating agency fees"), all travel expenses of the Purchaser's and
the Funding Corporation's or the Guarantors' officers and employees and any
other expenses of the Purchaser and the Funding Corporation or the Guarantors
in connection with attending or hosting meetings with prospective purchasers
of the Securities from the Purchaser and for expenses incurred in distributing
Preliminary Offering Circulars and Offering Circulars (including any
amendments and supplements thereto) to the Purchaser and prospective
purchasers of the Securities from the Purchaser; provided that such fees and
expenses (other than rating agency fees and blue sky fees) are estimated to be
approximately $225,000 and will be subject to audit and verification by the
Funding Corporation and the Guarantors that such fees and expenses were
reasonably incurred in connection with the issuance and offering of the
Securities. On the Closing Date, the Funding Corporation and the Guarantors
will pay to the Purchaser an amount equal to the additional costs of effecting
payment of the aggregate purchase price of the Securities purchased by the
Purchaser on the Closing Date in same day funds as compared with payment in
New York Clearing House (next day) funds.
(i) In connection with the offering, until the earlier of
(x) 180 days following the Closing Date and (y) the Purchaser shall have
notified the Funding Corporation of the completion of the resale of the
Securities, neither the Funding Corporation, the Guarantors nor any of their
affiliates has or will, either alone or with one or more other persons, bid
for or purchase for any account in which it or any of its affiliates has a
beneficial interest any Securities or attempt to induce any person to purchase
any Securities; and neither the Funding Corporation, the Guarantors nor any of
their affiliates will make bids or purchases for the purpose of creating
actual, or apparent, active trading in, or of raising the price of, the
Securities.
(j) The Funding Corporation will not, until 30 days
following the Closing Date, without the prior written consent of the
Purchaser, pursuant to Rule 144A, Regulation S or an offering registered under
the Securities Act, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any debt securities
issued or guaranteed by the Funding Corporation or any of the Guarantors
(other than the Securities).
6. Conditions of the Obligations of the Purchaser. The obligations of
the Purchaser to purchase and pay for the Securities will be subject to the
accuracy of the representations and warranties made by the Funding Corporation
and the Guarantors herein, to the accuracy of
17
the statements of officers of the Funding Corporation and the Guarantors made
pursuant to the provisions hereof, to the performance by the Funding
Corporation and the Guarantors of their obligations hereunder and to the
following additional conditions precedent:
(a) The Purchasers shall have received letters, dated the
date of this Agreement, of Deloitte & Touche LLP and Coopers & Lybrand L.L.P.
in form and substance satisfactory to the Purchaser concerning the financial
information with respect to the Funding Corporation and the Guarantors set
forth in the Offering Circular.
(b) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development or
event involving a prospective change, in or affecting the financial condition,
business or results of operations of the Funding Corporation or any of the
Guarantors which, in the judgment of the Purchaser, materially impairs the
investment quality of the Securities or is material and adverse and makes it
impractical or inadvisable to proceed with the offering of the Securities;
(ii) any downgrading in the rating of the Securities, the Series A Securities,
the Series B Securities or the Series C Securities by Standard & Poor's
Ratings Group or Moody's Investors Service, Inc. or any public announcement
that such organization has under surveillance or review its rating of the
Securities, the Series A Securities, the Series B Securities or the Series C
Securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading
on such exchange or any suspension of trading of any securities of CalEnergy
on any exchange or in the over the counter market; (iv) any banking moratorium
declared by U.S. Federal or New York authorities; (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress of the United States or any other change in
financial markets or substantial national calamity or emergency if, in the
judgment of the Purchaser, the effect of any such outbreak, escalation,
declaration, change, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Securities; or
(vi) any invalidation of Rule 144A or Regulation S by any court or any
amendment or proposed amendment of any rule or regulation under the Securities
Act or the Exchange Act by the Commission which in the Purchaser's judgment,
would materially impair the Purchaser's ability to purchase, hold or effect
resales of the Securities as contemplated hereby or the ability of holders of
the Securities to effect resales as currently contemplated by Rule 144A and
Regulation S.
(c) The Funding Corporation and the Guarantors shall have
furnished the Purchaser with such assurance and evidence as the Purchaser may
require to confirm that, as of the Closing Date, all Debt owed by the
Partnership Project Companies (other than Permitted
18
Guarantor Debt) will be repaid in full or effectively defeased and all liens
and collateral securing such Debt shall be released.
(d) The representations and warranties of each of the
Funding Corporation and the Guarantors contained herein and in each
Transaction Document to which the Funding Corporation or any of the Guarantors
is party shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as
of the Closing Date, each of the Funding Corporation and the Guarantors shall
have complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder or thereunder at or prior to the Closing
Date and, subsequent to the respective dates of the most recent financial
statements in the Offering Circular, there shall have been no material adverse
change in the financial position or results of operation of the Funding
Corporation and the Guarantors, taken as a whole, as evidenced by a
certificate, dated the Closing Date, of the President or any Vice-President
and a principal financial or accounting officer of the Funding Corporation and
the Guarantors.
(e) On or prior to the Closing Date, the Funding Corporation
and the Guarantors, as applicable shall have entered into the Supplemental
Indenture, Amendment No. 1 to the Depositary Agreement, Amendment No. 1 to the
Intercreditor Agreement, the Securities, an amended and restated Debt Service
Reserve LOC Reimbursement Agreement and such additional Financing Documents
and amendments or modifications thereto as may be reasonably required by the
Purchaser in connection with the issuance of Securities, all in such form as
shall be satisfactory to the Purchaser and its counsel, and such Financing
Documents and such amendments, modifications or supplements shall have been
fully executed and delivered and shall remain in full force and effect on the
Closing Date and all conditions precedent thereunder to the issuance of one or
more Debt Service Reserve Letters of Credit in an aggregate face amount equal
to the Debt Service Reserve Fund Required Balance (as defined in the
Depositary Agreement) as of the Closing Date shall have been satisfied on the
Closing Date and the Funding Corporation shall have delivered to the Trustee
evidence reasonably satisfactory to the Purchaser that the irrevocable letter
of credit currently anticipated to be required to be delivered to in order to
fund the Debt Service Reserve Fund at the Debt Service Reserve Fund Required
Balance (as defined in the Depositary Agreement) has been obtained and is in
existence on the Closing Date or other arrangements with respect to such
obligations acceptable to the Purchaser shall have been made.
(f) The Purchaser shall have received copies of all legal
opinions rendered in connection with the transactions contemplated by the
documents listed in paragraph (e) above and reliance letters in respect
thereof.
(g) On or prior to the Closing Date, the Funding Corporation
or the Guarantors shall have delivered to the Purchaser
19
evidence satisfactory to the Purchaser and its counsel that a title policy or
policies in the aggregate amount of $96,000,000 insuring each Deed of Trust
executed by the Partnership Project Companies has been obtained, each of which
title policies shall be satisfactory in form and substance to the Purchaser
and its counsel.
(h) On or prior to the Closing Date, each Partnership Deed
of Trust shall have been delivered to Chicago Title Insurance Company (the
"Title Company") for due recordation as a mortgage of real estate, and any
required filings with respect to personal property and fixtures subject to the
liens of the Partnership Deed of Trust shall have been delivered to the Title
Company for filing, in each place in which such recording or filing is
required to protect, preserve and perfect the liens of the Partnership Deed of
Trust as a valid and enforceable lien on the real estate and as a valid and
enforceable security interest in the personal property and fixtures covered or
purported to be covered by the Partnership Deed of Trust, with the priority
purported to be created thereby, in each case subject only to Permitted Liens,
and except for such recordation or filing no further action shall be required
to create, preserve or perfect such liens and security interests. The
Financing Statements shall have been delivered for filing, recordation and/or
registration in each office and in each jurisdiction where required to create
and perfect a valid and enforceable security interest in the Collateral owned
by the Partnership Guarantors covered or purported to be covered by the
Security Documents, with the priority purported to be created thereby. All
taxes and recording and filing fees required to be paid with respect to the
execution, recording or filing of the Partnership Deed of Trust and the
Financing Statements shall have been paid or provided for. All Collateral and
Funding Corporation Collateral shall be subject to no Liens other than
Permitted Liens.
(i) On or prior to the Closing Date, each of the Project
Documents, in the forms as previously delivered to the Purchaser or its
counsel and as they exist as executed versions as of the date of this
Agreement or in such forms as shall be satisfactory in form and substance to
the Purchaser and its counsel, shall have been executed and delivered, shall
remain in full force and effect, no default shall have occurred thereunder,
all conditions precedent thereunder shall be satisfied and there shall not
have occurred any event of force majeure thereunder on the Closing Date.
(j) The Purchaser shall have received a letter, dated the
Closing Date, of Deloitte & Touche LLP and Coopers & Lybrand L.L.P. that meets
the requirements of subsection (a) of this Section, except that the specified
date referred to in such subsection will be a date not more than five days
prior to the Closing Date for the purposes of this subsection.
(k) The Independent Engineer shall have consented to the
references to it in the Offering Circular and the use of the Independent
20
Engineer's Report (as defined in the Offering Circular) prepared by the
Independent Engineer and contained in Appendix B to the Offering Circular; and
since the date of the Independent Engineer's Report, no event affecting the
Independent Engineer's Report or the matters referred to therein shall have
occurred (A) which shall make untrue or incorrect in any material respect, as
of the Closing Date, any information or statement contained in the Independent
Engineer's Report or in the Offering Circular relating to matters referred to
in the Independent Engineer's Report, or (B) which shall not be reflected in
the Offering Circular but should be reflected therein in order to make the
statements and information contained in the Independent Engineer's Report, or
in the Offering Circular relating to matters referred to in the Independent
Engineer's Report, in light of the circumstances under which they were made,
not misleading, as evidenced by a certificate satisfactory to the Purchaser of
an authorized officer of the Independent Engineer, dated the Closing Date.
(l) The Purchaser shall have received a certificate, dated
the Closing Date, of any President or Vice President of the Funding
Corporation and the Guarantors, certifying, based on customary assumptions,
that there are sufficient geothermal resources to operate the Salton Sea
Projects and the Partnership Projects through the Final Maturity Date.
(m) The Purchaser shall have received opinions, dated the
Closing Date, of Willkie Farr & Gallagher, Latham & Watkins and Lionel Sawyer
& Collins, each counsel for the Funding Corporation and the Guarantors, and
Steven A. McArthur, Esq., General Counsel for the Funding Corporation and the
Guarantors, to the effect as set forth in Annexes B, C, D and E hereto and
satisfactory in all respects to the Purchaser and its counsel.
(n) The Purchaser shall have received an opinion, dated the
Closing Date, from Lillick & Charles, counsel to the Trustee, the Collateral
Agent and the Depositary Agent, in respect of the enforceability of the
Financing Documents to which the Trustee, the Collateral Agent and the
Depositary Agent are parties and the authentication of the Securities by the
Trustee, which opinion shall be satisfactory in all respects to the Purchaser
and its counsel.
(o) The Purchaser shall have received from Skadden, Arps,
Slate, Meagher & Flom, counsel for the Purchaser, such opinion or opinions as
the Purchaser may reasonably request, dated the Closing Date, with respect to
the Offering Circular and the Funding Corporation and the Guarantors shall
have furnished to such counsel such documents as they request for the purpose
of enabling them to pass upon such matters.
(p) The Purchaser shall have received, in form and substance
satisfactory to the Purchaser, copies of such opinions,
21
certificates, letters and documents as the Purchaser reasonably requests.
7. Indemnification and Contribution.
(a) The Funding Corporation and the Guarantors will
indemnify and hold harmless the Purchaser against any losses, claims, damages
or liabilities, joint or several, to which the Purchaser may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any breach of any of the representations and
warranties of the Funding Corporation and the Guarantors contained herein or
any untrue statement or alleged untrue statement of any material fact
contained in the Offering Circular, or any amendment or supplement thereto, or
any related Preliminary Offering Circular, or arise out of or are based upon
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and will reimburse the Purchaser for any
legal or other expenses reasonably incurred by the Purchaser in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Funding
Corporation and the Guarantors will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Funding Corporation by the Purchaser
specifically for use therein, it being understood and agreed that the only
such information consists of the information described as such in subsection
(b) below; and provided further that, with respect to any untrue statement or
omission in the Preliminary Offering Circular, this indemnity agreement shall
not inure to the benefit of the Purchaser on account of any loss, claim,
damage, liability or action arising from the sale of any Securities to any
person by the Purchaser if the Purchaser failed to send or give a copy of the
Offering Circular, as the same may be amended or supplemented, to that person
within the time required by the Securities Act, and the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact in the Preliminary Offering Circular was corrected in
the Offering Circular and the Offering Circular was made available to the
Purchaser prior to the sale of the Securities.
(b) The Purchaser will indemnify and hold harmless the
Funding Corporation and the Guarantors against any losses, claims, damages or
liabilities to which the Funding Corporation and the Guarantors may become
subject, under the Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Circular, or any
amendment or supplement
22
thereto, or any related preliminary offering circular, or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Funding Corporation by
the Purchaser specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Funding Corporation in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that the
only such information furnished by the Purchaser consists of the following
information in the Offering Circular: the last paragraph at the bottom of the
cover page concerning the terms of the offering by the Purchaser and the
legend concerning stabilizing on the inside front cover page, the column in
the chart on the cover page titled "Discount to Initial Purchaser" and the
information under the caption "Plan of Distribution."
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) above. In
case any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, that the indemnified party shall have the right to employ
counsel to represent the indemnified party and their respective controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the indemnified party against the
indemnifying party under this Section 7 if the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action or, if in the written opinion of counsel to
either the indemnifying party or the indemnified party, representation of both
parties by the same counsel would be inappropriate due to actual or likely
conflicts of interest between them, and in that event the fees and expenses of
one firm of separate counsel (in addition to the fees and expenses of local
counsel) shall be paid by the indemnifying party; and provided, further
23
that, with respect to any untrue statement or omission in the Preliminary
Offering Circular, this indemnity agreement shall not inure to the benefit of
the Purchaser on account of any loss, claim, damage, liability or action
arising from the sale of any Securities to any person by the Purchaser if the
Purchaser failed to send or give a copy of the Offering Circular, as the same
may be amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in the
Preliminary Offering Circular was corrected in the Offering Circular and the
Offering Circular was made available to the Purchaser prior to the sale of the
Securities. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened action in respect of which
any indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Funding Corporation and the Guarantors on the one
hand and the Purchaser on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Funding Corporation and the Guarantors on the one hand and the
Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Funding Corporation and the Guarantors on the one hand and the Purchaser on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Funding
Corporation and the Guarantors bear to the total discounts and commissions
received by the Purchaser from the Funding Corporation under this Agreement.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Funding Corporation or the Guarantors, on the one hand, or the
Purchaser, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence
of this subsection (d) shall be deemed to include any legal or other expenses
24
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the Purchaser shall not
be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased by it were resold exceeds the
amount of any damages which the Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
(e) The obligations of the Funding Corporation and the
Guarantors under this Section shall be in addition to any liability which the
Funding Corporation and the Guarantors may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Purchaser within the meaning of the Securities Act or the Exchange Act; and
the obligations of the Purchaser under this Section shall be in addition to
any liability which the Purchaser may otherwise have and shall extend, upon
the same terms and conditions, to each officer, director, employee, agent or
shareholder of the Funding Corporation and each Guarantor and to each officer,
director, employee, agent or shareholder of each person, if any, who controls
the Funding Corporation and the Guarantors within the meaning of the
Securities Act or the Exchange Act.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Funding Corporation and the Guarantors or their officers and
of the Purchaser set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of the Purchaser, the Funding
Corporation and the Guarantors or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Securities. If for any reason the purchase of the
Securities by the Purchaser is not consummated, the Funding Corporation and
the Guarantors shall remain responsible for the expenses to be paid or
reimbursed by them pursuant to Section 5 and the respective obligations of the
Funding Corporation and the Guarantors and the Purchaser pursuant to Section 7
shall remain in effect; provided that, notwithstanding the foregoing, in such
circumstances the Funding Corporation and the Guarantors.shall not be
obligated to reimburse the Purchaser for its out-of-pocket expenses (including
fees and disbursements of counsel but excluding rating agency fees) in excess
of $225, 000; and provided further that if the purchase of the Securities is
not consummated solely because of the occurrence of an event specified in
Section 6(b)(iv),(v) or (vi), then the Funding Corporation and the Guarantors
shall have no obligation to reimburse the Purchaser for its out-of-pocket
expenses (including fees and disbursements of counsel), except for rating
agency fees.
9. Notices. All communications hereunder will be in writing and, if
sent to the Purchaser will be mailed, delivered or telegraphed and confirmed
to the Purchaser, at CS First Boston Corporation, Park Avenue
25
Plaza, New York, N.Y. 10055, Attention: Investment Banking Department
Transactions Advisory Group, or, if sent to the Funding Corporation and the
Guarantors, will be mailed, delivered or telegraphed and confirmed to them at
302 South 36th Street, Suite 400-A, Omaha, Nebraska 68131, Attention: General
Counsel; provided, however, that any notice to the Purchaser pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to the
Purchaser.
10. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the controlling persons referred to in Section 7, and no other person will
have any right or obligation hereunder.
11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
26
12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS. The Funding Corporation and the Guarantors
hereby submit to the non-exclusive jurisdiction of the Federal and state
courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
If the foregoing is in accordance with the Purchaser's
understanding of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement between the
Funding Corporation, each of the Guarantors and the Purchaser in accordance
with its terms.
Very truly yours,
SALTON SEA FUNDING CORPORATION
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
SALTON SEA BRINE PROCESSING L.P.
By: SALTON SEA POWER COMPANY, as Managing
General Partner
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
SALTON SEA POWER GENERATION L.P.
By: SALTON SEA POWER COMPANY, as Managing
General Partner
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
FISH LAKE POWER COMPANY
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
27
CALENERGY OPERATING
COMPANY
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
VULCAN POWER COMPANY
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
NIGUEL ENERGY COMPANY
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
SAN FELIPE ENERGY COMPANY
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
CONEJO ENERGY COMPANY
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
BN/GEOTHERMAL, INC.
By: CALENERGY OPERATING COMPANY,
as General Partner
By: /s/ John G. Sylvia
-------------------------
Name: John G. Sylvia
Title: Senior Vice President
28
ELMORE, L.P.
By: CALENERGY OPERTAING COMPANY.
as General Partner
By: /s/ John G. Sylvia
-----------------------------
Name: John G. Sylvia
Title: Senior Vice President
LEATHERS, L.P.
By: CALENERGY OPERATING COMPANY,
as General Partner
By: /s/ John G. Sylvia
-----------------------------
Name: John G. Sylvia
Title: Senior Vice President
DEL RANCH, L.P.
By: CALENERGY OPERATING COMPANY,
as General Partner
By: /s/ John G. Sylvia
-----------------------------
Name: John G. Sylvia
Title: Senior Vice President
VULCAN/
BN GEOTHERMAL POWER COMPANY
By: VULCAN POWER COMPANY,
as General Partner
By: /s/ John G. Sylvia
-----------------------------
Name: John G. Sylvia
Title: Senior Vice President
SALTON SEA ROYALTY COMPANY
By: /s/ John G. Sylvia
-----------------------------
Name: John G. Sylvia
Title: Senior Vice President
29
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CS FIRST BOSTON CORPORATION
By: /s/ Adebayo O. Ogunlep
-------------------------
Name: Adebayo O. Ogunlep
Title: Managing Director
30
ANNEX A
SUPPLEMENTAL INDENTURE
ANNEX B
OPINION OF WILLKIE FARR & GALLAGHER
i) The Funding Corporation has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the State
of Delaware, has the full corporate power and authority to execute, deliver
and perform the Purchase Agreement and each of the Documents (as hereinafter
defined) and the Relevant California Documents (as hereinafter defined) it is
a party to and to carry on its business and to own, lease and operate its
properties as described in the Offering Circular, and is duly qualified and is
in good standing as a foreign corporation authorized to do business in the
State of California. "Documents," as used herein, shall mean collectively, the
Supplemental Indenture, the Registration Rights Agreement, the Debt Service
Reserve LOC Reimbursement Agreement, Amendment No. 1 to the Intercreditor
Agreement and the Agency Agreement. "Relevant California Documents," as used
herein, shall mean, collectively, the Amendment to Security Documents among
the Funding Corporation, certain of the Guarantors, Salton Sea Power Company,
and Magma, Amendment No. 1 to the Depositary Agreement and the Stock
Acquisition Agreement (the "Stock Acquisition Agreement") among Magma,
CalEnergy Imperial Valley Company, Inc., VPC and CEOC.
ii) Each of Magma, CalEnergy Imperial Valley Company, Inc.
CEOC, Fish Lake, SSRC and BN/Geothermal has the corporate power and authority
to execute, deliver and perform its obligations under the Purchase Agreement,
the Documents and the Relevant California Documents such Person is a party to.
iii) Each of CalEnergy and CalEnergy Imperial Valley
Company, Inc. has been duly organized, is validly existing as a corporation in
good standing under the laws of the State of Delaware, and is duly qualified
and is in good standing as a foreign corporation authorized to do business in
the State of California.
iv) Each of the Purchase Agreement and each other Document
to which the Funding Corporation or the Guarantors (collectively, "Parties")
is a party has been duly executed and delivered by such Party and constitutes
a valid and binding obligation of such Party enforceable in accordance with
its terms, except as the enforceability thereof may be limited by (a)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors and (b) general principles of equity, whether enforcement is
considered in a proceeding in equity or at law.
v) The Securities have been duly authorized by the Funding
Corporation. The Securities have been issued and executed in accordance
B-1
with the provisions of the Indenture and the Supplemental Indenture and
delivered to the Purchaser and constitute valid and binding obligations of the
Funding Corporation entitled to the benefits provided by the Indenture and the
Supplemental Indenture, enforceable against the Funding Corporation in
accordance with their terms, except as the enforceability thereof may be
limited by (a) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors and (b) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law.
vi) The execution and delivery of the Purchase Agreement,
the Stock Acquisition Agreement, the Agreement Terminating Commitments, all
Financing Documents (including, without limitation, any amendments,
modifications or supplements thereof) and Project Documents entered into on or
about the Closing Date by the Parties, the issuance and delivery of the
Securities to be sold by the Funding Corporation and the consummation by the
Parties of the transactions contemplated in the Purchase Agreement, such
Financing Documents and Project Documents, and the Consents (as defined
herein) (including, without limitation, the loans made by the Funding
Corporation to the Partnership Guarantors and the loans, dividends,
distributions or other payments made by the Partnership Guarantors to Magma,
CalEnergy or any affiliate thereof with certain of the proceeds of such loans,
as contemplated by the Offering Circular) will not conflict with or constitute
a breach or violation of any of the terms or provisions of, or constitute a
default under, (A) the certificate of incorporation or by-laws or certificate
of limited or general partnership and partnership agreement of the relevant
Party, (B) any existing federal or New York statute, rule or regulation (other
than the securities or blue sky laws of the various states and foreign
countries, as to all of which we express no opinion) of any governmental
agency or body having jurisdiction over the Parties or (C) those indentures or
agreements listed on Exhibit I attached hereto, in each case, except for such
conflicts, breaches or defaults that, in the aggregate, would not have a
material adverse effect on the financial condition of the Parties or the
enforceability of the Purchase Agreement, any Financing Document, any Consent
or any such Project Document, and the Funding Corporation has the requisite
corporate power and authority to authorize, issue and sell the Securities as
contemplated by the Purchase Agreement. "Consents," as used herein, shall
mean, collectively, any consents to assignment of any Project Documents to the
Collateral Agent, entered into on or about the Closing Date.
vii) Assuming the accuracy of the representations and
warranties, and compliance with the agreements, made by the Funding
Corporation and the Purchaser in the Purchase Agreement, the offer, sale and
delivery of the Securities by the Funding Corporation to the Purchaser
pursuant to the Purchase Agreement and the initial resales of the Securities
by the Purchaser in accordance with Section 4 of the Purchase Agreement and in
the manner contemplated by the Offering Circu-
B-2
lar and the Purchase Agreement do not require registration of the Securities
under the Securities Act and the Indenture is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
We have participated in conferences with officers and other
representatives of the Parties, some of which have been attended by the
Purchaser and their counsel, at which conferences the contents of the
Preliminary Offering Circular and the Offering Circular and related matters
were discussed, and, although we have not independently checked or verified
and are not passing upon and assume no responsibility for the factual
accuracy, completeness or fairness of the statements contained in the Offering
Circular, during the course of such participation no facts have come to our
attention which cause us to believe that (except for (i) the financial
statements, related schedules and other financial and statistical information
contained therein or omitted therefrom, (ii) the Independent Engineer's
Report, (iii) the Geothermal Resource Consultant's Report and (iv) the
information contained in (or omitted from) the Offering Circular under the
captions "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Guarantors", "Business of Guarantors", "Summary
Description of Principal Project Contracts" and the descriptions of the Credit
Agreements, Project Notes, Guarantees and Security Documents under the caption
"Summary Description of Principal Financing Documents", as to all of which we
do not express any belief) the Offering Circular, as of the date of the
Offering Circular and the Closing Date, contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Trustee, for the benefit of the Holders of the
Securities, may rely on our opinion dated July 21, 1995 issued in connection
with the initial sale of the Series A Securities, the Series B Securities and
the Series C Securities, it being acknowledged that such opinion is rendered
only as of the date thereof.
B-3
EXHIBIT I
13. Stock Purchase Agreement dated as of February 18, 1991 (re:
common stock) between CalEnergy and Kiewit Energy Company.
14. Amendment #1 to February 18, 1991 Stock Purchase Agreement dated
as of June 19, 1991 between CalEnergy and Kiewit Energy Company.
15. Amendment #2 to February 18, 1991 Stock Purchase Agreement dated
as of January 8, 1992 between CalEnergy and Kiewit Energy Company.
16. Amendment #3 to February 18, 1991 Stock Purchase Agreement dated
as of April 2, 1993 between CalEnergy and Kiewit Energy Company.
17. Shareholder's Agreement dated as of February 18, 1991 between
CalEnergy and Kiewit Energy Company.
18. Amendment #1 to February 18, 1991 Shareholder's Agreement dated
as of June 19, 1991 between CalEnergy and Kiewit Energy Company.
19. Amendment #2 to February 18, 1991 Shareholder's Agreement dated
as of November 20, 1991 between CalEnergy and Kiewit Energy Company.
20. Amendment #3 to February 18, 1991 Shareholder's Agreement dated
as of April 2, 1992 between CalEnergy and Kiewit Energy Company.
21. Amendment #4 to February 18, 1991 Shareholder's Agreement dated
as of July 20, 1993 between CalEnergy and Kiewit Energy Company.
22. Stock Option Agreement dated as of February 18, 1991 (re: $9.00
and $12.00 options) between CalEnergy and Kiewit Energy Company.
23. Amendments #1 to February 18, 1991 Stock Option Agreement dated
as of June 19, 1991 between CalEnergy and Kiewit Energy Company.
24. Amendment #2 to February 18, 1991 Stock Option Agreement dated as
of May 12, 1994 between CalEnergy and Kiewit Energy Company.
25. Stock Option Agreement dated as of June 19, 1991 (re: $11 5/8
options) between CalEnergy and Kiewit Energy Company.
26. Registration Rights Agreement dated as of February 18, 1991
(re: common stock $9.00 and $12.00 options) between CalEnergy and
Kiewit Energy Company.
B-4
27. Amendment #1 to February 18, 1991 Registration Rights Agreement
dated as of June 19, 1991 between CalEnergy and Kiewit Energy
Company.
28. Registration Rights Agreement dated as of June 19, 1991 (re: $11
5/8 options) between CalEnergy and Kiewit Energy Company.
29. Amendment #1 to June 19, 1991 Registration Rights Agreement dated
as of November 20, 1991 between CalEnergy and Kiewit Energy Company.
30. Securities Purchase Agreement dated as of November 20, 1991 (re:
Series C Preferred Stock and 9.5% Exchange Debenture) between
CalEnergy and Kiewit Energy Company.
31. Joint Venture Agreement dated as of December 14, 1993 between
CalEnergy and Kiewit Construction Group and Kiewit Diversified Group.
32. Indenture, dated as of March 24, 1994, relating to $529,640,000
10 1/4% Senior Discount Notes due 2004 between CalEnergy and IBJ
Schroder Bank and Trust Company, as Trustee.
33. Indenture, dated as June 24, 1993, relating to $100,000,000 5%
Convertible Subordinated Debentures due July 31, 2000 between
CalEnergy and Chemical Bank.
34. ___________% Limited Recourse Senior Secured Notes of CalEnergy,
due 2003.
35. Indenture, dated as of July 21, 1995 between CalEnergy and Bank
of New York, as Trustee.
36. 9.5% Convertible Subordinated Debenture Due 2003 of CalEnergy
dated March 15, 1995.
37. All Financing Documents.
B-5
ANNEX C
OPINION OF LATHAM & WATKINS
i) Each of SSPG, SSBP, Leathers, Del Ranch and Elmore has
been duly formed and is validly existing and in good standing under the laws
of the State of California with partnership power and authority to conduct its
business as now conducted and to own, or hold under lease, its assets and to
enter into the Purchase Agreement, the Financing Documents and the Project
Documents (including, without limitation, any amendments, modifications or
supplements thereto) entered into on or about the Closing Date, the Stock
Acquisition Agreement among Magma, CalEnergy Imperial Valley Company, Inc.,
CEOC and VPC and the Consents (as defined herein)(collectively, "the
Documents") to which it is a party and perform its obligations thereunder.
"Consents," as used herein, shall mean, collectively, any consents to
assignment of any Project Document to the Collateral Agent.
ii) Each of Dessert Valley Company ("DVC"), San Felipe,
Conejo and Niguel has been duly incorporated and is validly existing and in
good standing under the laws of the State of California with corporate power
and authority to conduct its business as now conducted and to own, or hold
under lease, its assets and to enter into those Documents to which it is a
party and perform its obligations thereunder.
iii) Each of Funding Corporation, Fish Lake, CEOC,
BN/Geothermal and the Royalty Guarantor has been duly incorporated and is
validly existing and in good standing under the laws of the State of Delaware
with corporate power and authority to conduct its business as now conducted
and to own, or hold under lease, its assets and to enter into those Documents
which are governed by California law to which it is a party and perform its
obligations thereunder. Each of Funding Corporation, Fish Lake, CEOC and the
Royalty Guarantor is qualified to do business and is in good standing in the
State of California.
iv) Each of Magma, Magma Land Company, SSPC, Vulcan and VPC
is qualified to do business and is in good standing in the State of
California.
v) The execution, delivery and performance of each Document
(other than the Stock Acquisition Agreement) entered into by each of Funding
Corporation, SSPG, SSBP, Leathers, Del Ranch, Elmore, Fish Lake, CEOC,
BN/Geothermal, Royalty Guarantor, DVC, San Felipe, Conejo and Niguel have been
duly authorized by all necessary partnership or corporate action, as
applicable, of each such Party (as hereafter defined) and each such Document
has been duly executed and delivered by each such Party that is a party
thereto. "Party" means each of Magma, CalEnergy Imperial Valley Company, Inc.,
Magma Land Company, SSPC, Vulcan, VPC, Funding Corporation, SSPG, SSBP, Fish
Lake, Leathers, Del
C-1
Ranch, Elmore, CEOC, Royalty Guarantor, San Felipe, Conejo, Niguel,
BN/Geothermal and DVC.
vi) Each Document which is governed by California law
constitutes a legally valid and binding obligation of each Party that is a
party thereto, enforceable against each such Party in accordance with the
terms of such Document.
vii) The execution and delivery of the Documents which are
governed by California law by the Parties, the borrowings by the Partnership
Guarantors pursuant to the Partnership Credit Agreement, the guarantee of the
Securities by the Guarantors pursuant to the Guarantees and the granting of
liens and security interests by the Parties in connection therewith, and the
payment of the indebtedness of the Guarantors evidenced by the Project Notes
do not: (a) violate any federal or California statute, rule or regulation
applicable to the Parties, (b) violate the provisions of the certificate of
incorporation, by-laws, certificate of limited or general partnership or
partnership agreement of any of the relevant Parties, or (c) to the best of
our knowledge, require any consents, approvals, authorizations, registrations,
declarations or filings by the Parties under any federal or California
statute, rule or regulation applicable to the Parties that has not been
obtained or made, as applicable. No opinion is expressed herein as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state law or of any antifraud laws, trade regulation laws, or
environmental laws and regulations, or pension and employee benefit laws and
regulation, or land use laws and regulations.
viii) The provisions of the Security Documents are effective
to create valid security interests in favor of the Collateral Agent on behalf
of and for the benefit of the Secured Parties and the Funding Corporation in
that portion of the collateral described in the Security Documents which is
subject to Division 9 of the California Uniform Commercial Code (the
"Collateral") as security for the payment, to the extent set forth therein, of
all obligations of the Partnership Guarantors to the Funding Corporation and
the Secured Parties under the Credit Agreements, the Project Notes and the
Guarantees.
ix) The Amendments to the Security Documents do not
adversely affect the validity, perfection or priority of the security interest
of the Collateral Agent for the benefit of the Secured Parties and, in certain
circumstances, the Funding Corporation, in the Collateral and, after giving
effect to the Amendments to Security Documents, the security interest of the
Collateral Agent for the benefit of the Secured Parties and, in certain
circumstances, the Funding Corporation, in the Collateral will be entitled to
the same status as a valid and perfected security interest to which it would
otherwise have been entitled immediately prior to giving effect to the
Amendments to Security Documents. "Amendments to Security Documents" shall
mean collectively the Amendment to Security Documents among Magma, the
C-2
Funding Corporation, the Guarantors and Salton Sea Power Company, Amendment
No. 1 to the Salton Sea Deed of Trust and Amendment No. 1 to the Royalty Deed
of Trust.
x) The provisions of the Security Documents are effective to
create valid security interests in the Collateral in favor of the Collateral
Agent on behalf of and for the benefit of the Trustee, and the Holders of the
Securities, as security for the payment, to the extent set forth therein, of
all obligations of the Guarantors to the Funding Corporation and such Secured
Parties under the Credit Agreements, the Project Notes and the Guarantees. The
provisions of the Security Documents are effective to create valid security
interests in the Partnership Collateral in favor of the Collateral Agent on
behalf of and for the benefit of the Funding Corporation, as security for the
payment, to the extent set forth therein, of all obligations of the
Partnership Guarantors to the Funding Corporation under the Credit Agreement
and the Project Notes.
xi) Each UCC financing statement to be filed in California
is in appropriate form for filing in the Office of the Secretary of State of
the State of California. Upon the proper filing of each such UCC financing
statement in the Office of the Secretary of State of the State of California,
the security interest in favor of the Collateral Agent on behalf of and for
the benefit of the Secured Parties and the Funding Corporation in the
Collateral described in such Financing Statement which is subject to Division
9 of the California Uniform Commercial Code will be perfected to the extent a
security interest in such Collateral can be perfected by filing a financing
statement under the provisions of the UCC.
xii) Assuming the Collateral Agent takes and maintains
possession of the shares of capital stock (the "Pledged Shares") listed on
Schedule 2.1 of each agreement providing for the pledge of capital stock of
Niguel, San Felipe, BN/Geothermal or Conejo (the "Stock Pledge Agreement")
delivered to the Collateral Agent pursuant to the Stock Pledge Agreements,
with undated stock powers duly indorsed in blank, in the State of California,
each such Stock Pledge Agreement creates a valid and perfected security
interest in favor of the Collateral Agent in the rights in such Pledged Shares
which each pledgor has or has actual authority to convey as security for the
payment, to the extent set forth in the Stock Pledge Agreements, of all
obligations of the Partnership Guarantors to Funding Corporation and the
Secured Parties under the Credit Agreements, the Project Notes and the
Guarantees.
xiii) The provisions of the Depositary Agreement are
effective to create valid security interests in favor of the Depositary Agent
in the money, Funds, Permitted Investments and proceeds thereof which are
subject to the provisions thereof. Assuming the Depositary Agent takes and
maintains possession of money in the bank accounts specified in the notice of
security interest executed by Funding Corporation and the Guarantors of even
date herewith (the "Notice of
C-3
Security Interest"), the Collateral Agent will have a perfected security
interest therein upon the execution and delivery to the Depositary Agent of
the notice of security interest.
xiv) Each Partnership Deed of Trust is in an appropriate
form for recordation in California as a deed of trust encumbering real
property and interests in real property. The DOT Fixture Filing is in an
appropriate form for recordation in California as a fixture filing encumbering
interests in any "fixtures" (as such terms are defined in Section 9313(1) of
the California Uniform Commercial Code) described in such DOT Fixture Filing.
xv) The recording of each Partnership Deed of Trust and the
DOT Fixture Filing with the County Recorder of the County of Imperial,
California, is the only recording necessary to give constructive notice to
third parties of the lien of such Deed of Trust on the real property interests
described therein.
xvi) There are no mortgage taxes or filing fees payable to
the State of California or any of its political subdivisions as a consequence
of the execution or delivery of the Documents or the creation of the
indebtedness evidenced or secured by any of the Documents or the filing or
recording of any of the Documents, except (i) normal filing fees payable to
the Secretary of State of the State of California and normal recording fees
payable to the Imperial County Recorder; and (ii) any fee or charge payable to
any entity whose services may have been used to assist in such filing and
recordation. We express no opinion, however, with respect to any income,
franchise, sales, withholding, business license or other tax that may result
from the transactions contemplated by the Documents or the performance of the
obligations described therein, including the payments of the indebtedness
evidenced by the Documents.
xvii) To the best of our knowledge, based solely on docket
searches performed in the Superior Courts of Imperial County, California, and
San Diego, County, California, and in the United States District Court for the
Southern District of California, there is no action, suit, or proceeding
pending against or affecting any Party or any Party's properties or that
involves the Projects or the borrowing under the Credit Agreements.
xviii) Each of the Salton Sea Projects and the Partnership
Projects qualifies as a Qualifying Facility.
xix) Neither the Funding Corporation nor the Guarantors is
(a) subject to regulation as a "holding company" or a "subsidiary company" of
a holding company or an "affiliate" of a subsidiary or holding company or a
"public utility company" as defined in Section 2 of PUHCA, (b) subject to
regulation under the Federal Power Act of 1920, as amended, other than as
contemplated by 18 C.F.R. Section 292.601(c) or (c) subject to regulation
under any law of the state of California with
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respect to the rates or the financial or organizational regulation of electric
utilities.
We have participated in conferences with officers and other
representatives of the Parties, and you and your representatives, at which the
contents of the Confidential Preliminary Offering Circular dated June 11, 1996
and the Final Offering Circular dated June __, 1996 (together, the "Offering
Circular") under the captions "Business of Guarantors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Guarantors", "Summary Description of Principal Project Contracts", "Summary
Description of Principal Financing Documents" (limited to the description of
the Credit Agreements, Project Notes, Guarantees and Security Documents)
(collectively, the "Subject Portions of the Offering Circular") and related
matters were discussed and, although we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of such
Subject Portions of the Offering Circular and have not made any independent
check or verification thereof, during the course of such participation, no
facts came to our attention that caused us to believe that (except for the
financial and statistical information contained therein or omitted therefrom)
the Subject Portions of the Offering Circular, as of the date thereof and
hereof, contain an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that we express no belief with respect to any other statements or portions of
the Offering Circular, including without limitation, the financial statements,
schedules and other financial and statistical data included in the Offering
Circular or incorporated therein.
The Trustee, for the benefit of the Holders of the
Securities, may rely on our opinion dated July 21, 1995 issued in connection
with the initial sale of the Series A Securities, the Series B Securities and
the Series C Securities, it being acknowledged that such opinion is rendered
only as of the date thereof.
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ANNEX D
OPINION OF LIONEL SAWYER & COLLINS
38. Magma, Magma Land Company ("MLC"), SSPC and VPC are each
duly incorporated and validly existing and in good standing under the laws of
the State of Nevada, each with the corporate power and authority to conduct
its respective business, and to own, or hold under lease, its respective
assets as described in the Offering Circular, and to enter into the
"Documents" to which each is a party and perform its respective obligations
thereunder. "Documents" shall mean, for purposes of this opinion, the Stock
Acquisition Agreement among Magma, CalEnergy Imperial Valley Company, Inc.,
CEOC and VPC, the Purchase Agreement, the Partnership Deed of Trust, the
Partnership Note, the Partnership Credit Agreement, Amendment No. 1 to the
Depositary Agreement, Amendment No. 1 to the Intercreditor Agreement,
Collateral Assignment of IID Agreement, Collateral Assignment of other
Partnership Project Documents, Collateral Assignment of SCE Agreements,
Partnership Interest Pledge Agreement, Stock Pledge Agreement and the Consents
(as defined herein). "Consents" shall mean, for purposes of this opinion, any
and all consents to assignment of any Project Document to the Collateral
Agent. Vulcan has been duly formed and is validly existing and in good
standing under the laws of the State of Nevada with partnership power and
authority to conduct its business as now conducted and to own, or hold under
lease, its assets as described in the Offering Circular, and to enter into the
documents to which it is a party and to perform its obligations thereunder.
39. The execution, delivery and performance of each Document
entered into by each of Magma, MLC, SSPC and VPC, have been duly authorized by
all necessary corporate action on the part of each of them, and each such
Document has been duly executed and delivered by each of them. The execution,
delivery and performance of each Document entered into by Vulcan has been duly
authorized by all necessary partnership action on its part, and each such
Document has been duly executed and delivered by Vulcan.
40. The execution and delivery by Magma, MLC, SSPC, VPC and
Vulcan of the Documents to which they are a party, the borrowings by VPC and
Vulcan pursuant to the Partnership Credit Agreement, the guarantee of the
Securities by VPC and Vulcan pursuant to the Guarantee and the granting of
liens and security interests by Magma, SSPC, VPC and Vulcan in connection
therewith, and the payment of the indebtedness of VPC and Vulcan evidenced by
the Partnership Project Note do not: (a) violate any Nevada statute, rule or
regulation applicable to Magma, MLC, SSPC, VPC or Vulcan, (b) violate any
provisions of the articles of incorporation and bylaws of Magma, SSPC, VPC and
MLC or the partnership agreement of Vulcan, or (c) to the best of our
knowledge, require any consents, approvals, authorizations, registrations,
declarations or filings by
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Magma, SSPC, MLC, VPC or Vulcan under any Nevada statute, rule or regulation
applicable to them.
41. Each UCC financing statement is in appropriate form for
filing in the Office of the Secretary of State of the State of Nevada. Upon
the proper filing of each such UCC financing statement in the Office of the
Secretary of State of the State of Nevada, the security interest in favor of
the Collateral Agent on behalf of and for the benefit of the Secured Parties
and the Funding Corporation in the Collateral described in such financing
statement which is subject to Article 9 of the Nevada Uniform Commercial Code
(the "UCC") will be perfected to the extent a security interest in such
collateral can be perfected by filing a financing statement under the
provisions of the UCC.
42. There are no mortgage taxes or filing fees payable to
the State of Nevada or any of its political subdivisions as a consequence of
the execution or delivery of the Documents or the creation of the indebtedness
evidenced or secured by any of the Documents or the filing or recording of any
of the Documents, except (i) normal filing fees payable to the Secretary of
State of the State of Nevada; and (ii) any fee or charge payable to any entity
whose services may have been used to assist in such filing and recordation. We
express no opinion, however, with respect to any income, franchise, sales,
withholding, business license or other tax that may result from the
transactions contemplated by the Documents or the performance of the
obligations described therein, including the payments of the indebtedness
evidenced by the Documents.
The Trustee, for the benefit of the Holders of the Securities, may
rely on our opinion dated July 21, 1995 issued in connection with the initial
sale of the Series A Securities, the Series B Securities and the Series C
Securities, it being acknowledged that such opinion is rendered only as of the
date thereof.
D-2
ANNEX E
OPINION OF GENERAL COUNSEL OF
CALIFORNIA ENERGY COMPANY, INC. AND SUBSIDIARIES
i) The Funding Corporation has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to execute, deliver and
perform its obligations under the Purchase Agreement, the Supplemental
Indenture, the Consents (as defined herein) and all Financing Documents and
Project Documents entered into on or about the Closing Date to which it is a
party (including, without limitation, all amendments, modifications or
supplements thereto) and to carry on its business and to own, lease and
operate its properties as described in the Offering Circular, and is duly
qualified and is in good standing as a foreign corporation authorized to do
business in the State of California and in each other jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to so qualify or be in good
standing would not have a material adverse impact on the financial condition
or results of operations of the Funding Corporation and the Guarantors, taken
as a whole. "Consents," as used herein, shall mean collectively, any consents
to assignment to the Collateral Agent of any Project Document that the
Partnership Guarantors are party to.
ii) Each of SSBP, SSPG, Leathers, Elmore and Del Ranch has
been duly organized, is validly existing as a limited partnership in good
standing under the laws of the State of California, has the partnership power
and authority to execute, deliver and perform its obligations under the
Purchase Agreement, the Agreement Terminating Commitments (the "Agreement
Terminating Commitments") among Leathers, Elmore, Del Ranch, The Fuji Bank,
Limited, Morgan Guaranty Trust Company and the banks party thereto, the
Consents and all Financing Documents and Project Documents entered into on or
about the Closing Date to which it is a party (including, without limitation,
all amendments, modifications or supplements thereto) and to carry on its
business and to own, lease and operate its properties as described in the
Offering Circular, and is duly registered or has obtained a certificate of
authority and is in good standing as a foreign limited partnership authorized
to do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such registration or authorization,
except where the failure to so qualify or be in good standing would not have a
material adverse impact on the financial condition or results of operations of
the Funding Corporation and the Guarantors, taken as a whole.
iii) Vulcan has been duly organized, is validly existing as
a general partnership in good standing under the laws of the State of
California, has the partnership power and authority to execute, deliver and
perform its obligations under the Purchase Agreement, the Consents,
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all Financing Documents and Project Documents entered into on or about the
Closing Date to which it is a party (including, without limitation, all
amendments, modifications or supplements thereto) and the Stock Acquisition
Agreement among Magma, CalEnergy Imperial Valley Company, Inc., Vulcan and
CEOC (the "Stock Acquisition Agreement") and to carry on its business and to
own, lease and operate its properties as described in the Offering Circular,
and is duly registered or has obtained a certificate of authority and is in
good standing as a foreign general partnership authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such registration or authorization, except where
the failure to so qualify or be in good standing would not have a material
adverse impact on the financial condition or results of operations of the
Funding Corporation and the Guarantors, taken as a whole.
iv) Each of CalEnergy Imperial Valley Company, Inc., Fish
Lake, CEOC, BN/Geothermal and SSRC has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and authority to execute, deliver and
perform its obligations under the Purchase Agreement, the Consents, all
Financing Documents and Project Documents entered into on or about the Closing
Date to which it is a party (including, without limitation, all amendments,
modifications, or supplements thereto) and the Stock Acquisition Agreement and
to carry on its business as it is currently being conducted and to own, lease
and operate its properties, and is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to so qualify or be in good
standing would not have a material adverse impact on the financial condition
or results of operations of the Funding Corporation and the Guarantors, taken
as a whole.
v) SSPC has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Nevada, has the
power and authority to execute the Purchase Agreement, the Consents and all
Financing Documents and Project Documents entered into on or about the Closing
Date to which SSBP and SSPG are party (including, without limitation, all
amendments, modifications or supplements thereto) on behalf of each of SSBP
and SSPG, to execute, deliver and perform its obligations under the Consents
and all Financing Documents and Project Documents entered into on or about the
Closing Date (including, without limitation, all amendments, modifications or
supplements thereto) to which SSPC is party and to carry on its business as it
is currently being conducted and as proposed to be conducted and to own, lease
and operate its properties, and is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to so qualify or be in good
standing would not have a material
E-2
adverse impact on the financial condition or results of operations of the
Funding Corporation and the Guarantors, taken as a whole.
vi) VPC has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Nevada, has the
corporate power and authority to execute, deliver and perform its obligations
under the Purchase Agreement, the Stock Acquisition Agreement, the Consents
and all Financing Documents and Project Documents entered into on or about the
Closing Date (including, without limitation, all amendments, modifications or
supplements thereto) to which such Person is a party and to carry on its
business as it is currently being conducted and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to so qualify or be in good
standing would not have a material adverse impact on the financial condition
or results of operations of the Funding Corporation and the Guarantors, taken
as a whole.
vii) Magma has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Nevada, has
the corporate power and authority to execute, deliver and perform its
obligations under the Consents, the Stock Acquisition Agreement and all
Financing Documents and Project Documents entered into on or about the Closing
Date (including, without limitation, all amendments, modifications or
supplements thereto) to which it is a party and to carry on its business and
to own, lease and operate its properties as currently being conducted and is
duly qualified and is in good standing as a foreign corporation authorized to
do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to so qualify or be in good standing would not have a material adverse
impact on the financial condition or results of operations of the Funding
Corporation and the Guarantors, taken as a whole.
viii) Cal Energy has been duly organized, is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has the power and authority to carry on its business and to own,
lease and operate its properties as currently being conducted, and is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to so qualify or be in good standing would not have a material adverse
impact on the financial condition or results of operations of the Funding
Corporation and the Guarantors, taken as a whole.
ix) The Purchase Agreement, the Supplemental Indenture, and
each Financing Document and Project Document entered into on or about the
Closing Date to which the Funding Corporation is a party to has been duly
authorized, executed and delivered by the Funding Corporation and
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each such agreement (other than the Purchase Agreement) constitutes a valid
and binding obligation of the Funding Corporation enforceable against it in
accordance with its terms, except as the enforceability thereof may be limited
by (a) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors and (b) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law.
x) The Purchase Agreement, each Consent, the Agreement
Terminating Commitments, the Stock Acquisition Agreement and each Financing
Document and Project Document entered into on or about the Closing Date
(including, without limitation, all amendments, modifications or supplements
thereto) to which any of the Guarantors is a party has been duly authorized,
executed and delivered by or on behalf of the Guarantors party thereto and
each such agreement (other than the Purchase Agreement) constitutes a valid
and binding obligation of each of the Guarantors party thereto enforceable
against it in accordance with its terms, except as the enforceability thereof
may be limited by (a) bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting the
rights and remedies of creditors and (b) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law.
xi) The Stock Acquisition Agreement, each Consent and each
Financing Document and Project Document entered into on or about the Closing
Date (including, without limitation, all amendments, modifications or
supplements thereto) to which Magma is a party has been duly authorized,
executed and delivered by Magma and constitutes a valid and binding obligation
of Magma enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by (a) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors and (b) general
principles of equity, whether enforcement is considered in a proceeding in
equity or at law.
xii) Each Consent and each Financing Document and Project
Document entered into on or about the Closing Date (including, without
limitation, all amendments, modifications or supplements thereto) to which
SSPC is a party has been duly authorized, executed and delivered by SSPC and
constitutes a valid and binding obligation of SSPC enforceable against it in
accordance with its terms, except as the enforceability thereof may be limited
by (a) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors and (b) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law.
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xiii) The Securities have been duly authorized by the
Funding Corporation and have been issued and executed in accordance with the
provisions of the Indenture and the Supplemental Indenture and delivered to
the Purchaser and constitute valid and binding obligations of the Funding
Corporation entitled to the benefits provided by the Indenture, enforceable
against it in accordance with their terms, except as the enforceability
thereof may be limited by (a) bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors and (b) general principles of
equity, whether enforcement is considered in a proceeding in equity or at law.
xiv) The execution, delivery and performance of the Purchase
Agreement, the Supplemental Indenture, the Consents and all Financing
Documents and Project Documents entered into on or about the Closing Date
(including, without limitation, all amendments, modifications or supplements
thereto) to which the Funding Corporation is a party and the issuance and sale
of the Securities by the Funding Corporation will not conflict with or violate
(A) the certificate of incorporation or by-laws of the Funding Corporation,
(B) to the best of my knowledge after due inquiry, any agreement or instrument
to which the Funding Corporation is a party or by which the Funding
Corporation is bound or to which any of the properties of the Funding
Corporation is subject, or result in the creation or imposition of any
mortgage, lien, charge or encumbrance upon any of the material properties or
assets of the Funding Corporation pursuant to the terms of any mortgage,
indenture, agreement or instrument to which the Funding Corporation is a party
or by which it is bound or (C) to the best of my knowledge after due inquiry,
result in a violation of any statute, rule, regulation, order, judgment or
decree of any court or governmental agency, body or authority having
jurisdiction over the Funding Corporation, except, in the case of clauses (B)
and (C), for such conflicts, breaches, encumbrances, violations or defaults
that, in the aggregate, would not have a material adverse effect on the
financial condition, business or results of operations of the Funding
Corporation and the Guarantors, taken as a whole or the enforceability of the
Financing Documents, Consents or Project Documents.
xv) The execution, delivery and performance of the Purchase
Agreement, the Consents, the Agreement Terminating Commitments, the Stock
Acquisition Agreement and all Financing Documents and Project Documents
entered into on or about the Closing Date to which the Guarantors, SSPC, Magma
or CalEnergy is a party will not (A) conflict with or violate the certificate
of incorporation or by-laws or certificate of limited or general partnership
or partnership agreement of any of the Guarantors, SSPC, Magma or CalEnergy or
(B) to the best of my knowledge after due inquiry, require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body or conflict with or
constitute a breach of
E-5
any of the terms or provisions of, or a default under, any agreement,
indenture or other instrument to which any of the Guarantors, SSPC, Magma or
CalEnergy is a party or by which any of the Guarantors, SSPC, Magma or
CalEnergy or their respective properties is bound, or result in a violation of
any statute, rule, regulation, order, judgment or decree of any court or
governmental agency, body or authority having jurisdiction over any of the
Guarantors, SSPC, Magma or CalEnergy or their respective properties or (except
as contemplated by the Financing Documents) result in the creation or
imposition of any mortgage, lien, charge or encumbrance upon any of the
material properties or assets of any of the Guarantors, SSPC, Magma or
CalEnergy pursuant to the terms of any mortgage, indenture, agreement or
instrument to which any of the Guarantors, SSPC, Magma or CalEnergy is a party
or by which it or they are bound, except, in the case of clauses (B) and (C),
for such conflicts, breaches, encumbrances, violations or defaults that, in
the aggregate, would not have a material adverse effect on the financial
condition, business or results of operations of the Funding Corporation and
the Guarantors, taken as a whole or the enforceability of the Financing
Documents, Consents or Project Documents.
xvi) To the best of my knowledge after due inquiry, the
execution, delivery and performance of the Purchase Agreement, the Consents,
the Agreement Terminating Commitments, the Stock Acquisition Agreement and all
Financing Documents and Project Documents entered into on or about the Closing
Date, to which any of the Funding Corporation, the Guarantors, SSPC, Magma and
CalEnergy is a party (A) will not require any consent, approval, authorization
or other order of any court, regulatory body, administrative agency or other
governmental body, (B) will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, (1) the certificate of
incorporation or by-laws of CalEnergy or (2) any agreement, indenture or other
instrument to which CalEnergy or any of its subsidiaries is a party or by
which CalEnergy or any of its material property is bound, or (C) will not
violate or conflict with any laws, administrative regulations or rulings or
court decrees applicable to CalEnergy or any of its material properties or
result in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature whatsoever upon any of the material properties or
assets of CalEnergy pursuant to the terms of any mortgage, indenture,
agreement or instrument to which CalEnergy or any entity owned by CalEnergy is
a party or by which it or they are bound, except, in the case of clauses (A),
(B)(2) and (C), for such conflicts, breaches, encumbrances, violations or
defaults that, in the aggregate, would not have a material adverse effect on
the financial condition, business or results of operations of the Guarantors
and the Funding Corporation, taken as a whole or the enforceability of the
Financing Documents, Consents or Project Documents.
xvii) All partnership interests or other ownership interest
in SSBP and SSPG have been duly and validly authorized, and are owned of
record, to the best of my knowledge after due inquiry, beneficially by SSBP,
SSPC and Magma, and, to the best of my knowledge after due
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inquiry, there are no security interests, claims, liens, encumbrances or
adverse interests of any nature on the partnership interests in SSBP and SSPG
except for the liens contemplated by the Partnership Interest Pledge Agreement
and the other Financing Documents. To the best of my knowledge after due
inquiry, there are no outstanding subscriptions, warrants, conversion rights,
calls, options, rights, commitments or agreements by which SSBP, SSPG, SSPC
and Magma is bound calling for the issuance of ownership interests in SSBP and
SSPG except as contemplated by the Financing Documents.
xviii) All the outstanding shares of common stock (par value
$.01 per share), of the Funding Corporation, Fish Lake, VPC, CEOC and SSRC
have been duly authorized and validly issued, are fully paid, non-assessable
and, to the best of my knowledge after due inquiry, are not subject to any
preemptive or similar rights and are owned by Magma and the Funding
Corporation, free and clear of any security interest, claim, lien or
encumbrance, except for the liens contemplated by the Financing Documents, and
all such shares have been issued in accordance with applicable federal and
state securities laws. To the best of my knowledge after due inquiry, there
are no outstanding subscriptions, warrants, conversion rights, calls, options,
rights, commitments or agreements by which the Funding Corporation, Fish Lake,
VPC, CEOC and SSRC is bound calling for the issuance of shares of common stock
of the Funding Corporation, Fish Lake, VPC, CEOC and SSRC or for the issuance
of any securities convertible into shares of common stock of the Funding
Corporation, Fish Lake, VPC, CEOC and SSRC except as contemplated by the
Financing Documents.
xix) All partnership interests or other ownership interests
in Vulcan have been duly and validly authorized, and are owned of record, to
the best of my knowledge after due inquiry, beneficially by VPC and
BN/Geothermal and, to the best of my knowledge after due inquiry, there are no
security interests, claims, liens, encumbrances or adverse interests of any
nature on the partnership interests in Vulcan except for the liens
contemplated by the Partnership Interest Pledge Agreement and the other
Financing Documents. To the best of my knowledge after due inquiry, there are
no outstanding subscriptions, warrants, conversion rights, calls, options,
rights, commitments or agreements by which VPC, BN/Geothermal and Vulcan is
bound calling for the issuance of ownership interests in Vulcan except as
contemplated by the Financing Documents.
xx) All the outstanding shares of common stock (par value
$.01 per share), of BN/Geothermal have been duly authorized and validly
issued, are fully paid, non-assessable and, to the best of my knowledge after
due inquiry, are not subject to any preemptive or similar rights and are owned
by VPC, free and clear of any security interest, claim, lien or encumbrance,
except for the liens contemplated by the Financing Documents, and all such
shares have been issued in accordance with applicable federal and state
securities laws. To the best of my knowledge after due inquiry, there are no
outstanding subscriptions,
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warrants, conversion rights, calls, options, rights, commitments or agreements
by which BN/Geothermal is bound calling for the issuance of shares of common
stock of BN/Geothermal or for the issuance of any securities convertible into
shares of common stock of BN/Geothermal except as contemplated by the
Financing Documents.
xxi) All partnership interests or other ownership interests
in Leathers, Elmore and Del Ranch have been duly and validly authorized, and
are owned of record, to the best of my knowledge after due inquiry,
beneficially by CEOC, Niguel, Conejo, San Felipe and Magma, and, to the best
of my knowledge after due inquiry, there are no security interests, claims,
liens, encumbrances or adverse interests of any nature on the partnership
interests in Leathers, Elmore and Del Ranch except for the liens contemplated
by the Partnership Interest Pledge Agreement and the other Financing
Documents. To the best of my knowledge after due inquiry, there are no
outstanding subscriptions, warrants, conversion rights, calls, options,
rights, commitments or agreements by which Leathers, Elmore, Del Ranch, CEOC,
Niguel, Conejo, San Felipe and Magma is bound calling for the issuance of
ownership interests in Leathers, Elmore, and Del Ranch except as contemplated
by the Financing Documents.
xxii) All the outstanding shares of common stock (par value
$.01 per share), of Niguel, Conejo and San Felipe have been duly authorized
and validly issued, are fully paid, non-assessable and, to the best of my
knowledge after due inquiry, are not subject to any preemptive or similar
rights and are owned by CEOC free and clear of any security interest, claim,
lien or encumbrance, except for the liens contemplated by the Financing
Documents, and all such shares have been issued in accordance with applicable
federal and state securities laws. To the best of my knowledge after due
inquiry, there are no outstanding subscriptions, warrants, conversion rights,
calls, options, rights, commitments or agreements by which Niguel, Conejo and
San Felipe is bound calling for the issuance of shares of common stock of
Niguel, Conejo and San Felipe or for the issuance of any securities
convertible into shares of common stock of Niguel, Conejo and San Felipe
except as contemplated by the Financing Documents.
xxiii) Each UCC Financing Statement is in appropriate form
for filing in the Office of the Secretary of State of the State of Nebraska.
Upon the proper filing of each such UCC Financing Statement in the Office of
the Secretary of State of the State of Nebraska, the security interest in
favor of the Collateral Agent on behalf of and for the benefit of the Secured
Parties and the Funding Corporation in the Collateral described in such
financing statement which is subject to Article 9 of the Nebraska Uniform
Commercial Code will be perfected to the extent a security interest in such
Collateral can be perfected by filing a financing statement under the
provisions of the UCC. For purposes of this opinion, the General Counsel of
the Funding Corporation and the Guarantors may rely on the opinion of the
assistant general counsel of the Funding Corporation and the Guarantors.
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xxiv) To the best of my knowledge after due inquiry, except
as set forth in the Offering Circular, there are no pending or threatened
legal or governmental actions, suits or proceedings against or involving the
Funding Corporation or the Guarantors of any of their respective properties,
(i) of a character required to be disclosed in the Offering Circular which is
not adequately disclosed in the Offering Circular or (ii) that if determined
adversely to any such party, is reasonably likely to have, individually or in
the aggregate, a material adverse effect on the financial condition, business
or results of operations of the Funding Corporation and the Guarantors, taken
as a whole, or on the ability of the Funding Corporation or the Guarantors to
perform their respective material obligations under the Purchase Agreement,
the Financing Documents or the Project Documents.
xxv) Except as disclosed in the Offering Circular, the
Funding Corporation and each Guarantor (i) has obtained each license, permit,
certificate, franchise or other governmental authorization which is material
to the ownership of their properties or to the conduct of their businesses as
described in the Offering Circular and (ii) is in compliance with all terms
and conditions of such license, permit certificate, franchise or other
governmental authorization, except (x) in either case, where the failure to do
so is not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the financial condition, business or results of
operations of the Funding Corporation and the Guarantors, taken as a whole,
(y) permits, consents and approvals that may be required for future drilling
or operating activities which are ordinarily deemed to be ministerial in
nature and which are anticipated to be obtained in the ordinary course, and
(z) permits, consents and approvals for development or construction activities
which have not yet been obtained but which have been or will be applied for in
the course of development or construction and which are anticipated to be
obtained in the ordinary course.
xxvi) Neither the Funding Corporation nor any of the
Guarantors is, and neither such party owns or controls or, to the best of such
counsel's knowledge, is owned or controlled by an "investment company" that is
or is required to be registered under Section 8 of the Investment Company Act
of 1940, as amended.
xxvii) There are no mortgage taxes or filing fees payable to
the State of Nebraska or any of its political subdivisions as a consequence of
the execution or delivery of the Purchase Agreement, the Consents and/or the
Financing Documents and the Project Documents entered into on or about the
Closing Date (including, without limitation, all amendments, modifications or
supplements thereto) or the creation of the indebtedness evidenced or secured
by any of the Financing Documents entered into on or about the Closing Date or
the filing or recording of any of the Purchase Agreement, the Consents and/or
the Financing Documents and the Project Documents entered into on or about the
Closing Date (including, without limitation, all
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amendments, modifications or supplements thereto), except (i) normal filing
fees payable to the Secretary of State of the State of Nebraska; and (ii) any
fee or charge payable to any entity whose services may have been used to
assist in such filing and recordation. We express no opinion, however, with
respect to any income, franchise, sales, withholding, business license or
other tax that may result from the transactions contemplated by the Purchase
Agreement, the Consents and/or the Financing Documents and the Project
Documents entered into on or about the Closing Date or the performance of the
obligations described therein, including the payments of the indebtedness
evidenced by the Financing Documents entered into on or about the Closing
Date. For purposes of this opinion, the General Counsel of the Funding
Corporation and the Guarantors may rely on the opinion of the assistant
general counsel of the Funding Corporation and the Guarantors.
xxviii) Such counsel has participated in conferences with
representatives of the Funding Corporation and the Guarantors, some of which
have been attended by the Purchaser and its counsel, at which conferences the
contents of the Preliminary Offering Circular and the Offering Circular and
related matters were discussed, and, although such counsel has not
independently checked or verified and is not passing upon and assumes no
responsibility for the factual accuracy, completeness or fairness of the
statements contained in the Offering Circular, based on the foregoing, no
facts have come to such counsel's attention which cause such counsel to
believe that (except for the financial statements, related schedules and other
financial and statistical information and expert's reports contained therein
or omitted therefrom as to all of which such counsel does not express any
belief) the Offering Circular, as of the date of the Offering Circular and the
Closing Date, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
The Trustee, for the benefit of the Holders of the
Securities, may rely on my opinion dated July 21, 1995 issued in connection
with the initial sale of the Series A Securities, the Series B Securities and
the Series C Securities, it being acknowledged that such opinion is rendered
only as of the date hereof.
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