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EXHIBIT 10.2
PURCHASE AGREEMENT
dated as of March 6, 1998
Between
COGENTRIX ENERGY, INC.
and
BECHTEL GENERATING COMPANY, INC.
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TABLE OF CONTENTS
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PAGE
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ARTICLE I. PURCHASE AND SALE OF ACQUIRED INTERESTS 2
1.1. Transfer of Acquired Interests. 2
1.2. Purchase Price. 2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER 6
2.1. Organization, Qualification and Corporate Power. 6
2.2. Authorization; No Conflict. 7
2.3. Validity. 8
2.4. Capital Stock and Partnership Interests. 8
2.5. Financial Statements. 10
2.6. Litigation; Compliance with Law. 12
2.7. Tax Matters 13
2.8. Material Agreements. 15
2.9. Consents and Approvals. 15
2.10. Qualifying Facility; EWG. 16
2.11. Brokers. 16
2.12. Labor Matters and ERISA. 17
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2.13. Events Subsequent to December 31, 1997. 17
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER 19
3.1. Organization and Corporate Power. 19
3.2. Authorization of Agreement. Etc. 19
3.3. Validity. 19
3.4. Public Utility Holding Company. 20
3.5. PURPA. 20
3.6. Consents and Approvals. 21
3.7. Brokers. 21
3.8. Tax Matters. 22
3.9. Availability of Funds. 22
ARTICLE IV. ACCESS; ADDITIONAL AGREEMENTS 22
4.1. Access to Information: Continuing Disclosure. 22
4.2. Antitrust Notification. 23
4.3. Further Assurances. 24
4.4. Certain Tax Matters. 24
4.5. Regular Course of Business. 26
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ARTICLE V. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS 27
5.1. No Injunction. 27
5.2. Representations and Warranties. 27
5.3. Performance. 28
5.4. Approvals and Filings. 28
5.5. Opinion of Counsel. 28
5.6. Proceedings; Additional Agreements. 28
5.7. Closing Documents. 29
5.8. Nonforeign Affidavit. 29
5.9. Regular Course of Business. 29
5.10. Certain Dispositions. 29
ARTICLE VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER 29
6.1. No Injunction. 30
6.2. Representations and Warranties. 30
6.3. Performance. 30
6.4. Approvals and Filings. 30
6.5. Opinion of Counsel. 31
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6.6. Proceedings; Additional Agreements. 31
6.7. Closing Documents. 31
ARTICLE VII. CLOSING 31
7.1. Time and Place. 31
7.2. Payment. 32
7.3. First Closing; Additional Closings. 32
ARTICLE VIII. TERMINATION AND ABANDONMENT 34
8.1. Methods of Termination. 34
8.2. Procedure Upon Termination and Consequences. 35
ARTICLE IX. SURVIVAL, INDEMNIFICATION AND OTHER MATTERS 36
9.1. Survival. 36
9.2. Agreement to Indemnify. 37
9.3. Claims for Indemnification. 39
9.4. Defense of Claims. 39
9.5. Limitation on Indemnification. 40
9.6. Indemnification for Taxes. 41
9.7. Cedar Bay Indemnity. 42
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ARTICLE X. MISCELLANEOUS 44
10.1. Amendment and Modification 44
10.2. Waiver of Compliance 44
10.3. Notices. 45
10.4. Binding Nature: Assignment. 46
10.5. Entire Agreement. 47
10.6. Expenses. 48
10.7. Press Releases and Announcements; Disclosure. 48
10.8. Acknowledgment. 48
10.9. Disclaimer Regarding Assets. 50
10.10. Governing Law. 51
10.11. Counterparts. 51
10.12. Interpretation. 51
10.13. ESI Amount Reimbursement. 51
ARTICLE XI. CERTAIN DEFINITIONS 52
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EXHIBITS AND SCHEDULES
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Exhibit 1 - Acquired Interests
Exhibit 2 - Holdback Partnerships
Exhibit 3 - Pending Transactions
Schedule 2.1(a) - Jurisdictions of Incorporation
Schedule 2.1(b) - Subsidiaries
Schedule 2.2 - Conflicts
Schedule 2.4 - Capital Stock and Partnership Interests
Schedule 2.5 - Financial Statements
Schedule 2.6 - Litigation; Compliance with Law
Schedule 2.7(b) - Tax Matters
Schedule 2.7(c) - Adjustments to Tax Liability
Schedule 2.8 - Material Agreements
Schedule 2.9 - Consents and Approvals
Schedule 2.12 - Labor Matters and ERISA
Schedule 2.13 - Events Subsequent to 1997
Schedule 4.4(b) - Beale Generating Company Tax Sharing Agreement
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Schedule 5.4 - Approvals and Filings
Schedule 5.5 - Opinion of Seller's Counsel
Schedule 5.6 - Additional Agreements
Schedule 6.4 - Approvals and Filings
Schedule 6.5 - Opinion of Buyer's Counsel
Schedule 6.6 - Additional Agreements
Schedule 7.3 - Asset Value
Schedule 10.8 - Pending Power Marketing Transactions
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Purchase Agreement
This Purchase Agreement, dated as of March 6, 1998 (this "Agreement")
between Cogentrix Energy, Inc., a North Carolina corporation ("Buyer"), and
Bechtel Generating Company, Inc., a Delaware corporation ("BGCI" or "Seller").
W I T N E S S E T H:
WHEREAS, the entities identified as Transferors on Exhibit I hereto (the
"Transferors") own certain interests in entities identified as Transferred
Entities on Exhibit I hereto (the "Transferred Entities");
WHEREAS, the Transferred Entities directly or indirectly own certain
interests in one or more of the electric power generation projects and the
natural gas pipeline (such projects and pipeline collectively, the "Projects")
identified on Exhibit I hereto;
WHEREAS, each of the Transferors is either BGCI or an indirect or direct
wholly-owned Subsidiary of BGCI;
WHEREAS, Buyer desires to purchase from the Transferors, and Seller
desires to, and to cause the other Transferors to, transfer to Buyer, subject
to the terms and conditions of this Agreement, all of the outstanding shares
of stock in the Transferred Entities that are corporations (the "Stock
Interests") and certain partnership interests in the Transferred Entities that
are partnerships (the "Partnership Interests" and, together with the Stock
Interests, the "Acquired Interests") that are owned by the Transferors and
identified on Exhibit I hereto.
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NOW THEREFORE, IT IS AGREED:
ARTICLE I.
PURCHASE AND SALE OF ACQUIRED INTERESTS
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1.1. Transfer of Acquired Interests. Upon the terms and subject to
the conditions contained herein, on the Closing Date Seller shall, and shall
cause each other Transferor to, sell, convey, transfer, assign and deliver to
Buyer, and Buyer shall purchase from each Transferor, the Acquired Interests
owned by such Transferor free and clear of any liens, options, charges,
restrictions, claims or encumbrances of any nature, except for (x) encumbrances
set forth on Schedule 2.4 hereto, (y) in the case of partnership interests,
restrictions or encumbrances arising under the agreement creating such interest
and (z) restrictions or encumbrances created by or at the behest of Buyer.
1.2. Purchase Price.(a) The purchase price (the "Purchase Price")
for the Acquired Interests will be [xxx] Dollars ($[xxx]) plus or minus the
Net Unrestricted Cash Differential plus, if applicable, the amount payable by
Buyer pursuant to Section 1.2(d).
(b) Subject to Section 7.3, no later than 2 Business Days prior to
the Closing, Seller shall deliver to Buyer a certificate (the "Closing
Adjustment Certificate") setting forth (i) the amount of Unrestricted Cash
for each Project Partnership and Aggregate Unrestricted Cash, (ii) each 1998
Distribution and Aggregate 1998 Distributions, (iii) each 1998 Contribution
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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and Aggregate 1998 Contributions, (iv) Aggregate Net Distributions, and
(v) the Net Unrestricted Cash Differential. Concurrently with the delivery
of the Closing Adjustment Certificate, Seller shall deliver or make available
to Buyer the records used by Seller in preparing such certificate. The
Purchase Price payable at Closing will be as set forth in Section 1.2(a) based
on Seller's determination of the Net Unrestricted Cash Differential as set
forth in the Closing Adjustment Certificate. If any 1998 Distributions or
1998 Contributions are made subsequent to the date of the Closing Adjustment
Certificate, Seller shall promptly deliver to Buyer a certificate (the
"Subsequent Certificate") setting forth the revised calculations. The
information set forth in any Subsequent Certificate shall be taken into
account in the final determination of the Net Unrestricted Cash Differential
pursuant to Section 1.2(c), so that an appropriate adjustment may be made.
(c) If Buyer in good faith disagrees with Seller's determination of
the Net Unrestricted Cash Differential as set forth in the Closing Adjustment
Certificate (as modified by any Subsequent Certificate), Buyer shall deliver
to Seller within 10 Business Days of receipt of Seller's certificate a notice
setting forth the basis for such disagreement, and Buyer and Seller shall in
good faith attempt to resolve any such disagreement. If Buyer and Seller
cannot resolve their disagreement within 15 days of Seller's receipt of
Buyer's notice of disagreement, Buyer and Seller shall mutually retain Arthur
Andersen LLP to determine the Net Unrestricted Cash Differential. Buyer and
Seller shall cause Arthur Andersen LLP (whose fee shall be borne 50% by each
of Buyer and Seller) to deliver its determination within 20 Business Days of
its retention, and the determination by Arthur Andersen LLP of such Net
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Unrestricted Cash Differential shall be final and binding on Buyer and Seller
absent manifest error (such as mathematical, computational or other mechanical
errors not involving judgment or discretion). If the Net Unrestricted Cash
Differential determined by Arthur Andersen LLP or as agreed upon by Buyer and
Seller (the "Final Net Unrestricted Cash Differential") is different from the
Net Unrestricted Cash Differential as set forth in the Closing Adjustment
Certificate, then (i) Seller shall refund to Buyer the difference if the
Purchase Price, determined by using the Final Net Unrestricted Cash
Differential, is less than the Purchase Price paid at Closing pursuant to
Section 1.2(b), or (ii) Buyer shall pay to Seller the difference if the
Purchase Price, determined by using the Final Net Unrestricted Cash
Differential, is greater than the Purchase Price paid at Closing pursuant to
Section 1.2(b), in each case within two (2) Business Days of such
determination or agreement, by wire transfer of immediately available funds
to an account designated by the recipient with interest on the final Net
Unrestricted Cash Differential from the Closing Date through the date of
payment at a rate per annum, which shall in no event be compounded, equal to
the offered rate as of each date the interest rate is set (rounded upwards,
if necessary, to the next higher 1/100th of 1%) which appears on the Telerate
Page 3750, British Bankers Association Interest Settlement Rates (or such
other system for the purpose of displaying rates of leading reference banks in
the London interbank market that replaces such system), plus forty (40) basis
points. The interest rate shall be set as of the Closing Date and as of each
six-month anniversary of the Closing Date (or the Business Day thereafter in
the case of any such anniversary that is not a Business Day).
(d) If a Logan Refinancing occurs prior to a Closing, then the
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Purchase Price shall be increased by $[xxx]. If a Logan Refinancing
occurs after a Closing, then within five (5) Business Days after Buyer has
received written notice of the occurrence of the Logan Refinancing Date, Buyer
shall pay Seller the Logan Refinancing Amount. Except as otherwise provided
in this Section 1.2(d), no provision in this Agreement shall be construed to
limit or affect the ability of the parties to the Refinancing Agreement to
determine whether or not to pursue the Logan Refinancing. Neither the
occurrence nor failure to occur of the Logan Refinancing or of any notice or
election relating thereto pursuant to the Logan Refinancing Agreement shall
constitute a condition to Closing pursuant to this Agreement. The sole
consequence of the occurrence or non-occurrence of the Logan Refinancing shall
be Buyer's obligation to pay the Logan Refinancing Amount or the increased
Purchase Price pursuant to the first sentence of this Section 1.2(d), and
neither party shall have any liability or obligation to the other party as a
result of any failure of the Logan Refinancing to occur.
If Atlantic City Electric Company initiates the refinancing and power
purchase agreement restructuring process pursuant to the Logan Refinancing
Agreement prior to the Closing, Seller will cause Aspen Power Corporation to
consult with Buyer with respect to the decisions Aspen Power Corporation will
make, in connection with such process, as a partner in the Logan Project.
Buyer shall have the right to consent to any material decision which Aspen
Power Corporation makes in connection with such process as a partner in the
Logan Project; provided that Buyer's consent shall not be withheld for any
decision by Aspen Power Corporation which (i) is consistent with the
obligations of the Logan Project under the Logan Refinancing Agreement, and
(ii) if alternative courses of action are available, each of which provides
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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substantially similar benefits and costs to the Logan Project, results in the
selection of the alternative which favors the longest average life for the
taxable indebtedness proposed for such refinancing. Aspen Power Corporation
may proceed with its decision without Buyer's consent, and the sole effect of
such decision with respect to this Agreement will be that Buyer's obligation
to pay any amount pursuant to the first two sentences of this Section 1.2.(d)
shall be extinguished.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
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Except as otherwise disclosed in this Agreement, or in any Schedule
hereto (each such Schedule relating to the corresponding Section of this
Agreement, unless otherwise provided in this Agreement or in any Schedule),
Seller hereby represents and warrants to Buyer, as of the date hereof (except
where such representation or warranty is expressly made as of another specific
date), as follows:
2.1. Organization, Qualification and Corporate Power. (a) Each of
BGCI and each of the other Transferors is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, as set forth on Schedule 2.1(a), and is duly licensed or
qualified to transact business as a foreign corporation in each jurisdiction
in which the nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or qualification,
except where the failure to be so licensed or qualified would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
described in Schedule 2.9, each of BGCI and each of the other Transferors has
full corporate power and authority to own, lease or otherwise hold its
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properties and assets and to carry on its business as now conducted and to
execute, deliver and perform this Agreement to the extent it is a party hereto
or to perform the actions which BGCI is required to cause such Transferor to
perform hereunder.
(b) Schedule 2.1(b) hereto contains a list of all Subsidiaries of each
Transferred Entity. Each Transferred Entity and each Subsidiary of a
Transferred Entity, in each case which is a corporation, is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, and each Transferred Entity which is a partnership is duly
formed, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each Transferred Entity and each Subsidiary
thereof is duly licensed or qualified to transact business as a foreign
corporation or partnership and is in good standing in each jurisdiction in
which the nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or qualification,
except where the failure to be so licensed or qualified and in good standing
would not, individually or in the aggregate, have a Material Adverse Effect.
Each Transferred Entity and Subsidiary thereof has the requisite corporate or
partnership power and authority to own, lease or otherwise hold its properties
and assets and to carry on its business as now conducted.
2.2. Authorization; No Conflict.(a) The execution, delivery and
performance by BGCI of this Agreement and the consummation by BGCI and each of
the other Transferors of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of BGCI, and at the
Closing will be duly authorized by all requisite corporate action on the part
of the Transferors.
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(b) Except as set forth in Schedule 2.2, the execution, delivery and
performance by BGCI of this Agreement and the consummation by BGCI and each of
the other Transferors of the transactions contemplated hereby will not
(i) violate any law or regulation applicable to BGCI, any other Transferor,
any Transferred Entity or any Subsidiary of any Transferred Entity, or any
order of any court or governmental agency or authority having jurisdiction
over BGCI, any other Transferor, any Transferred Entity or any Subsidiary of
any Transferred Entity which violation would have a Material Adverse Effect,
(ii) violate or conflict with, or constitute (with due notice or lapse of time
or both) a default under, any Material Agreement or (iii) result in the
creation or imposition of any Material Encumbrance.
2.3. Validity.(a) This Agreement has been duly executed and delivered
by BGCI and constitutes the valid and binding obligation of BGCI, enforceable
against BGCI in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereinafter in effect relating to creditors' rights generally, and
general equitable principles (whether considered in a proceeding in equity or
at law).
(b) At the Closing, each Additional Agreement will be duly executed and
delivered by BGCI or the Transferor who is a party thereto and will constitute
the valid and binding obligation of BGCI or the Transferor who is a party
thereto, enforceable against BGCI or such Transferor in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
relating to creditors' rights generally, and general equitable principles
(whether considered in a proceeding in equity or at law).
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2.4. Capital Stock and Partnership Interests.(a) The authorized,
issued and outstanding capital stock of each Transferred Entity that is a
corporation and each Subsidiary thereof are as set forth in Schedule 2.4
hereto. The existing partnership interests of each Transferred Entity that
is a partnership are as set forth in the applicable partnership agreement, as
amended, listed in Schedule 2.4, as the rights, obligations and interests of
the partners in any such partnership may be affected by any Material
Agreement which is indicated on Schedule 2.8 as relating to such Project
Partnership; and each such partnership agreement has not been further amended
and is in full force and effect, except for any amendments contemplated in
connection with the Closing. To Seller's knowledge, the stockholders of
record or partners of each Transferred Entity or Subsidiary thereof are as
set forth in Schedule 2.4. Except as set forth in Schedule 2.4, (i) there
is no authorized or outstanding subscription, warrant, option, convertible
security, or other right (contingent or other) to purchase or otherwise
acquire from a Transferred Entity which is wholly-owned, directly or
indirectly, by Seller or from any Subsidiary of any such Transferred Entity,
equity securities or partnership interests of any such Transferred Entity or
Subsidiary, (ii) there is no commitment on the part of any Transferred Entity
which is wholly-owned, directly or indirectly, by Seller or on the part of
any Subsidiary of any such Transferred Entity, to issue shares,
subscriptions, warrants, options, convertible securities, partnership
interests or other such rights, (iii) no equity securities or partnership
interests of any Transferred Entity which is wholly-owned, directly or
indirectly, by Seller or of any Subsidiary of any such Transferred Entity,
are reserved for issuance for any such purpose and (iv) with respect
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to Transferred Entities which are not wholly-owned, directly or indirectly,
by Seller and Subsidiaries of such Transferred Entities, neither Seller nor
any Subsidiary thereof has created or committed to create any subscription,
warrant, option, convertible security, commitment, other right or reservation
for issuance referred to in clauses (i) through (iii) above and, to Seller's
knowledge, none exists. Except as set forth in Schedule 2.4, no Transferred
Entity which is wholly-owned, directly or indirectly, by Seller and no
Subsidiary of any such Transferred Entity, has any obligation (contingent or
other) to purchase, redeem or otherwise acquire any of its equity securities
and, with respect to Transferred Entities which are not wholly-owned, directly
or indirectly, by Seller and Subsidiaries of such Transferred Entities,
neither Seller nor any Subsidiary thereof has created any such obligation and,
to Seller's knowledge, none exists. Except for this Agreement and as set
forth in Schedule 2.4, there is no voting trust or agreement, stockholders'
agreement, pledge agreement, buy-sell agreement, right of first refusal,
preemptive right or proxy relating to any securities of any Transferred Entity
which is wholly-owned, directly or indirectly, by Seller or to any securities
of any Subsidiary of any such Transferred Entity, or to which any such
Transferred Entity or Subsidiary is a party and, with respect to Transferred
Entities which are not wholly-owned, directly or indirectly, by Seller,
neither Seller nor any Subsidiary thereof has created any such voting trust,
agreement, right or proxy and, to Seller's knowledge, none exists.
(b) Each of the Stock Interests has been duly authorized and validly
issued and is fully paid and nonassessable and, except as disclosed on
Schedule 2.4 hereto, each of the Stock Interests is owned beneficially and of
record, and each of the Partnership Interests is owned, by the applicable
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Transferor thereof as indicated on Schedule 2.4. On the Closing Date, Buyer
will own the Acquired Interests free and clear of any liens, options, charges,
restrictions, claims or encumbrances of any nature, except for
(x) encumbrances set forth on Schedule 2.4 hereto, (y) in the case of
partnership interests, restrictions or encumbrances arising under the
agreement creating such interest and (z) restrictions or encumbrances created
by or at the behest of Buyer.
2.5. Financial Statements. Attached as Schedule 2.5 hereto are
(i) a consolidated audited balance sheet of each Project Partnership for each
of the years ended December 31, 1996 and 1995 in which such Project
Partnership existed and had a full year of operations, (ii) a consolidated
unaudited balance sheet of each Project Partnership and Transferred Entity for
the 12 months ended December 31, 1997 and (iii) if the Transferred Entity
with respect to any Project is not the Project Partnership, a consolidated
unaudited balance sheet of such Transferred Entity for each of the years
ended December 31, 1996 and 1995 in which such Transferred Entity existed
and had a full year of operations, and (iv) in each case specified in clauses
(i), (ii) and (iii) above, the related consolidated statements of income and
cashflows of such entities (audited in the case of each financial statement
of a Project Partnership for a period ending December 31 1996 or 1995) (such
statements specified in clauses (i), (ii), (iii) and (iv), together with the
related notes thereto, collectively, the "Financial Statements"). To
Seller's knowledge, the Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied, and
fairly present in all material respects the financial condition of such
entities and their consolidated Subsidiaries as of the dates thereof and the
results of their consolidated operations for the periods covered thereby
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subject, in the case of Financial Statements for the 12 months ended December
31, 1997, to any changes or additions contained in the audited financial
statements for such period or the notes thereto. To Seller's knowledge, no
Transferred Entity or Project Partnership has any liability or obligation
(whether accrued, absolute, contingent or otherwise) which, individually or
in the aggregate, is material to such entity and its consolidated
Subsidiaries, taken as a whole, other than (i) liabilities reflected (but
only to the extent so reflected) or reserved against in the Financial
Statements, (ii) liabilities or obligations that have arisen since December
31, 1997 in the ordinary course of business, none of which, individually or
in the aggregate, would have a Material Adverse Effect, (iii) liabilities or
obligations disclosed herein or in any Schedule hereto, or (iv) liabilities
or obligations incurred in accordance with the terms of this Agreement or
any Material Agreement.
2.6. Litigation; Compliance with Law. (a) Schedule 2.6 lists, to
BGCI's knowledge, each action, suit, claim, proceeding (including, but not
limited to, any arbitration proceeding) or investigation pending or
threatened against any Transferred Entity, Project Partnership or Subsidiary
of any such entity, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which, if determined adversely to
such Transferred Entity, Project Partnership or Subsidiary of any such entity
would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. For purposes of the preceding sentence, no
representation is made with respect to (i) any proceeding before any
regulatory authority initiated by any such Transferred Entity, Project
Partnership or Subsidiary of any such entity in which such Transferred
Entity, Project Partnership or Subsidiary of any such entity is an applicant
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for any governmental permit, approval, certificate, authorization or license,
to the extent the matters considered in such proceeding are limited to the
approval or authority requested in such application, or (ii) proceedings
initiated by a third party in which such Transferred Entity, Project
Partnership or Subsidiary of any such entity is an intervener, and the
subject matter of such intervention is of general applicability to
similarly-situated parties. To Seller's knowledge, no Transferred Entity,
Project Partnership or Subsidiary of any such entity is in default with
respect to any order, writ, injunction or decree known to or served upon
such entity of any court or of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, except for defaults which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) To Seller's knowledge, each Transferred Entity, Project Partnership
and Subsidiary of any such entity is in compliance with all laws, rules,
regulations and orders applicable to its business, except (i) where the
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect, and (ii) as set forth in Schedule 2.6. To Seller's
knowledge, each Transferred Entity, Project Partnership and Subsidiary of any
such entity has all permits, licenses and other governmental authorizations
necessary to own, lease or otherwise hold its properties and assets and to
conduct its business as currently conducted, except (i) where the failure to
obtain the same would not, individually or in the aggregate, have a Material
Adverse Effect, or (ii) as set forth in Schedule 2.6.
2.7. Tax Matters (a) There have been properly completed and filed
on a timely basis and in correct form all Tax Returns required to be filed by
any Taxpayer on or prior to the date hereof. As of the time of filing, the
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foregoing Returns were true and complete in all material respects.
(b) With respect to all amounts in respect of Taxes imposed on any
Taxpayer with respect to all taxable periods or portions of periods ending on
or before the Closing Date, all applicable Tax laws have been complied with in
all material respects, and all such amounts required to be paid to taxing
authorities or others on or before the date hereof have been paid, except such
Taxes, if any, as are set forth in Schedule 2.7(b) that are being contested in
good faith.
(c) Except as set forth on Schedule 2.7(c), no adjustments to the Tax
liability of any Taxpayer have been proposed in writing (and are currently
pending) by any taxing authority in connection with any Tax Return of any
Taxpayer. All deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or are fully reflected as a liability in
the financial statements of the applicable Taxpayer, or are being contested
in good faith and are described in Schedule 2.7(c).
(d) There are no liens for Taxes (other than for current Taxes not yet
due and payable) on any of the assets of any Transferor or Transferred Entity.
(e) Except for (i) that certain Tax Sharing Agreement dated March 31,
1993 by and between Cedar Power Corporation, a Delaware corporation, and Cedar
I Power Corporation, a Delaware corporation (the "Cedar Power Tax Sharing
Agreement"), and that certain Beale Generating Company Federal Income Tax
Sharing Agreement dated September 19, 1997 by and between PG&E Generating
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Company, a California corporation, Beale Generating Company, a Delaware
corporation, and Bechtel Generating Company, Inc., a Delaware corporation (the
"Beale Tax Sharing Agreement"), none of the Taxpayers is currently a party to
any tax sharing or tax allocation agreement.
(f) BGCI is the common parent of the affiliated group within the
meaning of Section 1504(a) of the Code that includes each of the Acquired 338
Subsidiaries, and BGCI will not be a target corporation within the meaning of
Section 338 of the Code for the taxable year that includes the Closing Date.
BGCI is eligible to make an election under Section 338(h)(10) of the Code
(and any comparable election under state, local or foreign tax law) with
respect to each Acquired 338 Subsidiary.
(g) Each of the Holdback Partnerships and each of the partnerships in
which any Acquired 338 Subsidiary is a partner has in effect an election
pursuant to Section 754 of the Code or will make such an election on a timely
basis effective for the tax period that includes the Closing Date.
2.8. Material Agreements. To Seller's knowledge, all of the material
notes, bonds, mortgages, indentures, licenses, leases, contracts and other
instruments and obligations ("Material Agreements") to which any Transferred
Entity, Project Partnership or Subsidiary of any such entity is a party or
by which any of them or any of their respective property may be bound as of
the date hereof are set forth in Schedule 2.8. To Seller's knowledge, except
as otherwise set forth in Schedule 2.8: (i) each such Material Agreement is
valid, binding and in full force and effect, and is enforceable by such
Transferred Entity, Project Partnership or Subsidiary in accordance with its
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terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
relating to creditors' rights generally, and general equitable principles
(whether considered in a proceeding in equity or at law), and (ii) each
Transferred Entity, Project Partnership and Subsidiary of any such entity and
each other party thereto, has performed all the obligations required to be
performed by it to date, has received no notice of default and is not in
default (with due notice or lapse of time or both) under any Material Agreement
to which it is a party, except for failures to perform and defaults which
would not, individually or in the aggregate, have a Material Adverse Effect.
2.9. Consents and Approvals. To Seller's knowledge, except as set
forth in Schedule 2.9, no registration or filing with, or consent or approval
of or other action by, any Federal, state or other governmental agency or
instrumentality or any other Person is or will be necessary for the valid
execution, delivery and performance by BGCI or any other Transferor of this
Agreement or the consummation of the transactions contemplated hereby, other
than filings required pursuant to the HSR Act and the rules and regulations
promulgated thereunder, filings or notices of change of ownership which may
be required under applicable federal, state or local law and filings or
approvals which may be required to be made or obtained with respect to
(i) the status of each of the Projects as a "qualifying facility" within the
meaning PURPA and the rules and regulations promulgated thereunder, (ii) the
status of each of the Logan Project, the Selkirk Project and the Pittsfied
Project as an "exempt wholesale generator" within the meaning of the Energy
Policy Act of 1992, as amended, and the rules and regulations promulgated
thereunder, (iii) transfer of Seller's interest in the Logan Project pursuant
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to Section 203 of the Federal Power Act, (iv) notices of change in status with
respect to market based rate tariffs on file with the Federal Energy Regulatory
Commission, and (v) any application to hold an interlocking position required
under Section 305(b) of the Federal Power Act.
2.10. Qualifying Facility; EWG. Immediately prior to the Closing,
(i) each of the Projects which is an electric generating facility satisfies
the requirements to be a "qualifying facility" within the meaning of PURPA and
the rules and regulations promulgated thereunder, and (ii) each of the owners
and/or operators of the Logan Project, the Selkirk Project and the Pittsfied
Project satisfies the requirements to be an "exempt wholesale generator"
within the meaning of the Energy Policy Act of 1992, as amended, the rules and
regulations promulgated thereunder and the implementing precedents.
2.11. Brokers. Neither Seller nor any Transferor nor any Subsidiary
of either has a contract, arrangement or understanding with any investment
banking firm, broker, finder or similar agent with respect to the transactions
contemplated by this Agreement, except for Goldman, Sachs & Co., whose fees
shall be borne by Seller.
2.12. Labor Matters and ERISA. Each Transferred Entity and each of
their respective Subsidiaries is in compliance with the Employee Retirement
Income Security Act of 1974, as amended, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
None of the Transferred Entities or their respective Subsidiaries has any
material obligation with respect to any employee benefits plan, program or
practice other than pursuant to the employee plans and programs described on
Schedule 2.12, and the Transferred Entities and their respective Subsidiaries
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have no liabilities in respect of the matters disclosed on Schedule 2.12 other
than (i) the obligation to pay benefits in the ordinary course, (ii) liabilities
reflected in the Financial Statements and (iii) additional liabilities which in
the aggregate would not have a Material Adverse Effect.
2.13. Events Subsequent to December 31, 1997. Except as set forth
on Schedule 2.13 or as specifically provided for by this Agreement or
consented to or approved by Buyer, since December 31, 1997, to Seller's
knowledge, none of the Transferred Entities or Project Partnerships, and none
of their respective Subsidiaries, has:
(a) incurred or guaranteed any indebtedness for borrowed money (not
including accounts payable and trade payables incurred in the ordinary course
of business), other than (i) indebtedness incurred in accordance with any
Material Agreement, and (ii) indebtedness which does not, individually or in
the aggregate, have a Material Adverse Effect;
(b) acquired or disposed of, in either case in any manner, any
material assets or properties, other than (i) acquisitions and dispositions in
the ordinary course of business, (ii) dispositions of obsolete or surplus
assets, (iii) dispositions and acquisitions in connection with the normal
repair and/or replacement of assets or properties, or property losses covered
by insurance, (iv) acquisitions or dispositions in accordance with any
Material Agreement or (v) acquisitions or dispositions which do not,
individually or in the aggregate, have a Material Adverse Effect;
(c) amended its Certificate of Incorporation, By-Laws, partnership
agreement or governing documents other than as described in Schedule 2.13 and
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other than amendments which do not, individually or in the aggregate, have a
Material Adverse Effect;
(d) acquired or agreed to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof which acquisition, agreement,
merger, consolidation or purchase is material relative to the value of (i) any
of the Principal Projects, in the case of an acquisition, agreement, merger,
consolidation or purchase by the applicable Transferred Entity or Entities,
the applicable Principal Project or any of their respective Subsidiaries, or
(ii) the Projects, taken as a whole;
(e) failed to pay and discharge on a timely basis consistent with
past practices any liabilities which constitute current liabilities under
generally accepted accounting principles, except for (i) liabilities not yet
due, (ii) liabilities which are subject to good faith contest for which
appropriate reserves have been established or (iii) liabilities for which the
failure to pay would not, individually or in the aggregate, have a Material
Adverse Effect;
(f) cancelled any material indebtedness owed to a Transferred Entity
or Project Partnership or waived in an enforceable manner any rights of
substantial value to a Transferred Entity or Project Partnership, except for
any such cancellations or waivers which, individually or in the aggregate, do
not have a Material Adverse Effect; or
(g) entered into any agreement or commitment to take any of the
actions described in clauses (a) through (f) hereof.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller that, as of the date hereof
(except where such representation or warranty is expressly made only as of a
specific date) as follows:
3.1. Organization and Corporate Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of North Carolina. Buyer has the corporate power and authority to execute,
deliver and perform this Agreement.
3.2. Authorization of Agreement. Etc. The execution and delivery
by Buyer of this Agreement, and the performance by Buyer of its obligations
hereunder, have been duly authorized by all requisite corporate action and
will not (i) violate any provision of law, any order of any court or other
agency of government, (ii) conflict with or result in a breach of any
provisions of Buyer's certificate or articles of incorporation or By-Laws,
or (iii) conflict with, result in a violation or breach of or constitute
(with due notice or lapse of time or both) a default under, any material
note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation by which Buyer or any of its assets is bound.
3.3. Validity. This Agreement has been duly executed and delivered
by Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors rights generally, and
general equitable principles (whether considered in a proceeding in equity or
at law).
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3.4. Public Utility Holding Company. Neither Buyer nor any
Permitted Assignee is a "holding company", a "public-utility company" or an
"affiliate" or "subsidiary company" of any of the foregoing within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
3.5. PURPA. Neither Buyer nor any Permitted Assignee is (i) an
"electric utility" or an "electric utility holding company" within the meaning
of PURPA and the rules and regulations promulgated thereunder and the Federal
Energy Regulatory Commission's implementing precedent, or (ii) owned directly
or indirectly by either of the foregoing. Neither Buyer nor any Permitted
Assignee is "primarily engaged in the generation or sale of electric power
(other than electric power solely from cogeneration facilities or small power
production facilities)" within the meaning of PURPA and the rules and
regulations promulgated thereunder and the Federal Energy Regulatory
Commission's implementing precedent. Neither Buyer's nor any Permitted
Assignee's acquisition and ownership of the Acquired Interests on the Closing
Date and any interests in any Holdback Partnerships purchased on the Put
Purchase Date will cause any of the Projects to lose their status as
"qualifying facilities" under PURPA and the rules and regulations thereunder
and the Federal Energy Regulatory Commission's implementing precedent, solely
by virtue of such acquisition and ownership.
3.6. Consents and Approvals. No registration or filing with, or
consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by Buyer of this Agreement and the
transactions contemplated hereby, other than filings required pursuant to
the HSR Act, and the rules and regulations promulgated thereunder, filings
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and notices of change of ownership which may be required under applicable
federal, state or local law and filings or approvals which may be required to
be made or obtained with respect to (i) the status of each of the Projects
as a "qualifying facility" within the meaning PURPA and the rules and
regulations promulgated thereunder, (ii) the status of each of the Logan
Project, the Selkirk Project and the Pittsfied Project as an "exempt
wholesale generator" within the meaning of the Energy Policy Act of 1992, as
amended, and the rules and regulations promulgated thereunder, (iii) transfer
of Seller's interest in the Logan Project pursuant to Section 203 of the
Federal Power Act, (iv) notices of change in status with respect to market
based rate tariffs on file with the Federal Energy Regulatory Commission, and
(v) any application to hold an interlocking position required under Section
305(b) of the Federal Power Act.
3.7. Brokers. Neither Buyer nor any Subsidiary of Buyer has a
contract, arrangement or understanding with any investment banking firm,
broker, finder or similar agent with respect to the transactions contemplated
by this Agreement, except for Salomon Brothers Inc., whose fees shall be borne
by Buyer.
3.8. Tax Matters. Buyer is eligible to make an election under
Section 338(h)(10) of the Code (and any comparable election under state, local
or foreign tax law) with respect to the acquisition of each Acquired 338
Subsidiary.
3.9. Availability of Funds. At the Closing, Buyer will have
sufficient funds to consummate the transactions contemplated hereby.
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ARTICLE IV.
ACCESS; ADDITIONAL AGREEMENTS
-----------------------------
4.1. Access to Information: Continuing Disclosure. Seller agrees
that from the date hereof until the Closing Date, and subject to the terms
of the Confidentiality Agreement (i) upon reasonable notice, Seller shall,
and shall cause each Transferor to, use reasonable efforts to cause each
Transferred Entity and Project Partnership to, provide to the officers,
employees, accountants, counsel and other representatives of Buyer
reasonable access, at reasonable times during normal business hours, to the
employees, properties, books and records of the Transferred Entities and the
Project Partnerships in which they have an interest, as the case may be, and
shall promptly furnish to the same Persons such information as such Persons
may reasonably request; provided, that such access shall be afforded to
Buyer after no less than 24 hours prior notice, and only in such manner so
as not to unreasonably disturb or interfere with the normal operations of
Seller, such Transferor, Transferred Entity or Project Partnership; and
provided, further, that neither Seller nor any such entity shall be required
to take any action that would constitute a waiver of the attorney-client
privilege and Seller need not supply to Buyer any information that Seller is
under a legal obligation not to supply, and (ii) at regular intervals prior to
the Closing Date, or at such other times as Buyer or its representatives shall
reasonably request, Seller shall, and shall cause each Transferor to, use
reasonable efforts to cause each Transferred Entity and Project Partnership
to, consult with Buyer regarding the conduct of the business of the
Transferred Entities and the Projects. All information furnished by Seller,
any Transferor or any Wholly-Owned Transferred Entity hereunder shall be
subject to the terms of the Confidentiality Agreement dated October 24, 1997
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among U.S. Generating Company, Bechtel Enterprises, Inc. and Buyer (the
"Confidentiality Agreement").
4.2. Antitrust Notification. Buyer and Seller will as promptly as
practical, but in no event later than thirty (30) days following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice
(the "DOJ") the Notification and Report Form under the HSR Act, if any,
required in connection with the transactions contemplated hereby and as
promptly as practicable supply any additional information requested in
connection herewith pursuant to the HSR Act. Any such Notification and
Report Form and additional information submitted to the FTC or the DOJ shall
be in substantial compliance with the requirements of the HSR Act. Each of
Buyer and Seller shall furnish to the other such information and assistance
as the other may reasonably request in connection with its preparation of
any filing or submission which is necessary under the HSR Act. Each of
Buyer and Seller shall keep the other apprised of the status of any
communications with, and inquiries or requests for additional information
from, the FTC and the DOJ and shall comply promptly with any such inquiry or
request. Each of Buyer and Seller will use its reasonable best efforts to
obtain the termination or expiration of any applicable waiting period required
under the HSR Act for the consummation of the transactions contemplated
hereby.
4.3. Further Assurances. From time to time, as and when requested
by either party hereto, the other party shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall take,
or cause to be taken, all such further or other actions as such other party
may reasonably deem necessary or desirable to consummate the transactions
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contemplated by this Agreement, including, without limitation, such actions as
are necessary or desirable in connection with obtaining any third party consent
or any regulatory filings (including filings with the Federal Energy Regulatory
Commission) as either party, any Transferor or any Transferred Entity may
undertake in connection herewith.
4.4. Certain Tax Matters. (a) Section 338(h)(10). BGCI, each
other Transferor, and Buyer agree to join in making an election under Section
338(h)(10) of the Code and any corresponding elections permitted under state,
local or foreign law with respect to the acquisition of each Acquired 338
Subsidiary and, if no election may be made pursuant to such state, local or
foreign law under an election corresponding to Code Section 338(h)(10),
elections corresponding to Section 338(a) and 338(g) of the Code. BGCI shall
be responsible for all taxes resulting from or arising out of such election
under Section 338 of the Code. Buyer and BGCI shall exchange completed
executed copies of Internal Revenue Service Form 8023-A, required schedules
thereto, and any similar state, local and foreign forms as soon as practical
after the Closing. Prior to Closing, Seller and Buyer shall use reasonable
efforts to agree to an allocation of the Purchase Price and all other
capitalized costs among the transferred assets (other than stock of the
Acquired 338 Subsidiaries and other than the interests in the Holdback
Partnerships) and the Acquired 338 Subsidiaries' assets (or the assets of
the partnerships in which such Subsidiaries' are partners, as applicable)
and the Holdback Partnerships' assets to be used by both Seller and Buyer
for federal and applicable state income tax reporting purposes; provided,
that such allocation shall be consistent with the allocation set forth on
Schedule 7.3 hereto.
(b) Beale Tax Sharing Agreement. The Beale Tax Sharing Agreement will
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be terminated or modified prior to the Closing Date such that no Transferred
Entity will have any liability under such Agreement after the Closing Date,
including but not limited to liability for amounts in respect of periods (or
portions thereof) ending on or prior to the Closing Date. Simultaneously with
the Closing, Buyer or a Permitted Assignee shall enter into a tax sharing
agreement relating to Beale Generating Company in the form set forth on
Exhibit 4.4(b).
(c) Cedar Bay Tax Sharing Agreement. At and as of Closing, the Cedar
Bay Tax Sharing Agreement shall be terminated, and Buyer or a Permitted
Assignee and Cedar I Power Corporation shall enter into a new tax sharing
agreement on the same terms as the Cedar Bay Tax Sharing Agreement.
(d) Tax Returns. BGCI shall prepare and file (or cause to be prepared
and filed) at its own expense all Tax Returns of the Transferred Entities
(other than the Holdback Partnerships, the returns for which will be prepared
by the tax matters partners thereof) for tax periods ending on or before the
Closing Date. Buyer shall prepare and file (or cause to be prepared and
filed) at its own expense all Tax Returns of the Transferred Entities (other
than the Holdback Partnerships, the returns for which will be prepared by the
tax matters partners thereof) for tax periods ending after the Closing Date,
provided however that with respect to any Tax Return for a period beginning
before the Closing Date and ending after the Closing Date, Buyer shall provide
BGCI with a copy of such Tax Return at least 30 days prior to the due date for
such return and shall obtain BGCI's written consent to the filing of such
returns (which shall not be unreasonably withheld or delayed) prior to the
filing thereof. Each of BGCI and Buyer shall provide the other with such
assistance as may reasonably be required by the other party in connection with
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the preparation of any Tax Return, any audit, or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability, for Taxes, and each will retain until the expiration of the
applicable statute of limitations and provide the other party upon request
with any records or information which may be relevant to such return, audit or
examination. Any information obtained pursuant to this Section 4.4(d) shall
be kept confidential.
(e) Transfer Taxes. All stamp, documentary, transfer and sales taxes
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by Buyer, and Buyer at its own expense shall file, to
the extent required by applicable law, all necessary Tax Returns and other
documentation with respect to all such transfer or sales taxes, and, if
required by applicable law, BGCI shall join the execution of any such Tax
Returns or other documentation.
4.5. Regular Course of Business. Prior to the Closing, except as
set forth on Schedule 2.13, Seller shall, and shall cause its Subsidiaries to,
vote their respective ownership interests in each Transferred Entity and
Project Partnership in a manner consistent with each such Transferred Entity
and Project Partnership conducting its respective business in the ordinary
course consistent with past practice and in accordance with the Material
Agreements to which such Transferred Entity or Project Partnership is a party
or by which it is bound.
ARTICLE V.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
-------------------------------------------
The obligations of Buyer under this Agreement shall be subject to the
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satisfaction (or waiver by Buyer), at or before the Closing, of each of the
following conditions, and Seller shall use reasonable efforts to cause each of
such conditions to be satisfied:
5.1. No Injunction. No Federal or state governmental agency or
authority or political subdivision thereof or Federal or state court of
competent jurisdiction shall have issued any injunction or other order
(whether temporary, preliminary or permanent) which prohibits the
consummation of the transactions contemplated hereby; provided, that the
parties shall use their reasonable efforts to litigate against, and obtain
the lifting of, any such injunction or order.
5.2. Representations and Warranties. The representations and
warranties of Seller contained herein shall be true and correct in all
material respects (provided, however, that any representation or warranty
which refers to "Material Adverse Effect" or otherwise references a concept
of materiality shall be true and correct in all respects) as of the date
hereof and as of the Closing Date (in each case except where such
representation or warranty is expressly made only as of another specific
date) as though such representations and warranties were made at and as of
the Closing Date, except as otherwise contemplated by this Agreement or as
may be specified on amendments to Schedules 2.5 (to the extent that audited
financial statements as of December 31, 1997 and for the year then ended are
available prior to the Closing and such audited financial statements reflect
any modifications to the unaudited financial statements as of and for such
date and year included in Schedule 2.5), 2.6, 2.7, 2.8, 2.12 and 2.13
provided at the Closing; no Material Adverse Effect shall have occurred
since December 31, 1997 (except as disclosed in this Agreement or any
Schedule hereto, but without giving effect to any amendment, other than any
amendment to any Schedule with respect to the dispute underlying the Cedar Bay
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Dispute, to any Schedule permitted by this Section 5.2) and Buyer shall have
received at the Closing a certificate, dated the Closing Date, signed on
behalf of Seller by an executive officer of Seller to such effect.
5.3. Performance. Seller and the Transferors shall have performed
and complied, in all material respects, with all agreements, obligations and
conditions required to be performed or complied with by them at or prior to
the Closing; and Buyer shall have received at the Closing a certificate, dated
the Closing Date, signed on behalf of Seller by an executive officer of Seller
to such effect.
5.4. Approvals and Filings. All consents, authorizations and
approvals from, and all declarations, filings and registrations with,
governmental agencies or third parties that are listed on Schedule 5.4 and
any other material consents, authorizations, approvals declarations, filings
and registrations that are required to consummate the transactions
contemplated hereby shall have been obtained or made, except where the
failure to obtain or make the same is a result of Buyer's breach of its
obligations hereunder. All HSR waiting periods shall have expired or been
properly terminated.
5.5. Opinion of Counsel. Buyer shall have received an opinion or
opinions dated the Closing Date of counsel to Seller, to the effect set forth
on Schedule 5.5 hereto.
5.6. Proceedings; Additional Agreements. (i) All corporate,
partnership and other proceedings or actions to be taken by BGCI and each
Transferor in connection with or prior to the transactions contemplated
herein and in the Additional Agreements and all documents incident hereto and
thereto shall be reasonably satisfactory in form and substance to Buyer, and
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Buyer shall have received certified or other copies of the documents listed
on Schedule 5.6 and such other documents as Buyer may reasonably request.
Seller shall have, or shall have caused each Transferor to, execute the
Additional Agreements to be signed by Seller or such Transferor.
5.7. Closing Documents. Buyer shall have received all Additional
Agreements and such other documents, certificates and instruments as are
reasonable and customary, in connection with the Closing.
5.8. Nonforeign Affidavit. Each Transferor shall furnish Buyer an
affidavit, stating, under penalty of perjury, that the indicated number is
such Transferor's United States taxpayer identification number and that such
Transferor is not a foreign Person, pursuant to Section 1445(b)(2) of the
Code.
5.9. Regular Course of Business. Except as set forth on Schedule
2.13, subsequent to the execution of this Agreement by the parties hereto,
(i) each of the Principal Projects, and (ii) the Projects, taken as a whole,
shall have conducted their respective businesses in the ordinary course
consistent with past practice.
5.10. Certain Dispositions. Prior to the Closing or, if there is a
First Closing, prior to the First Closing, the transactons described in
Item 3 of Exhibit 3 shall have been completed.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
-------------------------------------------------
The obligations of Seller under this Agreement shall be subject to the
satisfaction (or waiver by Seller) on or before the Closing, of each of the
following conditions, and Buyer shall use reasonable efforts to cause each of
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such conditions (other than that set forth in Section 6.1) to be satisfied:
6.1. No Injunction. No Federal or state governmental agency or
authority or political subdivision thereof or Federal or state court of
competent jurisdiction shall have issued any injunction or other order
(whether temporary, preliminary or permanent) which prohibits the
consummation of the transactions contemplated hereby; provided, that the
parties shall use their reasonable efforts to litigate against, and obtain
the lifting of, any such injunction or order.
6.2. Representations and Warranties. The representations and
warranties of Buyer contained herein shall be true and correct in all
material respects as of the date hereof and as of the Closing Date (in each
case except where such representation or warranty is expressly made only as
of another specific date) as though such representations and warranties were
made at and as of the Closing Date, except as otherwise contemplated by this
Agreement; and Seller shall have received at the Closing a certificate, dated
the Closing Date, signed on behalf of Buyer by an executive officer of Buyer
to such effect.
6.3. Performance. Buyer shall have performed and complied, in all
material respects, with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by it on or prior to the
Closing; and Seller shall have received at the Closing a certificate, dated
the Closing Date, signed on behalf of Buyer by an executive officer of Buyer
to such effect.
6.4. Approvals and Filings. All consents, authorizations and
approvals from, and all declarations, filings and registrations with,
government agencies or third parties that are listed on Schedule 6.4 and any
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other material consents, authorizations, approvals, declarations and filings
that are required to consummate the transactions contemplated hereby shall
have been obtained or made. All HSR waiting periods shall have expired or
been properly terminated.
6.5. Opinion of Counsel. Seller shall have received an opinion or
opinions dated the Closing Date from counsel to Buyer, to the effect set
forth in Schedule 6.5 hereto.
6.6. Proceedings; Additional Agreements. All corporate and other
proceedings or actions to the effect set forth in Schedule 6.6 hereto to be
taken by Buyer in connection with or prior to the transactions contemplated
herein and in the Additional Agreements and all documents incident hereto or
thereto shall be reasonably satisfactory in form and substance to Seller and
Seller shall have received certified or other copies of the documents listed
on Schedule 6.6 and such other documents as Seller may reasonably request.
6.7. Closing Documents. Seller shall have received all Additional
Agreements and such other documents, certificates, and instruments as are
reasonable and customary, in connection with the Closing.
ARTICLE VII.
CLOSING
-------
7.1. Time and Place. Subject to the provisions of Articles V and
VI, the closing of the sale by the Transferors and the purchase by Buyer of
the Acquired Interests (the "Closing") shall take place at the offices of
Latham & Watkins, 885 Third Avenue, New York, New York 10022 on the
Permitted Date or at such other place, at such other time, or on such other
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date as the parties hereto may mutually agree (the date on which the Closing
occurs being herein referred to as the "Closing Date").
7.2. Payment. At the Closing, upon the terms and subject to the
conditions set forth herein, Buyer shall pay to Seller, by wire transfer of
immediately available funds to an account designated by Seller, $[xxx]
plus or minus the Net Unrestricted Cash Differential as set forth in the
Closing Adjustment Certificate plus, if applicable, the amount payable by Buyer
pursuant to Section 1.2(d).
7.3. First Closing; Additional Closings.(a) Notwithstanding any
other provision of this Agreement, if the condition to Closing contained in
Section 5.4 is satisfied or waived with respect to Acquired Interests which
represent (i) at least 66 2/3% of the aggregate Asset Value as set forth on
Schedule 7.3 hereto and (ii) all of the Acquired Interests with respect to
the Principal Projects but are not satisfied or waived with respect to any
or all of the other Acquired Interests, at Seller's option (which may be
exercised in Seller's absolute discretion) a first closing shall occur as
follows (the "First Closing"): Seller shall deliver to Buyer five Business
Days' written notice of the First Closing (the "First Closing Notice") at
which the purchase and sale of the First Closing Assets shall occur. The
First Closing shall take place at the offices of Latham & Watkins, 885 Third
Avenue, New York, New York 10022 on the date specified in the First Closing
Notice; provided that such date shall not be earlier than the Permitted Date.
At the First Closing, all documents, certificates and agreements contemplated
to be delivered and conditions required to be satisfied at the Closing
pursuant to Articles V, VI and VII shall be delivered or satisfied to the
extent they relate to the First Closing Assets (including but not limited to
33
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
42
the Put Agreement with respect to the Holdback Partnerships included in the
First Closing Assets). The purchase price payable at the First Closing shall
be the aggregate Asset Value allocated to the First Closing Assets on Schedule
7.3, plus or minus the Net Unrestricted Cash Differential (but only with
respect to the First Closing Assets). The procedures set forth in Sections
1.2(b) and (c) shall be followed for establishing such Net Unrestricted Cash
Differential (but only with respect to the First Closing Assets) for the
purpose of determining the purchase price payable at the First Closing and
for determining any adjustment thereto.
(b) If the First Closing occurs, then, subject to Article VIII,
Seller and Buyer agree to use their reasonable efforts to satisfy all of the
remaining conditions to Closing set forth in Section 5.4 with respect to all
of the Acquired Interests that were not purchased and sold at the First
Closing (collectively, the "Remaining Interests"). If, subsequent to the
First Closing and prior to the termination of this Agreement pursuant to
Article VIII (but in no event later than December 31, 1998), the condition to
Closing contained in Section 5.4 is satisfied with respect to any Remaining
Interest or Remaining Interests, and the other conditions to Closing relating
to such Remaining Interest or Remaining Interests are satisfied, a subsequent
closing shall occur with respect to such Remaining Interest or Remaining
Interests on the date that is ten (10) Business Days after the satisfaction of
the condition set forth in Section 5.4 (the "Subsequent Closing"); provided
that Buyer shall not be obligated to participate in more than two Subsequent
Closings and Seller may delay any Subsequent Closing to a date (but in no
event later than December 31, 1998) on which the condition set forth in
Section 5.4 is satisfied as to one or more additional Remaining Interests.
Seller shall deliver to Buyer prompt written notice of any Subsequent Closing
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at which the purchase and sale of any Remaining Interest or Remaining
Interests (each as applicable, a "Subsequent Closing Asset") shall occur. Any
Subsequent Closing shall take place at the offices of Latham & Watkins, 885
Third Avenue, New York, New York 10022. At each Subsequent Closing, all
documents, certificates and agreements contemplated to be delivered and
conditions required to be satisfied pursuant to Articles V, VI and VII shall
be delivered or satisfied to the extent they relate to the Subsequent Closing
Asset or Subsequent Closing Assets to be transferred at such Subsequent
Closing. The purchase price payable at each Subsequent Closing shall be the
Asset Value allocated to the applicable Subsequent Closing Asset or Subsequent
Closing Assets on Schedule 7.3, plus or minus the Net Unrestricted Cash
Differential (but only with respect to such Subsequent Closing Asset or
Subsequent Closing Assets ). The procedure set forth in Sections 1.2(b) and
(c) shall be followed for establishing such Net Unrestricted Cash Differential
(but only with respect to such Subsequent Closing Asset or Subsequent Closing
Assets) for the purpose of determining the purchase price payable at each
Subsequent Closing and for determining any adjustment thereto.
ARTICLE VIII.
TERMINATION AND ABANDONMENT
---------------------------
8.1. Methods of Termination. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time prior to
the Closing Date or prior to any Subsequent Closing; provided that no
termination of this Agreement shall affect the parties' respective rights and
obligations with respect to Acquired Interests purchased by Buyer pursuant
hereto prior to such termination.
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(a) by mutual consent of Seller and Buyer; or
(b) by Buyer at any time after December 31, 1998 if any of the
conditions provided for in Article V of this Agreement shall not have been met
or waived in writing by Buyer prior to such date; provided, that if any
condition in Article V has not been satisfied because of the occurrence of a
Material Adverse Effect which can be cured, and diligent efforts are being
undertaken to cure such Material Adverse Effect, then the references to
December 31, 1998 in this Section 8.1(b) and in Section 7.3(b) shall be
extended for up to 90 days after the occurrence of such Material Adverse
Effect so long as diligent efforts to cure such Material Adverse Effect
continue; or
(c) by Seller at any time after December 31, 1998 if any of the
conditions provided for in Article VI of this Agreement shall not have been
met or waived in writing by Seller prior to such date; or
(d) by Buyer or Seller if there has been a material violation or breach
by the other of its agreements, representations or warranties contained in
this Agreement which is not susceptible to cure (or if so susceptible is not
the subject of diligent efforts on the part of the breaching party to cure)
and the party seeking termination is not in material violation or breach of
its agreements, representations or warranties contained in this Agreement.
8.2. Procedure Upon Termination and Consequences. Buyer or Seller,
as the case may be, may terminate this Agreement when permitted pursuant to
Section 8.1 by delivering written notice of such termination, and such
termination shall be effective upon delivery of such notice in accordance
with Section 10.3. If this Agreement is terminated as provided herein:
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(a) each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the parties
furnishing the same; and
(b) no party hereto shall have any liability or further obligation to
any other party to this Agreement (i) except with respect to the
Confidentiality Agreement, which shall survive the termination of this
Agreement, including with respect to information that is subject to the
Confidentiality Agreement pursuant to Section 4.1, and (ii) except for such
legal and equitable rights and remedies which any party may have by reason of
any breach or violation of this Agreement by any other party prior to such
termination. Notwithstanding the foregoing, if this Agreement is terminated
after the occurrence of the First Closing or any Subsequent Closing, the
obligations of the parties hereto shall continue in full force and effect,
except for the obligations pursuant to Section 7.3(b).
ARTICLE IX.
SURVIVAL, INDEMNIFICATION AND OTHER MATTERS
-------------------------------------------
9.1. Survival. The representations and warranties of Seller contained
in this Agreement shall survive Closing and terminate and expire eighteen (18)
months after each Closing with respect to the Acquired Interests as to which
such representations and warranties relate; provided, that the representations
and warranties contained in Sections 2.2(a) , 2.3 and 2.4 (other than the
second sentence of Section 2.4(a)) shall survive Closing indefinitely; and
provided, further, that the representations and warranties contained in
Section 2.7 shall survive Closing and terminate and expire 90 days after the
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expiration of the relevant statutes of limitation. The representations and
warranties of Buyer contained in this Agreement shall survive Closing and
terminate and expire eighteen (18) months after the Closing with respect to
the Acquired Interests as to which such representations and warranties relate;
provided, however, that the representations and warranties contained in
Sections 3.2, 3.3, 3.4 and 3.5 shall survive Closing indefinitely; and
provided, further that the representations and warranties contained in
Section 3.8 shall survive Closing and terminate and expire 90 days after the
expiration of the relevant statutes of limitation. The covenants and
agreements of the parties contained in this Agreement shall survive Closing
indefinitely; provided, that the covenants and agreements contained in
Section 4.1 (other than the last sentence) shall terminate and expire at
Closing; and provided, that the covenants and agreements contained in Section
4.4 shall survive Closing and terminate and expire 90 days after the expiration
of the relevant statutes of limitation; and provided, further, that the
covenants and agreements contained in Section 4.5 shall survive Closing and
terminate and expire eighteen (18) months after the Closing with respect to
the Acquired Interests as to which covenants and agreements relate.
9.2. Agreement to Indemnify. (a) Seller shall indemnify Buyer,
Buyer's Affiliates and Buyer's parent, Subsidiaries, Affiliate corporations,
past and present officers, directors, shareholders, partners, members,
attorneys, legal representatives, agents and employees (collectively, the
"Buyer Indemnitees") and hold the Buyer Indemnitees harmless to the extent set
forth in this Article IX in respect of any and all Losses arising out of or
resulting from any breach of any representation, warranty, covenant or
agreement made by Seller or any other Transferor in this Agreement or any
representation, warranty or certification contained in any certificate,
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instrument or agreement delivered by or on behalf of Seller or any other
Transferor pursuant hereto or in connection herewith, other than the
representations and warranties contained in Section 2.7, for which
indemnification is provided in Section 9.6, and other than any Losses
relating to, arising out of or in connection with the Cedar Bay Dispute or
the controversy underlying such litigation, for which indemnification is
provided in Section 9.7.
(b) Buyer shall indemnify Seller, Seller's Affiliates and Seller's
parent, Subsidiaries, Affiliate corporations, past and present officers,
directors, shareholders, partners, members, attorneys, legal representatives,
agents and employees (collectively, the "Seller Indemnitees") and hold the
Seller Indemnitees harmless to the extent set forth in this Article IX by
Seller in respect of any and all Losses arising out of or resulting from any
breach of any representation, warranty, covenant or agreement made by Buyer in
this Agreement or any representation, warranty or certification contained in
any certificate, instrument or agreement delivered by or on behalf of Buyer or
any Subsidiary or Affiliate thereof.
(c) The sole recourse of any Buyer Indemnitee or Seller Indemnitee
(each, as applicable, an "Indemnitee") for any breach of any representation,
warranty, covenant or agreement made in this Agreement or any representation,
warranty or certification contained in any certificate, instrument or
agreement delivered by or on behalf of Buyer or any Subsidiary or Affiliate
thereof or Seller or any other Transferor pursuant hereto or in connection
herewith (except as expressly provided otherwise therein) shall be the
indemnification provided in this Article IX, subject to the limitations
provided in this Article IX; provided, that the foregoing shall not limit
(i) remedies for fraud if the Indemnitee proves actual fraud on the part of
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the Indemifying Party (as defined in Section 9.2(d)), or (ii) the availability
of injunctive and other equitable relief, including without limitation,
specific performance.
(d) No Indemnitee shall be entitled to indemnification hereunder
except to the extent the claim for indemnity with respect thereto has been
made in a writing received by the appropriate indemnifying party (each, as
applicable, an "Indemnifying Party") prior to the expiration of the applicable
survival period provided in Section 9.1.
9.3. Claims for Indemnification. If any Indemnitee shall believe
that such Indemnitee is entitled to indemnification pursuant to this Article
IX (other than pursuant to Section 9.6 or 9.7) in respect of any Losses, such
Indemnitee shall give the appropriate Indemnifying Party prompt written notice
thereof. Any such notice shall set forth in reasonable detail and to the
extent then known the basis for such claim for indemnification. The failure
of such Indemnitee to give notice of any claim for indemnification promptly
shall not adversely affect such Indemnitee's right to indemnity hereunder
except to the extent that such failure adversely affects the right of the
Indemnifying Party to assert any reasonable defense to such claim and except
as provided in Section 9.2(d).
9.4. Defense of Claims. In connection with any claim which may give
rise to indemnity under this Article IX (other than pursuant to Section 9.6
or 9.7) resulting from or arising out of any claim or proceeding against an
Indemnitee by a Person that is not a party hereto, the Indemnifying Party may
(unless such Indemnitee elects not to seek indemnity hereunder for such
claim), upon written notice to the relevant Indemnitee, assume the defense of
any such claim or proceeding. If the Indemnifying Party assumes the defense
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of any such claim or proceeding, the Indemnifying Party shall select counsel
reasonably acceptable to such Indemnitee to conduct the defense of such
claim or proceeding, shall take all steps necessary in the defense or
settlement thereof and shall at all times diligently and promptly pursue the
resolution thereof. Without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld, the Indemnifying Party will
not enter into any settlement of any claim or proceeding which would lead to
liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. Without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, the Indemnitee will not
enter into any settlement of any claim or proceeding which would lead to
liability or create any financial or other obligation on the part of the
Indemnifying Party unless the Indemnifying Party has failed or refused to
acknowledge responsibility for or defend such claim or proceeding within a
reasonable period of time after notice is provided pursuant to Section 9.3.
9.5. Limitation on Indemnification. Except as expressly provided
otherwise in any written certificate, instrument or agreement delivered by
or on behalf of Seller or any Transferor and consented to by Buyer, the
indemnification obligations of Seller with respect to any Capped Losses
shall not be effective against Seller until the aggregate dollar amount of
all Capped Losses which would otherwise be indemnifiable by Seller exceeds
[xxx] Dollars ($[xxx]) and then such indemnification obligation
of Seller shall apply only to Capped Losses in excess of $[xxx];
provided, that solely for the purpose of calculating whether Capped Losses
exceed such $[xxx] threshold, once a representation, warranty, covenant
41
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
50
or agreement giving rise to a Capped Loss has been breached in accordance
with its terms (taking into account all limitations and qualifications in
such representation, warranty, covenant or agreement, including without
limitation references to "material" or "Material Adverse Effect"), all
Losses arising out of such breach, and not just Losses that are in excess of
amounts that are "material" or that result in a "Material Adverse Effect",
shall be counted toward determining whether Capped Losses exceed such
$[xxx] threshold. Except as expressly provided otherwise in any written
certificate, instrument or agreement delivered by or on behalf of Seller or
any other Transferor and consented to by Buyer, the indemnification
obligations of Seller with respect to any Capped Losses shall be limited to an
aggregate amount payable by Seller of [xxx] Dollars ($[xxx]).
9.6. Indemnification for Taxes. (a) BGCI shall indemnify Buyer
and hold harmless Buyer from and against all Taxes of any Transferred Entity
(other than Beale Generating Company, the responsibility for the Taxes of
which shall be governed by the Beale Tax Sharing Agreement) or the Taxes of
any other entity for which such a Transferred Entity is liable (including but
not limited to pursuant to Treasury Regulation Section 1.1502-6 or comparable
state tax provisions) (i) with respect to all periods ending on or prior to
the Closing Date, (ii) with respect to any period beginning before the Closing
Date and ending after the Closing Date, but only with respect to the portion
of such period up to and including the Closing Date (such portion, a
"Pre-Closing Partial Period"), and (iii) resulting from a breach of a
representation or warranty contained in Section 2.7. BGCI shall be entitled
to any net refunds of Taxes (including interest thereon) with respect to
periods described in clauses (i) and (ii) above, except to the extent such
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
51
refund arises as the result of a carryback of a loss or other tax benefit
from a period beginning after the Closing Date.
(b) Buyer shall indemnify BGCI and hold harmless BGCI from and
against all Taxes of any Transferred Entity (other than Beale Generating
Company, the responsibility for the Taxes of which shall be governed by the
Beale Tax Sharing Agreement) or the Taxes of any other entity for which such a
Transferred Entity is liable (i) with respect to all periods beginning after
the Closing Date, (ii) with respect to any period beginning before the Closing
Date and ending after the Closing Date, but only with respect to the portion
of such period beginning the day after the Closing Date (such portion, a
"Post-Closing Partial Period") and (iii) resulting from a breach of a
representation or warranty contained in Section 3.8. Buyer shall be entitled
to any refunds of Taxes of any Transferred Entity or the Tax of any other
entity for which such a Transferred Entity is liable, with respect to all
periods beginning after the Closing Date and all Post-Closing Partial Periods.
(c) Any Taxes for a period including a Pre-Closing Partial Period
and a Post-Closing Partial Period shall be apportioned between such Pre-
Closing Partial Period and such Post-Closing Partial Period based, in the case
of real and personal property Taxes, on a per diem basis and, in the case of
other Taxes, on the actual activities, taxable income or taxable loss of the
applicable entity during such Pre-Closing Partial Period and such Post-Closing
Partial Period.
(d) BGCI and Buyer agree to give prompt notice to each other of any
proposed adjustments to Taxes for periods ending on or prior to the Closing
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Date, or any Pre-Closing Partial Period. BGCI and Buyer shall cooperate with
each other in the conduct of any audit or other proceedings involving any
Transferred Entity for such periods and each may participate at its own
expense, provided that BGCI shall have the right to control the conduct of any
audit or proceeding for which all or a portion of the resulting Tax is covered
by the indemnity provided in paragraph (a) of this Section 9.6.
Notwithstanding the foregoing, BGCI shall not settle or otherwise resolve any
such claim, suit, or proceeding without the written consent of Buyer, such
consent not to be unreasonably withheld.
9.7. Cedar Bay Indemnity. (a) Within thirty (30) Business Days
after Seller has received notice of the occurrence of the Cedar Bay Dispute
Resolution Date, Seller shall calculate the Cedar Bay Indemnity Amount, if
any, and shall provide to Buyer a certificate of a duly authorized officer of
Seller (the "Cedar Bay Indemnity Amount Calculation Certificate")
(i) including a disk which contains the Cedar Bay Modified Proforma,
(ii) setting forth, in reasonable detail, the bases for calculating the
Cedar Bay Indemnity Amount and (iii) setting forth, in reasonable detail,
the differences in factual or methodological assumptions between the Cedar
Bay Proforma and the Cedar Bay Modified Proforma.
(b) If Buyer agrees with Seller's calculation of the Cedar Bay
Indemnity Amount, it shall notify Seller, and Seller shall, within five (5)
Business Days of receipt of such notice, pay Buyer the Cedar Bay Indemnity
Amount, if any. If Buyer in good faith disagrees with Seller's calculation of
the Cedar Bay Indemnity Amount as set forth in the Cedar Bay Indemnity
Calculation Certificate or in good faith believes that the Cedar Bay Modified
Proforma included with the Cedar Bay Indemnity Calculation Certificate does
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not accurately reflect the modifications to the Cedar Bay Proforma required by
this Agreement, then Buyer shall deliver to Seller within twenty (20) Business
Days of receipt of Seller's Cedar Bay Indemnity Calculation Certificate a
notice setting for the basis for such disagreement and Buyer and Seller shall
in good faith attempt to resolve any such disagreement. Buyer's failure to
deliver its notice of disagreement within such twenty (20) Business Day period
shall be deemed Buyer's waiver of any claims relating to the accuracy of the
Cedar Bay Indemnity Calculation Certificate or the Cedar Bay Modified Proforma
attached thereto. If Buyer and Seller shall not resolve their disagreement
within fifteen (15) Business Days after Seller's receipt of Buyer's notice of
disagreement, then Buyer and Seller shall mutually retain a consulting
engineer mutually agreeable to Buyer and Seller (the "Consulting Engineer") to
determine the Cedar Bay Indemnity Amount. Buyer and Seller shall cause the
Consulting Engineer (whose fee shall be borne 50% by each Buyer and Seller) to
deliver its determination within sixty (60) Business Days of its retention,
and the determination by the Consulting Engineer of such Cedar Bay Indemnity
Amount shall be final and binding on Buyer and Seller. Seller shall pay to
Buyer the amount of the Cedar Bay Indemnity Amount (i) as determined by the
Consulting Engineer or (ii) as agreed upon by Buyer and Seller (or as set
forth in the Cedar Bay Indemnity Amount Calculation Certificate if Buyer is
deemed, pursuant to this Section 9.7(b), to have waived its claims), in each
case within ten (10) Business Days of such determination or agreement (or
waiver).
(c) The sole recourse of any Buyer Indemnitee with respect to any
claims relating to, arising out of or in connection with the Cedar Bay Dispute
or the controversy underlying such litigation shall be the indemnity provided
in this Section 9.7.
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ARTICLE X.
MISCELLANEOUS
-------------
10.1. Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement of Buyer and Seller.
10.2. Waiver of Compliance. Any failure of any party to comply with
any obligation, covenant, agreement or condition contained herein may be
expressly waived in writing by the party to whom such obligation is owed,
but such waiver or failure to insist upon strict compliance shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.
10.3. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall
be in writing and may be given by any of the following methods: (a) personal
delivery, (b) facsimile transmission, (c) registered or certified mail, postage
prepaid, return receipt requested, or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such
party as shall be specified by notice given hereunder).
If to Seller, to:
Bechtel Generating Company, Inc.
50 California Street, Suite 2200
San Francisco, California 94105
Attn: President
Telecopy: (415) 768-4171
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with copies to:
Bechtel Enterprises, Inc.
50 California Street, Suite 2200
San Francisco, California 94105
Attn: Principal Counsel
Telecopy: (415) 951-0825
and:
U.S. Generating Company
7500 Old Georgetown Road
13th Floor
Bethesda, Maryland 20814
Attn: General Counsel
Telecopy: (301) 718-6900
and:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022-4802
Attn: Samuel A. Fishman, Esq.
Telecopy: (212) 751-4864
Or to such other Person or address as Seller shall designate in writing.
If to Buyer to: Cogentrix Energy, Inc.
9405 Arrowpoint Boulevard
Charlotte, NC 28273-8110
Attn: General Counsel
Telecopy: (704) 529-1006
with a copy to: Moore & Van Allen, PLLC
100 N. Tryon Street, Floor 47
Charlotte, NC 28202-4003
Attn: Stephen D. Hope
Telecopy: (704) 331-1159
or to such other Person or address as Buyer shall designate in writing
All such notices, requests, demands, waivers and communications shall be
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deemed received upon (i) actual receipt thereof by the addressee, (ii) actual
delivery thereof to the appropriate address or (iii) in the case of a
facsimile transmission, upon transmission thereof by the sender and issuance
by the transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously
mail a copy of the notice to the addressee at the address provided for above
by first class mail, postage prepaid. However, such mailing shall in no way
alter the time at which the facsimile notice is deemed received.
10.4. Binding Nature: Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either of the
parties hereto without prior written consent of the other party except as
otherwise provided in this Section; provided that Buyer may assign and
delegate its rights, interests and obligations hereunder to one or more
wholly-owned direct or indirect Subsidiaries of Buyer, which Subsidiary or
Subsidiaries have no business other than the ownership (and not the
operation) of the Acquired Interests and/or stock or partnership interests
or other passive investments (each, a "Permitted Assignee"), upon written
notice to all of the parties hereto at or before the Closing Date, in which
event Buyer shall remain liable for all of its obligations under this
Agreement and such Subsidiary or Subsidiaries shall, together with Buyer, be
jointly and severally liable for such obligations. Except as otherwise
provided in Section 9.2, nothing contained herein, express or implied, is
intended to confer on any Person other than the parties hereto or their
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successors and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
10.5. Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, the Additional Agreements and the Confidentiality
Agreement embody the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein. This Agreement,
the Confidentiality Agreement and the Additional Agreements supersede all
prior agreements and understandings among the parties with respect to such
subject matter and supersede any letters, memoranda or other documents
submitted by (i) Buyer or its agents or representatives to Seller, Goldman,
Sachs & Co. or any of their respective agents or representatives, or
(ii) Seller or its agents or representatives to Buyer or any of its agents
or representatives, in connection with the bidding process which occurred
prior to the parties hereto entering into this Agreement or otherwise in
connection with the negotiation and execution of this Agreement.
10.6. Expenses. Each party to this Agreement will pay its own
expenses in connection with the negotiation of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated herein.
10.7. Press Releases and Announcements; Disclosure. No press
release or other public announcement or disclosure related to this Agreement
or the transactions contemplated herein (including but not limited to the
terms and conditions of this Agreement) shall be issued or made without the
prior approval of the parties hereto. The foregoing shall not prohibit any
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disclosure required by law, provided that the disclosing party shall use best
efforts to consult with the other party in advance of such disclosure.
10.8. Acknowledgment.(a) Buyer acknowledges that neither Seller nor
any other Person has made any representation or warranty, expressed or implied,
as to the accuracy or completeness of any information regarding Seller, any
Transferor, any Transferred Entity, any Project Partnership, any of their
respective Subsidiaries or any Project not included in this Agreement and the
Schedules and Exhibits hereto or in any Additional Agreement. Without
limiting the generality of the foregoing, no representation or warranty is made
with respect to any information in the Confidential Information Memorandum or
any supplement or amendment thereto provided in connection with the
solicitation of proposals to acquire the Acquired Interests or any interests
in the Holdback Partnerships which may be purchased on the Put Purchase Date,
such information having been provided for the convenience of Buyer in order to
assist Buyer in framing its due diligence efforts.
(b) Buyer further acknowledges that (i) Buyer, either alone or
together with any Persons Buyer has retained to advise it with respect to the
transactions contemplated hereby ("Advisors"), has knowledge and experience in
transactions of this type and in the business of the Acquired Entities, and is
therefore capable of evaluating the risks and merits of acquiring the Acquired
Interests, (ii) it has relied on its own independent investigation, and has
not relied on any information or representations furnished by Seller or any
representative or agent thereof or any other Person (except as specifically
set forth herein), in determining to enter into this Agreement, and
(iii) neither Seller nor any representative or agent thereof or any other
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Person has given any investment, legal or other advice or rendered any opinion
as to whether the purchase of the Acquired Interests and any interests in the
Holdback Partnerships which may be purchased on the Put Purchase Date is
prudent, and Buyer is not relying on any representation or warranty by Seller
or any representative or agent thereof except as set forth in this Agreement.
Buyer also acknowledges that Buyer has conducted extensive due diligence,
including a review of the documents contained in a data room prepared by or on
behalf of Seller. In addition, Seller has made available to Buyer all
documents, records and books pertaining to the Transferred Entities, the
Project Partnerships and the Projects that Buyer's attorneys, accountants,
Advisors, if any, and Buyer have requested, and Buyer and its Advisors, if
any, have had the opportunity to visit the Projects and ask questions of, and
to receive answers from, Seller, the Project Partnerships and any Person
acting on their behalf concerning the Transferred Entities, the Project
Partnerships and the Projects and the terms and conditions of this Agreement.
All such questions have been answered to Buyer's full satisfaction.
(c) Buyer acknowledges that certain of the Material Agreements are
between the Project Partnerships or Affiliates thereof, on the one hand, and
investors in or Affiliates of such Project Partnerships, on the other hand,
including without limitation PG&E Generating Company and Affiliates thereof.
(d) Buyer acknowledges that the Project Partnerships identified on
Schedule 10.8 hereto will enter the enabling agreements and/or excess power
sales agreements identified on Schedule 10.8, which agreements will contain
the material terms identified thereon.
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(e) Buyer acknowledges and agrees that the closing of the pending
transactions described on Exhibit 3 hereto may occur before or after Closing,
and agrees that (i) Beale Generating Company shall distribute, pay or transfer
the proceeds therefrom net of taxes and transaction costs to Persons who are
stockholders of Beale prior to the Closing, and (ii) neither the disposition
by Beale Generating Company of the interests and assets related to such
pending transactions nor the receipt, distribution, payment or transfer by
Beale Generating Company of the proceeds therefrom shall conflict with or
violate any provision of, or affect any calculation pursuant to, this
Agreement.
10.9. Disclaimer Regarding Assets. Except as otherwise expressly
provided herein, Seller expressly disclaims any representations or warranties
of any kind or nature, express or implied, as to the condition, value or
quality of the assets or operations of the Projects or the prospects (financial
and otherwise), risks and other incidents of the Projects and Seller
specifically disclaims any representation or warranty of merchantability,
usage, suitability or fitness for any particular purpose with respect to such
assets, or any part thereof, or as to the workmanship thereof, or the absence
of any defects therein, whether latent or patent, or compliance with
environmental requirements, or as to the condition of, or the rights of the
Project Partnerships in, or their title to, the assets, or any part thereof,
or whether the Project Partnerships possess sufficient real property or
personal property interests to own or operate such assets. Except as
expressly provided herein, no schedule or exhibit to this agreement, nor any
other material or information provided by or communications made by Seller or
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61
any of its representatives will cause or create any warranty, express or
implied, as to the condition, value or quality of such assets.
10.10. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law principles thereof.
10.11. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. Delivery
of an executed counterpart of a signature page of this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.
10.12. Interpretation. The article and section headings contained
in this Agreement are inserted for convenience only and shall not constitute
a part hereof.
10.13. ESI Amount Reimbursement. If a Closing has occurred that
includes all of the Acquired Interests in Birch Power Corporation, BGCI shall
reimburse BPC within ten (10) Business Days of written demand, together with
reasonable documentation, for 50% of the ESI Amount that is paid subsequent
to such Closing; provided that BGCI's obligation pursuant to this Section
10.13 shall not exceed [xxx] Dollars ($[xxx]). Except as
provided in the preceding sentence, and notwithstanding any other provision
of this Agreement, BGCI shall have no liability or obligation arising out of
the matters described in Schedule 2.7(c) under the heading "Gilberton",
including, but not limited to, the ESI Amount.
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
62
ARTICLE XI.
CERTAIN DEFINITIONS
-------------------
For the purposes of this Agreement, the following words and phrases
shall have the following meanings:
"Acquired 338 Subsidiaries" means, collectively, each direct or indirect
wholly-owned Subsidiary of a Section 338 Corporation that is a corporation and
each Section 338 Corporation.
"Acquired Interests" has the meaning assigned in the Recitals.
"Advisors" has the meaning assigned in Section 10.9.
"Additional Agreements" mean the Agreements listed on Schedule 6.6.
"Affiliate" means any Person in control or under control of, or under
common control with, another Person. For purposes of the foregoing,
"control", with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities or
by contract or otherwise.
"Aggregate Net Distributions" means an amount equal to Aggregate 1998
Distributions minus Aggregate 1998 Contributions.
"Aggregate 1998 Contributions" means the aggregate amount of all 1998
Contributions.
"Aggregate 1998 Distributions" means the aggregate amount of all 1998
Distributions.
"Aggregate Unrestricted Cash" means the sum of (i) aggregate
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Unrestricted Cash for all of the Project Partnerships, (ii) the aggregate
amount of cash held by Wholly-Owned Transferred Entities as of December 31,
1997, and (iii) 10.9% of the cash held as of December 31, 1997 by Beale
Generating Company or any of its wholly-owned subsidiaries.
"Asset Value" means the value of each Acquired Interest as set forth on
Schedule 7.3 hereto.
"Beale Tax Sharing Agreement" means the Beale Generating Company Federal
Income Tax Sharing Agreement dated September 19, 1997 among PG&E Generating
Company, Beale Generating Company and BGCI.
"BGCI" means Bechtel Generating Company, Inc.
"BPC" means Birch Power Corporation.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banking institutions in New York, New York are
authorized or obligated by law or executive order to be closed.
"Buyer" means Cogentrix Energy, Inc.
"Buyer Indemnitees" has the meaning assigned in Section 9.2.
"Capped Losses" means Losses pursuant to Section 9.2(a) for breaches of
representations and warranties (other than the representations and warranties
in Section 2.4(b)) and for breach of the covenant set forth in Section 4.5.
"Carneys Point Project" means the approximately 262 megawatt pulverized-
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coal fueled cogeneration facility located within the grounds of the DuPont
Chambers Works in Carneys Point, New Jersey.
"CBGC" means Cedar Bay Generating Company Limited Partnership, a
Delaware limited partnership.
"Cedar Bay Capped Amount" means $[xxx].
"Cedar Bay Dispute" means the dispute currently in litigation initiated
by the filing of a complaint entitled Cedar Bay Generating Company Limited
Partnership v. Florida Power and Light Company, in the Circuit Court, Fourth
District, in and for Duval County, Florida, as Case No. 97-87037 CA, and any
litigation or arbitration of the same controversy underlying such matter.
"Cedar Bay Dispute Resolution Date" means the first to occur of (i) a
binding and legally enforceable settlement of the Cedar Bay Dispute settling
all outstanding matters covered by such dispute, or (ii) (a) a non-appealable
judgment or non-appealable arbitration award of a court or arbitrator of
competent jurisdiction or (b) a final dismissal with prejudice of such
litigation or arbitration, in the case of clause (a) or (b) covering all
outstanding matters covered by such dispute.
"Cedar Bay Indemnity Amount" means (i) the positive difference, if any,
but in no event more than the Cedar Bay Capped Amount, resulting from the
subtraction of (X) the net present value as of January 1, 1998 of the cash
flows from CBGC to Cedar Power Corporation generated by the Cedar Bay Modified
Proforma, utilizing the Discount Rate, from (Y) the net present value as of
January 1, 1998 of the cash flows from CBGC to Cedar Power Corporation
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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generated by the Cedar Bay Proforma, utilizing the Discount Rate, plus (ii)
interest on the amount calculated pursuant to (i) above, calculated from the
Closing of the acquisition by Buyer of Cedar Power Corporation to the date of
payment of the amount calculated pursuant to (i) above, at a rate per annum,
which shall in no event be compounded, equal to the offered rate as of each
date the interest rate is set (rounded upwards, if necessary, to the next
higher 1/100th of 1%) which appears on the Telerate Page 3750, British Bankers
Association Interest Settlement Rates (or such other system for the purpose of
displaying rates of leading reference banks in the London interbank market
that replaces such system), plus forty (40) basis points. The interest rate
shall be set as of the Closing Date and as of each six-month anniversary of
the Closing Date (or the Business Day thereafter in the case of any such
anniversary that is not a Business Day).
"Cedar Bay Indemnity Amount Calculation Certificate" has the meaning
assigned in Section 9.7.
"Cedar Bay Modified Proforma" means the Cedar Bay Proforma, with factual
and methodological assumptions modified by Seller, in good faith, after the
Cedar Bay Dispute Resolution Date, only to the extent necessary to reflect any
differences in factual or methodological assumptions (whether such
differences, individually or collectively, result in a lessening or an
increase in the net present value of the cash flows from CBGC to Cedar Power
Corporation) directly attributable to the prosecution or resolution of the
Cedar Bay Dispute or as a result of foreclosure or other remedial action taken
by the lenders to the Cedar Bay Project directly attributable to the
controversy underlying the Cedar Bay Dispute that results in a reduction in
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the ownership interest of Buyer or its Permitted Assignee, including but not
limited to out-of-pocket costs (including attorneys' fees, court costs and
amounts due U.S. Generating Company, as manager, under its Management Services
Agreement with CBGC) directly attributable to the prosecution or resolution of
the Cedar Bay Dispute and excluding any other changes such as, but not limited
to, changes in plant operating performance, operating costs, fuel costs,
market conditions or regulations, in each case not directly attributable to
the resolution, including the long-term consequence of the resolution, of the
Cedar Bay Dispute. The Cedar Bay Modified Proforma shall utilize the Discount
Rate.
"Cedar Bay Proforma" means the financial proforma for the Cedar Bay
Project, in the form attached hereto as Exhibit 4, generated by a computer
disk, copies of which are marked "Cedar Bay Proforma" and which are held by
each of Buyer and Seller and in escrow by Latham & Watkins, counsel for
Seller, and Moore & Van Allen, PLLC, counsel for Buyer, including but not
limited to all the factual and methodological assumptions utilized to generate
that proforma, which proforma utilizes a discount rate equal to the Discount
Rate.
"Cedar Bay Project" means the approximately 260 megawatt coal-fired
cogeneration facility located in Jacksonville, Florida.
"Cedar Power Tax Sharing Agreement" means The Tax Sharing Agreement
dated March 31, 1993 between Cedar Power Corporation and Cedar I Power
Corporation.
"Closing" has the meaning assigned in Section 7.1.
"Closing Adjustment Certificate" has the meaning assigned in Section 1.2.
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"Closing Date" has the meaning assigned in Section 7.1.
"Code" means the Internal Revenue Code of 1986, as amended. All
citations to the Code or to the regulations promulgated thereunder shall
include any amendments or any substitute or successor provisions thereto.
"Confidentiality Agreement" has the meaning assigned in Section 4.1.
"Consulting Engineer" has the meaning assigned in Section 9.7.
"Discount Rate" means the discount rate which generates a net present
value of the cash flows from CBGC to Cedar Power Corporation, as of January 1,
1998, under the Cedar Bay Proforma, equal to the Cedar Bay Capped Amount.
"DOJ" means the United States Department of Justice.
"ESI" means FPL Energy Services, Inc.
"ESI Amount" means the amount, if any, that BPC actually pays, from time
to time, to ESI as a result of the potential liability of BPC to ESI described
in Schedule 2.7(c).
"Final Net Unrestricted Cash Differential" has the meaning assigned in
Section 1.2.
"Financial Statements" has the meaning assigned in Section 2.5.
"First Closing" has the meaning assigned in Section 7.3.
"First Closing Assets" means the Acquired Interests as to which the
conditions to Closing contained in Sections 5.4 and 6.4 and the other
conditions to Closing contained in Articles V and VI and related to such
Acquired Interests are satisfied as of the date of the First Closing.
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"First Closing Notice" has the meaning assigned in Section 7.3.
"FTC" means the United States Federal Trade Commission.
"Holdback Partnerships" means the partnerships listed on Exhibit 2.
"Holdback Transferors" means the Transferors listed on Exhibit 2.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnifying Party" has the meaning assigned in Section 9.3.
"Indemnitee" has the meaning assigned in Section 9.3.
"Indiantown Project" means the approximately 380 megawatt pulverized-
coal fueled cogeneration facility located in southwestern Martin County,
Florida.
"Logan Power Purchase Agreement" means the Agreement for Purchase of
Electric Power, regarding an electric generating facility located in Logan
Township, New Jersey, dated as of August 25, 1988, as amended.
"Logan Refinancing" means a refinancing of indebtedness and associated
restructuring of the Logan Power Purchase Agreement (i) which are initiated by
a timely request by Atlantic City Electric Company pursuant to the Logan
Refinancing Agreement as in existence on the date hereof, and (ii) which are
structured and closed pursuant to the Logan Refinancing Agreement or any
amendment, modification, renewal or replacement thereof.
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"Logan Refinancing Agreement" means the draft dated November 15, 1993 of
the Refinancing Agreement among Atlantic City Electric Company ("AE"),
Keystone Energy Service Company, L.P. ("KESC") and Keystone Urban Renewal
Limited Partnership ("KURLP"), which draft is attached to the letter agreement
dated November 17, 1993 among KESC, KURLP and AE, and, to the extent
applicable, as modified by Amendment 009 to the Logan Power Purchase Agreement.
"Logan Refinancing Amount" means [xxx] Dollars ($[xxx])
plus interest calculated from the Logan Refinancing Date to the date of
payment at a rate per annum, which shall in no event be compounded, equal to
the offered rate as of each date the interest rate is set (rounded upwards, if
necessary, to the next higher 1/100th of 1%) which appears on the Telerate
Page 3750, British Bankers Association Interest Settlement Rates (or such
other system for the purpose of displaying rates of leading reference banks in
the London interbank market that replaces such system), plus forty (40) basis
points. The interest rate shall be set as of the Closing Date and as of each
six-month anniversary of the Closing Date (or the Business Day thereafter in
the case of any such anniversary that is not a Business Day).
"Logan Refinancing Date" means the date on which the closing of a Logan
Refinancing occurs.
"Losses" means, in respect of any obligation to indemnify any Person
pursuant to Article IX of this Agreement, any and all claims, suits,
proceedings, charges, complaints, demands, decrees, penalties, losses, costs,
damages, liabilities, obligations, judgments, settlements, awards, and offsets
which the Indemnitee may suffer or incur (together, "Damages"), and reasonable
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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out-of-pocket attorneys' fees and expenses relating to Damages; provided, that
the term "Losses" shall not include Damages in the nature of consequential
damages, incidental damages, punitive damages, loss of use or loss of profits,
diminution in value, damage to a reputation or the like (collectively,
"Secondary Damages") except for Permitted Secondary Damages.
"Material Adverse Effect" means an effect that either individually or in
the aggregate is materially adverse (a) to the business, assets, operations,
properties, condition (financial or otherwise) or results of operations of
(i) any of the Principal Projects, or (ii) the Projects, taken as a whole, or,
(b) to the extent applicable, to the ability of BGCI or any other Transferor to
consummate the transactions contemplated by this Agreement.
"Material Agreements" has the meaning assigned in Section 2.8.
"Material Encumbrances" means any liens, charges, restrictions, claims
or encumbrances of any nature, material to the value of (i) any of the
Principal Projects, or (ii) the Projects taken as a whole.
"Net Unrestricted Cash Differential" means, as the case may be, (i) the
amount by which Aggregate Unrestricted Cash exceeds Aggregate Net
Distributions, in which case the amount of the Net Unrestricted Cash
Differential shall be added to $[xxx] plus, if applicable, the amount
payable by Buyer pursuant to Section 1.2(d), in determining the Purchase
Price pursuant to Section 1.2(a), or (ii) the amount by which Aggregate Net
Distributions exceeds Aggregate Unrestricted Cash, in which case the amount
of the Net Unrestricted Cash Differential shall be subtracted from $[xxx]
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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plus, if applicable, the amount payable by Buyer pursuant to Section 1.2(d)
in determining the Purchase Price pursuant to Section 1.2(a).
"1998 Contribution" means a contribution of cash by or on behalf of a
Transferor to or for the benefit of a Transferred Entity, subsequent to
December 31, 1997 and prior to the Closing.
"1998 Distribution" means a distribution of cash by or on behalf of a
Transferred Entity to or for the benefit of a Transferor, subsequent to
December 31, 1997 and prior to the Closing, other than any distribution of the
net proceeds, after tax and related costs, of the pending transactions listed
on Exhibit 3.
"Northampton Project" means the approximately 110 megawatt anthracite
waste coal-fired electric generating facility located in Northampton County,
Pennsylvania.
"Partnership Interests" has the meaning assigned in the Recitals.
"Permitted Assignee" has the meaning assigned in Section 10.4.
"Permitted Date" means the later to occur of (i) the first Business Day
that is twenty-three (23) or more days after receipt by Buyer of notice from
Seller of the satisfaction or waiver of the condition set forth in Section
5.4; or, in the case of a First Closing pursuant to Section 7.3(a), the First
Business Day that is twenty-three (23) or more days after receipt by Buyer of
notice from Seller of the satisfaction or waiver of the condition contained in
Section 5.4 with respect to Acquired Interests which represent (x) at least 66
2/3% of the aggregate Asset Value set forth on Schedule 7.3 and (y) all of the
Acquired Interests with respect to the Principal Projects and (ii) the first
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Business Day that is seventy-five (75) or more days after the date of this
Agreement.
"Permitted Secondary Damages" means Secondary Damages asserted against
the Indemnitee by a third party that is not an Affiliate of the Indemnitee,
which Secondary Damages do not arise out of (i) any acts or omissions of the
Indemnitee or any Affiliate of the Indemnitee (other than a Transferred
Entity or any Subsidiary thereof), or (ii) any agreement to which the
Indemnitee or any Affiliate of the Indemnitee (other than a Transferred
Entity or any Subsidiary thereof) is a party or by which any of them or any
of their respective property is bound.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof.
"Pittsfield Project" means the approximately 173 megawatt natural gas
fired cogeneration facility located in Pittsfield, Massachusetts.
"Post-Closing Partial Period" has the meaning assigned in Section 9.6.
"Pre-Closing Partial Period" has the meaning assigned in Section 9.6.
"Principal Projects" means each of the Logan Project, Northampton
Project, Indiantown Project and Carneys Point Project.
"Project Partnership" means, with respect to any Project, the
partnership that directly owns and operates the Project.
"Projects" has the meaning assigned in the Recitals.
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"Purchase Price" has the meaning assigned in Section 1.2.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.
"Put Agreement" means the Put Agreement dated the Closing Date between
Buyer and Seller.
"Put Purchase Date" has the meaning assigned in the Put Agreement.
"reasonable efforts" means commercially reasonable efforts; provided,
that no party nor any Affiliate of such party shall be required to pay any
money to any third party or suffer any diminution in value of any Acquired
Interest or asset held by it or any of its Affiliates in exchange for the
granting by a third party of any release, consent or waiver to the
transactions contemplated hereby, other than reasonable and customary amounts
paid as amendment fees, filing or registration fees (including with respect to
the HSR Act) and attorneys' fees incurred by such third party.
"Remaining Interests" has the meaning assigned in Section 7.3.
"Section 338 Corporations" means, collectively, (i) Maple Power
Corporation, (ii) Pine Power Leasing, Inc. (iii) Palm Power Corporation, (iv)
Cedar Power Corporation, (v) and Panther Creek Leasing, Inc.
"Selkirk Project" means the approximately 396 megawatt natural gas
fired, combined-cycle cogeneration facility located near Albany, New York.
"Seller" means Bechtel Generating Company, Inc.
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"Seller Indemnitees" has the meaning assigned in Section 9.2.
"Seller's knowledge" or words to such effect means the actual knowledge
of Seller and the constructive knowledge that Seller would have had if a
reasonably prudent officer, or executive or supervisory employee, would have
known or should have known the fact after due inquiry.
"Stock Interests" has the meaning assigned in the Recitals.
"Subsequent Certificate" has the meaning assigned in Section 1.2.
"Subsequent Closing" has the meaning assigned in Section 7.3.
"Subsequent Closing Asset" has the meaning assigned in Section 7.3.
"Subsidiary" means, as to any specified entity, any corporation of which
a majority of the outstanding securities having ordinary voting power to elect
a majority of the board of directors are directly or indirectly owned by such
specified entity or any other Person of which a majority of the equity
interests therein are, directly or indirectly, owned by such specified entity.
"Taxes" mean all federal, state, local, foreign, and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments, or charges of any
kind whatever, together with any interest and any penalties, additions to tax,
or additional amounts with respect thereto, and the term "Tax" means any one
of the foregoing Taxes.
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"Taxpayer" means each of the Transferred Entities and its Subsidiaries.
"Tax Returns" means all returns, declarations, reports, statements, and
other documents required to be filed in respect of Taxes, and the term "Tax
Return" means any one of the foregoing Tax Returns.
"Transferors" has the meaning assigned in the Recitals.
"Transferred Entities" has the meaning assigned in the Recitals.
"Unrestricted Cash" means, for each Project Partnership,(a) the amount
of cash held by such Project Partnership as of December 31, 1997 which, in
accordance with the applicable financing agreements of such Project
Partnership, is available for distribution to equity partners as of such date,
or would be available for distribution if December 31, 1997 was a permitted
cash distribution date, such amounts determined consistent with existing
policies and practices as of December 31, 1997 for determining distributable
cash by such Project Partnership, multiplied by (b) the percentage interest in
Unrestricted Cash for such Project Partnership as listed on Exhibit I hereto.
"Wholly-Owned Transferred Entity" means a Transferred Entity which is
wholly-owned directly or indirectly by BGCI.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
BECHTEL GENERATING COMPANY, INC.
By: /s/ V. Paul Unruh
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Name: V. Paul Unruh
Title: President
COGENTRIX ENERGY, INC.
By: /s/ Mark F. Miller
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Name: Mark F. Miller
Title: President and Chief Operating Officer
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EXHIBIT 1
ACQUIRED INTERESTS
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PROJECT ACQUIRED INTEREST(S) TRANSFEROR TRANSFERRED ENTITY PERCENTAGE
INTEREST IN
UNRESTRICTED
CASH
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Logan (1) 49% general partnership (1) Aspen Power Corporation (1) Logan Generating Company, L.P.
interest in Logan
Generating Company, L.P.
(2) 49% general partnership (2) Aspen Power Corporation (2) Granite Generating Company, L.P. 49%
interest in Granite
Generating Company, L.P.
(3) 49% general partnership (3) Aspen Power Corporation (3) Keystone Cogeneration Company,
interest in Keystone
Cogeneration Company, L.P.
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Northampton 49% general partnership Poplar Power Corporation Northampton Generating Company, L.P. 49%
interest in Northampton
Generating Company, L.P.
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Indiantown 100% of the stock of Bechtel Generating Company, Inc. Palm Power Corporation 10%
Palm Power Corporation
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Carney's 100% of the stock of Bechtel Generating Company, Inc. Maple Power Corporation 10%
Point Maple Power Corporation
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Panther 100% of the stock of Bechtel Enterprises Leasing, Inc. Panther Creek Leasing, Inc. 0%
Creek Panther Creek Leasing, Inc.
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Scrubgrass 100% of the stock of Bechtel Enterprises Leasing, Inc. Pine Power Leasing, Inc. 20%
Pine Power Leasing, Inc.
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Cedar Bay 100% of the stock of Bechtel Generating Company, Inc. Cedar Power Corporation 0%
Cedar Power Corporation
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Morgantown 100% of the stock of Bechtel Generating Company, Inc. Hickory Power Corporation 15%
Hickory Power Corporation
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Gilberton 100% of the stock of Bechtel Generating Company, Inc. Birch Power Corporation 19.555%
Birch Power Corporation
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Selkirk 10.9% of the stock of Bechtel Generating Company, Inc. Beale Generating Company 0%
Beale Generating Company
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Masspower 10.9% of the stock of Bechtel Generating Company, Inc. Beale Generating Company 3.27%
Beale Generating Company
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Pittsfield 10.9% of the stock of Bechtel Generating Company, Inc. Beale Generating Company 5.45%
Beale Generating Company
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Iroquois 10.9% of the stock of Bechtel Generating Company, Inc. Beale Generating Company .54%
Beale Generating Company, Inc.
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EXHIBIT 2
HOLDBACK PARTNERSHIPS
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PROJECT HOLDBACK PARTNERSHIP HOLDBACK TRANSFEROR
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Logan (1) Logan Generating Company, L.P. (1) Aspen Power Corporation
(2) Granite Generating Company, L.P. (2) Aspen Power Corporation
(3) Keystone Cogeneration Company, L.P. (3) Aspen Power Corporation
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Northampton Northampton Generating Company, L.P. Poplar Power Corporation
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