AGREEMENT REGARDING REPRESENTATIONS AND WARRANTIES
Exhibit
2.2
AGREEMENT
REGARDING
REPRESENTATIONS
AND WARRANTIES
This
Agreement Regarding Representations and Warranties (this “Agreement”) is
entered into as of November 20, 2009, by and between Ridgewood Renewable Power,
LLC (“Ridgewood”), a New
Jersey limited liability company, the Sellers listed on Schedule 1 hereto
(the “Sellers”)
and KEI (USA) Power Management Inc., a Delaware corporation (“KEI”) and the other
Buyers listed on Schedule 1 hereto
(collectively, the “Buyers”) (Ridgewood,
the Sellers and the Buyers are collectively referred to as the “Parties”).
PRELIMINARY
STATEMENT
The
Buyers and the Sellers have entered into a Purchase and Sale Agreement (the
“PSA”) dated on
or about the date hereof. This Agreement is entered into pursuant to
Section 9.1(l) of the PSA, which provides that, as a condition to closing, the
Sellers are required to deliver certain limited indemnities from Ridgewood, and
pay the cost of an insurance policy as to certain representations and warranties
of the Sellers, a copy of which is attached hereto as Exhibit A (the “R&W Insurance
Policy”). In order to induce the Buyers to execute the
PSA and proceed to Closing (as defined in the PSA), Ridgewood and the Sellers
have agreed to execute this Agreement for the benefit of KEI and the
Buyers. All capitalized terms used herein but not otherwise defined
are as defined in the PSA.
NOW
THEREFORE, in consideration of the covenants, representations, warranties, and
mutual agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1.
Indemnification
of by Ridgewood.
Ridgewood shall indemnify, defend and hold harmless KEI, its Affiliates,
the Companies, their respective successors and permitted assignees, and all of
their respective stockholders, trustees, members, managers, partners, directors,
officers, employees, agents and representatives (collectively, “KEI Indemnified
Parties”) against and in respect of all Liabilities, obligations,
judgments, injunctions, charges, orders, decrees, rulings, damages, assessments,
Taxes, losses, fines, penalties, damages, expenses, fees, costs, and amounts
paid in settlement (including reasonable consultants’, attorneys’ and expert
witness fees and disbursements in connection with investigating, defending or
settling any action or threatened action) (collectively, the “Losses”), arising
from any of the following:
(a) the
Accountant Claim (as defined in the PSA), with respect to which claims may be
asserted hereunder to and including the final resolution of such claim;
and
(b) Any
fines, penalties, compliance costs or remedial costs arising out of inspections
of any Seller’s properties conducted prior to Closing under the Occupational
Safety and Health Act, or out of any written communications arising from such
inspections, with respect to which no Claims may be asserted hereunder after
fifteen (15) months following the Closing Date other than with respect to any
fines, penalties, compliance costs or remedial costs resulting from agency
correspondence threatening such potential costs and made within such 15 month
period.
2.
Seller
Representations and Warranties. Notwithstanding
anything to the contrary in the PSA, Ridgewood and the Sellers agree that the
following representations and warranties shall survive the Closing to the extent
necessary to allow any of the following Claims to be brought during the time
periods set forth below.
(a) Litigation and Governmental
Proceedings. Any Claim made with respect to any inaccuracy in
the representations and warranties contained in Sections 4.7 or 5.8 of the PSA,
other than the Accountant Claim, and in each case with respect to which no
claims may be asserted hereunder after the later of (i) fifteen (15) months
following the Closing Date, or (ii) the third (3rd) anniversary of the Closing
Date if a final and binding determination in
a Pre-Closing Investigation occurs after the fifteen (15) month period
contained in the foregoing item (a), where the term "Pre-Closing Investigation"
means any formal or informal governmental investigation or proceeding of which
the Sellers had Knowledge prior to the Closing.
(b) Taxes. Any
Claim made with respect to any inaccuracy in the representations and warranties
contained in Sections 4.14 or 5.15 of the PSA, with respect
to the period prior to Closing, with respect to which no claims may be asserted
hereunder after the seventh (7th)
anniversary of the later of the Closing Date or the date of any Tax Return filed
with respect to the period prior to Closing.
(c) Employees and Employee
Benefits. Any Claim made with respect to any inaccuracy in the
representations and warranties contained in Sections 4.8 or 5.9 of the PSA, with
respect to which no claims may be asserted hereunder after fifteen (15) months
following the Closing Date.
(d) Ownership of Interests,
Etc. Any Claim made with respect to any inaccuracy in the
representations and warranties contained in Sections 3.1 through 3.6 of the PSA,
to the extent related to events, circumstances or conditions first arising in
connection with or subsequent to the acquisition by Ridgewood, directly or
indirectly, of any ownership interest in such Seller or Company, as applicable,
with respect to which no claims may be asserted hereunder after the seventh
(7th)
anniversary of the Closing Date.
(e) Assessments, Rents and
Royalties. Any Claim made with respect to any inaccuracy in
any representation or warranty set forth in Sections 4.13 or 5.14 of the PSA,
but only to the extent that such inaccuracy is with respect to any valid
assessments, rents, royalties or other payment obligations owing by any Seller,
Company or any Affiliate and arising under a written agreement or law with
respect to the period prior to Closing, with respect to which no claims may be
asserted hereunder after fifteen (15) months following the Closing
Date.
(f) FERC
Matters. Any Claim made with respect to any inaccuracy in any
representation or warranty set forth in Sections 4.4 or 5.5 of the PSA, but only
to the extent that such Claim arises from a material agreement, permit, or study
performed in response to regulatory requirements or written correspondence from
the Federal Energy Regulatory Commission (“FERC”) that predates Closing, if such
material agreement, permit, or study (or unresolved matter with FERC related
thereto) was not disclosed in the PSA, and is binding on any Seller or Company,
or which addresses a Seller’s or Company’s operations or assets, which failure
results in a Material Adverse Effect, with respect to which no claims may be
asserted hereunder after twelve (12) months following the Closing
Date.
3.
Limitations
on Liability.
(a) With
respect to any Claim for which indemnification is sought under Section 1 of this
Agreement, the following provisions shall apply:
(1) The
KEI Indemnified Parties shall collectively be entitled to pursue Claims and
recover Losses as provided in Section 1 of this Agreement, in the aggregate not
in excess of the lesser of (i) the actual compensatory damages suffered by such
KEI Indemnified Parties, or (ii) $1,200,000; provided that no such liability
limits apply to subsection 1(b).
(2) KEI
and the Buyers on behalf of each of such KEI Indemnified Parties hereby waive
any right to recover incidental, indirect, special, exemplary, punitive or
consequential damages.
(3) Anything
to the contrary contained in this Agreement notwithstanding, KEI and the Buyers
agree that the KEI Indemnified Parties shall be entitled to look solely to (i) a
letter of credit in the amount of $1,200,000 for recovery with respect to any
Claim arising under Section 1 of this Agreement; provided that the parties agree
that, upon the final, non-appealable resolution of the Accountant Claim, such
letter of credit shall be reduced to $250,000 for the duration of the
indemnification set forth in Section 1(b) hereof, and (ii) a letter of credit in
the amount of $100,000 for payment by KEI of the deductible payable with respect
to the R&W Insurance Policy.
(b) With
respect to any Claim asserted by any third party as to the matters set forth in
Section 2 of this Agreement, the following provisions shall apply:
(1) The
KEI Indemnified Parties shall collectively be entitled to pursue Claims and
recover Losses as provided in Section 2 of this Agreement, in the aggregate not
in excess of the lesser of (i) the actual compensatory damages suffered by such
KEI Indemnified Parties, or (ii) $8,000,000.
(2) KEI
and the Buyers on behalf of each of such KEI Indemnified Parties hereby waive
any right to recover incidental, indirect, special, exemplary, punitive or
consequential damages.
(3) Anything
to the contrary contained in this Agreement notwithstanding, KEI and the Buyers
agree that the KEI Indemnified Parties shall be entitled to look solely to the
R&W Insurance Policy with respect to claims brought pursuant to Section 2
hereof, and, with respect to the amount of any deductible under such insurance
policy, to a letter of credit or bond in form reasonably satisfactory to
KEI.
(c) Except
as expressly provided in Section 3(a) and (b) above, KEI, the Buyers and the KEI
Indemnified Parties may not proceed against Ridgewood, the Sellers or their
respective shareholders, directors, officers, managers, members, employees or
agents other than on grounds constituting fraud or violation of securities
laws.
(d) Each
KEI Indemnified Party shall use Commercially Reasonable Efforts to mitigate all
Losses upon becoming aware of any event or circumstance that could reasonably be
expected to give rise to any Losses that are indemnifiable or recoverable
hereunder or in connection herewith.
4.
Third
Party Indemnification Claims. The following provisions shall
apply with respect to any third party claim brought pursuant to Section 1
hereof:
(a) If
any Third Party shall notify any KEI Indemnified Party with respect to any Claim
brought pursuant to Section 1 hereof that may give rise to a claim for
indemnification against Ridgewood under this Agreement, then such KEI
Indemnified Party shall promptly notify Ridgewood thereof in writing; provided that no delay on the
part of such KEI Indemnified Party in notifying Ridgewood shall relieve
Ridgewood from any obligation hereunder unless (and then solely to the extent)
Ridgewood is prejudiced thereby.
(b) Ridgewood
shall have the right to defend such KEI Indemnified Party against the Claim with
counsel of its choice reasonably satisfactory to such KEI Indemnified Party so
long as (i) within ten (10) days after receiving such notice, Ridgewood shall
give written notice to such KEI Indemnified Party stating whether it disputes
the claim for indemnification and whether it shall defend against any Claim or
liability at its own cost and expense, (ii) the Claim involves only money
damages and does not seek an injunction or other equitable relief and settlement
of, or an adverse judgment with respect to, the Claim is not, in the good faith
judgment of such KEI Indemnified Party, likely to establish a precedent, custom
or practice adverse to the continuing business interests of such KEI Indemnified
Party, and (iii) Ridgewood conducts the defense of the Claim actively and
diligently; provided
that if the claim is one that cannot by its nature be defended solely by
Ridgewood, the KEI Indemnified Party shall make available all information and
assistance reasonably available and necessary for the defense of the Claim as
Ridgewood may reasonably request and shall cooperate with Ridgewood in such
defense.
(c) So
long as Ridgewood is conducting the defense of the Claim in accordance with this
Agreement, (i) such KEI Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Claim, (ii) such KEI
Indemnified Party shall not consent to the entry of any judgment or enter into
any settlement with respect to the Claim without the prior written consent of
Ridgewood (which consent shall not unreasonably be withheld, conditioned or
delayed), and (iii) Ridgewood shall not consent to the entry of any judgment or
enter into any settlement with respect to the Claim unless written agreement is
obtained releasing such KEI Indemnified Party from all liability
thereunder.
(d) In
the event Ridgewood fails to comply in any material respect with any of the
conditions in this Section 4, which failure is not cured within the earlier to
occur of (i) fifteen (15) days after receipt by Ridgewood of written notice
thereof or (ii) any deadline applicable to the legal processing of the defense
of a Claim of which Ridgewood has been given written notice, then (x) such KEI
Indemnified Party may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Claim in any manner it may
deem appropriate (and such KEI Indemnified Party need not consult with, or
obtain any consent from, Ridgewood in connection therewith), (y) Ridgewood shall
reimburse such KEI Indemnified Party promptly and periodically for the
reasonable costs of defending against the Claim (including reasonable attorneys’
fees and expenses), and (z) Ridgewood shall remain responsible for any
Losses such KEI Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Claim to the fullest extent
provided in this Agreement.
(e) This
Section 4 applies only to Claims brought pursuant to Section 1
hereof.
5.
Cooperation. Ridgewood
and KEI shall cooperate with each other and provide the other Party with all
relevant information upon request of the other Party with respect to any
Claim.
6.
Survival. This
Agreement shall survive the expiration or termination of the PSA and any
representations or warranties thereunder; provided, however, that no claim may
be asserted hereunder by any KEI Indemnified Party after the respective periods
of time set forth in Sections 1 and 2 hereof.
7.
Miscellaneous.
(a) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
(b) Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) Notices. All
notices, requests, demands, claims and other communications hereunder shall be
in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly given (i) upon confirmation of facsimile, (ii)
one Business Day following the date sent when sent by overnight delivery and
(iii) five Business Days following the date mailed when mailed by registered or
certified mail return receipt requested and postage prepaid at the address
provided by each Party for notice under the PSA. Any Party may send
any notice, request, demand, claim, or other communication hereunder to the
intended recipient at such address using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.
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(d) Governing
Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Maine without giving effect to
any choice or conflict of law provision or rule (whether of the State of Maine
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Maine.
(e) Consent
to Jurisdiction. Ridgewood and KEI each consents to the
nonexclusive jurisdiction of any local, state or federal court located within
the State of Maine for adjudication of any suit, claim, action or other
proceeding at law or in equity relating to this Agreement, or to any transaction
contemplated hereby. Ridgewood and KEI each accept, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and waive
any objection as to venue, and any defense of forum non conveniens.
(f) Amendments
and Waivers. No amendment or waiver of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by KEI
and Ridgewood. The Buyers hereby agree to be bound by any amendment
or waiver of any provisions of this Agreement which KEI has approved in
writing. The Sellers hereby agree to be bound by any amendment or
waiver of any provisions of this Agreement which Ridgewood has approved in
writing. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(g) Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
(h) Construction. Ambiguities
or uncertainties in the wording of this Agreement shall not be construed for or
against any Party, but shall be construed in the manner that most accurately
reflects the Parties’ intent as of the Effective Date. The Parties
acknowledge that they have been represented by counsel in connection with the
review and execution of this Agreement, and, accordingly, there shall be no
presumption that this Agreement or any provision hereof be construed against the
Party that drafted this Agreement.
Signature Page
Follows
IN
WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement as
of the date first written above.
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BUYERS:
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KEI
(USA) POWER MANAGEMENT INC.
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Title:
VP Operations/ Special Representative
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2240867
DELAWARE, INC.
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2240870
DELAWARE, LLC
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Title:
VP Operations/ Special Representative
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Title:
VP Operations/ Special Representative
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2240871
DELAWARE, LLC
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2240872
DELAWARE, LLC
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Title:
VP Operations/ Special Representative
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Title:
VP Operations/ Special Representative
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KEI
(MAINE) POWER MANAGEMENT (I) LLC
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KEI
(MAINE) POWER MANAGEMENT (II) LLC
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Title:
VP Operations/ Special Representative
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Title:
VP Operations/ Special Representative
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KEI (MAINE) POWER MANAGEMENT
(III) LLC
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KEI
(MAINE) POWER MANAGEMENT (IV) LLC
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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By:
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/s/ Xxxx Xxx and /s/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Name:
Xxxx Xxx/ Xxx Xxxxxxxx
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Title:
VP Operations/ Special Representative
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Title:
VP Operations/ Special
Representative
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10
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SELLERS:
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RIDGEWOOD
MAINE HYDRO PARTNERS, L.P.
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RIDGEWOOD
RENEWABLE POWER, LLC
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| By: |
Ridgewood
Maine Hydro Corporation, its General Partner
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By:
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/s/ Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | |||||
| President & Chief Executive Officer | |||||
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By:
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/s/ Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | |||||
| President & Chief Executive Officer | |||||
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RIDGEWOOD
HYDRO HOLDING INC.
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BOX
CANYON HYDRO, INC.
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By:
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/s/ Xxxxxxx X. Xxxxxx
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By:
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/s/ Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | Xxxxxxx X. Xxxxxx | ||||
| President & Chief Executive Officer | President & Chief Executive Officer | ||||
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BCLP,
INC.
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EMPORIA
HYDRO, INC.
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By:
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/s/ Xxxxxxx X. Xxxxxx
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By:
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/s/ Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | Xxxxxxx X. Xxxxxx | ||||
| President & Chief Executive Officer | President & Chief Executive Officer | ||||
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X.
XXXXXXX COGENERATION INC.
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XXXXXX
KILL HYDRO, INC.
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By:
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/s/ Xxxxxxx X. Xxxxxx
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By:
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/s/ Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | Xxxxxxx X. Xxxxxx | ||||
| President & Chief Executive Officer | President & Chief Executive Officer | ||||
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UF,
INC.
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BKG,
INC.
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By:
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/s/ Xxxxxxx X. Xxxxxx
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By:
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/s/
Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | Xxxxxxx X. Xxxxxx | ||||
| President & Chief Executive Officer | President & Chief Executive Officer | ||||
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UNION
FALLS HYDRO, INC.
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By:
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/s/
Xxxxxxx X. Xxxxxx
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| Xxxxxxx X. Xxxxxx | |||
| President & Chief Executive Officer | |||
Schedule
1
SELLERS:
Ridgewood
Hydro Holding Inc.
Box
Canyon Hydro, Inc.
BCLP,
Inc.
Emporia
Hydro, Inc.
X.
Xxxxxxx Cogeneration, Inc.
Xxxxxx
Kill Hydro, Inc.
BKG,
Inc.
Union
Falls Hydro, Inc.
UF,
Inc.
Ridgewood
Maine Hydro Partners, L.P.
BUYERS:
KEI (USA)
POWER MANAGEMENT, INC.
KEI
(MAINE) POWER MANAGEMENT (I) LLC
KEI
(MAINE) POWER MANAGEMENT (III) LLC
KEI
(MAINE) POWER MANAGEMENT (IV) LLC
2240867
Delaware, Inc.
2240870
Delaware, LLC
2240871
Delaware, LLC
2240872
Delaware, LLC
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